0000788784-95-000009.txt : 19950815
0000788784-95-000009.hdr.sgml : 19950815
ACCESSION NUMBER: 0000788784-95-000009
CONFORMED SUBMISSION TYPE: 10-Q
PUBLIC DOCUMENT COUNT: 8
CONFORMED PERIOD OF REPORT: 19950630
FILED AS OF DATE: 19950814
SROS: NYSE
SROS: PHLX
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: PUBLIC SERVICE ENTERPRISE GROUP INC
CENTRAL INDEX KEY: 0000788784
STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931]
IRS NUMBER: 222625848
STATE OF INCORPORATION: NJ
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-Q
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-09120
FILM NUMBER: 95562906
BUSINESS ADDRESS:
STREET 1: 80 PARK PLZ
STREET 2: P O BOX 1171
CITY: NEWARK
STATE: NJ
ZIP: 07101
BUSINESS PHONE: 2014307000
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: PUBLIC SERVICE ELECTRIC & GAS CO
CENTRAL INDEX KEY: 0000081033
STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931]
IRS NUMBER: 221212800
STATE OF INCORPORATION: NJ
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-Q
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-00973
FILM NUMBER: 95562907
BUSINESS ADDRESS:
STREET 1: 80 PARK PLZ
STREET 2: PO BOX 570
CITY: NEWARK
STATE: NJ
ZIP: 07101
BUSINESS PHONE: 2014307000
10-Q
1
FORM 10-Q PSE&G, PS ENTERPRISE
===========================================================================
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
Commission file number 1-9120
Public Service Enterprise Group Incorporated
------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-2625848
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
80 Park Plaza, P. O. Box 1171, Newark, New Jersey 07101-1171
------------------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 201 430-7000
------------
Commission file number 1-973
Public Service Electric and Gas Company
------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-1212800
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
80 Park Plaza, P. O. Box 570, Newark, New Jersey 07101-0570
------------------------------------------------ ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 201 430-7000
------------
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes x No
---- ----
The number of shares outstanding of Public Service Enterprise Group
Incorporated's sole class of common stock, as of the latest practicable
date, was as follows:
Class Outstanding at July 31, 1995
----- -----------------------------
Common Stock, without par value 244,697,930
As of July 31, 1995, Public Service Electric and Gas Company had
issued and outstanding 132,450,344 shares of Common Stock, without nominal
or par value, all of which were privately held, beneficially and of record
by Public Service Enterprise Group Incorporated.
===========================================================================
TABLE OF CONTENTS
-----------------
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Public Service Enterprise Group Incorporated (Enterprise):
Consolidated Statements of Income for the Three, Six and
Twelve Months Ended June 30, 1995 and 1994 .................... 1
Consolidated Balance Sheets as of June 30, 1995, 1994
and December 31, 1994 ......................................... 2
Consolidated Statements of Cash Flows for the Six and
Twelve Months Ended June 30, 1995 and 1994 .................... 4
Consolidated Statements of Retained Earnings for the
Three, Six and Twelve Months Ended June 30, 1995 and 1994 ..... 5
Public Service Electric and Gas Company (PSE&G):
Consolidated Statements of Income for the Three, Six and
Twelve Months Ended June 30, 1995 and 1994 .................... 6
Consolidated Balance Sheets as of June 30, 1995,
1994 and December 31, 1994 .................................... 7
Consolidated Statements of Cash Flows for the Six and
Twelve Months Ended June 30, 1995 and 1994 .................... 9
Consolidated Statements of Retained Earnings for the
Three, Six and Twelve Months Ended June 30, 1995 and 1994 ..... 10
Notes to Consolidated Financial Statements - Enterprise........... 11
Notes to Consolidated Financial Statements - PSE&G................ 19
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Enterprise ......................................... 20
PSE&G .............................................. 30
i
TABLE OF CONTENTS
-----------------
Page
----
PART II. OTHER INFORMATION
Item 5. Other Information ........................................ 32
Item 6. Exhibits and Reports on Form 8-K ......................... 38
Signatures - Public Service Enterprise Group Incorporated ......... 39
Signatures - Public Service Electric and Gas Company .............. 39
ii
GLOSSARY OF TERMS
The following is a glossary of frequently used abbreviations or acronyms
that are found in this report:
TERM MEANING
----------------------- ----------------------------------------------
AFDC................... Allowance for Funds used During Construction
BPU.................... New Jersey Board of Public Utilities
Capital................ PSEG Capital Corporation
CEA.................... Community Energy Alternatives Incorporated
DSM.................... Demand Side Management
DSM Plan............... DSM Incentive Resource Plan
EBIT................... Earnings before interest and taxes
EDC.................... Energy Development Corporation
EDHI................... Enterprise Diversified Holdings Incorporated
EGDC................... Enterprise Group Development Corporation
Enterprise............. Public Service Enterprise Group Incorporated
EPA.................... United States Environmental Protection Agency
EPACT.................. Energy Policy Act
FERC................... Federal Energy Regulatory Commission
Fuelco................. PSE&G Fuel Corporation
Funding................ Enterprise Capital Funding Corporation
IRP.................... Integrated Electric Resource Plan
Hope Creek............. Hope Creek Nuclear Generating Station
KWH.................... Kilowatthours
LEAC................... Electric Levelized Energy Adjustment Clause
LGAC................... Levelized Gas Adjustment Charge
MD&A................... Management's Discussion and Analysis of
Financial Condition and Results of Operations
MIPS................... Monthly Income Preferred Securities
Mortgage............... First and Refunding Mortgage of PSE&G
MTNs................... Medium-Term Notes
MW..................... Megawatts
MWH.................... Megawatthours
iii
TERM MEANING
----------------------- ----------------------------------------------
NEIL.................. Nuclear Electric Insurance Limited
NJDEP................. New Jersey Department of Environmental
Protection
NJGRT................. New Jersey Gross Receipts and Franchise Tax
NOPR................... Notice of Proposed Rulemaking
NPS.................... The BPU's nuclear performance standard
established for nuclear generating stations
owned by New Jersey electric utilities
NRC.................... Nuclear Regulatory Commission
Partnership............ Public Service Electric and Gas Capital, L.P.
Peach Bottom........... Peach Bottom Atomic Power Station, Units 2
and 3
PECO................... PECO Energy, Inc.
Price Anderson......... Price-Anderson liability provisions of the
Atomic Energy Act of 1954, as amended
PSE&G.................. Public Service Electric and Gas Company
PSCRC.................. Public Service Conservation Resources
Corporation
PSRC................... Public Service Resources Corporation
RAC.................... Remediation Adjustment Clause
Remediation Program.... PSE&G Manufactured Gas Plant Remediation
Program
Salem.................. Salem Nuclear Generating Station, Units 1 and 2
SEC.................... Securities and Exchange Commission
Ventures............... Enterprise Ventures and Service Corporation
iv
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
The financial statements included herein as of June 30, 1995 and 1994 and for the periods then ended
are unaudited but, in the opinion of Enterprise's management, reflect all adjustments, consisting only of
normal recurring accruals, necessary for a fair presentation.
CONSOLIDATED STATEMENTS OF INCOME
(Thousands of Dollars)
Three Months Ended Six Months Ended Twelve Months Ended
June 30, June 30, June 30,
------------------------ ------------------------ ------------------------
1995 1994 1995 1994 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
OPERATING REVENUES
Electric......................$ 966,245 $ 903,348 $ 1,911,283 $ 1,792,690 $ 3,858,306 $ 3,726,181
Gas........................... 269,190 279,532 903,668 1,081,189 1,601,007 1,787,322
Nonutility Activities......... 93,349 96,708 190,101 201,166 393,137 428,404
----------- ----------- ----------- ----------- ----------- -----------
Total Operating Revenues.. 1,328,784 1,279,588 3,005,052 3,075,045 5,852,450 5,941,907
----------- ----------- ----------- ----------- ----------- -----------
OPERATING EXPENSES
Operation
Fuel for Electric
Generation and
Interchanged Power........ 210,214 158,250 418,324 325,451 788,636 688,726
Gas Purchased and Materials
for Gas Produced......... 166,011 163,986 510,204 624,542 909,618 1,034,829
Other...................... 265,665 257,334 519,571 507,512 1,130,582 1,038,752
Maintenance................... 68,038 75,437 132,083 151,912 288,251 325,235
Depreciation and Amortization 169,286 157,932 333,542 314,171 653,399 618,493
Property Impairments.......... -- -- -- -- -- 77,637
Taxes
Federal Income Taxes....... 55,642 67,824 162,431 188,298 286,684 343,801
New Jersey Gross Receipts
Taxes.................... 139,274 125,400 316,063 316,703 582,527 609,877
Other...................... 21,415 20,700 45,260 44,783 82,759 81,200
----------- ----------- ----------- ----------- ----------- -----------
Total Operating Expenses.. 1,095,545 1,026,863 2,437,478 2,473,372 4,722,456 4,818,550
----------- ----------- ----------- ----------- ----------- -----------
OPERATING INCOME............... 233,239 252,725 567,574 601,673 1,129,994 1,123,357
----------- ----------- ----------- ----------- ----------- -----------
OTHER INCOME
Allowance for Funds Used
During Construction -
Equity..................... 1,787 1,874 3,269 3,662 12,396 10,482
Miscellaneous - net.......... 1,555 1,348 3,557 2,503 7,484 (5,071)
----------- ----------- ----------- ----------- ----------- -----------
Total Other Income...... 3,342 3,222 6,826 6,165 19,880 5,411
----------- ----------- ----------- ----------- ----------- -----------
INCOME BEFORE INTEREST CHARGES
AND DIVIDENDS ON PREFERRED
SECURITIES................... 236,581 255,947 574,400 607,838 1,149,874 1,128,768
----------- ----------- ----------- ----------- ----------- -----------
INTEREST CHARGES
Long-Term Debt............... 111,193 115,947 222,797 228,059 453,896 458,195
Short-Term Debt.............. 7,592 6,086 12,419 9,920 26,461 17,946
Other........................ 7,128 1,624 13,833 4,475 22,163 13,669
----------- ----------- ----------- ----------- ----------- -----------
Total Interest Charges.. 125,913 123,657 249,049 242,454 502,520 489,810
Allowance for Funds Used During
Construction - Debt and
Capitalized Interest.......... (12,196) (7,739) (22,302) (15,052) (41,043) (26,746)
----------- ----------- ----------- ----------- ----------- -----------
Net Interest Charges........... 113,717 115,918 226,747 227,402 461,477 463,064
----------- ----------- ----------- ----------- ----------- -----------
Preferred Securities Dividend
Requirements................. 12,197 10,144 24,394 20,424 46,117 39,959
----------- ----------- ----------- ----------- ----------- -----------
NET INCOME.....................$ 110,667 $ 129,885 $ 323,259 $ 360,012 $ 642,280 $ 625,745
=========== =========== =========== =========== =========== ===========
SHARES OF COMMON STOCK
OUTSTANDING
End of Period ................244,697,930 244,697,930 244,697,930 244,697,930 244,697,930 244,697,930
Average for Period ...........244,697,930 244,697,930 244,697,930 244,239,893 244,697,930 243,296,564
EARNINGS PER AVERAGE SHARE OF
COMMON STOCK................... $.45 $.53 $1.32 $1.47 $2.62 $2.57
=========== =========== =========== =========== =========== ===========
DIVIDENDS PAID PER SHARE OF
COMMON STOCK ................. $.54 $.54 $1.08 $1.08 $2.16 $2.16
=========== =========== =========== =========== ========== ===========
See Notes to Consolidated Financial Statements.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
June 30, June 30, December 31,
ASSETS 1995 1994 1994
------ ------------ ------------ ------------
UTILITY PLANT - Original cost
Electric .............................................. $ 12,598,360 $ 12,193,592 $ 12,345,919
Gas ................................................... 2,381,112 2,227,899 2,318,233
Common ................................................ 522,689 525,102 545,131
------------ ------------ ------------
Total ............................................ 15,502,161 14,946,593 15,209,283
Less: accumulated depreciation and amortization........ 5,328,551 4,980,410 5,147,105
------------ ------------ ------------
Net .............................................. 10,173,610 9,966,183 10,062,178
Nuclear Fuel in Service, net of accumulated
amortization - $330,025, $270,360 and
$302,906, respectively ............................... 178,454 226,282 205,273
------------ ------------ ------------
Net Utility Plant in Service ..................... 10,352,064 10,192,465 10,267,451
Construction Work in Progress, including Nuclear
Fuel in Process - 92,846, 52,841 and
$65,429, respectively ................................ 756,753 680,640 806,934
Plant Held for Future Use ............................. 23,966 17,913 23,860
------------ ------------ ------------
Net Utility Plant ................................ 11,132,783 10,891,018 11,098,245
------------ ------------ ------------
INVESTMENTS AND OTHER PROPERTY
Long-Term Investments, net of amortization -$3,489,
$1,504 and $2,365, and net valuation allowances -
$17,105, $17,104 and $17,104 respectively .......... 1,693,605 1,657,420 1,625,952
Oil and Gas Property, Plant and Equipment, net of
accumulated depreciation and amortization -
$787,588, $736,059 and $748,245, respectively ....... 589,088 556,387 577,913
Real Estate Property and Equipment, net of accumulated
depreciation - $16,141, $12,525 and $14,242, and
net of valuation allowance - $23,306, $22,514 and
$23,264, respectively ............................... 111,307 104,920 115,210
Other Plant, net of accumulated depreciation
and amortization - $5,825, $4,149
and $4,653, respectively ............................ 28,298 28,474 36,063
Nuclear Decommissioning and Other Special Funds ....... 252,774 216,738 233,022
Other Assets - net .................................... 75,860 91,374 85,478
------------ ------------ ------------
Total Investments and Other Property ............. 2,750,932 2,655,313 2,673,638
------------ ------------ ------------
CURRENT ASSETS
Cash and Cash Equivalents ............................. 77,720 179,854 67,866
Accounts Receivable:
Customer Accounts Receivable ........................ 387,664 448,371 434,207
Other Accounts Receivable ........................... 183,248 157,620 211,779
