Dte Energy Company · NYSE:DTE
Dte Energy — Investor Presentation (June 2013)
47 slides from Dte Energy's investor presentation, Jun 7, 2013
Slide 1: Business and Financial Update
Business and Financial Update Peter Oleksiak, Senior Vice President of Finance Irene Dimitry, Vice President Marketing and Renewables June 10-12, 2013 EXHIBIT 99.1
Slide 2: Safe Harbor Statement
Safe Harbor Statement The information contained herein is as of the date of this presentation. Many factors may impact forward-looking statements including, but not limited to, the following: impact of regulation by the FERC, MPSC, NRC and other applicable governmental proceedings and regulations, i
Slide 3: Overview, Long-Term Growth Update, Financial Update
• Overview • Long-Term Growth Update – Utilities – Non-Utilities • Financial Update 3
Slide 4: DTE Energy is an Integrated Energy Company
Electric Gas DTE Energy is an Integrated Energy Company Complementary Non-Utility Businesses Strong, Stable and Growing Utilities • Electric generation and distribution • 2.1 million customers • Fully regulated by Michigan Public Service Commission (MPSC) • Natural gas distribution • 1.2 million cus
Slide 5: Long-term business mix weighted towards stable regulated utilities
DTE Energy’s long-term business mix continues to be weighted towards stable regulated utilities Electric 62% Gas 15% GSP 9% P&I 11% Energy Trading 3% Electric 69% Gas 12% GSP 12% P&I 7% * Reconciliation to GAAP reported earnings included in the appendix 2013 – 2017 Operating Earnings* ~$4 billion 20
Slide 6: We remain committed to delivering on our targets
2008A 2009A 2010A 2011A 2012A 2013E 2014E 2015E 2016E 2017E $3.80 We remain committed to delivering on our targets * Reconciliation to GAAP reported earnings included in the appendix; 2008 – 2012 operating EPS adjusted for Unconventional Gas Production discontinued operations $3.33 $3.75 $3.64 Divid
Slide 7: Utilities provide foundation for operating EPS growth
Utility Earnings Growth Non-Utility Earnings Growth DTE Earnings Growth Share Dilution Contingency DTE EPS Growth 1% - 2% Non-Utilities Utilities provide foundation for operating EPS growth 6% - 7% 15% - 20% ~10% 5% - 6% 4% Utilities Strong growth in non-utilities gives us confidence in our EPS grow
Slide 8: Overview, Long-Term Growth Update, Financial Update
• Overview • Long-Term Growth Update – Utilities – Non-Utilities • Financial Update 8
Slide 9: Michigan economic indicators highlight continued recovery in 2013
Michigan economic indicators highlight continued recovery in 2013 Ranked Michigan #1 for job growth Ranked Michigan #2 in Economic Health Michigan #7 up from #49 on Corporate Income Tax ranking 2009 2010 2011 2012 2013E 1,144 1,578 1,912 2,252 2,421 Increased Auto Production (000s) 2009 2010 2011 20
Slide 10: Strategies to delay rate case filings while maintaining financial health
Both utilities have strategies to delay rate case filings to address customer affordability while maintaining financial health 2013 • Continued cost control • Amortize revenue decoupling liability ($127 million) • Securitization surcharge* ends • Headroom for new rates • Infrastructure Recovery Mech
Slide 11: Continuous improvement enabled industry-leading cost management
DTE’s continuous improvement capability has enabled us to lead the industry in cost management $1,691 $1,530 2007 2008 2009 2010 2011 2012 2013F Utility O&M* ($ millions) * Excludes bad debt expense, LIEEF, Energy Optimization and Renewable Energy Program 2013 forecast shows ~$160 million in utility
Slide 12: Review of state energy policy to maintain constructive regulatory framework
We are confident that the process to review state energy policy will maintain a constructive regulatory framework and contribute to Michigan's turnaround DTE is actively participating throughout the process Fall 2012 2013 2014 + Governor’s energy message • Renewables • Energy efficiency • Deregulati
