Dte Energy Company · NYSE:DTE
Dte Energy — AGA Financial Forum 2014
53 slides from Dte Energy's conference presentation, May 15, 2014
Slide 1: AGA Financial Forum Business Update
AGA Financial Forum Business Update May 18 – 20, 2014 Exhibit 99.1
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 / Summary
• Overview • Long-Term Growth Update • Summary 3
Slide 4: DTE Energy is an integrated energy company
DTE Electric DTE 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
Slide 5: Our business strategy is fundamental to how we create value for our investors
Our business strategy is fundamental to how we create value for our investors Utility growth plan driven by infrastructure investments Strategic, transparent, low-risk growth opportunities in non-utility businesses provide diversity in earnings and geography Constructive regulatory structure a
Slide 6: Long-Term Growth Update
• Overview • Long-Term Growth Update • Summary 6
Slide 7: We remain committed to delivering 5% to 6% operating EPS growth
2008A 2009A 2010A 2011A 2012A 2013A 2014E 2015E 2016E 2017E 2018E $3.33 $4.09 $3.75 $3.64 $2.12 $2.24 $2.35 $2.48 $2.12 * Reconciliation to GAAP reported earnings included in the appendix We remain committed to delivering 5% to 6% operating EPS* growth (dollars) Operating EPS* 7.2% CAGR 2008-2014 Di
Slide 8: DTE has delivered total shareholder return above market indices
DTE has delivered total shareholder return above market indices 8 19% 21% 27% 12% 15% 14% 16% 11% 3% 14% 19% 8% YTD 3 YR 5 YR 10 YR DTE S&P500 Utilities S&P500 Historical Total Shareholder Return CAGR* * As of April 30, 2014 Source: Bloomberg
Slide 9: Michigan's regulatory environment ranks among the best in the country
Michigan’s regulatory environment ranks among the best in the country Data source: Standard & Poor’s, January 2014 9 MI Strong Strong / Adequate Adequate
Slide 10: Michigan economic indicators highlight continued growth over the next few years
Michigan economic indicators highlight continued growth over the next few years 10 Michigan leads the country in new manufacturing job creation 7.1% 13.4% 8.8% 7.6% 7.1% 2007 2009 2013 2014E 2015E Source: IHS Detroit named one of seven new entrepreneur tech hubs 368 314 353 362 369 2007 2009 2013 20
Slide 11: Continuous Improvement capability has enabled us to lead the industry in cost management
DTE’s Continuous Improvement 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 purchased power **Source: SNL Financial, FERC Form 2; gas distribution companies with greater t
Slide 12: Upward pressure on customer rates will be minimized
Upward pressure on customer rates will be minimized by cost controls, surcharge reductions and load growth $650 million of surcharge reductions Targeting to stay close to rate neutral though 2018 DTE Electric ~3 year rate case stay out strategy Rate increases below inflation levels DTE Gas 1
Slide 13: DTE Electric's next rate case filing will be more than years after last rate order
DTE Electric’s next rate case filing will be more than 3 years after last rate order 13 2011 • Amortize revenue decoupler liability over 12 months • File case mid-2014 • Self-implement rates early 2015 2014 2015 • Suspend decoupler amortization* in 2H’14; complete balance in 1H’15 • File case late 2
Slide 14: Our electric utility is investing $6.7 billion in three key growth areas through 2018
Our electric utility is investing $6.7 billion in three key growth areas through 2018 • Environmental requirements • $280 million in 2014 • Power plant reliability • Expanded distribution reliability program • Advanced Metering Infrastructure • $1.1 billion in 2014 • 10% renewable energy standard by
Slide 15: New natural gas and wind capacity will replace coal retirements
New natural gas and wind capacity will replace coal retirements over the next decade 15 2014 Coal retirements New gas/wind ~2025 Generation Capacity (GW) ~11.3 (~2.6) ~3.2 ~11.9 • New capacity by acquisition or new build • Most of spend is after 2018; may need to pull ahead sooner • Would not materi
Slide 16: Our gas utility is making $1.2 billion of reliability and pipeline integrity investments
Our gas utility is making $1.2 billion of reliability and pipeline integrity investments through 2018 • Capital recovered through the Infrastructure Recovery Mechanism • ~4,000 miles of distribution main to be replaced • $90 million investment in 2014 • Strengthen and expand distribution system • Co
Slide 17: Gas Storage & Pipelines is developing an asset portfolio with multiple growth platforms
Gas Storage & Pipelines is developing an asset portfolio with multiple growth platforms 17 Pipeline Gathering Storage
Slide 18: Gas Storage & Pipelines platforms drive growth through new projects and expansions