Less: Allowance for Doubtful Accounts .............. 40,031 30,877 40,915
Unbilled Revenues ..................................... 128,309 129,973 204,056
Fuel, at average cost ................................. 257,488 224,130 268,927
Materials and Supplies, net of inventory valuation
reserves - $18,200,$8,525 and $18,200, respectively.. 149,359 166,478 148,285
Prepaid Gross Receipts Taxes .......................... 304,705 268,364 --
Deferred Income Taxes ................................. 23,967 15,868 25,311
Miscellaneous Current Assets .......................... 35,615 28,410 37,356
------------ ------------ ------------
Total Current Assets ............................. 1,508,044 1,588,191 1,356,872
------------ ------------ ------------
DEFERRED DEBITS
Property Abandonments - net ........................... 79,308 97,010 88,269
Oil and Gas Property Write-Down ....................... 38,655 43,809 41,232
Unamortized Debt Expense .............................. 127,747 126,571 134,599
Deferred OPEB Costs ................................... 182,736 133,334 116,476
Under Recovered Electric Energy and Gas Costs - net ... 138,394 161,368 172,563
Unrecovered Environmental Costs (note 2) .............. 134,436 135,691 138,435
Unrecovered Plant and Regulatory Study Costs .......... 35,475 35,412 37,128
Unrecovered SFAS 109 Deferred Income Taxes ............ 790,561 789,103 791,393
Deferred Decontamination and Decommissioning Costs .... 53,016 56,546 53,016
Other ................................................. 10,100 56,328 15,574
------------ ------------ ------------
Total Deferred Debits ............................ 1,590,428 1,635,172 1,588,685
------------ ------------ ------------
Total ............................................ $ 16,982,187 $ 16,769,694 $ 16,717,440
============ ============ ============
See Notes to Consolidated Financial Statements.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
June 30, June 30, December 31,
CAPITALIZATION AND LIABILITIES 1995 1994 1994
------------------------------ ------------ ------------ --------------
CAPITALIZATION
Common Equity
Common Stock .................................... $ 3,801,157 $ 3,801,157 $ 3,801,157
Retained Earnings ............................... 1,568,995 1,456,025 1,510,010
------------ ------------ ------------
Total Common Equity .......................... 5,370,152 5,257,182 5,311,167
Subsidiaries' Securities and Obligations
Preferred Securities
Preferred Stock Without Mandatory Redemption..... 384,994 459,994 384,994
Preferred Stock With Mandatory Redemption ....... 150,000 150,000 150,000
Monthly Income Preferred Securities ............. 150,000 -- 150,000
Long-Term Debt .................................... 5,235,367 5,375,709 5,180,657
------------ ------------ ------------
Total Capitalization ......................... 11,290,513 11,242,885 11,176,818
------------ ------------ ------------
OTHER LONG-TERM LIABILITIES
Decontamination, Decommissioning, and Low Level
Radwaste Costs .................................. 59,180 56,546 56,149
Environmental Costs (note 2) ...................... 105,600 108,039 105,684
Capital Lease Obligations ......................... 53,450 52,824 53,770
------------ ------------ ------------
Total Other Long-Term Liabilities............. 218,230 217,409 215,603
------------ ------------ ------------
CURRENT LIABILITIES
Long-Term Debt due within one year ................ 242,806 482,176 499,738
Commercial Paper and Loans ........................ 883,055 703,223 491,586
Book Overdrafts ................................... 58,833 35,461 86,576
Accounts Payable .................................. 402,160 369,636 433,471
Other Taxes Accrued ............................... 52,114 36,206 44,149
Interest Accrued .................................. 80,504 113,103 107,962
Estimated Liability for Vacation Pay .............. 30,334 31,546 27,080
Customer Deposits ................................. 32,942 35,450 33,698
Liability for Injuries and Damages ................ 30,568 28,129 29,814
Miscellaneous Environmental Liabilities ........... 14,255 4,375 15,365
Other ............................................. 55,232 42,108 87,480
------------ ------------ ------------
Total Current Liabilities .................... 1,882,803 1,881,413 1,856,919
------------ ------------ ------------
DEFERRED CREDITS
Accumulated Deferred Income Taxes ................. 2,949,305 2,821,054 2,905,390
Accumulated Deferred Investment Tax Credits ....... 402,459 422,790 412,466
Deferred OPEB Costs ............................... 182,736 133,334 116,476
Other ............................................. 56,141 50,809 33,768
------------ ------------ ------------
Total Deferred Credits ....................... 3,590,641 3,427,987 3,468,100
------------ ------------ ------------
COMMITMENTS AND CONTINGENCIES (note 2)
Total ........................................ $ 16,982,187 $ 16,769,694 $ 16,717,440
============ ============ ============
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
Six Months Ended Twelve Months Ended
June 30, June 30,
-------------------------- --------------------------
1995 1994 1995 1994
------------ ----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income .............................. $ 323,259 $ 360,012 $ 642,280 $ 625,745
Adjustments to reconcile net income to
net cash flows from operating activities:
Depreciation and Amortization ........... 333,542 314,171 653,399 618,493
Amortization of Nuclear Fuel ............ 47,490 44,827 97,836 94,955
Recovery (Deferral) of Electric Energy
and Gas Costs - net ................... 34,169 (99,334) 22,974 (217,818)
Loss from Property Impairments .......... -- -- -- 77,637
Amortization of Discounts on Property
Abandonments and Disallowance.......... (3,038) (3,481) (6,300) (7,177)
Unrealized Gains on Investments - net.... (9,311) (8,906) (26,734) (13,718)
Provision for Deferred Income
Taxes - net............................ 37,930 98,964 77,885 195,311
Investment Tax Credits - net ............ (10,007) (9,923) (20,331) (19,647)
Allowance for Funds Used During
Construction - Debt and Equity and
Capitalized Interest................... (25,571) (18,714) (53,439) (37,228)
Proceeds from Leasing Activities - net... 3,783 3,476 27,989 14,857
Changes in certain current assets
and liabilities:
Net decrease in Accounts Receivable
and Unbilled Revenues................ 149,937 188,480 45,897 21,804
Net decrease (increase) in Inventory -
Fuel and Materials and Supplies...... 10,365 67,773 (16,239) 31,519
Net (decrease) increase in
Accounts Payable..................... (31,311) (149,625) 32,524 (28,541)
Net change in Prepaid/Accrued
Taxes................................ (296,740) (535,125) (20,433) (252,641)
Net change in Other Current Assets
and liabilities...................... (54,479) 8,449 (26,180) (16,577)
Other ................................... 39,456 33,521 55,571 10,407
------------ ----------- ----------- ------------
Net cash provided by operating
activities ......................... 549,474 294,565 1,486,699 1,097,381
------------ ----------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Utility Plant,
excluding AFDC ........................ (312,685) (360,415) (801,444) (938,121)
Additions to Oil and Gas Property,
Plant and Equipment, excluding
Capitalized Interest .................. (54,563) (92,254) (111,832) (138,029)
Net (increase) decrease in Long-Term
Investments and Real Estate ........... (62,751) (12,790) 8,455 100,784
Increase in Decommissioning and Other
Special Funds, excluding interest ..... (14,782) (20,567) (29,609) (26,170)
Cost of Plant Removal - net ............. (13,677) (18,688) (28,951) (48,546)
Other ................................... 14,756 (1,122) 23,032 (10,603)
------------ ----------- ----------- ------------
Net cash used in investing
activities ......................... (443,702) (505,836) (940,349) (1,060,685)
------------ ----------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in Short-Term Debt ......... 391,469 125,587 179,832 485,117
(Decrease) increase in Book Overdrafts .. (27,743) (27,531) 23,372 (14,674)
Issuance of Long-Term Debt .............. 100,000 664,365 285,435 1,642,065
Redemption of Long-Term Debt ............ (302,222) (230,865) (665,147) (1,745,918)
Long-Term Debt Issuance and
Redemption Costs ...................... -- -- (29,811) (50,154)
Issuance of Preferred Stock ............. -- 75,000 -- 75,000
Redemption of Preferred Stock ........... -- (45,000) (75,000) (45,000)
Issuance of Monthly Income
Preferred Securities .................. -- -- 150,000 --
Issuance of Common Stock ................ -- 28,495 -- 94,093
Cash Dividends Paid on Common Stock ..... (264,274) (263,797) (528,548) (525,628)
Other ................................... 6,852 (6,501) 11,383 (7,760)
------------ ----------- ----------- -----------
Net cash (used in) provided by
financing activities ............. (95,918) 319,753 (648,484) (92,859)
------------ ----------- ----------- -----------
Net increase (decrease) in Cash and
Cash Equivalents ........................ 9,854 108,482 (102,134) (56,163)
Cash and Cash Equivalents at Beginning
of Period ............................... 67,866 71,372 179,854 236,017
------------ ----------- ----------- -----------
Cash and Cash Equivalents at
End of Period............................ $ 77,720 $ 179,854 $ 77,720 $ 179,854
============ =========== =========== ===========
Income Taxes Paid ......................... $ 125,104 $ 94,629 $ 185,579 $ 161,159
Interest Paid ............................. $ 230,210 $ 212,025 $ 451,058 $ 438,456
See Notes to Consolidated Financial Statements.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(Thousands of Dollars)
Three Months Ended Six Months Ended Twelve Months Ended
June 30, June 30, June 30,
------------------------ ------------------------ ------------------------
1995 1994 1995 1994 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
Balance at Beginning of
Period......................$ 1,590,464 $ 1,458,357 $ 1,510,010 $ 1,361,018 $ 1,456,025 $ 1,358,284
Add:
Net Income ................. 110,667 129,885 323,259 360,012 642,280 625,745
----------- ----------- ----------- ----------- ----------- -----------
Total ................... 1,701,131 1,588,242 1,833,269 1,721,030 2,098,305 1,984,029
----------- ----------- ----------- ----------- ----------- -----------
Deduct:
Cash Dividends on
Common Stock ............. 132,136 132,137 264,274 263,797 528,548 525,628
Capital Stock Expenses ..... -- 80 -- 1,208 762 2,376
----------- ----------- ----------- ----------- ----------- -----------
Total Deductions ........ 132,136 132,217 264,274 265,005 529,310 528,004
----------- ----------- ----------- ----------- ----------- -----------
Balance at End of Period .....$ 1,568,995 $ 1,456,025 $ 1,568,995 $ 1,456,025 $ 1,568,995 $ 1,456,025
=========== =========== =========== =========== =========== ===========
See Notes to Consolidated Financial Statements.
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
The financial statements included herein as of June 30, 1995 and 1994 and for the periods then ended
are unaudited but, in the opinion of PSE&G's management, reflect all adjustments, consisting only of normal
recurring accruals, necessary for a fair representation.
CONSOLIDATED STATEMENTS OF INCOME
(Thousands of Dollars)
Three Months Ended Six Months Ended Twelve Months Ended
June 30, June 30, June 30,
------------------------ ------------------------ ------------------------
1995 1994 1995 1994 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
OPERATING REVENUES
Electric ..................$ 966,245 $ 903,348 $ 1,911,283 $ 1,792,690 $ 3,658,306 $ 3,726,181
Gas ....................... 269,190 279,532 903,668 1,081,189 1,601,007 1,787,322
----------- ----------- ----------- ----------- ----------- -----------
Total Operating
Revenues ........... 1,235,435 1,182,880 2,814,951 2,873,879 5,459,313 5,513,503
----------- ----------- ----------- ----------- ----------- -----------
OPERATING EXPENSES
Operation
Fuel for Electric
Generation and Net
Interchanged Power .... 210,214 158,250 418,324 325,451 788,636 688,726
Gas Purchased and
Materials for Gas
Produced .............. 166,011 168,064 510,204 633,204 913,701 1,053,830
Other ................... 226,384 218,217 446,601 433,535 972,925 894,125
Maintenance ............... 68,038 75,437 132,083 151,912 288,251 325,235
Depreciation and
Amortization ............ 148,275 137,045 291,868 272,050 571,190 532,868
Taxes:
Federal Income Taxes .... 53,576 63,879 155,860 177,308 273,081 333,870
New Jersey Gross Receipts
Taxes ................. 139,274 125,400 316,063 316,703 582,527 609,877
Other ................... 19,057 18,363 40,910 40,478 76,532 70,939
----------- ----------- ----------- ----------- ----------- -----------
Total Operating
Expenses ........... 1,030,829 964,655 2,311,913 2,350,641 4,466,843 4,509,470
----------- ----------- ----------- ----------- ----------- -----------
OPERATING INCOME ............ 204,606 218,225 503,038 523,238 992,470 1,004,033
----------- ----------- ----------- ----------- ----------- -----------
OTHER INCOME
Allowance for Funds Used
During Construction -
Equity .................. 1,787 1,874 3,269 3,662 12,396 10,482
Miscellaneous - net ....... 1,499 1,343 3,350 2,496 7,087 (5,260)
----------- ----------- ----------- ----------- ----------- -----------
Total Other Income ... 3,286 3,217 6,619 6,158 19,483 5,222
----------- ----------- ----------- ----------- ----------- -----------
INCOME BEFORE INTEREST
CHARGES AND DIVIDENDS ON
PREFERRED SECURITIES....... 207,892 221,442 509,657 529,396 1,011,953 1,009,255
----------- ----------- ----------- ----------- ----------- -----------
INTEREST CHARGES
Long-Term Debt ............ 91,610 92,514 183,102 180,841 369,155 358,997
Short-Term Debt ........... 4,833 4,954 6,783 7,213 17,745 11,850
Other ..................... 7,012 1,479 13,543 2,765 21,634 11,754
----------- ----------- ----------- ----------- ----------- -----------
Total Interest Charges 103,455 98,947 203,428 190,819 408,534 382,601
Allowance for Funds Used
During Construction - Debt. (10,380) (5,618) (18,999) (10,975) (33,343) (19,513)
----------- ----------- ----------- ----------- ----------- -----------
Net Interest Charges ........ 93,075 93,329 184,429 179,844 375,191 363,088
----------- ----------- ----------- ----------- ----------- -----------
Monthly Income Preferred
Securities Dividend
Requirements .............. 3,517 -- 7,032 -- 8,712 --
----------- ----------- ----------- ----------- ----------- -----------
NET INCOME .................. 111,300 128,113 318,196 349,552 628,050 646,167
----------- ----------- ----------- ----------- ----------- -----------
Preferred Stock Dividend
Requirements .............. 8,680 10,144 17,362 20,424 37,405 39,959
----------- ----------- ----------- ----------- ----------- -----------
EARNINGS AVAILABLE TO PUBLIC
SERVICE ENTERPRISE GROUP
INCORPORATED ..............$ 102,620 $ 117,969 $ 300,834 $ 329,128 $ 590,645 $ 606,208
=========== =========== =========== =========== =========== ===========
See Notes to Consolidated Financial Statements.
