Q4 2021 DTE Energy Co Earnings Call

Speaker 1: Thank you for holding and welcome to the DTE fourth quarter 2021 earnings conference call. All lines have been placed on mute to prevent any background noise.

Thank you for holding and welcome to the D. T E fourth quarter 2021 earnings conference call.

All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad expect to withdraw your question press the pound key.

Speaker 1: After the speaker's remarks, there will be a question and answer session.

Speaker 1: If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you'd like to withdraw your question, press the pound.

Speaker 1: press the star one key again. Thank you. I'd now like to turn the call over to Barbara Tuckfield, Director of Investor Relations. Ms. Tuck...

Press Star one again.

Thank you I'd now like to turn the call over to Barbara <unk> director of Investor Relations.

Please go ahead.

Speaker 2: Thank you and good morning everyone. Before we get started, I would like to remind you to read the Safe Harbor statement on page two of the presentation, including the reference to forward looking statements.

Thank you and good morning, everyone before we get started I would like to remind you to read the safe Harbor statement on page two of the presentation.

Including the reference to forward looking statements.

Speaker 2: Our presentation also includes references to operating earnings, which is a non-GAAP financial measure.

Our presentation also includes references to operating earnings which is a non-GAAP financial measure.

Please refer to the reconciliation of GAAP earnings to operating earnings provided in the appendix.

Speaker 2: Please refer to the reconciliation of GAAP earnings to operating earnings provided in the appendix.

Speaker 2: With us this morning are Jerry Narsia, President and CEO , and Dave Rood, Senior Vice President and CFO . And now I'll turn it over to Jerry to start the call this morning. Well, thanks, Barb. And good morning.

With us this morning are Jerry Norcia, President and CEO , and Dave Ruud Senior Vice President and CFO and now I'll turn it over to Gerry to start the call. This morning.

Well, thanks, Barb and good morning, everyone and thanks for joining us.

Speaker 3: I hope everyone is having a healthy and safe year so far.

Hope everyone is having a healthy and safety are so far.

Speaker 3: This morning, I'll start by giving you a recap of our 2021 business performance.

This morning, I'll start by giving you a recap of our 2021 business performance for.

Speaker 3: provide highlights on how we are well positioned for 2022.

Provide highlights on how we are well positioned for 2022.

Speaker 3: and give an overview on the robust opportunities in our long-term plan.

And given the overview on the robust opportunities and our long term plan.

Speaker 3: Dave Rood will close by providing a financial update and wrap things up before we take your question.

Dave Ruud will close by providing a financial update.

If things up before we take your questions I'll begin on slide four 'twenty 'twenty. One was another great year for operational and financial results, continuing our incredible track record of creating shareholder value.

Speaker 3: I'll begin on slide four. 2021 was another great year for operational and financial results, continuing our incredible track record of creating shareholder value.

We did all of this with a keen focus on our employees customers and communities.

Speaker 3: We did all of this with a keen focus on our employees, customers, and communities.

Speaker 3: continue to drive an organization to improve the health and well-being of our team.

We continue to drive and organization to improve the health and wellbeing of our team.

Speaker 3: cultivating deeper employee engagement, which results in service excellence.

Cultivating deeper employee engagement, which results in service excellence.

I always say that employee engagement is the secret sauce that drives our success.

Speaker 3: I always say that employee engagement is the secret sauce that drives our success.

Speaker 3: And for the 16th consecutive year, DTE was named one of the best and brightest companies to work for in metropolitan Detroit. Now I'll switch over.

For the 16th consecutive year DTE was named one of the best and brightest companies to work for in Metropolitan Detroit.

Now I'll switch over and discuss our customer focus.

As you know heavy storms impacted our service territory in 2021.

Speaker 3: As you know, heavy storms impacted our service territory in 2021.

Speaker 3: To further harden our system in preparation for similar extreme weather events in the future, we are investing an additional $90 million in our tree trimming program through 2023, and these investments will not impact the economy.

To further harden our system in preparation for similar extreme weather events in the future.

We're investing an additional $90 million and our tree trimming program through 2023.

And these investments will not impact our customer bills.

Speaker 3: Additionally, we have been making significant investments to further improve our reliability to ensure we are delivering for our customers now and into the future.

Additionally, we have been making significant investments to further improve our reliability.

To ensure we are delivering for our customers now and into the future.

Speaker 3: Our strong focus on service excellence positioned us to achieve high customer satisfaction rankings.

Our strong focus on service excellence positioned us to achieve high customer satisfaction rankings are.

Speaker 3: Our gas company is ranked number one by J.D. Power for both residential and business customer satisfaction.

Our gas company is ranked number one by J D power for both residential and business customer satisfaction.

Moving on to our communities, we are continuing our commitment to provide cleaner more reliable energy through our de carbonization and voluntary renewable programs, which I'll discuss in more detail in a few minutes.

Speaker 3: Moving on to our communities, we are continuing our commitment to provide cleaner, more reliable energy through our decarbonization and voluntary renewable programs, which I'll discuss in more detail in a few minutes.

Speaker 3: Additionally, we were recognized as the 2021 Corporation of the Year by the National Minority Supplier Development Council.

Additionally, we were recognized as the 2021 corporation of the year by the National minority supplier Development Council.

Speaker 3: We also had tremendous success on the economic development front.

We also had tremendous success on the economic development front.

Speaker 3: We were actively involved in General Motors' decision to invest over $4 billion in EV technology in our service territory.

We were actively involved in general Motors' decision to invest over $4 billion and EV technology in our service territory.

Speaker 3: On the investor front, we finished 2021 strong and are well positioned to deliver future growth.

On the Investor front, we finished 2021 strong and are well positioned to deliver future growth.

I'm also very proud of how the team successfully completed the spin of D. T M.

Speaker 3: I am also very proud of how the team successfully completed the spin of DTM.

Speaker 3: This separation, Position DPE, has a predominantly pure play utility and unlocks significant value for our investors.

This separation positioned DTE is it predominantly pure play utility and unlocked significant value for our investors.

Speaker 3: In addition, 2021 was the 13th consecutive year we exceeded our operating EPS original guidance midpoint.

In addition, 2021 was the 13th consecutive year, we exceeded our operating EPS original guidance midpoint.

Now, let's turn to slide five.

Our 2021 operating EPS of $5 99 per share provides 17% growth from our original 2020 guidance.

Speaker 3: Our 2021 operating EPS of $599 per share provides 17% growth from our original 2020 guidance.

We are narrowing our 2022 operating EPS guidance range.

Speaker 3: We are narrowing our 2022 operating EPS guidance range.

Speaker 3: Our increased midpoint of $5.90 per share provides 7% growth over the 2021 original guidance midpoint.

Our increased midpoint of $5 90 per share provides 7% growth over the 2021 original guidance midpoint.

Speaker 3: We are reaffirming our 5 to 7% long term operating EPS growth rate through 2026 from 2022 original guidance. we also increased

We are reaffirming our 5% to 7% long term operating EPS growth rate through 2026 from 2020 to your original guidance.

We also increased our dividend by 7%, which.

Speaker 3: is in line with the top end of our operating EPS growth target.

Which is in line with the top end of our operating EPS growth target.

With the highly successful spend of DPM.

Speaker 3: Over 90% of our growth will come from our utility business.

Over 90% of our growth will come from our utility businesses.

Speaker 3: At DTE Electric, we are investing heavily in the modernization of the grid and cleaner generation.

At DTE electric we are investing heavily in the modernization of the grid and cleaner generation.

Speaker 3: At DT Gas, we continue our main renewal work as well as infrastructure improvements. provisions in a bound for

At DTE gas, we continue our main renewal work as well as infrastructure improvements.

And the balance of our portfolio about 10%.

Speaker 3: Is made of mainly earnings from our DTE Vantage business earnings from this segment are primarily from cleaner energy focus projects.

Is made up mainly earnings from our D. T E Vantage business earnings from this segment are primarily from cleaner energy focused projects.

On to slide six.

Speaker 3: At DTE Electric, we announced our plan to accelerate decarbonization by ceasing coal use at the Bell River Power Plant by 2028, two years earlier than previously planned.

At DTE electric we announced our plan to accelerate decarbonization by ceasing coal use at the Belle River power plants by 2028, two years earlier than previously planned.

Speaker 3: Our Blue Water Energy Center is in the late stages of completion. We introduced test gas at the facility last year and...

Our blue water Energy center is in the late stages of completion.

We introduce test gas at the facility last year.

And two turbines have been synchronized to the grid.

Speaker 3: This state-of-the-art natural gas plant is 96% complete and is on track to be in service this summer.

This state of the art natural gas plant is 96% complete and is on track to be in service. This summer.

These steps move us closer to our goal of net zero carbon emissions.

Speaker 3: These steps move us closer to our goal of net zero carbon emissions. 2021

In 2021.

We continue to see great success.

With our voluntary renewables program.

We reached over 1000 megawatts of commitments from large business customers and over 48000 residential customers.

Speaker 3: We reached over 1,000 megawatts of commitments from large business customers and over 48,000 residential customers.

Speaker 3: We have an additional 1,300 megawatts in advanced stages of discussion with future customers.

We have an additional 300 megawatts in advanced stages of discussion with future customers.

Speaker 3: As we highlighted last year, we are filing our integrated resource plan in October of this year.

As we highlighted last year, we are filing our integrated resource plan in October of this year.

We continue to evaluate the opportunity to exit coal use at the Moreau plant.

