Form 8-K DTE ENERGY CO For: Apr 26
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________
FORM 8-K
_____________________________
Current Report
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 26, 2016
Commission File Number | Exact Name of Registrant as Specified in its Charter, State of Incorporation, Address of Principal Executive Offices and Telephone Number | IRS Employer Identification No. |
1-11607 | DTE Energy Company (a Michigan corporation) One Energy Plaza Detroit, Michigan 48226-1279 313-235-4000 | 38-3217752 |
1-2198 | DTE Electric Company (a Michigan corporation) One Energy Plaza Detroit, Michigan 48226-1279 313-235-4000 | 38-0478650 |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
DTE Energy Company (DTE Energy) is furnishing the Securities and Exchange Commission (SEC) with its earnings release issued April 26, 2016, announcing financial results for the quarter ended March 31, 2016. A copy of the earnings release and the slide presentation, including supplemental financial information, are furnished as Exhibits 99.1 and 99.2 and incorporated herein by reference. In its earnings release and the slide presentation discussed below, DTE Energy reaffirms its 2016 operating earnings guidance range of $4.80 - $5.05 per share.
Item 7.01. Regulation FD Disclosure.
DTE Energy is furnishing the SEC with its slide presentation issued April 26, 2016. A copy of the slide presentation is furnished as Exhibit 99.2 and incorporated herein by reference.
In its earnings release, slide presentation and this filing, DTE Energy discusses 2016 operating earnings guidance. It is likely that certain items that impact the company's 2016 reported results will be excluded from operating results. Reconciliations to the comparable 2016 reported earnings guidance are not provided because it is not possible to provide a reliable forecast of specific line items. These items may fluctuate significantly from period to period and may have a significant impact on reported earnings.
In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth in such a filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
99.1 Earnings Release of DTE Energy Company dated April 26, 2016.
99.2 | Slide Presentation of DTE Energy Company dated April 26, 2016. |
Forward-Looking Statements:
This Form 8-K contains forward-looking statements that are subject to various assumptions, risks and uncertainties. It should be read in conjunction with the “Forward-Looking Statements” section in DTE Energy's and DTE Electric Company's (DTE Electric) 2015 Form 10-K and 2016 Form 10-Q (which sections are incorporated by reference herein), and in conjunction with other SEC reports filed by DTE Energy and DTE Electric that discuss important factors that could cause DTE Energy's and DTE Electric's actual results to differ materially. DTE Energy and DTE Electric expressly disclaim any current intention to update any forward-looking statements contained in this report as a result of new information or future events or developments.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized.
Date: April 26, 2016
DTE ENERGY COMPANY (Registrant) | |
/s/PETER B. OLEKSIAK Peter B. Oleksiak Senior Vice President and Chief Financial Officer | |
DTE ELECTRIC COMPANY (Registrant) | |
/s/PETER B. OLEKSIAK Peter B. Oleksiak Senior Vice President and Chief Financial Officer | |
EXHIBIT INDEX
Exhibit Number | Description |
99.1 | Earnings Release of DTE Energy Company dated April 26, 2016. |
99.2 | Slide Presentation of DTE Energy Company dated April 26, 2016. |
EXHIBIT 99.1
April 26, 2016
DTE Energy reports first quarter 2016 results
DETROIT - DTE Energy (NYSE: DTE) today reported first quarter 2016 earnings of $247 million, or $1.37 per diluted share, compared with $273 million, or $1.53 per diluted share in 2015.
Operating earnings for the first quarter 2016 were $274 million, or $1.52 per diluted share, compared with 2015 operating earnings of $294 million, or $1.65 per diluted share. Operating earnings exclude non-recurring items, certain mark-to-market adjustments and discontinued operations. Reconciliations of reported earnings to operating earnings are included at the end of this news release.
“The company is on track for another successful year and our first quarter performance reflects this,” said Gerry Anderson, DTE chairman and CEO. Anderson also noted the following recent company accomplishments:
• | DTE Gas reduced natural gas prices charged to customers by 16 percent in the first quarter. Our gas purchasing strategy resulted in passing savings from reduced natural gas costs to customers. DTE Gas has been steadily decreasing prices since 2008 when the market price was three times the current level. |
• | DTE installed its 3 millionth automated meter. The entire installation project is expected to finish by the end of 2016, nearly two years ahead of schedule, with nearly 4 million electric and gas meters installed. These meters will improve reliability and, combined with the DTE Insight application, allow customers to reduce energy usage leading to decreased monthly bills. |
• | DTE is partnering with the City of Detroit to build one of the largest urban solar arrays in the country. The array will be built on a 10-acre vacant parcel of land in Detroit. The project will generate substantial tax revenue for Detroit over the life of its 20-year lease and will produce enough clean energy to power approximately 450 homes. |
• | DTE was recently recognized by the Gallup organization as a Gallup Great Workplace for the fourth consecutive year. This award is given to only a handful of companies worldwide for their extraordinary ability to create an engaged workplace culture. DTE remains the only utility company recognized by Gallup. |
• | DTE was named one of Fortune’s World’s Most Admired Companies, ranking among the top electric and gas utility companies nationwide. DTE scored high marks on key attributes including innovation and human resource management. |
Anderson also noted “These accomplishments reinforce our commitment to becoming the best operated energy company in North America and a force for growth and prosperity in the communities in which we live and serve. We continue to work hard for our customers and shareholders to reach new levels of operational and financial excellence.”
