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Rising electric sales brighten DTE outlook

作者：1 發(fā)布時(shí)間：2010-04-26 文字大?。?span id="da">【大】【中】【小】
 By Amy Lane
LANSING — After having its electricity sales drop 7 percent last year in Michigan's struggling economy, things are definitely looking up for DTE Energy Co. 

The Detroit Edison Co. parent entered 2010 with a “very modest forecast” of an overall 1 percent increase in sales and in the first two months saw a 2 percent increase, driven by improvements in the industrial sector, said DTE Chairman and CEO Anthony Earley Jr.

Edison's industrial sales were up 15 percent as of February, the most recent month available, helped by such factors as rebounding steel production. In 2009, the utility saw a 25 percent decline in industrial sales. 

There's also been additional demand from residential customers, with those electricity sales as of February up 1 percent compared with a year earlier. DTE is scheduled to announce first-quarter 2010 earnings this week and will hold its annual meeting May 6. 

“We're just starting to see very gradual improvements,” Earley said. 

They're among pieces of a brighter picture in 2010. In addition to reversing electricity sales declines, DTE is expecting growth in some of its non-utility business areas. 

For example, it expects returning demand for its steel-related products to boost its operations that convert coal to blast furnace coke, the primary fuel used in the steel-making process. 

Earley said both the price and demand for coke have risen, and the company's coke business is expected to be the biggest driver of a projected near-doubling of earnings this year in DTE's power and industrial projects business unit. 

The company expects that segment, which had earnings of $35 million in 2009, to post earnings of $60 million to $75 million in 2010. 

“We see some very attractive growth there,” Earley said. 

DTE also is involved in ventures to convert small, older coal-fired power plants to burn wood waste. 

Two wood conversion plants are operating in Alabama and California, construction is slated to begin on a second California plant, and a plant in Wisconsin that a DTE subsidiary purchased in 2008 is scheduled to start operating this year. 

Another emerging opportunity for DTE is a 182-mile natural gas pipeline traversing New York. 

DTE is a co-owner of the Millennium Pipeline, which came online last year and runs through an Appalachian region shale formation that is expected to be a major producer of natural gas for decades. 

Earley said the company sees an opportunity with the Millennium pipeline to install more compressors that help push gas through the line and to build spurs off the main line into what's known as the Marcellus Shale formation. The company hopes to move forward with a Marcellus-related pipeline project by later this year. 

Cost-cutting, which has been a priority at DTE, will continue this year, but to a lesser degree. 

The company achieved $130 million in cost reductions in 2009, including a $65 million decrease in utility operating and maintenance costs, and is targeting about $60 million in overall reductions in 2010 to help offset increases in health care costs and higher commodity prices. 

Credit-rating agency Fitch Ratings in March noted the company's cost-reduction efforts and other factors as it revised its rating outlook on DTE to stable, up from negative.

The agency said the revision “takes into account the company's solid financial performance in 2009, which was due largely to a sustainable improvement in its operating cost structure and the implementation of higher base rates by utility subsidiary Detroit Edison Co.” 

Karen Anderson, senior director at Fitch, said Michigan's regulatory environment and Michigan Public Service Commission actions that were helpful to Detroit Edison, the company's cost controls, and ability to withstand lower industrial sales contributed to a better 2009 than Fitch forecast for the company.

Fitch is watching factors that include an upcoming decision in a Michigan Consolidated Gas Co.rate case. 

But Anderson said that if DTE was able to perform like it did in a year marked by a down economy, low natural gas prices and mild weather, it bodes well for the company in an improving economy. 

“They were able to weather through 2009, and given that we're seeing some signs of economic upturn ... then they should be able to perform well going forward,” she said. 

Amy Lane: (517) 371-5355, alane@crain.com 

Sourced from www.crainsdetroit.com