Related-Party Transactions

The following discussion relates to intercompany transactions, the majority of which are eliminated during the PSEG consolidation process in accordance with GAAP.

Power

The financial statements for Power include transactions with related parties presented as follows:




		Three Months Ended
		March 31,
Related-Party Transactions		2013			2012
	Millions
Revenue from Affiliates:
Billings to PSE&G through BGSS (A)		$	478		$	451
Billings to PSE&G through BGS (A)		193			189
Total Revenue from Affiliates		$	671		$	640
Expense Billings from Affiliates:
Administrative Billings from Services (B)		$	(45	)	$	(34	)
Total Expense Billings from Affiliates		$	(45	)	$	(34	)




	As of			As of
Related-Party Transactions	March 31, 2013			December 31, 2012
	Millions
Receivables from PSE&G through BGS and BGSS Contracts (A)	$	223		$	238
Receivables from (Payable to) PSE&G Related to Gas Supply Hedges for BGSS (A)	(23		)	27
Receivable from (Payable to) Services (B)	(26		)	(31		)
Tax Receivable from (Payable to) PSEG (C)	(6		)	111
Receivable from (Payable to) PSEG	2			(5		)
Accounts Receivable (Payable)—Affiliated Companies, net	$	170		$	340
Short-Term Loan to Affiliate (Demand Note to PSEG) (D)	$	748		$	574
Working Capital Advances to Services (E)	$	17		$	17
Long-Term Accrued Taxes Receivable (Payable) (C)	$	(38	)	$	(50	)

PSE&G

The financial statements for PSE&G include transactions with related parties presented as follows:




		Three Months Ended
		March 31,
Related-Party Transactions		2013			2012
	Millions
Expense Billings from Affiliates:
Billings from Power through BGSS (A)		$	(478	)	$	(451	)
Billings from Power through BGS (A)		(193		)	(189		)
Administrative Billings from Services (B)		(61		)	(50		)
Total Expense Billings from Affiliates		$	(732	)	$	(690	)




	As of			As of
Related-Party Transactions	March 31, 2013			December 31, 2012
	Millions
Payable to Power through BGS and BGSS Contracts (A)	$	(223	)	$	(238	)
Receivable from (Payable to) Power Related to Gas Supply Hedges for BGSS (A)	23			(27		)
Payable to Power for SREC Liability (F)	(7		)	(7		)
Receivable from (Payable to) Services (B)	(52		)	(65		)
Tax Receivable from (Payable to) PSEG (C)	160			256
Receivable from (Payable to) PSEG	7			6
Receivable from Energy Holdings	3			2
Accounts Receivable (Payable)—Affiliated Companies, net	$	(89	)	$	(73	)
Working Capital Advances to Services (E)	$	33		$	33
Long-Term Accrued Taxes Receivable (Payable) (C)	$	(39	)	$	(32	)


(A)	PSE&G has entered into a requirements contract with Power under which Power provides the gas supply services needed to meet PSE&G’s BGSS and other contractual requirements. Power has also entered into contracts to supply energy, capacity and ancillary services to PSE&G through the BGS auction process.


(B)	Services provides and bills administrative services to Power and PSE&G at cost. In addition, Power and PSE&G have other payables to Services, including amounts related to certain common costs, such as pension and OPEB costs, which Services pays on behalf of each of the operating companies.

(C)

PSEG files a consolidated federal income tax return with its affiliated companies. A tax allocation agreement exists between PSEG and each of its affiliated companies. The general operation of these agreements is that the subsidiary company will compute its taxable income on a stand-alone basis. If the result is a net tax liability, such amount shall be paid to PSEG. If there are net operating losses and/or tax credits, the subsidiary shall receive payment for the tax savings from PSEG to the extent that PSEG is able to utilize those benefits.


(D)	Power’s short-term loans with PSEG are for working capital and other short-term needs. Interest Income and Interest Expense relating to these short-term funding activities were immaterial.


(E)	Power and PSE&G have advanced working capital to Services. The amounts are included in Other Noncurrent Assets on Power’s and PSE&G’s Condensed Consolidated Balance Sheets.

