Dte Energy Company · NYSE:DTE
Dte Energy — EEI Financial Conference 2018
48 slides from Dte Energy's conference presentation, Nov 9, 2018
Slide 1: EEI Financial Conference
EEI Financial Conference November 11-13, 2018
Slide 2: Safe Harbor Statement
Safe Harbor Statement Many factors impact forward-looking statements including, but not limited to, the following: impact of regulation by the EPA, the FERC, the MPSC, the NRC, and for DTE Energy, the CFTC, as well as other applicable governmental proceedings and regulations, including any associate
Slide 3: Growth plan continues to deliver significant shareholder value
Growth plan continues to deliver significant shareholder value Broad utility Strong track record Distinctive focus Strong non-utility infrastructure for shareholders on culture growth agenda investment ✓ Decade-long record ✓ Elite workforce ✓ Doubling renewables, ✓ Expanding pipeline of beating guid
Slide 4: DTE Energy overview
DTE Energy overview 70% - 75% Utility 25% - 30% Non-utility DTE Electric Gas Storage & Pipelines (GSP) Electric generation and Transport, store and gather distribution natural gas DTE Gas Power & Industrial Projects (P&I) Natural gas transmission, storage Own and operate energy related and distribut
Slide 5: Strong track record for shareholders
• Strong track record for shareholders • Distinctive focus on culture • Broad utility infrastructure investment • Strong non-utility growth agenda • Summary 2018 EEI Financial Forum 5
Slide 6: Growth fueled by investment in utility infrastructure and generation along with non-utility opportunities
Growth fueled by investment in utility infrastructure and generation along with non-utility opportunities (billions) DTE Energy Investment Electric $11.3 billion Distribution infrastructure, cleaner +18% generation, maintenance $20 Gas $2.5 billion $17 Base infrastructure, main renewal acceleration
Slide 7: Targeting 5% - 7% operating EPS growth through 2023 and dividend growth of 7% through 2020
Targeting 5% - 7% operating EPS* growth through 2023 and annualized dividend growth of 7% through 2020 Operating EPS Annualized Dividend Per Share $6.15 $5.78 $4.09 $3.78 $3.53 $2.62 2013 2018 2019 2013 2018 2019 original early guidance outlook * Reconciliation of operating earnings (non-GAAP) to re
Slide 8: Strong track record for shareholders
• Strong track record for shareholders • Distinctive focus on culture • Broad utility infrastructure investment • Strong non-utility growth agenda • Summary 2018 EEI Financial Forum 8
Slide 9: Highly engaged employees and top decile customer satisfaction provide a solid framework for success
Highly engaged employees and top decile customer satisfaction provide a solid framework for success Employee Community engagement Safety involvement Ranked top 3% National Safety Ranked as one of in the world Council’s top 2% of the country's top companies surveyed in corporate citizens by 6 consecu
Slide 10: Distinctive continuous improvement culture results in strong track record of cost management
Distinctive continuous improvement culture results in strong track record of cost management All 10,000 employees engaged in CI Utility O&M* to surface and solve problems ✓ Controlling costs while improving the customer experience Flat ‒ Productivity enhancements ‒ Technology innovations ‒ Automatio
Slide 11: Focus on culture and commitment to customers has delivered strong returns for shareholders
Focus on culture and commitment to customers has delivered strong returns for shareholders Decade of exceeding guidance… …and delivering strong TSR results Operating EPS* Total Shareholder Return** (Annualized) 15% $6.30E 14% 14% 11% $3.30 5% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 1-YR 2-
Slide 12: Strong track record for shareholders
• Strong track record for shareholders • Distinctive focus on culture • Broad utility infrastructure investment • Strong non-utility growth agenda • Summary 2018 EEI Financial Forum 12
Slide 13: Michigan has a constructive regulatory environment
Michigan has a constructive regulatory environment Ranking of U.S. regulatory jurisdictions* ✓ Recovery mechanism for renewables (Michigan in Tier 1) ✓ Certificate of necessity to build 1,100 MW natural gas power plant Tier 1 6 ✓ Infrastructure recovery mechanism (IRM) accelerated at DTE Gas Tier 2
Slide 14: DTE Electric overview
DTE Electric overview ✓ 2.2 million customers ✓ 11,000 megawatt system capacity ✓ Largest electric utility in Michigan DTE Electric service territory 2018 EEI Financial Forum 14
Slide 15: Providing cleaner energy and strengthened distribution infrastructure for our customers
Providing cleaner energy and strengthened distribution infrastructure for our customers Delivering 50% clean energy by 2030 Cleaner energy and >80% carbon emissions reduction by 2050* Infrastructure redesign Addresses substation load growth and aging infrastructure Technology enhancement Targets 100
Slide 16: Increasing reliability and customer satisfaction with investments in cleaner energy and distribution
