DTE Energy (DTE) Q2 2025 Earnings Call Transcript

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Date

Tuesday, July 29, 2025, at 9 a.m. ET

Call participants

• Chairman and CEO — Jerry Norcia
• President and COO (Incoming CEO) — Joi Harris
• Senior Vice President and CFO — David Ruud

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Takeaways

• Operating EPS guidance: Full-year 2025 operating EPS is guided to a range of $7.09 to $7.23, with management targeting the higher end of this range.
• Long-term EPS growth: The long-term operating EPS growth rate remains at 6%-8% based on 2025 original guidance through 2029, with the base year remaining as 2025 original guidance.
• Second quarter operating earnings: Company-wide operating earnings were $283 million, or $1.36 per share (operating).
• DTE Electric earnings: Segment earnings were $318 million, a $39 million increase compared to Q2 2024, attributed to rate implementation and tax timing, partially offset by higher O&M costs and prior period weather variance.
• DTE Gas earnings: Segment operating earnings were $6 million, a $6 million decrease, primarily due to increased O&M and rate-based costs, partially offset by cooler weather.
• DTE Vantage earnings: Segment operating earnings reached $31 million (operating, non-GAAP), a $17 million increase compared to Q2 2024, attributed to RNG production tax credits and higher custom energy solutions earnings.
• Energy trading earnings: The segment earned $24 million, with favorability driven by contracted and hedged physical power portfolio performance.
• Dividend policy: The annualized dividend is set at $4.36 per share for 2025, with management emphasizing its alignment with EPS growth practices.
• Balance sheet and equity issuance: The company expects equity issuances of $0-$100 million over the next three years, and $200–$300 million in incremental equity after 2027, maintaining a focus on investment grade ratings and a 15% FFO-to-debt target.
• Five-year capital investment plan: A $30 billion capital investment plan over the next five years was reaffirmed to support utility modernization and cleaner generation, with over 90% allocated to utility operations.
• Grid reliability investments: Over 220 smart grid devices were installed in the first half of 2025. Over 230 miles of pole-top maintenance were completed in the first half of the year. Over 1,500 utility poles were upgraded and replaced in the first half of the year. 3,300 miles of tree trimming were conducted in the first half of 2025, supporting reliability improvements.
• Data center load opportunity: Advanced discussions are underway for over three gigawatts of new hyperscale data center load, as disclosed in the 2025 earnings call, with an additional four gigawatts of data center load in the early pipeline as of the second quarter; with the intent to sign at least one gigawatt by year-end 2025.
• Renewable generation progress: The company currently has 2,500 megawatts of renewables in service, projecting average annual additions of 900 megawatts of renewables over the next five years.
• Tax credit extension: The extension of RNG production tax credits through 2029 has been incorporated into the company’s five-year plan, with safe harbor for investment tax credits covering renewables and storage assets.
• Regulatory filings: The company plans to file a DTE Gas rate case, is seeking $1 billion in electric distribution spend recovery by 2029, and expects intervener and staff testimony on its electric rate case on August 22.

Summary

DTE Energy (DTE 1.18%) confirmed a CEO transition with Jerry Norcia becoming Executive Chairman and Joi Harris assuming the CEO role effective September 8. Incremental operating earnings growth for DTE Vantage in 2025 and recognition of data center load opportunities as upside to the current five-year plan were emphasized as key drivers of future strategic flexibility. Progress on infrastructure investment includes a robust grid modernization effort and clear regulatory visibility, with additional growth from renewables and tax credit support. Management stated that capital requirements tied to incremental data center and storage projects will be incorporated into the next Integrated Resource Plan, targeting storage construction in 2026 and more baseload generation needs in the latter years of the plan.

• Norcia said, "We saw nearly 70% improvement in reliability in 2024 when compared to 2023," reflecting operational progress.
• Ruud clarified that tax timing variances, including a $67 million negative in the first quarter and a $37 million reversal in the second quarter, are expected to fully reverse during the remainder of the year.
• Harris described the shift in pipeline composition, stating, "hyperscalers consuming at least the upper portion of our pipeline" for data center load.
• Norcia noted that battery storage projects will continue to qualify for the investment tax credit through 2036, supporting planned generation additions for large new loads.
• Harris explained, "And combine the two, both self build and PPAs will be roughly about a billion dollars, for every gigawatt that we bring on a storage," specifying anticipated capital intensity per gigawatt of paired data center/storage investment.

Industry glossary

• IRM (Infrastructure Recovery Mechanism): A regulatory cost recovery tool used to pre-fund eligible capital investment in utility infrastructure outside of full rate case proceedings.
• RNG (Renewable Natural Gas): Methane-based fuel derived from organic waste, qualifying for production tax credits under current U.S. tax law.
• PPAs (Power Purchase Agreements): Contracts under which utilities purchase electricity from an independent generator at pre-agreed prices and terms.
• Hyperscaler: Large technology company that operates extensive data centers, representing significant load growth potential for utilities.
• Safe harbor (tax context): A provision allowing companies to preserve eligibility for investment tax credits by meeting certain timing benchmarks for project commencement or asset procurement.
• Integrated Resource Plan (IRP): A long-term planning document detailing utility strategies for generation, capacity additions, and resource mix to reliably serve projected load.
• MPSC (Michigan Public Service Commission): The regulatory agency overseeing utility rates, reliability standards, and capital investment approval in Michigan.