Bluestone Gathering • Long-term agreement with Southwestern in Marcellus shale Michigan Gathering • Lateral additions ongoing New Developments • Working with interested parties in Marcellus, Utica and Michigan shales Gas Storage & Pipelines platforms drive growth through new projects and expansions
Slide 19: Our Bluestone assets continue to attract investment
Our Bluestone assets continue to attract investment • 1Q 2014: Completed Cabot transportation interconnect with Bluestone lateral • 2Q 2014: Expanded Southwestern transportation agreement on Bluestone lateral • Ongoing: Continuing discussions with interested parties Cabot Interconnect 19
Slide 20: NEXUS is an attractive path to bring Utica natural gas to market
NEXUS is an attractive path to bring Utica natural gas to market Leading proposed project into Dawn market Anchored by 3 large LDCs in target markets Market area is large and liquid Access to 930 Bcf of high quality reef storage Significant demand growth in Ontario Connects to Chicago market v
Slide 21: Developments in Gas Storage & Pipelines provide increased confidence in 2018 operating earnings
2012A 2013A 2014E 2015E 2016E 2017E 2018E $78 - $86 Developments in Gas Storage & Pipelines provide increased confidence in 2018 operating earnings* * Reconciliation to GAAP reported earnings included in the appendix (millions) Pipeline Platform Gathering Platform Storage Platform New Project Develo
Slide 22: Power & Industrial Projects is focused in three key business lines
Power & Industrial Projects is focused in three key business lines Wood-fired Plant Cassville, WI • Fuel that reduces emissions from coal-fired plants • 9 units, 5 states • Utility contracted • Utility services at industrial sites • Coke and pulverized coal for steel customers • 37 projects, 11 stat
Slide 23: Power & Industrial Projects is executing on its growth plans
Power & Industrial Projects is executing on its growth plans Industrial Energy Services • Cogen project being constructed to serve Ohio manufacturer expected to commence operations in 3Q • Organic growth generated from 2012 acquisition of on-site energy portfolio Renewables • 45MW waste wood project
Slide 24: Power & Industrial Projects is targeting $155 million of operating earnings by 2018
2012A 2013A 2014E 2015E 2016E 2017E 2018E Power & Industrial Projects is targeting $155 million of operating earnings* by 2018 through growth in each of its business lines ~$155 (millions) $35 $70 $85 ($65) $30 $70 New Project Development / Acquisitions Renewable Energy Reduced Emissions Fuel Indust
Slide 25: Summary
• Overview • Long-Term Growth Update • Summary 25
Slide 26: Summary
Summary • Long-term plan supports continued 5% - 6% operating EPS growth • On track to achieve 2014 operating earnings guidance; strong first quarter earnings provides contingency • Constructive regulation, coupled with a focus on operational excellence and strong customer satisfaction, supports mea
Slide 27: Contact Us
Contact Us DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030 27
Slide 28: Appendix
mo DTE Energy: Appendix
Slide 29: DTE Energy First Quarter 2014 Operating Earnings Variance
1Q 2013 1Q 2014 Change DTE Electric 115$ 136$ 21$ DTE Gas 96 129 33 Gas Storage & Pipelines 17 21 4 Power & Industrial Projects 12 15 3 Corporate & Other (13) (9) 4 Growth segments** 227$ 292$ 65$ Growth segments operating EPS 1.30$ 1.64$ 0.34$ Energy Trading 7$ 8$ 1$ DTE Energy 234$ 300$ 66$ Operat
Slide 30: We remain confident in our 2014 operating earnings guidance
We remain confident in our 2014 operating earnings* guidance (millions, except EPS) 1Q 2014 Actuals 2014 Guidance DTE Electric $136 $520 - $530 DTE Gas 129 120 - 126 Gas Storage & Pipelines 21 78 - 86 Power & Industrial Projects 15 75 - 85 Energy Trading $8 $0 Corporate & Other (9) (49) - (45) DTE E
Slide 31: We are on track to achieve 2014 cash flow guidance
1Q 2014 2014 Actual Guidance Cash From Operations $0.5 $1.6 Capital Spending (0.5) (2.3) Free Cash Flow $0.0 ($0.7) Asset Sales - - Dividends (0.1) (0.5) Net Cash ($0.1) ($1.2) Debt Financing: Issuances $0.2 $2.1 Redemptions (0.1) (0.9) Change in Debt $0.1 $1.2 We are on track to achieve 2014 cash f
Slide 32: Strong balance sheet remains a key priority and supports growth
2013 2014E * 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* 2013 2014E 49% 52% Target 50% - 52% 23% 22% Target 20% - 22% Strong balance sheet remains a key priority and supports
Slide 33: 2014-2016 cash from operations and equity issuances plan supports utility capital spend
33 2014 – 2016 cash from operations and equity issuances plan supports utility capital spend and a strong balance sheet (billions) * Excludes securitization ** Debt excludes securitization, a portion of DTE Gas’ short-term debt, and considers 50% of the Junior Subordinated Notes as equity Equity $0.
