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DTE Energy Wind Farm Comes Online

DTE GE

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DTE Energy Company’s (DTE - Analyst Report) Gratiot County Wind Project has begun its full commercial operations. The farm was constructed by Livonia, Michigan based Aristeo Construction.

The farm comprises of 133 1.6 MW wind turbines from General Electric Company (GE - Analyst Report). DTE Energy owns 64 of these turbines while the remaining 69 are owned by Gratiot Wind LLC, an affiliate of Invenergy Wind LLC. Under a 20-year power purchase agreement, DTE Energy will buy the power from Invenergy's turbines.

Located on approximately 30,000 acres of private land in the townships of Wheeler, Bethany, Emerson and Lafayette, the wind farm has a generation capacity of 212.8 MW and the ability to power 50,000 Michigan homes.

Besides adding to the company’s profits, the project is eco-friendly. It will employ 14 full-time workers for its operation and maintenance. It will help the local economy through yearly lease payments to more than 240 landowners and will also contribute to the area's economic development through property tax payments, which can be used for improvements at schools, fire and police protection and road repair. Moreover, it will assist the company in meeting its goal of 10% of renewable energy by 2015 by adding 1000 MW of renewable power.

DTE Energy Company is a holding company with subsidiaries engaged in regulated and unregulated energy businesses. The company is trying to accomplish its renewable energy goals on a full fledged basis. It has begun construction of three wind farms – The Minden, Sigel and McKinley – estimated to generate 110 MW of energy. Announced in April 2011, the farms located in Huron and Sanilac counties would help expand the company’s renewable energy resources.

In April this year, the company announced that it plans to build another wind park in Huron County, which will add 110 MW. Its wind parks at Oliver and Chandler townships will add more than 500 MW to the company’s renewable energy projects. The company also has a solar energy pilot program that will likely produce approximately 20 MW.

The company is supported by its stable and growing utilities and its complementary non-utility businesses. Going forward, we expect the growth momentum to be maintained by higher rates for its regulated business and an industry-high dividend yield.

However, we prefer to remain on the sidelines due to the present unfavorable macro backdrop, lower demand for electricity, the dismal Michigan economy and pending regulatory cases. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.

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