DTE Energy Company

Ladies and gentlemen, thank you for standing by, and welcome to the DTE Energy fourth quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I would now like to hand the conference over to your first speaker 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 two 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, David Slater, President and CEO-elect of Midstream, and Dave Rude, Senior Vice President and CFO. And now I'll turn it over to Jerry to start the call this morning.

Well, thanks, Barb, and good morning, everyone, and thanks for joining us today. I hope everyone is staying healthy and safe. This morning I will start off by giving you a recap of our 2020 business performance and provide highlights on how we are well positioned for future growth. Then David Slater will give some details on our midstream business and provide an update on the spin transaction. Babe Ruth will provide a financial review of the year and wrap things up before we take your questions. So let's start on slide four. 2020 was clearly a challenging year for so many with the COVID-19 pandemic disrupting everyone's lives. And as I reflected on this past year, I think the best word to characterize my thoughts is pride. I cannot be prouder of how our DTE family confronted these challenges and took them head on and created incredible success in every part of our company. I am proud of how our employees responded to ensure their own safety and the safety of our communities while continuing to deliver for our customers. DTE also delivered very strong financial results, continuing our incredible track record of success. In 2020, we achieved extraordinary engagement and safety performance We achieved our safest year on record. As you all know, the safety of our people and our customers has always been our top priority at DTE. I am so incredibly proud of our team for this achievement while navigating through a pandemic. Additionally, our team remained highly engaged throughout the year. We were ranked by Gallup among the top 5% globally for employee engagement, earning our eighth consecutive Gallup Great Workplace Award. Best-in-class employee engagement is our secret sauce that defines our strong corporate culture and provides a foundation for long-term value creation and repeated success on the delivery of our goals. And as I said, our DTE team stepped up and supported our customers and communities through these tough times in 2020. Our team significantly streamlined payment plans for customers impacted by COVID-19 WE FOUND CREATIVE WAYS TO PUSH OUT RATE CASE VIOLENCE, WHICH WERE SUPPORTED BY THE MICHIGAN PUBLIC SERVICE COMMISSION, EFFECTIVELY KEEPING RATES UNCHANGED FOR CUSTOMERS THROUGH 2021. DTE LED A $23 MILLION INITIATIVE THAT PROVIDED 51,000 TABLETS AS WELL AS INTERNET ACCESS TO DETROIT PUBLIC SCHOOL STUDENTS, ASSURING THAT EDUCATION WOULD NOT BE INTERRUPTED. WE ALSO DONATED OVER 2 MILLION MASKS TO EMERGENCY MANAGERS first responders, and hospitals when PPE supplies were low. The DTE Foundation contributed to pandemic-related relief efforts in unprecedented ways in 2020. Finally, I'm incredibly proud of how our team worked together to execute our economic response plan to ensure a strong financial performance. We quickly analyzed how the pandemic could affect our company, customers, and communities, and put a plan in place to minimize the impacts We then followed through and executed on that plan. Our workforce of over 10,000 employees embraced our culture of continuous improvement and found opportunities to increase efficiency across all of our businesses. This work led to a successful year in 2020 and set DTE up well for the future. I want to congratulate all of our DTE family who delivered one of the best years on many fronts since I have been with the company. I will discuss our 2020 accomplishments on the next slide. As I mentioned, the success of 2020 was fueled by the execution of our economic response plan, which led to really strong earnings. 2020 was also a year of very strong cash flows for DTE, and we were able to use some of that strength to increase investment in our operations, positioning us nicely for 2021. Our 2020 operating EPS of $7.19 represents 14% growth over DTE's 2019 operating EPS. This is nearly 9% higher than our original 2020 guidance midpoint. 2020 was the 12th consecutive year we exceeded our original guidance midpoint. This success demonstrates our team's commitment to delivering results and continuous improvement. We also increased our dividend 7% for 2021, marking the 12th consecutive year of a dividend increase. In addition to solid financials, GT achieved many regulatory and operational successes in 2020. GT Electric received approval for an innovative one-time voluntary refund to customers for unexpected COVID-19 related sales. This will help maintain our customer affordability positions BT Electric to further defer its next rate case filing. We will continue to work on innovative ways to delay rate cases. BT Gas reached a constructive rate case settlement, which was approved by the NPSC in August. As a result, both utilities achieved regulatory certainty in 2020 that allows us to keep base rates steady for customers through 2021. We are very proud of these accomplishments as we continue our commitment to provide reliable affordable energy to our customers. I will go into more detail on the 2020 achievements for our utilities in a few minutes. Our non-utility businesses also achieved operational successes in 2020. DTE Midstream placed a lead pipeline in service ahead of schedule and under budget and began delivering for our customers, not a small feat in today's environment. At P&I, we continue to focus on the development of R&G and cogeneration projects to backfill the sunsetting REF business. In 2020, we operationalized our Wisconsin RNG project and Ford Central Energy Plant, and also finalized an additional cogeneration project. This continues our cadence of new project