Full Conference Call Transcript

Jerry Norcia: Thanks, Matt. Good morning, everyone, and thanks for joining us. Hope everyone is having a healthy and safe year so far. This morning, we will discuss the achievements we've made this year as we continue to deliver for all of our key stakeholders. Joi will provide an update on our business strategy, highlighting the significant improvements we are making to enhance reliability for our customers and the progress we are making on renewable energy investments supporting our path to cleaner generation. Joi will also provide an update on data center opportunities that provide potential upside to the plan. And Dave will provide a financial update and wrap things up before we take your questions.

So to start, I'm sure you're all aware that I will be turning over the CEO role to Joi Harris effective September 8. As I'm sure that you have seen over the last few years, we have been preparing for this structured transition for some time. I've worked with Joi for over twenty years, and I've been watching her to continue to deliver and really overdeliver in every role and challenge she has taken on at DTE Energy Company. And particularly in these last couple of years, where she has been serving as President and COO, she has just continued to excel, leading our company to be successful in all of our most critical areas.

So it has just become obvious to me, to our board, and to our entire company that Joi is ready for this role and ready to lead our company to continued excellence. It has been a real honor to be DTE Energy Company's CEO for the last six years. And I'm extremely proud of what we have accomplished over that time. As Joi transitions to the CEO role, I will be serving as Executive Chairman, supporting Joi and the company, helping to ensure the continued success of DTE Energy Company for all of our stakeholders. I am confident that we will continue to deliver and are well-positioned for long-term growth with solid opportunities across all of our business units.

I'll provide a brief overview of slide four highlighting key successes and the opportunities that reinforce my confidence in our continued progress towards our goals. We have had a strong 2025 and are well-positioned to meet our targets this year. Our success is a testament to our dedicated and engaged team committed to serving our customers and communities. As I mentioned last quarter, this year, we were recognized by the Gallup organization for the thirteenth consecutive year with a great workplace award. And our employee engagement ranks in the ninety-fourth percentile globally among thousands of organizations. As I mentioned before, our high level of employee engagement is our secret sauce for continued success.

We remain committed to making significant investments to enhance the grid and improve reliability for our customers. And we see that these investments and process improvements deliver results. We saw nearly 70% improvement in reliability in 2024 when compared to 2023. And we continue to make progress in 2025 as we work towards our goal of reducing outages by 30% and the amount of time customers spend without power by 50% by 2029. We continue to successfully execute significant investments in cleaner generation for our customers which will continue over the next five years and into the next decade. Significantly increasing our solar and wind investments, as well as battery storage.

Joi will share more details on our renewable investment strategy to support both our voluntary program and Michigan's clean energy goals. Our 2025 operating EPS guidance is $7.09 to $7.23. And we remain well-positioned to achieve the higher end of the range this year and continue to use additional favorability to extinguish backlogs that support future years. Our long-term operating EPS growth rate remains at 6% to 8%, with 2025 original guidance as the basis for this growth. And with the 45Z production tax credits, from our RNG projects coming into the plan this year, we have confidence we will reach the higher end of our targeted range 2025 through 2027.

As I'm sure you are aware, the budget bill that passed recently did extend the RNG tax credits through 2029. This was definitely a positive for DTE Energy Company. We plan to update our five-year plan this fall. And we'll provide more detail at that time. I'll say at this time that this gives us even more confidence that we'll be able to deliver on our targets over the next five years and beyond. So I'm feeling really positive about 2025 and the position we are in to continue to achieve long-term success. And as we have said, data center opportunities will provide upside to our current five-year plan.

We are in late-stage discussions with data centers for significant new load, which Joi will provide more details on shortly. Continue to maintain a strong balance sheet and investment-grade credit ratings support our customer-focused capital investment plan. We remain committed to delivering premium shareholder returns that our investors have come to expect. And our 2025 annualized dividend of $4.36 per share aligns with our practice of providing a growing dividend consistent with EPS growth. Now I'll turn it over to Joi. Joi, over to you.

Joi Harris: Thanks, Jerry, and good morning, everyone. I'll start by saying how grateful and excited I am for this opportunity to serve DTE Energy Company as its next CEO. In particular, I would like to express my appreciation to Jerry for his mentorship and friendship over the past twenty years. Jerry has been an exceptional leader for DTE Energy Company, driving the company to success year after year. And I look forward to working with him for a few more years to continue to drive value for DTE Energy Company. As I take on the role of CEO for DTE Energy Company, I want to emphasize that our core priorities, long-term vision, and strategic goals remain unchanged.

We are committed to building on the strong foundation and momentum we've established over the years. And we'll continue to deliver exceptional results for our customers, communities, and investors. Our plan is supported by a highly engaged and dedicated team. One that is deeply committed to achieving best-in-class outcomes across all key priorities. It is this shared focus and collective energy that fuel our continued success. We continue to see strong growth in our utility operations, driven by customer-focused investments aimed at improving reliability and transitioning to cleaner energy.

Our solid regulatory framework provides a stable and supportive environment for these infrastructure investments, enabling us to move forward with confidence as we modernize our distribution system and continue our transition to cleaner energy. Beyond our core utility business, we see transparent low-risk growth opportunities at DTE Vantage, providing diversification both in terms of earnings and geographic reach, while aligning with our broader strategic objective.

