The paragraph is the introduction to the DTE Energy Third Quarter 2024 Earnings Conference Call. The call is in a listen-only mode until the question-and-answer session. Matt Krupinski, Director of Investor Relations, provides preliminary remarks and introduces key company executives: Jerry Norcia (Chairman and CEO), Joi Harris (President and COO), and Dave Ruud (Executive Vice President and CFO). Jerry Norcia discusses the company's strong performance and successes in 2024, Joi Harris covers regulatory proceedings and customer-focused investments, and Dave Ruud provides a financial update. The company is confident in meeting its 2024 operating earnings per share (EPS) guidance.

The company is positioning itself for strong performance in 2025 and beyond, aiming for a long-term EPS growth rate of 6% to 8% while maintaining a healthy balance sheet and minimal equity issuances. The growth strategy relies on necessary investments in reliability and clean energy generation, supported by an audit of the electric distribution system, Michigan energy legislation promoting decarbonization, and infrastructure recovery mechanisms. The company is finalizing its five-year plan to enhance grid reliability and cleaner energy generation, with details to be shared at year-end. A successful 2024 is attributed to a committed team with high employee engagement, ranked in the 94th percentile globally by Gallup, and the company's focus on stakeholders, including customers, communities, and investors.

DTE was recognized for its efforts in disability inclusion and received a perfect score on the Disability Equality Index. The company also won the Best Employers Award for Excellence in Health and Well-being. DTE is committed to restoring service to customers within 48 hours after storms, demonstrated by their response to an extreme weather event in August where they restored 65% of power within 24 hours and 95% within 48 hours. Despite challenges from extreme heat, DTE supported vulnerable customers by installing 1,000 free air conditioners in Metro Detroit. The company also emphasizes giving back to the communities they serve, particularly in August.

During this year's Month of Caring, DTE team members volunteered extensively, contributing 5,000 hours to community services like food pantries and park cleanups. Additionally, 600 line workers, including 500 contractors, aided hurricane relief efforts in the southern U.S. The team received gratitude from Georgia elementary students for their contributions. Financially, DTE is on track to meet its earnings goals for the year, with a long-term EPS growth rate of 6% to 8%. The company's strong financial standing enables continued investments in reliability and cleaner energy. Future plans will be detailed in the 2024 year-end earnings call, reaffirming a focus on delivering premium shareholder returns. Progress is made in rate cases for both DTE Gas and DTE Electric.

The paragraph outlines DTE's commitment to enhancing grid reliability and cleaner energy generation, emphasizing the importance of upcoming outcomes for DTE Gas and Electric. They have received an independent audit confirming the necessity of their investment plan, which aims to improve reliability by reducing power outages by 30% and halving outage times by 2029. Recent storm restorations have shown improvements in processes and grid automation. The company is also progressing with infrastructure updates, smarter grid transitions, and significant tree trimming. Additionally, DTE Electric is advancing its renewable energy efforts, with several solar parks under development.

The paragraph discusses the ongoing projects and initiatives at DTE, highlighting the addition of 800 megawatts to the renewable portfolio, which can power over 220,000 homes. It mentions the MIGreenPower program reaching 2,500 megawatts with nearly 100,000 residential subscriptions. DTE Gas is making progress on modernizing its gas systems, and DTE Vantage is advancing custom energy solutions, including an RNG project set to be operational by year-end. Joi Harris then updates on regulatory proceedings aimed at improving system reliability and supporting investments for infrastructure modernization and transition to cleaner energy. Both DTE utilities are working on general rate cases, with a decision expected soon for DTE Gas.

The electric rate case focuses on investments to enhance the electric grid, support the transition to cleaner energy, and maintain affordability. It requests expanding the infrastructure recovery mechanism (IRM) to cover grid investments between rate cases, similar to the DTE Gas IRM, with the aim of extending time between rate cases. An independent audit of the electric distribution system supports the capital plan and highlights the need for strategic investment to improve reliability, aiming to reduce outages by 30% and outage time by half by 2029. A formal response to the audit will be filed in November to integrate its findings into the investment strategy.

