Ladies and gentlemen, thank you for standing by, and welcome to the DTE Energy First Quarter 2020 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to turn the conference over to your speaker for today, Barbara Tuckfield, Director of Investor Relations. Please go ahead.

Thank you 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 Jerry Norcia, President and CEO; and Peter Oleksiak, Senior Vice President and CFO, David Ruud, Senior Vice President and incoming CFO effective May 4. And now I'll turn it over to Jerry to start the call this morning.

Well thanks, Barb, and good morning, everyone, and thanks for joining us today. First off, I just want to say to everyone listening that I hope you and your families are healthy and safe. This is a very difficult time for everyone, and we are doing everything we can to try and help limit the pressures that all of our customers and communities are facing. I also want to thank the tireless efforts of our employees who are out there every day ensuring the community has safe and reliable service. We are holding this earnings call from separate locations as we follow our shelter-in-home guidelines. This morning, I'm going to provide details on how COVID-19 is affecting our business and what we are doing to respond to the challenges that it has presented. I'll also provide highlights on the progress of each of our business units. Then Peter will provide a review of our financials and then we'll wrap things up, before we take your questions. And I'll start on Slide 4. At the state level, a group of business leaders, medical experts and government officials have come together to develop recommendations on how to restart the Michigan economy as quickly and as safely as possible. Our executive chairman, Gerry Anderson, is the co-chair of this group that was set up by the governor. Our expectation is that the first part of May, the construction industry resumes its work and the autos and the other industrial companies start to resume operations later in May. Here at DTE, we plan to resume our construction and maintenance work. In the first part of May, I'll provide more detail on these plans a little later in the discussion. We're working very closely with state and local leaders as well as our regulators to…

Thanks, Jerry, and thanks for those kind words, and good morning, everyone. First of all, I want to thank everyone for all the congratulations and well wishes I've received from so many of you. I've been fortunate to work closely with all of you over the years and appreciate the relationships we've built together. I'd also like to thank the DTE family with whom I've had spent over 20 years and I congratulate David Ruud on his appointment to the CFO role, and I will be fully supporting him during this transition. It's a little bittersweet to be on my last DTE earnings call, but I'm excited about this new chapter in my life. Now to my last update on my Detroit Tigers. My Detroit Tigers are keeping safe like everyone else, but also contributing to the community and COVID-19 response efforts. Now I'm looking forward to the MLB draft in June, where my Tigers have the number one pick, but I'm really looking forward to is we all can return safely back to the ballpark to watch a game. Let's move on to our financial plan update on Slide 10. Total earnings for the quarter were $320 million. This translates into $1.66 per share for the quarter. And you can find a detailed breakdown of EPS by segment, including our reconciliation to GAAP reported earnings in the appendix. Let me start my review at the top of the page with our utilities. Overall, this quarter was warmer than normal and was the sixth warmest on record. DTE Electric earnings were $94 million for the quarter, which was $53 million lower than 2019, largely due to warmer weather, non-qualified benefit plan investment losses and implementation of higher depreciation rates offset by a new rate implementation. Just a quick note on…

Well, thank you, Peter, and I'll pick it back up on Slide 14. We've made a lot of progress in all of our businesses in the first quarter and I’ll be highlighting some of those successes on the next few slides. At DTE Electric, we're refilled our IRP back in March and the MPSC approved our plan, increasing our energy efficiency to 1.75% in 2020 and 2% in 2021, and filling our capacity need in 2030 for the mix of wind and solar. We filed our updated renewable plan this month. Also on the regulatory front, we expect to receive an electric rate order in early May, and through our conversations with the MPSC this rate order will not be delayed. We continue to expand our voluntary renewable program and currently we're ahead of our five-year plan we mentioned at EEI back in November of last year. In 2019, we added over 400 megawatts of voluntary renewable energy for our commercial customers and reached 10,000 residential customers who committed the voluntary renewable power. 2020 is off to a good start with General Motors subscribing an additional 250 megawatts. And we are ahead of pace of our five-year plan for voluntary renewables. We look forward to increasing our voluntary renewable base of customers and continuing to provide clean and reliable energy. Our Blue Water Energy Center, which is a 1,100 megawatt natural gas plant that we're building, is also progressing on plan. We're over 50% complete with an expected spring of 2022 in service date. It supports our carbon reduction plan by reducing our carbon emissions by 70% compared to the three coal plants that were retiring. Overall, I'm feeling confident that our Electric business will have another successful year in 2020. At DTE Gas, we received the approval from the…

Certainly. [Operator Instructions] Your first question comes from the line of Shar Pourreza with Guggenheim Partners. Your line is open.

