Good day and thank you for standing by. Welcome to the DTE Energy Second Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer I would now like to hand the conference over to your speaker today, Robert Tuckfield. Please go ahead.
Thank you, and good morning, everyone. Before we get started, I would like to remind everyone Today's conference 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 earnings to operating earnings provided in the appendix. With us this morning are Jerry Norcia, President and CEO and Dave Rood, Senior Vice President and CFO.
And now, I'll turn it over to Jerry to start the call this morning.
Thanks, Barb, and good morning, everyone, and thanks for joining us today. I hope everyone is staying healthy and safe. This morning, I'll recap our performance for the Q2, then Dave will provide a financial review of the quarter and wrap Thanks, Zep, before we take your questions. Let's start on Slide 4. We are making great progress this year at DTE for our team, our customers And our communities positioning us to deliver for our investors.
This progress has produced a strong second quarter It positions us well for continued growth. Our distinctive team of 10,000 plus employees continues to be recognized For our engagement by Gallup with our 9th consecutive Great Workplace Award, continue to build on this strength with our focus on diversity, Equity and inclusion to create an even better workplace for all our employees, where everyone feels valued, welcome and able to contribute Our company celebrated Juneteenth together last month with a series of virtual meetings we paid tribute to this important day With local community partners, a number of employees offered reflections on what the day means to them personally. Overall, it was a great way to come together and honor this significant holiday. We understand that all people thrive and succeed Welcome. We continue to focus on service excellence for our customers and delivering clean, safe and reliable energy As we continue our clean energy transformation, DTE Electric received approval from the MPSC to further expand the voluntary renewable program, My Green Power, while also making it even more affordable, including increased access for low income customers.
Additionally, we partnered with Ford Motor Company to install new rooftop solar and battery storage technology at the Ford Research and Engineering Center. The array includes an integrated battery storage system that will be used to power newly installed electric vehicle chargers. This can generate over 110091 hours of clean energy. We also continue to support the communities where we live and serve. We were also recognized by Points of Light for the 4th consecutive year as one of the Civic 50.
This award highlights DTE as one of the top 50 community minded companies nationwide in corporate citizenship. We also launched the Tree Churn Academy to create 200 high paying jobs in Detroit. DTE has a need for tree trimmers And the community has a need for good high quality jobs. It will also help us continue to improve electric reliability as trees account for over 70% of our customer outages. On the investor front, we completed the spin of the Midstream business.
Now DTE Midstream is a standalone company and DTE Energy is a predominantly pure plain utility With 90% of operating earnings coming from our utilities, the transaction went very smoothly and was well received by all stakeholders. We didn't miss a beat on a very strategic transaction and many said we made it look easy. Many thanks to the DTE team and our advisors that made this effort a great success for our employees and our investors. We delivered a strong second quarter With earnings of $1.70 per share and we are raising our 2021 operating earnings guidance and Full operating results. At DTE Electric, we made another significant step toward our goal of reducing carbon emissions as we retired The River Rouge Power Plant in the 2nd quarter.
For over 60 years, the River Rouge Power Plant delivered safe, reliable The Portable Energy, the community of SOREL, Southeast Michigan. River Rouge is one of
the 3 coal fired power
plants DTE is retiring by the end of which is an integral part of our company's clean energy transformation. We continue to look at ways to accelerate We continue to expand on our voluntary renewable program, which is exceeding our high expectations. In the Q1, We announced the commitment of new customers to My Green Power, including the state of Michigan, Bedrock and Trinity Health. During the second quarter, We signed up a number of new large customers, including Detroit Diesel, which is now one of our largest volunteer renewable customers. 9 50 Megawatts of voluntary renewable commitments with large business customers and approximately 35,000 residential customers.
