Welcome to the Q2 2019 earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Barbara Tuckfield. Please go ahead.
Thank you, Christian, and good morning, everyone. Before we get started, I would like to remind everyone to read the safe harbor statement on page two 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 of today's presentation. With us this morning are Gerry Anderson, Executive Chairman, Jerry Norcia, President and CEO, and Peter Oleksiak, Senior Vice President and CFO. We also have members of our management team to call on during the Q&A. Now I'll turn it over to Gerry Anderson to start our call.
Well, thank you, Barb. Good morning, everyone. I think you're all aware that I turned over the CEO role to Jerry Norcia, effective July 1st. I have long believed that one of the most important responsibilities that I had as CEO was to, at some point, hand off the job to a great successor at the right time, and I am fully confident that I am doing that. One of the characteristics of strong, healthy companies is that they execute seamless leadership transitions that don't involve a lot of drama or sharp shifts in strategy. We've been preparing for this transition for years, literally, almost since the day I took over. Back in December of 2018, I told the board that July 1st of this year felt right to me. It's been a real honor to be DTE's CEO for the last nine years.
I'm extremely proud of what the company accomplished for you during my tenure. DTE now has a great new CEO, and I am confident that he'll do great work for you and continue our pattern of outperformance. Gerry and I have worked closely together for more than 15 years. He's a great business leader. He also has a big heart for the people of DTE and for the communities we serve. He brings great experience to the role. He led our Gas Storage & Pipelines business as its President, and then was President of our DTE Gas, our DTE Electric, and then eventually played the role of President and COO of DTE. He's a strong businessman. I think those of you who've met him know that.
He also has the right values to lead this company, and so the CEO role will be in good hands as Jerry continues executing the vision that we share together for DTE. That said, I'm not leaving DTE Energy. Moving forward, I'm going to serve as the company's Executive Chairman, and in that position, I'll act as an advisor to Jerry on business and strategic issues. He and I will remain in close contact. I'll bring a particular focus to DTE's community, state, federal, and broader industry roles.
One of the most important things an energy company can have for its success is a positive context within which to operate, a context within which your community leaders and state legislators and regulators, federal players, view you as a good company trying to do the right things, and understand that you actually are doing that, and therefore want to see you succeed. I continue to focus on that. I'll continue to be a strong advocate for DTE's success, but I'm going to step back from many of the day-to-day roles I played as CEO. That's Gerry's work now, and I am fully confident that he will do it very well. It's been a pleasure working with and for all of you over the years, and I look forward to continuing to see many of you from time to time on the road at IR events.
With that, I am going to turn things over to Jerry Norcia.
Well, thanks, Gerry, and good morning, everyone. I'm very grateful for the confidence that Gerry and the board have in me to lead this company through what I believe is such an exciting and transformative time in the energy industry. DTE's top priorities remain the same. To be a great energy company, continuing to foster a world-class employee engagement culture, to drive customer service excellence, to be a force for good in our communities, and to deliver distinctive shareholder returns. I also want to thank Gerry for his mentorship and support since I joined DTE Energy. In his tenure leading DTE, Gerry led the transformation of our culture, drove a highly successful growth agenda, and put us on a path to reduce carbon emissions more than 80% in a way that also supports customer reliability and affordability.
He readied DTE for long-term success, and I look forward to building on the strong foundation that he set. I'm very optimistic and excited about the future of DTE because of our best-in-class team of employees, as well as the historic opportunity to reinvent the way we produce and deliver energy for our customers. I'm honored to be leading this great family we call DTE now and into the future. This morning, I'm going to give you a recap of our performance for the second quarter of 2019, as well as an update on our long-term growth plan. I'll turn it over to Peter, who will provide a financial review of the quarter and wrap things up. Let me start on slide four. Continue to make great progress on several key fronts. Our second quarter financial results are solidly on track with our plan.
