Unaudited Consolidated Financial Statements as of and for the Three and Nine
Unaudited Consolidated Financial Statements as of and for the Three and Nine Months Ended September 30, 2026
Page Definitions 1 Consolidated Statements of Operations (Unaudited) 2 Consolidated Statements of Comprehensive Income 3 (Unaudited) Consolidated Statements of Financial Position 4 (Unaudited) Consolidated Statements of Cash Flows (Unaudited) 6 Consolidated Statements of Changes in 7 Shareholder's Equity (Unaudited) Notes to Consolidated Financial Statements 8 (Unaudited) Note 1 — Organization and Basis of Presentation 8 Note 2 — Significant Accounting Policies 9 Note 3 — New Accounting Pronouncements 11 Note 4 — Revenue 12 Note 5 — Regulatory Matters 13 Note 6 — Fair Value 14 Note 7 — Financial and Other Derivative 15 Instruments Note 8 — Long-Term Debt 15 Note 9 — Short-Term Credit Arrangements and 15 Borrowings Note 10 — Commitments and Contingencies 16 Note 11 — Retirement Benefits and Trusteed Assets 17
ASU Accounting Standards Update issued by the FASB Company DTE Gas Company and subsidiary companies Customer Choice Michigan legislation giving customers the option of retail access to alternative suppliers for natural gas DTE Energy Company, directly or indirectly the parent of DTE Energy DTE Electric Company, DTE Gas, and numerous non-utility subsidiaries DTE Gas DTE Gas Company (an indirect wholly-owned subsidiary of DTE Energy) and subsidiary companies Michigan Department of Environment, Great Lakes, and EGLE Energy, formerly known as Michigan Department of Environmental Quality EPA U.S. Environmental Protection Agency FASB Financial Accounting Standards Board FERC Federal Energy Regulatory Commission A Gas Cost Recovery mechanism authorized by the MPSC that GCR allows DTE Gas to recover through rates its natural gas costs MGP Manufactured Gas Plant MPSC Michigan Public Service Commission TCJA Tax Cuts and Jobs Act of 2017, which reduced the corporate Federal income tax rate from 35% to 21% Topic 606 FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, as amended VIE Variable Interest Entity
September 30, ASSETS 2026 December 31, Current Assets (In millions) 2025 ────────────────────────────────────────────────────────────────────────────── Cash and cash equivalents $ — $ 31 Accounts receivable (less allowance for doubtful accounts of $31 and $17, respectively) Customer 160 422 Affiliates 20 10 Other 3 2 Inventories Gas 131 45 Materials and supplies 36 38 Gas customer choice 35 39 deferred asset Notes receivable Affiliates 8 — Other 4 3 Regulatory assets 3 12 Prepaid property tax 55 24 Other 7 7 462 633 Investments 55 54 Property Property, plant, and 9,740 9,212 equipment Accumulated depreciation and -2,166 -2,072 amortization 7,574 7,140 Other Assets Regulatory assets 532 559 Notes receivable 48 49 Prepaid pension costs — 142 130 affiliates Prepaid postretirement costs — 321 298 affiliates Other 53 42 1,096 1,078 Total Assets $ 9,187 $ 8,905
LIABILITIES AND September 30, SHAREHOLDER'S EQUITY 2026 Current Liabilities (In millions, except December 31, Accounts payable shares) 2025 ────────────────────────────────────────────────────────────────────────────── Affiliates $ 24 $ 30 Other 230 208 Accrued interest 45 31 Short-term borrowings Affiliates 1 1 Other — 80 Current portion of 40 — long-term debt Regulatory 25 40 liabilities Other 51 59 416 449 Long-Term Debt, net 3,302 3,043 of current portion Other Liabilities Deferred income taxes 1,069 1,031 Regulatory 1,004 1,006 liabilities Asset retirement 217 208 obligations Accrued pension liability — 10 11 affiliates Accrued postretirement 2 2 liability — affiliates Other 44 39 2,346 2,297 Commitments and Contingencies (Notes 5 and 10) Shareholder's Equity Common stock ($1 par value, 15,100,000 shares authorized, and 10,300,000 shares 1,803 1,803 issued and outstanding for both periods) Retained earnings 1,320 1,313 Total Shareholder's 3,123 3,116 Equity Total Liabilities and Shareholder's $ 9,187 $ 8,905 Equity
Nine Months Ended September 30, 2026 Operating Activities (In millions) 2025 ────────────────────────────────────────────────────────────────────────────── Net Income $ 176 $ 175 Adjustments to reconcile Net Income to Net cash from operating activities: Depreciation and amortization 174 166 Allowance for equity funds used during -3 -1 construction Deferred income taxes 26 34 Changes in assets and liabilities: Accounts receivable, net 251 188 Inventories -84 -51 Prepaid pension costs — affiliates -12 -13 Prepaid postretirement benefit costs — -23 -23 affiliates Accounts payable -24 -13 Accrued pension liability — -1 -2 affiliates Regulatory assets and liabilities 41 61 Other current and noncurrent assets and -13 -8 liabilities Net cash from operating activities 508 513 Investing Activities Plant and equipment expenditures -580 -437 Notes receivable from affiliates -8 -193 Other -1 -1 Net cash used for investing -589 -631 activities Financing Activities Issuance of long-term debt, net of 298 258 issuance costs Capital contribution by parent — 50 company Short-term borrowings, net — — -14 affiliates Short-term borrowings, net — other -80 -9 Dividends paid on common stock -169 -166 Other 1 1 Net cash from financing activities 50 120 Net Increase (Decrease) in Cash and Cash -31 2 Equivalents Cash and Cash Equivalents at Beginning 31 — of Period Cash and Cash Equivalents at End of $ — $ 2 Period Supplemental disclosure of non-cash investing and financing activities Plant and equipment expenditures in $ 118 $ 78 accounts payable
DTE Gas is a public utility engaged in the purchase, storage, transportation, distribution, and sale of natural gas to approximately 1.4 million customers throughout Michigan and the sale of storage and transportation capacity. The Company is regulated by the MPSC and certain activities are regulated by the FERC. In addition, the Company is regulated by other federal and state regulatory agencies including the EPA and EGLE.
The Consolidated Financial Statements should be read in conjunction with the Notes to Consolidated Financial Statements included in the Company's 2025 Consolidated Financial Statements furnished on Form 8-K.
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.
The Consolidated Financial Statements are unaudited but, in the Company's opinion include all adjustments necessary to present a fair statement of the results for the interim periods. All adjustments are of a normal recurring nature, except as otherwise disclosed in these Consolidated Financial Statements and Notes to Consolidated Financial Statements. Financial results for this interim period are not necessarily indicative of results that may be expected for any other interim period or for the fiscal year ending December 31, 2026.
Certain prior year balances were reclassified to match the current year's Consolidated Financial Statements presentation.
