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| 8-K - FORM 8-K - PUBLIC SERVICE ELECTRIC & GAS CO | d624514d8k.htm |
 Forward Looking Statement
EXHIBIT 99
Certain of the matters discussed in this communication about us and our
subsidiaries future performance, including, without
limitation, future revenues, earnings, strategies, prospects,
consequences and all other statements that are not purely historical
constitute
“forward-looking
statements”
within
the
meaning
of
the
Private
Securities
Litigation Reform Act of 1995. Such forward-looking statements are subject
to risks and uncertainties, which could cause actual results to differ
materially from those anticipated. Such statements are based on
management's beliefs as well as assumptions made by and information
currently available to management. When used herein, the words
“anticipate,” “intend,”
“estimate,”
“believe,”
“expect,”
“plan,”
“should,”
“hypothetical,”
“potential,”
“forecast,”
“project,”
variations of such words
and similar expressions are intended to identify forward-looking
statements. Factors that may cause actual results to differ are often
presented with the forward-looking statements themselves. Other
factors that could cause actual results to differ materially from those
contemplated in any forward looking statements made by us herein are
discussed in filings we make with the United States Securities and Exchange
Commission (SEC), including our Annual Report on Form 10-K and
subsequent reports on Form 10-Q and Form 8-K and available on
our website: http://www.pseg.com. These
factors include, but are not limited to: •
adverse changes in the demand for or the price of the capacity and energy that
we sell into wholesale electricity markets,
•
adverse changes in energy industry law, policies and regulation, including
market structures and a potential shift away from competitive markets
toward subsidized market mechanisms, transmission planning and cost
allocation rules, including
rules regarding how transmission is planned and who is permitted to build
transmission in the future, and reliability standards,
•
any inability of our transmission and distribution businesses to obtain
adequate and timely rate relief and regulatory approvals from
federal and state regulators,
•
changes in federal and state environmental regulations that could increase our
costs or limit our operations,
•
changes in nuclear regulation and/or general developments in the nuclear
power industry, including various impacts from any accidents or incidents
experienced at our facilities or by others in the industry, that could
limit operations of our nuclear generating units,
•
actions or activities at one of our nuclear units located on a multi-unit
site that might adversely affect our ability to continue to operate that
unit or other units located at the same site,
•
any inability to balance our energy obligations, available supply and
risks, •
any deterioration in our credit quality or the credit quality of our
counterparties, including in our leveraged leases,
•
availability of capital and credit at commercially reasonable terms and
conditions and our ability to meet cash needs,
•
changes in the cost of, or interruption in the supply of, fuel and other
commodities necessary to the operation of our generating units,
•
delays in receipt of necessary permits and approvals for our construction
and development activities,
•
delays or unforeseen cost escalations in our construction and development
activities, •
any inability to achieve, or continue to sustain, our expected levels of
operating performance,
•
any equipment failures, accidents, severe weather events or other incidents
that impact our ability to provide safe and reliable service
to our customers,
and any inability to obtain sufficient coverage or recover proceeds of
insurance on such matters,
•
increases in competition in energy supply markets as well as competition
from certain rate-based transmission projects,
•
any inability to realize anticipated tax benefits or retain tax
credits,
•
challenges associated with recruitment and/or retention of a qualified
workforce, •
adverse performance of our decommissioning and defined benefit plan trust
fund investments and changes in funding requirements, and
•
changes in technology, such as distributed generation and microgrids,
and resultant changes in customer usage patterns, including energy
efficiency and demand response.
All of the forward-looking statements made in this report are qualified by
these cautionary statements and we cannot assure you that the results
or developments anticipated by management will be realized or even if
realized, will have the expected consequences to, or effects on, us or
our business prospects, financial condition or results of operations.
Readers are cautioned not to place undue reliance on these
forward-looking statements in making any investment decision.
Forward-looking statements made in this report apply only as of the
date of this report. While we may
elect to update forward-looking statements from time to time, we
specifically disclaim any obligation to do so, even if internal
estimates change, unless otherwise required by applicable securities
laws. The forward-looking statements contained in this report are
intended to qualify for the safe harbor provisions of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as
amended.
