PUBLIC SERVICE ELECTRIC & GAS CO - FORM 8-K - EX-99.1 - SLIDESHOW PRESENTATION - May 5, 2011

Attached files

file filename
8-K - FORM 8-K - PUBLIC SERVICE ELECTRIC & GAS COd8k.htm
EX-99 - PRESS RELEASE DATED MAY 5, 2011 ANNOUNCING FIRST QUARTER 2011 RESULTS - PUBLIC SERVICE ELECTRIC & GAS COdex99.htm
Public Service Enterprise Group
PSEG Earnings Conference Call
1st Quarter 2011
May 5, 2011
EXHIBIT 99.1

1
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 toward 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 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,
•
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 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.

2
GAAP Disclaimer
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) and Mark-to-Market (MTM)
accounting, the impact of the sale of certain non-core domestic and
international assets and material impairments and lease-transaction-
related charges. 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 two slides in this
presentation include 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.

PSEG
2011 Q1 Review
Ralph Izzo
Chairman, President and Chief Executive Officer

4
Q1 2011 Earnings Summary
$ millions (except EPS)
2011
2010
Operating Earnings
$  431
$  439  
Reconciling Items, Net of Tax
31
59
Income from Continuing Operations
462
498
Discontinued Operations, Net of Tax
64
(7)
Net Income
526
491
EPS from Operating Earnings*
$  0.85
$  0.87
Quarter ended March 31            
* See page 31 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

5
PSEG –
Q1 2011
Results of $0.85 vs. $0.87 in Q1 2010
Maintaining our 2011 earnings guidance of $2.50-$2.75 per share
Regulatory/Market Environment
EPA proposals on HAPs-MACT, 316b regulations
PSEG Nuclear’s on-going community outreach efforts support local,
state and federal understanding of reactor design and emergency
procedures in place at Salem and Hope Creek
FERC decision on MOPR supports competitive wholesale markets
PSE&G awaiting FERC approval of incentive rate treatment on
$1.3 billion of transmission investment
NJBPU decisions expected on $400 million of incremental PSE&G
capital infrastructure and energy efficiency spending
Focused on building a financially strong, environmentally friendly
energy business

6
2009 Operating Earnings*
2010 Operating Earnings*
2011 Guidance
$2.50 -
$2.75E
PSEG –
Maintaining 2011 Guidance
$3.09
* See page 32 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.                    
$3.12

PSEG
2011 Q1 Operating Company Review
Caroline Dorsa
Executive Vice President and Chief Financial Officer

8
Q1 Operating Earnings by Subsidiary
Operating Earnings
Earnings per Share
$ millions (except EPS)
2011
2010
2011
2010
PSEG Power
$  267
$  312
$  0.53
$  0.62
PSE&G
163
117
0.32
0.23
PSEG Energy Holdings
(3)
7
(0.01)
0.01
Enterprise
4
3
0.01
0.01
Operating Earnings*
$  431
$  439
$  0.85
$  0.87
Quarter ended March 31
* See page 31 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

9
$0.85
(0.02)
0.09
(0.09)
$0.87
0.00
0.25
0.50
0.75
1.00
PSEG EPS Reconciliation –
Q1 2011 versus Q1 2010
Q1 2011       
operating
earnings*
Q1 2010       
operating
earnings*
Lower pricing &
Migration (0.01)
WPT (0.03)
O&M (0.03)
Interest &
Depreciation (0.03)
Taxes 0.01
PSEG Power
O&M 0.04
Electric & Gas
margin 0.04
Transmission
margin 0.01
Weather 0.01
D&A (0.01)
PSE&G
PSEG Energy
Holdings
Lower lease
sales and
Interest (0.01)
ES&P Write-
off (0.01) 
* See page 31 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