Speaker 3: We continue to evaluate the opportunity to exit coal use at the Moreau plant earlier than 2040.

Earlier than 2040.

Speaker 3: We started hosting meetings in January for the public to participate in shaping our clean energy plan.

We started hosting meetings in January for the public to participate in shaping our clean energy plan.

Getting our stakeholders input early in our process assures that what matters most to them.

Speaker 3: Getting our stakeholders input early in the process ensures that what matters most to them

Speaker 3: taken into consideration as we work to achieve the right balance of energy sources that will provide cleaner, affordable, reliable power for decades to come.

Taken into consideration as we work to achieve the right balance of energy sources.

That will provide cleaner affordable and reliable power for decades to come.

We announced during our third quarter call that we increased our five year capital program by $1 billion.

Speaker 3: We announced during our third quarter call that we increased our five-year capital program by $1 billion.

This increase in our electric five year plan is driven by distribution infrastructure investments preparing our grid for electrification.

Speaker 3: This increase in our electric 5 year plan is driven by distribution infrastructure investments, preparing our grid for electrification.

Speaker 3: and hardening initiatives, and we increased our investment in clean energy.

And hardening initiatives and we increased our investment in clean energy.

Speaker 3: Overall, this five-year, $15 billion investment.

Overall, this five year $15 billion investment.

Speaker 3: supports our plan to improve reliability and strengthen our system while focusing on customer affordability.

<unk> supports our plan to improve reliability and strengthen our system, while focusing on customer affordability.

DTE electric filed a general rate case last month, which was the first filing in almost three years.

Speaker 3: DT Electric filed a general rate case last month, which was the first filing in almost three years.

Speaker 3: I'm proud of the work we have done with the Commission to come up with innovative ways to maintain affordability. And we will continue to focus on keeping rates affordable as we invest in the system.

I'm proud of the work that we've done with the commission to come up with innovative ways to maintain affordability and we will continue to focus on keeping rates affordable as we invest in our system.

And now, let's turn to slide seven.

At the electric company.

Speaker 3: We are planning to invest $35 billion over the next 10 years to support reliability,

We are planning to invest $35 billion.

Over the next 10 years to support reliability Adil.

Speaker 3: Additionally, renewable resources and the increased pace of electric vehicle adoption. This provides a large inventory of potential capital investment.

Additionally, renewable resources.

And the increased pace of electric vehicle adoption.

This provides a large inventory.

A potential capital investment pull forwards.

Into the five year plans.

As we plan for the cessation of call us, we will need to invest in renewable resources.

Speaker 3: As we plan for the cessation of coal use, we will need to invest in renewable resources, short and long duration storage.

Short and long duration storage.

Demand response.

And other dispatch of our resources.

Over the next 10 years, we also see an increased pace of EV adoption that drives grid investments.

Speaker 3: Over the next 10 years, we also see an increased pace of EB adoption that drives grid investment.

Speaker 3: support increased sales and a need for additional reliable generation.

To support increased sales and a need for additional reliable generation.

Speaker 3: We believe EV adoption will increase our electric load by 5 to 10 percent over the next 10 to 15 years.

We believe EV adoption will increase our electric load by 5% to 10%.

Over the next 10 to 15 years.

Speaker 3: General Motors recently announced a $7 billion investment that will secure its commitment to accelerate an all-electric future.

General Motors recently announced a $7 billion investment that will secure its commitment to accelerate an all electric future.

Speaker 3: along with 5,000 high paying new and retained manufacturing jobs in Michigan.

Along with 5000 high paying new and retained manufacturing jobs in Michigan.

Speaker 3: This includes a $4 billion investment to convert GM's Orient Township Assembly Plant located in DP Service territory. This plant will produce full-size electric pickup trucks.

This includes a $4 billion investment.

The convert Gm's Orient Township Assembly plant.

Located in <unk> service territory. This plant will produce full sized electric pickup trucks.

Our collaboration with GM and the state of Michigan was fundamental in securing this investment.

Speaker 3: Our collaboration with GM and the state of Michigan was fundamental in securing this investment.

Speaker 3: The GM projects are the first to be approved utilizing the new critical industry program and strategic site readiness program signed into law by Governor Whitmer in December .

The GM projects are the first to be approved utilizing the new critical industry program.

Strategic site readiness program signed into law by Governor Whitmer in December .

Speaker 3: These programs were created to ensure Michigan could effectively compete for billions of dollars in investment and attract tens of thousands of jobs to ensure continued economic strength in the state.

These programs were created the insurer, Michigan could effectively compete for billions of dollars in investment and attract tens of thousands of jobs to ensure continued economic strength in the state.

Speaker 3: We are confident there will be more investment in EV industry in our state.

We are confident there will be more investment in EV industry in our state.

Speaker 3: Even in our own operations, we are making strides in this area. We recently announced that we will be replacing up to 25% of our fleet with green fuel technologies by 2030. Now let's turn to...

Even in our own operations, we are making strides in this area. We recently announced that we will be replacing up to 25% of our fleet.

With Greenfield technologies by 2030 now.

Now, let's turn to slide eight to discuss our gas business.

Speaker 3: We had significant accomplishments of D. P. Gas in 2021. We announced our new natural gas.

We had significant accomplishments at DTE gas in 2021.

We announced our new natural gas balanced program.

Speaker 3: This program provides the opportunity for customers to purchase both renewable natural gas and carbon offsets, allowing them to offset up to 100% of the carbon from the natural gas used.

This program provides the opportunity for customers to purchase both renewable natural gas and carbon offsets, allowing them to offset up to 100% of the carbon from the natural gas use.

We are the first gas utility to introduce this innovative program at our customers really like it.

Speaker 3: We are the first gas utility to introduce this innovative program, and our customers really like it.

Speaker 3: We are proud of how fast the program is growing with over 5,000 customers already subscribed.

We are proud of how fast the program is growing with over 5000 customers already subscribed.

Speaker 3: Another major accomplishment in 2021 is that we finish the first phase of our major transmission renewal project in Northern Michigan.

Another major accomplishment in 2021 is that we finished the first phase of our major transmission renewable project in Northern Michigan.

Speaker 3: project includes the installation of new pipe and facility modification work to provide supply redundancy for a growing market. We are on track.

Project includes the installation of new pipe and facility modification work to provide supply redundancy for a growing market.

We are on track to complete this project in 2022.

Speaker 3: We continue to focus on upgrading our system and replacing aging infrastructure to reduce costs and improve customer satisfaction. We plan on completing 200 main renewal miles in 2022.

We continue to focus on upgrading our system and replacing aging infrastructure to reduce costs and improve customer satisfaction. We plan on completing 200 main renewal miles in 2022.

Speaker 3: At DT Gas, we are planning on investing over $3 billion over the next five years to upgrade and replace aging infrastructure and to further reduce greenhouse gas emissions.

At DTE gas, we are planning on investing over $3 billion over the next five years to upgrade and replace aging infrastructure and to further reduce greenhouse gas emissions.

Overall, we're looking forward to another strong year from our gas company and we see natural gas playing an important role Michigan's energy needs over the long term.

Speaker 3: Overall, we're looking forward to another strong year from our gas company, and we see natural gas playing an important role Michigan's energy needs over the long term.

Now, let's turn to slide no.

At DTE vantage.

Speaker 3: continue to see additional opportunities in RNG and industrial energy services as the REF business sunset at the end of 2021.

We continue to see additional opportunities in R&D and industrial energy services as the RF business Sunset at the end of 2021.

Speaker 3: Last year, we told you about a new RNG project in South Dakota, which is now under construction....insulated startup in a second...

Last year, we told you about a new LNG project in South Dakota, which is now under construction.

Slated to start up in the second quarter of this year.

Speaker 3: We commenced construction on another Wisconsin RNG project in the third quarter and entered into an agreement for an additional one, which will be our first project in New York.

We commenced construction on another Wisconsin R&D project in the third quarter.

And entered into an agreement for an additional one which will be our first project in New York.

Speaker 3: Additionally, DTE Vantage, along with its 50% partner, will build a new RNG facility to take all of the available biogas from Riverview Energy, a Michigan-based landfill, and convert it into pipeline-quality, renewable natural gas.

Additionally, DTE vantage along with its 50% partner will build a new LNG facility to take all of the available biogas from Riverview energy, a Michigan based landfill and converted into pipeline quality renewable natural gas.

Speaker 3: The project adds the DTE Vantage's portfolio of RNG projects serving transportation and other end use markets.

The project adds to DTE vantages portfolio of R&D projects, serving transportation and other end use markets.

Speaker 3: The RNG business contributes to our decarbonization efforts as we move to a cleaner energy economy.

The LNG business contributes to our decarbonization efforts as we move to a cleaner energy economy.

At DTE advantage, we are planning to invest between one to one 5 billion.

Speaker 3: At DTE Vantage, we are planning to invest between $1 to $1.5 billion over the next five years.

Over the next five years.

Speaker 3: We are targeting operating earnings of 90 to 95 million dollars in 2022.

We're targeting operating earnings of $90 million to $95 million in 2022.

Speaker 3: growing to $160 to $170 million in 2026.

Growing a $160 million to $170 million in 2026.

So longer term, we are maintaining our earnings growth target of about $15 million per year.

Speaker 3: So longer term, we are maintaining our earnings growth target of about $15 million per year, which we have been able to achieve.

Which we have been able to achieve over the past few years.

Speaker 3: And we continue to have a great pipeline of projects in both RNG and industrial energy services.

