Exhibit 99
March 17, 1999
PSE&G AND OTHER PARTIES FILE PROPOSED STIPULATION
OF RESTRUCTURING CASE BEFORE THE BPU
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Public Service Electric and Gas Company (PSE&G) and other parties today
filed a proposed stipulation of the company's restructuring case before the New
Jersey Board of Public Utilities (BPU).
The sweeping proposal calls for reductions of up to 13.9% from current
rates over a four-year transition period and allows PSE&G to recover $3.075
billion of its generation-related stranded costs, including $2.475 billion
through securitization.
"We believe this proposed stipulation represents fair and equitable
treatment for all stakeholders which include customers, shareholders and
employees." said PSE&G president Lawrence R. Codey. "It sets the framework for a
competitive marketplace to begin on August 1, as prescribed by recently enacted
legislation that permits customers to choose their energy provider."
Codey said that he expects the BPU to review the proposed stipulation
and act on PSE&G's restructuring case within the next several weeks.
The other parties to the stipulation are: Independent Energy Producers
of New Jersey (IEPNJ), Enron, Tosco/Bayway, Natural Resource Defense Council
(NRDC), New Jersey Commercial Users (NJCU), New Jersey Transit Corporation (NJT)
and International Brotherhood of Electrical Workers Local 94 (IBEW 94).
The key elements of the proposal, which is designed to resolve all
company-specific and non-generic issues related to energy restructuring, are as
follows:
o A four-year transition period would begin August 1, 1999 and end July 31,
2003. During this transition period, rates would be capped for all
customers who choose to remain with PSE&G.
o Customers would receive the following reductions from current rates through
July 2003 according to this schedule:
o August 1, 1999 - 5%.
o January 1, 2000 - increasing to 7% depending on timing of securitization.
o August 1, 2001 - increasing to 8.25%.
o August 1, 2002 - increasing to 13.9% average (10% off rates in effect in
April 1997).
All rate reductions after the initial 5% reduction would be contingent on
PSE&G's implementing a BPU order providing for securitization of $2.475
billion of generation-related stranded costs, plus transaction costs, and
establishing a securitization bond charge under New Jersey's new energy
competition law. Securitization will result in savings for all customers.
Savings that may result for customers who receive electric generation
service from another supplier at a price less than shopping credits that
have been established would be above and beyond the guaranteed rate
reductions.
o Shopping credits would be established for four years on a per kWh basis and
would include cost of energy, capacity, transmission, ancillary services,
losses, taxes and a retail adder. The average annual credits would be as
follows:
o 1999: 4.95 cents
o 2000: 5.03 cents
o 2001: 5.06 cents
o 2002: 5.10 cents
o 2003: 5.10 cents
The shopping credits would be developed by rate schedule offering
residential customers the largest credits (5.71 cents per kWh in 1999).
Large industrial customers would receive the smallest (4.12 cents per kWh
in 1999).
o Generation-related stranded costs would be established at $3.3 billion, of
which $2.475 billion plus transaction costs of up to $125 million would be
securitized. As a result of negotiation, the company would reduce the
unsecuritized portion by $225 million. The company would then have the
opportunity to recover the remaining $600 million over the four-year
transition period. The $600 million would be recovered by various means,
including an explicit market transition charge (MTC). There would be a
reconciliation mechanism to insure that the company does not recover more
than $600 million.
o PSE&G would be allowed to issue a total of up to $2.6 billion of transition
bonds to be amortized over a 15-year period. A transition bond charge would
be collected from customers via a per kWh or wires charge. This would be
trued-up at least annually under the new law. Net proceeds from this
securitization of stranded costs would be used to refinance or retire debt
and/or equity. The resulting savings from this bond financing must be
returned to customers.
o PSE&G would be required to separate its transmission and distribution
assets from its generation assets. Its generation-related assets would be
transferred to a separate generation company (Genco) to be owned by PSE&G's
parent holding company, Public Service Enterprise Group. Given the
resolution of stranded costs, the proposed transfer price of $2.4 billion,
intended to ensure that PSE&G receives full and fair recompense for these
assets, was established by taking PSE&G's net book investment of $5.1
billion less $3.3 billion of its stranded costs plus $600 million of MTC.
Genco would become an exempt wholesale generator (EWG) upon receipt of
Federal Energy Regulatory Commission (FERC) approval. If the generation
related assets are sold during the four-year transition period, any gains
would be shared equally between customers and shareholders, subject to BPU
approval.
o Through a contract with Genco, PSE&G would provide basic generation service
(BGS) for the first three years and would not promote it as a competitive
alternative. BGS would be competitively bid for the fourth year and
annually thereafter.
o PSE&G would be authorized to amortize an excess electric distribution
depreciation reserve in the amount of $568.7 million over the period of
January 1, 2000 to July 31, 2003. Amortization amounts would be $125
million in the year 2000, $125 million in the year 2001, $135 million in
the year 2002, and $183.7 million in the year 2003.
o Societal benefit costs (SBC) and excess costs associated with non-utility
generation would be collected through clause mechanisms; deferral
accounting would be used during the transition period and the clauses would
be reset annually thereafter. The clause mechanism for the excess
non-utility generation costs (NTC) would be initially set at the 1999 level
of $183 million annually. The clause mechanism for societal benefits would
include costs related to: 1) social programs which include the universal
service fund; 2) nuclear plant decommissioning; 3) demand side management
(DSM) program; 4) manufactured gas plant remediation and 5) consumer
education.
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This news release includes forward-looking statements. Although Public
Service Enterprise Group Incorporated and its principal subsidiary, Public
Service Electric and Gas Company, believe that their expectations are based
on reasonable assumptions, they can give no assurance that these
expectations will be achieved. For further information, please refer to
their reports filed with the Securities and Exchange Commission. These
documents address company business, industry issues and other factors that
could cause actual results to differ materially from those indicated in
this release.