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FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1994
Commission file number 1-9120
Public Service Enterprise Group Incorporated
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- -
(Exact name of registrant as specified in its charter)
New Jersey 22-2625848
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- -
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
80 Park Plaza, P. O. Box 1171, Newark, New Jersey 07101-1171
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 201 430-7000
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Commission file number 1-973
Public Service Electric and Gas Company
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- -
(Exact name of registrant as specified in its charter)
New Jersey 22-1212800
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- -
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
80 Park Plaza, P. O. Box 570, Newark, New Jersey 07101-0570
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- -
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 201 430-7000
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes x . No .
---- ----
The number of shares outstanding of Public Service Enterprise Group
Incorporated's sole class of common stock, as of the latest practicable
date, was as follows:
Class Outstanding at October 30, 1994
----- -------------------------------
Common Stock, without par value 244,697,930
As of October 31, 1994 Public Service Electric and Gas Company had
issued and outstanding 132,450,344 shares of Common Stock, without nominal
or par value, all of which were privately held, beneficially and of record
by Public Service Enterprise Group Incorporated.
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TABLE OF CONTENTS
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Public Service Enterprise Group Incorporated (Enterprise):
Consolidated Statements of Income for the
Three, Nine and Twelve Months Ended September 30,
1994 and 1993 .................................... 5
Consolidated Balance Sheets as of
September 30, 1994, 1993 and December 31, 1993 ... 6
Consolidated Statements of Cash Flows for the
Nine and Twelve Months Ended September 30,
1994 and 1993 .................................... 8
Consolidated Statements of Retained Earnings for the
Three, Nine and Twelve Months Ended September 30,
1994 and 1993 .................................... 9
Public Service Electric and Gas Company (PSE&G):
Consolidated Statements of Income for the
Three, Nine and Twelve Months Ended September 30,
1994 and 1993 .................................... 10
Consolidated Balance Sheets as of
September 30, 1994, 1993 and December 31, 1993 ... 11
Consolidated Statements of Cash Flows for the
Nine and Twelve Months Ended September 30,
1994 and 1993 .................................... 13
Consolidated Statements of Retained Earnings for the
Three, Nine and Twelve Months Ended September 30,
1994 and 1993 .................................... 14
Notes to Consolidated Financial Statements
Enterprise ....................................... 15
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations
Enterprise ................................. 25
PSE&G ...................................... 45
PART II. OTHER INFORMATION
Item 5. Other Information ............................ 47
Item 6. Exhibits and Reports on Form 8-K ............. 52
Signatures - Enterprise ...................................... 53
Signatures - PSE&G ........................................... 53
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GLOSSARY OF TERMS
The following is a glossary of frequently used abbreviations or
acronyms that are found throughout this report:
Abbreviations
or Acronyms Term
- ----------------------- --------------------------------------------------
AFDC................... Allowance for Funds used During Construction
AIT.................... Nuclear Regulatory Commission's Augmented
Inspection Team
Bonds.................. First and Refunding Mortgage Bonds
BPU.................... New Jersey Board of Public Utilities
Capital................ PSEG Capital Corporation
CEA.................... Community Energy Alternatives Incorporated
CERCLA................. Federal Comprehensive Environmental Response,
Compensation and Liability Act of 1980
CON.................... Certificate of Need under the NJNAA
DOE.................... United States Department of Energy
DRIP................... Enterprise's Dividend Reinvestment and Stock
Purchase Plan
EBIT................... Earnings before interest and taxes to interest
EDC.................... Energy Development Corporation
EDHI................... Enterprise Diversified Holdings Incorporated
EITF................... Financial Accounting Standards Board's
Emerging Issues Task Force
EGDC................... Enterprise Group Development Corporation
EMF.................... Electric and Magnetic Fields
Enterprise............. Public Service Enterprise Group Incorporated
EPA.................... United States Environmental Protection Agency
FASB................... Financial Accounting Standards Board
FERC................... Federal Energy Regulatory Commission
Fuelco................. PSE&G Fuel Corporation
Funding................ Enterprise Capital Funding Corporation
HSCA................... Commonwealth of Pennsylvania's Hazardous Sites
Cleanup Act
Hope Creek............. Hope Creek Nuclear Generating Station
IEPNJ.................. Independent Energy Producers of New Jersey
IRP.................... Integrated Electric Resource Plan
LEAC................... Electric Levelized Energy Adjustment Clause
LGAC................... Levelized Gas Adjustment Clause
LLRW................... Low Level Radioactive Waste
MIPS................... Monthly Income Preferred Securities
MTNs................... Medium-Term Notes
MW..................... Megawatts
MWH.................... Megawatthours
NEIL................... Nuclear Electric Insurance Limited
NEPA................... National (Federal) Energy Policy Act
NJDEP.................. New Jersey Department of Environmental Protection
NJNAA.................. New Jersey Need Assessment Act
NJEDA.................. New Jersey Economic Development Authority
NJGRT.................. New Jersey Gross Receipts and Franchise Tax
NJPDES................. New Jersey Pollution Discharge Elimination System
NRC.................... Nuclear Regulatory Commission
NUGS................... Nonutility generators
NWPA................... Nuclear Waste Policy Act of 1982, as amended
OAL.................... Office of Administrative Law of the State of New
Jersey
OPEB................... Other Postretirement Benefits
Peach Bottom........... Peach Bottom Atomic Power Station, Units 2 and 3
PECO................... PECO Energy Inc.
