UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________________________

Form 10-K

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2013
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2014
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 1-2198

DTE Electric Company, a Michigan corporation, meets the conditions set forth in General Instruction I (1) (a) and (b) of Form 10-K and is, therefore, filing this form with the reduced disclosure format.

DTE ELECTRIC COMPANY

(Exact name of registrant as specified in its charter)



Michigan		38-0478650
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer 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)

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

None

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

None

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

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

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 þ No o

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

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



Large accelerated filer o	Accelerated filer o	Non-accelerated filer þ (Do not check if a smaller reporting company)	Smaller reporting company o

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

All of the registrant’s 138,632,324 outstanding shares of common stock, par value $10 per share, are owned by DTE Energy Company.

DOCUMENTS INCORPORATED BY REFERENCE

None

~~DTE~~TABLE ~~Electric~~OF ~~Company~~CONTENTS

Annual Report on Form 10-K



		Page
	Definitions	1
	Forward-Looking Statements	3
Part I
Items 1. & 2.	Business and Properties	4
Item 1A.	Risk Factors	8
Item 1B.	Unresolved Staff Comments	11
Item 3.	Legal Proceedings	11
Item 4.	Mine Safety Disclosures	11
Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	12
Item 6.	Selected Financial Data	12
Item 7.	Management’s Narrative Analysis of Results of Operations	13
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	15
Item 8.	Financial Statements and Supplementary Data	16
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	59
Item 9A.	Controls and Procedures	59
Item 9B.	Other Information	59
Part III
Item 10.	Directors, Executive Officers and Corporate Governance	59
Item 11.	Executive Compensation	59
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	59
Item 13.	Certain Relationships and Related Transactions, and Director Independence	59
Item 14.	Principal Accountant Fees and Services	59
Part IV
Item 15.	Exhibits and Financial Statement Schedule	60
	Signatures	66
EX-12.52
EX-23.29
EX-31.95
EX-31.96
EX-32.95
EX-32.96
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema
101.CAL XBRL Taxonomy Extension Calculation Linkbase
101.DEF XBRL Taxonomy Extension Definition Database
101.LAB XBRL Taxonomy Extension Label Linkbase
101.PRE XBRL Taxonomy Extension Presentation Linkbase

~~Year Ended December 31, 2013~~DEFINITIONS

		Page
AFUDC		Allowance for Funds Used During Construction
Definitions		1
COA		U.S Court of Appeals for the District of Columbia
Forward-Looking Statements		3
Company		DTE Electric Company and any subsidiary companies
Part I
Customer Choice		Michigan legislation giving customers the option of retail access to alternative suppliers for electricity
Items 1. & 2.	Business and Properties	4
DOE		U.S. Department of Energy
Item 1A.c	Risk Factors	8
DTE Electric		DTE Electric Company (a direct wholly owned subsidiary of DTE Energy Company) and subsidiary companies
Item 1B.	Unresolved Staff Comments	11
DTE Energy		DTE Energy Company, directly or indirectly the parent of DTE Electric, DTE Gas Company and numerous non-utility subsidiaries
Item 3.re	Legal Proceedings	11
EPA		United States Environmental Protection Agency
Item 4.	Mine Safety Disclosures	11
FASB		Financial Accounting Standards Board
Part II
FERC		Federal Energy Regulatory Commission
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	12
FOV		Finding of Violation
Item 6.	Selected Financial Data	12
FTRs		Financial transmission rights are financial instruments that entitle the holder to receive payments related to costs incurred for congestion on the transmission grid.
Item 7.	Management’s Narrative Analysis of Results of Operations	13
IRS		Internal Revenue Service
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	16
MBT		Michigan Business Tax
Item 8.	Financial Statements and Supplementary Data	17
MCIT		Michigan Corporate Income Tax
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	63
MCOA		Michigan Court of Appeals
Item 9A.	Controls and Procedures	63
MDEQ		Michigan Department of Environmental Quality
Item 9B.	Other Information	63
MGP		Manufactured Gas Plant
Part III
MISO		Midcontinent Independent System Operator, Inc.
Item 10.	Directors, Executive Officers and Corporate Governance	63
MPSC		Michigan Public Service Commission
Item 11.	Executive Compensation	63
MTM		Mark-to-market
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	63
NAV		Net Asset Value
Item 13.	Certain Relationships and Related Transactions, and Director Independence	63
NEIL		Nuclear Electric Insurance Limited
Item 14.	Principal Accountant Fees and Services	63
NOV		Notice of Violation
Part IV
NRC		U.S. Nuclear Regulatory Commission
Item 15.	Exhibits and Financial Statement Schedule	64
PLD		City of Detroit's Public Lighting Department
Signatures		70
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.
EX-12.48
PSCR		A Power Supply Cost Recovery mechanism authorized by the MPSC that allows DTE Electric to recover through rates its fuel, fuel-related and purchased power costs
EX-23.28
RDM		A Revenue Decoupling Mechanism authorized by the MPSC that is designed to minimize the impact on revenues of changes in average customer usage
EX-31.87
SEC		Securities and Exchange Commission
EX-31.88
EX-32.87
EX-32.88
101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema
101.CAL XBRL Taxonomy Extension Calculation Linkbase
101.DEF XBRL Taxonomy Extension Definition Database
101.LAB XBRL Taxonomy Extension Label Linkbase
101.PRE XBRL Taxonomy Extension Presentation Linkbase

Definitions

ASC		Accounting Standards Codification
ASU		Accounting Standards Update
Company		DTE Electric Company and any subsidiary companies
Customer Choice		Michigan legislation giving customers the option to choose alternative suppliers for electricity.
DTE Electric		DTE Electric Company (a direct wholly owned subsidiary of DTE Energy) and subsidiary companies. Formerly known as The Detroit Edison Company.
DTE Energy		DTE Energy Company, directly or indirectly the parent of DTE Electric, DTE Gas Company and numerous non-utility subsidiaries
EPA		United States Environmental Protection Agency
FASB		Financial Accounting Standards Board
FERC		Federal Energy Regulatory Commission
FTRs		Financial transmission rights are financial instruments that entitle the holder to receive payments related to costs incurred for congestion on the transmission grid.
MCIT		Michigan Corporate Income Tax
MDEQ		Michigan Department of Environmental Quality
MISO		Midcontinent Independent System Operator, Inc.
MPSC		Michigan Public Service Commission
NRC		United States 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.
PSCR		A Power Supply Cost Recovery mechanism authorized by the MPSC that allows DTE Electric to recover through rates its fuel, fuel-related and purchased power costs.
RDM		A Revenue Decoupling Mechanism authorized by the MPSC that is designed to minimize the impact on revenues of changes in average customer usage of electricity
Securitization		DTE Electric 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.
VIE		Variable Interest Entity

DEFINITIONS



Securitization		DTE Electric 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

TRIA		Terrorism Risk Insurance Extension Act of 2005

TRM		A Transitional Reconciliation Mechanism authorized by the MPSC that allows DTE Electric to recover through rates the deferred net incremental revenue requirement associated with the transition of PLD customers to DTE Electric's distribution system

VEBA		Voluntary Employees Beneficiary Association

VIE		Variable Interest Entity



Units of Measurement

kWh		Kilowatthour of electricity

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 with respect to the financial condition, results of operations and business of DTE Electric. Words such as “anticipate,” “believe,” “expect,” “projected,” “aspiration” and “goals” signify forward-looking statements. Forward-looking statements are not guarantees of future results and conditions, but rather are subject to numerous assumptions, risks and uncertainties that may cause actual future results to be materially different from those contemplated, projected, estimated or budgeted. Many factors may impact forward-looking statements including, but not limited to, the following:

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

• the amount and timing of cost recovery allowed as a result of regulatory proceedings, related appeals or new legislation; including legislative amendments and ~~Customer~~retail ~~Choice~~access programs;


•	economic conditions and population changes in our geographic area resulting in changes in demand, customer conservation and thefts of electricity;


•	environmental issues, laws, regulations, and the increasing costs of remediation and compliance, including actual and potential new federal and state requirements;


•	health, safety, financial, environmental and regulatory risks associated with ownership and operation of nuclear facilities;


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


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


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


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


•	the timing and extent of changes in interest rates;


•	the level of borrowings;


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


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


•	unplanned outages;


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


•	employee relations and the impact of collective bargaining agreements;


•	the risk of a major safety incident at an electric distribution or generation facility;


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


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


•	the effects of competition;


•	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;

• contract disputes, binding arbitration, litigation and related appeals; and


•	the risks discussed in our public filings with the Securities and Exchange Commission.

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 speak only as of the date on which such statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.

Part I

Items 1. and 2. Business and Properties

General

DTE Electric is a Michigan corporation organized in 1903 and is a wholly-owned subsidiary of DTE Energy. DTE Electric is a public utility subject to regulation by the MPSC and the FERC. DTE Electric is engaged in the generation, purchase, distribution and sale of electricity to approximately 2.1 million customers in southeastern Michigan.

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

DTE Electric is regulated by numerous federal and state governmental agencies, including, but not limited to, the MPSC, the FERC, the NRC, the EPA and the MDEQ. Electricity is generated from our fossil-fuel plants, a hydroelectric pumped storage plant, a nuclear plant and our wind and other renewable assets, and is purchased from electricity generators, suppliers and wholesalers. The electricity we produce and purchase is sold to three major classes of customers: residential, commercial and industrial, throughout southeastern Michigan.

Revenue by Service

	2013		2012		2011
	2014		2013		2012
	(In millions)
Residential	$	2,~~351~~168	$	2,~~354~~351	$	2,~~182~~354
Commercial	1,~~883~~761		1,~~898~~883		1,~~704~~898
Industrial	~~799~~767		~~784~~799		~~692~~784
Other	43		150		456
Other (a)	493		43		150
Subtotal	5,~~076~~189		5,~~186~~076		5,~~034~~186
Interconnection sales (a)	121		105		118
Interconnection sales (b)	93		121		105
Total Revenue	$	5,~~197~~282	$	5,~~291~~197	$	5,~~152~~291

~~_________________________________~~_______________________________________

(a) ~~Represents~~Includes ~~power~~revenue ~~that~~associated iswith ~~not~~under ~~distributed~~or byover ~~DTE~~recoveries ~~Electric~~of tracking mechanisms and deferred gain amortization of the previously reversed RDM liability.


(b)	Represents power that is not distributed by DTE Electric.

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

Fuel Supply and Purchased Power

Our power is generated from a variety of fuels and is supplemented with purchased power. We expect to have an adequate supply of fuel and purchased power to meet our obligation to serve customers. Our generating capability is heavily dependent upon the availability of coal. Coal is purchased from various sources in different geographic areas under agreements that vary in both pricing and terms. We expect to obtain the majority of our coal requirements through long-term contracts, with the balance to be obtained through short-term agreements and spot purchases. We have long-term and short-term contracts for the purchase of approximately 2930.43 million tons of low-sulfur western coal ~~to be delivered from 2014 through 2016~~ and approximately 13.65 million tons of Appalachian coal to be delivered infrom ~~2014~~2015 through 2017. All of these contracts have pricing schedules. We have approximately 9291% of our ~~2014~~2015 expected coal requirements under contract. Given the geographic diversity of supply, we believe we can meet our expected generation requirements. We lease a fleet of rail cars and have our expected western coal rail requirements under contract through 2018. All of our expected eastern coal rail requirements are under contract through 2016. ~~Our~~Contracts covering expected vessel transportation requirements for delivery of purchased coal to our generating facilities are ~~under~~currently ~~contract~~being ~~through 2014~~negotiated.

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

Properties

DTE Electric owns generating plants and facilities that are located in the State of Michigan. Substantially all of ~~our~~DTE Electric's property is subject to the lien of a mortgage.

	Location byMichigan	Summer NetRatedCapability (a)
Plant Name	County	(MW)	(%)	Year in Service
Fossil-fueled Steam-Electric
Belle River (b)	St. Clair	1,036	9.9	1984 and 1985
Greenwood	St. Clair	798	7.7	1979
Monroe (c)	Monroe	3,022	29.0	1971, 1973 and 1974
River Rouge	Wayne	537	5.2	1957 and 1958
St. Clair	St. Clair	1,386	13.3	1953, 1954, 1959, 1961 and 1969
Trenton Channel	Wayne	631	6.0	1949 and 1968
		7,410	71.1
Oil or Gas-fueled Peaking Units	Various	989	9.5	1966-1971, 1981 and 1999
Nuclear-fueled Steam-Electric Fermi 2 (d)	Monroe	1,102	10.6	1988
Hydroelectric Pumped StorageLudington (e)	Mason	917	8.8	1973
		10,418	100.0

Generating plants owned and in service as of December 31, 2014 are shown in the following table. The Company's renewable energy generation, principally wind turbines, is described below.



	Location by Michigan County	Summer Net Rated Capability (a)
Plant Name	Location by Michigan County	(MW)	(%)	Year in Service
Fossil-fueled Steam-Electric
Belle River (b)	St. Clair	1,036	9.9	1984 and 1985
Greenwood	St. Clair	785	7.5	1979
Monroe (c)	Monroe	3,080	29.5	1971, 1973 and 1974
River Rouge	Wayne	542	5.2	1957 and 1958
St. Clair	St. Clair	1,398	13.4	1953, 1954, 1959, 1961 and 1969
Trenton Channel	Wayne	609	5.8	1949 and 1968
		7,450	71.3
Oil or Gas-fueled Peaking Units	Various	936	9.0	1966-1971, 1981 and 1999
Nuclear-fueled Steam-Electric Fermi 2	Monroe	1,124	10.8	1988
Hydroelectric Pumped Storage Ludington (d)	Mason	917	8.9	1973
		10,427	100.0

_______________________________________


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

(b) The Belle River capability represents DTE Electric's entitlement to 81% of the capacity and energy of the plant. See Note 65 of the Notes to the Consolidated Financial Statements "Jointly Owned Utility Plant" in Item 8 of this Report.

(d) ~~Fermi~~Represents 2DTE ~~has~~Electric's a49% ~~design~~interest ~~electrical~~in ~~rating~~Ludington ~~(net)~~with a total capability of 1,~~150~~872 MW. See Note 5 of the Notes to the Consolidated Financial Statements "Jointly Owned Utility Plant" in Item 8 of this Report.

~~(e)~~In ~~Represents~~2008, a renewable portfolio standard was established for Michigan electric providers targeting 10% of electricity sold to retail customers from renewable energy by 2015. DTE Electric's ~~49%~~had ~~interest~~approximately 1,000 MW of owned or contracted renewable energy generation, principally wind turbines located in ~~Ludington~~Gratiot, ~~with~~Tuscola, aHuron ~~total~~and ~~capability~~Sanilac ofcounties 1in Michigan,~~872~~ MWat December 31, 2014. Approximately ~~See~~900 ~~Note~~MW 6is ofin ~~the~~commercial ~~Notes~~operation toat ~~the~~December 31, ~~Consolidated~~2014. DTE ~~Financial~~Electric ~~Statements~~expects into ~~Item~~meet 8the of10% ~~this~~renewable ~~Report~~portfolio standard in 2015.

InDTE ~~2008,~~Electric aexpects ~~renewable~~to ~~portfolio~~retire ~~standard~~Trenton ~~was~~Channel ~~established~~Unit ~~for~~7 ~~Michigan~~(109 ~~electric~~MW) ~~providers~~in ~~targeting~~April ~~10%~~2016. ofOver ~~electricity~~the ~~sold~~next tofifteen ~~retail~~years, ~~customers from renewable energy by 2015.~~ DTE Electric ~~had~~expects ~~approximately~~to ~~900 MW~~retire ofadditional ~~owned~~coal-fired ~~or contracted renewable energy~~ generation, ~~principally wind turbines located in Gratiot, Tuscola, Huron~~ and ~~Sanilac~~to ~~counties~~increase inthe ~~Michigan,~~proportion atof ~~December 31,~~its ~~2013,~~generation ~~which~~mix isattributable ~~projected~~ to ~~represent~~natural ~~approximately~~gas-fired ~~9.6%~~generation ofand ~~electricity~~renewables. In ~~that~~January ~~will~~2015, beDTE ~~sold~~Electric toclosed ~~retail~~on ~~customers~~the inacquisition ~~2015.~~of ~~Approximately~~a ~~690~~732 MW issimple-cycle innatural ~~commercial~~gas ~~operation~~facility atin ~~December 31~~Carson City, ~~2013. DTE~~ ~~Electric~~Michigan ~~expects~~(Montcalm toCounty). ~~meet~~See ~~the~~Note ~~10%~~19 ~~renewable~~- ~~portfolio~~Subsequent ~~standard~~Event ~~with~~of the ~~commercial~~Notes ~~operation~~to ofConsolidated anFinancial ~~additional~~Statements ~~210 MW~~ in ~~2014~~Item ~~and~~8 50of MWthis ~~in 2015~~Report.

DTE Electric owns and operates ~~669~~675 distribution substations with a capacity of approximately 3332,~~418~~867,000 kilovolt-amperes (kVA) and approximately ~~428~~432,~~600~~900 line transformers with a capacity of approximately 23,~~272~~359,000 kVA.

Circuit miles of electric distribution lines owned and in service as of December 31, ~~2013~~2014:

	Circuit Miles
Operating Voltage-Kilovolts (kV)	Overhead	Underground	~~Underground~~
4.8 kV to 13.2 kV	27,~~739~~807	14,647	~~14,578~~
24 kV	182	682	~~692~~
40 kV	2,~~289~~290	385	~~383~~
120 kV	5460	8	8
	30,264		15,661
	30,339	15,722

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

Regulation

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

See Notes 3, 74, 8, 9 and 1415 of the Notes to Consolidated Financial Statements in Item 8 of this Report.

Energy Assistance Programs

Energy assistance programs, funded by the federal government and the State of Michigan, remain critical to DTE Electric's ability to control its uncollectible accounts receivable and collections expenses. DTE Electric's uncollectible accounts receivable expense is directly affected by the level of government-funded assistance its qualifying customers receive. We work continuously with the State of Michigan and others to determine whether the share of funding allocated to our customers is representative of the number of low-income individuals in our service territory. We also partner with federal, state and local officials to attempt to increase the share of low-income funding allocated to our customers. Changes in the level of funding provided to our low-income customers will affect the level of uncollectible expense.

Strategy and Competition

WeOur ~~strive to be the preferred supplier of~~ electrical generation inoperations ~~southeast~~seek ~~Michigan. We~~to ~~can~~provide ~~accomplish~~the ~~this~~energy ~~goal~~needs byof ~~working with~~ our customers, ~~communities~~in ~~and regulatory agencies to be~~ a ~~reliable, low-~~cost ~~supplier~~effective ~~of electricity~~manner. ToWith ~~ensure~~potential ~~generation~~capacity ~~and~~constraints ~~network~~in ~~reliability~~our weMISO ~~continue~~region, tothere ~~make~~will ~~capital~~be ~~investments~~increased independency on our ~~generating~~generation ~~plants~~to ~~and~~provide ~~distribution~~reliable ~~system,~~service ~~which~~and ~~will~~price ~~improve~~stability ~~plant~~for ~~availability,~~our ~~operating~~customers. This ~~efficiencies~~generation ~~and~~will ~~environmental~~require ~~compliance~~a inlarge ~~areas~~investment ~~that~~driven ~~have~~by aour ~~positive~~aging ~~impact~~coal onfleet ~~reliability~~along with ~~the~~increased ~~goal~~environmental ~~of high customer satisfaction~~regulations.

Our distribution operations focus is on ~~improving~~distributing ~~reliability~~energy in a safe, ~~restoration~~cost ~~time~~effective, and ~~the~~reliable ~~quality~~manner ofto ~~customer~~our ~~service~~customers. We seek to ~~lower~~increase ~~our~~operational ~~operating costs by improving operating~~ efficiencies~~. Revenues~~ ~~from year~~ to ~~year~~increase ~~will~~our ~~vary~~customer ~~due~~satisfaction toat ~~weather~~an ~~conditions,~~affordable ~~economic factors, regulatory events and other risk factors as discussed in the “Risk Factors” in Item 1A~~rate. ~~of this Report.~~

The electric Customer Choice program in Michigan ~~allows~~gives our electric customers tothe ~~purchase~~option ~~their~~of ~~electricity~~retail ~~from~~access to alternative electric suppliers ~~of generation services~~, subject to limits. Customers ~~choosing~~with toretail ~~purchase~~access ~~power~~to ~~from~~ alternative electric suppliers represented approximately 10% of retail sales in ~~2013~~2014, ~~2012~~2013 and ~~2011. Customers~~2012 ~~participating~~and inconsisted ~~the electric Customer Choice program consist~~ primarily of industrial and commercial customers. MPSC rate orders and 2008 energy legislation enacted by the State of Michigan have placed a 10% cap on the total ~~potential~~retail ~~Customer~~access ~~Choice~~ related migration, mitigating some of the unfavorable effects of electric ~~Customer~~retail ~~Choice~~access on our financial performance and full service customer rates. We expect that in ~~2014~~2015 customers ~~choosing~~with toretail ~~purchase~~access ~~power~~to ~~from~~ alternative electric suppliers will represent approximately 10% of retail sales.

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

Revenues from year to year will vary due to weather conditions, economic factors, regulatory events and other risk factors as discussed in the “Risk Factors” in Item 1A. of this Report.

ENVIRONMENTAL MATTERS

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

	(In millions)
Air	$	~~1,420~~150
Water	8070
Contaminated and other sites	8180
Estimated total future expenditures through 2021	$	1,508
Estimated total future expenditures through 2022	$	400
Estimated 2014 expenditures	$	280
Estimated 2015 expenditures	$	100
Estimated 2015 expenditures	$	95
Estimated 2016 expenditures	$	40

Air -— DTE Electric is subject to the EPA ozone and fine particulate transport and acid rain regulations that limit power plant emissions of sulfur dioxide and nitrogen oxides. Since 2005, the EPA and the State of Michigan have issued additional emission reduction regulations relating to ozone, fine particulate, regional haze, mercury and other air pollution. These rules have led to additional emission controls on fossil-fueled power plants to reduce nitrogen oxide and sulfur dioxide, with further emission controls planned for reductions inof mercury and other emissions. ~~Further,~~These ~~additional~~ rulemakings could require additional controls for sulfur dioxide, nitrogen oxides and other hazardous air pollutants over the next few years.

~~Water -~~The InEPA ~~response~~is toimplementing anregulatory ~~EPA~~actions ~~regulation,~~under ~~DTE~~the ~~Electric~~Clean isAir ~~required~~Act to ~~examine~~address ~~alternatives~~emissions ~~for~~of ~~reducing~~greenhouse gases (GHGs) from the ~~environmental~~utility ~~impacts~~sector and other sectors of the ~~cooling~~economy. Among ~~water~~these ~~intake~~actions, ~~structures~~the atEPA ~~several~~is proposing performance standards for emissions of ~~its~~carbon ~~facilities~~dioxide from new and existing electric generating units (EGUs). ~~Based~~The onEPA ~~the~~plans ~~results~~to ofissue ~~completed~~a ~~studies~~final standard for both new and ~~expected~~existing ~~future~~sources ~~studies,~~by ~~DTE~~July ~~Electric~~2015. The ~~may~~carbon bestandards ~~required~~for tonew ~~install~~sources ~~technologies~~are not expected to ~~reduce~~have a material impact on the ~~impacts~~Company, ofsince the ~~water~~Company ~~intakes~~has no plans to build new coal-fired generation. ~~However,~~It is not possible to determine the ~~types~~potential impact of ~~technologies~~future ~~are~~regulations ~~unknown~~on existing sources at this time. ~~The~~Pending ~~EPA~~or isfuture ~~expected~~legislation toor ~~finalize~~other ~~regulations~~regulatory actions could have a material impact on ~~cooling~~our ~~water~~operations ~~intake~~and infinancial ~~early~~position ~~2014~~and the rates we charge our customers. ~~The~~Impacts ~~EPA~~include ~~has~~expenditures ~~also~~for ~~issued~~environmental ~~proposed~~equipment ~~steam~~beyond ~~electric~~what ~~effluent~~is ~~guidelines~~currently planned, financing costs related to additional capital expenditures, the purchase of emission credits from market sources, higher costs of purchased power, and the retirement of facilities where control equipment is not economical. ~~When~~We ~~finalized,~~would seek to recover these ~~guidelines~~incremental ~~are~~costs ~~expected~~through increased rates charged to ~~require~~our ~~additional~~utility ~~wastewater~~customers ~~discharge~~as ~~controls.~~authorized by the MPSC.

~~Contaminated~~Water — ~~and~~The ~~Other~~EPA ~~Sites -~~finalized ~~Prior~~regulations toon ~~the~~cooling ~~construction~~water ofintake ~~major~~in ~~interstate~~August ~~natural~~2014. DTE ~~gas~~Electric ~~pipelines,~~is ~~gas~~conducting studies to determine the best technology for ~~heating~~reducing ~~and~~the ~~other~~environmental ~~uses~~impacts ~~was~~of ~~manufactured~~the ~~locally~~cooling ~~from~~water ~~processes~~intake ~~involving~~structures ~~coal,~~at ~~coke~~each orof ~~oil~~its facilities. ~~The~~DTE ~~facilities,~~Electric ~~which~~may ~~produced~~be ~~gas,~~required ~~have~~to ~~been~~install ~~designated~~technologies asto ~~manufactured~~reduce ~~gas~~the ~~plant~~impacts ~~(MGP)~~of ~~sites~~the cooling water intakes. ~~DTE~~The ~~Electric~~EPA ~~owns,~~has oralso ~~previously~~issued ~~owned,~~proposed ~~three~~steam ~~former~~electric ~~MGP~~effluent ~~sites~~guidelines. These rules are expected to require additional wastewater discharge controls.

We are also in the process of cleaning up other sites where contamination is present as a result of historical and ongoing utility operations. These other sites include an engineered ash storage facility, electrical distribution substations, electric generating power plants, and underground and aboveground storage tank locations. Cleanup activities associated with these sites will be conducted over the next several years. Any significant change in assumptions, such as remediation techniques, nature and extent of contamination and regulatory requirements, could impact the estimate of remedial action costs for these sites and affect the Company's financial position and cash flows and the rates we charge our customers.

~~The~~In December 2014, the EPA ~~has~~released ~~published~~a ~~proposed~~pre-publication ~~rules~~version of a rule to regulate coal ash,. This ~~which~~rule ~~may~~is ~~result~~based inon athe ~~designation~~continued listing of ~~coal~~ ash as a non-hazardous waste~~. The EPA could apply some~~, orand ~~all,~~relies ofon ~~the~~various ~~disposal~~self-implementation design and ~~reuse~~performance standards. The ~~that~~rule ~~have~~is ~~been~~still ~~applied~~being toevaluated ~~other~~and ~~existing~~it ~~hazardous~~is ~~wastes. Some~~not ofpossible ~~the~~to ~~regulatory~~quantify ~~actions~~its ~~currently~~impact ~~being~~at ~~contemplated~~this ~~could~~time. DTE ~~have~~Electric aowns ~~significant~~and ~~impact~~operates onthree ~~our~~permitted ~~operations~~engineered ~~and~~ash ~~financial~~storage ~~position~~facilities ~~and~~to ~~the~~dispose ~~rates~~of wefly ~~charge~~ash ~~our~~from ~~customers. It~~coal isfired ~~not~~power ~~possible~~plants toand ~~quantify~~operates ~~the~~a ~~impact~~number of ~~those~~smaller ~~expected~~impoundments ~~rulemakings~~ at ~~this~~its ~~time~~power plants.