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
June 30, June 30, December 31,
ASSETS 1995 1994 1994
------ ------------ ------------ -------------
UTILITY PLANT - Original cost
Electric ................................................. $ 12,598,360 $ 12,193,592 $ 12,345,919
Gas ...................................................... 2,381,112 2,227,899 2,318,233
Common ................................................... 522,689 525,102 545,131
------------ ------------ ------------
Total ............................................... 15,502,161 14,946,593 15,209,283
Less: accumulated depreciation and amortization........... 5,328,551 4,980,410 5,147,105
------------ ------------ ------------
Net ................................................. 10,173,610 9,966,183 10,062,178
Nuclear Fuel in Service, net of accumulated
amortization - $330,025, $270,360 and
$302,906, respectively .................................. 178,454 226,282 205,273
------------ ------------ ------------
Net Utility Plant in Service ........................ 10,352,064 10,192,465 10,267,451
Construction Work in Progress, including Nuclear
Fuel in Process - 92,846, 52,841 and
$65,429, respectively ................................... 756,753 680,640 806,934
Plant Held for Future Use ................................ 23,966 17,913 23,860
------------ ------------ ------------
Net Utility Plant ................................... 11,132,783 10,891,018 11,098,245
------------ ------------ ------------
INVESTMENTS AND OTHER PROPERTY
Long-Term Investments, net of amortization - $3,489,
$1,504 and $2,365, respectively .......................... 85,204 139,100 65,886
Nuclear Decommissioning and Other Special Funds ............ 252,774 216,738 233,022
Other Plant, net of accumulated depreciation and
amortization - 1,857, 1,012 and $1,127, respectively...... 24,966 26,299 32,879
------------ ------------ ------------
Total Investments and Other Property ....................... 362,944 382,137 331,787
------------ ------------ ------------
CURRENT ASSETS
Cash and Cash Equivalents ................................ 38,146 144,734 27,498
Accounts Receivable:
Customer Accounts Receivable ........................... 387,664 448,371 434,207
Other Accounts Receivable .............................. 99,829 105,390 151,684
Less: Allowance for Doubtful Accounts ................. 40,031 30,877 40,915
Unbilled Revenues ........................................ 128,309 129,973 204,056
Fuel, at average cost .................................... 257,488 224,130 268,927
Materials and supplies, net of inventory valuation
reserves - $18,200, $8,525 and $18,200, respectively ... 147,846 165,134 146,763
Prepaid Gross Receipts Taxes ............................. 304,705 268,364 --
Deferred Income Taxes .................................... 23,967 15,868 25,311
Miscellaneous Current Assets ............................. 17,971 21,664 30,407
------------ ------------ ------------
Total Current Assets ................................ 1,365,894 1,492,751 1,247,938
------------ ------------ ------------
DEFERRED DEBITS
Property Abandonments - net .............................. 79,308 97,010 88,269
Oil and Gas Property Write-Down .......................... 38,655 43,809 41,232
Unamortized Debt Expense ................................. 125,560 123,351 132,342
Deferred OPEB Costs ...................................... 182,736 133,334 116,476
Under Recovered Electric Energy and Gas Costs - net ...... 138,394 161,368 172,563
Unrecovered Environmental Costs (note 2).. ............... 134,436 135,691 138,435
Unrecovered Plant and Regulatory Study Costs ............. 35,475 35,412 37,128
Deferred Decontamination and Decommissioning Costs........ 53,016 56,546 53,016
Unrecovered SFAS 109 Deferred Income Taxes ............... 790,561 789,103 791,393
Other .................................................... 10,100 56,328 15,574
------------ ------------ ------------
Total Deferred Debits ............................... 1,588,241 1,631,952 1,586,428
------------ ------------ ------------
Total ................................................ $ 14,449,862 $ 14,397,858 $ 14,264,398
============ ============ ============
See Notes to Consolidated Financial Statements.
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
June 30, June 30, December 31,
CAPITALIZATION AND LIABILITIES 1995 1994 1994
------------------------------ ------------ ------------ ------------
CAPITALIZATION
Common Equity
Common Stock ........................................... $ 2,563,003 $ 2,563,003 $ 2,563,003
Contributed Capital by Enterprise ...................... 534,395 534,395 534,395
Retained Earnings ...................................... 1,337,284 1,254,553 1,292,201
------------ ------------ ------------
Total Common Equity ................................. 4,434,682 4,351,951 4,389,599
Preferred Stock without mandatory redemption ............... 384,994 459,994 384,994
Preferred Stock with mandatory redemption .................. 150,000 150,000 150,000
Monthly Income Preferred Securities of Subsidiary .......... 150,000 -- 150,000
Long-Term Debt ............................................. 4,586,428 4,544,509 4,486,787
------------ ------------ ------------
Total Capitalization ................................ 9,706,104 9,506,454 9,561,380
------------ ------------ ------------
OTHER LONG-TERM LIABILITIES
Decontamination, Decommissioning, and Low Level
Radwaste Costs ........................................ 59,180 56,546 56,149
Environmental Costs (note 2).............................. 105,600 108,039 105,684
Capital Lease Obligations ................................ 53,450 52,824 53,770
------------ ------------ ------------
Total Other Long-Term Liabilities ................... 218,230 217,409 215,603
------------ ------------ ------------
CURRENT LIABILITIES
Long-Term Debt due within one year ....................... 60,200 354,565 310,200
Commercial Paper and Loans ............................... 725,881 671,995 401,759
Book Overdrafts .......................................... 58,833 35,461 86,576
Accounts Payable ......................................... 324,536 321,314 370,005
Accounts Payable - Associated Companies .................. 488 16,583 16,677
Other Taxes Accrued ...................................... 37,104 35,074 36,030
Interest Accrued ......................................... 69,560 100,462 95,721
Estimated Liability for Vacation Pay ..................... 30,334 31,546 27,080
Customer Deposits ........................................ 32,942 35,450 33,698
Liability for Injuries and Damages ....................... 30,568 28,129 29,814
Miscellaneous Environmental Liabilities .................. 14,255 4,375 15,365
Other .................................................... 23,947 17,431 50,778
------------ ------------ ------------
Total Current Liabilities ........................... 1,408,648 1,652,385 1,473,703
------------ ------------ ------------
DEFERRED CREDITS
Accumulated Deferred Income Taxes ........................ 2,502,304 2,442,652 2,478,539
Accumulated Deferred Investment Tax Credits .............. 380,234 399,525 389,721
Deferred OPEB Costs ...................................... 182,736 133,334 116,476
Other .................................................... 51,606 46,099 28,976
------------ ------------ ------------
Total Deferred Credits .............................. 3,116,880 3,021,610 3,013,712
------------ ------------ ------------
COMMITMENTS AND CONTINGENCIES (note 2)
Total ................................................. $ 14,449,862 $ 14,397,858 $ 14,264,398
============ ============ ============
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
Six Months Ended Twelve Months Ended
June 30, June 30,
--------------------------- ---------------------------
1995 1994 1995 1994
------------ ------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income ............................. $ 318,196 $ 349,552 $ 628,050 $ 646,167
Adjustments to reconcile net income
to net cash flows from operating
activities:
Depreciation and Amortization ........ 291,868 272,050 571,190 532,868
Amortization of Nuclear Fuel ......... 47,490 44,827 97,836 94,955
Recovery (Deferral) of Electric
Energy and Gas Costs - net ......... 34,169 (99,334) 22,974 (217,818)
Amortization of Discounts on Property
Abandonments and Disallowance ...... (3,038) (3,481) (6,300) (7,177)
Provision for Deferred Income
Taxes - net ........................ 24,597 74,566 58,194 176,603
Investment Tax Credits - net ......... (9,487) (9,404) (19,291) (18,608)
Allowance for Funds Used During
Construction - Debt and Equity ..... (22,268) (14,637) (45,739) (29,995)
Changes in certain current assets
and liabilities:
Net decrease in Accounts Receivable
and Unbilled Revenues ............ 173,261 171,066 77,086 8,239
Net decrease (increase) in Inventory -
Fuel and Materials and Supplies... 10,356 67,589 (16,070) 31,471
Net decrease in Accounts Payable ... (61,658) (148,573) (12,873) (37,930)
Net change in Prepaid/Accrued
Taxes ............................ (303,631) (530,357) (34,311) (230,159)
Net change in Other Current Assets
and Liabilities .................. (37,070) 19,368 (20,193) (16,383)
Other ................................ 29,669 (1,226) 60,401 (21,277)
------------ ----------- ----------- ------------
Net cash provided by operating
activities ....................... 492,454 192,006 1,360,954 910,956
------------ ----------- ----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Utility Plant,
excluding AFDC ....................... (312,685) (360,415) (801,444) (938,121)
Net (increase) decrease in
Long-Term Investments ................ (24,827) (22,546) 48,387 (43,669)
Increase in Decommissioning and
Other Special Funds,
excluding interest ................... (14,782) (20,567) (29,609) (26,171)
Cost of Plant Removal - net ............ (13,677) (18,688) (28,951) (48,546)
Other .................................. 7,913 (70) 9,675 (9,340)
------------ ----------- ----------- ------------
Net cash used in investing
activities ....................... (358,058) (422,286) (801,942) (1,065,847)
------------ ----------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in Short-Term Debt ........ 324,122 139,267 53,886 564,352
(Decrease) increase in Book
Overdrafts ........................... (27,743) (27,531) 23,372 (14,674)
Issuance of Long-Term Debt ............. 100,000 664,365 285,435 1,537,065
Redemption of Long-Term Debt............ (250,359) (191,428) (537,881) (1,421,312)
Long-Term Debt Issuance and
Redemption Costs ..................... -- -- (29,731) (49,553)
Issuance of Preferred Stock ............ -- 75,000 -- 75,000
Redemption of Preferred Stock .......... -- (45,000) (75,000) (45,000)
Issuance of Monthly Income
Preferred Securities ................. -- -- 150,000 --
Cash Dividends Paid .................... (273,112) (274,324) (544,555) (542,859)
Other .................................. 3,344 (7,500) 8,874 (1,443)
------------ ----------- ----------- ------------
Net cash used in financing
activities ..................... (123,748) 332,849 (665,600) 101,576
------------ ----------- ----------- ------------
Net increase (decrease) in Cash and
Cash Equivalents ....................... 10,648 102,569 (106,588) (53,315)
Cash and Cash Equivalents at Beginning
of Period .............................. 27,498 42,165 144,734 198,049
------------ ----------- ----------- ------------
Cash and Cash Equivalents at End
of Period .............................. $ 38,146 144,734 $ 38,146 $ 144,734
============ =========== =========== ============
Income Taxes Paid ........................ $ 158,502 $ 106,450 $ 261,248 $ 185,347
Interest Paid ............................ $ 188,795 $ 167,350 $ 367,312 $ 345,674
See Notes to Consolidated Financial Statements.
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(Thousands of Dollars)
Three Months Ended Six Months Ended Twelve Months Ended
June 30, June 30, June 30,
------------------------ ------------------------ ------------------------
1995 1994 1995 1994 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
Balance at Beginning of
Period ....................$ 1,360,215 $ 1,261,863 $ 1,292,201 $ 1,180,532 $ 1,254,553 $ 1,152,689
Add:
Net Income ................ 111,300 128,113 318,196 349,552 628,050 646,167
----------- ----------- ----------- ----------- ----------- -----------
Total .................. 1,471,515 1,389,976 1,610,397 1,530,084 1,882,603 1,798,856
----------- ----------- ----------- ----------- ----------- -----------
Deduct Cash Dividends:
Preferred Stock, at
required rates .......... 8,680 10,144 17,362 20,424 37,405 39,959
Common Stock .............. 125,550 125,200 255,750 253,900 507,150 502,900
Capital Stock Expenses ...... 1 79 1 1,207 764 1,444
----------- ----------- ----------- ----------- ----------- -----------
Total Deductions ....... 134,231 135,423 273,113 275,531 545,319 544,303
----------- ----------- ----------- ----------- ----------- -----------
Balance at End of Period ....$ 1,337,284 $ 1,254,553 $ 1,337,284 $ 1,254,553 $ 1,337,284 $ 1,254,553
=========== =========== =========== =========== =========== ===========
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. RATE MATTERS
Electric Levelized Energy Adjustment Clause (LEAC)
In December 1993, the New Jersey Board of Public Utilities (BPU)
approved a tariff modification to reduce electric costs of PSE&G's
largest industrial customer. The issues of a conversion service
agreement between this customer and PSE&G and accounting treatment for
this customer have been addressed in a Supplemental Order of the BPU,
dated July 10, 1995. The Supplemental Order directs BPU Staff to
investigate the compliance of current accounting treatment with the
BPU's intention to hold PSE&G's ratepayers harmless as a result of its
implementation of the conversion service agreement. PSE&G cannot
predict what actions the BPU may take in this matter.
