DTE Energy 2014 Annual Report Download - page 83




The Company manages its MTM risk on a portfolio basis based upon the delivery period of its contracts and the individual components of the risks
within each contract. Accordingly, it records and manages the energy purchase and sale obligations under its contracts in separate components based on the
commodity (e.g. electricity or natural gas), the product (e.g. electricity for delivery during peak or off-peak hours), the delivery location (e.g. by region), the
risk profile (e.g. forward or option), and the delivery period (e.g. by month and year). The following describes the categories of activities represented by their
operating characteristics and key risks:
•Asset Optimization — Represents derivative activity associated with assets owned and contracted by DTE Energy, including forward natural gas
purchases and sales, natural gas transportation and storage capacity. Changes in the value of derivatives in this category typically economically
offset changes in the value of underlying non-derivative positions, which do not qualify for fair value accounting. The difference in accounting
treatment of derivatives in this category and the underlying non-derivative positions can result in significant earnings volatility.
•Marketing and Origination — Represents derivative activity transacted by originating substantially hedged positions with wholesale energy
marketers, producers, end users, utilities, retail aggregators and alternative energy suppliers.
•Fundamentals Based Trading — Represents derivative activity transacted with the intent of taking a view, capturing market price changes, or
putting capital at risk. This activity is speculative in nature as opposed to hedging an existing exposure.
•Other — Includes derivative activity at DTE Electric related to FTRs. Changes in the value of derivative contracts at DTE Electric are recorded as
Derivative assets or liabilities, with an offset to Regulatory assets or liabilities as the settlement value of these contracts will be included in the
PSCR mechanism when realized.
The following tables present the fair value of derivative instruments as of December 31, 2014 and 2013:










Foreign currency exchange contracts  
 
$ —
$ (1)
Commodity Contracts:
Natural Gas 

396
(503)
Electricity 

400
(398)
Other 

37
(34)
  
 
$ 833
$ (936)

Current  
 
$ 691
$ (773)
Noncurrent 

142
(163)
  
 
$ 833
$ (936)
Certain of the Company's derivative positions are subject to netting arrangements which provide for offsetting of asset and liability positions as well as
related cash collateral. Such netting arrangements generally do not have restrictions. Under such netting arrangements, the Company offsets the fair value of
derivative instruments with cash collateral received or paid for those contracts executed with the same counterparty, which reduces the Company's total assets
and liabilities. Cash collateral is allocated between the fair value of derivative instruments and customer accounts receivable and payable with the same
counterparty on a pro rata basis to the extent there is exposure. Any cash collateral remaining, after the exposure is netted to zero, is reflected in accounts
receivable and accounts payable as collateral paid or received, respectively.
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