Dte Energy Company · NYSE:DTE
Dte Energy — Corporate Update (October 2015)
47 slides from Dte Energy's corporate update, Oct 6, 2015
Slide 1: Business Update October 6, 2015
Business Update October 6, 2015 EXHIBIT 99.1
Slide 2: Safe Harbor Statement
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: impact of regulation by the EPA, FERC, MPSC, NRC and CFTC as well as other applicable governmental proceedin
Slide 3: Overview, Long-Term Growth Update, Financial Update, Summary
3 • Overview • Long-Term Growth Update • Financial Update • Summary
Slide 4: DTE Energy's growth is driven by strong, stable utilities and complementary non-utility businesses
DTE Energy’s growth is driven by strong, stable utilities and complementary non-utility businesses 4 DTE Electric Electric generation and distribution DTE Gas Natural gas transmission, storage and distribution Complementary Non-Utility Businesses Strong, Stable and Growing Utilities Fully Regulated
Slide 5: Our system of priorities is fundamental to how we create value for our shareholders
Our system of priorities is fundamental to how we create value for our shareholders 5 5% - 6% Annual EPS Growth Attractive Dividend Strong Balance Sheet 5
Slide 6: DTE's 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 > 300,00
Slide 7: Engaged employees focusing on customers' experiences have led to strong satisfaction results
Engaged employees focusing on improving our customers’ experiences have led to strong satisfaction results J.D. Power Rank vs. Midwest Peers Note: DTE Energy received the highest numerical score in the Midwest in the proprietary J.D. Power 2015 Gas Utility Business Customer Satisfaction Study SM. Ba
Slide 8: Our 2015 operating EPS guidance and 2016 early outlook provide solid growth
Our 2015 operating EPS* guidance and 2015 early outlook provide solid growth 8 * Reconciliation to GAAP reported earnings included in the appendix (dollars per share) $3.33 $3.64 $3.75 $3.94 $4.09 $4.60 $2.12 $2.24 $2.35 $2.48 $2.62 $2.76 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Operat
Slide 9: Overview, Long-Term Growth Update, Financial Update, Summary
9 • Overview • Long-Term Growth Update • Financial Update • Summary
Slide 10: Michigan's economy continues to improve
410 417 426 435 442 2013 2014 2015E 2016E 2017E (billons) Michigan’s economy continues to improve 8.5% 7.1% 5.6% 5.6% 5.5% 2013 2014 2015E 2016E 2017E 2,433 2,243 2,386 2,522 2,485 2013 2014 2015E 2016E 2017E (000s) 15.1 15.8 16.9 19.8 21.8 2013 2014 2015E 2016E 2017E (000s) Gross State Product Auto
Slide 11: Lansing leaders are working toward constructive energy policy reform
Lansing leaders are working toward constructive energy policy reform 11 Senator Mike Nofs Energy and Technology Committee Chair Valerie Brader Executive Director for the Michigan Agency for Energy Representative Aric Nesbitt Energy Policy Committee Chair Governor Rick Snyder Clean 1 2 Reliable 4 Aff
Slide 12: Current comprehensive energy legislation policy proposals address a number of key issues
Current comprehensive energy legislation policy proposals address a number of key issues Retail Open Access Integrated Resource Planning Regulatory Senate 12 • One-time election • Cost pre-approval process • Fair net-metering 5 year requirement Position House 3 year requirement • Capacity requirem
Slide 13: We will invest ~$13 billion in capital projects to drive growth through 2020
We will invest ~$13 billion in capital projects to drive growth through 2020 13 (billions) ~$13 $8.2 Distribution infrastructure, maintenance, new generation $1.6 Base investments, infrastructure renewal, NEXUS related $2.0-$2.6 Gathering investments, NEXUS, pipeline expansions $0.6-$0.9 Cogeneratio
Slide 14: The investment needs at our utilities far outstrip what is included in our plans
The investment needs at our utilities far outstrip what is included in our plans 14 Generation capacity Gas/renewables mix Distribution infrastructure up to $8 billion Long-term Potential Additional Investment Gas infrastructure Opportunity to reprioritize or increase investment
Slide 15: Generation and infrastructure replacement will significantly increase investment over the next 10 years
Generation and infrastructure replacement will significantly increase investment over the next 10 years 32% DTE Electric Total Investment ~$8.2 ~$9.7 2016-2020 2021-2025 ~$7.1 2011-2015 New generation (billions) Distribution infrastructure 15 Maintenance and other projects
Slide 16: Our generation mix shifts from coal to natural gas and renewables
Our generation mix shifts from coal to natural gas and renewables as we address the EPA’s Clean Power Plan 32% Coal Retirements 2030 Scenario* ~6.7 2015* Gas / Renewables Additions* ~2.2 ~2.2 ~12.3 (~3.5) ~25% 15%-30% ~15% Nuclear / Other Gas Renewables Coal ~1.2 30%-45% DTE Electric Capacity (GW) *
