DTE sees efficiency helping with CO2 rules

OREANDA-NEWS. July 27, 2015. DTE Energy expects Michigan lawmakers' emphasis on energy efficiency will help meet federal requirements for CO2 emissions from existing power plants.

The company is optimistic that upgrades to its generation and distribution assets will synchronize with governor Rick Snyder's (R) long-term energy strategy, which aims to diversify the state's generation mix away from coal and expand energy efficiency penetration. Long-term generation planning in Michigan could complement emissions rate targets set under the US Environmental Protection Agency's (EPA) proposed Clean Power Plan.

Synder "has been really public about energy efficiency," DTE chief financial officer Peter Oleksiak said today. "So part of our generation planning will be what level will be covered by energy efficiency, and even the EPA Clean Power Plan requirements give credit for energy efficiency."

Earlier this year, Snyder outlined an energy strategy that called for energy efficiency and renewables to account for 30-40pc of the state's power by 2025, up from about 16pc now.

The Clean Power Plan would require each state to meet a CO2 emissions rate target by 2030. The agency says energy efficiency, emissions trading and other measures can count toward compliance. EPA says it will finalize the standards in August.

DTE said it could also benefit from rising demand for natural gas pipeline capacity in the midwest and expansion of large-scale renewable projects, particularly as state legislators debate raising the state's renewable energy mandate to 20pc by 2022 from 10pc by 2015. But legislation proposed by Senate Republicans would repeal the mandate.

The emphasis on efficiency led to lower-than-expected earnings in the second quarter. DTE's retail electric sales fell by 1.1pc in the first half. The company expects load growth to be "close to flat" over the next few years.