Dte Energy Company · NYSE:DTE
Dte Energy — Non-Deal Roadshow (December 2008)
43 slides from Dte Energy's roadshow presentation, Dec 5, 2008
Slide 1: New York Investor Meetings
New York Investor Meetings December 5, 2008 Anthony F. Earley, Chairman and CEO Nick Khouri, Vice President and Treasurer
Slide 2: Safe Harbor Statement
3 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 "an
Slide 3: DTE Energy is an Integrated Energy Company
5 Gas Midstream Power & Industrial Projects Unconventional Gas Production Detroit Edison MichCon DTE Energy is an Integrated Energy Company Complementary Non-Utility Businesses Strong, Stable and Growing Utilities Electric generation and distribution 2.2 million customers Fully regulated by Michigan
Slide 4: DTE Energy: A Focused, Integrated Energy Strategy
7 Execute strong regulated growth plan DTE Energy: A Focused, Integrated Energy Strategy Execute value-focused non-utility plan Continue to pay an attractive dividend Realize projected utility earnings growth Long-term: 5 - 6% per year average Effectively incorporate renewable energy, environmental
Slide 5: Execute Strong Utility Growth Plan
Execute Strong Utility Growth Plan
Slide 6: Legislation is a Historic Step in Improving Michigan's Energy Policies
11 Legislation is a Historic Step in Improving Michigan's Energy Policies Creates constructive regulatory environment Enables billions of dollars of investment in the State of Michigan Creates significant permanent jobs to spur Michigan's economy Provides lower cost solution for customers The Bills
Slide 7: Legislation Strengthens Michigan's Regulatory Framework
Reduces uncertainty for the utility by certifying need, reasonableness and prudence of investments Certificate of Need Process Ensures Michigan has enough power to meet future needs by improving supply, affordability and reliability Improves the effectiveness and timeliness of ratemaking Electric Ch
Slide 8: Legislation Establishes a Renewable Energy Program with Unique Characteristics
2009 2010 2011 2012 2013 2014 2015 East 0.01 0.01 0.01 0.03 0.04 0.060000000013148 0.1 West Legislation Establishes a Renewable Energy Program with Unique Characteristics 3% 4% 6% 10% Potential investment of over $1B to reach 10% RPS by 2015 % Renewables Detroit Edison - Renewable Portfolio Standard
Slide 9: DTE Energy has Proactively Initiated Wind Development
DTE Energy has Proactively Initiated Wind Development More than 42,000 acres of easements under contract by DTE Six operating meteorological stations collecting wind and weather data Wildlife studies and aviation restriction evaluations underway Applied for MISO interconnection at three locations 17
Slide 10: Energy Optimization Programs Provide Additional Growth Opportunities
EO includes energy efficiency, demand response and conservation EO investments with an economic life greater than one year may capitalized Working to determine expenditure levels, expect to spend $50 - 100 million at the utilities Targeted annual savings of 1% for electric sales by 2012 Targeted ann
Slide 11: Renewable Energy and Energy Optimization Programs will be Implemented in 2009
Renewable Energy and Energy Optimization Programs will be Implemented in 2009 Regulatory Timeline Oct 2008 Dec 2008 Feb 2009 Apr 2009 MPSC issues preliminary order on RPS/EO guidelines (within 60 days following passage of legislation) Detroit Edison files RPS/EO plan (within 90 days following MPSC o
Slide 12: Additional State and Federal Regulations Drive Significant Environmental Investment
Additional State and Federal Regulations Drive Significant Environmental Investment Reduces SO2 emissions Reduces mercury emissions Reduces NOx emissions Reduces mercury emissions when combined with Flue Gas Desulfurization Reduces temperature of water discharge Protects wildlife located in waters a
Slide 13: New Base Load Generation and Potential Carbon Legislation Drive Longer Term Growth
New Base Load Generation and Potential Carbon Legislation Drive Longer Term Growth Michigan's Future Energy Needs Drive Longer Term Investments in New Base Load Generation License application submitted for new nuclear unit in September 2008 NRC approval expected no earlier than 2012 Actual capital e