<PAGE>
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GLOSSARY OF TERMS - (Concluded)
Abbreviations
or Acronyms Term
- ---------------------- ---------------------------------------------------
PJM.................... Pennsylvania--New Jersey--Maryland Interconnection
Price Anderson......... Price Anderson liability provisions of the Atomic
Energy Act of 1954, as amended
PSE&G.................. Public Service Electric and Gas Company
PSRC................... Public Service Resources Corporation
RAC ................... Remediation Adjustment Clause
RI/FS.................. Remedial Investigation and Feasibility Study
Salem.................. Salem Nuclear Generating Station, Units 1 an0.d 2
Standard............... The BPU's nuclear performance standard established
for nuclear generating stations owned by New
Jersey utilities
THI.................... Temperature Humidity Index
USEC................... United States Enrichment Corporation
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<TABLE>
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
The financial statements included herein as of September 30, 1994 and 1993 and for the periods then ended are unaudited but,
in the opinion of Enterprise's management, reflect all adjustments, consisting only of normal recurring accruals.
CONSOLIDATED STATEMENTS OF INCOME
(Thousands of Dollars)
Three Months Ended Nine Months Ended Twelve Months Ended
September 30, September 30, September 30,
------------------------ ------------------------ ------------------------
1994 1993 1994 1993 1994 1993
----------- ------------ ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES
Electric ................................. $1,074,471 $1,099,248 $2,864,904 $ 2,861,188 $3,696,799 $3,664,299
Gas ...................................... 208,481 191,944 1,289,670 1,080,152 1,803,859 1,595,157
Nonutility Activities .................... 92,024 110,845 293,190 301,742 409,583 388,387
---------- ---------- ---------- ----------- ---------- ----------
Total Operating Revenues ............ 1,374,976 1,402,037 4,447,764 4,243,082 5,910,241 5,647,843
---------- ---------- ---------- ----------- ---------- ----------
OPERATING EXPENSES
Operation
Fuel for Electric Generation and
Net Interchanged Power ............... 189,384 203,516 514,835 557,377 674,594 738,481
Gas Purchased and Materials
for Gas Produced ..................... 124,723 119,846 749,265 607,444 1,039,706 899,254
Other ................................. 264,479 253,896 771,122 736,549 1,047,330 971,592
Maintenance .............................. 70,647 71,072 222,559 202,152 324,810 286,063
Depreciation and Amortization ............ 159,855 151,230 472,638 448,384 624,518 627,603
Property Impairment ...................... 77,637
Taxes
Federal Income Taxes ................... 96,950 123,985 285,416 282,761 317,414 316,729
New Jersey Gross Receipts Taxes ........ 136,436 140,321 453,139 445,045 605,992 600,904
Other .................................. 20,582 19,386 65,197 59,422 81,748 72,527
---------- ---------- ---------- ----------- ---------- ----------
Total Operating Expenses ............ 1,063,056 1,083,252 3,534,171 3,339,134 4,793,749 4,513,153
---------- ---------- ---------- ----------- ---------- ----------
OPERATING INCOME ........................... 311,920 318,785 913,593 903,948 1,116,492 1,134,690
---------- ---------- ---------- ----------- ---------- ----------
OTHER INCOME
Allowance for Funds Used During
Construction - Equity ................... 1,824 2,050 5,486 7,495 10,256 10,489
Peach Bottom Settlement - net of Federal
Income Taxes, $0, $0, $0, $0, $0
and $(7,023), respectively .............. (13,632)
Miscellaneous - net ...................... 2,174 (925) 4,677 2,871 (1,972) 7,092
---------- ---------- ---------- ----------- ---------- ----------
Total Other Income .................. 3,998 1,125 10,163 10,366 8,284 3,949
---------- ---------- ---------- ----------- ---------- ----------
INCOME BEFORE INTEREST CHARGES AND
DIVIDENDS ON PREFERRED STOCK ............. 315,918 319,910 923,756 914,314 1,124,776 1,138,639
---------- ---------- ---------- ----------- ---------- ----------
INTEREST CHARGES
Long-Term Debt ........................... 115,919 115,423 343,978 354,407 458,691 471,211
Short-Term Debt .......................... 7,067 4,360 16,987 10,194 20,653 12,746
Other .................................... 3,275 3,652 7,750 14,012 13,292 22,376
---------- ---------- ---------- ----------- ---------- ----------
Total Interest Charges .............. 126,261 123,435 368,715 378,613 492,636 506,333
Allowance for Funds Used During Construction
- Debt and Capitalized Interest .......... (7,665) (5,523) (22,717) (14,662) (28,888) (19,004)
---------- ---------- ---------- ----------- ---------- ----------