(F)

Pursuant to a BPU Order, certain BGS suppliers will be reimbursed for the cost they incurred above $300 per Solar Renewable Energy Certificate (SREC) or per Solar Alternative Compliance Payment (SACP) during the period June 1, 2008 through May 31, 2010 and such excess cost will be passed on to ratepayers. In a December 2012 order, the BPU approved a Stipulation of Settlement (Stipulation) that describes the mechanism by which BGS suppliers are to recover reasonable and prudently-incurred costs for these SRECs. In accordance with the Stipulation, New Jersey's EDCs, including PSE&G, made a Verification Filing defining the proposed BGS Supplier payments. PSE&G has estimated and accrued a total liability for the excess SREC cost expected to be recovered from ratepayers of $17 million as of March 31, 2013 and December 31, 2012, including approximately $7 million for Power’s share which is included in PSE&G’s Accounts Payable—Affiliated Companies as of March 31, 2013 and December 31, 2012. Under current accounting guidance, Power was unable to record the related intercompany receivable on its Condensed Consolidated Balance Sheet. As a result, PSE&G’s liability to Power is not eliminated in consolidation and is included in Other Current Liabilities on PSEG’s Condensed Consolidated Balance Sheet as of March 31, 2013 and December 31, 2012.

Related-Party Transactions

The following discussion relates to intercompany transactions, the majority of which are eliminated during the PSEG consolidation process in accordance with GAAP.

Power

The financial statements for Power include transactions with related parties presented as follows:




		Three Months Ended
		March 31,
Related-Party Transactions		2013			2012
	Millions
Revenue from Affiliates:
Billings to PSE&G through BGSS (A)		$	478		$	451
Billings to PSE&G through BGS (A)		193			189
Total Revenue from Affiliates		$	671		$	640
Expense Billings from Affiliates:
Administrative Billings from Services (B)		$	(45	)	$	(34	)
Total Expense Billings from Affiliates		$	(45	)	$	(34	)




	As of			As of
Related-Party Transactions	March 31, 2013			December 31, 2012
	Millions
Receivables from PSE&G through BGS and BGSS Contracts (A)	$	223		$	238
Receivables from (Payable to) PSE&G Related to Gas Supply Hedges for BGSS (A)	(23		)	27
Receivable from (Payable to) Services (B)	(26		)	(31		)
Tax Receivable from (Payable to) PSEG (C)	(6		)	111
Receivable from (Payable to) PSEG	2			(5		)
Accounts Receivable (Payable)—Affiliated Companies, net	$	170		$	340
Short-Term Loan to Affiliate (Demand Note to PSEG) (D)	$	748		$	574
Working Capital Advances to Services (E)	$	17		$	17
Long-Term Accrued Taxes Receivable (Payable) (C)	$	(38	)	$	(50	)

PSE&G

The financial statements for PSE&G include transactions with related parties presented as follows:




		Three Months Ended
		March 31,
Related-Party Transactions		2013			2012
	Millions
Expense Billings from Affiliates:
Billings from Power through BGSS (A)		$	(478	)	$	(451	)
Billings from Power through BGS (A)		(193		)	(189		)
Administrative Billings from Services (B)		(61		)	(50		)
Total Expense Billings from Affiliates		$	(732	)	$	(690	)




	As of			As of
Related-Party Transactions	March 31, 2013			December 31, 2012
	Millions
Payable to Power through BGS and BGSS Contracts (A)	$	(223	)	$	(238	)
Receivable from (Payable to) Power Related to Gas Supply Hedges for BGSS (A)	23			(27		)
Payable to Power for SREC Liability (F)	(7		)	(7		)
Receivable from (Payable to) Services (B)	(52		)	(65		)
Tax Receivable from (Payable to) PSEG (C)	160			256
Receivable from (Payable to) PSEG	7			6
Receivable from Energy Holdings	3			2
Accounts Receivable (Payable)—Affiliated Companies, net	$	(89	)	$	(73	)
Working Capital Advances to Services (E)	$	33		$	33
Long-Term Accrued Taxes Receivable (Payable) (C)	$	(39	)	$	(32	)


(A)	PSE&G has entered into a requirements contract with Power under which Power provides the gas supply services needed to meet PSE&G’s BGSS and other contractual requirements. Power has also entered into contracts to supply energy, capacity and ancillary services to PSE&G through the BGS auction process.