PSEG Power
2011 Q1 Review

11
PSEG Power –
Q1 2011 EPS Summary
$ millions (except EPS)
Q1 2011
Q1 2010
Variance
Operating Revenues
$  1,967
$  2,196
$  (229)
Operating Earnings
267
312
(45)
NDT Funds/Mark to Market
Related Activity, Net of Tax
31
59
(28)
Income from Continuing Operations
298
371
(73)
Discontinued Operations, Net of Tax
64
(7)
71
Net Income
362
364
(2)
EPS from Operating Earnings*
$  0.53
$  0.62
$  (0.09)
* See page 31 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

12
$0.53
0.01
(0.03)
(0.03)
(0.03)
(0.01)
$0.62
0.00
0.25
0.50
0.75
Lower
Pricing and 
Migration
PSEG Power EPS Reconciliation –
Q1 2011 versus Q1 2010
Q1 2011       
operating
earnings*
Q1 2010       
operating
earnings*
WPT
* See page 31 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.
O&M
Absence of
higher
effective tax
rate related to
2010
Healthcare
legislation
Higher
Depreciation
and Interest

13
PSEG Power –
Generation Measures
7,781
7,928
2,921
2,312
3,530
3,790
0
8,500
17,000
2010
2011
Quarter ended March 31
Total Nuclear
Total Coal*
Oil & Natural Gas
* Includes figures for Pumped Storage.
PSEG Power –
Generation (GWh)
14,030
14,232
PSEG Power –
Capacity Factors (%)
2010
2011
Nuclear
97.3%
99.0%
Coal
NJ
44%
29%
PA
86%
83%
CT
42%
24%
Combined
Cycle
PJM and NY
49%
53%
Quarter ended March 31

14
PSEG Power –
Fuel Costs
Quarter ended March 31
($ millions)
2010
2011
Coal
114
88
Oil & Gas*
199
191
Total Fossil
313
279
Nuclear
41
46
Total Fuel Costs
354
325
Total Generation
(GWh)
14,232
14,030
$ / MWh
24.87
23.16
PSEG Power –
Fuel Costs
*Excludes Texas.

15
PSEG Power –
Gross Margin Performance
$0
$25
$50
$75
2010
2011
$55
$55
Quarter ended March 31
Power’s gross margin benefited from increased production from both combined
cycle gas and nuclear units
Higher pricing in PJM offset $0.01 earnings impact from an increase in customer
migration
Regional Performance
Region
Q1 Gross
Margin ($M)
Q1 2011 Performance
PJM
$754
Q1 contribution to gross margin
increased slightly versus year ago;
decline in dark spreads and impact of
migration were offset by improved
pricing overall and increased nuclear
and combined-cycle production.
New
England
$16
Contribution to margin hurt by lower
volumes and prices.
New York
$7
Increase in generation offset by weak
pricing.
PSEG Power Gross Margin ($/MWh)*
* Excludes Texas
Generation mix saw increased nuclear and combined-cycle production.

16
PSEG Power –
Hedging Update
Contracted Energy*
*As of April 21, 2011.
2011
2012
2013
May - Dec
Volume TWh
24
36
36
Base Load
% Hedged
100%
60% - 70%
20% - 30%
Price $/MWh
$68
$66
$69
Volume TWh
12
18
20
% Hedged
30% - 35%
Price $/MWh
$68
Volume TWh
36
54
56
Total
% Hedged
75% - 80%
40% - 50%
10% - 20%
Price $/MWh
$68
$66
$69
Intermediate Coal, Combined Cycle,
Peaking
(Nuclear and Base Load Coal)

17
…
with the 2014/2015 RPM auction results set for release on May 13.
PJM’s capacity construct has acknowledged the value
of Power’s fleet…
PJM Capacity Available to Receive Auction Pricing
0
2,000
4,000
6,000
8,000
10,000
12,000
09/10
10/11
11/12
12/13
13/14
$/MW-day
PJM Zones
2009 / 2010
2010 / 2011
2011 / 2012
2012 / 2013
2013/2014
Eastern MAAC
$191.32
$174.29
$110.00
$139.73
$245.00
MAAC
$191.32
$174.29
$110.00
$133.37
$226.15
PSEG
$245.00
PSEG North Zone
$185.00
$245.00
Rest of Pool
$102.04
$174.29
$110.00
$16.46
$27.73
•Bid for 89 MW of new
capacity accepted for
2013/2014 auction;
in-service June 2012
•On schedule to
complete 178 MW of
previously cleared
peaking capacity
by June 2012
•Upcoming auction
anticipated to be
influenced by updated
demand forecast and 
transfer capabilities

