Good day and thank you for standing by. Welcome to the DTE Energy First 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 session. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Barbara Tuckfield. Thank you. Please go ahead.

Thank you, and good morning, everyone. Before we get started, I would like to remind you 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. With us this morning are Jerry Norcia, President and CEO; David Slater, President and CEO-Elect of DTM; and Dave Ruud, Senior Vice President and CFO. And now, I will 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 will start off by discussing DTE’s strong start to 2021. And David Slater will give some details on our Midstream business and provide an update on the spin transaction. Dave Ruud will provide a financial review of the quarter and wrap things up before we take your questions. So let’s start on slide four. As we have discussed before, our priorities of DTE are to support our employees, customers and community, which then enables us to provide the strong consistent growth the investors have come to expect. Our focus this quarter was no different, as we have delivered for all of our stakeholders. Our team at DTE has continued to perform at a very high level. We are recently recognized by Gallup as a great workplace. This is the ninth consecutive year we have received this award. We are off to an extremely safe start in 2021 coming out for our safest year ever in 2020. As I have said, safety is our top priority at DTE and getting people home safely to their families every day helps drive our success and employee engagement. We are building on our diversity, equity and inclusion focus with employees fully dedicated to helping the company on its journey. DTE is committed to accelerating our progression towards a workplace where everyone feels valued, welcome and able to contribute their best energy. We do understand that our people thrive and succeed when they feel included, safe and welcome. On the customer front, we continue to deliver safe and reliable energy. Just recently DTE Electric received approval on its deferral request that delays next rate case filing until October 2021. This provides price…

Thanks, Jerry, and good morning, everyone. I will start on slide seven. Our Midstream business has had a solid first quarter, executing well across all platforms and assets. We are on track to achieve our financial targets in 2021, which include an EBITDA range of $710 million to $750 million. DTM is also committed to a world-class ESG agenda. Earlier this year we announced a net zero emissions target by 2050, making us one of the first companies in Midstream sector to announce such a goal. We intend to use every tool available to reach our sustainability targets and we believe this will evolve to become a significant business opportunity over time for DTM. Additionally, DTM is establishing a Board of Directors committed to ensuring the company operates in an environmentally and socially responsible manner. As Jerry mentioned, we are on track for midyear spin execution. Our Midstream business has been transformed over the last decade and the solid, steady and strategic transformation has positioned this segment to become the industry leader it is today. The creation of an independent Midstream C-Corp will provide the opportunity to further advance the company and create value. Now let’s turn to slide eight. The spin is on track for midyear execution. We initiated the Form 10 process with the SEC back in February. Since then we have been diligently working through the comment period and this has been going smoothly as expected. In March we held discussions with the rating agencies which went very well. We will be receiving a credit rating at the time of debt raise. The Form 10 will be public in the second quarter. We plan to hold an investor roadshow later in the second quarter as well. DTM shares are expected to start trading on a when-issued basis one week or two weeks before DTM shares begin regular way trading on the New York Stock Exchange upon closing. Finally the spin transaction will be executed midyear. As Jerry mentioned, successfully executing the spin has been made possible by the commitment and dedication of all of our employees. Thank you to our team for bringing their best energy to work each day and keeping everything on track. Now, I will turn it over to Dave Ruud to discuss DTE’s financial performance.

Thanks, David. Good morning, everyone. Let me start on slide nine to review our first quarter financial results. Total operating earnings for the quarter were $473 million. This translates into $2.44 per share. You can find a detailed breakdown of EPS by segment including our reconciliation to the GAAP reported earnings in the Appendix. I will start the review at the top of the page with our utilities. DTE Electric earnings were $208 million for the quarter. This was $114 million higher than the first quarter of 2020, primarily due to new rate implementation and colder weather in 2021. DTE Electric also experienced non-qualified benefit plan losses in the first quarter of 2020. We have since taken measures to reduce market variability in these plans so we have no longer see this variability after the second quarter of 2020. If you remember in the second quarter of 2020, the benefit plan losses reversed and were positive in that quarter. Moving on to DTE Gas, operating earnings were $169 million, $48 million higher than first quarter last year. The earnings increase was driven primarily by new rate implementation and colder weather in 2021. Let’s keep moving down the page to our Gas Storage and Pipelines business on the third row. Operating earnings for GSP were $86 million. This was $14 million higher than first quarter of 2020, driven primarily by the LEAP pipeline going in the service in the second half of 2020. On the next row you can see our Power and Industrial business segment operating earnings were $28 million. This is a $2 million decrease from first quarter of last year due to steel-related earnings offset by new RNG projects. On the next row you can see our operating earnings at our Energy Trading business were $14 million, which…

[Operator Instructions] The first question is from Michael Weinstein with Credit Suisse.

