Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — Investor Day (March 2016)
119 slides from Public Service Enterprise's investor day presentation, Mar 11, 2016
Slide 1: 2016 PSEG Investor Conference
2016 PSEG Investor Conference NEW YORK – March 11, 2016 EXHIBIT 99
Slide 2: Forward-Looking Statement
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 “forward-look
Slide 3: GAAP Disclaimer
GAAP Disclaimer These materials and other financial releases can be found on the pseg.com website under the investor tab, or at http://investor.pseg.com/ PSEG presents Operating Earnings and Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) in addition to its Net Incom
Slide 4: 2016 PSEG Conference Agenda
2016 PSEG Conference Agenda Presentation Presenter Welcome and Introductions Kathleen Lally PSEG Ralph Izzo PSE&G Ralph LaRossa Q&A Session Break PSEG Power William Levis Power ER&T Shahid Malik Q&A Session Financial Review & Outlook Dan Cregg Summary and Q&A Conference Conclusion
Slide 5: Strategy – Growing high-quality, low-risk energy infrastructure company
STRATEGY – Growing high-quality, low-risk energy infrastructure company Chairman, president and chief executive Officer Ralph Izzo
Slide 6: PSEG's Strategy
Operational Excellence: Maintaining reliability and improving performance as we control costs in low price environment Financial Strength: Strong financial position supports investment program and dividend growth Disciplined Investment: Balanced business mix Robust pipeline of opportunities Results:
Slide 7: Two strong businesses
Two strong businesses A stable platform, each with growth opportunities Strategy: Investment program enhances competitive position with addition of efficient, clean, reliable CCGT capacity Value Proposition: Provides substantial free cash flow in current environment and upside from market rule impro
Slide 8: Delivering on commitments and realizing growth
Delivering on commitments and realizing growth Operational Excellence PSE&G: ReliabilityOne Mid-Atlantic Region’s Most Reliable Electric Utility (14th consecutive year), Electric Light & Power’s 2015 Utility of the Year, ReliabilityOne Outstanding Outage Response Time and Outstanding Customer Engage
Slide 9: Focus on building a reliable, efficient, clean energy infrastructure
Focus on building a reliable, efficient, clean energy infrastructure 2011 2012 2013 2014 2015 Gas System Modernization Project (GSMP) and Energy Efficiency Extension II approved New generation build starts Power fleet transformation Solar Source portfolio reaches 277 MWDC*** Expanded investment prog
Slide 10: Growth in capital spending aligned with customer needs
Growth in capital spending aligned with customer needs 2016E -- 2020E*: ~$16.0 Billion 2011 – 2015: ~$14.3 Billion Power Total** $2.9B PSE&G Total $11.2B PSE&G Total $11.9B PSEG Capital Spending Power Total** $3.9B *Includes all planned spending. **Power capital spending excludes nuclear fuel. ***in
Slide 11: Building an efficient, clean, reliable energy platform
Building an efficient, clean, reliable energy platform Timeframe Actions taken 2011 – 2015: Transformed business mix Applied ~$14.3 billion towards investments Improved credit ratings Monetized Energy Holdings’ portfolio Strong balance sheet sustained during period of low power prices, while increas
Slide 12: PSE&G's investment program
PSE&G’s investment program Meeting public policy goals and customer needs PSE&G Rate Base and Operating Earnings* *See slide a for Items excluded from Income from Continuing Operations/ NET INCOME to reconcile to Operating Earnings. Distribution rate base includes solar and energy efficiency 2011-20
Slide 13: Managing the total costs to customers while investing in the system
Managing the total costs to customers while investing in the system PSE&G customers’ combined electric and gas bills declined 28% over the period Low gas prices and elimination of transition charges drove rate decreases PSE&G Typical Residential Customer Bills* *For all years the billing Assumes 7,2
Slide 14: Transforming Power's fleet to maintain strong market position
Economic Drivers Outlook Combined Cycle Nuclear Scrubbed Coal Peakers Renewable Energy Margins Low natural gas and energy prices Robust portfolio of gas pipeline contracts n/a n/a Capacity Markets Tightened rules proposed for capacity performance n/a Environmental Regulations Tighter air emissions s
Slide 15: Operating Earnings
Operating Earnings Disciplined investment program and focus on operational excellence have supported growth Power’s diverse fuel mix and dispatch flexibility continue to generate strong earnings and free cash flow in low price environment PSE&G’s investment program has resulted in an increased contr
