Dte Energy Company · NYSE:DTE
Dte Energy — Investor Presentation (February 2016)
50 slides from Dte Energy's investor presentation, Feb 22, 2016
Slide 1: Business Update February 23-24, 2016
Business Update February 23-24, 2016 EXHIBIT 99.1
Slide 2: Safe Harbor Statement
2 Safe Harbor Statement Many factors 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 proceedings and regulations, including any associated impact on rate structures; t
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
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: Focus on reliability and customer experiences to achieve strong satisfaction
We continue to focus on reliability and our customers’ experiences to achieve strong satisfaction results J.D. Power Rank vs. Midwest Peers Source: J.D. Power 2015 Gas/Electric Utility Residential Customer Satisfaction Study(sm)(large providers) . Your experiences may vary. Visit jdpower.com Residen
Slide 7: We remain confident about delivering our 5%-6% operating EPS growth target
$2.35 $2.48 $2.62 $2.76 $2.92 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 We remain confident about delivering our 5%-6% operating EPS* growth target 7 * Reconciliation to GAAP reported earnings included in the appendix Operating EPS Dividend Actuals Forecast $4.73 2015 Operating EPS Total DTE
Slide 8: DTE has consistently delivered total shareholder return above the peer average
DTE has consistently delivered total shareholder return above the peer average Source: Bloomberg (as of 1/31/16) 8 Total Shareholder Return 50% • Total return in or near top quartile of S&P 500 Utilities for 3, 5 and 10 years 3-YR 124% 217% 10-YR 5-YR S&P 500 Utilities DTE Energy 41% 81% 136%
Slide 9: Overview, Long-Term Growth Update, Financial Update, Summary
9 • Overview • Long-Term Growth Update • Financial Update • Summary
Slide 10: Energy legislation continues to be a priority for the state
10 • Key elements focus on: Retail open access capacity and reliability requirements Integrated resource planning Renewable energy and energy efficiency • Moved package of bills out of House Energy Committee last year • Focus of activity is now in Senate Energy legislation continues to be a prio
Slide 11: Infrastructure improvements drive capital investments through 2020
~$13 Distribution infrastructure, maintenance, new generation Base investments, infrastructure renewal, NEXUS related Gathering investments, NEXUS, pipeline expansions Cogeneration, on-site energy 2016 – 2020 Current Plan 11 ~$10 2011 – 2015 Actual P&I GSP Gas Electric Distribution and generation in
Slide 12: Electric generation and infrastructure renewal will significantly increase investment in the decade ahead
Electric generation and infrastructure renewal will significantly increase investment in the decade ahead 32% DTE Electric Total Investment ~$8.2 ~$9.7 2016-2020 2021-2025 ~$7.1 2011-2015 New generation Distribution infrastructure 12 Maintenance and other projects (billions)
Slide 13: Plan to invest in distribution infrastructure over the next years
Over the next 10 years we plan to invest ~$6.5 billion to $10.5 billion in distribution infrastructure 32% 2016-2025 ~$18 Maintenance and other projects New generation Distribution infrastructure DTE Electric Total Investment Base Case Potential Investment Base Infrastructure redesign Infrastructure
Slide 14: Coal retirements will commence in the year window and then accelerate after 2020
Coal retirements will commence in the 5 year window and then accelerate after 2020 32% 2015 2016 - 2020 2021 - 2025 ~1,825 MW ~125 MW ~550 MW 2026 - 2030 ~1,000 MW DTE Coal Retirement Timeline (Scenario*) * Estimated amounts. Timing and mix of generation impacted by MISO capacity requirements, Michi
Slide 15: 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 15 2011-2015 2016-2020 ~$1.1 ~$1.6 DTE Gas Total Investment Base infrastructure Infrastructure renewal NEXUS related (billions)
Slide 16: Managing customer affordability even with requested rate increases
Average Annual Residential Bill* DTE Electric We are managing customer affordability even with requested rate increases 16 $1,223 $1,225 2012 2013 2014 2015 2016E 2017E Average Annual Residential Bill** DTE Gas $910 $830 2012 2013 2014 2015 2016E 2017E 9% Flat ** Assumes normal weather; assumes self
Slide 17: DTE Electric industrial rates have declined 22% since 2013
DTE Electric industrial rates have declined 22% since 2013 and are below the national average 17 * August 2015 2015 Industrial Electric Rate* by State (¢ / kWh) 1st quartile DTE 2015* WA RI 2nd quartile 3rd quartile 4th quartile US and Great Lakes average 6.9¢
Slide 18: The DTE Gas system will be expanded to support the NEXUS interconnection
The DTE Gas system will be expanded to support the 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 18
Slide 19: Approval to expand our main replacement program
