Dte Energy Company · NYSE:DTE
Dte Energy — Non-Deal Roadshow (July 2013)
57 slides from Dte Energy's roadshow presentation, Jul 9, 2013
Slide 1: Business and Financial Update
Business and Financial Update Peter Oleksiak, Senior Vice President of Finance Anastasia Minor, Director – Investor Relations July 9 – 10, 2013
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, Financial Update
• Overview • Long-Term Growth Update – Utilities – Non-Utilities • Financial Update 3
Slide 4: DTE Energy is an integrated energy company
Electric 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 customer
Slide 5: Long-term business mix weighted towards stable regulated utilities
DTE Energy’s long-term business mix continues to be weighted towards stable regulated utilities 5 Electric 62% Gas 15% GSP 9% P&I 11% Energy Trading 3% Electric 69% Gas 12% GSP 12% P&I 7% * Reconciliation to GAAP reported earnings included in the appendix 2013 – 2017 Operating Earnings* ~$4 billion
Slide 6: We remain committed to delivering on our targets
2008A 2009A 2010A 2011A 2012A 2013E 2014E 2015E 2016E 2017E $3.80 We remain committed to delivering on our targets * Reconciliation to GAAP reported earnings included in the appendix; 2008 – 2012 operating EPS adjusted for Unconventional Gas Production discontinued operations $3.33 $3.75 $3.64 Divid
Slide 7: Utilities provide the foundation for operating EPS growth
Utility Earnings Growth Non-Utility Earnings Growth DTE Earnings Growth Share Dilution Contingency DTE EPS Growth 1% - 2% Non-Utilities Our utilities provide the foundation for operating EPS growth 7 6% - 7% 15% - 20% ~10% 5% - 6% 4% Utilities Strong growth in non-utilities gives us confidence in ou
Slide 8: Non-utility businesses provided $2.6 billion of net cash flow over 10 years
Our non-utility businesses have provided $2.6 billion of net cash flow over the last 10 years Non-Utility Net Cash Flow* 2003 - 2012 ** Excludes ~$0.4 billion of capital invested in late 2012 Operations and Asset Sales Capital Expenditures** Net Cash Flow Shale Gas Asset Sales & Other Total Non-util
Slide 9: Overview, Long-Term Growth Update, Financial Update
• Overview • Long-Term Growth Update – Utilities – Non-Utilities • Financial Update 9
Slide 10: Michigan economic indicators highlight continued recovery in 2013
Michigan economic indicators highlight continued recovery in 2013 10 Michigan leads the country in new manufacturing job creation Michigan ranked #7 on Corporate Income Tax ranking 1,144 1,578 1,912 2,252 2,447 2009 2010 2011 2012 2013E Increased Auto Production (000s) 13.4% 12.7% 10.4% 8.9% 8.3% 20
Slide 11: DTE Electric total load forecast reflects ~1% growth
DTE Electric total load forecast reflects ~1% growth as Industrial sales continue to recover 11 *Temperature normalized sales 0% 10% 20% 30% 40% 2009 2010 2011 2012 2013E 2014E DTE Industrial Sales* Cumulative change from 2009 2012 2013E 2014E 2017E Total Service Area Annual Sales* (GWh) ~2% ~1% / y
Slide 12: Governor Snyder has played a strong role in rebuilding Michigan
Governor Snyder has played a strong role in rebuilding Michigan and its economy Dramatically improved business tax competitiveness (49th to 7th) Eliminated state’s $1.5 billion deficit Driving economic development Reshaping and creating a more efficient state government 12
Slide 13: Process to review state energy policy
We are confident that the process to review state energy policy will maintain a constructive regulatory framework and contribute to Michigan's turnaround 13 DTE is actively participating throughout the process Fall 2012 2013 2014 + Governor’s energy message • Renewables • Energy efficiency • Deregul
Slide 14: Michigan Public Service Commission
Sally Talberg Commissioner Appointed: 7/3/13 Term Ends: 7/2/19 (Independent) Greg White Commissioner Appointed: 12/4/09 Term Ends: 7/2/15 (Independent) Source: MPSC website - www.michigan.gov/mpsc - June 2013 • The Michigan Public Service Commission is composed of three members appointed by the Gove