We have an additional 400 megawatts in very advanced stages of discussion with future customers. My Green Power is one of the largest voluntary renewable programs in the nation and helps advance our work toward our net zero carbon emission goal While helping our customers meet their decarbonization goals. We have made progress With our expedited tree trimming program, which is greatly improving the liabilities for our customers and have received Michigan Public Service Commission approval To securitize the tree trimming costs along with costs associated with the River Rouge power plant retirement, At DTE Gas, we are on track to achieve net 0 greenhouse gas emissions by 2,050. We began the 2nd phase of construction Our major transmission renewal project in Northern Michigan in June. The project includes the installation of a new pipeline as well as facility modification work, Which will reduce the risk of significant customer outages.
Project is on track to be in service by the Q1 of next year. Last quarter, we announced our new Clean Vision Natural Gas Balance program. This program provides the opportunity for customers Purchased both carbon offsets and renewable natural gas to enable them to reduce their carbon footprint. We are proud of how fast the program is growing. Currently, we have over 3,000 customers subscribed And we are looking forward to seeing it become as successful as our voluntary renewable program at BP Electric.
On our Power and Industrial business, we continue to add new projects as we began construction on a new RNG facility on a large dairy farm in South This will be Kenai's largest dairy RNG project to date. Project will directly inject RNG into the Northern Natural Gas System for sale into the California transportation fuels market. Facility is expected to be in service in the Q3 of 2022. We are also in advanced discussions on several new industrial energy and RNG projects. I will provide updates on these as they progress.
P and I was also recognized by the Association of Unity Contractors with the 2020 Project of the Year Award for the Ford Dearborn cogeneration project. Overall, I am extremely proud of the team's accomplishments year to date and I'm looking forward to more successes in 2021 and beyond. Now moving on to Slide 6. As I said, we've had a very strong start to 2021. We are raising our operating earnings guidance midpoint from $5.51 per share to $5.77 per share, Moving our year over year growth in operating EPS guidance from 7.4% to a robust 12.5%.
We are able to use some of this favorability to position the company to continue to deliver in future years. We mentioned in Q1, We were deep into planning for 2022 in a great level of detail. With all of this work, we feel great about achieving a smooth 5% to 7% growth trajectory Into 2022 and through the 5 year plan, you're not going to see any surprise from us in our growth rate in 2022 In spite of the NREF rollout and the converts coming due, 90% of our future operating earnings will be from our 2 regulated utilities We have a large investment agenda with $17,000,000,000 of capital investment in our 5 year plan focused on clean energy And customer reliability. Overall, we feel very confident with our performance in 2021 and our future operational and financial performance. Now I'll turn it over to Dave to discuss DTE's financial performance.
Dave, over to you.
Thanks, Jerry, and good morning, everyone. Let me start on Slide 7 to review our 2nd quarter financial results. Total operating earnings for the quarter were $329,000,000 This translates into $1.70 per share. You'll find a detailed breakdown of EPS by segment, including a reconciliation to GAAP reported earnings in the appendix. I'll start the review at the top of the page with our utilities.
The 2nd quarter was a really warm quarter for us here in Michigan. In fact, it was a 7th foremost on record. DTE Electric earnings were $238,000,000 for the quarter, This was $19,000,000 higher than the Q2 of 2020, primarily due to higher commercial sales, rate implementation and warmer weather offset by non qualified benefit plan gains that we had in 2020. As we mentioned in the Q1 call, we've taken steps to reduce the variability of these investments going forward. Moving on to DTE Gas, operating earnings were $7,000,000 $4,000,000 lower than the Q2 last year.
The earnings decrease was driven primarily by the warmer weather in 2021, offset by new rates. Let's keep moving to the Gas Storage and Pipelines business on the 3rd row. Operating earnings for GSP were $86,000,000 versus $16,000,000 higher than the Q2 of 2020, Driven primarily by the lead pipeline going into service and strong earnings across the pipeline segment. On the next row, you can see our Power and Industrial segment operating earnings $34,000,000 This is a $9,000,000 increase in Q2 last year due to new RNG projects beginning operation. On Next, you can see our operating earnings at our energy trading business were $21,000,000 which is $60,000,000 higher than the 2nd quarter earnings last year, due primarily to strong performance in the gas portfolio.