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 significantly influence the operating policies of the investee. When the Company does not influence the operating policies of an investee, the equity investment is valued at cost minus any impairments, if applicable. 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 holds a variable interest in a natural gas pipeline entity through purchases under a long-term transportation capacity contract. The Company does not have a controlling influence in and does not consolidate the pipeline entity. As of September 30, 2026, the carrying amount of liabilities in the Company's Consolidated Statements of Financial Position that relate to its variable interest under the long-term contract are primarily related to working capital accounts and generally represent the amounts owed by the Company for transportation associated with the current billing cycle under the contract. The Company has not provided any significant form of financial support associated with the long-term contract. There is no material potential exposure to loss as a result of the Company's variable interest through the long-term contract. 8
Tax rates are affected by estimated annual permanent items, regulatory adjustments, and discrete items that may occur in any given period, but are not consistent from period to period. The table below summarizes how the Company's effective income tax rates have varied from the statutory federal income tax rate:
The Company had federal and state income tax receivables with DTE Energy of $9 million and $8 million at September 30, 2026 and December 31, 2025, respectively, which are included in Accounts receivable — Affiliates on the Consolidated Statements of Financial Position.
The Company received an allocation of costs from DTE Energy associated with stock-based compensation of $3 million for the three months ended September 30, 2026 and 2025, while such allocation was $10 million and $9 million for the nine months ended September 30, 2026 and 2025, respectively.
Financing receivables are primarily composed of trade receivables, notes receivable, and unbilled revenue. The Company's financing receivables are stated at net realizable value.
The Company monitors the credit quality of financing receivables on a regular basis by reviewing credit quality indicators and monitoring for trigger events, such as a credit rating downgrade or bankruptcy. Credit quality indicators include, but are not limited to, ratings by credit agencies where available, collection history, collateral, counterparty financial statements and other internal metrics. Utilizing such data, the Company has determined three internal grades of credit quality. Internal grade 1 includes financing receivables for counterparties where credit rating agencies have ranked the counterparty as investment grade. To the extent credit ratings are not available, the Company utilizes other credit quality indicators to determine the level of risk associated with the financing receivable. Internal grade 1 may include financing receivables for counterparties for which credit rating agencies have ranked the counterparty as below investment grade; however, due to favorable information on other credit quality indicators, the Company has determined the risk level to be similar to that of an investment grade counterparty. Internal grade 2 includes financing receivables for counterparties with limited credit information and those with a higher risk profile based upon credit quality indicators. Internal grade 3 reflects financing receivables for which the counterparties have the greatest level of risk, including those in bankruptcy status. 9
Notes to Consolidated Financial Statements (Unaudited) - (Continued) The following represents the Company's financing receivables by year of origination, classified by internal grade of credit risk, including current year-to-date gross write-offs, if any. The related credit quality indicators and risk ratings utilized to develop the internal grades have been updated through September 30, 2026.
(a) Included in Notes receivable — Affiliates on the Consolidated Statements of Financial Position.
The allowance for doubtful accounts on accounts receivable for the Company is generally calculated using an aging approach that utilizes rates developed in reserve studies. The Company establishes an allowance for uncollectible accounts based on historical losses and management's assessment of existing and future 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. The Company generally assesses 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.
The allowance for doubtful accounts for other receivables is generally calculated based on specific review of probable future collections based on receivable balances generally in excess of 30 days. Existing and future economic conditions, customer trends and other factors are also considered. Receivables are written off on a specific identification basis and determined based upon the specific circumstances of the associated receivable.
Notes receivable are primarily comprised of a finance lease receivable and loans that are included in Notes Receivable on the Consolidated Statements of Financial Position.
The Company establishes an allowance for credit loss for principal and interest amounts due that are estimated to be uncollectible in accordance with the contractual terms of the note receivable. In determining the allowance for credit losses for notes receivable, the Company considers the historical payment experience and other factors that are expected to have a specific impact on the counterparty's ability to pay including existing and future economic conditions. Notes receivable are typically considered delinquent when payment is not received for periods ranging from 60 to 120 days. If amounts are no longer probable of collection, the Company may consider the note receivable impaired, adjust the allowance, and cease accruing interest (nonaccrual status).
Cash payments received on nonaccrual status notes receivable, that do not bring the account contractually current, are first applied to the contractually owed past due interest, with any remainder applied to principal. Accrual of interest is generally resumed when the note receivable becomes contractually current. 10
Notes to Consolidated Financial Statements (Unaudited) - (Continued) The following tables present a roll-forward of the activity for the Company's financing receivables credit loss reserves:
Trade accounts receivable Other (In millions) receivables Total ────────────────────────────────────────────────────────────────────────────── Beginning reserve balance, $ 16 $ 1 $ 17 January 1, 2026 Current period 33 — 33 provision Write-offs charged against -29 — -29 allowance Recoveries of amounts previously 10 — 10 written off Ending reserve balance, $ 30 $ 1 $ 31 September 30, 2026
Trade accounts receivable Other (In millions) receivables Total ────────────────────────────────────────────────────────────────────────────── Beginning reserve balance, $ 21 $ 1 $ 22 January 1, 2025 Current period 25 — 25 provision Write-offs charged against -42 — -42 allowance Recoveries of amounts previously 12 — 12 written off Ending reserve balance, $ 16 $ 1 $ 17 December 31, 2025
Uncollectible expense is primarily comprised of the current period provision for allowance for doubtful accounts. Uncollectible expense was $5 million and $1 million for the three months ended September 30, 2026 and 2025, respectively, and $33 million and $24 million for the nine months ended September 30, 2026 and 2025, respectively.
There are no material amounts of past due financing receivables for the Company as of September 30, 2026.
In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets , which provides a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606. The Company adopted the ASU effective January 1, 2026 on a prospective basis and elected not to apply the practical expedient, with no impact on the Company's financial position or results of operations.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement-Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, as amended . The amendments in this update require disaggregated disclosure of income statement expense captions into specified categories in disclosures with the footnotes to the financial statements. The ASU is effective for the Company for annual reporting periods beginning after December 15, 2026, and for interim reporting periods beginning after December 15, 2027. The guidance may be applied on a prospective or retrospective basis. Early adoption is permitted. The Company will apply the guidance upon the effective date.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The amendments in this update modernize the accounting guidance for the costs to develop software for internal use. The amendments remove all references to a sequential software development method (referred to as "project stages") throughout ASC 350-40 and clarifies the threshold entities apply to begin capitalizing eligible costs. The ASU is effective for the Company for annual and interim periods beginning after December 15, 2027. The guidance may be applied on a prospective, retrospective, or modified transition basis. Early adoption is permitted. The Company is currently assessing the impact of this standard on its Consolidated Financial Statements. 11
Notes to Consolidated Financial Statements (Unaudited) - (Continued) In May 2026, the FASB issued ASU No. 2026-02, Environmental Credits and Environmental Credit Obligations (Topic 818) . The amendments in this update provide recognition, measurement, presentation, and disclosure requirements for all entities that generate, purchase, or receive environmental credits or have a regulatory compliance obligation that may be settled with environmental credits. The ASU is effective for the Company for annual periods beginning after December 15, 2027. The guidance will be applied on a retrospective basis as required by the ASU. Early adoption is permitted. The Company is currently assessing the impact of this standard on its Consolidated Financial Statements.
(a) Includes revenue adjustments related to various regulatory mechanisms, including the GCR, which may vary based on changes in the cost of gas.
In accordance with optional exemptions available under Topic 606, the Company did not disclose the value of unsatisfied performance obligations for (1) contracts with an original expected length of one year or less, (2) with the exception of fixed consideration, contracts for which revenue is recognized at the amount to which the Company has the right to invoice for goods provided and services performed, and (3) contracts for which variable consideration relates entirely to an unsatisfied performance obligation.