Slide 16: PSEG Annual Dividend
PSEG Annual Dividend An increased dividend with potential for consistent and sustainable growth given our business mix and financial position Payout Ratio 58% 56% 54% 54% 57%* *2016E payout ratio reflects the midpoint of 2016 operating earnings guidance. E = ESTIMATE PSEG Annual Dividend Rate +5.1%
Slide 17: Focus areas over the business plan horizon
Focus areas over the business plan horizon PSE&G Operational excellence and cost control Capital program execution – Transmission, Energy Strong and GSMP program Regulatory framework – Advocate for regulatory framework that provides support for long-term infrastructure programs Continue to develop i
Slide 18: PSEG's Value Proposition
PSEG’s Value Proposition A stable platform with predictable earnings and a robust investment pipeline PSE&G – Best in class utility performance and growth profile PSEG Power – Efficient, low-cost, clean fleet advantaged by asset diversity, fuel mix and location Strong balance sheet – Supports stable
Slide 19: PSE&G
PSE&G President and chief operating officer public service electric & gas Ralph LaRossa
Slide 20: PSE&G at a glance
Electric Gas Customers Growth (2011 – 2015) 2.2 Million 0.4% 1.8 Million 0.4% 2015 Electric Sales and Gas Sold and Transported 41,715 GWh 2,523M Therms* Projected Annual Load Growth (2016 – 2018)** 0.2% 0.3% PJM Projected Annual Load Growth Transmission (2016 – 2018) ** 0.7% Sales Mix Residential 33
Slide 21: PSE&G strategy
PSE&G strategy Building a sustainable platform that balances reliability, customer rates and public policy to ensure growth at reasonable returns DISCIPLINED INVESTMENT OPERATIONAL EXCELLENCE FINANCIAL STRENGTH ENGAGED WORKFORCE
Slide 22: Meeting customer reliability and policy objectives
PSE&G’s focus on meeting customer reliability and policy objectives are key to our investment strategy 2011 2012 2013 2014 2015 Gas System Modernization Project (GSMP) Energy Efficiency Extension II Transmission: S-R and Mickleton-Gloucester projects placed in-service Mid-Atlantic ReliabilityOne Awa
Slide 23: Building on our track record
Building on our track record Operational Excellence Strong reliability record, with plans for further improvement Cost control efforts Financial Strength Meeting or exceeding earnings targets Maintain solid investment grade credit ratings Disciplined Investment 14 investment programs approved over p
Slide 24: Reliability and Customer Service
Named most reliable electric utility in the Mid-Atlantic region for 14th consecutive year Recognized by PA Consulting with the Outstanding Customer Engagement and Outstanding Outage Response Time awards Named 2015 Utility of the Year by Electric Light & Power Magazine Received Star of Energy Efficie
Slide 25: PSE&G Operating Earnings Per Share
Achieved ~11% annual earnings growth over the past four years through implementation of supportive rate mechanisms on our expanded capital program and cost control PSE&G Operating Earnings Per Share
Slide 26: Recovery Mechanisms
Traditional Recovery Mechanisms Distribution Base Rates FERC Formula Rates Transmission Receive contemporaneous recovery on over 70% of our investments Clause Recovery Mechanisms Infrastructure/ Solar/Energy Efficiency PSEG DEFINES contemporaneous RECOVERY TO MEAN either a forward looking formula ra
Slide 27: Increasing investment across our portfolio
Increasing investment across our portfolio Transmission Large portfolio of projects to meet ongoing reliability and life-cycle requirements Electric Distribution Base spending Infrastructure investment programs with clause recovery Energy Strong (ES) and related programs Electric System Modernizatio
Slide 28: PSE&G Capital Spending 2016-2020E
Continued identification of investment opportunities focused on improving reliability for our customers E = ESTIMATE. Data as of march 2016 2016-2020E PSE&G Capital Spending
Slide 29: Transmission investment
Transmission investment – Focused on replacing aging infrastructure and improving reliability Program Major Incentive RTEP projects Bergen Linden Corridor project Hardening RTEP System Reinforcements Lifecycle Replacements 69kV Upgrades FERC 1000 / competitive growth opportunities Investment ~$7.0B
Slide 30: Electric Distribution investment
Electric Distribution – Infrastructure investment focused on reliability and resiliency Program Capital Infrastructure Program (CIP) 1 CIP 2 Energy Strong Electric System Modernization Program (ESMP) Life cycle replacements Investment* ~$525M ~$560M ~$300M/year ROE / Recovery mechanism 9.75% - 10.3%
