Earnings call transcript: DTE Energy Q2 2025 misses EPS forecast, stock dips

DTE Energy projects a positive long-term outlook, maintaining a 6-8% growth rate in operating EPS. The company is on track to achieve the high end of its 2025 operating EPS guidance of $7.09-$7.23. With a $30 billion capital investment plan over five years, DTE Energy aims to expand its renewable energy portfolio and enhance grid reliability. The company expects to finalize a major data center deal by the end of 2025. Notably, DTE has maintained dividend payments for 55 consecutive years, with a current dividend yield of 3.2% and recent dividend growth of 6.9%. The stock trades at a P/E ratio of 18.3x, which InvestingPro analysis suggests is relatively low compared to its near-term earnings growth potential. Notably, DTE has maintained dividend payments for 55 consecutive years, with a current dividend yield of 3.2% and recent dividend growth of 6.9%. The stock trades at a P/E ratio of 18.3x, which InvestingPro analysis suggests is relatively low compared to its near-term earnings growth potential.

Key Takeaways

• DTE Energy’s Q2 EPS of $1.36 missed the forecast by 8.11%.
• Pre-market trading saw a 0.25% decline in stock price.
• Investments in renewable energy and smart grid technology continue.
• The company maintains a positive long-term growth outlook.
• Data center load presents significant future opportunities.

Company Performance

DTE Energy projects a positive long-term outlook, maintaining a 6-8% growth rate in operating EPS. The company is on track to achieve the high end of its 2025 operating EPS guidance of $7.09-$7.23. With a $30 billion capital investment plan over five years, DTE Energy aims to expand its renewable energy portfolio and enhance grid reliability. The company expects to finalize a major data center deal by the end of 2025. Notably, DTE has maintained dividend payments for 55 consecutive years, with a current dividend yield of 3.2% and recent dividend growth of 6.9%. The stock trades at a P/E ratio of 18.3x, which InvestingPro analysis suggests is relatively low compared to its near-term earnings growth potential.

Financial Highlights

• Revenue forecast: $2.65 billion
• Operating earnings: $283 million
• EPS: $1.36, down from the forecasted $1.48
• DTE Electric earnings: $318 million
• DTE Gas earnings: $6 million
• DTE Vantage earnings: $31 million
• Energy Trading earnings: $24 million

Earnings vs. Forecast

DTE Energy’s Q2 EPS of $1.36 missed the forecasted $1.48, resulting in an EPS surprise of -8.11%. This miss marks a deviation from the company’s previous performance trends, where it typically met or exceeded expectations. The significance of this miss is underscored by its impact on pre-market trading.

Market Reaction

DTE Energy projects a positive long-term outlook, maintaining a 6-8% growth rate in operating EPS. The company is on track to achieve the high end of its 2025 operating EPS guidance of $7.09-$7.23. With a $30 billion capital investment plan over five years, DTE Energy aims to expand its renewable energy portfolio and enhance grid reliability. The company expects to finalize a major data center deal by the end of 2025. Notably, DTE has maintained dividend payments for 55 consecutive years, with a current dividend yield of 3.2% and recent dividend growth of 6.9%. The stock trades at a P/E ratio of 18.3x, which InvestingPro analysis suggests is relatively low compared to its near-term earnings growth potential.

Outlook & Guidance

DTE Energy projects a positive long-term outlook, maintaining a 6-8% growth rate in operating EPS. The company is on track to achieve the high end of its 2025 operating EPS guidance of $7.09-$7.23. With a $30 billion capital investment plan over five years, DTE Energy aims to expand its renewable energy portfolio and enhance grid reliability. The company expects to finalize a major data center deal by the end of 2025.

Executive Commentary

• "Our success is a testament to our dedicated and engaged team," said Jerry Norcia, CEO.
• "We are committed to building on the strong foundation and momentum we’ve established," noted Joy Harris, Incoming CEO.
• "Data center opportunities provide potential upside to our current five-year capital investment plan," added Dave Rood, CFO.

Risks and Challenges

• Potential regulatory changes in Michigan could impact infrastructure investments.
• Fluctuations in energy demand and prices may affect financial performance.
• Delays in renewable energy projects could hinder growth targets.
• Competitive pressures from other energy providers remain a concern.
• Economic downturns could affect customer demand and revenue.

Q&A

During the earnings call, analysts focused on DTE Energy’s strategy for integrating data center loads and the company’s renewable energy investment approach. Executives provided clarity on regulatory and tax credit implications, as well as plans for storage and generation expansion.

Full transcript - DTE Energy (DTE) Q2 2025:

Rebecca, Conference Operator: Thank you for standing by. My name is Rebecca, and I will be your conference operator today. At this time, I would like to welcome everyone to the DTE Energy Q2 twenty twenty five Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question and answer session.

Thank you. I will now turn the call over to Matt Krumpensky. Please begin.

Matt Krumpensky, Unspecified, DTE Energy: Thank you, and good morning, everyone. Before we get started, I’d like to remind you 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. With us this morning are Jerry Norcia, Chairman and CEO Joy Harris, President and COO and Dave Rood, Executive Vice President and CFO.

And now I’ll turn it over to Jerry to start our call this morning.

Jerry Norcia, Chairman and CEO, DTE Energy: Thanks, Matt. Good morning, everyone, and thanks for joining us. I hope everyone is having a healthy and safe year so far. This morning, we will discuss the achievements we’ve made this year as we continue to deliver for all of our key stakeholders. Joy will provide an update on our business strategy, highlighting the significant improvements we are making to enhance reliability for our customers and the progress we are making on renewable energy investments supporting our path to cleaner generation.

Joy will also provide an update on data center opportunities that provide potential upside to the plan. And Dave will provide a financial update and wrap things up before we take your questions. So to start, I’m sure you’re all aware that I will be turning over the CEO role to Joy Harris effective September 8. As I’m sure that you have seen over the last few years, we have been preparing for this structured transition for some time. I’ve worked with Joy for over twenty years, and I’ve been watching her to continue to deliver and really overdeliver in every role and challenge that she has taken on at DTE.

