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European Investor Update
Background Material
June/July 2004
2
Safe Harbor Statement
DTE Energy expressly disclaims any current intention to update any forward-looking statements contained in this document as a result of new information or future events or developments. Words such as “anticipate,” “believe,” “expect,” “projected” and “goals” signify forward-looking statements. Forward-looking statements are not guarantees of future results and conditions but rather are subject to various assumptions, risks and uncertainties. This press release contains forward-looking statements about DTE Energy’s financial results and estimates of future prospects, and actual results may differ materially. Factors that may impact forward-looking statements include, but are not limited to, timing and extent of changes in interest rates; access to the capital markets and capital market conditions and other financing efforts which can be affected by credit agency ratings requirements; ability to utilize Section 29 tax credits or sell interest in facilities producing such credits; the level of borrowings; the effects of weather and other natural phenomena on operations and actual sales; economic climate and growth in the geographic areas in which DTE Energy does business; unplanned outages; the cost of protecting assets against or damage due to terrorism; nuclear regulations and risks associated with nuclear operations; the grant of rate relief by the MPSC for the utilities; changes in the cost of fuel, purchased power and natural gas; the effects of competition; the implementation of electric and gas customer choice programs; the implementation of electric and gas utility restructuring in Michigan; environmental issues, including changes in the climate, and regulations, and the contributions to earnings by non-regulated businesses. This press release should also be read in conjunction with the forward-looking statements in DTE Energy’s, MichCon’s and Detroit Edison’s 2003 Form 10-K Item 1, and in conjunction with other SEC reports filed by DTE Energy, MichCon and Detroit Edison.
3
DTE Energy Geography
On-Site Energy Projects
Coke Batteries
Synfuels
Biomass
Regional Area of Focus
4
DTE Energy Overview
Utility Platform Non-Regulated Platform
• On-site Energy Projects• Steel-Related Projects• Power Generation with Services• Waste Coal Recovery
• Michigan Gas Production• Shale and Coalbed Methane• Landfill Gas
• Coal Transportation and Marketing
• Gas Pipelines and Storage• Energy Trading and Marketing
Power and Industrial Projects
Non-conventional Gas Production
Fuel Transportation and Marketing
Generates and distributes electricity throughout Southeastern Michigan
Produces, gathers, transmits, stores and distributes natural gas throughout Michigan
5
DTE Energy Business Segments
Regulated
Non Regulated
Detroit Edison Power Generation
EnergyServices
CoalServices
BiomassEnergy
Trading & Co-Energy Portfolio
EnergyResources
Detroit EdisonPower Distribution
DTE EnergyTechnologies
EnergyDistribution
MichConGas Distribution
Non RegEnergy Gas
EnergyGas
HoldingCompany
Energy TechInvestments
Corporate & Other
6
• Regulated Business Overview
• Non-Regulated Business Overview
• Financial Information
• Topical Issues– Environmental– Michigan Economy– Energy Technology
Outline
7
Profile of Detroit Edison and MichCon
Detroit Edison
MichCon
• Ninth largest electric utility in the U.S. with 2.1 million customers
• Over 11,000 MW of power generation, primarily coal fired
• Fermi 2 nuclear plant is a top industry performer
• 54,000 GWh in electric sales
• ~$3.7 billion in revenue
• Fifth largest natural gas utility in the U.S. with1.2 million customers
• 170 Bcf of gas sales
• 12% of national gas storage capacity with 124 Bcf of regulated gas storage
• ~$1.5 billion in revenue
MichConDistribution Services
Detroit EdisonDistribution Services
OverlappingDistribution Services Detroit
8
Profile of Detroit Edison and MichCon
• Detroit Edison has a balanced customer mix
• MichCon’s customers are largely stable residential users
• While important, the automobile sector accounts for only 14% of electric load and 10% of revenue at Detroit Edison
