DTEDTE Energy

We note your non-GAAP disclosures of Utility Margin on pages 32 and 34, and Nonutility Margin on pages 36 and 38, within the tabulations and associated segment results of operations discussions, and we see that you have disclosure in the third paragraph on page 31, identifying operating income as the most comparable GAAP measure.

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However, you have not provided any discussion and analysis of this GAAP measure that would be comparable to that provided for the non-GAAP margin measures. We understand that your non-GAAP margin measures generally represent segment revenues less fuel, purchased power, and gas expenses, and exclude certain amounts that would be attributable to a GAAP measure of cost of revenue, such as the allocable amounts of operation and maintenance expense and depreciation and amortization, as would be reflected in a GAAP measure of gross margin. We believe that you should identify gross margin as the most directly comparable GAAP measure in providing the disclosures required by Item 10(e)(1)(i)(A) and Item 10(e)(1)(i)(B) of Regulation S-K. Your disclosures should include a discussion and analysis of the changes in gross margin, comparable to that provided for changes in your non-GAAP measures of Utility Margin and Non-utility Margin. Please refer to the guidance in the answers to Questions 102.10(a) and 102.10(b) of our Compliance and Disclosure Interpretations (C&DIs) for Non-GAAP measures, and submit the revisions that you propose to address the concerns outlined above, utilizing gross margin as the most directly comparable GAAP measure.

We acknowledge the SEC staff’s comment and view that for the non-GAAP measures of Utility Margin and Non-utility Margin presented, the most directly comparable GAAP-basis measure is a fully burdened gross margin. For future Form 10-K and 10-Q filings, beginning with the quarter ended March 31, 2023, the Company will remove the non-GAAP measures of Utility Margin and Non-utility Margin.

* * * * *

We believe that the foregoing is fully responsive to the Comment Letter.

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If you have any questions, concerns, or require clarification on any of the matters addressed herein, please contact Tracy Myrick, Chief Accounting Officer at (313) 235-4846 or tracy.myrick@dteenergy.com.

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Please tell us how you recognize revenue under alternative revenue programs and what consideration you gave to disclosing your accounting policy.

We acknowledge and understand the accounting and reporting requirements for alternative revenue programs (ARPs) as provided for in ASC 980-605-25, Alternative Revenue Programs. DTE Energy recognizes revenue from two different mechanisms that are accounted for as ARPs. DTE Electric and DTE Gas are required to participate in an energy waste reduction program that provides a financial incentive if the energy savings of the utilities’ customers exceed annual targets established by the Michigan Public Service Commission (MPSC).

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DTE Energy recognizes revenue related to the incentive as soon as energy savings exceed the annual targets established by the MPSC. In addition, DTE Gas utilizes a revenue decoupling mechanism (RDM) authorized by the MPSC that is designed to minimize the impact on revenues of changes in average customer usage. DTE Gas recognizes revenue from the RDM once the specific events permitting billing of additional revenues have been completed.

DTE Energy reported total operating revenues from utility operations of $6.4 billion, $6.5 billion, and $6.2 billion for the years ended December 31, 2017, 2016 and 2015, respectively. Revenues recognized under ARPs and the percentage of total operating revenues for utility operations were $22 million (0.3%), $17 million (0.3%) and $21 million (0.3%) for the same respective periods. We have and will continue to monitor the materiality of revenues from ARPs on an annual basis to determine if disclosure of the related accounting policy is warranted. For all periods presented, ARP revenues were considered immaterial and therefore the related accounting policy was not disclosed.

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We note that adjustments to reconcile net income/reported earnings to operating earnings are presented net of income taxes. Please revise your disclosure in future presentations to disclose income taxes as a separate adjustment, which should be clearly explained.

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Please also consider revising the reconciliations of net income to operating earnings in Exhibit 99.1 to present income taxes as a separate adjustment rather than netting income taxes against other adjustments. Please refer to Question 102.11 of our Compliance and Disclosure Interpretations; Non-GAAP Financial Measures.

We acknowledge and understand the requirements posed in Question 102.11 of the SEC's Compliance and Disclosure Interpretations; Non-GAAP Financial Measures. In future filings, we will present operating adjustments as gross amounts and include income taxes as a separate adjustment. Refer to the illustrative example based on the quarter ended March 31, 2018 filing presented below for how we intend to disclose the reconciliation of reported to operating earnings:

Segment Net Income (Unaudited)

Three Months Ended March 31,

2018

2017

Reported

Earnings

Pre-tax

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Adjustments

Income

Taxes*

Operating

(In millions)

DTE Electric

$

140

—

A

142

106

B

(1

)

(9

C

DTE Gas

104

111

107

(3

Non-utility operations

Gas Storage and Pipelines

Power and Industrial Projects

(4

Energy Trading

(40

D

(128

Total Non-utility operations

138

(44

105

171

Corporate and Other

(21

(16

Net Income Attributable to DTE Energy Company

361

(53

342

400

322

* Excluding tax related adjustments, the amount of income taxes was calculated using a combined federal and state income tax rate of 27% for the three months ended March 31, 2018 and combined federal and state income tax rate of 41% for the three months ended March 31, 2017.

Adjustments key

A) True-up of remeasurement of deferred taxes as a result of the enactment of the Tax Cuts and Jobs Act of 2017 — recorded in Income Tax Expense

B) Implementation costs related to a new customer billing system, net of authorized regulatory deferral — recorded in Operating Expenses — Operation and maintenance

C) One-time benefits expense reimbursement — recorded in Operating Expenses — Operation and maintenance

D) Certain adjustments resulting from derivatives being marked-to-market without revaluing the underlying non-derivative contracts and assets — recorded in Operating Expenses — Fuel, purchased power, and gas — non-utility

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