Dte Energy Company · NYSE:DTE
Dte Energy — Investor Presentation (January 2016)
44 slides from Dte Energy's investor presentation, Jan 7, 2016
Slide 1: Business Update January 7-8, 2016
Business Update January 7-8, 2016 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 EPA, FERC, MPSC, NRC and CFTC as well as other applicable governmental proceedin
Slide 3: There continue to be positive developments for DTE Energy
There continue to be positive developments for DTE Energy 3 • Michigan energy policy reform ‒ Progress continues toward completion • Utility regulatory filings ‒ Received constructive rate order at DTE Electric ‒ Filed DTE Gas rate case ‒ Expect next electric rate case filing 1Q16 • NEXUS filed its
Slide 4: Overview, Long-Term Growth Update, Summary
4 • Overview • Long-Term Growth Update • Summary
Slide 5: DTE Energy's growth is 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 5 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
Slide 6: Our system of priorities is fundamental to how we create value
Our system of priorities is fundamental to how we create value for our shareholders 6 5% - 6% Annual EPS Growth Attractive Dividend Strong Balance Sheet 6
Slide 7: Engaged employees improving customer experiences have led to strong satisfaction results
Engaged employees focusing on improving our customers’ experiences have led to strong satisfaction results J.D. Power Rank vs. Midwest Peers Note: DTE Energy received the highest numerical score in the Midwest in the proprietary J.D. Power 2015 Gas Utility Business Customer Satisfaction Study SM. Ba
Slide 8: DTE's continuous improvement capability has enabled us to lead the industry in 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 > 300,00
Slide 9: We remain committed to delivering growth for our shareholders
We remain committed to delivering growth for our shareholders 9 * Reconciliation to GAAP reported earnings included in the appendix (dollars per share) $3.33 $3.64 $3.75 $3.94 $4.09 $4.60 2009 2010 2011 2012 2013 2014 $2.12 $2.24 $2.35 $2.48 $2.62 $2.76 $2.92 2009 2010 2011 2012 2013 2014 2015 Opera
Slide 10: DTE has consistently delivered total shareholder return above the peer average
DTE has consistently delivered total shareholder return above the peer average Source: Bloomberg (as of 12/31/15) 10 Total Shareholder Return 49% • Total return in or near top quartile of S&P 500 Utilities for 3, 5 and 10 years 3-YR 116% 192% 10-YR 5-YR S&P 500 Utilities DTE Energy 41% 76% 129%
Slide 11: DTE Operating Earnings Growth
DTE Operating Earnings Growth Share Issuance Contingency DTE Operating EPS* Growth Non-Utilities 7% - 8% 5% - 6% * Reconciliation to GAAP reported earnings included in the appendix Strong growth opportunities coupled with contingency planning gives us confidence in our ability to deliver 5% to 6% op
Slide 12: Overview, Long-Term Growth Update, Summary
12 • Overview • Long-Term Growth Update • Summary
Slide 13: Our long-term plan will provide solid results for our stakeholders
Our long-term plan will provide solid results for our stakeholders 13 * 5 year CAGR DTE Electric DTE Gas Gas Storage & Pipelines (GSP) Power & Industrial Projects (P&I) DTE Energy Capital Expenditures ($ billions) Operating Earnings Growth* Rate Base Growth* Targeted Utility ROE** / Non-utility IRR
Slide 14: We received a constructive outcome for our electric general rate case order
We received a constructive outcome for our electric general rate case order 14 $349 DTE Electric 2015 Rate Order (millions) As filed* Self implement** July 2015 Final order Dec 2015 $230 $238 • $238 million rate increase • 10.3% allowed ROE • 50%/50% capitalization • Rate relief driven by ~$3.5 bill
Slide 15: DTE Gas filed its rate case in December 2015
DTE Gas filed its rate case in December 2015 15 Sales/ Revenues Plant investments Working capital O&M Total $39 (millions) • $183 million revenue requirement • Effective rate increase of $151 million* • ROE request of 10.75% • Self-implement rates November 2016; order expected December 2016 $97 $18
Slide 16: Sally Talberg appointed chair of the Michigan Public Service Commission
