Dte Energy Company · NYSE:DTE
Dte Energy — Corporate Update (January 2008)
39 slides from Dte Energy's corporate update, Jan 14, 2008
Slide 1: Business Update January 14, 2008
Business Update January 14, 2008
Slide 2: Safe Harbor Statement
Safe Harbor Statement The information contained herein is as of the date of this presentation. DTE Energy expressly disclaims any current intention to update any forward-looking statements contained in this document as a result of new information or future events or developments. Words such as "anti
Slide 3: DTE Energy Is Well Positioned for Growth
DTE Energy Is Well Positioned for Growth Business update Executing a solid plan for consistent, predictable utility growth Creating value in focused non-utility businesses
Slide 4: DTE Energy Is an Attractive Investment
DTE Energy Is an Attractive Investment Strong utility growth outlook 5-6% annual long-term earnings growth Well-run utilities Increasingly constructive regulatory environment Growth upside from renewable generation ~ 5% dividend yield Proven track record of non-utility value creation Near-term catal
Slide 5: Potential Near-Term Catalysts
Potential Near-Term Catalysts Expect Core Barnett sale to close in January Plan to release updated Western Barnett reserves in mid-February Year end earnings release in February Staff testimony in Detroit Edison rate case due March 18 Power & Industrial Projects deal targeted to close in first quart
Slide 6: Detroit Edison Regulatory Update
Detroit Edison Regulatory Update Main Rate Case U-15244 Rates adjust upward April 13th with the sunset of the Show Cause rate reduction $79M pre-tax annualized $35-40M after-tax benefit realized in 2008 $20-25M after-tax benefit from Electric Choice assumed in 2008 guidance (less than 2,000 GWh) In
Slide 7: Constructive Legislative & Regulatory Relationships Benefit Customers and Shareholders
Constructive Legislative & Regulatory Relationships Benefit Customers and Shareholders Legislation introduced in early December addresses many of DTE Energy's priorities Re-establish load certainty by reforming Electric Choice Timely recovery of capital - "file and use" rate process similar to FERC
Slide 8: Operating Earnings Guidance 2007 and 2008
2007 operating earnings tracking toward high end of guidance Better than expected cost reductions partially offset one-time computer system startup costs Strong results at Energy Trading Utilities are targeted to earn their authorized ROE of 11% in 2008 2008 operating earnings guidance reflects cons
Slide 9: 2009 Early Outlook Shows Growth in All Segments
2009 Early Outlook Shows Growth in All Segments 2008 Guidance* ($ millions) - - 6% 2009 Early Outlook* +13% +6% +13% Potential Average Shares Outstanding 159M 158M * Reconciliation to GAAP reported earnings included in the appendix
Slide 10: EPS Accretion from the Non-Utility Monetization Program
EPS Accretion from the Non-Utility Monetization Program Share Buyback Interest Savings Lost Earnings Annualized Accretion Core and Southern 0.33 0.33 0.25 0.15 0.23 0.25 Total Program Accretion $0.33 (earnings per share) $0.15 ($0.23) $0.25 Monetization Debt Repayment ($Millions) * Debt previously a
Slide 11: DTE Corporate & Other Segment Details
DTE Corporate & Other Segment Details 2006A Michigan State Tax Interest Savings Other 2008E Core and Southern -61 -61 -71 -71 -80 -20 -10 -9 ($61) ~($20) ~$11 ~($10) ~($80) DTE Energy Corporate & Other Segment Operating Earnings* Significant one-time state tax benefit realized in 2006 does not recur
Slide 12: 2007 and 2008 Cash Flow Guidance
2007 and 2008 Cash Flow Guidance 2007 Guidance 2008 Guidance * includes cash accounted for as "investing activity" Positive net cash expected in 2007 and 2008; used for stock buyback and parent company debt reduction As anticipated, 2008 cash flow reflects lower synfuel cash and lower asset sales Pa
Slide 13: DTE Energy Capital Expenditures
DTE Energy Capital Expenditures 2007 and 2008 Capital Expenditures Guidance 2007 Guidance 2008 Guidance Detroit Edison's additional capital expenditures for operational and environmental projects drive overall DTE Energy capex higher MichCon capex remains higher than historical average of ~$100M ($
Slide 14: DTE Energy Is Well Positioned for Growth
