DTE Energy Company

Supply chain and procurement · Raw material availability and cost volatility

The Registrants are dependent on natural gas and coal for much of their electrical generating capacity as well as uranium for their nuclear operations. Price fluctuations and changes in transportation costs, driven by inflation or other factors, as well as fuel supply disruptions, could have a negative impact on the amounts DTE Electric charges utility customers for electricity.

Core operations · Safety incidents and operational accidents

The Registrants' businesses have safety risks. The Registrants' electric distribution system, power plants, renewable energy equipment, and other facilities, and DTE Energy's gas distribution system, gas infrastructure, and other facilities, could be involved in incidents that result in injury, death, or property loss to employees, customers, third parties, or the public.

Human capital and workforce · Labor relations and union negotiations

There are several bargaining units for DTE Energy's approximately 4,850 and DTE Electric's approximately 2,600 represented employees. The majority of represented employees are under contracts that expire in 2027. A union choosing to strike would have an impact on the Registrants' businesses.

Supply chain and procurement · Raw material availability and cost volatility

The Registrants are dependent on natural gas and coal for much of their electrical generating capacity as well as uranium for their nuclear operations. Price fluctuations and changes in transportation costs, driven by inflation or other factors, as well as fuel supply disruptions, could have a negative impact on the amounts DTE Electric charges utility customers for electricity.

Core operations · Operational disruption and business continuity

The Registrants' electric distribution and DTE Energy's gas distribution systems are subject to many operational risks. These operational systems and infrastructure have been in service for many years. Equipment, even when maintained in accordance with good utility practices, is subject to operational failure, including events that are beyond the Registrants' control.

Natural and catastrophic events · Force majeure and business interruption

The Registrants may not be fully covered by insurance. The Registrants have a comprehensive insurance program in place to provide coverage for various types of risks, including catastrophic damage as a result of severe weather or other natural disasters, war, terrorism, cyber incidents, liability claims against the Registrants.

Natural and catastrophic events · Natural disasters and extreme weather

As weather patterns exhibit increased deviations from historical trends, our utilities may experience financial and operational challenges. At DTE Electric, high winds, floods, tornadoes, or ice storms can damage the electric distribution system infrastructure and power generation facilities and require it to perform emergency repairs and incur material unplanned expenses.

Economic and market conditions · Economic recession and downturns

Regional, national, and international economic conditions, and market developments can have an unfavorable impact on the Registrants. The Registrants' utility and DTE Energy's non-utility businesses follow the economic cycles of the customers they serve and credit risk of counterparties they do business with.

Natural and catastrophic events · Terrorism and security threats

In addition, the Registrants' generation plants and electrical distribution facilities may be targets of physical security threats or terrorist activities that could disrupt the Registrants' ability to produce or distribute some portion of their products. The Registrants have increased security as a result of past events and may be required by regulators to make investments in security.

Geopolitical and trade · Trade policies tariffs and sanctions

In addition, import tariffs and other trade policies have the potential to disrupt global supply chains and could cause volatility in the availability and cost of materials and supplies for us and our customers.

Natural and catastrophic events · Climate change and environmental impact

The Registrants may also incur liabilities as a result of potential future requirements to address climate change issues. If increased regulations of GHG emissions are implemented, or if existing deadlines for these regulations are accelerated, the operations of DTE Electric's fossil-fueled generation assets may be significantly impacted.

Innovation and product development · Product development and randd investment risks

DTE Energy relies on non-utility businesses for a portion of earnings and will depend on the successful execution of new business development in its non-utilities to help achieve overall growth targets. DTE Energy also expects to grow the non-utility businesses over the long-term by developing or acquiring projects related to renewable energy, carbon capture and sequestration, and customer energy solutions; however, such opportunities may not materialize as anticipated.

Cybersecurity and data protection · Third party data security and vendors

Suppliers, vendors, contractors, and information technology providers have access to systems that support the Registrants' operations and maintain customer and employee data. A breach of these third-party systems could adversely affect the Registrants' business as if it were a breach of their own system.

Digital transformation and innovation · Technology obsolescence and evolution

Emerging technologies may have a material adverse effect on the Registrants. Advances in technology that produce power or reduce power consumption include cost-effective renewable energy technologies, distributed generation, energy waste reduction technologies, and energy storage devices. Such developments may impact the price of energy, may affect energy deliveries as customer-owned generation becomes more cost-effective.

Industry regulation · Safety and environmental regulations

The Registrants are subject to, and affected by, numerous environmental regulations. These regulations govern air emissions, water quality, wastewater discharge, and disposal of solid and hazardous waste. Compliance with these regulations can significantly increase capital spending, operating expenses, and plant down times.

Data and privacy · Data protection and privacy laws

Failure to maintain the security of personally identifiable information could adversely affect the Registrants. In connection with the Registrants' businesses, they collect and retain personally identifiable information of their customers, shareholders, and employees. The regulatory environment surrounding information security and privacy is increasingly demanding.

Tax and financial reporting · Tax compliance and changes in tax law

To promote U.S. climate initiatives, the Internal Revenue Code provides tax credits as an incentive for taxpayers to produce energy from alternative sources. If the Registrants' tax credits were disallowed in whole or in part as a result of an IRS audit or changes in tax law, there could be additional tax liabilities owed for previously recognized tax credits that could significantly impact the Registrants' earnings and cash flows.

Market and investment · Asset valuation and impairment

If DTE Energy's goodwill becomes impaired, it may be required to record a charge to earnings. Goodwill is also reviewed on a quarterly basis whenever events or circumstances indicate that the carrying value of these assets may not be recoverable. If the carrying value of any goodwill is determined to be not recoverable, DTE Energy may take a non-cash impairment charge.

Market and investment · Trading and market making activities

DTE Energy's participation in energy trading markets subjects it to risk. Energy trading activities take place in volatile markets and expose DTE Energy to risks related to commodity price movements, deviations in weather, and other related risks. DTE Energy's trading business routinely has speculative trading positions in the market.

Capital structure and performance · Debt management and refinancing

DTE Energy relies on cash flows from subsidiaries. DTE Energy is a holding company. Cash flows from the utility and non-utility subsidiaries are required to pay interest expenses and dividends on DTE Energy debt and securities. Should a major subsidiary not be able to pay dividends or transfer cash flows to DTE Energy, its ability to pay interest and dividends would be restricted.