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Public Service Enterprise Group 10-Q 2009
3B2 EDGAR HTML -- c58378_preflight.htm



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549


FORM 10-Q

(Mark One)

S QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED June 30, 2009
OR

£ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM   TO  

 

 

 

 

 

Commission
File Number

 

Registrants, State of Incorporation,
Address, and Telephone Number

 

I.R.S. Employer Identification No.

001-09120

 

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
(A New Jersey Corporation)
80 Park Plaza, P.O. Box 1171
Newark, New Jersey 07101-1171
973 430-7000
http://www.pseg.com

 

22-2625848

001-34232

 

PSEG POWER LLC
(A Delaware Limited Liability Company)
80 Park Plaza—T25
Newark, New Jersey 07102-4194
973 430-7000
http://www.pseg.com

 

22-3663480

001-00973

 

PUBLIC SERVICE ELECTRIC AND GAS COMPANY
(A New Jersey Corporation)
80 Park Plaza, P.O. Box 570
Newark, New Jersey 07101-0570
973 430-7000
http://www.pseg.com

 

22-1212800


Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes S No £

Indicate by check mark whether the registrants have submitted electronically and posted on their corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files).

 

 

 

 

 

Public Service Enterprise Group Incorporated

 

 

 

Yes S

   

 

 

No £

 

PSEG Power LLC

 

 

 

Yes £

   

 

 

No £

 

Public Service Electric and Gas Company

 

 

 

Yes £

   

 

 

No £

 

(Cover continued on next page)


(Cover continued from previous page)

Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

 

 

 

 

 

Public Service Enterprise Group Incorporated

 

Large accelerated filer S

 

Accelerated filer £

 

Non-accelerated filer £

 

Smaller reporting company £

PSEG Power LLC

 

Large accelerated filer £

 

Accelerated filer £

 

Non-accelerated filer S

 

Smaller reporting company £

Public Service Electric
and Gas Company

 

Large accelerated filer £

 

Accelerated filer £

 

Non-accelerated filer S

 

Smaller reporting company £

Indicate by check mark whether any of the registrants is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £ No S

As of July 15, 2009, Public Service Enterprise Group Incorporated had outstanding 505,981,904 shares of its sole class of Common Stock, without par value.

PSEG Power LLC is a wholly owned subsidiary of Public Service Enterprise Group Incorporated and meets the conditions set forth in General Instruction H(1) (a) and (b) of Form 10-Q and is filing its Quarterly Report on Form 10-Q with the reduced disclosure format authorized by General Instruction H.

As of July 15, 2009, Public Service Electric and Gas Company had issued and outstanding 132,450,344 shares of Common Stock, without nominal or par value, all of which were privately held, beneficially and of record by Public Service Enterprise Group Incorporated.




TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

Page

 

 

 

   

FORWARD-LOOKING STATEMENTS

     

ii

 

PART I. FINANCIAL INFORMATION

   

Item 1.

 

Financial Statements

   
   

Public Service Enterprise Group Incorporated

     

1

 

 

 

PSEG Power LLC

 

 

 

5

 
   

Public Service Electric and Gas Company

     

8

 

 

 

Notes to Condensed Consolidated Financial Statements

   
   

Note 1. Organization and Basis of Presentation

     

12

 

 

 

Note 2. Recent Accounting Standards

 

 

 

13

 
   

Note 3. Discontinued Operations and Dispositions

     

16

 

 

 

Note 4. Available-for-Sale Securities

 

 

 

17

 
   

Note 5. Pension and Other Postretirement Benefits (OPEB)

     

22

 

 

 

Note 6. Commitments and Contingent Liabilities

 

 

 

23

 
   

Note 7. Changes in Capitalization

     

34

 

 

 

Note 8. Financial Risk Management Activities

 

 

 

35

 
   

Note 9. Fair Value Measurements

     

42

 

 

 

Note 10. Other Income and Deductions

 

 

 

49

 
   

Note 11. Income Taxes

     

50

 

 

 

Note 12. Comprehensive Income (Loss), Net of Tax

 

 

 

52

 
   

Note 13. Earnings Per Share (EPS)

     

53

 

 

 

Note 14. Financial Information by Business Segments

 

 

 

54

 
   

Note 15. Related-Party Transactions

     

55

 

 

 

Note 16. Guarantees of Debt

 

 

 

57

 

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

   

 

 

Overview of 2009 and Future Outlook

 

 

 

60

 
   

Results of Operations

     

64

 

 

 

Liquidity and Capital Resources

 

 

 

73

 
   

Capital Requirements

     

76

 

 

 

Accounting Matters

 

 

 

77

 

Item 3.

 

Qualitative and Quantitative Disclosures About Market Risk

     

77

 

Item 4.

 

Controls and Procedures

 

 

 

80

 

PART II. OTHER INFORMATION

   

Item 1.

 

Legal Proceedings

     

81

 

Item 1A.

 

Risk Factors

 

 

 

81

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

     

82

 

Item 5.

 

Other Information

 

 

 

82

 

Item 6.

 

Exhibits

     

85

 

 

 

Signatures

 

 

 

86

 

i


FORWARD-LOOKING STATEMENTS

Certain of the matters discussed in this report constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those anticipated. Such statements are based on management’s beliefs as well as assumptions made by and information currently available to management. When used herein, the words “anticipate,” “intend,” “estimate,” “believe,” “expect,” “plan,” “hypothetical,” “potential,” “forecast,” “project,” variations of such words and similar expressions are intended to identify forward-looking statements. Factors that may cause actual results to differ are often presented with the forward-looking statements themselves. Other factors that could cause actual results to differ materially from those contemplated in any forward-looking statements made by us herein are discussed in Item 1. Financial Statements—Note 6. Commitments and Contingent Liabilities, Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and other factors discussed in filings we make with the United States Securities and Exchange Commission (SEC). These factors include, but are not limited to:

 

 

 

 

adverse changes in energy industry, law, policies and regulation, including market structures and rules, and reliability standards

 

 

 

 

any inability of our energy transmission and distribution businesses to obtain adequate and timely rate relief and regulatory approvals from federal and state regulators,

 

 

 

 

changes in federal and/or state environmental requirements that could increase our costs or limit operations of our generating units,

 

 

 

 

changes in nuclear regulation and/or developments in the nuclear power industry generally, that could limit operations of our nuclear generating units,

 

 

 

 

actions or activities at one of our nuclear units that might adversely affect our ability to continue to operate that unit or other units at the same site,

 

 

 

 

any inability to balance our energy obligations, available supply and trading risks,

 

 

 

 

any deterioration in our credit quality,

 

 

 

 

availability of capital and credit at reasonable pricing terms and our ability to meet cash needs,

 

 

 

 

any inability to realize anticipated tax benefits or retain tax credits,

 

 

 

 

increases in the cost of, or interruption in the supply of, fuel and other commodities necessary to the operation of our generating units,

 

 

 

 

delays or cost escalations in our construction and development activities,

 

 

 

 

adverse investment performance of our decommissioning and defined benefit plan trust funds and changes in discount rates and funding requirements, and

 

 

 

 

changes in technology and/or increased customer conservation.

Additional information concerning these factors is set forth in Part II under Item 1A. Risk Factors.

All of the forward-looking statements made in this report are qualified by these cautionary statements and we cannot assure you that the results or developments anticipated by management will be realized, or even if realized, will have the expected consequences to, or effects on, us or our business prospects, financial condition or results of operations. Readers are cautioned not to place undue reliance on these forward-looking statements in making any investment decision. Forward-looking statements made in this report only apply as of the date of this report. While we may elect to update forward-looking statements from time to time, we specifically disclaim any obligation to do so, even if internal estimates change, unless otherwise required by applicable securities laws.