John Quackenbush Commissioner Appointed: 9/15/11 Term Ends: 3/31/16 Sally Talberg appointed chair of the Michigan Public Service Commission (MPSC) Sally Talberg Chair Appointed: 7/3/13 Term Ends: 7/2/19 Norm Saari Commissioner Appointed: 8/2/15 Term Ends: 7/2/21 Source: State of Michigan website - w
Slide 17: We will invest ~$13 billion in capital projects to drive growth through 2020
We will invest ~$13 billion in capital projects to drive growth through 2020 17 (billions) ~$13 $8.2 Distribution infrastructure, maintenance, new generation $1.6 Base investments, infrastructure renewal, NEXUS related $2.0-$2.6 Gathering investments, NEXUS, pipeline expansions $0.6-$0.9 Cogeneratio
Slide 18: The EPA's Clean Power Plan will transform the electric industry
The EPA’s Clean Power Plan has set forth significant carbon reduction goals which will transform the electric industry The most transformational policy in the history of the electric industry Will cut CO2 emissions by 32% by 2030, compared to 2005 Initial compliance plans to be submitted by Septe
Slide 19: Our generation mix shifts from coal to natural gas and renewables
Our generation mix shifts from coal to natural gas and renewables as we address the EPA’s Clean Power Plan 32% Coal Retirements 2030 Scenario ~6.7 2015 Gas / Renewables Additions ~2.2 ~2.2 ~12.3 (~3.5) ~25% 15%-30% ~15% Nuclear / Other Gas Renewables Coal ~1.2 30%-45% DTE Electric Capacity (GW) Note
Slide 20: Energy legislation is in final stages of development
Energy legislation is in final stages of development and near-term approval is expected 20 • House and Senate closely aligned • Key elements focus on: Retail open access and capacity requirements Integrated resource planning Renewable energy and energy efficiency Q1 2016 • House and Senate appro
Slide 21: Electric generation and infrastructure renewal will significantly increase investment
Electric generation and infrastructure renewal will significantly increase investment in the decade ahead 32% DTE Electric Total Investment ~$8.2 ~$9.7 2016-2020 2021-2025 ~$7.1 2011-2015 New generation (billions) Distribution infrastructure 21 Maintenance and other projects
Slide 22: Plan to invest $6.6 billion to $10.6 billion in distribution infrastructure
Over the next 10 years we plan to invest $6.6 billion to $10.6 billion in distribution infrastructure 32% 2016-2025 (billions) ~$18 Maintenance and other projects New generation Distribution infrastructure DTE Electric Total Investment Base Case Potential Investment Base Infrastructure renewal Infra
Slide 23: We enter heavy investment with sharp declines in business rates
We enter this period of heavy investment with sharp declines in business rates 23 20%+* Large Industrial Customers 10%* Commercial Customers • $600 million of surcharge reductions in 2014 and 2015 • Business cost of service rates implemented in 2015 • $100 million PSCR** reduction in January 2016 •
Slide 24: Investment in our gas utility will increase significantly over the next 5 years
Investment in our gas utility will increase significantly over the next 5 years 24 2011-2015 2016-2020 ~$1.1 ~$1.6 DTE Gas Total Investment (billions) Base infrastructure Infrastructure renewal NEXUS related
Slide 25: The DTE Gas system will be expanded to support the NEXUS interconnection
The DTE Gas system will be expanded to support the NEXUS interconnection • $200 million of NEXUS related investment at DTE Gas through 2017 • Spend primarily for additional compression • Supported by long-term transport agreement with NEXUS DTE Gas service area NEXUS DTE Gas 25
Slide 26: We received approval to expand our main replacement program
We recently received approval to expand our main replacement program ~$80 Previous Plan Current Plan ~$130 Gas Renewal Plan (Investment) * Consists of main replacement, meter move-out and pipeline integrity 26 • MPSC approved expansion of main replacement program in November 2015 • Cuts renewal time
Slide 27: Gas Storage & Pipelines is developing an asset portfolio with multiple growth platforms
Gas Storage & Pipelines is developing an asset portfolio with multiple growth platforms 27 NEXUS Pipeline DTE Gas DTE Storage Marcellus Shale Utica Shale Bluestone Pipeline Bluestone Gathering System Michigan Gathering
Slide 28: NEXUS project is on track; FERC filing completed in November
