Dte Energy Company · NYSE:DTE
Dte Energy — Investor Presentation (March 2015)
56 slides from Dte Energy's investor presentation, Mar 6, 2015
Slide 1: Business Update March 9-11, 2015
Business Update March 9-11, 2015 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 FERC, MPSC, NRC, CFTC, EPA and other applicable governmental proceedings and reg
Slide 3: Overview, Long-Term Growth Update, Financial Update, Summary
• Overview • Long-Term Growth Update – Utilities – Non-Utilities • Financial Update • Summary 3
Slide 4: DTE Energy is a national energy company with deep Michigan roots
DTE Energy is a national energy company with deep Michigan roots 4 DTE Gas DTE Electric Headquarters • DTE Energy is a Fortune 300 company • Market cap currently ~$14 billion • Two utilities serving Michigan • DTE Electric (founded 1886) • DTE Gas (founded 1849) • Non-utility businesses with operati
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 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 by
Slide 6: Our business strategy is fundamental to how we create value for our investors
5% - 6% Annual EPS Growth Attractive Dividend Strong Balance Sheet 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 divers
Slide 7: We will invest over $11 billion in capital projects to drive growth through 2019
We will invest over $11 billion in capital projects to drive growth through 2019 (billions) 7 ~$11.2 – $11.8 $0.6 – $0.8 $1.5 – $1.9 $1.6 $7.5 Power & Industrial Projects Gas Storage & Pipelines DTE Gas DTE Electric On-site energy, cogeneration Gathering investments, NEXUS, additional pipeline expan
Slide 8: We remain committed to delivering 5% to 6% operating EPS growth
* Reconciliation to GAAP reported earnings included in the appendix (dollars per share) We remain committed to delivering 5% to 6% operating EPS* growth $3.33 $3.64 $3.75 $3.94 $4.09 $4.60 $4.60 $2.12 $2.24 $2.35 $2.48 $2.62 $2.76 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 EPS Dividend A
Slide 9: Earnings growth opportunities and contingency planning support 5% to 6% EPS growth
Our strong earnings growth opportunities coupled with our contingency planning gives us confidence in our ability to deliver 5% to 6% operating EPS* growth Utility Earnings Growth Non-Utility Earnings Growth DTE Earnings Growth Share Dilution Contingency DTE EPS Growth Non-Utilities 5% - 7% 5% - 6%
Slide 10: DTE has consistently delivered total shareholder return above the peer average
DTE has consistently delivered total shareholder return above the peer average * As of January 30, 2015 Source: Thomson Reuters DTE Energy’s Total Shareholder Return* Percentile Ranking Among S&P 500 Utilities 4th Quartile 3rd Quartile 2nd Quartile 1st Quartile 70% 87% 87% 1 YR 3 YR 5 YR 10
Slide 11: DTE Energy achieved highest customer satisfaction in Midwest gas service
DTE Energy has achieved “Highest in Customer Satisfaction With Business and Large Residential Natural Gas Service Providers in the Midwest”* J.D. Power Gas Utility Residential Gas Customer Satisfaction Ranking Midwest Region: Large Segment 2007 2012 2013 2014 R es id e n ti a l J.D. Power Gas Utilit
Slide 12: Michigan's economy has been revitalized and Detroit continues its rebirth
Michigan’s economy has been revitalized and the City of Detroit is continuing its economic rebirth 12 Unemployment rate in Michigan lowest since 2002 Michigan improved 8 spots in state ranking of growth in Real Gross Domestic Product* Detroit metro area ranks 8th in the U.S. for number of new or exp
Slide 13: Michigan energy policy and constructive regulatory environment
Michigan Energy policy Michigan’s return to economic health allows the state to focus on beneficial energy policy changes Constructive regulatory environment Michigan Public Service Commission 13 Michigan’s Energy Leaders Senator Mike Nofs Representative Aric Nesbitt Valerie Brader “I am calling for
Slide 14: Agenda: Overview, Long-Term Growth Update
• Overview • Long-Term Growth Update – Utilities – Non-Utilities • Financial Update • Summary 14
Slide 15: Policy will transform our generation mix, replacing coal with gas and renewables
