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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1993
COMMISSION FILE NUMBER 1-9120
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
(Exact name of registrant as specified in its charter)
NEW JERSEY 22-2625848
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
80 PARK PLAZA, P.O. BOX 1171 07101-1171
NEWARK, NEW JERSEY (Zip Code)
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 201 430-7000
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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New York Stock Exchange
Common Stock without par value Philadelphia Stock Exchange
COMMISSION FILE NUMBER 1-973
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
(Exact name of registrant as specified in its charter)
NEW JERSEY 22-1212800
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
80 PARK PLAZA, P.O. BOX 570 07101-0570
NEWARK, NEW JERSEY (Zip Code)
(Address of principal executive offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 201 430-7000
DOCUMENTS INCORPORATED BY REFERENCE
PART OF FORM 10-K DOCUMENTS INCORPORATED BY REFERENCE
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III Portions of the definitive Proxy Statement for the Annual
Meeting of Stockholders of Public Service Enterprise Group
Incorporated to be held April 19, 1994, which definitive
Proxy Statement is expected to be filed with the Securities
and Exchange Commission on or about March 1, 1994, as
specified herein.
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS TITLE OF EACH CLASS WHICH REGISTERED
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Cumulative Preferred Stock First and Refunding
$100 par value Series: Mortgage
Bonds Series Due:
4.08% 8 3/4% Z 1999
4.18% 9 3/4% AA 2020
4.30% 9 1/8% BB 2005
5.05% 9 1/4% CC 2021
5.28% 8 7/8% DD 2003
5.97% 8 3/4% EE 2021
6.80% 7 7/8% FF 2001
7.40% 7 1/8% GG 1997
7.52% 8 3/4% HH 2022
8.08% 7 5/8% II 2000
7.80% 6 % JJ 1995
7.70% 6 7/8% KK 1997 New York Stock Exchange
8.16% 8 1/2% LL 2022
7.44% 6 7/8% MM 2003
6 % NN 1998
Cumulative Preferred Stock 7 1/2% OO 2023
$25 par Series: 6 1/2% PP 2004
6 % QQ 2000
6.75% 6 1/8% RR 2002
7 % SS 2024
8 % 2037
5 % 2037
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
REGISTRANT TITLE OF CLASS
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Public Service Enterprise Group None
Incorporated
Public Service Electric and Gas 6.92% Cumulative Preferred Stock $100
Company par value
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrants were required to file such reports), and (2) have been subject to
such filing requirements for the past 90 days. Yes X No .
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. X
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The aggregate market value of the Common Stock of Public Service Enterprise
Group Incorporated held by non-affiliates as of January 31, 1994 was
$7,704,989,000 based upon the New York Stock Exchange Composite Transaction
closing price.
The number of shares outstanding of Enterprise's sole class of common
stock, as of the latest practicable date, was as follows:
CLASS OUTSTANDING AT JANUARY 31, 1994
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Common Stock, without par value 243,737,149
As of January 31, 1994 Public Service Electric and Gas Company had issued
and outstanding 132,450,344 shares of Common Stock, without nominal or par
value, all of which were privately held, beneficially and of record by
Enterprise.
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TABLE OF CONTENTS
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Table of Contents........................................................................ i
Glossary of Terms........................................................................ iv
PART I
Item 1. Business.................................................................. 1
General................................................................... 1
Enterprise................................................................ 1
PSE&G..................................................................... 1
Industry Issues........................................................... 2
Competition............................................................... 2
Construction and Capital Requirements..................................... 5
PSE&G..................................................................... 5
EDHI...................................................................... 6
Financing Activities...................................................... 6
Federal Income Taxes...................................................... 7
Credit Ratings............................................................ 7
PSE&G..................................................................... 8
Rate Matters.............................................................. 8
Nuclear Performance Standard.............................................. 8
Electric Operations....................................................... 8
Nuclear Operations........................................................ 9
Other Nuclear Matters..................................................... 11
Pennsylvania -- New Jersey -- Maryland Interconnection.................... 11
Other Power Purchases..................................................... 11
DSM....................................................................... 12
Electric Fuel Supply...................................................... 13
Gas Operations............................................................ 16
Employee Relations........................................................ 17
Regulation................................................................ 17
Environmental Controls.................................................... 19
Air Pollution Control..................................................... 20
Water Pollution Control................................................... 21
Control of Hazardous Substances........................................... 24
Certain Operating Statistics of PSE&G..................................... 30
Electric.................................................................. 30
Gas....................................................................... 31
EDHI...................................................................... 32
EDC....................................................................... 32
CEA....................................................................... 32
PSRC...................................................................... 33
EGDC...................................................................... 33
Capital................................................................... 33
Funding................................................................... 34
Item 2. Properties................................................................ 34
PSE&G..................................................................... 34
Electric Properties....................................................... 35
Gas Properties............................................................ 36
Office Buildings and Facilities........................................... 36
Item 3. Legal Proceedings......................................................... 37
Item 4. Submission of Matters to a Vote of Security Holders....................... 37
Item 10. Executive Officers of the Registrants..................................... 37
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PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters..... 38
Item 6. Selected Financial Data................................................... 39
Enterprise................................................................ 39
PSE&G..................................................................... 39
Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations.............................................................. 40
Enterprise................................................................ 40
Overview.................................................................. 40
PSE&G Energy and Fuel Adjustment Clauses.................................. 41
Enterprise Earnings....................................................... 41
PSE&G..................................................................... 41
EDHI...................................................................... 42
Dividends................................................................. 42
Revenues.................................................................. 43
PSE&G Electric............................................................ 43
PSE&G Gas................................................................. 43
EDHI...................................................................... 44
PSE&G Electric Energy Costs............................................... 45
Gas Supply Costs.......................................................... 45
Liquidity and Capital Resources........................................... 46
PSE&G..................................................................... 46
EDHI...................................................................... 46
Construction, Investments and Other Capital Requirements Forecast......... 47
Internal Generation of Cash from Operations............................... 48
External Financings....................................................... 48
PSE&G..................................................................... 50
Gas Supply Costs.......................................................... 50
Liquidity and Capital Resources........................................... 51
Internal Generation of Cash from Operations............................... 51
Item 8. Financial Statements and Supplementary Data............................... 52
Financial Statement Responsibility (Enterprise)........................... 52
Financial Statement Responsibility (PSE&G)................................ 53
Independent Auditors' Report (Enterprise)................................. 54
Independent Auditors' Report (PSE&G)...................................... 55
Consolidated Statements of Income (Enterprise)............................ 56
Consolidated Balance Sheets (Enterprise).................................. 57
Consolidated Statements of Cash Flows (Enterprise)........................ 59
Consolidated Statements of Retained Earnings (Enterprise)................. 60
Consolidated Statements of Income (PSE&G)................................. 61
Consolidated Balance Sheets (PSE&G)....................................... 62
Consolidated Statements of Cash Flows (PSE&G)............................. 64
Consolidated Statements of Retained Earnings (PSE&G)...................... 65
Notes to Consolidated Financial Statements (Enterprise)................... 66
Notes to Consolidated Financial Statements (PSE&G)........................ 92
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PART III
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure.............................................................. 96
Item 10. Directors and Executive Officers of the Registrants....................... 96
Directors of the Registrants.............................................. 96
Enterprise................................................................ 96
PSE&G..................................................................... 96
Executive Officers of the Registrants..................................... 97
Item 11. Executive Compensation.................................................... 99
Enterprise................................................................ 99
PSE&G..................................................................... 99
Summary Compensation Table................................................ 100
Option Grants in Last Fiscal Year (1993).................................. 101
Aggregated Option Exercises in Last Fiscal Year (1993).................... 101
Employment Contracts and Arrangements..................................... 101
Compensation Committee Interlocks and Insider Participation............... 102
Compensation of Directors and Certain Business Relationships.............. 102
Compensation Pursuant to Pension Plans.................................... 102
Item 12. Security Ownership of Certain Beneficial Owners and Management............ 103
Enterprise................................................................ 103
PSE&G..................................................................... 103
Item 13. Certain Relationships and Related Transactions............................ 104
Enterprise................................................................ 104
PSE&G..................................................................... 104
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.......... 105
Schedule V -- Property, Plant and Equipment (Enterprise).........................
107
Schedule VI -- Accumulated Depreciation, Depletion and Amortization of Property,
Plant and Equipment (Enterprise)....................................................
110
Schedule VIII -- Valuation and Qualifying Accounts (Enterprise).....................
113
Schedule V -- Property, Plant and Equipment (PSE&G)..............................
114
Schedule VI -- Accumulated Depreciation, Depletion and Amortization of Property,
Plant and Equipment (PSE&G).........................................................
117
Schedule VIII -- Valuation and Qualifying Accounts (PSE&G)..........................
120
Signatures -- Public Service Enterprise Group Incorporated............................... 121
Signatures -- Public Service Electric and Gas Company.................................... 122
Exhibit Index............................................................................ 123
Enterprise..........................................................................
124
PSE&G...............................................................................
130
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GLOSSARY OF TERMS
The following is a glossary of frequently used abbreviations or acronyms that
are found through this report:
TERM MEANING
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ACO................................ Administrative Consent Order
Advisory Council................... Advisory Council on Electricity Planning and Procurement
AFDC............................... Allowance for Funds used During Construction
AMT................................ Alternative Minimum Tax
Bonds.............................. First and Refunding Mortgage Bonds
BRC................................ New Jersey Board of Regulatory Commissioners
BTA................................ Best Technology Available
CAA................................ Clean Air Act
Capital............................ PSEG Capital Corporation
CEA................................ Community Energy Alternatives Incorporated
CEA USA............................ CEA USA, Inc.
CEA New Jersey..................... CEA New Jersey, Inc.
CERCLA............................. Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980
CORP............................... New Jersey Commission on Radiation Protection
DGW................................ Discharge to Ground Water
DOE................................ United States Department of Energy
DRBC............................... Delaware River Basin Commission
DRIP............................... Enterprise's Dividend Reinvestment and Stock Purchase
Plan
DSM................................ Demand Side Management
DSM Plan........................... DSM Incentive Resource Plan
DSW................................ Discharge to Surface Water
EBIT............................... Twelve months earnings before interest and taxes to
interest
ECRA............................... New Jersey Environmental Cleanup Responsibility Act
EDC................................ Energy Development Corporation
EDHI............................... Enterprise Diversified Holdings Incorporated
EGDC............................... Enterprise Group Development Corporation
EMF................................ Electric and Magnetic Fields
Enterprise......................... Public Service Enterprise Group Incorporated
EPA................................ United States Environmental Protection Agency
EWG................................ Exempt Wholesale Generator
FASB............................... Financial Accounting Standards Board
FERC............................... Federal Energy Regulatory Commission
Fuelco............................. PSE&G Fuel Corporation
Funding............................ Enterprise Capital Funding Corporation
FWPCA.............................. Federal Water Pollution Control Act
GEMS............................... Gloucester Environmental Management Services, Inc.
Hope Creek......................... Hope Creek Nuclear Generating Station
IRP................................ Integrated Electric Resource Plan
IRS................................ Internal Revenue Service
Kwh................................ Kilowatthours
LEAC............................... Electric Levelized Energy Adjustment Clause
LGAC............................... Levelized Gas Adjustment Clause
LLRW............................... Low Level Radioactive Waste
LLRWPA............................. Low Level Radioactive Waste Policy Act
LNG................................ Liquefied Natural Gas
LPG................................ Liquid Petroleum Air Gas
LTIP............................... Long-Term Incentive Plan
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TERM MEANING
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MD&A............................... Management's Discussion and Analysis of Financial
Position and Results of Operations
MICP............................... Management Incentive Compensation Plan
Mortgage........................... First and Refunding Mortgage
MTNs............................... Medium-Term Notes
MW................................. Megawatts
MWH................................ Megawatthours
NAAQS.............................. National Ambient Air Quality Standards
Need Assessment Act................ New Jersey Electric Facility Need Assessment Act
NEIL............................... Nuclear Electric Insurance Limited
NEPA............................... National Energy Policy Act
NJAPCC............................. New Jersey Air Pollution Control Code
NJDEPE............................. New Jersey Department of Environmental Protection and
Energy
NJGRT.............................. New Jersey Gross Receipts and Franchise Tax
NJPDES............................. New Jersey Pollution Discharge Elimination System
NJWPCA............................. New Jersey Water Pollution Control Act
NOC................................ Nuclear Oversight Committee
NOx................................ Nitrogen Oxides
NPDES.............................. National Pollutant Discharge Elimination System
Non-Jurisdictional Customer........ Electric resale customer whose rate schedule has been
approved by FERC. Also includes off-system sales to
other utilities
NRC................................ Nuclear Regulatory Commission
NUG................................ Nonutility Generators
NWPA............................... Nuclear Waste Policy Act of 1982
OI................................. Nuclear Regulatory Commission's Office of Investigation
OPEB............................... Other Postemployment Benefits
PDER............................... Pennsylvania Department of Environmental Resources
Peach Bottom....................... Peach Bottom Atomic Power Station, Unit 2 and 3
PECO............................... PECO Energy Inc.
Penelec............................ Pennsylvania Electric Company
PJM................................ Pennsylvania -- New Jersey -- Maryland Interconnection
PJP................................ PJP Landfill in Jersey City, Hudson County, New Jersey
PPUC............................... Pennsylvania Public Utility Commission
Price Anderson..................... Price-Anderson liability provisions of the Atomic Energy
Act of 1954, as amended
PRPs............................... Potentially Responsible Parties
PSE&G.............................. Public Service Electric and Gas Company
PSCRC.............................. Public Service Conservation Resources Corporation
PSRC............................... Public Service Resources Corporation
PUHCA.............................. Public Utility Holding Company Act
PURPA.............................. Public Utility Regulatory Policy Act of 1978
QFs................................ Qualifying Facilities
RAR................................ Revenue Agent's Report
RCRA............................... Federal Resource Conservation and Recovery Act of 1976
Remediation Program................ PSE&G Gas Plant Remediation Program
RI/FS.............................. Remedial Investigation and Feasibility Study
ROD................................ Record of Decision
Salem.............................. Salem Nuclear Generating Station, Unit 1 and 2
SALP............................... Systematic Assessment of Licensee Performance
SARA............................... Superfund Amendments and Reauthorization of 1986
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TERM MEANING
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SEC................................ Securities and Exchange Commission
SFAS 71............................ Statement of Financial Accounting Standards No. 71,
"Accounting for the Effects of Certain Types of
Regulations."
SFAS 106........................... Statement of Financial Accounting Standards No. 106,
"Employers' Accounting for Postretirement Benefits
Other Than Pensions"
SFAS 107........................... Statement of Financial Accounting Standards No. 107
"Disclosures About Fair Value of Financial Instruments"
SFAS 109........................... Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes"
SNG Plant.......................... Synthetic Natural Gas Plant
636 Orders......................... Orders No. 636 and No. 636-A of FERC
Spill Act.......................... New Jersey Spill Compensation and Control Act
Standard........................... The BRC's nuclear performance standard established for
nuclear generating stations owned by New Jersey
utilities
TRA-86............................. Tax Reform Act of 1986
TSF................................ Temporary Storage Facility
USDOT.............................. United States Department of Transportation
USEC............................... United States Enrichment Corporation
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PART I
ITEM 1. BUSINESS.
GENERAL
ENTERPRISE
Public Service Enterprise Group Incorporated (Enterprise), incorporated
under the laws of the State of New Jersey with its principal executive offices
located at 80 Park Plaza, Newark, New Jersey 07101, is a public utility holding
company that neither owns nor operates any physical properties. Enterprise has
two direct wholly-owned subsidiaries, Public Service Electric and Gas Company
(PSE&G) and Enterprise Diversified Holdings Incorporated (EDHI). Enterprise's
principal subsidiary, PSE&G, is an operating public utility providing electric
and gas service in certain areas in the State of New Jersey. Enterprise has
claimed an exemption from regulation by the Securities and Exchange Commission
(SEC) as a registered holding company under the Public Utility Holding Company
Act of 1935 (PUHCA), except for Section 9(a)(2) thereof which relates to the
acquisition of voting securities of an electric or gas utility company. PSE&G is
subject to direct regulation by the New Jersey Board of Regulatory Commissioners
(BRC) and the Federal Energy Regulatory Commission (FERC). PSE&G has a
nonutility finance subsidiary, PSE&G Fuel Corporation (Fuelco), providing
financing not to exceed $150 million aggregate principal amount at any one time
of a 42.49% undivided interest in the nuclear fuel acquired for Peach Bottom
Atomic Power Station Units 2 and 3 (Peach Bottom) and guaranteed by PSE&G. PSE&G
has also organized a nonutility subsidiary Public Service Conservation Resources
Corporation (PSCRC) to offer Demand Side Management (DSM) services to utility
customers. EDHI is the parent of Enterprise's other nonutility businesses:
Energy Development Corporation (EDC), an oil and gas exploration, development,
production and marketing company; Community Energy Alternatives Incorporated
(CEA), an investor in and developer of cogeneration and power production
facilities; Public Service Resources Corporation (PSRC), which makes diversified
passive investments; Enterprise Group Development Corporation (EGDC), a
diversified nonresidential real estate development and investment business; PSEG
Capital Corporation (Capital), which has provided up to $750 million of
privately-placed debt financing on the basis of a support agreement from
Enterprise; and Enterprise Capital Funding Corporation (Funding), which provides
privately-placed debt financing on the basis of the consolidated financial
position of EDHI without direct support from Enterprise. As of December 31, 1993
and December 31, 1992, respectively, PSE&G comprised 86% and 83% of Enterprise's
assets. For the years 1993, 1992 and 1991, PSE&G's revenues were 93%, 93% and
94%, respectively, of Enterprise's revenues and PSE&G's earnings available to
Enterprise for such years were 96%, 88% and 95%, respectively, of Enterprise's
net income. PSE&G will continue as the principal business of Enterprise for the
foreseeable future.
Financial information with respect to business segments of PSE&G and
Enterprise is set forth in Note 15 -- Financial Information by Business Segments
of Notes to Consolidated Financial Statements.
PSE&G
PSE&G, a New Jersey corporation with its principal executive offices at 80
Park Plaza, Newark, New Jersey 07101, is an operating public utility company
engaged principally in the generation, transmission, distribution and sale of
electric energy service and in the production, transmission, distribution and
sale of gas service in New Jersey. PSE&G supplies electric and gas service in
areas of New Jersey in which approximately 5,500,000 persons reside,
approximately 70% of the State's population. PSE&G is Enterprise's principal
operating subsidiary. (See General -- Enterprise.)
PSE&G's electric and gas service area is a corridor of approximately 2,600
square miles running diagonally across New Jersey from Bergen County in the
northeast to an area below the City of Camden in the southwest. The greater
portion of the area is served with both electricity and gas, but some parts are
served with electricity only and other parts with gas only. This heavily
populated, commercialized and industrialized territory encompasses most of New
Jersey's largest municipalities, including its six largest cities -- Newark,
Jersey City, Paterson, Elizabeth, Trenton and Camden -- in addition to
approximately 300 suburban and rural
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communities. It contains a diversified mix of commerce and industry, including
major facilities of many corporations of national prominence.
Under the general laws of New Jersey, PSE&G has the right to use the public
highways, streets and alleys in New Jersey for the erection, laying and
maintenance of poles, conduits and wires necessary for its electric operations.
PSE&G must, however, first obtain the consent in writing of the owners of the
soil for the purpose of erecting poles. In incorporated cities and towns, PSE&G
must obtain from the municipality a designation of the streets in which the
poles are to be placed and the manner of placing them. PSE&G's rights are also
subject to regulation by municipal authorities with respect to street openings
and the use of streets for erection of poles in incorporated cities and towns.
PSE&G, by virtue of a special charter granted by the State of New Jersey to
one of its predecessors, has the right to use the roads, streets, highways and
public grounds in New Jersey for pipes and conduits for distributing gas.
PSE&G believes that it has all the franchises (including consents)
necessary for its electric and gas operations in the territory it serves. Such
franchises are non-exclusive.
For discussion of the significant changes which PSE&G's electric and gas
utility businesses have been and are undergoing, see Competition and Regulation.
INDUSTRY ISSUES
Enterprise and PSE&G are affected by many issues that are common to the
electric and gas industries, such as: an increasingly competitive energy
marketplace; sales retention and growth potential in a mature service territory
and need to contain costs (see Regulation and Competition); deregulation and
unbundling of energy supplies and services (see Competition); ability to obtain
adequate and timely rate relief and other necessary regulatory approvals (see
PSE&G -- Rate Matters and Regulation); costs of construction (see Construction
and Capital Requirements and Competition); operating restrictions, increased
costs and construction delays attributable to environmental regulations (see
Environmental Controls); controversies regarding electric and magnetic fields
(EMF); nuclear decommissioning and the availability of reprocessing and storage
facilities for spent nuclear fuel (see Electric Fuel Supply); and credit market
concerns with these issues.
COMPETITION
Overview
The energy utility industry is an industry in transition. Changes in
Federal law and regulation are encouraging new entrants to the traditional
markets of electric and gas utilities. New technology is creating opportunity
for new energy services. Customers are more aware and sophisticated about their
choices and dissatisfied with the often limited range of options available from
the local utility and are turning elsewhere. Competition has now arrived and, as
a consequence, the traditional utility structure -- consisting of a vertically
integrated system and functioning as a natural monopoly -- is being dramatically
altered.
Current Federal energy laws are designed to decrease oil imports by
increasing production of non-conventional sources of domestic energy, making
more efficient use of all energy and shifting the use of energy to more abundant
domestic sources. Among other things, these laws are designed to (1) increase
ceiling prices on newly-discovered natural gas, (2) encourage conservation of
energy through certain financial incentives, including incentives by individual
utilities to customers to help them to conserve energy, (3) require state
regulatory authorities to consider certain standards on rate design and certain
other utility practices, (4) require interconnections of power systems and
wheeling of power for wholesale transactions and (5) encourage development of
alternative energy generation.
Federal and State laws designed to reduce air and water pollution and
control hazardous substances have had the effect of increasing the costs of
operation and replacement of existing utility plant. (See Environmental
Controls.) Retention of existing customers and potential sales growth will
depend upon the ability of
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PSE&G to contain costs, meet customer expectations and respond to changing
economic conditions. Competition from cogenerators and independent power
producers (IPP), as permitted by PURPA, continues to impact upon PSE&G. Further,
as a result of changes brought about by NEPA, discussed below, electric
customers and suppliers, including PSE&G and its customers, have increased
opportunities for purchase and sale of electricity from and to sellers and
buyers outside of traditional franchised territories.
Electric
In the electric utility industry, competitive pressures began with the
enactment of the Public Utility Regulatory Policies Act of 1978 ("PURPA"). This
law, together with subsequent changes in federal regulation, has increasingly
opened the electric utility industry to competition. PURPA created a class of
generating facilities exempt from federal and state public utility
regulation -- cogeneration and small power producers known as "qualifying
facilities" (QFs) -- and created an instant market for them. The Federal Energy
Policy Act of 1992 (NEPA), by facilitating the development of the independent
power industry, will lead to even stronger competition.
NEPA provides FERC with increased authority to order 'wheeling' of
wholesale, but not retail, electric power on the transmission systems of
electric utilities, provided that certain requirements are met. In order to
facilitate the transition to increased competition in wholesale power markets
made possible by NEPA, FERC has, in a Notice of Inquiry, requested comments on a
wide array of policy and legal questions related to wholesale transmission
pricing. NEPA also amends PUHCA to permit a new class of wholesale generators
who are exempt from PUCHA regulation (EWG). NEPA permits both independent
companies and utility affiliates to participate in the development of EWG
projects regardless of the location and ownership of other generating resources.
The transmission access provisions apply to wholesale, but not retail,
'wheeling' of power, subject to FERC review. See Construction and Capital
Requirements, Financing Activities and Electric Operations -- Other Power
Purchases and the discussion below of New Jersey Gross Receipts and Franchise
Tax (NJGRT). For information concerning the activities of CEA, which is an
owner-developer of QFs under PURPA, see EDHI -- CEA.
Another key factor in determining how competition will affect PSE&G's
electric business is the extent to which New Jersey public utility regulation
may be modified to be reflective of these new competitive realities. To this
end, the BRC convened an Advisory Council on Electricity Planning and
Procurement (Advisory Council). The Advisory Council issued a report in July
1993 which recommended that the BRC institute a rulemaking proceeding to adopt
rules for integrated resource planning. The Advisory Council could not reach
agreement on a new process for supply-side procurement but suggested several
general principles that the BRC should consider. The Advisory Council
acknowledged in its report that, with the adoption of integrated resource
planning and a new procurement process, the Electric Facility Need Assessment
Act (Need Assessment Act) could be modified. Further, the Advisory Council
recommended that the BRC consider the need for legislation to allow alternatives
to traditional ratemaking. PSE&G cannot predict what other actions, if any, the
BRC may take in response to these recommendations. (See Regulation and Note
2 -- Rate Matters of Notes to Consolidated Financial Statements).
Gas
The natural gas industry and its regulation have also been dramatically
altered. This restructuring, which began in 1978, has occurred in a series of
steps. In 1985, FERC issued Order 436 which generally required each interstate
gas pipeline company to make its pipeline capacity available on an equal basis
to all parties who wish to transport natural gas through the pipeline, if the
pipeline company elected to provide transportation of natural gas for any party
other than through a full certification procedure at FERC. In response to the
United States Court of Appeals order overturning Order 436 in 1987, FERC issued
subsequent orders adopting the same basic provisions as Order 436.
With the issuance of its Order Nos. 636 and 636-A (636 Orders) the FERC has
dramatically accelerated the pace at which the natural gas industry is being
transformed from an industry driven by regulation to one driven by competitive
market forces. The principal thrust of Orders 636 is to require interstate
natural gas
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pipelines to reconfigure their services such that services provided to third
party shippers are fully comparable to the services that pipelines have
historically provided in their role as gas merchants. To this end, Orders 636
required the unbundling of interstate pipeline services (i.e., transportation
service and sales service bundled together for one price) in order to develop a
more competitive interstate natural gas industry. While unbundling of services
provides PSE&G with greater access to lower cost gas supplies, it also results
in pipeline transition costs being borne by pipeline ratepayers and their
customers. The 636 Orders also prohibit buy/sell transactions; essentially
mandate the implementation of straight fixed/variable rate design (which
allocates all of the pipeline's fixed costs to the demand portion of the rate);
abolish capacity brokering programs; establish a right of first refusal
mechanism for long-term, firm transportation contracts; and create a formal
capacity release program. Currently, each pipeline has completed the
restructuring of its services in order to comply with the 636 Orders.
Furthermore, numerous parties have appealed the 636 Orders to the U.S. Court of
Appeals for the Eleventh Circuit and for the D.C. Circuit. PSE&G has been
granted status as an intervenor in these appeals. However, the appeals have not
had the effect of staying the 636 Orders.
PSE&G's gas business will also be affected by the extent to which New
Jersey public utility regulation may be modified to be reflective of these new
competitive realities. On November 10, 1993, the BRC adopted a proposal for the
unbundling of traditional services provided by the local gas distribution
companies within the State of New Jersey. The proposal was developed as a
guideline with the intention of encouraging and promoting unrestricted access to
natural gas and natural gas related services in New Jersey for all customer
classes except, at this time, the residential end user. The guidelines are
directed at developing a more competitive environment for the natural gas
industry within the state. The action by the BRC requires that local
distribution companies within New Jersey file modifications to their tariffs for
gas service which comply with the guidelines by April 1, 1994.
These regulatory changes, coupled with other economic factors, have made
and are expected to make the gas supply business extremely competitive. However,
the changes provide PSE&G, as a large pipeline customer, the opportunity to
convert its remaining pipeline sales contracts to transportation agreements and
purchase the natural gas supplies directly from a producer or other seller. Most
of PSE&G's sales contracts have been converted during the past year.
Fluctuation in the price of oil results in the loss of gas sales, at
certain times, to customers with dual fuel capability. In addition, other
companies supply gas service in certain portions of PSE&G's electric territory
and others supply electricity in parts of PSE&G's gas service area. Also, as
discussed above, as a result of deregulation, pipeline customers, such as PSE&G,
have the opportunity to convert a portion of their pipeline sales contracts to
transportation agreements and purchase the natural gas supplies directly from a
producer or other seller of natural gas, increasing competition in the gas
market by encouraging pipelines to act as non-discriminatory transporters of
natural gas. Aggressive competition in the gas supply business is expected to
continue.
Customers
As of December 31, 1993, PSE&G provided service to approximately 1,900,000
electric customers and 1,500,000 gas customers. PSE&G is not dependent on a
single customer or a few customers for its electric or gas sales. For the year
ended December 31, 1993, PSE&G's operating revenues aggregated $5.3 billion, of
which 70% was from its electric operations and 30% from its gas operations.
These revenues were derived as follows:
ELECTRIC GAS
--------- ---
Residential................................................ 33% 53 %
Commercial................................................. 43 32
Industrial................................................. 21 13
Transportation Service Gas................................. -- 1
Other...................................................... 3 1
--- ---
Total................................................. 100% 100%
--- ---
--- ---
4
13
In July 1993, PSE&G and its largest industrial customer submitted a
proposed electric tariff modification to the BRC, providing for a $9 million or
23% rate discount, with PSE&G's shareholders absorbing $2.4 million or 27% of
the discount. The proposed tariff modification was designed to dissuade the
customer from buying its electricity supply from a third party nonutility
generator. In December 1993, following extensive proceedings, the BRC recognized
the need for flexible pricing in a competitive market, approved the requested
discount but required PSE&G's shareholders to absorb $3.8 million or 42% of such
discount. The decision allows PSE&G a special tariff for certain large
customers.
Customers of PSE&G, as well as those of other New Jersey electric and gas
utilities, pay NJGRT which, in effect, adds approximately 13% to their bills.
The NJGRT is a unit tax based on electric kilowatt hour and gas therm sales.
This tax differential coupled with the increasing ability of large volume
electric and gas companies to obtain their energy supplies from nonutility
sources not subject to NJGRT could result in a significant decrease in PSE&G's
revenues and earnings.
PSE&G's business is seasonal in that sales of electricity are higher during
the summer months because of air conditioning requirements and sales of gas are
greater in the winter months due to the use of gas for space-heating purposes.
CONSTRUCTION AND CAPITAL REQUIREMENTS
PSE&G
PSE&G has substantial commitments as part of its ongoing construction
program which includes capital requirements for nuclear fuel. PSE&G's
construction program is continuously reviewed and periodically revised as a
result of changes in economic conditions, revised load forecasts, changes in the
scheduled retirement dates of existing facilities, changes in business plans,
site changes, cost escalations under construction contracts, requirements of
regulatory authorities and laws, the timing of and amount of electric and gas
rate changes and the ability of PSE&G to raise necessary capital. Pursuant to an
integrated electric resource plan (IRP), PSE&G periodically reevaluates its
forecasts of customer load and peak growth and the sources of electric
generating capacity load and DSM to meet such projected growth (see DSM). The
IRP takes into account assumptions concerning future customer demand,
effectiveness of conservation and load management activities, the long-term
condition of and projected additions to PSE&G's plants and capacity available
from electric utilities and other non-utility suppliers.
Based on PSE&G's current IRP and PSE&G's construction program, construction
expenditures are expected to aggregate approximately $4.2 billion during the
years 1994 through 1998, including $483 million for nuclear fuel and $133
million of allowance for funds used during construction (AFDC) and capitalized
interest. For additional information, see Management's Discussion and Analysis
of Financial Position and Results of Operation (MD&A) -- Liquidity and Capital
Resources and Note 12 -- Commitments and Contingent Liabilities -- Construction
and Fuel Supplies of Notes to Consolidated Financial Statements.
PSE&G's estimate of its electric construction expenditures, including AFDC,
for the years 1994 through 1998, described above, recognizes the current and
planned results of PSE&G's IRP which is designed to reduce the rate of growth in
its electric system peak demand and improve system load factor without
restricting the continued economic development of PSE&G's service area. PSE&G's
DSM Plan includes rebates for high efficiency appliances and heating equipment,
audits, loans, seal-ups and for larger customers, an overall standard offer for
eligible DSM end-users. PSE&G's 1993 IRP includes a demand forecast of the
average compound annual rate of growth through the year 2003 of electric system
peak demand of 1.1%. (See PSE&G -- Other Power Purchases and DSM.) Aggressive
conservation and load management efforts are expected to reduce the system peak
by 860 megawatts (MW) by 1998. By the year 2003, 1,323 MW are expected to be
saved through these programs.
The second component of PSE&G's consists of expected additions to
nonutility generation (NUG) from cogenerators, independent power producers and
refuse burning generators. These additions are projected to be 139 MW and are
scheduled for service by 1998. NUG projects are expected to grow from
approximately 4% of
5
14
efficient additions at Bergen Generating Station would allow PSE&G to retire
approximately 750 MW of older, less efficient generating units by 2000, if
economically and environmentally desirable. (See Note 12 -- Commitments and
Contingent Liabilities of Notes to Consolidated Financial Statements.)
In addition, PSE&G's construction program is also focusing on upgrading
electric and gas transmission and distribution systems and constructing new
transmission and distribution facilities to serve new load. Gross additions to
PSE&G's utility plant during the three-year period ended December 31, 1993
amounted to approximately $2.5 billion, including $83 million of AFDC.
Retirements of utility plant for the same period totaled $500 million. In 1993,
construction expenditures amounted to $890 million, including $27 million of
AFDC. Retirements for 1993 aggregated $102 million.
EDHI
Following a 1992 focused audit (see Regulation) of Enterprise's nonutility
businesses which concluded that such businesses had not harmed PSE&G, in April
1993, the BRC accepted a Focused Audit Implementation Plan in which Enterprise
agreed, among other things, that it will not permit its investments in EDHI, as
defined in the agreement, to exceed 20% of its consolidated assets without prior
notice to the BRC and that debt supported by a support agreement (see Financing
Activities) between Enterprise and Capital will be limited to $750 million, with
a good faith effort to eliminate such support over the next six to ten years.
(See Regulation and MD&A -- Liquidity and Capital Resources.)
As of December 31, 1993 and 1992, respectively, EDHI's long-term
investments and property, plant and equipment were as follows:
1993 1992
------ ------
(MILLIONS OF
DOLLARS)
Long-Term Investments: (net of valuation allowances)
PSRC..................................................... $1,277 $1,396
CEA...................................................... 207 153
EGDC..................................................... 30 29
------ ------
1,514 1,578
------ ------
Property, Plant and Equipment (net of accumulated depreciation
and amortization and valuation allowances):
1993 1992
------ ------
(MILLIONS OF
DOLLARS)
EDC...................................................... 506 507
EGDC..................................................... 91 203
PSRC..................................................... 20 22
Other.................................................... 2 2
------ ------
619 734
------ ------
Total............................................ $2,133 $2,312
------ ------
------ ------
For further discussion of capital requirements, investments and internal
generation of cash from operations, see MD&A -- Liquidity and Capital Resources,
and Note 7 -- Long-Term Investments, of Notes to Consolidated Financial
Statements. For a discussion of sinking fund payments and maturities through
1998 see Note 6 -- Schedule of Consolidated Long-Term Debt.
FINANCING ACTIVITIES
For a discussion of issuance, book value and market value of Enterprise's
Common Stock and external financing activities of Enterprise, PSE&G and EDHI for
the year 1993, see MD&A -- Liquidity and Capital Resources. Enterprise's Common
Stock is listed on the New York and Philadelphia Stock Exchanges.
6
15
In 1988, Enterprise entered into a support agreement with Capital which
provides, among other things, that Enterprise (i) maintain its ownership,
directly or indirectly, of all outstanding common stock of Capital, (ii) cause
Capital to have at all times a positive tangible net worth of at least $100,000
and (iii) make sufficient contributions of liquid assets to Capital in order to
permit it to pay its debt obligations.
Capital borrows on behalf of EDC, CEA, PSRC and EGDC and Funding borrows on
behalf of EDC, CEA and PSRC. Capital and Funding enter into financial agreements
with banks and other lenders in providing funds to the operating subsidiaries.
The operating subsidiaries generate cash from operating activities and
short-term investments are made on behalf of the operating subsidiaries only if
such funds cannot be employed in intercompany loans. Intercompany borrowing
rates are established with reference to market rates of interest at Capital's
and Funding's respective cost of funds. As of December 31, 1993, EDHI's
consolidated long-term debt and short-term commercial paper and loan debt was
$892 million and $151 million, respectively.
For further discussion of long-term debt and short-term debt, see Note
11 -- Short-Term Debt (Commercial Paper and Loans) and Note 12 -- Schedule of
Long-Term Debt of Notes to Consolidated Financial Statements.
FEDERAL INCOME TAXES
For information regarding Federal income taxes, see Note 1 -- Organization
and Summary of Significant Accounting Policies, Note 2 -- Rate Matters and Note
9 -- Federal Income Taxes of Notes to Consolidated Financial Statements.
CREDIT RATINGS
The current ratings of securities of Enterprise's subsidiaries set forth
below reflect the respective views of the rating agency furnishing the same,
from whom an explanation of the significance of such ratings may be obtained.
There is no assurance that such ratings will continue for any given period of
time or that they will not be revised downward or withdrawn entirely by such
rating agencies, if, in their respective judgment, circumstances so warrant. Any
such downward revision or withdrawal of such ratings, or any of them, may have
an adverse effect on the market price of Enterprise's Common Stock and PSE&G's
securities and serve to increase the cost of capital of PSE&G and EDHI.
STANDARD DUFF
PSE&G MOODY'S & POOR'S & PHELPS
------------------------------------------------------- ------- -------- --------
Mortgage Bonds......................................... A2 A- A
Debenture Bonds........................................ A3 BBB+ A-
Preferred Stock........................................ A3 BBB+ A-
Commercial Paper....................................... P1 A2 Duff 1
Fuelco:
Commercial Paper....................................... P1 A2 Duff 1
EDHI
----
Capital:
Senior Debt............................................ Baa2 BBB BBB+
Funding:
Commercial Paper(A).................................... P1 A1+ Duff 1+
(A) Supported by commercial bank letter of credit (see MD&A and Note
11 -- Short-Term Debt (Commercial Paper and Loans) of Notes to Consolidated
Financial Statements.)
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16
PSE&G
RATE MATTERS
For information concerning PSE&G's rate matters, see Note 2 -- PSE&G Rate
Matters of Notes to Consolidated Financial Statements.
For information concerning PSE&G Energy and Fuel Adjustment Clauses, see
MD&A. For information concerning PSE&G's Under (Over) recovered Electric Energy
and Gas Fuel Costs, see Note 5 -- Deferred Items of Notes to Consolidated
Financial Statements.
NUCLEAR PERFORMANCE STANDARD
PSE&G is subject to a BRC imposed nuclear performance standard with respect
to the five nuclear generating stations in which it has ownership interests:
Salem 1 and Salem 2 -- 42.59% each; Hope Creek -- 95% and Peach Bottom 2 and
Peach Bottom 3 -- 42.49% each. PSE&G operates Salem and Hope Creek and Peach
Bottom is operated by PECO Energy Inc., formerly known as Philadelphia Electric
Company, (PECO). The following table sets forth the capacity factor in
accordance with the nuclear performance standard of each of PSE&G's nuclear
units for the years indicated:
NUCLEAR UNITS 1993 1992 1991
--------------------------------------------------------------- ---- ---- ----
Capacity Factors:
Salem 1...................................................... 60% 54% 70%
Salem 2...................................................... 57% 49% 82%
Hope Creek................................................... 95% 76% 80%
Peach Bottom 2............................................... 84% 61% 55%
Peach Bottom 3............................................... 70% 80% 57%
Aggregate capacity factor of nuclear units..................... 77% 66% 71%
For information concerning such standard, see Note 12 -- Commitments and
Contingent Liabilities of Notes to Consolidated Financial Statements.
ELECTRIC OPERATIONS
The following table sets forth certain information as to PSE&G's installed
generating capacity as of December 31, 1993:
INSTALLED
SOURCE CAPACITY(MW) PERCENTAGE
----------------------------------------------------------- ------------ ----------
Conventional Steam Electric
Oil-fired(a)............................................. 2,359 23
Coal-fired New Jersey(b)................................. 1,227 12
Coal-fired Pennsylvania (mine mouth)(c).................. 770 7
Combustion Turbine(d)...................................... 2,872 27
Combined Cycle............................................. 249 2
Diesel(c).................................................. 5
Nuclear(c)
New Jersey............................................... 1,921 18
Pennsylvania............................................. 886 9
Pumped Storage(c)(d)....................................... 190 2
------------ ---
Total(e)......................................... 10,479 100
------------ ---
------------ ---
(a) Units with aggregate capacity of 1,406 MW can also burn gas.
(b) Can also burn gas.
(c) PSE&G share of jointly-owned facilities.
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17
(d) Primarily used for peaking purposes.
(e) Excludes 583 MW of nonutility generation contracted for purchase by PSE&G.
For additional information, see Item 2. Properties -- PSE&G -- Electric
Properties.
The capacity available at any time may be less than the installed capacity
because of temporary outages for inspection, maintenance, repairs, legal and
regulatory requirements or unforeseen circumstances.
The maximum one-hour demand (peak load) which PSE&G experienced in 1993 was
9,147 MW (a record) which occurred on July 8, 1993 when PSE&G's customers used a
total of 180,643 megawatthours (MWH) of electricity. (For information concerning
sales, output and capacity factors, see Certain Operating Statistics.) The peak
load in 1992 was 8,445 MW on July 14, 1992, when the day's output was 157,795
MWH of electricity. For additional information see Pennsylvania -- New Jersey --
Maryland Interconnection.
NUCLEAR OPERATIONS
Operation of nuclear generating units involves continuous close regulation
by the Nuclear Regulatory Commission (NRC). Such regulation involves testing,
evaluation and modification of all aspects of plant operation in light of NRC
safety and environmental requirements and continuous demonstrations to the NRC
that plant operations meet applicable requirements. The NRC has the ultimate
authority to determine whether any nuclear generating unit may operate. For
information concerning the performance of the nuclear units, see Nuclear
Performance Standard.
The scheduled 1994, 1995, and 1996 refueling outages, each estimated at
eight to ten weeks duration, for PSE&G's five licensed nuclear units are
expected to commence in the following months:
REFUELING OUTAGES
-----------------------------------------------
1994 1995 1996
------------- ------------- -------------
Salem 1............................... -- March September
Salem 2............................... September -- March
Hope Creek............................ March September --
Peach Bottom 2........................ September -- September
Peach Bottom 3........................ -- September --
Salem
The outage of a Salem unit causes PSE&G to incur replacement power costs of
approximately $4 million to $6 million per month. Such amounts vary, however,
depending upon the availability of other generation, the cost of purchased
energy and other factors including modifications to maintenance schedules of
other units.
On September 1, 1993, the NRC furnished PSE&G with its latest periodic
Systematic Assessment of Licensee Performance (SALP) report on Salem for the
period between December 29, 1991 and June 19, 1993. Salem received a rating "1",
the highest rating category, in three functional areas, and received a rating of
"2" in the four remaining areas. The NRC noted an improvement over the last
rating period in the Radiological Controls area and a declining trend in the
Emergency Preparedness area with good performance overall.
In order to improve Salem's materiel condition, plant and personnel
performance and address the NRC's concerns expressed in its October 1990 SALP
report, the Salem owners, including PSE&G, are in the process of augmenting
plans to improve Salem's materiel condition, upgrade procedures and enhance
personnel performance. PSE&G's share of the plan's capital requirements are
reflected in the current estimate of nuclear construction capital requirements
for the period 1994-1998. (See MD&A -- Liquidity and Capital Resources.) The
planned improvements are expected to coincide with plant operating schedules
over such five-year period. (See PSE&G -- Nuclear Performance Standard.)
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18
Hope Creek
An outage at Hope Creek causes PSE&G to incur replacement energy costs of
approximately $10 million to $16 million per month. Such amounts vary, however,
depending upon the availability of other generation, the cost of purchased
energy and other factors including modifications to maintenance schedules of
other units.
On September 1, 1993, the NRC furnished PSE&G with its latest periodic SALP
report on Hope Creek for the period between December 29, 1991 and June 19, 1993.
Hope Creek received a rating "1", the highest rating category, in six functional
areas, and received a rating of "2" in the one remaining area. The NRC noted an
improvement over the last rating period in the Maintenance/Surveillance and
Engineering/Technical Support areas and a declining trend in the Emergency
Preparedness area, with excellent performance overall.
As a result of an NRC inspection in July 1991 at Hope Creek, an enforcement
conference was held with the NRC on September 9, 1991 to discuss, among other
things, three potential violations relating to reports PSE&G submitted to the
NRC regarding reliability of motor operated valves at Hope Creek. Two violations
with no civil penalty were issued to PSE&G on October 10, 1991. The third
potential violation was investigated by the NRC's Office of Investigation (OI).
By letter dated October 20, 1993, the NRC advised PSE&G that OI concluded that
the PSE&G reports on motor operated valves which were the subject of its
investigation were incomplete and contained inaccurate information. An
enforcement conference was conducted on December 20, 1993 to review this matter.
PSE&G presented its position on the issues to demonstrate that the reports were
complete and accurate and that no violation had occurred. PSE&G cannot predict
what actions, if any, the NRC may take in this matter.
Peach Bottom
The outage of a Peach Bottom unit causes PSE&G to incur additional
replacement energy costs of approximately $4 million to $6 million per month per
unit. Such amounts vary, however, depending upon the availability of other
generation, the cost of purchased energy and other factors including
modifications to maintenance schedules of other units.
On March 19, 1993, the NRC issued its SALP Report on the performance of
activities at Peach Bottom for the period August 4, 1991 through October 31,
1992. Peach Bottom earning a rating of '1', the highest rating category, in each
of the areas of emergency preparedness and security and safeguards. The areas of
plant operations and radiological controls received a rating of '2' improving.
Each of the other three functional areas received a rating of '2'. Except for
the rating in the areas of plant operations and radiological controls (each
previously rated '2'), these were the same ratings as those received in the
prior SALP Report. The SALP Report further stated that many of the programmatic
weaknesses identified during the previous assessment period have either been
eliminated or performance has been improved. The SALP Report stated that
fundamental problems with the quality of root-cause analysis noted during the
last two periods have been resolved and that Peach Bottom's root-cause analysis
capabilities now constitute a strength. In addition, the SALP Report stated that
licensed operators staffing and training continued to strengthen, contributing
to improved plant operations performance. This assessment also highlighted
several areas needing improvement. Increased management attention is needed to
address weaknesses in plant performance monitoring and engineering and technical
support.
Enterprise and PSE&G have been advised by PECO that by letter dated June
23, 1993, PECO submitted a request to the NRC to rerate the authorized maximum
reactor core power level of both Peach Bottom units by 5% from 3,293 megawatts
thermal (Mwt) to 3,458 Mwt. The analyses and evaluations supporting this request
were completed using generic guidelines approved by the NRC. If the request is
approved, the associated hardware changes will be implemented on Peach Bottom 2
during its planned 1994 refueling outage and on Peach Bottom 3 during its
planned 1995 refueling outage.
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19
OTHER NUCLEAR MATTERS
As a by-product of their operations, nuclear generating units, including
those in which PSE&G owns an interest, produce low level radioactive waste
(LLRW). Such wastes include rags, plastic, paper and other materials of which
proper disposal must be made. Such materials are presently accumulated on site
and shipped to a federally licensed permanent disposal facility. Under
provisions of the federal Low Level Radioactive Waste Policy Act, as amended,
(LLRWPA), access to such federally licensed facilities may be, but has not been,
denied. The LLRWPA further requires that each state must provide for disposal of
LLRW by January 1, 1996. To date, New Jersey has complied with the LLRWPA by
entering into a compact with the State of Connecticut and certifying its
capability to manage, store or dispose of LLRW requiring disposal. PSE&G has
been advised that to date Pennsylvania has met such requirements by entering
into a compact with West Virginia, Maryland, Delaware and the District of
Columbia. In June 1991, New Jersey enacted legislation providing for funding of
the estimated $80 million cost of establishing such facility by 1998. The LLRWPA
will permit the State to recover the costs of such facility through fees paid by
LLRW generators. PSE&G's overall share is expected to be 30% to 40% of the
estimated total $80 million. PSE&G is currently disposing of its LLRW at a
disposal facility in Barnwell, S.C., which is expected to remain available to
PSE&G through June 1994 as long as certain contract conditions are met. After
such time, and until New Jersey provides for the disposal of LLRW, PSE&G must
provide on-site storage facilities. A LLRW storage facility to be operational in
1994 is under construction by PSE&G for Salem and Hope Creek radioactive waste.
PENNSYLVANIA -- NEW JERSEY -- MARYLAND INTERCONNECTION
PSE&G is a member of the Pennsylvania -- New Jersey -- Maryland
Interconnection (PJM) which integrates the bulk power generation and
transmission supply operations of eleven utilities in Pennsylvania, New Jersey,
Delaware, Maryland, Virginia and the District of Columbia and, in turn, is
interconnected with other major electric utility companies in the northeastern
part of the United States. The PJM is operated as one system and provides for
the purchase and sale of power among members on the basis of reliability of
service and operating economy. As a result, the most economical mix of
generating capability available is used to meet PJM daily load requirements and
PSE&G's output, as shown under Electric Fuel Supply, reflects purchased power
because at times it is more economical for PSE&G to purchase power from PJM and
others than to produce it. As of December 31, 1993, the aggregate installed
generating capacity of the PJM companies was 55,575 MW. The peak one-hour demand
experienced by the PJM power pool was 46,429 MW which occurred on July 8, 1993.
The 1993 peak was 559 MW higher than the previous peak of 45,870 MW, which
occurred on July 23, 1991. PSE&G's capacity obligations to the PJM system vary
from year to year due to changes in system characteristics. PSE&G expects to
have sufficient installed capacity to meet its obligations during the 1994-95
period.
A sustained cold wave swept across the Midwest and through the Mid-Atlantic
states during the week of January 17, 1994. Faced with customer demands that far
exceeded expectations and cold weather related problems with their generators
and fuel supplies, PJM's utility companies imported large blocks of power over
their transmission systems from utilities throughout the Eastern Interconnection
System. The Eastern Interconnection System, of which PJM is a member, had
forecast a maximum one-hour demand on its system of 334,000 MW, while the actual
demand was 375,000 MW. In order to protect the reliability of its bulk electric
supply system, PJM had to institute emergency procedures, including a 5% voltage
reduction, as well as rolling blackouts, to certain firm customers. During this
week, the peak one-hour demand experienced by the PJM power pool was 41,351 MW,
which occurred on January 18, 1994.
OTHER POWER PURCHASES
As previously noted, an element of PSE&G's IRP is the purchase of
electricity directly from certain utilities and NUGs. During 1993, PSE&G
purchased approximately 21.1% of its total electric output from these sources,
with NUGs providing 9.4% of PSE&G's total electrical energy. Two-party purchases
are expected to provide about 15% of such requirements by 1998 as resource
recovery, cogeneration and other
11
20
NUG facilities are constructed. Such two-party purchases reflect an increase in
NUGs and a decrease in net utility purchases.
PSE&G is also a party to the Mid-Atlantic Area Coordination Agreement which
provides for review and evaluation of plans for generation and transmission
facilities and other matters relevant to reliability of the bulk electric supply
systems in the Mid-Atlantic area.
PSE&G expects to be able to continue to meet the demand for electricity on
its system through operation of available equipment and by power purchases.
However, if periods of unusual demand should coincide with outages of equipment,
PSE&G could find it necessary at times to reduce voltage or curtail load in
order to safeguard the continued operation of its system.