And particularly in these last couple years where she has been serving as president and COO, she has just continued to excel in leading our company to be successful in all of our most critical areas. So it has just become obvious to me, to our board, and to our entire company that Joy is ready for this role and ready to lead our company to continued excellence. It has been a real honor to be DTE’s CEO for the last six years, and I’m extremely proud of what we have accomplished over that time. As Joy transitions to the CEO role, I will be serving as executive chairman, supporting Joy and the company, helping to ensure the continued success of DTE for all of our stakeholders. I am confident that we will continue to deliver and are well positioned for long term growth with solid opportunities across all of our business units.

I’ll provide a brief overview of slide four highlighting our key successes and the opportunities that reinforce my confidence in our continued progress towards our goals. We have had a strong 2025 and are well positioned to meet our targets this year. Our success is a testament to our dedicated and engaged team committed to serving our customers and communities. As I mentioned last quarter, this year we were recognized for the Gallup organization for the thirteenth consecutive year with a great workplace award. And our employee engagement ranks in the ninety fourth percentile globally among thousands of organizations.

As I mentioned before, our high level of employee engagement is our secret sauce for continued success. We remain committed to making significant investments to enhance the grid and improve reliability for our customers, and we see that these investments and process improvements deliver results. We saw nearly 70% improvement in reliability in 2024 when compared to 2023. And we continue to make progress in 2025 as we work towards our goal of reducing outages by 30% and

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Jerry Norcia, Chairman and CEO, DTE Energy: amount of time customers spend without power by 50% by 2029. We continue to successfully execute significant investments in cleaner generation for our customers, which will continue over the next five years and into the next decade, significantly increasing our solar and wind investments as well as battery storage. Joy will share more details on our renewable investment strategy to support both our voluntary program and Michigan’s clean energy goals. Our 2025 operating EPS guidance is 7.09 to $7.23 and we remain well positioned to achieve the higher end of the range this year and continue to use additional favorability to extinguish backlogs that supports future years. Our long term operating EPS growth rate remains at six to 8% with 2025 original guidance as the basis for this growth And with the 45Z production tax credits from our RNG projects coming into the plan this year, we have confidence we will reach the higher end of our targeted range 2025 through 2027.

As I’m sure you are aware, the budget bill that passed recently did extend the RNG tax credits through 2029. This is definitely a positive for DTE. We plan to update our five year plan this fall and we’ll provide more detail at that time. I’ll say at this time that this gives us even more confidence that we will be able to deliver on our targets over the next five years and beyond. So I’m feeling really positive about 2025 and the position we are in to continue to achieve long term success.

And as we have said, data center opportunities will provide upside to our current five year plan. We are in late stage discussions with multiple data centers for significant new load, which Joy will provide more details on shortly. We continue to maintain a strong balance sheet and investment grade credit ratings to support our customer focused capital investment plan. We remain committed to deliver premium shareholder returns that our investors have come to expect. And our 2025 annualized dividend of $4.36 per share aligns with our practice of providing a growing dividend consistent with EPS growth.

Now I’ll turn it over to Joy. Joy, over to you.

Joy Harris, President and COO, Incoming CEO, DTE Energy: Thanks, Jerry, and good morning, everyone. I’ll start by saying how grateful and excited I am for this opportunity to serve DTE as its next CEO. In particular, I would like to express my appreciation to Jerry for his mentorship and friendship over the past twenty years. Jerry has been an exceptional leader for DTE, driving the company to success year after year, and I look forward to working with him for a few more years to continue to drive value for DTE. As I take on the role of CEO for DTE Energy, I want to emphasize that our core priorities, long term vision, and strategic goals remain unchanged.

We are committed to building on the strong foundation and momentum we’ve established over the years and will continue to deliver exceptional results for our customers, communities, and investors. Our plan is supported by a highly engaged and dedicated team, one that is deeply committed to achieving best in class outcomes across all key priorities. It is this shared focus and collective energy that fuel our continued success. We continue to see strong growth in our utility operations driven by customer focused investments aimed at improving reliability and transitioning to cleaner energy. Our solid regulatory framework provides a stable and supportive environment for these infrastructure investments, enabling us to move forward with confidence as we modernize our distribution system and continue our transition to cleaner energy.

Beyond our core utility business, we see transparent low risk growth opportunities at DTE Vantage providing diversification both in terms of earnings and geographic reach while aligning with our broader strategic objective. We have a strong project development pipeline in place at DTE Vantage with multiple custom energy solutions projects underway, including a project with Ford Motor Company, which is expected to come online in 2026, and a project to build and operate a 42 megawatt combined heat and power project for a large industrial customer, which is expected to begin construction later this year. These projects are supported by long term fixed fee contracts, providing solid low risk growth opportunities in this space. So overall, we have a robust five year plan in place anchored by 30,000,000,000 of customer focused capital investments over the next five years with more than 90% of that investment directed towards strengthening and modernizing our utility operations. Additionally, we are well positioned to meet the potential surge in demand from data centers.

This represents significant upside to our plan, offering opportunities for additional investments in new generation capacity while supporting our commitment to customer affordability. I am confident in our direction, energized by our team, and excited about the opportunities ahead and as we continue to deliver sustainable long term value for all of our stakeholders. Let me move to slide six to highlight progress we are making to improve reliability. Our investments in our grid and the process improvements we are making are driving improved reliability for our customers with a continued emphasis on maintaining affordability. In the first half of the year, we made significant progress in strengthening the grid.