3 |
 GAAP Disclaimer
PSEG presents Operating Earnings in addition to its Income from Continuing
Operations/Net Income reported in accordance with accounting principles
generally accepted in the United States (GAAP). Operating Earnings
is a non- GAAP financial measure that differs from Net Income because
it excludes gains or losses associated with Nuclear Decommissioning
Trust (NDT), Mark-to-Market (MTM) accounting, and other material
one-time items. PSEG presents Operating Earnings because
management believes that it is appropriate for investors to consider
results excluding these items in addition to the results reported in
accordance with GAAP. PSEG believes that the non-GAAP financial
measure of Operating Earnings provides a consistent and comparable
measure of performance of its businesses to help shareholders understand
performance trends. This information is not
intended to be viewed as an alternative to GAAP
information. Slides A and B at the end of this presentation include a list of
items excluded from Income from Continuing Operations/Net Income to
reconcile to Operating Earnings, with a reference to that slide included
on each of the slides where the non-GAAP information appears.
4 |
 13
74 local NJ towns and 8 counties
support
•
74 municipalities and eight counties (Bergen, Essex, Hudson,
Mercer, Passaic, Somerset, Union and Middlesex) have approved
resolutions in support of Energy Strong, PSE&G’s infrastructure
proposal to improve and fortify its electric and gas distribution
systems
•
PSE&G is seeking BPU approval to implement the first five years of
the Energy Strong proposal, an investment of $2.6 Billion
•
The Energy Strong proposal is currently being evaluated by the
NJ Board of Public Utilities |
 17
PSEG Year to Date 2013 -
Highlights
Operating Earnings of $2.09 vs. $2.03 per share for YTD 2012
Delivered solid results in Q3 driven by Power’s locational value, and
PSE&G’s continuing investment in transmission
Raised
2013
full–year,
operating
earnings
guidance
from
$2.25
-
$2.50
to
$2.40
-
$2.55,
per share
Executing on operational goals
Power met summer demand using diverse fleet
Continued control of O&M supports full-year expectations
Executing on capital program
Transmission program of $3.4 billion, including construction of 5 major
transmission projects, continues on schedule and on budget
Review of Energy Strong proposal underway by NJBPU
74 NJ municipalities and 8 county governments have passed resolutions in support
of the Energy Strong infrastructure proposal
Market developments
US
District
Courts
in
NJ
and
MD
rendered
decisions
supportive
of
competitive
markets
and
FERC’s rate-setting authority
New LIPA agreement will broaden and extend original agreement when fully
executed |
 Strength in YTD operating earnings supports
increase in 2013
*SEE SLIDE A FOR ITEMS EXCLUDED FROM INCOME FROM CONTINUING
OPERATIONS/NET INCOME TO RECONCILE TO OPERATING EARNINGS.
Based on our performance year-to-date, we have raised guidance for
full year operating earnings from $2.25-$2.50 to $2.40-$2.55 per
share 18
PSEG Operating Earnings
$ Millions (except EPS)
PSEG Power
PSE&G
PSEG Energy Holdings/Parent
Operating Earnings*
2013E
$630 -
$685
$585 -
$600
$0 -
$10
$1,215 -
$1,295
2013 Earnings Guidance
$2.40
-
$2.55
operating earnings guidance
E=ESTIMATE |
 PSE&G’s 2013 operating earnings
benefiting from transmission growth and cost containment
initiatives
*SEE SLIDE A FOR ITEMS EXCLUDED FROM INCOME FROM CONTINUING
OPERATIONS/NET INCOME TO RECONCILE TO OPERATING EARNINGS.
