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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 September 30, 2018
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
Newark, New Jersey 07102
973 430-7000

  
22-2625848
001-00973
  
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
(A New Jersey Corporation)
80 Park Plaza
Newark, New Jersey 07102
973 430-7000

  
22-1212800
001-34232
  
PSEG POWER LLC
(A Delaware Limited Liability Company)
80 Park Plaza
Newark, New Jersey 07102
973 430-7000

  
22-3663480
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, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth 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
Emerging growth company  o
 
 
 
 
 
 
Public Service Electric and Gas Company
Large accelerated filer o
Accelerated filer o
Non-accelerated filer x
Smaller reporting company o
Emerging growth company  o
 
 
 
 
 
 
PSEG Power LLC
Large accelerated filer o
Accelerated filer o
Non-accelerated filer x
Smaller reporting company o
Emerging growth company  o
If any of the registrants is an emerging growth company, indicate by check mark if such registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ 
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 October 16, 2018, Public Service Enterprise Group Incorporated had outstanding 505,449,710 shares of its sole class of Common Stock, without par value.
As of October 16, 2018, 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.
Public Service Electric and Gas Company and PSEG Power LLC are wholly owned subsidiaries of Public Service Enterprise Group Incorporated and meet the conditions set forth in General Instruction H(1) 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
FILING FORMAT
PART I. FINANCIAL INFORMATION
 
Item 1.
Financial Statements
 
 
 
 
 
Notes to Condensed Consolidated Financial Statements
 
 
Note 1. Organization, Basis of Presentation and Significant Accounting Policies
 
Note 2. Recent Accounting Standards
 
Note 3. Revenues
 
Note 4. Early Plant Retirements
 
Note 5. Variable Interest Entity (VIE)
 
Note 6. Rate Filings
 
Note 7. Financing Receivables
 
Note 8. Trust Investments
 
Note 9. Pension and Other Postretirement Benefits (OPEB)
 
Note 10. Commitments and Contingent Liabilities
 
Note 11. Debt and Credit Facilities
 
Note 12. Financial Risk Management Activities
 
Note 13. Fair Value Measurements
 
Note 14. Other Income (Deductions)
 
Note 15. Income Taxes
 
Note 16. Accumulated Other Comprehensive Income (Loss), Net of Tax
 
Note 17. Earnings Per Share (EPS) and Dividends
 
Note 18. Financial Information by Business Segment
 
Note 19. Related-Party Transactions
 
Note 20. Guarantees of Debt
Item 2.
 
Executive Overview of 2018 and Future Outlook
 
 
 
 
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. These factors include, but are not limited to:
fluctuations in wholesale power and natural gas markets, including the potential impacts on the economic viability of our generation units;
our ability to obtain adequate fuel supply;
any inability to manage our energy obligations with available supply;
increases in competition in wholesale energy and capacity markets;
changes in technology related to energy generation, distribution and consumption and customer usage patterns;
economic downturns;
third-party credit risk relating to our sale of generation output and purchase of fuel;
adverse performance of our decommissioning and defined benefit plan trust fund investments and changes in funding requirements;
changes in state and federal legislation and regulations, and PSE&G’s ability to recover costs and earn returns on authorized investments;
the impact of pending and any future rate case proceedings;
risks associated with our ownership and operation of nuclear facilities, including regulatory risks, such as compliance with the Atomic Energy Act and trade control, environmental and other regulations, as well as financial, environmental and health and safety risks;
adverse changes in energy industry laws, policies and regulations, including market structures and transmission planning;
changes in federal and state environmental regulations and enforcement;
delays in receipt of, or an inability to receive, necessary licenses and permits;
adverse outcomes of any legal, regulatory or other proceeding, settlement, investigation or claim applicable to us and/or the energy industry;
changes in tax laws and regulations;
the impact of our holding company structure on our ability to meet our corporate funding needs, service debt and pay dividends;
lack of growth or slower growth in the number of customers or changes in customer demand;
any inability of Power to meet its commitments under forward sale obligations;
reliance on transmission facilities that we do not own or control and the impact on our ability to maintain adequate transmission capacity;
any inability to successfully develop or construct generation, transmission and distribution projects;
any equipment failures, accidents, severe weather events or other incidents that impact our ability to provide safe and reliable service to our customers;

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our inability to exercise control over the operations of generation facilities in which we do not maintain a controlling interest;
any inability to recover the carrying amount of our long-lived assets and leveraged leases;
any inability to maintain sufficient liquidity;
any inability to realize anticipated tax benefits or retain tax credits;
challenges associated with recruitment and/or retention of key executives and a qualified workforce;
the impact of our covenants in our debt instruments on our operations; and
the impact of acts of terrorism, cybersecurity attacks or intrusions.
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, results of operations or cash flows. 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 in light of new information or future events, 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.

