Good day and welcome to the DTE Energy Hosted Year End 2013 Earnings Release Conference Call. Today's conference is being recorded. (Operator Instructions) At this time, I would like to turn the conference over to Anastasia Minor. Please go ahead.

Thank you, Nova, and good morning everyone. Happy Valentine's Day. Welcome to our 2013 year-end earnings call. Before we get started, I would like to remind you to read the Safe Harbor statement on Page 2, including the referenced forward-looking statements. Our presentation also includes reference to operating earnings, which is the non-GAAP financial measure. Please refer to the reconciliation of GAAP net income to operating earnings provided in the appendix of today's presentation. With us this morning, are Gerry Anderson, our Chairman and CEO and Peter Oleksiak, our Senior Vice President of Finance and CFO. We also have members of our management team with us to call on during the Q&A Session. With that, I would like to turn it over Gerry to start our call this morning.

Thanks, Anastasia, and good morning, everybody. Thanks for being with us, particularly those of you in the East, who may have had to fight your way through weather, to find your way to home. We are going to take you through an agenda today that's shown on Slide 4. I am going to start with a look back on our accomplishments this past year. Then I will turn and look forward to some of our growth and investment opportunities and I think we have some interesting updates for you there today. Now, I will turn it over to Peter Oleksiak, who will give you a financial update.

Let me start with the look back and I am going to frame my look back on 2013 in the context of our company's system of six priorities, which is shown on Slide 5. I have discussed this system of priorities with all of you before. This is how we run the company. The concept is pretty simple. We are very focused at the company on employee engagement. We measure it and the notion is that if we can get people to bring a high degree of energy and focus to what we do and we can frame that energy and focus on producing great outcomes for our customers, frame it using our continuous improvement, skills to control our costs and then growing the company. If we do those three things really well, we have a much better chance of having a constructive political and regulatory context, because our politicians and regulators care about how we treat our customers, how we manage our costs and whether we are able to tie our growth into the economic development activities of the state, and if we can combine a strong political and regulatory context with healthy growth, we produce good sustainable outcomes for you. I certainly have learned over the past five years that if we are going to deliver you sustainable, strong financial results and do that consistently, then we need to bring intense focus to the priorities that are upstream or to the left of the financial performance shown on this page, so how we do against these priorities in 2013? Moving onto Slide 6, I said we start with engagement, use gallop to measure their pores. They do it all over the globe and we have the highest engagement measurement in the company's history. We moved from the 78th…

Thanks Gerry. Good morning, everyone. Before I get into the financial results, I'd like to give a shot of the date meter. I didn't do the exact count but this is the first call without Dave for over 15 years. Dave's not gone too far and many of you will see him on the road since we haven't been slated for several our investor conferences and business through 2014. Moving to the financial update, I would like to start with Slide 20 and the year-end earnings result. For 2013, DTE Energy's operating earnings are $4.09 per share. DTE Electric earned $2.76 per share and DTE Gas earned $0.80 per share. For the non-utility businesses, the Gas Storage and Pipelines and Power and Industrial Projects segments each earned $0.40 per share and Energy Trading finished the year with $0.02 per share loss. Finally, corporate and other incurred a loss of $0.25 per share. Let's move to Slide 21 and the summary of the year-over-year performance by segment. DTE Electrics earnings were $1 million higher in 2013 than 2012. For this segment, we saw an increase in earnings due to lower benefit expense, resulting from the planned design changes we implemented in the fourth quarter of 2012, and the first quarter of 2013. We also saw growth in our underlying electric service territory contributing to earnings in 2013. Temperature normalized, sales are 2% higher than last year, driven by growth in each of our customer classes. These improvements in earnings over last year were offset by return to normal weather and higher storm expense. If you recall, in 2012, DTE Electric saw $45 million of earnings capability due to weather. The higher year-over-year storm expenses were driven by two incremental catastrophic storms occurring in the fourth quarter. Our strong financial performance was…

Thank you. (Operator Instructions) We'll take our first question from Jonathan Arnold with Deutsche Bank.

