NEWARK, N.J., Aug. 3, 2011 /PRNewswire/ -- Public Service
Enterprise Group (PSEG) reported today Second Quarter 2011 Income
from Continuing Operations of $320
million or $0.63 per share as
compared to $222 million or
$0.44 per share for the Second
Quarter of 2010. Including Income from Discontinued
Operations, PSEG reported Net Income for the Second Quarter 2011 of
$323 million ($0.63 per share) versus $224 million ($0.44
per share) for the Second Quarter of 2010. Operating Earnings
for the second quarter of 2011 were $301
million or $0.59 per share
compared to the Second Quarter of 2010 Operating Earnings of
$321 million or $0.63 per share.
PSEG believes that the non-GAAP financial measure of "Operating
Earnings" provides a consistent and comparable measure of
performance of its businesses to help shareholders understand
performance trends. Operating Earnings exclude the impact of
returns/(losses) associated with Nuclear Decommissioning Trust
(NDT), Mark-to-Market (MTM) accounting and other material one time
items. The table below provides a reconciliation of PSEG's
Net Income to Operating Earnings for the second quarter. See
Attachment 12 for a complete list of items excluded from Income
from Continuing Operations in the determination of Operating
Earnings.
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|
PSEG
CONSOLIDATED EARNINGS (unaudited)
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|
Second
Quarter Comparative Results
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2011 and
2010
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|
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Income
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Diluted
Earnings
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($millions)
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Per
Share
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|
|
2011
|
2010
|
|
2011
|
2010
|
|
Operating Earnings
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$301
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$321
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|
$0.59
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$0.63
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|
Reconciling Items
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19
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(99)
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0.04
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(0.19)
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Income from Continuing
Operations
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$320
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222
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0.63
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$0.44
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|
Income from Discontinued
Operations
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$3
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$2
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-
|
-
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|
Net Income
|
$323
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$224
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$0.63
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$0.44
|
|
|
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Avg.
Shares
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507M
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507M
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|
|
|
|
|
|
|
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"We have achieved significant operational and regulatory success
during the past quarter. Our investment program, a strong
balance sheet and the operational focus of a dedicated workforce
position PSEG to be a reliable supplier of low-cost, clean energy
for the long-term," said Ralph Izzo,
chairman, president and chief executive officer of PSEG.
He went on to say, "Our results for the first half of 2011
continue to support our forecast of operating earnings for the full
year of $2.50 - $2.75 per share."
Operating Earnings guidance by company for the full year is as
follows:
|
|
Operating
Earnings
($ million,
except EPS)
|
|
|
2011E
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|
2010A
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|
PSEG Power
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$765 -
$855
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$1,091
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PSE&G
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$495 -
$520
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$430
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PSEG Energy Holdings
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$0 -
$5
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$49
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Parent
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$5 -
$15
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$14
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Total
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$1,265-
$1,395
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$1,584
|
|
|
|
|
|
|
Earnings Per Share
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$2.50-
$2.75
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$3.12
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Ralph Izzo also announced an
increase in PSEG's capital investment program to approximately
$6.9 billion over 2011-2013 compared
to its prior forecast level of spending of $6.7 billion during this period. As part of
the increase in spending, PSE&G's capital budget is forecast to
increase 15% from previously forecast levels to $5.2 billion. PSEG Energy Holdings'
forecast level of capital spending during this period has been
reduced to $40 million from
$570 million as PSEG Power's forecast
level of spending remains unchanged at approximately $1.5 billion.
"Our increased spending program," said Ralph Izzo, "aligns the interests of PSEG with
those of our customers, employees and shareholders.
Supportive regulation at the state and federal level has been
a foundation of our investments. The BPU's recent approval of
programs accelerating our investment in electric and gas
infrastructure and energy efficiency provides the continued
opportunity to support jobs and the economic growth of the state.
FERC's approval of incentive rate making treatment on major
transmission projects supports system reliability. Our strong
balance sheet provides the foundation to finance this growth.
A program of continuous engagement with our employees has led
to the resolution of labor contracts which has been an important
contributor in our ability to control the growth in costs, provide
the returns required by the market and support growth from our
investment program."
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 $186 million ($0.36
per share) for the second quarter of 2011 compared with operating
earnings of $229 million
($0.45 per share) for the second
quarter of 2010.
