DTE Energy (DTE) Q1 FY26 earnings call: guidance and Q&A

How to think about pushback in a contested Michigan case, and is the next data center deal still a Q3/year-end event that would lift the CAGR?

Community and media reception is positive; DTE expects an order by ~September 10 with no PFD, a constructive signal. Three GW gets DTE to 'A+' and Google alone has potential to reach 8%, but management won't get ahead of approval. On the next deal, targeting a signing before year-end with 2 GW of hyperscalers in late-stage negotiations (at least one with zoning done); the 5-year plan update comes on the Q3 call.

“We are expecting to get an order in the September time frame, upturn be by September 10, at least that's what the contract specifies.”

asked by Shahriar Pourreza · answered by Joi Harris

What ROE and equity ratio outcomes underpin the potential rate-case pause, and how is the IRM treated?

DTE requested a 10.25% ROE and typically includes a 51% equity layer; it expects a constructive outcome underpinned by legislation-backed grid and clean-generation investments. The IRM is aligned to the DSP and the 2024 Liberty audit. On gas, the next filing cadence will be set after the current case's final order; staff supported the requested IRM increase.

“In terms of ROE, what we requested is 10.25%. And then in terms of equity layer, -- we typically have included a 51% equity in our filing.”

asked by Michael Lonegan · answered by Joi Harris

What does the rate-case stay-out depend on, and how does Vantage (including recycling) factor in?

The filed mechanism takes excess margin above what's in the case and pushes it to a subsequent filing to flow benefits back to customers, enabling DTE to stay out for multiple cycles; layering Google on top could extend further. Vantage has a strong pipeline including a ~350 MW behind-the-meter data center project expected to be agreed within weeks, potentially transferable to other hyperscalers; portfolio rotation is reviewed annually but nothing is imminent.

“The mechanism that we filed essentially takes any excess margin above and beyond what we've incorporated in the case and pushes it into a subsequent filing where we will propose how to flow back the benefit to the customers.”

asked by Julien Dumoulin-Smith · answered by Joi Harris

How do Oracle/Google ramp over time versus minimum contracted levels, and how do the customer-benefit figures compare?

Oracle's 2026 ramp is small then rises exponentially to full over the next couple of years; Google starts small and reaches 1 GW by 2028. Minimum billing demand aligns with the load ramp, with a one-year delay option covered by the proposed mechanism. Oracle's ~$300M/yr benefit is larger because DTE only builds battery storage (fully cost-covered), while Google's ~$1.7B lifetime benefit is proportionally smaller because DTE must add baseload; all future deals must, by law, provide affordability benefits.

“The ramp for Oracle in 2026 is relatively small, but it shoots up exponentially beyond 26.”

asked by Jeremy Tonet · answered by Joi Harris

How is the incremental $5B funded, does it force capital recycling, and is there upside to RNG credits?

Incremental capital would be ~40% equity on average (timing-dependent), supplemented by convertibles and hybrids; the new equity need prompts consideration of asset recycling, though nothing imminent. DTE intends to serve future load through its two utilities rather than bilateral hyperscaler deals. RNG is assumed conservatively at $50M-$60M pending DOE/Treasury rules, with only modest potential upside this year.

“the incremental capital that would come into the plan would be partially funded with equity. So we think about 40% equity on average depending on the timing of the cash flows also use converts and hybrids to support our balance sheet.”

asked by William Appicelli · answered by David Ruud

Is ~$5B/GW a fair template for future deals, are the 2 GW late-stage two Google-sized customers, and what drove the negative trading quarter?

Deals are bespoke in capital and timing/resource mix (Google carries heavy renewables/storage plus some baseload); the late-stage pipeline is an assortment of sizes but includes deals at Google's scale. The negative trading quarter reflects Q1 shaping contemplated in February guidance (as seen in 2023-2024) plus timing that reverses through contracted positions, keeping DTE confident in the segment's full-year high end.

“all these deals are pretty bespoke and what they're going to be providing as far as capital and when that will flow in.”

asked by Michael Sullivan · answered by David Ruud

What is the customer concentration, and do credit/collateral protections differ by counterparty?

Credit protections differ based on counterparty strength and are set individually; concentration will be roughly 40% at full ramp. As more data centers come online, DTE tailors protections to insulate existing customers from stranded assets and rate shock. Storm results reflect targeted investments (a less-severe prior storm hit 750,000 vs 300,000 this year), measured at the circuit level, with positive regulator/community feedback.

“the concentration will be roughly 40% once they arrive at their full ramp.”

asked by Andrew Weisel · answered by Joi Harris

How much of the $5B falls in the current 5-year plan, where does the gas plant land, and when is the plan updated?

Some renewables and storage fall inside the 5-year plan with baseload ramping toward the back end and beyond; the ~700 MW gas plant straddles the 5-year window (site prep and purchases pull some spend forward). DTE would update the capital plan after the expected early-September order, likely detailing the $5B timing at EEI. On the governor's race, all four candidates are broadly supportive of data centers and affordability messaging.

“some of the renewables, some of the storage would fall into the 5-year. And then we would begin to ramp the base load generation toward the back end of the 5-year and then it will carry beyond the 5-year time horizon.”

asked by Paul Fremont · answered by Joi Harris