Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - PUBLIC SERVICE ELECTRIC & GAS CO | d720369d8k.htm |
| EX-99 - EX-99 - PUBLIC SERVICE ELECTRIC & GAS CO | d720369dex99.htm |
 Public Service Enterprise Group
PSEG Earnings Conference Call
1
st
Quarter 2014
May 1, 2014
EXHIBIT 99.1 |
 1
Forward-Looking Statement
Certain of the matters discussed in this report about our 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 and enforcement 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, •
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 with respect to such
events, •
acts of terrorism, cybersecurity attacks or intrusions that could adversely
impact our businesses, •
increases in competition in energy supply markets as well as competition for
certain 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 micro grids, and
greater reliance on these technologies and changes in customer behaviors, including energy efficiency,
net-metering 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.
|
 2
GAAP Disclaimer
PSEG presents Operating Earnings in addition to its Net Income reported in
accordance with accounting principles generally accepted in the United
States (GAAP). Operating Earnings is a non-GAAP financial measure that
differs from Net Income because it excludes gains or losses associated with
Nuclear Decommissioning Trust (NDT), Mark-to-Market (MTM)
accounting, and other material one-time items. PSEG presents
Operating Earnings because management believes that it is appropriate for
investors to
consider results excluding these items in addition to the results reported in
accordance with GAAP. PSEG believes that the non-GAAP financial
measure of Operating Earnings provides a consistent and comparable
measure of performance of its businesses to help shareholders understand
performance trends. This information is not
intended to be viewed as an
alternative to GAAP information. The last slide in this presentation includes
a list of items excluded from 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.
These
materials
and
other
financial
releases
can
be
found
on
the
pseg.com
website
under the investor tab, or at http://investor.pseg.com/
|
 PSEG
2014 Q1 Review
Ralph Izzo
Chairman, President and Chief Executive Officer |
 4
Q1 Earnings Summary
$ millions (except EPS)
2014
2013
Operating Earnings
$ 515
$ 433
Reconciling Items, Net of Tax
(129)
(113)
Net Income
$ 386
$ 320
EPS from Operating Earnings*
$ 1.01
$ 0.85
Quarter ended March 31
*
See
Slide
A
for
Items
excluded
from
Net
Income
to
reconcile
to
Operating
Earnings. |
 5
PSEG –
Q1 2014 Highlights
Strong Earnings
Operating earnings of $1.01 vs. $0.85 per share in Q1 2013
Power benefited from higher market pricing, market volatility and increased output
Increased contribution to earnings from PSE&G’s investment in
transmission Operational Excellence
PSEG Power output up 3% in quarter; nuclear capacity factor at 100%
Diversity and location of Power’s fleet provided flexibility to participate in
market O&M on track to meet full-year expectations
PSEG Disciplined Capital Investment
BPU decision pending on Energy Strong infrastructure proposal
PSE&G brought 230kV Burlington-Camden line in-service ahead of
schedule; energized a portion of 500 kV Susquehanna-Roseland
transmission line; and on schedule to place 230 kV North Central Reliability
line in-service this summer PSEG Power adding 63 MW at Linden CCGT
station with completion of AGP uprate Increased
common
dividend
to
indicative
annual
rate
of
$1.48
per
share in Q1 2014 |
 6
$2.55 -
$2.75E
PSEG –
Maintaining 2014 Guidance
$2.44
*
See
Slide
A
for
Items
excluded
from
Net
Income
to
reconcile
to
Operating
Earnings.
E
=
Estimate.
$2.58
2014 guidance reflects increased level of investment,
pension savings and assumes normal weather and unit operations for rest of
year |
 PSEG
2014 Q1 Operating Company Review
Caroline Dorsa
EVP and Chief Financial Officer |
 8
Q1 Operating Earnings by Subsidiary
Operating Earnings
Earnings per Share
$ millions (except EPS)
2014
2013
2014
2013
PSEG Power
$ 293
$ 254
$ 0.58
$ 0.50
PSE&G
214
179
0.42
0.35
PSEG Enterprise/Other
8
-
0.01
-
Operating Earnings*
$ 515
$ 433
$ 1.01
$ 0.85
Quarter ended March 31
*
See
Slide
A
for
Items
excluded
from
Net
Income
to
reconcile
to
Operating
Earnings. |
  9
$0.85
0.07
0.08
$1.01
0.00
0.20
0.40
0.60
0.80
1.00
0.01
PSEG EPS Reconciliation –
Q1 2014 versus Q1 2013
Q1 2014
Operating
Earnings*
Q1 2013
Operating
Earnings*
PSEG Power
PSE&G
PSEG
Enterprise/
Other
*
See
Slide
A
for
Items
excluded
from
Net
Income
to
reconcile
to
Operating
Earnings.