See Notes 87 and 1415 of the Notes to Consolidated Financial Statements, "Regulatory Matters" and "Commitments and Contingencies", in Item 8 of this Report.

EMPLOYEES

We had approximately 4,800 employees as of December 31, 2013, of which approximately 2,600 were represented by unions. The majority of our represented employees are under contracts that expire in 2016 and 2017.

EMPLOYEES

We had approximately 4,900 employees as of December 31, 2014, of which approximately 2,600 were represented by unions. The majority of our represented employees are under contracts that expire in 2016 and 2017.

Item 1A. Risk Factors

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

We are subject to rate regulation. Our electric rates are set by the MPSC and the FERC and cannot be changed without regulatory authorization. We may be negatively impacted by new regulations or interpretations by the MPSC, the FERC or other regulatory bodies. Our ability to recover costs may be impacted by the time lag between the incurrence of costs and the recovery of the costs in customers' rates. Our regulators also may decide to disallow recovery of certain costs in customers' rates if they determine that those costs do not meet the standards for recovery under our governing laws and regulations. We typically self-implement base rate changes six months after rate case filings in accordance with Michigan law. However, if the final rates authorized by our regulators in the final rate order are lower than the amounts we collected during the self-implementation period, we must refund the difference with interest. Our regulators may also disagree with our rate calculations under the various ~~tracking~~ mechanisms that are intended to mitigate the risk of certain aspects of our business. If we cannot agree with our regulators on an appropriate reconciliation of those mechanisms, it may impact our ability to recover certain costs through our customer rates. Our regulators may also decide to eliminate these mechanisms in future rate cases, which may make it more difficult for us to recover our costs in the rates we charge customers. We cannot predict what rates anthe MPSC ~~order~~ will authorize in future rate cases. New legislation, regulations or interpretations could change how our business operates, impact our ability to recover costs through rates or require us to incur additional expenses.

Changes to Michigan's electric Customer Choice program could negatively impact our financial performance. The State of Michigan currently experiences a hybrid market, where the MPSC continues to regulate electric rates for our customers, while alternative electric suppliers charge market-based rates. ~~Energy~~MPSC rate orders and energy legislation enacted by the State of Michigan in 2008, have placed a 10% cap on the total potential ~~electric~~retail ~~Customer~~access ~~Choice~~ related migration. However, even with the legislated 10% cap on participation, there continues to be legislative and financial risk associated with the electric Customer Choice program. Electric ~~Customer~~retail ~~Choice~~access migration is sensitive to market price and full service electric price changes. We are required under current regulation to provide full service to retail access customers that choose to return, potentially resulting in the need for additional generating capacity.

The MISO regional energy market, including the State of Michigan, is expected to face capacity constraints beginning in 2016 due primarily to the retirement of coal-fired generation caused by increasingly stringent environmental requirements. Significant investment in new natural gas-fired generation and renewables will be required. Under the current regulatory structure, retail access customers do not fund capacity costs potentially impacting electric supply reliability and utility customer affordability.

Environmental laws and liability may be costly. We are subject to and affected by numerous environmental regulations. These regulations govern air emissions, water quality, wastewater discharge and disposal of solid and hazardous waste. Compliance with these regulations can significantly increase capital spending, operating expenses and plant down times and can negatively affect the affordability of the rates we charge to our customers.

Uncertainty around future environmental regulations creates difficulty planning long-term capital projects in our generation fleet. These laws and regulations require us to seek a variety of environmental licenses, permits, inspections and other regulatory approvals. We could be required to install expensive pollution control measures or limit or cease activities, including the retirement of certain generating plants, based on these regulations. Additionally, we may become a responsible party for environmental cleanup at sites identified by a regulatory body. We cannot predict with certainty the amount and timing of future expenditures related to environmental matters because of the difficulty of estimating clean -up costs. There is also uncertainty in quantifying liabilities under environmental laws that impose joint and several liability on potentially responsible parties.

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

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

The supply and/or price of energy commodities and/or related services may impact our financial results. We are dependent on coal for much of our electrical generating capacity. Price fluctuations, fuel supply disruptions and changes in transportation costs could have a negative impact on the amounts we charge our utility customers for electricity. We have hedging strategies and regulatory recovery mechanisms in place to mitigate some of the negative fluctuations in commodity supply prices, but there can be no assurances that our financial performance will not be negatively impacted by price fluctuations.

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

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

Poor investment performance of pension and other postretirement benefit plan assets and other factors impacting benefit plan costs could unfavorably impact our liquidity and results of operations. Our costs of providing non-contributory defined benefit pension plans and other postretirement benefit plans are dependent upon a number of factors, such as the rates of return on plan assets, the level of interest rates used to measure the required minimum funding levels of the plans, future government regulation, and our required or voluntary contributions made to the plans. The performance of the debt and equity markets affects the value of assets that are held in trust to satisfy future obligations under our plans. We have significant benefit obligations and hold significant assets in trust to satisfy these obligations. These assets are subject to market fluctuations and will yield uncertain returns, which may fall below our projected return rates. A decline in the market value of the pension and other postretirement benefit plan assets will increase the funding requirements under our pension and other postretirement benefit plans if the actual asset returns do not recover these declines in the foreseeable future. Additionally, our pension and other postretirement benefit plan liabilities are sensitive to changes in interest rates. As interest rates decrease, the liabilities increase, resulting in increasing benefit expense and funding requirements. Also, if future increases in pension and other postretirement benefit costs as a result of reduced plan assets are not recoverable from our customers, the results of operations and financial position of our company could be negatively affected. Without sustained growth in the plan investments over time to increase the value of our plan assets, we could be required to fund our plans with significant amounts of cash. Such cash funding obligations could have a material impact on our cash flows, financial position, or results of operations.

~~Our~~ ability to access capital markets is important. Our ability to access capital markets is important to operate our businesses. Turmoil in credit markets may constrain our ability to issue new debt, including commercial paper, and refinance existing debt at reasonable interest rates. In addition, the level of borrowing by other energy companies and the market as a whole could limit our access to capital markets. Our long term revolving credit facility does not expire until 2018, but we regularly access capital markets to refinance existing debt or fund new projects, and we cannot predict the pricing or demand for those future transactions.9

Our ability to access capital markets is important. Our ability to access capital markets is important to operate our businesses and to fund capital investments. Turmoil in credit markets may constrain our ability to issue new debt, including commercial paper, and refinance existing debt at reasonable interest rates. In addition, the level of borrowing by other energy companies and the market as a whole could limit our access to capital markets. Our long term revolving credit facility does not expire until 2018, but we regularly access capital markets to refinance existing debt or fund new projects, and we cannot predict the pricing or demand for those future transactions.

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

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

Unplanned power plant outages may be costly. Unforeseen maintenance may be required to safely produce electricity or comply with environmental regulations. As a result of unforeseen maintenance, we may be required to make spot market purchases of electricity that exceed our costs of generation. Our financial performance may be negatively affected if we are unable to recover such increased costs.

Renewable portfolio standards and energy efficiency programs may affect our business. We are subject to existing Michigan and potential future federal legislation and regulation requiring us to secure sources of renewable energy. We expect to comply with the existing state legislation, but we do not know what requirements may be added by federal legislation. In addition, there could be additional state requirements increasing the percentage of power required to be provided by renewable energy sources. We cannot predict the financial impact or costs associated with complying with potential future legislation and regulations. Compliance with these requirements can significantly increase capital expenditures and operating expenses and can negatively affect the affordability of the rates we charge to our customers.

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

Regional and national economic conditions can have an unfavorable impact on us. Our business follows the economic cycles of the customers we serve and the credit risk of counterparties we do business with. Should national or regional economic conditions deteriorate, reduced volumes of electricity, collections of accounts receivable, and reductions in federal and state energy assistance funding, and potentially higher levels of stolen electricity could result in decreased earnings and cash flow.

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

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

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

Failure to ~~retain~~attract and ~~attract~~retain key executive officers and other skilled professional and technical employees could have an adverse effect on our operations. Our business is dependent on our ability to ~~recruit,~~attract ~~retain,~~ and ~~motivate~~retain skilled employees. Competition for skilled employees in some areas is high and the inability to ~~retain~~attract and ~~attract~~retain these employees could adversely affect our business and future operating results. In addition, we have an aging utility workforce and the failure of a successful transfer of knowledge and expertise could negatively impact our operations.

A work interruption may adversely affect us. There are several bargaining units for the Company's approximately 2,600 represented employees. The majority of represented employees are under contracts that expire in 2016 and 2017. A union choosing to strike would have an impact on our business. We are unable to predict the effect a work stoppage would have on our costs of operation and financial performance.

The Company's businesses have safety risks. The Company's electric distribution system, power plants, wind energy equipment and other facilities could be involved in incidents that result in injury or property loss to employees, customers, or the public. Although we have insurance coverage for many potential incidents, depending upon the nature and severity of any incident, the Company could experience financial loss, damage to its reputation, and negative consequences from regulatory agencies or other public authorities.

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

Item 1B. Unresolved Staff Comments

None.

Item 3. Legal Proceedings

InFor ~~July~~more ~~2009,~~information ~~DTE~~on ~~Energy~~material ~~received~~legal aproceedings Notice of Violation/Finding of Violation (NOV/FOV) from the EPA alleging, among other things, that five DTE Electric power plants violated New Source Performance standards, Prevention of Significant Deterioration requirements, and ~~operating~~matters ~~permit requirements under the Clean Air Act. In June 2010, the EPA issued a NOV/FOV making similar allegations~~ related to aus ~~project~~ and ~~outage~~our ~~at Unit 2 of the Monroe Power Plant. In March 2013~~subsidiaries, ~~DTE~~see ~~Energy~~Notes ~~received~~7 aand ~~supplemental~~15 ~~NOV~~of ~~from~~ the ~~EPA~~Notes ~~relating~~ to ~~the~~Consolidated ~~July~~Financial ~~2009~~Statements, ~~NOV/FOV. The~~"Regulatory ~~supplemental~~Matters" ~~NOV~~and ~~alleged~~"Commitments ~~additional~~and ~~violations~~Contingencies", ~~relating~~in toItem 8 ~~the~~of ~~New~~this ~~Source Review provisions under the Clean Air Act, among other things~~Report.

In August 2010, the U.S. Department of Justice, at the request of the EPA, brought a civil suit in the U.S. District Court for the Eastern District of Michigan against DTE Energy and DTE Electric, related to the June 2010 NOV/FOV and the outage work performed at Unit 2 of the Monroe Power Plant, but not relating to the July 2009 NOV/FOV. Among other relief, the EPA requested the court to require DTE Electric to install and operate the best available control technology at Unit 2 of the Monroe Power Plant. Further, the EPA requested the court to issue a preliminary injunction to require DTE Electric to (i) begin the process of obtaining the necessary permits for the Monroe Unit 2 modification and (ii) offset the pollution from Monroe Unit 2 through emissions reductions from DTE Electric's fleet of coal-fired power plants until the new control equipment is operating. On August 23, 2011, the U.S. District Court judge granted DTE Energy's motion for summary judgment in the civil case, dismissing the case and entering judgment in favor of DTE Energy and DTE Electric. On October 20, 2011, the EPA caused to be filed a Notice of Appeal to the U.S. Court of Appeals for the Sixth Circuit. On March 28, 2013, the Court of Appeals remanded the case to the U.S. District Court for review of the procedural component of the New Source Review notification requirements. On September 3, 2013, the EPA caused to be filed a motion seeking leave to amend their complaint regarding the June 2010 NOV/FOV adding additional claims related to outage work performed at the Trenton Channel and Belle River power plants as well as additional claims related to work performed at the Monroe Power Plant. In addition, the Sierra Club caused to be filed a motion to add a claim regarding the River Rouge Power Plant. The EPA and Sierra Club motions are currently pending with the U.S. District Court Judge.

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

In March 2013, the Sierra Club filed suit against DTE Energy and DTE Electric alleging violations of the Clean Air Act at four of DTE Electric's coal-fired power plants. The plaintiffs allege 1,499 6-minute periods of excess opacity of air emissions from 2007-2012 at those facilities. The suit asks that the court enjoin DTE Energy and DTE Electric from operating the power plants except in complete compliance with applicable laws and permit requirements, pay civil penalties, conduct beneficial environmental mitigation projects, pay attorney fees and require the installation of any necessary pollution controls or to convert and/or operate the plants' boilers on natural gas to avoid additional violations and to off-set historic unlawful emissions. In December 2013, a U.S. District Court judge issued an order dismissing, without prejudice, the plaintiff's complaint allowing them to file an amended complaint by January 17, 2014. The order dismissing the complaint resulted from a considerable number of plaintiff's claims being time barred based on the statute of limitations. On January 17, 2014, the plaintiffs filed an amended complaint for the period January 13, 2008 - June 30, 2012, reducing the total number of 6-minute periods from 1,499 to 1,139. DTE Energy and DTE Electric plan to file an answer to the amended complaint in the first quarter of 2014. The resolution of this matter is not expected to have a material effect on the Company's operations or financial statements.

For additional discussion on legal matters, see Notes 8 and 14 of the Notes to Consolidated Financial Statements in Item 8 of this Report.


Item 4.	Mine Safety Disclosures

Not applicable.

Part II

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

All of the 138,632,324 issued and outstanding shares of common stock of DTE Electric, par value $10 per share, are owned by DTE Energy, and constitute 100% of the voting securities of DTE Electric. Therefore, no market exists for our common stock.

We paid cash dividends on our common stock of $~~342~~370 million in ~~2013~~2014, $~~317~~342 million in ~~2012~~2013, and $~~305~~317 million in ~~2011~~2012.

Item 6. Selected Financial Data

Omitted per General Instruction I (2) (a) of Form 10-K for wholly owned subsidiaries (reduced disclosure format).

Item 7. Management’s Narrative Analysis of Results of Operations

The Management’s Narrative Analysis of Results of Operations discussion for DTE Electric is presented in accordance with General Instruction I (2) (a) of Form 10-K for wholly-owned subsidiaries (reduced disclosure format).

	2013			2012			2011
	2014			2013			2012
	(In millions)
Operating revenues	$	5,197		$	5,291		$	5,152
Operating Revenues	$	5,282		$	5,197		$	5,291
Fuel and purchased power	1,~~668~~706			1,~~758~~668			1,~~716~~758
Gross margin	3,~~529~~576			3,~~533~~529			3,~~436~~533
Operation and maintenance	1,~~376~~331			1,~~429~~376			1,~~369~~429
Depreciation and amortization	~~896~~927			~~822~~896			~~813~~822
Taxes other than income	~~260~~267			~~256~~260			~~240~~256
Asset (gains) losses and reserves, net	(3		)	(2		)	12
Asset (gains) losses and impairments, net	(1		)	(3		)	(2		)
Operating Income	1,~~000~~052			1,~~028~~000			1,~~002~~028
Other (Income) and Deductions	~~259~~222			~~260~~259			~~298~~260
Income Tax Expense	~~254~~298			~~282~~254			~~267~~282
Net Income	$	~~487~~532		$	~~486~~487		$	~~437~~486
Operating Income as a % of Operating Revenues	1920		%	19		%	19		%

Gross margin ~~decreased~~increased by $447 million in ~~2013~~2014 and ~~increased~~decreased $97 4 million in ~~2012~~2013. Revenues associated with certain tracking mechanisms and surcharges are offset by related expenses elsewhere in the Consolidated Statements of Operations.

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

	2013			2012
	2014			2013
	(In millions)
Base sales, inclusive of weather effect	$	(54	)	$	79
Amortization of refundable revenue decoupling/deferred gain	$	63		$	—
Restoration tracker, discontinued in October 2011	—			(47		)
Base sales, inclusive of weather effect	(48		)	(54		)
Securitization bond and tax surcharge	39(10		)	2539
Renewable energy program	1920			3519
Low income energy efficiency fund surcharge	(12		)	4
Low income energy efficiency surcharge	17			(12		)
Regulatory mechanisms and other	45			14
Increase (decrease) in gross margin	$	(447	)	$	97(4	)

	2013	2012	2011
	2014	2013	2012
	(In thousands of MWh)
Electric Sales
Residential	1514,~~273~~940	15,~~666~~273	15,~~907~~666
Commercial	16,~~661~~792	16,~~832~~661	16,~~779~~832
Industrial	10,~~303~~199	910,~~989~~303	9,~~739~~989
Other	~~942~~517	~~958~~942	~~3,136~~958
	43,179	43,445	45,561
	42,448	43,179	43,445
Interconnection sales (a)	3,~~883~~630	23,~~125~~883	32,~~512~~125
Total Electric Sales	4746,~~062~~078	4547,~~570~~062	4945,~~073~~570
Electric Deliveries
Retail and Wholesale	4342,~~179~~448	43,~~445~~179	4543,~~561~~445
Electric Customer Choice, including self generators (b)	5,~~200~~033	5,~~197~~200	5,~~445~~197
Total Electric Sales and Deliveries	4847,~~379~~481	48,~~642~~379	5148,~~006~~642

_______________________________________

(a) Represents power that is not distributed by DTE Electric.

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

Operation and maintenance expense decreased $53 45 million in ~~2013~~2014 and ~~increased~~decreased $60 53 million in ~~2012~~2013. The decrease in ~~2013~~2014 is primarily due to ~~lower~~decreased employee benefit expenses of $9068 million, ~~lower~~decreased ~~power~~distribution ~~plant~~operations ~~generation~~ expenses of $1436 million, and ~~reduced~~decreased ~~low~~power ~~income~~plant ~~energy~~generation ~~assistance~~expenses of $127 million, partially offset by higher restoration and line clearance expenses of $19 million, ~~higher~~increased ~~corporate~~low ~~administrative~~income ~~expenses~~energy assistance of $17 million, and increased ~~uncollectible~~energy optimization and renewable energy expenses of $1113 million. In addition, ~~higher~~2014 ~~energy~~included ~~optimization~~$17 ~~and~~million ~~renewable~~of ~~energy~~ expenses related to the transition of $8PLD ~~million,~~customers ~~and~~to ~~increased~~DTE Electric's distribution ~~operations~~system ~~expenses~~effective July 1, 2014. In May 2014, the MPSC approved a TRM that provides for recovery of $8the ~~million~~deferred net incremental revenue requirement associated with the transition that is reflected in the Depreciation and amortization line in the Consolidated Statement of Operations. The ~~increase~~decrease in ~~2012~~2013 is primarily due to ~~higher~~decreased employee benefit expenses of $5390 million, ~~increased~~decreased ~~energy~~power ~~optimization~~plant ~~and~~generation ~~renewable energy~~ expenses of $1714 million, ~~higher~~and ~~power~~decreased ~~plant~~low ~~generation~~income ~~expenses~~energy assistance of $12 million, partially offset by increased ~~distribution~~restoration ~~operations~~and line clearance expenses of $419 million, ~~and~~increased ~~higher~~corporate administrative expenses ~~for~~of ~~low~~$17 ~~income~~million, ~~energy~~increased ~~assistance~~uncollectible expenses of $411 million, ~~partially~~increased ~~offset~~energy byoptimization ~~reduced restoration~~ and ~~line~~renewable ~~clearance~~energy expenses of $228 million, and ~~reduced~~increased ~~uncollectible~~distribution operations expenses of $9 8 million.

Depreciation and amortization expense increased $7431 million in ~~2013~~2014 and increased $9 74 million in ~~2012~~2013. The ~~2013~~2014 increase was due to ~~higher~~$42 million of increased expense due to an increased depreciable base, increased amortization of regulatory assets of $573 million, primarily related to Securitization, ~~and~~partially ~~increased~~offset ~~depreciation~~by of $1714 million ~~due~~associated towith athe ~~higher depreciable base~~TRM. The ~~2012~~2013 increase was due to ~~higher~~increased amortization of regulatory assets of $4357 million, primarily related to Securitization, ~~partially~~and ~~offset~~increased bydepreciation ~~the net effect~~ of $3417 million ofdue ~~lower~~to ~~depreciation~~an ~~rates~~increased ~~on a higher~~ depreciable base.

~~Asset~~Other (~~gains~~income) and ~~losses,~~deductions ~~reserves~~decreased ~~and~~by ~~impairments, net increased~~ $137 million in ~~2013~~2014 and ~~increased~~decreased by $141 million in ~~2012~~2013. The ~~2012~~decrease ~~increase~~in 2014 was primarily due to adecreased ~~2011~~interest ~~accrual~~expenses of $19 million ~~resulting~~and ~~from~~the ~~management's~~2013 ~~revisions~~contribution ofto the ~~timing~~DTE ~~and~~Energy ~~estimate~~Foundation of $18 ~~cash~~million. The ~~flows~~decrease ~~for~~in ~~the~~2013 ~~decommissioning~~was ofprimarily ~~Fermi~~due 1,to ~~partially~~2012 ~~offset~~one bytime aexpenses ~~2011 revision~~ of $611 million inrelated ~~the~~to ~~timing~~Michigan ballot proposals and ~~estimate~~increased investment earnings of ~~cash~~$10 ~~flows~~million, ~~for~~offset ~~the~~by ~~Fermi~~a 1contribution ~~asbestos~~to ~~removal~~the ~~obligation~~DTE ~~and~~Energy ~~other~~Foundation ~~items~~of $18 million.

~~Other~~Outlook — ~~(income)~~We ~~and~~continue ~~deductions~~to ~~were~~move ~~lower~~forward byin $1our ~~million~~efforts into ~~2013~~achieve operational excellence, sustained strong cash flows and byearn ~~$38~~our ~~million~~authorized inreturn ~~2012~~on equity. ~~The~~We ~~decrease~~expect that our planned significant capital investments will result in ~~2013~~earnings ~~was~~growth. Looking ~~primarily~~forward, ~~due~~additional tofactors ~~2012~~may ~~one~~impact ~~time~~earnings ~~expenses~~such ofas ~~$11~~weather, ~~million~~the ~~related~~outcome toof ~~Michigan~~regulatory ~~ballot~~proceedings, ~~proposals~~benefit ~~and~~plan ~~higher~~design ~~2013~~changes, investment ~~earnings~~returns ofand ~~$10~~changes ~~million,~~in ~~offset~~discount byrate ~~the~~assumptions ~~2013~~in ~~contribution~~benefit toplans ~~the~~and ~~DTE~~health ~~Energy~~care ~~Foundation~~costs, and uncertainty of ~~$18~~legislative ~~million. The~~or ~~decrease~~regulatory inactions ~~2012~~regarding ~~was~~climate ~~due~~change ~~primarily~~and electric retail access. We expect to ~~the~~continue ~~2011~~our ~~contribution~~efforts to ~~the~~improve ~~DTE~~productivity ~~Energy~~and ~~Foundation~~decrease ofour ~~$21~~costs ~~million~~while ~~and~~improving ~~lower~~customer ~~interest~~satisfaction ~~expense~~with consideration of ~~$17~~customer ~~million.~~rate affordability.

~~Income~~In ~~tax~~May ~~expense~~2014, ~~decreased~~DTE ~~$28~~Electric ~~million~~filed inan ~~2013~~application ~~and~~with ~~increased~~the ~~$15~~NRC ~~million~~requesting ina ~~2012~~renewal of the license for its Fermi 2 nuclear power plant. ~~The~~DTE ~~variances~~Electric ~~were~~has ~~impacted~~requested bya ~~variations~~20-year inextension ~~pre-tax~~of ~~income~~its ~~and higher~~original ~~production~~license ~~tax~~due ~~credits~~to expire in 2025.

~~Outlook —~~In WeDecember ~~continue to move forward in our efforts to achieve operational excellence~~2014, ~~sustained~~DTE ~~strong~~Electric ~~cash~~filed ~~flows~~a ~~and~~rate ~~earn~~case ~~our~~with ~~authorized~~the ~~return~~MPSC onrequesting ~~equity. We~~an ~~expect~~increase ~~that our planned significant environmental expenditures will result~~ in ~~earnings~~base ~~growth. Looking~~rates ~~forward, additional factors may impact earnings such as weather, the outcome~~ of ~~regulatory~~$370 ~~proceedings,~~million ~~benefit~~based ~~plan~~on ~~design~~a ~~changes,~~projected ~~investment~~twelve ~~returns~~month ~~and~~period ~~changes~~ending inJune ~~discount rate assumptions in benefit plans and health care costs~~30, ~~and uncertainty of legislative or regulatory actions regarding climate change and electric customer choice~~2016. ~~We expect to continue our efforts to improve productivity and decrease our costs while improving customer satisfaction with consideration of customer rate affordability.~~

InAs directed by a June 2013 Presidential Memorandum, the ~~City~~EPA ofis ~~Detroit~~implementing ~~announced~~regulatory aactions ~~transition~~under the Clean Air Act to address emissions of ~~its~~greenhouse ~~Public~~gases ~~Lighting~~(GHGs) ~~Department's~~from ~~customers~~the toutility sector and other sectors of the ~~DTE~~economy. Among ~~Electric~~these ~~distribution~~actions, ~~system~~the ~~over~~EPA ais ~~five~~proposing toperformance ~~seven~~standards ~~year~~for ~~system~~emissions ~~conversion~~of ~~period~~carbon dioxide from new and existing electric generating units (EGUs). ~~See~~The ~~Note~~new 8source ofperformance standards for new EGUs were proposed in September 2013 and the ~~Notes~~standards for existing, reconstructed and modified EGUs were proposed in June 2014. The EPA plans to ~~Consolidated~~issue ~~Financial~~a ~~Statements~~final standard for both new and existing sources by July 2015 as described in the June 2013 Presidential Memorandum.

DTE Electric is an active participant in working with the EPA and other stakeholders to shape the final performance standards for new and existing power plants. The carbon standards for new sources are not expected to have a material impact on the Company, since the Company has no plans to build new coal-fired generation. It is not possible to determine the potential impact of future regulations on existing sources at this time. Pending or future legislation or other regulatory actions could have a material impact on our operations and financial position and the rates we charge our customers. Impacts include expenditures for environmental equipment beyond what is currently planned, financing costs related to additional capital expenditures, the purchase of emission credits from market sources and the retirement of facilities where control equipment is not economical. We would seek to recover these incremental costs through increased rates charged to our utility customers as authorized by the MPSC.

