![]() Public Service Enterprise Group PSEG Earnings Conference Call 4 th Quarter and Year-end 2009 February 18, 2010 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 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 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 located on a multi-unit site 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 commercially reasonable terms 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 or unforeseen cost escalations in our construction and development activities. • Adverse performance of our decommissioning and defined benefit plan trust fund investments, 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. |
![]() 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 2009 Q4 Review Ralph Izzo Chairman, President and Chief Executive Officer |
![]() 4 Q4 2009 Earnings Summary (3) - Discontinued Operations, Net of Tax $ 0.62 $ 0.62 EPS from Operating Earnings* 234 349 Net Income 237 349 Income from Continuing Operations (76) 34 Reconciling Items, Net of Tax $ 313 $ 315 Operating Earnings 2008 2009 $ millions (except EPS) Quarter ended December 31, * See page 32 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. |
![]() 5 Full-year 2009 Earnings Summary 205 - Discontinued Operations, Net of Tax $ 3.03 $ 3.12 EPS from Operating Earnings* 1,188 1,592 Net Income 983 1,592 Income from Continuing Operations (559) 13 Reconciling Items, Net of Tax $ 1,542 $ 1,579 Operating Earnings 2008 2009 $ millions (except EPS) For the twelve months ended December 31, * See page 32 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. |
![]() 6 PSEG – 2009: Balanced asset mix met market’s challenges 2009 earnings within guidance Focused on operational excellence Record production from nuclear and combined cycle fleet Reliability standards maintained at PSE&G Ownership of Texas assets transferred to Power O&M challenge met by employees Foundation laid for future Regulatory approvals in 2009 for $1.4 billion of investments in solar, infrastructure and energy efficiency BPU approval for $750 million investment in Susquehanna-Roseland transmission line Environmental upgrades at generation units to be completed in 2010 Financial position strengthened Lease terminations cut related tax liability in half Long-term debt reduced Dividend increased for seventh consecutive year |
![]() 7 2008 Operating Earnings* 2009 Operating Earnings* 2010 Guidance $3.00 - $3.25 PSEG – Introducing 2010 Guidance $3.03 * See page 32 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. $3.12 |
![]() 8 PSEG – Meeting Challenges Achieving earnings targets Enhancing operational efficiency with a focus on achieving top quartile performance across the enterprise Investing in areas with attractive risk-adjusted returns Sustaining a strong balance sheet Providing an above average return through our common dividend |
![]() PSEG 2009 Q4 Operating Company Review Caroline Dorsa Executive Vice President and Chief Financial Officer |
![]() 10 Q4 Operating Earnings by Subsidiary $ 313 (10) 1 76 $ 246 2008 $ 315 (7) 12 68 $ 242 2009 Operating Earnings Earnings per Share (0.02) (0.01) Enterprise $ 0.62 $ 0.62 Operating Earnings* - 0.03 PSEG Energy Holdings 0.15 0.13 PSE&G $ 0.49 $ 0.47 PSEG Power 2008 2009 $ millions (except EPS) Quarter ended December 31, * See page 32 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. |
![]() 11 Full-year 2009 Operating Earnings by Subsidiary $ 1,542 (24) 36 360 $ 1,170 2008 $ 1,579 10 43 321 $ 1,205 2009 Operating Earnings Earnings per Share (0.05) 0.02 Enterprise 3.03 $ 3.12 Operating Earnings* 0.07 0.09 PSEG Energy Holdings 0.71 0.63 PSE&G $ 2.30 $ 2.38 PSEG Power 2008 2009 $ millions (except EPS) For the year ended December 31, * See page 32 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. |
![]() 12 $.62 (.02) (.02) .03 .01 $.62 0.00 0.35 0.70 PSEG EPS Reconciliation – Q4 2009 versus Q4 2008 Q4 2009 operating earnings* Q4 2008 operating earnings* Interest Lower Pricing Offset by Lower Fuel Expense (.02) BGSS and Wholesale Power Trading .03 O&M and Other (.03) PSEG Power Weather (.01) O&M (.03) Transmission and Appliance Service .01 Taxes and Other .01 PSE&G PSEG Energy Holdings Enterprise 2009 Lease Sales .02 O&M, Interest and Other .01 * See page 32 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. |