Year to date through the Q2, this positions us positive to our expectation in our original guidance for the year. Finally, corporate and other was unfavorable $22,000,000 quarter over quarter, primarily due to the timing of taxes and higher interest expense. Overall, DTE earned $1.70 per share in the Q2 of 2021, which is $0.17 per share higher than 2020. Moving on to Slide 8. Given the strong start to the year, we are able to use this favorability to position ourselves to continue to deliver for our customers Investors in future years.
And we are also increasing our 2021 operating EPS guidance midpoint $5.51 per share to $5.77 per share. The increase in guidance is due primarily to warmer than normal weather, Sustained continuous improvement and uncollectible expense variability at EP Electric, higher REF volumes at P and I And stronger performance energy trading due to the realization gains from a small long physical storage position During extreme cold weather event in Texas in the Q1. In the Q3, we are seeing additional sales upside for Elektra compared to our plan And higher than planned REF volumes at P and I. We are continuing to explore opportunities to support future years through our invest strategy And to support future customer affordability. As you can see on the slide, there is no Gas Storage and Pipeline segment in our operating guidance for this year.
The GSP segment will be classified as discontinued operations starting in the 3rd quarter. Let's turn to Slide 9 to briefly discuss our balance sheet and equity issuance plan. We continue to focus on maintaining solid balance sheet metrics. Due to our continued strong cash flows, DTE is targeting no equity issuances in 2021 and has minimal equity needs in plan beyond the convertible equity units in 2022. We have a strong investment grade rating and target an FFO to debt ratio of 16%.
With the proceeds from the spin off of DPM, we are retiring long term parent debt of approximately $2,600,000,000 after debt breakage costs. These were NPV positive transaction and immediately EPS accretive as we were able to repay our higher interest rate debt To support our current plan and to deliver our 5% to 7% operating EPS growth rate. Now, I'll wrap up on Slide 10 and we open the line for questions. We feel great about our 2nd quarter accomplishments and we are confident in achieving our increased 2021 guidance And continuing delivering our long term 5% to 7% operating EPS growth rate. Our utilities continue to focus on our infrastructure investment agenda, Specifically investments in clean generation and investments to improve reliability and the customer experience.
We continue to focus on maintaining solid balance sheet metrics and are targeting no equity issuances in 2021. In closing, after executing the successful spin of our midstream business, DTE continues to be well positioned With that, I thank you for joining us today and we can open the line for questions. Hi, Sean.
So just on the IRP that Jerry you kind of referenced in your prepared, your Pierre obviously has an aggressive decarbonization plan out there, probably one of the more aggressive plans. Can we maybe just get a sense On how you're thinking about your upcoming IRP and sort of not front run the process, but can you get out of all your coal prior to the 2030s?
Well, we're looking Shahriar, we're looking at how we can accelerate our coal retirements. We've started with a larger position In our coal fleet and our self generation fleet. So we are looking very closely at how we can accelerate all of these retirements Prior to 2,040, so you'll recall that our prior IRP, we were retiring all of our Coal by 2,040. So we're looking at acceleration scenarios to pull that forward. And as I've mentioned in past discussions, we will update you Likely at the end of the year or early next year as to what those plans may look like.
And we're spending a lot of time with various stakeholders through the summer, including our Board having those conversations, Trying to balance the interest of acceleration and of course affordability and reliability.
Got it. And just Sherry, can EEI be the right podium to disclose the updated plan?
It will either be there Early in the New Year. It's sort of the that's the range of timing that we're looking at right now. We'll get a little tighter on that as we go forward.
Got it. Got it. And then just as a follow-up sort of between kind of already strong rate base growth The electric and gas, which obviously exceeds your earnings guidance growth rate, and you have the potential to Accelerate decarbonization with the updated IRP coming. And I guess how does all this kind of play into your 5% to 7% growth Great. Obviously, I understand you've taken a conservative bend here, but could we see some incremental upside here in time, especially if you decarbonize Faster than what's in your current internal planning assumptions?