Slide 34: Strong earnings growth opportunities give confidence in 5%-6% operating EPS growth
Our strong earnings growth opportunities coupled with our contingency planning gives us confidence in our ability to deliver 5% – 6% operating EPS* growth 34 * Reconciliation to GAAP reported earnings included in the appendix Growth of 5% - 6% at utilities and 15% - 20% at non-utilities drives overa
Slide 35: A substantial portion of non-utility operating earnings are regulated or contracted
A substantial portion of our non-utility operating earnings are either regulated or contracted 2018 Earnings Mix • Regulated / contracted earnings consist of: • Electric and gas utilities • FERC regulated gas pipelines • Long-term contracted energy projects • Growth of 5% - 6% at utilities and 15% -
Slide 36: Energy regulation passed in 2008 established a more 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 36 Regulatory Structure Changes • File & Use Rates with 6 month self- implementation • Final order in
Slide 37: The MPSC is the state regulator for electric and gas utilities
Sally Talberg Commissioner Appointed: 7/3/13 Term Ends: 7/2/19 Greg White Commissioner Appointed: 12/4/09 Term Ends: 7/2/15 Source: MPSC website - www.michigan.gov/mpsc - May 2014 • The MPSC establishes fair and reasonable rates and administers fair terms and conditions of service for Michigan’s uti
Slide 38: Utility rate strategies minimize new rate filings and their impacts on customers
Utility rate strategies minimize new rate filings and their impacts on our customers DTE Electric DTE Gas • Delay rate case filing to late 2014 or early 2015; self-implement after 6 months • First half of decoupler amortization* in 1H’14; complete balance in 1H’15 • Periodic rate cases to support in
Slide 39: City of Detroit to exit electricity distribution business
• Detroit Public Lighting Department (PLD) announced it was exiting the distribution business and its existing customers will be transitioned to DTE electric system • In May 2014, the MPSC approved DTE’s request for a transitional tariff and a reconciliation mechanism to recover costs related to the
Slide 40: DTE Electric will increase rate base ~$3 billion since 2011 rate order
$10.7 2011A 2012 - 2014 Rate Base Additions 2014E DTE Electric will increase rate base ~$3 billion since 2011 rate order with no new rates DTE Electric Rate Base* (billions) • Base rates flat over this period • Avoided ~$400 million in rate increases • DTE Electric has continued to earn its authoriz
Slide 41: DTE Electric plans $6.7 billion of investments over the next 5 years
2014E - 2018E Total 2008-2012 Average 2013A 2014E 2015E 2016E 2017E 2018E DTE Electric plans $6.7 billion of investments over the next 5 years $1,325 $1,600 $1,300 $1,100 $1,350 $1,000 * Includes AMI, Ludington expansion and other investments **Includes working capital; 2013 estimated Base New Gener
Slide 42: DTE Electric has built or contracted for approximately 890MWs of renewable energy
DTE Electric has built or contracted for approximately 890MWs of renewable energy (850MWs of wind) since 2009 42 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 43: DTE Gas plans $1.2 billion of investments over the next years