![]() 13 $3.03 .08 (.08) .02 .07 $3.12 0.00 0.65 1.30 1.95 2.60 3.25 PSEG EPS Reconciliation – Full-year 2009 versus Full- year 2008 2009 operating earnings* 2008 operating earnings* Interest .03 Intercompany Transaction Eliminated in Consolidation .04 Recontracting and Lower Fuel Expense .04 BGSS and Wholesale Power Trading .01 O&M .03 Interest .03 Depreciation and Other (.03) PSEG Power Margin – Gas, Electric, Transmission and Appliance Service .04 Weather (.01) O&M (.06) Depreciation (.03) Taxes (.03) Interest .01 PSE&G PSEG Energy Holdings Enterprise 2009 Lease Sales .13 Lease Income (.04) Effective Tax Rate and Other (.03) Intercompany Transaction Eliminated in Consolidation (.04) * See page 32 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. |
![]() PSEG Power 2009 Q4 Review |
![]() 15 PSEG Power – Q4 2009 EPS Summary 11 (14) (3) Mark-to-Market, Net of Tax 57 (49) 8 NDT Funds Related Activity, Net of Tax ($ 256) $ 2,008 $ 1,752 Operating Revenues ($ 0.02) $ 0.49 $ 0.47 EPS from Operating Earnings* 64 183 247 Net Income (4) 246 242 Operating Earnings Variance Q4 2008 Q4 2009 $ millions (except EPS) * See page 32 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. |
![]() 16 $.47 (.03) .03 (.02) $.49 0.00 0.25 0.50 0.75 Lower Pricing Offset by Lower Fuel Expense PSEG Power EPS Reconciliation – Q4 2009 versus Q4 2008 Q4 2009 operating earnings* Q4 2008 operating earnings* BGSS and Wholesale Power Trading * See page 32 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. O&M and Other |
![]() 17 29,284 30,283 12,918 8,899 13,090 12,982 7,866 7,644 0 32,500 65,000 2008 2009 PSEG Power – Generation Measures 7,360 7,531 2,642 2,509 2,516 3,547 1,784 1,688 0 8,750 17,500 2008 2009 Quarter ended December 31, Total Nuclear Total Coal* Oil & Natural Gas – excluding Texas * Includes figures for Pumped Storage PSEG Power – Generation (GWh) 14,206 15,371 Twelve months ended December 31, 63,158 59,808 Oil & Natural Gas - Texas |
![]() 18 PSEG Power – Fuel Costs 240 279 Oil & Gas* 97 92 Coal 24.53 28.44 $ / MWh 15,371 14,206 Total Generation (GWh) 377 404 Total Fuel Cost 40 33 Nuclear Total Fossil ($ millions) 337 371 2009 2008 Quarter ended December 31, PSEG Power – Fuel Costs 882 1,645 Oil & Gas* 336 423 Coal 22.87 34.79 $ / MWh 59,808 63,158 Total Generation (GWh) 1,368 2,197 Total Fuel Cost 150 129 Nuclear Total Fossil ($ millions) 1,218 2,068 2009 2008 Twelve months ended December 31, * Includes Texas. |
![]() 19 PSEG Power – Gross Margin Performance $0 $25 $50 $75 2008 2009 $0 $25 $50 $75 2008 2009 $55 $51 Quarter ended December 31, Twelve months ended December 31, $55 $60 PJM total gross margin was sustained by lower costs to serve, including strong performance of our nuclear fleet, which offset lower overall demand Low gas pricing resulted in gas displacing coal-fired generation Low spark spreads, partially offset by increase in generation. $13 Texas Regional Performance $17 $18 $657 Q4 Gross Margin ($M) Q4 Performance Region Low spark spreads, partially offset by increase in generation. New York Output of Bridgeport Harbor hurt by low energy prices and high cost of coal. New England Q4 contribution to gross margin ($M) increased 3.5% versus year ago; strong nuclear production, higher contracted prices offset impact of customer migration. PJM PSEG Power Gross Margin ($/MWh)* * Excludes Texas. Gross margin for Texas was $27M and $13M in Q4 2008 and Q4 2009, respectively. For full year, Texas gross margin was $207M and $113 for 2008 and 2009, respectively. |
![]() 20 PSEG Power – Q4 Operating Highlights Q4 output + 8%; full-year decline of 5% Q4 nuclear capacity factor at 92.0%; full-year at 93.4% Combined cycle units operated at record levels Higher NJ coal dispatch in Q4 Operations Regulatory and Market Environment Financial BGS auction priced at $95.77/MWh versus $98.88/MWh for expiring contract Poor economy hurt Q4 earnings ($0.01 per share); customer migration also hurt Q4 earnings ($0.02 per share) 90 - 95% of 2010 anticipated coal and nuclear output hedged following BGS auction Ownership of Texas assets transferred to Power on October 1; financial statements for 2009 and 2008 reflect transfer Power’s EBITDA and earnings in line with forecast |
![]() PSE&G 2009 Q4 Review |
![]() 22 PSE&G – Q4 2009 Earnings Summary (337) 2,065 1,728 Total Operating Expenses (2) 35 33 Taxes Other than Income Taxes Operating Expenses (380) 1,545 1,165 Energy Costs 39 345 384 Operation & Maintenance 6 140 146 Depreciation & Amortization ($ 0.02) $ 0.15 $ 0.13 EPS from Operating Earnings* (8) 76 68 Operating Earnings / Net Income ($ 366) $ 2,288 $ 1,922 Operating Revenues Variance Q4 2008 Q4 2009 $ millions (except EPS) * See page 32 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. |
![]() 23 $.13 .01 (.03) .01 (.01) $.15 0.00 0.10 0.20 PSE&G EPS Reconciliation – Q4 2009 versus Q4 2008 Q4 2009 operating earnings* Q4 2008 operating earnings* Weather Taxes and Other * See page 32 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. O&M Transmission and Appliance Service |
