Slide 1: DTE Business Update June 9, 2020
DT E B U S I N E SS U P DAT E JUNE 9, 2020 1
Slide 2: Safe harbor statement
Safe harbor statement Certain information presented herein includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, and businesses of DTE Energy. Words such as “anticipate,” “belie
Slide 3: Focusing on well-being of employees and communities while delivering financial targets
Focusing on the well-being of our employees and communities and positioned to deliver on our financial targets during COVID-19 pandemic Shareholders • Reaffirming 2020 operating EPS1 guidance Employees with Michigan starting to return to work • Ensuring the health and safety of our employees • Confi
Slide 4: Ensuring the health and safety of our employees while delivering reliable energy
Ensuring the health and safety of our employees while delivering reliable energy • Successfully implemented work from home for over half of our employees • Strategically sequestered crews to ensure healthy back-up support and orderly shift transitions • Adjusted shifts, using PPE, practicing social
Slide 5: Providing community support, especially to the most vulnerable
Providing community support, especially to the most vulnerable • Providing resources to serve families’ basic needs, such as food, shelter and access to core medical services • Assisting non-profit organizations and small businesses with emergency stabilization funds • Providing 2 million respirator
Slide 6: Positioned to deliver on our financial targets with cost reductions and contingency planning
Positioned to deliver on our financial targets with cost reductions and contingency planning Forecasted 2020 earnings pressure (~$60 million) Includes impact of: Earnings • COVID-19 sales reduction and incremental costs pressure • 1Q results below plan • Original contingency in plan used $6.47 – $6.
Slide 7: Potential 2020 operating earnings impact from electric sales scenarios is $30 – $50 million
Potential 2020 operating earnings1 impact from electric sales scenarios is $30 – $50 million May start scenario • Return-to-work assumptions Residential sales impacts − Construction and outdoor industries: May • 3% – 4% annual sales increase − Industrial: May − $40 – $50 million operating earnings i
Slide 8: Updated planning process includes daily review of contingency plan and lean actions
Updated planning process includes daily review of contingency plan and lean actions across all business lines Robust planning • Strong history of successfully Annually create detailed 5-year plan implementing earnings contingency plans including during the last recession Includes earnings contingenc
Slide 9: Positioned to achieve our 2020 operating EPS guidance
Positioned to achieve our 2020 operating EPS1 guidance (millions, except EPS) 2020 operating Assumptions underlying 2020 guidance earnings guidance • Electric sales assume Michigan’s shelter- in-place order is lifted in May DTE Electric $759 - $773 − Recovery will be slow and continues into DTE Gas
Slide 10: Additional measures taken to further strengthen our liquidity position
Additional measures taken to further strengthen our liquidity position Liquidity Actions taken to increase liquidity (billions) $0.4 $3.2 • Issued $1.7 billion of long-term debt at DTE $0.4 Electric at extremely favorable rates $0.8 • Secured bank term loans for additional liquidity; significantly m
Slide 11: Maintaining strong cash flow, balance sheet and credit profile
Maintaining strong cash flow, balance sheet and credit profile (billions) • Maintaining strong investment-grade credit rating and FFO1/Debt2 target at 18% Planned equity issuances 2020 – 2022 • Metrics within targeted ranges $1.3 • Targeting lower end of range for 2020 equity issuances Convertible •
Slide 12: Consistently earning authorized ROE in a constructive regulatory environment
Consistently earning authorized ROE in a constructive regulatory environment Ranking of U.S. regulatory jurisdictions1 DTE Electric ROE (Michigan in tier 1) Tier 1 8 10.3% 10.3% 10.1% 10.0% 10.0% Tier 2 9 2015 2016 2017 2018 2019 Authorized ROE Earned ROE Tier 3 18 DTE Gas ROE Tier 4 9 Tier 5 7 10.5
Slide 13: DTE Electric and DTE Gas regulatory update
DTE Electric and DTE Gas regulatory update DTE Electric MPSC order on COVID-19 • General rate case final order (U-20561) • Received approval to begin deferring − Effective: May 15, 2020 uncollectible expense in excess of amount in base rates starting March 2020 − Rate recovery: $188 million − ROE: 9
Slide 14: Continuous improvement culture drives strong cost management vs. peer average
Distinctive continuous improvement culture drives strong track record of cost management vs. peer average All 10,000+ employees engaged in CI to Average annual percentage change in surface and solve problems O&M costs 2008 – 2018 Electric utility1 • Controlling costs while improving the customer exp
Slide 15: Delivering premium results through disciplined planning and management
Delivering premium results through disciplined planning and management Delivering total shareholder return 2 well above History of exceeding operating EPS 1 guidance industry average $6.30 463% 332% $2.90 77% 5-Year 10-Year 15-Year S&P 500 Utilities DTE 1. Reconciliation of operating earnings (non-G
Slide 16: Increased dividend every year since 2010; 7% dividend growth through 2021