And we continue to have a great pipeline of projects in both R&D and.

Industrial energy services to achieve future growth.

With that I'll turn it over to Dave to give you a financial update.

Speaker 3: With that, I'll turn it over to Dave to give you a financial update.

Thanks, Gerry and good morning, everyone.

As Jerry said, we completed a successful financial year in 2021, and we are well positioned for this year and for our future growth.

Speaker 4: As Jerry said, we completed a successful financial year in 2021, and we are well positioned for this year and for our future growth.

Speaker 4: Let me start on slide 10 to review our 2021 financial.

Let me start on slide 10 to review, our 2021 financial results.

Speaker 4: Operating earnings for the year were 1.2 billion dollars. This translates into 5.99 cents per share.

Operating earnings for the year were $1 2 billion. This translates into $5 99 per share.

You can find a detailed breakdown of EPS by segment, including a reconciliation to GAAP reported earnings in the appendix.

Speaker 4: You can find a detailed breakdown of EPS by segment, including our reconciliation to gap reported earnings in the appendix.

I'll start the review at the top of the page with our utilities.

DTE electric earnings were $864 million for the year.

Speaker 4: DT electric earnings were 864 million dollars for the year. This was 51 million dollars higher than 2020.

This was $51 million higher than 2020, primarily.

Speaker 4: primarily due to the implementation of rates from the rate case we filed back in 2019, commercial and industrial sales, and additional renewable projects.

Primarily due to the implementation of rates from the rate case, we filed back in 2019.

Higher commercial and industrial sales and additional renewable projects.

Speaker 4: This was partially offset by higher O&M, rate based costs, and the tree trim deferral of 90 million dollars pre-tax that we'll be using over the next 2 years to further accelerate our reliability improvement.

This was partially offset by higher O&M.

Great based cost and the tree trimmed a furlough of $90 million pre tax that will be using over the next two years to further accelerate our reliability improvements.

Speaker 4: Moving on to DT gas operating earnings were 214M dollars. 18M dollars higher than 2020.

Moving onto DTE gas operating earnings were $214 million $18 million higher than 2020.

Speaker 4: The earnings increase was driven primarily by the implementation of rates partially offset by higher O&M and rate based costs.

The earnings increase was driven primarily by the implementation of rates, partially offset by higher O&M and rate based costs.

Let's move to <unk> advantage in the third Brown.

Operating earnings were $176 million in 2021.

Speaker 4: Operating earnings were 176 million dollars in 2021. This was 26 million dollars higher than 2020 driven primarily by RNG earnings.

This was $26 million higher than 2020, driven primarily by R&D earnings.

On an extra that you can see energy trading had another solid year due to strong performance in the gas portfolio throughout the year.

Speaker 4: On the next row, you can see energy trading had another solid year due to strong performance in the gas portfolio throughout the year.

Speaker 4: Finally, Corporate Another was unfavorable, $32 million year over year.

Finally, corporate and other was unfavorable $32 million year over year.

Speaker 4: This was driven by interest income in 2020 related to the CARES Act refund, which didn't repeat.

This was driven by interest income in 2020 related to the cares act refund, which didn't repeat and.

Speaker 4: And in 2021, we incurred expense to opportunistically retire higher price debt at the holding company, which will provide interest savings going forward.

And in 2021, we incurred expense to opportunistically retire higher priced debt at the holding company.

Which will provide interest savings going forward.

Overall, DTE earned $5 99 per share from continuing operations in 2021.

Speaker 4: Overall, DT earned $5.99 per share from continuing operations in 2021, representing 17% growth from our 2020 original guidance.

Representing 17% growth from our 2020 original guidance. So another strong year, putting us in a great position for the future.

Speaker 4: So another strong year putting us in a great position for the future.

Let's turn to slide 11 to discuss our 2022 operating earnings guidance.

Speaker 4: Let's turn to slide 11 to discuss our 2022 operating earnings guide.

We are well positioned to deliver another successful year in 2022.

Speaker 4: We are well positioned to deliver another successful year in 2022. As Jerry mentioned, we are raising our 2022 operating EPS guidance and nearing the range to $5.80 to $6 per share.

As Jerry mentioned, we are raising our 2022 operating EPS guidance and narrowing the range to $5 80 to $6 per share.

The increase midpoint of $5 90 per share provides 7% growth from the 2021 original guidance midpoint.

Speaker 4: The increased midpoint of $5.90 per share provides 7% growth from the 2021 original guidance midpoint.

In 2022 growth at DTE electric will be driven by distribution and cleaner generation investments.

Speaker 4: In 2022, growth at DT Electric will be driven by distribution and cleaner generation investments.

Speaker 4: DT Gas will see continued customer-focused investments in main renewal and other infrastructure improvements.

DTE gas, we'll see continued customer focus investments in main renewal and other infrastructure improvements.

Speaker 4: 2021 was the final year for our reduced emissions fuels business at DC Vantage.

2021 was the final year for our reduced emission fuels business at D. C vantage.

Approximately $100 million of RDF earnings net of associated costs rolled off last year.

Speaker 4: Approximately 100 million of earnings net of associated costs rolled off last year.

This is partially offset in 2022 by new R&D and industrial energy services projects that will serve as a base for growth going forward.

Speaker 4: This is partially offset in 2022 by new RNG and industrial energy services projects that will serve as a base for growth going forward.

Speaker 4: At corporate and other, the biggest driver in a year over year improvement is lower interest.

Our corporate and other the biggest driver on a year over year improvement as lower interest expense.

Speaker 4: This is a result of leveraging earnings and cash strength in 2021 to opportunistically, we market some higher price debt.

This is the result of leveraging earnings and cash strength in 2021 to Opportunistically remarket, some higher price debt.

Speaker 4: He also paid down parent debt with proceeds from DTM's debt issue.

We also paid down parent debt proceeds from Dpm's debt issuance.

Speaker 4: This will provide interest savings in 2022 and future years. Let's turn it.

This will provide interest savings in 2022 and future years.

Let's turn to slide 12 discuss our balance sheet strength.

We continue to focus on maintaining solid balance sheet metrics due to our strong cash flows TTS minimal equity issuances and our plan beyond the convertible equity units will convert later this year.

Speaker 4: We continue to focus on maintaining solid balance sheet metrics. Due to our strong cash flows, DTE has minimal equity issuances in our plan beyond the convertible equity units that will convert later this year, while we also increased our five-year capital investment plan by a billion dollars.

We also increased our five year capital investment plan by $1 billion.

Speaker 4: We have a strong investment grade credit rating and target on FFO to debt ratio 16%.

We have a strong investment grade credit rating targeted <unk> to debt ratio of 16%.

Speaker 4: We increased our 2022 dividend by 7%, continuing our track record of growing our dividend in line with the top end of our targeted EPS growth rate.

We increased our 2022 dividend by 7% continuing our track record of growing our dividend in line with top end of our targeted EPS growth rate.

We completed our liability management plan following the spin of our midstream business.

Speaker 4: We completed our liability management plan following the spin of our midstream business using the funds raised from DTM's debt issuance to repurchase a little over 2.6 billion dollars of corporate debt.

The funds raised from Ttm's debt issuance to repurchase a little over $2 $6 billion of corporate debt.

Speaker 4: Its liability management plan was NPV positive, GPS accretive and further supports our long-term growth.

This liability management claim was NPV positive EPS accretive and further supports our long term growth.

Speaker 4: Let me wrap up on slide 13, and then we will open the line for questions.

Let me wrap up on Slide 13, and then we will open the line for questions.

In summary, we achieved great success in 2020 , one across all of our business lines.

Speaker 4: In summary, we achieved great success in 2021 across all of our business lines.

Speaker 4: We raised and narrowed our guidance range and are in great shape for 2022 targeting 7% operating EPS growth from our 2021 original guidance midpoint.

<unk> narrowed our guidance range and are in great shape for 2022 targeting 7% operating EPS growth from our 2021 original guidance midpoint.

Speaker 4: A robust capital plan supports our 5 to 7% long term operating EPS growth while delivering cleaner generation and increase reliability for our customers.

Our robust capital plan supports our 5% to 7% long term operating EPS growth, while delivering cleaner generation and increase reliability for our customer.

<unk> continues to be well positioned to deliver the premium total shareholder returns that our investors have come to expect with strong utility growth dividend growing in line with operating EPS.

Speaker 4: DT continues to be well positioned to deliver the premium total shareholder returns their investors have come to expect with strong utility growth and a dividend growing in line with operating EPS.

With that thank you for joining us today, and we can open the line for questions.

Speaker 4: With that, thank you for joining us today and we can open the line for questions.

So right now we're going to open up for questions.

Speaker 5: So, our 1st question.

So our first question.

Speaker 5: comes from the line of Char Perezha from Guggenheim Partners.

Comes from the line of Shar.

Perretta.

From Guggenheim partners.

Go ahead your line is open.

Hi, Good morning, it's actually Constantine here for sure.

Speaker 6: Hi, good morning. It's actually Constantine here for Char. He senses the guards and congrats on a great quarter.

And congrats on a great quarter.

Thank you.

Great.

Speaker 6: Just as we're looking at the new guidance for 22 and the longer term EPS growth, right, you pointed that you're growing faster among, among spears on a trailing basis. And going forward, there's less volatility post spin, obviously. Can you elaborate on what brings you down below the 7% growth rate going forward? And maybe some of the assumptions that are in plan surrounding load growth and O&M contingency.