Remediation Adjustment Clause (RAC)
On July 21, 1995, PSE&G petitioned the BPU to recover Remediation
Program costs incurred during the period August 1, 1994 through July
31, 1995. In accordance with the Board Order dated November 4, 1994,
the petition proposes to recover, effective October 1, 1995, $2.5
million from gas customers and $1.6 million from electric customers.
NOTE 2. COMMITMENTS AND CONTINGENCIES
Nuclear Performance Standard
The BPU has established a nuclear performance standard (NPS) for
nuclear generating stations owned by New Jersey electric utilities,
including the five nuclear units in which PSE&G has an ownership
interest: Salem -- 42.59%; Hope Creek -- 95%; and Peach Bottom --
42.49%. PSE&G operates Salem and Hope Creek, while Peach Bottom is
operated by PECO Energy, Inc. (PECO).
The penalty/reward under the NPS is a percentage of replacement
power costs. (See table below.)
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. COMMITMENTS AND CONTINGENCIES - (Continued)
Nuclear Performance Standard - (Concluded)
CAPACITY FACTOR RANGE REWARD PENALTY
-------------------------------------------------- ------ -------
Equal to or greater than 75%......................... 30% --
Equal to or greater than 65% and less than 75%....... None None
Equal to or greater than 55% and less than 65%....... -- 30%
Equal to or greater than 45% and less than 55%....... -- 40%
Equal to or greater than 40% and less than 45%....... -- 50%
Below 40%............................................ BPU Intervenes
Under the NPS, the capacity factor is calculated annually using
maximum dependable capability of the five nuclear units in which PSE&G
owns an interest. This method takes into account actual operating
conditions of the units.
While the NPS does not specifically have a gross negligence
provision, the BPU has indicated that it would consider allegations
of gross negligence brought upon a sufficient factual basis. A finding
of gross negligence could result in penalties other than those
prescribed under the NPS. During 1994, the five nuclear units in which
PSE&G has an ownership interest aggregated a 74% combined capacity
factor. PSE&G currently estimates that the aggregate combined
capacity factor for 1995 will be approximately 63%, based on the
planned operation of the Hope Creek and Peach Bottom units, which
would result in a penalty for 1995 of approximately $3 to $4 million.
Both Salem units are presently out of service for the remainder of
1995. For information concerning the outage and operation of the
Salem units, see Part II, Other Information - Nuclear Operations,
Salem.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 2. COMMITMENTS AND CONTINGENCIES - (CONTINUED)
Nuclear Insurance Coverages and Assessments
PSE&G's insurance coverages and maximum retrospective assessments
for its nuclear operations are as follows:
PSE&G MAXIMUM
TOTAL ASSESSMENTS
SITE FOR A SINGLE
TYPE AND SOURCE OF COVERAGES COVERAGES INCIDENT
------------------------------------- --------- -------------
(MILLIONS OF DOLLARS)
Public Liability:
American Nuclear Insurers........... $ 200.0 $ --
Indemnity(A)........................ 8,720.3 210.2
-------- --------
$8,920.3 (B) $ 210.2
-------- --------
Nuclear Worker Liability:
American Nuclear Insurers(C)........ $ 200.0 $ 8.1
-------- --------
Property Damage:
Nuclear Mutual Limited.............. $ 500.0 $ 8.1
Nuclear Electric Insurance
Ltd. (NEIL II)..................... 1,400.0 (D) 8.2 (E)
Nuclear Electric Insurers
Ltd. (NEIL III).................... 850.0 6.7
-------- --------
$2,750.0 $ 23.0
-------- --------
Replacement Power:
Nuclear Electric Insurance
Ltd (NEIL I)....................... $ 3.5 (F) $ 12.4
(A) Retrospective premium program under the Price-Anderson liability
provisions of the Atomic Energy Act of 1954, as amended (Price-
Anderson). Subject to retrospective assessment with respect to
loss from an incident at any licensed nuclear reactor in the
United States. Assessment adjusted for inflation effective
August 20, 1993.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 2. COMMITMENTS AND CONTINGENCIES - (CONTINUED)
(B) Limit of liability for each nuclear incident under Price-Anderson.
(C) Industry aggregate limit representing the potential liability
from workers claiming exposure to the hazard of nuclear
radiation. This policy includes automatic reinstatements up to
an aggregate of $200 million, thereby providing total coverage
of $400 million. This policy does not increase PSE&G's
obligation under Price-Anderson.
(D) Includes up to $250 million for premature decommissioning costs.
(E) In the event of a second industry loss triggering NEIL II -
coverage, the maximum retrospective premium assessment can
increase to $17.5 million.
(F) Weekly indemnity for 52 weeks which commences after the first 21
weeks of an outage. Beyond the first 52 weeks of coverage,
indemnity of $2.8 million per week for 104 weeks is afforded.
Total coverage amounts to $473.2 million over three years.
Price-Anderson sets the "limit of liability" for claims that
could arise from an incident involving any licensed nuclear facility
in the nation. The "limit of liability" is based on the number of
licensed nuclear reactors and is adjusted at least every five years
based on the Consumer Price Index. The current "limit of liability"
is $8.9 billion. All utilities owning a nuclear reactor, including
PSE&G, have provided for this exposure through a combination of
private insurance and mandatory participation in a financial
protection pool as established by Price-Anderson. Under Price-
Anderson, each party with an ownership interest in a nuclear reactor
can be assessed its share of $79.3 million per reactor per incident,
payable at $10 million per reactor per incident per year. If the
damages exceed the "limit of liability," the President is to submit
to Congress a plan for providing additional compensation to the
injured parties. Congress could impose further revenue raising
measures on the nuclear industry to pay claims. PSE&G's maximum
aggregate assessment per incident is $210.2 million (based on PSE&G's
ownership interests in Hope Creek, Peach Bottom and Salem) and its
maximum aggregate annual assessment per incident is $26.5 million.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 2. COMMITMENTS AND CONTINGENCIES - (CONTINUED)
PSE&G purchases property insurance, including decontamination
expense coverage and premature decommissioning coverage, with respect
to loss or damage to its nuclear facilities, see Property Damage in
table above. PECO has advised PSE&G that it maintains similar
insurance coverage with respect to Peach Bottom. Certain of the
policies also provide that the insurer may suspend coverage with
respect to all nuclear units on a site without notice if the Nuclear
Regulatory Commission (NRC) suspends or revokes the operating license
for any unit on a site, issues a shutdown order with respect to such
unit or issues a confirmatory order keeping such unit shut down.
PSE&G is a member of an industry mutual insurance company,
Nuclear Electric Insurance Limited (NEIL), which provides replacement
power cost coverage in the event of a major accidental outage at a
nuclear station. The premium for this coverage is subject to
retrospective assessment for adverse loss experience, see table and
associated notes above.
Construction and Fuel Supplies
PSE&G has substantial commitments as part of its ongoing
construction program which include capital requirements for nuclear
fuel. PSE&G's construction program is continuously reviewed and
periodically revised as a result of changes in economic conditions,
revised load forecasts, changes in the scheduled retirement dates of
existing facilities, changes in business plans, site changes, cost
escalations under construction contracts, requirements of regulatory
authorities and laws, the timing of and amount of electric and gas
rate changes and the ability of PSE&G to raise necessary capital.
Pursuant to an integrated electric resource plan (IRP), PSE&G
periodically reevaluates its forecasts of future customers, load and
peak growth, sources of electric generating capacity and demand side
management (DSM) to meet such projected growth, including the need to
construct new electric generating capacity. The IRP takes into
account assumptions concerning future demands of customers,
effectiveness of conservation and load management activities, the
long-term condition of PSE&G's plants, capacity available from
electric utilities and other suppliers and the amounts of
co-generation and other non-utility capacity projected to be
available.
Based on PSE&G's construction program, construction expenditures
are expected to aggregate approximately $3.2 billion, which includes
$484 million for nuclear fuel and $78 million of Allowance for Funds
used During Construction (AFDC) during the years 1995 through 1999.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 2. COMMITMENTS AND CONTINGENCIES - (CONTINUED)
The estimate of construction requirements is based on expected project
completion dates and includes anticipated escalation due to inflation
of approximately 3%, annually. Therefore, construction delays or
higher inflation levels could cause significant increases in these
amounts. PSE&G expects to generate internally the funds necessary to
satisfy its construction expenditures over the next five years,
assuming adequate and timely recovery of costs, as to which no
assurances can be given. In addition, PSE&G does not presently
anticipate any difficulties in obtaining sufficient sources of fuel
for electric generation or adequate gas supplies during the years 1995
through 1999.
Bergen Station Repowering
PSE&G has completed the repowering of the Bergen Station
(Station), which was re-synchronized to the electric grid on June 1,
1995. The Station has been operating since then and is engaged in
final testing prior to being declared in commercial operation. The
repowering results in a slight increase in capacity from 629 MW to 669
MW, improves operational reliability and efficiency and significantly
improves the environmental effects of operation of the Station. The
original estimated cost for the Station's repowering was $400 million,
exclusive of AFDC. As of June 30, 1995, the repowering project had
capital costs of $330 million, excluding AFDC of $33 million. Final
costs are estimated to be $350 million, excluding AFDC of $36 million.
In order for PSE&G to recover its costs for the repowering project,
PSE&G would need either the BPU's authorization to charge rates sufficient
to recover costs or to be successful in selling the Station's output in
the emerging competitive electric market.
In a petition to the BPU filed on March 1, 1995, regarding the
deferral of any proposed rate treatment for the repowering project at
the Station, PSE&G agreed that it will not seek implementation of any
such rate treatment plan for a minimum of 90 days from the date of
filing of such plan. All parties to the November 1, 1994 LEAC
Stipulation have consented to the requested delay.
Hazardous Waste
Certain Federal and State laws authorize the United States
Environmental Protection Agency (EPA) and the New Jersey Department
of Environmental Protection (NJDEP), among other agencies, to issue
orders and bring enforcement actions to compel responsible parties to
take investigative and remedial actions at any site that is determined
to present an imminent and substantial danger to the public or the
environment because of an actual or threatened release of one or more
hazardous substances. Because of the nature of PSE&G's business,
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 2. COMMITMENTS AND CONTINGENCIES - (CONTINUED)
including the production of electricity, the distribution of gas and,
formerly, the manufacture of gas, various by-products and substances
are or were produced or handled which contain constituents classified
as hazardous. PSE&G generally provides for the disposal or processing
of such substances through licensed independent contractors. However,
these statutory provisions impose joint and several responsibility
without regard to fault on all responsible parties, including the
generators of the hazardous substances, for certain investigative and
remediation costs at sites where these substances were disposed of or
processed. PSE&G has been notified with respect to a number of such
sites and the remediation of these potentially hazardous sites is
receiving greater attention from the government agencies involved.
Generally, actions directed at funding such site investigations and
remediation include all suspected or known responsible parties. PSE&G
does not expect its expenditures for any such site to have a material
effect on its financial position, results of operations or net cash
flows.
PSE&G Manufactured Gas Plant Remediation Program
In 1988, NJDEP notified PSE&G that it had identified the need for
PSE&G, pursuant to a formal arrangement, to systematically investigate
and, if necessary, resolve environmental concerns extant at PSE&G's
former manufactured gas plant sites. To date, NJDEP and PSE&G have
identified 38 former gas plant sites. PSE&G is currently working with
NJDEP under a program to assess, investigate and, if necessary,
remediate environmental concerns at these sites (Remediation Program).
The Remediation Program is periodically reviewed and revised by PSE&G
based on regulatory requirements, experience with the Remediation
Program and available technologies. The cost of the Remediation
Program cannot be reasonably estimated, but experience to date
indicates that costs of at least $20 million per year could be
incurred over a period of more than 30 years and that the overall cost
could be material to PSE&G's financial position, results of operations
and net cash flows.
Costs incurred through June 30, 1995 for the Remediation Program
amounted to $54.9 million, net of insurance proceeds. In addition,
at June 30, 1995, PSE&G's estimated liability for estimated
remediation costs aggregated $105.6 million.
In accordance with a Stipulation approved by the BPU in January
1992, PSE&G is recovering over a six-year period $32 million of its
actual remediation costs to reflect costs incurred through September
30, 1992. As of June 30, 1995, PSE&G has recovered $26.9 million of
the $32 million of actual remediation costs through its Levelized Gas
Adjustment Charge (LGAC). PSE&G will recover the balance of $5.3
million in its next LGAC period ending in 1996.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONCLUDED)
NOTE 2. COMMITMENTS AND CONTINGENCIES - (Concluded)
PSE&G has reached a tentative settlement in the outstanding law
suit against certain of its insurers to recover the costs associated
with addressing and resolving environmental issues of the Remediation
Program.
Public Service Resources Corporation
PSRC had leased three wide-body aircraft to Continental Airlines
(Continental) through direct-finance leases. The lease for two A-300
aircraft was to expire December 2000, while the lease for one DC-10-30
aircraft expires June 2002. In February 1995, Continental failed to
make full payment on the A-300 lease due February 1 and indicated to
PSRC that it intended to return the A-300 aircraft and requested a
reduction in the rent on the DC-10-30 aircraft. At June 30, 1995,
prior to a termination of the A-300 lease and a restructuring of the
DC-10-30 lease, PSRC had investments in the A-300 lease and the DC-10-
30 lease of $41 million and $32 million, respectively. On June 30,
1995, PSRC concluded negotiations with Continental with respect to the
A-300 lease and the DC-10-30 lease. With respect to the DC-10-30
lease, PSRC will receive a reduced rental rate for a sixteen month
period, at which point the rent will revert to the contractual amount.
