Anastasia Minor - Investor Relations Peter Oleksiak - Senior Vice President and CFO Jeff Jewell - VP and Controller Mark Rolling - VP and Treasurer.

Michael Weinstein - UBS Daniel Eggers - Credit Suisse Matt Tucker - KeyBanc Capital Markets Andrew Weisel - Macquarie Capital Shahriar Pourreza - Guggenheim Partners Greg Gordon - Evercore ISI Jonathan Arnold - Deutsche Bank Paul Patterson - Glenrock Associates Andy Levi - Avon Capital Advisor.

Good day everyone and welcome to the DTE Energy First Quarter 2015 Earnings Release Conference Call. Today’s conference is being recorded. At this time, I would like to turn the call over to Anastasia Minor. Please go ahead..

Thank you, Dana and good morning everyone. Welcome to our first quarter 2015 earnings call. Before we get started, I would like to remind you to read the Safe Harbor statement on page two including the reference to forward-looking statements. Our presentation also includes reference to operating earnings, which is a non-GAAP financial measure.

Please refer to the reconciliation of GAAP net income to operating earnings provided in the appendix of today’s presentation. With us this morning is Peter Oleksiak, our Senior Vice President and CFO; Jeff Jewell, our Vice President and Controller, and Mark Rolling, our Vice President and Treasurer.

We also have members of our management team with us to call on during the Q&A session. I would like to turn it over to Peter to start our call this morning..

You can see some highlights of progress in 2015. Let me start first with Michigan’s energy policy. This is a major area of focus this year and I know that the people on this call are very interested in its status update. I feel there is positive momentum for constructive legislation.

We expect this to occur by the end of the year and quite possibly by mid-year. This is the priority of the Governor and he called up publicly the need to get legislation done this year. The House lead, Aric Nesbitt has introduced legislation and the Senate lead, Mike Nofs is about too. The process is in slow motion.

I’ll touch more an Energy Policy in a few minutes. Quick update on the various rate filings for our two utilities. We expect a rate order for our electric cost of service filing by June. This filing will deliver refined cost of service rates to our customers and our business customers will see sizable rate reductions.

The rate case process is ongoing for electric general rate case filing that we put in December last year. This is the first rate case we have filed in four years and it’s predominantly a recovery of the $3 billion of capital investment deployed since our last filing.

We expect to supplement rates in early July and receive a final order by the end of the year. For DTE Gas, we expect to receive an order this year for our expanded infrastructure recovery mechanism application that if approved will allow us to double the annual miles of our main line replacement program.

As you know, DTE Electric completed the acquisition of 700-megawatt gas-fired peaking plant earlier this year. We also received a result of our recent RFP for upto 350 megawatts of additional peaking generation are currently in late stage negotiations. We look to announce the transaction next month and close this transaction later this year.

With this purchase, full service customers’ capacity requirements will be covered during the summer timeframe. We felt it was very important to secure Michigan space generation for our full service customers, given the projected capacity shortfall in the state of Michigan next summer.

On the no-utility front, we’re definitely moving on all cylinders; the progress on a number of projects and our gas storage and pipeline business, we’re working to the details of successful open season for the Millennium Pipeline.

We’ve talked about this potential expansion, given the needs of the East Coast LDCs and the critical role the Millennium Pipeline plays in delivering Marcellus gas to market. This is another major milestone for gas pipeline business and helps firm up future year growth.

Let’s share the details of the expansion, once we’re through finalizing commercial terms of the contracts. For our NEXUS Pipeline, we have enough commitments and additional prospects to move forward with a 1.5 BCF pipe. Currently, we’re progressing through the pre-filing process quite nicely.

Most recent activity is around finalizing rightaways and the final path for the pipe. Our goal is to follow the FERC application early fourth quarter this year. We also expect the fourth quarter and service date for both the NEXUS Pipeline as well as the Millennium expansion, I touched on earlier.

In our power and industrial segment, we have a number of projects moving along including an 8-megawatt on-site cogeneration project that went into service this quarter. For our REF business, we’ve signed a contract to operate a third party REF facility that begins operations in the second quarter of this year.

This operating agreement will run through 2020 and has already been included in the guidance we provided. Regarding REF locations, we’re continuing to work on the relocation of our ninth unit and expect this later this year as well as potential optimization opportunities with our other units.