Hi. Good morning, guys. Sorry about that, I was on mute.

Good morning, Michael.

Hey. With the delay in the electric rate case, how would you say that affects what you are going to file for? I mean is it going to result in a larger rate filing than would normally be the case or is it basically the same case just delayed six months?

I would say it’s generally the same case, Michael, delayed six months. It will be a forward test to your result as well. We will be filing for…

Okay. Yeah. And I am wondering if you could provide a little bit more information on the RNG business. RNG has been coming up a lot lately and talks about how gas utilities might be able to reduce their carbon emissions exposure on a net basis. Is -- do you see this -- do you see RNG business ramping up significantly outside of the states you are already operating in as you expand that nationally as sites are developed?

Sure. So maybe I will just start by commenting on our own utility…

Yeah.

… where we have -- we are essentially offering a voluntary offset program that will be driven both by forestry products and RNG. And we may be one of the first in the country to offer that type of package to our customers and it’s a very interesting offering where for $4 a month, we can offset about 25% of your carbon footprint as a gas customer. So it’s a unique way of packaging carbon offsets through RNG, as well as forestry products to deliver a lower carbon footprint for our customers. I do see that expanding across the country, Michael. Right now most of our efforts in RNG of DTE Energy and our P&I business are focused on very gas going into the California markets, which gives us very nice returns both from renewable fuel standard, as well as the low carbon fuel standard in California. We get, as we have mentioned in prior calls, returns where we see our simple cash payback happen in three years to four years with pretty modest investments, lots of projects in the pipeline as well going forward.

Yeah. Is this -- has this come up at all in any of the Democrats infrastructure spending plans to ramp up RNG production or maybe even expand the fuel credit to natural gas, as well as biodiesel?

I have not seen those details yet, Michael. But we are looking for them. Most of the credits seem to be targeted at wind and solar at this point, as far as I can see, another clean sources of energy.

Got you. And just one last question on guidance, guidance is unchanged even after a really nice quarter. And I am just curious if -- is that just part of the -- it’s just early in the year at this point is you are also looking at the possible lean or lean in initiatives later in the year to keep guidance…

What we are looking -- yeah. What we are looking at is, using favorability to really build strength for 2022. That’s our first goal. As well as investing customer centric projects in 2021 in order to make that happen. And as we get more visibility into the balance of the year then we will continue to provide you updates at our next quarterly call.

Okay. Great. Anyway good quarter. Thanks a lot. Good.

Thank you.

Your next question is from Andrew Weisel with Scotiabank.

Hi. Good morning, everyone.

Good morning, Andrew.

My first question is on Midstream actually, are you able to isolate any financial impact from the extreme weather in mid-February in Texas in the surrounding areas, I don’t know if that impacting your Haynesville system or more broadly any operational surprises or any counterparty risks or issues?

David Slater do you want to take that?

Sure, Andrew. We really didn’t see a significant impact to us from an economic perspective. We did see our operational challenges probably three days or four days into that cold snap. It was primarily upstream of our facilities where we were just seeing the producer struggling to maintain their production at the wellhead. But as soon as the weather broke those volumes came back rather quickly. So from an impact to the Midstream business it was pretty modest.

Okay. Great. Then financially, you were pretty clear that you will have the IPO style roadshow for DTM in the coming months. When can we expect an updated financial outlook for 2021 and beyond for the remaining utility focused DTE? Will we seek guidance before the DTM shares start trading or would it come more like with second quarter earnings in late July?

Dave Ruud do you want to take that?

Yeah. Consistent with the timing of when we are going to go out with the DTM roadshow we want to be talking about DTE guidance at that point as well. So, we -- as we come forward into a post-June, we will be coming forward with our DTE guidance post-Midstream for 2021…

Okay.

… for the remainder of 2021.