45
$528
2012
2013 Guidance
PSE&G Operating Earnings*
($ Millions)
$585 -
$600E
E=ESTIMATE |
 Investing in Power to expand CCGT capacity
and improve efficiency
PSEG Power -
CCGT Uprate Project
o
Over 2014–2018, retrofit Bergen,
Linden and BEC (GE CCGTs) with
Advanced Gas Path (AGP) components
o
Expand Power’s CCGT fleet, one of the
largest gas-fired portfolios in PJM, with
incremental base and peaking MWs
o
Potential project investment of
~$120 million over the 5-year period
AGP Project Benefits
MWs: Base MW’s increase by 3.5%
(112MW) with an additional 40 MWs
of peak-firing capability
(CC) heat rate improvement ~ 1.2%
and upgrades technology
61
Expands CCGT capacity by over 150
Increases Efficiency -
Combined Cycle
Extends maintenance outage cycles |
 2012
2013 Guidance
Power’s 2013 operating earnings
benefiting from locational value and operational efficiency
*SEE SLIDE A FOR ITEMS EXCLUDED FROM INCOME FROM CONTINUING
OPERATIONS/NET INCOME TO RECONCILE TO OPERATING EARNINGS.
PSEG Power Operating Earnings*
($ Millions)
65
$630 -
$685E
$644
E=ESTIMATE |
 Storage
0.7 bcf/d
Tetco Gulf
0.2 bcf/d
Transco Gulf
0.4 bcf/d
Tetco M2
0.2 bcf/d
Transco Leidy
0.5 bcf/d
Tennessee
0.1 bcf/d
PSEG’s locational advantage
•
PSEG is well positioned to realize
supply cost advantages from the
shale deposits in PA and OH
•
The majority of Power’s pipeline
capacity goes through the shale
regions or emanates from
locations in the region
•
The lowest cost supplies have
come from the Tennessee 300
line in northeast PA and the
Transco Leidy line in central PA
•
Power also has significant Texas
Eastern capacity in southwest PA,
the next region to develop
•
Availability of a robust gas
portfolio of storage and pipeline
capacity primarily benefits
PSE&G’s gas customers and
then Power, as conditions permit
•
Power buys approximately
350BCF/year of gas
PSEG Pipeline and Storage Capacity
75
Total Capacity
2.2 bcf/d |
 HH - Henry Hub M3 – Texas Eastern (TETCO)
Access to lower cost shale supply
an advantage for PSE&G’s gas customers and Power’s CCGT
portfolio Spot
Natural
Gas
Prices:
Jun
–
Sep
2013
Access
to Lower
Cost Shale
Gas in
Marcellus
and Utica
Market
Prices for
Natural
Gas
76 |
 PSEG Summary
•
Raised
2013
full-year
operating
earnings
guidance
to
$2.40
-
$2.55
per share –
based on financial results year-to-date
•
Double digit operating earnings growth at PSE&G starting in 2013,
and continuing through 2015 driven by transmission investments
and approved programs
•
Power’s continued focus on operational excellence, market expertise
and financial strength reduces risk in low price environment
•
Strong Balance Sheet and Cash Flow support full capital program
without the need for equity
•
Long history of returning cash to the shareholder through the
common dividend, with opportunity for future growth
98 |
 •
Current market data indicates Leidy gas basis remains negative
to Henry Hub into 2016 but market is illiquid the further out you go
111
Leidy Basis 2014
Leidy Basis 2015
Leidy Basis 2016
-1.6
-1.4
-1.2
-1
-0.8
-0.6
-0.4
-0.2
0
Leidy Gas Basis to Henry Hub |
 Items Excluded from Income from Continuing
Operations/Net Income to Reconcile to Operating Earnings
A
PLEASE
SEE
PAGE
4
FOR
AN
EXPLANATION
OF
PSEG’S
USE
OF
OPERATING
EARNINGS
AS
A
NON-GAAP
FINANCIAL
MEASURE
AND
HOW
IT
DIFFERS
FROM
INCOME
FROM
CONTINUING
OPERATIONS/NET
INCOME.