~~Climate~~Increased ~~regulation~~costs ~~and/or~~for ~~legislation~~energy ~~has~~produced ~~been~~from ~~proposed~~traditional ~~and~~coal-based ~~discussed~~sources ~~within~~could ~~the~~also ~~U.S.~~increase ~~Congress and~~ the ~~EPA. The~~economic ~~EPA~~viability ~~is implementing regulatory actions under the Clean Air Act to address emissions~~ of ~~greenhouse~~energy ~~gases~~produced ~~(GHGs). EPA~~from ~~regulation~~renewable, ofnatural ~~GHGs~~gas-fired ~~requires~~generation ~~the best available control technology (BACT) for new major sources~~ and/or ~~modifications~~nuclear ~~to existing major~~ sources, ~~that~~from ~~cause~~energy ~~significant~~efficiency ~~increases~~initiatives, inand ~~GHG~~from ~~emissions. In June 2012,~~ the ~~EPA~~potential ~~proposed~~development ~~new~~of ~~source~~market-based ~~performance~~trading ~~standards~~of ~~for~~ carbon ~~dioxide~~offsets ~~emissions~~which ~~from~~could ~~new~~provide ~~fossil-fueled power plants. These~~ new ~~source~~business ~~performance~~opportunities ~~standards~~for ~~were~~DTE ~~re-proposed on September 20, 2013, under a presidential directive issued on June 25, 2013~~Electric. ~~Under~~A ~~the same presidential directive, the EPA is expected to propose performance standards for carbon dioxide emissions from existing and modified plants by~~ June 1, 2014 ~~and issue final standards by June 1, 2015~~U.S. ~~DTE~~Supreme ~~Energy~~Court ~~will~~decision beon ~~an active participant in working with~~ the EPA’s ~~and~~authority ~~other stakeholders~~ to ~~shape~~regulate ~~the~~GHG ~~final~~emissions ~~performance~~under ~~standards~~permitting ~~for~~programs ~~new~~of ~~and~~the ~~existing~~Clean ~~power~~Air ~~plants. The~~Act ~~standards~~is ~~for new sources are not~~ expected to have alittle ~~material~~effect ~~impact~~ on ~~the~~DTE ~~Company. It~~Electric issince ~~not possible to determine~~ the ~~potential~~Supreme ~~impact~~Court's ofdecision ~~future~~upholds ~~regulations on existing sources at this time. Pending or future legislation or other regulatory actions could have a material impact on our operations and financial position and~~ the ~~rates~~EPA’s weauthority ~~charge our customers. Impacts include expenditures for environmental equipment beyond what is currently planned, financing costs related~~ to ~~additional~~regulate ~~capital~~GHGs ~~expenditures,~~at ~~the purchase of emission offsets from market~~ sources ~~and~~that ~~the~~are ~~retirement~~already ofsubject ~~facilities where control equipment is not economical. We would seek~~ to ~~recover~~permitting ~~these~~due ~~incremental costs through increased rates charged~~ to ~~our~~emissions ~~utility~~of ~~customers~~conventional ~~per MPSC protocols~~pollutants. ~~Increased~~In ~~costs~~addition, ~~for energy produced from traditional coal based sources could also increase~~ the ~~economic~~Supreme ~~viability~~Court's ofruling ~~energy~~does ~~produced~~not ~~from~~affect ~~renewable and/or nuclear sources, from energy efficiency initiatives, and from~~ the ~~potential~~EPA’s ~~development~~current ofproposed ~~market-based trading of~~ carbon ~~offsets~~performance ~~which~~standards ~~could~~at ~~provided~~ new ~~business~~or ~~opportunities~~existing power plants. At the present time, it is not possible to quantify the financial ~~implication~~impacts of these climate related ~~legislative or~~ regulatory initiatives on DTE Electric or its customers.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Price Risk

We have commodity price risk arising from market price fluctuations. We have risks in conjunction with the anticipated purchases of coal, uranium, electricity, and base metals to meet our service obligations. However, we do not bear significant exposure to earnings risk as such changes are included in the PSCR regulatory rate-recovery mechanism. We are exposed to short-term cash flow or liquidity risk as a result of the time differential between actual cash settlements and regulatory rate recovery.

Credit Risk

Bankruptcies

The Company purchases and sells electricity from and to governmental entities and numerous companies operating in the steel, automotive, energy, retail and other industries. Certain of its customers have filed for bankruptcy protection under 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 Company provides services to the city of Detroit, Michigan (Detroit). Detroit filed for Chapter 9 bankruptcy protection on July 18, 2013. The Company had pre-petition accounts receivable of approximately $20 million outstanding as of the bankruptcy filing date. Detroit has been paying amounts owed in a timely manner and its accounts are substantially current. The Company does not expect Detroit's bankruptcy filing to have a material impact on its financial results.

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.

Interest Rate Risk

We are subject to interest rate risk in connection with the issuance of debt. 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). We estimate that if interest rates were 10% higher or lower, the fair value of long-term debt at December 31, ~~2013~~2014 would decrease $~~176~~202 million and increase $~~190~~ 216 million, respectively.

1615

Item 8. Financial Statements and Supplementary Data

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

	Page
Controls and Procedures	1817
Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm	1918
Consolidated Statements of Operations	2019
Consolidated Statements of Comprehensive Income	2120
Consolidated Statements of Financial Position	2221
Consolidated Statements of Cash Flows	2423
Consolidated Statements of Changes in Shareholder’s Equity	2524
Notes to Consolidated Financial Statements	2625
Financial Statement Schedule
Schedule II — Valuation and Qualifying Accounts	6965

1716

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 Electric’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, ~~2013~~2014, which is the end of the period covered by this report. Based on this evaluation, the Company’s CEO and CFO have concluded that such disclosure controls and procedures are effective in providing reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) is accumulated and communicated to the Company’s management, including its CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Due to the inherent limitations in the effectiveness of any disclosure controls and procedures, management cannot provide absolute assurance that the objectives of its disclosure controls and procedures will be attained.

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

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

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

Management of the Company has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, ~~2013~~2014. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (~~1992~~2013 COSO) in Internal Control - Integrated Framework. Based on this assessment, management concluded that, as of December 31, ~~2013~~2014, the Company’s internal control over financial reporting was effective based on those criteria.

This annual report does not include an audit report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to audit by the Company’s independent registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

There have been no changes in the Company’s internal control over financial reporting during the quarter ended December 31, ~~2013~~2014 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

1817

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholder of

DTE Electric Company

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of DTE Electric Company and its subsidiaries at December 31, ~~2013~~2014 and ~~2012~~2013, and the results of their operations and their cash flows for each of the three years in the period ended December 31, ~~2013~~2014 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the accompanying index presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Detroit, Michigan

February 1413, ~~2014~~2015

1918

DTE Electric Company

Consolidated Statements of Operations

	Year Ended December 31
	Year Ended December 31,
	2013			2012			2011
	2014			2013			2012
	(In millions)
Operating Revenues	$	5,~~197~~282		$	5,~~291~~197		$	5,~~152~~291
Operating Expenses
Fuel and purchased power	1,~~668~~706			1,~~758~~668			1,~~716~~758
Operation and maintenance	1,~~376~~331			1,~~429~~376			1,~~369~~429
Depreciation and amortization	~~896~~927			~~822~~896			~~813~~822
Taxes other than income	~~260~~267			~~256~~260			~~240~~256
Asset (gains) losses and reserves, net	(3		)	(2		)	12
Asset (gains) losses and impairments, net	(1		)	(3		)	(2		)
	4,197			4,263			4,150
	4,230			4,197			4,263
Operating Income	1,~~000~~052			1,~~028~~000			1,~~002~~028
Other (Income) and Deductions
Interest expense	~~268~~250			~~272~~268			~~289~~272
Interest income	—(1		)	(1—		)	—(1		)
Other income	(5462		)	(5354		)	(4753		)
Other expenses	4535			4245			5642
	259			260			298
	222			259			260
Income Before Income Taxes	~~741~~830			~~768~~741			~~704~~768
Income Tax Expense	~~254~~298			~~282~~254			~~267~~282
Net Income	$	~~487~~532		$	~~486~~487		$	~~437~~486

See Notes to Consolidated Financial Statements

2019

DTE Electric Company

Consolidated Statements of Comprehensive Income

	2013			2012			2011
	Year Ended December 31,
	2014			2013			2012
	(In millions)
Net income	$	487		$	486		$	437
Net Income	$	532		$	487		$	486
Other comprehensive income (loss), net of tax:
Benefit obligations, net of tax of $4, $(1) and $2	5			(2		)	(4		)
Benefit obligations, net of tax of $(4), $4 and $(1), respectively	(10		)	5			(2		)
Net unrealized gains on investments during the period, net of taxes of $—, $— and $—	1			—			—
Net unrealized gains on investments during the period, net of taxes of $—, $— and $—, respectively	—			1			—
Other comprehensive income (loss)	6(10		)	(26		)	(42		)
Comprehensive income	$	~~493~~522		$	~~484~~493		$	~~433~~484

See Notes to Consolidated Financial Statements

2120

DTE Electric Company

Consolidated Statements of Financial Position

	December 31
	December 31,
	2013			2012
	2014			2013
	(In millions)
ASSETS
Current Assets
Cash and cash equivalents	$	2714		$	3027
Restricted cash, principally Securitization	~~100~~96			~~102~~100
Accounts receivable (less allowance for doubtful accounts of $28 and $35, respectively)
Accounts receivable (less allowance for doubtful accounts of $29 and $28, respectively)
Customer	~~723~~688			~~697~~723
Affiliates	2431			524
Other	2415			6324
Inventories
Fuel	~~188~~269			~~246~~188
Materials and supplies	~~215~~231			~~193~~215
Notes receivable
Affiliates	~~200~~8			—200
Other	28			2
Regulatory assets	1346			~~162~~13
Other	6875			7768
	1,584			1,577
	1,481			1,584
Investments
Nuclear decommissioning trust funds	1,~~191~~241			1,~~037~~191
Other	~~160~~172			~~133~~160
	1,351			1,170
	1,413			1,351
Property
Property, plant and equipment	1819,~~730~~805			1718,~~689~~730
Less accumulated depreciation and amortization	(67,~~951~~216		)	(6,~~717~~951		)
	11,779			10,972
	12,589			11,779
Other Assets
Regulatory assets	2,~~275~~913			32,~~348~~275
Securitized regulatory assets	~~231~~34			~~413~~231
Intangible assets	4137			3041
Notes receivable	8			3
Other	182			149
Other	141			138
	3,166			2,696
	2,696			3,932
Total Assets	$	18,649		$	17,410
Total Assets	$	17,410		$	17,651

See Notes to Consolidated Financial Statements

2221

DTE Electric Company

Consolidated Statements of Financial Position

	December 31
	December 31,
	2013			2012
	2014			2013
	(In millions, except shares)
LIABILITIES AND SHAREHOLDER’S EQUITY
Current Liabilities
Accounts payable
Affiliates	$	60		$	6560
Other	~~424~~366			~~350~~424
Accrued interest	6158			61
Current portion long-term debt, including capital leases	~~504~~118			~~443~~504
Regulatory liabilities	~~278~~150			66278
Current deferred income taxes	91			14
Deferred income taxes	—			91
Short-term borrowings
Affiliates	5884			8058
Other	—50			~~130~~—
Other	~~177~~151			~~139~~177
	1,653			1,348
	1,037			1,653
Long-Term Debt (net of current portion)
Mortgage bonds, notes and other	45,~~540~~144			4,~~221~~540
Securitization bonds	~~105~~—			~~302~~105
Capital lease obligations	4—			14
	4,649			4,524
	5,144			4,649
Other Liabilities
Deferred income taxes	23,~~807~~188			2,~~761~~807
Regulatory liabilities	~~386~~245			~~483~~386
Asset retirement obligations	1,~~667~~796			1,~~557~~667
Unamortized investment tax credit	4136			4941
Nuclear decommissioning	~~178~~182			~~159~~178
Accrued pension liability — affiliates	~~705~~1,200			~~1,368~~705
Accrued postretirement liability — affiliates	~~369~~520			~~996~~369
Other	~~101~~105			~~103~~101
	6,254			7,476
	7,272			6,254
Commitments and Contingencies (Notes 8 and 14)
Commitments and Contingencies (Notes 7 and 15)
Shareholder’s Equity
Common stock, $10 par value, 400,000,000 shares authorized, and 138,632,324 shares issued and outstanding	3,~~596~~786			3,~~196~~596
Retained earnings	1,~~274~~436			1,~~129~~274
Accumulated other comprehensive income (loss)	(16		)	(22		)
Accumulated other comprehensive loss	(26		)	(16		)
	4,854			4,303
Total Shareholder's Equity	5,196			4,854
Total Liabilities and Shareholder’s Equity	$	1718,~~410~~649		$	17,~~651~~410

See Notes to Consolidated Financial Statements

2322

DTE Electric Company

Consolidated Statements of Cash Flows

	Year Ended December 31
	Year Ended December 31,
	2013			2012			2011
	2014			2013			2012
	(In millions)
Operating Activities
Net income	$	487		$	486		$	437
Net Income	$	532		$	487		$	486
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	~~896~~927			~~822~~896			~~813~~822
Nuclear fuel amortization	3848			2938			4629
Allowance for equity funds used during construction	(1421		)	(1214		)	(612		)
Deferred income taxes	~~108~~297			~~(52~~108		)	~~231~~(52		)
Asset (gains) losses and reserves, net	(3		)	(2		)	13
Asset (gains) losses and impairments, net	(1		)	(3		)	(2		)
Changes in assets and liabilities
Changes in assets and liabilities:
Accounts receivable, net	~~(30~~33		)	24(30		)	~~(62~~24		)
Inventories	36(97		)	736			~~(53~~7		)
Accounts payable	~~(23~~11		)	(6423		)	41(64		)
Regulatory assets and liabilities	~~1,029~~(926		)	~~286~~1,029			~~(519~~286		)
Accrued pension liability — affiliates	~~(663~~495		)	~~137~~(663		)	~~271~~137
Accrued postretirement liability — affiliates	~~(417~~151		)	(~~221~~417		)	~~157~~(221		)
Other assets	—(25		)	30—			(730		)
Other liabilities	44(40		)	4244			(942		)
Net cash from operating activities	1,~~488~~384			1,~~512~~488			1,~~353~~512
Investing Activities
Plant and equipment expenditures	(1,~~325~~561		)	(1,~~230~~325		)	(1,~~202~~230		)
Restricted cash for debt redemption, principally Securitization	2			5			(3		)
Notes receivable from affiliate	192			(200		)	26
Notes receivable from affiliate	(200		)	26			77
Proceeds from sale of nuclear decommissioning trust fund assets	1,146			1,118			759
Proceeds from sale of nuclear decommissioning trust fund assets	1,118			759			833
Investment in nuclear decommissioning trust funds	(1,156		)	(1,134		)	(764		)
Investment in nuclear decommissioning trust funds	(1,134		)	(764		)	(850		)
Other	(10		)	(31		)	(21		)
Other Investments	(33		)	(26		)	(32		)
Net cash used for investing activities	(1,389		)	(1,572		)	(1,230		)
Net cash used for investing activities	(1,572		)	(1,230		)	(1,177		)
Financing Activities
Issuance of long-term debt, net of issuance costs	~~768~~942			~~496~~768			~~609~~496
Redemption of long-term debt	(~~590~~837		)	(~~587~~590		)	(~~554~~587		)
Capital contribution by parent company	~~400~~190			—400			—
Short-term borrowings — other	(130		)	130			—
Short-term borrowings, net — other	50			(130		)	130
Short-term borrowings — affiliate	(22		)	16			64
Short-term borrowings, net — affiliate	26			(22		)	16
Dividends on common stock	(~~342~~370		)	(~~317~~342		)	(~~305~~317		)
Other	(39		)	(3		)	(73		)
Net cash from (used) for financing activities	81			(265		)	(193		)
Net cash from (used for) financing activities	(8		)	81			(265		)
Net Increase (Decrease) in Cash and Cash Equivalents	(313		)	17(3		)	(17		)
Cash and Cash Equivalents at Beginning of the Period	3027			1330			3013
Cash and Cash Equivalents at End of the Period	$	2714		$	3027		$	1330
Supplemental disclosure of cash information
Cash paid (received) for:
Interest (net of interest capitalized)	$	~~256~~240		$	~~280~~256		$	~~294~~280
Income taxes	$	~~183~~4		$	~~223~~183		$	~~(18~~223	)
Supplemental disclosure of non-cash information
Supplemental disclosure of non-cash investing and financing activities
Plant and equipment expenditures in accounts payable	$	~~231~~162		$	~~144~~231		$	~~166~~144

See Notes to Consolidated Financial Statements

2423

DTE Electric Company

Consolidated Statements of Changes in Shareholder’s Equity

				Additional					AccumulatedOther
									Accumulated
	Common Stock			Paid-in		Retained			Comprehensive
				Additional					Other
	Common Stock			Paid in		Retained			Comprehensive
	Shares	Amount		Capital		Earnings			Income (Loss)			Total
	(Dollars in millions, shares in thousands)
Balance, December 31, 2010	138,632	$	1,386	$	1,810	$	829		$	(16	)	$	4,009
Net income	—	—		—		437			—			437
Dividends declared on common stock	—	—		—		(306		)	—			(306		)
Benefit obligations, net of tax	—	—		—		—			(4		)	(4		)
Balance, December 31, 2011	138,632	$	1,386	$	1,810	$	960		$	(20	)	$	4,136
Net income	—	—		—		486			—			486
Net Income	—	—		—		486			—			486
Dividends declared on common stock	—	—		—		(317		)	—			(317		)
Benefit obligations, net of tax	—	—		—		—			(2		)	(2		)
Balance, December 31, 2012	138,632	$	1,386	$	1,810	$	1,129		$	(22	)	$	4,303
Net income	—	—		—		487			—			487
Net Income	—	—		—		487			—			487
Dividends declared on common stock	—	—		—		(342		)	—			(342		)
Benefit obligations, net of tax	—	—		—		—			5			5
Net change in unrealized losses on investments, net of tax	—	—		—		—			1			1
Capital contribution by parent company	—	—		400		—			—			400
Balance, December 31, 2013	138,632	$	1,386	$	2,210	$	1,274		$	(16	)	$	4,854
Net Income	—	—		—		532			—			532
Dividends declared on common stock	—	—		—		(370		)	—			(370		)
Benefit obligations, net of tax	—	—		—		—			(10		)	(10		)
Capital contribution by parent company	—	—		190		—			—			190
Balance, December 31, 2014	138,632	$	1,386	$	2,400	$	1,436		$	(26	)	$	5,196

See Notes to Consolidated Financial Statements

2524

DTE Electric Company

Notes to Consolidated Financial Statements

NOTE 1 — ORGANIZATION AND BASIS OF PRESENTATION

Corporate Structure

DTE Electric is an electric utility engaged in the generation, purchase, distribution and sale of electricity to approximately 2.1 million customers in southeastern Michigan. DTE Electric is regulated by the MPSC and the FERC. In addition, we are regulated by other federal and state regulatory agencies including the NRC, the EPA and the MDEQ.

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

Basis of Presentation

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

Certain prior year balances were reclassified to match the current year's financial statement presentation. Such revisions included an increase in the Consolidated Statements of Cash Flows line items for (i) Proceeds from sale of nuclear decommissioning trust funds, and (ii) Investment in nuclear decommissioning trust funds by $662 million and $753 million for the years ended December 31, 2012 and 2011, respectively. These revisions were needed to properly state the gross purchases and sales activity in the nuclear decommissioning trust fund for the respective years. The totals of Net cash used in investing activities for both 2012 and 2011 were unchanged by these revisions. The revisions noted above are not deemed material, individually or in the aggregate, to the prior period consolidated financial statements.

Principles of Consolidation

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

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

The Company has variable interests in VIEs through certain of its long-term purchase contracts. As of December 31, ~~2013~~2014, the carrying amount of assets and liabilities in the Consolidated Statements of Financial Position that relate to its variable interests under long-term purchase contracts are predominately related to working capital accounts and generally represent the amounts owed by the Company for the deliveries associated with the current billing cycle under the contracts. The Company has not provided any significant form of financial support associated with these long-term contracts. There is no significant potential exposure to loss as a result of its variable interests through these long-term purchase contracts.

In 2001, DTE Electric financed a regulatory asset related to Fermi 2 and certain other regulatory assets through the sale of rate reduction bonds by a wholly-owned special purpose entity, Securitization. DTE Electric performs servicing activities including billing and collecting surcharge revenue for Securitization. This entity is a VIE and is consolidated by the Company. The maximum risk exposure related to Securitization is reflected on the Company’s Consolidated Statements of Financial Position.

2625

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

The following table summarizes the major balance sheet items at December 31, ~~2013~~2014 and ~~2012~~2013 restricted for Securitization that are either (1) assets that can be used only to settle their obligations related to Securitization or (2) liabilities for which creditors do not have recourse to the general credit of the primary beneficiary.

	December 31,		~~December 31,~~
	2013		2012
	2014		2013
	(In millions)
ASSETS
Restricted cash	$	~~100~~96	$	~~102~~100
Accounts receivable	3426		34
Securitized regulatory assets	~~231~~34		~~413~~231
Other assets	4		7
Other current and long-term assets	1		4
	$	~~369~~157	$	~~556~~369
LIABILITIES
Accounts payable and accrued current liabilities	$	73	$	117
Current regulatory liabilities	43		50
Current portion long-term debt, including capital leases	105		196
Current portion long-term debt, including capital leases	196		177
Current regulatory liabilities	32		43
Securitization bonds	~~105~~—		~~302~~105
Other long term liabilities	8		7
Other current and long-term liabilities	9		8
	$	~~359~~149	$	~~547~~359

As of December 31, 2013, DTE Electric had no balance in Notes receivable related to non-consolidated VIEs, and at December 31, 2012, the Company had $3 million in Notes receivable related to non-consolidated VIEs.

NOTE 2 — SIGNIFICANT ACCOUNTING POLICIES

Revenues

Revenues from the sale and delivery of electricity are recognized as services are provided. The Company records revenues for electricity provided but unbilled at the end of each month. Rates for DTE Electric include provisions to adjust billings for fluctuations in fuel and purchased power costs, and certain other costs. Revenues are adjusted for differences between actual costs subject to reconciliation and the amounts billed in current rates. Under or over recovered revenues related to these cost recovery mechanisms are recorded on the Consolidated Statements of Financial Position and are recovered or returned to customers through adjustments to the billing factors.

See Note 8 7, "Regulatory Matters", for further discussion of recovery mechanisms authorized by the MPSC.

Accounting for ISO Transactions

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

Changes 27in Accumulated Other Comprehensive Loss

Comprehensive income (loss) is the change in common shareholder’s equity during a period from transactions and events from non-owner sources, including net income. The amounts recorded to accumulated other comprehensive loss include unrealized gains and losses on available-for-sale securities and changes in benefit obligations, consisting of deferred actuarial losses, and prior service costs.

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

~~Comprehensive~~The ~~Income~~following ~~(Loss)~~table summarizes the changes in Accumulated other comprehensive loss by component for the years ended December 31, 2014 and 2013:

Comprehensive income (loss) is the change in common shareholders’ equity during a period from transactions and events from non-owner sources, including net income. As shown in the following tables, amounts recorded to accumulated other comprehensive loss for the year ended December 31, 2013 include unrealized gains and losses on available-for-sale securities, which comprise the net unrealized gains and losses on investments, and changes in benefit obligations, consisting of deferred actuarial losses, prior service costs and transition amounts related to pension and other postretirement benefit plans.



	Changes in Accumulated Other Comprehensive Loss by Component (a)
	Net Unrealized Gain/(Loss) on Investments		Benefit Obligations (b)			Total
	(In millions)
Balance, January 1, 2013	$	—	$	(22	)	$	(22	)
Other comprehensive income before reclassifications	1		3			4
Amounts reclassified from accumulated other comprehensive income	—		2			2
Net current-period other comprehensive income	1		5			6
Balance, December 31, 2013	$	1	$	(17	)	$	(16	)
Other comprehensive loss before reclassifications	—		(12		)	(12		)
Amounts reclassified from accumulated other comprehensive income	—		2			2
Net current-period other comprehensive loss	—		(10		)	(10		)
Balance, December 31, 2014	$	1	$	(27	)	$	(26	)

	Changes in Accumulated Other Comprehensive Loss by Component (a)
	For The Year Ended December 31, 2013
	Net Unrealized Gain/(Loss) on Investments		Benefit Obligations (b)			Total
	(In millions)
Beginning balance, December 31, 2012	$	—	$	(22	)	$	(22	)
Other comprehensive income before reclassifications	1		3			4
Amounts reclassified from accumulated other comprehensive income (loss)	—		2			2
Net current-period other comprehensive income	1		5			6
Ending balance, December 31, 2013	$	1	$	(17	)	$	(16	)

________________________________________

_______________________________________


(a)	All amounts are net of tax.

(b) The amounts reclassified from accumulated other comprehensive income (loss) are included in the computation of the net periodic pension and other postretirement benefit costs (see Note 1516 to the Consolidated Financial Statements "Retirement Benefits and Trusteed Assets").

Cash, Cash Equivalents and Restricted Cash

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

Receivables

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

The allowance for doubtful accounts is generally calculated using the aging approach that utilizes rates developed in reserve studies. DTE Electric establishes an allowance for uncollectible accounts based on historical losses and management’s assessment of existing economic conditions, customer trends, and other factors. Customer accounts are generally considered delinquent if the amount billed is not received by the due date, which is typically in 21 days, however, factors such as assistance programs may delay aggressive action. We assess late payment fees on trade receivables based on past-due terms with customers. Customer accounts are written off when collection efforts have been exhausted. The time period for write-off is 150 days after service has been terminated.

Unbilled revenues of $~~280~~250 million and $~~275~~280 million are included in customer accounts receivable at December 31, ~~2013~~2014 and ~~2012~~2013, respectively.

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

Notes Receivable

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

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

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

Inventories

The Company generally values inventory at average cost.

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

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

Utility property is depreciated over its estimated useful life using straight-line rates approved by the MPSC.

Depreciation and amortization expense also includes the amortization of certain regulatory assets.

Approximately $2616 million and $1226 million of expenses related to Fermi 2 refueling outages were accrued at December 31, ~~2013~~2014 and ~~2012~~2013, respectively. Amounts are accrued on a pro-rata basis, generally over an 18-month period, that coincides with scheduled refueling outages at Fermi 2. This accrual of outage costs matches the regulatory recovery of these costs in rates set by the MPSC. See Note 87 to the Consolidated Financial Statements, "Regulatory Matters".

The cost of nuclear fuel is capitalized. The amortization of nuclear fuel is included within Fuel and purchased power in the Consolidated Statements of Operations and is recorded using the units-of-production method.

Long-Lived Assets

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

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

Intangible Assets

The Company has certain intangible assets relating to emission allowances and renewable energy credits as shown below:

	December 31,		~~December 31,~~
	2013		2012
	2014		2013
	(In millions)
Emission allowances	$	21	$	62
Renewable energy credits	5145		4451
	53		50
	46		53
Less current intangible assets	129		2012
	$	4137	$	3041

Emission allowances and renewable energy credits are charged to expense, using average cost, as the allowances and credits are consumed in the operation of the business.

Excise and Sales Taxes

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

Deferred Debt Costs

The costs related to the issuance of long-term debt are deferred and amortized over the life of each debt issue. In accordance with MPSC regulations, the unamortized discount, premium and expense related to debt redeemed with a refinancing are amortized over the life of the replacement issue.