Terrific. So before the DTE shares start trading, post-spin will have a better sense of what the standalone outlook looks like?

Yes.

Great. Then one last one if I may on the voluntary renewables program, seems like you are seeing really strong demand with the additional megawatts for middle of the decade. Are you thinking at all about a potential cap or ceiling from this business, and if so, what would be the limiting factor, I don’t imagine it would be demand? Are there any physical constraints around land access or regulatory constraints of any sort or could this just continue the pace of growth through the end of the decade?

I don’t see any limitation other than demand. So we are -- as -- if you followed our last settlement filing, where we operate 800 megawatts of incremental renewables, that makes us about 400 megawatts long. But I can tell you that we eat up those long positions pretty quickly. The demand is extremely strong right now for our voluntary renewables program. So I don’t see any limitations other than the customer demand.

Okay. Great to hear. Thank you for all the details.

Your next question is from Durgesh Chopra with Evercore ISI.

Hey. Good morning, team. Solid quarter. Thank you for taking my question.

Good morning.

And just on -- and good morning. And just on the quarter, just big picture, Jerry, and maybe the rest of the team, I want to get your thoughts, so I believe just yesterday, I mean, I think, there’s some news floating around that the Biden administration is now pushing for essentially doubling the clean generation going from like currently 40% or 80% over the next decade. Obviously, this is less aggressive than certainly zero -- net zero goal by 2035. Just your thoughts on how is DTE positioned. How is the sector position, is this even achievable?

Well, I would say, just to remind everyone of our goals that DTE where we want to be net zero by 2050, 80% carbon reduction by 2040, 50% by 2030 and we are already at 30% heading into ort of 2023 timeframe. So I would say we are well advanced. I would expect that the DTE plan will accelerate over time. We are deep into conversations with the -- as an industry with the Biden administration and I think there will be some consensus we hope as to how do we all accelerate our plans, which we view as beneficial to DTE’s plan and certainly it will be beneficial to others as well. So, yet to be determined. The plans that were described during the election process are very aggressive. But we also saw -- I think we see a meeting in the mines here, perhaps, to compromise over time.

Excellent. Thank you for that.

Overall, but -- yeah. But, overall, I would say, certainly, a tailwind for DTE’s plans.

Just maybe -- just a quick follow-up, I mean, how high up a priority this is for the Biden administration? And just your sense talking to key leaders as to when could we actually see something tangible on this front? Just open ended, just thinking about timing and what to look for over the next couple months?

Yeah. Based on the level of engagement with our industry association, I would say, it’s very high on their priority list to move forward a plan that affects climate change. So we are feeling positive that there’s a possibility to get something done. The elements that are being discussed seem quite positive as well. We are just going to need to see how this all plays out in the next several months. I think we will now probably heading into the summer and fall, while there is something to do here. But it feels positive at this point.

Perfect. Appreciate the time guys. Thank you.

Thank you.

Your next question is from Jonathan Arnold with Vertical Research Partners.

Good morning, guys. Thanks for taking my questions.

Good morning.

A quick, could you -- would you mind breaking down just kind of quarterly upside at DTE Electric and Gas just a little more? I mean, how much were the rate cases? And then maybe the benefit plan item, could you remind us what that was and I was curious if -- are you continuing to see mix benefit and COVID-related sales factors and yeah, to what extent was that driving the upside?

Dave Ruud?

Sure. Hi, Jonathan. As we look at the quarter, the majority of the upside we saw from the new rates coming in. We did see some weather differential versus last year. Was it -- it was still a little negative but it was better than last year. And also the DTE Electric that’s where we had those benefit plans that we -- you mentioned and that was about a $20 million to $25 million difference. So we had a loss last quarter. Of course, that’s going to be a gain in the second quarter of 2020 and then we have since taken all the actions to make sure we don’t see that market credibility again. As far as Gas, again in the first quarter of 2020 we had really negative weather. That’s what we were trying to come back from throughout the year. So -- and we had better weather this year and then the rest of the upside that we would see would be from the new rates coming into effect.

So can you quantify how much the rate case helped the quarter on the Electric side?

I think we can get back to you on that one to make sure that you have the right number.

Okay. And then any comments on the sort of the mix question?

