Dte Energy Company · NYSE:DTE
Dte Energy — Investor Presentation (December 2014)
44 slides from Dte Energy's investor presentation, Dec 9, 2014
Slide 1: Business Update December 9-10, 2014
Business Update December 9 - 10, 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, CFTC and other applicable governmental proceedings and regula
Slide 3: Overview, Long-Term Growth Update, Summary
3 • Overview • Long-Term Growth 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 business strategy is fundamental to how we create value for our investors
5% - 6% Annual EPS Growth Attractive Dividend Strong Balance Sheet Our business strategy is fundamental to how we create value for our investors 5 Utility growth plan driven by infrastructure investments Strategic, transparent, low-risk growth opportunities in non-utility businesses provide dive
Slide 6: DTE has consistently delivered total shareholder return above the peer average
DTE has consistently delivered total shareholder return above the peer average * As of October 31, 2014 Source: Thomson Reuters DTE Energy’s Total Shareholder Return Percentile Ranking Among S&P 500 Utilities 4th Quartile 3rd Quartile 2nd Quartile 1st Quartile 70% 67% 90% 93% YTD 1 YR 3 YR 5 YR 6
Slide 7: Earnings growth opportunities and contingency planning 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 Utility Earnings Growth Non-Utility Earnings Growth DTE Earnings Growth Share Dilution Contingency DTE EPS Growth Non-Utilities 5% - 7% 5% - 6% U
Slide 8: Raising 2014 operating earnings guidance; 2015 early outlook midpoint $4.55
* Reconciliation to GAAP reported earnings included in the appendix (dollars per share) We are raising our 2014 operating earnings* guidance to a midpoint of $4.52 per share; our 2015 early outlook midpoint of $4.55 EPS is 5.8% above our original 2014 guidance midpoint $2.83 $3.33 $3.64 $3.75 $3.94
Slide 9: Increasing 2014 operating earnings guidance due to cold November weather and business performance
We are increasing our 2014 operating earnings* guidance due to cold November weather and strong underlying business performance * Reconciliation to GAAP reported earnings included in the appendix ** Total DTE Energy excluding Energy Trading 2014 Prior Guidance 2014 Revised Guidance Cold November wea
Slide 10: Overview, Long-Term Growth Update, Summary
10 • Overview • Long-Term Growth Update • Summary
Slide 11: Michigan's regulatory environment is viewed as very constructive
Michigan’s regulatory environment is viewed as very constructive; we work hard to earn this every day Source: Standard & Poor’s, January 2014 MI 11
Slide 12: 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 greater
Slide 13: Electric utility is investing $7.5 billion in three key areas through 2019
Our electric utility is investing $7.5 billion in three key areas through 2019 $5.7 billion Distribution infrastructure renewal Power plant reliability Compliance Gas plant acquisition Generation asset base renewal $1.4 billion $400 million $7.5 billion Targeting 5% - 6% growth Base Infrastructure N
Slide 14: Transforming generation mix by replacing coal with natural gas and renewables
DTE will be transforming its generation mix by replacing coal with natural gas and renewables Generation Output 2014 2030 Scenario* Gas / Renewables Coal Nuclear / other ~70% ~30% ~50% ~20% ~20% ~10% * Ultimate timing and mix of generation impacted by MISO capacity requirements and Michigan and EPA
Slide 15: 2015 will be a year of stepped up activity with energy policy and electric rate cases
Self implement general rates 3Q 2015 2015 will be a year of stepped up activity as we work through Michigan energy policy and electric rate cases * Represents estimated average rate changes across all electric customer classes; securitization is netted with PSCR increase 15 General rate case filing
Slide 16: Gas utility is making $1.6 billion of reliability and infrastructure investments through 2019
Our gas utility is making $1.6 billion of reliability and infrastructure investments through 2019 Strengthen and expand infrastructure Main renewal, meter move-out and pipeline integrity Compression Targeting 7% - 8% growth Base Infrastructure Infrastructure Renewal Nexus Related Total $825 million
