Dte Energy Company · NYSE:DTE
Dte Energy — Non-Deal Roadshow (July 2009)
44 slides from Dte Energy's roadshow presentation, Jul 9, 2009
Slide 1: Business and Financial Update New York Investor Meetings
Business and Financial Update New York Investor Meetings July 10, 2009 Anthony F. Earley David E. Meador Chairman & CEO Executive VP & CFO
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, Future Growth Opportunities
3 Overview 2009 Priorities Future 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: 2009 Priorities
6 Overview 2009 Priorities Future 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: 2009 Plan Remains on Track
2009 Plan Remains on Track 11 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 12: Auto Bankruptcy Implications
Auto Bankruptcy Implications 12 GM $15 - $20 Chrysler 6 - 7 Key Automotive Suppliers** 5 - 10 $26 - $37 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 p
Slide 13: Future Growth Opportunities
13 Overview 2009 Priorities Future Growth Opportunities
Slide 14: Future Growth Opportunities
14 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 15: Environmental Investment Outlook
Environmental Investment Outlook 15 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: Scrubbers for Monroe units 3&4 will be completed in 2009 Scrubbers for Monroe units
Slide 16: Detroit Edison Renewable Program and Surcharge
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 ($35 million fo
Slide 17: Non-Utility Growth Opportunities
17 Non-Utility Growth Opportunities Power & Industrial Projects Gas Midstream Unconventional Gas Production Transport and Store Natural Gas Own and Operate Energy-Related Assets Western Barnett Shale Gas Production in Texas Industrial /Utility Solid Fuels On-Site Energy Services Renewable Energy Fut
Slide 18: Gas Midstream Growth Opportunities
Vector MichCon Chicago Empire Dawn TCPL Millennium Ontario New York Quebec Pennsylvania Ohio Michigan Indiana NY City Virginia West Virginia Kentucky Illinois Rockies Texas Gulf Coast Marcellus Shale 18 DTE Storage Midwest Pipeline Opportunities (40% ownership interest in Vector Pipeline, 1.2Bcf/d c
Slide 19: Gas Midstream is Well Positioned for Continued Growth
Gas Midstream is Well Positioned for Continued Growth 19 11 17 25 28 34 38 40 - 45 ($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 20: Power & Industrial Projects Provide Utility-Like Services
Industrial Solid Fuels Product Value: Quality coke production and supply for steel- making Cost savings via substituting pulverized coal and petcoke for higher priced natural gas On-Site Energy Services Product Value: Labor savings, fuel / energy savings, O&M efficiency Lower energy costs for indust
Slide 21: Past Success at Developing and Selling Unconventional Gas Assets
Past Success at Developing and Selling Unconventional Gas Assets for Premium Returns 2007 Q109 change Reserves (Bcfe) 336 432* +29% Proved 144 167* +16% Probable 192 265* +38% Gross Producing Wells 120 162 +35% Net Production Rate (Mmcfe/day) 10 17 +70% Future DTE's unconventional gas business has b
Slide 22: DTE Energy: A Focused, Integrated Energy Strategy
22 Constructive regulatory environment Managing economic risk Realistic 2009 Plan Investment opportunities support long term growth Well supported dividend DTE Energy: A Focused, Integrated Energy Strategy
Slide 23: Contact Us
23 Contact Us DTE Energy Investor Relations www.dteenergy.com/investors 313-235-8030
Slide 24: DTE Energy
DTE Energy
Slide 25: Q1 2009 Overview
Q1 2009 Overview 25 * 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 26: 1Q 2009 Operating Earnings Variance
26 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 27: Detroit Edison Variance Analysis
27 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 $78 Temperature-normalized sales volumes down 9% ye
Slide 28: Detroit Edison Sales Volumes are Tracking to Plan
Detroit Edison Sales Volumes are Tracking to Plan 28 Service Area Sales Volume Temperature Normalized (GWh) * Versus prior year
Slide 29: MichCon Variance Analysis
29 MichCon Variance Analysis Higher conservation Q1 2009 O&M reductions primarily driven by continuous improvement initiatives Increased asset base in 2009 ($ millions) MichCon Operating Earnings* Variance Drivers $59 $5 * Reconciliation to GAAP reported earnings included in the appendix Margin O&M
Slide 30: 1Q 2009 Cash Flow
30 1Q 2009 Cash Flow * Reconciliation to GAAP reported cash flow included in the appendix DTE Energy Cash Flow ($ 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 $400 million in Q1
Slide 31: 1Q 2009 Capital Expenditures
31 1Q 2009 Capital Expenditures DTE Energy Capital Expenditures ($ 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 32: 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 $1.5 billion at the end of Q1 2009 Balance sheet metrics within targeted range 32 As of 3/31/09 ($ milli
Slide 33: 2009 Operating Earnings Guidance
33 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 34: 2009 Capital & Cash Flow Guidance
34 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 35: Detroit Edison Rate Case Filing
35 Detroit Edison Rate Case Filing Detroit Edison's Estimated Revenue Deficiency Key Elements Anticipate self implementing some portion of rate request on or after July 26, 2009 Rate request primarily driven by economic pressures impacting sales, uncollectible expense and pension costs Includes prop
Slide 36: Barnett Map
36 Barnett Map Clay Zones of DTE Acreage Vertical Wells Horizontal Wells Dallas/ Ft Worth Metropolitan Area 60,000 acres Hood Johnson Erath Jack Somervell Hill Wise Tarrant Bosque Parker Denton Palo Pinto
Slide 37: 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 38: Reconciliation of 1Q 2009 Reported to Operating Earnings
38 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 39: Reconciliation of 1Q 2009 Reported to Operating Earnings per Share
39 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 40: 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 41: 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 42: Reconciliation of 2008 Reported to Operating Earnings
42 Reconciliation of 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 43: Reconciliation of 2009 Reported to Operating Earnings
43 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 44: Reconciliation of Cash from Operations to Adjusted Cash from Operations
44 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