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Public Service Enterprise Group (PEG)
Q2 2011 Earnings Call
August 03, 2011 11:00 am ET
Previous Statements by PEG
» Public Service Enterprise Group's CEO Discusses Q1 2011 Results - Earnings Call Transcript
» Public Service Enterprise Group's CEO Discusses Q4 2010 Results - Earnings Call Transcript
» Public Service Enterprise Group CEO Discusses Q3 2010 Results - Earnings Call Transcript
Caroline Dorsa - Chief Financial Officer and Executive Vice President
Kathleen Lally - Vice President of Investor Relations
Dan Eggers - Crédit Suisse AG
Paul Fremont - Jefferies & Company, Inc.
Paul Patterson - Glenrock Associates
Jonathan Arnold - Deutsche Bank AG
Julien Dumoulin-Smith - UBS Investment Bank
Andy Levy - Brencourt Advisors
Gregg Orrill - Barclays Capital
Ladies and gentlemen, thank you for standing by. Welcome to the Public Service Enterprise Group Second Quarter 2011 Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded, Wednesday, August 3, 2011, and will be available for telephone replay beginning at 1:00 p.m. Eastern Standard Time, August 3, 2011, until August 10, 2011. It will also be available as an audio webcast on PSEG's corporate website at www.pseg.com. I would now like to turn the conference over to Kathleen Lally. Please go ahead.
Thank you, Natalia. Good morning, everyone. We appreciate your participating in our call this morning. As you were aware, PSEG released the second quarter 2011 earnings statement early this morning. The release and attachments are posted on our website at www.pseg.com, under the Investors Section of the website. We also posted a series of slides that detailed the operating results by company for the quarter. Our 10-Q for the period ended June 30, 2011, is expected to be filed shortly, in fact most likely by this evening. I'm not going to read the full disclaimer statement or the comments we have made on the difference between operating earnings and GAAP results. 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. And 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 10-K or other filings for a discussion of 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. We do ask that you limit yourself to one question and one follow-up, then we hope to have time for all. Thank you. Ralph?
Thank you, Kathleen, and thank you everyone for joining us today. Earlier this morning, we reported operating earnings for the second quarter of 2011 of $0.59 per share, compared with operating earnings of $0.63 per share, earned in 2010's second quarter. The results for the quarter bring operating earnings for the first half of 2011 to $1.44 per share, compared with the operating earnings of $1.50 per share earned in 2010's first half. We have achieved significant operational and regulatory successes during the past quarter. Although our results are being affected by lower realized energy prices, we are seeing a benefits of increased levels of investment at PSE&G, as well as the benefits to cost control and reliability that come with the operational focus of a dedicated workforce.
Regulatory approval for several important initiatives should allow PSEG to maintain its position as a reliable supplier of low-cost, clean energy for the long term. The nuclear regulatory commission, approved PSEG's nuclear request to extend the operating license of the Hope Creek generating station and both sale in units for an additional 20 years. The approval was granted less than 2 years after PSEG Nuclear filed its request with the NRC in August 2009. This timely response speaks to the community support enjoyed by Power in Salem County, the preparedness of our workforce and the material condition and the facilities. The license renewal of these generating stations means clean nuclear energy will be available for New Jersey for years to come.
The NRC has also released its assessment of the U.S. nuclear industry in response to the events at Fukushima earlier this year. We believe the report, which finds the U.S. plants are operated in safe manner to be objective. Bill Levis, President of PSEG Power and his team, have worked closely with the NRC, as well as with state and local officials to keep them informed about the operations at Salem and Hope Creek.
Also this quarter, the New Jersey Board of Public Utilities approved $368 million of additional spending by PSE&G on critical electric and gas infrastructure programs, as well as energy efficiency. These investments provide the opportunity to expand jobs at a time when the improvement in the economy appears to have stalled. Similarly, the Federal Energy Regulatory Commission granted approval for incentive rate treatment effective on June 14, 2011, for 3 of the 5 230 kilovolt projects with a total investment of about $1 billion. The incentive rates treatment covers approximately 80% of our request.
A history continuous engagement with our employees has supported the resolution of a labor contract with one of our larger unions that balances the needs of all parties. A focus on cost control helps us earn our returns and provides the opportunity for the growth implied by our investment program. We have been saying for some time that the future marketplace for energy will be influenced by environmental regulations. We are starting to see the forward market for energy begin to reflect the impact of EPA proposals. Without any increase in price, it won't be economic to maintain the operation of older coal-fired facilities. Our investment in environmental upgrades and our coal stations supports their operation under the more stringent rules proposed by the EPA. The recognition of a similar level of cost by other suppliers in the region will help to levelize the cost of supply between Connecticut, New Jersey and surrounding states.