密歇根天然氣 (DTE) 2016 Q2 法說會逐字稿

Good day and welcome to today's DTE Energy second quarter 2016 earnings release conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Barb Tuckfield. Please go ahead

Thank you, Steffi, and good morning, everyone.

Before we get started, I would like to remind you to read the Safe Harbor statement on page 2 of the presentation, including the reference to forward-looking statements. Our presentation also includes references 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 are Gerry Anderson, our Chairman and CEO, Jerry Norcia, our President and COO, and Peter Oleksiak, our Senior Vice President and CFO. We also have members of the management team with us to call on during the Q&A session. And now I'll turn it over to Gerry to start this morning's call

Thank you, Barb, and good morning, everybody. Thanks very much for joining us. I'm going to start with an overview of our results in the second quarter as well as some key developments at the Company over the past quarter, then I'm going to turn things over to Peter for a financial update then we will wrap up and take some Q&A.

So moving on to slide 5, we continue to make good progress on a number of fronts this year. So with a successful first half of the year under our belts, I feel really good about our year-to-date financial results And based upon those strong results, we are increasing our operating earnings-per-share guidance, we'll talk a bit more about that in a minute.

We also recently increased our dividend for the seventh consecutive year, which continues the over 100-year history of issuing dividends at the Company. Our Rachel Eubanks was appointed by Governor Snyder to serve the remainder of John Quackenbush's six-year term that expires about year from now, July 2, 2017.

Her experience is in the area of finance, so it includes project finance, municipal bond refinancings, credit enhanced financing, variable and auction rate transactions and so forth. She also, over her career, has provided investment banking support on financial advisory and investment engagements for state government, governmental authorities, municipalities and non-profit organizations.

So as we look forward in Michigan to a really heavy period of investment in our infrastructure, I think that her understanding of finance will be a good compliment to the skills of the current commissioners. And we certainly will have somebody there who understands cash flows, balance sheet issues and so forth as the Company goes through a heavy investment period.

Thanks to the hard work of our employees. For the third said consecutive year, DTE was ranked second in the Midwest by J.D. Power in overall electric residential customer satisfaction, that's in the large utility category, and this was our sixth consecutive year of being in the top quartile of that survey.

We also achieved our best safety record in the Company's history in the first six months, and that was by a wide margin. Which I'm particularly proud of, I think it said something about where our employees heads are and if we can keep this performance, we may just be the safest company in the industry this year.

And earlier this year, we won our fourth consecutive Gallup Great Workplace award, and our results placed us in the top 12% of companies worldwide in terms of employee engagement.

On the NEXUS front, that pipeline continues to progress. The project reached another important regulatory milestone, which sets us up nicely to meet our in-service date late next year. So I'll talk a bit more about NEXUS and those developments in a few minutes.

So I'm going to move on to slide 6 and give you some color on our second-quarter financial results. So in the second quarter, we built upon what were really positive first-quarter results. We delivered second-quarter earnings per share of $0.98, which I feel great about.

As you know we, came into this year expecting warm weather. We planned for it, and that played through in our first-quarter results. And we've, based on the first and second quarters, come out of the first half of the year very well-positioned and we now have the potential to reinvest some of the weather-related favorability that may occur on the third quarter. We're seeing a hot July, and there's a warm August projected as well.

So given the strong results of the first half of the year, we are increasing the midpoint of our guidance by $0.12 from $4.93 to $5.05. And given that, we now have solid path to achieving our 10th consecutive year of meeting or beating our earnings targets.

We've also been growing our dividend along with earnings, and we just recently increased the dividend by $0.16 per share and our balance sheet continues to be in great shape. So bottom line, I feel really good about our financial position as we get into the second half of 2016.

Moving on to slide 7 for a little more color on earnings and dividends. We've talked for years to investors about delivering 5% to 6% annual earnings-per-share growth, and then pairing that with healthy dividend growth.

On the right-hand side of the slide in the ovals, you can see that our actual earnings-per-share growth over the past five years or so has been 6.5%. So really a percent above that 5% to 6%, and we have grown our dividends at the 5% to 6% rate.