Slide 14: 2009-2013 Capital Outlook
27 1st Qtr Infrastructure 3856 Environmental Controls 1244 Renewable Energy / Energy Efficiency 1099 MichCon 800 Detroit Edison Infrastructure Investments Environmental Compliance Renewable Energy 2009 - 2013 Capital Outlook MichCon Capital Disallowance Renewable Energy plan pre-approved by MPSC His
Slide 15: We Have a Strong Regulatory Structure in Place to Manage Economic Risk
1st Qtr 25.8 25.7 25.8 1st Qtr 25.8 25.7 25.8 29 We Have a Strong Regulatory Structure in Place to Manage Economic Risk Detroit Edison Service Area: Electric Sales (GWh) Temperature Normalized Includes Electric Choice 39.8 Q3 2007 Q3 2008 40.2 Down over 1% YTD 2008 Detroit Edison Service Area: % of
Slide 16: Cost Efficiency Reduces the Need for Rate Increases
Cost Efficiency Reduces the Need for Rate Increases Continuous improvement helps mitigate unfavorable economic conditions and uncertain future cost pressures 31 Illustrative customer rate impact from sustained cost savings and high capital investment Revenue Deficiency Revenue Sufficiency Increasing
Slide 17: Execute Value Focused Non-Utility Growth Plan
Execute Value Focused Non-Utility Growth Plan
Slide 18: Non-Utility Investment Focused on Three Key Areas
35 Non-Utility Investment Focused on Three Key Areas Transport and store natural gas 89 Bcf non-utility natural gas storage 348 miles of pipeline in service; 186 miles under construction Power & Industrial Projects Gas Midstream Unconventional Gas Production Western Barnett Shale gas production in T
Slide 19: Disciplined Non-Utility Investment Approach Focused on Value Creation
37 2007A MichCon 236 GSPP We Have a Disciplined Non-Utility Investment Approach Focused on Value Creation and Premium Returns 2008E Operating Earnings* Expect to invest $200-$300 million annually Expand existing assets Vector Pipeline Shelby Storage New investments Millennium Pipeline Storage Optimi
Slide 20: Unconventional Gas is Expected to Play an Increasingly Important Role
39 Source: Wood Mackenzie; EIA; CERA; DTE Analysis U.S. Supply - Past Forecast (2005) Unconventional Conventional LNG Imports from Canada U.S. Supply - Current Forecast Unconventional Conventional LNG Imports from Canada Bcf/d Forecast Bcf/d Forecast Unconventional Gas is Expected to Play an Increas
Slide 21: Gas is Expected to Flow to the Midwest and Onward to the Northeast
Gas is Expected to Flow to the Midwest and Onward to the Northeast from Several Sources Potential Key Unconventional Gas Supply Flows (2008-2015) Flows to the Midwest from the Rockies, Texas, and Gulf Coast will create supply that will be positioned to access markets in the Northeast In addition, de
Slide 22: DTE's Pipeline and Storage Infrastructure Well Positioned for New Gas Supply Flows
DTE's Pipeline and Storage Infrastructure is Well Positioned to Capture Value from the New Gas Supply Flows Vector MichCon Chicago Empire Dawn TCPL Millennium Ontario New York Quebec Pennsylvania Ohio Michigan Indiana DTE Gas Pipeline and Storage Investment Opportunities NY City Virginia West Virgin
Slide 23: Power & Industrial Projects Provide Utility-Like Services
Industrial Solid Fuels Product Value: Quality coke production and supply for steel- making Cost savings via substituting pulverized coal and petcoke for higher priced natural gas On-Site Energy Services Product Value: Labor savings, fuel / energy savings, O&M efficiency Lower energy costs for indust
Slide 24: Barnett Shale Properties Positioned to Produce Future Shareholder Value
Time, Capital Relative Value Unproven Acreage Initial Development Full Development ILLUSTRATIVE Barnett Core (sold) Western Barnett Mature Less Mature Concentrating on moving Western Barnett assets up the value curve Development of Western assets is progressing Economic success in all 5 areas where
Slide 25: Financial Outlook
DTE Energy Financial Outlook
Slide 26: 2008 Earnings Guidance Remains on Track