18
PSEG Power –
Q1 Operating Highlights
Q1 output declined by 1%
Q1 nuclear capacity factor at 99%
Coal output declined by 21% with reduction in dark spreads
Combined-cycle units captured market opportunities
Operations
Regulatory and Market
Environment
Financial
FERC decision on MOPR in support of competitive markets
PJM RPM auction results for 2014/2015 due May 13
Power’s $606 million of 7.75% Senior Notes was retired on April 15, 2011
using cash on hand
Power refinanced its $350 million credit facility, increasing it
to $1 billion
in a new, 5-year term; Power and PSEG’s credit facilities now total
$3.7 billion

PSE&G
2011 Q1 Review

20
PSE&G –
Q1 2011 Earnings Summary
$ millions (except EPS)
Q1 2011
Q1 2010
Variance
Operating Revenues
$  2,306
$  2,444
$  (138)
Operating Expenses
Energy Costs
1,366
1,540
(174)
Operation & Maintenance
368
414
(46)
Depreciation & Amortization
179
177
2
Taxes Other than Income Taxes
43
42
1
Total Operating Expenses
1,956
2,173
(217)
Operating Earnings / Net Income
163
117
46
EPS from Operating Earnings*
$  0.32
$  0.23
$  0.09
* See page 31 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

21
$0.23
0.04
0.04
0.01
0.01
$0.32
(0.01)
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
PSE&G EPS Reconciliation –
Q1 2011
versus Q1 2010
Q1 2011      
operating
earnings*
Q1 2010       
operating
earnings*
Weather
O&M: 
Pension
Lower storm
costs
Operational
savings 
* See page 31 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.
Transmission
margin
Electric & Gas
Distribution
margin 0.04
Higher D&A

22
PSE&G –
Monthly Heating Degree Days
2011 vs. 2010 vs. Normal
PSE&G –
Monthly Heating Degree Days
673
797
1089
520
888
1017
704
832
977
0
250
500
750
1000
1250
2011
2010
Normal
January
February
March
Weather
experienced
in
Q1
2011
was
colder
than
normal
and
colder
than
in
Q1
2010.

23
PSE&G –
Q1 Operating Highlights
BPU decision expected Summer 2011 on $400 million of energy efficiency and
capital infrastructure programs
PSE&G has requested approval from FERC for incentive rate treatment on five
230 Kv projects totaling $1.3 billion
Three LCAPP contracts totaling 1,949 MW signed under protest
PSE&G refinanced its existing $600 million credit facility with a new 5-year term
PSE&G’s operating earnings provided an earned return on equity of 10.8%,
which includes a Transmission ROE of 11.2% 
Operations
Regulatory and Market
Environment
Financial
Economy is showing early signs of recovery
O&M reductions reflect ongoing focus and lower pension expense
Focused on maintaining reliability

PSEG Energy Holdings
2011 Q1 Review

25
PSEG
Energy
Holdings
–
Q1
2011
Earnings
Summary
$ millions (except EPS)
Q1 2011
Q1 2010
Variance
Operating Revenues
$  20
$  36
$  (16)
Income from Continuing Operations /
Net Income
(3)
7
(10)
EPS from Operating Earnings*
$  (0.01)
$  0.01
$  (0.02)
* See page 31 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

26
$(0.01)
(0.01)
(0.01)
$0.01
-0.02
-0.01
0.00
0.01
0.02
0.03
PSEG Energy Holdings EPS Reconciliation –
Q1 2011 versus
Q1 2010
Q1 2011       
operating
earnings*
Q1 2010      
operating
earnings*
Lower gains on
lease sales and
Interest
* See page 31 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.
Investment
write-off (ES&P)