We installed more than 220 smart grid devices to help reduce outage duration and improve response time and conducted over 230 miles of pull top maintenance, upgrading and replacing over 1,500 utility poles, enhancing system resilience. We also continued the replacement of the aging 4.8 kV system, a key step in modernizing our network, and trimmed over 3,300 miles of trees as part of our ongoing vegetation management program to prevent outages. Our system was put to the test at the June with a record breaking four day heat wave followed by a powerful storm that swept through our service territory with winds reaching nearly 60 miles per hour, impacting over 55,000 customers. During the heat wave, our generation fleet performed exceptionally well, meeting high customer demand with reliability and resilience. And our storm response was very effective, restoring power to 95% of affected customers within twenty four hours and nearly 100% within forty eight hours.

I am grateful for the dedication of our team, including line workers, contractors, dispatchers, and everyone involved in this restoration effort. Their hard work through all of this highlights the critical importance of what we do and demonstrates the incredible results we can achieve when we work together. As I mentioned, we benefit from a constructive regulatory environment here in Michigan, supportive of the investments we need to make on behalf of our customers. We continue to work collaboratively with our regulators to affordably execute our distribution investments for our customers. Our DTE electric rate case filing supports our current five year plan of $10,000,000,000 in grid investments, including a request for $1,000,000,000 of distribution spend to be included in our infrastructure recovery mechanism by 2029.

These investments to improve reliability are also supported by the recent MPSC electric distribution audit. Lastly, we expect to file a DTE gas rate case later this year that will be focused on continued infrastructure investment and reliability improvements while maintaining affordability for our customers. Let me move to slide seven to provide an update on our renewable investments and data center opportunities. We have plans for significant investments in cleaner generation over the next five years and into the next decade, and these investments are supported by the recent settlement of our 2024 renewable energy plan filing, our long term integrated resource plan, and Michigan’s clean energy plan. The progress we are making on these investments has allowed us to safe harbor investment tax credits for these renewable projects into 2029 with the IRA provisions continuing to support our ability to execute these investments affordably for our customers.

Currently, we have 2,500 megawatts of renewable generation in service and are building roughly 900 megawatts of renewables per year on average over the next five years. Solid land positions combined with our ability to successfully move these projects through the interconnection and permitting processes these puts us in a great position to execute our transition to cleaner energy. We also continue to make great progress with data centers. We are in advanced discussions with multiple hyperscalers for over three gigawatts of new load and are having ongoing discussions with multiple other data center operators for an additional four gigawatts. Customers currently in advanced discussions have secured land positions, established clear zoning pathways, and have earned the backing of local community.

And the remaining four gigawatts in the pipeline either have confirmed access to land or are nearing finalization of land agreement. The near term data center load ramps up to three gigawatts will be met through a combination of existing generation capacity and new energy storage solutions. And longer term, additional data center loads will require incremental investments in new base load generation. Energy storage needs will be aligned directly with data center load ramps on a one to one basis in the near term, driving incremental investments, which is not included in our current five year capital plan. And as we have mentioned, we continue to target closing our first large data center deal by the end of this year, which we expect will ramp to at least one gigawatt of new load.

In addition to the growth these data centers could generate, they will also enhance affordability for existing customers. And as we have said, these data center opportunities are all upside to our current five year plan. And with that, I’ll turn it over to Dave to give you a financial update.

Dave Rood, Executive Vice President and CFO, DTE Energy: Thanks, Joy, and good morning, everyone. Let me start on Slide eight to review our second quarter financial results. Operating earnings for the quarter were $283,000,000 This translates into $1.36 per share. You can find a detailed breakdown of EPS by segment, including our reconciliation to GAAP reported earnings in the appendix. We’ll start the review at the top of the page with our utilities.

DTE Electric earnings were $318,000,000 for the quarter. Earnings were $39,000,000 higher than the 2024. The main drivers of the variance were rate implementation and timing of taxes, partially offset by higher O and M and rate based costs and warmer weather last year. On the timing of taxes, I mentioned this was fairly significant in the first quarter at negative $67,000,000 relative to 2024. This is related to investment tax credits on two solar projects that went into service in the first quarter.

This timing was known and built into our plan and reverses during the balance of the year with $37,000,000 reversing in the second quarter. Moving on to DTE Gas. Operating earnings were $6,000,000 which was $6,000,000 lower than the 2024. The earnings variance was driven by higher O and M and rate based costs, partially offset by cooler weather. Let’s move to DT Vantage on the third row.

Operating earnings were $31,000,000 for the 2025. This is a $17,000,000 increase from 2024 driven by RNG production tax credits and higher custom energy solutions earnings. We remain on track for the full year guidance at DTE Vantage. On the next row, can see Energy Trading earned $24,000,000 for the quarter. We continue to experience favorability and strong margins in our contracted and hedged physical power portfolio, putting us in a strong position to start 2025.

On a year to date basis, we are currently near the high end of operating earnings guidance for this segment. This strong performance places us in a favorable position to leverage any potential further upside across DTE, provide flexibility and strategic support for future years. Finally, corporate and other was unfavorable by $56,000,000 quarter over quarter due primarily to the timing of taxes as well as higher interest expense. As with DTE Electric, this tax timing will reverse during the year and we expect to end the year in the guidance range in this segment. Overall, DTE earned $1.36 per share in the 2025, which positions us well to achieve the high end of our guidance range in 2025.

Let me wrap up on slide nine and then we open the line for questions. Our team remains committed to deliver for all of our stakeholders. We are positioned to achieve the high end of our operating EPS guidance this year and continue to use favorability to eliminate backlogs that will help future years. Our five year capital investment plan of $30,000,000,000 supports our customer focused reliability investments and our cleaner generation investments. Emerging data center opportunities provide potential upside to this five year capital investment and EPS growth plan.

DTE continues to be well positioned to deliver the premium total shareholder returns that our investors have come to expect with a strong balance sheet that supports our future capital investment plan with modest equity issuances of 0 to $100,000,000 over the next three years. We remain confident in our long term operating EPS growth rate target of 6% to 8% through 2029 with RNG tax credits providing additional confidence we will reach the high end of our targeted range through 2027. As Jerry mentioned, the extension of these tax credits through 2029 are positive for DTE, giving us greater confidence in our five year plan, which we will be updating this fall. With that, I thank you for joining us today, and we can open the line for questions.