Net Interest Charges ....................... 118,596 117,912 345,998 363,951 463,748 487,329
---------- ---------- ---------- ----------- ---------- ----------
Preferred Stock Dividend Requirements -PSE&G 10,144 9,767 30,568 28,346 40,336 36,994
---------- ---------- ---------- ----------- ---------- ----------
Income before cumulative effect of
accounting change ......................... 187,178 192,231 547,190 522,017 620,692 614,316
Cumulative effect of change in accounting
for income taxes .......................... 5,414 5,414
---------- ---------- ---------- ----------- ---------- ----------
NET INCOME ................................. $ 187,178 $ 192,231 $ 547,190 $ 527,431 $ 620,692 $ 619,730
========== ========== ========== =========== ========== ==========
SHARES OF COMMON STOCK OUTSTANDING
End of Period ............................. 244,697,930 242,677,516 244,697,930 242,677,516 244,697,930 242,677,516
Average for Period ........................ 244,697,930 241,888,798 244,394,250 239,927,317 244,004,619 238,544,642
EARNINGS PER AVERAGE SHARE OF COMMON STOCK
Before cumulative effect of accounting
change .................................... $.76 $.79 $2.24 $2.18 $2.54 $2.58
Cumulative effect of change in accounting
for income taxes .......................... .02 .02
---------- ---------- ---------- ----------- ---------- ----------
Total earnings per average share of common
stock ..................................... $.76 $.79 $2.24 $2.20 $2.54 $2.60
=========== =========== ========== ========= ========== ==========
DIVIDENDS PAID PER SHARE OF COMMON STOCK ... $.54 $.54 $1.62 $1.62 $2.16 $2.16
=========== =========== ========== ========= ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.<PAGE>
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<TABLE>
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
<CAPTION>
September 30, September 30, December 31,
ASSETS 1994 1993 1993
- ------ --------------- ------------- ---------------
<S> <C> <C> <C>
UTILITY PLANT - Original cost
Electric ............................................................ $ 12,218,603 $ 11,836,689 $ 11,920,894
Gas ................................................................. 2,266,750 2,127,216 2,177,841
Common .............................................................. 530,143 495,025 520,285
-------------- ------------- -------------
Total .......................................................... 15,015,496 14,458,930 14,619,020
Less Accumulated Depreciation and Amortization ........................ 5,059,839 4,707,413 4,772,942
-------------- ------------- -------------
Net ............................................................ 9,955,657 9,751,517 9,846,078
Nuclear Fuel in Service, net of accumulated amortization -
$297,426; $282,963 and $284,162, respectively ......................... 199,886 193,802 205,237
-------------- ------------- -------------
Net Utility Plant in Service ................................... 10,155,543 9,945,319 10,051,315
Construction Work in Progress, including Nuclear Fuel in Process -
$56,983; $139,202 and $98,780, respectively .......................... 752,260 622,477 735,356
Plant Held for Future Use ............................................. 20,532 22,971 17,709
-------------- ------------- -------------
Net Utility Plant .............................................. 10,928,335 10,590,767 10,804,380
-------------- ------------- -------------
INVESTMENTS AND OTHER PROPERTY
Long-Term Investments, net of amortization - 9/94-$2,068 and 9/93-$312
net of valuation allowances - $15,892; $15,515 and $18,018,
respectively ...................................................... 1,664,191 1,739,169 1,613,823
Oil and Gas Property, Plant and Equipment, net of accumulated
depreciation and amortization - $758,196, $711,738 and $695,791,
respectively ...................................................... 560,737 499,758 506,047
Real Estate Property and Equipment, net of accumulated depreciation -
$13,375; $14,536 and $10,840, respectively and net of valuation
allowances - $22,514; $3,961 and $16,684, respectively ............ 105,468 222,640 110,661
Other Plant, net of accumulated depreciation
and amortization - $4,442; $3,587 and $3,735, respectively ........ 35,859 22,284 28,327
Nuclear Decommissioning and Other Special Funds ..................... 223,588 186,681 189,282
Other Investments - net ............................................. 79,063 73,751 120,711
-------------- ------------- -------------
Total Investments and Other Property ........................... 2,668,906 2,744,283 2,568,851
-------------- ------------- -------------
CURRENT ASSETS
Cash and Cash Equivalents ........................................... 64,217 347,284 46,880
Accounts Receivable:
