DTE Energy to make major investments to transform electric generation and boost reliability

Published on November 09, 2016 by Daily Energy Insider Reports

Detroit, Michigan-based DTE Energy Co. is poised to transform its electric utility business over the next decade and plans significant infrastructure investments to remake power generation, the company’s CEO said.

When he spoke at an Edison Electric Institute financial conference this week in Phoenix,

Gerard Anderson, chairman and CEO of DTE Energy, said improving power reliability through investments in its electric assets was a priority.

Over the next five years DTE Energy will invest $13.5 billion in capital improvements, up 12.5 percent over the previous five years. The majority of that investment, nearly $8.5 billion, will fund a remake of the company’s electric generation system, including investments in renewables and a new gas combined cycle plant.

Running parallel to the company’s investments in the grid will be productivity improvements of between 30 and 40 percent, Anderson said, but also some expected changes in costs.

“As we make these infrastructure investments, we will use those productivity improvements to make sure we manage customer affordability simultaneously,” he said.

DTE is also at the forefront of the industry in cost control. “Our costs at the end of last year were lower than they were in 2008,” Anderson said, adding that the company expects the same result for 2016.

Among its energy-related businesses, DTE develops and manages an electric utility serving 2.2 million customers in southeastern Michigan and a natural gas utility with 1.2 million customers in Michigan.

Due to the age of DTE’s plants and a variety of current and future environmental compliance issues, the company plans to retire 11 of its 17 (64 percent) coal-fired energy generating units by 2023.

Replacing part of the capacity from the coal-fired plants will be a new natural gas turbine plant that will provide about 1,000 megawatts of energy. The company will invest between $1 billion and $1.5 billion in this new generating asset, which is expected to be completed by 2023.

DTE also continues to add to its renewable energy portfolio; specifically, 50 MW of wind and 50 MW of solar this year. The company also secured approvals to move ahead with 150 MW of wind generation in 2018.

In 2015, more than 10 percent of the electricity provided by DTE was generated from a renewable source in Michigan.

The clean energy initiatives will help the company reduce its CO2 emissions by about 40 percent by 2030 when compared with 2005 levels.

DTE will invest to modernize its aging infrastructure. Much of the company’s 45,000 miles of lines and 400,000 distribution transformers were built between 1940 and 1970, and their performance is beginning to deteriorate. Circuitry will be upgraded and improvements will be made to the remote monitoring capability for the system.

“We are going to be adding circuit automation to enable quicker restorations,” he said. “And we will be undertaking substantial sub-station redesign and replacement because many of them are either old or overloaded in areas where we are growing, like in downtown Detroit or Ann Arbor.”

By investing heavily in distribution upgrades, the company also expects to see substantial productivity improvement in this area. “As we work through the combined investments in generation and distribution, we are very keenly aware they need to work not only to renew infrastructure, but to keep rates affordable,” Anderson said.

DTE’s gas utility segment also will benefit from significant capital investment.

“Over the next five years we expect to invest $1.8 billion in this business, which is about a 30 percent increase over the prior five years,” Anderson said. The increase is driven largely by the replacement of aging natural gas infrastructure, mainly cast iron mains and steel or copper service lines.

Anderson said the company also will focus its activities over the next five years on a series of growth and expansion opportunities in its pipeline business, including expansion projects related to its Bluestone and Millennium Pipelines.

Plans for the proposed NEXUS gas transmission system also are moving ahead. NEXUS, a joint venture between DTE Energy and Spectra Energy, will provide natural gas supply between Ontario and the Appalachian Basin, as well as to customers in Ohio, Michigan and Chicago.

“We get a lot of questions about whether this is on track and we have no reason to feel that it isn’t,” Anderson said.

The environmental impact study on the NEXUS pipeline is believed to be completed by the end of November and a final approval from the Federal Energy Regulatory Commission is expected in the first quarter of 2017, Anderson said. Construction is slated to begin early next year as well.

“Millennium and Bluestone have been a great growth platform for the company in recent years and we really feel that NEXUS will be positioned to play a similar role over the next five years,” Anderson said.