Yeah. On the load at Electric overall quarter-over-quarter sales were down about 2%. So we are -- our residential is -- was up versus Q1. It was up about 3%, commercial down 2% and industrial down 7%. But as we discussed before we were seeing some upside from COVID-related sales of residential and we are still seeing that right now. So our residential load in the first quarter versus what we would have thought it would have been pre-COVID was up about 5% to 7% still. Then our commercial and industrial were basically back to where we would have expected pre-COVID may be between 95% and 100% of the way back. So our residential usage continues to come in marginally better than expected with more people continue to work-from-home and we are seeing that trend continue a little longer than we thought until people go back to work.

Okay. Great. Thank you. And then just maybe on the -- I was looking at the CapEx disclosure in the slides. That seems to be a little bit of a slow start relative to annual guidance even adjusting for the normal seasonality. Just anything you can offer there in terms of what you are thinking about the full year plan and just how we are -- when we ramp up to it?

Yeah. I think the main thing that was a little slower there was one of wind parks was scheduled to come on in the first quarter and that will be coming on now in the second quarter and that’s -- we will be catching up with the capital there.

I think you always saving about $100-odd-million down on base electric there, so I am curious, is there anything driving that?

If timing of -- just timing of projects and when they come in for the others. No. When we look at our annual plan for capital, we are still right on target, but the timing for a few of our projects is a little slower in the first quarter, but ramping up now.

Great. Thank you very much.

Your next question is from Steve Fleishman with Wolfe Research.

Yeah. Hi. Good morning. I have got a…

Good morning, Steve.

Hey, Jerry. Just you mentioned that, I think GSMP is tracking ahead of plan. Could you maybe say what’s driving that?

Sure. David, do you want to take that?

Sure. I can. Steve, I think, the big driver quarter-over-quarter is leaping and service this first quarter. Then I’d say generally across the platforms, just running modestly ahead of plan across all the platforms, there isn’t any one item that I would call out. It’s just a little modest blush across all the assets.

Okay. And then also for GSMP, which I guess will be obviously DTE Midstream. The -- when you look beyond 2021 as kind of growth, could you maybe give a little color of what drives growth beyond 2021 there?

Yeah. Steve, it’s really no different than I think what we have shared in the past. I mean we are looking at what I will call out, our Appalachian footprints and then our Haynesville footprint. We are sitting in really good locations in both of those basins. We are sitting in and around some of the best resource in the country. And with pipeline connections to really the best markets in the country and we are just seeing incremental activity around all those assets right now. And as you know, some of the assets have some mud lay on that [ph] give us opportunity to do incremental business. So I would expect and continue to expect to see that organic accretive growth as we fill in around those assets.

Okay. And just for the Form 10, just so we know, is that primarily going to be just historical information actuals for DTE Midstream? Are there any projections in there?

Steve, what you will see in there is, you are going to see the past three years audited standalone financials and you will also see the first quarter of this year kind of standalone financials, and you will also see a pro forma for the full year as a kind of a standalone. So that’s what we will be in the package when it becomes public, which you will have an opportunity to look at.

Okay. Great. I have one last quick question, just the RNG business, do you have a handy what that business expects within your guide for 2021 in terms of earnings or whatever other measure?

We -- Steve, we haven’t broken it out between our cogen and our RNG business from a new development perspective. But if you recall, we have been landing this $15 million or more each year of new income generation at P&I. And I’d say the way to think about that is about half of it has been RNG and the other half has been cogen. That’s how we have been progressing over the last three years or four years.

Okay. Great. Thanks so much.

Thank you.

Your next question is from Shar Pourreza with Guggenheim Partners.

Good morning, team. It’s actually Constantine here calling in for Shar and congratulations…

Good morning, Con.

…for the quarter. Good morning.

Thank you.

A quick follow-up on the GSP and kind of appreciate the kind of the color that was provided. And just thinking about the spin of the business and kind of unlocking the value of potentially growing the platform kind of both organically. If you can just update on kind of growth opportunities, you are kind of looking at a 10% CAGR through 2024 kind of before the announcement? And just curious to know how that view has evolved and kind of in light of the improving commodity conditions, some of the re-contracting like on NEXUS and potentially some updated strategy on GSP for post-spin?

David.