I also mentioned a minute ago that we are increasing guidance from a midpoint of $4.93 to $5.05. Fundamentally, this is driven by strong performance in our electric business and in our gas storage and pipelines business, as well as a very solid first half in our energy trading operations.

As I stated a minute ago, in keeping with the commitment to grow dividends with earnings, we increased our dividend per share from $2.92 to $3.08, which was a 5.5% increase.

I'm going to move on to slide 8 now and discuss a significant development related to our power plant fleet that occurred in the second quarter. So in June, we announced closure plans for a coal-fired generating units. And this announcement combined with our decision to cease operation at three coal-fired plants which happened in April, means that we will replace 11 aging coal-fire generation units at three sites totaling 2.5 gigawatts on or before 2023.

Much of this coal base slow generation will be replaced with natural gas generation, but we also intend to continue to invest in wind and solar to ensure that we keep the mix in our portfolio that we want. This portion of what is a longer-term transition plan for our fleet will require about $3 billion of investment.

By 2030, we'd expect to retire an additional gigawatt of coal-fired generation, which would bring total retirements to 3.5 gigawatts. And in doing that, our reliance on coal would decline by about 60% and we'd expect to roughly double our current 10% renewable capacity, and to use more gas-fired generation in a base [that will grow]. Obviously emissions through 2030 will be down fundamentally as well, so CO2 we project would be down about 40% versus 2005 levels, and our conventional emissions would be down sharply as well.

Moving on to slide 9. NEXUS continues to move forward and make good progress. So NEXUS received its FERC notice of schedule on May 17 of this year.

The project also recently received a favorable draft environmental impact report, or EIS, from the FERC. We expect the final EIS by the end of November, and that would allow for a certificate of construction by the end of February of 2017 which would set us up nicely for the November in-service date next year. We're progressing on the right away acquisitions and detailed engineering plans, and we continue to work constructively with FERC and other regulatory agencies.

In addition, in June, we received a letter of support for the NEXUS project from the Michigan Agency for Energy. So the Michigan Agency for Energy takes the lead on energy policy for the administration.

We also received a letter of support from the Michigan Economic Development Corporation, which is the state's primary economic development agency. In addition, a recent Michigan Public Service Commission staff brief on our electric power cost recovery case, that's our fuel clause case, stated, and I quote, staff believes that DTE Electrics' participation in the NEXUS pipeline project is reasonable as proposed in DTE Electrics' application, it's testimony and its exhibits in this case. So we were gratified to have staff weigh in saying they think this project would benefit customers and benefit the state.

In addition, we had letters of support offered by both Senator Nofs and representative Nesbitt, they are the Chairs at the Senate and House Energy Committee's. So there's a lot of support in the state of Michigan for this pipeline moving forward.

So we really believe in the fundamentals of this [pipe]. It serves arguably the best dry gas production geology in the country. It connects that geology directly to growing markets in Michigan and Ontario, and then via our Vector Pipeline connects into Chicago and Wisconsin as well.

The pipe also connects directly to the largest collection of market area storage in the country in Michigan and in Western Ontario. The pipe has three strong utility sponsors, and up to 1.75 Bcf of signed interconnect agreements in Northern Ohio, and the pipe remains on schedule even as many of the pipes serving the Utica region struggle with delays. And given this, we continue to think that NEXUS is going to be a valuable addition to our gas storage and pipelines portfolio.

And with that, I'm going to then turn things over to Peter Oleksiak to cover our financial results in more detail. So, Peter, over to you.

Thanks, Gerry, and good morning to everyone I'd like to start with slide 11.

Gerry mentioned DTE's operating earnings for the second quarter were (inaudible), $0.98 per share, and for reference reported earnings were $0.84 per share. For a detailed breakdown EPS by segment, including a reconciliation to GAAP reported earnings, please refer to slide 24 in the appendix.

