PSE&G 2007 Annual Report Download - page 5

PSEG Annual Report 2007 | Page 3
We completed 2007 with operating earnings
in the upper half of our guidance range. Our
results were bolstered by a combination of strong
operations and favorable market conditions.
Our stock price doubled over the past two years.
Because of our stronger fi nancial situation, we
have been able to signifi cantly increase our
dividend. On January 15, 2008, PSEG’s board
of directors declared a 10 percent increase
in our dividend. This is the fi fth consecutive
year that PSEG increased its dividend and the
101st year in a row that PSEG or its pred-
ecessor companies paid dividends — a record
that few companies have equaled. It refl ects
a commitment to shareholders on which we
place great value.
With this higher dividend, our payout will
be in a range to provide fl exibility for further
dividend growth as well as new investment.
Although we expect to be in a position to grow
the dividend, future increases are expected
to be more modest as our fi nancial condition
may allow.
PSEG always has had a strong appeal to
individual shareholders, who comprise an im-
portant part of our ownership. With the interests
of smaller investors in mind, we announced
a two-for-one stock split at the same time as
our recent dividend increase. The split adjusts
the price of our stock to a level many smaller
shareholders may fi nd more affordable without
affecting shareholder value.
Each of our businesses contributed well to our
results in 2007:
PSEG Power
PSEG Power, our large generation business, is
a major wholesale electricity supplier with gen-
erating facilities in New Jersey, Pennsylvania,
Connecticut and New York State. Power has an
exceptionally well-positioned set of assets in the
markets where it competes. It has been driving
our earnings growth.
Power’s nuclear and fossil operations have
improved dramatically in recent years. Our nuclear
facilities, in particular, have never played a more
important role in providing clean, low-cost energy
for New Jersey and surrounding areas. In 2007,
our nuclear units achieved a capacity factor of
91.4 percent. We have in place the management
team and processes that allowed us to resume
independent operation of our nuclear facilities —
a signifi cant milestone toward our goal of long-
term nuclear excellence.
Of all signifi cant sources of energy, only nuclear
power can generate electricity without emitting
greenhouse gases. We believe in the future of
nuclear energy. We are taking steps to explore
the possibility of adding a new nuclear unit on
the site of our Hope Creek and Salem nuclear
facilities in southern New Jersey. The building
of a new nuclear facility is a highly complex
undertaking that could take a decade or even
longer. It is not something to be embarked upon
lightly. Nevertheless, the many advantages of
nuclear energy justify a close look at this option.
We will investigate it thoroughly before deciding
whether to apply for a new facility license.
Our fossil units have achieved stronger operations
as well. In 2007, our forced outage rates improved
across our fossil fl eet. We are making sizable
investments to ensure the long-term future of our
fossil units by adding advanced emissions control
technology. Such installations are underway at a
number of our coal-fi red units in New Jersey,
Pennsylvania and Connecticut.
As to the future, we are well-positioned to pursue
growth opportunities in our core markets of
PJM (originally known as the Pennsylvania-
New Jersey - Maryland Interconnection), New
England, New York and Texas. In PJM, for
example, we initiated planning for construction
of 300–400 megawatts of new, clean gas-fi red
peaking capacity. This step will complement
PSEG Power’s existing fl eet of 13,300 mega-
watts, improve overall fl eet effi ciency and
enhance reliability, in particular for our customers
in New Jersey, where PJM indicates additional
energy supply is needed.
Over the longer term, our aim is to leverage PSEG
Power’s strengths in the competitive markets it