DSM
As previously indicated, PSE&G is increasingly relying on DSM as an
integral part of its IRP. In order to encourage DSM, the BRC adopted rules in
late 1991 providing special incentives to encourage utilities to offer these
load management conservation services. The rules are designed to place DSM on an
equal footing with supply side or energy production investments. Both NEPA and
the New Jersey Energy Master Plan call for conservation to play a significant
role in meeting New Jersey's energy needs over the coming decade. PSE&G's DSM
Incentive Resource Plan (DSM Plan) has been approved by the BRC. The IRP calls
for PSE&G to utilize conservation and DSM to meet over half of incremental
resource needs for the next decade. (See Construction and Capital Requirements.)
PSE&G's DSM Plan is designed to encourage investment in energy-saving DSM
activities in New Jersey. These activities involve new techniques and
technologies, such as high-efficiency lighting and motors, that help reduce
customer demand for energy. The DSM Plan presents a two-phase approach -- a core
program that includes many of the conservation programs now available to
customers and a performance-based program that would offer payments for
introducing DSM technology and services that result in measurable energy
savings. The performance-based proposal uses a standard offer technique that
would provide direct payments for kilowatthours of electricity and therms of gas
saved through investments in DSM. Over the first two years, the DSM Plan is
designed to save about 150 megawatts of peak load capacity and about six million
therms of natural gas. PSE&G's current electric resource/demand forecast
projects 607 MW of passive DSM and 806 MW of active DSM required by the year
2004.
In December 1992, the BRC approved the recovery by PSE&G of all of its DSM
Plan costs through its Levelized Energy Adjustment Clause (LEAC) and Levelized
Gas Adjustment Clause (LGAC). In addition, PSE&G may recover through its LEAC
and LGAC lost revenues associated with the reduced consumption of electricity
and natural gas. See Note 2 -- Rate Matters of Notes to Consolidated Financial
Statements.
PSE&G has established PSCRC to offer DSM services to utility customers.
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21
ELECTRIC FUEL SUPPLY
The following table indicates PSE&G's kilowatthour (Kwh) output by source
of energy:
ACTUAL ESTIMATED
SOURCE 1993 1994
------------------------------------------------------------------ ------ ---------
Nuclear
New Jersey facilities........................................... 32% 29%
Pennsylvania facilities......................................... 15 14
Fossil
Coal
New Jersey facilities........................................ 9 9
Pennsylvania facilities...................................... 13 12
Natural Gas..................................................... 5 8
Residual Oil.................................................... 1 1
Net PJM Interchange............................................... 4 5
Two-Party Purchases (Including NUGs).............................. 21 22
------ ---
Total................................................... 100% 100%
------ ---
------ ---
PSE&G's cost of fuel used to generate electricity in the periods shown
below was as follows:
COAL
------------------------------------------
NEW JERSEY PENNSYLVANIA NATURAL
NUCLEAR OIL FACILITIES FACILITIES GAS
------- ------------------- ------------------ ------------------ -------
CENTS/ CENTS/ CENTS/ CENTS/ CENTS/
MILLION $/ MILLION MILLION MILLION MILLION
YEAR BTU BARREL BTU $/TON BTU $/TON BTU BTU
- ---- ------- ------ ------- ----- ------- ----- ------- -------
1991 63.3 23.51 383.6 60.10 221.8 42.52 172.3 186.1
1992 60.8 21.70 351.7 58.24 214.0 32.98 133.4 207.4
1993 59.3 23.44 384.5 55.45 203.8 33.73 136.6 221.7
Substantially all of PSE&G's electric sales are made under rates which are
designed to permit the recovery of increases in energy costs over base costs on
a current annual basis. (See PSE&G -- Rate Matters -- Adjustment Clauses.)
Oil
PSE&G uses residual oil in its conventional fossil-fired, steam-electric
units. The supply of residual oil is furnished by one contract supplier, which
contract expires December 31, 1994, supplemented by occasional spot market
purchases. PSE&G uses distillate fuel in its combustion turbines which is
acquired by spot market purchases. PSE&G does not presently anticipate any
difficulties in obtaining oil supplies.
Natural Gas
PSE&G utilizes surplus gas, available from its long-term, high load factor
gas contracts and from various short-term purchases, to replace other fuels for
electric generation. In October 1990, the BRC approved a Stipulation whereby the
method of pricing natural gas to the electric department of PSE&G was set at a
rate consisting of a fixed contribution to rates of firm gas customers of $2.4
million per month and a variable charge equal to the cost of gas to PSE&G's gas
department plus $0.01 for each dekatherm of natural gas used as fuel for
electric generation. This rate is subject to change by the BRC as part of
PSE&G's LGAC. (See PSE&G Rate Matters.)
Presently, there are no effective legal restrictions on the use of natural
gas for electric generation in existing plants. However, approval by FERC is
required for the interstate transportation of natural gas, either by virtue of
existing blanket authority or through individual proceedings. (See Competition
and Gas Supply.)
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Coal
Approximately 40% of PSE&G's coal supply for its New Jersey facilities is
obtained under a contract which expires in 1999. The balance of the supply is
contracted on an annual basis from various suppliers, many of whom PSE&G has
dealt with on a continuing basis for a number of years, and is supplemented by
spot market purchases. Since 1971, the New Jersey Air Pollution Control Code
(NJAPCC) has permitted the burning of coal with a sulfur content of up to 1% at
existing coal-fired generating stations including PSE&G's three coal-fired New
Jersey units, Hudson 2 and Mercer 1 and 2. The weighted monthly average sulfur
content of the coal received at Hudson Station and at Mercer Station must not
exceed 1.0% (dry weight basis). PSE&G has been able to obtain sufficient
quantities of 1% or less sulfur coal and does not presently anticipate any
difficulties in obtaining adequate coal supplies to replace expiring contracts.
(See Environmental Controls -- Air Pollution Control).
PSE&G has approximately a 23% interest in the Keystone and Conemaugh
coal-fired generating stations located in western Pennsylvania and operated by
Pennsylvania Electric Company (Penelec). At least 67%, optionally up to 100%, of
the fuel required by the Keystone station is supplied by one coal company under
a contract which expires December 31, 2004. At least 20% of the fuel required by
Conemaugh station is supplied by another coal company under a contract which
expires on December 31, 1997. In addition, approximately 50% of Conemaugh's coal
requirements is supplied under a mix of short-term contracts which expire on
September 30, 1994 and January 31, 1995. The balance of the fuel requirements
for each station is supplied through spot purchases obtained from local
suppliers. Penelec has advised PSE&G that it does not expect any difficulties in
obtaining adequate coal supplies. (See Environmental Controls).
Nuclear Fuel
The supply of fuel for nuclear generating units involves the mining and
milling of uranium ore to uranium concentrate, conversion of the uranium
concentrate to uranium hexafluoride, enrichment of that gas, conversion of the
enriched gas to fuel pellets and fabrication of fuel assemblies. After spent
fuel is removed from a nuclear reactor, it is placed in temporary storage for
cooling in a spent fuel pool at the nuclear station site. Under the Nuclear
Waste Policy Act of 1982, as amended, (NWPA), the Federal government has a
contractual obligation for transportation and ultimate disposal of the spent
fuel, as discussed below.
PSE&G has several long-term contracts with ore operators to process uranium
ore to uranium concentrate to meet the current projected requirements for the
Salem and Hope Creek units fully through the year 2000 and, thereafter, 60% of
their requirements through the year 2002.
Present contracts for conversion, enrichment and fabrication services meet
the fuel cycle requirements for Salem and Hope Creek units through the years
shown in the following table:
NUCLEAR UNIT CONVERSION ENRICHMENT FABRICATION
---------------------------------------------- ---------- ---------- -----------
Salem 1....................................... 2000 (1) 2004
Salem 2....................................... 2000 (1) 2005
Hope Creek.................................... 2000 (1) 2000
(1) 100% coverage through 1998 and, 30% through 2001. PSE&G has exercised its
option to remain uncommitted under the United States Enrichment Corporation
(USEC) enrichment contract from 1999 -- 2002; however, this action does not
exclude USEC enrichment services from consideration in this period. PSE&G
does not anticipate any difficulties in obtaining necessary enrichment
service for its Salem and Hope Creek units.
As a result of NEPA, all utilities owning nuclear units will be responsible
to co-fund with the United States Government a decontamination and
decommissioning fund for the United States Department of Energy (DOE) enrichment
facilities. Both PSE&G and PECO are responsible for making annual payments into
this fund through 2008, with payments based on enrichment services purchased.
(See Note 3 -- PSE&G Nuclear Decommissioning and Amortization of Nuclear Fuel).
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PSE&G has been advised by PECO that it has contracts for uranium
concentrates which will satisfy the fuel requirements of Peach Bottom 2 and 3
through 1996. PSE&G has also been advised by PECO that its contracts for uranium
concentrates will be allocated to Peach Bottom 2 and 3, and two other nuclear
generating units in which PSE&G does not have an interest, on an as needed
basis.
PECO has also advised PSE&G that it has contracted for the following
segments of the nuclear fuel supply cycle for Peach Bottom 2 and 3 through the
following years:
NUCLEAR UNIT CONVERSION ENRICHMENT FABRICATION
---------------------------------------------- ---------- ---------- -----------
Peach Bottom 2................................ 1997 2008 1999
Peach Bottom 3................................ 1997 2008 1998
PECO has exercised an option under its current enrichment contract to
terminate enrichment services for the years 2000 thru 2002 for Peach Bottom and
another of its nuclear facilities.
The Federal government's present policy is that spent nuclear fuel will be
accepted for long-term storage at government-owned and operated repositories. At
present no such repositories are in service.
In conformity with the NWPA, PSE&G entered into contracts with the DOE for
the disposal of spent nuclear fuel from Salem and Hope Creek. Similarly, PECO
contracted with the DOE in connection with Peach Bottom 2 and 3. Under these
contracts, the DOE will take title to the spent fuel at the site, then transport
it and provide for its permanent disposal at a cost to utilities with nuclear
facilities of one mil per Kwh of nuclear generation, subject to such escalation
as may be required to assure full cost recovery by the Federal government. In
addition, a one-time payment was made to the DOE for permanently discharged
spent fuels irradiated prior to 1983. Under this legislation, the Federal
government must commence the acceptance of these materials for permanent
off-site storage no later than 1998. In December 1989, the DOE announced that it
would not be able to open a permanent, high-level nuclear waste storage facility
until 2010, at the earliest. The DOE stated it would seek legislation from
Congress for the construction of a temporary storage facility (TSF) which would
accept spent nuclear fuel from utilities in 1998 or soon thereafter. On October
18, 1990, the NRC determined that spent nuclear fuel generated in any reactor
can be stored safely and without significant environmental impacts in reactor
facility storage pools or in independent spent fuel storage installations
located at reactor or away-from-reactor sites for at least 30 years beyond the
licensed life for operation (which may include the term of a revised or renewed
license). The DOE has stated that neither the NWPA nor its contracts imposes an
unconditional obligation to accept spent fuel by 1998 and indicated that such
obligation is conditional upon commencement of TSF operations. The DOE has also
stated its belief that it will have a TSF operational by 1998.
Salem 1 and 2 have adequate on-site temporary storage capability through
March 1998 and March 2002, respectively, when operational full core discharge
capability requirements are considered. PSE&G has developed an integrated
strategy to meet the longer term Salem and Hope Creek spent fuel storage needs.
PSE&G plans to replace the existing high density racks in the spent fuel pools
of Salem 1 and 2 with maximum density racks. The Salem re-racking project
commenced in early 1992 and is expected to extend the storage capability through
March 2008 for Salem 1 and March 2012 for Salem 2. When the Hope Creek pool is
fully racked, it will have the capacity to hold spent fuel through September
2007. PECO has advised PSE&G that spent fuel racks at Peach Bottom 2 have
storage capacity until 1997 for Unit 2 and 1998 for Unit 3 and that expansion of
storage capacity beyond such dates, including the viability of rod
consolidation, are being investigated.
In accordance with NWPA, utilities owning an interest in nuclear generating
facilities are required to determine the costs and methods of funding the costs
necessary to decommission such facilities upon commencement of operation. As a
general practice, a utility funding such costs places funds in trust accounts it
maintains. The utility recovers from its customers the amounts paid into the
trust fund over a period of years. For information concerning enrichment of
nuclear fuel and nuclear decommissioning costs, see Note 3 -- PSE&G Nuclear
Decommissioning and Amortization of Nuclear Fuel of Notes to Consolidated
Financial Statements.
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GAS OPERATIONS
PSE&G supplies its gas customers principally with natural gas. PSE&G
supplements natural gas with purchased refinery gas and liquefied petroleum gas
produced from propane. The adequacy of supply of all types of gas is affected by
the nationwide availability of all sources for energy production.
As of December 31, 1993, the daily gas capacity of PSE&G was as follows:
TYPE OF GAS THERMS PER DAY
-------------------------------------------------------------- --------------
Natural gas................................................... 22,731,000
Liquefied petroleum gas....................................... 2,200,000
Refinery gas.................................................. 400,000
--------------
Total............................................... 25,331,000
--------------
--------------
About 40% of the daily gas capacity is high load factor natural gas and is
available every day of the year. The remainder comes from field storage,
liquefied natural gas, seasonal sales, contract peaking supply, propane and
refinery gas.
PSE&G's total gas sold to and transported for its various customer classes
in 1993 was 3.7 billion therms which consisted of approximately 96% natural gas.
Included in this amount is 561 million therms of gas delivered to customers
under PSE&G's transportation tariffs and individual cogeneration contracts. (See
Certain Operating Statistics of PSE&G). During 1993, PSE&G purchased
approximately 3.4 billion therms of gas for its combined gas and electric
operations directly from natural gas producers and marketers including
Enterprise's wholly-owned indirect subsidiary EDC, and the balance from
traditional pipeline suppliers. These supplies were transported to New Jersey by
PSE&G's traditional pipeline suppliers: Transcontinental Gas Pipe Line
Corporation, Texas Eastern Transmission Corporation, Tennessee Gas Pipeline
Company and Columbia Gas Transmission Corporation. This diversification of
supply sources provides PSE&G with reliability of supply, purchasing flexibility
and lower overall costs.
PSE&G's supply contracts expire at various times over approximately the
next seven to ten years. PSE&G does not presently anticipate any difficulty in
negotiating replacement contracts. Since the quantities of gas available to the
Company under its supply contracts are more than adequate in warm months, PSE&G
nominates part of such quantities for storage, to be withdrawn during the winter
season, under storage contracts with its principal suppliers. Underground
storage capacity currently is approximately 764 million therms. The BRC directed
that the terms of the contracts relating to PSE&G's gas purchases from EDC be
renegotiated. (See Regulation.) In PSE&G's last base rate case, the BRC
established a new pricing mechanism for sales from EDC to PSE&G and also
provided that PSE&G discontinue gas purchases from EDC no later than September
30, 1994. PSE&G does not presently anticipate any difficulty in obtaining
adequate supplies of natural gas.
PSE&G's annual average cost of natural gas sendout is shown below:
CENTS PER
YEAR MILLION BTU(A)
------------------------------------------------------ --------------
1991.................................................. 311.38
1992.................................................. 311.16
1993.................................................. 340.78
(A) Excludes contribution by electric department for gas reservation charge and
natural gas refunds from suppliers.
Substantially all of PSE&G's gas sales are made under rates which are
designed to permit the recovery of projected increases in the cost of natural
gas and gas from supplemental sources, when compared to levels included in base
rates, on a current annual basis. (See PSE&G -- Rate Matters -- Adjustment
Clauses.)
The demand for gas by PSE&G's customers is affected by customer
conservation, economic conditions, the weather, the price relationship between
gas and alternative fuels and other factors not within PSE&G's
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control. Presently, the majority of gas sold in interstate commerce has become
deregulated. The ability of gas prices to respond to market conditions has
improved in recent years because of actions taken by the FERC. Pipeline
companies are able to adjust their gas rates up or down through their purchased
gas adjustment mechanism more often than the semi-annual filings of prior years.
As previously discussed, FERC orders provided pipeline customers, such as PSE&G,
with the opportunity to convert a portion of their pipeline sales contracts to
transportation agreements and purchase natural gas supplies directly from a
producer or other seller of natural gas. This regulatory framework has increased
competition in the gas market by encouraging pipeline companies to act as
non-discriminatory transporters of natural gas. PSE&G has used these regulations
to lower its overall gas costs through the displacement of higher cost contract
supplies with lower cost spot gas purchases and long-term producer contract
supplies. (See PSE&G -- Competition.)
PSE&G was able to meet all of the demands of its firm customers during the
1992-93 winter season and expects to continue to meet such energy-related
demands of its firm customers during the 1993-94 winter season. However, the
sufficiency of supply could be affected by several factors not within PSE&G's
control, including curtailments of natural gas by its suppliers, the severity of
the winter, the extent of energy conservation by its customers and the
availability of feedstocks for the production of supplements to its natural gas
supply. During the 1993-94 heating season through February 7, 1994, it was
necessary for PSE&G to interrupt service to 'interruptible' customers as
permitted by the applicable tariff for 22 days. During the 1992-93 heating
season, service to such customers was interrupted for 11 days.
EMPLOYEE RELATIONS
Enterprise has no employees. As of December 31, 1993, Enterprise's
subsidiaries employed 12,428 persons, of which 12,027 were employed by PSE&G, 17
by PSCRC, 244 by EDC, 107 by CEA, 10 by PSRC and 28 by EDHI. Enterprise and EDHI
and its subsidiaries reimburse PSE&G for the costs of services provided by
employees of PSE&G.
For information concerning employee pension plan and other post-employment
benefits, see Note 1 -- Organization and Summary of Significant Accounting
Policies, Note 13 -- Postretirement Benefits Other Than Pensions and Note
14 -- Pension Plan of Notes to Consolidated Financial Statements.
REGULATION
Enterprise has claimed an exemption from regulation by the SEC as a
registered holding company under PUHCA, except for Section 9(a)(2) thereof,
which relates to the acquisition of 5% or more of the voting securities of an
electric or gas utility company. Enterprise is not subject to direct regulation
by the BRC, except potentially with respect to certain transfers of control and
reporting requirements, and is not subject to regulation by the FERC. The BRC
may also impose certain requirements with respect to affiliate transactions
among PSE&G, Enterprise and its nonutility subsidiaries. (See EDHI.)
As a New Jersey public utility, PSE&G is subject to comprehensive
regulation by the BRC including, among other matters, regulation of intrastate
rates and service and the issuance and sale of securities. As a participant in
the ownership and operation of certain generation and transmission facilities in
Pennsylvania, PSE&G is subject to regulation by the Pennsylvania Public Utility
Commission (PPUC) in limited respects in regard to such facilities.
PSE&G is subject to regulation by FERC and by the Economic Regulatory
Administration, both within DOE, with respect to certain matters, including
regulation by FERC with respect to interstate sales and exchanges of electric
transmission, capacity and energy, including cogeneration and small power
production projects being constructed pursuant to PURPA, and accounts, records
and reports. PSE&G is also subject to regulation by the United States Department
of Transportation (USDOT) with respect to safety standards for pipeline
facilities and the transportation of gas under the Natural Gas Pipeline Safety
Act of 1968.
In addition, the Need Assessment Act provides that no public utility shall
commence construction of any electric facility (as defined in the Need
Assessment Act) without having first obtained from the Division of Energy
Planning and Conservation within the New Jersey Department of Environmental
Protection and
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Energy (NJDEPE) a certificate of need. A certificate of need, if granted, is
valid for three years, renewable subject to review by the Commissioner of the
NJDEPE. Under the Need Assessment Act, no state or local agency may issue any
license or permit required for any such construction or substantial expansion
prior to the issuance of the certificate of need. An electric facility is
defined under the Need Assessment Act as any electric power generating unit or
combination of units at a single site with a capacity of 100 MW or more or any
such units added to an existing electric generating facility which will increase
its installed capacity by 25% or by more than 100 MW, whichever is smaller. A
certificate of need shall be issued only if the NJDEPE Commissioner determines
that the proposed facility is necessary to meet the projected need for
electricity in the area to be served and that no more efficient, economical or
environmentally sound alternative is available. For a discussion of the
repowering of Bergen Generating Station, see Note 12 -- Commitments and
Contingent Liabilities of Notes to Consolidated Financial Statements.
For information concerning nuclear insurance coverages, the BRC's nuclear
performance standard (Standard) and assessments and the Price-Anderson
Amendments Act of 1988, as amended, see Note 12 -- Commitments and Contingent
Liabilities of Notes to Consolidated Financial Statements.
The New Jersey Public Utility Accident Fault Determination Act (Fault Act)
requires the BRC to make a determination of fault with regard to any past or
future accident at any electric generating or transmission facility prior to
granting a request by any utility for a rate increase to cover accident-related
costs in excess of $10 million. Fault, as defined in the Fault Act, means any
negligent action or omission of any party which either contributed substantially
to causing the accident or failing to mitigate its severity. However, the Fault
Act allows the affected utility to file for non-accident related rate increases
during such fault determination hearings and to recover contributions to
federally mandated or voluntary cost-sharing plans and allows the BRC to
authorize the recovery of certain fault-related repair, clean-up, power
replacement and damage costs if substantiated by the evidence presented and if
authorized in writing by the BRC. The Fault Act could have a material adverse
effect on PSE&G's financial position if such an accident were to occur at a
PSE&G facility and it was ultimately determined that the accident was due to the
fault of PSE&G and the BRC were to deny recovery of all or a portion of the
costs related thereto.
PSE&G has included net replacement power costs related to a turbine
generator failure at Salem 2 on November 9, 1991 in its current LEAC. The cost
of this replacement power, net of insurance recoveries, is significantly below
the $10 million threshold discussed above, which would require hearings and
actions under the Fault Act. However, the BRC Staff believes such costs are
above this $10 million threshhold and accordingly, in January 1994, advised
PSE&G that it believes that appropriate rate treatment of the net replacement
power cost should be addressed by the BRC. No additional action has been taken
on this matter. PSE&G believes that any separate regulatory treatment regarding
the net replacement power costs is not required and would be contrary to the
Standard and the Fault Act. PSE&G cannot predict the amount or timing of
recovery associated with the net replacement power costs for Salem.
Under New Jersey law, the BRC is required to audit all or a portion of the
operating procedures and other internal workings of every gas or electric
utility subject to its jurisdiction, including PSE&G, at least once every six
years. Under the law, the audit may be performed either by the BRC staff or
under the supervision of designated members of such staff by an independent
management consulting firm, chosen by the utility from a list provided by the
BRC containing at least five such firms, two of which must be of nationally
recognized stature. The BRC may, upon completion of the audit and after notice
and hearing, order the utility to adopt such new practices and procedures that
it shall find reasonable and necessary to promote efficient and adequate service
to meet public convenience and necessity. The last such management audit of
PSE&G, completed in 1991, concluded that, when compared with other leading U.S.
electric and gas utilities, PSE&G was among the best, particularly in the areas
of senior management leadership and responsiveness to external constituencies.
The audit also made a number of recommendations, the majority of which have been
implemented. A particular recommendation calling for the elimination of the use
of shared management to fulfill certain functions on behalf of both PSE&G and
EDHI was implemented by year end 1992 with the transfer of approximately 35
management positions from PSE&G to EDHI.
In addition, in 1992 the BRC, as a follow-up to such management audit,
conducted a focused audit of Enterprise's nonutility businesses to ascertain
whether diversified activities have harmed PSE&G. Enterprise
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has consistently maintained a clear and distinct separation of its utility and
nonutility operations and its diversification activities have not in any way
adversely affected the utility. On April 14, 1993, the BRC accepted the revised
Focused Audit Implementation Plan addressing the 18 recommendations of the BRC's
auditors regarding operations and intercompany relationships between PSE&G and
EDHI's nonutility businesses. Among other things, such Plan provides: (1) that
Enterprise will not permit EDHI's nonutility investments to exceed 20% of
Enterprise's consolidated assets without prior notice to the BRC (such assets
presently being approximately 15%); (2) a restructuring of the PSE&G Board to
include nonemployee Enterprise directors with an annual certification by such
Board that the business and financing plans of EDHI will not adversely affect
PSE&G; (3) Enterprise agreement to limit debt supported by the Support Agreement
between Enterprise and Capital to $750 million together with an agreement to
make a good faith effort to eliminate such support over a six to ten year
period; and (4) the payment by EDHI to PSE&G of an affiliation fee of $2 million
a year which will be applied by PSE&G through its LGAC and LEAC to reduce
utility rates. Such fee is predicated on $750 million of supported debt
outstanding and will be proportionately reduced as such debt is repaid. The
issue of Enterprise sharing the benefits of consolidated tax savings with PSE&G
or its ratepayers was not resolved by the Plan and remains open. Enterprise
believes that PSE&G's taxes should be treated on a stand-alone basis for
ratemaking purposes, based on the separate nature of the utility and nonutility
businesses. However, neither Enterprise nor PSE&G is able to predict what
action, if any, the BRC may take concerning consolidation of tax benefits in
future proceedings. (See MD&A -- Overview and Part III. Item 10 -- Directors and
Executive Officers of the Registrants.)
Construction and operation of nuclear generating facilities are regulated
by the NRC. For additional information relating to regulation by the NRC, see
Construction and Capital Requirements, PSE&G -- Rate Matters and Electric
Operations. In addition, the Federal Emergency Management Agency is responsible
for the review in conjunction with the NRC of certain aspects of emergency
planning relating to the operation of nuclear plants.
EDC is exempt from direct regulation by the BRC and FERC except that
certain FERC approval is required to transport its gas interstate from its
discovery fields. Pursuant to an agreement approved by the BRC in December 1987
and re-affirmed by a BRC Order in August 1990, EDC has provided a source of firm
gas supply to PSE&G which in 1993 accounted for approximately 9.6% of EDC's gas
sales. The BRC in December 1992, ordered that the terms of the contract be
renegotiated and that sales by EDC to PSE&G be discontinued by September 30,
1994. (See PSE&G -- Gas Operations and EDHI -- EDC).
CEA invests in and participates in the development of domestic and foreign
cogeneration and power production facilities, which include QFs under PURPA and
an EWG under PUHCA. The BRC has authority to regulate power sales agreements
within the BRC's pricing guidelines to utilities in the State of New Jersey and
ascertain that the terms and conditions of agreements with New Jersey utilities
are fair and reasonable. For additional information, see EDHI.
ENVIRONMENTAL CONTROLS
PSE&G, like most industrial enterprises, is subject to regulation with
respect to the environmental effects of its operations, including air and water
quality control, limitations on land use, disposal of wastes, aesthetics and
other matters, by various federal, regional, state and local authorities,
including the United States Environmental Protection Agency (EPA), the USDOT,
NJDEPE, the New Jersey Department of Health, the BRC, the Interstate Sanitation
Commission, the Hackensack Meadowlands Development Commission, the Pinelands
Commission, the Delaware River Basin Commission (DRBC), the United States Coast
Guard, the United States Army Corps of Engineers, the Delaware Department of
Natural Resources and Environmental Control and, with regard to its ownership
interest in the Keystone, Conemaugh and Peach Bottom generating stations in
Pennsylvania, by the PPUC and the Pennsylvania Department of Environmental
Resources (PDER). EDC, CEA and EGDC are also subject to similar regulation.
Environmental laws generally require air emissions and water discharges to
meet specified limits. They also impose potential joint and several liability,
without regard to fault, on the generators of various hazardous substances to
clean up property affected by the production and discharge of such substances.
Environmental
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controls also require, in many instances, balancing the need for additional
quantities of energy against the need to protect the environment. The necessity
to comply with environmental standards has caused PSE&G to modify the day-to-day
operation of its facilities, to participate financially in the cleanup of
various properties that have been contaminated and to modify, supplement and
replace existing equipment and facilities. Further, compliance with
environmental requirements has resulted in significant delays with respect to
construction of facilities. During 1993, PSE&G expended approximately $253
million of capital related to improving the environment, and it is estimated
that PSE&G will expend approximately $313 million, $168 million, $196 million,
$159 million and $146 million in the years 1994 through 1998, respectively, for
such purposes. Such amounts are included in PSE&G's estimates of construction
expenditures. (See MD&A -- Liquidity and Capital Resources.)
Preconstruction analyses and projections of the environmental effects of
contemplated activities and emissions are frequently required by the permitting
agency. Before licensing approvals and permits are granted, the agency usually
requests a modeling analysis of the effects of a specific action, and of its
effect in combination with other existing and permitted activities and may
request the applicant to address emerging environmental issues. Such
environmental reviews have caused delays in the proceedings for licensing
facilities and more such delays can be expected in the future. An emerging
environmental issue with respect to the construction and operation of electric
transmission and distribution lines is the possible adverse health effects of
EMF exposure. In September 1990, the New Jersey Commission on Radiation
Protection (CORP) decided against setting a limit on magnetic fields produced by
high-voltage power lines citing the lack of convincing evidence required to
determine dangerous levels. Proposed power regulations are currently under study
by CORP to cover new power lines and allow existing power lines to continue to
function regardless of new rule changes. As revised, the rules would authorize
the NJDEPE to screen all new power line projects of 100 kilovolts or more using
a principle of "as low as reasonably achievable" to demonstrate that all steps
within reason, including modest cost, were taken to reduce EMFs. The outcome of
EMF study and/or regulations and the public concerns will affect PSE&G's design
and location of future electric power lines and facilities and the cost thereof.
Such amounts as may be necessary to comply with these new EMF rules and address
public concerns cannot be determined at this time, but such amounts could be
material.
The New Jersey Environmental Rights Act provides that any person may
maintain a court action against any other person to enforce, or to restrain the
violation of, any statute, regulation or ordinance which is designed to prevent
or minimize pollution, impairment or destruction of the environment, or where no
such requirement exists, to protect the environment from pollution, impairment
or destruction. Certain Federal legislation confers similar rights on
individuals. The principal laws and regulations relating to the protection of
the environment which affect PSE&G's operations are described below.
AIR POLLUTION CONTROL
The Federal Clean Air Act (CAA) imposes stringent emission requirements
across the United States, including requirements related to the emissions of
sulfur dioxide and nitrogen oxide (NOx). Additional requirements are being
developed under the CAA by Federal and State agencies, the costs of which cannot
be quantified, but could be material. PSE&G's two wholly-owned and operated
coal-fired generating stations in New Jersey are presently expected to be able
to meet CAA sulfur dioxide requirements with only modest expenditures. PSE&G's
New Jersey generating stations are located in a severe non-attainment area for
ozone, and the CAA requires that reductions be made in NOx from major sources in
this area. A requirement for these areas is that each state impose reasonable
available control technologies on major sources of NOx effective May 1995. The
NJDEPE Regulations which were adopted in November 1993 will result in capital
expenditures of approximately $120 million over a period of years. Additional
reductions of NOx emissions will be needed continuing through the attainment
dates of 2005 and 2007 to bring the area into attainment with ozone standards.
The necessary reductions will be based upon modeling results and regulatory
agency discussions currently underway and could result in additional changes to
equipment, in methods of operation or in fuel. PSE&G also has a 22.5% interest
in Conemaugh and a 22.84% interest in Keystone coal-fired generating stations
located in western Pennsylvania. In order to comply with the CAA, the station's
co-owners, including PSE&G, have formally approved the installation of scrubbers
(flue gas desulfurization systems) at
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Conemaugh. PSE&G's share of the Conemaugh scrubber cost at year-end 1993 is now
estimated at approximately $77 million including cost of removal. Such amount is
included in PSE&G's estimate of construction expenditures. Construction at
Conemaugh is scheduled for completion by January 1, 1995 for Unit 1 and a year
later for Unit 2. Conemaugh and Keystone will also be required to reduce NOx
emissions. At year-end 1993, PSE&G's share of capital costs for NOx emission
controls are estimated at approximately $8 million for Keystone and $8.6 million
for Conemaugh.
Permitting of all major stationary sources will also be required under the
CAA. This new national air pollution emission source operating permit program
will require some PSE&G facilities to assess emissions, install continuous
emission monitors and/or make changes in facility operations or technology in
order to comply with permit conditions. All such amounts which can be quantified
and which may be necessary to comply with the revised CAA requirements through
1998 are included in PSE&G's estimate of construction expenditures. PSE&G
expects to request the BRC to allow the recovery of all such CAA costs from
electric customers, although no assurances can be given as to what action may be
taken by the BRC. In addition, the revised CAA requirements will increase the
cost of producing electricity for the Pennsylvania and Ohio Valley Region
generating units supplying electricity to the PJM and New Jersey. All of PSE&G's
current purchased power costs are included in PSE&G's LEAC.
In non-attainment areas, one of the effects of the CAA is to allow
construction or expansion of a facility only upon a showing that any additional
emissions from the source will be more than offset by reductions in similar
emissions from existing sources. In prevention of significant deterioration
areas, construction or expansion of a facility would be permitted only if
emissions from the source, together with emissions from other expected new
sources, would not violate air quality increments for particulates and sulfur
dioxide that are more stringent than the national ambient air quality standards
(NAAQS). All these requirements may affect PSE&G's ability to locate, construct
or expand generating facilities in the future.
NJDEPE is using the NJAPCC to achieve compliance with the NAAQS adopted by
EPA under the CAA. The NJAPCC currently establishes ambient air quality
standards and emission limitations for six pollutants, all of which have EPA
approval. In addition, the NJAPCC provides stringent requirements restricting
the sulfur content in coal and oil fuels. (See PSE&G -- Electric Fuel
Supply-Coal.) During 1993, the incremental costs of complying with the
low-sulfur requirements added $24 million to fuel costs and PSE&G estimates that
during 1994 such costs will add an additional $24 million. The increased cost of
purchasing low-sulfur fuel is offset by rates which are designed to permit the
recovery of fuel costs on a current annual basis. (See PSE&G -- Electric Fuel
Supply and Note 2 -- Rate Matters of Notes to Consolidated Financial
Statements.)
WATER POLLUTION CONTROL
The Federal Water Pollution Control Act (FWPCA) provides for the imposition
of technology and water-quality based effluent limitations to regulate the
discharge of pollutants into the waters of the United States. Certain PSE&G
facilities are directly regulated by permits issued pursuant to FWPCA.
Under the FWPCA, compliance with the above-referenced applicable limitation
is to be achieved under the National Pollutant Discharge Elimination System
(NPDES) permit program, which has been administered by NJDEPE since 1982
pursuant to the New Jersey Water Pollution Control Act (NJWPCA). The NJWPCA
authorizes NJDEPE to regulate discharges of pollutants to surface and ground
waters of the State. The NPDES permit program, administered by the NJDEPE, is
referred to as the New Jersey Pollutant Discharge Elimination System (NJPDES)
program. The NJPDES program provides for Discharge to Surface Water (DSW)
permits and Discharge to Ground Water (DGW) permits, among others.
Section 304(l) of the FWPCA requires all States to implement more stringent
controls on the discharges of toxics to certain water-bodies deemed contaminated
by toxic discharges. Four PSE&G electric generating stations (Bergen, Hudson,
Kearny and Sewaren) have completed effluent characterization studies to satisfy
304(l) requirements. A final permit has been issued for a fifth station, Linden,
which required similar 304(l) studies.
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The FWPCA also includes specific provisions relating to discharges of heat
and the design, location, construction and capacity of intake structures for
cooling water. Pursuant to Section 316(a) and (b) of the FWPCA, if the permittee
can demonstrate that the aquatic ecosystem is protected, then alternate thermal
limits may be imposed and/or the intake structure may be found to be the Best
Technology Available (BTA). PSE&G has submitted applications to EPA and NJDEPE
seeking variances from thermal limits and BTA determinations in connection with
six of its electric generating stations pursuant to Section 316(a) and (b). If
PSE&G's applications with respect to these generating stations do not receive
favorable action, NJDEPE may impose requirements for closed-cycle cooling, e.g.
cooling towers, or other structural modifications and/or operational
restrictions at these facilities. (See MD&A -- Liquidity and Capital Resources.)
The NJDEPE regulations relating to DGW require permits for some of PSE&G's
facilities and may require the monitoring of ground water at such locations.
PSE&G has applied for DGW permits at certain facilities as discussed below. The
total cost to comply with all applicable requirements of DGW permits at all
PSE&G facilities covered by NJPDES -- DGW permits cannot be accurately estimated
at this time, but aggregate annual ground water monitoring cost is not expected
to be material.
PSE&G has NJPDES DSW permits for its Bergen, Hudson, Kearny, Essex, Linden,
Sewaren, Edison, Mercer, Burlington, Salem and Hope Creek electric generating
stations and its Harrison gas facilities. Adjudicatory hearing requests are
pending before the NJDEPE to resolve one or more contested issues in the
above-referenced permits for Linden as discussed below.
Discussed below are pending actions or proceedings relating to specific
facilities or sites.
Bergen, Hudson, Kearny, Linden and Sewaren Stations
In January 1990, NJDEPE issued modified NJPDES DSW permits for Bergen,
Hudson, Kearny and Sewaren Stations which reflected agreements reached on all
contested issues with regard to permits issued in 1985-86, other than those
related to thermal discharge and intake structures. These permits also included
requirements pursuant to Section 304(l) of the FWPCA for additional monitoring
and analysis of discharges of certain pollutants as well as dilution studies on
the receiving waters. PSE&G requested an adjudicatory hearing to contest certain
permit conditions. In October 1991, the NJDEPE issued a draft NJPDES permit for
Sewaren Station which would impose water quality-based effluent limits both on
pollutants identified as a result of a monitoring program instituted pursuant to
Section 304(l) in non-contact cooling water and treatment plant discharges,
which could have significant adverse impact on the operations of this station.
PSE&G submitted comments addressing factual and legal issues raised by the draft
permit. PSE&G cannot anticipate whether more stringent permit limits will be
imposed in subsequent renewals/modifications to these permits as a result of
this monitoring program.
At Linden, numerous terms and conditions in a 1986 DSW permit were
contested. Agreement in principle with respect to these matters has been reached
and is reflected in the 1990 and 1992 draft permits. In January 1990, Linden
received a draft permit with regard to Section 304(1) of the FWPCA. A second
draft permit was issued in March 1992, which proposed monitoring programs
similar to those conducted at the other four stations. A final permit and a
draft permit modification were issued with respect to Linden Station in March
1993. PSE&G filed extensive comments on the 1992 draft permit addressing certain
terms and conditions with the NJDEPE on the 1992 draft permit, many of which are
reflected in the 1993 draft permit modification. In June, 1993, the NJDEPE
issued a final Major Modification to Linden's DSW permit incorporating
conditions consistent with the comments PSE&G previously filed on the 1992 draft
permit. PSE&G is evaluating whether to rescind its request for an adjudicatory
hearing based on these changes.
PSE&G filed four hearing requests on permits issued in 1990 which
incorporated requirements relating to Section 304(1). Stipulations of Settlement
resolving all contested issues in the Bergen, Hudson, Kearny and Sewaren
adjudicatory hearing requests concerning these permits have been executed. It is
anticipated that the issues relating to the Bergen permit will be similarly
resolved in the near future.
NJDEPE advised PSE&G in January 1986 that, with respect to PSE&G's Bergen,
Hudson, Kearny, Sewaren and Linden Stations, the demonstrations and reports
previously submitted to EPA supporting
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PSE&G's Section 316(a) variance requests and Section 316(b) determinations no
longer provided adequate information upon which decisions could be made. PSE&G
submitted supplemental Section 316(a) demonstrations in the spring of 1988, and
submitted supplemental Section 316(b) demonstrations in November 1988 for
Bergen, Hudson and Kearny Stations. In October 1989, PSE&G submitted
supplemental Section 316(b) demonstrations for both Linden and Sewaren Stations
and a supplemental Section 316(a) demonstration for Sewaren. The Linden
supplemental Section 316(a) demonstration was submitted January 1990. To date,
the NJDEPE has not responded to these submittals.
PSE&G received a final DGW permit for Bergen in February 1987. A hearing
request was filed and all issues but one were resolved amicably thereafter in
1987. PSE&G may ultimately contest the single unresolved issue contained in the
final Bergen DGW permit.
Mercer Station
A draft DGW permit was issued by NJDEPE for Mercer Generating Station in
February 1987. NJDEPE has taken no further action.
Salem Station
A final permit resolving all contested issues in the 1985 DSW permit, other
than those relating to Section 316, became effective in April 1989. As required
by the FWPCA, over the past 15 years, PSE&G has submitted to the EPA and NJDEPE
its demonstrations which concluded that structural modifications including
cooling towers are not required at Salem to achieve satisfactory environmental
effects. In October 1990, the NJDEPE issued a draft NJPDES Permit to the Salem
Station which required a number of new and more stringent conditions including
the immediate shutdown of both Salem units while the station was retrofitted for
closed-cycle cooling. In response to the 1990 Draft Permit, PSE&G submitted
extensive written comments to the NJDEPE regarding the ecological effects of
Station operations, and the nature, scope, and costs of retrofitting the station
for closed-cycle cooling. The estimated cost for closed-cycle cooling, based on
natural draft and forced draft technologies, range from $720 million to $2
billion including operation and maintenance costs and the cost of replacement
power during the construction periods, of which PSE&G's share would be 42.59%.
These comments demonstrated that Salem was not having and would not have an
adverse environmental impact and that closed-cycle cooling was an inappropriate
solution.
To resolve the NJDEPE's concerns, PSE&G also developed and submitted a
supplement to the permit renewal application setting forth an alternative
approach that would protect aquatic life in the Delaware Estuary and provide
broad-ranging ecological benefits. PSE&G proposed intake screen modifications to
reduce fish losses, a study of sound deterrent systems to divert fish from the
intake and a limit on intake flow of 3,024 million gallons per day. In addition,
PSE&G proposed conservation measures, including the restoration of up to 10,000
acres of degraded wetlands and the installation of fish ladders to allow fish to
reach upstream spawning areas. Finally, PSE&G proposed a comprehensive
biological monitoring program to expand existing knowledge of the Delaware
Estuary and to monitor station impacts.
In June 1993, the NJDEPE issued Salem a revised Draft Permit which
reconsidered the requirement for closed-cycle cooling and adopted alternative
measures proposed by PSE&G with certain modifications. The public comment period
on the revised Draft Permit closed January 15, 1994. The NJDEPE has received a
very substantial number of comments on the revised Draft Permit from a wide
variety of interests. These comments have included a large number of suggestions
to the NJDEPE for changes in the permit terms including: requiring, directly or
indirectly, closed cycle cooling at the station instead of the existing once-
through cooling system, seasonal reductions of the water flow through the plant,
the use of different technologies at the intake structures of the plant,
restoration of a greater number of acres of degraded wetlands, additional
control of pollutant discharges and the payment of natural resource damages for
the past or future cropping of aquatic biota at Salem. The comments to the
NJDEPE have also made a variety of claims as to alleged legal defects in the
revised Draft Permit including: failure to comply with applicable standards
under Section 316 of FWPCA, failure to assure consistency with applicable
Coastal Zone
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Management Plans, failure to comply with requirements of the DRBC and failure to
comply with procedural requirements of New Jersey and federal law.
In September 1993, PSE&G filed extensive comments in support of the terms
of the revised Draft Permit. On January 15, 1994, PSE&G filed extensive comments
with the NJDEPE which sought to respond to comments opposing the issuance of a
final permit with terms materially different than those found in the revised
Draft Permit.
NJDEPE has stated that it intends to issue a final permit in the second
quarter of 1994, but no assurances can be given as to when or in what manner
NJDEPE will act on the issuance of a final permit. The EPA has authority to veto
the issuance of a final permit by the NJDEPE and action by EPA also cannot be
predicted. Certain environmental groups have also petitioned EPA to veto any
final permit that does not require closed-cycle cooling and to withdraw NJDEPE's
permitting authority under FWPCA. If a final permit embodying the alternative
measures is issued, additional permits from various agencies will be required
for implementation, as to which no assurance can be given. Estimated capital
cost of compliance with the revised Draft Permit is approximately $75 million,
of which PSE&G's share would be 42.59%.
PSE&G would request the BRC to allow the recovery in rates from electric
customers of all costs associated with constructing cooling towers at Salem or
implementing other modifications and conservation measures that may be
ultimately required. PSE&G intends to vigorously defend its demonstrations, as
submitted. PSE&G also is prepared to pursue all available legal remedies,
including exercising its right to seek a stay, pending further administrative
and judicial review, of any conditions that may be imposed by a final permit.
(See MD&A -- Liquidity and Capital Resources -- Construction, Investment and
other Capital Requirements Forecast.)
Hope Creek Station
Hope Creek's existing permit has been in effect since October 1985. PSE&G
submitted an application for renewal in March 1990. The existing permit remains
in effect pending NJDEPE action expected in 1994. PSE&G cannot predict what new
permit terms and conditions NJDEPE may seek to impose in the renewed permit.
CONTROL OF HAZARDOUS SUBSTANCES
PSE&G Manufactured Gas Plant Remediation Program
For information regarding PSE&G's Manufactured Gas Plant Remediation
Program, see Note 12 -- Commitments and Contingent Liabilities of Notes to
Consolidated Financial Statements.
Other Sites
In 1989, PSE&G publicly announced its decision to close the Synthetic
Natural Gas Plant (SNG Plant) in Linden, New Jersey. The SNG Plant, which was
operated by PSE&G, was jointly owned by PSE&G (90%) and the Elizabethtown Gas
Company (10%). The decision to close the SNG Plant triggered certain
environmental compliance activities under the New Jersey Environmental Cleanup
Responsibility Act (ECRA). PSE&G has completed the first stage of the required
site sampling activities at this facility. During field work activities, certain
soil and ground water contamination has been identified. The costs of any
necessary cleanup are not currently estimable, but such costs are not expected
to be material.
The Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980 (CERCLA), as amended by the Superfund Amendments and
Reauthorization Act of 1986 (SARA), and the Federal Resource Conservation and
Recovery Act of 1976 (RCRA) authorize EPA to issue orders and/or to bring an
enforcement action to compel responsible parties to take investigative and/or
cleanup actions at any site that is determined to present an imminent and
substantial danger to the public or to the environment because of an actual or
threatened release of one or more hazardous substances. The New Jersey Spill
Compensation and Control Act (Spill Act) and the New York Environmental
Conservation Law provide similar authority to NJDEPE and the New York Attorney
General, respectively. Because of the nature of
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PSE&G's business, including the production of electricity, the distribution of
gas and, formerly, the manufacture of gas, various by-products and substances
are or were produced or handled which contain constituents classified as
hazardous under one or more of the above laws. PSE&G generally provides for the
disposal or processing of such substances through licensed independent
contractors. However, these statutory provisions impose joint and several
liability without regard to fault on all allegedly responsible parties,
including the generators of the hazardous substances for certain investigative
and cleanup costs at sites where these substances were disposed or processed.
PSE&G has been notified with respect to a number of such sites and the cleanup
of these potentially hazardous sites is receiving greater attention from the
government agencies involved. Generally, actions directed at funding such site
investigations and cleanups include all suspected or known allegedly responsible
parties. PSE&G's past operations suggest that some remedial action may be
required. PSE&G does not expect its expenditures for any such site to be
material.
Presently, such actions involving PSE&G include the following:
(1) In United States and New Jersey v. Alcan Aluminum, et al., Civil Action
Nos. 88-4646 (NHP) and 88-4670 (NHP), in the U. S. District Court for the
District of New Jersey, on March 21, 1989, a Consent Decree was entered with EPA
and NJDEPE, obligating potentially responsible parties (PRPs), including PSE&G,
to implement both a bioremediation treatability study and a two-stage subsurface
remedial action, i.e., excavation and bioremediation, at the Renora Superfund
Site in Edison, Middlesex County, New Jersey. The excavation and off-site
removal of soils contaminated with polychlorinated biphenyls has been completed.
However, because the treatability study showed that bioremediation would fail at
this site, on March 18, 1991, the Consent Decree was modified to eliminate that
remedial action. Instead, EPA required new treatability studies on
solidification technologies, and a Phase II Feasibility Study (FS II)
incorporating that new data. These new studies proved that all on-site soil
treatment technologies would fail, and on October 8, 1992, the PRPs submitted FS
II for EPA's and NJDEPE's comments. The PRPs' are awaiting either the agencies'
final comments on FS II or their agreement on an alternative remedial action
addressing the remaining on-site soil contamination.
(2) Claim by U. S. Department of the Interior, dated March 5, 1985, under
CERCLA with respect to the Pennsylvania Avenue and Fountain Avenue municipal
landfills in Brooklyn, New York for damages to natural resources. The U.S.
Government alleges damages of approximately $200 million.
(3) Claim by EPA, Region III, dated December 25, 1984, under CERCLA with
respect to a site operated by Sealand Ltd. in Mount Pleasant Township, New
Castle County, Delaware. PSE&G and other companies have entered into an
Administrative Consent Order (ACO) obligating the signatories thereto to fund an
RI/FS. In September 1991, EPA entered a Record of Decision (ROD) which
determined that no further action was required at the site. The State of
Delaware has filed comments objecting to this ROD and has hired a consultant
which has recommended that additional actions be taken at the site based on its
review of EPA's files. The State of Delaware has not taken any action to date on
this report.
(4) At the Duane Marine Salvage Corporation Superfund Site in Perth Amboy,
Middlesex County, New Jersey, the PRPs, including PSE&G, had completed an
EPA-approved surface removal action during 1986, and EPA had required no further
response actions. However, NJDEPE ordered that an RI/FS be performed to address
or disprove the alleged subsurface contamination, and following negotiations
with the PRPs, including PSE&G an ACO was executed. The PRPs have submitted the
RI/FS, as revised, and, during May 1993, the second revised Draft Feasibility
Study, and currently are awaiting NJDEPE's selection of a remedial action.
(5) Spill Act Directive issued by NJDEPE on July 7, 1987 to PRPs, including
PSE&G, with respect to a site formerly owned and operated by Borne Chemical
Company in Elizabeth, Union County, New Jersey, ordering certain interim actions
directed at both site security and the off-site removal of certain hazardous
substances. Certain PRPs, including PSE&G, signed an ACO with NJDEPE to secure
the site, which has been completed. After further negotiations, certain other
PRPs, including PSE&G, signed a further ACO requiring them to perform a removal
action at the site, which was completed on June 22, 1992. The PRPs have entered
into negotiations with NJDEPE regarding the terms of a third ACO which will
obligate the PRPs, including PSE&G, to conduct an RI/FS.
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(6) A second Directive pursuant to the Spill Act was issued by NJDEPE on
August 22, 1989 to PRPs, including PSE&G, with respect to the PJP Landfill in
Jersey City, Hudson County, New Jersey (PJP), ordering payment of operating and
maintenance costs of approximately $150,000 and reasserting claims made in an
initial March 1989 Directive for all past and future costs associated with
investigations and remediation of the alleged contamination. Additionally, in
May 1990, also pursuant to the Spill Act, NJDEPE issued a Multi-Site Directive
concerning four sites, including PJP. With respect to the PJP site, NJDEPE
reasserted demands for payment made in the earlier Directives. The NJDEPE
alleges that it has spent approximately $23 million in interim remedial measures
at the PJP site. The NJDEPE also alleges that it will incur approximately $2
million in costs to complete a remedial investigation of the PJP site. PSE&G is
currently evaluating the NJDEPE's claim and is working with other PRPs to
resolve the claim. PSE&G has made a good faith payment of approximately $21,000
to NJDEPE pursuant to the Multi-Site Directive in accord once with actions taken
by certain other PRPs named in these Directives.
(7) Prospective enforcement action by NJDEPE with respect to a site
formerly owned by the Township of Hillsborough, Somerset County, New Jersey and
used for a sanitary landfill and presently owned by PSE&G. NJPDES-DGW permits
were issued by NJDEPE to PSE&G and to the adjoining property owner to install
monitoring wells on these premises. As required by the foregoing permits,
groundwater monitoring wells were established and groundwater monitored. In
accordance with a subsequent New Jersey Supreme Court decision in a case to
which PSE&G was not a party, the subject NJPDES -- DGW permit was determined to
be invalid, effective April 19, 1989. However, the NJDEPE has recommended that
any existing ground water monitoring wells be maintained pending the NJDEPE's
drafting of groundwater regulations which may affect the former landfill site.