Customer Accounts Receivable ...................................... 380,539 409,556 446,629
Other Accounts Receivable ......................................... 172,464 213,534 230,373
Less: Allowance for Doubtful Accounts ............................ 27,075 31,047 27,932
Unbilled Revenues ................................................... 104,522 158,185 244,497
Fuel, at average cost ............................................... 302,676 307,506 285,943
Materials and Supplies, at average cost ............................. 163,824 186,232 172,438
Prepaid Gross Receipts Taxes ........................................ 131,985 - -
Miscellaneous Current Assets ........................................ 56,502 50,356 49,860
Deferred Income Taxes ............................................... 15,387 8,589 12,934
-------------- ------------- ------------
Total Current Assets ........................................... 1,365,041 1,650,195 1,461,622
-------------- ------------- ------------
DEFERRED DEBITS
Property Abandonments - net ......................................... 92,667 109,798 105,536
Oil and Gas Property Write-Down ..................................... 42,521 47,675 46,386
Unamortized Debt Expense ............................................ 129,870 102,776 121,278
Deferred OPEB Costs ................................................. 126,658 41,043 58,593
Under(Over) Recovered Electric Energy and Gas Costs - net ........... 211,783 588 62,034
Unrecovered Environmental Costs ..................................... 132,169 105,883 138,531
Unrecovered Plant and Regulatory Study Costs ........................ 36,986 34,689 35,196
Deferred Decontamination and Decommissioning Costs .................. 53,016 - 56,055
Unrecovered SFAS 109 Deferred Income Taxes .......................... 786,217 789,484 789,795
Preliminary Survey and Investigation Charges ........................ 30,942 22,970 26,292
Other ............................................................... 21,032 39,776 30,615
-------------- ------------- ------------
Total Deferred Debits .......................................... 1,663,861 1,294,682 1,470,311
-------------- ------------- ------------
Total .......................................................... $ 16,626,143 $ 16,279,927 $ 16,305,164
============== ============= ============
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
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<TABLE>
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
<CAPTION>
September 30, September 30, December 31,
CAPITALIZATION AND LIABILITIES 1994 1993 1993
- ------------------------------ -------------- ------------ --------------
<S> <C> <C> <C>
CAPITALIZATION
Common Equity
Common Stock ........................................................ $ 3,801,157 $ 3,740,003 $ 3,772,662
Retained Earnings ................................................... 1,511,054 1,418,805 1,361,018
-------------- ------------ ------------
Total Common Equity ............................................... 5,312,211 5,158,808 5,133,680
Subsidiaries' Securities and Obligations
Preferred Stock
Without Mandatory Redemption ........................................ 459,994 429,994 429,994
With Mandatory Redemption ........................................... 150,000 150,000 150,000
Long-Term Debt (note 2)................................................ 5,277,722 5,468,249 5,256,321
Capital Lease Obligations ............................................. 52,054 52,680 52,530
-------------- ------------ ------------
Total Capitalization .............................................. 11,251,981 11,259,731 11,022,525
-------------- ------------ ------------
OTHER LONG-TERM LIABILITIES
Decontamination and Decommissioning Costs ............................. 54,308 - 56,055
Environmental Costs ................................................... 105,544 85,529 111,000
-------------- ------------ ------------
Total Other Long-Term Liabilities ................................. 159,852 85,529 167,055
-------------- ------------ ------------
CURRENT LIABILITIES
Long-Term Debt and Capital Lease Obligations due within one year ...... 478,399 287,801 168,638
Commercial Paper and Loans ............................................ 562,665 522,327 577,636
Accounts Payable ...................................................... 332,356 444,819 557,761
New Jersey Gross Receipts Taxes Accrued ............................... - 110,283 263,357
Other Taxes Accrued ................................................... 49,796 53,337 39,610
Book Overdrafts ....................................................... 50,700 - -
Interest Accrued ...................................................... 126,682 127,390 107,027