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

Investments in Debt and Equity Securities

The Company generally classifies investments in debt and equity securities as either trading or available-for-sale and has recorded such investments at market value with unrealized gains or losses included in earnings or in other comprehensive income or loss, respectively. Changes in the fair value of Fermi 2 nuclear decommissioning investments are recorded as adjustments to regulatory assets or liabilities, due to a recovery mechanism from customers. The Company’s equity investments are reviewed for impairment each reporting period. If the assessment indicates that the impairment is other than temporary, a loss is recognized resulting in the equity investment being written down to its estimated fair value. See Note 39 to the Consolidated Financial Statements, "Fair Value".

Stock-Based Compensation

The Company received an allocation of costs from DTE Energy associated with stock-based compensation. Our allocation for ~~2013~~2014, ~~2012~~2013 and ~~2011~~2012 for stock-based compensation expense was approximately $5862 million, $4258 million and $3042 million, respectively.

Government Grants

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

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

Other Accounting Policies

See the following notes for other accounting policies impacting ~~our~~the ~~financial~~Company’s ~~statements~~Consolidated Financial Statements:

Note		Title
3		Fair Value
6		Asset Retirement Obligations
4		Financial and Other Derivative Instruments
7		Regulatory Matters
7		Asset Retirement Obligations
8		Income Taxes
8		Regulatory Matters
9		Fair Value
9		Income Taxes
10		Financial and Other Derivative Instruments

NOTE 3 — ~~FAIR~~NEW ~~VALUE~~ACCOUNTING PRONOUNCEMENTS

~~Fair~~In ~~value~~May is2014, ~~defined~~the asFASB ~~the~~issued ~~price~~Accounting ~~that~~Standards ~~would~~Update be(ASU) ~~received~~No. to2014-09, ~~sell~~Revenue anfrom ~~asset~~Contracts orwith ~~paid~~Customers. The objectives of this ASU are to ~~transfer~~improve aupon ~~liability~~revenue inrecognition anrequirements ~~orderly~~by ~~transaction~~providing ~~between~~a ~~market~~single ~~participants~~comprehensive atmodel to determine the measurement ~~date~~of inrevenue aand ~~principal~~timing orof ~~most advantageous market~~recognition. ~~Fair~~The ~~value~~core principle is athat ~~market-based~~an ~~measurement~~entity ~~that~~will isrecognize ~~determined~~revenue ~~based~~to ondepict ~~inputs,~~the ~~which~~transfer ~~refer~~of ~~broadly~~goods toor ~~assumptions~~services ~~that~~to ~~market~~customers ~~participants~~at ~~use~~an inamount ~~pricing~~that ~~assets~~the orentity ~~liabilities. These~~expects ~~inputs~~to ~~can~~ be ~~readily~~entitled ~~observable,~~to ~~market~~in ~~corroborated~~exchange orfor ~~generally~~those ~~unobservable~~goods ~~inputs~~or services. ~~The~~This ~~Company~~ASU ~~makes~~also ~~certain~~requires ~~assumptions~~expanded itqualitative ~~believes~~and ~~that~~quantitative ~~market~~disclosures ~~participants~~regarding ~~would~~the ~~use~~nature, inamount, ~~pricing assets or liabilities~~timing, ~~including~~and ~~assumptions~~uncertainty ~~about~~of ~~risk,~~revenues and ~~the~~cash ~~risks~~flows ~~inherent~~arising infrom ~~the~~contracts ~~inputs~~with ~~to valuation techniques~~customers. ~~Credit~~The ~~risk~~revenue ofstandard ~~the Company and its counterparties~~ is ~~incorporated~~effective infor the ~~valuation~~first ofinterim ~~assets~~period ~~and~~within ~~liabilities~~annual ~~through~~reporting ~~the~~periods ~~use~~beginning ofafter ~~credit~~December ~~reserves~~15, ~~the~~2016 ~~impact~~and ofis ~~which~~to ~~was~~be ~~immaterial~~applied atretrospectively. Early ~~December 31,~~adoption ~~2013~~is ~~and~~not ~~2012~~permitted. The Company ~~believes~~is itcurrently ~~uses~~assessing ~~valuation techniques that maximize~~ the ~~use~~impact of ~~observable~~this ~~market-based~~ASU ~~inputs~~on ~~and~~its ~~minimize~~Consolidated ~~the~~Financial ~~use of unobservable inputs~~Statements.

A fair value hierarchy has been established, that prioritizes the inputs to valuation techniques used to measure fair value in three broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). In some cases, the inputs used to measure fair value might fall in different levels of the fair value hierarchy. All assets and liabilities are required to be classified in their entirety based on the lowest level of input that is significant to the fair value measurement in its entirety. Assessing the significance of a particular input may require judgment considering factors specific to the asset or liability, and may affect the valuation of the asset or liability and its placement within the fair value hierarchy. The Company classifies fair value balances based on the fair value hierarchy defined as follows:29

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

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

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

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

~~The~~NOTE ~~following~~4 ~~table~~— ~~presents assets measured and recorded at fair value on a recurring basis as of December 31~~PROPERTY, ~~2013~~PLANT ~~and~~AND ~~2012:~~EQUIPMENT

	December 31, 2013								December 31, 2012
	Level 1		Level 2		Level 3		Net Balance		Level 1		Level 2		Level 3		Net Balance
	(In millions)
Assets:
Cash equivalents (a)	$	2	$	114	$	—	$	116	$	—	$	116	$	—	$	116
Nuclear decommissioning trusts	779		412		—		1,191		694		343		—		1,037
Other investments (b)	91		44		—		135		64		44		—		108
Derivative assets — FTRs	—		—		3		3		—		—		1		1
Total	$	872	$	570	$	3	$	1,445	$	758	$	503	$	1	$	1,262
Assets:
Current	$	2	$	114	$	3	$	119	$	—	$	116	$	1	$	117
Noncurrent	870		456		—		1,326		758		387		—		1,145
Total Assets	$	872	$	570	$	3	$	1,445	$	758	$	503	$	1	$	1,262

_______________________________________

(a) At December 31, 2013, available-for-sale securities of $116 million, included $100 million and $16 million of cash equivalents included in Restricted cash and Other investments, respectively, on the Consolidated Statements of Financial Position. At December 31, 2012, available-for-sale securities of $116 million, included $102 million and $14 million of cash equivalents included in Restricted cash and Other investments, respectively, on the Consolidated Statements of Financial Position.

(b) Available-for-sale equity securities at December 31, 2013 and 2012 of $7 million and $5 million, respectively, are included in Other investments on the Consolidated Statements of Financial Position.

Cash Equivalents

Cash equivalents include investments with maturities of three months or less when purchased. The cash equivalents shown in the fair value table are comprised of short-term investments and money market funds. The fair values of the shares in these investments are based upon observable market prices for similar securities and, therefore, have been categorized as Level 2 in the fair value hierarchy.

Nuclear Decommissioning Trusts and Other Investments

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

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

Derivative Assets and Liabilities

Derivative assets and liabilities are comprised of physical and financial derivative contracts, including futures, forwards, options and swaps that are both exchange-traded and over-the-counter traded contracts. Various inputs are used to value derivatives depending on the type of contract and availability of market data. Exchange-traded derivative contracts are valued using quoted prices in active markets. The Company considers the following criteria in determining whether a market is considered active: frequency in which pricing information is updated, variability in pricing between sources or over time and the availability of public information. Other derivative contracts are valued based upon a variety of inputs including commodity market prices, broker quotes, interest rates, credit ratings, default rates, market-based seasonality and basis differential factors. The Company monitors the prices that are supplied by brokers and pricing services and may use a supplemental price source or change the primary price source of an index if prices become unavailable or another price source is determined to be more representative of fair value. The Company has obtained an understanding of how these prices are derived. Additionally, the Company selectively corroborates the fair value of its transactions by comparison of market-based price sources. Mathematical valuation models are used for derivatives for which external market data is not readily observable, such as contracts which extend beyond the actively traded reporting period. The Company has established a Risk Management Committee whose responsibilities include directly or indirectly ensuring all valuation methods are applied in accordance with predefined policies. The development and maintenance of our forward price curves has been assigned to our Risk Management Department, which is separate and distinct from the trading functions within the Company.

The following table presents the fair value reconciliation of Level 3 assets and liabilities measured at fair value on a recurring basis for the years ended December 31, 2013 and 2012:

	Year EndedDecember 31,
	2013			2012
	(In millions)
Net Assets as of the beginning of the period	$	1		1
Change in fair value recorded in regulatory assets/liabilities	5			15
Purchases, issuances and settlements:
Settlements	(3		)	(15		)
Net Assets as of December 31	$	3		$	1
The amount of total gains (losses) included in regulatory assets and liabilities attributed to the change in unrealized gains (losses) related to regulatory assets and liabilities held at December 31, 2013 and 2012	$	2		$	1

No transfers between Levels 1, 2 or 3 occurred in the years ended December 31, 2013 and 2012.

Fair Value of Financial Instruments

The fair value of financial instruments included in the table below is determined by using quoted market prices when available. When quoted prices are not available, pricing services may be used to determine the fair value with reference to observable interest rate indexes. The Company has obtained an understanding of how the fair values are derived. The Company also selectively corroborates the fair value of its transactions by comparison of market-based price sources. Discounted cash flow analyses based upon estimated current borrowing rates are also used to determine fair value when quoted market prices are not available. The fair values of notes receivable, excluding capital leases, are estimated using discounted cash flow techniques that incorporate market interest rates as well as assumptions about the remaining life of the loans and credit risk. Depending on the information available, other valuation techniques may be used that rely on internal assumptions and models. Valuation policies and procedures are determined by the Company's Treasury Department which reports to the Company's Vice President and Treasurer.

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

The following table presents the carrying amount and fair value of financial instruments as of December 31, 2013 and 2012:

	December 31, 2013								December 31, 2012
	Carrying		Fair Value						Carrying		Fair Value
	Amount		Level 1		Level 2		Level 3		Amount		Level 1		Level 2		Level 3
	(In millions)
Notes receivable, excluding capital leases	$	10	$	—	$	—	$	10	$	5	$	—	$	—	$	5
Notes receivable — affiliates	$	200	$	—	$	—	$	200	$	—	$	—	$	—	$	—
Short-term borrowings — affiliates	$	58	$	—	$	—	$	58	$	80	$	—	$	—	$	80
Short-term borrowings — other	$	—	$	—	$	—	$	—	$	130	$	—	$	130	$	—
Long-term debt	$	5,146	$	—	$	5,253	$	136	$	4,963	$	—	$	5,021	$	620

Nuclear Decommissioning Trust Funds

DTE Electric has a legal obligation to decommission its nuclear power plants following the expiration of their operating licenses. This obligation is reflected as an asset retirement obligation on the Consolidated Statements of Financial Position. Rates approved by the MPSC provide for the recovery of decommissioning costs of Fermi 2 and the disposal of low-level radioactive waste. DTE Electric is continuing to fund FERC jurisdictional amounts for decommissioning even though explicit provisions are not included in FERC rates. See Note 7.

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

	December 31,		December 31,
	2013		2012
	(In millions)
Fermi 2	$	1,172	$	1,021
Fermi 1	3		3
Low level radioactive waste	16		13
Total	$	1,191	$	1,037

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

	Year EndedDecember 31,
	2013			2012			2011
	(In millions)
Realized gains	$	83		$	37		$	46
Realized losses	$	(41	)	$	(31	)	$	(38	)
Proceeds from sales of securities	$	1,118		$	759		$	833

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

	December 31, 2013				December 31, 2012
	Fair		Unrealized		Fair		Unrealized
	Value		Gains		Value		Gains
	(In millions)
Equity securities	$	730	$	201	$	631	$	122
Debt securities	442		12		399		27
Cash and cash equivalents	19		—		7		—
	$	1,191	$	213	$	1,037	$	149

At December 31, 2013, investments in the nuclear decommissioning trust funds consisted of approximately 61% in publicly traded equity securities, 37% in fixed debt instruments and 2% in cash equivalents. At December 31, 2012, investments in the nuclear decommissioning trust funds consisted of approximately 61% in publicly traded equity securities, 38% in fixed debt instruments and 1% in cash equivalents.

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

The debt securities at December 31, 2013 and 2012 had an average maturity of approximately 7 and 6 years, respectively. Securities held in the nuclear decommissioning trust funds are classified as available-for-sale. As DTE Electric does not have the ability to hold impaired investments for a period of time sufficient to allow for the anticipated recovery of market value, all unrealized losses are considered to be other-than-temporary impairments.

Unrealized losses incurred by the Fermi 2 trust are recognized as a Regulatory asset. DTE Electric recognized $31 million and $44 million of unrealized losses as Regulatory assets at December 31, 2013 and 2012, respectively. Since the decommissioning of Fermi 1 is funded by DTE Electric rather than through a regulatory recovery mechanism, there is no corresponding regulatory asset treatment. Therefore, unrealized losses incurred by the Fermi 1 trust are recognized in earnings immediately. There were no unrealized losses recognized in 2013, 2012 and 2011 for Fermi 1.

Other Securities

At December 31, 2013 and 2012, these securities are comprised primarily of money-market and equity securities. During the years ended December 31, 2013 and 2012, no amounts of unrealized losses on available-for-sale securities were reclassified out of other comprehensive income into net income for the periods. Gains related to trading securities held at December 31, 2013, 2012, and 2011 were $19 million, $9 million and $3 million, respectively.

NOTE 4 — FINANCIAL AND OTHER DERIVATIVE INSTRUMENTS

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

The Company's primary market risk exposure is associated with commodity prices, credit and interest rates. The Company has risk management policies to monitor and manage market risks. The Company uses derivative instruments to manage some of the exposure. DTE Electric generates, purchases, distributes and sells electricity. DTE Electric uses forward energy contracts to manage changes in the price of electricity and fuel. Substantially all of these contracts meet the normal purchases and sales exemption and are therefore accounted for under the accrual method. Other derivative contracts are recoverable through the PSCR mechanism when settled. This results in the deferral of unrealized gains and losses as Regulatory assets or liabilities, until realized.

The following represents the fair value of derivative instruments as of December 31, 2013 and 2012:

	December 31,
	2013		2012
	(In millions)
FTRs — Other current assets	$	3	$	1
Total derivatives not designated as hedging instrument	$	3	$	1

The effect of derivative instruments recoverable through the PSCR mechanism when realized on the Consolidated Statements of Financial Position were $5 million in gains related to FTRs recognized in Regulatory liabilities for the year ended December 31, 2013, and $15 million in gains related to FTRs recognized in Regulatory liabilities for the year ended December 31, 2012.

The following represents the cumulative gross volume of derivative contracts outstanding as of December 31, 2013:

Commodity	Number of Units
FTRs (MWh)	44,840

NOTE 5 — PROPERTY, PLANT AND EQUIPMENT

Summary of property by classification as of December 31:

	2013			2012
	December 31,
	2014			2013
	(In millions)
Property, Plant and Equipment
Generation	$	11,~~127~~641		$	1011,~~383~~127
Distribution	78,~~603~~164			7,~~306~~603
Total	1819,~~730~~805			1718,~~689~~730
Less Accumulated Depreciation and Amortization
Generation	(4,~~004~~149		)	(34,~~880~~004		)
Distribution	(23,~~947~~067		)	(2,~~837~~947		)
Total	(67,~~951~~216		)	(6,~~717~~951		)
Net Property, Plant and Equipment	$	1112,~~779~~589		$	1011,~~972~~779

~~The Allowance for Funds used During Construction (~~AFUDC) capitalized was approximately $2132 million and $1921 million ~~during~~for ~~2013~~the years ended December 31, 2014 and ~~2012~~2013, respectively.

The composite depreciation rate for DTE Electric was approximately 3.4% in 2014 and 2013 and 3.3% ~~2012~~in ~~and 2011~~2012.

The average estimated useful life for our generation and distribution property was 40 years and 41 years, respectively, at December 31, ~~2013~~2014.

Capitalized software costs are classified as Property, plant and equipment and the related amortization is included in Accumulated depreciation and amortization on the Consolidated Statements of Financial Position. The Company capitalizes the costs associated with computer software it develops or obtains for use in its business. The Company amortizes capitalized software costs on a straight-line basis over the expected period of benefit, ranging from 5 to 15 years.

Capitalized software costs amortization expense was $6471 million in ~~2013~~2014, $6264 million in ~~2012~~2013 and $5862 million in ~~2011~~2012. The gross carrying amount and accumulated amortization of capitalized software costs at December 31, ~~2013~~2014 were $~~572~~590 million and $~~323~~293 million, respectively. The gross carrying amount and accumulated amortization of capitalized software costs at December 31, ~~2012~~2013 were $~~515~~521 million and $~~259~~269 million, respectively.

Gross property under capital leases was $9 million ~~and $6 million~~ at December 31, ~~2013~~2014 and ~~2012, respectively~~2013. Accumulated amortization of property under capital leases was $15 million and $31 million at December 31, ~~2013~~2014 and ~~2012~~2013, respectively.

NOTE 65 — JOINTLY OWNED UTILITY PLANT

DTE Electric has joint ownership interest in two power plants, Belle River and Ludington Hydroelectric Pumped Storage. DTE Electric’s share of direct expenses of the jointly owned plants are included in Fuel and purchased power and Operation and maintenance expenses in the Consolidated Statements of Operations. Ownership information of the two utility plants as of December 31, ~~2013~~2014 was as follows:

	Belle River			LudingtonHydroelectricPumped Storage
In-service date	1984-1985			1973
Total plant capacity	1,270		MW	1,872		MW
Ownership interest	(a)			49		%
Investment in property, plant and equipment (in millions)	$	1,~~702~~742		$	~~354~~412
Accumulated depreciation (in millions)	$	~~969~~993		$	~~170~~175

_________________________________


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

3630

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

Belle River

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

Ludington Hydroelectric Pumped Storage

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

NOTE 76 — ASSET RETIREMENT OBLIGATIONS

The Company has a legal retirement obligation for the decommissioning costs for its Fermi 1 and Fermi 2 nuclear plants, dismantlement of facilities located on leased property and various other operations. The Company has conditional retirement obligations for asbestos and PCB removal at certain of its power plants and various distribution equipment. The Company recognizes such obligations as liabilities at fair market value when they are incurred, which generally is at the time the associated assets are placed in service. Fair value is measured using expected future cash outflows discounted at our credit-adjusted risk-free rate. The Company recognizes regulatory assets or liabilities for timing differences in expense recognition for legal asset retirement costs that are currently recovered in rates.

If a reasonable estimate of fair value cannot be made in the period in which the retirement obligation is incurred, such as for assets with indeterminate lives, the liability is recognized when a reasonable estimate of fair value can be made. Substations, manholes and certain other distribution assets have an indeterminate life. Therefore, no liability has been recorded for these assets.

A reconciliation of the asset retirement obligations for ~~2013~~2014 follows:

	(In millions)
Asset retirement obligations at December 31, 2012	$	1,557
Accretion	96
Revision in estimated cash flows	12
Liabilities incurred	4
Liabilities settled	(2		)
Asset retirement obligations at December 31, 2013	$	1,667
Accretion	103
Liabilities incurred	9
Liabilities settled	(6		)
Revision in estimated cash flows	23
Asset retirement obligations at December 31, 2014	$	1,796

InApproximately ~~2001,~~$1.7 ~~DTE~~billion ~~Electric~~of ~~began~~ the ~~final~~asset retirement obligations represent nuclear decommissioning ofliabilities ~~Fermi~~that 1,are ~~with~~funded ~~the~~through ~~goal~~a ofsurcharge ~~removing~~to ~~the~~electric ~~remaining~~customers ~~radioactive~~over ~~material~~the ~~and~~life ~~terminating~~of the Fermi 12 ~~license~~nuclear plant. InThe ~~2011,~~NRC has jurisdiction over the decommissioning of nuclear power plants and requires minimum decommissioning funding based onupon ~~management~~a ~~decisions~~formula. The ~~revising~~MPSC and FERC regulate the ~~timing~~recovery ~~and~~of ~~estimate~~costs of ~~cash~~decommissioning ~~flows,~~nuclear ~~DTE~~power ~~Electric~~plants ~~accrued~~and anboth ~~additional~~require ~~$19~~the ~~million~~use ~~with~~of ~~respect~~external trust funds to finance the decommissioning of Fermi 12. ~~Management~~Rates ~~has~~approved ~~suspended~~by the MPSC provide for the recovery of decommissioning ~~activities~~costs ~~and~~of ~~placed~~Fermi 2 and the ~~facility~~disposal inof ~~safe~~low-level ~~storage~~radioactive ~~status~~waste. ~~The~~DTE ~~expense~~Electric ~~amount~~is ~~has~~continuing ~~been~~to ~~recorded~~fund FERC jurisdictional amounts for decommissioning even though explicit provisions are not included in ~~Asset~~FERC ~~(gains)~~rates. The ~~losses~~Company believes the MPSC and ~~reserves,~~FERC ~~net~~collections onwill be adequate to fund the ~~Consolidated~~estimated ~~Statements~~cost of ~~Operations~~decommissioning. InThe ~~addition,~~decommissioning ~~in 2011~~assets, ~~based~~anticipated onearnings ~~updated~~thereon ~~studies~~and ~~revising~~future ~~the~~revenues ~~timing~~from ~~and~~decommissioning ~~estimate~~collections ofwill ~~cash~~be ~~flows,~~used ato ~~reduction~~decommission ofFermi ~~approximately~~2. The ~~$20~~Company ~~million~~expects ~~was~~the ~~made~~liabilities to ~~the~~be ~~DTE~~reduced ~~Electric~~to ~~asset~~zero ~~retirement~~at ~~obligation~~the ~~for~~conclusion ~~asbestos~~of ~~removal~~the ~~with~~decommissioning ~~approximately~~activities. If $6amounts ~~million~~remain ofin the ~~decrease~~trust ~~associated~~funds ~~with~~for Fermi 12 ~~recorded~~following inthe ~~Asset~~completion ~~(gains)~~of ~~losses~~the ~~and~~decommissioning ~~reserves~~activities, ~~net~~those amounts will be disbursed based on ~~the~~rulings ~~Consolidated~~by ~~Statements~~the ofMPSC ~~Operations~~and FERC.

InA ~~October~~portion ~~2011,~~of the ~~MPSC~~funds ~~approved~~recovered ~~DTE~~through ~~Electric's request for a reduction to~~ the ~~nuclear~~Fermi 2 decommissioning surcharge ~~under~~and ~~the~~deposited ~~assumption~~in ~~that~~external ittrust ~~would~~accounts ~~request~~is andesignated ~~extension of the Fermi 2 license~~ for ~~an additional 20 years beyond~~ the ~~term~~removal of ~~the~~non-radioactive ~~existing~~assets ~~license~~and ~~which~~returning ~~expires~~the insite ~~2025. DTE Electric expects~~ to ~~request the license extension in 2014~~greenfield. This ~~proposed~~removal ~~extension~~and ofgreenfielding ~~the~~is ~~license,~~not ~~including~~considered ~~the~~a ~~associated~~legal ~~impact on spent nuclear fuel~~liability. Therefore, ~~resulted~~it inis anot ~~revision~~included in ~~estimated cash flows for~~ the ~~Fermi 2~~ asset retirement obligation, ofbut ~~approximately $22 million in 2011. It~~ is ~~estimated~~reflected ~~that~~as the ~~cost~~Nuclear of decommissioning ~~Fermi 2 is $1~~liability.6 The ~~billion~~decommissioning inof ~~2013~~Fermi ~~dollars~~1 ~~and~~is ~~$10~~funded ~~billion~~by inDTE ~~2045 dollars, using a 6% inflation rate~~Electric. ~~Approximately~~Contributions ~~$1.6~~to ~~billion of~~ the ~~asset~~Fermi ~~retirement~~1 ~~obligations~~trust ~~represent~~are ~~nuclear~~discretionary. See ~~decommissioning~~Note ~~liabilities~~9 ~~that~~to ~~are~~the ~~funded~~Consolidated ~~through~~Financial aStatements, ~~surcharge~~"Fair toValue", ~~electric~~for ~~customers~~additional ~~over~~discussion ~~the life~~ of ~~the~~Nuclear ~~Fermi~~decommissioning ~~2 nuclear plant~~trust fund assets.

3731

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

~~The~~NOTE ~~NRC~~7 ~~has~~— ~~jurisdiction~~REGULATORY over the decommissioning of nuclear power plants and requires minimum decommissioning funding based upon a formula. The MPSC and FERC regulate the recovery of costs of decommissioning nuclear power plants and both require the use of external trust funds to finance the decommissioning of Fermi 2. Rates approved by the MPSC provide for the recovery of decommissioning costs of Fermi 2 and the disposal of low-level radioactive waste. DTE Electric is continuing to fund FERC jurisdictional amounts for decommissioning even though explicit provisions are not included in FERC rates. The Company believes the MPSC and FERC collections will be adequate to fund the estimated cost of decommissioning. The decommissioning assets, anticipated earnings thereon and future revenues from decommissioning collections will be used to decommission Fermi 2. The Company expects the liabilities to be reduced to zero at the conclusion of the decommissioning activities. If amounts remain in the trust funds for Fermi 2 following the completion of the decommissioning activities, those amounts will be disbursed based on rulings by the MPSC and FERC.MATTERS

A portion of the funds recovered through the Fermi 2 decommissioning surcharge and deposited in external trust accounts is designated for the removal of non-radioactive assets and returning the site to greenfield. This removal and greenfielding is not considered a legal liability. Therefore, it is not included in the asset retirement obligation, but is reflected as the Nuclear decommissioning liability. The decommissioning of Fermi 1 is funded by DTE Electric. Contributions to the Fermi 1 trust are discretionary. See Note 3 for additional discussion of Nuclear decommissioning trust fund assets.

