 2
Forward-Looking Statement
The forward-looking statements contained in this report are intended to
qualify for the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended.
All of the forward-looking statements made in this report are qualified by
these cautionary statements and we cannot assure you that the results or developments anticipated by
management will be realized or even if realized, will have the expected
consequences to, or effects on, us or our business prospects, financial condition or results of operations. Readers
are cautioned not to place undue reliance on these forward-looking
statements in making any investment decision. Forward-looking statements made in this report apply only as of the
date of this report. While we may elect to update forward-looking
statements from time to time, we specifically disclaim any obligation to do so, even if internal estimates change, unless
otherwise required by applicable securities laws.
adverse changes in the demand for or the price of the capacity and energy that
we sell into wholesale electricity markets,
adverse changes in energy industry law, policies and regulation, including
market structures and a potential shift away from competitive markets toward subsidized market
mechanisms, transmission planning and cost allocation rules, including rules
regarding how transmission is planned and who is permitted to build transmission in the future,
and reliability standards,
changes in nuclear regulation and/or general developments in the nuclear power
industry, including various impacts from any accidents or incidents experienced at our
facilities or by others in the industry, that could limit operations of our
nuclear generating units, actions or activities at one of our nuclear units located on a multi-unit
site that might adversely affect our ability to continue to operate that unit or other units located at the
same site,
any inability to balance our energy obligations, available supply and risks,
any deterioration in our credit quality or the credit quality of our
counterparties,
any inability to achieve, or continue to sustain, our expected levels of
operating performance, any equipment failures, accidents, severe weather events or other incidents
that impact our ability to provide safe and reliable service to our customers, and any inability to
obtain sufficient coverage or recover proceeds of insurance with respect to
such events, increases in competition in energy supply markets as well as competition for
certain transmission projects, any inability of our transmission and distribution businesses to obtain
adequate and timely rate relief and regulatory approvals from federal and state regulators,
changes in federal and state environmental regulations and enforcement that
could increase our costs or limit our operations, availability of capital and credit at commercially reasonable terms and
conditions and our ability to meet cash needs,
changes in the cost of, or interruption in the supply of, fuel and other
commodities necessary to the operation of our generating units,
delays in receipt of necessary permits and approvals for our construction and
development activities,
delays or unforeseen cost escalations in our construction and development
activities,
acts of terrorism, cybersecurity attacks or intrusions that could adversely
impact our businesses,
any inability to realize anticipated tax benefits or retain tax credits,
challenges associated with recruitment and/or retention of a qualified
workforce,
adverse performance of our decommissioning and defined benefit plan trust fund
investments and changes in funding requirements, and
changes in technology, such as distributed generation and micro grids, and
greater reliance on these technologies and changes in customer behaviors, including energy
efficiency,net-metering and demand response.
Certain of the matters discussed in this report about our and our subsidiaries'
future performance, including, without limitation, future revenues, earnings, strategies, prospects, consequences and all
other statements that are not purely historical constitute
“forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are
subject to risks and uncertainties, which could cause actual results to differ
materially from those anticipated. Such statements are based on management's beliefs as well as assumptions made by
and information currently available to management. When used herein, the words
“anticipate,” “intend,” “estimate,” “believe,” “expect,” “plan,” “should,” “hypothetical,” “potential,” “forecast,”
“project,” variations of such words and similar expressions are
intended to identify forward-looking statements. Factors that may cause actual results to differ are often presented with the forward-
looking statements themselves. Other factors that could cause actual results to
differ materially from those contemplated in any forward-looking statements made by us herein are discussed in filings
we make with the United States Securities and Exchange Commission (SEC),
including our Annual Report on Form 10-K and subsequent reports on Form 10-Q and Form 8-K and available on our
website: http://www.pseg.com. These factors include, but are not limited to: EXHIBIT 99 |
 GAAP Disclaimer
PSEG presents Operating Earnings in addition to its Income from Continuing
Operations/Net Income reported in accordance with accounting principles
generally accepted in the United States (GAAP). Operating Earnings is a
non- GAAP financial measure that differs from Income from Continuing
Operations/Net Income because it excludes gains or losses associated
with Nuclear Decommissioning Trust (NDT), Mark-to-Market (MTM)
accounting, and other material one-time items. PSEG presents
Operating Earnings because management believes that it is appropriate
for investors to consider results excluding these items in addition to
the results reported in accordance with GAAP. PSEG believes that the
non-GAAP financial measure of Operating Earnings provides a
consistent and comparable measure of performance of its businesses to
help shareholders understand performance trends. This information is
not intended to be viewed as an alternative to GAAP information.