FILING FORMAT
This combined Quarterly Report on Form 10-Q is separately filed by Public Service Enterprise Group Incorporated (PSEG), Public Service Electric and Gas Company (PSE&G) and PSEG Power LLC (Power). Information relating to any individual company is filed by such company on its own behalf. PSE&G and Power are each only responsible for information about itself and its subsidiaries.
Discussions throughout the document refer to PSEG and its direct operating subsidiaries, PSE&G and Power. Depending on the context of each section, references to “we,” “us,” and “our” relate to PSEG or to the specific company or companies being discussed.


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PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Millions, except per share data
(Unaudited)

 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
 
September 30,
 
September 30,
 
 
 
2018
 
2017
 
2018
 
2017
 
 
OPERATING REVENUES
$
2,394

 
$
2,254

 
$
7,228

 
$
6,987

 
 
OPERATING EXPENSES
 
 
 
 
 
 
 
 
 
Energy Costs
804

 
616

 
2,356

 
2,072

 
 
Operation and Maintenance
742

 
693

 
2,221

 
2,128

 
 
Depreciation and Amortization
294

 
252

 
854

 
1,721

 
 
Total Operating Expenses
1,840

 
1,561

 
5,431

 
5,921

 
 
OPERATING INCOME
554

 
693

 
1,797

 
1,066

 
 
Income from Equity Method Investments
5

 
3

 
12

 
11

 
 
Net Gains (Losses) on Trust Investments
45

 
18

 
31

 
71

 
 
Other Income (Deductions)
33

 
33

 
99

 
98

 
 
Non-Operating Pension and OPEB Credits (Costs)
19

 

 
57

 
1

 
 
Interest Expense
(127
)
 
(100
)
 
(341
)
 
(289
)
 
 
INCOME BEFORE INCOME TAXES
529

 
647

 
1,655

 
958

 
 
Income Tax Expense
(117
)
 
(252
)
 
(416
)
 
(340
)
 
 
NET INCOME
$
412

 
$
395

 
$
1,239

 
$
618

 
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
 
 
 
 
 
 
 
 
 
BASIC
504

 
505

 
504

 
505

 
 
DILUTED
507

 
507

 
507

 
507

 
 
NET INCOME PER SHARE:
 
 
 
 
 
 
 
 
 
BASIC
$
0.82

 
$
0.78

 
$
2.46

 
$
1.22

 
 
DILUTED
$
0.81

 
$
0.78

 
$
2.44

 
$
1.22

 
 
DIVIDENDS PAID PER SHARE OF COMMON STOCK
$
0.45

 
$
0.43

 
$
1.35

 
$
1.29

 
 
 
 
 
 
 
 
 
 
 
See Notes to Condensed Consolidated Financial Statements.

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PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Millions
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
 
September 30,
 
September 30,
 
 
 
2018
 
2017
 
2018
 
2017
 
 
NET INCOME
$
412

 
$
395

 
$
1,239

 
$
618

 
 
Other Comprehensive Income (Loss), net of tax
 
 
 
 
 
 
 
 
 
Unrealized Gains (Losses) on Available-for-Sale Securities, net of tax (expense) benefit of $2, $(15), $15 and $(40) for the three and nine months ended 2018 and 2017, respectively
(4
)
 
17

 
(23
)
 
42

 
 
Unrealized Gains (Losses) on Cash Flow Hedges, net of tax (expense) benefit of $0, $0, $1 and $0 for the three and nine months ended 2018 and 2017, respectively

 
(1
)
 
(1
)
 
(1
)
 
 
Pension/Other Postretirement Benefit Costs (OPEB) adjustment, net of tax (expense) benefit of $(3), $(4), $(9) and $(12) for the three and nine months ended 2018 and 2017, respectively
7

 
6

 
22

 
18

 
 
Other Comprehensive Income (Loss), net of tax
3

 
22

 
(2
)
 
59

 
 
COMPREHENSIVE INCOME
$
415

 
$
417

 
$
1,237

 
$
677

 
 
 
 
 
 
 
 
 
 
 
See Notes to Condensed Consolidated Financial Statements.

