PSE&G 2004 Annual Report Download - page 8

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PSE&G benefited from the $159.5 million electric distribution
rate case that became effective in August 2003, reflecting our
substantial investments in New Jersey’s utility infrastructure.
Even with the new rates, there has been an extraordinary degree
of rate stability over many years for residential customers.
PSEG Energy Holdings, our business with a mix of international
and domestic energy operations and investments, produced
strong cash flow and earnings from existing operations and
investments as well as selective asset sales. Its 2004 results
were consistent with our strategy of focusing this business on
profitability, cash generation and risk reduction. Overall, this
business realized over $300 million from asset sales in 2004.
PSEG Global—the operational arm of PSEG Energy Holdings—
sold several overseas facilities, including its entire equity interest
in several power plants in China and a power plant in Tunisia,
and sold part of its interest in a distribution company in Peru.
PSEG Global also rounded out its ownership of two 1,000-
megawatt generating plants in Texas by acquiring at minimal
cost the 50 percent interest of its partner in these facilities.
PSEG Resources—the passive investment arm of PSEG Energy
Holdings—continued to produce solid earnings and cash flow,
as it has since its establishment in 1985. The overall credit
quality of its investments was further enhanced by the early
termination of its lease on the Collins facility in Illinois.
A key area of accomplishment in 2004 involved our continued
steps to maintain a solid financial position. We further
strengthened our balance sheet. Our liquidity has remained
strong. We increased the capacity and duration of our credit
facilities while only tapping them to a limited extent. And we
have only a limited number of debt maturities on the horizon.
2005 will be a critical transition year in which we will be
working intensively with Exelon to prepare for a successful
merger. The Boards of Directors of PSEG and Exelon unani-
mously approved the merger agreement, and recommended
that shareholders from both companies approve it. From time
to time, you will be receiving more information about the
merger. We expect that the shareholder meeting to vote
on the transaction will occur in the second quarter of 2005.
We hope to complete the transaction by the first quarter
of 2006, after required regulatory approvals are obtained.
As committed as we are to combining with Exelon, we
recognize that a merger agreement in our industry is subject
to many layers of approval. We are very aware that we must
keep ourselves positioned with a viable stand-alone strategy.