Slide 15: Strategies to delay rate case filings
Both utilities have strategies to delay rate case filings to address customer affordability while maintaining financial health 15 2013 • Continued cost control • Amortize revenue decoupling liability ($127 million) • Securitization surcharge* ends • Headroom for new rates • Infrastructure Recovery M
Slide 16: Continuous improvement leads the industry in cost management
DTE’s continuous improvement capability has enabled us to lead the industry in cost management $1,691 $1,530 2007 2008 2009 2010 2011 2012 2013E Utility O&M* ($ millions) * Excludes bad debt expense, LIEEF, Energy Efficiency and Renewable Energy Program 2013 forecast shows ~$160 million in utility O
Slide 17: Continuous improvement leads industry in cost management vs peers
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 purchase power **Source: SNL Financial, FERC Form 2; gas distribution companies with greater than 300,000 customers
Slide 18: Electric utility investments in three key growth areas through 2017
Our electric utility is making significant investments in three key growth areas through 2017 18 Base Infrastructure $5.0 billion Renewable Energy & Energy Efficiency $500 million Environmental Compliance $900 million • Environmental requirements • $335 million investment in 2013 • Power plant relia
Slide 19: Transformation of generation fleet, 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 20: Electric utility investment from 2018 through 2022
Our electric utility will continue to invest approximately $1.3-1.7 billion per year from 2018 through 2022 20 Base Infrastructure $5 to $5.5 billion New Generation $1 to $2 billion Generation Compliance $0.5 to $1 billion • Environmental compliance • Post Fukushima nuclear investments • Fermi licen
Slide 21: Gas utility reliability and pipeline integrity investments through 2017
Main Renewal, Meter Move-Out & Pipeline Integrity $400 million Base Infrastructure $680 million Our gas utility continues to make reliability and pipeline integrity investments through 2017 21 • Capital recovered through the Infrastructure Recovery Mechanism • ~4,000 miles of distribution main to be
Slide 22: Overview, Long-Term Growth Update, Financial Update
• Overview • Long-Term Growth Update – Utilities – Non-Utilities • Financial Update 22
Slide 23: Gas Storage & Pipelines asset portfolio with multiple growth platforms
Gas Storage & Pipelines is developing an asset portfolio with multiple growth platforms 23
Slide 24: Gas Storage & Pipelines platforms drive growth
Bluestone Pipeline • 0.3 Bcf capacity; potential expansion to 0.6 Bcf Millennium Pipeline & Expansions • 0.3 Bcf expansion underway; total capacity of 0.8 Bcf • First expansion in-service June 1, 2013; second planned for 4Q 2013 • Future expansions economic up to 1.5 Bcf Proposed NEXUS Gas Transmiss
Slide 25: Bluestone assets strategically positioned for growth
Our Bluestone assets are strategically positioned for growth S U S Q U E H A N N A NEW YORK PENNSYLVANIA BLUESTONE PIPELINE TENNESSEE PIPELINE B R O O M E • ~50,000 acres for Southwestern Energy Wells started for selected producers from Jan '12 - Feb '13 • 180,000 acres within 5 miles of Bluestone •
Slide 26: Marcellus/Utica gas production expected to exceed demand
Marcellus/Utica gas production is expected to significantly exceed demand and drive the need for pipeline takeaway 11.5 2013 9.6 2015 13.0 2014 2012 6.7 2030 23.0 2025 21.0 2020 18.0 2012 Northeast Demand 10.2 Marcellus Utica Marcellus and Utica Shale Production (Bcf/d) Source: June 2013 Forecast -
Slide 27: Gas Storage & Pipelines operating earnings potential of $120 million by 2017
2012A 2013E 2014E 2015E 2016E 2017E Gas Storage & Pipelines operating earnings* potential of $120 million by 2017 ~$120 * Reconciliation to GAAP reported earnings included in the appendix (millions) Storage Platform Vector Platform Marcellus Platform Utica Platform and additional growth $30 $10 $60