Increasing reliability and customer satisfaction with investments in cleaner energy and distribution (billions) Electric Investment Cleaner generation +9% Building new gas plant, doubling renewable portfolio, adding voluntary renewable options $11.3 $10.4 Distribution infrastructure Progressing to b
Slide 17: DTE Gas overview
DTE Gas overview ✓ 1.3 million customers ✓ 139 Bcf storage capacity ✓ One of the nation’s largest natural gas utilities DTE Gas service territory 2018 EEI Financial Forum 17
Slide 18: Replacing aging infrastructure achieves fundamental shift in performance, cost and productivity
Replacing aging infrastructure achieves fundamental shift in performance, cost and productivity Main renewal Minimizes leaks, both reducing costs and improving customer satisfaction Reduces manual meter reading, Technology enhancement improving both operational efficiencies and customer satisfaction
Slide 19: Improving service to customers through infrastructure renewal and replacement
Improving service to customers through infrastructure renewal and replacement (billions) Gas Investment +19% NEXUS related Added compression $2.5 $2.1 Infrastructure renewal Accelerating main renewal program Base infrastructure Enhancing transmission, compression, distribution, storage 2018 - 2022 2
Slide 20: Strong track record for shareholders
• Strong track record for shareholders • Distinctive focus on culture • Broad utility infrastructure investment • Strong non-utility growth agenda • Summary 2018 EEI Financial Forum 20
Slide 21: GSP overview
GSP overview ✓ Transport, gather, store natural gas ✓ 6 pipelines ✓ 2,000 miles of pipe and gathering lines ✓ 91 Bcf of storage Ontario Michigan Northeast Gathering Market Gas Storage Bluestone Midwest Birdsboro Link Lateral & Gathering Mid-Atlantic & LNG Southeast Gulf 2018 EEI Financial Forum 21
Slide 22: Focus on growth platforms drives continued success
Focus on growth platforms drives continued success Pipeline Connecting high-quality markets to world-class geology Serving among strongest geology Gathering in a growing basin Capitalizing on strategic location to Storage serve key markets and future power generation load growth 2018 EEI Financial F
Slide 23: Multiple platforms underpin long-term growth
Multiple platforms underpin long-term growth (millions) GSP Operating Earnings* • 5-year growth of 21% through 2019 $335 - $345 • 12% growth from 2019 early outlook ‒ Continued pipeline expansions ‒ Investment around Link and NEXUS $208 - $218 platforms ‒ Strategic acquisitions • Strong development
Slide 24: Gas Storage & Pipelines continues growth track record
Gas Storage & Pipelines continues growth track record Accomplishments 2013 - 2018 operating earnings* growth of ~$160 million • Deployed ~$3.5 billion of capital over the past 5 years • Bluestone: significant expansion from 0.3 to 1.2 Bcf/day • Millennium and Vector: multiple expansions completed •
Slide 25: P&I overview
P&I overview ✓ Leading developer of energy related businesses in North America ✓ Business lines include industrial energy services, renewable energy and reduced emissions fuel 2018 EEI Financial Forum 25
Slide 26: Focus on growth platforms drives continued success
Focus on growth platforms drives continued success Developing new cogeneration projects to Industrial Energy Services improve customer environmental attributes and lower energy costs Expanding business to generate Renewable Energy RNG at landfill and agricultural sites Maximizing cash flows to reinv
Slide 27: Operating earnings post REF are underpinned by attractive growth opportunities
Operating earnings* post REF are underpinned by attractive growth opportunities (millions) P&I Operating Earnings • P&I growth opportunities stronger than previously anticipated, driving higher $119 - $134 $125 - $135 earnings in 5-year plan • Current project development queue is very strong • 5-yea
Slide 28: Long track record providing industrial energy services solutions
Long track record providing industrial energy services solutions • Strong track record of repeat business with multiple customers • Cogeneration drivers include: ‒ Increasing electricity rates ‒ Low natural gas costs ‒ Superior efficiency of industrial cogeneration systems • 2-3 GW of additional ind
Slide 29: Leveraging expertise by developing growing portfolio of renewable natural gas projects
Leveraging expertise by developing growing portfolio of renewable natural gas projects • RNG is methane that is upgraded to natural gas pipeline quality standards • P&I has produced RNG from landfill gas for over 15 years and recently entered the agricultural waste gas sector • Acquired four new pro
Slide 30: Energy Trading overview
Energy Trading overview Marketing and intelligence expertise supports other business units ✓ Moves GSP customers’ gas to market ✓ Markets and originates for P&I’s RNG business 2018 EEI Financial Forum 30
Slide 31: Energy Trading business provides valuable market insights and cash for reinvestment
