Dte Energy Company · NYSE:DTE
Dte Energy — Deutsche Bank Electric Power Conference 2005
23 slides from Dte Energy's conference presentation, Jun 14, 2005
Slide 1: Deutsche Bank Electric Power Conference
Deutsche Bank Electric Power Conference June 14, 2005 Nick Khouri Vice President & Treasurer
Slide 2: Safe Harbor Statement
Safe Harbor Statement The information contained herein is as of the date of this presentation. DTE Energy expressly disclaims any current intention to update any forward-looking statements contained in this document as a result of new information or future events or developments. Words such as "anti
Slide 3: Consistent and Successful Strategy
We Have Maintained and Executed a Consistent and Successful Strategy Maintain a sound regulated utility base that supports an attractive dividend yield Enhance traditional utility growth with an integrated portfolio of non-utility businesses Create and expand businesses that are closely linked to ou
Slide 4: DTE Energy Investment Thesis
DTE Energy Investment Thesis Increased regulatory certainty and earnings recovery at the utilities With the completion of the rate cases earnings are expected to rebound significantly in 2005 Pass through of many costs: Fuel, purchased power, transmission, NOx emissions allowances and uncollectible
Slide 5: DTE Energy Investment Thesis (cont.)
DTE Energy Investment Thesis (cont.) Improving balance sheet strength Expect to reduce parent company debt by $600-700M from 2005-2008 Anticipate improvement in coverage ratios Will actively pursue a ratings upgrade from S&P
Slide 6: Today's Discussion Will Focus on Two Areas
Synfuel Cash Redeployment Detroit Edison's Rate Restructuring Proposal Today's Discussion Will Focus on Two Areas
Slide 7: Synfuel Cash Represents a Substantial Opportunity
Synfuel Cash Represents a Substantial Opportunity 2005 2006 2007 2008 Total 415 900 1360 Cash from Operations 325 365 380 135 1205 Tax Credit Carryforward 90 120 80 120 410 Cash from operations Cash realization of previously earned tax credits ($ millions) $400 $1,200 $420 $490 $460 $260 ~$1,600
Slide 8: 2005-2008 Cash Redeployment Framework
2005-2008 Cash Redeployment Framework Balance Sheet Targets Excess Cash Share Repurchase Growth Investment Our objectives for cash redeployment are: Strengthen coverage ratios to improve current and long-term credit ratings Replace and exceed ~$7.50 of value that synfuel cash flows currently represe
Slide 9: Cash Available for Redeployment After Debt Reduction
Cash Available for Redeployment After Debt Reduction Cash Available for Redeployment ($ millions) $450-500 Cash Available for Redeployment Parent Debt Retirement Target Cash Available for Investment or Stock Buyback $200 $250-300 $1,650 Cash Available for Redeployment Parent Debt Retirement Target C
Slide 10: Potential Investment Opportunities 2005-2008
Potential Investment Opportunities 2005-2008 Power and Industrial Projects Fuel Transportation and Marketing Unconventional Gas Production On-Site Projects $100-150 Steel-Related 50-75 Power Generation 100-150 Waste Coal Recovery 50-100 Antrim Shale $80-120 Barnett Shale 150-250 Pipeline & Storage $
Slide 11: 2005 Investment Opportunity Update
2005 Investment Opportunity Update Looking at 6 site transaction for auto manufacturer, similar to 2004 DaimlerChrysler transaction In negotiations on 2 projects in pulp and paper industry Constructing facility in Vicksburg, Mississippi, to supply multiple pulp and paper mills with petroleum coke as
Slide 12: Antrim Shale unconventional gas experience
Involvement in Antrim shale has given us more than 15 years of unconventional gas experience Leasehold in excess of 290,000 net acres 79,000 net acres undeveloped Own Interest in 1,900 wells Operate 1,400 wells Drill 80-100 wells per year Produce 23 Bcf/year Own 325 Bcf of proven reserves DTE Energy
Slide 13: Position in the Barnett Shale
? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? Building on Our Antrim Expertise, DTE Energy Has Established a Position in the Barnett Shale The Barnett Shale has become a leading unconventional gas field in North America over the last 5 years Largest gas field in Texas with 1.1 Bcfd
Slide 14: Barnett Position Significant Growth Opportunity
Our Barnett Position Could Represent a Significant Growth Opportunity DTE Energy has leased more than 50,000 net acres in the Barnett and continue to add to this position Most of DTE's acreage is located in the southern portion of the expansion area, where other players have aggressively added posit
Slide 15: Detroit Edison's Rate Restructuring Proposal
Synfuel Cash Redeployment Detroit Edison's Rate Restructuring Proposal
Slide 16: Recent Regulatory Success
Recent Regulatory Success Conclusion of MichCon and Detroit Edison rate cases First general rate cases in more than 10 years Largest rate increases in history for either utility Full recovery of previously incurred environmental expenditures at Detroit Edison Established expense tracking mechanisms:
Slide 17: Utility Earnings Expected to Improve Substantially
Utility Earnings are Expected to Improve Substantially 2004 2005E 178 270 20 Detroit Edison Operating Net Income* ($ millions) $178 $270-290 2004 2005E 24 75 10 MichCon Operating Net Income* ($ millions) $24 $75-85 * Reconciliation to GAAP included in the appendix
Slide 18: Current Rate Restructuring Proposal
Current Rate Restructuring Proposal Beginning in 2002, all customers were allowed to choose an alternative electricity provider Historically, Detroit Edison's rates have not been indicative of the actual cost of service: Commercial customers have effectively been subsidizing the residential customer
Slide 19: Electric Choice Remains a Substantial Issue
Q1 Q2 Q3 Q4 Q1 Commercial Secondary 583 738 948 874 748 Commercial Primary / Industrial 1559 1742 1706 1689 1166 Despite Progress, Electric Choice Remains a Substantial Issue GWh Q1 Q2 Q3 Q4 Reflecting the impacts of the final rate order, Choice volumes are down from their peak, but still represente
Slide 20: Detroit Edison Rate Restructuring Proposal
Detroit Edison Rate Restructuring Proposal Intention is to eliminate subsidies in Detroit Edison's rates and eliminate artificial price signals The Rate Restructuring proposal would unbundle rates and establish rates based on actual cost of service for all customers Rate subsidies, either positive o
Slide 21: Status of Rate Restructuring Proposal
Status of Rate Restructuring Proposal On June 9, the MPSC Staff filed testimony on Detroit Edison's Rate Restructuring proposal Key Points Generally supported Edison's unbundling proposal All similarly situated customers pay same distribution rates (both bundled and choice) All similarly situated cu
Slide 22: Appendix
Appendix DTE Energy
Slide 23: Reconciliation of Operating Earnings to Reported Earnings
Reconciliation of Total Year Operating Earnings to Reported 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 pe
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