Increased dividend every year since 2010; 7% dividend growth through 20211 ($ per share) Annualized dividend 6.1% CAGR • Increased annualized dividend per 7.1% CAGR $4.05 share every year since 2010 − 6.1% average increase over that time $3.08 − 7.1% average increase since 2016 • Continuing 7% divid
Slide 17: Clear line of sight for growth supported by investment in utility infrastructure
Clear line of sight for growth supported by investment in utility infrastructure and disciplined non-utility opportunities (billions) 2020 – 2024 DTE Energy investment $19 billion Electric: Distribution infrastructure, $12 cleaner generation, maintenance $15 Gas: Base infrastructure, main $3 renewal
Slide 18: Potential $2 billion upside to 5-year utility investment plan
Potential $2 billion upside to 5-year utility investment plan with visible infrastructure investment (billions) Utility investment plan $1.0 – $1.5 billion additional electric investments above 5-year plan Additional ~$2 opportunity • Additional voluntary renewables − Current 600 MW in plan with lon
Slide 19: DTE Electric: transformational investments in generation and distribution
DTE Electric: transformational investments in generation and distribution provide customers cleaner, more reliable energy (billions) 2020 – 2024 electric investment Transformational investments Cleaner energy $3 Delivering 80% carbon emissions reduction by 2040 $5 $12 billion Infrastructure renewal
Slide 20: Steady march toward clean, reliable, affordable, home-grown energy
Steady march toward clean, reliable, affordable, home-grown energy Cleaner generation mix 1% 2% 17% 20% 25 – 30% Renewables 18% 20 – 25% Natural gas 20% 77% 20% Nuclear & other 45% 30% Coal 2005 2023E 2030E • More than doubling renewable energy by River St. Trenton Belle Monroe 2024 Rouge Clair Chan
Slide 21: DTE Gas: replacing aging infrastructure reduces methane emissions
DTE Gas: replacing aging infrastructure reduces methane emissions while improving performance, cost and productivity (billions) 2020 – 2024 gas investment Transformational investments Main renewal Minimizing leaks to reduce costs and $1.4 improve customer satisfaction $3 billion $1.6 Pipeline/transm
Slide 22: Committed to methane reduction goal of 80% by 2040
Committed to methane reduction goal of 80% by 2040 Reduced methane emissions continuing reductions in …to achieve goal by 2040 more than 20% since 2011… 2020... Compressor station upgrades Main renewal program Continued infrastructure • Reduced emissions by 93% • Achieving further emission investmen
Slide 23: Non-utility businesses complement utility growth and provide portfolio mix
Non-utility businesses complement utility growth and provide portfolio mix to manage business cycles Non-utility value creation Extension of our utility business core competencies Delivering higher than utility into other geographies returns Contributing over the last 10 years: Proven ability of ear
Slide 24: GSP: highly contracted assets provide confidence in meeting our plans
GSP: highly contracted assets provide confidence in meeting our plans Percentage of revenue from demand-based contracts or MVCs/flowing gas • Our assets are well-positioned − Pipelines have long-term contracts and favorable future dynamics as it is increasingly difficult to build new pipes 100% 92%
Slide 25: Delivering higher operating earnings with increased certainty
Delivering higher operating earnings1 with increased certainty (millions) • Continued organic growth from well-positioned platforms GSP operating earnings − Supported by strong contracts 9.5% CAGR − Connected to power and industrial markets • Adjusted EBITDA2 and allocated debt2 provide $400 – $420
Slide 26: Longer-term demand increases will require continued production growth through new drilling
Longer-term demand increases will require continued production growth through new drilling U.S. natural gas demand forecast (Bcf/d) • Longer-term natural gas supply/demand fundamentals remain 130 attractive; shorter-term gas prices +2% 120 CAGR remain challenged 110 • Gas demand is forecasted to gro
Slide 27: It is necessary to drill 19 Bcf/d of new natural gas supply annually
It is necessary to drill 19 Bcf/d of new natural gas supply on an annual basis to hold production flat Annual decline of US natural gas supply • Given decline profiles of flowing wells, from currently-flowing wells (Bcf/d) new production is needed to just keep supply flat 92 − Wood Mackenzie forecas
Slide 28: As associated gas supply decreases, demand for dry gas increases
As associated gas supply decreases due to lower oil prices, demand for other sources of dry gas increase • The quality of the resource underlying our assets ensures gas will continue to flow on our systems 2021 – 2023 drilling supply curve (Bcf/d) − Additionally, our assets are well- positioned in s
Slide 29: P&I: achieving growth from high-quality platforms
P&I: achieving growth from high- quality platforms Industrial energy services Developing new cogeneration projects to improve customer environmental attributes and lower energy costs Renewable energy Expanding RNG business at landfill and agricultural sites to meet growing demand for carbon reductio
Slide 30: Operating earnings are underpinned by RNG and cogeneration growth opportunities
Operating earnings1 are underpinned by RNG and cogeneration growth opportunities (millions) P&I operating earnings • RNG and cogeneration projects drive long- term earnings $133 – $148 − Backfill sunsetting REF projects with $125 – $135 new projects • Continuing an origination pace of ~$15 million p
Slide 31: Environmental, social and governance efforts are key priorities