Hey, good morning, guys.

Hey, good morning, Shar.

Good morning.

So just a couple of questions here. First, you do call out that $60 million headwind with plans to sort of offset that in Slide 7. Just what scenario from Slide 8 are you embedding in the $60 million assumption for the year? Is it the May? Is it the slow start scenario? And does sort of that $60 million offset get you to the midpoint of the 2020 guidance range assuming normal weather, obviously?

So, great question, Shar. So I'll start by saying, it does address the May start in terms of earnings impacts from sales reductions. So the $60 million just to go through it, deals with the COVID sales reduction at $30 million, the incremental costs associated with the COVID-19 pandemic. It also incorporates the results of the first quarter that were driven by weather and the trust performance as well as the durability of the non-utilities and also considers the original contingency in the plan. So that delivers the $60 million earnings pressure that we have to go and find and replace with further contingency development, as well as we're also considering further delay the other $20 million in our contingency development and potentially unfavorable weather in the summer and fall. So those are the things that we're building in addition to the $60 million. So we're going to build a response of $60 million. In addition to that, we're going to build contingency around that $60 million to address potential further degradation and sales or unfavorable weather.

Yes. And, Shar, this is Peter. I mean that the contingency build is going to be about – it’s about double that $60 million. So we understand there's uncertainty in the plan. So we’re going to be developing contingency really to cover that.

And then just the normal weather, if we assume normal weather and summer weather does return are you comfortable sort of with the midpoint of that earnings guidance?

Yes, we're comfortable with the midpoint and we're actually even building contingency beyond the $60 million, Shar, to accommodate things like cooler than normal weather or perhaps a warm fall.

Perfect. And then the detailed lean plan is targeting that $2.5 billion O&M budget. With sort of those lean actions you guys guide to on Slide 9, that's embedded in the $60 million offset. Do you need to sort of rebuild this contingency throughout the remainder of 2020? How much of it is sort of locked down and how much of that sort of O&M budget you expect to flex as one-time? Is there any of it that could be perpetual for sort of forecasting purposes? And maybe just a little bit more specificity and I guess any dollar amounts on that $2.5 billion budget you think in collects?

Well, as Peter mentioned, our target to build contingency is approximately $120 million to $130 million, which is much more than $60 million. And the reason we're doing that is to ensure that we have plenty of contingency in our $60 million go debt. And the tactics that we'll be using will be delaying additional hiring, minimizing overtime, reducing our contractor and consultant spend and really deploying our people into that work. As well as, Shar, we've developed a deferred – we've developed a bank of maintenance work over the years that we can now defer without sacrificing safety or service. We'll also be looking at other items such as reducing materials and support expense. Those are the big items and we've got a very detailed plan. I will tell you that – $3 million of contingency built.

And Shar, you've also asked about the nature of the one-time nature, how much is sustainable, right?

Right. Right.

Right now, most of these are – majority of these are going to be one-time in nature. We know we had to bridge between rate cases and we plan on filing another case in the summer. So and with the 10-month process, we know we'll get trued up on sales then. Not to say that, as we do these, as there are new efficiencies and productivity, they can make more sustainable and we've definitely would like to do that, that provide more headroom for capital investment.

Terrific. And then just lastly on sort of the equity, I mean, you obviously mentioned in the slides, you're at the low end of guidance in 2020. How do we sort of think about equity needs in 2021? Does that increase the equity needs in 2021? The reason why I say is that there was obviously some – a little bit of credit rating pressure in recent months with DTE. And I think agencies are somewhat not comfortable with the level of the midstream exposure. What do you sort of need to do to offset the concerns there? Do you need more equity down the line? So how do we sort of think about the equity guide beyond 2020?