We are off to a strong start across our portfolio of businesses and we’re optimistic on having another successful year in 2015. Let me now move to update the Michigan economy and the updates of energy policy legislation.

On the road we get asked quite a bit on how the economy is progressing in Michigan and with the city of Detroit; on slide seven is a positive commercial update for both. We continue to see economic momentum in our state. Michigan’s unemployment rate in March was 5.6% which is the lowest since September 2001.

Year-over-year, Michigan’s unemployment rate has dropped to full 2 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.

You can see on the page that Michigan is showing growth by moving up 8 spots in the state ranking of Real Gross Domestic Product. Michigan now is in the upper 50% of all states in terms of growth. Also want to highlight the city of Detroit’s economic rebirth. I believe the city has come a long way since the bankruptcy filing on many fronts.

One indicator that we show on this slide is a Detroit metro area ranking number eight in the U.S. for a number of new expansion projects. The city’s rebirth is largely due to the strong leadership we have in this city. Detroit Mayor, Mike Duggan is very focused on the financial and operational strength of the city.

DTE as well as other city partners are working with them to help continue this momentum. Moving on to slide eight, I am now going to turn to an update on energy policy. As I mentioned earlier, Governor Snyder has made it clear that energy policy is important legislative priority for him this year.

He called off the need for new legislation in a state of the state address and provided more detail goals in his energy message in March, highlighting this significant transformation and the generation sources that our state will undertake over the next 10 to 15 years.

Michigan also has strong leadership in both the House and the Senate and Energy Policy; Representative, Aric Nesbitt, Chair of the House Energy Policy Committee. We’re confident that he thoroughly understands the future energy policy needs of our state.

Representative Nesbitt introduced legislation in March that’s consistent with the Governor’s goals of the liability and adaptability. He also recommended the elimination of the broken retail access program we have here in Michigan which we support.

Senator, Mike Nofs, Chair of the Energy and Technology Committee and is very seasoned when it comes to Energy Policy. He is one of the principal architects of the Michigan’s 2008 energy legislation as a Member of the House back then.

He will be introducing legislation shortly and in recent interviews has indicated that he will include design changes to the retail access program to make it more fair, and will also contain a longer-term generation integrated resource planning process, which will give us upfront review and approval of our coal plant retirement and replacement.

We expect legislation to be completed this year and are confident that Michigan has the strong leaders in place that understand energy and utility dynamics and will provide this year constructive legislation for Michigan’s future.

In a minute I’ll turn the call over to Jeff and Mark to review the quarter results, before that I just want to highlight that we’re on track to achieve our earnings guidance. So on slide nine, this slide shows our EPS history and our target of 5% to 6% growth. As I mentioned before, we expect to grow our dividend with earnings.

The chart shows our current 2015 guidance midpoint of $4.60 with the next page showing our earnings guidance by segment. So, you can see on slide 10 that we are holding our EPS guidance range of $4.48 to $4.72 for 2015. This slide shows 2015 year-to-date actuals compared to the full year guidance.

Just like last year, weather favorability helped provide a strong quarter for utilities, particularly on the gas side as we again hit one of the coldest winters on record. Our non-utilities also had a strong first quarter. Jeff will take you through the details of our quarter results shortly.

Like last year, we will reserve this first quarter favorability as contingency for summer weather variability. The bottom-line, there are no changes in guidance at this time, but we’re off to a strong start.

And with that, I’d like to turn the call over to Jeff Jewell, our Vice President and Controller to provide more details on the first quarter results..

Thanks, Peter and good morning, everyone. Let’s turn to slide 12 to review the quarterly earnings performance. For the quarter, DTE Energy’s operating earnings were $1.65 per share and for reference our reported earnings were $1.53 per share. You can find a reconciliation of the first quarter reported to operating earnings on slide 24.

As you know, Michigan and the rest of the Northeast in the first quarter of both 2014 and 2015 experienced significantly below normal temperatures including setting a couple of records. For us, the majority of the weather fluctuations can be seen in our gas segment. Here are couple of data points.

The first quarter of 2014 set the record for the coldest quarter in over 60 years. The first quarter of 2015 was the third coldest and February itself set the record for that month. Now for the quarter-over-quarter results, our growth segments first quarter operating earnings in 2015 were lower by $10 million or $0.06 per share.