The forward-looking statements contained in this report are intended to qualify for the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

ii


PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Millions, except Share Data)
(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

For The Three Months
Ended June 30,

 

For the Six Months
Ended June 30,

 

2009

 

2008

 

2009

 

2008

OPERATING REVENUES

   

$

 

2,561

     

$

 

2,550

     

$

 

6,482

     

$

 

6,342

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

Energy Costs

     

1,067

       

1,535

       

3,135

       

3,654

 

Operation and Maintenance

 

 

 

628

   

 

 

620

   

 

 

1,303

   

 

 

1,247

 

Depreciation and Amortization

     

203

       

191

       

410

       

383

 

Taxes Other Than Income Taxes

 

 

 

26

   

 

 

27

   

 

 

70

   

 

 

70

 

 

 

 

 

 

 

 

 

 

Total Operating Expenses

     

1,924

       

2,373

       

4,918

       

5,354

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME

 

 

 

637

   

 

 

177

   

 

 

1,564

   

 

 

988

 

Income from Equity Method Investments

     

9

       

7

       

19

       

19

 

Impairment on Equity Method Investments

 

 

 

(8

)

 

 

 

 

   

 

 

(8

)

 

 

 

 

 

Other Income

     

91

       

97

       

162

       

190

 

Other Deductions

 

 

 

(44

)

 

 

 

 

(56

)

 

 

 

 

(99

)

 

 

 

 

(113

)

 

Other Than Temporary Impairments

     

(1

)

       

(32

)

       

(61

)

       

(70

)

 

Interest Expense

 

 

 

(133

)

 

 

 

 

(146

)

 

 

 

 

(278

)

 

 

 

 

(299

)

 

 

 

 

 

 

 

 

 

 

INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES

     

551

       

47

       

1,299

       

715

 

Income Tax Expense

 

 

 

(240

)

 

 

 

 

(213

)

 

 

 

 

(544

)

 

 

 

 

(446

)

 

 

 

 

 

 

 

 

 

 

INCOME (LOSS) FROM CONTINUING OPERATIONS

     

311

       

(166

)

       

755

       

269

 

Income from Discontinued Operations, net of tax expense of $5 and $13 for the three and six months ended 2008

 

 

 

   

 

 

16

   

 

 

   

 

 

29

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

   

$

 

311

     

$

 

(150

)

     

$

 

755

     

$

 

298

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (THOUSANDS):

 

 

 

 

 

 

 

 

BASIC

     

505,990

       

508,491

       

505,988

       

508,491

 

 

 

 

 

 

 

 

 

 

DILUTED

 

 

 

506,936

   

 

 

509,487

   

 

 

506,812

   

 

 

509,483

 

 

 

 

 

 

 

 

 

 

EARNINGS PER SHARE:

 

 

 

 

 

 

 

 

BASIC

 

 

 

 

 

 

 

 

INCOME (LOSS) FROM CONTINUING OPERATIONS

   

$

 

0.61

     

$

 

(0.32

)

     

$

 

1.49

     

$

 

0.53

 

NET INCOME (LOSS)

 

 

$

 

0.61

   

 

$

 

(0.29

)

 

 

 

$

 

1.49

   

 

$

 

0.59

 

 

 

 

 

 

 

 

 

 

DILUTED

 

 

 

 

 

 

 

 

INCOME (LOSS) FROM CONTINUING OPERATIONS

   

$

 

0.61

     

$

 

(0.32

)

     

$

 

1.49

     

$

 

0.53

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS)

 

 

$

 

0.61

   

 

$

 

(0.29

)

 

 

 

$

 

1.49

   

 

$

 

0.59

 

 

 

 

 

 

 

 

 

 

DIVIDENDS PAID PER SHARE OF COMMON STOCK

   

$

 

0.3325

     

$

 

0.3225

     

$

 

0.6650

     

$

 

0.6450

 

 

 

 

 

 

 

 

 

 

See Notes to Condensed Consolidated Financial Statements.

1


PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS

(Millions)
(Unaudited)

 

 

 

 

 

 

 

June 30,
2009

 

December 31,
2008

ASSETS

 

 

 

 

CURRENT ASSETS

 

 

 

 

Cash and Cash Equivalents

   

$

 

393

     

$

 

321

 

Accounts Receivable, net of allowances of $69 and $66 in 2009 and 2008, respectively

 

 

 

1,271

   

 

 

1,398

 

Unbilled Revenues

     

303

       

454

 

Fuel

 

 

 

730

   

 

 

938

 

Materials and Supplies

     

343

       

317

 

Prepayments

 

 

 

465

   

 

 

150

 

Restricted Funds

     

10

       

118

 

Derivative Contracts

 

 

 

259

   

 

 

237

 

Other

     

60

       

66

 

 

 

 

 

 

Total Current Assets

 

 

 

3,834

   

 

 

3,999

 

 

 

 

 

 

PROPERTY, PLANT AND EQUIPMENT

 

 

 

21,519

   

 

 

20,818

 

Less: Accumulated Depreciation and Amortization

     

(6,620

)

       

(6,385

)

 

 

 

 

 

 

Net Property, Plant and Equipment

 

 

 

14,899

   

 

 

14,433

 

 

 

 

 

 

NONCURRENT ASSETS

 

 

 

 

Regulatory Assets

     

6,022

       

6,352

 

Long-Term Investments

 

 

 

2,309

   

 

 

2,695

 

Nuclear Decommissioning Trust (NDT) Funds

     

1,059

       

970

 

Other Special Funds

 

 

 

140

   

 

 

133

 

Goodwill

     

16

       

16

 

Other Intangibles

 

 

 

108

   

 

 

53

 

Derivative Contracts

     

154

       

160

 

Other

 

 

 

219

   

 

 

238

 

 

 

 

 

 

Total Noncurrent Assets

     

10,027

       

10,617

 

 

 

 

 

 

TOTAL ASSETS

 

 

$

 

28,760

   

 

$

 

29,049

 

 

 

 

 

 

See Notes to Condensed Consolidated Financial Statements.

2


PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS

(Millions)
(Unaudited)

 

 

 

 

 

 

 

June 30,
2009

 

December 31,
2008

LIABILITIES AND CAPITALIZATION

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

Long-Term Debt Due Within One Year

   

$

 

746

     

$

 

1,033

 

Commercial Paper and Loans

 

 

 

333

   

 

 

19

 

Accounts Payable

     

941

       

1,227

 

Derivative Contracts

 

 

 

310

   

 

 

356

 

Accrued Interest

     

100

       

99

 

Accrued Taxes

 

 

 

206

   

 

 

8

 

Clean Energy Program

     

159

       

142

 

Obligation to Return Cash Collateral

 

 

 

96

   

 

 

102

 

Other

     

430

       

424

 

 

 

 

 

 

Total Current Liabilities

 

 

 

3,321

   

 

 

3,410

 

 

 

 

 

 

NONCURRENT LIABILITIES

 

 

 

 

Deferred Income Taxes and Investment Tax Credits (ITC)

     

4,046

       

3,865

 

Regulatory Liabilities

 

 

 

396

   

 

 

355

 

Asset Retirement Obligations

     

595

       

576

 

Other Postretirement Benefit (OPEB) Costs

 

 

 

968

   

 

 

975

 

Accrued Pension Costs

     

877

       

1,196

 

Clean Energy Program

 

 

 

451

   

 

 

532

 

Environmental Costs

     

730

       

743

 

Derivative Contracts

 

 

 

106

   

 

 

164

 

Long-Term Accrued Taxes

     

856

       

1,241

 

Other

 

 

 

130

   

 

 

125

 

 

 

 

 

 

Total Noncurrent Liabilities

     

9,155

       

9,772

 

 

 

 

 

 

COMMITMENTS AND CONTINGENT LIABILITIES (See Note 6)

 

 

 

 

     

 

 

 

 

CAPITALIZATION
LONG-TERM DEBT

 

 

 

 

Long-Term Debt

     

6,515

       

6,621

 

Securitization Debt

 

 

 

1,250

   

 

 

1,342

 

Project Level, Non-Recourse Debt

     

40

       

42

 

 

 

 

 

 

Total Long-Term Debt

 

 

 

7,805

   

 

 

8,005

 

 

 

 

 

 

 

 

 

 

SUBSIDIARY’S PREFERRED STOCK WITHOUT MANDATORY REDEMPTION

     

80

       

80

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

Common Stock, no par, authorized 1,000,000,000 shares; issued, 2009 and 2008—533,556,660 shares

     

4,772

       

4,756

 

Treasury Stock, at cost, 2009—27,571,375 shares;
2008—27,538,762 shares

 

 

 

(587

)

 

 

 

 

(581

)

 

Retained Earnings

     

4,204

       

3,773

 

Accumulated Other Comprehensive Loss

 

 

 

   

 

 

(177

)

 

 

 

 

 

 

Total Common Stockholders’ Equity

     

8,389

       

7,771

 

Noncontrolling Interest—Equity Investments

 

 

 

10

   

 

 

11

 

 

 

 

 

 

Total Capitalization

     

16,284

       

15,867

 

 

 

 

 

 

TOTAL LIABILITIES AND CAPITALIZATION

 

 

$

 

28,760

   

 

$

 

29,049

 

 

 

 

 

 

See Notes to Condensed Consolidated Financial Statements.

