Dte Energy Company · NYSE:DTE
Dte Energy — Investor Presentation (March 2015)
44 slides from Dte Energy's investor presentation, Mar 3, 2015
Slide 1: Business Update March 3-4, 2015
Business Update March 3-4, 2015 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, CFTC, EPA and other applicable governmental proceedings and reg
Slide 3: Overview, Long-Term Growth Update, Financial Update, Summary
• Overview • Long-Term Growth Update • Financial Update • Summary 3
Slide 4: Growth driven by strong, stable utilities and complementary non-utility businesses
DTE Energy’s growth is driven by strong, stable utilities and complementary non-utility businesses DTE Electric Electric generation and distribution DTE Gas Natural gas transmission, storage and distribution Complementary Non-Utility Businesses Strong, Stable and Growing Utilities Fully Regulated by
Slide 5: Our system of priorities is fundamental to how we create value
5% - 6% Annual EPS Growth Attractive Dividend Strong Balance Sheet Our system of priorities is fundamental to how we create value for our investors 5
Slide 6: Highest in Customer Satisfaction With Business and Large Residential Gas Service
DTE Energy has achieved “Highest in Customer Satisfaction With Business and Large Residential Natural Gas Service Providers in the Midwest”* J.D. Power Gas Utility Residential Gas Customer Satisfaction Ranking Midwest Region: Large Segment 2007 2012 2013 2014 R esi d e n ti a l J.D. Power Gas Utilit
Slide 7: Earnings growth opportunities and contingency planning support 5%-6% operating EPS growth
Our strong earnings growth opportunities coupled with our contingency planning gives us confidence in our ability to deliver 5% – 6% operating EPS* growth Utility Earnings Growth Non-Utility Earnings Growth DTE Earnings Growth Share Dilution Contingency DTE EPS Growth Non-Utilities 5% - 7% 5% - 6% U
Slide 8: Committed to delivering 5% to 6% operating EPS growth
* Reconciliation to GAAP reported earnings included in the appendix (dollars per share) We remain committed to delivering 5% to 6% operating EPS* growth $3.33 $3.64 $3.75 $3.94 $4.09 $4.60 $4.60 $2.12 $2.24 $2.35 $2.48 $2.62 $2.76 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 EPS Dividend A
Slide 9: Overview, Long-Term Growth Update, Financial Update, Summary
• Overview • Long-Term Growth Update • Financial Update • Summary 9
Slide 10: Michigan has returned to economic health, allowing focus on energy policy changes
Michigan has returned to economic health, allowing the state to focus on beneficial energy policy changes Detroit’s economic rebirth Michigan’s economic health Michigan Energy policy Constructive regulatory environment Michigan leads nation in manufacturing job growth Brookings Institution ranked Mi
Slide 11: Experienced state leadership to drive successful changes in energy policy
The state has experienced leadership to drive successful changes in energy policy 11 “I am calling for the creation of an Agency on Energy… …we can all work together to come up with better policies.” From Governor Snyder’s State of the State address, January 20, 2015 Senator Mike Nofs Energy and Tec
Slide 12: Policy will transform generation mix, replacing coal with gas and renewables
Federal and state policy will lead to transformation of our generation mix by replacing coal with natural gas and renewables 12 DTE Electric Generation Output 2014 2030 Scenario* Gas / Renewables Coal Nuclear / other ~70% ~30% ~50% ~20% ~20% ~10% * Ultimate timing and mix of generation impacted by M
Slide 13: Investing over $11 billion in capital projects through 2019
We will invest over $11 billion in capital projects to drive growth through 2019 (billions) 13 ~$11.2 – $11.8 $0.6 – $0.8 $1.5 – $1.9 $1.6 $7.5 Power & Industrial Projects Gas Storage & Pipelines DTE Gas DTE Electric On-site energy, cogeneration Gathering investments, NEXUS, additional pipeline expa
Slide 14: Electric utility investing $7.5 billion in three key areas through 2019
Our electric utility is investing $7.5 billion in three key areas through 2019 $5.7 billion Distribution infrastructure renewal Power plant reliability Compliance Gas plant acquisition Generation asset base renewal $1.4 billion $400 million $7.5 billion Targeting 5% - 6% growth Base Infrastructure N
Slide 15: Generation replacement will significantly increase DTE Electric's investment
Generation replacement will significantly increase DTE Electric’s investment over the next 10 years DTE Electric Total Investment ~$7.5 ~$9.0 2015-2019 2020-2024 ~$6.0 2010-2014 New generation investment (billions) 15
