Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — Deutsche Bank 2008 Energy and Utilities Conference
30 slides from Public Service Enterprise's conference presentation, May 29, 2008
Slide 1: Public Service Enterprise Group
Exhibit 99 Public Service Enterprise Group Deutsche Bank 2008 Energy and Utilities Conference Miami Beach, FL May 29, 2008
Slide 2: Forward-Looking Statement
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 pu
Slide 3: GAAP Disclaimer
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 the impact of the sale
Slide 4: PSEG Power
PSEG Power Dan Cregg Vice President – Finance, PSEG Power
Slide 5: PSEG Power represents the largest subsidiary within a diverse platform
PSEG Power represents the largest subsidiary within a diverse platform… Major electric generation Stable electric and gas Redeployment of capital company with 13,300 distribution and through the sale of MW of base-load, transmission company international assets. intermediate and load rated top quart
Slide 6: Major influences on our business environment remain
Major influences on our business environment remain … Infrastructure Climate Change Capacity Needs Requirements • Capital investment in • PSEG Power’s base- • Significant new coal fleet to meet load nuclear assets transmission capital environmental well situated in carbon program to improve requirem
Slide 7: Right set of assets, right markets at the right time
Right set of assets, right markets at the right time … • Low-cost portfolio Fuel Diversity – 2007 Total MW: 13,300* • Strong cash generator Oil Nuclear 8% • Regional focus in competitive, 26% liquid markets Pumped Storage 47% 18% 1% • Assets favorably located Coal – Many units east of PJM constraint
Slide 8: Power's assets along the dispatch curve
Power’s assets along the dispatch curve … Nuclear National Park Coal Sewaren 6 Mercer 3 Combined Cycle Kearny 10-11 Steam Burlington 8-9-11 GT Peaking Edison 1-2-3 New Essex 10-11-12 Haven Bergen 1 Linden 5-8 / Essex 9 Burlington 12 / Kearny 12 Linden 1,2 Keystone Yards Sewaren 1-4 Peach Conemaugh B
Slide 9: Our five unit nuclear fleet
Our five unit nuclear fleet … Hope Creek • Operated by PSEG Nuclear Salem Units 1 and 2 • PSEG Ownership: 100% • Operated by PSEG Nuclear • Technology: • Ownership: PSEG - 57%, Boiling Water Reactor Exelon – 43% Peach Bottom Units 2 and 3 • Total Capacity: 1,061MW • Technology: • Owned Capacity: 1,0
Slide 10: We have delivered strong nuclear performance
We have delivered strong nuclear performance … Total Nuclear Output O&M Total Incurred Cost (000 GWh) ($ millions) $589 $567 $564 $554 $542 29.2 28.5 28.8 27.4 24.8 2004 2005 2006 2007 2008 Target 2004 2005 2006 2007 2008 Target … while reducing cost of operations. 10 Note: Values represent Salem/Ho
Slide 11: We have some major 2008 initiatives
We have some major 2008 initiatives … Hope Creek Uprate Salem Steam Generator Outage • NRC approved Hope Creek’s • Unit 2 outage concluded extended power uprate within 58 days – on time license amendment in May • 15 MW uprate (PS share) 2008 expected for 2008 summer • 125 MW uprate expected for run
Slide 12: Fossil operations contribute to earnings
Fossil operations contribute to earnings … Total Fossil Output A Diverse 9,800 MW Fleet (MW) (GWh) 30,000 Coal 2,350 Combined Cycle 3,150 25,000 Steam / Peaking 4,300 Right Assets – Right Location 20,000 • Fuel diversity 15,000 ` • Technical diversity • Near load centers 10,000 Operation of 2,000 MW
Slide 13: Fossil's capital spending on pollution control equipment declines over time
Fossil’s capital spending on pollution control equipment declines over time … Coal Environmental Capital Coal Emissions Output $600 80,000 60,000 $300 40,000 20,000 $0 0 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Coal – SO2 Coal – NOx • Fossil spending on BET reaches a peak of over • Aggregat
Slide 14: Power's eastern coal plants are in the right areas
Power’s eastern coal plants are in the right areas … System Interface Coal Units Capacity (MW) Bridgeport Harbor 3 Hudson 2 558 Mercer 1&2 648 Hudson 2 Bridgeport 372 Mercer 1&2 Total 1,578 Power’s New Jersey coal units are Power is also making considerable mid-merit, with capacity factors investmen
Slide 15: Markets remain attractive
Markets remain attractive … Energy markets have seen rising prices Fuel costs have risen Reserve margins have tightened Capacity pricing mechanisms have been implemented in Power’s key markets Five RPM auctions implemented in PJM First FCM auction implemented in NE Power’s hedging strategy enables s
Slide 16: Through the new capacity constructs, and repricing at market prices
