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Fair Value Measurements (Tables)
 3 Months Ended
Mar. 31, 2015
Text Block [Abstract]  
PSEG's, Power's And PSE&G's Respective Assets And (Liabilities) Measured At Fair Value On A Recurring Basis
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recurring Fair Value Measurements as of March 31, 2015
 
 
Description
 
Total
 

Netting  (E)
 
Quoted Market Prices for Identical Assets
(Level 1)
 
Significant Other Observable Inputs (Level 2)
 
Significant Unobservable Inputs
(Level 3)
 
 
 
 
Millions
 
 
PSEG
 
 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Cash Equivalents (A)
 
$
951

 
$
—

 
$
951

 
$
—

 
$
—

 
 
Derivative Contracts:
 
 
 
 
 
 
 
 
 
 
 
 
Energy-Related Contracts (B)
 
$
177

 
$
(599
)
 
$
—

 
$
766

 
$
10

 
 
Interest Rate Swaps (C)
 
$
18

 
$
—

 
$
—

 
$
18

 
$
—

 
 
NDT Fund (D)
 
 
 
 
 
 
 
 
 
 
 
 
Equity Securities
 
$
923

 
$
—

 
$
922

 
$
1

 
$
—

 
 
Debt Securities—Govt Obligations
 
$
498

 
$
—

 
$
—

 
$
498

 
$
—

 
 
Debt Securities—Other
 
$
369

 
$
—

 
$
—

 
$
369

 
$
—

 
 
Other Securities
 
$
31

 
$
—

 
$
31

 
$
—

 
$
—

 
 
Rabbi Trust (D)
 
 
 
 
 
 
 
 
 
 
 
 
Equity Securities—Mutual Funds
 
$
22

 
$
—

 
$
22

 
$
—

 
$
—

 
 
Debt Securities—Govt Obligations
 
$
109

 
$
—

 
$
—

 
$
109

 
$
—

 
 
Debt Securities—Other
 
$
80

 
$
—

 
$
—

 
$
80

 
$
—

 
 
Other Securities
 
$
3

 
$
—

 
$
3

 
$
—

 
$
—

 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Contracts:
 
 
 
 
 
 
 
 
 
 
 
 
Energy-Related Contracts (B)
 
$
(119
)
 
$
603

 
$
—

 
$
(721
)
 
$
(1
)
 
 
PSE&G
 
 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Cash Equivalents (A)
 
$
316

 
$
—

 
$
316

 
$
—

 
$
—

 
 
Derivative Contracts:
 
 
 
 
 
 
 
 
 
 
 
 
Energy-Related Contracts (B)
 
$
7

 
$
—

 
$
—

 
$
—

 
$
7

 
 
Rabbi Trust (D)
 
 
 
 
 
 
 
 
 
 
 
 
Equity Securities—Mutual Funds
 
$
4

 
$
—

 
$
4

 
$
—

 
$
—

 
 
Debt Securities—Govt Obligations
 
$
21

 
$
—

 
$
—

 
$
21

 
$
—

 
 
Debt Securities—Other
 
$
16

 
$
—

 
$
—

 
$
16

 
$
—

 
 
Other Securities
 
$
1

 
$
—

 
$
1

 
$
—

 
$
—

 
 
Power
 

 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Contracts:
 
 
 
 
 
 
 
 
 
 
 
 
Energy-Related Contracts (B)
 
$
170

 
$
(599
)
 
$
—

 
$
766

 
$
3

 
 
NDT Fund (D)
 
 
 
 
 
 
 
 
 
 
 
 
Equity Securities
 
$
923

 
$
—

 
$
922

 
$
1

 
$
—

 
 
Debt Securities—Govt Obligations
 
$
498

 
$
—

 
$
—

 
$
498

 
$
—

 
 
Debt Securities—Other
 
$
369

 
$
—

 
$
—

 
$
369

 
$
—

 
 
Other Securities
 
$
31

 
$
—

 
$
31

 
$
—

 
$
—

 
 
Rabbi Trust (D)
 