Detroit Edison2003 Total System Sales - 45,890 GWh
Residential 33%
Commercial 35%
Industrial 26%
Other 6%
Detroit Edison2003 Customer Volumes – 172 Bcf
Residential 75%
Commercial 24%
Industrial 1%
Excludes End User Transportation
9
Detroit Edison Generation Fleet
~11,000 MW TotalSummer Net Rated Capacity
Coal 63%
Nuclear 10%
Gas/Oil 9%
Peakers 10%
Pumped Storage 8%
~46,000 GWh Gross Generation2003 Generation Fuel Mix
Coal 81%
Nuclear 18%
Gas/Oil 1%
• Detroit Edison has a diversified generation portfolio anchored by lower cost, base load coal and nuclear generation
• With a focus on coal, Detroit Edison generally has limited exposure to more volatile natural gas prices
10
Detroit Edison Power Plant Portfolio
MW %
Fossil-Fueled Steam-Electric
Belle River 1,026 9.3
Conners Creek 215 1.9
Greenwood 785 7.1
Harbor Beach 103 0.9
Marysville 84 0.8
Monroe 3,045 27.6
River Rouge 510 4.6
St. Clair 1,415 12.8
Trenton Channel 730 6.6
Nuclear - Fermi 2 1,111 10.1
Hydroelectric Pumped Storage 917 8.3
9,941 90%
Oil or Gas-fueled Peaking Units 1,102 10.0
Total 11,043 100%
11
Detroit Edison Plants are Well-Positioned on the Regional Supply Curve
All costs include emissions ( NOx and SO2)
Hydro & Nuclear Coal Combined-Cycle & Steam (Gas) CT - Gas/Oil
ECAR Dispatch Curve - Summer 2005
$0.00
$20.00
$40.00
$60.00
$80.00
0 25,000 50,000 75,000 100,000 125,000
Cumulative MW
$/M
Wh
Min Annual Demand(44,000 MW)
Avg. Annual Demand(67,000 MW)
SummerPeakDemand(104,000 MW)
Detroit Edison Power Plant
12
Detroit EdisonResidential Electric Rates1992 - 2003
8
8.5
9
9.5
10
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
0
25
50
75
100
125
150
Residential Electric Rates ¢/KWh
-11%
1992–2003 Percent Change
Source: EEI Summer Typical Bill Survey
CPI+31%
CPI1992 = 100
13
Detroit EdisonCommercial Electric Rates1992-2003
7.854
9.8175
11.781
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
0
25
50
75
100
125
150
Commercial Electric Rates ¢/KWh
-12%
Source: EEI Summer Typical Bill Survey
CPI+31%
CPI1992 = 100
1992–2003 Percent Change
14
Detroit EdisonIndustrial Electric Rates1992-2003
6
6.5
7
7.5
8
8.5
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
0
25
50
75
100
125
150
Industrial Electric Rates ¢/KWh
-16%
Source: EEI Summer Typical Bill Survey
CPI
+31%
CPI1992 = 100
1992–2003 Percent Change
15
• Regulated Business Overview
• Non-Regulated Business Overview
• Financial Information
• Topical Issues– Environmental– Michigan Economy– Energy Technology
Outline
16
DTE Energy’s Approach to Non-Regulated Businesses
1998 1999 2000 2001 2002 2003
• Build around unique DTE Energy strengths
• Focus where competition is manageable
• Focus on value added/profit first, scale second
• Pursue closely inter-linked business lines
• Build outward from regional base of strength
• Build around broad portfolio, not a single platform
CAGR: ~40%
Non-Regulated Net Income($ millions)
$42
$68$84
$162
$205
$228
17
Non-Regulated Business Segments
Energy Services
Energy Marketing & Trading
Coal Services & Biomass
Gas Production & Storage, Pipelines and Processing
Develops and manages energy-related assets and services, including coke production, synfuel production, independent power plants, on-site energy projects and cogeneration services
Physical power marketing and structured transactions as well as enhancing returns from DTE’s power plant, pipeline and storage assets
Coal marketing and transportation, waste coal recovery and landfill gas recovery
Develops and produces natural gas in Northern Michigan, transports and stores natural gas
18
Using This Approach, DTE Energy Avoided Recent Industry Pitfalls
• Did not overpay for auctioned generation assets
• Avoided international investments
• Did not overemphasize trading business
• Predicted overbuild of merchant generation
• Did not pursue growth at the expense of the balance sheet
• Do not use overly complex and non-transparent financial structures
• Do not promote unrealistic earnings growth expectations
19
Profile of DTE Energy Services
Business Profile• Leverages DTE’s expertise with large
energy users, coal-based fuels and power generation
• Business lines include− Coal based fuels (coke batteries and
