Dte Energy Company · NYSE:DTE
Dte Energy — EEI Financial Conference 2013
53 slides from Dte Energy's conference presentation, Nov 8, 2013
Slide 1: EEI Financial Conference
EEI Financial Conference Gerry Anderson – Chairman and CEO November 10 - 12, 2013 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: Overview, Long-Term Growth Update, Summary
• Overview • Long-Term Growth Update – Utilities – Non-utility businesses • Summary 3
Slide 4: DTE Energy is an integrated energy company
DTE Electric DTE Gas DTE Energy is an integrated energy company 4 Complementary Non-Utility Businesses Strong, Stable and Growing Utilities • Electric generation and distribution • 2.1 million customers • Fully regulated by Michigan Public Service Commission • Natural gas distribution • 1.2 million
Slide 5: A substantial portion of non-utility earnings are regulated or contracted
A substantial portion of our non-utility operating earnings are either regulated or contracted 5 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 6: Our system of priorities is fundamental to how we create value
Our system of priorities is fundamental to how we create value for our investors 5% - 6% Annual EPS Growth Attractive Dividend Strong Balance Sheet 6
Slide 7: Committed to growth targets; narrowed 2014 outlook range
2008A 2009A 2010A 2011A 2012A 2013E 2014E 2015E 2016E 2017E 2018E $2.62 7 $3.33 $4.05 $3.75 $3.64 $2.12 $2.24 $2.35 $2.48 Guidance Midpoint $2.12 * Reconciliation to GAAP reported earnings included in the appendix We remain committed to delivering on our growth targets and have narrowed our 2014 out
Slide 8: DTE EPS growth versus analyst expectations
0% 5% 10% 15% 0% 5% 10% 15% A CT U A L E P S G ro w th Rate 2 0 0 8 - 2 0 1 2 Analyst EPS Growth FORECAST Actual Earnings Growth Below Expectations DTE 8 Exceeded Growth Expectations DTE’s 2008-2012 EPS growth of ~8% was significantly higher than the market’s original expectations of 5% Source: Base
Slide 9: DTE Energy has many catalysts for strong future growth
DTE Energy has many catalysts for strong future growth opportunities 9 Constructive REGULATORY environment Michigan’s economic recovery Long-term non-utility growth Long-term utility growth
Slide 10: DTE Earnings Growth 2013E - 2018E
DTE Earnings Growth 2013E - 2018E DTE Operating EPS Growth 2013E - 2018E 1% - 2% Non-Utilities Our strong earnings growth opportunities coupled with our contingency planning gives us confidence in our ability to deliver 5% – 6% operating EPS* growth 10 ~9% 5% - 6% 4% Utilities * Reconciliation to GA
Slide 11: Taking steps to minimize the rate impact on customers
11 As we continue to grow, we are taking steps to minimize the rate impact on customers Lower Surcharges Structural Cost Reductions Continuous Improvement Reliability Investments Cost Pressure Environmental Investments Customer Rates Upward pressure on customer rates being minimized by cost control
Slide 12: Utility rate strategies minimize new rate filings
Utility rate strategies minimize new rate filings and their impacts on our customers 12 DTE Electric DTE Gas • Periodic rate cases to support investment profile • Surcharge reduction* provides $450 million offset • Next steps include filing mid-2014; self-implement early 2015 • Targeting to stay as
Slide 13: Continuous improvement leads 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 14: Utility O&M has remained flat over the past 10 years
2003A 2013E Utility O&M*, including 2013 reinvestment, has remained flat over the past 10 years 14 (millions), pre-tax * Excludes bad debt expense, LIEEF, Energy Optimization and Renewable Energy Program $1,587 Avoided inflation ~$500 million ~$1,590 Reinvestment
Slide 15: Overview, Long-Term Growth Update, Summary
• Overview • Long-Term Growth Update – Utilities – Non-utility businesses • Summary 15
Slide 16: Electric utility investing in three key growth areas through 2018
Our electric utility is making significant investments in three key growth areas through 2018 16 • Environmental requirements • $300 million in 2014 • Power plant reliability • Expanded distribution reliability program • Advanced Metering Infrastructure • $1 billion in 2014 • 10% renewable standard
Slide 17: Plant modernization and energy policy transform generation mix
DTE Energy Coal Fleet (MW of Capacity) Long-term Units ~4,400 MW Potential Retirements ~2,600 MW Plant modernization and energy policy drive investments that will transform our generation mix over the next decade 17
Slide 18: DTE Electric capital investments after 2018 may exceed near-term levels
As a result, DTE Electric capital investments after 2018 may exceed near-term levels (billions) Average Annual Investments ~$1.3 - $2.0 ~$1.3 2014E - 2018E 2019E - 2023E 18 Potential increase due to new regulations / policies
