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���������ֳ� - New York - 08 May 2023: ���������ֳ� has assigned a rating of 'BBB' to DTE Energy Co.'s (DTE; BBB/Stable) issuance of 2023 Series C Senior Unsecured Notes. The notes will rank pari passu with DTE's existing senior unsecured debt. The Rating Outlook is Stable.

The proceeds of the notes will be used to repay amounts outstanding under the Term Loan Credit Agreement dated June 24, 2022, under which $1.0 billion aggregate principal amount is currently outstanding, the repayment of commercial paper and for general corporate purposes.

Key Rating Drivers

Credit Metrics Support Ratings: DTE's Funds from operations (FFO) leverage is projected to remain in line with the ratings over 2023-2025 forecast period despite the near-term pressures from higher storm costs and unfavorable weather. Recovery of 2022 deferred fuel balances and a constructive rate relief from 2023 DTE Electric rate case later in the year should drive an improvement in leverage. ���������ֳ� expects the company to continue managing its costs to mitigate the impact of near-term cost pressures and lower than expected rate relief from the last DTE Electric rate case. Parent debt is projected to continue to remain elevated at around 33% of the total debt in 2022-2025.

Significant Utility-Focused Investments: DTE's current $22.6 billion-$23.1 billion capital program for 2023-2027 represents an approximately 19% increase compared with the 2022-2026 plan, with the upward revision factoring in the renewable tax benefits provided by the Inflation Reduction Act (IRA). This includes distribution, environmental compliance projects, gas generation, pumped storage, and a focus on clean generation with 40% increase in wind and solar generation to 1.9GWs. Nonregulated investments are focused on developing new renewable natural gas (RNG) and cogeneration projects.

IRA Tailwinds: DTE's renewable plans are expected to be supported by the extended and expanded tax incentives and introduction of tax credit transferability under the IRA passed in August 2022. Additionally, DTE does not project any impact from Alternate Minimum Tax (AMT) until it hits the $1 billion of pre-tax earnings threshold in 2025. Any potential negative cash impact should be mostly offset by accelerated depreciation and renewable tax credits. DTE Vantage's RNG investments will also benefit from the tax credits and lower cost of construction. However, RNG investments are not expected to increase beyond 10% of DTE's total earnings.

Constructive Utility Regulatory Environment: The Michigan regulatory environment remains constructive from a credit perspective, evidenced by approved authorized ROEs of 9.9% for DTEE and DTEG which are above industry averages for electric and gas utilities. The regulatory framework, overseen by the Michigan Public Service Commission, allows full pass through of fuel and purchased power costs, forward-looking test years and a timely 10-month review period for the General Rate Case resolution. The gas utility business also benefits from partial revenue decoupling, and infrastructure recovery mechanisms (IRM).

���������ֳ� believes the last DTEE rate order is modestly negative from a credit perspective. The approved revenue requirement increase is lower than ���������ֳ�'s estimate, driven primarily by the differences in residential sales forecasts. ���������ֳ� assumes DTEE will be able to offset near-term pressures with cost reductions. DTEE filed a new rate case in February 2023 for a $619 million rate increase effective Dec. 1, 2023. ���������ֳ� assumes a more constructive rate case outcome vs. the last rate case; in-line with historical levels. A supportive regulatory environment remains a key rating driver, as most of DTE's cash flow is derived from its two utilities.

Parent/Subsidiary Linkage: There is parent subsidiary linkage between DTE and its rated subsidiaries. ���������ֳ� determines DTE's standalone credit profile (SCP) based upon consolidated metrics. ���������ֳ� considers DTEE and DTEG to have SCPs stronger than DTE. As such, ���������ֳ� has followed the stronger subsidiary path. Emphasis is placed on the DTEE and DTEG status as regulated entities. Legal ring fencing is considered porous given the general protections afforded by economic regulation. Access and control are evaluated as porous.

DTE centrally manages the treasury function for all of its entities and is the sole source of equity; however, each subsidiary issues its own short-term and long-term debt. Due to the aforementioned linkage considerations, ���������ֳ� will limit the difference between DTE and its subsidiaries DTEE and DTEG to two notches.

