DTE Energy 2014 Annual Report Download - page 33

Operation and maintenance expense increased $367 million in 2014 and increased $126 million in 2013. The 2014 increase is primarily due to a $365
million increase associated with higher volumes from REF projects, a $23 million increase associated with the start-up of a renewable power project and a
$20 million increase due to higher volumes, maintenance and general administrative expenses in the steel business, partially offset by a $46 million decrease
due primarily to lower coal prices associated with the steel business. The 2013 increase is primarily due to a $173 million increase associated with higher
volumes from REF projects and an $84 million increase due to the on-site energy projects acquired in the 2012 fourth quarter, partially offset by a $67
million decrease from exiting the coal transportation and marketing business and a $67 million decrease due primarily to lower coal prices associated with
the steel business.
Depreciation and amortization expense increased by $5 million in 2014 and increased by $7 million in 2013. The 2014 increase is primarily due to $4
million associated with the start-up of a renewable power project. The 2013 increase is primarily due to $10 million associated with the on-site energy
projects acquired in the 2012 fourth quarter, partially offset by a $3 million decrease from exiting the coal transportation and marketing business.
Asset (gains) and losses, reserves and impairments, net increased by $8 million in 2014 and decreased by $1 million in 2013. The 2014 increase was
due primarily to a gain associated with a sale of an on-site project in 2014 and an asset impairment recorded in the prior year.
Other (income) and deductions decreased by $7 million in 2014 and increased $29 million in 2013 due primarily to variations in volumes of refined
coal produced at REF sites with investors, and in 2014, lower equity earnings at various projects.
Production tax credits increased by $44 million in 2014 and increased $9 million in 2013 primarily due to higher production volumes of refined coal
that resulted in higher tax credits at REF projects.
Outlook — The Company has constructed and placed in service nine REF facilities including five facilities located at third party owned coal-fired
power plants. The Company has sold membership interests in four of the facilities. We continue to optimize these facilities by seeking investors for facilities
operating at DTE Electric and other utility sites. We intend to relocate an underutilized facility, located at a DTE Electric site, to an alternative coal-fired
power plant which may provide increased production and emission reduction opportunities in future years.
We expect sustained production levels of metallurgical coke and pulverized coal supplied to steel industry customers for 2015. Substantially all of the
metallurgical coke margin is maintained under long-term contracts. We have five renewable power generation facilities in operation. Our on-site energy
services will continue to be delivered in accordance with the terms of long-term contracts. We will continue to look for additional investment opportunities
and other energy projects at favorable prices.
Power and Industrial Projects will continue to leverage its extensive energy-related operating experience and project management capability to
develop additional energy projects to serve energy intensive industrial customers.
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Energy Trading focuses on physical and financial power and natural gas marketing and trading, structured transactions, enhancement of returns from
DTE Energy’s asset portfolio, and optimization of contracted natural gas pipeline transportation and storage, and generating capacity positions. Energy
Trading also provides natural gas, power and related services, which may include the management of associated storage and transportation contracts on the
customers’ behalf, and the supply or purchase of renewable energy credits to various customers.
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