Dte Energy Company · NYSE:DTE
Dte Energy — Investor Presentation (June 2014)
52 slides from Dte Energy's investor presentation, Jun 25, 2014
Slide 1: Business Update June 25 – 27, 2014
Business Update June 25 – 27, 2014 EXHIBIT 99.1
Slide 2: Safe Harbor Statement
Safe Harbor Statement 2 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,
Slide 3: Overview, Long-Term Growth Update, Financial Update, Summary
• Overview • Long-Term Growth Update • Financial Update • Summary 3
Slide 4: DTE Energy is an integrated energy company
DTE Electric DTE Gas DTE Energy is an integrated energy company 4 Complementary Non-Utility Businesses Strong, Stable and Growing Utilities • Electric generation and distribution • Fully regulated by Michigan Public Service Commission • Natural gas distribution • Fully regulated by Michigan Public S
Slide 5: Our business strategy is fundamental to how we create value for our investors
Our business strategy is fundamental to how we create value for our investors Utility growth plan driven by infrastructure investments Strategic, transparent, low-risk growth opportunities in non-utility businesses provide diversity in earnings and geography Constructive regulatory structure a
Slide 6: Long-Term Growth Update
• Overview • Long-Term Growth Update • Financial Update • Summary 6
Slide 7: Operating EPS and dividend growth
2008A 2009A 2010A 2011A 2012A 2013A 2014E 2015E 2016E 2017E 2018E $3.33 $4.09 $3.75 $3.64 $2.12 $2.24 $2.35 $2.48 $2.12 * Reconciliation to GAAP reported earnings included in the appendix DTE has raised its annual dividend over 5% to $2.76 marking the fifth consecutive year of an increase in line wi
Slide 8: DTE has delivered total shareholder return above market indices
DTE has delivered total shareholder return above market indices 8 16% 19% 26% 12% 14% 13% 15% 10% 5% 16% 18% 8% YTD 3 YR 5 YR 10 YR DTE S&P500 Utilities S&P500 Historical Total Shareholder Return CAGR* * As of May 30, 2014 Source: Bloomberg
Slide 9: Michigan’s regulatory environment ranks among the best in the country
Michigan’s regulatory environment ranks among the best in the country Data source: Standard & Poor’s, January 2014 9 MI Strong Strong / Adequate Adequate
Slide 10: Michigan economic indicators highlight continued growth
Michigan economic indicators highlight continued growth over the next few years 10 Michigan leads the country in new manufacturing job creation 7.1% 13.4% 8.8% 7.6% 7.1% 2007 2009 2013 2014E 2015E Source: IHS Detroit named one of seven new entrepreneur tech hubs 368 314 353 362 369 2007 2009 2013 20
Slide 11: DTE’s CI capability has enabled us to lead the industry in cost management
DTE’s CI 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 than 300,000 customer
Slide 12: Upward pressure on customer rates will be minimized
Upward pressure on customer rates will be minimized by cost controls, surcharge reductions and load growth $650 million* of surcharge reductions Targeting to stay close to rate neutral though 2018 DTE Electric ~3 year rate case stay out strategy Rate increases below inflation levels DTE Gas
Slide 13: Both utilities have strategies to delay rate case filings
Both utilities have strategies to delay rate case filings to address customer affordability while maintaining financial health 13 Last Rate Order • Amortize first half of revenue decoupler in 1H ’14 and balance in 1H ’15 • File case late 2014 or early 2015; self-implement after 6 months 2014 2015 20
Slide 14: Our electric utility is investing $6.7 billion through 2018
Our electric utility is investing $6.7 billion in three key growth areas through 2018 • Environmental requirements • $280 million in 2014 • Power plant reliability • Expanded distribution reliability program • Advanced Metering Infrastructure • $1.1 billion in 2014 • 10% renewable energy standard by
Slide 15: New natural gas and wind capacity will replace coal retirements
New natural gas and wind capacity will replace coal retirements and increase DTE Electric total average annual investment 15 2014 Coal retirements New gas/wind ~2025 ~11.3 (~2.6) ~3.2 ~11.9 • New capacity by acquisition or new build • Most of spend is after 2018; may need to pull ahead sooner • Woul
Slide 16: Our gas utility is making $1.2 billion of investments through 2018