NEXUS project is on track; FERC filing completed in November 28 Right of way, field work, design, planning • 50% ownership with Spectra Energy • 1.5 Bcf/d pipeline • ~250 miles of pipe • DTE expected investment of $1 billion 2014 2015 2016 2017 2018 Construction Commercial operation Contracted for p
Slide 29: The Ohio market has provided strong support on the NEXUS path
The Ohio market has provided strong support on the NEXUS path 29 Interconnect agreements with local distribution companies, industrials and power generators in Ohio – 1.4 Bcf/d of opportunity Close proximity to significant additional power generation load
Slide 30: Power & Industrial Projects operates within three distinct business lines
Power & Industrial Projects (P&I) operates within three distinct business lines DTW Airport, Michigan Gallia Fuels Project, Ohio Mt. Poso Waste Wood Project, California • On-site utility services for industrial and commercial customers • Coke and pulverized coal for steel customers • Wood-fired powe
Slide 31: P&I serves its customers from sites in states
P&I serves its customers from 69 sites in 17 states 31 Industrial Energy Services Renewable Energy Reduced Emissions Fuel
Slide 32: Overview, Long-Term Growth Update, Summary
32 • Overview • Long-Term Growth Update • Summary
Slide 33: Summary
• Proven track record of premium returns • Targeting 5% to 6% operating EPS* growth and parallel dividend growth • Progress in Michigan’s energy policy reform and constructive outcomes in DTE’s regulatory filings provide certainty in utility investment • Strategic growth opportunities in non-utility
Slide 34: Detroit is in the midst of a revitalization
Detroit is in the midst of a revitalization 34 DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030 DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030
Slide 35: DTE Energy
DTE Energy
Slide 36: A strong balance sheet remains a key priority and supports our growth
A strong balance sheet remains a key priority and supports our growth 36 * Debt excludes securitization, a portion of DTE Gas’ short-term debt, and considers 50% of the Junior Subordinated Notes as equity ** FFO (Funds from Operations) is calculated using operating earnings 25% 21% 2014 2015E 2016-2
Slide 37: Michigan's economy continues to improve
Michigan’s economy continues to improve 37 Source: IHS 8.5% 7.1% 5.4% 5.1% 5.0% 2013 2014 2015E 2016E 2017E 15.1 15.8 17.3 19.7 22.1 2013 2014 2015E 2016E 2017E Unemployment Rate Housing Start Ups (000s) Detroit Metro #8 in number of new or expansion projects* Lowest Michigan unemployment since 2001
Slide 38: DTE regulatory filing timeline
DTE regulatory filing timeline DTE Gas • Filed expanded Infrastructure Recovery Mechanism (IRM) 2015 • Filed cost of service rates and general rate case DTE Electric 2014 2016 • Business cost of service rates implemented 3Q • Self implement general rates 3Q • Final rate order 4Q • Expect rate case f
Slide 39: Coal retirements will commence in the five year window and then accelerate after 2020
Coal retirements will commence in the 5 year window and then accelerate after 2020 32% 2015 2016 - 2020 2021 - 2025 ~1,825 MW ~125 MW ~550 MW 2026 - 2030 ~1,000 MW DTE Coal Retirement Timeline (Scenario*) * Estimated amounts. Timing and mix of generation impacted by MISO capacity requirements and Mi
Slide 40: Gas Storage & Pipelines operates projects within asset platforms
Gas Storage & Pipelines operates projects within 3 asset platforms • Bluestone Pipeline • Millennium Pipeline ‒ Valley Lateral • Vector Pipeline • NEXUS Pipeline ‒ FERC filing completed • Bluestone Gathering • Michigan Gathering • 91 Bcf of working capacity • Strategically located between Chicago an
Slide 41: Contractual commitments materially expand the Millennium pipeline
Contractual commitments materially expand the Millennium pipeline • Millennium Expansion – 200+ MMcf/day – In-service expected 4Q 2018 • Valley Lateral: ~130 MMcf/day on new 8 mile lateral – FERC filing complete November 2015; in-service expected April 2017 • Working with interested parties on addit
Slide 42: 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 Expansion #1 0.2+ 4Q 2018 Total Planned Capacity ~1.0 Bluestone Pipeline (bi-directional)* 0.9 Expansion #3 0.1 2Q 2016 Total Planned Capacit
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