Outlook for 2016
DTE reiterated its 2016 operating earnings per share guidance of $4.80 to $5.05.
"A solid start to the year puts us on track to achieve our financial goals and we will continue to focus on replacing aging infrastructure at our utilities which will improve service levels and lower costs for our customers,” said Peter Oleksiak, DTE Energy senior vice president and chief financial officer.
This earnings announcement, as well as a package of slides, is available at www.dteenergy.com/investors.
DTE Energy plans to conduct a conference call with the investment community hosted by Anderson at 9 a.m. EDT today, to discuss first quarter 2016 earnings results. Investors, the news media and the public may listen to a live internet broadcast of the call at www.dteenergy.com/investors. The telephone dial-in numbers are U.S. and Canada toll free: (888) 505-4378 or International toll: (719) 325-2381. The passcode is 3887141. The webcast will be archived on the DTE Energy website at www.dteenergy.com/investors. An audio replay of the call will be available from noon today to May 10. To access the replay, dial US and Canada toll free (888) 203-1112 or International toll (719) 457-0820 and enter passcode 3887141.
DTE Energy is a Detroit-based diversified energy company involved in the development and management of energy-related businesses and services nationwide. Its operating units include an electric utility serving 2.2 million customers in Southeastern Michigan and a natural gas utility serving 1.2 million customers in Michigan. The DTE Energy portfolio includes non-utility energy businesses focused on power and industrial projects, natural gas pipelines, gathering and storage, and energy marketing and trading. As one of Michigan's leading corporate citizens, DTE Energy is a force for growth and prosperity in the 450 Michigan communities it serves in a variety of ways, including philanthropy, volunteerism and economic progress. Information about DTE Energy is available at dteenergy.com, twitter.com/dte_energy and facebook.com/dteenergy.
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 measurement for external communications with analysts and investors. Internally, DTE Energy uses operating earnings to measure performance against budget and to report to the Board of Directors.
In this release, DTE Energy discusses 2016 operating earnings guidance. It is likely that certain items that impact the company's 2016 reported results will be excluded from operating results. Reconciliations to the comparable 2016 reported earnings guidance are not provided because it is not possible to provide a reliable forecast of specific line items. These items may fluctuate significantly from period to period and may have a significant impact on reported earnings.
The information contained herein is as of the date of this release. DTE Energy expressly disclaims any current intention to update any forward-looking statements contained in this release as a result of new information or future events or developments. Words such as “anticipate,” “believe,” “expect,” “projected,” “aspiration” and “goals” signify forward-looking statements. Forward-looking statements are not guarantees of future results and conditions but rather are subject to various assumptions, risks and uncertainties. This release contains forward-looking statements about DTE Energy’s financial results and estimates of future prospects, and actual results may differ materially.
Many factors impact forward-looking statements including, but not limited to, the following: impact of regulation by the EPA, FERC, MPSC, NRC, and CFTC, as well as other applicable governmental proceedings and regulations, including any associated impact on rate structures; the amount and timing of cost recovery allowed as a result of regulatory proceedings, related appeals, or new legislation, including legislative amendments and retail access programs; economic conditions and population changes in our geographic area resulting in changes in demand, customer conservation, and thefts of electricity and, for DTE Energy, natural gas; environmental issues, laws, regulations, and the increasing costs of remediation and compliance, including actual and potential new federal and state requirements; health, safety, financial, environmental, and
regulatory risks associated with ownership and operation of nuclear facilities; changes in the cost and availability of coal and other raw materials, purchased power, and natural gas; volatility in the short-term natural gas storage markets impacting third-party storage revenues related to DTE Energy; impact of volatility of prices in the oil and gas markets on DTE Energy's gas storage and pipelines operations; impact of volatility in prices in the international steel markets on DTE Energy's power and industrial projects operations; volatility in commodity markets, deviations in weather, and related risks impacting the results of DTE Energy's energy trading operations; changes in the financial condition of DTE Energy's significant customers and strategic partners; the potential for losses on investments, including nuclear decommissioning and benefit plan assets and the related increases in future expense and contributions; access to capital markets and the results of other financing efforts which can be affected by credit agency ratings; instability in capital markets which could impact availability of short and long-term financing; the timing and extent of changes in interest rates; the level of borrowings; the potential for increased costs or delays in completion of significant capital projects; changes in, and application of, federal, state, and local tax laws and their interpretations, including the Internal Revenue Code, regulations, rulings, court proceedings, and audits; the effects of weather and other natural phenomena on operations and sales to customers, and purchases from suppliers; unplanned outages; the cost of protecting assets against, or damage due to, terrorism or cyber attacks; employee relations and the impact of collective bargaining agreements; the risk of a major safety incident at an electric distribution or generation facility and, for DTE Energy, a gas storage, transmission, or distribution facility; the availability, cost, coverage, and terms of insurance and stability of insurance providers; cost reduction efforts and the maximization of plant and distribution system performance; the effects of competition; changes in and application of accounting standards and financial reporting regulations; changes in federal or state laws and their interpretation with respect to regulation, energy policy, and other business issues; contract disputes, binding arbitration, litigation, and related appeals; and the risks discussed in our public filings with the Securities and Exchange Commission. New factors emerge from time to time. We cannot predict what factors may arise or how such factors may cause results to differ materially from those contained in any forward-looking statement. Any forward-looking statements speak only as of the date on which such statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. This presentation should also be read in conjunction with the Forward-Looking Statements section of the joint DTE Energy and DTE Electric 2015 Form 10-K and 2016 Form 10-Q (which sections are incorporated by reference herein), and in conjunction with other SEC reports filed by DTE Energy and DTE Electric.
