Dte Energy Company · NYSE:DTE
Dte Energy — Corporate Update (June 2014)
60 slides from Dte Energy's corporate update, Jun 9, 2014
Slide 1: Business Update June 9 – 13, 2014
Business Update June 9 – 13, 2014 EXHIBIT 99.1
Slide 2: Safe Harbor Statement
Safe Harbor Statement 2 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 and other applicable governmental proceedings and regulations,
Slide 3: Agenda
• 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 DTE Gas DTE Electric Headquarters • DTE Energy is a Fortune 300 company • Market cap currently ~ $13 billion • Two utilities serving Michigan • DTE Electric (founded 1886) • DTE Gas (founded 1849) • Non-utility businesses with operatio
Slide 5: DTE Energy is an integrated energy company
DTE Electric DTE Gas DTE Energy is an integrated energy company 5 Complementary Non-Utility Businesses Strong, Stable and Growing Utilities • Electric generation and distribution • Fully regulated by Michigan Public Service Commission • Natural gas distribution • Fully regulated by Michigan Public S
Slide 6: Non-utility operating earnings are regulated or contracted
A substantial portion of our non-utility operating earnings are either regulated or contracted 2018 Earnings Mix • Regulated / contracted earnings consist of: • Electric and gas utilities • FERC regulated gas pipelines • Long-term contracted energy projects • Growth of 5% - 6% at utilities and 15% -
Slide 7: Our business strategy is fundamental to how we create value
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 diversity in earnings and geography Constructive regulatory structure a
Slide 8: Governor Snyder has played a strong role in rebuilding Michigan
Governor Snyder has played a strong role in rebuilding Michigan and its economy Dramatically improved business tax competitiveness (49th to 9th) Eliminated state’s $1.5 billion deficit Driving economic development Reshaping and creating a more efficient state government 8
Slide 9: Michigan economic indicators highlight continued growth
Michigan economic indicators highlight continued growth over the next few years 9 Michigan leads the country in new manufacturing job creation 7.1% 13.4% 8.8% 7.6% 7.1% 2007 2009 2013 2014E 2015E Source: IHS Detroit named one of seven new entrepreneur tech hubs 368 314 353 362 369 2007 2009 2013 201
Slide 10: Committed to delivering 5% to 6% operating EPS growth
2008A 2009A 2010A 2011A 2012A 2013A 2014E 2015E 2016E 2017E 2018E $3.33 $4.09 $3.75 $3.64 $2.12 $2.24 $2.35 $2.48 $2.12 * Reconciliation to GAAP reported earnings included in the appendix We remain committed to delivering 5% to 6% operating EPS* growth (dollars) Operating EPS* 7.2% CAGR 2008-2014 Di
Slide 11: Earnings growth opportunities and contingency planning
Our strong earnings growth opportunities coupled with our contingency planning gives us confidence in our ability to deliver 5% – 6% operating EPS* growth 11 * Reconciliation to GAAP reported earnings included in the appendix Growth of 5% - 6% at utilities and 15% - 20% at non-utilities drives overa
Slide 12: DTE has delivered total shareholder return above market indices
DTE has delivered total shareholder return above market indices 12 19% 21% 27% 12% 15% 14% 16% 11% 3% 14% 19% 8% YTD 3 YR 5 YR 10 YR DTE S&P500 Utilities S&P500 Historical Total Shareholder Return CAGR* * As of April 30, 2014 Source: Bloomberg
Slide 13: Agenda
• Overview • Long-Term Growth Update – Utilities – Non-Utilities • Financial Update • Summary 13
Slide 14: MPSC is the state regulator for electric and gas utilities
Sally Talberg Commissioner Appointed: 7/3/13 Term Ends: 7/2/19 Greg White Commissioner Appointed: 12/4/09 Term Ends: 7/2/15 Source: MPSC website - www.michigan.gov/mpsc - May 2014 • The MPSC establishes fair and reasonable rates and administers fair terms and conditions of service for Michigan’s uti
Slide 15: 2008 energy regulation established a more constructive environment