Well, we're looking obviously, we're in the middle of all of that analysis. And As you've mentioned, Shar, typically we update our capital forecast at EEI for our 5 year outlook. And As we start to build in these earlier retirements, there could be impact on the back end of that plan. As you recall, the back end of our plan I'll return more to the average in terms of rate base growth and earnings growth of the 2 utilities. So we're Likely it will be impactful in the back end of that plan.
So more to come on that, Shar, but we're working through all those details now.
Terrific. Thanks guys. That's all I had. Appreciate it. Thank you.
Your next question is from Jeremy Tonet with JPMorgan.
Hi, good morning.
Good morning. Hi, Jeremy.
I know that GSP is now discontinued, So obviously not a focus going forward in the same way. But just wanted to better understand, I guess, what was happening here. If I look at The results so far, it seems like GSP had put up 56% of the high end of the guidance already. And so, I was just wondering if you could expand a bit more on what specifically, GSP did to kind of exceed expectations The first half or if there was something baked into later in the year that was going to weigh down, just trying to understand a bit better what was happening there?
We can comment on the first half and I know the pipeline company will have their earnings call here later, I think early next month. So I'm sure they'll comment on that, but what we can talk about is the first half of the year and we just saw favorability in all the platforms Across the board, our southern platforms and our northern platforms.
Got it. I mean, were those sustained or is there anything kind of one time in nature that was a positive benefit?
Again, it was a pickup in activity and value across all our platforms, both in the Appalachia platforms and the Haynesville platform. I think in terms of forward looking, that will be more appropriate for DTE Energy to describe.
Got
it. And maybe just kind of pivoting over to the electric utility, some really strong results there. And just wondering if you could provide a bit more color With regard to load trend recoveries there, it seems like commercial sales were coming better. But just wondering if you could provide a little bit more detail on how things versus your expectations versus your guidance for the segment and how you see that kind of trending?
Dave, do you want to take that?
Sure. Yes. First, if you look at quarter over quarter that we have in there, you could see that was way up and that was Especially CommercialIndustrial and that was really because we were comparing back to the worst period of the pandemic. So quarter over quarter, we saw Commercial industrial way up. Interestingly, we saw residential stay pretty flat quarter over quarter.
That's interesting because last year with people working from home and we saw our residential load running on average about 8% higher than we would have And this year so far, we're seeing that continue even though there has been some return to work, We still see that we're seeing this favorability at residential and that's what's driving some of the favorability. So we had expected it to reduce more, but at this point it's pretty sticky. So we're going to be watching this closely to see how it plays out, How it can impact really customer affordability going forward if it's remained sticky?
Got it. Yes,
I'd say on commercial load, I mean that's come pretty much all the way back from as to what we would have expected. We at the kind of the height of the pandemic, we thought we'd see some more bankruptcies and closures In commercial, we really haven't seen that. So we've seen our commercial load really come back to as expected. Industrial load Was coming back and pretty much came back, but that has some variability in it due to some of the Instability really or the challenges at the auto plants right now with the chip shortages, they're running a little more sporadically. Really, it's been a great return to load and then the residential remains really sticky for us.
Got it. That's very helpful there. If I could slip in one more on RNG. Just wondering if you could expand a little bit on how large do you see this business Kind of growing over time, it seems like there's more of a focus there. And how do you see the growth rate of that business kind of comparing to the rest of DTE.
Well, the non utility business will make up no more than 10 Overall operating earnings for the company. So the growth will be modest compared to the growth that we're seeing at our 2 utilities. We're planning to put $17,000,000,000 to work over the next 5 years in our 2 utilities and somewhere between $1,500,000,000 $2,000,000,000 to work in our 9 utility businesses. So it will be modest levels of investment. We don't need a lot of income growth from that business.
So we're being really picky and discerning about the type of projects that we invest In RNG, we're seeing 3 to 4 year paybacks, simple cash paybacks and unlevered IRRs After tax and the teens. So that's what we're going after. So not a lot of pressure to grow there. And So we're being very discerning about our growth projects.
