 Public Service Enterprise Group PSEG Earnings Conference Call 1st Quarter 2011 May 5, 2011 EXHIBIT 99.1 |
 1 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, consequences 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. When used herein, the words “anticipate”, “intend”, “estimate”, “believe”, “expect”, “plan”, “should”, “hypothetical”, “potential”, “forecast”, “project”, variations of such words and similar expressions are intended to identify forward-looking statements. Although we believe that our expectations are based on reasonable assumptions, they are subject to risks and uncertainties and we can give no assurance they will be achieved. The results or developments projected or predicted in these statements may differ materially from what may actually occur. 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 a potential shift away from competitive markets toward subsidized market mechanisms, transmission planning and cost allocation rules, including rules regarding how transmission is planned and who is permitted to build transmission going forward, and reliability standards, • any inability of our transmission and distribution businesses to obtain adequate and timely rate relief and regulatory approvals from federal and state regulators, • changes in federal and state environmental regulations that could increase our costs or limit operations of our generating units, • changes in nuclear regulation and/or general developments in the nuclear power industry, including various impacts from any accidents or incidents experienced at our facilities or by others in the industry that could limit operations of our nuclear generating units, • actions or activities at one of our nuclear units located on a multi-unit site that might adversely affect our ability to continue to operate that unit or other units located at the same site, • any inability to balance our energy obligations, available supply and trading risks, • any deterioration in our credit quality, or the credit quality of our counterparties, • availability of capital and credit at commercially reasonable terms and conditions and our ability to meet cash needs, • any inability to realize anticipated tax benefits or retain tax credits, • changes in the cost of, or interruption in the supply of, fuel and other commodities necessary to the operation of our generating units, • delays in receipt of necessary permits and approvals for our construction and development activities, • delays or unforeseen cost escalations in our construction and development activities, • adverse changes in the demand for or price of the capacity and energy that we sell into wholesale electricity markets, • increase in competition in energy markets in which we compete, • challenges associated with retention of a qualified workforce, • adverse performance of our decommissioning and defined benefit plan trust fund investments and changes in discount rates and funding requirements, and • changes in technology and customer usage patterns. 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. |
 2 GAAP Disclaimer PSEG presents Operating Earnings in addition to its Net Income reported in accordance with accounting principles generally accepted in the United States (GAAP). Operating Earnings is a non-GAAP financial measure that differs from Net Income because it excludes gains or losses associated with Nuclear Decommissioning Trust (NDT) 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 two slides in this presentation include 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. |
 PSEG 2011 Q1 Review Ralph Izzo Chairman, President and Chief Executive Officer |
 4 Q1 2011 Earnings Summary $ millions (except EPS) 2011 2010 Operating Earnings $ 431 $ 439 Reconciling Items, Net of Tax 31 59 Income from Continuing Operations 462 498 Discontinued Operations, Net of Tax 64 (7) Net Income 526 491 EPS from Operating Earnings* $ 0.85 $ 0.87 Quarter ended March 31 * See page 31 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. |
