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Public Service Enterprise Group Annual Report, Year Ended Dec 31, 1993

Filing Date
Filed February 25, 1994
Period End
December 31, 1993
Security
PEG
In the record · 2016–202610-K1110-Q338-K149

PEG filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 149 current reports (8-K) between 2016 and 2026.

  1. FY2016 annual report10-K · Feb ’17Feb ’17
  2. Impairment8-K · Jun ’19Jun ’19
  3. Leadership change8-K · Apr ’22Apr ’22
  4. Leadership change8-K · Jan ’26Jan ’26

01—Abstract

Summary

Summary of the 10-K filed February 25, 1994. Cited figures are marked; the original filing is the authoritative source.

Public Service Enterprise Group Incorporated (Enterprise) is a New Jersey public utility holding company that owns no physical properties.

Its principal subsidiary, Public Service Electric and Gas Company (PSE&G), provides electric and gas service in New Jersey, serving approximately 5,500,000 persons. PSE&G accounted for 86%a of Enterprise's assets and 93% of its 1993 revenues at December 31, 1993, and 96% of 1993 net income available to Enterprise. Enterprise's nonutility businesses are held through Enterprise Diversified Holdings Incorporated (EDHI), which includes Energy Development Corporation (oil and gas), Community Energy Alternatives (cogeneration), Public Service Resources Corporation (passive investments) and Enterprise Group Development Corporation (real estate).

Financial results for 1993 show total operating revenues of $5.71 billionb and net income of $600.9 million, or $2.50 per average share, compared with $504.1 million, or $2.17 per share, in 1992. Net income included a $77.6 million property impairment at EGDC ($50.5 million after tax). PSE&G's base rates increased effective January 1, 1993, under a December 31, 1992 settlement that provides for additional annual base revenues of $295 million and a 12% return on common equity.

Net cash provided by operating activities fell to $1.008 billionc from $1.340 billion, mainly due to an underrecovery of energy and gas costs and higher New Jersey Gross Receipts Tax payments. Total capital requirements for 1994 through 1998 are forecast at $7.335 billion, and construction expenditures for PSE&G are expected to total about $4.2 billion over that period.

Key risks highlighted in the filing include a pending NJDEPE final water permit for the Salem nuclear station, with cooling-tower retrofit costs estimated at $720 million to $2 billiond if required; an IRS Revenue Agent's Report proposing about $121 million of additional federal tax, plus interest; and multiple environmental cleanup matters under CERCLA and state law. Note that the filing describes the 1993 nuclear capacity factors and regulatory standard, which provided a reward of approximately $3.9 million for the 77% aggregate capacity factor.

02—Key points

Key Highlights

  1. Total operating revenues of $5.71 billion in 1993, up from $5.36 billion in 1992.
  2. Net income of $600.9 million, or $2.50 per average share, versus $504.1 million, or $2.17 per share, in 1992.
  3. PSE&G's 1993 base rate increase, effective January 1, 1993, provides for additional annual base revenues of $295 million and a 12% return on common equity.
  4. Net cash provided by operating activities declined to $1.008 billion from $1.340 billion, primarily due to electric and gas cost underrecoveries and higher NJ Gross Receipts Tax payments.
  5. Capital requirements for 1994 through 1998 total $7.335 billion, including $4.213 billion for PSE&G construction.
  6. A $77.6 million property impairment at Enterprise Group Development Corporation reduced 1993 net income by $50.5 million after tax.
  7. Pending NJDEPE final water permit for Salem nuclear station could require cooling towers, with estimated costs of $720 million to $2 billion; the filing anticipates a final permit in the second quarter of 1994.

03—Questions

Frequently Asked Questions

  1. What is the core business of Public Service Enterprise Group?

    Enterprise is a public utility holding company whose principal subsidiary, PSE&G, generates, transmits, distributes and sells electric energy and gas in New Jersey. PSE&G accounted for 86% of Enterprise's assets at December 31, 1993. Nonutility businesses are held through EDHI.

  2. How did earnings change in 1993?

    Net income rose to $600.9 million, or $2.50 per average share, from $504.1 million, or $2.17 per share, in 1992. PSE&G's higher base rates and increased electric kilowatthour sales were the main contributors, partly offset by higher operating expenses and Federal income taxes.

  3. What are the main risks to future results?

    The filing cites the pending Salem water permit that could require cooling towers, an IRS proposed adjustment of about $121 million plus interest for 1985 through 1987, the New Jersey Gross Receipts Tax burden that could lead to customer loss, and numerous environmental cleanup proceedings. It also notes that rate relief and continued access to capital markets are necessary.

  4. How will the company fund its planned construction program?

    PSE&G expects to generate internally a majority of its capital requirements over the next five years, assuming adequate and timely rate relief. Enterprise also raised $273 million from common stock issuance in 1993 and expects EDHI's operating cash flows to cover a majority of its needs.

04—Continue

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