Slide 16: Gas utility making $1.6 billion of reliability and infrastructure investments
Our gas utility is making $1.6 billion of reliability and infrastructure investments through 2019 Strengthen and expand infrastructure Main renewal, meter move-out and pipeline integrity Compression Targeting 7% - 8% growth Base Infrastructure Infrastructure Renewal Nexus Related Total $825 million
Slide 17: Focusing on minimizing the customer rate impact as we grow
$ * Includes ~$300 million surcharge reduction for renewable energy, power supply cost recovery (PSCR) and choice incentive mechanism implemented 1Q 2014 and net reduction of ~$300 million due to elimination of securitization surcharge and PSCR increase in 1Q 2015 As we continue to grow, we are focu
Slide 18: Continuous improvement enables industry-leading cost management
DTE’s continuous improvement capability has enabled us to lead the industry in cost management * Source: SNL Financial, FERC Form 1; major US Electric Utilities with O&M > $800 million; excluding fuel and purchased power ** Source: SNL Financial, FERC Form 2; gas distribution companies with greater
Slide 19: Gas Storage & Pipelines developing asset portfolio with multiple growth platforms
Gas Storage & Pipelines is developing an asset portfolio with multiple growth platforms DTE Gas DTE Storage Proposed NEXUS Pipeline Marcellus Shale Bluestone Pipeline Utica Shale Michigan Gathering 19 Bluestone Gathering System
Slide 20: Gas Storage & Pipelines platforms drive growth through new projects and expansions
Gas Storage & Pipelines platforms drive growth through new projects and expansions Pipeline Platform Gathering Platform Storage Platform • Bluestone Pipeline • Millennium Pipeline • Vector Pipeline • Proposed NEXUS Pipeline • Bluestone Gathering • Michigan Gathering • 91 Bcf of working capacity • St
Slide 21: NEXUS and Vector pipelines have taken important steps forward
The NEXUS and Vector pipelines have taken important steps forward in recent months NEXUS GAS TRANSMISSION VECTOR PIPELINE Vector Pipeline® 21 • Open season results finalized: - Executed 15+ year transport contracts with NEXUS Gas Transmission and Rover Pipeline LLC - Contracts firm up long-term util
Slide 22: Gas Storage & Pipelines operating earnings potential is $145 million by 2019
Gas Storage & Pipelines’ operating earnings* potential is $145 million by 2019 2013A 2014A 2015E 2016E 2017E 2018E 2019E * Reconciliation to GAAP reported earnings included in the appendix Pipeline Platform** Gathering Platform Storage Platform New Project Development (Other gathering and pipeline e
Slide 23: Power & Industrial Projects focused in three key business lines
Power & Industrial Projects is focused in three key business lines across the country Industrial Energy Services Renewable Energy Reduced Emissions Fuel 23
Slide 24: Power & Industrial Projects pursuing new opportunities in each business line
Power & Industrial Projects is pursuing new opportunities in each business line in order to achieve growth aspirations 24 • On-site energy and utility services for industrial, commercial and institutional customers • Several cogeneration projects currently under development • Wood-fired power plants
Slide 25: Power & Industrial Projects targeting $145 million of operating earnings by 2019
Power & Industrial Projects is targeting $145 million of operating earnings* by 2019 through growth in each of its business lines 2013A 2014A 2015E 2016E 2017E 2018E 2019E ~$145 $35 $70 $85 ($65) $20 $70 New Project Development / Acquisitions Renewable Energy Reduced Emissions Fuel Industrial Energy
Slide 26: Overview, Long-Term Growth Update, Financial Update, Summary
• Overview • Long-Term Growth Update • Financial Update • Summary 26
Slide 27: We raised our 2015 operating EPS guidance from early outlook
We raised our 2015 operating EPS* guidance from our previous early outlook * Reconciliation to GAAP reported earnings included in the appendix ** Total DTE Energy excluding Energy Trading Drivers (millions, except EPS) 2015 Early Outlook 2015 Guidance 2014 Actuals* DTE Electric $528 $554 - $570 $554
Slide 28: Strong balance sheet remains a key priority and supports growth
Leverage* 49% 51% 23% 25% Strong balance sheet remains a key priority and supports growth * Debt excludes securitization, a portion of DTE Gas’ short-term debt, and considers 50% of the Junior Subordinated Notes as equity Funds from Operations** / Debt* Target 50% - 53% Target 20% - 22% 5 • Achieved
