Exhibit 99.1
Public Service Enterprise Group
PSEG Earnings Conference Call
2nd Quarter 2009
July 31, 2009
Forward-Looking Statement
Readers are cautioned that statements contained in this presentation about our and our subsidiaries’ future performance, including future
revenues, earnings, strategies, prospects and all other statements that are not purely historical, are forward-looking statements for purposes of
the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Although we believe that our expectations are based on
reasonable assumptions, we can give no assurance they will be achieved. The results or events predicted in these statements may differ
materially from actual results or events. Factors which could cause results or events to differ from current expectations include, but are not
limited to:
Adverse changes in energy industry, law, policies and regulation, including market structures and rules, and reliability standards.
Any inability of our energy transmission and distribution businesses to obtain adequate and timely rate relief and regulatory approvals from
federal and state regulators.
Changes in federal and state environmental regulations that could increase our costs or limit operations of our generating units.
Changes in nuclear regulation and/or developments in the nuclear power industry generally, that could limit operations of our nuclear generating
units.
Actions or activities at one of our nuclear units that might adversely affect our ability to continue to operate that unit or other units at the same
site.
Any inability to balance our energy obligations, available supply and trading risks.
Any deterioration in our credit quality.
Availability of capital and credit at reasonable pricing terms and our ability to meet cash needs.
Any inability to realize anticipated tax benefits or retain tax credits.
Increases in the cost of or interruption in the supply of fuel and other commodities necessary to the operation of our generating units.
Delays or cost escalations in our construction and development activities.
Adverse investment performance of our decommissioning and defined benefit plan trust funds, and changes in discount rates and funding
requirements.
Changes in technology and increased customer conservation.
For further information, please refer to our Annual Report on Form 10-K, including Item 1A. Risk Factors, and subsequent reports on Form 10-Q
and Form 8-K filed with the Securities and Exchange Commission. These documents address in further detail our business, industry issues and
other factors that could cause actual results to differ materially from those indicated in this presentation. In addition, any forward-looking
statements included herein represent our estimates only as of today and should not be relied upon as representing our estimates as of any
subsequent date. While we may elect to update forward-looking statements from time to time, we specifically disclaim any obligation to do so,
even if our internal estimates change, unless otherwise required by applicable securities laws.
1
GAAP Disclaimer
PSEG presents Operating Earnings in addition to its Net Income reported
in accordance with accounting principles generally accepted in the United
States (GAAP). Operating Earnings is a non-GAAP financial measure that
differs from Net Income because it excludes gains or losses associated
with Nuclear Decommissioning Trust (NDT) and Mark-to-Market (MTM)
accounting, the impact of the sale of certain non-core domestic and
international assets and material impairments and lease-transaction-
related charges. PSEG presents Operating Earnings because
management believes that it is appropriate for investors to consider
results excluding these items in addition to the results reported in
accordance with GAAP. PSEG believes that the non-GAAP financial
measure of Operating Earnings provides a consistent and comparable
measure of performance of its businesses to help shareholders
understand performance trends. This information is not intended to be
viewed as an alternative to GAAP information. The last slide in this
presentation includes a list of items excluded from Income from
Continuing Operations to reconcile to Operating Earnings, with a
reference to that slide included on each of the slides where the non-GAAP
information appears.
2
PSEG
2009 Q2 Review
Ralph Izzo
Chairman, President and Chief Executive Officer
Q2 2009 Earnings Summary
16
-
Discontinued Operations, Net of Tax
$ 0.61
$ 0.63
EPS from Operating Earnings*
(150)
311
Net Income (Loss)
(166)
311
Income (Loss) from Continuing Operations
(479)
(7)
Reconciling Items, Net of Tax
$ 313
$ 318
Operating Earnings
2008
2009
$ millions (except EPS)
Quarter ended June 30,
* See page 33 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.