With one half of 2019 behind us, I'm confident that DTE is well-positioned to raise our EPS guidance midpoint by $0.05. This guidance raise is mainly based on colder winter weather at the gas company and warmer late June and July weather at the electric company. This increase takes into consideration the significant storms we experienced this past weekend. In total, 600,000 customers were impacted, and all should be restored by the end of the day. We've made really good progress on this front. I want to express my gratitude to our employees, contractors, and nearly 900 workers from as far as Georgia and New York for aiding our restoration efforts. In total, we had well over 2,000 people deployed in the field and many more in our operation centers working around the clock to get service restored to our customers.
Longer term, we continue to target a 5%-7% operating EPS growth rate through 2023, with 2019 original guidance as a starting point for this growth. All of our business have accomplishments to note this quarter, and I will give you a brief overview when we go into more detail on the following slides. Back in May, DTE Electric received a constructive rate order from the Michigan Public Service Commission that supports the modernization and automation of our grid. It also supports an aggressive tree trim program, both of which result in significant improvements in the service reliability to our customers. Included in this order was approval for Charging Forward, which is our new program for electric vehicles. This program will bring the benefits of EVs to more Michigan residents and businesses through incentives, customer education, and charging infrastructure growth.
We also filed a new rate case in July at DTE Electric. We recently received approval for the purchase of three new Michigan wind parks. At DTE Gas, we have a number of projects that are progressing nicely, including our accelerated main renewal program and additional transmission system improvements. At our Gas Storage & Pipelines business, we acquired an additional 30% of Link, bringing our total ownership to 85%. This additional stake in Link complements our existing midstream business and is supported by solid underlying resources. This acquisition is organic in nature and stems from assets that we are already very familiar with. Link's performance has been better than pro forma since we acquired it in 2016. We expect it to continue to perform well into the future. Moving on to our Power & Industrial business. We are pleased to announce three new cogeneration projects.
These are in addition to the RNG projects mentioned on the first quarter call. We are very excited of our development within the industrial energy services space. As you all know, our REF earnings will sunset in 2020 and 2022. The long-term plan for P&I is to replace these earnings as we move forward toward our 2023 earnings target range of $125 million to $135 million. We are ahead of plan to originate approximately $15 million of earnings per year to reach this target. As you know, we successfully originated projects that achieved that growth target in 2017 with the Ford Motor Company project and two RNG projects in 2017, and in 2018, with two additional RNG projects. We feel great that halfway through 2019, we have secured three cogeneration and two RNG projects, which gets us to our origination target for 2019.
I'll provide more details on these P&I developments on the following slides. First, I want to highlight several significant achievements at both utilities on slide five. As I mentioned earlier, the electric company received a constructive rate case order in May. We continue to have very constructive working relationships with the Michigan Public Service Commission and look forward to working with the newly appointed commissioner, Tremaine Phillips. We were approved for a total rate base of $17 billion to continue to harden our system and make necessary improvements for our customers. We were also given the opportunity to surge our tree trim efforts, which will serve our customers well. Most of our damage over the past weekend was related to trees, so I believe that this surge will certainly drive significant improvement in the performance of our system, and we're grateful for that.
In early July, DTE Electric filed a new rate case. In this filing, we requested that the MPSC approve a $1.3 billion rate-based increase driven by continued infrastructure investments to ensure generation availability and improve distribution reliability. This continued reliability will be achieved through upgrading our circuits. The filing also requested the redesigning of substations to avoid system overload and adding more remote operating capabilities to detect and restore outages more quickly. The rate case filing includes a 50/50 debt equity capital structure and a low-income renewable pilot program that will better enable low-income customers to participate in our MI Green Power voluntary renewables program. We expect a final order on this case next May. As Michigan's leading producer of renewable energy, we received approval for the purchase of three new Michigan wind parks, which qualify for a 100% federal tax credit, resulting in savings that will benefit our customers.