(8) In State of New Jersey, Department of Environmental Protection v.
Gloucester Environmental Management Services, Inc. (GEMS), et al., Docket No.
84-0152 (SSB), in the U.S. District Court for the District of New Jersey, the
Fourth Amended Complaint was filed October 28, 1986, naming PSE&G and
approximately forty other alleged generators of hazardous waste materials as
defendants. PSE&G investigated possible involvement with the GEMS site in
Gloucester Township, Camden County, in response to an earlier inquiry from EPA.
That investigation revealed that certain waste materials originating at a PSE&G
facility may have contained asbestos and may have been taken to the GEMS site by
an independent contractor performing removal work for PSE&G. PSE&G agreed to
participate in the partial settlement of the litigation which includes the Phase
I remediation of the landfill and contributed $150,000 toward the estimated
Phase I cost of approximately $32.5 million.
(9) Claim by EPA, Region III, dated December 15, 1987, under CERCLA with
respect to a Superfund Site in Philadelphia, Pennsylvania, owned and formerly
operated by Metal Bank, Inc., as a non-ferrous scrap reclamation facility.
PSE&G, together with several other similarly situated utilities, is alleged to
be liable either to conduct an RI/FS and undertake the necessary cleanup, if
any, or to reimburse EPA for the cost of performing these functions. On May. 29,
1991, these utilities, including PSE&G, entered into an ACO with the EPA to
perform an RI/FS, Docket No. III-91-34-DC, which is currently underway.
(10) Inquiry and prospective enforcement action by EPA, Region II, dated
March 19, 1987, with respect to a site known as the Florence Land Recontouring
(FLR) Landfill Site in the Townships of Florence, Mansfield and Springfield,
Burlington County, New Jersey. In December 1989, the NJDEPE issued Directive and
Notice to Insurers (1989 Directive) to PSE&G and twenty-six other respondents.
The 1989 Directive requires the respondents to arrange for certain remedial
measures at the FLR Site and to pay the NJDEPE a total of approximately $7.5
million in estimated remedial construction activities and administration costs
regarding future operations and maintenance. In May 1990, pursuant to the Spill
Act, the NJDEPE issued Multi-Site Directive and Notice to Insurers Number One
(1990 Directive) in the matter of four sites including the FLR Site. The 1990
Directive, as it relates to the FLR Site, directs eighteen of the twenty-seven
respondents named in the 1989 Directive to undertake the same remedial measures
and pay the same costs as set forth in the 1989 Directive. PSE&G is currently
evaluating the NJDEPE's claim and is working in concert with other PRPs to
address the NJDEPE Directives.
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(11) Claim by EPA, Region II, under CERCLA with respect to a Superfund Site
known as the Lone Pine Landfill in Freehold Township, Monmouth County, New
Jersey. EPA investigation regarding this site disclosed that certain hazardous
waste materials generated by approximately 200 alleged generators and
transported to a site known as the SCP Scientific Chemical Processing Site,
Wilson Avenue, Essex County, Newark, New Jersey (SCP-Newark), were allegedly
subsequently transshipped, taken to and disposed of at the Lone Pine Landfill.
PSE&G's prior investigation in response to an earlier inquiry from EPA regarding
the SCP-Newark Site revealed that certain waste materials originating at a PSE&G
facility were received by Scientific Chemical Processing, Inc. for processing
and disposal. A consent decree was entered in the U.S. District Court for the
District of New Jersey in March 1990 approving the terms of a settlement under
which PSE&G agreed to participate as a de minimis settlor and contributed
approximately $27,000, toward an estimated on site remediation cost of $40
million. A second Consent Decree was lodged with the United States District
Court for the District of New Jersey in July 1991 seeking approval of the terms
of a settlement under which PSE&G agreed to participate as a de minimis settlor
and contributed approximately $27,000 toward an off-site
investigation/remediation cost of approximately $17 million. PSE&G cannot
determine, at this time, whether the off-site investigation activities will
result in the identification of further off-site remediation costs.
(12) Inquiry and prospective enforcement action by NJDEPE against PSE&G
regarding PSE&G's property in Hamilton Township, Mercer County, New Jersey,
adjacent to PSE&G's Trenton Switching Station. PSE&G is implementing a site
investigation, including installation of ground water monitoring wells, to
determine the scope of a remedial action plan.
(13) Inquiry and prospective enforcement action by EPA, Region II, dated
March 9, 1987, under CERCLA regarding a site formerly owned and/or operated by
Atlantic Resources Corporation in Sayreville, Middlesex County, New Jersey.
(14) Inquiry and prospective enforcement action by EPA, Region II, dated
November 9, 1987, under CERCLA regarding PSE&G's possible use of the Sharkey
Landfill in Parsippany-Troy Hills, Morris County, New Jersey, for waste disposal
during the period between 1945 and 1973.
(15) Inquiry and prospective enforcement action by EPA, Region II, dated
November 16, 1987, under CERCLA regarding PSE&G's possible use of the Curcio
Scrap Metal facility in Saddle Brook Township, Bergen County, New Jersey, for
scrap reclamation since 1981.
(16) Inquiry and prospective enforcement action by EPA, Region II, dated
May 2, 1988, under CERCLA regarding PSE&G's possible use of Higgins Disposal
Service Site in Kingston, Franklin Township, Somerset County, New Jersey.
(17) Inquiry and prospective enforcement actions by EPA, Region II and
NJDEPE, dated April 8, 1988 and February 6, 1991, respectively, under CERCLA and
the Spill Act regarding PSE&G's possible use of Global Landfill Site in Old
Bridge Township, Middlesex County, New Jersey (Global Site). In March 1991, the
NJDEPE issued Directive and Notice to Insurers Number Two (Directive Two) to 24
Insurers and 52 Respondents, including PSE&G. Directive Two seeks recovery of
past and anticipated future NJDEPE response costs ($37.4 million) incurred and
to be incurred in connection with an investigation and remediation of the Global
Site. PSE&G's alleged liability is based on assertions that it generated
asbestos-containing materials which were disposed of at the Global Site. In May
1991, PSE&G entered into an agreement with the NJDEPE and 29 other Directive Two
Respondents effecting a partial settlement of the foregoing costs in the amount
of $1.3 million. PSE&G's financial contribution to the foregoing partial
settlement ($4,500) is subject to a subsequent reallocation based upon the
parties' further development of information concerning their respective
proportionate waste contributions to the Global Site. The New Jersey Department
of Law and Public Safety and PRPs who participated in the partial settlement set
forth above have concluded negotiations concerning a resolution of the balance
of the response costs sought pursuant to Directive Two. In connection with those
negotiations, the PRPs are currently attempting to secure the information
necessary to determine their respective proportionate waste contributions to the
Global Site for the purpose of further establishing proportionate shares of any
future settlement. The New Jersey Department of Law and Public Safety and the
Directive Two Respondents continue to conduct negotiations regarding resolution
of the balance of the
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response costs sought pursuant to Directive Two. In August 1993, the NJDEPE and
various participating PRPs, including PSE&G, executed a Consent Decree whereby
the participating PRPs agreed to perform the remedial design and remedial action
for the operable unit one remedy as specified in an ROD dated September 11, 1991
(approximate total cost $30 million). The Consent Decree was executed and
entered by the United States District Court for the District of New Jersey on
November 15, 1993. Subject to a subsequent reallocation, the various parties to
the Consent Decree have agreed that PSE&G's contribution under the Consent
Decree settlement will be $300,000.
(18) Inquiry and prospective enforcement action by EPA, Region II dated
March 6, 1989, under CERCLA regarding PSE&G's possible use of the Port
Washington Landfill in North Hempstead, New York.
(19) Spill Act inquiry and prospective enforcement action issued by NJDEPE
on July 14, 1989 to PRPs, including PSE&G, regarding PSE&G's possible use of
Combe Fill North Sanitary Landfill in Mt. Olive Township, Morris County, New
Jersey.
(20) Spill Act inquiry and prospective enforcement action issued by NJDEPE
on December 5, 1989 to PRPs, including PSE&G, regarding PSE&G's possible use of
Combe Fill South Sanitary Landfill in Washington and Chester Townships, Morris
County, New Jersey (Combe Site). In July 1991, the New Jersey Department of Law
and Public Safety, Division of Law, issued Directive and Notice To Insurers
Number One (Directive One) to 50 Insurers and 20 Respondents, including PSE&G,
seeking from the Respondents payment of $5.5 million of NJDEPE's anticipated
costs of remedial action and of administrative oversight at the Combe Site. The
$5.5 million represents the NJDEPE's 10% share of such anticipated costs
pursuant to a cooperative agreement with the United States regarding the
selected remedial action. Therefore, total site remediation costs approximate
$50 million. Further, the Directive One Respondents are directed to perform the
operation and maintenance of the remedial action including all remedial
facilities on the Combe Site. PSE&G's alleged liability is based on the
assertion that PSE&G-generated waste oil and water, containing hazardous
substances, was transported to the Combe Site and applied to Combe Site roads
for dust control.
(21) In United States of America v. Superior Tube Company, et al., Docket
No. 89-7421 in the U.S. District Court for the Eastern District of Pennsylvania,
PSE&G was served in March 1990 with a Third Party Complaint. Pursuant to CERCLA,
the United States filed suit against Superior Tube Company (Superior) and others
seeking recovery of past and future costs incurred or to be incurred in the
cleanup of the Moyer Landfill located in Pennsylvania. Superior filed a Third
Party Complaint naming approximately 150 third party defendants, including
PSE&G.
Superior alleges that PSE&G generated, transported, arranged for the
disposal of and/or caused to be deposited certain hazardous substances at the
Moyer Landfill. On the basis of those allegations, Superior seeks contribution
and/or indemnification from the third party defendants, including PSE&G, on the
United States' action against it. PSE&G has recently participated in
negotiations concerning resolution of the United States' and Superior Tube's
claims.
(22) Spill Act Multi-Site Directive (Directive) issued by the NJDEPE in May
1990 to PRPs, including PSE&G, listing four separate sites, including the former
bulking and transfer facility called the Marvin Jonas Transfer Station (Sewell
Site) in Deptford Township, Gloucester County, New Jersey. With regard to the
Sewell Site, this Directive ordered approximately 350 PRPs, including PSE&G, to
enter into an ACO with NJDEPE, requiring them to remediate the Sewell Site.
Certain PRPs, including PSE&G, have completed the interim actions directed at
both site security and off-site disposal of containers, trailers and
contaminated surface soils. PRPs, including PSE&G, are currently fulfilling the
terms of a Memorandum of Agreement (MOA) entered into with NJDEPE on July 13,
1993. The MOA obligates PRPs to conduct an RI/FS and, if necessary, a remedial
action which, when completed to NJDEPE's standards, will satisfy the Directive.
(23) In Transtech Industries, Inc. et al v. A&Z Septic Clean et al., Docket
No. 2-90-2578(HAA), filed on October 5, 1992, in the U.S. District Court for the
District of New Jersey, PSE&G has been named a defendant in a Complaint which
has been filed pursuant to CERCLA, against several hundred parties seeking
recovery of past and future response costs incurred or to be incurred in the
investigation and/or remediation of the Kin-Buc Landfill, located in Edison
Township, Middlesex County, New Jersey. Plaintiffs allege that all
28
37
named defendants, including PSE&G, are PRPs as generators and/or transporters of
various hazardous substances ultimately deposited at the Kin-Buc Landfill.
(24) Ongoing and prospective enforcement action by EPA, Region II, dated
November 27, 1992, under CERCLA regarding PSE&G's possible use of the Custom
Distribution Services Site in Perth Amboy, Middlesex County, New Jersey.
(25) Inquiry and prospective CERCLA enforcement action by EPA, Region II,
dated November 25, 1992, regarding PSE&G's possible use of the Scientific
Chemical Processing Superfund Site, Carlstadt, New Jersey.
(26) Inquiries and prospective enforcement action by EPA, Region II, dated
May 7, 1992 and June 24, 1993, regarding the Company's possible use of the
Bridgeport Rental and Oil Services site located in Logan Township, Gloucester
County, New Jersey.
29
38
CERTAIN OPERATING STATISTICS OF PSE&G
ELECTRIC
YEARS ENDED DECEMBER 31,
---------------------------------------
1993 1992 1991
----------- ----------- -----------
Sources of Electric Energy (1,000 Kwh):
Generation:
Fossil............................................. 11,116,606 12,079,984 13,377,558
Nuclear............................................ 19,094,252 16,344,009 17,439,043
Pumped Storage........................................ 260,693 256,483 306,127
Other (principally Combustion Turbines)............... 537,210 280,523 465,855
Less Synchronous Condenser Operation.................. 11,860 8,307 22,204
Net Two Party Purchases............................... 9,535,968 10,582,483 8,401,441
Net PJM Interchange................................... 3,072,536 2,435,069 2,878,900
----------- ----------- -----------
Subtotal...................................... 43,605,405 41,970,244 42,846,720
Less pumping energy used.............................. 383,927 386,880 461,311
----------- ----------- -----------
Total energy available........................ 43,221,478 41,583,364 42,385,409
Less Company use (electric operations) and energy lost
or unaccounted for................................. 2,695,690 2,553,619 2,677,975
----------- ----------- -----------
Total Electric Energy Sold.................... 40,525,788 39,029,745 39,707,434
----------- ----------- -----------
----------- ----------- -----------
Costs of Electric Fuel (cents per Kwh):
Fossil................................................ 1.89 1.89 2.10
Nuclear............................................... .64 .66 .68
Other (principally Combustion Turbines)............... 3.18 4.16 3.99
Two Party Purchases................................... 3.67 3.21 3.98
Net PJM Interchange................................... 3.74 2.77 2.72
----------- ----------- -----------
Weighted average cost......................... 1.78 1.73 1.84
----------- ----------- -----------
----------- ----------- -----------
Sales (1,000 Kwh):
Residential........................................ 10,631,402 9,816,046 10,505,547
Commercial......................................... 18,096,312 17,454,352 17,596,569
Industrial......................................... 9,203,839 9,298,741 9,406,109
Other.............................................. 348,342 344,557 340,619
Non-Jurisdictional................................. 2,245,893 2,116,049 1,858,590
----------- ----------- -----------
Total......................................... 40,525,788 39,029,745 39,707,434
----------- ----------- -----------
----------- ----------- -----------
Average Number of Customers:
Residential........................................... 1,630,330 1,623,396 1,615,342
Commercial............................................ 214,892 213,510 212,867
Industrial............................................ 9,320 9,287 8,283
Other................................................. 7,549 7,374 7,207
----------- ----------- -----------
Total......................................... 1,862,091 1,853,567 1,843,699
----------- ----------- -----------
----------- ----------- -----------
Operating Revenues (thousands of dollars)
Residential........................................... $ 1,175,875 $ 1,037,099 $ 1,116,699
Commercial............................................ 1,678,011 1,554,956 1,575,547
Industrial............................................ 710,206 683,750 728,411
Other sales........................................... 52,756 49,273 47,999
----------- ----------- -----------
Subtotal...................................... 3,616,848 3,325,078 3,468,656
Other Electric Revenues............................... 76,235 82,740 51,150
----------- ----------- -----------
Total Electric Operating Revenues............. $ 3,693,083 $ 3,407,818 $ 3,519,806
----------- ----------- -----------
----------- ----------- -----------
Sources of Electric Energy at time of Peak Load (1,000
Kw):
Generation............................................ 6,894 6,665 7,655
Purchased and net Interchanged........................ 2,253 1,780 1,430
----------- ----------- -----------
Peak Load..................................... 9,147 8,445 9,085
----------- ----------- -----------
----------- ----------- -----------
Installed Generating Capacity at time of Peak Load(1,000 Kw):
Fossil................................................ 4,356 4,686 4,595
Nuclear............................................... 2,807 2,807 2,807
Pumped Storage........................................ 190 180 180
Combustion Turbines................................... 3,121 2,810 2,810
Other................................................. 5 5 5
----------- ----------- -----------
Total......................................... 10,479 10,488 10,397
----------- ----------- -----------
----------- ----------- -----------
Total Electric Operating Expenses per Kwh of Total Sales
(cents per Kwh)....................................... 7.29 7.35 7.20
Temperature Humidity Index Hours........................ 20,372 14,466 19,113
Load Factor............................................. 51.1% 53.2% 50.9%
Capacity Factor......................................... 33.8% 31.5% 33.1%
30
39
GAS
YEARS ENDED DECEMBER 31,
------------------------------------
1993 1992 1991
---------- ---------- ----------
Sources of Gas Supply (1,000 Therms):
Sendout:
Natural Gas........................................... 2,996,727 2,856,734 2,331,338
Refinery Gas.......................................... 159,131 158,121 166,021
Other Manufactured Gas................................ 702 1,358 1,470
---------- ---------- ----------
Gas purchased and produced (1,000 Therms)(A)............. 3,156,560 3,016,213 2,498,829
Less Company use (gas operations) and gas lost or
unaccounted for..................................... 48,782 65,779 58,648
---------- ---------- ----------
Total Gas Sold................................... 3,107,778 2,950,434 2,440,181
---------- ---------- ----------
---------- ---------- ----------
Gas Fuel Costs (cents per therm):
Natural Gas(B)........................................... 34.09 31.12 31.14
Refinery Gas............................................. 26.47 23.60 20.73
Other Manufactured Gas................................... 84.19 126.14 --
---------- ---------- ----------
Weighted average cost............................ 33.71 30.77 30.53
---------- ---------- ----------
---------- ---------- ----------
Sales (1,000 Therms):
Residential.............................................. 1,280,128 1,265,270 1,140,887
Commercial............................................... 943,054 939,021 893,069
Industrial............................................... 876,421 739,508 399,385
Other.................................................... 8,175 6,635 6,840
---------- ---------- ----------
Total Sales of Gas............................... 3,107,778 2,950,434 2,440,181
---------- ---------- ----------
Transportation Service................................... 557,403 543,097 381,497
---------- ---------- ----------
Total Gas Sold and Transported................... 3,665,181 3,493,531 2,821,678
---------- ---------- ----------
---------- ---------- ----------
Average Number of Customers:
Residential.............................................. 1,317,294 1,305,708 1,294,974
Commercial............................................... 161,161 159,402 162,527
Industrial............................................... 9,988 10,220 7,216
Other.................................................... 15 15 15
---------- ---------- ----------
Total............................................ 1,489,458 1,475,345 1,464,732
---------- ---------- ----------
---------- ---------- ----------
Transportation Service Gas (TSG) Firm.................... 178 153 116
Non-Firm.............................................. 151 128 122
Co-generation......................................... 2 2 1
---------- ---------- ----------
Total TSG........................................ 331 283 239
---------- ---------- ----------
---------- ---------- ----------
Operating Revenues (thousands of dollars):
Residential.............................................. $ 780,195 $ 809,559 $ 699,696
Commercial............................................... 460,340 481,960 426,110
Industrial............................................... 299,762 243,527 138,394
Other sales.............................................. 3,545 3,040 3,157
---------- ---------- ----------
Subtotal......................................... 1,543,842 1,538,086 1,267,357
Transportation Service................................... 37,081 34,739 27,036
Other Revenues........................................... 13,418 13,356 13,456
---------- ---------- ----------
Total Gas Operating Revenues..................... $1,594,341 $1,586,181 $1,307,849
---------- ---------- ----------
---------- ---------- ----------
Total Gas Operating Expenses per therm sold (cents per
therm)................................................... 47.04 50.58 49.92
Maximum 24-hour Gas Sendout (1,000 Therms)................. 21,159 19,571 18,188
Daily Capacity at Time of Peak Sendout (1,000
Therms)(reflects curtailments)........................... 27,148 25,833 25,088
Degree Days................................................ 4,594 4,784 4,327
(A) Reflects changes in holder stock.
(B) Excludes contribution by electric department for gas reservation charge and
natural gas refunds from suppliers.
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40
EDHI
EDHI, a wholly-owned, direct subsidiary of Enterprise, is incorporated
under the laws of New Jersey and is the parent of EDC, CEA, PSRC, EGDC, Capital
and Funding. EDHI's principal executive offices are located at One Riverfront
Plaza, Newark, New Jersey 07102. EDHI intends to focus its efforts on its energy
related core businesses, placing greater emphasis on its investment in the
independent energy market. For a discussion of the impact on EDHI of PSE&G's
Focused Audit Implementation Plan, see Regulation.
EDC
EDC, a New Jersey corporation, has its principal executive offices at 1000
Louisiana Street, Suite 2900, Houston, Texas 77002. EDC is an oil and gas
exploration, development, production and marketing company with principal
operations both onshore and offshore in the southern United States and has a
growing international production base. EDC has been pursuing a program to attain
and maintain its reserve base at approximately 900 billion cubic feet
equivalent, both by acquiring proved oil and gas reserves, as well as through
exploratory and development drilling. Year-end 1993 proven reserves were 538
billion cubic feet of gas and 45 million barrels of oil, a decrease of 3% and an
increase of 20%, respectively, compared to 1992. As of December 31, 1993 and
1992, EDC's consolidated assets aggregated $679 million and $703 million,
respectively. (See Regulation and Note 1 -- Summary of Significant Accounting
Policies of Notes to Consolidated Financial Statements.)
CEA
CEA, a New Jersey corporation, has its principal executive offices at 1200
East Ridgewood Avenue, Ridgewood, New Jersey 07450. CEA invests in and
participates in the development of cogeneration and power production facilities,
which include QFs under PURPA and a foreign EWG. Pursuant to EDHI's business
plan, CEA is expected to be the primary vehicle for its business growth. CEA's
two direct subsidiaries, CEA New Jersey, Inc. (CEA New Jersey) and CEA USA, Inc.
(CEA USA), hold certain of its investments. CEA New Jersey's subsidiaries invest
in projects selling power to New Jersey utilities including PSE&G. CEA USA's
subsidiaries invest in projects selling power to other domestic and foreign
utilities. CEA and/or its subsidiaries and affiliates have investments in 18
cogeneration or power projects and one anthracite coal mine which are in
operation or under development. Completion of the projects under construction
cannot be assured. CEA continuously evaluates the status of project development
and construction in light of the realities of timely completion and the costs
incurred. As of December 31, 1993 and 1992, the status of CEA's projects was as
follows:
1993 1992
----------------------- -----------------------
NUMBER OF CEA'S SHARE NUMBER OF CEA'S SHARE
STATUS PROJECTS (MW) PROJECTS (MW)
--------- ----------- --------- -----------
In Operation....................................... 17(A) 408 15(A) 215
Under Construction................................. 2 70 2 118
Advanced Development............................... -- -- 3 531
(A) Includes one anthracite coal mine.
CEA's investments in QF projects have been undertaken with other
participants because CEA, together with any other utility affiliate, may not own
more than 50% of a QF under applicable law subsequent to the in-service date.
CEA's projects are diversified geographically and technologically and are
generally financed through non-recourse debt. CEA is an investor in these
projects and the electricity produced by the facilities is not part of PSE&G's
installed capacity. However, some of such power is being purchased by PSE&G
pursuant to long-term contracts with the applicable projects.
As of December 31, 1993 and 1992, CEA's consolidated assets aggregated $211
million and $161 million, respectively.
32
41
PSRC
PSRC, a New Jersey corporation, has its principal executive offices at One
Riverfront Plaza, Newark, New Jersey 07102. PSRC makes diversified passive
investments in assets that can provide funds for future growth as well as
provide incremental earnings for Enterprise. Investments have been made in
leveraged and direct financing leases, project financings, venture capital
funds, leveraged buyout funds, real estate limited partnerships and marketable
securities. The maturities of the portfolio's investments are also fairly
diverse, with some having terms exceeding 30 years. PSRC's leveraged lease
investments include various asset sectors from aircraft to nuclear power plants.
Some of the transactions in which PSRC and its subsidiaries participate involve
other equity investors. Pursuant to EDHI's business plan, PSRC will limit new
investments to existing commitments and investments related to EDHI's core
business.
In January 1994, in response to regulatory changes occurring at both the
national and state levels regarding the sale and distribution of natural gas
(see Competition), PSRC formed a gas marketing subsidiary, Public Service Gas
Marketing Company, which has entered into a partnership with two major utilities
to market natural gas and associated services on an unregulated basis to
commercial and industrial gas consumers nationwide. PSRC expects that the
partnership will commence its marketing activities late in the first quarter of
1994.
PSRC is a limited partner in various partnerships and is committed to make
investments from time to time, upon the request of the respective general
partners. On December 31, 1993, $139.5 million remained as PSRC's unfunded
commitment subject to call. As of year end 1993 and 1992 PSRC investments
aggregated $1.3 billion and $1.4 billion, respectively and were as follows:
INVESTMENTS 1993 1992
----------------------------------------------------------- ------ ------
Lease Agreements........................................... $ 831 $ 823
Limited Partnerships....................................... 374 380
Securities................................................. 82 198
Valuation Allowances....................................... (10) (5)
------ ------
Total............................................ $1,277 $1,396
------ ------
------ ------
EGDC
EGDC, a New Jersey corporation having its principal executive offices at
One Riverfront Plaza, Newark, New Jersey 07102, is a diversified nonresidential
real estate development and investment business. EGDC has investments in 11
commercial real estate properties (seven of which are developed) in several
states. EGDC's strategy is to preserve and build the value of its assets to
allow for the controlled disposition of its properties as the real estate market
improves. As of December 31, 1993 and 1992, EGDC's consolidated assets
aggregated $203 million and $260 million, respectively.
In 1993, EGDC recorded a $77.6 million property impairment ($50.5 million
after taxes) related to certain of its properties, including properties upon
which EGDC's management altered its intent from a long-term investment strategy
to a hold for sale status, reflecting such properties on its books at their net
realizable value.
For further discussion of EGDC, see MD&A -- Enterprise Earnings -- EDHI.
CAPITAL
Capital, a New Jersey corporation, has its principal executive offices at
80 Park Plaza, Newark, New Jersey 07101. Capital serves as a financing vehicle
for EDHI's businesses, borrowing on their behalf on the basis of a support
agreement with Enterprise. Intercompany borrowing rates are established with
reference to market rates of interest at Capital's cost of funds. Capital will
not have more than $750 million of debt
33
42
outstanding at any time. In 1993, Enterprise agreed with the BRC to make a good
faith effort to eliminate such Enterprise support within six to ten years.
Capital's assets consist principally of demand notes of EDC, CEA, PSRC and EGDC.
As of December 31, 1993 and 1992, Capital had privately placed $724.5 million
and $750 million, respectively, of its long-term debt. For additional
information, see Construction and Capital Requirements -- Financing Activities
and MD&A -- Liquidity and Capital Resources -- EDHI.
FUNDING
Funding, a New Jersey corporation, has its principal executive offices at
80 Park Plaza, Newark, New Jersey 07101. Funding serves as a financing vehicle
for EDHI's businesses (excluding EGDC), borrowing on their behalf, as well as
investing their short-term funds. Short-term investments are made only if the
funds cannot be employed in intercompany loans. Intercompany borrowing rates are
established with reference to market rates of interest at Funding's cost of
funds. Funding is providing both long and short-term capital for the nonutility
businesses other than EGDC on the basis of an unconditional guaranty from EDHI,
but without direct support from Enterprise. As of December 31, 1993 and 1992,
Funding's assets consisted principally of demand notes of EDC, CEA and PSRC and
their subsidiaries, all of which are pledged to Funding's lenders and which
aggregated $296 million and $561 million, respectively. For additional
information, see MD&A -- Liquidity and Capital Resources -- EDHI.
ITEM 2. PROPERTIES.
PSE&G
The statements under this Item as to ownership of properties are made
without regard to leases, tax and assessment liens, judgments, easements, rights
of way, contracts, reservations, exceptions, conditions, immaterial liens and
encumbrances and other outstanding rights affecting such properties, none of
which is considered to be significant in the operations of PSE&G, except that
PSE&G's First and Refunding Mortgage, (Mortgage), securing the bonds issued
thereunder, constitutes a direct first mortgage lien on substantially all of
such property.
PSE&G maintains insurance coverage against loss or damage to its principal
plants and properties, subject to certain exceptions, to the extent such
property is usually insured and insurance is available at a reasonable cost. For
a discussion of nuclear insurance, see Note 12 -- Commitments and Contingent
Liabilities of Notes to Consolidated Financial Statements.
The electric lines and gas mains of PSE&G are located over or under public
highways, streets, alleys or lands, except where they are located over or under
property owned by PSE&G or occupied by it under easements or other rights. These
easements and rights are deemed by PSE&G to be adequate for the purposes for
which they are being used. Generally, where payments are minor in amount, no
examinations of underlying titles as to the rights of way for transmission or
distribution lines or mains have been made.
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43
ELECTRIC PROPERTIES
As of December 31, 1993, PSE&G's share of installed generating capacity was
10,479 MW, as shown in the following table:
INSTALLED NET
MEGAWATT PRINCIPAL HEAT GENERATION CAPACITY
NAME AND LOCATION CAPACITY FUEL USED RATE (000 MWH) FACTOR(a)
- -------------------------------------------- ------- --------- ------ --------- ---------
Fossil
Bergen, Ridgefield, N.J. ................... 570 Gas 13,349 438 8.8
Burlington, Burlington, N.J. ............... 180 Oil 24,901 19 1.2
Conemaugh, New Florence, PA. 22.50%(c)...... 382 Coal 9,366 2,445 73.1
Hudson, Jersey City, N.J. .................. 983 Coal 10,875 2,348 53.3
Kearny, Kearny, N.J. ....................... 292 Oil 14,590 77 3.0
Keystone, Shelocta, PA. 22.84%(c)........... 388 Coal 9,643 2,717 79.9
Linden, Linden, N.J. ....................... 481 Oil 22,022 71 1.7
Mercer, Hamilton, N.J. ..................... 627 Coal 9,787 2,660 48.4
Sewaren, Woodbridge Twp., N.J. ............. 453 Gas 13,612 342 8.6
------- ------ --------- ---------
Total Fossil........................... 4,356 10,953 11,117 29.1
------- ------ --------- ---------
Nuclear (Capacity factor calculated in
accordance with industries maximum
dependable capability standards)
Hope Creek, Lower Alloways Creek, N.J.
95%(b)(c)................................. 979 Nuclear 10,729 8,362 97.7
Peach Bottom, Peach Bottom PA. 42.49%(b).... 886 Nuclear 10,803 5,904 76.5
Salem, Lower Alloways Creek, N.J.
42.59%(b)................................. 942 Nuclear 10,707 4,828 58.9
------- ------ --------- ---------
Total Nuclear(c)....................... 2,807 10,748 19,094 78.0
------- ------ --------- ---------
Combustion Turbine
Bayonne, N.J. .............................. 42 Oil 19,551 0.8
Bergen, Ridgefield, N.J. ................... 59 Oil 12,520 1
Burlington, N.J. ........................... 632 Gas 9,477 224
Edison, Edison Township, N.J. .............. 504 Gas 14,476 31
Essex, Newark, N.J. ........................ 621 Gas 13,501 232
Hudson, Jersey City, N.J. .................. 134 Oil -- (.1)
Kearny, Kearny, N.J. ....................... 510 Oil 16,880 38
Linden, Linden, N.J. ....................... 326 Oil 21,218 10
Mercer, Hamilton, N.J. ..................... 124 Oil 91,226 0.2
National Park, National Park, N.J. ......... 19 Oil 31,260 0.1
Salem, Lower Alloways Creek, N.J.
42.59%(b)................................. 16 Oil 28,398 0.1
Sewaren, Woodbridge Township, N.J. ......... 134 Oil -- (.4)
------- ------ --------- ---------
Total Combustion Turbine............... 3,121 12,388 536.7 2.0
------- ------ --------- ---------
Diesel
Conemaugh, New Florence, PA., 22.50%(b)..... 3 Oil 9,901 .3 1.1
Keystone, Shelocta, PA., 22.84%(b).......... 2 Oil 9,286 .6 4.1
------- ------ --------- ---------
Total Diesel........................... 5 9,464 .9 2.3
------- ------ --------- ---------
Pumped Storage
Yards Creek, Blairstown, N.J., 50%(b)....... 190 261 15.7
------- ------ --------- ---------
---------
Total PSE&G............................ 10,479 10,620 31,010 33.8
------- ------ --------- ---------
------- ------ --------- ---------
(a) Net generation divided by the product of weighted average generating
capacity times total hours.
(b) PSE&G's share of jointly-owned facility.
(c) Excludes energy for pumping and synchronous condensers.
35
44
For information regarding construction see Item 1. Business -- Construction
and Capital Expenditures.
As of December 31, 1993, PSE&G owned 40 switching stations with an
aggregate installed capacity of 31,249,000 kilovolt-amperes, and 224 substations
with an aggregate installed capacity of 7,194,000 kilovolt-amperes. In addition,
6 substations having an aggregate installed capacity of 133,000 kilovolt-amperes
were operated on leased property. All of these facilities are located in New
Jersey. Also at that date, PSE&G owned undivided interests in similar
jointly-owned facilities at jointly-owned generating facilities in New Jersey
and Pennsylvania as indicated in the table above.
As of December 31, 1993, PSE&G's transmission and distribution system
included 148,272 circuit miles, of which 33,937 miles were underground, and
776,484 poles, of which 531,952 poles were jointly-owned. Approximately 99% of
this property is located in New Jersey.
In addition, as of December 31, 1993, PSE&G owned 4 electric distribution
headquarters and 5 subheadquarters and leased 2 subheadquarters in 4 operating
divisions all located in New Jersey. Also, PSE&G leases electric transmission
headquarters and owns subheadquarters.
GAS PROPERTIES
As of December 31, 1993, the daily gas capacity of PSE&G's 100%-owned
peaking facilities (the maximum daily gas delivery available during the three
peak winter months) consisted of liquid petroleum air gas (LPG) and liquefied
natural gas (LNG) and aggregated 2,973,000 therms (approximately 297,300 Mcf. on
an equivalent basis of 1,000 Btu/cubic foot) as shown in the following table:
DAILY CAPACITY
PLANT LOCATION (THERMS)
------------------------------------------ ------------------ --------------
Burlington LNG............................ Burlington, N.J. 773,000
Camden LPG................................ Camden, N.J. 280,000
Central LPG............................... Edison Twp., N.J. 960,000
Harrison LPG.............................. Harrison, N.J. 960,000
--------------
Total........................... 2,973,000
--------------
--------------
As of December 31, 1993, PSE&G owned and operated approximately 15,172
miles of gas mains, owned 12 gas distribution headquarters and one
subheadquarter and leased one other subheadquarter all in two operating regions
located in New Jersey and owned one meter shop in New Jersey serving all such
areas. In addition, PSE&G operated 61 natural gas metering or regulating
stations, all located in New Jersey, of which 26 were located on land owned by
customers or natural gas pipeline companies supplying PSE&G with natural gas and
were operated under lease, easement or other similar arrangement. In some
instances, portions of the metering and regulating facilities were owned by
pipeline companies.
OFFICE BUILDINGS AND FACILITIES
PSE&G leases substantially all of a 26-story office tower for its corporate
headquarters at 80 Park Plaza, Newark, N. J., together with an adjoining
three-story building. PSE&G also leases other office space at various locations
throughout New Jersey for district offices and offices for various corporate
groups and services. PSE&G also owns various other sites for training, testing,
parking, records storage, research, repair and maintenance, warehouse facilities
and for other purposes related to its business.
EDHI owns no real property. EDHI leases its corporate headquarters at One
Riverfront Plaza, Newark, New Jersey 07102. For a brief general description of
the properties of the subsidiaries of EDHI, see Item 1. Business -- EDHI.
36
45
ITEM 3. LEGAL PROCEEDINGS.
See the following under Business, at the pages indicated:
(1) Page 3. Proceedings before FERC relating to competition and electric
wholesale power markets. (Inquiry Concerning the Pricing Policy for Transmission
Services Provided by Utilities Under the Federal Power Act, Docket No.
RM93-19(NOI).)
(2) Page 3. Proceedings before FERC relating to restructuring of natural
gas industry pursuant to Orders 636. (In Re Pipeline Service Obligations and
Revisions to Regulations Governing Self-Implementing Transportation Under Part
284 of the Commission's Regulations, Docket No. RM91-11-000).
(3) Page 8. Proceedings before the BRC relating to PSE&G's LGAC, filed
November 3, 1993, in Docket No. GR91071226J.
(4) Page 18. Appeal by an association of competitors of PSE&G of the
NJDEPE's air permit for Phase I of the repowering of PSE&G's Bergen station to
the Appellate Division of the New Jersey Superior Court.
(5) Page 22. Requests filed in 1974 and later supplemented, to EPA and
NJDEPE to establish thermal discharges and intake structures for PSE&G's
electric generating stations (Sewaren Generating Station, NJ 0000680; Bergen
Generating Station, NJ 0000621; Hudson Generating Station, NJ 0000647; Kearny
Generating Station, NJ 0000655; Salem Generating Station, NJ 0005622; Linden
Generating Station, NJ 0000663).
(6) Page 24. On November 7, 1988, PSE&G filed a lawsuit in the United
States District Court for the District of New Jersey against Associated Electric
& Gas Insurance Services, Ltd., Certain Underwriters at Lloyd's London, and
Certain London Market Companies (PSE&G v. AEGIS, et al., Civ. Action No.
884811.) The suit seeks insurance coverage from these insurers for claims that
have been made against PSE&G by the NJDEPE and certain private parties. The
claims concern alleged contamination at former gas manufacturing plant sites in
New Jersey that are either currently owned by PSE&G or that were previously
owned by PSE&G or one of its predecessors.
(7) Pages 24 through 29. Various administrative actions, claims, litigation
and requests for information by federal and/or state agencies, and/or private
parties, under CERCLA, RCRA, and state environmental laws to compel PRPs, which
may include PSE&G, to provide information with respect to transportation and
disposal of hazardous substances and wastes, and/or to undertake or contribute
to the costs of investigative and/or cleanup actions at various locations
because of actual or threatened releases of one or more potentially hazardous
substances and/or wastes. As part of one of the administrative actions by
NJDEPE, PSE&G has signed ACO's with NJDEPE in the matter of its former gas plant
sites: South Amboy, Morristown, Bordentown, Gloucester, Bayonne (Hobart Avenue),
Woodbury, Riverton and Paterson.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Enterprise and PSE&G, inapplicable.
ITEM 10. EXECUTIVE OFFICERS OF THE REGISTRANTS.
Enterprise and PSE&G. Information regarding executive officers required by
this Item is set forth in Part III, Item 10 hereof.
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46
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Enterprise's Common Stock is listed on the New York Stock Exchange, Inc.
and the Philadelphia Stock Exchange, Inc. All of PSE&G's common stock is owned
by Enterprise, its corporate parent. As of December 31, 1993, there were 192,999
holders of record of Enterprise Common Stock.
The following table indicates the high and low sale prices for Enterprise's
Common Stock, as reported in The Wall Street Journal as Composite Transactions
and dividends paid for the periods indicated:
DIVIDEND
HIGH LOW PER SHARE
---- --- ---------
Common Stock:
1993
First Quarter..................................... 34 1/4 30 .54
Second Quarter.................................... 35 31 7/8 .54
Third Quarter..................................... 36 1/8 34 .54
Fourth Quarter.................................... 35 1/4 30 .54
1992
First Quarter..................................... 29 1/2 26 1/2 .54
Second Quarter.................................... 28 1/8 25 3/8 .54
Third Quarter..................................... 28 3/8 26 5/8 .54
Fourth Quarter.................................... 31 3/8 27 3/8 .54
Since 1986, PSE&G has made regular cash payments to Enterprise in the form
of dividends on outstanding shares of PSE&G's Common Stock. PSE&G has paid
quarterly dividends on its common stock in each year commencing in 1948, the
year of the distribution of PSE&G's common stock by Public Service Corporation
of New Jersey, the former parent of PSE&G. Beginning in 1992, EDHI has made
regular cash payments to Enterprise in the form of dividends on outstanding
shares of EDHI's common stock. Enterprise has paid quarterly dividends in each
year commencing with the corporate restructuring of PSE&G when Enterprise became
the owner of all the outstanding common stock of PSE&G. While the Board of
Directors of Enterprise intends to continue the practice of paying dividends
quarterly, amounts and dates of such dividends as may be declared will
necessarily be dependent upon Enterprise's future earnings, financial
requirements and other factors.
The ability of Enterprise to declare and to pay dividends is contingent
upon its receipt of dividend payments from its subsidiaries. PSE&G has
restrictions on the payments of dividends which are contained in its Restated
Certificate of Incorporation, as amended, certain of the indentures supplemental
to its Mortgage and certain debenture bond indentures. Under these restrictions,
dividends on PSE&G's common stock may be paid only out of PSE&G's earned surplus
and may not reduce PSE&G's earned surplus to less than $10,000,000. PSE&G
dividends on common stock would be limited to 75% of Earnings Available for
Public Service Enterprise Group Incorporated if payment thereof would reduce
PSE&G's Stock Equity to less than 33 1/3% of PSE&G's Total Capitalization and
would be limited to 50% of Earnings Available for Public Service Enterprise
Group Incorporated if payment thereof would reduce Stock Equity to less than 25%
of PSE&G's Total Capitalization, as each of said terms is defined in PSE&G's
said debenture bond indentures. None of these restrictions presently limits the
payment of dividends out of current earnings. The amount of Enterprise's and
PSE&G's consolidated retained earnings free of these restrictions at December
31, 1993 was $1.351 billion and $1.171 billion, respectively.
38
47
ITEM 6. SELECTED FINANCIAL DATA.
ENTERPRISE
The information presented below should be read in conjunction with
Enterprise Consolidated Financial Statements and Notes thereto.
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------
1993 1992 1991 1990 1989
----------- ----------- ----------- ----------- -----------
(THOUSANDS OF DOLLARS, WHERE APPLICABLE)
Total Operating Revenues.... $ 5,705,559 $ 5,356,781 $ 5,091,658 $ 4,799,239 $ 4,804,279
Net Income.................. $ 600,933 $ 504,117 $ 543,035 $ 403,663 $ 523,435
Earnings per average share
of Common Stock........... $ 2.50 $ 2.17 $ 2.43 $ 1.90 $ 2.53
Dividends paid per share of
Common Stock.............. $ 2.16 $ 2.16 $ 2.13 $ 2.09 $ 2.05
As of December 31:
Total Assets.............. $16,305,164 $14,754,709 $14,452,565 $13,693,469 $12,799,398
Long-Term Liabilities:
Capital Lease
Obligations....... $ 52,530 $ 53,104 $ 54,617 $ 54,073 $ 54,513
Long-Term Debt....... $ 5,256,321 $ 4,977,579 $ 5,128,373 $ 4,668,024 $ 4,293,578
Preferred Stock with
mandatory redemption...... $ 150,000 $ 75,000 $ -- $ -- $ --
Ratio of Earnings to Fixed
Charges plus Preferred
Stock Dividend
Requirements (A).......... 2.59 2.30 2.54 2.09 2.60
(A) Fixed charges include the preferred stock dividend requirements of PSE&G.
PSE&G
The information presented below should be read in conjunction with PSE&G
Consolidated Financial Statements and Notes thereto.
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------
1993 1992 1991 1990 1989
----------- ----------- ----------- ----------- -----------
(THOUSANDS OF DOLLARS, WHERE APPLICABLE)
Total Operating Revenues.... $ 5,287,424 $ 4,994,000 $ 4,807,892 $ 4,569,164 $ 4,642,383
Net Income.................. $ 614,868 $ 475,936 $ 545,479 $ 537,619 $ 544,374
As of December 31:
Total Assets.............. $13,959,806 $12,250,834 $12,008,058 $11,632,429 $11,116,262
Long-Term Liabilities:
Capital Lease
Obligations....... $ 52,530 $ 53,104 $ 53,617 $ 54,073 $ 54,513
Long-Term Debt....... $ 4,364,437 $ 3,978,138 $ 3,933,389 $ 3,733,444 $ 3,524,210
Preferred Stock with
mandatory redemption...... $ 150,000 $ 75,000 $ -- $ -- $ --
Ratio of Earnings to Fixed
Charges................... 3.30 2.70 3.20 3.10 3.21
Ratio of Earnings to Fixed
Charges plus Preferred
Stock Dividend
Requirements.............. 2.89 2.43 2.86 2.79 2.88
39
48
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
ENTERPRISE
Following are the significant factors affecting the consolidated financial
condition and the results of operations of Public Service Enterprise Group
Incorporated (Enterprise) and its subsidiaries. This discussion refers to the
Consolidated Financial Statements and related Notes of Enterprise and should be
read in conjunction with such statements and notes.
OVERVIEW
Enterprise has two direct wholly-owned subsidiaries, Public Service
Electric and Gas Company (PSE&G) and Enterprise Diversified Holdings
Incorporated (EDHI). Enterprise's principal subsidiary, PSE&G, is an operating
public utility providing electric and gas service in certain areas in the State
of New Jersey.
PSE&G has a finance subsidiary, PSE&G Fuel Corporation (Fuelco), providing
financing, unconditionally guaranteed by PSE&G, of up to $150 million aggregate
principal amount at any one time of a 42.49% interest in the nuclear fuel
acquired for Peach Bottom Atomic Power Station Units 2 and 3 (Peach Bottom).
PSE&G also has a nonutility subsidiary, Public Service Conservation Resources
Corporation (PSCRC), which offers demand side management (DSM) services to
utility customers.
EDHI is the parent of Enterprise's other nonutility businesses: Energy
Development Corporation (EDC), an oil and gas exploration, development,
production and marketing company; Community Energy Alternatives Incorporated
(CEA), an investor in and developer of cogeneration and power production
facilities; Public Service Resources Corporation (PSRC), which makes diversified
passive investments; and Enterprise Group Development Corporation (EGDC), a
diversified nonresidential real estate development and investment business. EDHI
also has two finance subsidiaries: PSEG Capital Corporation (Capital), which has
provided up to $750 million of privately-placed debt financing on the basis of a
support agreement from Enterprise and Enterprise Capital Funding Corporation
(Funding), which provides privately-placed debt financing guaranteed by EDHI but
without direct support from Enterprise.
As of December 31, 1993 and December 31, 1992, PSE&G comprised 86% and 83%,
respectively, of Enterprise assets. For the years 1993, 1992 and 1991, PSE&G
revenues were 93%, 93% and 94%, respectively, of Enterprise revenues and PSE&G
earnings available to Enterprise for such years were 96%, 88% and 95%,
respectively, of Enterprise net income.
Pursuant to the Focused Audit Implementation Plan approved by the New
Jersey Board of Regulatory Commissioners (BRC) regarding operations and
intercompany relationships between PSE&G and EDHI, in 1993 Enterprise agreed
with the BRC, among other things, that it will not permit its investment in EDHI
to exceed 20% of its consolidated assets without prior notice to the BRC, that
the PSE&G Board will make an annual certification that the business and
financing plans of EDHI will not adversely affect PSE&G, that debt supported by
the support agreement between Enterprise and Capital will be limited to $750
million, that a good faith effort will be made to eliminate such support over
the next six to ten years and that EDHI will pay PSE&G an affiliation fee of $2
million a year, to be proportionately reduced as the amount of debt under the
support agreement is reduced.
The major factors which will affect Enterprise's future results include
general and regional economic conditions, PSE&G's customer retention and growth,
the ability of PSE&G and EDHI to meet competitive pressures and to contain
costs, the adequacy and timeliness of required regulatory approvals, including
rate relief to PSE&G, continued access to the capital markets and continued
favorable regulatory treatment of consolidated tax benefits. (See Note 2 -- Rate
Matters and Note 12 -- Commitments and Contingent Liabilities of Notes to
Consolidated Financial Statements.)
40
49
PSE&G ENERGY AND FUEL ADJUSTMENT CLAUSES
PSE&G has fuel and energy tariff rate adjustment clauses which are designed
to permit adjustments for changes in electric energy and gas supply costs and
certain other costs as approved by the BRC, when compared to cost recovery
included in base rates. Charges under the clauses are primarily based on energy
and gas supply costs which are normally projected over twelve-month periods. The
changes in the Levelized Gas Adjustment Clause (LGAC) and the Levelized Energy
Adjustment Clause (LEAC) do not directly affect earnings because such costs are
adjusted monthly to match amounts recovered through revenues. However, the
carrying of underrecovered costs ultimately increases financing costs. PSE&G is
also required to pay interest on net overrecovered costs. Under the clauses, if
actual costs differ from the costs recovered, the amount of the underrecovery or
overrecovery is deferred and is reflected in the average cost used to determine
the fuel and energy tariff rate adjustment for the period in which it is
recovered or repaid. Actual costs otherwise includable in the LEAC are subject
to adjustment by the BRC in accordance with PSE&G's nuclear performance
standard. (See Note 2 -- Rate Matters and Note 12 -- Commitments and Contingent
Liabilities of Notes to Consolidated Financial Statements.)
ENTERPRISE EARNINGS
Earnings per share of Enterprise Common Stock were $2.50 in 1993, $2.17 in
1992 and $2.43 in 1991. The changes are summarized as follows:
1993 VS. 1992 1992 VS. 1991
-------------- --------------
PER PER
AMOUNT SHARE AMOUNT SHARE
------ ----- ------ -----
(MILLIONS, EXCEPT PER SHARE DATA)
PSE&G
Revenues (net of fuel costs and gross receipts taxes)......... $ 347 $1.49 $ (43) $(.19)
Peach Bottom Settlement (net of Federal income taxes of $17
million)................................................... (33) (.14) 33 .15
Other operation expenses...................................... (62) (.26) (49) (.22)
Maintenance expenses.......................................... 3 .01 8 .03
Depreciation and amortization expenses........................ (15) (.06) (22) (.10)
Federal income taxes.......................................... (113) (.49) 53 .24
Other taxes................................................... (1) -- (9) (.04)
Other income.................................................. -- -- 2 .01
Interest charges.............................................. 12 .05 (36) (.16)
Allowance for Funds Used During Construction (AFDC)........... -- -- (4) (.02)
Preferred Stock Dividend Requirements......................... (6) (.02) (3) (.01)
Other income and expenses..................................... 1 -- (2) (.01)
------ ----- ------ -----
Earnings Available to Enterprise........................... 133 .58 (72) (.32)
------ ----- ------ -----
EDHI............................................................ (36) (.16) 33 .14
------ ----- ------ -----
Net Income............................................ $ 97 .42 $ (39) (.18)
------ ----- ------ -----
------ ------
Effect of additional shares of Enterprise Common Stock issued... (.09) (.08)
----- -----
Total................................................. $ .33 $(.26)
----- -----
----- -----
The average shares of Enterprise Common Stock outstanding were 240,663,599
for 1993 and 232,306,492 for 1992.
PSE&G
In 1993, excluding the $33 million net effect of the 1992 settlement of
litigation against Philadelphia Electric Company, now known as PECO Energy
Company (PECO) in connection with the 1987 shutdown of Peach Bottom by the
Nuclear Regulatory Commission (1992 Settlement), PSE&G's earnings available to
Enterprise increased by $166 million. The principal contributing factors to the
increase in earnings available to Enterprise were PSE&G's higher electric and
gas base rates that became effective January 1, 1993 and a
41
50
substantial increase in electric kilowatthour sales. (See PSE&G Electric and Gas
Revenues, below.) The increase in electric sales was primarily due to the
abnormally warm weather. Partially offsetting the increase in earnings were
higher other operation expenses (comprised primarily of labor and employee
benefits costs and miscellaneous nuclear production costs), higher depreciation
and amortization and higher Federal income taxes resulting from increased
pre-tax operating income and an increase in the Federal corporate income tax
rate, effective January 1993. (See Note 9 -- Federal Income Taxes of Notes to
Consolidated Financial Statements.)