Yes. Shar, this is Peter, again. First on the rating agencies, I know we had a recent action by Fitch, which was anticipated. We have a strong investment credit rating across all the agencies now. They're all at the same level with cushion with them all. Our plan is not actually to use that cushion. We really want to keep a strong balance sheet as we move into these are more uncertain times. So we are driving to the low end of the targeted range. So we have $100 million to $300 million range here in 2020, and that's not going to be deferring equity into next year, it's really going to be based on the strength of cash and the balance sheet cut for this year. And we do have some plans. I mean, we talked about the earnings, continuously we're building. We're also looking at cash as well because now we would like to where we can minimize the equity for this year.

Terrific. Peter, congrats on phase two. I know it's not a goodbye, so I'll just tell you, I'll see you later. Thanks again, guys.

I appreciate it.

Thank you.

Michael Weinstein with Credit Suisse, your line is open.

Hi, good morning.

Good morning.

Good morning.

Just to be clear, I just want to make sure that the guidance does hold up under the slow start scenario. I want to make sure I'm clear on that. And also, what is the monthly degradation rates for the summer under the slow start scenario? I assuming things drag on.

So I guess the answer to the first question, Michael, is yes, the guidance does hold up under the slow start scenario. We've modeled that way and we've also modeled our contingency built that way. So we're comfortable that the plan that we have today can deliver under the May start and the slow start. We've given the annual impact on Slide 8 from sales reductions. We really haven't – we've modeled – we've got various scenarios and abandoned scenarios that get you between the May start and slow start scenario on a monthly basis, but we haven't laid that out here.

And how much of that $120 million to $130 million contingency that you're planning on is coming from CapEx postponements versus OpEx cuts?

We're maintaining our capital guidance. So we basically pause some of our capital projects, as you can imagine, due to the shelter at home order from the Governor. But we're resuming our construction activity here in May and we plan to catch up on our capital investments and deliver on our capital guidance for the year.

And is there – has the IRP, the new, the refiled IRP and also our new renewable plant that filed, has any of that changed any of the CapEx or cap going forward?

It has not changed the CapEx plan going forward. As a matter of fact, the IRP recently got approved and we filed our contracts associated with our renewables plan. We expect approvals of that in July. We feel good about that as well, and that's both a self build and some amount of PPAs.

And just to confirm, it sounds like things are moving along pretty well with Gas Storage and Pipeline business. But just want to confirm that in the Haynesville especially, that current forward curve for gas which is building is supportive of growth users your producer customers, long-term growth plans are supported by the forward curves?

Yes. The positive for the Pipeline and Storage business in the first quarter is that it's delivered better than plan for the first quarter. And so that's been a positive start to the year. And if you look at Slide 29, and you talked about the price complex in the gas business, you'll see that the reason that the price complex is being influenced in a positive way is that the associated gas at the front end of that dispatch curve is expected to decline in terms of production volumes. And what that does is it starts to – on that cost curve, it starts to slide, you're right, in order just to replace a supply that’s slowing today. So the pricing that's in the market today and what our producers are hedged at is well to the right of where our resources dispatch. So you can see, for example, the blue is our Haynesville assets and you can see there at the very front of the dry gas dispatch curve well within the current price complex for both 2020, 2021 and 2022. So we're feeling that our resources that we ship on our pipelines are extremely well positioned in all our basins that we operate in.

Helps the dry gas basins.

Yes. It also helps the high quality resources.

All right. Thank you very much.

Thanks Michael.

Julien Dumoulin-Smith with BofA, your line is open.

Hey, good morning team, and Peter, congratulations.

Good morning.

Good morning, Julien. Thanks.

Hey, good morning. Absolutely. So, okay, let's do a little cleanup following some of these questions. So if I can go back to the ongoing nature of the cost reductions that you just alluded to or was talking about that in grays, how do you think about balancing the ongoing elements of this cost reduction relative to rate increases and how that frames your future CapEx setting given what that implies for rate increases? So I know that applies more holistically to the industry, but since we’re specifically talking about cost reduction today and what the shape of that looks like? Can you speak to that a little bit? And especially in the context of, it seems like you all are very specifically confident about being able to catch up on your contemplated CapEx in 2020 despite some of the hurdles here, which is impressive. So just want to talk about the other side of that on recovery, et cetera.