The paragraph discusses the efforts of improving reliability and enhancing customer experience through strategic investments and process improvements. DTE has made significant progress by implementing smart grid technology, which has prevented thousands of power interruptions and saved millions of outage minutes. Tree-trimming efforts have also improved reliability, accounting for half the instances where customers lose power. DTE aims to trim trees on a five-year cycle by next year, helping reduce power outages by 30% and outage durations by half by 2029. Despite these investments, DTE focuses on maintaining customer affordability by managing costs, with residential electric bill growth projected to be just over 1% annually through 2025, well below the national average increase.

The paragraph discusses a company's investment of over $6 billion in its distribution system over the past five years, resulting in some of the industry's lowest bill increases. Their performance over the last three years is highlighted, emphasizing their use of a diverse energy mix to maintain affordability and flexibility for future technology. They also leverage federal tax credits for renewable energy to support customer affordability goals. The financial update by David Ruud reveals third-quarter operating earnings at $460 million or $2.22 per share. DTE Electric earnings rose by $169 million due to various factors, while DTE Gas experienced a decline due to higher costs. DTE Vantage posted operating earnings of $33 million for the third quarter of 2024.

The paragraph discusses a $23 million decrease from 2023 due to timing and one-time items in the RNG and steel-related businesses, while expressing confidence in meeting the full-year guidance for Vantage, aided by new projects. Energy Trading reported $25 million in earnings, driven by strong portfolio performance. A $30 million quarter-over-quarter improvement in corporate and other segments is attributed to tax timing, which will reverse by year-end, aligning with full-year guidance. DTE's third-quarter earnings were $2.22 per share, positioning them to achieve 7% operating EPS growth in 2024 and sustain growth in 2025. Additionally, the company highlights a robust balance sheet and credit profile, supported by strong cash flow, targeting minimal equity issuances and maintaining a financial plan that incorporates debt refinancing to meet its 6% to 8% EPS growth target. The company has largely executed its 2024 financing plan, including prefunding fourth-quarter debt maturities.

The company is focused on maintaining a strong investment-grade credit rating and solid balance sheet metrics, targeting an FFO to debt ratio of 15% to 16%. They emphasize their commitment to stakeholders, investing heavily in utilities for reliability and cleaner energy, while ensuring customer affordability. The company is well-positioned to handle increased load demands in their service area. They project a 7% growth in the 2024 operating EPS compared to 2023 and aim for a long-term operating EPS growth of 6% to 8%. They plan to share long-term details in the year-end earnings call and anticipate delivering strong shareholder returns with their capital investment plan. The line is opened for questions, and Shar Pourreza from Guggenheim Partners inquires about the removal of the $25 billion CapEx plan reference, asking about system needs and future generation plans.

The paragraph discusses the opportunities and plans for investment and improvement in energy generation and distribution. Gerardo Norcia highlights the potential for incremental investment in renewable energy generation, spurred by voluntary subscriptions and updated clean energy legislation. The report from an independent audit on their distribution system also indicates opportunities for investment. Shar Pourreza inquires about the need for additional spending due to storm and resiliency audits, and Joi Harris confirms that the company has a five-year aggressive plan to enhance reliability, which aligns with the service quality standards set by the PSC. The plan may require the reprioritization of some capital investments.

The discussed findings support the overall levels planned, with noted increases in certain areas like pull-top maintenance being considered. The focus is on affordability, as highlighted in their presentation. Page 13 shows success in maintaining overall bills and build growth below the national average. Shar Pourreza inquires about potential funding needs beyond the $25 billion figure, and David Ruud responds, indicating plans to update this in the fourth quarter call. Current plans involve minimal equity needs, with strong cash flow generation and IRA support for capital investments. Further updates will be provided for future years. Finally, Durgesh Chopra from Evercore ISI questions the team, suggesting they are ahead of their plan year-to-date.