Capacity 0.11
Market Prices
and Volume 0.02
Re-contracting (0.05)
Gas Send-Out 0.05
Lower Pension
Expense 0.01
O&M (0.05)
Taxes and
Other (0.01)
Transmission
Net Earnings 0.03
Gas Volume &
Demand 0.02
Weather 0.01
Lower Pension
Expense 0.02
Distribution
O&M (0.02)
Taxes and
Other 0.01
Interest
and
PSEG
Long Island |
 PSE&G
2014 Q1 Review |
 11
PSE&G –
Q1 EPS Summary
$ millions (except EPS)
Q1 2014
Q1 2013
Variance
Operating Revenues
$ 2,145
$ 1,995
$ 150
Operating Expenses
Energy Costs
1,045
967
78
Operation & Maintenance
462
427
35
Depreciation & Amortization
227
215
12
Taxes Other than Income Taxes
-
21
(21)
Total Operating Expenses
1,734
1,630
104
Operating Earnings/Net Income
$ 214
$ 179
$ 35
EPS from Operating Earnings/Net Income
$ 0.42
$ 0.35
$ 0.07 |
 $0.35
0.06
0.01
$0.42
0.00
0.00
0.10
0.20
0.30
0.40
0.50
12
PSE&G EPS Reconciliation –
Q1 2014
versus Q1 2013
Transmission
Net Earnings 0.03
Gas Volume &
Demand 0.02
Weather 0.01
Taxes and
Other
Lower
Pension
Expense
0.02
Distribution
O&M (0.02)
Q1 2013
Operating
Earnings*
Q1 2014
Operating
Earnings*
* Operating Earnings is equal to Net Income . |
 13
PSE&G –
Q1 Operating Highlights
Operations
PSE&G continuing pursuit of Energy Strong infrastructure proposal with the
NJBPU to invest $2.6 billion over initial five years of a 10-year plan
addressing E&G system hardening and resiliency
Construction of major transmission lines progressing on schedule: A portion
of S-R energized in NJ –
full line expected in service for summer 2015 peak demand
Regulatory and Market
Environment
PSE&G plans to invest over $2.2 billion in its T&D system in 2014
PSE&G 2014-2018 Capital Spending program increased 40% to $10
billion, with further opportunity from Energy Strong
PSE&G earned its authorized return in the quarter
Financial
Q1 weather was significantly colder than Q1 2013: Heating degree days were
16% above Q1 2013 and 18% above normal
Slowly improving economy providing some support to weather normalized electric
sales: Overall improvement of 1.3%, with the residential sector up a
more modest 0.6% Gas deliveries, up 3.4% for the quarter, continue to
benefit from decline in supply costs |
 PSEG
Power 2014 Q1 Review |
 15
PSEG Power –
Q1 EPS Summary
$ millions (except EPS)
Q1 2014
Q1 2013
Variance
Operating Revenues
$ 1,700
$ 1,451
$ 249
Operating Earnings
$ 293
$ 254
$ 39
Reconciling Items,
Net of Tax**
(129)
(113)
(16)
Net Income
$ 164
$ 141
$ 23
EPS from Operating Earnings*
$ 0.58
$ 0.50
$ 0.08
*
See
Slide
A
for
Items
excluded
from
Net
Income
to
reconcile
to
Operating
Earnings.
**Includes the financial impact from Mark-to-Market positions with forward
delivery months. |
 16
$0.50
0.13
$0.58
(0.04)
(0.01)
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
Capacity 0.11
Market Prices
and Volume 0.02
Re-Contracting (0.05)
Gas Send-Out 0.05
PSEG Power EPS Reconciliation –
Q1 2014 versus Q1 2013
Q1 2014
Operating
Earnings*
Q1 2013
Operating
Earnings*
Lower Pension
Expense 0.01
O&M (0.05)
*
See
Slide
A
for
Items
excluded
from
Net
Income
to
reconcile
to
Operating
Earnings.