Rebecca, Conference Operator: Your first question comes from the line of Nicholas Campanella with Barclays.

Nicholas Campanella, Analyst, Barclays: Hey, good morning. Thanks for taking my questions. Hope everyone is doing well. Good morning. Congrats on all the announcements.

Hey, so I just wanted to confirm, it sounds like line of sight to three gigawatts of conversations, there’s four more gigawatts behind that. Just what is the current capacity on the system to absorb that three gigawatts? And I guess just what is the kind of tipping point for you to have to pull forward the 26 IRP with more capacity needed? Or said differently, when would you start to have to incur a new generation CapEx? How many how many gigawatts?

Thank you.

Joy Harris, President and COO, Incoming CEO, DTE Energy: Hey, Nick. Thanks for the question. And what an exciting time that we’re talking about load growth. That’s really, an important piece of, of discussions we’re having internally with data center providers, and those conversations are going quite well. So let me just recap.

Early on, we announced, 2.1 gigawatts, frame agreements, with data center providers, and we’re seeing a lot of, interest in Michigan because we have excess capacity. So that’s drawn, data center providers to the state. And, of course, we now have the sales and use tax exemption, so that further increases their interest. What we’re seeing now is a lot of activation on the part of hyperscalers. So we’ve been very conservative about building out our pipeline and allowing people to enter our pipeline companies to enter our pipeline.

They have to have land positions or line of sight to a land position and a pathway to zoning and permitting that’s required for them to build. And so based on just recent intensity on the part of hyperscalers, we’re seeing them make pretty nice inroads on securing land positions and making way their way to, permitting requirements. And they’re also garnering the support of the local communities, and that goes a long way in advancing them through our pipeline. So now we see what was co locators kinda moving toward the back of the pipeline and hyperscalers, consuming at least the upper portion of our pipeline and and positioning themselves to sign energy service agreements along with storage agreements. And we’re exchanging paper right now, and and that paper has a little bit of red ink on it, and that’s all good progress.

So we’re in active negotiations with large hyperscalers, and we’re continuing conversations with those colocators. As we understand their load ramps, we’re gonna use our existing d 11 rates or our industrial rate to serve that load along with storage. And the way you can think about it is, near term load ramps would require us to begin, construction of storage assets, in in 2026 and beyond. There is some urgency on the part of the data center providers to begin the construction of their facilities by 2028 so that they can take advantage of the sales and use tax. So with that said, we have to get ahead of them in building out those storage assets.

This load ramp, all those load ramps that we we are getting a better understanding of and we’ll finalize once we finalize the deals, will be incorporated in our IRP next year. So the idea here is to serve the load with existing capacity, and we have up to a gigawatt. And there are certain periods within, the planning year where we’re a little short, I’ll call it, marginally short, that will meet the need by way of storage. So it will bridge the gap near term. As we progress through their load ramps, we’ll get to a point where we have to build out more dispatchable resources, larger dispatchable resources, but that’ll get all flushed out in our IRP next year.

So we don’t intend to pull forward the IRP. What we intend to do is serve the low near term with our existing riders and tariffs and then move toward, building out larger assets based on the results of the IRP.

Nicholas Campanella, Analyst, Barclays: Thanks a lot. That’s really clear. So I guess just to to wrap that all up, I mean, you know, thinking about the context of the long term CAGR, load is a tailwind. It seems like some CapEx and storage is coming into the plan as soon as 2026. You just got the extension of RNG.

I know you’ve had that communication that you’re at the high end or above the EPS CAGR in 2026 and 2027. Just how are you kinda thinking about it beyond that through, 2029?

Joy Harris, President and COO, Incoming CEO, DTE Energy: Yeah. So where we are right now is, of course, the the r and g tax credits give us flexibility in our plan, and it was a really positive move to see that get extended. So that gives us additional flexibility, and it gives us confidence that we can hit that high end. And so as our plan unfolds and we updated, we’re intending to update our plan toward the end of this year and probably likely in the in the third quarter call or at EEI. We’ll offer up what our, our plan looks like for CapEx and also our growth rate, but we don’t intend to go beyond the 68.

This just gives us, confidence that we can hit that higher end.

Nicholas Campanella, Analyst, Barclays: Thank you so much.

Rebecca, Conference Operator: Your next question comes from the line of David Arcario with Morgan Stanley.

David Arcario, Analyst, Morgan Stanley: Good morning. Thanks so much. Congratulations, Jerry.

: Good morning. I was wondering, maybe on the back of the OBBB, could you just frame any impacts on the renewable plans, any risk that you see from the executive order and continued uncertainty there?

Joy Harris, President and COO, Incoming CEO, DTE Energy: Yeah. Thanks, David. And, the final bill, the reconciliation bill, really supports our five year plan. And what we’ve been able to do is, safe harbor our renewable investments through into 2029. And, this is all positive news for our customers.

Just as a reminder, we have to build these assets. It is required under the law, and we also have a very popular and successful voluntary renewable plant, program. So we’re going to build these renewable assets regardless. And what what the, IRA did is make it more affordable for customers. That said, what we’ve done based on us, you know, just being in a position to activate very quickly, we’ve been able to safe harbor those investment tax credits for our customers through 2029.

Additionally, the battery storage projects will continue to qualify for the investment tax credits through 2036, which is also supportive of our plan and puts us in a really good position with the build out we intend to do for data centers. Transferability was maintained. So that’s another key element that we we view as very positive. So we feel really confident in what our plan, entails today. And, also, we feel really good about, where we’re sitting with r and g tax credits as well.