# # #
For further information, members of the media may call:
Stephanie Beres, DTE Energy, (313) 235-5555
Analysts, for further information call:
Barbara Tuckfield, DTE Energy, (313) 235-1018
Joyce Leslie, DTE Energy, (313) 235-3209
DTE Energy Company | |||||||
Consolidated Statements of Operations | |||||||
Three Months Ended | |||||||
March 31, | |||||||
2016 | 2015 | ||||||
(In millions, except per share amounts) | |||||||
Operating Revenues | |||||||
Utility operations | $ | 1,664 | $ | 1,841 | |||
Non-utility operations | 902 | 1,143 | |||||
2,566 | 2,984 | ||||||
Operating Expenses | |||||||
Fuel, purchased power, and gas — utility | 565 | 693 | |||||
Fuel, purchased power, and gas — non-utility | 776 | 1,005 | |||||
Operation and maintenance | 516 | 526 | |||||
Depreciation and amortization | 229 | 209 | |||||
Taxes other than income | 99 | 100 | |||||
Asset (gains) losses and impairments, net | — | (10 | ) | ||||
2,185 | 2,523 | ||||||
Operating Income | 381 | 461 | |||||
Other (Income) and Deductions | |||||||
Interest expense | 113 | 110 | |||||
Interest income | (11 | ) | (4 | ) | |||
Other income | (52 | ) | (51 | ) | |||
Other expenses | 8 | 10 | |||||
58 | 65 | ||||||
Income Before Income Taxes | 323 | 396 | |||||
Income Tax Expense | 83 | 122 | |||||
Net Income | 240 | 274 | |||||
Less: Net Income (Loss) Attributable to Noncontrolling Interests | (7 | ) | 1 | ||||
Net Income Attributable to DTE Energy Company | $ | 247 | $ | 273 | |||
Basic Earnings per Common Share | |||||||
Net Income Attributable to DTE Energy Company | $ | 1.38 | $ | 1.53 | |||
Diluted Earnings per Common Share | |||||||
Net Income Attributable to DTE Energy Company | $ | 1.37 | $ | 1.53 | |||
Weighted Average Common Shares Outstanding | |||||||
Basic | 179 | 178 | |||||
Diluted | 180 | 178 | |||||
Dividends Declared per Common Share | $ | 0.73 | $ | 0.69 | |||
DTE Energy Company | |||||||||||||||||||||||||
Segment Net Income | |||||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||||
2016 | 2015 | ||||||||||||||||||||||||
Reported Earnings | Adjustments | Operating Earnings | Reported Earnings | Adjustments | Operating Earnings | ||||||||||||||||||||
(In millions) | |||||||||||||||||||||||||
DTE Electric | $ | 127 | $ | — | $ | 127 | $ | 136 | $ | — | $ | 136 | |||||||||||||
DTE Gas | 87 | — | 87 | 111 | — | 111 | |||||||||||||||||||
Non-utility operations | |||||||||||||||||||||||||
Gas Storage and Pipelines | 30 | — | 30 | 27 | — | 27 | |||||||||||||||||||
Power and Industrial Projects | 17 | 4 | A | 21 | 33 | — | 33 | ||||||||||||||||||
Energy Trading | (7 | ) | 23 | B | 16 | (9 | ) | 31 | B | 12 | |||||||||||||||
(10 | ) | C | |||||||||||||||||||||||
Total Non-utility operations | 40 | 27 | 67 | 51 | 21 | 72 | |||||||||||||||||||
Corporate and Other | (7 | ) | — | (7 | ) | (25 | ) | — | (25 | ) | |||||||||||||||
Net Income Attributable to DTE Energy Company | $ | 247 | $ | 27 | $ | 274 | $ | 273 | $ | 21 | $ | 294 | |||||||||||||
Adjustments key | |||||||||||||||||||||||||
A) Plant closure | |||||||||||||||||||||||||
B) Certain mark to market adjustments | |||||||||||||||||||||||||
C) Natural gas pipeline refund | |||||||||||||||||||||||||
DTE Energy Company | |||||||||||||||||||||||||
Segment Diluted Earnings Per Share | |||||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||||||||||
2016 | 2015 | ||||||||||||||||||||||||
Reported Earnings | Adjustments | Operating Earnings | Reported Earnings | Adjustments | Operating Earnings | ||||||||||||||||||||
DTE Electric | $ | 0.71 | $ | — | A | $ | 0.71 | $ | 0.76 | $ | — | $ | 0.76 | ||||||||||||
DTE Gas | 0.48 | — | 0.48 | 0.62 | — | 0.62 | |||||||||||||||||||
Non-utility operations | |||||||||||||||||||||||||
Gas Storage and Pipelines | 0.17 | — | 0.17 | 0.15 | — | 0.15 | |||||||||||||||||||
Power and Industrial Projects | 0.09 | 0.02 | A | 0.11 | 0.19 | — | 0.19 | ||||||||||||||||||
Energy Trading | (0.04 | ) | 0.13 | B | 0.09 | (0.05 | ) | 0.18 | B | 0.07 | |||||||||||||||
(0.06 | ) | C | |||||||||||||||||||||||
Total Non-utility operations | 0.22 | 0.15 | 0.37 | 0.29 | 0.12 | 0.41 | |||||||||||||||||||
Corporate and Other | (0.04 | ) | — | (0.04 | ) | (0.14 | ) | — | (0.14 | ) | |||||||||||||||
Net Income Attributable to DTE Energy Company | $ | 1.37 | $ | 0.15 | $ | 1.52 | $ | 1.53 | $ | 0.12 | $ | 1.65 | |||||||||||||
Adjustments key | |||||||||||||||||||||||||
A) Plant closure | |||||||||||||||||||||||||
B) Certain mark to market adjustments | |||||||||||||||||||||||||