Sure. As it relates to the cost, Julien, I think you know that we've got a long track record of managing our costs to our customers and also managing rates and bills, at rates less than inflation over a great number of years. And we will continue with that. This event has presented a unique challenge where we have to pursue some one-time items to reduce us. But like Peter said, we will have the opportunity perhaps, as we go forward here to persist with some of those costs reductions. And if that happens, what that'll do is it'll provide more headroom in our investment plans. I think we've mentioned before that we've got $2 billion of capital sitting on the sidelines, looking for affordability headroom. Well, I think this event may provide the opportunity to bring some of that in as we go forward, but the first thing we need to do is secure this year. And then as we look forward, we'll look to see if some of these costs reductions provide an opportunity for us.

Okay, fair enough. And then turning to the other side of the business here on the non-reg side, can you talk to what the implications of higher gas prices are? And I know you've already done that so – or thus far in the conversation. Can you speak specifically to incremental opportunities, right? So I suppose the perception is that this is largely de-risking to counterparties, et cetera. And how does this potentially crude to your trajectory in that business altogether when you think about it?

We're seeing that most of our growth, Julien, in the pipeline business has been contracted over the next three years. But we're seeing a lot of action in the Haynesville were small projects that are starting to emerge. The fact that we will have a pipeline that can move significant volumes from North to South and it could be doubled in capacity very economically. It's also starting to show signs of promise in terms of opportunity so early to tell since we're new in that basin. But I think we're starting to see some really positive movement and potential growth there. And they will be small projects with very high IRS so very accretive. We've also seen movement on Nexus. We've seen some very positive movement there with customers showing interest and also a value – valuing up, the value of that pipeline valuing up in the short-term markets and even in the medium term markets. And even on our Bluestone asset, which is mature, we're starting to see some activity there as well. So, I think it's positive that the price complex is moving in the right direction and I think that will help to propel some of our developments.

So thank you all very much. Take care.

Thanks Julien. Thank you.

Stephen Byrd with Morgan Stanley. Your line is open. Stephen Byrd, your line is open. Your next question comes from the line of Jonathan Arnold with Vertical Research. Your line is open.

Hi, good morning guys.

Hi. Good morning, Jonathan.

Thank you for the detail and Peter, congratulations from me.

Thanks.

Just quick question. Just you mentioned both GSP and P&I were ahead of plan in the first quarter. Can you be a bit more specific on what drove that variability versus plan?

Well, ahead of – pipeline of stores was ahead of plan primarily due to favorable volumes in all our platforms, our platforms as well as our gathering pipelines. So we're seeing favorability there in that regard. At P&I, it was primarily driven by the new projects that we brought online showing some favorability.

And given the nature of those, Jerry, I'm just curious just what's the source of variability there?

I would say that the pipeline capability, unless there's other events that undo that for the balance of the year, we plan to hold on to that favorability for the balance of the year, a great contingency in the plan. We're not completely counting on that, Jonathan. So we're building consistency in and around both the pipeline business and P&I business in order to have a conservative outcome for the balance of the year. So we've got approximately about $30 million of favorability in the first quarter for our non-utilities. And we're not going to count on all of that for the balance of the year and build some contingency around that $30 million.

Okay, great. Thank you. And then just to the assumption you have around residential sales, actually before that, are you making any – what are you assuming around natural gas and how significant is that to your contingency plan for the current situation or are you primarily focused on weakness in electric sales?

Well, our – in the pipe, you talked about the natural gas utility, Jonathan?

Yes, yes.

We are seeing modest impact on the natural gas utility from this COVID-19 experience primarily because most of it has happened beyond the first quarter. So we don't see much of an impact for the balance of the year. The primary pressure is coming from the electric company in terms of sales…

The 3% to 4% increase in annual electric sales. And I think you mentioned that you're currently seeing them sort of up 10% to 11% in April. Can you just help us sort of bridge to how you have confidence that that number is as high for the year as a whole. When you're assuming that we kind of – it will have effectively been a month or two at home and then starting to kind of move back.