Slide 29: Overview, Long-Term Growth Update, Financial Update, Summary
• Overview • Long-Term Growth Update • Financial Update • Summary 29
Slide 30: Summary
Summary * Reconciliation to GAAP reported earnings included in the appendix 30 • Exceeded our operating EPS* growth target with historical growth of nearly 7% • Targeting 5% to 6% operating EPS* growth ‒ 2015 growth segment guidance midpoint of $4.60 provides 5.5% EPS growth over 2014, with normal w
Slide 31: Contact Us
Contact Us DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030 31
Slide 32: Appendix
se DTE Energy Appendix
Slide 33: DTE Energy 2015 Cash Flow Guidance
2014 2015 Actual Guidance Cash From Operations $1.8 $1.7 Capital Spending (2.1) (2.6) Free Cash Flow ($0.3) ($0.9) Asset Sales & Other - 0.1 Dividends (0.5) (0.5) Net Cash ($0.8) ($1.3) Debt Financing: Issuances $2.0 $1.6 Redemptions (1.2) (0.3) Change in Debt $0.8 $1.3 DTE Energy 2015 Cash Flow Gui
Slide 34: DTE Energy 2015 Capital Expenditure Guidance
DTE Energy 2015 Capital Expenditure Guidance 2014 2015 Actual Guidance DTE Electric Operational $1,187 $1,270 Environmental 169 100 Renewable Energy / New Generation 205 450 $1,561 $1,820 DTE Gas Operational $143 $200Main Renewal / Meter Move-out / Pipeline Integrity 81 80 $224 $280 $309 $400 - $500
Slide 35: DTE Energy 2014 Operating Earnings Variance
DTE Energy 2014 Operating Earnings* Variance * Reconciliation to GAAP reported earnings included in the appendix ** Total DTE Energy excluding Energy Trading Drivers (millions, except EPS) 2014 Change 2013 DTE Electric • Revenue decoupling mechanism amortization and lower O&M DTE Gas • Colder winter
Slide 36: DTE Electric plans $7.5 billion of investments over the next 5 years
DTE Electric plans $7.5 billion of investments over the next 5 years 2014A 2015E 2016E 2017E 2018E 2019E Base New Generation Other Projects* Environmental Distribution Reliability 2015E - 2019E Total ~$13.4B ~$17.5B YE Rate Base** $595M ~$820M Depreciation * Includes AMI, Ludington expansion and oth
Slide 37: DTE Gas plans nearly $1.6 billion of investments over the next 5 years
DTE Gas plans nearly $1.6 billion of investments over the next 5 years 2014A 2015E 2016E 2017E 2018E 2019E 2015E - 2019E Total Base Gas Renewal NEXUS related $224 $280 $350 $360 $280 $280 $1,550 $125 $600 $825 ~$3.1B ~$4.4B - $4.5B YE Rate Base* $99M ~$130M Depreciation * Includes working capital; 2
Slide 38: Utility regulatory timeline
DTE Gas • Filed expanded Infrastructure Recovery Mechanism (IRM) 2015 • Filed cost of service rates and general rate case DTE Electric 2014 2016+ • Revised business cost of service rates 2Q • Self implement general rates 3Q • Final rate order 4Q • Periodic rate cases • IRM review and ruling • Begin
Slide 39: Gas Storage & Pipelines assets have expansion opportunities
Gas Storage & Pipelines assets have expansion opportunities to accommodate increased demand Pipeline Assets Capacity Bcf/ d In-Service Millennium Pipeline 0.8 Future Expansion (planning phase) 0.2 - 0.5 2017 + Total Planned Capacity 1.0 - 1.3 Bluestone Pipeline (bi-directional)* 0.8 Expansion #2 0.1
Slide 40: DTE Energy Trading Reconciliation of Operating Earnings to Economic Net Income
DTE Energy Trading Reconciliation of Operating Earnings* to Economic Net Income 40 (millions, after-tax) Operating Earnings* $61 • Economic net income equals economic gross margin*** minus O&M expenses and taxes • DTE Energy management uses economic net income as one of the performance measures for
Slide 41: 2014 Reconciliation of Reported to Operating Earnings
2014 DTE Electric DTE Gas Gas Storage and Pipelines Power and Industrial Projects Corporate and Other Growth Segments Energy Trading DTE Energy Reported Earnings 528$ 140$ 82$ 90$ (57)$ 783$ 122$ 905$ Investment impairment - - - - 5 5 - 5 NY state tax law change - - - - 8 8 - 8 Certain mark-to-marke
Slide 42: 2013 Reconciliation of Reported to Operating Earnings
2013 DTE Electric DTE Gas Gas Storage and Pipelines Power and Industrial Projects Corporate and Other Growth Segments Energy Trading DTE Energy Reported Earnings 484$ 143$ 70$ 66$ (44)$ 719$ (58)$ 661$ Asset impairment - - - 4 - 4 - 4 Certain mark-to-market transactions - - - - - - 55 55 Operating E
Slide 43: 2009-2014 Full Year Reconciliation of Reported to Operating Earnings
2009 – 2014 Full Year Reconciliation of 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
Slide 44: Use of Operating Earnings Information
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