Federal and state policy will lead to transformation of our generation mix by replacing coal with natural gas and renewables 15 DTE Electric Generation Output 2014 2030 Scenario* Gas / Renewables Coal Nuclear / other ~70% ~30% ~50% ~20% ~20% ~10% * Ultimate timing and mix of generation impacted by M
Slide 16: Our electric utility is investing $7.5 billion in three key areas through 2019
Our electric utility is investing $7.5 billion in three key areas through 2019 $5.7 billion Distribution infrastructure renewal Power plant reliability Compliance Gas plant acquisition Generation asset base renewal $1.4 billion $400 million $7.5 billion Targeting 5% - 6% growth Base Infrastructure N
Slide 17: Generation replacement will significantly increase DTE Electric's investment
Generation replacement will significantly increase DTE Electric’s investment over the next 10 years DTE Electric Total Investment ~$7.5 ~$9.0 2015-2019 2020-2024 ~$6.0 2010-2014 New generation investment (billions) 17
Slide 18: Our gas utility is making $1.6 billion of reliability and infrastructure investments
Our gas utility is making $1.6 billion of reliability and infrastructure investments through 2019 Strengthen and expand infrastructure Main renewal, meter move-out and pipeline integrity Compression Targeting 7% - 8% growth Base Infrastructure Infrastructure Renewal Nexus Related Total $825 million
Slide 19: Expanding main replacement would reduce our replacement cycle by half
Expanding to 160 miles per year by 2018 would reduce our planned main replacement cycle by approximately half ~$80 Investment* (millions) Miles ~80 miles ~$130 ~160 miles Key Components of Expanded Infrastructure Recovery Mechanism (IRM) Filing** Increase annual investment ~$50 million beginning J
Slide 20: Focusing on minimizing the customer rate impact
$ * Includes ~$300 million surcharge reduction for renewable energy, power supply cost recovery (PSCR) and choice incentive mechanism implemented 1Q 2014 and net reduction of ~$300 million due to elimination of securitization surcharge and PSCR increase in 1Q 2015 As we continue to grow, we are focu
Slide 21: Continuous improvement enables 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 greater
Slide 22: Agenda: Non-Utilities
• Overview • Long-Term Growth Update – Utilities – Non-Utilities • Financial Update • Summary 22
Slide 23: Gas Storage & Pipelines is developing an asset portfolio with multiple growth platforms
Gas Storage & Pipelines is developing an asset portfolio with multiple growth platforms DTE Gas DTE Storage Proposed NEXUS Pipeline Marcellus Shale Bluestone Pipeline Utica Shale Michigan Gathering 23 Bluestone Gathering System
Slide 24: Gas Storage & Pipelines growth strategy leverages existing and new assets
The Gas Storage & Pipelines business growth strategy leverages existing and new assets Understand and anticipate opportunities in new resource plays Pipeline Platform Gathering Platform Storage Platform Leverage existing foundational assets and build out incremental projects Develop greenfield pipes
Slide 25: Gas Storage & Pipelines platforms drive growth through new projects and expansions
Pipeline Platform Gathering Platform Storage Platform 25 Gas Storage & Pipelines platforms drive growth through new projects and expansions Bluestone Pipeline • 0.8 Bcf/d capacity (bi-directional); planned expansions of 0.2 Bcf/d Millennium Pipeline • 0.8 Bcf/d to Ramapo, NY; 0.2 – 0.5 Bcf future ex
Slide 26: The NEXUS project has reached major milestones
The NEXUS project has reached major milestones • ~250 mile pipeline to provide natural gas from Marcellus and Utica shales to Michigan, Ohio, Chicago and Ontario • 1.5 Bcf/d capacity; DTE’s expected investment is ~$700 million • Agreements executed with LDCs and several key shippers; additional disc
Slide 27: Gas Storage & Pipelines operating earnings potential is $145 million by 2019
Gas Storage & Pipelines’ operating earnings* potential is $145 million by 2019 2013A 2014A 2015E 2016E 2017E 2018E 2019E * Reconciliation to GAAP reported earnings included in the appendix Pipeline Platform** Gathering Platform Storage Platform New Project Development (Other gathering and pipeline e
Slide 28: Power & Industrial Projects is focused in three key business lines
Power & Industrial Projects is focused in three key business lines across the country Industrial Energy Services Renewable Energy Reduced Emissions Fuel 28