In 1992, excluding the $33 million net effect of the 1992 Settlement,
PSE&G's earnings available to Enterprise declined by $105 million. This decline
was principally due to the 1.7% decrease in electric kilowatthour sales
resulting from significantly cooler weather during 1992 and higher other
operation expenses (comprised primarily of labor and employee benefits costs and
miscellaneous nuclear production costs). Also contributing to the decrease in
earnings were increased interest charges resulting from timing of refunding
operations and higher depreciation and amortization expenses. Partially
offsetting the decrease in earnings were lower maintenance expenses at certain
of PSE&G's fossil fuel generating stations and at Peach Bottom and lower Federal
income taxes resulting from lower pre-tax operating income.
EDHI
The net income of EDHI was $24 million in 1993, a decrease of $36 million
from 1992. As a result of a management review of each of EGDC's property's
current value and the potential for increasing such value through operating and
other improvements, EGDC recorded an impairment related to certain properties,
including properties upon which management revised its intent from a long-term
investment strategy to a short-term hold for sale status, reflecting such
properties on its books at their net realizable value. This impairment reduced
EDHI earnings by $51 million, after tax, or 21 cents per share of Enterprise
Common Stock. Partially offsetting this decrease was an increase in the earnings
of EDC due to the higher price of natural gas. Exclusive of the recorded
impairment, EDHI net income would have been $75 million for 1993.
The net income of EDHI was $60 million in 1992, an increase of $33 million
from 1991. The increase in EDHI net income was due primarily to an increase in
EDC net income of $23 million resulting from higher natural gas prices and
volumes and an $8 million increase in CEA net income due to improved performance
of certain projects and the sale of its interest in various projects.
DIVIDENDS
The ability of Enterprise to declare and pay dividends is contingent upon
its receipt of dividend payments from its subsidiaries. PSE&G has made regular
payments to Enterprise in the form of dividends on outstanding shares of its
common stock since Enterprise was formed in 1986. In addition, commencing in
1992, EDHI has also made payments to Enterprise in the form of dividends on its
outstanding common stock.
Dividends paid to holders of Enterprise Common Stock increased $18 million
during 1993 compared to 1992 and increased $27 million during 1992 compared to
1991. The increase in the 1993 dividend payment over 1992 was due to the
issuance of additional shares of Enterprise Common Stock. The increase in the
1992 dividend payment over 1991 was due to the issuance of additional shares of
Enterprise Common Stock and a one cent per share increase in the quarterly
dividend rate for the first three quarters of 1992 compared to the same periods
of 1991.
Dividends paid to holders of PSE&G Preferred Stock increased $6 million
during 1993 compared to 1992 and $3 million during 1992 compared to 1991. The
increase in 1993 dividend payments over 1992 dividend payments was due to the
issuance and sale of 750,000 shares of 5.97% Preferred Stock on March 17, 1993
and the issuance and sale of 750,000 shares of 7.44% Preferred Stock on June 23,
1992, while the increase in 1992 dividend payments over 1991 dividend payments
was due to the issuance and sale of the 7.44% Preferred Stock.
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51
REVENUES
PSE&G ELECTRIC
Revenues increased $285 million, or 8.4%, in 1993 from 1992; 1992 revenues
decreased $92 million, or 2.6%, compared to 1991. The significant components of
these changes follow:
INCREASE OR (DECREASE)
-------------------------------
1993 VS. 1992 1992 VS. 1991
------------- -------------
(MILLIONS)
Kilowatthour sales..................................... $ 67 $ (65)
Base rate increase effective January 1, 1993........... 244 --
Tax Reform Act of 1986 (TRA-86)........................ 13 (6)
Recovery of energy costs............................... (52) (6)
New Jersey Gross Receipts and Franchise Taxes
(NJGRT).............................................. 17 (15)
Other operating revenues............................... (4) --
------ ------
Total Electric Revenues...................... $ 285 $ (92)
------ ------
------ ------
Changes in kilowatthour sales by customer category are described below:
INCREASE OR (DECREASE)
------------------------------
1992 VS.
1993 VS. 1992 1991
------------- ------------
Residential............................................ 8.3% (6.6)%
Commercial............................................. 3.7 (0.8)
Industrial............................................. (1.0) (1.1)
1993 -- The increase in electric revenues over 1992 was primarily due to
the base rate increase which became effective January 1, 1993, partially offset
by the larger LEAC credit also effective January 1, 1993. Abnormally warm
weather resulted in a significant increase in weather sensitive sales during
1993. Increased competition from nonutility generators (NUGs) and an unscheduled
maintenance shutdown at PSE&G's largest industrial customer negatively impacted
industrial sales.
1992 -- The reduction in electric revenues from 1991 was due to a 1.7%
reduction in kilowatthour sales resulting from reduced weather-sensitive load.
Industrial and commercial sales also declined reflecting the effect of New
Jersey's weak economy. Competition from NUGs continued to negatively impact
industrial sales.
PSE&G GAS
Revenues increased $8 million, or 0.5%, during 1993 over 1992; 1992
revenues increased $278 million or 21.3% over 1991. The significant components
of these changes follow:
INCREASE OR (DECREASE)
------------------------------
1992 VS.
1993 VS. 1992 1991
------------- ------------
(MILLIONS)
Therm sales............................................ $ (29) $ 36
Base rate increase effective January 1, 1993........... 48 --
TRA-86................................................. -- 3
Recovery of fuel costs................................. 15 216
NJGRT.................................................. (5) 16
Other operating revenues............................... (21) 7
------ ------
Total Gas Revenues........................... $ 8 $278
------ ------
------ ------
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52
Changes in gas sold or transported by customer category are described
below:
INCREASE OR (DECREASE)
-------------------------------
1993 VS. 1992 1992 VS. 1991
------------- -------------
Residential............................................ 1.2% 10.9%
Commercial............................................. .4 5.1
Industrial............................................. 18.5 85.2
Transportation Service................................. 2.6 42.4
1993 -- The increase in gas revenues over 1992 was primarily attributable
to the base rate increase which became effective January 1, 1993 and the higher
recovery of fuel related costs. Sales to cogenerators was the largest
contributor to the increase in industrial sales as cogeneration average customer
usage for electric generation continues to increase. Transportation service
sales reflect the movement of some interruptible customers to transportation
service.
1992 -- Revenues for 1992 increased over 1991 due principally to the
recovery of fuel costs resulting from higher levels of weather-sensitive therm
sales and an increase in the LGAC authorized by the BRC, effective January 1,
1992. The increase in residential and firm commercial sales, which represent the
majority of PSE&G gas revenues, was principally attributable to the colder
weather. Higher industrial and transportation service sales over 1991 were due
to cogeneration customer growth.
EDHI
EDHI revenues increased $33 million, or 8% during 1993 over 1992; 1992
revenues increased $72 million, or 22% in 1992 over 1991. The significant
components contributing to such results were as follows:
INCREASE OR (DECREASE)
-------------------------------
1993 VS. 1992 1992 VS. 1991
------------- -------------
(MILLIONS)
EDC.................................................... $ 30 $35
CEA.................................................... 10 15
PSRC................................................... (11) 15
EGDC................................................... 4 7
------ ---
Total EDHI Revenues.......................... $ 33 $72
------ ---
------ ---
1993 -- EDC was the largest contributor to the EDHI revenue increase due to
the higher price of natural gas, partially offset by lower sales to PSE&G. CEA
revenues increased as a result of greater income from partnership operating
projects. PSRC revenues decreased due to unrealized losses on investments and
lower income from leases.
1992 -- The increase in 1992 revenues over 1991 was due to higher revenues
of each of EDHI's operating subsidiaries. EDC's higher revenues were principally
attributable to increased sales and higher gas prices in 1992. CEA's increased
revenues were derived from higher partnership income and gains on the sales of
certain partnership interests in 1992. PSRC's greater revenues were attributable
to increased gains on investments and higher income from partnerships and
leases, net of pre-tax valuation allowances and a write-off totaling $35
million, primarily related to the loss on its investment in the Second National
Federal Savings Bank of Salisbury, Maryland. EGDC's increased revenues resulted
from higher rental and partnership income.
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53
PSE&G ELECTRIC ENERGY COSTS
Electric energy costs decreased $59 million or 7.7% in 1993 compared to
1992 and $5 million or .6% in 1992 compared to 1991. The significant components
of these changes follow:
INCREASE OR (DECREASE)
-------------------------------
1993 VS. 1992 1992 VS. 1991
------------- -------------
(MILLIONS)
Change in prices paid for fuel and power purchases..... $ 18 $ 7
Kilowatthour generation................................ 29 (20)
Adjustment of actual costs to match recoveries through
revenues(A).......................................... (106) 8
------------- ------
Total Electric Energy Costs.................. $ (59) $ (5)
------------- ------
------------- ------
(A) Reflects the change in the deferred over(under)recovered energy costs, which
in the years 1993, 1992 and 1991 amounted to $(93) million, $13 million and
$5 million, respectively. (See PSE&G Energy and Fuel Adjustment Clauses and
Note 2 -- Rate Matters of Notes to Consolidated Financial Statements.)
1993 -- The decrease in total costs was the result of an adjustment in the
recovery of energy costs resulting from the base rate case decision effective
January 1, 1993, partially offset by a 17% increase in nuclear kilowatthour
generation and an 11% increase in purchased power costs.
1992 -- The decrease in total costs resulted from lower kilowatthour
generation due primarily to a reduction in weather-sensitive load. Higher prices
paid for fuel and power purchases resulted principally from the need to purchase
power due to outages at various times of the Salem Nuclear Generating Station,
Units 1 and 2 (Salem 1 and 2), in which PSE&G owns 42.59% of undivided interest.
Kilowatthour generation from the Salem units declined 31% in 1992 compared to
1991. (See Note 12 -- Commitments and Contingent Liabilities -- Nuclear
Performance Standard of Notes to Consolidated Financial Statements.)
GAS SUPPLY COSTS
Gas supply costs increased $39 million or 4.6% in 1993 compared to 1992 and
$223 million or 35.0% in 1992 compared to 1991. The significant components of
these changes follow:
INCREASE OR (DECREASE)
-------------------------------
1993 VS. 1992 1992 VS. 1991
------------- -------------
(MILLIONS)
Change in prices paid for gas supplies................. $ 117 $ 25
Therm sendout.......................................... 41 147
Refunds from pipeline suppliers........................ 33 (33)
Adjustment of actual costs to match recoveries through
revenues(A).......................................... (152) 84
------------- -------------
Total Gas Supply Costs....................... $ 39 $ 223
------------- -------------
------------- -------------
(A) Reflects the change in the deferred over(under)recovered gas supply costs,
which in the years 1993, 1992 and 1991 amounted to $(100) million, $52
million and $(32) million, respectively. (See PSE&G Energy and Fuel
Adjustment Clauses and Note 2 -- Rate Matters of Notes to Consolidated
Financial Statements.)
1993 -- The increase in total costs was principally due to greater sales to
NUGs and other customers, higher gas costs and higher therm sendout resulting
from the colder 1993 winter season compared to the 1992 winter season. The
increase in costs was reduced by deferred underrecovered 1993 gas costs
resulting from the BRC approved adjustment in PSE&G's LGAC, effective January 1,
1993 of $71 million on an annualized basis through December 31, 1993. The
adjustment reflects lower gas costs and the inclusion of $15.1 million of
conservation program costs in LGAC. In addition, gas customers received $45
million of credits during the first quarter of 1993.
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1992 -- The increase in total costs was principally due to greater therm
sendout resulting from the colder 1992 weather compared to 1991 and increased
sales to NUGs.
LIQUIDITY AND CAPITAL RESOURCES
Enterprise's liquidity is affected by maturing debt (see Note 6 -- Schedule
of Consolidated Long-Term Debt of Notes to Consolidated Financial Statements),
investment and acquisition activities and the capital requirements of PSE&G's
construction program. Capital resources available to meet such requirements
depend upon the factors noted above under Overview.
PSE&G
For 1993, PSE&G had utility plant additions, including AFDC, of $890
million, an increase of $63 million versus 1992 additions of $827 million.
Additions in 1992 increased $14 million from 1991 additions of $813 million.
AFDC for 1993, 1992 and 1991 amounted to $27 million, $26 million and $30
million, respectively. Construction expenditures were related to improvements in
PSE&G's existing power plants, transmission and distribution system, gas system
and common facilities. Construction expenditures from 1994 through 1998 are
expected to aggregate $4.2 billion. (See Construction, Investments and Other
Capital Requirements Forecast below.)
PSE&G expects that it will be able to generate internally a majority of its
capital requirements including construction expenditures over the next five
years, assuming adequate and timely rate relief as to which no assurances can be
given. (See Note 2 -- Rate Matters and Note 12 -- Commitments and Contingent
Liabilities of Notes to Consolidated Financial Statements.)
Legislation effective January 1, 1992 phases in an acceleration of payment
of the NJGRT during 1992-94, so that for 1994 and for each year thereafter PSE&G
will be paying its estimated current year's NJGRT liability in April of each
such year. In April 1993, PSE&G paid $899 million (its 1992 NJGRT plus 50% of
its estimated 1993 NJGRT). In April 1994, PSE&G will be required to pay
approximately $850 million (the remainder of its 1993 NJGRT plus its 1994
estimated NJGRT). Pending collection from customers, PSE&G is required to
finance such NJGRT payments.
EDHI
During the next five years, a majority of EDHI's capital requirements are
expected to be provided from operational cash flows. EDHI intends to focus its
efforts on CEA and EDC, its energy-related core businesses. CEA is expected to
be the primary vehicle for its business growth and EDC is projected to attain
and maintain a reserve base at approximately 900 billion cubic feet equivalent,
approximately 11% above the year-end 1993 level. PSRC will limit new
investments, while EGDC will exit the real estate business in a prudent manner.
This strategy places greater emphasis on its investment in the independent
energy market. Over the next several years, EDHI and its subsidiaries will also
be required to refinance a portion of their maturing debt in order to meet their
capital requirements. Any inability to extend or replace maturing debt at
current levels and interest rates may affect future earnings and result in an
increase in EDHI's cost of capital.
PSRC is a limited partner in various partnerships and is committed to make
investments from time to time, upon the request of the respective general
partners. On December 31, 1993, $139.5 million remained as PSRC's unfunded
commitment subject to call.
EDHI and each of its subsidiaries are subject to restrictive business and
financial covenants contained in existing debt agreements and are required to
not exceed various debt to equity ratios which vary from 3:1 to 1.75:1. EDHI is
also required to maintain a twelve months earnings before interest and taxes to
interest (EBIT) coverage ratio of at least 1.35:1. As of December 31, 1993 and
1992, EDHI had consolidated debt to equity ratios of 1.34:1 and 1.84:1 and, for
the years ended December 31, 1993 and 1992, EBIT coverage ratios, which exclude
the effect of EGDC, of 2.13:1 and 1.88:1, respectively. Compliance with
applicable financial covenants will depend upon future levels of earnings, among
other things, as to which no assurance can be given. (See Construction,
Investments and Other Capital Requirements Forecast and Note 6 -- Schedule of
Consolidated Long-Term Debt of Notes to Consolidated Financial Statements.)
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CONSTRUCTION, INVESTMENTS AND OTHER CAPITAL REQUIREMENTS FORECAST
The estimated construction requirements of PSE&G, including AFDC,
investments and other capital requirements of PSE&G and EDHI for 1994 through
1998 are based on expected project completion dates and include anticipated
escalation due to inflation of approximately 4% for utility projects and are as
follows:
1994 1995 1996 1997 1998 TOTAL
------ ------ ------ ------ ------ ------
(MILLIONS OF DOLLARS)
PSE&G
ELECTRIC
Nuclear Production Facilities...... $ 114 $ 82 $ 87 $ 95 $ 87 $ 465
Nuclear Fuel....................... 74 102 99 94 114 483
Transmission and Distribution...... 218 196 204 216 221 1,055
Other Production................... 321 138 139 170 252 1,020
Conservation and Other............. 47 42 91 17 41 238
------ ------ ------ ------ ------ ------
Total Electric..................... 774 560 620 592 715 3,261
------ ------ ------ ------ ------ ------
GAS
Production Facilities.............. 2 2 2 -- -- 6
Transmission and Distribution...... 144 136 140 142 142 704
------ ------ ------ ------ ------ ------
Total Gas.......................... 146 138 142 142 142 710
------ ------ ------ ------ ------ ------
Miscellaneous Corporate.............. 56 47 45 46 48 242
------ ------ ------ ------ ------ ------
Total Construction
Requirements of PSE&G.... 976 745 807 780 905 4,213
------ ------ ------ ------ ------ ------
EDHI................................. 326 177 193 194 285 1,175
------ ------ ------ ------ ------ ------
Mandatory Retirement of Securities:
PSE&G.............................. 60 310 -- 300 118 788
EDHI............................... 106 190 91 125 204 716
------ ------ ------ ------ ------ ------
166 500 91 425 322 1,504
------ ------ ------ ------ ------ ------
Working Capital and Other-net...... 247 90 56 33 17 443
------ ------ ------ ------ ------ ------
Total Capital Requirements......... $1,715 $1,512 $1,147 $1,432 $1,529 $7,335
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------
While the above forecast includes capital costs to comply with revised
Clean Air Act (CAA) requirements through 1998, it does not include additional
requirements being developed under the CAA by Federal and State agencies. Such
additional costs cannot be reasonably estimated at this time. PSE&G believes
that such CAA costs would be recoverable from electric customers. Not included
in PSE&G's estimated construction expenses is the capital cost of compliance
with the New Jersey Department of Environmental Protection and Energy (NJDEPE)
draft permit issued October 3, 1990 pursuant to the Federal Water Pollution
Control Act with respect to Salem 1 and 2 which, if adopted as proposed, would
require the immediate shutdown of both units pending retrofit with cooling
towers. On June 24, 1993, NJDEPE issued a revised draft permit that would permit
Salem to continue to operate with once-through cooling and would require PSE&G
to make certain plant modifications and to take certain other actions to enhance
the ecology of the affected water body. The public comment period with respect
to the revised draft permit expired on January 15, 1994. While a final permit is
expected to be issued sometime in the second quarter of 1994, no assurances can
be given as to the timing of any final agency determination. The capital cost of
complying with the revised permit is estimated at approximately $75 million,
PSE&G's share of which is included in the above forecast. Nevertheless, if
cooling towers are ultimately required, PSE&G estimates that it would take at
least four years, and between $720 million and $2.0 billion in capital,
operation and maintenance costs and replacement power costs to retrofit Salem
with cooling towers. PSE&G's share of any
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56
such costs would be 42.59%. In addition, the estimate does not include costs
associated with the proposed Phase II of the repowering of PSE&G's Bergen
Generating Station.
INTERNAL GENERATION OF CASH FROM OPERATIONS
Although net income increased $97 million for 1993 (See Enterprise Earnings
and Revenues), net cash provided by operating activities decreased by $332
million from 1992 to $1.008 billion. This decrease was primarily due to an
underrecovery of electric energy and gas costs through PSE&G's LEAC and LGAC,
increased NJGRT payments and a decrease in amortization of property abandonments
and write-downs. Partially offsetting these cash outflows were the increase in
net income, increases in deferred income taxes and inventory decreases in fuel
and materials and supplies.
Although net income decreased $39 million for 1992 (See Enterprise Earnings
and Revenues), Enterprise's cash provided by operating activities increased by
$185 million from 1991 to $1.340 billion. This increase was primarily due to
greater recovery of electric energy and gas costs through PSE&G's LEAC and LGAC
and increases in accounts payable. Partially offsetting these cash inflows were
inventory increases in fuel and materials and supplies and decreases in deferred
income taxes.
EXTERNAL FINANCINGS
CASH FLOWS FROM FINANCING ACTIVITIES
1993 1992 1991
------- ------- -----
(MILLIONS OF DOLLARS)
Enterprise:
Issuance of Common Stock(A)....................... $ 273 $ 237 $ 219
------- ------- -----
Cash Dividends paid on Common Stock(B)............ (522) (503) (476)
------- ------- -----
PSE&G:(C)
Net increase (decrease) in Short-Term Debt(D)..... 275 92 (321)
Issuance of Long-Term Debt(E)..................... 1,973 850 750
Redemptions of Long-Term Debt and Other
Obligations.................................... (1,717) (1,032) (171)
(Deferral) Amortization of Debt Expense -- net.... (58) (13) 5
Issuance of Preferred Stock(F).................... 75 75 --
Other............................................. (1) (1) --
------- ------- -----
Total PSE&G............................... 547 (29) 263
------- ------- -----
EDHI:(G)
Net decrease in Short-Term Debt................... (90) (89) (49)
Issuance of Long-Term Debt........................ 165 30 264
Redemptions of Long-Term Debt..................... (367) (27) (81)
Other............................................. (6) (4) 2
------- ------- -----
Total EDHI................................ (298) (90) 136
------- ------- -----
Net cash provided by (used in) financing
activities........................................ $ -- $ (385) $ 142
------- ------- -----
------- ------- -----
(A) During 1993, Enterprise issued and sold 4,400,000 shares of Common Stock
through a public offering through underwriters and 3,892,505 shares of
Common Stock through its Dividend Reinvestment and Stock Purchase Plan
(DRIP) and various employee benefit plans. The net proceeds from such
sales, aggregating approximately $273 million, were used by Enterprise to
make equity investments of $179 million in PSE&G and $94 million in EDHI.
PSE&G utilized such funds for general corporate purposes, including payment
of a portion of its construction expenditures. EDHI used the funds for
general corporate purposes, including the payment of outstanding debt
obligations. Book value per share was $21.07 at December 31, 1993 compared
to $20.32 at December 31, 1992. (See Note 4 -- Schedule of Consolidated
Capital Stock of Notes to Consolidated Financial Statements.)
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57
(B) See DIVIDENDS.
(C) Under the terms of PSE&G's First and Refunding Mortgage (Mortgage) and its
Restated Certificate of Incorporation, as amended, at December 31, 1993,
PSE&G would qualify to issue an additional $4.488 billion of First and
Refunding Mortgage Bonds (Bonds) at a rate of 7.375% or $4.101 billion of
Preferred Stock at a rate of 7.0%.
In addition, as a prerequisite to the issuance of additional Bonds, PSE&G's
Mortgage requires a 2:1 ratio of earnings to fixed charges as computed
thereunder. For the twelve months ended December 31, 1993 such ratio was
3.30:1.
The BRC has authorized PSE&G to issue not more than $800 million of its
short-term obligations at any one time outstanding, consisting of
commercial paper and other unsecured borrowings from banks and other
lenders through December 31, 1994. On December 31, 1993, PSE&G had $424
million of short-term debt outstanding.
PSE&G has a $600 million revolving credit agreement with a group of
commercial banks which expires on September 17, 1994. On December 31, 1993,
there was no short-term debt outstanding under this credit agreement.
(D) Includes commercial paper issued and/or redeemed by Fuelco and guaranteed
by PSE&G pursuant to a commercial paper program supported by a bank
revolving credit facility to finance the acquisition of a 42.49% undivided
interest in the nuclear fuel for Peach Bottom. Fuelco has a $150 million
commercial paper program through June 1996. On December 31, 1993, Fuelco
had $109 million of its commercial paper outstanding.
(E) Enterprise's long-term debt aggregated $5.256 billion as of December 31,
1993, of which $4.364 billion was attributable to PSE&G and $892 million to
EDHI.
During 1993, PSE&G issued $1.973 billion principal amount of its Bonds.
The net proceeds of these Bonds were used by PSE&G to refund and redeem
certain of its higher-cost and maturing debt obligations including
reimbursement of its treasury for funds expended for such purposes and for
the payment of a portion of PSE&G's construction expenditures. During 1993,
PSE&G redeemed or paid at maturity $1.7 billion aggregate principal amount
of its Bonds and Debenture Bonds.
In February 1994, PSE&G issued $50 million principal amount of its Bonds
to service and secure an equal principal amount of tax-exempt revenue bonds
issued by the Pollution Control Financing Authority of Salem County, New
Jersey to finance pollution control facilities at the Hope Creek Generating
Station.
Under authority granted by the BRC, expiring December 31, 1994, PSE&G is
authorized to issue an additional $495 million principal amount of Bonds
after giving effect to the 1994 issuance of Bonds.
For more detail see Note 6 -- Schedule of Consolidated Long-Term Debt of
Notes to Consolidated Financial Statements.
(F) In March 1993, PSE&G sold 750,000 shares of Preferred Stock ($100 Par). The
net proceeds of $75 million were used by PSE&G for general corporate
purposes.
In February 1994, PSE&G sold 600,000 shares of Preferred Stock -- $25 Par
and 600,000 shares of Preferred Stock ($100 Par). The net proceeds of $15
million from the sale of the Preferred Stock -- $25 Par were used by PSE&G
to redeem all of the 150,000 outstanding shares of PSE&G's 8.08% Preferred
Stock ($100 Par). The net proceeds of $60 million from the sale of the
Preferred Stock ($100 Par) were added to the general funds of PSE&G and
used to pay a portion of its then outstanding short-term debt obligations,
which were principally incurred to fund a portion of its construction
expenditures.
Under authority granted by the BRC, expiring December 31, 1995, PSE&G is
authorized to issue an additional $330 million of Preferred Stock after
giving effect to the 1994 issuances of Preferred Stock. (See Note
4 -- Schedule of Consolidated Capital Stock of Notes to Consolidated
Financial Statements.)
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(G) Funding has a commercial paper program, supported by a commercial bank
letter of credit and revolving credit facility, through November 18, 1995
in the amount of $225 million. As of December 31, 1993, Funding had $45
million outstanding under its commercial paper program.
Funding has a $225 million revolving credit facility which terminates on
November 18, 1995. As of December 31, 1993, Funding had no debt outstanding
under this facility.
In February 1993, Funding repaid $60 million of its 9.43% Series A Notes.
In March 1993, Funding privately placed an aggregate of $60 million
principal amount of its Senior Notes.
In May 1993, Capital amended its Medium-Term Notes (MTNs) program to
provide for an aggregate principal amount of up to $750 million of MTNs,
provided that its total debt outstanding at any time, including MTNs, shall
not exceed such amount. During 1993, $88 million principal amount of
Capital's MTNs were repaid, $42.5 million sinking fund payments on
Capital's long-term debt obligations were made and $105 million principal
amount of MTNs were issued. At December 31, 1993, Capital had $517 million
of MTNs outstanding and total debt outstanding of $724.5 million.
For additional detail see Note 6 -- Long-Term Debt of Notes to Consolidated
Financial Statements.
PSE&G
Following are the significant factors affecting the consolidated financial
condition and the results of operations of PSE&G and its subsidiaries. This
discussion refers to the Consolidated Financial Statements and related Notes of
PSE&G and should be read in conjunction with such statements and notes.
Except as modified below, the information required by this item is
incorporated herein by reference to the following portions of Enterprise's
Management's Discussion and Analysis of Financial Condition and Results of
Operations, insofar as they relate to PSE&G and its subsidiaries: Overview;
PSE&G Energy and Fuel Adjustment Clauses; Enterprise Earnings; Dividends;
Revenues -- PSE&G Electric, PSE&G Gas; PSE&G Electric Energy Costs; Liquidity
and Capital Resources, PSE&G; Construction, Investments and Other Capital
Requirements Forecast; and External Financings.
GAS SUPPLY COSTS
Gas supply costs increased $17 million or 1.8% in 1993 compared to 1992 and
$216 million or 31.4% in 1992 compared to 1991. The significant components of
these changes follow:
INCREASE OR (DECREASE)
------------------------------
1993 VS. 1992 1992 VS. 1991
------------- -------------
(MILLIONS)
Change in prices paid for gas supplies...................... $ 93 $ 7
Therm sendout............................................... 43 158
Refunds from pipeline suppliers............................. 33 (33)
Adjustment of actual costs to match recoveries
through revenues(A)....................................... (152) 84
------ ------
Total Gas Supply Costs............................ $ 17 $ 216
------ ------
------ ------
(A) Reflects the change in the deferred over(under)recovered gas supply costs,
which in the years 1993, 1992 and 1991 amounted to $(100) million, $52
million and $(32) million, respectively. (See PSE&G Energy and Fuel
Adjustment Clauses and Note 2 -- Rate Matters of Notes to Consolidated
Financial Statements.)
1993 -- The increase in total costs was principally due to greater sales to
cogenerators and other customers, higher gas costs and higher therm sendout
resulting from the colder 1993 winter season compared to the 1992 winter season.
The increase in costs was reduced by deferred underrecovered 1993 gas costs
resulting from the BRC approved adjustment in PSE&G's LGAC, effective January 1,
1993, of $71 million on an annualized basis through December 31, 1993. The
adjustment reflects lower gas costs and the inclusion of $15.1 million of
conservation program costs in LGAC. In addition, gas customers received $45
million of credits during the first quarter of 1993.
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59
1992 -- The increase in total costs was principally due to greater therm
sendout resulting from the colder 1992 weather compared to 1991 and increased
sales to cogenerators.
LIQUIDITY AND CAPITAL RESOURCES
INTERNAL GENERATION OF CASH FROM OPERATIONS
Although net income increased $139 million for 1993 (See Enterprise
Earnings -- PSE&G and Revenues -- PSE&G Electric and PSE&G Gas), PSE&G's net
cash provided by operating activities decreased by $376 million from 1992 to
$811 million. This decrease was primarily due to an underrecovery of electric
energy and gas costs through PSE&G's LEAC and LGAC, increased NJGRT payments,
and a decrease in amortization of property abandonments and write-down.
Partially offsetting these cash outflows were increases in deferred income taxes
and decreases in fuel and materials and supplies inventories.
Although net income decreased $70 million for 1992 (See Enterprise
Earnings -- PSE&G and Revenues -- PSE&G Electric and PSE&G Gas), PSE&G's net
cash provided by operating activities increased by $128 million from 1991 to
$1.187 billion. This increase was primarily due to greater recovery of electric
energy and gas costs through PSE&G's LEAC and LGAC and increases in accounts
payable. Partially offsetting these cash inflows were the decrease in net
income, increases in fuel and materials and supplies inventories and decreases
in deferred income taxes.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
FINANCIAL STATEMENT RESPONSIBILITY
Management of Enterprise is responsible for the preparation, integrity and
objectivity of the consolidated financial statements and related notes of
Enterprise. The consolidated financial statements and related notes are prepared
in accordance with generally accepted accounting principles. The financial
statements reflect estimates based upon the judgment of management where
appropriate. Management believes that the consolidated financial statements and
related notes present fairly Enterprise's financial position and results of
operations. Information in other parts of this Annual Report is also the
responsibility of management and is consistent with these consolidated financial
statements and related notes.
The firm of Deloitte & Touche, independent auditors, is engaged to audit
Enterprise's consolidated financial statements and related notes and issue a
report thereon. Deloitte & Touche's audit is conducted in accordance with
generally accepted auditing standards. Management has made available to Deloitte
& Touche all the corporation's financial records and related data, as well as
the minutes of directors' meetings. Furthermore, management believes that all
representations made to Deloitte & Touche during its audit were valid and
appropriate.
Management has established and maintains a system of internal accounting
controls to provide reasonable assurance that assets are safeguarded, and that
transactions are executed in accordance with management's authorization and
recorded properly for the prevention and detection of fraudulent financial
reporting, so as to maintain the integrity and reliability of the financial
statements. The system is designed to permit preparation of consolidated
financial statements and related notes in accordance with generally accepted
accounting principles. The concept of reasonable assurance recognizes that the
costs of a system of internal accounting controls should not exceed the related
benefits. Management believes the effectiveness of this system is enhanced by an
ongoing program of continuous and selective training of employees. In addition,
management has communicated to all employees its policies on business conduct,
safeguarding assets and internal controls.
The Internal Auditing Department of PSE&G conducts audits and appraisals of
accounting and other operations of Enterprise and its subsidiaries and evaluates
the effectiveness of cost and other controls and recommends to management, where
appropriate, improvements thereto. Management has considered the internal
auditors' and Deloitte & Touche's recommendations concerning the corporation's
system of internal accounting controls and has taken actions that, in its
opinion, are cost-effective in the circumstances to respond appropriately to
these recommendations. Management believes that, as of December 31, 1993, the
corporation's system of internal accounting controls is adequate to accomplish
the objectives discussed herein.
The Board of Directors of Enterprise carries out its responsibility of
financial overview through its Audit Committee, which presently consists of six
directors who are neither employees of Enterprise nor its affiliates. The Audit
Committee meets periodically with management as well as with representatives of
the internal auditors and Deloitte & Touche. The Audit Committee reviews the
work of each to ensure that their respective responsibilities are being carried
out and discusses related matters. Both the internal auditors and Deloitte &
Touche periodically meet alone with the Audit Committee and have free access to
the Audit Committee, and its individual members, at any time.
E. JAMES FERLAND ROBERT C. MURRAY
E. James Ferland Robert C. Murray
Chairman of the Board, Vice President and
President and Chief Chief Financial Officer
Executive Officer
PATRICIA A. RADO
Patricia A. Rado
Vice President and Comptroller
Principal Accounting Officer
February 18, 1994
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61
FINANCIAL STATEMENT RESPONSIBILITY
Management of PSE&G is responsible for the preparation, integrity and
objectivity of the consolidated financial statements and related notes of PSE&G.
The consolidated financial statements and related notes are prepared in
accordance with generally accepted accounting principles. The financial
statements reflect estimates based upon the judgment of management where
appropriate. Management believes that the consolidated financial statements and
related notes present fairly PSE&G's financial position and results of
operations. Information in other parts of this Annual Report is also the
responsibility of management and is consistent with these consolidated financial
statements and related notes.
The firm of Deloitte & Touche, independent auditors, is engaged to audit
PSE&G's consolidated financial statements and related notes and issue a report
thereon. Deloitte & Touche's audit is conducted in accordance with generally
accepted auditing standards. Management has made available to Deloitte & Touche
all the corporation's financial records and related data, as well as the minutes
of directors' meetings. Furthermore, management believes that all
representations made to Deloitte & Touche during its audit were valid and
appropriate.
Management has established and maintains a system of internal accounting
controls to provide reasonable assurance that assets are safeguarded, and that
transactions are executed in accordance with management's authorization and
recorded properly for the prevention and detection of fraudulent financial
reporting, so as to maintain the integrity and reliability of the financial
statements. The system is designed to permit preparation of consolidated
financial statements and related notes in accordance with generally accepted
accounting principles. The concept of reasonable assurance recognizes that the
costs of a system of internal accounting controls should not exceed the related
benefits. Management believes the effectiveness of this system is enhanced by an
ongoing program of continuous and selective training of employees. In addition,
management has communicated to all employees its policies on business conduct,
safeguarding assets and internal controls.
The Internal Auditing Department conducts audits and appraisals of
accounting and other operations and evaluates the effectiveness of cost and
other controls and recommends to management, where appropriate, improvements
thereto. Management has considered the internal auditors' and Deloitte &
Touche's recommendations concerning the corporation's system of internal
accounting controls and has taken actions that are cost-effective in the
circumstances to respond appropriately to these recommendations. Management
believes that, as of December 31, 1993, the corporation's system of internal
accounting controls is adequate to accomplish the objectives discussed herein.
The Board of Directors carries out its responsibility of financial overview
through the Audit Committee of Enterprise, which presently consists of six
directors who are neither employees of Enterprise nor its affiliates. The
Enterprise Audit Committee meets periodically with management as well as with
representatives of the internal auditors and Deloitte & Touche. The Audit
Committee reviews the work of each to ensure that their respective
responsibilities are being carried out and discusses related matters. Both the
internal auditors and Deloitte & Touche periodically meet alone with the Audit
Committee and have free access to the Audit Committee, and its individual
members, at any time.
E. JAMES FERLAND ROBERT C. MURRAY
E. James Ferland Robert C. Murray
Chairman of the Board Senior Vice President and
and Chief Executive Officer Chief Financial Officer
PATRICIA A. RADO
Patricia A. Rado
Vice President and Comptroller
Principal Accounting Officer
February 18, 1994
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INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors of
Public Service Enterprise Group Incorporated:
We have audited the accompanying consolidated balance sheets of Public
Service Enterprise Group Incorporated and its subsidiaries as of December 31,
1993 and 1992, and the related consolidated statements of income, retained
earnings, and cash flows for each of the three years in the period ended
December 31, 1993. Our audits also included the consolidated financial statement
schedules listed in the Index in Item 14(a)(1). These consolidated financial
statements and the consolidated financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and consolidated financial
statement schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Public Service Enterprise Group
Incorporated and its subsidiaries at December 31, 1993 and 1992, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1993 in conformity with generally accepted accounting
principles. Also, in our opinion, such consolidated financial statement
schedules, when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
We have also previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheets as of December 31, 1991,
1990, and 1989, and the related consolidated statements of income, retained
earnings, and cash flows for the years ended December 31, 1990 and 1989 (none of
which are presented herein) and we expressed unqualified opinions on those
consolidated financial statements. In our opinion, the information set forth in
the Selected Financial Data for each of the five years in the period ended
December 31, 1993 for the Company, presented in Item 6, is fairly stated in all
material respects, in relation to the consolidated financial statements from
which it has been derived.
As discussed in Note 1 to the Consolidated Financial Statements, in 1993
the Company changed its method of accounting for income taxes to conform with
Statement of Financial Accounting Standards No. 109 and changed its method of
accounting for the costs of postretirement benefits other than pensions to
conform with Statement of Financial Accounting Standards No. 106.
DELOITTE & TOUCHE
February 18, 1994
Parsippany, New Jersey
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63
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Public Service Electric and Gas Company:
We have audited the accompanying consolidated balance sheets of Public
Service Electric & Gas Company and its subsidiaries as of December 31, 1993 and
1992, and the related consolidated statements of income, retained earnings, and
cash flows for each of the three years in the period ended December 31, 1993.
Our audits also included the consolidated financial statement schedules listed
in the Index in Item 14(a)(2). These consolidated financial statements and the
consolidated financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and consolidated financial statement schedules
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in
all material respects, the financial position of Public Service Electric & Gas
Company and its subsidiaries at December 31, 1993 and 1992, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 1993 in conformity with generally accepted accounting
principles. Also, in our opinion, such consolidated financial statement
schedules, when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.
We have also previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheets as of December 31, 1991,
1990, and 1989, and the related consolidated statements of income, retained
earnings, and cash flows for the years ended December 31, 1990 and 1989 (none of
which are presented herein) and we expressed unqualified opinions on those
consolidated financial statements. In our opinion, the information set forth in
the Selected Financial Data for each of the five years in the period ended
December 31, 1993 for the Company, presented in Item 6, is fairly stated in all
material respects, in relation to the consolidated financial statements from
which it has been derived.
As discussed in Note 1 to the Consolidated Financial Statements, in 1993
the Company changed its method of accounting for income taxes to conform with
Statement of Financial Accounting Standards No. 109 and changed its method of
accounting for the costs of postretirement benefits other than pensions to
conform with Statement of Financial Accounting Standards No. 106.
DELOITTE & TOUCHE
February 18, 1994
Parsippany, New Jersey
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64
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------
1993 1992 1991
----------- ----------- -----------
(THOUSANDS OF DOLLARS)
OPERATING REVENUES
Electric............................................... $ 3,693,083 $ 3,407,819 $ 3,500,043
Gas.................................................... 1,594,341 1,586,181 1,307,849
Nonutility Activities.................................. 418,135 362,781 283,766
----------- ----------- -----------
Total Operating Revenues........................ 5,705,559 5,356,781 5,091,658
----------- ----------- -----------
OPERATING EXPENSES
Operation
Fuel for Electric Generation and Net Interchanged
Power............................................. 717,136 776,571 781,191
Gas Purchased and Materials for Gas Produced......... 897,885 858,737 636,058
Other................................................ 1,012,757 924,942 867,182
Maintenance............................................ 304,403 307,726 315,372
Depreciation and Amortization.......................... 600,264 642,548 585,919
Property Impairment (note 16).......................... 77,637 -- --
Taxes
Federal Income Taxes (note 9)........................ 314,759 221,694 264,856
New Jersey Gross Receipts Taxes...................... 597,898 585,770 583,071
Other................................................ 75,973 72,658 60,855
----------- ----------- -----------
Total Operating Expenses........................ 4,598,712 4,390,646 4,094,504
----------- ----------- -----------
OPERATING INCOME......................................... 1,106,847 966,135 997,154
----------- ----------- -----------
OTHER INCOME
Allowance for Funds Used During
Construction -- Equity............................... 12,265 12,828 7,092
Peach Bottom Settlement -- net of Federal income taxes
$16,985.............................................. -- 32,970 --
Miscellaneous -- net................................... (3,778) 30,188 15,024
----------- ----------- -----------
Total Other Income.............................. 8,487 75,986 22,116
----------- ----------- -----------
INCOME BEFORE INTEREST CHARGES AND DIVIDENDS ON PREFERRED
STOCK.................................................. 1,115,334 1,042,121 1,019,270
----------- ----------- -----------
INTEREST CHARGES (note 6)
Long-Term Debt......................................... 469,120 479,898 437,701
Short-Term Debt........................................ 13,860 14,858 35,000
Other.................................................. 19,554 29,269 12,576
----------- ----------- -----------
Total Interest Charges.......................... 502,534 524,025 485,277
Allowance for Funds Used During Construction -- Debt and
Capitalized Interest................................... (20,833) (17,928) (38,054)
----------- ----------- -----------
Net Interest Charges..................................... 481,701 506,097 447,223
----------- ----------- -----------
Preferred Stock Dividend Requirements (note 4)........... 38,114 31,907 29,012
----------- ----------- -----------
Income before cumulative effect of accounting change..... 595,519 504,117 543,035
Cumulative effect of change in accounting for income
taxes
(note 9)............................................... 5,414 -- --
----------- ----------- -----------
Net Income............................................... $ 600,933 $ 504,117 $ 543,035
----------- ----------- -----------
----------- ----------- -----------
SHARES OF COMMON STOCK OUTSTANDING
End of Year............................................ 243,688,256 235,395,751 226,700,852
Average for Year....................................... 240,663,599 232,306,492 223,565,239
EARNINGS PER AVERAGE SHARE OF COMMON STOCK
Income before cumulative effect of accounting change... $ 2.48 $ 2.17 $ 2.43
Cumulative effect of change in accounting for income
taxes................................................ .02 -- --
----------- ----------- -----------
TOTAL EARNINGS PER AVERAGE SHARE OF COMMON STOCK......... $ 2.50 $ 2.17 $ 2.43
----------- ----------- -----------
----------- ----------- -----------
DIVIDENDS PAID PER SHARE OF COMMON STOCK................. $ 2.16 $ 2.16 $ 2.13
----------- ----------- -----------
----------- ----------- -----------
See Notes to Consolidated Financial Statements
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PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONSOLIDATED BALANCE SHEETS
ASSETS
DECEMBER 31,
---------------------------
1993 1992
----------- -----------
(THOUSANDS OF DOLLARS)
UTILITY PLANT-ORIGINAL COST
Electric.................................................................. $11,920,894 $11,565,669
Gas....................................................................... 2,177,841 2,044,944
Common.................................................................... 520,285 479,972
----------- -----------
Total.............................................................. 14,619,020 14,090,585
Less accumulated depreciation and amortization.............................. 4,772,942 4,386,738
----------- -----------
Net......................................................................... 9,846,078 9,703,847
Nuclear Fuel in Service, net of accumulated amortization --
1993, $284,162; 1992, $223,857.......................................... 205,237 252,299
----------- -----------
Net Utility Plant in Service....................................... 10,051,315 9,956,146
Construction Work in Progress, including Nuclear Fuel in Process --
1993, $98,780; 1992, $68,789.............................................. 735,356 492,914
Plant Held for Future Use (principally land)................................ 17,709 22,252
----------- -----------
Net Utility Plant.................................................. 10,804,380 10,471,312
----------- -----------
INVESTMENTS AND OTHER PROPERTY (notes 3,7 and 10)
Long-Term Investments, net of valuation allowance --
1993, $18,018; 1992, $17,548.............................................. 1,613,823 1,650,248
Oil and Gas Property, Plant and Equipment, net of accumulated depreciation
and amortization -- 1993, $695,791; 1992, $663,915...................... 506,047 506,814
Real Estate, Property and Equipment, net of accumulated
depreciation -- 1993, $10,840; 1992, $11,146............................ 110,661 225,289
Other Plant, net of accumulated depreciation and amortization --
1993, $4,307; 1992, $3,073.............................................. 45,501 26,260
Nuclear Decommissioning and Other Special Funds........................... 189,282 134,524
Other Investments -- net.................................................. 103,537 79,616
----------- -----------
Total Investments and Other Property............................... 2,568,851 2,622,751
----------- -----------
CURRENT ASSETS
Cash and Cash Equivalents (note 8)........................................ 46,880 31,674
Accounts Receivable:
Customer Accounts Receivable............................................ 446,629 395,991
Other Accounts Receivable............................................... 233,307 214,195
Less allowance for doubtful accounts.................................... 27,932 24,059
Unbilled Revenues......................................................... 244,497 248,742
Fuel, at average cost..................................................... 285,943 263,743
Materials and Supplies, at average cost................................... 172,438 211,076
Prepayments............................................................... 82,586 63,026
Deferred Income Taxes (note 9)............................................ 12,934 --
----------- -----------
Total Current Assets............................................... 1,497,282 1,404,388
----------- -----------
DEFERRED DEBITS (note 5)
Property Abandonments -- net.............................................. 105,536 122,261
Oil and Gas Property Write-Down........................................... 46,386 51,540
Unamortized Debt Expense.................................................. 121,278 62,134
Deferred Debit -- OPEB (notes 1 and 13)................................... 58,593 --
Unrecovered Environmental Costs (notes 2 and 12).......................... 138,531 108,047
Unrecovered Plant and Regulatory Study Costs.............................. 35,196 23,091
Under (Over) Recovered Electric Energy and Gas Costs -- net............... 62,034 (122,736)
Unrecovered SFAS 109 Deferred Income Taxes (note 9)....................... 789,795 --
Deferred Decontamination and Decommissioning Costs (note 3)............... 56,055 --
Other..................................................................... 21,247 11,921
----------- -----------
Total Deferred Debits.............................................. 1,434,651 256,258
----------- -----------
Total............................................................ $16,305,164 $14,754,709
----------- -----------
----------- -----------
See Notes to Consolidated Financial Statements
57
66
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONSOLIDATED BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
DECEMBER 31,
---------------------------
1993 1992
----------- -----------
(THOUSANDS OF DOLLARS)
CAPITALIZATION (notes 4 and 6)
Common Equity
Common Stock................................................. $ 3,772,662 $ 3,499,183
Retained Earnings............................................ 1,361,018 1,282,931
----------- -----------
Total Common Equity..................................... 5,133,680 4,782,114
Subsidiaries' Securities and Obligations
Preferred Stock
Without Mandatory Redemption................................. 429,994 429,994
With Mandatory Redemption.................................... 150,000 75,000
Long-Term Debt (note 6)...................................... 5,256,321 4,977,579
Capital Lease Obligations (note 10).......................... 52,530 53,104
----------- -----------
Total Capitalization.................................... 11,022,525 10,317,791
----------- -----------
OTHER LONG-TERM LIABILITIES
Decontamination and Decommisioning Costs (note 3)............... 56,055 --
Unrecovered Environmental Costs (notes 2 and 12)................ 111,000 93,169
----------- -----------
Total Other Long-Term Liabilities....................... 167,055 93,169
----------- -----------
CURRENT LIABILITIES
Long-Term Debt and Capital Lease Obligations due within one
year......................................................... 168,638 393,071
Commercial Paper and Loans (note 11)............................ 577,636 391,982
Accounts Payable................................................ 557,761 473,977
New Jersey Gross Receipts Taxes Accrued......................... 263,357 555,329
Other Taxes Accrued............................................. 39,610 41,557
Interest Accrued................................................ 107,027 116,165
Other........................................................... 157,751 134,768
----------- -----------
Total Current Liabilities............................... 1,871,780 2,106,849
----------- -----------
DEFERRED CREDITS
Accumulated Deferred Income Taxes (note 9)...................... 2,702,386 1,711,089
Accumulated Deferred Investment Tax Credits (note 9)............ 432,713 444,368
Deferred Credit -- OPEB (notes 1 and 13)........................ 58,593 --
Materials and Supplies.......................................... 11,847 24,018
Other........................................................... 38,265 57,425
----------- -----------
Total Deferred Credits.................................. 3,243,804 2,236,900
----------- -----------
COMMITMENTS AND CONTINGENT LIABILITIES (note 12)
Total................................................... $16,305,164 $14,754,709
----------- -----------
----------- -----------
58
67
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
1993 1992 1991
---------- --------- ----------
(THOUSANDS OF DOLLARS)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income......................................... $ 600,933 $ 504,117 $ 543,035
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation and Amortization................... 600,264 642,548 585,919
Amortization of Nuclear Fuel.................... 102,718 91,903 96,420
(Deferral) Recovery of Electric Energy
and Gas Costs -- net.......................... (184,770) 121,371 (36,146)
Loss From Property Impairments.................. 77,637 -- --
Cumulative Effect of Change in Accounting for
Income Taxes.................................. (5,414) -- --
Amortization of Discounts on Property
Abandonments
and Disallowance.............................. (7,801) (11,293) (11,754)
Unrealized Gains on Investments -- net.......... (8,694) (24,843) (11,264)
Provision for Deferred Income Taxes -- net...... 168,406 56,846 114,681
Investment Tax Credits -- net................... (11,655) (20,342) (19,779)
Allowance for Funds Used During Construction --
Debt and Equity and Capitalized Interest...... (33,098) (30,756) (45,146)
Proceeds from Leasing Activities -- net......... 14,780 30,295 17,463
Changes in certain current assets and
liabilities
Net increase in Accounts Receivable and
Unbilled Revenues.......................... (61,632) (75,275) (50,052)
Net decrease (increase) in Inventory -- Fuel
and Materials and Supplies................. 16,438 (37,084) 63,043
Net increase (decrease) in Accounts Payable... 83,784 60,853 (52,535)
Net (decrease) increase in Accrued Taxes...... (293,919) 37,892 (7,736)
Net change in Other Current Assets and
Liabilities................................ (18,649) 6,658 (16,592)
Other........................................... (31,662) (12,987) (14,437)
---------- --------- ----------
Net cash provided by operating
activities............................... 1,007,666 1,339,903 1,155,120
---------- --------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Utility Plant, excluding AFDC......... (863,294) (800,344) (783,175)
Additions to Oil and Gas Property, Plant and
Equipment, excluding Capitalized Interest....... (87,968) (32,337) (183,673)
Net decrease (increase) in Long-Term Investments
and Real Estate................................. 66,659 (61,099) (304,541)
Increase in Decommissioning and Other Special
Funds, excluding interest....................... (45,508) (9,262) (11,665)
Cost of Plant Removal -- net....................... (47,791) (40,111) (44,199)
Other.............................................. (14,938) (6,000) 11,278
---------- --------- ----------
Net cash used in investing activities...... (992,840) (949,153) (1,315,975)
---------- --------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in Short-Term Debt......... 185,654 2,932 (369,809)
Issuance of Long-Term Debt......................... 2,137,700 880,000 1,013,794
Redemption of Long-Term Debt and Other
Obligations..................................... (2,083,965) (1,058,637) (252,241)
Issuance of Preferred Stock........................ 75,000 75,000 --
(Deferral) Amortization of Debt Expense -- net..... (59,144) (12,490) 4,562
Issuance of Common Stock........................... 273,479 237,045 218,736
Cash Dividends Paid on Common Stock................ (521,572) (503,197) (476,099)
Other.............................................. (6,772) (5,719) 2,838
---------- --------- ----------
Net cash provided by (used in) financing
activities............................... 380 (385,066) 141,781
---------- --------- ----------
Net increase (decrease) in Cash and Cash
Equivalents........................................ 15,206 5,684 (19,074)
Cash and Cash Equivalents at Beginning of Year....... 31,674 25,990 45,064
---------- --------- ----------
Cash and Cash Equivalents at End of Year............. $ 46,880 $ 31,674 $ 25,990
---------- --------- ----------
---------- --------- ----------
Income Taxes Paid.................................... $ 140,172 $ 143,211 $ 148,171
Interest Paid........................................ $ 458,956 $ 486,396 $ 436,994
See Notes to Consolidated Financial Statements
59
68
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------
1993 1992 1991
---------- ---------- ----------
(THOUSANDS OF DOLLARS)
BALANCE JANUARY 1...................................... $1,282,931 $1,282,029 $1,203,772
ADD NET INCOME......................................... 600,933 504,117 543,035
---------- ---------- ----------
Total........................................ 1,883,864 1,786,146 1,746,807
---------- ---------- ----------
DEDUCT
Cash Dividends on Common Stock(A).................... 521,572 503,197 476,099
Adjustments to Retained Earnings..................... 1,274 18 (11,321)
---------- ---------- ----------
Total Deductions............................. 522,846 503,215 464,778
---------- ---------- ----------
BALANCE DECEMBER 31.................................... $1,361,018 $1,282,931 $1,282,029
---------- ---------- ----------
---------- ---------- ----------
(A) The ability of Enterprise to declare and pay dividends is contingent upon
its receipt of dividend payments from its subsidiaries. PSE&G, Enterprise's
principal subsidiary, has restrictions on the payment of dividends which are
contained in its Restated Certificate of Incorporation, as amended, certain
of the indentures supplemental to its Mortgage, and certain debenture bond
indentures. However, none of these restrictions presently limits the payment
of dividends out of current earnings. The amount of PSE&G's restricted
retained earnings at December 31, 1993 was $10 million.
