DTE Energy Company · NYSE:DTE
DTE Energy — UBS conference, March 1-2, 2017
38 slides from DTE Energy's conference presentation, Feb 28, 2017
Slide 1: Business Update March 1-2, 2017
Click to edit Master title style 1 EXHIBIT 99.1 Business Update March 1-2, 2017
Slide 2: Safe Harbor Statement
2 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 associa
Slide 3: Focus on employees and customers is the foundation of our success
3 • Best employee safety rate in company history • 4th consecutive Gallup Great Workplace award; only utility to be recognized Focus on our employees and customers has been the foundation of our success * J.D. Power 2016 Electric Utility Residential and 2016 Gas Utility Residential Customer Satisfac
Slide 4: Political and regulatory environment, growth and value
4 • Constructive electric and gas rate orders • Michigan energy legislation signed into law Our growth plans for the utilities and non-utilities are well supported for the long-term Political & Regulatory Environment • Combined cycle gas plant build announced • Major acquisition at Gas Storage & Pip
Slide 5: DTE achieved strong financial performance in 2016
5 Achieved operating EPS* of $5.28 Exceeded original guidance for 10th consecutive year Increased operating EPS growth target to 5% - 7% from 5% - 6% Increased 2017 annualized dividend by 7.1%; targeting ~7% dividend increases in 2018 and 2019 Delivered total shareholder return at top quar
Slide 6: Overview, Long-Term Growth Update, Summary
6 • Overview • Long-Term Growth Update • Summary
Slide 7: Growth driven by strong utilities and complementary non-utility businesses
7 Growth is driven by strong, stable utilities and complementary non-utility businesses DTE Electric • Electric generation and distribution • 2.2 million customers • Fully regulated Growth driven by infrastructure investments aimed at improving customer reliability Growth driven by strategic opportu
Slide 8: Continuous improvement makes us an industry leader in cost management
8 Continuous improvement has enabled us to be an industry leader in cost management * Source: SNL Financial, FERC Form 1; major US Electric Utilities with O&M greater than $800 million; excluding fuel and purchased power ** Source: SNL Financial, FERC Form 2; gas distribution companies with greater
Slide 9: Michigan's regulatory environment is one of the best in the country
9 Minimal regulatory lag Solid ROEs Unique recovery mechanisms Source: Barclays, February 2017 Top Tier Michigan’s regulatory environment is one of the best in the country
Slide 10: With tax reform, DTE is uniquely situated to maximize value
10 With tax reform, DTE is uniquely situated to maximize customer and shareholder value = Consolidated DTE Impact Customer savings allow for potential additional reliability investment Increased earnings at non-utilities offset loss of interest deductions at holding company Operating EPS growth
Slide 11: Overview, Long-Term Growth Update, Summary
11 • Overview • Long-Term Growth Update • Summary
Slide 12: Detailed roadmap for the transformation of our business
12 Design detailed roadmap for the transformation of our business that ties near-term work to long-term success providing 30% - 40% cost reductions over the next decade Apply continuous improvement Shift from coal to natural gas Distribution improvements Advanced metering Enhanced customer
Slide 13: Growth through 2021 fueled by utility infrastructure and midstream
13 2017 – 2021 Plan 2012 – 2016 $12 billion $13.5 billion 2017 – 2021 Capital Plan Electric............... $8.4 billion Distribution infrastructure, maintenance, new generation Gas .................... $1.8 billion Base investments, infrastructure renewal, NEXUS related GSP .......... $2.2 to $2.8 b
Slide 14: Generation and distribution infrastructure replacement over next 10 years
14 Generation and distribution infrastructure replacement will improve service to customers over the next 10 years DTE Electric Investment New generation • Retire 60% of coal fleet; replacing with clean energy Distribution infrastructure • Move electric reliability to 1st quartile Maintenance and ot
Slide 15: Gas generation and renewables will replace coal fired generation
15 Gas generation and renewables will replace coal fired generation Belle RiverSt. ClairRiver Rouge Retirements* Additions* Wind / Solar Trenton New gas plant * Timing and mix is subject to change 2024 - 2030 New gas plantWind / Solar 2017 - 2023 2017 - 2023 2024 - 2030 ~2,100 MW ~1,000 MW ~2,500 –
Slide 16: Significant emissions reductions achieved on the path to clean energy
16 Significant emissions reductions have already been achieved and we continue on the path to clean energy 2005 2015 2030 CO2 Emissions 16% Reduction 2005 2015 2030 2005 2015 2030 NOX Emissions SO2 Emissions Emissions reductions are largely due to $2 billion in controls installed at Monroe Power P
Slide 17: DTE Electric distribution investments drive reliability
17 Infrastructure RedesignInfrastructure Resilience Technology Enhancements Upgraded nearly 20% of circuits since 2013; impact 33% of circuits by the end of 2020, improving reliability on impacted circuits by up to 70% Major investments planned at 20-25 substations by 2021 to address load growth and
Slide 18: Infrastructure renewal and replacement at DTE Gas
18 Infrastructure renewal and replacement will improve service to customers over the next 10 years DTE Gas Investment NEXUS related compression Infrastructure renewal • Strengthen gas infrastructure by reducing planned main replacement cycle by half Base infrastructure • Transmission, compression, d
Slide 19: Main replacement, pipeline integrity, meter move out
