Dte Energy Company · NYSE:DTE
Dte Energy — Corporate Update (June 2017)
47 slides from Dte Energy's corporate update, Jun 13, 2017
Slide 1: Business Update
Click to edit Master title style Business Update Australian Investor Meetings June 13-14, 2017 1
Slide 2: Safe Harbor Statement
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 associate
Slide 3: Overview, Long-Term Growth Update, Financial Update, Summary
• Overview • Long-Term Growth Update • Financial Update • Summary 3
Slide 4: DTE Energy overview
DTE Energy overview Leader in $924M - $980M ~$20B 2017 operating earnings* continuous market cap guidance improvement Success tied to Fortune 300 Employees volunteered our system of company 10,000 over 21,000 hours to employees 300+ organizations priorities in 2016 Top quartile DTE is Michigan’s Mic
Slide 5: Growth is driven by strong, stable utilities and complementary non-utility businesses
Growth is driven by strong, stable utilities and complementary non-utility businesses Growth driven by infrastructure investments 75%-80% Utility aimed at improving customer reliability DTE Electric DTE Gas • Electric generation • Natural gas and distribution transmission, storage and distribution •
Slide 6: Our business strategy is fundamental to creating value for investors
Our business strategy is fundamental to creating value for investors Infrastructure investments drive 5%-7% regulated utility growth Operating EPS* growth target Strategic and transparent growth opportunities in non-utility businesses provide diversity in earnings and ~7% dividend growth targete
Slide 7: Employee and customer focus provides a solid framework for success
Employee and customer focus provides a solid framework for success Received Gallup’s Great Top quartile in residential Work Place Award for the 5th customer satisfaction* for both consecutive year DTE Electric and DTE Gas Received AGA Safety Achievement Award for the 2nd year in a row * J.D. P
Slide 8: Continuous improvement has enabled us to be an industry leader in cost management
Continuous improvement has enabled us to be an industry leader in cost management 2008 to 2015 Change in O&M Costs Electric Peers* Daily focus on problem solving 82% Metrics drive progress DTE Electric -3% Average 34% Scorecards monitor success Gas Peers** 92% DTE Gas -5% Average 22% * Source: S
Slide 9: Maintain customer affordability while significantly investing in our utilities
Maintain customer affordability while significantly investing in our utilities (dollars) Average Annual Residential Bill Average Annual Residential Bill* DTE Electric DTE Gas $1,223 $1,200 Flat $910 $826 9% 2012 2013 2014 2015 2016 2017E 2012 2013 2014 2015 2016 2017E * Assumes normal weather 9
Slide 10: Michigan's regulatory environment is one of the best in the United States
Michigan’s regulatory environment is one of the best in the United States Minimal regulatory lag Solid ROEs Unique recovery mechanisms Top Tier Source: Barclays, February 2017 10
Slide 11: Michigan's energy legislation is beneficial for both customers and utilities
Michigan’s energy legislation is beneficial for both customers and utilities Capacity requirement for retail open access (ROA) providers 10% ROA cap Certificate of need (CON) / integrated resource plan (IRP) 10-month rate case cycle 15% renewable standard by 2021 100% ownership of increm
Slide 12: Overview, Long-Term Growth Update, Financial Update, Summary
• Overview • Long-Term Growth Update • Financial Update • Summary 12
Slide 13: Growth through 2021 fueled by investment in utility infrastructure and generation
Growth through 2021 fueled by investment in utility infrastructure and generation along with midstream opportunities $13.5 billion 2017 – 2021 Capital Plan Electric ................ $8.4 billion Distribution infrastructure, maintenance, new generation +12.5% Gas ...................... $1.8 billion 2
Slide 14: DTE Electric overview
DTE Electric overview 47,000 miles distribution lines Transitioning to cleaner energy $610M - $624M DTE Electric service territory $15.6B 2017 operating 2016 rate base earnings* guidance 2.2M customers $8.4B Founded 5 year capital plan 1886 (2017-2021) * Reconciliation of operating earnings (non-GAA
Slide 15: Generation and distribution infrastructure replacement will continue to improve service
Generation and distribution infrastructure replacement will continue to improve service to customers over the next 10 years DTE Electric Investment $7.4 billion $8.4 billion $9.8 billion 2012 – 2016 2017 – 2021 2022 – 2026 New generation • Replace remaining coal with cleaner energy Distribution infr
Slide 16: Transformation of our generation fleet is driven by the age of our coal plants
Transformation of our generation fleet is driven by the age of our coal plants and environmental regulations Electric Capacity Shift (% of GW) Nuclear/Other 15% 15% • Retirement of all coal plants 15% Renewables 10% by 2040 with capacity 15%- replaced with combination of Gas 22% 30% 40%- natural gas
