NEWARK, N.J., Aug. 1, 2018 /PRNewswire/ -- Public Service
Enterprise Group (NYSE: PEG) reported today Net Income for the
second quarter of 2018 of $269
million, or $0.53 per share as
compared to Net Income of $109
million, or $0.22 per share,
in the second quarter of 2017. Non-GAAP Operating Earnings
for the second quarter of 2018 were $325
million, or $0.64 per share,
compared to non-GAAP Operating Earnings for the second quarter of
2017 of $316 million, or $0.62 per share. Prior-year results included
costs related to the early retirement of the Hudson and
Mercer generating stations.
Ralph Izzo, chairman, president
and chief executive officer, said "PSEG's second quarter earnings
benefited once again from expanded investment at PSE&G and
ongoing focus on cost containment across PSEG. We recently
reached several significant milestones, including obtaining final
New Jersey Board of Public
Utilities (BPU) approval of PSE&G's $1.9
billion, 5-year Gas System Modernization Program II (GSMP
II); filing the utility's Energy Strong II infrastructure program;
and completing construction of Power's newest generating stations
at Keys and Sewaren. PSEG was also an active participant as
New Jersey shaped its energy
policy with the enactment of a wide ranging clean energy law that
sets ambitious targets on energy efficiency, off-shore wind,
battery storage and renewable portfolio standards that would
require use of 50% of renewable energy by 2030. Governor
Murphy also signed zero emission certificate (ZEC) legislation that
will help preserve the benefits nuclear generation provides to
New Jersey."
The table below provides a reconciliation of PSEG's Net Income
to non-GAAP Operating Earnings for the second quarter. See
Attachment 10 for a complete list of items excluded from Net Income
in the determination of non-GAAP Operating Earnings.
PSEG CONSOLIDATED
RESULTS (unaudited)
|
Second Quarter
Comparative Results
|
2018 and
2017
|
|
|
Income
|
|
Diluted
Earnings
|
|
($
millions)
|
|
Per Share
|
|
2018
|
2017
|
|
2018
|
2017
|
Net
Income
|
$269
|
$109
|
|
$0.53
|
$0.22
|
Reconciling Items*
|
56
|
207
|
|
0.11
|
0.40
|
Non-GAAP Operating
Earnings
|
$325
|
$316
|
|
$0.64
|
$0.62
|
|
|
Avg.
Shares
|
507M
|
507M
|
*See Attachment
10
|
|
|
|
|
Ralph Izzo went on to say, "With
solid financial results in the first half of 2018, we are
re-affirming our non-GAAP Operating Earnings guidance for the year
of $3.00 - $3.20 per share. The approval of
PSE&G's GSMP II combined with two recently outlined investment
programs (Energy Strong II filed in June, and Clean Energy Future
(CEF) expected to be filed later in 2018) support PSEG's projected
capital investment program of $14
billion to $17 billion over
the 2018 to 2022 period. PSEG's strong balance sheet and
financial flexibility will enable funding of this expanded capital
program over the 5-year period without the need to issue
equity."
The following table outlines PSEG's expectations for non-GAAP
Operating Earnings by subsidiary for 2018.
2018 Non-GAAP
Operating Earnings
Guidance
($ millions,
except EPS)
|
|
2018E
|
PSE&G
|
$1,000 -
$1,030
|
PSEG Power
|
$485 -
$560
|
PSEG
Enterprise/Other
|
$35 - $35
|
Non-GAAP Operating
Earnings
|
$1,520 -
$1,625
|
Non-GAAP
EPS
|
$3.00 -
$3.20
|
E =
Estimate
|
|
Non-GAAP Operating Earnings Review and Outlook by Operating
Subsidiary
See Attachments 5 and 6 for detail regarding the second quarter
and year-to-date reconciliations for each of PSEG's businesses.
PSE&G
PSE&G reported Net Income of $231
million ($0.46 per share) for
the second quarter of 2018 compared with Net Income of $208 million ($0.41
per share) for the second quarter of 2017.
