Q2 2019 Earnings Call

July 24, 2019

Operator: Welcome to the event center. An event specialist will join you shortly. If you're a speaker or presenter, please notify the event specialist. You may be asked to provide a confirmation code, speaker's name, or the title of your event. Please be prepared to provide that information. Once you have provided that information, you'll be placed on hold with music or placed into your event. Hello and welcome to the event center. An event specialist will join you shortly. If you're a speaker or presenter, please notify the event specialist. You may be asked to provide a confirmation code, speaker's name, or the title of your event. Please be prepared to provide that information. Once you have provided that information, you'll be placed on hold with music or placed into your event.

[Company Representative] (Event Center): Hello. May I have your confirmation code, please?

Operator: Hello. May I have your confirmation code, please?

Operator: 5739101.

Bryan Healey: 5739101.

[Company Representative] (Event Center): Thank you. I will need your first and your last name with spelling, please.

Operator: Thank you. I will need your first and your last name with spelling, please.

Operator: Brian Healey, B-R-Y-A-N H-E-A-L-E-Y.

Bryan Healey: Brian Healey, B-R-Y-A-N H-E-A-L-E-Y.

[Company Representative] (Event Center): And company?

Operator: And company?

Operator: Aira, A-I-E-R-A.

Bryan Healey: Aira, A-I-E-R-A.

[Company Representative] (Event Center): Perfect. I will place you through. Just a moment.

Operator: Perfect. I will place you through. Just a moment.

Operator: Thank you.

Bryan Healey: Thank you.

[Company Representative] (Event Center): No problem.

Operator: No problem.

Jerry Norcia: Call DTE now and into the future. This morning I'm going to give you a recap of our performance for the second quarter of 2019, as well as an update on our long-term growth plan. Then I'll turn it over to Peter, who will provide a financial review of the quarter and wrap things up. So let me start on slide 4. We continue to make great progress on several key fronts. Our second quarter financial results are solidly on track with our plan. With one half of 2019 behind us, I'm confident that DTE is well positioned to raise our EPS guidance midpoint by $0.05. This guidance raise is mainly based on colder winter weather at the gas company and warmer late June and July weather at the electric company.

Jerry Norcia: This increase takes into consideration the significant storms we experienced this past weekend, and in total, 600,000 customers were impacted, and all should be restored by the end of the day. We've made really good progress on this front. I want to express my gratitude to our employees, contractors, and nearly 900 workers from as far as Georgia and New York for aiding our restoration efforts. In total, we had well over 2,000 people deployed in the field and many more in our operations centers working around the clock to get service restored to our customers. Longer term, we continue to target a 5% to 7% operating EPS growth rate through 2023, with 2019 original guidance as a starting point for this growth.

This increase takes into consideration the significant storms we experienced this past weekend, and in total, 600,000 customers were impacted, and all should be restored by the end of the day. We've made really good progress on this front. I want to express my gratitude to our employees, contractors, and nearly 900 workers from as far as Georgia and New York for aiding our restoration efforts. In total, we had well over 2,000 people deployed in the field and many more in our operations centers working around the clock to get service restored to our customers. Longer term, we continue to target a 5% to 7% operating EPS growth rate through 2023, with 2019 original guidance as a starting point for this growth.

Jerry Norcia: All of our businesses have accomplishments to note this quarter, and I will give you a brief overview when we go into more detail on the following slides. So back in May, DTE Electric received a construction rate order from the Michigan Public Service Commission that supports the modernization and automation of our grid. It also supports an aggressive tree trim program, both of which result in significant improvements in the service reliability to our customers. Included in this order was approval for Charging Forward, which is our new program for electric vehicles. This program will bring the benefits of EVs to more Michigan residents and businesses through incentives, customer education, and charging infrastructure growth. We also filed a new rate case in July at the electric company, and we recently received approval for the purchase of 3 new Michigan wind parks.

All of our businesses have accomplishments to note this quarter, and I will give you a brief overview when we go into more detail on the following slides. So back in May, DTE Electric received a construction rate order from the Michigan Public Service Commission that supports the modernization and automation of our grid. It also supports an aggressive tree trim program, both of which result in significant improvements in the service reliability to our customers. Included in this order was approval for Charging Forward, which is our new program for electric vehicles. This program will bring the benefits of EVs to more Michigan residents and businesses through incentives, customer education, and charging infrastructure growth. We also filed a new rate case in July at the electric company, and we recently received approval for the purchase of 3 new Michigan wind parks.

Jerry Norcia: At DTE Gas, we have a number of projects that are progressing nicely, including our accelerated main renewal program and additional transmission system improvements. At our gas storage and pipeline business, we acquired an additional 30% of LINK, bringing our total ownership to 85%. This additional stake in LINK complements our existing midstream business and is supported by solid underlying resources. This acquisition is organic in nature and stems from assets that we are already very familiar with. LINK's performance has been better than PERFORMA since we acquired it in 2016, and we expect it to continue to perform well into the future. Moving on to our power and industrial business, we are pleased to announce three new cogeneration projects. These are in addition to the R&G projects mentioned on the Q1 call. We are very excited about our development within the industrial energy services space.

At DTE Gas, we have a number of projects that are progressing nicely, including our accelerated main renewal program and additional transmission system improvements. At our gas storage and pipeline business, we acquired an additional 30% of LINK, bringing our total ownership to 85%. This additional stake in LINK complements our existing midstream business and is supported by solid underlying resources. This acquisition is organic in nature and stems from assets that we are already very familiar with. LINK's performance has been better than PERFORMA since we acquired it in 2016, and we expect it to continue to perform well into the future. Moving on to our power and industrial business, we are pleased to announce three new cogeneration projects. These are in addition to the R&G projects mentioned on the Q1 call. We are very excited about our development within the industrial energy services space.

Jerry Norcia: As you all know, our REF earnings will sunset in 2020 and 2022. The long-term plan for P&I is to replace these earnings as we move forward toward our 2023 earnings target range of $125 million to $135 million. We are ahead of plan to originate approximately $15 million of earnings per year to reach this target. As you know, we successfully originated projects that achieved that growth target in 2017 with the Ford Motor Company project and two RNG projects in 2017, and in 2018 with two additional RNG projects. We feel great that halfway through 2019, we have secured three cogeneration and two RNG projects, which gets us to our origination target for 2019. I'll provide more details on these P&I developments on the following slides. But first, I want to highlight several significant achievements at both utilities on slide 5.

As you all know, our REF earnings will sunset in 2020 and 2022. The long-term plan for P&I is to replace these earnings as we move forward toward our 2023 earnings target range of $125 million to $135 million. We are ahead of plan to originate approximately $15 million of earnings per year to reach this target. As you know, we successfully originated projects that achieved that growth target in 2017 with the Ford Motor Company project and two RNG projects in 2017, and in 2018 with two additional RNG projects. We feel great that halfway through 2019, we have secured three cogeneration and two RNG projects, which gets us to our origination target for 2019. I'll provide more details on these P&I developments on the following slides. But first, I want to highlight several significant achievements at both utilities on slide 5.

Jerry Norcia: As I mentioned earlier, the electric company received a constructive rate case order in May. We continue to have very constructive working relationships with the Michigan Public Service Commission and look forward to working with the newly appointed commissioner, Tremaine Phillips. We were approved for a total rate base of $17 billion to continue to harden our system and make necessary improvements for our customers. We were also given the opportunity to surge our tree trim efforts, which will serve our customers well. Most of our damage over the past weekend was related to trees, so I believe that this surge will certainly drive significant improvement in the performance of our system, and we're grateful for that. In early July, DTE Electric filed a new rate case.

As I mentioned earlier, the electric company received a constructive rate case order in May. We continue to have very constructive working relationships with the Michigan Public Service Commission and look forward to working with the newly appointed commissioner, Tremaine Phillips. We were approved for a total rate base of $17 billion to continue to harden our system and make necessary improvements for our customers. We were also given the opportunity to surge our tree trim efforts, which will serve our customers well. Most of our damage over the past weekend was related to trees, so I believe that this surge will certainly drive significant improvement in the performance of our system, and we're grateful for that. In early July, DTE Electric filed a new rate case.

Jerry Norcia: In this filing, we requested that the MPSC approve a $1.3 billion rate base increase driven by continued infrastructure investments to ensure generation availability and improve distribution reliability. This continued reliability will be achieved through upgrading our circuits. The filing also requested the redesigning of substations to avoid system overload, and adding more remote operating capabilities to detect and restore outages more quickly. The rate case filing includes a 50/50 debt equity capital structure and a low-income renewable pilot program that will better enable low-income customers to participate in our MIGreenPower Voluntary Renewables program. We expect a final order on this case next May. As Michigan's leading producer of renewable energy, we received approval for the purchase of three new Michigan wind parks, which qualify for a 100% federal tax credit, resulting in savings that will benefit our customers.

