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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/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
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)12(b) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- -----------------------------------------------------------------NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
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New York Stock Exchange
Common Stock without par value New York Stock Exchange
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,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 18, 1995, which definitive
Proxy Statement is expected to be filed with the Securities
and Exchange Commission on or about March 1, 1995, as
specified herein.
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SECURITIES REGISTERED PURSUANT TO SECTION 12(B)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%7.44% 8 3/4% HH 2022
8.08%7.52% 7 5/8% II 2000
7.80%7.70% 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
7 3/8% TT 2014
6 3/4% UU 2006
8 % 2037
5 % 2037
5 % 2037Monthly Income Preferred
Securities
SECURITIES REGISTERED PURSUANT TO SECTION 12(G)
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
Medium-Term Notes, Series A
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 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
$7,704,989,000held by
non-affiliates as of January 31, 1995 was $7,031,387,787 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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1995
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Common Stock, without par value 243,737,149244,697,930
As of January 31, 1995, 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 Public
Service Enterprise Group Incorporated (Enterprise).
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........................................................................Contents................................................... i
Glossary of Terms........................................................................ ivTerms................................................... v
PART I
Item 1. Business..................................................................Business............................................. 1
General...................................................................General.............................................. 1
Enterprise................................................................Enterprise......................................... 1
PSE&G..................................................................... 1&G.............................................. 2
Industry Issues........................................................... 2
Competition............................................................... 2Issues...................................... 3
Competition.......................................... 3
Overview........................................... 3
Electric........................................... 4
Gas................................................ 5
Construction and Capital Requirements..................................... 5Requirements................ 6
PSE&G..................................................................... 5
EDHI......................................................................&G.............................................. 6
EDHI............................................... 7
Financing Activities...................................................... 6Activities................................. 7
Federal Income Taxes...................................................... 7Taxes................................. 8
Credit Ratings............................................................ 7Ratings....................................... 8
PSE&G..................................................................... 8&G................................................ 9
Rate Matters.............................................................. 8Matters....................................... 9
Nuclear Performance Standard.............................................. 8
Electric Operations....................................................... 8
Nuclear Operations........................................................Standard....................... 9
Other Nuclear Matters.....................................................Customers.......................................... 10
Integrated Resource Plan........................... 11
Pennsylvania -- New Jersey -- Maryland
Interconnection....................Interconnection................................ 11
Other Power Purchases.....................................................Purchases.................................. 11
DSM.......................................................................Demand Side Management........................... 12
Electric Generating Capacity....................... 13
Nuclear Operations................................. 14
Salem............................................ 14
Hope Creek....................................... 16
Peach Bottom..................................... 16
Other Nuclear Matters............................ 17
Electric Fuel Supply...................................................... 13Supply and Disposal.................. 18
Nuclear Fuel..................................... 19
Coal............................................. 20
Natural Gas...................................... 20
Oil.............................................. 20
Nuclear Fuel Disposal............................ 21
Low Level Radioactive Waste (LLRW)............... 22
Gas Operations............................................................ 16Operations and Supply.......................... 23
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Employee Relations........................................................ 17
Regulation................................................................ 17Relations................................... 25
Regulation........................................... 25
Environmental Controls.................................................... 19Controls............................... 28
Air Pollution Control..................................................... 20Control.............................. 29
Water Pollution Control................................................... 21Control............................ 31
Control of Hazardous Substances........................................... 24
CertainSubstances.................... 34
Financial Statistics of Enterprise................... 42
Operating Statistics of PSE&G..................................... 30
Electric.................................................................. 30
Gas....................................................................... 31
EDHI...................................................................... 32
EDC....................................................................... 32
CEA....................................................................... 32
PSRC...................................................................... 33
EGDC...................................................................... 33
Capital................................................................... 33
Funding................................................................... 34&G........................ 43
EDHI................................................. 44
EDC................................................ 44
CEA................................................ 44
PSRC............................................... 45
EGDC............................................... 46
Capital............................................ 46
Funding............................................ 46
Item 2. Properties................................................................ 34Properties........................................... 47
PSE&G..................................................................... 34&G.............................................. 47
Electric Properties....................................................... 35Properties.............................. 48
Gas Properties............................................................ 36Properties................................... 49
Office Buildings and Facilities........................................... 36Facilities.................... 50
Item 3. Legal Proceedings......................................................... 37Proceedings.................................... 51
Item 4. Submission of Matters to a Vote of Security
Holders....................... 37Holders............................................ 52
Item 10. Executive Officers of the Registrants..................................... 37
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Registrants................ 52
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters..... 38Matters................................ 53
Item 6. Selected Financial Data................................................... 39
Enterprise................................................................ 39Data............................. 55
Enterprise........................................ 55
PSE&G..................................................................... 39&G............................................. 55
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................................................. 40
Enterprise................................................................ 40
Overview.................................................................. 40Operations............... 56
Enterprise.......................................... 56
Overview.......................................... 56
PSE&G Energy and Fuel Adjustment Clauses.................................. 41Clauses.......... 57
Competition....................................... 57
Enterprise Earnings....................................................... 41Earnings............................... 59
PSE&G..................................................................... 41
EDHI...................................................................... 42
Dividends................................................................. 42
Revenues.................................................................. 43&G........................................... 60
EDHI............................................ 60
Dividends......................................... 61
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Revenues.......................................... 62
PSE&G Electric............................................................ 43Electric................................ 62
PSE&G Gas................................................................. 43
EDHI...................................................................... 44
PSE&GGas..................................... 63
EDHI.......................................... 65
Electric Energy Costs............................................... 45Costs............................. 66
Gas Supply Costs.......................................................... 45Costs.................................. 66
Liquidity and Capital Resources........................................... 46Resources................... 68
PSE&G..................................................................... 46
EDHI...................................................................... 46&G........................................... 68
EDHI............................................ 68
Long-Term Investments and Real Estate........... 63
Construction, Investments and Other Capital
Requirements Forecast......... 47Forecast......................... 70
Internal Generation of Cash from Operations............................... 48Operations..... 71
External Financings....................................................... 48Financings............................. 71
PSE&G..................................................................... 50&G............................................... 75
Gas Supply Costs.......................................................... 50Costs.................................. 75
Liquidity and Capital Resources........................................... 51Resources................... 76
Internal Generation of Cash from Operations............................... 51Operations..... 76
Item 8. Financial Statements and Supplementary Data............................... 52Data......... 77
Financial Statement Responsibility (Enterprise)........................... 52... 77
Financial Statement Responsibility (PSE&G)................................ 53........ 79
Independent Auditors' Report (Enterprise)................................. 54......... 81
Independent Auditors' Report (PSE&G)...................................... 55.............. 82
Consolidated Statements of Income (Enterprise)............................ 56.... 83
Consolidated Balance Sheets (Enterprise).................................. 57.......... 84
Consolidated Statements of Cash Flows (Enterprise)........................ 59 86
Consolidated Statements of Retained Earnings
(Enterprise)................. 60.................................... 87
Consolidated Statements of Income (PSE&G)................................. 61......... 88
Consolidated Balance Sheets (PSE&G)....................................... 62............... 89
Consolidated Statements of Cash Flows (PSE&G)............................. 64..... 91
Consolidated Statements of Retained Earnings
(PSE&G)...................... 65.......................................... 92
Notes to Consolidated Financial Statements
(Enterprise)................... 66..................................... 93
Notes to Consolidated Financial Statements (PSE&G)........................ 92. 132
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PART III
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.............................................................. 96Disclosure................ 136
Item 10. Directors and Executive Officers of the Registrants....................... 96Registrants.. 136
Directors of the Registrants.............................................. 96
Enterprise................................................................ 96Registrants....................... 136
Enterprise....................................... 136
PSE&G..................................................................... 96&G............................................ 136
Executive Officers of the Registrants..................................... 97Registrants................ 137
Item 11. Executive Compensation.................................................... 99
Enterprise................................................................ 99Compensation............................... 139
Enterprise......................................... 139
PSE&G..................................................................... 99&G.............................................. 139
Summary Compensation Table................................................ 100Table....................... 140
Option Grants in Last Fiscal Year (1993).................................. 101(1994)......... 141
Aggregated Option Exercises in Last Fiscal
Year (1993).................... 101(1994) and Fiscal Year-End Option
Values (12/31/94).............................. 141
Employment Contracts and Arrangements..................................... 101Arrangements............ 142
Compensation Committee Interlocks and Insider
Participation............... 102Participation.................................. 142
Compensation of Directors and Certain Business
Relationships.............. 102Relationships.................................. 142
Compensation Pursuant to Pension Plans.................................... 102Plans........... 143
Item 12. Security Ownership of Certain Beneficial Owners and
Management............ 103
Enterprise................................................................ 103Management......................................... 144
Enterprise......................................... 144
PSE&G..................................................................... 103&G.............................................. 144
Item 13. Certain Relationships and Related Transactions............................ 104
Enterprise................................................................ 104Transactions....... 145
Enterprise......................................... 145
PSE&G..................................................................... 104&G.............................................. 145
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)....................................................
1108-K........................................ 146
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... 149
Schedule VIII -- Valuation and Qualifying Accounts (PSE&G)..........................
120........ 150
Signatures -- Public Service Enterprise Group Incorporated............................... 121Incorporated..... 151
Signatures -- Public Service Electric and Gas Company.................................... 122Company.......... 152
Exhibit Index............................................................................ 123
Enterprise..........................................................................
124Index..................................................... 153
Enterprise........................................................ 154
PSE&G...............................................................................
130&G............................................................. 160
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GLOSSARY OF TERMS
The following is a glossary of frequently used abbreviations or acronyms that
are found throughin this report:
TERM MEANING
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ACO................................ACO.................... Administrative Consent Order
Advisory Council................... Advisory Council on Electricity Planning and Procurement
AFDC...............................AFDC................... Allowance for Funds used During Construction
AMT................................AMT.................... Alternative Minimum Tax
Bonds..............................BCFE................... Billion Cubic Feet Equivalent
Bonds.................. First and Refunding Mortgage Bonds
BRC................................BPU.................... New Jersey Board of Regulatory Commissioners
BTA................................Public Utilities
BTA.................... Best Technology Available
CAA................................BWA.................... Boiling Water Reactor
CAA.................... Federal Clean Air Act
Capital............................Capital................ PSEG Capital Corporation
CEA................................CEA.................... Community Energy Alternatives Incorporated
CEA USA............................USA................ CEA USA, Inc.
CEA New Jersey.....................Jersey......... CEA New Jersey, Inc.
CERCLA.............................CERCLA................. Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980
CORP...............................Certificate............ Certificate of Need under the NJNAA
CORP................... New Jersey Commission on Radiation Protection
DGW................................DGW.................... Discharge to Ground Water
DOE................................DOE.................... United States Department of Energy
DRBC............................... Delaware River Basin Commission
DRIP...............................DRIP................... Enterprise's Dividend Reinvestment and Stock
Purchase Plan
DSM................................DSM.................... Demand Side Management
DSM Plan...........................Plan............... DSM Incentive Resource Plan
DSW................................DSW.................... Discharge to Surface Water
EBIT............................... Twelve months earningsEBIT................... Earnings before interest and taxes
to
interest
ECRA...............................ECRA................... New Jersey Environmental Cleanup Responsibility Act
EDC................................EDC.................... Energy Development Corporation
EDHI...............................EDHI................... Enterprise Diversified Holdings Incorporated
EGDC...............................EGDC................... Enterprise Group Development Corporation
EMF................................EITF................... FASB's Emerging Issues Task Force
EMF.................... Electric and Magnetic Fields
Enterprise.........................Enterprise............. Public Service Enterprise Group Incorporated
EPA................................ United States Environmental Protection Agency
EWG................................EPA.................... United States Environmental Protection Agency
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TERM MEANING
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EWGs................... Exempt Wholesale Generator
FASB...............................Generators
FASB................... Financial Accounting Standards Board
FERC...............................Fault Act.............. New Jersey Public Utility Accident
Fault Determination Act
FERC................... Federal Energy Regulatory Commission
Fuelco.............................Fuelco................. PSE&G Fuel Corporation
Funding............................Funding................ Enterprise Capital Funding Corporation
FWPCA..............................FWPCA.................. Federal Water Pollution Control Act
GEMS...............................GE..................... General Electric
GEMS................... Gloucester Environmental Management Services, Inc.
Hope Creek.........................Creek............. Hope Creek Nuclear Generating Station
IRP................................IEPNJ.................. Independent Energy Producers of New Jersey
IPP.................... Independent Power Producers
IRP.................... Integrated Electric Resource Plan
IRS................................IRS.................... Internal Revenue Service
Kwh................................KWH.................... Kilowatthours
LEAC...............................LEAC................... Electric Levelized Energy Adjustment Clause
LGAC...............................LGAC................... Levelized Gas Adjustment Clause
LLRW...............................Charge
LLRW................... Low Level Radioactive Waste
LLRWPA.............................LLRWPA................. Low Level Radioactive Waste Policy Act, LNG................................as amended
LNG.................... Liquefied Natural Gas
LPG................................LPG.................... Liquid Petroleum Air Gas
LTIP...............................LTIP................... Long-Term Incentive Plan
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TERM MEANING
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MD&A...............................&A................... Management's Discussion and Analysis of Financial
PositionCondition and Results of Operations
MICP...............................MICP................... Management Incentive Compensation Plan
Mortgage...........................MIPS................... Monthly Income Preferred Securities
Mortgage............... First and Refunding Mortgage MTNs...............................of PSE&G
MTNs................... Medium-Term Notes
MW.................................MW..................... Megawatts
MWH................................MWH.................... Megawatthours
NAAQS..............................NAAQS.................. National Ambient Air Quality Standards
Need Assessment Act................ New Jersey Electric Facility Need Assessment Act
NEIL...............................NEIL................... Nuclear Electric Insurance Limited
NEPA...............................NEPA................... National Energy Policy Act NJAPCC.............................of 1992
NJAPCC................. New Jersey Air Pollution Control Code
NJDEPE.............................NJDEP.................. New Jersey Department of Environmental Protection
and
Energy
NJGRT..............................NJEDA.................. New Jersey Economic Development Authority
NJGRT.................. New Jersey Gross Receipts and Franchise Tax
NJPDES.............................NJNAA.................. New Jersey Need Assessment Act
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TERM MEANING
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NJPDES................. New Jersey Pollution Discharge Elimination System
NJWPCA.............................NJWPCA................. New Jersey Water Pollution Control Act
NOC................................NOC.................... Nuclear Oversight Committee
NOx................................NOx.................... Nitrogen Oxides
NPDES..............................NPDES.................. National Pollutant Discharge Elimination System
Non-Jurisdictional Customer........ Electric resale customer whose rate schedule has been
approvedNPS.................... The BPU's nuclear performance standard established
for nuclear generating stations owned by
FERC. Also includes off-system sales to
otherNew Jersey electric utilities
NRC................................NRC.................... Nuclear Regulatory Commission
NUG................................NUGs................... Nonutility Generators
NWPA...............................NWPA................... Nuclear Waste Policy Act of 1982, OI................................. Nuclear Regulatory Commission'sas amended
OAL.................... Office of Investigation
OPEB...............................Administrative Law of the State of
New Jersey
OPEB................... Other PostemploymentPostretirement Benefits
PDER............................... Pennsylvania Department of Environmental ResourcesPartnership............ Public Service Electric and Gas Capital, L.P.
Peach Bottom.......................Bottom........... Peach Bottom Atomic Power Station, UnitUnits 2 and 3
PECO...............................PECO................... PECO Energy Inc.
Penelec............................Penelec................ Pennsylvania Electric Company
PJM................................PJM.................... Pennsylvania -- New Jersey -- Maryland
Interconnection
PJP................................PJP.................... PJP Landfill in Jersey City, Hudson County, New Jersey
PPUC...............................PPUC................... Pennsylvania Public Utility Commission
Price Anderson.....................Anderson......... Price-Anderson liability provisions of the Atomic
Energy Act of 1954, as amended
PRPs...............................PRPs................... Potentially Responsible Parties
PSE&G..............................&G.................. Public Service Electric and Gas Company
PSCRC..............................PSCRC.................. Public Service Conservation Resources Corporation
PSRC...............................PSRC................... Public Service Resources Corporation
PUHCA..............................PUHCA.................. Public Utility Holding Company Act PURPA..............................of 1935
PURPA.................. Public Utility Regulatory PolicyPolicies Act of 1978
QFs................................QFs.................... Qualifying Facilities
RAR................................RAC.................... Remediation Adjustment Charge
RACT................... Reasonable Available Control Technologies
RAR.................... Revenue Agent's Report
RCRA...............................RCRA................... Federal Resource Conservation and Recovery Act
of 1976
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TERM MEANING
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Remediation Program................Program.... PSE&G Gas Plant Remediation Program
RI/FS..............................FS.................. Remedial Investigation and Feasibility Study
ROD................................ROD.................... Record of Decision
Salem..............................Salem.................. Salem Nuclear Generating Station, UnitUnits 1 and 2
SALP...............................SALP................... Systematic Assessment of Licensee Performance
SARA............................... Superfund Amendments and Reauthorization of 1986
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TERM MEANING
- ----------------------------------- --------------------------------------------------------
SEC................................SEC.................... Securities and Exchange Commission
SFAS 71............................71................ Statement of Financial Accounting Standards
No. 71, "Accounting for the Effects of Certain
Types of Regulations."Regulation"
SFAS 106...........................106............... Statement of Financial Accounting Standards
No. 106, "Employers' Accounting for Postretirement
Benefits Other Thanthan Pensions"
SFAS 107...........................107............... Statement of Financial Accounting Standards
No. 107, "Disclosures About Fair Value of
Financial Instruments"
SFAS 109...........................109............... Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes"
SNG Plant..........................Plant.............. Synthetic Natural Gas Plant
636 Orders.........................Orders............. Orders No. 636 and No. 636-A of FERC
Spill Act..........................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..............................USDOT.................. United States Department of Transportation
USEC...............................USEC................... United States Enrichment Corporation
USEP................... U.S. Energy Partners
viviii
9
PART I
ITEM 1. BUSINESS.
GENERAL
ENTERPRISEGeneral
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)Public Utilities
(BPU) 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,and production and marketing company; Community
Energy Alternatives Incorporated (CEA), an investor in and developer of
cogeneration and independent power production facilities; Public Service
Resources Corporation (PSRC), which makes diversifiedhas made primarily 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 supportminimum net worth maintenance agreement from Enterprise; and Enterprise
Capital Funding Corporation (Funding), which provides privately-placedprivately placed debt
financing on the basis of the consolidated financial position of EDHI without
direct support from Enterprise. As of December 31, 19931994 and December 31, 1992,1993,
respectively, PSE&G comprised 86%85% and 83%86% of Enterprise's assets. For the yearsPSE&G's 1994,
1993 1992 and 1991, PSE&G's1992 revenues were 93%, 93% and
94%, respectively, of Enterprise's revenues and PSE&G's earnings
available to Enterprise for such years were 96%91%, 88%96% and 95%88%, respectively, of
Enterprise's net income. PSE&GElectric and gas production and distribution 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,
approximatelyabout 70% of the
State's population. PSE&G is Enterprise's principal
operating subsidiary.population, reside. (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 thethis 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 1
10
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,erecting, laying and
maintenance ofmaintaining 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 oferecting 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
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;marketplace, sales retention and growth potential in a mature service territory
and need to contain costs (see Regulation and Competition); deregulation and
the unbundling of energy supplies and services (see Competition); ability to
obtain adequate and timely rate relief, cost recovery, and other necessary
regulatory approvals (see PSE&G -- Rate MattersMatters; Regulation and Regulation)Item 7,
Management's Discussion and Analysis of Financial Condition and Results of
Operations (MD&A) - Competition); costs of construction (see Construction and
Capital Requirements and Competition)Requirements); operating restrictions, increased costs and construction
delays attributable to environmental regulations (see Environmental Controls);
controversies regarding electric and magnetic fields (EMF) (see Environmental
Controls); nuclear decommissioning and the availability of reprocessing and
storage facilities for spent nuclear fuel (see Electric Fuel Supply)Supply and
Disposal); and credit market concerns with these issues.
COMPETITIONCompetition
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 istechnologies are creating opportunityopportunities 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, are increasingly turning elsewhere for energy supplies and are turning elsewhere.services.
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. CurrentFurther, PSE&G's ability
to meet competition and shift costs among customer categories is impacted by
State regulation, including the historic utility mandate to serve all
customers. (See MD&A -- Competition.)
Federal energy laws and regulations are designed to decreasemake more efficient
use of all energy, introduce price competition and encourage the use of
nonconventional energy sources and to limit 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.resources. Among other things, these laws are designedactions (1)
encourage development of alternative energy generation, (2) require wheeling
of power for wholesale transactions, (3) require state regulatory authorities
to (1) increase
ceiling pricesconsider certain standards on newly-discovered natural gas, (2)rate design and certain other utility
practices, (4) 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.deregulate prices on natural gas.
Also, 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.plants. (See Environmental
Controls.)
Retention of existing customers and potential sales growth will
depend upon the ability of
2
11
PSE&G to contain costs, meet customer expectations and respond to changing
economic conditions.
Competition from nonutility generators (NUGs), such as
cogenerators, and independent power producers (IPP) and exempt wholesale generators
(EWGs), as permitted by PURPA,the Public Utility Regulatory Policies Act of 1978
(PURPA) and the National Energy Policy Act of 1992 (NEPA), continues to impact
upon PSE&G. Further,
asAs a result of changes brought about by NEPA, along with proposals
in some states to authorize retail wheeling, 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. Retention of existing
customers and potential sales growth will depend upon the ability of PSE&G to
contain costs, meet customer expectations and respond to changing economic
conditions and energy regulation. As a result of such competitive forces,
Enterprise announced a corporate reorganization on February 22, 1995, effective
March 1, 1995, that includes the creation of a new ventures and services
corporation ("Ventures") as a subsidiary of PSE&G to develop and market new
energy-related products and services and the establishment of three new
separate business units: fossil generation; electric and gas transmission and
distribution; and customer services. Previously in the Fall of 1994, PSE&G
reorganized its nuclear operations as a business unit, (see Nuclear
Operations). Ventures is expected to be the foundation for new businesses
through the development of energy-related products and services that may be
marketed beyond traditional boundries. It will include such existing
businesses as Public Service Conservation Resources Corporation (PSCRC)
offering demand side management (DSM) services (see PSE&G Demand Side
Management) and U.S. Energy Partners (USEP) a natural gas marketing company
(see EDHI -- PSRC). (See PSE&G -- Customers and MD&A -- Competition.)
Competition may also adversely impact upon the economics of certain
regulatory-created incentives, such DSM and conservation. For additional
information, including a discussion of the potential effects of competition
upon rates, cost recovery and assets, see MD&A -- Competition.
Electric
In the electric utility industry, competitive pressures began with the
enactment of the Public Utility Regulatory Policies Act of 1978 ("PURPA").PURPA. This law, together with subsequent changes in federalFederal
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),them by requiring regulated utilities to purchase their excess power
production. NEPA, by facilitating the development of the independentwholesale power
industry, willmarket, has lead to even stronger competition. The increasing competitiveness
of the electric wholesale markets, along with consideration of retail wheeling
or "direct retail access" within utility franchise areas in several states, but
not New Jersey to date, has brought to the forefront the issue of potential
stranded costs within the electric utility industry (see MD&A - Competition).
NEPA provides FERC with increased authority to order 'wheeling'"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.pricing, alternative power pooling institutions and stranded costs. NEPA also
amendsamended PUHCA to permit a new class of wholesale generators
whoEWGs, which are exempt from PUCHA regulation (EWG).not subject to PUHCA regulation. NEPA
permits both independent companies and utility affiliates to participate in the
development of EWGEWGs' projects regardless of the location and ownership of other
generating resources. The transmission access provisions apply to wholesale,
but not retail, 'wheeling'"wheeling" of power, subject to FERC review. See PSE&G --
Integrated Resource Plan, Construction and Capital Requirements, Financing
Activities and Electric OperationsPSE&G -- Other Power
Purchases and the discussion below of New Jersey Gross Receipts and Franchise
Tax (NJGRT).Customers. For information concerning the activities
of CEA, which is an owner-developer of QFs under PURPA,and EWGs, 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 BPU
in November 1994 issued the BRC convened an Advisory Council on Electricity Planningfirst phase of a draft revised Energy Master Plan.
The revised Energy Master Plan acknowledges the need for regulatory flexibility
that is responsive to the competitive realities of today's energy marketplace
and Procurement (Advisory Council)the competitive pressures being experienced by energy customers in New
Jersey. The revised Energy Master Plan calls for legislation that would allow
PSE&G and other New Jersey utilities to propose, subject to BPU approval,
alternatives to existing rate base/rate-of-return pricing and allow for pricing
flexibility under certain standards for customers with competitive options and
for the equalization of the impact of tax policy upon energy producers (see
PSE&G -- Customers). The Advisory Council issued a report in July
1993 which recommended that the BRC institute a rulemaking proceeding to adopt
rulesrevised Energy Master Plan also calls 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 newcompetitive supply procurement process for electric
utilities as measures that would accommodate competition and support the
Electric FacilityState's environmental and energy conservation goals. Repeal of the Certificate
of Need Assessment
Act (Need Assessment Act) could be modified. Further,(Certificate) process for new electric capacity also is recommended
(see Regulation).
PSE&G is in agreement with the Advisory Council
recommendedessential elements of this first phase of
the revised Energy Master Plan and is encouraged that the BRC considerplan acknowledges the
need for legislation that would provide much needed regulatory flexibility in
meeting the needs of customers and New Jersey's economy. PSE&G has supported
such legislation in the past and will review the precise terms and conditions
of any proposed legislation. The BPU is expected to allow alternativesbegin consideration of a
second phase of the revised Energy Master Plan during the second quarter of
1995. This second phase is expected to traditional ratemaking.address the future structure of the
utility industry, including retail wheeling and wholesale competition. PSE&G
intends to actively participate in the public debate concerning the revised
Energy Master Plan. PSE&G cannot predict what other actions, ifthe impact of any the
BRC may takeregulatory or
legislative changes which might ultimately be adopted.
Gas
Competition in response to these recommendations. (See Regulation and Note
2 -- Rate Matters of Notes to Consolidated Financial Statements).
Gas
Thethe natural gas industry and its regulation have also beenwas 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.
Withaccelerated with
the issuance by FERC 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 it from an industry driven by regulation to one driven by
competitive market forces. The principal thrusteffect of the 636 Orders 636 ishas been to
requirecause interstate natural gas
3
12 pipelines to reconfigure their services suchso that
services provided to third
partythird-party shippers are now fully comparable to the
services that pipelines havehad historically provided in their role as gas
merchants. To this end, the 636 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 and certain
of its customers 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,Although each pipeline has completed the restructuring of its
services in order to comply with the 636 Orders.
Furthermore,Orders, 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.appeals, which remain pending. 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
In November 10, 1993, the BRCBPU adopted a proposal for the unbundling of
traditional services provided by the local gas distribution companies, such as
PSE&G, within the State of New Jersey. The proposal was developed as a
guideline with the intention of encouraging and promotingJersey in order to promote 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.
TheOn November 30, 1994, the BPU approved PSE&G's proposed new rate
schedules, effective December 1, 1994, to implement the BPU guidelines are
directed at developing a more competitive environment for the naturalon
unbundled gas industry within the state. The action by the BRC requires that local
distribution companies within New Jersey file modifications to their tariffs forservices. This will enable PSE&G's industrial and commercial 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. Mostcustomers, who represent about half of PSE&G's sales contracts have been converted during the past year.
Fluctuationvolumes, to participate
in the price of oil resultscompetitive market. The transportation rate schedules produce the same
non-fuel revenue per therm as the customers' existing sales service rate
schedules. Thus, PSE&G's earnings are unaffected whether the customers remain
on sales service or convert to transportation service. PSE&G cannot predict
how its gas business may be affected 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 modificationfuture should additional
modifications 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 electricpublic utility regulations be made. (See Note
2 - Rate Matters of Notes to Consolidated Financial Statements.)
Construction 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 REQUIREMENTSCapital 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$3.2 billion during the
years 19941995 through 1998,1999, including $483$484 million for nuclear fuel and
$133$78 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)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 19941995 through 1998,1999, described above, recognizes the current
and planned results of PSE&G's IRPDemand Side Management (DSM) Incentive Resource
Plan (DSM Plan) 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 19931994 IRP includes a demand forecast of the
average
compound annual rate of growth through the year 20032004 of electric system peak
demand of 1.1%0.6%. (See PSE&G -- Other Power Purchases and DSM.) Aggressive conservation and load management efforts are
expected to reduce the system peak by 860 megawatts843 Megawatts (MW) by 1998. By the year
2003, 1,3232004, 1,412 MW are expected to be saved through these programs. The second component of PSE&G's consists of expected additionsIt is
important 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 allownote that, through its "Standard Offer" program, PSE&G to retire
approximately 750 MW of older, less efficient generating units by 2000, if
economically and environmentally desirable. (See Note 12only pays
for its verified, audited conservation (see PSE&G -- Commitments and
Contingent Liabilities of Notes to Consolidated Financial Statements.)
In addition,Integrated Resource Plan).
PSE&G's construction program is also focusingfocuses 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, 19931994 amounted to
approximately $2.5 billion, including $83$92 million of AFDC.
RetirementsEDHI
As of utilityDecember 31, 1994 and 1993, EDHI's long-term investments aggregated
$1.6 billion and $1.5 billion, respectively. Its property, plant for the same period totaled $500 million. Inand equipment
(net of accumulated depreciation and amortization and valuation allowances)
aggregated $.7 billion and $.6 billion, respectively. As of December 31, 1994
and December 31, 1993, construction expenditures amounted to $890 million, including $27 million of
AFDC. Retirements for 1993 aggregated $102 million.respectively, EDHI Following a 1992 focused audit (see Regulation)comprised 15% and 14% of Enterprise's
nonutility
businesses which concluded that such businesses had not harmed PSE&G,assets.
Enterprise has an agreement in April
1993,place with the BRC accepted a Focused Audit Implementation Plan in which Enterprise
agreed, among other things,BPU 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 BRCBPU and that debt supported
by a supportminimum net worth maintenance agreement (see Financing
Activities)EDHI -- Capital) between
Enterprise and Capital will be limited to $750 million, with a good faith
effort to eliminate such support over a six-to-ten-year period from April 1993.
Effective January 31, 1995, the next sixmaximum amount of Capital debt that may be
outstanding was reduced to ten years.$650 million. As of December 31, 1994, Capital's
long-term and short-term portion of long-term debt was $478 million and $154
million, respectively. (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 19981999, see Note 6 -- Schedule of Consolidated Long-Term Debt.
FINANCING ACTIVITIESDebt of Notes to
Consolidated Financial Statements.
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 1993,1994, see MD&A -- Liquidity and Capital Resources.Resources and Item 5. -
Market for Registrant's Common Equity and Related Stockholder Matters.
Enterprise's Common Stock is listed on the New York and Philadelphia Stock
Exchanges.
6
15
In 1988, Enterprise entered intoFor a support agreement with Capital which
provides, among other things, that Enterprise (i) maintain its ownership,
directly or indirectly,discussion 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 bankssee EDHI -- Capital 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.EDHI -
Funding. For further discussion of long-term debt and short-term debt, see
Note 11 -- Short-Term Debt (Commercial Paper and Loans) and Note 126 -- Schedule of Long-TermConsolidated Debt of Notes to Consolidated Financial
Statements.
FEDERAL INCOME TAXESFederal Income Taxes
For information regarding Federal income taxes, see Note 1 --
Organization and Summary of Significant Accounting Policies, Note 2 -- Rate
Matters and Note 910 -- Federal Income Taxes of Notes to Consolidated Financial
Statements.
CREDIT RATINGSCredit 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,judgments, 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 -------------------------------------------------------FITCH
- ----- ------- -------- -------- -----
Mortgage Bonds.........................................Bonds............... A2 A- A A-
Debenture Bonds........................................Bonds.............. A3 BBB+ A- BBB+
Preferred Stock........................................Stock.............. A3 BBB+ A- BBB+
Commercial Paper.......................................Paper............. P1 A2 Duff 1
Fuelco: Commercial Paper.......................................Paper..... P1 A2 Duff 1
As a component of the ratings noted above, each rating agency issues its
opinion of the credit trend or outlook for the entity being rated. For PSE&G,
these opinions are as follows: Moody's -- negative; Standard & Poor's --
stable; Duff & Phelps -- stable; and Fitch -- stable.
EDHI
- ----
Capital: Senior Debt............................................Debt......... Baa2 BBB BBB+
Funding: Commercial Paper(A)..................................... P1 A1+ Duff 1+
(A) Supported by commercial bank letter of credit (see MD&A -- Liquidity and
Capital Resources and Note 116-- Schedule of Consolidated Debt --
Short-Term Debt (Commercial Paper and Loans) of Notes to Consolidated Financial Statements.)
7
16
PSE&G
RATE MATTERSRate 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&G's Energy Remediation 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 subjectFor a discussion of the repowering of Bergen Generating Station, see Note
12 -- Commitments and Contingent Liabilities of Notes to Consolidated Financial
Statements.
Nuclear Performance Standard
The BPU has established a BRC imposed nuclear performance standard with respect
to(NPS) for nuclear
generating stations owned by New Jersey electric utilities, including the five
nuclear generating stationsunits in which itPSE&G has an ownership interests:interest: Salem Nuclear
Generating Station, Units 1 and Salem 2 (Salem 1 and 2) -- 42.59% each;; Hope Creek Nuclear
Generating Station (Hope Creek) -- 95%; and Peach Bottom Atomic Power Station,
Units 2 and Peach3 (Peach Bottom 32 and 3) -- 42.49% each.. PSE&G operates Salem and Hope
Creek, andwhile 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 standardNPS of
each of PSE&G's nuclear units for the years indicated:
NUCLEAR UNITS 1994 1993 1992
1991
---------------------------------------------------------------- -------------- ---- ---- ----
Capacity Factors:
Salem 1......................................................1...................................... 59% 60% 54%
70%
Salem 2...................................................... 57% 49% 82%2...................................... 58 57 49
Hope Creek................................................... 95% 76% 80%Creek................................... 77 95 76
Peach Bottom 2............................................... 84% 61% 55%2............................... 80 84 61
Peach Bottom 3............................................... 70% 80% 57%3............................... 98 70 80
Aggregate capacity factor of nuclear units..................... 77% 66% 71%units... 74 77 66
For information concerning such standard,NPS, see Note 12 -- Commitments and
Contingent Liabilities of Notes to Consolidated Financial Statements.
ELECTRIC OPERATIONS
Customers
As of December 31, 1994, 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, 1994, PSE&G's operating revenues aggregated $5.5 billion,
of which 68% was from its electric operations and 32% from its gas operations.
These revenues were derived as follows:
Revenues
------------------
Electric Gas
--------- ------
(Millions of Dollars)
Residential........................................ $1,187 $ 890
Commercial......................................... 1,735 511
Industrial......................................... 693 312
Transportation Service - Gas....................... -- 35
Other.............................................. 118 31
------ ------
Total........................................... $3,733 $1,779
====== ======
Customers of PSE&G, as well as those of other New Jersey electric and gas
utilities, pay New Jersey Gross Receipts and Franchise Tax (NJGRT) which, in
effect, adds approximately 13% to their bills. The following table sets forth certain information asNJGRT is a unit tax based
on electric kilowatthour and gas therm sales. This tax differential provides
an incentive to large-volume electric and gas customers to seek to obtain their
energy supplies from nonutility sources not subject to NJGRT. To the extent
this occurs, it could result in a significant decrease in PSE&G's revenues and
earnings. (See Competition.)