We recently received approval to expand our main replacement program ~$80 Previous Plan Current Plan ~$130 Gas Renewal Plan (Investment) * Consists of main replacement, meter move-out and pipeline integrity 19 • MPSC approved expansion of main replacement program in November 2015 • Cuts renewal time
Slide 20: Gas Storage & Pipelines is well positioned around premium shale plays
20 NEXUS Pipeline DTE Gas DTE Storage Marcellus Shale Utica Shale Bluestone Pipeline Bluestone Gathering System Michigan Gathering Gas Storage & Pipelines is well positioned around premium shale plays in North America Headquarters Regional offices
Slide 21: Marcellus and Utica Shale development will drive investment in NEXUS and Millennium pipelines
The Marcellus and Utica Shale development will drive on-going investment in our NEXUS and Millennium pipelines • Millennium expansion: ~200 MMcf/day – FERC pre-filing 1Q16; in-service expected 2H18 • Valley Lateral: ~130 MMcf/day on new 8 mile lateral – FERC filing 4Q15; in-service expected 2Q17 • W
Slide 22: The Ohio market has provided strong support on the NEXUS path
The Ohio market has provided strong support on the NEXUS path 22 Interconnect agreements with local distribution companies, industrials and power generators in Ohio – 1.4 Bcf/d of opportunity Close proximity to significant additional power generation load
Slide 23: Gas Storage & Pipelines is focused on continued success in pipeline and gathering
Gas Storage & Pipelines is focused on continued success in pipeline and gathering • Accelerated Marcellus development in 2015 delivered 30% year over year earnings growth • Earnings growth driven by both pipeline and gathering platforms • Assessing investment opportunities given current sector dynam
Slide 24: Power & Industrial Projects operates within three distinct business lines
Power & Industrial Projects operates within three distinct business lines DTW Airport, Michigan Gallia Fuels Project, Ohio Mt. Poso Waste Wood Project, California • On-site utility services for industrial and commercial customers • Coke and pulverized coal for steel customers • Wood-fired power plan
Slide 25: Power & Industrial Projects serves its customers from sites in 17 states
Power & Industrial Projects serves its customers from 66 sites in 17 states 25 Industrial Energy Services Renewable Energy Reduced Emissions Fuel
Slide 26: Power & Industrial Projects is focused on replacing REF earnings over the 5 year outlook
Power & Industrial Projects is focused on replacing REF earnings over the 5 year outlook • 2016 earnings in line with 2015 actuals • Higher REF earnings offset by lower steel related earnings Near-Term • Grow cogeneration portfolio • Pursue strategic asset acquisitions • Maximize REF opportunities t
Slide 27: Overview, Long-Term Growth Update, Financial Update, Summary
• Overview • Long-Term Growth Update • Financial Update • Summary 27
Slide 28: We are confident we will achieve our 2016 operating EPS guidance
We are confident we will achieve our 2016 operating EPS* guidance * Reconciliation to GAAP reported earnings included in the appendix ** Total DTE Energy excluding Energy Trading 2016 Guidance 2015 Actuals DTE Electric DTE Gas Gas Storage & Pipelines Power & Industrial Projects Corporate & Other Gro
Slide 29: Extension of bonus depreciation is a key driver of lower planned equity issuances
Previous Plan Current Plan Planned Equity Issuances 2016-2018 Extension of bonus depreciation is a key driver of lower planned equity issuances • Bonus depreciation provides a total estimated cash benefit of $300 million to $400 million over the 5 year period • Lower planned equity compared to previ
Slide 30: A strong balance sheet remains a key priority to support growth
25% 21% 2014 2015 2016-2018E 51% 52% 2014 2015 2016-2018E Leverage* A strong balance sheet remains a key priority to support growth * Debt excludes securitization, a portion of DTE Gas’ short-term debt, and considers 50% of the Junior Subordinated Notes as equity Funds from Operations** / Debt* Targ
Slide 31: Overview, Long-Term Growth Update, Financial Update, Summary
31 • Overview • Long-Term Growth Update • Financial Update • Summary
Slide 32: Summary
• Exceeded our operating EPS* growth target with historical growth of 6.5% • Targeting 5% to 6% operating EPS* growth ‒ 2015 growth segments provided a 5.6% year over year increase ‒ Grow dividends in line with earnings • Constructive state policy, coupled with a focus on operational excellence and
Slide 33: Detroit is in the midst of a revitalization
Detroit is in the midst of a revitalization 33 DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030 DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030
Slide 34: DTE Energy
DTE Energy
Slide 35: DTE Energy 2015 Operating Earnings Variance