Energy regulation passed in 2008 established a more constructive regulatory environment Key components of the 2008 Energy Legislation Regulatory Structures Fully Regulated Fully Deregulated Michigan 15 Regulatory Structure Changes • File & Use Rates with 6 month self- implementation • Final order in
Slide 16: Michigan's regulatory environment ranks among the best
Michigan’s regulatory environment ranks among the best in the country Data source: Standard & Poor’s, January 2014 16 MI Strong Strong / Adequate Adequate
Slide 17: Strategies to delay rate case filings
Both utilities have strategies to delay rate case filings to address customer affordability while maintaining financial health 17 Last Rate Order • Amortize first half of revenue decoupler in 1H ’14 and balance in 1H ’15 • File case late 2014 or early 2015; self-implement after 6 months 2014 2015 •
Slide 18: Upward pressure on customer rates will be minimized
Upward pressure on customer rates will be minimized by cost controls, surcharge reductions and load growth $650 million* of surcharge reductions Targeting to stay close to rate neutral though 2018 DTE Electric ~3 year rate case stay out strategy Rate increases below inflation levels DTE Gas
Slide 19: DTE's CI capability leads the industry in cost management
DTE’s CI 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 than 300,000 customer
Slide 20: Profile of DTE Electric
Nuclear 15% Coal 76% Gas & Other 3% Renewable 6% Profile of DTE Electric 20 • Twelfth largest US electric utility with 2.1 million customers • 12,200 square kilometers service territory centered around Detroit • ~$5.2 billion in revenue, $17.4 billion in assets • Regulated by the Michigan Public Ser
Slide 21: Electric utility investing $6.7 billion in three key growth areas
Our electric utility is investing $6.7 billion in three key growth areas through 2018 • Environmental requirements • $280 million in 2014 • Power plant reliability • Expanded distribution reliability program • Advanced Metering Infrastructure • $1.1 billion in 2014 • 10% renewable energy standard by
Slide 22: New natural gas and wind capacity will replace coal retirements
New natural gas and wind capacity will replace coal retirements and increase DTE Electric total average annual investment 22 2014 Coal retirements New gas/wind ~2025 ~11.3 (~2.6) ~3.2 ~11.9 • New capacity by acquisition or new build • Most of spend is after 2018; may need to pull ahead sooner • Woul
Slide 23: Profile of DTE Gas
Profile of DTE Gas 23 • Eighth largest US natural gas utility with 1.2 million customers • 23,500 square kilometers service territory throughout Michigan • Significant state regulated gas storage capacity benefits customers (~139 Bcf) • ~$1.5 billion in revenue, $4 billion in assets Revenue by Type
Slide 24: Gas utility making $1.2 billion of reliability investments
Our gas utility is making $1.2 billion of reliability and pipeline integrity investments through 2018 • Capital recovered through the Infrastructure Recovery Mechanism • ~6,400 kilometers of distribution main to be replaced • $90 million investment in 2014 • Strengthen and expand distribution system
Slide 25: Agenda
• Overview • Long-Term Growth Update – Utilities – Non-Utilities • Financial Update • Summary 25
Slide 26: Gas Storage & Pipelines asset portfolio with multiple growth platforms
Gas Storage & Pipelines is developing an asset portfolio with multiple growth platforms 26 Pipeline Gathering Storage
Slide 27: GSP platforms drive growth through new projects and expansions
Bluestone Gathering • Long-term agreement with Southwestern in Marcellus shale Michigan Gathering • Lateral additions ongoing New Developments • Working with interested parties in Marcellus, Utica and Michigan shales Gas Storage & Pipelines platforms drive growth through new projects and expansions
Slide 28: Bluestone assets continue to attract investment