We have a strong project development pipeline in place at DTE Vantage, with multiple custom energy solutions projects underway, including a project with Ford Motor Company, which is expected to come online in 2026, and a project to build and operate a 42-megawatt combined heat and power project for a large industrial customer, which is expected to begin construction later this year. These projects are supported by long-term fixed-fee contracts providing solid low-risk growth opportunities in this space. So overall, we have a robust five-year plan in place anchored by $30 billion of customer-focused capital investments over the next five years, with more than 90% of that investment directed towards strengthening and modernizing our utility operations.

Additionally, we are well-positioned to meet the potential surge in demand from data centers. This represents significant upside to our plan, offering opportunities for additional investments in new generation capacity while supporting our commitment to customer affordability. I am confident in our direction, energized by our team, and excited about the opportunities ahead. And as we continue to deliver sustainable long-term value for all of our stakeholders. Let me move to slide six to highlight progress we are making to improve reliability. Our investments in our grid and the process improvements we are making are driving improved reliability for our customers, with a continued emphasis on maintaining affordability.

In the first half of the year, we made significant progress in strengthening the grid. We installed more than 220 smart grid devices to help reduce outage duration and improve response time, and conducted over 230 miles of pole top maintenance upgrading and replacing over 1,500 utility poles enhancing system resilience. We also continued the replacement of the aging 4.8 k system, a key step in modernizing our network, and trimmed over 3,300 miles of trees as part of our ongoing vegetation management program to prevent outages.

Our system was put to the test in June, with a record-breaking four-day heat wave followed by a powerful storm that swept through our service territory, with winds reaching nearly 60 miles per hour, impacting over 55,000 customers. During the heat wave, our generation fleet performed exceptionally well meeting high customer demand, with reliability and resilience. And our storm response was very effective restoring power to 95% of affected customers within twenty-four hours, and nearly 100% within forty-eight hours. I am grateful for the dedication of our team, including line workers, contractors, dispatchers, and everyone involved in this restoration effort.

Their hard work through all of this highlights the critical importance of what we do and demonstrates the incredible results we can achieve when we work together. As I mentioned, we benefit from a constructive regulatory environment here in Michigan, supportive of the investments we need to make on behalf of our customers. We continue to work collaboratively with our regulators to affordably execute our distribution for our customers, including a request for $1 billion of distribution spend to be included in our infrastructure recovery mechanism by 2029. These investments to improve reliability are also supported by the recent MPSC electric distribution audit.

Lastly, we expect to file a DTE gas rate case later this year that will be focused on continued infrastructure investment and reliability improvements. We have plans for significant investments in cleaner generation over the next five years and into the next decade, and these investments are supported by the recent settlement of our 2024 renewable energy plan filing, our long-term integrated resource plan, and Michigan's clean energy plan. The progress we are making on these investments has allowed us to safe harbor investment tax credits for these renewable projects into 2029. With the IRA provisions continuing to support our ability to execute these investments affordably for our customers.

Currently, we have 2,500 megawatts of renewable generation in service, and are building roughly 900 megawatts of renewables per year on average over the next five years. Solid land positions combined with our ability to successfully move these projects through the interconnection and permitting processes puts us in a great position to execute our transition to cleaner energy. We also continued to make great progress with data centers. We are in advanced discussions with multiple hyperscalers for over three gigawatts of new load, and are having ongoing discussions with multiple other data center operators for an additional four gigawatts. Customers currently in advanced discussions have secured land positions, established clear zoning pathways, and have earned the backing of local community.

And the remaining four gigawatts in the pipe either have confirmed access to land or are nearing finalization of land agreement. The near-term data center load ramps up to three gigawatts will be met through a combination of existing generation capacity, and new energy storage solutions. And longer term, additional data center loads will require incremental investments in new base load generation. Energy storage needs will be aligned directly with data center load ramp on a one-to-one basis. In the near term, driving incremental investments which is not included in our current five-year capital plan.

And as we have mentioned, we continue to target closing our first large data center deal by the end of this year, which we expect will ramp to at least one gigawatt of new load. In addition to the growth these data centers could generate, they will also enhance affordability for existing customers. And as we have said, these data center opportunities are all upside to our current five-year plan. And with that, I'll turn it over to Dave to give you a financial update.

Dave Ruud: Thanks, Joi, and good morning, everyone. Let me start on Slide eight to review our second quarter financial results. Operating earnings for the quarter were $283 million. This translates into $1.36 per share. You can find a detailed breakdown of EPS by segment, including our reconciliation to GAAP reported earnings in the appendix. We'll start the review at the top of the page with our utilities. DTE Electric earnings were $318 million for the quarter. Earnings were $39 million higher than in 2024. The main drivers of the variance were rate implementation and timing of taxes, partially offset by higher O&M, and rate-based costs, and warmer weather last year.

On the timing of taxes, I mentioned this was fairly significant in the first quarter, negative $67 million relative to 2024. This is related to investment tax credits on two solar projects that went into service in the first quarter. This timing was known and built into our plan, and reverses during the balance of the year, with $37 million reversing in the second quarter. Moving on to DTE Gas. Operating earnings were $6 million, which was $6 million lower than in 2024. The earnings variance was driven by higher O&M and rate-based costs partially offset by cooler weather. Let's move to DTE Vantage on the third row. Operating earnings were $31 million for 2025.

