DTE Energy 2014 Annual Report Download - page 78

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Cash equivalents include investments with maturities of three months or less when purchased. The cash equivalents shown in the fair value table are
comprised of short-term investments and money market funds.
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The nuclear decommissioning trusts and other investments hold debt and equity securities directly and indirectly through institutional mutual funds.
Exchange-traded debt and equity securities held directly are valued using quoted market prices in actively traded markets. The institutional mutual funds
hold exchange-traded equity or debt securities and are valued based on stated NAVs. Non-exchange-traded fixed income securities are valued 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 trustee monitors
prices supplied by pricing services and may use a supplemental price source or change the primary price source of a given security if the trustee determines
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 value of securities by comparison of
market-based price sources. Investment policies and procedures are determined by the Company's Trust Investments Department which reports to the
Company's Vice President and Treasurer.
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Derivative assets and liabilities are comprised of physical and financial derivative contracts, including futures, forwards, options and swaps that are
both exchange-traded and over-the-counter traded contracts. Various inputs are used to value derivatives depending on the type of contract and availability
of market data. Exchange-traded derivative contracts are valued using quoted prices in active markets. DTE Energy considers the following criteria in
determining whether a market is considered active: frequency in which pricing information is updated, variability in pricing between sources or over time
and the availability of public information. Other derivative contracts are valued based upon a variety of inputs including commodity market prices, broker
quotes, interest rates, credit ratings, default rates, market-based seasonality and basis differential factors. DTE Energy monitors the prices that are supplied by
brokers and pricing services and may use a supplemental price source or change the primary price source of an index if prices become unavailable or another
price source is determined to be more representative of fair value. DTE Energy has obtained an understanding of how these prices are derived. Additionally,
DTE Energy selectively corroborates the fair value of its transactions by comparison of market-based price sources. Mathematical valuation models are used
for derivatives for which external market data is not readily observable, such as contracts which extend beyond the actively traded reporting period. The
Company has established a Risk Management Committee whose responsibilities include directly or indirectly ensuring all valuation methods are applied in
accordance with predefined policies. The development and maintenance of our forward price curves has been assigned to our Risk Management Department,
which is separate and distinct from the trading functions within the Company.
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