Slide 31: Gas Distribution investment
Gas Distribution –Investment program focused on modernizing and upgrading 4,800 miles of cast iron and unprotected steel main Program Capital Infrastructure Program (CIP) 1 CIP 2 GSMP GSMP extension Investment* ~$425M ES = $82M GSMP = $905M ~$300M/year ROE / Recovery mechanism 9.75% - 10.3% Clause r
Slide 32: Solar investment
Solar – Investment supports New Jersey policy objectives which have evolved with focus on utility-scale landfill solar Program Solar Loan I, II & III Solar 4 All (S4A) S4A Extension Solar Loan III S4A Extension Further extension of S4A, focused on landfills (20 sites, ~150 MW identified) Investment
Slide 33: Energy Efficiency investment
Energy Efficiency – Helping customers manage their energy costs and achieving New Jersey’s Energy Master Plan goals Program Carbon Abatement Demand Response Energy Efficiency (EE) EE Extension I & II EE Extension II Extension of EE Investment ~$215M ~$95M TBD ROE / Recovery mechanism 9.75% - 10.3% C
Slide 34: Potential incremental investments
Traditional Recovery Mechanisms Distribution Base Rates FERC Formula Rates Transmission Develop investment opportunities with near-contemporaneous recovery mechanisms Clause Recovery Mechanisms Infrastructure / Solar / Energy Efficiency E = ESTIMATE. Data as of march 2016 Potential to increase curre
Slide 35: Cost control actions
Cost control actions: PSE&G is utilizing the Lean Six Sigma discipline to achieve costs savings and process improvements Conducting organizational reviews resulting in streamlining of processes through restructuring Continued focus on vendor and inventory practices ensuring maximum value Successful
Slide 36: Bonus depreciation and rate base growth
Bonus depreciation Lowered rate base and growth rate but growth still remains strong Investments are less expensive for customers, providing an opportunity for incremental cost-effective system improvements Year-end Rate Base and Net Income Investment program combined with cost control drives growth
Slide 37: Managing the total costs to customers
Managing the total costs to customers while investing in the system PSE&G customers’ combined electric and gas bills declined 28% over the period Low gas prices and elimination of transition charges drove rate decreases PSE&G Typical Residential Customer Bills* *For all years the billing Assumes 7,2
Slide 38: PSE&G 2016 operating earnings
PSE&G’s 2016 operating earnings to benefit from investment programs and cost control e =estimate. $787 $725 $875 -- $925E PSE&G Operating Earnings ($ Millions) 2014 2015 2016 Guidance
Slide 39: The Utility of the Future
Enhanced Reliability and Resiliency Cleaner Energy Reduced Emissions Universal Access to Innovation and New Technology Affordable Energy THE UTILITY OF THE FUTURE
Slide 40: We make things work for you.
oO We make things work for you.
Slide 41: PSEG Long Island
PSEG Long Island - Focused on improving customer service and reliability while managing costs Earned $0.03* per share in 2015 as expected Realized 18/21 metrics in 2014 and 2015 Customer service Reliability Economic Green Safety A contracted increase in revenues expected to bring contribution to ear
Slide 42: 2016 PSEG Power and ER&T Business Review & Outlook
2016 PSEG Power and ER&T Business Review & Outlook March 2016
Slide 43: PSEG Power
PSEG Power William Levis President and Chief operating officer PSEG Power
Slide 44: PSEG Power strategy
PSEG Power strategy Excellence in operating our units safely, reliably, cost-competitively and in an environmentally, responsible manner DISCIPLINED INVESTMENT OPERATIONAL EXCELLENCE FINANCIAL STRENGTH ENGAGED WORKFORCE
Slide 45: Transforming Power's portfolio
Focus on transforming Power’s portfolio with reliable, efficient, and cleaner energy infrastructure 2011 2012 2013 2014 2015 Record CCGT fleet annual output Continued growth in fleet with 1,300 MW new CCGT’s announced Keys Sewaren 7 Prepared successful bid for 485 MW Bridgeport Harbor 5 Projects Com
Slide 46: Asset diversity, fuel flexibility and location
PSEG Power’s value is advantaged by asset diversity, fuel flexibility and location Fuel Diversity* Total MW: 11,678 Energy Produced* Total GWh: 55,213 Energy Market Served* Total MW: 11,678 * EXCLUDES SOLAR AND KALAELOA. **Includes New Jersey units that fuel switch to gas. , 87% dual fuel 2015 Actua
Slide 47: Power investing $2 billion in new capacity
Power investing $2 billion of capital in new capacity E=Estimate. DATA As of march 2016 $ Millions
Slide 48: Power's PJM assets are becoming more efficient