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PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
Millions
(Unaudited)
 
 
 
 
 
 
 
 
 
September 30,
2018
 
December 31,
2017
 
 
ASSETS
 
 
CURRENT ASSETS
 
 
 
 
 
Cash and Cash Equivalents
$
88

 
$
313

 
 
Accounts Receivable, net of allowances of $56 in 2018 and $59 in 2017
1,240

 
1,348

 
 
Tax Receivable
225

 
127

 
 
Unbilled Revenues
155

 
296

 
 
Fuel
329

 
289

 
 
Materials and Supplies, net
590

 
577

 
 
Prepayments
214

 
118

 
 
Derivative Contracts
11

 
29

 
 
Regulatory Assets
317

 
211

 
 
Other
46

 
4

 
 
Total Current Assets
3,215

 
3,312

 
 
PROPERTY, PLANT AND EQUIPMENT
43,613

 
41,231

 
 
     Less: Accumulated Depreciation and Amortization
(9,832
)
 
(9,434
)
 
 
Net Property, Plant and Equipment
33,781

 
31,797

 
 
NONCURRENT ASSETS
 
 
 
 
 
Regulatory Assets
3,761

 
3,222

 
 
Long-Term Investments
923

 
932

 
 
Nuclear Decommissioning Trust (NDT) Fund
2,096

 
2,133

 
 
Long-Term Receivable of Variable Interest Entity (VIE)
682

 
686

 
 
Rabbi Trust Fund
225

 
231

 
 
Goodwill
16

 
16

 
 
Other Intangibles
107

 
114

 
 
Derivative Contracts
2

 
7

 
 
Other
265

 
266

 
 
Total Noncurrent Assets
8,077

 
7,607

 
 
TOTAL ASSETS
$
45,073

 
$
42,716

 
 
 
 
 
 
 
See Notes to Condensed Consolidated Financial Statements.

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PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
Millions
(Unaudited)

 
 
 
 
 
 
 
 
 
September 30,
2018
 
December 31,
2017
 
 
LIABILITIES AND CAPITALIZATION
 
 
CURRENT LIABILITIES
 
 
 
 
 
Long-Term Debt Due Within One Year
$
1,450

 
$
1,000

 
 
Commercial Paper and Loans
419

 
542

 
 
Accounts Payable
1,317

 
1,694

 
 
Derivative Contracts
13

 
16

 
 
Accrued Interest
159

 
103

 
 
Accrued Taxes
36

 
48

 
 
Clean Energy Program
187

 
128

 
 
Obligation to Return Cash Collateral
130

 
129

 
 
Regulatory Liabilities
303

 
47

 
 
Other
471

 
461

 
 
Total Current Liabilities
4,485

 
4,168

 
 
NONCURRENT LIABILITIES
 
 
 
 
 
Deferred Income Taxes and Investment Tax Credits (ITC)
5,720

 
5,240

 
 
Regulatory Liabilities
3,286

 
2,948

 
 
Asset Retirement Obligations
1,059

 
1,024

 
 
OPEB Costs
1,410

 
1,455

 
 
OPEB Costs of Servco
560

 
542

 
 
Accrued Pension Costs
451

 
537

 
 
Accrued Pension Costs of Servco
108

 
129

 
 
Environmental Costs
348

 
357

 
 
Derivative Contracts
2

 
5

 
 
Long-Term Accrued Taxes
152

 
175

 
 
Other
224

 
221

 
 
Total Noncurrent Liabilities
13,320

 
12,633

 
 
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 10)


 


 
 
CAPITALIZATION

 
 
 
 
LONG-TERM DEBT
12,909

 
12,068

 
 
STOCKHOLDERS’ EQUITY

 
 
 
 
Common Stock, no par, authorized 1,000 shares; issued, 2018 and 2017—534 shares
4,966

 
4,961

 
 
Treasury Stock, at cost, 2018—30 shares; 2017—29 shares
(811
)
 
(763
)
 
 
Retained Earnings
10,611

 
9,878

 
 
Accumulated Other Comprehensive Loss
(407
)
 
(229
)
 
 
Total Stockholders’ Equity
14,359

 
13,847

 
 
Total Capitalization
27,268

 
25,915

 
 
TOTAL LIABILITIES AND CAPITALIZATION
$
45,073

 
$
42,716

 
 
 


 
 
 
See Notes to Condensed Consolidated Financial Statements.