In January 1995, PSE&G and its second-largest industrial customer
submitted a petition to the BPU to approve a tariff modification for this
customer that would vary the electric price hourly to reflect changes in
PSE&G's marginal cost of energy. The proposed pricing would result in a bill
reduction for the customer of approximately $7 million or about 25%. This
reduction in revenues would be partially offset by a proposed decrease of $1.8
million in PSE&G's State tax liability. Under the agreement between the
customer and PSE&G, the customer will forego an opportunity to relocate to
another state and remain a PSE&G customer for ten years. BPU approval is
pending. A tariff modification to reduce electric costs of PSE&G's largest
industrial customer by approximately $9 million, or about 23%, was approved by
the BPU in December 1993.
PSE&G has signed each of its three existing wholesale electric customers,
aggregating 40 mw of load, to new 5-year full service agreements with mid-term
extension options. Two of these agreements are pending approval by FERC.
Beginning in 1995, under the terms of a previously negotiated 10-year wholesale
power transaction negotiated in 1992, PSE&G will receive $12.5 million in
annual revenues from Old Dominion Electric Cooperative.
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.
Integrated Resource Plan
Pursuant to its IRP, PSE&G periodically reevaluates its forecasted
customer load and peak growth and the sources of electric generating capacity
and DSM to meet such projected growth (see Demand Side Management below). The
IRP takes into account assumptions concerning future customer demand, future
cost trends, especially fuel and purchased power expenses, effectiveness of
conservation and load management activities, the long-term condition of and
projected additions 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.
8
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.
Theplants and capacity available at any time may be less than the installed capacity
becausefrom other
electric utilities and nonutility suppliers. PSE&G's IRP consists principally
of temporary outages for inspection, maintenance, repairs, legalplant additions, power purchases through PJM 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, outputNUGs 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 seeDSM.
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.)
9
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.
10
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 INTERCONNECTIONInterconnection
PSE&G is a member of the Pennsylvania -- New Jersey -- Maryland
Interconnection (PJM) which integrates the bulk power generation and
transmission supply operations of eleven11 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 andrequirements.
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, 1993,1994, the aggregate installed
generating capacity of the PJM companies was 55,57556,073 MW. The peak one-hour
demand experienced by the PJM power pool was 45,992 MW which occurred on July
8, 1994. The 1994 peak was 437 MW lower than the record-setting 1993 summer
peak of 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 1994-951995-96 period.
Power Purchases
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 elementcomponent of PSE&G's IRP is the purchaseconsists of electricity directlyexpected capacity additions from
certain utilitiesNUGs. These additions are projected to be 57 MW 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 purchasesare scheduled for service
by 1998. NUG projects are expected to provide about 15%comprise approximately 7% of such requirementsresources
by 1998 as resource
recovery, cogeneration and other
112004. This availability of NUG generation will reduce the need for PSE&G
to build or acquire additional generation.
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.Demand Side Management
Integrated resource planning brings together demand-side and supply-side
strategies. In order to encourage DSM, the BRCBPU 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 regulatory footing with supply side or energy production investments.
Both NEPA and the New Jerseyrevised 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.BPU. The IRP calls for PSE&G to
utilize conservation and DSM to meet over halfmost of the incremental resource needs for
the next decade. (See Construction and Capital Requirements.)decade (see Competition).
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 offeroffers payments for introducing
DSM technology and services that result in measurable energy savings. The
performance-based proposal uses a standard offer technique that would provideprovides 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 forecastIRP projects 607597 MW of passive DSM and 806815 MW of active DSM required by
the year 2004.
InPSE&G has established a wholly owned subsidiary, Public Service
Conservation Resources Corporation (PSCRC), to offer DSM services. PSCRC has
its principal office at 9 Campus Drive, Parsippany, N.J. 07054. PSCRC
finances, markets and develops energy conservation projects, mostly within the
PSE&G service territory. At December 1992,31, 1994, assets totaled $49.6 million,
of which $38.1 million were project assets and work in progress.
Electric Generating Capacity
The following table sets forth certain information as to PSE&G's installed
generating capacity as of December 31, 1994:
INSTALLED
SOURCE CAPACITY(MW) PERCENTAGE
- --------------- ------------ ----------
Conventional Steam Electric
Oil-fired(a)............................. 2,359 23
Coal-fired New Jersey(b)................. 1,242 12
Coal-fired Pennsylvania (mine mouth)(c).. 770 7
Combustion Turbine(d)...................... 2,875 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)......................... 10,497 100
====== ====
(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.
(d) Primarily used for peaking purposes.
(e) Excludes 664 MW of nonutility generation and temporary capacity sales
of 173 MW to Baltimore Gas and Electric and 111 MW to General Public
Utilities.
For additional information, see Item 2. Properties -- PSE&G -- Electric
Properties.
The capacity available at any time may be less than the BRC approvedinstalled 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 1994
was 9,001 MW, which occurred on June 15, 1994 when PSE&G's customers used a
total of 172,362 Megawatthours (MWH) of electricity. (For information
concerning sales, output and capacity factors, see Operating Statistics.) The
peak load in 1993 was 9,147 MW, a record which occurred on July 8, 1993, when
the recoveryday's output was 180,643 MWH of electricity.
Nuclear Operations
Operation of nuclear generating units involves continuous close regulation
by PSE&Gthe Nuclear Regulatory Commission (NRC). Such regulation involves testing,
evaluation and modification of all aspects of its DSM
Plan costs through its Levelized Energy Adjustment Clause (LEAC)plant operation in light of NRC
safety and Levelized
Gas Adjustment Clause (LGAC). In addition, PSE&Genvironmental 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 recover through its LEACoperate. For
information concerning the performance of the nuclear units, see Nuclear
Performance Standard and LGAC lost revenues associated with the reduced consumption of electricityNote 12 -- Commitments and natural gas. See Note 2 -- Rate MattersContingent Liabilities of
Notes to Consolidated Financial Statements.
The scheduled 1995, 1996, and 1997 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
-----------------------------------------------
1995 1996 1997
------------- ------------- -------------
Salem 1................... April September --
Salem 2................... -- March September
Hope Creek................ September -- March
Peach Bottom 2............ -- September --
Peach Bottom 3............ September -- 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. Operations at the Salem units continue to present
challenges for PSE&G. These units have experienced equipment failures and
personnel errors that have precipitated or contributed to plant events or trips
which have lead to a number of outages over the units' lifetimes.
As a result of the NRC investigation following the reactor shutdown of
Salem 1 in April 1994, PSE&G was fined $500,000 for violations relating to the
failure to identify and correct significant conditions adverse to quality at
the facility related to spurious steam flow signals and inoperable atmospheric
relief valves, both of which, the NRC concluded, lead to unnecessary safety
injections during the event; the failure to identify and correct significant
conditions adverse to quality at the facility related to providing adequate
training, guidance and procedures for the operators to cope with the event; and
the failure by supervisors to exercise appropriate command and control of the
operations staff and the reactor during the event. On November 1, 1994, PSE&G
responded to the violations and paid the fine.
On January 3, 1995, the NRC provided PSE&G with its latest Systematic
Assessment of Licensee Performance (SALP) report on Salem for the period
between June 20, 1993 and November 5, 1994. SALP is a process pursuant to
which the NRC periodically reviews the performance of nuclear power plant
operations. The Salem SALP report was issued under the revised SALP process
in which the number of assessment areas has been reduced from seven to four:
Operations, Maintenance, Engineering and Plant Support (the Plant Support area
includes security, emergency preparedness, radiological controls, fire
protection, chemistry and housekeeping). Ratings range from a high of "1" to
a low of "3" for each assessment area. Salem received a rating of "3" in the
Operations and Maintenance areas, a rating of "2" in Engineering, and a rating
of "1" in the Plant Support area. The NRC noted an overall decline in
performance, and evidenced particular concern with plant and operator
challenges caused by repetitive equipment problems and personnel errors. The
NRC also noted that although PSE&G has initiated several comprehensive actions
within the past year to improve plant performance, and some recent incremental
gains have been made, these efforts have yet to noticeably change overall
performance at Salem.
PSE&G's own assessments, as well as those by the NRC and the Institute of
Nuclear Power Operations indicate that additional efforts are required to
further improve operating performance, and PSE&G is committed to taking the
necessary actions to address Salem's performance needs. It is anticipated that
the NRC will maintain a close watch on Salem's performance and corrective
actions related to the April reactor shutdown. No assurance can be given as
to what, if any, further or additional actions may be taken or required by the
NRC to improve Salem's performance.
PSE&G is taking significant steps to address performance shortfalls at
Salem. In 1993, a comprehensive performance assessment team identified areas
of weakness through an in-depth investigation of common causes and events.
Corrective action plans and effectiveness measures were then initiated in 1994
and are ongoing, along with additional measures designed to achieve a change
in Salem's performance. Personnel performance is being addressed through
improved supervisory training and increased monitoring of work activities,
improved operational command and control and the reorganization and increased
staffing of Salem Station. PSE&G has established PSCRCa goal of safe, uneventful
operation to offer DSM servicesbe achieved through enhanced self-assessment and corrective action
processes, resolution of long-standing equipment problems, improved independent
oversight of plant operations and improved root-cause analysis of plant
problems. In furtherance of these goals, PSE&G has reorganized the operational
structure of its Nuclear Department and recruited a new chief nuclear officer.
In addition, Enterprise has strengthened oversight of nuclear plant operations
by establishing a standing Nuclear Committee of its Board of Directors. (see
Item 10. -- Directors and Executive Officers of the Registrants).
On February 6, 1995, Enterprise and PSE&G received a request from the NRC
for a meeting of its representatives with their respective Boards of Directors
to utility customers.
12discuss the need for continued improvements in equipment reliability and
staff performance. This meeting is scheduled for mid-March. Enterprise cannot
predict what actions, if any, the NRC may take as a result of this meeting.
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.
The NRC's latest periodic SALP report on Hope Creek was received in
September 1993 and covered the period between December 29, 1991 and June 19,
1993. This report was issued under prior SALP procedures. Hope Creek received
a rating of "1" in six functional areas, and received a rating of "2" in the
one remaining area. The NRC noted an improvement over the prior 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 internal allegation report, PSE&G submitted a License
Event Report to the NRC on October 14, 1994 which stated that in 1992, the Hope
Creek control room was understaffed for approximately three minutes and a
decision was made by those involved that the incident did not warrant
initiation of NRC reporting documentation. A meeting with Region I NRC
personnel was held on October 18, 1994 in which the NRC expressed a high degree
of concern over the issue. The NRC's Office of Investigation has since looked
into the event, as well as an internal investigation by PSE&G as to the
validity of the allegation. The NRC's Senior Resident Inspector has indicated
to PSE&G that a Notice of Violation would likely be issued. A second meeting
with the NRC was held on February 3, 1995, with resolution of this issue
pending completion of the NRC's investigation. PSE&G cannot predict what other
action 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.
PSE&G has been advised by PECO that on June 29, 1994, the NRC issued its
periodic SALP Report for Peach Bottom for the period November 1, 1992 to April
30, 1994. The Report was issued under the revised SALP process described above
for Salem. PECO has advised PSE&G that Peach Bottom received a rating of "1"
in the area of Plant Operations; the areas of Engineering, Maintenance, and
Plant Support received ratings of "2" overall, the NRC found continued
improvement in performance during the period; the NRC stated that enhancement
in problem identification and resolution, good control of refuelings and
outages and excellent oversight by plant management of day-to-day activities
in a manner that ensured safe operation of the units contributed to the
improvement; despite the overall improvement, the NRC noted that some areas
require continued management attention and that management needs to continue
to encourage plant personnel at all levels to identify existing, and sometimes
longstanding, problems so that priorities can be established, and effective
corrective actions implemented; the NRC also noted instances of personnel
inattention to detail and failure to follow procedures which warranted
additional management attention. PECO has advised PSE&G that it has taken and
is taking actions to address the weaknesses discussed in the SALP Report.
PSE&G has been advised by PECO that on October 18, 1994, the NRC held an
enforcement conference to discuss a violation at Peach Bottom. An emergency
service water valve was left closed and unattended for approximately 45 minutes
during testing, which would have prevented safety-related equipment from
receiving the proper cooling flow in an emergency. On November 21, ELECTRIC FUEL SUPPLY1994, PECO
received a Level III violation for this incident, including a civil penalty of
$87,500. PSE&G cannot predict what other actions, if any, the NRC may take in
this matter.
PSE&G has been advised by PECO that, by letter dated October 18, 1994, the
NRC has approved PECO's request to re-rate the authorized maximum reactor core
power levels of both Peach Bottom units by 5% to 3,458 MW from the current
limits of 3,293 MW. The amendment of the Peach Bottom 2 facility operating
license was effective upon the date of the NRC approval letter and the hardware
changes were completed during the fall 1994 refueling outage. The amendment
of the Peach Bottom 3 facility operating license will be effective upon the
implementation of associated hardware changes, which are to be completed during
Peach Bottom 3's next refueling outage scheduled for the fall of 1995.
Other Nuclear Matters
In October 1990, General Electric (GE) reported that crack indications
were discovered near the seam welds of the core shroud assembly in a GE Boiling
Water Reactor (BWR) located outside the United States. As a result, GE issued
a letter requesting that the owners of GE BWR plants take interim corrective
actions, including a review of fabrication records and visual examinations of
accessible areas of the core shroud seam welds. PSE&G (Hope Creek) and PECO
(Peach Bottom) are participating in a GE BWR Owners' Group to evaluate this
issue and develop long-term corrective actions. During the spring 1994
refueling outage, PSE&G inspected the shroud of Hope Creek in accordance with
GE's recommendations and found no cracks. PSE&G is working closely with GE and
the BWR Owners' Group on coordination of inspections, evaluations and repair
options, if required. PSE&G expects minimal impact due to the age and
materials of the Hope Creek shroud and the historical maintenance of low
conductivity water chemistry. For these reasons, Hope Creek has been placed
in the lowest susceptibility category by the BWR Owners' Group.
PECO has advised PSE&G that Peach Bottom 3 was examined in October 1993
during the last refueling outage and crack indications were identified at two
locations. On November 3, 1993, PECO presented its findings to the NRC and
provided justification for continued operation of Unit 3 for another two-year
cycle with crack indications. PECO has also advised that Peach Bottom 2 was
examined in October 1994 during its refueling outage. Although some crack
indications were identified, they were considered to be much less severe than
those previously found on Unit 3, and no repairs were required to operate Unit
2 for another two-year cycle.
Electric Fuel Supply and Disposal
The following table indicates PSE&G's kilowatthour (Kwh)KWH output by source of energy:
ACTUAL ESTIMATED
SOURCE 1993 1994 ------------------------------------------------------------------1995
------ ------ ---------
Nuclear
New Jersey facilities........................................... 32% 29%facilities.......................... 28% 30%
Pennsylvania facilities......................................... 15facilities........................ 17 14
Fossil
Coal
New Jersey facilities........................................ 9 9facilities........................... 7 11
Pennsylvania facilities...................................... 13facilities......................... 12 12
Natural Gas..................................................... 5 8Gas..................................... 7 6
Residual Oil.................................................... 1Oil.................................... 2 1
Net PJM Interchange............................................... 4 5
Two-PartyInterchange and Utility Purchases
(Including NUGs).............................. 21 22
------ ---
Total...................................................and NUGs........................................ 27 26
---- ----
Total................................................. 100% 100%
------ ---
------ ---==== ====
PSE&G's cost of fuel used to generate electricity in the periods shown below was as follows:
NATURAL
COAL ------------------------------------------GAS
---------------------------------------- --------
NEW JERSEY PENNSYLVANIA
NATURAL
NUCLEAR OIL FACILITIES FACILITIES GASOIL
------- ------------------- ------------------ ------------------ -------------------------- -------------------
CENTS/ CENTS/ CENTS/ CENTS/ CENTS/
MILLION $/ MILLION MILLION MILLION $/ MILLION
YEAR BTU BARREL BTU $/TON BTU $/TON BTU BTU BARREL 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 21.70 351.7
1993 59.3 55.45 203.8 33.73 136.6 221.7 23.44 384.5
55.45 203.8 33.73 136.6 221.7
1994 62.3 56.31 213.8 34.78 140.7 197.8 22.19 361.02
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.
Nuclear Fuel
The supply of residual oil is furnished by one contract supplier, which
contract expires December 31, 1994, supplemented by occasional spot market
purchases.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.
PSE&G uses distillatehas several long-term contracts with ore operators to process
uranium ore to uranium concentrate to meet the currently 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 its combustion turbines which is
acquired by spot market purchases.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; approximately 50% through 2002; and
approximately 30% through 2004. PSE&G does not presently anticipate
any difficulties in obtaining oil supplies.
Natural Gasnecessary enrichment service for
its Salem and Hope Creek units.
PSE&G utilizes surplus gas, available from its long-term, high load factor
gashas been advised by PECO that it has 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 transportationpurchase of
natural gas, eitheruranium which will satisfy the fuel requirements of Peach Bottom 2 and 3
through 2002. PSE&G has also been advised by virtuePECO that it has contracts for
uranium concentrates which 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 existing blanket authority orthe nuclear fuel supply cycle for Peach Bottom 2 and 3 through individual proceedings. (See Competition
and Gas Supply.)
13the
following years:
NUCLEAR UNIT CONVERSION ENRICHMENT FABRICATION
- ------------ ---------- ---------- -----------
Peach Bottom 2.............. 1997 2008 1999
Peach Bottom 3.............. 1997 2008 1998
22
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 basisannually 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, theThe New Jersey Air Pollution Control Code (NJAPCC) has permittedpermits 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(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 an 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%18% 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%51% of
Conemaugh's coal requirements is supplied under a mix of short-term contracts
which expire on March 31, 1995 and 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 FuelNatural Gas
PSE&G utilizes natural gas available from various spot, short-term and
long-term gas contracts, to replace other fuels for electric generation.
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. PSE&G does not
expect any difficulties in obtaining natural gas supplies.
Oil
PSE&G uses residual oil in its conventional fossil-fired, steam-electric
units. The supply of residual oil is furnished by contract suppliers,
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.
Nuclear Fuel Disposal
As a result of NEPA, all utilities owning nuclear units will be
responsible to co-fund with the Federal government a decontamination and
decommissioning fund for nuclear generating units involves the miningUnited States Department of Energy (DOE)
enrichment facilities. Both PSE&G and millingPECO are responsible for making annual
payments into this fund through 2008, with payments based on enrichment
services purchased from the DOE prior to 1993. (See Note 3 -- PSE&G Nuclear
Decommissioning and Amortization of uranium oreNuclear Fuel of Notes 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.Consolidated
Financial Statements.)
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 obligationentered into contracts 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).
14
23
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.fuel. 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.service or
under construction.
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
KwhKWH 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,May 25, 1994, the DOE published a Notice of Inquiry indicating its
preliminary view on waste acceptance. The DOE stated that, despite provisions
of NWPA to the contrary, it has no statutory obligation to accept spent nuclear
fuel beginning in 1998 in the absence of an operational repository or other
facility constructed under the NWPA although the DOE may have created an
expectation that it would begin accepting such spent nuclear fuel in 1998. The
Notice of Inquiry is intended to elicit the views of the affected parties on
the DOE's preliminary view on the 1998 obligation issue, the need for an
interim, away-from-reactor storage facility prior to repository operations and
options for offsetting, through the use of a nuclear waste fund, a portion of
the financial burden that may be incurred by utilities to store spent fuel at
reactor sites beyond 1998. Pursuant to NRC determined thatrules, spent nuclear fuel generated
in any reactor can be stored safely and without significant environmental
impactsimpact 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
In June 1994, two separate lawsuits were filed by a group of states and
a group of utilities, respectively, in the U. S. Court of Appeals for the
District of Columbia Circuit to compel DOE has stated that neither the NWPA nor its contracts imposes an
unconditional obligation to accept spent fuel by 1998 and indicated that such
obligation1998. On
July 19, 1994, the BPU voted to join the lawsuit brought by the group of
states. PSE&G is conditional upon commencementnot a party to the lawsuit brought by the group of TSF operations. The DOE has also
stated its belief that it will have a TSF operational by 1998.utilities.
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.
In May 1994, PSE&G plansreceived a license from the NRC 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 1992is ongoing and is expected to extend the
storage capability through March 2008 for Salem 1 and March 2012 for Salem 2. When the2,
considering operational full core discharge requirements. The Hope Creek pool
is fully racked and it will have thehas capacity to hold spent fuel through September 2007.2007,
considering operational full core discharge requirements. PECO has advised
PSE&G that spent fuel racks at Peach Bottom 2 have storage capacity until 19972000
for Unit 2 and 19981999 for Unit 3 prior to loss of full core reserve occurring,
and that expansion of storage capacity beyond such dates including the viability of rod
consolidation, areis 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 commencementtermination
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.
15Low Level Radioactive Waste (LLRW)
As a by-product of their operations, nuclear generating units, including
those in which PSE&G owns an interest, produce LLRW. Such wastes include
paper, plastics, protective clothing, water purification materials and other
materials of which proper disposal must be made. Prior to July 1, 1994, such
materials were accumulated on site and disposed of at a federally licensed
permanent disposal facility. However, in accordance with the Low Level
Radioactive Waste Policy Act, as amended (LLRWPA), operating disposal sites
have exercised their authority to either cease operations or deny access to
LLRW generated in states which are not members of the regional compact in which
they are located. For PSE&G and all other New Jersey LLRW generators, this
means that since July 1, 1994, LLRW must be temporarily stored on site until
New Jersey provides for permanent disposal.
In 1991, New Jersey enacted legislation providing for funding of the
estimated $90 million cost of establishing a disposal facility. The State
would recover the costs through fees paid by LLRW generators. PSE&G's overall
share is expected to be about 40% of the total cost and has provided about $4.8
million to date. New Jersey has introduced a volunteer siting process as its
24
GAS OPERATIONSplan for establishing a LLRW disposal facility by the year 2000. Public
meetings have been held across the state in an effort to provide information
to and obtain feedback from the public. The plan is expected to be approved
in early 1995 and an official invitation to municipalities to become volunteer
hosts for a disposal facility will be announced sometime in 1995.
Until New Jersey provides for disposal, PSE&G will temporarily store LLRW
in an on-site facility completed in September 1994 at a total cost of $7.1
million. This facility will provide five years' storage for LLRW from Hope
Creek and Salem. PECO has advised PSE&G that as of July 1, 1994, the Peach
Bottom plants are also providing temporary on-site storage with adequate space
for at least five years. PECO has also advised that Pennsylvania is pursuing
its own LLRW site development via state-selected candidate sites, along with
a volunteer plan option. PSE&G will continue to accrue monies for stored LLRW
from Salem, Hope Creek and Peach Bottom to cover expenses with a concurrent
liability for the amount to be paid at the time of ultimate disposal when New
Jersey and Pennsylvania provide disposal facilities.
Gas Operations and Supply
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, 1993,1994, the daily gas capacity of PSE&G was as follows:
TYPE OF GAS THERMS PER DAY
--------------------------------------------------------------Type of Gas Therms Per Day
------------------------------------ --------------
Natural gas................................................... 22,731,000gas......................... 23,191,270
Liquefied petroleum gas.......................................gas............. 2,200,000
Refinery gas..................................................gas........................ 400,000
--------------
Total............................................... 25,331,000
--------------
-------------------------
Total........................... 25,791,270
===========
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 19931994 was 3.73.8 billion therms which consisted of approximately 96% natural
gas. Included in this amount is 561 million1.3 billion therms of gas delivered to
customers under PSE&G's transportation tariffs and individual cogeneration
contracts. (See Certain Operating Statistics of PSE&G). During 1993,1994, PSE&G purchased
approximately 3.43.5 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 traditionalinterstate pipeline suppliers. These supplies were transported to New
Jersey by PSE&G's traditionalfour interstate pipeline suppliers: Transcontinental Gas Pipe Line
Corporation, Texas Eastern Transmission Corporation, Tennessee Gas Pipeline
Company and Columbia Gas Transmission Corporation.suppliers. This diversification of
supply sources provides PSE&G with reliability of supply, purchasing
flexibility and lower overall costs.
PSE&G's gas supply contracts expire at various times over approximately the next seventwo to
ten years. PSE&G does not presently anticipate any difficulty in negotiating
replacement contracts. Since the quantities of gas available to the
CompanyPSE&G 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 764770 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 MILLIONCents Per
Year Million BTU(A)
---------------------------------------------------------------------------------------- --------------
1991.................................................. 311.38
1992..................................................1994............................. 338.09
1993.............................. 340.85
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&GNote 2 -- Rate Matters -- Adjustment
Clauses.of Notes to
Consolidated Financial Statements.)
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
16
25 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 ordersFERC's 636 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
1992-931993-94 winter season and expects to continue to meet such energy-related
demands of its firm customers during the 1993-941994-95 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 1993-941994-95 heating season through February 7, 1994,13, 1995, it was
necessary for PSE&G to interrupt service to 'interruptible' customers for eight
days as permitted by the applicable tariff for 22 days.tariff. During the 1992-931993-94 heating season,
service to such customers was interrupted for 1125 days.
EMPLOYEE RELATIONSEmployee Relations
Enterprise has no employees. As of December 31, 1993, Enterprise's1994, PSE&G and its
subsidiaries employed 12,42811,919 persons. Four-year bargaining agreements between
PSE&G and its unions, representing approximately 7,000 employees, will expire
April 30, 1996. EDHI and its subsidiaries employed 471 persons, of which 12,027 were employed37
are represented by PSE&G, 17
by PSCRC, 244 by EDC, 107 by CEA, 10 by PSRC and 28 by EDHI.unions. Enterprise and EDHI and its subsidiaries reimburse
PSE&G for the costs of services provided by employees of PSE&G. PSE&G, EDHI
and their subsidiaries believe that they maintain satisfactory relationships
with their employees.
For information concerning the employee pension plan and other
post-employmentpostretirement 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.
REGULATIONRegulation
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,BPU, except potentially with respect to certain transfers of control and
reporting requirements, and is not subject to regulation by the FERC. The BRCBPU
may also impose certain requirements with respect to affiliate transactions
between and among PSE&G, Enterprise and itsEnterprise's nonutility subsidiaries.
(See EDHI.)
As a New Jersey public utility, PSE&G is subject to comprehensive
regulation by the BRCBPU 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 New Jersey Need Assessment Act (NJNAA) provides that no
public utility shall commence construction of any electric facility (as defined
in the Need
Assessment Act)NJNAA) without having first obtained from the Division of Energy
Planning and Conservation within the New Jersey Department of Environmental
Protection and
17
26
Energy (NJDEPE)(NJDEP) a certificate of need.Certificate. A certificate of need,Certificate, if granted, is valid for three
years, renewable subject to review by the Commissioner of the NJDEPE.NJDEP. Under the
Need Assessment Act,NJNAA, 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.Certificate. An electric facility is defined under the Need Assessment ActNJNAA 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 needUnder NJNAA, a Certificate shall be issued only if
the NJDEPENJDEP 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)BPU's NPS 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 BRCBPU 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 failingfailed 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 BRCBPU 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.BPU. 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 BRCBPU were to deny recovery of all or a portion of the
costs related thereto. PSE&G has included net replacement power costs relatedSee Note 2 - Rate Matters -- LEAC of Notes 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.Consolidated Financial Statements.
Under New Jersey law, the BRCBPU 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 staffBPU Staff or
under the supervision of designated members of such staffStaff 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.BPU. The BRCBPU 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 was
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 end1991.
In 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 suchits 1991 management audit, the BPU conducted
a focused audit of Enterprise's nonutility businesses to ascertain whether
diversifiednonutility activities havehad harmed PSE&G. Enterprise
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27 has consistently maintained
a clear and distinct separation of its utility and nonutility operations and
believes that its diversificationnonutility 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 recommendationsThe results of the BRC'sfocused audit confirmed that there has been
no harm to PSE&G as a result of Enterprise's nonutility activities. However,
as a result of recommendations made by the BPU's auditors regarding operations
and intercompany relationships between PSE&G and EDHI's nonutility businesses. Amongbusinesses,
the BPU approved a plan which, 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 BRCBPU (such assets
presently being approximately 15%); (2) for 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) for an Enterprise agreement to (a) limit debt supported by
the Support Agreementminimum net worth maintenance agreement between Enterprise and Capital to
$750 million, together with an agreement toand (b) make a goodgood- faith effort to eliminate such support over
a six to ten year period;period from April 1993; and (4) the payment by EDHI to PSE&G
of an affiliation fee of up to $2 million a year which will be applied by PSE&G
through its LGAC and LEAC to reduce utility rates. SuchEffective January 31, 1995,
such fee is predicated on $750up to $650 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 Planthis 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 BRCBPU may take concerning consolidation of tax benefits
in future proceedings. (See MD&ANote 2 -- Overview and Part III. Item 10 -- Directors and
Executive OfficersRate Matters - Consolidated Tax Benefits
of the Registrants.Notes to Consolidated Financial Statements.)
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 ElectricNuclear 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.EWGs. For
additional information, see EDHI -- CEA.
The BRCBPU has authority to regulate power sales agreements within the BRC'sBPU'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 CONTROLSEnvironmental 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,NJDEP, the New Jersey Department of Health, the BRC,BPU, 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).Resources. 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
19
28 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 1993,1994,
PSE&G expended approximately $253$255 million of capital related to improving the
environment, and it
environment. It is estimated that PSE&G will expend approximately $313$169
million, $168$142 million, $196$54 million, $159$53 million and $146$54 million in the years
19941995 through 1998,1999, 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 NJDEPENJDEP 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 CONTROLAir 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 oxideoxides (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 (RACT) on major sources
of NOx effective May 1995.
The
NJDEPEAll of PSE&G's fossil steam and combustion turbine generating units are
subject to RACT requirements. NJDEP RACT Regulations which were adopted in November
1993 and will result in capital expenditures of approximately $120$90 million over
a period of years. Such amount is included in PSE&G's estimate of construction
expenditures. Additional reductions of NOx emissions will likely 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%an approximately 23% interest in Conemaugh and a 22.84% interest in Keystone,
coal-fired generating stations located in western Pennsylvania. InWith respect
to Conemaugh, 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
20
29
Conemaugh.. PSE&G's share of the remaining Conemaugh scrubber
cost at year-end 1993 is now estimated at approximately $77$78.6 million including cost of removal. Such amount is
included in PSE&G's estimate of construction expenditures. Construction at
Conemaugh Unit 2 is scheduled for completion by January 1, 1995 for Unit 1 and a year
later for Unit 2.1996. 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 included in PSE&G's estimate of
construction expenditures and are estimated at approximately $8$8.2 million for
Keystone and $8.6$9.1 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 19981999
are included in PSE&G's estimate of construction expenditures. PSE&G expects
to request the BRCBPU 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.BPU. 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. (See Note 2 -- Rate
Matters of Notes to Consolidated Financial Statements.)
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 standardsNational Ambient Air Quality Standards
(NAAQS). All of these requirements may affect PSE&G's ability to locate,
construct or expand generating facilities in the future.
NJDEPENJDEP is using the NJAPCCNew Jersey Air Pollution Control Code (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 costsSupply and PSE&G estimates that
during 1994 such costs will add an additional $24 million.Disposal -- Coal.) 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 Disposal and Note 2 -- Rate Matters of Notes to
Consolidated Financial Statements.)
WATER POLLUTION CONTROLWater 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 beenis administered by NJDEPE since 1982NJDEP pursuant to the
New Jersey Water Pollution Control Act (NJWPCA). The NJWPCA authorizes NJDEPENJDEP
to regulate discharges of pollutants to surface and ground waters of the State.
The NPDES permit program, administered by the NJDEPE,NJDEP, 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 Statesstates to implement more
stringent controls on the discharges of toxics to certain water-bodies deemed
contaminated by toxic discharges. FourAlthough five PSE&G electric generating
stations (Bergen, Hudson, Kearny, Linden and Sewaren) were originally subject
to requirements imposed pursuant to Section 304(l), the NJDEP and EPA have
completed effluent characterization studies to satisfyproposed delisting these stations from the 304(l) requirements. Aprogram for the present time.
No final permitaction on this proposal has been issued for a fifth station, Linden,
which required similar 304(l) studies.
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30taken.
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 NJDEPENJDEP 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, NJDEPENJDEP 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 NJDEPENJDEP 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 NJDEPENJDEP to resolve one or more contested issues
in the above-referenced permits for Linden asand are 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 NJDEPENJDEP 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/modificationsThe
NJDEP and the EPA have proposed delisting Sewaren and the NJDEP has indicated
its intent 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
receivedreissue a draft permit with regard to Section 304(1)which would not impose water-quality-based
effluent limits.
In August 1994, the Bergen County Utilities Authority issued a significant
industrial user permit for the discharge of the FWPCA. A second
draft permit was issued in March 1992, which proposed monitoring programs
similar to those conducted at thecooling tower blowdown and 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 conditionssources associated with the NJDEPE onnewly repowered Bergen Unit. This permit will
replace the 1992 draft permit, many of which are
reflected in the 1993 draft permit modification.expired NJPDES DSW permit.
In June, 1993, the NJDEPENJDEP 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.
NJDEPENJDEP 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
22
31 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 Januaryin
1990. To date, the NJDEPENJDEP 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 NJDEPENJDEP for Mercer Generating Station in
February 1987. NJDEPENJDEP 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 NJDEPENJDEP its demonstrations which concluded that structural
modifications including cooling towers, are not required at Salem to achieve
satisfactory environmental effects. In October 1990, the NJDEPENJDEP 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
NJDEPENJDEP regarding the ecological effects of Stationstation 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 demonstrateddemonstrating 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'sNJDEP'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-rangingother 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.flow. 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 NJDEPENJDEP issued Salem a revised Draft Permitdraft permit which
reconsidered the requirement for closed-cycle cooling and adopted alternative
measures proposed by PSE&G with certain modifications. The public comment period
onA final five-year
permit, with essentially the same provisions as the revised Draft Permit closed January 15,draft permit, was
issued on July 20, 1994 with an effective date of September 1, 1994. The NJDEPEEPA,
which has receivedauthority to review the final permit issued by the NJDEP, completed
its review and has not raised any objections.
Certain environmental groups and other entities, including the State of
Delaware, have filed requests for hearings with the NJDEP challenging the final
permit. The NJDEP granted the hearing requests on certain of the issues and
PSE&G has been named as a very substantial number of comments onrespondent along with the revised Draft Permit from a wide
variety of interests. These comments have included a large number of suggestions
to the NJDEPE for changesNJDEP in these matters
which are pending in the permit terms including: requiring, directly or
indirectly, closed cycle cooling at the station insteadOffice of Administrative Law 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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32
Management Plans, failure to comply with requirements of the DRBC and failure to
comply with procedural requirementsState of New
Jersey and federal law.
In September 1993,(OAL).
