Public Service Enterprise Group (NYSE: PEG) reported Net Income for the third quarter of 2020 of $575 million, or $1.14 per share, compared to Net Income of $403 million, or $0.79 per share, in the third quarter of 2019. Non-GAAP Operating Earnings for the third quarter of 2020 were $488 million, or $0.96 per share, compared to non-GAAP Operating Earnings for the third quarter of 2019 of $495 million, or $0.98 per share. Non-GAAP results for the third quarter exclude items shown in Attachments 8 and 9.
Ralph Izzo, chairman, president and chief executive officer commented, "We delivered a solid quarter at both PSE&G and PSEG Power and remain on track to deliver full year results within our updated range which removes five cents per share from the lower end. Last month, the New Jersey Board of Public Utilities (NJBPU) approved the settlement of our Clean Energy Future – Energy Efficiency (CEF-EE) filing. PSE&G was authorized to invest $1 billion over three years in programs that will allow us to work toward universal access to energy efficiency for all New Jersey customers. This will lower customer bills and shrink their carbon footprint. PSE&G's CEF-EE investment program will also establish significant job training programs and create over 3,200 clean energy jobs, as it also helps New Jersey avoid 8 million metric tons of carbon emissions through 2050."
Izzo continued, "In early August, Tropical Storm Isaias wreaked havoc with powerful winds and heavy rains in a fast moving storm that left approximately 575,000 of our New Jersey and 420,000 Long Island customers without power. This was the most damaging storm experienced in the region since Superstorm Sandy. PSE&G and PSEG LI worked around the clock alongside nearly 3,000 mutual aid personnel in New Jersey and over 5,000 in Long Island to restore 90% and 80% of affected customers in NJ and LI within 72 hours, respectively. Our commitment to safely providing reliable service to all our customers remains PSEG's core focus.
Our service area experienced significantly warmer weather during the first half of the summer that helped to moderate the load loss seen earlier in the year from the ongoing economic impacts of the COVID-19 pandemic. New Jersey has aggressively managed its positivity rates since the spring with some recent resurgence and continues a phased reopening of businesses, schools, and activities, which will determine the pace of economic recovery.
PSEG is also continuing efforts to optimize strategic alternatives for PSEG Power's non-nuclear generating fleet to accelerate the transformation of PSEG into a primarily regulated electric and gas utility focused on reliability and resiliency infrastructure, clean energy investments, methane reduction, and zero-carbon generation. We expect to begin marketing the non-nuclear assets later this year," said Izzo.
The following table provides a reconciliation of PSEG's Net Income to non-GAAP Operating Earnings for the third quarter. See Attachments 8 and 9 for a complete list of items excluded from Net Income in the determination of non-GAAP Operating Earnings.
PSEG Power's third quarter non-GAAP Operating Earnings were positively affected by several items that improved results by $0.04 per share compared to the year-ago quarter. The scheduled rise in PJM capacity revenue on June 1 increased non-GAAP Operating Earnings comparisons by $0.03 per share compared with Q3 2019. Reduced generation volumes lowered results by $0.02 per share versus Q3 2019. Re-contracting and market impacts reduced results by $0.02 per share versus the year-ago quarter. Gas operations were $0.02 per share higher. Lower O&M expense was $0.03 per share favorable compared with last year's third quarter, reflecting lower fossil maintenance costs including the absence of a major Linden outage in Q3 2019. Lower interest and lower depreciation expense combined to add $0.01 per share versus the year-ago quarter. New Jersey implemented an increase in a corporate surtax to 2.5% during the quarter, lowering comparisons by $0.01 per share to third quarter 2019.
Total generation output declined by 9% to 14.9 TWh for the third quarter of 2020, reflecting the sale of the Keystone and Conemaugh units last fall. PSEG Power's CCGT fleet produced 6.7 TWh of output, down 7%, reflecting lower market demand driven by ongoing COVID-19 related restrictions on economic activity in the state. The nuclear fleet operated at an average capacity factor of 95.7% for the quarter, producing 8.2 TWh, up 5% over Q3 2019, and representing 55% of total generation.