In addition, at that time Continental will commence repayment of the
deferred rent with interest. PSRC has agreed to terminate the A-300
lease. As compensation, PSRC received $21 million face amount of 6%
Series A Convertible Secured Debentures of Continental due in 2002.
PSRC also received additional cash payments as compensation for
various costs related to the termination. Upon termination of the
lease with Continental, PSRC signed new 48 month leases for both A-
300 aircraft with AKDENIZ Airlines/Air Mediterranean (AKDair). AKDair
is a Turkish registry charter carrier with headquarters in Istanbul,
Turkey.
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PSE&G
The Notes to Consolidated Financial Statements of Enterprise are
incorporated herein by reference insofar as they relate to PSE&G and
its subsidiaries:
Note 1. Rate Matters
Note 2. Commitments and Contingencies
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Following are the significant changes in or additions to
information reported in Enterprise's Annual Report to the Securities
and Exchange Commission (SEC) on Form 10-K for 1994, and Quarterly
Report on Form 10-Q for March 1995, affecting the consolidated
financial condition and the results of operations of Enterprise and
its subsidiaries. This discussion refers to the Consolidated
Financial Statements and related Notes to Consolidated Financial
Statements (Notes) of Enterprise and should be read in conjunction
with such statements and notes.
COMPETITION
Ongoing initiatives affecting PSE&G's electric and gas utility
businesses associated with the continuing transition to a competitive
market environment will continue to have an increasingly significant
impact on Enterprise and PSE&G. Federal legislation, including the
Energy Policy Act (EPACT), as well as regulatory initiatives at both
the federal and state levels that are designed to promote competition
and lessen regulation of the energy supply industry can be expected
to result in additional pressures on customer retention due to energy
prices, especially with respect to larger industrial and commercial
customers. Growth potential of traditional gas and electric sales is
limited in PSE&G's mature service territory.
The Federal Energy Regulatory Commission's (FERC) recent Notice
of Proposed Rulemaking (NOPR) on open access would fundamentally
change the electric utility industry by providing wholesale customers
with competitive open access to the interstate transmission system.
However, in the NOPR, FERC states its position that utilities should
be entitled to full recovery of legitimate and verifiable stranded
costs at the federal and state levels. Competition will force
utilities, including PSE&G, to operate more cost effective and
efficient plants, particularly in light of the technological
advantages available to new entrants, which unlike utilities, do not
operate older, less efficient units. Recovery of related costs by
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
utilities, including PSE&G, will depend upon the decisions of the
regulators, which cannot be predicted, or the ability to sell the
electricity generated by such plants in the emerging competitive
electric power market. For discussion of PSE&G's renovation project
at Bergen, see Note 2 - Commitments and Contingencies of Notes.
Competition may also have an adverse impact upon the economics of
certain regulatory- created incentives such as demand side management
(DSM).
The BPU presented its final, first phase of the New Jersey Energy
Master Plan to Governor Whitman March 1995, which acknowledged the
need for regulatory flexibility as competition unfolds and called for
legislation that would allow New Jersey utilities to propose, subject
to BPU approval, alternatives to existing rate base/rate of return
pricing, allow for pricing flexibility under certain standards for
customers with competitive options and equalize the impact of tax
policies, such as New Jersey Gross Receipts and Franchise Tax (NJGRT)
currently assessed on retail energy utility sales, upon all energy
producers. On July 20, 1995, Governor Whitman signed into law
legislation which provides utilities the flexibility to propose
alternative regulatory pricing and to offer off-tariff agreements
based on negotiations rather than solely on a cost of service basis.
PSE&G is currently evaluating its available options including the
submission of an alternative economic regulatory proposal, such as a
rate cap pricing plan, and presently anticipates making a submission
later this year.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
ENTERPRISE EARNINGS
Earnings per share of Enterprise Common Stock were 45 cents, $1.32, and $2.62 for the three, six
and twelve months ended June 30, 1995. This resulted in a decrease per share of 8 cents and 15 cents
for the three and six months ended June 30, 1995 from the comparable 1994 periods and an increase per
share of 5 cents for the twelve months ended June 30, 1995 over the comparable twelve months ended June
30, 1994. (See Liquidity and Capital Resources - External Financing.) The changes are summarized as
follows:
Better or (Worse)
----------------------------------------------------------------
Three Months Ended Six Months Ended Twelve Months Ended
June 30, June 30, June 30,
1995 vs. 1994 1995 vs. 1994 1995 vs. 1994
-------------------- -------------------- --------------------
Per Per Per
Amount Share Amount Share Amount Share
-------- -------- -------- -------- -------- --------
(Millions, except Per Share Data)
PSE&G
Revenues (net of fuel costs gross
receipts taxes, and
uncollectibles) .................. $ (10) $ (0.04) $ (25) $(0.10) $ (2) $(0.01)
Other operation expenses ........... (8) (0.04) (15) (0.07) (62) (0.25)
Maintenance expenses ............... 7 0.03 20 0.08 37 0.15
Depreciation and amortization
expenses ......................... (9) (0.03) (17) (0.07) (33) (0.14)
Federal income taxes ............... 10 0.04 21 0.09 61 0.25
Interest charges ................... (5) (0.02) (13) (0.05) (26) (0.11)
Allowance for Funds used During
Construction (AFDC)............... 5 0.02 8 0.03 16 0.07
Preferred Securities Dividend
Requirements ..................... (1) -- (4) (0.02) (6) (0.03)
Other income and expenses........... (4) (0.02) (3) (0.01) -- --
-------- -------- -------- -------- -------- --------
Earnings Available to Enterprise ... (15) (0.06) (28) (0.12) (15) (0.06)
-------- -------- -------- -------- -------- --------
EDHI
EDC ................................ (2) (0.01) (11) (0.04) (30) (0.12)
CEA................................. 1 -- (1) -- 2 0.01
PSRC ............................... (4) (0.01) 1 -- 6 0.02
EGDC...(A).......................... 1 -- 2 0.01 54 0.22
-------- -------- -------- -------- -------- --------
Subtotal ........................... (4) (0.02) (9) (0.03) 32 0.13
-------- -------- -------- -------- -------- --------
Net Income ......................... $ (19) (0.08) $ (37) (0.15) $ 17 0.07
======== -------- ======== -------- ======== --------
Effect of additional shares of
Enterprise Common Stock Issued .... -- -- (0.02)
-------- -------- --------
Total ............................ $ (0.08) $(0.15) $0.05
======== ========= =========
(A) Includes the impact of an impairment of assets of $51 Million, after tax, by EGDC in December 1993.
(See EDHI, below.)
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
ENTERPRISE EARNINGS - (Continued)
PSE&G
Earnings available to Enterprise decreased by $15 million for the
quarter ended June 30, 1995 from the quarter ended June 30, 1994. The
decrease in earnings was due to a decrease in revenues, net of fuel
costs, gross receipts taxes and uncollectibles (Net Revenues), of $10
million, as well as higher depreciation/expenses, partially offset by
lower maintenance expenses. The lower revenues were attributable to
a decrease in electric and gas residential sales.
Earnings available to Enterprise decreased by $28 million for the
period ended June 30, 1995 compared to the period ended June 30, 1994.
Net Revenues decreased $25 million. This decrease was due to lower
electric and gas sales resulting from a milder winter and a cooler
spring. Degree days were 11.4% lower and THI Hours were 36.8% lower
when comparing the two periods. Operating expenses, excluding fuel
and gross receipts taxes, decreased principally due to lower taxes and
maintenance expenses, partially offset by higher interest and
depreciation expenses. Maintenance expenses were lower than in 1994
primarily due to the 1994 refueling outage at the Hope Creek Nuclear
Station. Dividend requirements were higher due to the issuance of
Monthly Income Preferred Securities (MIPS).
Earnings available to Enterprise decreased by $15 million for the
twelve months ended June 30, 1995 compared to the same period ended
June 30, 1994. Net Revenues decreased $2 million. This decrease was
due to lower gas sales resulting from the milder winter. Also
reducing earnings were higher employee benefits expenses, higher
depreciation due to more plant in service, higher interest due to
higher short-term debt at higher interest rates and higher dividend
requirements due to the issuance of MIPS.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
ENTERPRISE EARNINGS - (Concluded)
EDHI
The net income of EDHI was $8 million for the quarter ended June
30, 1995, a decrease of $4 million from the quarter ended June 30,
1994. EDHI's earnings decreased due to lower gains related to PSRC's
security-based, partnership investments and EDC's lower gas prices and
volumes, partially offset by increased income from partnership
investments of CEA.
The net income of EDHI was $22 million for the six-month period
ended June 30, 1995, a decrease of $9 million from the six-month
period ended June 30, 1994. EDHI's earnings decreased due to EDC's
lower gas prices and volumes, partially offset by improved performance
of EGDC properties.
The net income of EDHI was $52 million for the twelve-month
period ended June 30, 1995, an increase of $32 million over the
twelve-month period ended June 30, 1994. Excluding the impact of an
impairment of assets of $51 million, after tax, by EGDC in December
1993, EDHI's earnings decreased by $18 million. Lower EDC earnings
resulting from lower gas prices and volumes were partially offset by
higher PSRC earnings due to lower Federal income taxes (the effect of
a 1993 Federal income tax increase was recorded in August 1993).
To the extent that the prices at which EDC is able to sell gas
remain low, EDHI's earnings may continue to be negatively impacted.
DIVIDENDS
Since 1992, Enterprise has maintained a constant rate of common
stock dividends which has had the result of reducing its dividend
payout ratio. Management believes this is a prudent policy which
needs to be continued.
LIQUIDITY AND CAPITAL RESOURCES
Enterprise's liquidity is affected by maturing debt, investment
and acquisition activities, the capital requirements of PSE&G's and
EDHI's construction programs, permitted regulatory recovery of
expenses and collection of revenues. Capital resources available to
meet such requirements depend upon general and regional economic
conditions, PSE&G's customer retention and growth, the ability of
PSE&G and EDHI to meet competitive pressures and to contain costs, the
adequacy and timeliness of rate relief, cost recovery and necessary
regulatory approvals, the ability to continue to operate and maintain
nuclear programs in accordance with NRC and BPU requirements, the
impact of environmental regulations, continued access to the capital
markets and continued favorable regulatory treatment of consolidated
tax benefits. (For additional information see the discussion of
Competition above and Note 2, Commitments and Contingencies of the
Notes.)
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
PSE&G
Construction expenditures were related to improvements in PSE&G's
existing power plants, transmission and distribution system, gas
system and common facilities. PSE&G expects that it will internally
generate all of its capital requirements including construction
expenditures over the next five years and significantly reduce its
debt outstanding, assuming adequate and timely recovery of costs, as
to which no assurances can be given.
EDHI
For the six-month period ended June 30, 1995, EDC had additions
to oil and gas property, plant and equipment, excluding capitalized
interest, of $55 million, a decrease of $38 million from the
corresponding period in 1994. For the twelve-month period ended June
30, 1995, EDC had additions to oil and gas property, plant, and
equipment, excluding capitalized interest, of $112 million, a decrease
of $26 million compared to the corresponding period in 1994.
PSRC is a limited partner in various limited partnerships and is
committed to make investments from time to time, upon the request of
the respective general partners. At June 30, 1995, $103 million
remained as PSRC's unfunded commitment subject to call.
EDHI and each of its subsidiaries are subject to restrictive
business and financial covenants contained in existing debt agreements
and are required to not exceed various debt to equity ratios which range
from 3:1 to 1.75:1. EDHI is also required to maintain a twelve month
earnings before interest and taxes to interest (EBIT) coverage ratio
of at least 1.35:1. As of June 30, 1995 and 1994, EDHI had
consolidated debt to equity ratios, including contingent obligations,
of 1.15:1 and 1:19:1 and, for the twelve months ended June 30, 1995
and 1994, EBIT coverage ratios, as defined to exclude the effects of
EGDC, of 1.81:1 and 2.22:1, respectively. Compliance with applicable
financial covenants will depend upon future levels of earnings, among
other things, as to which no assurance can be given.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
LONG TERM INVESTMENTS AND REAL ESTATE
Long-Term Investments and Real Estate increased $63 million for
the six-month period ended June 30, 1995, primarily due to an increase
in Public Service Conservation Resources Corporation's (PSCRC)
investments in conservation projects of $20 million and in PSRC's
investments of $28 million due to KKR LBO Fund capital calls. For the
six-month period ended June 30, 1994, Long-Term Investments and Real
Estate increased $13 million, primarily due to an increase in PSE&G's
investment in an insurance contract.
Long-Term Investments and Real Estate decreased $8 million for
the twelve-month period ended June 30, 1995 primarily due to a net
decrease in PSE&G's investment in an insurance contract of $88
million, partially offset by PSCRC's increase in investments in
conservation projects of $34 million and PSRC's investments which
increased $27 million due to KKR LBO Fund capital calls. For the
twelve-month period ended June 30, 1994, a $101 million decrease was
primarily due to a $136 million decrease due to PSRC security sales,
partially offset by a net increase in PSE&G's investment in an
insurance contract of $26 million and an increase in PSCRC's
investments of $27 million.
In April 1995, EGDC entered into agreements for the sale of three
properties with an aggregate book value of approximately $80 million.
The sale of one of the properties for $13 million, which approximates
its book value, was closed on July 28, 1995. The other two
properties, with an aggregate book value of approximately $67 million,
are expected to be sold in the third quarter of 1995. No assurances
can be given as to the ultimate consummation of such sales by EGDC.
Enterprise does not expect such sales to have a significant effect on
its results of operations.