PSE&G filed extensive comments in support ofis implementing the terms
offinal permit. Additional permits from various
agencies are required to be obtained to implement 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 nopermit. No assurances
can be given as to when or in what manner
NJDEPE will act on the issuancereceipt of a final permit.any such additional permits. 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. Estimatedestimated
capital cost of compliance with the revised Draft Permitfinal permit is approximately $75$100 million,
of which PSE&G's share would beis 42.59%. and is included in PSE&G's 1995-1999
construction program. PSE&G wouldwill request the BRCBPU to allow the recovery in
rates from electric customers of all costs associated with constructing cooling towers at Salem or
implementing otherthe 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 imposedrequired by a finalthe permit. (See MD&A -- Liquidity and
Capital Resources -- Construction, InvestmentInvestments and otherOther 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 NJDEPENJDEP action expected in 1994.1995. PSE&G cannot predict what new
permit terms and conditions NJDEPENJDEP may seek to impose in the renewed permit.
CONTROL OF HAZARDOUS SUBSTANCESControl 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
InPSE&G's 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 jointlyJersey (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 have a material effect on its
financial position, results of operations or net cash flows.
A preliminary review of possible mercury contamination at the Kearny
Generating Station concluded that additional study and investigations are
required. PSE&G filed an application in January 1995 for a Memorandum of
Agreement with NJDEP for the conduct of the additional study and investigation.
A work plan detailing additional sampling will be material.developed in early 1995 and
submitted to the NJDEP. Soil sampling and surveys will begin after approval
of the detailed work plan with completion estimated for the end of the third
quarter 1995.
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 NJDEPENJDEP and the New York Attorney
General, respectively. Because of the nature of
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33 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 of 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.have a material effect on its
financial position, results of operations or net cash flows.
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,in 1989, a Consent Decree was entered with EPA and
NJDEPE,NJDEP, 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,in 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,in 1992, the PRPs submitted FS II for
EPA's and NJDEPE'sNJDEP's comments. The PRPs' are awaiting eitherAn amended Record of Decision (ROD) issued by EPA
in October 1994 requires additional excavation and off-site removal of soil,
the agencies'
final comments on FS II or their agreement on an alternative remedial action
addressingestimated cost of which is approximately $2.8 million. Based upon
discussions held among the remaining on-site soil contamination.parties to date, it appears that PSE&G's
responsibility for clean-up costs at this site will approximate 10% of such
costs.
(2) Claim1985 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. To PSE&G's knowledge, there has
been no action on this matter since 1988.
(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.a Remedial Investigation and
Feasibility Study (RI/FS). PSE&G's share of the costs of actions taken at this
site have approximated 25% of such costs. In September 1991, EPA entered a Record of Decision (ROD)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 takenrequired the PRPs to conduct
additional groundwater analyses during 1994 and is presently reviewing the
results to determine whether any action to date onfuture actions are required at this report.site.
(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, NJDEPENJDEP ordered that an RI/FS be performed to address
or disprove thean alleged subsurface contamination and, following negotiations
with the PRPs, including PSE&G, an ACO was executed. The PRPs have submitted
thean RI/FS as revised, and during May 1993, thea second revised Draft Feasibility Study,Study. In 1994, NJDEP selected
a remedy for the site, the total cost of which is estimated to be $1,500,000.
Based upon the claims made and currently are awaiting NJDEPE's selection of a remedial action.activities taken to date, PSE&G anticipates that
its obligations with respect to this site will be de minimis.
(5) Spill Act Directive issued by NJDEPE on July 7,NJDEP in 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 NJDEPENJDEP 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,in 1992. In 1994, NJDEP issued a third
Directive requiring the performance of an RI/FS. The PRPs have entered into
negotiations with NJDEPENJDEP regarding the terms of a third ACO whichthe RI/FS oversight document.
Based upon the claims made and activities taken to date, PSE&G anticipates that
its obligations with respect to this site will obligate the PRPs, including PSE&G, to conduct an RI/FS.
25
34be de minimis.
(6) A second Directive pursuant to the Spill Act was issued by NJDEPE on
August 22,NJDEP in
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, NJDEPENJDEP issued a Multi-Site Directive concerning four sites,
including PJP. With respect to the PJP site, NJDEPENJDEP reasserted demands for
payment made in the earlier Directives. The NJDEPENJDEP alleges that it has spent
approximately $23 million in interim remedial measures at the PJP site. The
NJDEPENJDEP 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 faithgood-faith
payment of approximately $21,000 to NJDEPENJDEP pursuant to the Multi-Site Directive
in accord onceaccordance with actions taken by certain other PRPs named in these
Directives. The NJDEP has filed a cost recovery action in Superior Court
against certain of the other PRPs named in the Directives. Based upon the
claims made and activities taken to date, PSE&G anticipates that its
obligations with respect to this site will be de minimis.
(7) Prospective enforcement action by NJDEPENJDEP 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 NJDEPENJDEP 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.invalid. However, the NJDEPENJDEP has recommended that any existing ground
water monitoring wells be maintained pending the NJDEPE'sNJDEP'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,In 1991 these utilities, including
PSE&G, entered into an ACO with the EPA to perform an RI/FS, Docket No.
III-91-34-DC, whichIII-91-34-DC. The RI/FS was recently completed and the RI/FS Report was
submitted to EPA on October 14, 1994. The RI/FS Report proposes various
remedial alternatives for consideration by EPA in its selection of a remedy for
the site. The alternatives proposed in the RI/FS range in cost from
approximately $2 million to approximately $90 million. However, the RI/FS
proposes a remedy ranging in cost from $15 to $30 million. It is currently underway.expected that
during 1995 EPA will select a remedy and issue a ROD memorializing this remedy
selection. At that time it is anticipated that EPA will assess a claim against
PSE&G and the other similarly situated utility companies, and perhaps others
as well, for the performance or funding of the selected remedy. PSE&G's share
of the costs of the proposed remedy is approximately $7 million or
approximately 26% of the total.
(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 NJDEPENJDEP 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 NJDEPENJDEP 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 NJDEPENJDEP
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'sNJDEP's claim and is working in concert with other PRPs to address the NJDEPENJDEP
Directives. 26
35Based upon the claims made and activities taken to date, PSE&G
anticipates that its obligations with respect to this site will be de minimis.
(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, Newark, 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.settlor.
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.cost. PSE&G cannot determine, at
this time, whether the off-site investigation activities will result in the
identification of further off-site remediation costs. Based upon the claims
made and activities taken to date, PSE&G anticipates that its obligations with
respect to this site will be de minimis.
(12) Inquiry and prospective enforcement action by NJDEPENJDEP 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 watergroundwater monitoring wells, to
determineprogram at the scope of a remedial action plan.site.
(13) Inquiry1987 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. To PSE&G's
knowledge, there has been no action taken on this matter since the initial
filing by the EPA.
(14) In U.S. v. CDMG Realty Co., et al., Civil Action No. 89-4246 (NHP)
(RJH), pending in the United States District Court for the District of New
Jersey, PSE&G and over 60 other entities were joined in January 1995 as
additional third-party defendants. Third-party plaintiffs, an association of
44 entities, are essentially seeking contribution and/or indemnification for
the expenses they have incurred and will incur as a result of having settled
the direct claims of the NJDEP and EPA related to the investigation and
remediation of Sharkey's Landfill, located in Parsippany-Troy Hills, Morris
County, New Jersey. The claims are all alleged to be brought pursuant to
CERCLA, and PSE&G is alleged to have arranged for the disposal of industrial
wastes at Sharkey's Landfill.
(15) 1987 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. To PSE&G's knowledge, there has been no action taken on this
matter since the initial filing by the EPA.
(16) Inquiry1988 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. To PSE&G's
knowledge, there has been no action taken on this matter since the initial
filing by the EPA.
(17) Inquiry and prospective enforcement actions by EPA, Region II and
NJDEPE, dated April 8, 1988 and February 6, 1991, respectively,NJDEP, 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 NJDEPENJDEP 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 NJDEPENJDEP 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 NJDEPENJDEP
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 negotiationsNegotiations are ongoing regarding resolution of the
balance of the
27
36 response costs sought pursuant to Directive Two. In August 1993, the
NJDEPENJDEP 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 ana 1991 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,in
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.$300,000 (approximately 1% of the total cost).
(18) Inquiry1989 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. To PSE&G's knowledge, there has been no action
taken on this matter since the initial filing by the EPA (NJDEP).
(19) 1989 Spill Act inquiry and prospective enforcement action issued by
NJDEPE
on July 14, 1989NJDEP 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. To
PSE&G's knowledge, there has been no action taken on this matter since the
initial filing by the NJDEP.
(20) Spill Act inquiry and prospective enforcement action issued by NJDEPE
on December 5, 1989NJDEP
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'sNJDEP's anticipated costs of
remedial action and of administrative oversight at the Combe Site. The $5.5
million represents the NJDEPE'sNJDEP'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.
Based upon the claims made and activities taken to date, PSE&G anticipates that
its obligations, if any, with respect to this site will be deminimis.
(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 PartyThird-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
PartyThird-Party Complaint naming approximately 150 third partythird-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 partythird-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. Based upon the claims made and activities taken to date, PSE&G
anticipates that its obligations with respect to this site will be de minimis.
(22) Spill Act Multi-Site Directive (Directive) issued by the NJDEPE in May
1990NJDEP 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,NJDEP, 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 onNJDEP in July 13,
1993. The MOA obligates PRPs1993
to conduct an RI/FS and, if necessary, atake remedial action which, when completedaction. An RI/FS Work
Plan has been approved by the NJDEP and the RI/FS is expected to NJDEPE's standards,be conducted
during 1995. Based upon the claims made and activities taken to date, PSE&G
anticipates that its obligations with respect to this site will satisfy the Directive.be de minimis.
(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.
Based upon the claims made and activities taken to date, PSE&G anticipates that
its obligations with respect to this site will be de minimis.
(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) Inquiry1992 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) Inquiries1993 inquiries and prospective enforcement action by EPA, Region II,
dated
May 7, 1992 and June 24, 1993, regarding the Company'sPSE&G'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
ELECTRICEnterprise
- ----------
Consolidated Financial Statistics (A)
YEARS ENDED DECEMBER 31,
---------------------------------------(Thousands of Dollars where applicable) 1994 1993 1992 1991 1990
- ---------------------------------------------- ------------ ----------- ----------- ----------------------- ------------ ------------
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
----------- ----------- -----------
----------- ----------- -----------
Selected Income Information
Operating Revenues
(thousandsElectric...................................... $ 3,733,113 $ 3,693,083 $ 3,407,819 $ 3,519,806 $ 3,380,742
Gas........................................... 1,778,528 1,594,341 1,586,181 1,307,849 1,236,747
Nonutility Activities......................... 404,202 418,135 362,781 283,766 230,075
- ------------------------------------------------------------------------------------------------------------------
Total Operating Revenues...................... $ 5,915,843 $ 5,705,559 $ 5,356,781 $ 5,111,421 $ 4,847,564
- ------------------------------------------------------------------------------------------------------------------
Net Income.................................... $ 679,033 $ 600,933 $ 504,117 $ 543,035 $ 403,663
- ------------------------------------------------------------------------------------------------------------------
Earnings per average share of dollars)
Residential...........................................Common Stock.... $ 2.78 $ 2.50 $ 2.17 $ 2.43 $ 1.90
Dividends Paid per Share...................... $ 2.16 $ 2.16 $ 2.16 $ 2.13 $ 2.09
Payout Ratio.................................. 78% 86% 100% 88% 110%
Rate of Return on Average Common Equity(B).... 12.94% 11.91% 10.69% 12.24% 9.66%
Ratio of Earnings to Fixed Charges............ 2.76 2.59 2.30 2.54 2.09
Book Value per Common Share(C)................ $ 21.70 $ 21.07 $ 20.32 $ 20.04 $ 19.44
Gross Utility Plant........................... $16,566,058 $15,861,484 $15,081,907 $14,426,560 $12,836,874
Accumulated Depreciation and Amoritzation
of Utility Plant............................ $ 5,467,813 $ 5,057,104 $ 4,610,595 $ 4,243,979 $ 3,963,093
Total Assets.................................. $16,717,440 $16,329,656 $14,777,732 $14,804,354 $13,713,248
- ------------------------------------------------------------------------------------------------------------------
Consolidated Capitalization
Common Stock.................................. $ 3,801,157 $ 3,772,662 $ 3,499,183 $ 3,262,138 $ 3,043,402
Retained Earnings............................. 1,510,010 1,361,018 1,282,931 1,282,029 1,203,772
- ------------------------------------------------------------------------------------------------------------------
Common Equity................................. 5,311,167 5,133,680 4,782,114 4,544,167 4,247,174
Long-Term Debt................................ 5,180,657 5,256,321 4,977,579 5,128,373 4,668,024
Preferred Stock without Mandatory Redemption.. 384,994 429,994 429,994 429,994 429,994
Preferred Stock with Mandatory Redemption..... 150,000 150,000 75,000 -- --
Monthly Income Preferred Securities........... 150,000 -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
Total Capitalization.......................... $11,176,818 $10,969,995 $10,264,687 $10,102,534 $ 9,345,192
==================================================================================================================
(A) See Management's Discussion and Analysis of Financial Condition and Results of Operations and Notes to
Consolidated Financial Statements.
(B) Net Income for a twelve-month period divided by the thirteen-month average of Common Equity.
(C) Total Common Equity divided by end-of-period Common Shares outstanding.
Operating Statistics
PSE&G
- -----
(Thousands of Dollars where applicable) 1994 1993 1992 1991 1990
- ---------------------------------------------- ------------ ----------- ------------ ------------ ------------
Electric
Revenues from Sales of Electricity:
Residential................................. $ 1,187,103 $ 1,175,875 $ 1,037,099 $ 1,116,699 Commercial............................................$ 1,038,906
Commercial.................................. 1,734,901 1,678,011 1,554,956 1,575,547 Industrial............................................1,516,755
Industrial.................................. 693,535 710,206 683,750 728,411 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
-----------697,571
Public Street Lighting...................... 52,353 51,019 47,729 46,400 45,418
----------- ----------- ----------- ----------- -----------
Total Revenues from Sales to Customers........ 3,667,892 3,615,111 3,323,534 3,467,057 3,298,650
Interdepartmental........................... 1,710 1,737 1,544 1,599 1,652
Non-Jurisdictional Sales.................... 35,223 48,625 51,313 19,763 48,325
----------- ----------- ----------- ----------- -----------
Total Revenues from Sales of Electricity...... 3,704,825 3,665,473 3,376,391 3,488,419 3,348,627
Other Electric Revenues....................... 28,288 27,610 31,428 31,387 32,115
----------- ----------- ----------- ----------- -----------
Total Operating Expenses per KwhRevenues................. $ 3,733,113 $ 3,693,083 $ 3,407,819 $ 3,519,806 $ 3,380,742
=========== =========== =========== =========== ===========
Sales of Electricity - megawatthours:
Residential................................. 10,594,134 10,631,402 9,816,046 10,505,547 9,875,569
Commercial.................................. 18,466,863 18,096,312 17,454,352 17,596,569 17,054,495
Industrial.................................. 9,249,233 9,203,839 9,298,741 9,406,109 9,457,985
Public Street Lighting...................... 334,726 329,828 325,545 320,900 314,936
----------- ----------- ----------- ----------- -----------
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
---------- ---------- ----------to Customers...................... 38,644,956 38,261,381 36,894,684 37,829,125 36,702,985
Interdepartmental........................... 17,755 18,514 19,012 19,719 19,822
Non-Jurisdictional Sales.................... 1,320,170 2,245,884 2,116,049 1,858,590 1,625,016
----------- ----------- ----------- ----------- -----------
Total Sales of Gas............................... 3,107,778 2,950,434 2,440,181
---------- ---------- ----------
Transportation Service................................... 557,403 543,097 381,497
---------- ---------- ----------
TotalElectricity............... 39,982,881 40,525,779 39,029,745 39,707,434 38,347,823
=========== =========== =========== =========== ===========
Gas
Sold and Transported................... 3,665,181 3,493,531 2,821,678
---------- ---------- ----------
---------- ---------- ----------
Average NumberRevenues from Sales 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..............................................Gas:
Residential................................. $ 889,541 $ 780,195 $ 809,559 $ 699,696 Commercial...............................................$ 667,077
Commercial.................................. 510,829 460,340 481,960 426,110 Industrial...............................................406,577
Industrial.................................. 312,405 299,762 243,527 138,394 Other sales.............................................. 3,545 3,040 3,157
---------- ---------- ----------
Subtotal.........................................130,273
Street Lighting............................. 491 467 468 468 385
----------- ----------- ----------- ----------- -----------
Total Revenues from Sales to Customers........ 1,713,266 1,540,764 1,535,514 1,264,668 1,204,312
Interdepartmental............................ 3,976 3,078 2,572 2,689 2,157
----------- ----------- ----------- ----------- -----------
Total Revenues from Sales of Gas.............. 1,717,242 1,543,842 1,538,086 1,267,357 1,206,469
Transportation Service...................................Service Revenues............... 35,057 37,081 34,739 27,036 15,654
Other Revenues...........................................Gas Revenues............................ 26,229 13,418 13,356 13,456 ---------- ---------- ----------14,624
----------- ----------- ----------- ----------- -----------
Total Operating Revenues................. $ 1,778,528 $ 1,594,341 $ 1,586,181 $ 1,307,849 $ 1,236,747
=========== =========== =========== =========== ===========
Sales of Gas - kilotherms:
Residential................................. 1,337,267 1,280,128 1,265,270 1,140,887 1,097,034
Commercial.................................. 945,950 943,054 939,021 893,069 837,650
Industrial.................................. 912,689 876,421 739,508 399,385 341,467
Street Lighting............................. 668 666 668 666 657
----------- ----------- ----------- ----------- -----------
Total Sales to Customers...................... 3,196,574 3,100,269 2,944,467 2,434,007 2,276,808
Interdepartmental............................. 9,316 7,509 5,967 6,174 5,144
----------- ----------- ----------- ----------- -----------
Total Sales of Gas............................ 3,205,890 3,107,778 2,950,434 2,440,181 2,281,952
Transportation Service........................ 544,539 557,403 543,097 381,497 182,056
----------- ----------- ----------- ----------- -----------
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 4,327Sold and Transported........... 3,750,429 3,665,181 3,493,531 2,821,678 2,464,008
=========== =========== =========== =========== ===========
(A) Reflects changes in holder stock.
(B) Excludes contribution by electric department for gas reservation charge and
natural gas refunds from suppliers.
31
40
EDHI
EDHI, a wholly-owned,wholly owned, direct subsidiary of Enterprise, is incorporated
under the laws of New Jersey and is the parent company 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 toEDHI's focus its effortsis on its energyenergy-
related core businesses, placing greaterwith 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,Enterprise's agreement
with the BPU regarding utility/nonutility activities, 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,and 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 maintaingrow its
reserve base at approximately 900 billion cubic feet
equivalent, both by acquiring proved oil and gas reserves, as well asin order to maintain an annual production level of 130-140 Billion
Cubic Feet Equivalent (BCFE) through a combination of exploratory and
development drilling.activities. EDC's worldwide 1994 production totaled 108 BCFE.
Year-end 1993 proven1994 proved reserves were 538594 billion cubic feet of gas and 4549 million
barrels of oil, a decreaseincreases of 3%10% and an
increase of 20%9%, respectively, compared to 1992.1993. As of
December 31, 19931994 and 1992,1993, EDC's consolidated assets aggregated $729 million
and $679 million, respectively. EDC is exempt from direct regulation by the
BPU and $703 million,
respectively.FERC except that certain FERC approval is required to transport its gas
interstate from its discovery fields. EDC had provided a source of firm gas
supply to PSE&G which in 1994 accounted for approximately 7% of EDC's gas
sales volumes. Sales by EDC to PSE&G were discontinued on September 30, 1994
pursuant to an agreement with the BPU. (See PSE&G -- Gas Operations and Supply,
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 itsEDHI's business growth.growth for the foreseeable future, with
emphasis on international projects. 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 in New Jersey
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 1817 commercially operating cogeneration or power
projects, and one anthracite coal mine which areand one project scheduled for start-up in
operation or under development. Completionthe first quarter of the projects under construction
cannot be assured.1995. 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. Projects involving EWGs are not restricted to a 50% investment
limitation. CEA's projects are diversified geographicallyinternationally 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, 19931994 and 1992,1993, CEA's consolidated assets aggregated
$232 million and $211 million, and $161 million, respectively. 32
41(See Note 7 -- Long-Term
Investments of Notes to Consolidated Financial Statements.)
PSRC
PSRC, a New Jersey corporation, has its principal executive offices at One
Riverfront Plaza, Newark, New Jersey 07102. PSRC makes diversifiedprimarily 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 variousa wide range of asset sectors from aircraft to nuclear power plants.sectors. Some of the transactions in
which PSRC and its subsidiaries participate involve other equity investors.
PursuantPSRC plans to EDHI's business plan, PSRC will limit new investments to existing commitments and investments
related to EDHI's core business. For information concerning PSRC's three
direct-finance leases with Continental Airlines, see Note 12 -- Commitment and
Contingent Liabilities of Notes to Consolidated Financial Statements.
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 twoanother major
utilitiesutility to market natural gas and associated services on an unregulated basis
to commercial and industrial gas consumers nationwide. PSRC expects that theThe partnership, will commenceUSEP,
commenced its marketing activities late in the first quarterMay 1994 and had sold approximately 4.9
mmbtu of gas through December 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, $139.51994, $134 million remained as PSRC's unfunded
commitment subject to call. As of year endyear-end 1994 and 1993, and 1992 PSRCPSRC's long-term
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
------ ------
------ ------
billion.
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 11ten
commercial real estate properties (seven(five 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, 19931994 and 1992,1993, EGDC's consolidated assets
aggregated $189 million and $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 EarningsLiquidity and Capital
Resources -- EDHI.
CAPITALCapital
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 supportminimum net
worth maintenance agreement with Enterprise. Intercompany borrowing rates are established with
referenceThat agreement provides, among
other things, that Enterprise (i) maintain its ownership, directly or
indirectly, of all outstanding common stock of Capital, (ii) cause Capital to
market rateshave at all times a positive tangible net worth of interest at Capital's costleast $100,000 and (iii)
make sufficient contributions of funds.liquid assets to Capital will
not have more than $750 million ofin order to permit
it to pay its debt 33
42
outstanding at any time.obligations. In 1993, Enterprise agreed with the BRCBPU to
make a good
faithgood-faith effort to eliminate such Enterprise support within six to ten
years. Intercompany borrowing rates are established with reference to
Capital's cost of funds. Effective January 31, 1995, Capital will not have more
than $650 million of debt outstanding at any time. Capital's assets consist
principally of demand notes of EDC, CEA, PSRC and EGDC. As of December 31, 19931994
and 1992,1993, Capital had privately placed $724.5outstanding $632 million and $750$724.5 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.
FUNDINGFunding
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, 19931994 and 1992,1993, 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$334 million and
$561$289 million, respectively. For additional information, see MD&A -- Liquidity
and Capital Resources -- EDHI.
ITEM 2. PROPERTIES.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.
34
43
ELECTRIC PROPERTIESElectric Properties
As of December 31, 1993,1994, PSE&G's share of installed generating capacity was
10,47910,497 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. ...................NJ ..................... 570 Gas 13,349 438 8.814,433 305 6.1
Burlington, Burlington, N.J. ...............NJ ................. 180 Oil 24,901 19 1.216,921 57 3.6
Conemaugh, New Florence, PA.PA - 22.50%(b)(c)........ 382 Coal 9,366 2,445 73.19,488 2,463 73.6
Hudson, Jersey City, N.J. ..................NJ .................... 983 Coal 10,875 2,348 53.310,975 2,611 30.3
Kearny, Kearny, N.J. .......................NJ ......................... 292 Oil 14,590 77 3.014,349 101 3.9
Keystone, Shelocta, PA.PA - 22.84%(b)(c).................. 388 Coal 9,643 2,717 79.99,647 2,381 70.1
Linden, Linden, N.J. .......................NJ ......................... 481 Oil 22,022 71 1.716,540 177 4.2
Mercer, Hamilton, N.J. ..................... 627NJ ....................... 642 Coal 9,787 2,660 48.410,130 2,297 40.8
Sewaren, Woodbridge Twp., N.J. .............NJ ............... 453 Gas 13,612 342 8.613,480 441 11.1
------- ------ --------- ---------
Total Fossil........................... 4,3564,371 10,953 11,117 29.110,833 28.5
------- ------ --------- ---------
Nuclear (Capacity factor calculated in
accordance with industries maximum
dependable capability standards)
Hope Creek, Lower Alloways Creek, N.J.NJ
95%(b)(c)................................. 979 Nuclear 10,729 8,362 97.710,751 6,752 78.9
Peach Bottom, Peach Bottom PA.PA - 42.49%(b)....... 886 Nuclear 10,803 5,904 76.510,798 6,873 89.3
Salem, Lower Alloways Creek, N.J.NJ
42.59%(b)................................. 942 Nuclear 10,707 4,828 58.911,032 4,809 58.5
------- ------ --------- ---------
Total Nuclear(c).......................Nuclear(b)(c).................... 2,807 10,748 19,094 78.010,842 18,434 75.4
------- ------ --------- ---------
Combustion Turbine
Bayonne, N.J. ..............................NJ ................................ 42 Oil 19,551 0.814,130 0.9
Bergen, Ridgefield, N.J. ................... 59NJ ..................... 61 Oil 12,520 114,716 1.0
Burlington, N.J. ........................... 632NJ ............................. 629 Gas 9,477 2249,291 413.7
Edison, Edison Township, N.J. ..............NJ ................ 504 Gas 14,476 3115,299 12.7
Essex, Newark, N.J. ........................ 621NJ .......................... 617 Gas 13,501 23213,855 189.5
Hudson, Jersey City, N.J. ..................NJ .................... 134 Oil -- (.1)26,703 1.7
Kearny, Kearny, N.J. ....................... 510NJ ......................... 501 Oil 16,880 3816,478 40.0
Linden, Linden, N.J. ....................... 326NJ ......................... 329 Oil 21,218 1018,494 10.0
Mercer, Hamilton, N.J. ..................... 124NJ ....................... 134 Oil 91,226 0.247,299 1.0
National Park, National Park, N.J. ......... 19NJ ........... 21 Oil 31,26043,551 0.1
Salem, Lower Alloways Creek, N.J.NJ
42.59%(b)................................. 1618 Oil 28,398 0.123,603 0.2
Sewaren, Woodbridge Township, N.J. .........NJ ........... 134 Oil -- (.4)35,332 2.0
------- ------ --------- ---------
Total Combustion Turbine............... 3,121 12,388 536.7 2.03,124 11,432 672.8 0.2
------- ------ --------- ---------
Diesel
Conemaugh, New Florence, PA.,PA - 22.50%(b)..... 3 Oil 9,901 .3 1.110,226 0.2 0.7
Keystone, Shelocta, PA.,PA - 22.84%(b).......... 2 Oil 9,286 .6 4.110,261 0.7 4.0
------- ------ --------- ---------
Total Diesel........................... 5 9,464 .9 2.310,254 0.9 2.0
------- ------ --------- ---------
Pumped Storage
Yards Creek, Blairstown, N.J.,NJ - 50%(b).......(c)..... 190 261 15.7367 22.0
------- ------ --------- ---------
---------
Total PSE&G............................ 10,479 10,620 31,010 33.8
------- ------ --------- ---------
------- ------ --------- ---------10,497(d) 10,739 30,308(e) 33.0
======= ====== ========= =========
(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.
(d) Excludes 664 MW of nonutility generation and temporary capacity sales of 173 MW to Baltimore Gas and
Electric and 111 MW to General Public Utilities.
(e) Excludes 4,876 of NUGs.
(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, 1993,1994, PSE&G owned 40 switching stations with an
aggregate installed capacity of 31,249,00031,351,000 kilovolt-amperes, and 224
substations with an aggregate installed capacity of 7,194,0007,277,000 kilovolt-amperes.
In addition, 6 substations having an aggregate installed capacity of 133,000139,250
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-ownedjointly owned facilities at jointly-ownedjointly owned generating facilities in New
Jersey and Pennsylvania as indicated in the table above.
As of December 31, 1993,1994, PSE&G's transmission and distribution system
included 148,272149,533 circuit miles, of which 33,93734,868 miles were underground, and
776,484782,031 poles, of which 531,952533,017 poles were jointly-owned.jointly owned. Approximately 99% of
this property is located in New Jersey.
In addition, as of December 31, 1993,1994, PSE&G owned 4 electric distribution
headquarters and 5 subheadquarters and leased 2five subheadquarters in 4four operating divisions all located
in New Jersey.
Also, PSE&G leases electric transmission
headquarters and owns subheadquarters.
GAS PROPERTIESGas Properties
As of December 31, 1993,1994, 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)
------------------------------------------Daily Capacity
Plant Location (Therms)
- -------------------------------- ------------------ --------------
Burlington LNG............................LNG.................. Burlington, N.J. 773,000
Camden LPG................................LPG...................... Camden, N.J. 280,000
Central LPG...............................LPG..................... Edison Twp., N.J. 960,000
Harrison LPG..............................LPG.................... Harrison, N.J. 960,000
-----------------------
Total........................... 2,973,000
--------------
--------------=========
As of December 31, 1993,1994, PSE&G owned and operated approximately 15,17215,406
miles of gas mains, owned 12 gas distribution headquarters and one
subheadquartersubheadquarters and leased one other subheadquartersubheadquarters 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 2628 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 FACILITIESOffice 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.PROCEEDINGS
See the following, under Business, at the pages indicated:
(1) Page 3.4. 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).RM93-19.)
(2) Page 3.5. 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 8.10. Proceedings before the BRCBPU relating to PSE&G's LGAC,Second
Largest Customer, filed November 3, 1993,January 6, 1995, in Docket No. GR91071226J.ER95010005.
(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 22.31. Requests filed in 1974 and later supplemented, to EPA and
NJDEPENJDEP 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)(5) Pages 2435 through 29.41. 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(6) Page 98. Proceedings before the BPU relating to PSE&G's LGAC, filed
July 1, 1994, in Docket No. GR94070292.
(7) Page 98. Proceedings before the BPU relating to PSE&G's LEAC, filed
July 1, 1994, in Docket No. ER94070293.
(8) Page 123. 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 of
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 NJDEP 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 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.predecessors.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.HOLDERS
Enterprise and PSE&G, inapplicable.
ITEM 10. EXECUTIVE OFFICERS OF THE REGISTRANTS.REGISTRANTS
Enterprise and PSE&G. Information regarding executive officers required
by this Item is set forth in Part III, Item 10 hereof.
37
46
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.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, 1993,1994, there were
192,999185,941 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
---- ---Dividend
High Low Per Share
------ ------- ---------
Common Stock:
1994
First Quarter........................ 32 27 1/4 .54
Second Quarter....................... 29 1/4 25 .54
Third Quarter........................ 28 5/8 23 7/8 .54
Fourth Quarter....................... 27 1/8 25 .54
1993
First Quarter.....................................Quarter........................ 34 1/4 30 .54
Second Quarter....................................Quarter....................... 35 31 7/8 .54
Third Quarter.....................................Quarter........................ 36 1/8 34 .54
Fourth Quarter....................................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.$10
million. 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 said PSE&G's
said debenture bond indentures. Further, under an
indenture relating to the loan to PSE&G of the proceeds of the monthly income
preferred securities (MIPS) of Public Service Electric and Gas Capital, L.P.
(see Note 4. -- Schedule of Consolidated Capital Stock and Other Securities of
Notes to Consolidated Financial Statements), dividends may not be paid on
PSE&G's capital stock as long as any payments on PSE&G's deferrable interest
subordinated debentures issued under said indenture have been deferred or there
is a default under said indenture or PSE&G's guarantee relating to the MIPS.
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, 19931994 was $1.351$1.5 billion and
$1.171$1.3 billion, respectively.
38
47
ITEM 6. SELECTED FINANCIAL DATA.
ENTERPRISEDATA
Enterprise
The information presented below should be read in conjunction with Enterprise Consolidated Financial
Statements and Notes thereto.
YEARYEARS ENDED DECEMBER 31,
-----------------------------------------------------------------------
1994 1993 1992 1991 1990 1989
----------- ----------- ----------- ----------- -----------
(THOUSANDS OF DOLLARS, WHERE APPLICABLE)
Total Operating Revenues.... $ 5,915,843 $ 5,705,559 $ 5,356,781 $ 5,091,6585,111,421 $ 4,799,2394,847,564
Net Income.................. $ 4,804,279
Net Income..................679,033 $ 600,933 $ 504,117 $ 543,035 $ 403,663
$ 523,435
Earnings per average share
of Common Stock........... $ 2.78 $ 2.50 $ 2.17 $ 2.43 $ 1.90 $ 2.53
Dividends paid per share of
Common Stock.............. $ 2.16 $ 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$16,717,440 $16,329,656 $14,777,732 $14,804,354 $13,713,248
Long-Term Liabilities:
Capital Lease
Obligations.......Long-Term Debt....... $ 52,530 $ 53,104 $ 54,617 $ 54,073 $ 54,513
Long-Term Debt.......5,180,657 $ 5,256,321 $ 4,977,579 $ 5,128,373 $ 4,668,024
Other Long-Term
Liabilities........ $ 4,293,578215,603 $ 220,159 $ 53,617 $ 54,073 $ 54,512
Preferred Stock with
mandatory redemption...... $ 150,000 $ 150,000 $ 75,000 $ -- $ --
Monthly Income Preferred
Securities................ $ 150,000 $ -- $ -- $ -- $ --
Ratio of Earnings to Fixed
Charges plus Preferred
StockSecurities Dividend
Requirements (A).......... 2.76 2.59 2.30 2.54 2.09
2.60
(A) Fixed charges include the preferred stock(A) Fixed charges include the preferred securities 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.
YEARYEARS ENDED DECEMBER 31,
-----------------------------------------------------------------------
1994 1993 1992 1991 1990 1989
----------- ----------- ----------- ----------- -----------
(THOUSANDS OF DOLLARS, WHERE APPLICABLE)
Total Operating Revenues.... $ 5,511,641 $ 5,287,424 $ 4,994,000 $4,827,655 $ 4,807,892 $ 4,569,164 $ 4,642,3834,617,489
Net Income.................. $ 659,406 $ 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$14,264,398 $13,984,298 $12,273,857 $12,027,971 $11,652,208
Long-Term Liabilities:
Capital Lease
Obligations.......Long-Term Debt....... $ 52,530 $ 53,104 $ 53,617 $ 54,073 $ 54,513
Long-Term Debt.......4,486,787 $ 4,364,437 $ 3,978,138 $ 3,933,389 $ 3,733,444
Other Long-Term
Liabilities........ $ 3,524,210215,603 $ 220,159 $ 53,617 $ 54,073 $ 54,512
Preferred Stock with
mandatory redemption...... $ 150,000 $ 150,000 $ 75,000 $ -- $ --
Monthly Income Preferred
Securities................ $ 150,000 $ -- $ -- $ -- $ --
Ratio of Earnings to Fixed
Charges................... 3.35 3.30 2.70 3.20 3.10 3.21
Ratio of Earnings to Fixed
Charges plus Preferred
StockSecurities Dividend
Requirements.............. 2.92 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.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.