DTE Energy 2015 Operating Earnings* Variance 35 2014 2015 Change DTE Electric 528$ 562$ 34$ DTE Gas 140 132 (8) Gas Storage & Pipelines 82 107 25 Power & Industrial Projects 90 95 5 Corporate & Other (44) (48) (4) Growth segments** 796$ 848$ 52$ Growth segments operating EPS 4.48$ 4.73$ 0.25$ Energy
Slide 36: Cash Flow Summary and 2016 Capital Guidance
Cash Flow Summary 36 DTE Energy 2016 Cash Flow and Capital Guidance 2015 Actual 2016 Guidance Cash From Operations* $1.9 $1.8 Capital Spending (2.3) (2.7) Free Cash Flow ($0.4) ($0.9) Asset Sales & Other $0.1 - Dividends (0.5) (0.5) Net Cash ($0.8) ($1.4) Debt Financing: Issuances $1.1 $1.9 Redempti
Slide 37: Our generation mix shifts from coal to natural gas and renewables
Gas / Renewables Additions 37 Our generation mix shifts from coal to natural gas and renewables Coal Retirements 2030 Scenario 2015 12.4 (3.5) 10% 12 - 13 3.3 - 4.5 Nuclear / Other Gas Renewables Coal DTE Electric Capacity (GW)
Slide 38: DTE is focused on retiring its aging coal fleet
38 DTE is focused on retiring its aging coal fleet, with some facilities upwards of 60 years old Facility Year in Service Belle River 1984 & 1985 Monroe 1971, 1973 & 1974 River Rouge 1957 & 1958 St. Clair 1953, 1954, 1959, 1961 & 1969 Trenton Channel 1949 & 1968 Source: DTE Energy 2015 10-K 38
Slide 39: 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 2015A 2016E 2017E 2018E 2019E 2020E Distribution infrastructure New generation Maintenance and other projects* 2016E - 2020E Total ~$14.6B ~$19.7B YE Rate Base** ~$662M ~$886M Depreciation * Includes power reliability, existing gen
Slide 40: 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 2015A 2016E 2017E 2018E 2019E 2020E 2016E - 2020E Total Base infrastructure Main Replacement* NEXUS related $1,600 $200 $600 $800 ~$3.3B ~$4.6B - $4.7B YE Rate Base** ~$102M ~$137M Depreciation ** Includes working capital (millions) $27
Slide 41: Rate case highlights
Approved by MPSC on December 11, 2015 Filed December 18, 2015 Filed February 1, 2016 DTE Electric Rate Case 2014 DTE Gas Rate Case 2015 DTE Electric Rate Case 2016 41 DTE rate case highlights • Rate recovery: $243 million • Test year: July 1, 2015 to June 30, 2016 • Return on Equity: 10.3% • Cost of
Slide 42: Sally Talberg appointed chair of the Michigan Public Service Commission
John Quackenbush Commissioner Appointed: 9/15/11 Term Ends: 3/31/16 Sally Talberg appointed chair of the Michigan Public Service Commission (MPSC) Sally Talberg Chair 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 - w
Slide 43: Michigan's economy continues to improve
Michigan’s economy continues to improve 43 Source: IHS 15.1 15.8 18.4 19.7 22.6 2013 2014 2015 2016E 2017E Unemployment Rate Housing Start Ups (000s) Detroit Metro ranked 8th in the number of new or expansion projects* Lowest unemployment in Michigan since 2001 7th most competitive state for job cre
Slide 44: NEXUS project is on track; FERC filing completed in November
NEXUS project is on track; FERC filing completed in November 44 Right of way, field work, design, planning • 50% ownership with Spectra Energy • 1.5 Bcf/d pipeline • ~250 miles of pipe • DTE expected investment of $1 billion 2014 2015 2016 2017 2018 Construction Commercial operation Contracted for p
Slide 45: Contractual commitments materially expand the Millennium pipeline
Contractual commitments materially expand the Millennium pipeline BLUESTONE Valley Lateral Expansion 45 Working with interested parties on additional expansion opportunities
Slide 46: Gas Storage & Pipelines assets have expansion opportunities
Gas Storage & Pipelines assets have expansion opportunities to accommodate increased demand Pipeline Assets Capacity Bcf/ d In-Service Millennium Pipeline 0.8 Expansion #1 0.2 2H 2018 Total Planned Capacity 1.0 Bluestone Pipeline (bi-directional) 0.9 Expansion #3 0.1 4Q 2016 Total Planned Capacity 1
Slide 47: 2015 Reconciliation of Reported to Operating Earnings
2015 Reconciliation of Reported to Operating Earnings 47 2015 DTE Electric DTE Gas Gas Storage and Pipelines Power and Industrial Projects Corporate and Other Growth Segments Energy Trading DTE Energy Reported Earnings 542$ 132$ 107$ 16$ (48)$ 749$ (22)$ 727$ 2011/2012 PSCR* disallowance 12 12 12 Tr
Slide 48: 2014 Reconciliation of Reported to Operating Earnings
2014 Reconciliation of Reported to Operating Earnings 48 2014 DTE Electric DTE Gas Gas Storage and Pipelines Power and Industrial Projects Corporate and Other Growth Segments Energy Trading DTE Energy Reported Earnings 528$ 140$ 82$ 90$ (57)$ 783$ 122$ 905$ Investment impairment 5 5 5 NY state tax l
Slide 49: 2011 – 2015 Full Year Reconciliation of Reported to Operating Earnings
2011 – 2015 Full Year Reconciliation of Reported to Operating Earnings 49 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 prima
Slide 50: 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