NEWARK, N.J., Feb. 23, 2012 /PRNewswire/ -- Public Service
Enterprise Group (PSEG) reported today 2011 Income from Continuing
Operations of $1,407 million or
$2.77 per share as compared to Income
from Continuing Operations of $1,557
million or $3.07 per share for
2010. Including Income from Discontinued Operations ($96 million or $0.19 per share), PSEG reported Net Income for
2011 of $1,503 million or
$2.96 per share compared to Net
Income for 2010 of $1,564 million or
$3.08 per share. Operating
Earnings for the year 2011 were $1,389
million or $2.74 per share
compared to 2010 Operating Earnings of $1,584 million or $3.12 per share.
PSEG also reported Income from Continuing Operations and Net
Income for the fourth quarter of 2011 of $360 million, or $0.71 per share. This compares to fourth
quarter 2010 Income from Continuing Operations of $290 million, or $0.57 per share. Including a loss on Discontinued
Operations ($8 million, or
$0.01 per share), PSEG reported Net
Income for the fourth quarter of 2010 of $282 million, or $0.56 per share. Operating Earnings for the
fourth quarter of 2011 were $237
million, or $0.47 per share
compared to fourth quarter 2010 Operating Earnings of $303 million, or $0.60 per share.
"We closed out the year on a strong note with results at the
upper end of our guidance," said Ralph
Izzo, chairman, president and chief executive officer.
He went on to say, "2011 was a year of significant
accomplishment as we build an energy infrastructure for the future
despite challenging conditions. We received approval to renew
and extend the Nuclear Regulatory Commission (NRC) operating
licenses for our Hope Creek and
Salem stations. Our Hope Creek nuclear generating station
exceeded its best annual generation operating at a 98.7% capacity
factor. Record generation from Power's combined cycle fleet
overcame weakness in coal-related generation demonstrating the
benefits of the fleet's fuel diversity. PSE&G's strong,
customer-focused operations withstood the impacts of two major
storms in the second half of 2011. Through focused planning
and preparation, and with a highly skilled workforce, we restored
hundreds of thousands of customers quickly and safely in both
storms. We made progress on our capital programs investing
$2.1 billion in 2011 as we near
completion in 2012 of 400 MW of new peaking capacity in
New Jersey and Connecticut. Major transmission projects
designed to increase reliability remain on track for service in
2015. In addition, we are expanding our interest in solar
with the planned $75 million
investment in a 25 MW facility in Arizona."
PSEG believes that the non-GAAP financial measure of "Operating
Earnings" provides a consistent and comparable measure of
performance of its businesses to help shareholders understand
performance trends. Operating Earnings exclude the impact of
returns/(losses) associated with Nuclear Decommissioning Trust
(NDT) investments and Mark-To-Market accounting as well as other
one-time items not related to ongoing operations. The table
below provides a reconciliation of PSEG's Net Income to Operating
Earnings (a non-GAAP measure) for the full year and fourth quarter.
See Attachment 12 for a complete list of items excluded from
Income from Continuing Operations in the determination of Operating
Earnings.
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|
PSEG
CONSOLIDATED EARNINGS (unaudited)
|
|
Full-Year
Comparative Results
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|
2011 and
2010
|
|
|
|
|
Income
|
|
Diluted
Earnings
|
|
|
($millions)
|
|
Per
Share
|
|
|
2011
|
2010
|
|
2011
|
2010
|
|
Net Income
|
$1,503
|
$1,564
|
|
$2.96
|
$3.08
|
|
(Income) Loss from Discontinued
Ops
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(96)
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(7)
|
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(0.19)
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(0.01)
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|
Income From Continuing
Ops
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$1,407
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$1,557
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$2.77
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$3.07
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Reconciling Items:
Lease Transaction Loss and
related activity
|
173
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--
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0.34
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--
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MTM and Other Items
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( 191)
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27
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(0.37)
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0.05
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Operating Earnings
(Non-GAAP)
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$1,389
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$1,584
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$2.74
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$3.12
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|
|
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Avg.
Shares
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507M
|
507M
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PSEG
CONSOLIDATED EARNINGS (unaudited)
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|
Fourth
Quarter Comparative Results
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2011 and
2010
|
|
|
|
|
Income
|
|
Diluted
Earnings
|
|
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($millions)
|
|
Per
Share
|
|
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2011
|
2010
|
|
2011
|
2010
|
|
Net Income
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$360
|
$282
|
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$0.71
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$0.56
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|
Loss from Discontinued
Ops
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--
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8
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--
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0.01
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Income From Continuing
Ops
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$360
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$290
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|
$0.71
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$0.57
|
|
Reconciling
Items:
Lease Transaction Loss and
related activity
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3
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--
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|
--
|
--
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|
MTM and Other Items
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(126)
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13
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(0.24)
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0.03
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Operating Earnings
(Non-GAAP)
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$237
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$303
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$0.47
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$0.60
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|
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Avg.