OVERVIEWOverview
Enterprise has two direct wholly-ownedwholly 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,and production and
marketing company; Community Energy Alternatives Incorporated (CEA), an
investor in and developer of cogeneration and independent power production
facilities;(IPP) facilities and exempt wholesale generators (EWGs); Public Service
Resources Corporation (PSRC), which makes diversifiedhas made primarily 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-placedprovides privately
placed debt financing on the basis of a supportminimum net worth maintenance agreement
from Enterprise and Enterprise Capital Funding Corporation (Funding), which
provides privately-placedprivately placed debt financing guaranteed by EDHI but without direct
support from Enterprise.
As of December 31, 19931994 and December 31, 1992,1993, PSE&G comprised 86%85% and
83%86%, respectively, of Enterprise assets. For each of the years 1994, 1993 1992 and
1991,1992, PSE&G revenues were 93%, 93% and 94%, respectively, of EnterpriseEnterprise's revenues and PSE&G&G's earnings
available to Enterprise for such years were 96%91%, 88%96% and 95%88%, respectively, of
EnterpriseEnterprise's 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 requiredrate relief, cost recovery and
necessary regulatory approvals, including
rate reliefthe ability to PSE&G,continue to operate and maintain
nuclear programs in accordance with Nuclear Regulatory Commission (NRC) and New
Jersey Board of Public Utilities (BPU) requirements, the impact of
environmental regulations, continued access to the capital markets and
continued favorable regulatory treatment of consolidated tax benefits. (See
Note 2 -- Rate Matters, Note 10 -- Federal Income Taxes and Note 12 --
Commitments and Contingent Liabilities of Notes to Consolidated Financial
Statements.Statements ("Notes").)
40
49
PSE&G ENERGY AND FUEL ADJUSTMENT CLAUSESEnergy 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,BPU, 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 ClauseCharge (LGAC) and the
electric 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 BRCBPU in
accordance with PSE&G'sits nuclear performance standard.standard (NPS). (See Note 2 -- Rate
Matters and Note 12 -- Commitments and Contingent Liabilities of NotesNotes.)
Competition
Ongoing initiatives affecting PSE&G's electric and gas utility businesses
associated with the continuing transition to Consolidateda competitive market environment
will have an increasingly significant impact on Enterprise and PSE&G. Federal
legislation, including the National Energy Policy Act (NEPA), as well as
regulatory initiatives at both the federal and state levels that are designed
to promote competition and lessen regulation of the energy supply industry can
be expected to result in additional pressures on customer retention due to
energy prices, especially with respect to larger industrial and commercial
customers. Growth potential is limited in PSE&G's mature service territory.
The shift of rate regulation from traditional concepts based upon rate
base/rate of return to concepts based upon market competition and service is
accelerating. As a result, added emphasis will be placed upon cost reduction.
Utilities and their regulators will need to develop flexible ratemaking
strategies to minimize adverse impacts which might otherwise occur to revenues
and earnings and to maximize potential opportunities presented by deregulation.
The manner in which regulators address evolving competitive issues will also
affect utility credit quality and the carrying value of assets.
The transition to a competitive market environment will cause changes
from traditional utility ratemaking and is likely to affect utilities' ability
to recover costs, resulting in these costs being "stranded." Stranded costs
are costs and liabilities that were incurred by regulated utilities as a result
of the regulatory compact among utilities, regulators and customers which are
no longer recoverable from such customers due to changes in the regulatory
framework that allow such customers to change electric suppliers before paying
for the costs the utility has incurred on their behalf. Potential stranded
costs include but are not limited to: generation assets; long-term purchase
power and fuel contracts; "regulatory assets" -- Statement of Financial
Statements.Accounting Standards No. 71, "Accounting for the Effects of Certain Types of
Regulation" (SFAS 71), which are expenses that have been deferred pending
recovery from customers; and costs which regulators have ordered utilities to
incur to fulfill a variety of broader social purposes (including such things
as energy conservation costs such as demand-side management (DSM) costs). More
competitive electric wholesale markets, proposals to authorize retail wheeling
or direct retail access within utility franchise areas, but not New Jersey to
date, as well as the recent Federal Energy Regulatory Commission's (FERC)
notice of proposed rulemaking on stranded costs have brought to the forefront
the issue of potential stranded costs. If changes in rate regulation
ultimately require a recognition of any such stranded costs, asset write-downs
for utilities, including PSE&G, may occur. At this time, management cannot
predict the level of transition costs or stranded costs resulting from industry
deregulation, if any, or whether utility regulators will allow recovery of any
such transition costs from customers. In addition, PSE&G cannot presently
quantify what the financial statement impact may be if depreciation expense is
determined absent regulation. However, if any such amounts are not recovered,
the impact on the financial position, results of operations or net cash flows
of PSE&G and Enterprise could be material. (See Note 1 -- Organization and
Summary of Significant Accounting Policies and 2 -- Rate Matters of Notes.)
ENTERPRISE EARNINGSFurther, competition will force utilities, including PSE&G, to operate
more cost effective and efficient plants, particularly in light of the
technological advantages available to new entrants, which unlike utilities, do
not operate older, less efficient units. Recovery of related costs by
utilities, including PSE&G, will depend upon the decisions of the regulators,
which cannot be predicted, or the ability to sell the electricity generated by
such plants in the emerging wholesale power market. For discussion of PSE&G's
renovation project at Bergen, see Note 12 - Commitments and Contingent
Liabilities of Notes.
The BPU has issued the first phase of a draft revised Energy Master Plan
which acknowledges the need for regulatory flexibility as competition unfolds
and calls for legislation that would allow New Jersey utilities to propose,
subject to BPU approval, alternatives to existing rate base/rate of return
pricing, allow for pricing flexibility under certain standards for customers
with competitive options and equalize the impact of tax policies, such as New
Jersey Gross Receipts and Franchise Tax (NJGRT), upon energy producers.
Management cannot predict the ultimate form of any legislative or regulatory
changes which may be adopted as a result of this revised Energy Master Plan.
Enterprise Earnings
Earnings per share of Enterprise Common Stock were $2.78 in 1994, $2.50
in 1993 and $2.17 in 1992 and $2.43 in 1991.1992. The changes are summarized as follows:
1994 vs. 1993 VS.1993 vs. 1992
1992 VS. 1991
-------------- --------------
PER PER
AMOUNT SHARE AMOUNT SHARE---------------- ---------------
Per Per
Amount Share Amount Share
------ ----- ------ -----
(MILLIONS, EXCEPT PER SHARE DATA)------ ------
(Millions, except Per Share Data)
PSE&G
Revenues (net of fuel costs and gross
receipts taxes)................................... $ 144 $ .60 $ 347 $1.49 $ (43) $(.19)
Peach Bottom Settlement (net of Federal
income taxes of $17
million)...................................................taxes)........................... -- -- (33) (.14)
33 .15
Other operation expenses......................................expenses.................. (77) (.32) (62) (.26)
(49) (.22)
Maintenance expenses..........................................expenses...................... (3) (.02) 3 .01 8 .03
Depreciation and amortization expenses........................expenses.... (29) (.12) (15) (.06)
(22) (.10)
Federal income taxes..........................................taxes...................... 14 .06 (113) (.49)
53 .24
Other taxes...................................................taxes............................... (9) (.04) (1) --
(9) (.04)
Other income.................................................. -- -- 2 .01
Interest charges..............................................charges.......................... (6) (.02) 12 .05 (36) (.16)
Allowance for Funds Usedused During
Construction (AFDC)................................. 11 .05 -- --
Preferred Securities Dividend
Requirements............................ (4) (.02) Preferred Stock Dividend Requirements......................... (6) (.02) (3) (.01)
Other income and expenses.....................................expenses................. 1 -- (2) (.01)1 --
------ ----- ------ ----- ----
Earnings Available to Enterprise...........................Enterprise.......... 42 .17 133 .58
(72) (.32)
------EDHI
PSRC................................. 14 .06 (07) (.04)
CEA.................................. 2 .01 3 .01
EDC.................................. (34) (.14) 17 .07
EGDC................................. 54 .22 (49) (.20)
----- ------ ----- EDHI............................................................----- -----
Subtotal.................................. 36 .15 (36) (.16)
33 .14
------ ----- ----------- ----- -----
Net Income............................................Income................................ $ 78 .32 $ 97 .42
$ (39) (.18)
------ ----- ------ -----
------ ------===== =====
Effect of additional shares of
Enterprise Common Stock issued...issued........... (.04) (.09)
(.08)
----- -----
Total................................................. $ .33 $(.26)
----- -----
----- ---------
Total........................... $.28 $.33
===== ====
The average shares of Enterprise Common Stock outstanding were
244,470,794 for 1994, 240,663,599 for 1993 and 232,306,492 for 1992.1992,
respectively.
PSE&G
In 1994, PSE&G's earnings available to Enterprise increased by $42
million. The increase was primarily due to higher electric commercial sales
and firm gas residential and commercial sales. Electric kilowatthour (KWH)
commercial sales increased 2% and total gas therms sold and transported
increased 2.3%, respectively, principally due to weather and a modest
improvement in New Jersey's economy. Also benefitting earnings was the
decrease in Federal income tax expense resulting from the receipt of a
nontaxable insurance benefit partially offset by higher pre-tax operating
income. In addition, higher AFDC was a benefit to earnings due to greater
construction, partially offset by a slightly reduced 1994 AFDC rate. The major
factors adversely affecting earnings were higher other operation expenses,
comprised primarily of miscellaneous nuclear production expenses,
employee benefits expenses and increased accruals for uncollectible customer
accounts, increased depreciation and amortization expenses due to more utility
plant in service, higher interest charges due to a higher average daily balance
of short-term debt outstanding at higher interest rates and higher maintenance
expenses, principally at Hope Creek nuclear station due to the spring 1994
refueling outage.
In 1993, excluding the $33 million net effect of the 1992 settlement of
litigation against Philadelphia Electric Company, now known as PECO Energy,
CompanyInc. (PECO), in connection with the 1987 shutdown of Peach Bottom Atomic Power
Station, Units 2 and 3 (Peach Bottom) by the Nuclear Regulatory Commission (1992 Settlement),NRC, 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 kilowatthourKWH sales. (See PSE&G Electric and Gas Revenues below.) The
increase in electric sales was primarily due to the abnormally warm summer
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 910 -- Federal Income Taxes of NotesNotes.)
EDHI
The net income of EDHI was $60 million in 1994. Excluding the impact of
an impairment of assets of $51 million, after tax, by EGDC in 1993, EDHI's
earnings in 1994 decreased $15 million in comparison to Consolidated Financial Statements.)
In 1992, excluding1993. Increased income
from PSRC (higher investment income, lower income taxes compared to 1993 which
included the $33 million net effecteffects of the 1992 Settlement,
PSE&G'sa Federal income tax increase and lower interest
charges) and CEA (higher income from operating plants) was offset by lower EDC
earnings available to Enterprise declined by $105 million. This decline
was principally(lower gas volumes and prices and higher exploration and development
expenditures due to increased drilling activities).
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 contributingextent that the prices at which EDC is able to the decrease insell gas remain low,
EDHI's 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 atmay continue to be negatively impacted. For information
concerning certain of PSE&G's fossil fuel generating stationsPSRC's direct-finance aircraft leases, see Note 12 --
Commitments and at Peach Bottom and lower Federal
income taxes resulting from lower pre-tax operating income.
EDHIContingent Liabilities of Notes.
The net income of EDHI was $24 million in 1993, a decrease of $36 million
from 1992. As a resultThe decrease in EDHI's net income was due primarily to EGDC's
recording 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 real estate 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 EDHIEDHI's 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, EDHIEDHI's 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.
DIVIDENDSDividends
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 $6 million
during 1994 compared to 1993 and increased $18 million during 1993 compared to
1992 and increased $27 million during 1992 compared to
1991.1992. The increase in thedividend payments for 1994 over 1993 dividend paymentand for 1993 over
1992, respectively, was due to the issuance of additional shares of Enterprise
Common Stock.
Dividends paid to holders of PSE&G's Preferred Stock increased $2 million
during 1994 compared to 1993 and $6 million during 1993 compared to 1992. The
increase in the
1992 dividend payment over 1991such dividends was due to the issuance of additional shares of
Enterprise CommonPSE&G's Preferred Stock, partially offset by reduced dividend requirements
resulting from the redemption of certain higher cost series of Preferred Stock.
(See Liquidity 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.Capital Resources.)
Dividends paidpayable to holders of Monthly Income Preferred Securities (MIPS)
of Public Service Electric and Gas Capital, L.P. (Partnership), a limited
partnership of which PSE&G Preferredis the general partner, aggregated $2 million for
1994. (See Note 4 -- Schedule of Consolidated Capital 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 saleOther
Securities 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.
42Notes.)
51
REVENUESRevenues
PSE&G ELECTRICElectric
Revenues increased $40 million, or 1.1%, in 1994 from 1993; 1993 revenues
increased $285 million, or 8.4%, in 1993 from 1992; 1992 revenues
decreased $92 million, or 2.6%, compared to 1991.1992. The significant components
of these changes follow:
INCREASE OR (DECREASE)
-------------------------------Increase or (Decrease)
------------------------------
1994 vs. 1993 VS.1993 vs. 1992 1992 VS. 1991
------------- -------------
(MILLIONS)(Millions)
Kilowatthour sales.....................................sales....................... $ 6769 $ (65)67
Base rate increase effective January 1,
1993...........1993................................... - 244 --
Tax Reform Act of 1986 (TRA-86)........................1986................... - 13 (6)
Recovery of energy costs...............................costs................. (26) (52)
(6)
New Jersey Gross Receipts and Franchise Taxes
(NJGRT)..............................................NJGRT.................................... (4) 17 (15)
Other operating revenues...............................revenues................. 1 (4)
--
------ ----------- -----
Total Electric Revenues......................Revenues.................. $ 40 $ 285
$ (92)
------ ------
------ ------===== =====
Changes in kilowatthour sales by customer category are described below:
INCREASE OR (DECREASE)
------------------------------Increase or (Decrease)
-----------------------------
1994 vs. 1993 1993 vs. 1992
VS.
1993 VS. 1992 1991
------------- -------------------------
Residential............................................Residential.............................. (0.4)% 8.3%
(6.6)%
Commercial.............................................Commercial............................... 2.0 3.7
(0.8)
Industrial.............................................Industrial............................... 0.5 (1.0)
(1.1)Total Sales of Electricity
to Customers........................... 1.0 3.7
1994 -- The increase in electric revenues was primarily due to higher
kilowatthour sales, partially offset by lower recovery of energy costs. The
increase in kilowatthour sales is due to higher commercial and industrial sales
as a result of an improving economy. Residential sales were below last year's
levels due to the abnormally warm summer weather experienced in 1993.
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
summer 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 GASGas
Revenues increased $184 million, or 11.6%, during 1994 over 1993; 1993
revenues increased $8 million, or 0.5%, during 1993 over 1992; 1992
revenues increased $278 million or 21.3% over 1991.1992. The significant components
of these changes follow:
INCREASE OR (DECREASE)Increase or (Decrease)
------------------------------
1994 vs. 1993 1993 vs. 1992
VS.
1993 VS. 1992 1991
------------- ------------
(MILLIONS)-------------
(Millions)
Therm sales............................................sales.............................. $ (29)61 $ 36(29)
Base rate increase effective
January 1, 1993...........1993........................ - 48 --
TRA-86................................................. -- 3
Recovery of fuel costs.................................costs................... 121 15
216
NJGRT..................................................NJGRT.................................... (12) (5) 16
Other operating revenues...............................revenues................. 14 (21)
7
------ ----------- -----
Total Gas Revenues...........................Revenues............. $ 184 $ 8
$278
------ ------
------ ------===== =====
43
52
Changes in gas revenues sold orand transported by customer category are
described below:
INCREASE OR (DECREASE)Increase or (Decrease)
-------------------------------
1994 vs. 1993 VS.1993 vs. 1992 1992 VS. 1991
------------- -------------
Residential............................................Residential.............................. 4.5% 1.2%
10.9%
Commercial.............................................Commercial............................... .3 .4
5.1
Industrial.............................................Industrial............................... 4.1 18.5
85.2
Transportation Service.................................Service................... (2.3) 2.6
42.4Total Gas Sold and Transported........... 2.3 4.9
1994 -- The increase in gas revenues was primarily due to an increase in
the recovery of fuel costs, principally due to higher fuel rates, higher sales
and significantly lower customer refunds. Residential, commercial and
industrial sales increased due to favorable weather conditions and an improving
economy. Sales to cogenerators was the largest contributor to the increase in
industrial sales as cogeneration average customer usage continues to increase.
Transportation sales decreased due to storm-related service interruptions in
January and February.
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 relatedfuel-related costs. Sales to cogenerators was the largest
contributor to the increase in industrial sales as cogeneration average
customer usage for electric generation continuescontinued 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 $33decreased $23 million, or 8%5%, during 1994 from 1993; 1993 over 1992; 1992
revenues increased $72$30 million, or 22% in 19927%, over 1991.1992. The significant components
contributing to such results were as follows:
INCREASE OR (DECREASE)
-------------------------------Increase or (Decrease)
------------------------------
1994 vs. 1993 VS.1993 vs. 1992 1992 VS. 1991
------------- -------------
(MILLIONS)(Millions)
EDC....................................................EDC...................................... $ (46) $ 30
$35
CEA....................................................CEA...................................... 17 10
15
PSRC...................................................PSRC..................................... 10 (11)
15
EGDC................................................... 4 7
------ ---EGDC..................................... (4) 1
----- ----
Total EDHI Revenues..........................Revenues............ $ 33 $72
------ ---
------ ---(23) $ 30
===== ====
1994 -- EDC's revenues decreased due to lower natural gas volumes ($29
million) and prices ($17 million). CEA's revenues increased as a result of
greater income from operating projects. PSRC's revenues increased due to
higher income from partnerships.
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.gas. 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.
44
53
PSE&G ELECTRIC ENERGY COSTSElectric Energy Costs
Electric energy costs decreased $21 million, or 3.0%, in 1994 compared
to 1993 and $59 million, or 7.7%, in 1993 compared to 1992 and $5 million or .6% in 1992 compared to 1991.1992. The significant
components of these changes follow:
INCREASE OR (DECREASE)Increase or (Decrease)
-------------------------------
1994 vs. 1993 VS.1993 vs. 1992 1992 VS. 1991
------------- -------------
(MILLIONS)(Millions)
Change in prices paid for fuel
and power purchases.....purchases................. $ 12 $ 18
$ 7
Kilowatthour generation................................generation............... 9 29 (20)
Adjustment of actual costs to match
recoveries through revenues(A)................................................ (42) (106)
8
------------- ----------- ----
Total Electric Energy Costs..................Costs.... $ (21) $ (59)
$ (5)
------------- ------
------------- ------===== =====
(A) Reflects the change in the deferred over(under)recovered energy costs,
which in the years 1994, 1993 1992 and 19911992 amounted to $(135) million, $(93)
million $13 million and $5$13 million, respectively. (See PSE&G Energy and Fuel
Adjustment Clauses and Note 2 -- Rate Matters of NotesNotes.)
1994 -- The decrease in total costs was principally due to Consolidated Financial Statements.)the
underrecovery of energy costs, partially offset by a 12% increase in purchased
power costs and a 1% increase in kilowatthour generation.
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 COSTSGas Supply Costs
Gas supply costs increased $126 million, or 14.0%, in 1994 compared to
1993 and $39 million, or 4.6%, in 1993 compared to 1992 and
$223 million or 35.0% in 1992 compared to 1991.1992. The significant
components of these changes follow:
INCREASE OR (DECREASE)
-------------------------------Increase or (Decrease)
------------------------------
1994 vs. 1993 VS.1993 vs. 1992 1992 VS. 1991
------------- -------------
(MILLIONS)(Millions)
Change in prices paid for gas supplies.................supplies... $ (10) $ 117
$ 25
Therm sendout..........................................sendout............................ 31 41 147
Refunds from pipeline suppliers........................suppliers.......... (21) 33 (33)
Adjustment of actual costs to match
recoveries through revenues(A)................................................... 126 (152)
84
------------- ------------------ -----
Total Gas Supply Costs.......................Costs......... $ 126 $ 39
$ 223
------------- -------------
------------- -------------===== =====
(A) Reflects the change in the deferred over(under)recovered gas supply costs,
which in the years 1994, 1993 1992 and 19911992 amounted to $26 million, $(100)
million $52
million and $(32)$52 million, respectively. (See PSE&G Energy and Fuel
Adjustment Clauses and Note 2 -- Rate Matters of NotesNotes.)
1994 -- The increase in total costs was principally due to Consolidated
Financial Statements.)the
overrecovery of fuel costs and increased sales to nonutility generators (NUGs),
partially offset by lower gas prices.
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 BRCBPU 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.
45
54
1992 -- The increase in total costs was principally due to greater therm
sendout resulting from the colder 1992 weather compared to 1991Liquidity and increased
sales to NUGs.
LIQUIDITY AND CAPITAL RESOURCESCapital Resources
Enterprise's liquidity is affected by maturing debt (see Note 6 --
Schedule of Consolidated Long-Term Debt of Notes to Consolidated Financial Statements)Notes), investment and acquisition activities, and
the capital requirements of PSE&G's construction program.program, permitted regulatory
recovery of expenses and collection of revenues. Capital resources available to
meet such requirements depend upon the factors noted above under Overview. (See
Construction, Investments and Other Capital Requirements Forecast below.)
PSE&G
For 1993,1994, PSE&G had utility plant additions, including AFDC, of $887
million, a decrease of $3 million versus 1993 additions of $890 million, an increase ofmillion.
Additions in 1993 increased $63 million versusfrom 1992 additions of $827 million.
Additions in 1992 increased $14 million from 1991 additions of $813 million.
AFDC for 1994, 1993 1992 and 19911992 amounted to $38 million, $27 million $26 million and $30$26
million, respectively. Construction expenditures were related to improvements
in PSE&G's existing power plants, transmission and distribution system, gas
system and common facilities. PSE&G also expended $34 million, $48 million and
$40 million for the cost of plant removal (net of salvage) in 1994, 1993 and
1992, respectively. Construction expenditures from 19941995 through 19981999 are
expected to aggregate $4.2$3.2 billion. Forecasted construction expenditures are
related to improvements in PSE&G's existing power plants, transmission and
distribution system, gas system and common facilities. (See Construction,
Investments and Other Capital Requirements Forecast below.)
Decommissioning and other special funds, excluding interest, increased $35
million, $46 million and $9 million in 1994, 1993 and 1992, respectively. (See
Note 3 -- PSE&G Nuclear Decommissioning and Amortization of Nuclear Fuel of
Notes.)
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 reliefrecovery of costs 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.Notes.)
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(See Construction,
Investments and Other Capital Requirements Forecast below.) EDHI's focus its
effortsis
on CEA and EDC, its energy-related core businesses. CEA is expected to be the
primary vehicle for itsEDHI's business growth, both domestically and
internationally. A significant portion of CEA's growth is expected to occur
in the international arena, due to the current and anticipated growth in
electric capacity required in certain regions of the world. EDC is projected
to attain
and maintain agrow its reserve base, at approximately 900principally through exploration and drilling, in
order to maintain an annual production level of 130-140 billion cubic feet
equivalent (BCFE). EDC's worldwide 1994 production totaled 108 BCFE and at
year end had proved reserves of 888 BCFE. EDC expended approximately 11% above the year-end$188
million, $109 million and $56 million in 1994, 1993 level.and 1992, respectively, to
acquire, discover or develop domestic and international reserves. Of these
expenditures, $154 million, $91 million and $36 million in 1994, 1993 and 1992,
respectively, were capitalized. These amounts included capitalized interest of
$4 million, $3 million and $4 million, respectively.
PSRC will limit new investments to those which support EDHI's core
businesses, 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.
A partnership, in which EGDC is an 80% partner ($21 million equity
investment), is currently negotiating to extend or replace a mortgage financing
of $40.2 million which is maturing on February 28, 1995. EGDC has guaranteed
$5.3 million of the financing. No assurances can be given that EGDC or the
partnership will be able to extend this loan or obtain a replacement loan in
the amount of the existing loan. Failure to extend or replace the existing loan
at the current outstanding loan balance, or at current interest rates, may
result in an increase in the amount of capital which EGDC will require.
PSRC is a limited partner in various limited partnerships and is committed
to make investments from time to time, upon the request of the respective
general partners. OnAt December 31, 1993, $139.51994, $134 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 monthstwelve-months earnings before(before interest and taxestaxes)
to interest (EBIT) coverage ratio of at least 1.35:1. As of December 31, 19931994
and 1992,1993, EDHI had consolidated debt to equity ratios of 1.34:1.15:1 and 1.84:1.34:1 and,
for the years ended December 31, 1994, 1993 and 1992, EBIT coverage ratios, whichas
defined to exclude the effecteffects of EGDC of 1.94:1, 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 Note 6 -- Schedule of Consolidated Debt and Note 16 -- Property
Impairment of Enterprise Group Development Corporation of Notes.)
Long-Term Investments and Real Estate
Long-Term Investments and Real Estate, which are primarily those of EDHI,
decreased $58 million and $67 million in 1994 and 1993, respectively, and
increased $61 million in 1992. The decrease in 1994 is primarily due to a $73
million net decrease in PSE&G's investment in an insurance contract, partially
offset by an increase in Public Service Conservation Resources Corporation's (a
PSE&G subsidiary) Long-Term Investments of $23 million. The decrease in 1993
is due primarily to EDHI's decrease in Long-Term Investments of $63 million.
The increase in 1992 is due primarily to EDHI's increase in investments in real
estate of $77 million. (For more details, see Note 7 -- Long-Term Investments
and Note 11 -- Leasing Activities - As Lessor of Notes.)
Construction, Investments and Other Capital Requirements Forecast
and Note 6 -- Schedule of
Consolidated Long-Term Debt of Notes to Consolidated Financial Statements.)
46
55
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%
The estimated construction requirements of PSE&G, including AFDC, investments and other capital requirements
of PSE&G and EDHI for 1995 through 1999 are based on expected project completion dates, included anticipated
escalation due to inflation of approximately 3% for utility projects and are as follows:
1994
1995 1996 1997 1998 1999 TOTAL
------ ------ ------ ------ ------ ------
(MILLIONS OF DOLLARS)
PSE&G
ELECTRIC
Nuclear Production Facilities...... $ 11489 $ 8285 $ 8766 $ 9565 $ 8766 $ 465371
Nuclear Fuel....................... 74 10296 90 87 112 99 94 114 483484
Transmission and Distribution...... 218 196 204 216 221 1,055165 185 175 163 175 863
Other Production................... 321 138 139 170 252 1,020166 118 42 52 58 436
Conservation and Other............. 47 42 91 17 41 23845 39 37 33 29 183
------ ------ ------ ------ ------ ------
Total Electric..................... 774 560 620 592 715 3,261561 517 407 425 427 2,337
------ ------ ------ ------ ------ ------
GAS
Production Facilities.............. 2 2 2 -- -- 6- - - 4
Transmission and Distribution...... 144 136 140 142 142 704141 143 143 143 706
------ ------ ------ ------ ------ ------
Total Gas.......................... 146 138 142 142 142143 143 143 143 710
------ ------ ------ ------ ------ ------
Miscellaneous Corporate.............. 56 47 45 46 48 24238 35 35 35 189
------ ------ ------ ------ ------ ------
Total Construction
Requirements of PSE&G.... 976 745 807 780 905 4,213698 585 603 605 3,236
------ ------ ------ ------ ------ ------
EDHI................................. 326 177 193 194 285 1,175242 175 125 153 149 844
------ ------ ------ ------ ------ ------
Mandatory Retirement of Securities:
PSE&G.............................. 60 310 --- 300 118 788100 828
EDHI............................... 106 190 91 125 204 716196 200 802
------ ------ ------ ------ ------ ------
166 500 91 425 322 1,504314 300 1,630
------ ------ ------ ------ ------ ------
Working Capital and Other-net...... 247 90 56 33 17 443101 43 41 21 21 227
------ ------ ------ ------ ------ ------
Total Capital Requirements......... $1,715 $1,512 $1,147 $1,432 $1,529 $7,335
------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------$1,588 $1,007 $1,176 $1,091 $1,075 $5,937
====== ====== ====== ====== ====== ======
While the above forecast includes capital costs to comply with revised
Federal Clean Air Act (CAA) requirements through 1998,1999, 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
Internal Generation of compliance
with the New Jersey Department of Environmental Protection and Energy (NJDEPE)
draft permit issued October 3, 1990 pursuantCash from Operations
Enterprise's cash provided by operating activities for 1994 increased $200
million to $1.232 billion when compared to 1993. This increase was primarily
due to the Federal Water Pollution
Control Act with respect to Salem 1increase in net income of $78 million, higher recovery of electric
energy and 2 which, if adopted as proposed, would
require the immediate shutdowngas costs through PSE&G's LEAC and LGAC of both units pending retrofit with cooling
towers. On June 24, 1993, NJDEPE issued$74 million, 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 takedecrease in
accounts receivable of $152 million, a decrease in accrued taxes of $35 million,
a positive net change in certain other actions to enhance
the ecologycurrent assets and liabilities 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$57
million and $2.0 billiona positive net change in capital,
operationcertain noncurrent assets and maintenance costsliabilities,
primarily deferred amounts, of $61 million. Partially offsetting these cash
inflows were a decrease in accounts payable of $181 million and replacement power costs to retrofit Salem
with cooling towers. PSE&G's sharethe loss from
property impairments in 1993 of any
47
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$78 million. (For additional information see
Enterprise Earnings and Revenues.)
Although net income increased $97 million forin 1993 (See(see Enterprise Earnings and
Revenues), net cash provided by operating activities decreased by $332$292 million
from 1992 to $1.008$1.032 billion. This decrease was primarily due to an
underrecovery of electric energy and gas costs through PSE&G's LEAC and LGAC of
$306 million, a decrease in accrued taxes of $332 million (primarily increased
NJGRT paymentspayments), and a decrease in depreciation and amortization of property abandonments
and write-downs.$42 million.
Partially offsetting these cash outflows were the increase in net income of $97
million, increases in deferred income taxes andof $112 million, inventory decreases
in fuel and materials and supplies.
Although net income decreased $39supplies of $54 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 fuelpayable of $57 million and materials and supplies and decreases in deferred
income taxes.
EXTERNAL FINANCINGSa loss from property impairments of $78 million.
External Financings
ENTERPRISE CONSOLIDATED CASH FLOWS FROM FINANCING ACTIVITIES
1994 1993 1992
1991
------- ------- -----------
(MILLIONS OF DOLLARS)
Enterprise:Enterprise (Parent Company):
Issuance of Common Stock(A)....................... $ 28 $ 273 $ 237 $ 219
------- ------- -----
Cash Dividends paid on Common Stock(B)............ (528) (522) (503)
(476)
------- ------- ------------
Total Enterprise (Parent Company)......... (500) (249) (266)
------- ------- -------
PSE&G:(C)
Net (decrease) increase (decrease) in Short-Term Debt(D)..... (131) 275 92
(321)Increase (decrease) in Book Overdrafts............ 24 (10) 24
Issuance of Long-Term Debt(E)..................... 850 1,973 850 750
Redemptions of Long-Term Debt..................... (479) (1,716) (1,032)
Long-Term Debt Issuance and Other
Obligations.................................... (1,717) (1,032) (171)
(Deferral) Amortization of Debt Expense -- net.... (58) (13) 5Redemption Costs...... (30) (68) (19)
Issuance of Preferred Stock(F).................... 75 75 --75
Redemption of Preferred Stock..................... (120) - -
Issuance of Monthly Income Preferred
Securities (G)................................. 150 - -
Other............................................. (1) (1) --(2) (6) (6)
------- ------- ------------
Total PSE&G............................... 547 (29) 263337 523 (16)
------- ------- ------------
EDHI:(G)(H)
Net decreaseincrease (decrease) in Short-Term Debt...................Debt........ 45 (90) (89) (49)
Issuance of Long-Term Debt........................ 165 30
264
Redemptions of Long-Term Debt..................... (115) (367) (27)
(81)
Other............................................. (6)- (4) 2-
------- ------- ------------
Total EDHI................................ (298) (90) 136(70) (296) (86)
------- ------- ------------
Net cash provided by (used in)used in financing activities........................................activities............... $ --(233) $ (385)(22) $ 142
------- ------- -----
------- ------- -----(368)
======= ======= =======
(A) During 1993,1994, Enterprise issued and sold 4,400,000 shares of Common Stock
through a public offering through underwriters and 3,892,5051,009,674 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$28 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.subsidiaries. Book value per share was $21.70 at December 31, 1994,
compared to $21.07 at December 31, 1993 compared
to $20.32 at December 31, 1992.1993. (See Note 4 -- Schedule of
Consolidated Capital Stock and Other Securities of Notes to Consolidated Financial Statements.Notes.)
48
57
(B) See DIVIDENDS.Dividends.
(C) Under the terms of PSE&G's FirstMortgage and Refunding Mortgage (Mortgage) and its Restated Certificate of
Incorporation as amended, at December 31, 1993,1994, PSE&G would qualify to issue an
additional $4.488$3.511 billion of its First and Refunding Mortgage Bonds
(Bonds) at a rate of 7.375%8.875% or $4.101$3.017 billion of Preferred Stock at a
rate of 7.0%8.750%. PSE&G's Restated Certificate of Incorporation currently
limits the issuance of Preferred Stock to $1.0 billion, of which $535
million is outstanding.
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, 19931994, such ratio was 3.30:3.62:1. The BRCratio
of earnings to fixed charges as required by the Securities and Exchange
Commission was 3.35:1.
The BPU has authorized PSE&G to issue $370 million of Bonds/Medium-Term
Notes (MTNs) through 1996 for refunding purposes.
The BPU has authorized PSE&G to issue not more than $800 million$1 billion 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.January 1, 1997. On December 31, 1993,1994, PSE&G had $424$308
million of short-term debt outstanding.
PSE&G hasrenewed and increased to $800 million a $600 million revolving credit
agreement with a group of commercial banks which expires onthrough September 17, 1994.14, 1995.
On December 31, 1993,1994, there waswere no short-term debtborrowings outstanding
under this credit agreement.
(D) Includes commercial paper issued and/or redeemed by FuelcoFor additional detail, see Note 4 -- Schedule of Consolidated Capital
Stock and guaranteed
byOther Securities and Note 6 -- Schedule of Consolidated Debt of
Notes.
(D) 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. FuelcoFuel Corporation (Fuelco) has a $150 million commercial paper
program throughto 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 on June 28, 1996. OnPSE&G has guaranteed
repayment of Fuelco's respective obligations. As of December 31,
1993,1994, Fuelco had $109 million of its commercial paper outstanding.of $93.7 million outstanding under
such program.
(E) Enterprise's long-term debt aggregated $5.256$5.181 billion as of December 31,
1993,1994, of which $4.364$4.487 billion was attributable to PSE&G and $892$694 million
to EDHI.
During 1993,1994, PSE&G issued $1.973 billiona total of $850 million principal amount of
its Bonds.Bonds/MTNs. The net proceeds from the sale of thesethe Bonds were used by
PSE&G to refund and redeem certainor defease $474 million of its higher-costhigher cost Bonds and maturing debt obligations including
reimbursement of its treasury for funds expended for such purposes and for
the payment ofto
pay a portion of PSE&G'sits current 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 anprogram.
For 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.Notes.