Electric segment was equal to the first quarter of 2014. This was primarily due to fewer storms year-over-year which drove lower operating and maintenance expenses offset by increased rate base growth cost driven by increased capital investments.

The gas segment was lower by $18 million, driven by the extreme weather experienced in the first quarter of 2014. The major contributor to the quarter-over-quarter decline, were the weather of $11 million and weather related storage and transport of $7 million. Gas storage and pipelines earnings were $6 million above the prior year.

This increase was primarily due to the volume growth in the Bluestone Pipeline and Susquehanna gathering assets, partially offset by weather driven storage earnings in 2014. Our Power and industrial projects segment was up $18 million versus 2014. A good portion of this variance was due to our REF business.

As we saw last year, the performance in REF can vary depending on the underlying volumes and the timing of new relocations. As a result, we expect much of the REF favorability to reverse out over the balance of the year, more than offsetting underlying growth from new relocations and projects.

In addition, we do expect some of the $18 million of favorability to flow through from growth in our renewables and on-site businesses related to new investments that came on line in 2014 and early 2015. Our corporate and other segment came in unfavorable by $16 million versus last year.

This variance is due largely to an effective tax rate adjustment which will reverse within the year. As a result, we remain comfortable with our earnings guidance range for this segment. Again, the overall growth segments results for the quarter were $282 million or $1.58 per share.

At energy trading, operating results for the quarter came in at $12 million with economic net income of $20 million, both the power and the gas business lines contributed to these results. Please refer to page 23 of the appendix to review energy trading standard reconciliation page, which shows both economic and accounting performance.

That concludes the update on our earnings for the quarter. I’d like to now turn the discussion over to Mark, who will cover cash flow and balance sheet metrics..

Thanks, Jeff and good morning to everyone on the call. Let me open by saying that our cash flow and balance sheet remain strong and continue to support our long-term growth plans. I’m going to begin on slide 14 with look at our cash flows for the first quarter of the year.

Cash from operations in the first quarter is $800 million which is up from the first quarter last year. The favorability we’re seeing is spread across several business units and most of it is timing related. So, we’re sticking with our guidance of $1.7 million of cash from operations for the full year.

Capital spending was also higher in the first quarter due to increased investments at the electric utility, partially offset by lower capital spending at our non-utility businesses. We achieved $500 million of long-term debt in the first quarter which drove a reduction in our commercial paper balance.

And somewhat unceremoniously, in the first quarter, we made a final payment on the securitization bonds. Back in 2001, we issued $1.8 billion of securitization bonds to recover the costs of our Fermi 2 nuclear plant and those bonds are now paid off. Moving to slide 15, which lays out our capital investments in a little more detail.

DTE Electric CapEx is higher due to our $240 million investment in a 700 megawatt gas peaker in January of this year.

And compared to last year, CapEx for our non-utility business was down in the first quarter, but that’s just a result of how the investments show up across the quarters; we refer to that as the lumpy nature of our non-utility projects.

For the first quarter, our capital spending is on track to our plan and in line with your full year guidance of $2.5 billion to $2.6 billion. Let me wrap up on slide 16 with a look at our balance sheet metrics. Our plan for 2015 is to maintain our strong balance sheet and end year within our targeted range for both leverage and FFO to debt.

In the first quarter, we issued nearly $200 million of equity to our internal mechanisms and that fulfills the equity needs for this year. And we continue to plan for $800 million to $900 million of equity through 2017. To fund the growth at DTE Electric, we issued $500 million of 30-year debt at very attractive rate.

In fact it’s a lowest rate 30-year debt, we’ve issued since the Eisenhower administration. As of the end of March, we had a healthy $1.9 billion of available liquidity and earlier this month, we successfully amended and extended our credit facilities, increasing the size to $1.9 billion and extending the term to April 2020.

And now, I’ll hand the discussion back over to Peter to wrap up..

Thanks Mark. Let me give you a quick summary on slide 18 and open it up -- the line for questions. You just heard, we had a very strong first quarter. We remain on track to achieve our earnings guidance for 2015; anticipate successful outcomes this year for both our utility regulatory filings as well as the Michigan’s energy policy reform.

