UPDATE: PSEG 2Q Profit Drops 28% On Charges; Some Demand Up
July 30 2010 - 12:51PM
Dow Jones News
Public Service Enterprise Group Inc. (PEG) second-quarter profit
dropped 28% on hedging and other impacts, but adjusted earnings
beat expectations while revenue continued to fall.
New Jersey's largest utility has seen revenue decline amid
stagnant demand. Like peers, it struggled with back-to-back years
of declining purchases as well as slumping prices for the power its
wholesale generation business sells at market-driven rates. The
sector has seen signs of improvement but faces a considerable climb
to pre-recession conditions.
The in-service date for the Susquehanna-Roseland transmission
line, which will extend from Pennsylvania to New Jersey, has been
delayed by two years because of ongoing environmental permit
reviews, PSEG said. The eastern portion of line is expected to be
operational in 2014, while the western portion should enter service
in 2015, the company said. PPL Corp. (PPL) is building the
Pennsylvania portion of the line, while PSEG is developing the New
Jersey section.
Environmental groups are challenging New Jersey regulators'
approval of the line, and the National Park Service is holding
public hearings on possible alternatives to the line.
"We are disappointed by the delay, but look forward to meeting
the region's reliability requirements in partnership with our
regulators and PJM," PSEG Chief Executive Ralph Izzo said in a
statement.
PSEG posted a profit of $224 million, or 44 cents a share, down
from $311 million, or 61 cents a share, a year earlier. Excluding
impacts from nuclear decommissioning fund-related activity and
hedging impacts, earnings rose to 65 cents from 63 cents even as
revenue dropped 4.1% to $2.46 billion.
Analysts polled by Thomson Reuters most recently forecast
earnings of 64 cents on $2.86 billion in revenue.
The utility business, Public Service Electric & Gas, saw
operating earnings jump 74% as weather conditions drove demand. But
sales to industrial customers remained weak.
At the generation segment, PSEG Power, operating profit dropped
5.5% on lower prices, though generation rose 20%.
Shares of PSEG, which affirmed its current-year earnings target,
were recently down 2.7% at $32.92.
-By Matt Jarzemsky and Christine Buurma, Dow Jones Newswires;
212-416-2240; matthew.jarzemsky@dowjones.com
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