PSEG-3/31/2014-Q1
Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549 
FORM 10-Q
(Mark One)
ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED March 31, 2014
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 ý 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). Yes ý No ¨
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 x
Accelerated filer o
Non-accelerated filer o
Smaller reporting company o
 
 
 
 
 
PSEG Power LLC
Large accelerated filer o
Accelerated filer o
Non-accelerated filer x
Smaller reporting company o
 
 
 
 
 
Public Service Electric and Gas Company
Large accelerated filer o
Accelerated filer o
Non-accelerated filer x
Smaller reporting company o
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 ý
As of April 15, 2014, Public Service Enterprise Group Incorporated had outstanding 505,928,448 shares of its sole class of Common Stock, without par value.
As of April 15, 2014, 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.
PSEG Power LLC and Public Service Electric and Gas Company are wholly owned subsidiaries of Public Service Enterprise Group Incorporated and meet the conditions set forth in General Instruction H(1) (a) and (b) of Form 10-Q. Each is filing its Quarterly Report on Form 10-Q with the reduced disclosure format authorized by General Instruction H.



Table of Contents

 
  
Page
 
 
PART I. FINANCIAL INFORMATION
 
Item 1.
Financial Statements
 
 
 
 
 
Notes to Condensed Consolidated Financial Statements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
 
 
Item 3.
Item 4.
 
 
PART II. OTHER INFORMATION
 
Item 1.
Item 1A.
Item 2.
Item 5.
Item 6.
 


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FORWARD-LOOKING STATEMENTS
Certain of the matters discussed in this report about our and our subsidiaries' future performance, including, without limitation, future revenues, earnings, strategies, prospects, consequences and all other statements that are not purely historical 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,” “should,” “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 filings we make with the United States Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K and subsequent reports on Form 10-Q and Form 8-K and available on our website: http://www.pseg.com. These factors include, but are not limited to:
adverse changes in the demand for or the price of the capacity and energy that we sell into wholesale electricity markets,
adverse changes in energy industry law, policies and regulation, including market structures and a potential shift away from competitive markets toward subsidized market mechanisms, transmission planning and cost allocation rules, including rules regarding how transmission is planned and who is permitted to build transmission in the future, and reliability standards,
any inability of our transmission and distribution businesses to obtain adequate and timely rate relief and regulatory approvals from federal and state regulators,
changes in federal and state environmental regulations and enforcement that could increase our costs or limit our operations,
changes in nuclear regulation and/or general developments in the nuclear power industry, including various impacts from any accidents or incidents experienced at our facilities or by others in the industry, that could limit operations of our nuclear generating units,
actions or activities at one of our nuclear units located on a multi-unit site that might adversely affect our ability to continue to operate that unit or other units located at the same site,
any inability to balance our energy obligations, available supply and risks,
any deterioration in our credit quality or the credit quality of our counterparties,
availability of capital and credit at commercially reasonable terms and conditions and our ability to meet cash needs,
changes in the cost of, or interruption in the supply of, fuel and other commodities necessary to the operation of our generating units,
delays in receipt of necessary permits and approvals for our construction and development activities,
delays or unforeseen cost escalations in our construction and development activities,
any inability to achieve, or continue to sustain, our expected levels of operating performance,
any equipment failures, accidents, severe weather events or other incidents that impact our ability to provide safe and reliable service to our customers, and any inability to obtain sufficient coverage or recover proceeds of insurance with respect to such events,
acts of terrorism, cybersecurity attacks or intrusions that could adversely impact our businesses,
increases in competition in energy supply markets as well as competition for certain transmission projects,
any inability to realize anticipated tax benefits or retain tax credits,
challenges associated with recruitment and/or retention of a qualified workforce,
adverse performance of our decommissioning and defined benefit plan trust fund investments and changes in funding requirements, and
changes in technology, such as distributed generation and micro grids, and greater reliance on these technologies and changes in customer behaviors, including energy efficiency, net-metering and demand response.

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 apply only 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

Table of Contents




PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Millions, except per share data
(Unaudited)
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
March 31,
 
 
 
2014
 
2013
 
 
OPERATING REVENUES
$
3,223

 
$
2,786

 
 
OPERATING EXPENSES
 
 
 
 
 
Energy Costs
1,356

 
1,155

 
 
Operation and Maintenance
856

 
710

 
 
Depreciation and Amortization
306

 
290

 
 
Taxes Other Than Income Taxes

 
21

 
 
Total Operating Expenses
2,518

 
2,176

 
 
OPERATING INCOME
705

 
610

 
 
Income from Equity Method Investments
4

 
2

 
 
Other Income
48

 
61

 
 
Other Deductions
(12
)
 
(29
)
 
 
Other-Than-Temporary Impairments
(2
)
 
(2
)
 
 
Interest Expense
(97
)
 
(102
)
 
 
INCOME BEFORE INCOME TAXES
646

 
540

 
 
Income Tax Expense
(260
)
 
(220
)
 
 
NET INCOME
$
386

 
$
320

 
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING (THOUSANDS):
 
 
 
 
 
BASIC
506,077

 
505,942

 
 
DILUTED
507,831

 
507,220

 
 
NET INCOME PER SHARE:
 
 
 
 
 
BASIC
$
0.76

 
$
0.63

 
`
DILUTED
$
0.76

 
$
0.63

 
 
DIVIDENDS PAID PER SHARE OF COMMON STOCK
$
0.37

 
$
0.36

 
 
 
 
 
 
 

See Notes to Condensed Consolidated Financial Statements.