Our balance sheet and cash flow metrics remain strong and our investments in our utility and non-utility businesses support our target of 5% to 6% to EPS growth going forward. I’d like to thank you all for joining our call this morning. And now I’d like to open it up for any questions that you have.

Dina, if you want to open up the line, I would appreciate it..

Thank you. [Operator Instructions] And we’ll take our first question from Michael Weinstein with UBS..

The first question I have is how does this positive quarter affect your future lean initiatives later on in the year? I’m just wondering and I know it’s kind of earlier that you may have the summer to get through but just wondering if that -- how you expect that to impact mix?.

As we’ve mentioned on this call and the past, when we’re on the road, we’re going to the every year with three plans, the base plan; the lean plan; and the invest plan. For each of those, we wait for the different additions, to see which one we strike; weather normal would be the base plan.

Where we’re right now with the weather favorability is we’re actually looking at investing potentially but we’re going to the process right now of in our gas utility in particular, going through the list to understand what the potential investments we can make there with the idea of making those investments to help the long-term assets in operational excellence and consistently earning our authorized returns there.

So, the short answer there is at least at this moment, we don’t see lean plans having to strike that, our lean plans more than anything, there will be some invest in particular in our gas utility..

And I just had one another question on NEXUS, and I am wondering how you’re seeing shipper demand and also just LDC demand and other demand shaping up in the region, given the low gas prices or oil prices, lower rig counts?.

We’re continuing to see strong interest as that region’s continuing to get drilled up and evolve. There is increased capital allocation, the shippers overall have dropped their level of capital that they are spending. But most of them, if they have investments in this area have reallocated more capital to this region. So, we are seeing that.

So we’re continuing to see interest coming through both the shippers and the LDCs..

Is that a reflection of the regions you’re in or more dry versus wet; is there an advantage that you have?.

It is. We were on the as a Marcellus with our Bluestone Pipeline and Millennium, that’s definitely a prolific shale play, low on the dispatch curve and then our NEXUS pipeline is going to Utica Shale which again is very prolific and low on the dispatch curve.

There is a lot of interest to shippers as well; they can drill and the capital is getting allocated there because there gas to market..

And actually one final question would be, do you guys expect that legislation could be finished by June or you think it’s more of an August project?.

There is some probability that it gets done by mid-year; the Governor has been pretty public and that is his goal. We’re planning on it getting done by the end of the year.

We want to make sure it kind of goes through the as normal process as you are kind of seeing out there; it is progressing nicely and it’s going like other legislative prophecies with a lot of different proposals out there; they need to work through those and reconcile those.

So, I would say there is some chance here, most likely it will be done later this year..

And we’ll take our next question from Daniel Eggers with Credit Suisse..

Just on the last question on the legislation, I guess the Governor is talking about this fair choice concept. When you guys look at the House and Senate bills, do you see interest on those two, because they are giving a little more different opinions [indiscernible].

Are you seeing them converging toward what the Governor’s laying out and as prospects we could see some new version of legislation coming sometime soon?.

It’s tough to say where this is going to end, one thing that we’re actually happy to see is that the legislation is getting the most momentum and support as some sort of fix to this broken retail access program we have in Michigan. And then, there is various ways you can fix this program.

Aric Nesbitt has put out there, how do we just maybe completely eliminate the flaw of retail access program. His focus is on angling the liability and capacity needs for the state. We support that plan, but we’re also happy to see that both the Governor and Senators are also focused on retail access and how unfair it is.

But at this point, it’s kind of tough to say where we’re going to end up; we’re just happy that the retail access program is getting work out..

Zone 7 wasn’t a big capacity prices option, obviously the price in Illinois was pretty dramatic change.

How is that affecting you? A, how you guys are looking at resource adequacy and adding capacity to be owned by DTE versus contracted and what level of attention has that gotten at the commission or down in Lansing?.

The recent option on MISO, I know there was a bit of confusion on that or at least in terms of where did the prices come in. It came in as expected.

The planning cycle that they are planning for when it goes up, all up until the summer of next year, the capacity shortfall that we’re anticipating will be in the summer of next year ‘16 and that’s the’16 and ‘17 planning cycle for MISO. So those results came in as expected.

What we saw down in Zone 4 is what we’re going to anticipate we’re going to see in Zone 7 where year-over-year you saw a pretty dramatic change I think zone factor 10 of capacity prices with the shortfall that occurred there. So, there could be option and we’re expecting a significant increase.

