Dte Energy Company · NYSE:DTE
Dte Energy — Investor Presentation (June 2017)
42 slides from Dte Energy's investor presentation, Jun 23, 2017
Slide 1: Business Update June 26-27, 2017
Click to edit Master title style EXHIBIT 99.1 Business Update June 26-27, 2017
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, the FERC, the MPSC, the NRC, and for DTE Energy, the CFTC, as well as other applicable governmental proceedings and regulations, including any associa
Slide 3: Overview, Long-Term Growth Update, Financial Update, Summary
3 • Overview • Long-Term Growth Update • Financial Update • Summary
Slide 4: DTE Energy overview
4 Success tied to our system of priorities DTE Energy overview Fortune 300 company Leader in continuous improvement DTE is Michigan’s largest investor in and producer of renewable energy Top quartile in residential customer satisfaction for both DTE Electric & DTE Gas Michigan’s largest investor in
Slide 5: Growth driven by strong, stable utilities and complementary non-utility businesses
5 Growth is driven by strong, stable utilities and complementary non-utility businesses DTE Electric • Electric generation and distribution • 2.2 million customers • Fully regulated Growth driven by infrastructure investments aimed at improving customer reliability Growth driven by strategic opportu
Slide 6: Our business strategy is fundamental to creating value for investors
6 Our business strategy is fundamental to creating value for investors Infrastructure investments drive regulated utility growth Strategic and transparent growth opportunities in non-utility businesses provide diversity in earnings and geography Constructive regulatory structure and continued
Slide 7: Employee and customer focus provides a solid framework for success
7 Employee and customer focus provides a solid framework for success 7 Received Gallup’s Great Work Place Award for the 5th consecutive year Received AGA Safety Achievement Award for the 2nd year in a row Top quartile in residential customer satisfaction* for both DTE Electric and DTE Gas * J.
Slide 8: Continuous improvement has enabled us to be an industry leader in cost management
8 Continuous improvement has enabled us to be an industry leader in cost management * Source: SNL Financial, FERC Form 1; major US Electric Utilities with O&M greater than $800 million; excluding fuel and purchased power ** Source: SNL Financial, FERC Form 2; gas distribution companies with greater
Slide 9: Maintain customer affordability while significantly investing in our utilities
9 Average Annual Residential Bill DTE Electric Maintain customer affordability while significantly investing in our utilities $1,200$1,223 2012 2013 2014 2015 2016 2017E Average Annual Residential Bill* DTE Gas $826 $910 2012 2013 2014 2015 2016 2017E 9% (dollars) * Assumes normal weather Flat
Slide 10: Michigan's regulatory environment is one of the most constructive in the United States
10 Minimal regulatory lag Solid ROEs Unique recovery mechanisms Source: Barclays, February 2017 Top Tier Michigan’s regulatory environment is one of the most constructive in the United States
Slide 11: Overview, Long-Term Growth Update, Financial Update, Summary
11 • Overview • Long-Term Growth Update • Financial Update • Summary
Slide 12: 2017-2021 Capital Plan
12 2017 – 2021 Plan 2012 – 2016 $12 billion $13.5 billion 2017 – 2021 Capital Plan Electric ................ $8.4 billion Distribution infrastructure, new generation, replacement Gas ...................... $1.8 billion Base infrastructure, NEXUS related, main replacement GSP ......... $2.2 to $2.8 b
Slide 13: DTE Electric overview
13 DTE Electric overview Transitioning to cleaner energy $8.4B 5 year capital plan (2017-2021) $15.6B 2016 rate base 47,000 miles distribution lines 2.2M customers DTE Electric service territory Founded 1886 * Reconciliation of operating earnings (non-GAAP) to reported earnings included in the appen
Slide 14: Generation and distribution infrastructure replacement will improve service over the next 10 years
14 Generation and distribution infrastructure replacement will continue to improve service to customers over the next 10 years DTE Electric Investment New generation • Replace remaining coal with cleaner energy Distribution infrastructure • Move electric reliability to 1st quartile Replacement and o
Slide 15: Committed to cleaner energy and coal-free by 2040