Other ................................................................. 145,056 148,273 157,751
-------------- ------------ ------------
Total Current Liabilities ......................................... 1,745,654 1,694,230 1,871,780
-------------- ------------ ------------
DEFERRED CREDITS
Accumulated Deferred Income Taxes ..................................... 2,879,733 2,681,648 2,702,386
Accumulated Deferred Investment Tax Credits ........................... 417,627 437,576 432,713
Deferred OPEB Costs ................................................... 126,658 41,043 58,593
Other ................................................................. 44,638 80,170 50,112
-------------- ------------ ------------
Total Deferred Credits ............................................ 3,468,656 3,240,437 3,243,804
-------------- ------------ ------------
COMMITMENTS AND CONTINGENT LIABILITIES (note 3)
Total ............................................................. $ 16,626,143 $ 16,279,927 $ 16,305,164
============== ============ ============
</TABLE>
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<TABLE>
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Thousands of Dollars)
<CAPTION>
Nine Months Ended Twelve Months Ended
September 30, September 30,
---------------------- ----------------------
1994 1993 1994 1993
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income .......................................... $ 547,190 $ 527,431 $ 620,692 $ 619,730
Adjustments to reconcile net income to net cash flows
from operating activities:
Depreciation and Amortization ..................... 472,638 448,384 624,518 627,603
Amortization of Nuclear Fuel ...................... 71,892 80,650 93,960 101,921
Deferral of Electric Energy and Gas
Costs - net ...................................... (149,749) (123,324) (211,195) (73,161)
Loss from Property Impairment ..................... - - 77,637 -
Cumulative Effect of Change in Accounting for
Income Taxes .................................... - (5,414) - (5,414)
Amortization of Discounts on Property
Abandonments and Disallowance ................... (5,140) (5,979) (6,962) (9,605)
Unrealized (Gains) Losses on Investments .......... (11,488) (7,289) (12,893) 9,569
Provision for Deferred Income Taxes - net ......... 146,587 143,611 171,382 119,424
Investment Tax Credits - net ...................... (15,086) (6,792) (19,949) (11,927)
Allowance for Funds Used During Construction -
Debt and Equity and Capitalized Interest ....... (28,203) (22,157) (39,144) (29,493)
Proceeds from Leasing Activities .................. 9,364 29,923 (5,779) 44,954
Changes in certain current assets and liabilities:
Net decrease (increase) in Accounts Receivable and
Unbilled Revenues ................................ 263,117 81,707 119,778 (16,134)
Net (increase) decrease in Inventory - Fuel and
Materials and Supplies ............................ (8,119) (18,919) 27,238 (8,100)
Net (decrease) increase in Accounts Payable ....... (225,405) (29,158) (112,463) 82,587
Net change in Prepaid/Accrued Taxes ............... (385,156) (433,266) (245,809) (302,356)
Net change in Other Current Assets and
Liabilities ...................................... (2,135) (4,771) (16,869) (21,208)
Other ............................................. 47,274 (7,993) 24,461 5,385
---------- ---------- ---------- ----------
Net cash provided by operating
activities .................................. 727,581 646,644 1,088,603 1,133,775
---------- ---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Utility Plant, excluding AFDC ........ (550,717) (534,448) (879,563) (800,623)
Additions to Oil and Gas Property, Plant and
Equipment, excluding Capitalized Interest ......... (117,632) (61,469) (144,131) (71,885)
Net (increase) decrease in Long-Term Investments and
Real Estate ...................................... (8,807) (60,773) 118,625 (119,842)
Increase in Decommissioning and Other Special
Funds, excluding interest ........................ (28,006) (45,498) (28,016) (49,354)
Cost of Plant Removal - net ....................... (21,866) (17,776) (51,881) (31,437)
Other ............................................. (2,380) (9,896) (7,422) (15,446)
---------- ---------- ---------- ----------
Net cash used in investing activities ......... (729,408) (729,860) (992,388) (1,088,587)
---------- ---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in Short-Term Debt ........ (14,971) 130,345 40,338 91,624
Increase in Book Overdrafts ....................... 50,700 - 50,700 -
Issuance of Long-Term Debt ........................ 752,245 1,959,500 1,039,445 1,959,500
Redemption of Long-Term Debt and Other Obligations. (421,559) (1,574,524) (1,040,000) (1,573,017)
Deferral of Debt Expense - net .................... (8,592) (40,642) (27,094) (40,700)