Your next question is from Julien Dumoulin Smith with Bank of America. [SPEAKER JULIEN DUMOULIN
SMITH:] Hey, good morning, team. Congratulations on the results.
Thank you, Julien. Good morning, Julien. Absolutely.
Quick question. I think you've alluded to it a couple of times and I think Jeremy might have been trying to get at this. But You've alluded to a smooth trajectory here of 5% to 7% in the 'twenty two percent. I just want to make sure that sort of on balance net of all these items, but that's the Ballpark, we should still be assuming, right?
That's
correct, Julien. We're going to be typically, we target the midpoint of our growth rates. That's how we plan for our business. That's how we build contingency plans and that's what we're going to deliver next year.
Excellent. And then perhaps even more importantly here, as you think about layering in these incremental items, be it the IRP at some point Or frankly, some of the renewable opportunities that are more on voluntary side, and or some additional, As you say, perhaps late stage or advanced stage conversations on the industrial and RNG side, what's that outlook, the timeline here? Some of the IRP updates may be beyond the 5 year or do you think that some of that actually accrues to the near term? I would presume the voluntary renewables And the non utility businesses will be more in that 5 year period.
Yes, the voluntary renewables update And that we'll provide in the fall, we'll certainly play into the 5 year plan. I would say the IRP Work that we're doing could come into the 5 year plan, the late latter part of the 5 year plan, but certainly There will be a good story beyond the 5 year plan as well.
Got it. And maybe to clarify your earlier comment Sort of showing a normalization in the rate base growth trajectory when you commented to Shahriar. Is that beyond the 5 years that you were talking about? Or is that even within the You're kind of alluding to potentially seeing a more sustained current level of rate base growth rather than that normalization trend.
What we are seeing, Julian, is growth rates in our operating earnings for our 2 utilities higher than our average that we've advertised, Right, the 9% at the gas company and the 7%, 8% at the electric company in the 1st couple of years of our 5 year plan. And that's helping us deliver that smooth EPS growth rate that we've described and then it returns more To the average and the over years of the plan as we've described.
Right. So despite the long term nature of some of the IRP, on balance, we could see some of that really accrue into the back half of this 5 year plan Regardless,
that's possible. Too early to tell, but certainly possible.
Excellent. All right. And just again to
come back to Jeremy's Quick clarification there on the RNG side. Again, you're 10%, you're sticking with it, right? So we should really be thinking about
All the best.
Thank you, Julien. Thank you.
The next question is from Insoo Kim with Goldman Sachs.
Thank you. My first question on the financing side of things, when you think about the 5 year growth plan And beyond 2023, how should we think about potential equity needs in the back half of that plan and what's embedded in your guidance?
Right now, we're you've seen we've given the guidance through the 3 years, which only has The only acquisitions as those convert to come in 'twenty two. As we look out of the 5 year plan, our goal is going to be to continue to Minimize the acquisitions we need and that's how it fits within the plan that we're looking at right now.
Got it. So based on the base, the current CapEx plan, you're looking at more moderate level of need, but kind of like what we're seeing on the 20 23
funds? Right.
Got it. And then just going back to RNG a little bit, Appreciate the earnings mix that's going to have in the overall portfolio. When you talk about the strong returns that you're talking about, are you seeing increased Competition now with a lot of other players focused on that and as you look out at potential new projects, are you seeing those You're translating into a tougher returns on a comp basis.
What we're seeing is With the level of investment that we have to make, which is a couple of RNG projects a year, a couple of dairy farms a year is another way to think about it, Not really having trouble originating Greenfield. Where we've seen things get a little more frothy is when assets are up and running. People are paying a lot of money for these assets that are up and running, private equity and other types of Investment vehicles, so but on the origination front, Greenfield, we're able to get the returns we want, get the projects that we want.
Understood. Thank you so much.
Your next question is from Jonathan Arnold with Vertical Research.
Good morning, guys.
Good morning, Jonathan. Hi, Jonathan.
