DTE ENERGY CODTE
DTE ENERGY CO Leases Disclosure
LEASES
Lessee
Leases at DTE Energy and DTE Electric are primarily comprised of various forms of land easements, coal railcars, buildings, equipment, and computer hardware, leases with terms ranging from approximately 2 to 52 years.
A lease is deemed to exist when the Registrants have the right to control the use of identified property, plant or equipment, as conveyed through a contract, for a certain period of time and consideration paid. The right to control is deemed to occur when the Registrants have the right to obtain substantially all of the economic benefits of the identified assets and the right to direct the use of such assets.
In accordance with ASC Subtopic 980-842, Regulated Operations - Leases, DTE Electric recognizes expense for operating leases using the timing that conforms to the regulatory rate treatment as rental payments are recovered from customers.
Lease liabilities are determined utilizing the discount rate implicit in the lease when it is readily determinable. When the rate implicit in the lease is not readily determinable, the incremental borrowing rate is used. The incremental borrowing rates for DTE Electric and DTE Gas have been determined utilizing respective secured borrowing rates for first mortgage bonds with like tenors of remaining lease terms. Incremental borrowing rates for non-utility entities have been determined utilizing an implied secured borrowing rate based upon an unsecured rate for a similar tenor of remaining lease terms, which is then adjusted for the estimated impact of collateral.
The Registrants have certain leases which contain renewal or purchase options. Where the renewal options were deemed reasonably certain to occur, the impacts of such options were included in the determination of the right of use assets and lease liabilities. The Registrants have determined that it is not reasonably certain that purchase options will be utilized and have not included the impact in the determination of right of use assets and lease liabilities for the subject leases.
Certain leases of the Registrants contain escalation clauses whereby the payments are adjusted for consumer price or labor indices, as well as non-index based escalations for percentage increases. The Registrants also have leases with variable payments based upon the usage of the leased assets.
Certain leases contain provisions whereby the Registrants have the option to terminate the lease agreement by giving notice of such termination during the time frames specified in the respective lease. The Registrants have considered such provisions in the determination of the lease term when it is reasonably certain that the lease would be terminated.
The Registrants have agreements with lease and non-lease components, which are generally accounted for separately. Consideration in a lease is allocated between lease and non-lease components based upon the estimated relative standalone prices. The Registrants have certain coal railcar leases for which non-lease and lease components are accounted for as a single lease component, as permitted under Topic 842.
The following is a summary of the components of lease cost for the years ended December 31:
| DTE Energy | DTE Electric | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||
| Operating lease cost | $ | 23 | $ | 26 | $ | 22 | $ | 17 | $ | 22 | $ | 17 | |||||||||||||||||||||||
| Finance lease cost: | |||||||||||||||||||||||||||||||||||
| Amortization of right-of-use assets | 4 | 4 | 7 | 3 | 3 | 6 | |||||||||||||||||||||||||||||
| Interest of lease liabilities | 1 | 1 | — | — | 1 | — | |||||||||||||||||||||||||||||
| Total finance lease cost | 5 | 5 | 7 | 3 | 4 | 6 | |||||||||||||||||||||||||||||
| Variable lease cost | 17 | 17 | 13 | 1 | — | — | |||||||||||||||||||||||||||||
| Short-term lease cost | 19 | 18 | 12 | 11 | 10 | 4 | |||||||||||||||||||||||||||||
| $ | 64 | $ | 66 | $ | 54 | $ | 32 | $ | 36 | $ | 27 | ||||||||||||||||||||||||
The Registrants have elected not to apply the recognition requirements of Topic 842 to leases with a term of 12 months or less. DTE Energy and DTE Electric record operating, variable, and short-term lease costs as Operating Expenses on the Consolidated Statements of Operations, except for certain amounts that may be capitalized to Property, plant, and equipment and Inventories.
