Long-Term Investments

12 Months Ended

Dec. 31, 2016

Long-Term Investments

Long-Term Investments as of December 31, 2016 and 2015 included the following:




	As of December 31,
	2016		2015
	Millions
PSE&G
Life Insurance and Supplemental Benefits	$	140	$	150
Solar Loans	159		175
Other Investments	—		5
Power
Partnerships and Corporate Joint Ventures (Equity Method Investments) (A)	102		119
Energy Holdings
Lease Investments	649		784
Total Long-Term Investments	$	1,050	$	1,233


(A)	During the three years ended December 31, 2016, 2015 and 2014, dividends from these investments were $18 million, $16 million and $17 million, respectively.

Leases

Energy Holdings, through several of its indirect subsidiary companies, has investments in domestic energy and real estate assets subject primarily to leveraged lease accounting. A leveraged lease is typically comprised of an investment by an equity investor and debt provided by a third-party debt investor. The debt is recourse only to the assets subject to lease and is not included on PSEG’s Consolidated Balance Sheets. As an equity investor, Energy Holdings’ equity investments in the leases are comprised of the total expected lease receivables over the lease terms plus the estimated residual values at the end of the lease terms, reduced for any income not yet earned on the leases. This amount is included in Long-Term Investments on PSEG’s Consolidated Balance Sheets. The more rapid depreciation of the leased property for tax purposes creates tax cash flow that will be repaid to the taxing authority in later periods. As such, the liability for such taxes due is recorded in Deferred Income Taxes on PSEG’s Consolidated Balance Sheets.

During the third quarter of 2016, Energy Holdings completed its annual review of estimated residual values embedded in the

NRG REMA, LLC (REMA) leveraged leases. The outcome indicated that the revised residual value estimates were lower than

the recorded residual values and the decline was deemed to be other than temporary due to the adverse economic conditions

experienced by coal generation in PJM, as discussed in Note 3. Early Plant Retirements, negatively impacting the economic

outlook of the leased assets. As a result, a pre-tax write-down of $137 million was reflected in Operating Revenues in the

quarter ended September 30, 2016, calculated by comparing the gross investment in the leases before and after the revised

residual estimates. During the fourth quarter of 2016, Energy Holdings recorded a $10 million charge for its best estimate of loss as a result of the current liquidity issues facing REMA, which was reflected in Operating Revenues and is included in Gross Investments in Leases as of December 31, 2016. For additional information, see Note 8. Financing Receivables.

The following table shows Energy Holdings’ gross and net lease investment as of December 31, 2016 and 2015, respectively.




	As of December 31,
	2016			2015
	Millions
Lease Receivables (net of Non-Recourse Debt)	$	629		$	631
Estimated Residual Value of Leased Assets	346			519
Total Investment in Rental Receivables	975			1,150
Unearned and Deferred Income	(326		)	(366		)
Gross Investments in Leases	649			784
Deferred Tax Liabilities	(674		)	(724		)
Net Investments in Leases	$	(25	)	$	60

The pre-tax income (loss) and income tax effects, excluding gains and losses on sales, related to investments in leases were as follows:




	Years Ended December 31,
	2016			2015		2014
	Millions
Pre-Tax Income (Loss) from Leases	$	(135	)	$	12	$	24
Income Tax Expense (Benefit) on Income from Leases	$	(51	)	$	5	$	32

Equity Method Investments

Power had the following equity method investments as of December 31, 2016 and 2015:




	As of December 31,
Name	2016		2015		Location	% Owned
	Millions
Power
Keystone Fuels, LLC	$	7	$	16	PA	23%
Conemaugh Fuels, LLC	$	8	$	14	PA	23%
PennEast Pipeline	$	11	$	5	PA	10%
Kalaeloa	$	76	$	84	HI	50%

PSE&G [Member]

Long-Term Investments [Line Items]

Long-Term Investments [Text Block]

Long-Term Investments

Long-Term Investments as of December 31, 2016 and 2015 included the following:




	As of December 31,
	2016		2015
	Millions
PSE&G
Life Insurance and Supplemental Benefits	$	140	$	150
Solar Loans	159		175
Other Investments	—		5
Power
Partnerships and Corporate Joint Ventures (Equity Method Investments) (A)	102		119
Energy Holdings
Lease Investments	649		784
Total Long-Term Investments	$	1,050	$	1,233


(A)	During the three years ended December 31, 2016, 2015 and 2014, dividends from these investments were $18 million, $16 million and $17 million, respectively.