In this filing, we requested that the MPSC approve a $1.3 billion rate base increase driven by continued infrastructure investments to ensure generation availability and improve distribution reliability. This continued reliability will be achieved through upgrading our circuits. The filing also requested the redesigning of substations to avoid system overload, and adding more remote operating capabilities to detect and restore outages more quickly. The rate case filing includes a 50/50 debt equity capital structure and a low-income renewable pilot program that will better enable low-income customers to participate in our MIGreenPower Voluntary Renewables program. We expect a final order on this case next May. As Michigan's leading producer of renewable energy, we received approval for the purchase of three new Michigan wind parks, which qualify for a 100% federal tax credit, resulting in savings that will benefit our customers.

Jerry Norcia: Two of the projects, totaling 383MW, are located in mid-Michigan and will be the largest clean energy projects in the state, as well as the largest renewable energy projects in DTE's portfolio. The third project is a 72MW park in Michigan's Upper Peninsula, which may alternatively be used to support additional sales under our MIGreenPower program, which is our voluntary renewables program. These parks will increase the company's renewable energy portfolio nearly 50%, furthering DTE's commitment to providing clean, affordable, and reliable power to its customers. Investing in new renewable energy is a key part of our commitment to reduce carbon emissions by at least 80% by 2040. Adding these new wind parks to our portfolio will help us meet the clean energy needs of our largest customers who have chosen MIGreenPower.

Two of the projects, totaling 383MW, are located in mid-Michigan and will be the largest clean energy projects in the state, as well as the largest renewable energy projects in DTE's portfolio. The third project is a 72MW park in Michigan's Upper Peninsula, which may alternatively be used to support additional sales under our MIGreenPower program, which is our voluntary renewables program. These parks will increase the company's renewable energy portfolio nearly 50%, furthering DTE's commitment to providing clean, affordable, and reliable power to its customers. Investing in new renewable energy is a key part of our commitment to reduce carbon emissions by at least 80% by 2040. Adding these new wind parks to our portfolio will help us meet the clean energy needs of our largest customers who have chosen MIGreenPower.

Reliable power to its customers.

Investing in renewable energy as a key part of our commitment to reduce carbon emissions by at least 80% by 2040.

Adding these new wind parks, our portfolio will help us meet the clean energy needs of our largest customers who have chosen by green power.

Jerry Norcia: We have aggressive plans to expand our Voluntary Renewable Energy programs, enabling more customers to reduce their carbon footprint and meet personal or business sustainability goals. We are proud of the environmental and economic benefits these projects will bring to Michigan. DTE's renewable projects not only benefit the environment, they are also helping drive Michigan's economy. DTE has driven investment of more than $2.8 billion in renewables since 2009 and will invest an additional $2 billion over the next five years. DTE's renewable energy projects have created or sustained more than 4,000 Michigan jobs, while powering the equivalent of more than 500,000 homes with clean energy. As I mentioned earlier, DTE Electric also launched our Charging Forward program, which is our new initiative for electric vehicles.

We have aggressive plans to expand our Voluntary Renewable Energy programs, enabling more customers to reduce their carbon footprint and meet personal or business sustainability goals. We are proud of the environmental and economic benefits these projects will bring to Michigan. DTE's renewable projects not only benefit the environment, they are also helping drive Michigan's economy. DTE has driven investment of more than $2.8 billion in renewables since 2009 and will invest an additional $2 billion over the next five years. DTE's renewable energy projects have created or sustained more than 4,000 Michigan jobs, while powering the equivalent of more than 500,000 homes with clean energy. As I mentioned earlier, DTE Electric also launched our Charging Forward program, which is our new initiative for electric vehicles.

We have aggressive plans to expand our voluntary renewable energy programs, enabling more customers to reduce their carbon footprint and meet personal or business sustainability goals.

We are proud of the environmental and economic benefits. These projects will bring the Michigan.

Cts renewable projects not only benefit the environment. They are also helping drive Michigan's economy.

The team has driven investment of more than $2.8 billion in renewables.

Since 2009, and we'll have debt invest in addition, $2 billion over the next five years.

Ease and renewable energy projects have created or sustain more than 4000, Michigan jobs will power and the equivalent more than 500000 homes with clean energy.

As I mentioned earlier.

Electric also launched that are charging forward program, which is our new initiative for electric vehicles.

Jerry Norcia: We will provide a rebate of up to $500 to a residential customer who purchases or leases a new or used EV, installs a qualified charger, and enrolls in a special rate beneficial for EV charging. DTE's business customers can also receive incentives on our EV charging equipment. We are thankful for the support of both the Michigan Public Service Commission, as well as our auto industry partners and environmental advocacy groups in supporting our EV program. Also, in late June, along with CMS, we renewed the license for our Ludington Hydroelectric plant. The pumped storage plant is the second largest in the US with a capacity of over 2,000MW and takes advantage of the unique geography we enjoy here in Michigan. We are investing $800 million to upgrade Ludington, which will add 300MW of capacity and prepare it for a long-term future.

We will provide a rebate of up to $500 to a residential customer who purchases or leases a new or used EV, installs a qualified charger, and enrolls in a special rate beneficial for EV charging. DTE's business customers can also receive incentives on our EV charging equipment. We are thankful for the support of both the Michigan Public Service Commission, as well as our auto industry partners and environmental advocacy groups in supporting our EV program. Also, in late June, along with CMS, we renewed the license for our Ludington Hydroelectric plant. The pumped storage plant is the second largest in the US with a capacity of over 2,000MW and takes advantage of the unique geography we enjoy here in Michigan. We are investing $800 million to upgrade Ludington, which will add 300MW of capacity and prepare it for a long-term future.

We will provide a rebate of up to $500 to a residential customer who purchases or leases, a new or used VB.

Installs a qualified charger and enrolled in a special.

Great beneficial freebie charging.

Cts business customers can also receive incentives on our TV charging equipment, we are thankful for the supportable, The Michigan Public Service Commission as well as our auto industry partners and environmental advocacy groups and supporting our ERP program.

Also in late June along with CMS, we renewed the license for our Ludington hydroelectric plant the pump storage plant is the second largest in the us with a capacity of over 2000 megawatts and takes advantage of the unique geography, we enjoy here in Michigan, we are investing $800 million upgrade ludington, which will add 300 megawatts of capacity and prepared for a long term future.

Jerry Norcia: The upgrades are on schedule to be completed in 2020. The plant generates hydroelectric power and supports our renewables generation because it acts like a giant battery that can be tapped when renewable output drops. The plant pumps water from Lake Michigan uphill to a 27 billion gallon reservoir at low demand times and releases the stored water and energy downhill through the turbines that generate electricity when energy demand is higher. Ludington can ramp up to peak output in just 30 minutes. It provides a sustainable, clean, reliable energy source. It also helps keep energy bills lower because it allows DTE Energy to avoid having to buy expensive out-of-state electricity when demand peaks. Our new Blue Water Energy Center is also progressing on plan. We broke ground last year and received all the necessary permits.

The upgrades are on schedule to be completed in 2020. The plant generates hydroelectric power and supports our renewables generation because it acts like a giant battery that can be tapped when renewable output drops. The plant pumps water from Lake Michigan uphill to a 27 billion gallon reservoir at low demand times and releases the stored water and energy downhill through the turbines that generate electricity when energy demand is higher. Ludington can ramp up to peak output in just 30 minutes. It provides a sustainable, clean, reliable energy source. It also helps keep energy bills lower because it allows DTE Energy to avoid having to buy expensive out-of-state electricity when demand peaks. Our new Blue Water Energy Center is also progressing on plan. We broke ground last year and received all the necessary permits.

The upgrades are all on are on schedule to be completed in 2020.

The plant generates hydro electric power and supports our renewables generation because it acts like a giant battery that can be tapped one renewable output drops.

The plant pumps water from Lake, Michigan uphill.

27 billion gallon reservoir at low demand times and releases the store.

Water and energy downhill through the turbine to generate electricity when energy demand is higher.

Why do you think can ramp up.

The peak output in just 30 minutes and provide sustainable clean reliable energy source and also helps keep energy deals bills lower because it allows energy to avoid having to buy expensive out of state electricity.

When demand peaks.

Our new Blue water Energy Center is also progressing on plan, we broke ground last year and received all the necessary permits.