DTE Energy Is Well Positioned for Growth Business update Executing a solid plan for consistent, predictable utility growth Customer-focused investment program Excellence in operations and cost Constructive regulatory environment Creating value in focused non-utility businesses
Slide 15: Detroit Edison Capital Driven by Investments in System Reliability and Environmental Compliance
2007 2008 2009 2010 2011 2012 Base 650 650 650 650 650 650 Environmental 235 260 200 200 200 200 AMI 20 45 45 45 45 Depreciation 485 510 535 560 585 615 Detroit Edison Capital Driven by Investments in System Reliability and Environmental Compliance Projected Detroit Edison Capital Investment (2007-2
Slide 16: MichCon Capital Investments Focus on Pipeline and Storage Optimization
2007 2008 2009 2010 2011 2012 Base 95 100 105 105 105 105 Projected MichCon Capital Investment (2007-2012) Growing rate base: $2.0B in 2007 to ~$2.3B by end of 2012 Expansion projects planned for completion by year end 2008: $70M pipeline in W. Michigan $75M utility storage $40M in Panhandle Pipelin
Slide 17: Significant Potential Investments Not Included in Base Plan
Significant Potential Investments Not Included in Base Plan State legislation introduced on renewable energy and energy efficiency programs Possible investments in wind, biomass, energy efficiency and demand response programs Potential investment of $1B or more Long-term investment opportunities (be
Slide 18: Our Utility Strategy Enables Consistent and Predictable Growth
Characteristics to succeed in the current high capital investment cycle Our Utility Strategy Enables Consistent and Predictable Growth Continuing to drive cost efficiency and continuous improvement initiatives Increasing focus on customer satisfaction Building collaborative relationships with regula
Slide 19: Cost Efficiency Reduces the Need for Rate Increases
Cost Efficiency Reduces the Need for Rate Increases Illustrative customer rate impact from sustained cost savings and high capital investment Revenue Deficiency Revenue Sufficiency 2006 2007 2008 2009 2010 Increasing need for rate increase due to investments Decreasing need for rate increases due to
Slide 20: Our Utility Operating Strategy Enables Increased Earnings Potential
Our Utility Operating Strategy Enables Increased Earnings Potential Well-run, customer-focused operations promote a constructive regulatory environment and strong financial performance Constructive Regulation Run the Business Well Collaborative Environment Creative Solutions Timely capital recovery
Slide 21: DTE Energy Is Well Positioned for Growth
DTE Energy Is Well Positioned for Growth Business update Executing a solid plan for consistent, predictable utility growth Creating value in focused non-utility businesses Successful 2007 monetization plan realizing significant value Expect to selectively invest and complement utility earnings growt
Slide 22: Total Monetization Proceeds Expected to More than Double Original Plan
Total Monetization Proceeds Expected to More than Double Original Plan Original Guidance Mid-2007 Guidance Current Guidance At least $800 million Antrim Power & Industrial Peakers Monetization After-Tax Cash Proceeds Closed Closed Final Stages Core Barnett $1.7B Agreement Signed Closing delayed due
Slide 23: Barnett Value Proposition
Barnett Value Proposition Invested to Date Cash Flow to Date Net Sales Proceeds Core and Southern -130 -73 -73 -57 102 ($130) $55 $175 Net Cash Flow From Core Barnett ($millions) Announced sale of Barnett Shale core properties for $260 million pre-tax in early Dec. Interests in 51 producing wells 11
Slide 24: Non-Utility Value Creation
Non-Utility Value Creation Development of remaining Barnett Shale acreage has potential for significant near-term value creation Northeast US gas market dynamics pave the way for continued growth investments in our non-utility gas pipelines & storage segment We will continue to execute upon our exis
Slide 25: Development of Remaining Barnett Acreage Focused on Near-Term Value Creation
Development of Remaining Barnett Acreage Focused on Near-Term Value Creation Clay Zones of DTE Acreage Vertical Wells Horizontal Wells Dallas/ Ft Worth Metropolitan Area West 44,000 acres Hood Johnson Erath Jack Somervell Hill Wise Tarrant Bosque Parker Denton Palo Pinto South 30,000 acres Western a
Slide 26: Barnett Shale Operating Metrics
