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DTE Energy Company Reports Operating Results (10-Q)

May 05, 2009 | About:

DTE Energy Company (DTE) filed Quarterly Report for the period ended 2009-03-31.

DTE Energy is a Detroit-based diversified energy company involved in the development and management of energy-related businesses and services nationwide. Its largest operating units are Detroit Edison an electric utility serving 2.1 million customers in Southeastern Michigan and MichCon a natural gas utility serving 1.2 million customers in Michigan. Detroit Edison is the Company's principal operating subsidiary. Affiliates of the Company are engaged in non-regulated businesses including energy-related services and products. DTE Energy Company has a market cap of $5.03 billion; its shares were traded at around $30.8 with a P/E ratio of 9.7 and P/S ratio of 0.5. The dividend yield of DTE Energy Company stocks is 6.9%. DTE Energy Company had an annual average earning growth of 7.5% over the past 5 years.

Highlight of Business Operations:

DTE Energy is a diversified energy company with 2008 revenues in excess of $9 billion and over $24 billion of assets. We are the parent company of Detroit Edison and MichCon, regulated electric and gas utilities engaged primarily in the business of providing electricity and natural gas sales, distribution and storage services throughout southeastern Michigan. We operate four energy-related non-utility segments with operations throughout the United States.

Net income attributable to DTE Energy in the first quarter of 2009 was $178 million, or $1.09 per diluted share, compared to net income of $212 million, or $1.29 per diluted share, in the first quarter of 2008. The decrease in net income is primarily due to the $80 million after-tax gain on the 2008 sale of a portion of Barnett shale properties, partially offset by higher earnings in the electric and gas utilities and in the gas midstream and energy trading segments in our non-utility operations.

Collectibility of Accounts Receivable on Utility Operations Both utilities continue to experience high levels of past due receivables, which is primarily attributable to economic conditions, including high levels of unemployment and home foreclosures. High energy prices and a lack of adequate levels of assistance for low-income customers have also impacted our accounts receivable. We have taken actions to manage the level of past due receivables, including increasing customer disconnections, contracting with collection agencies and working with Michigan officials and others to increase the share of low-income funding allocated to our customers. The April 2005 MPSC gas rate order provided for an uncollectible true-up mechanism for MichCon. The uncollectible true-up mechanism enables MichCon to recover ninety percent of the difference between the actual uncollectible expense for each year and $37 million after an annual reconciliation proceeding before the MPSC. Our uncollectible accounts expense for the two utilities was approximately $42 million for both the three months ended March 31, 2009 and the corresponding period of 2008 (net of amounts deferred for future recovery under MichCons uncollectible true-up mechanism.)

Impact of Regulatory Decisions on Utility Operations On December 23, 2008, the MPSC issued an order in Detroit Edisons February 20, 2008 updated rate case filing. The MPSC approved an annual revenue increase of $84 million effective January 14, 2009 or a 2.0 percent average increase in Detroit Edisons annual revenue requirement for 2009. Included in the approved $84 million increase in revenues was a return on equity of 11 percent on an expected 49 percent equity and 51 percent debt capital structure.

We anticipate significant capital investment across all of our business segments during the next five years. Most of our capital expenditures will be concentrated within our utility segments. Our electric utility segment currently expects to invest approximately $6 billion (excluding investments in new base-load generation capacity, if any), including renewable and energy-efficiency related expenditures, increased environmental requirements and reliability enhancement projects during the period of 2009 through 2013. Our gas utility segment currently expects to invest approximately $750 million on system expansion, pipeline safety and reliability enhancement projects through the same period. We plan to seek regulatory approval to include these capital expenditures within our regulatory rate base consistent with prior treatment. Due to the economy and credit market conditions, we are continually reviewing our capital expenditure commitments for potential reductions and deferrals and plan to adjust spending as appropriate.

Read the The complete ReportDTE is in the portfolios of John Hussman of Hussman Economtrics Advisors, Inc., John Hussman of Hussman Economtrics Advisors, Inc., Kenneth Fisher of Fisher Asset Management, LLC, Kenneth Fisher of Fisher Asset Management, LLC.

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