Well, on the Trading in the quarter, which you said was gas portfolio, was that really the sale of storage out of Yes, that related to the winter storm event or was that favorability more in the Q1 and this was just continued good performance? Just curious what's
This was just continued good performance of the trading group in the gas portfolio. I can't say the what gave us the confidence to raise the guidance was the favorability we had from that small physical storage position They gave us the gain during the Q1 during that cold weather in Texas. So our expectation going forward in future years is that We'll be more in line with our original guidance when we don't have those unexpected one time things.
Okay. And then Just on back to the growth rate and the comments about Toulouse, Jerry, just to be clear, you're talking off of the Original 2020 midpoint, right, which was, I think, 5.13%. I just want to be sure that and that's Is that the number of which you're intending to show smooth 5% to 7% growth? Or yes, and we should think of sort of this Q 'twenty one favorability as Which kind of puts you above that range, but that's but you still are using that as the base? I just want to be clear about that.
We're using the you're correct. We're using the original 2021 guidance that we provided as the basis for our growth rate.
'twenty one or
2020? 2020. Okay. But it would be similarly smooth for Because we target midpoint for each of the years in terms of original guidance as a starting point.
Okay. So we should just
Your next question comes from the line of Durgesh Chopra with Evercore.
Hey, good morning team. Thanks for Maybe just update us on the recent What's the most latest on the gas rate case front? And then the timing of the electric rate cases, is that still sort of late this year?
So on the electric freight case, yes, it's still late this year, no earlier than October of this year that we will file. And on the gas case, we've engaged in conversations with interested parties to try and move the We're feeling pretty good about that in terms of how that case is progressing and it's a final outcome.
Excellent. And then just real quick clarification. I know you sort of addressed the demand trends pretty strong quarter Q2 2021 versus Q2 2020. Obviously, a ton of concerns around this Delta variant. Anything sort of that is striking or sort of material for us to sort of Talk about anything that you're seeing in your territory, any cause of concern as it relates to delta variant?
We are not at this point. Certainly, the large manufacturing outlets are starting to take actions to make sure that the development variant Doesn't impact our operations. Things like masking and social distancing are starting to be reintroduced somewhat in preparation for Delta variant surge here in Michigan, but we're not seeing anything that puts any of our margin at risk at this point in time.
Excellent. Thank you, guys. Great quarter.
Thank you.
Your next question is from Andrew Weisel with Scotiabank.
Hey, good morning, everyone.
Good morning, Andrew. A lot of
my questions
on the outlook. Good morning, Andrew. Hi. A lot of my questions were answered appreciating the conservatism given that you're growing 12.5% this year and you grew 9 You beat by 9% in 2020, but we'll stick with 5% to 7% for now. Just two clarifying ones on 2021 outlook.
First of all, does the
Yes, we do take into account weather into account, but There hasn't been too much weather in July yet.
Okay. Then on cash flow, excuse me, I see you updated the outlook from cash from operations to reflect the midstream spin off. What about the underlying DTE business? It looks like cash has been stronger than expected since you're pointing to no equity needs this year. Of that $300,000,000 reduction, can you talk about how much was midstream and if there was any change
In the guidance update, that was all taken up the second half of midstream. And you're right, we have seen some strength too and we're coming in a little bit above our plan in cash so far this year, Mainly due to strength in operating cash flows from electric and from some of the other businesses too.
Okay. But that strength is not reflected in the updated guidance, right? So there might be some upside?
Yes, there might be some upside. The guidance was Really just taken out the midstream part.
Okay, great. Thank you for clarifying.
The next question is from the line of Brian Levine with Citi.
Can you update us on longer term O and M outlook? And now that we're emerging from A COVID environment, if you're seeing any more structural changes to your cost profile?
We constantly work To maintain our O and M as flat as possible and I think you'll see from our history that we're one of the better performing utilities in terms of being able to keep Our O and M costs relatively flat. I think over the last several years we've been about 1% jager on O and M. We do We have significant opportunities to continue to do that looking forward and that certainly is built into our growth plans as well as our affordability go gets For our 2 utilities.
Are you seeing any inflationary pressure for labor or any other component of your cost structure?