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PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Millions
(Unaudited)
 
 
 
 
 
 
 
 
Nine Months Ended
 
 
 
September 30,
 
 
 
2018
 
2017
 
 
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
Net Income
$
1,239

 
$
618

 
 
Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:
 
 
 
 
 
Depreciation and Amortization
854

 
1,721

 
 
Amortization of Nuclear Fuel
143

 
152

 
 
Emission Allowances and Renewable Energy Credit (REC) Compliance Accrual

74

 
79

 
 
Provision for Deferred Income Taxes (Other than Leases) and ITC
510

 
227

 
 
Non-Cash Employee Benefit Plan Costs
52

 
67

 
 
Leveraged Lease (Income) Loss, Adjusted for Rents Received and Deferred Taxes
(27
)
 
(7
)
 
 
Net (Gain) Loss on Lease Investments
14

 
48

 
 
Net Realized and Unrealized (Gains) Losses on Energy Contracts and Other Derivatives
78

 
8

 
 
Net Change in Regulatory Assets and Liabilities
(35
)
 
(121
)
 
 
Cost of Removal
(121
)
 
(72
)
 
 
Net (Gains) Losses and (Income) Expense from NDT Fund
(62
)
 
(86
)
 
 
Net Change in Certain Current Assets and Liabilities:
 
 
 
 
 
          Tax Receivable
(98
)
 
64

 
 
          Accrued Taxes
(12
)
 
115

 
 
          Margin Deposit
(77
)
 
64

 
 
          Other Current Assets and Liabilities
12

 
(71
)
 
 
Employee Benefit Plan Funding and Related Payments
(85
)
 
(64
)
 
 
Other
33

 
(9
)
 
 
Net Cash Provided By (Used In) Operating Activities
2,492

 
2,733

 
 
CASH FLOWS FROM INVESTING ACTIVITIES


 
 
 
 
Additions to Property, Plant and Equipment
(3,028
)
 
(3,046
)
 
 
Purchase of Emissions Allowances and RECs
(111
)
 
(90
)
 
 
Proceeds from Sales of Trust Investments
1,085

 
1,013

 
 
Purchases of Trust Investments
(1,100
)
 
(1,029
)
 
 
Other
41

 
48

 
 
Net Cash Provided By (Used In) Investing Activities
(3,113
)
 
(3,104
)
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
Net Change in Commercial Paper and Loans
(123
)
 
(186
)
 
 
Issuance of Long-Term Debt
2,050

 
1,125

 
 
Redemption of Long-Term Debt
(750
)
 

 
 
Cash Dividends Paid on Common Stock
(682
)
 
(652
)
 
 
Other
(83
)
 
(62
)
 
 
Net Cash Provided By (Used In) Financing Activities
412

 
225

 
 
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash
(209
)
 
(146
)
 
 
Cash, Cash Equivalents and Restricted Cash at Beginning of Period
315

 
426

 
 
Cash, Cash Equivalents and Restricted Cash at End of Period
$
106

 
$
280

 
 
Supplemental Disclosure of Cash Flow Information:
 
 
 
 
 
Income Taxes Paid (Received)
$
64

 
$
(16
)
 
 
Interest Paid, Net of Amounts Capitalized
$
292

 
$
261

 
 
Accrued Property, Plant and Equipment Expenditures
$
543

 
$
604

 
 
 
 
 
 
 
See Notes to Condensed Consolidated Financial Statements.

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

 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
 
September 30,
 
September 30,
 
 
 
2018
 
2017
 
2018
 
2017
 
 
OPERATING REVENUES
$
1,595

 
$
1,530

 
$
4,826

 
$
4,749

 
 
OPERATING EXPENSES
 
 
 
 
 
 
 
 
 
Energy Costs
593

 
543

 
1,863

 
1,793

 
 
Operation and Maintenance
389

 
357

 
1,133

 
1,086

 
 
Depreciation and Amortization
192

 
169

 
569

 
506

 
 
Total Operating Expenses
1,174

 
1,069

 
3,565

 
3,385

 
 
OPERATING INCOME
421

 
461

 
1,261

 
1,364

 
 
Net Gains (Losses) on Trust Investments

 

 

 
2

 
 
Other Income (Deductions)
21

 
22

 
61

 
65

 
 
Non-Operating Pension and OPEB Credits (Costs)
14

 
(2
)
 
44

 
(5
)
 
 
Interest Expense
(83
)
 
(79
)
 
(246
)
 
(223
)
 
 
INCOME BEFORE INCOME TAXES
373

 
402

 
1,120

 
1,203

 
 
Income Tax Expense
(95
)
 
(156
)
 
(292
)
 
(450
)
 
 
NET INCOME
$
278

 
$
246

 
$
828

 
$
753

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

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


 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
 
September 30,
 
September 30,
 
 
 