Sure. We are very close to the plans that the state is developing in terms of return to work. And so we have a pretty good understanding as to when office workers will return to work as well as when industrial workers will return to work. So we understand that schedule, that's being planned and obviously we've modeled scenarios around those returning to work plans, both a May start scenario, as we call it, and a slow start. And so what we do is we migrate our residential sales from 10% to 11% higher than planned here in April and part of May and then we slowly start to drift that down back towards normal by the end of the year. With the milestones embedded in the plan that we are aware of from the state.

Okay. So there's an element of the summer and air conditioning seasonal which helps…

Yes. The expectation is that the office workers return to work in our offices later in the summer, they won't be first out of the gate because on a risk basis, they are viewed as very high risk because they operate in very close quarters and highly congested environments. So the state then the medical experts in the state believe that the office workers going to be the last to return to their office complexes.

Great. Thank you for the extra color.

Andrew Weisel with Scotia, your line is open.

Hey, good morning everyone.

Hey, good morning, Andrew.

I want to echo the congratulations to Peter on a fantastic run at DTE, through good times and bad, you kept things stable. Dave, congrats to you as well, you have big shoes to fill, but at a minimum at least the earnings calls will be one minute shorter, so we don't have to hear about Detroit Tigers off-season anymore.

Yes, that’s true.

So first question, I just want to clarify the $30 million to $50 million potential impacts from COVID, does that means $30 million would be the May start scenario and $50 million would be the slow start or is that just kind of the range for the May scenario?

$30 million as the sales impact for the May start scenario and $50 million as the sales impact with a slower start scenario.

Okay, great. Just wanted to be clear on that. And in terms of the contingency, can you compare the $120 million to $130 million to what you were able to cut in 2008, 2009 if you had the memory to get that back that far?

Well, it's a similar, we targeted back in 2008 and 2009 $150 million, but that was a pretax, so this is $120 million to $130 million after tax. But we are a much larger company at this point in time and have a much larger base to pursue.

Okay. Great. And then on the IRP, congrats on getting the modified version approved. Can you remind us and walk us through the changes you made, particularly on the self-build generation side? And what would happen if the economic downturn is deeper and longer lasting? Is there a risk to the plan to add a lot of generation capacity?

Well, we are actually ahead of plan on our voluntary renewables. We had planned to sign up about 600 megawatts over the next three or four years, and I'm happy to report with the most recent just weeks ago from General Motors to sign up for another 250 megawatts of voluntary renewables. Then we were actually at 650 megawatts of sold against the target of 600, which was a three or four-year target. So we're well ahead of plan on this. And so that's quite exciting. And we continue to market the product. Obviously, our marketing efforts and sales efforts have slowed a bit here but we plan to resume in the summer. A great amount of interest in this product from both our industrial customers as well as our commercial and residential customers. In terms of what we filed for self build, we filed 325 megawatts of self build, which is a wind park. And also, we signed some PPAs for solar to meet our 15% requirement. That's our RPS requirement for here in Michigan, 15% by 2021. That's what it will fill that requirement, the 650 megawatts of voluntary, we had 400 of that approved last year. And so this summer, we will be pursuing 350-megawatt filing with some self-build – with lot of sell build and some PPAs.

Very good. And then just the last…

Which supports our – sorry, which supports our capital plan long-term. Yes, all of that supports our capital plan long-term.

Okay. Great. And then lastly, just to be abundantly clear, can you describe – do you have any appetite for potential additional midstream M&A given the turmoil in that space?

We've essentially, what I would say, they filled the order book for acquisitions and the pipeline space. We are in the process now really digesting what we own. We acquired Haynesville asset, we got the linked asset and we have NEXUS those are all sort of new platforms, if you will. And we're going to pursue highly accretive and high return, expansions and organic developments in and around those platforms. That's our plan right now.

Sounds good. Thank you.

Yes. Thanks, Andrew.

Steve Fleishman with Wolfe Research, your line is open.

Hey, good morning. Thank you.

