NEWARK, N.J., July 30 /PRNewswire-FirstCall/ -- Public Service
Enterprise Group (PSEG) reported today Second Quarter 2010 Net
Income and Income from Continuing Operations of $224 million or $0.44 per share as compared to $311 million or $0.61 per share for the Second Quarter of 2009.
Operating Earnings for the second quarter of 2010 were
$331 million or $0.65 per share compared to the Second Quarter of
2009 Operating Earnings of $318
million or $0.63 per
share.
PSEG believes that the non-GAAP financial measure of "Operating
Earnings" provides a consistent and comparable measure of
performance of its businesses to help shareholders understand
performance trends. Operating Earnings exclude the impact of
returns/(losses) associated with Nuclear Decommissioning Trust
(NDT), Mark-to-Market (MTM) accounting and other material one time
items. The table below provides a reconciliation of PSEG's
Net Income to Operating Earnings (a non-GAAP measure) for the first
quarter. See Attachment 12 for a complete list of items
excluded from Income from Continuing Operations in the
determination of Operating Earnings.
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PSEG CONSOLIDATED EARNINGS
(unaudited)
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Second Quarter Comparative
Results
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2010 and 2009
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Income
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Diluted Earnings
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($millions)
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Per Share
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2010
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2009
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2010
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2009
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Net Income/Income from
Continuing Ops
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$224
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$311
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$0.44
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$0.61
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Less: Excluded
Items
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107
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7
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0.21
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0.02
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Operating Earnings
(Non-GAAP)
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$331
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$318
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$0.65
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$0.63
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Avg. Shares
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507M
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507M
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"Although our results continue to be affected by weak economic
conditions and low energy prices, our employees' dedication to
operational efficiency continues to provide important support for
our earnings," said Ralph Izzo,
chairman, president and chief executive officer of PSEG. He
went on to say, "With the implementation of an increase in electric
and gas rates at the start of the summer and extremely warm weather
conditions, we are reaffirming our operating earnings guidance for
2010 of $3.00 - $3.25 per share."
Operating Earnings guidance by company for the full year is
as follows:
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Operating
Earnings
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2010E
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2009A
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PSEG Power
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$1,060 - $1,135
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$1,205
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PSE&G
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$425 - $455
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$321
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PSEG Energy Holdings
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$30 - $40
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$43
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Parent
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$5 - $15
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$10
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Total
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$1,520 - $1,645
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$1,579
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Earnings Per Share
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$3.00 - $3.25
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$3.12
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Ralph Izzo indicated that
PSE&G has notified the PJM Interconnection that the in-service
date for the eastern portion of the Susquehanna-Roseland transmission line has been delayed by
2 years to 2014 with the in-service date for the western portion of
the line delayed until 2015. He added, "We are disappointed by the
delay, but look forward to meeting the region's reliability
requirements in partnership with our regulators and PJM." The
delays are due to on-going environmental permit reviews.
Operating Earnings Review and Outlook by Operating
Subsidiary
See Attachment 6 for detail regarding the quarter-over-quarter
reconciliations for each of PSEG's businesses.
PSEG Power
PSEG Power reported operating earnings of $239 million ($0.47
per share) for the second quarter of 2010 compared with operating
earnings of $253 million
($0.50 per share) for the second
quarter of 2009. PSEG Power's operating earnings for 2009 have been
adjusted to reflect the inclusion of the results for the
Texas gas-fired generating assets
transferred from PSEG Energy Holdings during the fourth quarter of
last year.
PSEG Power's results in the second quarter of 2010 were
supported by a 20% increase in generation. Demand increased due to
warmer than normal weather which more than offset the impact on
earnings from a decline in pricing aiding earnings by $0.02 per share. Lower realized pricing
includes the effect of customer migration from BGS. Although the
level of customer migration is consistent with the Company's
expectations, market prices for energy were lower than anticipated.
As a result, the impact on margins from customer migration
away from BGS reduced earnings by $0.01 per share quarter-over-quarter.
Included in Power's fuel expense is an impairment of excess
sulfur dioxide emissions allowances which reduced earnings by
$0.02 per share. A decline in
margin associated with other trading related activity reduced
Power's earnings during the quarter by $0.02 per share. A quarter-over-quarter
decline in depreciation and O&M more than offset an increase in
interest expense aiding earnings by $0.01 per share. An increase in the effective tax
rate reduced earnings by $0.02 per
share.
The nuclear generating units operated by PSEG Power performed at
an average capacity factor of 88% during the quarter resulting in a
capacity factor of 92.5% for the first half of the year. The
results for the quarter include the effect of a 25-day refueling
outage at Salem 1. Including
Power's 50% interest in the Peach Bottom units, the fleet operated
at an average capacity factor during the quarter of 92.6%.