Jerry Norcia: The plant is a little over 20% complete with an expected spring 2022 in service date. A significant amount of civil work has been completed, and we expect the turbines to arrive on site later this year. Six days a week, workers representing numerous trades are on site to support the $950 million project. Moving on to our gas company, I mentioned we are progressing on several fronts. Our accelerated distribution main renewal program is on track. We have completed 48 miles this year and will complete 178 miles by year-end. Over the past several years, we have replaced over 650 miles with plans to replace an additional 3,500 miles by 2035. We're also developing plans to invest in additional system improvements, including a transmission renewable program following a risk-based approach to support the growth, integrity, and reliability of our gas transmission system inside our utility.

The plant is a little over 20% complete with an expected spring 2022 in service date. A significant amount of civil work has been completed, and we expect the turbines to arrive on site later this year. Six days a week, workers representing numerous trades are on site to support the $950 million project. Moving on to our gas company, I mentioned we are progressing on several fronts. Our accelerated distribution main renewal program is on track. We have completed 48 miles this year and will complete 178 miles by year-end. Over the past several years, we have replaced over 650 miles with plans to replace an additional 3,500 miles by 2035. We're also developing plans to invest in additional system improvements, including a transmission renewable program following a risk-based approach to support the growth, integrity, and reliability of our gas transmission system inside our utility.

The plant is a little over 20% complete with an expected spring 2022 in service date.

A significant amount of civil work has been completed and we expect the turbines to arrive on site later this year.

Six days a week workers, representing numerous trades are on site to support the 950 million dollar project.

Moving on to our gas company I mentioned, we are progressing on several fronts.

Our accelerated distribution main renewal program is on track we have completed.

40 miles this year would lead 170 miles by year end.

Over the past several years, we have replaced over 650 miles plans to replace an additional 3500 miles by 2035.

We're also developing plans of this invest an additional system improvements, including a transmission of renewable program. Following a risk based approach to support the growth integrity and reliability of our.

Gas transmission system in centre utility.

Jerry Norcia: We are utilizing our risk model to prioritize upgrading or replacing approximately 100mi of transmission lines by 2037 and compression in a range of 81,000hp by 2035. We'll be working with our regulators to demonstrate the reasonableness and prudence of these programs. Together, these programs showcase the great things that are going on here in Michigan. Now I'll turn to our non-utilities on slide 6. Starting with our gas storage and pipeline business, we feel great about the progress year to date, as well as yet to come for the rest of 2019 and beyond. In the second half of the year, GSB earnings will increase from the first half of the year for a number of reasons, including the acquisition of an additional 30% of LINK.

We are utilizing our risk model to prioritize upgrading or replacing approximately 100mi of transmission lines by 2037 and compression in a range of 81,000hp by 2035. We'll be working with our regulators to demonstrate the reasonableness and prudence of these programs. Together, these programs showcase the great things that are going on here in Michigan. Now I'll turn to our non-utilities on slide 6. Starting with our gas storage and pipeline business, we feel great about the progress year to date, as well as yet to come for the rest of 2019 and beyond. In the second half of the year, GSB earnings will increase from the first half of the year for a number of reasons, including the acquisition of an additional 30% of LINK.

We are using utilizing our risk model prioritize upgrading or replacing approximately 100 miles of transmission lines by 2037.

Inc. and compression in the range of 81000 horsepower by 2035.

We'll be working with our regulators and demonstrate the reasonableness of prudency of these programs.

Together these programs showcase the great things that are that are going on here in Michigan.

Now I'll turn to our non utilities on on slide six.

Starting with our gas storage and pipeline business, we feel great about the progress year to date as well as the outlook for the rest of 2019 and beyond.

The second half of the year.

GSP earnings will increase from the first half of the year for a number of reasons, including.

The acquisition of an additional 30% of link.

Jerry Norcia: Also, as you remember, we are acquiring the Generation Pipeline, which is consistent with the strategic growth plans DTE and Enbridge have for Nexus. The acquisition is progressing through regulatory proceedings as it is on track to close in the second half of this year. Additionally, we placed Millennium's Eastern System lateral upgrade in service late in Q1 of this year. Finally, the LINK expansion is progressing quite well. We're expanding the system and connecting new gathering resources. Due to all these factors, we expect GSB to have a very solid finish to 2019. Next, I'll walk through our power and industrial business. This quarter, a number of deals we've had in the works came to fruition. We are finalizing three new cogeneration projects. First, we finalized a development agreement with Stelco to develop a strategic cogeneration project at their Lake Erie Steel facility in Ontario.

Also, as you remember, we are acquiring the Generation Pipeline, which is consistent with the strategic growth plans DTE and Enbridge have for Nexus. The acquisition is progressing through regulatory proceedings as it is on track to close in the second half of this year. Additionally, we placed Millennium's Eastern System lateral upgrade in service late in Q1 of this year. Finally, the LINK expansion is progressing quite well. We're expanding the system and connecting new gathering resources. Due to all these factors, we expect GSB to have a very solid finish to 2019. Next, I'll walk through our power and industrial business. This quarter, a number of deals we've had in the works came to fruition. We are finalizing three new cogeneration projects. First, we finalized a development agreement with Stelco to develop a strategic cogeneration project at their Lake Erie Steel facility in Ontario.

Also as you remember we are acquiring the generation pipeline, which is consistent with the strategic growth plans DT and enbridge have for Nexus.

The acquisition is progressing through regulatory proceeding as it is on track to close in the second half of this year.

Additionally, we place millenniums eastern system lateral upgrade in service late in the first quarter this year.

Finally, the link expansion.

Is progressing quite well, we're expanding and system and connecting new gathering resources.

Due to all these factors, we expect GSP to have a very solid finished at 20 a 19.

Next I'll walk through our power and industrial business. This quarter a number of deals we've had an works came to fruition.

We are finalizing three nuclear power generation projects first we finalized the development agreement with Stelco develop a strategic cogeneration project at their Lake Erie Steel facility in Ontario.

Jerry Norcia: DTE's experience in the cogeneration space will enable Stelco to reduce its energy costs by utilizing excess industrial gases and reducing exposure to peak electricity pricing. Also, we are purchasing a CHP plant that serves a commercial customer. This project provides hot and chilled water to the facility and fits well within our growth strategy to provide on-site energy for large commercial and industrial customers. Both of these investments are underpinned by long-term offtake agreements. Finally, we will also operate a CHP plant here in Detroit at the Wayne County Criminal Justice Center. P&I will design, build, and operate a county-owned central utility plant and provide hot and chilled water and backup power. The Justice Center is on track to begin operations in 2022. On the R&G front, we have closed on 2 Greenfield projects which we mentioned on the first quarter call.

DTE's experience in the cogeneration space will enable Stelco to reduce its energy costs by utilizing excess industrial gases and reducing exposure to peak electricity pricing. Also, we are purchasing a CHP plant that serves a commercial customer. This project provides hot and chilled water to the facility and fits well within our growth strategy to provide on-site energy for large commercial and industrial customers. Both of these investments are underpinned by long-term offtake agreements. Finally, we will also operate a CHP plant here in Detroit at the Wayne County Criminal Justice Center. P&I will design, build, and operate a county-owned central utility plant and provide hot and chilled water and backup power. The Justice Center is on track to begin operations in 2022. On the R&G front, we have closed on 2 Greenfield projects which we mentioned on the first quarter call.

Dts experience and a cogeneration space will enable stelco to reduce its energy costs by utilizing excess industrial gases.

And reducing exposure to peak electricity pricing.

Also we are purchasing us CHP plant it serves a commercial customer.

It's project provides hot and chilled water the facility fits well within our growth strategy to provide onsite energy for large commercial industrial customers.

Both of these investments are underpinned by long term offtake agreements.

Finally, we will also operate a CHP plant here in Detroit at the Wayne County.

Criminal Justice Center.

We will design build and operate county owned central utility plant and provide hot and chilled water and backup power.

The Justice Center is on track to begin operations in 2022.

On the R&D front.

We have closed on two Greenfield projects, we mentioned on the first quarter call.

Jerry Norcia: Both projects are located in Wisconsin, where we have built a strong RNG presence based on our extensive experience there. For competitive reasons, we don't discuss the returns on these non-utility assets, but I can tell you that they get better than utility returns, and the capital investment for all the projects I just discussed is in excess of $200 million. As I mentioned earlier, we feel great about our recent project developments and how they fit into our plan to replace our REF earnings, which will sunset in the near future. With that, I'm going to turn it over to Peter to share our financial results.