Our Bluestone assets continue to attract investment • 1Q 2014: Completed Cabot transportation interconnect with Bluestone lateral • 2Q 2014: Expanded Southwestern transportation agreement on Bluestone lateral • Ongoing: Continuing discussions with interested parties Cabot Interconnect 28
Slide 29: NEXUS is an attractive path to bring gas to market
NEXUS is an attractive path to bring Utica and Southwest Marcellus natural gas to market Leading proposed project into Dawn market Utility agreements complete for ~50% capacity; producer negotiations underway Market area is large and liquid Access to 930 Bcf of high quality reef storage Si
Slide 30: Bluestone developments increase 2018 pipeline earnings
2012A 2013A 2014E 2015E 2016E 2017E 2018E $78 - $86 Bluestone developments increase 2018 pipeline earnings to $45 million, closing the gap to Gas Storage & Pipelines’ $130 million operating earnings* * Reconciliation to GAAP reported earnings included in the appendix (millions) Pipeline Platform Gat
Slide 31: Power & Industrial Projects focused in three key business lines
Power & Industrial Projects is focused in three key business lines Wood-fired Plant Cassville, WI • Fuel that reduces emissions from coal-fired plants • 9 units, 5 states • Utility contracted • Utility services at industrial sites • Coke and pulverized coal for steel customers • 36 projects, 11 stat
Slide 32: Power & Industrial Projects 2014 progress
Power & Industrial Projects is executing on its growth plans Industrial Energy Services • Cogen project being constructed to serve Ohio manufacturer expected to commence operations in 3Q • Organic growth generated from 2012 acquisition of on-site energy portfolio Renewables • 45MW waste wood project
Slide 33: Targeting $155 million of operating earnings by 2018
2012A 2013A 2014E 2015E 2016E 2017E 2018E Power & Industrial Projects is targeting $155 million of operating earnings* by 2018 through growth in each of its business lines ~$155 (millions) $35 $70 $85 ($65) $30 $70 New Project Development / Acquisitions Renewable Energy Reduced Emissions Fuel Indust
Slide 34: Systematic approach to evaluate business opportunities
Power & Industrial Projects applies a systematic approach to evaluate business opportunities to achieve premium returns Limited Competition Long-Term Contracts Strong Customer Sites Focus on niche areas where we can capitalize on unique competencies Contract maturities ranging from 5 to 25 years for
Slide 35: Agenda
• Overview • Long-Term Growth Update – Utilities – Non-Utilities • Financial Update • Summary 35
Slide 36: Confident in 2014 operating earnings guidance
We remain confident in our 2014 operating earnings* guidance (millions, except EPS) 1Q 2014 Actuals 2014 Guidance DTE Electric $136 $520 - $530 DTE Gas 129 120 - 126 Gas Storage & Pipelines 21 78 - 86 Power & Industrial Projects 15 75 - 85 Energy Trading $8 $0 Corporate & Other (9) (49) - (45) DTE E
Slide 37: On track to achieve 2014 cash flow guidance
1Q 2014 2014 Actual Guidance Cash From Operations $0.5 $1.6 Capital Spending (0.5) (2.3) Free Cash Flow $0.0 ($0.7) Asset Sales - - Dividends (0.1) (0.5) Net Cash ($0.1) ($1.2) Debt Financing: Issuances $0.2 $2.1 Redemptions (0.1) (0.9) Change in Debt $0.1 $1.2 We are on track to achieve 2014 cash f
Slide 38: Strong balance sheet remains a key priority
2013 2014E * Debt excludes securitization, a portion of DTE Gas’ short-term debt, and considers 50% of the Junior Subordinated Notes as equity Leverage* Funds from Operations / Debt* 2013 2014E 49% 52% Target 50% - 52% 23% 22% Target 20% - 22% Strong balance sheet remains a key priority and supports
Slide 39: 2014–2016 cash from operations and equity issuances plan
39 2014 – 2016 cash from operations and equity issuances plan supports utility capital spend and a strong balance sheet (billions) * Excludes securitization ** Debt excludes securitization, a portion of DTE Gas’ short-term debt, and considers 50% of the Junior Subordinated Notes as equity Equity $0.