Performance in the second half of the year, however, will be
impacted by an unplanned 17-day outage at Salem 1 during the month of July to repair a
transformer. The unit returned to service on July 24. The unplanned outage is expected
to reduce Salem's capacity factor
for the full year by 5%, however, given year-to-date positive
results for the rest of the nuclear fleet, the outage is expected
to lower the full year capacity factor for the fleet by
approximately 0.5%.
Generation from the coal-fired fleet increased 77% during the
quarter in response to weather-related demand. The combined
cycle fleet benefited from market opportunities, operating at an
average capacity factor of 53% in the quarter.
Power's operating earnings for 2010 are forecast at $1,060 - $1,135 million compared to operating
earnings for 2009 of $1,205 million.
Full year operating earnings will be affected by continued lower
forward energy pricing.
Power's coal and nuclear production is 100% hedged for 2010 at
an average price of $72 per MWh
versus average hedge prices in place for 2009 of $78 per MWh. Power continues to hedge its
expected generation in future years consistent with past practice.
At mid-2010, approximately 66% of Power's anticipated coal
and nuclear generation is hedged for 2011 with hedges in place for
26% of Power's anticipated coal and nuclear generation for
2012.
Power's full year earnings comparisons will also be affected by
greater than anticipated erosion in margins from BGS customer
migration as well as volume declines associated with other full
requirement contracts. The forecast includes the impact of
the unscheduled 17-day outage at Salem 1. These items will be partially
offset by an increase in generation volume, a decline in
depreciation expense and continued focus on O&M. In
addition, Power's full year earnings will reflect the impact of a
one-time increase in taxes related to the enactment of health care
legislation recognized in March 2010
along with the impairment of sulfur-dioxide emissions
allowances.
PSE&G
PSE&G reported operating earnings of $75 million ($0.15
per share) for the second quarter of 2010 compared with operating
earnings of $43 million ($0.09 per share) for the second quarter of
2009.
PSE&G's results were driven by warmer than normal weather.
The THI Index which takes temperature and humidity into
account was 41% above normal during the second quarter and 131%
higher than year ago levels. An increase in demand related
revenues aided earnings by $0.03 per
share; an increase in weather related sales added $0.01 per share. Higher transmission revenues
added $0.01 per share. A
reduction in operating and maintenance expense was offset by a
one-time $0.02 per share charge
related to expenses disallowed in the rate case. A reduction in the
effective tax rate improved earnings by $0.01 per share.
PSE&G's weather normalized electric sales showed a slight
improvement during the quarter as increased sales to the
residential and commercial sectors were largely offset by continued
weakness in the industrial sector.
PSE&G received approval from the New Jersey Board of Public Utilities (BPU) for
an increase in electric rates of $73.5
million on June 7, 2010; the
BPU subsequently approved an increase in gas rates of $26.5 million on June
18. The rate increase provides for a 10.3% return on
equity and a 51.2% equity ratio. As part of the rate
agreement, the rate of return authorized in this agreement will
also apply to the investment programs approved in 2009.
PSE&G also agreed to refund $122
million to electric customers over a 24-month period to
resolve a long-standing issue associated with the state's
de-regulation law. The refund was recognized in the second
quarter, and resulted in a charge of $0.14 per share against PSE&G's net income.
This item was excluded from our operating earnings.
PSE&G's operating earnings for 2010 are forecast at
$425 million - $455 million compared
to 2009 operating earnings of $321
million. Operating earnings will be influenced by a
full year of return on capital projects approved by the BPU in
2009, the increase in electric and gas distribution rates, an
increase in transmission revenue effective at the beginning of the
year, growth in weather normalized sales and focus on operating
expenses.
PSE&G notified PJM that it has not obtained certain
environmental approvals that are required for completion of the
Eastern and Western segments of the Susquehanna – Roseland transmission line. Consequently, at
this time, we do not expect the Eastern portion of the line to be
in service before June 2014, and we
do not expect the Western portion to be in service before
June 2015.
PSEG Energy Holdings
PSEG Energy Holdings reported operating earnings of $12 million ($0.02
per share) for the second quarter of 2010 versus operating earnings
of $21 million ($0.04 per share) during the second quarter of
2009. The results for 2009 have been adjusted to reflect the
transfer of the Texas gas-fired
generating assets to PSEG Power during the fourth quarter of
2009.
The decline in operating earnings for the quarter reflects lower
gains on lease sales and lower project earnings which together
reduced quarter over quarter earnings by $0.05 per share. Tax benefits primarily
associated with the start-up of solar projects in Ohio and Florida added $0.02 per share to earnings. A decline in
interest expense aided earnings comparisons by $0.01 per share.