3


PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Millions)
(Unaudited)

 

 

 

 

 

 

 

For the Six Months
Ended June 30,

 

2009

 

2008

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

Net Income

   

$

 

755

     

$

 

298

 

Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:

 

 

 

 

Depreciation and Amortization

     

410

       

387

 

Amortization of Nuclear Fuel

 

 

 

57

   

 

 

48

 

Provision for Deferred Income Taxes (Other than Leases) and ITC

     

139

       

90

 

Non-Cash Employee Benefit Plan Costs

 

 

 

173

   

 

 

84

 

Lease Transaction Charges, net of tax

     

       

490

 

Leveraged Lease Income, Adjusted for Rents Received and Deferred Taxes

 

 

 

(364

)

 

 

 

 

(23

)

 

Gain on Sale of Investments

     

(99

)

       

(1

)

 

Undistributed Earnings from Affiliates

 

 

 

(11

)

 

 

 

 

(37

)

 

Net Realized and Unrealized Gains on Energy Contracts and Other Derivatives

     

(71

)

       

(50

)

 

Over (Under) Recovery of Electric Energy Costs (BGS and NTC) and Gas Costs

 

 

 

8

   

 

 

(66

)

 

Over (Under) Recovery of Societal Benefits Charge (SBC)

     

47

       

(12

)

 

Cost of Removal

 

 

 

(23

)

 

 

 

 

(20

)

 

Net Realized (Gains) Losses and Expense from NDT Funds

     

(3

)

       

5

 

Net Change in Certain Current Assets and Liabilities

 

 

 

307

   

 

 

(585

)

 

Employee Benefit Plan Funding and Related Payments

     

(409

)

       

(30

)

 

Other

 

 

 

(127

)

 

 

 

 

45

 

 

 

 

 

 

Net Cash Provided By Operating Activities

     

789

       

623

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

Additions to Property, Plant and Equipment

     

(816

)

       

(739

)

 

Proceeds from the Sale of Capital Leases and Investments

 

 

 

510

   

 

 

41

 

Proceeds from NDT Funds Sales

     

1,475

       

1,257

 

Investment in NDT Funds

 

 

 

(1,491

)

 

 

 

 

(1,271

)

 

Restricted Funds

     

108

       

 

NDT Funds Interest and Dividends

 

 

 

21

   

 

 

24

 

Other

     

(17

)

       

(14

)

 

 

 

 

 

 

Net Cash Used In Investing Activities

 

 

 

(210

)

 

 

 

 

(702

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

Net Change in Commercial Paper and Loans

     

314

       

854

 

Issuance of Long-Term Debt

 

 

 

209

   

 

 

700

 

Redemptions of Long-Term Debt

     

(320

)

       

(1,263

)

 

Repayment of Non-Recourse Debt

 

 

 

(283

)

 

 

 

 

(22

)

 

Redemption of Securitization Debt

     

(87

)

       

(82

)

 

Net Premium Paid on Early Extinguishment of Debt

 

 

 

   

 

 

(80

)

 

Cash Dividends Paid on Common Stock

     

(336

)

       

(328

)

 

Other

 

 

 

(4

)

 

 

 

 

3

 

 

 

 

 

 

Net Cash Used In Financing Activities

     

(507

)

       

(218

)

 

 

 

 

 

 

Effect of Exchange Rate Change

 

 

 

   

 

 

1

 

 

 

 

 

 

Net Increase (Decrease) in Cash and Cash Equivalents

     

72

       

(296

)

 

Cash and Cash Equivalents at Beginning of Period

 

 

 

321

   

 

 

380

 

 

 

 

 

 

Cash and Cash Equivalents at End of Period

   

$

 

393

     

$

 

84

 

 

 

 

 

 

Supplemental Disclosure of Cash Flow Information:

 

 

 

 

Income Taxes Paid

   

$

 

613

     

$

 

454

 

Interest Paid, Net of Amounts Capitalized

 

 

$

 

254

   

 

$

 

279

 

See Notes to Condensed Consolidated Financial Statements.

4


PSEG POWER LLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Millions)
(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

For the Three Months
Ended June 30,

 

For the Six Months
Ended June 30,

 

2009

 

2008

 

2009

 

2008

OPERATING REVENUES

   

$

 

1,301

     

$

 

1,623

     

$

 

3,675

     

$

 

3,998

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

Energy Costs

     

563

       

867

       

2,025

       

2,456

 

Operation and Maintenance

 

 

 

271

   

 

 

275

   

 

 

529

   

 

 

514

 

Depreciation and Amortization

     

48

       

41

       

95

       

79

 

 

 

 

 

 

 

 

 

 

Total Operating Expenses

 

 

 

882

   

 

 

1,183

   

 

 

2,649

   

 

 

3,049

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME

     

419

       

440

       

1,026

       

949

 

Other Income

 

 

 

86

   

 

 

93

   

 

 

156

   

 

 

179

 

Other Deductions

     

(44

)

       

(55

)

       

(94

)

       

(108

)

 

Other Than Temporary Impairments

 

 

 

   

 

 

(32

)

 

 

 

 

(60

)

 

 

 

 

(70

)

 

Interest Expense

     

(39

)

       

(41

)

       

(82

)

       

(83

)

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

 

 

422

   

 

 

405

   

 

 

946

   

 

 

867

 

Income Tax Expense

     

(165

)

       

(165

)

       

(371

)

       

(352

)

 

 

 

 

 

 

 

 

 

 

EARNINGS AVAILABLE TO PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

 

 

$

 

257

   

 

$

 

240

   

 

$

 

575

   

 

$

 

515

 

 

 

 

 

 

 

 

 

 

See disclosures regarding PSEG Power LLC included in the Notes to Condensed Consolidated Financial Statements.

5


PSEG POWER LLC
CONDENSED CONSOLIDATED BALANCE SHEETS

(Millions)
(Unaudited)

 

 

 

 

 

 

 

June 30,
2009

 

December 31,
2008

ASSETS

 

 

 

 

CURRENT ASSETS

 

 

 

 

Cash and Cash Equivalents

   

$

 

20

     

$

 

20

 

Accounts Receivable

 

 

 

362

   

 

 

472

 

Accounts Receivable—Affiliated Companies, net

     

499

       

732

 

Short-Term Loan to Affiliate

 

 

 

142

   

 

 

 

Fuel

     

730

       

938

 

Materials and Supplies

 

 

 

247

   

 

 

233

 

Derivative Contracts

     

230

       

225

 

Restricted Funds

 

 

 

10

   

 

 

21

 

Prepayments

     

40

       

53

 

Other

 

 

 

2

   

 

 

11

 

 

 

 

 

 

Total Current Assets

     

2,282

       

2,705

 

 

 

 

 

 

PROPERTY, PLANT AND EQUIPMENT

 

 

 

7,770

   

 

 

7,441

 

Less: Accumulated Depreciation and Amortization

     

(2,068

)

       

(1,960

)

 

 

 

 

 

 

Net Property, Plant and Equipment

 

 

 

5,702

   

 

 

5,481

 

 

 

 

 

 

NONCURRENT ASSETS

 

 

 

 

Nuclear Decommissioning Trust (NDT) Funds

     

1,059

       

970

 

Goodwill

 

 

 

16

   

 

 

16

 

Other Intangibles

     

99

       

43

 

Other Special Funds

 

 

 

28

   

 

 

27

 

Derivative Contracts

     

145

       

143

 

Other

 

 

 

75

   

 

 

74

 

 

 

 

 

 

Total Noncurrent Assets

     

1,422

       

1,273

 

 

 

 

 

 

TOTAL ASSETS

 

 

$

 

9,406

   

 

$

 

9,459

 

 

 

 

 

 

LIABILITIES AND MEMBER’S EQUITY

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

Long-Term Debt Due Within One Year

   

$

 

     

$

 

250

 

Accounts Payable

 

 

 

513

   

 

 

752

 

Short-Term Loan from Affiliate

     

       

3

 

Derivative Contracts

 

 

 

300

   

 

 

338

 

Accrued Interest

     

38

       

35

 

Other

 

 

 

159

   

 

 

155

 

 

 

 

 

 

Total Current Liabilities

     

1,010

       

1,533

 

 

 

 

 

 

NONCURRENT LIABILITIES

 

 

 

 

Deferred Income Taxes and Investment Tax Credits (ITC)

     

567

       

335

 

Asset Retirement Obligations

 

 

 

347

   

 

 

334

 

Other Postretirement Benefit (OPEB) Costs

     

124

       

118

 

Derivative Contracts

 

 

 

62

   

 

 

111

 

Accrued Pension Costs

     

277

       

374

 

Environmental Costs

 

 

 

54

   

 

 

54

 

Long-Term Accrued Taxes

     

4

       

16

 

Other

 

 

 

59

   

 

 

47

 

 

 

 

 

 

Total Noncurrent Liabilities

     

1,494

       

1,389

 

 

 

 

 

 

COMMITMENTS AND CONTINGENT LIABILITIES (See Note 6)

 

 

 

 

LONG-TERM DEBT

 

 

 

 

Total Long-Term Debt

     

2,862

       

2,653

 

 

 

 

 

 

MEMBER’S EQUITY

 

 

 

 

Contributed Capital

     

2,000

       

2,000

 

Basis Adjustment

 

 

 

(986

)

 

 

 

 

(986

)

 

Retained Earnings

     

2,976

       

2,988

 

Accumulated Other Comprehensive Income (Loss)

 

 

 

50

   

 

 

(118

)

 

 

 

 

 

 

Total Member’s Equity

     

4,040

       

3,884

 

 

 

 

 

 

TOTAL LIABILITIES AND MEMBER’S EQUITY

 

 

$

 

9,406

   

 

$

 

9,459

 

 

 

 

 

 

See disclosures regarding PSEG Power LLC included in the Notes to Condensed Consolidated Financial Statements.