synfuels)− On-site energy projects− Power generation
* Synfuel facility in Price, Utah not shown
AL
ILIN
OHPA
NY
KY
WV
NC
MI
On-Site Energy ProjectsCoke Batteries
SynfuelsPower Generation
20
Profile of DTE Energy Trading
Business Profile
• Fundamental role of energy trading and marketing at DTE:– Add value to the company’s assets and
contractual positions, and to help manage the risks tied to these assets and positions
– Provide products and services to customers that lack required capabilities e.g. munis, co-ops
• Commodities marketed and traded include power, gas, coal and emissions credits
• 2003 combined net income for Energy Trading and CoEnergy Portfolio was $29M
Regions where 95% of DTE’s trading activityis concentrated
21
Profile of DTE Coal Services
Business Profile
• Leverages DTE’s scale as a coal user and its expertise in coal transportation and marketing
• Business lines include:– Coal marketing– Rail / water transportation– Railcar maintenance– Coal and emissions trading– Coal tolling– Waste coal recovery
• 2003 net income of $8M
Utility Customers / Tolling Sites
Detroit Edison Plants
Industrial or DTE Energy Services’ Sites
DTE Transportation Services Customer
DTE Dock
22
Profile of DTE Biomass Energy
Business Profile• DTE Biomass is a leading
landfill gas to energy producer– A niche business for DTE, with
modest competition, and opportunities for high and medium Btu production driven by high natural gas prices
– Owns and operates 34 projects in 13 states
– Extracts 28 Bcf of landfill gas annually
– Helped reduce DTE Energy’s overall CO2 emissions by 10%
• 2003 net income of $6M
Gas Sales
Steam Sales
Power Sales
Pipeline Quality Gas
Current Projects
23
Profile of Upstream and Midstream Gas
Business Profile
• Upstream Gas– Leverages DTE’s leading position in Michigan
gas production and our strong technical expertise and operating skills
– 25 Bcf of annual production from 1700 wells in northern Michigan
– DTE Gas Resources, which develops coalbed methane projects
• Midstream Gas– Value and returns enhanced by marketing and
trading opportunities, economic expansion of assets, and structuring/partnership opportunities
• 55 Bcf of unregulated gas storage in Michigan
• 40% equity interest in Vector pipeline
• 2003 net income of $29M
Gas Production, Gas Production, Gathering & Gathering & ProcessingProcessing
Vector
Gas StorageGas Storage
Coalbed MethaneFocus Areas
Cherokee Basin
Arkoma Basin
24
Historical Non-Regulated Business Returns
Average 2001 - 2003
2003 Invested Capital, $MM
Unlevered After-Tax Return on Capital
After-Tax ROE
Energy Services $810 21% 28%
Coal Services $60 23% >30%
Biomass Energy $40 14% 16%
Gas Production & Midstream Gas $440 7% 7%
Energy Trading* $10 N/A N/A
$ Millions
* Return on capital is not generally used as a metric for trading operations
25
• Regulated Business Overview
• Non-Regulated Business Overview
• Financial Information
• Topical Issues– Environmental– Michigan Economy– Energy Technology
Outline
26
2003 Financial Summary
Regulated
Non Regulated
PowerGeneration
EnergyServices
CoalServices
BiomassEnergy
EnergyResources
PowerDistribution
DTE EnergyTechnologies
EnergyDistribution
Gas Distribution
Non RegEnergy Gas
EnergyGas
HoldingCompany
Energy TechInvestments
Corporate & Other
Operating Earnings per Share*
$2.84 $0.44$0.09 ($0.28)
$1.50
$1.18
$0.18
$0.05
$0.03
$0.17
($0.09) $0.17
($0.05)
($0.23)
$3.09
Overheads & Other ($0.09)
$0.27
* Reconciliation to GAAP reported earnings included in the appendix
Trading & Co-Energy Portfolio
27
DTE Energy 2002 vs. 2003 Variance
Operating Earnings*
Holding Company
Regulated Electric
Non-Regulated**
$66Regulated Gas
$207
$3.55***
($39)
$352
2002
$46
$228
$3.09
($35)
$282
2003
• Weather demand
• Electric Choice impact / regulatory deferrals
• Storm restoration costs
• Benefit cost escalation
• Uncollectable expenses
• Non-regulated growth
Earnings Per Share*
$586 $521 Key Drivers:
($ millions)
* Reconciliation to GAAP reported earnings included in the appendix
** Includes Energy Technology Investment
*** Excludes earnings from discontinued operations (International Transmission Company)
28
Non-Regulated 2003 Review