C) Natural gas pipeline refund | |||||||||||||||||||||||||
EXHIBIT 99.2 1st Quarter 2016 Earnings Conference Call April 26, 2016
Safe Harbor Statement Many factors impact forward-looking statements including, but not limited to, the following: impact of regulation by the EPA, FERC, MPSC, NRC, and CFTC, as well as other applicable governmental proceedings and regulations, including any associated impact on rate structures; the amount and timing of cost recovery allowed as a result of regulatory proceedings, related appeals, or new legislation, including legislative amendments and retail access programs; economic conditions and population changes in our geographic area resulting in changes in demand, customer conservation, and thefts of electricity and, for DTE Energy, natural gas; environmental issues, laws, regulations, and the increasing costs of remediation and compliance, including actual and potential new federal and state requirements; health, safety, financial, environmental, and regulatory risks associated with ownership and operation of nuclear facilities; changes in the cost and availability of coal and other raw materials, purchased power, and natural gas; volatility in the short-term natural gas storage markets impacting third-party storage revenues related to DTE Energy; impact of volatility of prices in the oil and gas markets on DTE Energy's gas storage and pipelines operations; impact of volatility in prices in the international steel markets on DTE Energy's power and industrial projects operations; volatility in commodity markets, deviations in weather, and related risks impacting the results of DTE Energy's energy trading operations; changes in the financial condition of DTE Energy's significant customers and strategic partners; the potential for losses on investments, including nuclear decommissioning and benefit plan assets and the related increases in future expense and contributions; access to capital markets and the results of other financing efforts which can be affected by credit agency ratings; instability in capital markets which could impact availability of short and long-term financing; the timing and extent of changes in interest rates; the level of borrowings; the potential for increased costs or delays in completion of significant capital projects; changes in, and application of, federal, state, and local tax laws and their interpretations, including the Internal Revenue Code, regulations, rulings, court proceedings, and audits; the effects of weather and other natural phenomena on operations and sales to customers, and purchases from suppliers; unplanned outages; the cost of protecting assets against, or damage due to, terrorism or cyber attacks; employee relations and the impact of collective bargaining agreements; the risk of a major safety incident at an electric distribution or generation facility and, for DTE Energy, a gas storage, transmission, or distribution facility; the availability, cost, coverage, and terms of insurance and stability of insurance providers; cost reduction efforts and the maximization of plant and distribution system performance; the effects of competition; changes in and application of accounting standards and financial reporting regulations; changes in federal or state laws and their interpretation with respect to regulation, energy policy, and other business issues; contract disputes, binding arbitration, litigation, and related appeals; and the risks discussed in our public filings with the Securities and Exchange Commission. New factors emerge from time to time. We cannot predict what factors may arise or how such factors may cause results to differ materially from those contained in any forward- looking statement. Any forward-looking statements speak only as of the date on which such statements are made. We undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. This presentation should also be read in conjunction with the Forward-Looking Statements section of the joint DTE Energy and DTE Electric 2015 Form 10-K and 2016 Form 10-Q (which sections are incorporated by reference herein), and in conjunction with other SEC reports filed by DTE Energy and DTE Electric. 2
• Gerry Anderson – Chairman and CEO • Jerry Norcia – President and COO • Peter Oleksiak – Senior Vice President and CFO • Barbara Tuckfield – Director, Investor Relations 3 Participants
• Overview • 1st Quarter 2016 Financial Update • Summary 4