Two of the projects, totaling 383 megawatts, are located in mid-Michigan and will be the largest clean energy projects in the state, as well as the largest renewable energy projects in DTE's portfolio. The third project is a 72-megawatt park in Michigan's Upper Peninsula, which may alternatively be used to support additional sales under our MI Green Power program, which is our voluntary renewables program. These parks will increase the company's renewable energy portfolio nearly 50%, furthering DTE's commitment to providing clean, affordable, and reliable power to its customers. Investing in renewable energy is a key part of our commitment to reduce carbon emissions by at least 80% by 2040. Adding these new wind parks to our portfolio will help us meet the clean energy needs of our largest customers who have chosen MI Green Power.
We have aggressive plans to expand our voluntary renewable energy programs, enabling more customers to reduce their carbon footprint and meet personal or business sustainability goals. We are proud of the environmental and economic benefits these projects will bring to Michigan. DTE's renewable projects not only benefit the environment, they are also helping drive Michigan's economy. DTE has driven investment of more than $2.8 billion in renewables since 2009, and will invest an additional $2 billion over the next five years. DTE's renewable energy projects have created or sustained more than 4,000 Michigan jobs, while powering the equivalent of more than 500,000 homes with clean energy. As I mentioned earlier, DTE Electric also launched our Charging Forward program, which is our new initiative for electric vehicles.
We will provide a rebate of up to $500 to a residential customer who purchases or leases a new or used EV, installs a qualified charger, and enrolls in a special rate beneficial for EV charging. DTE's business customers can also receive incentives on our EV charging equipment. We're thankful for the support of both the Michigan Public Service Commission, as well as our auto industry partners and environmental advocacy groups in supporting our EV program. In late June, along with CMS, we renewed the license for our Ludington hydroelectric plant. The pumped storage plant is the second largest in the U.S., with a capacity of over 2,000 megawatts, and takes advantage of the unique geography we enjoy here in Michigan. We're investing $800 million to upgrade Ludington, which will add 300 megawatts of capacity and prepare it for a long-term future.
The upgrades are on schedule to be completed in 2020. The plant generates hydroelectric power and supports our renewables generation because it acts like a giant battery that can be tapped when renewable output drops. The plant pumps water from Lake Michigan uphill to a 27-billion-gallon reservoir at low demand times, and releases the stored water and energy downhill through the turbines that generate electricity when energy demand is higher. Ludington can ramp up to peak output in just 30 minutes, and provides a sustainable, clean, reliable energy source. It also helps keep energy bills lower because it allows DTE Energy to avoid having to buy expensive out-of-state electricity when demand peaks. Our new Blue Water Energy Center is also progressing on plan. We broke ground last year and received all the necessary permits. The plant is a little over 20% complete, with an expected spring 2022 in-service date.
A significant amount of civil work has been completed. We expect the turbines to arrive on-site later this year. Six days a week, workers representing numerous trades are on-site to support the $950 million project. Moving on to our gas company. I mentioned we are progressing on several fronts. Our Accelerated Distribution Main Renewal Program is on track. We have completed 48 miles this year and will complete 178 miles by year-end. Over the past several years, we have replaced over 650 miles, with plans to replace an additional 3,500 miles by 2035. We're also developing plans to invest in additional system improvements, including a Transmission Renewal Program following a risk-based approach to support the growth, integrity, and reliability of our gas transmission system inside our utility.
We are utilizing our risk model to prioritize upgrading or replacing approximately 100 miles of transmission lines by 2037 and compression in the range of 81,000 horsepower by 2035. We'll be working with our regulators to demonstrate the reasonableness and prudency of these programs. Together, these programs showcase the great things that are going on here in Michigan. Now I'll turn to our non-utilities on slide six. Starting with our Gas Storage & Pipelines business, we feel great about the progress here to date, as well as the outlook for the rest of 2019 and beyond. In the second half of the year, GSP earnings will increase from the first half of the year for a number of reasons, including the acquisition of an additional 30% of Link.
