DTE Energy Company JR SUB DB 2017 E Q3 FY2024 earnings call

Management Statement and Operational Highlights

• Year Performance: Strong 2024 year, confident in delivering 2024 operating EPS guidance, positioning for strong 2025 and beyond with long-term EPS growth 6%-8%.
• Regulatory Proceedings: Progress in rate cases at DTE Gas (expected order in coming weeks) and DTE Electric (expected final order in January). Independent audit of electric distribution system confirmed proposed investment plan for reliability improvements.
• Reliability Improvements: Effective storm restoration in August, with 65% restored in 24 hours and 95% in 48 hours. Progress on smart grid technology, tree trimming (nearly 40,000 miles trimmed since 2015), and renewables build-out (800 MW solar parks under construction).
• Community Support: Employee engagement ranked 94th percentile globally, recognized as Best Place to Work for disability inclusion. Employees volunteered 5,000 hours, and team helped with hurricane relief.
• Renewables and Gas Initiatives: DTE Electric broke ground on 3 solar parks, DTE Gas progressing on gas main renewal, DTE Vantage advancing custom energy solutions, RNG, and carbon capture projects.

Segment Performance

• DTE Electric: Earnings of $437 million in Q3 2024, $169 million higher than Q3 2023. Drivers include base rates, warmer weather, lower storm expenses, and timing of taxes partially offset by higher rate base costs.
• DTE Gas: Operating earnings unfavorable $8 million vs Q3 2023, driven by higher rate base costs and return to normalized O&M, partially offset by increased revenue from IRM.
• DTE Vantage: Operating earnings $33 million in Q3 2024, a $23 million decrease from 2023 due to timing and one-time items, but confident in full-year guidance as new projects ramp up in Q4.
• Energy Trading: Earnings of $25 million in Q3 2024, strong performance in contract and hedged physical power and gas portfolios.
• Corporate and Other: Favorable by $30 million quarter-over-quarter due to tax timing, reversing through the year.

Guidance

• Confident in delivering 2024 operating EPS guidance.
• Long-term operating EPS growth target of 6%-8%.
• Update on five-year plan to be provided on year-end call.
• DTE Vantage expected to ramp up in Q4 with new projects.

Risks

• Regulatory proceedings may impact near-term capital plans.
• Supply chain or weather-related risks affecting performance.
• Uncertainty in rate case outcomes and their impact on affordability.

Q: Shar Pourreza asks about system needs and generation needs A: Gerardo Norcia responds that they are seeing incremental investment opportunity in generation due to voluntary renewables subscription and clean energy legislation, with update at year-end call Q: Durgesh Chopra asks about year-to-date performance and performance-based rule-making A: David Ruud says year-to-date strong, Jeremy Tonet asks about Vantage's RNG and carbon capture, David Ruud responds about pipeline in those areas Q: Nick Campanella asks about load growth and data center bill A: Gerardo Norcia says forecast flat demand growth, sales and use tax bill passed House, expected in lame duck session Q: David Arcaro asks about voluntary renewables and gas rate case A: Gerardo Norcia says voluntary renewables will exceed 2,500 MW, Joi Harris says gas rate case near final order Q: Julien Dumoulin-Smith asks about rate case cadence and IRM A: Joi Harris says staff testimony supports current levels, need to grow IRM to significant levels; Gerardo Norcia says see willingness to grow IRM to reduce rate case frequency Q: Michael Sullivan asks about Q4 drivers and trading segment A: David Ruud says trading performance strong, no big reversal in Q4, optimistic about future Q: Paul Fremont asks about tax credits and Vantage A: David Ruud says tax timing items about $40 million, Vantage Q4 on track with Ford project Q: Bill Appicelli asks about tax timing and Vantage projects A: David Ruud says tax items about $40 million, Vantage Q4 on track with Ford project coming online Q: Sophie Karp asks about audit impact and Vantage opportunities A: Gerardo Norcia says confident in affordability goals, Vantage has opportunities in custom energy solutions with data centers Q: Travis Miller asks about audit pathway and supply chain A: Joi Harris says file response in mid-November, collaborative process; Gerardo Norcia says supply chain lined up for renewables