Shares
|
507M
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507M
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|
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|
|
|
|
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"We are issuing operating earnings guidance for 2012 of
$2.25 - $2.50 per share," said
Ralph Izzo, chairman, president and
chief executive officer. He said that, "the contribution to
earnings from our regulated business is expected to grow
year-over-year; however, it will not be enough to offset the impact
of lower power prices on our consolidated results. We have
made progress on our operational, capital investment and financial
goals in 2011, which will take us through this period of low power
prices, and provide for sustainable growth in value over the long
term. The Board of Directors recent decision on the common
stock dividend established an indicated annual rate of $1.42 per share for 2012, a 3.6% increase.
The decision represents a change in our dividend policy.
We are moving from a strict earnings payout based approach to
one that takes into consideration the growing contribution to
earnings and cash from our regulated operations and continued cash
flow from our generation business. The dividend increase
represents a re-set of the annual dividend rate."
The following table outlines PSEG 2011 operating earnings by
subsidiary and expectations for 2012.
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2012
Guidance and 2011 Operating Earnings
($
millions)
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2012E
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2011A
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PSEG Power
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$575-$665
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$845
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PSE&G
|
$530-$560
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$521
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PSEG Energy
Holdings/Parent
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$35-$45
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$23
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|
Operating Earnings
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$1,140-$1,270
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$1,389
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|
Earnings Per Share
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$2.25-$2.50
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$2.74
|
|
|
|
|
|
|
|
|
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Operating Earnings Review and Outlook by Operating
Subsidiary
See Attachments 6 and 7 for detail regarding the
quarter-over-quarter and year-over-year earnings reconciliations
for each of PSEG's businesses.
PSEG Power
PSEG Power reported operating earnings of $134 million ($0.27
per share) for the fourth quarter of 2011 bringing full year
operating earnings to $845 million
($1.67 per share). On a
comparative basis, PSEG Power reported operating earnings of
$212 million ($0.42 per share) and $1,091 million ($2.15 per share) for the fourth quarter and full
year 2010 respectively.
Power's quarterly earnings were affected primarily by a
quarter-over-quarter decline in realized energy and capacity
prices. A decline in capacity prices to $110/MW-day on June 1,
2011 from $174/MW-day reduced
Power's earnings in the quarter by $0.07 per share. A decline in energy prices
under the Basic Generating Service contract (BGS) to $94.30 per MWh, also effective on June 1, 2011, from the prior $111.50 per MWh, as well as migration and other
recontracting efforts reduced earnings in the quarter by
$0.05 per share. Demand in the
fourth quarter was affected by above normal temperatures in the
2011 fourth quarter which compared unfavorably with below normal
temperatures in the year ago quarter. A 4.8% decline in
volume lowered earnings comparisons by $0.01 per share. Higher depreciation
expense and lower capitalized interest reduced Power's earnings by
$0.02 per share. Power continued to
sell surplus coal supply. These sales added $0.02 per share to results in the quarter.
A premium paid on the early extinguishment of debt resulted
in higher other deductions in the quarter and reduced earnings by
$0.02 per share. An increase in
operating and maintenance expense reduced Power's earnings by
$0.01 per share. Included in
Power's operating and maintenance expense in the fourth quarter is
$0.03 per share of expense associated
with the cancellation and re-negotiation of a major contractual
arrangement for parts and services at our combined cycle
facilities. Other miscellaneous items added $0.01 per share to earnings.
Customer migration represented an estimated 34% of BGS volumes
at year-end. This level of migration was in line with
expectations, and compared with migration levels of 33% at the end
of September 2011 and 27% at the end
of 2010. Despite the small increase in customer migration
levels during the fourth quarter, Power's energy margin and
earnings were reduced by $0.02 per
share in the quarter as a result of migration. The impact on
earnings is attributed to the increase in migration
quarter-over-quarter coupled with a decline in market prices in the
fourth quarter of 2011 relative to the year-ago period.
PSEG Power's nuclear and combined cycle fleet continued their
strong performance with generation for both improving
quarter-over-quarter. This strength offset a decline in the
dispatch of Power's intermediate load coal units, which continue to
be affected by a decline in dark spreads and low gas prices.
PSEG Power's nuclear fleet operated at an average capacity
factor of 91.3% during the fourth quarter resulting in a capacity
factor for 2011 of 92.8%. The Hope Creek nuclear facility,
100%-owned by PSEG Power, produced record levels of generation in
2011 operating at a capacity factor 98.7% for the year. The
combined cycle fleet's strong fourth quarter operation resulted in
a capacity factor of 54% for the year.
Power's forecast output for 2012 of 53 TWh is approximately 75%
-80% hedged at an average price of $59 per MWh compared with an average hedge price
in 2011 of $68 per MWh. For
2013, forecast output of 52 TWh is approximately 55% - 60% hedged
at an average price of $53 per MWh.
The forecast represents a decline in output from 2011's
output of 54 TWh given the sharp decline in natural gas prices and
compression in dark spreads which we expect may continue to limit
the output from Power's coal-fired units in the near-term. We
forecast Power's output returns to 54 TWh in 2014. Power has hedged
20% - 25% of that year's forecast output at an average price of
$57 per MWh.