DTE Gas plans $1.2 billion of investments over the next 5 years 2013A 2014E 2015E 2016E 2017E 2018E $240 $240 $240 $240 $240 2014E - 2018E $500 $700 $1,200 Base Main Renewal, Meter Move-Out, Pipeline Integrity (millions) 43 $2.8B $3.5 - $3.7B YE Rate Base* $95M $114M Depreciation *Includes working c
Slide 44: Gas Storage & Pipelines assets have expansion opportunities
Pipeline Assets Capacity Bcf/ d In-Service Millennium Pipeline 0.8 Future Expansion (planning phase) 0.2 - 0.5 2017 + Total Planned Capacity 1.0 - 1.3 Bluestone Pipeline (bi-directional) 0.6 Expansion #1 0.2 3Q 2014 Expansion #2 0.1 2Q 2015 Expansion #3 0.1 2Q 2016 Total Planned Capacity 1.0 Vector
Slide 45: 1Q 2014 Reconciliation of Reported to Operating Earnings
1Q 2014 DTE Electric DTE Gas Gas Storage and Pipelines Power and Industrial Projects Corporate and Other Growth Segments Energy Trading DTE Energy Reported Earnings 136$ 129$ 21$ 15$ (17)$ 284$ 42$ 326$ NY state tax law change - - - - 8 8 - 8 Mark to market transactions - - - - - - (34) (34) Operati
Slide 46: 1Q 2013 Reconciliation of Reported to Operating Earnings
1Q 2013 DTE Electric DTE Gas Gas Storage and Pipelines Power and Industrial Projects Corporate and Other Growth Segments Energy Trading DTE Energy Reported Earnings 115$ 96$ 17$ 12$ (13)$ 227$ 7$ 234$ Operating Adjustments 1Q 2013 - - - - - - - - Operating Earnings 115$ 96$ 17$ 12$ (13)$ 227$ 7$ 234
Slide 47: 2013 Reconciliation of Reported to Operating Earnings
2013 Reconciliation of 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 measu
Slide 48: 2012 Reconciliation of Reported to Operating Earnings
2012 Reconciliation of Reported to Operating Earnings 2012 DTE Energy DTE Electric DTE Gas Gas Storage and Pipelines Power and Industrial Projects Energy Trading Corporate and Other Unconventional Gas Reported Earnings 610$ 483$ 115$ 61$ 42$ 12$ (47)$ (56)$ Coke oven gas settlement 7 - - - 7 - - - C
Slide 49: 2011 Reconciliation of Reported to Operating Earnings
2011 Reconciliation of Reported to Operating Earnings 2011 DTE Energy DTE Electric DTE Gas Gas Storage & Pipelines Power & Indust. Projects Energy Trading Corporate & Other Unc. Gas Prod. Reported Earnings 711$ 434$ 110$ 57$ 38$ 52$ 23$ (3)$ Michigan Corporate Income Tax Adjustment (87) - - - - - (8
Slide 50: 2010 Reconciliation of Reported to Operating Earnings
2010 Reconciliation of Reported to Operating Earnings * Deferral of previously expensed cost to achieve as allowed for in June 3, 2010 MPSC order (case - U-15985) 2010 DTE Energy DTE Electric DTE Gas Gas Storage & Pipelines Power & Indust. Projects Energy Trading Corporate & Other Unc. Gas Prod. epo
Slide 51: 2009 Reconciliation of Reported to Operating Earnings
2009 Reconciliation of Reported to Operating Earnings 2009 DTE Energy DTE Electric DTE Gas Gas Storage & Pipelines Power & Indust. Projects Energy Trading Corporate & Other Unc. Gas Prod. Reported Earnings 532$ 376$ 80$ 49$ 31$ 75$ (73)$ (6)$ Gain on Sale - gathering and treating assets (before good
Slide 52: 2008 Reconciliation of Reported to Operating Earnings
2008 Reconciliation of Reported to Operating Earnings 2008 DTE Energy DTE Electric DTE Gas Gas Storage & Pipelines Power & Indust. Projects Energy Trading Corporate & Other Unc. Gas Prod. Syn Fuel Reported Earnings 546$ 331$ 85$ 38$ 40$ 42$ (97)$ 87$ 20$ Performance Excellence Process 6 - 4 - 1 1 -
Slide 53: 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