DTE Energy Company · NYSE:DTE
DTE Energy — Investor Presentation (March 2017)
36 slides from DTE Energy's investor presentation, Mar 27, 2017
Slide 1: Business Update March 28-29, 2017
Click to edit Master title style EXHIBIT 99.1 Business Update March 28-29, 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, Summary
3 • Overview • Long-Term Growth Update • Summary
Slide 4: Growth is driven by strong, stable utilities and complementary non-utility businesses
4 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 5: Focus on employees and customers aided our success in 2016
5 • Best employee safety record in company history • 4th consecutive Gallup Great Workplace award; only utility to be recognized Focus on employees and customers aided our success in 2016 and remains a priority * J.D. Power 2016 Electric Utility Residential and 2016 Gas Utility Residential Customer
Slide 6: Recent activities support growth plans for utilities and non-utilities
6 • Constructive electric and gas rate orders • Michigan energy legislation signed into law Recent activities support growth plans for utilities and non-utilities Political & Regulatory Environment • Combined cycle gas plant build announced • Major acquisition at Gas Storage & Pipelines • Significan
Slide 7: Continuous improvement has enabled us to be an industry leader in cost management
7 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 8: Michigan's regulatory environment is one of the best in the United States
8 Minimal regulatory lag Solid ROEs Unique recovery mechanisms Source: Barclays, February 2017 Top Tier Michigan’s regulatory environment is one of the best in the United States
Slide 9: Overview, Long-Term Growth Update, Summary
9 • Overview • Long-Term Growth Update • Summary
Slide 10: We are focused on continuing our strong financial performance
10 Strong track record of exceeding original guidance; targeting 11th consecutive year in 2017 Increased operating EPS growth target to 5% - 7% from 5% - 6% Increased 2017 annualized dividend by 7.1%; targeting ~7% dividend increases in 2018 and 2019 * Reconciliation to GAAP reported earnings
Slide 11: Cash flow and balance sheet strength are a key priority
11 21% 2016 2017-2019E 51% 2016 2017-2019E Leverage* Funds from Operations** / Debt* Target 50% - 53% Target 20% + • No equity issuances planned for 2017 ‒ Acquisition related equity of $675 million in late 2019 (through convertible equity units) ‒ No additional equity planned through 2019 • Issued
Slide 12: With tax reform, DTE is uniquely situated to maximize customer and shareholder value
12 With tax reform, DTE is uniquely situated to maximize customer and shareholder value = Consolidated DTE Impact Customer savings allow for potential additional reliability investment Increased earnings at non-utilities offset loss of interest deductions at holding company Operating EPS growth
Slide 13: Growth through 2021 fueled by investment in utility infrastructure and generation
13 2017 – 2021 Plan 2012 – 2016 $12 billion $13.5 billion 2017 – 2021 Capital Plan Electric............... $8.4 billion Distribution infrastructure, maintenance, new generation Gas .................... $1.8 billion Base investments, infrastructure renewal, NEXUS related GSP .......... $2.2 to $2.8 b
Slide 14: Generation and distribution infrastructure replacement will continue to improve service
14 Generation and distribution infrastructure replacement will continue to improve service to customers over the next 10 years DTE Electric Investment New generation • Retire 60% of coal fleet; replacing with clean energy Distribution infrastructure • Move electric reliability to 1st quartile Mainte
Slide 15: Transformation of our generation fleet is driven by renewable energy standards and coal plant age
15 Transformation of our generation fleet is driven by renewable energy standards and the age of our coal plants Belle River St. Clair River Rouge Retirements* Additions* Wind / Solar Trenton New gas plant * Timing and mix subject to change 2024 - 2030 New gas plant Wind / Solar 2017 - 2023 2017 - 2
Slide 16: Significant emissions reductions and a path to cleaner energy
16 We have already achieved significant emissions reductions and continue on the path to even cleaner energy 2005 2015 2030 CO2 Emissions 16% Reduction 2005 2015 2030 2005 2015 2030 NOX Emissions SO2 Emissions Emissions reductions are largely due to $2 billion in controls installed at Monroe Power
Slide 17: DTE Electric distribution investments drive reliability and customer satisfaction
17 Infrastructure Resilience Infrastructure Redesign Technology Enhancements 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% Major investments planned at 20-25 substations by 2021 to address load growth an
Slide 18: Infrastructure renewal and replacement improves service to customers over the next 10 years
