Financial Information By Business Segments

Note 22. Financial Information by Business Segment

Basis of Organization

PSEG's operating segments are Power, PSE&G and Energy Holdings. The operating segments were determined by management in accordance with GAAP—Disclosures about Segments of an Enterprise and Related Information. These segments were determined based on how management measures performance based on segment Net Income, as illustrated in the following table, and how it allocates resources to each business.

See Note 1. Organization, Basis of Presentation and Summary of Significant Accounting Policies for additional information.

Power

Power earns revenues by selling energy, capacity and ancillary services on a wholesale basis under contract to power marketers and to load serving entities and by bidding energy, capacity and ancillary services into the markets for these products. Power also enters into trading contracts for energy, capacity, FTRs, gas, emission allowances and other energy-related contracts to optimize the value of its portfolio of generating assets and its electric and gas supply obligations.

PSE&G

PSE&G earns revenues from its tariffs, under which it provides electric transmission and electric and gas distribution services to residential, commercial and industrial customers in New Jersey. The rates charged for electric transmission are regulated by FERC while the rates charged for electric and gas distribution are regulated by the BPU. Revenues are also earned from several other activities such as sundry sales, the appliance service business, wholesale transmission services and other miscellaneous services.

Energy Holdings

Energy Holdings earns revenues from its solar generation projects and its portfolio of passive investments primarily consisting of domestic leveraged leases. Gains and losses on sales of the lease investments are typically recognized in revenues. Energy Holdings also has equity method generation projects. Earnings from these projects are presented below Operating Income.

Other

Other activities include amounts applicable to PSEG (parent corporation), Services and intercompany eliminations, primarily relating to intercompany transactions between Power and PSE&G. No gains or losses are recorded on any intercompany transactions; rather, all intercompany transactions are at cost or, in the case of the BGS and BGSS contracts between Power and PSE&G, at rates prescribed by the BPU. For a further discussion of the intercompany transactions between Power and PSE&G, see Note 23. Related-Party Transactions. The net losses primarily relate to financing and certain administrative and general costs.


	Power		PSE&G		Energy Holdings			Other			Consolidated Total
	Millions
For the Year Ended December 31, 2011:
Operating Revenues	$	6,143	$	7,326	$	(140	)	$	(2,250	)	$	11,079
Depreciation and Amortization		224		719		15			18			976
Operating Income (Loss)		1,771		1,151		(197	)		17			2,742
Income from Equity Method Investments		0		0		4			0			4
Interest Income		4		12		2			1			19
Interest Expense		175		310		3			(13	)		475
Income (Loss) before Income Taxes		1,687		861		(193	)		29			2,384
Income Tax Expense (Benefit)		685		340		(59	)		11			977
Income (Loss) from Continuing Operations		1,002		521		(134	)		18			1,407
Income from Discontinued Operations, net of tax		96		0		0			0			96
Net Income (Loss)		1,098		521		(134	)		18			1,503
Segment Earnings (Loss)		1,098		521		(134	)		18			1,503
Gross Additions to Long-Lived Assets	$	757	$	1,302	$	4		$	20		$	2,083
As of December 31, 2011:
Total Assets	$	11,087	$	17,487	$	1,888		$	(641	)	$	29,821
Investments in Equity Method Subsidiaries	$	31	$	0	$	106		$	0		$	137


	Power		PSE&G		Energy Holdings		Other			Consolidated Total
	Millions
For the Year Ended December 31, 2010:
Operating Revenues	$	6,558	$	7,869	$	137	$	(2,771	)	$	11,793
Depreciation and Amortization		175		750		14		16			955
Operating Income (Loss)		1,963		886		81		7			2,937
Income from Equity Method Investments		0		0		4		0			4
Interest Income		3		7		2		8			20
Interest Expense		157		318		11		(14	)		472
Income (Loss) before Income Taxes		1,914		591		86		25			2,616
Income Tax Expense (Benefit)		778		232		37		12			1,059
Income (Loss) from Continuing Operations		1,136		359		49		13			1,557
Income from Discontinued Operations, net of tax		7		0		0		0			7
Net Income (Loss)		1,143		359		49		13			1,564
Segment Earnings (Loss)		1,143		358		49		14			1,564
Gross Additions to Long-Lived Assets	$	825	$	1,257	$	63	$	15		$	2,160
As of December 31, 2010:
Total Assets	$	11,452	$	16,873	$	2,234	$	(650	)	$	29,909
Investments in Equity Method Subsidiaries	$	25	$	0	$	105	$	0		$	130


