Quieting recent suggestions that the company was going to separate its regulated and unregulated entities in the wake of its failed merger with Exelon, Public Service Enterprise Group's (PSEG) management said Tuesday the whole company continues to produce strong operational results and that the continued financial success will allow for "disciplined future growth" going forward.
Following the merger breakup in September (see Daily GPI, Sept. 15), PSEG CEO James Ferland had said the stand-alone energy company might consider further separating its unregulated and regulated operations at some point because of the adverse regulatory restrictions that led to the merger failure in the first place (see Power Market Today, Sept. 21).
Addressing shareholders in Newark, NJ on Tuesday, Ferland and Ralph Izzo, president of PSEG, stressed that the company has significantly strengthened its position in the past two years and is ready to resume a position of leadership within the industry, starting with the completion of three short-term operational objectives: continuing its nuclear progress, restaffing the company and fairly resolving PSE&G's pending electric and gas rate cases.
Izzo noted that the rate cases have now been fairly settled, the restaffing process has begun and the company recently extended the Nuclear Operating Services Agreement for two years, with an option to extend the agreement one year thereafter. "We are not content with a three-year strategy," Izzo said. "We are working hard -- examining all the options we have to sustain our nuclear progress -- to build on the tremendous accomplishments during the past two years at Salem and Hope Creek."
Izzo, who is expected to succeed Ferland as CEO when Ferland retires in March 2007, said, "PSEG's earnings growth prospects are enviable. In 2007, we expect earnings to be around one-third higher than in 2006 and 10% higher still in 2008."
Ferland outlined for shareholders how PSEG has moved forward in the last two years by improving the operations of its nuclear and fossil generation plants, improving the company's balance sheet and reducing international risk exposure. In addition, the company has benefited from the strengthening of electric markets. "Our improved position has been recognized by the investment community, with the shares of PSEG trading at roughly 50% higher than just two years ago," noted Ferland.
Ferland added that the strength of the company's generation portfolio has been key to the company's success. "Our nuclear plants have been producing more energy than ever before; they have set new refueling duration records, including a world record at one of the Salem units; and have made significant and measurable improvements in a broad range of other key operational areas," said Ferland. He also indicated that PSEG's fossil plants have improved output and capacity and that PSEG Energy Holdings is having its most profitable year ever due to especially strong performance from its two 1,000 MW power plants in Texas.
Ferland noted that the company's PSE&G utility is continuing its strong performance, adding that it was named the most reliable electric utility in the nation for the second year in a row, and the region's most reliable electric utility for the fifth year in a row.
As for resuming the company's leadership image within the industry, Izzo allowed that the merger period was a rough patch for the company. "Although our company's profile was somewhat less visible while the merger was being considered, there is now both the need and the opportunity to reestablish ourselves as a thought leader," said Izzo. "We will do this by contributing practical solutions on challenging and emerging issues. We will build on our leadership position as an environmentally responsible company; as an innovative company in the area of workforce development; and as an early adopter of new technology."
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