Exhibit 99.1
Public Service Enterprise Group
PSEG Earnings Conference Call
4thQuarter and Year-end 2007
February 1, 2008
Disclaimer Statement
The statements contained in this communication about our and our
subsidiaries’ future performance, including, without limitation, 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 information
currently available and on reasonable assumptions, we can give no
assurance they will be achieved. There are a number of risks and
uncertainties that could cause actual results to differ materially from the
forward-looking statements made herein. A discussion of some of these
risks and uncertainties is contained in our Annual Report on Form 10-K and
subsequent reports on Form 10-Q and Form 8-K filed with the Securities
and Exchange Commission (SEC), and available on our website:
http://www.pseg.com. 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 communication. 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 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 generally accepted accounting principles (GAAP).
Operating Earnings is a non-GAAP financial measure that differs from Net
Income because it excludes the impact of the sale of certain non-core
domestic and international assets and costs stemming from the
terminated merger agreement with Exelon Corporation. PSEG presents
Operating Earnings because management believes that it is appropriate
for investors to consider results excluding these items in addition to the
results reported in accordance with GAAP. PSEG believes that the non-
GAAP financial measure of Operating Earnings provides a consistent and
comparable measure of performance of its businesses to help
shareholders understand performance trends. This information is
not intended to be viewed as an alternative to GAAP information. The last
slide in this presentation includes a list of items excluded from Net Income
to reconcile to Operating Earnings, with a reference to that slide included
on each of the slides where the non-GAAP information appears. These
slides are only intended to be reviewed in conjunction with the oral
presentation to which they relate.
2
PSEG
2007 Q4 Review
Ralph Izzo
Chairman, President and Chief Executive Officer
Q4 2007 EPS Summary
-
($ 51)
Impact of Asset Sales
($ 182)
($ 2)
Discontinued Operations, net of tax
$ 0.54
$ 1.09
EPS from Operating Earnings
($ 47)
$ 224
Net Income
$ 135
$ 226
Income from Continuing Operations
($ 1)
-
Merger Costs
$ 136
$ 277
Operating Earnings
Q4 2006
Q4 2007
$ millions (except EPS)
* See page 32 for Items excluded from Net Income to reconcile to Operating Earnings
4
Full year 2007 Income Summary
($ 185)
($ 58)
Impact of Asset Sales
$ 60
$ 16
Discontinued Operations, net of tax
$ 3.45
$ 5.41
EPS from Operating Earnings
$ 739
$ 1,335
Net Income
$ 679
$ 1,319
Income from Continuing Operations
($ 8)
-
Merger Costs
$ 872
$ 1,377
Operating Earnings
2006
2007
$ millions (except EPS)
For the years ended December 31,
* See page 32 for Items excluded from Net Income to reconcile to Operating Earnings
5
$3.45
$5.41
$5.60 - $6.10
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
Earnings – A Year of Strong Results to be Followed by Growth
2006 Operating
Earnings*
2007 Operating
Earnings*
2008 Guidance
* See page 32 for Items excluded from Net Income to reconcile to Operating Earnings
** Percentage change in growth based on mid-point of guidance
6
PSEG — 2007: A Defining Year
• 2007 earnings at top end of guidance
• Focus on core businesses
• Resumed independent operation of nuclear
• Top decile reliability standards maintained at PSE&G
• Latin American assets sold at attractive values
• Meeting commitment to system reliability
• Transmission investment announced
• New peaking investment announced
• Addressing NJ’s clean energy goals
• Multi-faceted strategy
• Financial risk reduced with stronger balance sheet
• Debt reduced
• Cash returned to shareholders