INTERNAL GENERATION OF CASH FROM OPERATIONS
Enterprise's cash provided by operating activities for the six
months ended June 30, 1995 increased $255 million to $549 million when
compared to the corresponding period in 1994. This increase was
primarily due to a greater recovery of electric energy and gas costs
through PSE&G's LEAC and LGAC of $134 million, a smaller decrease in
accounts payable of $118 million, a net decrease in prepaid/accrued
taxes of $238 million primarily the result of lower gross receipts
taxes, and increased depreciation and amortization of $21 million.
Partially offsetting these cash inflows were a decrease in net income
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Continued)
of $37 million, a smaller increase in deferred income taxes of $61
million, a smaller decrease in accounts receivable of $39 million, a
smaller decrease in inventory - fuel and materials and supplies of $57
million, and a negative net change in certain other current assets and
liabilities of $63 million. (For additional information see
Enterprise Earnings.)
Enterprise's cash provided by operating activities for the twelve
months ended June 30, 1995 increased $389 million to $1.487 billion
when compared to the corresponding period in 1994. This increase was
primarily due to a higher recovery of electric energy and gas costs
through PSE&G's LEAC and LGAC of $241 million, a net decrease in
prepaid/accrued taxes of $232 million primarily the result of lower
gross receipts taxes, a decrease in accounts receivable of $24
million, greater depreciation and amortization of $35 million, an
increase in accounts payable of $61 million and a positive net change
in certain noncurrent assets and liabilities, primarily deferred
amounts, of $46 million. Partially offsetting these cash inflows were
a loss from property impairments of $78 million in 1993, a smaller
increase in deferred income taxes of $117 million, an increase in
inventory - fuel and materials and supplies of $48 million. (For
additional information see Enterprise Earnings.)
EXTERNAL FINANCING ACTIVITIES
Book value per share was $21.95 at June 30, 1995, compared to
$21.48 at June 30, 1994.
On February 22, 1995 the BPU authorized PSE&G to issue $370
million of First and Refunding Mortgage Bonds (Bonds)/Medium-Term
Notes (MTNs) through 1996 for refunding purposes. On April 5, 1995
PSE&G issued $100 million of its MTNs for the purpose of redeeming
$100 million of its Series JJ Bonds which matured on June 1, 1995.
The BPU has authorized PSE&G to issue and have outstanding at any
one time not more than $1 billion of its short-term obligations,
consisting of commercial paper and other unsecured borrowings from
banks and other lenders through January 1, 1997. On June 30, 1995,
PSE&G had $623 million of short-term debt outstanding.
PSE&G has an $800 million revolving credit agreement with a group
of commercial banks through September 14, 1995. On June 30, 1995,
there were no short-term borrowings outstanding under this credit
agreement. Negotiations are in progress, and PSE&G expects to extend
this agreement.
The BPU has authorized PSE&G to issue an additional $180 million
of Preferred Stock through 1995.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (Concluded)
PSCRC has a $30 million revolving credit facility supported by
a PSE&G subscription agreement in an aggregate amount of $30 million
which terminates on March 6, 1996. As of June 30, 1995 PSCRC, had $23
million outstanding under this facility.
PSE&G Fuel Corporation (Fuelco) has a $150 million commercial
paper program to finance a 42.49% share of Peach Bottom nuclear fuel,
supported by a $150 million revolving credit facility with a group of
banks, which expires on June 28, 1996. PSE&G has guaranteed repayment
of Fuelco's respective obligations. As of June 30, 1995, Fuelco had
commercial paper of $80 million outstanding under such program.
Enterprise Capital Funding Corporation (Funding) has a commercial
paper program, supported by a commercial bank letter of credit and
credit facility, in the amount of $225 million expiring March 1998.
As of June 30, 1995, Funding had $158 million of borrowings
outstanding under this program.
Additionally, Funding has a $225 million revolving credit
facility expiring March 1998. As of June 30, 1995, Funding had no
borrowings outstanding under this facility.
PSEG Capital Corporation's (Capital) MTN program has previously
provided for an aggregate principal amount of up to $750 million of
MTNs so that its total debt outstanding at any time, including MTNs,
would not exceed such amount. Effective January 31, 1995, Capital
will not have more than $650 million of debt outstanding at any time.
At June 30, 1995, Capital had total debt outstanding of $615 million,
including $467 million of MTNs.
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Following are changes in or additions to the significant factors
reported in PSE&G's Annual Report to the SEC on Form 10-K for 1994 and
Quarterly Report on Form 10-Q for March 1995, affecting the
consolidated financial condition of PSE&G and its subsidiaries as
reflected in their consolidated results of operations. This
discussion refers to the consolidated financial statements and related
notes herein of PSE&G and should be read in conjunction with such
statements and notes.
Except as modified below, the information required by this item
is incorporated herein by reference to the following portions of
Enterprise's MD&A, insofar as they relate to PSE&G and its
subsidiaries: Competition; Enterprise Earnings - PSE&G; Dividends;
Liquidity and Capital Resources - PSE&G, Long Term Investments and
Real Estate and External Financings Activities.
LIQUIDITY AND CAPITAL RESOURCES
INTERNAL GENERATION OF CASH FROM OPERATIONS
PSE&G's cash provided by operating activities for the six months
ended June 30, 1995 increased $300 million to $492 million when
compared to the corresponding period in 1994. This increase was
primarily due to a net decrease in prepaid/accrued taxes of $227
million primarily the result of lower gross receipts taxes, a greater
recovery of electric energy and gas costs through PSE&G's LEAC and
LGAC of $134 million, a smaller decrease in accounts payable of $87
million, a positive net change in certain noncurrent assets and
liabilities, primarily deferred amounts, of $30 million, and increased
depreciation and amortization of $21 million. Partially offsetting
these cash inflows were a decrease in net income of $31 million, a
smaller increase in deferred income taxes of $50 million, a smaller
decrease in inventory - fuel and materials and supplies of $57
million, and a negative net change in certain other current assets and
liabilities of $56 million. (For additional information see
Enterprise Earnings.)
PSE&G's cash provided by operating activities for the twelve
months ended June 30, 1995 increased $450 million to $1.361 billion
when compared to the corresponding period in 1994. This increase was
primarily due to a higher recovery of electric energy and gas costs
through PSE&G's LEAC and LGAC of $241 million, a net decrease in
prepaid/accrued taxes of $196 million primarily the result of lower
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES - (Concluded)
INTERNAL GENERATION OF CASH FROM OPERATIONS - (Concluded)
gross receipts taxes, a decrease in accounts receivable of $69
million, greater depreciation and amortization of $38 million, and
a positive net change in certain noncurrent assets and liabilities,
primarily deferred amounts, of $82 million. Partially offsetting
these cash inflows were a smaller increase in deferred income taxes
of $118 million, an increase in inventory - fuel and materials and
supplies of $48 million. (For additional information see Enterprise
Earnings.)
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
PART II. OTHER INFORMATION
Item 5. Other Information
------ -----------------
Certain information reported under Item 1 - Business of Part I
of Enterprise's and PSE&G's Annual Reports to the SEC on Form 10-K
for 1994 Form 10-K) and Part II of Enterprise's and PSE&G's Quarterly
Report to the SEC on Form 10-Q for the period ended March 31, 1995
(Form 10-Q) are updated herein at the respective pages indicated.
References are to the related pages and paragraph(s) of the Form 10-K
and 10-Q.
Form 10-K, Page 3, Paragraph 3 and Form 10-Q, Page 40, Paragraph 2
------------------------------------------------------------------
Competition - Electric
PSE&G has filed its initial comments on the FERC's NOPR on August
7, 1995. PSE&G indicated in its comments that it supported the FERC's
goal of making regulatory changes that will promote more competition,
increase efficiency and lead to lower electricity rates. PSE&G also
indicated that the following actions were necessary to facilitate
transition to a more competitive wholesale market through open access:
creation of institutions necessary to ensure that reliability of
service is preserved and that the market will work openly, fairly, and
efficiently for consumers and competitors, avoidance of making native
load customers the repository of residual costs, allowance for
recovery of stranded costs including those costs that are not
currently included in rates and establishment of a firm legal
foundation for the actions to be taken by the FERC in transitioning
to open access. Reply comments are due to be filed with the FERC by
October 4, 1995. PSE&G cannot predict the impact of any regulations
that may be adopted. See Management's Discussion and Analysis --
Competition.
Form 10-K, Page 7, Paragraph 5
------------------------------
On July 24, 1995, PSE&G, its second largest industrial customer,
BPU Staff and the New Jersey Office of the Ratepayer Advocate entered
into a stipulation for the implementation of a proposed pricing tariff
modification for this customer.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
PART II. OTHER INFORMATION
Item 5. Other Information - (Continued)
------ -------------------------------
Form 10-K, Page 11, Paragraph 1 and Form 10-Q, Page 40, Paragraph 4
--------------------------------------------------------------------
PSE&G - Nuclear Operations - Salem
As previously reported, Salem Unit 1 and Unit 2 were taken out
of service on May 16, 1995 and June 7, 1995, respectively. PSE&G
subsequently informed the Nuclear Regulatory Commission (NRC) that it
had determined to keep the Salem units shut down pending review and
resolution of certain equipment and management issues, and NRC
agreement that each unit is sufficiently prepared to restart. On June
9, 1995, the NRC issued a Confirmatory Action Letter documenting these
commitments by PSE&G.
Also on June 9, 1995, the NRC reported the results of a NRC
Special Inspection Team (SIT) it formed to assess how effectively
Salem is currently performing from a safety perspective in the areas
of problem identification, prioritizing and conducting work on plant
equipment, and management oversight of plant performance. While the
SIT identified some areas of strength at Salem as well as areas where
improvements are being made, including equipment problem
identification systems and some aspects of work control and root cause
analysis, the team also identified a number of findings that reveal
that the day-to-day focus on priority issues and trends were not
managed well from a safety perspective. In the report the NRC noted
its concern that the SIT found that historically poor performance in
the areas of configuration control, operator work-arounds and
equipment operability determinations, have not substantially improved
and constitute a burden on the plant operators to safely operate the
Salem units, especially during plant events.
As previously reported, PSE&G is engaged in a thorough assessment
of equipment issues that have affected Salem's operation and the
related management systems and will keep the units off line until it
is satisfied that they are ready to return to service and operate
reliably over the long term. While PSE&G has not yet finalized its
analysis and assessment activities, it currently estimates that Unit
1 will be ready to return to service in the first quarter of 1996 and
Unit 2 during the second quarter of 1996, although no assurances can
be given. During the outages, Unit 1 will undergo a previously
scheduled refueling and Unit 2 will undergo a partial refueling which
will allow PSE&G to eliminate a full refueling outage for Unit 2
scheduled for 1996. The restart plan is focused on improving
equipment reliability before restarting the units.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
PART II. OTHER INFORMATION
Item 5. Other Information - (Continued)
------ -------------------------------
Form 10-K, Page 11, Paragraph 1 and Form 10-Q, Page 40, Paragraph 4
--------------------------------------------------------------------
PSE&G - Nuclear Operations - Salem - (Continued)
PSE&G has developed and is implementing a number of detailed
action plans designed to improve performance in a number of key areas.
Before restarting the units, PSE&G will complete a thorough review of
station systems and gain concurrence from the NRC that management
action has positioned the plant for reliable and safe operation.
PSE&G has recently undertaken a number of senior nuclear
management changes, including the hiring from outside of PSE&G of a
Senior Vice President - Nuclear Operations, a Senior Vice President -
Nuclear Engineering, a General Manager - Salem Operations, and a
Director - Quality Assurance and Nuclear Safety Review. PSE&G is
committed to achieving high standards of safety and operational
performance for its nuclear program. PSE&G's objective is to restart
and run the Salem plants in accord with these standards so as to
assure long-term reliability and reduce overall production costs in
order to provide customers serviced by Salem with reliable and
economic energy.
PSE&G estimates that its share of additional operating and
maintenance expenses associated with restart activities will amount
to approximately $17 million. Included in the $17 million is the 1996
net impact of the restart costs exceeding costs previously budgeted
for the Salem 1996 refueling outage which is preliminarily estimated
at $2 million. The remaining $15 million represents the 1995 impact
and results in a total of $104 million of operating and maintenance
expenses for Salem for the year. Replacement power costs incurred
while the units are out of service are expected to be approximately
$5 million per month, per unit. In addition, PSE&G currently
anticipates that the 1995 aggregate capacity factor of its five
nuclear units will be below the 65% minimum annual standard
established by the BPU. See Note 2, Commitments and Contingent
Liabilities of Notes.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
PART II. OTHER INFORMATION
Item 5. Other Information - (Continued)
------ -------------------------------
Form 10-K, Page 11, Paragraph 1 and Form 10-Q, Page 40, Paragraph 4
--------------------------------------------------------------------
PSE&G - Nuclear Operations - Salem - (Concluded)
As part of PSE&G's ongoing coordination with the NRC regarding
the restart of the Salem units, on August 10, 1995, PSE&G met with
representatives of the NRC concerning the Salem restart plan (Plan).
PSE&G presented an overview of the Plan and discussed independent
oversight and engineering performance issues to gain alignment with
the NRC's expectations for improvement at Salem.
A Salem NRC enforcement conference, originally scheduled for June
1, 1995, was held on July 28, 1995. Apparent violations discussed
included valves that were incorrectly positioned following a plant
modification in May 1993, nonconservatisms in setpoints for a
pressurizer overpressure protection system and several examples of
inadequate root cause determination of events, leading to insufficient
corrective actions at Salem. PSE&G cannot predict what action, if
any, the NRC may take as a result of this meeting.
