Attached files
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| 8-K - FORM 8-K - PUBLIC SERVICE ELECTRIC & GAS CO | d8k.htm |
 2
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 towards subsidized market mechanisms,
transmission planning and cost allocation rules, including rules regarding how
transmission is planned and who is permitted to build transmission going forward, 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 developments in the nuclear power industry
generally 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.
•
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.
•
Adverse performance of our decommissioning and defined benefit plan trust fund
investments and changes in discount rates and funding requirements.
•
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.
EXHIBIT 99 |
 3
PSEG presents Operating Earnings in addition to its Net Income reported in
accordance with accounting principles generally accepted in the United
States (GAAP). Operating Earnings is a non-GAAP financial measure that
differs from Net Income because it excludes gains or losses associated with
Nuclear Decommissioning Trust (NDT), Mark-to-Market (MTM) accounting,
and other material one-time items. PSEG presents Operating Earnings
because
management
believes
that
it
is
appropriate
for
investors
to
consider
results excluding these items in addition to the results reported in
accordance with GAAP. 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.
This information is not
intended to be viewed as an
alternative to GAAP information. The last slide in this presentation includes
a list of items excluded from Income from Continuing Operations to reconcile
to Operating Earnings, with a reference to that slide included on each of the
slides where the non-GAAP information appears.
GAAP Disclaimer |
 7
* See page 64 for Items excluded from Income from Continuing Operations to
reconcile to Operating Earnings. $2.75E
$2.50E
…
offset
by
continuous
improvement
in
operations,
utility
growth,
and
generating
asset optionality.
PSEG 2011 outlook influenced by lower
market prices…
$3.12
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
2010 Operating Earnings*
2011E Earnings Guidance* |
 9
•Contractual support for
up to 2,000 MW of new
generation to stimulate
jobs and economic
growth, and suppress
wholesale power prices
•BPU has approved
contracts for up to 1,948
MW of new capacity
•PSEG Power, as part of
P3, has filed a complaint
at FERC to require that
all new generators bid
into the market at cost
•PSEG has filed suit at
Federal District Court
asking that LCAPP be
ruled unconstitutional
PSEG Response
NJ Position
Long Term Capacity Agreement Pilot Program (LCAPP)
PSEG -
An active participant in
market discussions |
 10
April 2010 –
Susquehanna-Roseland transmission project siting
approved by
NJBPU.
June/July 2010 –
Electric and Gas rate settlements approved
Market transition charge refund provided to customers
over 2-year period
December 2010 –
Morris Energy dispute settled
Settlement resolved a dispute over discounted gas rates and the application of
the Societal Benefits Clause.
Spring/Summer 2011 –
PSE&G expects BPU decision on request to spend $400
million on Capital Infrastructure Program and Energy Efficiency supporting NJ
economic recovery
Constructive working relationship with NJ
vital to meeting customer, employee, and
shareholder interests |
 Future Projects
15
($ Millions)
Phase
In-Service
Spending Up
To
Susquehanna-Roseland
Engineering / Licensing
2014 East
2015 West
$750
Northeast Grid (formerly BRH Alternative)
Preliminary Design
2015
$700
Burlington –
Camden 230kV Conversion
Engineering / Licensing
2014
$381
North Central (formerly West Orange)
230kV Conversion
Engineering / Licensing
2014
$336
Approved RTEP projects thru 2013
Various
Various
$440
69 kV Reliability projects thru 2013
Various
Various
$215
Transmission Life Cycle
Various
Various
$350
…
and CWIP in rate base* for certain projects.
* CWIP in Rate Base and 1.25% ROE incentive treatment approved for the
Susquehanna-Roseland project and seeking recovery of CWIP in Rate Base
and abandonment for other major projects Transmission Projects
Future Transmission project spending will be influenced by PJM
evaluation,
potentially
adding
additional
projects
over
2011
–
2015 and
revising required in-service dates.