Issuance of Preferred Stock ....................... 75,000 75,000 75,000 75,000
Redemption of Preferred Stock ..................... (45,000) (45,000)
Issuance of Common Stock .......................... 28,495 240,820 61,154 276,113
Cash Dividends Paid on Common Stock .............. (395,934) (390,394) (527,110) (517,051)
Other ............................................. (1,220) (1,279) (6,715) (1,452)
---------- ---------- ---------- ----------
Net cash provided by (used in) financing
activities ................................... 19,164 398,826 (379,282) 270,017
---------- ---------- ---------- ----------
Net increase (decrease) in Cash and Cash Equivalents. 17,337 315,610 (283,067) 315,205
Cash and Cash Equivalents at Beginning of Period .... 46,880 31,674 347,284 32,079
---------- ---------- ---------- ----------
Cash and Cash Equivalents at End of Period ............ $ 64,217 $ 347,284 $ 64,217 $ 347,284
========== ========== ========== ==========
Income Taxes Paid ..................................... $ 126,369 $ 109,668 $ 156,873 $ 151,704
Interest Paid ......................................... $ 306,454 $ 331,551 $ 433,859 $ 472,583
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE> 9
<TABLE>
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(Thousands of Dollars)
Three Months Ended Nine Months Ended Twelve Months Ended
September 30, September 30, September 30,
------------------------- ---------------------- -----------------------
1994 1993 1994 1993 1994 1993
------------ ----------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Balance at Beginning of Period ........... $1,456,025 $1,358,284 $1,361,018 $1,282,931 $1,418,805 $1,317,376
Add Net Income ........................... 187,178 192,231 547,190 527,431 620,692 619,730
---------- ---------- ---------- ---------- ---------- ----------
Total ............................... 1,643,203 1,550,515 1,908,208 1,810,362 2,039,497 1,937,106
---------- ---------- ---------- ---------- ---------- ----------
Deduct
Dividends on Common Stock ................ 132,137 130,654 395,934 390,394 527,110 517,051
Adjustments to Retained Earnings ......... 12 1,056 1,220 1,163 1,333 1,250
---------- ---------- ---------- ---------- ---------- ----------
Total Deductions .................... 132,149 131,710 397,154 391,557 528,443 518,301
---------- ---------- ---------- ---------- ---------- ----------
Balance at End of Period ................. $1,643,203 $1,550,515 $1,908,208 $1,810,362 $2,039,497 $1,937,106
========== ========== ========== ========== ========== ==========
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE> 10
<TABLE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
The financial statements included herein as of September 30, 1994 and 1993 and for the periods then ended are unaudited
but, in the opinion of PSE&G's management, reflect all adjustments, consisting only of normal recurring accruals.
CONSOLIDATED STATEMENTS OF INCOME
(Thousands of Dollars)
Three Months Ended Nine Months Ended Twelve Months Ended
September 30, September 30, September 30,
------------------------ ----------------------- -----------------------
1994 1993 1994 1993 1994 1993
---------- --------- ---------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
OPERATING REVENUES
Electric .............................. $1,074,471 $1,099,248 $2,864,904 $2,861,188 $3,696,799 $3,664,299
Gas ................................... 208,481 191,944 1,289,670 1,080,152 1,803,859 1,595,157
---------- ---------- ---------- ----------- ---------- ----------
Total Operating Revenues ......... 1,282,952 1,291,192 4,154,574 3,941,340 5,500,658 5,259,456
---------- ---------- ---------- ----------- ---------- ----------
OPERATING EXPENSES
Operation
Fuel for Electric Generation
and Net Interchanged Power ....... 189,384 203,516 514,835 557,377 674,594 738,481
Gas Purchased and Materials for
Gas Produced ..................... 128,719 124,755 761,923 623,999 1,057,794 927,280
Other ............................... 222,225 220,133 654,891 641,622 894,212 843,652
Maintenance ........................... 70,647 71,072 222,559 202,152 324,810 286,063
Depreciation and Amortization ......... 137,797 127,920 408,459 377,520 540,145 530,986
Taxes
Federal Income Taxes ................ 96,385 106,882 273,693 259,110 323,373 291,399
New Jersey Gross Receipts Taxes ..... 136,436 140,321 453,139 445,045 605,992 600,904
Other ............................... 18,577 17,420 59,055 54,552 72,096 64,948
---------- ---------- ---------- ----------- ---------- ----------
Total Operating Expenses ......... 1,000,170 1,012,019 3,348,554 3,161,377 4,493,016 4,283,713
---------- ---------- ---------- ----------- ---------- ----------
OPERATING INCOME ........................ 282,782 279,173 806,020 779,963 1,007,642 975,743