2012
2011
2010
2009
2008
Earnings
Impact
($
Millions)
Operating Earnings
1,236
$
1,389
$
1,584
$
1,567
$
1,478
$
Gain (Loss) on Nuclear Decommissioning Trust (NDT)
Fund Related Activity (PSEG Power)
52
50
46
9
(71)
Gain
(Loss)
on
Mark-to-Market
(MTM)
(a)
(PSEG
Power)
(10)
107
(1)
(11)
14
Lease Transaction Activity (Energy Holdings)
36
(173)
-
29
(490)
Storm O&M (PSEG Power)
(39)
-
-
-
-
Market Transition Charge Refund (PSE&G)
-
-
(72)
-
-
Gain (Loss) on Asset Sales and Impairments (Energy Holdings)
-
34
-
-
(13)
Income from Continuing Operations
1,275
$
1,407
$
1,557
$
1,594
$
918
$
Discontinued Operations
-
96
7
(2)
270
Net Income
1,503
$
1,564
$
1,592
$
1,188
$
Fully Diluted Average Shares Outstanding (in Millions)
507
507
507
507
508
Per Share Impact (Diluted)
Operating Earnings
2.44
$
2.74
$
3.12
$
3.09
$
2.91
$
Gain (Loss) on NDT Fund Related Activity (PSEG Power)
0.10
0.10
0.09
0.02
(0.14)
Gain
(Loss)
on
MTM
(a)
(PSEG
Power)
(0.02)
0.21
-
(0.02)
0.03
Lease Transaction Activity (Energy Holdings)
0.07
(0.34)
-
0.05
(0.96)
Storm O&M (PSEG Power)
(0.08)
-
-
-
-
Market Transition Charge Refund (PSE&G)
-
-
(0.14)
-
-
Gain (Loss) on Asset Sales and Impairments (Energy Holdings)
-
0.06
-
-
(0.03)
Income from Continuing Operations
2.51
$
2.77
$
3.07
$
3.14
$
1.81
$
Discontinued Operations
-
0.19
0.01
-
0.53
Net Income
2.51
$
2.96
$
3.08
$
3.14
$
2.34
$
(a) Includes the financial impact from positions with forward delivery
months. (Unaudited)
For the Year Ended
December 31,
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
Reconciling Items, net of tax
1,275
$ |
 Items Excluded from Income from Continuing
Operations/Net Income to Reconcile to Operating Earnings
B
2013
2012
2013
2012
Earnings Impact ($ Millions)
Operating Earnings
385
$
382
$
1,061
$
1,029
$
Gain (Loss) on Nuclear Decommissioning Trust (NDT)
Fund Related Activity (PSEG Power)
12
40
29
49
Gain
(Loss)
on
Mark-to-Market
(MTM)
(a)
(PSEG
Power)
3
(76)
(22)
(34)
Lease Related Activity (PSEG Energy Holdings)
-
1
-
7
Storm O&M, net of insurance recoveries (PSEG Power)
(10)
-
(25)
-
Income from Continuing Operations
390
$
347
$
1,043
$
1,051
$
Net Income
390
$
347
$
1,043
$
1,051
$
Fully Diluted Average Shares Outstanding (in Millions)
508
507
507
507
Per Share Impact (Diluted)
Operating Earnings
0.76
$
0.75
$
2.09
$
2.03
$
Gain (Loss) on NDT Fund Related Activity (PSEG Power)
0.02
0.08
0.06
0.10
Gain
(Loss)
on
MTM
(a)
(PSEG
Power)
0.01
(0.15)
(0.04)
(0.07)
Lease Related Activity (PSEG Energy Holdings)
-
-
-
0.01
Storm O&M, net of insurance recoveries (PSEG Power)
(0.02)
-
(0.05)
-
Income from Continuing Operations
0.77
$
0.68
$
2.06
$
2.07
$
Net Income
0.77
$
0.68
$
2.06
$
2.07
$
(a) Includes the financial impact from positions with forward delivery
months. Three Months Ended
Nine Months Ended
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
(Unaudited)
September 30,
September 30,
Reconciling Items, net of tax
PLEASE SEE PAGE 4 FOR AN EXPLANATION OF PSEG’S USE OF OPERATING EARNINGS
AS A NON-GAAP FINANCIAL MEASURE AND HOW IT DIFFERS FROM INCOME FROM
CONTINUING OPERATIONS/NET INCOME. |