Good morning, guys. I apologize if you just went over this. I thought you pulled off for a second when you were on the topic. On the way you are going to present the trading business going forward is this exclusion of mark-to-market on these particular contracts going to be a feature of how you present your numbers in the future or is that some kind of a sort of materiality threshold that will govern that?

Jonathan, yes. This is how we will be presenting it in the future. As we move more to these physical type of deals, derivative accounting treatments will be occurring on these type of deals, so you will see this going forward.

It may not be as material, Jonathan, we don’t expect to get this sort of weather every year.

Absolutely this is how you will do it going forward and the difference in the annual guidance is basically because some of the reversal occurs in 2015?

Well, a couple of things. This is how we will do it, because it's frankly kind of silly to have a fully hedged transaction produce a big down and a big up or you could have a flip through a big up and big down and none of it means anything, so from an accounting perspective which is a lot clear to do it this way. In terms of the earnings level, I think what Peter was saying is, I think we had a modest loss in trading last year. We look at our earnings goals for this year. We can fully achieve that with our asset based businesses, our guidance is based on that. The growth of our asset based businesses. Frankly in the future, we would like to keep the guidance for our trading modest. What we expect to earn profits from the business over time, but I think you all could just look at those as additive cash flow to what we are doing in the other business.

Thanks Gerry. Then just on the Gas Pipeline and Storage business, you talked a lot about incremental opportunities. Are you still in the sort of mode of you like the things in front of you and you want to see those on a standalone basis or is the dynamic in that business sort of increasingly - does it make it more interesting to try and look for other partnership with somebody we could step up scale of what you're doing there?

We always have been open to partnerships that were a good strategic fit, so I won't say that we are not open to or interested in that. We would be, but the current pace and level of activity around Millennium, Bluestone and our gathering in Pennsylvania and the degree of interest, the intensified interest in Nexus adds plenty in front of our team right now to execute put in place, so they are feeling a need for it to grow the business the way we talked about.

Thank you.

We'll take our next question from Andrew Weisel with Macquarie Capital.

Thanks. Good morning, everyone. First is an easy one. Am I reading it correctly that the guidance for '14 Gas does not reflect any of the weather that we have seen year-to-date?

We have not reflected any of the early year weather in our guidance. Weather can change as you move through the year across both, the electric and the gas utilities. Obviously, it's been a positive for both our gas and electric business to start the year, but we'll just watch that as the year goes on. It gives us a strong starting point and will help us offset any bumps we run into if we do.

Okay. Great. Next question on the Storage and Pipelines business. You sound more enthusiastic, it sounds like you have got this new third expansion to Millennium and the enthusiasm from Southwestern and the LDC seem higher than what you have talked about in the past. My question is, when you showed the five-year outlook to 2018, there's no change, so at the very least, why haven't you moved some of the white box down into the more specific project contributions and what would it take to make you increases those targets?

Well, that's a good question and I think really, we evaluate that. We haven't evaluated the mix in the past month, I'd say. As some of these things become firm, so we pull an expansion in that wasn't part of the mix previously and it becomes firm or Nexus just becomes that much clear. I think you will see us shifting the mix of to-be-determined and what we think we have locked down, but you're right, we haven't changed that since we showed it to you a few months ago. You are also right that the tenure and the feel of things have changed over the past few months. I've always said that the Gas Storage and Pipeline business, the nature of the conversations can flip on you in a hurry and people can go from, well, that's interesting, and let's talk about it too. Why can't you give me that tomorrow, and it can happen in the course of month or two, and the reason that it happens is that those companies are evaluating their capital investment plans, their strategic interests and they are evaluating the marketplace. The combination of people thinking about their strategies at year end and the incredible strain on the gas pipeline system that emerged late last year and early this year has made an awful lot of people in the industry sit up and realize that we are going to need a lot of new assets to get all this gas to market. That combined with the strength of the Utica Shale, when we are talking about Nexus, and just incredible price blow out in the Northeast when we are talking about Millennium, has got people anxious to move.

