The operator begins the DTE Energy Second Quarter 2023 Earnings Conference Call and turns it over to Ms. Barbara Tuckfield, Director of Investor Relations. She reminds listeners to read the safe harbor statement and references to operating earnings. Gerry Norcia, Chairman and CEO, and Dave Ruud, Executive Vice President and CFO, are present for the call. Norcia discusses the achievements made so far this year and provides a general business update. He also mentions the recent appointments to the Michigan Public Service Commission, including Chair Dan Scripps and Alessandra Carillon.

DTE is committed to their stakeholders, including employees, customers, communities, and shareholders. They have received recognition for their employee engagement, including the Gallup Exceptional Workplace Award and being named one of Metro Detroit's best and brightest companies. The MPSC approved their IRP settlement agreement, which reduces the cost of their clean energy transformation. They were also honored with the Civic 50 award for their commitment to the communities they serve. They are executing on their plan to achieve their 2023 guidance midpoint and their long-term financial growth, despite the weather and storms they experienced earlier this year.

DTE is making progress on cost management and seeing additional favorability across their portfolio of businesses. They have come to an IRP settlement agreement with 21 organizations from across Michigan, which includes ending DTE's use of coal in 2032 and providing retraining for employees impacted by the plant retirements. They plan to cease coal use at their Bell River power plant in 2026, retire two coal units at Monroe in 2028, and accelerate the retirement of their two remaining units from 2035 to 2032. This will help them reach their 85% carbon reduction goal by 2032.

This IRP will develop over 15,000 megawatts of renewables by 2042 to power homes, businesses and industrial facilities, and build over 1,800 megawatts of energy storage to support the company's clean energy transformation. It will also provide over $2.5 billion in future cost savings, and direct $110 million to support vulnerable customers. It will also invest over $11 billion in the next 10 years and support 32,000 Michigan jobs. Additionally, it will provide full recovery of the net book value of Bell River and Monroe, as well as securitize a portion of the assets to balance customer affordability with the increased investment in clean energy.

DTE Electric has made significant progress this year, placing Michigan's largest wind park in service and joining their voluntary renewables program with Dakota, a Native American and women-owned automotive supplier. Additionally, Monroe received regulatory asset treatment for the majority of their undepreciated coal unit investment balances with a 9% return on equity. A small portion of the net book value will be securitized after 2026, and the remaining portion will be securitized beginning in 2032, receiving their full authorized ROE of 9.9% until then. This settlement is beneficial for customers and supports DTE's 5-year financial plan and 6-8% EPS growth rate.

DTE is continuing to focus on renewable energy and improved reliability of the electric grid. They have trained over 25,000 miles of trees in the past five years and plan to trim an additional 5,000 miles in 2023, with 2,800 miles already completed this year. DTE Gas has completed 150 miles of renewal in the first half of the year and the natural gas balance program has over 12,000 customers subscribed since 2021. The city of East Grand Rapids was the first municipality in Michigan to join the program and two RNG and one custom Energy Solutions projects have been placed in service in 2023. DTE is on track to place two additional RNG projects in service by year-end and is in advanced discussions on an additional customer energy solutions project.

In the second quarter of 2023, DTE Electric earnings were $8 million lower than the second quarter of 2022 due to cooler weather, lower residential sales, and higher rate base costs. DTE Gas operating earnings were $18 million higher than the second quarter of 2022 due to onetime O&M cost reductions and IRM revenue. DTE Vantage operating earnings were $2 million lower due to planned outage timing, while Energy Trading finished the quarter with $29 million higher than the second quarter of 2022 due to contracts with revenue based on fixed prices and hedged upon execution.