Both projects are located in Wisconsin, where we have built a strong RNG presence based on our extensive experience there. For competitive reasons, we don't discuss the returns on these non-utility assets, but I can tell you that they get better than utility returns, and the capital investment for all the projects I just discussed is in excess of $200 million. As I mentioned earlier, we feel great about our recent project developments and how they fit into our plan to replace our REF earnings, which will sunset in the near future. With that, I'm going to turn it over to Peter to share our financial results.

Both projects are located in Wisconsin, where we have built a strong R&D presence based on our extensive experience there.

For competitive reasons, we don't discuss the returns.

On these non utility assets, but I can tell you that they get better than utility returns and the capital investment for all the projects I just discussed.

Is in excess of $200 million.

As I mentioned earlier, we feel great about our recent project developments and how they fit into our plan reflects area earnings which were sunset in the near future.

And with that I'm going to turn it over to Peter to share our financial results. Thanks, Gerry and good morning, everyone.

[Company Representative] (Event Center): Thanks, Jerry, and good morning, everyone. Before I get into the financials, as you know, I always like to give an update on my Detroit Tigers. At this point in our rebuild process, the eyes definitely are on the future and the farm system. At this one point, Casey Mize, who was our number one pick last year, did pitch a no-hitter this year in the minors. To the present, it's currently dark, but the future is looking bright. Now, the financials are consistently bright here at DTE. Let me turn your attention to the financial results, and I'll start the review on slide 7. Total earnings for the second quarter were $183 million. This translates into $0.99 per share for the quarter. You can find a detailed breakdown of EPS by segment, including our reconciliation to GAAP reported earnings in the appendix.

Peter Oleksiak: Thanks, Jerry, and good morning, everyone. Before I get into the financials, as you know, I always like to give an update on my Detroit Tigers. At this point in our rebuild process, the eyes definitely are on the future and the farm system. At this one point, Casey Mize, who was our number one pick last year, did pitch a no-hitter this year in the minors. To the present, it's currently dark, but the future is looking bright. Now, the financials are consistently bright here at DTE. Let me turn your attention to the financial results, and I'll start the review on slide 7. Total earnings for the second quarter were $183 million. This translates into $0.99 per share for the quarter. You can find a detailed breakdown of EPS by segment, including our reconciliation to GAAP reported earnings in the appendix.

I get into the financials.

I would like to give an update on my Detroit Tigers at this point in our rebuild process the eyes definitely on the future of the farm system.

And just one point keep in mind, who is their number one pick last year did pigeon no later this year and the miners.

The President is currently dark, but the future is looking bright.

On the financials are consistently bright here at D. As let me turn your attention to the financial results now start to review on slide seven.

Total earnings for the second quarter were $183 million.

This translates into 99 cents per share for the quarter.

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

[Company Representative] (Event Center): Earnings for the quarter are lower than the second quarter last year, primarily due to unfavorable weather this year. Let me start my review at the top of the page with our utilities. DTE Electric earnings were $134 million for the quarter. This was lower than 2018, largely due to cooler weather and rate-based growth costs offset by the impact of new rates implemented in May. DTE Gas has second quarter 2019 operating earnings of $4 million. This is $10 million lower than the second quarter of 2018. The earnings decrease is driven primarily by the $10 million tax timing item I mentioned on the first quarter call that is reversing this quarter, as well as less weather favorability in 2019. This was offset by the impact of new rates implemented late last year. Let's move down the page to the third row to our gas storage and pipeline business.

Earnings for the quarter are lower than the second quarter last year, primarily due to unfavorable weather this year. Let me start my review at the top of the page with our utilities. DTE Electric earnings were $134 million for the quarter. This was lower than 2018, largely due to cooler weather and rate-based growth costs offset by the impact of new rates implemented in May. DTE Gas has second quarter 2019 operating earnings of $4 million. This is $10 million lower than the second quarter of 2018. The earnings decrease is driven primarily by the $10 million tax timing item I mentioned on the first quarter call that is reversing this quarter, as well as less weather favorability in 2019. This was offset by the impact of new rates implemented late last year. Let's move down the page to the third row to our gas storage and pipeline business.

Earnings for the quarter are lower than the second quarter last year, primarily due to unfavorable weather this year.

Let me start my review at the top of the page with our utilities.

Detailed electric earnings were $134 million for the quarter. This was lower than 2018, largely due to cooler weather and rate base growth cost offset by the impact of new rates implemented in may.

DT gas.

And second quarter 2019 operating earnings of 4 million.

This is 10 million lower than the second quarter of 2018.

The earnings decrease is driven primarily by the 10 million tax timing item I mentioned on the first quarter call that is reversing this quarter.

As well as less weather favorability in 2019.

This was offset by the impact the new rates implemented late last year.

Let's move down the page to the third row onto our gas storage and pipeline business.

[Company Representative] (Event Center): Operating earnings for our GSB segment were $50 million for the quarter. Last year, we had one-time positive earnings related to AFUDC at Nexus and higher than planned volumes across the portfolio. This year, we have normalized earnings at Nexus, and volumes are on plan. As a result, this quarter is down $10 million versus the second quarter of 2018. GSB is performing according to plan through the second quarter, and we will see the benefit in the second half of the year from the volumes on LINK that continue to ramp up, and we will also see the full impact of the Millennium expansion and recent acquisitions. On the next row, you can see our power and industrial business segment operating earnings were $29 million. Earnings are $14 million lower than the second quarter of 2018.

Operating earnings for our GSB segment were $50 million for the quarter. Last year, we had one-time positive earnings related to AFUDC at Nexus and higher than planned volumes across the portfolio. This year, we have normalized earnings at Nexus, and volumes are on plan. As a result, this quarter is down $10 million versus the second quarter of 2018. GSB is performing according to plan through the second quarter, and we will see the benefit in the second half of the year from the volumes on LINK that continue to ramp up, and we will also see the full impact of the Millennium expansion and recent acquisitions. On the next row, you can see our power and industrial business segment operating earnings were $29 million. Earnings are $14 million lower than the second quarter of 2018.

Operating earnings for our GSP segment were $50 million.

For the quarter.

Last year, we had one time positive earnings related to AFUDC and access and higher than planned volumes across the portfolio.

This year, we have normalized earnings at Nexus and volumes are on plan.

As a result, this quarter is down $10 million versus the second quarter of 2018.

GSP performing according to plan out through the second quarter.

And we will see the benefit in the second half of the year on the volumes on linked that continue to ramp up and we also see the full impact of the millennium expansion and recent acquisitions.

On the next real you can see our power and industrial business segment operating earnings were $29 million.

Earnings are 14 million lower than the second quarter of 2018.

[Company Representative] (Event Center): This decrease is due mainly to the REF tax equity transactions that occurred in the Q4 of 2018. As we communicated previously, we entered into equity partnerships in our REF units to accelerate cash flows around $100 million per year for the next three years to support growth projects. This lowers earnings this year around $40 million versus 2018. Also, I would like to note that most of our new projects originated over the last few years but start adding to earnings later this year and early next year. Our energy trading business had an accounting operating loss of $2 million. Earnings are lower this quarter compared to the Q2 last year due to the lower gas portfolio earnings and timing of realized economic earnings. Our trading company is having another solid year. Year to date, economic earnings are on plan and in line with guidance.

This decrease is due mainly to the REF tax equity transactions that occurred in the Q4 of 2018. As we communicated previously, we entered into equity partnerships in our REF units to accelerate cash flows around $100 million per year for the next three years to support growth projects. This lowers earnings this year around $40 million versus 2018. Also, I would like to note that most of our new projects originated over the last few years but start adding to earnings later this year and early next year. Our energy trading business had an accounting operating loss of $2 million. Earnings are lower this quarter compared to the Q2 last year due to the lower gas portfolio earnings and timing of realized economic earnings. Our trading company is having another solid year. Year to date, economic earnings are on plan and in line with guidance.

This this this decrease is due mainly to the ARIA tax equity transactions that occurred in the fourth quarter of 2018.

And as we communicated previously we entered into equity partnerships and our RF units.

To accelerate cash flow is around $100 million per year for the next three years to support.

Growth projects.

This lowered earnings this year around $40 million versus 2018.

Also I would like to note that most of the new projects originated over the last few years will start adding to earnings later this year and early next year.

Our energy trading business had an accounting operating loss of $2 million earnings a lower this quarter compared to the second quarter last year due to the lower gas portfolio earnings and timing.

Ill realize economic earnings.

Our trading company is having another solid year.

Year to date economic earnings are on plan and in line with guidance.

