PUBLIC SERVICE ELECTRIC & GAS CO - FORM 8-K - EX-99 - SELECTED PRESENTATION SLIDES

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8-K - FORM 8-K - PUBLIC SERVICE ELECTRIC & GAS CO	d234763d8k.htm

Bank of America-Merrill Lynch

2011 Power & Gas Leaders Conference

September 21, 2011

EXHIBIT 99

PSEG

Public

Service

Enterprise

Group

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 “will”, “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 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 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 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.

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), 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 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 Advantage: Asset mix, strong

operations…

Reliability One Award

winner for Mid-Atlantic

Region –

year in a row

Regulatory agreements

and cost control provide

opportunity for improved

returns

Investment program

focused on growth and

providing customers with

clean, reliable energy

PSEG Power

PSE&G

…with balance sheet to support growth.

Asset mix

Strong platform open to

improvement in the market

Well-run, low-cost

generating fleet combined

with fuel flexibility

supports margins

Hedging strategy mitigates

near-term risk

Major environmental

compliance capital

program completed

Actively working to defend

competitive power markets

Reducing risk

Building a platform for

renewables and investing

through PPA-supported

projects

International lease

investments terminated

Resources carefully

monitoring remaining

traditional leases and

other investments

PSEG Energy Holdings

PSEG’s 2011 earnings guidance reflects

continued improvement at PSE&G…

–

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 = ~ ($0.06) per share

–

Loss of Income from Asset Sales = ~ ($0.04) per share

Guidance

$2.75

$2.50

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.

$3.12

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

2010 Operating Earnings*

2011E Earnings Guidance*

Outlook for 2011 Operating Earnings

Maintained

* See page 64 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

$2.75E

$2.50E

$3.12

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

2010 Operating Earnings*

2011E Earnings Guidance*

EPS contribution from PSE&G expected to represent 35 to 40% of 2011

forecast earnings versus 27% contribution to 2010 earnings.

Investment program supporting NJ’s energy

and economic goals has led to 45 MW of solar…

…

with 30 MW in development.

($ Millions)

Approval

Date

Total

Amount

Spending

Thru

6/2011

Remaining

Spending

Thru 2013

Solar Loan I & II

April 2008/

November 2009

$248

$93

$151

Carbon Abatement

December 2008

NJ Capital Infrastructure Stimulus I

April 2009

694

701

Solar 4 All *

July 2009

465

278

187

Energy Efficiency Economic Stimulus

July 2009

166

118

Demand Response

July 2009

Energy Efficiency Economic Stimulus

Extension

July 2011

NJ Capital Infrastructure Stimulus II

July 2011

273

Total

$2,052

$1,230

$805

* Filing amount based on installation of 80MW, total forecasted spend is lower due to a lower cost per watt to install.

Energy Holdings is pursuing renewable

energy alternatives with emphasis on solar

•

Solar is a good strategic fit for PSEG

–

Predictable and attractive returns through long-term Power Purchase

Agreements with creditworthy counterparties

–

Improves geographic, technology, regulatory and market risk profile

–

Strong relationships established across the value chain

–

Favorable tax attributes, long-term earnings, short construction cycles and

proven technology

•

Solar In-Service

–

Installed 29 MW at three locations; ~$117 million investment to date

–

Projects completed ahead of schedule and under budget; operating

performance better than plan

PSEG received a perfect score of 100 on the Corporate Equality Index and

Best Places to Work 2010 Survey

conducted by the Human Rights Campaign.

The Edison Award. Presented annually by EEI

and recognizes U.S. and international electric

utilities for their innovation and role in advancing

the industry.

Our focus on customers, community and

employees…

PSE&G named America’s Most Reliable

Utility 4 of past 6 years

Mid-Atlantic

Region

winner

for

the

straight

year

Carbon Performance Leadership Index (CPLI)

2010. Named Maplecroft Climate Innovation Index (CII) utility sector Leader.

Second year in World Index, fourth year in the North

American Index.