• Higher year-over year synfuel production, partially offset by the absence in 2003 of coke battery tax credits
• Power Generation gains from contract restructuring of $20M
• Gain on the sale of the Portland pipeline of $10M
• Solid growth in realized earnings at Energy Trading
• Discontinued equity accounting at Plug Power in November 2003
* Reconciliation to reported earnings included in the appendix
** Primarily Plug Power losses
2002 2003
Synfuels 136$ 197$
Coke Batteries 52 (7)
On Site Energy Projects 9 9
Power Generation (5) 4
Coal Services 13 8
Biomass Energy 7 6
Energy Trading & CoEnergy Portfolio 25 29
Energy Resources overheads & interest (22) (23)
Upstream & Midstream Gas 26 29
DTE Energy Technologies (16) (15)
Energy Technology Investments** (10) (9)
Other (8) -
Total 207$ 228$
Operating Earnings (after tax)*($ millions)
29
2004 Outlook
• Detroit Edison net income is highly dependent on:– Timing and amount of rate relief– Implementation of Power Supply Cost Recovery Factor
(PSCR)– Resolution of customer choice
• MichCon net income is highly dependent on the timing and amount of rate relief
• Non-regulated net income will be driven by:– Timing and number of synfuel interests sold and synfuel
production levels– Growth in coal bed methane, waste coal recovery and on-
site energy projects
30
Non-Regulated 2004 Outlook
• Timing of synfuel sales
• Restructured coke battery contracts
• Closing the utility outsourcing deal
• Continued weakness in generation pricing
• Drive to profitability in Energy Technologies
• Discontinued equity accounting at Plug Power
2003A 2004E
Synfuels 197$ $150-190
Coke Batteries (7) 6-8
On Site Energy Projects 9 18-22
Power Generation 4 (16)
Coal Services 8 14-16
Biomass Energy 6 6
Energy Trading & CoEnergy Portfolio 29 35-40
Energy Resources overhead & interest (23) (33)
Upstream & Midstream Gas 29 18-20
DTE Energy Technologies (15) (4)
Energy Technology Investments & Other (9) -
Total 228$ $194-249
* Reconciliation to reported earnings included in the appendix
Operating Earnings (after tax)*($ millions)
31
Financial Objectives
• Maintain strong balance sheet and solid investment grade rating– 2003 year-end leverage declined to 49%*
• Generate strong cash flows– Solid 2003 adjusted cash from operations of over $1 billion– Synfuels turns from cash negative in 2003 to cash positive in 2004– Capital expenditures declined $233M in 2003, mostly due to lower NOx
spending
• Conservative and sound financial policies
• Continue dividend of $2.06 per share, with a current yield of 5.2%
* Excludes securitization debt, MichCon short-term debt and quasi-equity instruments
32
DTE Energy Leverage
• Despite the problems that have plagued the industry, DTE Energy has been able to maintain a strong balance sheet
• This was achieved without having to resort to a ‘back-to-basics’ strategy
• Despite the current challenges, DTE Energy’s leverage has not been negatively impacted
DTE Energy Leverage*
40%
45%
50%
55%
60%
1999 2000 2001 2002 2003
* Excludes securitization debt, MichCon short-term debt and quasi-equity instruments
33
DTE Energy 2004 Cash Flows
Cash from Operations $950 $800
Capital Expenditures (751) (750)
Dividends (346) (353)
Asset Sales 669 40
Cash Flow $611
($ millions)
$12
2003A Low
Synfuel Production Payment*
Adjusted Cash from Operations
89 175
$1,039 $975
$1,050
(1,060)
(353)
40
$2
High
225
$1,275
2004E
* Accounted for as ‘investing activity’
• Cash flows in 2004, similar to net income, are uncertain. Final results depend on:
– Timing and amount of rate relief
– Electric Choice– Timing of synfuel sales
• The cash initiative successfully implemented in 2003 will continue this year, with a minimum goal of internally funding the dividend
• Leverage is expected to remain at the low end of our range
Cash Improvement Initiative 100 100
34
DTE EnergyCapital Expenditures
Detroit Edison
NOx
MichCon
Non Regulated & Corporate*
Total
• Based on utility rate case filings, 2004 capital expenditures will be approximately $1B
• These capital expenditures are largely incurred at the two regulated utilities
• We intend to match actual 2004 capital spending with available cash flows. Until utility rate cases are resolved, capital spending will remain at 2003 levels