Slide 17: Committed to providing cleaner energy and will be coal-free by 2040
Committed to providing cleaner energy to our customers and will be coal-free by 2040 2017 - 2023 Retirements* 2024 - 2030 2031 - 2040 River Rouge St. Clair Trenton Belle River Monroe ~2,100 MW ~1,000 MW ~3,100 MW Additions* Natural Gas Wind Solar Up to ~ 9,500 MW** * Timing and mix subject to change
Slide 18: Distribution investments continue to drive reliability and increase customer satisfaction
Distribution investments continue to drive reliability and increase customer satisfaction Infrastructure Resilience Infrastructure Redesign • Upgraded nearly 20% • Major investments of circuits since 2013 planned at 20-25 • Impact 33% of circuits substations by 2021 by the end of 2020, to address lo
Slide 19: DTE Gas overview
DTE Gas overview Replacing $3.7B 4,000 miles of cast iron and 2016 rate base unprotected distribution main 19,000 miles distribution main $1.8B 5 year capital plan (2017-2021) DTE Gas service territory $143M – $151M 139 Bcf Founded 2017 operating storage 1849 1.3M earnings* guidance capacity custome
Slide 20: Infrastructure renewal and replacement improves service to customers over the next 10 years
Infrastructure renewal and replacement improves service to customers over the next 10 years DTE Gas Investment $1.4 billion $1.8 billion $1.7 billion 2012 – 2016 2017 – 2021 2022 – 2026 NEXUS related compression Main replacement • Strengthen gas infrastructure by reducing planned main replacement cy
Slide 21: Replacing aging infrastructure achieves a fundamental shift in performance at DTE Gas
Replacing aging infrastructure achieves a fundamental shift in performance, cost and productivity at DTE Gas Pipeline Integrity Main Replacement Meter Move Out • Strengthens the • Systematically replaces • Drives productivity - system - decreasing poor performing reducing manual meter the potential
Slide 22: Gas Storage & Pipelines (GSP) overview
Gas Storage & Pipelines (GSP) overview Transport, store and gather ??? natural gas 5 pipelines, 1,600 miles of pipe and gathering lines $2.2B – $2.8B 5 year capital plan (2017-2021) $140M – $150M Serves markets in $90Bcf 91 – 100M 2017 operating Midwest, Northeast, 2017 Operating ofEarnings storage
Slide 23: Asset portfolio with multiple growth platforms
Asset portfolio with multiple growth platforms Michigan Growth Platforms Gathering Purposefully located in the D best geology in North America D ‒ Millennium Pipeline ‒ Bluestone Pipeline & DTE Storage Gathering DTE Gas Bluestone Pipeline & Gathering ‒ Link* Lateral & Gathering ‒ NEXUS Pipeline Mi
Slide 24: Pipeline and gathering platforms provide unique opportunities and synergies
Pipeline and gathering platforms provide unique opportunities and synergies for long-term growth Link* Lateral & Gathering NEXUS • Renegotiated agreement with key • Targeting year-end 2017 in-service shipper date with second quarter FERC – Significantly extends contract certificate duration • Earnin
Slide 25: Focused on continued success in pipeline and gathering platforms
Focused on continued success in pipeline and gathering platforms Near-Term • Earnings growth driven by both Operating earnings* pipeline and gathering platforms 2016 Actual $127 million • Pursuing additional investment opportunities 2017 Guidance $140-$150 million Long-Term • Growth drivers Operatin
Slide 26: Power & Industrial Projects (P&I) overview
Power & Industrial Projects (P&I) overview 68 sites Industrial energy $90M – $100M in 17 states services, 2017 operating renewable energy, earnings* guidance and environmental controls $0.6B – $1.0B 191 MW 5 year capital plan (2017-2021) 191 MW renewable plant renewable plant capacity capacity * Rec
Slide 27: Operate three distinct business lines across the United States
Operate three distinct business lines across the United States Reduced Emissions Fuel Renewable Energy Industrial Energy Services (REF) • Wood-fired power plants • On-site utility services for • Projects to reduce • Landfill gas to energy industrial and commercial emissions from coal-fired conversio
Slide 28: Focused on strategic opportunities for future growth
Focused on strategic opportunities for future growth Near-Term Operating earnings* • Closed on two landfill gas projects 2016 Actual • Finalize combined heat and power $95 million project • Pursue additional investment 2017 Guidance opportunities $90-$100 million Long-Term • Identify and execute on
Slide 29: Overview, Long-Term Growth Update, Financial Update, Summary
• Overview • Long-Term Growth Update • Financial Update • Summary 29
Slide 30: Manage the business through established base, lean and invest plans
Manage the business through established base, lean and invest plans Invest FAVORABLE WEATHER Base UNFAVORABLE WEATHER Lean • Along with our base plan, we enter each year with prepared “lean” and “invest” plans • Developing three plans allows us to be flexible and adapt to external forces such as wea
Slide 31: Focus on continuing our strong financial performance