(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 issued and sold 600,000 shares$75 million of its
Cumulative Preferred Stock -- $25 Par
and 600,000 shares of Preferred Stock ($100 Par). The net proceeds of $15
millionStock. In March 1994, PSE&G used the funds
from the above sale of the Preferred Stock -- $25 Par were used by PSE&G to redeem all$45 million of the 150,000 outstanding shares of PSE&G's 8.08%its higher priced
Preferred Stock ($100 Par).Stock. The net proceeds of $60 million from the sale of the
Preferred Stock ($100 Par)remaining funds 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, expiringIn December 31, 1995,1994,
PSE&G isredeemed an additional $75 million of its Preferred Stock.
The BPU has authorized PSE&G to issue an additional $330not more than $180 million
of Preferred Stock after
giving effect to the 1994 issuances of Preferred Stock. (Seethrough 1995.
For additional detail see Note 4 -- Schedule of Consolidated Capital Stock
and Other Securities of NotesNotes.
(G) In November 1994, Public Service Electric and Gas Capital, L.P.
(Partnership) issued $150 million of Monthly Income Preferred Securities
(MIPS), the proceeds of which were loaned to PSE&G and used to redeem $75
million of Preferred Stock and the payment of construction expenditures.
For additional detail see Note 4 -- Schedule of Consolidated Financial Statements.)
49Capital Stock
and Other Securities of Notes.
58
(G)(H) 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, 1993,1994, Funding had $45$90
million of borrowings outstanding under its commercial paperthis program.
Funding has a $225 million revolving credit facility which terminates
on November 18, 1995. As of December 31, 1993,1994, Funding had no
debtborrowings outstanding under this facility.
In February 1993, Funding repaid $60 millionis in the process of amending its 9.43% Series A Notes.
In March 1993, Funding privately placed an aggregateletter of $60 million
principal amount of its Senior Notes.
In May 1993, Capital amended its Medium-Term Notes (MTNs)credit and revolving
credit facility in order to adjust pricing and extend the maturity to
early 1998.
Capital's MTN program to
provideprovides 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, $88Effective January
31, 1995, Capital will not have more than $650 million principal amount of Capital's MTNs weredebt outstanding
at any time. In November 1994, Capital repaid $42.5$50 million sinking fund payments on
Capital's long-term debt obligations were made and $105 million principal
amount of MTNs were issued.its 7.40%
MTNs. At December 31, 1993,1994, Capital had $517$467 million of MTNs outstanding
and total debt outstanding of $724.5$632 million.
For additional detail see Note 6 -- Long-TermSchedule of Consolidated Debt of
Notes to Consolidated
Financial Statements.Notes.
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;Earnings: Dividends;
Revenues -- PSE&G Electric, PSE&G Gas; PSE&G Electric Energy Costs; Liquidity
and Capital Resources, PSE&G;&G, Long-Term Investments and Real Estate;
Construction, Investments and Other Capital Requirements Forecast; and External
Financings.
GAS SUPPLY COSTSGas Supply Costs
Gas supply costs increased $117 million or 12.7% in 1994 compared to 1993
and $17 million or 1.8% in 1993 compared to 1992 and
$216 million or 31.4% in 1992 compared to 1991.1992. The significant components
of these changes follow:
INCREASE OR (DECREASE)
------------------------------Increase or (Decrease)
-----------------------------
1994 vs.1993 1993 VS.vs. 1992 1992 VS. 1991
------------- -------------
(MILLIONS)(Millions)
Change in prices paid for gas supplies......................supplies... $ (20) $ 93
$ 7
Therm sendout...............................................sendout............................ 32 43 158
Refunds from pipeline suppliers.............................suppliers.......... (21) 33 (33)
Adjustment of actual costs to match
recoveries through revenues(A).......................................revenues (A)........ 126 (152)
84
------ ----------- -----
Total Gas Supply Costs............................Costs......... $ 117 $ 17
$ 216
------ ------
------ ------===== =====
(A) Reflects the change in the deferred over(under)recovered gas supply costs,
which in the years 1994, 1993 1992 and 19911992 amounted to $26 million, $(100)
million $52
million and $(32)$52 million, respectively. (See PSE&G Energy and Fuel
Adjustment Clauses and Note 2 -- Rate Matters of NotesNotes.)
1994 -- The increase in total costs was principally due to Consolidated
Financial Statements.)the
overrecovery of fuel costs and increased sales to NUGs, partially offset by
lower gas prices.
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 BRCBPU 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.
50
59
1992 -- TheLiquidity and Capital Resources
Internal Generation of Cash from Operations
PSE&G's cash provided by operating activities increased $229 million to
$1,061 million for 1994 compared to the corresponding period in 1993. This
increase was primarily due to an increase in totalnet income of $45 million, a
decrease in accounts receivable of $154 million, a greater recovery of electric
energy and gas costs was principally due to greater therm
sendout resulting from the colder 1992 weather compared to 1991through PSE&G's LEAC and increased
sales to cogenerators.
LIQUIDITY AND CAPITAL RESOURCES
INTERNAL GENERATION OF CASH FROM OPERATIONSLGAC of $74 million, an increase
in depreciation and amortization of $38 million, a decrease in accrued taxes
of $25 million, a positive net change in certain other current assets and
liabilities of $64 million and a positive net change in certain noncurrent
assets and liabilities, primarily deferred amounts, of $69 million, partially
offset by a decrease in accounts payable of $183 million and a decrease in
deferred income taxes of $68 million. (For additional information see PSE&G -
Earnings and Revenues.)
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$338 million from 1992 to $811$832 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,
andof $306 million, a decrease in accrued taxes of
$306 million (primarily increased NJGRT payments), a decrease in depreciation
and amortization of property abandonments$43 million and write-down.a negative net change in certain other
current assets and liabilities of $28 million and a negative net change in
certain noncurrent assets and liabilities, primarily deferred amounts, of $32
million. Partially offsetting these cash outflows were increasesthe increase in net
income of $139 million, an increase in deferred income taxes and decreases in fuel and materials and supplies inventories.
Although net income decreased $70of $154 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 thea decrease in net
income, increases in fuel and materials and supplies inventories of $54 million and
decreasesan increase in deferred income taxes.
51accounts payable of $36 million.
60
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 LLP, 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 LLP, 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 LLP, 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, 1993,1994, 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 neithernot employees of Enterprise noror any of its affiliates. The
Audit Committee meets periodically with management as well as with
representatives of the internal auditors and Deloitte & Touche.Touche LLP. The Audit
Committee reviews the work of each to ensure that theirits respective
responsibilities are being carried out and discusses related matters. Both the
internal auditors and Deloitte & Touche LLP 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 ComptrollerController
Principal Accounting Officer
February 18, 199414, 1995
52
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 LLP, 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 LLP, 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 LLP, 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, 1993,1994, 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 neithernot employees of Enterprise noror any of its affiliates.
The Enterprise Audit Committee meets periodically with management as well as
with representatives of the internal auditors and Deloitte & Touche.Touche LLP. 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 LLP, 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 ComptrollerController
Principal Accounting Officer
February 18, 199414, 1995
53
62
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,
19931994 and 1992,1993, and the related consolidated statements of income, retained
earnings, and cash flows for each of the three years in the period ended
December 31, 1993.1994. Our audits also included the consolidated financial
statement schedules listed in the Index in Item 14(a)14(b)(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, 19931994 and 1992,1993, and the
results of their operations and their cash flows for each of the three years
in the period ended December 31, 19931994 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, 1992,
1991, 1990, and 1989,1990, and the related consolidated statements of income, retained
earnings, and cash flows for the years ended December 31, 19901991 and 19891990 (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, 19931994 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 LLP
February 18, 199414, 1995
Parsippany, New Jersey 54
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, 19931994 and
1992,1993, and the related consolidated statements of income, retained earnings, and
cash flows for each of the three years in the period ended December 31, 1993.1994.
Our audits also included the consolidated financial statement schedules listed
in the Index in Item 14(a)14(b)(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, 19931994 and 1992,1993, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 19931994 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, 1992,
1991, 1990, and 1989,1990, and the related consolidated statements of income, retained
earnings, and cash flows for the years ended December 31, 19901991 and 19891990 (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, 19931994 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 LLP
February 18, 199414, 1995
Parsippany, New Jersey
55
64
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------------
1994 1993 1992
1991
----------- ----------- ----------------------- ------------ ------------
(THOUSANDS OF DOLLARS)
OPERATING REVENUES
Electric............................................... $ 3,733,113 $ 3,693,083 $ 3,407,819
$ 3,500,043
Gas.................................................... 1,778,528 1,594,341 1,586,181
1,307,849
Nonutility Activities.................................. 404,202 418,135 362,781
283,766
----------- ----------- ----------------------- ------------ ------------
Total Operating Revenues........................ 5,915,843 5,705,559 5,356,781
5,091,658
----------- ----------- ----------------------- ------------ ------------
OPERATING EXPENSES
Operation
Fuel for Electric Generation and Net Interchanged
Power............................................. 695,763 717,136 776,571 781,191
Gas Purchased and Materials for Gas Produced......... 1,023,956 897,885 858,737
636,058
Other................................................ 1,116,263 1,012,757 924,942
867,182
Maintenance............................................ 308,080 304,403 307,726 315,372
Depreciation and Amortization.......................... 629,688 600,264 642,548 585,919
Property Impairment (note 16).......................... -- 77,637 -- --
Taxes
Federal Income Taxes (note 9)........................ 314,759 221,694 264,85610)....................... 312,551 313,680 221,469
New Jersey Gross Receipts Taxes...................... 583,167 597,898 585,770
583,071
Other................................................ 75,973 72,658 60,855
----------- -----------82,282 77,052 72,883
------------ ------------ -----------
Total Operating Expenses........................ 4,751,750 4,598,712 4,390,646
4,094,504
----------- ----------------------- ------------ -----------
OPERATING INCOME......................................... 1,164,093 1,106,847 966,135
997,154
----------- ----------------------- ------------ -----------
OTHER INCOME
Allowance for Funds Used During
Construction -- Equity............................... 12,789 12,265 12,828 7,092
Peach Bottom Settlement -- net of Federal income taxes
$16,985..............................................1992, $16,985 (note 2)............................... -- -- 32,970 --
Miscellaneous -- net................................... 6,430 (3,778) 30,188
15,024
----------- ----------------------- ------------ -----------
Total Other Income.............................. 19,219 8,487 75,986
22,116
----------- ----------------------- ------------ -----------
INCOME BEFORE INTEREST CHARGES AND DIVIDENDS ON
PREFERRED STOCK..................................................SECURITIES................................... 1,183,312 1,115,334 1,042,121
1,019,270
----------- ----------------------- ------------ -----------
INTEREST CHARGES (note 6)
Long-Term Debt......................................... 459,158 469,120 479,898
437,701
Short-Term Debt........................................ 23,962 13,860 14,858
35,000
Other.................................................. 12,805 19,554 29,269
12,576
----------- ----------------------- ------------ -----------
Total Interest Charges.......................... 495,925 502,534 524,025 485,277
Allowance for Funds Used During Construction -- Debt and
Capitalized Interest................................... (33,793) (20,833) (17,928)
(38,054)
----------- ----------------------- ------------ -----------
Net Interest Charges..................................... 462,132 481,701 506,097
447,223
----------- ----------------------- ------------ -----------
Preferred StockSecurities Dividend Requirements (note 4)................. 42,147 38,114 31,907
29,012
----------- ----------------------- ------------ -----------
Income before cumulative effect of accounting change..... 679,033 595,519 504,117 543,035
Cumulative effect of change in accounting for income taxes
(note 9)...............................................10).............................................. -- 5,414 --
--
----------- ----------------------- ------------ -----------
Net Income............................................... $ 679,033 $ 600,933 $ 504,117
$ 543,035
----------- ----------- -----------
----------- ----------- -----------============ ============ ===========
SHARES OF COMMON STOCK OUTSTANDING
End of Year............................................ 244,697,930 243,688,256 235,395,751 226,700,852
Average for Year....................................... 244,470,794 240,663,599 232,306,492 223,565,239
EARNINGS PER AVERAGE SHARE OF COMMON STOCK
Income before cumulative effect of accounting change... $ 2.78 $ 2.48 $ 2.17 $ 2.43
Cumulative effect of change in accounting for income
taxes................................................ -- .02 --
--
----------- ----------------------- ------------ -----------
TOTAL EARNINGS PER AVERAGE SHARE OF COMMON STOCK......... $ 2.78 $ 2.50 $ 2.17
$ 2.43
----------- ----------- -----------
----------- ----------- -----------============ ============ ===========
DIVIDENDS PAID PER SHARE OF COMMON STOCK................. $ 2.16 $ 2.16 $ 2.13
----------- ----------- -----------
----------- ----------- -----------2.16
============ ============ ===========
See Notes to Consolidated Financial Statements
56Statements.
65
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONSOLIDATED BALANCE SHEETS
ASSETS
DECEMBER 31,
---------------------------
1994 1993 1992
----------- -----------
(THOUSANDS OF DOLLARS)
UTILITY PLANT-ORIGINAL COST (note 15)
Electric.................................................................. $12,345,919 $11,920,894
$11,565,669
Gas....................................................................... 2,318,233 2,177,841
2,044,944
Common.................................................................... 545,131 520,285 479,972
----------- -----------
Total.............................................................. 15,209,283 14,619,020 14,090,585
Less accumulated depreciation and amortization.............................. 5,147,105 4,772,942 4,386,738
----------- -----------
Net......................................................................... 10,062,178 9,846,078 9,703,847
Nuclear Fuel in Service, net of accumulated amortization --
1994, $302,906; 1993, $284,162; 1992, $223,857..........................................$275,638.......................................... 205,273 205,237 252,299
----------- -----------
Net Utility Plant in Service....................................... 10,267,451 10,051,315 9,956,146
Construction Work in Progress, including Nuclear Fuel in Process --
1994, $65,429; 1993, $98,780; 1992, $68,789..............................................$98,780.............................................. 806,934 735,356 492,914
Plant Held for Future Use (principally land)................................Use................................................... 23,860 17,709 22,252
----------- -----------
Net Utility Plant.................................................. 11,098,245 10,804,380 10,471,312
----------- -----------
INVESTMENTS AND OTHER PROPERTYNONCURRENT ASSETS (notes 3,73, 7, 8, 11,12 and 10)16)
Long-Term Investments, net of amortization --
1994, $2,365; 1993, $572, and net of valuation allowanceallowances --
1994, $17,104; 1993, $18,018; 1992, $17,548.............................................. 1,613,823 1,650,248$18,018, respectively.............................. 1,625,952 1,630,996
Oil and Gas Property, Plant and Equipment, net of accumulated depreciation
and amortization -- 1994, $748,245; 1993, $695,791; 1992, $663,915......................$695,791...................... 577,913 506,047 506,814
Real Estate, Property and Equipment, net of accumulated depreciation --
1994, $14,242; 1993, $10,840; 1992, $11,146............................$10,840, and net of valuation allowances --
1994, $23,264; 1993, $16,684, respectively.............................. 115,210 110,661 225,289
Other Plant, net of accumulated depreciation and amortization --
1994, $4,653; 1993, $4,307; 1992, $3,073.............................................. 45,501 26,260$3,735.............................................. 36,063 28,327
Nuclear Decommissioning and Other Special Funds........................... 233,022 189,282
134,524
Other Investments -- net.................................................. 103,537 79,616Assets - net........................................................ 85,478 103,538
----------- -----------
Total Investments and Other Property...............................Noncurrent Assets...................... 2,673,638 2,568,851 2,622,751
----------- -----------
CURRENT ASSETS
Cash and Cash Equivalents (note 8)9)........................................ 46,880 31,67467,866 71,372
Accounts Receivable:
Customer Accounts Receivable............................................ 434,207 446,629 395,991
Other Accounts Receivable............................................... 233,307 214,195
Less211,779 230,373
Less: allowance for doubtful accounts....................................accounts.................................. 40,915 27,932 24,059
Unbilled Revenues......................................................... 204,056 244,497 248,742
Fuel, at average cost..................................................... 268,927 285,943 263,743
Materials and Supplies, at average cost...................................net of inventory valuation reserves --
1994, $18,200; 1993, $8,525, respectively............................... 148,285 172,438 211,076
Prepayments............................................................... 82,586 63,026
Deferred Income Taxes (note 9)............................................10)........................................... 25,311 12,934
--Miscellaneous Current Assets.............................................. 37,356 49,860
----------- -----------
Total Current Assets............................................... 1,497,282 1,404,3881,356,872 1,486,114
----------- -----------
DEFERRED DEBITS (note 5)
Property Abandonments -- net.............................................. 88,269 105,536 122,261
Oil and Gas Property Write-Down........................................... 41,232 46,386 51,540
Unamortized Debt Expense.................................................. 134,599 121,278
62,134
Deferred Debit -- OPEB Costs (notes 1 and 13)......................................................................... 116,476 58,593
Underrecovered Electric Energy and Gas Costs -- net....................... 172,563 62,034
Unrecovered Environmental Costs (notes 2 and 12).......................... 135,499 138,531 108,047
Unrecovered Plant and Regulatory Study Costs.............................. 37,128 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).......................10)...................... 791,393 789,795 --
Deferred Decontamination and Decommissioning Costs (note 3)............... 53,016 56,055
--
Other..................................................................... 21,247 11,92118,510 56,907
----------- -----------
Total Deferred Debits.............................................. 1,434,651 256,2581,588,685 1,470,311
----------- -----------
Total............................................................ $16,305,164 $14,754,709
----------- -----------
----------- -----------$16,717,440 $16,329,656
=========== ===========
See Notes to Consolidated Financial Statements
57Statements.
66
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONSOLIDATED BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
DECEMBER 31,
---------------------------
1994 1993 1992
----------- -----------
(THOUSANDS OF DOLLARS)
CAPITALIZATION (notes 4, 5 and 6)
Common Equity
Common Stock.................................................Stock.................................. $ 3,801,157 $ 3,772,662
$ 3,499,183
Retained Earnings............................................Earnings............................. 1,510,010 1,361,018 1,282,931
----------- -----------
Total Common Equity.....................................Equity...................... 5,311,167 5,133,680 4,782,114
Subsidiaries' Securities and Obligations
Preferred Securities
Preferred Stock Without Mandatory Redemption.................................Redemption.. 384,994 429,994
429,994Preferred Stock With Mandatory Redemption....................................Redemption..... 150,000 75,000150,000
Monthly Income Preferred Securities........... 150,000 --
Long-Term Debt (note 6)......................................Debt................................... 5,180,657 5,256,321 4,977,579
Capital Lease Obligations (note 10).......................... 52,530 53,104
----------- -----------
Total Capitalization.................................... 11,022,525 10,317,791Capitalization..................... 11,176,818 10,969,995
----------- -----------
OTHER LONG-TERM LIABILITIES
Decontamination and DecommisioningDecommissioning Costs (note 3)............... 56,149 56,055 --
Unrecovered
Environmental Costs (notes 2 and 12).............................. 105,684 111,000
93,169Capital Lease Obligations......................... 53,770 53,104
----------- -----------
Total Other Long-Term Liabilities....................... 167,055 93,169Liabilities......... 215,603 220,159
----------- -----------
CURRENT LIABILITIES
Long-Term Debt and Capital Lease Obligations due within one year......................................................... 168,638 393,071year................ 499,738 168,064
Commercial Paper and Loans (note 11)............................6)............... 491,586 577,636
391,982Book Overdrafts................................... 86,576 62,992
Accounts Payable................................................ 557,761 473,977Payable.................................. 433,471 519,261
New Jersey Gross Receipts Taxes Accrued.........................Accrued........... -- 263,357 555,329
Other Taxes Accrued.............................................Accrued............................... 44,149 39,610
41,557
Interest Accrued................................................Accrued.................................. 107,962 107,027
116,165
Other........................................................... 157,751 134,768Estimated Liability for Vacation Pay.............. 27,080 26,993
Customer Deposits................................. 33,698 36,668
Liability for Injuries and Damages................ 29,814 28,338
Miscellaneous Environmental Liabilities........... 15,365 4,475
Other............................................. 87,480 61,277
----------- ---------------------
Total Current Liabilities............................... 1,871,780 2,106,849Liabilities................. 1,856,919 1,895,698
----------- ---------------------
DEFERRED CREDITS
Accumulated Deferred Income Taxes (note 9)......................10)....... 2,905,390 2,702,386 1,711,089
Accumulated Deferred Investment Tax Credits (note 9).................. 412,466 432,713
444,368
Deferred Credit -- OPEB Costs (notes 1 and 13)...................................... 116,476 58,593
--
Materials and Supplies.......................................... 11,847 24,018
Other........................................................... 38,265 57,425Other............................................. 33,768 50,112
----------- ---------------------
Total Deferred Credits..................................Credits.................... 3,468,100 3,243,804
2,236,900
----------- ---------------------
COMMITMENTS AND CONTINGENT LIABILITIES (note 12)
Total................................................... $16,305,164 $14,754,709
----------- -----------
----------- -----------Total..................................... $16,717,440 $16,329,656
=========== ===========
58
67
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
---------------------------------------
1994 1993 1992
1991---------- ---------- --------- ----------
(THOUSANDS OF DOLLARS)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income......................................... $ 679,033 $ 600,933 $ 504,117 $ 543,035
Adjustments to reconcile net income to net cash
flows from operating activities:
Depreciation and Amortization................... 629,688 600,264 642,548 585,919
Amortization of Nuclear Fuel.................... 95,173 102,718 91,903 96,420
(Deferral) Recovery of Electric Energy
and Gas Costs -- net.......................... (110,529) (184,770) 121,371
(36,146)
Loss Fromfrom Property Impairments.................. -- 77,637 -- --
Cumulative Effect of Change in Accounting for
Income Taxes.................................. -- (5,414) -- --
Amortization of Discounts on Property
Abandonments and Disallowance..............................Disallowance................. (6,743) (7,801) (11,293) (11,754)
Unrealized Gains on Investments -- net.......... (26,329) (8,694) (24,843) (11,264)
Provision for Deferred Income Taxes -- net...... 138,919 168,406 56,846 114,681
Investment Tax Credits -- net................... (20,247) (11,655) (20,342) (19,779)
Allowance for Funds Used During Construction --
Debt and Equity and Capitalized Interest...... (46,582) (33,098) (30,756) (45,146)
Proceeds from Leasing Activities -- net......... 27,682 14,780 30,295 17,463
Changes in certain current assets and liabilities
Net increasedecrease (increase) in Accounts Receivable
and Unbilled Revenues.......................... (61,632) (75,275) (50,052)Revenues...................... 84,440 (68,382) (68,525)
Net decrease (increase) in Inventory -- Fuel
and Materials and Supplies................. 41,169 16,438 (37,084) 63,043(37,083)
Net (decrease) increase (decrease) in Accounts Payable... 83,784 60,853 (52,535)(85,790) 95,331 38,589
Net (decrease) increase in Accrued Taxes...... (258,818) (293,919) 37,892 (7,736)
Net change in Other Current Assets and
Liabilities................................ (18,649) 6,658 (16,592)36,748 (19,505) 8,263
Other........................................... (31,662) (12,987) (14,437)53,976 (11,598) (14,538)
---------- ------------------- ----------
Net cash provided by operating
activities............................... 1,007,666 1,339,903 1,155,1201,231,790 1,031,671 1,324,444
---------- ------------------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Utility Plant, excluding AFDC......... (849,174) (863,294) (800,344) (783,175)
Additions to Oil and Gas Property, Plant and
Equipment, excluding Capitalized Interest....... (149,523) (87,968) (32,337) (183,673)
Net decrease (increase) in Long-Term Investments
and Real Estate................................. 58,416 66,659 (61,099) (304,541)
Increase in Decommissioning and Other Special
Funds, excluding interest....................... (35,394) (45,508) (9,262) (11,665)
Cost of Plant Removal -- net....................... (33,962) (47,791) (40,111)
(44,199)
Other.............................................. 7,154 (14,938) (6,000)
11,278
---------- ------------------- ----------
Net cash used in investing activities...... (1,002,483) (992,840) (949,153)
(1,315,975)
---------- ------------------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase (decrease) in Short-Term Debt......... (86,050) 185,654 2,932
(369,809)Increase (decrease) in Book Overdrafts............. 23,584 (10,078) 24,009
Issuance of Long-Term Debt......................... 849,800 2,137,700 880,000 1,013,794
Redemption of Long-Term Debt....................... (593,790) (2,083,453) (1,058,179)
Long-Term Debt Issuance and Other
Obligations..................................... (2,083,965) (1,058,637) (252,241)Redemption Costs....... (29,811) (72,114) (19,753)
Issuance of Preferred Stock........................ 75,000 75,000 75,000
Redemption of Preferred Stock...................... (120,000) -- (Deferral) Amortization--
Issuance of Debt ExpenseMonthly Income Preferred Securities.... 150,000 -- net..... (59,144) (12,490) 4,562--
Issuance of Common Stock........................... 28,495 273,479 237,045 218,736
Cash Dividends Paid on Common Stock................ (528,071) (521,572) (503,197)
(476,099)
Other.............................................. (1,970) (6,772) (5,719)
2,838
---------- ------------------- ----------
Net cash provided by (used in)used in financing activities............................... 380 (385,066) 141,781activities...... (232,813) (22,156) (367,862)
---------- ------------------- ----------
Net (decrease) increase (decrease) in Cash and Cash
Equivalents........................................ 15,206 5,684 (19,074)(3,506) 16,675 7,429
Cash and Cash Equivalents at Beginning of Year....... 31,674 25,990 45,06471,372 54,697 47,268
---------- ------------------- ----------
Cash and Cash Equivalents at End of Year............. $ 46,88067,866 $ 31,67471,372 $ 25,990
---------- --------- ----------
---------- --------- ----------54,697
========== ========== ==========
Income Taxes Paid.................................... $ 155,104 $ 140,172 $ 143,211
$ 148,171
Interest Paid........................................ $ 432,873 $ 458,956 $ 486,396 $ 436,994
See Notes to Consolidated Financial Statements
59Statements.
68
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
FOR THE YEARS ENDED DECEMBER 31,
----------------------------------------
1994 1993 1992 1991
---------- ---------- ----------
(THOUSANDS OF DOLLARS)
BALANCE JANUARY 1...................................... $1,361,018 $1,282,931 $1,282,029 $1,203,772
ADD NET INCOME......................................... 679,033 600,933 504,117 543,035
---------- ---------- ----------
Total........................................ 2,040,051 1,883,864 1,786,146 1,746,807
---------- ---------- ----------
DEDUCT
Cash Dividends on Common Stock(A)............................................. 528,071 521,572 503,197
476,099
Adjustments to Retained Earnings.....................Capital Stock Expenses............................... 1,970 1,274 18 (11,321)
---------- ---------- ----------
Total Deductions............................. 530,041 522,846 503,215 464,778
---------- ---------- ----------
BALANCE DECEMBER 31.................................... $1,510,010 $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 and other
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, 1994, 1993
and 1992 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,
----------------------------------------
1994 1993 1992 1991
---------- ---------- ----------
(THOUSANDS OF DOLLARS)
OPERATING REVENUES
Electric............................................. $3,733,113 $3,693,083 $3,407,819
$3,500,043
Gas.................................................. 1,778,528 1,594,341 1,586,181 1,307,849
---------- ---------- ----------
Total Operating Revenues..................... 5,511,641 5,287,424 4,994,000 4,807,892
---------- ---------- ----------
OPERATING EXPENSES
Operation
Fuel for Electric Generation and Net Interchanged
Power........................................... 695,763 717,136 776,571 781,191
Gas Purchased and Materials for Gas Produced...... 1,036,701 919,870 903,360
687,365
Other............................................. 957,599 880,943 818,606
769,786
Maintenance.......................................... 308,080 304,403 307,726 315,372
Depreciation and Amortization........................ 547,032 509,206 552,011 493,097
Taxes
Federal Income Taxes (note 9).....................10).................... 294,529 308,790 195,464 255,760
New Jersey Gross Receipts Taxes................... 583,167 597,898 585,770
583,071
Other............................................. 76,100 67,593 65,968 57,086
---------- ---------- ----------
Total Operating Expenses..................... 4,498,971 4,305,839 4,205,476 3,942,728
---------- ---------- ----------
OPERATING INCOME....................................... 1,012,670 981,585 788,524 865,164
---------- ---------- ----------
OTHER INCOME
Allowance for Funds Used During
Construction -- Equity............................ 12,789 12,265 12,828 7,092
Peach Bottom Settlement -- net of Federal income
taxes -- $16,985..................................1992, $16,985 (note 2)................... -- -- 32,970 --
Miscellaneous -- net................................. 6,233 (3,841) 29,927 15,814
---------- ---------- ----------
Total Other Income........................... 19,022 8,424 75,725 22,906
---------- ---------- ----------
INCOME BEFORE INTEREST CHARGES AND DIVIDENDS ON
PREFERRED STOCK......................................SECURITIES................................. 1,031,692 990,009 864,249 888,070
---------- ---------- ----------
INTEREST CHARGES (note 6)
Long-Term Debt....................................... 366,894 364,252 368,496
337,235
Short-Term Debt...................................... 18,175 6,414 5,920
15,941
Other................................................ 10,856 19,290 27,486 12,297
---------- ---------- ----------
Total Interest Charges....................... 395,925 389,956 401,902 365,473
Allowance for Funds Used During Construction -- Debt... (25,319) (14,815) (13,589) (22,882)
---------- ---------- ----------
Net Interest Charges................................... 370,606 375,141 388,313
342,591---------- ---------- ----------
Monthly Income Preferred Securities
Dividend Requirements (note 4)....................... 1,680 -- --
---------- ---------- ----------
Net Income............................................. 659,406 614,868 475,936 545,479
---------- ---------- ----------
Preferred Stock Dividend Requirements (note 4)......... 40,467 38,114 31,907 29,012
---------- ---------- ----------
EARNINGS AVAILABLE TO PUBLIC SERVICE ENTERPRISE GROUP
INCORPORATED......................................... $ 618,939 $ 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,
---------------------------
1994 1993 1992
----------- -----------
(THOUSANDS OF DOLLARS)
UTILITY PLANT-ORIGINAL COST (note 15)
Electric........................................................ $12,345,919 $11,920,894
$11,565,669
Gas............................................................. 2,318,233 2,177,841
2,044,944
Common.......................................................... 545,131 520,285 479,972
----------- -----------
Total................................................... 15,209,283 14,619,020 14,090,585
Less accumulated depreciation and amortization.................... 5,147,105 4,772,942 4,386,738
----------- -----------
Net............................................................... 10,062,178 9,846,078 9,703,847
Nuclear Fuel in Service, net of accumulated amortization --
1994, $302,906; 1993, $284,162; 1992, $223,857...............................$275,638............................... 205,273 205,237 252,299
----------- -----------
Net Utility Plant in Service............................ 10,267,451 10,051,315 9,956,146
Construction Work in Progress, including Nuclear Fuel in
Process -- 1994, $65,429; 1993, $98,780; 1992, $68,789....................................$98,780......................... 806,934 735,356 492,914
Plant Held for Future Use (principally land)......................Use......................................... 23,860 17,709 22,252
----------- -----------
Net Utility Plant....................................... 11,098,245 10,804,380 10,471,312
----------- -----------
INVESTMENTS AND OTHER PROPERTYNONCURRENT ASSETS
Long-Term Investments, net of amortization --
1994, $2,365; 1993, $572, respectively...................... 65,886 116,554
Nuclear Decommissioning and Other Special Funds (note 3)........ 233,022 189,282
Other Plant, net of accumulated depreciation and amortization --
1994, $1,127; 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$872................................... 32,879 26,369
----------- -----------
Total Investments and Other Property....................Noncurrent Assets........... 331,787 332,205 231,321
----------- -----------
CURRENT ASSETS
Cash and Cash Equivalents (note 8)9).............................. 17,673 13,32627,498 42,165
Accounts Receivable:
Customer Accounts Receivable................................. 434,207 446,629 395,991
Other Accounts Receivable.................................... 163,663 127,230151,684 160,729
Less: allowance for doubtful accounts........................ 40,915 27,932 24,059
Unbilled Revenues............................................... 204,056 244,497 248,742
Fuel, at average cost........................................... 268,927 285,943 263,743
Materials and Supplies, at average cost.........................net of inventory valuation reserves --
1994, $18,200; 1993, $8,525, respectively..................... 146,763 170,910 210,030
Prepayments..................................................... 78,480 60,156
Deferred Income Taxes (note 9)..................................10)................................. 25,311 12,934
--Miscellaneous Current Assets.................................... 30,407 45,754
----------- -----------
Total Current Assets.................................... 1,392,797 1,295,1591,247,938 1,381,629
----------- -----------
DEFERRED DEBITS (note 5)
Property Abandonments -- net.................................... 88,269 105,536 122,261
Oil and Gas Property Write-Down................................. 41,232 46,386 51,540
Unamortized Debt Expense........................................ 132,342 117,057
58,924Deferred OPEB Costs (notes 1 and 13)............................ 116,476 58,593
Underrecovered Electric Energy and Gas Costs -- net............. 172,563 62,034
Unrecovered Environmental Costs (notes 2 and 12)................ 135,499 138,531
Unrecovered Plant and Regulatory Study Costs.................... 37,128 35,196
Deferred Decontamination and Decommissioning Costs (note 3)..... 53,016 56,055
Unrecovered SFAS 109 Deferred Income Taxes (note 9).............10)............ 791,393 789,795
--
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 11,91518,510 56,901
----------- -----------
Total Deferred Debits................................... 1,430,424 253,0421,586,428 1,466,084
----------- -----------
Total................................................. $13,959,806 $12,250,834
----------- -----------
----------- -----------$14,264,398 $13,984,298
=========== ===========
See Notes to Consolidated Financial Statements.
