Dte Energy Company · NYSE:DTE
Dte Energy — Non-Deal Roadshow (February 2011)
42 slides from Dte Energy's roadshow presentation, Feb 22, 2011
Slide 1: Investor Meetings
Investor Meetings Tony Earley, Executive ChairmanPeter Oleksiak, VP, Controller & Investor RelationsFebruary 22-23, 2011
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: economic conditions resulting in changes in demand, customer conservation and increased thefts of electricit
Slide 3: DTE Energy is an Integrated Energy Company
Gas Storage & Pipelines Power & Industrial Projects Unconventional Gas Production Detroit Edison MichCon DTE Energy is an Integrated Energy Company Complementary Non-Utility Businesses Strong, Stable and Growing Utilities Electric generation and distribution2.1 million customersFully regulated by Mi
Slide 4: 2010 Accomplishments, Long-Term Growth Strategy, 2011 Outlook
2010 AccomplishmentsLong-Term Growth Strategy2011 Outlook 4
Slide 5: 2010 Overview
5 2010 Overview Achieved solid 2010 operating EPS growth of 9% year over yearEarned authorized return on equity (ROE) at both utilitiesAchieved solid earnings in our non-utility businesses Cash flow and balance sheet metrics remain strongS&P upgraded DTE credit ratings in December 2010Increased annu
Slide 6: Continuous Improvement Initiatives Driving Cost Reductions and Customer Satisfaction
Continuous Improvement (CI) Initiatives Driving Cost Reductions and Customer Satisfaction 6 Utility O&M* CI initiatives have more than offset large, structural cost pressures over last 5 yearsUltimate goal: manage rate affordability during heavy investment periodTargeting additional cost savings to
Slide 7: Regulatory Highlights
Regulatory Highlights 7 Final Order Detroit Edison Rate Case(U-15768) Jan. Final Order MichCon Rate Case(U-15985) Filed MichCon Rate Case(U-16400) Filed Detroit Edison Case with Alternatives to Lower Rate Request(U-16472) Withdrew MichCon Rate Case(U-16400) Constructive rate orders during first half
Slide 8: Michigan Economy Continues to Show Signs of Improvement
(CHART) Michigan Economy Continues to Show Signs of Improvement (CHART) Detroit Edison Temperature Normal Territory Sales - GWh Residential Residential Commercial Commercial Industrial Industrial Other Other 48,280 49,591 +21% (2%) (2%) Michigan Unemployment* (%) Utility Accounts Receivable Arrears
Slide 9: 2010 Accomplishments, Long-Term Growth Strategy, 2011 Outlook
2010 AccomplishmentsLong-Term Growth Strategy2011 Outlook 9
Slide 10: Growth and Value Creation
"Bridge" (CHART) 10 $2.82 $3.30 Growth and Value Creation * Reconciliation to GAAP reported earnings included in the appendix $2.89 DTE Energy Operating Earnings Per Share* $3.60 $3.55 CAGR = ~9% Targeting 5% - 6% Annual Growth
Slide 11: Target 5%-6% Annual DTE EPS Growth Rate: Utilities
Target 5% - 6% Annual DTE EPS Growth RateResume 5% - 6% annual growth at the utilitiesTargeting authorized ROERenewable and environmental investments ramp up materially DTE Annual EPS Growth Rate of ~9%Combined utility growth 9%Focus on CI and improved regulation drove utilities to earn allowed ROEP
Slide 12: Detroit Edison Capital Investment
(CHART) 12 Detroit Edison lowered capital spending during economic crisisThis temporarily slowed rate base growth / earnings growthRenewable investments ramp up materially over next 3 years~$200 million renewable project could be late 2011 or early 2012Environmental mandates also driving increased c
Slide 13: Detroit Edison Investment Profile, 2011-2013
13 Detroit Edison Investment Profile, 2011 - 2013 Base Infrastructure$2.1 - $2.3 billion Investments in scrubbers, SCRs to meet Clean Air Act requirements Infrastructure investments to ensure the reliability of generation fleet and distribution systems Renewable Energy & Energy Efficiency$500 - $600