[Company Representative] (Event Center): The appendix contains our standard energy trading reconciliation showing both economic and accounting performance. Finally, corporate and other was favorable $9 million this year compared to the second quarter last year, and this was due primarily to the timing of taxes. So overall, DTE earned $0.99 per share in the second quarter of 2019. Now on to slide 8. Given the strong start to the year for both our utilities, driven by favorable winter weather at our gas company and favorable July weather at our electric company, we are increasing the 2019 operating EPS guidance midpoint by $0.05 to $6.20. Though earnings were lower than the first half of last year, this was contemplated in our original guidance. And as you know, DTE enters each year with continuity, and this year was no exception.

The appendix contains our standard energy trading reconciliation showing both economic and accounting performance. Finally, corporate and other was favorable $9 million this year compared to the second quarter last year, and this was due primarily to the timing of taxes. So overall, DTE earned $0.99 per share in the second quarter of 2019. Now on to slide 8. Given the strong start to the year for both our utilities, driven by favorable winter weather at our gas company and favorable July weather at our electric company, we are increasing the 2019 operating EPS guidance midpoint by $0.05 to $6.20. Though earnings were lower than the first half of last year, this was contemplated in our original guidance. And as you know, DTE enters each year with continuity, and this year was no exception.

The appendix contains our standard energy trading reconciliation, showing both economic and accounting performance.

And finally corporate and other was favorable 9 million this year compared to the second quarter last year and this was due primarily to the timing of taxes.

So overall DT earned 99 cents per share in the second quarter of 2019.

Now on to slide eight.

Given the strong start to the year for both our utilities driven by favorable winter weather at our gas company and favorable July weather at our electric company. We are increasing the 2019 operating EPS guidance midpoint by five cents to $6.20.

The earnings were lower than the first half of <unk>.

Last year this was contemplated in our original guidance.

And as you know DT Anders each year with contingency.

And this year was no exception.

[Company Representative] (Event Center): We mentioned on the Q1 call we built additional continuity with the winter weather at our gas utility, and our electric company has had a strong first half of the year with additional weather-related earnings coming here in July. The weather favorability over and above our increased guidance will be held for reinvestment and storm expenses associated with this warmer than normal weather. This sort of planning has been one of the keys to our success in providing predictable results every year. Now I'll wrap up on slide 9, and then we'll open it up for questions. In summary, I feel confident in achieving our increased 2019 guidance, keeping us on track to beat our original guidance for the 11th consecutive year. For the past 10 years, we've beat original guidance by an average of 0.25 per share.

We mentioned on the Q1 call we built additional continuity with the winter weather at our gas utility, and our electric company has had a strong first half of the year with additional weather-related earnings coming here in July. The weather favorability over and above our increased guidance will be held for reinvestment and storm expenses associated with this warmer than normal weather. This sort of planning has been one of the keys to our success in providing predictable results every year. Now I'll wrap up on slide 9, and then we'll open it up for questions. In summary, I feel confident in achieving our increased 2019 guidance, keeping us on track to beat our original guidance for the 11th consecutive year. For the past 10 years, we've beat original guidance by an average of 0.25 per share.

You mentioned on the first quarter call, we built additional contingency with the winter weather at our gas utility.

Now electric company has had a strong first half the year with additional weather related earnings coming here in July .

The weather favorability over and above our increased guidance will be held for reinvestment and storm expenses associated with this warmer than normal weather.

The sort of planning has been when the keys to our success in providing predictable results every year.

Now I'll wrap up on slide nine and then we'll open it up for questions.

In summary, I feel confident and achieving our increased 2019 guidance keeping us on track to beat our original guidance for the 11th consecutive year.

For the past 10 years, we beat our original guidance by an average of 25 cents per share.

[Company Representative] (Event Center): We are also well positioned to continue our 5% to 7% operating EPS growth in the years to come. Our utilities continue to focus on necessary infrastructure investments, specifically for investments to improve reliability and the customer experience. Our non-utilities continue to position us for long-term growth. Finally, I feel very good about our ability to continue to deliver the premium total shareholder returns that we have delivered over the past decade. And with that, I'd like to thank everyone this morning for joining us. And Christian, you can open up the line now for questions.

We are also well positioned to continue our 5% to 7% operating EPS growth in the years to come. Our utilities continue to focus on necessary infrastructure investments, specifically for investments to improve reliability and the customer experience. Our non-utilities continue to position us for long-term growth. Finally, I feel very good about our ability to continue to deliver the premium total shareholder returns that we have delivered over the past decade. And with that, I'd like to thank everyone this morning for joining us. And Christian, you can open up the line now for questions.

We are also well positioned to continue our 5% to 7% operating EPS growth in the years to come.

For utilities continue to focus on necessary infrastructure investments, specifically for investments to improve reliability and the customer experience.

Our non utilities continue to position us for long term growth.

Finally, I feel very good about our ability to continue deliver the premium total shareholder returns that we have delivered over the past decade.

And with that I'd like to thank everyone on the same for joining us and Christian you can open up the line now for questions.

Operator: Thank you, sir. Ladies and gentlemen over the phone, if you do wish to ask a question during today's call, please press star 1 on your telephone keypad. Please ensure that the mute function is switched off to allow your signal to reach our equipment. And if you find that your question has already been answered, you may remove yourself from the queue by pressing star 2. Once again, please press star 1 if you wish to ask a question. We'll pause for just a moment to allow everyone to signal. Okay. We will now take our first question from Praful Mehta from Citigroup. Please go ahead. Your line is.

Thank you Sir.

Ladies and gentlemen over the phone if you wish to ask a question during today's call. Please.

One on your telephone keypad.

Please ensure that the mute function is switched off I know, you're saying can we turn equipment any fine. Jay question is really been answered you may remember.

I can start to.

Once again please.

One if you wish to ask a question.

We'll pause for just a moment to allow everyone to see.

Yes.

Jerry Norcia: Thanks so much. Hi, guys.

Praful Mehta: Thanks so much. Hi, guys.

Peter Oleksiak: Good morning.

Jerry Norcia: Good morning.

Peter Oleksiak: Good morning.

Jerry Norcia: Morning. Congratulations, Jerry.

Praful Mehta: Morning. Congratulations, Jerry.

Peter Oleksiak: Thank you very much, Praful.

Jerry Norcia: Thank you very much, Praful.

Jerry Norcia: All right. So maybe the first question on the quarter. The weather clearly impacted the electric side. Just wanted to understand when you highlighted the lower performance of Q2 2019 versus 2018, you highlighted weather and rate base growth costs. Could you clarify a little bit of exactly how much was weather and what exactly is rate base growth costs, and what was the impact of that part of it?

Praful Mehta: All right. So maybe the first question on the quarter. The weather clearly impacted the electric side. Just wanted to understand when you highlighted the lower performance of Q2 2019 versus 2018, you highlighted weather and rate base growth costs. Could you clarify a little bit of exactly how much was weather and what exactly is rate base growth costs, and what was the impact of that part of it?

And rate base growth costs could you clarify a little bit of exactly how much was weather and what exactly is rate based growth costs and what was the impact of that part of it.

Yes, the weather.

Peter Oleksiak: Yeah. The weather favorability that we have in the appendix as well, the actual amount, we did have a cooler, excuse me.

Jerry Norcia: Yeah. The weather favorability that we have in the appendix as well, the actual amount, we did have a cooler, excuse me.

Favorability that we have in the appendix as well.

The actual amount we did have a cooler.

Great for 44.4 million for the quarter. So its been relatively significant from a weather perspective, we had a very hot.

Jerry Norcia: 44.

Peter Oleksiak: 44.

Peter Oleksiak: Yeah, $44 million for the quarter. So it's been relatively significant from a weather perspective. We had a hot weather last year in the second quarter. The first part of June started actually relatively cold for us. So a good portion of that decline that you're seeing there is weather-related. Now, the term rate base-related costs, that is depreciation, interest expense, property tax related to rate base. Now, that is more than offset by the new rates that were deployed in our last rate case.

Jerry Norcia: Yeah, $44 million for the quarter. So it's been relatively significant from a weather perspective. We had a hot weather last year in the second quarter. The first part of June started actually relatively cold for us. So a good portion of that decline that you're seeing there is weather-related. Now, the term rate base-related costs, that is depreciation, interest expense, property tax related to rate base. Now, that is more than offset by the new rates that were deployed in our last rate case.

Our weather last year in the second quarter.

First part of June started actually relatively cold for us.

So a good portion of that decline that you're seeing there is weather related.

Now the term rate base related costs that is depreciation interest expense property tax related to rate base now that has more than offset by the new rates that were deployed in our last rate case.