	Power			PSE&G		Energy Holdings		Other			Consolidated Total
	Millions
For the Year Ended December 31, 2009:
Operating Revenues	$	6,772		$	8,243	$	221	$	(3,201	)	$	12,035
Depreciation and Amortization		184			608		11		16			819
Operating Income (Loss)		2,081			858		163		14			3,116
Income from Equity Method Investments		0			0		17		0			17
Interest Income		6			2		5		(6	)		7
Interest Expense		161			312		37		11			521
Income (Loss) before Income Taxes		1,958			551		117		10			2,636
Income Tax Expense (Benefit)		767			226		45		4			1,042
Income (Loss) from Continuing Operations		1,191			325		72		6			1,594
Loss from Discontinued Operations, net of tax		(2	)		0		0		0			(2	)
Net Income (Loss)		1,189			325		72		6			1,592
Segment Earnings (Loss)		1,189			321		72		10			1,592
Gross Additions to Long-Lived Assets	$	869		$	855	$	62	$	8		$	1,794

Financial Information By Business Segments

Note 22. Financial Information by Business Segment

Basis of Organization

PSEG's operating segments are Power, PSE&G and Energy Holdings. The operating segments were determined by management in accordance with GAAP—Disclosures about Segments of an Enterprise and Related Information. These segments were determined based on how management measures performance based on segment Net Income, as illustrated in the following table, and how it allocates resources to each business.

See Note 1. Organization, Basis of Presentation and Summary of Significant Accounting Policies for additional information.

Power

Power earns revenues by selling energy, capacity and ancillary services on a wholesale basis under contract to power marketers and to load serving entities and by bidding energy, capacity and ancillary services into the markets for these products. Power also enters into trading contracts for energy, capacity, FTRs, gas, emission allowances and other energy-related contracts to optimize the value of its portfolio of generating assets and its electric and gas supply obligations.

PSE&G

PSE&G earns revenues from its tariffs, under which it provides electric transmission and electric and gas distribution services to residential, commercial and industrial customers in New Jersey. The rates charged for electric transmission are regulated by FERC while the rates charged for electric and gas distribution are regulated by the BPU. Revenues are also earned from several other activities such as sundry sales, the appliance service business, wholesale transmission services and other miscellaneous services.

Energy Holdings

Energy Holdings earns revenues from its solar generation projects and its portfolio of passive investments primarily consisting of domestic leveraged leases. Gains and losses on sales of the lease investments are typically recognized in revenues. Energy Holdings also has equity method generation projects. Earnings from these projects are presented below Operating Income.

Other

Other activities include amounts applicable to PSEG (parent corporation), Services and intercompany eliminations, primarily relating to intercompany transactions between Power and PSE&G. No gains or losses are recorded on any intercompany transactions; rather, all intercompany transactions are at cost or, in the case of the BGS and BGSS contracts between Power and PSE&G, at rates prescribed by the BPU. For a further discussion of the intercompany transactions between Power and PSE&G, see Note 23. Related-Party Transactions. The net losses primarily relate to financing and certain administrative and general costs.


	Power		PSE&G		Energy Holdings			Other			Consolidated Total
	Millions
For the Year Ended December 31, 2011:
Operating Revenues	$	6,143	$	7,326	$	(140	)	$	(2,250	)	$	11,079
Depreciation and Amortization		224		719		15			18			976
Operating Income (Loss)		1,771		1,151		(197	)		17			2,742
Income from Equity Method Investments		0		0		4			0			4
Interest Income		4		12		2			1			19
Interest Expense		175		310		3			(13	)		475
Income (Loss) before Income Taxes		1,687		861		(193	)		29			2,384
Income Tax Expense (Benefit)		685		340		(59	)		11			977
Income (Loss) from Continuing Operations		1,002		521		(134	)		18			1,407
Income from Discontinued Operations, net of tax		96		0		0			0			96
Net Income (Loss)		1,098		521		(134	)		18			1,503
Segment Earnings (Loss)		1,098		521		(134	)		18			1,503
Gross Additions to Long-Lived Assets	$	757	$	1,302	$	4		$	20		$	2,083
As of December 31, 2011:
Total Assets	$	11,087	$	17,487	$	1,888		$	(641	)	$	29,821
Investments in Equity Method Subsidiaries	$	31	$	0	$	106		$	0		$	137