Slide 14: Renewable Energy Investments
Renewable Energy Investments 14 Gratiot County Wind FarmDetroit Edison pursuing 200MW wind farm with partner;Own 56 turbines (~90MW); ~$200 million capital investmentPurchase output of 69 additional turbines (~110MW)Construction began December 2010; acquisition in late 2011 or early 2012 Two 3.2MW L
Slide 15: MichCon Growth Opportunities
Strengthen and expand MichCon's distribution systemMain renewal, pipeline integrity and meter relocation Investment in additional pipelines to connect our storage products to third parties Expansion projects provide increased storage for third party customers Distribution Other Retail MichCon Growth
Slide 16: Target 5%-6% Annual DTE EPS Growth Rate: Non-Utility
Target 5% - 6% Annual DTE EPS Growth RateREF and renewable investments provide solid growth at P&ILonger-term investments provide earnings growth at GSPEnergy Trading returns to historical profit levelsMonetize Unconventional Gas assets to fund growth DTE Annual EPS Growth Rate of ~9%20% combined an
Slide 17: Power & Industrial Projects: Earnings Potential of Over $100 Million by 2015
(CHART) *Reconciliation to GAAP reported earnings included in the appendix**Excludes corporate allocations, interest and overheads Power & Industrial Projects: Earnings Potential of Over $100 Million by 2015 Illustrative** 2010A 2009A 2011E Earnings Contribution by Project Type $85 2012E 2013E 2014E
Slide 18: Gas Storage & Pipeline: Marcellus Shale Growth Opportunities
Gas Storage & Pipeline: Development of Marcellus Shale Provides Future Growth Opportunities Corning Vector Millennium Storage Assets Pipeline Interests Iroquois Trans Canada Empire Union Gas 18 Growth Opportunities Marcellus shale development creates growth opportunities for Millennium PipelineMainl
Slide 19: 2011 Priorities: Financial Performance and Growth & Value Creation
Successfully execute our investments in Detroit Edison renewable assetsTightly manage our Monroe Power Plant environmental investmentsExecute non-utility investments focused on premium returns and shareholder value creation Achieve operating EPS* of $3.40 - $3.70 in 2011Targeting 5%-6% long-term ear
Slide 20: 2010 Accomplishments, Long-Term Growth Strategy, 2011 Outlook
2010 AccomplishmentsLong-Term Growth Strategy2011 Outlook 20
Slide 21: 2011 Guidance Operating Earnings
2011 Guidance Operating Earnings*(millions) 2011 Drivers * Reconciliation to GAAP reported earnings included in the appendix 2011 Guidance 2010 Actual 21 Productive outcome in Q4 2010 rate case filing; ongoing cost reductions; earn authorized ROE (11%) Earn authorized ROE (11%); lower midstream reve
Slide 22: Detroit Edison General Rate Case Filing
Detroit Edison General Rate Case Filing (U - 16472) 22 Detroit Edison's Estimated Net Rate Request* (CHART) Sales / Wholesale Revenue Rate Base / Capital Structure Benefit Expense / Other Total $116 $77 $60 $253 (millions) *Revenue requirement of $443 less proposed reductions to: delay recognition o
Slide 23: 2011 Cash Flow Guidance
2011 Cash Flow Guidance Cash Flow Summary (billions) 2011 cash from operations expected to be higher than 2010 driven by lower tax payments2011 capital spending increases $200 million versus 2010 due to: Increased environmental spendIncreased non-utility investmentsIssued $180 million of equity in 2
Slide 24: 2011 Capital Expenditure Guidance
2011 Capital Expenditure Guidance Capital Expenditures Summary (millions) Detroit EdisonHigher environmental capital for scrubbers at Monroe Power PlantSignificant renewable construction in 2011; 56 turbines to be acquired from partner in late 2011 or early 2012 for $200 million MichConHigher operat
Slide 25: Targeted Financial Metrics
