NEWARK, N.J., Nov. 1, 2011 /PRNewswire/ -- Public Service
Enterprise Group (PSEG) today reported third quarter 2011 Income
from continuing operations of $265
million or $0.52 per share as
compared to $547 million or
$1.08 per share for the third quarter
of 2010. Income from continuing operations for the third
quarter of 2011 includes an after-tax charge of $170 million ($0.34
per share) related to the reserve for Energy Holdings' lease
receivable from Dynegy. Including Income from Discontinued
Operations, PSEG reported Net Income for the third quarter 2011 of
$294 million or $0.58 per share versus $567 million or $1.12 per share for the third quarter 2010.
Operating earnings for the third quarter of 2011 were
$420 million or $0.83 per share compared to the third quarter of
2010 operating earnings of $521
million or $1.03 per
share.
PSEG believes that the non-GAAP financial measure of "Operating
Earnings" provides a consistent and comparable measure of
performance of its businesses to help shareholders understand
performance trends. Operating Earnings exclude the impact of
returns/(losses) associated with Nuclear Decommissioning Trust
(NDT), certain Mark-to-Market (MTM) accounting and other material
one time items. The table below provides a reconciliation of
PSEG's Net Income to Operating Earnings (a non-GAAP measure) for
the third quarter. See Attachment 12 for a complete list of
items excluded from Income from Continuing Operations in the
determination of Operating Earnings.
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|
PSEG
CONSOLIDATED EARNINGS (unaudited)
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|
Third
Quarter Comparative Results
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2011 and
2010
|
|
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Income
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Diluted
Earnings
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($millions)
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Per
Share
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2011
|
2010
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|
2011
|
2010
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|
Operating Earnings
|
$420
|
$521
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$0.83
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$1.03
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|
Less: Lease Transaction
Reserve
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(170)
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--
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(0.34)
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--
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Add: Other Excluded
Items
|
15
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26
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0.03
|
0.05
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|
Income from Continuing
Operations
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$265
|
$547
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$0.52
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$1.08
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Income from Discontinued
Operations
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29
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20
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0.06
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0.04
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Net Income
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$294
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$567
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$0.58
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$1.12
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Shares
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|
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507
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507
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|
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|
|
|
|
|
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"We reported solid operating earnings for the third quarter in
spite of considerable challenges," said Ralph Izzo, chairman, chief executive officer
and president. "We experienced an historic number of customer
outages and level of system damage in the wake of Hurricane Irene.
The dedication and teamwork exhibited by our employees
supported the restoration of service to more than 800,000 customers
within five days, and assured our generating units remained on
line."
He went on to say, "Based on our results for the first nine
months of 2011, we expect operating earnings for the full year to
be at the upper end of our forecast of $2.50
- $2.75 per share."
Operating Earnings guidance by company for the full year is as
follows:
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Operating
Earnings
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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
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|
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Earnings Per Share
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$2.50-
$2.75
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$3.12
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|
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"PSEG's success during this period of low commodity prices is
primarily due to our employees' continuing focus on meeting
operational goals," said Izzo. "This provides the foundation
of our future expectations. The investments we have made to
replace inefficient, older generating units and upgrade the
environmental profile of existing facilities improves the company's
competitive position as new environmental requirements become
effective, and allows PSEG to direct its capital toward growth
opportunities."
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 $258 million ($0.51
per share) for the third quarter of 2011 compared with operating
earnings of $338 million
($0.67 per share) for the third
quarter of 2010.
Power's quarterly earnings were affected primarily by a
quarter-over-quarter decline in realized energy and capacity
prices. As reported, capacity prices declined to $110/MW-day on June 1,
2011 from $174/MW-day earlier
in the year as a result of PJM's RPM auction. This decline
reduced Power's earnings in the quarter by $0.07 per share. A decline in energy prices
within the Basic Generation Service (BGS) contract to $94.30 per MWh, also effective on June 1, 2011, from the prior $111.50 per MWh, as well as the effect of other
recontracting efforts, reduced earnings in the quarter by
$0.07 per share. A 7% decline
in volume lowered earnings comparisons by $0.02 per share. Higher depreciation expense
coupled with lower capitalized interest reduced Power's earnings by
$0.03 per share. An increase in
operation and maintenance expense due to the timing of planned
outages at the fossil stations reduced earnings by $0.01 per share. Power's earnings benefited
from the absence of trading related losses in the prior year of
$0.03 per share. Other
miscellaneous items together reduced earnings by $0.01 per share.