NOTE 8 — REGULATORY MATTERS

Regulation

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

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

Regulatory Assets and Liabilities

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

The 38following are balances and a brief description of the regulatory assets and liabilities at December 31:



	2014			2013
	(In millions)
Assets
Recoverable pension and other postretirement costs:
Pension	$	1,743		$	1,257
Other postretirement costs	191			—
Asset retirement obligation	448			394
Recoverable Michigan income taxes	220			237
Other recoverable income taxes	66			71
Cost to achieve Performance Excellence Process	46			64
Unamortized loss on reacquired debt	44			38
Accrued PSCR revenue	34			—
Recoverable income taxes related to securitized regulatory assets	19			126
Removal costs asset	15			—
Transitional Reconciliation Mechanism	14			—
Other	119			101
	2,959			2,288
Less amount included in current assets	(46		)	(13		)
	$	2,913		$	2,275
Securitized regulatory assets	$	34		$	231

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

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



	2014			2013
	(In millions)
Liabilities
Renewable energy	$	227		$	277
Over recovery of Securitization	71			72
Refundable revenue decoupling / deferred gain	63			127
Fermi 2 refueling outage	16			26
Energy optimization	14			25
Accrued PSCR refund	—			53
Refundable other postretirement costs	—			48
Removal costs liability	—			33
Other	4			3
	395			664
Less amount included in current liabilities	(150		)	(278		)
	$	245		$	386

	2013			2012
	(In millions)
Assets
Recoverable pension and other postretirement costs:
Pension	$	1,257		$	1,815
Other postretirement costs	—			316
Asset retirement obligation	394			424
Recoverable Michigan income taxes	237			253
Recoverable income taxes related to securitized regulatory assets	126			226
Other recoverable income taxes	71			76
Cost to achieve Performance Excellence Process	64			82
Unamortized loss on reacquired debt	38			37
Enterprise Business Systems costs	13			16
Choice incentive mechanism	3			66
Accrued PSCR revenue	—			87
Recoverable restoration expense	—			49
Other	85			63
	2,288			3,510
Less amount included in current assets	(13		)	(162		)
	$	2,275		$	3,348
Securitized regulatory assets	$	231		$	413

	2013			2012
	(In millions)
Liabilities
Renewable energy	$	277		$	230
Refundable revenue decoupling / deferred gain	127			127
Over recovery of Securitization	72			54
Accrued PSCR refund	53			—
Refundable other postretirement costs	48			—
Asset removal costs	33			81
Fermi 2 refueling outage	26			12
Energy optimization	25			26
Refundable uncollectible expense	—			10
Other	3			9
	664			549
Less amount included in current liabilities	(278		)	(66		)
	$	386		$	483

As noted below, regulatory assets for which costs have been incurred have been included (or are expected to be included, for costs incurred subsequent to the most recently approved rate case) in DTE Electric's rate base, thereby providing a return on invested costs (except as noted). Certain other regulatory assets are not included in rate base but accrue recoverable carrying charges until surcharges to collect the assets are billed. Certain regulatory assets do not result from cash expenditures and therefore do not represent investments included in rate base or have offsetting liabilities that reduce rate base.

ASSETS

•

Recoverable pension and other postretirement costs — Accounting rules for pension and other postretirement benefit costs require, among other things, the recognition in other comprehensive income of the actuarial gains or losses and the prior service costs that arise during the period but that are not immediately recognized as components of net periodic benefit costs. The Company records the impact of actuarial gains and losses and prior service costs as a regulatory asset since the traditional rate setting process allows for the recovery of pension and other postretirement costs. The asset will reverse as the deferred items are amortized and recognized as components of net periodic benefit costs. (a)

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)


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

• Recoverable Michigan income taxes — In July 2007, the ~~Michigan Business Tax (~~MBT) was enacted by the State of Michigan. A State deferred tax liability was established, and an offsetting regulatory asset was recorded as the impact of the deferred tax liability will be reflected in rates as the related taxable temporary difference reverses and flows through current income tax expense. In May 2011, the MBT was repealed and the MCIT was enacted. The regulatory asset was remeasured to reflect the impact of the MCIT tax rate. (a)

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


•	Other recoverable income taxes — Income taxes receivable from DTE Electric customers representing the difference in property-related deferred income taxes and amounts previously reflected in DTE Electric's rates. This asset will reverse over the remaining life of the related plant. (a)


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


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

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

• Choice incentive mechanism (CIM) — Receivable for non-fuel revenues lost as a result of fluctuations in electric Customer Choice sales. The CIM was terminated in the October 20, 2011 MPSC order issued to DTE Electric.


•	Accrued PSCR revenue — Receivable for the temporary under-recovery of and carrying costs on fuel and purchased power costs incurred by DTE Electric which are recoverable through the PSCR mechanism.

• Recoverable ~~restoration~~income ~~expense~~taxes related to securitized regulatory assets — Receivable for the ~~MPSC~~recovery ~~approved~~of ~~restoration~~income ~~expense~~taxes ~~tracking~~to ~~mechanism~~be ~~that~~paid ~~tracked~~on the ~~difference~~non-bypassable ~~between~~securitization ~~actual~~bond ~~restoration~~surcharge. ~~expense~~A ~~and~~non-bypassable ~~the~~securitization ~~amount~~tax ~~provided~~surcharge, ~~for~~which ended in ~~base~~December ~~rates~~2014, ~~recognized pursuant to MPSC authorization. The restoration expense tracking mechanism~~ was ~~terminated~~ in ~~the~~place ~~October~~to ~~20,~~recover ~~2011~~the ~~MPSC~~income ~~order~~tax ~~issued~~over toa ~~DTE~~fourteen-year ~~Electric~~period. (a)

• Securitized regulatory assets — The net book balance of the Fermi 2 nuclear plant was written off in 1998 and an equivalent regulatory asset was established. In 2001, the Fermi 2 regulatory asset and certain other regulatory assets were securitized pursuant to PA 142 and an MPSC order. A non-bypassable securitization bond surcharge recovers the securitized regulatory asset over a fourteen-year period ending in 2015.33

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)


•	Removal costs asset — Receivable for the recovery of asset removal expenditures in excess of amounts collected from customers.


•	Transitional Reconciliation Mechanism (TRM) — The MPSC approved the recovery of the deferred net incremental revenue requirement associated with the transition of PLD customers to DTE Electric's distribution system, effective July 1, 2014. Annual reconciliations will be filed and surcharges will be implemented to recover approved amounts. (a)

•

Securitized regulatory assets — The net book balance of the Fermi 2 nuclear plant was written off in 1998 and an equivalent regulatory asset was established. In 2001, the Fermi 2 regulatory asset and certain other regulatory assets were securitized pursuant to PA 142 and an MPSC order. A non-bypassable securitization bond surcharge, which ended in December 2014, was in place to recover the securitized regulatory asset over a fourteen-year period.

_________________________________


(a)	Regulatory assets not earning a return or accruing carrying charges.

LIABILITIES


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

• Refundable revenue decoupling / deferred gain — Amounts were originally accrued as refundable to DTE Electric customers for the change in revenue resulting from the difference between actual average sales per customer compared to the base level of average sales per customer established by the MPSC. In 2012, the Michigan Court of Appeals issued a decision reversing the MPSC's decision to authorize a RDM for DTE Electric. The revenue decoupling liability was reversed and, after receiving an order from the MPSC to defer the resulting gain for future amortization, DTE Electric created a regulatory liability representing its obligation to refund the gain. The deferred gain will be amortized into earnings in 2014.

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)


•	Over recovery of Securitization — Over recovery of securitization bond expenses.

• ~~Accrued~~Refundable ~~PSCR~~revenue ~~refund~~decoupling / deferred gain — ~~Liability~~Amounts were originally accrued as refundable to DTE Electric customers for the ~~temporary~~change ~~over-recovery~~in revenue resulting from the difference between actual average sales per customer compared to the base level of ~~and~~average sales per customer established by the MPSC. In 2012, the Michigan Court of Appeals issued a ~~return~~decision onreversing ~~power~~the ~~supply~~MPSC's ~~costs~~decision to authorize a RDM for DTE Electric. The revenue decoupling liability was reversed and, ~~transmission~~after ~~costs~~receiving ~~incurred~~an byorder from the MPSC to defer the resulting gain for future amortization, DTE Electric ~~which~~created ~~are~~a ~~recoverable~~regulatory ~~through~~liability representing its obligation to refund the ~~PSCR~~gain. ~~mechanism~~The deferred gain is being amortized into earnings in 2014 and 2015.

• Refundable other postretirement costs — Accounting rules for other postretirement benefit costs require, among other things, the recognition in other comprehensive income of the actuarial gains or losses and the prior service costs or credits that arise during the period but that are not immediately recognized as components of net periodic benefit costs. DTE Electric records the favorable impact of actuarial gains or losses and prior service credits as a regulatory liability since the impact will reduce expense in a future rate setting process as the deferred items are recognized as a component of net periodic benefit costs.

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


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


•	Energy optimization (EO) — Amounts collected in rates in excess of energy optimization expenditures.

• ~~Refundable~~Accrued ~~uncollectible~~PSCR ~~expense~~refund ~~(UETM)~~ — Liability for the ~~MPSC~~temporary ~~approved~~over-recovery ~~uncollectible~~of ~~expense~~and ~~tracking~~a ~~mechanism~~return ~~that~~on ~~tracks~~power ~~the~~supply ~~difference~~costs ~~in the fluctuation in uncollectible accounts~~ and ~~amounts~~transmission ~~recognized~~costs ~~pursuant~~incurred toby ~~the~~DTE ~~MPSC~~Electric ~~authorization.~~which ~~The~~are ~~UETM~~recoverable ~~was~~through ~~terminated in~~ the ~~October~~PSCR ~~20, 2011 MPSC order issued to DTE Electric~~mechanism.

~~2009~~• Refundable other postretirement costs — Accounting rules for other postretirement benefit costs require, among other things, the recognition in other comprehensive income of the actuarial gains or losses and the prior service costs or credits that arise during the period but that are not immediately recognized as components of net periodic benefit costs. DTE Electric ~~Rate~~records ~~Case~~the ~~Filing~~favorable -impact ~~Court~~of actuarial gains or losses and prior service credits as a regulatory liability since the impact will reduce expense in a future rate setting process as the deferred items are recognized as a component of ~~Appeals~~net ~~Decision~~periodic benefit costs.

In• ~~April~~Removal ~~2012,~~costs ~~the~~liability ~~Michigan~~— ~~Court of Appeals (COA) issued a decision relating to an appeal of the January 2010 MPSC rate order in DTE Electric's January 2009 rate case filing.~~ The ~~COA~~amount ~~found~~collected ~~that~~from ~~the~~customers ~~record of evidence in the January 2010 rate order was insufficient to support the MPSC's authorization to recover costs~~ for the ~~advanced~~funding ~~metering~~of ~~infrastructure~~future ~~(AMI)~~asset ~~program~~removal ~~and remanded this matter to the MPSC~~activities. On October 17, 2013, the MPSC issued an order affirming the approximately $8 million rate increase authorized in the MPSC's January 2010 rate order for the AMI program and further concluded that the evidence presented after remand supports the authorized cost recovery.

~~2010~~2014 Electric Rate Case Filing ~~- Court of Appeals Decision~~

~~In July 2013, the COA issued a decision relating to an appeal of the October 2011 MPSC order in~~ DTE Electric's ~~October~~filed ~~2010~~a rate case ~~filing. The~~with ~~COA found that~~ the ~~record~~MPSC ofon ~~evidence~~December in19, ~~the~~2014 ~~2010~~requesting ~~rate~~an ~~case~~increase ~~order~~in ~~was~~base ~~insufficient~~rates toof ~~support~~$370 ~~the~~million ~~MPSC's~~based ~~authorization~~on toa ~~recover~~projected ~~costs~~twelve-month ~~for~~period ~~the~~ending ~~AMI~~June ~~program~~30, ~~and remanded this matter to the MPSC~~2016. The ~~MPSC~~requested ~~had~~in ~~approved~~base anrates ~~approximately~~is ~~$11~~due ~~million~~primarily ~~rate increase related~~ to ~~the~~an ~~AMI~~increase ~~program~~ in ~~the~~net ~~October~~plant ~~2011~~resulting ~~order. DTE~~from ~~Electric~~infrastructure isinvestments, ~~currently~~plant ~~operating~~acquisitions, ~~its~~environmental ~~AMI~~compliance ~~program~~and ~~pursuant~~reliability toimprovement ~~the MPSC's approval set forth in the October 2011 order~~projects. OnThe ~~August~~rate ~~29,~~filing ~~2013,~~also ~~the~~included ~~MPSC~~projected ~~reopened~~changes ~~the~~in ~~2010~~sales, ~~electric~~working ~~rate~~capital, ~~case~~operation ~~for~~and ~~the~~maintenance ~~limited~~expenses, ~~purpose~~return ofon ~~addressing~~equity ~~the~~and ~~COA's~~capital ~~opinion on AMI~~structure. ~~The~~New ~~Company~~rates iscould ~~unable~~be toself-implemented ~~predict~~in ~~the~~July ~~outcome~~2015, ofwith ~~this~~a ~~matter~~final ororder ~~the~~expected ~~timing~~in ofDecember ~~its resolution~~2015.

~~Transition~~ ~~of the City of Detroit's Public Lighting Department's (PLD) Customers to DTE Electric's Distribution System~~34

Accounting Authority

On June 28, 2013, DTE Electric filed an application for accounting authority to defer certain costs associated with the transition of the City of Detroit's PLD customers to the DTE Electric distribution system over a five to seven year system conversion period. The Company requested authority to defer as a regulatory asset, all net incremental revenue requirement associated with the transition. The net incremental revenue requirement includes costs to install meters and attach customers; system and customer facility upgrades and repairs; and the difference between DTE Electric's tariff rates and any transitional rates approved in the future. On July 11, 2013, the MPSC approved DTE Electric's request to defer, for accounting purposes, the net incremental revenue requirement.

The approval excludes the request to defer the difference between DTE Electric's tariff rates and any transitional rates that might be approved by the MPSC in the future. The MPSC will address proposed rates and recovery matters in a future contested proceeding. As the accounting order did not provide a regulatory recovery mechanism, a regulatory asset will not be recognized until a regulatory recovery mechanism is put into place and the recovery of the regulatory asset becomes probable.

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

~~Transitional~~2010 ~~Reconciliation~~Electric ~~Mechanism~~Rate ~~(TRM)~~Case Filing - Court of Appeals Decision

OnIn July ~~19,~~ 2013, ~~DTE~~the ~~Electric~~MCOA ~~filed~~issued ~~its~~a ~~TRM~~decision ~~application~~relating ~~proposing~~to aan ~~transitional~~appeal ~~tariff~~of ~~option~~the ~~for~~October ~~certain~~2011 ~~former~~MPSC ~~PLD~~order ~~customers~~in ~~and~~DTE aElectric's ~~modified~~October ~~line~~2010 ~~extension~~rate ~~provision~~case filing. The ~~application~~MCOA ~~also~~found ~~proposed~~that athe ~~recovery~~record ~~mechanism~~of ~~for~~evidence in the ~~deferred~~2010 ~~net~~rate ~~incremental~~case ~~revenue~~order ~~requirement~~was ~~described~~insufficient ~~above. The~~to ~~application~~support ~~further~~the ~~discussed~~MPSC's ~~that~~authorization ~~DTE~~to ~~Electric~~recover ~~will~~costs befor ~~requesting~~the ~~recovery,~~AMI inprogram ~~subsequent~~and ~~PSCR~~remanded ~~cases,~~this ofmatter ~~PLD~~to ~~transmission~~the ~~delivery~~MPSC. The ~~service~~MPSC ~~costs~~had ~~incurred~~approved ~~while~~an approximately $11 million rate increase related to the AMI program in the October 2011 order. DTE Electric is ~~temporarily~~currently ~~relying~~operating ~~upon~~its ~~PLD~~AMI toprogram ~~operate~~pursuant ~~and~~to ~~maintain~~the ~~PLD~~MPSC's ~~system~~approval ~~during~~set forth in the ~~system~~October ~~conversion~~2011 ~~period~~order. IfIn August 2013, the MPSC ~~determines~~reopened ~~that~~ the ~~transmission~~2010 ~~costs~~electric ~~are~~rate ~~not~~case ~~recoverable~~for inthe limited purpose of addressing the ~~PSCR~~MCOA's opinion on AMI. On November 6, 2014, the ~~Company~~MPSC ~~requested~~issued ~~recovery~~an asorder ~~part~~affirming the recovery of costs associated with the ~~TRM~~AMI program.

~~Energy~~Customer360 ~~Optimization~~Accounting ~~(EO) Plans~~Authority

~~The~~In EOJuly ~~plan~~2014, isDTE ~~designed~~Electric filed an application for accounting authority to ~~help~~defer ~~customers~~certain ~~reduce~~costs ~~their~~associated ~~electric~~with ~~usage~~implementing ~~by:~~Customer360, 1)which ~~building~~is an integrated software application that enables improved interface among customer ~~awareness~~service, ofbilling, ~~energy~~meter ~~efficiency~~reading, ~~options~~credit and 2)collections, ~~offering~~device amanagement, ~~diverse~~account ~~set~~management, and retail access. The estimated implementation cost of ~~programs~~Customer360 is approximately $215 million and ~~participation~~DTE ~~options~~Electric ~~that~~proposed ~~result~~an inamortization ~~energy~~period ~~savings~~of ~~for~~15 ~~each~~years. On ~~customer~~September ~~class~~26, 2014, the MPSC approved the accounting request.

InRefundable ~~May~~Revenue ~~2013,~~Decoupling ~~DTE~~/ ~~Electric~~Deferred ~~filed~~Gain an application for approval of its reconciliation of its 2012 EO plan expenses. DTE Electric’s EO reconciliation included a cumulative $26 million net over-recovery. DTE Electric proposed that the calculated over-recovery for 2012 be carried forward into 2013 and used as the beginning balance for the 2013 reconciliation. On December 6, 2013, the MPSC approved a settlement agreement of the DTE Electric 2012 EO reconciliation that carried forward to 2013 the 2012 over-recovery. In addition, the MPSC authorized performance incentive surcharges, over a 12-month period effective January 1, 2014, of approximately $10 million for DTE Electric.. Amortization

In ~~July~~September ~~2013~~2012, the MPSC approved DTE Electric's ~~filed~~accounting an application to defer for future amortization the gain resulting from the reversal of the Company's $127 million regulatory liability associated with the ~~MPSC~~operation of the RDM. The approved application provided for the ~~biennial~~amortization ~~review~~of the regulatory liability to income, at a monthly rate of ~~its~~approximately EO$10.6 ~~plan~~million, beginning January 2014. On ~~December~~April 191, ~~2013~~2014, the MPSC approved ~~settlement~~DTE ~~agreements~~Electric's ~~for~~accounting application to suspend the EOamortization ~~plan~~of the RDM regulatory liability as of June 30, 2014 and to complete the amortization over the period January 2015 to June 2015. If DTE Electric's base rates are increased prior to July 1, 2015, the Company will cease amortization and refund to customers the remaining unamortized balance of the regulatory liability.

~~DTE~~Transition ~~Electric~~of ~~Restoration~~PLD ~~Expense~~Customers ~~Tracker~~to ~~Mechanism~~DTE ~~(RETM)~~Electric's ~~and~~Distribution ~~Line Clearance Tracker (LCT) Reconciliation~~System

InOn ~~January~~July ~~2012~~19, 2013, DTE Electric filed anits TRM application ~~with~~proposing ~~the~~a ~~MPSC~~transitional tariff option for ~~approval~~certain offormer ~~the~~PLD ~~reconciliation~~customers ofand ~~its~~a ~~2011~~modified ~~RETM~~line ~~and~~extension ~~LCT~~provision. The ~~Company's~~application ~~2011~~also ~~restoration~~proposed ~~expenses~~a ~~were~~recovery ~~higher~~mechanism ~~than~~for the ~~amount~~deferred ~~provided~~net inincremental ~~rates~~revenue requirement associated with the transition. ~~Accordingly,~~The net incremental revenue requirement includes costs to install meters and attach customers; system and customer facility upgrades and repairs; and the difference between DTE Electric's ~~requested~~tariff ~~net~~rates ~~recovery~~and ofany ~~approximately~~transitional ~~$44~~rates ~~million~~approved in the future. On ~~February~~May 2813, ~~2013~~2014, the MPSC approved athe ~~settlement~~TRM ~~agreement~~as requested and ~~authorized~~also aordered ~~$44~~DTE ~~million~~Electric ~~net~~to ~~surcharge~~include toin ~~recover~~the TRM the PLD transmission delivery service costs ~~over~~incurred awhile ~~three-month~~DTE Electric is temporarily relying upon PLD to operate and maintain PLD's system during the system conversion period. The ~~beginning~~meter ~~April~~installation phase of the transition was completed in June 2014. On July 1, ~~2013~~2014, former PLD customers became customers of DTE Electric.

~~DTE~~PSCR ~~Electric Uncollectible Expense True-Up Mechanism (UETM)~~Proceedings

InThe ~~February~~PSCR ~~2012,~~process ~~DTE~~is ~~Electric~~designed ~~filed~~to anallow ~~application~~DTE ~~with~~Electric ~~the~~to ~~MPSC~~recover ~~for~~all ~~approval~~ of its ~~UETM~~power ~~for~~supply ~~2011~~costs ~~requesting~~if ~~authority~~incurred tounder ~~refund~~reasonable ~~approximately~~and $9prudent ~~million~~policies ~~consisting~~and ofpractices. DTE Electric's power supply costs include fuel and related totransportation ~~2011~~costs, ~~uncollectible~~purchased ~~expense. On~~and ~~February~~net ~~28,~~interchange ~~2013~~power costs, ~~the~~nitrogen ~~MPSC~~oxide ~~approved~~and asulfur ~~settlement~~dioxide ~~agreement~~emission ~~and~~allowances ~~authorized~~costs, aurea $9costs, ~~million~~transmission ~~credit~~costs toand ~~refund~~MISO ~~the~~costs. The ~~over-recovery~~MPSC ~~over~~reviews athese ~~one~~costs, ~~month~~policies ~~period~~and ~~beginning~~practices ~~April~~for 1,prudence ~~2013~~in annual plan and reconciliation filings.

~~Low~~2012 ~~Income~~PSCR ~~Energy~~Year ~~Assistance~~— ~~Fund~~In ~~(LIEAF)~~March 2013, DTE Electric filed the 2012 PSCR reconciliation calculating a net under-recovery of approximately $87 million that includes an under-recovery of approximately $148 million for the 2011 PSCR year. The reconciliation includes purchased power costs related to the manual shutdown of our Fermi 2 nuclear power plant in June 2012 caused by the failure of one of the plant's two non-safety related feed-water pumps. The plant was restarted on July 30, 2012, which restored production to approximately 68% of full capacity. In September 2013, the repair to the plant was completed and production was returned to full capacity. DTE Electric was able to purchase sufficient power from MISO to continue to provide uninterrupted service to our customers. Certain intervenors in the reconciliation case have challenged the recovery of up to $32 million of the Fermi 2 related purchased power costs. Resolution of this matter is expected in 2015.

On July 1, 2013, Michigan Public Act 95 was signed into law and created the LIEAF. The legislation allows the use of a LIEAF funding factor to be determined by the MPSC and assessed on all customer classes of Michigan electric utilities to fund the LIEAF. On July 29, 2013, the MPSC adopted a funding factor of $0.99 per meter per month for all Michigan electric utilities that are participating in the program, including DTE Electric, effective with the September 2013 billing month. The surcharge billed by DTE Electric is remitted to the State of Michigan for subsequent distribution through a grant process to social service agencies and utilities to assist low income customers.35

Renewable Energy Plan (REP)

In June 2013, DTE Electric filed an application for the biennial review and approval of its amended REP with the MPSC requesting authority to reduce its annual surcharge revenue recovery from approximately $100 million to $15 million. The proposed level is appropriate to continue to properly implement DTE Electric’s 20-year REP, designed to deliver cleaner, renewable electric generation to its customers, to further diversify DTE Electric’s and the State of Michigan’s sources of electric supply, and to address the state and national goals of increasing energy independence. On December 19, 2013, the MPSC approved DTE Electric’s amended REP.

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

~~Power~~NOTE ~~Supply~~8 ~~Cost~~— ~~Recovery~~INCOME ~~Proceedings~~TAXES

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

2010 PSCR Year - On April 25, 2013, the MPSC approved the 2010 PSCR net under-recovery of $52.6 million and the recovery of this amount as part of the 2011 PSCR reconciliation. The order also approved DTE Electric's Pension Equalization Mechanism reconciliation and authorized a one month surcharge in June 2013 and approved the recovery of the over-refund of the self-implemented rate increase related to the 2009 electric rate case filing as part of the 2011 PSCR reconciliation.

2012 PSCR Year - In March 2013, DTE Electric filed the 2012 PSCR reconciliation calculating a net under-recovery of approximately $87 million that includes an under-recovery of approximately $148 million for the 2011 PSCR year. The reconciliation includes purchased power costs related to the manual shutdown of our Fermi 2 nuclear power plant in June 2012 caused by the failure of one of the plant's two non-safety related feed-water pumps. The plant was restarted on July 30, 2012, which restored production to nominal 68% of full capacity. In September 2013, the repair to the plant was completed and production was returned to full capacity. DTE Electric was able to purchase sufficient power from MISO to continue to provide uninterrupted service to our customers. Certain intervenors in the reconciliation case have challenged the recovery of up to $32 million of the Fermi-related purchased power costs. Resolution of this matter is expected in 2014.

NOTE 9 — INCOME TAXES

Income Tax Summary

We are part of the consolidated federal income tax return of DTE Energy. The federal income tax expense for DTE Electric is determined on an individual company basis with no allocation of tax expenses or benefits from other affiliates of DTE Energy. We had an income tax receivable from DTE Energy of $2329 million ~~at December 31, 2013~~ and ~~we had an income tax payable due to DTE Energy of~~ $1323 million at December 31, ~~2012~~2014 and 2013, respectively.

Total income tax expense varied from the statutory federal income tax rate for the following reasons:

	2013			2012			2011
	Year Ended December 31,
	2014			2013			2012
	(In millions)
Income before income taxes	$	~~741~~830		$	~~768~~741		$	~~704~~768
Income tax expense at 35% statutory rate	$	~~260~~291		$	~~269~~260		$	~~246~~269
Production tax credits	(1522		)	(515		)	—(5		)
Investment tax credits	(5		)	(65		)	(6		)
Depreciation	3			3			3
AFUDC - Equity	(57		)	(45		)	(14		)
Employee Stock Ownership Plan dividends	(23		)	(32		)	(3		)
Domestic production activities deduction	(182		)	(1618		)	(616		)
State and other income taxes, net of federal benefit	4143			4041			3940
Other, net	(5—		)	4(5		)	(54		)
Income tax expense	$	~~254~~298		$	~~282~~254		$	~~267~~282
Effective income tax rate	3435.39		%	3634.73		%	3836.07		%

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

Components of income tax expense were as follows:

	2013			2012			2011
	Year Ended December 31,
	2014			2013			2012
	(In millions)
Current income tax expense (benefit)
Federal	$	~~123~~(19	)	$	~~267~~123		$	15267
State and other income tax	2320			6723			2167
Total current income taxes	~~146~~1			~~334~~146			36334
Deferred income tax expense (benefit)
Federal	68251			~~(47~~68		)	~~193~~(47		)
State and other income tax	4046			(540		)	38(5		)
Total deferred income taxes	~~108~~297			~~(52~~108		)	~~231~~(52		)
Total	$	~~254~~298		$	~~282~~254		$	~~267~~282

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

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

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

	2013			2012
	2014			2013
	(In millions)
Property, plant and equipment	$	(23,~~807~~152	)	$	(2,~~578~~807	)
Securitized regulatory assets	(~~130~~3		)	(~~261~~130		)
Pension and benefits	27(43		)	7327
Other comprehensive income	—			15
Other	12			12
Other, net	12			(24		)
	$	(3,186	)	$	(2,898	)
	$	(2,898	)	$	(2,775	)
Current deferred income tax assets (liabilities)	$	2		$	(91	)
Current deferred income tax liabilities	$	(91	)	$	(14	)
Long-term deferred income tax liabilities	(3,188		)	(2,807		)
Long-term deferred income tax liabilities	(2,807		)	(2,761		)
	$	(3,186	)	$	(2,898	)
	$	(2,898	)	$	(2,775	)
Deferred income tax assets	$	357		$	420
Deferred income tax assets	$	1,158		$	557
Deferred income tax liabilities	(3,543		)	(3,318		)
Deferred income tax liabilities	(4,056		)	(3,332		)
	$	(3,186	)	$	(2,898	)
	$	(2,898	)	$	(2,775	)

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

Uncertain Tax Positions

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

	2013		2012			2011
	2014		2013			2012
	(In millions)
Balance at January 1	$	4	$	594		$	1859
Additions for tax positions of prior years	—		—			45
Reductions for tax positions of prior years	—		—			(3		)
Reductions for tax positions of prior years	—		(3		)	(5		)
Settlements	—		—			(52		)
Additions for tax positions of current year	—		—			1
Balance at December 31	$	4	$	4		$	4
Settlements	—		(52		)	—
Balance at December 31	$	4	$	4		$	59

The 44Company had $2 million of unrecognized tax benefits at December 31, 2014 and 2013 that, if recognized, would favorably impact our effective tax rate. The Company does not anticipate any material decrease in unrecognized tax benefits in the next twelve months.