Slide 11 shows our quarter-over-quarter operating earnings by segment. Starting at the top of the page with the two utilities, we experienced unusual weather this quarter which give a boost to both utilities. April was colder than normal, while May and June were warmer than normal.

This unusual weather in the quarter created both heating and cooling load causing earnings for both utilities to be up quarter over quarter. DTE Electric's earnings were $135 million for the second quarter this year compared to $111 million last year. Setting the weather in last year's rate case, DTE Electric's earnings were lower due to the absence of a revenue decoupling mechanism amortization in 2016.

As you may recall, this revenue decoupling amortization was part of our strategy that extended the timeframe in between rate cases by four years. We've increased guidance for the segment given the warm weather through June. A further breakdown of DTE Electrics' quarter-over-quarter results can be found at the appendix on slide 19.

For DTE Gas, earnings for the second quarter were $13 million compared to a loss of $7 million last year. The variance is due to cooler weather in April of this year, increased revenue related to our infrastructure replacement program and plan initiatives in response to the warm weather we experienced in the first quarter.

As we discussed on our first quarter call, we went into the year anticipating warmer than normal weather for the winter and we planned for it. With this advanced planning, we were able to stay on track to meet guidance.

Moving down the page, gas storage and pipeline earnings were $35 million for the quarter. Earnings for the quarter were up $10 million over last year due to higher pipeline and gathering earnings from production that came online in the second half of 2015.

We continue to see strength in this segment, even in current conditions. We've adjusted the midpoint of guidance upwards for this segments, which I'll discuss in a minute.

Moving further down the slide, earnings for our power and industrial projects were $17 million for the quarter, down $1 million from the second quarter last year. This decrease was primarily driven by lower earnings in the steel sector, offset by favorable REF volumes from an additional project that came online in the fourth quarter of last year.

Earnings for corporate and other were negative $23 million for the second quarter. This year, $10 million favorable over last year due to the timing of taxes. So earnings were $177 million for gross segments of the second quarter or $0.98 per share compared to the $134 million or $0.75 per share last year.

To round out our operating earnings, we included the results of our energy trading business. At energy trading, the accounting earnings were zero, down $3 million from the second quarter of last year driven by lower realized power performance. Trading's economic potential position for the second quarter of 2016 was $12 million.

Trading is having another strong economic year, actually $30 million year-to-date economic contribution. A portion of year-to-date economic performance will flow through the total year operating income results. I will talk more in a minute on the new guidance for our trading segment. Slide 22 of the appendix contains our standard energy trading reconciliation, showing both economic and accounting performance.

Let me now turn to slide 12 and the EPS guidance for the year. As Gerry Anderson mentioned start of the call, based on our financial results in the first half of the year, we are increasing our midpoint of the 2016 EPS guidance by $0.12 from $4.93 to $5.05 for DTE Energy. Our EPS guidance range for DTE Energy is now $4.91 to $5.19, and $4.85 to $5.08 for our growth segments.

Our guidance increase for our gross segments is driven by the strong start up to the year at our DTE Electric and gas storage and pipelines segments. If the warmer than normal weather continues for the remainder of the summer, we will initiate an invest plan at our DTE Electric to put the incremental revenue and cash back into customer centric assets and activities.

For our [GSB] segment, the new drilling plans to Southwestern announced last week in the Bluestone region may provide upside to 2016, sets us up nicely for 2017. Operating earnings guidance for these segments increased from a midpoint of $5.92 to $5.97 at DTE Electric, and $110 million to $113 million(sic-see presentation slides "$110 million to $115 million") at our Gas Storage and Pipeline segment.

As I just mentioned on the prior page, our DTE Energy's business is off to a strong economic start. We have raised our earnings guidance from zero to a range of $10 million to $20 million for this year.

Energy trading is not part of our growth segments, and we let the business be opportunistic for setting into fine operating earnings target. So we've conservatively set the original guidance at zero, then typically update the earnings guidance as we assess the results for the first two quarters after we cover operating costs.

Given the strong results in the first half this year, we are increasing the guidance for energy trading. We'll give another guidance update in the third quarter based on economic results for the first three quarters.