Focus on continuing our strong financial performance (dollars per share) $5.28 $5.31 $5.14 $5.25 Strong track record of $4.93 Growth Growth meeting or exceeding original Segments Segments guidance; targeting 11th consecutive year in 2017 $3.30 $3.08 Operating EPS* growth target of 5% - 7% Targ
Slide 32: Consistently provide value to shareholders
Consistently provide value to shareholders Annualized Dividend per Share Total Shareholder Return* (dollars per share) $3.30 DTE Energy S&P 500 Utilities 220% $2.35 Top quartile 131% 130% 91% 2011 2012 2013 2014 2015 2016 2017 5-YR 10-YR Over 100 consecutive years of Top quartile of S&P 500 Utilitie
Slide 33: Cash flow and balance sheet remain strong
Cash flow and balance sheet remain strong Leverage* Target 50% - 53% 51% • Acquisition related equity of $675 million in late 2019 (through convertible equity units) ‒ No additional equity planned 2016 2017-2019E through 2019 Funds from Operations** / Debt* • $2 billion of available liquidity at Mar
Slide 34: Overview, Long-Term Growth Update, Financial Update, Summary
• Overview • Long-Term Growth Update • Financial Update • Summary 34
Slide 35: Summary
Summary • On track to achieve 2017 operating EPS* guidance • Utility growth plan driven by infrastructure investments focused on improving reliability and the customer experience • Strategic and sustainable growth in non-utility businesses • Strong balance sheet metrics • EPS and dividend growth dri
Slide 36: Appendix
Appendix oe DTE Energy 36
Slide 37: 2017 operating EPS guidance supports 5% - 7% growth
2017 operating EPS* guidance supports 5% - 7% growth (millions, except EPS) 2016 2017 Actuals Guidance DTE Electric $622 $610 - $624 • 2017 operating EPS growth DTE Gas 138 143 - 151 segment guidance midpoint growing 6.5% from 2016 Gas Storage & Pipelines 127 140 - 150 original guidance of $4.93 Pow
Slide 38: Cash flow and capital expenditures guidance underpins growth target
Cash flow and capital expenditures guidance underpins growth target (billions) (millions) Cash Flow Capital Expenditures 2016 2017 2016 2017 Actual Guidance Actual Guidance Cash from operations $2.1 $1.9 DTE Electric Distribution infrastructure $567 $690 Capital expenditures (3.4) (3.0) New generati
Slide 39: Recognized by ESG analysts for our sustainability efforts
Recognized by environmental, social and governance analysts for our sustainability efforts • Environmental Leadership ‒ Generation portfolio shift to gas and renewables (including one of the largest solar arrays east of the Mississippi) ‒ Greenhouse gas reduction program in place with targets and de
Slide 40: Committed to producing cleaner energy
Committed to producing cleaner energy Coal-free by Since 2005, we have reduced CO2 by 26%, SO2 2040 by 76% and mercury emissions by 86% Generated more than 3.4 million MWh of renewable electricity in 2016 Carbon emissions reduction goals -20% -45% -75% -80% 2005 2020 2030 2040 2050 40
Slide 41: Positive trends continue with Michigan's economy
Positive trends continue with Michigan’s economy Unemployment Rate 8.5% 7.1% Lowest unemployment in 5.4% 4.9% 4.9% Michigan since 2000 2013 2014 2015 2016 2017E Gross State Product 7th top state for business* (billions) $414 $421 $429 $437 Michigan has the highest $407 number of manufacturing jobs s
Slide 42: Regulatory update
Regulatory update DTE Electric DTE Gas • Annual rate cases 2018+ • Expect rate case filing in 1-2 years • 1Q 2017 order (U-18014) • 4Q 2016 order (U-17999) – $184 million – $122 million – 10.1% ROE – 10.1% ROE • Filed rate case April 19, 2017 (U-18255) – Requested rate recovery: $231 million – Test
Slide 43: The Michigan Public Service Commission (MPSC) is the state regulator
The Michigan Public Service Commission (MPSC) is the state regulator for electric and gas utilities • The MPSC establishes fair and reasonable rates and administers terms and conditions of service for Michigan’s utility customers • The MPSC is composed of three members appointed by the Governor with
Slide 44: DTE Electric plans $8.4 billion of investments over the next 5 years
DTE Electric plans $8.4 billion of investments over the next 5 years with a focus on increasing customer reliability (millions) Targeting 6% - 7% growth $8,400 $1,840 $1,800 $1,700 New $1,600 $2,000 generation $1,503 $1,460 Distribution $3,200 infrastructure Replacement $3,200 and other* 2016A 2017E
Slide 45: Customer reliability will be improved through $1.8 billion of planned investments at DTE Gas
Customer reliability will be improved through $1.8 billion of planned investments over the next 5 years at DTE Gas (millions) Targeting 7% - 8% growth $1,800 $435 $100 NEXUS related $395 $375 Main $330 $330 $330 $700 replacement* Base $1,000 infrastructure 2016A 2017E 2018E 2019E 2020E 2021E 2017E -
Slide 46: Reconciliation of reported to operating earnings (non-GAAP)
Reconciliation of reported to operating earnings (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 performance
Slide 47: 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 repres