Our gas utility is making $1.2 billion of reliability and pipeline integrity investments through 2018 • Capital recovered through the Infrastructure Recovery Mechanism • ~4,000 miles of distribution main to be replaced • $90 million investment in 2014 • Strengthen and expand distribution system • Co
Slide 17: Gas Storage & Pipelines is developing an asset portfolio with multiple growth platforms
Gas Storage & Pipelines is developing an asset portfolio with multiple growth platforms 17 Pipeline Gathering Storage
Slide 18: Gas Storage & Pipelines platforms drive growth through new projects and expansions
Bluestone Gathering • Long-term agreement with Southwestern in Marcellus shale Michigan Gathering • Lateral additions ongoing New Developments • Working with interested parties in Marcellus, Utica and Michigan shales Gas Storage & Pipelines platforms drive growth through new projects and expansions
Slide 19: Our Bluestone assets continue to attract investment
Our Bluestone assets continue to attract investment • 1Q 2014: Completed Cabot transportation interconnect with Bluestone lateral • 2Q 2014: Expanded Southwestern transportation agreement on Bluestone lateral • Ongoing: Continuing discussions with interested parties Cabot Interconnect 19
Slide 20: NEXUS is an attractive path to bring Utica and Marcellus gas to market
NEXUS is an attractive path to bring Utica and Southwest Marcellus natural gas to market Leading proposed project into Dawn market Utility agreements complete for ~50% capacity; producer negotiations underway Market area is large and liquid Access to 930 Bcf of high quality reef storage Si
Slide 21: Bluestone developments increase 2018 pipeline earnings
2012A 2013A 2014E 2015E 2016E 2017E 2018E $78 - $86 Bluestone developments increase 2018 pipeline earnings to $45 million, closing the gap to Gas Storage & Pipelines’ $130 million operating earnings* * Reconciliation to GAAP reported earnings included in the appendix (millions) Pipeline Platform Gat
Slide 22: Power & Industrial Projects is focused in three key business lines
Power & Industrial Projects is focused in three key business lines Wood-fired Plant Cassville, WI • Fuel that reduces emissions from coal-fired plants • 9 units, 5 states • Utility contracted • Utility services at industrial sites • Coke and pulverized coal for steel customers • 36 projects, 11 stat
Slide 23: Power & Industrial Projects is executing on its growth plans
Power & Industrial Projects is executing on its growth plans Industrial Energy Services • Cogen project being constructed to serve Ohio manufacturer expected to commence operations in 3Q • Organic growth generated from 2012 acquisition of on-site energy portfolio Renewables • 45MW waste wood project
Slide 24: Power & Industrial Projects is targeting $155 million of operating earnings by 2018
2012A 2013A 2014E 2015E 2016E 2017E 2018E Power & Industrial Projects is targeting $155 million of operating earnings* by 2018 through growth in each of its business lines ~$155 (millions) $35 $70 $85 ($65) $30 $70 New Project Development / Acquisitions Renewable Energy Reduced Emissions Fuel Indust
Slide 25: Financial Update
• Overview • Long-Term Growth Update • Financial Update • Summary 25
Slide 26: We remain confident in our 2014 operating earnings guidance
We remain confident in our 2014 operating earnings* guidance (millions, except EPS) 1Q 2014 Actuals 2014 Guidance DTE Electric $136 $520 - $530 DTE Gas 129 120 - 126 Gas Storage & Pipelines 21 78 - 86 Power & Industrial Projects 15 75 - 85 Energy Trading $8 $0 Corporate & Other (9) (49) - (45) DTE E
Slide 27: We are on track to achieve 2014 cash flow guidance
1Q 2014 2014 Actual Guidance Cash From Operations $0.5 $1.6 Capital Spending (0.5) (2.3) Free Cash Flow $0.0 ($0.7) Asset Sales - - Dividends (0.1) (0.5) Net Cash ($0.1) ($1.2) Debt Financing: Issuances $0.2 $2.1 Redemptions (0.1) (0.9) Change in Debt $0.1 $1.2 We are on track to achieve 2014 cash f
Slide 28: Strong balance sheet remains a key priority and supports growth
2013 2014E * 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* 2013 2014E 49% 52% Target 50% - 52% 23% 22% Target 20% - 22% Strong balance sheet remains a key priority and supports
Slide 29: 2014–2016 sources and uses of cash
29 2014 – 2016 cash from operations and equity issuances plan supports utility capital spend and a strong balance sheet (billions) * Excludes securitization ** Debt excludes securitization, a portion of DTE Gas’ short-term debt, and considers 50% of the Junior Subordinated Notes as equity Equity $0.