This is we're looking at the new guidance for 'twenty, two and the longer term EPS growth rate to your point that you're growing faster among amongst peers on a trailing basis and going.

Going forward, there's less volatility post spin, obviously and can you elaborate on what brings you down below the 7% growth rate going forward and maybe some of the assumptions that are in plan surrounding load growth O&M contingency.

Speaker 3: Sure, Constantine, great question. So as you mentioned, we've raised our guidance this year to 7% growth and we've had a long track record of having best in class EPS growth in our industry. We're also, for the first time in almost three years, filed an electric ray case and are going to file...

Sure Gossiping and great question, So as you mentioned.

We've raised our guidance this year to 7% growth and we've had a long track record of having best in class EPS growth in our industry.

We're also for the first time in almost three years filed a electric rate case and are going to file an ERP in October all of that will instruct our long term capital plans.

Speaker 3: on IRP in October . All of that will instruct our long-term capital plans.

Speaker 3: and also our long-term growth rate. So more to come on that.

And and also our long term growth rate, so more and more to come on that.

Yeah.

Speaker 5: OK, our next question comes from the line of Jeremy Toney from JP Morgan. Your line is open. Please go ahead.

Okay. Our next question comes from the line of Jeremy Toney from J P. Morgan.

Your line is open. Please go ahead.

Good morning.

Speaker 7: Good morning. Hey Jeremy. Just wanted to, uh...

Good morning, Hey, Jeremy.

Just wanted to start.

Start with you know thinking.

Speaker 7: start with, you know, thinking about the rate case coming up here. We're seeing some inflation concerns throughout much of the economy and just how do you think about customer bill impacts in this type of environment, you know, and also in light of, I guess, recent, you know, rate case filing.

Thinking about the rate case coming up here, we're seeing some inflation concerns throughout much of the economy and just how do you think about customer bill impacts in this type of environment.

And also in light of I guess recent.

You know rate case filing.

Sure.

Question I.

Speaker 3: What I'll say is that we've stayed out of an electric grade case for almost three years at the electric company and that was really in response to the pandemic, making sure that we maintained affordable bills for our customers.

What I'll say is that we've stayed out of an electric rate case for almost three years at the electric company and that was really in response to the pandemic to making sure that we maintain affordable bills for our customers.

Speaker 3: This rate case that we filed is primarily about capital infrastructure and that's investing in our grid and preparing our grid for continued climate change as well as preparing it for demand growth from our EV.

This rate case that we filed this primarily about capital infrastructure and that's investing in our grid.

In preparing our grid for continued climate change as well as preparing it for demand growth from our E D.

Speaker 3: from EV adoption, as well as building for a cleaner energy future. So it's all about capital. If you looked at our Ray Case filing, you'll also see for the first time in my memory.

From EV adoption as well as a building for a cleaner energy future. So it's all about capital. If you had looked at our rate case filing you'll also see for the first time in my memory and we filed for lower operating expense, which will make us distinctive continue to make us distinctive in the industry.

Speaker 3: We filed for lower operating expense, which will continue to make us distinctive in the industry.

Got it thanks.

Speaker 7: Got it. Thanks. Thanks for that there and then just want to pivot towards the.

Thanks for that there and then.

Just wanted to.

Pivot towards the.

Speaker 7: coal plants. And just wondering how, realistically, how far can DTE pull forward some of these retirements over time, you know, especially Monroe here? And I guess, how do you think about the replacement capacity needs, you know, if you're going to

Coal plants.

And just wondering how realistically how far can DTE.

Pull forward some of these retirements over time, you know, especially Monroe here and I guess, how do you think about the replacement capacity needs.

No.

In conjunction with that.

Speaker 3: We're certainly going to accelerate Monroe from 2040. How far we accelerated from 2040 is something we're doing a lot of analysis on and having a lot of conversation with our stakeholders on. But I think you can expect to see a significant acceleration. What limits it is really how do we ensure that there's good affordability and also what do we need to do to make sure that you sap

We're certainly going to accelerate our Monroe from 'twenty 40, you know how far are we accelerated from 2040 years.

Something we're having are doing a lot of analysis on and having a lot of conversation with their stakeholders on but I think you can expect to see a significant acceleration.

What limits. It is a is really how do we.

Ensure that theres, good affordability and also.

Speaker 3: reliability. Those are the two premises that we really need to nail here as we complete our acceleration plan. Thanks at COLE.

Reliability I mean, those are the two premises that we really need to nail here as we complete our acceleration plan. Thanks It cool.

Got it thanks for that and then last one if I could real quick just with vantage here. It seems like you know orangey opportunities highlighted.

Speaker 7: Got it. Thanks for that. And then last one, if I could real quick, just with Vantage here, it seems like, you know, RNG opportunities highlighted, you know, growth there. Just wondering if you could update us, I guess, on, you know, hitting targeted returns in light of, you know, it seems like a highly competitive environment on the RNG side and then just taking a step back on Vantage overall, just how, you know, core that business is, you know, having spun the midstream business recently, just want, you know, want to see advantages is still fully core, I guess.

Growth there just.

Wonder if you could update us I guess on you know hitting targeted returns in light of you know it seems like a highly competitive environment on the R&D side, and then just taking a step back.

On vantage overall, just how core that business is having spun the midstream business recently, just one you know one of the advantages is still fully core I guess in your mind.

Speaker 3: So Jeremy, the projects we're pursuing, we're still seeing high IRRs, unlevered IRRs in the mid teens after tax, and in simple case, cash paybacks of three to five years.

So Jeremy the are the projects, we're pursuing we're still seeing high.

Erez Unlevered IRR is in the in the mid teens after tax and simple case cash paybacks of three to five years.

Speaker 3: going forward, and that's all organic development. And that's one of our latest projects, actually.

Going forward and that's all organic development, our latest projects actually were taken some of our biomass and biogas projects that were feeding.

Speaker 3: taking some of our biomass and biogas projects that were...

Speaker 3: feeding small power units and converting them to RNG. That's providing us a significant runway for future development as well. So we're limiting that business, as you know, to 10% of our earnings growth as well as 10% of our overall portfolio.

Feeding small power units and converting them to R&D, that's providing us a significant runway for future future development as well. So we're limiting that business as you know that 10% of our earnings growth as well as 10% of our raw portfolio and it's really pointed at the complementing our ESG agenda for them.

Speaker 3: and it's really pointed at complementing our ESG agenda. From an investor perspective, 90% of our focus is really on utility growth. So I would say that's the cake.

An investor perspective, you know 90% of our focus is really on utility girls. So I would say that's the case can.

Speaker 3: the high cash flows and high returns from Vantage is sort of the frosting on the cake, if you will, for our investors. So major focus on our utilities and obviously growing this business.

The high cash flows and high returns from vantage is sort of the frosting on the cake. If you will for our investors.

So major focus on our utilities and are obviously growing this business slowly and and attracting really high returns.

Speaker 3: slowly and attracting really high returns.

Got it that's helpful I'll leave it there thank you.

Thank you Jeremy.

Okay. Our next question comes from the line of ensue Kim from Goldman Sachs. Your line is open. Please go ahead.

Speaker 5: Okay, our next question comes from the line of Into Kim from Goldman Sachs. Your line is open, please go ahead.

Speaker 8: Yeah, thank you. My first question is on related to, you know, the upcoming or the current rate case in Michigan, and then, you know, thinking about the growth rate beyond 22. You know, obviously, I think you're

Yes, Thank you Mike.

My first question.

Is on related to the upcoming or the current rate case in Michigan, and then thinking about the growth rate beyond 'twenty. Two you know obviously I think you are.

Speaker 8: peer in the recent case had some rate base or capital items that were at least deferred to the next case. So when you think about the potential range of outcomes that could play out in your case, and combined with the converts happening later this year, should we still think that with the contingency that you guys have in place, that 5-7 is a pretty good benchmark for 23 on a year-over-year basis?

And appear in the recent case had some rate base or capital items that were at least defer to the next case. So when you think about the potential range of outcomes.

That could play out in your case.

And combined with the converts happening later this year.

Should we still think that with the contingency that you guys have in place that five to seven is a pretty good benchmark for 'twenty three on a year over year basis.

Speaker 3: So I'll just start by saying that five to seven is rock solid for us as a guidance for 2023. We're working on those plans now and fine tuning those plans for 2023 and that'll start to shape up. And I think you could expect us to deliver similar results next year that we've been delivering in the past.

So I'll just start that by saying at five to seven is rock solid for us.

As our guidance for 2023, we're working on those plans now and fine tuning those plans for 2023 and that'll start to shape up and I think you could expect us to deliver similar results next year that we've been delivering in the past.

Speaker 3: In terms of the rate case, again, it's the capital plan. We've spent a lot of time with commission staff and the commissioners themselves before we filed to really create a strong understanding of the investment that we were making in the grid, why we were making the investment in the grids that we are making, and also the impact on reliability. So there's a strong understanding of what we plan to do. And if you'll recall...

In terms of the rate case again, it's.

The capital plan, we spent a lot of time with commission staff and the commissioners themselves before we filed two really.

Create a strong understanding of.

The investment that we're making in the grid, while we were making the investment in the grid that we are making and also the impact on reliability. So there isn't as strong.

Understanding of what we plan to do and if you'll recall.

Speaker 3: Last year we filed a five-year plan, 10-year plan, and 15-year plan for the grid. We spent a lot of time socializing our plans with the Commission staff and the Commissioners. We believe there's a strong understanding of the grid investments. Then with our renewable plans, much of it is voluntary at this point in time. So again, that's well understood. That in combination with the fact that we've been out for almost three years, we're feeling pretty good about that.