Slide 29: Power & Industrial Projects is pursuing new opportunities in each business line
• Projects reduce emissions from coal-fired plants • Negotiations underway on relocation of 9th unit • Utility contracted • 9 units, 6 states • On-site energy and utility services for industrial, commercial and institutional customers • Coke and pulverized coal for steel customers • Several cogenera
Slide 30: Power & Industrial Projects is targeting $145 million of operating earnings by 2019
Power & Industrial Projects is targeting $145 million of operating earnings* by 2019 through growth in each of its business lines 2013A 2014A 2015E 2016E 2017E 2018E 2019E ~$145 $35 $70 $85 ($65) $20 $70 New Project Development / Acquisitions Renewable Energy Reduced Emissions Fuel Industrial Energy
Slide 31: Agenda: Financial Update
• Overview • Long-Term Growth Update – Utilities – Non-Utilities • Financial Update • Summary 31
Slide 32: 2015 operating EPS guidance reflects a return to normal weather
2015 operating EPS* guidance reflects a return to normal weather and targeted growth rate Drivers (millions, except EPS) 2015 Guidance 2014 Actuals* 32 * Reconciliation to GAAP reported earnings included in the appendix ** Total DTE Energy excluding Energy Trading Return to normal weather, rate incr
Slide 33: Growth segments provide 5.5% EPS growth with normal weather
* Reconciliation to GAAP reported earnings included in the appendix Growth segments provide 5.5% EPS growth with normal weather (per share) 33 2014 Growth Segment Operating EPS* Weather Utility Performance Non-Utility Performance 2015 Growth Segments Operating EPS* Guidance Midpoint $4.48 ($0.12) $0
Slide 34: 2015 Cash Flow and Capital Expenditure Guidance
2015 Cash Flow and Capital Expenditure Guidance (billions) 34 Capital Expenditures Summary Cash Flow Summary (millions) 2014 2015 Actual Guidance Cash From Operations $1.8 $1.7 Capital Sending (2.1) (2.6) Free Cash Flow ($0.3) ($0.9) Asset Sales & Other - 0.1 Dividends (0.5) (0.5) Net Cash ($0.8) ($
Slide 35: Strong balance sheet remains a key priority and supports growth
Leverage* 49% 51% 23% 25% Strong balance sheet remains a key priority and supports growth * Debt excludes securitization, a portion of DTE Gas’ short-term debt, and considers 50% of the Junior Subordinated Notes as equity Funds from Operations** / Debt* Target 50% - 53% Target 20% - 22% 5 • Achieved
Slide 36: Agenda: Summary
• Overview • Long-Term Growth Update – Utilities – Non-Utilities • Financial Update • Summary 36
Slide 37: Summary
Summary * Reconciliation to GAAP reported earnings included in the appendix 37 • Long term plan supports 5% to 6% targeted operating EPS* growth ‒ 2015 growth segment guidance midpoint of $4.60 provides 5.5% EPS* growth over 2014, with normal weather ‒ Grow dividends in line with earnings ‒ Exceeded
Slide 38: Contact Us
Contact Us DTE Energy Investor Relations www.dteenergy.com/investors +1 (313) 235-8030 38
Slide 39: Appendix
se DTE Energy Appendix
Slide 40: DTE Energy 2014 Operating Earnings Variance
DTE Energy 2014 Operating Earnings* Variance * Reconciliation to GAAP reported earnings included in the appendix ** Total DTE Energy excluding Energy Trading Drivers (millions, except EPS) 2014 Change 2013 DTE Electric • Revenue decoupling mechanism amortization and lower O&M DTE Gas • Colder winter
Slide 41: DTE Electric has delivered consistent growth
DTE Electric has delivered consistent growth 41 Operating Earnings* $380 $528 2009 2014 2015E $793 $1,561 $1,820 2009 2014 2015E (millions) $9.4 $12.4 2009 2013 2014E ~$13.4 $554 - $570 ~46,200 ~48,400 ~47,800 2009 2013 2014 ** Temperature normalized; sales exclude wholesale contract terminated in D
Slide 42: DTE Electric plans $7.5 billion of investments over the next 5 years
DTE Electric plans $7.5 billion of investments over the next 5 years 2014A 2015E 2016E 2017E 2018E 2019E Base New Generation Other Projects* Environmental Distribution Reliability 2015E - 2019E Total ~$13.4B ~$17.5B YE Rate Base** $595M ~$820M Depreciation * Includes AMI, Ludington expansion and oth
Slide 43: DTE Electric has built or contracted for approximately 900MWs of renewable energy