(B)	Services provides and bills administrative services to Power and PSE&G at cost. In addition, Power and PSE&G have other payables to Services, including amounts related to certain common costs, such as pension and OPEB costs, which Services pays on behalf of each of the operating companies.

(C)

PSEG files a consolidated federal income tax return with its affiliated companies. A tax allocation agreement exists between PSEG and each of its affiliated companies. The general operation of these agreements is that the subsidiary company will compute its taxable income on a stand-alone basis. If the result is a net tax liability, such amount shall be paid to PSEG. If there are net operating losses and/or tax credits, the subsidiary shall receive payment for the tax savings from PSEG to the extent that PSEG is able to utilize those benefits.


(D)	Power’s short-term loans with PSEG are for working capital and other short-term needs. Interest Income and Interest Expense relating to these short-term funding activities were immaterial.


(E)	Power and PSE&G have advanced working capital to Services. The amounts are included in Other Noncurrent Assets on Power’s and PSE&G’s Condensed Consolidated Balance Sheets.

(F)

Pursuant to a BPU Order, certain BGS suppliers will be reimbursed for the cost they incurred above $300 per Solar Renewable Energy Certificate (SREC) or per Solar Alternative Compliance Payment (SACP) during the period June 1, 2008 through May 31, 2010 and such excess cost will be passed on to ratepayers. In a December 2012 order, the BPU approved a Stipulation of Settlement (Stipulation) that describes the mechanism by which BGS suppliers are to recover reasonable and prudently-incurred costs for these SRECs. In accordance with the Stipulation, New Jersey's EDCs, including PSE&G, made a Verification Filing defining the proposed BGS Supplier payments. PSE&G has estimated and accrued a total liability for the excess SREC cost expected to be recovered from ratepayers of $17 million as of March 31, 2013 and December 31, 2012, including approximately $7 million for Power’s share which is included in PSE&G’s Accounts Payable—Affiliated Companies as of March 31, 2013 and December 31, 2012. Under current accounting guidance, Power was unable to record the related intercompany receivable on its Condensed Consolidated Balance Sheet. As a result, PSE&G’s liability to Power is not eliminated in consolidation and is included in Other Current Liabilities on PSEG’s Condensed Consolidated Balance Sheet as of March 31, 2013 and December 31, 2012.

Related-Party Transactions

The following discussion relates to intercompany transactions, the majority of which are eliminated during the PSEG consolidation process in accordance with GAAP.

Power

The financial statements for Power include transactions with related parties presented as follows:




		Three Months Ended
		March 31,
Related-Party Transactions		2013			2012
	Millions
Revenue from Affiliates:
Billings to PSE&G through BGSS (A)		$	478		$	451
Billings to PSE&G through BGS (A)		193			189
Total Revenue from Affiliates		$	671		$	640
Expense Billings from Affiliates:
Administrative Billings from Services (B)		$	(45	)	$	(34	)
Total Expense Billings from Affiliates		$	(45	)	$	(34	)




	As of			As of
Related-Party Transactions	March 31, 2013			December 31, 2012
	Millions
Receivables from PSE&G through BGS and BGSS Contracts (A)	$	223		$	238
Receivables from (Payable to) PSE&G Related to Gas Supply Hedges for BGSS (A)	(23		)	27
Receivable from (Payable to) Services (B)	(26		)	(31		)
Tax Receivable from (Payable to) PSEG (C)	(6		)	111
Receivable from (Payable to) PSEG	2			(5		)
Accounts Receivable (Payable)—Affiliated Companies, net	$	170		$	340
Short-Term Loan to Affiliate (Demand Note to PSEG) (D)	$	748		$	574
Working Capital Advances to Services (E)	$	17		$	17
Long-Term Accrued Taxes Receivable (Payable) (C)	$	(38	)	$	(50	)

