DTE Energy Company Reports Operating Results (10-Q)
Dte Energy Company has a market cap of $8 billion; its shares were traded at around $48.29 with a P/E ratio of 14.5 and P/S ratio of 1. The dividend yield of Dte Energy Company stocks is 4.5%. Dte Energy Company had an annual average earning growth of 2.3% over the past 10 years.DTE is in the portfolios of John Hussman of Hussman Economtrics Advisors, Inc., Jeremy Grantham of GMO LLC, Steven Cohen of SAC Capital Advisors, Kenneth Fisher of Fisher Asset Management, LLC, George Soros of Soros Fund Management LLC.
Highlight of Business Operations:Net income attributable to DTE Energy in the first quarter of 2010 was $229 million, or $1.38 per diluted share, compared to net income of $178 million, or $1.09 per diluted share, in the first quarter of 2009. The increase in net income is primarily due to higher earnings in the electric and gas utilities and in the Power and Industrial Projects segment.
Both utilities continue to experience high levels of past due receivables 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. Despite the economic conditions, total arrears were reduced during 2010 in our electric and gas utilities. 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. Detroit Edison has an uncollectible expense tracking mechanism that enables it to recover or refund 80 percent of the difference between the actual uncollectible expense for each year and $66 million. MichCon has an uncollectible expense tracking mechanism that enables it to recover or refund 90 percent of the difference between the actual uncollectible expense for each year and $37 million. The Detroit Edison and MichCon uncollectible tracking mechanisms require annual reconciliation proceedings before the MPSC.
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, the impact of high levels of uncollectible expense 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 self-implemented $170 million of its requested annual increase on January 1, 2010. This increase will remain in place until a final order is issued by the MPSC, which is expected by June 2010. If rates in the final rate case order are lower than the self-implemented rate increase, MichCon must refund the difference with interest. MichCon has recorded a refund liability of $9 million at March 31, 2010 representing the potential refund due customers.
Gross margin increased $33 million in the first quarter of 2010 as compared to the same period in 2009. This increase reflects $71 million impact of the January 1, 2010 self-implemented rate increase, partially offset by $23 million related to the impacts of warmer weather, $4 million of continued customer conservation efforts, $4 million lower valued gas received as compensation for transportation of third party customer gas, $4 million of lower revenue from the uncollectible tracking mechanism and $3 million of lower midstream transportation and storage services.
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