 5 PSEG – Q1 2011 Results of $0.85 vs. $0.87 in Q1 2010 Maintaining our 2011 earnings guidance of $2.50-$2.75 per share Regulatory/Market Environment EPA proposals on HAPs-MACT, 316b regulations PSEG Nuclear’s on-going community outreach efforts support local, state and federal understanding of reactor design and emergency procedures in place at Salem and Hope Creek FERC decision on MOPR supports competitive wholesale markets PSE&G awaiting FERC approval of incentive rate treatment on $1.3 billion of transmission investment NJBPU decisions expected on $400 million of incremental PSE&G capital infrastructure and energy efficiency spending Focused on building a financially strong, environmentally friendly energy business |
 6 2009 Operating Earnings* 2010 Operating Earnings* 2011 Guidance $2.50 - $2.75E PSEG – Maintaining 2011 Guidance $3.09 * See page 32 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. $3.12 |
 PSEG 2011 Q1 Operating Company Review Caroline Dorsa Executive Vice President and Chief Financial Officer |
 8 Q1 Operating Earnings by Subsidiary Operating Earnings Earnings per Share $ millions (except EPS) 2011 2010 2011 2010 PSEG Power $ 267 $ 312 $ 0.53 $ 0.62 PSE&G 163 117 0.32 0.23 PSEG Energy Holdings (3) 7 (0.01) 0.01 Enterprise 4 3 0.01 0.01 Operating Earnings* $ 431 $ 439 $ 0.85 $ 0.87 Quarter ended March 31 * See page 31 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. |
 9 $0.85 (0.02) 0.09 (0.09) $0.87 0.00 0.25 0.50 0.75 1.00 PSEG EPS Reconciliation – Q1 2011 versus Q1 2010 Q1 2011 operating earnings* Q1 2010 operating earnings* Lower pricing & Migration (0.01) WPT (0.03) O&M (0.03) Interest & Depreciation (0.03) Taxes 0.01 PSEG Power O&M 0.04 Electric & Gas margin 0.04 Transmission margin 0.01 Weather 0.01 D&A (0.01) PSE&G PSEG Energy Holdings Lower lease sales and Interest (0.01) ES&P Write- off (0.01) * See page 31 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. |
 PSEG Power 2011 Q1 Review |
 11 PSEG Power – Q1 2011 EPS Summary $ millions (except EPS) Q1 2011 Q1 2010 Variance Operating Revenues $ 1,967 $ 2,196 $ (229) Operating Earnings 267 312 (45) NDT Funds/Mark to Market Related Activity, Net of Tax 31 59 (28) Income from Continuing Operations 298 371 (73) Discontinued Operations, Net of Tax 64 (7) 71 Net Income 362 364 (2) EPS from Operating Earnings* $ 0.53 $ 0.62 $ (0.09) * See page 31 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. |
 12 $0.53 0.01 (0.03) (0.03) (0.03) (0.01) $0.62 0.00 0.25 0.50 0.75 Lower Pricing and Migration PSEG Power EPS Reconciliation – Q1 2011 versus Q1 2010 Q1 2011 operating earnings* Q1 2010 operating earnings* WPT * See page 31 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. O&M Absence of higher effective tax rate related to 2010 Healthcare legislation Higher Depreciation and Interest |
 13 PSEG Power – Generation Measures 7,781 7,928 2,921 2,312 3,530 3,790 0 8,500 17,000 2010 2011 Quarter ended March 31 Total Nuclear Total Coal* Oil & Natural Gas * Includes figures for Pumped Storage. PSEG Power – Generation (GWh) 14,030 14,232 PSEG Power – Capacity Factors (%) 2010 2011 Nuclear 97.3% 99.0% Coal NJ 44% 29% PA 86% 83% CT 42% 24% Combined Cycle PJM and NY 49% 53% Quarter ended March 31 |
 14 PSEG Power – Fuel Costs Quarter ended March 31 ($ millions) 2010 2011 Coal 114 88 Oil & Gas* 199 191 Total Fossil 313 279 Nuclear 41 46 Total Fuel Costs 354 325 Total Generation (GWh) 14,232 14,030 $ / MWh 24.87 23.16 PSEG Power – Fuel Costs *Excludes Texas. |
 15 PSEG Power – Gross Margin Performance $0 $25 $50 $75 2010 2011 $55 $55 Quarter ended March 31 Power’s gross margin benefited from increased production from both combined cycle gas and nuclear units Higher pricing in PJM offset $0.01 earnings impact from an increase in customer migration Regional Performance Region Q1 Gross Margin ($M) Q1 2011 Performance PJM $754 Q1 contribution to gross margin increased slightly versus year ago; decline in dark spreads and impact of migration were offset by improved pricing overall and increased nuclear and combined-cycle production. New England $16 Contribution to margin hurt by lower volumes and prices. New York $7 Increase in generation offset by weak pricing. PSEG Power Gross Margin ($/MWh)* * Excludes Texas Generation mix saw increased nuclear and combined-cycle production. |