---------- ---------- ---------- ----------- ---------- ----------
OTHER INCOME
Allowance for Funds Used During
Construction - Equity .............. 1,824 2,050 5,486 7,495 10,256 10,489
Peach Bottom Settlement - net of Federal
Income Taxes, $0, $0, $0, $0, $0
and $(7,023), respectively ......... - - - - - (13,632)
Miscellaneous - net ................... 2,104 (1,039) 4,600 2,876 (2,117) 7,150
---------- ---------- ---------- ----------- ---------- ----------
Total Other Income ............... 3,928 1,011 10,086 10,371 8,139 4,007
---------- ---------- ---------- ----------- ---------- ----------
INCOME BEFORE INTEREST CHARGES AND
DIVIDENDS ON PREFERRED STOCK .......... 286,710 280,184 816,106 790,334 1,015,781 979,750
---------- ---------- ---------- ----------- ---------- ----------
INTEREST CHARGES
Long-Term Debt ........................ 92,997 89,546 273,838 275,642 362,448 364,552
Short-Term Debt ....................... 5,629 2,292 12,842 4,069 15,187 4,836
Other ................................. 3,173 3,572 5,938 13,873 11,355 22,108
---------- ---------- ---------- ----------- ---------- ----------
Total Interest Charges ........... 101,799 95,410 292,618 293,584 388,990 391,496
Allowance for Funds Used During
Construction - Debt............ (5,467) (3,801) (16,442) (10,078) (21,179) (13,250)
---------- ---------- ---------- ----------- ---------- ----------
Net Interest Charges .................... 96,332 91,609 276,176 283,506 367,811 378,246
---------- ---------- ---------- ----------- ---------- ----------
NET INCOME .............................. 190,378 188,575 539,930 506,828 647,970 601,504
---------- ---------- ---------- ----------- ---------- ----------
Preferred Stock Dividend Requirements ... 10,144 9,767 30,568 28,346 40,336 36,994
---------- ---------- ---------- ----------- ---------- ----------
EARNINGS AVAILABLE TO PUBLIC SERVICE
ENTERPRISE GROUP INCORPORATED ......... $ 180,234 $ 178,808 $ 509,362 $ 478,482 $ 607,634 $ 564,510
========== ========== ========== =========== ========== ==========
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE> 11
<TABLE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
<CAPTION>
September 30, September 30, December 31,
ASSETS 1994 1993 1993
- ------ -------------- ------------- --------------
<S> <C> <C> <C>
UTILITY PLANT - Original cost
Electric ............................................................. $ 12,218,603 $ 11,836,689 $ 11,920,894
Gas .................................................................. 2,266,750 2,127,216 2,177,841
Common ............................................................... 530,143 495,025 520,285
------------ ------------ ------------
Total ........................................................... 15,015,496 14,458,930 14,619,020
Less Accumulated Depreciation and Amortization ......................... 5,059,839 4,707,413 4,772,942
------------ ------------ ------------
Net ............................................................. 9,955,657 9,751,517 9,846,078
Nuclear Fuel in Service, net of accumulated amortization - $297,426;
$282,963 and $284,162, respectively .................................. 199,886 193,802 205,237
------------ ------------ ------------
Net Utility Plant in Service .................................... 10,155,543 9,945,319 10,051,315
Construction Work in Progress, including Nuclear Fuel in Process -
$56,983; $139,202 and $98,780, respectively .......................... 752,260 622,477 735,356
Plant Held for Future Use .............................................. 20,532 22,971 17,709
------------ ------------ ------------
Net Utility Plant ............................................... 10,928,335 10,590,767 10,804,380
------------ ------------ ------------
INVESTMENTS AND OTHER PROPERTY
Long-Term Investments - net of amortization - $2,068, $312 and $572,
respectively ........................................................ 150,866 104,973 116,554
Nuclear Decommissioning and Other Special Funds ...................... 223,588 186,681 189,282
Other Plant, net of accumulated depreciation and amortization - $1,126;
$848 and $872, respectively ......................................... 32,865 20,271 26,369
------------ ------------ ------------
Total Investments and Other Property .............................. 407,319 311,925 332,205
------------ ------------ ------------
CURRENT ASSETS
Cash and Cash Equivalents ............................................ 20,052 294,836 17,673
Accounts Receivable:
Customer Accounts Receivable ....................................... 380,539 409,556 446,629
Other Accounts Receivable .......................................... 92,582 144,860 160,729
Less: Allowance for Doubtful Accounts ............................. 27,075 31,047 27,932
