DTE Energy Company · NYSE:DTE
DTE Energy — Non-Deal Roadshow (March 2017)
45 slides from DTE Energy's roadshow presentation, Mar 17, 2017
Slide 1: Business Update European Investor Meetings March 20-22, 2017
Click to edit Master title style Business Update European Investor Meetings March 20-22, 2017 EXHIBIT 99.1
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 is a Fortune company with deep Michigan roots
4 DTE Energy is a Fortune 300 company with deep Michigan roots DTE Gas DTE Electric Headquarters • Market cap ~$18 billion • Two fully regulated utilities serving Michigan ‒ DTE Electric (founded 1886) ‒ DTE Gas (founded 1849) • Non-utility businesses with operations in 19 states • Top tier regulato
Slide 5: Growth is 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 our investors
6 Our business strategy is fundamental to creating value for our investors 5% - 7% Annual EPS Growth Attractive Dividend Strong Balance Sheet Infrastructure investments drive regulated utility growth Strategic and transparent growth opportunities in non-utility businesses provide diversity in ea
Slide 7: We manage the business through established base, lean and invest plans
7 We manage the business through established base, lean and invest plans • Along with our base plan, we enter each year with prepared “lean” and “invest” plans • Developing three plans allows us to be flexible and adapt to external forces such as weather Invest Base Lean FAVORABLE WEATHER UNFAVORABL
Slide 8: DTE is recognized by ESG analysts for our sustainability efforts
8 DTE is recognized by environmental, social and governance analysts for our sustainability efforts • Environmental Leadership ‒ Generation portfolio shift to gas and renewables (including building largest solar array east of the Mississippi) ‒ Greenhouse gas reduction program in place with targets
Slide 9: Focus on employees and customers aided our success in 2016
9 • 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 10: Recent activities support growth plans for utilities and non-utilities
10 • 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 • Significa
Slide 11: Continuous improvement has enabled us to be an industry leader in cost management
11 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 12: Michigan's regulatory environment is one of the best in the United States
12 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 13: Positive trends continue with Michigan's economy
13 Positive trends continue with Michigan’s economy Source: IHS 15.0 15.5 16.4 22.7 24.1 2013 2014 2015 2016 2017E Unemployment Rate 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
Slide 14: Long-Term Growth Update
14 • Overview • Long-Term Growth Update • Financial Update • Summary
Slide 15: Growth through 2021 fueled by investment in utility infrastructure and generation
15 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 16: Generation and distribution infrastructure replacement will improve service over the next 10 years
16 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 17: Transformation of our generation fleet
17 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 18: Significant emissions reductions achieved and continuing
18 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 19: DTE Electric distribution investments drive reliability and customer satisfaction
19 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 20: Infrastructure renewal and replacement improves service over the next 10 years
20 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 21: Replacing aging infrastructure at DTE Gas
21 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 22: GSP has an asset portfolio with multiple growth platforms
22 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 23: NEXUS and Link pipeline and gathering platforms
23 • 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 24: GSP has a solid track record for earnings results
24 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 25: Power & Industrial Projects operates three distinct business lines
25 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 26: Future growth focused on utility-like projects and asset acquisitions
26 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 27: P&I's new project growth will offset expiration of reduced emissions fuel earnings
27 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 28: Financial Update
28 • Overview • Long-Term Growth Update • Financial Update • Summary
Slide 29: We increased our operating EPS growth target to 5% - 7%
29 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 30: DTE consistently provides value to shareholders
30 DTE consistently provides value to shareholders * Source: Bloomberg (as of 12/31/2016) 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 65% 117% 216% 46% 75% 123% DTE Energy S&
Slide 31: Cash flow and balance sheet strength are a key priority
31 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 32: Summary
32 • Overview • Long-Term Growth Update • Financial Update • Summary
Slide 33: Summary
33 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 34: Appendix
34 Appendix
Slide 35: 2017 operating EPS guidance supports 5% - 7% growth
35 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 36: 2017 cash flow and capital expenditures guidance support growth
36 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 37: With tax reform, DTE is uniquely situated to maximize customer and shareholder value
37 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 38: The Michigan Public Service Commission is the state regulator
38 The Michigan Public Service Commission (MPSC) is the state regulator for electric and gas utilities • The MPSC establishes fair and reasonable rates and administers terms and conditions of service for Michigan’s utility customers • The MPSC is composed of three members appointed by the Governor w
Slide 39: Over 10% of DTE Electric energy supply is from renewable sources
39 Over 10% of DTE Electric energy supply is from renewable energy sources Wind • Includes owned and contracted • Nearly 280 DTE owned turbines in- service with 65 more expected in 2018 Solar • 28 solar arrays with 3 more in development Landfill Gas • Converts methane gas from landfills to electrici
Slide 40: DTE Electric plans $8.4 billion of investments over the next 5 years
40 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 41: DTE Gas planned $1.8 billion of investments over the next 5 years
41 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 42: NEXUS continues to move forward with expected in-service of 4Q 2017
42 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 43: Reconciliation of Other Reported to Operating Earnings
43 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 44: Reconciliation of 2011 Reported to Operating Earnings
44 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 45: Use of Operating Earnings Information
45 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