 16 PSEG Power – Hedging Update Contracted Energy* *As of April 21, 2011. 2011 2012 2013 May - Dec Volume TWh 24 36 36 Base Load % Hedged 100% 60% - 70% 20% - 30% Price $/MWh $68 $66 $69 Volume TWh 12 18 20 % Hedged 30% - 35% Price $/MWh $68 Volume TWh 36 54 56 Total % Hedged 75% - 80% 40% - 50% 10% - 20% Price $/MWh $68 $66 $69 Intermediate Coal, Combined Cycle, Peaking (Nuclear and Base Load Coal) |
 17 … with the 2014/2015 RPM auction results set for release on May 13. PJM’s capacity construct has acknowledged the value of Power’s fleet… PJM Capacity Available to Receive Auction Pricing 0 2,000 4,000 6,000 8,000 10,000 12,000 09/10 10/11 11/12 12/13 13/14 $/MW-day PJM Zones 2009 / 2010 2010 / 2011 2011 / 2012 2012 / 2013 2013/2014 Eastern MAAC $191.32 $174.29 $110.00 $139.73 $245.00 MAAC $191.32 $174.29 $110.00 $133.37 $226.15 PSEG $245.00 PSEG North Zone $185.00 $245.00 Rest of Pool $102.04 $174.29 $110.00 $16.46 $27.73 •Bid for 89 MW of new capacity accepted for 2013/2014 auction; in-service June 2012 •On schedule to complete 178 MW of previously cleared peaking capacity by June 2012 •Upcoming auction anticipated to be influenced by updated demand forecast and transfer capabilities |
 18 PSEG Power – Q1 Operating Highlights Q1 output declined by 1% Q1 nuclear capacity factor at 99% Coal output declined by 21% with reduction in dark spreads Combined-cycle units captured market opportunities Operations Regulatory and Market Environment Financial FERC decision on MOPR in support of competitive markets PJM RPM auction results for 2014/2015 due May 13 Power’s $606 million of 7.75% Senior Notes was retired on April 15, 2011 using cash on hand Power refinanced its $350 million credit facility, increasing it to $1 billion in a new, 5-year term; Power and PSEG’s credit facilities now total $3.7 billion |
 PSE&G 2011 Q1 Review |
 20 PSE&G – Q1 2011 Earnings Summary $ millions (except EPS) Q1 2011 Q1 2010 Variance Operating Revenues $ 2,306 $ 2,444 $ (138) Operating Expenses Energy Costs 1,366 1,540 (174) Operation & Maintenance 368 414 (46) Depreciation & Amortization 179 177 2 Taxes Other than Income Taxes 43 42 1 Total Operating Expenses 1,956 2,173 (217) Operating Earnings / Net Income 163 117 46 EPS from Operating Earnings* $ 0.32 $ 0.23 $ 0.09 * See page 31 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. |
 21 $0.23 0.04 0.04 0.01 0.01 $0.32 (0.01) 0.00 0.05 0.10 0.15 0.20 0.25 0.30 0.35 PSE&G EPS Reconciliation – Q1 2011 versus Q1 2010 Q1 2011 operating earnings* Q1 2010 operating earnings* Weather O&M: Pension Lower storm costs Operational savings * See page 31 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. Transmission margin Electric & Gas Distribution margin 0.04 Higher D&A |
 22 PSE&G – Monthly Heating Degree Days 2011 vs. 2010 vs. Normal PSE&G – Monthly Heating Degree Days 673 797 1089 520 888 1017 704 832 977 0 250 500 750 1000 1250 2011 2010 Normal January February March Weather experienced in Q1 2011 was colder than normal and colder than in Q1 2010. |
 23 PSE&G – Q1 Operating Highlights BPU decision expected Summer 2011 on $400 million of energy efficiency and capital infrastructure programs PSE&G has requested approval from FERC for incentive rate treatment on five 230 Kv projects totaling $1.3 billion Three LCAPP contracts totaling 1,949 MW signed under protest PSE&G refinanced its existing $600 million credit facility with a new 5-year term PSE&G’s operating earnings provided an earned return on equity of 10.8%, which includes a Transmission ROE of 11.2% Operations Regulatory and Market Environment Financial Economy is showing early signs of recovery O&M reductions reflect ongoing focus and lower pension expense Focused on maintaining reliability |