As you remember, we are acquiring the Generation Pipeline, which is consistent with the strategic growth plans DTE and Enbridge have for NEXUS. The acquisition is progressing through regulatory proceedings. It is on track to close in the second half of this year. We placed Millennium's Eastern System Upgrade in service late in the first quarter of this year. The Link expansion is progressing quite well. We're expanding the system and connecting new gathering resources. Due to all these factors, we expect GSP to have 2019. I'll walk through our Power and Industrial business. This quarter, a number of deals we've had in the works came to fruition. We are finalizing three new cogeneration projects. We finalized a development agreement with Stelco to develop a strategic cogeneration project at their Lake Erie steel facility in Ontario.
DTE's experience in the cogeneration space will enable Stelco to reduce its energy cost by utilizing excess industrial gases and reducing exposure to peak electricity pricing. We are purchasing a CHP plant that serves a commercial customer. This project provides hot and chilled water to the facility and fits well within our growth strategy to provide on-site energy for large commercial and industrial customers. Both of these investments are underpinned by long-term offtake agreements. We will also operate a CHP plant here in Detroit at the Wayne County Criminal Justice Center. P&I will design, build, and operate the county-owned central utility plant and provide hot and chilled water and backup power. The Justice Center is on track to begin operations in 2022. On the RNG front, we have closed on two greenfield projects, which we mentioned on the first quarter call.
Both projects are located in Wisconsin, where we have built a strong RNG presence based on our extensive experience there. For competitive reasons, we don't discuss the returns on these non-utility assets, but I can tell you that they get better than utility returns, and the capital investment for all the projects I just discussed is in excess of $200 million. As I mentioned earlier, we feel great about our recent project developments and how they fit into our plan to replace REF earnings, which will sunset in the near future. With that, I'm going to turn it over to Peter to share our financial results.
Thanks, Jerry. Good morning, everyone. Before I get into the financials, as you know, I always like to give an update on my Detroit Tigers. At this point in our rebuild process, the eye is definitely on the future in the farm system. At this one point, Casey Mize, who was our number one pick last year, did pitch a no-hitter this year in the minors. The present is currently dark, but the future is looking bright. Now, the financials are consistently bright here at DTE. Let me turn your attention to the financial results, and I'll start the review on slide seven. Total earnings for the second quarter were $183 million. This translates into $0.99 per share for the quarter. You can find a detailed breakdown of EPS by segment, including our reconciliation to GAAP-reported earnings in the appendix.
Earnings for the quarter are lower than the second quarter last year, primarily due to unfavorable weather this year. Let me start my review at the top of the page with our utilities. DTE Electric earnings were $134 million for the quarter. This was lower than 2018, largely due to cooler weather and rate base growth cost, offset by the impact of new rates implemented in May. DTE Gas has second quarter 2019 operating earnings of $4 million. This is $10 million lower than the second quarter of 2018. The earnings decrease is driven primarily by the $10 million tax timing item I mentioned on the first quarter call that is reversing this quarter, as well as less weather favorability in 2019. This was offset by the impact of new rates implemented late last year.
Let's move down the page to the third row, to our Gas Storage and Pipeline business. Operating earnings for our GSP segment were $50 million for the quarter. Last year, we had one-time positive earnings related to AFUDC at NEXUS and higher-than-planned volumes across the portfolio. This year, we have normalized earnings at NEXUS and volumes are on plan. This quarter is down $10 million versus the second quarter of 2018. GSP is performing according to plan through the second quarter. We will see the benefit in the second half of the year from the volumes on Link that continue to ramp up. We will also see the full impact of the Millennium expansion and recent acquisitions. On the next row, you can see our Power and Industrial Business segment operating earnings were $29 million.
Earnings are $14 million lower than the second quarter of 2018. This decrease is due mainly to the REF tax equity transactions that occurred in the fourth quarter of 2018. As we communicated previously, we entered into equity partnerships in our REF units to accelerate cash flows around $100 million per year for the next three years to support growth projects. This lowers earnings this year around $40 million versus 2018. I would like to note that most of the new projects originated over the last few years will start adding to earnings later this year and early next year. Our energy trading business had an accounting operating loss of $2 million. Earnings are lower this quarter compared to the second quarter last year due to the lower gas portfolio earnings and timing of realized economic earnings. Our trading company is having another solid year.