Power’s PJM assets are becoming more efficient Energy Revenue X X X Capacity Revenue X X X Ancillary Revenue X X Dual Fuel X X Base Load ensures cash flow certainty Load Following provides ability to serve load shape Readiness for Capacity Performance (CP), successful in CP auction Peaking takes adv
Slide 49: Generating assets in three competitive markets
PSEG Power has generating assets in three competitive markets Assets located near load Low cost portfolio with gas cost advantage Positioned to benefit from volatility in real-time markets Fleet meets new capacity performance standards 1,800 MW of new CCGT capacity under construction in PJM and ISO-
Slide 50: Developing 1,800 MW of new CCGT capacity
PSEG Power developing 1,800 MW of new, efficient CCGT capacity in MD, NJ and CT PJM *SWMAAC = SOUTHWEST/EMAAC = EASTERN MID-ATLANTIC AREA COUNCIL LOCATIONAL DELIVERABILITY AREA WITHIN PJM. SEWAREN 7 SITE KEYS ENERGY CENTER SITE Constructing the 755 MW CCGT Keys Energy Center in Maryland (SWMAAC*) at
Slide 51: Fleet transformed by 2020
PSEG Power’s fleet transformed with focus on new investment and improvement in efficiency Fuel Diversity* Total MW: 13,100 Energy Produced* Total GWh: 65,000 Energy Market Served* Total MW: 13,100 *EXCLUDES Solar and Kalaeloa E = ESTIMATE **Includes New Jersey units that fuel switch to gas. , 87% du
Slide 52: Fossil fleet efficiency improvements
PSEG Power’s fossil fleet expected to see improvements in efficiency System Heat Rate AGP (Advanced Gas Path) investments CCGT material condition assessment Unit testing and testing coordination initiatives HEDD retirements Keys/Sewaren Combined Cycle Development (2018) Bridgeport Harbor 5 Combined
Slide 53: Fossil fleet among the lowest emitting
PSEG Power’s fossil fleet among the lowest emitting in the industry SO2 & NOx (Tons) More efficient testing and improved operational flexibility through utilization of Continuous Emission Monitoring System testing With the addition of new units, emissions continue to improve GWh E = ESTIMATE
Slide 54: Fossil fleet expected to reduce carbon footprint
PSEG Power’s fossil fleet expected to reduce its carbon footprint Carbon emission rates projected to steadily approach EPA national pollution standards for New and Reconstructed Natural Gas Combined Cycle (1,000 lbs CO2/MWh-gross) CO2 (lbs/MWh) E = ESTIMATE
Slide 55: Nuclear is a critical element of our success
Nuclear is a critical element of our success Hope Creek Operated by PSEG Nuclear PSEG Ownership: 100% Technology: Boiling Water Reactor Total Capacity: 1,176 MW Owned Capacity: 1,176 MW License Expiration: 2046 Next Refueling Fall 2016 Uprate 18MW Spring 2018 Salem Units 1 and 2 Operated by PSEG Nuc
Slide 56: PSEG Power's Growth Investments
PSEG Power’s Growth Investments Site Project Estimate ($ Millions) Benefits Status Peach Bottom Peach Bottom EPU (2014 – 2015) $403 Increased capacity: 130 MW PB2 & PB3 completed in 2015 Linden/ Bergen/ BEC Advanced Gas Path Uprates (AGP): Linden -- 63 MW Bergen -- 31 MW BEC -- 58 MW $120 Increased
Slide 57: Solar Source portfolio
Solar Source portfolio Utility scale solar projects in 12 states in operation or under construction Long-term PPA’s with creditworthy counterparties Lump sum, full wrap EPC* agreements Asset Optimization Maintain high equipment availability Minimize operating expenses Seek additional revenue streams
Slide 58: Gas Asset Optimization
Gas Asset Optimization Large wholesale provider to PSE&G and others Storage capacity of approximately 75 Bcf (in the Gulf and market regions) Firm transportation of 1.3 Bcf/day on seven pipelines Off-system sales margins shared with residential customers Commercial & Industrial gas sales Ancillary S
Slide 59: Cost control actions taken
Cost control actions taken: Fossil plant assessment CCGT material condition assessment Vendor contract renegotiations Nuclear security services brought in-house to control costs Nuclear maintenance productivity study Nuclear outage efficiency initiative Materials management Nuclear excellence initia
Slide 60: Power has delivered on earnings in volatile markets
During volatile market conditions, Power has delivered on earnings 2011 2012 2013 2014 2015 Cooling Degree Days % to average, Higher/(Lower) 26% 13% 7% (5%) 25% Heating Degree Days % to average, Higher/(Lower) (11%) (17%) (1%) 5% (4%) # Days over 90 degrees 29 29 21 12 27 # Days below 20 degrees 13
Slide 61: Power's 2016 operating earnings
Power’s 2016 operating earnings incorporates impact from abnormally warm weather and retirement of capacity Power Operating Earnings* ($ Millions) *SEE SLIDE A FOR ITEMS EXCLUDED FROM NET INCOME TO RECONCILE TO OPERATING EARNINGS. E = ESTIMATE.
