Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — 41st EEI Financial Conference (November 2006)
30 slides from Public Service Enterprise's conference presentation, Nov 6, 2006
Slide 1: Public Service Enterprise Group – 41st EEI Financial Conference
Public Service Enterprise Group 41 st EEI Financial Conference November 7, 2006
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, that are subject to risks and uncertainties. The factors that could cause actual results of Public Service Enterprise Group Incorporated (PSEG)
Slide 3: Agenda
Agenda PSEG Overview Ralph Izzo PSE&G Update PSEG Power Update Tom O’Flynn Energy Holdings Update PSEG Update
Slide 4: PSEG Overview
PSEG Overview Ralph Izzo President and Chief Operating Officer
Slide 5: PSEG Overview
PSEG Overview Electric Customers: 2.1M Gas Customers: 1.7M Nuclear Capacity: 3,494 MW Total Capacity: 14,636 MW Traditional T&D Leveraged Leases 2006E Operating Earnings (1)(2): $875M - $950M 2006 EPS Guidance (1)(2): $3.45 - $3.75 Assets (as of 9/30/06): $28.7B Domestic/Int’l Energy Regional Wholes
Slide 6: Operations, Regulatory, Energy Markets, Financial
Operations PSE&G consistently demonstrates top reliability performance Significant improvement in nuclear operations Regulatory PSE&G settlement demonstrates return to constructive environment Environmental – nearing NJ coal solution Energy Markets Power benefiting from higher prices and lower risk
Slide 7: Financial Strength
Financial Strength We will focus on the basics of operational excellence... …to produce financial strength that will be deployed through disciplined investment. Operational Excellence Disciplined Investment
Slide 8: Solidify improvements in nuclear and fossil operations
Solidify improvements in nuclear and fossil operations Extended Nuclear Operations Services Agreement Considering long term alternatives for Nuclear Operations Implement fair and timely rate relief Awaiting final BPU approval of electric distribution financial review and gas distribution rate case T
Slide 9: Strong earnings and cash flows used to delever balance sheet
Strong earnings and cash flows will be used to further delever the balance sheet. Improving our credit profile will enable us to maximize growth opportunities. $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 2005 Actual 2006 Guidance 2007 Guidance 2008 Est. 0% 5% 10% 15% 20% 25% 30% Excess of 10% Growth F
Slide 10: Disciplined investments to grow generation and delivery businesses
…and decide how to grow the generation and delivery businesses. From a position of financial strength, we will make disciplined investments… Near-term: Capitalize on opportunities for rate base growth Optimize our existing generation portfolio Environmental improvements at NJ coal stations Take a ha
Slide 11: Positioning as industry thought leaders
By positioning ourselves as industry thought leaders… Environmental leadership Engage in policy debate Pledged support to develop Energy Master Plan in New Jersey Workforce development Partner with higher education institutions Recruit new and diverse talent Technology adapters Evaluate use of techn
Slide 12: PSE&G
PSE&G
Slide 13: PSE&G Overview
1 2 3 4 5 6 7 8 9 PSE&G Overview 10 ml Sussex Co. Passaic Co. Warren Co. Bergen Co. Morris Co. Essex Co. Hudson Co. Hunterdon Co. Union Co. STATEN ISLAND Somerset Co. Middlesex Co. Mercer Co. Monmouth Co. Burlington Co. Ocean Co. Gloucester Co. Camden Co. COMBINED ELECTRIC & GAS TERRITORIES ELECTRIC
Slide 14: PSE&G is recognized as a top performing utility
PSE&G is recognized as a top performing utility… …providing a foundation for satisfied customers and a constructive regulatory environment Worse Better 0.80 0.75 0.70 0.65 0.60 Worse Better Worse Better CAIDI (Duration of Outages) - Minutes SAIFI (Frequency of Outages) - % of Customers Gas Leak Resp
Slide 15: Fair outcomes on both rate cases
Fair outcomes on both cases will help ensure… Settlement agreement with BPU staff, Public Advocate, and other parties Gas Base Rate case provides for $79M of gas margin $40M increase in rates $39M decrease in non-cash expenses Electric Distribution financial review provides $47M of additional revenu