See Notes to Consolidated Financial Statements.
60
69
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------
1993 1992 1991
---------- ---------- ----------
(THOUSANDS OF DOLLARS)
OPERATING REVENUES
Electric............................................. $3,693,083 $3,407,819 $3,500,043
Gas.................................................. 1,594,341 1,586,181 1,307,849
---------- ---------- ----------
Total Operating Revenues..................... 5,287,424 4,994,000 4,807,892
---------- ---------- ----------
OPERATING EXPENSES
Operation
Fuel for Electric Generation and Net Interchanged
Power........................................... 717,136 776,571 781,191
Gas Purchased and Materials for Gas Produced...... 919,870 903,360 687,365
Other............................................. 880,943 818,606 769,786
Maintenance.......................................... 304,403 307,726 315,372
Depreciation and Amortization........................ 509,206 552,011 493,097
Taxes
Federal Income Taxes (note 9)..................... 308,790 195,464 255,760
New Jersey Gross Receipts Taxes................... 597,898 585,770 583,071
Other............................................. 67,593 65,968 57,086
---------- ---------- ----------
Total Operating Expenses..................... 4,305,839 4,205,476 3,942,728
---------- ---------- ----------
OPERATING INCOME....................................... 981,585 788,524 865,164
---------- ---------- ----------
OTHER INCOME
Allowance for Funds Used During
Construction -- Equity............................ 12,265 12,828 7,092
Peach Bottom Settlement -- net of Federal income
taxes -- $16,985.................................. -- 32,970 --
Miscellaneous -- net................................. (3,841) 29,927 15,814
---------- ---------- ----------
Total Other Income........................... 8,424 75,725 22,906
---------- ---------- ----------
INCOME BEFORE INTEREST CHARGES AND DIVIDENDS ON
PREFERRED STOCK...................................... 990,009 864,249 888,070
---------- ---------- ----------
INTEREST CHARGES (note 6)
Long-Term Debt....................................... 364,252 368,496 337,235
Short-Term Debt...................................... 6,414 5,920 15,941
Other................................................ 19,290 27,486 12,297
---------- ---------- ----------
Total Interest Charges....................... 389,956 401,902 365,473
Allowance for Funds Used During Construction -- Debt... (14,815) (13,589) (22,882)
---------- ---------- ----------
Net Interest Charges................................... 375,141 388,313 342,591
---------- ---------- ----------
Net Income............................................. 614,868 475,936 545,479
---------- ---------- ----------
Preferred Stock Dividend Requirements (note 4)......... 38,114 31,907 29,012
---------- ---------- ----------
EARNINGS AVAILABLE TO PUBLIC SERVICE ENTERPRISE GROUP
INCORPORATED......................................... $ 576,754 $ 444,029 $ 516,467
---------- ---------- ----------
---------- ---------- ----------
See Notes to Consolidated Financial Statements.
61
70
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONSOLIDATED BALANCE SHEETS
ASSETS
DECEMBER 31,
---------------------------
1993 1992
----------- -----------
(THOUSANDS OF DOLLARS)
UTILITY PLANT-ORIGINAL COST
Electric........................................................ $11,920,894 $11,565,669
Gas............................................................. 2,177,841 2,044,944
Common.......................................................... 520,285 479,972
----------- -----------
Total................................................... 14,619,020 14,090,585
Less accumulated depreciation and amortization.................... 4,772,942 4,386,738
----------- -----------
Net............................................................... 9,846,078 9,703,847
Nuclear Fuel in Service, net of accumulated amortization --
1993, $284,162; 1992, $223,857............................... 205,237 252,299
----------- -----------
Net Utility Plant in Service............................ 10,051,315 9,956,146
Construction Work in Progress, including Nuclear Fuel in
Process --
1993, $98,780; 1992, $68,789.................................... 735,356 492,914
Plant Held for Future Use (principally land)...................... 17,709 22,252
----------- -----------
Net Utility Plant....................................... 10,804,380 10,471,312
----------- -----------
INVESTMENTS AND OTHER PROPERTY
Other Plant, net of accumulated depreciation and amortization --
1993, $1,444; 1992, $639..................................... 43,543 24,397
Nuclear Decommissioning and Other Special Funds................. 189,282 134,524
Long-Term Investments........................................... 99,380 72,400
----------- -----------
Total Investments and Other Property.................... 332,205 231,321
----------- -----------
CURRENT ASSETS
Cash and Cash Equivalents (note 8).............................. 17,673 13,326
Accounts Receivable:
Customer Accounts Receivable................................. 446,629 395,991
Other Accounts Receivable.................................... 163,663 127,230
Less: allowance for doubtful accounts........................ 27,932 24,059
Unbilled Revenues............................................... 244,497 248,742
Fuel, at average cost........................................... 285,943 263,743
Materials and Supplies, at average cost......................... 170,910 210,030
Prepayments..................................................... 78,480 60,156
Deferred Income Taxes (note 9).................................. 12,934 --
----------- -----------
Total Current Assets.................................... 1,392,797 1,295,159
----------- -----------
DEFERRED DEBITS (note 5)
Property Abandonments -- net.................................... 105,536 122,261
Oil and Gas Property Write-Down................................. 46,386 51,540
Unamortized Debt Expense........................................ 117,057 58,924
Unrecovered SFAS 109 Deferred Income Taxes (note 9)............. 789,795 --
Deferred Decontamination and Decommissioning Costs (note 3)..... 56,055 --
Deferred Debit -- OPEB (notes 1 and 13)......................... 58,593 --
Unrecovered Environmental Costs (notes 2 and 12)................ 138,531 108,047
Unrecovered Plant and Regulatory Study Costs.................... 35,196 23,091
Under (Over) Recovered Electric Energy and Gas Costs -- net..... 62,034 (122,736)
Other........................................................... 21,241 11,915
----------- -----------
Total Deferred Debits................................... 1,430,424 253,042
----------- -----------
Total................................................. $13,959,806 $12,250,834
----------- -----------
----------- -----------
See Notes to Consolidated Financial Statements.
62
71
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONSOLIDATED BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
DECEMBER 31,
-------------------------
1993 1992
----------- -----------
(THOUSANDS OF DOLLARS)
CAPITALIZATION (notes 4 and 6)
Common Equity
Common Stock................................................... $ 2,563,003 $ 2,563,003
Contributed Capital from Enterprise............................ 534,395 359,725
Retained Earnings.............................................. 1,180,532 1,097,734
----------- -----------
Total Common Equity....................................... 4,277,930 4,020,462
Preferred Stock without mandatory redemption........................ 429,994 429,994
Preferred Stock with mandatory redemption........................... 150,000 75,000
Long-Term Debt (note 6)............................................. 4,364,437 3,978,138
Capital Lease Obligations (note 10)................................. 52,530 53,104
----------- -----------
Total Capitalization...................................... 9,274,891 8,556,698
----------- -----------
OTHER LONG-TERM LIABILITIES
Decontamination and Decommissioning Costs (note 3)................ 56,055 --
Unrecovered Environmental Costs (note 2 and 12)................... 111,000 93,169
----------- -----------
Total Other Long-Term Liabilities......................... 167,055 93,169
----------- -----------
CURRENT LIABILITIES
Long-Term Debt and Capital Lease Obligations due within one
year........................................................... 62,274 192,212
Commercial Paper and Loans (note 11).............................. 532,728 257,536
Accounts Payable.................................................. 519,296 434,561
Accounts Payable -- Associated Companies (note 17)................ 5,674 18,535
New Jersey Gross Receipts Taxes Accrued........................... 263,357 555,329
Other Taxes Accrued............................................... 33,710 27,857
Interest Accrued.................................................. 96,257 103,988
Other.......................................................... 122,924 110,869
----------- -----------
Total Current Liabilities................................. 1,636,220 1,700,887
----------- -----------
DEFERRED CREDITS
Accumulated Deferred Income Taxes (note 9)........................ 2,368,778 1,403,115
Accumulated Deferred Investment Tax Credits (note 9).............. 408,929 427,337
Deferred Credit -- OPEB (notes 1 and 13).......................... 58,593 --
Materials and Supplies (note 5)................................... 11,847 24,018
Other............................................................. 33,493 45,610
----------- -----------
Total Deferred Credits.................................... 2,881,640 1,900,080
----------- -----------
COMMITMENTS AND CONTINGENT LIABILITIES (note 12)
Total..................................................... $13,959,806 $12,250,834
----------- -----------
----------- -----------
63
72
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------
1993 1992 1991
----------- ----------- ----------
(THOUSANDS OF DOLLARS)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income................................................. $ 614,868 $ 475,936 $ 545,479
Adjustments to reconcile net income to net cash flows from
operating activities:
Depreciation and Amortization........................... 509,206 552,011 493,097
Amortization of Nuclear Fuel............................ 102,718 91,903 96,420
(Deferral) Recovery of Electric Energy and Gas
Costs -- net.......................................... (184,770) 121,371 (36,146)
Amortization of Discounts on Property Abandonments and
Disallowance.......................................... (7,801) (11,293) (11,754)
Provision for Deferred Income Taxes -- net.............. 175,868 21,839 97,278
Investment Tax Credits -- net........................... (18,408) (19,089) (20,229)
Allowance for Funds Used During Construction -- Debt and
Equity................................................ (27,080) (26,417) (29,974)
Changes in certain current assets and liabilities
Net increase in Accounts Receivable and Unbilled
Revenues........................................... (78,953) (54,792) (52,087)
Net decrease (increase) in Inventory -- Fuel and
Materials and Supplies............................. 16,920 (36,775) 62,773
Net increase (decrease) in Accounts Payable........... 71,874 69,629 (56,885)
Net (decrease) increase in Accrued Taxes.............. (286,119) 20,227 778
Net change in Other Current Assets and Liabilities.... (26,934) (1,063) (12,022)
Other................................................... (50,309) (16,060) (16,874)
----------- ----------- ----------
Net cash provided by operating activities............. 811,080 1,187,427 1,059,854
----------- ----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Utility Plant, excluding AFDC................. (863,294) (800,344) (783,175)
Net increase in Other Investments.......................... (26,980) (20,438) (31,788)
Net increase in Decommissioning Funds and Other Special
Funds, excluding interest............................... (45,508) (9,262) (11,665)
Cost of Plant Removal -- net............................... (47,791) (40,111) (44,199)
Other...................................................... (13,607) (4,572) --
----------- ----------- ----------
Net cash used in investing activities................. (997,180) (874,727) (870,827)
----------- ----------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in Short-Term Debt................. 275,192 91,679 (320,961)
Issuance of Long-Term Debt................................. 1,972,700 850,000 750,000
Redemption of Long-Term Debt and Other Obligations......... (1,716,913) (1,032,118) (170,658)
Issuance of Preferred Stock................................ 75,000 75,000 --
(Deferral) Amortization of Debt Expense -- net............. (58,133) (13,367) 4,666
Contributed Capital by Enterprise.......................... 174,670 239,725 60,000
Cash Dividends Paid........................................ (531,314) (517,907) (507,013)
Other...................................................... (755) (402) 1
----------- ----------- ----------
Net cash provided by (used in) financing activities... 190,447 (307,390) (183,965)
----------- ----------- ----------
Net increase in Cash and Cash Equivalents.................... 4,347 5,310 5,062
Cash and Cash Equivalents at Beginning of Year............... 13,326 8,016 2,954
----------- ----------- ----------
Cash and Cash Equivalents at End of Year..................... $ 17,673 $ 13,326 $ 8,016
----------- ----------- ----------
----------- ----------- ----------
Income Taxes Paid............................................ $ 172,869 $ 209,258 $ 193,347
Interest Paid................................................ $ 356,620 $ 374,049 $ 337,669
See Notes to Consolidated Financial Statements.
64
73
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------
1993 1992 1991
---------- ---------- ----------
(THOUSANDS OF DOLLARS)
BALANCE JANUARY 1...................................... $1,097,734 $1,140,117 $1,101,651
ADD NET INCOME......................................... 614,868 475,936 545,479
---------- ---------- ----------
Total........................................ 1,712,602 1,616,053 1,647,130
---------- ---------- ----------
DEDUCT CASH DIVIDENDS(A)
Preferred Stock, at required rates................... 38,114 31,907 29,012
Common Stock......................................... 493,200 486,000 478,001
Adjustments to Retained Earnings..................... 756 412 --
---------- ---------- ----------
Total Deductions............................. 532,070 518,319 507,013
---------- ---------- ----------
BALANCE DECEMBER 31.................................... $1,180,532 $1,097,734 $1,140,117
---------- ---------- ----------
---------- ---------- ----------
(A) The Company has restrictions on the payment of dividends which are
contained in its Restated Certificate of Incorporation, as amended, certain of
the indentures supplemental to its Mortgage, and certain debenture bond
indentures. However, none of these restrictions presently limits the payment of
dividends out of current earnings. The amount of the Company's restricted
retained earnings at December 31, 1993 was $10 million.
See Notes to Consolidated Financial Statements.
65
74
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Enterprise has two direct wholly-owned subsidiaries, Public Service
Electric and Gas Company (PSE&G) and Enterprise Diversified Holdings
Incorporated (EDHI). Enterprise's principal subsidiary, PSE&G, is an operating
public utility providing electric and gas service in certain areas in the State
of New Jersey.
PSE&G has a finance subsidiary, PSE&G Fuel Corporation (Fuelco), providing
financing, unconditionally guaranteed by PSE&G, of up to $150 million aggregate
principal amount at any one time of a 42.49% interest in the nuclear fuel
acquired for Peach Bottom Atomic Power Station Units 2 and 3 (Peach Bottom).
PSE&G also has a nonutility subsidiary, Public Service Conservation Resources
Corporation (PSCRC) which offers demand side management (DSM) services to
utility customers.
EDHI is the parent of Enterprise's other nonutility businesses: Energy
Development Corporation (EDC), an oil and gas exploration, development,
production and marketing company; Community Energy Alternatives Incorporated
(CEA), an investor in and developer of cogeneration and power production
facilities; Public Service Resources Corporation (PSRC), which makes diversified
passive investments; and Enterprise Group Development Corporation (EGDC), a
diversified nonresidential real estate development and investment business. EDHI
also has two finance subsidiaries: PSEG Capital Corporation (Capital), and
Enterprise Capital Funding Corporation (Funding).
Enterprise has claimed an exemption from regulation by the Securities and
Exchange Commission (SEC) as a registered holding company under the Public
Utility Holding Company Act of 1935, except for Section 9(a)(2) which relates to
the acquisition of voting securities of an electric or gas utility company.
Also, Enterprise is not subject to direct regulation by the New Jersey Board of
Regulatory Commissioners (BRC) or the Federal Energy Regulatory Commission
(FERC).
CONSOLIDATION POLICY
The consolidated financial statements include the accounts of Enterprise
and its subsidiaries. All significant intercompany accounts and transactions
have been eliminated in consolidation. Certain reclassifications of prior years'
data have been made to conform with the current presentation.
REGULATION -- PSE&G
The accounting and rates of PSE&G are subject, in certain respects, to the
requirements of the BRC and FERC. As a result, PSE&G maintains its accounts in
accordance with their prescribed Uniform Systems of Accounts, which are the
same. The applications of generally accepted accounting principles by PSE&G
differ in certain respects from applications by non-regulated businesses.
UTILITY PLANT AND RELATED DEPRECIATION -- PSE&G
Additions to utility plant and replacements of units of property are
capitalized at original cost. The cost of maintenance, repairs and replacements
of minor items of property is charged to appropriate expense accounts. At the
time units of depreciable properties are retired or otherwise disposed of, the
original cost less net salvage value is charged to accumulated depreciation.
For financial reporting purposes, depreciation is computed under the
straight-line method. Depreciation is based on estimated average remaining lives
of the several classes of depreciable property. These estimates are reviewed on
a periodic basis and necessary adjustments are made as approved by the BRC.
Depreciation provisions stated in percentages of original cost of depreciable
property were 3.46% in 1993 and 3.48% in 1992 and 1991.
66
75
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECONTAMINATION AND DECOMMISSIONING -- PSE&G
In September 1993, FERC issued Order No. 557 on the accounting and
ratemaking treatment of special assessments levied under the National Energy
Policy Act (NEPA). Order No. 557 provides that special assessments are a
necessary and reasonable current cost of fuel and shall be fully recoverable in
rates in the same manner as other fuel costs. While PSE&G expects to recover
such special assessments through its Levelized Energy Adjustment Clause (LEAC)
no assurances can be given that the BRC will authorize such recovery from
customers. PSE&G cannot predict what actions the BRC will take concerning any
recovery associated with this matter.
AMORTIZATION OF NUCLEAR FUEL -- PSE&G
Nuclear energy burnup costs are charged to fuel expense on a
units-of-production basis over the estimated life of the fuel. Rates for the
recovery of fuel used at all nuclear units include a provision of one mill per
kilowatthour (Kwh) of nuclear generation for spent fuel disposal costs. (See
Note 3 -- PSE&G Nuclear Decommissioning and Amortization of Nuclear Fuel.)
REVENUES AND FUEL COSTS -- PSE&G
Revenues are recorded based on services rendered to customers during each
accounting period. PSE&G records unbilled revenues representing the estimated
amount customers will be billed for services rendered from the time meters were
last read to the end of the respective accounting period.
Rates include projected fuel costs for electric generation, purchased and
interchanged power, gas purchased and materials used for gas production.
Any under or overrecoveries, together with interest (in the case of
overrecoveries), are deferred and included in operations in the period in which
they are reflected in rates.
LONG-TERM INVESTMENTS
PSRC has invested in marketable securities and limited partnerships
investing in securities, which are stated at fair value, and various leases and
other limited partnerships. EGDC is a participant in the nonresidential real
estate markets. CEA is an investor in and developer of cogeneration and power
production facilities. (See Note 7 -- Long-Term Investments.)
OIL AND GAS ACCOUNTING -- EDC
EDC uses the successful efforts method of accounting under which proved
leasehold costs are capitalized and amortized over the proved developed and
undeveloped reserves on a units-of-production basis. Drilling and equipping
costs, except exploratory dry holes, are capitalized and depreciated over the
proved developed reserves on a units-of-production basis. Estimated future
abandonment costs of offshore proved properties are depreciated on a
units-of-production basis over the proved developed reserves. Unproved leasehold
costs are capitalized and not amortized, pending an evaluation of their
exploration potential. Unproved leasehold and producing properties costs are
assessed periodically to determine if an impairment of the cost of significant
individual properties has occurred. The cost of an impairment is charged to
expense in the period in which it occurs. Costs incurred for exploratory dry
holes, exploratory geological and geophysical work and delay rentals are charged
to expense as incurred.
INCOME TAXES
Enterprise and its subsidiaries file a consolidated Federal income tax
return and income taxes are allocated to Enterprise's subsidiaries based on
taxable income or loss of each.
67
76
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Investment tax credits are deferred and amortized over the useful lives of
the related property including nuclear fuel.
Deferred income taxes are provided for differences between book and taxable
income. For periods prior to January 1, 1993, PSE&G provided deferred income
taxes to the extent permitted for ratemaking purposes. Effective January 1,
1993, Enterprise and its subsidiaries adopted Statement of Financial Accounting
Standards No. 109 "Accounting for Income Taxes" (SFAS 109). Under SFAS 109,
deferred income taxes are provided for all temporary differences between the
financial statement carrying amounts and the tax bases of existing assets and
liabilities irrespective of the treatment for ratemaking purposes. (See Note
9 -- Federal Income Taxes.)
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION (AFDC) AND CAPITALIZED INTEREST
PSE&G -- AFDC represents the cost of debt and equity funds used to finance
the construction of new utility facilities. The amount of AFDC capitalized is
also reported in the Consolidated Statements of Income as a reduction of
interest charges for the borrowed funds component and as other income for the
equity funds component. The rates used for calculating AFDC in 1993, 1992 and
1991 were 6.96%, 7.80% and 7.50%, respectively. These rates are within the
limits set by the FERC.
EDHI -- The operating subsidiaries of EDHI capitalize interest costs
allocable to construction expenditures at the average cost of borrowed funds.
PENSION PLAN AND OTHER POSTRETIREMENT BENEFITS
The employees of PSE&G and participating affiliates, after completing one
year of service, are covered by a noncontributory trusteed pension plan (Pension
Plan). The policy is to fund pension costs accrued. PSE&G also provides certain
health care and life insurance benefits to active and retired employees. The
portion of such costs pertaining to retirees amounted to $28 million, $24
million and $24 million in 1993, 1992 and 1991, respectively. The current cost
of these benefits is charged to expense when paid and is currently being
recovered from ratepayers.
On January 1, 1993, Enterprise and PSE&G adopted Statement of Financial
Accounting Standards No. 106, "Employers Accounting for Postretirement Benefits
Other Than Pensions" (SFAS 106), which requires that the expected cost of
employees' postretirement health care benefits be charged to expense during the
years in which employees render service. PSE&G elected to amortize over 20 years
its unfunded obligation at January 1, 1993. The effect of EDHI's adoption of
SFAS 106 was not material. Prior to 1993, Enterprise and PSE&G recognized
postretirement health care costs in the year in which the benefits were paid.
(See Note 13 -- Postretirement Benefits Other Than Pensions and Note
14 -- Pension Plan.)
NOTE 2. RATE MATTERS
BASE RATES
On December 31, 1992, the BRC approved a settlement of PSE&G's base rate
case that effectively provides additional annual base revenues of $295 million.
At such time, the BRC also approved annual reductions of $66 million and $71
million, respectively, in PSE&G's LEAC and Levelized Gas Adjustment Clause
(LGAC). The BRC also approved stipulations resolving all electric and gas cost
of service/rate design issues. The new base rates became effective January 1,
1993. The settlement agreement allows PSE&G a 12% return on common equity and a
10.08% return on rate base.
In July 1993, PSE&G and its largest industrial customer submitted a
proposed electric tariff modification to the BRC, providing for a $9 million or
23% rate discount, with PSE&G's shareholders absorbing $2.4 million or 27% of
the discount. The proposed tariff modification was designed to dissuade the
customer from buying its electricity supply from a third party nonutility
generator. In December 1993, following extensive proceedings, the BRC recognized
the need for flexible pricing in a competitive market, approved the
68
77
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
requested discount but required PSE&G's shareholders to absorb $3.8 million or
42% of such discount. The decision allows PSE&G a special tariff for certain
large customers.
LEVELIZED GAS ADJUSTMENT CLAUSE
On December 8, 1993, the BRC approved an interim LGAC settlement which
provides for an increase of $75.3 million for the approximate ten-month period
ending September 1994. The LGAC increase principally reflects recent increases
in the cost of natural gas.
PSE&G GAS PLANT REMEDIATION PROGRAM
On September 15, 1993, the BRC issued a written order allowing the
continued collection of costs incurred by PSE&G to identify and clean up its
former gas plant sites (Remediation Costs). The decision concluded that PSE&G
had met its burden of proof for establishing the reasonableness and prudence of
Remediation Costs incurred in operating and decommissioning these facilities in
the past. The Remediation Costs incurred during the period July 1, 1992 through
September 30, 1992 are subject to verification and audit in PSE&G's 1992-1993
LGAC. The audit is currently ongoing. The order also approved a mechanism for
costs incurred since October 1, 1992. This mechanism allows the recovery of
actual costs plus carrying charges, net of insurance recoveries, over a
seven-year period through a rider to PSE&G's LEAC and LGAC. Sixty percent of
such costs will be charged to gas customers and forty percent charged to
electric customers. On November 1, 1993, the Public Advocate of New Jersey filed
a motion requesting the BRC to reconsider its September 15, 1993 order. On
January 21, 1994, the BRC denied the motion. (See Note 12 -- Commitments and
Contingent Liabilities.)
CONSOLIDATED TAX BENEFITS
The BRC does not directly regulate Enterprise's nonutility activities.
However, in a case affecting another utility in which neither Enterprise nor
PSE&G were parties, the BRC considered the extent to which tax savings generated
by nonutility affiliates included in the consolidated tax return of that
utility's holding company should be considered in setting that utility's rates.
On September 30, 1992, the BRC approved an order in such case treating certain
consolidated tax savings generated after June 30, 1990 by that utility's
nonutility affiliates as a reduction of its rate base. On December 31, 1992 the
BRC issued an order approving a stipulation in PSE&G's 1992 base rate proceeding
which resolved the case without separate quantification of the consolidated tax
issue. The stipulation does not provide final resolution of the consolidated tax
issue for any subsequent base rate filing. While Enterprise continues to account
for these entities on a stand-alone basis, resulting in a realization of the tax
benefits by the entity generating the benefit, an ultimate unfavorable
resolution of the consolidated tax issue could reduce PSE&G's future revenue and
net income and the future net income of Enterprise. In addition, an unfavorable
resolution may adversely impact Enterprise's nonutility investment strategy.
Enterprise believes that PSE&G's taxes should be treated on a stand-alone basis
for ratemaking purposes, based on the separate nature of the utility and
nonutility businesses. However, neither Enterprise nor PSE&G is able to predict
what action, if any, the BRC may take concerning consolidation of tax benefits
in future rate proceedings. (See Note 9 -- Federal Income Taxes.)
NOTE 3. PSE&G NUCLEAR DECOMMISSIONING AND AMORTIZATION OF NUCLEAR FUEL
PSE&G's 1992 base rate decision by the BRC utilized studies based on the
prompt removal/dismantlement method of decommissioning for all of PSE&G's
nuclear generating stations. This method consists of removing all fuel, source
material and all other radioactive materials with activity levels above accepted
release limits from the nuclear sites. PSE&G has an ownership interest in five
nuclear units: Salem 1 and Salem 2 -- 42.59% each, Hope Creek -- 95% and Peach
Bottom 2 and 3 -- 42.49% each. In accordance with rate orders received from the
BRC, PSE&G has established an external master nuclear decommissioning trust for
all of its nuclear units. The Internal Revenue Service (IRS) has ruled that
payments to the trust are tax deductible. PSE&G's total estimated cost of
decommissioning its share of these
69
78
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
nuclear units is estimated at $681 million in year-end 1990 dollars, (the year
that the site specific estimate was prepared), excluding contingencies. The 1992
base rate decision provided that $15.6 million of such costs are to be collected
through base rates and an additional annual amount of $7.0 million in 1993 and
$14.0 million in 1994 and thereafter are to be recovered through PSE&G's LEAC.
At December 31, 1993 and 1992, the accumulated provision for depreciation and
amortization included reserves for nuclear decommissioning for PSE&G's units of
$211 million and $179 million, respectively. As of December 31, 1993 and 1992,
PSE&G has contributed $155 million and $109 million, respectively, into external
qualified and nonqualified nuclear decommissioning trust funds.
URANIUM ENRICHMENT DECONTAMINATION AND DECOMMISSIONING FUND
In accordance with the NEPA, domestic utilities that own nuclear generating
stations are required to pay a cumulative total of $150 million each year into a
decontamination and decommissioning fund, based on their past purchases of
enriched nuclear fuel from the United States Department of Energy (DOE) Uranium
Enrichment Enterprise (now a federal government corporation known as the United
States Enrichment Corporation (USEC)). These amounts are being collected over a
period of 15 years or until $2.25 billion has been collected. Under this
legislation, the nuclear facilities operated by PSE&G, Salem and Hope Creek,
aggregate 2.82% of the total amount of enrichment services sold to the domestic
commercial nuclear industry and the nuclear facilities operated by PECO Energy
Company, formerly known as Philadelphia Electric Company (PECO), Peach Bottom
and other nuclear facilities not co-owned by PSE&G, aggregate 3.89%. In 1993,
PSE&G paid approximately $4 million and deferred the balance of $56 million.
PSE&G has included these costs in its LEAC. PSE&G cannot predict the outcome,
amount or timing of any recovery associated with this matter.
SPENT NUCLEAR FUEL DISPOSAL COSTS
In accordance with the Nuclear Waste Policy Act, PSE&G has entered into
contracts with the USEC for the disposal of spent nuclear fuel. Payments made to
the USEC for disposal costs are based on nuclear generation and are included in
Fuel for Electric Generation and Net Interchanged Power in the Statements of
Income. These costs are recovered through the LEAC.
70
79
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 4. SCHEDULE OF CONSOLIDATED CAPITAL STOCK
CURRENT
REDEMPTION DECEMBER 31,
OUTSTANDING PRICE -----------------------
(THOUSANDS OF DOLLARS) SHARES PER SHARE 1993 1992
- --------------------------------------------------- ----------- ---------- ---------- ----------
ENTERPRISE COMMON STOCK (no par) -- authorized
500,000,000 shares; issued and outstanding at
December 31, 1993, 243,688,256 shares, at
December 31, 1992, 235,395,751 shares, and
at December 31, 1991, 226,700,852 shares (note
A). $3,772,662 $3,499,183
---------- ----------
---------- ----------
ENTERPRISE PREFERRED STOCK (note B)
PSE&G CUMULATIVE PREFERRED STOCK (note C)
Without Mandatory Redemption (note D)
$100 par value -- Series
4.08%.................................... 250,000 $103.00 $ 25,000 $ 25,000
4.18%.................................... 249,942 103.00 24,994 24,994
4.30%.................................... 250,000 102.75 25,000 25,000
5.05%.................................... 250,000 103.00 25,000 25,000
5.28%.................................... 250,000 103.00 25,000 25,000
6.80%.................................... 250,000 102.00 25,000 25,000
7.40%.................................... 500,000 101.00 50,000 50,000
7.52%.................................... 500,000 101.00 50,000 50,000
8.08%.................................... 150,000 101.00 15,000 15,000
7.80%.................................... 750,000 101.00 75,000 75,000
7.70%.................................... 600,000 100.79 60,000 60,000
8.16%.................................... 300,000 100.74 30,000 30,000
---------- ----------
Total Preferred Stock without
Mandatory Redemption.............. $ 429,994 $ 429,994
---------- ----------
---------- ----------
With Mandatory Redemption (notes D, E and F)
$100 par value -- Series
7.44%.................................... 750,000 $103.72 $ 75,000 $ 75,000
5.97%.................................... 750,000 102.99 75,000 --
---------- ----------
Preferred Stock with Mandatory Redemption......................... $ 150,000 $ 75,000
---------- ----------
---------- ----------
NOTES TO SCHEDULE OF CONSOLIDATED CAPITAL STOCK
(A) Total authorized and unissued shares include 7,571,442 shares of Enterprise
Common Stock reserved for issuance through Enterprise's Dividend
Reinvestment and Stock Purchase Plan (DRIP) and various employee benefit
plans. In 1993, 8,292,505 shares of Enterprise Common Stock were issued and
sold for $273,479,342, including a public offering of 4,400,000 shares
issued and sold for $142,670,000; in 1992, 8,694,899 shares were issued and
sold for $237,045,247, including a public offering of 5,000,000 shares
issued and sold for $132,025,000; in 1991, 8,228,647 shares were issued and
sold for $218,735,528, including a public offering of 5,000,000 shares
issued and sold for $129,950,000.
(B) Enterprise has authorized a class of 50,000,000 shares of Preferred Stock
without par value, none of which is outstanding.
(C) As of December 31, 1993, there were 1,700,060 shares of $100 par value and
10,000,000 shares of $25 par value Cumulative Preferred Stock which were
authorized and unissued, and which upon issuance may or may not provide for
mandatory sinking fund redemption. If dividends upon any shares of
Preferred Stock are in arrears in an amount equal to the annual dividend
thereon, voting rights for the election of a majority of PSE&G's Board of
Directors become operative and continue until all
71
80
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
accumulated and unpaid dividends thereon have been paid, whereupon all such
voting rights cease, subject to being again revived from time to time.
In January 1994, PSE&G called for redemption on March 1, 1994 all of the
outstanding shares of two series of securities: 300,000 shares of its 8.16%
Cumulative Preferred Stock ($100 Par) and 150,000 shares of its 8.08%
Cumulative Preferred Stock ($100 Par).
In February 1994, PSE&G issued and sold 600,000 shares of 6.92% Cumulative
Preferred Stock ($100 Par) which may not be redeemed before February 1,
2004 and 600,000 shares of 6.75% Cumulative Preferred Stock -- $25 Par
which may not be redeemed before February 1, 1999. The net proceeds from
the sale of the 6.75% Cumulative Preferred Stock -- $25 Par will be used by
PSE&G to redeem the outstanding shares of the 8.08% Cumulative Preferred
Stock ($100 Par).
(D) At December 31, 1993, the annual dividend requirement and embedded dividend
for Preferred Stock without mandatory redemption were $29,012,000 and
6.75%, respectively and for Preferred Stock with mandatory redemption were
$10,057,500 and 6.71%, respectively.
(E) In March 1993, PSE&G sold 750,000 shares of 5.97% Cumulative Preferred
Stock ($100 Par). PSE&G will be required to redeem through the operation of
a sinking fund 37,500 shares, plus accumulated dividends, on March 1 of
each year commencing March 1, 2003 and shall redeem the remaining shares on
March 1, 2008, plus accumulated dividends.
(F) In accordance with the requirements of Statement of Financial Accounting
Standards No. 107, "Disclosures about Fair Value of Financial Instruments"
(SFAS 107), the estimated fair value was determined using the ready market
price for the Preferred Stock at the end of 1993. As of December 31, 1993,
the estimated fair value of the Preferred Stock was $158 million. As of
December 31, 1992, the estimated fair value of the Preferred Stock was $78
million.
NOTE 5. DEFERRED ITEMS
PROPERTY ABANDONMENTS
The BRC has authorized PSE&G to recover after-tax property abandonment
costs from its customers. The following table reflects the application of
Statement of Financial Accounting Standards No. 90, "Regulated
Enterprises -- Accounting for Abandonments and Disallowances of Plant Costs"
(SFAS 90), as amended, on property abandonments for which no return is earned.
The net-of-tax discount rate used was between 4.443% and 7.801%.
As part of its base rate decision of December 31, 1992, the BRC required
the elimination of the amortization of the abandonment cost for Hope Creek Unit
2 as of December 31, 1992. The net remaining balance was transferred to the
LEAC. (See Note 2 -- Rate Matters.) The following table reflects the property
abandonments and related tax effects on which no return is earned.
DECEMBER 31,
---------------------------------------
1993 1992
------------------ ------------------
DISCOUNTED DISCOUNTED
PROPERTY ABANDONMENTS COST TAXES COST TAXES
------------------------------------------------ -------- ------- -------- -------
(THOUSANDS OF DOLLARS)
Atlantic Project................................ $ 81,475 $34,229 $ 92,282 $38,778
LNG Project..................................... 11,362 4,227 15,231 5,738
Uranium Projects................................ 12,699 5,442 14,450 6,168
Other........................................... -- -- 298 --
-------- ------- -------- -------
$105,536 $43,898 $122,261 $50,684
-------- ------- -------- -------
-------- ------- -------- -------
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81
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
UNDER (OVER) RECOVERED ELECTRIC ENERGY AND GAS COSTS -- NET
Recoveries of electric energy and gas costs are determined by the BRC under
the LEAC and LGAC. PSE&G's deferred fuel balances as of December 31, 1993 and
December 31, 1992, reflect an underrecovery of $62.0 million and an overrecovery
of $122.7 million, respectively.
UNRECOVERED PLANT AND REGULATORY STUDY COSTS
Amounts shown in the consolidated balance sheets consist of costs
associated with developing, consolidating and documenting the specific design
basis of PSE&G's jointly-owned nuclear generating stations, as well as PSE&G's
share of costs associated with the cancellation of the Hydrogen Water Chemistry
System Project at Peach Bottom. PSE&G has received both BRC and FERC approval to
defer and amortize, over the remaining life of the Salem and Hope Creek nuclear
units, costs associated with configuration baseline documentation projects.
PSE&G has received FERC approval to defer and amortize over the remaining life
of the applicable Peach Bottom units, costs associated with the configuration
baseline documentation and the cancelled Hydrogen Water Chemistry System
Projects. While PSE&G expects the BRC to authorize recovery of such costs from
electric customers, no assurances can be given.
OIL AND GAS PROPERTY WRITE-DOWN
On December 31, 1992, the BRC approved the recovery of the EDC write-down
through PSE&G's LGAC over a ten year period beginning January 1, 1993. At
December 31, 1993, the remaining balance to be amortized was $46 million.
UNAMORTIZED DEBT EXPENSE
Gains and losses and the cost of redeeming long-term debt for PSE&G are
deferred and amortized over the life of the applicable debt.
NOTE 6. SCHEDULE OF CONSOLIDATED LONG-TERM DEBT
DECEMBER 31,
--------------------------
INTEREST RATES DUE 1993 1992
- ----------------- ------------------------------------------------- ---------- ----------
(THOUSANDS OF DOLLARS)
PSE&G
FIRST AND REFUNDING MORTGAGE BONDS (note A)
4 3/8% - 9 1/8% 1993............................................. $ -- $ 190,000
4 5/8% 1994............................................. 60,000 60,000
4 3/4% - 6% 1995............................................. 310,000 310,000
9 3/4% 1996............................................. -- 75,000
6 1/4% - 7 1/8% 1997............................................. 300,000 375,000
6% - 7% 1998............................................. 100,000 75,000
6% - 8 7/8% 1999-2003........................................ 1,200,000 798,600
6.30% - 9 1/8% 2004-2008........................................ 438,900 530,400
6.80% - 10 3/8% 2009-2013........................................ 73,710 137,710
8.10% - 10 1/2% 2014-2018........................................ 310,200 745,400
7 1/2% - 9 3/4% 2019-2023........................................ 1,068,500 822,500
5.20% - 7% 2024-2028........................................ 387,000 --
5.55% 2033............................................. 145,200 --
5% - 8% 2037............................................. 15,001 15,001
MEDIUM-TERM NOTES
7.15% - 7.18% 2023............................................. 40,500 --
---------- ----------
Total First and Refunding Mortgage Bonds............................... $4,449,011 $4,134,611
---------- ----------
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31,
--------------------------
INTEREST RATES DUE 1993 1992
- ----------------- ------------------------------------------------- ---------- ----------
(THOUSANDS OF DOLLARS)
DEBENTURE BONDS UNSECURED
7 3/4% 1996............................................. $ -- $ 41,994
6% 1998............................................. 18,195 18,195
---------- ----------
Total Debenture Bonds.................................................. 18,195 60,189
---------- ----------
Principal Amount Outstanding (note F).................................. 4,467,206 4,194,800
Amounts Due Within One Year (note B)................................... (61,700) (191,700)
Net Unamortized Discount............................................... (41,069) (24,962)
---------- ----------
Total Long-Term Debt of PSE&G.......................................... 4,364,437 3,978,138
---------- ----------
EDHI
CAPITAL (note C)
8.95% - 9.72% 1993............................................. -- 88,000
7.40% 1994............................................. 50,000 50,000
5.65% - 9.55% 1995............................................. 112,000 112,000
9.00% 1996............................................. 20,000 20,000
5.79% - 5.92% 1997............................................. 27,000 --
9.875% - 10.05% 1998............................................. 282,500 325,000
6.54% - 9.93% 1999-2000........................................ 233,000 155,000
---------- ----------
Principal Amount Outstanding (note F).................................. 724,500 750,000
Amounts Due Within One Year (note B)................................... (92,436) (130,431)
Net Unamortized Discount............................................... (1,746) (1,571)
---------- ----------
Total Long-Term Debt of Capital........................................ 630,318 617,998
---------- ----------
FUNDING (note D)
9.43% 1993............................................. -- 60,000
9.54% 1995............................................. 35,000 35,000
9.55% 1996............................................. 28,000 28,000
6.85% - 9.59% 1997............................................. 55,000 40,000
9.95% 1998............................................. 83,000 83,000
7.58% 1999............................................. 45,000 --
4.5625% - 5.0%
Bank Loans 1994-95.......................................... -- 175,000
---------- ----------
Principal Amount Outstanding (note F).................................. 246,000 421,000
Amounts Due Within One Year (note B)................................... -- (60,000)
---------- ----------
Total Long-Term Debt of Funding........................................ 246,000 361,000
---------- ----------
EGDC MORTGAGE NOTES
5.18% - 7.736% 1994............................................. 13,638 13,678
5.75% 1998............................................. 9,050 10,280
10.625% - 12.75% 2012............................................. 6,806 6,913
---------- ----------
Principal Amount Outstanding (note F).................................. 29,494 30,871
Amounts Due Within One Year (note B)................................... (13,928) (10,428)
---------- ----------
Total Long-Term Debt of EGDC........................................... 15,566 20,443
---------- ----------
Total Long-Term Debt of EDHI........................................... 891,884 999,441
---------- ----------
Consolidated Long-Term Debt (note E)................................... $5,256,321 $4,977,579
---------- ----------
---------- ----------
NOTES:
(A) PSE&G's Mortgage, securing the Bonds, constitutes a direct first mortgage
lien on substantially all PSE&G property and franchises.
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83
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In January 1994, PSE&G called for redemption on March 1, 1994 all of its
First and Refunding Mortgage Bonds 4 5/8% Series due 1994. In February 1994,
PSE&G issued $50 million principal amount of its First and Refunding
Mortgage Bonds Pollution Control Series O due 2032.
(B) The aggregate principal amounts of mandatory requirements for sinking funds
and maturities for each of the five years following December 31, 1993 are as
follows:
SINKING FUNDS MATURITIES
----------------- ----------------------------------------------------
YEAR PSE&G CAPITAL PSE&G CAPITAL EGDC FUNDING TOTAL
(THOUSANDS OF DOLLARS)
1994................ $1,700 $ 42,500 $ 60,000 $ 49,936 $13,928 $ -- $ 168,064
1995................ 200 42,500 310,000 112,000 305 35,000 500,005
1996................ 200 42,500 -- 20,000 320 28,000 91,020
1997................ 200 42,500 300,000 27,000 337 55,000 425,037
1998................ 200 37,500 100,000 75,000 8,551 83,000 304,251
------ -------- -------- -------- ------- -------- ---------
$2,500 $207,500 $770,000 $283,936 $23,441 $201,000 $1,488,377
------ -------- -------- -------- ------- -------- ---------
------ -------- -------- -------- ------- -------- ---------
For sinking fund purposes, certain First and Refunding Mortgage Bond issues
require annually the retirement of an aggregate $13.3 million principal
amount of bonds or the utilization of bondable property additions at 60% of
cost. The portion expected to be met by property additions has been
excluded from the table above.
(C) Capital is providing up to $750 million debt financing for EDHI's businesses
on the basis of a support agreement with Enterprise.
(D) Funding provides debt financing for EDHI's businesses other than EGDC on the
basis of unconditional guarantees from EDHI.
(E) At December 31, 1993, the annual interest requirement on long-term debt was
$421.2 million of which $327.5 million was the requirement for Bonds. The
embedded interest cost on long-term debt on such date was 8.06%.
(F) In accordance with the requirements of SFAS 107, the estimated fair value
was determined using market quotations or values of debt with similar
terms, credit ratings and remaining maturities at the end of 1992. As of
December 31, 1993, the estimated fair value of PSE&G's and EDHI's long-term
debt was $4.7 billion and $1.2 billion, respectively. As of December 31,
1992, the estimated fair value of PSE&G's and EDHI's long-term debt was
$4.4 billion and $1.3 billion, respectively.
75
84
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 7. LONG-TERM INVESTMENTS
Long-Term Investments are primarily those of EDHI. A summary of Long-Term
Investments is as follows:
1993 1992
------ ------
(MILLIONS OF DOLLARS)
Lease Agreements (see Note 10 -- Leasing Activities):
Leveraged Leases.............................................. $ 738 $ 718
Direct-Financing Leases....................................... 85 93
Other Leases.................................................. 8 12
------ ------
Total.................................................... 831 823
------ ------
Partnerships:
General Partnerships.......................................... 152 135
Limited Partnerships.......................................... 433 428
------ ------
Total.................................................... 585 563
------ ------
Joint Ventures..................................................... 35 11
Securities......................................................... 82 198
Valuation Allowances............................................... (18) (17)
Corporate-owned Life Insurance (PSE&G)............................. 99 72
------ ------
Total Long-Term Investments.............................. $1,614 $1,650
------ ------
------ ------
PSRC's leveraged leases are reported net of principal and interest on
nonrecourse loans and unearned income, including deferred tax credits. Income
and deferred tax credits are recognized at a level rate of return from each
lease during the periods in which the net investment is positive.
Partnership investments are those of PSRC, EGDC and CEA and are undertaken
with other investors. PSRC is a limited partner in various partnerships and is
committed to make investments from time to time, upon the request of the
respective general partners. As of December 31, 1993, $139.5 million remained as
PSRC's unfunded commitment subject to call.
PSRC has invested in marketable securities and limited partnerships
investing in securities, which are stated at fair value. Realized investment
gains and losses on the sale of investment securities are determined utilizing
the specific cost identification method.
NOTE 8. CASH AND CASH EQUIVALENTS
The December 31, 1993 and 1992 balances consist primarily of working funds
and highly liquid marketable securities (commercial paper) with a maturity of
three months or less.
76
85
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 9. FEDERAL INCOME TAXES
A reconciliation of reported Net Income with pretax income and of Federal
income tax expense with the amount computed by multiplying pretax income by the
statutory Federal income tax rates of 35% in 1993 and 34% in 1992 and 1991 is as
follows:
1993 1992 1991
-------- -------- --------
(THOUSANDS OF DOLLARS)
Net Income......................................... $600,933 $504,117 $543,035
Preferred stock dividend requirements.............. 38,114 31,907 29,012
SFAS 109 Cumulative Effect......................... (5,414) -- --
-------- -------- --------
Subtotal................................. 633,633 536,024 572,047
-------- -------- --------
Federal income taxes:
Operating income:
Current provision................................ 152,076 152,225 146,408
Provision for deferred income taxes -- net(A).... 186,467 91,104 137,955
Investment tax credits -- net.................... (23,784) (21,635) (19,507)
-------- -------- --------
Total included in operating income................. 314,759 221,694 264,856
Miscellaneous other income:
Current provision................................ (15,419) 4,721 (11,396)
Provision for deferred income taxes(A)........... 9,815 19,261 10,906
SFAS 90 deferred income taxes(A)................... 2,948 2,690 4,967
-------- -------- --------
Total Federal income tax provisions................ 312,103 248,366 269,333
-------- -------- --------
Pretax income...................................... $945,736 $784,390 $841,380
-------- -------- --------
-------- -------- --------
Reconciliation between total Federal income tax provisions and tax computed
at the statutory tax rate on pretax income:
Tax computed at the statutory rate................. $331,008 $266,693 $286,069
-------- -------- --------
Increase (decrease) attributable to flow through of
certain tax adjustments:
Depreciation.................................. 9,002 15,614 9,229
Amortization of plant abandonments and
write-downs................................. (2,239) (18,867) (4,497)
Amortization of investment tax credits........... (23,784) (20,681) (22,004)
Other............................................ (1,884) 5,607 536
-------- -------- --------
Subtotal........................................... (18,905) (18,327) (16,736)
-------- -------- --------
Total Federal income tax provisions................ $312,103 $248,366 $269,333
-------- -------- --------
-------- -------- --------
Effective Federal income tax rate.................. 33.0% 31.7% 32.0%
(A) The provision for deferred income taxes represents the tax effects of the
following items:
1993 1992 1991
-------- -------- --------
(THOUSANDS OF DOLLARS)
Deferred Credits:
Additional tax depreciation and amortization..... $112,814 $136,073 $123,122
Leasing Activities............................... 34,958 56,087 41,741
Property Abandonments............................ (6,632) (34,739) (11,582)
Oil and Gas Property Write-Down.................. (2,451) (6,393) (6,393)
Deferred fuel costs -- net....................... 63,330 (40,148) 9,285
Other............................................ (2,789) 2,175 (2,345)
-------- -------- --------
Total.............................................. $199,230 $113,055 $153,828
-------- -------- --------
-------- -------- --------
77
86
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Since 1987, Enterprise's Federal alternative minimum tax (AMT) liability
has exceeded its regular Federal income tax liability. This excess can be
carried forward indefinitely to offset regular income tax liability in future
years. Enterprise expects to utilize these AMT credits in the future as regular
tax liability exceeds AMT. As of December 31, 1993, 1992 and 1991, Enterprise
had AMT credits of $247 million, $212 million and $185 million, respectively.
Since 1986, Enterprise has filed a consolidated Federal income tax return
on behalf of itself and its subsidiaries. Prior to 1986, PSE&G filed
consolidated tax returns. On March 20, 1992, the Internal Revenue Service (IRS)
issued a Revenue Agents Report (RAR) following completion of examination of
PSE&G's consolidated tax return for 1985 and Enterprise's consolidated tax
returns for 1986 and 1987, proposing various adjustments for such years which
would increase Enterprise's consolidated Federal income tax liability by
approximately $121 million, exclusive of interest and penalties, of which
approximately $118 million is attributable to PSE&G. Interest after taxes on
these proposed adjustments is currently estimated to be approximately $82
million as of December 31, 1993 and will continue to accrue at the Federal rate
for large corporate underpayments, currently 9% annually.
The most significant of these proposed adjustments relates to the IRS
contention that PSE&G's Hope Creek nuclear unit is a partnership with a short
1986 taxable year. In addition, the IRS contends that the tax in-service date of
that unit is four months later than the date claimed by PSE&G. On June 19, 1992,
Enterprise and PSE&G filed a protest with the IRS disagreeing with certain of
the proposed adjustments (including those related to Hope Creek) contained in
the RAR for taxable years 1985 through 1987 and continues to contest these
issues. Any tax adjustments resulting from the RAR would reduce Enterprise's and
PSE&G's respective deferred credits for accumulated deferred income taxes.
Enterprise expects PSE&G to recover all interest paid with respect to tax
adjustments attributable to PSE&G from PSE&G's customers through rates. While
PSE&G believes that assessments attributable to it are generally recoverable
from its customers in rates, no assurances can be given as to what regulatory
treatment may be afforded by the BRC.
On January 1, 1993, Enterprise adopted SFAS 109 without restating prior
years' financial statements which resulted in Enterprise recording a $5.4
million cumulative effect increase in its net income. Under SFAS 109, deferred
taxes are provided at the enacted statutory tax rate for all temporary
differences between the financial statement carrying amounts and the tax bases
of existing assets and liabilities irrespective of the treatment for ratemaking
purposes. Since management believes that it is probable that the effects of SFAS
109 on PSE&G, principally the accumulated tax benefits that previously have been
treated as a flow-through item to customers, will be recovered from utility
customers in the future, an offsetting regulatory asset was established. As of
December 31, 1993, PSE&G had recorded a deferred tax liability and an offsetting
regulatory asset of $790 million representing the future revenue expected to be
recovered through rates based upon established regulatory practices which permit
recovery of current taxes payable. This amount was determined using the 1993
Federal income tax rate of 35%.