4
YTD Earnings Summary
29
-
Discontinued Operations, Net of Tax
$ 1.47
$ 1.58
EPS from Operating Earnings*
298
755
Net Income
269
755
Income from Continuing Operations
(482)
(45)
Reconciling Items, Net of Tax
$ 751
$ 800
Operating Earnings
2008
2009
$ millions (except EPS)
Six months ended June 30,
* See page 33 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.
5
PSEG – Q2 2009: Securing long-term objectives
Q2 2009 results in line with expectations
Demonstrates strength and flexibility of asset base
Regulatory approvals for major PSE&G initiatives
Advances State’s clean energy agenda
Supports job creation
Maintains financial health and stability
Lease terminations
Improves net cash position
Economic decision that improves risk profile
Markets remain challenging
2nd coolest June on record since 1970
2009 earnings guidance of $3.00 - $3.25 remains unchanged
Upper-end of earnings guidance challenged
6
$2.68
$3.00 - $3.25
PSEG Earnings
$3.03
* See page 34 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.
2007 Operating Earnings*
2008 Operating Earnings*
2009 Guidance
7
PSEG – Meeting Challenges
Greenhouse gas reduction goals exceeded
Focused on maintaining strong operations; lower expenses
Investing in areas with good risk-adjusted returns
Reducing financial risk
Common stock dividend provides above average returns
8
PSEG
2009 Q2 Operating Company Review
Caroline Dorsa
Executive Vice President and Chief Financial Officer
Q2 Operating Earnings by Subsidiary
$ 313
(4)
50
51
$ 216
2008
$ 318
1
36
43
$ 238
2009
Operating Earnings
Earnings per Share
(0.01)
-
Enterprise
$ 0.61
$ 0.63
Operating Earnings*
0.10
0.07
PSEG Energy Holdings
0.10
0.09
PSE&G
$ 0.42
$ 0.47
PSEG Power
2008
2009
$ millions (except EPS)
Quarter ended June 30,
* See page 33 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.
10
YTD Operating Earnings by Subsidiary
$ 751
(9)
78
187
$ 495
2008
$ 800
(3)
40
166
$ 597
2009
Operating Earnings
Earnings per Share
(0.02)
(0.01)
Enterprise
$ 1.47
$ 1.58
Operating Earnings*
0.15
0.08
PSEG Energy Holdings
0.37
0.33
PSE&G
$ 0.97
$ 1.18
PSEG Power
2008
2009
$ millions (except EPS)
Six months ended June 30,
* See page 33 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.
11
PSEG EPS Reconciliation – Q2 2009 versus Q2 2008
Q2 2009
operating
earnings*
Q2 2008
operating
earnings*
Recontracting
and Lower Fuel
Expense .04
BGSS (.01)
O&M .01
Depreciation,
Interest and Other
.01
PSEG
Power
Weather (.01)
Transmission
Margin .01
Gas Margin .01
Depreciation
and O&M (.02)
PSE&G
PSEG Energy
Holdings
Texas Generation
Facilities (.06)
2009 Lease Sales
.05
Lease Income (.01)
Effective Tax Rate
and Other (.01)
* See page 33 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.
Enterprise
Interest
$.61
.05
(.01)
(.03)
.01
$.63
0.00
0.25
0.50
0.75
12
PSEG Power
2009 Q2 Review
PSEG Power – Q2 2009 EPS Summary
(25)
27
2
Mark-to-Market, Net of Tax
20
(3)
17
NDT Funds Related Activity,
Net of Tax
($ 322)
$ 1,623
$ 1,301
Operating Revenues
$ 0.05
$ 0.42
$ 0.47
EPS from Operating Earnings*
17
240
257
Income from Continuing Operations/
Net Income
22
216
238
Operating Earnings
Variance
Q2 2008
Q2 2009
$ millions (except EPS)
* See page 33 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.
14
Recontracting
and Lower Fuel
Expense
PSEG Power EPS Reconciliation – Q2 2009 versus Q2 2008
Q2 2009
operating
earnings*
Q2 2008
operating
earnings*
BGSS
O&M
* See page 33 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.