Slides A and B at the end of this presentation include a list of
items excluded
from Income from Continuing Operations/Net Income to reconcile to Operating
Earnings, with a reference to that slide included on each of the
slides where the
non-GAAP information appears.
These
materials
and
other
financial
releases
can
be
found
on
the
pseg.com
website under the investor tab, or at http://investor.pseg.com/
3 |
 8
Maintaining PSEG 2014 Operating Earnings
Guidance
SEE SLIDE A FOR ITEMS EXCLUDED FROM INCOME FROM CONTINUING
OPERATIONS/NET INCOME TO RECONCILE TO OPERATING
EARNINGS. $2.44
$2.58
$2.55
-
$2.75E
Reflects increased level of utility investment, pension savings and assumes
normal weather and unit operations for the rest of year
2012
2013
2014 Guidance
E = ESTIMATE. |
 Operating Earnings Mix
Long term investment program has driven increased earnings
contribution from stable, regulated business
*SEE SLIDE A FOR ITEMS EXCLUDED FROM INCOME FROM
CONTINUING OPERATIONS/ NET INCOME TO RECONCILE TO OPERATING EARNINGS;
DISCONTINUED OPERATIONS REFLECT TEXAS. E=ESTIMATE ** 2014
PERCENTS USE MIDPOINT OF EARNINGS GUIDANCE. Power’s
diverse
fuel
mix
and dispatch flexibility
continues to generate
earnings and free cash flow
PSE&G’s
investment
in
transmission has
diversified its asset base
and, coupled with other
investments
and cost controls,
supported compound
annual earnings growth of
~18% over 2009 –
2013
Operating Earnings* Contribution by Subsidiary (%)
PSE&G
Power
Other
$2.44
$2.58
$2.55 -
$2.75E
$3.12
$2.74
$3.09
2009
2010
2011
2012
2013
2014E**
9
20%
27%
38%
43%
47%
54%
76%
69%
62%
54%
54%
43% |
 PSEG Q1 2014 Financial Highlights
Operating earnings of $1.01 vs. $0.85 per share in Q1 2013
Power benefited from higher market pricing, market volatility and increased
output Increased contribution to earnings from PSE&G’s
investment in transmission Focused on maintaining operating efficiency
and customer reliability PSE&G expected to grow at double-digit
rate in 2014 and provide over 50% of operating earnings Positive cash
from Power and increasing cash flow from PSE&G supports dividend growth and funds capital
spending program without the need to issue equity
Increased
common
dividend
to
indicative
annual
rate
of
$1.48
per
share
in
Q1
2014
Debt as a percentage of capital was 41% at March 31, 2014
17
Maintaining 2014 operating earnings guidance of $2.55 - $2.75 per
share Agreement
on PSE&G’s Energy Strong infrastructure program to invest $1.22 billion over 2014 – 2018
Strong Q1 Earnings
Financial position remains
strong Executing
existing 5-year, $6.8 billion transmission capital spending program on budget and on schedule
Power recognized a liability in the quarter related to its discovery that it
incorrectly calculated certain components of its cost-based bids for certain
generating units in the PJM energy market, with resulting
over-collection of revenues related to its fossil fleet. Power has notified FERC, PJM and
the PJM Independent Market Monitor of this issue, which is still under review; we
are unable to estimate the ultimate impact or predict any resulting
penalties or other costs associated with the matter at this time
*SEE SLIDE B FOR ITEMS EXCLUDED FROM INCOME FROM
CONTINUING OPERATIONS/NET INCOME TO RECONCILE TO OPERATING
EARNINGS. |
   PSE&G’s
demonstrated
ability
to
successfully
execute large
projects leaves us
well positioned to
pursue new
opportunities
Future RTEP as
identified by PJM
Near-term participation
in RTO competitive
open planning windows
PJM
MISO
NYISO
Participating in
competitive solicitations
under FERC 1000 --
Artificial Island
recommendation
42 |
 PSE&G’s 2014 operating earnings
to benefit from increased investment in transmission and
on-going cost control
E=ESTIMATE
*SEE
SLIDE
A
FOR
ITEMS
EXCLUDED
FROM
INCOME
FROM
CONTINUING
OPERATIONS/NET INCOME TO RECONCILE TO OPERATING EARNINGS.