Slide 28: Power & Industrial focused in three key business lines
Power & Industrial is focused in three key businesses lines 28 Wood-fired Plant Cassville, WI • Produces fuel that reduces emissions from coal-fired plants • 9 units, 4 states Industrial Energy Services • Utility services at industrial sites • Coke and pulverized coal for steel customers • 42 projec
Slide 29: P&I investments structured to achieve premium returns
P&I investments are structured to achieve premium returns within investor risk tolerance Premium returns Limited competition Opportunity to scale Long term contracts / limited commodity exposure • Knowledge of industrial, energy intensive customers • Strong project development and risk management •
Slide 30: P&I should reach $140 million of operating earnings by 2017
2012A 2013E 2014E 2015E 2016E 2017E P&I should reach $140 million of operating earnings* by 2017 through growth in each of its business lines 30 ~$140 (millions) $52 $35 $65 $85 ($70) $25 $60 - $70 New Project Development Renewable Energy Reduced Emissions Fuel Industrial Energy Services Corporate a
Slide 31: Overview, Long-Term Growth Update, Financial Update
• Overview • Long-Term Growth Update – Utilities – Non-Utilities • Financial Update 31
Slide 32: DTE Energy 2014 Operating Earnings Early Outlook
2014 Drivers 2014 Early Outlook* 2013 Revised Guidance* (millions, except EPS) DTE Electric $480 - $490 $515 - $525 DTE Gas Full year of Infrastructure Recovery Mechanism; continuous improvement 115 - 120 120 - 126 Gas Storage & Pipelines Bluestone pipeline and gathering 65 - 70 72 - 78 Power & Indu
Slide 33: Strong balance sheet remains a key priority
2012 2013E 2014E- 2015E *Debt excludes securitization, a portion of DTE Gas’ short-term debt, and considers 50% of the Junior Subordinated Notes as equity Leverage* Funds from Operations / Debt* 2012A 2013E 2014E- 2015E 50% 50% Target 50% - 52% 22% 22% Target 21% - 22% Strong balance sheet remains a
Slide 34: Credit rating upgrades
Our continued financial strength and improved regulatory environment have resulted in credit rating upgrades 34 • Upgraded DTE Energy, DTE Electric and DTE Gas February 2013 January 2013 • Upgraded DTE Gas January 2012 • Upgraded DTE Electric and DTE Gas December 2010 • Upgraded DTE Energy, DTE Elec
Slide 35: Business strategy is fundamental to how we create value
Our business strategy is fundamental to how we create value for our investors Utility growth plan driven by mandated investments Constructive regulatory structure and continued cost savings enable utilities to earn their authorized returns Program in place to achieve operational excellence and
Slide 36: Contact Us
Contact Us DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030 36
Slide 37: Appendix
mo DTE Energy: Appendix
Slide 38: Revised 2013 operating earnings per share guidance
We revised our original 2013 operating earnings* per share guidance mid-point from $4.00 to $4.05 Drivers 2013 Revised Guidance 2013 Original Guidance (millions, except EPS) DTE Electric Strong underlying performance, regulatory certainty, cost efficiencies $475 - $485 $480 - $490 DTE Gas 113 - 118
Slide 39: DTE Energy 2013 Cash Flow Guidance
2012 2013 Actual Guidance Cash From Operations* $2.2 $1.8 Capital Spending (2.1) (2.2) Free Cash Flow $0.1 ($0.4) Asset Sales 0.3 - Dividends (0.4) (0.4) Net Cash $0.0 ($0.8) Debt Financing: Issuances $0.8 $1.6 Redemptions (0.8) (0.8) Change in Debt $0.0 $0.8 DTE Energy 2013 Cash Flow Guidance Cash
Slide 40: DTE Energy 2013 Capital Expenditure Guidance
40 DTE Energy 2013 Capital Expenditure Guidance 2012 2013 Actual Guidance DTE Electric Operational $823 $1,020 Environmental 161 335 Renewable Energy 246 200 $1,230 $1,555 DTE Gas Operational $172 $140 Main Renewal / Meter Move-out 48 80 $220 $220 $594 $400 Total $2,044 $2,175 Non-Utility Capital Ex