• 10% increase in common dividend announced
7
PSEG
2007 Q4 Operating Company Review
Tom O’Flynn
Executive Vice President and Chief Financial Officer
President — PSEG Energy Holdings
Q4 Operating Earnings by Subsidiary
$ 136
(16)
(14)
64
$ 102
2006
$ 277
(20)
15
77
$ 205
2007
Operating Earnings
Per Share
$ Millions (except EPS)
(0.06)
(0.07)
Enterprise
$ 0.54
$ 1.09
PSEG
(0.05)
0.06
PSEG Energy Holdings
0.25
0.30
PSE&G
$ 0.40
$ 0.80
PSEG Power
2006
2007
For the Quarters ended December 31,
* See page 32 for Items excluded from Net Income to reconcile to Operating Earnings
9
Full Year 2007 Operating Earnings by Subsidiary
$ 872
(66)
161
262
$ 515
2006
$ 1,377
(63)
115
376
$ 949
2007
Operating Earnings
Per Share
$ Millions (except EPS)
(0.26)
(0.25)
Enterprise
$ 3.45
$ 5.41
PSEG
0.63
0.45
PSEG Energy Holdings
1.04
1.48
PSE&G
$ 2.04
$ 3.73
PSEG Power
2006
2007
For the years ended December 31,
* See page 32 for Items excluded from Net Income to reconcile to Operating Earnings
10
$0.54
$0.40
$0.05
$0.11
($0.01)
$1.09
0.00
0.50
1.00
1.50
Recontracting &
strong markets .32
BGSS .06
MTM .01
O&M .01
PSEG EPS Reconciliation – Q4 2006 versus Q4 2007
Q4 2007
operating
earnings
Power
PSE&G
Holdings
Enterprise
Q4 2006
operating
earnings
Weather .06
Rate relief .04
Volume &
demand .03
Transmission
.01
O&M (.06)
Other (.03)
Interest .03
Misc. (.04)
Global
Texas – MTM .06 &
operations .01
Effective tax rate .05
Interest expense .02
Other operations (.02)
Resources
Interest expense .02
Effective tax rate (.02)
Other (.01)
* See page 32 for Items excluded from Net Income to reconcile to Operating Earnings
11
$3.45
$1.69
$0.44
($0.18)
$0.01
$5.41
0.00
2.00
4.00
6.00
Recontracting & strong
markets 1.48
BGSS .23
Higher tax rate in 2006
.04
Depreciation, interest &
other (.03)
MTM (.02)
Shares outstanding
(.01)
PSEG EPS Reconciliation – Full Year 2006 versus Full Year 2007
2007
operating
earnings
Power
PSE&G
Holdings
Enterprise
2006
operating
earnings
Rate relief .27
Weather .14
Volume &
demand .08
Transmission &
appliance
service .03
O&M & other
(.07)
Shares
outstanding
(.01)
Interest .06
Misc. (.05)
Global
Texas – MTM (.05) &
operations (.07)
Italy (.09)
RGE – sale in 2006 (.04)
Other operations .05
Effective tax rate .02
Interest expenses .01
Other .03
Resources
Interest expense .05
Effective tax rate (.06)
Other (.02)
Holdings
Other (.01)
* See page 32 for Items excluded from Net Income to reconcile to Operating Earnings
12
PSEG Power
2007 Q4 Review
PSEG Power – Q4 2007 EPS Summary
$ 0.40
$ 0.40
$ 0.80
EPS from Operating Earnings
$ 103
$ 102
$ 205
Income from Continuing Operations
$ 103
$ 102
$ 205
Operating Earnings
$ 256
$ 1,506
$ 1,762
Operating Revenues
Variance
Q4 2006
Q4 2007
$ millions (except EPS)
$ 220
($ 220)
-
Discontinued Operations, net of tax
$ 323
($ 118)
$ 205
Net Income (Loss)
* See page 32 for Items excluded from Net Income to reconcile to Operating Earnings
14
$0.40
$0.32
$0.06
$0.02
$0.80
0.00
0.30
0.60
0.90
Recontracting &
strong markets
PSEG Power EPS Reconciliation – Q4 2006 versus Q4 2007
Q4 2007
operating
earnings
Q4 2006
operating
earnings
BGSS
MTM .01
O&M .01
* See page 32 for Items excluded from Net Income to reconcile to Operating Earnings
15
Prices and Operations Yield Margin Increase
$0
$20
$40
$60
Q4 2006
Q4 2007
PSEG Power Realized Gross Margin
($/MWh)
$38
+34%
$51
$0
$20
$40
$60
2006
2007
$38
+32%
$50
16
PSEG Power – Generation Measures
0
5,000
10,000
15,000
2006
2007
PSEG Power – Generation (GWh)
4th Quarter
Years ended December 31,
7,343
3,779
1,924
13,046
12,391
2,767
3,083
6,541
Total Nuclear
Total Coal*
Total Oil &
Natural Gas
0
20,000
40,000
60,000
29,108
2006
2007
14,841
9,190
53,139
11,819
53,196
13,014
28,363
17
* Includes figures for Pumped Storage; excludes Lawrenceburg
RPM Capacity Auction – Transparent Pricing Model
• Auctions scheduled in the next year provide price certainty through the
2011-2012 delivery year.