We've been looking at that pretty hard as we started to build our plans for 'twenty two and beyond. And We've got long term contracts for some of our key commodities on the material side. So we're not seeing pressure there. And with our contractors that do a good portion of our work, those are obviously negotiated prices and Again, not seeing anything that would give us a great concern at this point in time.
Okay. And then on energy trading, you had highlighted the increase in guidance range that largely was reflecting the Year over year increase for the 2nd quarter. Is there embedded conservatism for the second half outlook In light of some of the volatility in the gas prices and rising higher prices, or is there any color you can share And what's driving the relatively no change to the second half?
Yes, there's conservatism that's in that. As you can see, we put our guidance from 25% to 35% and we're Pretty much within that range or at the top end of that range already. So we do have some conservatism in that number and Yes, we'll just have to watch how it plays out throughout the year.
Okay. Appreciate it. Thank you.
Your next question is from James Dahlacher with BMO Capital Markets.
Good morning. Can you guys hear me?
Yes. Good morning. Good morning.
One real quick question. And I know it's early in
the IRP, it's sort of The end of next year, but as you're approaching the acceleration potentially of more coal, how are you thinking about, I guess, The regulatory recovery mechanisms for accelerating that coal retirement, are you thinking more
What we're looking at are various techniques We have at our disposal, one of the accelerated depreciation. We're also looking at ways to make the assets Asset lives longer in terms of remaining used in new cylinders, all kinds of physical options for that We're considering and we're also looking at some tax strategies that could help smooth affordability as well. So Multiple ways that we're looking at making financing of the retirement of coal earlier More affordable to our customers and also making sure that our investors get their value out of these assets.
Great. Thanks so much, guys.
You have a follow-up from Jonathan Arnold with Vertical Research.
Thank you, guys. Just one quick one. On the convert, post the spin, I believe the numbers may change In terms of the shares it will convert into and what have you, will that be disclosed in the Q? Or can you give us some guidance here as What are the implications of the spin where for the conversion?
Yes, there is there will be an adjustment to the settlement rates To ensure consistency of the economics, so it will change the convert price kind of in proportion with the equity price, so that Equity holders remain whole. And Barb can send those mechanics to your you can contact Barb and get the actual mechanics of that if you want Call.
So those are now set, Dave, is really my question. Or are they still pending on trading levels?
I think with the trading levels, Seeing where the stock price will be at the time the converts though will affect that.
Okay, great. Thank you.
And your final question comes from the line of Anthony Carato with Mizuho.
Hey, good morning, Jerry. Good morning, Dave.
Good morning, Anthony. Hey,
hopefully, 2 easy ones. I guess the first one, Jerry, earlier in the call, you were highlighting how The transaction team worked. You got the spin of DTE Midstream seemed very seamless. I I mean, you seem like your transaction team is in mid season form right now. Any thought to keeping them in shape with other transactions?
Well, right now, we're Anthony, we're really focused on our $17,000,000,000 growth agenda at the utilities, Which is the lion's share of our CapEx and of course having nice modest growth for our non utility business, P and I and RNG and cogen primarily. So that's really our play right now for the next 5 years.
Great. And then just lastly, post spin and I just don't know the process. Do you know if your ESG score is under like evaluation now that the company has removed the ESP business and Looking at your new, I guess, environmental footprint, DTE Classic, I mean, how often does that review happen or any insight you give on
So I would venture to say that our ESG metrics will improve With the spin of DTM, but Barb maybe I'll get Barb to provide some insights to you, Anthony, as to
Barbara, can you
hear me? Sorry about that. Yes, those happen annually typically. And right now, we're sitting above average on quite a few of those metrics.
Great. Thanks so much.
Thank you, Anthony.
I will now turn the call back over to Jerry Norsteel for closing remarks.
Thank you everyone for joining us today. I'll just close by saying that DTE had a very successful first half of the year and we're feeling really good about the And also how well we're setting up for 2022. So I hope everyone has a great morning and stay healthy and safe.
This concludes today's conference call. You may now disconnect.