PSEG Announces 2012 Results

Thu Feb 21, 2013 7:45am EST

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Operating Earnings of $2.44 Per Share; Earnings from Continuing Operations of
$2.51 Per Share
NEWARK, N.J.,  Feb. 21, 2013  /PRNewswire/ -- Public Service Enterprise Group
(PSEG) reported today 2012 Income from Continuing Operations and Net Income of 
$1,275 million  or  $2.51  per share as compared to Income from Continuing
Operations of  $1,407 million, or  $2.77  per share for 2011.  PSEG reported Net
Income for 2011 of  $1,503 million, or  $2.96  per share.  Operating Earnings
for the year 2012 were  $1,236 million  or  $2.44  per share compared to 2011
Operating Earnings of  $1,389 million  or  $2.74  per share.  

PSEG also reported Income from Continuing Operations and Net Income for the
fourth quarter of 2012 of  $224 million, or  $0.44  per share.  This compares to
fourth quarter 2011 Income from Continuing Operations of  $360 million, or 
$0.71  per share.  Operating Earnings for the fourth quarter of 2012 were  $207
million, or  $0.41  per share compared to fourth quarter 2011 Operating Earnings
of  $237 million, or  $0.47  per share.  

"The past year was one of significant accomplishment. We reported results for
the year at the upper end of guidance, and we managed to do so despite the
effects of continued low energy prices and Superstorm Sandy," said  Ralph Izzo,
chairman, president and chief executive officer. He went on to say "these strong
results reflect our employees' focus on operational excellence, the fuel
flexibility of our generating fleet and the returns on our investment programs
at PSE&G.  Superstorm Sandy challenged us more than any other natural disaster
in PSEG's 109-year history. We restored service to more than 2.1 million
customers in a two week period.  The damage created by this latest storm has
also challenged us to review and expand our investment program to pursue
measures targeted at preventing a similar level of storm related damage in the
future. We recently filed a proposal at the NJ Board of Public Utilities (BPU)
that calls for spending up to  $3.9 billion  over 10 years.  In addition, we
have proposed spending on transmission projects amounting to approximately  $1.5
billion  over the 10-year period.  Our proposed investments are designed to
protect our system, enhance our efforts in communicating with our customers and
enable us to continue to deliver the reliable service expected by our
customers."

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 Nuclear Decommissioning Trust (NDT)
investments and Mark-To-Market accounting as well as other one-time items not
related to ongoing operations.  The table below provides a reconciliation of
PSEG's Net Income to Operating Earnings (a non-GAAP measure) for the full year
and fourth quarter.  See Attachment 12 for a complete list of items excluded
from Income from Continuing Operations in the determination of Operating
Earnings.

 PSEG CONSOLIDATED EARNINGS (unaudited)                                                  
 Full-Year Comparative Results                                                           
 2012 and 2011                                                                           
                                                                                         
                                      Income                   Diluted Earnings       
                                      ($millions)              Per Share              
                                      2012    2011            2012       2011       
 Net Income                           $1,275  $1,503          $2.51      $2.96      
 (Income) Loss from Discontinued Ops  --      (96)            --         (0.19)     
 Income From Continuing Ops           $1,275  $1,407          $2.51      $2.77      
 Reconciling Items:                                                                 
 Power Storm Costs                    39      --              0.08       --         
 Reconciling Items, Net of Tax        (78)    (18)            (0.15)     (0.03)     
 Operating Earnings (Non-GAAP)        $1,236  $1,389          $2.44      $2.74      
                                              Avg. Shares      507M       507M       
 PSEG CONSOLIDATED EARNINGS (unaudited)                                                  
 Fourth Quarter Comparative Results                                                      
 2012 and 2011                                                                           
                                                                                         
                                      Income                   Diluted Earnings       
                                      ($millions)              Per Share              
                                      2012    2011            2012       2011       
 Net Income/Income from                                                             
 Continuing Ops                       $224    $360            $0.44      $0.71      
                                                                                    
 Reconciling Items:                                                                 
 Power Storm Costs                    39      --              0.08       --         
 Reconciling Items, Net of Tax        (56)    (123)           (0.11)     (0.24)     
 Operating Earnings (Non-GAAP)        $207    $237            $0.41      $0.47      
                                              Avg. Shares      507M       507M       


"We are initiating operating earnings guidance for 2013 of  $2.25 - $2.50  per
share," continued  Ralph Izzo. He added that "although our guidance for
operating earnings in 2013 remains unchanged from our guidance for 2012, we
believe PSEG is at a transition point. We expect to benefit from investments
made to expand our regulated infrastructure and to improve the reliability of
our system as we continue to control our costs. Our regulated business is
expected to represent approximately half of 2013's operating earnings, and our
planned investment program is expected to greatly expand the earnings
contribution from our regulated business as we maintain the upside optionality
of our merchant business. A strong balance sheet and cash flow allows us to
expand our capital investment and maintain a long history of returning cash to
our shareholders. The Board of Directors recent decision on the common stock
dividend established an indicated annual rate of  $1.44  per share for 2013. The
decision represents the ninth increase in the dividend in the past ten years and
over a century of annual dividend payments."