62
71
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONSOLIDATED BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
DECEMBER 31,
-------------------------
1994 1993 1992
----------- -----------
(THOUSANDS OF DOLLARS)
CAPITALIZATION (notes 4, 5 and 6)
Common Equity
Common Stock...................................................Stock................................... $ 2,563,003 $ 2,563,003
Contributed Capital from Enterprise............................Enterprise........... 534,395 359,725534,395
Retained Earnings..............................................Earnings............................. 1,292,201 1,180,532 1,097,734
----------- -----------
Total Common Equity.......................................Equity...................... 4,389,599 4,277,930 4,020,462
Preferred Stock without mandatory redemption........................ 429,994redemption....... 384,994 429,994
Preferred Stock with mandatory redemption...........................redemption.......... 150,000 75,000150,000
Monthly Income Preferred Securities of
Subsidiary....................................... 150,000 --
Long-Term Debt (note 6).............................................Debt..................................... 4,486,787 4,364,437 3,978,138
Capital Lease Obligations (note 10)................................. 52,530 53,104
----------- -----------
Total Capitalization...................................... 9,274,891 8,556,698Capitalization..................... 9,561,380 9,222,361
----------- -----------
OTHER LONG-TERM LIABILITIES
Decontamination and Decommissioning Costs (note 3)................ 56,149 56,055 --
Unrecovered
Environmental Costs (note(notes 2 and 12)................................ 105,684 111,000
93,169Capital Lease Obligations (note 11).............. 53,770 53,104
----------- -----------
Total Other Long-Term Liabilities......................... 167,055 93,169Liabilities......... 215,603 220,159
----------- -----------
CURRENT LIABILITIES
Long-Term Debt and Capital Lease Obligations due within one year........................................................... 62,274 192,212year................ 310,200 61,700
Commercial Paper and Loans (note 11)..............................6)............... 401,759 532,728
257,536Book Overdrafts................................... 86,576 62,992
Accounts Payable.................................................. 519,296 434,561Payable.................................. 370,005 480,796
Accounts Payable --- Associated Companies (note 17)................19). 16,677 5,674 18,535
New Jersey Gross Receipts Taxes Accrued...........................Accrued........... -- 263,357 555,329
Other Taxes Accrued...............................................Accrued............................... 36,030 33,710
27,857
Interest Accrued..................................................Accrued.................................. 95,721 96,257
103,988
Other.......................................................... 122,924 110,869Estimated Liability for Vacation Pay.............. 27,080 26,993
Customer Deposits................................. 33,698 36,668
Liability for Injuries and Damages................ 29,814 28,338
Miscellaneous Environmental Liabilities........... 15,365 4,475
Other............................................. 50,778 26,450
----------- -----------
Total Current Liabilities................................. 1,636,220 1,700,887Liabilities................. 1,473,703 1,660,138
----------- -----------
DEFERRED CREDITS
Accumulated Deferred Income Taxes (note 9)........................10)....... 2,478,539 2,368,778 1,403,115
Accumulated Deferred Investment Tax Credits (note 9).................... 389,721 408,929
427,337
Deferred Credit -- OPEB Costs (notes 1 and 13)........................................ 116,476 58,593
--
Materials and Supplies (note 5)................................... 11,847 24,018
Other............................................................. 33,493 45,610Other............................................. 28,976 45,340
----------- -----------
Total Deferred Credits....................................Credits.................... 3,013,712 2,881,640 1,900,080
----------- -----------
COMMITMENTS AND CONTINGENT LIABILITIES (note 12)
Total..................................................... $13,959,806 $12,250,834
----------- -----------
----------- -----------Total..................................... $14,264,398 $13,984,298
=========== ===========
63
72
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------------------
1994 1993 1992
1991
----------- ----------- ---------------------
(THOUSANDS OF DOLLARS)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income................................................. $ 659,406 $ 614,868 $ 475,936 $ 545,479
Adjustments to reconcile net income to net cash flows from
operating activities:
Depreciation and Amortization........................... 547,032 509,206 552,011 493,097
Amortization of Nuclear Fuel............................ 95,173 102,718 91,903 96,420
(Deferral) Recovery of Electric Energy and Gas
Costs -- net.......................................... (110,529) (184,770) 121,371 (36,146)
Amortization of Discounts on Property Abandonments and
Disallowance.......................................... (6,743) (7,801) (11,293) (11,754)
Provision for Deferred Income Taxes -- net.............. 108,163 175,868 21,839 97,278
Investment Tax Credits -- net........................... (19,208) (18,408) (19,089) (20,229)
Allowance for Funds Used During Construction -- Debt and
Equity................................................ (38,108) (27,080) (26,417) (29,974)
Changes in certain current assets and liabilities
Net increasedecrease (increase) in Accounts Receivable
and Unbilled Revenues...........................................Revenues.............................. 74,891 (78,953) (54,792) (52,087)
Net decrease (increase) in Inventory -- Fuel and
Materials and Supplies............................. 41,163 16,920 (36,775)
62,773
Net (decrease) increase (decrease) in Accounts Payable........... 71,874 69,629 (56,885)(99,788) 83,421 47,365
Net (decrease) increase in Accrued Taxes.............. (261,037) (286,119) 20,227 778
Net change in Other Current Assets and Liabilities.... (26,934) (1,063) (12,022)36,245 (27,790) 492
Other................................................... (50,309) (16,060) (16,874)33,846 (39,872) (12,115)
----------- ----------- ---------------------
Net cash provided by operating activities............. 811,080 1,187,427 1,059,8541,060,506 832,208 1,170,663
----------- ----------- ---------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Utility Plant, excluding AFDC................. (849,174) (863,294) (800,344)
(783,175)
Net increasedecrease (increase) in Other Investments..........................Long-Term Investments........... 50,668 (26,980) (20,438) (31,788)
Net increase in Decommissioning Funds and Other Special
Funds, excluding interest............................... (35,394) (45,508) (9,262) (11,665)
Cost of Plant Removal -- net............................... (33,962) (47,791) (40,111)
(44,199)
Other...................................................... 1,692 (13,607) (4,572)
--
----------- ----------- ---------------------
Net cash used in investing activities................. (866,170) (997,180) (874,727)
(870,827)
----------- ----------- ---------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase (decrease) in Short-Term Debt................. (130,969) 275,192 91,679
(320,961)Increase (decrease) in Book Overdrafts..................... 23,584 (10,078) 24,009
Issuance of Long-Term Debt................................. 849,800 1,972,700 850,000 750,000
Redemption of Long-Term Debt............................... (478,950) (1,716,401) (1,031,660)
Long-Term Debt Issuance and Other Obligations......... (1,716,913) (1,032,118) (170,658)Redemption Costs............... (29,731) (68,227) (19,314)
Issuance of Preferred Stock................................ 75,000 75,000 --
(Deferral) Amortization75,000
Redemption of Debt Expense -- net............. (58,133) (13,367) 4,666Preferred Stock.............................. (120,000) - -
Issuance of Monthly Income Preferred Securities............ 150,000 - -
Contributed Capital by Enterprise.......................... 174,670 239,725
60,000
Cash Dividends Paid........................................ (545,767) (531,314) (517,907)
(507,013)
Other...................................................... (755)(1,970) (754) (402) 1
----------- ----------- ---------------------
Net cash (used in) provided by (used in) financing activities... 190,447 (307,390) (183,965)(209,003) 170,788 (288,881)
----------- ----------- ---------------------
Net (decrease) increase in Cash and Cash Equivalents.................... 4,347 5,310 5,062Equivalents......... (14,667) 5,816 7,055
Cash and Cash Equivalents at Beginning of Year............... 13,326 8,016 2,95442,165 36,349 29,294
----------- ----------- ---------------------
Cash and Cash Equivalents at End of Year..................... $ 17,67327,498 $ 13,32642,165 $ 8,016
----------- ----------- ----------
----------- ----------- ----------36,349
=========== =========== ===========
Income Taxes Paid............................................ $ 209,196 $ 172,869 $ 209,258 $ 193,347
Interest Paid................................................ $ 345,867 $ 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,
----------------------------------------
1994 1993 1992 1991
---------- ---------- ----------
(THOUSANDS OF DOLLARS)
BALANCE JANUARY 1...................................... $1,180,532 $1,097,734 $1,140,117 $1,101,651
ADD NET INCOME......................................... 659,406 614,868 475,936 545,479
---------- ---------- ----------
Total........................................ 1,839,938 1,712,602 1,616,053 1,647,130
---------- ---------- ----------
DEDUCT CASH DIVIDENDS(A)
Preferred Stock, at required rates................... 40,467 38,114 31,907
29,012
Common Stock......................................... 505,300 493,200 486,000
478,001
Adjustments to Retained Earnings.....................CAPITAL STOCK EXPENSES................................. 1,970 756 412 --
---------- ---------- ----------
Total Deductions............................. 547,737 532,070 518,319 507,013
---------- ---------- ----------
BALANCE DECEMBER 31.................................... $1,292,201 $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, 1994, 1993 and 1992 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
ORGANIZATIONOrganization
Enterprise has two direct wholly-ownedwholly 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 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, 1994, 1993 and 1992, there were 132,450,344 shares outstanding,
with an aggregate book value of $2.6 billion.
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. In 1994, Public Service Electric and Gas Capital, L.P.
(Partnership), a limited partnership in which PSE&G is the general partner, was
formed for the purpose of issuing monthly income preferred securities (MIPS).
(See Note 4 -- Schedule of Consolidated Capital Stock and Other Securities.)
EDHI is the parent of Enterprise's other nonutility businesses: Energy
Development Corporation (EDC), an oil and gas exploration development,and production and
marketing company; Community Energy Alternatives Incorporated (CEA), an
investor in and developer of cogeneration and independent power production
facilities; Public Service Resources Corporation (PSRC), which makes diversifiedprimarily
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
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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.
REGULATIONRegulation -- PSE&G
The accounting and rates of PSE&G are subject, in certain respects, to
the requirements of the BRCNew Jersey Board of Public Utilities (BPU) and FERC.the
Federal Energy Regulatory Commission (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 principlesGenerally Accepted Accounting Principles by
PSE&G differ in certain respects from applications by non-regulated businesses.
UTILITY PLANT AND RELATED DEPRECIATIONPSE&G prepares its financial statements in accordance with the provisions of
Statement of Financial Accounting Standards No. 71 -- "Accounting for the
Effects of Certain Types of Regulation" (SFAS 71). In general, SFAS 71
recognizes that accounting for rate-regulated enterprises should reflect the
relationship of costs and revenues. As a result, a regulated utility may defer
recognition of cost (a regulatory asset) or recognize an obligation (a
regulatory liability) if it is probable that, through the rate-making process,
there will be a corresponding increase or decrease in revenues. Accordingly,
PSE&G has deferred certain costs, which will be amortized over various periods.
To the extent that collection of such costs or payment of liabilities is no
longer probable as a result of changes in regulation and/or PSE&G's competitive
position, the associated regulatory asset or liability will be reversed with
a charge or credit to income. (See Note 5 -- Deferred Items.)
Amounts charged to operations for depreciation expense reflect
estimated useful lives and methods, that include estimated cost of removal and
salvage, prescribed and approved by regulators rather than those that might
otherwise apply to unregulated enterprises. PSE&G cannot presently quantify
what the financial statement impact may be if depreciation expense is
determined absent regulation.
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.BPU. Depreciation provisions stated in percentages of original cost of
depreciable property were 3.51% in 1994, 3.46% in 1993 and 3.48% in 1992 and 1991.
661992.
75
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECONTAMINATION AND DECOMMISSIONINGDecontamination and Decommissioning -- PSE&G
In September 1993, FERC issued Order No. 557 on the accounting and
ratemakingrate-making treatment of special assessments levied under the National Energy
Policy Act of 1992 (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 electric Levelized Energy
Adjustment Clause (LEAC) no assurances can be given that the BRCBPU will authorize
such recovery from customers. (See Note 3 -- PSE&G cannot predict what actions the BRC will take concerning any
recovery associated with this matter.
AMORTIZATION OF NUCLEAR FUELNuclear Decommissioning and
Amortization of Nuclear Fuel - Uranium, Decontamination and Decommissioning
Fund.)
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)(KWH) of nuclear generation for spent fuel disposal costs. (See
Note 3 -- PSE&G Nuclear Decommissioning and Amortization of Nuclear Fuel.)
REVENUES AND FUEL COSTSRevenues 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 net overrecoveries), are
deferred and included in operations in the period in which they are reflected
in rates.
LONG-TERM INVESTMENTSLong-Term Investments
PSRC has invested in marketable securities and limited partnerships investing in
securities, which are statedrecorded 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
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Derivatives
Gains and losses on hedges of existing assets or liabilities are included
in the carrying amounts of those assets and liabilities and are ultimately
recognized in income as part of those carrying amounts. Gains and losses
related to qualifying hedges of firm commitments or anticipated transactions
also are deferred and recognized in income or as adjustments of carrying
amounts when the hedged transaction occurs.
PSRC's security derivatives are recorded at fair value. Realized and
unrealized changes in fair values are recognized in revenues in the period in
which the changes occur. (See Note 8 -- Financial Instruments and Risk
Management.)
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 theirthe
exploration potential.results. 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.expense. Costs incurred for exploratory dry holes, exploratory geological and
geophysical work and delay rentals are charged to expense as incurred.
INCOME TAXESIncome 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
ratemakingrate-making purposes. For periods prior to January 1, 1993, PSE&G provided
deferred income taxes to the extent permitted for rate-making purposes. (See
Note 910 -- Federal Income Taxes.)
ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION (AFDC) AND CAPITALIZED INTEREST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Allowance for Funds Used During Construction and Capitalized Interest
PSE&G -- AFDCAllowance for Funds Used During Construction (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 1994, 1993 and 1992 were 6.48%, 6.96%
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 BENEFITSPension 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$29
million, $24$28 million, and $24 million in 1994, 1993 1992 and 1991,1992, 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. PSE&G elected to amortize over 20 years its unfunded obligation at
January 1, 1993. (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 requiredNOTE 2. RATE MATTERS
Levelized Gas Adjustment Charge
On July 1, 1994, PSE&G petitioned the BPU to increase its Levelized Gas
Adjustment Charge (LGAC) rates to recover an additional $23.7 million, to be
effective October 1, 1994. On August 4, 1994, the matter was transmitted to
the Office of Administrative Law of the State of New Jersey (OAL) for
adjudication. Due to recent projections of lower gas prices, the parties
reached a stipulated settlement on October 6, 1994 which provides for the
implementation of the Gas Remediation Adjustment Charge (RAC) with an equal
corresponding offsetting adjustment to the current LGAC rate. These LGAC and
RAC rates, when combined, produce a charge which results in a zero increase to
the firm customers for the LGAC period ending September 30, 1995. The
settlement was approved by the BPU on December 21, 1994.
The BPU, on January 24, 1995, approved PSE&G's shareholdersproposal to absorb $3.8credit a total
of $50 million or
42%to its firm gas sales customers during February and March 1995.
Specifically, PSE&G will credit approximately $30 million in February and $20
million in March 1995. The opportunity to provide these credits was due
principally to abnormally warm winter weather, lower gas prices and a lower
current short-term price forecast.
Electric Levelized Energy Adjustment Clause
On July 1, 1994, PSE&G petitioned the BPU to increase its LEAC rates,
effective October 1, 1994, to recover an additional $130 million of such discount. The decision allowsenergy
costs. A significant part of the need for an increase is the larger percentage
of power that PSE&G is obligated to purchase under prior BPU approved contracts
with non-regulated power producers. On November 1, 1994, the parties reached
a special tariff for certain
large customers.
LEVELIZED GAS ADJUSTMENT CLAUSE
On December 8, 1993, the BRC approved an interim LGACstipulated settlement which provides for the implementation of provisional
LEAC rates, subject to refund, designed to recover an increase of $75.3additional $98 million
over the period November 1994 through May 1995. The stipulation provided
sufficient rate relief to recover current fuel costs and to begin to reduce the
accumulated underrecovered balance while affording the parties the opportunity
to continue litigating unresolved issues of: a) rate treatment 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.Bergen
repowering project (See Note 12 -- Commitments and Contingent Liabilities.Liabilities -
Bergen Station Repowering); b) an alleged overearnings issue; c) recovery of
the costs related to the April 7, 1994 shutdown at Salem 1 nuclear unit; and
d) the appropriateness of PSE&G's gas to electric transfer and pricing
calculations pertaining to the 1993 agreement with PSE&G's largest industrial
customer (Bayway Decision and Order). This stipulation was approved by the BPU
without modification and became effective on November 4, 1994.
With respect to the litigated issues outlined above, an Administrative Law
Judge (ALJ) decision was filed with the BPU on January 30, 1995 recommending
that (1) the issue of alleged overearnings is not a LEAC issue and PSE&G is not
earning in excess of its rate of return; (2) a hearing convene regarding the
Salem 1 shutdown to determine replacement power costs and whether any
limitations imposed by the New Jersey Public Utility Fault Determination Act
should be triggered; (3) a reduction of the 1993 Nuclear Performance Standard
(NPS) reward to $1.9 million from $3.9 million be made; (4) the joint position
of the parties on gas to electric pricing and the accounting procedures
approved by the BPU in its Bayway Decision and Order should not be revised; (5)
a decrease of $700 thousand in DSM program costs; and (6) the BPU should
address the RAC costs in the LEAC. PSE&G filed exceptions to the ALJ's
decision on February 14, 1995 addressing the 1993 NPS reward; DSM estimates;
replacement power costs for the April 7, 1994 Salem outage and the treatment
of RAC charges. However, neither Enterprise nor PSE&G is able to predict what
action, if any, the BPU may take concerning the ALJ's decision. (See Note 3 --
PSE&G Nuclear Decommissioning and Amortization of Nuclear Fuel.)
NOTES TO CONSOLIDATED TAX BENEFITSFINANCIAL STATEMENTS -- (CONTINUED)
On July 7, 1994, the BPU approved a stipulation which made permanent the
LEAC rates that went into effect on January 1, 1993 on an interim basis and
closed out the previous LEAC for the period ended December 31, 1992. The
BRC does not directly regulate Enterprise's nonutility activities.
However,stipulation also provided a credit of $2.5 million to the deferred fuel balance
for LEAC customers in resolution of all outstanding issues related to the
November 9, 1991 Salem 2 turbine generator outage and a credit of $1.3 million
to reflect an adjustment of estimated New Jersey Gross Receipts and Franchise
Tax (NJGRT) unit tax rates to actual unit tax rates.
Remediation Adjustment Charge
In accordance with the BPU Order dated September 15, 1993 and the BPU
approved Technical Conference Decision and Order dated November 4, 1993, PSE&G
proposed to recover, effective October 1, 1994, $3.7 million from its gas
customers and $2.4 million from its electric customers for costs incurred
during the period October 1, 1992 through July 31, 1994 with respect to PSE&G's
Manufactured Gas Plant Remediation Program (Remediation Program). Pursuant to
the above-referenced Board Order and Technical Conference Stipulation, costs
are to be included in a RAC and are amortized over a rolling seven-year period,
60 percent to be recovered through the gas RAC and the remaining 40 percent to
be recovered through the electric RAC. This Remediation Program has been and
continues to be carried out under the direction and supervision of the New
Jersey Department of Environmental Protection (NJDEP). On December 21, 1994,
the BPU approved a LGAC Stipulation allowing PSE&G to recover $3.1 million of
Remediation Program costs from gas customers. (See Note 12 -- Commitments and
Contingent Liabilities of Notes.) All recovery of costs through PSE&G rates are
subject to audit and verification by the BPU.
Consolidated Tax Benefits
In a case affecting another utility in which neither Enterprise nor PSE&G
were parties, the BRCBPU 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 BRCBPU 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
BRCBPU 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 and Enterprise's future revenue and net income and the future net income of Enterprise.income. 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 ratemakingrate-making purposes, based on the separate nature of the
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
utility and nonutility businesses. However, neither Enterprise nor PSE&G is
able to predict what action, if any, the BRCBPU may take concerning consolidation
of tax benefits in future rate proceedings. (See Note 910 -- Federal Income
Taxes.)
Peach Bottom Settlement
In the first quarter of 1992, Enterprise and PSE&G allocated 75% of the
net proceeds of the Peach Bottom settlement to income attributable to
shareholders and deferred 25% attributable to ratepayers. Pursuant to the base
rate case settlement, such allocations were adjusted in December 1992 to an
equal sharing of the benefits of the Peach Bottom settlement.
NOTE 3. PSE&G NUCLEAR DECOMMISSIONING AND AMORTIZATION OF NUCLEAR FUEL
The BPU decision in PSE&G's 1992 base rate decision by the BRCcase 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,BPU, 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)5 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$14
million in 1994 andeach year thereafter are to be recovered through PSE&G's LEAC. At
December 31, 19931994 and 1992,1993, the accumulated provision for depreciation and
amortization included reserves for nuclear decommissioning for PSE&G's units
of $211$249 million and $179$211 million, respectively. As of December 31, 19931994 and
1992,1993, PSE&G has contributed $155$190 million and $109$155 million, respectively, into
external qualified and nonqualified nuclear decommissioning trust funds.
URANIUM ENRICHMENT DECONTAMINATION AND DECOMMISSIONING FUNDBased upon current regulatory requirements, PSE&G must file a
decommissioning cost update by January 1, 1996 based on a site-specific study
or upon the generic NRC guidelines.
The staff of the Securities and Exchange Commission (SEC) has questioned
certain of the current accounting practices of the electric utility industry,
including PSE&G, regarding the recognition, measurement and classification of
decommissioning costs for nuclear generating stations in the financial
statements of electric utilities. In response to these questions, the
Financial Accounting Standards Board (FASB) has agreed to review the accounting
for removal costs, including decommissioning. If current electric utility
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
industry accounting practices for such decommissioning are changed: (1) annual
provisions for decommissioning could increase, (2) the estimated cost for
decommissioning could be recorded as a liability rather than as accumulated
depreciation and (3) trust fund income from the external decommissioning trusts
could be reported as investment income rather than as a reduction to
decommissioning expense.
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
(adjusted for inflation) into a decontamination and decommissioning fund, based
on their past purchases of enriched nuclear fuelenrichment services 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 (adjusted for inflation) has been collected. Under this
legislation, PSE&G's obligation for the nuclear facilities operated bygenerating stations in which
it has an interest is $66 million (adjusted for inflation). To date, PSE&G Salem and Hope Creek,
aggregate 2.82%has
paid $13 million, resulting in a balance due 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$53 million. PSE&G has
included thesedeferred the expenditures incurred to date as part of deferred underrecovered
electric energy costs and expects to recover its costs in itsthe next LEAC. PSE&G
cannot predict the outcome, amount or timing of any recovery associated with
this matter. SPENT NUCLEAR FUEL DISPOSAL COSTSIn addition, as of December 31, 1994, PSE&G has recorded a
liability of $3 million relating to low level radioactive waste costs incurred
at its nuclear generating stations.
Spent Nuclear Fuel Disposal Costs
In accordance with the Nuclear Waste Policy Act (NWPA), PSE&G has entered
into contracts with the USECDOE for the disposal of spent nuclear fuel. Payments
made to the USECDOE 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 AND OTHER SECURITIES
CURRENT
REDEMPTION
OUTSTANDING PRICE DECEMBER 31, OUTSTANDING PRICE -----------------------DECEMBER 31,
(THOUSANDS OF DOLLARS) SHARES PER SHARE 1994 1993 1992
- --------------------------------------------------- ----------- ---------- ---------- ---------------------- ------------
ENTERPRISE COMMON STOCK (no par) - note (A) --
authorized 500,000,000 shares; issued and
outstanding at December 31, 1994, 244,697,930
shares, at December 31, 1993, 243,688,256 shares,
and 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
---------- ----------
---------- ----------shares. 3,801,157 3,772,662
ENTERPRISE PREFERRED STOCKSECURITIES (note B)
PSE&G CUMULATIVE PREFERRED STOCKSECURITIES (note C)
Without Mandatory Redemption (note D)(notes D and E)
$100 par value -- Seriesseries
4.08%.................................... 250,000 $103.00 $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
6.92%.................................... 600,000 103.46 60,000 -
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
8.08%.................................... 150,000 - - 15,000
8.16%.................................... 300,000 100.74- - 30,000
30,000
---------- ------------------- ---------
$25 par value series
6.75%.................................... 600,000 - 15,000 -
--------- ---------
Total Preferred Stock without
Mandatory Redemption.............. $Redemption................... 384,994 429,994
$ 429,994
---------- ----------
---------- ----------========= =========
With Mandatory Redemption (notes D E and F)
$100 par value -- Seriesseries
7.44%.................................... 750,000 $103.72 $103.72 75,000 $ 75,000
5.97%.................................... 750,000 102.99 75,000 --
---------- ----------75,000
--------- ---------
Total Preferred Stock With
Mandatory Redemption (note G).......... 150,000 150,000
========= =========
Monthly Income Preferred Securities (notes F and G)
9.375%................................... 6,000,000 25.00 150,000 -
---------
Total Monthly Income Preferred Securities 150,000 -
=========
(A) Total authorized and unissued shares include 7,302,488 shares of Enterprise Common Stock reserved
for issuance through Enterprise's Dividend Reinvestment and Stock Purchase Plan and various
employee benefit plans. In 1994, 1,009,674 shares of Enterprise Common Stock were issued and
sold for $28,495,122 and in 1993, 8,292,505 shares were issued and sold for $273,479,342, including
a public offering of 4,400,000 shares issued and sold for $142,670,000.
(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, 1994, there were 2,300,058 shares of $100 par value and 9,400,000 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 accumulated and unpaid dividends thereon have been paid, whereupon all such voting rights
cease, subject to being again revived from time to time.
(D) At December 31, 1994, the annual dividend requirement and embedded dividend for Preferred Stock
without mandatory redemption were $24,666,763 and 6.39%, respectively, and for Preferred Stock
with Mandatory Redemption......................... $mandatory redemption were $10,057,500 and 6.75%, respectively.
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 February 1994, PSE&G sold 600,000 shares of its 6.92% Cumulative Preferred Stock ($100 Par)
and 600,000 shares of its 6.75% Cumulative Preferred Stock ($25 par). PSE&G redeemed the 150,000
$ 75,000
---------- ----------
---------- ----------shares of its outstanding 8.08% Cumulative Preferred Stock ($100 par) on March 1, 1994 at a
redemption price of $101.00. In addition, PSE&G redeemed on March 1, 1994, all of the 300,000
shares of its outstanding 8.16% Cumulative Preferred Stock ($100 par), at a redemption price
of $100.74. On December 16, 1994, PSE&G redeemed all of the outstanding 750,000 shares of its
7.80% cumulative preferred stock ($100 par), at a redemption price of $101.00.
(F) Public Service Electric and Gas Capital, L.P. (Partnership) was formed for the purpose of issuing
Monthly Income Preferred Securities (MIPS). The proceeds of MIPS sales are lent to PSE&G and evidenced
by PSE&G's Deferrable Interest Subordinated Debentures. If and for as long as payments on PSE&G's
Deferred Interest Subordinated Debentures have been deferred, or PSE&G has defaulted on the indenture
related thereto or its guarantee thereof, PSE&G may not pay any dividends on its Capital Stock. On
November 9, 1994, the Partnership issued 6,000,000 of its 9-3/8% MIPS, Series A, with a stated
liquidation preference of $25 each.
(G) For information concerning fair value of financial instruments, see Note 8 -- Financial Instruments and
Risk Management.
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 BRCProperty Abandonments
The BPU 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," as amended (SFAS 90), on property abandonments, and related tax effects,
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. The net-of-tax discount rate used was between 4.443% and 7.801%.
(See Note 2 -- Rate Matters.) The following table reflects property abandonments:
DECEMBER 31, ---------------------------------------1994 DECEMBER 31, 1993 1992
------------------ ------------------
DISCOUNTED DISCOUNTED
PROPERTY ABANDONMENTS COST TAXES COST TAXES
- ------------------------------------------------ ------------------ ------- ------------------ -------
(THOUSANDS OF DOLLARS)
Atlantic Project................................ $ 81,47570,130 $29,453 $81,475 $34,229 $ 92,282 $38,778
LNG Project..................................... 7,287 2,635 11,362 4,227
15,231 5,738
Uranium Projects................................ 10,852 4,677 12,699 5,442 14,450 6,168
Other........................................... -- -- 298 --
-------- ------- -------- -------
$ 88,269 $36,765 $105,536 $43,898
$122,261 $50,684
-------- ------- -------- -------
-------- ------- -------- -------======== ======= ======== =======
72
81
NOTES TO CONSOLIDATED FINANCIAL STATEMENTSUnder (Over) Recovered Electric Energy and Gas Costs -- (CONTINUED)
UNDER (OVER) RECOVERED ELECTRIC ENERGY AND GAS COSTS -- NETnet
Recoveries of electric energy and gas costs are determined by the BPU under the LEAC and LGAC.
PSE&G's deferred fuel balances as of December 31, 1994 and December 31, 1993, reflect underrecovered
costs as follows:
DECEMBER 31,
-------------------
1994 1993
------ ------
(Thousands of Dollars)
Underrecovered Electric Energy Costs......... $172.0 $ 35.2
Underrecovered Gas Fuel Costs................ .6 26.8
------ ------
Total................................... $172.6 $ 62.0
====== ======
Unrecovered Plant 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 COSTSRegulatory 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-ownedjointly 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 BRCBPU 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 BRCBPU 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 EXPENSEUnamortized Debt Expense
Gains and losses and the costcosts of issuing and redeeming long-term debt for
PSE&G are deferred and amortized over the life of the applicable debt.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Oil and Gas Property Write-Down
On December 31, 1992, the BPU 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, 1994 and 1993, the remaining balance to be amortized was $41.2
million and $46.4, respectively.
NOTE 6. SCHEDULE OF CONSOLIDATED DEBT
LONG-TERM DEBT
DECEMBER 31,
--------------------------DECEMBER
INTEREST RATES DUE 1994 1993 1992
- ----------------- ------------------------------------------------- ---------- ----------
(THOUSANDS OF DOLLARS)
PSE&G
FIRST AND REFUNDING MORTGAGE BONDS (note A)
4 3/5/8% - 9 1/8% 1993.............................................1994............................................. $ -- $ 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%7/8% - 7 1/8% 1997............................................. 300,000 375,000300,000
6% - 7% 1998............................................. 100,000 75,000100,000
8 3/4% 1999............................................. 100,000 100,000
6% - 8 7/8% 1999-2003........................................ 1,200,000 798,6002000-2004........................................ 1,400,000 1,400,000
6.30% - 9 1/8% 2004-2008........................................ 438,900 530,4002005-2009........................................ 359,310 184,510
6.80% - 10 3/8% 2009-2013........................................ 73,710 137,7101/2% 2010-2014........................................ 198,500 313,300
6.45% - 8.10% - 10 1/2% 2014-2018........................................ 310,200 745,400
7 1/2%2015-2019........................................ 29,600 25,000
7% - 9 3/4% 2019-2023........................................ 1,068,500 822,500
5.20%2020-2024........................................ 1,244,500 1,368,500
5.2% - 7% 2024-2028........................................ 387,000 --
5.55% 2033.............................................6.55% 2025-2029........................................ 179,955 87,000
5.45% - 6.40% 2030-2034........................................ 487,445 145,200 --
5% - 8% 2037............................................. 15,001 15,001
MEDIUM-TERM NOTES
7.15% - 7.18% 2023............................................. 40,500 40,500
8.10% - 8.16% 2009............................................. 60,000 --
---------- ----------
Total First and Refunding Mortgage Bonds...............................Bonds.......................... $4,824,811 $4,449,011
$4,134,611
---------- ----------========== ==========
73
82
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
DECEMBER 31,
--------------------------DECEMBER
INTEREST RATES DUE 1994 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 60,18918,195
---------- ----------
Principal Amount Outstanding (note F).................................. 4,843,006 4,467,206 4,194,800
Amounts Due Within One Year (note B)................................... (310,200) (61,700) (191,700)
Net Unamortized Discount............................................... (46,019) (41,069) (24,962)
---------- ----------
Total Long-Term Debt of PSE&G..........................................&G (note G)............................ 4,486,787 4,364,437 3,978,138
---------- ----------
EDHI
CAPITAL (note C)
8.95%Senior Notes
9.875% - 9.72% 1993............................................. -- 88,00010.05% 1998............................................. 165,000 207,500
Medium-Term Notes
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%5.91% 1997............................................. 27,000 --
9.875% - 10.05%27,000
9.00% 1998............................................. 282,500 325,000
6.54%75,000 75,000
8.95% - 9.93% 1999-2000........................................ 233,0001999............................................. 155,000 155,000
6.54% 2000............................................. 78,000 78,000
---------- ----------
Principal Amount Outstanding (note F).................................. 632,000 724,500 750,000
Amounts Due Within One Year (note B)................................... (154,405) (92,436) (130,431)
Net Unamortized Discount............................................... (1,278) (1,746) (1,571)
---------- ----------
Total Long-Term Debt of Capital........................................Capital................................... 476,317 630,318 617,998
---------- ----------
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 40,00055,000
9.95% 1998............................................. 83,000 83,000
7.58% 1999............................................. 45,000 --
4.5625% - 5.0%
Bank Loans 1994-95.......................................... -- 175,00045,000
---------- ----------
Principal Amount Outstanding (note F).................................. 246,000 421,000246,000
Amounts Due Within One Year (note B)................................... (35,000) -- (60,000)
---------- ----------
Total Long-Term Debt of Funding........................................Funding................................... 211,000 246,000 361,000
---------- ----------
EGDC MORTGAGE NOTES
5.18% - 7.736% 1994............................................. -- 13,638 13,678
5.75% 1998............................................. -- 9,050 10,280
10.625% - 12.75% 2012............................................. 6,686 6,806 6,913
---------- ----------
Principal Amount Outstanding (note F).................................. 6,686 29,494 30,871
Amounts Due Within One Year (note B)................................... (133) (13,928) (10,428)
---------- ----------
Total Long-Term Debt of EGDC........................................... 6,553 15,566 20,443
---------- ----------
Total Long-Term Debt of EDHI........................................... 693,870 891,884 999,441
---------- ----------
Consolidated Long-Term Debt (note E)................................................................. $5,180,657 $5,256,321
$4,977,579
---------- ----------
---------- ----------========== ==========
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTES:
(A) PSE&G's Mortgage, securing the Bonds, constitutes a direct first mortgage
lien on substantially all PSE&G&G'S property and franchises.
74
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, 19931994 are
as follows:
SINKING FUNDS MATURITIES
----------------- ----------------------------------------------------
YEAR PSE&G CAPITAL PSE&G CAPITAL EGDC FUNDING TOTAL
(THOUSANDS OF DOLLARS)
1994................ $1,7001995................ $ 200 $ 42,500 $310,000 $112,000 $ 60,000133 $ 49,936 $13,92835,000 $ -- $ 168,064
1995................ 200 42,500 310,000 112,000 305 35,000 500,005499,833
1996................ 200 42,500 -- 20,000 320149 28,000 91,02090,849
1997................ 200300 42,500 300,000 27,000 337166 55,000 425,037424,966
1998................ 200300 37,500 118,195 75,000 184 83,000 314,179
1999................ 300 -- 100,000 75,000 8,551 83,000 304,251155,000 205 45,000 300,505
------ -------- -------- -------- ------- -------- ---------
$2,500 $207,500 $770,000 $283,936 $23,441 $201,000 $1,488,377$1,300 $165,000 $828,195 $389,000 $ 837 $246,000 $1,630,332
====== ======== ======== ======== ======= ======== ==========
(C) Capital has provided up to $750 million debt financing for EDHI's businesses on the basis of a net
worth maintenance agreement with Enterprise. Effective January 31, 1995, Capital will not have more
than $650 million of debt outstanding at any one time.
(D) Funding provides debt financing for EDHI's businesses other than EGDC on the basis of unconditional
guarantees from EDHI.
(E) At December 31, 1994 and 1993, the annual interest requirement on long-term debt was $422.7 million and
$421.2 million, of which $335.6 million and $327.5 million was the requirement for Bonds. The embedded
interest cost on long-term debt on such date was 7.79% and 8.06%, respectively.
(F) For information concerning fair value of financial instruments, see Note 8 -- Financial Instruments and
Risk Management.
(G) At December 31, 1994 and 1993, PSE&G's annual interest requirement on long-term debt was $343.3 million
and $331.5 million, of which $335.6 million and $327.5 million, respectively, was the requirement for Bonds.
The embedded interest cost on long-term debt was 7.59% and 7.85%, respectively.
SHORT-TERM (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.
Bank loans represent PSE&G's unsecured promissory notes issued under
informal credit arrangements with various banks and have a term of eleven
months or less.
PSE&G
- -----
1994 1993 1992
------ -------- -------- -------- ------- -------- ---------
------ -------- -------- -------- ------- -------- ---------
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------
(Millions of Dollars)
Principal amount outstanding at end of year,
primarily commercial paper...................... $ 402 $ 533 $ 258
Weighted average interest rate for Short-Term
Debt at year-end................................ 6.07% 3.34% 3.64%
PSE&G has authorization from the BPU to issue and have outstanding not more than $1 billion 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 January 1, 1997.