We continue to make progress on many fronts 5 Financial performance Strong 1st quarter financial results Well positioned to achieve 2016 EPS* guidance Legislation Senate hearings and key stakeholder testimony this week Key provisions allow for constructive policy NEXUS project On track for 4th quarter 2017 in-service FERC filing complete; compressors ordered * Reconciliation to GAAP reported earnings included in the appendix
6 2016 has started out strong and we are confident in achieving our guidance for the year • 1st quarter 2016 operating EPS* of $1.52 • On track to achieve 2016 operating EPS guidance range of $4.80 to $5.05 • Targeting 10th consecutive year of meeting or exceeding operating EPS initial guidance and we are continuing to grow dividends with earnings • Continuing significant investment to improve operations and reliability • Balance sheet remains strong * Reconciliation to GAAP reported earnings included in the appendix
7 Energy legislation continues to be a priority for the state and there is positive momentum • Occurring this week − Senate hearings to introduce substitute bills (SB437 and SB438) − Testimony expected from key stakeholders including MISO • Key provisions include − Capacity requirements for all electricity providers − Energy efficiency related incentives and revenue decoupling − Integrated resource planning pre-approval process • 2008 law is working well and includes − 10% retail open access cap − Certificate of Need for large capital projects − 12 month final order; 6 month rate case self implementation − 10% renewable portfolio standard Clean Reliable Flexible Affordable
8 NEXUS project is progressing and originates in the most economical geology in the country • Project on track for 4th quarter 2017 in-service • 1st quarter accomplishments − Increased interconnect agreements from 1.4 Bcf/d to 1.75 Bcf/d − Ordered compressors − Continued to advance work with FERC and other regulatory agencies • Continue to expect FERC Notice of Schedule 2nd quarter 2016 Natural Gas LDC Industrial Customer Power Generation Utica Dry Gas Core DTE Gas Vector
$4.82 $2.35 $2.48 $2.62 $2.76 $2.92 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 We remain confident in delivering 5%-6% operating EPS* growth target 9 * Reconciliation to GAAP reported earnings included in the appendix (dollars per share) Operating EPS Dividend Actuals Forecast Dividend per share 5.6% CAGR 2011 – 2015 (Annualized) $3.75 $4.93 5.8% increase Operating EPS 6.5% CAGR 2011 – 2015 Targeting 10th consecutive year meeting or exceeding initial guidance
• Overview • 1st Quarter 2016 Financial Update • Summary 10
DTE Energy 1st Quarter 2016 Operating Earnings* Variance 1Q 2015 1Q 2016 Change DTE Electric 136$ 127$ (9)$ DTE Gas 111 87 (24) Gas Storage & Pipelines 27 30 3 Power & Industrial Projects 33 21 (12) Corporate & Other (25) (7) 18 Growth segments** 282$ 258$ (24)$ Growth segments operating EPS 1.58$ 1.43$ (0.15)$ Energy Trading 12$ 16$ 4$ DTE Energy 294$ 274$ (20)$ Operating EPS 1.65$ 1.52$ (0.13)$ Avg. Shares Outstanding 178 180 Operating Earnings * Reconciliation to GAAP reported earnings included in the appendix Drivers DTE Electric • Warmer weather and 2015 revenue decoupler amortization offset by rate implementation DTE Gas • Primarily warmer weather Non-Utility • Gas Storage & Pipelines earnings across all platforms • Power & Industrial Projects steel related earnings and weather related impact on REF Corporate & Other • Timing of taxes Energy Trading • Stronger realized gas performance (millions, except EPS) ** Total DTE Energy excluding Energy Trading 11
Capital Expenditures Summary 12 Drivers 1Q 2015 1Q 2016 DTE Electric Distribution Infrastructure $130 $111 New Generation 242 13 Maintenance & Other 180 191 $552 $315 DTE Gas Base Infrastructure $44 $58 Nexus Related - 2 Main Replacement* 11 19 $55 $79 Non-Utility $60 $57 Total $667 $451 • DTE Electric capital lower due to purchase of peaking plant in 2015 • DTE Gas capital higher due to timing of spend DTE Energy 1st Quarter 2016 Capital Expenditures (millions) * Includes Main Renewal / Meter Move-out / Pipeline Integrity
Focus remains on key areas to improve distribution reliability 13 $6.5 billion investment over the next 10 years • Replace aging infrastructure • Address overloaded substations • Enhance technology Customer benefits • Reduce restoration time • Improve reliability • Decrease outages • Create and support Michigan jobs DTE Electric total investment expected to be $18 billion over the next 10 years