The following table outlines PSEG 2012 operating earnings by subsidiary and
expectations for 2013.

              2013 Guidance and 2012 Operating Earnings                  
              
($ millions)                                              
                                2013E            2012A                   
 PSE&G                          $580-$635        $528                    
 PSEG Power                     $535-$600        $644                    
 PSEG Energy Holdings/                                                   
 Parent                         $25-$35          $64                     
 Operating Earnings             $1,140-$1,270    $1,236                  
 Earnings Per Share             $2.25-$2.50      $2.44                   
                                                                       


Operating Earnings Review and Outlook by Operating Subsidiary

See Attachments 6 and 7 for detail regarding the quarter-over-quarter and
year-over-year earnings reconciliations for each of PSEG's businesses.

PSEG Power

PSEG Power reported operating earnings of  $122 million  ($0.24  per share) for
the fourth quarter of 2012 bringing full year operating earnings to  $644
million  ($1.27  per share).  On a comparative basis, PSEG Power reported
operating earnings of  $134 million  ($0.27  per share) and  $845 million 
($1.67  per share) for the fourth quarter and full year 2011 respectively.

Power's fourth quarter operating earnings benefited from strong control of
operating expenses, higher capacity prices and post-storm recovery of the power
fleet.

PSEG Power's generation and maintenance facilities were affected in the quarter
by the storm surge associated with Superstorm Sandy. The total cost to restore
Power's facilities (prior to insurance recovery) could be up to  $300 million. 
The cost and work associated with restoration of Power's facilities is expected
to occur over a 2 year period from the date of the October storm.  Of this
amount, Power incurred  $85 million  in higher pre-tax operating and maintenance
expenses in the fourth quarter, and recorded  $19 million  of insurance recovery
to date, to return its facilities to service. These costs, as well as all future
storm-related restoration costs at Power, are excluded from the calculation of
operating earnings given the unusual nature of the storm's impact on Power's
operations.  

Lower realized prices for energy reduced Power's earnings by  $0.08  per share
quarter-over-quarter. The decline in prices reflects lower contract prices
hedged through the Basic Generation Services (BGS) contract and other wholesale
contracts. The contract price for one-third of the BGS-related load declined to 
$84  per MWh on  June 1, 2012  from  $104  per MWh. The impact on earnings from
lower prices incorporates the effect of a small improvement in margin
quarter-over-quarter on volumes associated with customer migration away from the
BGS contract. An increase in capacity prices on  June 1, 2012  to  $153  per
MW-day from  $110  per MW-day improved Power's quarter-over-quarter earnings by 
$0.06  per share.  

PSEG Power experienced a 4% decline in generation during the quarter, in large
part as a result of Superstorm Sandy's impact on Power's facilities. The decline
in generation reduced earnings quarter-over-quarter by  $0.02  per share. An
improvement in off-system margins and generation-related gas volumes improved
quarter-over-quarter earnings from the BGSS contract by  $0.01  per share. The
absence of a gain on coal sales in the year-ago quarter reduced earnings
comparisons by  $0.02  per share. Power continued to exercise control of its
operating costs (exclusive of storm related activity) helping offset the impact
of lower prices. Operating and maintenance expense (exclusive of storm-related
activity) declined by  $0.02  per share in the quarter from year ago levels. A
premium paid on the early extinguishment of debt in the fourth quarter of 2012 
increased Power's interest expense in the quarter by  $0.02  per share but did
not affect quarter-over-quarter earnings comparisons given a similar level of
cost incurred for the early extinguishment of debt during the fourth quarter of
2011.  

The nuclear fleet operated at a strong capacity factor of 91.1% for the year.
The fleet's capacity factor was reduced by 0.3% as a result of the storm's
effect on operations.  The fourth quarter refueling outage at  Salem  2 was
delayed for two days to reduce the potential for risk to employee safety, and 
Salem  1 was removed from service for five days to reduce the risk of damage
from the storm surge on the unit's intake valves.  Operation of the Linden
combined cycle facility was also curtailed during the quarter as a result of
storm damage, but has since returned to service.  This caused a reduction in
gas-fired generation in the quarter that was partially offset by an improvement
in generation volumes from Power's low-cost, base-load coal facilities as well
as improved performance from the Bergen and  Bethlehem, NY gas-fired combined
cycle units which were available to meet the load.  