78
87
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SFAS 109
The following is an analysis of accumulated deferred income taxes:
ACCUMULATED DEFERRED INCOME TAXES 1993 1992
- ---------------------------------------------------------------------- ---------- ----------
(THOUSANDS OF DOLLARS)
Assets:
Current (net)....................................................... $ 12,934 $ --
Non-Current:
Unrecovered Investment Tax Credits............................... 143,125 --
Nuclear Decommissioning.......................................... 25,211 24,305
Hope Creek Cost Disallowance..................................... 20,231 29,468
Uncollectibles................................................... 9,776 --
Vacation Pay..................................................... 6,721 6,424
AMT Credit....................................................... 246,862 212,453
Real Estate Impairment........................................... 27,173 --
Other............................................................ 14,880 1,209
---------- ----------
Total Non-Current........................................... $ 493,979 $ 273,859
---------- ----------
Total Assets.......................................................... $ 506,913 $ 273,859
---------- ----------
---------- ----------
Liabilities:
Non-Current:
Plant Related Items.............................................. $2,169,861 $1,395,725
Leasing Activities............................................... 520,286 451,733
Property Abandonments............................................ 32,206 50,684
Oil and Gas Property Write-Down.................................. 16,790 24,518
Deferred Electric Energy & Gas Costs............................. 20,133 (44,415)
Unamortized Debt Expense......................................... 38,768 17,082
Taxes Recoverable Through Future Rates........................... 270,518 --
Other............................................................ 127,803 89,621
---------- ----------
Total Non-Current........................................... $3,196,365 $1,984,948
---------- ----------
Total Liabilities..................................................... $3,196,365 $1,984,948
---------- ----------
---------- ----------
Summary -- Accumulated Deferred Income Taxes
Net Current Assets.................................................. $ 12,934 $ --
Net Deferred Liability.............................................. $2,702,386 $1,711,089
---------- ----------
Total............................................................ $2,689,452 $1,711,089
---------- ----------
---------- ----------
The Revenue Reconciliation Act of 1993, enacted in August 1993, increased
the Federal corporate income tax rate from 34% to 35% effective January 1, 1993.
This resulted in an increase in Federal income tax expense for Enterprise of
$18.1 million for the year 1993.
NOTE 10. LEASING ACTIVITIES
As Lessee
The Consolidated Balance Sheets include assets and related obligations
applicable to capital leases where PSE&G is a lessee. The total amortization of
the leased assets and interest on the lease obligations equals the net minimum
lease payments included in rent expense for capital leases.
Capital leases of PSE&G relate primarily to its corporate headquarters and
other capital equipment. Certain of the leases contain renewal and purchase
options and also contain escalation clauses.
Enterprise and its other subsidiaries are not lessees in any capitalized
leases.
79
88
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Utility plant includes the following amounts for capital leases at December
31:
1993 1992
------- -------
(THOUSANDS OF DOLLARS)
Common Plant............................................. $56,812 $56,812
Less: Accumulated Amortization........................... 3,708 3,196
------- -------
Net Assets under Capital Leases.......................... $53,104 $53,616
------- -------
------- -------
Future minimum lease payments for noncancelable capital and operating
leases at December 31, 1993 were:
CAPITAL OPERATING
LEASES LEASES
------- -------
(THOUSANDS OF DOLLARS)
1994..................................................... $13,015 $14,353
1995..................................................... 13,016 14,056
1996..................................................... 13,017 12,942
1997..................................................... 13,017 10,982
1998..................................................... 13,018 7,820
Later Years.............................................. 212,521 24,184
------- -------
Minimum Lease Payments................................... 277,604 $84,337
-------
-------
Less: Amount representing estimated executory costs,
together with any profit thereon, included in
minimum lease payments............................. 138,876
-------
Net minimum lease payments............................... 138,728
Less: Amount representing interest....................... 85,624
-------
Present value of net minimum lease payments(A)........... $53,104
-------
-------
(A) Reflected in the Consolidated Balance Sheets in Capital Lease Obligations of
$52.530 million and in Long-Term Debt and Capital Lease Obligations due
within one year of $574 thousand.
The following schedule shows the composition of rent expense included in
Operating Expenses:
FOR THE YEARS ENDED DECEMBER
31,
-------------------------------
1993 1992 1991
------- ------- -------
(THOUSANDS OF DOLLARS)
Interest on Capital Lease Obligations................. $ 6,074 $ 6,129 $ 6,205
Amortization of Utility Plant under Capital Leases.... 513 457 439
------- ------- -------
Net minimum lease payments relating to Capital
Leases.............................................. 6,587 6,586 6,644
Other Lease payments.................................. 22,095 21,739 26,290
------- ------- -------
Total Rent Expense.................................... $28,682 $28,325 $32,934
------- ------- -------
------- ------- -------
80
89
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
AS LESSOR
PSRC's net investments in leveraged and direct financing leases are
composed of the following elements:
DECEMBER 31, 1993 DECEMBER 31, 1992
---------------------------------- ----------------------------------
(MILLIONS OF DOLLARS)
DIRECT DIRECT
LEVERAGED FINANCING LEVERAGED FINANCING
LEASES LEASES TOTAL LEASES LEASES TOTAL
--------- --------- ------ --------- --------- ------
Lease rents receivable.......... $ 980 $ 114 $1,094 $ 1,015 $ 130 $1,145
Estimated residual value........ 595 12 607 599 12 611
--------- --------- ------ --------- --------- ------
1,575 126 1,701 1,614 142 1,756
Unearned and deferred income.... (837) (41) (878) (896) (49) (945)
--------- --------- ------ --------- --------- ------
Total investments............... 738 85 823 718 93 811
Deferred taxes.................. (267) (20) (287) (225) (18) (243)
--------- --------- ------ --------- --------- ------
Net investments................. $ 471 $ 65 $ 536 $ 493 $ 75 $ 568
--------- --------- ------ --------- --------- ------
--------- --------- ------ --------- --------- ------
PSRC's other leases are with various regional, state and city authorities
for transportation equipment and aggregated $8 million and $12 million as of
December 31, 1993 and 1992, respectively.
NOTE 11. SHORT-TERM DEBT (COMMERCIAL PAPER AND LOANS)
Commercial paper represents unsecured bearer promissory notes sold through
dealers at a discount with a term of nine months or less.
PSE&G
Certain information regarding commercial paper follows:
1993 1992 1991
-------- -------- --------
(THOUSANDS OF DOLLARS)
Principal amount outstanding at end of year........ $532,728 $257,536 $165,857
Maximum principal amount outstanding at any
month-end........................................ $532,728 $549,914 $499,171
Average daily outstanding.......................... $310,400 $279,900 $400,000
Weighted average annual interest rate.............. 3.20% 3.76% 5.98%
Weighted average interest rate for commercial paper
outstanding at year-end.......................... 3.34% 3.64% 4.99%
PSE&G has authorization from the BRC to issue and have outstanding not more
than $800 million of its short-term obligations at any one time, consisting of
commercial paper and other unsecured borrowings from banks and other lenders.
This authorization expires December 31, 1994. PSE&G expects to be able to renew
such authority.
PSE&G has a $600 million revolving credit agreement with a group of banks
which expires in September 1994. As of December 31, 1993, there was no
short-term debt outstanding under this agreement.
Fuelco has a $150 million commercial paper program to finance a 42.49%
share of Peach Bottom nuclear fuel, supported by a $150 million revolving credit
facility with a group of banks which expires in June 1996. PSE&G has guaranteed
repayment of Fuelco's respective obligations. As of December 31, 1993, 1992 and
1991, Fuelco had commercial paper of $108.7 million, $122.5 million and $135.9
million, respectively, outstanding under such program, which amounts are
included in the table above.
81
90
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
EDHI
Certain information regarding commercial paper follows:
1993 1992 1991
-------- -------- --------
(THOUSANDS OF DOLLARS)
Amount outstanding at end of year.................. $ 44,908 $134,446 $223,193
Maximum amount outstanding at any month-end........ $150,321 $204,558 $326,537
Average daily outstanding.......................... $ 91,800 $156,400 $243,700
Weighted average annual interest rate.............. 3.24% 3.78% 5.92%
Weighted average interest rate for commercial paper
outstanding at year-end.......................... 3.47% 3.76% 5.04%
At December 31, 1993, Funding had a $225 million commercial paper program
supported by a direct pay commercial bank letter of credit and revolving credit
facility and a $225 million revolving credit facility each of which expires in
November 1995.
ENTERPRISE
At each of December 31, 1993, 1992 and 1991, Enterprise had $25 million of
lines of credit supported by compensating balances under informal arrangements
with banks. At each of December 31, 1993, 1992 and 1991, Enterprise had no line
of credit compensated for by fees.
NOTE 12. COMMITMENTS AND CONTINGENT LIABILITIES
NUCLEAR PERFORMANCE STANDARD
The BRC has established a nuclear performance standard (Standard) for
nuclear generating stations owned by New Jersey electric utilities, including
the five nuclear units in which PSE&G has an ownership interest:
Salem -- 42.59%; Hope Creek -- 95%; and Peach Bottom -- 42.49%. PSE&G operates
Salem and Hope Creek, while Peach Bottom is operated by PECO.
The penalty/reward under the Standard is a percentage of replacement power
costs. (See table below.) The Standard provides that the penalties will be
calculated to the edge of each capacity factor range. For example, a 30% penalty
applies to replacement power costs incurred in the 55% to 65% range and a 40%
penalty applies to replacement power costs in the 45% to 55% range.
CAPACITY FACTOR RANGE REWARD PENALTY
------------------------------------------------------------------- ------ -------
Equal to or greater than 75%....................................... 30% --
Equal to or greater than 65% and less than 75%..................... None None
Equal to or greater than 55% and less than 65%..................... -- 30%
Equal to or greater than 45% and less than 55%..................... -- 40%
Equal to or greater than 40% and less than 45%..................... -- 50%
Below 40%.......................................................... BRC Intervenes
Under the Standard, the capacity factor is calculated annually using
maximum dependable capability of the five nuclear units in which PSE&G owns an
interest. This method takes into account actual operating conditions of the
units.
While the Standard does not specifically have a gross negligence provision,
the BRC has indicated that it would consider allegations of gross negligence
brought upon a sufficient factual basis. A finding of gross negligence could
result in penalties other than those prescribed under the Standard. During 1993,
the five nuclear units in which PSE&G has an ownership interest aggregated a 77%
combined capacity factor. In accordance with the Standard, PSE&G's combined
capacity factor exceeded the 75% reward threshold, entitling PSE&G to a reward
of approximately $3.9 million. PSE&G will petition the BRC to recover this
reward through the LEAC commencing on June 30, 1994.
82
91
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NUCLEAR INSURANCE COVERAGES AND ASSESSMENTS
PSE&G's insurance coverages and maximum retrospective assessments for its
nuclear operations are as follows:
PSE&G
MAXIMUM
ASSESSMENTS
TOTAL FOR A
SITE SINGLE
TYPE AND SOURCE OF COVERAGES COVERAGES INCIDENT
- ------------------------------------------------------------------- --------- ----------
(MILLIONS OF DOLLARS)
Public Liability:
American Nuclear Insurers........................................ $ 200.0 $ --
Indemnity(A)..................................................... 9,195.9 210.2
--------- ----------
$9,395.9 (B) $210.2
--------- ----------
Nuclear Worker Liability:
American Nuclear Insurers(C)..................................... $ 200.0 $ 8.3
--------- ----------
Property Damage:
Nuclear Mutual Limited........................................... $ 500.0 $ 17.4
American Nuclear Insurers........................................ 765.0 (D) --
Nuclear Electric Insurance Ltd. (NEIL I)......................... 85.0 (E) --
Nuclear Electric Insurance Ltd. (NEIL II)........................ 1,400.0 (F) 10.9(G)
--------- ----------
$2,750.0 $ 28.3
--------- ----------
Replacement Power:
Nuclear Electric Insurance Ltd. ................................. $ 3.5 (H) $ 11.3
(A) Retrospective premium program under the Price-Anderson liability provisions
of the Atomic Energy Act of 1954, as amended, (Price-Anderson). Subject to
retrospective assessment with respect to loss from an incident at any
licensed nuclear reactor in the United States. Assessment adjusted for
inflation effective August 20, 1993.
(B) Limit of liability for each nuclear incident under Price-Anderson.
(C) Industry aggregate limit representing the potential liability from workers
claiming exposure to the hazard of nuclear radiation. This policy includes
automatic reinstatements up to an aggregate of $200 million, thereby
providing total coverage of $400 million. This policy does not increase
PSE&G's obligation under Price-Anderson.
(D) Includes $100 million sublimit for premature decommissioning costs.
(E) New policy effective January 1, 1994.
(F) Includes up to $250 million for premature decommissioning costs.
(G) In the event of a second industry loss triggering NEIL coverage, the maximum
retrospective premium assessment can increase to $23.4 million.
(H) Weekly indemnity for 52 weeks which commences after the first 21 weeks of an
outage. Beyond the first 52 weeks of coverage indemnity of $2.3 million per
week for 104 weeks is afforded. Total coverage amounts to $425.9 million
over three years.
Price-Anderson sets the "limit of liability" for claims that could arise
from an incident involving any licensed nuclear facility in the nation. The
"limit of liability" is based on the number of licensed nuclear reactors and is
adjusted at least every five years based on the Consumer Price Index. The
current "limit of liability" is $9.4 billion. All utilities owning a nuclear
reactor, including PSE&G, have provided for this exposure through a combination
of private insurance and mandatory participation in a financial protection pool
as established by Price-Anderson. Under Price-Anderson, each party with an
ownership interest in a nuclear reactor can be assessed its share of $79.3
million per reactor per incident, payable at $10 million per reactor
83
92
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
per incident per year. If the damages exceed the "limit of liability", the
President is to submit to Congress a plan for providing additional compensation
to the injured parties. Congress could impose further revenue raising measures
on the nuclear industry to pay claims. PSE&G's maximum aggregate assessment per
incident is $210.2 million (based on PSE&G's ownership interests in Hope Creek,
Peach Bottom and Salem) and its maximum aggregate annual assessment per incident
is $26.5 million.
PSE&G purchases all property insurance available, including decontamination
expense coverage and premature decommissioning coverage, with respect to loss or
damage to its nuclear facilities. PECO has advised PSE&G that it maintains
similar insurance coverage with respect to Peach Bottom. Under the terms of the
various insurance agreements, PSE&G could be subject to a maximum retrospective
assessment for a single incident of up to $28.3 million. Certain of the policies
also provide that the insurer may suspend coverage with respect to all nuclear
units on a site without notice if the NRC suspends or revokes the operating
license for any unit on a site, issues a shutdown order with respect to such
unit or issues a confirmatory order keeping such unit shut down.
PSE&G is a member of an industry mutual insurance company, NEIL, which
provides replacement power cost coverage in the event of a major accidental
outage at a nuclear station. The policies provide for a weekly indemnity payment
of $3.5 million for 52 weeks, subject to a 21-week waiting period. The policies
provide for weekly indemnity payments of $2.3 million for a 104 week period
beyond the first year's indemnity. The premium for this coverage is subject to
retrospective assessment for adverse loss experience. Under the policies,
PSE&G's present maximum share of any retrospective assessment in any year is
$11.3 million.
NUCLEAR FUEL
As a result of the NEPA, all United States nuclear utilities are
responsible to co-fund with the United States Government a decontamination and
decommissioning fund for DOE nuclear fuel enrichment facilities. PSE&G is
responsible for making annual payments into this fund for 15 years beginning in
1993.
In September 1993, PSE&G paid its $4 million annual assessment based on its
proportionate share of the five nuclear units in which it has an ownership
interest. PSE&G deferred such amount and expects to recover it, together with
its estimated $56 million future liability, from customers through its LEAC.
(See Note 3 -- PSE&G Nuclear Decommissioning and Amortization of Nuclear
Fuel -- Uranium Enrichment Decontamination and Decommissioning Fund.)
CONSTRUCTION AND FUEL SUPPLIES
PSE&G has substantial commitments as part of its ongoing construction
program which includes capital requirements for nuclear fuel. PSE&G's
construction program is continuously reviewed and periodically revised as a
result of changes in economic conditions, revised load forecasts, changes in the
scheduled retirement dates of existing facilities, changes in business plans,
site changes, cost escalations under construction contracts, requirements of
regulatory authorities and laws, the timing of and amount of electric and gas
rate changes and the ability of PSE&G to raise necessary capital. Pursuant to an
integrated electric resource plan (IRP), PSE&G periodically reevaluates its
forecasts of future customers, load and peak growth, sources of electric
generating capacity and DSM to meet such projected growth, including the need to
construct new electric generating capacity. The IRP takes into account
assumptions concerning future demands of customers, effectiveness of
conservation and load management activities, the long-term condition of PSE&G's
plants, capacity available from electric utilities and other suppliers and the
amounts of cogeneration and other nonutility capacity projected to be available.
Based on PSE&G's 1994-1998 construction program, construction expenditures
are expected to aggregate approximately $4.2 billion, which includes $483
million for nuclear fuel and $133 million of AFDC and capitalized interest
during the years 1994 through 1998. The estimate of construction requirements is
based on expected project completion dates and includes anticipated escalation
due to inflation of approximately 4%, annually. Therefore, construction delays
or higher inflation levels could cause significant increases in these
84
93
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
amounts. PSE&G expects to generate internally a majority of the funds necessary
to satisfy its construction expenditures over the next five years, assuming
adequate and timely rate relief, as to which no assurances can be given. In
addition, PSE&G does not presently anticipate any difficulties in obtaining
sufficient sources of fuel for electric generation or adequate gas supplies
during the years 1994 through 1998.
BERGEN STATION REPOWERING
PSE&G is presently engaged in Phase I of a construction project to renovate
(or "repower") the Bergen Station pursuant to an air pollution control permit
issued by New Jersey Department of Environmental Protection and Energy (NJDEPE)
on May 27, 1993. The current effort would maintain the existing electric supply
of the station (with a small increase from 629 MW to 669 MW), improve
operational reliability and efficiency and significantly improve the
environmental effects of operation of the facility. Phase II of the project, if
it is undertaken by PSE&G, would increase the capacity of Bergen by an
additional 650 MW.
On July 12, 1993, an association of competitors of PSE&G appealed the
NJDEPE's issuance of the air permit for Phase I of the project to the Appellate
Division of the New Jersey Superior Court, alleging that PSE&G is first required
to obtain a Certificate of Need under the New Jersey Need Assessment Act (Need
Assessment Act). The NJDEPE determined that the Need Assessment Act was
inapplicable to this renovation project. Obtaining a Certificate of Need would
be a complex procedure entailing proceedings of at least a two year duration
before the NJDEPE, the outcome of which could not be assured. As of December 31,
1993, Phase I of the renovation project was about 20% complete and PSE&G had
spent approximately $169 million on this effort. The final cost is estimated to
be approximately $400 million.
Briefs have been filed in the appeal and PSE&G believes that a Certificate
of Need is not required for Phase I of the project. However, if a Certificate of
Need were ultimately required by the courts after exhaustion of all appeals, the
permits needed to operate the plant could not be issued until after a
Certificate of Need was obtained. PSE&G intends to continue this renovation
project and to vigorously defend its position through all available means.
ENVIRONMENT
GENERAL
Certain Federal and State laws authorize the United States Environmental
Protection Agency (EPA) and the NJDEPE, among other agencies, to issue orders
and bring enforcement actions to compel responsible parties to take
investigative and remedial actions at any site that is determined to present an
imminent and substantial danger to the public or the environment because of an
actual or threatened release of one or more hazardous substances. Because of the
nature of PSE&G's business, including the production of electricity, the
distribution of gas and, formerly, the manufacture of gas, various by-products
and substances are or were produced or handled which contain constituents
classified as hazardous. PSE&G generally provides for the disposal or processing
of such substances through licensed independent contractors. However, these
statutory provisions impose joint and several responsibility without regard to
fault on all responsible parties, including the generators of the hazardous
substances, for certain investigative and remediation costs at sites where these
substances were disposed of or processed. PSE&G has been notified with respect
to a number of such sites and the remediation of these potentially hazardous
sites is receiving greater attention from the government agencies involved.
Generally, actions directed at funding such site investigations and remediation
include all suspected or known responsible parties. PSE&G does not expect its
expenditures for any such site to be material.
PSE&G MANUFACTURED GAS PLANT REMEDIATION PROGRAM
In March 1988, NJDEPE notified PSE&G that it had identified the need for
PSE&G, pursuant to a formal arrangement, to systematically investigate and, if
necessary, resolve environmental concerns extant at PSE&G's former manufactured
gas plant sites. To date, NJDEPE and PSE&G have identified 38 former gas
85
94
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
plant sites. PSE&G is currently working with NJDEPE under a program to assess,
investigate and, if necessary, remediate environmental concerns at its former
gas plant sites (Remediation Program). The Remediation Program is periodically
reviewed and revised by PSE&G based on regulatory requirements, experience with
the Remediation Program and available technologies. The cost of the Remediation
Program cannot be reasonably estimated, but experience to date indicates that
costs of at least $20 million per year could be incurred over a period of more
than 30 years and that the overall cost could be material.
Costs incurred through December 31, 1993 for the Remediation Program
amounted to $44.5 million, net of insurance recoveries. In addition, at December
31, 1993, PSE&G's liability for estimated remediation costs, net of insurance
recoveries, through 1996 aggregated $111 million. In accordance with a
Stipulation approved by the BRC on January 21, 1992, PSE&G is recovering $32
million of its actual remediation costs to reflect costs incurred through
September 30, 1992, net of insurance recoveries, over a six-year period. In its
1992-93 LGAC, PSE&G refunded $0.3 million during the 1993 LGAC year and will
recover $5.3 million in each of its next three LGAC periods ending in 1996, net
of insurance recoveries. The regulatory treatment of the remediation costs
covered by this Stipulation was not changed in the BRC's September 15, 1993
written order, allowing continued collection under the terms of the January 21,
1992 Stipulation. The decision of September 15, 1993 concluded that PSE&G had
met its burden of proof for establishing the reasonableness and prudence of
remediation costs incurred in operating and decommissioning these facilities in
the past. The remediation costs incurred during the period July 1, 1992 through
September 30, 1992 are subject to verification and audit in PSE&G's 1992-93
LGAC. The audit is currently ongoing. The order also approved a mechanism for
costs incurred since October 1, 1992, allowing the recovery of actual costs plus
carrying charges, net of insurance recoveries, over a seven-year period through
PSE&G's LEAC and LGAC, with 60% charged to gas customers and 40% charged to
electric customers. On November 1, 1993, the Public Advocate of New Jersey filed
a motion requesting the BRC to reconsider its September 15, 1993 order. On
January 21,1994, the BRC denied the motion.
In November 1988, PSE&G filed suit against certain of its insurers to
recover the costs associated with addressing and resolving environmental issues
of the Remediation Program. PSE&G has settled its claim with one insurer and
there is a trial scheduled for September 1994 with the remaining insurers.
Pending full recovery of Remediation Program costs through rates or under its
insurance policies, neither of which can be assured, PSE&G will be required to
finance the unreimbursed costs of its Remediation Program.
NOTE 13. POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
On January 1, 1993, Enterprise and PSE&G adopted SFAS 106, which requires
that the expected cost of employees' postretirement health care and insurance
benefits be charged to expense during the years in which employees render
service. PSE&G elected to amortize over 20 years its unfunded obligation of
$609.3 million at January 1, 1993. Prior to 1993, Enterprise and PSE&G
recognized postretirement health care and insurance costs in the year that the
benefits were paid. The following table discloses the significant components of
the January 1, 1993, accumulated postretirement benefit obligation amortization:
JANUARY 1, 1993
NET POSTRETIREMENT BENEFIT OBLIGATION ---------------
------------------------------------------------------------------------------- (MILLIONS)
Accumulated postretirement benefit obligation (PSE&G).......................... $(609.3)
Unrecognized transition obligation (PSE&G)..................................... 578.8
---------------
Accrued postretirement obligation.............................................. $ (30.5)
---------------
---------------
86
95
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table discloses the significant components of the net
periodic postretirement benefit obligation:
NET PERIODIC POSTRETIREMENT BENEFIT OBLIGATION 1993
---------------------------------------------- ----
(MILLIONS)
Service cost................................................................ $ 11.7
Interest on accumulated postretirement obligation........................... 44.4
Amortization of transition obligations...................................... 30.5
Deferral of current expense................................................. (58.6)
--------
Annual net expense................................................. $ 28.0
--------
--------
The discount rate used in determining the PSE&G net periodic postretirement
benefit cost was 7.5%.
A one-percentage-point increase in the assumed health care cost trend rate
for each year would increase the aggregate of the service and interest cost
components of net periodic postretirement health care cost by approximately $2.4
million, or 6.0%, and increase the accumulated postretirement benefit obligation
as of December 31, 1993 by $29.3 million, or 6.0%.
The assumed health care cost trend rates used in measuring the accumulated
postretirement benefit obligation in 1993 were: medical costs for pre-age
sixty-five retirees -- 13.5%, medical costs for post-age retirees -- 9.5%,
prescription drugs -- 18% and dental costs -- 7.5%, such rates are assumed to
gradually decline to 5.5%, 5.0%, 5.5% and 5.0%, respectively, in 2010.
In its recent base rate case, PSE&G requested full recovery of the costs
associated with postretirement benefits other than pensions (OPEB) on an accrual
basis, in accordance with SFAS 106. The BRC's December 31, 1992 base rate order,
provided that (1) PSE&G's pay-as-you-go basis OPEB costs will continue to be
included in cost of service and will be recoverable in base rates on a
pay-as-you-go basis; (2) prudently incurred OPEB costs, that are accounted for
on an accrual basis in accordance with SFAS 106, will be recoverable in future
rates; (3) PSE&G should account for the differences between its OPEB costs on an
accrual basis and the pay-as-you-go basis being recovered in rates as a
regulatory asset; (4) the issue of cash versus accrual accounting will be
revisited and in the event that the Financial Accounting Standards Board (FASB)
or the SEC requires the use of accrual accounting for OPEB costs for ratemaking
purposes, the regulatory asset will be recoverable, through rates, over an
appropriate amortization period.
Accordingly, PSE&G is accounting for the differences between its SFAS 106
accruals cost and the cash cost currently recovered through rates as a
regulatory asset. OPEB costs charged to expense during 1993 were $28 million and
accrued OPEB costs deferred were $58.6 million, including an increase of $25
million due to the recognition of PSE&G's obligation for life insurance
benefits. The amount of the unfunded liability, at December 31, 1993, as shown
below, is $657.0 million and funding options are currently being explored. The
primary effect of adopting SFAS 106 on Enterprise's and PSE&G's financial
reporting is on the presentation of their financial positions with minimal
effect on their results of operations.
In accordance with SFAS 106 disclosure requirements, a reconciliation of
the funded status of the plan as of December 31, 1993, is as follows:
87
96
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31, 1993
-----------------
(MILLIONS)
Accumulated postretirement benefit obligation:
Retirees................................................... $(406.4)
Fully eligible active plan participants.................... (35.0)
Other active plan participants............................. (215.6)
-----------------
Total.............................................. (657.0)
-----------------
Plan assets at fair value.................................... --
-----------------
Accumulated postretirement benefit obligation in excess of
plan assets................................................ (657.0)
Unrecognized net loss from past experience different from
that assumed and from changes in assumptions............... $ 19.6
Unrecognized prior service cost.............................. --
Unrecognized transition obligation........................... 578.8
-----------------
Accrued postretirement obligation............................ $ (58.6)
-----------------
-----------------
The discount rate used in determining the accumulated postretirement
benefit obligation as of December 31, 1993 was 7.25%.
During January 1993 and subsequent to the receipt of the Order, the FASB's
Emerging Issues Task Force (EITF) concluded that deferral of such costs is
acceptable, provided regulators allow SFAS 106 costs in rates within
approximately five years of the adoption of SFAS 106 for financial reporting
purposes, with any cost deferrals recovered in approximately twenty years. PSE&G
intends to request the BRC for full SFAS 106 recovery in accordance with the
EITF's view of such standard and believes that it is probable that any deferred
costs will be recovered from utility customers within such twenty year time
period.
NOTE 14. PENSION PLAN
The discount rate, expected long-term return on assets and average
compensation growth used in determining the Pension Plan's funded status as of
December 31, 1993 and 1992, and net pension costs for 1993, 1992 and 1991, were
as follows:
1993 1992
---- ----
Discount Rate Used to Determine Pension Cost......................... 7 1/2% 7 1/2%
Discount Rate Used to Determine Benefit Obligations.................. 7 1/4% 7 1/2%
Expected Long-Term Return on Assets.................................. 8% 8%
Average Compensation Growth to Determine Pension Cost................ 6% 6%
Average Compensation Growth to Determine Benefit Obligations......... 5.5% 6%
88
97
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table shows the Pension Plan's funded status:
DECEMBER 31,
-------------------------
1993 1992
----------- -----------
(THOUSANDS OF DOLLARS)
Actuarial present value of benefit obligations:
Accumulated benefit obligations, including vested benefits
of $1,045,035 in 1993 and $993,867 in 1992............. $(1,144,214) $(1,065,842)
Effect of projected future compensation................... (346,416) (332,843)
----------- -----------
Projected benefit obligations............................... (1,490,630) (1,398,685)
Plan assets at fair value, primarily listed equity and debt
securities................................................ 1,312,619 1,172,775
----------- -----------
Projected benefit obligations in excess of plan assets...... (178,011) (225,910)
Unrecognized net gain (loss) from past experience and
effects of changes in assumptions......................... (20,981) 18,326
Prior service cost not yet recognized in net pension cost... 113,397 121,998
Unrecognized net obligations being recognized over 16.7
years..................................................... 77,486 85,586
----------- -----------
Accrued pension expense..................................... $ (8,109) $ --
----------- -----------
----------- -----------
The net pension cost for the years ending December 31, 1993, 1992 and 1991,
include the following components:
1993 1992 1991
--------- -------- --------
(THOUSANDS OF DOLLARS)
Service cost-benefits earned during year.......... $ 42,948 $ 36,125 $ 33,652
Interest cost on projected benefit obligations.... 103,118 94,233 89,324
Return on assets.................................. (166,916) (62,323) (191,996)
Net amortization and deferral..................... 90,958 (14,035) 119,020
--------- -------- --------
Total............................................. $ 70,108 $ 54,000 $ 50,000
--------- -------- --------
--------- -------- --------
Supplemental pension costs in 1993, 1992 and 1991, were $168,000, $299,000
and $419,000, respectively.
See Note 1 -- Organization and Summary of Significant Accounting Policies.
89
98
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 15. FINANCIAL INFORMATION BY BUSINESS SEGMENTS
Information related to the segments of Enterprise's business is detailed
below:
NONUTILITY
ELECTRIC GAS ACTIVITIES(A) TOTAL
----------- ---------- ---------- -----------
(THOUSANDS OF DOLLARS)
FOR THE YEAR ENDED DECEMBER 31, 1993
Operating Revenues...................... $ 3,693,083 $1,594,341 $ 440,120 $ 5,727,544
Eliminations (Intersegment Revenues).... -- -- (21,985) (21,985)
----------- ---------- ---------- -----------
Total Operating Revenues................ 3,693,083 1,594,341 418,135 5,705,559
----------- ---------- ---------- -----------
Depreciation and Amortization........... 439,831 69,375 91,058 600,264
Operating Income Before Income Taxes.... 1,117,739 173,916 135,472 1,427,127
Capital Expenditures.................... 738,362 152,012 94,014 984,388
December 31, 1993
Net Utility Plant....................... 9,451,581 1,352,799 -- 10,804,380
Oil and Gas Property, Plant &
Equipment............................. -- -- 506,047 506,047
Other Corporate Assets.................. 2,291,596 863,830 1,839,311 4,994,737
----------- ---------- ---------- -----------
Total Assets............................ $11,743,177 $2,216,629 $2,345,358 $16,305,164
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
FOR THE YEAR ENDED DECEMBER 31, 1992
Operating Revenues...................... $ 3,407,819 $1,586,181 $ 407,404 $ 5,401,404
Eliminations (Intersegment Revenues).... -- -- (44,623) (44,623)
----------- ---------- ---------- -----------
Total Operating Revenues................ 3,407,819 1,586,181 362,781 5,356,781
----------- ---------- ---------- -----------
Depreciation and Amortization........... 435,104 116,907 90,537 642,548
Operating Income Before Income Taxes.... 861,066 124,893 206,783 1,192,742
Capital Expenditures.................... 668,537 158,224 61,048 887,809
December 31, 1992
Net Utility Plant....................... 9,224,543 1,246,769 -- 10,471,312
Oil and Gas Property, Plant &
Equipment............................. -- -- 506,814 506,814
Other Corporate Assets.................. 1,295,073 484,449 1,997,061 3,776,583
----------- ---------- ---------- -----------
Total Assets............................ $10,519,616 $1,731,218 $2,503,875 $14,754,709
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
FOR THE YEAR ENDED DECEMBER 31, 1991
Operating Revenues...................... $ 3,500,043 $1,307,849 $ 335,073 $ 5,142,965
Eliminations (Intersegment Revenues).... -- -- (51,307) (51,307)
----------- ---------- ---------- -----------
Total Operating Revenues................ 3,500,043 1,307,849 283,766 5,091,658
----------- ---------- ---------- -----------
Depreciation and Amortization........... 399,574 93,523 92,822 585,919
Operating Income Before Income Taxes.... 1,007,342 115,259 144,223 1,266,824
Capital Expenditures.................... 672,852 140,297 249,078 1,062,227
December 31, 1991
Net Utility Plant....................... 9,006,125 1,176,456 -- 10,182,581
Oil and Gas Property, Plant &
Equipment............................. -- -- 563,190 563,190
Other Corporate Assets.................. 1,254,559 570,918 1,881,317 3,706,794
----------- ---------- ---------- -----------
Total Assets............................ $10,260,684 $1,747,374 $2,444,507 $14,452,565
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
(A) The Nonutility Activities include amounts applicable to Enterprise, the
parent corporation.
90
99
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 16. PROPERTY IMPAIRMENT OF ENTERPRISE GROUP DEVELOPMENT CORPORATION
As a result of a management review of each property's current value and the
potential for increasing such value through operating and other improvements,
EGDC recorded an impairment related to certain of its properties, including
properties upon which EDHI's management revised its intent from a long-term
investment strategy to a hold for sale status, reflecting such properties on its
books at their net realizable value. This impairment reduced the estimated value
of EGDC's properties by $77.6 million and net income by $50.5 million, after
tax, or 21 cents per share of Enterprise common stock. EGDC's real estate held
for sale of $33.8 million and $6.7 million at December 31, 1993 and 1992 are
presented in "Other Investments -- net" and "Current Assets", respectively, in
the accompanying consolidated balance sheets.
NOTE 17. JOINTLY-OWNED FACILITIES -- UTILITY PLANT
PSE&G, has ownership interests and is responsible for providing its share
of the necessary financing for the following jointly-owned facilities. All
amounts reflect the share of jointly-owned projects and the corresponding direct
expenses are included in Consolidated Statements of Income as an operating
expense. (See Note 1 -- Organization and Summary of Significant Accounting
Policies.)
PLANT
OWNERSHIP IN ACCUMULATED PLANT UNDER
PLANT -- DECEMBER 31, 1993 INTEREST SERVICE DEPRECIATION CONSTRUCTION
- ------------------------------------------------ ------- --------- ------------ ------------
(THOUSANDS OF DOLLARS)
Coal Generating
Conemaugh..................................... 22.50% $ 103,938 $ 35,101 $ 63,428
Keystone...................................... 22.84 101,543 30,385 4,742
Nuclear Generating
Peach Bottom.................................. 42.49 699,445 265,679 26,545
Salem......................................... 42.59 1,003,872 343,925 33,134
Hope Creek.................................... 95.00 4,096,287 819,595 20,439
Nuclear Support Facilities.................... Various 153,147 23,414 3,523
Pumped Storage Generating
Yards Creek................................... 50.00 20,636 8,353 3,487
Transmission Facilities......................... Various 119,979 32,359 9
Merrill Creek Reservoir......................... 13.91 37,117 8,876 --
Linden Gas Plant................................ 90.00 15,871 17,630 --
NOTE 18. SELECTED QUARTERLY DATA (UNAUDITED)
The information shown below in the opinion of Enterprise includes all
adjustments, consisting only of normal recurring accruals, necessary to a fair
presentation of such amounts. Due to the seasonal nature of the utility
business, quarterly amounts vary significantly during the year.
CALENDAR MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
QUARTER --------------------- --------------------- --------------------- ---------------------
ENDED 1993 1992 1993 1992 1993 1992 1993 1992
- -------------------------- --------- --------- --------- --------- --------- --------- --------- ---------
(THOUSANDS WHERE APPLICABLE)
Operating Revenues........ $1,594,708 $1,512,450 $1,246,337 $1,190,798 $1,402,037 $1,248,772 $1,462,477 $1,404,761
Operating Income.......... $ 336,505 $ 268,653 $ 248,658 $ 207,355 $ 318,785 $ 259,385 $ 202,899 $ 230,742
Net Income................ $ 215,418 $ 186,333 $ 119,782 $ 87,358 $ 192,231 $ 138,127 $ 73,502 $ 92,299
Earnings Per Share of
Common Stock............ $ 0.91 $ 0.81 $ 0.49 $ 0.38 $ 0.79 $ 0.59 $ 0.30 $ 0.39
Average Shares of Common
Stock Outstanding....... 236,919 229,567 240,920 231,993 241,889 233,192 242,848 234,442
91
100
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PSE&G
Except as modified below the Notes to Consolidated Financial Statements of
Enterprise are incorporated herein by reference insofar as they relate to PSE&G
and its subsidiaries: Note 1. Organization and Summary of Significant Accounting
Policies, Note 2. Rate Matters, Note 3. PSE&G Nuclear Decommissioning and
Amortization of Nuclear Fuel, Note 4. Schedule of Consolidated Capital Stock,
Note 5. Deferred Items, Note 6. Schedule of Consolidated Long-Term Debt, Note 7.
Long-Term Investments, Note 8. Cash and Cash Equivalents, Note 10. Leasing
Activities -- As Lessee, Note 11. Short-Term Debt (Commercial Paper and Loans),
Note 12. Commitments and Contingent Liabilities, Note 13. Postretirement
Benefits Other Than Pensions, Note 14. Pension Plan and Other Postemployment
Benefits, Note 15. Financial Information by Business Segments and Note 17.
Jointly-Owned Facilities -- Utility Plant.
NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
PSE&G is an operating public utility, providing electric and gas service in
certain areas of New Jersey. PSE&G is the principal subsidiary of Enterprise,
which owns all of PSE&G's common stock (without nominal or par value). Of the
150,000,000 authorized shares of such common stock at December 31, 1993, 1992
and 1991, there were 132,450,344 shares outstanding, with an aggregate value of
$2,563,003,000. Enterprise has claimed an exemption from regulation by the
Securities and Exchange Commission as a registered holding company under the
Public Utility Holding Company Act of 1935, except for Section 9(a)(2) which
relates to the acquisition of voting securities of an electric or gas utility
company. PSE&G has a nonutility finance subsidiary, Fuelco, providing financing,
unconditionally guaranteed by PSE&G, not to exceed $150 million aggregate
principal amount at any one time of a 42.49% undivided interest in the nuclear
fuel acquired for Peach Bottom. PSE&G also has organized a nonutility
subsidiary, PSCRC, which offers DSM services to utility customers.
CONSOLIDATION POLICY
The consolidated financial statements include the accounts of PSE&G and its
subsidiaries. All significant intercompany accounts and transactions have been
eliminated in consolidation. Certain reclassifications of prior years' data have
been made to conform with the current presentation.
NOTE 6. SCHEDULE OF CONSOLIDATED LONG-TERM DEBT
At December 31, 1993, the annual interest requirement on long-term debt was
$331.5 million, of which $327.5 million was the requirement for Bonds. The
embedded interest cost on long-term debt was 7.85%.
NOTE 8. CASH AND CASH EQUIVALENTS
The December 31, 1993 and 1992 balances consist primarily of working funds.
92
101
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 9. FEDERAL INCOME TAXES
A reconciliation of reported Net Income with pretax income and of Federal
income tax expense with the amount computed by multiplying pretax income by the
statutory Federal income tax rates of 35% in 1993 and 34% in 1992 and 1991 is as
follows:
1993 1992 1991
-------- -------- --------
(THOUSANDS OF DOLLARS)
Net Income......................................... $614,868 $475,936 $545,479
-------- -------- --------
Federal income taxes:
Operating income:
Current provision............................. 177,314 214,887 194,583
Provision for deferred income taxes-net(A).... 149,884 (334) 81,406
Investment tax credits -- net................. (18,408) (19,089) (20,229)
-------- -------- --------
Total included in operating income................. 308,790 195,464 255,760
Miscellaneous other income:
Current provision................................ (15,419) 4,718 (11,397)
Provision for deferred income taxes(A)........... 9,815 19,261 10,906
SFAS 90 deferred income taxes(A)................... 2,948 2,690 4,967
-------- -------- --------
Total Federal income tax provisions................ 306,134 222,133 260,236
-------- -------- --------
Pretax income...................................... $921,002 $698,069 $805,715
-------- -------- --------
-------- -------- --------
Reconciliation between total Federal income tax provisions and tax computed
at the statutory tax rate on pretax income:
1993 1992 1991
-------- -------- --------
(THOUSANDS OF DOLLARS)
Tax expense at the statutory rate.................. $322,351 $237,343 $273,943
-------- -------- --------
Increase (decrease) attributable to flow through of
certain tax adjustments:
Depreciation.................................. 9,002 15,614 9,229
Amortization of plant abandonments and
write-downs................................. (2,239) (18,867) (4,497)
Amortization of investment tax credits........ (18,408) (18,408) (20,868)
Other......................................... (4,572) 6,451 2,429
-------- -------- --------
Subtotal........................................... (16,217) (15,210) (13,707)
-------- -------- --------
Total Federal income tax provisions................ $306,134 $222,133 $260,236
-------- -------- --------
-------- -------- --------
Effective Federal income tax rate.................. 33.2% 31.8% 32.3%
(A) The provision for deferred income taxes represents the tax effects of the
following items:
1993 1992 1991
-------- -------- --------
(THOUSANDS OF DOLLARS)
Deferred Credits:
Additional tax depreciation and amortization......... $104,195 $ 94,757 $ 98,445
Property Abandonments................................ (6,632) (34,739) (11,582)
Oil and Gas Property Write-Down...................... (2,451) (6,393) (6,393)
Deferred fuel costs-net.............................. 63,330 (40,148) 9,285
Other................................................ 4,205 8,140 7,524
-------- -------- --------
Total........................................ $162,647 $ 21,617 $ 97,279
-------- -------- --------
-------- -------- --------
93
102
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SFAS 109
The following is an analysis of accumulated deferred income taxes:
ACCUMULATED DEFERRED INCOME TAXES 1993 1992
---------- ----------
THOUSANDS OF DOLLARS)
Assets:
Current (net)....................................................... $ 12,934 $ --
Non-Current:
Unrecovered Investment Tax Credits............................... 143,125 --
Nuclear Decommissioning.......................................... 25,211 24,305
Hope Creek Cost Disallowance..................................... 20,231 29,468
Uncollectibles................................................... 9,776 --
Vacation Pay..................................................... 6,721 6,424
Other............................................................ 14,880 1,209
---------- ----------
Total Non-Current........................................... $ 219,944 $ 61,406
---------- ----------
Total Assets.......................................................... $ 232,878 $ 61,406
---------- ----------
---------- ----------
Liabilities:
Non-Current:
Plant Related Items.............................................. $2,075,359 $1,328,997
Property Abandonments............................................ 32,206 50,684
Oil and Gas Property Write-Down.................................. 16,790 24,518
Deferred Electric Energy & Gas Costs............................. 20,133 (44,415)
Unamortized Debt Expense......................................... 38,768 17,082
Taxes Recoverable Through Future Rates (Net)..................... 270,518 --
Other............................................................ 134,948 87,655
---------- ----------
Total Non-Current........................................... $2,588,722 $1,464,521
---------- ----------
Total Liabilities..................................................... $2,588,722 $1,464,521
---------- ----------
---------- ----------
Summary -- Accumulated Deferred Income Taxes
Net Current Assets.................................................. $ 12,934 $ --
Net Deferred Liability.............................................. $2,368,778 $1,403,115
---------- ----------
Total............................................................ $2,355,844 $1,403,115
---------- ----------
---------- ----------
The Revenue Reconciliation Act of 1993, enacted in August 1993, increased
the Federal corporate income tax rate from 34% to 35% effective January 1, 1993.
This resulted in an increase in Federal income tax expense for PSE&G of $9.2
million for the year ended December 31, 1993.
The balance of Federal income tax payable by PSE&G to Enterprise was zero
and $7 million, as of December 31, 1993 and December 31, 1992, respectively.
94
103
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 18. SELECTED QUARTERLY DATA (UNAUDITED)
The information shown below, in the opinion of PSE&G, includes all
adjustments, consisting only of normal recurring accruals, necessary to a fair
presentation of such amounts. Due to the seasonal nature of the utility
business, quarterly amounts vary significantly during the year.
CALENDAR MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
QUARTER ---------------------- ---------------------- ---------------------- ----------------------
ENDED 1993 1992 1993 1992 1993 1992 1993 1992
- ---------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
(THOUSANDS OF DOLLARS)
Operating Revenues.... $1,502,247 $1,427,081 $1,147,901 $1,097,623 $1,291,192 $1,151,180 $1,346,084 $1,318,116
Operating Income...... $ 294,734 $ 224,915 $ 206,056 $ 156,350 $ 279,173 $ 211,479 $ 201,622 $ 195,780
Net Income............ $ 204,404 $ 179,796 $ 113,849 $ 72,901 $ 188,575 $ 128,563 $ 108,040 $ 94,676
Earnings Available to
Public Service
Enterprise Group
Incorporated........ $ 195,582 $ 172,543 $ 104,092 $ 65,539 $ 178,808 $ 119,919 $ 98,272 $ 86,028
NOTE 19. ACCOUNTS PAYABLE TO ASSOCIATED COMPANIES -- NET
The balances at December 31, consisted of the following:
1993 1992
------- -------
(THOUSANDS OF DOLLARS)
Public Service Enterprise Group Incorporated..................... $ 582 $15,264
Energy Development Corporation(A)................................ 5,698 4,849
Other............................................................ (606) (1,578)
------- -------
Total.................................................. $ 5,674 $18,535
------- -------
------- -------
(A) Liability for gas purchased.
95
104
PART III
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Enterprise and PSE&G, none.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS.
DIRECTORS OF THE REGISTRANTS
ENTERPRISE
The information required by Item 10 of Form 10-K with respect to present
directors who are nominees for election as directors at Enterprise's Annual
Meeting of Stockholders to be held on April 19, 1994, and directors whose terms
will continue beyond the meeting, is set forth under the heading "Election of
Directors" in Enterprise's definitive Proxy Statement for such Annual Meeting of
Stockholders, which definitive Proxy Statement is expected to be filed with the
Securities and Exchange Commission on or about March 1, 1994 and which
information set forth under said heading is incorporated herein by this
reference thereto.
The information with respect to present directors who have reached the
mandatory retirement age for directors and thus will not be standing for
election follows. There is shown as to each information as to the period of
service as a director of Enterprise (and PSE&G prior to the formation of
Enterprise), age as of April 19, 1994, present committee memberships, business
experience during the last five years and other present directorships.
ROBERT R. FERGUSON, JR. has been a director since 1981. Age 70. Director of
Enterprise and PSE&G. Was Chairman of the Board, President and Chief Executive
Officer of First Fidelity Bancorporation, Newark, New Jersey, from December 1988
until his retirement in February 1990; Chairman of the Board of First Fidelity,
Inc., from March 1988 until February 1990, and Chairman of the Board of First
Fidelity Bank, N.A., New Jersey from 1984 until February 1990. Was Chairman of
the Board of First Fidelity Bancorporation from March 1988 to December 1988, and
President and Chief Executive Officer, First Fidelity Bancorporation, from 1985
to March 1988.
WILLIAM E. MARFUGGI has been a director since 1980. Age 70. Director of
Enterprise and its subsidiary, EDHI. Was Chairman of Tri-Maintenance &
Contractors, Inc. (provides property management and facility maintenance
services) from August 1989 until 1993. Was Chairman of the Board of Victory
Optical Manufacturing Company and Plaza Sunglasses Inc., both of Newark, New
Jersey, from 1973 until 1989.
PSE&G
Pursuant to the Focused Audit Implementation Plan (see Item
1. Business -- Regulation), effective July 20, 1993, Harold W. Borden, Jr.,
Thomas M. Crimmins, Jr., Robert J. Dougherty, Jr., Robert C. Murray, R. Edwin
Selover and Rudolph D. Stys, each of whom is an officer of PSE&G, resigned as
directors of PSE&G and the persons shown below, except for Lawrence R. Codey and
E. James Ferland, each of whom remained as a director, were elected as directors
of PSE&G to serve until the next Annual Meeting of Stockholders of PSE&G, to be
held April 19, 1994, and until each of their successors are duly elected and
qualified. There is shown as to each present director information as to the
period of service as a director of PSE&G, age as of April 19, 1994, present
committee memberships, business experience during the last five years and other
present directorships.
LAWRENCE R. CODEY has been a director since 1988. Age 49. Member of
Executive Committee. Has been President and Chief Operating Officer of PSE&G
since September 1991. Was Senior Vice President-Electric of PSE&G from January
1989 to September 1991. Director of Enterprise. Director of Sealed Air
Corporation, The Trust Company of New Jersey, United Water Resources Inc.,
Hackensack Water Company, Rivervale Realty Company Inc. and Blue Cross & Blue
Shield of New Jersey.
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ROBERT R. FERGUSON, JR. has been a director since July 20, 1993. Was
previously a director from 1981 to February 1988. For additional information,
see Enterprise, above.
E. JAMES FERLAND has been a director since 1986, and Chairman of the Board,
President and Chief Executive Officer of Enterprise since July 1986, Chairman of
the Board and Chief Executive Officer of PSE&G since September 1991, and
Chairman of the Board and Chief Executive Officer of EDHI since June 1989. Age
52. Chairman of Executive Committee. President of PSE&G from July 1986 to
September 1991. Director of Enterprise and of EDHI and its subsidiaries, CEA,
EDC, PSRC, EGDC, Capital and Funding. Director of First Fidelity Bancorporation,
First Fidelity Bank, N.A., Foster Wheeler Corporation and The Hartford Steam
Boiler Inspection and Insurance Company.
RAYMOND V. GILMARTIN has been a director since July 20, 1993. Age 53.
Director of Enterprise. Has been Chairman of the Board, President and Chief
Executive Officer of Becton Dickinson and Company, Franklin Lakes, New Jersey
(manufactures medical devices and diagnostic systems) since November 1992. Was
President and Chief Executive Officer of Becton Dickinson and Company from
February 1989 to November 1992 and President from September 1987 to February
1989. Director of Becton Dickinson and Company and Capital Holding Corp.
SHIRLEY A. JACKSON has been a director since July 20, 1993. Was previously
a director from 1987 to February 1988. Age 47. Director of Enterprise. Has been
Professor of Physics, Rutgers University, since 1991 and has been a theoretical
physics consultant since 1991 and was a theoretical physicist from 1976 to 1991
at AT&T Bell Laboratories (performs research and development in areas related to
telecommunications for American Telephone and Telegraph Company). Director of
Core States Financial Corporation, Core States/New Jersey National Bank, New
Jersey Resources Corporation and Sealed Air Corporation. Trustee of
Massachusetts Institute of Technology.