PSE&G's second quarter results reflect continued, successful
execution of its infrastructure investment programs and ongoing
control of operating expenses. PSE&G's growth in
Transmission investment added $0.03
per share to quarter-over-quarter Net Income comparisons.
Recovery of investments made to enhance system resiliency under
Energy Strong and GSMP drove improved margin comparisons of
$0.02 per share. Distribution
O&M savings added $0.01 per share
over second quarter 2017 results. Changes to the accounting
treatment of the non-service component of pension and other
post-retirement benefit (OPEB) expenses resulted in a favorable
$0.02 per share comparison over
2017's second quarter. These favorable items were offset by
an increase in depreciation expense of $0.01 per share, higher interest expense of
$0.01 per share, and an increase in
taxes and other items of $0.01 versus
the second quarter of 2017.
Economic indicators for New
Jersey continued to be generally positive, supported by
gains in employment and housing data. Quarterly gas sales
were higher, influenced by cold April temperatures. On a
trailing 12-month basis, which provides longer-term trending data,
weather normalized electric sales were relatively flat while gas
sales were 2.7% higher, led by demand from the commercial
sector. Residential electric and gas customer growth
continues to trend higher at approximately 1% per year.
PSE&G received approval of its GSMP II from the BPU in May,
and expects to begin this infrastructure replacement program in
2019 to invest $1.9 billion over five
years. In early June, PSE&G filed with the BPU the second
stage of its Energy Strong Program that proposed a $2.5 billion investment in New Jersey's infrastructure to further
strengthen the utility's distribution systems to withstand storms,
improve reliability, and significantly enhance grid resiliency and
modernize an aging infrastructure.
PSE&G's pending electric and gas distribution base rate case
filed in January 2018 is progressing.
PSE&G expects to provide another routine update to its filing
with the BPU in August. In addition, three public hearings
were recently completed, and initial testimony from the BPU staff
and intervenors is expected in early August.
In support of New Jersey's
clean energy legislation enacted in late May, PSE&G continues
to develop its CEF program, a $2.9
billion, six-year proposal aligned with NJ's energy policy
goals. The CEF details PSE&G's broad range of planned
investments in energy efficiency, electric vehicle infrastructure,
and battery storage focused on achieving required savings in
electric and gas usage in a cost efficient manner to broadly
benefit our customer base.
PSE&G's forecast of Net Income for 2018 is unchanged at
$1,000 million - $1,030 million.
PSEG Power
PSEG Power reported Net Income of $41
million ($0.08 per share) for
the second quarter of 2018 compared with a Net Loss of $97 million ($0.19
per share) for the second quarter of 2017. PSEG Power's
non-GAAP Operating Earnings and non-GAAP Adjusted EBITDA for the
second quarter of 2018 were $83
million ($0.16 per share) and
$210 million, respectively, compared
to non-GAAP Operating Earnings of $97
million ($0.19 per share) and
non-GAAP Adjusted EBITDA of $261
million for the second quarter of 2017.
PSEG Power's Net Income comparison for the second quarter
reflects an increase in capacity prices of $0.03 per share. Re-contracting and lower
market demand reduced results by $0.08 per share compared with the second quarter
of 2017. Higher gas send out in response to cold April
weather added $0.01, but was offset
by $0.01 per share of lower
generation volume. Higher O&M expense of $0.02 per share reflects Power's full ownership
share of the Hope Creek nuclear refueling outage in Q2 2018
compared with its co-ownership share of the Salem nuclear refueling outage in Q2 2017,
along with other planned fossil maintenance. Lower
depreciation from cost savings associated with the early retirement
of Hudson and Mercer generating
stations along with lower interest added $0.01 per share versus the year-ago
quarter. A reduction in the corporate tax rate from the Tax
Cut and Jobs Act and other tax items improved Net Income
comparisons by $0.03 per share in the
second quarter.