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Table of Contents

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Millions
(Unaudited)
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
March 31,
 
 
 
2014
 
2013
 
 
NET INCOME
$
386

 
$
320

 
 
Other Comprehensive Income (Loss), net of tax
 
 
 
 
 
Unrealized Gains (Losses) on Available-for-Sale Securities, net of tax (expense) benefit of $(3) and $(27) for 2014 and 2013, respectively
2

 
27

 
 
Unrealized Gains (Losses) on Cash Flow Hedges, net of tax (expense) benefit of $(2) and $2 for 2014 and 2013, respectively
2

 
(4
)
 
 
Pension/Other Postretirement Benefit Costs (OPEB) adjustment, net of tax (expense) benefit of $(2) and $(7) for 2014 and 2013, respectively
4

 
10

 
 
Other Comprehensive Income (Loss), net of tax
8

 
33

 
 
COMPREHENSIVE INCOME
$
394

 
$
353

 
 
 
 
 
 
 

See Notes to Condensed Consolidated Financial Statements.


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PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
Millions
(Unaudited)
 
 
 
 
 
 
 
 
 
March 31,
2014
 
December 31,
2013
 
 
ASSETS
 
 
CURRENT ASSETS
 
 
 
 
 
Cash and Cash Equivalents
$
655

 
$
493

 
 
Accounts Receivable, net of allowances of $61 and $56 in 2014 and 2013, respectively
1,710

 
1,203

 
 
Tax Receivable
111

 
109

 
 
Unbilled Revenues
261

 
300

 
 
Fuel
271

 
545

 
 
Materials and Supplies, net
475

 
479

 
 
Prepayments
55

 
89

 
 
Derivative Contracts
43

 
98

 
 
Deferred Income Taxes
114

 
24

 
 
Regulatory Assets
125

 
243

 
 
Other
33

 
31

 
 
Total Current Assets
3,853

 
3,614

 
 
PROPERTY, PLANT AND EQUIPMENT
30,152

 
29,713

 
 
     Less: Accumulated Depreciation and Amortization
(8,219
)
 
(8,068
)
 
 
Net Property, Plant and Equipment
21,933

 
21,645

 
 
NONCURRENT ASSETS
 
 
 
 
 
Regulatory Assets
2,570

 
2,612

 
 
Regulatory Assets of Variable Interest Entities (VIEs)
414

 
476

 
 
Long-Term Investments
1,321

 
1,313

 
 
Nuclear Decommissioning Trust (NDT) Fund
1,734

 
1,701

 
 
Long-Term Receivable of VIE
418

 

 
 
Other Special Funds
635

 
613

 
 
Goodwill
16

 
16

 
 
Other Intangibles
48

 
33

 
 
Derivative Contracts
47

 
163

 
 
Restricted Cash of VIEs
24

 
24

 
 
Other
313

 
312

 
 
Total Noncurrent Assets
7,540

 
7,263

 
 
TOTAL ASSETS
$
33,326

 
$
32,522

 
 
 
 
 
 
 

See Notes to Condensed Consolidated Financial Statements.


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Table of Contents

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
Millions
(Unaudited)
 
 
 
 
 
 
 
 
 
March 31,
2014
 
December 31,
2013
 
 
LIABILITIES AND CAPITALIZATION
 
 
CURRENT LIABILITIES
 
 
 
 
 
Long-Term Debt Due Within One Year
$
544

 
$
544

 
 
Securitization Debt of VIEs Due Within One Year
242

 
237

 
 
Commercial Paper and Loans

 
60

 
 
Accounts Payable
1,116

 
1,222

 
 
Derivative Contracts
75

 
76

 
 
Accrued Interest
112

 
95

 
 
Accrued Taxes
311

 
37

 
 
Clean Energy Program
85

 
142

 
 
Obligation to Return Cash Collateral
134

 
119

 
 
Regulatory Liabilities
159

 
43

 
 
Other
579

 
488

 
 
Total Current Liabilities
3,357

 
3,063

 
 
NONCURRENT LIABILITIES
 
 
 
 
 
Deferred Income Taxes and Investment Tax Credits (ITC)
7,148

 
7,107

 
 
Regulatory Liabilities
172

 
233

 
 
Regulatory Liabilities of VIEs
11

 
11

 
 
Asset Retirement Obligations
687

 
677

 
 
Other Postretirement Benefit (OPEB) Costs
1,081

 
1,095

 
 
OPEB Costs of Servco
307

 

 
 
Accrued Pension Costs
122

 
121

 
 
Accrued Pension Costs of Servco
109

 

 
 
Environmental Costs
400

 
414

 
 
Derivative Contracts
28

 
31

 
 
Long-Term Accrued Taxes
186

 
180

 
 
Other
116

 
119

 
 
Total Noncurrent Liabilities
10,367

 
9,988

 
 
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 8)


 


 
 
CAPITALIZATION
 
 
 
 
 
LONG-TERM DEBT

 
 
 
 
Long-Term Debt
7,586

 
7,587

 
 
Securitization Debt of VIEs
200

 
259

 
 