Slide 17: We have identified areas of greatest need for capital investment
We have identified areas of greatest need for capital investment 32% Infrastructure Resilience • Replace aging infrastructure • Focus on worst performing areas Technology Enhancements • Increase control capabilities • Provide greater visibility Infrastructure Redesign • Address overloaded substation
Slide 18: Plan to invest $6.6 billion to $10.6 billion in distribution infrastructure
Over the next 10 years we plan to invest $6.6 billion to $10.6 billion in distribution infrastructure 32% 2016-2025 (billions) ~$18 Maintenance and other projects New generation Distribution infrastructure DTE Electric Total Investment Base Case Potential Investment Base Infrastructure renewal Infra
Slide 19: Sharp declines in business rates ahead of heavy investment
We enter this period of heavy investment on the heels of sharp declines in business rates 19 15%* Large Industrial Customers 9%* Commercial Customers • $600 million of surcharge reductions in 2014 and 2015 • Business cost of service rates implemented in 2015 • These reductions are after $230 million
Slide 20: Investment in our gas utility will increase significantly over the next 5 years
Investment in our gas utility will increase significantly over the next 5 years 20 2011-2015 2016-2020 ~$1.1 ~$1.6 DTE Gas Total Investment (billions) Base infrastructure Infrastructure renewal NEXUS related
Slide 21: The DTE Gas system will be expanded to support the proposed NEXUS interconnection
The DTE Gas system will be expanded to support the proposed NEXUS interconnection • $200 million of NEXUS related investment at DTE Gas through 2017 • Spend primarily for additional compression • Supported by long-term transport agreement with NEXUS DTE Gas service area NEXUS DTE Gas 21
Slide 22: Recovery of DTE Gas capital investments will require periodic rate cases
Recovery of DTE Gas capital investments will require periodic rate cases Capital Investment and Recovery 2016 - 2020 Infrastructure recovery mechanism Base rates (depreciation) Customer growth and cost reductions Periodic rate cases Capital Investment Recovery Mechanism (billions) ~$1.6 22 Next gas
Slide 23: Gas Storage & Pipelines is developing an asset portfolio with multiple growth platforms
Gas Storage & Pipelines is developing an asset portfolio with multiple growth platforms 23 Proposed NEXUS Pipeline Michigan Gathering DTE Gas DTE Storage Marcellus Shale Utica Shale Bluestone Pipeline Bluestone Gathering System
Slide 24: Gas Storage & Pipelines operates projects within asset platforms
Gas Storage & Pipelines operates projects within 3 asset platforms • Bluestone Pipeline • Millennium Pipeline • Vector Pipeline • Proposed NEXUS Pipeline • Bluestone Gathering • Michigan Gathering • 91 Bcf of working capacity • Strategically located between Chicago and Dawn trading hubs Pipeline Pla
Slide 25: Gas Storage & Pipelines assets have expansion opportunities
Gas Storage & Pipelines assets have expansion opportunities to accommodate increased demand Pipeline Assets Capacity Bcf/ d In-Service Millennium Pipeline 0.8 Expansion #1 0.2+ 4Q 2017 Total Planned Capacity ~1.0 Bluestone Pipeline (bi-directional)* 0.9 Expansion #3 0.1 2Q 2016 Total Planned Capacit
Slide 26: DTE is increasing ownership and investment in NEXUS Gas Pipeline
DTE is increasing ownership and investment in NEXUS Gas Pipeline • 50% ownership with Spectra Energy • 1.5 Bcf/d pipeline • ~250 miles of pipe • DTE expected investment $1 billion • In-service 4Q 2017 26 Increased ownership percentage from 33% to 50%
Slide 27: We are actively developing several new investments
We are actively developing several new investments 27 Proposed NEXUS Pipeline Marcellus Shale Utica Shale Bluestone Pipeline Bluestone Gathering System • Gathering opportunities in Appalachian Basin • Lateral opportunities with link to: ‒ End use markets ‒ Power plants • Bolt-on acquisition in advan
Slide 28: Gas Storage & Pipelines is targeting operating earnings of $170 million by 2020
2014A 2015E 2016E 2017E 2018E 2019E 2020E * Reconciliation to GAAP reported earnings included in the appendix Pipeline Platform** Gathering Platform Storage Platform New Project Development (Other gathering and pipeline expansions) ~$170 $85 $45 $15 $25 ** Includes NEXUS at 50% ownership $82 $95 - $
Slide 29: Power & Industrial Projects operates within three distinct business lines
Power & Industrial Projects (P&I) operates within three distinct business lines DTW Airport, Michigan Gallia Fuels Project, Ohio Mt. Poso Waste Wood Project, California • On-site energy and utility services for industrial and commercial customers • Coke and pulverized coal for steel customers • Wood
Slide 30: P&I serves its customers from sites in states
P&I serves its customers from 69 sites in 17 states 30 Industrial Energy Services Renewable Energy Reduced Emissions Fuel