Generation output declined by 5% compared with Q2 2017
reflecting the planned refueling at Hope Creek and other scheduled
maintenance outages. Power's gas-fired CCGT fleet operated at an
average capacity factor of 46% and produced 3.5 TWh of output
during the second quarter of 2018, down by 11% over the year-ago
quarter, reflecting the outages and lower market demand. Coal
generation output remained constant at 1.4 TWh and operated at an
81% capacity factor in the quarter. For the year-to-date
period, Power's nuclear fleet operated at an average capacity
factor of 92.9%, producing 15.8 TWh representing 63% of total
generation.
Power's forecast of total output for 2018 is now slightly lower
at 53 – 55 TWh from its prior estimate of 55 – 57 TWh. For
the remainder of 2018, Power has hedged 90% - 95% of total
forecasted production of 28 – 30 TWh at an average price of
$38 per MWh. For 2019, Power
has hedged 65% - 70% of forecasted production of 57 – 59 TWh at an
average price of $37 per MWh.
For 2020, Power has hedged 35% - 40% of output forecasted to be 62
– 64 TWh at an average price of $36
per MWh. The forecasted output for 2018 – 2020 includes
generation associated with 1,300 MW of new, gas-fired combined
cycle capacity at the Keys Energy Center in Maryland and Sewaren 7 in New
Jersey, as well as the mid-2019 commercial start-up of the
485 MW gas-fired CCGT at Bridgeport Harbor, Connecticut.
In May, New Jersey legislation
enabling zero emission certificates was signed into law by Governor
Murphy in an effort to preserve the economic viability of nuclear
power resources that produce over 90% of the state's carbon free
generation. The legislation calls for the BPU (within a
330-day period from enactment) to establish a collection process
for a customer charge, determine eligibility and certification of
need, and ultimately select nuclear plants to potentially receive
ZECs starting in April 2019. The BPU will rank nuclear plant
applicants based on considerations that impact fuel diversity, air
quality, and other environmental attributes. Power estimates that
if all of its New Jersey nuclear
units are selected, it could be eligible to receive ZEC revenues of
approximately $200 million per year
during each 3-year cycle.
In June 2018, the Federal Energy
Regulatory Commission (FERC) issued an order finding that PJM's
current capacity market is unjust and unreasonable because it
allows resources supported by out-of-market payments to suppress
capacity prices. FERC established a new proceeding to address
an alternative approach in which PJM would: (1) modify PJM's
minimum offer price rule (MOPR) so that it would apply to new and
existing resources that receive out-of-market payments, regardless
of resource type; and (2) establish an option that would allow, on
a resource-specific basis, resources receiving out-of-market
support to be removed from the PJM capacity market, along with a
commensurate amount of load, for some period of time. We
intend to continue to participate in this proceeding.
In July 2018, the State of New Jersey made significant changes
to its income tax laws, including imposing a temporary surtax on
corporate taxable income of 2.5% effective January 1, 2018 and 2019, and 1.5% in 2020 and
2021. The surcharge provides an exemption for public
utilities; as such PSE&G is not expected to be impacted by this
change. For the full-year 2018, the tax surcharge is expected
to have a modest negative impact on results at Power, and to a
lesser extent on Enterprise/Other, as each begins to accrue the
surcharge starting July 1,
2018.
The forecast of Power's non-GAAP Operating Earnings for 2018 and
non-GAAP Adjusted EBITDA remain unchanged at $485 million - $560
million and $1,075 million -
$1,180 million, respectively.
PSEG Enterprise/Other
PSEG Enterprise/Other reported Net Loss of $3 million ($0.01
per share) for the second quarter of 2018 compared to a Net Loss of
$2 million for the second quarter of
2017.
Non-GAAP Operating Earnings for the second quarter of 2018 were
$11 million ($0.02 per share) compared to non-GAAP Operating
Earnings of $11 million ($0.02 per share) in the second quarter of
2017.
The net loss for the second quarter of 2018 includes a pre-tax
charge of $20 million related to
ongoing liquidity challenges facing NRG REMA compared to a similar
pre-tax charge of $22 million in the
year-ago quarter. Results this quarter also reflect higher
parent interest expense, offset by tax benefits at PSEG.
For 2018, the forecast of PSEG Enterprise/Other non-GAAP
Operating Earnings remains unchanged at $35
million.