The Company recognizes interest and penalties pertaining to income taxes in Interest expense and Other expenses, respectively, on its Consolidated Statements of Operations. Accrued interest pertaining to income taxes totaled $1 million at December 31, 2014 and 2013, respectively. The Company had no accrued penalties pertaining to income taxes. The Company recognized a nominal amount of interest expense (income) related to income taxes in 2014 and 2013 and $(3) million in 2012.

In 2014, DTE Energy and its subsidiaries settled a federal tax audit for the 2012 tax year. DTE Energy's federal income tax returns for years 2013 and subsequent years remain subject to examination by the IRS. DTE Energy's MBT and MCIT returns for the year 2008 and subsequent years remain subject to examination by the State of Michigan. DTE Energy also files tax returns in numerous state and local jurisdictions with varying statutes of limitation.

NOTE 9 — FAIR VALUE

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in a principal or most advantageous market. Fair value is a market-based measurement that is determined based on inputs, which refer broadly to assumptions that market participants use in pricing assets or liabilities. These inputs can be readily observable, market corroborated or generally unobservable inputs. The Company makes certain assumptions it believes that market participants would use in pricing assets or liabilities, including assumptions about risk, and the risks inherent in the inputs to valuation techniques. Credit risk of the Company and its counterparties is incorporated in the valuation of assets and liabilities through the use of credit reserves, the impact of which was immaterial at December 31, 2014 and 2013. The Company believes it uses valuation techniques that maximize the use of observable market-based inputs and minimize the use of unobservable inputs.

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

A fair value hierarchy has been established, that prioritizes the inputs to valuation techniques used to measure fair value in three broad levels. The ~~Company~~fair ~~had~~value $2hierarchy ~~million~~gives ~~and~~the $3highest ~~million~~priority ofto ~~unrecognized~~quoted ~~tax~~prices ~~benefits~~(unadjusted) in atactive ~~December~~markets ~~31,~~for ~~2013~~identical assets or liabilities (Level 1) and ~~2012,~~the ~~respectively,~~lowest ~~that,~~priority ifto ~~recognized~~unobservable inputs (Level 3). In some cases, ~~would~~the ~~favorably~~inputs ~~impact~~used ~~our~~to ~~effective~~measure ~~tax~~fair ~~rate~~value might fall in different levels of the fair value hierarchy. ~~The~~All ~~Company~~assets ~~does~~and ~~not~~liabilities ~~anticipate~~are ~~any~~required ~~material~~to ~~decrease~~be classified in ~~unrecognized~~their ~~tax~~entirety ~~benefits~~based on the lowest level of input that is significant to the fair value measurement in its entirety. Assessing the ~~next~~significance ~~twelve~~of ~~months~~a particular input may require judgment considering factors specific to the asset or liability, and may affect the valuation of the asset or liability and its placement within the fair value hierarchy. The Company classifies fair value balances based on the fair value hierarchy defined as follows:

~~The~~•Level ~~Company~~1 ~~recognizes~~— ~~interest~~Consists ~~and~~of ~~penalties~~unadjusted ~~pertaining~~quoted toprices ~~income taxes~~ in ~~Interest~~active ~~expense~~markets ~~and~~for ~~Other~~identical ~~expenses,~~assets ~~respectively,~~or onliabilities ~~its~~that ~~Consolidated~~the ~~Statements of Operations. Accrued interest pertaining to income taxes totaled $1 million and $1 million at December 31, 2013 and 2012, respectively. The~~ Company ~~had~~has nothe ~~accrued~~ability ~~penalties pertaining~~ to ~~income~~access ~~taxes. The~~as ~~Company recognized a nominal amount~~ of ~~interest~~the ~~expense~~reporting ~~(income) related to income taxes in 2013 and $(3) million and $1 million in 2012 and 2011, respectively~~date.

In•Level ~~2013,~~2 ~~DTE~~— ~~Energy~~Consists ~~and its subsidiaries settled a federal tax audit for the 2011 tax year, which resulted in the recognition~~ of ainputs ~~nominal~~other ~~amount~~than ofquoted ~~unrecognized~~prices ~~tax~~included ~~benefits~~within byLevel ~~DTE~~1 ~~Electric. DTE~~that ~~Energy's~~are ~~federal~~directly ~~income~~observable ~~tax returns~~ for ~~years 2012 and subsequent years remain subject to examination by~~ the ~~IRS. The~~asset ~~DTE~~or ~~Energy's~~liability ~~Michigan~~or ~~Business~~indirectly ~~Tax~~observable ~~and~~through ~~Michigan~~corroboration ~~Corporate Income Tax returns for the year 2008 and subsequent years remain subject to examination by the State of Michigan. DTE Energy also files tax returns in numerous state and local jurisdictions~~ with ~~varying~~observable ~~statutes~~market ~~of limitation~~data.

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

InThe ~~May~~following ~~2011~~table ~~the~~presents ~~Michigan~~assets ~~Business~~measured ~~Tax (MBT) was repealed~~ and ~~the~~recorded ~~MCIT~~at ~~was~~fair ~~enacted~~value ~~effective January 1, 2012. The MCIT subjects corporations with business activity in Michigan to a 6% tax rate~~ on an apportioned income tax base and eliminates the modified gross receipts tax and nearly all credits available under the old MBT. The MCIT also eliminated the future deductions allowed under MBT that enabled companies to establish a ~~one-time~~recurring ~~deferred~~basis ~~tax~~as ~~asset upon enactment~~ of ~~the MBT to offset deferred tax liabilities that resulted from enactment of the MBT. As a result of the enactment of the MCIT~~December 31, ~~the~~2014 ~~net~~and ~~state deferred tax liability was remeasured to reflect the impact of the MCIT tax rate on cumulative temporary differences expected to reverse after the effective date.~~ 2013:

No recognition of these non-cash transactions have been reflected in the Consolidated Statements of Cash Flows.



	December 31, 2014								December 31, 2013
	Level 1		Level 2		Level 3		Net Balance		Level 1		Level 2		Level 3		Net Balance
	(In millions)
Assets:
Cash equivalents (a)	$	5	$	99	$	—	$	104	$	2	$	114	$	—	$	116
Nuclear decommissioning trusts	792		449		—		1,241		779		412		—		1,191
Other investments (b)	97		50		—		147		91		44		—		135
Derivative assets — FTRs	—		—		3		3		—		—		3		3
Total	$	894	$	598	$	3	$	1,495	$	872	$	570	$	3	$	1,445

Assets:
Current	$	5	$	99	$	3	$	107	$	2	$	114	$	3	$	119
Noncurrent	889		499		—		1,388		870		456		—		1,326
Total Assets	$	894	$	598	$	3	$	1,495	$	872	$	570	$	3	$	1,445

~~NOTE 10 — LONG-TERM DEBT~~_______________________________________

(a)

At December 31, 2014, available-for-sale securities of $104 million, included $96 million and $8 million of cash equivalents included in Restricted cash and Other investments, respectively, on the Consolidated Statements of Financial Position. At December 31, 2013, available-for-sale securities of $116 million, included $100 million and $16 million of cash equivalents included in Restricted cash and Other investments, respectively, on the Consolidated Statements of Financial Position.


(b)	Available-for-sale equity securities at December 31, 2014 and 2013 of $8 million and $7 million, respectively, are included in Other investments on the Consolidated Statements of Financial Position.

Cash Equivalents

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

Nuclear Decommissioning Trusts and Other Investments

The nuclear decommissioning trusts and other investments hold debt and equity securities directly and indirectly through institutional mutual funds. Exchange-traded debt and equity securities held directly are valued using quoted market prices in actively traded markets. The institutional mutual funds hold exchange-traded equity or debt securities and are valued based on stated NAVs. Non-exchange-traded fixed income securities are valued based upon quotations available from brokers or pricing services. A primary price source is identified by asset type, class or issue for each security. The trustee monitors prices supplied by pricing services and may use a supplemental price source or change the primary price source of a given security if the trustee determines that another price source is considered to be preferable. The Company has obtained an understanding of how these prices are derived, including the nature and observability of the inputs used in deriving such prices. Additionally, the Company selectively corroborates the fair value of securities by comparison of market-based price sources. Investment policies and procedures are determined by the Company's Trust Investments Department which reports to the Company's Vice President and Treasurer.

Derivative Assets and Liabilities

The following table presents the fair value reconciliation of Level 3 assets and liabilities measured at fair value on a recurring basis for the years ended December 31, 2014 and 2013:



	Year Ended December 31,
	2014			2013
	(In millions)
Net Assets as of beginning of period	$	3		1
Change in fair value recorded in regulatory assets/liabilities	8			5
Purchases, issuances and settlements:
Settlements	(8		)	(3		)
Net Assets as of December 31,	$	3		$	3
The amount of total gains (losses) included in regulatory assets and liabilities attributed to the change in unrealized gains (losses) related to regulatory assets and liabilities held at December 31, 2014 and 2013	$	3		$	2

No transfers between Levels 1, 2 or 3 occurred in the years ended December 31, 2014 and 2013.

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

Fair Value of Financial Instruments

The following table presents the carrying amount and fair value of financial instruments as of December 31, 2014 and 2013:



	December 31, 2014								December 31, 2013
	Carrying		Fair Value						Carrying		Fair Value
	Amount		Level 1		Level 2		Level 3		Amount		Level 1		Level 2		Level 3
	(In millions)
Notes receivable, excluding capital leases	$	12	$	—	$	—	$	12	$	10	$	—	$	—	$	10
Notes receivable — affiliates	$	8	$	—	$	—	$	8	$	200	$	—	$	—	$	200
Short-term borrowings — affiliates	$	84	$	—	$	—	$	84	$	58	$	—	$	—	$	58
Short-term borrowings — other	$	50	$	—	$	50	$	—	$	—	$	—	$	—	$	—
Long-term debt, excluding capital leases	$	5,259	$	—	$	5,341	$	496	$	5,146	$	—	$	5,253	$	136

Nuclear Decommissioning Trust Funds

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



	December 31,
	2014		2013
	(In millions)
Fermi 2	$	1,221	$	1,172
Fermi 1	3		3
Low-level radioactive waste	17		16
Total	$	1,241	$	1,191



	Year Ended December 31,
	2014			2013			2012
	(In millions)
Realized gains	$	54		$	83		$	37
Realized losses	$	(33	)	$	(41	)	$	(31	)
Proceeds from sales of securities	$	1,146		$	1,118		$	759

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)



	December 31, 2014							December 31, 2013
	Fair		Unrealized		Unrealized			Fair		Unrealized		Unrealized
	Value		Gains		Losses			Value		Gains		Losses
	(In millions)
Equity securities	$	756	$	204	$	(39	)	$	730	$	201	$	(25	)
Debt securities	474		21		(2		)	442		12		(6		)
Cash and cash equivalents	11		—		—			19		—		—
	$	1,241	$	225	$	(41	)	$	1,191	$	213	$	(31	)

At December 31, 2014, investments in the nuclear decommissioning trust funds consisted of approximately 61% in publicly traded equity securities, 38% in fixed debt instruments and 1% in cash equivalents. At December 31, 2013, investments in the nuclear decommissioning trust funds consisted of approximately 61% in publicly traded equity securities, 37% in fixed debt instruments and 2% in cash equivalents.

The debt securities at December 31, 2014 and 2013 had an average maturity of approximately 7 years. Securities held in the nuclear decommissioning trust funds are classified as available-for-sale. As DTE Electric does not have the ability to hold impaired investments for a period of time sufficient to allow for the anticipated recovery of market value, all unrealized losses are considered to be other-than-temporary impairments.

Unrealized losses incurred by the Fermi 2 trust are recognized as a Regulatory asset.

Other Securities

At December 31, 2014 and 2013, these securities are comprised primarily of money-market and equity securities. During the years ended December 31, 2014 and 2013, no amounts of unrealized losses on available-for-sale securities were reclassified out of other comprehensive income and realized into net income for the periods. Gains related to trading securities held at December 31, 2014, 2013, and 2012 were $12 million, $19 million and $9 million, respectively.

NOTE 10 — FINANCIAL AND OTHER DERIVATIVE INSTRUMENTS

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

The Company's primary market risk exposure is associated with commodity prices, credit and interest rates. The Company has risk management policies to monitor and manage market risks. The Company uses derivative instruments to manage some of the exposure. DTE Electric generates, purchases, distributes and sells electricity. DTE Electric uses forward energy contracts to manage changes in the price of electricity and fuel. Substantially all of these contracts meet the normal purchases and sales exemption and are therefore accounted for under the accrual method. Other derivative contracts are MTM and recoverable through the PSCR mechanism when settled. This results in the deferral of unrealized gains and losses as Regulatory assets or liabilities until realized.

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

The following table presents the fair value of derivative instruments as of December 31, 2014 and 2013:



	December 31,
	2014		2013
	(In millions)
FTRs — Other current assets	$	3	$	3
Total derivatives not designated as hedging instrument	$	3	$	3

NOTE 11 — LONG-TERM DEBT

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

	2013			2012
	2014			2013
	(In millions)
Taxable Debt, Principally Secured
4.7% due 2014 to 2043	$	4,286		$	3,777
4.5% due 2016 to 2044	$	4,824		$	4,286
Tax- Exempt Revenue Bonds (b)
5.1% due 2014 to 2036	558			707
5.2% due 2020 to 2030	330			558
	4,844			4,484
	5,154			4,844
Less amount due within one year	(~~304~~10		)	(~~263~~304		)
	$	45,~~540~~144		$	4,~~221~~540
Securitization Bonds
6.6% due 2015	$	~~302~~105		$	~~479~~302
Less amount due within one year	(~~197~~105		)	(~~177~~197		)
	$	~~105~~—		$	~~302~~105

_________________________________

(a) Weighted average interest rates as of December 31, ~~2013~~2014 are shown below the description of each category of debt.


(b)	Tax-Exempt Revenue Bonds are issued by a public body that loans the proceeds to DTE Electric on terms substantially mirroring the Revenue Bonds.

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

Debt Issuances

In ~~2013~~2014, the following debt was issued:

Month	~~Type~~	Type	~~Interest Rate~~	Interest Rate		~~Maturity~~	Maturity	~~Amount~~	Amount
								~~(In millions)~~	(In millions)
March	Mortgage Bonds (a)		4.00	%		2043		$	375
June		Mortgage Bonds (a)		3.77	%		2026		$	100
August	Mortgage Bonds (a)		3.65	%		2024		400
June		Mortgage Bonds (a)		4.60	%		2044		150
								$	775
July		Mortgage Bonds (a)		3.375	%		2025		350
July		Mortgage Bonds (a)		4.30	%		2044		350
									$	950

_____________________________


(a)	Proceeds were used for the redemption of long-term debt, repayment of short-term borrowings and general corporate purposes.

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

Debt Redemptions

In ~~2013~~2014, the following debt was redeemed:

Month	Type	Interest Rate		Maturity	Amount
					(In millions)
March	~~Securitization~~Mortgage Bonds	~~6.42~~Various	%	~~2013~~2014	$	8813
March	~~Tax~~Securitization ~~Exempt Revenue~~ Bonds ~~(a)~~	56.3062	%	~~2030~~2014	51100
April	~~Other~~Tax ~~Long-Term~~Exempt ~~Debt~~Revenue Bonds (a)	~~Various~~2.35	%	~~2013~~2024	1331
September	Securitization Bonds	6.62	%	2013	89
April	Tax Exempt Revenue Bonds (a)	4.65	%	2028	32
September	Senior Notes	6.40	%	2013	250
June	Tax Exempt Revenue Bonds (a)	4.875	%	2029	36
December	Tax Exempt Revenue Bonds (a)	5.50	%	2030	49
June	Tax Exempt Revenue Bonds (a)	6.00	%	2036	69
December	Tax Exempt Revenue Bonds (a)	6.75	%	2038	50
July	Senior Notes	4.80	%	2015	200
					$	590
August	Tax Exempt Revenue Bonds (a)	5.25	%	2029	60
August	Senior Notes	5.40	%	2014	200
September	Securitization Bonds	6.62	%	2014	96
					$	837

_____________________________


(a)	Tax Exempt Revenue Bonds are issued by a public body that loans the proceeds to DTE Electric on terms substantially mirroring the Revenue Bonds.

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

											2019 &
											2020 and
	2014		2015		2016		2017		2018		thereafter		Total
	2015		2016		2017		2018		2019		Thereafter		Total
	(In millions)
Amount to mature	$	~~501~~115	$	~~315~~151	$	~~151~~—	$	—300	$	~~300~~—	$	34,~~879~~704	$	5,~~146~~270

Cross Default Provisions

Substantially all of the net properties of DTE Electric are subject to the lien of its mortgage. Should DTE Electric fail to timely pay its indebtedness under this mortgage, such failure may create cross defaults in the indebtedness of DTE Energy.

NOTE 1112 — PREFERRED AND PREFERENCE SECURITIES

At December 31, ~~2013~~2014, DTE Electric had approximately 6.75 million shares of preferred stock with a par value of $100 per share and 30 million shares of preference stock with a par value of $1 per share authorized, with no shares issued.

NOTE 1213 — SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS

DTE Electric has a $300 million unsecured revolving credit agreement ~~with a syndicate of 19 banks~~ that ~~may~~can be used for general corporate borrowings, but is intended to provide liquidity support for the Company's commercial paper program. ~~No one bank provides more than 8.7% of the commitment in the facility.~~ Borrowings under the facility are available at prevailing short-term interest rates. The facility will expire in April 2018. At December 31, ~~2013~~2014, there ~~were~~was no$50 ~~amounts~~million outstanding against ~~this~~the facility, while there ~~was~~were ~~$130~~no ~~million~~amounts outstanding against ~~this~~the facility at December 31, ~~2012~~2013.

The 46agreement requires the Company to maintain a total funded debt to capitalization ratio of no more than 0.65 to 1. At December 31, 2014, the total funded debt to total capitalization ratio for DTE Electric was 0.51 to 1 and is in compliance with this financial covenant.

The weighted average interest rates for short-term borrowings was 0.5% and zero at December 31, 2014 and 2013, respectively.

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

~~The~~NOTE ~~agreement~~14 ~~requires~~— ~~the~~OPERATING Company to maintain a total funded debt to capitalization ratio of no more than 0.65 to 1. In the agreements, “total funded debt” means all indebtedness of the Company and its consolidated subsidiaries, including capital lease obligations, hedge agreements and guarantees of third parties' debt, but excluding contingent obligations and nonrecourse and junior subordinated debt. “Capitalization” means the sum of (a) total funded debt plus (b) “consolidated net worth,” which is equal to consolidated total stockholders' equity of the Company and its consolidated subsidiaries (excluding pension effects under certain FASB statements), as determined in accordance with accounting principles generally accepted in the United States of America. At December 31, 2013, the total funded debt to total capitalization ratio for DTE Electric was 0.50 to 1. LEASES

~~NOTE~~Lessee — 13The —Company ~~CAPITAL~~leases ~~AND~~various ~~OPERATING~~assets ~~LEASES~~under operating leases, including coal railcars, computers, vehicles and other equipment. The lease arrangements expire at various dates through 2046.

~~Lessee —~~Future ~~The~~minimum ~~Company~~lease ~~leases~~payments ~~various assets~~ under ~~capital~~non-cancelable ~~and operating~~ leases, ~~including~~at ~~coal railcars~~December 31, ~~computers,~~2014 ~~vehicles and other equipment. The lease arrangements expire at various dates through 2046.~~were:

Future minimum lease payments under non-cancelable leases at December 31, 2013 were:



	Operating
	Leases
	(In millions)
2015	$	28
2016	22
2017	18
2018	15
2019	10
Thereafter	40
Total minimum lease payments	$	133

	Capital			Operating
	Leases			Leases
	(In millions)
2014	$	3		$	24
2015	4			20
2016	—			18
2017	—			17
2018	—			14
Thereafter	—			51
Total minimum lease payments	7			$	144
Less imputed interest	—
Present value of net minimum lease payments	7
Less current portion	(3		)
Non-current portion	$	4

Rental expense for operating leases was $26 million in 2014, $28 million in 2013, and $29 million in 2012.

~~Rental~~NOTE ~~expense~~15 ~~for~~— ~~operating~~COMMITMENTS ~~leases~~AND ~~was $28 million in 2013, $29 million in 2012, and $27 million in 2011.~~ CONTINGENCIES

NOTE 14 — COMMITMENTS AND CONTINGENCIES

Environmental

Air — DTE Electric is subject to the EPA ozone and fine particulate transport and acid rain regulations that limit power plant emissions of sulfur dioxide and nitrogen oxides. ~~Since~~The ~~2005, the~~ EPA and the State of Michigan have issued ~~additional~~ emission reduction regulations relating to ozone, fine particulate, regional haze, mercury, and other air pollution. These rules have led to ~~additional~~ controls on fossil-fueled power plants to reduce nitrogen oxide, sulfur dioxide, mercury and other emissions. To comply with these requirements, DTE Electric ~~has~~ spent approximately $2.2 billion through ~~2013~~2014. The Company estimates DTE Electric will make capital expenditures of approximately $~~280~~100 million in ~~2014~~2015 and up to approximately $~~1.2~~30 ~~billion~~million of additional capital expenditures through ~~2021~~2019 based on current regulations. Further, additional rulemakings are expected over the next few years which could require additional controls for sulfur dioxide, nitrogen oxides and other hazardous air pollutants. The Cross State Air Pollution Rule (CSAPR), finalized in July 2011, required further reductions of sulfur dioxide and nitrogen oxides emissions beginning in 2012. On December 30, 2011, the U.S. Court of Appeals for the District of Columbia (D.C.) Circuit granted the motions to stay the rule, leaving DTE Electric temporarily subject to the previously existing Clean Air Interstate Rule (CAIR). On August 21, 2012, the Court issued its decision, vacating CSAPR and leaving CAIR in place. The EPA's petition seeking a rehearing of the U.S. Court of Appeals' decision regarding the CSAPR was denied on January 24, 2013. On June 24, 2013, the U.S. Supreme Court granted EPA's petition asking the Court to review the D.C. Circuit Court's decision on CSAPR. A ruling by the Supreme Court is expected in 2014. Notwithstanding the appeal filed with the Supreme Court, the EPA and a number of states have started working on the framework of revised CSAPR regulations which we anticipate to be proposed in the next few years.

Additional 47rulemakings are expected over the next few years which could require additional controls for sulfur dioxide, nitrogen oxides and other hazardous air pollutants. The Cross State Air Pollution Rule (CSAPR), requires further reductions of sulfur dioxide and nitrogen oxides emissions effective in January 2015. DTE Electric expects to meet its obligations under CSAPR beginning in 2015.

The Mercury and Air Toxics Standard (MATS) rule, formerly known as the Electric Generating Unit Maximum Achievable Control Technology (EGU MACT) Rule was finalized in December 2011. The MATS rule requires reductions of mercury and other hazardous air pollutants beginning in April 2015, with a potential extension to April 2016. DTE Electric has requested and been granted compliance date extensions for all relevant units to April 2016. DTE Electric has tested technologies to determine technological and economic feasibility as MATS compliance alternatives to Flue Gas Desulfurization (FGD) systems. Implementation of Dry Sorbent Injection (DSI) and Activated Carbon Injection (ACI) technologies will allow several units that would not have been economical for FGD installations to continue operation in compliance with MATS. In November 2014, the Supreme Court agreed to review a challenge to the MATS rule based on a narrowly focused question of how the EPA considered costs in regulating air pollutants emitted by electric utilities. DTE Electric cannot predict the financial impact or outcome of this Supreme Court case, or the timing of its resolution.

The EPA proposed revised air quality standards for ground level ozone in November 2014 and the standards are expected to be finalized by October 2015. DTE Electric will engage with the EPA and other stakeholders in commenting on this rule. DTE Electric cannot predict the financial impact of the proposed ozone standards at this time.

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

~~The~~In ~~Mercury~~July ~~and~~2009, ~~Air~~DTE ~~Toxics~~Energy ~~Standard~~received ~~(MATS)~~a ~~rule,~~NOV/FOV ~~formerly~~from ~~known as~~ the ~~Electric~~EPA ~~Generating~~alleging, ~~Unit~~among ~~Maximum~~other ~~Achievable~~things, ~~Control~~that ~~Technology~~five ~~(EGU~~DTE ~~MACT)~~Electric ~~Rule,~~power ~~was~~plants ~~finalized~~violated onNew ~~December~~Source 16Performance standards, ~~2011. The~~Prevention ~~MATS~~of ~~rule~~Significant ~~requires~~Deterioration ~~reductions~~requirements, ofand ~~mercury~~operating ~~and~~permit ~~other~~requirements ~~hazardous~~under ~~air~~the ~~pollutants~~Clean ~~beginning~~Air inAct. In ~~April~~June ~~2015~~2010, ~~with~~the EPA issued a ~~potential~~NOV/FOV ~~extension~~making tosimilar ~~April~~allegations ~~2016. DTE~~related ~~Electric~~to ~~has~~a ~~requested~~project and ~~been~~outage ~~granted~~at ~~compliance~~Unit ~~date~~2 ~~extensions~~of ~~for~~the ~~some~~Monroe ~~units~~Power ~~to April 2016~~Plant. ~~DTE~~In ~~Electric~~March ~~has~~2013, ~~tested~~DTE ~~technologies~~Energy toreceived ~~determine~~a ~~technological~~supplemental ~~and~~NOV ~~economic~~from ~~feasibility~~the asEPA ~~MATS~~relating ~~compliance alternatives~~ to ~~Flue~~the ~~Gas~~July ~~Desulfurization~~2009 ~~(FGD) systems~~NOV/FOV. ~~Implementation~~The ofsupplemental ~~Dry~~NOV ~~Sorbent~~alleged ~~Injection~~additional ~~(DSI)~~violations ~~and~~relating ~~Activated~~to ~~Carbon~~the ~~Injection~~New ~~(ACI)~~Source ~~technologies~~Review ~~will~~provisions ~~allow~~under ~~several~~the ~~units~~Clean ~~that~~Air ~~would~~Act, ~~not~~among ~~have~~other ~~been economical for FGD installations to continue operation in compliance with MATS~~things.