Okay. Great, and did I hear you say that in addition to the obvious demand side interest, the producers seem happier with what they are seeing in terms of results than what they had said in the past? Is that – did I hear you right?

Utica in particular, I think the results in the Susquehanna County and Pennsylvania are well-known as continuing to be very strong. Southwestern is the best spokesperson for that and it's really them and other producers who are drilling the wells, but they continue to have very good results. In the Utica, yes, I think we do continue to see strong, bullish, whatever you want to call it, results and here producers are talking about the scale of what is going to happen there and the scale is large and it will be constrained by infrastructure to get the gas to market, so they are now transitioning from evaluating the resource to believing that and now they got to get it to market. The other thing you hear them thinking about is, what market and they are clearly places that take it that are better than others. A lot of it's been taken south to this point, but the basis to Michigan and Ontario if you watched in the recent year was strong, and those are growing markets. Demand for gas in Ontario is growing same is true in Michigan, particularly as we transition our generation fleet. Then our Vector Pipeline reaches into Chicago, Wisconsin and so forth, I think there is a lot of interest in reaching those markets with Utica gas.

Very good. Then one last one if I can. When I compare the 2013 actual CapEx of the utilities versus the guidance that you had put out most recently it was a little bit light by about $140 million. Just wondering is that a timing issue? Is there anything in terms of cost savings that you've identified from the capital side and how does that tie in? Is that the reason that you were able to offset the equity mid-this year?

This is Peter. The reduction actually is a combination of continuous improvement in our environmental capital spend as well as timing related to that. And I'd say that plus our strength in the operating cash flow actually is really a key enabler and us be able to take the equity issuance down to zero.

We had cash flow strength in a lot of fronts this past year when you looked at it and that became clear as last year played out that the need for equity this year was going to go away, so the $300 million or so that we had planned we just took off the table and we will be able to keep our credit metrics right where we want them without issuing.

Perfect. Thank you.

We'll take our next question from Steven Fleishman with Wolfe Research.

Hi, Gerry. Good morning. Just to kind of clarify Slides 15 and 16 together on Gas Storage and Pipelines. The Bluestone lateral expansion and Millennium 2 expansion, those are in the core growth and Nexus and then the kind of other gathering pipeline expansions Millennium 3, those would all be in that new project box or upside to that?

Yes. I would say that Nexus, we have talked about as being in the new project box or in that timeframe. In some of the things that we considered possible, but not yet locked in like some of these expansions that we are beginning to see come into our window, we also get some of those in the new project development. One of the things we will do for you guys is give you an update on what we think is in the locked abound portion of these and what we've received to be in new project development. Next time around, we will give you a good, clearer delineation of those things.

Okay. Then just any update on the kind of what to expect on Michigan Legislation, this year and alike on the kind of electric reforms. How do you think that process is going?

I would say a couple of things. One is that this is going to be a year, primarily for discussion of future policy. It's clear that there is a lot of thinking going on about future generation policy. I mentioned that earlier, but people also want to understand the future renewables that program is playing out in the state as of 2015 and there is diverse thinking about what the future should be. The same is true for energy efficiency, so I foresee this year principally being focused on the administration, the commission and a number of other parties trying to reach some common ground on those topics. You mentioned the choice issue. I don't think the administration or the Public Service Commission see expanded choice as a stable base to build the future of Michigan's energy infrastructure around. The Governor is pretty clear. He sees it as a free option, kind of like having the access to your fixed rate mortgage and your variable rate mortgage both, whenever you want it. It's just not reality. When you try to build an important industry around a structure that's unstable, you get bad results. I will tell you watching deregulated markets trying to deal with the stresses that emerged this year and the stresses that are coming as markets get tighter, we better watch it. Those markets are in trouble and I think an increasing number of observers believe that. I don't think Michigan has an appetite for stepping into that. For example, there's a bill that's being introduced in the House on deregulation, we see those pop up every now and then. I don't think there is serious interest in that and I don't think it'll clear.