Last year, we filed a five year plan 10 year plan in 15 year plan for the grid. So we spend a lot of time socializing our plants with the commission staff and the commissioners.

We believe there is strong understanding of the grid investments in and what their renewable plans much of it is voluntary voluntary at this point in time. So again, that's a that's well understood. So.

That in combination with the fact that we've been out for almost three years, where we're feeling pretty good about.

Speaker 3: delivering a constructive rate case outcome.

Delivering a.

A constructive rate case outcome.

Speaker 8: Understood. Thanks for the color there. My only other question is on this year and maybe just going forward, what's the right level of weather normal electric for gas demand growth that we should be embedding?

Understood. Thanks for the color there.

My only other question is on that this year and maybe just going forward, what's the right level of weather normal electric or gas demand growth that we should be embedding.

Dave Ruud do you want to take that one.

Speaker 4: Sure. Hi. We continue to see really good trends.

Sure Hi.

Yeah, we we've continued to see really good trends across our customer classes and so if you look from 'twenty one to 'twenty.

Speaker 4: across our customer classes. And so if you look from 21 to 20,

Speaker 4: We were up overall about 3%. What we saw is our commercial load and our industrial load really coming back to mitigate any of the decreased activity we saw.

So we were up overall about 3% and what we saw is our commercial load and our industrial load really coming back to kind of mitigate any of the decreased activity we saw to COVID-19 .

Speaker 4: We see that a little more growth continuing across commercial and industrial. Residential was still high relative to pre-COVID.

You see that little more growth continuing across commercial and industrial residential was still high relative to pre Covid. You saw 21 had no real change from 2020 at those higher levels, we've seen that come down a little bit recently.

Speaker 4: 21 had no real change from 2020 at those higher levels. We've seen that come down a little bit recently.

Speaker 4: But we're still seeing right now residential load, you know, somewhere around 5% higher than what we would have expected pre-COVID. We do expect that to come down and taper off this year as more people go back to work and closer to how they did before.

But we're still seeing right now residential load somewhere around 5% higher than what we would've expected pre COVID-19 , we do expect that to come down and taper off this year as more people go back to work in closer to how they did before.

Speaker 8: So for 2022, should we assume that something like 1% overall growth is the right number, or is it even more conservative than that, just relative to what you're making in pure?

So for 2022 should I should we assume that something like 1% overall growth is the right number or is that even more conservative and that just relative to what you're baking into your assumptions.

Speaker 4: Probably a little more conservative due to the residential load coming down and tapering off as the year goes on. We had really high residential in 2021.

Probably a little more conservative due to the residential load coming to coming down and tapering off as the year goes on.

Doesn't really high residential in the 'twenty ones, though.

Understood. Thank you so much.

Yeah.

Speaker 5: Okay, our next question comes from the line of Durgash Chopra from Evercore. Go ahead sir, your line is...

Okay. Our next question comes from the line of drew Gash, Joe brought from Evercore go.

Go ahead, Sir your line is open.

Speaker 9: Hey, good morning, team. Thank you for taking my question. Good morning.

Hey, good morning team.

Thank you for taking my good morning.

Speaker 9: Good morning, Jeff. Just, Jerry, sorry, just in previous slides, you have this, Dave, this disclosure on earnings growth for segments, 7% to 8% for electric and then 9% for gas. Just for a model, is that still sort of how you're thinking about the growth through 2026 in those in the segment?

Good morning, Jeff.

Just Jerry just.

Sorry, just a.

In the in previous slide you've had this Dave this disclosure on earnings growth.

Four segments is 78% for electric and then 9% for gas just for our models is that still sort of.

How youre thinking about the growth through 2026 and those are in the segments.

Speaker 4: So what we see is we see higher growth in these early years, so 22 and 23 at electric and gas that allow us to grow at five to 7% through the convert to come in this year, 1.3 billion of converts.

So what we see is we see higher growth in these early years, So 22, and 23 at electric and gas that allow us to grow at a 5% to 7% through the converts to come in this year $1 3 billion a convert.

Speaker 4: And then it comes down to where EPS and our growth in our utilities kind of match. So we have a little bit higher in these early years. But then as we get to the out years, you'll see EPS and our earnings of our utilities closer to each other.

And then it comes down to where EPS and our growth in our utilities kind of match. So we have a little bit higher in these early years, but then as we get to the out years, you'll see EPS in our earnings of our utilities closer to each other.

Speaker 9: Got it. So higher in the early years and then basically in line.

Got it so higher in the R&D area and then.

Basically in line.

With the with rate base in yellow.

Speaker 9: Yes. Okay. And then just on the CapEx upside opportunity, Jerry, just can you clarify one thing for me? The 35 billion, is some of that already baked into your current plan or is that truly all upside?

Yes, okay.

Then just on the Capex upside opportunity Jerry just can you clarify one thing for me the 35 billion as some of that already baked into your current plan or is that really all upside.

On the electric side.

Speaker 3: Yeah, the $35 billion, certainly the first five years are in our plan. The reason we put that out there is to show that we have a very large inventory of investment opportunity and that does give us the opportunity to pull forward our investments.

Yeah. The 35 billion are certainly the first five years are are in our plan.

The reason, we put that out there is to show that there we have a very large inventory of investment opportunity and that does give us the opportunity to pull forward our investments so.

Speaker 3: That's really the opportunity and I think you've seen we've got a pattern of increasing investments in our five-year outlook every year that we update.

That's a that's really the opportunity and I think you've seen we've got a pattern of increasing.

Investments in our five year outlook every year that we we update.

Okay.

Got it and just quick follow up on that and I'll jump back into queue is the D. D. D. These load increase by 10%. Obviously you know very robust is that incorporated in the 35 billion number or will that be will that will that drive further additional capex and rate base investment opportunities.

Speaker 9: Got it. And just quick follow up on that and I'll jump back into queue. Is the the the the EV load increased 5 to 10 percent? Obviously, you know, very robust. Is that incorporated in the 35 billion number or will that be will that will that drive for the further additional capex and reducing

Yeah.

Speaker 3: That could potentially drive incremental investment. We've assumed some level of investment, obviously, to harden our grid and prepare our grid for the future, but depending on how quickly that EV load comes on in the out years beyond our five-year plan, it could certainly drive acceleration of investment in the grid as well as investments in generation. We're fanning some interesting stuff eastend tunnels in the

That could potentially drive incremental investment we've assumed some level of investment obviously, the harden our grid and prepare our grid for the future, but depending on how quickly that EV load comes on in the out years beyond our five year plan. It could certainly drive acceleration of investment in the grid as well as investments in generation.

I mean, we're seeing.

Speaker 3: The placement of EV manufacturing facilities in the state of Michigan, they are highly energy intensive facilities, more so than traditional assembly plants. So to give you an example... residents of

The placement of E V manufacturing facilities in the state of Michigan. They are highly energy intensive facilities more so than traditional assembly plants. So to give you. An example traditional.

Speaker 3: You know, a traditional assembly plant can consume anywhere from 20 to 25 megawatts of power. An EV assembly and battery plant, you're talking north of 70 megawatts. So these are significant loads that will come to the state in addition to the demand just from the vehicles themselves.

Traditional assembly plant can consume anywhere from 20 to 25 megawatts of power.

E V Assembly and battery plant, you're talking north of 70 megawatts.

These are significant loads.

That will come to the state.

In addition to the demand just from the vehicles themselves.

Excellent. Thank you guys congratulations on a great quarter.

Thank you. Thank you.

Speaker 5: Our next question comes from the line of Angie Sorozinski from Seaport. Your line is open. Please go ahead.

Our next question comes from the line that Angie Snow Rosin ski from Seaport. Your line is open. Please go ahead.

Speaker 10: Thank you. So I wanted to follow up on Vantage. I think if you look at your stock, there seems to be an imputed discount to your closest peer, which I think we all associate with that business. And so you keep adding new projects. The market for RNG product projects, like resales RNG product projects seems to be holding off, I think.

Thank you so I wanted to follow up on vantage.

Thank you.

If you look at your stock does seem to be an imputed discount.

So your closest peer, which I think we all associated with that business and so.

You keep adding new projects.

You know the market for LNG product projects like Resales LNG correct project seems.

Speaker 10: pretty hot still. So if you could tell us if there is any plan to have a strategic review regarding Vantage and if yes, what would be the potential use of process?

Pretty hot style. So as you could tell us if there is any plan to have a strategic review.

Regarding advantage and if yes, what would be the potential use of proceeds. Thank you.

Speaker 3: So Angie, I'll start with that. Right now we're seeing our RNG business grow nicely, quite modestly in terms of the overall DTE portfolio. We're generating anywhere from $7-8 million a year of new net income from that business and the returns are really, really high. As you said, the market valuation is really, really high.

So Angie I'll I'll start with that eye right now we're seeing.

Our LNG business grow nicely.

Quite modestly in terms of the overall DTE portfolio.

You know, where we're generating anywhere from $7 million to $8 million a year of new net income from from that business and the returns are really really high and as you said the market evaluation.

Speaker 3: for RNG assets right now is pretty hot. And so we're constantly looking at are there opportunities to continue to optimize our portfolio and.

For R&D assets right now is pretty hot right and so we're constantly looking at are there opportunities to <unk>.

To optimize our portfolio and and.

