(EDGAR Online via COMTEX) -- Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following combined discussion is separately filed by DTE Energy and DTE Electric. However, DTE Electric does not make any representations as to information related solely to DTE Energy or the subsidiaries of DTE Energy other than itself. EXECUTIVE OVERVIEW DTE Energy is a diversified energy company and is the parent company of DTE Electric and DTE Gas, regulated electric and natural gas utilities engaged primarily in the business of providing electricity and natural gas sales, distribution, and storage services throughout Michigan. DTE Energy also operates three energy-related non-utility segments with operations throughout the United States. The following table summarizes DTE Energy's financial results: Six Months Ended June Three Months Ended June 30, 30, 2020 2019 2020 2019 (In millions, except per share amounts) Net Income Attributable to DTE Energy Company $ 277 $ 182 $ 617 $ 583 Diluted Earnings per Common Share $ 1.44 $ 0.99 $ 3.20 $ 3.18
The increase in Net Income for the three months ended June 30, 2020 was primarily due to higher earnings in the Electric, Gas Storage and Pipelines, and Corporate and Other segments, partially offset by lower earnings in the Gas segment. The increase in Net Income for the six months ended June 30, 2020 was primarily due to higher earnings in the Gas Storage and Pipelines and Corporate and Other segments, partially offset by lower earnings in the Gas segment. During the first quarter 2020, the COVID-19 pandemic began impacting Michigan and the other service territories throughout the United States in which the Registrants operate. DTE Energy took certain safety precautions including directing employees to work remotely whenever possible and pausing all non-critical business activities. The spread of COVID-19 and efforts to contain the virus resulted in closures and reduced operations of businesses, governmental agencies, and other institutions.
OUTLOOK The next few years will be a period of rapid change for DTE Energy and for the energy industry. DTE Energy's strong utility base, combined with its integrated non-utility operations, position it well for long-term growth. Looking forward, DTE Energy will focus on several areas that are expected to improve future performance: electric and gas customer satisfaction; electric distribution system reliability; new electric generation; gas distribution system renewal; rate competitiveness and affordability; regulatory stability and investment recovery for the electric and gas utilities; employee safety and engagement; cost structure optimization across all business segments; cash, capital, and liquidity to maintain or improve financial strength; and investments that integrate assets and leverage skills and expertise. DTE Energy will continue to pursue opportunities to grow its businesses in a disciplined manner if it can secure opportunities that meet its strategic, financial, and risk criteria. In the near term, DTE Energy will continue to monitor the impact of the COVID-19 pandemic on supply chains, markets, counterparties, and customers, and any related impacts on the operating costs, customer demand, and recoverability of assets in our business segments that could materially impact the Registrants' financial results. DTE Energy expects the reduction in electric demand from commercial and industrial customers and increased demand from residential customers to continue in the near term. Operation and maintenance expenses will also continue to be impacted by the need for personal protective equipment and other safety-related costs. DTE Energy will continue to review the allowance for doubtful accounts for any additional risk related to COVID-19 and will monitor any ongoing challenges to production and demand in the Power and Industrial Projects segment. DTE Energy will also continue to monitor and evaluate the impact of any regulatory and legislative activities related to the COVID-19 pandemic. Refer to Note 6 to the Consolidated Financial Statements, "Regulatory Matters," for further information on current regulatory issues.
The Registrants cannot predict the ultimate impact of these factors to our Consolidated Financial Statements as future developments involving COVID-19 and related impacts on economic and operating conditions are highly uncertain.
RESULTS OF OPERATIONS
Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 (In millions) Net Income (Loss) Attributable to DTE Energy by Segment Electric $ 183 $ 133 $ 277 $ 280 Gas 1 8 122 159 Gas Storage and Pipelines 70 50 142 98 Power and Industrial Projects 25 29 55 55 Energy Trading (1) (6) 33 26 Corporate and Other (1) (32) (12) (35) Net Income Attributable to DTE Energy Company $ 277 $ 182 $ 617 $ 583
ELECTRIC The Results of Operations discussion for DTE Electric is presented in a reduced disclosure format in accordance with General Instruction H(2) of Form 10-Q. The Electric segment consists principally of DTE Electric. Electric results are discussed below: Six Months Ended June Three Months Ended June 30, 30, 2020 2019 2020 2019 (In millions) Operating Revenues - Utility operations $ 1,309 $ 1,190 $ 2,521 $ 2,425 Fuel and purchased power - utility 340 322 634 668 Utility Margin 969 868 1,887 1,757 Operating Revenues - Non-utility operations 3 - 7 - Operation and maintenance 349 330 705 682 Depreciation and amortization 256 229 517 450 Taxes other than income 58 69 141 153 Asset (gains) losses and impairments, net 41 13 41 13 Operating Income 268 227 490 459 Other (Income) and Deductions 60 69 175 125 Income Tax Expense 25 25 38 54 Net Income Attributable to DTE Energy Company $ 183 $ 133 $ 277 $ 280
See DTE Electric's Consolidated Statements of Operations for a complete view of its results. Differences between the Electric segment and DTE Electric's Consolidated Statements of Operations are primarily due to non-utility operations at DTE Sustainable Generation and the classification of certain benefit costs. Refer to Note 14 to the Consolidated Financial Statements, "Retirement Benefits and Trusteed Assets" for additional information. Utility Margin increased $101 million and $130 million in the three and six months ended June 30, 2020, respectively. Revenues associated with certain mechanisms and surcharges are offset by related expenses elsewhere in the Registrants' Consolidated Statements of Operations.
Three Months Six Months (In millions) Implementation of new rates $ 53 $ 121 Weather 44 11 Base sales 15 10 Regulatory mechanism - TRM (2) (15) Other regulatory mechanisms and other (9) 3 Increase in Utility Margin $ 101 $ 130
Six Months Ended June Three Months Ended June 30, 30, 2020 2019 2020 2019 (In thousands of MWh) DTE Electric Sales Residential 3,922 3,209 7,492 6,897 Commercial 3,520 4,068 7,429 8,145 Industrial 1,582 2,498 3,884 4,958 Other 48 48 108 111 9,072 9,823 18,913 20,111 Interconnection sales(a) 120 711 528 1,741 Total DTE Electric Sales 9,192 10,534 19,441 21,852 DTE Electric Deliveries Retail and wholesale 9,072 9,823 18,913 20,111 Electric retail access, including self-generators(b) 792 1,114 1,835 2,234 Total DTE Electric Sales and Deliveries 9,864 10,937 20,748 22,345 ______________________________
Other (Income) and Deductions decreased $9 million and increased $50 million in the three and six months ended June 30, 2020, respectively. The decrease in the second quarter was primarily due to an increase in investment earnings (gain of $22 million in 2020 compared to a gain of $7 million in 2019), partially offset by $9 million of higher interest expense. The increase in the six-month period was primarily due to a change in investment earnings (loss of $9 million in 2020 compared to a gain of $24 million in 2019) and $15 million of higher interest expense.
Jul 28, 2020
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