PSE&G 2006 Annual Report Download - page 7

pseg 2006 annual report pp. 4/5
PSEG Energy Holdings
PSEG Energy Holdings, our business with
a mix of domestic and international energy
assets and investments, had its most profit-
able year ever in 2006. It enjoyed especially
robust earnings from its two 1,000-mega-
watt combined-cycle generating facilities
in Texas, due to a combination of strong
operations and record electric demand
there during an especially hot summer.
Holdings also made considerable progress
with its long-term plan to reduce interna-
tional exposure, pay down debt and deliver
returns to the parent company. In 2006
it divested a number of non-strategic inter-
national assets, enabling it to retire debt
and return $520 million to the parent com-
pany. During the past three years Holdings’
main subsidiaries — PSEG Resources and
PSEG Global — sold assets for approxi-
mately $1.5 billion, close to $200 million
over the assets’ book value. PSEG Global’s
portfolio has been effectively reshaped dur-
ing this period with a view to reducing risk
going forward. Fully one half of its earn-
ings in 2006 came from U.S.-based
assets, with most of the rest from electric
distribution companies in Chile and Peru.
A Smooth Transition
In 2006, we also prepared the ground for
a smooth transition to new leadership at
your company. Ralph Izzo, who has served
superbly in many senior management
positions during the past 15 years, was
elected president and a director in October
2006. Ralph is well qualified to lead
your company upon my retirement at the
end of March 2007. In Ralph’s letter
which follows my own, he has more to say
about key business goals as well as his
vision for your company.
The 20-plus years in which I have been
privileged to lead your company have
been productive and eventful. There have
been many changes during this time,
including a new, constructive opening to
market forces. PSEG not only participated
in the process that brought competition to
our industry, but in many ways has helped
lead it. For all the changes, I am also
struck by how remarkably steady our course
has been. We remain a company known
for keeping our commitments to customers,
employees, communities and, not least,
shareholders who invest their hard-earned
money with us.
In closing, I want to pay tribute to your
company’s dedicated workforce, past and
present. Our reputation as a reliable,
profitable, well-run company owes more to
our employees than I can possibly say
in this letter. They have met many chal-
lenges, adjusted to many changes and
contributed in innumerable ways to making
PSEG the great company it is. I am
confident that under Ralph Izzo’s leadership
they will write a new and even brighter
chapter in PSEG’s 100-year-plus history.
It has been my privilege to work with them
and I wish them every continued success.
Sincerely,
E. James Ferland
Chairman of the Board and
Chief Executive Officer
Public Service Enterprise Group
February 28, 2007
We remain a company
known for keeping our
commitments to customers,
employees, communities
and, not least, shareholders
who invest their hard-
earned money with us.
PSE&G
Our New Jersey energy delivery company,
PSE&G, has long been known for out-
standing safety and reliability. It further
improved operations to the point that
in 2005 and again in 2006 it was recog-
nized by PA Consulting, a well-known
benchmarking firm, as the nation’s most
reliable electric utility. PSE&G has received
similar recognition as the reliability leader
in the Mid-Atlantic region five years in
a row.
In 2006, PSE&G employees again rose to
the occasion in restoring customers safely
following six major storms and periods
of record heat that pushed electric demand
to an all-time peak. They performed
superbly on both the gas and electric sides
of the business.
Quality service has long fostered an envi-
ronment in which PSE&G is fairly compen-
sated for our large, necessary investments
in energy infrastructure. The electric and
gas rate relief approved by the New Jersey
Board of Public Utilities in November
2006 will help PSE&G’s long-term financial
picture — with a fair return for our
investors and resources to support our abil-
ity to provide safe, reliable service.