15 Committed to providing cleaner energy to our customers and will be coal-free by 2040 Retirements* Additions* Solar * Timing and mix subject to change ** Approximate capacity 3,500 MW natural gas and 6,000 MW renewables Natural Gas Wind Up to ~ 9,500 MW** 2017 - 2023 2024 - 2030 2031 - 2040 River
Slide 16: Distribution investments continue to drive reliability and customer satisfaction
16 Distribution investments continue to drive reliability and increase customer satisfaction • Upgraded nearly 20% of circuits since 2013 • Impact 33% of circuits by the end of 2020, improving reliability on impacted circuits by up to 70% Infrastructure Resilience • Major investments planned at 20-2
Slide 17: DTE Gas overview
17 DTE Gas overview $143M – $151M 2017 operating earnings* guidance 1.3M customers $3.7B 2016 rate base DTE Gas service territory Founded 1849 $1.8B 5 year capital plan (2017-2021) * Reconciliation of operating earnings (non-GAAP) to reported earnings included in the appendix 139 Bcf storage capacit
Slide 18: Infrastructure renewal and replacement improves service over the next 10 years
18 Infrastructure renewal and replacement improves service to customers over the next 10 years DTE Gas Investment Base infrastructure • Transmission, compression, distribution, storage Main replacement • Strengthen gas infrastructure by reducing planned main replacement cycle by half NEXUS related c
Slide 19: Replacing aging infrastructure achieves a fundamental shift in performance
19 Replacing aging infrastructure achieves a fundamental shift in performance, cost and productivity at DTE Gas Pipeline Integrity Main Replacement Meter Move Out • Strengthens the system - decreasing the potential for system failures • Systematically replaces poor performing unprotected main - mini
Slide 20: Gas Storage & Pipelines (GSP) overview
20 Gas Storage & Pipelines (GSP) overview $90 – 100M 2017 Operating Earnings Guidance $2.2B – $2.8B 5 year capital plan (2017-2021) Serves markets in Midwest, Northeast, and Mid-Atlantic $140M – $150M 2017 operating earnings* guidance Transport, store and gather natural gas 5 pipelines, 1,600 miles
Slide 21: Asset portfolio with multiple growth platforms
21 Asset portfolio with multiple growth platforms Growth Platforms Purposefully located in the best geology in North America ‒ Millennium Pipeline ‒ Bluestone Pipeline & Gathering ‒ Link* Lateral & Gathering ‒ NEXUS Pipeline Michigan Assets Strategically located between Chicago and Ontario, Cana
Slide 22: Focused on continued success in pipeline and gathering platforms
22 Focused on continued success in pipeline and gathering platforms • Earnings growth driven by both pipeline and gathering platforms • Pursuing additional investment opportunities Near-Term • Growth drivers – Further development of Link** Lateral & Gathering – NEXUS project operational and potentia
Slide 23: Power & Industrial Projects (P&I) overview
23 Power & Industrial Projects (P&I) overview $90M – $100M 2017 operating earnings* guidance Industrial energy services, renewable energy, and environmental controls 68 sites in 17 states $0.6B – $1.0B 5 year capital plan (2017-2021) 191 MW renewable plant capacity * Reconciliation of operating earn
Slide 24: Operate three distinct business lines across the United States
24 Operate three distinct business lines across the United States Renewable Energy Industrial Energy Services Reduced Emissions Fuel (REF) • Wood-fired power plants • Landfill gas to energy conversion • On-site utility services for industrial and commercial customers • Coke and pulverized coal for s
Slide 25: Focused on strategic opportunities for future growth
25 Focused on strategic opportunities for future growth Near-Term • Closed on two landfill gas projects • Finalize combined heat and power project • Pursue additional investment opportunities Long-Term Operating earnings* 2016 Actual $95 million 2017 Guidance $90-$100 million Operating earnings 2021
Slide 26: Overview, Long-Term Growth Update, Financial Update, Summary
26 • Overview • Long-Term Growth Update • Financial Update • Summary
Slide 27: Focus on continuing our strong financial performance
27 Strong track record of meeting or exceeding original guidance; targeting 11th consecutive year in 2017 Operating EPS* growth target of 5% - 7% Targeting ~7% dividend increases in 2018 and 2019 * Reconciliation to GAAP reported earnings included in the appendix Focus on continuing our strong
Slide 28: Consistently provide value to shareholders