Yeah. Sure. I can take that. So as we have talked in the past in terms of what I will call our capital investment agenda is for this segment. We will be not seeing that changing at all and like as we approach the spin, we will be able to provide a little more granularity and visibility on the, what I call the DTM standalone kind of view going forward. But if I just look at this year as a -- just as a proxy, we are going to deliver strong growth this year year-over-year and actually compare us to what I will call the Midstream sector. We got sector leading growth rate this year year-over-year. So the portfolio is strong and healthy. And I look forward to talking to you in more detail about the DTM specific forward view shortly as soon as we can.

Excellent. And I kind of have a follow-up on, maybe a two-part on kind of the post-spin unregulated exposure. Just given the scale of the commodity impact of businesses that’s shrinking within the RemainCo? Does that kind of mean the need for DTE Energy Trading kind of remains or just some of that business activity move away post-spin?

So, just as a remainder, 90% of our earnings going forward will be utility based with about 10% being non-utility. And any growth that comes from our non-utility sector will come from our two business lines, cogeneration and RNG. We don’t expect any growth from our Trading company. It’s a quite a small operation, generates anywhere from $30 million to $40 million of cash flow for us, but also provides us great market insights and to some of the non-utility businesses that we are in, cogen, as well as RNG where they help us manage some of our market positions there, as well as manage risk in and around some of our utility portfolios. So it’s a small business. We don’t expect it to grow and we will continue to run it that way.

And a short follow-up on the RNGP I think [ph] kind of the P&I segment just with the local and kind of federal decarbonization efforts ramping up. Are you strictly looking at kind of RNG opportunities or potentially expand the offering maybe hydrogen value chain, carbon capture, et cetera?

At -- we are primarily focused on RNG at this point in time. That’s where the investment opportunities are, and I would say, really nice returns as well from that business line. As we start to understand more, we are starting to understand a lot more about carbon capture. We will look at that as an opportunity. But that seems to be somewhat into the future at this point in time. Hydrogen again is very early, but certainly, promising. So more to come and we will see how our utilities, and perhaps, our non-utility business can play into both of those opportunities.

Excellent. Thank you for your time and I will jump back in queue. Thanks.

Your next question is from Sophie Karp with KeyBanc.

Hi. Good morning. Thank you for taking my question.

Good morning.

A lot has been discussed already, but I just wanted to double check with the guys about the qualified plans in the Electric business. So, when you say that you took measures to reduce volatility in that segment going forward, can you clarify what that means? Is that -- does it mean that you diversified the assets in those plans differently or is it an accounting measure, like, how should we think about that?

Dave Ruud?

Sure. Yeah. The main thing we did there is, we matched up our assets and our liabilities. So, any movement on one side will be matched on the other, and so that will take away any of the market variability that we were seeing there in the past and we limited the size of the plan a little bit too. So we are confident that we are not going to see these market movements past the second quarter of 2020, where you will see that the losses that were in the first quarter of 2020 come back in the second quarter.

Right. Very helpful. Thank you. And then my other question was on the GSP business, I am sorry, P&I business. It looks like it might have a little bit of catching up to do to -- for the full year guidance in the last three quarters of the year compared to what we would think as a ratable distribution of your guidance throughout the year. Is that something that you envisioned or is it something that’s close to electric projects there? How should we think about that one?

Maybe I will start and then I will let Dave give a little more details. But we fully expect P&I to hit its targets this year. I can tell you we are not concerned about that at all. So, feeling real good about the targets and the progress for the balance of the year. Dave, do you want to shed little more light on this?

Yeah. You are right. In the next few quarters what we see is some of the RNG projects and the benefit of some of those new RNG projects come in a little bit better for us. And so we are confident in that coming back and meeting the full year guidance.

Terrific. Thank you. That’s all I had.

Your next question is from Insoo Kim with Goldman Sachs.

Thank you. Two couple of questions. One, on the -- when we think about the RemainCo going over and the growth in both the utility businesses, as well as the P&I with RNG. On the balance sheet, we still expect a 90%-plus of the business over the next five years to be at the utility level?

Yes. We do. Absolutely.

Understood. And then just this might be a little bit early, but obviously part of the payment to the infrastructure fund that Biden proposed is the potential increase in tax rates. We have gone through this cycle as an industry of the past -- a few years ago and just assuming the plan that’s in place goes into effect. Just any initial thoughts on your end especially in terms of cash or rate base and rate base growth?