Slide 62: PSEG Power – Delivering on priorities
Financial Strength Disciplined Investment Operational Excellence PSEG Power – Delivering on priorities Fuel and technology-diverse fleet produced 55 TWh, 2% higher than 2014 Nuclear capacity factor exceeded 90%; output of 30 TWh, close to 30.3 TWh is third best ever, record set in 2009 Production re
Slide 63: PSEG Power ER&T
PSEG Power ER&T PSEG Power Shahid Malik President ENERGY RESOURCES & TRADE
Slide 64: Agenda
Agenda Market Review Commodity markets: Gas, Power and Spark Spreads Marcellus gas review and PSEG Power’s natural gas position Regulatory framework PSEG Power’s Portfolio Technology, locational and fleet strengths PJM portfolio Northeast portfolio PSEG Power Marketing and Hedging Tactics Robust hed
Slide 65: Markets in 2015 affected by abnormal weather
Q2-Q4: A normal summer and mild December, combined with increased supply of gas, reduced energy prices and basis Market Review: Markets in 2015 were affected by abnormal weather conditions $/MMbtu Q1: Periods of extremely cold temperatures resulted in high gas prices, significant basis differentials
Slide 66: Q1 2016 market review
Market Review: Q1 2016 impacted by weather but forward gas and electric prices retain seasonal volatility Forwards as of January 18, 2016
Slide 67: Gas asset portfolio and Marcellus Shale access
Market Review: PSEG’s extensive gas asset portfolio provides unparalleled access to Marcellus Shale gas PSEG Power maintains a robust portfolio of pipeline and storage assets in the Mid-Atlantic Marcellus Shale gas production reached 18.8 BCF/day in 2015 PSEG Power procured over 423 BCF in 2015 with
Slide 68: New pipeline infrastructure to move Marcellus gas
Market Review: Completion of new pipeline infrastructure expected to move significant quantities of Marcellus gas out of the region by 2018 New England 3.4 bcf/d Southeast 5.9 bcf/d Midwest 6.0 bcf/d Gulf Coast 3.7 bcf/d NJ/NY 1.1 bcf/d Pipeline capacity grows significantly by 2018 Significant amoun
Slide 69: Regulatory Framework: new capacity and energy market designs
Regulatory Framework: New capacity and energy market designs in PSEG’s core markets (PJM and New England) will better reward reliable generation units ISSUE /POLICY OUTCOME PJM CAPACITY Higher payments for enhanced reliability (Capacity Performance) and lower energy revenues have raised absolute and
Slide 70: Our fleet is well positioned in key markets
PSEG Power’s Portfolio: Our fleet is well positioned in key markets *On peak SPARK SPREADS FOR CALENDAR YEAR 2018 calculated with 7.5 heat rate using following gas sources: pjm West = hh, pepco = transco z6 NON-NY, mass hub and zone g = Algonquin, PS zone = leidy. Forwards as of January 18, 2016. Ca
Slide 71: New York and New England portfolio
PSEG Power’s Portfolio: New York and New England New York (757 MW) Single state ISO Multiple gas supplies to BEC gives fuel flexibility and access to Marcellus Long Island Power Authority Management Contract New England (976 MW plus 485 MW new build) Small but dynamic market Significant improvement
Slide 72: Capacity Market Pricing
2019 Onwards RPM Auction Impacted By: • Capacity Performance • Demand response rules • Convex Demand Curve • Elimination of 2.5% Holdback • Change in Net CONE• Reduction in Load Forecast • Change in PJM Parameters • Environmental Retirement Capacity Market Pricing: PJM’s capacity market is transitio
Slide 73: Hedging Strategy: 2016 BGS Auction Results
Hedging Strategy: 2016 BGS Auction Results Latest auction reflects a decline in energy prices and increase in cost of transmission, capacity and renewables NOTE: BGS PRICES ARE QUOTED IN $/MWH AND REFLECT PSE&G ZONE; RESULTS FROM THE 2014-2016 AUCTIONS WILL BE THE NEW BLENDED PRICES BEGINNING JUNE 1
Slide 74: Hedging Strategy
Hedge percentages and prices as of December 31, 2015. updated with 2016 bgs auction results. Revenues of full requirement load deals based on contract price, including renewable energy credits, ancillary, and transmission components but excluding capacity. Hedges include positions with mtm accountin
Slide 75: Revenue stream secured with hedges for next 3 years
PSEG Power’s revenue stream is secured with approximately 60% of the portfolio hedged for next 3 years Energy Produced in 2015 Average 3 Year Forward Revenue (%) 55,213 GWh 2016E-2018E . E = ESTIMATE.