Slide 17: Expanding main replacement to 160 miles per year by 2018
Expanding to 160 miles per year by 2018 would reduce our planned main replacement cycle by approximately half ~$80 Investment* (millions) Miles ~80 miles ~$130 ~160 miles Key Components of Expanded Infrastructure Recovery Mechanism (IRM) Filing** Increase annual investment ~$50 million beginning J
Slide 18: Recovery of DTE Gas capital investments will require periodic rate cases
Recovery of DTE Gas capital investments will require periodic rate cases • Expect next general rate case filing in 2016/2017 • Target to keep annualized rate increases in low single digits Capital Investment and Recovery 2015 - 2019 Infrastructure recovery mechanism Base rates (depreciation) Custome
Slide 19: Gas Storage & Pipelines is developing an asset portfolio with multiple growth platforms
Gas Storage & Pipelines is developing an asset portfolio with multiple growth platforms DTE Gas DTE Storage Proposed NEXUS Pipeline Marcellus Shale Bluestone Gathering System Bluestone Pipeline Utica Shale Michigan Gathering 19
Slide 20: Gas Storage & Pipelines platforms drive growth through new projects and expansions
Gas Storage & Pipelines platforms drive growth through new projects and expansions Pipeline Platform Gathering Platform Storage Platform 20 • Bluestone Pipeline • Millennium Pipeline • Vector Pipeline • Proposed NEXUS Pipeline • Bluestone Gathering • Michigan Gathering • 91 Bcf of working capacity •
Slide 21: Expanding gathering footprint in the Marcellus shale
Expanding gathering footprint in the Marcellus shale • Executed agreement to expand relationship with Southwestern Energy in November 2014 ‒ Increases gathering area and assets by 50% ‒ Increases volumes on Bluestone lateral • Pace of gathering development may drive acceleration of earnings growth N
Slide 22: NEXUS continues to move forward to bring Utica and Southwest Marcellus gas to markets
NEXUS continues to move forward to bring Utica and Southwest Marcellus gas to Michigan, Chicago and Ontario markets • Agreements executed with LDC’s and several key shippers; additional discussions underway • Capacity 1.5 Bcf/day; scalable up to 2 Bcf/d • DTE’s expected investment is $700 million to
Slide 23: Vector Pipeline is evaluating expansion opportunities
Vector Pipeline is evaluating expansion opportunities to provide increased capacity • Binding open season completed; discussions with key shippers are progressing • Goal of open season: ‒ Recontracting current capacity ‒ Incremental expansion opportunities • Expected in-service date 4Q 2017 DTE Gas
Slide 24: Gas Storage & Pipelines' operating earnings potential is $145 million by 2019
Gas Storage & Pipelines’ operating earnings* potential is $145 million by 2019 2013A 2014E 2015E 2016E 2017E 2018E 2019E * Reconciliation to GAAP reported earnings included in the appendix Pipeline Platform** Gathering Platform Storage Platform New Project Development (Other gathering and pipeline e
Slide 25: Power & Industrial Projects is focused in three key business lines
Power & Industrial Projects (P&I) is focused in three key business lines across the country Industrial Energy Services Renewable Energy Reduced Emissions Fuel 25
Slide 26: Each business line is pursuing new opportunities contributing to growth
Each business line is pursuing new opportunities contributing to P&I’s growth aspirations • On-site energy and utility services for industrial, commercial and institutional customers • Long-term growth from existing expansions, greenfield projects and acquisitions • Wood-fired power plants and landf
Slide 27: Power & Industrial Projects is targeting $145 million of operating earnings by 2019
Power & Industrial Projects is targeting $145 million of operating earnings* by 2019 through growth in each of its business lines 2013A 2014E 2015E 2016E 2017E 2018E 2019E ~$145 $35 $70 $85 ($65) $20 $70 New Project Development / Acquisitions Renewable Energy Reduced Emissions Fuel Industrial Energy
Slide 28: Overview, Long-Term Growth Update, Summary
• Overview • Long-Term Growth Update • Summary 28
Slide 29: Summary
