Financing Receivables

9 Months Ended

Sep. 30, 2016

Schedule of Financial Receivables [Line Items]

PSE&G

PSE&G sponsors a solar loan program designed to help finance the installation of solar power systems throughout its electric service area. The loans are generally paid back with solar renewable energy certificates generated from the installed solar electric system. A substantial portion of these amounts are noncurrent and reported in Long-Term Investments on PSEG’s and PSE&G’s Condensed Consolidated Balance Sheets. The following table reflects the outstanding loans by class of customer, none of which are considered “non-performing.”




Outstanding Loans by Class of Customer
	As of		As of
Consumer Loans	September 30, 2016		December 31, 2015
	Millions
Commercial/Industrial	$	165	$	177
Residential	11		12
Total	$	176	$	189

Energy Holdings

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 Condensed Consolidated Balance Sheets. As an equity investor, Energy Holdings’ investments in the leases are comprised of the total expected lease receivables on its investments 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 Condensed 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 Condensed 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.

The following table shows Energy Holdings’ gross and net lease investment as of September 30, 2016 and December 31, 2015, respectively.




	As of			As of
	September 30, 2016			December 31, 2015
	Millions
Lease Receivables (net of Non-Recourse Debt)	$	630		$	631
Estimated Residual Value of Leased Assets	346			519
Total Investment in Rental Receivables	976			1,150
Unearned and Deferred Income	(320		)	(366		)
Gross Investment in Leases	656			784
Deferred Tax Liabilities	(661		)	(724		)
Net Investment in Leases	$	(5	)	$	60

The corresponding receivables associated with the lease portfolio are reflected in the following table, net of non-recourse debt. The ratings in the table represent the ratings of the entities providing payment assurance to Energy Holdings.




	Lease Receivables, Net of Non-Recourse Debt
Counterparties’ Credit Rating Standard & Poor’s (S&P) as of September 30, 2016
	As of September 30, 2016
	Millions
AA	$	16
BBB+ — BBB-	316
BB-	134
CCC	164
Total	$	630

The “BB-” and the “CCC” ratings in the preceding table represent lease receivables related to coal-fired assets in Illinois and Pennsylvania, respectively. As of September 30, 2016, the gross investment in the leases of such assets, net of non-recourse debt, was $436 million ($(108) million, net of deferred taxes). A more detailed description of such assets under lease, as of September 30, 2016, is presented in the following table.




Asset	Location	Gross Investment		% Owned		Total MW	Fuel Type	Counterparties’ S&P Credit Ratings	Counterparty
		Millions
Powerton Station Units 5 and 6	IL	$	134	64	%	1,538	Coal	BB-	NRG Energy, Inc.
Joliet Station Units 7 and 8	IL	$	83	64	%	1,044	Gas	BB-	NRG Energy, Inc.
Keystone Station Units 1 and 2	PA	$	55	17	%	1,711	Coal	CCC (B)	REMA
Conemaugh Station Units 1 and 2	PA	$	55	17	%	1,711	Coal	CCC (B)	REMA
Shawville Station Units 1, 2, 3 and 4	PA	$	109	100	%	603	Coal (A)	CCC (B)	REMA


(A)	REMA notified PJM that it deactivated the coal-fired units at the Shawville generating facility in June 2015 and has disclosed that it expects to return the Shawville units to service in the late fall of 2016 with the ability to use natural gas.

(B)

On May 24, 2016, S&P lowered its corporate credit rating on REMA’s parent company, GenOn Energy Inc. (GenOn) and affiliates (including REMA) to “CCC” from “CCC+” due to a weaker forward power curve, milder weather patterns and weakening financial measures. On October 7, 2016, Moody’s downgraded the GenOn Corporate Family Rating to Caa3 to reflect its high debt burden relative to cash flow. GenOn reported in August 2016 that it did not expect to have sufficient liquidity to repay the senior unsecured notes due in June 2017.

The credit exposure for lessors is partially mitigated through various credit enhancement mechanisms within the lease transactions. These credit enhancement features vary from lease to lease and may include letters of credit or affiliate guarantees. Upon the occurrence of certain defaults, indirect subsidiary companies of Energy Holdings would exercise their rights and attempt to seek recovery of their investment, potentially including stepping into the lease directly to protect their investments. While these actions could ultimately protect or mitigate the loss of value, they could require the use of significant capital investments and trigger certain material tax obligations which could be mitigated by tax indemnification claims with the counterparty. A bankruptcy of a lessee would likely delay and potentially limit any efforts on the part of the lessors to assert their rights upon default and could delay the monetization of claims. Failure to recover adequate value could ultimately lead to a foreclosure on the assets under lease by the lenders. Although all lease payments are current, PSEG cannot predict the outcome of GenOn’s efforts to restructure its portfolio and improve its liquidity and the possible related impact on REMA. PSEG continues to monitor any changes to REMA’s and GenOn’s status and potential impacts on Energy Holdings’ lease investments. If foreclosures were to occur, Energy Holdings could potentially record a pre-tax write-off up to its gross investment in these facilities and may also be required to pay significant cash tax liabilities to the Internal Revenue Service.

Although all lease payments are current, no assurances can be given that future payments in accordance with the lease contracts will continue. Factors which may impact future lease cash flows include, but are not limited to, new environmental legislation and regulation regarding air quality, water and other discharges in the process of generating electricity, market prices for fuel, electricity and capacity, overall financial condition of lease counterparties and their affiliates and the quality and condition of assets under lease.

PSE And G [Member]

Schedule of Financial Receivables [Line Items]

Financing Receivables

PSE&G




Outstanding Loans by Class of Customer
	As of		As of
Consumer Loans	September 30, 2016		December 31, 2015
	Millions
Commercial/Industrial	$	165	$	177
Residential	11		12
Total	$	176	$	189

Energy Holdings

The following table shows Energy Holdings’ gross and net lease investment as of September 30, 2016 and December 31, 2015, respectively.




	As of			As of
	September 30, 2016			December 31, 2015
	Millions
Lease Receivables (net of Non-Recourse Debt)	$	630		$	631
Estimated Residual Value of Leased Assets	346			519
Total Investment in Rental Receivables	976			1,150
Unearned and Deferred Income	(320		)	(366		)
Gross Investment in Leases	656			784
Deferred Tax Liabilities	(661		)	(724		)
Net Investment in Leases	$	(5	)	$	60




	Lease Receivables, Net of Non-Recourse Debt
Counterparties’ Credit Rating Standard & Poor’s (S&P) as of September 30, 2016
	As of September 30, 2016
	Millions
AA	$	16
BBB+ — BBB-	316
BB-	134
CCC	164
Total	$	630




Asset	Location	Gross Investment		% Owned		Total MW	Fuel Type	Counterparties’ S&P Credit Ratings	Counterparty
		Millions
Powerton Station Units 5 and 6	IL	$	134	64	%	1,538	Coal	BB-	NRG Energy, Inc.
Joliet Station Units 7 and 8	IL	$	83	64	%	1,044	Gas	BB-	NRG Energy, Inc.
Keystone Station Units 1 and 2	PA	$	55	17	%	1,711	Coal	CCC (B)	REMA
Conemaugh Station Units 1 and 2	PA	$	55	17	%	1,711	Coal	CCC (B)	REMA
Shawville Station Units 1, 2, 3 and 4	PA	$	109	100	%	603	Coal (A)	CCC (B)	REMA


(A)	REMA notified PJM that it deactivated the coal-fired units at the Shawville generating facility in June 2015 and has disclosed that it expects to return the Shawville units to service in the late fall of 2016 with the ability to use natural gas.

(B)