 
 
 
 
 
 
 
 
 
 
 
Equity Securities—Mutual Funds
 
$
5

 
$
—

 
$
5

 
$
—

 
$
—

 
 
Debt Securities—Govt Obligations
 
$
27

 
$
—

 
$
—

 
$
27

 
$
—

 
 
Debt Securities—Other
 
$
20

 
$
—

 
$
—

 
$
20

 
$
—

 
 
Other Securities
 
$
1

 
$
—

 
$
1

 
$
—

 
$
—

 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Contracts:
 
 
 
 
 
 
 
 
 
 
 
 
Energy-Related Contracts (B)
 
$
(119
)
 
$
603

 
$
—

 
$
(721
)
 
$
(1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recurring Fair Value Measurements as of December 31, 2014
 
 
Description
 
Total
 
Netting  (E)
 
Quoted Market Prices for Identical Assets
(Level 1)
 
Significant Other Observable Inputs (Level 2)
 
Significant Unobservable Inputs
(Level 3)
 
 
 
 
Millions
 
 
PSEG
 
 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Cash Equivalents (A)
 
$
365

 
$
—

 
$
365

 
$
—

 
$
—

 
 
Derivative Contracts:
 
 
 
 
 
 
 
 
 
 
 
 
Energy-Related Contracts (B)
 
$
295

 
$
(517
)
 
$
—

 
$
774

 
$
38

 
 
Interest Rate Swaps (C)
 
$
22

 
$
—

 
$
—

 
$
22

 
$
—

 
 
NDT Fund (D)
 
 
 
 
 
 
 
 
 
 
 
 
Equity Securities
 
$
897

 
$
—

 
$
896

 
$
1

 
$
—

 
 
Debt Securities—Govt Obligations
 
$
438

 
$
—

 
$
—

 
$
438

 
$
—

 
 
Debt Securities—Other
 
$
339

 
$
—

 
$
—

 
$
339

 
$
—

 
 
Other Securities
 
$
106

 
$
—

 
$
106

 
$
—

 
$
—

 
 
Rabbi Trust (D)
 
 
 
 
 
 
 
 
 
 
 
 
Equity Securities—Mutual Funds
 
$
23

 
$
—

 
$
23

 
$
—

 
$
—

 
 
Debt Securities—Govt Obligations
 
$
91

 
$
—

 
$
—

 
$
91

 
$
—

 
 
Debt Securities—Other
 
$
75

 
$
—

 
$
—

 
$
75

 
$
—

 
 
Other Securities
 
$
2

 
$
—

 
$
—

 
$
2

 
$
—

 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Contracts:
 
 
 
 
 
 
 
 
 
 
 
 
Energy-Related Contracts (B)
 
$
(165
)
 
$
541

 
$
—

 
$
(705
)
 
$
(1
)
 
 
PSE&G
 
 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Cash Equivalents (A)
 
$
294

 
$
—

 
$
294

 
$
—

 
$
—

 
 
Derivative Contracts:
 
 
 
 
 
 
 
 
 
 
 
 
Energy Related Contracts (B)
 
$
26

 
$
—

 
$
—

 
$
—

 
$
26

 
 
Rabbi Trust (D)
 
 
 
 
 
 
 
 
 
 
 
 
Equity Securities—Mutual Funds
 
$
5

 
$
—

 
$
5

 
$
—

 
$
—

 
 
Debt Securities—Govt Obligations
 
$
20

 
$
—

 
$
—

 
$
20

 
$
—

 
 
Debt Securities—Other
 
$
16

 
$
—

 
$
—

 
$
16

 
$
—

 
 
Other Securities
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
 
Power
 
 
 
 
 
 
 
 
 
 
 
 
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Contracts:
 
 
 
 
 
 
 
 
 
 
 
 
Energy-Related Contracts (B)
 
$
269

 
$
(517
)
 
$
—

 
$
774

 
$
12

 
 
NDT Fund (D)
 
 
 
 
 
 
 
 
 
 
 