I got you great helpful. Thank you.

Jerry Norcia: I got you. Great. Helpful. Thank you. And then in terms of the increased guidance for 2019, it sounds like the benefit from what you saw in July is flowing in there as well. How much is that benefit as a part of the 0.05 increase that you had for the 2019 guidance?

Praful Mehta: I got you. Great. Helpful. Thank you. And then in terms of the increased guidance for 2019, it sounds like the benefit from what you saw in July is flowing in there as well. How much is that benefit as a part of the 0.05 increase that you had for the 2019 guidance?

And then in terms of the the increased guidance for 2019, it sounds like the benefit from what you saw in July is flowing in there as well how much is that benefit as a part of like the five cents increase that you had for the.

Turning 19 guidance.

Yeah, we can't really I cant really give exactly the number yet for July if I can tell you that July is one of the hotter July is we've had here in recent history. So I was a good portion of that as it relates to that and we did hold back some of that weather favorability here in July so, but as for the storm that we've experienced Gerry mentioned that we do traditionally give back a portion of many of the extreme weather. We had in July two storms that we're going to be funding that as well holding back for reinvestment.

Peter Oleksiak: Yeah. I can't really give exactly the number yet for July, but I can tell you that July is one of the hotter Julys we've had here in recent history. So I'd say a good portion of that relates to that. Now, we did hold back some of that weather favorability here in July. Some of that is for the storm that we've experienced. Jerry mentioned that. We do traditionally give back a portion when you have the extreme weather we had in July's storm, so we're going to be funding that, as well as holding back for reinvestment. We'd like to do that as well, especially with customer-centric and facing projects.

We'd like to do that as well and such with customer centric and facing product projects. One of the things I'll add is that you know that contains the levels that we have in all our business units feels quite strong at this point in time and that's why we felt comfortable with the raising guidance at this point. So we still continue to hold a significant amount of contingency in our plans for the balance of the year.

Jerry Norcia: Yeah. One of the things I'll add is that the continuity levels that we have in all our business units feels quite strong at this point in time, and that's why we felt comfortable with raising guidance at this point. So we still continue to hold a significant amount of continuity in our plans for the balance of the year.

Great. That's super helpful and just finally in terms of the equity issuance any clarity on timing of how we should think about the equity between 19 and 21.

Jerry Norcia: Great. That's super helpful. And just finally, in terms of the equity issuance, any clarity on timing of how we should think about the equity between 2019 and 2021?

Praful Mehta: Great. That's super helpful. And just finally, in terms of the equity issuance, any clarity on timing of how we should think about the equity between 2019 and 2021?

Well, we did mentioned and we want the 1.1 billion to 1.5 billion or less over the next three years $250 million of that this year, we've done already 165 million.

Peter Oleksiak: Well, we did mention that we want $1 billion to 1.5 billion over the next three years, $250 million of that this year. We've done already $165 million for this year. So $250 million target this year. We'll give an update to EEI for our plan for next year but let you know that our goal would be to be at the lower end of that $1 billion range. And if we do that with continued strong performance like we're seeing this year, we do hold continuity. If we don't need that continuity, we'll be at the lower end of the range. But we'll give a folder update here in the fall.

For this year, so 250 million target this year, we'll give an update at EEI.

For our plan for next year.

But I do know, though our goal would be to be at the lower end of that $1 billion range and if we do that with continued strong performance like we're seeing this year.

We do we will continuously we don't do that continuously will be at the lower end the range, but we'll give a fuller update here in the fall.

Jerry Norcia: Got it. Very helpful. Thank you, guys.

Praful Mehta: Got it. Very helpful. Thank you, guys.

Got it very helpful. Thank you guys.

Thank you.

Operator: Thank you. We will now take our next question from Shar Pourreza from Guggenheim Partners. Please go ahead. Your line is open.

We will now take our next question.

From Sean.

From Guggenheim partners.

Please go ahead your line is open.

[noise] Morningstar.

Peter Oleksiak: Morning, Shar.

Jerry Norcia: Morning, Shar.

[Analyst] (Guggenheim Partners): Hi. Good morning. Sorry, it's actually Constantine here. I was on mute for a second. Just a quick question on the expectations for future acquisitions and kind of capital that's getting deployed in the GS&P segment. How is that tracking versus the prior guidance that you provided? I think it was roughly $4 to 5 billion over the course of the plan, and just curious to see kind of with the current acquisitions and the expansion that's going.

Constantine Lednev: Hi. Good morning. Sorry, it's actually Constantine here. I was on mute for a second. Just a quick question on the expectations for future acquisitions and kind of capital that's getting deployed in the GS&P segment. How is that tracking versus the prior guidance that you provided? I think it was roughly $4 to 5 billion over the course of the plan, and just curious to see kind of with the current acquisitions and the expansion that's going.

Hi, good morning, sorry, it's actually a common theme here.

I mean for a second.

Just a quick question on the.

The expectations or future acquisitions, and kind of capital that's getting deployed in the S&P.

Segment.

How is that tracking versus the prior guidance that you provided I think it was roughly four to 5 million over the course of the plan.

Just curious to see how kind of what the current acquisitions on the expansion that's going.

Jerry Norcia: Sure. So we mentioned the four organic investments that are progressing quite nicely this year, the LINK expansion, the Millennium expansion, which is complete. The LINK expansion will be complete later this year. We completed the LINK acquisition, the Bolton acquisition, and we're also looking to complete the Generation Pipeline acquisition. All of that feeds quite nicely into our 2019 plans and 2020 plans, so we feel like we're lining up growth quite nicely for that platform over the next two years. We are looking at acquisitions. We always do. The market's actually starting to bring a lot of opportunities forward as we see some midstream companies under severe stress from a balance sheet perspective, as well as we see producers redirecting capital towards their drill bit.

Sure. So I, we mentioned the other four organic investments.

That we're progressing quite nicely this year the other linked expansion the millennium expansion, which is complete.

A link good luck expansion will be complete later this year.

We completed the link acquisition the bolt on acquisition and we're also looking to complete the generation pipeline acquisition all of that.

Feeds quite nicely.

Into our 19 plans and 2020 plants. So we feel like we're lining up grow quite nicely for that platform over the next two years, we are looking at acquisitions, we always do.

The markets actually become.

Starting to bring a lot of opportunities forward as we see.

Some midstream companies under severe stress for a balance sheet perspective, as well as we see producers redirecting.

Capital towards our drill bit.

Jerry Norcia: We're starting to see opportunities kind of float our way, and we're being very selective and very disciplined about how we look at those. So feeling pretty good about the prospects of that business line right now.

We're starting to see opportunities kind of float our way, and we're being very selective and very disciplined about how we look at those. So feeling pretty good about the prospects of that business line right now.

We're starting to see opportunities kind of flowed our way and we're being very selective very disciplined about how we look at those so feeling pretty good about the prospects for that business line right now.

Okay, perfect and one quick follow up just a housekeeping item on.

[Analyst] (Guggenheim Partners): Okay. Perfect. And just one quick follow-up, just a housekeeping item on kind of the to-do for the rest of the year, the raise in the utilities guidance. The earnings contributions there is mostly going to be driven by rate cases and reinvestment. Is that correct?

Constantine Lednev: Okay. Perfect. And just one quick follow-up, just a housekeeping item on kind of the to-do for the rest of the year, the raise in the utilities guidance. The earnings contributions there is mostly going to be driven by rate cases and reinvestment. Is that correct?

The to go for the rest of the year the.

Rain in the utilities guidance.

The earnings contributions there is mostly going to be driven by rate cases, and reinvestment that I have is that correct.

That's correct that's correct.

Jerry Norcia: That's correct.

Peter Oleksiak: That is correct.

[Analyst] (Guggenheim Partners): Okay. Perfect. That's it for me. Thanks.

Constantine Lednev: Okay. Perfect. That's it for me. Thanks.

Okay perfect.

Okay, great. Thanks.

Thank you.

Operator: Thank you. We will now take our next question. It comes from Michael Weinstein from Credit Suisse. Please go ahead. Your line is open. Michael.

We will now take our next question comes from Michael Weinstein from Credit Suisse. Please go ahead. Your line is open.

Jerry Norcia: Morning, Michael.

Operator: Your line is now open.

[Analyst] (Credit Suisse): Oh, sorry about that. I was on mute. Hey, congratulations to both Jerrys.

Michael Weinstein: Oh, sorry about that. I was on mute. Hey, congratulations to both Jerrys.

Jerry Norcia: Thank you, Michael.

