DTE Energy 2012 Annual Report Download - page 105

Table of Contents
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
(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 VEBA trusts hold 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 which hold exchange-traded equity or debt securities are valued based on underlying securities, using quoted prices in actively traded markets. 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 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 challenge an assigned price and determine that another price source is considered to be
preferable. DTE Energy 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 Energy selectively corroborates the fair values of securities by comparison of market-based price sources.
Fair Value Measurements Using Significant Unobservable Inputs (Level 3):















Beginning Balance at January 1  
 

$ 79
$ 55
$134
Total realized/unrealized gains (losses):
Realized gains (losses) 


(1)
2
1
Unrealized gains (losses) 


2
(22)
(20)
Purchases, sales and settlements:
Purchases 


68
48
116
Sales 


(53)
(23)
(76)
Ending Balance at December 31 
 

$ 95
$60
$155
The amount of total gains (losses) for the period attributable to
the change in unrealized gains or losses related to assets still held
at the end of the period  

 
$ 5
$(16)
$(11)
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, 2012 and 2011.
Healthcare Legislation
In December 2003, the Medicare Act was signed into law which provides for a non-taxable federal subsidy to sponsors of retiree health care benefit plans
that provide a benefit that is at least “actuarially equivalent” to the benefit established by law. The effects of the subsidy reduced net periodic postretirement
benefit costs by $6 million in 2012, $6 million in 2011 and $7 million in 2010.
Grantor Trust
DTE Gas maintains a Grantor Trust to fund other postretirement benefit obligations that invests in life insurance contracts and income securities.
Employees and retirees have no right, title or interest in the assets of the Grantor Trust, and DTE Gas can revoke the trust subject to providing the MPSC with
prior notification. The Company accounts for its investment at fair value, approximately $ 14 million at December 31, 2012, with unrealized gains and losses
recorded to earnings. The Grantor Trust investment is included in Other investments on the Consolidated Statements of Financial Position.
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