Dte Energy Company · NYSE:DTE
Dte Energy — AGA Financial Forum 2009
41 slides from Dte Energy's conference presentation, May 4, 2009
Slide 1: Business and Financial Update
Business and Financial Update AGA Financial Forum - May 4, 2009 Gerry M. Anderson President & COO Jerry Norcia President and COO, MichCon
Slide 2: Safe Harbor Statement
2 Safe Harbor Statement 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: access to capital markets and capital market conditions and the results of other financing efforts which c
Slide 3: Overview, 2009 Priorities, Regulated Growth Opportunities
3 Overview 2009 Priorities Regulated Growth Opportunities
Slide 4: DTE Energy is an Integrated Energy Company
4 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 5: DTE Energy: 2009 Overview
5 Overarching 2009 goal: Achieve strong results in a challenging economic environment 2009 plans are based on realistic assumptions. Our goal is to: Preserve solid earnings Keep cash flow and balance sheet metrics strong Position DTE to resume growth as economic conditions ease Michigan legislation
Slide 6: Overview, 2009 Priorities, Regulated Growth Opportunities
6 Overview 2009 Priorities Regulated Growth Opportunities
Slide 7: 2009 Priorities
7 Execute realistic, flexible operating plan Deliver stable earnings Maintain strong balance sheet Preserve/strengthen financial metrics to support future growth Continue to deliver cost savings to mitigate economic conditions and minimize rate increases Maintain or improve safety and reliability me
Slide 8: 2009 Regulatory Priorities
8 Constructive Regulatory Environment Strengthen relationships with customers and regulators Continuous improvement Focus on strong customer satisfaction Timely recovery of capital Regular rate filings Self-implement rate increases Pursue additional regulatory tools Uncollectible tracker at Detroit
Slide 9: Regulatory Catalysts
9 Regulatory Catalysts Successfully Executing our Regulatory Strategy in 2009 will Position us Well for Future Growth Renewable Energy & Energy Optimization plans filed with MPSC RPS & EO plans approved by MPSC; EO surcharges begin RPS customer surcharges begin Detroit Edison self implements rates M
Slide 10: Using Continuous Improvement to Lower Costs and Improve Efficiencies
Using Continuous Improvement to Lower Costs and Improve Efficiencies Since 2005, cost savings have more than offset inflation and new incremental costs Strong employee engagement supports our ability to realize sustainable cost savings Driving an additional $100 million of cost savings in response t
Slide 11: Q1 2009 Overview
Q1 2009 Overview 11 * Reconciliation to GAAP reported earnings included in the appendix DTE Energy Q1 2009 operating earnings* per share of $1.10 vs. $0.77 in Q1 2008 Positive results at our utilities driven by proactive cost reduction efforts Solid non-utility results driven by growth in our Gas Mi
Slide 12: 1Q 2009 Operating Earnings Variance
12 1Q 2009 Operating Earnings Variance December 2008 rate order, expiration of temporary rate reduction from show cause settlement and O&M cost reductions partially offset by decreased sales volumes Drivers * Reconciliation to GAAP reported earnings included in the appendix Detroit Edison MichCon O&
Slide 13: 2009 Plan Remains on Track
2009 Plan Remains on Track 13 Driving for $100 million of cost savings in 2009 $55 million after-tax rate increase at Detroit Edison from Dec. 2008 Rate Order Mid-year self implementation of rates at Detroit Edison 6% annual load loss at Detroit Edison Automotive uncertainty Downturn in the steel in
Slide 14: Overview, 2009 Priorities, Regulated Growth Opportunities
14 Overview 2009 Priorities Regulated Growth Opportunities
Slide 15: Future Growth Opportunities
15 Future Growth Opportunities Utility growth heavily driven by mandated environmental and renewable investment New and existing state and federal regulations drive environmental investments State legislation calls for significant investment in renewable power and energy optimization More substantia
Slide 16: Environmental Investment Outlook
Environmental Investment Outlook 16 Active Carbon Injection (ACI) and Fabric Filters Selective Catalytic Reduction (SCR) Over $1 billion of state and federally mandated environmental investments during the next 5 years Historical full recovery of environmental investment Near-term investment summary
Slide 17: Detroit Edison Renewable Program
Levelized customer surcharge beginning fall 2009 Fixed monthly payment (~$3/month per residential customer) for 20 years Revenues in early years help to pre-fund early construction and avoid regulatory lag Plan estimates annual revenue of approximately $110 million from the surcharge ($35 million fo
Slide 18: DTE Energy's Gas Asset Portfolio
DTE Energy's Gas Asset Portfolio MichCon is the 11th largest US gas utility DTE Gas Midstream is among the top 10 North American storage providers Vector Millennium MichCon MichCon Service Area DTE Gas Storage Fields DTE's gas asset portfolio is well positioned to take advantage of attractive market
Slide 19: MichCon Investment Opportunities
19 Investments to strengthen and expand MichCon's distribution system Investments focused on providing additional outlets to move storage to markets outside of Michigan Storage expansion and improvement projects which benefit customers and provide increased storage to 3rd party customers Distributio
Slide 20: MichCon Retail Growth Opportunities
MichCon Retail Growth Opportunities 20 ~138,000 contracts ~161,000 contracts Home Services Revenues ($ millions) 20% of revenues from this business turns into net income Solid customer growth 138 thousand contracts in 2006; expected to grow to 161 thousand in 2009 MichCon's Home Services Program Sup