19 Main Replacement Pipeline Integrity Meter Move Out Systematically replaces poor performing unprotected main - minimizing leaks and improving customer satisfaction Drives productivity - reducing manual meter reading costs Strengthens the system - decreasing the potential for system failures Replac
Slide 20: GSP asset portfolio with multiple growth platforms
20 GSP has an asset portfolio with multiple growth platforms Growth Platforms Purposefully located in the best geology in North America Bluestone Pipeline & Gathering Millennium Pipeline NEXUS Pipeline Link* Lateral & Gathering Michigan Assets Strategically located between Chicago and Dawn
Slide 21: NEXUS and Link Lateral & Gathering growth opportunities
21 • FERC certificate of construction expected 1H17 • In-service 4Q17 • Ohio interconnect agreements provide 1.75 Bcf/d of market access • Mainline expandable up to 2.0 Bcf/d NEXUS • Initial shipper demand greater than anticipated - Firming up near-term growth plans • Strong tie with existing market
Slide 22: P&I operates three distinct business lines
22 P&I operates three distinct business lines across the United States Industrial Energy Services Renewable Energy Reduced Emissions Fuel (REF) • On-site utility services for industrial and commercial customers • Coke and pulverized coal for steel customers • Wood-fired power plants • Convert landfi
Slide 23: Focus on strategic opportunities in utility-like projects and asset acquisitions
23 Focus on strategic opportunities in utility-like projects and asset acquisitions for future growth Utility-Like Projects Asset Acquisition Distinct capabilities Experience with large industrial and commercial customers History of executing utility-like long-term contracts Expertise in opera
Slide 24: Overview, Long-Term Growth Update, Summary
24 • Overview • Long-Term Growth Update • Summary
Slide 25: Summary
25 Engaged employees create a safe work environment and drive great operational results Value driven utility investments provide an excellent customer experience while ensuring affordable rates Constructive regulatory environment and continued cost savings enable utilities to earn authorized returns
Slide 26: DTE Energy
se DTE Energy
Slide 27: 2017 Guidance
27 2017 Guidance DTE Electric DTE Gas Gas Storage & Pipelines Power & Industrial Projects Corporate & Other Growth segments** Growth segments operating EPS Energy Trading DTE Energy Operating EPS Avg. Shares Outstanding $610 - $624 143 - 151 140 - 150 90 - 100 (64) - (60) $919 - $965 $5.12 - $5.38 $
Slide 28: Strong balance sheet supports growth
28 21% 2016 2017-2019E 51% 2016 2017-2019E Leverage* Funds from Operations** / Debt* Target 50% - 53% Target 20% + • Cash flow and balance sheet strength are a key priority • No equity issuances in 2016 ‒ Acquisition related equity of $675 million in late 2019 (through convertible equity units) ‒ No
Slide 29: 2016 Cash Flow and Capital Expenditures Actuals
29 2015 Actual 2016 Actual Cash From Operations* $1.9 $2.1 Capital Expenditures (2.3) (3.4) Free Cash Flow ($0.4) ($1.3) Asset Sales & Other 0.1 - Dividends (0.5) (0.5) Net Cash ($0.8) ($1.8) Debt Financing: Issuances $1.1 $2.7 Redemptions (0.3) (0.9) Change in Debt $0.8 $1.8 Cash Flow DTE Energy 20
Slide 30: 2017 Cash Flow and Capital Expenditures Guidance
30 2016 Actual 2017 Guidance DTE Electric Distribution Infrastructure $567 $690 New Generation 131 45 Maintenance & Other 805 725 $1,503 $1,460 DTE Gas Base Infrastructure $177 $200 NEXUS Related 94 90 Main Replacement* 124 145 $395 $435 Non-Utility $1,533 $900 - $1,100 Total $3,431 $2,795 - $2,995
Slide 31: DTE Electric plans $8.4 billion of investments over 5 years
31 DTE Electric plans $8.4 billion of investments over the next 5 years with a focus on increasing customer reliability * Includes power reliability, existing generation maintenance, AMI, Ludington expansion and other investments ** Includes working capital and rate base associated with surcharges T
Slide 32: DTE Gas $1.8 billion of planned investments over 5 years
32 Customer reliability will be improved through $1.8 billion of planned investments over the next 5 years at DTE Gas 2016A 2017E 2018E 2019E 2020E 2021E 2017E - 2021E Total Base infrastructure Main Replacement* NEXUS related $1,800 $100 $700 $1,000 ~$3.6B ~$5.0B - $5.1BYE Rate Base** $104M ~$154MDe
Slide 33: Regulatory Update – Electric and Gas
33 • Self implemented general rates 3Q DTE GasDTE Electric 2017 2016 2018+ • Final rate order and IRM ruling 4Q – $122 million rate order – 10.1% ROE • Final rate order 1Q – $184 million rate order – 10.1% ROE • File rate case 2Q • Annual rate cases • Expect rate case filing 2018/2019 Regulatory Upd
Slide 34: GSP track record for earnings results
34 GSP has a solid track record for earnings results and expects to continue this success * Reconciliation to GAAP reported earnings included in the appendix GSP Operating Earnings* 2011 2016 2021E $127 $195 - $215 $57 (millions) Pipeline and gathering platforms strategically situated to take adva
Slide 35: P&I new project growth offsets REF earnings expiration
35 P&I’s new project growth will offset expiration of reduced emissions fuel earnings (millions) P&I Operating Earnings* Replace short-term REF earnings with long-term contracted value Development of cogeneration and utility-like services Asset acquisition Capital investment 2017-2021: $0.6 - $1
Slide 36: Reconciliation of Other Reported to Operating Earnings
36 Reconciliation of Other 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 m
Slide 37: Reconciliation of 2011 Reported to Operating Earnings
37 Reconciliation of 2011 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 me
Slide 38: Use of Operating Earnings Information
38 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 representation of the company’s earnings from ongoing operation