completion, accompanied by a strong pipeline for future growth. Turning to slide six, I'll discuss how DT is positioned for future success. Overall, our achievements in 2020 have set us up well for continued success in 2021. Our 2021 operating EPS guidance midpoint of $7.07 provides 7% growth over 2020 original guidance. The vast majority of our growth comes from our utility businesses. At DT Electric, we are investing heavily in the modernization of the grid and cleaner generation. At DT Gas, our main renewal work as well as infrastructure improvements. We continue our steady growth in our non-utility businesses through strategic and sustainable investments. As you know, we are executing the spin of our midstream business this year. David Slater will give you more details, but let me just say that the transaction is progressing as planned and we are on track for completion mid-year. This separation positions DTE as a predominantly pure-play utility and establishes Midstream as an independent C-Corp gas midstream company. We truly believe this transaction unlocks significant value for investors of both companies. We are reaffirming our 5% to 7% long-term operating EPS growth for DTE from our 2020 original guidance bid point, and will continue to provide an attractive and growing dividend to investors. DTE has a long track record of delivering premium shareholder returns, consistently beating the S&P 500 utilities index, and we plan to continue delivering for our investors. As I said, we have exceeded the midpoint of our operating EPS guidance for 12 straight years. And early in this year, we feel we are well positioned to continue that streak in 2021. Turn to slide seven, I'll highlight some of the successes at DT Electric. Both utilities progressed on key initiatives in 2020 while navigating the pandemic. For DT Electric, that has included clean energy investments as well as investments to accelerate the modernization of our electric grid. In 2020, DT Electric commissioned the largest wind park in Michigan, which is the Polaris Wind Park, with 68 turbines generating 168 megawatts of power. Our voluntary renewables program, My Green Power, continues to exceed our high expectations. The program is the largest of its kind in the nation with 850 megawatts of commitments to date and 25,000 customers enrolled. Enrollment in this program has doubled over the past year. We continue to be excited about this program and see additional opportunity for expansion as the customer enrollments continue to grow. These accomplishments helped DT Electric work towards its net zero carbon emissions target by 2050. DT Electric also announced its commitment to promote electric vehicles by joining forces with other companies to facilitate the construction of a network of fast charging stations across the Midwest. To assist our customers with affordability during the pandemic, we filed an innovative plan to delay an electric brake case filing. The Michigan Public Service Commission approved this plan, allowing us to provide study-based rates for our customers and regulatory certainty for our company and investors. The Commission also approved a one-time customer refund for unexpected load increases from additional residential usage from customers working from home due to COVID-19. This allows us to defer our next rate case even further and keep customer rates steady longer. Looking forward, the future is bright for DP Electric. At the EEI conference, we rolled forward our five-year capital plan, which included a 17% increase in capital at the electric company compared to our prior plan. These investments will focus on cleaner energy as well as infrastructure investments for reliability and growth. We're also upgrading substations for current and future load growth and addressing aging infrastructure to position a grid Through the implementation of this plan, DTElectric is targeting 78% long-term operating earnings growth. Moving to slide 8, I'll describe the successes of DTE Gas. DTE Gas progressed on key initiatives in 2020 and is well positioned for future growth. We announced an innovative program to achieve net zero greenhouse gas emissions by 2050. and customers. Recently, we also announced a voluntary program for customers to purchase carbon offsets and renewable natural gas to offset 25% to 100% of the average home's gas use emissions. We progressed on a major transmission renewal project in northern Michigan. This project includes the installation of new pipeline and facility modification work, provide redundancy, and mitigate customer outages. We have completed the first of three phases for this project, with the second phase scheduled to begin in June. DTE Gas also continued main renewal upgrades and operational improvements in 2020, including completing 206 main renewal miles, despite a pause in work during the height of the pandemic in the spring. Finally, DTE Gas achieved a rate case settlement in August that supports investment plans PROVIDE REGULATORY CERTAINTY THROUGH 2021. THE CURRENT CAPITAL PLAN FOR DT GAS INCLUDES ADDITIONAL OPPORTUNITIES THAT COULD POTENTIALLY BE INCLUDED AS WE CONTINUE TO FIND WAYS TO CREATE HEADROOM AND AFFORDABILITY WITH CONTINUOUS IMPROVEMENT. OUR FIVE-YEAR INVESTMENT PLAN ON DT GAS FOCUSES ON MAIN RENEWAL, PIPELINE AND TRANSMISSION INTEGRITY, AND ENHANCED TECHNOLOGY. UPGRADING OUR SYSTEM and replacing aging infrastructure continues our path to reducing costs and improving customer satisfaction. DT Gas recently filed a gas rate case with the NPSC to support these investments in infrastructure and reliability for our customers. With our usual 10-month rate case cycle, new rates will be effective in 2022. Before I turn it over to David Slater, who will walk you through the successful year Midstream had, and give updates on the spin transaction progress. Let me congratulate him on being elected to serve on the Income Board as chairman of the industry group representing Interstate Gas Pipelines. David, over to you.