Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — Investor Presentation (November 2014)
23 slides from Public Service Enterprise's investor presentation, Nov 12, 2014
Slide 1: Forward-Looking Statement
Exhibit 99 Forward-Looking Statement 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 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 gains or losses associa
Slide 3: Delivering on commitments and pursuing opportunities for growth
Delivering on commitments and pursuing opportunities for growth Operational • Power: Record 2013 output at Linden CCGT and Salem 2; Excellence nuclear capacity factor greater than 90% forth9 straight year th • PSE&G: Mid-Atlantic Reliability Award (12 consecutive year) • PSEG Long Island: Went “live
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 $2.60 - continues to generate $3.09 $3.12 $2.74 $2.44 $2.58 $2.75E earnings
Slide 5: PSEG – Year to Date 2014 Highlights
PSEG –Year to Date 2014 Highlights Operating Earnings YTD up 9% to $2.27 per share from $2.09 for YTD 2013 PSE&G on track to record double-digit growth in earnings on expanded capital investment program PSEG Power expected to earn at upper level of expectations for the full year Narrowed 2014 full–y
Slide 6: PSEG – 2014 Another Year of Growth
PSEG –2014 Another Year of Growth 2014 operating earnings guidance narrowed; forecast full-year at upper end of range, assuming normal weather and unit operations for rest of year $2.60 - $2.75E $2.58 $2.44 2012 2013 2014 Guidance SEE SLIDE A FOR ITEMS EXCLUDED FROM INCOME FROM CONTINUING 14 OPERATI
Slide 7: Investment opportunities exceeding $1 billion
Investment opportunities exceeding $1 billion Focused on providing our customers with access to low-cost gas and cost-effective technologies that reduce emissions as they also improve system reliability Potential Investment Description Amount Bridgeport Harbor Station New 450 MW CCGT Unit $500 -- $7
Slide 8: PSEG Annual Dividend – A long history of growth
PSEG Annual Dividend – A long history of growth and returning cash to shareholders with a financial position that provides opportunity for consistent and sustained growth PSEG Annual Dividend Rate 10-YEAR COMPOUND ANNUAL RATE OF GROWTH 3.0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E Pay
Slide 9: PSE&G's 2014 operating earnings
PSE&G’s 2014 operating earnings to benefit from increased investment in transmission and on-going cost control PSE&G Operating Earnings* ($ Millions) 2012 2013 2014 Guidance *SEE SLIDE A FOR ITEMS EXCLUDED FROM NET INCOME TO RECONCILE TO OPERATING EARNINGS. E=ESTIMATE 42
Slide 10: PSEG Long Island commenced operations on January 1, 2014
PSEG Long Island commenced operations on January 1, 2014 Key elements of Operating Services Agreement Increased PSEG Use of PSEG brand 3-Year rate freeze scope and control as PSEG Long Island (2013-2015) NY Department of Utility 2.0 – Performance metrics Public Service Expanded program oversight fil
Slide 11: PSEG Power Nuclear is a critical element of our success
PSEGPowerNuclear 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: Pres
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: Industry infrastructure build through 2018 to meet demand growth
Industry infrastructure build through 2018 to meet demand growth New England 1.4 bcf/d New investment will increase pipeline takeaway capacity NJ/NY 1.4 bcf/d from low-cost Marcellus and Utica Midwest 2.3 bcf/d shale basins to meet demand in the South and Midwest Southeast 6.5 bcf/d Gulf Coast 2.8 b
Slide 14: Sustainable Advantage: Forward power curves
Sustainable Advantage: Forward power curves indicate PSEG Zone retains premium price Monthly Power Price Summary* Growing importance of the winter peak has influenced PJM reliability planning …with supportive implications for price formation * MARKET AS OF OCTOBER 22, 2014. SOURCE: ICE/BROKER QUOTES
Slide 15: Sustainable Advantage: Hedging strategy
Sustainable Advantage: Hedging strategy designed to protect gross margin while leveraging the portfolio Oct-Dec 2014 2015 2016 Volume TWh 8 36 36 Base Load % Hedged 100% 100% 55-60% (Nuclear and Base Load Coal) Price $/MWh $49 $50 $49 Volume TWh 5 21 21 Intermediate Coal, Combined % Hedged 50-55% 5-
Slide 16: PJM Capacity Performance Proposal
PJM Capacity Performance Proposal: aims to increase electric supply reliability Capacityperformance(CP)proposal placesemphasison reliabilitygiven observed outages during times of extreme weather stress and anticipated retirements; Imposition of higher penalty structure to encourageavailability Gener
Slide 17: In 2013, PSE&G invested over $2B, using $1.4B of internally generated cash flow and debt
In 2013, PSE&G invested over $2B, using $1.4B of internally generated cash flow and debt, while maintaining its capital structure PSE&G2013 CashFlows Cash ~$0.1B PSE&G Parent Capital Net Debt Contribution ~$0.1B ~$0.6B PSE&G Capital Investment ~$2.2B PSE&G Cash from Ops(1) ~$1.4B (1) PSE&G CASH FROM
Slide 18: 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 $710 - $745 PSEG Power $663 $710 $575 - $610 Enterprise/Other $45 ($13) $35 - $40 Operating Earnings* $1,236 $1,309 $1,320 - $1,395 Operating EPS* $2.44
Slide 19: Opportunity for consistent and sustainable dividend growth
Opportunityfor consistent and sustainable dividend growth supported by strong cash flow from both businesses 2.8% increase Annual Dividend Per Share (10 YEAR HISTORICAL CAGR ~3%) PSE&G EPS Payout Ratio 43% 44% 50% 58% 56% 55%( 1) (1) THE 2014 PAYOUT RATIO IS BASED ON THE MIDPOINT OF PSEG'S 2014 OPER
Slide 20: Our balance sheet remains strong
Our balance sheet remains strong September 30, 2014 $ Billions PSEG PSE&G Power Cash and Cash Equivalents $0.7 $0.3 $0.0 Short Term Debt $0.0 $0.0 N/A Long Term Debt (2) 8.6 6.1 2.5 Common Equity 12.1 6.6 5.5 Total Capitalization $20.7 $12.7 $8.0 Total Debt / Capitalization 42% 48% 32% PSE&G Regulat
Slide 21: PSEG Energy Holdings Investment Portfolio
PSEG Energy Holdings Investment Portfolio Investment Balance* at 9/30/2014 Equipment ($ 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) $218 2 coal-fired gen
Slide 22: Items Excluded from Income from Continuing Operations/Net Income to Reconcile to Operating Earnings
Items Excluded from Income from Continuing Operations/Net Income to Reconcile to Operating Earnings PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED For the Year Ended Reconciling Items, net of tax December 31, 2013 2012 2011 2010 2009 2008 Earnings Impact ($ Millions) (Unaudited) Operating Earnings $ 1
Slide 23: 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 Nine Months Ended Year Ended Reconciling Items, net of tax September 30, September 30, December 31, 2014 2013 2014 2013 2013 2012 (Unaud
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