Public Service Enterprise Group Inc.
) has announced its expectation for costs and earnings associated
with the Superstorm Sandy that had badly hit the U.S. East Coast
electric companies at the end of October 2012 and the subsequent
Nor'easter that had worsened the situation later in November
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Public Service Enterprise currently expects storm restoration
costs to be in the range of $250 million to $300 million. After
taking these costs into account, the company maintained its
earnings guidance for full-year 2012 as announced during its
third quarter earnings call. The company expects earnings to be
in the range of $2.25 to $2.50 per share.
The cost guidance includes both expenses and capital related to
the restoration. However, these costs do not include the future
expenses for permanent repair of the company's damaged
infrastructure or any modification in the infrastructure to
minimize the risk of damage caused by future storms. The company
expects 85% of these costs to be deferred or capitalized for
future distribution or transmission recovery. The company will
recognize these costs as one-time items.
Public Service Enterprise Group based in Newark, New Jersey, was
the hardest hit state. Besides damaging the company's
transmission and distribution system throughout the service
territory, the storm also smashed some of the generation
infrastructure in the northern part of New Jersey. Superstorm
Sandy's strong winds and heavy rainfall resulted in overflow of
the Hudson, Hackensack and Passaic rivers, thereby damaging the
switching stations, substations and generating infrastructure.
However, the company has recovered to some extent from the
damages caused by Sandy as well as Nor'easter. Besides making
current repairs, the company is working on best possible ways to
protect the system from this type of storm in the future.
In November, Public Service Enterprise reported third-quarter
2012 results. During the quarter, operating earnings per share
were 75 cents, above the Zacks Consensus Estimate of 72 cents.
However, it was lower than the previous year figure of 83 cents
per share. The company has indicated that it expects double-digit
compound annual growth in its regulated operations due to the
Susquehanna - Roseland transmission line through 2014. Moreover,
it expects the line to provide benefits to New Jersey's economy
in the long term.
The Zacks Consensus Estimates for fourth-quarter 2012 and
full-year 2012 are currently at 38 cents per share and $2.39 per
Going forward, we believe that the diversified utility's robust
portfolio of regulated and non-regulated assets will offer a
steady earnings base and significant long-term growth prospects.
Over the longer run, Public Service's growth will be driven by a
low-cost nuclear fleet, assumed rate relief, operational
excellence, disciplined investment and added generating
However, the increasing cost of coal, higher pension &
financial costs, power-price volatility and the extent of
restoration costs for hurricane Sandy are areas of concern. The
company presently retains a short-term Zacks #3 Rank (Hold).
Public Service Enterprise Group Inc. is a diversified utility
holding company. The company's operations are mostly located in
the Northeastern and Mid-Atlantic parts of the U.S. Public
Service Enterprise principally operates through three key
subsidiaries: Public Service Electric and Gas Company
(PSE&G), PSEG Power LLC (PSEG Power) and PSEG Energy Holdings
LLC (PSEG Energy).
Some other Sandy Storm affected utilities are
Consolidated Edison Inc.