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DTE Energy pursues Ohio customers through Nexus pipeline expansion

Nexus Gas Transmission LLC is buying a natural gas line near the 1.5-Bcf/d Nexus interstate pipeline and planning to build a lateral connecting the two pieces of infrastructure in a move that will expand DTE Energy Co.'s customer base, DTE executives said Feb. 7.

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Nexus, a joint venture of DTE and Enbridge Inc., signed an agreement to acquire Generation Pipeline LLC — a fully contracted 355-MMcf/d intrastate pipeline, 24 inches in diameter and 23 miles long — for between $150 million and $200 million, DTE executives said.

The Generation line, located north of a section of the Nexus pipeline and as close as four miles, supplies gas to power and industrial customers in northwestern Ohio and connects with the ANR Pipeline Co. and Panhandle Eastern Pipe Line Co. LP, DTE said. The Nexus pipeline recently opened, running from the Marcellus and Utica shale region through Ohio and Michigan on a path that ends in Ontario.

"Our plan is to interconnect Nexus [to] this pipeline," DTE President and COO Gerardo Norcia said during the company's Feb. 7 earnings call. "That will provide significant market access for the Nexus pipeline … as we attach new customers on that line and will create value for our shipments in the future."

Generation Pipeline is already working with Ohio regulators on another lateral known as the Ironville lateral. The lateral would be an extension of an existing pipe, the Oregon lateral, and would be aimed at supplying gas to an industrial area Generation Pipeline has said is underserved. The pipeline operator told the Ohio Power Siting Board that it could begin construction on this lateral around Feb. 25.

"In terms of connecting and Generation pipeline, it will provide a significant market outlook and demand source for the [Nexus] pipeline," DTE Senior Vice President and CFO Peter Oleksiak said during the call. "It will make the pipeline much more attractive for our current shippers and also for future shippers."

DTE officials declined to comment on whether they expect to take on more pipeline acquisitions in the coming year.

In addition to pursuing gas transportation opportunities, DTE also received Michigan Public Service Commission approval for a voluntary renewable energy plan. The plan includes adding 300 MW of new wind capacity for a program for large industrial customers looking to reduce emissions.

DTE already signed definitive agreements for voluntary renewables with two large industrial customers, totaling 280 MW. A third "large contract" is pending, company official said, adding they believe that DTE can expand its voluntary renewable plan by an additional 300 MW in the future.

"We told you that voluntary renewables will become an important new area of investment for us, and these transactions are our first concrete moves in that direction," DTE Chairman and CEO Gerard Anderson said.

DTE on Feb. 7 reported operating earnings of $165 million, or 91 cents per share, in the fourth quarter of 2018, down from $224 million, or $1.26 per share, in the same quarter of 2017. The results missed the S&P Global Market Intelligence consensus normalized earnings estimate for the quarter of 93 cents per share by 2 cents.

For full year 2018, the company booked operating earnings of $1.1 billion, or $6.30 per share, improving from $1.0 billion, or $5.59 per share, in 2017. The results missed the S&P Global Market Intelligence consensus normalized earnings estimate for 2018 of $6.33 per share by 3 cents.