PSE&G Operating Earnings*
($ Millions)
43 |
 PSEG Power creating value by responding to
changing markets and regulations
Safety/Environmental Focus
Fleet Diversity/Efficiency Focus
Financial/Economic
Focus
Regulatory Focus
•
Nuclear units operated at over 90%
capacity
factors
for
the
9
th
consecutive
year through 2013
•
Fleet diversity across the dispatch
curve and fuel types provide flexibility
to meet changing conditions
•
Linden CCGT and Salem 2 nuclear unit
achieved record output in 2013
•
“Getting the most out of
existing fleet”
•
Locational advantage
•
O&M control programs
have delivered a CAGR of
1.6% between 2009 and
2014
•
Sites offer competitive
advantage for expansion
•
Strong regulatory
performance
•
Industry leadership in the
changing business
environment
50 |
 PSEG Solar Source owns 92 MW of
operating solar facilities*
*PSEG Solar Source recently acquired a 10MW (AC) Texas solar project
from juwi solar for $22 million. The expected COD is YE 2014; the
project has a 30-year PPA with El Paso Electric. Shasta A &
B California (4 MW)
COD March 2014
Polycrystalline -
single axis
tracker
Investment $13 million
20 year PPAs with PG&E
Hackettstown (Mars)
New Jersey (2 MW)
COD September 2009
Thin film panels –
fixed tilt
Investment $13 million
15 year PPA with Mars, Inc.
Wyandot
Ohio (12 MW)
COD May 2010
Thin film panels –
fixed tilt
Investment $45 million
20 year PPA with AEP
JEA
Florida (15 MW)
COD September 2010
Thin film panels –
fixed tilt
Investment $59 million
30 year PPA with JEA
Queen Creek
Arizona (25 MW)
COD October 2012
Polycrystalline -
single axis
tracker
Investment $79 million
20 year PPA with SRP
Milford
Delaware (15 MW)
COD December 2012
Polycrystalline -
fixed tilt
Investment $49 million
20 year PPA with DEMEC
Badger I
Arizona (19 MW)
COD November 2013
Polycrystalline -
single axis
tracker
Investment $50 million
30 year PPA with APS
•
Continue to seek high quality projects with
creditworthy off-takers.
•
Solar portfolio delivers strong EBITDA post-
construction period.
66 |
 PSE&G’s Cash from Operations and Power’s Free Cash Flow support
growth investments without the need for new equity PSE&G
Net Debt
2014 –
2016E
PSEG Sources and Uses
(1)
PSE&G CASH FROM OPERATIONS ADJUSTS FOR SECURITIZATION PRINCIPAL REPAYMENTS
OF ~$500M FROM 2014-2016 (2)
OTHER CASH FLOW INCLUDES PSEG LI, HOLDINGS NET CASH FLOW, CASH, AND SHORT TERM
DEBT E = ESTIMATE
PSE&G
Cash
from
Ops
(1)
PSE&G
Capital
Investment
With Energy Strong
Shareholder
Dividend
Power
Cash from Ops
Other
Cash Flow
(2)
Power Net
Debt
Power
Capital
Investment
94
Sources
Uses |
 Improving Operating Earnings
and increased contribution from PSE&G
PSEG Operating Earnings
$ Millions (except EPS)
2012
2013
2014E
PSE&G
$528
$612
$705 -
$745
PSEG Power
$663
$710
$550 -
$610
Other
$45
($13)
$35 -
$40
Operating Earnings*
$1,236
$1,309
$1,290 -
$1,395
Operating EPS*
$2.44
$2.58
$2.55
-
$2.75
Regulated % of Earnings
43%
47%
53%
-
55%
*
SEE SLIDE A FOR ITEMS EXCLUDED FROM INCOME FROM CONTINUING OPERATIONS/NET
INCOME TO RECONCILE TO OPERATING EARNINGS.
NOTE: 2012 OPERATING EARNINGS RE-STATED FOR TRANSFER OF ASSETS FROM PSEG
HOLDINGS TO PSEG POWER. E=ESTIMATE.