So that's really the work that we constantly do to evaluate who values that the most of our current slate of investors or other investors and I think you've seen we have a reputation of if we see significant opportunity to optimize value will we will take that move but no plans at this current state to do that.

Speaker 3: So that's really the work that we constantly do to evaluate who values that the most, our current slate of investors or other investors. And I think you've seen we have a reputation of, if we see significant opportunity to optimize value, we will take that move. But no plans at this current state to do that, as we see continued growth and high returns and high cash flows.

We see continued growth and are at high returns and high cash flows.

Speaker 10: Okay, and then just going back to that notion of maintaining the 5 to 7% EPS KGIR, and I understand the acceleration of growth in operating earnings for utilities beyond 23, but do you really see yourself below 7% in this sort of a steady state utility growth given all of the, you know, given the IRP and...

Okay.

And then just going back to that notion of you know.

Maintaining a 5% to 7%.

P S Kinder and I understand the are some deceleration of.

Growth in operating earnings so utilities beyond 'twenty, three but do you really see yourself are below 7% store you know in the in this sort of a steady state utility growth given all of the.

You know given that they are key.

Speaker 10: voluntary renewables and additional growth drivers that you've talked about.

Voluntary renewables.

An additional growth drivers that you've talked about.

Speaker 3: Angie, again, what I'll point to is that, I think you've said it, we've been delivering extraordinary EPS growth results over the last decade, including last year and even this year, where we're forecasting 7%. Looking forward, this is something we're examining really closely, because we're getting a lot of feedback from analysts and investors on what will your growth rate look like beyond 2022.

N G again, I, what I'll point to is that I think you've said it we've been delivering.

Ordinary EPS growth results over the last decade, including last year and even this year, where we're forecasting 7% looking forward. This is something we're examining where the closely because we're getting a lot of feedback from analysts and investors on what will your growth rate look like beyond 2022.

Speaker 3: And we're doing a lot of work on that. We feel that the filing of the IRP in October , as well as...

We're doing a lot of work on that we feel that the filing of the AARP in October .

As well as.

Speaker 3: you know, we would be moving very close to the conclusion of our first rate case at the electric company in three years. That'll be very instructive in us laying out our long-term growth plans.

You know we would be moving very close to conclusion. The conclusion of our first rate case with the electric company a three years that'll be very instructive and us laying out our long term growth plans as well as our long term capex plans for this for the company, so more and more to come on that Angie.

Speaker 3: as well as our long-term CapEx plans for the company. So more to come on that, Angie.

And then lastly at the the last remaining.

Speaker 10: And then lastly, the last remaining co-plants. So I understand the IRP filing is on you in October , but is the assumption that at least some of this capacity would be replaced by a gas fired plant?

Our coal plants.

So the I understand the ERP filings on me in October but is the assumption that at least some of this capacity would be replaced by a gas fired plant.

I would say that yes is the is the short answer we will need this basketball generation and so you will see gas in our plant. You'll also see an extraordinary amount of renewables, you'll see battery storage in that plant and you'll also see demand response initiatives. So you'll see many initiatives.

Speaker 3: I would say that yes is the short answer. We will need dispatchable generation and so you will see gas in our plant. You will also see an extraordinary amount of renewables.

Speaker 3: You'll see battery storage in that plant, and you'll also see demand response initiatives. So you'll see many initiatives.

Speaker 3: to replace that coal fire generation. So gas will be part of it. We are also looking very closely at enabling any new gas facilities that we install or propose that will have carbon capture and storage capability as well as the ability to burn hydrogen.

To replace that coal fired generation, so gas will be part of it we're also.

Looking very closely at enabling our any new gas facilities that we own.

Install or propose that all will have carbon capture and storage capability as well as the.

The ability to burn hydrogen.

Very good thank you.

Yeah.

Okay. Our next question comes from the line of Julien Dumoulin Smith from the Bank of America. Please go ahead.

Speaker 5: Okay, our next question comes from the line of Julian Dumoulin-Smith from the Bank of America. Please go ahead.

Yeah.

Speaker 8: Hey, good morning. It's Darry. It's on for Julian here. Thank you for taking my morning. Most of them have been answered already. Just if you don't mind, just reminding us how you're tracking against the 16% of the photo debt target and when do you expect to achieve that?

Hey, good morning, it's Darius on for Julian here.

Thank you for taking my good morning, most of them have been answered already.

If you don't mind.

Reminding us how youre tracking against the 60% episodes that target and when do you expect to achieve that.

Yeah. Good question.

Speaker 4: In 21, we were a little bit higher than that because we still had the cash flows from DTM in there for part of the year but we will be getting to that 16% in 22 and going forward.

And 'twenty, one where we were a little bit higher than that because we still have the cash flows from D. T. M. In there for part of the year, but we will be getting to that 16% in 'twenty, two and going forward.

Okay.

Okay. Thank you like I said, you've got you've answered all my other questions. So thanks again.

Speaker 11: Okay, thank you. Like I said, you've answered all my other questions, so thanks again.

Thanks Sue.

Okay.

Okay.

Speaker 5: Our next question comes from a line of Michael Sullivan from Wolf Research. Your line is open. Please go ahead.

Our next question comes from the line of Michael Sullivan from Wolfe Research. Your line is open. Please go ahead.

Okay.

Hey, everyone. Good morning.

Good morning.

Speaker 5: Hey Jerry, so just wanted to quickly circle back to the discussion on potentially point forward some of these these coal plant shutdowns Is is there a possibility for fuel switching as well? for replacement

Hey, Jerry So just wanted to quickly circle back to the discussion on.

Potentially pulling forward some of these these coal plant shutdowns.

Is there a possibility for fuel switching as well per.

For replacement.

Speaker 3: There is actually at the Bell River Power Plant, which we pulled forward to 2028 in our filings there with the EPA and other agencies, we indicated that we would be using the Bell River Power Plant, which is about 1,200 megawatts of coal right now, as a gas peeker. So there is that opportunity. And we view that as favorable for our customers because one, it provides a reliability source, and secondly, it allows the continued depreciation of that plant.

There is actually at the Belle River power plant, which we pulled forward to 2028 are in our filings there with the EPA and other agencies, we indicated that we.

We would be using the Belle River power plant, which is about 200 megawatts of coal right now as a as a gas peak or so there is that opportunity.

And we view that as favorable for our customers because one it provides a reliability source and secondly, it allows the continued depreciation of their client.

Speaker 3: for longer than 2012, well beyond 2028. I think at Monroe we're examining similar opportunities for either fuel switching or voltage support on the grid, as well as using some of the existing infrastructure. We have to put some base load gas down there.

For longer than 20, well beyond 2028.

And I think I'd Monroe, we're examining similar opportunities for either fuel switching our voltage support on the grid as well as using some of the existing infrastructure, we have to put some baseload gas down there.

Speaker 5: That's great. Thanks. And then my other question was, so you guys continue to add to this voluntary renewables program, just wanted to get a sense of how you're doing on some of the projects associated with that demand. What's embedded in 2022 in terms of new wind or solar farms being added? And are you seeing any?

That's great. Thanks, and then my other question was.

So you see you guys continue to add to this voluntary renewables program just wanted to get a sense of.

How are you doing on some of the projects associated with that demand.

What's embedded in 2022 in terms of.

You wind or solar.

Farms being added in are you seeing any.

Speaker 5: delays or pressures related to supply chain or inflation there.

Delays or pressures related to supply chain or inflation there.

Speaker 3: So we have 1,000 megawatts that's signed and underway from a construction perspective.

So we have 1000 megawatts, that's signed and underway from a construction perspective.

And then we have another 300 megawatts that are in advanced stages of negotiation.

Speaker 3: and then we have another 1,300 megawatts that are in advanced stages of negotiation. So we are in really good shape on the demand side. On the supply side, we have got all of our 22 and 23

And so we're really good shape on the demand side on the supply side, we've got all of our 'twenty two and 'twenty three.

Speaker 3: resources, physical resources lined up for that, whether it's solar panels or wind turbines. So we're in really good shape there. We have seen some supply chain stress, if you will, but that's beyond the time frame that we're securing assets for right now.

<unk> physical resources lined up for that whether it's solar panels or or wind turbines. So we're in really good shape. There we have seen some supply chain.

Stress, if you will but that's beyond the time frame that we're securing assets for right now they've Rudolph he had other.

Thomas you want to add.

Speaker 4: And even for our future builds, we're seeing the supply chain strength ease up now. So we're going to be fine getting those two. Pricing may be a little higher than what it was a few years ago, but it's going to be consistent with the rest of the market and also good for customers still too.

And even for our future our future builds we're seeing the supply chain constraints ease up now so we were gonna be fine getting those two pricing may be a little a little higher than what it was a few years ago, but it's going to be consistent with the rest of the market and also.

Good for our customers still too.

Yeah.

That's great really appreciate the color. Thanks.

Thank you.

Yeah.

Speaker 12: All right, our next question comes from the line of Andrew Weisel from Scotiabank. Your line is open, please go ahead.

Alright. Our next question comes from the line of Andrew Weisel from Scotia Bank. Your line is open. Please go ahead.

Speaker 1: Thank you. Good morning, everyone. And congrats on another morning here.

Thank you and good morning, everyone and congrats on another as Marty here.

Thank you Andrew.

First question is on the 2022 guidance I see that you've upped the forecast for each of the three major segments, what's driving that is it individual business specific factors or general cost controls or maybe simply removing some conservatism.