Well, I will start. Certainly, we don’t expect our growth trajectory to be impacted by the new plan. We will put some pressure on rates and affordability at the utilities that we will have to manage. But we think all of that at this point in time will be manageable. Dave Ruud, do you want to add to that at all?

Yeah. Jerry, I think that’s the right high level. When we saw the tax rate reduction in 2017, we could -- that was a 14% reduction. Now it’s looking like, what Biden saying is about a 7% increase and that could come off as about 1.5% increase we would see in rates. Also, it would improve our cash position a little bit because cash taxes would lag the book taxes. So it would improve our FFO to debt by 0.5% to a 4%. But as Jerry said, right, the key we would have to do there is continue to work on cost structure to offset the increase in rates, so it wouldn’t impact our capital plans as we continue to improve on our customer liability and clean energy transition.

Got it. And my apologies if you have already got into this or -- and I am just picking it, but from O&M perspective over a multiyear period, is there a general guidance that we should be using or potential opportunity for more?

Dave?

All right. Yeah. We are continuing to manage our O&M and trying to keep it well below inflation and it’s one of our plans going forward. We haven’t given long-term O&M guidance on that. But it’s definitely an area where we are going to make sure that we can continue to have opportunities for increased capital and infrastructure that’s needed for our customers.

I think you will also see that, if you look at our O&M performance over the last decade, we have been quite distinctive in the industry with our continuous improvement plans where we have had a very low to no O&M increases on an absolute basis.

Understood. Thank you so much.

Your next question is from Anthony Crowdell with Mizuho.

Hey. Good morning, Jerry. Good morning, Dave.

Good morning. Good morning, Anthony.

Hey, Anthony.

Hi. Jerry, great move on swapping out the multiple Jerry’s on a call with multiple dates. Just, I guess -- just two quick questions. One is I think you talked about 1,800 megawatts of renewables. I believe that’s mostly, if not all in the regulated utility. Is there any thought to growing renewables or what’s the thought process for renewables either in the regulated utility or the P&I business?

Well, certainly, we have got a significant effort to continue to increase our renewables position in our regulated businesses. I think, as I mentioned, we have got 900 megawatts of voluntary renewables lined up and we expect over the next five years to invest about $2 billion in regulated renewables inside our electric utility. As far as the non-utility business, our niche play has really become RNG where we see that as a very lucrative -- a lucrative renewable resource and we were a first mover in that space and continue to originate really nice projects with unlevered IRRs after-tax in the teams. And as I mentioned, simple cash paybacks of three years to four years, and we see nothing but demand growth for that product. So we are pretty excited about our position there and how it continues to grow.

Okay. And then last and it’s kind of touches on your response, I guess. How do you balance the returns in the renewable project with how it would impact the company’s net zero targets or such as, hey, this really contributes to the net zero target, but the returns are lower. Is there a threshold or what’s the balancing act of, hey, it’s a really, really green project, but maybe less of an economic benefit or how do you handle that?

Well, right now, all of our regulated renewable investments inside our electric utility attract the regulated rate of return, 9.9% and a 50/50 debt equity structure. So it’s a -- these are very accretive projects for us and we continue to see lots of opportunity to finance these renewable projects in that manner. What we are trying to manage through the voluntary program is our customers pay a slight premium in order to make sure that there’s no impact on customer rates. So, sort of a win-win for both our customers and our investors.

What about in the unregulated business then?

In the unregulated business, we are seeing nice returns, and as long as we continue to see those returns, we will deploy the capital. As I mentioned, the unleveraged returns after-tax are around -- are in the teens and our simple cash paybacks are three years to four years. So as long as we get that steady stream of projects with those types of parameters we will continue to invest in. And the investments are can be -- are modest. Yeah, there’s small projects, like I mentioned we are generating anywhere from $7 million to $8 million a year of new net income from our RNG and that’s building a nice level business line for us.

Great. Thanks for taking my questions and great job on the quarter.

Thank you, Anthony.

Your next question is from Julien Dumoulin-Smith with Bank of America.

Hey. Good morning, teams. Hi. Thanks for the time.

Good morning.