Slide 16: Looking forward PSE&G
Looking forward PSE&G… Continues to invest in its assets for the future Distribution System Reinforcements Transmission Investments Customer Service Is committed to meeting customer needs and expectations Maintains constructive regulatory relations regarding traditional utility matters
Slide 17: PSEG Power
PSEG Power Tom O’Flynn PSEG Chief Financial Officer
Slide 18: PSEG Power Overview
PSEG Power Overview Diverse asset mix mitigates risk and provides strong returns 15,000 MW of nuclear, coal, gas, oil and hydro facilities Low-cost portfolio Strong cash generator Regional focus with demonstrated BGS success Assets favorably located Many units east of PJM constraint Southern NEPOOL/
Slide 19: Capacity Factors
Capacity Factors 82% 90% 96% 77% 89% 98% 2006 YTD *Uprate of 127MW scheduled for Fall 2007 Strong operational performance Capacity factors: YTD ~96% Summer ~100% Outage management Site records achieved, including most recent 21 day refueling outage at Salem 2 Continuing the Nuclear Operating Service
Slide 20: Strong Fossil Operations
Strong Fossil Operations round out a diverse portfolio… 5,000 10,000 15,000 20,000 25,000 2006 Est. Coal Combined Cycle Peaking & Other Total Fossil Output (Gwh) A Diverse 11,000 MW Fleet 2,400 MW coal 4,300 MW combined cycle 4,500 MW peaking and other Strong Performance Continued growth in output I
Slide 21: Calendar Forward Prices – PJM West RTC
Calendar Forward Prices - PJM West RTC Strong electric prices support growth in margins… …as Power secures a stable revenue stream through a strategy of forward hedging Average PJM West RTC Price 2005 = $60/mwh 2004 = $42/mwh 2003 = $38/mwh Nov ‘05 Nov ‘06 10-40% 65-80% 85-95% >95% Percent of coal a
Slide 22: Strengthening of capacity market design
Strengthening of capacity market design… New England Forward Capacity Market (FCM) scheduled to begin 12/1/06 Transition period prices have been established 12/1/06 – 5/31/08 $36.60/kw-yr 6/1/08 – 5/31/09 $45.00/kw-yr 6/1/09 – 5/31/10 $49.20/kw-yr First auction scheduled in 2008 for 2010 delivery PJ
Slide 23: Year over year improvements drive 2007 earnings guidance
The year over year improvements… Energy Capacity Other …drive growth in PSEG’s 2007 earnings guidance. 2007E Gross Margin 2006E Gross Margin Key Drivers BGS Pricing UI Recontracting Other Recontracting Capacity Markets $400M - $500M $100M - $150M $2.5B- $2.0B- $1.5B- $1.0B- $0.5B- $0M - $50M
Slide 24: PSEG Energy Holdings
PSEG Energy Holdings
Slide 25: Energy Holdings Overview
Latin American Distribution Texas Merchant Generation (2,000 MW) Energy Holdings Overview PSEG Resources International Generation Other fully contracted US Generation Projected 2007 Earnings Contribution Global’s risk profile substantially improved Vast majority of earnings from U.S. generation and
Slide 26: Holdings has provided meaningful earnings and cash flow
Holdings has provided meaningful earnings and cash flow… * For investments accounted for under the equity method of accounting, includes Global’s share of net earnings, including Interest Expense and Income Tax Expense. Excludes loss on sale of RGE of $263M in 2006 and Global G&A – Unallocated. …whi
Slide 27: Looking Forward Energy Holdings
Looking Forward Energy Holdings… Optimize Texas assets Take a hard look at the pace of monetizing international assets Maintain financial and operational stability of existing assets
Slide 28: PSEG Update
© PSEG
Slide 29: PSEG 2007 Earnings Outlook & Drivers
PSEG 2007 Earnings Outlook & Drivers 2006 Guidance Power PSE&G Holdings 2007 Guidance $3.45 - $3.75 $4.60 - $5.00 Excess of 10% Growth Forward Hedging Re-contracting - PJM/NE Capacity Market Design Gas Rate Case Electric Financial Review Weather Texas 2006 RGE Sale New Accounting Standard
Slide 30: Public Service Enterprise Group
Public Service Enterprise Group
Public Service Enterprise Group — 41st EEI Financial Conference (November 2006) on 6ix