PSE&G has an $800 million revolving credit agreement with a group of banks which expires September
14, 1995. As of December 31, 1994, 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,
1994, 1993 and 1992, Fuelco had commercial paper of $93.7 million, $108.7 million and $122.5 million,
respectively, outstanding under such program, which amounts are included in 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
EDHI
- ----
1994 1993 1992
------ ------ ------
(Millions of Dollars)
Principal amount outstanding at end of year....... $ 90 $ 45 $ 134
Weighted average interest rate for Short-Term
Debt at year-end................................ 5.97% 3.47% 3.76%
At December 31, 1994, 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, 1994, 1993 and 1992, Enterprise had a $25 million line of credit supported by
compensating balances under an informal arrangement with a bank. At each of December 31, 1994, 1993 and
1992, Enterprise had no lines of credit compensated for by fees.
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:
1994 1993 1992
------ ------
(MILLIONS OF DOLLARS)
Lease Agreements (see Note 10 --11 - Leasing Activities):
Leveraged Leases..............................................Leases................................ $ 789 $ 738
$ 718
Direct-Financing Leases.......................................Leases......................... 76 85
93
Other Leases..................................................Leases.................................... 6 8 12
------ ------
Total....................................................Total...................................... 871 831 823
------ ------
Partnerships:
General Partnerships..........................................Partnerships............................ 157 152
135
Limited Partnerships..........................................Partnerships............................ 437 433 428
------ ------
Total....................................................Total...................................... 594 585 563
------ ------
Joint Ventures.....................................................Ventures....................................... 37 35
11
Securities.........................................................Securities........................................... 75 82
198
Valuation Allowances...............................................Allowances................................. (17) (18)
(17)
Corporate-owned Life Insurance (PSE&G)............................. 99 72Other Investments.................................... 66 116
------ ------
Total Long-Term Investments.............................. $1,614 $1,650
------ ------
------ ------Investments................ $1,626 $1,631
====== ======
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. For
information concerning PSRC's three direct-finance leases with Continental
Airlines, see Note 12 -- Commitment and Contingent Liabilities of Notes.
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, $139.51994, $134 million remained as
PSRC's unfunded commitment subject to call.
PSRC has invested in marketable securities and limited partnerships investing in
securities, which are statedrecorded at fair value. Realized investment gains and
losses on the sale of investment securities are determined utilizing the
specific cost identification method. (See Note 8 -- Financial Instruments and
Risk Management.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 8. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
Enterprise's operations give rise to exposure to market risks from changes
in crude oil and natural gas prices, interest rates, foreign exchange rates and
security prices of investments recorded at fair value. Enterprise's policy is
to use derivatives for the purpose of managing market risk consistent with its
business plans and prudent practices. Enterprise does not hold or issue
financial instruments for trading purposes.
The notional amounts of derivatives summarized below do not represent
amounts exchanged by the parties and, thus, are not a measure of the exposure
of Enterprise through its use of derivatives. The amounts exchanged, under the
terms of the derivatives, are calculated on the basis of the notional amounts.
Enterprise limits its exposure to credit-related losses in the event of
nonperformance by counterparties by limiting its counterparties to those with
high credit ratings.
Natural Gas Hedging
EDC sold futures contracts outstanding at December 31, 1994 which hedged
10,650,000 mmbtu representing approximately 13% of anticipated domestic natural
gas production in 1995 at an average sales price of $1.95 per mmbtu. The
deferred unrealized gain at December 31, 1994 related to EDC's futures
contracts was $2.6 million. EDC did not have any outstanding futures contracts
at December 31, 1993.
Interest Rate Swap
Capital entered into an interest rate swap on December 7, 1990 to allow
EDHI to borrow at floating rates and effectively swap them into fixed rates.
The interest differential to be received or paid under the interest rate swap
agreement is accrued over the life of the agreement as an adjustment to the
interest expense of the related borrowing. The swap terminates on December 11,
1995.
1994 1993
--------- ---------
(Thousands of Dollars)
Pay-fixed swap
Notional amount............................... $100,000 $100,000
Pay rate...................................... 8.0% 8.0%
Average receive rate.......................... 4.1% 3.5%
Year-end receive rate......................... 6.8% 3.4%
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Foreign Exchange
During 1994, PSRC entered into a forward purchase contract for foreign
currency to hedge an EDC firm purchase commitment denominated in pound
sterling. The EDC commitment related to the acquisition of Industrial Scotland
Energy Limited (ISE) for approximately 21 million pounds. The realized gain
of approximately $800 thousand on the forward purchase contract for foreign
currency was used to reduce the net acquisition cost allocated to ISE's assets
upon completion of the acquisition in June 1994.
Currently, substantially all of Enterprise's foreign revenues and expenses
are denominated in U.S. dollars.
Security Swap
During 1994, PSRC entered into two agreements to swap portions of its
ownership interest in certain equity securities, held in a partnership, to the
S&P 500 return. The purpose of the swap was to minimize PSRC's exposure to the
potential price volatility of such equity securities. One agreement with a
notional amount of $17.6 million expires in June 1995; the other agreement,
with a notional amount of $12.9 million, expires in September 1995.
The notional amount swapped and the year end gain during 1994 for these
two agreements were as follows:
Notional Year End
Amount Fair Value Gain
-------- ----------------------
(Thousands of Dollars)
$30,489 $ 3,801
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Fair Value of Financial Instruments
The estimated fair value was determined using the market quotations or values of securities
with similar terms, credit ratings, remaining maturities and redemptions at the end of 1994 and
1993, respectively.
1994 1993
------------------------ ------------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
---------- ---------- ---------- ----------
(Millions of Dollars)
Long-Term Debt:
EDHI.................................... $ 884,686 $ 900,000 $ 999,994 $1,200,000
PSE&G................................... 4,843,006 4,500,000 4,467,206 4,700,000
Preferred Securities Subject to
Mandatory Redemption:
PSE&G Cumulative Preferred Securities... 150,000 145,900 150,000 158,000
Monthly Income Preferred Securities..... 150,000 158,300 -- --
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 9. CASH AND CASH EQUIVALENTS
The December 31, 19931994 and 19921993 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 9.10. 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 1994 and 1993 and 34% in 1992 and 1991 is
as follows:
1994 1993 1992
1991
------------------ -------- --------
(THOUSANDS OF DOLLARS)
Net Income......................................... $ 679,033 $600,933 $504,117
$543,035
Preferred stocksecurities dividend requirements..............requirements......... 40,467 38,114 31,907 29,012
SFAS 109 Cumulative Effect......................... -- (5,414) --
--
------------------ -------- --------
Subtotal................................. 719,500 633,633 536,024
572,047
------------------ -------- --------
Federal income taxes:
Operating income:
Current provision................................ 152,076 152,225 146,408162,521 151,208 151,509
Provision for deferred income taxes -- net(A).... 186,467 91,104 137,955173,327 186,256 91,595
Investment tax credits -- net.................... (23,297) (23,784) (21,635)
(19,507)
------------------ -------- --------
Total included in operating income................. 314,759 221,694 264,856312,551 313,680 221,469
Miscellaneous other income:
Current provision................................ (15,419) 4,721 (11,396)(8,186) (14,340) 4,946
Provision for deferred income taxes(A)........... 10,422 9,815 19,261 10,906
SFAS 90 deferred income taxes(A)................... 2,530 2,948 2,690
4,967
------------------ -------- --------
Total Federal income tax provisions................ 317,317 312,103 248,366
269,333
------------------ -------- --------
Pretax income...................................... $1,036,817 $945,736 $784,390
$841,380
-------- -------- --------
-------- -------- --------========== ======== ========
Reconciliation between total Federal income tax provisions and tax computed
at the statutory tax rate on pretax income:
1994 1993 1992
-------- -------- --------
(THOUSANDS OF DOLLARS)
Tax computed at the statutory rate................. $362,887 $331,008 $266,693 $286,069
-------- -------- --------
Increase (decrease) attributable to flow through of
certain tax adjustments:
Depreciation.................................. 9,002 15,614 9,229(4,597) 3,347 19,330
Amortization of plant abandonments and
write-downs................................. (2,046) (2,239) (18,867) (4,497)
Amortization of investment tax credits........... (23,297) (23,784) (20,681)
(22,004)
Other............................................ (1,884) 5,607 536(15,630) 3,771 1,891
-------- -------- --------
Subtotal........................................... (45,570) (18,905) (18,327) (16,736)
-------- -------- --------
Total Federal income tax provisions................ $317,317 $312,103 $248,366
$269,333
-------- -------- --------
-------- -------- --------======== ======== ========
Effective Federal income tax rate.................. 30.6% 33.0% 31.7% 32.0%
(A) The provision for deferred income taxes represents the tax effects of the
following items:
1994 1993 1992 1991
-------- -------- --------
(THOUSANDS OF DOLLARS)
Deferred Credits:
Additional tax depreciation and amortization..... $109,106 $112,814 $136,073
$123,122
Leasing Activities............................... 60,129 34,958 56,087
41,741
Property Abandonments............................ (6,606) (6,632) (34,739) (11,582)
Oil and Gas Property Write-Down.................. (2,451) (6,393)(2,451) (6,393)
Deferred fuel costs -- net....................... 39,361 63,330 (40,148)
9,285
Other............................................ (2,789) 2,175 (2,345)(13,260) (3,000) 2,666
-------- -------- --------
Total.............................................. $199,230 $113,055 $153,828
-------- -------- --------
-------- -------- --------$186,279 $199,019 $113,546
======== ======== ========
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, 1994, 1993 1992 and 1991,1992, Enterprise
had AMT credits of $256 million, $247 million $212 million and $185$212 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 AgentsAgent's 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$97
million as of December 31, 19931994 and will continue to accrue at the Federal rate
for large corporate underpayments, currently 9%11% 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. OnIn 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 continuescontinue 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.BPU.
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, 1993,1994, PSE&G had recorded a deferred tax
liability and an offsetting regulatory asset of $790$791 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 19931994 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 1994 1993
1992
- --------------------------------------------------------------------------------------------------------------- ---------- ----------
(THOUSANDS OF DOLLARS)
Assets:
Current (net).......................................................................................... $ 12,93425,311 $ --12,934
Non-Current:
Unrecovered Investment Tax Credits...............................Credits......... 136,402 143,125
--
Nuclear Decommissioning..........................................Decommissioning.................... 25,082 25,211 24,305
Hope Creek Cost Disallowance.....................................Disallowance............... 10,127 20,231
29,468
Uncollectibles................................................... 9,776 --Construction Period Interest and Taxes..... 15,913 9,811
Vacation Pay.....................................................Pay............................... 6,822 6,721
6,424
AMT Credit.......................................................Credit................................. 255,828 246,862 212,453
Real Estate Impairment...........................................Impairment..................... 20,932 27,173
--
Other............................................................ 14,880 1,209Other...................................... 6,863 14,845
---------- ----------
Total Non-Current...........................................Non-Current..................... $ 493,979477,969 $ 273,859493,979
---------- ----------
Total Assets..........................................................Assets.................................... $ 503,280 $ 506,913
$ 273,859
---------- ----------
---------- ----------========== ==========
Liabilities:
Non-Current:
Plant Related Items..............................................Items........................ $2,268,688 $2,169,861
$1,395,725
Leasing Activities...............................................Activities......................... 580,415 520,286
451,733
Property Abandonments............................................Abandonments...................... 26,971 32,206 50,684
Oil and Gas Property Write-Down..................................Write-Down............ 14,925 16,790 24,518
Deferred Electric Energy & Gas Costs.............................Costs....... 59,884 20,133 (44,415)
Unamortized Debt Expense.........................................Expense................... 37,599 38,768 17,082
Taxes Recoverable Through Future
Rates...........................Rates (net).............................. 270,684 270,518
--
Other............................................................Other...................................... 124,193 127,803 89,621
---------- ----------
Total Non-Current...........................................Non-Current..................... $3,383,359 $3,196,365 $1,984,948
---------- ----------
Total Liabilities.....................................................Liabilities............................... $3,383,359 $3,196,365
$1,984,948
---------- ----------
---------- ----------========== ==========
Summary -- Accumulated Deferred Income Taxes
Net Current Assets..................................................Assets........................... $ 25,311 $ 12,934
$ --
Net Deferred Liability..............................................Liability....................... $2,905,390 $2,702,386 $1,711,089
---------- ----------
Total............................................................Total..................................... $2,880,079 $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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 10.11. LEASING ACTIVITIES
As Lessee
The Consolidated Balance Sheets include assets and related obligations
applicable to capital leases whereunder which 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:
1994 1993 1992
------- -------
(THOUSANDS OF DOLLARS)
Common Plant............................................. $56,812$58,610 $56,812
Less: Accumulated Amortization........................... 4,840 3,708 3,196
------- -------
Net Assets under Capital Leases.......................... $53,770 $53,104
$53,616
------- -------
------- -------======= =======
Future minimum lease payments for noncancelable capital and operating leases at
December 31, 1994 were:
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 $14,353
1995..................................................... 13,016 14,056$ 13,174 $ 15,013
1996..................................................... 13,017 12,94213,174 13,933
1997..................................................... 13,017 10,98213,175 11,945
1998..................................................... 13,018 7,82013,176 8,631
1999..................................................... 13,177 6,442
Later Years.............................................. 212,521 24,184
------- -------202,064 18,426
-------- --------
Minimum Lease Payments................................... 277,604 $84,337
-------
-------267,940 $ 74,390
========
Less: Amount representing estimated executory costs,
together with any profit thereon, included in
minimum lease payments............................. 138,876
-------132,453
--------
Net minimum lease payments............................... 138,728135,487
Less: Amount representing interest....................... 85,624
-------81,717
--------
Present value of net minimum lease payments(A)........... $53,104
-------
-------$ 53,770
========
(A) Reflected in the Consolidated Balance Sheets for 1994 and 1993 were Capital Lease Obligations of
$53.770 million and $53.104 million which includes Capital Lease Obligations due within one year of
$659 thousand and $574 thousand, respectively.
(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,
---------------------------------------------------------------
1994 1993 1992 1991
------- ------- -------
(THOUSANDS OF DOLLARS)
Interest on Capital Lease Obligations................. $ 6,156 $ 6,074 $ 6,129 $ 6,205
Amortization of Utility Plant under Capital Leases.... 588 513 457 439
------- ------- -------
Net minimum lease payments relating to Capital
Leases.............................................. 6,744 6,587 6,586 6,644
Other Lease payments.................................. 28,447 22,095 21,739 26,290
------- ------- -------
Total Rent Expense.................................... $35,191 $28,682 $28,325
$32,934
------- ------- -------
------- ------- -------======= ======= =======
80
89
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
AS LESSORAs Lessor
PSRC's net investments in leveraged and direct financing leases are composed of the following elements:
DECEMBER 31, 19931994 DECEMBER 31, 19921993
---------------------------------- ----------------------------------
(MILLIONS OF DOLLARS)
DIRECT DIRECT
LEVERAGED FINANCING LEVERAGED FINANCING
LEASES LEASES TOTAL LEASES LEASES TOTAL
--------- --------- ------------- --------- --------- -------------
Lease rents receivable.......... $ 990 $ 92 $ 1,082 $ 980 $ 114 $1,094 $ 1,015 $ 130 $1,1451,094
Estimated residual value........ 622 13 635 595 12 607
599 12 611
--------- --------- ------ --------- --------- -------------- ------- ------- -------- ------- -------
1,612 105 1,717 1,575 126 1,701 1,614 142 1,756
Unearned and deferred income.... (823) (29) (852) (837) (41) (878)
(896) (49) (945)
--------- --------- ------ --------- --------- -------------- ------- ------- -------- ------- -------
Total investments............... 789 76 865 738 85 823
718 93 811
Deferred taxes.................. (333) (20) (353) (267) (20) (287)
(225) (18) (243)
--------- --------- ------ --------- --------- -------------- ------- ------- -------- ------- -------
Net investments................. $ 456 $ 56 $ 512 $ 471 $ 65 $ 536
$ 493 $ 75 $ 568
--------- --------- ------ --------- --------- ------
--------- --------- ------ --------- --------- ------======== ======= ======= ======== ======= =======
PSRC's other leases are with various regional, state and city authorities for transportation equipment and
aggregated $6 million and $8 million as of December 31, 1994 and 1993, respectively.
For information concerning PSRC's three direct-finance leases with Continental Airlines, see Note 12 --
Commitments and Contingent Liabilities -- Public Service Resources Corporation.
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 STANDARDNuclear Performance Standard
The BRCBPU has established a nuclear performance standard (Standard)an NPS 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 StandardNPS is a percentage of replacement power
costs. (See table below.) The StandardNPS 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............................................ BPU Intervenes
Under the Standard,NPS, 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 StandardNPS does not specifically have a gross negligence provision, the
BRCBPU 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.NPS. During
1993,1994, the five nuclear units in which PSE&G has an ownership interest
aggregated a 77%74% 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 ASSESSMENTSNuclear Insurance Coverages and Assessments
PSE&G's insurance coverages and maximum retrospective assessments for its
nuclear operations are as follows:
PSE&G MAXIMUM
TOTAL ASSESSMENTS
TOTALSITE FOR A
SITE SINGLE
TYPE AND SOURCE OF COVERAGES COVERAGES INCIDENT
- --------------------------------------------------------------------------------------------------------------- --------- -----------------------
(MILLIONS OF DOLLARS)
Public Liability:
American Nuclear Insurers........................................Insurers.................. $ 200.0 $ --
Indemnity(A)..................................................... 9,195.9............................... 8,720.3 210.2
--------- ----------
$9,395.9-------- --------
$8,920.3 (B) $210.2
--------- ----------$ 210.2
-------- --------
Nuclear Worker Liability:
American Nuclear Insurers(C).................................................... $ 200.0 $ 8.3
--------- ----------8.2
-------- --------
Property Damage:
Nuclear Mutual Limited...........................................Limited..................... $ 500.0 $ 17.4
American Nuclear Insurers........................................ 765.0 (D) --11.6
Nuclear Electric Insurance Ltd. (NEIL I)......................... 85.0II).. 1,400.0 (D) 8.2 (E) --
Nuclear Electric InsuranceInsurers Ltd. (NEIL II)........................ 1,400.0 (F) 10.9(G)
--------- ----------III).. 850.0 6.7
-------- --------
$2,750.0 $ 28.3
--------- ----------26.5
-------- --------
Replacement Power:
Nuclear Electric Insurance Ltd. .................................Ltd (NEIL I).... $ 3.5 (H)(F) $ 11.312.4
(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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(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)(E) In the event of a second industry loss triggering NEIL II - coverage, the
maximum retrospective premium assessment can increase to $23.4$17.5 million.
(H)(F) 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$2.8
million per week for 104 weeks is afforded. Total coverage amounts to
$425.9$473.2 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$8.9 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",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$26.5 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 NRCNuclear Regulatory Commission
(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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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$2.8 million for a 104 week104-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$12.4 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 decontaminationConstruction 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 SUPPLIESSupplies
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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Based on PSE&G's 1994-19981995-1999 construction program, construction expenditures
are expected to aggregate approximately $4.2$3.2 billion, which includes $483$484
million for nuclear fuel and $133$78 million of AFDC and capitalized interest
during the years 19941995 through
1998.1999. The estimate of construction requirements is based on expected project
completion dates and includes anticipated escalation due to inflation of
approximately 4%3%, annually. Therefore, construction delays or higher inflation
levels could cause significant increasesincrease 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,recovery
of costs, 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 19941995 through
1998.
BERGEN STATION REPOWERING1999.
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)
onthe NJDEP in 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.
OnIn July 12, 1993, an association of competitors of PSE&G appealed the NJDEPE'sNJDEP'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 (Certificate) under the New Jersey Need Assessment Act
(Need
Assessment Act)(NJNAA). The NJDEPENJDEP determined that the Need Assessment ActNJNAA was inapplicable to this
renovation project. Obtaining a CertificateThe Appellate Division of Need would
be a complex procedure entailing proceedingsNew Jersey Superior Court
affirmed this determination. The New Jersey Supreme Court has denied
certification of at least a two year duration
before the NJDEPE, the outcomepetition for review of which could not be assured.this decision.
As of December 31, 1993, Phase I of1994, the renovationrepowering project was about 20%95% complete and
PSE&G had spent approximately $169$291 million on this effort. The final cost is
estimated to be approximately $400 million. Briefs have been filedIn order for PSE&G to recover its
costs for the project, PSE&G would need either BPU authorization to recover
such costs in its rates or be successful in selling the station's output 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
GENERALemerging wholesale market.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Hazardous Waste
Certain Federal and State laws authorize the United States Environmental
Protection Agency (EPA)EPA and the NJDEPE,NJDEP, 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.have a material effect on its financial position, results of operations
or net cash flows.
PSE&G MANUFACTURED GAS PLANT REMEDIATION PROGRAMManufactured Gas Plant Remediation Program
In March 1988, NJDEPENJDEP 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, NJDEPENJDEP and PSE&G have identified 38 former gas 85
94
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
plant
sites. PSE&G is currently working with NJDEPENJDEP under a program to assess,
investigate and, if necessary, remediate environmental concerns at its former
gas plantthese 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.material to PSE&G's financial
position, results of operations or net cash flows.
Costs incurred through December 31, 19931994 for the Remediation Program
amounted to $44.5 million, net of insurance recoveries.$51.4 million. In addition, at December 31, 1993,1994, PSE&G's
estimated liability for estimated remediation costs net of insurance
recoveries,aggregated $105.7 million
through 1996 aggregated $111 million.1997.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
In accordance with a Stipulation approved by the BRC onBPU in 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 threetwo LGAC periods ending in 1996, net
of insurance recoveries.1996. The
regulatory treatment of the remediation costs covered by this Stipulation was
not changed in the BRC'sBPU's September 15, 1993 written order, allowing continued
collection under the terms of the January 21,
1992 Stipulation. As of December 31,
1994, PSE&G has recovered $22.2 million through its LGAC.
The decision of September 15, 1993 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 arewere subject to verificationaudit and auditverification 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, allowinghas been completed and resulted in no disallowance of any costs. (See Note 2
- - Rate Matters - Remediation Adjustment Charge). A final Board Order was
received on November 4, 1994, memorializing 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 itsabove September 15, 1993
order. On
January 21,1994, the BRC denied the motion.
In NovemberStipulation.
Also in 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 1994March 1995 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.
Public Service Resources Corporation
PSRC has leased three wide-body aircraft to Continental Airlines
(Continental) through direct-finance leases. The leases for two A-300 aircraft
expire December 2000, while the lease for one DC 10-30 aircraft expires June
2002. At December 31, 1994, PSRC had investments in the A-300 leases and the
DC 10-30 lease of $43.0 million and $33.1 million, respectively. Continental
has failed to make full payment of its required lease payments due February 1,
1995 and has advised PSRC of its intent to seek the termination of the A-300
leases and return the A-300 aircraft to PSRC. Continental also advised PSRC
of its intention, effective February 1, 1995, to reduce its rental payments due
under all three leases by approximately 50%. Continental indicated that
payments under these leases could include debt securities convertible into
equity in lieu of full cash payments. Under the leases, PSRC rents receivable
and pre-tax lease income in 1995 would have been $9.4 million and $4.1 million,
respectively for the A-300 aircraft and $5.5 million and $2.7 million,
respectively for the DC 10-30 aircraft. PSRC has informed Continental that it
expects all of Continental's lease obligations to be satisfied in full.
Negotiations are continuing concerning this matter. No assurances can be given
that PSRC will be able to obtain new leases, sell or otherwise dispose of any
such aircraft on satisfactory terms in the event of an unscheduled lease
termination. Enterprise believes the ultimate resolution of this matter will
not have a material effect on its financial position, results of operations or
net cash flows.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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 of 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, accumulatednet periodic postretirement benefit obligation amortization:obligation:
JANUARY 1, 1993DECEMBER 31,
----------------------
NET PERIODIC POSTRETIREMENT BENEFIT OBLIGATION ---------------
-------------------------------------------------------------------------------1994 1993
- ---------------------------------------------------- --------- ---------
(MILLIONS)
Accumulated
Service cost......................................... $ 11.1 $ 11.7
Interest on accumulated postretirement benefit obligation (PSE&G).......................... $(609.3)
Unrecognizedobligation.... 45.4 44.4
Amortization of transition obligation (PSE&G)..................................... 578.8
---------------
Accrued postretirement obligation..............................................obligations............... 30.5 30.5
Deferral of current expense.......................... (57.8) (58.6)
------ ------
Annual net expense.............................. $ (30.5)
---------------
---------------29.2 $ 28.0
====== ======
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%.7.25% and 7.50% for 1994 and 1993,
respectively.
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$4.7 million, or 6.0%10.5%, and increase the accumulated postretirement benefit
obligation as of December 31, 19931994 by $29.3$54.4 million, or 6.0%11.3%.
The assumed health care cost trend rates used in measuring the accumulated
postretirement benefit obligation in 19931994 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. The medical costs above include a provision
for prescription drugs.
In its recent1992 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'sBPU'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; and (4) the issue of cash versus
accrual accounting will be revisited and in the event that the Financial Accounting Standards Board (FASB)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
accrualsaccrual cost and the cash cost currently recovered through rates as a
regulatory asset. OPEB costs charged to expenseexpenses during 19931994 were $28$29.2 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.$57.8 million. The amount of the unfunded
liability, at December 31, 1993,1994, as shown below, is $657.0$585.9 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 BRCBPU for full SFAS 106 recovery in accordance with
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
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 yeartwenty-year
time period. As of December 31, 1994, PSE&G has deferred $116.4 million of
such costs.
In accordance with SFAS 106 disclosure requirements, a reconciliation of
the funded status of the plan is as follows:
DECEMBER 31,
----------------------
1994 1993
-------- --------
(MILLIONS)
Accumulated postretirement benefit obligation:
Retirees........................................... $(379.2) $(406.4)
Fully eligible active plan participants............ (45.7) (35.0)
Other active plan participants..................... (161.0) (215.6)
------- -------
Total.......................................... (585.9) (657.0)
Plan assets at fair value.......................... -- --
------- -------
Accumulated postretirement benefit obligation
in excess of plan assets......................... (585.9) (657.0)
Unrecognized net (gain)/loss from past experience
different from that assumed and from changes
in assumptions................................... (78.8) 19.6
Unrecognized prior service cost.................... -- --
Unrecognized transition obligation................. 548.3 578.8
------- -------
Accrued postretirement obligation.................. $(116.4) $ (58.6)
======= =======
The discount rate used in determining the accumulated postretirement
benefit obligation as of December 31, 1994 was 8.50% and 7.25% for 1994 and
1993, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 14. PENSION PLAN
The discount rate,rates, expected long-term rates of return on assets and
average compensation growth rates used in determining the Pension Plan's funded
status and net pension cost as of December 31, 19931994 and 1992, and net pension costs for 1993 1992 and 1991, were as follows:
1994 1993
1992
---- ---------- ------
Funded Status:
- -------------
Discount Rate Used to Determine Pension Cost......................... 7 1/2% 7 1/2%
Discount Rate Usedused to Determine Benefit Obligations.................. 7 1/4% 7 1/Obligations...... 8-1/2% Expected Long-Term Return on Assets.................................. 8% 8%
Average Compensation Growth to Determine Pension Cost................ 6% 6%7-1/4%
Average Compensation Growth to Determine
Benefit Obligations.........Obligations.................................... 4.5% 5.5%
Net Pension Cost:
- ----------------
Discount Rate............................................ 7-1/4% 7-1/2%
Expected Long-Term Return on Assets...................... 8% 8%
Average Compensation Growth.............................. 5.5% 6%
88
97
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following table shows the Pension Plan's funded status:
DECEMBER 31,
-------------------------
1994 1993 1992
----------- -----------
(THOUSANDS OF DOLLARS)
Actuarial present value of benefit obligations:
Accumulated benefit obligations, including vested benefits
of $1,151,677 in 1994 and $1,045,035 in 1993 and $993,867 in 1992.............1993........... $(1,235,930) $(1,144,214) $(1,065,842)
Effect of projected future compensation................... (261,846) (346,416) (332,843)
----------- -----------
Projected benefit obligations............................... (1,497,776) (1,490,630) (1,398,685)
Plan assets at fair value, primarily listed equity and debt
securities................................................ 1,270,116 1,312,619 1,172,775
----------- -----------
Projected benefit obligations in excess of plan assets...... (227,660) (178,011) (225,910)
Unrecognized net gain (loss) from past experience and
effects of changes in assumptions......................... 32,815 (20,981) 18,326
Prior service cost not yet recognized in net pension cost... 119,783 113,397 121,998
Unrecognized net obligations being recognized over
16.7 years.....................................................years................................................ 69,387 77,486 85,586
----------- -----------
Accrued pension expense..................................... $ (5,675) $ (8,109)
$ --
----------- -----------
----------- -----------=========== ===========
The net pension cost for the years ending December 31, 1994, 1993 and 1992, and 1991, include the following
components:
1994 1993 1992
1991
----------------- -------- --------
(THOUSANDS OF DOLLARS)
Service cost-benefitscost - benefits earned during year..........year......... $ 42,904 $ 42,948 $ 36,125 $ 33,652
Interest cost on projected benefit obligations....obligations..... 108,394 103,118 94,233
89,324
Return on assets..................................assets................................... 5,022 (166,916) (62,323) (191,996)
Net amortization and deferral.....................deferral...................... (90,752) 90,958 (14,035)
119,020
--------- -------- -------- Total.............................................--------
Total.............................................. $ 65,568 $ 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, 1994
Operating Revenues...................... $ 3,733,113 $1,778,528 $ 416,947 $ 5,928,588
Eliminations (Intersegment Revenues).... -- -- (12,745) (12,745)
----------- ---------- ---------- -----------
Total Operating Revenues................ 3,733,113 1,778,528 404,202 5,915,843
----------- ---------- ---------- -----------
Depreciation and Amortization........... 467,570 79,462 82,656 629,688
Operating Income Before Income Taxes.... 1,083,155 226,196 172,800 1,482,151
Capital Expenditures.................... 734,100 153,183 168,741 1,056,024
December 31, 1994
Net Utility Plant....................... 9,642,177 1,456,068 -- 11,098,245
Oil and Gas Property, Plant &
Equipment............................. -- -- 577,913 577,913
Other Corporate Assets.................. 2,589,348 576,806 1,875,128 5,041,282
----------- ---------- ---------- -----------
Total Assets............................ $12,231,525 $2,032,874 $2,453,041 $16,717,440
=========== ========== ========== ===========
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.................. 2,291,596 863,8302,313,394 866,524 1,839,311 4,994,7375,019,229
----------- ---------- ---------- -----------
Total Assets............................ $11,743,177 $2,216,629$11,764,975 $2,219,323 $2,345,358 $16,305,164
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------$16,329,656
=========== ========== ========== ===========
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.................. 1,295,073 484,4491,315,564 486,981 1,997,061 3,776,5833,799,606
----------- ---------- ---------- -----------
Total Assets............................ $10,519,616 $1,731,218$10,540,107 $1,733,750 $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
----------- ---------- ---------- -----------
----------- ---------- ---------- -----------
$14,777,732
=========== ========== ========== ===========
(A) The Nonutility Activities include amounts applicable to Enterprise, the parent corporation.
90
99
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Information related to Property, Plant and Equipment of PSE&G is detailed below:
DECEMBER DECEMBER DECEMBER
1994 1993 1992
----------- ----------- -----------
(Thousands of Dollars)
Utility Plant - Original Cost
Electric Plant in Service
Steam Production....................... $ 1,810,674 $ 1,763,253 $ 1,668,198
Nuclear Production..................... 5,931,049 5,873,274 5,819,755
Transmission........................... 1,078,928 1,034,150 1,024,843
Distribution........................... 2,877,862 2,724,202 2,573,226
Other.................................. 647,406 526,015 479,647
----------- ----------- ------------
Total Electric Plant in Service.... 12,345,919 11,920,894 11,565,669
----------- ----------- -----------
Gas Plant in Service
Transmission........................... 62,213 63,395 57,405
Distribution........................... 2,131,816 1,993,044 1,870,462
Other.................................. 124,204 121,402 117,077
----------- ----------- -----------
Total Gas Plant in Service......... 2,318,233 2,177,841 2,044,944
----------- ----------- -----------
Common Plant in Service
Capital Leases......................... 58,610 56,812 56,812
General................................ 486,521 463,473 423,160
----------- ----------- -----------
Total Common Plant in Service...... 545,131 520,285 479,972
----------- ----------- -----------
TOTAL......................... $15,209,283 $14,619,020 $14,090,585
=========== =========== ===========
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONCLUDED)
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 in 1993 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 1993 net income by $50.5 million, after tax, or 21 cents per share of
Enterprise common stock.Common Stock. EGDC's real estate held for sale of $33.8$13.5 million and
$6.7$33.8 million at December 31, 19931994 and 19921993 are presented in "Other InvestmentsAssets --
net" and "Current Assets",net," respectively, in the accompanying consolidated balance sheets.
NOTE 17. JOINTLY-OWNEDJOINTLY OWNED FACILITIES -- UTILITY PLANT
PSE&G has ownership interests in and is responsible for providing its
share of the necessary financing for the following jointly-ownedjointly owned facilities.
All amounts reflect the share of jointly-ownedPSE&G's jointly owned projects and the
corresponding direct expenses are included in Consolidated Statements of Income
as an operating expense.expenses. (See Note 1 -- Organization and Summary of Significant
Accounting Policies.)
OWNERSHIP PLANT
OWNERSHIP IN ACCUMULATED PLANT UNDER
PLANT -- DECEMBER 31, 19931994 INTEREST SERVICE DEPRECIATION CONSTRUCTION
- ------------------------------------------------ ---------------- --------- ------------ ------------
% (THOUSANDS OF DOLLARS)
Coal Generating
Conemaugh..................................... 22.50%22.50 $ 103,938176,463 $ 35,10135,044 $ 63,42816,150
Keystone...................................... 22.84 101,543 30,385 4,742111,360 30,935 2,615
Nuclear Generating
Peach Bottom.................................. 42.49 699,445 265,679 26,545729,317 286,565 28,239
Salem......................................... 42.59 1,003,872 343,925 33,1341,021,588 358,492 39,550
Hope Creek.................................... 95.00 4,096,287 819,595 20,4394,120,538 938,535 5,104
Nuclear Support Facilities.................... Various 153,147 23,414 3,523158,400 28,211 6,342
Pumped Storage Generating
Yards Creek................................... 50.00 20,636 8,353 3,48723,645 8,721 2,886
Transmission Facilities......................... Various 119,979 32,359120,274 34,720 9
Merrill Creek Reservoir......................... 13.91 37,117 8,87637,184 10,492 --
Linden Gas Plant................................ 90.00 15,871 17,63015,872 18,532 --
NOTE 18. SELECTED QUARTERLY DATA (UNAUDITED)
The information shown below, in the opinion of Enterprise, includes all
adjustments, consisting only ofonlyof 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 1994 1993 19921994 1993 19921994 1993 19921994 1993 1992
- -------------------------- --------- --------- --------- --------- --------- --------- --------- ------------------- ---------- ---------- ---------- ---------- ----------- ---------- ----------
(THOUSANDS WHERE APPLICABLE)
Operating Revenues........ $1,794,425 $1,594,708 $1,512,450$1,278,363 $1,246,337 $1,190,798$1,374,976 $1,402,037 $1,248,772$1,468,079 $1,462,477 $1,404,761
Operating Income.......... $ 348,948 $ 336,505 $ 268,653252,725 $ 248,658 $ 207,355311,920 $ 318,785 $ 259,385250,500 $ 202,899 $ 230,742
Net Income................ $ 230,127 $ 215,418 $ 186,333129,885 $ 119,782 $ 87,358187,178 $ 192,231 $ 138,127131,843 $ 73,502 $ 92,299
Earnings Per Share of
Common Stock............ $ 0.94 $ 0.91 $ 0.810.53 $ 0.49 $ 0.380.76 $ 0.79 $ 0.590.54 $ 0.30 $ 0.39
Average Shares of Common
Stock Outstanding....... 243,777 236,919 229,567244,698 240,920 231,993244,698 241,889 233,192244,698 242,848 234,442
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 and Other Securities
Note 5. - Deferred Items
Note 6. - Schedule of Consolidated Long-Term Debt
Note 7. - Long-Term Investments
Note 8. Cash- Financial Instruments and Cash Equivalents,Risk Management
Note 10.11. - 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- Jointly Owned Facilities -- Utility Plant.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 POLICYConsolidation 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. CASH AND CASH EQUIVALENTS
The December 31, 1994 and 1993 balances consist primarily of working funds.