Such contracts consist of varying types of performance obligations, including the supply and delivery of energy related products and services. Contracts with variable volumes and/or variable pricing have also been excluded as the related consideration under the contract is variable at inception of the contract. Contract lengths vary from cancellable to multi-year. 12
Notes to Consolidated Financial Statements (Unaudited) - (Continued) The Company expects to recognize revenue for the following amounts related to fixed consideration associated with remaining performance obligations in each of the future periods noted:
DTE Gas filed a rate case with the MPSC on November 13, 2025 requesting a net increase in base rates of $163 million based on a projected twelve-month period ending September 30, 2027, and an increase in return on equity from 9.8% to 10.25%. The net increase is based on a total revenue deficiency of $238 million, net of the IRM roll-in of $75 million. The requested net increase in base rates was primarily due to continued infrastructure investment and increasing operations and maintenance costs needed to ensure the continued safe and reliable delivery of natural gas to customers. On September 10, 2026 the MPSC issued an order approving an annual revenue increase of $149 million for services rendered on or after October 1, 2026 and a return of equity of 9.8%. 13
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 September 30, 2026 and December 31, 2025. The Company believes it uses valuation techniques that maximize the use of observable market-based inputs and minimize the use of unobservable inputs.
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:
• 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.
As of September 30, 2026, the Company had $16 million of equity securities, which are recorded at fair value on a recurring basis and classified as Level 1 assets. These assets are included in Investments on the Consolidated Statements of Financial Position. At December 31, 2025, the Company had $44 million recorded at fair value on a recurring basis and classified as Level 1 assets. The assets included $31 million of cash equivalents and $13 million of equity securities recorded in Cash and cash equivalents and Investments, respectively, on the Consolidated Statements of Financial Position. For both periods, the assets exclude the cash surrender value of life insurance investments.
The following table presents the carrying amount and fair value of financial instruments:
For further fair value information on financial and derivative instruments, see Note 7 to the Consolidated Financial Statements, "Financial and Other Derivative Instruments." 14
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 derivative gain or loss is deferred in Accumulated other comprehensive income (loss) and later reclassified into earnings when the underlying transaction occurs. 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 purchases, stores, transports, distributes, and sells natural gas, and buys and sells transportation and storage capacity. The Company has fixed-priced contracts for portions of its expected natural gas supply requirements through March 2029. Substantially all of these contracts meet the normal purchases and normal sales exception and are therefore accounted for under the accrual method. Forward transportation and storage contracts are generally not derivatives and are therefore accounted for under the accrual method.
(a) Proceeds used for the repayment of short-term borrowings, for capital expenditures, and for other corporate purposes.
In June 2026, the U.S. Department of Energy's Office granted a $1.6 billion loan to DTE Gas to support modernization of DTE Gas' natural gas infrastructure under the Energy Dominance Financing program (EDF). There have been no draws on this loan as of September 30, 2026.
The Company has a $300 million unsecured revolving credit agreement that can be used for general corporate borrowings but is intended to provide liquidity support for the Company's commercial paper program. Borrowings under the revolver are available at prevailing short-term interest rates. The facility will expire in October 2030. As of September 30, 2026, the Company did not have any commercial paper or revolver borrowings outstanding. 15
Notes to Consolidated Financial Statements (Unaudited) - (Continued) The unsecured revolving credit agreement requires the Company to maintain a total funded debt to capitalization ratio of no more than 0.65 to 1. In the agreement, "total funded debt" means all indebtedness of the Company and its consolidated subsidiaries, including finance lease obligations, hedge agreements, and guarantees of third parties' debt, but excluding contingent obligations, nonrecourse and junior subordinated debt, and, except for calculations at the end of the second quarter, certain short-term debt. "Capitalization" means the sum of (a) total funded debt plus (b) "consolidated net worth," which is equal to consolidated total 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 September 30, 2026, the total funded debt to total capitalization ratio for the Company was 0.52 to 1 and was in compliance with this financial covenant.
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 MGP sites. The Company owns or previously owned 14 former MGP sites. Investigations have revealed contamination related to the by- products of gas manufacturing at each site. Cleanup of eight MGP sites is complete, and those sites are closed. The Company has also completed partial closure of five additional sites. Cleanup activities associated with the remaining sites will continue over the next several years. The MPSC has established a cost deferral and rate recovery mechanism for investigation and remediation costs incurred at former MGP sites. In addition to the MGP sites, the Company is also in the process of cleaning up other contaminated sites, including gate stations, gas pipeline releases, and underground storage tank locations. At September 30, 2026 and December 31, 2025, the Company had $25 million accrued for remediation. These costs are not discounted to their present value. Any change in assumptions, such as remediation techniques, nature and extent of contamination, and regulatory requirements, could impact the estimate of remedial action costs for the sites and affect the Company's financial position and cash flows. The Company anticipates the cost amortization methodology approved by the MPSC, which allows for amortization of the MGP costs over a ten-year period beginning with the year subsequent to the year the MGP costs were incurred, will prevent the associated investigation and remediation costs from having a material adverse impact on the Company's results of operations.
Air — In March 2023, the EPA published the Good Neighbor Rule, which includes provisions for compressor engines operated for the transportation of natural gas. In June 2024, the United States Supreme Court issued an opinion granting emergency applications to stay the Good Neighbor Rule. The stay will remain in effect during other litigation. The status of the rule remains uncertain as litigation is ongoing. At this time, the Company does not expect a significant financial impact.
In March 2024, the EPA finalized the National Ambient Air Quality Standards for fine particulate matter, particles of pollution with diameters generally 2.5 micrometers and smaller (PM2.5). It is likely that areas of Michigan in which the Company operates will be designated as non-attainment in the future and the state will be required to develop a State Implementation Plan for such areas. However, the EPA has announced its intention to review the standard. No impact is expected in the near term, and any long-term financial impacts cannot be assessed at this time.
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 and may provide guarantees in certain indemnification agreements. The Company may also provide indirect guarantees for the indebtedness of others.
There are several bargaining units for the Company's approximate 1,150 represented employees, which represents 66% of the Company's total employees. Approximately 2% of the represented employees have contracts expiring within one year.
The Company has made certain commitments in connection with 2026 annual capital expenditures that are expected to be approximately $900 million. 16
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 Consolidated Financial Statements in the periods they are resolved.
For a discussion of contingencies related to regulatory matters, see Note 5 to the Consolidated Financial Statements, "Regulatory Matters."
The Company participates in various plans that provide defined benefit pension and other postretirement benefits for DTE Energy and its affiliates. The plans are primarily sponsored by DTE Energy's subsidiary, DTE Energy Corporate Services, LLC, and cover substantially all employees of the Company. Plan participants of all plans are solely DTE Energy and affiliate participants.
The Company accounts for its participation in the represented qualified pension plan by applying single-employer accounting. Non-represented participation in qualified pension plans, and non-represented and represented participation in non-qualified pension plans, are accounted for by applying multiemployer accounting. Participation in other postretirement benefit plans is accounted for by applying multiple-employer accounting. Within multiemployer and multiple- employer plans, participants pool plan assets for investment purposes and to reduce the cost of plan administration. The primary difference between plan types is that assets contributed in multiemployer plans can be used to provide benefits for all participating employers, while assets contributed within a multiple-employer plan are restricted for use by the contributing employer.