Moving on to slide 13 and adjusting installer earnings results for the year, our cash flow and balance sheet remains strong and we'll continue to provide the foundation for our long-term growth plans. This slide lays out our cash flow and CapEx through the first half of the year.

Cash from operations was $1.3 billion. We saw a strong performance across several business units, which is driving the increase over the same period of last year, and puts us a little ahead of our plan this year. We've invested $1 billion of CapEx through the second quarter, and on the right side of the page you can see the break out by business unit.

DTE Electrics' CapEx decrease was due to the timing of operational investments, and lower new generation spend with the acquisition of large gas [taker] back in the first quarter of 2015. So now utilities are higher than last year driven by the timing of projects, and particularly our Gas Storage and Pipeline segment. To fund this CapEx program and refinance maturing debt, we have issued $600 million of long-term debt financing this year.

We've been consistent in our messaging over the years that maintaining a strong balance sheet is a priority. Slide 14 provides the key balance sheet metrics we target and monitor, which is FFO to debt and leverage. This slide shows the projected the level for each metric.

Our 2016 financing plan is on track, and we plan to issue up to $100 million of equity this year. However given the strong strength of the cash flows we have experienced to date, we are looking at the possibility of deferring equity issuance in the next two years. Our three-year projected equity needs remain at the $200 million to $300 million level, which is just a small fraction of the total capital spend over that timeframe.

Our disciplined approach to maintaining a strong balance sheet across the years has proven to be valuable. And it sets us up nicely as we enter a period of incremental infrastructure improvements and investments at our utilities, and funding the growth plans at our non-utility businesses.

Let me wrap up on slide 16, and then we can move to questions and answers. We've had a very good quarter as well, as the first half of the year. We were able to raise our EPS guidance, setting up nicely to extend our street to 10 consecutive years of meeting or exceeding our initial EPS guidance.

This will be the seventh consecutive year that we've increased our dividends. This quarter, we announced coal plant retirements that will bring cleaner energy to our customers, and considerable investment to our electric utility. Maintaining a strong balance sheet will allow us to invest in the utilities and pursue growth opportunities at our non-utility businesses.

Before I open up to Q&A, our call would not be complete without a quick update on my hometown Detroit Tigers. The good news is that we've won 50 games so far this year, the bad news is that we've lost about as many games as well. Justin Verlander is looking better recently as he won last night in Boston, be Miguel Cabrera's bat needs to heat up for us to have a chance. There's a lot of season left, so I'm remaining optimistic.

With that, I'd like to thank everyone for joining us this morning. Steffi, you can open the lines up for questions.

(Operator Instructions)

Michael Weinstein, Credit Suisse.

The first question is about the $3 billion of additional investment from the retirement of coal generation by 2023. That's correct?

Yes, the timeframe -- so we're going to work through the certificate of need process and work through with our regulators the phasing of both the retirements and the investment, but we do expect that the play out by 2023, yes.

Is that part of the $18 billion that you had previously announced for 10 years?

Yes.

Okay, so that number, the $18 billion, doesn't change as a result of that?

Correct.

Okay. And on NEXUS, just wondering, I think you mentioned this. But could you reiterate the level interconnect agreements versus the capacity in the pipeline, and also how those interconnect agreements are being converted over to full contracts?

Yes, the pipelines 1.5 Bcf and the interconnect agreements are [1.75 Bcf]. Those interconnects are independent of what we already have contracted on the pipe. And then maybe I'll hand it over to Jerry Norcia to talk about the probably the process and timing for converting those two to contracts.

Sure, thanks, Gerry. So right now, the pipe is two-thirds full and the environment (inaudible) improved significantly in that region, in the production region, that NEXUS serves or our collective gas from. So we're seeing renewed interest in terms of discussions from the producers, as well as we're progressing a series of conversations along the pipeline in Ohio and in Michigan and other markets in Ontario as well as other parts of the Midwest where customers are interested in subscribing for capacity. So we're confident that by the time the pipe goes into service we will have more market commitment through this pipe.