Slide 19: Gas utility reliability and pipeline integrity investments through 2018
Our gas utility continues to make reliability and pipeline integrity investments through 2018 19 • Capital recovered through the Infrastructure Recovery Mechanism • ~4,000 miles of distribution main to be replaced • $80 million investment in 2014 • Strengthen and expand distribution system • Continu
Slide 20: Overview, Long-Term Growth Update, Summary
• Overview • Long-Term Growth Update – Utilities – Non-utility businesses • Summary 20
Slide 21: Gas Storage & Pipelines asset portfolio with multiple growth platforms
21 Gas Storage & Pipelines is developing an asset portfolio with multiple growth platforms Pipeline Gathering Storage
Slide 22: Our Bluestone assets continue to attract investment
Expanded Gathering Scope Our Bluestone assets continue to attract investment 22 • 3Q 2013: expanded scope of Southwestern gathering to include additional acreage in Susquehanna County • 1Q 2014: Cabot transportation interconnect with Bluestone lateral • Ongoing: Continuing discussions with other int
Slide 23: Gas Storage and Pipelines portfolio of investment opportunities
Gas Storage and Pipelines has a portfolio of investment opportunities that drive earnings growth 23 • Build-out Bluestone gathering • Bluestone lateral expansion • Millennium expansion II • Continue build-out of Bluestone gathering • NEXUS • Other gatherings and pipeline expansions • Vector expansio
Slide 24: Gas Storage & Pipelines operating earnings potential of $130 million by 2018
2013E 2014E 2015E 2016E 2017E 2018E $76 - $84 Gas Storage & Pipelines operating earnings* potential of $130 million by 2018 * Reconciliation to GAAP reported earnings included in the appendix (millions) Pipeline Platform Gathering Platform Storage Platform New Project Development 24 $1.0 - $1.3 bill
Slide 25: Power & Industrial Projects focused in three key business lines
Power & Industrial Projects is focused in three key businesses lines 25 Wood-fired Plant Cassville, WI • Fuel that reduces emissions from coal-fired plants • 9 units, 4 states • Utility contracted • Utility services at industrial sites • Coke and pulverized coal for steel customers • 42 projects, 11
Slide 26: Systematic approach to evaluate opportunities for premium returns
Power & Industrial Projects applies a systematic approach to evaluate business opportunities to achieve premium returns 26 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
Slide 27: Power & Industrial targeting $155 million operating earnings by 2018
2013E 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 27 ~$155 (millions) $35 $70 $85 ($65) $30 $60 - $70 New Project Development / Acquisitions Renewable Energy Reduced Emissions Fuel Ind
Slide 28: Overview, Long-Term Growth Update, Summary
• Overview • Long-Term Growth Update – Utilities – Non-utility businesses • Summary 28
Slide 29: Summary
Summary 29 • On track to achieve 2013 operating EPS guidance • 2014 outlook supports ~7% operating EPS growth over midpoint of 2013 original guidance and 5.4% over current guidance • Constructive regulation, coupled with a focus on operational excellence and strong customer satisfaction, supports me
Slide 30: Contact Us
Contact Us 30 DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030
Slide 31: Appendix
mo DTE Energy: Appendix
Slide 32: Narrowed 2013 guidance range, maintained $4.05 EPS midpoint
We have narrowed our 2013 guidance* range and maintained our $4.05 EPS midpoint target 2013 Guidance Drivers Prior Guidance* (millions, except EPS) DTE Electric $383 $480 - $490 DTE Gas 91 115 - 120 Gas Storage & Pipelines 49 65 - 70 Power & Industrial Projects 50 60 - 70 Energy Trading (1) 10 - 30
Slide 33: Revised 2014 Outlook
Prior 2014 Outlook* (millions, except EPS) DTE Electric DTE Gas Gas Storage & Pipelines Power & Industrial Projects Energy Trading Corporate & Other DTE Energy Operating EPS* Avg. Shares Outstanding * Reconciliation to GAAP reported earnings included in the appendix 33 2013 Guidance* Revised 2014
Slide 34: Increased 2013 cash flow guidance
2013 2013 Prior Revised Guidance Guidance Cash From Operations* $1.8 $1.9 Capital Spending (2.2) (2.1) Free Cash Flow ($0.4) ($0.2) Asset Sales - - Dividends (0.4) (0.4) Net Cash ($0.8) ($0.6) Debt Financing: Issuances $1.6 $1.4 Redemptions (0.8) (0.8) Change in Debt $0.8 $0.6 We have increased our
Slide 35: 2014-2016 sources and uses of cash
Uses 35 2014 – 2016 cash from operations and equity issuances plan supports utility capital spend and a strong balance sheet • Annual equity issuances $200 - $300 million • Leverage target** 50% – 52% • FFO / Debt** target 20% – 22% (billions) * Excludes securitization ** Debt excludes securitizatio