The following tables detail the components of net periodic benefit costs (credits) for represented pension benefits and total other postretirement benefits:
Notes to Consolidated Financial Statements (Unaudited) - (Continued) DTE Energy's subsidiaries accounted for under multiemployer guidance are responsible for their share of qualified and non-qualified pension benefit costs. The Company's allocated portion of pension benefit costs for non- represented plans included in regulatory assets and liabilities, operation and maintenance expense, and capital expenditures was $1 million and $3 million for the three and nine months ended September 30, 2026, respectively, and nominal for the three and nine months ended September 30, 2025. These amounts may include recognized contractual termination benefit charges, curtailment gains, and settlement charges.
The Company is not expecting to make any contributions to the represented or non-represented qualified pension plans or postretirement benefit plans in 2026. Plans may be updated at the discretion of management and depending on economic and financial market conditions. The Company anticipates transferring up to $25 million from its non-represented qualified pension plan to DTE Electric Company during the fourth quarter of 2026 in exchange for cash consideration. In 2025, the Company transferred $25 million of qualified pension plan funds to DTE Electric Company in exchange for cash consideration. 18
Full text with the tables
Exhibit 99.1
DTE Gas Company
Unaudited Consolidated Financial Statements as of and for the Three and Nine
Months Ended September 30, 2026
TABLE OF CONTENTS
Page
Definitions 1
Consolidated Statements of Operations (Unaudited) 2
Consolidated Statements of Comprehensive Income 3
(Unaudited)
Consolidated Statements of Financial Position 4
(Unaudited)
Consolidated Statements of Cash Flows (Unaudited) 6
Consolidated Statements of Changes in 7
Shareholder's Equity (Unaudited)
Notes to Consolidated Financial Statements 8
(Unaudited)
Note 1 — Organization and Basis of Presentation 8
Note 2 — Significant Accounting Policies 9
Note 3 — New Accounting Pronouncements 11
Note 4 — Revenue 12
Note 5 — Regulatory Matters 13
Note 6 — Fair Value 14
Note 7 — Financial and Other Derivative 15
Instruments
Note 8 — Long-Term Debt 15
Note 9 — Short-Term Credit Arrangements and 15
Borrowings
Note 10 — Commitments and Contingencies 16
Note 11 — Retirement Benefits and Trusteed Assets 17
Table of Contents
DEFINITIONS
ASU Accounting Standards Update issued by the FASB
Company DTE Gas Company and subsidiary companies
Customer Choice Michigan legislation giving customers the option of
retail access to alternative suppliers for natural gas
DTE Energy Company, directly or indirectly the parent of
DTE Energy DTE Electric Company, DTE Gas, and numerous non-utility
subsidiaries
DTE Gas DTE Gas Company (an indirect wholly-owned subsidiary of
DTE Energy) and subsidiary companies
Michigan Department of Environment, Great Lakes, and
EGLE Energy, formerly known as Michigan Department of
Environmental Quality
EPA U.S. Environmental Protection Agency
FASB Financial Accounting Standards Board
FERC Federal Energy Regulatory Commission
A Gas Cost Recovery mechanism authorized by the MPSC that
GCR allows DTE Gas to recover through rates its natural gas
costs
MGP Manufactured Gas Plant
MPSC Michigan Public Service Commission
TCJA Tax Cuts and Jobs Act of 2017, which reduced the
corporate Federal income tax rate from 35% to 21%
Topic 606 FASB issued ASU No. 2014-09, Revenue from Contracts with
Customers, as amended
VIE Variable Interest Entity
1
Table of Contents
DTE Gas Company
Consolidated Statements of Operations (Unaudited)
Three
Months
Ended Nine
September Months
30, Ended
2026 September
(In 30,
millions) 2025 2026 2025
──────────────────────────────────────────────────────────────────────────────
Operating $ 211 $ 207 $ 1,445 $ 1,388
Revenues
Operating
Expenses
Cost of -9 3 400 372
gas
Operation
and 139 142 446 444
maintena…
Deprecia…
and 58 58 174 166
amortiza…
Taxes
other 28 27 102 97
than
income
216 230 1,122 1,079
Operating
Income -5 -23 323 309
(Loss)
Other
(Income)
and
Deductio…
Interest 35 33 105 97
expense
Interest -2 -3 -6 -9
income
Non-oper…
retireme… -1 -1 -2 -2
benefits,
net
Other -3 -4 -9 -8
income
Other 4 1 6 4
expenses
33 26 94 82
Income
(Loss)
Before -38 -49 229 227
Income
Taxes
Income
Tax -9 -13 53 52
Expense
(Benefit)
Net
Income $ -29 $ -36 $ 176 $ 175
(Loss)
See Notes to Consolidated Financial Statements (Unaudited)
2
Table of Contents
DTE Gas Company
Consolidated Statements of Comprehensive Income (Unaudited)
Three
Months
Ended
September Nine Months
30, Ended
2026 September
(In 30,
millions) 2025 2026 2025
──────────────────────────────────────────────────────────────────────────────
Net Income $ -29 $ -36 $ 176 $ 175
(Loss)
Other
comprehen… — — — —
income
Comprehen…
Income $ -29 $ -36 $ 176 $ 175
(Loss)
See Notes to Consolidated Financial Statements (Unaudited)
3
Table of Contents
DTE Gas Company
Consolidated Statements of Financial Position (Unaudited)
September 30,
ASSETS 2026 December 31,
Current Assets (In millions) 2025
──────────────────────────────────────────────────────────────────────────────
Cash and cash equivalents $ — $ 31
Accounts receivable (less
allowance for
doubtful accounts of $31
and $17,
respectively)
Customer 160 422
Affiliates 20 10
Other 3 2
Inventories
Gas 131 45
Materials and supplies 36 38
Gas customer choice 35 39
deferred asset
Notes receivable
Affiliates 8 —
Other 4 3
Regulatory assets 3 12
Prepaid property tax 55 24
Other 7 7
462 633
Investments 55 54
Property
Property, plant, and 9,740 9,212
equipment
Accumulated depreciation
and -2,166 -2,072
amortization
7,574 7,140
Other Assets
Regulatory assets 532 559
Notes receivable 48 49
Prepaid pension costs — 142 130
affiliates
Prepaid postretirement
costs — 321 298
affiliates
Other 53 42
1,096 1,078
Total Assets $ 9,187 $ 8,905
See Notes to Consolidated Financial Statements (Unaudited)
4
Table of Contents
DTE Gas Company
Consolidated Statements of Financial Position (Unaudited) — Continued
LIABILITIES AND September 30,
SHAREHOLDER'S EQUITY 2026
Current Liabilities (In millions, except December 31,
Accounts payable shares) 2025
──────────────────────────────────────────────────────────────────────────────
Affiliates $ 24 $ 30
Other 230 208
Accrued interest 45 31
Short-term borrowings
Affiliates 1 1
Other — 80
Current portion of 40 —
long-term debt
Regulatory 25 40