May 2008
2011 – 2012
Annual base auction in May of each
subsequent year
January 2008
2010 – 2011
Auction Date
Planning Year
• RPM has had an influence on the market – forced outage rates
declining, retirements slowing, more DSM bid into market.
• PSEG Power is taking steps to add 300 – 400MW ($250 - $350 million)
of new gas-fired peaking capacity that may be bid into PJM’s Reliability
Pricing Model (RPM) base residual auctions in 2008.
• The final decision to proceed with construction will take into account capital
and interconnection costs, available siting and potential for
environmental limitations.
18
PSEG Power – Q4 Highlights
Operations
ü PSEG Nuclear resumed independent operation of Salem and Hope
Creek at year-end
ü NRC approval of Hope Creek 125MW uprate expected by July 1
ü Overall generation output – Q4 decline; full year at record levels
ü Nuclear down 11%
ü Fossil up 2.6%
Markets
ü Improved pricing for energy in PJM, New York and New England
ü Benefiting from roll-off of below market contracts
Financial
ü Construction of back-end technology on Fossil units - on time and on
budget
ü $250 million dividend paid to Enterprise
19
PSE&G
2007 Q4 Review
PSE&G – Q4 2007 EPS Summary
$ 13
$ 64
$ 77
Operating Earnings
$ 0.05
$ 0.25
$ 0.30
EPS from Operating Earnings
$ 13
$ 64
$ 77
Income from Continuing Operations/
Net Income
$ 338
$ 1,815
$ 2,153
Operating Revenues
Variance
Q4 2006
Q4 2007
$ millions (except EPS)
21
$0.25
$0.06
$0.04
$0.03
($0.08)
$0.30
0.00
0.10
0.20
0.30
0.40
0.50
Weather
Gas .04
Electric .02
PSE&G EPS Reconciliation – Q4 2006 versus Q4 2007
Q4 2007
operating
earnings
Q4 2006
operating
earnings
Rate relief
Gas .02
Electric .02
Other
Transmission .01
O&M (.06)
Miscellaneous (.03)
Demand
Gas .01
Electric .02
22
PSE&G – Q4 Highlights
Operations
ü Sales growth reflects:
• Weather normalized growth from all customer classes – annual increase of 1.7%
• Weather – more normal versus less than optimal conditions
ü Re-staffing of organization nearly complete – 2% increase for year
Regulatory
ü NJ enacts Regional Greenhouse Gas Initiative in January 2008
ü PSE&G files initiatives with NJ BPU to reduce carbon, explore AMI
ü PSE&G files for incentives on new transmission capital investment
ü Awaiting BPU response to $100M solar initiative
ü NJ Energy Master Plan – draft proposal expected in Spring 2008
Financial
ü $100 million dividend paid to Enterprise
23
PSEG Energy Holdings
2007 Q4 Review
PSEG Energy Holdings – Q4 2007 EPS Summary
($ 23)
-
($ 23)
Sale of Chilquinta & Luz del Sur
0.11
($ 0.05)
$ 0.06
EPS from Operating Earnings
($ 40)
$ 38
($ 2)
Discontinued Operations, net of tax
($ 22)
($ 14)
($ 36)
Income (Loss) from Continuing Operations
($ 28)
-
($ 28)
Bond Redemption Costs
$ 29
($ 14)
$ 15
Operating Earnings
($ 62)
$ 24
($ 38)
Net Income
Variance
Q4 2006
Q4 2007
$ millions (except EPS)
* See page 32 for Items excluded from Net Income to reconcile to Operating Earnings
25
($0.05)
$0.07
$0.05
$0.02
Global
Resources
($0.02)
$0.02
($0.02)
($0.01)
$0.06
-0.07
-0.03
0.01
0.05
0.09
Effective tax
rate
PSEG Energy Holdings EPS Reconciliation – Q4 2006 versus Q4 2007
Q4 2007
operating
earnings
Texas – MTM
.06 & lower
maintenance
expense .01
Q4 2006
operating
earnings
Interest
expense
Other
operations
Interest
expense
Effective tax
rate
Other
* See page 32 for Items excluded from Net Income to reconcile to Operating Earnings
26
PSEG Energy Holdings – Q4 Highlights
Operations
ü Continued strong operations in Texas and other domestic facilities
Markets
ü Valuations remain strong for international assets
ü Texas near-term spark spreads lower
Financial
ü Electroandes closed in October for $284 million; Chilquinta and Luz
del Sur sale closed in December for $685 million
ü Discontinued operations for SAESA with intent to sell
ü Called $400 million of Holdings 10% debt maturing in 2009
ü Filed with SEC to de-register Holdings
ü $210 million dividend paid to Enterprise
27
PSEG
2007 Q4 Review
Summary of Q4 Fundamental Factors
Operations
ü The PSEG organization has maintained its focus on safe and reliable operations
ü PSEG Nuclear resumed independent operation of Salem and Hope Creek at
year-end.
