DTE Energy Company (DTE) filed Quarterly Report for the period ended 2009-09-30.
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 $6.33 billion; its shares were traded at around $38.48 with a P/E ratio of 10.7 and P/S ratio of 0.7. The dividend yield of Dte Energy Company stocks is 5.4%. 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 approximately $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 third quarter of 2009 was $158 million, or $0.96 per diluted share, compared to net income attributable to DTE Energy of $177 million, or $1.08 per diluted share, in the third quarter of 2008. Net income attributable to DTE Energy for the nine months ended September 30, 2009 was $419 million, or $2.55 per diluted share, compared to net income attributable to DTE Energy of $417 million, or $2.55 per diluted share, in the comparable period of 2008. The decrease in the 2009 third quarter was due primarily to lower earnings in the power and industrial projects, energy trading and gas utility segments. The increase in the nine-month period ended September 30, 2009 was primarily due to higher earnings in the electric utility and energy trading segments, partially offset by the $80 million after-tax gain recorded in the Unconventional Gas production segment on the 2008 sale of a portion of Barnett shale properties.
Both utilities continue to experience high levels of past due receivables, which is primarily attributable to economic conditions. Our service territories continue to experience high levels of unemployment, underemployment and low income households, home foreclosures and a lack of adequate levels of assistance for low-income customers. 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. We experienced an increase in our uncollectible accounts expense for the two utilities to approximately $37 million in the 2009 third quarter from approximately $32 million in the 2008 third quarter. Uncollectible accounts expense was approximately $151 million during the nine months ended September 30, 2009, in comparison to $168 million during the nine months ended September 30, 2008. The 2008 nine-month period experienced higher expense due to an analysis of our greater than ninety day receivables that indicated a change in the mix of customers in that group and therefore an increased risk of collection. The bankruptcies of General Motors Corporation (GM) and Chrysler LLC (Chrysler) did not have a significant impact to our uncollectible expense in the 2009 periods.
Detroit Edison filed a general rate case on January 26, 2009 based on a twelve months ended June 30, 2008 historical test year. The filing with the MPSC requested a $378 million, or 8.1 percent average increase in Detroit Edisons annual revenues for the twelve months ended June 30, 2010 projected test year. The requested $378 million increase in revenues is required to recover the increased costs associated with environmental compliance, operation and maintenance of the Companys electric distribution system and generation plants, customer uncollectible accounts, inflation, the capital costs of plant additions and the reduction in territory sales. Pursuant to an MPSC order issued May 26, 2009, Detroit Edison filed proposed tariffs on June 26, 2009 to implement $280 million of its requested annual increase on July 26, 2009. On July 16, 2009, the MPSC issued an order requiring Detroit Edison to implement the increase by applying the rate design reflected in its January 26, 2009 application. This increase will remain in place until a final order is issued by the MPSC, which is expected in January 2010. Detroit Edison recorded approximately $40 million of increased revenues in the third quarter of 2009 as a result of the self-implemented rates. If the final rate case order does not support the self-implemented rate increase, Detroit Edison must refund the difference with interest. We have assessed whether a refund will be likely in accordance with the requirements of ASC 450-20 Loss Contingencies and believe that it is reasonably possible, but not probable, that Detroit Edison will be required to refund some or all of its self-implemented rate increase and therefore have not recorded a refund liability as of September 30, 2009.
MichCon filed a general rate case on June 9, 2009 based on a 2008 historical test year. The filing with the MPSC requested a $193 million, or 11.5 percent average increase in MichCons annual revenues for a 2010 projected test year. The requested $193 million increase in revenues is required to recover the increased costs associated with increased investments in net plant and working capital, an increase in the base level of the uncollectible expense tracking mechanism and the cost of natural gas theft primarily due to economic conditions in Michigan, sales reductions due to customer conservation and the trend of warmer weather on MichCons market, and increasing operating costs, largely due to inflation. Pursuant to the October 2008 Michigan legislation, and the settlement in MichCons last base gas sale case, MichCon anticipates self-implementing a rate increase on January 1, 2010. See Note 5 of the Notes to Consolidated Financial Statements.
Gross margin increased $46 million in the third quarter of 2009 and increased $51 million in the nine-month period ended September 30, 2009. The following table details changes in various gross margin components relative to the comparable prior period:John Hussman of Hussman Economtrics Advisors, Inc., Kenneth Fisher of Fisher Asset Management, LLC.