Peter Oleksiak: Thank you.

Gerard Anderson: Thank you.

[Analyst] (Credit Suisse): Yep. First question I had is about the delays in other pipelines throughout the country, such as Atlantic Coast Pipeline, Mountain Valley Pipeline. I'm wondering if that's what kind of opportunities that may be giving you guys for long-term contracts at Nexus, if any. Are you seeing any difference there?

Michael Weinstein: Yep. First question I had is about the delays in other pipelines throughout the country, such as Atlantic Coast Pipeline, Mountain Valley Pipeline. I'm wondering if that's what kind of opportunities that may be giving you guys for long-term contracts at Nexus, if any. Are you seeing any difference there?

Jerry Norcia: We're starting to feel that, for sure. I mean, with these projects being delayed and uncertainty developing in those projects, certainly, there's a lot more interest in some of our pipeline platforms to move the growing Appalachian Basin. Just to give you a feel for it, the basin grew about 13% year-over-year from a production volume perspective. So we're still of the view that this basin goes short pipe capacity over the next year or two, and that's going to play, in our opinion, very favorably into how our assets are positioned to take advantage of that, especially Nexus.

[Analyst] (Credit Suisse): Right. And also, the company has a history with the fuel cell industry a long time ago. I'm just wondering if there's any potential opportunity at P&I to maybe pursue that once again at some point in the future as the technology starts to improve.

Michael Weinstein: Right. And also, the company has a history with the fuel cell industry a long time ago. I'm just wondering if there's any potential opportunity at P&I to maybe pursue that once again at some point in the future as the technology starts to improve.

Jerry Norcia: We haven't looked at that lately. I mean, we're really focused on cogeneration and renewable natural gas. Those are our two primary business lines, but we have not looked at that in some time.

[Analyst] (Credit Suisse): Okay. All right. Thank you very much.

Michael Weinstein: Okay. All right. Thank you very much.

Operator: Thank you. We will now take our next question from Andrew Weisel from Scotia Howard Weil. Please go ahead. Your line is open.

Andrew Weisel: Hey. Good morning, everyone. And again, just want to echo congratulations to both Jerrys, outstanding work, and looking forward to the next chapter.

Jerry Norcia: Thank you, Andrew. Thank you, sir.

Jerry Norcia: Thank you, Andrew.

Peter Oleksiak: Thank you, sir.

Andrew Weisel: My first question is on the wind farm acquisitions. You gave the IRP out in March and talked about the plans to grow your renewables. My question is, does this change simply the timing as far as accelerating when the wind capacity will grow, or would this be more incremental renewables in the mix? And might that impact the timing of coal plant retirements?

Jerry Norcia: Well, the renewable parks that we're acquiring and building out are part of our plan and included in our current forecast, and I think that's really it. Does that answer your question?

Andrew Weisel: Yeah, I guess. So in other words, this doesn't change the outlook for the mix. It just gives better visibility. Is that a fair way to put it?

Jerry Norcia: Yeah. And Andrew, we had filed this some time ago as part of our renewables buildout program to meet the 2016 energy legislation goals of being at 15% by 2021. So this 455MW accomplishes that, plus also gives us the opportunity to sell into the voluntary renewables markets.

Peter Oleksiak: Yeah. And Andrew, this is Peter. Just to further add to Jerry, at EEI, we mentioned we had targeted 600 megawatts of voluntary renewable. So this helps support that as well as our compliance with our state plan.

Andrew Weisel: All right. Great. That's what I thought. Then my other question on midstream. You briefly talked about the Appalachian gas production. Recently, though, the activity has really been moving down with the commodity. The rig count is down about 25% or so since April and probably continuing the fall. Does this change your outlook at all as far as activity in the basin or utilization of your system?

Jerry Norcia: We watch activity in and around our pipelines very closely, producer activity, that is. And what the producers said they were going to do this year, they are doing in terms of drilling and connecting wells to our system. So we're seeing volumes right on top of our forecast. Actually, that also plays well into next year as they drill wells this year also feeds our growth for next year. So we're seeing them do what they said they're going to do. I think the one thing we are seeing is more companies coming forward and looking to sell some of their midstream assets, which I think will make it pretty interesting for us going forward to look at some of those. So we feel real good about where we sit right now.

Jerry Norcia: Now, I did mention that the basin grew about 13% year-over-year in terms of production volumes. We're forecasting about a 5% to 6% growth rate going forward. So we are forecasting what we would call a slight slowdown, but that's built into our forward-looking view for this business line.

Now, I did mention that the basin grew about 13% year-over-year in terms of production volumes. We're forecasting about a 5% to 6% growth rate going forward. So we are forecasting what we would call a slight slowdown, but that's built into our forward-looking view for this business line.

Andrew Weisel: Okay. Very good. And then lastly, you did just mention some midstream M&A. We've seen some activity recently. With the assets that have passed, were there any specific characteristics you didn't like, or is it more a function of price discipline?

Jerry Norcia: We look at assets that, one, create value for us, obviously, and secondly, that are either early or mid-cycle growth. We don't like buying assets that are very mature and don't provide us with upside opportunity. And then we also look at the resource base. That's the third thing we look at, if they're gathering-related type assets. And we do a pretty hard scrub on the resource base because that's really what drives the opportunity for growth and value in the future. So that's the criteria that we use. So if we pass on assets, it likely doesn't meet one of those three criteria.

Andrew Weisel: Thank you very much.

Operator: Thank you. We will now take our next question from David Fishman from Goldman Sachs. Please go ahead. Your line is open.

[Analyst] (Goldman Sachs): Hi. And congrats to both Jerrys again.

David Fishman: Hi. And congrats to both Jerrys again.

Jerry Norcia: Thank you, David.

[Analyst] (Goldman Sachs): So just kind of continuing on that theme, I think you did a good job of outlining those three points. But when you think about adding value for your system, do you usually focus more on opportunities that would connect to an existing portfolio and kind of smaller bolt-on, or is this really going to be more just opportunistic for somewhere that you see growth kind of in the future? So if I'm thinking about Generation Pipeline or GSB, those have the potential to connect to your system and grow from there.

David Fishman: So just kind of continuing on that theme, I think you did a good job of outlining those three points. But when you think about adding value for your system, do you usually focus more on opportunities that would connect to an existing portfolio and kind of smaller bolt-on, or is this really going to be more just opportunistic for somewhere that you see growth kind of in the future? So if I'm thinking about Generation Pipeline or GSB, those have the potential to connect to your system and grow from there.

Jerry Norcia: All of our growth in this business line has been in the Great Lakes region, so we'll continue. That'll be our primary focus, to continue focusing on the Great Lakes region. If an asset opportunity did present itself outside of the region that we understood how it would create value, we would be open to that, but our primary focus is in the Great Lakes region.

[Analyst] (Goldman Sachs): Okay. That makes sense. And then just one quick follow-up on the regulated guidance. I know you mentioned very favorable weather in July so far. Have you guys gotten a bit of a sense of what the storm impact might look like over the past weekend? And just curious if you guys have insurance or how you think about some of the levers there.

David Fishman: Okay. That makes sense. And then just one quick follow-up on the regulated guidance. I know you mentioned very favorable weather in July so far. Have you guys gotten a bit of a sense of what the storm impact might look like over the past weekend? And just curious if you guys have insurance or how you think about some of the levers there.

Jerry Norcia: So these kind of storms usually come with really, really hot weather, and I can tell you that the hot weather far outstrips the expense for this storm. So we're net ahead, and that's why we feel comfortable that we're actually building contingency in the electric business line, even with the guidance raise. And the answer on insurance is, no, we don't carry insurance for storms.

[Analyst] (Goldman Sachs): Okay. That makes sense. And then one last question, just on cogeneration and kind of how you think about the opportunity set there and how maybe from our standpoint, we should think about where the opportunities might lie. Is this something where you'd contract with more newer facilities or those going through kind of transformative investment plans, kind of like Ford Dearborn put out a 10-year plan? Stelco, they have two facilities, but naturally, you went with kind of the newer one. As we just think about the new exposure to the Toledo corridor, should we be looking for new facilities specifically as potential opportunity sets?

David Fishman: Okay. That makes sense. And then one last question, just on cogeneration and kind of how you think about the opportunity set there and how maybe from our standpoint, we should think about where the opportunities might lie. Is this something where you'd contract with more newer facilities or those going through kind of transformative investment plans, kind of like Ford Dearborn put out a 10-year plan? Stelco, they have two facilities, but naturally, you went with kind of the newer one. As we just think about the new exposure to the Toledo corridor, should we be looking for new facilities specifically as potential opportunity sets?