This is a $17 million increase from 2024 driven by RNG production tax credits, and higher custom energy solutions earnings. We remain on track for the full-year guidance at DTE Vantage. On the next row, you can see energy trading earned $24 million for the quarter. We continue to experience favorability and strong margins in our contracted and hedged physical power portfolio, putting us in a strong position to start 2025. On a year-to-date basis, we are currently near the high end of operating earnings guidance for this segment. This strong performance places us in a favorable position to leverage any potential further upside across DTE Energy Company, provide flexibility, and strategic support for future years.

Finally, corporate and other was unfavorable by $56 million quarter over quarter due primarily to the timing of taxes as well as higher interest expense. As with DTE Electric, this tax timing will reverse during the year, and we expect to end the year in the guidance range in this segment. Overall, DTE Energy Company earned $1.36 per share in 2025, which positions us well to achieve the high end of our guidance range in 2025. Let me wrap up on Slide nine, and then we open the line for questions. Our team remains committed to delivering for all of our stakeholders.

We are positioned to achieve the high end of our operating EPS guidance this year, and continue to use favorability to eliminate backlogs that will help future years. Our five-year capital investment plan of $30 billion supports our customer-focused reliability investments and our cleaner generation investments. Emerging data center opportunities provide potential upside to this five-year capital investment and EPS growth plan. DTE Energy Company continues to be well-positioned to deliver the premium total shareholder returns that our investors have come to expect. With a strong balance sheet that supports our future capital investment plan, with modest equity issuances, of zero to $100 million over the next three years.

We remain confident in our long-term operating EPS growth rate target of 6% to 8% through 2029, with RNG tax credits providing additional confidence we will reach the high end of our targeted range through 2027. As Jerry mentioned, the extension of these tax credits through 2029 is positive for DTE Energy Company, giving us greater confidence in our five-year plan, which we'll be updating this fall. With that, I thank you for joining us today, and we can open the line for questions.

Operator: At this time, if you would like to ask a question, press star, then the number one on your telephone keypad. Your first question comes from the line of Nicholas Campanella with Barclays.

Nick Campanella: Good morning. Thanks for taking my questions. Hope everyone's doing well. Good morning. Congrats on all the announcements. So hey. So I just wanted to confirm. Sounds like, you know, line of sight to three gigawatts of conversations, there's four more gigawatts behind that. Just what is the current capacity on the system to absorb that three gigawatts? And, I guess, just what is the kind of tipping point for you to have to pull forward the 26 IRP with more capacity needed? Or said differently, when would you start to have to incur new generation CapEx how many how many gigawatts? Thank you.

Joi Harris: Hey, Nick. Thanks for the question. And what an exciting time that we're talking about load growth. That's really an important piece of discussions we're having internally with data center providers, and those conversations are going quite well. So let me just recap. Early on, we announced a 2.1 gigawatts, frame agreement. With data center providers. And we're seeing a lot of interest in Michigan because we have excess capacity. So that's drawn data center providers to the state and of course, we now have the sales and use tax exemption. So that further increases their interest. What we're seeing now is a lot of activation on the part of hyperscalers.

So we've been very conservative about building out our pipeline and allowing people to enter our pipeline, companies to enter our pipeline. They have to have land positions or line of sight to a land position and a pathway to zoning and permitting that's required for them to build. And so based on just recent intensity on the part of hyperscalers, we're seeing them make pretty nice inroads on securing land positions and making way their way to, permitting. Requirements. And they're also garnering the support of the local communities. And that goes a long way in advancing them through our pipelines.

So now we see what was co locators kinda moving toward the back of the pipeline and hyperscalers consuming at least the upper portion of our pipeline and positioning themselves to sign energy service agreements along with storage agreements. And we're exchanging paper right now, and that paper has a little bit of red ink on it. And that's all good progress. So we're in active negotiations with large hyperscalers, and we're continuing conversations with those colocators. As we understand their load ramps, we're gonna use our existing d 11 rates or our existing industrial rates to serve that load along with storage. And the way you can think about it is near term load ramps.

Would require us to begin construction of storage assets in 2026 and beyond. There is some urgency on the part of the data center providers to begin the of their facilities by 2028 so that they can take advantage of the sales and use tax. So with that said, we have to get ahead of them in building out those storage assets. This load ramp, all those load ramps that we are getting a better understanding of and we'll finalize once we finalize the deals will be incorporated in our IRP next year. So the idea here is to serve the load with existing capacity. We have up to a gigawatt.

And there are certain periods within, the planning year where we're a little short, I call it marginally short, that will meet the need by way of storage. So it will bridge the gap near term. As we progress through their load ramps, we'll get to a point where we have to build out more dispatchable resources, larger dispatchable resources, but that'll get all flushed out in our IRP next year. So we don't intend to pull forward the IRP. What we intend to do is serve the load near term with our existing riders and a tariff and then move toward, building out larger assets based on the results of the IRP.

