Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — Q2 2014 Earnings Presentation
27 slides from Public Service Enterprise's earnings presentation, Aug 5, 2014
Slide 1: Forward-Looking Statement
Forward-Looking Statement EXHIBIT 99 Certain of the matters discussed in this report about our and our subsidiaries' future performance, including, without limitation, future revenues, earnings, strategies, prospects, consequences and all other statements that are not purely historical constitute “f
Slide 2: GAAP Disclaimer
GAAP Disclaimer PSEG presents Operating Earnings in addition to its Income from Continuing Operations/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 Income from Continu
Slide 3: PSEG 2014 Operating Earnings expected to be at the upper end of guidance range
PSEG 2014 Operating Earnings expected to be at the upper end of guidance range Reflects increased level of utility investment, pension savings and assumes normal weather and unit operations for the rest of year $2.55 - $2.75E $2.58 $2.44 2012 2013 2014 Guidance SEE SLIDE A FOR ITEMS EXCLUDED FROM IN
Slide 4: Operating Earnings Mix
Operating Earnings Mix Long term investment program has driven increased earnings contribution from stable, regulated business Power’sdiverse fuel mix OperatingEarnings* Contribution by Subsidiary(%) and dispatch flexibility $2.55 - continues to generate $3.09 $3.12 $2.74 $2.44 $2.58 $2.75E earnings
Slide 5: PSEG Q2 2014 Financial Highlights
PSEG Q2 2014 Financial Highlights Earnings on Track Operating earnings of $0.49 vs. $0.48 per share in Q2 2013 Increased earnings contribution from PSE&G’s investment in Transmission Expect 2014 Operating Earnings to be at the upper end of the $2.55 to $2.75 per share guidance range – assuming norma
Slide 6: PSE&G's existing major transmission investment program remains on schedule and on budget
PSE&G’s existing major transmission investment program remains on schedule and on budget Major Transmission Projects 100% Project Inclusion Recovery Expected Approved Estimate of CWIP in of Costs In-service ROE Up To Rate Base Due to Date ($ Millions) Abandonment June 2014 / Susquehanna-Roseland 12.
Slide 7: Susquehanna-Roseland transmission project
Susquehanna-Roseland consists of constructing 150 miles of 500kV circuit (46 miles in NJ) with two new 500kV GIS switching stations at Roseland and Hopatcong Project Through Expected Estimate Year-end 2013 In-service Date Up To* June 2014 $790M $661M / June 2015 • PJM RTEP project b0489 • ROE of 12.
Slide 8: North Central Reliability project
North Central Reliability consists of upgrading 55 circuit miles of 138kV transmission line to 230kV, and converting six existing stations to 230kV operation Project Estimate Through Year-end Expected Up To 2013 In-service Date Completed $390M $349M • PJM RTEP project b1154 • ROE of 11.68% • 100% CW
Slide 9: PSE&G's 2014 operating earnings
PSE&G’s 2014 operating earnings to benefit from increased investment in transmission and on-going cost control PSE&G Operating Earnings* ($ Millions) *SEE SLIDE A FOR ITEMS EXCLUDED FROM INCOME FROM CONTINUING E=ESTIMATE OPERATIONS/NET INCOME TO RECONCILE TO OPERATING EARNINGS. 42
Slide 10: PSEG Power Nuclear is a critical element of our success
PSEG Power Nuclear is a critical element of our success Salem Peach Bottom Hope Creek Units 1 and 2 Units 2 and 3 Operated by PSEG Nuclear Operated by PSEG Nuclear Operated by Exelon PSEG Ownership: 100% PSEG Ownership: 57% PSEG Ownership: 50% Technology: Boiling Water Technology:PressurizedWater Te
Slide 11: PSEG Power Nuclear is core to the fleet and has competitive advantages
PSEG Power Nuclear is core to the fleet and has competitive advantages Continued strong nuclear operations: Fukushima action plan nine consecutive years of >90% in response to NRC staff review capacity factor through 2013 FLEX* plan submitted with implementation starting with Fall outage Significant
Slide 12: PSEG Solar Source owns ~110 MW of solar facilities
PSEG Solar Source owns ~110 MW of solar facilities with long term contracted revenues* Hackettstown (Mars) Queen Creek New Jersey (2 MW) Arizona (25 MW) COD September 2009 COD October 2012 Thin film panels –fixed tilt Polycrystalline -single axis tracker Investment $13 million Investment $79 million
Slide 13: Market Review: Long-term fundamentals remain sound
Market Review:Long-term fundamentals remain sound NYMEX Natural Gas Price PJM West RTC $6 $60 $55 $5 $50 $4 $45 $3 $40 $35 $2 $30 $1 $25 $- $20 1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/2016 1/1/2017 1/1/2018 2011 2012 2013 2014F 2015F 2016F 2017F 2018F Historical Forward PJM West Spark Sprea
Slide 14: Competitive Advantage: ~25% of Power's gas from Marcellus
Competitive Advantage:~25% of Power’s gas for generation comes from Marcellus Spot Natural Gas Prices: June 2013 J–uly 2014* Market Prices for Natural Gas Access to Lower Cost Shale Gas in Marcellus and Utica • Our combined cycle and peaking assets have been able to take advantage of locational gas