Derivation Summary

DTE's credit profile is in line with its peers, Dominion Energy, Inc. (DEI; BBB+/Stable) and CMS Energy (BBB/Stable), which are also parents to regulated utility operations and with sizeable debt at the parent-level. DTE's consolidated operations are smaller than Dominion's which is geographically diversified in six states, but larger than CMS Energy's which is also limited to a single state, Michigan.

90% of DTE's EBITDA is expected to come from its single- state regulated utility businesses over the forecast period. DEI has approximately 85%-90% of EBITDA coming from state-regulated utility businesses. However, CMS has a higher (96% in 2020) EBITDA coming from a regulated utility in Michigan. In addition, DTE's parent-level debt is projected to stay around 33% over our forecast period. Although still elevated it is lower than 35%-40% projected for DEI but higher than about 25% at CMS Energy.

���������ֳ� anticipates DTE's FFO leverage to average 5.4x over 2023-2025, in line with DEI and modestly worse than CMS's, which are projected to average around 5.4x and 5.1x, respectively in the next couple of years.

Key Assumptions

--Constructive regulatory environment in Michigan with ROEs for DTEE and DTEG in line with the currently approved going forward;

--No material equity issuances apart from the mandatory converts in 2022;

--Securitization debt and revenues are excluded from the FFO and debt calculations;

--DTE Vantage business growing earnings 5%-7% annually and remaining below 10% EBITDA target over the forecast period;

--Capital structure commensurate with regulatory structure.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to positive rating action/upgrade:

--While not anticipated at this time given the sizable capital program and elevated leverage, sustained improvement in FFO leverage of 4.8x or lower through the forecast period.

Factors that could, individually or collectively, lead to negative rating action/downgrade:

--A significant deviation from the current business risk with the regulated businesses comprising less than 90% of consolidated cash flow due to growth in the non-utility businesses;

--An adverse change in Michigan's regulatory environment;

--Sustained weakening in FFO leverage of 5.8x or higher through the forecast period;

--Sustained increase in Parent Level debt beyond currently projected 30%-35% of total.

Best/Worst Case Rating Scenario

International scale credit ratings of Non-Financial Corporate issuers have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of three notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of four notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAA' to 'D'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit /site/re/10111579.

Liquidity and Debt Structure

DTE had around $3.1 billion of available liquidity as of March 31, 2023, consisting of cash and amounts available under revolving credit facilities and letter of credit facilities. DTE's revolving credit facilities expire in 2027.

The revolving credit facilities are $1.5 billion at DTE, $800 million at DTEE and $300 million at DTEG. DTE, DTEE and DTEG were compliant with consolidated debt/capitalization of 63%, 53% and 46%, respectively, as defined under the credit agreement, as of March 31, 2023. Debt maturities remain manageable given the history of successful refinancing and ���������ֳ� expects DTE to have continued access to the capital markets.

���������ֳ� assigns 50% equity credit to $883 million junior subordinated debentures issued by DTE.

Issuer Profile

DTE Energy Co. (DTE) is the parent holding company of DTE Electric (DTEE) and DTE Gas (DTEG), regulated electric and natural gas utilities that provide electric and natural gas sales, distribution, and storage services throughout Michigan. DTEE is an integrated electric utility company that serves approximately 2.3 million customers in south-eastern Michigan and is the primary driver of consolidated cash flows. DTEG is a natural gas utility distribution company serving approximately 1.3 million customers throughout Michigan. DTE also owns non-utility operations consisting of industrial energy projects and energy trading.

Date of Relevant Committee

04 November 2022

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG Considerations

Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on ���������ֳ�'s ESG Relevance Scores, visit .

Additional information is available on

APPLICABLE MODELS

Numbers in parentheses accompanying applicable model(s) contain hyperlinks to criteria providing description of model(s).

• Corporate Monitoring & Forecasting Model (COMFORT Model), v8.0.3 (1)

ADDITIONAL DISCLOSURES

• Solicitation Status
• Endorsement Policy

ENDORSEMENT STATUS