14 $600 million investment from 2016-2020 • Replace ~4,000 miles of cast iron and unprotected steel main • Cut timeline in half from 50 to 25 years Customer benefits • Reduce leaks and lost gas • Create and support Michigan jobs Continued focus on expanded main renewal program and upgrading gas infrastructure DTE Gas total investment expected to be $1.6 billion over the next 5 years
25% 21% 2014 2015 2016-2018E 51% 52% 2014 2015 2016-2018E Leverage* A strong balance sheet remains a key priority to support growth * Debt excludes securitization, a portion of DTE Gas’ short-term debt, and considers 50% of the Junior Subordinated Notes as equity Funds from Operations** / Debt* Target 50%- 53% Target 20% + • Target $200 to $300 million total equity issuances over the next 3 years; continue to evaluate current year equity needs • $1.6 billion of available liquidity • Maintain strong balance sheet metrics • FitchRatings 1st quarter 2016 upgrade − DTE Energy unsecured to BBB+ − DTE Electric senior secured to A+ 15 ** Funds from Operations (FFO) is calculated using operating earnings
• Overview • 1st Quarter 2016 Financial Update • Summary 16
Summary • Confident we will achieve our 2016 operating EPS* guidance... ...extending our streak to 10 consecutive years meeting or exceeding guidance • Utilities continue to invest in infrastructure improvements... ...which will fundamentally renew Michigan’s infrastructure and enhance customer reliability • Non-utility businesses have investment opportunities... ...and will continue to provide growth and portfolio diversity • Continue targeting 5% to 6% operating EPS growth... ...and growing dividends in line with earnings • Balance sheet remains strong... ...providing support for future growth opportunities 17 AGA conference presentation is May 16 at 1:00 PM EDT With Steve Kurmas – Vice Chairman, DTE Energy Webcast access: www.dteenergy.com/investors * Reconciliation to GAAP reported earnings included in the appendix
DTE Energy Investor Relations www.dteenergy.com/investors (313) 235-8030 18 Contact Us
Appendix
We are confident we will achieve our 2016 operating EPS* guidance * Reconciliation to GAAP reported earnings included in the appendix ** Total DTE Energy excluding Energy Trading 2016 Guidance 1Q 2016 Actuals 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 $4.80 - $5.05 $4.80 - $5.05 $584 - $600 135 - 141 105 - 115 90 - 100 (50) - (46) $864 - $910 $0 $864 - $910 180 $127 87 30 21 (7) $258 $1.43 $16 $274 180 $1.52 20 (millions, except EPS)
$136 ($18) $36 ($19) ($8) $127 1 Q 2 0 1 5 O p e rati n g E a rn in g s W e a th e r Ra te Impl e m e n ta ti o n 2 0 1 5 R e v e n u e Dec o u p le r A m o rtiza ti o n Ra te B a s e / O th e r 1 Q 2 0 1 6 O p e rati n g E a rn in g s * Reconciliation to GAAP reported earnings included in the appendix Drivers • Warmer weather in 2016 Variance to normal weather - 1Q 2015: $10 - 1Q 2016: ($8) • July 1st 2015 rate implementation supporting infrastructure improvements to enhance reliability for our customers Operating Earnings* Variance 21 DTE Electric Variance Analysis (millions)
Cash Flow Summary Drivers 1Q 2015 1Q 2016 Cash From Operations* $0.8 $0.7 Capital Spending (0.7) (0.5) Free Cash Flow $0.1 $0.2 Asset Sales & Other - - Dividends (0.1) (0.1) Net Cash $0.0 $0.1 Debt Financing: Issuances $0.5 - Redemptions (0.5) (0.1) Change in Debt $0.0 ($0.1) • DTE Electric capital lower due to purchase of peaking plant in 2015 DTE Energy 1st Quarter 2016 Cash Flow (billions) 22 * Includes ~$0.2b and $0 of equity issued for employee benefit programs in 1Q 2015 and 1Q 2016, respectively
Cash Flow Summary DTE Energy 2016 Cash Flow and Capital Guidance 2015 Actual 2016 Guidance Cash From Operations* $1.9 $1.8 Capital Spending (2.3) (2.7) Free Cash Flow ($0.4) ($0.9) Asset Sales & Other $0.1 - Dividends (0.5) (0.5) Net Cash ($0.8) ($1.4) Debt Financing: Issuances $1.1 $1.9 Redemptions (0.3) (0.5) Change in Debt $0.8 $1.4 Capital Expenditures Summary (millions) 2015 Actual 2016 Guidance DTE Electric Distribution Infrastructure $579 $610 New Generation 316 150 Maintenance & Other 892 790 $1,787 $1,550 DTE Gas Base Infrastructure $184 $220 NEXUS Related 2 110 Main Replacement** 87 100 $273 $430 Non-Utility $299 $520 – 720 Total $2,359 $2,500 - 2,700 ** Includes Main Renewal / Meter Move-out / Pipeline Integrity 23 (billions) * Includes ~$0.2b and ~$0.1b of equity issued for employee benefit programs in 2015 actuals and 2016 guidance, respectively