Slide 30: Summary
• Overview • Long-Term Growth Update • Financial Update • Summary 30
Slide 31: Summary
Summary • Long-term plan supports continued 5% - 6% operating EPS growth • On track to achieve 2014 operating earnings guidance; strong first quarter earnings provides contingency • Constructive regulation, coupled with a focus on operational excellence and strong customer satisfaction, supports mea
Slide 32: Contact Us
Contact Us DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030 32
Slide 33: Appendix
mo DTE Energy: Appendix
Slide 34: DTE Energy First Quarter 2014 Operating Earnings Variance
1Q 2013 1Q 2014 Change DTE Electric 115$ 136$ 21$ DTE Gas 96 129 33 Gas Storage & Pipelines 17 21 4 Power & Industrial Projects 12 15 3 Corporate & Other (13) (9) 4 Growth segments** 227$ 292$ 65$ Growth segments operating EPS 1.30$ 1.64$ 0.34$ Energy Trading 7$ 8$ 1$ DTE Energy 234$ 300$ 66$ Operat
Slide 35: Confidence in delivering 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 35 * Reconciliation to GAAP reported earnings included in the appendix Growth of 5% - 6% at utilities and 15% - 20% at non-utilities drives overa
Slide 36: Substantial portion of non-utility earnings are regulated or contracted
A substantial portion of our non-utility operating earnings are either regulated or contracted 2018 Earnings Mix • Regulated / contracted earnings consist of: • Electric and gas utilities • FERC regulated gas pipelines • Long-term contracted energy projects • Growth of 5% - 6% at utilities and 15% -
Slide 37: Energy regulation passed in 2008 established a more constructive environment
Energy regulation passed in 2008 established a more constructive regulatory environment Key components of the 2008 Energy Legislation Regulatory Structures Fully Regulated Fully Deregulated Michigan 37 Regulatory Structure Changes • File & Use Rates with 6 month self- implementation • Final order in
Slide 38: Michigan Public Service Commission is the state regulator
Sally Talberg Commissioner Appointed: 7/3/13 Term Ends: 7/2/19 Greg White Commissioner Appointed: 12/4/09 Term Ends: 7/2/15 Source: MPSC website - www.michigan.gov/mpsc - May 2014 • The MPSC establishes fair and reasonable rates and administers fair terms and conditions of service for Michigan’s uti
Slide 39: DTE Electric rate base increase since 2011 rate order
$10.7 2011A 2012 - 2014 Rate Base Additions 2014E DTE Electric will increase rate base ~$3 billion since 2011 rate order with no new rates DTE Electric Rate Base* (billions) • Base rates flat over this period • Avoided ~$400 million in rate increases • DTE Electric has continued to earn its authoriz
Slide 40: DTE Electric plans $6.7 billion of investments over the next 5 years
2014E - 2018E Total 2008-2012 Average 2013A 2014E 2015E 2016E 2017E 2018E DTE Electric plans $6.7 billion of investments over the next 5 years $1,325 $1,600 $1,300 $1,100 $1,350 $1,000 * Includes AMI, Ludington expansion and other investments **Includes working capital Base New Generation Other Proj
Slide 41: DTE Electric renewable energy built or contracted since 2009
DTE Electric has built or contracted for approximately 890MWs of renewable energy (850MWs of wind) since 2009 41 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
Slide 42: DTE Gas plans $1.2 billion of investments
