Dte Energy Company · NYSE:DTE
Dte Energy — Investor Presentation (May 2014)
50 slides from Dte Energy's investor presentation, May 12, 2014
Slide 1: Business Update May 2014
Business Update May 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, Financial Update, Summary
• Overview • Long-Term Growth Update • Financial 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: Substantial portion of non-utility operating earnings 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 6: Our business strategy is fundamental to how we create value for 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 7: Long-Term Growth Update
• Overview • Long-Term Growth Update • Financial Update • Summary 7
Slide 8: 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 9: DTE has delivered total shareholder return above market indices
DTE has delivered total shareholder return above market indices 9 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 10: Michigan economic indicators highlight continued growth
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 Lower Unemployment Rate Source: IHS Detroit named one of seven new entrepreneur tech hubs $368 $314 $35
Slide 11: 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 11 MI Strong Strong / Adequate Adequate
Slide 12: Upward pressure on customer rates being minimized
Upward pressure on customer rates being minimized by cost control initiatives and surcharge reductions Lower Surcharges Structural Cost Reductions Continuous Improvement Reliability Investments Cost Pressure Environmental Investments Customer Rates $650 million of surcharge reductions Targeting
Slide 13: DTE Electric's next rate case filing delayed
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: DTE Electric will increase rate base ~$3 billion with no new rates
$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 15: Electric utility investing $6.7 billion in three key growth areas
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 16: Resource Adequacy Survey Update
Resource Adequacy Survey Update DTE Energy Coal Fleet (MW of Capacity) Long-term Units ~4,400 MW Potential Retirements ~2,600 MW Plant modernization, energy policy and MISO resource findings drive investments that will transform our generation mix over the next decade Expect $1.3 - $2.0 billion annu
Slide 17: Gas utility making $1.2 billion of reliability and pipeline 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 18: Gas Storage & Pipelines developing asset portfolio with multiple growth platforms
Gas Storage & Pipelines is developing an asset portfolio with multiple growth platforms Pipeline Gathering Storage 18
Slide 19: Gas Storage & Pipelines platforms drive growth
Bluestone Pipeline • 0.6 Bcf/d to Millennium and Tennessee pipelines; 0.3 Bcf/d expansion 2014-2015 Millennium Pipeline • 0.8 Bcf/d to Ramapo, NY; 0.2 – 0.5 Bcf future expansion (planning phase) post 2017 Vector Pipeline • 1.3 Bcf/d from Chicago to Ontario; potential NEXUS related expansion Proposed
Slide 20: Gas Storage & Pipelines operating earnings potential of $130 million by 2018
2012A 2013A 2014E 2015E 2016E 2017E 2018E $78 - $86 Gas Storage & Pipelines operating earnings* potential of $130 million by 2018 * Reconciliation to GAAP reported earnings included in the appendix (millions) Pipeline Platform Gathering Platform Storage Platform New Project Development (NEXUS; other
Slide 21: Power & Industrial Projects 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, 10 stat
Slide 22: Power & Industrial Projects 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 23: Systematic approach to evaluate business opportunities
Power & Industrial Projects applies a systematic approach to evaluate business opportunities to achieve premium returns Limited Competition Long-Term Contracts Strong Customer Sites Focus on niche areas where we can capitalize on unique competencies Contract maturities ranging from 5 to 25 years for
Slide 24: Financial Update
• Overview • Long-Term Growth Update • Financial Update • Summary 24
Slide 25: Confident in 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 26: 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 $1.2 We are on track to achieve 2014 cash f
Slide 27: Strong balance sheet remains a key priority
2013 2014E * Debt excludes securitization, a portion of DTE Gas’ short-term debt, and considers 50% of the Junior Subordinated Notes as equity Leverage* Funds from Operations / Debt* 2013 2014E 49% 52% Target 50% - 52% 23% 22% Target 20% - 22% Strong balance sheet remains a key priority and supports
Slide 28: Summary
• Overview • Long-Term Growth Update • Financial Update • Summary 28
Slide 29: Summary
Summary • Long-term plan supports continued 5% - 6% operating EPS growth • On track to achieve 2014 operating earnings guidance • Constructive regulation, coupled with a focus on operational excellence and strong customer satisfaction, supports meaningful growth at the utilities • Solid earnings gro
Slide 30: Contact Us
Contact Us DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030 30
Slide 31: Appendix
mo DTE Energy: Appendix
Slide 32: First Quarter 2014 Operating Earnings Variance
1Q 2013 1Q 2014 Change DTE Electric 115$ 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 33: 2014-2016 cash from operations and equity issuances plan
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: Earnings growth opportunities support 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: Utility rate strategies minimize new rate filings
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 36: DTE Electric plans $6.7 billion of investments over 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 37: DTE Electric has built or contracted ~890MWs of renewable energy
DTE Electric has built or contracted for approximately 890MWs of renewable energy (850MWs of wind) since 2009 37 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 38: DTE Gas plans $1.2 billion of investments
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) 38 $2.8B $3.5 - $3.7B YE Rate Base* $95M $114M Depreciation *Includes working c
Slide 39: CI capability has enabled us to lead the industry in cost management
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 > $800 million; excluding fuel and purchased power **Source: SNL Financial, FERC Form 2; gas distribution companies with greater than 300,000 customer
Slide 40: Gas Storage & Pipelines assets have expansion opportunities
Pipeline Assets Capacity Bcf/ d In-Service Millennium Pipeline 0.8 Future Expansion (planning phase) 0.2 - 0.5 2017 + Total Planned Capacity 1.0 - 1.3 Bluestone Pipeline (bi-directional) 0.6 Expansion #1 0.2 3Q 2014 Expansion #2 0.1 2Q 2015 Total Planned Capacity 0.9 Vector Pipeline 1.3 NEXUS-relate
Slide 41: Energy regulation passed in 2008 established constructive regulatory environment
Energy regulation passed in 2008 established a more constructive regulatory environment Key components of the 2008 Energy Legislation Regulatory Structures Fully Regulated Fully Deregulated Michigan 41 Regulatory Structure Changes • File & Use Rates with 6 month self- implementation • Final order in
Slide 42: MPSC is the state regulator for electric and gas utilities
Sally Talberg Commissioner Appointed: 7/3/13 Term Ends: 7/2/19 Greg White Commissioner Appointed: 12/4/09 Term Ends: 7/2/15 Source: MPSC website - www.michigan.gov/mpsc - May 2014 • The MPSC establishes fair and reasonable rates and administers fair terms and conditions of service for Michigan’s uti
Slide 43: 1Q 2014 Reconciliation of Reported to Operating Earnings
1Q 2014 DTE Electric DTE Gas Gas Storage and Pipelines Power and Industrial Projects Corporate and Other Growth Segments Energy Trading DTE Energy Reported Earnings 136$ 129$ 21$ 15$ (17)$ 284$ 42$ 326$ NY state tax law change - - - - 8 8 - 8 Mark to market transactions - - - - - - (34) (34) Operati
Slide 44: 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 45: 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 46: 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 47: 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 48: 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 49: 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 50: 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 -