The added year is an added benefit. And as I mentioned before, that gives us more flexibility and allows us, to have more confidence around hitting the high end. In terms of some of the the executive orders, the safe harboring we we’ve already done, really insulates us from any exposure to, Fiat. And so I I feel like we’ve got we’ve got solid plans in place that remain in place through the duration of our five year plan. And we still have a little bit of opportunity because we have to bid begin construction by the end of this year.

So that gives us a little more flexibility. If there’s any additional tax credits that we want to secure, we may be able to do that. But all in all, I think the, the final bill supports our plan, and we’ve been able to activate to insulate ourselves from any exposure hereafter.

: Great. That’s really helpful color. Thanks for that. And then, maybe just to, look at, earnings performance so far this year. I think, Dave, you had mentioned just how do you where do you stand in terms of how much flex you have here to absorb any volatility maybe in weather for the rest of 2025?

And where do you stand in terms of now looking ahead to 2026 and pulling forward against some strength in earnings this year?

Dave Rood, Executive Vice President and CFO, DTE Energy: Yes, David. We said, we’re in a good position right now after the second quarter. I can also say we’ve had a warm July. And so we are looking for those opportunities where we can to make ensure we’re going to have a great year in ’twenty five, but then look for those investment opportunities that can help us in future years too. So we’re feeling positive on the year and our ability to hit the upper end and continue to help future years.

: Great. Sounds good. Thanks so much. Appreciate it.

Rebecca, Conference Operator: Your next question comes from the line of Jeremy Tonet with JPMorgan.

Aiden Kelly, Analyst, JPMorgan: Hey, good morning. This is actually Aiden Kelly on for Jeremy.

Joy Harris, President and COO, Incoming CEO, DTE Energy: Hey. Hey, Aiden. How are you?

Aiden Kelly, Analyst, JPMorgan: Yeah. Just just wanted to hone in on the data center front again. Just curious to see if you could offer any, like, confidence level for the three gigawatts of hyperscaler load coming online, you know, as well as the four gigawatts you kinda outlined in the opening remarks. I know you mentioned some pathways to zoning and permitting and, you know, land position. So seems like some good visibility there, but just wanted to see how you frame it in terms of, you know, confidence level.

Joy Harris, President and COO, Incoming CEO, DTE Energy: Yeah. So our goal is to get at least one gigawatt signed before the end of the year, and we’re making great progress toward that goal. We’re in active discussions. I can tell you that, I’ve had personal interaction with the principals at some of the data center providers. These are hyperscalers, large large companies that are looking to land here in Michigan.

And we we’ve got, you know, meetings set up yet this week to talk to additional providers. So we’re feeling really good about the progress that we’re making and the fact that we’re exchanging terms. We’re getting feedback on what works for them, certainly, and we’ve we’ve got some flexibility to meet their needs. I think we will have a lot more to say on the on the third quarter call and and by the end of the year, but, certainly, things are progressing in in the right fashion. And we feel really good about the progress and are feeling fairly confident that we’ll get something done before the end of the year.

Aiden Kelly, Analyst, JPMorgan: Understood. Understood. That that’s helpful. I guess just on the storage, just curious for that one gigawatt gigawatt of data center, you know, presumably could be matched with with energy storage. Like, would that be over, like, a a one, three, or five year, like, time frame, like, at a high level?

Joy Harris, President and COO, Incoming CEO, DTE Energy: Yeah. So think about it. I’ll I’ll explain it this way. So as the data center load comes on, let’s just call it this gigawatt, we’ll we’ll we’ll meet that demand with the excess capacity we have plus a storage build out. And you can think about it as one for one.

So if we bring on a gigawatt of data center load, we’ll have to build a gigawatt of storage. And to do that, we’ll use the combination of, PPAs and self build, to meet that demand. And so the pricing that we’re seeing, just so you have some some benchmarks to use, is about $15 a megawatt for self build. And combine the two, both self build and p p PPAs will be roughly about a billion dollars, for every gigawatt that we bring on of storage. And we’ll start that construction based on the low ramps, at least that we’re seeing now, in, 2026.

So think about it coming online in ’27 in increments just based on their load ramps, and that will progress over a couple of years, call it. As we get further into the plan, we get out toward the the end of our five year plan, the demand grows in such a way, at least as we understand it today, that we’ll have to build something more substantial, like a combined cycle plant with, carbon capture or being carbon capture ready. So that’s how we’re looking at it today. And, as the negotiations materialize and we finalize those load ramps, we’ll incorporate all of this into our IRP, and the IRP process will determine the the optimal generation mix.

Aiden Kelly, Analyst, JPMorgan: Understood. That’s super clear. I’ll leave it there. Thanks.

Rebecca, Conference Operator: Your next question comes from the line of Julien JULIEN Dumoulin Smith SMITH:] with

: Hey. Good morning, team. Thank you guys so very much. Appreciate it. And congrats to both of you again.

I really it’s been a pleasure and more importantly, Joy, I look forward to working with you going forward. Congrats again.

Joy Harris, President and COO, Incoming CEO, DTE Energy: Thank you.

: Actually, maybe let me pick of course. Absolutely. If I can pick it up where you just left it off there because I think it was a nice point. As you think about the totality of the update to come here, right, clearly, I believe the forecast hasn’t really reflected the total opportunity in RNG and the extension through ’29 per your comments to Nick. And subsequently per your prior comments here, it seems like the battery storage opportunity seems very much right in that same twenty seven to twenty nine period.

But maybe if I can put a finer point on the last point you said a second ago about the gas opportunity. How do you think about that the visibility on that piece here and the IRP and the potential to have that CapEx ramp in that those tail end, the ’27 through ’29 period? Just trying to make sure I understand the different puzzle pieces that fit into kind of a third quarter or or year end kind of update here if you think about it. What are the different CapEx items?

Joy Harris, President and COO, Incoming CEO, DTE Energy: Yeah. So the a combined cycle plan would be towards the tail end of our five year plan and into the next phase of our plan. We would have to go through, the significant, well, the certificate of need process, which is really a part of the IRP in order to bring on a combined cycle plant. As you know, the queues are building, so we’re getting ourselves in the queue. We’re already in the MISO queue, for at least, one plant and potentially two, and that’s to serve our existing load.