The dispatch of Power's intermediate-load coal units has been
affected by a decline in dark spreads and low gas prices.
Given the decline in current utilization, Power has taken
advantage of the flexibility available under the terms of one of
its coal contracts to sell supply on the open market. Power has
also restructured the contract to more closely match supply with
future coal requirements. The sale of coal in the third quarter of
2011 coupled with the absence of freight cancellation costs
incurred in the year-ago quarter benefited Power's third quarter
2011 earnings by $0.03 per share.
PSEG Power's nuclear and fossil fleets performed strongly during
the summer heat waves. PSEG Power's nuclear fleet operated at an
average capacity factor of 90.6% during the third quarter of 2011
compared to an average capacity factor of 89.4% in the year-ago
quarter. The performance for the quarter resulted in a
capacity factor for the first nine months of 2011 of 93.3% compared
with a capacity factor of 93.1% for the year-ago period.
Strong performance from the Hope Creek nuclear facility –
which operated at a capacity factor slightly in excess of 97%
during the quarter – offset the effects of a coolant system leak
and hurricane-related debris in the Delaware River on the operation
of the Salem units. The
Salem 1 nuclear facility entered a planned refueling outage on
October 23, 2011.
Customer migration represented 33% of BGS volumes at the end of
the third quarter of 2011 compared with 26% at the end of
September 2010. Although
customer migration away from the BGS contract grew during the
quarter versus year-ago levels, earnings were unaffected given a
reduction in headroom. We have lowered our full year estimate
of customer migration to an average of 32% - 33% from 34%.
Our updated estimate assumes year-end customer migration
levels of 33% - 35% versus our previous forecast of 37% - 39%.
Power's output for the remainder of 2011 is approximately 80%
hedged for this period at an average price of $68 per MWh. For 2012, hedges are in place
for approximately 50% - 55% of expected total 2012 generation of 58
TWh at an average price of $63 per
MWh. For 2013, approximately 25% - 30% of expected total
generation of 58 TWh is hedged at an average price of $61 per MWh.
PSE&G
PSE&G reported operating earnings of $154 million ($0.30
per share) for the third quarter of 2011 compared with operating
earnings of $155 million
($0.30 per share) for the third
quarter of 2010.
PSE&G's results were affected by increased capital
investment and the cost of responding to hurricane-related outages.
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
investment in renewables and electric and gas infrastructure
programs added $0.02 per share to
earnings. An increase in operation and maintenance expense
reduced earnings by $0.01 per share.
Storm-related costs and higher tree trimming expense in the
quarter amounting to $0.03 per share
partially offset a reduction in pension related costs during the
quarter. An increase in depreciation expense and the absence
of gains in the year-ago quarter reduced earnings by $0.02 per share.
PSE&G's service territory experienced days of record
breaking temperatures during the month of July. Although
temperatures reached new highs during several days, the number of
hours in the quarter experiencing peak temperatures was lower than
the levels experienced in the year-ago period. Hence, weather
had little impact on quarter-over-quarter earnings comparisons.
Weather-normalized electric sales remain weak as residential
customers conserve in response to economic conditions.
The Susquehanna-Roseland 500-kv
transmission project has been placed on a list of projects for a
new federal Rapid Response Team with the aim of coordinating and
expediting the federal permitting process.
PSEG Energy Holdings
PSEG Energy Holdings reported operating earnings of $4 million ($0.01
per share) for the third quarter of 2011 versus operating earnings
of $24 million ($0.05 per share) during the third quarter of
2010.
The decline in operating earnings for the quarter reflects the
absence of gains in the third quarter of 2010 from the termination
of leases.
Other Items
Energy Holdings has evaluated its likely recovery under the
lease arrangements for the Roseton and Danskammer generating
facilities leased to subsidiaries of Dynegy Holdings LLC (DH), a
subsidiary of Dynegy, in light of Dynegy's and DH's financial
condition and considering the overall value of the underlying
assets subject to the leases. Energy Holdings, as a result,
has fully reserved its $264 million
gross investment which resulted in an after-tax charge of
$170 million ($0.34 per share) in the third quarter. In
the event of non-payment of the lease obligations, Energy Holdings
intends to fully assert its claims against DH, its directors and
Dynegy affiliates including its claims under a tax indemnity
agreement designed to protect Energy Holdings from adverse tax
consequences should the lease structure not be maintained.
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 "will",
"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 our operations,
- 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, including in our leveraged leases,
- 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.
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
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)