(CHART) 25 *Debt excludes securitization, a portion of MichCon's short-term debt, and considers 50% of the trust preferreds as equity Targeted Financial Metrics A strong balance sheet continues to be a key priorityLeverage and cash flow metrics within or above targeted rangesIn December 2010, S&P up
Slide 26: Our Dividend is Well Supported
(CHART) Our Dividend is Well Supported 26 Increased annualized dividend from $2.12 per share to $2.24 per share in 2010; 5.7% increaseDividend yield currently in-line with utility peersPayout ratio is in-line with 60%-70% targetDividend remains well supported Dividend Yield (as of February 2011) 4.8
Slide 27: Investment Thesis
Investment Thesis DTE Energy has a plan it believes will provide 5% - 6% long-term operating EPS growth, an attractive dividend yield and a strong balance sheetUtility growth plan driven by mandated investmentsConstructive regulatory structure and continued cost savings enable utilities to earn thei
Slide 28: Contact Us
Contact Us DTE Energy Investor Relationswww.dteenergy.com/investors313-235-8030 28
Slide 29: DTE Energy
DTE Energy
Slide 30: Michigan Public Service Commission (MPSC)
Orjiakor IsioguChairmanAppointed: 9/9/07Term Ends: 7/2/13(Democrat) Monica MartinezCommissionerAppointed: 7/3/05Term Ends: 7/2/11(Democrat) Greg WhiteCommissionerAppointed: 12/4/09Term Ends: 7/2/15(Independent) Source: MPSC website - www.michigan.gov/mpsc - Jan. 2010 The Michigan Public Service Comm
Slide 31: Detroit Edison Generation Portfolio
Detroit Edison Generation Portfolio 31
Slide 32: 2010 Operating Earnings Variance
Power & Industrial driven by higher coke sales and Steel Industry Fuels tax creditEnergy Trading driven primarily by lower economic performance and accounting timing 2010 Operating Earnings Variance Full year rate increase and normal weather partially offset by higher depreciation and 2009 property
Slide 33: DTE Energy Trading Reconciliation of Operating Earnings to Economic Net Income
(CHART) DTE Energy Trading Reconciliation of Operating Earnings* to Economic Net Income ** Consists of the income statement effect of not recognizing changes in the fair market value of certain non-derivative contracts including physical inventory and capacity contracts for transportation, transmiss
Slide 34: Energy Trading Faced Unique Market Challenges in 2010
Energy Trading Faced Unique Market Challenges in 2010 Historically has contributed strong operating earnings and cash flowIn addition, Energy Trading provides:Strategic market intelligence Execution capability for other DTE segments to support hedging and risk management initiatives2010 provided mar
Slide 35: Barnett Shale Operating Metrics
Barnett Shale Operating Metrics 35 Continue to prudently manage and develop oil and gas assets Invest $25 millionDrill up to 25 wells Produce 6 Bcfe net, increase oil productionFocus on water handling & production optimization 17 new wells on-line, 3 acquiredProduction of 4.8 BcfeIncreased oil produ
Slide 36: DTE Unconventional Gas Valuation
DTE Unconventional Gas Valuation 14% decrease in proved reserves in 2010 due primarily to removal of reserves that exceed 5 year development limit for Proven Undeveloped classification; majority of reduction shifted to probableIncreased focus on crude oil directed investmentsOil commands a premium v
Slide 37: 2010 Capital Expenditures and Cash Flow
2010 Capital Expenditures and Cash Flow DTE Energy Cash Flow (billions) DTE Energy Capital Expenditures (millions) 37
Slide 38: Reconciliation of 2010 Reported to Operating Earnings
38 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 an
Slide 39: 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 40: 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 41: Reconciliation of 2007 Reported to Operating Earnings
Reconciliation of 2007 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 42: 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