We’re we’re still intending to retire Monroe at the 2032. And so, therefore, we’ve gotta get in the queue and gotta we’ve gotta ready ourselves in advance of us, filing the IRP. So the timing doesn’t exactly match up. All that said, we continue to, prepare as if we are going to bring on CCGT at that time and establish the right relationships with EPC contractors and also with turbine providers. So if you wanna think about the storage, think about the storage coming into the plan beginning in 2026 in increments.

And then toward the very tail end of the plan, that would result in us, bringing on capital for a combined cycle plan.

: Got it. Excellent. And then just to understand the the ramp rate here. I mean, obviously, you’re talking about a gigawatt of of both conveniently incremental load and opportunity to serve. Is there a potential that you kind of accelerate, that incremental?

You talked upwards of seven, I think, implied gigawatts of opportunity here. How do you think about the timing of that sort of feathering in? Is that principally at the tail end or beyond the plan? Or is there a potential that you actually are ramping up even more, shall we say, multiple parallel data centers to achieve more than a gigawatt? And and is that conceivable given the generation mix and and planning cycle you just described?

Joy Harris, President and COO, Incoming CEO, DTE Energy: Well, Julia, let me just say it this way. Negotiations are ongoing, and a a point of negotiation is really understanding the low ramp. So we’ve got early near term ideas around what that low ramp exactly looks like for for at least a few of the hyperscalers, and we’re still continuing those discussions. So serving where we have a short is really early on in the plan is really how how we, support the load. We bring on the storage to support the load during those periods.

But until we get a final deal done, we don’t know definitively what those load ramps look like. That’s still a point of negotiation. And so I don’t wanna get too far over our skis and and articulate to you that, you know, we’re gonna ramp in a gigawatt this year and a gigawatt next year. I can’t say that definitively. What I do know is at least what we’re seeing right now across multiple data center providers, we’ve got at least a gigawatt worth of opportunity that we will have to support near term.

: Looking forward to that update. Alright?

Dave Rood, Executive Vice President and CFO, DTE Energy: To clarify on that, Julian, a little bit this is Dave. Yeah. With the additional storage, it gives us a little more of the excess generation that we’ve been talking about. So we’re able to use that storage to to reach some of those capacity positions. And so we do have more than a gigawatt of, availability as we bring the storage on to support that.

Joy Harris, President and COO, Incoming CEO, DTE Energy: Yeah. It’s it’s one for one. So a gigawatt of storage gives you essentially makes one gigawatt almost two gigawatts.

: Hey. Thanks for that clarification. I appreciate it. Best of luck, guys.

Rebecca, Conference Operator: Your next question comes from the line of Andrew Weasel with Scotiabank.

Matt Krumpensky, Unspecified, DTE Energy0: Hey. Good morning, everyone. I want to echo the congratulations to both Joy and Jerry. Between the last Jerry, this Jerry, now, Joy, your board clearly likes alliteration.

Joy Harris, President and COO, Incoming CEO, DTE Energy: Morning, Andrew.

Matt Krumpensky, Unspecified, DTE Energy0: Joy Joy, my first one is more of a a philosophical one. It is a financial question, but the company has generally been very conservative. Your your DTE reputation is one of under promising and over delivering. I think the philosophy serves you well, but my question is how are you thinking about that philosophy? I think I heard you say that you’re not expecting to grow EPS faster than the high end of 6%, so maybe that sort of answers it.

I’d love to hear how you’re thinking about that general attitude. I know you’ll you’re you’ve clearly alluded to an update in a few months, but how do you think about that philosophy?

Joy Harris, President and COO, Incoming CEO, DTE Energy: Yeah. I I feel like I’ve learned from the best to to make sure that we we always deliver for our our stakeholders, including our shareholders. And so we wanna make sure that we have a high degree of confidence in our plans, and we have the requisite flexibility in those plans to be consistent and deliver consistently, for our shareholders. So at this point, I think we’ve got a solid plan in place, and we’re incorporating what we believe is flexibility in that plan so that we continue to deliver right on top of what we promised.

Matt Krumpensky, Unspecified, DTE Energy0: Okay. Very good. Next one, I I think we’ll get your 10 q later today. But can you let us know, did you issue any equity during the quarter? And Dave, I think you reiterated the 0 to $100,000,000 per year.

How are you thinking about the long term outlook? I guess the positive side, you’ve got tax credits from the OBBB on the maybe negative side from a financing perspective, upside to CapEx. How do you think of those as kind of maybe washing out?

Dave Rood, Executive Vice President and CFO, DTE Energy: Yes, Andrew, we did we have a little bit of equity that comes in kind of ratably throughout the year, so there’s some of that. But it’s within that 0 to a 100,000,000 we u we issue through an internal mechanisms. And at zero to a 100, that is from 25 to 27 in our expectation in our base plan. And then, you know, we did say after ’27, we see some incremental equity that would come in. Even in our base plan, that’s, you know, dollars 200,000,000 to $300,000,000 more out there in those in those years.

But to your question on if we bring in some additional capital, we would have to look at some additional equity or equity like products to continue to be at our 15% FFO to debt. But as you know, this is good equity and would be associated with increased growth that we would see with that as well.

Matt Krumpensky, Unspecified, DTE Energy0: Right. And that’s something you’ll give more details on in a few months?

Dave Rood, Executive Vice President and CFO, DTE Energy: Yeah. That would yeah. We’ll put all that together when we show our new capital plan. You know, we’ll we’ll define how we’re gonna how we’re gonna finance that as well.

Matt Krumpensky, Unspecified, DTE Energy0: Okay. Great. And during the quarter, was there any activity?

Dave Rood, Executive Vice President and CFO, DTE Energy: It it’s just a little bit that comes in ratably from the internal mechanisms we use, but nothing, you know, nothing public.