Great. Thank you very much.

We will take our next question match Matt Tucker with KeyBanc Capital Markets.

Hi. Good morning and congrats on a nice year. First question. Could you comment on the extent to which the decision to bring the Energy Trading guidance to zero is driven by a change in market conditions versus a change in strategy that you described versus just want to be conservative by kind of pointed out of the equation?

Just go through the last year. Last year, our economic earnings at trading were $21 million, economic earnings in cash in this business – this business over the past decade has produced about $0.5 billion in cash over the past five years, about $300 million? Yes. What we find over time is the economic earnings converge with gas one-to-one. The economic earnings this past year were $21 million. The accounting earnings were minus $3 million. We have seen the environment produce fewer opportunities. If you look back over time, our economic earnings used to be larger. It's an opportunity for us when we look at the balance of the company and see it, those utilities and non-utility business is able to support very healthy EPS growth. It's an opportunity for us to take trading down to a zero level, not premise our earnings growth on it and essentially say to you, hey, if it produces some upside in the coming year, it's great. We don't intend for it to be a big piece of the picture. As I said a couple of percent, and that's kind of the way we would like to posture it heading forward.

I guess long-term then, is there a kind of a new normal earnings run rate you'd expect post-2014?

It will be over time in line with the economic earnings with the recent years have been in that $20 million range.

$20 million to $25 million.

$20 million to $25 million, but how that comes into and out of accounting varies because of the accounting rules, so, I think what we are really looking to do is take the up and down noise out of that, give you, I guess, it's right to say conservative guidance there, because we don't want your perception of our earnings hinging on that. We would like it to be focused on the utilities and our non-utility businesses if we get some earnings contribution from trading grade.

Got it. Thanks. Then just on O&M, with the utilities. In '13, you had a weather benefit at both and you kind of used that opportunity to utilize your lean and best strategy and ramp up O&M, can you just talk directionally about O&M in '14 and if you continue to see a weather benefit? Will more of that start to flow to the bottom line?

Yes. We targeted in our operating groups in our planning cycle for flat O&M, so we take the reinvestment as incremental. We take that off when we do our planning for the following year. Right now, we are planning on flat O&M. Now, having said that, for instance, we have a strong start here and the weather and we know there's a lot of the year left, but that continues on. We will take some of that and reinvest that back into our utilities. We really are focused on keeping our utilities strong for the long-term, so both utilities are in a stay-out, so I don't from a rate proceeding and we would like to take that opportunity where we can to take extra revenue and put it back into our core assets from those utilities.

Just a follow-up to that, can you quantify how much of the '13 O&M you viewed as kind of being above the base level?

Between the two utilities combined, it's now $50 million pre-tax, so it's roughly, call it around, $20 million at our Gas Utility, $30 million at the Electric Utility.

Thanks a lot guys

We will take our next question from Michael Weinstein with UBS.

Hi, guys. Could you talk about your impact of interest rates on pension expense, benefit expense? I think you had mentioned earlier that that was expected to decline in the fourth quarter and how it will affect 2014 as well?

Yes. For 2014, the pension accounts capability was roughly $15 million. We have baked that into guidance. That is; one, if you look at the DTE Electric guidance versus pre-outlook we have increased guidance and its related to the discount rate change.

Great. Just curious, the news on - the Utica play sounds very good, very positive. I think there is a lot of growth there and I am wondering if I'm wondering if at some point you might consider alternative financing structures, or if the need for equity might get - if the growth rate is so fast, so high - interest is intense will you have to consider alternative methods of financing fast growth.

