Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — Investor Presentation (May 2008)
25 slides from Public Service Enterprise's investor presentation, May 28, 2008
Slide 1: Public Service Enterprise Group Capital Research Portfolio Managers Meeting
EX-99 Public Service Enterprise Group Capital Research Portfolio Managers Meeting May 28, 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 Overview
PSEG Overview Tom O’Flynn Executive Vice President and Chief Financial Officer – PSEG President and Chief Operating Officer – PSEG Energy Holdings
Slide 5: Our platform …
Our platform … Stable electric and gas Redeployment of capital Major electric generation distribution and through the sale of company with 13,300 transmission company international assets. MW of base-load, rated top quartile for Focused on managing intermediate and load reliability providing lease p
Slide 6: Our focus is to maximize benefits from existing assets …
Our focus is to maximize benefits from existing assets … Operational Regulatory and Growth with Excellence Market Environment Manageable Risk Maintain strong Regulatory Processes embedded balance sheet mechanisms in place throughout the providing supporting best-in- organization on how opportunity t
Slide 7: Major influences on business environment remain:
Major influences on business environment remain: Infrastructure Climate Change Capacity Needs Requirements Capital investment in coal fleet to meet PSEG Power’s base- Significant new environmental load nuclear assets transmission capital requirements well situated in carbon program to improve mainta
Slide 8: We are continuing to improve operational practices and participate in market design discussions …
We are continuing to improve operational practices and participate in market design discussions … Fossil fleet adopted operating model based Operational on Excellence Nuclear’s success Goal is to maintain (at a minimum) operating capability of nuclear fleet at 90% capacity factor PSE&G pursuing pilo
Slide 9: Power’s open EBITDA is approximately $2.6 - $2.8 billion …
Power’s open EBITDA is approximately $2.6 - $2.8 billion … $3.0 EBITDA Assumption Sensitivity Impact $2.5 Capacity ~ $60 - $65/KW-yr $10/KW-yr ~ $120M (~ $165 - $178/MW-day) ~ $69 - 73/MWh Energy ~ $40M (PJM-West) $1/MWh $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 10: PSE&G’s base investment plan …
PSE&G’s base investment plan … Regulated electric transmission, electric and gas distribution system Characteristics FERC regulation for electric transmission (formula rates) NJ BPU regulation for electric and gas distribution Managing recovery lag on electric and gas distribution investments PSE&G
Slide 11: Improved processes, markets and well-positioned assets …
Improved processes, markets and well-positioned assets … + 8 - 9% + 8 - 9% $3.05 - $3.35 $2.80 - $3.05 $2.71 $1.73 2006 Operating 2007 Operating 2008 2009 2010E 2011E Earnings* Earnings* Guidance Guidance … should continue to drive annual earnings guidance growth of 8 - 9%. * See page 24 for Items e
Slide 12: Our recent 10% dividend increase continues 100-year history of paying common dividends.
Our recent 10% dividend increase continues 100-year history of paying common dividends. $1.50 ? $1.29 * $1.25 $1.17 $1.14 $1.12 $1.00 2005 2006 2007 2008 2009E Payout Ratio 63% 66% 43% 44% 40 – 50% Payout objective of 40 – 50% provides opportunity for growth with earnings. * Indicated annual dividen
Slide 13: At PSEG, we forecast $3.0B of discretionary cash through 2011
At PSEG, we forecast $3.0B of discretionary cash through 2011. Parent Sources and Uses (2008 – 2011 Forecast) $6.0 Holdings Dividend PSE&G Dividend Discretionary $3.0B Cash* $4.0 Power Dividend $2.0 Shareholder Dividend $0.0 Sources Uses Cash flow from Power is the primary driver of discretionary ca
Slide 14: Cash flow projection
Cash flow projection During Q1 2008, cash from operations improved by approximately $100 million over the same period last year. Excluding changes in working capital, cash from operations is approximately $140 million higher than the first quarter of 2007. PSEG expects that it could have up to $3 bi
Slide 15: Redeploying our $3.0B of discretionary cash towards additional growth and / or share repurchases…
Redeploying our $3.0B of discretionary cash towards additional growth and / or share repurchases… +8 –9% Annual Growth Discretionary Cash Total Shareholder Return Annual Growth 3% 10-13% $2.80- $3.05 Holdings 45- 60 6– 8% PSE&G 350- 370 Annual Dividend Yield 3% Subsidiary 5– 7% Annual Growth 5– 7% P
Slide 16: Fitting the pieces together - PSEG value proposition
Fitting the pieces together - PSEG value proposition PSEG well positioned in current business environment Process improvement programs support efforts to: - maintain reliability - control costs - provide value to the customer Asset mix provides opportunities in attractive markets Strengthened balanc
Slide 17: APPENDIX
APPENDIX
Slide 18: PSEG Power
PSEG Power
Slide 19: Right set of assets, right markets at the right time …
Right set of assets, right markets at the right time … Low-cost portfolio Fuel Diversity – 2007 Total MW: 13,300 Strong cash generator Oil Nuclear Regional focus in competitive, 8% 26 % Pumped liquid markets Storage 47 % 18% 1% Assets favorably located Coal Gas Many units east of PJM constraints Sou
Slide 20: Power’s assets have a low carbon profile …
Power’s assets have a low carbon profile … 2006 CO2 Emissions Rate Ranking (Companies in PJM States) 3,000 2,500 2,000 1,500 1,000 500 0 Source: Energy Information Administration (2006) … which is well positioned for virtually any form of carbon restrictions.
Slide 21: The implementation of carbon legislation will address the critical issue of global warming …
The implementation of carbon legislation will address the critical issue of global warming … By Fuel Type Coal CTs CC Carbon tons/MWh 1.0 0.6 0.4 PSEG Power Generation by Fuel Price ($/MWh) 2007 Total GWh: 53,200 @$10/ton $10.0 $6.0 $4.0 Nuclear @$20/ton $20.0 $12.0 $8.0 @$30/ton $30.0 $18.0 $12.0 5
Slide 22: Rising coal and natural gas prices have driven LMPs ...
Rising coal and natural gas prices have driven LMPs ... $90 Central Appalachian Coal ($/Ton) $10.0 Natural Gas Henry Hub ($/MMbtu) $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 23: Power’s hedging program provides near-term stability from market volatility …
Power’s hedging program provides near-term stability from market volatility … Contracted Energy Power has 100% $80 % sold contracted for a 75% (left Price considerable scale) (right percent of its 50% scale) $70 output over the 25% next three years at increasing 0% $60 2008 2009 2010 2011 prices. Es
Slide 24: Items Excluded from Net Income to Reconcile to Operating Earnings
Items Excluded from Net Income to Reconcile to Operating Earnings ($ 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 o
Slide 25: Public Service Enterprise Group
Public Service Enterprise Group
Public Service Enterprise Group — Investor Presentation (May 2008) on 6ix