PSE&G 2006 Annual Report Download - page 12

$2.00
$1.00
$0.00
$3.00
$4.00 $3.71
Excess of 10% Growth
$5.00
$6.00
2006 ACTUAL*
$4.60–$5.00
2007 GUIDANCE 2008 OUTLOOK
pseg operating earnings per share
Another priority is to continue progress
at the Salem and Hope Creek nuclear
generating stations. On January 1, 2007
the senior management team at Salem
and Hope Creek became PSEG employ-
ees as part of our plan to resume direct
management at the stations before
the expiration of our Nuclear Operating
Services Agreement with Exelon. This
was an important step toward assuring
Salem and Hope Creek continue on their
journey toward operational excellence
under the guidance of one of the most
capable and experienced management
teams in the industry.
We recently advised the Nuclear
Regulatory Commission that we intend
to pursue life extension of all three
nuclear units at Salem and Hope Creek
in 2009. We are determined to continue
building the type of nuclear expertise
that will contribute clean, reliable power
to meet the energy needs of New Jersey
and surrounding areas for years to come.
We are also focusing on improving our
balance sheet by further reducing debt.
Cash flow from operations was $1.9
billion in 2006, enabling us to achieve
a meaningful reduction in our financial
leverage. We are quite comfortable
with our liquidity position, with available
liquidity at year-end 2006 exceeding
$3 billion.
Approaching Investment Decisions with
Discipline…from a Position of Strength
While focused on our near-term objec-
tives, we are also hard at work planning
how to sustain a strong growth trajectory
over the long term. The outlook for
2007 and 2008 is extremely bright. As
Jim Ferland mentioned in his letter, we
are anticipating about a one-third improve-
ment in operating earnings in 2007 with
growth in 2008 in excess of 10 percent.
Our company is well served by having one
of the nation’s most diverse generation
fleets, giving us the ability to meet energy
needs in a wide variety of conditions,
around the clock and throughout the year.
We expect cash flow to remain robust
based on a combination of strong opera-
tions, the prices we have contracted for
our anticipated energy supply, and positive
developments in electric capacity mar-
kets. This should yield ample resources to
keep strengthening our financial position,
thereby providing more and better options
for future growth. The advantages of diver-
sification will remain an important strategic
consideration for us.
We intend to pursue opportunities in
new energy markets as they develop —
concentrating on areas where our expertise
lies. Global climate change and other
environmental concerns will create oppor-
tunities for new, clean generation. In the
fossil generation area, we are examining
questions such as at what point might
conditions be right for building new plants
or acquiring them. Also, nuclear power
is increasingly recognized as an abundant
source of clean, emissions-free electric
generation that promotes energy independ-
ence while combating global warming. We
will be ready to act on this option for
future growth if and when the time comes
to build additional nuclear generation.
At PSE&G, we will also keep an eye on
growth opportunities — making investments
that further improve customer service and
produce fair returns for shareholders. We
are eager to take advantage of advances
in metering technology to better enable
energy efficiency as well as improvements
in our operations without compromising
* See 2006 financial highlights on page one for GAAP reconciliation.