Nick Campanella: Thanks a lot. That's really clear. I guess just to wrap that all up, I mean, you know, thinking about the context of the long-term CAGR, load is a tailwind. It seems like some CapEx in storage is coming into the plan. As soon as 2026. Just got the extension of RNG. I know you've had that communication that you're at the high end or above the EPS CAGR in '26 and '27. Just how are you kind of thinking about it beyond that through 2029?

Joi Harris: Yeah. So where we are right now is, of course, the RNG tax credits give us flexibility in our plan, and it was a really positive move to see that get extended. So that gives us additional flexibility. And it gives us confidence that we can hit that high end. And so as our plan unfolds and we updated we're intending to update our plan toward the end of this year and felt likely in the in the third quarter call or at EEI. We'll offer up what our plan looks like for CapEx and also our growth rate, but we don't intend to go beyond the 68 This just gives us confidence that we can hit that higher end.

Nick Campanella: Thank you so much.

Operator: Your next question comes from the line of David Arcaro with Morgan Stanley.

David Arcaro: Oh, hey. Good morning. Thanks so much. And congratulations, Stewart. Congratulations, Jerry. Morning. I was I was wondering, maybe on the back of the OBBB, could you just frame any impacts on the renewable plans, any risk that you see from the executive order and continued uncertainty there?

Jerry Norcia: Yeah, thanks David. And the final bill, the reconciliation bill, really supports our five-year plan. And what we've been able to do is safe harbor our investments through into 2029 And this is all positive news for our customers. Just as a reminder, we have to build these assets. It is required under the law, and we also have a very popular and successful voluntary renewable plant, program. So we're going to build these renewable assets regardless. And what the, IRA did is make it more affordable for customers.

That said, what we've done based on us, you know, just being in a position to activate very quickly, we've been able to safe harbor those investment tax credits for our customers through 2029. Additionally, the battery storage projects will continue to qualify for the investment tax credit through 2036. Which is also supportive of our plan and puts us in a really good position with the build-out we to do for data centers. Transferability was maintained, so that another key element that we view as very positive. So we feel really confident in what our plan entails today. And, also, we feel really good about where we're sitting with RNG tax credits as well.

The added year is an added benefit. And as I mentioned before, that gives us more flexibility and allows us to have more confidence around hitting the high end. In terms of some of the executive orders, the safe harboring, we've already done really insulates us from any exposure to pheoch And so I feel like we've got we've got solid plans in place that remain in place through the duration of our five-year plan, and we still have a little bit of opportunity because we have to bid begin construction by the end of this year.

So that gives us a little more flexibility if there's any additional tax credits that we want to secure, we may be able to do that. But all in all, I think the, the final bill supports our plan, and we've been able to activate to insulate ourselves from any exposure. Hereafter.

David Arcaro: Great. That's really helpful color. Thanks for that. And then maybe just to look at earnings performance so far this year, I think Dave, you had mentioned just how do you where do you stand in terms of how much flex you have here to absorb any volatility maybe in weather for the rest of 2025? And where do you stand in terms of now looking ahead to 2026 and pulling forward? Against some strength in earnings this year?

Dave Ruud: Yeah, David. As we said, we're in a good position right now after the second quarter I can also say we've had a warm July and so we are looking for those opportunities where we can to you know, make ensure we're gonna have a great year in '25, but then look for those investment opportunities that can help us in future years too. So we're we're feeling positive on the year and our ability to hit the upper end and continue to help future years. Great.

David Arcaro: Sounds good. Thanks so much. Appreciate it.

Operator: Your next question comes from the line of Jeremy Tonet with JPMorgan.

Aiden Kelly: Hey. Good morning. This is actually Aiden Kelly on for Jeremy.

Joi Harris: Hey. Hey, Aidan. How are you?

Aiden Kelly: Yeah. Just wanted to hone in on the data center front again. Just curious to see if you could offer any, like, confidence level for the three gigawatts of hyper load coming online. As well as the four gigawatts you kinda outlined in the opening remarks. I know you mentioned some pathways to zoning and permitting and, you know, land position. So seems like some good visibility there, but just wanted to see how you frame it in terms you know, confidence level.

Joi Harris: Yeah. So our goal is to get at least one gigawatt signed before the end of the year. And we're making great progress toward that goal. We're in active discussions. I can tell you that I've had personal interaction with the at some of the, data center providers. These are hyperscalers. Large, large companies that are looking to land here in Michigan. And we've got, you know, meetings set up yet this week to talk to additional providers. So we're feeling really good about the progress that we're making. And the fact that we're exchanging terms We're getting feedback on what works for them, certainly, and we've got some flexibility to meet their needs.

I think we will have a lot more to say on the on the third quarter call and by the end of the year, but certainly, things are progressing in the right fashion. We feel really good about the progress. And are feeling fairly confident that we'll get something done before the end of the year.

Aiden Kelly: Understood. Understood. That's helpful. I guess just on the story, just curious for that one gigawatt of data center, you know, presumably could be matched with energy storage. Like, would that be over, a one, three, or five year, like, time frame, like, at a high level?

Joi Harris: Yeah. So think about it. I'll I'll explain it this way. So as the data center load comes on, let's just call it this gigawatt, we'll we'll a storage build out. And you can think about it as one for one. So if we bring on a gigawatt of PPAs and self build. And so the pricing that we're seeing, just so you have some benchmarks to use, is about $15 a megawatt for self build. And combine the two, both self build and PPAs will be roughly about a billion dollars, for every gigawatt that we bring on a storage. And we'll start that construction based on the low ramps, at least, that we're seeing now in 2026.