Slide 15: Competitive Advantage: Locational advantage from short term basis volatility
Competitive Advantage:Locational advantage from short term basis volatility PS Zone Annual Basis to PJM-W PS Zone Day Ahead On Peak Monthly Basis to PJM-W PS Zone Real Time On Peak Hourly Basis to PJM-W Annual basis benefits baseload $56 units - $58 Intermediate units flexible to seasonal opportunit
Slide 16: Sustainable Advantage: Hedging strategy
Sustainable Advantage: Hedging strategy designed to protect gross margin while leveraging the portfolio Jul-Dec 2014 2015 2016 Volume TWh 17 36 36 Base Load % Hedged 100% 100% 45 -50% (Nuclear and Base Load Coal) Price $/MWh $50 $50 $51 Volume TWh 13 21 19 Intermediate Coal, Combined % Hedged 35 -40
Slide 17: Improving Operating Earnings and increased contribution from PSE&G
Improving Operating Earnings and increased contribution from PSE&G PSEG Operating Earnings $ Millions (except EPS) 2012 2013 2014E PSE&G $528 $612 $705 - $745 PSEG Power $663 $710 $550 - $610 Enterprise/Other $45 ($13) $35 - $40 Operating Earnings* $1,236 $1,309 $1,290 - $1,395 Operating EPS* $2.44
Slide 18: Power's coal hedging reflects 2014 supply matched with 2014 sales
Power’s coal hedging reflects 2014 supply matched with 2014 sales Contracted Coal Pricing % Hedged Station Coal Type Comments ($/MWh)* (left scale) 100% $50 Higher price, Bridgeport Adaro Low $40’s lower BTU, Harbor enviro coal $/MWh 80% (right scale) $40 Coal/Gas Hudson CAPP Mid $40’s Fuel 60% $30
Slide 19: Q2 Operating Earnings by Subsidiary
Q2 Operating Earnings by Subsidiary Quarter ended June 30 Operating Earnings Earnings per Share $ millions (except EPS) 2014 2013 2014 2013 PSE&G $ 151 $ 121 $ 0.30 $ 0.24 PSEG Power 87 120 0.17 0.24 PSEG Enterprise/Other 7 2 0.02 - Operating Earnings* $ 245 $ 243 $ 0.49 $ 0.48 * SEE SLIDEB FORITEMS
Slide 20: PSEG EPS Reconciliation – Q2 2014 vs. Q2 2013
PSEG EPS Reconciliation – Q2 2014 vs. Q2 2013 0.60 0.06 (0.07) $0.48 0.02 $0.49 0.50 Transmission Capacity 0.04 PSEG Net Earnings 0.03 0.40 Long Island Re-Contracting & and Other Gas Volume & Market Pricing (0.04) Other Revenue 0.01 0.30 Lower Volume (0.03) Weather (0.01) O&M (0.04) 0.20 O&M 0.02 D&
Slide 21: First Half Operating Earnings by Subsidiary
First Half Operating Earnings by Subsidiary Six months ended June 30 Operating Earnings Earnings per Share $ millions (except EPS) 2014 2013 2014 2013 PSE&G $ 365 $ 300 $ 0.72 $ 0.59 PSEG Power 380 374 0.75 0.74 PSEG Enterprise/Other 15 2 0.03 - Operating Earnings* $ 760 $ 676 $ 1.50 $ 1.33 * SEE SL
Slide 22: PSEG EPS Reconciliation – YTD 2014 vs. YTD 2013
PSEG EPS Reconciliation – YTD 2014 vs. YTD 2013 1.75 0.01 0.03 $1.50 0.13 1.50 $1.33 PSEG Long Capacity 0.15 Island and 1.25 Other Transmission Net Earnings 0.06 Re-Contracting & Market Pricing (0.04) 1.00 Gas Volume, Demand & Other Lower Volume (0.01) Revenue 0.03 0.75 O&M (0.08) Distribution O&M 0
Slide 23: Our balance sheet remains strong
Our balance sheet remains strong June 30, 2014 $ Billions PSEG PSE&G Power Cash and Cash Equivalents $0.6 $0.3 $0.0 Short Term Debt $0.0 $0.0 N/A LongTerm Debt(2) 8.6 6.1 2.5 Common Equity 11.8 6.4 5.5 Total Capitalization $20.4 $12.5 $8.0 Total Debt / Capitalization 42% 49% 32% PSE&GRegulatedEquity
Slide 24: PSEG Liquidity as of June 30, 2014
PSEG Liquidity as of June 30, 2014 Expiration Total Available Company Facility Date Facility Usage Liquidity ($Millions) 1 PSE&G 5-year Credit Facility Mar-18 $600 $13 $587 PSEG / 5-Year Credit Facility (Power) Apr-19 $1,600 $114 $1,486 2 Power 5-Year Credit Facility (Power) Mar-18 $1,000 $0 $1,000
Slide 25: PSEG Energy Holdings Investment Portfolio
PSEG Energy Holdings Investment Portfolio Investment Balance * at 6/30/14 Equipment ($millions) Merchant Energy Leases NRG REMA Keystone, Conemaugh & Shawville (PA) $345 3 coal-fired plants (1,162 equity MW) NRG Energy/Midwest Gen ** Powerton & Joliet Generating Stations (IL) $218 2 coal-fired gener
Slide 26: Items Excluded from Income from Continuing Operations/Net Income to Reconcile to Operating Earnings
Items Excluded from Income from Continuing Operations/Net Income to Reconcile to Operating Earnings PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED For the Year Ended Reconciling Items, net of tax December 31, 2013 2012 2011 2010 2009 2008 Earnings Impact ($ Millions) (Unaudited) Operating Earnings $ 1
Slide 27: Items Excluded from Income from Continuing Operations/Net Income to Reconcile to Operating Earnings
Items Excluded from Income from Continuing Operations/Net Income to Reconcile to Operating Earnings PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED Three Months Ended Six Months Ended Year Ended Reconciling Items, net of tax June 30, June 30, December 31, 2014 2013 2014 2013 2013 2012 (Unaudited) Earni
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