Slide 36: Michigan economic indicators highlight continued growth
Michigan economic indicators highlight continued growth over the next few years 36 Michigan leads the country in new manufacturing job creation 1,144 1,578 1,912 2,252 2,452 2,342 2,611 2009 2010 2011 2012 2013E 2014E 2015E Increased Auto Production (000s) 13.4% 12.7% 10.4% 8.9% 8.7% 8.3% 7.4% 2009
Slide 37: Michigan's economy thrives on a favorable business climate
Michigan’s economy thrives on a favorable business climate 37 Competitive tax structure Flat 6% Corporate Income Tax among the lowest in the nation and has reduced business costs by 83% $150 million in incentives and assistance annually, along with an additional $100 million available to loan small
Slide 38: Detroit companies launch national campaign
Leaders of 28 Detroit companies (with a combined market cap of $250 billion) launched a national campaign, advertising their commitment to the city 38
Slide 39: 2008 energy regulation established constructive regulatory 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 39 Regulatory Structure Changes • File & Use Rates with 6 month self- implementation • Final order in
Slide 40: Michigan Public Service Commission
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 - July 2013 • The Michigan Public Service Commission is composed of three members appointed by the Governor with the advice and con
Slide 41: DTE Coal Fleet Plans through 2020
Long-term units 4,410 MW Medium- term units 2,420 MW Pending EPA regulations 650 MW Short-term units 203 MW DTE Coal Fleet Plans through 2020 (MW of Capacity) Much of the longer-term investment will be tied to the ongoing transformation of our generation fleet Long-term units • Continued long-term i
Slide 42: DTE Electric renewable energy built or contracted since 2009
DTE Electric has built or contracted for approximately 870MWs of renewable energy (830MWs of wind) since 2009 42 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 43: DTE Electric plans over $6.5 billion of investments
2008-2012 Average 2013E 2014E 2015E 2016E 2017E 2018E DTE Electric plans over $6.5 billion of investments over the next 5 years $1,450 $1,550 $1,300 $1,100 $1,350 $1,000 * Includes AMI, Ludington expansion and other investments **Includes working capital Base New Generation Other Projects* Environme
Slide 44: DTE Gas plans over $1 billion of investments
DTE Gas plans over $1 billion of investments over the next 5 years 2013E 2014E 2015E 2016E 2017E 2018E $240 $240 $240 $240 $240 2014E - 2018E $400 $800 $1,200 Base Main Renewal, Meter Move-Out, Pipeline Integrity (millions) 44 $2.8B $3.5 - $3.7B YE Rate Base* $96M $114M Depreciation *Includes workin
Slide 45: Gas Storage & Pipelines platforms drive growth
Bluestone Pipeline • 0.6 Bcf/d to Millennium and Tennessee pipelines; expanding in 2014 Millennium Pipeline • 1Q 2014 expansion; total capacity over 0.8 Bcf/d Vector Pipeline • 1.3 Bcf/d from Chicago to Dawn, Ontario Proposed NEXUS Pipeline • 1 Bcf/d from western Marcellus and central / northern Uti
Slide 46: Reduced Emissions Fuel earnings contribution should continue to grow
Reduced Emissions Fuel earnings contribution should continue to grow 46 2012A 2013E 2014E - 2018E • Operations target met at five placed units • 6th unit operational at year end • 7th unit operational Sept 2013 • Agreement signed for 8th unit; marketing remaining unit • Optimizing operations • Conti
Slide 47: Reconciliation of Reported to Operating Earnings 2013 Quarterly Views
Reconciliation of Reported to Operating Earnings 2013 Quarterly Views 1 Asset impairment Note: Quarterly earnings per share may not equal full year totals, since quarterly computations are based on weighted average common shares outstanding during each quarter $ EPS Reported Earnings Operating Adjus
Slide 48: Reconciliation of 2012 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 measurement for external communications with analysts and i
Slide 49: 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 measurement for external communications with analysts and i
Slide 50: Reconciliation of 2010 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 measurement for external communications with analysts and i
Slide 51: Reconciliation of 2009 Reported to Operating Earnings
Reconciliation of 2009 Reported to Operating Earnings 51 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 52: Reconciliation of 2008 Reported to Operating Earnings
Reconciliation of 2008 Reported to Operating Earnings 52 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 53: 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