DTE EnergyCost and Affordability

Trevor F. Lauer

Marketing Executive Council

Cost and Affordability

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Customer Satisfaction

Countermeasures

Conclusion

Affordability

Over time, Detroit Edison’s rates have increased at the same time income decreased

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• Rates are growing at a faster pace then Michigan’s Disposable Income. Disposable Income percent changes: 2008: 3.8% 2009: -0.3% 2010: 4.0%

• Drivers of Rate Increases Environmental Regulations Energy Efficiency Renewables Deskewing

• Detroit Edison’s commercial rates are in line with the national average

Electric Rates (¢/kWhr)

Disposable Income Source: U.S. Department of Commerce, Bureau of Economic Analysis

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Michigan’s unemployment rate is higher than the national average at the same time DTE Energy has increased collection efforts causing an impact on satisfaction

• 2008: 20%• 2009: 15%• 2010: 14%• YTD 2011: 14%

Customers in arrears are decreasing over time

Unemployment Rates

Source: Michigan Labor Market InformationBureau of Labor Statistics

Cost and Affordability

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Affordability

Customer Satisfaction

Countermeasures

Conclusion

DTE Energy Customer Satisfaction

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• Despite the focus on our customers and defect reduction, customer satisfaction levels have not improved

• Leading metrics, however, are showing increased customer satisfaction across our key transactions

• The current drivers impacting customers satisfaction are Electric Delivery and Corporate Image

Cost and Affordability

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Affordability

Customer Satisfaction

Conclusion

Countermeasures

DTE Energy is implementing multiple countermeasures to help customers with cost and affordability

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DTE has segmented residential into seven groups to better target customer programs and services

Affluent GreensGreens

Cash Flows

Energy Indifferent

Budget DIY

Traditionals

DIY Conservers

• Attuned to programs with environmental attributes

• Most likely to be conserve energy• Tech savvy, early adopters, use Internet

Greens

• Average knowledge with saving energy• Tend not to be early adopters• Higher income spend more for products

• Tend to be late adopters• Budget conscious• Believe it is important to save energy• May be willing to sacrifice comfort to save

money

• Feels comfort is more important than saving energy• Do not feel knowledgeable about conserving energy• Find it difficult to understand the payback of energy

efficiency

CharacteristicsVolume Programs

• Online energy management tools

• Green Currents

• Solar & PEV Programs

Energy efficiency programs

•Home energy audits

•ENERGY STAR products

• Bill management or budget programs

• Payment assistance programs

• Low-cost, no-cost energy efficiency tips

• Lower electric rate options

• Bill management or budget programs

• Payment assistance programs

443K

595K

464K

510K

340K

495K

546K

DTE Energy has segmented business customers into six major verticals to better understand and assist business customers

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• Smallest energy consumers • Mostly telecommunications, electric and gas utilities and transportation and freight service

companies

*Segmentation verticals will be revised in November based on further market analysis.

Manufacturing

FIREES

Education/Health/Government

Process Related

Retail/ Wholesale

Communication/ Utilities/ Trans

• Largest energy consumers and smallest customer segment among our service territory • Primarily Automotive, Primary and Fabricated Metals Manufacturing

• Third largest energy consumers • Primarily process businesses such as glass, chemical, rubber & plastics, paper

• Second largest energy consumers• Primarily K-12, Universities & Community Colleges, Hospitals, Assisted Living, Medical

Centers, Federal, State, County, Municipalities and Water & Sanitary businesses

• Second largest customer segment mainly consisting of big box non-food and food chains, restaurant chains, lodging and wholesale food distributors

• Largest customer group • Includes businesses such as national and regional financial institutions, insurance and real

estate, entertainment – stadiums, casinos, and theaters, and service orientated businesses.

A rigorous defect identification and resolution process has been implemented across key transactions to drive continuous improvement

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DTE Energy Overall DPMO (2011)

Key Transactions•Turn Ons/ Disconnects/Transfers•Outage•Billing•Collections

DTE’s contact strategy focuses on three key areas to deliver stellar experiences across channels

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Know the Customer Help the Customer Delight the Customer

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2

3

3 X 5 Approach

Drive a Deliberate Focus on Business Customers

Expand the Edges

• Web, Call Center, IVR• Payment, Account Inquiry,

Outage, Collection Turn On

• Segmentation• Stellar Service• Clean Handoffs• Easy Access

• Mobile• Social Media

Energy Efficiency investment will create long-term benefits for DTE Energy’s Customers

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• DTE Energy’s EE investment will reach nearly $600 million by 2015

• By 2029, program investment will provide a total of $4.5 billion of avoided costs to customers through avoided costs

• The energy efficiency programs impact on satisfaction is best measured by “helps customers save money on energy bills.” Over the past four years, customer ratings have increased

DTE Cumulative EE Investment($ millions)

Helps Customers Save Money on Energy Bills

Community outreach and employee engagement continues to be central to DTE’s strategy to helping customers

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• DTE has had a long standing effort with community outreach with a particular emphasis on Economic Development especially with suffering communities

Community Outreach

• Build long-term sustainable relationships in the community

• Establish connections within the community to help identify customers in need

• Utilize On-the-Ground activities to enhance DTE Energy image

• Build a grass-roots network of allies

Improve image of DTE Energy through community outreach

Scope

Employee Engagement

• Engaging employees helps DTE increase the number of advocates in communities

• Driving the mindset that every employee is an ambassador of DTE

• Increase employee understanding and commitment to our customer satisfaction

• Raise employee awareness of current initiatives

• Help employees see a clearer line of sight between their jobs and customer satisfaction

• Create a sense of pride in employees

Create a customer centric culture and mindset among the workforce

Scope

Examples of Community Outreach and Employee Engagement

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The Michigan Jobs & Energy Coalition was created in 2007 to work towards an energy policy

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Members

Goals

Ongoing Discussions

• Members include the Michigan Chamber of Commerce, the Michigan Manufacturers Association, the Detroit Regional Chamber, the Michigan State Building & Construction Trades Council, Consumers Energy, DTE Energy, and nearly 300 other Michigan businesses and business growth organizations

• Members of the coalition gathered together to influence state policy

• Assure stable and affordable rates in Michigan

• Create an environment where businesses can grow

• Ensure power plants are built in the state

• Implement Rate Deskewing

• DTE Energy’s account managers and regional government affairs representatives meet regularly with businesses to introduce them to the coalition and engage them in grassroots advocacy for the coalition’s goals

• MJEC representatives meet regularly with businesses and consumer groups

Cost and Affordability

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Affordability

Customer Satisfaction

Countermeasures

Conclusion

Conclusion

• Affordability continues to be a challenge in Michigan

• DTE is committed to customer satisfaction by improving customer experiences through channel management and defect reduction

• Continued focus on becoming the best operating utility across North America

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