If I can play -- hey, if I can do a little cleanup here. I just want to go back to this RNG conversation. It has come up a few times. But I want to press a little bit on targets here as you think about the forward guidance that you guys have. What kind of assumptions have you reflected there just to reset against your $24 million baked into RNG. I heard the $15 million per year comment earlier. But I want to come back to just understand what’s reflected against your earlier comments about looking at other states and other perhaps opportunities there are in?

We have -- I think at our last IR meeting we provided guidance for P&I business overall. And Dave Ruud, if you -- if I recall correctly, we are in the $130 million to $135 million in terms of income targets for that business in the 2024 timeframe.

Yeah.

That’s right. And it’s continued to our historical development of $15 million of new net income a year. A lot of that within RNG, but also continuing to look at cogen and other opportunities within the kind of ESG space to grow that business.

Then let me then -- perhaps let me phrase that slightly differently. When you think about the emerging opportunities outside of California should we say, how do you think about that reconciling against that, is this something that you want to keep small all your comments earlier about keeping energy trading small for instance? Do you want to keep RNG small within those parameters or is this something that you are willing to organically grow into whatever opportunity may exist behind it?

Well, I will start this way, Julien we are trying to keep our mix at 90%-10%, so we will pursue as we watch both our utilities and our non-utilities grow. We will continue to pursue RNG and do great projects and as basis we have been. Could it have become sort of more dominant and in a P&I play perhaps but I think it’s something that we will have to watch. Right now we are seeing like I mentioned a pretty even split between cogen and RNG, and that feels good to us. The cogen projects come with 15-year and 20-year agreements, which feels more like utility -- utility like type investments and capital deployment with higher returns in our utilities. And then RNG comes with really hot returns, right, and sort of shorter timeframe commitments in terms of price mixing.

Right. But maybe the point is that if you strip out the GSP side of the business, you still have latitude within that 90%-10% mix even in the forward years?

I think the 90%-10% that we put out there took into account the spin of DTM or Midstream. So as we deploy capital, the mix that we are looking at, Julien, is about $17 billion going into our utilities and about $2 billion going into P&I. So that kind of gives you a feel how we are planning -- that’s our base plan and how we plan to allocate capital right now.

Okay. Okay. All right. Excellent. I will leave it there. Thanks, guys.

Your next question is from Angie Storozynski with Seaport Global.

Thank you. So I realize that you guys are busy with the Midstream and all, but I was just -- and then seemingly you have plenty of growth opportunities at your own utilities. But just looking beyond the spin-off, it looks to me that your credit metrics will look very strong, given the improvement in the credit profile, the risk profile of the business that about 16% FFO to that. So, typically that strong credit metrics would support some M&A transactions under regulated utility side and I was just wondering what’s your take on this?

Angie, good morning. We -- our base plan is really to grow our company organically. We see that being the most accretive way to create value for our shareholders. And we have got a $17 billion plan in front of us, which we are always looking for opportunities to accelerate. And one of the reasons we are primarily focused on the organic growth around our platform, current platforms is that, you get in a book value and your shareholders get a multiple of that book value from a value perspective. So it’s the most accretive thing we can do. Having said all that, if there’s assets that could become available to us and create value for our investors, we are always open to that. But it’s certainly, Angie, not our primary focus at the point in time.

But do you have any preference as to electric versus gas? How about electric transmission assets, I mean, any comments to that effect?

Sure. I -- our views probably has been changed in the last couple of years and we are really focused on electric investments. I think if you look at our capital plan it’s very heavy electric both in the renewable space, as well as in wires and block renewables and wires are primarily electric investment focus right now. So if we were to do more -- we had the opportunity to deploy more capital and we were deployed in those two spaces wires and renewables -- regulated renewables.

Okay. And just as a follow-up, given that the voluntary renewables program seems to be ahead of your expectations, is that increasing your expectations about the earnings growth at DTE Electric versus what you had stated before or is it just that it offsets some of the other rate based growth that you would -- you have compensated?

Yeah. Certainly, what we are seeing and we updated at last fall is that, we put our renewables growth at $2 billion over the next five years of capital deployment. I -- as we move forward, we will continue to update that number, Angie. But I will tell you I have been pleasantly surprised with this program. As soon as we have supply available it just flies off the shelf with our large industrials and commercial customers have a very strong appetite for this. And even our residential customers were signing up thousands of customers every month and we are sitting at about 30,000 customers right now on a residential level. So it seems to be a very appealing product. So more to come on that, but I do expect these investments to continue to grow. But right now we have got $2 billion in the plan as we see it.