PSEG Power continues to forecast total output for 2020 of 50 - 52 TWh. For the remainder of 2020, Power has hedged approximately 95% - 100% of production at an average price of $36 per MWh. For 2021, Power has hedged 75% - 80% of forecast production of 48 - 50 TWh at an average price of $35 per MWh. Power is also forecasting output for 2022 of 48 - 50 TWh. Approximately 35% – 40% of Power's output in 2022 is hedged at an average price of $34 per MWh.
We are updating both the forecast of PSEG Power's non-GAAP Operating Earnings for 2020 to a range of $385 million - $430 million (from $345 million - $435 million), and our estimate of non-GAAP Adjusted EBITDA to a range of $980 million to $1,045 million (from $950 million - $1,050 million).
PSEG Enterprise/Other
PSEG Enterprise/Other reported Net Income of $8 million ($0.02 per share) for the third quarter of 2020 compared to Net Income of $6 million ($0.01 per share) for the third quarter of 2019. Net Income for the quarter reflects ongoing contributions from PSEG Long Island and lower taxes that were partially offset by a loss on the sale of the Powerton and Joliet investments at Energy Holdings.
The forecast for PSEG Enterprise/Other for 2020 has been updated to a Net Loss of $10 million (from a Net Loss of $5 million).
Public Service Enterprise Group Inc. (PSEG) (NYSE: PEG) is a publicly traded diversified energy company with approximately 13,000 employees. Headquartered in Newark, N.J., PSEG's principal operating subsidiaries are: Public Service Electric and Gas Co. (PSE&G), PSEG Power and PSEG Long Island. PSEG is a Fortune 500 company included in the S&P 500 Index and has been named to the Dow Jones Sustainability Index for North America for 12 consecutive years (https://corporate.pseg.com).
From time to time, PSEG, PSE&G and PSEG Power release important information via postings on their corporate Investor Relations website athttps://investor.pseg.com. Investors and other interested parties are encouraged to visit the Investor Relations website to review new postings. You can also use the "Email Alerts" link athttps://investor.pseg.comto sign up for automatic email alerts regarding new postings.
Non-GAAP Financial Measures
Management uses non-GAAP Operating Earnings in its internal analysis, and in communications with investors and analysts, as a consistent measure for comparing PSEG's financial performance to previous financial results. Non-GAAP Operating Earnings exclude the impact of returns (losses) associated with the Nuclear Decommissioning Trust (NDT), Mark-to-Market (MTM) accounting and material one-time items.
Management believes the presentation of non-GAAP Adjusted EBITDA for PSEG Power is useful to investors and other users of our financial statements in evaluating operating performance because it provides them with an additional tool to compare business performance across companies and across periods. Management also believes that non-GAAP Adjusted EBITDA is widely used by investors to measure operating performance without regard to items such as income tax expense, interest expense and depreciation and amortization, which can vary substantially from company to company depending upon, among other things, the book value of assets, capital structure and whether assets were constructed or acquired. Non-GAAP Adjusted EBITDA also allows investors and other users to assess the underlying financial performance of our fleet before management's decision to deploy capital. Non-GAAP Adjusted EBITDA excludes the same items as our non-GAAP Operating Earnings measure as well as income tax expense, interest expense and depreciation and amortization.
See Attachments 8 and 9 for a complete list of items excluded from Net Income in the determination of non-GAAP Operating Earnings and non-GAAP Adjusted EBITDA. The presentation of non-GAAP Operating Earnings and non-GAAP Adjusted EBITDA is intended to complement, and should not be considered an alternative to the presentation of Net Income, which is an indicator of financial performance determined in accordance with GAAP. In addition, non-GAAP Operating Earnings and non-GAAP Adjusted EBITDA as presented in this release may not be comparable to similarly titled measures used by other companies.
Due to the forward looking nature of non-GAAP Operating Earnings and non-GAAP Adjusted EBITDA guidance, PSEG is unable to reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measure. Management is unable to project certain reconciling items, in particular MTM and NDT gains (losses), for future periods due to market volatility.
