Dte Energy Company · NYSE:DTE
Dte Energy — Lehman Brothers 2008 CEO Energy/Power Conference
39 slides from Dte Energy's conference presentation, Sep 3, 2008
Slide 1: Lehman Brothers 2008 CEO Energy/Power Conference
Lehman Brothers 2008 CEO Energy/Power Conference September 3, 2008 David E. Meador Executive Vice President and CFO
Slide 2: Safe Harbor Statement
2 Safe Harbor Statement The information contained herein is as of the date of this presentation. DTE Energy expressly disclaims any current intention to update any forward-looking statements contained in this document as a result of new information or future events or developments. Words such as "an
Slide 3: DTE Energy is an Integrated Energy Company
3 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 4: DTE Energy's Business Mix
4 Detroit Edison 350 MichCon 87.5 FERC/MPSC Regulated Pipes & Storage 37.5 P&I 40 Other Non-Regulated 48 DTE Energy's Business Mix 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr East 20.4 27.4 90 20.4 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9 Non-Regulated = 16% Regulated = 84% 2008 Estimated Operating Earn
Slide 5: DTE Energy: A Focused, Integrated Energy Strategy
5 Execute strong regulated growth plan DTE Energy: A Focused, Integrated Energy Strategy Execute value-focused non-utility plan Continue to pay an attractive dividend Realize projected utility earnings growth Near-term: 7 - 9% per year Long-term: 5 - 6% per year Upside potential from renewables Mana
Slide 6: Execute Strong Regulated Growth Plan
Execute Strong Regulated Growth Plan
Slide 7: Factors For Successful Utility Growth
7 Factors For Successful Utility Growth Reduce need for customer rate increases Drive to top quartile cost performance High customer satisfaction Flexibility to fund utility growth plans Solid liquidity position Strong cash flow Improving credit metrics Manage relationships with customers and regula
Slide 8: Legislation Will Be a Historic Step in Improving Michigan's Energy Policies
8 Legislation Will Be a Historic Step in Improving Michigan's Energy Policies Four bills passed Michigan House on April 17 on a bi-partisan vote and moved to Senate On June 27, two bills passed the Michigan Senate on a bi-partisan vote Completion of legislation backed by a broad coalition including
Slide 9: Expect Constructive Resolution to Detroit Edison Rate Case at Year End
Rate request driven by required environmental investment Strong record of recovery on past environmental spending Cost saving initiatives offset almost all O&M increases Requesting $64 million merger premium recovery Expect Michigan Supreme Court to rule on merger premium issue Timeline: MPSC Staff
Slide 10: Detroit Edison Growth Profile
10 Detroit Edison Growth Profile Infrastructure Environmental Renewable Nuclear Detroit Edison Long-term Investment Profile Illustrative Investments in environmental controls, renewable energy and new base load generation create significant growth potential 2008 CO2 Controls
Slide 11: Detroit Edison Investment Program Includes Over $1B for Clean Air Act Compliance
11 Future Current Complete Monroe Power Plant in 2012 Environmental Construction Complete Current Future 3 Selective Catalytic Reduction (SCR) Units (reduce NOx) completed 2005 - - 2007 (~$175M per unit) Scrubbers for Units 3&4 (reduce SO2) planned for completion in 2009 (~$650M investment 2006-2009
Slide 12: Significant Potential Near-Term Investment in Renewable Energy
12 Significant Potential Near-Term Investment in Renewable Energy State legislation has been introduced on renewable energy Potential investments in wind and biomass Detroit Edison could spend ~$2 billion to meet a 10% renewable standard by 2015 Potential Renewable Energy Requirements in Michigan Le
