DTE Energy Sees Lower Profits in First-Quarter 2015, Sets Full-Year Capex at Up to $2.6 Billion

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Researched by Industrial Info Resources (Sugar Land, Texas)--DTE Energy Company (NYSE:DTE) (Detroit, Michigan), a diversified energy company that generates most of its power in Michigan, benefited from harsh winter weather and an improved economic environment in the first quarter of 2015, although the former fell short of the record cold (and strong profits) of last year. Net income was reported to be $273 million, a 16.26% decrease from first-quarter 2014.

Industrial Info is tracking $737 million in active projects involving DTE, including $30 million in mercury controls retrofits at the coal-fired Trenton Channel Power Station in Trenton, Michigan. The project will retrofit units 7 and 9, which have a total capacity of about 650 megawatts, by installing Trona Dry Sorbent Injection devices on three Alstom/CE tangential-fired dry bottom boilers to reduce emissions.

Total operating revenues stood at $2.98 billion, a 24.07% decrease from the same period last year. Results for the quarter were driven largely by colder-than-expected winter weather, which only failed to benefit the DTE in that is was less extreme than the record-setting chills of first-quarter 2014. Both of the company's utility segments reduced expenses for their customers: DTE Electric reduced electricity rates 6%, and DTE Gas reduced natural gas prices charged to customers 17%.

Both of DTE's non-utility businesses improved their operating earnings: the Gas Storage & Pipelines segment benefited from higher profits from pipeline and gathering, while the Power & Industrial Projects segment saw strong operational performances in all of its business lines. On the whole, DTE benefited from an improved economic environment in Michigan, where the unemployment rate is at its lowest since 2001.

Capital expenditures for first-quarter 2015 were reported to be $667 million, compared with $500 million in the same period last year. Spending for DTE Electric stood at $552 million, compared with $354 million in first-quarter 2014, while spending for DTE Gas stood at $55 million, compared with $44 million in the same period last year.

"Michigan's unemployment rate in March was 5.6%, which is the lowest since September 2001," said Peter Oleksiak, the senior vice president and chief financial officer of DTE, in a conference call. "Year-over-year, Michigan's unemployment rate has dropped a full two percentage points. This is the second-largest improvement in the country. We continue to see improvement in other economic indicators, including increases in residential customer and business customer accounts, and our forecasts show this trend continuing."

Capital expenditures for full-year 2015 are expected to be between $2.5 billion and $2.6 billion, compared with $2.09 billion in 2014. Expenditures on DTE Electric are expected to be about $1.82 billion, compared with $1.56 billion last year, while those for DTE Gas are expected to be about $280 million, compared with $224 million in 2014.

"Our electric utility growth is driven by environmental spending in near term and the renewal of our generation fleet in the longer term, which will be the natural replacement of our aging coal fleet," Oleksiak said in the conference call. "Our gas utility growth is driven by infrastructure investments and the mainline pipe replacement."

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.