Taxes
and
Other |
 17
PSEG Power –
Generation Measures
8,137
8,049
3,813
3,975
2,541
2,207
0
7,500
15,000
2013
2014
Quarter ended March 31
Total Nuclear
Total Coal*
Oil & Natural Gas
Generation by Fuel (GWh)**
14,565
Quarter ended March 31
* Includes figures for Pumped Storage. Also includes natural gas fuel
switching intervals. ** Excludes Solar and Kalaeloa
2013
2014
Combined
Cycle
PJM and NY
52%
49%
Coal*
NJ (Coal/Gas)
19%
21%
PA
85%
83%
CT
36%
73%
Nuclear
101%
100%
14,157
Fleet Capacity Factors (%)
55%
of
Output
28%
of
Output |
 18
PSEG Power –
Fuel Costs
Quarter ended March 31
($ millions)
2013
2014
Coal
$66
$87
Oil & Gas
178
365
Total Fossil
244
452
Nuclear
58
62
Total Fuel
Cost
$302
$514
Total
Generation
(GWh)
14,157
14,565
$ / MWh
21.33
35.29
PSEG Power –
Fuel Costs |
 19
PSEG Power –
Gross Margin Performance
$0
$15
$30
$45
$60
2012
2013
2014
$50
$46
Quarter ended March 31
Weather
driven
volatility
pushed
natural
gas
and
power
prices
to
multi-year
highs,
offsetting
decline
in average hedge prices
Q1 spot prices higher across PJM, ISO-NE, and NYISO
Capacity prices higher year-over-year through May 2014; then resets to
$166/MW-day Fuel flexibility and Power’s market position essential
to serving BGS volumetric load Q1 2014 Regional Performance
Region
Gross
Margin ($M)
2014 Performance
PJM
$689
Higher market pricing and higher
volumes offset lower priced hedges.
Higher capacity pricing versus a year
ago.
New
England
$38
Higher volume and higher pricing.
New York
$6
Higher pricing.
PSEG Power Gross Margin ($/MWh)
$48 |
 20
Hedging Update…
Contracted Energy*
*
Hedge
percentages
and
prices
as
of
March
31,
2014.
Revenues
of
full
requirement
load
deals
based
on
contract
price,
including
renewable
energy
credits,
ancillary,
and
transmission
components
but
excluding
capacity.
Hedges
include
positions
with
MTM
accounting
treatment
and
options.
Volume TWh
26
35
36
Base Load
% Hedged
100%
75-80%
35-40%
(Nuclear and Base Load Coal)
Price $/MWh
$49
$51
$51
Volume TWh
18
21
19
Intermediate Coal, Combined
% Hedged
30-35%
0%
0%
Cycle, Peaking
Price $/MWh
$49
$51
$51
Volume TWh
42-44
54-56
54-56
Total
% Hedged
70-75%
50-55%
25-30%
Price $/MWh
$49
$51
$51
Apr-Dec
2014
2015
2016 |
 21
PSEG Power –
Q1 2014 Operating Highlights
Q1 output up 3% under extreme weather conditions; nuclear capacity factor at
100% Advance gas path uprates (~63MW) accelerated at Linden for May
in-service date Output of NJ coal units was 69% coal, 31% gas fueled
Operations
Financial
Regulatory and Market
Environment
Improved
spot
power
prices
from
2
nd
coldest
winter
since
1970;
higher
natural
gas
prices persisted for the quarter
Increased generation forecast to 56-58 TWh from 53-55 TWh, with 70%-75%
of remaining 2014 production hedged at an average price of $49/MWh
Power recognized a liability in the quarter related to its discovery that it
incorrectly calculated certain components of its cost-based bids for
certain of its generating units in the PJM energy market, with resulting
over-collection of revenues related to its fossil fleet. Power has notified
FERC, PJM and the PJM Independent Market Monitor of this issue, which is still
under review;
we
are
unable
to
estimate
the
ultimate
impact
or
predict
any
resulting
penalties
or
other costs associated with the matter at this time
Power’s total debt as a percentage of capital at March 31 was 31%
|
 PSEG |
 23
PSEG Financial Highlights
Maintaining 2014 operating earnings guidance of $2.55 -
$2.75 per share
Focused on maintaining operating efficiency and customer reliability
PSE&G expected to grow at double-digit rate in 2014 and provide over 50% of
operating earnings Executing existing 5-year, $6.8 billion transmission
capital spending program on budget and on schedule
PSE&G continuing to pursue Energy Strong infrastructure proposal with the
NJBPU to invest $2.6 billion over initial five years of a 10-year plan
addressing E&G system hardening and resiliency
Financial position remains strong
Positive cash from Power and increasing cash flow from PSE&G supports dividend
growth and funds capital spending program without the need to issue
equity Debt as a percentage of capital was 41% at March 31, 2014
Long history of returning cash to the shareholder through the common dividend,
with opportunity for consistent and sustainable growth
Increased
common
dividend
to
indicative
annual
rate
of
$1.48
per
share
in
Q1
2014 |
 24
PSEG 2014 Operating Earnings Guidance -
By Subsidiary
$ millions (except EPS)
2014E
2013
2012
PSE&G
$705 –
$745
$612
$528
PSEG Power
$550 –
$610
$710
$663
PSEG Enterprise/Other
$35 –
$40
$(13)
$45
Operating Earnings*
$1,290 –
$1,395
$1,309
$1,236
Earnings per Share
$2.55 –
$2.75
$2.58
$2.44
*
See
Slide
A
for
Items
excluded
from
Net
Income
to
reconcile
to
Operating
Earnings.