liabilities
Other 51 59
416 449
Long-Term Debt, net 3,302 3,043
of current portion
Other Liabilities
Deferred income taxes 1,069 1,031
Regulatory 1,004 1,006
liabilities
Asset retirement 217 208
obligations
Accrued pension
liability — 10 11
affiliates
Accrued
postretirement 2 2
liability —
affiliates
Other 44 39
2,346 2,297
Commitments and
Contingencies (Notes
5
and 10)
Shareholder's Equity
Common stock ($1 par
value, 15,100,000
shares authorized,
and 10,300,000 shares 1,803 1,803
issued and
outstanding for both
periods)
Retained earnings 1,320 1,313
Total Shareholder's 3,123 3,116
Equity
Total Liabilities and
Shareholder's $ 9,187 $ 8,905
Equity
See Notes to Consolidated Financial Statements (Unaudited)
5
Table of Contents
DTE Gas Company
Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended
September 30,
2026
Operating Activities (In millions) 2025
──────────────────────────────────────────────────────────────────────────────
Net Income $ 176 $ 175
Adjustments to reconcile Net Income
to
Net cash from operating activities:
Depreciation and amortization 174 166
Allowance for equity funds used
during -3 -1
construction
Deferred income taxes 26 34
Changes in assets and liabilities:
Accounts receivable, net 251 188
Inventories -84 -51
Prepaid pension costs — affiliates -12 -13
Prepaid postretirement benefit
costs — -23 -23
affiliates
Accounts payable -24 -13
Accrued pension liability — -1 -2
affiliates
Regulatory assets and liabilities 41 61
Other current and noncurrent assets
and -13 -8
liabilities
Net cash from operating activities 508 513
Investing Activities
Plant and equipment expenditures -580 -437
Notes receivable from affiliates -8 -193
Other -1 -1
Net cash used for investing -589 -631
activities
Financing Activities
Issuance of long-term debt, net of 298 258
issuance costs
Capital contribution by parent — 50
company
Short-term borrowings, net — — -14
affiliates
Short-term borrowings, net — other -80 -9
Dividends paid on common stock -169 -166
Other 1 1
Net cash from financing activities 50 120
Net Increase (Decrease) in Cash and
Cash -31 2
Equivalents
Cash and Cash Equivalents at
Beginning 31 —
of Period
Cash and Cash Equivalents at End of $ — $ 2
Period
Supplemental disclosure of non-cash
investing and financing activities
Plant and equipment expenditures in $ 118 $ 78
accounts payable
See Notes to Consolidated Financial Statements (Unaudited)
6
Table of Contents
DTE Gas Company
Consolidated Statements of Changes in Shareholder's Equity (Unaudited)
Com…
Sto…
Sha…
(Do…
in
mil…
sha… Add…
in Pai… Ret…
tho… Amo… Cap… Ear… Tot…
──────────────────────────────────────────────────────────────────────────────
Ba…
De… 10,… $ 10 $ 1,7… $ 1,3… $ 3,1…
31,
20…
Net — — — 209 209
In…
Di…
de…
on — — — -56 -56
co…
st…
Ba…
Ma… 10,… $ 10 $ 1,7… $ 1,4… $ 3,2…
31,
20…
Net — — — -4 -4
Lo…
Di…
de…
on — — — -56 -56
co…
st…
Ba…
Ju… 10,… $ 10 $ 1,7… $ 1,4… $ 3,2…
30,
20…
Net — — — -29 -29
Lo…
Di…
de…
on — — — -57 -57
co…
st…
Ba…
Se… 10,… $ 10 $ 1,7… $ 1,3… $ 3,1…
30,
20…
Com…
Sto…
Sha…
(Do…
in
mil…
sha… Add…
in Pai… Ret…
tho… Amo… Cap… Ear… Tot…
──────────────────────────────────────────────────────────────────────────────
Ba…
De… 10,… $ 10 $ 1,7… $ 1,2… $ 2,9…
31,
20…
Net — — — 205 205
In…
Di…
de…
on — — — -55 -55
co…
st…
Ba…
Ma… 10,… $ 10 $ 1,7… $ 1,3… $ 3,1…
31,
20…
Net — — — 6 6
In…
Di…
de…
on — — — -55 -55
co…
st…
Ca…
co…
by — — 50 — 50
pa…
co…
Ba…
Ju… 10,… $ 10 $ 1,7… $ 1,3… $ 3,1…
30,
20…
Net — — — -36 -36
Lo…
Di…
de…
on — — — -56 -56
co…
st…
Ba…
Se… 10,… $ 10 $ 1,7… $ 1,2… $ 3,0…
30,
20…
See Notes to Consolidated Financial Statements (Unaudited)
7
Table of Contents
DTE Gas Company
Notes to Consolidated Financial Statements (Unaudited)
NOTE 1
—
ORGANIZATION AND BASIS OF PRESENTATION
Corporate Structure
DTE Gas is a public utility engaged in the purchase, storage, transportation,
distribution, and sale of natural gas to approximately 1.4 million customers
throughout Michigan and the sale of storage and transportation capacity. The
Company is regulated by the MPSC and certain activities are regulated by the
FERC. In addition, the Company is regulated by other federal and state
regulatory agencies including the EPA and EGLE.
Basis of Presentation
The Consolidated Financial Statements should be read in conjunction with the
Notes to Consolidated Financial Statements included in the Company's 2025
Consolidated Financial Statements furnished on Form 8-K.
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.
The Consolidated Financial Statements are unaudited but, in the Company's
opinion include all adjustments necessary to present a fair statement of the
results for the interim periods. All adjustments are of a normal recurring
nature, except as otherwise disclosed in these Consolidated Financial Statements
and Notes to Consolidated Financial Statements. Financial results for this
interim period are not necessarily indicative of results that may be expected
for any other interim period or for the fiscal year ending December 31, 2026.
Certain prior year balances were reclassified to match the current year's
Consolidated Financial Statements presentation.
Principles of Consolidation
The Company consolidates all majority-owned subsidiaries and investments in
entities in which it has controlling influence. Non-majority owned investments
are accounted for using the equity method when the Company is able to
significantly influence the operating policies of the investee. When the Company
does not influence the operating policies of an investee, the equity investment
is valued at cost minus any impairments, if applicable. 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 holds a variable interest in a natural gas pipeline entity through
purchases under a long-term transportation capacity contract. The Company does
not have a controlling influence in and does not consolidate the pipeline
entity. As of September 30, 2026, the carrying amount of liabilities in the
Company's Consolidated Statements of Financial Position that relate to its
variable interest under the long-term contract are primarily related to working
capital accounts and generally represent the amounts owed by the Company for
transportation associated with the current billing cycle under the contract. The
Company has not provided any significant form of financial support associated
with the long-term contract. There is no material potential exposure to loss as
a result of the Company's variable interest through the long-term contract.
