DTE Energy Company Q2 FY2025 earnings call

Management Statement and Operational Highlights

• Jerry Norcia announced transition to Executive Chairman, with Joi Harris becoming CEO effective September 8. Joi will lead the company, continuing focus on reliability, renewable energy, and data centers.
• Grid reliability progress: Installed 220 smart grid devices, 230 miles of pole top maintenance, replaced 1,560 utility poles, and trimmed 3,500 miles of trees.
• Renewable investments: $30 billion customer-focused capital investments over 5 years, 2,500 MW of renewable generation in service, building ~900 MW per year.
• Data center opportunities: Advanced discussions with multiple data centers for over 3 GW of new loads, aiming to close first large deal by end of 2025.

Segment Performance

• Utilities: DTE Electric earnings for the quarter were $318 million, $39 million higher than Q2 2024, driven by rate implementation and tax timing, offset by higher O&M and rate base costs. DTE Gas operating earnings were $6 million, $6 million lower than Q2 2024 due to higher O&M, rate base costs, and cooler weather.
• DTE Vantage: Operating earnings were $31 million for Q2 2025, a $17 million increase from 2024, driven by RNG production tax credits and higher custom energy solutions earnings.
• Energy Trading: Earned $24 million for the quarter, with favorable margins in contracted and hedged physical power portfolio.
• Corporate & Other: Unfavorable by $56 million quarter-over-quarter due to tax timing, but expected to reverse during the year.

Guidance

• 2025 operating EPS guidance: $7.09 to $7.23, well-positioned for higher end.
• Long-term operating EPS growth rate target: 6% to 8% through 2029, with RNG tax credits extending through 2029 providing confidence to reach high end by 2027.
• 5-year capital investment plan: $30 billion, with data center opportunities providing upside.

Risks

• Uncertainty in regulatory proceedings and potential changes in tax credits or policies.
• Regulatory audit and intervention in electric rate case could impact plans.
• Data center negotiations and permitting processes need to be successfully completed for full realization of opportunities.

Question and Answer Q: About capacity to absorb 3 GW of data center load and when new generation CapEx would be needed.

A: Joi Harris discussed data center negotiations, near-term load met with existing capacity and storage, longer term may require incremental baseload generation.

Q: Impact of OBBB on renewable plans.

A: Joi Harris said RNG tax credits extension supports plans, safe harbored investments through 2029, and battery storage projects qualify for tax credits through 2036.

Q: Equity issuance and long-term outlook.

A: Dave Ruud mentioned $0 to $100 million equity issuance per year, with tax credits and growth providing flexibility.

Q: Data center revenue displacement and customer savings.

A: Joi Harris and Dave Ruud discussed data centers increasing load by ~40% over 5 years, storage paid for by data centers, providing affordability to existing customers.

Q: Electric rate case progress.

A: Joi Harris said still in audit and discovery, expecting PFD in December and final order in February.

Q: Data center announcement timeline.

A: Joi Harris intended to have a deal done by end of 2025, with progress in third quarter.

Q: Treasury guidelines and safe harbor.

A: Joi Harris said they've insulated themselves based on existing safe harbor guidelines and early asset purchases.