 
Equity Securities
 
$
897

 
$
—

 
$
896

 
$
1

 
$
—

 
 
Debt Securities—Govt Obligations
 
$
438

 
$
—

 
$
—

 
$
438

 
$
—

 
 
Debt Securities—Other
 
$
339

 
$
—

 
$
—

 
$
339

 
$
—

 
 
Other Securities
 
$
106

 
$
—

 
$
106

 
$
—

 
$
—

 
 
Rabbi Trust (D)
 
 
 
 
 
 
 
 
 
 
 
 
Equity Securities—Mutual Funds
 
$
5

 
$
—

 
$
5

 
$
—

 
$
—

 
 
Debt Securities—Govt Obligations
 
$
21

 
$
—

 
$
—

 
$
21

 
$
—

 
 
Debt Securities—Other
 
$
18

 
$
—

 
$
—

 
$
18

 
$
—

 
 
Other Securities
 
$
1

 
$
—

 
$
—

 
$
1

 
$
—

 
 
Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Derivative Contracts:
 
 
 
 
 
 
 
 
 
 
 
 
Energy-Related Contracts (B)
 
$
(165
)
 
$
541

 
$
—

 
$
(705
)
 
$
(1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(A)
Represents money market mutual funds
(B)
Level 2—Fair values for energy-related contracts are obtained primarily using a market-based approach. Most derivative contracts (forward purchase or sale contracts and swaps) are valued using the average of the bid/ask midpoints from multiple broker or dealer quotes or auction prices. Prices used in the valuation process are also corroborated independently by management to determine that values are based on actual transaction data or, in the absence of transactions, bid and offers for the day. Examples may include certain exchange and non-exchange traded capacity and electricity contracts and natural gas physical or swap contracts based on market prices, basis adjustments and other premiums where adjustments and premiums are not considered significant to the overall inputs.
Level 3—For energy-related contracts, which include more complex agreements where limited observable inputs or pricing information are available, modeling techniques are employed using assumptions reflective of contractual terms, current market rates, forward price curves, discount rates and risk factors, as applicable. Fair values of other energy contracts may be based on broker quotes that we cannot corroborate with actual market transaction data.
(C)
Interest rate swaps are valued using quoted prices on commonly quoted intervals, which are interpolated for periods different than the quoted intervals, as inputs to a market valuation model. Market inputs can generally be verified and model selection does not involve significant management judgment.
(D)
The NDT Fund maintains investments in various equity and fixed income securities classified as “available for sale.” The Rabbi Trust maintains investments in an S&P 500 index fund and various fixed income securities classified as “available for sale.” These securities are generally valued with prices that are either exchange provided (equity securities) or market transactions for comparable securities and/or broker quotes (fixed income securities).
Level 1—Investments in marketable equity securities within the NDT Fund are primarily investments in common stocks across a broad range of industries and sectors. Most equity securities are priced utilizing the principal market close price or, in some cases, midpoint, bid or ask price. Certain open-ended mutual funds with mainly short-term investments are valued based on unadjusted quoted prices in active markets. The Rabbi Trust equity index fund is valued based on quoted prices in an active market.
Level 2—NDT and Rabbi Trust fixed income securities are limited to investment grade corporate bonds, collateralized mortgage obligations, asset backed securities and government obligations or Federal Agency asset-backed securities with a wide range of maturities. Since many fixed income securities do not trade on a daily basis, they are priced using an evaluated pricing methodology that varies by asset class and reflects observable market information such as the most recent exchange price or quoted bid for similar securities. Market-based standard inputs typically include benchmark yields, reported trades, broker/dealer quotes and issuer spreads. Certain short-term investments are valued using observable market prices or market parameters such as time-to-maturity, coupon rate, quality rating and current yield.
(E)
Represents the netting of fair value balances with the same counterparty (where the right of offset exists) and the application of collateral. All cash collateral received or posted that has been allocated to derivative positions, where the right of offset exists, has been offset in the Condensed Consolidated Balance Sheets. As of March 31, 2015, net cash collateral (received) paid of $4 million, was netted against the corresponding net derivative contract positions. Of the $4 million as of March 31, 2015, $(12) million of cash collateral was netted against assets, and $16 million was netted against liabilities. As of December 31, 2014, net cash collateral (received) paid of $24 million, was netted against the corresponding net derivative contract positions. Of the $24 million as of December 31, 2014, $(12) million of cash collateral was netted against assets, and $36 million was netted against liabilities.