Power's forecast output for 2013 of 53 - 55 TWh is approximately 75% - 80%
hedged at an average price of  $50  per MWh. For 2014, forecast output of 53 -
55 TWh is approximately 50% - 60% hedged at an average price of  $49  per MWh.
Power has hedged 25% - 30% of its forecast generation in 2015 of 52 TWh - 54 TWh
at an average price of  $51  per MWh. The results reflect the impact of the 
February 2013  auction of Basic Generation Service (BGS) in New Jersey.  Average
prices of  $92  per MWh for the PSE&G zone in the latest BGS auction will
replace BGS auction prices of  $96  per MWh for the three year period beginning 
June 1, 2013. The most recent BGS auction price for the PSE&G zone represented
an increase of approximately 10% from last year's auction result given increases
in transmission, renewables and energy.  

Power's operating earnings for 2013 are forecast at  $535 million - $600
million. The guidance for Power's operating earnings does not include the impact
of storm restoration costs or any insurance recovery.

PSE&G

PSE&G reported operating earnings of  $75 million  ($0.15  per share) for the
fourth quarter bringing full year operating earnings to  $528 million  ($1.04 
per share).  On a comparative basis, PSE&G reported operating earnings of  $99
million  ($0.19  per share) and  $521 million  ($1.03  per share) for the fourth
quarter and full year 2011, respectively.

PSE&G's fourth quarter results reflect the impact of Superstorm Sandy on
operating expenses which more than offset the return on increased levels of
capital investment.  

PSE&G made more than 2.1 million electric service restorations over a two-week
period after the storm hit in late October. About 48,000 trees had to be removed
or trimmed and 2,400 utility poles were repaired or replaced. The restoration
cost amounted to approximately  $295 million. Of this amount, approximately 14%
or  $40 million  ($0.05  per share) was expensed and, unlike at PSEG Power, was
included in 2012's fourth quarter and full year operating earnings. The cost of
restoration in 2012 was greater than the storm-related costs PSE&G incurred in
the prior year, and reduced earnings quarter-over-quarter by  $0.04  per share. 
An increase in other operating expenses (primarily pension) reduced earnings
comparisons by  $0.02  per share quarter-over-quarter. PSE&G's
quarter-over-quarter earnings comparisons were also affected by an increase in
depreciation expense and a higher tax rate, partially offset by an increase in
miscellaneous income which together reduced earnings by  $0.02  per share.  

An increase in transmission revenue added  $0.02  per share to earnings in the
quarter. Electric and gas demand was influenced by weather in the quarter which
was warmer than normal but colder than a year ago. The favorable weather
comparison also added  $0.02  per share to earnings.

The most significant event in the quarter was Superstorm Sandy. Widespread
outages resulted in the loss of 3.4% of October customer hours and 5.4% of the
November customer hours. The loss of demand reduced sales by 2.7% and 0.6% for
the quarter and the year respectively.  

On a weather normalized basis (excluding the impact of the storm), it is
estimated that electric sales declined by 1.6% in the fourth quarter resulting
in a year-over-year decline in weather normalized electric demand of 0.6%.
Weather normalized demand from residential customers grew by 3.2% and 1.3% for
the fourth quarter and the year respectively. Demand from the commercial and
industrial customer base, which is less sensitive to the weather, declined by
3.7% on a weather normalized basis in the fourth quarter and 1.4% for the year
as a result of the storm's impact on  New Jersey's economy and a slow recovery
in the State's economic growth.

The Federal Energy Regulatory Commission (FERC) approved PSE&G's request for an
annual increase in transmission revenue of  $174 million  under the company's
formula rate filing.  The rate increase was effective on  January 1, 2013.  

PSE&G's operating earnings for 2013 are forecast at  $580 million - $635
million.  Operating earnings will be influenced by an increase in transmission
revenues and higher levels of capital investment.

PSEG Energy Holdings and Parent

PSEG Energy Holdings/Parent reported operating earnings for the fourth quarter
of  $10 million  ($0.02  per share) compared to operating earnings of  $4
million  ($0.01  per share) for the fourth quarter of 2011.  The results for the
fourth quarter brought full year 2012 operating earnings for PSEG Energy
Holdings/Parent to  $64 million  ($0.13  per share) versus  $23 million  ($0.04 
per share) in 2011.   