6


PSEG POWER LLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Millions)
(Unaudited)

 

 

 

 

 

 

 

For the Six Months
Ended June 30,

 

2009

 

2008

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

Net Income

   

$

 

575

     

$

 

515

 

Adjustments to Reconcile Net Income to Net Cash Flows from
Operating Activities:

 

 

 

 

Depreciation and Amortization

     

95

       

79

 

Amortization of Nuclear Fuel

 

 

 

57

   

 

 

48

 

Interest Accretion on Asset Retirement Obligations

     

13

       

12

 

Provision for Deferred Income Taxes and ITC

 

 

 

79

   

 

 

70

 

Net Realized and Unrealized Gains on Energy Contracts and Other Derivatives

     

(76

)

       

(68

)

 

Non-Cash Employee Benefit Plan Costs

 

 

 

39

   

 

 

12

 

Net Realized (Gains) Losses and (Income) Expense from NDT Funds

     

(3

)

       

5

 

Net Change in Certain Current Assets and Liabilities:

 

 

 

 

Fuel, Materials and Supplies

     

194

       

(43

)

 

Margin Deposit Asset

 

 

 

(60

)

 

 

 

 

(389

)

 

Margin Deposit Liability

     

114

       

14

 

Accounts Receivable

 

 

 

296

   

 

 

(54

)

 

Accounts Payable

     

(187

)

       

139

 

Accounts Receivable/Payable-Affiliated Companies, net

 

 

 

233

   

 

 

138

 

Accrued Interest Payable

     

3

       

 

Other Current Assets and Liabilities

 

 

 

(42

)

 

 

 

 

(31

)

 

Employee Benefit Plan Funding and Related Payments

     

(111

)

       

(1

)

 

Other

 

 

 

(19

)

 

 

 

 

20

 

 

 

 

 

 

Net Cash Provided By Operating Activities

     

1,200

       

466

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

Additions to Property, Plant and Equipment

     

(425

)

       

(384

)

 

Short-Term Loan—Affiliated Company, net

 

 

 

(142

)

 

 

 

 

 

Proceeds from NDT Funds Sales

     

1,475

       

1,257

 

NDT Funds Interest and Dividends

 

 

 

21

   

 

 

24

 

Investment in NDT Funds

     

(1,491

)

       

(1,271

)

 

Restricted Funds

 

 

 

11

   

 

 

13

 

Other

     

(5

)

       

(11

)

 

 

 

 

 

 

Net Cash Used In Investing Activities

 

 

 

(556

)

 

 

 

 

(372

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

Issuance of Recourse Long-Term Debt

     

209

       

 

Cash Dividend Paid

 

 

 

(600

)

 

 

 

 

(250

)

 

Redemption of Long-term Debt

     

(250

)

       

 

Short-Term Loan—Affiliated Company, net

 

 

 

(3

)

 

 

 

 

162

 

 

 

 

 

 

Net Cash Used In Financing Activities

     

(644

)

       

(88

)

 

 

 

 

 

 

Net Increase in Cash and Cash Equivalents

 

 

 

   

 

 

6

 

Cash and Cash Equivalents at Beginning of Period

     

20

       

11

 

 

 

 

 

 

Cash and Cash Equivalents at End of Period

 

 

$

 

20

   

 

$

 

17

 

 

 

 

 

 

Supplemental Disclosure of Cash Flow Information:

       

Income Taxes Paid

 

 

$

 

312

   

 

$

 

261

 

Interest Paid, Net of Amounts Capitalized

   

$

 

78

     

$

 

80

 

See disclosures regarding PSEG Power LLC included in the Notes to Condensed Consolidated Financial Statements.

7


PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Millions)
(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

For the Three Months
Ended June 30,

 

For the Six Months
Ended June 30,

 

2009

 

2008

 

2009

 

2008

OPERATING REVENUES

   

$

 

1,643

     

$

 

1,858

     

$

 

4,378

     

$

 

4,476

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

Energy Costs

     

979

       

1,213

       

2,838

       

3,006

 

Operation and Maintenance

 

 

 

344

   

 

 

320

   

 

 

739

   

 

 

680

 

Depreciation and Amortization

     

144

       

139

       

293

       

282

 

Taxes Other Than Income Taxes

 

 

 

26

   

 

 

27

   

 

 

70

   

 

 

70

 

 

 

 

 

 

 

 

 

 

Total Operating Expenses

     

1,493

       

1,699

       

3,940

       

4,038

 

 

 

 

 

 

 

 

 

 

OPERATING INCOME

 

 

 

150

   

 

 

159

   

 

 

438

   

 

 

438

 

Other Income

     

4

       

2

       

5

       

7

 

Other Deductions

 

 

 

(1

)

 

 

 

 

   

 

 

(2

)

 

 

 

 

(1

)

 

Interest Expense

     

(80

)

       

(81

)

       

(159

)

       

(162

)

 

 

 

 

 

 

 

 

 

 

INCOME BEFORE INCOME TAXES

 

 

 

73

   

 

 

80

   

 

 

282

   

 

 

282

 

Income Tax Expense

     

(29

)

       

(28

)

       

(114

)

       

(93

)

 

 

 

 

 

 

 

 

 

 

NET INCOME

 

 

 

44

   

 

 

52

   

 

 

168

   

 

 

189

 

Preferred Stock Dividends

     

(1

)

       

(1

)

       

(2

)

       

(2

)

 

 

 

 

 

 

 

 

 

 

EARNINGS AVAILABLE TO PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

 

 

$

 

43

   

 

$

 

51

   

 

$

 

166

   

 

$

 

187

 

 

 

 

 

 

 

 

 

 

See disclosures regarding Public Service Electric and Gas Company included in the Notes to Condensed Consolidated Financial Statements.

8


PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS

(Millions)
(Unaudited)

 

 

 

 

 

 

 

June 30,
2009

 

December 31,
2008

ASSETS

 

 

 

 

CURRENT ASSETS

 

 

 

 

Cash and Cash Equivalents

   

$

 

23

     

$

 

91

 

Accounts Receivable, net of allowances of $69 in 2009 and $65 in 2008, respectively

 

 

 

875

   

 

 

909

 

Unbilled Revenues

     

303

       

454

 

Materials and Supplies

 

 

 

69

   

 

 

61

 

Prepayments

     

391

       

45

 

Restricted Funds

 

 

 

   

 

 

1

 

Deferred Income Taxes

     

54

       

52

 

 

 

 

 

 

Total Current Assets

 

 

 

1,715

   

 

 

1,613

 

 

 

 

 

 

PROPERTY, PLANT AND EQUIPMENT

     

12,623

       

12,258

 

Less: Accumulated Depreciation and Amortization

 

 

 

(4,232

)

 

 

 

 

(4,122

)

 

 

 

 

 

 

Net Property, Plant and Equipment

     

8,391

       

8,136

 

 

 

 

 

 

NONCURRENT ASSETS

 

 

 

 

Regulatory Assets

     

6,022

       

6,352

 

Long-Term Investments

 

 

 

173

   

 

 

158

 

Other Special Funds

     

48

       

46

 

Other

 

 

 

92

   

 

 

101

 

 

 

 

 

 

Total Noncurrent Assets

     

6,335

       

6,657

 

 

 

 

 

 

TOTAL ASSETS

 

 

$

 

16,441

   

 

$

 

16,406

 

 

 

 

 

 

See disclosures regarding Public Service Electric and Gas Company included in the Notes to Condensed Consolidated Financial Statements.