2018
 
2017
 
2018
 
2017
 
 
NET INCOME
$
278

 
$
246

 
$
828

 
$
753

 
 
Unrealized Gains (Losses) on Available-for-Sale Securities, net of tax (expense) benefit of $0, $0, $0 and $1 for the three and nine months ended 2018 and 2017, respectively
(1
)
 

 
(1
)
 
(1
)
 
 
COMPREHENSIVE INCOME
$
277

 
$
246

 
$
827

 
$
752

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

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

 
 
 
 
 
 
 
 
September 30,
2018
 
December 31,
2017
 
 
ASSETS
 
 
CURRENT ASSETS

 
 
 
 
Cash and Cash Equivalents
$
25

 
$
242

 
 
Accounts Receivable, net of allowances of $56 in 2018 and $59 in 2017
842

 
882

 
 
Accounts Receivable—Affiliated Companies
55

 

 
 
Unbilled Revenues
155

 
296

 
 
Materials and Supplies
200

 
197

 
 
Prepayments
117

 
44

 
 
Regulatory Assets
317

 
211

 
 
Other
26

 
4

 
 
Total Current Assets
1,737

 
1,876

 
 
PROPERTY, PLANT AND EQUIPMENT
30,997

 
29,117

 
 
Less: Accumulated Depreciation and Amortization
(6,241
)
 
(6,101
)
 
 
Net Property, Plant and Equipment
24,756

 
23,016

 
 
NONCURRENT ASSETS
 
 
 
 
 
Regulatory Assets
3,761

 
3,222

 
 
Long-Term Investments
278

 
280

 
 
Rabbi Trust Fund
46

 
46

 
 
Other
116

 
114

 
 
Total Noncurrent Assets
4,201

 
3,662

 
 
TOTAL ASSETS
$
30,694

 
$
28,554

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

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

 
 
 
 
 
 
 
 
September 30,
2018
 
December 31,
2017
 
 
LIABILITIES AND CAPITALIZATION
 
 
CURRENT LIABILITIES
 
 
 
 
 
Long-Term Debt Due Within One Year
$
500

 
$
750

 
 
Commercial Paper and Loans
40

 

 
 
Accounts Payable
666

 
728

 
 
Accounts Payable—Affiliated Companies
164

 
340

 
 
Accrued Interest
96

 
78

 
 
Clean Energy Program
187

 
128

 
 
Obligation to Return Cash Collateral
130

 
129

 
 
Regulatory Liabilities
303

 
47

 
 
Other
367

 
311

 
 
Total Current Liabilities
2,453

 
2,511

 
 
NONCURRENT LIABILITIES
 
 
 
 
 
Deferred Income Taxes and ITC
3,718

 
3,391

 
 
OPEB Costs
1,052

 
1,103

 
 
Accrued Pension Costs
171

 
226

 
 
Regulatory Liabilities
3,286

 
2,948

 
 
Environmental Costs
271

 
283

 
 
Asset Retirement Obligations
215

 
212

 
 
Long-Term Accrued Taxes
67

 
91

 
 
Other
118

 
114

 
 
Total Noncurrent Liabilities
8,898

 
8,368

 
 
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 10)


 


 
 
CAPITALIZATION
 
 
 
 
 
LONG-TERM DEBT
8,682

 
7,841

 
 
STOCKHOLDER’S EQUITY
 
 
 
 
 
Common Stock; 150 shares authorized; issued and outstanding, 2018 and 2017—132 shares
892

 
892

 
 
Contributed Capital
1,095

 
1,095

 
 
Basis Adjustment
986

 
986

 
 
Retained Earnings
7,689

 
6,861

 
 
Accumulated Other Comprehensive Income
(1
)
 

 
 
Total Stockholder’s Equity
10,661

 
9,834

 
 
Total Capitalization
19,343

 
17,675

 
 
TOTAL LIABILITIES AND CAPITALIZATION
$
30,694

 
$
28,554

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

9


Table of Contents

PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Millions
(Unaudited)
 
 
 
 
 
 
 
 
Nine Months Ended
 
 
 
September 30,
 
 
 
2018
 
2017
 
 
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
  Net Income
$
828

 
$
753

 
 
Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:
 
 
 
 
 
Depreciation and Amortization
569

 
506

 
 
Provision for Deferred Income Taxes and ITC
330

 
497

 
 
Non-Cash Employee Benefit Plan Costs
28

 
37

 
 
Cost of Removal
(121
)
 
(72
)
 
 
Net Change in Regulatory Assets and Liabilities
(35
)
 
