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PSEG Lowers Forecast for New Jersey Customer Migration

August 3, 2011
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Customer migration in New Jersey had an approximately $5.1 million negative impact on PSEG earnings in the second quarter versus the year-ago period.

PSEG Power, PSEG's competitive generation unit, reported lower operating earnings for the quarter of $186 million, versus $229 million a year ago.

The largest driver for the decrease was lower realized energy and capacity prices.

As the quarter progressed, and subsequent to the end of the quarter, market prices have increased, which is also reducing the impact of migration on PSEG Power's earnings, executives said during an earnings call.

Approximately 33% of Basic Generation Service-related volume had migrated to third-party suppliers by end of June 2011, compared with 31% as of the end of March 2011, PSEG said. This level of customer migration was slightly less than forecast by PSEG, and a continuation of the pattern witnessed in the first quarter.

Accordingly, PSEG reduced its full-year estimate of average customer migration to 34% from the prior 35%. This estimate assumes between 37% and 39% of customer load will have migrated from BGS by the end of the year.

PSEG said that headroom has declined during the quarter versus year-ago levels and its expectations. A continuation of these trends would result in headroom for the full year at levels experienced in 2010, PSEG noted.

GAAP net income for PSEG Power for the quarter was $208 million, versus $204 million a year ago.

PSEG Power Gross Margin for the quarter was $49/MWh, versus $51/MWh a year ago.

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