DTE Energy 2012 Annual Report Download - page 40

Table of Contents
Various non-utility subsidiaries of the Company have entered into contracts which contain ratings triggers and are guaranteed by DTE Energy. These
contracts contain provisions which allow the counterparties to request that the Company post cash or letters of credit as collateral in the event that DTE
Energy’s credit rating is downgraded below investment grade. As of December 31, 2012, the value of the transactions for which the Company would have
been exposed to collateral requests had DTE Energy’s credit rating been below investment grade on such date was approximately $ 326 million. In
circumstances where an entity is downgraded below investment grade and collateral requests are made as a result, the requesting parties often agree to accept
less than the full amount of their exposure to the downgraded entity. In addition, the Company maintains adequate credit facilities to meet this obligation
should such an occurrence arise.
We believe we have sufficient operating flexibility, cash resources and funding sources to maintain adequate amounts of liquidity and to meet our future
operating cash and capital expenditure needs. However, virtually all of our businesses are capital intensive, or require access to capital, and the inability to
access adequate capital could adversely impact earnings and cash flows.
See Notes 11, 12, 15, 17, and 20 of the Notes to Consolidated Financial Statements in Item 8 of this Report.
Contractual Obligations
The following table details our contractual obligations for debt redemptions, leases, purchase obligations and other long-term obligations as of
December 31, 2012:







Long-term debt:
Mortgage bonds, notes and other $6,865
$ 634
$1,066
$ 474
$4,691
Securitization bonds 479
177
302
—
—
Junior subordinated debentures 480
—
—
—
480
Capital lease obligations 20
7
10
3
—
Interest 5,890
415
688
577
4,210
Operating leases 233
38
56
41
98
Electric, gas, fuel, transportation and storage purchase obligations (a) 4,229
1,856
1,584
222
567
Other long-term obligations (b)(c)(d) 148
80
39
13
16
Total obligations $18,344
$3,207
$3,745
$1,330
$10,062
_______________________________________
(a) Excludes amounts associated with full requirements contracts where no stated minimum purchase volume is required.
(b) Includes liabilities for unrecognized tax benefits of $11 million.
(c) Excludes other long-term liabilities of $179 million not directly derived from contracts or other agreements.
(d) At December 31, 2012, we met the minimum pension funding levels required under the Employee Retirement Income Security Act of 1974 (ERISA) and the Pension Protection Act
of 2006 for our defined benefit pension plans. We may contribute more than the minimum funding requirements for our pension plans and may also make contributions to our benefit
plans and our postretirement benefit plans; however, these amounts are not included in the table above as such amounts are discretionary. Planned funding levels are disclosed in
the Capital Resources and Liquidity and Critical Accounting Estimates sections herein and in Note 20 of the Notes to Consolidated Financial Statements in Item 8 of this Report.
Credit Ratings
Credit ratings are intended to provide banks and capital market participants with a framework for comparing the credit quality of securities and are not
a recommendation to buy, sell or hold securities. The Company’s credit ratings affect our cost of capital and other terms of financing as well as our ability to
access the credit and commercial paper markets. Management believes that our current credit ratings provide sufficient access to the capital markets. However,
disruptions in the banking and capital markets not specifically related to us may affect our ability to access these funding sources or cause an increase in the
return required by investors.
As part of the normal course of business, DTE Electric, DTE Gas and various non-utility subsidiaries of the Company routinely enter into physical or
financially settled contracts for the purchase and sale of electricity, natural gas, coal, capacity, storage and other energy-related products and services. Certain
of these contracts contain provisions which allow the counterparties to request that the Company post cash or letters of credit in the event that the senior
unsecured debt rating of DTE Energy is downgraded below investment grade. Certain of these contracts for DTE Electric and DTE Gas contain similar
provisions in the event that the senior unsecured debt rating of the particular utility is downgraded below investment grade.
38