Speaker 1: First question is on the 2022 guidance. I see that you've upped the forecast for each of the three major segments. What's driving that? Is it individual business-specific factors or general cost controls or maybe simply removing some conservatism?

Speaker 4: Dave? Yeah, really, it was the latter. As we ended the year and relooked at our plans, we just gained even more confidence in each of the businesses and where we could come out and were able to bring up the bottom end of those.

It really it was the latter.

As we ended the year and we looked at our plans. We're just gained even more confidence in each of the businesses and where we could come out.

And we're able to bring up the bottom end of those.

Also we're seeing the contingency built we're starting to see the contingency built in each of our big business lines as well as we've had some really nice weather in Detroit.

Speaker 3: Also, we're seeing the contingency build. We're starting to see the contingency build in each of our big business lines as well as we've had some really nice weather in Detroit.

Speaker 1: Right, very good. Then my other question is, can you elaborate on your commitment to helping the vulnerable customers in the winter months? What exactly is that and how are these programs maybe different from your typical low-income assistance program?

Right very good.

And then my other question is can you elaborate on your commitment to helping the vulnerable customers in the winter months, what exactly is that and what how do these programs maybe.

Maybe different from your typical low income assistance programs.

Speaker 3: The most impactful program that we have, Andrew, is our low income self-sufficiency plan. Something that we developed through legislation a little over a decade ago and it's pretty unique in a sense that...

Are the most impactful program that we have Andrew is our low income self sufficiency plan, yes, something that we develop through legislation.

A little over a decade ago, and it's pretty unique in a sense that.

Speaker 3: The way it works is that we look at a customer's income levels and then apply...

The way it works is that we look at it customers income levels and and then apply.

Speaker 3: credit to their bills using federal funding and also some value that comes from our rate making. What that does is it buys down the bill for low-income customers so that they're paying $75 a month or $50 a month depending on what they can afford and the balance of that.

A credit to their bills using federal funding and also some of the value that comes from our ratemaking.

And what that does is it biased down the bill for low income customers that they're paying $75, a month or $50 a month, depending on what they can afford in the balance of that.

Speaker 3: payment comes from federal or state assistance.

Payment comes from a federal or state assistance.

Speaker 3: which we're always bringing in for our customers at least about $160 million a year in terms of federal and state assistance to our customers. So that helps our customers.

Which we're always bringing in for our customers at least about $160 million a year in terms of federal and state assistance to our customers. So that helps our customers.

Speaker 3: keep their heat on and their lights on through the winter months and it also creates a sense of dignity for our customers because they're also paying in for a portion of the bill. So that's the most unique program that we have.

Keep their heat on and their lights on through the winter months and it also creates a sense of dignity for our customers because they're also paying.

For a portion of the bill.

So that's the most unique program that we have.

Okay, great. Thank you so much.

Thank you.

Okay.

Yeah.

Speaker 12: Our next question comes from the line of Sophie Karp from KeyBank. Your line is open, please go ahead.

Our next question comes from the line of Sophie Karp from Keybanc. Your line is open. Please go ahead.

Hi, Good morning. Thank you for taking my question I have a couple of quick good morning Shirley.

Speaker 13: Hi, good morning, thank you for taking my question. I have a couple questions, actually.

Speaker 13: Yeah, hi. So on the RNG technology, I'm just curious if this technology at this point is pretty, I guess, mature or are you still seeing potential for price improvements there that potentially drive?

Yeah, Hi, so on the LNG technology I'm just curious if this technology at this point that is pretty mature or are you still seeing potential for price improvements there that would potentially drive the you know the cost of LNG down.

Speaker 13: the cost of RNG down over time or is everybody much going to be stable at the level where we are based on what the technology is doing.

With time or is it pretty much going to be stable at the level, where we're at based on what the technology is doing.

Sophie we saw some technology improvements over the last couple of years that drove costs are significantly down in this arena and we've adopted that technology for several of our projects and in Wisconsin.

Speaker 3: Sophie, we saw some technology improvements over the last couple of years that drove costs significantly down in this arena, and we've adopted that technology for several of our projects in Wisconsin, and even in, we're considering it in the Dakotas. So we have seen technology price movement. We have not seen anything recently, but it has helped with boosting our returns beyond our expectations by adopting some of this technology.

And even and we're considering it in the Dakotas, So we have seen.

Technology price movement.

We have not seen anything recently, but it has helped with the.

Boosting our returns beyond our expectations by adopting some of this technology.

Got it.

Speaker 13: And then I also have a question on the EVs and this is I think one of the first times when you start talking about the potential impacts of the EVs on load and we begin hearing more about the EV penetration in general.

And then I also have a question on the vs and the this is I think Mark first times when you start talking about the potential impact of Ceb's unload.

The big in hearing more about the EV penetration in general.

Speaker 13: I'm just curious, how do you see your particular territory adopting, how do you see the speed of adoption in your particular territory, I guess? I get it that all the manufacturers are there, but the territory is not particularly affluent or has high penetration with renewables. So, should we expect Michigan to be at the forefront of the adoption of EVs or maybe a laggard in that aspect? How should we think about that?

I'm just curious if how do you see your particular territory are adopting.

How do you see the speed of adoption in your particular territory I guess I get it that the auto manufacturers are there, but the territory is not particularly affluent or.

Its high penetration of renewables, so what should we expect the Michigan to be at the forefront of the adoption of E. Visa, maybe a laggard and that's in that aspect like how should we think about that.

We see you know significant adoption potential here in the state of Michigan I think as you mentioned with our voluntary renewables there is a strong desire.

Speaker 3: significant adoption potential here in the state of Michigan. I think as you mentioned with our voluntary renewables, there is a strong desire to green the environment and we are seeing that with many customers, large institutional customers as well as the large institutional customers.

Two green environment, and we're seeing that with many customers large institutional customers as well as.

Speaker 3: also residential customers. So EV adoption is something we've also started to see ramp up in the state of Michigan. It's still quite small. Last year, actually in 2020, we were seeing maybe several hundred a month. Now we're getting close to 500 to 1,000 a month of EV attachments to our system, and that's significant. So we see a continued ramp there as new models are introduced. So there is a...

Also our residential customers. So EV adoption is something we've also started to see ramp up in the state of Michigan is still quite small.

Last year and actually in 2020, we were seeing you.

You know maybe several hundred a month now we're getting close to 500 to 1000 a month.

A V V attachments onto our system and that's that significant so we see a continued ramp there as new models are introduced so there is a.

Speaker 3: there is the ability to see the adoption and we expect it to happen.

There is the ability to see the adoption and we expect that to happen.

Thank you.

Yeah.

Speaker 12: Our next question comes from the line of Jonathan Arnold from Vertical Research Partners. Your line is open, please go ahead.

Our next question comes from the line of Jeremy Jonathan Arnold from vertical Research partners. Your line is open. Please go ahead.

Hey, good morning, guys.

Speaker 14: Good morning, Jonathan. A quick follow up on the EV topic. You talk about the 5% to 7%. I understand that to be kind of a volume load. I am just checking that's correct. But can you comment on what you think it might do to peak load as you start to think about rate design and folding this demand in.

Hey, John morning, Jonathan a quick a follow up on the EV topic.

You talk about the 5% to 7%.

I understand that to be head of volume load.

I'm just checking that's correct, but any can you comment on what your what do you think it might do to peak load as you start to think about rate design and following.

Following this.

Demand in.

Sure.

Speaker 3: Sure, you know that's a good consideration. What we're seeing right now is that most of the EV adoption, people are charging at home. And all of the feedback that we're getting from the OEMs, from the large autos here in Detroit.

It's a good consideration what we're seeing right now is that most of the EV adoption people are charging at home and all of the feedback that we're getting from the Oems from the large auto is here in Detroit.

Speaker 3: is that the customer preference, 80% of the customer preference at this point in time is the charge of EVs at home. There's a lot of convenience in being able to do that. Most of that will happen in the evening, so that's beneficial to our grid. We see the early adoption of EVs as being very beneficial to us because it won't require a lot of investment.

Is that the customer preference.

80% of the customer preference at this point in time as the charge the reviews at home, there's a lot of convenience and being able to do that.

And most of that will happen in the evening.

So that's beneficial to our grid. So we see the early adoption of evs as being very beneficial to us because it won't require a lot of investments. So the early years.

Speaker 3: EV adoption will be quite good for our load and our margins and also helps support much of the great investments we need to make for the future.

V adoption EV adoption will be quite good for our load in our margins and also help support.

Of the grid investments, we need to make for the future.

Speaker 3: As you get deeper into EV adoption, I think you'll start to see a significant amount of investment required on a grid to support usage throughout the day.

As you get deeper into EV adoption, I think you'll start to see a significant amount of <unk>.

Investment required on a grid to support you.

Usage throughout the day.

Speaker 14: Great, and what's your assumption on penetration, Jerry, just behind that number you've shared with us today?

Great and what's your assumption on penetration Jerry just behind that number you shared with us today.

David do you have any thoughts on that.

Oh, I don't have the penetration number but.

Speaker 3: I don't have the penetration number, but we can get back to you guys on that. Okay, definitely. Thank you guys. I would say, Jonathan, in order of magnitude, what's being predicted is that in the early 2030s, about half of the vehicle sales will be...

We can get back to you guys on that okay perfect.

I would say Oh say, Jonathan in order of magnitude.

What's being predicted as a in the 20th <unk> early 'twenty 30 is about half of.

The vehicle sales will be E b cells.