Slide 76: PSEG Power's Value Proposition
PSEG Power’s Value Proposition Well-positioned fleet of merchant generating assets in attractive markets Portfolio transformed with addition of 1,800 MWs of new efficient CCGT Low capital requirements to meet capacity performance standards Growth in fast-growing DC area Hedging strategy has capably
Slide 77: A Successful Power Company in the Future
A Successful Power Company in the Future Increasingly Reliable An Environmental Steward Flexible Cost Competitive
Slide 78: PSEG Financial Review & Outlook
PSEG FINANCIAL REVIEW & OUTLOOK Daniel Cregg EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
Slide 79: Strong financial position demonstrated by 2015 results
Strong financial position demonstrated by 2015 results 2015 Financial Position Earnings Delivered strong 2015 earnings Increased regulated earnings mix Investment Executed major PSE&G capital program Added new Power growth investments Cash Flow and Credit Metrics Produced growing PSE&G cash from ope
Slide 80: 2015 earnings increased 5.4% to upper end of guidance
2015 earnings increased 5.4% to upper end of guidance highlighting our consistent delivery of results PSEG Operating Earnings $ Millions (except EPS) 2012 2013 2014 2015 Initial Earnings Guidance $2.25 – $2.50 $2.25 – $2.50 $2.55 – $2.75 $2.75 – $2.95 Operating EPS* $2.44 $2.58 $2.76 $2.91 Upper End
Slide 81: PSEG Operating Earnings and 2016 Guidance
PSEG Operating Earnings $ Millions (except EPS) 2012 2013 2014 2015 2016E Guidance PSE&G $528 $612 $725 $787 $875 - $925 PSEG Power $663 $710 $642 $653 $490 - $540 Enterprise/Other $45 ($13) $33 $36 $60 Operating Earnings* $1,236 $1,309 $1,400 $1,476 $1,425 - $1,525 Operating EPS* $2.44 $2.58 $2.76
Slide 82: Strong financial position to support 2016 and beyond
Strong financial position to support our business initiatives in 2016 and beyond 2016 and Beyond Earnings Continuing strong earnings trend in 2016 with guidance of $2.80 to $3.00 Investment Deploying significant capital at PSE&G for projects with contemporaneous returns Pursuing Power projects that
Slide 83: PSEG 2016E–2020E Capital Investment
PSEG 2016E – 2020E Capital Investment Growth spend represents ~75% of total investment with new investment opportunities of ~$2.0B Power & Other Maintenance PSE&G Distribution Maintenance Power Growth PSE&G Transmission Growth PSE&G Distribution Growth Approved Growth Investment ~$12.1B E = Estimate
Slide 84: We increased our Capital Program by $3B
We increased our Capital Program by $3B since last year 2015E – 2019E ~$13.0B 2016E – 2020E ~$16.0B Power PSE&G Other Power Other PSE&G PSEG 5-Year Capital Spending Forecast Increased Capital Program by $3B E = Estimate; Capital INcludes AFUDC and IDC During the common 4-year forecast period of 2016
Slide 85: Rate Base CAGR Growth
2015 – 2018E Rate Base CAGR Growth of ~10% Distribution Transmission PSE&G’s spending drives high single-digit growth in rate base through 2020 with known investments ~$13.4B ~$17.7B ~$7.7B ~$5.7B ~$1.8B ~$10.2B ~$2.7B ~$9.3B Rate Base Growth E = Estimate. 2015 Rate Base Potential Upside Potential 2
Slide 86: Bonus Depreciation adds $1.7B cash through 2019
PSE&G cash benefit of $1.2B Identified additional growth opportunities to offset rate base decrease Power cash benefit of $0.5B Power’s strong financial profile allows monetization of tax benefits to more efficiently invest in new generation Bonus Depreciation adds $1.7B cash through 2019
Slide 87: Strong Balance Sheet and Cash Flow support capital program
Utilizing our Strong Balance Sheet and Cash Flow to support current capital program and new potential opportunities without the need for equity PSEG Cash from Operations Excluding Bonus Depreciation PSEG Maintenance Investment PSEG Growth Investment Shareholder Dividend PSE&G Net Debt(3) PSEG Consol
Slide 88: Total Incremental Investment Capacity through 2018E
Total Incremental Investment Capacity through 2018E Power PSEG Estimate Mid – 40’s Low – 20’s Minimum Threshold 30% High - teens Minimum Funds From Operations / Debt 2016E – 2018E PSEG’s credit metrics remain strong providing substantial investment capacity to pursue additional growth opportunities