Approved by MPSC on December 11, 2015 Filed December 18, 2015 Filed February 1, 2016 DTE Electric Rate Case 2014 DTE Gas Rate Case 2015 DTE Electric Rate Case 2016 DTE rate case highlights • Rate recovery: $243 million • Test year: July 1, 2015 to June 30, 2016 • Return on Equity: 10.3% • Cost of Capital: 5.70% • Capital Structure: 50% debt, 50% equity • Rate Base: $13.4 billion • Requested rate recovery: $183 million • Test year: November 1, 2016 to October 31, 2017 • Staff/Intervenor testimony: May 2016 • Self implementation: on or after November 1, 2016 • Return on Equity: 10.75% • Cost of Capital: 6.04% • Capital Structure: 52% equity, 48% debt • Rate Base: $3.7 billion • Last rate case order December 2012 • Requested rate recovery: $344 million • Test year: August 1, 2016 to July 31, 2017 • Staff/Intervenor testimony: July 2016 • Self implementation: on or after August 1, 2016 • Return on Equity: 10.5% • Cost of Capital: 5.71% • Capital Structure: 50% debt, 50% equity • Rate Base: $14.5 billion 24
Interconnect agreements provide strong support on the NEXUS path up to 1.75 Bcf/d 25
8.5% 7.1% 5.4% 5.0% 4.9% 2013 2014 2015 2016E 2017E Michigan’s economy continues to improve 26 Source: IHS 15.1 15.8 18.6 21.9 22.7 2013 2014 2015 2016E 2017E Unemployment Rate Housing Start Ups (000s) Greatest improved state addressing 21st century challenges*** Lowest unemployment since 2001 7th most competitive state for job creation**** Most new manufacturing jobs since 2009* $407 $414 $419 $426 $434 2013 2014 2015 2016E 2017E Gross State Product (billions) Ranked Top 10 in pro- business 50 state rankings** **** Source: Site Selection magazine * Source: State of Michigan website ** Source: Pollina Corporate/Aedi Pro-Business 50 State Rankings *** Source: American Economic Institute
Weather and DTE Electric Weather Normal Sales 27 * Includes adjustments for temperature normalization and customer outages due to weather ** Includes choice of 1,243 1Q 2015 and 1,164 1Q 2016 YTD 2015 YTD 2016 % change YTD 2015 YTD 2016 % change Actuals - - Actuals 3,791 2,917 -23% Normal - - Normal 3,224 3,321 3% Deviation from normal 0% 0% Deviation from normal 18% -12% 1Q YTD 1Q YTD $10 $10 $20 $20 ($8) ($8) ($14) ($14) (Includes Electric Choice) (GWh) Q1 2015 Q1 2016 % change Residential 3,718 3,712 0% Commercial 4,833 4,846 0% Industrial 2,967 2,878 -3% Other 85 78 -8% TOTAL SALES** 11,603 11,514 -1% 2016 2016 Weather Normal Electric Sales* - DTE Electric Service Area Variance from normal weather (millions, after-tax) Variance from normal weather (millions, after-tax) 2015 2015 DTE Electric service territory DTE Gas service territory Earnings impact of weather - DTE Electric Earnings impact of weather - DTE Gas Cooling degree days Heating degree days
DTE Energy Trading Reconciliation of Operating Earnings* to Economic Net Income 1Q 2016 Economic Net Income Accounting Adjustments** 1Q 2016 Operating Earnings* $12 $20 • Economic net income equals economic gross margin*** minus O&M expenses and taxes • DTE Energy management uses economic net income as one of the performance measures for external communications with analysts and investors • Internally, DTE Energy uses economic net income as one of the measures to review performance against financial targets and budget * Reconciliation to GAAP reported earnings included in the appendix Operating Earnings Realized Unrealized O&M / Other 1Q 2015 1Q 2016 $16 $31 (4) 8 (12) (11) (millions, after-tax) $12 $16 1Q 2015 Operating Earnings* 1Q 2015 Economic Net Income Accounting Adjustments** $8 $16 $2 $18 28 (millions) ** Consists of 1) the income statement effect of not recognizing changes in the fair market value of certain non-derivative contracts including physical inventory and capacity contracts for transportation, transmission and storage. These contracts are not marked-to- market, instead are recognized for accounting purposes on an accrual basis; and 2) operating adjustments for unrealized marked-to- market changes of certain derivative contracts *** Economic gross margin is the change in net fair value of realized and unrealized purchase and sale contracts including certain non- derivative contract costs