E
=
Estimate. |
 In
April 2014, Power and PSEG amended their respective 5-year credit agreements ending in 2017,
extending the expiration dates from March 2017 to April 2019.
PSEG Liquidity as of March 31, 2014
$188
25
Expiration
Total
Available
Company
Facility
Date
Facility
Usage
Liquidity
($Millions)
PSE&G
5-year Credit Facility
Mar-18
$600
1
$13
$587
5-Year Credit Facility (Power)
Mar-17
$1,600
$67
$1,533
5-Year Credit Facility (Power)
Mar-18
$1,000
2
$0
$1,000
5-Year Bilateral (Power)
Sep-15
$100
$100
$0
5-year Credit Facility (PSEG)
Mar-17
$500
$8
$492
5-year Credit Facility (PSEG)
Mar-18
$500
3
$0
$500
Total
$4,300
$4,112
1 PSE&G Facility to be reduced by $29M on April 15, 2016
$434
2 Power Facility to be reduced by $48M on April 15, 2016
*PSE&G ST Investment
$132
3 PSEG Facility to be reduced by $23M on April 15, 2016
Total Liquidity Available
$4,678
Total Parent / Power Liquidity
$3,959
PSEG /
Power
*PSEG Money Pool ST Investment |
 A
Items Excluded from Net Income to Reconcile to Operating Earnings
Please see Slide 2 for an explanation of PSEG’s use of Operating Earnings as a
non-GAAP financial measure and how it differs from Net Income.
Attachment 10
2014
2013
2013
2012
Earnings Impact ($ Millions)
Operating Earnings
515
$
433
$
1,309
$
1,236
$
Gain (Loss) on Nuclear Decommissioning Trust (NDT)
Fund Related Activity (PSEG Power)
9
9
40
52
Gain (Loss) on Mark-to-Market (MTM)
(a)
(PSEG Power)
(132)
(105)
(74)
(10)
Lease Related Activity (PSEG Enterprise/Other)
-
-
-
36
Storm O&M, net of insurance recoveries (PSEG Power)
(6)
(17)
(32)
(39)
Net Income
386
$
320
$
1,243
$
1,275
$
Fully Diluted Average Shares Outstanding (in Millions)
508
507
508
507
Per Share Impact (Diluted)
Operating Earnings
1.01
$
0.85
$
2.58
$
2.44
$
Gain (Loss) on NDT Fund Related Activity (PSEG Power)
0.02
0.02
0.08
0.10
Gain (Loss) on MTM
(a)
(PSEG Power)
(0.26)
(0.21)
(0.14)
(0.02)
Lease Related Activity (PSEG Enterprise/Other)
-
-
-
0.07
Storm O&M, net of insurance recoveries (PSEG Power)
(0.01)
(0.03)
(0.07)
(0.08)
Net Income
0.76
$
0.63
$
2.45
$
2.51
$
(a) Includes the financial impact from positions with forward delivery
months. PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
Reconciling Items, net of tax
Three Months Ended
Year Ended
March 31,
December 31,
(Unaudited) |