Long-Term Investments

12 Months Ended

Dec. 31, 2019

Long-Term Investments [Line Items]

Long-Term Investments [Text Block]

Long-Term Investments

Long-Term Investments as of December 31, 2019 and 2018 included the following:

	As of December 31,
	2019		2018
	Millions
PSE&G
Life Insurance and Supplemental Benefits	$	111	$	121
Solar Loans	137		149
PSEG Power
Equity Method Investments (A)	66		86
Energy Holdings
Lease Investments	497		540
Equity Method Investments	1		—
Total Long-Term Investments	$	812	$	896

(A) During the three years ended December 31, 2019, 2018 and 2017, dividends from these investments were $15 million, $16 million and $18 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 second quarter of 2019, Energy Holdings completed its annual review of estimated residual values embedded in the leveraged leases. The outcome indicated that the updated residual value estimate of the coal-fired Powerton lease was lower than the recorded residual value and the decline was deemed to be other than temporary as a result of expected future adverse market conditions. As a result, a pre-tax write-down of $58 million was reflected in Operating Revenues in 2019, calculated by comparing the gross investment in the leases before and after the revised residual estimates.

In the first quarter of 2020, PSEG’s Board of Directors approved the marketing and sale of certain non-core assets held by subsidiaries of Energy Holdings. As a result, PSEG expects to reclassify approximately $160 million as Assets Held for Sale on its Consolidated Balance Sheet in the first quarter of 2020.

Due to liquidity issues facing NRG REMA, LLC (REMA) prior to its emergence from bankruptcy protection, economic challenges facing coal generation in PJM and based upon ongoing reviews of available alternatives as well as certain discussions with REMA management leading up to and in connection with REMA’s bankruptcy, Energy Holdings recorded pre-tax charges of $20 million in 2018 and $77 million (including a residual value impairment of $7 million) in 2017. Pre-tax charges were reflected in Operating Revenues in each year and are included in Gross Investment in Leases as of December 31, 2019.

In December 2018, REMA emerged from its in-court proceeding under Chapter 11 of the Bankruptcy Code. As a result of the restructuring, Energy Holdings recognized a pre-tax gain in Operating Revenues of approximately $12 million ($9 million after tax). PSEG realized the remaining tax liability related to the restructuring of approximately $120 million with the filing of the consolidated federal and state income tax returns in 2019.

The following table shows Energy Holdings’ gross and net lease investment as of December 31, 2019 and 2018.

	As of December 31,
	2019			2018
	Millions
Lease Receivables (net of Non-Recourse Debt)	$	498		$	504
Estimated Residual Value of Leased Assets	202			326
Total Investment in Rental Receivables	700			830
Unearned and Deferred Income	(203		)	(290		)
Gross Investments in Leases	497			540
Deferred Tax Liabilities	(328		)	(354		)
Net Investments in Leases	$	169		$	186

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

	Years Ended December 31,
	2019			2018		2017
	Millions
Pre-Tax Income (Loss) from Leases	$	(39	)	$	17	$	(69	)
Income Tax Expense (Benefit) on Income from Leases	$	(22	)	$	6	$	(26	)

Equity Method Investments

PSEG Power had the following equity method investments as of December 31, 2019 and 2018:

	As of December 31,
Name	2019		2018		Location	% Owned
	Millions
PSEG Power
Keystone Fuels, LLC (A)	$	—	$	9	PA	23%
Conemaugh Fuels, LLC (A)	—		8		PA	23%
Kalaeloa	66		69		HI	50%
Total	$	66	$	86

(A)

In September 2019, PSEG Power completed the sale of its ownership interests in the Keystone and Conemaugh generation plants and related assets and liabilities.

Public Service Electric and Gas Company

Long-Term Investments [Line Items]

Long-Term Investments [Text Block]

Long-Term Investments

Long-Term Investments as of December 31, 2019 and 2018 included the following:

	As of December 31,
	2019		2018
	Millions
PSE&G
Life Insurance and Supplemental Benefits	$	111	$	121
Solar Loans	137		149
PSEG Power
Equity Method Investments (A)	66		86
Energy Holdings
Lease Investments	497		540
Equity Method Investments	1		—
Total Long-Term Investments	$	812	$	896

(A) During the three years ended December 31, 2019, 2018 and 2017, dividends from these investments were $15 million, $16 million and $18 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 second quarter of 2019, Energy Holdings completed its annual review of estimated residual values embedded in the leveraged leases. The outcome indicated that the updated residual value estimate of the coal-fired Powerton lease was lower than the recorded residual value and the decline was deemed to be other than temporary as a result of expected future adverse market conditions. As a result, a pre-tax write-down of $58 million was reflected in Operating Revenues in 2019, calculated by comparing the gross investment in the leases before and after the revised residual estimates.

In the first quarter of 2020, PSEG’s Board of Directors approved the marketing and sale of certain non-core assets held by subsidiaries of Energy Holdings. As a result, PSEG expects to reclassify approximately $160 million as Assets Held for Sale on its Consolidated Balance Sheet in the first quarter of 2020.

Due to liquidity issues facing NRG REMA, LLC (REMA) prior to its emergence from bankruptcy protection, economic challenges facing coal generation in PJM and based upon ongoing reviews of available alternatives as well as certain discussions with REMA management leading up to and in connection with REMA’s bankruptcy, Energy Holdings recorded pre-tax charges of $20 million in 2018 and $77 million (including a residual value impairment of $7 million) in 2017. Pre-tax charges were reflected in Operating Revenues in each year and are included in Gross Investment in Leases as of December 31, 2019.