Schedule of Quantitative Information About Level 3 Fair Value Measurements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quantitative Information About Level 3 Fair Value Measurements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Significant
 
 
 
 
 
 
 
 
Fair Value as of
 
Valuation
 
Unobservable
 
 
 
 
Commodity
 
Level 3 Position
 
March 31, 2015
 
Technique(s)
 
 Input
 
Range
 
 
 
 
 
 
Assets
 
(Liabilities)
 
 
 
 
 
 
 
 
 
 
 
 
Millions
 
 
 
 
 
 
 
 
PSE&G
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas
 
Forward Contracts 
 
$
7

 
$
—

 
Discounted Cash Flow
 
Transportation Costs
 
$0.70 to $1/dekatherm
 
 
Total PSE&G
 
 
 
$
7

 
$
—

 
 
 
 
 
 
 
 
Power
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                 Electricity
 
Electric Load Contracts
 
$
3

 
$
(1
)
 
Discounted Cash flow
 
Historic Load Variability
 
0% to +10%
 
 
Other
 
Various (A)
 
—

 
—

 
 
 
 
 
 
 
 
Total Power
 
 
 
$
3

 
$
(1
)
 
 
 
 
 
 
 
 
Total PSEG
 
 
 
$
10

 
$
(1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quantitative Information About Level 3 Fair Value Measurements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Significant
 
 
 
 
 
 
 
 
Fair Value as of
 
Valuation
 
Unobservable
 
 
 
 
Commodity
 
Level 3 Position
 
December 31, 2014
 
Technique(s)
 
 Input
 
Range
 
 
 
 
 
 
Assets
 
(Liabilities)
 
 
 
 
 
 
 
 
 
 
 
 
Millions
 
 
 
 
 
 
 
 
PSE&G
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas
 
                     Forward Contracts
 
$
26

 
$
—

 
Discounted Cash Flow
 
Transportation Costs
 
$0.70 to $1/dekatherm
 
 
Total PSE&G
 
 
 
$
26

 
$
—

 
 
 
 
 
 
 
 
Power
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                 Electricity
 
Electric Load Contracts
 
$
12

 
$
(1
)
 
Discounted Cash Flow
 
Historic Load Variability
 
0% to +10%
 
 
Other
 
Various (B)
 
—

 
—

 
 
 
 
 
 
 
 
Total Power
 
 
 
$
12

 
$
(1
)
 
 
 
 
 
 
 
 
Total PSEG
 
 
 
$
38

 
$
(1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

(A)Includes long-term electric positions which were immaterial as of March 31, 2015.
(B)
Includes gas supply positions and long-term electric capacity positions which were immaterial as of December 31, 2014.
Changes In Level 3 Assets And (Liabilities) Measured At Fair Value On A Recurring Basis
Changes in Level 3 Assets and (Liabilities) Measured at Fair Value on a Recurring Basis
for the Three Months Ended March 31, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Gains or (Losses)
Realized/Unrealized
 
 
 
 
 
 
 
 
 
 
Description
 
Balance as of
January 1, 2015
 
Included in
Income (A)
 
Included in
Regulatory Assets/
Liabilities (B)
 
Purchases
(Sales)
 
Issuances/
Settlements
(C)
 
Transfers
In/Out
 
Balance as of March 31, 2015
 
 
 
 
Millions
 
 
 
 
PSEG
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Derivative Assets (Liabilities)
 
$
37

 
$
3

 
$
(19
)
 
$
—

 
$
(12
)
 
$
—

 
$
9

 
 
PSE&G
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Derivative Assets (Liabilities)
 