So think about it coming online in '27 in increments. Just based on their load ramps, and that will progress over a couple of years, call it. As we get further into the plan, we get out toward the end of our five-year plan, the demand grows in such a way, at least in we understand it today, that we'll have to build something more substantial. Like a combined cycle plant with carbon capture or being carbon capture ready. So that's how we're looking at it today. And as the negotiations materialize and we finalize those load ramps, we'll incorporate all of this into our IRP. And the IRP process will determine the optimal generation mix.

Aiden Kelly: Understood. That's super clear. I'll leave it there. Thanks. congrats to both of you again. I really it's been a pleasure and, more importantly, a joy. I look to working with you going forward. Congrats again.

Dave Ruud: I believe the forecast hasn't really reflected the total opportunity in RNG and the extension through 29 per your comments to Nick. And subsequently, per your prior comments here, it seems like the battery storage opportunity seems very much ripe in that same twenty-seven to twenty-nine period.

Aiden Kelly: But maybe if I can put a finer point on the last point you said a second ago, about the gas opportunity. How do you think about that the visibility on that piece here and the IRP and the potential to have that CapEx ramp in that those tail end, you know, the twenty-seven through twenty-nine period. Trying to make sure I understand the different puzzle pieces that fit into kind of a third quarter or year-end kind of update here if you think about it. What are the different CapEx items?

Joi Harris: Yeah. So the a combined cycle plant would be towards the tail end of our five-year plan and into the next phase of our plan, we would have to go through which is really a part of the IRP in order to bring on a combined cycle plan. As you know, the queues are building, so we're getting ourselves in the queue. We're already in the mice queue, for at least load. We're we're still intending to retire Monroe at the 2032. And so, therefore, we've gotta get in the queue and gotta we've gotta ready ourselves in advance of us, filing the IRP. So the timing doesn't exactly match up.

All that said, we continue to prepare as if we are going to bring on a CCGT at that time and establish the right relationships EPC contractors and also with turbine providers. So if you wanna think about the storage coming into the plan beginning in 2026 in increments. And then toward the very tail end of the plan, that would result in us bringing on capital for a combined cycle plan.

Aiden Kelly: Got it. Excellent. And then just to understand the ramp rate here. I mean, obviously, you're talking a gigawatt of both conveniently incremental load and opportunity to serve. There a potential that you kind of accelerate, though, that incremental you talked to? Talked about with the seven, I think, implied? Gigawatts of opportunity here. How do you think about the timing of that sort of feathering in? Is that principally at the tail end or beyond the plan? Or is there a potential that you actually are ramping even more, shall we say, multiple parallel data centers to achieve more than a gigawatt? And is that conceivable given the generation mix and planning cycle you just described?

Joi Harris: Well, Julian, let me just say it this way. The negotiations are ongoing. And a point of negotiation is really understanding the low ramp. So we've got early near-term ideas around what that low ramp exactly looks like for at least a few of the hyperscalers, and we're still continuing those discussions. So serving where we have a short, is really early on in the plan, is really how we support the load. We bring on the storage, to support the load during those periods. But until we get a final deal done, we don't know definitively what those low ramps look like. That's still a point of negotiation.

And so I don't wanna get too far over our skis and articulate to you that, you know, we're gonna ramp in a gigawatt this year and a gigawatt next year. Can't say that definitively. What I do know is at least what we're seeing right now across multiple data center providers, we've got it least a gigawatt worth of opportunity that we will have to support near term.

Dave Ruud: Look forward to that update. Alright? To clarify on that, Julian, a little bit, this is Dave. Yeah. With the additional storage, it gives us a little more of the excess generation that we've been talking about. So we're able to use that storage to reach some of those capacity positions. And so we do have more than a gigawatt of availability as we bring the storage on to support that. Yeah.

Joi Harris: It's it's one for one. So a gigawatt of storage gives you essentially makes one gigawatt almost two gigawatts.

Aiden Kelly: Hey. Thanks for that clarification. I appreciate it.

Operator: Your next question comes from the line of Andrew Weisel with Scotiabank.

Andrew Weisel: Wanna echo the congratulations to both Joi and Jerry. Between the last Jerry, this Jerry, now, Joi, your board clearly makes alliteration. Good morning, Andrew. Joey, my first one is more of a philosophical one. It is a financial question, but the company has generally been very conservative. Your DPE reputation is one of under promising and over delivering I think the philosophy serves you well, but my question is how are you thinking about that philosophy? I think I heard you say that you're not expecting to grow EPS faster than the high end of 6% to 8%. So maybe that sort of answers it. I'd love to hear how you're thinking about that general attitude. I know you'll you're you clearly alluded to an update in a few months but how do you think about that velocity?

Joi Harris: Yeah. I feel like I've learned from the best. To make sure that we always deliver for our stakeholders, including our shareholders. And so we wanna make sure that we have a high degree of confidence in our plans and we have the requisite flexibility in those plans to be and deliver consistently, for our shareholders. So at this point, I think we've got a solid plan in place and we're incorporating what we believe is flexibility in that plan. So that we continue to deliver right on top of what we promised.

