New Jersey Utility Operations Surge

Hackensack, N.J. -- - At a time when much of the electricity industry was struggling with overcapacity, a credit crunch, and a sagging economy, New Jersey's largest utility "really had a remarkable year" in 2002, its top executive said Tuesday.

Although earnings are expected to be flat this year, the outlook for the next four to five years is promising, James Ferland, chairman and chief executive of Public Service Enterprise Group, told shareholders at the company's annual meeting at the New Jersey Performing Arts Center in Newark.

"We encountered some choppy seas during the year, especially in the international part of our business," Ferland said. "Yet overall and compared to many others, we did quite well."

Public Service got off to a good start in the first quarter of 2003, with revenues reaching $676 million, or $3 a share, compared with $60 million, or 29 cents a share a year earlier. Those figures are somewhat misleading, because this year's numbers are inflated by a change in an accounting rule for dealing with money set aside for future decommissioning of nuclear plants.

Even so, income from ongoing operations -- helped by a colder than normal winter -- rose to $321 million, or $1.42 a share, from $181 million, or 88 cents a share, Ferland said.

Even with earnings held down by rate caps imposed under New Jersey's historic energy deregulation legislation, Public Service continued to outperform its peer group last year, Ferland said. The caps forced the company to sell electricity below market prices.

Those caps are due to expire Aug. 1, and if the company's requested rate increase is approved by the Board of Public Utilities, most or all of the savings customers enjoyed over the past four years will be wiped out.

Still, rates are expected to be no higher than they were in 1999, proof that consumers have benefited from electric deregulation, even if the process isn't working the way state legislators thought.

The law was expected to produce retail competition, but that has been almost non-existent. On the wholesale level, however, competition is strong, and that will benefit consumers, Ferland said.