8
Table of Contents
DTE Gas Company
Notes to Consolidated Financial Statements (Unaudited) - (Continued)
NOTE 2
—
SIGNIFICANT ACCOUNTING POLICIES
Income Taxes
Tax rates are affected by estimated annual permanent items, regulatory
adjustments, and discrete items that may occur in any given period, but are not
consistent from period to period. The table below summarizes how the Company's
effective income tax rates have varied from the statutory federal income tax
rate:
Three Nine
Mont… Months
Ended Ended
Sept… Septe…
30, 30,
2026 2025 2026 2025
Stat…
fede…
inco… 21.0 % 21.0 % 21.0 % 21.0 %
tax
rate
Incr…
(dec…
due
to:
State
and
local
inco…
taxe… 5.3 5.4 5.4 5.4
net
of
fede…
bene…
TCJA
regu… -2.9 -2.9 -2.9 -2.9
liab…
amor…
Other 0.2 1.1 -0.4 -0.4
Effe…
inco… 23.6 % 24.6 % 23.1 % 23.1 %
tax
rate
The Company had federal and state income tax receivables with DTE Energy of $9
million and $8 million at September 30, 2026 and December 31, 2025,
respectively, which are included in Accounts receivable — Affiliates on the
Consolidated Statements of Financial Position.
Allocated Stock-Based Compensation
The Company received an allocation of costs from DTE Energy associated with
stock-based compensation of $3 million for the three months ended September 30,
2026 and 2025, while such allocation was $10 million and $9 million for the nine
months ended September 30, 2026 and 2025, respectively.
Financing Receivables
Financing receivables are primarily composed of trade receivables, notes
receivable, and unbilled revenue. The Company's financing receivables are stated
at net realizable value.
The Company monitors the credit quality of financing receivables on a regular
basis by reviewing credit quality indicators and monitoring for trigger events,
such as a credit rating downgrade or bankruptcy. Credit quality indicators
include, but are not limited to, ratings by credit agencies where available,
collection history, collateral, counterparty financial statements and other
internal metrics. Utilizing such data, the Company has determined three internal
grades of credit quality. Internal grade 1 includes financing receivables for
counterparties where credit rating agencies have ranked the counterparty as
investment grade. To the extent credit ratings are not available, the Company
utilizes other credit quality indicators to determine the level of risk
associated with the financing receivable. Internal grade 1 may include financing
receivables for counterparties for which credit rating agencies have ranked the
counterparty as below investment grade; however, due to favorable information on
other credit quality indicators, the Company has determined the risk level to be
similar to that of an investment grade counterparty. Internal grade 2 includes
financing receivables for counterparties with limited credit information and
those with a higher risk profile based upon credit quality indicators. Internal
grade 3 reflects financing receivables for which the counterparties have the
greatest level of risk, including those in bankruptcy status.
9
Table of Contents
DTE Gas Company
Notes to Consolidated Financial Statements (Unaudited) - (Continued)
The following represents the Company's financing receivables by year of
origination, classified by internal grade of credit risk, including current
year-to-date gross write-offs, if any. The related credit quality indicators and
risk ratings utilized to develop the internal grades have been updated through
September 30, 2026.
Year of
Origination
2026
Notes (In 2024 and
receivable millions) 2025 Prior Total
──────────────────────────────────────────────────────────────────────────────
Internal $ 8 $ — $ — $ 8
grade 1(a)
Notes
receivable, $ 3 $ 3 $ 12 $ 18
internal
grade 2
Total notes $ 11 $ 3 $ 12 $ 26
receivable
Net
investment
in leases, $ — $ — $ 34 $ 34
internal
grade
1
_______________________________________
(a) Included in Notes receivable — Affiliates on the Consolidated Statements of
Financial Position.
The allowance for doubtful accounts on accounts receivable for the Company is
generally calculated using an aging approach that utilizes rates developed in
reserve studies. The Company establishes an allowance for uncollectible accounts
based on historical losses and management's assessment of existing and future
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. The Company generally assesses 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.
The allowance for doubtful accounts for other receivables is generally
calculated based on specific review of probable future collections based on
receivable balances generally in excess of 30 days. Existing and future economic
conditions, customer trends and other factors are also considered. Receivables
are written off on a specific identification basis and determined based upon the
specific circumstances of the associated receivable.
Notes receivable are primarily comprised of a finance lease receivable and loans
that are included in Notes Receivable on the Consolidated Statements of
Financial Position.
The Company establishes an allowance for credit loss for principal and interest
amounts due that are estimated to be uncollectible in accordance with the
contractual terms of the note receivable. In determining the allowance for
credit losses for notes receivable, the Company considers the historical payment
experience and other factors that are expected to have a specific impact on the
counterparty's ability to pay including existing and future economic conditions.
Notes receivable are typically considered delinquent when payment is not
received for periods ranging from 60 to 120 days. If amounts are no longer
probable of collection, the Company may consider the note receivable impaired,
adjust the allowance, and cease accruing interest (nonaccrual status).
Cash payments received on nonaccrual status notes receivable, that do not bring
the account contractually current, are first applied to the contractually owed
past due interest, with any remainder applied to principal. Accrual of interest
is generally resumed when the note receivable becomes contractually current.
10
Table of Contents
DTE Gas Company
Notes to Consolidated Financial Statements (Unaudited) - (Continued)
The following tables present a roll-forward of the activity for the Company's
financing receivables credit loss reserves:
Trade accounts
receivable Other
(In millions) receivables Total
──────────────────────────────────────────────────────────────────────────────
Beginning
reserve
balance, $ 16 $ 1 $ 17
January 1,
2026
Current period 33 — 33
provision
Write-offs
charged against -29 — -29
allowance
Recoveries of
amounts
previously 10 — 10
written
off
Ending reserve
balance, $ 30 $ 1 $ 31
September 30,
2026
Trade accounts
receivable Other
(In millions) receivables Total
──────────────────────────────────────────────────────────────────────────────
Beginning
reserve
balance, $ 21 $ 1 $ 22
January 1,
2025
Current period 25 — 25
provision
Write-offs
charged against -42 — -42
allowance
Recoveries of
amounts
previously 12 — 12
written
off
Ending reserve
balance, $ 16 $ 1 $ 17
December 31,
2025
Uncollectible expense is primarily comprised of the current period provision for
allowance for doubtful accounts. Uncollectible expense was $5 million and $1
million for the three months ended September 30, 2026 and 2025, respectively,
and $33 million and $24 million for the nine months ended September 30, 2026 and
2025, respectively.
There are no material amounts of past due financing receivables for the Company
as of September 30, 2026.
NOTE 3 — NEW ACCOUNTING PRONOUNCEMENTS
Recently Adopted Pronouncements
In July 2025, the FASB issued ASU No. 2025-05, Financial Instruments – Credit
Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and
Contract Assets , which provides a practical expedient related to the estimation
of expected credit losses for current accounts receivable and current contract
assets arising from transactions accounted for under ASC 606. The Company
adopted the ASU effective January 1, 2026 on a prospective basis and elected not
to apply the practical expedient, with no impact on the Company's financial
position or results of operations.
Recently Issued Pronouncements
In November 2024, the FASB issued ASU No. 2024-03, Income Statement-Reporting
Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):
Disaggregation of Income Statement Expenses, as amended . The amendments in this
update require disaggregated disclosure of income statement expense captions
into specified categories in disclosures with the footnotes to the financial
statements. The ASU is effective for the Company for annual reporting periods
beginning after December 15, 2026, and for interim reporting periods beginning
after December 15, 2027. The guidance may be applied on a prospective or
retrospective basis. Early adoption is permitted. The Company will apply the
guidance upon the effective date.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles – Goodwill and
Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the
Accounting for Internal-Use Software. The amendments in this update modernize
the accounting guidance for the costs to develop software for internal use. The
amendments remove all references to a sequential software development method
(referred to as "project stages") throughout ASC 350-40 and clarifies the
threshold entities apply to begin capitalizing eligible costs. The ASU is
effective for the Company for annual and interim periods beginning after
December 15, 2027. The guidance may be applied on a prospective, retrospective,
or modified transition basis. Early adoption is permitted. The Company is
currently assessing the impact of this standard on its Consolidated Financial
Statements.
