Dte Energy Company · NYSE:DTE
Dte Energy — EEI Financial Conference 2019
49 slides from Dte Energy's conference presentation, Nov 10, 2019
Slide 1: EEI Financial Conference
EEI FINANCIAL CONFERENCE NOVEMBER 10–12, 2019 1
Slide 2: Safe Harbor Statement
Safe Harbor Statement Certain information presented herein includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, and businesses of DTE Energy. Words such as “anticipate,” “belie
Slide 3: Overview
• Overview • Strong track record of delivering value for shareholders • High-quality utilities with clear line of sight for growth • Disciplined approach for non-utility value creation • Appendix ― Financial and regulatory disclosures ― Recent acquisition 3
Slide 4: DTE Energy
DTE ENERGY 70% – 75% Utility DTE Electric Electric generation and distribution DTE Gas Natural gas transmission, storage and distribution 25% – 30% Non-Utility Gas Storage & Pipelines (GSP) Transport, store and gather natural gas DTE Energy Power & Industrial Projects (P&I) Own and operate energy re
Slide 5: Accelerating and solidifying future growth with updated plan
Accelerating and solidifying future growth with updated plan 7.5% operating EPS1 growth from 2019 original guidance to 2020 early outlook 5% – 7% operating EPS growth through 2024 from higher 2020 base 7% dividend growth extended through 20212 5-year utility investment $1 billion higher than prior p
Slide 6: Distinctive business portfolio delivers superior results
Distinctive business portfolio delivers superior results Strong track record of delivering value for shareholders • Decade-long record of beating original guidance • Premium total shareholder returns vs. peers • Commitment to strong balance sheet • Underpinned by strong corporate culture High-qualit
Slide 7: Overview
• Overview • Strong track record of delivering value for shareholders • High-quality utilities with clear line of sight for growth • Disciplined approach for non-utility value creation • Appendix ― Financial and regulatory disclosures ― Recent acquisition 7
Slide 8: Distinctive business portfolio has delivered a strong track record of value and growth
Distinctive business portfolio has delivered a strong track record of value and growth Total Shareholder Return1 10-Year Operating EPS2 CAGR vs. Peers 451% 8.1% 106% 56% 3-Year 5-Year 10-Year DTE S&P 500 Utilities DTE 2nd among peers for operating EPS growth from 2008 – 20183 Delivering shareholder
Slide 9: Accelerating operating EPS and dividend growth with updated plan
Accelerating operating EPS1 and dividend growth with updated plan Operating EPS Operating EPS grows 7.5% from 2019 original guidance to 2020 early outlook 5% – 7% operating EPS growth from 7.5% higher 2020 base $6.61 Growth from Extending 7% dividend growth through higher base 20212 $6.15 2019 2020
Slide 10: Consistently deliver premium operating EPS results due to disciplined planning and management
Consistently deliver premium operating EPS1 results due to disciplined planning and management Decade of exceeding operating EPS guidance Robust Planning 8.1% CAGR Annually create detailed 5-year plan 9.0% CAGR $6.30 Includes earnings contingency across $4.09 the portfolio $2.90 Weekly detailed exec
Slide 11: Clear line of sight for growth supported by investment in utility infrastructure
Clear line of sight for growth supported by investment in utility infrastructure and disciplined non-utility opportunities (billions) 2020 – 2024 DTE Energy Investment $19 billion $15 Electric: Distribution infrastructure, $12 cleaner generation, maintenance Gas: Base infrastructure, main 80% $3 ren
Slide 12: Accelerated investment growth underpinned by strong balance sheet
Accelerated investment growth underpinned by strong balance sheet Planned Equity Issuances 2019 – 2022 (billions) $1.3 Convertible equity units $0.5 $0.1 - $0.4 Internal $0.2 $0.1 - $0.3 mechanisms Acquisition $0.3 20191 2020 2021 2022 $1.5 – $2.0 billion • $1.7 billion of available liquidity at end
Slide 13: Commitment to culture provides a solid framework for success
Commitment to culture provides a solid framework for success Employee Engagement Ranked top 3% in the world by Gallup 7 consecutive Gallup Great Workplace Awards Customer Community Safety Satisfaction Involvement National Safety Council’s Ranked as one of Ranked 1st for gas top 2% of companies the c
Slide 14: Environmental, social and governance efforts are key priorities
Environmental, social and governance efforts are key priorities Environmental Social Governance • Net zero carbon emissions by • Advancing leadership in • 11 out of 13 Board 2050 diversity members are independent • 80% carbon emissions • Recognized by Diversity • Incentive plans tied to reduction by
Slide 15: Overview
• Overview • Strong track record of delivering value for shareholders • High-quality utilities with clear line of sight for growth • Disciplined approach for non-utility value creation • Appendix ― Financial and regulatory disclosures ― Recent acquisition 15
Slide 16: Consistently earning authorized ROE in a constructive regulatory environment
