Public Service Enterprise Group (PSEG) beat Wall Street estimates and avoided the large one-time negative charges of a year ago in announcing earnings from continuing operations for the second quarter of $150 million, or 66 cents/share, compared to a loss of $227 million, or $1.10/share.

Analysts were looking for 52 cents/share, according to Thomson Financial’s First Call. Net income for the quarter was $130 million (57 cents/share) compared to a net loss of $264 million or $1.28/share in 2Q02, which was the result of a write down of Argentine investments.

CFO Thomas M. O’Flynn said the second quarter results represent a 10 cents/share improvement over comparable results for the second quarter of 2002, which excluded losses relating to the Argentine investments. The improvements, he said, were primarily driven by the strength of PSEG Power’s energy portfolio management, favorable weather impacts on Public Service Electric and Gas’ (PSE&G) sales and higher investment income at PSEG Resources.

“Our ability to combine electric generation, fuel supply, trading and purchased power costs effectively to meet the needs of [basic generation] suppliers is reflected in PSEG’s year over year earnings improvement,” he said. “Looking ahead, these skills will be especially important during the peak electric demand months of the third quarter.”

Outside New Jersey, PSEG Power continued to benefit from the 2002 acquisition of two generating facilities in Connecticut, he said.

PSE&G also had favorable second quarter weather. The unusually cold spring resulted in higher gas heating demand in April, partially offset by lower electric cooling demand in June.

Also in the second quarter, the decision by the New Jersey Board of Public Utilities (BPU) in PSE&G’s electric base rate case marked a major final step in the transition process to a deregulated electric market that began in 1999. The extraordinary charge recorded in the second quarter resulted from the disallowance of some previously recognized revenues related to nuclear decommissioning.

In deciding the rate case, the BPU approved an increase in annual revenues of $159.5 million, effective Aug. 1. “Even with the increase, customer rates will still be slightly below levels before the start of the four-year transition to deregulation,” O’Flynn said. “During that four-year period, customers enjoyed rate discounts of up to 14%.

“PSEG’s overall second-quarter results were consistent with our objectives for the first half of the year and keeps us on track to achieve 2003 earnings from continuing operations in the range of $3.70 to $3.90 per share.” O’Flynn said. “We anticipate a solid second half of the year, barring unforeseen circumstances.”

O’Flynn said PSEG, anticipating that its solid performance will continue into next year, has set initial 2004 earnings guidance at $3.75 to $3.95 per share.

©Copyright 2003 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.