Good day. And welcome to the Q2 2019 Earnings Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Barbara Tuckfield. Please go ahead.

Thank you, Christian, and good morning everyone. Before we get started, I would like to remind everyone to read the Safe Harbor statement on page 2 of the presentation, including the reference to forward-looking statements. Our presentation also includes references to operating earnings, which is a non-GAAP financial measure. Please refer to the reconciliation of GAAP earnings to operating earnings provided in the appendix of today's presentation. With us this morning are Gerry Anderson, Executive Chairman; Jerry Norcia, President and CEO; and Peter Oleksiak, Senior Vice President and CFO. We also have members of our management team to call on during the Q&A. And now, I'll turn it over to Gerry Anderson to start our call.

Well, thank you, Barb, and good morning, everyone. So I think you're all aware that I turned over the CEO role to Jerry Norcia effective July 1st. So I have long believed that one of the most important responsibilities that I had as CEO was to at some point hand off the job to a great successor at the right time. And I'm fully confident that I'm doing that. And one of the characteristics of strong healthy companies is that they execute seamless leadership transitions, transitions that don't involve a lot of drama or sharp shifts in strategy. We've been preparing for this transition for years literally, almost since the day I took over. And back in December of 2018, I told the Board that July 1st of this year felt right to me. So it's been a real honor to be DTE's CEO for the last nine years. I'm extremely proud of what the company accomplished for you during my tenure, but DTE now has a great new CEO, and I am confident that he will do great work for you and continue our pattern of outperformance. Jerry and I have worked closely together for more than 15 years. He is a great business leader. He also has a big heart for the people of DTE and for the communities we serve. He brings great experience to the role. He led our Gas Storage & Pipeline business as its President. And then was President of our gas utility, our electric utility and then eventually played the role of President and COO of DTE. He is a strong businessman. I think those of you who have met him know that. He also has the right values to lead this company. And so the CEO role will be in good hands…

Well, thanks, Gerry, and good morning everyone. I'm very grateful for the confidence that Gerry and the Board have in me to lead this company through what I believe is such an exciting and transformative time in the energy industry. DTE's top priorities remain the same to be a great energy company, committed to foster a world-class employee engagement culture, to drive customer service excellence, to be a force for good in our communities, and to deliver distinctive shareholder returns. Also, I want to thank Gerry for his mentorship and support since I joined DTE Energy. In his tenure, leading DTE, Gerry led the transformation of our culture, drove a highly successful growth agenda and put us on a path to reduce carbon emissions more than 80%, and a way that also supports customer liability and affordability. He readied DTE for long-term success, and I look forward to building on a strong foundation that he set. I'm very optimistic and excited about the future of DTE, because of our best-in-class team of employees as well as the historic opportunity to reinvent the way we produce and deliver energy for our customers. I am honored to be leading this great family we 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…

Thanks, Jerry, and good morning, everyone. Before I get into financials, as you know, I would like to give an update on the Detroit Tigers. At this point in our rebuild process, the eye is definitely on the future in the farm system. At this one point, Casey Mize was our number one pick last year to pitch a no-hitter this year in the minors. So the present is currently dark, but the future is looking bright. And the financials are consistently bright here at DTE, let me turn your attention to the financial results, now 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. 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 cost, offset by the impact of new rates implemented in May. DTE Gas at second quarter 2019, operating earnings of $4 million and 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. And 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. Operating earnings for our GSP segment…

Thank you, sir. [Operator Instructions] Okay. We will now take our first question from Praful Mehta from Citigroup. Please go ahead. Your line is…

Thanks so much. Hi guys.

Good morning

Good morning and congratulations, Jerry.

Thank you very much, Praful.

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 Q2 2018, you highlighted weather and rate based growth costs. Could you clarify a little bit exactly how much was weather, and what exactly is rate based growth cost and what was the impact of that part of it?

Yeah. The weather availability that we have in the appendix as well the actual amount. We did have a cooler, its $44 million for the quarter. So, it's been relatively significant from a weather perspective. We had a hot weather last year and the second quarter; first part of June was actually relatively cold for us. So, a good portion of that decline that you're seeing there is weather related. Now the term rate based related cost 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.

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 of that benefit is a part of like the $0.05 increase that you had for the 2019 guidance?

Yeah, we can't really -- I can't really give exactly the number yet for July, but I can tell you that July is one of the hotter July's we've had here in recent history. So I'd say a good portion of that as it relates to that. Now we did hold back some of that weather favorability here in July. Some of those is for the storm that we've experienced, Jerry mentioned that we do traditionally give back a portion and when we have the extreme weather we had in July, two storms. 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 that projects.

Yeah. One of the things I'll add is that the contingency 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 contingency 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 2019 and 2021?

Well, we did mention and we wanted the $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 at EEI for our plan for next year. And let you know, 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 and we do hope contingency, we don't need that contingency to be at the lower end of the range, but we'll give a fuller update here in the fall.

Got it. Very helpful, thank you guys.

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

Good morning, Shar.