Slide 13: Electric utility investing in three key growth areas through 2017
Our electric utility is making significant investments in three key growth areas through 2017 Base Infrastructure $5.0 billion Renewable Energy & Energy Efficiency $500 million Environmental Compliance $900 million • Environmental requirements • $335 million investment in 2013 • Power plant reliabil
Slide 14: DTE Electric plans over $6 billion of investments over 5 years
2008-2012 Average 2013E 2014E 2015E 2016E 2017E DTE Electric plans over $6 billion of investments over the next 5 years (millions) $1,555 $1,500 $1,000 $1,100 $1,300 $1,000 * Includes AMI, Ludington expansion and other investments Base Renewables Other Projects* Environmental / New Generation 2013E-
Slide 15: Transformation of the generation fleet
Long-term units 4,410 MW Medium- term units 2,420 MW Pending EPA regulations 650 MW Short-term units 203 MW DTE Coal Fleet Plans through 2020 (MW of Capacity) Much of the longer-term investment will be tied to the ongoing transformation of our generation fleet Long-term units • Continued long-term i
Slide 16: Electric utility investment of $1.3-1.7 billion per year from 2018 through 2022
Our electric utility will continue to invest approximately $1.3-1.7 billion per year from 2018 through 2022 Base Infrastructure $5 to $5.5 billion New Generation $1 to $2 billion Generation Compliance $0.5 to $1 billion •Environmental compliance •Post Fukushima nuclear investments • Fermi relicensin
Slide 17: Regulatory strategy enabling potential rate reduction
Our regulatory strategy and continuous improvement initiatives will enable a potential rate reduction during a period of significant rate base growth Current rate ~$350 million securitization surcharge drop off in 2015 Base rates in 2015 / 2016 Potential Customer Rates Our goal is to achieve a net r
Slide 18: DTE Electric load forecast reflects ~1% growth
DTE Electric total load forecast reflects ~1% growth as Industrial sales continue to recover *Temperature normalized sales 0% 10% 20% 30% 40% 2009 2010 2011 2012 2013E 2014E DTE Industrial Sales* Cumulative change from 2009 2012 2013E 2014E 2017E Total Service Area Annual Sales* (GWh) ~2% ~1% / yr ~
Slide 19: Gas utility reliability and pipeline integrity investments through 2017
Main Renewal, Meter Move-Out & Pipeline Integrity $400 million Base Infrastructure $680 million Our gas utility continues to make reliability and pipeline integrity investments through 2017 • Capital recovered through the Infrastructure Recovery Mechanism • ~4,000 miles of distribution main to be re
Slide 20: DTE Gas plans over $1 billion of investments
DTE Gas plans over $1 billion of investments over the next 5 years (millions) 2013E 2014E 2015E 2016E 2017E $220 $215 $215 $215 $215 2013E - 2017E $400 $680 $1,080 Five Year Total Base Main Renewal, Meter Move-Out, Pipeline Integrity $2.8B $3.4 - $3.6B YE Rate Base* $94M $109M Depreciation Includes
Slide 21: Regulatory strategy minimizes customer rate impact near-term
Our regulatory strategy and continuous improvement initiatives minimize customer rate impact in the near- term Current rate Surcharge reductions IRM Potential Customer Rates Our goal is to keep rates essentially flat over the next 3 years 21
Slide 22: Overview, Long-Term Growth Update, Financial Update
• Overview • Long-Term Growth Update – Utilities – Non-Utilities • Financial Update 22
Slide 23: Gas Storage & Pipelines developing asset portfolio with multiple growth platforms
Gas Storage & Pipelines is developing an asset portfolio with multiple growth platforms 23
Slide 24: Gas Storage & Pipelines platforms drive growth through new projects