$
26

 
$
—

 
$
(19
)
 
$
—

 
$
—

 
$
—

 
$
7

 
 
Power
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Derivative Assets (Liabilities)
 
$
11

 
$
3

 
$
—

 
$
—

 
$
(12
)
 
$
—

 
$
2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Changes in Level 3 Assets and (Liabilities) Measured at Fair Value on a Recurring Basis
for the Three Months Ended March 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Gains or (Losses)
Realized/Unrealized
 
 
 
 
 
 
 
 
 
 
Description
 
Balance as of
January 1, 2014
 
Included in
Income (D)
 
Included in
Regulatory Assets/
Liabilities (B)
 
Purchases
(Sales)
 
Issuances/
Settlements
(C)
 
Transfers
In/Out
 
Balance as of March 31, 2014
 
 
 
 
Millions
 
 
 
 
PSEG
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Derivative Assets (Liabilities)
 
$
88

 
$
(64
)
 
$
(82
)
 
$
—

 
$
59

 
$
—

 
$
1

 
 
PSE&G
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Derivative Assets (Liabilities)
 
$
94

 
$
—

 
$
(82
)
 
$
—

 
$
—

 
$
—

 
$
12

 
 
Power
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Derivative Assets (Liabilities)
 
$
(6
)
 
$
(64
)
 
$
—

 
$
—

 
$
59

 
$
—

 
$
(11
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(A)
PSEG’s and Power’s gains and losses attributable to changes in net derivative assets and liabilities include $3 million in Operating Income for the three months ended March 31, 2015, respectively. Of the $3 million in Operating Income, $(9) million is unrealized.
(B)
Mainly includes gains/losses on PSE&G’s derivative contracts that are not included in either earnings or Other Comprehensive Income, as they are deferred as a Regulatory Asset/Liability and are expected to be recovered from/returned to PSE&G’s customers.
(C)
Represents $(12) million and $59 million in settlements for the three months ended March 31, 2015 and 2014.
(D)
PSEG’s and Power’s gains and losses attributable to changes in net derivative assets and liabilities include $(64) million in Operating Income for the three months ended March 31, 2014. Of the $(64) million in Operating Income, $(5) million is unrealized.
Schedule of Fair Value of Debt
 
 
 
 
 
 
 
 
 
 
 
 
As of
 
As of
 
 
 
March 31, 2015
 
December 31, 2014
 
 
 
Carrying
Amount
 
Fair
Value
 
Carrying
Amount
 
Fair
Value
 
 
 
Millions
 
 
Long-Term Debt:
 
 
 
 
 
 
 
 
 
PSEG (Parent) (A)
$
11

 
$
18

 
$
14

 
$
22

 
 
PSE&G (B)
6,312

 
7,138

 
6,312

 
6,912

 
 
Transition Funding (PSE&G) (B)
193

 
199

 
251

 
261

 
 
Transition Funding II (PSE&G) (B)
8

 
8

 
8

 
8

 
 
Power -Recourse Debt (B)
2,544

 
2,974

 
2,543

 
2,930

 
 
Energy Holdings:
 
 
 
 
 
 
 
 
 
  Project Level, Non-Recourse Debt (C)
16

 
16

 
16

 
16

 
 
Total Long-Term Debt
$
9,084

 
$
10,353

 
$
9,144

 
$
10,149

 
 
 
 
 
 
 
 
 
 
 
(A)
Fair value represents net offsets to debt resulting from adjustments from interest rate swaps entered into to hedge certain debt at Power. Carrying amount represents such fair value reduced by the unamortized premium resulting from a debt exchange entered into between Power and Energy Holdings.
(B)
The debt fair valuation is based on the present value of each bond’s future cash flows. The discount rates used in the present value analysis are based on an estimate of new issue bond yields across the treasury curve. When a bond has embedded options, an interest rate model is used to reflect the impact of interest rate volatility into the analysis (primarily Level 2 measurements).
(C)
Non-recourse project debt is valued as equivalent to the amortized cost and is classified as a Level 3 measurement.