Depreciation,
Interest and
Other
$.47
.01
.01
(.01)
.04
$.42
0.00
0.25
0.50
15
PSEG Power – Generation Measures
Quarter ended June 30,
Total Nuclear
Total Coal*
Total Oil &
Natural Gas
* Includes figures for Pumped Storage
PSEG Power – Generation (GWh)
13,569
11,553
Six months ended June 30,
27,268
24,673
7,032
7,196
2,889
1,470
3,648
2,887
0
5,000
10,000
15,000
2008
2009
14,296
15,014
6,546
4,149
6,426
5,510
0
10,000
20,000
30,000
2008
2009
16
PSEG Power – Fuel Costs
117
379
Oil & Gas
47
86
Coal
$17.20
$36.50
$ / MWh
11,600
13,600
Total Generation
(GWh)
199
496
Total Fuel Cost
35
31
Nuclear
Total Fossil
($ millions)
164
465
2009
2008
Quarter ended June 30,
PSEG Power – Fuel Costs
291
621
Oil & Gas
141
201
Coal
$20.40
$32.40
$ / MWh
24,700
27,300
Total Generation
(GWh)
503
884
Total Fuel Cost
71
62
Nuclear
Total Fossil
($ millions)
432
822
2009
2008
Six months ended June 30,
17
Market forces supported margins in Q2 2009…
PSEG Power Gross Margin ($/MWh)
$50
$63
Quarter ended June 30
… and will support stronger than forecast improvement for full-year.
$0
$25
$50
$75
2008
2009
18
PSEG Power – Q2 Operating Highlights
15% decline in total output is a reflection of market conditions.
Weighted average combined cycle capacity factor of 40.5% vs 48.2% in Q2 2008.
Weighted average coal capacity factor of 29.0% vs 56.0% in Q2 2008.
Nuclear fleet capacity factor of 89.1%.
Low cost nuclear fleet met 62% of load requirements in the quarter.
Operations
Regulatory and Market Environment
Financial
Power markets affected by abnormally cool weather, contraction in economic
growth and excess supply of gas.
PSEG Power bid for 178MW of new peaking capacity accepted by PJM in 2012-
2013 RPM capacity auction at $185MW/day.
Power entered into a new $350 million credit facility that expires July 2011.
This facility replaces two expired credit facilities and one termination.
19
PSE&G
2009 Q2 Review
PSE&G – Q2 2009 Earnings Summary
(206)
1,699
1,493
Total Operating Expenses
(1)
27
26
Taxes Other than Income Taxes
Operating Expenses
(234)
1,213
979
Energy Costs
24
320
344
Operation & Maintenance
5
139
144
Depreciation & Amortization
($ 0.01)
$ 0.10
$ 0.09
EPS from Operating Earnings*
(8)
51
43
Operating Earnings / Net Income
($ 215)
$ 1,858
$ 1,643
Operating Revenues
Variance
Q2 2008
Q2 2009
$ millions (except EPS)
* See page 33 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.
21
PSE&G EPS Reconciliation – Q2 2009 versus Q2 2008
Q2 2009
operating
earnings*
Q2 2008
operating
earnings*
Weather -
Electric
Depreciation and
O&M
* See page 33 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.
Margin:
Transmission .01
Gas .01
$.10
(.01)
.02
(.02)
$.09
0.00
0.10
0.20
22
PSE&G’s Margins are affected by Residential Sales and C&I
Demand and Customer charges.
Electric
Gas
2009 Forecast
Total electric sales expected to decline by 1.5% – 2.0% vs. 2008.
Residential electric sales are expected to be flat versus last year.
Gas sales, on a weather normalized basis, are forecasted to
decline ~ 0.5%.