Bluestone Pipeline • In-service and ramping up Millennium Pipeline & Expansions • 0.3 Bcf expansion underway (total capacity of 0.8 Bcf) • First expansion in service June 1, 2013, second planned for 4Q 2013 • Future expansions economic up to 1.5 Bcf/d Proposed NEXUS Gas Transmission • ~ $1.5 billion
Slide 25: Bluestone assets strategically positioned for growth
Our Bluestone assets are strategically positioned for growth • Potential ~0.3 Bcf/d expansion to ~0.6 Bcf/d S U S Q U E H A N N A NEW YORK PENNSYLVANIA BLUESTONE PIPELINE TENNESSEE PIPELINE B R O O M E • ~50,000 acres for Southwestern Energy Wells started for selected producers from Jan '12 - Feb '1
Slide 26: Marcellus/Utica production expected to exceed demand
Marcellus/Utica gas production is expected to significantly exceed demand and drive the need for pipeline takeaway 10.8 2013 9.3 2015 12.0 2014 2012 6.6 2030 23.0 2025 21.0 2020 18.0 2012 Northeast Demand 10.2 Marcellus Utica Marcellus and Utica Shale Production (Bcf/d) Source: Wood Mackenzie 26
Slide 27: Gas Storage & Pipelines operating earnings potential of $120 million by 2017
2012A 2013E 2014E 2015E 2016E 2017E Gas Storage & Pipelines operating earnings* potential of $120 million by 2017 ~$120 * Reconciliation to GAAP reported earnings included in the appendix (millions) Storage Platform Vector Platform Marcellus Platform Utica Platform and additional growth $30 $10 $60
Slide 28: Confident in 2017 operating earnings outlook
2012A 2013E 2014E 2015E 2016E 2017E $30 $10 $10 $35 $15 2017E ~$100 We are confident in our 2017 operating earnings outlook Millennium pipeline ~$500 million investment in Bluestone and initial gathering Additional expansion and gathering opportunities (under development) (millions) ~$120 $10 $60 $2
Slide 29: Power & Industrial is focused in three businesses
Power & Industrial is focused in three businesses Wood-fired Plant Cassville, WI • Produces fuel that reduces emissions from coal-fired plants • 9 REF units, 4 states Industrial Energy Services • Utility services at industrial sites • Coke and pulverized coal for steel customers • 42 projects, 11 st
Slide 30: P&I should reach $140 million of operating earnings by 2017
2012A 2013E 2014E 2015E 2016E 2017E P&I should reach $140 million of operating earnings* by 2017 through growth in each of its business lines ~$140 (millions) $52 $35 $65 $85 ($70) $25 $60 - $70 New Project Development Renewable Energy Reduced Emissions Fuel Industrial Energy Services Corporate allo
Slide 31: Overview, Long-Term Growth Update, Financial Update
• Overview • Long-Term Growth Update – Utilities – Non-Utilities • Financial Update 31
Slide 32: DTE Energy 2014 Operating Earnings Early Outlook
2014 Drivers 2014 Early Outlook* 2013 Revised Guidance* (millions, except EPS) DTE Electric $480 - $490 $515 - $525 DTE Gas Full year of IRM; Continuous Improvement 115 - 120 120 - 126 Gas Storage & Pipelines Bluestone pipeline and gathering 65 - 70 72 - 78 Power & Industrial Projects REF and renewa
Slide 33: Strong balance sheet remains a key priority and supports growth
2012 2013E 2014E- 2015E *Debt excludes securitization, a portion of DTE Gas’ short-term debt, and considers 50% of the Junior Subordinated Notes as equity Leverage* Funds from Operations / Debt* 2012A 2013E 2014E- 2015E 50% 50% Target 50% - 52% 22% 22% Target 21% - 22% Strong balance sheet remains a
Slide 34: Our system of priorities creates value for investors
Our system of priorities is fundamental to how we create value for our investors 5% - 6% Annual EPS Growth Attractive Dividend Strong Balance Sheet 34
Slide 35: Contact Us
Contact Us DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030 35
Slide 36: Appendix
DTE Energy Appendix
Slide 37: Revising 2013 operating earnings per share guidance