In ~~July~~August ~~2009~~2010, ~~DTE~~the ~~Energy~~U.S. ~~received~~Department of Justice, at the request of the EPA, brought a ~~Notice~~civil suit in the U.S. District Court for the Eastern District of ~~Violation~~Michigan against DTE Energy and DTE Electric, related to the June 2010 NOV/~~Finding~~FOV and the outage work performed at Unit 2 of ~~Violation~~the (Monroe Power Plant, but not relating to the July 2009 NOV/FOV). Among ~~from~~other relief, the EPA ~~alleging,~~requested ~~among~~the ~~other~~court ~~things~~to require DTE Electric to install and operate the best available control technology at Unit 2 of the Monroe Power Plant. Further, ~~that~~the ~~five~~EPA requested the court to issue a preliminary injunction to require DTE Electric to (i) begin the process of obtaining the necessary permits for the Monroe Unit 2 modification and (ii) offset the pollution from Monroe Unit 2 through emissions reductions from DTE Electric's fleet of coal-fired power plants ~~violated~~until ~~New~~the ~~Source~~new ~~Performance~~control ~~standards~~equipment is operating. On August 23, ~~Prevention~~2011, ofthe ~~Significant~~U.S. ~~Deterioration~~District ~~requirements~~Court judge granted DTE Energy's motion for summary judgment in the civil case, dismissing the case and ~~operating~~entering ~~permit~~judgment ~~requirements~~in ~~under~~favor of DTE Energy and DTE Electric. In October 2011, the ~~Clean~~EPA ~~Air~~caused ~~Act~~to be filed a Notice of Appeal to the U.S. Court of Appeals for the Sixth Circuit. In ~~June~~March ~~2010~~2013, the Court of Appeals remanded the case to the U.S. District Court for review of the procedural component of the New Source Review notification requirements. In September 2013, the EPA ~~issued~~caused to be filed a motion seeking leave to amend their complaint regarding the June 2010 NOV/FOV ~~making~~adding ~~similar~~additional ~~allegations~~claims related to aoutage ~~project~~work performed at the Trenton Channel and ~~outage~~Belle atRiver ~~Unit~~power 2plants ofas well as additional claims related to work performed at the Monroe Power Plant. In addition, the Sierra Club caused to be filed a motion to add a claim regarding the River Rouge Power Plant. In March ~~2013~~2014, the U.S. District Court judge granted again DTE Energy's ~~received~~motion afor ~~supplemental~~summary ~~NOV~~judgment ~~from~~dismissing the civil case related to Monroe Unit 2. In April 2014, the U.S. District Court judge granted motions filed by the EPA ~~relating~~and the Sierra Club to amend their New Source Review complaint adding additional claims for Monroe Units 1, 2 and 3, Belle River Units 1 and 2, Trenton Channel Unit 9 and denied the ~~July~~claims ~~2009~~related ~~NOV/FOV~~to River Rouge that were brought by the Sierra Club. ~~The~~In ~~supplemental~~June ~~NOV~~2014, ~~alleged~~the ~~additional~~EPA ~~violations~~filed ~~relating~~a tomotion requesting certification for appeal of the March 2014 summary judgment decision. In October 2014, the EPA and the U.S. Department of Justice filed the anticipated notice of appeal of the U.S. District Court judge's dismissal of the Monroe Unit 2 case. This will officially start the appellate process. The amended New Source Review ~~provisions~~claims ~~under~~are all stayed until the ~~Clean~~appeal ~~Air~~is ~~Act,~~resolved ~~among~~by ~~other~~the ~~things~~U.S. Court of Appeals for the Sixth Circuit.

~~In August 2010, the U.S. Department of Justice, at the request of the EPA, brought a civil suit in the U.S. District Court for the Eastern District of Michigan against~~ DTE Energy and ~~DTE~~ Electric, ~~related~~believes tothat the ~~June~~plants ~~2010 NOV/FOV~~ and ~~the~~generating ~~outage~~units ~~work~~identified ~~performed~~by atthe ~~Unit~~EPA 2and of the ~~Monroe~~Sierra ~~Power~~Club ~~Plant,~~have ~~but~~complied ~~not~~with ~~relating~~all toapplicable ~~the~~federal ~~July~~environmental ~~2009 NOV/FOV~~regulations. ~~Among~~Depending ~~other~~upon ~~relief,~~ the ~~EPA~~outcome ~~requested the court to require DTE Electric to install and operate the best available control technology at Unit 2~~ of ~~the~~discussions ~~Monroe~~with ~~Power Plant. Further,~~ the EPA ~~requested~~regarding the ~~court~~two toNOVs/FOVs, ~~issue a preliminary injunction to require~~ DTE Electric tocould ~~(i)~~be ~~begin~~required ~~the~~to ~~process~~install ofadditional ~~obtaining~~pollution ~~the~~control ~~necessary~~equipment ~~permits~~at ~~for~~some ~~the~~or ~~Monroe~~all ~~Unit~~of ~~2 modification and (ii) offset~~ the ~~pollution~~power ~~from~~plants ~~Monroe~~in ~~Unit~~question, 2implement ~~through~~early ~~emissions~~retirement ~~reductions from DTE Electric's fleet~~ of ~~coal-fired~~facilities ~~power~~where ~~plants until the new~~ control equipment is ~~operating. On~~not ~~August 23~~economical, ~~2011,~~engage ~~the U.S. District Court judge granted DTE Energy's motion for summary judgment~~ in ~~the~~supplemental ~~civil~~environmental ~~case~~programs, ~~dismissing the case~~ and/or ~~entering~~pay ~~judgment in favor of DTE Energy and DTE Electric~~fines. OnThe ~~October~~Company ~~20,~~cannot ~~2011,~~predict the ~~EPA~~financial ~~caused~~impact toor beoutcome ~~filed a Notice~~ of ~~Appeal~~this ~~to the U.S. Court of Appeals for the Sixth Circuit. On March 28~~matter, ~~2013,~~or the ~~Court~~timing of ~~Appeals~~its ~~remanded the case to the U~~resolution.S. District Court for review of the procedural component of the New Source Review notification requirements. On September 3, 2013, the EPA caused to be filed a motion seeking leave to amend their complaint regarding the June 2010 NOV/FOV adding additional claims related to outage work performed at the Trenton Channel and Belle River power plants as well as additional claims related to work performed at the Monroe Power Plant. In addition, the Sierra Club caused to be filed a motion to add a claim regarding the River Rouge Power Plant. The EPA and Sierra Club motions are currently pending with the U. S. District Court Judge.

~~DTE~~In ~~Electric~~2010, ~~believes that~~ the ~~plants identified by the~~ EPA, ~~including~~finalized ~~Unit~~a 2new of1-hour ~~the~~sulfur ~~Monroe~~dioxide ~~Power~~ambient ~~Plant,~~air ~~have~~quality ~~complied~~standard ~~with~~that ~~all~~requires ~~applicable~~states ~~federal~~to ~~environmental~~submit ~~regulations. Depending~~plans ~~upon~~for ~~the~~non-attainment ~~outcome~~areas ofto ~~discussions~~be ~~with~~in ~~the~~compliance ~~EPA~~by ~~regarding~~2017. Michigan's ~~the~~non-attainment ~~two~~area ~~NOVs/FOVs,~~includes DTE Electric ~~could~~facilities bein ~~required~~southwest toDetroit ~~install~~and ~~additional~~areas ~~pollution~~of ~~control~~Wayne ~~equipment~~County. Preliminary atmodeling ~~some~~runs orby ~~all of~~ the ~~power~~MDEQ ~~plants~~suggest inthat ~~question,~~emission ~~implement~~reductions ~~early~~may ~~retirement~~be ofrequired ~~facilities~~by ~~where~~significant ~~control~~sources ~~equipment~~of issulfur ~~not~~dioxide ~~economical,~~emissions ~~engage~~ in ~~supplemental~~these ~~environmental programs~~areas, ~~and/or~~including ~~pay~~DTE ~~fines~~Electric power plants. The ~~Company~~state ~~cannot~~implementation ~~predict~~plan process is in the ~~financial~~information ~~impact~~gathering orstage, ~~outcome~~and ofDTE ~~this~~Electric ~~matter,~~is orunable ~~the~~to ~~timing~~estimate ofany ~~its~~required ~~resolution~~emissions reductions at this time.

OnWater — ~~March~~In ~~13,~~response ~~2013,~~to ~~the~~an ~~Sierra~~EPA ~~Club~~regulation, ~~filed suit against~~ DTE Electric ~~alleging~~would ~~violations~~be ofrequired ~~the~~to ~~Clean~~examine ~~Air~~alternatives ~~Act~~for atreducing ~~four~~the ofenvironmental ~~DTE~~impacts ~~Electric's~~of ~~coal-fired~~the ~~power~~cooling ~~plants. The~~water ~~plaintiffs~~intake ~~allege~~structures ~~1,499~~at ~~6-minute~~several ~~periods~~ of ~~excess~~its ~~opacity of air emissions from 2007-2012 at those~~ facilities. ~~The~~Based ~~suit~~on ~~asks that~~ the ~~court~~results ~~enjoin~~of ~~the~~completed ~~Company~~studies ~~from operating the power plants except in complete compliance with applicable laws~~ and ~~permit~~expected ~~requirements,~~future ~~pay civil penalties~~studies, ~~conduct~~DTE ~~beneficial~~Electric ~~environmental~~may ~~mitigation~~be ~~projects,~~required ~~pay~~to ~~attorney~~install ~~fees~~technologies ~~and~~to ~~require~~reduce the ~~installation~~impacts of ~~any necessary pollution controls or to convert and/or operate~~ the ~~plants'~~water ~~boilers~~intake onstructures. A ~~natural~~final ~~gas~~rule towas ~~avoid~~issued ~~additional~~in ~~violations~~May ~~and to off-set historic unlawful emissions~~2014. InThe ~~December~~final ~~2013,~~rule specifies a ~~U.S.~~time ~~District~~period ~~Court~~exceeding ~~judge~~three ~~issued~~years anto ~~order~~complete ~~dismissing,~~studies ~~without~~to ~~prejudice,~~determine the ~~plaintiff's~~type ~~complaint~~of ~~allowing~~technology ~~them~~needed to ~~file~~reduce animpacts ~~amended~~to ~~complaint by January 17, 2014~~fish. ~~The~~Final ~~order~~compliance ~~dismissing~~for the ~~complaint~~installation ~~resulted~~of ~~from~~the arequired ~~considerable~~technology ~~number~~will ofbe ~~plaintiff's~~determined ~~claims~~by ~~being~~each ~~time~~state ~~barred based~~ on ~~the~~a ~~statute~~case ofby ~~limitations~~case basis. OnWe ~~January~~are ~~17,~~currently ~~2014,~~evaluating the ~~plaintiffs~~compliance ~~filed~~options anand ~~amended~~working ~~complaint~~with ~~for~~ the ~~period~~State ~~January~~of ~~13,~~Michigan ~~2008~~on -evaluating ~~June~~whether ~~30,~~any ~~2012,~~controls ~~reducing~~are ~~the total number of 6-minute periods from 1,499 to 1,139~~needed. ~~DTE~~These ~~Energy~~evaluations/studies ~~and~~may ~~DTE~~require ~~Electric~~modifications ~~plan~~ to ~~file~~some anexisting ~~answer~~intake ~~to the amended complaint in the first quarter of 2014~~structures. ~~The~~It ~~resolution of this matter~~ is not ~~expected~~possible to ~~have~~quantify athe ~~material~~impact ~~effect~~of onthis ~~the~~rulemaking ~~Company's~~at ~~operations~~this ~~or financial statements~~time.

In 48April 2013, the EPA proposed revised steam electric effluent guidelines regulating wastewater streams from coal-fired power plants including multiple possible options for compliance. The rules are expected to be finalized by September 2015. It is not possible at this time to quantify the impacts of these developing requirements.

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

~~Water~~Contaminated and Other Sites — InPrior ~~response~~ to anthe ~~EPA~~construction ~~regulation~~of major interstate natural gas pipelines, ~~DTE~~gas ~~Electric~~for ~~would~~heating beand ~~required~~other touses ~~examine~~was ~~alternatives~~manufactured ~~for~~locally ~~reducing~~from ~~the~~processes ~~environmental~~involving ~~impacts~~coal, ofcoke ~~the~~or ~~cooling~~oil. The ~~water~~facilities, ~~intake~~which ~~structures~~produced gas, have been designated as MGP sites. DTE Electric conducted remedial investigations at ~~several~~contaminated ofsites, ~~its~~including ~~facilities~~three former MGP sites. ~~Based~~The oninvestigations have revealed contamination related to the ~~results~~by-products of ~~completed~~gas ~~studies~~manufacturing ~~and~~at ~~expected~~each ~~future~~MGP ~~studies,~~site. In ~~DTE~~addition ~~Electric~~to ~~may~~the beMGP ~~required~~sites, tothe ~~install~~Company ~~technologies~~is toalso ~~reduce~~in the ~~impacts~~process of cleaning up other contaminated sites, including the ~~water~~area ~~intake~~surrounding ~~structures. The~~an ~~initial~~ash ~~rule~~landfill, ~~published~~electrical indistribution ~~2004~~substations, ~~was~~electric ~~subsequently~~generating ~~remanded~~power plants, and aunderground ~~proposed~~and ~~rule~~aboveground ~~published~~storage intank ~~2011~~locations. The ~~proposed~~findings ~~rule~~of ~~specified~~these aninvestigations ~~eight~~indicated ~~year~~that ~~compliance~~the ~~timeline~~estimated cost to remediate these sites is expected to be incurred over the next several years. ~~Final~~At ~~action~~December 31, on2014 ~~this~~and ~~rule~~2013, ~~has~~the ~~been~~Company ~~delayed~~had $10 million and is$8 ~~expected~~million inaccrued ~~2014~~for remediation, respectively. ~~Depending~~Any onchange ~~final~~in ~~regulations~~assumptions, ~~its~~such ~~requirements~~as ~~may~~remediation ~~require~~techniques, ~~modifications~~nature toand ~~some~~extent ~~existing~~of ~~intake~~contamination ~~structures~~ and regulatory requirements, could impact the ~~rates~~estimate weof ~~charge~~remedial ~~our~~action ~~customers~~costs for the sites and affect the Company’s financial position and cash flows. ItThe isCompany ~~not~~believes ~~possible~~the tolikelihood ~~quantify~~of a material change to the ~~impact~~accrued ofamount ~~those~~is ~~expected~~remote ~~rulemakings~~based on current knowledge of the conditions at ~~this~~each ~~time~~site.

OnIn ~~April~~December 192014, ~~2013,~~ the EPA ~~proposed~~released ~~revised~~a ~~steam~~pre-publication ~~electric~~version ~~effluent~~of ~~guidelines~~a ~~regulating~~rule ~~wastewater~~to ~~streams~~regulate ~~from~~ coal ash. This rule is based on the continued listing of ash as a non-~~fired~~hazardous ~~power~~waste, ~~plants~~and ~~including~~relies ~~multiple~~on ~~possible~~various ~~options~~self-implementation ~~for~~design ~~compliance~~and performance standards. The ~~rules~~rule ~~are~~is ~~expected~~still being evaluated and it is not possible to bequantify ~~finalized~~its byimpact ~~May~~at ~~2014~~this time. DTE Electric ~~has~~owns ~~provided~~and ~~comments~~operates three permitted engineered ash storage facilities to ~~the~~dispose ~~EPA. However,~~of itfly isash ~~not~~from ~~possible~~coal atfired ~~this~~power ~~time~~plants toand ~~quantify~~operates ~~the~~a ~~impacts~~number of ~~these~~smaller ~~developing~~impoundments ~~requirements~~at its power plants.

Contaminated and Other Sites — Prior to the construction of major interstate natural gas pipelines, gas for heating and other uses was manufactured locally from processes involving coal, coke or oil. The facilities, which produced gas, have been designated as manufactured gas plant (MGP) sites. DTE Electric conducted remedial investigations at contaminated sites, including three former MGP sites. The investigations have revealed contamination related to the by-products of gas manufacturing at each site. In addition to the MGP sites, the Company is also in the process of cleaning up other contaminated sites, including the area surrounding an ash landfill, electrical distribution substations, electric generating power plants, and underground and aboveground storage tank locations. The findings of these investigations indicated that the estimated cost to remediate these sites is expected to be incurred over the next several years. At December 31, 2013 and 2012, the Company had $8 million and $9 million, respectively, accrued for remediation. Any significant change in assumptions, such as remediation techniques, nature and extent of contamination and regulatory requirements, could impact the estimate of remedial action costs for the sites and affect the Company’s financial position and cash flows. The Company believes that the likelihood of a materially greater liability than the accrued amount is remote based on current knowledge of the conditions at each site.

DTE Electric owns and operates three permitted engineered ash storage facilities to dispose of fly ash from coal fired power plants. The EPA has published proposed rules to regulate coal ash under the authority of the Resources Conservation and Recovery Act (RCRA). The proposed rule published in June 2010 contains two primary regulatory options to regulate coal ash residue. The EPA is currently considering either designating coal ash as a “Hazardous Waste” as defined by RCRA or regulating coal ash as non-hazardous waste under RCRA. Agencies and legislatures have urged the EPA to regulate coal ash as a non-hazardous waste. If the EPA designates coal ash as a hazardous waste, the agency could apply some, or all, of the disposal and reuse standards that have been applied to other existing hazardous wastes to disposal and reuse of coal ash. Some of the regulatory actions currently being contemplated could have a significant impact on our operations and financial position and the rates we charge our customers. It is not possible to quantify the impact of those expected rulemakings at this time.

Other

In March 2011, the EPA finalized a new set of regulations regarding the identification of non-hazardous secondary materials that are considered solid waste, industrial boiler and process heater maximum achievable control technologies (IBMACT) for major and area sources, and commercial/industrial solid waste incinerator new source performance standard and emission guidelines (CISWI). The effective dates of the major source IBMACT and CISWI regulations were stayed and a re-proposal was issued by the EPA in December 2011. Final IBMACT and CISWI were issued by the EPA in December 2012. The Company is developing compliance plans to upgrade or convert existing industrial boilers to natural gas and to perform required energy assessments in compliance with the applicable new standards. Capital costs for the boiler conversions and the expenses for the one-time energy assessments are not expected to be material.

In 2010, the EPA finalized a new 1-hour sulfur dioxide ambient air quality standard that requires states to submit plans for non-attainment areas to be in compliance by 2017. Michigan's non-attainment area includes DTE Electric facilities in southwest Detroit and areas of Wayne County. Preliminary modeling runs by the MDEQ suggest that emission reductions may be required by significant sources of sulfur dioxide emissions in these areas, including DTE Electric power plants. The state implementation plan process is in the information gathering stage and any required emission reductions for DTE Electric sources to meet the standard cannot be estimated currently.

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

Nuclear Operations

Property Insurance

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

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

DTE Electric has $~~500~~1.5 ~~million~~billion in primary coverage and $21.25 billion of excess coverage for stabilization, decontamination, debris removal, repair and/or replacement of property and decommissioning. The combined coverage limit for total property damage is $2.75 billion, subject to a $1 million deductible. AsThe ~~of April 1, 2013, the~~ total limit for property damage for non-nuclear events is $~~1.8~~2 billion and an aggregate of $~~327~~328 million of coverage for extra expenses over a two-year period.

InOn ~~2007~~January 13, 2015, the Terrorism Risk Insurance ~~Extension~~Program Reauthorization Act of ~~2005~~2015 ~~(TRIA)~~ was ~~extended~~signed, extending TRIA through December 31, ~~2014~~2020. ~~A major change in the extension is the inclusion of “domestic” acts of terrorism in the definition of covered or “certified” acts.~~ For multiple terrorism losses caused by acts of terrorism not covered under the TRIA occurring within one year after the first loss from terrorism, the NEIL policies would make available to all insured entities up to $3.2 billion, plus any amounts recovered from reinsurance, government indemnity, or other sources to cover losses.

Under ~~the~~ NEIL policies, DTE Electric could be liable for maximum assessments of up to approximately $3435 million per event if the loss associated with any one event at any nuclear plant ~~in the United States~~ should exceed the accumulated funds available to NEIL.

Public Liability Insurance

As required by federal law, DTE Electric maintains $375 million of public liability insurance for a nuclear incident. For liabilities arising from a terrorist act outside the scope of TRIA, the policy is subject to one industry aggregate limit of $300 million. Further, under the Price-Anderson Amendments Act of 2005, deferred premium charges up to $127.3 million could be levied against each licensed nuclear facility, but not more than $19 million per year per facility. Thus, deferred premium charges could be levied against all owners of licensed nuclear facilities in the event of a nuclear incident at any of these facilities.

~~Nuclear~~ ~~Fuel Disposal Costs~~46

In accordance with the Federal Nuclear Waste Policy Act of 1982, DTE Electric has a contract with the U.S. Department of Energy (DOE) for the future storage and disposal of spent nuclear fuel from Fermi 2. DTE Electric is obligated to pay the DOE a fee of 1 mill per kWh of Fermi 2 electricity generated and sold. The fee is a component of nuclear fuel expense. The DOE's Yucca Mountain Nuclear Waste Repository program for the acceptance and disposal of spent nuclear fuel was terminated in 2011. DTE Electric currently employs a spent nuclear fuel storage strategy utilizing a fuel pool. The Company continues to develop its on-site dry cask storage facility and has scheduled the initial offload from the spent fuel pool in 2014. The dry cask storage facility is expected to provide sufficient spent fuel storage capability for the life of the plant as defined by the original operating license.

DTE Electric is a party in the litigation against the DOE for both past and future costs associated with the DOE's failure to accept spent nuclear fuel under the timetable set forth in the Federal Nuclear Waste Policy Act of 1982. In July 2012, DTE Electric executed a settlement agreement with the federal government for costs associated with the DOE's delay in acceptance of spent nuclear fuel from Fermi 2 for permanent storage. The settlement provided for a payment of approximately $48 million, received in August 2012, for delay-related costs experienced by DTE Electric through 2010, and a claims process for submittal of delay-related costs from 2011 through 2013. DTE Electric has begun the claims process and claims are being settled on a timely basis. The settlement proceeds reduced the cost of the dry cask storage facility assets. In January 2014, the settlement agreement was extended through 2016. The federal government continues to maintain its legal obligation to accept spent nuclear fuel from Fermi 2 for permanent storage. Issues relating to long-term waste disposal policy and to the disposition of funds contributed by DTE Electric ratepayers to the federal waste fund await future governmental action.

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

InNuclear ~~February~~Fuel ~~2013,~~Disposal the U.S. Court of Appeals for the District of Columbia (COA) granted a motion to reopen the fee adequacy litigation to review the DOE's latest fee adequacy report which was released in January 2013. In November 2013, the COA issued a decision ordering the DOE to submit a proposal to Congress to reduce the nuclear waste fee to zero until the DOE enacts an alternative nuclear waste management plan. In January 2014, the DOE submitted such a proposal to Congress that will take effect in 90 legislative calendar days, absent legislative action to the contrary. Simultaneously, the DOE filed a petition for rehearing of the November 2013 decision with the COA. DTE Electric continues to pay fees to the U.S. government's nuclear waste fund pending further developments in this proceeding.Costs

In accordance with the Federal Nuclear Waste Policy Act of 1982, DTE Electric has a contract with the DOE for the future storage and disposal of spent nuclear fuel from Fermi 2 that required DTE Electric to pay the DOE a fee of 1 mill per kWh of Fermi 2 electricity generated and sold. The fee was a component of nuclear fuel expense. The DOE's Yucca Mountain Nuclear Waste Repository program for the acceptance and disposal of spent nuclear fuel was terminated in 2011. DTE Electric is a party in the litigation against the DOE for both past and future costs associated with the DOE's failure to accept spent nuclear fuel under the timetable set forth in the Federal Nuclear Waste Policy Act of 1982. In July 2012, DTE Electric executed a settlement agreement with the federal government for costs associated with the DOE's delay in acceptance of spent nuclear fuel from Fermi 2 for permanent storage. The settlement agreement, including extensions, provides for a claims process and payment of delay-related costs experienced by DTE Electric through 2016. DTE Electric's claims are being settled and paid on a timely basis. The settlement proceeds reduce the cost of the dry cask storage facility assets and provide reimbursement for related operating expenses. The 1 mill per kWh fee was reduced to zero effective May 16, 2014.

DTE Electric currently employs a spent nuclear fuel storage strategy utilizing a fuel pool and a newly completed dry cask storage facility. The initial dry cask loading campaign planned for 2014 has been completed. The dry cask storage facility is expected to provide sufficient spent fuel storage capability for the life of the plant as defined by the original operating license.

The federal government continues to maintain its legal obligation to accept spent nuclear fuel from Fermi 2 for permanent storage. Issues relating to long-term waste disposal policy and to the disposition of funds contributed by DTE Electric ratepayers to the federal waste fund await future governmental action.

Guarantees

In certain limited circumstances, the Company enters into contractual guarantees. The Company may guarantee another entity’s obligation in the event it fails to perform. The Company may provide guarantees in certain indemnification agreements. Finally, the Company may provide indirect guarantees for the indebtedness of others.

Labor Contracts

There are several bargaining units for the Company's approximately 2,600 represented employees. The majority of the represented employees are under contracts that expire in 2016 and 2017.

Purchase Commitments

As of December 31, ~~2013~~2014, the Company was party to numerous long-term purchase commitments relating to a variety of goods and services required for the Company’s business. These agreements primarily consist of fuel supply commitments and renewable energy contracts. The Company estimates that these commitments will be approximately $2.64 billion from ~~2014~~2015 through 2033 as detailed in the following table:

	(In millions)
2014	$	537
2015	$	496
2015	295
2016	330
2016	199
2017	278
2017	133
2018	125
2018	134
2019	106
2019 - 2033	1,335
2020 and thereafter	1,063
	$	2,~~633~~398

The Company also estimates that ~~2014~~2015 capital expenditures will be approximately $1.69 billion. The Company has made certain commitments in connection with expected capital expenditures.

Bankruptcies

~~The~~ Company provides services to the city of Detroit, Michigan (Detroit). Detroit filed for Chapter 9 bankruptcy protection on July 18, 2013. The Company had pre-petition accounts receivable of approximately $20 million outstanding as of the bankruptcy filing date. Detroit has been paying amounts owed in a timely manner and its accounts are substantially current. The Company does not expect Detroit's bankruptcy filing to have a material impact on its financial results.47

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

Other Contingencies

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

~~See~~For ~~Note 8 for~~ a discussion of contingencies related to regulatory matters see Note 7 to the Consolidated Financial Statements, "Regulatory Matters".

NOTE 1516 — RETIREMENT BENEFITS AND TRUSTEED ASSETS

Pension Plan Benefits

DTE Electric participates in various plans that provide pension and other postretirement benefits for DTE Energy and its affiliates. The plans are sponsored by DTE Energy Corporate Services, LLC (LLC), a subsidiary of DTE Energy. DTE Electric is allocated net periodic benefit costs for its share of the amounts of the combined plans.