Environmental, social and governance efforts are key priorities Environmental Delivering clean and reliable energy to customers Transitioning towards net zero carbon emissions and 80% methane emissions reduction Protecting our natural resources Social Focusing on the safety, well-being and success o
Slide 32: Continuing to secure a greener future: net zero
Continuing to secure a greener future Wind Net zero • 14 wind parks carbon emissions by 2050 • Enough clean energy to power more than 500,000 homes Solar • 31 solar parks 80% • Lapeer solar park one of the largest parks east of the Mississippi carbon emissions reduction by 2040 Voluntary renewables
Slide 33: Continuing to secure a greener future for continuous generation
Continuing to secure a greener future for continuous generation Blue Water Energy Center Ludington Hydropower Plant 70% reduction1 in CO2 emissions 2nd largest pumped storage facility in the U.S. 95% reduction1 in SO2 and NOx 175k+ homes powered 850k+ homes powered $800m turbine upgrades by 2020 $1b
Slide 34: Promoting environmental sustainability through stewardship and conservation
Promoting environmental sustainability through stewardship and conservation • Received Corporate Conservation Leadership award from the Wildlife Habitat Council for leadership in wildlife management • 37 sites certified under the Wildlife Habitat Council • Taking care of land, water and living creat
Slide 35: Commitment to strong culture provides a solid framework for success
Commitment to strong culture provides a solid framework for success Safety National Safety Council’s top 2% of companies surveyed in safety culture Employee engagement Top 3% in the world by Gallup; 7 consecutive Gallup Great Workplace Awards Customer satisfaction Top quartile at both utilities for
Slide 36: Reaching a world class status in volunteerism
Reaching a world class status in volunteerism and strengthening ties with communities where we live and serve 5,610 $16m 101,618 1,335 volunteers value of in-kind hours nonprofits helped services since volunteered 2015 New pic 36
Slide 37: Promoting employee resource groups creates diversity and inclusion
Promoting employee resource groups creates an atmosphere of diversity and inclusion Black LGBTQ group Young professionals professionals group group Family Differently- Latinx oriented group abled group professionals group Women’s group Asian and Middle Veteran Eastern group empowerment group 37
Slide 38: Our award-winning commitment to being a top ESG employer
Our award-winning commitment to being a top ESG employer in the country Superior corporate Company diversity Top quartile in Named as one of citizenship and customer satisfaction America’s best large community employers involvement Outstanding Inclusion of women- Overall excellence contribution to A
Slide 39: Outperforming industry average in ESG scores
Outperforming industry average in ESG scores A 75 • Continuing to make progress on ESG performance − Improved MSCI rating from BBB to A BBB 50 • Aspiring to be the best in the industry MSCI Sustainalytics DTE Energy Industry average 39
Slide 40: Contact Us
CONTACT US DTE Investor Relations www.dteenergy.com/investors 313.235.8030 40
Slide 41: Appendix
Appendix DTE
Slide 42: DTE Energy
DTE Energy 70% – 75% utility DTE Electric Electric generation and distribution DTE Gas Natural gas transmission, storage and distribution 25% – 30% non-utility Gas Storage & Pipelines (GSP) Transport, store and gather natural gas Power & Industrial Projects (P&I) DTE Energy Own and operate energy re
Slide 43: Cash flow and capital expenditures guidance
Cash flow and capital expenditures guidance Cash flow Capital expenditures (billions) (millions) 2020 2020 guidance guidance Cash from operations1 $3.0 DTE Electric Capital expenditures (4.5) Base infrastructure $680 Free cash flow ($1.5) New generation 1,050 Distribution infrastructure 850 Dividend
Slide 44: Well-positioned platforms provide confidence in securing highly accretive growth
Well-positioned platforms provide confidence in securing highly accretive growth Platforms Regulation Phase Growth Opportunities • $2.2 – $2.7 billion of investment in 2020 – 2024 Blue Union Early Gathering build-outs − $1.0 billion of growth LEAP System Early Gathering build-outs/compression/ contr
Slide 45: Blue Union and LEAP asset additions to portfolio provide great value and growth
Blue Union and LEAP asset additions to portfolio provide great value and growth Perryville Hub • Premier assets in high-quality Haynesville Carthage Hub basin Southeast Power Markets − Existing fully contracted gathering system Gulf South − Fully contracted large-diameter Texas markets via Mid-coast
Slide 46: 2018 – 2019 reconciliation of reported to operating EPS (non-GAAP)
2018 – 2019 reconciliation of reported to operating EPS (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 perf
Slide 47: 2008 reconciliation of reported to operating EPS (non-GAAP)
2008 reconciliation of reported to operating EPS (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 48: 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 represe
Slide 49: Adjusted EBITDA and Allocated Debt are non-GAAP measures
Adjusted EBITDA and Allocated Debt are non-GAAP measures Adjusted EBITDA is calculated using net income, the most comparable GAAP measure and adding back expenses for interest, taxes, depreciation and amortization. Adjusted EBITDA also includes an adjustment for DTE’s proportional share of joint ven