ü Significant re-staffing effort nearing completion
Markets
ü Energy markets responding to tight supply conditions
ü Weather normalized demand for electric and gas in line with expectations
ü International asset values remain strong
Financials
ü Strong cash flow supported a reduction in debt at Enterprise ($709 million) and
call of $400 million at Holdings
ü Strength in earnings and cash flow supported a 10% increase in the common
dividend effective in Q1 2008
29
Cash Outlook – Forecast Intact
We remain comfortable with improvement in cash
Operating income exceeding expectations
Successful asset sales
Planned rate mechanisms for transmission investments
would provide cash recovery during construction
Excess cash between $2.0 billion and $2.5 billion will be
available through 2011
Excess cash expected to be used to retire debt and
further strengthen the balance sheet, invest in target
markets, and/or share repurchase
30
2008 Operating Earnings Guidance – Continued Growth
$ 5.41
$ 1,377
($ 63)
$ 115
$ 376
$ 949
2007A
($ 15) - ($ 10)
Parent
$ 5.60 - $ 6.10
Earnings per Share
$ 1,420 - $ 1,560
Operating Earnings
$ 45 - $ 60
PSEG Energy Holdings
$ 350 - $ 370
PSE&G
$ 1,040 - $ 1,140
PSEG Power
2008E
$ millions (except EPS)
31
Items Excluded from Net Income to Reconcile to Operating Earnings
Please see Slide 2 for an explanation of PSEG’s use of Operating Earnings as a non-GAAP financial measure and how
it differs from Net Income.
$ Millions (except EPS)
2007
2006
2007
2006
2007
2006
2007
2006
Merger related Costs:
PSE&G
-
$
-
$
-
$
(1)
$
Enterprise
-
(1)
-
(7)
Total Merger related Costs
-
$
(1)
$
-
$
(8)
$
-
$
-
$
-
$
(0.03)
$
Impact of Asset Sales:
Loss on Sale of RGE
-
-
-
(178)
-
$
-
$
-
$
(0.70)
$
Chilquinta & Luz Del Sur
(23)
-
(23)
-
(0.09)
-
(0.09)
-
Write down of Turboven
-
-
(7)
-
-
-
(0.03)
-
Premium on bond redemption
(28)
-
(28)
(7)
(0.11)
-
(0.11)
(0.03)
Total Impact of Asset Sales
(51)
$
-
$
(58)
$
(185)
$
(0.20)
$
-
$
(0.23)
$
(0.73)
$
Discontinued Operations:
Power - Lawrenceburg
-
$
(220)
$
(8)
$
(239)
$
-
$
(0.87)
$
(0.03)
$
(0.95)
$
Holdings:
SAESA
(69)
32
(33)
57
(0.27)
0.12
(0.13)
0.23
Electroandes
67
6
57
16
0.26
0.03
0.22
0.06
Elcho and Skawina
-
-
-
226
-
-
-
0.90
Total Holdings
(2)
$
38
$
24
$
299
$
(0.01)
$
0.15
$
0.09
$
1.19
$
Total Discontinued Operations
(2)
$
(182)
$
16
$
60
$
(0.01)
$
(0.72)
$
0.06
$
0.24
$
Quarters Ended Dec. 31,
Years Ended Dec. 31,
Impact to PSEG EPS
Quarters Ended Dec. 31,
Years Ended Dec. 31,
32