	Power		PSE&G		Energy Holdings		Other			Consolidated Total
	Millions
For the Year Ended December 31, 2010:
Operating Revenues	$	6,558	$	7,869	$	137	$	(2,771	)	$	11,793
Depreciation and Amortization		175		750		14		16			955
Operating Income (Loss)		1,963		886		81		7			2,937
Income from Equity Method Investments		0		0		4		0			4
Interest Income		3		7		2		8			20
Interest Expense		157		318		11		(14	)		472
Income (Loss) before Income Taxes		1,914		591		86		25			2,616
Income Tax Expense (Benefit)		778		232		37		12			1,059
Income (Loss) from Continuing Operations		1,136		359		49		13			1,557
Income from Discontinued Operations, net of tax		7		0		0		0			7
Net Income (Loss)		1,143		359		49		13			1,564
Segment Earnings (Loss)		1,143		358		49		14			1,564
Gross Additions to Long-Lived Assets	$	825	$	1,257	$	63	$	15		$	2,160
As of December 31, 2010:
Total Assets	$	11,452	$	16,873	$	2,234	$	(650	)	$	29,909
Investments in Equity Method Subsidiaries	$	25	$	0	$	105	$	0		$	130


	Power			PSE&G		Energy Holdings		Other			Consolidated Total
	Millions
For the Year Ended December 31, 2009:
Operating Revenues	$	6,772		$	8,243	$	221	$	(3,201	)	$	12,035
Depreciation and Amortization		184			608		11		16			819
Operating Income (Loss)		2,081			858		163		14			3,116
Income from Equity Method Investments		0			0		17		0			17
Interest Income		6			2		5		(6	)		7
Interest Expense		161			312		37		11			521
Income (Loss) before Income Taxes		1,958			551		117		10			2,636
Income Tax Expense (Benefit)		767			226		45		4			1,042
Income (Loss) from Continuing Operations		1,191			325		72		6			1,594
Loss from Discontinued Operations, net of tax		(2	)		0		0		0			(2	)
Net Income (Loss)		1,189			325		72		6			1,592
Segment Earnings (Loss)		1,189			321		72		10			1,592
Gross Additions to Long-Lived Assets	$	869		$	855	$	62	$	8		$	1,794

Financial Information By Business Segments

Note 22. Financial Information by Business Segment

Basis of Organization

PSEG's operating segments are Power, PSE&G and Energy Holdings. The operating segments were determined by management in accordance with GAAPDisclosures about Segments of an Enterprise and Related Information. These segments were determined based on how management measures performance based on segment Net Income, as illustrated in the following table, and how it allocates resources to each business.

See Note 1. Organization, Basis of Presentation and Summary of Significant Accounting Policies for additional information.

Power

Power earns revenues by selling energy, capacity and ancillary services on a wholesale basis under contract to power marketers and to load serving entities and by bidding energy, capacity and ancillary services into the markets for these products. Power also enters into trading contracts for energy, capacity, FTRs, gas, emission allowances and other energy-related contracts to optimize the value of its portfolio of generating assets and its electric and gas supply obligations.

PSE&G

PSE&G earns revenues from its tariffs, under which it provides electric transmission and electric and gas distribution services to residential, commercial and industrial customers in New Jersey. The rates charged for electric transmission are regulated by FERC while the rates charged for electric and gas distribution are regulated by the BPU. Revenues are also earned from several other activities such as sundry sales, the appliance service business, wholesale transmission services and other miscellaneous services.

Energy Holdings

Energy Holdings earns revenues from its solar generation projects and its portfolio of passive investments primarily consisting of domestic leveraged leases. Gains and losses on sales of the lease investments are typically recognized in revenues. Energy Holdings also has equity method generation projects. Earnings from these projects are presented below Operating Income.