51 * Reconciliation to GAAP reported earnings included in the appendix 2008 Operating Earnings Guidance * Drivers ($ millions) 51 Solid Q3 earnings results YTD 2008 results are on track Strong focus on cost reductions as we continue to monitor the economy YTD 09/30/2008 2008 Guidance 2008 Earnings G
Slide 27: Maintaining our Commitment to a Strong Balance Sheet and Solid Liquidity
Successfully accessed the bond market in October Expect to occasionally access credit markets to improve liquidity Drew on bank lines to provide cushion Staggered maturities of bank credit lines No remaining debt maturities this year; only $220M next year, which we expect to pay off We are building
Slide 28: Our Sustainable Dividend is Very Competitive
55 Our Sustainable Dividend is Very Competitive As utility earnings increase, our payout ratio will improve, providing flexibility to consider further dividend increases Industry Dividend Yield NI 0.070661 TE 0.069144 PNW 0.066204 CNP 0.063149 PGN 0.062723 WR 0.060104 DTE 0.059853 TEG 0.056457 SCG 0
Slide 29: Summary
DTE Energy Summary
Slide 30: DTE Energy: A Focused, Integrated Energy Strategy
59 Execute strong regulated growth plan DTE Energy: A Focused, Integrated Energy Strategy Execute value-focused non-utility plan Continue to pay an attractive dividend Realize projected utility earnings growth Long-term: 5 - 6% per year average Effectively incorporate renewable energy, environmental
Slide 31: Appendix
DTE Energy Appendix
Slide 32: Q3 2008 Segment Operating Earnings Variance
63 1st Qtr 136 136 182 190 192 209 182 172 45 8 2 17 2 29 10 172 Q3 2008 Operating Earnings Variance 3Q 2007 Operating Earnings Detroit Edison MichCon Power & Industrial Projects Unconventional Gas Production Gas Midstream Energy Trading Corporate & Other 3Q 2008 Operating Earnings $136 $9 $2 $17 $2
Slide 33: YTD September 30th Segment Operating Earnings Variance
65 1st Qtr 317 317 338 338 340 343 327 327 23 2 2 5 2 17 2 329 YTD September 30th Operating Earnings Variance YTD 9/30/07 Operating Earnings Detroit Edison MichCon Power & Industrial Projects Unconventional Gas Production Gas Midstream Energy Trading Corporate & Other YTD 9/30/08 Operating Earnings
Slide 34: DTE Energy Cash Flow YTD September 30th 2008
67 YTD September 30th 2008 Cash Flow Adjusted cash from operations includes refunds to synfuel partners in 2008 Proceeds from Antrim sale used for stock repurchases and debt reductions in 2007 Capital primarily driven by operational improvements at our utilities ($ billions) DTE Energy Cash Flow Dri
Slide 35: DTE Energy Capital Expenditures YTD September 30th 2008
69 YTD September 30th 2008 Capital Expenditures YTD 09/30/07 YTD 09/30/08 Detroit Edison capital spending totaled $651M YTD 9/30/08, driven by environmental spending and normal operational improvements MichCon capital driven by timing of routine capital spend Power & Industrial capital driven by a c
Slide 36: 2008 Cash Flow and Capital Guidance
71 2008 Cash Flow and Capital Guidance DTE Energy 2008 Cash Flow Guidance ($ billions) 2008 Capex Guidance ($ billions) * Reconciliation to GAAP reported cash flow included in the appendix
Slide 37: Detroit Edison Sales Volumes
Detroit Edison Sales Volumes 73
Slide 38: Barnett Map
75 Barnett Map Clay Zones of DTE Acreage Vertical Wells Horizontal Wells Dallas/ Ft Worth Metropolitan Area 62,000 acres Hood Johnson Erath Jack Somervell Hill Wise Tarrant Bosque Parker Denton Palo Pinto
Slide 39: Reconciliation of Q3 2008 Reported to Operating Earnings
77 Reconciliation of Q3 2008 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
Slide 40: Reconciliation of Q3 2007 Reported to Operating Earnings
79 Reconciliation of Q3 2007 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
Slide 41: Reconciliation of YTD September 30th 2008 Reported to Operating Earnings
81 Reconciliation of YTD September 30th 2008 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 pri
Slide 42: Reconciliation of YTD September 30th 2007 Reported to Operating Earnings
83 Reconciliation of YTD September 30th 2007 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 pri
Slide 43: Reconciliation of 2008 Reported to Operating Earnings
85 Reconciliation of 2008 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