PSE&G 2005 Annual Report Download - page 6

4PSEG 2005
Our long-term emphasis on creating shareholder value
again benefited investors:
■In 2005, PSEG achieved a total shareholder return of
approximately 30 percent, outpacing major national and
industry indices by a wide margin.
■Our performance continues to compare favorably with
the same indices over a longer period: We delivered a
total shareholder return of more than 70 percent for the
five years ending December 31, 2005.
Dividends continued to be a key way we reward our
shareholders: 2005 marked the 98th consecutive year
that PSEG paid annual dividends. We again increased
our dividend modestly in 2005, raising it from an annual
rate of $2.20 to $2.24 per share. Our Board of Directors
recently approved a further one-cent increase in the
quarterly dividend, raising the annual indicated dividend
rate to $2.28 per share. Looking ahead, the merger
agreement provides that our shareholders will be kept
whole with respect to the dividend payout.
Operating earnings, which exclude merger-related
costs, were $3.65 per share in 2005, well above 2004
operating earnings of $3.24 per share. All of our
businesses performed well.
2005 was marked by dramatic changes in the natural
gas and electricity markets. In particular, natural gas
prices more than doubled in 2005, leading to unavoidable
increases in gas supply costs which we strove to minimize
on behalf of our New Jersey utility customers. Twice
during the year we had to pass on these increases,
even as we continued working to hold the line on them.
PSEG Power: Improved Operations
While higher natural gas prices affected all purchasers
of fuel, including our company, we are fortunate in having
a large domestic generation business whose electric
output mostly comes from low-cost nuclear and coal
units. This business, PSEG Power, benefited significantly
in 2005 from improved operations in this environment of
higher-trending electric prices. PSEG Power’s five nuclear
units achieved a combined capacity factor of 90 percent
in 2005, compared to 82 percent in 2004, and its coal
units improved year-over-year availability by nine percent.
The improvements at our Hope Creek and Salem
nuclear stations are an especially encouraging and
important development. This progress owes much to
our collaboration with Exelon, which since January 2005
has been managing the stations under a nuclear oper-
ating services agreement. Exelon owns and operates
the nation’s largest nuclear fleet. Its expertise and
depth of resources in nuclear operations are producing
substantial benefits at Hope Creek and Salem.
Milestones in Nuclear Progress
A number of milestones marked our nuclear progress
in 2005:
■We improved operations by many performance measures,
with continued attention to safety as our number-one pri-
ority. The Hope Creek and Salem stations generated more
electricity in 2005 than in any other year in their history.
■We executed planned-refueling outages at our Salem
units – both involving reactor head replacements – and
set new records for ourselves and the industry. In the
spring Salem Unit 2 completed its best-ever refueling
outage in 35 days. Applying lessons learned in achieving
this positive outcome, Salem 1 completed its fall outage
in 25 days and 6 hours – a new world record for a reac-
tor head replacement outage.
■We achieved long, successful runs: Both Salem units
were simultaneously online for 152 days prior to the fall
outage at Salem Unit 1.