IRWIN LERNER has been a director since July 20, 1993. Was previously a
director from 1981 to February 1988. Age 63. Director of Enterprise. Was
Chairman, Board of Directors and Executive Committee from January 1993 to
September 1993 and President and Chief Executive Officer from 1980 to December
1992 of Hoffmann-La Roche Inc., Nutley, New Jersey (manufactures
pharmaceuticals, vitamins, fine chemicals and provides home health care and
diagnostic products and services). Director of Humana Inc. and Affymax, N.V.
JAMES C. PITNEY has been a director since July 20, 1993. Was previously a
director from 1979 to February 1988. Age 67. Member of Executive Committee.
Director of Enterprise. Has been a partner in the law firm of Pitney, Hardin,
Kipp & Szuch, Morristown, New Jersey, since 1958, Director of Seligman Capital
Fund, Inc., Seligman Cash Management Fund, Inc., Seligman Common Stock Fund,
Inc., Seligman Communications and Information Fund, Inc., Seligman Frontier
Fund, Inc., Seligman Growth Fund, Inc., Seligman High Income Fund Series, Inc.,
Seligman Income Fund, Inc., Seligman Mutual Benefit Portfolios, Inc., Seligman
New Jersey Tax-Exempt Fund, Inc., Seligman Pennsylvania Tax-Exempt Fund Series,
Seligman Tax-Exempt Fund Series, Inc., Seligman Tax-Exempt Series Trust, Inc.,
Seligman Quality Fund, Inc., Seligman Select Municipal Fund, Inc. and
Tri-Continental Corporation.
EXECUTIVE OFFICERS OF THE REGISTRANTS
The following table sets forth certain information concerning the executive
officers of Enterprise and PSE&G, respectively.
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AGE EFFECTIVE DATE
DECEMBER 31, FIRST ELECTED
NAME 1993 OFFICE TO PRESENT POSITION
- ------------------------------------ ---------------------------------- -------------------------
E. James Ferland........ 51 Chairman of the Board, President July 1986 to present
and Chief Executive Officer
(Enterprise)
Chairman of the Board and Chief July 1986 to present
Executive Officer (PSE&G)
President (PSE&G) June 1986 to
September 1991
Chairman of the Board and Chief June 1989 to present
Executive Officer (EDHI)
Lawrence R. Codey....... 49 President and Chief Operating September 1991 to
Officer (PSE&G) present
Senior Vice President -- Electric January 1989 to
(PSE&G) September 1991
Robert C. Murray........ 48 Vice President and Chief Financial January 1992 to present
Officer (Enterprise)
Senior Vice President -- Finance January 1992 to present
and Chief Financial Officer
(PSE&G)
Managing Director of Morgan January 1987 to July 1991
Stanley & Co. Incorporated
Patricia A. Rado........ 51 Vice President and Comptroller April 1993 to present
(Enterprise)
Vice President and Comptroller April 1993 to present
(PSE&G)
Controller of Yankee Energy July 1989 to April 1993
Systems Inc.
Director -- Accounting January 1988
of Northeast Utilities to June 1989
Paul H. Way............. 56 President, Chief Operating Officer February 1993 to present
and Director (EDHI)
Senior Vice President (EDHI) June 1992 to
February 1993
Senior Vice President -- Corporate April 1988 to
Performance (PSE&G) June 1992
R. Edwin Selover........ 48 Vice President and General Counsel April 1988 to present
(Enterprise)
Senior Vice President and General January 1988 to present
Counsel (PSE&G)
Francis J. Riepl........ 57 Treasurer (Enterprise) March 1987 to present
Vice President and Treasurer March 1987 to present
(PSE&G)
Harold W. Borden, Jr.... 49 Senior Vice President -- External January 1990 to present
Affairs (PSE&G)
Assistant Vice President and January 1983 to
Associate General Counsel December 1989
(PSE&G)
Thomas M. Crimmins, 50 Senior Vice President -- Customer September 1991 to
Jr.................... Operations (PSE&G) present
Vice President -- Nuclear May 1989 to
Engineering (PSE&G) September 1991
Vice President -- Power January 1987 to May 1989
Production, Pennsylvania Power
and Light Company
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AGE EFFECTIVE DATE
DECEMBER 31, FIRST ELECTED
NAME 1993 OFFICE TO PRESENT POSITION
- ------------------------------------ ---------------------------------- -------------------------
Robert J. Dougherty, 42 Senior Vice President -- Electric September 1991 to present
Jr. .................. (PSE&G)
Senior Vice President -- Customer September 1989 to
Operations (PSE&G) September 1991
Vice President -- Marketing January 1988 to
(PSE&G) September 1989
Rudolph D. Stys......... 58 Senior Vice President -- Gas January 1989 to present
(PSE&G)
ITEM 11. EXECUTIVE COMPENSATION
ENTERPRISE
The information required by Item 11 of Form 10-K is set forth under the
heading "Executive Compensation" in Enterprise's definitive Proxy Statement for
the Annual Meeting of Stockholders to be held April 19, 1994, which definitive
Proxy Statement is expected to be filed with the Securities and Exchange
Commission on or about March 1, 1994 and such information set forth under such
heading is incorporated herein by this reference thereto.
PSE&G
Information regarding the compensation of the Chief Executive Officer and
the four most highly compensated executive officers of PSE&G as of December 31,
1993 is set forth below. Amounts shown were paid or awarded for all services
rendered to Enterprise and its subsidiaries and affiliates including PSE&G.
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SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
---------------------
AWARDS
ANNUAL COMPENSATION ---------- PAYOUTS
----------------------- SECURITIES -------
BONUS/ANNUAL UNDERLYING LTIP ALL OTHER
SALARY INCENTIVE OPTIONS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR $(1) AWARD($)(2) (#)(3) ($) ($)(4)
- --------------------------- ---- ------- ------------ ---------- ------- ------------
E. James Ferland........... 1993 622,606 (5) 5,800 28,072 8,007
Chairman of the Board, 1992 620,691 244,759 5,600 27,588 7,610
President and CEO of 1991 562,836 220,481 5,200 75,204 7,350
Enterprise
Lawrence R. Codey.......... 1993 378,545 (5) 2,800 9,570 7,218
President and Chief 1992 336,208 102,919 2,700 6,270 6,789
Operating Officer of PSE&G 1991 276,545 114,668 2,000 27,157 6,443
Robert C. Murray........... 1993 288,889 75,000(5)(6) 2,000 3,190 7,264
Vice President and Chief 1992 263,410 70,463 3,200 0 5,064
Financial Officer of 1991 0(7) 0(7) 0(7) 0(7) 0(7)
Enterprise and
Senior Vice President-
Finance and Chief Financial
Officer of PSE&G
Robert J. Dougherty, 1993 259,004 (5) 2,000 5,104 6,422
Jr. .....................
Senior Vice President- 1992 222,415 59,916 1,600 0 5,995
Electric of PSE&G 1991 183,220 61,349 1,100 0 4,929
R. Edwin Selover........... 1993 231,113 (5) 1,400 0 7,840
Vice President and General 1992 228,621 44,918 1,300 0 7,576
Counsel of Enterprise and 1991 206,207 48,889 1,200 18,801 5,876
Senior Vice President and
General Counsel of PSE&G
- ---------------
(1) Due to pay schedules, 1992 amounts reflect one additional pay period per
individual compared to 1993 and 1991.
(2) Amount awarded in given year was earned under Management Incentive
Compensation Plan (MICP) and determined in following year with respect to
the given year based on individual performance and financial and operating
performance of Enterprise and PSE&G, including comparison to other
companies. Award is accounted for as market-priced phantom stock with
dividend reinvestment at 95% of market price, with payment made over three
years beginning in second year following grant.
(3) Granted under Long-Term Incentive Plan in tandem with equal number of
performance units and dividend equivalents which may provide cash payments,
dependent upon future financial performance of Enterprise in comparison to
other companies and dividend payments by Enterprise, to assist officers in
exercising options granted.
(4) Employer contribution to Thrift and Tax-Deferred Savings Plan and value of
5% discount on phantom stock dividend reinvestment under MICP:
FERLAND CODEY MURRAY DOUGHERTY SELOVER
-------------- -------------- ------------- ------------- ---------------
THRIFT MICP THRIFT MICP THRIFT MICP THRIFT MICP THRIFT MICP
------ ----- ------ ----- ------ ---- ------ ---- ------ ------
1993............ 5,900 2,107 5,896 1,322 7,078 186 5,907 515 6,630 1,210
1992............ 5,725 1,885 5,725 1,064 5,064 0 5,562 433 6,588 988
1991............ 5,558 1,792 5,558 884 0 0 4,588 340 4,940 936
(5) The 1993 MICP award amount has not yet been determined. The target award is
40% of salary for Mr. Ferland, 30% for Mr. Codey, 25% for Messrs. Murray
and Dougherty and 20% for Mr. Selover. The target award is adjusted to
reflect Enterprise's comparative return on common equity, PSE&G's
comparative electric and gas costs and individual performance.
(6) Amount paid pursuant to Mr. Murray's employment agreement. (See below).
(7) Mr. Murray commenced employment January 6, 1992.
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OPTION GRANTS IN LAST FISCAL YEAR (1993)
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------- VALUE AT ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE OR TERM(2)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME GRANTED(1) FISCAL YEAR ($/SH) DATE 0%($) 5%($) 10%($)
- ------------------------- ----------- ------------ ----------- ---------- ----- ------- -------
E. James Ferland......... 5,800 25.4 30.50 1/05/03 0 111,251 281,933
Lawrence R. Codey........ 2,800 12.3 30.50 1/05/03 0 53,708 136,106
Robert C. Murray......... 2,000 8.8 30.50 1/05/03 0 38,363 97,218
Robert J. Dougherty,
Jr..................... 2,000 8.8 30.50 1/05/03 0 38,363 97,218
R. Edwin Selover......... 1,400 6.1 30.50 1/05/03 0 26,854 68,053
- ---------------
(1) Granted under Long-Term Incentive Plan in tandem with equal number of
performance units and dividend equivalents which may provide cash payments,
dependent on future financial performance of Enterprise in comparison to
other companies and dividend payments by Enterprise, to assist individuals
in exercising options, with exercisability commencing January 1, 1996.
(2) All options reported have a ten-year term, as noted. Amounts shown represent
hypothetical future values at such term based upon hypothetical price
appreciation of Enterprise Common Stock and may not necessarily be
realized. Actual values which may be realized, if any, upon any exercise of
such options, will be based on the market price of Enterprise Common Stock
at the time of any such exercise and thus are dependent upon future
performance of Enterprise Common Stock.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR (1993) AND
FISCAL YEAR-END OPTION VALUES (12/31/93)
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
SHARES OPTIONS AT FY-END(#)(1) AT FY-END($)(3)
ACQUIRED VALUE -------------------------- --------------------------
ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
NAME (#)(1) ($)(2) (#) (#) ($) ($)
- ------------------------- ----------- -------- ----------- ------------- ----------- -------------
E. James Ferland......... 4,400 10,450 0 16,600 0 53,372
Lawrence R. Codey........ 1,500 8,063 700 7,500 5,425 22,949
Robert C. Murray......... 500 2,813 0 4,700 0 12,679
Robert J. Dougherty,
Jr..................... 800 3,900 0 4,700 0 13,642
R. Edwin Selover......... 0 0 2,200 3,900 11,550 12,431
- ---------------
(1) Does not reflect any options granted and/or exercised after year-end
(12/31/93). The net effect of any such grants and exercises is reflected in
the table appearing under Security Ownership of Directors and Management.
(2) Represents difference between exercise price and market price of Enterprise
Common Stock on date of exercise.
(3) Represents difference between market price of Enterprise Common Stock and
the respective exercise prices of the options at fiscal year-end
(12/31/93). Such amounts may not necessarily be realized. Actual values
which may be realized, if any, upon any exercise of such options will be
based on the market price of Enterprise Common Stock at the time of any
such exercise and thus are dependent upon future performance of Enterprise
Common Stock.
EMPLOYMENT CONTRACTS AND ARRANGEMENTS
Employment agreements were entered into with Messrs. Ferland and Murray at
the time of their employment. For Mr. Ferland, the remaining applicable
provisions of these agreements provide for additional
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credited service for pension purposes in the amount of 22 years. The principal
remaining applicable terms of the agreement with Mr. Murray provide for payment
of severance in the amount of one year's salary, if discharged without cause
during his first five years of employment, for lump sum cash payments of $75,000
in 1993, $50,000 in 1994 and $25,000 in 1995 to align Mr. Murray with MICP
payments for other executive officers, and additional years of credited service
for pension purposes for allied work experience of five years after completion
of five years of employment, and up to fifteen years after completion of ten
years of service.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
PSE&G does not have a compensation committee. Decisions regarding
compensation of PSE&G's executive officers are made by the Organization and
Compensation Committee of Enterprise. Hence, during 1993 the PSE&G Board of
Directors did not have, and no officer, employee or former officer of PSE&G
participated in any deliberations of such Board, concerning executive officer
compensation. In December 1993, Mr. Codey was elected as a director of Sealed
Air Corporation, the President and Chief Executive Officer of which, T.J. Dermot
Dunphy, served as a director and member of the Organization and Compensation
Committee of Enterprise during 1993.
COMPENSATION OF DIRECTORS AND CERTAIN BUSINESS RELATIONSHIPS
A director who is not an officer of Enterprise or its subsidiaries and
affiliates, including PSE&G, is paid an annual retainer of $20,000 and a fee of
$1,000 for attendance at any Board or committee meeting, inspection trip,
conference or other similar activity relating to Enterprise, PSE&G or EDHI.
Enterprise has a Retirement Plan for outside directors. Each of the outside
directors of PSE&G is also an outside director of Enterprise. Under this Plan,
directors with five years of service who have not been employees of Enterprise
or its subsidiaries, who leave service after age 65, or for disability, receive
an annual retirement benefit payable for life equal to the annual Board retainer
in effect at the time the director's service terminates. The benefit payment is
prorated for directors with less than 10 years of service on the Board.
Dr. Shirley A. Jackson, a director of Enterprise and PSE&G, is the liaison
member for the Board of Directors on and Chair of PSE&G's Nuclear Oversight
Committee (NOC). The NOC met five times during 1993, with each meeting lasting
two days. In accordance with the compensation policy for all NOC members, Dr.
Jackson receives an annual retainer of $28,000 and $1,000 per day for each NOC
meeting attended.
COMPENSATION PURSUANT TO PENSION PLANS
PENSION PLAN TABLE
AVERAGE LENGTH OF SERVICE
FINAL -----------------------------------------------
COMPENSATION 30 YEARS 35 YEARS 40 YEARS 45 YEARS
- ------------ -------- -------- -------- --------
$ 300,000 $180,000 $195,000 $210,000 $225,000
400,000 240,000 260,000 280,000 300,000
500,000 300,000 325,000 350,000 375,000
600,000 360,000 390,000 420,000 450,000
700,000 420,000 455,000 490,000 525,000
800,000 480,000 520,000 560,000 600,000
900,000 540,000 585,000 630,000 675,000
1,000,000 600,000 650,000 700,000 750,000
The above table illustrates annual retirement benefits expressed in terms
of single life annuities based on the average final compensation and service
shown and retirement at age 65. A person's annual retirement benefit is based
upon a percentage that is equal to years of credited service plus 30, but not
more than 75%, times average final compensation at the earlier of retirement,
attainment of age 65 or death. These amounts are reduced by Social Security
benefits and certain retirement benefits from other employers. Pensions in the
form of joint and survivor annuities are also available.
Average final compensation, for purposes of retirement benefits of
executive officers, is generally equivalent to the average of the aggregate of
the salary and bonus amounts reported in the Summary
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Compensation Table above under 'Annual Compensation' for the five years
preceeding retirement, not to exceed 120% of the average annual salary for such
five year period. Messrs. Ferland, Codey, Murray, Dougherty and Selover will
have accrued approximately 48, 41, 39, 48 and 43 years of credited service,
respectively, as of age 65.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
ENTERPRISE
The information required by Item 12 of Form 10-K with respect to directors
and executive officers is set forth under the heading 'Security Ownership of
Directors and Management' in Enterprise's definitive Proxy Statement for the
Annual Meeting of Stockholders to be held April 19, 1994, which definitive Proxy
Statement is expected to be filed with the Securities and Exchange Commission on
or about March 7, 1994 and such information set forth under such heading is
incorporated herein by this reference thereto.
PSE&G
All of PSE&G's 132,450,344 outstanding shares of Common Stock are owned
beneficially and of record by PSE&G's parent, Enterprise, 80 Park Plaza, P.O.
Box 1171, Newark, New Jersey.
The following table sets forth beneficial ownership of Enterprise Common
Stock by the directors and executive officers named below as of February 23,
1994. None of these amounts exceed 1% of the Enterprise Common Stock outstanding
at such date. No director or executive officer owns any PSE&G Preferred Stock of
any class.
AMOUNT AND NATURE OF
NAME BENEFICIAL OWNERSHIP
----------------------------------------------------------- --------------------
Lawrence R. Codey.......................................... 7,583(1)
Robert J. Dougherty, Jr.................................... 1,486(2)
Robert R. Ferguson, Jr..................................... 1,006
E. James Ferland........................................... 33,034(3)
Raymond V. Gilmartin....................................... 1,000
Shirley A. Jackson......................................... 431
Irwin Lerner............................................... 3,303
Robert C. Murray........................................... 3,477(4)
James C. Pitney............................................ 2,527
R. Edwin Selover........................................... 3,591(5)
All directors and executive officers (15) as a group....... 66,062(6)
- ---------------
(1) Disclaims beneficial ownership of 472 shares. Has options to purchase 8,700
additional shares.
(2) Includes the equivalent of 588 shares held under Thrift and Tax-Deferred
Savings Plan. Has options to purchase 6,500 additional shares.
(3) Includes the equivalent of 8,087 shares held under Thrift and Tax-Deferred
Savings Plan. Has options to purchase 16,800 additional shares.
(4) Includes the equivalent of 377 shares held under Thrift and Tax-Deferred
Savings Plan. Has options to purchase 5,400 additional shares.
(5) Disclaims beneficial ownership of 273 shares. Has options to purchase 6,200
additional shares.
(6) Includes 745 shares owned by relatives as to which beneficial ownership is
disclaimed. Also includes the equivalent of 9,711 shares held under Thrift
and Tax-Deferred Savings Plan. All directors and executive officers as a
group have options to purchase 55,600 additional shares.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
ENTERPRISE
The information required by Item 13 of Form 10-K is set forth under the
heading "Executive Compensation" in Enterprise's definitive Proxy Statement for
the Annual Meeting of Stockholders to be held April 19, 1994, which definitive
Proxy Statement is expected to be filed with the Securities and Exchange
Commission on or about March 1, 1994. Such information set forth under such
heading is incorporated herein by this reference thereto.
PSE&G
None.
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PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) Financial Statements:
(1) Enterprise Consolidated Statements of Income for the years ended
December 31, 1993, 1992, and 1991, on page 55.
Enterprise Consolidated Balance Sheets for the years ended
December 31, 1993 and 1992, on pages 56 and 57.
Enterprise Consolidated Statements of Cash Flows for the
years ended December 31, 1993, 1992 and 1991 on page 58.
Enterprise Statements of Retained Earnings for the years
ended December 31, 1993, 1992 and 1991 on page 59.
Enterprise Notes to Consolidated Financial Statements on
pages 65 through 90.
(2) PSE&G Consolidated Statements of Income for the years ended
December 31, 1993, 1992 and 1991, on page 60.
PSE&G Consolidated Balance Sheets for the years ended
December 31, 1993 and 1992, on pages 61 and 62.
PSE&G Consolidated Statements of Cash Flows for the years
ended December 31, 1993, 1992 and 1991 on page 63.
PSE&G Statements of Retained Earnings for the years ended
December 31, 1993, 1992 and 1991 on page 64.
PSE&G Notes to Consolidated Financial Statements on pages
91 through 94.
(b) The following documents are filed as a part of this report:
(1) Enterprise Financial Statement Schedules:
Schedule V -- Property, Plant and Equipment for each of the
three years in the period ended December 31,
1993 (pages 105 through 107).
Schedule VI -- Accumulated Depreciation, Depletion, and
Amortization of Property, Plant and Equipment
for each of the three years in the period
ended December 31, 1993 (pages 108 through 110).
Schedule VIII -- Valuation and Qualifying Accounts for each of
the three years in the period ended
December 31, 1993 (page 111).
Schedules other than those listed above are omitted for the
reason that they are not required or are not applicable, or
the required information is shown in the consolidated financial
statements or notes thereto.
(2) PSE&G Financial Statement Schedules:
Schedule V -- Property, Plant and Equipment for each of the
three years in the period ended December 31,
1993 (pages 112 through 114).
Schedule VI -- Accumulated Depreciation, Depletion, and
Amortization of Property, Plant and Equipment
for each of the three years in the period
ended December 31, 1993 (pages 115 through
117).
Schedule VIII -- Valuation and Qualifying Accounts for each of the
three years in the period ended December 31, 1993
(page 118).
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Schedules other than those listed above are omitted for the reason
that they are not required or are not applicable, or the required
information is shown in the consolidated financial statements or
notes thereto.
(c) The following exhibits are filed herewith:
(1) Enterprise:
10a(5)(ii) -- Limited Supplemental Plan for Certain Employees.
*10a(14) -- Letter Agreement with Patricia A. Rado dated March 24, 1993.
12 -- Computation of Ratios of Earnings to Fixed Charges.
21 -- Subsidiaries of Registrant.
23 -- Independent Auditors' Consent.
(See Exhibit Index on pages 121 through 127).
(2) PSE&G:
10a(5)(ii) -- Limited Supplemental Plan for Certain Employees.
*10a(13) -- Letter Agreement with Patricia A. Rado dated March 24, 1993.
12(a) -- Computation of Ratios of Earnings to Fixed Charges.
12(b) -- Computation of Ratios of Earnings to Fixed Charges Plus Preferred
Stock Dividend Requirements.
23 -- Independent Auditors' Consent.
(See Exhibit Index on pages 128 through 133).
(d) The following reports on Form 8-K were filed by the registrant(s) named
below during the last quarter of 1993 and the 1994 period covered by this report
under Item 5:
REGISTRANT DATE OF REPORT ITEM REPORTED
- --------------------- ------------------ -------------------------------------------------
PSE&G December 1, 1993 Item 5. Other Events (Earnings Statement Safe
Harbor)
Enterprise and PSE&G January 21, 1994 Item 5. Other Events (Credit Ratings and
Unaudited
Operating Results)
- ---------------
* Indicates employment agreement.
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SCHEDULE V
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED DECEMBER 31, 1993
- -----------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -----------------------------------------------------------------------------------------------------------------------
OTHER
BALANCE AT CHANGES--
BEGINNING ADD (DEDUCT)-- BALANCE AT
OF ADDITIONS AT DESCRIBE END OF
CLASSIFICATION PERIOD COST RETIREMENTS (A) PERIOD
- -----------------------------------------------------------------------------------------------------------------------
(THOUSANDS OF DOLLARS)
Utility Plant
Electric Plant in Service
Intangible............................ $ 4,596 $ 2,224 $ -- $ -- $ 6,820
Steam Production...................... 1,668,198 108,360 (13,310) 5 1,763,253
Nuclear Production.................... 5,819,755 67,412 (16,010) 2,117(B) 5,873,274
Pumped Storage Production............. 20,063 (14) -- -- 20,049
Other Production...................... 350,526 30,099 (363) 380,262
Transmission.......................... 1,024,843 10,996 (2,846) 1,157 1,034,150
Distribution.......................... 2,573,226 168,436 (16,329) (1,131) 2,724,202
General............................... 104,462 15,291 1,299 430 118,884
---------- ------------ ----------- -------------- ----------
Total Electric Plant in
Service........................ 11,565,669 402,804 (50,157) 2,578 11,920,894
---------- ------------ ----------- -------------- ----------
Gas Plant in Service
Manufactured Gas Production........... 77,942 (15) 123 (229) 77,821
Local Storage......................... 9,709 (5) (69) -- 9,635
Transmission.......................... 57,405 5,990 -- -- 63,395
Distribution.......................... 1,870,462 127,991 (5,409) -- 1,993,044
General............................... 29,426 4,581 (61) -- 33,946
---------- ------------ ----------- -------------- ----------
Total Gas Plant in Service....... 2,044,944 138,542 (5,416) (229) 2,177,841
---------- ------------ ----------- -------------- ----------
Common Plant in Service
Capital Leases........................ 56,812 -- -- -- 56,812
General............................... 423,160 49,332 (8,581) (438) 463,473
---------- ------------ ----------- -------------- ----------
Total Common Plant in Service.... 479,972 49,332 (8,581) (438) 520,285
---------- ------------ ----------- -------------- ----------
Nuclear Fuel in Service.................. 476,156 55,657 (42,414) -- 489,399
---------- ------------ ----------- -------------- ----------
Total Utility Plant in Service... 14,566,741 646,335 (106,568) 1,911 15,108,419
---------- ------------ ----------- -------------- ----------
Construction Work in Progress............ 492,914 242,457(C) -- (15) 735,356
Plant Held for Future Use................ 22,252 1,582 -- (6,125) 17,709
---------- ------------ ----------- -------------- ----------
Total Utility Plant.............. $15,081,907 $890,374 $ (106,568) $ (4,229) $15,861,484
---------- ------------ ----------- -------------- ----------
---------- ------------ ----------- -------------- ----------
EDC's Oil and Gas Property, Plant and
Equipment................................ $1,170,729 $ 91,052 $ (59,943) $ -- $1,201,838
---------- ------------ ----------- -------------- ----------
---------- ------------ ----------- -------------- ----------
EGDC's/PSRC's Real Estate.................. $ 240,396 $ 2,271 $ (1,102) $ (103,379)(D) $ 138,186
---------- ------------ ----------- -------------- ----------
---------- ------------ ----------- -------------- ----------
Other Plant................................ $ 29,333 $ 14,302 $ (22) $ 6,195 $ 49,808
---------- ------------ ----------- -------------- ----------
---------- ------------ ----------- -------------- ----------
NOTES:
(A) Interaccount and interdepartment transfers.
(B) Includes amortization of discount on the Hope Creek indirect
disallowance of $2,113,299.
(C) Additions to Construction Work in Progress (CWIP) is net of transfers
of completed construction of $249,363,488.
(D) Includes $77.6 million EGDC property impairment and reclassifications
of $33.8 million to assets held for sale.
Descriptions of Utility Plant and Related Depreciation and
Amortization -- PSE&G and Oil and Gas Accounting -- EDC are set forth in Note
1 -- Organization and Summary of Significant Accounting Policies of Notes to
Consolidated Financial Statements.
107
116
SCHEDULE V
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED DECEMBER 31, 1992
- ---------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ---------------------------------------------------------------------------------------------------------------------
OTHER
BALANCE AT CHANGES--
BEGINNING ADD (DEDUCT)-- BALANCE AT
OF ADDITIONS AT DESCRIBE END OF
CLASSIFICATION PERIOD COST RETIREMENTS (A) PERIOD
- ---------------------------------------------------------------------------------------------------------------------
(THOUSANDS OF DOLLARS)
Utility Plant
Electric Plant in Service
Intangible......................... $ 4,675 $ (79) $ -- $ -- $ 4,596
Steam Production................... 1,618,630 59,160 (9,592) 1,668,198
Nuclear Production................. 5,721,768 136,596 (34,094) (4,515)(B) 5,819,755
Pumped Storage Production.......... 19,968 135 (4) (36) 20,063
Other Production................... 322,527 36,077 (8,114) 36 350,526
Transmission....................... 960,958 69,454 (6,093) 524 1,024,843
Distribution....................... 2,418,494 172,408 (17,143) (533) 2,573,226
General............................ 84,983 20,431 (1,739) 787 104,462
---------- ------------ --------- -------------- ----------
Total Electric Plant in
Service....................... 11,152,003 494,182 (76,779) (3,737) 11,565,669
---------- ------------ --------- -------------- ----------
Gas Plant in Service
Manufactured Gas Production........ 55,371 22,580 (9) -- 77,942
Local Storage...................... 9,376 333 -- -- 9,709
Transmission....................... 44,249 13,156 -- -- 57,405
Distribution....................... 1,759,079 117,154 (5,771) -- 1,870,462
General............................ 26,422 3,433 (429) -- 29,426
---------- ------------ --------- -------------- ----------
Total Gas Plant in Service....... 1,894,497 156,656 (6,209) -- 2,044,944
---------- ------------ --------- -------------- ----------
Common Plant in Service
Capital Leases..................... 56,812 -- -- -- 56,812
General............................ 376,534 58,563 (11,156) (781) 423,160
---------- ------------ --------- -------------- ----------
Total Common Plant in Service.... 433,346 58,563 (11,156) (781) 479,972
---------- ------------ --------- -------------- ----------
Nuclear Fuel in Service............... 387,242 161,666 (72,752) -- 476,156
---------- ------------ --------- -------------- ----------
Total Utility Plant in Service... 13,867,088 871,067 (166,896) (4,518) 14,566,741
---------- ------------ --------- -------------- ----------
Construction Work in Progress......... 537,228 (44,314)(C) -- 492,914
Plant Held for Future Use............. 22,244 8 -- 22,252
---------- ------------ --------- -------------- ----------
Total Utility Plant.............. $14,426,560 $826,761 $(166,896) $ (4,518) $15,081,907
---------- ------------ --------- -------------- ----------
---------- ------------ --------- -------------- ----------
EDC's Oil and Gas Property, Plant and
Equipment(D).......................... $1,151,527(D) $ 34,246 $ (15,044) $ -- $1,170,729
---------- ------------ --------- -------------- ----------
---------- ------------ --------- -------------- ----------
EGDC's/PSRC's Real Estate............... $ 163,358 $ 25,557 $ (378) $ 51,859(D) $ 240,396
---------- ------------ --------- -------------- ----------
---------- ------------ --------- -------------- ----------
Other Plant............................. $ 23,444 $ 593 $ -- $ (42) $ 29,333
---------- ------------ --------- -------------- ----------
---------- ------------ --------- -------------- ----------
NOTES:
(A) Interaccount and interdepartment transfers.
(B) Includes amortization of discount on the Hope Creek indirect disallowance
of $1,676,456, and an increase in the Hope Creek indirect disallowance of
6,191,172 resulting from the rate case settlement.
(C) Additions to Construction Work in Progress (CWIP) is net of transfers of
completed construction of $358,917,902.
(D) Consolidation of partnership interests.
Descriptions of Utility Plant and Related Depreciation and
Amortization -- PSE&G and Oil and Gas Accounting -- EDC are set forth in Note
1 -- Organization and Summary of Significant Accounting Policies of Notes to
Consolidated Financial Statements.
108
117
SCHEDULE V
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
SCHEDULE V -- PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED DECEMBER 31, 1991
- -----------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -----------------------------------------------------------------------------------------------------------------------
OTHER
BALANCE AT CHANGES--
BEGINNING ADD (DEDUCT)-- BALANCE AT
OF ADDITIONS AT DESCRIBE END OF
CLASSIFICATION PERIOD COST RETIREMENTS (A) PERIOD
- -----------------------------------------------------------------------------------------------------------------------
(THOUSANDS OF DOLLARS)
Utility Plant
Electric Plant in Service
Intangible....................... $ 3,800 $ 875 $ -- $ -- $ 4,675
Steam Production................. 1,394,187 245,951 (88,805) 67,297 1,618,630
Nuclear Production............... 5,591,338 137,803 (8,931) 1,558(B) 5,721,768
Pumped Storage Production........ 20,096 27 (155) -- 19,968
Other Production................. 291,479 37,021 (5,973) -- 322,527
Transmission..................... 948,567 14,563 (2,172) -- 960,958
Distribution..................... 2,292,726 142,689 (16,875) (46) 2,418,494
General.......................... 66,928 18,634 (557) (22) 84,983
---------- ------------ ----------- -------------- ----------
Total Electric Plant in
Service..................... 10,609,121 597,563 (123,468) 68,787 11,152,003
---------- ------------ ----------- -------------- ----------
Gas Plant in Service
Manufactured Gas Production...... 55,944 258 (830) (1) 55,371
Local Storage.................... 10,654 11 (1,289) -- 9,376
Transmission..................... 34,389 9,860 -- -- 44,249
Distribution..................... 1,652,625 112,508 (6,053) (1) 1,759,079
General.......................... 23,673 2,970 (221) -- 26,422
---------- ------------ ----------- -------------- ----------
Total Gas Plant in Service..... 1,777,285 125,607 (8,393) (2) 1,894,497
---------- ------------ ----------- -------------- ----------
Common Plant in Service
Capital Leases................... 57,226 -- (414) -- 56,812
General.......................... 335,761 49,125 (12,518) 4,166 376,534
---------- ------------ ----------- -------------- ----------
Total Common Plant in
Service..................... 392,987 49,125 (12,932) 4,166 433,346
---------- ------------ ----------- -------------- ----------
Nuclear Fuel in Service............. 386,190 85,423 (84,371) -- 387,242
---------- ------------ ----------- -------------- ----------
Total Utility Plant in
Service..................... 13,165,583 857,718 (229,164) 72,951 13,867,088
---------- ------------ ----------- -------------- ----------
Construction Work in Progress....... 576,904 (39,692)(C) -- 16 537,228
Plant Held for Future Use........... 94,387 (4,877) -- (67,266) 22,244
---------- ------------ ----------- -------------- ----------
Total Utility Plant............ $13,836,874 $813,149 $ (229,164) $ 5,701 $14,426,560
---------- ------------ ----------- -------------- ----------
---------- ------------ ----------- -------------- ----------
EDC's Oil and Gas Property, Plant and
Equipment (D)....................... $ 965,969 $188,955 $ (1,844) $ (1,553) $1,151,527
---------- ------------ ----------- -------------- ----------
---------- ------------ ----------- -------------- ----------
EGDC's/PSRC's Real Estate............. $ 135,386 $ 5,022 $ -- $ 22,950(D) $ 163,358
---------- ------------ ----------- -------------- ----------
---------- ------------ ----------- -------------- ----------
Other Plant........................... $ 28,326 $ 277 $ (5,159) $ -- $ 23,444
---------- ------------ ----------- -------------- ----------
---------- ------------ ----------- -------------- ----------
NOTES:
(A) Interaccount and interdepartment transfers.
(B) Includes amortization of discount on the Hope Creek indirect
disallowance of $1,686,000.
(C) Additions to Construction Work in Progress (CWIP) is net of transfers
of completed construction of $477,201,000.
(D) Consolidation of partnership interests.
Descriptions of Utility Plant and Related Depreciation and
Amortization -- PSE&G and Oil and Gas Accounting -- EDC are set forth in Note
1 -- Organization and Summary of Significant Accounting Policies of Notes to
Consolidated Financial Statements.
109
118
SCHEDULE VI
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION, AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED DECEMBER 31, 1993
- -----------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -----------------------------------------------------------------------------------------------------------------------
BALANCE OTHER
AT CHANGES--
BEGINNING CHARGED TO ADD (DEDUCT)-- BALANCE AT
OF COSTS AND DESCRIBE END OF
DESCRIPTION PERIOD EXPENSES RETIREMENTS (A) PERIOD
- -----------------------------------------------------------------------------------------------------------------------
(THOUSANDS OF DOLLARS)
Accumulated Depreciation and Amortization of
Utility Plant
Electric Plant in Service
Intangible............................. $ 1,816 $ 1,751 $ -- $ -- $ 3,567
Steam Production....................... 460,768 58,575 (41,273) 478,070
Nuclear Production..................... 1,302,035 184,933 (9,981) (25,304) 1,451,683
Pumped Storage Production.............. 7,531 479 8,010
Other Production....................... 227,408 14,572 (369) -- 241,611
Transmission........................... 338,283 23,106 (2,385) -- 359,004
Distribution........................... 927,488 91,767 (27,873) -- 991,382
General................................ 8,560 3,304 (1,295) 10,569
Nuclear Decommissioning................ 136,137 31,762 -- 25,304 193,203
--------- ------------ ----------- -------------- ----------
Total Electric Plant in Service... 3,410,026 410,249 (83,176) 0 3,737,099
--------- ------------ ----------- -------------- ----------
Gas Plant in Service
Manufactured Gas Production............ 62,878 5,424 (9,010) (154) 59,138
Local Storage.......................... 12,416 395 (69) -- 12,742
Transmission........................... 12,856 1,465 -- -- 14,321
Distribution........................... 762,453 50,617 (12,499) -- 800,571
General................................ 3,305 792 (61) -- 4,036
--------- ------------ ----------- -------------- ----------
Total Gas Plant in Service........ 853,908 58,693 (21,639) (154) 890,808
--------- ------------ ----------- -------------- ----------
Common Plant in Service
Capital Leases......................... 3,195 513 -- -- 3,708
General................................ 119,609 29,797 (8,079) -- 141,327
--------- ------------ ----------- -------------- ----------
Total Common Plant in Service..... 122,804 30,310 (8,079) -- 145,035
--------- ------------ ----------- -------------- ----------
Nuclear Fuel in Service................... 223,857 102,718 (42,413) -- 284,162
Plant Held for Future Use................. -- -- -- --
--------- ------------ ----------- -------------- ----------
Total Accumulated Depreciation and
Amortization.................... $4,610,595 $601,970 $ (155,307) $ (154) $5,057,104
--------- ------------ ----------- -------------- ----------
--------- ------------ ----------- -------------- ----------
Accumulated Depreciation and Amortization of
EDC's Oil and Gas Property, Plant and
Equipment................................. $ 663,915(B) $ 87,260 $ (55,384) $ -- $ 695,791
--------- ------------ ----------- -------------- ----------
--------- ------------ ----------- -------------- ----------
Accumulated Depreciation and Amortization of
EGDC's/PSRC's Real Estate................. $ 11,146 $ 4,579 $ (116) $ (4,769)(B) $ 10,840
--------- ------------ ----------- -------------- ----------
--------- ------------ ----------- -------------- ----------
Accumulated Depreciation and Amortization of
Other Plant............................... $ 3,073 $ 1,100 $ (18) $ 152 $ 4,307
--------- ------------ ----------- -------------- ----------
--------- ------------ ----------- -------------- ----------
NOTES:
(A) Interaccount and interdepartment transfers.
(B) Reclassification of accumulated depreciation for real estate held for
sale to other investments -- net.
110
119
SCHEDULE VI
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION, AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED DECEMBER 31, 1992
- --------------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- --------------------------------------------------------------------------------------------------------------------------
ADDITIONS OTHER
BALANCE AT CHARGED TO CHANGES-- BALANCE AT
BEGINNING OF COSTS AND ADD(DEDUCT)-- END OF
DESCRIPTION PERIOD EXPENSES RETIREMENTS DESCRIBE (A) PERIOD
- --------------------------------------------------------------------------------------------------------------------------
(THOUSANDS OF DOLLARS)
Accumulated Depreciation and Amortization of
Utility Plant
Electric Plant in Service
Intangible................................ $ 1,013 $ 803 $ -- $ -- $ 1,816
Steam Production.......................... 438,663 41,700 (19,595) -- 460,768
Nuclear Production........................ 1,157,525 182,636 (38,126) -- 1,302,035
Pumped Storage Production................. 7,043 488 7,531
Other Production.......................... 221,775 13,757 (8,124) -- 227,408
Transmission.............................. 321,884 22,224 (5,825) -- 338,283
Distribution.............................. 868,499 86,483 (27,494) -- 927,488
General................................... 7,551 2,859 (1,850) -- 8,560
Nuclear Decommissioning................... 112,462 23,675 -- -- 136,137
------------ ---------- ----------- -------------- ----------
Total Electric Plant in Service......... 3,136,415 374,625 (101,014) -- 3,410,026
------------ ---------- ----------- -------------- ----------
Gas Plant in Service
Manufactured Gas Production............... 64,834 4,343 (6,299) -- 62,878
Local Storage............................. 12,033 383 -- -- 12,416
Transmission.............................. 11,562 1,294 -- -- 12,856
Distribution.............................. 702,249 72,629 (12,425) -- 762,453
General................................... 3,033 698 (426) -- 3,305
------------ ---------- ----------- -------------- ----------
Total Gas Plant in Service.............. 793,711 79,347 (19,150) -- 853,908
------------ ---------- ----------- -------------- ----------
Common Plant in Service
Capital Leases............................ 2,738 457 -- -- 3,195
General................................... 102,968 27,291 (10,650) -- 119,609
------------ ---------- ----------- -------------- ----------
Total Common Plant in Service........... 105,706 27,748 (10,650) -- 122,804
------------ ---------- ----------- -------------- ----------
Nuclear Fuel in Service...................... 208,147 91,903 (76,193) -- 223,857
Plant Held for Future Use.................... -- -- -- -- --
------------ ---------- ----------- -------------- ----------
Total Accumulated Depreciation and
Amortization......................... $ 4,243,979 $ 573,623 $ (207,007) $ -- $4,610,595
------------ ---------- ----------- -------------- ----------
------------ ---------- ----------- -------------- ----------
Accumulated Depreciation and Amortization of
EDC's Oil and Gas Property, Plant and
Equipment.................................... $ 588,333(B) $ 86,492 $ (10,910) $ -- $ 663,915
------------ ---------- ----------- -------------- ----------
------------ ---------- ----------- -------------- ----------
Accumulated Depreciation and Amortization of
EGDC's/PSRC's Real Estate.................... $ 7,402 $ 3,098 $ (381) $ 1,027 $ 11,146
------------ ---------- ----------- -------------- ----------
------------ ---------- ----------- -------------- ----------
Accumulated Depreciation and Amortization of
Other Plant.................................. $ 2,987 $ 124 $ -- $ (38) $ 3,073
------------ ---------- ----------- -------------- ----------
------------ ---------- ----------- -------------- ----------
NOTES:
(A) Interaccount and interdepartment transfers.
111
120
SCHEDULE VI
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION, AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED DECEMBER 31, 1991
- ----------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ----------------------------------------------------------------------------------------------------------------------
BALANCE OTHER
AT ADDITIONS CHANGES-- BALANCE
BEGINNING CHARGED TO ADD (DEDUCT)-- AT
OF COSTS AND DESCRIBE END OF
DESCRIPTION PERIOD EXPENSES RETIREMENTS (A) PERIOD
- ----------------------------------------------------------------------------------------------------------------------
(THOUSANDS OF DOLLARS)
Accumulated Depreciation and Amortization
of Utility Plant
Electric Plant in Service
Intangible............................. $ 253 $ 760 $ -- $ -- $ 1,013
Steam Production....................... 486,361 37,164 (112,184) 27,322 438,663
Nuclear Production..................... 989,649 179,594 (11,718) -- 1,157,525
Pumped Storage Production.............. 6,719 482 (158) -- 7,043
Other Production....................... 214,718 13,028 (5,971) -- 221,775
Transmission........................... 303,717 21,455 (3,288) -- 321,884
Distribution........................... 813,438 81,736 (26,675) -- 868,499
General................................ 5,957 2,192 (598) -- 7,551
Nuclear Decommissioning................ 90,110 22,352 -- -- 112,462
--------- ---------- ----------- -------------- ---------
Total Electric Plant in
Service...................... 2,910,922 358,763 (160,592) 27,322 3,136,415
--------- ---------- ----------- -------------- ---------
Gas Plant in Service
Manufactured Gas Production......... 64,132 3,842 (3,140) -- 64,834
Local Storage....................... 12,914 408 (1,289) -- 12,033
Transmission........................ 10,613 949 -- 11,562
Distribution........................ 645,912 68,177 (11,840) -- 702,249
General............................. 2,619 634 (220) -- 3,033
--------- ---------- ----------- -------------- ---------
Total Gas Plant in Service..... 736,190 74,010 (16,489) -- 793,711
--------- ---------- ----------- -------------- ---------
Common Plant in Service
Capital Leases...................... 2,713 439 (414) -- 2,738
General............................. 89,848 24,687 (11,567) -- 102,968
--------- ---------- ----------- -------------- ---------
Total Common Plant in
Service...................... 92,561 25,126 (11,981) -- 105,706
--------- ---------- ----------- -------------- ---------
Nuclear Fuel in Service................ 196,098 96,420 (84,371) 208,147
Plant Held for Future Use.............. 27,322 -- -- (27,322) --
--------- ---------- ----------- -------------- ---------
Total Accumulated Depreciation
and Amortization............. $3,963,093 $ 554,319 $ (273,433) $ -- $4,243,979
--------- ---------- ----------- -------------- ---------
--------- ---------- ----------- -------------- ---------
Accumulated Depreciation and
Amortization of EDC's Oil and Gas
Property, Plant and Equipment....... $ 500,831 $ 88,443 $ (307) $ (634) $ 588,333
--------- ---------- ----------- -------------- ---------
--------- ---------- ----------- -------------- ---------
Accumulated Depreciation and Amortization
of EGDC's Real Estate Property and
Equipment.............................. $ 4,648 $ 1,790 $ -- $ 964 $ 7,402
--------- ---------- ----------- -------------- ---------
--------- ---------- ----------- -------------- ---------
Accumulated Depreciation and Amortization
of Other Plant......................... $ 3,701 $ 338 $ (1,052) $ -- $ 2,987
--------- ---------- ----------- -------------- ---------
--------- ---------- ----------- -------------- ---------
NOTES:
(A) Interaccount and interdepartment transfers.
112
121
SCHEDULE VIII
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1993 -- DECEMBER 31, 1991
- ----------------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- ----------------------------------------------------------------------------------------------------------------------------
ADDITIONS
--------------------------------
CHARGED TO
BALANCE AT CHARGED TO OTHER BALANCE AT
BEGINNING OF COST AND ACCOUNTS-- DEDUCTIONS-- END OF
DESCRIPTION PERIOD EXPENSES DESCRIBE DESCRIBE PERIOD
- ----------------------------------------------------------------------------------------------------------------------------
(THOUSANDS OF DOLLARS)
1993
Allowance for Doubtful Accounts........... $ 24,059 $ 31,625 $ -- $27,752(A) $ 27,932
------------ ---------- --------------- ----------- ----------
------------ ---------- --------------- ----------- ----------
Discount on Property Abandonments......... $ 21,951 $ -- $ -- $ 5,688(B) $ 16,263
------------ ---------- --------------- ----------- ----------
------------ ---------- --------------- ----------- ----------
Valuation Allowances...................... $ 21,509 $ 17,887 $ -- $ 4,693 $ 34,703
------------ ---------- --------------- ----------- ----------
------------ ---------- --------------- ----------- ----------
1992
Allowance for Doubtful Accounts........... $ 21,241 $ 29,488 $ -- $26,670(A) $ 24,059
------------ ---------- --------------- ----------- ----------
------------ ---------- --------------- ----------- ----------
Discount on Property Abandonments......... $ 31,567 $ -- $ -- $ 9,616(B) $ 21,951
------------ ---------- --------------- ----------- ----------
------------ ---------- --------------- ----------- ----------
Valuation Allowances...................... $ 16,696 $ 42,859 $ -- $38,046 $ 21,509
------------ ---------- --------------- ----------- ----------
------------ ---------- --------------- ----------- ----------
1991
Allowance for Doubtful Accounts........... $ 19,642 $ 29,098 $ -- $27,499(A) $ 21,241
------------ ---------- --------------- ----------- ----------
------------ ---------- --------------- ----------- ----------
Discount on Property Abandonments......... $ 41,635 $ -- $ -- $10,068(B) $ 31,567
------------ ---------- --------------- ----------- ----------
------------ ---------- --------------- ----------- ----------
Valuation Allowances...................... $ 8,890 $ 7,806 $ -- $ -- $ 16,696
------------ ---------- --------------- ----------- ----------
------------ ---------- --------------- ----------- ----------
NOTES:
(A) Accounts Receivable/Investments written off.
(B) Amortization of discount to income.
113
122
SCHEDULE V
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
SCHEDULE V -- PROPERTY, PLANT, AND EQUIPMENT
YEAR ENDED DECEMBER 31, 1993
- -----------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -----------------------------------------------------------------------------------------------------------------------
BALANCE AT OTHER
BEGINNING CHANGES-- BALANCE AT
OF ADDITIONS AT ADD (DEDUCT)-- END OF
CLASSIFICATION PERIOD COST RETIREMENTS DESCRIBE (A) PERIOD
- -----------------------------------------------------------------------------------------------------------------------
(THOUSANDS OF DOLLARS)
Utility Plant
Electric Plant in Service
Intangible....................... $ 4,596 $ 2,224 $ -- $ -- $ 6,820
Steam Production................. 1,668,198 108,360 (13,310) 5 1,763,253
Nuclear Production............... 5,819,755 67,412 (16,010) 2,117(B) 5,873,274
Pumped Storage Production........ 20,063 (14) -- -- 20,049
Other Production................. 350,526 30,099 (363) -- 380,262
Transmission..................... 1,024,843 10,996 (2,846) 1,157 1,034,150
Distribution..................... 2,573,226 168,436 (16,329) (1,131) 2,724,202
General.......................... 104,462 15,291 (1,299) 430 118,884
---------- ------------ ----------- -------------- ----------
Total Electric Plant in
Service................... 11,565,669 402,804 (50,157) 2,578 11,920,894
---------- ------------ ----------- -------------- ----------
Gas Plant in Service
Manufactured Gas Production...... 77,942 (15) 123 (229) 77,821
Local Storage.................... 9,709 (5) (69) -- 9,635
Transmission..................... 57,405 5,990 -- -- 63,395
Distribution..................... 1,870,462 127,991 (5,409) -- 1,993,044
General.......................... 29,426 4,581 (61) -- 33,946
---------- ------------ ----------- -------------- ----------
Total Gas Plant in
Service................... 2,044,944 138,542 (5,416) (229) 2,177,841
---------- ------------ ----------- -------------- ----------
Common Plant in Service
Capital Leases................... 56,812 56,812
General.......................... 423,160 49,332 (8,581) (438) 463,473
---------- ------------ ----------- -------------- ----------
Total Common Plant in
Service................... 479,972 49,332 (8,581) (438) 520,285
---------- ------------ ----------- -------------- ----------
Nuclear Fuel in Service............. 476,156 55,657 (42,414) -- 489,399
---------- ------------ ----------- -------------- ----------
Total Utility Plant in
Service................... 14,566,741 646,335 (106,568) 1,911 15,108,419
---------- ------------ ----------- -------------- ----------
Construction Work in Progress....... 492,914 242,457(C) -- (15) 735,356
Plant Held for Future Use........... 22,252 1,582 -- (6,125) 17,709
---------- ------------ ----------- -------------- ----------
Total Utility Plant......... $15,081,907 $890,374 $ (106,568) $ (4,229) $15,861,484
---------- ------------ ----------- -------------- ----------
---------- ------------ ----------- -------------- ----------
Other Plant........................... $ 25,036 $ 13,612 $ (4) $ 6,343 $ 44,987
---------- ------------ ----------- -------------- ----------
---------- ------------ ----------- -------------- ----------
NOTES:
(A) Interaccount and interdepartment transfers.
(B) Includes amortization of discount on the Hope Creek indirect
disallowance of $2,113,299.
(C) Additions to Construction Work in Progress (CWIP) is net of transfers
of completed construction of $249,363,488.
Description of Utility Plant and Related Depreciation and Amortization is
set forth in Note 1 -- Organization and Summary of Significant Accounting
Policies of Notes to Consolidated Financial Statements.