DTE Gas plans $1.2 billion of investments over the next 5 years 2013A 2014E 2015E 2016E 2017E 2018E $240 $240 $240 $240 $240 2014E - 2018E $500 $700 $1,200 Base Main Renewal, Meter Move-Out, Pipeline Integrity (millions) 42 $2.9B $3.5 - $3.7B YE Rate Base* $95M $114M Depreciation *Includes working c
Slide 43: Gas Storage & Pipelines assets have expansion opportunities
Pipeline Assets Capacity Bcf/ d In-Service Millennium Pipeline 0.8 Future Expansion (planning phase) 0.2 - 0.5 2017 + Total Planned Capacity 1.0 - 1.3 Bluestone Pipeline (bi-directional) 0.6 Expansion #1 0.2 3Q 2014 Expansion #2 0.1 2Q 2015 Expansion #3 0.1 2Q 2016 Total Planned Capacity 1.0 Vector
Slide 44: 1Q 2014 Reconciliation of Reported to Operating Earnings
1Q 2014 DTE Electric DTE Gas Gas Storage and Pipelines Power and Industrial Projects Corporate and Other Growth Segments Energy Trading DTE Energy Reported Earnings 136$ 129$ 21$ 15$ (17)$ 284$ 42$ 326$ NY state tax law change - - - - 8 8 - 8 Mark to market transactions - - - - - - (34) (34) Operati
Slide 45: 1Q 2013 Reconciliation of Reported to Operating Earnings
1Q 2013 DTE Electric DTE Gas Gas Storage and Pipelines Power and Industrial Projects Corporate and Other Growth Segments Energy Trading DTE Energy Reported Earnings 115$ 96$ 17$ 12$ (13)$ 227$ 7$ 234$ Operating Adjustments 1Q 2013 - - - - - - - - Operating Earnings 115$ 96$ 17$ 12$ (13)$ 227$ 7$ 234
Slide 46: 2013 Reconciliation of Reported to Operating Earnings
2013 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 performance measu
Slide 47: 2012 Reconciliation of Reported to Operating Earnings
2012 Reconciliation of Reported to Operating Earnings 2012 DTE Energy DTE Electric DTE Gas Gas Storage and Pipelines Power and Industrial Projects Energy Trading Corporate and Other Unconventional Gas Reported Earnings 610$ 483$ 115$ 61$ 42$ 12$ (47)$ (56)$ Coke oven gas settlement 7 - - - 7 - - - C
Slide 48: 2011 Reconciliation of Reported to Operating Earnings
2011 Reconciliation of Reported to Operating Earnings 2011 DTE Energy DTE Electric DTE Gas Gas Storage & Pipelines Power & Indust. Projects Energy Trading Corporate & Other Unc. Gas Prod. Reported Earnings 711$ 434$ 110$ 57$ 38$ 52$ 23$ (3)$ Michigan Corporate Income Tax Adjustment (87) - - - - - (8
Slide 49: 2010 Reconciliation of Reported to Operating Earnings
2010 Reconciliation of Reported to Operating Earnings * Deferral of previously expensed cost to achieve as allowed for in June 3, 2010 MPSC order (case - U-15985) 2010 DTE Energy DTE Electric DTE Gas Gas Storage & Pipelines Power & Indust. Projects Energy Trading Corporate & Other Unc. Gas Prod. epo
Slide 50: 2009 Reconciliation of Reported to Operating Earnings
2009 Reconciliation of Reported to Operating Earnings 2009 DTE Energy DTE Electric DTE Gas Gas Storage & Pipelines Power & Indust. Projects Energy Trading Corporate & Other Unc. Gas Prod. Reported Earnings 532$ 376$ 80$ 49$ 31$ 75$ (73)$ (6)$ Gain on Sale - gathering and treating assets (before good
Slide 51: 2008 Reconciliation of Reported to Operating Earnings
2008 Reconciliation of Reported to Operating Earnings 2008 DTE Energy DTE Electric DTE Gas Gas Storage & Pipelines Power & Indust. Projects Energy Trading Corporate & Other Unc. Gas Prod. Syn Fuel Reported Earnings 546$ 331$ 85$ 38$ 40$ 42$ (97)$ 87$ 20$ Performance Excellence Process 6 - 4 - 1 1 -
Slide 52: 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