DTE Energy Company Q2 2009 Earnings Call Transcript

Tags: Cost Reduction, Restoration, Call Transcript, Earnings, Credit Suisse Group AG, Seeking Alpha, DTE Energy Co.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Dan Eggers – Credit Suisse

Dan Eggers – Credit Suisse

Can you just share a little more thought on the O&M expenses, maybe a little more color around why the timing was a little front end loaded as far as maintenance from the first half to the second half if there’s any true up obligation associated with the rate case based

Dave Meador

I put this in the context of what we saw playing out last fall. We got our groups into the rooms and said listen, we’ve got to get prepared for what’s going on in the auto industry and the local economy and we can’t have a cost reduction program that is back end loaded, we’ve got to do everything we can to do to front end load this and engage our employees. Then also the goal was to make sure that this was as sustainable as possible so we told the groups we know we’re moving fast here but we want 80% of this sustainable and as front end loaded as possible. Some of this was by design.

Then we also have some timing issues that are playing out when you look at this year over year whether you look at plant maintenance outages and things like that. I would describe this as we wanted to make sure with this economy that we were not in a situation where we were trying to dig out of a hole in the second half of the year and the marching order this had to be a January 1^st cost reduction and I think that sets the context and background of how we set this whole thing up.

Peter Oleksiak

The main part of the timing, a little more than half of it is tied to restoration. A lot of that, the restoration expense is pretty comparable that we’re forecasting this year versus last year. At the front end of the year the first half has been about $25 or $30 million lower. Right now we’re projecting that to be back on budget and on top of that we do have a restoration tracker so we’re essentially whatever over and under we incur will be offset in terms of revenues.

Dan Eggers – Credit Suisse

With O&M coming down so much in the midst of the rate case proceeding is there any sort of adjustments we need to be aware of to your rate case? I guess that comes down to getting the final order done.

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