Public Utilities Reports

PUR Guide 2012 Fully Updated Version

Available NOW!
PUR Guide

This comprehensive self-study certification course is designed to teach the novice or pro everything they need to understand and succeed in every phase of the public utilities business.

Order Now

The Ultimate CEOs: Anthony F. Earley Jr., DTE Energy

The CEO Power Forum: Not all utility CEOs are created equal...

Fortnightly Magazine - June 2005

in the coal markets. Many of our non-utility businesses relate to the coal business.

Second characteristic: large energy-intensive customers. We are a company that has a tradition of supplying steel companies, auto companies, major users of electricity. So, many of our non-utility businesses are around services to those large energy-intensive customers. Third, we continue to be fairly geographically focused because we do believe that energy markets continue to be regional and not national in scope. We generally focus on the industrial Midwest, though we are starting to branch out a little bit from that East and a little bit down to the industrial South, but [we are] largely focused in the Midwest.

And finally, we are focused on non-utility businesses that have attractive competitive dynamics. By that I mean business lines where there might only be two or three competitors, not 20 or 30 competitors. Back in the day when people were putting power plants on the market, and all of these people were bidding for them, we decided that you are never going to be able to build a business by going out and being the highest bidder on one of these things and trying to make money off of it. For example, we provide energy services to a number of auto companies-compressed air, steam, chilled water-those sorts of energy services that not a lot of people are talking about but can be very lucrative. We did a deal last year. It was a $300-plus million deal with DaimlerChrysler to supply energy services at eight Midwest facilities. So, it is that kind of non-utility business that we are focusing on…

Fortnightly Of the businesses that you have, what are the top three earners, and how do you think that will change in the next five years?

Earley Good question because it is going to change. Around half of our net income comes from our synfuels business. Synfuel is the production of coal fuel from marginal useable coal. It is the stuff that might not be shipped. You mix it with good coal and you process it into charcoal-like briquettes. This is then a very useable fuel. Because of the perceived benefits of using this marginal coal, Congress authorized tax credits for this. We have a number of synfuel facilities that produce synfuels and a large number of tax credits. We use some of the tax credits ourselves. But largely we sell off interest in these plants to companies that can use the tax credits.

Fortnightly The Internal Revenue Service (IRS) has recently placed the synfuel industry under a microscope, questioning the scientific validity as to whether the companies are meeting the criteria to claim tax credits. How did the recent IRS initiative affect DTE Energy?

Earley It didn't affect us at all. As long as you follow the rules, you are entitled to the tax credits. The problems that came up were people that didn't follow the rules. One of the requirements was that you had to have the facility in-service by a certain date. So, if you didn't meet the