Andrew Weisel: Okay. Very good. Next one, I think we'll get your 10 q later today, but can you let us 0 to $100,000,000 per year. How are you thinking about the long-term outlook?

Joi Harris: I guess, the positive side, you've got tax credits from the OBBB on the How do you think of those as kind of maybe washing out ratably throughout the year, so there's some of that. But it's within that $0,100,000,000 we issue through an internal mechanisms. And at 0 to 100, that is from 25 to 27 in our expectation in our base plan. And then yeah, we did say after '27, we see some incremental equity that would come in. Even in our base plan, that's you know, 200 to 300,000,000 more out there in those in those years. But to your question on if we bring in some additional capital, we would have to look at some additional equity or equity-like products to continue to be at our 15% FFO to debt.

But as you know, this is good equity and would be associated with the increased growth that we would see with that as well. Right. And that's something you'll get more details on in a few months? Yeah. That would yeah. We'll put all that together. When we show our new capital plan. You know, we'll we'll define how we're gonna how we're gonna finance that as well. Okay. Great. And during the quarter, was there any activity? It's just a little bit that comes in ratably from internal mechanisms we use. But nothing know, nothing public.

Andrew Weisel: Okay. Very good. And one last one if I can. During the call, I've me if I missed it, but I don't think you said anything about wind. There was a lot of focus on solar and storage and gas. How are you thinking about opportunities for wind, whether that would be new build or potentially repowering?

Joi Harris: Yeah. We're examining wind. We currently have some wind assets that would might be eligible for repowering. But we're we're right now, we're focused on building out solar and that's where we have the greatest opportunity, but we have not closed the door completely on wind assets.

Andrew Weisel: Is there a reason there's such a preference for one over the other?

Joi Harris: Just the amount of land that's required based on the land that we have. And the receptiveness to wind also is a key driver. Right now, solar more communities are more receptive to solar build outs in their in their areas. So that's really why we've we've pivoted to, solar. For the most part. The economics are a little better as well.

Andrew Weisel: Okay. That's very helpful. Thank you.

Operator: Your next question comes from the line of Sophie Karp with KeyBanc.

Sophie Karp: Hi. Good morning. Thank you for taking my question, and congratulations to, Joi and Jerry. On a good quarter as well. Thank you. Hey, guys. Can I can I ask you a question on the data center build out? Again from a different angle maybe? Is there a way for us to think about how much of a revenue increase is displaced by the addition of the data center customers? You know, you know, the industry keeps talking about savings that can be accrued to retail customers. How should we, start thinking about that, like, for every gigawatt of data center additions, x amount of revenue requirement is displaced, or, like, is that a good rule of thumb yet given your framework?

Joi Harris: Well, I'll put it to you this way. Just based on what we announced previously, the 2.1 gigawatts, I believe that increases the load over that five-year time horizon by about 40%. So you could think of that as headroom on, rate growth for existing customers.

So, effectively, we could take that, kinda net out the cost of investment that's needed to serve those additions, and that would be cost savings to customers.

Dave Ruud: Yeah. Actually, for the initial that we bring on, there's there's not much additional capital investment we have to bring on The storage will be paid for by the data centers. Really, you get the advantage because system is about a 50% load factor. So it really provides a lot of affordability just by using the our base industrial rate provides a lot of affordability for our base customers.

Sophie Karp: Got it. This is very helpful. Thank you. And then any, color you could share on how the electric rate case is going?

Joi Harris: Yeah. Sophie, we are we're still in audit and discovery. And we're getting about, you know, the amount of questions that we would anticipate given the size and scale of the case and the fact that we're looking to expand the IRM and grow it to a billion dollars over the next couple of years. So the line of questioning is as you would think. It's all around, you know, system reliability and what we've been able to deliver and how our plans align with the Liberty audit, which we feel we're in a really good position to answer those questions and provide compelling testimony. We will hear back from interveners and staff next month.

So we'll get staff and intervener testimony on August 22, and that'll be our first indication as to whether or not we're completely aligned with staff or their still some explanation that's required. And likewise, we'll understand what interveners think of our plan. And how we can engage them in discussions to potentially pursue a settlement. But that's where we stand right now. The PFD is expected in December, kinda mid-December, and then we'll get a final order in February.

Sophie Karp: Got it. Thank you. This is all for me. I appreciate the answers.

Operator: Your next question is from Anthony Crowdell.

Anthony Crowdell: Morning. Thank you. Hey. Just one quick question. I'm wondering, Joi, you know, goals or processes you're hoping to accomplish early on in your tenure or that you're putting on your to-do list of maybe you know, whether it's a decoupling mechanism or something to the legislature that you're focused on right now?

Joi Harris: Yeah. Right now, Anthony, we are focused very heavily on the IRM. We that is proven. We've used the IRM in the gas business for a number of years now, and that delivered the value for the customers, and it's also helped keep us out of regulatory proceedings for multiple years. And so our focus is growing the electric IRM, and we've included that in the case. And that's the biggest thing for us right now on the regulatory front. And we think we've laid a good foundation for that and the Liberty Audit supports it. So that's where I'm gonna focus my attention.

And as we see testimony from the staff, and interveners, we'll make sure that they understand the benefits of expansion of the IRM going forward.