Form 10-K, Page 11, Paragraph 6
-------------------------------
PSE&G - Nuclear Operations - Hope Creek
On June 29, 1995, the NRC provided PSE&G with the latest periodic
SALP report for Hope Creek, for the period between June 20, 1993 and
April 22, 1995. This was the first report for Hope Creek issued under
the revised SALP process, utilizing four assessment areas. The
Operations, Maintenance and Engineering areas each received a rating
of "2", while the Plant Support area received a rating of "1". The
NRC noted an overall decline in performance in the Operations,
Maintenance and Engineering areas compared to the previous SALP period
and cited weak root cause analysis as a dominant factor.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
PART II. OTHER INFORMATION
Item 5. Other Information - (Continued)
------ -------------------------------
Form 10-K, Page 12 and Form 10-Q, Page 42, Paragraph 3
------------------------------------------------------
PSE&G - Nuclear Operations - Hope Creek
A small amount of low-level radioactive materials was released
to the atmosphere at Hope Creek Generating Station on April 5, 1995.
The release did not exceed federal limits nor pose any danger to the
public or plant employees; however, a trailer driven offsite had
exceeded the limit for releasing materials and was later cleaned.
PSE&G and the NRC have investigated the event, and on June 16, 1995
an enforcement conference was held. On July 20, 1995, the NRC issued
a Notice Of Violation (NOV) for the Hope Creek unplanned release which
noted four violations. No fine was issued, partly because of the
comprehensive corrective actions taken following the event and the
plant's history of limited enforcement action.
New Matter
------------
On July 8, 1995, during a manual shutdown of Hope Creek in order
to repair control room ventilation equipment, operators partially
opened a valve for a period of time and inadvertently reduced the
effectiveness of the shutdown cooling system. Although the impact of
the event to plant safety was minimal, the positioning of the valve
and the resulting temperature change violated plant procedures and
technical specifications. On July 31, 1995, NRC staff met with plant
management concerning this issue and subsequently determined to assign
a special inspection team to independently evaluate this event as well
as PSE&G's response to it, including PSE&G's procedures and training
for operator handling of abnormal conditions. PSE&G cannot predict
what the team's findings may be nor what other actions, if any, the
NRC may take in this matter.
Form 10-K, Page 12
------------------
PSE&G - Nuclear Operations - Peach Bottom
New Matter
----------
PSE&G has been advised by PECO that on August 2, 1995, the NRC
held an enforcement conference regarding three alleged violations
identified by the NRC at Peach Bottom Atomic Power Station. The NRC's
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
PART II. OTHER INFORMATION
Item 5. Other Information - (Continued)
------ -------------------------------
Form 10-K, Page 12 - (Concluded)
---------------------------------
PSE&G - Nuclear Operations - Peach Bottom - (Concluded)
findings include alleged violations in control and design activities
and technical specification requirements regarding operability of the
emergency diesel generators. PSE&G cannot predict what action, if
any, the NRC may take as a result of the enforcement conference.
Form 10-K, Page 16, Paragraph 5
-------------------------------
In June 1995, South Carolina approved legislation to extend
operation of the Barnwell low-level radioactive waste (LLRW) disposal
facility, which opened to waste generators in all states except North
Carolina on July 1, 1995. PSE&G has begun to ship all waste currently
stored in the on-site LLRW storage facility to Barnwell.
Form 10-K, Page 20, Paragraph 1
-------------------------------
On July 28, 1995, the BPU reported to PSE&G that it had fully
evaluated all available information regarding the 18 recommendations
of the Focused Audit conducted by the Liberty Consulting Group and
determined that 17 have been implemented pursuant to the Board's Order
Approving Audit Implementation Plans. The remaining issue regarding
Enterprise sharing the benefits of consolidated taxes with PSE&G or
its ratepayers may be considered in the context of a future base rate
case, or in a filing that considers an alternative form of regulation.
PSE&G cannot predict what actions, if any, the BPU may take regarding
the consolidated tax issue.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
------ --------------------------------
(a) A listing of exhibits being filed with this document is as
follows:
Exhibit
Number Document
------- --------------------------------------------------
10a(15) Letter Agreement with Louis F. Storz signed July
7, 1995.
10a(16) Letter Agreement with Elbert C. Simpson signed
May 31, 1995.
12 Computation of Ratios of Earnings to Fixed
Charges plus Preferred Securities Dividend
Requirements (Enterprise).
12(A) Computation of Ratios of Earnings to Fixed
Charges (PSE&G).
12(B) Computation of Ratios of Earnings to Fixed
Charges plus Preferred Securities Dividend
Requirements (PSE&G).
27 (A) Financial Data Schedule (Enterprise).
27 (B) Financial Data Schedule (PSE&G).
(b) Reports on Form 8-K.
Registrant Date of Report Item Reported
------------ ---------------- ------------
Enterprise and PSE&G 6/13/95 Item 5. Other
events (Nuclear
Operations -
Salem and Hope
Creek)
Enterprise and PSE&G 7/19/95 Item 5. Other
events (Nuclear
Operations -
Salem)
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrants have duly caused these reports to be signed on
their respective behalf by the undersigned thereunto duly authorized.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
--------------------------------------------
(Registrants)
By: PATRICIA A. RADO
--------------------------------------
Patricia A. Rado
Vice President and Controller
(Principal Accounting Officer)
Date: August 14, 1995
EX-10.A15
2
EX-10.A15
PSE&G's Logo
Public Service Electric and Gas Company
M. Peter Mellett
Vice President - Human Resources
80 Park Plaza
Newark, New Jersey 07107
201-430-7620
Mailing Address:
PO Box 570
Newark, New Jersey, 07101
Fax: 201-642-1689
June 30, 1995
Mr. Louis F. Storz
Rural Route 2, Box 123
Howard Road
Fulton, New York, 13065
Dear Mr. Storz:
In Conjunction with your employment as Senior Vice President -
Nuclear Operations of Public Service Electric and Gas Company (PSE&G), the
agreed terms of employment are as follows:
1. The Effective date of your employment with PSE&G shall
be July 28, 1995 or such earlier date as may be agreed to in
writing (the Date of Employment (DOE)).
2. You shall be paid a salary at the annual rate of
$250,000, which salary may be increased, but shall not be reduced,
thereafter during the five - year period commencing on the DOE.
This initial annual rate of salary shall remain in effect until
December 31, 1996.
3. PSE&G will make a cash payment to you on the DOE in the
amount of $70,000 as inducement for you to commence employment with
PSE&G.
4. You shall be entitled to those benefits from time to
time available to officers and employees of PSE&G generally, except
as otherwise provided in this letter. You shall be initially
eligible for a minimum of four weeks of vacation per year. In
addition, financial counseling will be available to you on the same
terms and conditions that it is provided to officers of PSE&G.
5. PSE&G will compensate you for reasonably incurred
moving and relocation expenses in accordance with PSE&G's
Relocation Program. Such compensation shall specifically include
either the purchase of the residence you presently have under
construction at appraised value, which shall be no less than your
investment therein, plus reimbursement of any sales commissions,
or reimbursement to you of the costs incurred in such construction.
In addition, PSE&G will provide you, and your spouse temporary
living expenses in New Jersey, Delaware, or Pennsylvania for a
period of up to six months from DOE and will provide for the taxes
associated with providing you such housing during such 6- month
period.
6. You may be discharged with or without cause at any
time. If you should be discharged without cause during the five -
year period commencing on DOE, PSE&G will pay to you the salary in
effect pursuant to Paragraph 1 above at the time of your discharge
for a period of twelve months following such discharge, or for the
remainder of such five - year period, whichever is less. "Cause"
shall mean (i) the willful or negligent dereliction of, and
continued failure by you to perform your duties with PSE&G (other
than any such failure resulting from your incapacity due to
physical or mental illness), after a written demand for performance
is delivered to you by the Chief Executive Officer or Chief Nuclear
Officer of PSE&G which identifies the manner in which the CEO or
CNO believes that you have not so performed your duties, or (ii)
any conduct constituting a felony or moral turpitude.
7. Your participation in PSE&G's Management Incentive
Compensation Plan (MICP) for 1995 will reflect a full year's award.
Your target incentive award as Senior Vice President - Nuclear
Operations will initially be 20% of salary. This may be adjusted
from time to time in accordance with established plan procedures.
In addition, to provide an appropriate transition adjustment,
because any MICP awards are paid out one third annually over a
three-year period, PSE&G will pay to you the following lump sum
cash payments in January of the following years: 1996 - $50,000;
1997 - $35,000; 1998 - $20,000; in addition to any payouts which
may result from your participation in the MICP itself. Copies of
the MICP and the calculation determining the 1994 corporate factor
have previously been forwarded to you.
8. As Senior Vice President - Nuclear Operations, you will
participate in the Long - Term Incentive Plan (LTIP) of Public
Service Enterprise Group Incorporated (Enterprise), the parent of
PSE&G. The LTIP provides senior officers selected by the
Organization and Compensation Committee with options to purchase
shares of Enterprise Common Stock. The options are generally
granted in January and become exercisable three years after the
date of grant, and the LTIP provides for payments to be made,
dependant upon dividends paid by Enterprise and future financial
performance by Enterprise in comparison to other corporations, to
assist the officers in exercising the options granted. It will be
recommended to the Organization and Compensation Committee that you
be granted 1,200 options in January 1996 (which would be
exercisable in 1999). In addition, it will be recommended to the
Organization and Compensation Committee that you also be granted
600 stock options under the LTIP which are exercisable in 1996, 800
stock options exercisable in 1997 and 1,000 stock options
exercisable in 1998. Such options would be subject to all of the
provisions of the LTIP and would permit the purchase by you of
numbers of shares granted by the Organization and Compensation
Committee that appropriately reflect your responsibilities and
ability to contribute to the long term success of Enterprise.
9. In light of your allied work experience, you shall be
granted credited service, in addition to that earned as a result
of your employment by PSE&G, for the purpose of determining any
pension benefits from PSE&G in accordance with the following
schedule:
Additional Years
Date of Termination of Employment of Credited Service
--------------------------------- ------------------
On or after DOE plus 4 years and
prior to DOE plus 5 years 15
On or after DOE plus 5 years and
prior to DOE plus 6 years 18
On or after DOE plus 7 years and
prior to DOE plus 7 years 20
On or after DOE plus 7 years 25
The additional credited service shown in the table above is
not cumulative, but is applied from the table depending upon when
you retire. For example, assuming you are currently age 55, the
additional credited service set forth above, together with the
Board's current policy of granting 5 years of additional credited
service to officers who retire between age 60 and age 65 1/2, and
your actual credited service, will afford you a total of 28 years
of credited service at age 60, and 40 years of credited service at
age 65, dependent upon your actual date of birth and DOE. You will
be a participant in PSE&G's Pension Plan and in its Limited
Supplemental Death Benefits and Retirement Plan. The Limited Plan
provides a retirement benefit of a percentage of final average
compensation as defined in the Plan that is equal to credited
service plus 30 years. This would result in a target retirement
benefit of 58% (28 years plus 30) at age 60 and 70% at age 65 times
final average compensation, adjusted for any survivorship benefit
you may choose, and reduced by Social Security benefits and
pensions from other employers as provided in the Plan. Under these
pension programs as presently in effect, you would be eligible to
retire at age 60 without an early retirement penalty, dependent
upon your actual date of birth and DOE. The amount of your pension
or survivorship benefits paid by your present employer (or any
other employer) shall be deducted from the pension benefits payable
to you or your beneficiary by PSE&G on account of such service with
your present employer (or other employer).
10. In recognition of your need for an automobile for
business purposes, PSE&G will provide you with a full size American
made automobile (Oldsmobile, Buick or other comparable model) and
shall provide the related maintenance, repairs, insurance and costs
of operation thereof.
11. As part of PSE&G's requirement for a work force that
is free from the influence of foreign chemical substances, you will
be required to complete a medical examination which will include
definitive analysis of freshly voided urine specimen for the
presence of commonly abused drugs, including marijuana.
If the foregoing is in accordance with your understanding,
please sign the enclosed copy of this letter and return it to me.
Sincerely,
By: M. PETER MELLETT
-------------------------
M. Peter Mellett
Vice President - Human Resources
Agreed to this 7th day
of July, 1995
By: LOUIS F. STORZ
--------------------
Louis F. Storz
EX-10.A16
3
EX-10.A16
PSE&G's Logo
Public Service Electric and Gas Company
80 Park Plaza
Newark, New Jersey 07107
201-430-7620
Mailing Address:
PO Box 570
Newark, New Jersey, 07101
May 27, 1995
Mr. Elbert C. Simpson
13618 S. 34th Street
Phoenix, Arizona 85044
Dear Mr. Simpson:
In Conjunction with your employment as Senior Vice President -
Nuclear Engineering of Public Service Electric and Gas Company (PSE&G), the
agreed terms of employment are as follows:
1. The effective date of your employment with PSE&G shall
be June 30, 1995 or such earlier date as may be agreed to in
writing (the Date of Employment (DOE)).
2. You shall be paid a salary at the annual rate of
$225,000, which salary may be increased, but shall not be reduced,
thereafter during the five - year period commencing on the DOE.
This initial annual rate of salary shall remain in effect until
December 31, 1996.
3. PSE&G will make a cash payment to you on the DOE in the
amount of $126,000 to compensate you for the loss of benefits under
plans of your present employer. You agree to repay this amount
($126,000) to PSE&G if you voluntarily terminate your employment
with PSE&G prior to five years from the DOE.
4. PSE&G will make a further cash payment to you on the
DOE in the amount of $60,000 as inducement for you to commence
employment with PSE&G.
5. You shall be entitled to those benefits from time to
time available to officers and employees of PSE&G generally, except
as otherwise provided in this letter. You shall be initially
eligible for a minimum of four weeks of vacation per year. In
addition, financial counseling will be available to you on the same
terms and conditions that it is provided to officers of PSE&G.