PSEG Energy Holdings/Parent fourth quarter earnings were aided by the
recognition of tax benefits associated with the start-up of two new solar
projects (Milford  and  Queen Creek).  The projects (which together have a
capacity of 40MW) brought the Energy Holdings solar portfolio to 69 MW at
year-end. Energy Holdings acquired an additional 19MW solar-project currently
under construction in  Arizona  which is scheduled for commercial operation in
the second half of 2013.

PSEG Energy Holdings/Parent operating earnings for 2013 are forecast to be  $25
million - $35 million. The results will primarily reflect the absence of tax
benefits received in 2012 related to the settlement of IRS tax audits.  

 Balance Sheet

PSEG had  $379 million  of cash on the balance sheet at year-end and debt
represented 40.8% of consolidated capital.  During the quarter, PSEG Power
redeemed  $250 million  of Senior Notes with an interest rate of 5.0% that were
due in 2014. With this reduction, debt represented 30% of PSEG Power's
capitalization at year-end.  

Utility Filings

PSE&G, as announced yesterday, has requested approval from the  New Jersey 
Board of Public Utilities (BPU) to spend up to  $3.9 billion  to harden and
improve the resiliency of its utility network; in addition, PSE&G plans to spend
 $1.5 billion  over this period on its transmission network under its Federal
Energy Regulatory Commission formula rate process.  The program would entail
spending approximately  $2.8 billion  of the  $5.4 billion  through 2017.  The
initial phase of the program includes spending on upgrades to our electric and
gas distribution system and strengthening the backbone of our transmission
infrastructure.  


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 - Consolidating Statements of Operations
Attachment 4 - Capitalization Schedule
Attachment 5 - Condensed Consolidated Statements of Cash Flows
Attachment 6 - Quarter-over-Quarter EPS Reconciliation
Attachment 7 - Year-over-Year EPS Reconciliation
Attachment 8 - Generation Measures
Attachment 9 - Retail Sales and Revenues
Attachment 10 - Retail Sales and Revenues
Attachment 11 - Statistical Measures
Attachment 12 - Reconciling Items Excluded from Continuing Operations to Compute
Operating Earnings

Forward Looking Statement

Certain of the matters discussed in this report constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements are subject to risks and uncertainties,
which could cause actual results to differ materially from those anticipated.
Such statements are based on management's beliefs as well as assumptions made by
and information currently available to management. 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. Factors
that may cause actual results to differ are often presented with the
forward-looking statements themselves. Other factors that could cause actual
results to differ materially from those contemplated in any forward-looking
statements made by us herein are discussed in Item 1A. Risk

Factors, Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations (MD&A), Item 8.  Financial Statements and Supplementary
Data -Note 13. Commitments and Contingent Liabilities, and other factors
discussed in filings we make with the United States Securities and Exchange
Commission (SEC).  


These factors include, but are not limited to:

* adverse changes in the demand for or the price of the capacity and energy that
we sell into wholesale electricity markets,  
* 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
in the future, 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 our operations,  
* 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 risks,  
* any deterioration in our credit quality or the credit quality of our
counterparties, including in our leveraged leases,  
* availability of capital and credit at commercially reasonable terms and
conditions and our ability to meet cash needs,  
* 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,  
* any inability to achieve, or continue to sustain, our expected levels of
operating performance,  
* any equipment failures, accidents, severe weather events or other incidents
that impact our ability to provide safe and reliable service to our customers,  
* increase in competition in energy supply markets as well as competition for
certain rate-based transmission projects,  
* any inability to realize anticipated tax benefits or retain tax credits,  
* challenges associated with recruitment and/or retention of a qualified
workforce,  
* adverse performance of our decommissioning and defined benefit plan trust fund
investments and changes in funding requirements, and  
* changes in technology and customer usage patterns.

All of the forward-looking statements made in this report are qualified by these
cautionary statements and we cannot assure you that the results or developments
anticipated by management will be realized or, even if realized, will have the
expected consequences to, or effects on, us or our business prospects, financial
condition or results of operations. Readers are cautioned not to place undue
reliance on these forward-looking statements in making any investment decision.
Forward-looking statements made in this report apply only as of the date of this
report. While we may elect to update forward-looking statements from time to
time, we specifically disclaim any obligation to do so, even if internal
estimates change, unless otherwise required by applicable securities laws.  The
forward-looking statements contained in this report are intended to qualify for
the safe harbor provisions of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

Public Service Enterprise Group (NYSE:PEG) is a publicly traded diversified
energy company with annual revenues of more than  $11 billion, and three
principal subsidiaries: PSEG Power, Public Service Electric and Gas Company
(PSE&G) and PSEG Energy Holdings.

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SOURCE  Public Service Enterprise Group (PSEG)


Jenn Kramer, +1-973-430-6027, jennifer.kramer@pseg.com

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