Year-to-date economic earnings are on plan and in line with guidance. The appendix contains our standard energy trading reconciliation, showing both economic and accounting performance. Corporate and other was favorable $9 million this year compared to the second quarter last year, and this was due primarily to the timing of taxes. DTE earned $0.99 per share in the second quarter of 2019. Now on to slide eight. Given the strong start to the year for both our utilities, driven by favorable winter weather at our gas company and favorable July weather at our electric company, we are increasing the 2019 operating EPS guidance midpoint by $0.05 to $6.20. Though earnings were lower than the first half of last year, this was contemplated in our original guidance. As you know, DTE enters each year with contingency, and this year was no exception.
As we mentioned on the first quarter call, we built additional contingency with the winter weather at our gas utility. Our electric company has had a strong first half of the year with additional weather-related earnings coming here in July. The weather favorability over and above our increased guidance will be held for reinvestment and storm expenses associated with this warmer-than-normal weather. This sort of planning has been one of the keys to our success in providing predictable results every year. Now I'll wrap up on slide nine, and then we'll open it up for questions. In summary, I feel confident in achieving our increased 2019 guidance, keeping us on track to beat our original guidance for the 11th consecutive year. For the past 10 years, we've beat original guidance by an average of $0.25 per share.
We're also well-positioned to continue our 5%-7% operating EPS growth in the years to come. Our utilities continue to focus on necessary infrastructure investments, specifically for investments to improve reliability and the customer experience. Our non-utilities continue to position us for long-term growth. Finally, I feel very good about our ability to continue to deliver the premium total shareholder returns that we have delivered over the past decade. Now with that, I'd like to thank everyone this morning for joining us. Christian, you can open up the line now for questions.
Thank you, sir. Ladies and gentlemen over the phone, if you do wish to ask a question during today's call, please press star one on your telephone keypad. Please ensure that the mute function is switched off to allow your signal to reach our equipment. If you find that your question has already been answered, you may remove yourself from the queue by pressing star two. Once again, please press star one if you wish to ask a question. We'll pause for just a moment to allow everyone to signal. Okay. We will now take our first question from Praful Mehta from Citigroup. Please go ahead.
Thanks so much. Hi, guys.
Good morning.
Good morning.
Morning, and congratulations, Jerry.
Thank you very much, Praful.
All right. Maybe the first question on the quarter. The weather clearly impacted the electric side. Just wanted to understand when you highlighted the lower performance of Q2 2019 versus 2018, you highlighted weather and rate base growth costs. Could you clarify a little bit of exactly how much was weather and what exactly is rate base growth costs, and what was the impact of that part of it?
Yeah. The weather unfavorability that we have in the appendix as well, the actual amount, but we did have a cooler. Excuse me.
Forty-four.
Yeah, $44 million for the quarter. It's been relatively significant from a weather perspective. We had very hot weather last year in the second quarter. First part of June started actually relatively cold for us. A good portion of that decline that you're seeing there is weather-related. The term rate base-related cost, that is depreciation, interest expense, property tax related to rate base. That is more than offset by the new rates that were deployed in our last rate case.
I got you. Great. Helpful. Thank you. In terms of the increased guidance for 2019, it sounds like the benefit from what you saw in July is flowing in there as well. How much is that benefit as a part of the $0.05 increase that you had for the 2019 guidance?
I can't really give exactly the numbers yet for July, but I can tell you that July is one of the hotter Julys we've had here in recent history. I'd say a good portion of that as it relates to that. We did hold back some of that weather favorability here in July. Some of that is for the storm that we've experienced. Jerry mentioned that. We do traditionally give back a portion of any of the extreme weather we had in July, two storms. We're going to be funding that as well as holding back for reinvestment. We'd like to do that as well, and especially with customer-centric and facing projects.