29 1Q 2016 DTE Electric DTE Gas Gas Storage and Pipelines Power and Industrial Projects Corporate and Other Growth Segments Energy Trading DTE Energy Reported Earnings 127$ 87$ 30$ 17$ (7)$ 254$ (7)$ 247$ Plant closure - - - 4 - 4 - 4 Certain mark-to-market transactions - - - - - - 23 23 Operating Earnings 127$ 87$ 30$ 21$ (7)$ 258$ 16$ 274$ Net Income (millions) 1Q 2016 DTE Electric DTE Gas Gas Storage and Pipelines Power and Industrial Projects Corporate and Other Growth Segments Energy Trading DTE Energy Reported Earnings 0.71$ 0.48$ 0.17$ 0.09$ (0.04)$ 1.41$ (0.04)$ 1.37$ Plant closure - - - 0.02 - 0.02 - 0.02 Certain mark-to-market transactions - - - - - - 0.13 0.13 Operating Earnings 0.71$ 0.48$ 0.17$ 0.11$ (0.04)$ 1.43$ 0.09$ 1.52$ EPS First Quarter 2016 Reconciliation of 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 measurement for external communications with analysts and investors. Internally, DTE Energy uses operating earnings to measure performance against budget and to report to the Board of Directors. Operating earnings are presented both with and without Energy Trading. The term “Growth Segments” refers to DTE Energy without Energy Trading and represents the business segments that management expects to generate earnings growth going forward. 1st Quarter 2016 Reconciliation of Reported to Operating Earnings
30 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 measurement for external communications with analysts and investors. Internally, DTE Energy uses operating earnings to measure performance against budget and to report to the Board of Directors. Operating earnings are presented both with and without Energy Trading. The term “Growth Segments” refers to DTE Energy without Energy Trading and represents the business segments that management expects to generate earnings growth going forward. 1Q 2015 DTE Electric DTE Gas Gas Storage and Pipelines Power and Industrial Projects Corporate and Other Growth Segments Energy Trading DTE Energy Reported Earnings 136$ 111$ 27$ 33$ (25)$ 282$ (9)$ 273$ Natural gas pipeline refund - - - - - - (10) (10) Certain mark-to-market transactions - - - - - - 31 31 Operating Earnings 136$ 111$ 27$ 33$ (25)$ 282$ 12$ 294$ Net Income (millions) 1Q 2015 DTE Electric DTE Gas Gas Storage and Pipelines Power and Industrial Projects Corporate and Other Growth Segments Energy Trading DTE Energy Reported Earnings 0.76$ 0.62$ 0.15$ 0.19$ (0.14)$ 1.58$ (0.05)$ 1.53$ Natural gas pipeline refund - - - - - - (0.06) (0.06) Certain mark-to-market transactions - - - - - - 0.18 0.18 Operating Earnings 0.76$ 0.62$ 0.15$ 0.19$ (0.14)$ 1.58$ 0.07$ 1.65$ EPS 1st Quarter 2015 Reconciliation of Reported to Operating Earnings
2011 – 2015 Full Year Reconciliation of Reported to Operating Earnings 31 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 measurement for external communications with analysts and investors. Internally, DTE Energy uses operating earnings to measure performance against budget and to report to the Board of Directors. 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 DTE Energy Report Earnings 711$ 610$ 661$ 905$ 727$ 4.18$ 3.55$ 3.76$ 5.10$ 4.05$ DTE Electric Fermi 1 asset retirement obligation 9 0.05 2011/2012 PSCR disallowance 12 0.07 Tree trimming disallowance 8 0.05 DTE Gas Gas Storage & Pipelines Power & Industrial Projects Coke oven gas settlement 7 0.04 Chicago Fuels terminal sale 2 0.01 Pet coke mill impairment 1 0.01 Asset impairment 4 0.02 Contract termination 10 0.05 Plant closure 69 0.39 Energy Trading Certain mark-to-market transactions 55 (102) 47 0.31 (0.57) 0.26 Natural gas pipeline refund (10) (0.05) Corporate & Other Michigan corporate income tax adj. (87) (0.50) Investment impairment 5 0.03 NY state tax law change 8 0.04 Unconventional Gas Discontinued operations 3 56 0.02 0.33 DTE Energy Operating Earnings 636$ 676$ 720$ 816$ 863$ 3.75$ 3.94$ 4.09$ 4.60$ 4.82$ Net Income (millions) EPS
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 measurement for external communications with analysts and investors. Internally, DTE Energy uses operating earnings to measure performance against budget and to report to the Board of Directors. In this presentation, DTE Energy provides guidance for future period operating earnings. It is likely that certain items that impact the company’s future period reported results will be excluded from operating results. A reconciliation to the comparable future period reported earnings is not provided because it is not possible to provide a reliable forecast of specific line items. These items may fluctuate significantly from period to period and may have a significant impact on reported earnings. For comparative purposes, 2011 and 2012 operating earnings exclude the Unconventional Gas Production segment that was classified as a discontinued operation on 12/31/2012. Reconciliation of Other Reported to Operating Earnings 32