Through the new capacity constructs, and repricing at market prices … Power’s capacity is located in three Northeast markets. NE NY Total Capacity 13,300MW* (~ 1,000 - 1,500 MW under RMR) PJM * Excludes 2,000MW of combined cycle generation in Texas under PSEG Power’s operating control. The RPM Aucti
Slide 17: Power's fleet diversity and location
Power’s fleet diversity and location ... Market Perspective – BGS Auction Results Increase in Full Requirements Component Due to: Increased Congestion (East/West Basis) Full Requirements Increase in Capacity Markets/RPM $111.50 Volatility in Market Increases Risk Premium $102.51 $98.88 • Ancillary s
Slide 18: Rising coal and natural gas prices have driven LMPs
Rising coal and natural gas prices have driven LMPs ... Central Appalachian Coal ($/Ton) Natural Gas Henry Hub ($/MMbtu) $90 $10.0 $9.5 $80 $9.0 $70 $8.5 $60 $8.0 $7.5 $50 $7.0 $40 $6.5 2009 2010 2011 2009 2010 2011 Electric PJM Western Hub RTC Price ($/MWh) On Peak Heat Rate Expansion (MMbtu/MWh) $
Slide 19: The Regional Greenhouse Gas Initiative (RGGI)
The Regional Greenhouse Gas Initiative (RGGI) … • Cooperative effort by Northeast states to design a regional cap-and-trade program to reduce carbon dioxide (CO2 ) emissions – Full participants – CT, MA, MD, ME, NH, VT, RGGI NY, NJ, RI, and DE – Observers – PA, DC, and Eastern Canadian States ME Pro
Slide 20: The RGGI cap shows headroom
The RGGI cap shows headroom … • Affected Sources – Fossil fired electric generating units CO2 Emissions vs. RGGI Cap with a capacity of 25 megawatts (Actuals through 2007) (MW) and larger 200 RGGI Cap • Targets and Timing Actual CO Forecast & 2 190 – Three-year compliance periods 180 with the first
Slide 21: RGGI's CO2 pricing projections
RGGI’s CO2 pricing projections … $10 $8 $6 $4 $2 $0 2009 2011 2013 2015 2017 2019 2021 2023 2025 RGGI - ICF Base RGGI - ICF Base (Rev. Oct-06) … reflect moderate prices, based on the headroom in the cap. 21
Slide 22: Power's open EBITDA is approximately $2.6 - $2.8 billion
Power’s open EBITDA is approximately $2.6 - $2.8 billion … $3.0 Assumption Sensitivity EBITDA Impact $2.5 Capacity ~ $60 - $65/KW-yr $10/KW-yr ~ $120M (~ $165 - $178/MW-day) ~ $69 - 73/MWh Energy (PJM-West) $1/MWh ~ $40M $2.0 Fuel Gas ~$8.50 to $9.00/MB Coal ~ $2.85 to $3.15/MB O&M ~ $1.0 - 1.05B $1
Slide 23: PSEG Power's capital program
PSEG Power’s capital program 2007 2008 2009 2010 2011 2006 10-K $584 $626 $516 $527 $198 ($ millions) 2007 10-K $562 $890 $675 $620 $430 ($ millions) Program focused on meeting environmental commitments, capital associated with new capacity ($500M*) and exploring the opportunity for new nuclear. All
Slide 24: At Power, strong cash generation and declining capital expenditures
At Power, strong cash generation and declining capital expenditures … Power Cash Flow Power Sources and Uses Net Cash (2008 – 2011 Forecast) $2.0 Cash Flow Asset from Ops Sales Incremental debt $10.0 Net capacity while maintaining target Dividends Financing to Parent $1.0 credit measures $8.0 $0.0 $
Slide 25: Public Service Enterprise Group
Public Service Enterprise Group
Slide 26: APPENDIX
APPENDIX
Slide 27: The implementation of carbon legislation will address global warming
The implementation of carbon legislation will address the critical issue of global warming … By Fuel Type Coal CTs CC Carbon tons/MWh 1.0 0.6 0.4 PSEG Power Generation by Fuel Price ($/MWh) 2007 Total GWh: 53,200* @$10/ton $10.0 $6.0 $4.0 @$20/ton $20.0 $12.0 $8.0 Nuclear @$30/ton $30.0 $18.0 $12.0
Slide 28: Power's fleet has a low carbon profile
Power’s fleet has a low carbon profile … 3,000 2006 CO2 Emissions Rate Ranking (Companies in PJM States) 2,500 2,000 1,500 1,000 500 0 * Source: Energy Information Administration (2006) … which is well positioned for virtually any form of carbon restrictions. 28
Slide 29: The separation between coal and gas pricing
The separation between coal and gas pricing … Allowance Price Needed to Dispatch Gas over Coal • Fuel switching is an expensive $120.00 option $100.00 $23.25 • At current fuel and allowance $80.00 CO2 Adder prices, switching from coal to $52.62 $60.00 NOx & SO2 combined-cycle natural gas Fuel Cost m
Slide 30: Items Excluded from Net Income to Reconcile to Operating Earnings
Items Excluded from Net Income to Reconcile to Operating Earnings ($ millions ) (EPS) Years Ended Dec. 31, Years Ended Dec. 31, 2007 2006 2007 2006 Merger related Costs: PSE&G $ - $ (1) $ - Enterprise - (7) (0.02) Total Merger related Costs $ - $ (8) $ - $ (0.02) Impact of Asset Sales: Loss on Sale
Public Service Enterprise Group — Deutsche Bank 2008 Energy and Utilities Conference on 6ix