(121
)
 
 
Net Change in Certain Current Assets and Liabilities:

 
 
 
 
Accounts Receivable and Unbilled Revenues
184

 
136

 
 
Materials and Supplies
(3
)
 
(13
)
 
 
Prepayments
(73
)
 
(106
)
 
 
Accounts Payable
(7
)
 
(37
)
 
 
Accounts Receivable/Payable—Affiliated Companies, net
(232
)
 
(61
)
 
 
Other Current Assets and Liabilities
10

 
(14
)
 
 
Employee Benefit Plan Funding and Related Payments
(73
)
 
(55
)
 
 
Other
(8
)
 
(58
)
 
 
Net Cash Provided By (Used In) Operating Activities
1,397

 
1,392

 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
Additions to Property, Plant and Equipment
(2,213
)
 
(2,118
)
 
 
Proceeds from Sales of Trust Investments
15

 
33

 
 
Purchases of Trust Investments
(17
)
 
(34
)
 
 
Solar Loan Investments
(15
)
 
(2
)
 
 
Other
6

 
7

 
 
Net Cash Provided By (Used In) Investing Activities
(2,224
)
 
(2,114
)
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
Net Change in Short-Term Debt
40

 

 
 
Issuance of Long-Term Debt
1,350

 
425

 
 
 Contributed Capital

 
150

 
 
Redemption of Long-Term Debt
(750
)
 

 
 
Other
(14
)
 
(5
)
 
 
Net Cash Provided By (Used In) Financing Activities
626

 
570

 
 
Net Increase (Decrease) In Cash, Cash Equivalents and Restricted Cash
(201
)
 
(152
)
 
 
Cash, Cash Equivalents and Restricted Cash at Beginning of Period
244

 
393

 
 
Cash, Cash Equivalents and Restricted Cash at End of Period
$
43

 
$
241

 
 
Supplemental Disclosure of Cash Flow Information:
 
 
 
 
 
Income Taxes Paid (Received)
$
60

 
$
(107
)
 
 
Interest Paid, Net of Amounts Capitalized
$
223

 
$
208

 
 
Accrued Property, Plant and Equipment Expenditures
$
375

 
$
363

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

10


Table of Contents


PSEG POWER LLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Millions
(Unaudited)

 
 
 
 
 
 
 
 
 
 
 

Three Months Ended
 
Nine Months Ended
 
 
 
September 30,
 
September 30,
 
 
 
2018
 
2017
 
2018
 
2017
 
 
OPERATING REVENUES
$
868

 
$
846

 
$
3,038

 
$
3,033

 
 
OPERATING EXPENSES
 
 
 
 
 
 
 
 
 
Energy Costs
431

 
330

 
1,550

 
1,408

 
 
Operation and Maintenance
231

 
229

 
745

 
717

 
 
Depreciation and Amortization
94

 
76

 
260

 
1,191

 
 
Total Operating Expenses
756

 
635

 
2,555

 
3,316

 
 
OPERATING INCOME (LOSS)
112

 
211

 
483

 
(283
)
 
 
Income from Equity Method Investments
5

 
3

 
12

 
11

 
 
Net Gains (Losses) on Trust Investments
44

 
19

 
30

 
62

 
 
Other Income (Deductions)
14

 
11

 
38

 
34

 
 
Non-Operating Pension and OPEB Credits (Costs)
4

 
2

 
11

 
6

 
 
Interest Expense
(29
)
 
(12
)
 
(47
)
 
(41
)
 
 
INCOME (LOSS) BEFORE INCOME TAXES
150

 
234

 
527

 
(211
)
 
 
Income Tax Benefit (Expense)
(25
)
 
(98
)
 
(127
)
 
80

 
 
NET INCOME (LOSS)
$
125

 
$
136

 
$
400

 
$
(131
)
 
 
 
 
 
 
 


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

11


Table of Contents

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

 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
 
 
 
September 30,
 
September 30,
 
 
 
2018
 
2017
 
2018
 
2017
 
 
NET INCOME (LOSS)
$
125

 
$
136

 
$
400

 
$
(131
)
 
 
Other Comprehensive Income (Loss), net of tax
 
 
 
 
 
 
 
 
 
Unrealized Gains (Losses) on Available-for-Sale Securities, net of tax (expense) benefit of $2, $(14), $13 and $(41) for the three and nine months ended 2018 and 2017, respectively
(4
)
 
15

 
(19
)
 
44

 
 
Pension/OPEB adjustment, net of tax (expense) benefit of $(3), $(4), $(8) and $(11) for the three and nine months ended 2018 and 2017, respectively
7

 
5

 
19

 
15

 
 
Other Comprehensive Income (Loss), net of tax
3

 
20

 

 
59

 
 
COMPREHENSIVE INCOME (LOSS)
$
128

 
$
156

 
$
400

 
$
(72
)
 
 
 
 
 
 
 
 
 
 
 
See disclosures regarding PSEG Power LLC included in the Notes to Condensed Consolidated Financial Statements.