PSEG is one of only two U.S. electric companies in the World Index.

…

has been widely recognized.

Note: Forward prices as of September 2011.

Forward

spark

spreads

have

increased

significantly

from earlier this year…

…

while the increase in forward dark spreads has been more moderate.

-$10

$10

$20

$30

$40

$50

2005

2006

2007

2008

2009

2010

2011

2012

2013

$10

$20

$30

$40

$50

$60

$70

2005

2006

2007

2008

2009

2010

2011

2012

2013

Annual Average

Historical Monthly

Forecast

PJM Western Hub Spark Spread (On-Peak –

Henry Hub x 7.5 Heat Rate)

PJM Western Hub Dark Spread (RTC –

Central Appalachian Coal x 10 Heat Rate)

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 64 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

Items Excluded from Income from Continuing

Operations to Reconcile to Operating Earnings

Please see Page 3 for an explanation of PSEG’s use of Operating Earnings as a non-GAAP financial measure and how it differs from Net Income.

Pro-forma Adjustments, net of tax

2011

2010

2011

2010

Earnings Impact ($ Millions)

Gain (Loss) on Nuclear Decommissioning Trust (NDT)

Fund Related Activity (PSEG Power)

Gain (Loss) on Mark-to-Market (MTM) (PSEG Power)

(37)

Market Transition Charge Refund (PSE&G)

(72)

Total Pro-forma adjustments

(99)

(40)

Fully Diluted Average Shares Outstanding (in Millions)

507

Per Share Impact (Diluted)

Gain (Loss) on NDT Fund Related Activity (PSEG Power)

0.03

0.02

0.08

0.04

Gain (Loss) on MTM (PSEG Power)

0.01

(0.07)

0.02

Market Transition Charge Refund (PSE&G)

(0.14)

Total Pro-forma adjustments

0.04

(0.19)

0.10

(0.08)

For the Three Months Ended

For the Six Months Ended

June 30,

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

Reconciling Items Excluded from Continuing Operations to Compute Operating Earnings

(Unaudited)

Please

see

Page

for

explanation

PSEG’s

use

Operating

Earnings

non-GAAP

financial

measure

and

how

differs

from

Net

Income.

Items Excluded from Income from Continuing

Operations to Reconcile to Operating Earnings

Pro-forma Adjustments, net of tax

2010

2009

2008

Earnings

Impact

Millions)

Gain (Loss) on Nuclear Decommissioning Trust (NDT)

Fund Related Activity (PSEG Power)

(71)

Gain (Loss) on Mark-to-Market (MTM) (PSEG Power)

(1)

(11)

Market Transition Charge Refund (PSE&G)

(72)

Net Reversal of Lease Transaction Reserves (Energy Holdings)

Lease Transaction Reserves (Energy Holdings)

(490)

Asset Impairments

(13)

Premium on Bond Redemption

(1)

Total Pro-forma adjustments

(27)

(561)

Fully Diluted Average Shares Outstanding (in Millions)

507

508

Per

Impact

(Diluted)

Gain (Loss) on Nuclear Decommissioning Trust (NDT)

Fund Related Activity (PSEG Power)

0.09

0.02

(0.14)

Gain (Loss) on Mark-to-Market (MTM) (PSEG Power)

(0.02)

0.03

Market Transition Charge Refund (PSE&G)

(0.14)

Net Reversal of Lease Transaction Reserves (Energy Holdings)

0.05

Lease Transaction Reserves (Energy Holdings)

(0.96)

Asset Impairments

(0.03)

Premium on Bond Redemption

Total Pro-forma adjustments

(0.05)

0.05

(1.10)

December 31,

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

Reconciling

Items

Excluded

from

Continuing

Operations

Compute

Operating

Earnings

(Unaudited)

For the Twelve Months Ended

PUBLIC SERVICE ELECTRIC & GAS CO - FORM 8-K - EX-99 - SELECTED PRESENTATION SLIDES - September 21, 2011

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