UPDATE: PSEG 4Q Profit Rises, But Low Prices Hit Revenue
February 23 2012 - 1:00PM
Dow Jones News
Public Service Enterprise Group Inc. (PEG) posted higher
fourth-quarter earnings, thanks to mark-to-market gains that masked
lower earnings from power sales amid low natural gas and power
prices.
As low natural gas prices are expected to cut revenue from the
company's fleet of power plants, higher expected profit from the
company's regulated utility will offset some of the shortfall,
Ralph Izzo, PSEG chief executive said.
"We believe the progress we have made on our operational capital
investment and financial goals will take us through this period of
low power prices and provide for sustainable growth and value over
the long term," Izzo said during a conference call with
analysts.
Operating earnings at PSEG's wholesale power unit, the company's
largest business, fell by more than a third to $134 million, as low
prices, less output and other issues cost the company 15 cents a
share. Better results at the company's PSE&G utility added 3
cents a share.
PSEG has sold forward all or most of its nuclear power for 2012
and 2013, but has sold less than half the electricity from its
natural gas and coal-fired plants for 2012 and none for 2013, the
company said.
If gas and power prices remain at historic lows, companies that
sold most of their electricity under earlier contracts that locked
in higher power prices would have an advantage over rivals that
don't have such contracts and sell most of their power in
short-term sales.
PSEG forecast full-year 2012 operating earnings of $2.25 to
$2.50 a share. Analysts polled by Thomson Reuters recently expected
$2.43 a share.
Shares of PSEG were recently trading 1.2% lower at about
$30.57.
PSEG reported a profit of $360 million, or 71 cents a share, up
28% from $282 million, or 56 cents a share, a year earlier.
Excluding mark-to-market impacts, a prior-year loss at discontinued
operations and other items, operating earnings were down at 47
cents from 60 cents. Analysts polled by Thomson Reuters most
recently projected earnings of 48 cents.
-By Cassandra Sweet, Dow Jones Newswires; 415-439-6468;
cassandra.sweet@dowjones.com
--Tess Stynes contributed to this article
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