Project Level, Non-Recourse Debt
16

 
16

 
 
Total Long-Term Debt
7,802

 
7,862

 
 
STOCKHOLDERS’ EQUITY

 
 
 
 
Common Stock, no par, authorized 1,000,000,000 shares; issued, 2014 and 2013—533,556,660 shares
4,856

 
4,861

 
 
Treasury Stock, at cost, 2014— 27,680,836 shares; 2013— 27,699,398 shares
(626
)
 
(615
)
 
 
Retained Earnings
7,656

 
7,457

 
 
Accumulated Other Comprehensive Loss
(87
)
 
(95
)
 
 
Total Common Stockholders’ Equity
11,799

 
11,608

 
 
Noncontrolling Interest
1

 
1

 
 
Total Stockholders’ Equity
11,800

 
11,609

 
 
Total Capitalization
19,602

 
19,471

 
 
TOTAL LIABILITIES AND CAPITALIZATION
$
33,326

 
$
32,522

 
 
 
 
 
 
 
See Notes to Condensed Consolidated Financial Statements.

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Table of Contents

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Millions
(Unaudited)
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
March 31,
 
 
 
2014
 
2013
 
 
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
Net Income
$
386

 
$
320

 
 
Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:
 
 
 
 
 
Depreciation and Amortization
306

 
290

 
 
Amortization of Nuclear Fuel
54

 
50

 
 
Provision for Deferred Income Taxes (Other than Leases) and ITC
(39
)
 
(5
)
 
 
Non-Cash Employee Benefit Plan Costs
11

 
61

 
 
Leveraged Lease Income, Adjusted for Rents Received and Deferred Taxes
(22
)
 
(6
)
 
 
Net Realized and Unrealized (Gains) Losses on Energy Contracts and Other Derivatives
224

 
165

 
 
Change in Accrued Storm Costs
(1
)
 
(46
)
 
 
Net Change in Other Regulatory Assets and Liabilities
177

 
80

 
 
Cost of Removal
(25
)
 
(24
)
 
 
Net Realized (Gains) Losses and (Income) Expense from NDT Fund
(23
)
 
(24
)
 
 
Net Change in Certain Current Assets and Liabilities
80

 
207

 
 
Employee Benefit Plan Funding and Related Payments
(32
)
 
(192
)
 
 
Other
20

 
1

 
 
Net Cash Provided By (Used In) Operating Activities
1,116

 
877

 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
Additions to Property, Plant and Equipment
(609
)
 
(724
)
 
 
Proceeds from Sales of Available-for-Sale Securities
257

 
258

 
 
Investments in Available-for-Sale Securities
(269
)
 
(271
)
 
 
Other
(8
)
 
4

 
 
Net Cash Provided By (Used In) Investing Activities
(629
)
 
(733
)
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
Net Change in Commercial Paper and Loans
(60
)
 
(98
)
 
 
Issuance of Long-Term Debt

 
400

 
 
Redemption of Long-Term Debt

 
(150
)
 
 
Redemption of Securitization Debt
(54
)
 
(51
)
 
 
Cash Dividends Paid on Common Stock
(187
)
 
(182
)
 
 
Other
(24
)
 
(22
)
 
 
Net Cash Provided By (Used In) Financing Activities
(325
)
 
(103
)
 
 
Net Increase (Decrease) in Cash and Cash Equivalents
162

 
41

 
 
Cash and Cash Equivalents at Beginning of Period
493

 
379

 
 
Cash and Cash Equivalents at End of Period
$
655

 
$
420

 
 
Supplemental Disclosure of Cash Flow Information:
 
 
 
 
 
Income Taxes Paid (Received)
$
15

 
$
3

 
 
Interest Paid, Net of Amounts Capitalized
$
79

 
$
82

 
 
Accrued Property, Plant and Equipment Expenditures
$
247

 
$
265

 
 
 
 
 
 
 

See Notes to Condensed Consolidated Financial Statements.

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Table of Contents


PSEG POWER LLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Millions
(Unaudited)
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
March 31,
 
 
 
2014
 
2013
 
 
OPERATING REVENUES
$
1,700

 
$
1,451

 
 
OPERATING EXPENSES
 
 
 
 
 
Energy Costs
1,044

 
860

 
 
Operation and Maintenance
302

 
283

 
 
Depreciation and Amortization
72

 
66

 
 
Total Operating Expenses
1,418

 
1,209

 
 
OPERATING INCOME
282

 
242

 
 
Income from Equity Method Investments
4

 
3

 
 
Other Income
33

 
47

 
 
Other Deductions
(10
)
 
(28
)
 
 
Other-Than-Temporary Impairments
(2
)
 
(2
)
 
 
Interest Expense
(32
)
 
(30
)
 
 
INCOME BEFORE INCOME TAXES
275

 
232

 
 
Income Tax Expense
(111
)
 
(91
)
 
 
EARNINGS AVAILABLE TO PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
$
164

 
$
141

 
 
 


 
 
 

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


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Table of Contents

PSEG POWER LLC
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Millions
(Unaudited)

 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
March 31,
 
 
 
2014
 
2013
 
 
NET INCOME
$
164

 
$
141

 
 
Other Comprehensive Income (Loss), net of tax
 
 
 
 
 