One other nuance that pushed this until next year is there was an extension with some retirements in our region for a few months that literally helped us get bridge the capacity all happen to the edge of next summer..

I think I am seeing Peter with the potential for very meaningful increase in capacity prices for next year, are you guys using that or having those conversations with the Commissioner and others to say we need to be doing even more to get or have this from owned and new build resource perspective?.

Conversations we’re having with them is really highlighting the need for new generation in the eight choice program where that has not been built for them, but it’s really helping us highlight its retail access issue that’s more than anything.

The results of that retail access program, I know we’ve talked about this in the call, we’ll see if we get some load coming back to us, if we do, you’ll have to figure out in the short-term basis how we satisfy that low demand in longer term, we’ll roll it into our integrated resource planning process..

And last one I guess when we look at the P&I results, obviously was a really good quarter relative to plan.

How much of the probably the upside in the quarter were things, were period specific, whether be better trading opportunities and how much of it is a recalibration operators? Are you guys seeing better performance than may be you thought when you put out guidance earlier?.

The main difference remained and Jeff was highlighting this in his talking points, is our REF business. That is tied to coal plant production and the variability around that coal plant production.

The variability in that coal plant production is tied to when outages are taken at the coal plants and when they’re dispatched and depending where they’re at on the dispatch curve. So, you do see variability that occurs during the year on those coal plants. So, we did see quarter over quarter basis more coal plant production.

We are anticipating relatively normalized production for the balance of the year. So we will see that variability bleed off for the balance of the year. Underlying that, there is some growth.

We do have growth in our renewal projects; we have some wood waste projects came on line; we’re going to get a full year’s annual growth out of them, some landfill gas projects on line as well as I was mentioning the 8-megawatt cogeneration plant as well..

We’ll go next to Matt Tucker with KeyBanc Capital Markets..

With respect to the intact guidance, it sounds like you had some timing issues in the quarter with corporate and the REF units and sort of offset.

So assuming normal weather for the rest of the year; is it fair to say you’re at least on pace to beat the midpoint of guidance with the weather benefit you have or are there some other offsets that we should be thinking about?.

At one quarter end, one thing as you know what we like to do especially with the summer ahead of us in our electric business and the variability with the summer timeframe, we like to hold on reserve any type of contingency around that.

We are starting off strong in our gas utility there in particular; we make the judgment call on how much do we want to reinvest that into the gas utility. And we are in any stay out period right now in terms of rate filings is one of the ways that we help stay out of rate filling is reinvesting, go lean when we can with a gas utility.

And then for our non-utilities, we mentioned the P&I segment; most of that was timing; we’re expecting that to come back in from a guidance perspective. Our gas storage and pipeline business, we do have additional incremental volume that we did see in the quarter.

So, they are off to a strong start but there is volume variability that still could remain in the balance of the year. So, we’re kind of holding that favorability right now for that potential variability. So, I guess it’s a long winded answer. We feel positive about the quarter.

And right now we’re just reserving that favorability for the balance of the year..

And then, it looks like your electric weather normal sales were down about 1% in the quarter year-over-year.

Can you just give us a little color on what think is going there, in particular given what sounds like a pretty healthy and improving economy in your territory?.

I’ll ask Jeff Jewell to answer that question..

Overall view of the forecast is about 0.5% for the full year and that’s kind of what our long-term is. So what we’re seeing in the quarter is sort of one-time outages on retooling in the auto sector and also the steel.

So again, we sort of characterize the timing just from when they were planning on doing those and sort of what their balance of the year production is going to be. So again, we’re looking at it about 0.5% growth..

And given how weak gas prices have been so far this year and look likely to remain obviously this summer, just update us on the Bluestone system, what you’re seeing there and if there is any change to your growth plans, your expectations?.

We are not seeing any impact on the gas prices with our Bluestone Pipeline or gathering. We did sign new agreement with Southwestern; we mentioned that last year and really some northern acreage around Bluestone Pipeline; we’re doing the gathering for them there. That part of the Marcellus Shale in particular is very prolific.

And so they are very bullish around getting the drilling done there; volumes are coming strong as well, no impact..

We’ll go next to Andrew Weisel with Macquarie Capital..