Consistently earning authorized ROE in a constructive regulatory environment DTE Electric ROE Ranking of U.S. Regulatory Jurisdictions1 (Michigan in Tier 1) 10.3% 10.3% Tier 1 8 10.1% 10.0% Tier 2 9 2015 2016 2017 2018 Authorized ROE Earned ROE Tier 3 17 DTE Gas ROE Tier 4 10 Tier 5 7 10.5% 10.1% 10
Slide 17: 5-year utility investment is 7% higher than prior plan
5-year utility investment is 7% higher than prior plan; potential $2 billion upside to plan with visible infrastructure investment Additional $2 billion of investments Utility Investment Plan (billions) above 5-year plan require incremental cost and organic revenue actions Additional ~$2 opportunity
Slide 18: DTE Electric: transformational investments in generation and distribution
DTE Electric: transformational investments in generation and distribution provide customers cleaner, more reliable energy 2020 – 2024 Electric Investment Transformational Investments (billions) Cleaner energy • Delivers 80% carbon emissions reduction by 2040 $3 $5 $12 billion Infrastructure renewal
Slide 19: Steady march to creating clean, reliable, affordable, home-grown energy
Steady march to creating clean, reliable, affordable, home-grown energy Cleaner Generation Mix 1% 2% 17% 20% 25-30% 18% 20-25% 20% 77% 20% 45% 30% 2005 2023E 2030E Coal Natural Gas Nuclear & Other Renewables Accelerating carbon emissions reduction • Doubling renewable investment from • 32% by 2023,
Slide 20: DTE Gas: replacing aging infrastructure reduces methane emissions
DTE Gas: replacing aging infrastructure reduces methane emissions while improving performance, cost and productivity 2020 – 2024 Gas Investment Transformational Investments (billions) Main renewal • Minimizes leaks, both reducing costs and improving customer satisfaction $1.4 $3 billion Technology e
Slide 21: Committed to methane reduction goal of 80% by 2040
Committed to methane reduction goal of 80% by 2040 Reduced methane emissions continuing reductions in …to achieve goal by 2040 more than 20% since 2011… 2019... Compressor station upgrades Main renewal program Continued infrastructure • Reduced emissions by 93% • Achieving further emission investmen
Slide 22: Overview
• Overview • Strong track record of delivering value for shareholders • High-quality utilities with clear line of sight for growth • Disciplined approach for non-utility value creation • Appendix ― Financial and regulatory disclosures ― Recent acquisition 22
Slide 23: Non-utility businesses complement utility growth
Non-utility businesses complement utility growth and provide portfolio mix to manage business cycles Non-Utility Value Creation Extension of our utility business core competencies into other geographies Delivering higher than utility returns Proven ability of early identification of value- creating
Slide 24: GSP: larger platform base underpins long-term growth
GSP: larger platform base underpins long-term growth Northeast Pipeline Ontario • Connecting world-class supply basins to high-quality markets Gathering Midwest • Serving some of the strongest geologies in growing basins Mid-Atlantic & LNG Storage • Capitalizing on strategic locations to serve key S
Slide 25: Majority of GSP growth secured; higher operating earnings with increased certainty
Majority of GSP growth secured; delivering higher operating earnings1 with increased certainty GSP Operating Earnings (millions) $400–$420 • $2.2 – $2.7 billion of investment in New project origination 2020 – 2024 $277–$293 ‒ $1.0 billion of growth contractually $208–$218 secured on Blue Union/LEAP
Slide 26: High-quality assets with revenue certainty are the foundation for growth
High-quality assets with revenue certainty are the foundation for long-term growth Platform Foundational Strengths 85% of total revenue covered by fixed revenue contracts and flowing gas 100% Fixed revenue, Serving major Volume growth and 15% contract renewal long-term contracts market centers Minim
Slide 27: Well-positioned platforms provide confidence in securing highly accretive growth
Well-positioned platforms provide confidence in securing highly accretive growth with $2.2 – $2.7 billion of investment Platforms Regulation Phase Growth Opportunities Blue Union Early Gathering build-outs • $1.0 billion of growth contractually secured on Gathering build-outs/compression/ LEAP Syste
Slide 28: P&I: achieving growth from high-quality platforms
P&I: achieving growth from high-quality platforms Industrial Energy Services • Developing new cogeneration projects to improve customer environmental attributes and lower energy costs Renewable Energy • Expanding renewable natural gas (RNG) business at landfill and agricultural sites to meet growing
Slide 29: Operating earnings are underpinned by RNG and cogeneration growth opportunities
Operating earnings1 are underpinned by RNG and cogeneration growth opportunities P&I Operating Earnings (millions) • RNG and cogeneration projects drive long- $133 – $148 term earnings $125 – $135 ‒ Backfill sunsetting REF projects with new projects REF • Continuing an origination pace of ~$15 milli
Slide 30: Leveraging expertise to grow our portfolio of RNG projects