Unrealized Gains (Losses) on Available-for-Sale Securities, net of tax (expense) benefit of $(2) and $(27) for 2014 and 2013, respectively
2

 
27

 
 
Unrealized Gains (Losses) on Cash Flow Hedges, net of tax (expense) benefit of $(1) and $2 for 2014 and 2013, respectively
1

 
(4
)
 
 
Pension/OPEB adjustment, net of tax (expense) benefit of $(2) and $(5) for 2014 and 2013, respectively
3

 
9

 
 
Other Comprehensive Income (Loss), net of tax
6

 
32

 
 
COMPREHENSIVE INCOME
$
170

 
$
173

 
 
 
 
 
 
 

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


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Table of Contents

PSEG POWER LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
Millions
(Unaudited)
 
 
 
 
 
 
 
 
 
March 31,
2014
 
December 31,
2013
 
 
ASSETS
 
 
CURRENT ASSETS
 
 
 
 
 
Cash and Cash Equivalents
$
10

 
$
6

 
 
Accounts Receivable
544

 
338

 
 
Accounts Receivable—Affiliated Companies, net
36

 
333

 
 
Short-Term Loan to Affiliate
942

 
790

 
 
Fuel
271

 
545

 
 
Materials and Supplies, net
347

 
362

 
 
Derivative Contracts
27

 
57

 
 
Prepayments
15

 
13

 
 
Deferred Income Taxes
105

 
30

 
 
Other
2

 
2

 
 
Total Current Assets
2,299

 
2,476

 
 
PROPERTY, PLANT AND EQUIPMENT
10,372

 
10,278

 
 
Less: Accumulated Depreciation and Amortization
(3,037
)
 
(2,911
)
 
 
Net Property, Plant and Equipment
7,335

 
7,367

 
 
NONCURRENT ASSETS
 
 
 
 
 
Nuclear Decommissioning Trust (NDT) Fund
1,734

 
1,701

 
 
 Long-Term Investments
123

 
123

 
 
Goodwill
16

 
16

 
 
Other Intangibles
48

 
33

 
 
Other Special Funds
148

 
139

 
 
Derivative Contracts
9

 
72

 
 
Other
76

 
75

 
 
Total Noncurrent Assets
2,154

 
2,159

 
 
TOTAL ASSETS
$
11,788

 
$
12,002

 
 
 
 
 
 
 

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


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Table of Contents

PSEG POWER LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
Millions
(Unaudited)

 
 
 
 
 
 
 
 
March 31,
2014
 
December 31,
2013
 
 
LIABILITIES AND MEMBER’S EQUITY
 
 
CURRENT LIABILITIES
 
 
 
 
 
Long-Term Debt Due Within One Year
$
44

 
$
44

 
 
Accounts Payable
490

 
516

 
 
Derivative Contracts
67

 
76

 
 
Accrued Interest
43

 
28

 
 
Other
137

 
136

 
 
Total Current Liabilities
781

 
800

 
 
NONCURRENT LIABILITIES
 
 
 
 
 
Deferred Income Taxes and Investment Tax Credits (ITC)
2,044

 
2,031

 
 
Asset Retirement Obligations
405

 
400

 
 
Other Postretirement Benefit (OPEB) Costs
209

 
206

 
 
Derivative Contracts
28

 
31

 
 
Accrued Pension Costs
35

 
35

 
 
Long-Term Accrued Taxes
49

 
53

 
 
Other
87

 
91

 
 
Total Noncurrent Liabilities
2,857

 
2,847

 
 
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 8)


 


 
 
LONG-TERM DEBT
 
 
 
 
 
Total Long-Term Debt
2,497

 
2,497

 
 
MEMBER’S EQUITY
 
 
 
 
 
Contributed Capital
2,214

 
2,214

 
 
Basis Adjustment
(986
)
 
(986
)
 
 
Retained Earnings
4,482

 
4,693

 
 
Accumulated Other Comprehensive Loss
(57
)
 
(63
)
 
 
Total Member’s Equity
5,653

 
5,858

 
 
TOTAL LIABILITIES AND MEMBER’S EQUITY
$
11,788

 
$
12,002

 
 
 
 
 
 
 

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


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Table of Contents

PSEG POWER LLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Millions
(Unaudited)
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
March 31,
 
 
 
2014
 
2013
 
 
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
Net Income
$
164

 
$
141

 
 
Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:
 
 
 
 
 
Depreciation and Amortization
72

 
66

 
 
Amortization of Nuclear Fuel
54

 
50

 
 
Provision for Deferred Income Taxes and ITC
(71
)
 
(33
)
 
 
Net Realized and Unrealized (Gains) Losses on Energy Contracts and Other Derivatives
224

 
165

 
 
Non-Cash Employee Benefit Plan Costs
3

 
17

 
 
Net Realized (Gains) Losses and (Income) Expense from NDT Fund
(23
)
 
(24
)
 
 
Net Change in Certain Current Assets and Liabilities:
 
 
 
 
 
Fuel, Materials and Supplies
289

 
259

 
 
Margin Deposit
(261
)
 
(117
)

 
Accounts Receivable
(19
)
 
2

 
 
Accounts Payable
(70
)
 
(68
)
 
 
Accounts Receivable/Payable—Affiliated Companies, net
279

 
121

 
 
Accrued Interest Payable
15

 
15

 
 