($ millions)
$672
38
139
211
$1,060
2004E
Capital Expenditures(2004 Based on Rate Case Filings)
* 2004 includes $55M of corporate capital
$516
64
98
73
$751
2003A
35
DTE EnergyCurrent Credit Ratings
• Negative outlook from Moody’s and S&P reflects concerns over:
– Rate case outcomes
– Electric choice program and need for change
• Cash flow metrics should start improving with impact of rate cases and synfuel monetization
S&P Moody's Fitch
DTE Energy BBB+A, B Baa2 B BBB
Detroit Edison A- B A3 B A-
MichCon BBB+ B A2 C A
Last action 11/7/2003 1/28/2004 11/10/2003
Current Ratings
A) Corporate Credit Rating
B) Negative Outlook
C) Under review for possible downgrade
36
DTE Energy’s Commitment to the Dividend
• Despite recent earnings pressure to date the dividend has remained stable at $2.06 per share
• Management is committed to maintaining dividend at current level
• As cash flows improve DTE intends, in the absence of new investments that meet our return requirements, to return excess cash to shareholders or pay down debt
4.8%
6.5%
5.3%4.9%
4.4%
5.2%
1998 1999 2000 2001 2002 2003
Dividend Yield
$2.06Dividend
37
• Regulated Business Overview
• Non-Regulated Business Overview
• Financial Information
• Topical Issues– Environmental– Michigan Economy– Energy Technology
Outline
38
Status of Multi-Emission Legislation in the U.S.
• Lack of consensus from the industry and political challenges prevented multi-emission legislation from being passed in 2003 – Presidential politics in 2004 continue to block its consideration
• DTE Energy played a leadership role in attempting to create consensus between companies taking a “just say no” position and those with more aggressive positions (primarily Eastern and nuclear utilities)
• Although legislation is stalled, the Administration has proposed regulations to control sulfur dioxide (SO2), nitrogen oxides (NOx), and mercury (Hg) with similar reductions and timeframes as legislation DTE Energy supported
39
DTE Energy Estimated Cost of Environmental Compliance
-
200
400
600
800
1,000
1,200
Previous 2005-2010 2011-2015
NOx SO2 Mercury
($millions)
536
870
1,011
Total Estimated Capital: $2.4 Billion
• DTE Energy will seek to gain agreement with the Michigan Public Service Commission on the mechanism by which these environmental investments will be recovered:
– Another rate case that gives clear path for recovery
– Securitization of environmental capital
– Environmental wires charge (social benefit)
40
Air Issues Dominate DTE Energy’s Focus
-100%
-80%
-60%
-40%
-20%
0%
20%
40%
Changes in Detroit Edison Power Plant Emissions and Generation(1974–2003)
PM SO2 NOxHg
CO2
MWhFossil
MWhSystem
-88%
-63%-60%
-12%
12%16%
39%
Landfill Methane Recovery and Carbon Sequestration Projects offset much of the CO2 increase
41
DTE Energy has Taken Significant Action on Climate Change and will Continue its Efforts
• DTE Energy’s carbon dioxide emissions continue below its 1990 level of 44.2 million tons. The company’s emissions for SO2, CO2
and NOx are 50-60% below the regional average
• DTE Biomass landfill gas projects eliminate substantial volumes of greenhouse gas (equivalent to approximately 10% of DTE’s fossil-fired carbon dioxide emissions)
• We have planted more than 20 million trees in Michigan since 1995. These trees will absorb about 6.6 million tons of carbon dioxide and produce 4.6 million tons of oxygen over a 50-year timeframe
• We continue to invest in high efficiency turbines at several of our plants which will reduce emissions by approximately 2%
42
DTE Energy’s Environmental Stewardship is Well-Recognized
DTE Energy’s relative environmental performance, as rated by Innovest Strategic Value Advisors, an internationally recognized investment research and advisory firm specializing in analyzing companies' performance on environmental, social, and strategic governance issues
43
DTE Energy is Actively Involved in Waste Coal Recovery Efforts
WasteCoal Fines
Raw Coal
Prep PlantMine
WashedCoal
Coal Buyer
RefusePond
• DTE Energy has sole rights to a proprietary waste coal recovery technology, “PepTec”
• The technology uses a chemical and mechanical process to separate clay from waste coal, thereby increasing Btu content of the coal