Summary • Proven track record of premium returns • We are confident in this year’s performance and are increasing our 2014 operating EPS* guidance midpoint to $4.43 for our growth segments and $4.52 for DTE Energy • Targeting 5% to 6% operating EPS* growth and parallel dividend growth ‒ 2015 operati
Slide 30: Contact Us
Contact Us DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030 30
Slide 31: Appendix
Appendix oe DTE Energy:
Slide 32: 2015 early outlook midpoint of $4.55 per share, 5.8% growth
2015 early outlook has a midpoint of $4.55 per share, providing 5.8% growth from 2014 original operating earnings* guidance midpoint * Reconciliation to GAAP reported earnings included in the appendix ** Total DTE Energy excluding Energy Trading 2015 Early Outlook (see note) Anticipated rate increas
Slide 33: 2014 cash flow guidance
2014 cash flow guidance Cash Flow Summary Capital Expenditures Summary 2013 2014 Actual Guidance Cash From Operations* $2.2 $1.6 Capital Spending (1.9) (2.2) Free Cash Flow $0.3 ($0.6) Asset Sales - - Dividends (0.4) (0.5) Net Cash ($0.1) ($1.1) Debt Financing Issuances $1.2 $2.3 Redemptions (1.1) (
Slide 34: 2015-2017 cash from operations and equity issuances plan supports capital spend
2015 – 2017 cash from operations and equity issuances plan supports utility capital spend and a strong balance sheet * Excludes securitization ** Debt excludes securitization, a portion of DTE Gas’ short-term debt, and considers 50% of the Junior Subordinated Notes as equity Equity $0.9 Debt** $2.6
Slide 35: DTE Electric plans $7.5 billion of investments over the next 5 years
DTE Electric plans $7.5 billion of investments over the next 5 years 2014E 2015E 2016E 2017E 2018E 2019E Base New Generation Other Projects* Environmental Distribution Reliability 2015E - 2019E Total ~$13.1B ~$17.1B YE Rate Base** $600M $800M Depreciation * Includes AMI, Ludington expansion and othe
Slide 36: DTE Gas plans nearly $1.6 billion of investments over the next 5 years
DTE Gas plans nearly $1.6 billion of investments over the next 5 years 2014E 2015E 2016E 2017E 2018E 2019E 2015E - 2019E Total Base Gas Renewal NEXUS related $240 $300 $340 $360 $275 $275 $1,550 $125 $600 $825 ~$3.2B ~$4.6B YE Rate Base* $96M $119M Depreciation * Includes working capital (millions)
Slide 37: 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 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
Slide 38: Utilities continue to move toward best in class in customer satisfaction
Our utilities continue to move toward best in class in customer satisfaction Source: JD Power JD Power Gas Utility Residential Gas Customer Satisfaction Ranking Midwest Region: Large Segment #1 2006 2012 2013 2014 G a s JD Power Electric Utility Residential Electric Customer Satisfaction Ranking Mid
Slide 39: Michigan economic indicators highlight continued growth
Michigan economic indicators highlight continued growth over the next few years 39 7.1% 13.4% 8.8% 7.4% 7.0% 6.8% 6.5% 2007 2009 2013 2014E 2015E 2016E 2017E 420 366 408 414 423 430 438 2007 2009 2013 2014E 2015E 2016E 2017E (billons) 2,295 1,144 2,433 2,256 2,446 2,573 2,760 2007 2009 2013 2014E 20
Slide 40: Michigan economy continues to improve
Michigan economy continues to improve Michigan most improved Pro-Business state AMERICAN ECONOMIC DEVELOPMENT INSTITUTE with Pollina Corp. Real Estate Michigan leads nation in manufacturing job growth Michigan is moving up in ranking of competitive states… …and continues to receive positive recognit
Slide 41: The Michigan Public Service Commission is the state regulator
The Michigan Public Service Commission (MPSC) is the state regulator for electric and gas utilities Source: MPSC website - www.michigan.gov/mpsc 41 Sally Talberg Commissioner Appointed: 7/3/13 Term Ends: 7/2/19 Greg White Commissioner Appointed: 12/4/09 Term Ends: 7/2/15 • The MPSC establishes fair
Slide 42: Third Quarter and September YTD Reconciliation of Reported to Operating Earnings
Third Quarter and September Year To Date 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 earni
Slide 43: 2008-2013 Full Year Reconciliation of Reported to Operating Earnings
2008 – 2013 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 44: Reconciliation of Other Reported to Operating Earnings
Reconciliation of Other 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 meas