Leveraging expertise to grow our portfolio of RNG projects with focus on LCFS market • P&I has produced RNG from landfill gas for RNG is methane that is upgraded to natural gas over 15 years and has successfully entered pipeline quality standards the agricultural waste gas sector • Federal and state
Slide 31: Long track record providing utility-like industrial energy services solutions
Long track record providing utility-like industrial energy services solutions • P&I expects to develop multiple cogeneration projects over the next five years ‒ Strong track record of repeat business with multiple customers • Industrial energy services is attractive due to increasing electricity rat
Slide 32: Continuing to deliver distinctive shareholder value
Continuing to deliver distinctive shareholder value Strong track record of delivering value for shareholders • Decade-long record of beating guidance • Premium total shareholder returns Top performing utilities with clear line of sight for growth • Sustained infrastructure investment • Constructive
Slide 33: Overview
• Overview • Strong track record of delivering value for shareholders • High-quality utilities with clear line of sight for growth • Disciplined approach for non-utility value creation • Appendix ― Financial and regulatory disclosures ― Recent acquisition 33
Slide 34: DTE Electric and DTE Gas regulatory update
DTE Electric and DTE Gas regulatory update DTE Electric DTE Gas • General rate case - order received • General rate case - order received May 2019 (U-20162) September 2018 (U-18999) ‒ Effective: May 2019 ‒ Effective: October 2018 ‒ Rate recovery: $273 million ‒ Rate recovery: $47 million ‒ ROE: 10.0
Slide 35: Continuous improvement culture drives strong cost management vs. peers
Distinctive continuous improvement culture drives strong track record of cost management vs. peer average All 10,000 employees engaged in CI to Average annual percentage change in surface and solve problems O&M costs 2008 – 2018 Electric Utility1 • Controlling costs while improving the customer expe
Slide 36: 2020 operating EPS early outlook grows 7.5% from 2019 original guidance
2020 operating EPS1 early outlook grows 7.5% from 2019 original guidance (millions, except EPS) 2019 Original 2019 Revised 2020 Early Guidance Guidance Outlook DTE Electric $698 - $712 $705 - $719 $759 - $773 DTE Gas 171 - 179 175 - 183 185 - 193 Gas Storage & Pipelines 208 - 218 208 - 218 277 - 293
Slide 37: 2019 cash flow and capital expenditures guidance
2019 cash flow and capital expenditures guidance Cash Flow Capital Expenditures (billions) (millions) 2019 2019 Guidance Guidance Cash From Operations1 $2.7 DTE Electric Capital Expenditures (5.9) Base Infrastructure $820 Free Cash Flow ($3.2) New Generation 490 Distribution Infrastructure 890 $2,20
Slide 38: Overview
• Overview • Strong track record of delivering value for shareholders • High-quality utilities with clear line of sight for growth • Disciplined approach for non-utility value creation • Appendix ― Financial and regulatory disclosures ― Recent acquisition 38
Slide 39: Blue Union and LEAP asset additions to portfolio
Blue Union and LEAP asset additions to portfolio provide great value and growth Perryville Hub • Premier assets in high-growth Haynesville Carthage Hub basin Southeast – Existing fully contracted gathering Power Markets system Gulf South – Fully contracted large-diameter Texas markets gathering pipe
Slide 40: Recent acquisition has enabled DTE to move into a rapidly growing basin
Recent acquisition has enabled DTE to move into a rapidly growing basin Haynesville Production, 2013 – 2019 • Driven by technology innovation, the (Bcf/d) Haynesville basin has expanded since 12 2017 after a flat production period from 2013 – 2017 – Making this basin the 2nd fastest 10 growth shale
Slide 41: Haynesville is a rapidly growing basin
Haynesville is a rapidly growing basin U.S. Gas Supply by Basin Bcf/d 112 100 16 '14-’18 '18-’23 '23-’30 14 CAGR CAGR CAGR 83 19 (%) (%) (%) 9 16 69 Haynesville 11.6% 8.4% 2.4% 9 6 20 5 21 18 Permian 15.8% 12.2% 2.4% 15 15 Other Associated 14 3.7% 3.7% (1.0%) Gas 19 27 Other U.S. Supply (8.1%) (6.5%
Slide 42: Haynesville is well-positioned to serve growing Gulf Coast demand centers
Haynesville is well-positioned to serve growing Gulf Coast demand centers U.S. Gulf Coast Demand by Sector Bcf/d 43 • Gulf Coast demand growth is 1 Commercial driven by the electric and 11 Industrial industrial sectors and LNG exports 30 1 Residential • LNG exports in 2023 are from 1 4 Other facilit
Slide 43: 2017 - 2018 full year reconciliation of reported to operating EPS
2017 - 2018 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
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: 2013 - 2014 full year reconciliation of reported to operating EPS
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 46: 2011 - 2012 full year reconciliation of reported to operating EPS
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 47: 2009 - 2010 full year reconciliation of reported to operating EPS
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 48: 2008 full year reconciliation of reported to operating EPS
2008 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
Slide 49: 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 represe