Okay, thanks. And one last question, you'd mentioned that you might push off the equity raise this year. But I noticed in the guidance the share count isn't different, that's obviously just for convention?

Yes, we are still planning on the $100 million. We're really monitoring the summer over here, the weather we get additional revenue off of the cash flows coming into the year. So we are looking at potentially deferring it, the material right does reflect $100 million (inaudible).

All right. Thank you very much.

Thank you.

Shahriar Pourreza, Guggenheim Partners.

Just on the NEXUS, the additional conversations you're having in the Midwest, can you just maybe disclose whether that's with shippers or additional LDC or electric demand?

I think it's primary with other LDCs.

Got it.

And Ohio also involves power producers as well.

Okay, got it. And it's too early to figure out whether this thing can be upsized to a little over [two]?

Correct. Yes, that will be later. I think step one is bring it in, get it well contracted for current capacity, and step two then is to take on expansions. And expansions, as we've talked in the past, are always bring good economic value.

One of the things that we're finding that I'll that is a lot of the pipelines that are greenfield pipelines we're proposing take gas out of this region are facing significant delays and oppositions. And right now, our pipe is not faced with that so we feel that we may be one of the first greenfield pipes to the market.

Got it, that's helpful. And then just on the coal retirement, is there any more upside to that retirement? Because even if you shift to the latter part of the decade, you'll still have a little over 3.5 gigs of coal or is that do you that envisioned within the portfolio?

So by the end of 2030, I think we'll have everything in retired but our Monroe plant. The Monroe plant is the one plant the we invested in scrubbers and SCRs. It's a big plant, it's 3,000 megawatts.

But that will be what remains. And essentially all the other coal will be retired and replaced with that blend of renewables and gas that I described.

Okay, that's helpful. And then just lastly on the growth trajectory on the earnings standpoint, how should we think about it off the higher base of $5.05? Is it supportive, are your comfortable at 5% to 6% growth off of $5.05 or still within that $4.93 as the base?

[Predicating] at this point, it's off the original guidance and we'll continue to assess 2017 and beyond. But at this point, it's off the original guidance.

So that's been pretty much our pattern is that that original guidance if we exceed, we grow earnings off the original guidance of the prior year. But I guess I'd just keep pulling you back to the actual performance which has been 6.5%. So I think our pattern is pretty well established at this point.

Thanks. Solid results, congrats.

Thank you, appreciate it.

Neel Mitra, Tudor, Pickering.

I had another question on the NEXUS pipeline. You expressed that there had been a lot of support from Michigan, even the Attorney's General come out with some opposition. Could you just remind us the process, does the Commission ultimately have to rule on the utility contracts and when would that be?

So let me comment on the Attorney's General first. If you watch energy discussions and dynamics in Michigan, our rate cases and most things get filed on around the energy there's usually a challenge of some sort or another put out by the Attorney General. They just need to understand whether or not the challenge really is fundamental.

But that's just a way of saying not unusual or surprised given advanced dynamics. Don, maybe you can talk about timeframe for inclusion. Don Stanczyk is here with us, he has handles our regulatory affairs, and he can talk about how the inclusion of NEXUS would play out at the utility.

So as Gerry indicated in his comments earlier, we've already put NEXUS in our PSCR cost recovery plan because it covers the five-year period versus and of course the first costs we'll actually incur will be in 2017. So the real key will be our PSCR plan in 2017 and the reconciliation where we actually get recovery of those costs.

And that was the case being reviewed that I quoted from earlier where the staff was supported in their comments.

Got it okay. And then my second question, could you just generally comment on what's going on in the power and industrial segment? Is it seasonality? Just right now, I guess you're at $38 million of earnings versus $90 million to $100 million for the full year. And then in the presentation you commented on maybe some weaker steel offset by more positive REF earnings.

Yes, there's two dynamics happening, of one of them you mentioned was the seasonality that will occur with our REF units, actually the first quarter. We delivered lower volumes given the warm weather, winter we are seeing that's actually reversed coming here in the summer with the hot weather we are experiencing.