Power's earnings were affected by a quarter-over-quarter decline
in realized energy and capacity prices. A decline in capacity
prices to $110 MW/Day from
$174 MW/Day on June 1, 2011 reduced Power's earnings by
$0.02 per share. A decline in
energy prices under the Basic Generation Service (BGS) contract,
also effective on June 1, 2011, to
$94.30/MWh from $111.50/MWh and other hedges reduced earnings by
$0.03 per share. A 6% decline
in volume in comparison to abnormally warm conditions during the
year ago period reduced earnings by $0.02 per share. An increase in customer
migration from the BGS contract reduced earnings by $0.01 per share. Higher depreciation
expense coupled with a decline in capitalized interest associated
with the commercial operation of the back-end technology at
Hudson and Mercer reduced Power's earnings by
$0.02 per share. An increase in
operation and maintenance expense on the fossil stations reduced
earnings by $0.01 per share. A
decline in trading related losses and other miscellaneous items
improved Power's earnings by $0.02
per share.
PSEG Power's nuclear fleet operated at an average capacity
factor of 90.3% during the second quarter of 2011 compared to an
average capacity factor of 92.6% in the year ago quarter. The
performance for the quarter resulted in a capacity factor for the
first half of 2011 of approximately 94.6% compared with a capacity
factor of 95% for the year ago period. Availability in the
quarter was mainly affected by a 29-day refueling outage at
Salem 2. A decline in
weather-related demand and higher costs reduced the dispatch of
PSEG Power's fossil fleet which resulted in a 10% reduction in
generation from the fossil fleet during the quarter.
The Nuclear Regulatory Commission (NRC) approved PSEG Nuclear's
request to extend the operating license of the Hope Creek
Generating Station and both Salem
units an additional 20 years. Hope
Creek's operating license has been extended through 2046.
Salem units 1 and 2 are now licensed through 2036 and 2040,
respectively. The license renewal of these important assets
will support the availability of low-cost, carbon-free energy.
We have lowered our full-year estimate of customer migration to
an average of 34% from 35%. Our updated estimate assumes
year-end customer migration levels of 37% - 39%. The
reduction in estimated levels of customer migration has not had a
major impact on Power's hedge profile. For the balance of
2011, Power's base load output is fully hedged at an average price
of $68 per MWh; with additional
hedges in place on intermediate and peaking generation,
approximately 70% -75% of total expected generation for that period
is hedged at an average price of $68
per MWh. Power continues to forecast total generation for 2011 of
55 TWh. For 2012, hedges are in place for approximately 75% -
80% of expected base-load generation of 36 TWh at an average price
of $64 per MWh resulting in
approximately 45% -50% of expected total 2012 generation of 56 TWh
hedged at an average price of $64 per
MWh. For 2013, approximately 35% - 40% of anticipated
base-load output of 36 TWh is hedged at an average price of
$63 per MWh which results in hedges
on approximately 20% - 25% of expected total generation of 56-58
TWh at an average price of $63 per
MWh.
PSE&G
PSE&G reported operating earnings of $105 million ($0.21
per share) for the second quarter of 2011 compared with operating
earnings of $75 million ($0.15 per share) for the second quarter of
2010.
PSE&G's results were driven by rate relief and improved
returns on higher levels of capital investment. An increase
in electric and gas rates that went into effect on June 7, 2010 and July 9,
2010, respectively, improved earnings by $0.01 per share. An annualized increase in
transmission revenue of $45 million
effective on January 1, 2011 added
$0.01 per share to results. A
return on investments made under capital adjustment clauses
supporting renewables and electric and gas infrastructure programs
added $0.02 per share to earnings.
Quarter-over-quarter earnings comparisons were also aided by
the implementation, as part of the rate case settlement, of the gas
weather normalization clause and warmer than normal weather in the
prior quarter. Together, these items added $0.02 per share to earnings. Lower volumes
quarter over quarter reduced earnings by $0.01 per share. A reduction in operating
and maintenance expense as a result of a decline in pension costs
and the absence of a write-off in the second quarter of 2010
combined to add $0.03 per share to
earnings. An increase in depreciation expense as a result of
higher levels of capital spending reduced earnings by $0.01 per share. Other miscellaneous items
combined to reduce earnings by $0.01
per share.