DTE Energy earned $0.99 per share in the second quarter, and is still on track to deliver on its overall EPS guidance for 2023. This is despite headwinds such as a lower-than-expected rate order and the winter storms in the first quarter. DTE Electric is achieving offsets for over half of these headwinds, but will likely still fall below its guidance range. However, favorability at each of the other business units will overcome the remaining headwinds and achieve the EPS guidance, with additional favorability at DTE Gas and DTE Vantage driven by onetime O&M reductions and stronger R&G pricing, respectively. Energy Trading is also seeing favorability in its contracted, highly hedged power portfolio.

DTE is focused on their team, customers, communities, and investors and is executing on their plan to achieve full year guidance without compromising safety and reliability. They have implemented onetime O&M reductions across the company and are advancing their regulatory filings. Their capital plan supports their long-term operating EPS growth and 6-8% operating EPS growth target through 2027, as well as a dividend growing in line with operating EPS.

Gerry Norcia of DTE Energy has stated that they are aiming to settle the electric rate case by mid-October, and that they have the ingredients for settlement. Dave Ruud of DTE Energy has also stated that they are seeing weather conditions close to what was expected and that they are looking for offsets across their portfolio. One example is opportunistic steel sales.

The leadership team at Vantage meets weekly to look for opportunities to offset the challenges they have faced due to weather and storms. They have already found some cost reductions and increased RNG pricing that have allowed them to take advantage of these opportunities. They will continue to look for other ways to reduce costs and increase profits throughout the year.

Gerry Norcia and Dave Ruud discuss the company's initiatives to reduce costs and take advantage of attrition, such as reducing overtime and contractor workforce, and renegotiating supply chain contracts. They are also looking to efficiently finance their credit metrics in the tighter capital market environment, and plan to use zero to $100 million in equity over the next few years. Vantage assets are potentially helping with this.

Gerry Norcia reports that the staff has been supportive of the IRM proposal and have signaled that it would be beneficial for customers in terms of grid resilience and reliability. He also notes that they are exploring additional mechanisms such as ring-fencing vegetation management spend.

Dave Ruud reported that sales were in line with expectations on a weather-adjusted basis, with residential sales down 3.5-4%, commercial sales down slightly due to energy efficiency, and industrial sales up due to less downtime in Michigan. Gerry Norcia reported that there were some storms that passed through the service jurisdiction last night, but it is too early to comment on the restoration efforts or the severity of the storms relative to expected or normal storm activity.

Gerry Norcia states that the company has settled on filing another IRP in several years to address the retirement of the last two units of Monroe in 2032. He mentions that a lot could change in two or three years, and that they will need a dispatchable resource there. He also mentions that the company has seen $200 million of headwinds due to firestorm activity and cooler and warmer weather, but the team is achieving the plan and they are proud of their accomplishments.

Detroit Edison is considering a combined cycle plan with carbon capture as well as other options such as more batteries and renewables to provide a 24/7 dispatchable resource. As part of their infrastructure renewal and generation plan, they are also looking into the possibility of using DOE funds to help with customer affordability for the Belle River conversion. This funding would provide lower interest rates and lower overall expenses.

Gerry Norcia and Dave Ruud discussed the different financial tools available to offset weather headwinds this year, such as convertible debt, and the upcoming updated distribution grid plan. The plan will focus on tree trimming, pull-top maintenance, and automation, and is expected to be filed before the end of the year. It is intended to maximize value for shareholders.

The new commissioners are supportive of the agenda to transition to electric vehicles, which will be beneficial for the environment and create investment opportunities for the company. The company expects that by the end of their 5-year plan, the transition to electric vehicles will contribute significantly to margin growth and help finance large investments to prepare for the transition and for inclement weather.

DTE Energy held their Second Quarter 2023 Earnings Conference Call, during which CEO Gerry Norcia discussed the company's prospects for electrification and their reliance on normal weather for the rest of the year to achieve their midpoint of guidance. He also noted that the bias is towards the midpoint of the guidance and that contingency in the electric company had been exhausted. The call concluded with Norcia wishing everyone a great morning and a safe day.

This summary was generated with AI and may contain some inaccuracies.