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Public Service Enterprise Group Annual Report, Year Ended Dec 31, 1996

Filing Date
Filed February 27, 1997
Period End
December 31, 1996
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 27, 1997. Cited figures are marked; the original filing is the authoritative source.

Public Service Enterprise Group Incorporated (Enterprise) is a public utility holding company whose principal subsidiary, Public Service Electric and Gas Company (PSE&G), provides electric and gas service to about 5.5 million persons in New Jersey.

Enterprise reported 1996 net income of $611.6 milliona, or $2.52 per share, down from $662.3 million, or $2.71 per share, in 1995. The filing attributes the decline mainly to a one-time $59 million (25 cents per share) earnings reduction from the BPU's December 31, 1996 Order resolving Salem and other regulatory issues, which required $83.9 million in customer bill credits and a forgone $12 million in deferred energy costs. Total operating revenues were $6.04 billion, and PSE&G operating revenues were $5.83 billion.

The company's key concern is the shutdown of Salem Units 1 and 2 since mid-1995. Salem Unit 2 is expected to return to service in the second quarter of 1997 and Unit 1 in the fall of 1997, and the filing states that the inability to return these units to continuous, safe operation could have a material adverse effect on Enterprise and PSE&G. The NRC placed Salem on its Watch List as a Category 2 facility.

Regulatory change is also significant: the BPU's draft Phase II report proposes retail electric choice beginning October 1998, and PSE&G withdrew its 1996 rate filing in response. Credit ratings carry negative outlooks at all three agencies. Common dividends were $2.16b per share for each year shown, and Enterprise repurchased 12.7 million shares for $350 million under a program that concluded January 17, 1997.

02—Key points

Key Highlights

  1. 1996 net income was $611.6 million ($2.52 per share), versus $662.3 million ($2.71 per share) in 1995.
  2. A one-time $59 million (25 cents per share) earnings reduction stemmed from the BPU's December 31, 1996 Order, which included $83.9 million of customer bill credits.
  3. Salem Units 1 and 2 have been out of service since 1995; Unit 2 is expected back in Q2 1997 and Unit 1 in Fall 1997, with replacement power costs of about $4 to $6 million per month per unit.
  4. The BPU draft Phase II report proposes retail electric choice starting October 1998, with full customer phase-in by April 2001.
  5. Total operating revenues were $6.04 billion in 1996, with PSE&G at $5.83 billion; PSE&G's electric operations accounted for 68% of its operating revenues.
  6. Credit ratings for PSE&G are A3/A-/A (Mortgage Bonds), and all three rating agencies view the outlook as negative.
  7. Enterprise repurchased 12.7 million common shares for $350 million under a program concluded January 17, 1997.

03—Questions

Frequently Asked Questions

  1. Why did Enterprise's earnings decline in 1996?

    Earnings per share fell 19 cents to $2.52, mainly due to the refunds and bill credits required by the BPU's December 31, 1996 Order, which produced a one-time $59 million (25 cents per share) loss. Higher operation and maintenance costs tied to the Salem and Hope Creek outages and higher depreciation also reduced earnings, partly offset by higher gas sales, a $18.2 million gain on preferred stock redemptions, and a $13 million gain on the sale of EDC.

  2. When are the Salem nuclear units expected to return to service?

    Salem Unit 2 is expected to return to service in the second quarter of 1997, and Salem Unit 1 is expected in the Fall of 1997 after replacement of its steam generators. The filing states that restart is subject to NRC approval and that the inability to return these units to safe, continuous operation could materially affect Enterprise and PSE&G's financial position and cash flows.

  3. What does the proposed New Jersey deregulation mean for PSE&G?

    The BPU's draft Phase II report would let 5% of retail electric load choose suppliers beginning October 1998, rising to 100% by April 2001. Each utility would file restructuring and stranded cost plans by July 15, 1997. The filing says PSE&G cannot predict the outcome, and it withdrew its 1996 New Jersey Partners in Power rate plan in response.

  4. What are the capital requirements for 1997 through 2001?

    Total construction and investment requirements are $3.99 billion, with PSE&G at $2.63 billion and EDHI at $1.37 billion. Including mandatory retirement of securities of $1.72 billion, total capital requirements are $5.71 billion. PSE&G expects to internally generate all of its construction and capital requirements over the next five years and reduce its debt by about $1 billion, assuming adequate and timely cost recovery.

04—Continue

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