114
123
SCHEDULE V
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
SCHEDULE V -- PROPERTY, PLANT, AND EQUIPMENT
YEAR ENDED DECEMBER 31, 1992
- -----------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -----------------------------------------------------------------------------------------------------------------------
BALANCE AT OTHER
BEGINNING CHANGES-- BALANCE AT
OF ADDITIONS AT ADD (DEDUCT)-- END OF
CLASSIFICATION PERIOD COST RETIREMENTS DESCRIBE (A) PERIOD
- -----------------------------------------------------------------------------------------------------------------------
(THOUSANDS OF DOLLARS)
Utility Plant
Electric Plant in Service
Intangible....................... $ 4,675 $ (79) $ -- $ -- $ 4.596
Steam Production................. 1,618,630 59,160 (9,592) 1,668,198
Nuclear Production............... 5,721,768 136,596 (34,094) (4,515)(B) 5,819,755
Pumped Storage Production........ 19,968 135 (4) (36) 20,063
Other Production................. 322,527 36,077 (8,114) 36 350,526
Transmission..................... 960,958 69,454 (6,093) 524 1,024,843
Distribution..................... 2,418,494 172,408 (17,143) (533) 2,573,226
General.......................... 84,983 20,431 (1,739) 787 104,462
---------- ------------ ----------- -------------- ----------
Total Electric Plant in
Service..................... 11,152,003 494,182 (76,779) (3,737) 11,565,669
---------- ------------ ----------- -------------- ----------
Gas Plant in Service
Manufactured Gas Production......... 55,371 22,580 (9) -- 77,942
Local Storage....................... 9,376 333 -- -- 9,709
Transmission........................ 44,249 13,156 -- -- 57,405
Distribution........................ 1,759,079 117,154 (5,771) -- 1,870,462
General............................. 26,422 3,433 (429) -- 29,426
---------- ------------ ----------- -------------- ----------
Total Gas Plant in Service..... 1,894,497 156,656 (6,209) -- 2,044,944
---------- ------------ ----------- -------------- ----------
Common Plant in Service
Capital Leases...................... 56,812 -- -- -- 56,812
General............................. 376,534 58,563 (11,156) (781) 423,160
---------- ------------ ----------- -------------- ----------
Total Common Plant in
Service..................... 433,346 58,563 (11,156) (781) 479,972
---------- ------------ ----------- -------------- ----------
Nuclear Fuel in Service............. 387,242 161,666 (72,752) -- 476,156
---------- ------------ ----------- -------------- ----------
Total Utility Plant in
Service..................... 13,867,088 871,067 (166,896) (4,518) 14,566,741
---------- ------------ ----------- -------------- ----------
Construction Work in Progress....... 537,228 (44,314)(C) -- -- 492,914
Plant Held for Future Use........... 22,244 8 -- -- 22,252
---------- ------------ ----------- -------------- ----------
Total Utility Plant............ $14,426,560 $826,761 $ (166,896) $ (4,518) $15,081,907
---------- ------------ ----------- -------------- ----------
---------- ------------ ----------- -------------- ----------
Other Plant........................... $ 20,462 $ 4,570 $ -- $ 4 $ 25,036
---------- ------------ ----------- -------------- ----------
---------- ------------ ----------- -------------- ----------
NOTES:
(A) Interaccount and interdepartment transfers.
(B) Includes amortization of discount on the Hope Creek indirect
disallowance of $1,676,456, and an increase in the Hope Creek indirect
disallowance of $6,191,172 resulting from the recent rate case
settlement.
(C) Additions to Construction Work in Progress (CWIP) is net of transfers
of completed construction of $358,917,902.
Description of Utility Plant and Related Depreciation and Amortization is
set forth in Note 1 -- Organization and Summary of Significant Accounting
Policies of Notes to Consolidated Financial Statements.
115
124
SCHEDULE V
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
SCHEDULE V -- PROPERTY, PLANT, AND EQUIPMENT
YEAR ENDED DECEMBER 31, 1991
- -----------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -----------------------------------------------------------------------------------------------------------------------
BALANCE AT OTHER
BEGINNING CHANGES-- BALANCE AT
OF ADDITIONS AT ADD (DEDUCT)-- END OF
CLASSIFICATION PERIOD COST RETIREMENTS DESCRIBE (A) PERIOD
- -----------------------------------------------------------------------------------------------------------------------
(THOUSANDS OF DOLLARS)
Utility Plant
Electric Plant in Service
Intangible........................ $ 3,800 $ 875 $ -- $ -- $ 4,675
Steam Production.................. 1,394,187 245,951 (88,805) 67,297 1,618,630
Nuclear Production................ 5,591,338 137,803 (8,931) 1,558(B) 5,721,768
Pumped Storage Production......... 20,096 27 (155) -- 19,968
Other Production.................. 291,479 37,021 (5,973) -- 322,527
Transmission...................... 948,567 14,563 (2,172) -- 960,958
Distribution...................... 2,292,726 142,689 (16,875) (46) 2,418,494
General........................... 66,928 18,634 (557) (22) 84,983
---------- ------------ ----------- -------------- ----------
Total Electric Plant in
Service.................... 10,609,121 597,563 (123,468) 68,787 11,152,003
---------- ------------ ----------- -------------- ----------
Gas Plant in Service
Manufactured Gas Production....... 55,944 258 (830) (1) 55,371
Local Storage..................... 10,654 11 (1,289) -- 9,376
Transmission...................... 34,389 9,860 -- -- 44,249
Distribution...................... 1,652,625 112,508 (6,053) (1) 1,759,079
General........................... 23,673 2,970 (221) -- 26,422
---------- ------------ ----------- -------------- ----------
Total Gas Plant in Service... 1,777,285 125,607 (8,393) (2) 1,894,497
---------- ------------ ----------- -------------- ----------
Common Plant in Service
Capital Leases.................... 57,226 (414) -- 56,812
General........................... 335,761 49,125 (12,518) 4,166 376,534
---------- ------------ ----------- -------------- ----------
Total Common Plant in
Service.................... 392,987 49,125 (12,932) 4,166 433,346
---------- ------------ ----------- -------------- ----------
Nuclear Fuel in Service.............. 386,190 85,423 (84,371) -- 387,242
---------- ------------ ----------- -------------- ----------
Total Utility Plant in
Service.................... 13,165,583 857,718 (229,164) 72,951 13,867,088
---------- ------------ ----------- -------------- ----------
Construction Work in Progress........ 576,904 (39,692)(C) -- 16 537,228
Plant Held for Future Use............ 94,387 (4,877) -- (67,266) 22,244
---------- ------------ ----------- -------------- ----------
Total Utility Plant.......... $13,836,874 $813,149 $ (229,164) $ 5,701 $14,426,560
---------- ------------ ----------- -------------- ----------
---------- ------------ ----------- -------------- ----------
Other Plant............................ $ 25,570 $ -- $ (1,093) $ (4,015) $ 20,462
---------- ------------ ----------- -------------- ----------
---------- ------------ ----------- -------------- ----------
NOTES:
(A) Interaccount and interdepartment transfers.
(B) Includes amortization of discount on the Hope Creek indirect
disallowance of $1,686,000.
(C) Additions to Construction Work in Progress (CWIP) is net of transfers
of completed construction of $447,201,000.
Description of Utility Plant and Related Depreciation and Amortization is
set forth in Note 1 -- Organization and Summary of Significant Accounting
Policies of Notes to Consolidated Financial Statements.
116
125
SCHEDULE VI
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION AND
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED DECEMBER 31, 1993
- -----------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- -----------------------------------------------------------------------------------------------------------------------
BALANCE
AT ADDITIONS OTHER BALANCE
BEGINNING CHARGED TO CHANGES-- AT
OF COSTS AND ADD (DEDUCT)-- END OF
DESCRIPTION PERIOD EXPENSES RETIREMENTS DESCRIBE (A) PERIOD
- -----------------------------------------------------------------------------------------------------------------------
(THOUSANDS OF DOLLARS)
Accumulated Depreciation and
Amortization of Utility Plant
Electric Plant in Service
Intangible......................... $ 1,816 $ 1,751 $ -- $ -- $ 3,567
Steam Production................... 460,768 58,575 (41,273) 478,070
Nuclear Production................. 1,302,035 184,933 (9,981) (25,304) 1,451,683
Pumped Storage Production.......... 7,531 479 -- -- 8,010
Other Production................... 227,408 14,572 (369) -- 241,611
Transmission....................... 338,283 23,106 (2,385) -- 359,004
Distribution....................... 927,488 91,767 (27,873) -- 991,382
General............................ 8,560 3,304 (1,295) -- 10,569
Nuclear Decommissioning............ 136,137 31,762 -- 25,304 193,203
--------- ------------ ----------- -------------- ---------
Total Electric Plant in
Service....................... 3,410,026 410,249 (83,176) -- 3,737,099
--------- ------------ ----------- -------------- ---------
Gas Plant in Service
Manufactured Gas Production........ 62,878 5,424 (9,010) (154) 59,138
Local Storage...................... 12,416 395 (69) -- 12,742
Transmission....................... 12,856 1,465 -- -- 14,321
Distribution....................... 762,453 50,617 (12,499) -- 800,571
General............................ 3,305 792 (61) -- 4,036
--------- ------------ ----------- -------------- ---------
Total Gas Plant in Service....... 853,908 58,693 (21,639) (154) 890,808
--------- ------------ ----------- -------------- ---------
Common Plant in Service
Capital Leases..................... 3,195 513 -- -- 3,708
General............................ 119,609 29,797 (8,079) -- 141,327
--------- ------------ ----------- -------------- ---------
Total Common Plant in Service.... 122,804 30,310 (8,079) -- 145,035
--------- ------------ ----------- -------------- ---------
Nuclear Fuel in Service............... 223,857 102,718 (42,413) -- 284,162
--------- ------------ ----------- -------------- ---------
Total Accumulated Depreciation
and Amortization.............. $4,610,595 $601,970 $ (155,307) $ (154) $5,057,104
--------- ------------ ----------- -------------- ---------
--------- ------------ ----------- -------------- ---------
Accumulated Depreciation and
Amortization of Other Plant........... $ 639 $ 651 $ -- $ 154 $ 1,444
--------- ------------ ----------- -------------- ---------
--------- ------------ ----------- -------------- ---------
NOTE:
(A) Interaccount and interdepartment transfers.
117
126
SCHEDULE VI
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED DECEMBER 31, 1992
- ---------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ---------------------------------------------------------------------------------------------------------------------
BALANCE ADDITIONS OTHER
AT CHARGED CHANGES-- BALANCE
BEGINNING TO ADD (DEDUCT)-- AT
OF COST AND DESCRIBE END OF
DESCRIPTION PERIOD EXPENSES RETIREMENTS (A) PERIOD
- ---------------------------------------------------------------------------------------------------------------------
(THOUSANDS OF DOLLARS)
Accumulated Depreciation and Amortization
of Utility Plant
Electric Plant in Service
Intangible.......................... $ 1,013 $ 803 $ -- $ -- $ 1,816
Steam Production.................... 438,663 41,700 (19,595) -- 460,768
Nuclear Production.................. 1,157,525 182,636 (38,126) -- 1,302,035
Pumped Storage Production........... 7,043 488 -- -- 7,531
Other Production.................... 221,775 13,757 (8,124) -- 227,408
Transmission........................ 321,884 22,224 (5,825) -- 338,283
Distribution........................ 868,499 86,483 (27,494) -- 927,488
General............................. 7,551 2,859 (1,850) -- 8,560
Nuclear Decommissioning............. 112,462 23,675 -- -- 136,137
--------- --------- ----------- -------------- ---------
Total Electric Plant in
Service...................... 3,136,415 374,625 (101,014) -- 3,410,026
--------- --------- ----------- -------------- ---------
Gas Plant in Service
Manufactured Gas Production......... 64,834 4,343 (6,299) -- 62,878
Local Storage....................... 12,033 383 -- -- 12,416
Transmission........................ 11,562 1,294 -- -- 12,856
Distribution........................ 702,249 72,629 (12,425) -- 762,453
General............................. 3,033 698 (426) -- 3,305
--------- --------- ----------- -------------- ---------
Total Gas Plant in Service..... 793,711 79,347 (19,150) -- 853,908
--------- --------- ----------- -------------- ---------
Common Plant in Service
Capital Leases...................... 2,738 457 -- -- 3,195
General............................. 102,968 27,291 (10,650) -- 119,609
--------- --------- ----------- -------------- ---------
Total Common Plant in
Service...................... 105,706 27,748 (10,650) -- 122,804
--------- --------- ----------- -------------- ---------
Nuclear Fuel in Service................ 208,147 91,903 (76,193) -- 223,857
--------- --------- ----------- -------------- ---------
Total Accumulated Depreciation
and Amortization............. $4,243,979 $ 573,623 $ (207,007) $ -- $4,610,595
--------- --------- ----------- -------------- ---------
--------- --------- ----------- -------------- ---------
Accumulated Depreciation and Amortization
of Other Plant......................... $ 695 $ (56) $ -- $ -- $ 639
--------- --------- ----------- -------------- ---------
--------- --------- ----------- -------------- ---------
NOTE:
(A) Interaccount and interdepartment transfers.
118
127
SCHEDULE VI
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
SCHEDULE VI -- ACCUMULATED DEPRECIATION, DEPLETION AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT
YEAR ENDED DECEMBER 31, 1991
- ----------------------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
- ----------------------------------------------------------------------------------------------------------------------
BALANCE
AT ADDITIONS OTHER BALANCE
BEGINNING CHARGED TO CHANGES-- AT
OF COSTS AND ADD (DEDUCT)-- END OF
DESCRIPTION PERIOD EXPENSES RETIREMENTS DESCRIBE (A) PERIOD
- ----------------------------------------------------------------------------------------------------------------------
(THOUSANDS OF DOLLARS)
Accumulated Depreciation and Amortization of
Utility Plant
Electric Plant in Service
Intangible................................ $ 253 $ 760 $ -- $ -- $ 1,013
Steam Production.......................... 486,361 37,164 (112,184) 27,322 438,663
Nuclear Production........................ 989,649 179,594 (11,718) -- 1,157,525
Pumped Storage Production................. 6,719 482 (158) -- 7,043
Other Production.......................... 214,718 13,028 (5,971) -- 221,775
Transmission.............................. 303,717 21,455 (3,288) -- 321,884
Distribution.............................. 813,438 81,736 (26,675) -- 868,499
General................................... 5,957 2,192 (598) -- 7,551
Nuclear Decommissioning................... 90,110 22,352 -- -- 112,462
--------- ---------- ----------- -------------- ---------
Total Electric Plant in Service......... 2,910,922 358,763 (160,592) 27,322 3,136,415
--------- ---------- ----------- -------------- ---------
Gas Plant in Service
Manufactured Gas Production............... 64,132 3,842 (3,140) -- 64,834
Local Storage............................. 12,914 408 (1,289) -- 12,033
Transmission.............................. 10,613 949 -- -- 11,562
Distribution.............................. 645,912 68,177 (11,840) -- 702,249
General................................... 2,619 634 (220) -- 3,033
--------- ---------- ----------- -------------- ---------
Total Gas Plant in Service.............. 736,190 74,010 (16,489) -- 793,711
--------- ---------- ----------- -------------- ---------
Common Plant in Service
Capital Leases............................ 2,713 439 (414) -- 2,738
General................................... 89,848 24,687 (11,567) -- 102,968
--------- ---------- ----------- -------------- ---------
Total Common Plant in Service........... 92,561 25,126 (11,981) -- 105,706
--------- ---------- ----------- -------------- ---------
Nuclear Fuel in Service...................... 196,098 96,420 (84,371) -- 208,147
Plant Held for Future Use.................... 27,322 -- -- (27,322) --
--------- ---------- ----------- -------------- ---------
Total Accumulated Depreciation and
Amortization......................... $3,963,093 $ 554,319 $ (273,433) $ -- $4,243,979
--------- ---------- ----------- -------------- ---------
--------- ---------- ----------- -------------- ---------
Accumulated Depreciation and Amortization of
Other Plant.................................. $ 1,627 $ 91 $ (1,023) $ -- $ 695
--------- ---------- ----------- -------------- ---------
--------- ---------- ----------- -------------- ---------
NOTE:
(A) Interaccount and interdepartment transfers.
119
128
SCHEDULE VIII
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1993 -- DECEMBER 31, 1991
- -----------------------------------------------------------------------------------------------------------
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -----------------------------------------------------------------------------------------------------------
ADDITIONS
-----------------------
CHARGED
BALANCE AT CHARGED TO TO OTHER BALANCE AT
BEGINNING OF COST AND ACCOUNTS-- DEDUCTIONS-- END OF
DESCRIPTION PERIOD EXPENSES DESCRIBE DESCRIBE PERIOD
- -----------------------------------------------------------------------------------------------------------
(THOUSANDS OF DOLLARS)
1993
Allowance for Doubtful Accounts... $ 24,059 $ 31,625 -- $27,752(A) $ 27,932
------------ ---------- --------- ----------- ----------
------------ ---------- --------- ----------- ----------
Discount on Property
Abandonments.................... $ 21,951 $ -- $ -- $ 5,688(B) $ 16,263
------------ ---------- --------- ----------- ----------
------------ ---------- --------- ----------- ----------
1992
Allowance for Doubtful Accounts... $ 21,241 $ 29,488 $ -- $26,670(A) $ 24,059
------------ ---------- --------- ----------- ----------
------------ ---------- --------- ----------- ----------
Discount on Property
Abandonments.................... $ 31,567 $ -- $ -- $ 9,616(B) $ 21,951
------------ ---------- --------- ----------- ----------
------------ ---------- --------- ----------- ----------
1991
Allowance for Doubtful Accounts... $ 19,642 $ 29,098 $ -- $27,499(A) $ 21,241
------------ ---------- --------- ----------- ----------
------------ ---------- --------- ----------- ----------
Discount on Property
Abandonments.................... $ 41,635 $ -- $ -- $10,068(B) $ 31,567
------------ ---------- --------- ----------- ----------
------------ ---------- --------- ----------- ----------
Notes:
(A) Accounts Receivable written off.
(B) Amortization of discount to income.
120
129
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PUBLIC SERVICE ENTERPRISE GROUP
INCORPORATED
By E. JAMES FERLAND
-------------------------------
E. James Ferland
Chairman of the Board, President
and Chief Executive Officer
Date: February 25, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- --------------------------------------------- --------------------------- ------------------
E. JAMES FERLAND Chairman of the Board, February 25, 1994
- --------------------------------------------- President and Chief
E. James Ferland Executive Officer
(Principal Executive
Officer)
ROBERT C. MURRAY Vice President and Chief February 25, 1994
- --------------------------------------------- Financial Officer
Robert C. Murray (Principal Financial
Officer)
PATRICIA A. RADO Vice President and February 25, 1994
- --------------------------------------------- Comptroller (Principal
Patricia A. Rado Accounting Officer)
LAWRENCE R. CODEY Director February 25, 1994
- ---------------------------------------------
Lawrence R. Codey
ERNEST H. DREW Director February 25, 1994
- ---------------------------------------------
Ernest H. Drew
T. J. DERMOT DUNPHY Director February 25, 1994
- ---------------------------------------------
T. J. Dermot Dunphy
ROBERT R. FERGUSON, JR. Director February 25, 1994
- ---------------------------------------------
Robert R. Ferguson, Jr.
RAYMOND V. GILMARTIN Director February 25, 1994
- ---------------------------------------------
Raymond V. Gilmartin
SHIRLEY A. JACKSON Director February 25, 1994
- ---------------------------------------------
Shirley A. Jackson
IRWIN LERNER Director February 25, 1994
- ---------------------------------------------
Irwin Lerner
WILLIAM E. MARFUGGI Director February 25, 1994
- ---------------------------------------------
William E. Marfuggi
MARILYN M. PFALTZ Director February 25, 1994
- ---------------------------------------------
Marilyn M. Pfaltz
JAMES C. PITNEY Director February 25, 1994
- ---------------------------------------------
James C. Pitney
JOSH S. WESTON Director February 25, 1994
- ---------------------------------------------
Josh S. Weston
121
130
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PUBLIC SERVICE ELECTRIC AND GAS
COMPANY
By E. JAMES FERLAND
--------------------------------
E. James Ferland
Chairman of the Board and
Chief Executive Officer
Date: February 25, 1994
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- --------------------------------------------- ---------------------------- ------------------
E. JAMES FERLAND Chairman of the Board and February 25, 1994
- --------------------------------------------- Chief Executive Officer
E. James Ferland and Director (Principal
Executive Officer)
LAWRENCE R. CODEY President and Chief February 25, 1994
- --------------------------------------------- Operating Officer and
Lawrence R. Codey Director
ROBERT C. MURRAY Senior Vice February 25, 1994
- --------------------------------------------- President-Finance and
Robert C. Murray Chief Financial Officer
and Director (Principal
Financial Officer)
PATRICIA A. RADO Vice President and February 25, 1994
- --------------------------------------------- Comptroller (Principal
Patricia A. Rado Accounting Officer)
ROBERT R. FERGUSON, JR. Director February 25, 1994
- ---------------------------------------------
Robert R. Ferguson, Jr.
RAYMOND V. GILMARTIN Director February 25, 1994
- ---------------------------------------------
Raymond V. Gilmartin
SHIRLEY A. JACKSON Director February 25, 1994
- ---------------------------------------------
Shirley A. Jackson
IRWIN LERNER Director February 25, 1994
- ---------------------------------------------
Irwin Lerner
JAMES C. PITNEY Director February 25, 1994
- ---------------------------------------------
James C. Pitney
122
131
EXHIBIT INDEX
Certain Exhibits previously filed with the Commission and the appropriate
securities exchanges are indicated as set forth below. Such Exhibits are not
being refiled, but are included because inclusion is desirable for convenient
reference.
(a) Filed by PSE&G with Form 8-A under the Securities Exchange Act of
1934, on the respective dates indicated, File No. 1-973.
(b) Filed by PSE&G with Form 8-K under the Securities Exchange Act of
1934, on the respective dates indicated, File No. 1-973.
(c) Filed by PSE&G with Form 10-K under the Securities Exchange Act of
1934, on the respective dates indicated, File No. 1-973.
(d) Filed by PSE&G with Form 10-Q under the Securities Exchange Act of
1934, on the respective dates indicated, File No. 1-973.
(e) Filed by Enterprise with Form 10-K under the Securities Exchange
Act of 1934, on the respective dates indicated, File No. 1-9120.
(f) Filed with registration statement of PSE&G under the Securities
Exchange Act of 1934, File No. 1-973, effective July 1, 1935, relating to
the registration of various issues of securities.
(g) Filed with registration statement of PSE&G under the Securities
Act of 1933, No. 2-4995, effective May 20, 1942, relating to the issuance
of $15,000,000 First and Refunding Mortgage Bonds, 3% Series due 1972.
(h) Filed with registration statement of PSE&G under the Securities
Act of 1933, No. 2-7568, effective July 1, 1948, relating to the proposed
issuance of 200,000 shares of Cumulative Preferred Stock.
(i) Filed with registration statement of PSE&G under the Securities
Act of 1933, No. 2-8381, effective April 18, 1950, relating to the issuance
of $26,000,000 First and Refunding Mortgage Bonds, 2 3/4% Series due 1980.
(j) Filed with registration statement of PSE&G under the Securities
Act of 1933, No. 2-12906, effective December 4, 1956, relating to the
issuance of 1,000,000 shares of Common Stock.
(k) Filed with registration statement of PSE&G under the Securities
Act of 1933, No. 2-59675, effective September 1, 1977, relating to the
issuance of $60,000,000 First and Refunding Mortgage Bonds, 8 1/8% Series I
due 2007.
(l) Filed with registration statement of PSE&G under the Securities
Act of 1933, No. 2-60925, effective March 30, 1978, relating to the
issuance of 750,000 shares of Common Stock through an Employee Stock
Purchase Plan.
(m) Filed with registration statement of PSE&G under the Securities
Act of 1933, No. 2-65521, effective October 10, 1979, relating to the
issuance of 3,000,000 shares of Common Stock.
(n) Filed with registration statement of PSE&G under the Securities
Act of 1933, No. 2-74018, filed on June 16, 1982, relating to the Thrift
Plan of PSE&G.
(o) Filed with registration statement of Public Service Enterprise
Group Incorporated under the Securities Act of 1933, No. 33-2935 filed
January 28, 1986, relating to PSE&G's plan to form a holding company as
part of a corporate restructuring.
(p) Filed with registration statement of PSE&G under the Securities
Act of 1933, No. 33-13209 filed April 9, 1987, relating to the registration
of $575,000,000 First and Refunding Mortgage Bonds pursuant to Rule 415.
123
132
ENTERPRISE
EXHIBIT NUMBER
- --------------------------------------------
PREVIOUS FILING
THIS --------------------------------
FILING COMMISSION EXCHANGES
- --------- -------------- --------------
3a (o) 3a (o) 3a Certificate of Incorporation Public Service
Enterprise Group Incorporated
3b (e) 3b (e) 3b Copy of By-Laws of Public Service Enterprise
4/11/88 Group Incorporated, as in effect May 1, 1987
3c (e) 3c (e) 3c Certificate of Amendment of Certificate of
4/11/88 Incorporation of Public Service Enterprise Group
Incorporated, effective April 23, 1987
4a(1) (f) B-1 (c) 4b(1) Indenture between PSE&G and Fidelity Union Trust
2/18/81 Company, (now First Fidelity Bank, National
Association), as Trustee, dated August 1, 1924,
securing First and Refunding Mortgage Bonds
Indentures between PSE&G and First Fidelity
Bank, National Association, as Trustee,
supplemental to Exhibit 4a(1), dated as follows:
4a(2) (i) 7(1a) (c) 4b(2) April 1, 1927
2/18/81
4a(3) (k) 2b(3) (c) 4b(3) June 1, 1937
2/18/81
4a(4) (k) 2b(4) (c) 4b(4) July 1, 1937
2/18/81
4a(5) (k) 2b(5) (c) 4b(5) December 19, 1939
2/18/81
4a(6) (g) B-10 (c) 4b(6) March 1, 1942
2/18/81
4a(7) (k) 2b(7) (c) 4b(7) June 1, 1949
2/18/81
4a(8) (k) 2b(8) (c) 4b(8) May 1, 1950
2/18/81
4a(9) (k) 2b(9) (c) 4b(9) October 1, 1953
2/18/81
4a(10) (k) 2b(10) (c) 4b(10) May 1, 1954
2/18/81
4a(11) (j) 4b(16) (c) 4b(11) November 1, 1956
2/18/81
4a(12) (k) 2b(12) (c) 4b(12) September 1, 1957
2/18/81
4a(13) (k) 2b(13) (c) 4b(13) August 1, 1958
2/18/81
4a(14) (k) 2b(14) (c) 4b(14) June 1, 1959
2/18/81
4a(15) (k) 2b(15) (c) 4b(15) September 1, 1960
2/18/81
124
133
EXHIBIT NUMBER
- --------------------------------------------
PREVIOUS FILING
THIS --------------------------------
FILING COMMISSION EXCHANGES
- --------- -------------- --------------
4a(16) (k) 2b(16) (c) 4b(16) August 1, 1962
2/18/81
4a(17) (k) 2b(17) (c) 4b(17) June 1, 1963
2/18/81
4a(18) (k) 2b(18) (c) 4b(18) September 1, 1964
2/18/81
4a(19) (k) 2b(19) (c) 4b(19) September 1, 1965
2/18/81
4a(20) (k) 2b(20) (c) 4b(20) June 1, 1967
2/18/81
4a(21) (k) 2b(21) (c) 4b(21) June 1, 1968
2/18/81
4a(22) (k) 2b(22) (c) 4b(22) April 1, 1969
2/18/91
4a(23) (k) 2b(23) (c) 4b(23) March 1, 1970
2/18/81
4a(24) (k) 2b(24) (c) 4b(24) May 15, 1971
2/18/81
4a(25) (k) 2b(25) (c) 4b(25) November 15, 1971
2/18/81
4a(26) (k) 2b(26) (c) 4b(26) April 1, 1972
2/18/81
4a(27) (a) 2 (c) 4b(27) March 1, 1974
3/29/74 2/18/81
4a(28) (a) 2 (c) 4b(28) October 1, 1974
10/11/74 2/18/81
4a(29) (a) 2 (c) 4b(29) April 1, 1976
4/6/76 2/18/81
4a(30) (a) 2 (c) 4b(30) September 1, 1976
9/16/76 2/18/81
4a(31) (k) 2b(31) (c) 4b(31) October 1, 1976
2/18/81
4a(32) (a) 2 (c) 4b(32) June 1, 1977
6/29/77 2/18/81
4a(33) (l) 2b(33) (c) 4b(33) September 1, 1977
2/18/81
4a(34) (a) 2 (c) 4b(34) November 1, 1978
11/21/78 2/18/81
4a(35) (a) 2 (c) 4b(35) July 1, 1979
7/25/79 2/18/81
4a(36) (m) 2d(36) (c) 4b(36) September 1, 1979 (No. 1)
2/18/81
4a(37) (m) 2d(37) (c) 4b(37) September 1, 1979 (No. 2)
2/18/81
125
134
EXHIBIT NUMBER
- --------------------------------------------
PREVIOUS FILING
THIS --------------------------------
FILING COMMISSION EXCHANGES
- --------- -------------- --------------
4a(38) (a) 2 (c) 4b(38) November 1, 1979
12/3/79 2/18/81
4a(39) (a) 2 (c) 4b(39) June 1, 1980
6/10/80 2/18/81
4a(40) (a) 2 (a) 2 August 1, 1981
8/19/81 8/19/81
4a(41) (b) 4e (b) 4e April 1, 1982
4/29/82 5/5/82
4a(42) (a) 2 (a) 2 September 1, 1982
9/17/82 9/20/82
4a(43) (a) 2 (a) 2 December 1, 1982
12/21/82 12/21/82
4a(44) (d) 4(ii) (d) 4(ii) June 1, 1983
7/26/83 7/27/83
4a(45) (a) 4 (a) 4 August 1, 1983
8/19/83 8/19/83
4a(46) (d) 4(ii) (d) 4(ii) July 1, 1984
8/14/84 8/17/84
4a(47) (d) 4(ii) (d) 4(ii) September 1, 1984
11/2/84 11/9/84
4a(48) (b) 4(ii) (b) 4(ii) November 1, 1984 (No. 1)
1/4/85 1/9/85
4a(49) (b) 4(ii) (b) 4(ii) November 1, 1984 (No. 2)
1/4/85 1/9/85
4a(50) (a) 2 (a) 2 July 1, 1985
8/2/85 8/2/85
4a(51) (c) 4a(51) (c) 4a(51) January 1, 1986
2/11/86 2/11/86
4a(52) (a) 2 (a) 2 March 1, 1986
3/28/86 3/28/86
4a(53) (a) 2(a) (a) 2(a) April 1, 1986 (No. 1)
5/1/86 5/1/86
4a(54) (a) 2(b) (a) 2(b) April 1, 1986 (No. 2)
5/1/86 5/1/86
4a(55) (p) 4a(55) (p) 4a(55) March 1, 1987
4/9/87 4/9/87
4a(56) (a) 4 (a) 4 July 1, 1987 (No. 1)
8/17/87 8/17/87
4a(57) (d) 4 (d) 4 July 1, 1987 (No. 2)
11/13/87 11/20/87
4a(58) (a) 4 (a) 4 May 1, 1988
5/17/88 5/18/88
4a(59) (a) 4 (a) 4 September 1, 1988
9/27/88 9/28/88
126
135
EXHIBIT NUMBER
- --------------------------------------------
PREVIOUS FILING
THIS --------------------------------
FILING COMMISSION EXCHANGES
- --------- -------------- --------------
4a(60) (a) 4 (a) 4 July 1, 1989
7/25/89 7/26/89
4a(61) (a) 4 (a) 4 July 1, 1990 (No. 1)
7/25/90 7/26/90
4a(62) (a) 4 (a) 4 July 1, 1990 (No. 2)
7/25/90 7/26/90
4a(63) (a) 4 (a) 4 June 1, 1991 (No. 1)
7/1/91 7/2/91
4a(64) (a) 4 (a) 4 June 1, 1991 (No. 2)
7/1/91 7/2/91
4a(65) (a) 4 (a) 4 November 1, 1991 (No. 1)
12/2/91 12/3/91
4a(66) (a) 4 (a) 4 November 1, 1991 (No. 2)
12/2/91 12/3/91
4a(67) (a) 4 (a) 4 November 1, 1991 (No. 3)
12/2/91 12/3/91
4a(68) (a) 4 (a) 4 February 1, 1992 (No. 1)
2/27/92 2/28/92
4a(69) (a) 4 (a) 4 February 1, 1992 (No. 2)
2/27/92 2/28/92
4a(70) (a) 4 (a) 4 June 1, 1992 (No. 1)
6/17/92 6/11/92
4a(71) (a) 4 (a) 4 June 1, 1992 (No. 2)
6/17/92 6/11/92
4a(72) (a) 4 (a) 4 June 1, 1992 (No. 3)
6/17/92 6/11/92
4a(73) (a) 4 (a) 4 January 1, 1993 (No.1)
2/2/93 2/2/93
4a(74) (a) 4 (a) 4 January 1, 1993 (No. 2)
2/2/93 2/2/93
4a(75) (a) 4 (a) 4 March 1, 1993
3/17/93 3/18/93
4a(76) (b) 4 (a) 4 May 1, 1993
5/27/93 5/28/93
4a(77) (a) 4 (a) 4 May 1, 1993 (No. 2)
5/25/93 5/25/93
4a(78) (a) 4 (a) 4 May 1, 1993 (No. 3)
5/25/93 5/25/93
4a(79) (b) 4 (b) 4 July 1, 1993
12/1/93 12/1/93
4a(80) (a) 4 (a) 4 August 1, 1993
8/3/93 8/3/93
4a(81) (b) 4 (b) 4 September 1, 1993
12/1/93 12/1/93
127
136
EXHIBIT NUMBER
- --------------------------------------------
PREVIOUS FILING
THIS --------------------------------
FILING COMMISSION EXCHANGES
- --------- -------------- --------------
4a(82) (b) 4 (b) 4 September 1, 1993 (No. 2)
12/1/93 12/1/93
4a(83) (b) 4 (b) 4 November 1, 1993
12/1/93 12/1/93
4a(84) (a) 4 (a) 4 February 1, 1994
2/3/94 2/14/94
4b(1) (h) 7(12) (c) 4c(1) Indenture between PSE&G and Federal Trust
2/18/81 Company, as Trustee (Midlantic National Bank,
Successor Trustee) dated July 1, 1948, providing
for 6% Debenture Bonds due 1998
4b(2) (l) 2c(8) (c) 4c(8) Indenture between PSE&G and The Chase Manhattan
2/18/81 Bank (National Association), as Trustee, dated
August 15, 1971, providing for 7 3/4% Debenture
Bonds due 1996
4b(3) (b) 4 (b) 4 Indenture of Trust between PSE&G and The Chase
12/1/93 12/1/93 Manhattan Bank (National Association), as
Trustee, providing for Secured Medium-Term Notes
dated July 1, 1993
9 Inapplicable
10a(1) (c) 10c(1) (c) 10c(1) Directors' Deferred Compensation Plan
3/17/82 3/19/82
10a(2) (c) 10c(2) (c) 10c(2) Officers' Deferred Compensation Plan
3/17/82 3/19/82
10a(3) (c) 10c(3) (c) 10c(3) Supplemental Death Benefits Plan for officers
3/17/82 3/19/82
10a(4) (c) 10c(4) (c) 10c(4) Description of additional retirement benefits
3/17/82 3/19/82 for certain officers
10a(5)(i) (c) 10b(5) (c) 10b(5) Limited Supplemental Death Benefits and
3/31/83 4/8/83 Retirement Plan
10a(5)(ii) Limited Supplemental Benefits Plan for Certain
Employees
10a(6)(i) (c) 10a(6) (c) 10a(6) Description of additional retirement benefits
3/10/87 4/16/87 for certain officers
10a(6)(ii) (c) 10a(6)(1) (c) 10a(6)(1) Description of additional retirement benefits
3/30/90 3/30/90 for certain officers.
10a(6)(iii) (c) 10a(6)(2) (c) 10a(6)(2) Description of additional retirement benefits
3/30/92 4/27/92 for a certain officer.
10a(7) (o) 10g (o) 10g Management Incentive Compensation Plan
10a(8) (c) 10a(8) (c) 10a(8) Long-Term Incentive Plan
3/30/89 4/18/89
10a(9) (c) 10a(9) (c) 10a(9) Public Service Enterprise Group Incorporated
3/30/89 4/18/89 Pension Plan for Outside Directors
10a(10) (c) 10a(11) (c) 10a(11) Letter Agreement with E. James Ferland dated
2/10/93 2/11/93 April 16, 1986
10a(11) (c) 10a(12) (c) 10a(12) Letter Agreement with Paul H. Way dated March
2/10/93 2/11/93 28, 1988
128
137
EXHIBIT NUMBER
- --------------------------------------------
PREVIOUS FILING
THIS --------------------------------
FILING COMMISSION EXCHANGES
- --------- -------------- --------------
10a(12) (c) 10a(13) (c) 10a(13) Letter Agreement with Thomas M. Crimmins, Jr.
2/10/93 2/11/93 dated April 5, 1989
10a(13) (c) 10a(15) (c) 10a(15) Letter Agreement with Robert C. Murray dated
2/10/93 2/11/93 December 17, 1991
10a(14) Letter agreement with Patricia A. Rado dated
March 24, 1993
11 Inapplicable
12 Computation of Ratios of Earnings to Fixed
Charges
13 Inapplicable
16 Inapplicable
18 Inapplicable
19 Inapplicable
21 Subsidiaries of Registrant
22 Inapplicable
23 Independent Auditors' Consent
24 Inapplicable
27 Inapplicable
28 Inapplicable
129
138
PSE&G
EXHIBIT NUMBER
- --------------------------------------------
PREVIOUS FILING
THIS --------------------------------
FILING COMMISSION EXCHANGES
- --------- -------------- --------------
3a(1) (b) 3a (b) 3a Restated Certificate of Incorporation of PSE&G,
8/28/86 8/29/86 effective May 1, 1986
3a(2) (c) 3a(2) (c) 3a(2) Certificate of Amendment of Certificate of
4/10/87 Restated Certificate of Incorporation of PSE&G
filed February 18, 1987 with the State of New
Jersey adopting limitations of liability
provisions in accordance with an amendment to
New Jersey Business Corporation Act
3a(3) (a) 3(a)3 (a) 3(a)3 Certificate of Amendment of Restated Certificate
2/3/94 2/14/94 of Incorporation of PSE&G filed June 17, 1992
with the State of New Jersey establishing the
7.44% Cumulative Preferred Stock ($100 Par) as a
series of the Preferred Stock
3a(4) (a) 3(a)4 (a) 3(a)4 Certificate of Amendment of Restated Certificate
2/3/94 2/14/94 of Incorporation of PSE&G filed March 11, 1993
with the State of New Jersey establishing the
5.97% Cumulative Preferred Stock ($100 Par) as a
series of Preferred Stock
3a(5) (a) 3(a)5 (a) 3(a)5 Certificate of Amendment of Restated Certificate
2/3/94 2/14/94 of Incorporation of PSE&G filed January 27, 1994
with the State of New Jersey establishing the
6.92% Cumulative Preferred Stock ($100 Par) and
the 6.75% Cumulative Preferred Stock -- $25 Par
as series of Preferred Stock
3b (c) 3b (c) 3b Copy of By-Laws of PSE&G, as in effect February
4/11/88 16, 1988
4a(1) (f) B-1 (c) 4b(1) Indenture between PSE&G and Fidelity Union Trust
2/18/81 Company, (now First Fidelity Bank, National
Association), as Trustee, dated August 1, 1924,
securing First and Refunding Mortgage Bonds
Indentures between PSE&G and First Fidelity
Bank, National Association, as Trustee,
supplemental to Exhibit 4a(1), dated as follows:
4a(2) (i) 7(1a) (c) 4b(2) April 1, 1927
2/18/81
4a(3) (k) 2b(3) (c) 4b(3) June 1, 1937
2/18/81
4a(4) (k) 2b(4) (c) 4b(4) July 1, 1937
2/18/81
4a(5) (k) 2b(5) (c) 4b(5) December 19, 1939
2/18/81
4a(6) (g) B-10 (c) 4b(6) March 1, 1942
2/18/81
4a(7) (k) 2b(7) (c) 4b(7) June 1, 1949
2/18/81
4a(8) (k) 2b(8) (c) 4b(8) May 1, 1950
2/18/81
130
139
EXHIBIT NUMBER
- --------------------------------------------
PREVIOUS FILING
THIS --------------------------------
FILING COMMISSION EXCHANGES
- --------- -------------- --------------
4a(9) (k) 2b(9) (c) 4b(9) October 1, 1953
2/18/81
4a(10) (k) 2b(10) (c) 4b(10) May 1, 1954
2/18/81
4a(11) (j) 4b(16) (c) 4b(11) November 1, 1956
2/18/81
4a(12) (k) 2b(12) (c) 4b(12) September 1, 1957
2/18/81
4a(13) (k) 2b(13) (c) 4b(13) August 1, 1958
2/18/81
4a(14) (k) 2b(14) (c) 4b(14) June 1, 1959
2/18/81
4a(15) (k) 2b(15) (c) 4b(15) September 1, 1960
2/18/81
4a(16) (k) 2b(16) (c) 4b(16) August 1, 1962
2/18/81
4a(17) (k) 2b(17) (c) 4b(17) June 1, 1963
2/18/81
4a(18) (k) 2b(18) (c) 4b(18) September 1, 1964
2/18/81
4a(19) (k) 2b(19) (c) 4b(19) September 1, 1965
2/18/81
4a(20) (k) 2b(20) (c) 4b(20) June 1, 1967
2/18/81
4a(21) (k) 2b(21) (c) 4b(21) June 1, 1968
2/18/81
4a(22) (k) 2b(22) (c) 4b(22) April 1, 1969
2/18/81
4a(23) (k) 2b(23) (c) 4b(23) March 1, 1970
2/18/81
4a(24) (k) 2b(24) (c) 4b(24) May 15, 1971
2/18/81
4a(25) (k) 2b(25) (c) 4b(25) November 15, 1971
2/18/81
4a(26) (k) 2b(26) (c) 4b(26) April 1, 1972
2/18/81
4a(27) (a) 2 (c) 4b(27) March 1, 1974
3/29/74 2/18/81
4a(28) (a) 2 (c) 4b(28) October 1, 1974
10/11/74 2/18/81
4a(29) (a) 2 (c) 4b(29) April 1, 1976
4/6/76 2/18/81
4a(30) (a) 2 (c) 4b(30) September 1, 1976
9/16/76 2/18/81
131
140
EXHIBIT NUMBER
- --------------------------------------------
PREVIOUS FILING
THIS --------------------------------
FILING COMMISSION EXCHANGES
- --------- -------------- --------------
4a(31) (k) 2b(31) (c) 4b(31) October 1, 1976
2/18/81
4a(32) (a) 2 (c) 4b(32) June 1, 1977
6/29/77 2/18/81
4a(33) (l) 2b(33) (c) 4b(33) September 1, 1977
2/18/81
4a(34) (a) 2 (c) 4b(34) November 1, 1978
11/21/78 2/18/81
4a(35) (a) 2 (c) 4b(35) July 1, 1979
7/25/79 2/18/81
4a(36) (m) 2d(36) (c) 4b(36) September 1, 1979 (No. 1)
2/18/81
4a(37) (m) 2d(37) (c) 4b(37) September 1, 1979 (No. 2)
2/18/81
4a(38) (a) 2 (c) 4b(38) November 1, 1979
12/3/79 2/18/81
4a(39) (a) 2 (c) 4b(39) June 1, 1980
6/10/80 2/18/81
4a(40) (a) 2 (a) 2 August 1, 1981
8/19/81 8/19/81
4a(41) (b) 4e (b) 4e April 1, 1982
4/29/82 5/5/82
4a(42) (a) 2 (a) 2 September 1, 1982
9/17/82 9/20/82
4a(43) (a) 2 (a) 2 December 1, 1982
12/21/82 12/21/82
4a(44) (d) 4(ii) (d) 4(ii) June 1, 1983
7/26/83 7/27/83
4a(45) (a) 4 (a) 4 August 1, 1983
8/19/83 8/19/83
4a(46) (d) 4(ii) (d) 4(ii) July 1, 1984
8/14/84 8/17/84
4a(47) (d) 4(ii) (d) 4(ii) September 1, 1984
11/2/84 11/9/84
4a(48) (b) 4(ii) (b) 4(ii) November 1, 1984 (No. 1)
1/4/85 1/9/85
4a(49) (b) 4(ii) (b) 4(ii) November 1, 1984 (No. 2)
1/4/85 1/9/85
4a(50) (a) 2 (a) 2 July 1, 1985
8/2/85 8/2/85
4a(51) (c) 4a(51) (c) 4a(51) January 1, 1986
2/11/86 2/11/86
4a(52) (a) 2 (a) 2 March 1, 1986
3/28/86 3/28/86
132
141
EXHIBIT NUMBER
- --------------------------------------------
PREVIOUS FILING
THIS --------------------------------
FILING COMMISSION EXCHANGES
- --------- -------------- --------------
4a(53) (a) 2(a) (a) 2(a) April 1, 1986 (No. 1)
5/1/86 5/1/86
4a(54) (a) 2(b) (a) 2(b) April 1, 1986 (No. 2)
5/1/86 5/1/86
4a(55) (p) 4a(55) (p) 4a(55) March 1, 1987
4/9/87 4/9/87
4a(56) (a) 4 (a) 4 July 1, 1987 (No. 1)
8/17/87 8/17/87
4a(57) (d) 4 (d) 4 July 1, 1987 (No. 2)
11/13/87 11/20/87
4a(58) (a) 4 (a) 4 May 1, 1988
5/17/88 5/18/88
4a(59) (a) 4 (a) 4 September 1, 1988
9/27/88 9/28/88
4a(60) (a) 4 (a) 4 July 1, 1989
7/25/89 7/26/89
4a(61) (a) 4 (a) 4 July 1, 1990 (No. 1)
7/25/90 7/26/90
4a(62) (a) 4 (a) 4 July 1, 1990 (No. 2)
7/25/90 7/26/90
4a(63) (a) 4 (a) 4 June 1, 1991 (No. 1)
7/1/91 7/2/91
4a(64) (a) 4 (a) 4 June 1, 1991 (No. 2)
7/1/91 7/2/91
4a(65) (a) 4 (a) 4 November 1, 1991 (No. 1)
12/2/91 12/3/91
4a(66) (a) 4 (a) 4 November 1, 1991 (No. 2)
12/2/91 12/3/91
4a(67) (a) 4 (a) 4 November 1, 1991 (No. 3)
12/2/91 12/3/91
4a(68) (a) 4 (a) 4 February 1, 1992 (No. 1)
2/27/92 2/28/92
4a(69) (a) 4 (a) 4 February 1, 1992 (No. 2)
2/27/92 2/28/92
4a(70) (a) 4 (a) 4 June 1, 1992 (No. 1)
6/17/92 6/11/92
4a(71) (a) 4 (a) 4 June 1, 1992 (No. 2)
6/17/92 6/11/92
4a(72) (a) 4 (a) 4 June 1, 1992 (No. 3)
6/17/92 6/11/92
4a(73) (a) 4 (a) 4 January 1, 1993 (No.1)
2/2/93 2/2/93
4a(74) (a) 4 (a) 4 January 1, 1993 (No. 2)
2/2/93 2/2/93
133
142
EXHIBIT NUMBER
- --------------------------------------------
PREVIOUS FILING
THIS --------------------------------
FILING COMMISSION EXCHANGES
- --------- -------------- --------------
4a(75) (a) 4 (a) 4 March 1, 1993
3/17/93 3/18/93
4a(76) (b) 4 (a) 4 May 1, 1993
5/27/93 5/28/93
4a(77) (a) 4 (a) 4 May 1, 1993 (No. 2)
5/25/93 5/25/93
4a(78) (a) 4 (a) 4 May 1, 1993 (No. 3)
5/25/93 5/25/93
4a(79) (b) 4 (b) 4 July 1, 1993
12/1/93 12/1/93
4a(80) (a) 4 (a) 4 August 1, 1993
8/3/93 8/3/93
4a(81) (b) 4 (b) 4 September 1, 1993
12/1/93 12/1/93
4a(82) (a) 4 (a) 4 September 1, 1993 (No. 2)
12/1/93 12/1/93
4a(83) (b) 4 (b) 4 November 1, 1993
12/1/93 12/1/93
4a(84) (a) 4 (a) 4 February 1, 1994
2/3/94 2/14/94
4b(1) (h) 7(12) (c) 4c(1) Indenture between PSE&G and Federal Trust
2/18/81 Company, as Trustee, (Midlantic National Bank,
Successor Trustee) dated July 1, 1948, providing
for 6% Debenture Bonds due 1998
4b(2) (l) 2c(8) (c) 4c(8) Indenture between PSE&G and the Chase Manhattan
2/18/81 Bank (National Association), as Trustee, dated
August 15, 1971, providing for 7 3/4% Debenture
Bonds due 1996
4b(3) (b) 4 (b) 4 Indenture of Trust between the Company and The
12/1/93 12/1/93 Chase Manhattan Bank (National Association), as
Trustee, providing for Secured Medium-Term Notes
dated July 1, 1993
9 Inapplicable
10a(1) (c) 10c(1) (c) 10c(1) Directors' Deferred Compensation Plan
3/17/82 3/19/82
10a(2) (c) 10c(2) (c) 10c(2) Officers' Deferred Compensation Plan
3/17/82 3/19/82
10a(3) (c) 10c(3) (c) 10c(3) Supplemental Death Benefits Plan for officers
3/17/82 3/19/82
10a(4) (c) 10c(4) (c) 10c(4) Description of additional retirement for certain
3/17/82 3/19/82 officers
10a(5)(i) (c) 10b(5) (c) 10b(5) Limited Supplemental Death Benefits and
3/31/83 4/8/83 Retirement Plan
10a(5)(ii) Limited Supplemental Benefits Plan for Certain
Employees
134
143
EXHIBIT NUMBER
- --------------------------------------------
PREVIOUS FILING
THIS --------------------------------
FILING COMMISSION EXCHANGES
- --------- -------------- --------------
10a(6)(i) (c) 10a(6) (c) 10a(6) Description of additional retirement benefits
3/10/87 4/16/87 for certain officers
10a(6)(ii) (c) 10a(6)(1) (c) 10a(6)(1) Description of additional retirement benefit for
3/30/90 3/30/90 certain officers.
10a(6)(iii) (c) 10a(6)(2) (c) 10a(6)(2) Description of additional retirement benefit for
3/30/92 4/27/92 a certain officer.
10a(7) (o) 10g (o) 10g Management Incentive Compensation Plan
10a(8) (c) 10a(8) (c) 10a(8) Long-Term Incentive Plan
3/30/89 4/18/89
10a(9) (c) 10a(9) (c) 10a(9) Public Service Enterprise Group Incorporated
3/30/89 4/18/89 Pension Plan for Outside Directors
10a(10) (c) 10a(9) (c) 10a(9) Letter Agreement with E. James Ferland dated
2/10/93 2/11/93 April 16, 1986
10a(11) (c) 10a(10) (c) 10a(10) Letter Agreement with Thomas M. Crimmins, Jr.
2/10/93 2/11/93 dated April 5, 1989
10a(12) (c) 10a(12) (c) 10a(12) Letter Agreement with Robert C. Murray dated
2/10/93 2/11/93 December 17, 1991
10a(13) Letter agreement with Patricia A. Rado dated
March 24, 1993.
11 Inapplicable
12(a) Computation of Ratios of Earnings to Fixed
Charges
12(b) Computation of Ratios of Earnings to Fixed
Charges Plus Preferred Stock Dividend
Requirements
13 Inapplicable
16 Inapplicable
18 Inapplicable
19 Inapplicable
21 Inapplicable
22 Inapplicable
23 Independent Auditors' Consent
24 Inapplicable
27 Inapplicable
28 Inapplicable
135