Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — Investor Presentation (June 2015)
29 slides from Public Service Enterprise's investor presentation, Jun 24, 2015
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 and Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) in addition to its Income from Continuing Operations/Net Income reported in accordance with accounting principles generally accepted in the United States (GAAP). Oper
Slide 3: Delivering on commitments and realizing growth
Delivering on commitments and realizing growth • PSE&G:Mid-AtlanticReliabilityAward(13 th consecutiveyear),top ranked amongeastern electric and gas utilities inbusinesscustomer satisfaction Operational • PSEGPower: Recordoutput from combinedcycleunits Excellence • PSEG Long Island:Demonstrated manag
Slide 4: Operating Earnings
Operating Earnings Disciplined investment program and focus on operational excellence have supported growth Operating Earnings* Contribution by Subsidiary Power’sdiversefuel mix and dispatch flexibility continue to generate strong ** earnings and free cash flow in low price environment PSE&G’sinvest
Slide 5: Robust pipeline of investment opportunities supports growth objectives
Robust pipeline of investment opportunities supports growth objectives PSEG Capital Spending 2010 – 2014: $12.6 Billion 2015E -2019E*: $13 Billion PSE&G Total PSE&G Total $9.8B $10.8B Power Total*** $2.7B Power Total*** $2.0B 2015E–2019E: • $2.2B of capital for Gas System Modernization Program, Arti
Slide 6: Balance sheet strength supports capital allocation
Balance sheet strength supports capital allocation Timeframe Actions taken • Applied $16 billion towards investments and dividends • Improved credit ratings 2010 – 2014: Transformed • Monetized Energy Holdings’ portfolio business mix • Strong balance sheet sustained during period of low power prices
Slide 7: Power – Growing value by improving market rules and developing investment opportunities
Power –Growing value by improving market rules and developing investment opportunities Value Source Opportunities and Actions Taken Improvingrules • PJM’sCapacitymarket – 2014 limits on demandresponseand willbetter August2015 Capacity Performance auction recognize • Demand response treatment at U.S.
Slide 8: PSEG Annual Dividend
PSEG Annual Dividend An increased dividend growth rate with potential for consistent and sustainable growth given our business mix and financial position PSEG Annual Dividend Rate 2011-2014 CAGR: 2.6% Payout Ratio 50% 58% 56% 54% 55%* *2015E PAYOUT RATIO REFLECTS THE MIDPOINT OF OPERATING EARNINGS G
Slide 9: Focus areas over business plan horizon
Focus areas over business plan horizon PSE&G • Capitalprogramexecution– Transmission,EnergyStrongand additional programs • Operational excellence and cost control • Regulatory framework • Continue to develop incremental growth opportunities PSEG Power • Operational excellence and cost control • Stro
Slide 10: PSE&G's 2015 operating earnings
PSE&G’s 2015 operating earnings expected to benefit from increased investment in Transmission *SEE SLIDE A FOR ITEMS EXCLUDED FROM NET INCOME TO RECONCILE TO OPERATING EARNINGS. E =ESTIMATE. DATA AS OF MARCH 2, 2015. 37
Slide 11: PSEG Power Delivering on priorities
PSEG Power Delivering on priorities • Maximize value of existing generating • OEM implemented and Operational plants through implementation of the achieving measures Excellence Operational Excellence Model (OEM) • Resource sharing program • Workforce engagement and development between Nuclear & Foss
Slide 12: Power's PJM assets along the dispatch curve
Power’s PJM assets along the dispatch curve reduce the risk of serving full requirement load contracts and can take advantage of volatile market conditions Nuclear POST -HEDD Coal Coal/Gas Combined Cycle Sewaren 1-4 Steam Essex 9 Combustion Turbine / Linden 5-8 Pumped Storage Burlington 12 Kearny 12
Slide 13: PSEG Power's fleet is among the lowest emitting in the industry
PSEG Power’s fleet is among the lowest emitting in the industry 70,000 90,000 80,000 60,000 70,000 50,000 60,000 50,000 40,000 40,000 30,000 30,000 20,000 20,000 10,000 10,000 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 • Mercury reduced 80% across the timeframe above • More efficient testing and
Slide 14: PSEG Power CCGT/Fossil initiatives
PSEG Power CCGT/Fossil initiatives Actions Taken to Create Value Capacity • NewKeysCCGT755MW online in 2018E adds geographicdiversityto fleet • AdvancedGasPath (AGP)investments2014 through2018 to provideadditional efficient capacity,heat rate improvements • Newlowercost gas line at BECwith Dominion
Slide 15: PSEG Power's capital expenditures dedicated toward growing portfolio
PSEG Power’s capital expenditures dedicated toward growing portfolio $1,000 INCREMENTAL INVESTMENT IN KEYS 2015E-2017E $800 $600 $400 $200 $0 2010 2011 2012 2013 2014 2015E 2016E 2017E Keys CCGT Penn East (equity investment) Growth Environmental/Regulatory* Maintenance *BASEDONCURRENTLY KNOWNANDQUAN
