Building a 21 st Century Electric Grid February 23, 2018 1
DTE strives to provide customers with a 21 st century electric grid that is safe, highly reliable, affordable and accessible 2
Our investment plan is built around four pillars which are aimed at reducing risk, improving reliability and managing costs Strategic Pillars Desired Outcomes Tree Trimming Infrastructure Redesign Mitigate Risk Infrastructure Resilience and Hardening Technology and Automation Improve Reliability Reduce Cost 3
DTE s electric grid, built primarily from 1940 to 1970 as population growth occurred, is aging beyond its useful life Infrastructure Resilience & Hardening Historical Population Change (Indexed to 1930 Population) Selected Asset Age Summary (Years) 300 Asset Average Age Age Range Typical Life Expectancy 250 United States Substation Transformers 41 0-93 40-45 200 Michigan Circuit Breakers 48 0-87 30-40 150 Switchgear 34 0-64 35-45 100 Poles 44 0-90+ 40-50 50 Detroit System Cable 40 0-100+ 25-40 0 1940 1960 1980 2000 2020 URD Cable 2 23 0-50+ 25-35 4
Failures per Mile per Year Many assets are failing at much higher rates, negatively impacting our customers experience Infrastructure Resilience & Hardening Underground System Cable Failure Rates Historical Failure Rates Failure Curve Age Distribution 0.20 24 22 20 0.15 0.10 0.05 18 16 14 12 10 8 6 Percent of Population 4 2 0.00 0 10 20 30 40 50 60 70 80+ 0 5
Infrastructure resilience and hardening programs are designed to address aging assets and stabilize the system Infrastructure Resilience & Hardening Select Initiatives 4.8 kv System Hardening As asset age increases, so does the likelihood of failures of critical distribution equipment a phenomenon we are experiencing with increasing regularity Aging Asset Replacement Circuit Improvement These failures have the potential to last days, and impact a large number of customers Our programs have been designed to bring DTE s asset replacement cycle on-par with industry standards 6
A key infrastructure redesign program is the conversion of the older 4.8kV system to one with modern equipment and high levels of automation Infrastructure Redesign The 4.8 kv system is older, less efficient, and associated with more trouble events Converting the 4.8kV system to a higher voltage class will reduce risk, improve reliability and reduce costs but it will require substantial investment and will take decades to complete 7
Technology and automation will bring DTE s grid operations to best-in-class standards Technology & Automation Installation of Remote Monitoring and Control Devices Continue to install field devices, providing an enhanced view of the real time state of the system Upgrade equipment to allow remote monitoring and control Modernization of the Electric System Operations Center Upgrade our System Operations Center to meet industry best practices and enhance the ability to respond to significant disruptions Implementation of an Advanced Distribution Management System Improve real-time operating decisions based on integrated data and models Provide consistent information on system conditions to all Electric Distribution groups Facilitate the integration of distributed resources 8
ADMS is an integrated technology platform that will vastly improve the way we monitor and control our electrical grid to meet customer needs Technology & Automation Advanced Distribution Management System (SCADA/DMS/OMS) Mobile Applications Geographic Information System AMI Distributed Resources Customer Information System Advanced Monitoring & Control Applications Reporting 9
DTE also actively monitors trends and performs pilots to evaluate new technologies Technology & Automation Utility-Scale Energy Storage Paired storage with solar array and deployed distributed storage as part of community energy storage demonstration project in Monroe Completed technical testing of battery and inverter technologies Evaluating additional pilot opportunities arising from decline in battery costs projects could help integrate distributed generation and EV charging, improve reliability and power quality, or defer high cost distribution investments Electric Vehicles (EVs) Designing near-term pilots to gain insights into building make-ready EV distribution infrastructure and to understand consumer behaviors and preferences. Potential pilots include: Downtown charging showcases with fast charging capabilities in Detroit and/or Ann Arbor Fast charging along a highway corridor Load management demonstrations to study the opportunity to shift charging away from peak hours, or integrate storage with EV charging 10
Cost Reliability Risk Investments are prioritized based on their impact on seven factors Impact Dimension Safety Strategic Spend Prioritization Factors Drivers Reduction in wire down events Reduction in secondary cable manhole events Reduction in major substation safety events Weight 10 Load Relief System capability to meet area load growth and system operation needs Elimination of system overload or over firm 4 Regulatory Compliance MPSC staff s recommendation (March 30, 2010 report) on utilities pole inspection program Docket U-12270 Service restoration and same circuit repetitive interruptions 4 Substation Outage Risk Reduction in extensive substation outage events that lead to large amount of stranded load for more than 24 hours 4 Reliability Reduction in number of outage events Reduction in restoration duration for outage events 3 O&M Cost Avoided costs from trouble event and truck roll reduction Preventive maintenance spend reduction 3 Reactive Capital Avoided costs from lower trouble events and truck roll reduction Avoided costs in reactive capital replacements during major equipment failures 3 11
The benefit-cost score for each investment is used to drive prioritization other factors, such as resource constraints, must also be considered Benefit Cost Score Overall Benefit-Cost Scores for Strategic Capital Programs and Projects 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 0 5 10 15 20 25 30 35 40 45 50 Project Rank Note: Tree trimming to enhanced specifications provides the highest customer benefit of any program with benefit cost score at 2,964 12