Slide 31: P&I's new project growth will offset reduced emissions fuel expirations in 2020
P&I’s new project growth will offset reduced emissions fuel expirations in 2020 2014A 2015E 2016E 2017E 2018E 2019E 2020E ~$105 $30 $50 $60 ($65) $30 New Project Development / Acquisitions Renewable Energy Reduced Emissions Fuel Industrial Energy Services Corporate allocations, interest, overheads $
Slide 32: Overview, Long-Term Growth Update, Financial Update, Summary
32 • Overview • Long-Term Growth Update • Financial Update • Summary
Slide 33: We are confident our growth plan will deliver value to our shareholders
We are confident our growth plan will deliver value to our shareholders 33 ** Compared to S&P 500 utilities. Source: Bloomberg 2015 operating EPS Guidance midpoint $4.78 total DTE $4.69 growth segments 2016 operating EPS early outlook midpoint $4.93 Providing 5% - 6% growth Significant capital inves
Slide 34: We increased our 2015 operating EPS guidance and issued 2016 early outlook
We increased our 2015 operating EPS* guidance and issued 2016 early outlook (millions, except EPS) * Reconciliation to GAAP reported earnings included in the appendix ** Total DTE Energy excluding Energy Trading 2015 Revised Guidance 2016 Early Outlook 2015 Original Guidance DTE Electric DTE Gas Gas
Slide 35: A strong balance sheet remains a key priority and supports our growth
A strong balance sheet remains a key priority and supports our growth Leverage* 23% 25% * Debt excludes securitization, a portion of DTE Gas’ short-term debt, and considers 50% of the Junior Subordinated Notes as equity Target 50% - 53% Target 20% - 22% 5 ** Funds from Operations (FFO) is calculated
Slide 36: Overview, Long-Term Growth Update, Financial Update, Summary
36 • Overview • Long-Term Growth Update • Financial Update • Summary
Slide 37: Summary
• We are confident in this year’s performance as we increased our 2015 operating EPS* guidance midpoint to $4.69 for our growth segments and $4.78 for DTE Energy • Our 2016 early outlook midpoint of $4.93 EPS* represents 7% growth from original 2015 guidance midpoint • This year we increased our ann
Slide 38: Detroit is in the midst of a revitalization
Detroit is in the midst of a revitalization 38 DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030 DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030
Slide 39: Appendix
39 Appendix
Slide 40: Strong growth opportunities coupled with contingency planning support 5% to 6% EPS growth
DTE Operating Earnings Growth Share Issuance Contingency DTE Operating EPS* Growth Non-Utilities 7% - 8% 5% - 6% * Reconciliation to GAAP reported earnings included in the appendix Strong growth opportunities coupled with contingency planning gives us confidence in our ability to deliver 5% to 6% op
Slide 41: 2015 Cash Flow and Capital Expenditures Guidance
2015 Cash Flow and Capital Expenditures Guidance 41 (billions) Capital Expenditures Summary Cash Flow Summary 2014 2015 Actual Guidance Cash From Operations* $1.8 $1.7 Capital Spending (2.1) (2.6) Free Cash Flow ($0.3) ($0.9) Asset Sales & Other - 0.1 Dividends (0.5) (0.5) Net Cash ($0.8) ($1.3) Deb
Slide 42: The MPSC is the state regulator for electric and gas utilities
The Michigan Public Service Commission (MPSC) is the state regulator for electric and gas utilities Sally Talberg Commissioner Appointed: 7/3/13 Term Ends: 7/2/19 Norm Saari Commissioner Appointed: 8/2/15 Term Ends: 7/2/21 Source: State of Michigan website - www.michigan.gov/ • The MPSC establishes
Slide 43: DTE regulatory filing timeline
DTE regulatory filing timeline DTE Gas • Filed expanded Infrastructure Recovery Mechanism (IRM) 2015 • Filed cost of service rates and general rate case DTE Electric 2014 2016 • Business cost of service rates implemented 3Q • Self implement general rates 3Q • Final rate order 4Q • Expect rate case f
Slide 44: DTE Electric plans $8.2 billion of investments over the next 5 years
DTE Electric plans $8.2 billion of investments over the next 5 years 2015E 2016E 2017E 2018E 2019E 2020E Distribution infrastructure New generation Maintenance and other projects* 2016E - 2020E Total ~$14.5B ~$19.4B YE Rate Base** ~$663M ~$888M Depreciation * Includes power reliability, existing gen
Slide 45: DTE Gas plans $1.6 billion of investments over the next years
DTE Gas plans $1.6 billion of investments over the next 5 years 2015E 2016E 2017E 2018E 2019E 2020E 2016E - 2020E Total Base infrastructure Infrastructure renewal* NEXUS related $1,600 $200 $650 $750 ~$3.3B ~$4.5B - $4.6B YE Rate Base** ~$102M ~$136M Depreciation ** Includes working capital (million
Slide 46: 2009 – 2014 Full Year Reconciliation of Reported to Operating Earnings
2009 – 2014 Full Year 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
Slide 47: Use of Operating Earnings Information
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