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 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 billion to $5 billion over the course of the plan and just curious to see how kind of with the current acquisitions and the expansion that's going?

Sure. So we mentioned the four organic investments that were -- 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 bolt-on 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 aligning up growth quite nicely for that platform over the next two years. We are looking at acquisitions, we always do. The market has actually become -- 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 toward our drill bit. We're starting to see opportunities 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.

Okay, perfect. And just one quick follow-up, just a housekeeping item on the -- to go 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?

That's correct.

Okay, perfect. Perfect, thanks.

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

Good morning, Michael.

Your line is now open.

Sorry about that, I was on mute. Hey congratulations to both Jerry’s.

Thank you, Michael.

Thank you.

And first question I had is about the delays in other pipelines throughout the country, such as you know Atlantic Coast Pipeline, non-volatile pipeline. I am wondering if that's -- what opportunities that may be giving you guys for long-term contracts at NEXUS, if any, are you seeing any difference there?

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

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

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

Okay. Thank you very much.

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

Hey, good morning, everyone. And again, just want to echo congratulations to both Jerry's outstanding work and looking forward to the next chapter.

Thank you, Andrew.

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 -- impact the timing of coal plant retirements.

Well the renewables that we -- 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?

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 say?

Yeah. We had filed this some time ago as part of our renewables build-out program to meet the 2016 energy legislation goals would be in at 15% by 2021. So this 455 MW accomplishes that plus also gives us the opportunity to sell into the voluntary renewables markets.

And Andrew, this is Peter. Just to further add to Jerry. At EEI, we mentioned, we had 600 MW of voluntary renewable, so this help support that as well as our compliance with our state, state plan.

All right, great. As good as that. Then my other question on midstream, you briefly talked about the Appalachian gross -- gas production recently though the activity has really been moving down with the commodity. The rig count is down about 20% or so since April and probably continuing to fall. Does this change your outlook at all as far as activity in the basin or utilization of your system?

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 the 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 really good about where we sit right now. And 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.

Okay, very good. And lastly, you just mentioned some midstream M&A, we've seen some activity recently with the assets that have passed out. Were there any specific characteristics you didn't like or is it more a function of price discipline?

We look at assets that won great 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 they will provide us with upside opportunity. And then we also look at the resource base, that's the third thing we look at it there, gathering related type assets. And we do a pretty hard scrub on 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, that likely doesn't meet one of those three criterias.

Thank you very much.

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

Hi, congrats to both Jerrys again.

Thank you, David.

So just kind of continuing on that theme, I think you did a good job of outlining those three points. But do you guys, when you think about adding value for your system, does this -- 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 I'm thinking about Generation Pipeline or FTG those have the potential to connect your system and grow from there?

All of our growth in this business line has been in the Great Lakes region. So we'll continue that will be our primary focus, that continue focusing on the Great Lakes region. If an asset opportunity represent itself outside of the region that we understood, or would create value, we would be open to that, but our primary focus is in the Great Lakes region.

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 leverage there?

So, these kind of storms usually come with a 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.

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

Yes, so the criteria that we use is, of course we examine the site that we're investing against in 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. And so that's how we look at those types of investments of the site and the business on a site is really important. In terms of the Toledo corridor, we are seeing a lot of action, mostly combined cycle plants that are building up in and around the NEXUS pipeline. So, we're excited about that and we're actively pursuing, connecting some of those assets for the NEXUS pipeline. So, that's what we're seeing in that -- in the Ohio corridor that we are most -- that we can most influence results there.

Okay, that's very helpful color. Thank you.

Thank you. Our next question comes from Gregg Orrill from UBS. Please go ahead, your line is open.

Yes, thank you and congratulations.

Thank you, Gregg.

So, the 50 -- just to maybe reconfirm on the origination goal at the P&I business of $50 million a year, you said--

It's 15.

Sorry.

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

Okay and you reached the goal for 2019, is that what you were saying?

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

Okay. Thank you.

With the pilot projects.

How much do you think a project is contribute?

We really don't disclose how much each project contributes. But I can tell you that the -- where we that -- 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.

Yes, thank you.

Thank you. Our next question comes from Paul Patterson from Glenrock Associates. Please go ahead, your line is open.

Congratulations guys.

Thank you, Paul.

It's been quite a road and well congratulations. And I guess the question I have for you is and this is a special inspection for Fermi, and I think we're going to get a report like in 30 days or something like that.

Yes.

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

Well, Paul, it's a great question. I -- 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 the merchant market where everything trades toward variable cost. And the price that we can produce carbon-free energy from that plant and the amount of power that we can produce from in a carbon-free way. I don't think any other renewable resource can touch it. So I feel like it's is a bit of a jewel in terms of our future and provides us great options in the future to produce highly economic and carbon-free power. So, we see a long future for Fermi

Okay.

And then I think the issue that you referred to as a 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. And of course as you know, we will always do the right thing at a nuclear plant.

Yes. Once again, congratulations.

Thank you.

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.

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.

This concludes today’s call. Thank you for your participation. You may now disconnect.