Anthony Crowdell: Great. And then if I if I could just take another crack maybe in an earlier question. You were very clear on this 6% to 8% earnings growth rate. You seem like your intention to stay there. But are you including, if you do get some of the you know, the large load customers, data centers? I mean, it maybe I'm just splitting hairs here, but is there the ability to rebase higher or something? Or even with the potential that long pipeline you have, are you still to see yourself at the 6% to 8%? And I know that's going really forward, and I know that you haven't, you know, a lot of it's still, the nearing formalization agreement. But just I guess, how rigid is that six to eight even if you get the seven gigawatts on?

Joi Harris: Yeah. So I would say that, the five-year plan that we laid out, we intend to stay in that six to 8%. Beyond that, there's a lot that can happen. That we've gotta reconcile, and it's too early, for us to say the definitively what we might look like beyond our five-year plan. So, as we have always done, we will look to continue to deliver value for all of our stakeholders and minimize any kind of risk that we see in our plan and use the flexibility to deliver smooth and reliable results going forward.

Anthony Crowdell: Great. Thanks for taking my questions.

Dave Ruud: Yeah. Just to add to that, I think Joi hit it head on as we roll up the new plan.

Jerry Norcia: I think we'll we'll provide new guidance. So we don't wanna do this piecemeal. So as all of this comes together and continues to come together, we'll reevaluate where we're at.

Anthony Crowdell: Thanks again, Jerry. Glad you stepped up there. We weren't sure if you were just already you know, on the golf course. Well, I'm I'm here, Anthony. You know, big uh-oh. We lost you. We lost you. We lost you.

Operator: He's keeping us on track, Anthony. Your next question comes from the line of Paul Fremont with Ladenburg. Thank you very much.

Paul Fremont: And congratulations. I guess, first question, given that we're halfway through the year, can you give us an idea as to whether you would expect additional data center announcement to be a third quarter or a fourth quarter event?

Joi Harris: Morning, Paul. Our intention is to have a deal done by the end of the year. And we're really making nice progress near term. As I mentioned before, we have received feedback from the data center providers on contractual language both in the ESA and right now, we're really focused on solidifying the storage contract. So we understand that the build-out, that we'll have to do to support the load. So our intention is to have a really good indicator by the third quarter and finalize have a final deal in hand by the end of the year.

Paul Fremont: And then in terms of corporate and other, you're showing sort of 56,000,000 negative change in the quarter. How much of that is the timing of tax that's expected to reverse by the end of the year?

Dave Ruud: Yeah. A lot of that is the timing of taxes. We're we're we're on track. You know, that'll that will all reverse. We're on

Paul Fremont: Okay. So that's, like, that's, like, 27¢ just by itself. Okay. What are you expecting with respect to how they look at safe the definition of safe harbor?

Joi Harris: Yeah. So the way that we've been we've been looking at this is you know, this the begin construction and safe harbor language has existed in this form in the treasury guidance for over a decade. And we've relied on that for years. So in terms of what we anticipate, we don't necessarily anticipate there being in a reversal. Of those guidelines, but what we've done is insulated ourselves based on our understanding of what it means today And we made our purchases and secured our safe harbor assets well in advance of the law being promulgated. So we feel good about our position.

We started in '24 and right before the law passed, we were able to safe harbor additional renewable assets at that time. Excuse me, one last one. When you rebase, if you remain within the six to eight, could any particular year be above sort of the 8% that you that you're currently at the high end?

Jerry Norcia: Like we said already, Paul, I think we'll roll that up in the fall. Or at EEI. And we'll give you a better view and what we plan to do. At this point, we're everything is based off, you know, the guidance original 2024 guidance growth rate. In our current five-year plan. So we give you a lot more insight on that at the for third quarter.

Paul Fremont: I appreciate it. Thank you so much.

Joi Harris: Thank you.

Operator: Ladies and gentlemen, there are no further questions. I will now turn the call back over to Jerry Norcia for closing remarks.

Jerry Norcia: Well, thank you, everyone, for joining us today. You can see that, you know, DTE Energy Company is firing on all cylinders. I'm really proud of the accomplishments that the team has made so far this year. Especially in the areas of, you know, we've got this really high levels of employee engagement. As I mentioned, which is our secret sauce. The grid's operating extremely well. And all the investments, as Joi loves to say, is investments are working, and they're making a fundamental difference. I also wanna congratulate our power plant operators and leaders who really ran through a heat wave here flawlessly.

At Fermi, our nuclear plant specifically, we've been recognized by the end of industry as one of the best in class plants from an operating excellence perspective and of course, our gas team has not gone out of the park and weathered nice colder than normal weather, and that's working well. And financially, we're gonna hit our high end of guidance, and we're building favorability, but we're gonna use that extinguish backlogs and prepare ourselves for 2026 and beyond. So I'll just close by saying it's been a true honor to serve you. And, Anna's DTE Energy Company's CEO. Joi is an exceptional leader who will continue to execute the t DTE Energy Company's strategic plans with excellence.

And that's her specialty is operating excellence, and that's what we need. I look forward to staying connected with you in my role as executive chairman over the next few years, and DTE Energy Company is in great hands with Joi. And she'll drive success for this company. So have a great morning. Stay healthy and stay safe.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining You may now disconnect.