PSE&G

The financial statements for PSE&G include transactions with related parties presented as follows:




		Three Months Ended
		March 31,
Related-Party Transactions		2013			2012
	Millions
Expense Billings from Affiliates:
Billings from Power through BGSS (A)		$	(478	)	$	(451	)
Billings from Power through BGS (A)		(193		)	(189		)
Administrative Billings from Services (B)		(61		)	(50		)
Total Expense Billings from Affiliates		$	(732	)	$	(690	)




	As of			As of
Related-Party Transactions	March 31, 2013			December 31, 2012
	Millions
Payable to Power through BGS and BGSS Contracts (A)	$	(223	)	$	(238	)
Receivable from (Payable to) Power Related to Gas Supply Hedges for BGSS (A)	23			(27		)
Payable to Power for SREC Liability (F)	(7		)	(7		)
Receivable from (Payable to) Services (B)	(52		)	(65		)
Tax Receivable from (Payable to) PSEG (C)	160			256
Receivable from (Payable to) PSEG	7			6
Receivable from Energy Holdings	3			2
Accounts Receivable (Payable)—Affiliated Companies, net	$	(89	)	$	(73	)
Working Capital Advances to Services (E)	$	33		$	33
Long-Term Accrued Taxes Receivable (Payable) (C)	$	(39	)	$	(32	)


(A)	PSE&G has entered into a requirements contract with Power under which Power provides the gas supply services needed to meet PSE&G’s BGSS and other contractual requirements. Power has also entered into contracts to supply energy, capacity and ancillary services to PSE&G through the BGS auction process.


(B)	Services provides and bills administrative services to Power and PSE&G at cost. In addition, Power and PSE&G have other payables to Services, including amounts related to certain common costs, such as pension and OPEB costs, which Services pays on behalf of each of the operating companies.

(C)

PSEG files a consolidated federal income tax return with its affiliated companies. A tax allocation agreement exists between PSEG and each of its affiliated companies. The general operation of these agreements is that the subsidiary company will compute its taxable income on a stand-alone basis. If the result is a net tax liability, such amount shall be paid to PSEG. If there are net operating losses and/or tax credits, the subsidiary shall receive payment for the tax savings from PSEG to the extent that PSEG is able to utilize those benefits.


(D)	Power’s short-term loans with PSEG are for working capital and other short-term needs. Interest Income and Interest Expense relating to these short-term funding activities were immaterial.


(E)	Power and PSE&G have advanced working capital to Services. The amounts are included in Other Noncurrent Assets on Power’s and PSE&G’s Condensed Consolidated Balance Sheets.

(F)

Pursuant to a BPU Order, certain BGS suppliers will be reimbursed for the cost they incurred above $300 per Solar Renewable Energy Certificate (SREC) or per Solar Alternative Compliance Payment (SACP) during the period June 1, 2008 through May 31, 2010 and such excess cost will be passed on to ratepayers. In a December 2012 order, the BPU approved a Stipulation of Settlement (Stipulation) that describes the mechanism by which BGS suppliers are to recover reasonable and prudently-incurred costs for these SRECs. In accordance with the Stipulation, New Jersey's EDCs, including PSE&G, made a Verification Filing defining the proposed BGS Supplier payments. PSE&G has estimated and accrued a total liability for the excess SREC cost expected to be recovered from ratepayers of $17 million as of March 31, 2013 and December 31, 2012, including approximately $7 million for Power’s share which is included in PSE&G’s Accounts Payable—Affiliated Companies as of March 31, 2013 and December 31, 2012. Under current accounting guidance, Power was unable to record the related intercompany receivable on its Condensed Consolidated Balance Sheet. As a result, PSE&G’s liability to Power is not eliminated in consolidation and is included in Other Current Liabilities on PSEG’s Condensed Consolidated Balance Sheet as of March 31, 2013 and December 31, 2012.