11
Table of Contents
DTE Gas Company
Notes to Consolidated Financial Statements (Unaudited) - (Continued)
In May 2026, the FASB issued ASU No. 2026-02, Environmental Credits and
Environmental Credit Obligations (Topic 818) . The amendments in this update
provide recognition, measurement, presentation, and disclosure requirements for
all entities that generate, purchase, or receive environmental credits or have a
regulatory compliance obligation that may be settled with environmental credits.
The ASU is effective for the Company for annual periods beginning after December
15, 2027. The guidance will be applied on a retrospective basis as required by
the ASU. Early adoption is permitted. The Company is currently assessing the
impact of this standard on its Consolidated Financial Statements.
NOTE 4 — REVENUE
Disaggregation of Revenue
The following is a summary of disaggregated revenues for the Company:
Three
Months
Ended Nine
September Months
30, Ended
2026 September
(In 30,
millions) 2025 2026 2025
──────────────────────────────────────────────────────────────────────────────
Gas sales $ 136 $ 110 $ 1,042 $ 1,018
End User 48 44 192 186
Transpor…
Intermed… 16 16 71 63
Transpor…
Other(a) 11 37 140 121
Total Gas
operating $ 211 $ 207 $ 1,445 $ 1,388
revenues
_______________________________________
(a) Includes revenue adjustments related to various regulatory mechanisms,
including the GCR, which may vary based on changes in the cost of gas.
Revenues included the following which were outside the scope of Topic 606:
Three Months
Ended Nine Months
September 30, Ended
2026 September 30,
(In millions) 2025 2026 2025
──────────────────────────────────────────────────────────────────────────────
Other $ 3 $ 2 $ 11 $ 9
revenues
Transaction Price Allocated to the Remaining Performance Obligations
In accordance with optional exemptions available under Topic 606, the Company
did not disclose the value of unsatisfied performance obligations for (1)
contracts with an original expected length of one year or less, (2) with the
exception of fixed consideration, contracts for which revenue is recognized at
the amount to which the Company has the right to invoice for goods provided and
services performed, and (3) contracts for which variable consideration relates
entirely to an unsatisfied performance obligation.
Such contracts consist of varying types of performance obligations, including
the supply and delivery of energy related products and services. Contracts with
variable volumes and/or variable pricing have also been excluded as the related
consideration under the contract is variable at inception of the contract.
Contract lengths vary from cancellable to multi-year.
12
Table of Contents
DTE Gas Company
Notes to Consolidated Financial Statements (Unaudited) - (Continued)
The Company expects to recognize revenue for the following amounts related to
fixed consideration associated with remaining performance obligations in each of
the future periods noted:
(In millions)
───────────────────────────────────────────
2026 $ 31
2027 121
2028 110
2029 94
2030 76
2031 and thereafter 169
$ 601
NOTE 5 — REGULATORY MATTERS
2025 Gas Rate Case Filing
DTE Gas filed a rate case with the MPSC on November 13, 2025 requesting a net
increase in base rates of $163 million based on a projected twelve-month period
ending September 30, 2027, and an increase in return on equity from 9.8% to
10.25%. The net increase is based on a total revenue deficiency of $238 million,
net of the IRM roll-in of $75 million. The requested net increase in base rates
was primarily due to continued infrastructure investment and increasing
operations and maintenance costs needed to ensure the continued safe and
reliable delivery of natural gas to customers. On September 10, 2026 the MPSC
issued an order approving an annual revenue increase of $149 million for
services rendered on or after October 1, 2026 and a return of equity of 9.8%.
13
Table of Contents
DTE Gas Company
Notes to Consolidated Financial Statements (Unaudited) - (Continued)
NOTE 6
—
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
September 30, 2026 and December 31, 2025. The Company believes it uses valuation
techniques that maximize the use of observable market-based inputs and minimize
the use of unobservable inputs.
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:
• 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.
As of September 30, 2026, the Company had $16 million of equity securities,
which are recorded at fair value on a recurring basis and classified as Level 1
assets. These assets are included in Investments on the Consolidated Statements
of Financial Position. At December 31, 2025, the Company had $44 million
recorded at fair value on a recurring basis and classified as Level 1 assets.
The assets included $31 million of cash equivalents and $13 million of equity
securities recorded in Cash and cash equivalents and Investments, respectively,
on the Consolidated Statements of Financial Position. For both periods, the
assets exclude the cash surrender value of life insurance investments.
The following table presents the carrying amount and fair value of financial
instruments:
S… D…
3… 3…
2… 2…
──────────────────────────────────────────────────────────────────────────────
C… F… C… F…
V… V…
A… L… L… L… A… L… … …
1 2 3 1 2 3
-…
m…
…
… $ 8 $ — $ — $ 8 $ — $ — $ — $ —
—
…
…
…
—
… $ 18 $ — $ — $ 18 $ … $ — $ — $ 18
…
…
…
…
…
… $ 1 $ — $ — $ 1 $ 1 $ — $ — $ 1
—
…
…
… $ — $ — $ — $ — $ … $ — $ 80 $ —
—
…
… $ 3… $ — $ 1… $ 1… $ … $ — $ 1… $ 1…
…
_______________________________________
(a) Carrying value also includes unamortized debt discounts and issuance costs.
For further fair value information on financial and derivative instruments, see
Note 7 to the Consolidated Financial Statements, "Financial and Other Derivative
Instruments."
14
Table of Contents
DTE Gas Company
Notes to Consolidated Financial Statements (Unaudited) - (Continued)
NOTE 7 — 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 derivative gain or loss is deferred in Accumulated other
comprehensive income (loss) and later reclassified into earnings when the
underlying transaction occurs. 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 purchases, stores, transports, distributes,
and sells natural gas, and buys and sells transportation and storage capacity.
The Company has fixed-priced contracts for portions of its expected natural gas
supply requirements through March 2029. Substantially all of these contracts
meet the normal purchases and normal sales exception and are therefore accounted
for under the accrual method. Forward transportation and storage contracts are
generally not derivatives and are therefore accounted for under the accrual
method.
NOTE 8 — LONG-TERM DEBT
Debt Issuances
In 2026, the following debt was issued:
Amount
Interest Maturity (In
Month Type Rate Date millions)
──────────────────────────────────────────────────────────────────────────────
September Mortgage 5.34% 2031 $ 150
bonds(a)
September Mortgage 5.68% 2036 100
bonds(a)
September Mortgage 6.26% 2056 50
bonds(a)
$ 300
_______________________________________
(a) Proceeds used for the repayment of short-term borrowings, for capital
expenditures, and for other corporate purposes.
In June 2026, the U.S. Department of Energy's Office granted a $1.6 billion loan
to DTE Gas to support modernization of DTE Gas' natural gas infrastructure under
the Energy Dominance Financing program (EDF). There have been no draws on this
loan as of September 30, 2026.