12


Table of Contents

PSEG POWER LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
Millions
(Unaudited)

 
 
 
 
 
 
 
 
September 30,
2018
 
December 31,
2017
 
 
ASSETS
 
 
CURRENT ASSETS
 
 
 
 
 
Cash and Cash Equivalents
$
41

 
$
32

 
 
Accounts Receivable
343

 
380

 
 
Accounts Receivable—Affiliated Companies
121

 
221

 
 
Short-Term Loan to Affiliate
119

 

 
 
Fuel
329

 
289

 
 
Materials and Supplies, net
386

 
376

 
 
Derivative Contracts
11

 
29

 
 
Prepayments
20

 
11

 
 
Other
6

 
3

 
 
Total Current Assets
1,376

 
1,341

 
 
PROPERTY, PLANT AND EQUIPMENT
12,277

 
11,755

 
 
Less: Accumulated Depreciation and Amortization
(3,408
)
 
(3,159
)
 
 
Net Property, Plant and Equipment
8,869

 
8,596

 
 
NONCURRENT ASSETS
 
 
 
 
 
NDT Fund
2,096

 
2,133

 
 
Long-Term Investments
88

 
87

 
 
Goodwill
16

 
16

 
 
Other Intangibles
107

 
114

 
 
Rabbi Trust Fund
57

 
57

 
 
Derivative Contracts
2

 
7

 
 
Other
70

 
67

 
 
Total Noncurrent Assets
2,436

 
2,481

 
 
TOTAL ASSETS
$
12,681

 
$
12,418

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

13


Table of Contents

PSEG POWER LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
Millions
(Unaudited)

 
 
 
 
 
 
 
 
September 30,
2018
 
December 31,
2017
 
 
LIABILITIES AND MEMBER’S EQUITY
 
 
CURRENT LIABILITIES
 
 
 
 
 
Long-Term Debt Due Within One Year
$
250

 
$
250

 
 
Accounts Payable
465

 
712

 
 
Accounts Payable—Affiliated Companies
21

 
57

 
 
Short-Term Loan from Affiliate

 
281

 
 
Derivative Contracts
13

 
16

 
 
Accrued Interest
51

 
20

 
 
Other
69

 
99

 
 
Total Current Liabilities
869

 
1,435

 
 
NONCURRENT LIABILITIES
 
 
 
 
 
Deferred Income Taxes and ITC
1,577

 
1,406

 
 
Asset Retirement Obligations
841

 
810

 
 
OPEB Costs
289

 
283

 
 
Derivative Contracts
2

 
5

 
 
Accrued Pension Costs
161

 
184

 
 
Long-Term Accrued Taxes
1

 
52

 
 
Other
140

 
140

 
 
Total Noncurrent Liabilities
3,011

 
2,880

 
 
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 10)


 


 
 
LONG-TERM DEBT
2,834

 
2,136

 
 
MEMBER’S EQUITY

 
 
 
 
Contributed Capital
2,214

 
2,214

 
 
Basis Adjustment
(986
)
 
(986
)
 
 
Retained Earnings
5,086

 
4,911

 
 
Accumulated Other Comprehensive Loss
(347
)
 
(172
)
 
 
Total Member’s Equity
5,967

 
5,967

 
 
TOTAL LIABILITIES AND MEMBER’S EQUITY
$
12,681

 
$
12,418

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

14


Table of Contents

PSEG POWER LLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Millions
(Unaudited)

 
 
 
 
 
 
 
 
Nine Months Ended
 
 
 
September 30,
 
 
 
2018
 
2017
 
 
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
Net Income (Loss)
$
400

 
$
(131
)
 
 
Adjustments to Reconcile Net Income (Loss) to Net Cash Flows from Operating Activities:
 
 
 
 
 
Depreciation and Amortization
260

 
1,191

 
 
Amortization of Nuclear Fuel
143

 
152

 
 
Provision for Deferred Income Taxes and ITC
177

 
(259
)
 
 
Interest Accretion on Asset Retirement Obligation
31

 
23

 
 