Net Production Rate 9/30/07 Gross Producing Wells 9/30/07 108 Reserves 12/31/06 Probable Proven Acreage Position 9/30/07 Net Undeveloped Acres Net Developed Acres West 180 107 287 Barnett Shale Operating Metrics (Bcfe) (mmcf/day) 67 86 Core 153 8,000 West 36,000 44,000 5,000 6,000 Core 11,000 West C
Slide 27: Western Barnett has Different Characteristics than the Core
Western Barnett has Different Characteristics than the Core Western Core Cost per horizontal well ~$1.5M ~$3M Reserves per well (Bcf) 1 - 1.5 2 - 4 Peak rate per well (Mcf/day) 500 - 1,000 800 - 3,000 Well spacing (acres)* 90-120 40-120 Western Barnett development is economically attractive Generall
Slide 28: Attractive Market Dynamics in Non-Utility Gas Pipelines & Storage
Attractive Market Dynamics in Non-Utility Gas Pipelines & Storage Source: EEA/DTE Gas Flow Model LNG (from Trinidad, Middle East and North Africa) LNG LNG LNG Traditional pipeline paths unable to expand economically Expected Flow of New Gas Supply, 2007 - 2020 Western Canada & Arctic / Alaskan suppl
Slide 29: DTE Energy Gas Pipelines and Storage Assets Are Well-Positioned for Growth
DTE Energy Gas Pipelines and Storage Assets Are Well-Positioned for Growth Near-Term Gas Midstream Earnings Drivers 2007 2009 2010 Vector Expansion 4.5 Bcf Storage Expansion - - Millennium Pipeline in Service - - 6.7 Bcf Storage Expansion - - Vector Expansion - - 2 Bcf Storage Expansion - - 2 Bcf St
Slide 30: Current Gas Pipeline and Storage Expansion Projects
Current Gas Pipeline and Storage Expansion Projects 65.6 Bcf 13.5 Bcf Phase in service Q2 2008 Phase 1 - 4.9Bcf (8.1Bcf total) Millennium Pipeline (DTE owns 26.25%) Under construction - majority of activity to occur in summer of 2008. In-service projected for 4th Q of 2008 Initial capacity: 0.5 Bcf/
Slide 31: We Have the Financial Resources to Fund Our Utility Growth Plan
We Have the Financial Resources to Fund Our Utility Growth Plan We have the flexibility to fund utility growth Non-utility monetization plan expected to produce at least $1.7 billion in after-tax proceeds Synfuels expected to produce $900 million in total cash from 2007 through 2009 Balance sheet an
Slide 32: Appendix
Appendix DTE Energy *
Slide 33: Summary of Bills Introduced in Michigan Legislature
Summary of Bills Introduced in Michigan Legislature House Bill #5520: Gives the MPSC authority to approve generation asset sales over 200 MW HB 5521: Certificate of Need process for major capital investments in electric generation HB 5522: Cost-of-service based electric rates (deskewing) HB 5523: Fi
Slide 34: We Expect the Commission to Continue to Support Michigan's 21st Century Energy Plan
We Expect the Commission to Continue to Support Michigan's 21st Century Energy Plan Orjiakor Isiogu Chairman Appointed: 9-9-2007 Term Ends: 7-2-2013 (Democrat) Served as the Director of the Telecommunications Division of the MPSC since 2003 where he advised the Commission on all issues relating to t
Slide 35: Performance Excellence Process Reduces Fixed Cost Structure
Completed Projects Projects in Process Pending Projects Total Expected Program Benefits 205 295 Detroit Edison 205 90 35 330 PEP Benefits 2006 - 2008 O&M, Capital & Other $ millions, pre-tax Performance Excellence Process Reduces Fixed Cost Structure 2005 2006 2007 10300 9300 9075 Employees at Year
Slide 36: Sources and Uses of Monetization Proceeds and Synfuel Cash
Sources Uses East 1.4 0.7 West 0.95 1 0.2 0.7 Sources and Uses of Monetization Proceeds and Synfuel Cash Synfuel $900 (2007 - 2009) Monetization Proceeds ~$1,700 (2007 - 2008) Monetization Proceeds and Synfuel Cash Sources and Uses ~$2,600 ~$2,600 Debt Redemption $700 Share Repurchase* $1,000 Utilit
Slide 37: Our Sustainable Dividend is Very Competitive
Our Sustainable Dividend is Very Competitive As utility earnings increase, our payout ratio will improve, providing flexibility to consider further dividend increases Industry Dividend Yield PGN 0.051 NI 0.049 DTE 0.049 ED 0.048 AEE 0.048 SO 0.041 CNP 0.041 AEP 0.034 PCG 0.033 D 0.033 FE 0.029 ETR 0
Slide 38: Reconciliations of Reported to Operating Earnings
Reconciliations 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 measureme
Slide 39: Reconciliation of 2006 Reported to Operating Earnings
Reconciliation of 2006 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