Other Current Assets and Liabilities
(4
)
 
24

 
 
Employee Benefit Plan Funding and Related Payments
(2
)
 
(45
)
 
 
Other
24

 
2

 
 
Net Cash Provided By (Used In) Operating Activities
674

 
575

 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
Additions to Property, Plant and Equipment
(126
)
 
(151
)
 
 
Proceeds from Sales of Available-for-Sale Securities
247

 
244

 
 
Investments in Available-for-Sale Securities
(259
)
 
(256
)
 
 
Short-Term Loan—Affiliated Company, net
(152
)
 
(174
)
 
 
Other
(5
)
 
8

 
 
Net Cash Provided By (Used In) Investing Activities
(295
)
 
(329
)
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
Cash Dividend Paid
(375
)
 
(253
)
 
 
Contributed Capital

 
8

 
 
Other

 
(2
)
 
 
Net Cash Provided By (Used In) Financing Activities
(375
)
 
(247
)
 
 
Net Increase (Decrease) in Cash and Cash Equivalents
4

 
(1
)
 
 
Cash and Cash Equivalents at Beginning of Period
6

 
7

 
 
Cash and Cash Equivalents at End of Period
$
10

 
$
6

 
 
Supplemental Disclosure of Cash Flow Information:
 
 
 
 
 
Income Taxes Paid (Received)
$
(93
)
 
$
2

 
 
Interest Paid, Net of Amounts Capitalized
$
16

 
$
18

 
 
Accrued Property, Plant and Equipment Expenditures
$
62

 
$
41

 
 
 
 
 
 
 

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


10

Table of Contents


PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Millions
(Unaudited)

 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
March 31,
 
 
 
2014
 
2013
 
 
OPERATING REVENUES
$
2,145

 
$
1,995

 
 
OPERATING EXPENSES
 
 
 
 
 
Energy Costs
1,045

 
967

 
 
Operation and Maintenance
462

 
427

 
 
Depreciation and Amortization
227

 
215

 
 
Taxes Other Than Income Taxes

 
21

 
 
Total Operating Expenses
1,734

 
1,630

 
 
OPERATING INCOME
411

 
365

 
 
Other Income
14

 
13

 
 
Other Deductions

 
(1
)
 
 
Interest Expense
(68
)
 
(73
)
 
 
INCOME BEFORE INCOME TAXES
357

 
304

 
 
Income Tax Expense
(143
)
 
(125
)
 
 
EARNINGS AVAILABLE TO PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
$
214

 
$
179

 
 
 
 
 
 
 

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


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Table of Contents

PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Millions
(Unaudited)

 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
March 31,
 
 
 
2014
 
2013
 
 
NET INCOME
$
214

 
$
179

 
 
COMPREHENSIVE INCOME
$
214

 
$
179

 
 
 
 
 
 
 

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


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Table of Contents

PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
Millions
(Unaudited)

 
 
 
 
 
 
 
 
March 31,
2014
 
December 31,
2013
 
 
ASSETS
 
 
CURRENT ASSETS
 
 
 
 
 
Cash and Cash Equivalents
$
177

 
$
18

 
 
Accounts Receivable, net of allowances of $61 and $56 in 2014 and 2013, respectively
1,135

 
832

 
 
Unbilled Revenues
261

 
300

 
 
Materials and Supplies
126

 
115

 
 
Prepayments
6

 
24

 
 
Regulatory Assets
125

 
243

 
 
Derivative Contracts

 
25

 
 
Deferred Income Taxes
6

 
16

 
 
Other
14

 
12

 
 
Total Current Assets
1,850

 
1,585

 
 
PROPERTY, PLANT AND EQUIPMENT
19,424

 
19,071

 
 
Less: Accumulated Depreciation and Amortization
(4,993
)
 
(4,964
)
 
 
Net Property, Plant and Equipment
14,431

 
14,107

 
 
NONCURRENT ASSETS
 
 
 
 
 
Regulatory Assets
2,570

 
2,612

 
 
Regulatory Assets of VIEs
414

 
476

 
 
Long-Term Investments
367

 
361

 
 
Other Special Funds
362

 
354

 
 
Derivative Contracts
20

 
69

 
 
Restricted Cash of VIEs
24

 
24

 
 
Other
137

 
132

 
 
Total Noncurrent Assets
3,894

 
4,028

 
 
TOTAL ASSETS
$
20,175

 
$
19,720

 
 
 
 
 
 
 

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


13

Table of Contents

PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
Millions
(Unaudited)

 
 
 
 
 
 
 
 
March 31,
2014
 
December 31,
2013
 
 
LIABILITIES AND CAPITALIZATION
 
 
CURRENT LIABILITIES
 
 
 
 
 
Long-Term Debt Due Within One Year
$
500

 
$
500

 
 
Securitization Debt of VIEs Due Within One Year
242

 
237

 
 
Commercial Paper and Loans

 
60

 
 
Accounts Payable
490

 
535

 
 
Accounts Payable—Affiliated Companies, net
293

 
190

 
 
Accrued Interest
69

 
67

 
 
Clean Energy Program
85

 
142

 
 
Derivative Contracts
8

 

 
 
Deferred Income Taxes
4

 
30

 
 
Obligation to Return Cash Collateral
134

 
119

 
 
Regulatory Liabilities
159

 
43

 
 