Slide 89: Investment opportunities beyond approved forecasts
We have consistently identified investment opportunities beyond our approved forecasted expenditures Actual vs Capital Forecast
Slide 90: Post-Capitalization Pension and OPEB Expense
Post-Capitalization Pension and OPEB Expense Manageable Pension and OPEB Expense with a reduction of $25 million in 2016 Adopted the Yield curve (Spot rate) methodology for calculating 2016 pension expense reduces Pension expense by $34 million reduces OPEB expense by $13 million Historical 3-year a
Slide 91: PSEG O&M Expense
Power excludes impacts from storm recovery costs and related insurance proceeds NM = not material E = ESTIMATE. 2011 - 2016E CAGR: ~1.5% 2011 – 2016E CAGR Transmission ~10.2% Distribution ~1.5% Power ~0.8% Other: N.M. $Millions PSEG O&M Expense(1) PSEG has demonstrated ability to control O&M, with p
Slide 92: Annual Dividend Per Share and Payout Ratio
PSE&G EPS $1.82 $1.72 ($/Share) Annual Dividend Per Share (2011-2016 CAGR: 3.7%) The 2016 payout ratio is based on the midpoint of PSEG's 2016 operating earnings guidance of $2.80-$3.00E per share. See slide a for items excluded from income from continuing operations/net income to reconcile to opera
Slide 93: Longer-term outlook and EPS sensitivities
PSEG’s longer-term outlook is influenced by Power’s hedge position and increased investment at PSE&G 2016E 2017E Each $0.75/mcf Change in Natural Gas Each $2/MWh Change in Spark Spread Each $5/MWh Change in Dark Spread Each 1% Change in Nuclear Capacity Factor Segment EPS Drivers Each $100 Million o
Slide 94: PSEG Summary
PSEG Summary 2015 earnings of $2.91 were at the upper end of our upwardly revised operating earnings guidance of $2.85 - $2.95 per share Forecast growth at PSE&G supports our 2016 guidance of $2.80 to $3.00 per share Forecast high single-digit rate base growth at PSE&G on five year basis from 2015 t
Slide 95: PSE&G Appendix
PSE&G APPENDIX © PSEG
Slide 96: PSE&G provides high reliability at below average cost
PSE&G provides high reliability at below average cost which creates superior value for customers SAIDI = System Average Interruption Duration Index, a measure of average outage duration for all customers served, Excluding major events. Better
Slide 97: PSE&G prioritizes public safety
PSE&G prioritizes public safety while maintaining value for customers Leak Response Rate = Percentage of Utility responses to reported leaks within one hour. Better
Slide 98: PSEG Power and ER&T Appendix
PSEG POWER AND ER&T APPENDIX © PSEG
Slide 99: PSEG Power's fleet transformation
PSEG Power’s fleet transformation- clean natural gas & increasingly more fuel-efficient Unit Technology Capacity Operating Heat Rate In Service Bergen 1CC Siemens 638 8.3 6/1995 Bergen 2CC GE FA 591 7.3 6/2002 BEC GE FA 757 7.3 7/2005 Linden 1CC GE FA 621 7.3 4/2006 Linden 2CC GE FA 621 7.3 4/2006 K
Slide 100: Nuclear fuel needs hedged through 2018
Nuclear fuel needs have been hedged through 2018 Anticipated Nuclear Fuel Cost Hedged
Slide 101: BGS rate and forward PJM capacity market price
The full requirements BGS rate recognizes the forward PJM capacity market price
Slide 102: PSEG Financial Appendix
PSEG FINANCIAL APPENDIX © PSEG
Slide 103: Our balance sheet remains strong
December 31, 2015 $ Billions PSEG PSE&G Power Cash and Cash Equivalents $0.4 $0.2 $0.0 Short Term Debt $0.4 $0.2 N/A Long Term Debt(2) 9.6 6.8 2.2 Common Equity 13.1 7.6 6.0 Total Capitalization $23.1 $14.6 $8.2 Total Debt / Capitalization 43% 48% 27% PSE&G Regulated Equity Ratio(1) 52.3% Our balanc
Slide 104: PSEG Liquidity as of December 31, 2015
PSEG Liquidity as of December 31, 2015
Slide 105: PSEG Energy Holdings Investment Portfolio
PSEG Energy Holdings Investment Portfolio Equipment Investment Balance* at 12/31/2015 ($ Millions) Merchant Energy Leases NRG REMA Keystone, Conemaugh & Shawville (PA) 3 coal-fired plants (1,162 equity MW) $ 355 NRG Energy, Inc. / Midwest Gen Powerton & Joliet Generating Stations (IL) 2 coal-fired g
Slide 106: We make things work for you.
oO We make things work for you.