![]() 24 PSE&G – Q4 Operating Highlights NJ BPU approved construction of the $750 million Susquehanna-Roseland 500kV transmission line; in-service date of 2012 Electric and gas rate filing updated to reflect actual results for 2009 test year Electric increase ($148 million); gas increase ($74 million) Leadership of NJ BPU changed with election of Chris Christie (R) as governor PSE&G issued $250 million of 30-year secured debt at 5.375% PSE&G’s 2009 operating earnings provided an earned return on equity of 8.3% Operations Regulatory and Market Environment Financial Decline in employment having impact on sales growth Non-pension related O&M remains under control Agreements with majority of union employees will contain O&M growth in 2010 Focused on maintaining reliability |
![]() PSEG Energy Holdings 2009 Q4 Review |
![]() 26 PSEG Energy Holdings – Q4 2009 Earnings Summary 3 (3) -- Discontinued Operations, net of tax 13 (13) -- Asset Impairments 29 -- 29 Net Reversal of Lease Transaction Reserves $0.03 -- $ 0.03 EPS from Operating Earnings* $ 56 ($ 15) $ 41 Net Income (Loss) $ 11 $ 1 $ 12 Operating Earnings Variance Q4 2008 Q4 2009 $ millions (except EPS) * See page 32 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. |
![]() 27 .03 .01 .02 $.00 0.00 0.05 PSEG Energy Holdings EPS Reconciliation – Q4 2009 versus Q4 2008 Q4 2009 operating earnings* Q4 2008 operating earnings* 2009 Lease Sales * See page 32 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. O&M, Interest and Other |
![]() 28 PSEG Energy Holdings – Q4 Operating Highlights Financial Termination of two leases in Q4 brought total number of leases terminated to 13, reducing potential tax liability at year-end to $660 million Reserve for IRS interest reduced in Q4 2009 based on reassessment of risk following court decision in case with facts similar to ours Ownership of Texas gas-fired generating assets transferred to Power on October 1, 2009 |
![]() PSEG |
![]() 30 PSEG Financial Highlights 2010 operating earnings guidance of $3.00 - $3.25 per share Guidance by operating company will be provided following conclusion of PSE&G distribution rate case 2009 earnings included $0.13 per share of gains on lease terminations offsetting $0.08 per share negative impact on earnings from contraction in economic activity and cooler than normal weather Financial risk associated with lease investments reduced to approximately $660 million Financial position strengthened Parent level long-term debt eliminated Debt:capital ratio at 45% at year-end 2009 versus 49% at end of 2008 |
![]() 31 PSEG Liquidity as of February 12, 2010 Expiration Total Primary Usage at Available Company Facility Date Facility Purpose 2/12/2010 2/12/2010 PSEG 5-year Credit Facility Dec-12 $1,000 1 CP Support/Funding/LCs $288 $712 Uncommitted Bilateral Agreement N/A N/A Funding 0 N/A Power 5-Year Credit Facility Dec-12 1,600 2 Funding/LCs 203 1,397 2-Year Credit Facility Jul-11 350 Funding 0 350 Bilateral Credit Facility Mar-10 100 Funding/LCs 39 61 PSE&G 5-year Credit Facility Jun-12 600 3 CP Support/Funding/LCs 0 600 Uncommitted Bilateral N/A N/A Funding 0 N/A Total $3,650 $3,120 1 PSEG Facility reduces by $47 million in 12/2011 2 Power Facility reduces by $75 million in 12/2011 3 PSE&G Facility reduces by $28 million in 12/2011 |
![]() 32 Items Excluded from Income from Continuing Operations to Reconcile to Operating Earnings Please see Page 2 for an explanation of PSEG’s use of Operating Earnings as a non-GAAP financial measure and how it differs from Net Income. Pro-forma Adjustments, net of tax 2009 2008 2009 2008 Earnings Impact ($ Millions) Gain (Loss) on Nuclear Decommissioning Trust (NDT) Fund Related Activity 8 $ (49) $ 9 $ (71) $ Gain (Loss) on Mark-to-Market (MTM) (3) (14) (25) 16 Lease Transaction Reserves - - - (490) Net Reversal of Lease Transaction Reserves 29 - 29 - Asset Impairments - (13) - (13) Premium on Bond Redemption - - - (1) Total Pro-forma adjustments 34 $ (76) $ 13 $ (559) $ Fully Diluted Average Shares Outstanding (in Millions) 507 507 507 508 Per Share Impact (Diluted) Gain (Loss) on Nuclear Decommissioning Trust (NDT) Fund Related Activity 0.02 $ (0.10) $ 0.02 $ (0.14) $ Gain (Loss) on Mark-to-Market (MTM) - (0.03) (0.05) 0.03 Lease Transaction Reserves - - - (0.96) Net Reversal of Lease Transaction Reserves 0.05 - 0.05 - Asset Impairments - (0.03) - (0.03) Premium on Bond Redemption - - - - Total Pro-forma adjustments 0.07 $ (0.16) $ 0.02 $ (1.10) $ For the Quarters Ended For the Twelve Months Ended December 31, PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED Reconciling Items Excluded from Continuing Operations to Compute Operating Earnings (Unaudited) December 31, |