PSEG Energy Holdings terminated one cross-border lease during
the quarter. The successful termination reduced Holdings
potential cash tax liability to $550
million at the end of June. In addition, Holdings has
deposited $320 million with the IRS
to defray potential interest costs associated with this disputed
tax liability, reducing our potential cash exposure to $230 million.
Holdings operating earnings for 2010 are forecast at
$30 million to $40 million compared
to 2009 operating earnings of $43
million. The decline reflects the loss of income on
terminated leases, and a reduction in gains from the termination of
leases.
Financings
PSEG completed several financings during the quarter at Power
and PSE&G with funds used to finance our capital expenditures
and redeem higher cost debt facilities.
FORWARD-LOOKING STATEMENT
Readers are cautioned that statements contained in this
presentation about our and our subsidiaries' future performance,
including future revenues, earnings, strategies, prospects,
consequences and all other statements that are not purely
historical, are forward-looking statements for purposes of the safe
harbor provisions under The Private Securities Litigation Reform
Act of 1995. When used herein, the words "anticipate",
"intend", "estimate", "believe", "expect", "plan", "should",
"hypothetical", "potential", "forecast", "project", variations of
such words and similar expressions are intended to identify
forward-looking statements. Although we believe that our
expectations are based on reasonable assumptions, they are subject
to risks and uncertainties and we can give no assurance they will
be achieved. The results or developments projected or
predicted in these statements may differ materially from what may
actually occur. Factors which could cause results or events
to differ from current expectations include, but are not limited
to:
- Adverse changes in energy industry law, policies and
regulation, including market structures, transmission planning and
rules and reliability standards.
- Any inability of our transmission and distribution businesses
to obtain adequate and timely rate relief and regulatory approvals
from federal and state regulators.
- Changes in federal and state environmental regulations that
could increase our costs or limit operations of our generating
units.
- Changes in nuclear regulation and/or developments in the
nuclear power industry generally that could limit operations of our
nuclear generating units.
- Actions or activities at one of our nuclear units located on a
multi-unit site that might adversely affect our ability to continue
to operate that unit or other units located at the same site.
- Any inability to balance our energy obligations, available
supply and trading risks.
- Any deterioration in our credit quality.
- Availability of capital and credit at commercially reasonable
terms and conditions and our ability to meet cash needs.
- Any inability to realize anticipated tax benefits or retain tax
credits.
- Changes in the cost of, or interruption in the supply of, fuel
and other commodities necessary to the operation of our generating
units.
- Delays in receipt of necessary permits and approvals for our
construction and development activities.
- Delays or unforeseen cost escalations in our construction and
development activities.
- Increase in competition in energy markets in which we
compete.
- Adverse performance of our decommissioning and defined benefit
plan trust fund investments and changes in discount rates and
funding requirements.
- Changes in technology and customer usage patterns.
For further information, please refer to our Annual Report on
Form 10-K, including Item 1A. Risk Factors, and subsequent reports
on Form 10-Q and Form 8-K filed with the Securities and Exchange
Commission. These documents address in further detail our
business, industry issues and other factors that could cause actual
results to differ materially from those indicated in this
presentation. In addition, any forward-looking statements
included herein represent our estimates only as of today and should
not be relied upon as representing our estimates as of any
subsequent date. While we may elect to update forward-looking
statements from time to time, we specifically disclaim any
obligation to do so, even if our internal estimates change, unless
otherwise required by applicable securities laws.
The following attachments can be found on www.pseg.com:
Attachment 1 - Operating
Earnings and Per Share Results by Subsidiary
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Attachment 2 - Consolidating
Statements of Operations
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Attachment 3 - Consolidating
Statements of Operations
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Attachment 4 - Capitalization
Schedule
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Attachment 5 - Condensed
Consolidated Statements of Cash Flows
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Attachment 6 -
Quarter-over-Quarter EPS Reconciliation
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Attachment 7 - Year-over-Year
EPS Reconciliation
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Attachment 8 - Generation
Measures
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Attachment 9 – Retail Sales and
Revenues
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Attachment 10 – Retail Sales and
Revenues
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Attachment 11 - Statistical
Measures
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Attachment 12 – Reconciling
Items Excluded from Continuing Operations to Compute Operating
Earnings
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Public Service Enterprise Group (NYSE: PEG) is a publicly
traded diversified energy company with annual revenues of more than
$12 billion, and three principal
subsidiaries: PSEG Power, Public Service Electric and Gas Company
(PSE&G) and PSEG Energy Holdings.
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SOURCE Public Service Enterprise Group (PSEG)