9


PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS

(Millions)
(Unaudited)

 

 

 

 

 

 

 

June 30,
2009

 

December 31,
2008

LIABILITIES AND CAPITALIZATION

CURRENT LIABILITIES

 

 

 

 

Long-Term Debt Due Within One Year

   

$

 

492

     

$

 

248

 

Commercial Paper and Loans

 

 

 

333

   

 

 

19

 

Accounts Payable

     

327

       

336

 

Accounts Payable—Affiliated Companies, net

 

 

 

415

   

 

 

763

 

Accrued Interest

     

56

       

58

 

Accrued Taxes

 

 

 

3

   

 

 

3

 

Clean Energy Program

     

159

       

142

 

Derivative Contracts

 

 

 

10

   

 

 

14

 

Obligation to Return Cash Collateral

     

96

       

102

 

Other

 

 

 

242

   

 

 

227

 

 

 

 

 

 

Total Current Liabilities

     

2,133

       

1,912

 

 

 

 

 

 

NONCURRENT LIABILITIES

 

 

 

 

Deferred Income Taxes and ITC

     

2,591

       

2,533

 

Other Postretirement Benefit (OPEB) Costs

 

 

 

798

   

 

 

813

 

Accrued Pension Costs

     

447

       

634

 

Regulatory Liabilities

 

 

 

396

   

 

 

355

 

Clean Energy Program

     

451

       

532

 

Environmental Costs

 

 

 

676

   

 

 

689

 

Asset Retirement Obligations

     

246

       

240

 

Derivative Contracts

 

 

 

28

   

 

 

53

 

Long-Term Accrued Taxes

     

88

       

82

 

Other

 

 

 

29

   

 

 

31

 

 

 

 

 

 

Total Noncurrent Liabilities

     

5,750

       

5,962

 

 

 

 

 

 

COMMITMENTS AND CONTINGENT LIABILITIES (See Note 6)

 

 

 

 

     

 

 

 

 

CAPITALIZATION

 

 

 

 

LONG-TERM DEBT

 

 

 

 

Long-Term Debt

     

3,164

       

3,463

 

Securitization Debt

 

 

 

1,250

   

 

 

1,342

 

 

 

 

 

 

Total Long-Term Debt

     

4,414

       

4,805

 

 

 

 

 

 

Preferred Stock Without Mandatory Redemption,
$100 par value, 7,500,000 authorized;
issued and outstanding, 2009 and 2008—795,234 shares

 

 

 

80

   

 

 

80

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

Common Stock; 150,000,000 shares authorized;
issued and outstanding, 2009 and 2008—132,450,344 shares

     

892

       

892

 

Contributed Capital

 

 

 

420

   

 

 

170

 

Basis Adjustment

     

986

       

986

 

Retained Earnings

 

 

 

1,763

   

 

 

1,597

 

Accumulated Other Comprehensive Income

     

3

       

2

 

 

 

 

 

 

Total Stockholders’ Equity

 

 

 

4,064

   

 

 

3,647

 

 

 

 

 

 

Total Capitalization

     

8,558

       

8,532

 

 

 

 

 

 

TOTAL LIABILITIES AND CAPITALIZATION

 

 

$

 

16,441

   

 

$

 

16,406

 

 

 

 

 

 

See disclosures regarding Public Service Electric and Gas Company included in the Notes to Condensed Consolidated Financial Statements.

10


PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Millions)
(Unaudited)

 

 

 

 

 

 

 

For The Six Months
Ended June 30,

 

2009

 

2008

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

Net Income

   

$

 

168

     

$

 

189

 

Adjustments to Reconcile Net Income to Net Cash Flows from

 

 

 

 

Operating Activities:

 

 

 

 

Depreciation and Amortization

     

293

       

282

 

Provision for Deferred Income Taxes and ITC

 

 

 

51

   

 

 

23

 

Non-Cash Employee Benefit Plan Costs

     

118

       

65

 

Cost of Removal

 

 

 

(23

)

 

 

 

 

(20

)

 

Employee Benefit Plan Funding and Related Payments

     

(255

)

       

(28

)

 

Under Recovery of Electric Energy Costs (BGS and NTC)

 

 

 

(45

)

 

 

 

 

(12

)

 

Over (Under) Recovery of Gas Costs

     

53

       

(54

)

 

Over (Under) Recovery of SBC

 

 

 

47

   

 

 

(12

)

 

Net Changes in Certain Current Assets and Liabilities:

       

Accounts Receivable and Unbilled Revenues

 

 

 

184

   

 

 

128

 

Materials and Supplies

     

(8

)

       

(10

)

 

Prepayments

 

 

 

(346

)

 

 

 

 

(304

)

 

Accrued Taxes

     

1

       

(26

)

 

Accounts Payable

 

 

 

(9

)

 

 

 

 

74

 

Accounts Receivable/Payable-Affiliated Companies, net

     

(316

)

       

(191

)

 

Obligation to Return Cash Collateral

 

 

 

(6

)

 

 

 

 

178

 

Other Current Assets and Liabilities

     

4

       

(6

)

 

Other

 

 

 

(6

)

 

 

 

 

6

 

 

 

 

 

 

Net Cash (Used In) Provided By Operating Activities

     

(95

)

       

282

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

Additions to Property, Plant and Equipment

     

(379

)

       

(345

)

 

Other

 

 

 

(9

)

 

 

 

 

 

 

 

 

 

 

Net Cash Used In Investing Activities

     

(388

)

       

(345

)

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

Net Change in Short-Term Debt

     

314

       

135

 

Issuance of Long-Term Debt

 

 

 

   

 

 

700

 

Redemption of Long-Term Debt

     

(60

)

       

(651

)

 

Redemption of Securitization Debt

 

 

 

(87

)

 

 

 

 

(82

)

 

Contributed Capital

     

250

       

 

Deferred Issuance Costs

 

 

 

   

 

 

(4

)

 

Premium Paid on Early Retirement of Debt

     

       

(32

)

 

Preferred Stock Dividends

 

 

 

(2

)

 

 

 

 

(2

)

 

 

 

 

 

 

Net Cash Provided By Financing Activities

     

415

       

64

 

 

 

 

 

 

Net (Decrease) Increase In Cash and Cash Equivalents

 

 

 

(68

)

 

 

 

 

1

 

Cash and Cash Equivalents at Beginning of Period

     

91

       

32

 

 

 

 

 

 

Cash and Cash Equivalents at End of Period

 

 

$

 

23

   

 

$

 

33

 

 

 

 

 

 

Supplemental Disclosure of Cash Flow Information:

       

Income Taxes Paid

 

 

$

 

41

   

 

$

 

40

 

Interest Paid, Net of Amounts Capitalized

   

$

 

153

     

$

 

153

 

See disclosures regarding Public Service Electric and Gas Company included in the Notes to Condensed Consolidated Financial Statements.

11


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

This combined Form 10-Q is separately filed by Public Service Enterprise Group Incorporated (PSEG), PSEG Power LLC (Power) and Public Service Electric and Gas Company (PSE&G). Information relating to any individual company is filed by such company on its own behalf. Power and PSE&G each is only responsible for information about itself and its subsidiaries.

Note 1. Organization and Basis of Presentation

Organization

PSEG is a holding company with a diversified business mix within the energy industry. Its operations are primarily in the Northeastern and Mid Atlantic United States and in other select markets. PSEG’s four principal direct wholly owned subsidiaries are:

 

 

 

 

Power—which is a multi-regional, wholesale energy supply company that integrates its generating asset operations and gas supply commitments with its wholesale energy, fuel supply, energy trading and marketing and risk management function through three principal direct wholly owned subsidiaries. Power’s subsidiaries are subject to regulation by the Federal Energy Regulatory Commission (FERC), the Nuclear Regulatory Commission (NRC) and the states in which they operate.

 

 

 

 

PSE&G—which is an operating public utility engaged principally in the transmission of electricity and distribution of electricity and natural gas in certain areas of New Jersey. PSE&G is subject to regulation by the New Jersey Board of Public Utilities (BPU) and the FERC.

 

 

 

 

PSEG Energy Holdings, L.L.C. (Energy Holdings)—which owns and operates primarily domestic projects engaged in the generation of energy and has invested in energy-related leveraged leases through its direct wholly owned subsidiaries. Certain Energy Holdings’ subsidiaries are subject to regulation by the FERC and the states in which they operate. Energy Holdings is also exploring opportunities for investment in renewable generation projects.

 

 

 

 

PSEG Services Corporation (Services)—which provides management and administrative and general services to PSEG and its subsidiaries.

Basis of Presentation

The respective financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) applicable to Quarterly Reports on Form 10-Q. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (GAAP) have been condensed or omitted pursuant to such rules and regulations. These Condensed Consolidated Financial Statements and Notes to Condensed Consolidated Financial Statements (Notes) should be read in conjunction with, and update and supplement matters discussed in, PSEG’s, Power’s and PSE&G’s respective Annual Report on Form 10-K for the year ended December 31, 2008 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2009.

