PSE&G 2009 Annual Report Download - page 5

of PSEG Power’s generation and a very solid
capacity factor of 93.4 percent.
Upgrades have enabled us to expand our
nuclear generating capacity with favorable
economics, and these efforts continue. We
have committed approximately $400 million
for nuclear uprates at the Peach Bottom nu-
clear facility, which we jointly own with Exelon.
We plan to implement these improvements in
two phases, with the goal of adding approxi-
mately 165 megawatts by 2016.
We are working to ensure our nuclear units
remain a vital resource long into the future.
In 2009, we fi led for a 20-year license ex-
tension for our Salem and Hope Creek units.
And we plan to pursue an early site permit for
a possible additional nuclear unit alongside
our existing nuclear facilities in southern New
Jersey. New nuclear is a long-term proposi-
tion. At this early stage, our aim is to keep our
options open.
We have also benefi ted from improved
fossil operations. In 2009, our coal units
shaved 40 percent off average start-up times
and reduced forced-outages by more than 50
percent. Our combined-cycle units ran more,
and our peaking units performed with fl ying
colors when called upon to run.
We are investing more than $1 billion in
state-of-the-art technology at our coal units
to achieve dramatic reductions in emissions.
In 2010, we expect to complete back-end
installations at our Hudson and Mercer
generating stations in New Jersey.
We are planning to build new peaking units
in New Jersey and Connecticut. In 2009, we
reached an agreement with the city of New
Haven, Connecticut, allowing us to move for-
ward with 130 megawatts of new peaking
generation at our existing New Haven Harbor
generating station. The agreement refl ects
our strong commitment to the environment
and to communities in which we operate.
PSEG Energy Holdings:
Reducing Risk and Exploring
Renewables
Our third business, PSEG Energy Holdings,
is focused on maximizing the value of its
current investment portfolio while pursuing
attractive opportunities in renewable energy.
This business has reduced the tax exposure
on its leveraged lease portfolio. During 2009,
PSEG Energy Holdings sold its interest in
12 leases; our activity reduced our cash tax
potential liability by $670 million to around
$660 million. We continue to evaluate the
possibility of additional sales if economic
thresholds are met.
PSEG Energy Holdings has renewable
energy efforts related to offshore wind,
solar and compressed air energy storage.
Working closely with the state of New Jersey,
we are assessing the viability of developing
a 350-megawatt wind farm 16 miles off the
southern New Jersey coast.
We have established a new subsid-
iary, PSEG Solar Source, with the goal of
developing a portfolio of solar facilities
throughout the United States. PSEG Solar
Source opened a solar garden in 2009, a
two-megawatt project for Mars Chocolate
North America, and is working to complete
two additional projects in Ohio and Florida
totaling 27 megawatts in 2010.
We are pursuing opportunities in com-
pressed air energy storage (CAES) through
our joint venture with Energy Storage &
Power. CAES is an enabling technology for
optimizing renewable energy resources and
improving the capacity of combined-cycle
plants. In 2009, the U.S. Department of Ener-
gy awarded grants to two projects that intend
to use CAES technology.
Outlook: Growing an
Operationally Excellent,
Integrated Energy Business
The energy policy and market environment
is highly uncertain. Wholesale energy
prices trended lower in 2009, but remain
unpredictable. We run our business with
a close eye on developments, such as new
supplies of domestic natural gas, which may
affect markets in the near and long term.
Although economic conditions remain
challenging, cost reduction programs
implemented throughout our organization –
including support from our union membership
– should help us achieve our objectives.
Our position remains one of considerable
strength. We benefi t from a balanced
business mix that includes a critical mass of
strategically situated assets in regulated and
competitive energy markets. Our fi nancial
strength and cash fl ows support our ability
to pursue an organic growth strategy without
needing to issue additional equity.
The dedication of our employees to opera-
tional excellence supports a high standard of
reliability, cost control and value for our cus-
tomers. We are building on more than 100
years of strong regulatory and community re-
lationships as we respond to society’s needs
to replace aging infrastructure, improve reli-
ability, prepare the grid for green resources
and develop green resources ourselves.