DTE Energy Presentation

1
2003 Year-End Earnings Review and Business
Update
February 6, 2004 New York, NY
2
Meeting Agenda

• Welcome and Opening Remarks
• Tony Earley, Chairman and CEO
• Non-Regulated Business Update
• Gerry Anderson, President and COO, DTE Energy
  Resources
• Financial Update
• Dave Meador, Senior Vice President and CFO
• Question Answer

830900 a.m. 900945 a.m. 9451030
a.m. 10301100 a.m.
3
Positioning for the Future
Anthony F. Earley, Jr. February 6, 2004 New York,
NY
4
Safe Harbor Statement
The information contained in this document is as
of the date of this press release. DTE Energy
expressly disclaims any current intention to
update any forward-looking statements contained
in this document as a result of new information
or future events or developments. Words such as
anticipate, believe, expect, projected
and goals signify forward-looking statements.
Forward-looking statements are not guarantees of
future results and conditions but rather are
subject to various assumptions, risks and
uncertainties. This press release contains
forward-looking statements about DTE Energys
financial results and estimates of future
prospects, and actual results may differ
materially. Factors that may impact
forward-looking statements include, but are not
limited to, timing and extent of changes in
interest rates access to the capital markets and
capital market conditions and other financing
efforts which can be affected by credit agency
ratings requirements ability to utilize Section
29 tax credits or sell interest in facilities
producing such credits the level of borrowings
the effects of weather and other natural
phenomena on operations and actual sales
economic climate and growth in the geographic
areas in which DTE Energy does business
unplanned outages the cost of protecting assets
against or damage due to terrorism nuclear
regulations and risks associated with nuclear
operations the grant of rate relief by the MPSC
for the utilities changes in the cost of fuel,
purchased power and natural gas the effects of
competition the implementation of electric and
gas customer choice programs the implementation
of electric and gas utility restructuring in
Michigan environmental issues, including changes
in the climate, and regulations, and the
contributions to earnings by non-regulated
businesses. This press release should also be
read in conjunction with the forward-looking
statements in DTE Energys, MichCons and Detroit
Edisons 2002 Form 10-K Item 1, and in
conjunction with other SEC reports filed by DTE
Energy, MichCon and Detroit Edison.
5
2003 in Review
DTE Energy had many successes in 2003 and
undertook key actions that position us for the
future.

• Laid foundation for legislative reform of the
  Choice Program
• Filed Detroit Edison and MichCon rate cases
• Exceptional restoration response to the August
  blackout
• Excellent operational year at Fermi 2
• Strong cost reduction results from the DTE
  Operating System
• Successful resolution of the IRS / PLR issue
• Continued progress in developing waste coal
  recovery business
• Renewal of 1.3 billion credit facility
• Redeemed 500M debt and restructured 650M debt

6
2003 in Review
We also faced many financial challenges in 2003...

• Soft economy
• Mild summer weather
• Ice storm and wind storm restoration

• Customer Choice impact
• IRS review of synfuels
• Pension and healthcare costs
• Blackout restoration

7
2003 in Review
...as reflected in our financial results.
Operating Earnings Per Share
DTE Stock vs. SP Electrics
2003 3.09 2002 3.55
2003
2002
SP Electrics
1.14
23.7
Non-Regulated
1.02
DTE
10.6
SP Electrics
-18.8
1.95
DTE
Regulated
-15.1
2.53
Reconciliation to GAAP reported earnings
included in appendix
Excludes discontinued operations of
International Transmission Company
8
2003 in Review
Despite 2003, we have achieved attractive
long-term investment returns...
Cumulative Total Return ()
53.5
55
45
34.9
35
25
17.6
15
5.4
4.0
5
-5
-12.3
-15
1999 - 2003
2001 - 2003
2000 - 2003
9
2004 Priorities
Successful regulatory agenda Achieve structural fixes to the Electric Choice program Successful outcome in rate cases for Detroit Edison and MichCon