Residential
Service
Charge, 5%
C&I Non-
Volume
Customer
and Demand
Charges, 45%
Street
Lighting, 10%
Residential
Sales, 40%
C&I Non-
Volume
Customer
and Demand
Charges, 15%
Residential
Sales, 60%
Residential
Service
Charge, 15%
C&I Sales,
10%
23
PSE&G: Capital spending
Capital Spending Update
418
183
228
7
Solar 4 All
$4,470
$1,521
$1,901
$1,048
Revised Capital Spending
$3,190
$1,237
$1,111
$842
2008 10-K Projections
$1,280
$284
$790
$206
TOTAL
166
52
106
8
Energy Efficiency
5
44
2011
274
177
92
Gas
422
279
99
Electric
NJ Stimulus
TOTAL
2010
2009
24
PSE&G – Q2 Operating Highlights
PSE&G received BPU approval of proposals on energy efficiency ($166M) and
Solar 4 All ($515M).
PSE&G filed for an increase in electric ($134M) and gas ($97M) revenues on May
29, 2009; request based on 2009 test year and supports 11.5% ROE and 51%
equity ratio.
2009-2011 capital expenditures increased by $1.3 billion for new capital
programs.
Some deterioration in aging of accounts receivable; reserve levels adequate.
Average return on equity for 12 months ended June 30, 2009 of 9.2%.
Operations
Regulatory and Market Environment
Financial
Electric sales affected by abnormally cool weather.
June 2009 is 2nd coldest on record since 1970.
Maintaining forecast for weather adjusted decline in electric sales of 1.5% – 2.0% for full-
year.
Controllable O&M expenses down slightly from year ago levels.
25
PSEG Energy Holdings
2009 Q2 Review
PSEG Energy Holdings – Q2 2009 Earnings Summary
490
(490)
--
Lease Transaction Reserves
(16)
16
--
Discontinued Operations, Net of Tax
(13)
(13)
(26)
Mark-to-Market, Net of Tax
($0.03)
$ 0.10
$ 0.07
EPS from Operating Earnings*
($ 447)
($ 437)
$ 10
Net Income (Loss)
($ 14)
$ 50
$ 36
Operating Earnings
Variance
Q2 2008
Q2 2009
$ millions (except EPS)
* See page 33 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.
27
PSEG Energy Holdings EPS Reconciliation – Q2 2009 versus
Q2 2008
Q2 2009
operating
earnings*
Q2 2008
operating
earnings*
Texas Generation
Facilities
2009 Lease
Sales
Lease
Income
* See page 33 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.
Effective Tax Rate
and Other
.07
(.01)
(.01)
.05
(.06)
$.10
0.00
0.05
0.10
0.15
28
PSEG Energy Holdings – Q2 Operating Highlights
Texas market hurt by decline in demand and availability of wind resources.
Reached agreement on termination of five cross-border leveraged leases in 2Q
2009.
Terminated eight of these types of leases since December 2008 for a total for $450M.
Cross-border leveraged lease tax liability reduced by $350M; increased reserve
on deposit with IRS by $140M to $320M.
Operations
Regulatory and Market Environment
Financial
Texas – 2,000 MW gas-fired combined cycle capacity.
$16.99
1,937
Q2 2009
$41.21
2,157
Q2 2008
Gross Margin ($/MWh)
Production (GWh)
Lower margin a reflection of decline in energy prices.
29
PSEG
2009 Operating Earnings Guidance
$ 3.03
$ 1,542
($ 24)
$ 99
$ 360
$ 1,107
2008A*
$ 3.00 – $ 3.25
$ 1,520 – $ 1,640
($ 5)
$ 40 – $ 65
$ 315 – $ 335
$ 1,170 – $ 1,245
2009E
Enterprise
Earnings per Share
Operating Earnings
PSEG Energy Holdings
PSE&G
PSEG Power
$ millions (except EPS)
* See page 34 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.