The following is a summary of other information related to leases for the years ended December 31:
| DTE Energy | DTE Electric | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | 2025 | 2024 | 2023 | ||||||||||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||||||||||||||
| Supplemental Cash Flows Information | |||||||||||||||||||||||||||||||||||
| Cash paid for amounts included in the measurement of these liabilities: | |||||||||||||||||||||||||||||||||||
| Operating cash flows for finance leases | $ | 5 | $ | 9 | $ | 9 | $ | 3 | $ | 7 | $ | 7 | |||||||||||||||||||||||
| Operating cash flows for operating leases | $ | 27 | $ | 19 | $ | 19 | $ | 21 | $ | 15 | $ | 15 | |||||||||||||||||||||||
| Right-of-use assets obtained in exchange for lease obligations: | |||||||||||||||||||||||||||||||||||
| Operating leases | $ | 95 | $ | 75 | $ | 61 | $ | 86 | $ | 74 | $ | 61 | |||||||||||||||||||||||
| Finance leases | $ | — | $ | 16 | $ | 5 | $ | — | $ | 14 | $ | 5 | |||||||||||||||||||||||
| Weighted Average Remaining Lease Term (Years) | |||||||||||||||||||||||||||||||||||
| Operating leases | 24.5 | 23.3 | 18.7 | 26.3 | 24.8 | 19.8 | |||||||||||||||||||||||||||||
| Finance leases | 6.6 | 7.4 | 8.9 | 3.0 | 4.0 | 4.5 | |||||||||||||||||||||||||||||
| Weighted Average Discount Rate | |||||||||||||||||||||||||||||||||||
| Operating leases | 5.1 | % | 4.8 | % | 4.4 | % | 5.2 | % | 4.9 | % | 4.5 | % | |||||||||||||||||||||||
| Finance leases | 4.5 | % | 4.6 | % | 4.0 | % | 5.8 | % | 5.8 | % | 5.4 | % | |||||||||||||||||||||||
The Registrants' future minimum lease payments under leases for remaining periods as of December 31, 2025 are as follows:
| DTE Energy | DTE Electric | ||||||||||||||||||||||
| Operating Leases | Finance Leases | Operating Leases | Finance Leases | ||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||
| 2026 | $ | 37 | $ | 5 | $ | 31 | $ | 3 | |||||||||||||||
| 2027 | 35 | 4 | 30 | 3 | |||||||||||||||||||
| 2028 | 32 | 4 | 28 | 3 | |||||||||||||||||||
| 2029 | 21 | 1 | 17 | — | |||||||||||||||||||
| 2030 | 13 | 1 | 10 | — | |||||||||||||||||||
| 2031 and thereafter | 400 | 5 | 379 | — | |||||||||||||||||||
| Total future minimum lease payments | 538 | 20 | 495 | 9 | |||||||||||||||||||
| Imputed interest | (271) | (2) | (262) | — | |||||||||||||||||||
| Lease liabilities | $ | 267 | $ | 18 | $ | 233 | $ | 9 | |||||||||||||||
Finance leases reported on the Consolidated Statements of Financial Position of the Registrants are as follows for the years ended December 31:
| DTE Energy | DTE Electric | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||
| $ | 18 | $ | 23 | $ | 9 | $ | 12 | ||||||||||||||||
| $ | 4 | $ | 5 | $ | 3 | $ | 4 | ||||||||||||||||
| Long-term lease liabilities | $ | 14 | $ | 18 | $ | 6 | $ | 8 | |||||||||||||||
Lessor
DTE Energy leases various assets under operating leases for a pipeline, energy facilities and related equipment. Such leases are comprised of both fixed payments and variable payments which are contingent on volumes, with terms ranging from 10 to 24 years. Generally, the operating leases do not have renewal provisions or options to purchase the assets at the end of the lease. The operating leases generally do not have termination for convenience provisions. Termination may be allowed under specific circumstances stated in the lease contract, such as under an event of default.
Certain of the finance and operating leases have lease terms that extend to the end of the estimated economic life of the leased assets, thereby resulting in no residual value. Any remaining residual values under the finance and operating leases are expected to be recovered through rates, renewals or new lease contracts. Residual values have been determined using the estimated economic life of the leased assets. The finance and operating leases do not contain residual value guarantees.
Certain of the operating leases have both lease and non-lease components. The lease and non-lease components are allocated based upon estimated relative standalone selling prices.
A lease is deemed to exist when the Registrants have provided other parties with the right to control the use of identified property, plant or equipment, as conveyed through a contract, for a certain period of time and consideration received. The right to control is deemed to occur when the Registrants have provided other parties with the right to obtain substantially all of the economic benefits of the identified assets and the right to direct the use of such assets.
DTE Energy’s lease income associated with operating leases was included on the Consolidated Statements of Operations for the years ended December 31:
| 2025 | 2024 | 2023 | |||||||||||||||
| (In millions) | |||||||||||||||||
| Fixed payments | $ | 15 | $ | 15 | $ | 15 | |||||||||||
| Variable payments | 46 | 45 | 44 | ||||||||||||||
| $ | 61 | $ | 60 | $ | 59 | ||||||||||||
DTE Energy’s minimum future rental revenues under operating leases for remaining periods as of December 31, 2025 are as follows:
| DTE Energy | |||||
| (In millions) | |||||
| 2026 | $ | 11 | |||
| 2027 | 10 | ||||
| 2028 | 6 | ||||
| 2029 | 6 | ||||
| 2030 | 6 | ||||
| 2031 and thereafter | 23 | ||||
| $ | 62 | ||||
Depreciation expense associated with DTE Energy's property under operating leases was $8 million, $9 million, and $8 million for the years ended December 31, 2025, 2024, and 2023, respectively.
The following is a summary of property under operating leases for DTE Energy as of December 31:
| 2025 | 2024 | ||||||||||
| (In millions) | |||||||||||
| Gross property under operating leases | $ | 228 | $ | 227 | |||||||
| Accumulated amortization of property under operating leases | $ | 126 | $ | 118 | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 17, 2026 | Showing above |
| 2024 | Feb 13, 2025 | |
| 2023 | Feb 8, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 10, 2022 | |
| 2020 | Feb 19, 2021 | |
| 2019 | Feb 5, 2020 | |
| 2018 | Feb 7, 2019 | |
| 2017 | Feb 16, 2018 | |
| 2016 | Feb 9, 2017 | |
| 2015 | Feb 10, 2016 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.