First question on the Governor’s energy speech. For retail open access, you didn’t talk about re-regulation but talked about sort of this five year commitment. And I don’t if there are other options that would be somewhere in between like potentially an interruptible tariff or customers switching back.

If the final ends up kind of in line with the Governor’s suggestions, how much of the load that has switched you think might return over the next few years?.

Andrew, I’d say it’s a good question, but I just don’t want to answer at this point in time.

We’ll get into the details, it ends up being more of a design change with the capacity commitment as well as return provisions that are more fair to upholster with customers; it will be a choice by choice basis in terms of the customers currently in the program.

So, I would anticipate some of that load coming back for people trying to bottom-line of that new type of structure; some could remain. So, you kind of get into the details and the economics and the decision making process with individual customers will be tough to predict..

Then on the Governor’s proposals for energy efficiency, pretty ambitious target.

How do you think that might affect your weather normalized load growth outlook? And would your expectation be that you would continue to get revenue recovery and incentives or is that something being debated?.

The energy, where energy efficiency is going is one area of focus within this legislative progress. I know we talk a lot about the retail access piece of it, but the energy efficiency will be discussed just this week. Some of the Democrats introduced some bills around energy efficiencies and wanted to increase energy efficiencies.

The Governor has mentioned a big part of his focus is on energy efficiency. We like energy efficiency; it’s good for customers; it lowers customers’ bills. And as we’re putting new generation in place, replacing fully depreciated generation, it helps from a bill and total rates perspective.

From a weather load perspective, Jeff was mentioning the 0.5% growth. We’re assuming some element of energy efficiency end at 0.5% growth, probably up to 1%.

So, it really would depend on the outcome of this energy efficiency program with the requirements of that and a bit more and above what we already have embedded in our long range forecast for sales growth..

Then next is -- first quarter is any update on ownership structure and when Enbridge might make their decision?.

The update is Enbridge is still considering ownership of the pipe. They are particularly in the pipeline their LDCs. They have expressed obviously -- they like to pipe itself; they expressed it in recent year-end call as well. So, they are still considering; it’s going through this normal decision making process for them.

If they are not in the pipe, we get 50% ownership of a great project. So, we’re okay with either outcome..

Then in terms of NEXUS, it pretty much seems like it’s a go at this point pending all the FERC approvals and filings.

How do you think about that NEXUS system holistically and what it might mean for longer term growth, once it’s in service?.

The NEXUS pipeline, when I think about the NEXUS Pipeline, I would like to refer back to the Millennium Pipeline that’s a Bluestone for that. So, the NEXUS Pipeline will grow and will become a variable asset for us as the Utica Shale production grows and develops and as gas needs to get to market by those shippers.

So, we’re anticipating at some point, maybe in the future we can set up for future expansions on NEXUS that’s going to help NEXUS as well as Vector which NEXUS ties into. We also have skills, knowledge on developing laterals and gatherings. So, we’re hoping opportunities around NEXUS as well on the laterals and gathering projects.

And the great thing about those projects is that the gathering project, you make money on that; it goes on to a lateral which helps make money on that; it goes on the NEXUS, helps make money on that; it goes in the Vector, help makes money on that. So it’s amplification of value to that value chain.

So that’s how we’re seeing NEXUS will progress over the next few years after it’s in service..

Then very quickly just a modeling one, the corporate taxes, there were some timing issues; any sense of over the next few quarters when those would reverse?.

The effective tax rate, the way to think about that is we had strong income in the first quarter, we’re holding our total year forecast the same. So, you’re really seeing a flush of taxes, the timing of taxes on a profile in the first quarter.

So, we are -- if you hold your total year forecast, the taxes will be balance out in the second, third and fourth quarter..

Evenly though or is there, do you have any sense of when that might happen if it’s lumpy?.

It will follow the income profile for those quarters. So, my sense is it will probably maybe be a little bit back and loaded, given our gas utility, low earnings in the second and third quarter..

We’ll take our next question from Shahriar Pourreza with Guggenheim Partners..

Let me ask you on ultimately what gets approved, what choice, whether it’s the House, Senate or what the Governor is proposing? Is there any update on when we could potentially get some guidance around how much generation you could potentially build as a result of the 3 gigs of shortage?.