Yeah. One of the things I'll add is that the contingency levels that we have in all our business units feels quite strong at this point in time, and that's why we felt comfortable with raising guidance at this point. We still continue to hold a significant amount of contingency in our plans for the balance of the year.
Great. That's super helpful. Then just finally, in terms of the equity issuance, any clarity on timing of how we should think about the equity between 2019 and 2021?
Well, we did mention that we want $1 billion-$1.5 billion over the next 3 years, $250 million of that this year. We've done already $165 million for this year. $250 million target this year. We'll give an update at EEI for our plan for next year. To let you know that our goal would be to be at the lower end of that $1 billion range. If we do that with continued strong performance like we're seeing this year, and we do hold contingency, we don't need that contingency, we'll be at the lower end of the range, but we'll give a fuller update here in the fall.
Got it. Very helpful. Thank you, guys.
Thank you. We will now take our next question from Shahriar Pourreza from Guggenheim Partners. Please go ahead. Your line is open.
Morning, Shar.
Hi. Good morning. Sorry, it's actually Constantine here. I was on mute for a second. A quick question on the expectations for future acquisitions and kind of capital that's getting deployed in the GS&P segment. How is that tracking versus the prior guidance that you provided? I think it was roughly $4 billion-$5 billion over the course of the plan. Just curious to see how kind of with the current acquisitions and the expansions, that's going.
Sure. We mentioned the four organic investments that are progressing quite nicely this year. The Link expansion, the Millennium expansion, which is complete. Link expansion will be complete later this year. We completed the Link acquisition, the bolt-on acquisition, and we're also looking to complete the Generation Pipeline acquisition. All of that feeds quite nicely into our 2019 plans and 2020 plans. We feel like we're lining up growth quite nicely for that platform over the next two years. We are looking at acquisitions. We always do. The market's actually become starting to bring a lot of opportunities forward as we see some midstream companies under severe stress from a balance sheet perspective, as well as we see producers redirecting capital towards their drill bit.
We're starting to see opportunities kind of float our way, and we're being very selective and very disciplined about how we look at those. Feeling pretty good about the prospects of that business line right now.
Okay, perfect. Just one quick follow-up, just a housekeeping item on kind of the to-go for the rest of the year, the raise in the utilities guidance. The earnings contributions there is mostly going to be driven by rate cases and reinvestment. Is that correct?
That's correct.
Okay, perfect. That's it for me. Thanks.
Thank you. We will now take our next question. It comes from Michael Weinstein from Credit Suisse. Please go ahead. Your line is open. Michael Weinstein-
Morning, Michael.
Your line is now open.
Oh, sorry about that. I was on mute. Hey, congratulations to both Jerrys.
Thank you, Michael.
Thank you.
Yep. First question I had is about the delays in other pipelines throughout the country, such as Atlantic Coast Pipeline, Mountain Valley Pipeline. I'm wondering what kind of opportunities that may be giving you guys for long-term contracts at NEXUS, if any. Are you seeing any difference there?
We're starting to feel that for sure. With these projects being delayed and uncertainty developing in those projects, certainly there's a lot more interest in some of our pipeline platforms to move the growing Appalachian Basin. Just to give you a feel for it, the basin grew about 13% year-over-year from a production volume perspective. We're still of the view that this basin goes short pipe capacity over the next year or two, and that's going to play, in our opinion, very favorably into how our assets are positioned to take advantage of that, especially NEXUS.
Right. The company has a history with the fuel cell industry a long time ago. I'm just wondering if there's any potential opportunity at P&I to maybe pursue that once again at some point in the future as the technology starts to improve.
We haven't looked at that lately. We're really focused on cogeneration and renewable natural gas. Those are our two primary business lines, but we have not looked at that in some time.
Okay. All right. Thank you very much.
Thank you. We will now take our next question from Andrew Weisel from Scotia Howard Weil. Please go ahead. Your line is open.