In the paragraph, David Ruud discusses the company's strong performance in comparison to the previous year, particularly highlighting improvements in the electric segment and trading, which exceeded expectations. He mentions factors like storms affecting operations last year and additional margins available next year. Overall, the company is expected to have a good year and aims to set the foundation for continued success in 2025. Durgesh Chopra asks about the performance-based rule-making docket, to which Joi Harris responds that the commission has finalized its proposal, which includes seven metrics that the company already uses. They are advocating for balanced incentives and disincentives.

The paragraph is a discussion during a Q&A session involving Jeremy Tonet from JPMorgan, Gerardo Norcia, and David Ruud. Jeremy asks about Vantage's progress on RNG (Renewable Natural Gas) custom solutions and carbon capture projects. David Ruud responds, highlighting that there is a robust pipeline of projects, including an RNG project and opportunities in custom energy solutions supported by the IRA, with significant involvement in the industrial sector. He also mentions developments in smaller carbon capture and storage (CCS) projects. Jeremy further inquires about potential increases in utility capital expenditures and how portfolio rotation might assist in funding this. Gerardo Norcia responds by indicating that, as capital needs increase, they will manage investments and focus more on utility capital in the future.

In the paragraph, Nick Campanella from Barclays asks Gerardo Norcia about his company's expectations for load growth and the status of a data center bill. Norcia responds that they anticipate flat demand growth over the next five years and have not yet finalized any data center deals, though there is significant interest. He updates that the sales and use tax portion of the data center bill has passed the House and Senate and is expected to be addressed in the lame duck session, with the governor indicating support. Norcia believes this will attract hyperscale data centers and improve affordability for customers. Campanella then briefly asks about the status of the electric case.

The paragraph is a Q&A discussion involving Joi Harris, Gerardo Norcia, and David Arcaro about a rate case and potential settlements related to gas and electric rates. Joi Harris mentions the low likelihood of a settlement due to many intervenors but remains hopeful for a constructive outcome by January. David Arcaro from Morgan Stanley queries about the gas rate case and the ALJ's (Administrative Law Judge) recommendation regarding the lower-than-expected Return on Equity (ROE). Joi Harris replies that the staff's position is aligned with their initial testimony and remains constructive, expressing confidence about the gas rate case outcome, expected in a couple of weeks. David also asks about the momentum in the voluntary renewables program, but the paragraph does not include Harris's response to that inquiry.

In the paragraph, Gerardo Norcia discusses the potential increase in subscribed megawatts beyond the current 2,500, noting that expectations are consistently exceeded. They have already filled their forecasted order book for the next four years and see significant future opportunities, with more details to come at the year-end call. Julien Dumoulin-Smith asks about the implications of a sales and use tax exemption, noting its potential impact on near-term capacity acquisition. Norcia explains that the available capacity is under 1,000 megawatts, with plans to secure more in the next 12 months, independent of the tax exemption's outcome. He notes that hyperscalers may depend on the tax exemption, expected to be addressed in the fall, highlighting its bipartisan support.

The paragraph discusses expectations for moving a bill in the House by the year's end and plans for implementing hundreds of megawatts of power soon. Julien Dumoulin-Smith inquires about the Infrastructure Recovery Mechanism (IRM) and its impact on rate cases. Joi Harris mentions the reliance on positive audit results to support their capital plan and emphasizes the need to grow the IRM significantly, potentially up to $1 billion, to avoid frequent rate cases. Gerardo Norcia agrees, indicating that while substantial changes in the rate case are not expected soon, they anticipate a willingness to increase the IRM, which would help reduce the frequency of rate cases over time.

In the paragraph, Julien Dumoulin-Smith and Michael Sullivan engage in a discussion about the timing of rate cases and the company's decision to delay a long-term financial refresh due to ongoing cases. David Ruud responds, saying the company will continue to evaluate the situation and update plans as needed, but remains confident in securing necessary capital investments through these cases. Michael then shifts the conversation to the company's strong trading performance year-to-date. David acknowledges the strong results, attributing them to contracted and hedged positions in their gas portfolio, and indicates no expected reversal in the fourth quarter.