The unaudited condensed consolidated financial information furnished herein reflects all adjustments which are, in the opinion of management, necessary to fairly state the results for the interim periods presented. All such adjustments are of a normal recurring nature. The year-end Condensed Consolidated Balance Sheets were derived from the audited Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2008.

Reclassifications

Certain reclassifications were made to the prior period financial statements in accordance with new accounting guidance adopted in 2009. Minority interests of $11 million were reclassified from Other

12


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

Noncurrent Liabilities to Noncontrolling Interests in PSEG’s Condensed Consolidated Balance Sheet as of December 31, 2008.

In addition, other-than-temporary impairments related to Power’s credit losses on available-for-sale debt securities in its Nuclear Decommissioning Trust (NDT) Funds were reclassified from Other Deductions to a separate line caption in the Condensed Consolidated Statement of Operations of PSEG and Power, for the three and six months ended June 30, 2008.

Certain reclassifications have also been made to the prior period financial statements to conform to the current presentation.

Operating results for Bioenergie S.p.A. (Bioenergie) were reclassified to Income (Loss) from Discontinued Operations in the Consolidated Statements of Operations of PSEG for the three and six months ended June 30, 2008. See Note 3. Discontinued Operations and Dispositions.

Income from Equity Method Investments, as well as any impairments or gain/losses on the sale of equity method investments which were reflected in Operating Revenues and Operating Expenses prior to the fourth quarter of 2008, have been reclassified to below Operating Income in the Consolidated Statements of Operations of PSEG for the three and six months ended June 30, 2008 since these equity method investments are no longer an integral part of the business.

Note 2. Recent Accounting Standards

The following is a summary of new accounting guidance adopted in 2009 and guidance issued but not yet adopted that could impact our businesses. The new accounting guidance adopted in 2009 did not have a material impact on our financial statements.

Accounting standards adopted in 2009

Statement of Financial Accounting Standards (SFAS) No. 141 (revised 2007), “Business Combinations” (SFAS 141(R))

 

 

 

 

changes financial accounting and reporting of business combination transactions,

 

 

 

 

applies to all transactions and events in which an entity obtains control of one or more businesses of an acquiree,

 

 

 

 

requires all assets acquired and liabilities assumed in a business combination to be measured at their acquisition date fair value, with limited exceptions, and

 

 

 

 

requires acquisition-related costs and certain restructuring costs to be recognized separately from the business combination.

We adopted SFAS 141(R) effective January 1, 2009. Any new business combination transactions will be accounted for under this guidance.

SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment of Accounting Research Bulletin (ARB) No. 51” (SFAS 160)

 

 

 

 

changes the financial reporting relationship between a parent and non-controlling interests,

 

 

 

 

requires all entities to report non-controlling interests in subsidiaries as a separate component of equity in the consolidated financial statements,

 

 

 

 

requires net income attributable to the non-controlling interest to be shown on the face of the income statement in addition to net income attributable to the controlling interest, and

13


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

 

 

 

 

applies prospectively, except for presentation and disclosure requirements, which are applied retrospectively.

We adopted SFAS 160 effective January 1, 2009 and revised the balance sheet and income statement presentations as required by the standard. The income statement impact was immaterial.

SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133” (SFAS 161)

 

 

 

 

requires an entity to disclose an understanding of:

 

¡

 

 

 

how and why it uses derivatives,

 

¡

 

 

 

how derivatives and related hedged items are accounted for, and

 

¡

 

 

 

the overall impact of derivatives on an entity’s financial statements.

We adopted SFAS 161 effective January 1, 2009. For additional information / disclosures, see Note 8. Financial Risk Management Activities.

SFAS No. 165, “Subsequent Events” (SFAS 165)

 

 

 

 

establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued and

 

 

 

 

requires the disclosure of the date through which subsequent events have been evaluated and whether that date is the date on which the financial statements were issued or the date on which the financial statements were available to be issued.

We adopted SFAS 165 effective for our second quarter 2009 reporting. We evaluated any subsequent events through July 31, 2009, which is the date the financial statements were issued.

FASB Staff Position (FSP) FAS 115-2 and FAS 124-2, “Recognition and Presentation of Other-Than-Temporary Impairments” (FSP FAS 115-2 and FAS 124-2)

 

 

 

 

revises recognition guidance in determining whether a debt security is other-than-temporarily impaired. A debt security is considered other-than-temporarily impaired in either of the following circumstances if the fair value is less than the amortized cost:

 

¡

 

 

 

An entity has an intent to sell the security, or it is more likely than not that an entity will be required to sell the security prior to the recovery of its amortized cost basis or

 

¡

 

 

 

an entity does not expect to recover the entire amortized cost basis of the security.

 

 

 

 

provides further guidance to determine the amount of impairment to be recorded in earnings (credit-related loss) and/ or Accumulated Other Comprehensive Income/(Loss) (non-credit related loss).

We adopted FSP FAS 115-2 and FAS 124-2 effective April 1, 2009 and recorded a cumulative-effect adjustment to reclassify $12 million of non-credit losses, net-of-tax, from retained earnings to Accumulated Other Comprehensive Income (Loss). The expanded disclosures related to FSP FAS 115-2 and FAS 124-2 are included in Note 4. Available-for-Sale Securities.

FSP FAS 107-1 and APB 28-1, “Interim Disclosures about Fair Value of Financial Instruments” (FSP FAS 107-1 and APB 28-1)

 

 

 

 

requires a publicly traded company to disclose the following information, in the notes to the financial statements:

 

¡

 

 

 

fair value of its financial instruments in interim and annual reporting periods, together with the related carrying amounts,

14


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

 

¡

 

 

 

methods and significant assumptions used to estimate the fair value, and

 

¡

 

 

 

changes in methods and significant assumptions, if any.

We adopted FSP FAS 107-1 and APB 28-1 effective April 1, 2009. For additional information / disclosures, see Note 9. Fair Value Measurements.

FSP FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (FSP FAS 157-4)

 

 

 

 

provides guidance:

 

¡

 

 

 

to determine if there has been a significant decrease in the volume and level of activity for the asset or liability and

 

¡

 

 

 

to estimate fair values, when transactions or quoted prices are not determinative of fair value.

 

 

 

 

requires management to use judgment to determine whether a market is distressed or not orderly, even if there has been a significant decrease in the volume and level of activity for the asset or liability.

We adopted FSP FAS 157-4 effective April 1, 2009. For additional information / disclosures, see Note 9. Fair Value Measurements.

Accounting standards to be adopted effective for third quarter 2009 reporting

SFAS No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles—a replacement of FASB Statement No. 162” (SFAS 168)

 

 

 

 

issued by the FASB in June 2009,

 

 

 

 

the single source of authoritative non-governmental U.S. GAAP other than the SEC rules, regulations, interpretive releases and the SEC staff guidance,

 

 

 

 

does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place, and

 

 

 

 

will not have any impact on our financial condition or results of operations. We are currently evaluating the impact to our financial reporting process which includes providing accounting references in our SEC filings and other documents. We anticipate eliminating specific accounting references and replacing them with more general topical references.

Accounting standard to be adopted effective for 2009 year-end reporting

FSP FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets” (FSP FAS 132(R)-1)

 

 

 

 

issued by the FASB in December 2008,

 

 

 

 

requires additional disclosures about the fair value of plan assets of a defined benefit pension or other postretirement plan, including:

 

¡

 

 

 

how investment allocation decisions are made by management,

 

¡

 

 

 

major categories of plan assets,

 

¡

 

 

 

significant concentrations of risk within plan assets, and

15


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

 

¡

 

 

 

inputs and valuation techniques used to measure the fair value of plan assets and effect of fair value measurements using significant unobservable inputs on changes in plan assets for the period.

We do not anticipate that this guidance will have a material impact on our financial statements.

Accounting standards to be adopted effective January 1, 2010

SFAS No. 167, “Amendments to FASB Interpretation No. 46(R)” (SFAS 167)

 

 

 

 

issued by the FASB in June 2009,

 

 

 

 

removes the exception from applying consolidation guidance to qualifying special-purpose entities,

 

 

 

 

requires ongoing assessment of the Company’s involvement in the activities of a Variable Interest Entity (VIE), and

 

 

 

 

amends the criteria in determination of a primary beneficiary, such that a primary beneficiary would be an enterprise with

 

¡

 

 

 

the power to direct the activities of a VIE that most significantly impact the economic performance of a VIE and

 

¡

 

 

 

the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE.

We are currently evaluating the impact of this standard on our financial statements.