It’ll be -- once we understand the final design, then we’ll have to be at that point in time some type of period to understand what customers under the total elimination of the broken program, it will be apparent, we have 900 megawatts out there on choice.

There is some contract that they would have to work through, so they will all come back over a period or probably three-year period. Any other design, it really will be a case-by-case and really understanding what customers stay on choice, what customers come back to us.

It would be some period of time after the legislation is passed and maybe a few months it as getting absorbed for us to. And as soon as we know that, we would give you guys an update in terms of what does this mean, in terms of additional megawatt that we’re going to have to serve..

And then just one housekeeping on the stronger than expected results of energy trading, is there -- should we assume that’s going to invert the rest of the year or should we assume stronger results the rest or some of the economic hedges that unwind?.

They are off to a strong start, I can say that and when we look at them, we do target $20 million to $25 million of economic and income. So, what you’re seeing on the accounting results is some of that stronger performance falling through. Typically there is seasonality in that business.

We do have a good physical portfolio of businesses that serve and deliver gas and electricity. In the first quarter, the gas was flowing which helped out the earnings there, we’re going to see that again in the fourth quarter. So there is some seasonality in that business, so the next few quarters maybe a little bit quieter.

So, I can tell you that we are off to a good start there; three quarters ago that’s one of the reasons why we’re holding the guidance on accounting..

And then just one last question, Michigan State in the implementation plan under 111(d); is there any status there?.

They’ve been holding some hearings in Lansing around that. So, there is some early work being done around that. There is a new agency that’s more going to be a policy courting agency that’s going to be involved in that working with environmental agencies as well as the MPSC.

So there is early work that’s being done around coordinating and setting an overall Michigan policy that’s also lining up with the EPA requirements and having the states filed in individual plans within that.

The good thing is that there is discussions happening and some really early thinking around what is going to be the structure of the state compliance process..

We’ll go next to Greg Gordon with Evercore ISI..

Most of my questions have actually been answered. But if you don’t me asking and perhaps this should be offline. If I go back to your year-end/Q4 slide deck and look at the $70 million of operating earnings that you expect to come from your pipeline platform in 2019, this was noted that you include a 33% ownership of NEXUS.

What percentage of that $70 million of operating earnings is the place holder for the NEXUS contribution?.

We have not disclosed at that level detail. But we have disclosed that this could be a $700 million [ph] investment assuming that the 33% ownership interest and we have given some parameters around returns that we target..

We’ll go next to Michael Doran [ph] with Goldman Sachs..

Most of my questions actually been answered, but just may be a little additional color on your sales growth and outlook there.

It looks like it was down from a weather normalized basis just for the quarter but may be some additional color on that?.

So, what we’re seeing is with the 1% that’s related to timing, mainly in the auto and the steel sectors is again as they were doing some retooling there was also plant in Canada that’s down as retooling. So obviously there is a little bit of flow on during the quarter.

But for the balance of the year, all those plants, the anticipation that they’re going to be growing for a lot of stuff. So that’s what sort of brings our growth back up to our anticipated 0.5% of the full year..

And Michael, on the residential, we saw this last year as well. When you got this extreme weather, you have additional conservation that happens and people will dialogue a little bit differentially, a little bit lower in their house. So we did see some additional conservation that’s playing through the residential segment..

And some off topic but to your comments on the Red Wings, it was great to see the tradition maintain with octopus. I think it was enormous too..

We lost in overtime last night that as always, but it’s two, two..

I don’t understand how they get them in the arena, innovative people out there in Michigan..

We’ll go next to Jonathan Arnold with Deutsche Bank..

Just a quick one on the legislation, is it -- obviously the Governor didn’t call for a specific RPF.

So just curious whether you think that eventual outcome will include some sort of explicit higher RPF and if not what kind of number do you think is likely to fall out of your planning?.

A lot of it is intertwined with the EPA requirements. There was a debate a few years ago, do we do more renewable or not in Michigan? So that Washington has determined that we will, so for us to comply with the current reductions, the EPA has outlined, we will be doing more renewables.

Where the supporter momentum is going is more having flexibility around that. There will be a process we’re going to be submitting in to comply with 111(d) but there is also going to be need of the state and how they want renewable to be.

So renewables will be going out to file amount, determined by a combination of our 111(d) filing as well as what the state wants. I’m not anticipating any type of new standard coming and it will be more on our portfolio basis what do we need to get cleaner in terms of CO2 and other emissions..