In the paragraph, the discussion is about future business outlooks and financial performance. The speaker mentions optimistic views on power contracts due to higher margins, despite some challenges with weather impacting gas performance. It is noted that last year's cost-cutting efforts affected Q4 finances, but some costs have returned this year. The company remains strong and expects good performance, hoping to continue this trend into 2025. Regarding tax credits for the next year, it is queried if they will boost the contribution of the nonregulated business beyond the targeted range for several years, to which David Ruud gives a consistent answer he has provided before.

In the paragraph, the company discusses its expectations for the fourth quarter update, specifically mentioning the favorable impact of the 45Z tax credits on their RNG business from 2025 to 2027. Despite not including these credits in their 2028 growth projections, they remain confident in achieving their earnings per share (EPS) growth targets. Paul Fremont inquires whether the company might exceed their targeted percentage range due to these temporary 45Z contributions. David Ruud responds that they will provide more comprehensive guidance during the fourth quarter call. When asked if they are tracking toward the higher end of their guidance range for the current year, Ruud indicates they expect to meet their guidance range and mentions timing effects of taxes that will align them within the range. The operator then announces the next caller, Bill Appicelli from UBS.

In the paragraph, David Ruud and Bill Appicelli discuss the impact of tax timing items, quantifying them at around $40 million for electric and corporate sectors. They also confirm that a projected $80 million increase related to Vantage projects is on track for the fourth quarter, particularly from the Ford project's central energy plant in Tennessee. There are no issues anticipated with these projects, which are expected to impact income and investment tax credits positively. Gerardo Norcia speaks about the potential for increased large load demand, stating that any resulting incremental margin will be used to support affordability initiatives and accelerate capital plans without increasing customer bills. However, the exact sensitivity and impact on earnings are not yet determined due to early-stage contract discussions.

The paragraph discusses a company's plan to invest $9 billion over the next five years to address a backlog in their distribution business, with the potential to accelerate investment without increasing customer bills. Gerardo Norcia mentions that while the existing tariff structure is adequate for current capacity, a new tailored tariff might be needed for future capacity additions to prevent creating stranded assets. Sophie Karp asks about the impact of storm audit results on the company's capital plan and customer bills. She inquires if mechanisms like storm securitization costs might be needed to offset potential bill increases, or if the existing rate structure can accommodate the investment plan without significant customer rate growth.

Gerardo Norcia discusses the company's five-year capital plan aimed at reducing service interruption frequency and duration while maintaining cost affordability. Despite an audit suggesting increased capital for the distribution business, the company is confident in its affordability strategies, having invested significantly in recent years and benefiting from renewable energy assets. Norcia does not foresee the need for new structural mechanisms. Sophie Karp inquires about potential growth opportunities in the Vantage business, to which Norcia responds that they are exploring opportunities, particularly in providing energy solutions to data center customers.

The paragraph features a conversation during a conference call, where Travis Miller from Morningstar asks about the outcome of an audit process. Joi Harris explains that responses will be filed by mid-November and there is no formal conclusion to the audit; the discussions and findings will continue to be incorporated into future regulatory proceedings. Gerardo Norcia mentions the usefulness of the distribution grid plan in integrating audit findings, highlighting ongoing collaboration with staff to enhance future investment security and predictability. Both Harris and Norcia emphasize the collaborative and high-quality nature of the process.

Travis Miller and Gerardo Norcia discuss the status of performance-based rates, with Norcia clarifying that while this topic was not included in the current docket, there is a separate docket addressing it that might be integrated into a future rate case. Norcia is optimistic about the metrics and investment support for performance-based rates. Miller also inquires about supply chain issues in renewable energy growth, to which Norcia responds confidently, highlighting secured solar panel supplies and ongoing battery plant projects with no foreseeable supply chain issues. The call concludes with Norcia expressing optimism for 2024 and future years, and looking forward to upcoming events.

The paragraph is a closing remark from a conference call, reminding participants to stay healthy and safe and informing them that the call has concluded and they can disconnect.

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