The Federal Energy Regulatory Commission (FERC) granted approval
for incentive rate treatment effective on June 14, 2011 for three of five 230-kv projects
with a total capital investment of about $1.0 billion. The incentive rate treatment
covers approximately 80% of our request, and provides for recovery
of Construction Work In Progress and 100% recovery of
prudently-incurred abandonment costs.
PSE&G has increased its capital spending for 2011-2013 to
$5.2 billion from $4.6 billion. The adjusted forecast
reflects the NJ Board of Public Utilities' recent decision to
approve $368 million of increased
spending on energy efficiency programs and electric and gas
infrastructure. The forecast also includes an additional
$96 million of spending on electric
and gas distribution, and an update of forecast spending on certain
transmission projects. The revised capital program will
provide the opportunity for annual rate base growth of 11.5% from
year-end 2010 over this period.
PSEG Energy Holdings
PSEG Energy Holdings reported operating earnings of $5 million ($0.01
per share) for the second quarter of 2011 versus operating earnings
of $12 million ($0.02 per share) during the second quarter of
2010. The decline in operating earnings for the quarter
reflects the absence of tax benefits recognized in the second
quarter of 2010 associated with the start-up of solar projects in
Ohio and Florida.
Roseton OL, LLC and Danskammer OL, LLC, indirect subsidiaries of
PSEG (the "PSEG Entities"), are the owner-lessors of the Roseton
and Danskammer electric generating facilities, which are leased to
indirect subsidiaries of Dynegy and Dynegy Holdings Inc. ("DHI").
DHI has guaranteed the payment obligations of the lessees to
the PSEG entities. As a result of DHI's proposed transfer of
substantially all of its coal and natural gas-fired generation
assets, other than the Roseton and Danskammer facilities, to new
"bankruptcy remote" subsidiaries, the PSEG entities filed suit
against DHI in the Delaware Court
of Chancery to halt DHI's proposed transfer and protect is rights
under the DHI guarantees. The PSEG Entities request for a
temporary restraining order was denied on Friday, July 29, 2011 and they have since sought
review with the Delaware Supreme Court. As of June 30, 2011, the PSEG Entities had a gross
equity investment at risk in the Roseton and Danskammer leases of
$264 million. A foreclosure
event could result in an after-tax charge of $170 - $180 million. As part of this
potential foreclosure event, PSEG could be required to pay
approximately $100 million to satisfy
income tax obligations. This potential cash tax obligation is
fully reflected in the overall estimate of the aggregate after-tax
charge noted above.
Other Items
PSEG Power LLC closed on the sale of its 1,000 MW Odessa
gas-fired generating plant on July 18,
2011 for approximately $335
million, subject to final adjustments for working capital.
The closing of the Odessa
sale completed the Texas asset
sale process announced by PSEG Power in early 2011. In
March 2011, PSEG Power closed the
sale of the 1,000 MW Guadalupe plant for approximately $352 million.
The following attachments can be found on www.pseg.com:
Attachment 1 - Operating Earnings and Per Share Results by
Subsidiary
Attachment 2 - Consolidating Statements of Operations
Attachment 3 - Consolidating Statements of Operations
Attachment 4 - Capitalization Schedule
Attachment 5 - Condensed Consolidated Statements of Cash
Flows
Attachment 6 - Quarter-over-Quarter EPS Reconciliation
Attachment 7 – Year-over-Year EPS Reconciliation
Attachment 8 - Generation Measures
Attachment 9 – Retail Sales and Revenues
Attachment 10 – Retail Sales and Revenues
Attachment 11 - Statistical Measures
Attachment 12 – Reconciling Items Excluded from Continuing
Operations to Compute Operating Earnings
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 and a potential shift away
from competitive markets toward subsidized market mechanisms,
transmission planning and cost allocation rules, including rules
regarding how transmission is planned and who is permitted to build
transmission in the future, 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 general developments in
the nuclear power industry, including various impacts from any
accidents or incidents experienced at our facilities or by others
in the industry 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, or the credit quality
of our counterparties,
- 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,
- adverse changes in the demand for or price of the capacity and
energy that we sell into wholesale electricity markets,
- increase in competition in energy markets in which we
compete,
- challenges associated with recruitment and/or retention of a
qualified workforce,
- adverse performance of our decommissioning and defined benefit
plan trust fund investments and changes in discount rates and
funding requirements, and
- 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.
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)