Continued growth in non-regulated portfolio

Continued sell-down of synfuel portfolio

Maintain cash and balance sheet strength
1
2
3
4
10
2004 Priorities
1
Successful regulatory agenda Electric Choice

• 2004 Projection of Electric Choice Penetration
  Escalates
• Market prices for power remain low
• Increasing number of energy marketers
  capitalizing on structural flaws of the program
• The lack of an authorized mechanism to recover
  lost Choice margin, combined with transition
  credits for Choice customers, creates artificial
  pricing headroom

Generation Margin Loss
Pre
-
Tax (Millions)
Pre
-
240
120
50
15
0
2000
2002
2004E
2001
2000
2002
2003
2004E
2001
11
The Choice Program is
Deeply Flawed

• An artificial market structure exists in Michigan
• Historical rate subsidies and Choice transition
  credits create artificial price signals and
  promote cherry picking
• Market structure encumbers utilities
• Marketers not required to have reserve margins
• Utilities are effectively precluded from
  competing to retain customers
• The current regulatory structure is not
  sustainable
• Utilities operate simultaneously in two different
  and incompatible market systems competition and
  regulation
• Customers can switch back and forth between lower
  of market or regulated cost-based rates
• Utility retains obligation to serve for all
  customers prevents full recovery of its
  generation cost

If not fixed now, residential and small
commercial customers will likely face large rate
increases in 2006
12
MPSC Actions to Date are Limited
Proposed Regulatory Solutions
Actions to Date

• Eliminate transition credits for Choice customers
• Establish appropriate customer transition charges
  to recover net stranded costs
• Implement 5-year surcharge to recover Choice
  program implementation costs
• Modify PSCR mechanism to reflect impact of Choice
  program

MPSC issued an order on Jan. 15 eliminating
approximately 40 of the Choice credits
Staff incorporated actual Choice margin loss in
interim recommendation but only proposed 10-20
recovery from Choice customers
Staff proposed deferral of surcharge issue until
final rate relief recommendation
MPSC has deferred the issue until a later time
13
The Choice Issue is Also Being Addressed in the
Legislative Arena

• A series of hearings have begun and will continue
  over the next several weeks to review the
  Michigan law that created Electric Choice
• Hearings are being sponsored by Senator Bruce
  Patterson (R-Canton), Chairman of the Senate
  Technology Energy Committee

The Legislature- this standing committee
specifically has a due diligence duty to
conduct a thorough review of the effects of
implementation of the law on Michigans residents
and business entities. I want the people of
Michigan residents, employees, employers, young
and old, ratepayers and utility investors, all
electricity consumers, to benefit from the
objective, goals and good intentions of the
legislation.
- Senator Bruce Patterson, January 29, 2004
14
DTE Energys Principles for Creating a Fair
Choice Program
Create a Program that

• Is based on true economic drivers
• Remove rate subsidies and Choice credits that
  convey false price signals
• Require marketers to have reserve margins
• Is fair and balanced
• Remove utilitys obligation to serve once a
  customer switches to Choice
• Prevent customers from switching back and forth
  to capture lower of market or regulated prices
• Ensures affordable and reliable electric service
• Provide certainty relative to recovery of
  stranded costs from Choice customers
• Require all suppliers to meet appropriate
  reliability standards
• Ends the transition period

15
We Have a Two-Pronged Strategy
We are working actively in both the regulatory
and legislative arenas to fix the Choice problem
Regulatory
Legislative

• Meeting with legislative leadership to educate
  them on the problems with the Choice program
• Educating community organizations
• Launching a grassroots and mass media campaign

• Structure of our rate relief request allocates
  net Choice margin loss between Choice and
  full-service customers
• Requested Choice transition charge to eliminate
  artificial pricing headroom
• Proposal to modify PSCR mechanism to reflect the
  impact of the Choice program