Other
410

 
314

 
 
Total Current Liabilities
2,394

 
2,237

 
 
NONCURRENT LIABILITIES
 
 
 
 
 
Deferred Income Taxes and ITC
4,450

 
4,406

 
 
Other Postretirement Benefit (OPEB) Costs
822

 
839

 
 
Accrued Pension Costs
27

 
27

 
 
Regulatory Liabilities
172

 
233

 
 
Regulatory Liabilities of VIEs
11

 
11

 
 
Environmental Costs
349

 
363

 
 
Asset Retirement Obligations
278

 
274

 
 
Long-Term Accrued Taxes
82

 
72

 
 
Other
48

 
47

 
 
Total Noncurrent Liabilities
6,239

 
6,272

 
 
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 8)


 


 
 
CAPITALIZATION
 
 
 
 
 
LONG-TERM DEBT
 
 
 
 
 
Long-Term Debt
5,067

 
5,066

 
 
Securitization Debt of VIEs
200

 
259

 
 
Total Long-Term Debt
5,267

 
5,325

 
 
STOCKHOLDER’S EQUITY
 
 
 
 
 
Common Stock; 150,000,000 shares authorized; issued and outstanding, 2014 and 2013—132,450,344 shares
892

 
892

 
 
Contributed Capital
695

 
520

 
 
Basis Adjustment
986

 
986

 
 
Retained Earnings
3,701

 
3,487

 
 
Accumulated Other Comprehensive Income
1

 
1

 
 
Total Stockholder’s Equity
6,275

 
5,886

 
 
Total Capitalization
11,542

 
11,211

 
 
TOTAL LIABILITIES AND CAPITALIZATION
$
20,175

 
$
19,720

 
 
 
 
 
 
 

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


14

Table of Contents


PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Millions
(Unaudited)

 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
March 31,
 
 
 
2014
 
2013
 
 
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
  Net Income
$
214

 
$
179

 
 
Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:
 
 
 
 
 
Depreciation and Amortization
227

 
215

 
 
Provision for Deferred Income Taxes and ITC
31

 
29

 
 
Non-Cash Employee Benefit Plan Costs
6

 
39

 
 
Cost of Removal
(25
)
 
(24
)
 
 
Change in Accrued Storm Costs
(1
)
 
(46
)
 
 
Net Change in Other Regulatory Assets and Liabilities
177

 
80

 
 
Net Change in Certain Current Assets and Liabilities:
 
 
 
 
 
Accounts Receivable and Unbilled Revenues
(264
)
 
(200
)
 
 
Materials and Supplies
(11
)
 
(7
)
 
 
Prepayments
18

 
20

 
 
Accounts Payable
14

 
8

 
 
Accounts Receivable/Payable—Affiliated Companies, net
120

 
64

 
 
Other Current Assets and Liabilities
112

 
104

 
 
Employee Benefit Plan Funding and Related Payments
(29
)
 
(120
)
 
 
Other
(10
)
 
(12
)
 
 
Net Cash Provided By (Used In) Operating Activities
579

 
329

 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
Additions to Property, Plant and Equipment
(481
)
 
(572
)
 
 
Proceeds from Sales of Available-for-Sale Securities
5

 
6

 
 
Investments in Available-for-Sale Securities
(3
)
 
(6
)
 
 
Solar Loan Investments
(2
)
 
(7
)
 
 
Restricted Funds

 
1

 
 
Net Cash Provided By (Used In) Investing Activities
(481
)
 
(578
)
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
Net Change in Short-Term Debt
(60
)
 
(98
)
 
 
Issuance of Long-Term Debt

 
400

 
 
Redemption of Long-Term Debt

 
(150
)
 
 
Redemption of Securitization Debt
(54
)
 
(51
)
 
 
Contributed Capital
175

 
100

 
 
Other

 
(7
)
 
 
Net Cash Provided By (Used In) Financing Activities
61

 
194

 
 
Net Increase (Decrease) In Cash and Cash Equivalents
159

 
(55
)
 
 
Cash and Cash Equivalents at Beginning of Period
18

 
116

 
 
Cash and Cash Equivalents at End of Period
$
177

 
$
61

 
 
Supplemental Disclosure of Cash Flow Information:
 
 
 
 
 
Income Taxes Paid (Received)
$
(37
)
 
$

 
 
Interest Paid, Net of Amounts Capitalized
$
62

 
$
63

 
 
Accrued Property, Plant and Equipment Expenditures
$
185

 
$
224

 
 
 
 
 
 
 

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

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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 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 and energy trading functions through its 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. PSE&G also invests in solar generation projects and has implemented energy efficiency and demand response programs in New Jersey, which are regulated by the BPU.
PSEG's other direct wholly owned subsidiaries include PSEG Energy Holdings L.L.C. (Energy Holdings), which primarily has investments in leveraged leases; PSEG Long Island LLC (PSEG LI), which, effective January 1, 2014, operates the Long Island Power Authority's (LIPA) transmission and distribution (T&D) system under a twelve year Amended and Restated Operations Services Agreement (OSA); and PSEG Services Corporation (Services), which provides certain management, administrative and general services to PSEG and its subsidiaries at cost.
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, the Annual Report on Form 10-K for the year ended December 31, 2013.
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. All significant intercompany accounts and transactions are eliminated in consolidation. 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, 2013.
On December 31, 2013, Energy Holdings distributed the outstanding equity of its 50% interest in a partnership that owns and operates a generation facility in Hawaii and its wholly owned interest in PSEG Solar Source LLC to PSEG. PSEG in turn contributed this distribution to Power as an additional equity investment. This transaction was accounted for as a non-cash transfer of equity interest between entities under common control with prior period financial statements for Power retrospectively adjusted to include the earnings related to the transfer. As a result, Power’s Operating Revenues and Net Income for the three months ended March 31, 2013 each increased by $4 million.