About PSEG:
Public Service Enterprise Group (NYSE:PEG) is a publicly
traded diversified energy company with annual revenue of
$9.1 billion in 2017. Its
operating subsidiaries are: Public Service Electric and Gas Company
(PSE&G), PSEG Power LLC, and PSEG Long Island.
PSE&G is New Jersey's
oldest and largest regulated gas and electric delivery utility,
serving nearly three-quarters of the state's population. PSE&G
is the winner of the ReliabilityOne Award for superior electric
system reliability.
PSEG Power LLC is an independent power producer that
generates and sells electricity in the PJM, New York and New England wholesale power
markets.
Non-GAAP Financial Measures
Management uses non-GAAP Operating Earnings in its internal
analysis, and in communications with investors and analysts, as a
consistent measure for comparing PSEG's financial performance to
previous financial results. Non-GAAP Operating Earnings exclude the
impact of returns (losses) associated with the Nuclear
Decommissioning Trust (NDT), Mark-to-Market (MTM) accounting and
material one-time items such as the revaluation of deferred tax
liabilities and the impact of the retirement of the Hudson and
Mercer coal stations on Power.
Management believes the presentation of non-GAAP Adjusted EBITDA
for Power is useful to investors and other users of our financial
statements in evaluating operating performance because it provides
them with an additional tool to compare business performance across
companies and across periods. Management also believes that
non-GAAP Adjusted EBITDA is widely used by investors to measure
operating performance without regard to items such as income tax
expense, interest expense and depreciation and amortization, which
can vary substantially from company to company depending upon,
among other things, the book value of assets, capital structure and
whether assets were constructed or acquired. Non-GAAP Adjusted
EBITDA also allows investors and other users to assess the
underlying financial performance of our fleet before management's
decision to deploy capital. Non-GAAP Adjusted EBITDA excludes the
same items as our non-GAAP Operating Earnings measure as well as
income tax expense, interest expense and depreciation and
amortization.
See Attachments 10 and 11 for a complete list of items excluded
from Net Income in the determination of non-GAAP Operating Earnings
and non-GAAP Adjusted EBITDA. The presentation of non-GAAP
Operating Earnings and non-GAAP Adjusted EBITDA is intended to
complement, and should not be considered an alternative to the
presentation of Net Income, which is an indicator of financial
performance determined in accordance with GAAP. In addition,
non-GAAP Operating Earnings and non-GAAP Adjusted EBITDA as
presented in this release may not be comparable to similarly titled
measures used by other companies.
Due to the forward looking nature of non-GAAP Operating Earnings
and non-GAAP Adjusted EBITDA guidance, PSEG is unable to reconcile
these non-GAAP financial measures to the most directly comparable
GAAP financial measure. Management is unable to project certain
reconciling items, in particular MTM and NDT gains (losses), for
future periods due to market volatility.
The following attachments can be found on www.pseg.com.
Attachment 1 - Consolidating Statements of Operations – 3
months
Attachment 2 - Consolidated Statement of Operations – 6 months
Attachment 3 - Capitalization Schedule
Attachment 4 - Condensed Consolidated Statements of Cash Flows
Attachment 5 - Quarter-over-Quarter EPS Reconciliation
Attachment 6 - Year-over-Year EPS Reconciliation
Attachment 7 - Retail Sales and Revenues – Electric and Gas
Attachment 8 - Generation Measures
Attachment 9 - Statistical Measures
Attachment 10 - Consolidated Operating Earnings (non-GAAP)
Reconciliation
Attachment 11 - PSEG Power Operating Earnings (non-GAAP) and
Adjusted EBITDA (non-GAAP) Reconciliation, PSEG Enterprise/Other
Operating Earnings (non-GAAP) Reconciliation
Forward Looking Statement
Certain of the matters discussed in this report about our and
our subsidiaries' future performance, including, without
limitation, future revenues, earnings, strategies, prospects,
consequences and all other statements that are not purely
historical constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements are subject to risks and
uncertainties, which could cause actual results to differ
materially from those anticipated. Such statements are based on
management's beliefs as well as assumptions made by and information
currently available to management. 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. Factors that may cause actual
results to differ are often presented with the forward-looking
statements themselves. Other factors that could cause actual
results to differ materially from those contemplated in any