• Builds upon DTE Energy’s strong knowledge of coal markets and relationships with coal companies
• The large market potential for the recovery technology makes it a significant opportunity for DTE
– Amount of coal in U.S. waste coal pond is estimated to be over 1 billion tons with 30 million tons added each year
• Reclamation of coal fines from waste coal ponds also provides a significant environmental benefit
• Our first plant is operational and producing at a rate of ~250,000 tons per year
44
• Regulated Business Overview
• Non-Regulated Business Overview
• Financial Information
• Topical Issues– Environmental– Michigan Economy– Energy Technology
Outline
45
Michigan’s Economy has Diversified
1980 2001
Industrial54%
Services44%
Other 2%
Industrial46%
Services53%
Other 1%
Michigan Gross State Product (GSP) by Sector
Source: U.S. Department of Commerce, Bureau of Economic Analysis, “Regional Economic Accounts”
46
Diversification Assures a Steady Base, Countering the Cycles of Michigan's Manufacturing Industry
• Automotive, plastics, engineering and R&D, wood products, agribusiness and tourism
• Life sciences– Nearly $2 billion industry – Main sectors:
• Pharmaceuticals • Medical devices, instrumentation
and diagnostics • Research and ancillary services
– Over 540 firms including Pfizer, Lumigen and Pharmacia
• Information Technology– Home to major technology-
focused companies including Compuware, Dow Chemical, and EDS
• Alternative energy
• Advanced automotive technology
Traditional IndustriesTraditional Industries High-Tech IndustriesHigh-Tech Industries
Source: U.S. Dept. of Commerce, Michigan Economic Development Corporation
Services 21%
Agriculture, forest., fish
1%
Construction 5%
Finance / Insurance / Real Estate
16%
Retail trade 10% Wholesale
trade 7%
Government 11%
Transportation
& utilities6%
Manufacturing
23%
2001 Michigan Industries
47
Michigan Is Emerging As a Hotbed of Technology-focused Industry
• Michigan ranked fifth in the 2003 annual national ranking of corporate expansions and locations
• Michigan ranks fourth nationally for total employment in high tech industries – Employment in high tech industries accounts for 5.3% of
Michigan’s total workforce, exceeding the national average of 4.4%
• The University of Michigan is #1 in the nation for life sciences research, with $591 million in research expenditures in 2001
• Venture capital investment up in Michigan– More than $2.4 billion is under management by Michigan
venture capital firms– Software, Industrial, and Biotechnology firms continued to attract
the most investment capital
Source: Michigan Economic Development Corporation
48
Michigan’s Unemployment Tracks National Rate
Historical Comparison of UnemploymentMichigan v. United States
• Michigan’s economy and unemployment was once thought to be more severely impacted than the nation as a whole by downturns in the economy.
• While once true, the correlation no longer exists as Michigan’s unemployment now tracks with the national rate
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
Jan-
1979
Jan-
1980
Jan-
1981
Jan-
1982
Jan-
1983
Jan-
1984
Jan-
1985
Jan-
1986
Jan-
1987
Jan-
1988
Jan-
1989
Jan-
1990
Jan-
1991
Jan-
1992
Jan-
1993
Jan-
1994
Jan-
1995
Jan-
1996
Jan-
1997
Jan-
1998
Jan-
1999
Jan-
2000
Jan-
2001
Jan-
2002
Jan-
2003
Jan-
2004
Un
emp
loym
ent
Rat
e (%
)
U.S. Michigan
Source: U.S. Bureau of Labor Statistics
49
Michigan’s Automobile Industry
0
0.2
0.4
0.6
0.8
1
1.2
2003 2004 2005 2006 2007 2008
General Motors
DaimlerChryslerFord
Mil
lio
ns
of
Ve h
icle
s P
rod
uc e
d
• The automobile sector accounts for 14% of Detroit Edison’s sales and 10% of revenue
• Within Detroit Edison’s service territory, the Big 3 automakers generally produce more popular and higher margin vehicles
• Over the past 15 years, area auto production volume has remained relatively constant while Detroit Edison’s electric load has increased by ~25%
• In the next five years, Big 3 auto production in Detroit Edison’s service territory is expected to remain relatively stable
Detroit Area Light Vehicle Production
50
Light Vehicle Production Forecast 2003 to 2008: Detroit Area versus Rest of U.S.