6. PSE&G will compensate you for reasonably incurred
moving and relocation expenses in accordance with PSE&G's
Relocation Program. Such compensation shall specifically include
reimbursement of any sales commissions on your existing principal
residence and will also include, if you so elect, the purchase of
your principal residence at an appraised value. In addition, PSE&G
will provide your, spouse and children temporary living expenses
in New Jersey for a period of up to six months and will provide for
the taxes associated with providing you housing in New Jersey
during such 6 - month period.
7. You may be discharged with or without cause at any
time. If you should be discharged without cause during the five -
year period commencing on DOE, PSE&G will pay to you the salary in
effect pursuant to Paragraph 1 above at the time of your discharge
for a period of twelve months following such discharge, or for the
remainder of such five - year period, whichever is less. "Cause"
shall mean (i) the willful or negligent dereliction of, and
continued failure by you to perform your duties with PSE&G (other
than any such failure resulting from your incapacity due to
physical or mental illness), after a written demand for performance
is delivered to you by the Chief Executive Officer or Chief Nuclear
Officer of PSE&G which identifies the manner in which the CEO or
CNO believes that you have not so performed your duties, or (ii)
any conduct constituting a felony or moral turpitude.
8. Your participation in PSE&G's Management Incentive
Compensation Plan (MICP) for 1995 will reflect a full year's award.
Your target incentive award as Senior Vice President - Nuclear
Engineering will initially be 20% of salary. This may be adjusted
from time to time in accordance with established plan procedures.
In addition, to provide an appropriate transition adjustment,
because any MICP awards are paid out one third annually over a
three-year period, PSE&G will pay to you the following lump sum
cash payments in January of the following years: 1996 - $45,000;
1997 - $30,000; 1998 - $15,000; in addition to any payouts which
may result from your participation in the MICP itself. Copies of
the MICP and the calculation determining the 1994 corporate factor
have previously been forwarded to you.
9. As Senior Vice President - Nuclear Engineering, you
will participate in the Long - Term Incentive Plan (LTIP) of Public
Service Enterprise Group Incorporated (Enterprise), the parent of
PSE&G. The LTIP provides senior officers selected by the
Organization and Compensation Committee with options to purchase
shares of Enterprise Common Stock. The options generally are
granted in January and become exercisable three years after the
date of grant, and the LTIP provides for payments to be made,
dependant upon dividends paid by Enterprise and future financial
performance by Enterprise in comparison to other corporations, to
assist the officers in exercising the options granted. I will
recommend to the Organization and Compensation Committee that you
be granted 1,200 options in January 1996 (which would be
exercisable in 1999). In addition, I will recommend to the
Organization and Compensation Committee that you also be granted
600 stock options under the LTIP which are exercisable in 1996, 800
stock options exercisable in 1997, and 1,000 stock options
exercisable in 1998. Such options would be subject to all of the
provisions of the LIPT and would permit the purchase by you of
numbers of shares granted by the Organization and Compensation
Committee that appropriately reflect your responsibilities and
ability to contribute to the long term success of Enterprise.
10. In light of your allied work experience, you shall be
granted credited service, in addition to that earned as a result
of your employment by PSE&G, for the purpose of determining any
pension benefits from PSE&G in accordance with the following
schedule:
Additional Years
Date of Termination of Employment of Credited Service
--------------------------------- ------------------
On or after DOE plus 5 years and
prior to DOE plus 6 years 13
On or after DOE plus 6 years and
prior to DOE plus 7 years 15
On or after DOE plus 7 years and
prior to DOE plus 8 years 17
On or after DOE plus 8 years and
prior to DOE plus 9 years 19
On or after DOE plus 9 years and
prior to DOE plus 10 years 21
On or after DOE plus 10 years 23
The additional credited service shown in the table above is
not cumulative, but is applied from the table depending upon when
you retire. For example, assuming you are currently age 47, the
additional credited service set forth above, together with the
Board's current policy of granting 5 years of additional credited
service to officers who retire between age 60 and age 65 - 1/2, and
your actual credited service, will afford you a total of 41 years
of credited service at age 60, and 46 years of credited service at
age 65, dependent upon your actual date of birth and DOE. You will
be a participant in PSE&G's Pension Plan and in its Limited
Supplemental Death Benefits and Retirement Plan. The Limited Plan
provides a retirement benefit of a percentage of final average
compensation as defined in the Plan that is equal to credited
service plus 30 years. This would result in a target retirement
benefit of 71% (41 years plus 30) at age 60 and 75% at age 64 (the
maximum replacement value under the program) times final average
compensation, adjusted for any survivorship benefit you may choose,
and reduced by Social Security benefits and pensions from other
employers as provided in the Plan. Under these pension programs
as presently in effect, you would be eligible to retire at age 56
with a reduced pension, or at age 57 with an unreduced pension,
dependent upon your actual date of birth and DOE. Specifically,
the amount of your pension or survivorship benefits paid by your
present employer (or any other employer) shall be deducted from the
pension benefits payable to you or your beneficiary by PSE&G on
account of such service with your present employer (or other
employer).
11. In recognition of your need for an automobile for
business purposes, PSE&G will provide you with a full size American
made automobile (Oldsmobile, Buick or other comparable model) and
shall provide the related maintenance, repairs, insurance and costs
of operation thereof.
12. As part of PSE&G's requirement for a work force that
is free from the influence of foreign chemical substances, you will
be equired to complete a medical examination which will include
definitive analysis of freshly voided urine specimen for the
presence of commonly abused drugs, including marijuana.
If the foregoing is in accordance with your understanding,
please sign the enclosed copy of this letter and return it to me.
Sincerely,
By: M. PETER MELLETT
---------------------------
M. Peter Mellett
Vice President - Human Resources
Agreed to this 31st day
of May, 1995
By: ELBERT C. SIMPSON
-------------------------
Elbert C. Simpson
EX-12
4
EX-12
EXHIBIT 12
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
PLUS PREFERRED SECURITIES DIVIDEND REQUIREMENTS
12 Months
YEARS ENDED DECEMBER 31, Ended
---------------------------------------------------------------- June 30,
1990(A) 1991(A) 1992(A) 1993 1994 1995
--------- --------- ---------- ---------- ---------- ---------
(THOUSANDS OF DOLLARS)
Net Income........................ $ 403,663 $ 543,035 $ 504,117 $ 595,519(A) $ 679,033 $ 642,280
Plus Income Taxes (B)............. 144,652 274,146 253,276 316,010 322,824 295,441
--------- --------- ---------- ---------- ---------- ----------
Income Before Income Taxes........ 548,315 817,181 757,393 911,529 1,001,857 937,721
--------- --------- ---------- ---------- ---------- ----------
Fixed Charges and Preferred
Securities Dividend Requirements:
Interest Charges (C)............ 457,017 478,321 524,025 502,534 495,925 502,520
Interest Factor in Rentals...... 9,162 9,311 9,591 11,090 12,120 12,131
Preferred Securities Dividend
Requirements (Pre-tax) (D).... 38,544 42,676 46,748 58,112 60,566 64,427
--------- --------- ---------- ---------- ---------- ----------
Total................... 504,723 530,308 580,364 571,736 568,611 579,078
--------- --------- ---------- ---------- ---------- ----------
Earnings Before Fixed Charges and
Preferred Securities Dividend
Requirements.................. $1,053,038 $1,347,489 $1,337,757 $1,483,265 $1,570,468 $1,516,799
========== ========== ========== ========== ========== ==========
Ratio............................. 2.09 2.54 2.30 2.59 2.76 2.62
==== ==== ==== ==== ==== ====
(A) Excludes cumulative effect of $5.4 million credit to income reflecting a change in income taxes.
(See Note 9 -- Federal Income Taxes of Notes to Consolidated Financial Statements.)
(B) Includes state income taxes and federal income taxes for other incomes.
(C) Excludes 1991 and 1992 interest expense on decommissioning costs of $6,956 and $5,208, respectively.
Effective January 1, 1992, accounting was changed to follow Federal Energy Regulatory Commission
guidelines.
(D) Includes a reduction for tax-deductible preferred dividends in accordance with Sections 244(a) and
11(b) of the Internal Revenue Code of 1986, as amended, before applying accounting Rule S-K of
Regulation 229.503, Item 503 (d)(6).
EX-12.A
5
EX-12.A
EXHIBIT 12(A)
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
12 Months
YEARS ENDED DECEMBER 31, Ended
-------------------------------------------------------------- June 30,
1990 1991 1992 1993 1994 1995
---------- ---------- ---------- ---------- ---------- ---------
(THOUSANDS OF DOLLARS)
Net Income....................... $ 537,619 $ 545,479 $ 475,936 $ 614,868 $ 659,406 $ 590,645
Plus Income Taxes (A)............ 209,360 261,912 223,782 307,414 301,447 278,730
---------- ---------- ---------- ---------- ---------- ----------
Income Before Income Taxes....... 746,979 807,391 699,718 922,282 960,853 869,375
---------- ---------- ---------- ---------- ---------- ----------
Fixed Charges
Interest Charges (B)........... 346,020 358,517 401,902 389,956 395,925 408,534
Interest Factor in Rentals..... 9,162 9,311 9,591 11,090 12,120 12,131
---------- ---------- ---------- ---------- ---------- ----------
Total.................. 355,182 367,828 411,493 401,046 408,045 420,665
---------- ---------- ---------- ---------- ---------- ----------
Earnings Before Fixed Charges.... $1,102,161 $1,175,219 $1,111,211 $1,323,328 $1,368,898 $1,290,040
========== ========== ========== ========== ========== ==========
Ratio............................ 3.10 3.20 2.70 3.30 3.35 3.07
==== ==== ==== ==== ==== ====
(A) Includes state income taxes and federal income taxes for other income.
(B) Excludes 1991 and 1992 interest expense on decommissioning costs of $6,956 and $5,208,
respectively. Effective January 1, 1992, accounting was changed to follow Federal Energy
Regulatory Commission guidelines.
EX-12.B
6
EX-12.B
EXHIBIT 12(B)
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
PLUS PREFERRED SECURITIES DIVIDEND REQUIREMENTS
12 Months
YEARS ENDED DECEMBER 31, Ended
------------------------------------------------------------- June 30,
1990 1991 1992 1993 1994 1995
---------- ---------- ---------- ---------- ---------- ---------
(THOUSANDS OF DOLLARS)
Net Income............................ $ 537,619 $ 545,479 $ 475,936 $ 614,868 $ 659,406 $ 590,645
Plus Income Taxes (A)................. 209,361 261,912 223,782 307,414 301,447 278,730
---------- ---------- --------- ---------- ---------- ----------
Income Before Income Taxes............ 746,980 807,391 699,718 922,282 960,853 869,375
---------- ---------- --------- ---------- ---------- ----------
Fixed Charges and Preferred Securities
Dividend Requirements:
Interest Charges (B)................ 346,020 358,517 401,902 389,956 395,925 408,534
Interest Factor in Rentals.......... 9,162 9,311 9,591 11,090 12,120 12,131
Preferred Securities Dividend
Requirements (Pre-tax) (C)........ 40,116 42,703 46,675 56,957 60,910 65,994
---------- ---------- --------- ---------- ---------- ----------
Total....................... 395,298 410,531 458,168 458,003 468,955 486,659
---------- ---------- --------- ---------- ---------- ----------
Earnings Before Fixed Charges and
Preferred Securities Dividend
Requirements........................ $1,102,162 $1,175,219 $1,111,211 $1,323,328 $1,368,898 $1,290,040
========== ========== ========== ========== ========== ==========
Ratio................................. 2.79 2.86 2.43 2.89 2.92 2.65
==== ==== ==== ==== ==== ====
(A) Includes state income taxes and federal income taxes for other income.
(B) Excludes 1991 and 1992 interest expense on decommissioning costs of $6,956 and $5,208, respectively.
Effective January 1, 1992, accounting was changed to follow Federal Energy Regulatory Commission
guidelines.
(C) Includes a reduction for tax-deductible preferred dividends in accordance with Sections 244(a) and
11(b) of the Internal Revenue Code of 1986, as amended, before applying accounting Rule S-K of
Regulation 229.503, Item 503 (d)(6).
EX-27.A
7
FDS ENTERPRISE
UT
0000788784
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
1000
6-MOS
DEC-31-1994
JAN-01-1995
JUN-30-1995
PER-BOOK
11,132,783
2,750,932
1,508,044
1,590,428
0
16,982,187
3,801,157
0
1,568,995
5,370,152
300,000
384,994
5,235,367
0
0
883,055
242,806
0
53,450
0
4,512,363
16,982,187
2,997,923
166,761
2,264,555
2,430,349
567,574
6,826
574,400
249,049
323,259
24,394
323,259
264,274
222,797
549,474
1.32
1.32
State Income Taxes of $3,363 and Federal Income Taxes for Other Income of $967 were
incorporated into this line item for FDS purposes. In the referenced financial statements,
State Income Taxes are included in Taxes - Other and Federal Income Taxes for Other Income
are included in Other Income - Miscellaneous.
EX-27.B
8
FDS PSE&G
UT
0000081033
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
1000
6-MOS
DEC-31-1994
JAN-01-1995
JUN-30-1995
PER-BOOK
11,132,783
362,944
1,365,894
1,588,241
0
14,449,862
2,563,003
0
1,337,284
4,434,682
300,000
384,994
4,586,428
0
0
725,881
60,200
0
53,450
0
3,904,227
14,449,862
2,807,822
158,046
2,147,705
2,304,784
503,038
6,619
509,657
203,428
318,196
17,362
300,834
255,750
183,102
492,454
0
0
State Income Taxes of $1,219 and Federal Income Taxes for Other Income of $967 were
incorporated into this line item for FDS purposes. In the referenced financial statements,
State Income Taxes are included in Taxes - Other and Federal Income Taxes for Other Income
are included in Other Income - Miscellaneous.