Leases

During the third quarter of 2016, Energy Holdings completed its annual review of estimated residual values embedded in the

NRG REMA, LLC (REMA) leveraged leases. The outcome indicated that the revised residual value estimates were lower than

the recorded residual values and the decline was deemed to be other than temporary due to the adverse economic conditions

experienced by coal generation in PJM, as discussed in Note 3. Early Plant Retirements, negatively impacting the economic

outlook of the leased assets. As a result, a pre-tax write-down of $137 million was reflected in Operating Revenues in the

quarter ended September 30, 2016, calculated by comparing the gross investment in the leases before and after the revised

The following table shows Energy Holdings’ gross and net lease investment as of December 31, 2016 and 2015, respectively.




	As of December 31,
	2016			2015
	Millions
Lease Receivables (net of Non-Recourse Debt)	$	629		$	631
Estimated Residual Value of Leased Assets	346			519
Total Investment in Rental Receivables	975			1,150
Unearned and Deferred Income	(326		)	(366		)
Gross Investments in Leases	649			784
Deferred Tax Liabilities	(674		)	(724		)
Net Investments in Leases	$	(25	)	$	60

The pre-tax income (loss) and income tax effects, excluding gains and losses on sales, related to investments in leases were as follows:




	Years Ended December 31,
	2016			2015		2014
	Millions
Pre-Tax Income (Loss) from Leases	$	(135	)	$	12	$	24
Income Tax Expense (Benefit) on Income from Leases	$	(51	)	$	5	$	32

Equity Method Investments

Power had the following equity method investments as of December 31, 2016 and 2015:




	As of December 31,
Name	2016		2015		Location	% Owned
	Millions
Power
Keystone Fuels, LLC	$	7	$	16	PA	23%
Conemaugh Fuels, LLC	$	8	$	14	PA	23%
PennEast Pipeline	$	11	$	5	PA	10%
Kalaeloa	$	76	$	84	HI	50%

Power [Member]

Long-Term Investments [Line Items]

Long-Term Investments [Text Block]

Long-Term Investments

Long-Term Investments as of December 31, 2016 and 2015 included the following:




	As of December 31,
	2016		2015
	Millions
PSE&G
Life Insurance and Supplemental Benefits	$	140	$	150
Solar Loans	159		175
Other Investments	—		5
Power
Partnerships and Corporate Joint Ventures (Equity Method Investments) (A)	102		119
Energy Holdings
Lease Investments	649		784
Total Long-Term Investments	$	1,050	$	1,233


(A)	During the three years ended December 31, 2016, 2015 and 2014, dividends from these investments were $18 million, $16 million and $17 million, respectively.

Leases

During the third quarter of 2016, Energy Holdings completed its annual review of estimated residual values embedded in the

NRG REMA, LLC (REMA) leveraged leases. The outcome indicated that the revised residual value estimates were lower than

the recorded residual values and the decline was deemed to be other than temporary due to the adverse economic conditions

experienced by coal generation in PJM, as discussed in Note 3. Early Plant Retirements, negatively impacting the economic

outlook of the leased assets. As a result, a pre-tax write-down of $137 million was reflected in Operating Revenues in the

quarter ended September 30, 2016, calculated by comparing the gross investment in the leases before and after the revised

The following table shows Energy Holdings’ gross and net lease investment as of December 31, 2016 and 2015, respectively.




	As of December 31,
	2016			2015
	Millions
Lease Receivables (net of Non-Recourse Debt)	$	629		$	631
Estimated Residual Value of Leased Assets	346			519
Total Investment in Rental Receivables	975			1,150
Unearned and Deferred Income	(326		)	(366		)
Gross Investments in Leases	649			784
Deferred Tax Liabilities	(674		)	(724		)
Net Investments in Leases	$	(25	)	$	60

The pre-tax income (loss) and income tax effects, excluding gains and losses on sales, related to investments in leases were as follows:




	Years Ended December 31,
	2016			2015		2014
	Millions
Pre-Tax Income (Loss) from Leases	$	(135	)	$	12	$	24
Income Tax Expense (Benefit) on Income from Leases	$	(51	)	$	5	$	32

Equity Method Investments

Power had the following equity method investments as of December 31, 2016 and 2015:




	As of December 31,
Name	2016		2015		Location	% Owned
	Millions
Power
Keystone Fuels, LLC	$	7	$	16	PA	23%
Conemaugh Fuels, LLC	$	8	$	14	PA	23%
PennEast Pipeline	$	11	$	5	PA	10%
Kalaeloa	$	76	$	84	HI	50%