Energy Trading business provides valuable market insights and cash for reinvestment (millions) • 20+ years of experience in the trading business Energy Trading Earnings* • Marketing capabilities support other business units ‒ Moves GSP customers’ gas to $40 $30 - $40 market ‒ Markets and originates
Slide 32: Strong track record for shareholders
• Strong track record for shareholders • Distinctive focus on culture • Broad utility infrastructure investment • Strong non-utility growth agenda • Summary 2018 EEI Financial Forum 32
Slide 33: Summary
Summary • Targeting 5% - 7% operating EPS* growth through 2023 • Driving utility growth through infrastructure investments focused on cleaner energy, improved reliability and an enhanced customer experience • Continuing strategic and sustainable growth in non-utility businesses • Maintaining strong
Slide 34: Appendix
Appendix 2018 EEI Financial Forum 34
Slide 35: 2019 operating EPS early outlook grows 6.4% from 2018 original guidance
2019 operating EPS* early outlook grows 6.4% from 2018 original guidance (millions, except EPS) 2018 2018 2019 Original Revised Early Guidance Guidance Outlook DTE Electric $648 - $662 $667 - $679 $698 - $712 DTE Gas 152 - 160 152 - 160 171 - 179 Gas Storage & Pipelines 185 - 195 225 - 235 208 - 218
Slide 36: 2018 cash flow and capital expenditures guidance
2018 cash flow and capital expenditures guidance (billions) (millions) Cash Flow Capital Expenditures 2018 2018 Guidance Guidance Cash From Operations* $2.2 DTE Electric Base Infrastructure $750 Capital Expenditures (3.6) New Generation 340 Free Cash Flow ($1.4) Distribution Infrastructure 810 $1,90
Slide 37: Maintaining strong cash flow and balance sheet
Maintaining strong cash flow and balance sheet Sources and Uses (2019 - 2021) Debt Equity Capital • Issuing $1.0 billion - $1.5 billion of Investment equity 2019 - 2021 Cash from Operations ‒ Up to $250 million of equity in 2019 Dividends using internal mechanisms Sources Uses • Strong cash from ope
Slide 38: DTE Electric and DTE Gas regulatory update
DTE Electric and DTE Gas regulatory update DTE Electric DTE Gas • General rate case - filed July 2018 (U-20162) • General rate case - order received – Final order: May 2019 September 2018 (U-18999) – Rate recovery: $320 million – Effective: October 2018 – ROE: 10.5% – Rate recovery: $9 million ($47
Slide 39: Doubling renewable generation provides cleaner mix
Doubling renewable generation provides cleaner mix Generation Mix ✓ 300 MW volunteer renewable program 1% with potential for more 2% 10% 20% 2% 15% 25% ✓ Targeting 50% clean energy by 2030 24% 20% ✓ Over 80% reduction of carbon emissions by 2050* 25% 20% ✓ Additional 1,000 MW by 2022 77% 20% 64% 45%
Slide 40: Replacing coal with renewables and natural gas
Replacing coal with renewables and natural gas Planned Retirements (~6,400 MW) River St. Trenton Belle Monroe Rouge Clair Channel River 2020 2030 2040 2050 Planned Additions (~7,500 MW*) 2018-2022 1,000 MW Additional renewables capacity (TBD) 2018-2022 15 MW 2022 Additional natural gas capacity (TBD
Slide 41: 2009 - 2010 full year reconciliation of reported to operating EPS (non-GAAP)
2009 - 2010 full year reconciliation of reported to operating EPS (non-GAAP) 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 pr
Slide 42: 2011 - 2012 full year reconciliation of reported to operating EPS (non-GAAP)
2011 - 2012 full year reconciliation of reported to operating EPS (non-GAAP) 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 pr
Slide 43: 2013 - 2014 full year reconciliation of reported to operating EPS (non-GAAP)
2013 - 2014 full year reconciliation of reported to operating EPS (non-GAAP) 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 pr
Slide 44: 2015 - 2016 full year reconciliation of reported to operating EPS (non-GAAP)
2015 - 2016 full year reconciliation of reported to operating EPS (non-GAAP) 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 pr
Slide 45: 2017 full year reconciliation of reported to operating EPS (non-GAAP)
2017 full year reconciliation of reported to operating EPS (non-GAAP) 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 p
Slide 46: 2014 full year reconciliation of reported to operating earnings (non-GAAP)
2014 full year reconciliation of reported to operating earnings (non-GAAP) 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 prim
Slide 47: 2013 - 2017 Energy Trading reconciliation of operating earnings to economic earnings (non-GAAP)
2013 - 2017 Energy Trading reconciliation of operating earnings to economic earnings (non-GAAP) (millions) 2013 2014 2015 2016 2017 Reported earnings ($58) $122 ($22) ($45) $72 Operating adjustments 55 (102) 37 70 (52) (3) 20 15 25 20 Operating earnings • Economic earnings (non-GAAP) Accounting adju
Slide 48: Reconciliation of reported to operating earnings (non-GAAP)
Reconciliation of reported to operating earnings (non-GAAP) Use of Operating Earnings Information – Operating earnings exclude non-recurring items, certain mark-to- market adjustments and discontinued operations. DTE Energy management believes that operating earnings provide a more meaningful repres