DTE Energy Co. Q4 FY2023 earnings call

• 2023 was a challenging year but DTE offset most headwinds, achieving operating earnings per share of $5.73.
• Invested heavily in utilities, including DTE Electric investing $3.1 billion and DTE Gas investing nearly $750 million in 2023.
• Filed distribution grid plan and electric rate case, and a rate case at DTE Gas.
• Recognized with 11th consecutive Gallup Great Workplace Award, etc.
• Michigan clean energy legislation passed in November 2023, supporting solar, wind, and storage assets.
• $25 billion 5-year capital plan with a $2 billion increase, 95% of capital invested at utilities.

DTE Electric had earnings of $791 million in 2023, $170 million lower than 2022 due to warmer winter weather, cooler summer weather, higher storm expenses, etc. DTE Gas had operating earnings $22 million higher than 2022, driven by one-time O&M cost reductions and IRM revenue but offset by warmer weather and higher rate base costs. DTE Vantage had operating earnings $153 million in 2023, a $60 million increase from 2022 due to new RNG projects and steel-related earnings. Energy Trading finished 2023 with earnings of $105 million. Corporate and Other was unfavorable by $15 million year-over-year primarily due to interest expense.

• 2024 operating EPS guidance midpoint is $6.69 per share, 7% growth from 2023 original guidance midpoint.
• Long-term operating EPS growth remains at 6% to 8%.
• 2024 annualized dividend is $4.08 per share, consistent with operating EPS growth.
• Strong balance sheet and investment-grade credit ratings to support capital investment plan.

• Significant headwinds from weather and storm activity in 2023.
• Regulatory uncertainties related to rate cases and compliance with clean energy legislation.
• Potential changes in market conditions affecting the Energy Trading business.

Q: Shar Pourreza asked about CapEx funding and RNG sale.

A: Dave Ruud said strong cash flow allows minimal equity issuances and Gerardo Norcia mentioned non-utility assets are under review.

Q: Nick Campanella asked about Vantage portfolio and Michigan legislation.

A: Gerardo Norcia said prefer ownership for customers and investors, and Michigan legislation provides opportunities.

Q: Jeremy Tonet asked about capital program and CCS.

A: Gerardo Norcia said $2 billion increase in cleaner generation at DTE Electric due to IRP settlement and legislation, and DTE is advanced on CCS projects.

Q: Durgesh Chopra asked about January storm and contingency.

A: Gerardo Norcia said storm expense increased and they plan with standard deviation of weather.

Q: David Arcaro asked about renewable energy plan.

A: Gerardo Norcia said voluntary renewable plan is progressing and may have upside.

Q: Andrew Weisel asked about fuel cost savings and non-utility CapEx.

A: David Ruud said $300 million fuel cost savings was recovery and non-utility CapEx is driven by Ford project.

Q: Michael Sullivan asked about Energy Trading and PBR.

A: David Ruud said Energy Trading has favorable premiums and Gerardo Norcia said PBR process is constructive.

Q: Sophie Karp asked about Energy Trading visibility and capital plan.

A: David Ruud said Energy Trading contracts are mostly 1 year and Gerardo Norcia said capital plan reflects IRP and legislation.

Q: Julien Dumoulin-Smith asked about PPA ownership and compensation.

A: Gerardo Norcia said ownership is reflected and financial compensation mechanism will provide incremental value.

Q: Gregg Orrill asked about RNG contribution and returns.

A: David Ruud said RNG contributed and returns are still strong.

Q: Anthony Crowdell asked about undergrounding and credit metrics.

A: Gerardo Norcia said undergrounding is in early stages and David Ruud said credit metrics are on track.

Q: Ryan Levine asked about utility ownership and carbon pipelines.

A: Gerardo Norcia said prefer ownership and DTE is advanced on carbon capture and storage projects.