DTE's SolarCurrents Expansion Ok'd

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DTE Energy Company (DTE) has received approval from the Michigan Public Service Commission (“MPSC”) for the second phase of the SolarCurrents expansion program. Under the SolarCurrents customer-owned pilot program, the company provides financial incentives for customers, who install solar energy systems on their homes and businesses.

DTE Energy's SolarCurrents program consists of two components - one is a pilot program for customer-owned solar installations that has met its goal of five megawatts (“MW”), and the other one is for utility-owned installations with a goal of 15 MW.

In the second phase of the SolarCurrents program, the company will offer an additional 2 megawatts of capacity over the next two years. The 2 MW of installations will be done in 4 installments with 500 kilowatts each over two years in January and June of 2013 and 2014. Under the first phase, approximately 600 solar energy projects were built and had a generation capacity of 5 MW. The first phase got fully subscribed in May 2011.

As a part of its utility-owned SolarCurrents program, the company also issued Request for Proposals (“RFP”) for the purchase of one or more large solar photovoltaic installation in September 2012. It is looking for photovoltaic installations in the range of 500 kilowatts to 2 megawatts.

By 2015, DTE Energy plans to add approximately 1,200 MW of renewable energy capacity. The company plans to meet the state’s goals with the help of its own projects and renewable energy purchased from other sources in the state. SolarCurrents program will contribute 20 MW, but the bulk is expected to come from wind turbines.

Detroit, Michigan-based DTE Energy Company is a holding company with subsidiaries engaged in regulated and unregulated energy businesses. Detroit Edison Company and Michigan Consolidated Gas Company are its largest regulated subsidiaries.

In October, DTE Energy reported third-quarter 2012 earnings per share of $1.31, easily beating the Zacks Consensus Estimate by 19 cents. Results improved 22.4% year over year.

Our bullish outlook for DTE Energy is supported by its stable and growing utilities and its complementary non-utility businesses. Going forward, the growth momentum will be maintained by beneficial regulatory policies in Michigan, higher authorized rates for its regulated business, growth opportunities in its un-regulated businesses and an industry-high dividend yield. The expansion of SolarCurrents program would increase the customer heads while adding to the company’s profitability.

Moreover, there are also plans to monetize its Barnett Shale assets and other properties, which would alleviate the need for external borrowings. The company presently retains a short-term Zacks #2 Rank (Buy) that corresponds with our long-term Outperform recommendation on the stock.

The company mainly competes with NRG Energy Inc. (NRG) and CenterPoint Energy Inc. (CNP).

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