DTE Energy 2014 Annual Report Download - page 85
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The following table presents the netting offsets of derivative assets and liabilities at December 31, 2014 and 2013:
Total fair value of derivatives
$ 691
$ 142
$ (773)
$ (163)
Counterparty netting
(566)
(115)
566
115
Collateral adjustment
(26)
—
12
5
$ 99
$ 27
$ (195)
$ (43)
The effect of derivatives not designated as hedging instruments on the Consolidated Statements of Operations for years ended December 31, 2014 and
2013 is as follows:
Foreign currency exchange contracts
Operating Revenue
$ (1)
Commodity Contracts:
Natural Gas
Operating Revenue
(48)
Natural Gas
Fuel, purchased power and gas
(44)
Electricity
Operating Revenue
82
Other
Operating Revenue
—
$ (11)
Revenues and energy costs related to trading contracts are presented on a net basis in the Consolidated Statements of Operations. Commodity
derivatives used for trading purposes, and financial non-trading commodity derivatives, are accounted for using the MTM method with unrealized and
realized gains and losses recorded in Operating revenues. Non-trading physical commodity sale and purchase derivative contracts are generally accounted for
using the MTM method with unrealized and realized gains and losses for sales recorded in Operating revenue and purchases recorded in Fuel, purchased
power and gas.
The following represents the cumulative gross volume of derivative contracts outstanding as of December 31, 2014:
Natural Gas (MMBtu)
895,599,953
Electricity (MWh)
11,296,153
Foreign Currency Exchange (Canadian dollars)
63,022,462
Various 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 require 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. Certain of these provisions (known as “hard triggers”) state specific circumstances under which the Company
can be required to post collateral upon the occurrence of a credit downgrade, while other provisions (known as “soft triggers”) are not as specific. For
contracts with soft triggers, it is difficult to estimate the amount of collateral which may be requested by counterparties and/or which the Company may
ultimately be required to post. The amount of such collateral which could be requested fluctuates based on commodity prices (primarily natural gas, power
and coal) and the provisions and maturities of the underlying transactions. As of December 31, 2014, DTE Energy's contractual obligation to post collateral
in the form of cash or letter of credit in the event of a downgrade to below investment grade, under both hard trigger and soft trigger provisions, was
approximately $349 million.
82