Slide 41: 2008 energy regulation established a 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 41 Regulatory Structure Changes • File & Use Rates with 6 month self- implementation • Final order in
Slide 42: City of Detroit to exit electricity distribution business
City of Detroit to exit electricity distribution business 42 Pending MPSC approval of the transitional structure of this program: • City of Detroit Public Lighting Department (PLD) will transition 115 customers to DTE • In the next 6 to 12 months, existing PLD customers’ meters will be converted to
Slide 43: DTE Electric plans over $6 billion of investments over next 5 years
2008-2012 Average 2013E 2014E 2015E 2016E 2017E DTE Electric plans over $6 billion of investments over the next 5 years $1,555 $1,500 $1,000 $1,100 $1,300 $1,000 * Includes AMI, Ludington expansion and other investments **Includes working capital Base Renewables Other Projects* Environmental / New G
Slide 44: Electric regulatory strategy and potential rate reduction
Our electric regulatory strategy and continuous improvement initiatives will enable a potential rate reduction during a period of significant rate base growth Current rate ~$350 million securitization surcharge drop off in 2015 Base rates in 2015 / 2016 Potential Electric Customer Rates Our goal is
Slide 45: 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 45 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 46: 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 $220 $215 $215 $215 $215 2013E - 2017E $400 $680 $1,080 Base Main Renewal, Meter Move-Out, Pipeline Integrity (millions) 46 $2.8B $3.4 - $3.6B YE Rate Base* $94M $109M Depreciation *Includes working capi
Slide 47: Gas regulatory strategy minimizes customer rate impact
Our gas regulatory strategy and continuous improvement initiatives minimize customer rate impact in the near-term Current rate Surcharge reductions IRM Potential Gas Customer Rates Our goal is to keep rates essentially flat over the next 3 years 47
Slide 48: Confident in 2017 operating earnings outlook
2012A 2013E 2014E 2015E 2016E 2017E $30 $10 $10 $35 $15 2017E ~$100 We are confident in our 2017 operating earnings outlook Millennium pipeline ~$500 million investment in Bluestone and initial gathering Additional expansion and gathering opportunities (under development) (millions) ~$120 $10 $60 $2
Slide 49: Susquehanna is one of the most economical gas producing counties
Susquehanna is one of the most economical gas producing counties in Pennsylvania Natural Gas Break-even Cost @ 10% IRR* (by county**) Susquehanna County Average $3.40 * Counties in Marcellus Pennsylvania * DTE internal calculation * $1.90 $2.50 $5.50 49
Slide 50: Reduced Emissions Fuel earnings contribution should continue to grow
Reduced Emissions Fuel earnings contribution should continue to grow 50 2012 2013E 2014E - 2017E • Operations target met at five placed units • 6th unit operational at year end • 7th unit sited; online mid-2013 • Marketing two remaining units to potential host sites • Optimizing operations • Continu
Slide 51: 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 52: 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 53: 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 54: Reconciliation of 2009 Reported to Operating Earnings
Reconciliation of 2009 Reported to Operating Earnings 54 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 55: Reconciliation of 2008 Reported to Operating Earnings
Reconciliation of 2008 Reported to Operating Earnings 55 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 56: 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
Slide 57: Reconciliation of 2003-2012 Non-Utility Cash Flows
Reconciliation of 2003 – 2012 Non-Utility Cash Flows (billions) Cash from operating activities P&I and Shale Gas GSP & Other DTE Energy (consolidated) (1) $14.9 Less DTE Electric and DTE Gas (2) (13.1) Adjustments (3) (0.3) 1.5 Proceeds from sale of assets $2.2 $2.4 DTE Energy (consolidated) (1) 3.9