Slide 21: Attractive Market Dynamics in Gas Midstream
Source: EEA/DTE Gas Flow Model LNG (from Trinidad, Middle East and North Africa) LNG LNG LNG Non-Utility Attractive Market Dynamics in Gas Midstream Expected Flow of New Gas Supply, 2007 - 2020 Western Canada & Arctic / Alaskan supply Northeast market LNG Coal Bed Methane Tight Sands Gas Fayettevill
Slide 22: Gas Midstream Growth Opportunities
Vector MichCon Chicago Empire Dawn TCPL Millennium Ontario New York Quebec Pennsylvania Ohio Michigan Indiana NY City Virginia West Virginia Kentucky Illinois Rockies Texas Gulf Coast Marcellus Shale 22 DTE Storage Midwest Pipeline Opportunities (40% ownership interest in Vector Pipeline, 1.2Bcf/d c
Slide 23: Gas Midstream is Well Positioned for Continued Growth
Gas Midstream is Well Positioned for Continued Growth 23 11 17 25 28 34 38 40 - 45 ($millions) Vector Expansion Millennium Expansion Storage Expansion Current Projects Growth Long term contracts with investment grade customers Storage 100% contracted (7.5 year average life) Vector Pipeline 100% cont
Slide 24: DTE Energy: A Focused, Integrated Energy Strategy
24 DTE Energy: A Focused, Integrated Energy Strategy Constructive regulatory environment Managing economic risk Realistic 2009 Plan Investment opportunities support long term growth Well supported dividend
Slide 25: Contact Us
25 Contact Us DTE Energy Investor Relations www.dteenergy.com/investors 313-235-8030
Slide 26: DTE Energy
DTE Energy
Slide 27: Auto Bankruptcy Implications
Auto Bankruptcy Implications 27 GM $15 - $20 Chrysler 6 - 12 Key Automotive Suppliers** 5 - 10 $26 - $42 Average DTE Energy Receivables Exposure (after-tax)* Power & Industrial Exposure (after-tax)* GM - Asset Impairment $46 Net GM asset exposure is $11 million after-tax***; we expect some of these
Slide 28: Detroit Edison Variance Analysis
28 Detroit Edison Variance Analysis * Reconciliation to GAAP reported earnings included in the appendix 1Q 2008 Operating Earnings $11 ($23) $41 1Q 2009 Operating Earnings Economy $26 ($ millions) Detroit Edison Operating Earnings* Variance Drivers $78 Temperature-normalized sales volumes down 9% ye
Slide 29: Detroit Edison Sales Volumes are Tracking to Plan
Detroit Edison Sales Volumes are Tracking to Plan 29 Service Area Sales Volume Temperature Normalized (GWh) * Versus prior year
Slide 30: MichCon Variance Analysis
30 MichCon Variance Analysis Higher conservation Q1 2009 O&M reductions primarily driven by continuous improvement initiatives Increased asset base in 2009 ($ millions) MichCon Operating Earnings* Variance Drivers $59 $5 * Reconciliation to GAAP reported earnings included in the appendix Margin O&M
Slide 31: 1Q 2009 Cash Flow
31 1Q 2009 Cash Flow * Reconciliation to GAAP reported cash flow included in the appendix DTE Energy Cash Flow ($ billions) * Drivers Free Cash Flow reached ~$500 million Q1 2009 Free Cash Flow is down from 2008 due to the phasing out of synfuel cash in 2008 Total debt pay down of $400 million in Q1
Slide 32: 1Q 2009 Capital Expenditures
32 1Q 2009 Capital Expenditures DTE Energy Capital Expenditures ($ millions) Drivers Detroit Edison up $50 million driven by Q1 2009 planned plant maintenance MichCon down $24 million driven by completion of storage expansion project in 2008 Lower non-utility spending driven by unconventional gas dr
Slide 33: DTE Energy - Liquidity Summary
DTE Energy - Liquidity Summary Closed $1 billion revolving bank credit facility Demand was strong with 19 banks participating Upsized from original $900 million request Unused liquidity of almost $1.5 billion at the end of Q1 2009 Balance sheet metrics within targeted range 33 As of 3/31/09 ($ milli
Slide 34: 2009 Operating Earnings Guidance
34 2009 Operating Earnings Guidance * Reconciliation to GAAP reported earnings included in the appendix 2009 Operating Earnings Guidance* (millions) 2009 Guidance Goal for 2009 is to preserve our financial strength and earnings level 2009 plan includes a 6% electric sales reduction (~3,000 GWh) vs.
Slide 35: 2009 Capital & Cash Flow Guidance
35 2009 Capital & Cash Flow Guidance Capital Summary ($ millions) * Reconciliation to GAAP reported cash flow included in the appendix Cash Flow Summary ($ billions) Plan to issue $60 - $80 million of equity in 2009 to fund Dividend Reinvestment and employee benefit programs *
Slide 36: Reconciliation of 1Q 2009 Reported to Operating Earnings
36 Reconciliation of 1Q 2009 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 37: Reconciliation of 1Q 2009 Reported to Operating Earnings per Share
37 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 an
Slide 38: Reconciliation of 1Q 2008 Reported to Operating Earnings
Reconciliation of 1Q 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
Slide 39: Reconciliation of 1Q 2008 Reported to Operating Earnings per Share
Reconciliation of 1Q 2008 Reported to Operating Earnings per Share 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 40: Reconciliation of 2009 Reported to Operating Earnings
40 Reconciliation of 2009 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
Slide 41: Reconciliation of Cash from Operations to Adjusted Cash from Operations
41 Reconciliation of Cash from Operations to Adjusted Cash from Operations * accounted for in the investing activities section of the statement of cash flows Adjusted Cash From Operations Use of Adjusted Cash From Operations - DTE Energy management believes that adjusted cash from operations provide