PSE&G 2006 Annual Report Download - page 6

PSEG
S&P 500
DJ Utilities
0
50
100
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1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
10-year cumulative total comparitive returns
as of december 29, 2006
Among the major reasons for this:
•Our Hope Creek and Salem nuclear sta-
tions have greatly improved performance,
setting new plant records for electric gen-
eration in 2005 and again in 2006;
•We have continued to improve the balance
sheet, strengthening our financial position;
•We further reduced international risk and
exposure by selling a number of overseas
assets; and
•We are also benefiting from a period of
higher energy prices.
These developments have not gone unno-
ticed by the financial community. Our
stock price was approximately 50 percent
higher at year end 2006 than it was
prior to the announcement of the proposed
merger in mid-December 2004.
Investors have continued to benefit as well
from our emphasis on long-term shareholder
value: The value of your investment dou-
bled during the past five years, assuming
you held shares throughout the period.
Dividends are one of the key ways we
have traditionally rewarded shareholders.
In 2006, we paid dividends once again,
extending PSEG’s record of paying annual
dividends to 100 consecutive years. We
increased our dividend modestly in 2006
and again early in 2007, bringing our
annual indicated dividend rate to $2.34
per share. We expect to continue modest
increases in the dividend as our financial
conditions allows.
Energy prices in 2006 were again volatile,
but generally remained at significantly
higher levels than three years ago. Strong
operations, a period of higher energy
prices and an improving picture for elec-
tric capacity markets are contributing to
a very positive trend for your company. In
addition to being solidly positioned for
growth in 2007 and 2008, we continue to
benefit from the stability provided by a
strong, balanced mix of energy businesses.
PSEG Power
PSEG Power, our large wholesale energy
supply business, had an outstanding
year in 2006. It continued to strengthen
its position as our main earnings driver.
Power has a low-cost generation fleet of
nuclear and fossil units, and is reaping
benefits from strong operations in a favor-
able pricing environment. As Power’s
older contracts for its output have rolled
off, they have been replaced by newer
contracts at much higher prices, boosting
profitability.
Our Salem and Hope Creek nuclear gener-
ating facilities in southern New Jersey
continued their excellent operations in
2006. The plants have been producing more
energy than ever before; they have set
new refueling duration records, including a
world record at one of the Salem units;
and have made significant and measura-
ble improvements in a broad range of
other key operational areas. Importantly, this
strong performance has been recognized
by the Nuclear Regulatory Commission,
which oversees the industry, and INPO, the
nuclear industry’s evaluation arm.
Our fossil units also significantly improved
performance and reliability in 2006, gen-
erating all-time highs for output. In addition
to responding well in the peak summer
season, our fossil operations focused on
long-term maintenance to lay the founda-
tion for continued strong performance.
PSEG’s total return for the last 10 years has outpaced two major market indices. This chart shows the value at
each year’s end of $100 invested at year end 1996. The value assumes reinvested dividends.