Hey, good morning, everyone. Again, just want to echo congratulations to both Jerrys. Outstanding work and looking forward to the next chapter.
Thank you, Andrew.
Thank you, sir.
My first question is on the wind farm acquisitions. You gave the IRP out in March and talked about the plans to grow your renewables. My question is, does this change simply the timing as far as accelerating when the wind capacity will grow, or would this be more incremental renewables in the mix? Might that impact the timing of coal plant retirements?
Well, the renewable parks that we're acquiring and building out are part of our plan and included in our current forecast. I think that's really it. Does that answer your question?
Yeah, I guess so. In other words, this doesn't change the outlook for the mix. It just gives better visibility. Is that a fair way to put it?
Yeah. We had filed this some time ago as part of our renewables build-out program to meet the 2016 energy legislation goals of being at 15% by 2021. This 455 megawatts accomplishes that, plus also gives us the opportunity to sell into the voluntary renewables markets.
Yeah. Andrew, this is Peter. Just to further add to Jerry. During the EEI, we mentioned we had targeted 600 MW of voluntary renewable. This helps support that as well as our compliance with our state plan.
All right, great. That's what I thought. My other question on midstream, you briefly talked about the Appalachian growth gas production. Recently, though, the activity has really been moving down with the commodity. The rig count is down about 25% or so since April and probably continuing to fall. Does this change your outlook at all as far as activity in the basin or utilization of your system?
We watch activity in and around our pipelines very closely, producer activity that is. What the producers said they were going to do this year, they are doing in terms of drilling and connecting wells to our system. We're seeing volumes right on top of our forecast. Actually, that also plays well into next year, as they drill wells this year, also feeds our growth for next year. We're seeing them do what they said they're going to do. I think the one thing we are seeing is more companies coming forward and looking to sell some of their midstream assets, which I think will make it pretty interesting for us going forward to look at some of those. We feel real good about where we sit right now. Now, I did mention that the basin grew about 13% year-over-year in terms of production volumes.
We're forecasting about a 5% to 6% growth rate going forward. We are forecasting what we would call a slight slowdown, but that's built into our forward-looking view for this business line.
Okay, very good. Lastly, you did just mention some midstream M&A. We've seen some activity recently with the assets that have passed. Were there any specific characteristics you didn't like, or is it more a function of price discipline?
We look at assets that, one, create value for us, obviously, and secondly, that are either early or mid-cycle growth. We don't like buying assets that are very mature and don't provide us with upside opportunity. We also look at the resource base. That's the third thing we look at if they're gathering-related type assets. We do a pretty hard scrub on the resource base because that's really what drives the opportunity for growth and value in the future. That's the criteria that we use. If we pass on assets, it likely doesn't meet one of those three criterias.
Thank you very much.
Thank you. We will now take our next question from David Fishman from Goldman Sachs. Please go ahead. Your line is open.
Hi, congrats to both Gerry's again.
Thank you, David.
Just kind of continuing on that theme, I think you did a good job of outlining those three points, but do you guys, when you think about adding value for your system, do you usually focus more on opportunities that would connect to an existing portfolio and kind of smaller bolt-on, or is this really going to be more just opportunistic for somewhere that you see growth kind of in the future? Sort of, I'm thinking about Generation Pipeline or SGG, those have the potential to connect to your system and grow from there.
All of our growth in this business line has been in the Great Lakes region. We'll continue. That'll be our primary focus, to continue focusing on the Great Lakes region. If an asset opportunity did present itself outside of the region that we understood how it would create value we would be open to that, but our primary focus is in the Great Lakes region.
Okay. That makes sense. Then just one quick follow-up on the regulated guidance. I know you mentioned very favorable weather in July so far. Have you guys gotten a bit of a sense of what the storm impact might look like over the past weekend? Just curious if you guys have insurance or how you think about some of the levers there.
These kind of storms usually come with really, really hot weather. I can tell you that the hot weather far outstrips the expense for this storm. We're net ahead. That's why we feel comfortable that we're actually building contingency in the electric business line, even with the guidance raise. The answer on insurance is no, we don't carry insurance for storms.