Slide 40: Agenda
• Overview • Long-Term Growth Update – Utilities – Non-Utilities • Financial Update • Summary 40
Slide 41: Summary
Summary • Long-term plan supports continued 5% - 6% operating EPS growth • On track to achieve 2014 operating earnings guidance; strong first quarter earnings provides contingency • Constructive regulation, coupled with a focus on operational excellence and strong customer satisfaction, supports mea
Slide 42: Contact Us
Contact Us DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030 42
Slide 43: Appendix
mo DTE Energy: Appendix
Slide 44: DTE Energy First Quarter 2014 Operating Earnings Variance
1Q 2013 1Q 2014 Change DTE Electric 115$ 136$ 21$ DTE Gas 96 129 33 Gas Storage & Pipelines 17 21 4 Power & Industrial Projects 12 15 3 Corporate & Other (13) (9) 4 Growth segments** 227$ 292$ 65$ Growth segments operating EPS 1.30$ 1.64$ 0.34$ Energy Trading 7$ 8$ 1$ DTE Energy 234$ 300$ 66$ Operat
Slide 45: DTE Electric will increase rate base ~$3 billion
$10.7 2011A 2012 - 2014 Rate Base Additions 2014E DTE Electric will increase rate base ~$3 billion since 2011 rate order with no new rates DTE Electric Rate Base* (billions) • Base rates flat over this period • Avoided ~$400 million in rate increases • DTE Electric has continued to earn its authoriz
Slide 46: DTE Electric has delivered consistent growth
DTE Electric has delivered consistent growth 46 Operating Earnings* $380 $484 2009 2013 2014E $793 $1,325 $1,600 2009 2013 2014E $ millions $9.4 $12.4 2009 2013 2014E $13.5 -$13.7 $520 - $530 ~46,200 ~48,400 ~48,600 2009 2013 2014E ** Temperature normalized; sales exclude wholesale contract terminat
Slide 47: DTE Electric plans $6.7 billion of investments
2014E - 2018E Total 2008-2012 Average 2013A 2014E 2015E 2016E 2017E 2018E DTE Electric plans $6.7 billion of investments over the next 5 years $1,325 $1,600 $1,300 $1,100 $1,350 $1,000 * Includes AMI, Ludington expansion and other investments **Includes working capital Base New Generation Other Proj
Slide 48: DTE Electric built or contracted ~890MWs of renewable energy
DTE Electric has built or contracted for approximately 890MWs of renewable energy (850MWs of wind) since 2009 48 L’Anse Warden 17 MW Biomass Baraga County Eagle Valley 3 MW Landfill Gas Oakland County Smiths Creek 3 MW Landfill Gas St. Clair County Stoney Corners 32 MW Wind Missaukee County Gratiot
Slide 49: DTE Gas has delivered consistent growth
DTE Gas has delivered consistent growth 49 Operating Earnings* $80 $143 2009 2013 2014E $167 $209 ~$240 2009 2013 2014E $ millions Capital Expenditures $2.5 $2.9 ~$3.0 2009 2013 2014E Rate Base $ millions $ billions $120 - $126 Total Gas Sales 259 259 282 2009 2012 2013 Bcf * Reconciliation to GAAP
Slide 50: DTE Gas plans $1.2 billion of investments
DTE Gas plans $1.2 billion of investments over the next 5 years 2013A 2014E 2015E 2016E 2017E 2018E $240 $240 $240 $240 $240 2014E - 2018E $500 $700 $1,200 Base Main Renewal, Meter Move-Out, Pipeline Integrity (millions) 50 $2.9B $3.5 - $3.7B YE Rate Base* $95M $114M Depreciation *Includes working c
Slide 51: Gas Storage & Pipelines assets have expansion opportunities