Okay. Thank you.

Your next question is from Ryan Levine with Citi.

Good morning.

Good morning.

How is the commercial development opportunities in the Haynesville progressed in the last few months and are you seeing any more meaningful developments there?

Sure. I will answer this question because David Slater is having some phone problems. Otherwise he would take this. But we are seeing lots of opportunities in and around the Haynesville assets and actually doing some nice small projects that are highly accretive. So David and his team have been quite successful. Nothing very large yet, but I think as we evolve that platform we have got a very significant opportunity with the fact that we were a first mover in building a 150-mile 36-inch pipeline that takes volumes in the northern part of the Haynesville to markets in the Gulf Coast, as well as the LNG export markets. So we are in discussions with various shippers to see if we can get a project off the ground there. So it’s early. But I would say encouraging because as you know expanding new pipelines can be a very economic and also accretive.

Great. And then maybe just one on RNG, post-spin realized the 10% threshold that you had highlighted. But in terms of deal structuring is there any change in appetite around taking else past or other credit risks? And is there any different approach that you may take pro forma for the spin given the change in tax position?

So I would say this that you asked about RNG markets, certainly and hopefully, this is answering your question. We are using financial instruments that hedge those markets and that’s what our trading company is doing for us. So, we are taking a portfolio approach where we hedge. We also have fixed price contracts for term and then we leave some of it open to the market. So that’s the portfolio approach we are taking with RNG, both in the LCFS markets and the RFS markets.

Okay. But the pro forma for the deal, would you look to take any more duration risk or less in light of the more utility focus company that you would be managing?

Certainly. We always look for length in our contracts. So that’s what we -- that’s how we approach it. We will give up a better return to get length in our contracts. But we also look for a portfolio approach.

Okay. Appreciate it. Thank you.

Thank you.

Your next question is from Jeremy Tonet with JPMorgan.

Hi. Good morning.

Good morning.

Just want to come back to GSP if I could kind of slice it a little bit differently maybe. For the first quarter, the piece you landed there would handily beat guidance and with the strength due to seasonality and how should we think about seasonality for the business overall at this point?

Well, the primary strength, as David mentioned in his comments, was driven by the fact that the LEAP pipeline, which was a brand new pipeline that came into service last August. We are starting to see the full impact of that on our financials year-over-year, because in the first quarter of last year, LEAP wasn’t -- was not in the portfolio, it was under construction. So that’s the primary lift that we got year-over-year. And then as we mentioned, we have got moderate favorability from all of our platforms and that’s what created the first quarter favorability year-over-year, those two factors. But predominantly the in-service of 150-mile 36-inch pipeline that we put into service.

Got it. So no seasonality to think of the business overall for our GSP?

Typically, we don’t get seasonality in that business. We are getting a little extra juice from the -- all the platforms blowing a little higher than we expected. That’s likely due to -- we do -- as you know we plan conservatively and have contingency in our plans. And that’s starting to play out on that platform somewhat in addition to the LEAP pipeline, which is a big investment that came online.

Got it. Separately, for Midstream, could you discuss how advanced the carbon capture initiatives that, I think, you alluding to before were in? Do you see the 45Qs as written as sufficient to make these projects economic? Just trying to see how the pace of what could develop for a carbon capture with the Midstream side?

45Q is helpful. But if you think about 45Q and LCFS in California, that starts to create a little more interesting returns. And so, I would say, that’s what we are going to need to see across the country as little more juice for these types of projects. So, otherwise, it will create a significant burden for customers that are looking to sign on. So it all really depends on do customers have to do this. And secondly, while the tax credit regimes both federal and state support. Certainly, in California, there is more -- I guess, it looks more positive than other states.

Got it. That’s helpful. Thank you.

At this time, there are no further questions. I would like to turn the call over to Jerry Norcia for any closing remarks.

Well, thank you, and I want to thank everyone for joining us today. I will just close by saying that DTE had a very successful first quarter and we are really feeling strong about the remainder of 2021 and we are busy working on putting a really successful 2022 together and beyond. So I hope everyone has a great morning and stay healthy and safe.

This concludes today’s conference call. Thank you for participating. You may now disconnect.