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
40%
U.S. Detroit
DaimlerChrysler GeneralMotors
Ford
6% 6%
-5% 0% -3% 34%
Cha
nge
in P
rodu
ctio
n L
evel
• DaimlerChrysler’s forecasted Detroit area light vehicle production should match overall US production levels
• While General Motors is forecasting a decrease in US production, Detroit-area production will remain flat
• Ford Motor Company’s latest forecast indicates a sharp increase in production at Detroit-area plants, driven by :
– new product offerings in the sport utility and pick-up truck lines
– production of the Ford Focus (best selling car in the world) will move from Mexico to Wayne, Michigan
51
• Regulated Business Overview
• Non-Regulated Business Overview
• Financial Information
• Topical Issues– Environmental– Michigan Economy– Energy Technology
Outline
52
Alternative Energy Technologies Will Play a Role As the Energy System Evolves
• Increasing Demand• Need for Economic Growth
• Environmental Pressure• Energy Security Needs
• Supply and Infrastructure Constraints
CurrentEnergy System
• The current energy system is under pressure
• Incumbent fuels and technologies(oil, gas, coal, internal combustion engines) will likely still dominate
• Alternative technologies (renewables, fuel cells, distributed power, hydrogen) will become increasingly important as performance improves
53
DTE Energy Has Taken a Pragmatic Approach to New Energy Technologies
Basic Philosophy
• New energy technologies and approaches will play an increasing role in our energy system
• Need to be active in these markets to build expertise
Business Approach
• Invest limited capital
• Leverage existing skills and customer relationships
• Look for profitable market segments to build new businesses or expand existing businesses
• Exit when business opportunities don’t develop
54
DTE Energy Has a Long History of Technology Innovation in Conventional and Alternative Technologies
Electrostatic Precipitators
(1970s)
Low SulfurCoal
(1970s)
DTE Biomass Energy (1989)
Solar Currents(1996)
Plug Power(1997)
High Temperature Superconductors
(1998)
DTE Energy Technologies
(1998)
DTE Solar of California
(1999)Hydrogen PowerPark
(2003)
Peptec Waste Coal Technology
(2002)
55
DTE Biomass Energy
DTE Energy Technologies
DTE Energy Ventures
DTE Hydrogen Project
DTE Solar Projects
Today, DTE Energy Is a Leader in Alternative and Clean Energy Technologies
56
Appendix
57
Operating Earnings to Reported Earnings Reconciliation
Earnings Per Share
Full Year 2003DTE Energy
ConsolidatedDTE Energy
ConsolidatedRegulated
ElectricRegulated
GasNon-
RegulatedHolding
Company
Operating 3.09 521 282 46 228 (35)
Blackout Costs (0.10) (16) (16) Adjustment of EITF 98-10 accounting change (Flowback) 0.10 16 16 Loss on sale of steam heating business (0.08) (14) (14) Disallowance of gas costs (0.10) (17) (17) Contribution to DTE Energy Foundation (0.06) (10) (10) Adjustment for discontinued operations of ITC 0.03 5 5 Gain on sale of ITC 0.37 63 63 Asset retirement obligations (SFAS 143) (0.07) (11) (6) (1) (4)
Adjustment of EITF 98-10 accounting change (cumulative effect) (0.09) (16) (16)
Reported 3.09 521 314 28 224 (45)
Net Income ($ millions)
Reconciliation of Operating Earnings to Reported Earnings
58
Operating Earnings to Reported Earnings Reconciliation
Earnings Per Share
Full Year 2002DTE Energy
ConsolidatedNet Income ($ millions)
Regulated Electric
Regulated Gas
Non-Regulated
Holding Company
Operating 3.55 586 352 66 207 (39)
Adjustment for discontinued operations of ITC 0.28 46 - - - - Intercompany Gain 4
Reported 3.83 632 356 66 207 (39)
Q4 2003Earnings Per
Share Net Income
DTE Energy Consolidated
DTE Energy Consolidated
Operating 0.94 159
Tax credit driven normalization 0.42 70
Reported 1.36 229
Net Income ($ millions)
Reconciliation of Operating Earnings to Reported Earnings