Matt Krumpensky, Unspecified, DTE Energy0: Okay. Very good. And one last one if I can. During the call, forgive me if I missed it, but I don’t think you said anything about wind. There was a lot of focus on, solar and storage and gas.

How are you thinking about opportunities for wind, whether that would be new build or potentially repowerings?

Joy Harris, President and COO, Incoming CEO, DTE Energy: Yeah. We’re examining wind. We we currently have some wind assets that would might be eligible for repowering. But we’re we’re right now, we’re focused on, building out solar, and that’s where we have the greatest opportunity, but we have not, closed the door completely on wind assets.

Matt Krumpensky, Unspecified, DTE Energy0: Is there a reason there’s such a preference for one over the other?

Joy Harris, President and COO, Incoming CEO, DTE Energy: Just the amount of land that’s required based on the land that we have and, the receptiveness to wind also is a key driver. Right now, more communities are more receptive to solar build outs in their in their areas. So that’s really why we’ve we’ve pivoted to, solar for the most part. The economics are a little better as well.

Matt Krumpensky, Unspecified, DTE Energy0: Okay. That’s very helpful. Thank you.

Rebecca, Conference Operator: Your next question comes from the line of Sophie Karp with KeyBanc.

Matt Krumpensky, Unspecified, DTE Energy1: Hi. Good morning. Thank you for taking my question and congratulations to Joy and Jerry on a good quarter as well. Thank you. Guys.

Can I can I ask you a question on the data center build out again from a different angle maybe? Is there a way for us to think about how much of a revenue increase is displaced by the addition of data center customers. You know, know, the industry keeps talking about savings that can be accrued to retail customers. How should we start thinking about that? Like, for every gigawatt of data center additions, x amount of revenue requirement is displaced or, like, is that able to rule of thumb yet given your framework?

Joy Harris, President and COO, Incoming CEO, DTE Energy: Well, I’ll put it to you this way. Just based on what we announced previously, the 2.1 gigawatts, I believe that increases the load over that five year time horizon by about 40%. So you could think of that as headroom on, rate growth for for existing customers.

Matt Krumpensky, Unspecified, DTE Energy1: So effectively, we could take that, kinda net out the, cost of, investment that’s needed to serve those additions, and that would be, cost savings to customers?

Dave Rood, Executive Vice President and CFO, DTE Energy: Yeah. Actually, the the initial that we bring on, there’s there’s not much additional capital investment we have to bring on. The storage will be paid for by the data centers. Really, you get the advantage because these data centers operate at, a 90% load factor, and our system is about a 50% load factor. So it really provides a lot of affordability just by using the our base industrial rate, provides a lot of affordability for our our base customers.

Matt Krumpensky, Unspecified, DTE Energy1: Got it. This is very helpful. Thank you. And then any, color you could share on how the electric rate case is going?

Joy Harris, President and COO, Incoming CEO, DTE Energy: Yeah. Sophie, we are we’re still in audit and discovery, and we’re getting about, you know, the amount of questions that we would anticipate given the size and scale of the case and the fact that we’re looking to expand the IRM and grow it to a a billion dollars over the next couple of years. So the line of questioning is is as you would think. It’s all around, you know, system reliability and and what we’ve been able to deliver and how our plans align with the the Liberty audit, which we feel we’re in a really good position to to answer those questions and provide compelling testimony. We will, hear back from interveners and staff, next month.

So we’ll get, staff and intervener testimony on August 22, and that’ll be our first indication as to whether or not we’re completely aligned with staff or there’s still some explanation that’s required. And likewise, we’ll understand what interveners think of our plan and how we can engage them in discussions, to potentially pursue a settlement. But that’s where we stand right now. The PFD is, expected in December, kinda mid December, and then we’ll get a final order in February.

Matt Krumpensky, Unspecified, DTE Energy1: Got it. Thank you. This is all for me. I appreciate the answers.

Rebecca, Conference Operator: Your next question comes from the line of Anthony Crowdell with Mizuho Securities.

David Arcario, Analyst, Morgan Stanley: Hey, good morning, Joy. Good morning, Jerry. Congrats to both of you.

Nicholas Campanella, Analyst, Barclays: Good morning. Thank you.

David Arcario, Analyst, Morgan Stanley: Hey, just one quick question. I’m wondering, Joy, it’s very early in your tenure, but any legislative or regulatory goals or processes you’re hoping to accomplish early on in your tenure or that you’re putting on your to do list of maybe, you know, whether it’s a decoupling mechanism or something to the legislature that you’re focused on right now?

Joy Harris, President and COO, Incoming CEO, DTE Energy: Yeah. Right now, Anthony, we we are focused very heavily on the IRM. We that is proven. We’ve used the IRM in the gas business, for a number of years now, and that’s delivered the value for the customers. And it’s also helped keep us out of regulatory proceedings for multiple years.

And so our focus is growing the electric IRM, and we’ve included that in the case. And that that’s the biggest thing for us right now on the regulatory front. And we think we’ve we’ve laid a good foundation for that, and the Liberty Audit supports it. So that’s where I’m gonna focus my attention. And as we, see testimony from the staff and interveners, we’ll make sure that they understand the benefits of expansion of the IRM going forward.

David Arcario, Analyst, Morgan Stanley: Great. And then if I if I could just take another crack maybe in an earlier question. You were very clear on the 6% to 8% earnings growth rate. You seem like your intention to stay there. But are you including if you do get some of the large load customers, the data centers?

I mean, maybe I’m just splitting hairs here, but is there the ability to rebase higher or something? Or even with the potential that long pipeline you have, are you still to see yourself at the 6% to 8%? And I know that’s going really forward and I know that you haven’t, you know, a lot of it’s still, the nearing formalization agreement. But just, I guess, how rigid is that 6% to 8% even if you get the seven gigawatts on?