NOTE 10. 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 1994 and 1993 and 34% in 1992 and 1991 is as follows:
1994 1993 1992 1991
-------- -------- --------
(THOUSANDS OF DOLLARS)
Net Income......................................... $659,406 $614,868 $475,936 $545,479
-------- -------- --------
Federal income taxes:
Operating income:
Current provision............................. 230,709 177,314 214,887 194,583
Provision for deferred income taxes-net(A).... 83,028 149,884 (334) 81,406
Investment tax credits -- net................. (19,208) (18,408) (19,089) (20,229)
-------- -------- --------
Total included in operating income................. 294,529 308,790 195,464 255,760
Miscellaneous other income:
Current provision................................ (8,186) (15,419) 4,718 (11,397)
Provision for deferred income taxes(A)........... 10,422 9,815 19,261 10,906
SFAS 90 deferred income taxes(A)................... 2,530 2,948 2,690 4,967
-------- -------- --------
Total Federal income tax provisions................ 299,295 306,134 222,133 260,236
-------- -------- --------
Pretax income...................................... $958,701 $921,002 $698,069
$805,715
-------- -------- --------
-------- -------- --------======== ======== ========
Reconciliation between total Federal income tax provisions and tax computed at the statutory tax
rate on pretax income:
1994 1993 1992 1991
-------- -------- --------
(THOUSANDS OF DOLLARS)
Tax expense at the statutory rate.................. $335,546 $322,351 $237,343 $273,943
-------- -------- --------
Increase (decrease) attributable to flow throughflow-through of
certain tax adjustments:
Depreciation.................................. 9,002 15,614 9,229(4,597) 3,347 19,330
Amortization of plant abandonments and
write-downs................................. (2,046) (2,239) (18,867) (4,497)
Amortization of investment tax credits........ (19,208) (18,408) (18,408)
(20,868)
Other......................................... (4,572) 6,451 2,429(10,400) 1,083 2,735
-------- -------- --------
Subtotal........................................... (36,251) (16,217) (15,210) (13,707)
-------- -------- --------
Total Federal income tax provisions................ $299,295 $306,134 $222,133
$260,236
-------- -------- --------
-------- -------- --------======== ======== ========
Effective Federal income tax rate.................. 31.2% 33.2% 31.8% 32.3%
(A) The provision for deferred income taxes represents the tax effects of the following items:
1994 1993 1992 1991
-------- -------- --------
(THOUSANDS OF DOLLARS)
Deferred Credits:
Additional tax depreciation and amortization......... $104,195$ 85,335 $ 92,693 $ 94,757
$ 98,445
Property Abandonments................................ (6,606) (6,632) (34,739) (11,582)
Oil and Gas Property Write-Down...................... (2,451) (6,393)(2,451) (6,393)
Deferred fuel costs-net.............................. 39,361 63,330 (40,148)
9,285
Other................................................ 4,205(19,659) 15,707 8,140 7,524
-------- -------- --------
Total........................................ $ 95,980 $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 1994 1993 1992
---------- ----------
THOUSANDS(THOUSANDS OF DOLLARS)
Assets:
Current (net)....................................................... $ 12,93425,311 $ --12,934
Non-Current:
Unrecovered Investment Tax Credits............................... 136,402 143,125 --
Nuclear Decommissioning.......................................... 25,082 25,211 24,305
Hope Creek Cost Disallowance..................................... 10,127 20,231
29,468
Uncollectibles................................................... 9,776 --Construction Period Interest and Taxes........................... 15,913 9,811
Vacation Pay..................................................... 6,822 6,721
6,424
Other............................................................ 14,880 1,2096,863 14,845
---------- ----------
Total Non-Current........................................... $ 219,944201,209 $ 61,406219,944
---------- ----------
Total Assets.......................................................... $ 226,520 $ 232,878
$ 61,406
---------- ----------
---------- ----------========== ==========
Liabilities:
Non-Current:
Plant Related Items.............................................. $2,157,206 $2,075,359 $1,328,997
Property Abandonments............................................ 26,971 32,206 50,684
Oil and Gas Property Write-Down.................................. 14,925 16,790 24,518
Deferred Electric Energy & Gas Costs............................. 59,884 20,133 (44,415)
Unamortized Debt Expense......................................... 37,599 38,768 17,082
Taxes Recoverable Through Future Rates (Net)..................... 270,684 270,518
--
Other............................................................ 112,479 134,948 87,655
---------- ----------
Total Non-Current........................................... $2,679,748 $2,588,722 $1,464,521
---------- ----------
Total Liabilities..................................................... $2,679,748 $2,588,722
$1,464,521
---------- ----------
---------- ----------========== ==========
Summary -- Accumulated Deferred Income Taxes
Net Current Assets.................................................. $ 12,93425,311 $ --12,934
Net Deferred Liability.............................................. $2,478,539 $2,368,778 $1,403,115
---------- ----------
Total............................................................ $2,453,228 $2,355,844
$1,403,115
---------- ----------
---------- ----------========== ==========
The balance of Federal income tax payable by PSE&G to Enterprise was $15.6 million and zero, as of
December 31, 1994 and December 31, 1993, respectively.
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)(CONCLUDED)
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 1994 1993 19921994 1993 19921994 1993 19921994 1993 1992
- ---------------------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
(THOUSANDS OF DOLLARS)
Operating Revenues.... $1,689,967 $1,502,247 $1,427,081$1,181,655 $1,147,901 $1,097,623$1,282,952 $1,291,192 $1,151,180$1,357,067 $1,346,084 $1,318,116
Operating Income...... $ 305,013 $ 294,734 $ 224,915218,225 $ 206,056 $ 156,350282,782 $ 279,173 $ 211,479206,650 $ 201,622 $ 195,780
Net Income............ $ 221,439 $ 204,404 $ 179,796128,113 $ 113,849 $ 72,901190,378 $ 188,575 $ 128,563119,476 $ 108,040 $ 94,676
Earnings Available to
Public Service
Enterprise Group
Incorporated........ $ 211,159 $ 195,582 $ 172,543117,969 $ 104,092 $ 65,539180,234 $ 178,808 $ 119,919109,577 $ 98,272 $ 86,028
NOTE 19. ACCOUNTS PAYABLE TO ASSOCIATED COMPANIES -- NET
The balancesbalance at December 31, 1994 and 1993 consisted of the following:
1994 1993 1992
------- -------
(THOUSANDS OF DOLLARS)
Public Service Enterprise Group Incorporated.....................Incorporated (A).......... $17,678 $ 582
$15,264
Energy Development Corporation(A)................................Corporation............................ (336) 5,698
4,849
Other............................................................Other..................................................... (665) (606) (1,578)
------- -------
Total..................................................Total.............................................. $16,677 $ 5,674
$18,535
------- -------
------- -------======= =======
(A) Principally Federal income taxes related to PSE&G's taxable income.
(A) Liability for gas purchased.
95
104
PART III
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.DISCLOSURE
Enterprise and PSE&G, none.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS.REGISTRANTS
DIRECTORS OF THE REGISTRANTS
ENTERPRISEEnterprise
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, 1994,18, 1995, 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, 19941995 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, 1994,18, 1995, present committee
memberships, business experience during the last five years and other present
directorships.
LAWRENCE R. CODEY has been a director since 1988. Age 49.50. 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.
96
105
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 52.53. 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 53.54.
Director of Enterprise. Has been Chairman of the Board, President and Chief
Executive Officer of Merck & Co., Inc. Whitehouse Station, New Jersey
(discovers, develops, produces and markets human and animal health products)
since November 1994. Was President and Chief Executive Officer of Merck & Co.,
Inc. from June 1994 to November 1994. Was Chairman of the Board, President and
Chief Executive Officer of Becton Dickinson and Company Franklin Lakes, New Jersey (manufactures medical
devices and diagnostic systems) sincefrom November 1992. Was1992 to June 1994 and President
and Chief Executive Officer of Becton Dickinson and Company from February 1989
to November 1992 and President from September 1987 to February
1989.1992. Director of Becton DickinsonMerck & Co., Inc. and Company and Capital Holding Corp.Providian Corporation.
SHIRLEY A. JACKSON has been a director since July 20, 1993. Was previously
a director from 1987 to February 1988. Age 47.48. 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)AT&T Corp.). 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 63.64. 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 67.68. 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 Tri-Continental
Corporation and sixteen funds of the 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 REGISTRANTSfamily of funds.
Executive Officers of the Registrants
The following table sets forth certain information concerning the
executive officers of Enterprise and PSE&G, respectively.
97
106
AGE EFFECTIVE DATE
DECEMBER 31, FIRST ELECTED
NAME 19931994 OFFICE TO PRESENT POSITION
- ------------------------------------ ---------------------------------- -------------------------
E. James Ferland........ 5152 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....... 4950 President and Chief Operating September 1991 to present
Officer (PSE&G) present
Senior Vice President -- Electric January 1989 to (PSE&G) September 1991
(PSE&G)
Robert C. Murray........ 4849 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........ 5152 Vice President and ComptrollerController April 1993 to present
(Enterprise)
Vice President and ComptrollerController 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............. 5657 President, Chief Operating Officer February 1993 to present
Officer and Director (EDHI)
Senior Vice President (EDHI) June 1992 to February 1993
Senior Vice President -- Corporate April 1988 to
Corporate Performance (PSE&G) June 1992
R. Edwin Selover........ 4849 Vice President and General Counsel April 1988 to present
Counsel (Enterprise)
Senior Vice President and General January 1988 to present
Counsel (PSE&G)
Francis J. Riepl........ 5758 Treasurer (Enterprise) March 1987 to present
Vice President and Treasurer March 1987 to present
(PSE&G)
Harold W. Borden, Jr.... 4950 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, 50Jr. . 51 Senior Vice President -- Customer September 1991 to Jr....................present
Customer Operations (PSE&G)
present
Vice President -- Nuclear May 1989 to
Engineering (PSE&G) September 1991
Vice President -- Power January 1987 toNuclear May 1989 Production, Pennsylvania Power
and Light Companyto
Engineering (PSE&G) September 1991
98
107
AGE EFFECTIVE DATE
DECEMBER 31, FIRST ELECTED
NAME 19931994 OFFICE TO PRESENT POSITION
- ------------------------------------ ---------------------------------- -------------------------
Robert J. Dougherty, 42Jr. 43 Senior Vice President -- Electric September 1991 to present
Jr. ..................
(PSE&G)
Senior Vice President -- Customer September 1989 to
Operations (PSE&G) September 1991
Leon R. Eliason 55 Chief Nuclear Officer and October 1994 to
President - Nuclear Business present
Unit (PSE&G)
President, Power Supply Business January 1993 to
Unit, Northern States Power September 1994
Vice President, -- MarketingNuclear Genera- July 1990 to
tion, Northern States Power January 19881993
General Manager, Nuclear Opera- 1980 to (PSE&G) September 1989June 1990
tions, Prairie Island and Monti-
cello Nuclear Station, Northern
States Power
Rudolph D. Stys......... 5859 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, 1994,18, 1995, which definitive
Proxy Statement is expected to be filed with the Securities and Exchange
Commission on or about March 1, 19941995 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,
19931994 is set forth below. Amounts shown were paid or awarded for all services
rendered to Enterprise and its subsidiaries and affiliates including PSE&G.
99
108
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
---------------------
AWARDS
ANNUAL COMPENSATION ----------AWARDS PAYOUTS
----------------------- --------- ---------
SECURITIES -------
BONUS/ANNUAL UNDERLYING LTIP ALL OTHER
SALARY INCENTIVE OPTIONS PAYOUTS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR $(1) AWARD($)(2) (#)(3) ($)(4) ($)(4)(5)
- --------------------------- ---- ------- ------------ ---------- ------- ------------
E. James Ferland........... 1993 622,606 (5) 5,800 28,072 8,0071994 652,492 (6) 5,400 127,140 5,628
Chairman of the Board, 1993 622,606 265,316 5,800 28,072 7,678
President and CEO of 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 7,2181994 398,468 (6) 2,500 48,900 5,351
President and Chief 1993 378,545 109,585 2,800 9,570 6,981
Operating Officer of PSE&G 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 7,2641994 303,832 50,000(6)(7) 1,800 26,895 4,944
Vice President and Chief 1993 288,889 154,032(6)(8) 2,000 3,190 7,264
Financial Officer of 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. ....................... 1994 273,946 (6) 1,800 26,895 4,227
Senior Vice President- 1993 259,004 65,703 2,000 5,104 6,341
Electric of PSE&G 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 7,8401994 241,074 (6) 1,300 29,340 5,512
Vice President and General 1992 228,621 44,918 1,3001993 231,113 51,040 1,400 0 7,5767,594
Counsel of Enterprise and 1991 206,207 48,889 1,200 18,801 5,8761992 228,621 44,914 1,300 0 7,576
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 1994
and General Counsel1993.
(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 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) EmployerEnterprise 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 (LTIP) 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. The grant is made at the beginning of a three-year performance period and
cash payment of the value of such performance units and dividend equivalents is made following such period
in proportion to the options, if any, exercised at such time.
(4) Amount paid in proportion to options exercised, if any, based on value of previously granted performance
units and dividend equivalents, each as measured during three-year period ending the year prior to the
year in which payment is made.
(5) Includes 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
$ $ $ $ $ $ $ $ $ $
------ ----- ------ ----- ------ ---- ------ ---- ------ ------
1994............ 3,751 1,877 4,197 1,154 4,504 440 3,752 475 4,506 1,006
1993............ 5,900 2,1071,778 5,896 1,3221,085 7,078 186 5,907 515434 6,630 1,210964
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) The 1994 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 capital, PSE&G's comparative electric and gas costs
and individual performance.
(7) Amount paid pursuant to Mr. Murray's employment agreement.
(See below).
(7)
(8) Includes $75,000 paid pursuant to Mr. Murray commencedMurray's employment January 6, 1992.
100
109agreement.
OPTION GRANTS IN LAST FISCAL YEAR (1993)(1994)
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
-------------------------------------------------- VALUE AT ASSUMED ANNUAL
NUMBER OF % OF TOTAL RATES OF STOCK PRICE
SECURITIES OPTIONS APPRECIATION FOR OPTION
UNDERLYING GRANTED TO EXERCISE OR TERM(2)
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION -----------------------
NAME GRANTED(1) FISCAL YEAR ($/SH) DATE 0%($) 5%($) 10%($)
- ------------------------- ----------- ------------ ----------- ---------- ----- ------- -------
E. James Ferland......... 5,800 25.4 30.505,400 28.1 31.375 1/05/0304/94 0 111,251 281,933106,550 270,020
Lawrence R. Codey........ 2,800 12.3 30.502,500 13.0 31.375 1/05/0304/94 0 53,708 136,10649,329 125,009
Robert C. Murray......... 2,000 8.8 30.501,800 9.4 31.375 1/05/0304/94 0 38,363 97,21835,517 90,007
Robert J. Dougherty,
Jr..................... 2,000 8.8 30.501,800 9.4 31.375 1/05/0304/94 0 38,363 97,21835,517 90,007
R. Edwin Selover......... 1,400 6.1 30.501,300 6.8 31.375 1/05/0304/94 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, 1996.25,651 65,005
(1) Granted under LTIP 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, 1997. Cash payment is made, based on the value, if any, of performance units awarded and
dividend equivalents accrued, if any, as measured during the three-year period ending the year prior to the year
in which payment, if any, is made, only if the specified performance level is achieved, dividend equivalents have
accrued and options are exercised.
(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)(1994) AND
FISCAL YEAR-END OPTION VALUES (12/31/93)94)
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 10,4505,200 19,874 0 16,60016,800 0 53,3720
Lawrence R. Codey........ 1,500 8,0632,000 6,500 700 7,500 5,425 22,9498,000 1,575 0
Robert C. Murray......... 500 2,8131,100 2,200 0 4,7005,400 0 12,6790
Robert J. Dougherty, Jr..................... 800 3,900Jr.. 1,100 0 4,700 0 13,6425,400 0 0
R. Edwin Selover......... 1,200 3,450 2,200 4,000 2,700 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)(1) Does not reflect any options granted and/or exercised after year-end (12/31/94). 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 (12/31/94). 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 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
101
110 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 a lump sum cash paymentspayment 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 PARTICIPATIONCompensation 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 19931994 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 directorCompensation of Sealed
Air Corporation, the PresidentDirectors 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 RELATIONSHIPSCertain 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$22,000 and a fee
of $1,000$1,200 for attendance at any Board or committee meeting, inspection trip,
conference or other similar activity relating to Enterprise, PSE&G or EDHI.
Each of the directors of PSE&G is also a director of Enterprise. No additional
retainer is paid for service as a director of PSE&G. Effective July 1, 1994,
50 percent of the annual retainer is payable each January in Enterprise Common
Stock for the twelve-month period beginning the preceding July 1 and ending the
following June 30.
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.
During 1994, Dr. Shirley A. Jackson, a director of Enterprise and PSE&G,
iswas the liaison member for the Board of Directors on and Chair of PSE&G's
Nuclear Oversight Committee (NOC). The NOC met fivethree times during 1993,1994, with
eachtwo meetings lasting two days and one meeting lasting twothree days. In accordance
with the compensation policy for all NOC members, Dr. Jackson receivesreceived 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 102
111
Compensation Table above
under 'Annual Compensation' for the five years preceedingpreceding 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.
ENTERPRISEMANAGEMENT
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, 1994,18, 1995 which definitive Proxy
Statement is expected to be filed with the Securities and Exchange Commission
on or about March 7, 19941, 1995 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, including options, by the directors and executive officers named below
as of February 23,
1994.January 31, 1995. 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)Codey.............................. 18,611(1)
Robert J. Dougherty, Jr.................................... 1,486(2)
Robert R. Ferguson, Jr..................................... 1,006Jr. ...................... 10,147(2)
E. James Ferland........................................... 33,034(3)Ferland............................... 56,335(3)
Raymond V. Gilmartin....................................... 1,000Gilmartin........................... 1,415
Shirley A. Jackson......................................... 431Jackson............................. 1,488
Irwin Lerner............................................... 3,303Lerner................................... 3,996
Robert C. Murray........................................... 3,477(4)Murray............................... 11,555(4)
James C. Pitney............................................ 2,527Pitney................................ 3,154
R. Edwin Selover........................................... 3,591(5)Selover............................... 11,191(5)
All directors and executive officers (15)
as a group....... 66,062(6)group................................... 148,561(6)
- ---------------
(1) Disclaims beneficial ownership of 472 shares. HasIncludes options to purchase 8,70011,500 additional shares.shares, 3,400 of which are
currently exercisable.
(2) Includes the equivalent of 588639 shares held under Thrift and Tax-Deferred
Savings Plan. HasInclude options to purchase 6,5007,400 additional shares.shares, 1,600 of
which are currently exercisable.
(3) Includes the equivalent of 8,0878,788 shares held under Thrift and Tax-Deferred
Savings Plan. HasIncludes options to purchase 16,80022,600 additional shares.shares, 5,600
of which are currently exercisable.
(4) Includes the equivalent of 377555 shares held under Thrift and Tax-Deferred
Savings Plan. HasIncludes options to purchase 5,4007,400 additional shares.shares, 1,600
of which are currently exercisable.
(5) Disclaims beneficial ownership of 273 shares. HasIncludes options to
purchase 6,2007,600 additional shares.shares, 3,500 of which are currently
exercisable.
(6) Includes 745275 shares owned by relatives as to which beneficial ownership
is disclaimed. Also includes the equivalent of 9,71110,699 shares held under
Thrift and Tax-Deferred Savings Plan. All directors and executive officers as a
group haveIncludes options to purchase 55,60078,400
additional shares.
103
112shares, of which 21,000 are currently exercisable.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
ENTERPRISETRANSACTIONS
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, 1994,18, 1995, which definitive
Proxy Statement is expected to be filed with the Securities and Exchange
Commission on or about March 1, 1994.1995. Such information set forth under such
heading is incorporated herein by this reference thereto.
PSE&G
None.
104
113
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.8-K
(a) Financial Statements:
(1) Enterprise Consolidated Statements of Income for the years ended
December 31, 1994, 1993, 1992, and 1991,1992, on page 55.83.
Enterprise Consolidated Balance Sheets for the years ended
December 31, 19931994 and 1992,1993, on pages 5684 and 57.85.
Enterprise Consolidated Statements of Cash Flows for the
years ended December 31, 1994, 1993 1992 and 19911992 on page 58.86.
Enterprise Statements of Retained Earnings for the years
ended December 31, 1994, 1993 1992 and 19911992 on page 59.87.
Enterprise Notes to Consolidated Financial Statements on
pages 6593 through 90.131.
(2) PSE&G Consolidated Statements of Income for the years ended
December 31, 1994, 1993 1992 and 1991,1992, on page 60.88.
PSE&G Consolidated Balance Sheets for the years ended
December 31, 19931994 and 1992,1993, on pages 6189 and 62.90.
PSE&G Consolidated Statements of Cash Flows for the years
ended December 31, 1994, 1993 1992 and 19911992 on page 63.91.
PSE&G Statements of Retained Earnings for the years ended
December 31, 1994, 1993 1992 and 19911992 on page 64.92.
PSE&G Notes to Consolidated Financial Statements on pages
91132 through 94.135.
(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, 19931994 (page 111)149).
(2) PSE&G Financial Statement Schedules:
Schedule VIII -- Valuation and Qualifying Accounts for each of
the three years in the period ended December 31,
1994 (page 150).
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).
105
114
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.[S] [C]
4b(4) -- Indenture dated November 1, 1994
10a(15) -- Letter Agreement, as amended, with
Leon R. Eliason dated September 14, 1994
12 -- Computation of Ratios of Earnings to Fixed Charges.
21 -- Subsidiaries of Registrant.
23 -- Independent Auditors' Consent.
27 -- Financial Data Schedule
(See Exhibit Index on pages 121153 through 127)159).
(2) PSE&G:
10a(5)(ii) -- Limited Supplemental Plan for Certain Employees.
*10a(13) -- Letter Agreement with Patricia A. Rado dated March 24, 1993.[S] [C]
3b -- Copy of By-Laws of PSE&G, as in effect
September 1, 1994
4b(4) -- Indenture dated November 1, 1994
10a(14) -- Letter Agreement, as amended, with
Leon R. Eliason dated September 14, 1994
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.
27 -- Financial Data Schedule
(See Exhibit Index on page 153 and pages 128160 through 133)165).
(d) The following reports on Form 8-K were filed by the registrant(s)
named below during the last quarter of 19931994 and the 19941995
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,October 6, 1994 Item 5. Other Events (Credit Ratings(NRC fine
for the Salem Unit No. 1 event
and Unaudited
Operating Results)electric Levelized Energy
Adjustment Charge).
- ---------------
* Indicates employment agreement.
106
115
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)SCHEDULE VIII
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
SCHEDULE VIII -- 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 $VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1994 -- $ -- $ 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 OTHERCHARGED TO BALANCE AT
BEGINNING OF COST AND ACCOUNTS-- DEDUCTIONS--OTHER ACCOUNTS- DEDUCTIONS- END OF
DESCRIPTION PERIOD EXPENSES DESCRIBE DESCRIBE PERIOD
- ----------------------------------------------------------------------------------------------------------------------------
(THOUSANDS OF DOLLARS)
1994
Allowance for Doubtful Accounts........... $ 27,932 $ 50,140 $ -- $37,157(A) $ 40,915
============ ========== =============== =========== ==========
Discount on Property Abandonments......... $ 16,263 $ -- $ -- $ 4,840(B) $ 11,423
============ ========== =============== =========== ==========
Valuation Allowances...................... $ 34,703 $ 6,827 $ 4,500 $ 5,662 $ 40,368
============ ========== =============== =========== ==========
Inventory Valuation Reserve............... $ 8,525 $ 9,675 $ -- $ -- $ 18,200
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
------------ ---------- --------------- ----------- ----------
------------ ---------- --------------- ----------- ----------============ ========== =============== =========== ==========
Inventory Valuation Reserve............... $ -- $ 8,525 $ -- $ -- $ 8,525
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
------------ ---------- --------------- ----------- ----------
------------ ---------- --------------- ----------- ----------============ ========== =============== =========== ==========
Inventory Valuation Allowances...................... $ 8,890 $ 7,806Reserve............... $ -- $ -- $ 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)SCHEDULE VIII
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
SCHEDULE VIII -- END OF
CLASSIFICATION PERIOD COST RETIREMENTS DESCRIBE (A) PERIOD
- -----------------------------------------------------------------------------------------------------------------------
(THOUSANDS OF DOLLARS)
Utility Plant
Electric Plant in Service
Intangible....................... $ 4,596 $ 2,224 $VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1994 -- $ -- $ 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 TO
BALANCE AT CHARGED TO CHARGED TO OTHER BALANCE AT
BEGINNING OF COST AND ACCOUNTS-- DEDUCTIONS--OTHER ACCOUNTS- DEDUCTIONS- END OF
DESCRIPTION PERIOD EXPENSES DESCRIBE DESCRIBE PERIOD
- ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(THOUSANDS OF DOLLARS)
1994
Allowance for Doubtful Accounts........... $ 27,932 $ 50,140 $ -- $37,157(A) $ 40,915
============ ========== =============== =========== ==========
Discount on Property Abandonments......... $ 16,263 $ -- $ -- $ 4,840(B) $ 11,423
============ ========== =============== =========== ==========
Inventory Valuation Reserve............... $ 8,525 $ 9,675 $ -- $ -- $ 18,200
1993
Allowance for Doubtful Accounts...Accounts........... $ 24,059 $ 31,625 $ -- $27,752(A) $ 27,932
------------ ---------- --------- ----------- ----------
------------ ---------- --------- ----------- ----------============ ========== =============== =========== ==========
Discount on Property Abandonments....................Abandonments......... $ 21,951 $ -- $ -- $ 5,688(B) $ 16,263
------------ ---------- --------- ----------- ----------
------------ ---------- --------- ----------- ----------============ ========== =============== =========== ==========
Inventory Valuation Reserve............... $ -- $ 8,525 $ -- $ -- $ 8,525
1992
Allowance for Doubtful Accounts...Accounts........... $ 21,241 $ 29,488 $ -- $26,670(A) $ 24,059
------------ ---------- --------- ----------- ----------
------------ ---------- --------- ----------- ----------============ ========== =============== =========== ==========
Discount on Property Abandonments....................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============ ========== =============== =========== ==========
Inventory Valuation Reserve............... $ -- $ -- $10,068(B) $ 31,567
------------ ---------- --------- ----------- ----------
------------ ---------- --------- ----------- ----------
Notes:
(A) Accounts Receivable-- $ -- $ --
NOTES:
(A) Accounts Receivable/Investments 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
Date: February 23, 1995 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
- ---------------------------------------------23, 1995
E. James Ferland President and Chief
E. James Ferland Executive Officer and
Director (Principal
Executive Officer)
ROBERT C. MURRAY
- -------------------------------- Vice President and Chief February 25, 1994
- --------------------------------------------- Financial Officer23, 1995
Robert C. Murray Financial Officer
(Principal Financial
Officer)
PATRICIA A. RADO
- -------------------------------- Vice President and February 25, 1994
- --------------------------------------------- Comptroller (Principal23, 1995
Patricia A. Rado Controller (Principal
Accounting Officer)
LAWRENCE R. CODEY
- -------------------------------- Director February 25, 1994
- ---------------------------------------------23, 1995
Lawrence R. Codey
ERNEST H. DREW
- -------------------------------- Director February 25, 1994
- ---------------------------------------------23, 1995
Ernest H. Drew
T. J. DERMOT DUNPHY
- -------------------------------- Director February 25, 1994
- ---------------------------------------------23, 1995
T. J. Dermot Dunphy
ROBERT R. FERGUSON, JR. Director February 25, 1994
- ---------------------------------------------
Robert R. Ferguson, Jr.
RAYMOND V. GILMARTIN
- -------------------------------- Director February 25, 1994
- ---------------------------------------------23, 1995
Raymond V. Gilmartin
SHIRLEY A. JACKSON
- -------------------------------- Director February 25, 1994
- ---------------------------------------------23, 1995
Shirley A. Jackson
IRWIN LERNER
- -------------------------------- Director February 25, 1994
- ---------------------------------------------23, 1995
Irwin Lerner
WILLIAM E. MARFUGGI Director February 25, 1994
- ---------------------------------------------
William E. Marfuggi
MARILYN M. PFALTZ
- -------------------------------- Director February 25, 1994
- ---------------------------------------------23, 1995
Marilyn M. Pfaltz
JAMES C. PITNEY
- -------------------------------- Director February 25, 1994
- ---------------------------------------------23, 1995
James C. Pitney
RICHARD J. SWIFT
- -------------------------------- Director February 23, 1995
Richard J. Swift
JOSH S. WESTON
- -------------------------------- Director February 25, 1994
- ---------------------------------------------23, 1995
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, 199423, 1995
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
- ---------------------------------------------23, 1995
E. James Ferland Chief Executive Officer
E. James Ferland
and Director (Principal
Executive Officer)
LAWRENCE R. CODEY
- -------------------------------- President and Chief February 25, 1994
- ---------------------------------------------23, 1995
Lawrence R. Codey Operating Officer and
Lawrence R. Codey
Director
ROBERT C. MURRAY
- -------------------------------- Senior Vice President - February 25, 1994
- --------------------------------------------- President-Finance and23, 1995
Robert C. Murray Finance and Chief
Financial Officer
and Director
(Principal Financial
Officer)
PATRICIA A. RADO
- -------------------------------- Vice President and February 25, 1994
- --------------------------------------------- Comptroller (Principal23, 1995
Patricia A. Rado Controller (Principal
Accounting Officer)
ROBERT R. FERGUSON, JR. Director February 25, 1994
- ---------------------------------------------
Robert R. Ferguson, Jr.
RAYMOND V. GILMARTIN
- -------------------------------- Director February 25, 1994
- ---------------------------------------------23, 1995
Raymond V. Gilmartin
SHIRLEY A. JACKSON
- -------------------------------- Director February 25, 1994
- ---------------------------------------------23, 1995
Shirley A. Jackson
IRWIN LERNER
- -------------------------------- Director February 25, 1994
- ---------------------------------------------23, 1995
Irwin Lerner
JAMES C. PITNEY
- -------------------------------- Director February 25, 1994
- ---------------------------------------------23, 1995
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
4a(85) (a) 4 (a) 4 March 1, 1994 (No. 1)
3/15/94 3/16/94
4a(86) (a) 4 (a) 4 March 1, 1994 (No. 2)
3/15/94 3/16/94
4a(87) (d) 4 (d) 4 May 1, 1994
11/8/94 12/2/94
4a(88) (d) 4 (d) 4 June 1, 1994
11/8/94 12/2/94
4a(89) (d) 4 (d) 4 August 1, 1994
11/8/94 12/2/94
4a(90) (d) 4 (d) 4 October 1, 1994 (No. 1)
11/8/94 12/2/94
4a(91) (d) 4 (d) 4 October 1, 1994 (No. 2)
11/8/94 12/2/94
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
4b(4) Indenture between PSE&G and First Fidelity Bank,
National Association, as Trustee, dated November 1,
1994, providing for Deferrable Interest Subordinated
Debentures in Series
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) (c) 10a(5)(ii) (c) 10a(5)(ii) Limited Supplemental Benefits Plan for Certain
2/25/94 3/1/94 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.
EXHIBIT NUMBER
- --------------------------------------------
PREVIOUS FILING
THIS --------------------------------
FILING COMMISSION EXCHANGES
- --------- -------------- --------------
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) (c) 10a(14) (c) 10a(14) Letter agreement with Patricia A. Rado dated
2/26/94 3/9/94 March 24, 1993
10a(15) Letter Agreement, as amended, with Leon R. Eliason
dated September 14, 1994
11 Inapplicable
12 Computation of Ratios of Earnings to Fixed
Charges
13 Inapplicable
16 Inapplicable
18 Inapplicable
19 Inapplicable
21 Subsidiaries of the Registrant
22 Inapplicable
23 Independent Auditors' Consent
24 Inapplicable
27 Financial Data Schedule
28 Inapplicable
2899 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, 1988September 1,
1994
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
4a(85) (a) 4 (a) 4 March 1, 1994 (No. 1)
3/15/94 3/16/94
4a(86) (a) 4 (a) 4 March 1, 1994 (No. 2)
3/15/94 3/16/94
4a(87) (d) 4 (d) 4 May 1, 1994
11/8/94 12/2/94
4a(88) (d) 4 (d) 4 June 1, 1994
11/8/94 12/2/94
4a(89) (d) 4 (d) 4 August 1, 1994
11/8/94 12/2/94
4a(90) (d) 4 (d) 4 October 1, 1994 (No. 1)
11/8/94 12/2/94
4a(91) (d) 4 (d) 4 October 1, 1994 (No. 2)
11/8/94 12/2/94
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
4b(4) Indenture between PSE&G and First Fidelity Bank,
National Association, as Trustee, dated November 1,
1994, providing for Deferrable Interest Subordinated
Debentures in Series
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
Supplemental Benefits Plan for Certain
2/25/94 3/1/94 Employees
EXHIBIT NUMBER
- --------------------------------------------
PREVIOUS FILING
THIS --------------------------------
FILING COMMISSION EXCHANGES
- --------- -------------- --------------
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) (c) 10a(5)(ii) (c) 10a(5)(ii) Limited Supplemental Benefits Plan for Certain
Employees
134
143
EXHIBIT NUMBER
- --------------------------------------------
PREVIOUS FILING
THIS --------------------------------
FILING COMMISSION EXCHANGES
- --------- -------------- --------------
S-----
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) (c) 10a(13) (c) 10a(13) Letter agreement with Patricia A. Rado dated
2/26/94 3/9/94 March 24, 1993.
10a(14) Letter Agreement, as amended, with Leon R. Eliason
dated September 14, 1994
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 Financial Data Schedule
28 Inapplicable
2899 Inapplicable
135