So there's back-end loading that will occur with our REF units. We did have some planned maintenance outages. We have a wood waste renewable plant, so those planned outages did occur this year in the second quarter.

So there is seasonality related to those earnings as well for the planned maintenance outages. Se came into the year understanding the depressed deal market, we put that into the plan and the onset was the REF units and the buy in related to REF [mets] playing out as designed.

I guess one comment would be that just as in the E&P sector, you're beginning to feel the turn there, same in steel that you're beginning to feel the turn in the steel sector. So I think it begins to bode well for 2017 and 2018 as that sector gets some wind behind it.

Okay, great. Thank you.

Thank you.

Thanks, Neel.

Paul Ridzon, KeyBanc.

Congratulations on a solid quarter.

Thank you.

That's kind of a big pickup in DTE Gas. Just wondering how much of that is leaning out the business in response to the first quarter?

It is. It's basically all of that. You look at the year-to-date results, year over year their relatively flat.

We knew going into the year we're going to have a warm first quarter, that did play out and we plan for the rest of the year to make it up. And the second quarter, the O&M levels in particular were down quite a bit that helped offset those first-quarter earnings. One thing we're looking around given the strength in our electric utility and we always like to manage to put you on a combined utility basis that we essentially will start investing back into the gas utility and getting those O&M levels back to normal levels.

So what should we look for, for the balance of the year gas as far as the O&M? Have you caught up where you want to be?

We still have some investment we're going to be making for the balance of year. We're still committed to the guidance range as well for that segment.

And then if you were to expand NEXUS from 1.5 to 2 Bcfs, with that just incremental compression, what would that involve and what's the capital opportunity?

Jerry, you want to take that?

Sure. It would evolve to get to 2 Bcf a day would involve some compression and some looping on the 36-inch pipe.

And then a sense of the capital?

Not yet, that's something that we haven't worked out quite yet. We're trying to get to the 1.5 Bcf first, and then I think we'll quickly move to that 1.75 Bcf once the pipeline gets built and people start to get interested in more economic expansions.

And then lastly, is there anything going on behind the scenes in Lansing with regards to energy policy and legislation?

So we continue to work this summer with some of the principles. I think what's likely come fall is that there will be activity again in the senate. We ran out of time there with all the dynamics in the legislature, between Flint and roads and Detroit schools and things.

So I think there will be activity in the senate, and then there will be a chance that something could get passed in the senate and then session in September. But we will see. And then I think everybody will watch the election and see what the election dynamics mean for the Michigan legislature with a possibility that we would pick back up and pass legislation in the lame-duck session at the end of the year.

So if legislation is going to pass this year, it would be in the lame-duck. I guess I'd keep reminding folks that this is not so much a financial discussion, in fact it's not a financial discussion. It really doesn't affect our five-year plan, but it is an energy reliability discussion.

And at some point or another, we need to be clear on just building power plants for 10% on the market. And right now the answer is nobody. And until we get policy in place that ensures that somebody does it, there's risk of reliability issues for the state. So if it doesn't happen this year, it will happen at some point when it becomes clear that we need to take care of that.

Thank you for the update.

You're welcome.

Steve Fleishman, Wolfe Research.

The higher guidance for 2016 for the midstream segment, I might've missed this, but can you just explain what's driving that for the full year guidance?

We are seeing earnings -- a stronger earnings coming across the multiple segments and sub segments and projects within that. It's tightening the guidance, pulling up that bottom out of the range. So we are seeing strong results for the year, and so we're feeling comfortable now of pulling up that bottom end of the range.

Whether (multiple speakers) includes, Steve, is the increased drilling activity that we now expect. So I think will be soft followed for example if Swinn's calls, they are now back drilling again.

So they've completing ducts, and they continue that but will be drilling again in our region. And so that has the potential to help with some strength for the balance of the year, but as Peter said earlier, in particularly sets up well for next year.

Okay. But you noted that it does not include Southwest most recent announcement?