We have got it modeled in our five-year plan now and it's not pressuring our equity. In fact, these businesses tend to be strong contributors to your FFO to debt. They throw off a lot of cash, so they have a – they improve your credit metrics as you build them out, as long as you do it well, but our projects in this area have been credit strengtheners in recent years. In terms of MLP, we have said pretty consistently that we don't think we have the scale right now. We haves got a lot of growth out in front of us. We don't want to be pursuing growth or get into the pursuit of growth or acquisitions to feed an MLP. They may come when we have accumulated the scale that alternative structure would make sense. I think what we see in the near-term is pursuit of what we think is a good slate of organic growth opportunities that should have that business growing at a 15% plus clip. Then, over time as we watch the scale, we'll ask the question again.

Thank you.

We will take our next question from Andy Levi with Avon Capital.

…guys. Thank you very much.

We will take our next question from Paul Patterson, Glenrock Associates.

All my questions have answered. Just the Power and Industrials, it seems that there was a little bit of a scale down on the renewal projects and the industrial ones in terms of the numbers. I know that the profitability didn't change or anything. I'm just wondering has anything changed or is that's just sort of optimization and why did they not, I guess, impact earnings or the earnings guidance?

Maybe you could clarify your question when you say there's been a scale down.

Well, it looks like the number of projects, from at least where I remember in the EEI, were a little bit higher. I think renewable was 27 now they are 25 and industrial, was 42 now I have 33?

Yeah. Slide 18, kind of lays it out, reduced emissions fuel, what we've been seeing for the last several years, it's been $60 million now we are saying $70 million and the renewable energy is at a $35 million and the renewable energy is at a $35 million target for 2018.

I know that the earnings, there's no changing in the earnings, but I just thought the projects themselves - the number of [projects] - I was suggesting there was a change in them. I just was wondering if there was anything like that.

No. There's nothing fundamental in the project accounts. If they changed it, it may be just the way they were categorized or aggregated. Anastasia is nodding her head.

That is more grouping of contracts and projects.

Nothing material there.

Okay. Then going back to the slide where we talked about the Millennium Project, the map, so to speak, is Millennium 3 in there? I mean, I'm just sort of wondering, is Millennium part of that or where would that show up?

It's in the solid.

It's in the solid, - would be $40 million.

Okay. When you talk about what's happened with respect to the increased interest because of the volatility and everything we have seen, how should we think about the potential expansion beyond that solid blue line or is there any?

When you say the solid blue, you mean the solid gold there on 16?

I guess, I'm looking at Slide 14. I'm just wondering what kind of opportunities you guys see in terms of the bottlenecks and everything that apparently are causing some concern obviously on the part of customers. You have been mentioning that why people are now more interested. I'm just wondering if that might show up.

Okay. On Millennium, I think we always thought there would be expansions, multiple expansions and those are included in the solid colors on the following slide, but I think both the pace and the potential scale of those expansions may play out to be larger than we thought and there maybe follow-on expansions that could come after that. The other thing I would say is that, the gathering around Bluestone, it's grown quickly this past year. We have made major investments there, we will again this year, but it's clear that the scale and pace of what Southwestern is pursuing there is ramping up. It's a great resource for them and we are partner for them there, so we are very focused on doing well for them and continuing to grow there. Then, Nexus, we have always said Nexus is kind of the next platform that would play out at the end of the five-year period. As I have tried to make clear, we have always felt good about it, because the fundamental seemed right to us but it has been a real strong uptick in perception from counterparties over the past couple of months.

Okay. Great. Thanks a lot.

Yes.

This concludes the question-and-answer session. I would now like to turn the call back over to Gerry Anderson for any closing remarks.

Well, I would just like to reiterate that we feel we had a really good year this past year and I come into 2014 with a high degree of confidence that we can deliver you another good year. We look forward to keeping you abreast of developments as things emerge this year. Thanks for joining us this morning. We look forward to seeing you all out on the road. Take care.