Other

Other activities include amounts applicable to PSEG (parent corporation), Services and intercompany eliminations, primarily relating to intercompany transactions between Power and PSE&G. No gains or losses are recorded on any intercompany transactions; rather, all intercompany transactions are at cost or, in the case of the BGS and BGSS contracts between Power and PSE&G, at rates prescribed by the BPU. For a further discussion of the intercompany transactions between Power and PSE&G, see Note 23. Related-Party Transactions. The net losses primarily relate to financing and certain administrative and general costs.


	Power		PSE&G		Energy Holdings			Other			Consolidated Total
	Millions
For the Year Ended December 31, 2011:
Operating Revenues	$	6,143	$	7,326	$	(140	)	$	(2,250	)	$	11,079
Depreciation and Amortization		224		719		15			18			976
Operating Income (Loss)		1,771		1,151		(197	)		17			2,742
Income from Equity Method Investments		0		0		4			0			4
Interest Income		4		12		2			1			19
Interest Expense		175		310		3			(13	)		475
Income (Loss) before Income Taxes		1,687		861		(193	)		29			2,384
Income Tax Expense (Benefit)		685		340		(59	)		11			977
Income (Loss) from Continuing Operations		1,002		521		(134	)		18			1,407
Income from Discontinued Operations, net of tax		96		0		0			0			96
Net Income (Loss)		1,098		521		(134	)		18			1,503
Segment Earnings (Loss)		1,098		521		(134	)		18			1,503
Gross Additions to Long-Lived Assets	$	757	$	1,302	$	4		$	20		$	2,083
As of December 31, 2011:
Total Assets	$	11,087	$	17,487	$	1,888		$	(641	)	$	29,821
Investments in Equity Method Subsidiaries	$	31	$	0	$	106		$	0		$	137


	Power		PSE&G		Energy Holdings		Other			Consolidated Total
	Millions
For the Year Ended December 31, 2010:
Operating Revenues	$	6,558	$	7,869	$	137	$	(2,771	)	$	11,793
Depreciation and Amortization		175		750		14		16			955
Operating Income (Loss)		1,963		886		81		7			2,937
Income from Equity Method Investments		0		0		4		0			4
Interest Income		3		7		2		8			20
Interest Expense		157		318		11		(14	)		472
Income (Loss) before Income Taxes		1,914		591		86		25			2,616
Income Tax Expense (Benefit)		778		232		37		12			1,059
Income (Loss) from Continuing Operations		1,136		359		49		13			1,557
Income from Discontinued Operations, net of tax		7		0		0		0			7
Net Income (Loss)		1,143		359		49		13			1,564
Segment Earnings (Loss)		1,143		358		49		14			1,564
Gross Additions to Long-Lived Assets	$	825	$	1,257	$	63	$	15		$	2,160
As of December 31, 2010:
Total Assets	$	11,452	$	16,873	$	2,234	$	(650	)	$	29,909
Investments in Equity Method Subsidiaries	$	25	$	0	$	105	$	0		$	130


	Power			PSE&G		Energy Holdings		Other			Consolidated Total
	Millions
For the Year Ended December 31, 2009:
Operating Revenues	$	6,772		$	8,243	$	221	$	(3,201	)	$	12,035
Depreciation and Amortization		184			608		11		16			819
Operating Income (Loss)		2,081			858		163		14			3,116
Income from Equity Method Investments		0			0		17		0			17
Interest Income		6			2		5		(6	)		7
Interest Expense		161			312		37		11			521
Income (Loss) before Income Taxes		1,958			551		117		10			2,636
Income Tax Expense (Benefit)		767			226		45		4			1,042
Income (Loss) from Continuing Operations		1,191			325		72		6			1,594
Loss from Discontinued Operations, net of tax		(2	)		0		0		0			(2	)
Net Income (Loss)		1,189			325		72		6			1,592
Segment Earnings (Loss)		1,189			321		72		10			1,592
Gross Additions to Long-Lived Assets	$	869		$	855	$	62	$	8		$	1,794