Net Realized and Unrealized (Gains) Losses on Energy Contracts and Other Derivatives
78

 
8

 
 
Emission Allowances and Renewable Energy Credit (REC) Compliance Accrual

74

 
79

 
 
Non-Cash Employee Benefit Plan Costs
17

 
21

 
 
Net (Gains) Losses and (Income) Expense from NDT Fund
(62
)
 
(86
)
 
 
Net Change in Certain Current Assets and Liabilities:
 
 
 
 
 
Fuel, Materials and Supplies
(50
)
 
(32
)
 
 
Margin Deposit
(77
)
 
64


 
Accounts Receivable
42

 
19

 
 
Accounts Payable
(22
)
 
(32
)
 
 
Accounts Receivable/Payable—Affiliated Companies, net
65

 
205

 
 
Other Current Assets and Liabilities
(11
)
 
11

 
 
Employee Benefit Plan Funding and Related Payments
(7
)
 
(5
)
 
 
Other
(53
)
 
21

 
 
Net Cash Provided By (Used In) Operating Activities
1,005

 
1,249

 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
Additions to Property, Plant and Equipment
(800
)
 
(903
)
 
 
Purchase of Emissions Allowances and RECs
(111
)
 
(90
)
 
 
Proceeds from Sales of Trust Investments
1,024

 
886

 
 
Purchases of Trust Investments
(1,037
)
 
(900
)
 
 
Short-Term Loan—Affiliated Company
(119
)
 
86

 
 
Other
33

 
37

 
 
Net Cash Provided By (Used In) Investing Activities
(1,010
)
 
(884
)
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
Issuance of Long-Term Debt
700

 

 
 
Cash Dividend Paid
(400
)
 
(350
)
 
 
Short-Term Loan—Affiliated Company
(281
)
 

 
 
Other
(5
)
 
(4
)
 
 
Net Cash Provided By (Used In) Financing Activities
14

 
(354
)
 
 
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash
9

 
11

 
 
Cash, Cash Equivalents and Restricted Cash at Beginning of Period
32

 
11

 
 
Cash, Cash Equivalents and Restricted Cash at End of Period
$
41

 
$
22

 
 
Supplemental Disclosure of Cash Flow Information:
 
 
 
 
 
Income Taxes Paid (Received)
$
31

 
$
75

 
 
Interest Paid, Net of Amounts Capitalized
$
32

 
$
30

 
 
Accrued Property, Plant and Equipment Expenditures
$
168

 
$
241

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

15

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









Note 1. Organization, Basis of Presentation and Significant Accounting Policies
Organization
Public Service Enterprise Group Incorporated (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:
Public Service Electric and Gas Company (PSE&G)—which is a 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 Federal Energy Regulatory Commission (FERC). PSE&G also invests in solar generation projects and energy efficiency and related programs in New Jersey, which are regulated by the BPU.
PSEG Power LLC (Power)—which is a multi-regional energy supply company that integrates the operations of its merchant nuclear and fossil generating assets with its power marketing businesses and fuel supply functions through competitive energy sales in well-developed energy markets primarily in the Northeast and Mid-Atlantic United States through its principal direct wholly owned subsidiaries. In addition, Power owns and operates solar generation in various states. Power’s subsidiaries are subject to regulation by FERC, the Nuclear Regulatory Commission (NRC), the Environmental Protection Agency (EPA) and the states in which they operate.
PSEG’s other direct wholly owned subsidiaries are: PSEG Long Island LLC (PSEG LI), which operates the Long Island Power Authority’s (LIPA) electric transmission and distribution (T&D) system under an Operations Services Agreement (OSA); PSEG Energy Holdings L.L.C. (Energy Holdings), which primarily has investments in leveraged leases; and PSEG Services Corporation (Services), which provides certain management, administrative and general services to PSEG and its subsidiaries at cost.
Basis of Presentation
The 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, 2017.
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, 2017.
Significant Accounting Policies
Cash, Cash Equivalents and Restricted Cash
Cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less. Restricted cash consists primarily of deposits received related to various construction projects at PSE&G.
The following provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts for the beginning (December 31, 2017) and ending periods shown in the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2018.

16

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








 
 
 
 
 
 
 
 
 
 
 
 
PSE&G
 
Power
 
Other (A)
 
Consolidated
 
 
 
Millions
 
 
As of December 31, 2017
 
 
 
 
 
 
 
 
 
Cash and Cash Equivalents
$
242

 
$
32

 
$
39

 
$
313

 
 
Restricted Cash in Other Current Assets