We are revising our 2013 operating earnings* per share guidance mid-point from $4.00 to $4.05 Drivers 2013 Revised Guidance 2013 Original Guidance (millions, except EPS) DTE Electric Strong underlying performance, regulatory certainty, cost efficiencies $475 - $485 $480 - $490 DTE Gas 113 - 118 115
Slide 38: DTE Energy 2013 Cash Flow Guidance
2012 2013 Actual Guidance Cash From Operations* $2.2 $1.8 Capital Spending (2.1) (2.2) Free Cash Flow $0.1 ($0.4) Asset Sales 0.3 - Dividends (0.4) (0.4) Net Cash $0.0 ($0.8) Debt Financing: Issuances $0.8 $1.6 Redemptions (0.8) (0.8) Change in Debt $0.0 $0.8 DTE Energy 2013 Cash Flow Guidance Cash
Slide 39: DTE Energy 2013 Capital Expenditure Guidance
DTE Energy 2013 Capital Expenditure Guidance 2012 2013 Actual Guidance DTE Electric Operational $823 $1,020 Environmental 161 335 Renewable Energy 246 200 $1,230 $1,555 DTE Gas Operational $172 $140 Main Renewal / Meter Move-out 48 80 $220 $220 $594 $400 Total $2,044 $2,175 Non-Utility Capital Expen
Slide 40: DTE Electric has built or contracted ~870MWs of renewable energy
DTE Electric has built or contracted for approximately 870MWs of renewable energy since 2009 (830MWs of wind) L’Anse Warden 17 MW Biomass Baraga County Eagle Valley 3 MW Landfill Gas Oakland County Smiths Creek 3 MW Landfill Gas St. Clair County Stoney Corners 32 MW Wind Missaukee County Gratiot Win
Slide 41: Reduced Emissions Fuel earnings contribution should continue to grow
Reduced Emissions Fuel earnings contribution should continue to grow 2012 2013E 2014E - 2017E • Operations target met at five placed units • 6th unit operational at year end • 7th unit sited; online mid-2013 • Marketing two remaining units to potential host sites • Optimizing operations • Continued
Slide 42: Reconciliation of 2012 Reported to Operating Earnings
Use of Operating Earnings Information – DTE Energy management believes that operating earnings provide a more meaningful representation of the company’s earnings from ongoing operations and uses operating earnings as the primary performance measurement for external communications with analysts and i
Slide 43: Reconciliation of 2011 Reported to Operating Earnings
Use of Operating Earnings Information – DTE Energy management believes that operating earnings provide a more meaningful representation of the company’s earnings from ongoing operations and uses operating earnings as the primary performance measurement for external communications with analysts and i
Slide 44: Reconciliation of 2010 Reported to Operating Earnings
Use of Operating Earnings Information – DTE Energy management believes that operating earnings provide a more meaningful representation of the company’s earnings from ongoing operations and uses operating earnings as the primary performance measurement for external communications with analysts and i
Slide 45: Reconciliation of 2009 Reported to Operating Earnings
Reconciliation of 2009 Reported to Operating Earnings Use of Operating Earnings Information – DTE Energy management believes that operating earnings provide a more meaningful representation of the company’s earnings from ongoing operations and uses operating earnings as the primary performance measu
Slide 46: Reconciliation of 2008 Reported to Operating Earnings
Reconciliation of 2008 Reported to Operating Earnings Use of Operating Earnings Information – DTE Energy management believes that operating earnings provide a more meaningful representation of the company’s earnings from ongoing operations and uses operating earnings as the primary performance measu
Slide 47: Reconciliation of Other Reported to Operating Earnings
Reconciliation of Other Reported to Operating Earnings Use of Operating Earnings Information – DTE Energy management believes that operating earnings provide a more meaningful representation of the company’s earnings from ongoing operations and uses operating earnings as the primary performance meas