Jerry Norcia: Yeah. So the criteria that we use is, of course, we examine the site that we're investing against and the business that we're investing against very carefully. So we look at the long-term viability and prosperity of the site that we're going to invest against as a cogeneration investor. And so that analysis is something that we do in a great level of detail. And once we get comfortable with that, then it's really about negotiating a return that is more attractive than our utility returns before we deploy capital. So that's how we look at those types of investments. So the site and the business on the site is really important. In terms of the Toledo corridor, we are seeing a lot of action, but mostly combined cycle plants that are building up in and around the Nexus pipeline.

Oh, so that's how we look at those types of investments of the site.

In the business on a site is really important in terms of Toledo Court are we're seeing a lot of action, mostly a combined cycle.

Plants that are a building up in and around the Nexus pipeline.

Jerry Norcia: So we're excited about that, and we're actively pursuing connecting some of those assets to the Nexus pipeline. So that's what we're seeing in the Ohio corridor that we can most influence, results in.

So we're excited about that, and we're actively pursuing connecting some of those assets to the Nexus pipeline. So that's what we're seeing in the Ohio corridor that we can most influence, results in.

So we're excited about that and we're actively pursuing a connecting some of those those assets, but an x. is pipeline.

So that's what we're seeing and that any Ohio, a court order that were most.

That we could most influence results and.

[Analyst] (Goldman Sachs): Okay. That's a very helpful color. Thank you.

David Fishman: Okay. That's a very helpful color. Thank you.

Okay, that's very helpful color.

Thank you.

Operator: Thank you. Our next question comes from Greg Orrill from UBS. Please go ahead. Your line is open.

Our next question comes from Greg all around from you.

Please go ahead.

Yeah, Thank you and congratulations.

[Analyst] (UBS): Yes. Thank you and congratulations.

Gregg Orrill: Yes. Thank you and congratulations.

Jerry Norcia: Thank you, Greg.

Thank you Greg.

[Analyst] (UBS): So just to maybe reconfirm on the origination goal at the P&I business of $50 million a year, you said you had reached it.

Gregg Orrill: So just to maybe reconfirm on the origination goal at the P&I business of $50 million a year, you said you had reached it.

So the the 15 just to.

Maybe reconfirm on the origination goal that business of 50 million a year.

You said you <unk>.

Jerry Norcia: 15.

[Analyst] (UBS): Sorry?

Gregg Orrill: Sorry?

Sorry.

Jerry Norcia: I'm sorry. I just said it's $15 million a year. That's correct.

I'm, sorry, I I, just said it $15 million a year that's correct.

[Analyst] (UBS): Okay. And you reached the goal for 19, is what you were saying?

Gregg Orrill: Okay. And you reached the goal for 19, is what you were saying?

Okay and you reach the goal for 19 is what you were saying.

Jerry Norcia: That's correct. We feel, actually, we may have exceeded it somewhat as well with the five projects.

That's correct, we feel actually we may have exceeded it somewhat as well.

Okay, what the heck.

Five projects.

How much do you think of a project is contributes.

[Analyst] (UBS): How much do you think a project contributes?

Gregg Orrill: How much do you think a project contributes?

We really don't you know disclose how much each project contributes but I can tell you that the.

Jerry Norcia: We really don't disclose how much each project contributes, but I can tell you that the five projects that we're talking about will generate about $200 million of capital investment, and that those returns are in excess of our utility returns. So that might give you a feel for what kind of income is being generated.

You know, where we there by projects that we're talking about will generate about $200 million of capital investment and that those returns are in excess of our.

Utility return so that might give you a feel.

For what kind of income as being generated.

Yes. Thank you.

[Analyst] (UBS): Yes. Thank you.

Gregg Orrill: Yes. Thank you.

Operator: Thank you. Our next question comes from Paul Patterson from Glenrock Associates. Please go ahead. Your line is open.

Thank you.

Our next question comes from Paul Patterson from Glenrock Associates. Please go ahead. Your line is open.

[Analyst] (Glenrock Associates): Congratulations, guys.

Paul Patterson: Congratulations, guys.

Congratulations guys.

Jerry Norcia: Thank you, Paul.

Thank you Paul.

[Analyst] (Glenrock Associates): It's been quite a road, and, well, congratulations. I guess the question I sort of have for you is I noticed there was a special inspection for Fermi, and I think we're going to get a report in 30 days or something like that.

Paul Patterson: It's been quite a road, and, well, congratulations. I guess the question I sort of have for you is I noticed there was a special inspection for Fermi, and I think we're going to get a report in 30 days or something like that.

HM.

Sinclair Road and Ah well congratulations.

And I guess the question Nice would have for you is I knew there was a special inspection for for me.

And I think we're going to get a report like in 30 days or something like that.

Jerry Norcia: Yes.

Oh, yes.

[Analyst] (Glenrock Associates): But I was just sort of wondering, sort of given how nuclear economics are challenged around the country, and, of course, this special inspection just made me think generically, what is the long-term plan for Fermi, and are there any opportunities maybe to replace it, or just how are you guys thinking about that?

Paul Patterson: But I was just sort of wondering, sort of given how nuclear economics are challenged around the country, and, of course, this special inspection just made me think generically, what is the long-term plan for Fermi, and are there any opportunities maybe to replace it, or just how are you guys thinking about that?

But I just sort of wondering sort of given how nuclear economics or are challenged around the country and.

And of course, the special inspection just made me think generically what is the long term plan for for me are there any opportunities maybe to.

To replace its.

Or just how are you guys thinking about that.

Jerry Norcia: Well, Paul, that's a great question. We view Fermi in a very positive light, and let me explain why. One, it is a regulated asset, so we don't operate in a merchant market where everything trades towards variable cost. And the price that we can produce carbon-free energy from that plant, and the amount of power that we can produce in a carbon-free way, I don't think any other renewable resource can touch it. So I feel like it's a bit of a jewel in terms of our future and provides us great options into the future to produce highly economic and carbon-free power. So we see a long future for Fermi.

[noise] <unk> Oh, that's a great question I you know, we view Fermi in a very positive light and let me explain why.

One it is a regulated assets. So we don't operate in the merchant market, where everything trades towards variable costs and the price that we can produce carbon free energy from that plant and the amount of power that we can produce from a in a carbon free way.

I don't think any other renewable resource can touch it so I I feel like it's a it's a bit of a jewel in terms of our future and provides us great options into the future to produce highly economic and carbon free power. So we see a long future affirming.

Okay, and I think the tourists issue that you referred to as a you know something thats existed at the plant for 30 years, we've managed it well with the what the regulator and we're working with the regulator to to move that issue to a a good conclusion and of course as you know, we'll always do the right thing on a nuclear plant.

Jerry Norcia: I think the Taurus issue that you referred to as something that's existed at the plant for 30 years, we've managed it well with the regulator, and we're working with the regulator to move that issue to a good conclusion. Of course, as you know, we'll always do the right thing at a nuclear plant.

I think the Taurus issue that you referred to as something that's existed at the plant for 30 years, we've managed it well with the regulator, and we're working with the regulator to move that issue to a good conclusion. Of course, as you know, we'll always do the right thing at a nuclear plant.

[Analyst] (Glenrock Associates): Yes. Once again, congratulations.

Paul Patterson: Yes. Once again, congratulations.

Yes.

And once again congratulations.

Jerry Norcia: Thank you.

Thank you.

Operator: Thank you. As there are no further questions in the phone queue at this time, I would like to hand the call back over to you, Mr. Norcia, for any additional or closing remarks.

As there are no further questions in the phone queue.

I would like to hand, the call back over to you Mr. North Sea for any additional or closing remarks.

Jerry Norcia: Well, thank you, Christian. And with that, I'll wrap up by thanking everyone for joining the call. We've had a great first half of the year as evidenced by our increased guidance, and I feel really good about the position we are in to continue our solid track record of delivering premium results. I look forward to providing you with updates as we move through the year. Thanks again for joining us. We appreciate the questions, and we'll talk to you all soon. Have a great day.

Thank you Christian and with that I'll wrap up by thanking everyone for joining the call. We've had a great first half of the year as evidenced by our increased guidance and I feel really good about the position. We are in to continue our solid track record of delivering premium results.

I look forward to providing you with updates as we move through the year. Thanks again for joining US. We appreciate the questions and we'll talk to you all soon.

Good day.

Yes. It does conclude today's conference. Thank you all for your participation you may now disconnect.

Operator: This will conclude today's conference. Thank you all for your participation. You may now disconnect.

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