Pipeline Assets Capacity Bcf/ d In-Service Millennium Pipeline 0.8 Future Expansion (planning phase) 0.2 - 0.5 2017 + Total Planned Capacity 1.0 - 1.3 Bluestone Pipeline (bi-directional) 0.6 Expansion #1 0.2 3Q 2014 Expansion #2 0.1 2Q 2015 Expansion #3 0.1 2Q 2016 Total Planned Capacity 1.0 Vector
Slide 52: 1Q 2014 Reconciliation of Reported to Operating Earnings
1Q 2014 DTE Electric DTE Gas Gas Storage and Pipelines Power and Industrial Projects Corporate and Other Growth Segments Energy Trading DTE Energy Reported Earnings 136$ 129$ 21$ 15$ (17)$ 284$ 42$ 326$ NY state tax law change - - - - 8 8 - 8 Mark to market transactions - - - - - - (34) (34) Operati
Slide 53: 1Q 2013 Reconciliation of Reported to Operating Earnings
1Q 2013 DTE Electric DTE Gas Gas Storage and Pipelines Power and Industrial Projects Corporate and Other Growth Segments Energy Trading DTE Energy Reported Earnings 115$ 96$ 17$ 12$ (13)$ 227$ 7$ 234$ Operating Adjustments 1Q 2013 - - - - - - - - Operating Earnings 115$ 96$ 17$ 12$ (13)$ 227$ 7$ 234
Slide 54: 2013 Reconciliation of Reported to Operating Earnings
2013 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 performance measu
Slide 55: 2012 Reconciliation of Reported to Operating Earnings
2012 Reconciliation of Reported to Operating Earnings 2012 DTE Energy DTE Electric DTE Gas Gas Storage and Pipelines Power and Industrial Projects Energy Trading Corporate and Other Unconventional Gas Reported Earnings 610$ 483$ 115$ 61$ 42$ 12$ (47)$ (56)$ Coke oven gas settlement 7 - - - 7 - - - C
Slide 56: 2011 Reconciliation of Reported to Operating Earnings
2011 Reconciliation of Reported to Operating Earnings 2011 DTE Energy DTE Electric DTE Gas Gas Storage & Pipelines Power & Indust. Projects Energy Trading Corporate & Other Unc. Gas Prod. Reported Earnings 711$ 434$ 110$ 57$ 38$ 52$ 23$ (3)$ Michigan Corporate Income Tax Adjustment (87) - - - - - (8
Slide 57: 2010 Reconciliation of Reported to Operating Earnings
2010 Reconciliation of Reported to Operating Earnings * Deferral of previously expensed cost to achieve as allowed for in June 3, 2010 MPSC order (case - U-15985) 2010 DTE Energy DTE Electric DTE Gas Gas Storage & Pipelines Power & Indust. Projects Energy Trading Corporate & Other Unc. Gas Prod. epo
Slide 58: 2009 Reconciliation of Reported to Operating Earnings
2009 Reconciliation of Reported to Operating Earnings 2009 DTE Energy DTE Electric DTE Gas Gas Storage & Pipelines Power & Indust. Projects Energy Trading Corporate & Other Unc. Gas Prod. Reported Earnings 532$ 376$ 80$ 49$ 31$ 75$ (73)$ (6)$ Gain on Sale - gathering and treating assets (before good
Slide 59: 2008 Reconciliation of Reported to Operating Earnings
2008 Reconciliation of Reported to Operating Earnings 2008 DTE Energy DTE Electric DTE Gas Gas Storage & Pipelines Power & Indust. Projects Energy Trading Corporate & Other Unc. Gas Prod. Syn Fuel Reported Earnings 546$ 331$ 85$ 38$ 40$ 42$ (97)$ 87$ 20$ Performance Excellence Process 6 - 4 - 1 1 -
Slide 60: Reconciliation of Other Reported to Operating Earnings
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 meas