PSEG

28
PSEG 2011 Operating Earnings Guidance -
By Subsidiary
$ 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 32 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

29
PSEG Q1 2011 –
Cash Update and Financing Activities
Cash position at March 31, 2011 was $900 million
Retired PSEG Power’s $606 million of 7.75% Senior Notes
which matured on April 15 using cash on hand
Refinanced $2.1 billion of credit facilities
at PSEG, Power, and
PSE&G in new, 5-year facilities; PSEG credit facilities now
total $4.3 billion
Liquidity position at April 30, 2011 was $4.2
billion
Standard & Poor’s affirmed credit ratings for PSEG, Power
and PSE&G; Outlooks raised to Positive
Moody’s affirmed credit ratings for PSEG, Power and PSE&G;
PSE&G’s Outlook raised to Positive

30
PSEG Liquidity as of April 30, 2011
Expiration
Total
Available
Company
Facility
Date
Facility
Usage
Liquidity
($ Millions)
PSE&G
5-year Credit Facility
Apr-16
$600
$0
$600
5-Year Credit Facility (Power)
Dec-12
$1,600
1
$186
$1,414
5-Year Credit Facility (Power)
Apr-16
$1,000
$0
$1,000
5-Year Bilateral (Power)
Sep-15
$100
$100
$0
5-year Credit Facility (PSEG)
Dec-12
$500
2
$14
$486
5-year Credit Facility (PSEG)
Apr-16
$500
$0
$500
Total
$4,300
$4,000
$153
PSE&G ST Investment
$21
Total Liquidity Available
$4,174
Total Parent / Power Liquidity
$3,553
1
Power Facility reduced by $75 million in 12/2011
2
PSEG Facility reduced by $23 million in 12/2011
PSEG /
Power
PSEG Money Pool ST Investment

31
Items Excluded from Income from Continuing Operations to
Reconcile to Operating Earnings
Please see Page 2 for an explanation of PSEG’s use of Operating Earnings as a non-GAAP financial measure and how
it differs from Net Income.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
Items Excluded from Income from Continuing Operations to Reconcile to Operating Earnings
(Unaudited)
Pro-forma Adjustments, net of tax
2011
2010
Earnings
Impact
($
Millions)
Gain (Loss) on Nuclear Decommissioning Trust (NDT)
Fund Related Activity (PSEG Power)
27
$          
10
$           
Gain (Loss) on Mark-to-Market (MTM) (PSEG Power)
4
49
Total Pro-forma adjustments
31
$          
59
$           
Fully Diluted Average Shares Outstanding (in Millions)
507
507
Per
Share
Impact
(Diluted)
Gain (Loss) on NDT Fund Related Activity (PSEG Power)
0.05
$       
0.02
$         
Gain (Loss) on MTM (PSEG Power)
0.01
0.10
Total Pro-forma adjustments
0.06
$       
0.12
$         
For the Three Months Ended
March 31,

32
Items Excluded from Income from Continuing Operations to
Reconcile to Operating Earnings
Please see Page 2 for an explanation of PSEG’s use of Operating Earnings as a non-GAAP financial measure and how
it differs from Net Income.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
Reconciling Items Excluded from Continuing Operations to Compute Operating Earnings
(Unaudited)
Pro-forma Adjustments, net of tax
2011
2010
Earnings
Impact
($
Millions)
Gain (Loss) on Nuclear Decommissioning Trust (NDT)
Fund Related Activity (PSEG Power)
27
$          
10
$           
Gain (Loss) on Mark-to-Market (MTM) (PSEG Power)
4
49
Total Pro-forma adjustments
31
$          
59
$           
Fully Diluted Average Shares Outstanding (in Millions)
507
507
Per
Share
Impact
(Diluted)
Gain (Loss) on NDT Fund Related Activity (PSEG Power)
0.05
$       
0.02
$         
Gain (Loss) on MTM (PSEG Power)
0.01
0.10
Total Pro-forma adjustments
0.06
$       
0.12
$         
For the Three Months Ended
March 31,