 PSEG Energy Holdings 2011 Q1 Review |
 25 PSEG Energy Holdings – Q1 2011 Earnings Summary $ millions (except EPS) Q1 2011 Q1 2010 Variance Operating Revenues $ 20 $ 36 $ (16) Income from Continuing Operations / Net Income (3) 7 (10) EPS from Operating Earnings* $ (0.01) $ 0.01 $ (0.02) * See page 31 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. |
 26 $(0.01) (0.01) (0.01) $0.01 -0.02 -0.01 0.00 0.01 0.02 0.03 PSEG Energy Holdings EPS Reconciliation – Q1 2011 versus Q1 2010 Q1 2011 operating earnings* Q1 2010 operating earnings* Lower gains on lease sales and Interest * See page 31 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. Investment write-off (ES&P) |
 PSEG |
 28 PSEG 2011 Operating Earnings Guidance - By Subsidiary $ millions (except EPS) 2011E 2010A PSEG Power $ 765 – $ 855 $ 1,091 PSE&G $ 495 – $ 520 $ 430 PSEG Energy Holdings $ 0 – $ 5 $ 49 Enterprise $ 5 – $ 15 $ 14 Operating Earnings* $ 1,265 – $ 1,395 $ 1,584 Earnings per Share $ 2.50 – $ 2.75 $ 3.12 * See page 32 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. |
 29 PSEG Q1 2011 – Cash Update and Financing Activities Cash position at March 31, 2011 was $900 million Retired PSEG Power’s $606 million of 7.75% Senior Notes which matured on April 15 using cash on hand Refinanced $2.1 billion of credit facilities at PSEG, Power, and PSE&G in new, 5-year facilities; PSEG credit facilities now total $4.3 billion Liquidity position at April 30, 2011 was $4.2 billion Standard & Poor’s affirmed credit ratings for PSEG, Power and PSE&G; Outlooks raised to Positive Moody’s affirmed credit ratings for PSEG, Power and PSE&G; PSE&G’s Outlook raised to Positive |
 30 PSEG Liquidity as of April 30, 2011 Expiration Total Available Company Facility Date Facility Usage Liquidity ($ Millions) PSE&G 5-year Credit Facility Apr-16 $600 $0 $600 5-Year Credit Facility (Power) Dec-12 $1,600 1 $186 $1,414 5-Year Credit Facility (Power) Apr-16 $1,000 $0 $1,000 5-Year Bilateral (Power) Sep-15 $100 $100 $0 5-year Credit Facility (PSEG) Dec-12 $500 2 $14 $486 5-year Credit Facility (PSEG) Apr-16 $500 $0 $500 Total $4,300 $4,000 $153 PSE&G ST Investment $21 Total Liquidity Available $4,174 Total Parent / Power Liquidity $3,553 1 Power Facility reduced by $75 million in 12/2011 2 PSEG Facility reduced by $23 million in 12/2011 PSEG / Power PSEG Money Pool ST Investment |
 31 Items Excluded from Income from Continuing Operations to Reconcile to Operating Earnings Please see Page 2 for an explanation of PSEG’s use of Operating Earnings as a non-GAAP financial measure and how it differs from Net Income. PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED Items Excluded from Income from Continuing Operations to Reconcile to Operating Earnings (Unaudited) Pro-forma Adjustments, net of tax 2011 2010 Earnings Impact ($ Millions) Gain (Loss) on Nuclear Decommissioning Trust (NDT) Fund Related Activity (PSEG Power) 27 $ 10 $ Gain (Loss) on Mark-to-Market (MTM) (PSEG Power) 4 49 Total Pro-forma adjustments 31 $ 59 $ Fully Diluted Average Shares Outstanding (in Millions) 507 507 Per Share Impact (Diluted) Gain (Loss) on NDT Fund Related Activity (PSEG Power) 0.05 $ 0.02 $ Gain (Loss) on MTM (PSEG Power) 0.01 0.10 Total Pro-forma adjustments 0.06 $ 0.12 $ For the Three Months Ended March 31, |
 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. PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED Reconciling Items Excluded from Continuing Operations to Compute Operating Earnings (Unaudited) Pro-forma Adjustments, net of tax 2011 2010 Earnings Impact ($ Millions) Gain (Loss) on Nuclear Decommissioning Trust (NDT) Fund Related Activity (PSEG Power) 27 $ 10 $ Gain (Loss) on Mark-to-Market (MTM) (PSEG Power) 4 49 Total Pro-forma adjustments 31 $ 59 $ Fully Diluted Average Shares Outstanding (in Millions) 507 507 Per Share Impact (Diluted) Gain (Loss) on NDT Fund Related Activity (PSEG Power) 0.05 $ 0.02 $ Gain (Loss) on MTM (PSEG Power) 0.01 0.10 Total Pro-forma adjustments 0.06 $ 0.12 $ For the Three Months Ended March 31, |