Slide 1: Business and Financial Update July 31, 2008
Business and Financial Update July 31, 2008
Slide 2: Safe Harbor Statement
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 "anti
Slide 3: Overview, 2nd Quarter 2008 Earnings Results, Cash Flow and Capital Expenditures
Overview 2nd Quarter 2008 Earnings Results Cash Flow and Capital Expenditures
Slide 4: Participants
Participants Dave Meador, Executive Vice President and CFO Peter Oleksiak, VP and Controller Nick Khouri, VP and Treasurer Lisa Muschong, Director of Investor Relations
Slide 5: DTE Energy: A Focused, Integrated Energy Strategy
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 Manage
Slide 6: Overview
Overview Michigan Energy Legislation Versions of energy policy and renewable portfolio standard bills passed by the House and Senate House and Senate conference committees actively working on a compromise If committees reach a compromise, bills could be voted on as early as August 13th when the full
Slide 7: 2nd Quarter 2008 Earnings Results
Overview 2nd Quarter 2008 Earnings Results Cash Flow and Capital Expenditures
Slide 8: Q2 2008 Operating Earnings per Share
Q2 2008 Operating Earnings per Share* Detroit Edison $0.31 Unconventional Gas Production $0.02 Non-Utility ($0.03) Gas Midstream*** $0.06 Corporate & Other ($0.05) MichCon** ($0.07) $0.16 Power and Industrial Projects ($0.04) * Reconciliation to GAAP reported earnings included in the appendix ** Inc
Slide 9: Q2 2008 Operating Earnings Variance
Q2 2008 Operating Earnings Variance 2Q 2007 Operating Earnings Detroit Edison MichCon Power & Industrial Projects Unconventional Gas Production Gas Midstream Energy Trading Corporate & Other 2Q 2008 Operating Earnings $64 ($8) ($15) ($2) $0 ($18) $18 $26 ($13) Higher storm costs at Detroit Edison Hi
Slide 10: Detroit Edison Variance Analysis
Detroit Edison Variance Analysis * Reconciliation to GAAP reported earnings included in the appendix 2Q 2007 Operating Earnings $18 $6 $64 2Q 2008 Operating Earnings ($12) Margin ($13) ($ millions) Detroit Edison Operating Earnings Variance* Drivers Information System Costs Storm Costs Uncollectible
Slide 11: Detroit Edison Sales Volumes
Detroit Edison Sales Volumes Detroit Edison Service Area: Electric Sales Temperature Normalized (GWh thousands) 13.0 Q2 2007 Q2 2008 12.7 25.7 YTD 6/30/07 YTD 6/30/08 25.8 Temperature normalized sales volumes were down 2.4% Q2 2008, offsetting the favorability in Q1 2008 Sales are down only 0.3% on
Slide 12: MichCon Variance Analysis
MichCon Variance Analysis ($3) Uncollectible Expense Margin ($2) ($3) ($11) 2Q 2007 Operating Earnings 2Q 2008 Operating Earnings * Reconciliation to GAAP reported earnings included in the appendix Taxes / Other Seasonal second quarter loss is typical Lower storage margins Fewer heating degree days
Slide 13: Non-Utility Variance Analysis
Non-Utility Variance Analysis * Reconciliation to GAAP reported earnings included in the appendix ($ millions) Non-Utility Operating Earnings Variance* Drivers $10M expense for depreciation deferred while certain P&I assets were classified as "held for sale" and decreased contribution from Coal Serv
Slide 14: 2008 Earnings Guidance
2008 Earnings Guidance * Reconciliation to GAAP reported earnings included in the appendix 2008 Operating Earnings Guidance * Drivers 07/31/08 Revised Segments ($ millions) 07/02/08 Previous Segments Overall guidance remains unchanged Realigned Coal Services business from Gas Midstream segment to Po
Slide 15: Cash Flow and Capital Expenditures
Overview 2nd Quarter 2008 Earnings Results Cash Flow and Capital Expenditures
Slide 16: YTD 2008 Cash Flow
YTD 2008 Cash Flow Strong cash flow YTD 2008, free cash flow of $600 million YTD 2008 Adjusted cash from operations* totaled $1.5B compared to capital spending of $700M 2008 cash driven by intra-year timing, including the timing of synfuel cash payments ($ billions) DTE Energy Cash Flow Drivers YTD
Slide 17: YTD 2008 Capital Expenditures
YTD 2008 Capital Expenditures YTD 06/30/07 YTD 06/30/08 Detroit Edison capital spending totaled $414M YTD 2008, driven by environmental spending and normal operational improvements Non-utility capital spending driven by project development at Power & Industrial ($ millions) DTE Energy Capital Expend
Slide 18: 2008 Guidance Revised
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 appe
Slide 19: DTE Energy: A Focused, Integrated Energy Strategy
DTE Energy: A Focused, Integrated Energy Strategy Realize projected utility earnings growth Near-term: 7 - 9% per year Long-term: 5 - 6% per year Upside potential from renewables Manage constructive regulatory environment Use cost savings to minimize rate increases Advocate for comprehensive energy
Slide 20: Contact Us
Contact Us DTE Energy Investor Relations www.dteenergy.com/investors 313-235-8030
Slide 21: Appendix
DTE Energy Appendix 2
Slide 22: Leverage
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 12/31/06 12/31/07 12/31/08E** 53.4% 51.7% 12/31/06 12/31/07 12/31/08E** 19.5% ~23%
Slide 23: DTE Energy Trading Earnings Reconciliation
DTE Energy Trading Earnings Reconciliation ** Consists of the income statement effect of not recognizing changes in the fair market value of certain non derivative contracts including physical inventory and capacity contracts for transportation, transmission and storage. These contracts are not MTM,
Slide 24: Barnett Shale Operating Metrics
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 38
Slide 25: 2009 Early Outlook
2009 Early Outlook 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* Detroit Edison $340 - 360 $390 - 410 MichCon 85 - 90 90 - 95 Non-Utility 115 - 150
Slide 26: Hearing Schedule For Detroit Edison General Rate Case
Hearing Schedule For Detroit Edison General Rate Case Hearing Schedule Date Detroit Edison Updated Application and Testimony ............... February 20, 2008 Prehearing Conference ................................. .............................. March 20, 2008 Staff and Intervenor Testimony ........
Slide 27: Reconciliation of Q2 2008 Reported to Operating Earnings
Reconciliation of Q2 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 28: Reconciliation of Q2 2008 Reported to Operating Earnings per Share
Reconciliation of Q2 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 29: Reconciliation of Q2 2007 Reported to Operating Earnings
Reconciliation of Q2 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 30: Reconciliation of YTD 2008 Reported to Operating Earnings
Reconciliation of YTD 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 m
Slide 31: Reconciliation of 2008 and 2009 Reported to Operating Earnings
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 performa
Slide 32: Reconciliations of Cash From Operations to Adjusted Cash from Operations
Reconciliations 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 a