Public Service Enterprise Group's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Public Service Enterprise Group (PEG)

Q1 2012 Earnings Call

May 02, 2012 11:00 am ET


Kathleen A. Lally - Vice President of Investor Relations

Ralph Izzo - Chairman, Chief Executive Officer, President, Chairman of Executive Committee, Chairman of PSEG Power LLC, Chairman of Public Service Electric & Gas Company, Chief Executive Officer of PSEG Power LLC and Chief Executive Officer of Public Service Electric & Gas Company

Caroline D. Dorsa - Chief Financial Officer and Executive Vice President


Paul B. Fremont - Jefferies & Company, Inc., Research Division

Dan Eggers - Crédit Suisse AG, Research Division

Stephen Byrd - Morgan Stanley, Research Division

Paul Patterson - Glenrock Associates LLC

Unknown Analyst

Steven I. Fleishman - BofA Merrill Lynch, Research Division

Ashar Khan

Kit Konolige - Konolige Research, LLC

Angie Storozynski - Macquarie Research

Travis Miller - Morningstar Inc., Research Division



Ladies and gentlemen, thank you for standing by. Welcome to the Public Service Enterprise Group First Quarter 2012 Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded today, Wednesday, May 2, 2012, and will be available for telephone replay beginning at 1:00 p.m., May 2, 2012 to May 16, 2012. It will also be available as an audio webcast on PSEG's corporate website at

I would now like to turn the conference over to Kathleen Lally. Please go ahead.

Kathleen A. Lally

Thank you. Good morning. Thank you for participating in our call this morning. As you are aware, we released our first quarter 2012 earnings statements earlier this morning. The release and attachments are posted on our website at under the Investors section. We also posted a series of slides that detail operating results by company for the quarter. Our 10-Q for the period ended March 31, 2012 is expected to be filed shortly. I won't go through the full disclaimer statements or the comments we have on the difference between operating earnings and GAAP results, but as you know, the earnings release and other matters that we will discuss in today's call contain forward-looking statements and estimates that are subject to various risks and uncertainties. Although we may elect to update forward-looking statements from time to time, we specifically disclaim any obligation to do so, even if our estimate changes, unless required to do so. Our release also contains adjusted non-GAAP operating earnings. Please refer to today's 8-K or other filings for a discussion of the factors that may cause results to differ from management's projections, forecasts and expectations and for a reconciliation of operating earnings to GAAP results.

I would now like to turn the call over to Ralph Izzo, Chairman, President and Chief Executive Officer of Public Service Enterprise Group. Joining Ralph on the call is Caroline Dorsa, Executive Vice-President and Chief Financial Officer. At the conclusion of their remarks, there will be time for your questions.

Ralph Izzo

Thank you, Kathleen, and thank you, everyone, for joining us today. Earlier this morning, we reported operating earnings for the first quarter of 2012 of $0.85 per share, which equaled the operating earnings from 2011's first quarter. Our results for the first quarter are strong in the face of a continued sharp decline in the price of natural gas and a very mild winter. The date indicates that the first quarter of 2012 was the warmest since 1970, and that March of 2012 tied March of 1945 in terms of average temperature as the mildest March since 1895. Let me remind you, that this is the earliest the national weather service began keeping records.

And if you can follow all those years, that basically says this is the tie for first as the warmest March in history. So our results were very strong in the face of these headwinds. In a few minutes, Caroline will review our earnings in greater detail. At the end of the call, you will have an understanding of our first quarter and outlook and how we've been able to report better-than-expected earnings. As always, our competitiveness is greatly aided by our employees, who continued to perform at the top of their profession. At PSEG Power, this was exhibited in the quarter by our Fossil employees, who took cost control to a new level. The alignment of expenses with operations demonstrates their understanding of the need to control costs in the current price environment. The focus on operating efficiency and the increased availability from our combined cycle assets positions us well in the power markets.

Turning my attention to the utility. PSE&G's execution on its capital investment program, as it maintains a focus on meeting needs of its customers, is providing a growing source of earnings. PSE&G received good news in March from the National Park Service that identified our route for the Susquehanna-Roseland transmission line as its preferred alternative for the portion of the line that runs through the Delaware Water Gap Recreational Area. This is the route that was approved by state regulators, including the New Jersey Board of Public Utilities. A final decision is expected by October of this year.

This $790 million dollar project is scheduled to enter service in June 2015. We are awaiting the BPU's approval for the $390 million North Central transmission line. This line is scheduled to enter service in 2014. Over the next 3 years, PSE&G plans to invest $5.4 billion on transmission, as well as energy efficiency, solar power and upgrading the reliability of the distribution system. In addition to the obvious customer and shareholder benefits, these capital programs will provide important jobs and support the state's economy. PSEG Power is adding 270 megawatts of new peaking capacity at its Kearny station in June 2012, in place of older, less efficient capacity that it will retire. It will also be adding 130 megawatts of new peaking capacity in Connecticut.

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