Good morning, Steve.

Good morning, Steve.

Hey, Jerry. And congrats Peter again. Best of your lucks. The April data that you provided, do you have just like overall sales when you net for the company, for that deal.

Yes. The total – this is Peter. Yes, the total loan was down 16% to 18%.

Down 16% to 18%?

Yes. Yes.

Okay. And then just the – could you give any update on what you're seeing in terms of customer payments and any non-payments and then may be tie into that this uncollectibles deferral that the commission proposed and any kind of cost related component to that, too? So two questions in there.

Sure. Thanks, Steve, for those questions. So I’ll start with what we’ve done for our customers. We’ve suspended our for our low income customers and our senior vulnerable customers till the first week of June. And that's something that we work very closely with the Michigan Public Service Commission on, so total alignment in that regard. In terms of arrears, Steve, we watch that daily every morning in our financial call, one of the first things we look at is arrears and it has started to move, but not in a fundamental way but we're planning that it may as part of our contingency build. Now that the positive here is that the commission issued an accounting order that allows us to defer those expenses. And we have filed for cash recovery of those expected expenses in our gas case, which is under way right now. And we will look to file for recovery of those cash expenses in the electric case that we file later this summer. So we have an accounting deferral and then followed by cash recovery in future cases.

And that’s why you are assuming that’s embedded in your plan?

That’s embedded. And that’s very constructive. Back in 2008 and 2009, we did have a track in the gas, but not the electric. So it really – the commission, we can really work with them around our disconnect strategy with these customers with a very constructive order for us. And it really does cap the amount of exposure we have on uncollectibles.

And then I think there was some talk in the CMS call yesterday about there could be like cost offset to the deferral though. Could you talk about that at all? Is that something you need to monitor?

Sure. The commissioning indicated that they would consider extraordinary costs related to this pandemic things like cost sequester employees and hotels, cost for a home reserve, workforce and also cost for incremental PPE. So they have asked us to make a filing to take all of those costs into consideration. So, that will be a case for future, something that we'll have to look for in the future.

Yes, Steve, that's separate from the uncollectible. Uncollectible can stand alone. They're asking for comments now around potential deferment of real direct COVID-19 related costs.

Okay. Last question is just if – it's hard to compare exactly, but it does seem like your sales sensitivity is a little bit less than CMS sales sensitivity. Do you have any way to kind of maybe better explain that? Do you have higher fixed charges, maybe or some other component there?

Peter, any thoughts on that?

Yes. One of the things that's embedded in here, and I know we've had some questions on the residential. The residential increase, we're saying is 2% to 4%. And obviously, less than the commercial/industrial down, but 1% change in residential is about $15 million positive for us. And it's about 2.5 times commercial and 15 times industrial. So I think we have been done a really detailed job of forecasting out for the whole year, the residential. And we did see residential up even in the first quarter, 2%, that really related to that March shelter-in-place. So I think that's some of the difference. And I think that's also a difference back in 2008 and 2009, we had a housing crisis back then. We did see residential decline. So that's – it really is offsetting and the overall load reduction, even though we're down 6% to 8%, the residential is really helping to net some of that exposure down.

Great. Okay. Thanks very much.

Ryan Levine with Citi, your line is open.

Good morning.

Good morning.

What are you seeing or what's your EBITDA and CapEx for the midstream business this quarter? And where did you see the favorable variance in terms of which asset?

Well, I’ll start with – where we saw the variability, we saw it across all platforms. We saw positive movement, as I mentioned in our Haynesville platform as well as our NEXUS platform and Vector platform, which go together as well as our Bluestone assets and Millennium assets. So we – again, it was across all platforms. In terms of the EBITDA for the first quarter, Peter, is that something that you have any color?

We don't, we haven't broken that out yet. We've recently introduced this EBITDA overall for the year. But it's, it is proportional to the earnings I'd say. So, we did see some EIBTDA increase as well while with those earnings. Well, maybe something in the future that is big enough so we're not breaking it up.

Okay, great. Appreciate that. And then recognizing your Haynesville contract structure, are you and your customers considering a mutually beneficial delay to the expansion? That's expected for next quarter?