98 |
 Items Excluded from Income from Continuing
Operations/Net Income to Reconcile to Operating Earnings
PLEASE SEE PAGE 3 FOR AN EXPLANATION OF PSEG’S USE OF OPERATING EARNINGS
AS A NON-GAAP FINANCIAL MEASURE AND HOW IT DIFFERS FROM NET
INCOME. (a)
Includes the financial impact from positions with forward delivery
months. A
2013
2012
2011
2010
2009
2008
Earnings
Impact
($
Millions)
Operating Earnings
1,309
$
1,236
$
1,389
$
1,584
$
1,567
$
1,478
$
Gain (Loss) on Nuclear Decommissioning Trust (NDT)
Fund Related Activity (PSEG Power)
40
52
50
46
9
(71)
Gain
(Loss)
on
Mark-to-Market
(MTM)
(a)
(PSEG Power)
(74)
(10)
107
(1)
(11)
14
Lease Transaction Activity (PSEG Enterprise/Other)
-
36
(173)
-
29
(490)
Storm O&M (PSEG Power)
(32)
(39)
-
-
-
-
Market Transition Charge Refund (PSE&G)
-
-
-
(72)
-
-
Gain (Loss) on Asset Sales and Impairments (PSEG Enterprise/Other)
-
-
34
-
-
(13)
Income from Continuing Operations
1,243
$
1,275
$
1,407
$
1,557
$
1,594
$
918
$
Discontinued Operations
-
-
96
7
(2)
270
Net Income
1,243
$
1,275
$
1,503
$
1,564
$
1,592
$
1,188
$
Fully Diluted Average Shares Outstanding (in Millions)
508
507
507
507
507
508
Per
Share
Impact
(Diluted)
Operating Earnings
2.58
$
2.44
$
2.74
$
3.12
$
3.09
$
2.91
$
Gain (Loss) on NDT Fund Related Activity (PSEG Power)
0.08
0.10
0.10
0.09
0.02
(0.14)
Gain
(Loss)
on
MTM
(a)
(PSEG Power)
(0.14)
(0.02)
0.21
-
(0.02)
0.03
Lease Transaction Activity (PSEG Enterprise/Other)
-
0.07
(0.34)
-
0.05
(0.96)
Storm O&M (PSEG Power)
(0.07)
(0.08)
-
-
-
-
Market Transition Charge Refund (PSE&G)
-
-
-
(0.14)
-
-
Gain (Loss) on Asset Sales and Impairments (PSEG Enterprise/Other)
-
-
0.06
-
-
(0.03)
Income from Continuing Operations
2.45
$
2.51
$
2.77
$
3.07
$
3.14
$
1.81
$
Discontinued Operations
-
-
0.19
0.01
-
0.53
Net Income
2.45
$
2.51
$
2.96
$
3.08
$
3.14
$
2.34
$
For the Year Ended
December 31,
(Unaudited)
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
Reconciling Items, net of tax |
 Items Excluded from Net Income to Reconcile to Operating Earnings
PLEASE SEE PAGE 3 FOR AN EXPLANATION OF PSEG’S USE OF OPERATING EARNINGS
AS A NON-GAAP FINANCIAL MEASURE AND HOW IT DIFFERS FROM NET
INCOME. Attachment 10
2014
2013
2013
2012
Earnings Impact ($ Millions)
Operating Earnings
515
$
433
$
1,309
$
1,236
$
Gain (Loss) on Nuclear Decommissioning Trust (NDT)
Fund Related Activity (PSEG Power)
9
9
40
52
Gain (Loss) on Mark-to-Market (MTM)
(a)
(PSEG Power)
(132)
(105)
(74)
(10)
Lease Related Activity (PSEG Enterprise/Other)
-
-
-
36
Storm O&M, net of insurance recoveries (PSEG Power)
(6)
(17)
(32)
(39)
Net Income
386
$
320
$
1,243
$
1,275
$
Fully Diluted Average Shares Outstanding (in Millions)
508
507
508
507
Per Share Impact (Diluted)
Operating Earnings
1.01
$
0.85
$
2.58
$
2.44
$
Gain (Loss) on NDT Fund Related Activity (PSEG Power)
0.02
0.02
0.08
0.10
Gain (Loss) on MTM
(a)
(PSEG Power)
(0.26)
(0.21)
(0.14)
(0.02)
Lease Related Activity (PSEG Enterprise/Other)
-
-
-
0.07
Storm O&M, net of insurance recoveries (PSEG Power)
(0.01)
(0.03)
(0.07)
(0.08)
Net Income
0.76
$
0.63
$
2.45
$
2.51
$
(a) Includes the financial impact from positions with forward delivery
months. PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
Reconciling Items, net of tax
Three Months Ended
Year Ended
March 31,
December 31,
(Unaudited)
B |