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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


Note 2. Recent Accounting Standards
New Standards Adopted during 2014
Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists
This accounting standard was issued to address diversity in practice related to the presentation of an unrecognized tax benefit in certain cases. This standard requires entities to present an unrecognized tax benefit or a portion thereof on the Balance Sheet as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss or a tax credit carryforward.
However, the unrecognized tax benefit will be presented on the Balance Sheet as a liability and will not be combined with deferred tax assets in cases where that tax benefit cannot or will not, if permissible, be used to settle any additional income taxes that would result from the disallowance of a tax position.
The standard was effective for fiscal years and interim periods beginning after December 15, 2013. The impact of adopting this standard was immaterial.

Note 3. Variable Interest Entities (VIEs)
Variable Interest Entities for which PSE&G is the Primary Beneficiary
PSE&G is the primary beneficiary and consolidates two marginally capitalized VIEs, PSE&G Transition Funding LLC (Transition Funding) and PSE&G Transition Funding II LLC (Transition Funding II), which were created for the purpose of issuing transition bonds and purchasing bond transitional property of PSE&G, which is pledged as collateral to a trustee. PSE&G acts as the servicer for these entities to collect securitization transition charges authorized by the BPU. These funds are remitted to Transition Funding and Transition Funding II and are used for interest and principal payments on the transition bonds and related costs.
The assets and liabilities of Transition Funding and Transition Funding II are presented separately on the face of the Condensed Consolidated Balance Sheets of PSEG and PSE&G because the assets of these VIEs are restricted and can only be used to settle their respective obligations. No Transition Funding or Transition Funding II creditor has any recourse to the general credit of PSE&G in the event the transition charges are not sufficient to cover the bond principal and interest payments of Transition Funding or Transition Funding II, respectively.
PSE&G’s maximum exposure to loss is equal to its equity investment in these VIEs which was $16 million as of March 31, 2014 and December 31, 2013. The risk of actual loss to PSE&G is considered remote. PSE&G did not provide any financial support to Transition Funding or Transition Funding II during the first three months of 2014 or in 2013. PSE&G does not have any contractual commitments or obligations to provide financial support to Transition Funding or Transition Funding II.
Variable Interest Entity for which PSEG LI is the Primary Beneficiary
PSEG LI consolidates Long Island Electric Utility Servco, LLC (Servco), a marginally capitalized VIE, which was created for the purpose of operating LIPA's T&D system in Long Island, New York as well as providing administrative support functions to LIPA. PSEG LI is the primary beneficiary of Servco because it directs the operations of Servco, the activity that most significantly impacts Servco's economic performance and it has the obligation to absorb losses of Servco that could potentially be significant to Servco. Such losses would be immaterial to PSEG.
Pursuant to the OSA, Servco's operating costs are reimbursable entirely by LIPA, and therefore, PSEG LI's risk is limited related to the activities of Servco. PSEG LI has no current obligation, nor expectation, to provide direct financial support to Servco. In addition to reimbursement of Servco’s operating costs as provided for in the OSA, PSEG LI receives an annual contract management fee. PSEG LI’s annual contractual management fee, in certain situations, could be partially offset by ServCo's annual storm costs not approved by the Federal Emergency Management Agency, limited contingent liabilities and penalties for failing to meet certain performance metrics.
PSEG recognized a long-term receivable primarily related to future funding by LIPA of Servco’s recognized pension and other postretirement benefit (OPEB) liabilities. This receivable is presented separately on the Condensed Consolidated Balance Sheet of PSEG as a noncurrent asset because it is restricted. See Note 7. Pension and Other Postretirement Benefits for additional information.
For transactions in which Servco acts as principal, such as transactions with its employees for labor and labor-related activities, including pension and OPEB related transactions, Servco records revenues and the related pass-through expenditures separately in Operating Revenues and Operations and Maintenance Expense, respectively. For transactions in which Servco acts as an

17

Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


agent for LIPA, it records revenues and the related expenses on a net basis, resulting in no impact on PSEG's Condensed Consolidated Statement of Operations.

Note 4. Rate Filings
The following information discusses significant updates regarding orders and pending rate filings. This Note should be read in conjunction with Note 6. Regulatory Assets and Liabilities to the Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2013.
Remediation Adjustment Charge (RAC)—On April 18, 2014, PSE&G filed a petition with the BPU requesting recovery of $66 million related to RAC 21 net manufactured gas plant expenditures through July 31, 2013. This matter is pending.
Weather Normalization Clause (WNC)—In April 2014, the BPU approved PSE&G's filing with respect to deficiency revenues from the 2012-2013 Winter Period. The BPU’s approval of a final WNC resulted in no change to the provisional rate previously approved by the BPU and implemented effective October 1, 2013, which was set to recover $26 million from customers during the 2013-2014 Winter Period (October 1, 2013 through May 31, 2014).
Basic Gas Supply Service (BGSS)—In January and February 2014, PSE&G filed self-implementing one-month BGSS residential customer bill credits with the BPU for 25 cents per therm for the months of February and March 2014. These credits provided approximately $93 million in total credits to residential customers, reducing the BGSS deferred balance. On April 1, 2014, the BGSS rate reverted back to the current rate.