Correct.

Okay.

That's with the upside to this year.

Okay. And then one of the areas you've talked about for growth at P&I is cogeneration. So I'm wondering if there's any update on new opportunities there?

I would say that the portfolio discussions there on cogeneration is as full and interesting as it's been in years. We don't have one to tell you about that's popped yet, but I think we all feel that out of that portfolio discussions we're going to have some that do play through. So we hope to be able to give you a positive update sometime over the next six months.

Okay, thank you.

Thank you, Steve. Appreciate it.

Brian Chin, Bank of America.

Just piggybacking off the Swinn question, is there a sense of sensitivity that you can give? We've seen how many rig announcements Southwestern has announced over the last few days here, but is there a sense of sensitivity that you might be able to help us calibrate a little bit?

Well we've seen two rigs move into the area that we're operating with Southwestern, so that's a very encouraging sign. So our expectation is that they will continue to complete the ducts as well as drill new wells with those two rigs.

When you say sensitivity, you're talking about upside this year and what it means for next year. Is that what I'm hearing?

That would be helpful, yes.

Yes, I think that what we probably ought to do is let our team get a better sense for the pace of completions and what we're seeing there, and put a pencil to that. Maybe we can be clearer about what we see in terms of impacts this year and next maybe on the next call.

Great. And then just going back to the -- .

(Multiple speakers) as you know. So we haven't -- I don't think we've played it all the way through.

Understood. And then just going back to the equity issuance question. So you gave a little bit more clarity on the equity issuance thoughts this time. Can you talk about for the $200 million to $300 million in equity issuance for the next two to three years should we be marginally shading our thought process on 2017 and 2018 as well, or do you still feel comfortable with the $200 million to $300 million in equity issuance over the next two to three years?

I'm still feeling comfortable with the $200 million to $300 million in the next 2 to 3 years. It really, as it relates to the amount of capital spend that we're spending at both our utilities and non-utility business. So and as you look at it, we really want to maintain this strong balance sheet.

That set us up nicely, it's good even in this period of time having the strong balance sheet. So it's $200 million to $300 million until we see otherwise.

Excellent. Thank you very much.

Thank you.

Thank you. As there are no further question in the queue, I will hand back to the speaker for any additional or closing remarks. Thank you.

We had -- is Gregg Orrill, did he sign off? We had heard Greg wanted to come in with a question.

He removed himself from the queue. Thank you.

He removed himself, well great. Well then we're out of questions?

He came back, sorry for that. He just moved back to the queue. I will take his question now if you wish.

Very good.

Two quick ones. On the DTE Electric variance analysis for the quarter, there was a negative $8 million around rate base and other. Was that -- what was that? Was that bonus depreciation?

It's standard depreciation on the new capital spend coming in in property tax.

I got it, okay. And then on the PSCR, when are you looking for an outcome on that? And are there any other -- I guess we've talked about the drivers in general, is there any anything else that you would point out that's noteworthy there?

On the PSCR case?

Yes.

Okay, I'll have Don answer that as well in terms of play out.

So in terms of the timing, I'd expect a commission order later this year, it could slip into next year. And again, as Gerry indicated earlier, having support from Michigan Agency for Energy and the committee chairs of the legislature, all that bodes well for a good result I think.

We've spend a lot of time talking to the energy committee chairs, the MEBC, the Michigan Economic Development Corporation and the administration about NEXUS. So they get how it fits in to the gas supply picture here in the state, as the state, both we and consumers, are transitioning an awful lot of fuel supply from coal to gas.

So they've taken the time to understand it, and I think the letters of support and statements of support are really based upon their belief that this is good for the customers. Most importantly, good for economic development in the state as well.

Okay, thank you.

Thank you. I think with that, we're done with questions. So I will just reiterate what I said at the outset, six months in, we're off to a really good start financially and otherwise. So we look forward to giving you another positive update in three months, and thanks very much for joining us this morning

Thank you. Ladies and gentlemen, this will conclude today's conference call. Thank you for participating, you may now disconnect.