28 Consistently provide value to shareholders * Source: Bloomberg (as of 5/31/2017) 2011 2012 2013 2014 2015 2016 2017 Annualized Dividend per Share $2.35 $3.30 Total Shareholder Return* (dollars per share) Over 100 consecutive years of paying dividends 131% 220% 91% 130% DTE Energy S&P 500 Utilitie
Slide 29: Cash flow and balance sheet remain strong
29 21% 2016 2017-2019E 51% 2016 2017-2019E Leverage* Funds from Operations** / Debt* Target 50% - 53% Target 20% + Cash flow and balance sheet remain strong * Debt excludes a portion of DTE Gas’ short-term debt and considers 50% of the junior subordinated notes and 100% of the convertible equity uni
Slide 30: Overview, Long-Term Growth Update, Financial Update, Summary
30 • Overview • Long-Term Growth Update • Financial Update • Summary
Slide 31: Summary
31 • On track to achieve 2017 operating EPS* guidance • Utility growth plan driven by infrastructure investments focused on improving reliability and the customer experience • Strategic and sustainable growth in non-utility businesses • Strong balance sheet metrics • EPS and dividend growth drive pr
Slide 32: DTE Energy
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Slide 33: 2017 operating EPS guidance supports 5%-7% growth
33 2017 Guidance DTE Electric DTE Gas Gas Storage & Pipelines Power & Industrial Projects Corporate & Other Growth segments** Growth segments operating EPS Energy Trading DTE Energy Operating EPS Avg. Shares Outstanding $610 - $624 143 - 151 140 - 150 90 - 100 (64) - (60) $919 - $965 $5.12 - $5.38 $
Slide 34: Cash flow and capital expenditures guidance underpins growth target
34 2016 Actual 2017 Guidance DTE Electric Distribution infrastructure $567 $690 New generation 131 45 Replacement & other 805 725 $1,503 $1,460 DTE Gas Base infrastructure $177 $200 NEXUS related 94 90 Main replacement 124 145 $395 $435 Non-Utility $1,533 $900 - $1,100 Total $3,431 $2,795 - $2,995 2
Slide 35: Recognized by ESG analysts for our sustainability efforts
35 Recognized by environmental, social and governance analysts for our sustainability efforts • Environmental Leadership ‒ Generation portfolio shift to gas and renewables (including one of the largest solar arrays east of the Mississippi) ‒ Greenhouse gas reduction program in place with targets and
Slide 36: Committed to producing cleaner energy
36 Committed to producing cleaner energy 2005 2020 2030 2040 2050 Carbon emissions reduction goals -20% -45% -75% -80% Coal-free by 2040 Since 2005, we have reduced CO2 by 26%, SO2 by 76% and mercury emissions by 86% Generated more than 3.4 million MWh of renewable electricity in 2016
Slide 37: Positive trends continue with Michigan's economy
37 Positive trends continue with Michigan’s economy Source: IHS 15.0 15.5 16.4 22.7 23.5 2013 2014 2015 2016 2017E Housing Start Ups (000s) Lowest unemployment in Michigan since 2000 7th top state for business* Michigan has the highest number of manufacturing jobs since 2007** $407 $414 $421 $429 $4
Slide 38: Regulatory update
38 DTE GasDTE Electric • Expect rate case filing in 1-2 years • 4Q 2016 order (U-17999) – $122 million – 10.1% ROE • Annual rate cases 2018+ • 1Q 2017 order (U-18014) – $184 million – 10.1% ROE • Filed rate case April 19, 2017 (U-18255) – Requested rate recovery: $231 million – Test year: November 1
Slide 39: DTE Electric plans $8.4 billion of investments over the next 5 years
39 DTE Electric plans $8.4 billion of investments over the next 5 years with a focus on increasing customer reliability * Includes power reliability, existing generation maintenance, AMI, Ludington expansion and other investments ** Includes working capital and rate base associated with surcharges T
Slide 40: Customer reliability improved through $1.8 billion of planned investments at DTE Gas
40 Customer reliability will be improved through $1.8 billion of planned investments over the next 5 years at DTE Gas 2016A 2017E 2018E 2019E 2020E 2021E 2017E - 2021E Total Base infrastructure Main replacement* NEXUS related $1,800 $100 $700 $1,000 $3.7B ~$5.1B - $5.2BYE Rate Base** $104M ~$154MDep
Slide 41: Reconciliation of reported to operating earnings (non-GAAP)
41 Reconciliation of reported to operating earnings (non-GAAP) 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 performa
Slide 42: Use of Operating Earnings Information
42 Use of Operating Earnings Information – Operating earnings exclude non-recurring items, certain mark-to- market adjustments and discontinued operations. DTE Energy management believes that operating earnings provide a more meaningful representation of the company’s earnings from ongoing operation