Speaker 3: That's how we're building our forecast that you see. Great. Thank you.

That's our we're building our building our forecast that you see.

Great. Thank you.

Okay.

Yeah.

Speaker 12: Our next question comes from the line of Anthony Crowdell from Mizuo. Your line is open. Please go ahead. Hey, good morning Jerry. Good morning Dave.

Our next question comes from the line of Anthony crowd know from Mizuho.

Your line is open. Please go ahead, hey, good morning, Jerry Good morning, Dave Good.

Hey, Anthony.

Speaker 15: Hopefully just a couple quick ones. I think in one of the earlier questions you talked about maybe the growth rate and I don't know if you used the word review, you're looking at it. When do you believe you'll be done with that review? Is it you're going to wait for the rate case and IRP to play out or is that something that you think may conclude sooner?

Hopefully just a couple quick ones I think and one of the earlier questions you talked about maybe the growth rate.

I don't know if you use the word review you're looking at it.

When does the when do you believe you'll be done with that review is it you're going to wait for the rate case and I are Peter play out or is that something that you think may conclude sooner.

At this point Anthony we're thinking it's going to be at the time that we are in and around the time that we file our IRB.

Speaker 3: At this point, Anthony, we're thinking it's going to be at the time that we, in and around the time that we file our IRP. We'll have a lot of our long-term growth plans, especially as we think about replacing our generation fleet laid out. And that's the current timing that we're thinking about.

Have a lot of our long term growth plans.

Especially as we think about replacing our generation fleet laid out.

And that's the current timing that we're thinking about.

Speaker 15: Great. And then on the IRP, I believe in Michigan when you file it and you talked about maybe on the array case you had a lot of, before the filing you met with a lot of policymakers and maybe get support. On the IRP, have you begun that dialogue and has there been any particular issues that maybe maybe require more discussion than others?

Great and then on the I R. P. I believe in Michigan, when you file it and you talked about maybe on the rate case, you had a lot of them before the filing you met with a lot of policymakers and maybe get support on the ERP have you begun that dialogue and has there been any particular issues that maybe maybe require a more discussion than others.

We have become begun that dialogue with many stakeholders as it relates to our ERP.

Speaker 3: We have begun that dialogue with many stakeholders as it relates to IRP. And the dialogue ranges from strong support around what we're planning to do, as well as you would expect people asking us to accelerate. So we view that as all positive and constructive, and it'll help us build a really solid IRP that we'll file in October .

And they dialog ranges from strong support around what we're planning to do as well as as you would expect people asking us to accelerate so we view that as all positive and constructive and it'll help us build a really solid ERP that will fall in October .

Speaker 15: Great. And then my last question, I think some of the earlier questions really are focused on maybe on the 5 to 7 percent growth rate you're giving out, maybe on the higher end. But if I could flip the question like…

Great and then my last question I think.

One of the earlier questions really are focused on maybe on the 5% to 7% growth rate you've given out maybe on the higher end, but if I could flip the question like.

Speaker 15: What do you see that would cause you to be at the lower end of that range? Not that I'm hoping that happens, but just what do you have to see operationally or something that maybe we should be focused on that 5% of the range?

What do you see that would cause you to be at the lower end of that range and what not that I'm, hoping that happens, but just what what what do you have to see operationally or something that that maybe where we should be focused on that 5% of the range.

Well as you know Anthony we've never even come close to delivering on the lower end of that range and I think if you look at our track record we've been at the top end of our range pretty consistently.

Speaker 3: Well, as you know, Anthony, we've never even come close to delivering on the lower end of that range. I think if you look at our track record, we've been at the top end of our range pretty consistently.

Speaker 3: And we strive to accomplish that each and every year. And if we don't, we would be very disappointed.

And we strive to accomplish that each and every year and if we don't we we would be very disappointed. So that's our plan going forward. We aim for the mid point, but certainly we try to do all we can with our plans to deliver the top end of that range and I think you're seeing that again this year and if you look at the last decade, we've done that pretty consistently.

Speaker 3: So that's our plan going forward. We aim for the midpoint, but certainly we try to do all we can with our plans to deliver the top end of that range. I think you're seeing that again this year.

Speaker 3: And if you look at the last decade, we've done that pretty consistently.

Speaker 3: So it'd be a pretty remote possibility. I mean, we've weathered the...

So it would be pretty remote possibility I mean, we've weathered a L.

Speaker 3: you know, economic collapses. We've weathered pandemics and have delivered well above that 5% as you know.

Economic collapses.

Weather.

Pandemics and not have and have delivered well above that 5% as you know.

Speaker 15: Yeah, absolutely. Thanks again in the solid quarter. Thanks so much for taking my questions.

Yeah, absolutely, thanks, again, and the solid quarter. Thanks, so much taking my questions.

Thank you.

Yeah.

Okay. Our next question comes from the line of Travis Miller from Morningstar. Your line is open. Please go ahead.

Speaker 12: Okay, our next question comes from the line of Travis Miller from Morningstar. Your line is open. Please go ahead. Good morning.

Good morning, everyone.

Good morning, I was saying.

Speaker 4: Thank you. Two follow-ups to some of the comments you made on the 10-year plan. One, if you start to invest in the fuel switching at one or more of the coal plants, does that eliminate the need for a new gas plant or some other new non-renewable source of generation?

Thank you two follow ups to some of the comments you made on the 10 year plan.

One if you start to invest in our fuel switching at some of the one on one or more of the coal plants does that eliminate the need for a new gas plant or some other new nonrenewable sources of generation.

Sure.

Speaker 3: Well, switching coal boilers to natural gas is a good peaking resource, Travis, but not necessarily a good base load resource because of efficiencies. The new gas turbines, for example, they've got very low heat rates, around 7,000, whereas an old coal boiler might be up around 10,000, meaning just a...

Well the switching coal boilers to natural gas is a good peaking resource Travis, but not necessarily a good base Lewis baseload resource because of efficiencies the new.

Gas turbines for example, they've got a.

Very low heat rates and around 7000, whereas.

Whereas in an old coal boiler might be up around 10000 meeting.

Speaker 3: means they burn a lot more fuel to produce the same energy output. So they're good peaking resources but they would be very expensive as a base load resource. So we do see at least at this point more gas turbines in our future that would have carbon capture and hydrogen consumption capability.

It just means they burn a lot more fuel to produce the same energy output. So they're good peaking resources, but are they it would be they would be very expensive as a baseload resource. So we do see.

At least at this point more gas turbines in our future that would have carbon capture and hydrogen.

Consumption capability.

Speaker 4: Okay, that makes sense. And then you just mentioned that, but as you look out those 10 years, Jerry had mentioned long-term storage. How does that play into in terms of hydrogen, if not directly into the plants like...

Okay, Yeah that makes sense and then.

You just mentioned it but as you look out those 10 years thing Jerry had mentioned long term storage, how does that play into in terms of hydrogen.

If not directly into the plants like you said right now, but some other way yeah hydrogen I think I think it's a great question.

Speaker 3: some other way? Yeah, hydrogen, I think it's a great question. You've seen in our rate case that we filed for a hydrogen pilot, so we're going to start experimenting with using hydrogen.

You have seen in our rate case that we filed for a hydrogen pilot.

We're gonna start experimenting with using hydrogen small scale hydrogen storage as well as our hydrogen consumption and our new gas turbine.

Speaker 3: small-scale hydrogen storage as well as the hydrogen consumption in our new gas turbine, which is the Blue Water Energy Center in St. Clair County that will go into service this summer.

The Blue water Energy Center and St. Clair County that will go into service this summer.

Speaker 3: So we're going to start experimenting with the use of hydrogen to see how the turbine responds and also start to understand how to handle, move, and store hydrogen. Longer term, hydrogen is a good fuel to store electric energy.

So we're gonna start experimenting with the use of hydrogen and see how the turbine responds and also start to understand how to handle and move and store hydrogen.

Longer term our hydrogen is a good fuel to store electric energy because it has high energy density and also it's it can be blended with natural gas.

Speaker 3: because it has high energy density. And also, it can be blended with natural gas.

Speaker 3: and store it in natural gas facilities to some extent. So we're going to start experimenting with all of that so that we can understand it more deeply. And I know some of our peers are also doing that as well.

And stored and natural gas facilities, but to some extent so we're gonna start experimenting with all of that so that we can understand it more deeply and I know some of our peers are also doing that as well.

Yeah, great. Thanks, so much I really appreciate it.

Thank you.

Okay.

There are no more no further questions at this time I will now turn the call back over to Jerry Norcia for closing remarks.

Speaker 12: There are no further questions at this time. I will now turn the call back over to Jerry Norsia for closing remarks.

Yeah.

Speaker 3: Well, thank you everyone for joining us today. And I'll just close by saying that we had another strong year in 2021, as you've seen. And I'm feeling really good about delivering a strong 2022, which will position us for the future and deliver premium returns for our investors, both from an EPS growth perspective, as well as a dividend growth perspective. So hope everyone has a great morning, and stay healthy and safe.

Well. Thank you everyone for joining us today and I'll, just close by saying that we had another strong year in 2021, as you've seen and I'm feeling really good about delivering a strong 2022, which will position us for the future and deliver a premium.

Premium returns for our investors both from an EPS growth perspective, as well as the dividend growth perspective. So hope everyone has a great morning, and stay healthy and safe.

Okay.

Speaker 12: That concludes today's conference call. Thank you for your participation.

That concludes today's conference call. Thank you for your participation you may now disconnect.

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