But either way, you anticipate obviously participating in building some of that whether it’s gas or renewable; it will be incorporated in your plan; is that how we should think of it?.

Yes..

I did noticed in the prepared remarks, you mentioned potential opportunities to optimize some of the other REF units, presumably the existing ones.

Is that potentially significant or more kind of tweaking at the edges?.

More on the edge; these units are very scalable and they can handle lot of different volumes; more volumes is better. So, we’re continuing to look at those units that some units that we have on coal plant and some sites have monthly units, there may be opportunities to relocate some of those units to higher volume cola plant. It’s more on the edge..

Many of the units or is this just couple of them?.

Just a few, a couple..

We’ll go next to Paul Patterson with Glenrock Associates..

Just a follow-up on a few things, the gas storage and pipeline. You mentioned some timing and you mentioned Bluestone seems to be on track.

And I was just wondering if you can just elaborate a little bit more on the timing issue that are going to be bringing down the -- just how that’s going to flow over the year?.

The timing is, our gathering business in particular is volume based from a revenue perspective. Southwestern is as mentioning is seeing really good volumes in this region and volumes around the acreage that we’re tying or gathering too. So we’re seeing those plus the incremental volumes come through.

Now, we also see there is some variability that does occur sometimes in the balance of the year, the summer timeframe, the decision Southwestern makes around pricing and volume levels, so they may fluctuate a bit. But I would say we’re off to a strong start and some of that potentially could flow to the bottom-line for that segment..

But what will drive it down I guess, I mean if you could take that $27 million and you look at what’s your forecast is, what’s going to be -- I am sorry if it’s done, but what’s driving it down over the next few, is there some seasonal situations which you’re talking about or….

There is some seasonality to that business line..

But there is no change in any of the projects outlook in terms of….

No..

And then on the MISO capacity, I am sorry, you guys were mentioning sort of a forecast that you guys had and I want to make sure I completely understood that in your zone.

You expected it to go up, how much I think in the following year?.

We don’t have a particular forecast for our zone. And what I was mentioning is that where the prices came out was where we’re anticipating then. It was relatively -- we’re anticipating to see a sizable price increase in Zone 7 is for the summer ‘16 which will be next year’s, next planning year.

But I did indicate, we did see some results in Zone 4 on a year-over-year basis that came up dramatically that was a 10-time increase that may or may not -- I mean there is some element or increase will occur in Zone 7 but it’s probably good indication of what’s going to happen within one planning year when there is a shortfall that occurs..

So, I mean I just want to make sure are you guys thinking that you might see similar signs like a 10-fold increase in….

It’s tough to say but we will see a sizeable increase..

And then just finally, you guys were mentioning the sales growth of 0.5%.

And the Governor, it wasn’t clear to me whether or not the Governor’s strong emphasis on energy efficiency was part of that or whether you think that would incrementally make that lower or impacted at all, you follow them?.

We do in our long range planning the 0.5, I did mentioned we do anticipate energy efficiency there to continue occur and it’s probably a rule of thumb is probably about 1%. So we are probably at more of organic growth of 1.5%, it gets down to 0.5% through energy efficiency.

What I was indicating earlier was that depending on the nature of the energy efficiency programs that are out there, they’ll all be relative to our assumption of that 1%. This is more aggressive energy efficiency and potentially it could put down 0.5% of it..

So the Governor’s emphasis on this may lower that, but I guess it’s too early to say; is that sort of how to think about it?.

The Governor’s message really is aspirational. I mean he really wants us to focus on energy efficiency. The EPA 111(d) compliance credits energy efficiency. So, we also have reason to focus on energy efficiency. But more than anything, I believe he is setting a real good tone around energy efficiency in the state of Michigan..

And we’ll take our final question today from Andy Levi with Avon Capital Advisor..

You can take another question; I am all set..

Dana, I think that’s maybe it..

Yes, that is it..

Well, let me just conclude by saying that I appreciate everybody for joining us this morning. Once again, we are off to a good start here at DTE. Definitely appreciate your continued interest in DTE and hopefully everybody can be voting and supporting our Detroit based sports team. Have a great day..

Again this does conclude today’s presentation. We thank you for your participation..