Slide 107: Ralph Izzo
Chairman, President and Chief Executive Officer PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED Ralph Izzo Ralph Izzo was elected chairman and chief executive officer of Public Service Enterprise Group Incorporated (PSEG) in April 2007. He was named as the company’s president and chief operating office
Slide 108: Daniel Cregg
Executive Vice President and Chief Financial Officer Public Service Enterprise Group Incorporated, Public Service Electric and Gas Company, PSEG Power LLC and PSEG Services Corporation Daniel Cregg Daniel J. Cregg was named executive vice president and chief financial officer for Public Service Ente
Slide 109: Tamara L. Linde
Executive Vice President and General Counsel Public Service Enterprise Group Incorporated, Public Service Electric and Gas Company, PSEG Power, PSEG Services Corporation Tamara L. Linde Tamara Linde was named executive vice president and general counsel for Public Service Enterprise Group Incorporat
Slide 110: Ralph A. LaRossa
Ralph A. LaRossa PRESIDENT AND CHIEF OPERATING OFFICER PUBLIC SERVICE ELECTRIC AND GAS COMPANY Ralph A. LaRossa was named president and chief operating officer of Public Service Electric and Gas Company (PSE&G) in October 2006. PSE&G is New Jersey’s oldest and largest regulated gas and electric deli
Slide 111: William Levis
William Levis PRESIDENT AND CHIEF OPERATING OFFICER PSEG POWER William Levis is president and chief operating officer of PSEG Power, a position he’s held since June 2007. PSEG Power is a major, unregulated independent power producer in the U.S. with four main subsidiaries: PSEG Nuclear, PSEG Fossil,
Slide 112: Shahid Malik
Shahid Malik PRESIDENT PSEG ENERGY RESOURCES & TRADE Shahid Malik was appointed President of PSEG Energy Resources & Trade (ER&T) in 2011. PSEG operates one of the most balanced generation and marketing portfolios in the country, both in terms of fuel mix and market segment (base load units, load fo
Slide 113: Derek M. Di Risio
Derek M. Di Risio PRESIDENT PSEG SERVICES CORPORATION Derek M. Di Risio was named President, PSEG Services Corporation, in July 2014. He is responsible for the coordination and delivery of several centralized services currently residing within PSEG Services Corporation including corporate communicat
Slide 114: Richard P. Lopriore
Richard P. Lopriore PRESIDENT PSEG FOSSIL Richard P. Lopriore was elected president of PSEG Fossil in May 2007. He oversees operations for 13 generation facilities spanning four states. He is also responsible for the oversight of two service groups: Laboratory & Testing Services, and Maintenance & R
Slide 115: Peter P. Sena III
Peter P. Sena III Peter P. Sena III was named president of PSEG Nuclear (Nuclear) in February 2016. Mr. Sena will join PSEG in late March 2016 as president of PSEG Nuclear. Most recently, he was Senior Vice President of Operations, Chief Operating Officer at NextEra Energy. Mr. Sena was named Chief
Slide 116: Robert C. Braun
Robert C. Braun Robert C. Braun was elected president & chief nuclear officer, PSEG Nuclear and assumed the position on April 1, 2015. He currently serves as chief nuclear officer. Mr. Braun had previously served as the senior vice president and chief operating officer of PSEG Nuclear, a position he
Slide 117: Margaret M. Pego
Margaret M. Pego, SPHR SENIOR VICE PRESIDENT – HUMAN RESOURCES AND CHIEF HUMAN RESOURCES OFFICER PSEG SERVICES CORPORATION Margaret M. Pego was named senior vice president – human resources and chief human resources officer of PSEG Services Corporation in December 2006. Prior, she had been vice pres
Slide 118: Items Excluded from Income from Continuing Operations/Net Income
Items Excluded from Income from Continuing Operations/Net Income to Reconcile to Operating Earnings Please see Page 3 for an explanation of PSEG’s use of Operating Earnings as a non-GAAP financial measure and how it differs from Net Income. (a)Includes the financial impact from positions with forwar
Slide 119: Items Excluded from Net Income to Reconcile to Operating Earnings and Adjusted EBITDA
Items Excluded from Net Income to Reconcile to Operating Earnings and Adjusted EBITDA Please see Slide 3 for an explanation of PSEG’s use of Operating Earnings and Adjusted EBITDA as non-GAAP financial measures and how they differ from Net Income. B PSEG Power Adjusted EBITDA Reconciliation Attachme
Public Service Enterprise Group — Investor Day (March 2016) on 6ix