DTE Electric has built or contracted for approximately 900MWs of renewable energy since 2009 43 • 10% of retail sales from renewables by 2015 • 50/50 ownership construct • New capacity requirements Michigan’s RPS Stoney Corners Wind Tuscola Bay Wind Brookfield Wind Big Turtle Wind Echo Wind Garden P
Slide 44: DTE Gas has delivered consistent growth
DTE Gas has delivered consistent growth 44 Operating Earnings* $80 $140 2009 2014 2015E $167 $224 ~$280 2009 2014 2015E (millions) Capital Expenditures $2.5 $2.9 ~$3.1 2009 2013 2014E Rate Base (millions) (billions) $128 - $134 Total Gas Sales 259 282 302 2009 2013 2014 (Bcf) * Reconciliation to GAA
Slide 45: DTE Gas plans nearly $1.6 billion of investments over the next 5 years
DTE Gas plans nearly $1.6 billion of investments over the next 5 years 2014A 2015E 2016E 2017E 2018E 2019E 2015E - 2019E Total Base Gas Renewal NEXUS related $224 $280 $350 $360 $280 $280 $1,550 $125 $600 $825 ~$3.1B ~$4.4B - $4.5B YE Rate Base* $99M ~$130M Depreciation * Includes working capital; 2
Slide 46: Utility regulatory timeline
DTE Gas • Filed expanded Infrastructure Recovery Mechanism (IRM) 2015 • Filed cost of service rates and general rate case DTE Electric 2014 2016+ • Revised business cost of service rates 2Q • Self implement general rates 3Q • Final rate order 4Q • Periodic rate cases • IRM review and ruling • Begin
Slide 47: 2008 energy regulation established a more constructive regulatory environment
Energy regulation passed in 2008 established a more constructive regulatory environment 47 Key components of the 2008 Energy Legislation Regulatory Structures Fully Regulated Fully Deregulated Michigan Regulatory Structure Changes • File & Use Rates with 6 month self- implementation • Final order in
Slide 48: DTE filed its electric rate case in December 2014
DTE filed its electric rate case in December 2014 Plant additions Working capital O&M Sales / revenues Return and capital structure Other (millions) Electric Base Rate Increase Total rate increase • First electric general rate case in over 4 years • Anticipate self- implementation on or after July 1
Slide 49: Filed electric rate increases are offset by surcharge reductions and securitization roll off
Increase in filed electric rates are offset by surcharge reductions and securitization roll off Residential Commercial Large Industrial 2015 general rates and cost of service implementation 2014 surcharge reductions and 2015 securitization roll-off Total rate change from 2013 (%) New rates Offsets I
Slide 50: 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 Future Expansion (planning phase) 0.2 - 0.5 2017 + Total Planned Capacity 1.0 - 1.3 Bluestone Pipeline (bi-directional)* 0.8 Expansion #2 0.1
Slide 51: Michigan economic indicators highlight continued growth
Michigan economic indicators highlight continued growth over the next few years 7.1% 13.4% 8.8% 7.4% 6.6% 6.3% 6.1% 6.0% 2007 2009 2013 2014 2015E 2016E 2017E 2018E 420 366 408 414 424 431 437 443 2007 2009 2013 2014E 2015E 2016E 2017E 2018E (billons) 2,295 1,144 2,433 2,242 2,479 2,604 2,746 2,817
Slide 52: DTE Energy Trading Reconciliation of Operating Earnings to Economic Net Income
DTE Energy Trading Reconciliation of Operating Earnings* to Economic Net Income 52 (millions, after-tax) Operating Earnings* $61 • Economic net income equals economic gross margin*** minus O&M expenses and taxes • DTE Energy management uses economic net income as one of the performance measures for
Slide 53: 2014 Reconciliation of Reported to Operating Earnings
2014 DTE Electric DTE Gas Gas Storage and Pipelines Power and Industrial Projects Corporate and Other Growth Segments Energy Trading DTE Energy Reported Earnings 528$ 140$ 82$ 90$ (57)$ 783$ 122$ 905$ Investment impairment - - - - 5 5 - 5 NY state tax law change - - - - 8 8 - 8 Certain mark-to-marke
Slide 54: 2013 Reconciliation of Reported to Operating Earnings
2013 DTE Electric DTE Gas Gas Storage and Pipelines Power and Industrial Projects Corporate and Other Growth Segments Energy Trading DTE Energy Reported Earnings 484$ 143$ 70$ 66$ (44)$ 719$ (58)$ 661$ Asset impairment - - - 4 - 4 - 4 Certain mark-to-market transactions - - - - - - 55 55 Operating E
Slide 55: 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 56: 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