Slide 16: PSEG Power's Growth Investments
PSEG Power’s Growth Investments Cost Site Project ($ millions) Benefits Status Keys 755 MW $825 - Geographic diversitywithin PJM; highly Maryland 2018 CCGT $875 efficient gas fired unit in SWMAAC Accessto a 2 nd, lower cost gas supply: BEC Dominion Gas Line $8 Completed $8-9 million/year increase in
Slide 17: PSEG Solar Source owns ~123 MW
PSEG Solar Source owns ~123 MW of solar facilities* with long term contracted revenues Hackettstown (Mars) Queen Creek Newman New Jersey (2 MW) Arizona (25 MW) Texas (13 MW) COD September 2009 COD October 2012 COD December 2014 Thin film panels –fixed tilt Polycrystalline -single axis Polycrystallin
Slide 18: Power's 2015 operating earnings maintain solid performance
Power’s 2015 operating earnings maintain solid performance Power Operating Earnings* ($ Millions) $710 $620 – $680E $642 2015 Observations • 75-80% hedged at $52/MWh • Increase in average hedge price for energy helps mitigate reset in capacity price and volume 2013 2014 2015 Guidance * SEE SLIDE A F
Slide 19: PJM Capacity Performance Proposal
PJM Capacity Performance Proposal: aims to increase electric supply reliability • Capacity performance (CP) product places emphasis on reliability, with robust performance standards, imposition of higher penalty structure and enhanced opportunities for cost recovery to encourage reliability • Genera
Slide 20: Capacity Performance: >90% of PSEG's PJM capacity meets new standards
Capacity Performance: >90% of PSEG’s PJM capacity meets the new capacity performance standards with minimal to moderate investment Howdoesourfleet stackup?* CPCompliantAssets** Larger Investment to Moderate Meet CP Investment to Requirement Meet CP Requirement Combustion Turbine Combined Cycle Steam
Slide 21: Strong financial position to support our business initiatives
Strong financial position to support our business initiatives 2014 Financial Position Strong 2014 earnings growth Exceeded earnings guidance Executed major PSE&G capital program Strong balance sheet with no long term Parent debt Solid credit metrics 2015 and Beyond Third year of anticipated positive
Slide 22: PSEG growth spend represents ~70% of total investment
PSEG growth spend represents ~70% of total investment PSEG2015– 2019E CapitalExpenditures(1) Maintenance ~$3.8B Planned Growth Investment ~$9.2B Potential Upside ~$1.3B ~$14.3B ~$13.0B ~$1.3B ~$6.7B ~$1.9B ~$0.6B ~$2.2B ~$1.6B Power & Other PSE&G Power PSE&G PSE&G PSEG PSE&G PSEG Maintenance Distrib
Slide 23: Substantial internal cash generation
Substantial internal cash generation supports our planned growth capital program and potential investment opportunities without the need for equity PSEG 2015 -2019E Sources and Uses Planned Programs Including Potential Upside Projects Other Cash Power Net Other Cash Power Net Flow(2) Flow(2) Debt De
Slide 24: Power's key credit metric remains strong
Power’s key credit metricremains strong providing opportunity for incremental investment* PSEGPower FundsfromOperations/ Debt 70% 60% Increased contribution to earnings from the more stable regulated business 50% Power’s annual Cash From Operations and Funds From Operations each average ~$1.4B over
Slide 25: Substantial Investment Capacity to pursue additional growth
Substantial Investment Capacity to pursue additional growth without the need for equity AverageFundsfromOperations/Debt TotalIncrementalInvestmentCapacity 2015 - 2017 through2017 ($ Billions) $4.0 Power PSEG Estimate ~ 55% ~30% Minimum 30% Low -20’s Threshold $0.0 Power Parent Total Our incremental
Slide 26: PSEG 2015 Guidance for Operating Income by Subsidiary
PSEG2015 Guidancefor OperatingIncome– by Subsidiary and PSEGPowerAdjustedEBITDA Anticipates Another Year of Growth in Operating Earnings $ millions (except EPS) 2015E 2014 PSE&G $735 - $775 $725 PSEG Power $620 - $680 $642 PSEG Enterprise/Other $40 - $45 $33 Operating Earnings* $1,395 - $1,500 $1,40
Slide 27: PSEG Summary
PSEG Summary • Our 2014 earnings of $2.76 exceeded our revised operating earnings guidance of $2.60 -$2.75 per share • Continued third year of anticipated positive earnings trend in 2015 with operating earnings guidance of $2.75 to $2.95 per share • Continued5 th straight yearof expecteddouble digit
Slide 28: Items Excluded from Income from Continuing Operations/Net Income to Reconcile to Operating Earnings
Items Excluded from Income from Continuing Operations/Net Income to Reconcile to Operating Earnings PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED For the Year Ended Reconciling Items, net of tax December 31, 2014 2013 2012 2011 2010 2009 Earnings Impact ($ Millions) (Unaudited) Operating Earnings $ 1
Slide 29: 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 PSEG Power Adjusted EBITDA Reconcilation Three Months Ended Year Ended Reconciling Items March 31, December 31, 2015 2014 2014 ($ Millions, Unaudited) Adjusted EBITDA $ 626 $ 651 $ 1,584 Fossil Major Maintenance, p
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