Public Service Enterprise Group (PEG)
Q3 2012 Earnings Call
November 01, 2012 11:00 am ET
Kathleen A. Lally - Vice President of Investor Relations
Previous Statements by PEG
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Caroline D. Dorsa - Chief Financial Officer and Executive Vice President
Dan Eggers - Crédit Suisse AG, Research Division
Paul Patterson - Glenrock Associates LLC
Travis Miller - Morningstar Inc., Research Division
Kit Konolige - BGC Partners, Inc., Research Division
Paul B. Fremont - Jefferies & Company, Inc., Research Division
Maura A. Shaughnessy - MFS Investment Management, Inc.
Stephen Byrd - Morgan Stanley, Research Division
Julien Dumoulin-Smith - UBS Investment Bank, Research Division
Ladies and gentlemen, thank you for standing by. My name is Kamika, and I'm your event operator today. I would like to welcome everyone to today's conference, Public Service Enterprise Group Third Quarter Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded today, November 1, 2012, and will be available for telephone replay beginning at 1 p.m. Eastern Time today until 11:30 p.m. Eastern on November 15, 2012. 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.
Kathleen A. Lally
Thank you, Kamika. Good morning, everyone. We appreciate you participating in our earnings call this morning. We know it's not as easy for all of us to participate this morning. Operating conditions may not be optimal in the wake of Hurricane Sandy, and do appreciate you taking the time to listen to our call this morning.
As you are aware, we released third quarter 2012 earnings statement earlier today. As mentioned, the release and attachments are posted on our website under the Investor section that would be www.pseg.com/investor.
We also posted a series of slides that detail the operating results by company for the quarter. And our 10-Q for the period ended September 30, 2012, is expected to be filed shortly.
We won't go through the full disclaimer. 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. 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 we are 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?
Thank you, Kathleen. Good morning, everyone, and thank you for joining us today. I'm going to deviate a little bit from our usual approach to this quarterly call by briefly discussing Hurricane Sandy and then we'll go to the usual discussion that Caroline and I will walk you through. It does seem that every storm that hits our service territory nowadays has a particularly different set of challenges that come along with it. But I must tell you the one thing that's consistent in each of those storms is the willingness of our employees to respond to each and every challenge in ways that can be ascribed as nothing short of heroic. So at the risk of stating the obvious, you know our system was hit earlier this week by high winds, heavy rainfall. But probably the most significant damage we sustained was due to a tidal surge that was associated with Hurricane Sandy that hit the northern part of the territory and uniquely, did some damage to our transmission system, some of our switching stations which -- and then of course, obviously, the high winds damaged the distribution system throughout the service territory.
Some of our generation infrastructure was affected in the northern part of New Jersey as well, but that is less of a story than what's happened from a customer point of view. We believe that about 1.7 million customers lost power at some point since this began on Monday. And right now, we have about 775,000 customers still without power. So we restored about 1 million and that just gives you a sense of the dedication that our employees have shown to this restoration effort. We've got an unprecedented amount of help from colleagues in the industry, and I cannot say enough good things about the help we're getting from Governor Christie and his administration, and recently, the President actually was willing to speak to a group of EEI CEOs and me personally about what he could do to help us out. So all hands on deck, and everyone is pitching in. But again, the Christie administration has just been incredible and unbelievable.
We have told people that we think full restoration is going to take anywhere from 7 to 10 days. And hopefully -- not hopefully, I know from a fact that in the last 30 seconds that I've been speaking to you, we've restored some customers, but the tail is going to be long, and there are going to be some folks at the end of that tail that will unfortunately just need to exercise some patience in ways that we haven't had to ask them before in the past.
Now it is too early for us obviously to give you an exact accounting of the costs. But I just want to give you some comparative numbers, so that you can get a sense for the issue here. Because the issue here is a customer issue, all right? Irene was $0.02 impact on O&M with $0.03 of deferred costs. And the snow storm last year was about $0.01 impact on O&M with $0.03 of deferred costs. Now this storm is different in 2 major ways. It's bigger. It's about twice the size of Irene from a customer out point of view. But it's got a lot more transmission outage, which is driving that customer count. And as you know, our transmission equipment is regulated by FERC, and we do think that we have the ability to recover those costs through our formula rate. What we're evaluating right now is whether or not we can modify our filing in October or do we need to true that up next year. On the distribution level, we've asked the BPU for their approval to defer the cost of this storm that has been their custom in the past, can't guarantee that for the future, but that has been their custom consistently. And I know I'm going to sound like a broken record, but I just can't say enough good things about we've been working with the administration throughout this event with the staff of the BPU, with senior officials with the commissioner's themselves. So everyone is committed to 100% -- 100% committed to the safe restoration of the power and making sure that we get the job done as quickly and as safely as possible.