In December 2018, REMA emerged from its in-court proceeding under Chapter 11 of the Bankruptcy Code. As a result of the restructuring, Energy Holdings recognized a pre-tax gain in Operating Revenues of approximately $12 million ($9 million after tax). PSEG realized the remaining tax liability related to the restructuring of approximately $120 million with the filing of the consolidated federal and state income tax returns in 2019.

The following table shows Energy Holdings’ gross and net lease investment as of December 31, 2019 and 2018.

	As of December 31,
	2019			2018
	Millions
Lease Receivables (net of Non-Recourse Debt)	$	498		$	504
Estimated Residual Value of Leased Assets	202			326
Total Investment in Rental Receivables	700			830
Unearned and Deferred Income	(203		)	(290		)
Gross Investments in Leases	497			540
Deferred Tax Liabilities	(328		)	(354		)
Net Investments in Leases	$	169		$	186

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

	Years Ended December 31,
	2019			2018		2017
	Millions
Pre-Tax Income (Loss) from Leases	$	(39	)	$	17	$	(69	)
Income Tax Expense (Benefit) on Income from Leases	$	(22	)	$	6	$	(26	)

Equity Method Investments

PSEG Power had the following equity method investments as of December 31, 2019 and 2018:

	As of December 31,
Name	2019		2018		Location	% Owned
	Millions
PSEG Power
Keystone Fuels, LLC (A)	$	—	$	9	PA	23%
Conemaugh Fuels, LLC (A)	—		8		PA	23%
Kalaeloa	66		69		HI	50%
Total	$	66	$	86

(A)

In September 2019, PSEG Power completed the sale of its ownership interests in the Keystone and Conemaugh generation plants and related assets and liabilities.

PSEG Power LLC

Long-Term Investments [Line Items]

Long-Term Investments [Text Block]

Long-Term Investments

Long-Term Investments as of December 31, 2019 and 2018 included the following:

	As of December 31,
	2019		2018
	Millions
PSE&G
Life Insurance and Supplemental Benefits	$	111	$	121
Solar Loans	137		149
PSEG Power
Equity Method Investments (A)	66		86
Energy Holdings
Lease Investments	497		540
Equity Method Investments	1		—
Total Long-Term Investments	$	812	$	896

(A) During the three years ended December 31, 2019, 2018 and 2017, dividends from these investments were $15 million, $16 million and $18 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 second quarter of 2019, Energy Holdings completed its annual review of estimated residual values embedded in the leveraged leases. The outcome indicated that the updated residual value estimate of the coal-fired Powerton lease was lower than the recorded residual value and the decline was deemed to be other than temporary as a result of expected future adverse market conditions. As a result, a pre-tax write-down of $58 million was reflected in Operating Revenues in 2019, calculated by comparing the gross investment in the leases before and after the revised residual estimates.

In the first quarter of 2020, PSEG’s Board of Directors approved the marketing and sale of certain non-core assets held by subsidiaries of Energy Holdings. As a result, PSEG expects to reclassify approximately $160 million as Assets Held for Sale on its Consolidated Balance Sheet in the first quarter of 2020.

Due to liquidity issues facing NRG REMA, LLC (REMA) prior to its emergence from bankruptcy protection, economic challenges facing coal generation in PJM and based upon ongoing reviews of available alternatives as well as certain discussions with REMA management leading up to and in connection with REMA’s bankruptcy, Energy Holdings recorded pre-tax charges of $20 million in 2018 and $77 million (including a residual value impairment of $7 million) in 2017. Pre-tax charges were reflected in Operating Revenues in each year and are included in Gross Investment in Leases as of December 31, 2019.

In December 2018, REMA emerged from its in-court proceeding under Chapter 11 of the Bankruptcy Code. As a result of the restructuring, Energy Holdings recognized a pre-tax gain in Operating Revenues of approximately $12 million ($9 million after tax). PSEG realized the remaining tax liability related to the restructuring of approximately $120 million with the filing of the consolidated federal and state income tax returns in 2019.

The following table shows Energy Holdings’ gross and net lease investment as of December 31, 2019 and 2018.

	As of December 31,
	2019			2018
	Millions
Lease Receivables (net of Non-Recourse Debt)	$	498		$	504
Estimated Residual Value of Leased Assets	202			326
Total Investment in Rental Receivables	700			830
Unearned and Deferred Income	(203		)	(290		)
Gross Investments in Leases	497			540
Deferred Tax Liabilities	(328		)	(354		)
Net Investments in Leases	$	169		$	186

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

	Years Ended December 31,
	2019			2018		2017
	Millions
Pre-Tax Income (Loss) from Leases	$	(39	)	$	17	$	(69	)
Income Tax Expense (Benefit) on Income from Leases	$	(22	)	$	6	$	(26	)

Equity Method Investments

PSEG Power had the following equity method investments as of December 31, 2019 and 2018:

	As of December 31,
Name	2019		2018		Location	% Owned
	Millions
PSEG Power
Keystone Fuels, LLC (A)	$	—	$	9	PA	23%
Conemaugh Fuels, LLC (A)	—		8		PA	23%
Kalaeloa	66		69		HI	50%
Total	$	66	$	86

(A)

In September 2019, PSEG Power completed the sale of its ownership interests in the Keystone and Conemaugh generation plants and related assets and liabilities.