Wayne Lafferty and Matt Mooren, energy market and utility advisors at PA Consulting, comment on DTE Energy’s plan to spin off its non-utility natural gas pipeline, storage and gathering business into an independent, publicly-traded company.
DTE Energy's Board of Directors authorized management to pursue a plan to spin off DTE Midstream, the company’s non-utility natural gas pipeline, storage and gathering business, into an independent, publicly-traded company, DTE announced Tuesday.
DTE's decision follows similar moves by Dominion, PSE&G and other utilities. Analysts pointed to potential clean energy drivers behind DTE's move.
Wayne and Matt said: "DTE’s move may be part of a wider trend, at least for a while, as many utility holding companies align evolving clean energy brands, earnings expectations and public policy. More utilities are adopting corporate [environmental, social and governance] goals that in some cases can make certain mid-stream businesses look less attractive, especially for a more pure play utility holding company."
Wayne and Matt continued: "A more pure play utility business model may also provide more stable earnings growth. These trends may lead to increased separation of midstream businesses into separately publicly-traded or private entities."