Power's operating earnings for 2012 are forecast at $575 million - $665 million. The decline in
forecasted operating earnings is due to lower energy prices in 2012
due to the roll-off of high-priced legacy hedges. The
recently completed BGS auction for PSE&G cleared at an average
price of $83.88 per MWh effective on
June 1, 2012 and will replace the BGS
contract for $103.72 per MWh which
expires on May 31, 2012. The
forecast (and our hedge data) reflect assumed customer migration
levels of 36% - 40% at the end of 2012 versus 34% at year-end
2011.
PSE&G
PSE&G reported operating earnings of $99 million ($0.19
per share) for the fourth quarter bringing full year operating
earnings to $521 million
($1.03 per share). On a
comparative basis, PSE&G reported operating earnings of
$83 million ($0.16 per share) and $430
million ($0.85 per share) for
the fourth quarter and full year 2010, respectively.
PSE&G's results benefited from increased levels of capital
investment and a tight control on operating expenditures which
offset the impact of below normal weather on sales and the cost of
storm-related outages. An annualized increase in transmission
revenue of $45 million effective on
January 1, 2011 added $0.02 per share to earnings in the quarter.
A return on investments made under capital adjustment clauses
supporting investments in energy efficiency, solar and electric and
gas infrastructure programs added $0.01 per share to results. Warmer weather
compared to the fourth quarter of 2010 reduced earnings by
$0.02 per share. A decline in
pension related costs more than offset the impact of the
October 2011 snow storm and increased
tree trimming work on operating expenses. Higher levels of
capital investment led to an increase in depreciation expense which
reduced quarterly earnings comparisons by $0.01 per share. A lower tax rate and other
items added $0.03 per share to
results.
Electric and gas sales comparisons in the fourth quarter were
affected by warm weather and weak economic conditions.
Heating degree days in the fourth quarter were 24% below the
level experienced in 2010's fourth quarter and 18% below normal.
Weather normalized electric sales declined 4.4% in the
quarter from year-ago levels resulting in an estimated 2.3% decline
in weather normalized electric sales for the year. The
decline was led by reduced demand from the commercial and
industrial sectors. On a weather normalized basis, gas sales
increased 0.8% in the fourth quarter resulting in 1.9% growth for
the year. The improvement in gas sales was experienced in the
industrial sector as demand from residential customers was flat
quarter-over-quarter.
The Federal Energy Regulatory Commission (FERC) granted
incentive rate-making treatment for the $895
million North-East Grid Reliability Project at the end of
2011. The rate-making treatment, effective on January 1, 2012, provides for construction work
in progress in rate base, recovery of abandonment costs and a 25
basis point adder to return on equity.
PSE&G's operating earnings for 2012 are forecast at
$530 million - $560 million compared
to 2011's operating earnings of $521
million. Operating earnings will be influenced by
higher transmission revenues, higher levels of capital investment
and a forecasted increase in pension expense.
PSEG Energy Holdings and Parent
PSEG Energy Holdings reported a loss in operating earnings for
the fourth quarter of $1 million
compared to operating earnings of $5
million ($0.01 per share) for
the fourth quarter of 2010. The results for the fourth
quarter brought Energy Holdings' full year 2011 operating earnings
to $5 million ($0.01 per share). The results for 2011
compare with 2010's operating earnings of $49 million ($0.10
per share). Holdings' fourth quarter operating earnings
reflect our on-going efforts to reduce the legacy portfolio which
results in a decline in lease income and the absence of asset sales
gains than recorded in the year ago quarter.
PSEG entered into a definitive agreement with the Internal
Revenue Service (IRS) in January 2012
that settles the tax treatment for challenged lease transactions
(LILO/SILO) for all tax years. In addition, the company
closed the federal tax audit for the period 1997 through 2003.
These agreements were consistent with expectations, and will
not have a material impact on earnings in 2012, but should
eventually yield a net refund of approximately $100 million in cash.
Energy Holdings reached a settlement agreement in December 2011 with Dynegy in regard to the lease
arrangements for the Roseton and Danskammer facilities leased to
subsidiaries of Dynegy Holdings LLC (DH). The agreement calls
for the payment by DH of $7.5 million
(received in January 2012), and an
agreed $110 million claim payable
through a mix of cash, senior secured notes and mandatorily
convertible notes. The agreement and the amount received are
subject to final approval of the DH re-organization by the
Bankruptcy Court.
Energy Holdings, also in December, sold its investment in an
office building in Denver,
Colorado for $215 million.
The sale resulted in an after-tax gain of $34 million recorded as part of 2011's Income
from Continuing Operations but is not included in Holdings
Operating Earnings.
Energy Holdings operating earnings for 2012 will be consolidated
with the Parent company. On this basis, operating earnings
are forecast at $35 million - $45
million compared with consolidated operating earnings in
2011 of $23 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 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 the demand for or price of the capacity and
energy that we sell into wholesale electricity markets,
- 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,
- any inability to achieve or continue to sustain, our expected
levels of operating performance,
- 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)