DTE Energy reports flat $1.1B earnings in 2018
DTE Energy Co. said Thursday its net income for 2018 was nearly flat year over year at $1.1 billion after a hot summer helped make up for a wet and warm fourth quarter.
The Detroit-based utility reported a 33 percent decrease in fourth-quarter net income to $191 million after Michigan residents used less electricity and its nonutility operations sustained losses. DTE also said it is acquiring a natural gas pipeline in Northwest Ohio to bolster its nonutility segment.
In 2018, earnings were $6.17 per diluted share, down 2 percent. Its operating earnings per share rose 9 percent from 2017 to $6.30, meeting its guidance midpoint.
"We logged another strong financial year and made great progress," CEO Gerry Anderson told analysts on a conference call. "I'm also confident we are set up for success in 2019. I feel really good about the plan we've put together for the year."
Following record-breaking low temperatures last week that caused a cold-weather crisis for Consumers Energy after one of its stations caught fire, DTE saw 4.5 billion cubic feet of natural gas flow through its pipelines in a single day — with 2.5 billion flowing to its customers and another 2 billion to support Consumers as well as areas in Canada, Chicago, New York and Wisconsin.
"The weather produced strong demand," Anderson said, "which will give our two utilities a solid start to the year."
DTE Electric saw a 61 percent decrease in reported earnings in the fourth quarter to $56 million. For the full year, the segment increased earnings 10 percent to $664 million from higher rates and warmer weather.
In the fourth quarter, DTE Gas grew 17 percent to $63 million, despite rate decreases and above-average temperatures. For the full year, the utility's earnings grew 3 percent to $150 million from cool winter weather early in 2018.
The greatest loss in earnings for the most recent quarter, however, came from the company's gas storage and pipelines business with a 69 percent drop from $154 million to $47 million. In 2018, the operations earned $235 million, a decrease of 15 percent.
Earnings from its power and industrial projects fell 56 percent to $15 million, a 56 percent decrease. For 2018, the operations increased 17 percent to $161 million. Two new renewable natural gas projects are in the works, and the company plans to complete construction on a cogeneration project for Ford Motor Co. Such projects can help companies "improve their environmental footprint and lower energy costs," said Peter Oleksiak, DTE chief financial officer.
After losing $25 million in its energy trading business in the fourth quarter of 2017, however, the company earned $25 million over the same period in 2018, benefited by natural gas expansion projects. Energy trading's earnings over the full year decreased 46 percent to $39 million.
DTE said Monday the NEXUS Gas Transmission system, a joint venture with Enbridge Inc., signed an agreement to purchase Generation pipeline, an existing 24-inch, 23-mile pipeline that can deliver up to 355 million cubic feet per day of natural gas to industrial customers in Northwest Ohio.
The purchase price is between $150 and $200 million, according to the company. It expects to connect the pipeline to the joint venture's 255-mile NEXUS pipeline, which began operations last year and sits 4 miles from the acquisition.
"We told investors last year that we were looking hard at an acquisition, but it didn't meet our return requirements, so we walked away from it," Anderson said. "This one we liked, and we liked the future growth potential. .... If we didn’t make any expansions, we would be very happy with the returns."
The company reaffirmed its 2019 operating earnings per share guidance of $5.97 to $6.33 with a $6.15 midpoint. DTE's shares are up 16 percent over the past year. Its stock closed at $117.08 per share Wednesday.