Okay. That makes sense. Then one last question, just on cogeneration and kind of how you think about the opportunity set there and how maybe from our standpoint, we should think about where the opportunities might lie. Is this something where you contract with more newer facilities or those going through kind of transformative investment plans, kind of like Ford Dearborn put out a 10-year plan. Stelco, they have two facilities, but naturally you went with kind of the newer one. As we just think about the new exposure to Toledo Corridor, should we be looking for new facilities specifically as potential opportunity sets?
Yeah. The criteria that we use is, of course, we examine the site that we're investing against and the business that we're investing against very carefully. We look at the long-term viability and prosperity of the site that we're going to invest against as a cogeneration investor. That analysis is something that we do in a great level of detail. Once we get comfortable with that, then it's really about negotiating a return that is more attractive than our utility returns before we deploy capital. That's how we look at those types of investments. The site and the business on the site is really important. In terms of the Toledo Corridor, we are seeing a lot of action, but mostly combined cycle plants that are building up in and around the NEXUS Pipeline. We're excited about that.
We're actively pursuing connecting some of those assets to the NEXUS Pipeline. That's what we're seeing in the Ohio corridor that we can most influence results in.
Okay. That's very helpful color. Thank you.
Thank you. Our next question comes from Greg Gordon from UBS. Please go ahead. Your line is open.
Yeah, thank you and congratulations.
Thank you, Greg.
Just to maybe reconfirm on the origination goal at the P&I business of $50 million a year, you said you would.
15.
Sorry?
I'm sorry. I just said it, $15 million a year. That's correct.
Okay. You reached the goal for 19, is what you were saying?
That's correct. We feel actually we may have exceeded it somewhat as well.
Okay.
With the five projects.
How much do you think a project contributes?
We really don't disclose how much each project contributes. I can tell you that the five projects that we're talking about will generate about $200 million of capital investment and that those returns are in excess of our utility returns. That might give you a feel for what kind of income is being generated.
Yes. Thank you.
Thank you. Our next question comes from Paul Patterson from Glenrock Associates. Please go ahead. Your line is open.
Congratulations, guys.
Thank you, Paul.
It's been quite a road. Well, congratulations. I guess the question I have for you is, I noticed there was a special inspection for Fermi, and I think we're going to get a report in 30 days or something like that.
Yes.
I was just wondering, given how nuclear economics are challenged around the country, and of course, the special inspection just made me think generically, what is the long-term plan for Fermi, and are there any opportunities maybe to replace it? Just how are you guys thinking about that?
Well, Paul, that's a great question. We view Fermi in a very positive light. Let me explain why. One, it is a regulated asset. We don't operate in the merchant market where everything trades towards variable cost. The price that we can produce carbon-free energy from that plant, and the amount of power that we can produce in a carbon-free way, I don't think any other renewable resource can touch it. I feel like it's a bit of a jewel in terms of our future and provides us great options into the future to produce highly economic and carbon-free power. We see a long future for Fermi.
Okay. Great.
I think the torus issue that you referred to is something that's existed at the plant for 30 years. We've managed it well with the regulator, we're working with the regulator to move that issue to a good conclusion. Of course, as you know, we'll always do the right thing at a nuclear plant.
Yes. Once again, congratulations.
Thank you.
Thank you. As there are no further questions in the phone queue at this time, I would like to hand the call back over to you, Mr. Norcia, for any additional or closing remarks.
Well, thank you, Christian. With that, I'll wrap up by thanking everyone for joining the call. We've had a great first half of the year, as evidenced by our increased guidance, and I feel really good about the position we are in to continue our solid track record of delivering premium results. I look forward to providing you with updates as we move through the year. Thanks again for joining us. We appreciate the questions, and we'll talk to you all soon. Have a great day.
This will conclude today's conference. Thank you all for your participation. You may now disconnect.