Note 5. Financing Receivables
PSE&G
PSE&G sponsors a solar loan program designed to help finance the installation of solar power systems throughout its electric service area. The loans are generally paid back with Solar Renewable Energy Certificates generated from the installed solar electric system. The following table reflects the outstanding loans by class of customer, none of which are considered “non-performing.”
 
 
 
 
 
 
 
Credit Risk Profile Based on Payment Activity
 
 
 
As of
 
As of
 
 
Consumer Loans
March 31,
2014
 
December 31,
2013
 
 
 
Millions
 
 
Commercial/Industrial
$
197

 
$
192

 
 
Residential
15

 
15

 
 
Total
$
212

 
$
207

 
 
 
 
 
 
 

Energy Holdings
Energy Holdings, through various of its indirect subsidiary companies, has investments in domestic energy and real estate assets subject primarily to leveraged lease accounting. A leveraged lease is typically comprised of an investment by an equity investor and debt provided by a third party debt investor. The debt is recourse only to the assets subject to lease and is not included on PSEG’s Condensed Consolidated Balance Sheets. As an equity investor, Energy Holdings’ investments in the leases are comprised of the total expected lease receivables on its investments over the lease terms plus the estimated residual values at the end of the lease terms, reduced for any income not yet earned on the leases. This amount is included in Long-Term Investments on PSEG’s Condensed Consolidated Balance Sheets. The more rapid depreciation of the leased property for tax purposes creates tax cash flow that will be repaid to the taxing authority in later periods. As such, the liability for such taxes due is recorded in Deferred Income Taxes on PSEG’s Condensed Consolidated Balance Sheets. 

18

Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


The following table shows Energy Holdings’ gross and net lease investment as of March 31, 2014 and December 31, 2013, respectively.
 
 
 
 
 
 
 
 
As of
 
As of
 
 
 
March 31,
2014
 
December 31,
2013
 
 
 
Millions
 
 
Lease Receivables (net of Non-Recourse Debt)
$
700

 
$
701

 
 
Estimated Residual Value of Leased Assets
529

 
529

 
 
Total Investments in Rental Receivables
1,229

 
1,230

 
 
Unearned and Deferred Income
(401
)
 
(405
)
 
 
Gross Investments in Leases
828

 
825

 
 
Deferred Tax Liabilities
(708
)
 
(727
)
 
 
Net Investment in Leases
$
120

 
$
98

 
 
 
 
 
 
 
The corresponding receivables associated with the lease portfolio are reflected in the following table, net of non-recourse debt. The ratings in the table represent the ratings of the entities providing payment assurance to Energy Holdings. "Not Rated" counterparties represent investments in lease receivables related to coal-fired assets and commercial real estate properties.
 
 
 
 
 
 
 
 
 
 
Lease Receivables, Net of
Non-Recourse Debt
 
 
Counterparties’ Credit Rating (Standard & Poor's (S&P))
 
As of
 
As of
 
 
As of March 31, 2014
 
March 31, 2014
 
December 31, 2013
 
 
 
 
Millions
 
 
AA
 
$
19

 
$
19

 
 
AA-
 
56

 
56

 
 
BBB+ - BB+
 
316

 
316

 
 
B
 
165

 
166

 
 
Not Rated
 
144

 
144

 
 
Total
 
$
700

 
$
701

 
 
 
 
 
 
 
 
The “B” rating and the "Not Rated" in the preceding table include lease receivables related to coal-fired assets in Pennsylvania and Illinois, respectively. As of March 31, 2014, the gross investment in the leases of such assets, net of non-recourse debt, was $562 million ($18 million, net of deferred taxes). A more detailed description of such assets under lease is presented in the following table.

19

Table of Contents
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Asset
 
Location
 
Gross
Investment
 
%
Owned
 
Total
 
Fuel
Type
 
Counter-parties’
S&P Credit
Ratings
 
Counterparty
 
 
 
 
 
 
Millions
 
 
 
MW
 
 
 
 
 
 
 
 
Powerton Station Units 5 and 6
 
IL
 
$
134

 
64
%
 
1,538

 
Coal
 
Not Rated
 
Edison Mission Energy
 
 
Joliet Station Units 7 and 8
 
IL
 
$
84

 
64
%
 
1,044

 
Coal
 
Not Rated
 
Edison Mission Energy
 
 
Keystone Station Units 1 and 2
 
PA
 
$
117

 
17
%
 
1,711

 
Coal
 
B
 
GenOn REMA, LLC
 
 
Conemaugh Station Units 1 and 2
 
PA
 
$
117

 
17
%
 
1,711

 
Coal
 
B
 
GenOn REMA, LLC
 
 
Shawville Station Units 1, 2, 3 and 4
 
PA
 
$
110

 
100
%
 
603

 
Coal
 
B
 
GenOn REMA, LLC