forward-looking statements made by us herein are discussed in
filings we make with the United States Securities and Exchange
Commission (SEC), including our Annual Report on Form 10-K and
subsequent reports on Form 10-Q and Form 8-K. These factors
include, but are not limited to:
- fluctuations in wholesale power and natural gas markets,
including the potential impacts on the economic viability of our
generation units;
- our ability to obtain adequate fuel supply;
- any inability to manage our energy obligations with available
supply;
- increases in competition in wholesale energy and capacity
markets;
- changes in technology related to energy generation,
distribution and consumption and customer usage patterns;
- economic downturns;
- third-party credit risk relating to our sale of generation
output and purchase of fuel;
- adverse performance of our decommissioning and defined benefit
plan trust fund investments and changes in funding
requirements;
- changes in state and federal legislation and regulations, and
PSE&G's ability to recover costs and earn returns on authorized
investments;
- the impact of pending and any future rate case proceedings;
- regulatory, financial, environmental, health and safety risks
associated with our ownership and operation of nuclear
facilities;
- adverse changes in energy industry laws, policies and
regulations, including market structures and transmission
planning;
- changes in federal and state environmental regulations and
enforcement;
- delays in receipt of, or an inability to receive, necessary
licenses and permits;
- adverse outcomes of any legal, regulatory or other proceeding,
settlement, investigation or claim applicable to us and/or the
energy industry;
- changes in tax laws and regulations;
- the impact of our holding company structure on our ability to
meet our corporate funding needs, service debt and pay
dividends;
- lack of growth or slower growth in the number of customers or
changes in customer demand;
- any inability of Power to meet its commitments under forward
sale obligations;
- reliance on transmission facilities that we do not own or
control and the impact on our ability to maintain adequate
transmission capacity;
- any inability to successfully develop or construct generation,
transmission and distribution projects;
- any equipment failures, accidents, severe weather events or
other incidents that impact our ability to provide safe and
reliable service to our customers;
- our inability to exercise control over the operations of
generation facilities in which we do not maintain a controlling
interest;
- any inability to recover the carrying amount of our long-lived
assets and leveraged leases;
- any inability to maintain sufficient liquidity;
- any inability to realize anticipated tax benefits or retain tax
credits;
- challenges associated with recruitment and/or retention of key
executives and a qualified workforce;
- the impact of our covenants in our debt instruments on our
operations; and
- the impact of acts of terrorism, cybersecurity attacks or
intrusions.
All of the forward-looking statements made in this report are
qualified by these cautionary statements and we cannot assure you
that the results or developments anticipated by management will be
realized or even if realized, will have the expected consequences
to, or effects on, us or our business, prospects, financial
condition, results of operations or cash flows. Readers are
cautioned not to place undue reliance on these forward-looking
statements in making any investment decision. Forward-looking
statements made in this report apply only as of the date of this
report. While we may elect to update forward-looking statements
from time to time, we specifically disclaim any obligation to do
so, even in light of new information or future events, unless
otherwise required by applicable securities laws.
The forward-looking statements contained in this report are
intended to qualify for the safe harbor provisions of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended.
From time to time, PSEG, PSE&G and PSEG Power release
important information via postings on their corporate website
at https://investor.pseg.com. Investors and other interested
parties are encouraged to visit the corporate website to review new
postings. The "Email Alerts" link
at https://investor.pseg.com may be used to enroll to
receive automatic email alerts and/or Really Simple Syndication
(RSS) feeds regarding new postings.
Visit PSEG at: www.pseg.com;
PSEG blog, Energize!; PSEG My Alerts!
TO FOLLOW AND CONNECT WITH PSEG VIA SOCIAL MEDIA, CLICK ON
THE LINKS BELOW:
PSEG Social Media Channels: PSEG on
Facebook; PSEG on Twitter; PSEG on LinkedIn; PSEG on YouTube
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SOURCE Public Service Enterprise Group (PSEG)