DTE Energy 2014 Annual Report Download - page 45

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

The Electric and Gas businesses have commodity price risk, primarily related to the purchases of coal, natural gas, uranium and electricity. However,
the Company does not bear significant exposure to earnings risk as such changes are included in the PSCR and GCR regulatory rate-recovery mechanisms. In
addition, changes in the price of natural gas can impact the valuation of lost and stolen gas, storage sales and transportation services revenue at the Gas
segment. Gas segment manages its market price risk related to storage sales revenue primarily through the sale of long-term storage contracts. The Company
is exposed to short-term cash flow or liquidity risk as a result of the time differential between actual cash settlements and regulatory rate recovery.
Our Gas Storage and Pipelines business segment has exposure to natural gas price fluctuations which impact the pricing for natural gas storage and
transportation. The Company manages its exposure through the use of short, medium and long-term storage and transportation contracts.
Our Power and Industrial Projects business segment is subject to electricity and natural gas product price risk. The Company manages its exposures to
commodity price risk through the use of long-term contracts.
Our Energy Trading business segment has exposure to electricity, natural gas, coal, crude oil, heating oil, and foreign currency exchange price
fluctuations. These risks are managed by our energy marketing and trading operations through the use of forward energy, capacity, storage, options and
futures contracts, within pre-determined risk parameters.


The Company purchases and sells electricity, natural gas, coal, coke and other energy products from and to governmental entities and numerous
companies operating in the steel, automotive, energy, retail, financial and other industries. Certain of its customers have filed for bankruptcy protection under
the U.S. Bankruptcy Code. The Company regularly reviews contingent matters relating to these customers and its purchase and sale contracts and records
provisions for amounts considered at risk of probable loss. The Company believes its accrued amounts are adequate for probable loss.

We engage in business with customers that are non-investment grade. We closely monitor the credit ratings of these customers and, when deemed
necessary, we request collateral or guarantees from such customers to secure their obligations.

We are exposed to credit risk through trading activities. Credit risk is the potential loss that may result if our trading counterparties fail to meet their
contractual obligations. We utilize both external and internal credit assessments when determining the credit quality of our trading counterparties.
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