DTE Energy Co.

Overview Key strengths Key risks Most of DTE Energy Co.?s (DTE) consolidated cash flow (90%) comes from its more predictable and lower-risk regulated electric and gas businesses. Lack of regulatory diversity makes the company primarily dependent on its Michigan regulators to sustain credit quality. We view the Michigan Public Service Commission (MPSC) as a generally supportive regulatory environment. Exposed to environmental risk related to coal-fired generation, partially offset by its carbon-reduction plan. Large customer base supports cash flow stability. Service territory is prone to localized weather events, including tornados, high winds, and ice storms. The company?s strategy to decarbonize over time could support its regulatory risk management. Negative discretionary cash flow primarily due to elevated capital spending and dividend payments

...Recent Michigan legislation could have credit implications for affected utilities. In late 2023, Michigan passed several legislative measures that affect utilities, including Senate Bills (SB) 271, 273, 277, 502, and 519. Specifically, the actions now require 80% of power generated in the state to be derived from clean energy by 2035 and 100% by 2040. The state commits to 50% renewable energy by 2030 (60% by 2035), increases the cap on distributed generation-- including rooftop solar to 10% from 1%--and a 2,500-megawatt (MW) energy storage mandate by 2030. SB 271 includes a financial incentive for utilities that procure clean energy or storage through a purchased power agreement with third parties. Specifically, if a regulated electric utility enters into a purchase power agreement for renewable energy resources or clean energy storage with a nonaffiliated third-party, the commission shall authorize an annual financial incentive for the utility, which includes the utility's pre-tax weighted...

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