We are not. The construction of that pipeline is progressing on plan and actually our customers are very excited to start shipping gas on that pipeline. So, none of those recessions are happening.

Okay. And then just to follow up on the bad debt expense, is there any data points that you could point us to quantify the recent uptick that you noticed?

It's modest, the up-tick. So we're watching it daily, right? We have the instruments to be able to watch it daily. And I would not say that it's pressuring UCX at the moment. But then again, we're not, early in the aging buckets, as you know. The more the accounts age, the higher the reserve, so we're early in a – do expect some pressure there, but we have an accounting order that differs that expense and it gives us the opportunity to recover it in future rate cases.

Okay. And then to me you mentioned that you can't, you're not disclosing the quarter EBITDA. Are you able to share, the CapEx spend for the quarter.

Peter?

Yes. We have not provided that and maybe something I got Barb on the line, we could see what we have, we can go ahead with public documents that potentially we can connect it to. Do you have that number.

We did provide the non-utility CapEx of 338 for the quarter.

Yes. Told you we did.

Okay. Thank you.

Thanks.

Okay, thanks Sophie Karp with KeyBank. Your line is open.

He guys, thanks for squeezing me in. A couple of questions here.

Good morning.

Good morning, yes. On the customer non-payments potentially, right. And I know it's been deferred for, from the accounting order and it looks like you can recover that cash quite quickly because of your cadence of rate cases, but just give us something that we shouldn't be concerned as far as balance sheet pressures as a results of that or is it something that you're looking into?

Well, we've modeled the cash that comes along with prior arrears of bad debt expense and our corresponding actions to respond to that pressure, involve a lot of cash actions. So, we believe that the offset will come through our cash initiatives and earnings initiatives. Most of our earnings initiatives are cash initiatives as well. So, that $120 million that we're targeting will offset any pressure that we may see from arrears.

Yes. And this is Peter and I guess Sophie, just to add to that we are seeing the stimulus package from cash upside for us. The tech AMT is going to be accelerated, if you recall back in 2018 AMT was eliminated with a three year refund of us. And it got accelerated to two. So, just one example, it's at about $75 million of capability that's what we're going to continue to look for opportunities on the cash side as well. And we are modeling both earnings and cash with uncollectibles separate and our goal would be to offset that cash impact.

Got it. Of those things that you realized this year that one tiny that you're talking about, how much of that could be kind of sticking in the run rate going forward as opposed to just, being a onetime going lean and then going back to some baseline?

Well, that's a great question because we’ve had this same discussion in 2008, 2008 when we started a similar initiative. What started out as a one time items over time we were able to convert some portion of that into permanent cost reductions, which of course creates a benefit for our customers. And with our aging infrastructure it gives us headroom to invest without creating affordability pressure for our customers. So, I view it as a positive over time, but it's hard to quantify right now because we're early and somebody of these one-time items. But our goal will be to try and use this opportunity to create headroom in the future.

Got it. And the last one for me maybe given that the topography of your gas network, right in Marcellus is there any incentive at all for some of you off takers to potentially inject their contract with you guys in favor of maybe other owned to markets, if they were to become financial distress to a proactively seeking some better earnings?

Well, we've looked at that very closely, especially when the gas complex was heavily pressured from a price perspective. What we look at is obviously a lot of the – of our customers are captive to our system because of the infrastructure. The infrastructure, it's hard to reproduce, to deliver, to source and deliver the gas to locations that are being sourced and delivered to. So that's one. Two, we also look at the competitive nature of our contracts in terms of pricing and we're very competitive with all our contracts. Three our contract structure is very strong and has strong credit provisions in it as well.

Got it. Thank you very much. Appreciate the color.

Thanks Sophie.

David Fishman with Goldman Sachs. Your line is open.

Hey, good morning Peter. David congratulations. Just going back to the IRP and specifically kind of the RFP results you guys laid out there. I know you touched upon this a little bit when you were talking about the wind that you're going to self build and own in the solar, which is going to enable more PPAs. I was hoping you can maybe walk us through kind of how you see DTEs competitive position compared to other bidders when it comes to wind versus solar.