Slide 13: New Base Load Generation Drives Longer Term Growth
13 New Base Load Generation Drives Longer Term Growth Michigan may require at least one new base load plant by 2015 and additional plants in the following decade Plan to submit a license application for new nuclear unit in Sept. 2008 Potential construction from 2012 to 2020 Michigan's Future Energy
Slide 14: Detroit Edison Growth Investments
14 2007A 2008E 2009E 2010E 2011E 2012E Base 600 675 650 650 650 650 Environmental 210 260 200 200 200 200 Automated Metering Infrastructure 20 45 45 45 45 Renewable 250 250 250 250 Detroit Edison Growth Investments Detroit Edison Capital Investment (2007-2012) $ millions $810 Potential Average Equit
Slide 15: MichCon Growth Investments
15 MichCon Growth Investments Potential ~$60 million Automated Metering Infrastructure (AMI) program coordinated with Detroit Edison; pilot program in 2008 ~$100 million meter relocation program to move meters to outside of homes $90 million distribution system expansion in Western Michigan $90 mill
Slide 16: Utility Earnings Growth 2007 - 2009
16 Utility Earnings Growth 2007 - 2009 * Reconciliation to GAAP reported earnings included in the appendix Original 2007 Guidance rate red rate case Detroit Edison 340 360 400 82 88 93 2007A 2009 Early Outlook 2008 Guidance $422 $425 - 450 $480 - 505 $340 $82 $85 - 90 $340 - 360 $390 - 410 $90 - 95
Slide 17: Michigan Economy
17 Michigan Economy Detroit Edison Service Area: Electric Sales (GWh) Includes Electric Choice Temperature Normalized Actual 0.7% compound annual temperature-normalized load growth (2002 to 2007) 1st Qtr 25.8 25.7 25.8 25.7 YTD 6/30/07 YTD 6/30/08 25.8 Temperature-normalized sales are down about 0.3
Slide 18: Execute Value Focused Non-Utility Growth Plan
Execute Value Focused Non-Utility Growth Plan
Slide 19: Non-Utility Investment Focused on Three Key Areas
19 Non-Utility Investment Focused on Three Key Areas Transport and store natural gas 85 Bcf non-utility natural gas storage 348 miles of pipeline in service; 186 miles under construction Power & Industrial Projects Gas Midstream Unconventional Gas Production Barnett Shale gas production in Texas 62,
Slide 20: Attractive Market Dynamics in Gas Pipelines & Storage
20 Source: EEA/DTE Gas Flow Model LNG (from Trinidad, Middle East and North Africa) LNG LNG LNG Attractive Market Dynamics in Gas Pipelines & Storage Traditional pipeline paths unable to expand economically Expected Flow of New Gas Supply, 2007 - 2020 Western Canada & Arctic / Alaskan supply Northea
Slide 21: DTE Energy's Non-Utility Gas Asset Portfolio
21 DTE Energy's Non-Utility Gas Asset Portfolio DTE's gas asset portfolio is well positioned to take advantage of attractive market dynamics Vector Millennium MichCon MichCon Service Area DTE Gas Storage Fields Significant non state regulated storage Over 85 Bcf of storage capacity Additional ~5 Bcf
Slide 22: Barnett Shale Properties Positioned to Produce Future Shareholder Value
22 Barnett Shale Properties Positioned to Produce Future Shareholder Value Fundamentals are very supportive Strong gas/oil prices Services readily available DTE development of Western assets progressing Economic success in all 5 areas where we have focused drilling activity 70% of revenue from natur
Slide 23: Power & Industrial Projects Provide Utility-Like Services
23 Power & Industrial Projects Provide Utility-Like Services to Select, Energy-Intensive Industries Coke Battery (metallurgical coal) Pulverized Coal Injection On-Site Energy Renewables Value Proposition Power & Industrial Asset Type Own interest in 4 coke batteries Expect to produce 2 millions tons
Slide 24: Future Investment Approach in Power & Industrial Projects