NOTE 9
—
SHORT-TERM CREDIT ARRANGEMENTS AND BORROWINGS
The Company has a $300 million unsecured revolving credit agreement that can be
used for general corporate borrowings but is intended to provide liquidity
support for the Company's commercial paper program. Borrowings under the
revolver are available at prevailing short-term interest rates. The facility
will expire in October 2030. As of September 30, 2026, the Company did not have
any commercial paper or revolver borrowings outstanding.
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DTE Gas Company
Notes to Consolidated Financial Statements (Unaudited) - (Continued)
The unsecured revolving credit agreement requires the Company to maintain a
total funded debt to capitalization ratio of no more than 0.65 to 1. In the
agreement, "total funded debt" means all indebtedness of the Company and its
consolidated subsidiaries, including finance lease obligations, hedge
agreements, and guarantees of third parties' debt, but excluding contingent
obligations, nonrecourse and junior subordinated debt, and, except for
calculations at the end of the second quarter, certain short-term debt.
"Capitalization" means the sum of (a) total funded debt plus (b) "consolidated
net worth," which is equal to consolidated total 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 September 30, 2026, the total
funded debt to total capitalization ratio for the Company was 0.52 to 1 and was
in compliance with this financial covenant.
NOTE 10
—
COMMITMENTS AND CONTINGENCIES
Environmental
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 MGP sites. The Company owns or previously owned 14
former MGP sites. Investigations have revealed contamination related to the by-
products of gas manufacturing at each site. Cleanup of eight MGP sites is
complete, and those sites are closed. The Company has also completed partial
closure of five additional sites. Cleanup activities associated with the
remaining sites will continue over the next several years. The MPSC has
established a cost deferral and rate recovery mechanism for investigation and
remediation costs incurred at former MGP sites. In addition to the MGP sites,
the Company is also in the process of cleaning up other contaminated sites,
including gate stations, gas pipeline releases, and underground storage tank
locations. At September 30, 2026 and December 31, 2025, the Company had $25
million accrued for remediation. These costs are not discounted to their present
value. Any change in assumptions, such as remediation techniques, nature and
extent of contamination, and regulatory requirements, could impact the estimate
of remedial action costs for the sites and affect the Company's financial
position and cash flows. The Company anticipates the cost amortization
methodology approved by the MPSC, which allows for amortization of the MGP costs
over a ten-year period beginning with the year subsequent to the year the MGP
costs were incurred, will prevent the associated investigation and remediation
costs from having a material adverse impact on the Company's results of
operations.
Air — In March 2023, the EPA published the Good Neighbor Rule, which includes
provisions for compressor engines operated for the transportation of natural
gas. In June 2024, the United States Supreme Court issued an opinion granting
emergency applications to stay the Good Neighbor Rule. The stay will remain in
effect during other litigation. The status of the rule remains uncertain as
litigation is ongoing. At this time, the Company does not expect a significant
financial impact.
In March 2024, the EPA finalized the National Ambient Air Quality Standards for
fine particulate matter, particles of pollution with diameters generally 2.5
micrometers and smaller (PM2.5). It is likely that areas of Michigan in which
the Company operates will be designated as non-attainment in the future and the
state will be required to develop a State Implementation Plan for such areas.
However, the EPA has announced its intention to review the standard. No impact
is expected in the near term, and any long-term financial impacts cannot be
assessed at this time.
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 and may provide guarantees in certain indemnification
agreements. The Company may also provide indirect guarantees for the
indebtedness of others.
Labor Contracts
There are several bargaining units for the Company's approximate 1,150
represented employees, which represents 66% of the Company's total employees.
Approximately 2% of the represented employees have contracts expiring within one
year.
Purchase Commitments
The Company has made certain commitments in connection with 2026 annual capital
expenditures that are expected to be approximately $900 million.
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DTE Gas Company
Notes to Consolidated Financial Statements (Unaudited) - (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 Consolidated Financial Statements in the periods they are
resolved.
For a discussion of contingencies related to regulatory matters, see Note 5 to
the Consolidated Financial Statements, "Regulatory Matters."
NOTE 11
—
RETIREMENT BENEFITS AND TRUSTEED ASSETS
The Company participates in various plans that provide defined benefit pension
and other postretirement benefits for DTE Energy and its affiliates. The plans
are primarily sponsored by DTE Energy's subsidiary, DTE Energy Corporate
Services, LLC, and cover substantially all employees of the Company. Plan
participants of all plans are solely DTE Energy and affiliate participants.
The Company accounts for its participation in the represented qualified pension
plan by applying single-employer accounting. Non-represented participation in
qualified pension plans, and non-represented and represented participation in
non-qualified pension plans, are accounted for by applying multiemployer
accounting. Participation in other postretirement benefit plans is accounted for
by applying multiple-employer accounting. Within multiemployer and multiple-
employer plans, participants pool plan assets for investment purposes and to
reduce the cost of plan administration. The primary difference between plan
types is that assets contributed in multiemployer plans can be used to provide
benefits for all participating employers, while assets contributed within a
multiple-employer plan are restricted for use by the contributing employer.
The following tables detail the components of net periodic benefit costs
(credits) for represented pension benefits and total other postretirement
benefits:
Three Pension
Months Benefits Other
Ended 2026 Postretire…
September (In Benefits
30, millions) 2025 2026 2025
──────────────────────────────────────────────────────────────────────────────
Service $ 2 $ 2 $ 1 $ 1
cost
Interest 6 6 3 3
cost
Expected
return on -9 -8 -10 -10
plan
assets
Amortizat…
of:
Net
actuarial 2 1 2 1
loss
Net
periodic
benefit $ 1 $ 1 $ -4 $ -5
cost
(credit)
Nine Pension
Months Benefits Other
Ended 2026 Postretire…
September (In Benefits
30, millions) 2025 2026 2025
──────────────────────────────────────────────────────────────────────────────
Service $ 5 $ 5 $ 3 $ 3
cost
Interest 18 18 10 10
cost
Expected
return on -25 -25 -31 -30
plan
assets
Amortizat…
of:
Net
actuarial 6 5 4 4
loss
Net
periodic
benefit $ 4 $ 3 $ -14 $ -13
cost
(credit)
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DTE Gas Company
Notes to Consolidated Financial Statements (Unaudited) - (Continued)
DTE Energy's subsidiaries accounted for under multiemployer guidance are
responsible for their share of qualified and non-qualified pension benefit
costs. The Company's allocated portion of pension benefit costs for non-
represented plans included in regulatory assets and liabilities, operation and
maintenance expense, and capital expenditures was $1 million and $3 million for
the three and nine months ended September 30, 2026, respectively, and nominal
for the three and nine months ended September 30, 2025. These amounts may
include recognized contractual termination benefit charges, curtailment gains,
and settlement charges.
Pension and Other Postretirement Contributions
The Company is not expecting to make any contributions to the represented or
non-represented qualified pension plans or postretirement benefit plans in 2026.
Plans may be updated at the discretion of management and depending on economic
and financial market conditions. The Company anticipates transferring up to $25
million from its non-represented qualified pension plan to DTE Electric Company
during the fourth quarter of 2026 in exchange for cash consideration. In 2025,
the Company transferred $25 million of qualified pension plan funds to DTE
Electric Company in exchange for cash consideration.
18