Joy Harris, President and COO, Incoming CEO, DTE Energy: Yeah. So I would say that, the five year plan that we laid out, we intend to stay in that six to 8%. Beyond that, there’s a lot that can happen that we’ve gotta reconcile. And it’s too early, for us to say definitively what we might look like beyond our five year plan. So, as we have always done, we will look to continue to deliver value for all of our stakeholders and minimize any kind of risk that we see in our plan and use the flexibility to deliver smooth and reliable results going forward.

David Arcario, Analyst, Morgan Stanley: Great. Thanks for taking my questions.

Jerry Norcia, Chairman and CEO, DTE Energy: Yeah. Just to add to that, I I think, Joy, hit on. As we roll up the new plan, I think we’ll we’ll provide, new guidance. So we don’t wanna do this piecemeal. So as as all of this comes together and continues to come together, we’ll reevaluate what we’re at.

David Arcario, Analyst, Morgan Stanley: Thanks again, Jerry. Glad you stepped up there. We weren’t sure if you were just already, you know, on the golf course.

: Well, I’m I’m here, Anthony. You

David Arcario, Analyst, Morgan Stanley: know, big

Joy Harris, President and COO, Incoming CEO, DTE Energy: Uh-oh. We lost you.

Jerry Norcia, Chairman and CEO, DTE Energy: We lost you, Anthony.

Joy Harris, President and COO, Incoming CEO, DTE Energy: We lost you. He’s keeping us on track, Anthony.

Rebecca, Conference Operator: Your next question comes from the line of Paul Freeman with Ladenburg.

Matt Krumpensky, Unspecified, DTE Energy2: Hey. Thank you very much, and congratulations. I guess, first question, given that we’re halfway through the year, can you give us an idea as to whether you would expect additional data center announcement to be a third quarter or a fourth quarter event?

Joy Harris, President and COO, Incoming CEO, DTE Energy: Morning, Paul. Our intention is to have a deal done by the end of the year, and we’re really making nice progress near term. As I mentioned before, we have received feedback from the data center providers you know, contractual language both in the ESA. And right now, we’re really focused on solidifying the storage contract so we understand that the build out, that we’ll have to do to support the load. So our intention is to have a really good indicator by the third quarter and finalize have a final deal in hand by the end of the year.

Matt Krumpensky, Unspecified, DTE Energy2: And then in terms of corporate and other, you’re showing sort of 56,000,000 negative change in the quarter. How much of that is the timing of tax that’s expected to reverse by the end of the year?

Dave Rood, Executive Vice President and CFO, DTE Energy: Yeah. A lot of that is the timing of taxes. We’re we’re we’re on track. You know, that’ll that will all reverse. We’re on track to meet our full year guides for that segment through the year.

Matt Krumpensky, Unspecified, DTE Energy2: Okay. So that’s, like, that’s, like, 27¢ just by itself. Okay.

Nicholas Campanella, Analyst, Barclays: Yeah. And

Matt Krumpensky, Unspecified, DTE Energy2: then last question for me. When the treasury guidelines come out later in August, what are you expecting with with respect to how they look at safe, the definition of, safe harbor.

Joy Harris, President and COO, Incoming CEO, DTE Energy: Yeah. So the way that we’ve been we’ve been looking at this is, you know, this the begin construction of safe harbor language has existed in this form in the treasury guidance for for over a decade, and we’ve relied on that, for for years. So in terms of what we anticipate, we don’t we don’t necessarily anticipate there being in a reversal of those guidelines. But what we’ve done is is insulated ourselves, based on our understanding of what it means today. And we made our purchases and secured our safe harbor assets well in advance of the law being promulgated.

So we feel good about our position. We started in 2024, and right before the law passed, we were able to safe harbor additional, renewable assets at that time.

Matt Krumpensky, Unspecified, DTE Energy2: And then, excuse me, one last one. When you rebase, if you remain within the six to eight, could any particular year be above sort of the the 8% that you, that you’re currently at at the high end?

Jerry Norcia, Chairman and CEO, DTE Energy: I think like we said already, Paul, I think we’ll roll that up in the fall or at EEI, and we’ll give you a better better view and what we plan to do. At this point, we’re everything is based off, you know, the guidance, original, 2024 guidance growth rate, in our current five year plan. So we, we’ll give you a lot more insight on that at EEI for third quarter.

Matt Krumpensky, Unspecified, DTE Energy2: I appreciate it. Thank you so much.

Jerry Norcia, Chairman and CEO, DTE Energy: Thank you.

Rebecca, Conference Operator: Ladies and gentlemen, there are no further questions. I will now turn the call back over to Jerry Norcia for closing remarks.

Jerry Norcia, Chairman and CEO, DTE Energy: Well, thank you everyone for joining us today. You can see that, you know, DTE is firing on all cylinders. I’m really proud of the accomplishments that the team has made so far this year, especially in the areas of, you know, we’ve got this really high levels of employee engagement, as I mentioned, which is our secret sauce. The grid is operating extremely well, and all the investments, as Joy loves to say, is investments are working and are making a fundamental difference. I also want congratulate our power plant operators and leaders who really ran through a heat wave here flawlessly.

At Fermi, our nuclear plant specifically, we’ve been recognized by the industry as one of the best in class plants from an operating excellence perspective. And of course, our gas team has not gone out of the park and weathered nice colder than normal weather, and that’s working well. And financially, we’re going to hit our high end of guidance and we’re building favorability, but we’re going to use that extinguish backlogs and prepare ourselves for 2026 and beyond. So I’ll just close by saying it’s been a true honor to serve you Anna’s DTE CEO. Joy is an exceptional leader who will continue to execute the DTE’s strategic plans with excellence, and that’s her specialty, is operating excellence, and that’s what we need.

I look forward to staying connected with you in my role as Executive Chairman over the next few years, and D. T. Is in great hands with Joy, and she’ll drive success for this company. So have a great morning. Stay healthy and stay safe.

Rebecca, Conference Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.

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