Note 3. Discontinued Operations and Dispositions

Discontinued Operations

Bioenergie

In November 2008, Energy Holdings sold its 85% ownership interest in Bioenergie for $40 million. The sale resulted in an after-tax loss of $15 million. Net cash proceeds, after realization of tax benefits, were approximately $70 million.

Bioenergie’s operating results for the quarter and six months ended June 30, 2008, which were reclassified to Discontinued Operations, are summarized below:

 

 

 

 

 

 

 

Three Months Ended
June 30,
2008

 

Six Months Ended
June 30,
2008

 

 

Millions

Operating Revenues

   

$

 

11

     

$

 

22

 

Income Before Income Taxes

 

 

$

 

   

 

$

 

1

 

Net Loss

   

$

 

     

$

 

(1

)

 

SAESA Group

In July 2008, Energy Holdings sold its investment in the SAESA Group for a total of $1.3 billion, including the assumption of $413 million of the consolidated debt of the group. The sale resulted in an after-tax gain of $187 million. Net cash proceeds, after Chilean and U.S. taxes of $269 million, were $612 million.

16


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

SAESA Group’s operating results for the quarter and six months ended June 30, 2008, which are included in Discontinued Operations, are summarized below:

 

 

 

 

 

 

 

Three Months Ended
June 30,
2008

 

Six Months Ended
June 30,
2008

 

 

Millions

Operating Revenues

   

$

 

156

     

$

 

342

 

Income Before Income Taxes

 

 

$

 

21

   

 

$

 

41

 

 

 

 

 

 

Net Income

   

$

 

16

     

$

 

30

 

Dispositions

GWF Energy LLC (GWF Energy)

In May 2009, Energy Holdings entered into a Memorandum of Understanding under which it will sell, in two separate transactions, its 60% ownership interest in GWF Energy, an equity method investment, for a total purchase price of $70 million. As a result, Energy Holdings recorded an after- tax impairment charge of $3 million.

Energy Holdings completed the first stage of the sale in June 2009, selling a 10.1% interest in GWF Energy for approximately $7 million. The sale of Energy Holdings’ remaining 49.9% interest is subject to certain conditions, including the execution of a new power purchase agreement (PPA) with its customer and the related approval of the PPA by the California Public Utilities Commission.

PPN Power Generating Company Limited (PPN)

In May 2009, Energy Holdings sold its 20% ownership interest in PPN, which owns and operates a 330 MW generation facility in India for approximately book value.

Leveraged Leases

In the first six months of 2009, Energy Holdings sold its interest in nine leveraged leases with a combined book value of approximately $369 million, including seven international leases for which the IRS has disallowed deductions taken in prior years. Total proceeds for the sales were approximately $460 million and resulted in an after-tax gain of $35 million. Proceeds from these transactions are being used to reduce Energy Holdings’ tax exposure related to these lease investments. For additional information see Note 6. Commitments and Contingent Liabilities.

Other

In May 2009, Energy Holdings sold its 6.5% interest in the Midland Cogeneration Venture LP (MCV) for an after-tax gain of $2 million.

Note 4. Available-for-Sale Securities

NDT Funds

In accordance with NRC regulations, entities owning an interest in nuclear generating facilities are required to determine the costs and funding methods necessary to decommission such facilities upon termination of operation. As a general practice, each nuclear owner places funds in independent external trust accounts it maintains to provide for decommissioning.

Power maintains the external master nuclear decommissioning trust which contains two separate funds: a qualified fund and a non-qualified fund. Section 468A of the Internal Revenue Code limits the amount of

17


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

money that can be contributed into a qualified fund. In the most recent study of the total cost of decommissioning, Power’s share related to its five nuclear units was estimated at approximately $2.1 billion, including contingencies. The liability for decommissioning recorded on a discounted basis as of June 30, 2009 was approximately $309 million and is included in the Asset Retirement Obligation (ARO). The trust funds are managed by third-party investment advisors who operate under investment guidelines developed by Power’s NDT Investment Committee.

Power classifies investments in the NDT Funds as available-for-sale under SFAS No. 115, “Accounting for Certain Investments in Debt and Equity Securities,” (SFAS 115). The following tables show the fair values and gross unrealized gains and losses for the securities held in the NDT Funds.

 

 

 

 

 

 

 

 

 

 

 

As of June 30, 2009

 

Cost

 

Gross
Unrealized
Gains

 

Gross
Unrealized
Losses

 

Estimated
Fair Value

 

 

Millions

Equity Securities

   

$

 

441

     

$

 

88

     

$

 

(2

)

     

$

 

527

 

 

 

 

 

 

 

 

 

 

Debt Securities

 

 

 

 

 

 

 

 

Government Obligations

     

296

       

4

       

(4

)

       

296

 

Other Debt Securities

 

 

 

212

   

 

 

14

   

 

 

(20

)

 

 

 

 

206

 

 

 

 

 

 

 

 

 

 

Total Debt Securities

     

508

       

18

       

(24

)

       

502

 

 

 

 

 

 

 

 

 

 

Other Securities

 

 

 

30

   

 

 

   

 

 

   

 

 

30

 

 

 

 

 

 

 

 

 

 

Total Available-for-Sale Securities

   

$

 

979

     

$

 

106

     

$

 

(26

)

     

$

 

1,059

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2008

 

Cost

 

Gross
Unrealized
Gains

 

Gross
Unrealized
Losses

 

Estimated
Fair Value

 

 

Millions

Equity Securities

   

$

 

386

     

$

 

32

     

$

 

(5

)

     

$

 

413

 

 

 

 

 

 

 

 

 

 

Debt Securities

 

 

 

 

 

 

 

 

Government Obligations

     

192

       

3

       

       

195

 

Other Debt Securities

 

 

 

284

   

 

 

6

   

 

 

   

 

 

290

 

 

 

 

 

 

 

 

 

 

Total Debt Securities

     

476

       

9

       

       

485

 

Other Securities

 

 

 

72

   

 

 

1

   

 

 

(1

)

 

 

 

 

72

 

 

 

 

 

 

 

 

 

 

Total Available-for-Sale Securities

   

$

 

934

     

$

 

42

     

$

 

(6

)

     

$

 

970

 

 

 

 

 

 

 

 

 

 

18


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The following table shows the value of securities in the NDT Funds that have been in an unrealized position for less than 12 months, or for 12 months or longer.

 

 

 

 

 

 

 

 

 

 

 

 

 

   

As of
June 30, 2009
Greater Than
12 Months

 

As of
June 30, 2009
Less Than
12 Months

 

As of
December 31, 2008
Less Than
12 Months*

 

Fair
Value

 

Gross
Unrealized
Losses

 

Fair
Value

 

Gross
Unrealized
Losses

 

Fair
Value

 

Gross
Unrealized
Losses

 

 

Millions

Equity Securities (A)

   

$

 

     

$

 

     

$

 

43

     

$

 

(2

)

     

$

 

85

     

$

 

(5

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Debt Securities

 

 

 

 

 

 

 

 

 

 

 

 

Government Obligations (B)

     

       

       

148

       

(4

)

       

       

 

Other Debt Securities (C)

 

 

 

57

   

 

 

(13

)

 

 

 

 

86

   

 

 

(7

)

 

 

 

 

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Debt Securities

     

57

       

(13

)

       

234

       

(11

)

       

       

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Securities

 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Available-for-Sale Securities

   

$

 

57

     

$

 

(13

)

     

$

 

277

     

$

 

(13

)

     

$

 

85

     

$

 

(6

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

*

 

 

 

There were no gross unrealized losses as of December 31, 2008 for 12 months or longer.

 

(A)

 

 

 

Equity Securities—Investments in marketable equity securities within the NDT fund are primarily investments in common stocks within a broad range of industries and sectors. The unrealized losses are distributed over several hundred companies with an impairment duration of three months or less and a severity that is generally ten percent or less than cost. The Company does not consider these securities to be other-than-temporarily impaired as of June 30, 2009.

 

(B)

 

 

 

Debt Securities (Government)—Unrealized losses on Power’s NDT investments in US Treasury obligations and Federal Agency mortgage-backed securities were caused by interest rate changes. Since these investments are guaranteed by the US government or an agency of the US government, it is not expected that these securities will settle for less that their amortized cost basis, assuming the Company does not intend to sell nor will they be more likely than not required to sell. The Company does not consider these securities to be other-than-temporarily impaired as of June 30, 2009.

 

(C)

 

 

 

Debt Securities (Corporate)—Power’s investments in corporate bonds are primarily with investment grade securities. It is not expected that these securities would settle at less than their amortized cost. Since the Company does not intend to sell these securities nor will they be more likely than not required to sell, the company does not consider these debt securities to be other-than-temporarily impaired as of June 30, 2009.