Sure. We in this most recent filing, which was a compliance filing at the meter a renewable standard in 2021, we were very competitive with our wind resources and, so we had that project well-developed. It was a self build and we actually developed it from scratch. So that was a very competitive project. We also layered in some solar PPAs that were very competitive. So, basically what we did is what was right for our customers. We offered the most competitive product, well, the combination of self build and solar. In the future we will likely be focused on solar. And at this point we feel really good that we could be competitive with self build, but we'll also introduce PPAs where it's beneficial to our customers. So, we'll always do what's right for our customers in the long-term. And that – so far that's supporting our capital plans in this space and overall.

Okay. That makes sense. And turning a little bit to the voluntary commitments, as you mentioned earlier, you've already kind of sourced some 600 or so megawatts by the early 2020s, which is what you've been showing in your slide deck. I think when I went through the IRP, I saw through 2024 it was more of a 790 megawatt kind of expectation number. Would that be upside to the capital plan you kind of outlined for us? Or is the closer to 800-megawatt number for the voluntary segment? What you guys are embedding or is that upside in the capital budget?

I believe there could be upside in this space simply because, we had planned to sell 600 megawatts in three years and we're at 650 sold now in the first year. So, we seem to be selling the product faster than we expected. Now well, whether or not that continues remains to be seen, but there's tremendous interest in this product. Even at a residential level, we've sold 10,000 contracts already for this product. And we're also targeting smaller commercial and industrial customers who may have an interest in this space. But certainly, I would say there's, the wins in our sales on this one. There's a great desire for this type of product in our communities.

And do you have more flexibility on that to pretty much, is it guaranteed it's more self build on the voluntary side or do you go through a similar RFP process that was outlined

We're going to go through a similar RFP process and obviously we want to compete and build as much as we can, but there are times when other developers can offer as competitive of a product as we can offer and we'll take those as well. But we certainly target to build as much of it as we can. But then we have to be realistic and know that there are others that perhaps have small advantages that we'd like to take advantage of for our customers.

Got it.

Well, we think there's plenty of build out here that – plenty of build out here that will support our capital plans.

Got it. Thank you. Appreciate taking the question.

We have time for one final question. Anthony Crowdell with Mizuho. Your line is open.

Good morning guys. Peter, congratulations. It's probably been a while since our a first quarter call. The tigers weren’t eliminated from post-season play.

We have no losses this year

No losses this year. Just most of my question's been answered. If I could just jump to I guess your GSP assets, especially – specifically on in the Eastern region. There have been multiple delays on getting other pipes built over in the East Coast. Have you seen any increase in customers looking to subscribe to any of your assets on the East Coast? And if you want to opine, do you think those assets get built anymore? I guess any more assets get built on the East Coast?

Well, let me start with our assets, Anthony. We are seeing more activity on all our assets. We've actually seen some nice favorable movement on pricing in NEXUS as well as interest levels but primarily interest level on NEXUS has been demand pull. Initially the pipe was built with a combination of supply push and demand pull, producers putting gas into the pipe under long term contracts. And then of course LDC is pulling it off the other end under long-term contracts. We're starting to see a lot, a few more LDCs show up and signing some contracts as well as some power plants along the road, and industrial customers that we've connected to NEXUS, so that – all of that has been quite positive. In terms of the pipelines going East Coast, it really remains to be seen. It's been a long time in them getting their approvals and I believe that some of it, some of that infrastructure would get built. I'm not sure that all of it will be built. But I think that it was all positive for us in terms of how that may play out over time, whether it's just delay or perhaps with some of the infrastructure doesn't get built.

Thanks for taking my question and hope everybody stays healthy.

Thank you. Same to you Anthony.

This ends our Q&A session. I would now like to turn the call back over.

Well. Thank you Jack, and thank you everyone for joining us today. Again, I hope that everyone and their loved ones are healthy and safe. We are living in challenging times and I believe DTE has the people and the plans to deliver this year and also to deliver our long-term plan. So with that stay healthy and stay safe.

This concludes the DTE Energy first quarter 2020 earnings conference call. We thank you for your participation. You may now disconnect.