PSEG Announces 2010 First Quarter Results; $0.97 Per Share From Net Income; $0.84 Per Share of Operating Earnings

NEWARK, N.J., May 5 /PRNewswire-FirstCall/ -- Public Service Enterprise Group (PSEG) (NYSE: PEG) reported today First Quarter 2010 Net Income and Income from Continuing Operations of $491 million or $0.97 per share as compared to $444 million or $0.88 per share for the First Quarter of 2009.  Operating Earnings for the first quarter of 2010 were $425 million or $0.84 per share compared to the First Quarter of 2009 Operating Earnings of $482 million or $0.95 per share.

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.  Operating Earnings exclude the impact of returns/(losses) associated with NDT and MTM accounting.  The table below provides a reconciliation of PSEG's Net Income to Operating Earnings (a non-GAAP measure) for the first quarter.  See Attachment 10 for a complete list of items excluded from Income from Continuing Operations in the determination of Operating Earnings.

"The economy has shown signs of stabilizing, but pricing in our markets remains difficult," said Ralph Izzo, chairman, president and chief executive officer of PSEG. He went on to say, "Our results were also hurt by a devastating rain and wind storm which struck New Jersey in March.  However, the exemplary performance of our employees—along with aid from other utilities—resulted in customers returning to service within a week.  Our ongoing focus on operational excellence, and our commitment to maintaining financial strength should support the long-term needs of our customers and shareholders in an evolving energy market.  This focus continues to support our operating earnings guidance for 2010 of $3.00-$3.25 per share."

Operating Earnings Review and Outlook by Operating Subsidiary

See Attachment 5 for detail regarding the quarter-over-quarter reconciliations for each of PSEG's businesses.

PSEG Power

PSEG Power reported operating earnings of $298 million ($0.59 per share) for the first quarter of 2010 compared with operating earnings of $352 million ($0.69 per share) for the first quarter of 2009. PSEG Power's operating earnings for 2009 have been adjusted to reflect the inclusion of the results for the Texas gas-fired generating assets transferred from PSEG Energy Holdings during the fourth quarter of last year.

PSEG Power's results in the first quarter of 2010 were affected by weak power prices which more than offset a 7% increase in volume.  The reduction in prices reduced Power's quarter-over-quarter earnings by $0.05 per share.  This impact from lower pricing includes the effect of customer migration from BGS, which saw a slight increase over levels experienced in the fourth quarter of 2009.  Customer migration away from BGS amounted to $0.01 per share.  A decline in gas prices and volumes associated with BGSS and other trading related activity reduced Power's earnings during the quarter by $0.04 per share.  Earnings comparisons were also hurt by an increase in O&M associated with planned major maintenance programs in Texas and New York which reduced earnings by $0.02 per share.  A quarter-over-quarter decline in depreciation and financing costs improved Power's earnings comparisons by $0.03 per share.  Results were also affected by a one-time increase in taxes associated with new health care legislation enacted in March 2010 which reduced earnings by $0.02 per share.

The nuclear fleet continued its strong performance.  The nuclear generation operated by PSEG Power performed at an average capacity factor of 97.2% during the quarter; including PSEG Power's 50% interest in the Peach Bottom units, the fleet operated at an average capacity factor during the quarter of 97.3%.  Even though weather for the quarter was warmer than normal, a combination of cold weather and higher pricing in the months of January and February supported an increase in generation from the coal-fired fleet which operated at an average capacity factor during the quarter of 57%.  The combined cycle fleet benefited from market opportunities, operating at an average capacity factor of 45% during the quarter versus a 35% capacity factor during the year ago quarter.

PSE&G

PSE&G reported operating earnings of $117 million ($0.23 per share) for the first quarter of 2010 compared with operating earnings of $123 million ($0.24 per share) for the first quarter of 2009.

The results for the quarter were affected by several factors.  Warmer than normal weather during the quarter in contrast to colder than normal weather experienced in 2009's first quarter reduced the demand for gas heating, and lowered quarter-over-quarter earnings by $0.02 per share.  Heating Degree Days in the quarter were 3.8% below normal and 10.5% below 2009's first quarter.  This decline in demand was partially offset by an increase in transmission revenues which added $0.01 per share.  An improvement in demand related margin on electric sales to the commercial sector added $0.01 per share. Weather-normalized electric sales were flat versus year ago levels as a slight increase in sales to residential customers was offset by a small decline in sales to commercial and industrial customers.  The company experienced several storms during the quarter including extreme weather in March, resulting in an increase in operating and maintenance expense of $0.02 per share.

PSE&G continues to await a decision on its request to increase electric ($139.8 million) and gas ($64.4 million) rates for a total increase in revenue of $204 million. The company's request has been adjusted from its original request for an increase in revenue of $239 million. A decision is anticipated by mid-year.

PSE&G received the New Jersey BPU's written order in late April approving the Susquehanna-Roseland transmission line.  Subject to obtaining certain other necessary approvals, the company plans to begin construction of the line this summer between Hopatcong Borough and Roseland Township.

PSEG Energy Holdings

PSEG Energy Holdings reported operating earnings of $7 million ($0.01 per share) for the first quarter of 2010 versus operating earnings of $11 million ($0.02 per share) during the first quarter of 2009.  The results for 2009 have been adjusted to reflect the transfer of the Texas gas-fired generating assets to PSEG Power during the fourth quarter of 2009.

The decline in operating earnings for the quarter reflects lower project earnings and lower gains on lease sales which together reduced quarter over quarter earnings by $0.01 per share.

Financings

PSE&G and PSEG Power completed a number of financings during the quarter which had the net effect of reducing the cost of financing for PSEG Power and extending out the maturity schedule of both companies' long-term debt.

The following attachments can be found on www.pseg.com:

Attachment 1 - Operating Earnings and Per Share Results by Subsidiary

Attachment 2 - Consolidating Statements of Operations

Attachment 3 - Capitalization Schedule

Attachment 4 - Condensed Consolidated Statements of Cash Flows

Attachment 5 - Quarter-over-Quarter EPS Reconciliation

Attachment 6 - Generation Measures

Attachment 7 - Retail Sales and Revenues

Attachment 8 - Retail Sales and Revenues

Attachment 9 - Statistical Measures

Attachment 10 - Reconciling Items Excluded from Continuing Operations to Compute Operating Earnings

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.

Public Service Enterprise Group (NYSE: PEG) is a publicly traded diversified energy company with annual revenues of more than $12 billion, and three principal subsidiaries: PSEG Power, Public Service Electric and Gas Company (PSE&G) and PSEG Energy Holdings.  

SOURCE Public Service Enterprise Group (PSEG)

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