18 Infrastructure renewal and replacement improves service to customers over the next 10 years DTE Gas Investment NEXUS related compression Infrastructure renewal • Strengthen gas infrastructure by reducing planned main replacement cycle by half Base infrastructure • Transmission, compression, distr
Slide 19: Main Replacement, Pipeline Integrity, Meter Move Out
19 Main Replacement Pipeline Integrity Meter Move Out Systematically replaces poor performing unprotected main - minimizing leaks and improving customer satisfaction Drives productivity - reducing manual meter reading costs Strengthens the system - decreasing the potential for system failures Replac
Slide 20: Gas Storage & Pipelines has an asset portfolio with multiple growth platforms
20 Gas Storage & Pipelines (GSP) has an asset portfolio with multiple growth platforms Growth Platforms Purposefully located in the best geology in North America ‒ Bluestone Pipeline & Gathering ‒ Millennium Pipeline ‒ NEXUS Pipeline ‒ Link* Lateral & Gathering Michigan Assets Strategically loca
Slide 21: Pipeline and gathering platforms provide unique opportunities for long-term growth
21 • FERC certificate of construction expected 1H17 • In-service 4Q17 • Ohio interconnect agreements provide 1.75 Bcf/d of market access • Mainline expandable up to 2.0 Bcf/d NEXUS • Initial shipper demand greater than anticipated ‒ Firming up near-term growth plans • Strong tie with existing market
Slide 22: GSP has a solid track record for earnings results
22 GSP has a solid track record for earnings results and expects to continue this success * Reconciliation to GAAP reported earnings included in the appendix GSP Operating Earnings* 2011 2016 2021E $127 $195 - $215 $57 (millions) Pipeline and gathering platforms strategically situated to take adva
Slide 23: Power & Industrial Projects operates three distinct business lines
23 Power & Industrial Projects (P&I) operates three distinct business lines across the United States Industrial Energy Services Renewable Energy Reduced Emissions Fuel (REF) • On-site utility services for industrial and commercial customers • Coke and pulverized coal for steel customers • Wood-fired
Slide 24: Future growth focused on strategic utility-like projects and asset acquisitions
24 Future growth focused on strategic utility-like projects and asset acquisitions Utility-Like Projects Asset Acquisition Distinct capabilities Experience with large industrial and commercial customers History of executing utility-like long-term contracts Expertise in operations and project m
Slide 25: P&I's new project growth will offset expiration of reduced emissions fuel earnings
25 P&I’s new project growth will offset expiration of reduced emissions fuel earnings (millions) P&I Operating Earnings* Replace short-term REF earnings with long-term contracted value Development of cogeneration and utility-like services Asset acquisition Capital investment 2017-2021: $0.6 - $1
Slide 26: Overview, Long-Term Growth Update, Summary
26 • Overview • Long-Term Growth Update • Summary
Slide 27: Summary
27 Engaged employees create a safe work environment and drive great operational results Value driven utility investments provide an excellent customer experience while ensuring affordable rates Constructive regulatory environment and continued cost savings enable utilities to earn authorized returns
Slide 28: Appendix
28 Appendix
Slide 29: 2017 operating EPS guidance supports 5% - 7% growth
29 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 30: 2017 cash flow and capital expenditures guidance support growth
30 2016 Actual 2017 Guidance DTE Electric Distribution Infrastructure $567 $690 New Generation 131 45 Maintenance & 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
Slide 31: DTE Electric plans $8.4 billion of investments over the next 5 years
31 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 32: Customer reliability improved through $1.8 billion of planned investments at DTE Gas
32 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 ~$3.6B ~$5.0B - $5.1B YE Rate Base** $104M ~$154M
Slide 33: NEXUS continues to move forward with expected in-service of 4Q 2017
33 NEXUS continues to move forward with expected in-service of 4Q 2017 Natural Gas LDC Industrial Customer Power Generation Marcellus / Utica Dry Gas Core DTE Gas Vector • Contractors secured • Procurement update – Compressors ordered – Compressor air permits secured • FERC approval – FEIS received
Slide 34: Reconciliation of Other Reported to Operating Earnings
34 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 m
Slide 35: Reconciliation of 2011 Reported to Operating Earnings
35 Reconciliation of 2011 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 36: Use of Operating Earnings Information
36 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