24 Future Investment Approach in Power & Industrial Projects Build business lines around a handful of distinctive strengths: Knowledge of large / industrial energy users and expertise in managing energy programs and assets for them Skill in structuring transactions Leveraging our expertise throughou
Slide 25: Non-Utility Growth Profile
25 2007A MichCon 236 GSPP Non-Utility Growth Profile 2008E Operating Earnings* Expect to invest $200-$300 million annually Expand existing assets Vector Pipeline Shelby Storage New investments Millennium Pipeline Storage Optimize existing projects Disciplined approach to new industrial and renewable
Slide 26: Continue To Pay An Attractive Dividend
Continue To Pay An Attractive Dividend
Slide 27: Our Sustainable Dividend is Very Competitive
27 Our Sustainable Dividend is Very Competitive As utility earnings increase, our payout ratio will improve, providing flexibility to consider further dividend increases Industry Dividend Yield PNW 0.059897 ED 0.057313 PGN 0.055732 NI 0.055288 TEG 0.051489 WR 0.050567 DTE 0.050356 SCG 0.048294 VVC 0
Slide 28: 2009 Early Outlook Shows Significant Growth over 2008
28 2009 Early Outlook Shows Significant Growth over 2008 2008 Guidance* ($ millions) +6% 2009 Early Outlook* +13% +6% +14% Projected Average Shares Outstanding 163M 163M Reconciliation to GAAP reported earnings included in the appendix Operating Earnings*
Slide 29: Summary
DTE Energy Summary
Slide 30: DTE Energy: A Focused, Integrated Energy Strategy
30 Execute strong regulated growth plan DTE Energy: A Focused, Integrated Energy Strategy Execute value-focused non-utility plan Continue to pay an attractive dividend Realize projected utility earnings growth Near-term: 7 - 9% per year Long-term: 5 - 6% per year Upside potential from renewables Man
Slide 31: Appendix
DTE Energy Appendix
Slide 32: Creating Jobs in Michigan
Creating Jobs in Michigan Governor Announces 6,917 New Michigan Jobs, $231.2 Million in Investment July 16th, 2008 Governor Announces Nearly 9,500 Jobs; $658 Million in Investment for Michigan August 19th, 2008 "Earlier this year, we made changes to our business attraction strategies and re- energiz
Slide 33: A Strong Balance Sheet Continues to Be a Priority for DTE Energy
33 Leverage* * Excludes securitization debt and MichCon short-term borrowing **2008 assumes midpoint of applicable estimates Funds from Operations / Debt* A Strong Balance Sheet Continues to Be a Priority for DTE Energy 12/31/2006 12/31/2006 12/31/07E 0.534 0.515 0.52 12/31/2006 12/31/2006 12/31/07E
Slide 34: 2008 Guidance Revised
34 2008 Guidance Revised 2008 Cash Flow Original Guidance DTE Energy 2008 Cash Flow Guidance ($ billions) 2008 Capex Guidance ($ billions) 07/31/08 Revised Guidance (1) Adjusted to reflect discontinuance of Power & Industrial monetization * Reconciliation to GAAP reported cash flow included in the a
Slide 35: Hearing Schedule For Detroit Edison General Rate Case
35 Hearing Schedule For Detroit Edison General Rate Case
Slide 36: Barnett Shale Operating Metrics
36 Net Production Rate (Mmcfe/day) Gross Producing Wells 144 Reserves (Bcfe) Probable Proven Acreage Position (000's Acres) Net Undeveloped Acres Net Developed Acres YE2007 192 144 336 Barnett Shale Operating Metrics (Excludes Sold or Held for Sale Properties) 111 180 YE2006 291 12 6/30/08 49 61 10
Slide 37: Reconciliation of 2007 Reported to Operating Earnings
37 Reconciliation of 2007 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 38: Reconciliation of 2007 Reported to Operating Earnings per Share
38 Reconciliation of 2007 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 39: Reconciliation of 2008 and 2009 Reported to Operating Earnings
39 Reconciliation of 2008 and 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 perfo
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