Transmission investment recovery is supported by
formula rate treatment…
Hopatcong
Roseland
W Orange
Bergen
Hudson
Bridgewater
Bayonne
Sewaren
Middlesex
Burlington
Camden
Gloucester |
 32
Source: MJ Bradley
Compliance with Federal GHG Reporting Rule
Compliance with PSD GHG BACT
Compliance with Toxics Rule
Pre-Compliance Period
Develop Toxics
Rule
Develop
Transport
Rule
SIP provisions developed in response to revised NAAQS
Develop
Revised O3
NAAQS
Pre-Compliance Period
Compliance with
Federal CCB
Regulations
Dev. Coal Comb.
By-Products Rule
Develop 316(b)
Regulations
Develop O3
Transport Rule
Estimated Compliance w/TR II
Phase-In of Compliance Period by 2020
Compliance w/GHG NSPS
Pre-Compliance Period
Develop GHG
NSPS
…and Power is well positioned to succeed under numerous outcomes.
Today
Phase I Compliance
Phase II Compliance
There are numerous upcoming EPA
environmental regulations…
2010
2011
2012
2013
2014
2015
2016
2017
2018
Haz. Air
Pollutants
Criteria
Pollutants
Greenhouse
Gases
Coal
Combustion
By-Products
316(b) |
 46
–
Network transmission service revenue increase
= ~ $0.05 per share
–
Full year of E&G Rate Relief = ~ $0.05 per share
–
Each 1% change in Load = ~ $0.02 per share
–
Each 1% change in O&M = ~ $0.01 per share
–
2010 Utility ROE 9.9%; Each 10 bp = $0.01 per share
Revenue/Margin
–
Decline in average Hedge Price/Volume = ~ ($0.25-$0.30)
per share
–
Decline in Capacity revenues = ~ ($0.15-$0.20) per share
–
Improvement in WPT/BGSS = ~ $0.03-$0.05 per share
Other Expense
–
Higher O&M = ~ ($0.03) per share
–
Increase in Depreciation rate = ~ ($0.05) per share
–
Absence of LILO/SILO termination gains = ~ ($0.05) per share
–
Loss of Income from Asset Sales = ~ ($0.05) per share
2011 Drivers
…offset by a decline in margins at Power and Holdings.
Earnings Per Share
* See page 64 for Items excluded from Income from Continuing Operations to reconcile
to Operating Earnings. E Estimate. PSEG’s 2011 earnings guidance
reflects continued improvement at PSE&G…
$3.12
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
2010 Operating Earnings*
2011E Earnings Guidance*
Guidance
$2.75
$2.50 |
 58
$ millions (except EPS)
2011E
2010A
PSEG Power
$ 765 –
$ 855
$ 1,091
PSE&G
$ 495 –
$ 520
$ 430
PSEG Energy Holdings
$ 0 –
$ 5
$ 49
Enterprise
$ 5 –
$ 15
$ 14
Operating Earnings*
$ 1,265 –
$ 1,395
$ 1,584
Earnings per Share
$ 2.50 –
$ 2.75
$ 3.12
* See Page 64 for Items excluded from Income from Continuing Operations to
reconcile to Operating Earnings. PSEG 2011 Operating Earnings Guidance
-
by Subsidiary |
 63
Lessee
Equipment
12/31/10
Invested
($millions)
S&P Credit
Rating
As of 3/30/11
REMA (GenOn)
Keystone, Conemaugh
& Shawville
(PA)
3 coal fired plants (1,184 equity MW)
325
B
Dynegy Holdings
Danskammer
& Roseton
Generating Station (NY) 370
MW coal fired and 1,200 MW oil/gas fired
267
CC
Edison Mission
Energy (EME)
Powerton
& Joliet Generating Stations (IL)
2 coal-fired generating facilities (1,652 equity MW)
218
B-
Merrill Creek –
(PECO, MetEd,
Delmarva Power &
Light)
Reservoir in NJ
126
BBB, BBB-,
BBB+
Grand Gulf
Nuclear station in Mississippi (154 equity MW)
99
A+
US West/Qwest
Qwest headquarters located in Denver, CO
109
BB
Renaissance Ctr.
GM headquarters located in Detroit, MI
40
BB-
Wal-Mart
Portfolio of 27 Wal-Mart stores
41
AA
E-D Centers
Portfolio of 8 shopping centers
23
NR
Total Leases
$1,249
PSEG Resources Leveraged Lease Portfolio |