Wednesday, January 23, 2019

PSEG Earnings, Combined Cycle Fleet Grow in Q2

By Rich Heidorn Jr.

pseg combined cycle plants q2 2018 earnings

Public Service Enterprise Group announced second-quarter earnings of $269 million ($0.53/share), more than doubling the $109 million ($0.22/share) in profits a year earlier, which were weighed down by costs related to the early retirement of the company’s Hudson and Mercer generating stations.

Operating earnings for the quarter were $325 million ($0.64/share), up modestly from 2017’s $316 million ($0.62/ share).

Public Service Electric and Gas earnings rose 12% year over year thanks to continued investment in transmission and distribution. PSE&G has invested more than $3 billion in electric and gas infrastructure in the past year.

The company recently finished construction of the third and final phase of its $1.2 billion, 345-kV Bergen-Linden Corridor (BLC) project. It was “one of the larger and more complex projects we have built and was finished safely on time and on budget,” CEO Ralph Izzo said on an earnings call Thursday.

Izzo told analysts that the company is not jeopardized by the long-running dispute over cost allocation for the BLC. (See FERC Rethinking DFAX for Stability Tx Projects.)

“The issue is who pays, not whether we get paid,” he said. “So PSE&G will get fully compensated for its transmission investments.”

PSEG projects $14 billion to $18 billion in capital spending through 2022, 90% of which will be on “regulated growth initiatives” at PSE&G, said CFO Daniel Cregg. The spending should support a compound annual growth rate of 8 to 10% over the period, officials said.

The company sees investment opportunities in the legislation signed by New Jersey Gov. Phil Murphy in May that raises its renewable generation targets, boosts storage and offshore wind, and revamps its solar program. PSE&G plans to seek approval of $2.9 billion in investments in energy efficiency, electric vehicle infrastructure and battery storage over six years. It also expects its three New Jersey nuclear plants to receive about $200 million annually under the state’s zero-emission certificates beginning in April 2019. (See Gov. Signs NJ Nuke Subsidy, Renewables Bills.)

New Generation

PSEG Power began commercial operation of its two newest generators in the second quarter, the Keys Energy Center, a 755-MW plant east of Brandywine, Md., and Sewaren 7, a 540-MW generator in Woodbridge, N.J.

pseg combined cycle plants q2 2018 earnings

PSEG’s Keys Energy Center, shown under construction in May 2017. The 755-MW combined cycle plant east of Brandywine, Maryland went into service in early July. | PSEG

Sewaren 7 is replacing Units 1, 2, 3 and 4 of its existing Sewaren coal-fired plant, which are being retired after about 70 years of operation.

With the addition of Sewaren and Keys, PSEG will have more than 4,000 MW of combined cycle gas turbines, one-third of its total fleet.

Bridgeport Harbor 5, a 485-MW dual-fuel, combined cycle plant in Connecticut, is expected to go online in mid-2019.

The investments in the three plants “reflect our recognition of the value of opportunistic growth in the power business,” the company said in its quarterly securities filing. “These additions to our fleet both expand our geographic diversity and adjust our fuel mix and are expected to enhance the environmental profile and overall efficiency of Power’s generation fleet.”

Analyst call transcript courtesy of Seeking Alpha.