31
Expiration
Total
Primary
Usage at
Available
Company
Facility
Date
Facility
Purpose
7/24/2009
7/24/2009
PSEG
5-year Credit Facility
Dec-12
$1,000
1
CP Support/Funding/LCs
$16
$984
Uncommitted Bilateral
Agreement
N/A
N/A
Funding
0
N/A
Power
5-Year Credit Facility
Dec-12
1,600
3
Funding/LCs
187
1,413
2-Year Credit Facility
Jul-11
350
Funding
0
350
Bilateral Credit Facility
Sep-09
150
Funding/LCs
0
150
Bilateral Credit Facility
Sep-09
50
Funding
0
50
Bilateral Credit Facility
Mar-10
100
Funding/LCs
44
56
PSE&G
5-year Credit Facility
Jun-12
600
2
CP Support/Funding/LCs
373
227
Uncommitted Bilateral
N/A
N/A
Funding
0
N/A
Total
$3,850
$3,230
1
PSEG Facility reduces by $47 million in 12/2011
2
PSE&G Facility reduces by $28 million in 12/2011
3
Power Facility reduces by $75 million in 12/2011
PSEG Liquidity as of July 24, 2009
32
Items Excluded from Income from Continuing Operations to
Reconcile to Operating Earnings
Please see Page 2 for an explanation of PSEG’s use of Operating Earnings as a non-GAAP financial measure and how
it differs from Net Income.
Pro-forma Adjustments, net of tax
2009
2008
2009
2008
Earnings Impact ($ Millions)
Gain (Loss) on Nuclear Decommissioning Trust (NDT) Fund Related Activity
17
$
(3)
$
(6)
$
(10)
$
Gain (Loss) on Mark-to-Market (MTM)
(24)
14
(39)
19
Lease Reserves
-
(490)
-
(490)
Premium on Bond Redemption
-
-
-
(1)
Total Pro-forma adjustments
(7)
$
(479)
$
(45)
$
(482)
$
Fully Diluted Average Shares Outstanding (in Millions)
507
509
507
509
Per Share Impact (Diluted)
Gain (Loss) on Nuclear Decommissioning Trust (NDT) Fund Related Activity
0.03
$
-
$
(0.01)
$
(0.02)
$
Gain (Loss) on Mark-to-Market (MTM)
(0.05)
0.03
(0.08)
0.04
Lease Reserves
-
(0.96)
-
(0.96)
Premium on Bond Redemption
-
-
-
-
Total Pro-forma adjustments
(0.02)
$
(0.93)
$
(0.09)
$
(0.94)
$
For the Quarters Ended
For the Six Months Ended
June 30,
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
Reconciling Items Excluded from Continuing Operations to Compute Operating Earnings
(Unaudited)
June 30,
33
Please see Page 2 for an explanation of PSEG’s use of Operating Earnings as a non-GAAP financial measure
and how it differs from Net Income.
Items Excluded from Income from Continuing Operations to
Reconcile to Operating Earnings
Pro-forma Adjustments, net of tax
2008
2007
Earnings Impact (in Millions)
Impairment of PPN
(9)
$
(2)
$
Impairment of Turboven
(4)
(7)
Loss on Sale of Chilquinta and Luz del Sur
-
(23)
Nuclear Decommissioning Trust (NDT) Fund Related Activity
(71)
12
Mark-to-Market (MTM)
16
10
Premium on Bond Redemption
(1)
(28)
Lease Reserves
(490)
-
Total Pro-forma to Operating Earnings
(559)
$
(38)
$
Fully Diluted Average Shares Outstanding (in Millions)
508
509
Per Share Impact (Diluted)
Impairment of PPN
(0.02)
$
-
$
Impairment of Turboven
(0.01)
(0.01)
Loss on Sale of Chilquinta and Luz del Sur
-
(0.05)
Nuclear Decommissioning Trust (NDT) Fund Related Activity
(0.14)
0.02
Mark-to-Market (MTM)
0.03
0.02
Premium on Bond Redemption
-
(0.06)
Lease Reserves
(0.96)
-
Total Pro-forma to Operating Earnings
(1.10)
$
(0.08)
$
December 31,
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
Reconciling Items Excluded from Continuing Operations to Compute Operating Earnings
(Unaudited)
For the Twelve Months Ended
34