Effective January 1, 2012 for non-represented employees, and in ~~June 2011 and~~ March 2013 for the majority of represented employees, the Company discontinued offering a defined benefit retirement plan to newly hired employees. In its place, the Company will annually contribute an amount equivalent to 4% of an employee's eligible pay to the employee's defined contribution retirement savings plan.

The Company’s policy is to fund pension costs by contributing amounts consistent with the provisions of the Pension Protection Act of 2006 and additional amounts when it deems appropriate. The Company contributed $~~275~~145 million to its qualified pension plans in ~~2013~~2014. At the discretion of management, and depending upon financial market conditions, wethe ~~anticipate~~Company anticipates making up to $~~275~~145 million in contributions to the pension plans in ~~2014~~2015.

Net pension cost includes the following components:

	2013			2012			2011
	2014			2013			2012
	(In millions)
Service cost	$	7364		$	6473		$	5564
Interest cost	~~146~~162			~~155~~146			~~154~~155
Expected return on plan assets	(~~184~~194		)	(~~166~~184		)	(~~168~~166		)
Amortization of:
Net loss	~~148~~110			~~124~~148			99124
Prior service cost	12			1			41
Settlements	—			2—			2
Net pension cost	$	~~184~~144		$	~~180~~184		$	~~146~~180

	2013			2012
	(In millions)
Other changes in plan assets and benefit obligations recognized in Regulatory assets and Other comprehensive income
Net actuarial (gain) loss	$	(418	)	$	289
Amortization of net actuarial loss	(148		)	(125		)
Amortization of prior service cost	(1		)	(1		)
Total recognized in Regulatory assets and Other comprehensive income	$	(567	)	$	163
Total recognized in net periodic pension cost, Regulatory assets and Other comprehensive income	$	(383	)	$	343
Estimated amounts to be amortized from Regulatory assets and Accumulated other comprehensive income into net periodic benefit cost during next fiscal year
Net actuarial loss	$	106		$	143
Prior service cost	$	1		$	1

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)



	2014			2013
	(In millions)
Other changes in plan assets and benefit obligations recognized in Regulatory assets and Other comprehensive income
Net actuarial (gain) loss	$	614		$	(418	)
Amortization of net actuarial loss	(110		)	(148		)
Prior service cost	(2		)	—
Amortization of prior service cost	(2		)	(1		)
Total recognized in Regulatory assets and Other comprehensive income	$	500		$	(567	)
Total recognized in net periodic pension cost, Regulatory assets and Other comprehensive income	$	644		$	(383	)
Estimated amounts to be amortized from Regulatory assets and Accumulated other comprehensive income into net periodic benefit cost during next fiscal year
Net actuarial loss	$	149		$	106
Prior service cost	$	1		$	1

The following table reconciles the obligations, assets and funded status of the plan as well as the amount recognized as prepaid pension cost or pension liability in the Consolidated Statements of Financial Position at December 31:

	2013			2012
	2014			2013
	(In millions)
Accumulated benefit obligation, end of year	$	3,~~111~~712		$	3,~~307~~111
Change in projected benefit obligation
Projected benefit obligation, beginning of year	$	3,~~585~~341		$	3,~~196~~585
Service cost	7364			6473
Interest cost	~~146~~162			~~155~~146
Actuarial (gain) loss	(286		)	342
Plan amendments	(2		)	—
Settlements	—			2
Actuarial (gain) loss	634			(286		)
Benefits paid	(~~177~~181		)	(~~174~~177		)
Projected benefit obligation, end of year	$	34,~~341~~018		$	3,~~585~~341
Change in plan assets
Plan assets at fair value, beginning of year	$	2,~~211~~632		$	12,~~957~~211
Actual return on plan assets	~~316~~212			~~220~~316
Company contributions	~~282~~149			~~208~~282
Benefits paid	(~~177~~181		)	(~~174~~177		)
Plan assets at fair value, end of year	$	2,~~632~~812		$	2,~~211~~632
Funded status of the plan	$	(~~709~~1,206	)	$	(~~1,374~~709	)
Amount recorded as:
Current liabilities	$	(46	)	$	(64	)
Noncurrent liabilities	(~~705~~1,200		)	(~~1,368~~705		)
	$	(~~709~~1,206	)	$	(~~1,374~~709	)
Amounts recognized in Regulatory assets (see Note 8)
Amounts recognized in Regulatory assets (see Note 7 - "Regulatory Matters")
Net actuarial loss	$	1,~~248~~738		$	1,~~805~~248
Prior service cost	95			109
	$	1,~~257~~743		$	1,~~815~~257

At December 31, ~~2013~~2014, the benefits related to the Company’s qualified and nonqualified pension plans expected to be paid in each of the next five years and in the aggregate for the five fiscal years thereafter are as follows:

	(In millions)
2014	$	187
2015	$	210
2015	193
2016	216
2016	200
2017	223
2017	208
2018	233
2018	216
2019	239
2019 - 2023	1,182
2020 - 2024	1,264
Total	$	2,~~186~~385

~~Assumptions~~ ~~used in determining the projected benefit obligation and net pension costs are listed below:~~49

	2013		2012		2011
Projected benefit obligation
Discount rate	4.95	%	4.15	%	5.00	%
Rate of compensation increase	4.20	%	4.20	%	4.20	%
Net pension costs
Discount rate	4.15	%	5.00	%	5.50	%
Rate of compensation increase	4.20	%	4.20	%	4.00	%
Expected long-term rate of return on plan assets	8.25	%	8.25	%	8.50	%

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

~~The~~Assumptions ~~Company~~used ~~employs a formal process~~ in determining the ~~long-term~~projected ~~rate~~benefit ofobligation ~~return for various asset classes. Management reviews historic financial market risks~~ and ~~returns~~net and long-term historic relationships between the asset classes of equities, fixed income and other assets, consistent with the widely accepted capital market principle that asset classes with higher volatility generate a greater return over the long-term. Current market factors such as inflation, interest rates, asset class risks and asset class returns are evaluated and considered before long-term capital market assumptions are determined. The long-term portfolio return is also established employing a consistent formal process, with due consideration of diversification, active investment management and rebalancing. Peer data is reviewed to check for reasonableness. As a result of this process, the Company has long-term rate of return assumptions for its pension ~~plans~~costs ~~of 7.75% and other postretirement benefit plans of 8.00%, for 2014. The Company believes these rates~~ are alisted ~~reasonable assumption for the long-term rate of return on its plan assets for 2014 given its investment strategy.~~below:



	2014	2013	2012
Projected benefit obligation
Discount rate	4.12%	4.95%	4.15%
Rate of compensation increase	4.65%	4.20%	4.20%
Net pension costs
Discount rate	4.95%	4.15%	5.00%
Rate of compensation increase	4.20%	4.20%	4.20%
Expected long-term rate of return on plan assets	7.75%	8.25%	8.25%

The Company employs a formal process in determining the long-term rate of return for various asset classes. Management reviews historic financial market risks and returns and long-term historic relationships between the asset classes of equities, fixed income and other assets, consistent with the widely accepted capital market principle that asset classes with higher volatility generate a greater return over the long-term. Current market factors such as inflation, interest rates, asset class risks and asset class returns are evaluated and considered before long-term capital market assumptions are determined. The long-term portfolio return is also established employing a consistent formal process, with due consideration of diversification, active investment management and rebalancing. Peer data is reviewed to check for reasonableness. As a result of this process, the Company has long-term rate of return assumptions for its pension plans of 7.75% and other postretirement benefit plans of 8.00%, for 2015. The Company believes these rates are a reasonable assumption for the long-term rate of return on its plan assets for 2015 given its investment strategy.

The Company employs a total return investment approach whereby a mix of equities, fixed income and other investments are used to maximize the long-term return on plan assets consistent with prudent levels of risk, with consideration given to the liquidity needs of the plan. Risk tolerance is established through consideration of future plan cash flows, plan funded status and corporate financial considerations. The investment portfolio contains a diversified blend of equity, fixed income and other investments. Furthermore, equity investments are diversified across U.S. and non-U.S. stocks, growth and value stocks and large and small market capitalizations. Fixed income securities generally include market and long duration bonds of companies from diversified industries, mortgage-backed securities, non-US securities, bank loans and U.S. Treasuries. Other assets such as private markets and hedge funds are used to enhance long-term returns while improving portfolio diversification. Derivatives may be utilized in a risk controlled manner, to potentially increase the portfolio beyond the market value of invested assets and/or reduce portfolio investment risk. Investment risk is measured and monitored on an ongoing basis through annual liability measurements, periodic asset/liability studies, and quarterly investment portfolio reviews.

Target allocations for pension plan assets as of December 31, ~~2013~~2014 are listed below:



U.S. Large Cap Equity Securities	22	%
U.S. Small Cap and Mid Cap Equity Securities	5
Non U.S. Equity Securities	20
Fixed Income Securities	25
Hedge Funds and Similar Investments	20
Private Equity and Other	8
	100	%

5450

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

Fair Value Measurements for pension plan assets at December 31, ~~2013~~2014 and ~~2012~~2013 (a):

	December 31, 2013											December 31, 2012
	December 31, 2014											December 31, 2013
	Level 1			Level 2			Level 3		Total			Level 1		Level 2		Level 3		Total
	(In millions)
Asset Category:
Asset category:
Short-term investments (b)	$	1533		$	—		$	—	$	1533		$	—15	$	16—	$	—	$	1615
Equity securities
U.S. Large Cap (c)	639			—			—		639			478		31		—		509
U.S. large cap (c)	638			—			—		638			639		—		—		639
U.S. Small/Mid Cap (d)	160			—			—		160			108		3		—		111
U.S. small/mid cap (d)	162			—			—		162			160		—		—		160
Non U.S. (e)	~~440~~378			94157			—		~~534~~535			~~372~~440		8594		—		~~457~~534
Fixed income securities (f)	115			~~623~~758			—		~~634~~763			6111		~~491~~623		—		~~552~~634
Hedge Funds and Similar Investments (g)	193			50			285		528			147		56		238		441
Hedge funds and similar investments (g)	163			68			315		546			193		50		285		528
Private Equity and Other (h)	—			—			122		122			—		—		125		125
Private equity and other (h)	—			—			135		135			—		—		122		122
Total	$	1,458		$	767		$	407	$	2,632		$	1,166	$	682	$	363	$	2,211
Securities lending (i)	(136		)	(36		)	—		(172		)	—		—		—		—
Securities lending collateral (i)	136			36			—		172			—		—		—		—
Total	$	1,379		$	983		$	450	$	2,812		$	1,458	$	767	$	407	$	2,632

_______________________________________

(a) ~~See~~For ~~Note 3 — Fair Value for~~ a description of levels within the fair value hierarchy see Note 9 to the Consolidated financial Statements, "Fair Value".


(b)	This category predominantly represents certain short-term fixed income securities and money market investments that are managed in separate accounts or commingled funds. Pricing for investments in this category are obtained from quoted prices in actively traded markets or valuations from brokers or pricing services.


(c)	This category comprises both actively and not actively managed portfolios that track the S&P 500 low cost equity index funds. Investments in this category are exchange-traded securities whereby unadjusted quote prices can be obtained. Exchange-traded securities held in a commingled fund are classified as Level 2 assets.


(d)	This category represents portfolios of small and medium capitalization domestic equities. Investments in this category are exchange-traded securities whereby unadjusted quote prices can be obtained. Exchange-traded securities held in a commingled fund are classified as Level 2 assets.


(e)	This category primarily consists of portfolios of non-U.S. developed and emerging market equities. Investments in this category are exchange-traded securities whereby unadjusted quote prices can be obtained. Exchange-traded securities held in a commingled fund are classified as Level 2 assets.


(f)	This category includes corporate bonds from diversified industries, U.S. Treasuries, and mortgage-backed securities. Pricing for investments in this category is obtained from quoted prices in actively traded markets and quotations from broker or pricing services. Non-exchange traded securities and exchange-traded securities held in commingled funds are classified as Level 2 assets.

(g)

This category utilizes a diversified group of strategies that attempt to capture financial market inefficiencies and includes publicly traded debt and equity, publicly traded mutual funds, commingled and limited partnership funds and non-exchange traded securities. Pricing for Level 1 and Level 2 assets in this category is obtained from quoted prices in actively traded markets and quoted prices from broker or pricing services. Non-exchange traded securities held in commingled funds are classified as Level 2 assets. Valuations for some Level 3 assets in this category may be based on limited observable inputs as there may be little, if any, publicly available pricing.

(h)

This category includes a diversified group of funds and strategies that primarily invests in private equity partnerships. This category also includes investments in timber and private mezzanine debt. Pricing for investments in this category is based on limited observable inputs as there is little, if any, publicly available pricing. Valuations for assets in this category may be based on discounted cash flow analyses, relevant publicly-traded comparables and comparable transactions.

~~The~~(i) ~~pension~~In ~~trust~~2014, ~~holds~~DTE ~~debt~~Electric ~~and~~began ~~equity~~a securities ~~directly~~lending ~~and~~program ~~indirectly~~with ~~through~~a ~~commingled~~third ~~funds~~party ~~and institutional mutual funds~~agent. ~~Exchange-traded~~ ~~debt and equity securities held directly are valued using quoted market prices in actively traded markets.~~ The ~~commingled~~program ~~funds~~allows ~~and~~the ~~institutional~~agent ~~mutual~~to ~~funds~~lend ~~hold~~certain ~~exchange-traded equity or debt~~ securities ~~and~~from ~~are valued based on net asset values (NAV). Non-exchange traded fixed income securities are valued by~~ the ~~trustee~~Company's ~~based~~pension ~~upon~~trusts ~~quotations~~to ~~available~~selected ~~from~~entities ~~brokers~~against orreceipt pricing services. A primary price source is identified by asset type, class or issue for each security. The trustee monitors prices supplied by pricing services and may use a supplemental price source or change the primary price source of acollateral ~~given~~(in ~~security if~~ the ~~trustees~~form ~~challenge an assigned price and determine that another price source is considered to be preferable. DTE Electric has obtained an understanding~~ of ~~how~~cash) ~~these~~as ~~prices~~provided ~~are~~for ~~derived, including the nature~~ and ~~observability~~determined ~~of the inputs used~~ in ~~deriving~~accordance ~~such~~with ~~prices. Additionally,~~its ~~DTE Electric selectively corroborates the fair values of~~ securities bylending ~~comparison~~agency ~~of market-based price sources~~agreement.

The 55pension trust holds debt and equity securities directly and indirectly through commingled funds and institutional mutual funds. Exchange-traded debt and equity securities held directly are valued using quoted market prices in actively traded markets. The commingled funds and institutional mutual funds hold exchange-traded equity or debt securities and are valued based on NAV. Non-exchange traded fixed income securities are valued by the trustee based upon quotations available from brokers or pricing services. A primary price source is identified by asset type, class or issue for each security. The trustee monitors prices supplied by pricing services and may use a supplemental price source or change the primary price source of a given security if the trustee challenges an assigned price and determines that another price source is considered to be preferable. DTE Electric has obtained an understanding of how these prices are derived, including the nature and observability of the inputs used in deriving such prices. Additionally, DTE Electric selectively corroborates the fair values of securities by comparison of market-based price sources.

DTE Electric Company

Notes to Consolidated Financial Statements — (Continued)

Fair Value Measurements Using Significant Unobservable Inputs (Level 3):

	Year Ended December 31, 2013									Year Ended December 31, 2012
	Year Ended December 31, 2014									Year Ended December 31, 2013
	Hedge Fundsand Similar			~~Private Equity~~PrivateEquity						Hedge Fundsand Similar			~~Private Equity~~PrivateEquity
	Investments			and Other			Total			Investments			and Other			Total
	(In millions)
Beginning Balance at January 1	$	~~238~~285		$	~~125~~122		$	~~363~~407		$	~~205~~238		$	~~116~~125		~~321~~363
Total realized/unrealized gains (losses):
Total realized/unrealized gains (losses)	15			12			27			29			2			31
Realized gains (losses)	—			12			12			13			(4		)	9
Unrealized gains (losses)	29			(10		)	19			(3		)	8			5
Purchases, sales and settlements:
Purchases	1816			1522			3338			~~176~~18			2315			~~199~~33
Sales	—(1		)	(2021		)	(2022		)	~~(153~~—		)	(1820		)	(~~171~~20		)
Ending Balance at December 31	$	~~285~~315		$	~~122~~135		$	~~407~~450		$	~~238~~285		$	~~125~~122		$	~~363~~407
The amount of total gains for the period attributable to the change in unrealized gains or losses related to assets still held at the end of the period	$	2715		$	28		$	2923		$	1127		$	42		$	1529

There were no transfers between Level 3 and Level 2 and there were no significant transfers between Level 2 and Level 1 in the years ended December 31, ~~2013~~2014 and ~~2012~~2013.



	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total Year to Date
	(In millions)
2014
Operating Revenues	$	1,410	$	1,281	$	1,357	$	1,234	$	5,282
Operating Income	$	271	$	259	$	272	$	250	$	1,052
Net Income	$	137	$	130	$	136	$	129	$	532

2013
Operating Revenues	$	1,219	$	1,265	$	1,457	$	1,256	$	5,197
Operating Income	$	235	$	202	$	338	$	225	$	1,000
Net Income	$	116	$	90	$	180	$	101	$	487

	FirstQuarter		SecondQuarter		ThirdQuarter		FourthQuarter		Total Year to Date
	(In millions)
2013
Operating Revenues	$	1,219	$	1,265	$	1,457	$	1,256	$	5,197
Operating Income	$	235	$	202	$	338	$	225	$	1,000
Net Income	$	116	$	90	$	180	$	101	$	487
2012
Operating Revenues	$	1,198	$	1,289	$	1,542	$	1,262	$	5,291
Operating Income (a)	$	213	$	265	$	378	$	172	$	1,028
Net Income	$	97	$	127	$	195	$	67	$	486


(a)	Represents the aggregate fees for the audits of DTE Electric’s annual financial statements included in the Annual Reports on Form 10-K and for the reviews of the financial statements included in the Quarterly Reports on Form 10-Q.


(b)	Represents the aggregate fees billed for audit-related services for various attest services.


(c)	Represents consulting services for the purpose of providing advice and recommendations.

12-48		Computation of Ratio of Earnings to Fixed Charges
12-52		Computation of Ratio of Earnings to Fixed Charges
23-28		Consent of PricewaterhouseCoopers LLP
23-29		Consent of PricewaterhouseCoopers LLP
31-87		Chief Executive Officer Section 302 Form 10-K Certification of Periodic Report
31-95		Chief Executive Officer Section 302 Form 10-K Certification of Periodic Report
31-88		Chief Financial Officer Section 302 Form 10-K Certification of Periodic Report
31-96		Chief Financial Officer Section 302 Form 10-K Certification of Periodic Report
101.INS		XBRL Instance Document
101.SCH		XBRL Taxonomy Extension Schema
101.CAL		XBRL Taxonomy Extension Calculation Linkbase
101.DEF		XBRL Taxonomy Extension Definition Database
101.LAB		XBRL Taxonomy Extension Label Linkbase
101.PRE		XBRL Taxonomy Extension Presentation Linkbase



		Certain exhibits listed below refer to "The Detroit Edison Company" and were effective prior to the change to DTE Electric Company effective January 1, 2013.
3(a)		Articles of Incorporation of DTE Electric Company, as amended effective January 1, 2013. (Exhibit 3-1 to Form 8-K filed January 2, 2013).

3(b)		Bylaws of The Detroit Edison Company, as amended through September 22, 1999. (Exhibit 3-14 to Form 10-Q for the quarter ended September 30, 1999).

4(a)		Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit B-1 to Registration Statement on Form A-2 (File No. 2-1630)) and indentures supplemental thereto, dated as of dates indicated below, and filed as exhibits to the filings set forth below:

		Supplemental Indenture, dated as of December 1, 1940, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit B-14 to Registration Statement on Form A-2 (File No. 2-4609)). (amendment)

		Supplemental Indenture, dated as of September 1, 1947, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit B-20 to Registration Statement on Form S-1 (File No. 2-7136)). (amendment)

		Supplemental Indenture, dated as of March 1, 1950, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit B-22 to Registration Statement on Form S-1 (File No. 2-8290)). (amendment)

		Supplemental Indenture, dated as of November 15, 1951, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit B-23 to Registration Statement on Form S-1 (File No. 2-9226)). (amendment)




		Supplemental Indenture, dated as of September 30, 2005, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between Detroit Edison and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-248 to Form 10-Q for the quarter ended September 30, 2005). (2005 Series E)

		Supplemental Indenture, dated as of May 15, 2006, to the Mortgage and Deed of Trust, dated as of October 1, 1924, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-250 to Form 10-Q for the quarter ended June 30, 2006). (2006 Series A)

		Supplemental Indenture, dated as of May 1, 2008 to Mortgage and Deed of Trust dated as of October 1, 1924 between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-253 to Form 10-Q for the quarter ended June 30, 2008). (2008 Series ET)



		Fourteenth Supplemental Indenture, dated as of July 15, 2004, to the Collateral Trust Indenture, dated as of June 30, 1993, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-239 to Form 10-Q for the quarter ended June 30, 2004). (2004 Series D 5.40% Senior Notes due 2014)

		Sixteenth Supplemental Indenture, dated as of April 1, 2005, to the Collateral Trust Indenture, dated as of June 30, 1993, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4.1 to Registration Statement on Form S-4 (File No. 333-123926)). (2005 Series AR 4.80% Senior Notes due 2015 and 2005 Series BR 5.45% Senior Notes due 2035)

		Eighteenth Supplemental Indenture, dated as of September 15, 2005, to the Collateral Trust Indenture, dated as of June 30, 1993, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4.1 to Form 8-K dated September 29, 2005). (2005 Series C 5.19% Senior Notes due October 1, 2023)

		Nineteenth Supplemental Indenture, dated as of September 30, 2005, to the Collateral Trust Indenture, dated as of June 30, 1993, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-247 to Form 10-Q for the quarter ended September 30, 2005). (2005 Series E 5.70% Senior Notes due 2037)




		Twentieth Supplemental Indenture, dated as of May 15, 2006, to the Collateral Trust Indenture dated as of June 30, 1993, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-249 to Form 10-Q for the quarter ended June 30, 2006). (2006 Series A Senior Notes due 2036)

		Twenty-Second Supplemental Indenture, dated as of December 1, 2007, to the Collateral Trust Indenture, dated as of June 30, 1993, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4.1 to Form 8-K dated December 18, 2007). (2007 Series A Senior Notes due 2038)

		Twenty-Fourth Supplemental Indenture, dated as of May 1, 2008, to the Collateral Trust Indenture, dated as of June 30, 1993, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-254 to Form 10-Q for the quarter ended June 30, 2008). (2008 Series ET Variable Rate Senior Notes due 2029)

		Amendment dated June 1, 2009 to the Twenty-fourth Supplemental Indenture, dated as of May 1, 2008 to the Collateral Trust Indenture, dated as of June 30, 1993 between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A. as successor trustee (2008 Series ET Variable Rate Senior Notes due 2029) (Exhibit 4-265 to Form 10-Q for the quarter ended June 30, 2009)

		Twenty-Fifth Supplemental Indenture, dated as of June 1, 2008, to the Collateral Trust Indenture, dated as of June 30, 1993, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-256 to Form 10-Q for the quarter ended June 30, 2008). (2008 Series G 5.60% Senior Notes due 2018)

		Twenty-Sixth Supplemental Indenture, dated as of July 1, 2008, to the Collateral Trust Indenture, dated as of June 30, 1993, between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-258 to Form 10-Q for the quarter ended June 30, 2008). (2008 Series KT Variable Rate Senior Notes due 2020)

		Amendment dated June 1, 2009 to the Twenty-Sixth Supplemental Indenture, dated as of July 1, 2008 to the Collateral Trust Indenture, dated as of June 30, 1993 between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee Exhibit 4-266 to Form 10-Q for the quarter ended June 30, 2009)



		Twenty-Ninth Supplemental Indenture, dated as of March 15, 2009, to the Collateral Trust Indenture, dated as of June 30, 1993 between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee (Exhibit 4-264 to Detroit Edison's Form 10-Q for the quarter ended March 31, 2009). (2009 Series BT 6.00% Senior Notes due 2036)

		Thirty-First Supplemental Indenture, dated as of August 1, 2010 to the Collateral Trust Indenture, dated as of June 1, 1993 by and between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee. (Exhibit 4-270 to Form 10-Q for the quarter ended September 30, 2010). (2010 Series B 3.45% Senior Notes due 2020)

		Thirty-Second Supplemental Indenture, dated as of September 1, 2010, to the Collateral Trust Indenture, dated as of June 1, 1993 between The Detroit Edison Company and The Bank of New York Mellon Trust Company, N.A., as successor trustee. (Exhibit 4-272 to Form 10-Q for the quarter ended September 30, 2010.) (2010 Series A 4.89% Senior Notes due 2020)

10(a)		Securitization Property Sales Agreement dated as of March 9, 2001, between The Detroit Edison Securitization Funding LLC and The Detroit Edison Company. (Exhibit 10-42 to Form 10-Q for the quarter ended March 31, 2001).

10(b)		Certain arrangements pertaining to the employment of Gerard M. Anderson with The Detroit Edison Company, dated October 6, 1993. (Exhibit 10-48 to Form 10-K for year ended December 31, 1993).

10(c)		Certain arrangements pertaining to the employment of David E. Meador with The Detroit Edison Company, dated January 14, 1997. (Exhibit 10-5 to Form 10-K for the year ended December 31, 1996).

10(d)		The Detroit Edison Company Supplemental Long-Term Disability Plan, dated January 27, 1997. (Exhibit 10-4 to Form 10-K for the year ended December 31, 1996).

10(e)		Form of Second Amended and Restated DTE Electric Company Five-Year Credit Agreement, dated as of October 21, 2011 and amended and restated as of April 15, 2013 by and among The DTE Electric Company, the lenders party thereto, Barclays Bank PLC, as Administrative Agent, and Citibank, N.A., JPMorgan Chase Bank, N.A., and The Royal Bank of Scotland plc, as Co-Syndication Agents (Exhibit 10.01 to Form 8-K dated April 9, 2013

99(a)		Belle River Participation Agreement, dated as of December 1, 1982, between The Detroit Edison Company and Michigan Public Power Agency. (Exhibit 28-5 to Registration Statement No. 2-81501).

99(b)		Belle River Transmission Ownership and Operating Agreement, dated as of December 1, 1982, between The Detroit Edison Company and Michigan Public Power Agency. (Exhibit 28-6 to Registration Statement No. 2-81501).

32-87		Chief Executive Officer Section 906 Form 10-K Certification of Periodic Report
32-95		Chief Executive Officer Section 906 Form 10-K Certification of Periodic Report
32-88		Chief Financial Officer Section 906 Form 10-K Certification of Periodic Report
32-96		Chief Financial Officer Section 906 Form 10-K Certification of Periodic Report

			DTE ELECTRIC COMPANY(Registrant)
Date:	February 1413, ~~2014~~2015	By	/s/ GERARD M. ANDERSON
			Gerard M. Anderson
			Chairman of the Board andChief Executive Officer

/s/ GERARD M. ANDERSON

/s/ PETER B. OLEKSIAK

Gerard M. Anderson

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