19


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The proceeds from the sales of and the net realized gains on securities in the NDT Funds were:

 

 

 

 

 

 

 

 

 

 

 

Three Months
Ended
June 30, 2009

 

Three Months
Ended
June 30, 2008

 

Six Months
Ended
June 30, 2009

 

Six Months
Ended
June 30, 2008

 

 

Millions

Proceeds from Sales

   

$

 

917

     

$

 

634

     

$

 

1,475

     

$

 

1,257

 

 

 

 

 

 

 

 

 

 

Net Realized Gains (Losses):

 

 

 

 

 

 

 

 

Gross Realized Gains

   

$

 

82

     

$

 

78

     

$

 

127

     

$

 

147

 

Gross Realized Losses

 

 

 

(65

)

 

 

 

 

(51

)

 

 

 

 

(111

)

 

 

 

 

(103

)

 

 

 

 

 

 

 

 

 

 

Net Realized Gains

   

$

 

17

     

$

 

27

     

$

 

16

     

$

 

44

 

 

 

 

 

 

 

 

 

 

Net realized gains disclosed in the above table were recognized in Other Income and Other Deductions in Power’s Consolidated Statement of Operations. Net unrealized gains of $40 million (after-tax) were recognized in Accumulated Other Comprehensive Income in Power’s Consolidated Balance Sheet as of June 30, 2009.

The available-for-sale debt securities held as of June 30, 2009 had the following maturities:

 

 

 

 

$5 million less than one year,

 

 

 

 

$64 million after one through five years,

 

 

 

 

$96 million after five through 10 years, $58 million after 10 through 15 years, and

 

 

 

 

$16 million after 15 through 20 years, and $263 million over 20 years.

The cost of these securities was determined on the basis of specific identification.

Power periodically assesses individual securities whose fair value is less than amortized cost to determine whether the investments are considered to be other-than-temporarily impaired. For equity securities, management considers the ability and intent to hold for a reasonable time to permit recovery in addition to the severity and duration of the loss. For fixed income securities, management considers its intent to sell or requirement to sell a security prior to expected recovery. In those cases where a sale is expected, any impairment would be recorded through earnings. For fixed income securities where there is no intent to sell or likely requirement to sell, management evaluates whether credit loss is a component of the impairment. If so, that portion is recorded through earnings while the noncredit loss component is recorded through Other Comprehensive Income (OCI). In 2009, other-than-temporary impairments of $60 million were recognized on securities in the NDT Funds. Any subsequent recoveries in the value of these securities are recognized in OCI. The assessment of fair market value compared to cost is applied on a weighted average basis taking into account various purchase dates and initial cost detail of the securities.

Rabbi Trusts

PSEG maintains certain unfunded nonqualified benefit plans; assets have been set aside in grantor trusts commonly known as “Rabbi Trusts” to provide supplemental retirement and deferred compensation benefits to certain of its and its subsidiaries’ key employees.

20


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

PSEG classifies investments in the Rabbi Trusts as available for sale under SFAS 115. The following tables show the fair values, gross unrealized gains and losses and amortized cost bases for the securities held in the Rabbi Trusts:

 

 

 

 

 

 

 

 

 

 

 

As of June 30, 2009

 

Cost

 

Gross
Unrealized
Gains

 

Gross
Unrealized
Losses

 

Estimated
Fair Value

 

 

Millions

Equity Securities

   

$

 

12

     

$

 

     

$

 

(1

)

     

$

 

11

 

Debt Securities

 

 

 

102

   

 

 

13

   

 

 

   

 

 

115

 

Other Securities

     

14

       

       

       

14

 

 

 

 

 

 

 

 

 

 

Total PSEG Available-for-Sale Securities

 

 

$

 

128

   

 

$

 

13

   

 

$

 

(1

)

 

 

 

$

 

140

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2008

 

Cost

 

Gross
Unrealized
Gains

 

Gross
Unrealized
Losses

 

Estimated
Fair Value

 

 

Millions

Equity Securities

   

$

 

11

     

$

 

     

$

 

(2

)

     

$

 

9

 

Debt Securities

 

 

 

102

   

 

 

9

   

 

 

(1

)

 

 

 

 

110

 

Other Securities

     

14

       

       

       

14

 

 

 

 

 

 

 

 

 

 

Total PSEG Available-for-Sale Securities

 

 

$

 

127

   

 

$

 

9

   

 

$

 

(3

)

 

 

 

$

 

133

 

 

 

 

 

 

 

 

 

 

The Rabbi Trusts are invested in commingled indexed mutual funds, in which the shares have the characteristics of equity securities. Due to the commingled nature of these funds, PSEG does not have the ability to hold these securities until expected recovery. As a result, any declines in fair market value below cost are recorded as a charge to earnings. In the first half of 2009, other-than-temporary impairments of $1 million were recognized on the investments of the Rabbi Trusts.

 

 

 

 

 

 

 

 

 

 

 

Three Months
Ended
June 30, 2009

 

Three Months
Ended
June 30, 2008

 

Six Months
Ended
June 30, 2009

 

Six Months
Ended
June 30, 2008

 

 

Millions

Proceeds from Sales

   

$

 

2

     

$

 

23

     

$

 

2

     

$

 

23

 

 

 

 

 

 

 

 

 

 

Net Realized Gains (Losses):

 

 

 

 

 

 

 

 

Gross Realized Gains

   

$

 

     

$

 

2

     

$

 

     

$

 

2

 

Gross Realized Losses

 

 

 

   

 

 

   

 

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Realized Gains (Losses):

   

$

 

     

$

 

2

     

$

 

(1

)

     

$

 

2

 

 

 

 

 

 

 

 

 

 

The cost of these securities was determined on the basis of specific identification.

21


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

The estimated fair value of the Rabbi Trusts related to PSEG, Power and PSE&G are detailed as follows:

 

 

 

 

 

 

 

As of June 30,
2009

 

As of December 31,
2008

 

 

Millions

Power

   

$

 

28

     

$

 

27

 

PSE&G

 

 

 

48

   

 

 

46

 

Other

     

64

       

60

 

 

 

 

 

 

Total PSEG Available-for-Sale Securities

 

 

$

 

140

   

 

$

 

133

 

 

 

 

 

 

Note 5. Pension and OPEB

PSEG sponsors several qualified and nonqualified pension plans and other postretirement benefit plans covering PSEG’s and its participating affiliates’ current and former employees who meet certain eligibility criteria. The following table provides the components of net periodic benefit costs relating to all qualified and nonqualified pension and OPEB plans on an aggregate basis. OPEB costs are presented net of the federal subsidy expected for prescription drugs under the Medicare Prescription Drug Improvement and Modernization Act of 2003.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Pension Benefits
Three Months
Ended
June 30,

 

OPEB
Three Months
Ended
June 30,

 

Pension Benefits
Six Months
Ended
June 30,

 

OPEB
Six Months
Ended
June 30,

 

2009

 

2008

 

2009

 

2008

 

2009

 

2008

 

2009

 

2008

 

 

Millions

Components of Net Periodic Benefit Cost:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service Cost

   

$

 

19

     

$

 

20

     

$

 

3

     

$

 

3

     

$

 

38

     

$

 

39

     

$

 

6

     

$

 

7

 

Interest Cost

 

 

 

59

   

 

 

57

   

 

 

18

   

 

 

18

   

 

 

118

   

 

 

114

   

 

 

36

   

 

 

36

 

Expected Return on Plan Assets

     

(54

)

       

(73

)

       

(3

)

       

(3

)

       

(108

)

       

(145

)

       

(6

)

       

(7

)

 

Amortization of Net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transition Obligation

     

       

       

7

       

7

       

       

       

14

       

14

 

Prior Service Cost

 

 

 

2

   

 

 

3

   

 

 

3

   

 

 

3

   

 

 

4

   

 

 

5

   

 

 

7

   

 

 

6

 

Actuarial Loss

     

28

       

3

       

(1

)

       

(1

)

       

56

       

6

       

(2

)

       

(1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Periodic Benefit Cost

 

 

$

 

54

   

 

$

 

10

   

 

$

 

27

   

 

$

 

27

   

 

$

 

108

   

 

$

 

19

   

 

$

 

55

   

 

$

 

55

 

Effect of Regulatory Asset

     

       

       

5

       

5

       

       

       

10

       

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Benefit Expense, Including Effect of Regulatory Asset

 

 

$

 

54

   

 

$

 

10

   

 

$

 

32

   

 

$

 

32

   

 

$

 

108

   

 

$

 

19

   

 

$

 

65

   

 

$

 

65

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22


NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)