16
Choice Recovery Requires a Balance
Economic Loss fromChoice Program
Choice Sales Volumes
Resolution

• Utility generation remains regulated and earns a
  reasonable return
• Recovery will be through combination of
  transition charges and base rate increases

Allocation BetweenChoice and Full-ServiceCustome
rs
Choice Headroom
17
2004 Priorities
1
Successful regulatory agenda Successful Rate
Case Outcomes
Detroit Edison Rate Case
Facts Updates
Filed on June 20, 2003 Requested 525 million in total relief (in 2006) 378 million interim relief MPSC Staff and intervenors filed recommendations regarding interim rate relief on December 12 Testimony from all parties concluded mid-January MPSC decision on interim relief anticipated after February 10
18
Regulatory Update MichCon Rate Case
Facts

• Case filed September 30, 2003
• Seeking 194 million final rate increase 154
  million interim rate increase

Key Cost Drivers

• Significant increase in routine and mandated
  infrastructure improvements
• Increased operating costs and employee pension
  and healthcare costs
• Lower margins due to decline in customer
  consumption and current economic conditions

Goals

• Immediately address current cost pressures and
  cash flow issues
• Ability to fund continued safe reliable system
  operation at reasonable prices, as well as fund
  mandated safety security programs
• Provide shareholders a fair opportunity to earn a
  return on equity commensurate with the risks
  relative to the operating and
  financial environment

19
Anticipated Timelines for
Rate Cases
Detroit Edison
Interim Reply Briefs February 10, 2004
Interim Order Anticipated by early March
Staff Intervenor Filings on Final Relief March 5, 2004
Proposal for Decision June 30, 2004
Final Order September 2004
MichCon
Staff Interim Report Intervenor Testimony May 3, 2004
Interim Briefs June 15, 2004
Interim Reply Briefs June 30, 2004
Interim Order Anticipated late July
Final Order Anticipated January 2005
20
2004 Priorities
2
Continued growth in non-regulated portfolio
Non-Regulated Net Income

• Current non-regulated strategy continues
• Linked to the core skills and assets of the
  utilities
• Low-risk, low capital requirements
• Sources of growth going forward
• Waste coal recovery
• On-site energy projects
• Coal bed methane projects

(millions)
250
228
207
200
162
150
100
84
68
50
0
1999
2000
2001
2002
2003
21
2004 Priorities
3
Continued sell-down of synfuel portfolio

• Favorable IRS PLR resolution announced October
  29, 2003
• We have sold majority interest in 5 of 9 synfuel
  facilities
• We plan to sell interests in remaining 4
  facilities by year end 2004
• Synfuel Plan
• Sell down interests in all facilities
• Targeted production in 2004 of 13-17M tons
• Expected 2004 net income of 150 - 190M and net
  cash of 130 - 150M

22
2004 Priorities
4
Maintain balance sheet strength
Dividend Yield
DTE Energy Leverage
60
6.5
5.3
5.2
4.9
55
4.8
Targeted 50-55 Range
4.4
50
2.06 Dividend
45
40
1999
2000
2001
2002
2003
1998
1999
2000
2001
2002
2003
Excludes securitization debt and quasi-equity
instruments
23
Our Management Incentives are Aligned with
Shareholder Value Creation

• 2003 executive incentive awards were down 72
  over 2002 levels
• Executive ownership of DTE Energy stock is over 5
  times higher than 1998 ownership levels
• Executive stock ownership guidelines in place for
  VP levels and above
• DTE Energy management and employees are our 1
  shareholder
• Executive 2004 incentive plan structure aligns
  with creation of shareholder value

2004 Plan Measure Weighting
Earnings per Share 35
Cash Flow 35
Customer Satisfaction 10
Diversity 10
Safety 10
24
Summary

• We are aggressively working to fix the structural
  flaws of the Electric Choice program
• We are actively managing rate cases to bring
  about reasonable outcomes
• Our non-regulated strategy remains solid well
  manage our growth capital carefully
• Balance sheet and liquidity position remain
  strong