DTE Energy Co (DTE)

• DTE's trading segment is performing exceptionally well, with earnings of $61 million compared to the guidance of $35 million, driven by contracted and hedged positions in their physical gas portfolio. The company is optimistic about this business going forward. -
• DTE is working closely with regulators to incorporate the positive findings from the independent audit into their investment plans, which will help secure future investments and improve predictability. The collaborative process is enhancing the company's investment strategy and regulatory relations. -
• There is a willingness from regulators to expand the Infrastructure Recovery Mechanism (IRM), which would allow DTE to make necessary investments while reducing the frequency of rate cases. This development is expected to benefit both the company and its customers. -

• The electric rate case faces significant uncertainty due to a large number of intervenors, resulting in a low probability of settlement and potential pressure on DTE's near-term capital plans. -
• The Administrative Law Judge's recommendation in the gas rate case included a lower-than-expected Return on Equity (ROE), raising concerns about possible negative impacts on financial performance. -
• The performance-based regulation (PBR) docket lacks an official end date, and there is uncertainty regarding the application of incentives and disincentives, which could affect future earnings. -

1. Capital Expenditure Upside
   Q: Are you seeing opportunities to increase CapEx plans?
   A: Yes, we're seeing opportunities for incremental investment, especially in generation. Our voluntary renewables program forecasted 2,500 megawatts over the next four years, and we've already filled the queue. - We're also updating our generation plan due to new clean energy legislation and see further opportunities in our distribution system following the independent audit. -

2. Load Growth and Data Centers
   Q: What's your outlook on load growth, particularly with data centers?
   A: While our current plan forecasts essentially flat demand growth over the next five years - , we have significant interest from data center operators. The sales and use tax exemption bill is progressing, and once passed, we expect to begin connecting data center load. This will be highly beneficial to our customers and improve affordability. -

3. Funding and Equity Needs
   Q: Will increased CapEx require additional funding or equity?
   A: We plan to update this on our fourth-quarter call, but in our current plan, we have $0 to $100 million of equity needs over the next three years and don't anticipate that changing. - With strong cash flow generation and the benefits from the IRA, we're confident we can support our capital plan. -

4. Electric Rate Case Outlook
   Q: What's the status of the electric rate case?
   A: The staff's position is constructive but puts some pressure on our near-term capital plans. - Given the large number of intervenors, there's a low probability of settlement. However, we believe we can still achieve a constructive outcome, with a definitive decision expected in January. -

5. Performance-Based Ratemaking
   Q: Any updates on the performance-based ratemaking docket?
   A: The commission's final proposal includes seven metrics that align with how we already measure ourselves. - We're advocating for symmetry in incentives and disincentives. There's no official end date to this docket, and it won't be incorporated into the current rate case. -

6. Trading Segment Performance
   Q: Can you discuss the performance of the trading segment?
   A: Trading is performing well, with $61 million year-to-date versus our guidance of $35 million for the year - - . This strong performance is based on contracted and hedged positions in our physical gas portfolio. We don't anticipate a significant reversal in the fourth quarter and see reasons for optimism going forward. -

7. Impact of 45Z Tax Credits
   Q: How will 45Z tax credits affect non-regulated earnings?
   A: The 45Z production tax credits for our RNG business are favorable and will come into effect from 2025 through 2027. - This will give us better confidence and flexibility in achieving our earnings over those years. We'll provide more updates on this in our fourth-quarter call. -

8. Voluntary Renewables Program Growth
   Q: How is the momentum in your voluntary renewables program?
   A: The momentum is strong; we've already filled the 2,500 megawatt forecast for the next four years. - We continue to see significant opportunities and will provide further updates at our year-end call. -

9. Storm Audit and Capital Plans
   Q: Do you need new mechanisms to fund storm-related capital needs?
   A: Our five-year capital plan anticipates the necessary investment to achieve our ambitious goals of reducing outage frequency by 30% and duration by 50%. - The audit confirms our plan, and we believe we can accomplish this within the existing rate structure while maintaining affordability. -

10. Supply Chain for Renewables
    Q: Are you experiencing supply chain issues for renewables?
    A: We are well-positioned for the next three years regarding solar panels and have our battery plant project underway. - We don't see any supply chain issues and feel we have a good runway in this area. -

Annual guidance for FY 2024:

• Operating EPS Growth (2024 midpoint): 7% - - (no change from 7% - )
• Long-term operating EPS growth target: 6% to 8% - - (no change from 6% to 8% - - )
• Capital Investment Plan: $0 to $100 million annually through 2026 - (no change from $0 to $100 million - )
• Credit Metrics (FFO to debt ratio): 15% to 16% - (no change from 15% to 16% - )
• Renewable Energy: 800 megawatts - (no prior guidance)
• Reliability Improvements: reduce power outages by 30% and cut outage time in half by 2029 - (no prior guidance)
• Voluntary Renewable Program: 2,500 megawatts subscribed - - (no prior guidance)