Unbilled Revenues .................................................... 104,522 158,185 244,497
Fuel, at average cost ................................................ 302,676 307,506 285,943
Materials and Supplies, at average cost .............................. 162,252 184,589 170,910
Prepaid Gross Receipts Taxes ......................................... 131,985 - -
Miscellaneous Current Assets ......................................... 49,459 44,269 45,754
Deferred Income Taxes ................................................ 15,387 8,589 12,934
------------ ------------ ------------
Total Current Assets ............................................ 1,232,379 1,521,343 1,357,137
------------ ------------ ------------
DEFERRED DEBITS
Property Abandonments - net .......................................... 92,667 109,798 105,536
Oil and Gas Property Write-Down ...................................... 42,521 47,675 46,386
Unamortized Debt Expense ............................................. 127,157 100,736 117,057
Deferred OPEB Costs .................................................. 126,658 41,043 58,593
Under(Over)Recovered Electric Energy and Gas Costs - net ............. 211,783 588 62,034
Unrecovered Environmental Costs ...................................... 132,169 105,883 138,531
Unrecovered Plant and Regulatory Study Costs ......................... 36,986 34,689 35,196
Deferred Decontamination and Decommissioning Costs ................... 53,016 - 56,055
Unrecovered SFAS 109 Deferred Income Taxes ........................... 786,217 789,484 789,795
Preliminary Survey and Investigation Charges ......................... 30,942 22,970 26,292
Other ................................................................ 21,032 39,769 30,609
------------ ------------ ------------
Total Deferred Debits ........................................... 1,661,148 1,292,635 1,466,084
------------ ------------ ------------
Total ........................................................... $ 14,229,181 $ 13,716,670 $ 13,959,806
============ ============ ============
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE> 12
<TABLE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONSOLIDATED BALANCE SHEETS
(Thousands of Dollars)
<CAPTION>
September 30, September 30, December 31,
CAPITALIZATION AND LIABILITIES 1994 1993 1993
- ------------------------------ ------------- ------------- -------------
<S> <C> <C> <C>
CAPITALIZATION
Common Equity
Common Stock ........................................................ $ 2,563,003 $ 2,563,003 $ 2,563,003
Contributed Capital by Enterprise ................................... 534,395 534,395 534,395
Retained Earnings ................................................... 1,310,074 1,205,373 1,180,532
------------ ------------- ------------
Total Common Equity .............................................. 4,407,472 4,302,771 4,277,930
Preferred Stock Without Mandatory Redemption .......................... 459,994 429,994 429,994
Preferred Stock With Mandatory Redemption ............................. 150,000 150,000 150,000
Long-Term Debt (note 2)................................................ 4,486,371 4,367,381 4,364,437
Capital Lease Obligations ............................................. 52,054 52,680 52,530
------------ ------------- ------------
Total Capitalization ............................................. 9,555,891 9,302,826 9,274,891
------------ ------------- ------------
OTHER LONG-TERM LIABILITIES
Decontamination and Decommissioning Costs ........................... 54,308 - 56,055
Environmental Costs ................................................. 105,544 85,529 111,000
------------ ------------- ------------
Total Other Long-Term Liabilities 159,852 85,529 167,055
------------ ------------- ------------
CURRENT LIABILITIES
Long-Term Debt and Capital Lease Obligations due within one year .... 310,826 209,258 62,274
Commercial Paper and Loans .......................................... 562,665 472,722 532,728
Accounts Payable .................................................... 300,996 411,592 519,296
Accounts Payable-Associated Companies ............................... 1,324 26,175 5,674
New Jersey Gross Receipts Taxes Accrued ............................. - 110,283 263,357
Other Taxes Accrued ................................................. 36,853 36,697 33,710
Book Overdraft ...................................................... 50,700 - -
Interest Accrued .................................................... 98,972 103,009 96,257
Other ............................................................... 105,741 117,332 122,924
------------ ------------ ------------
Total Current Liabilities ......................................... 1,468,077 1,487,068 1,636,220
------------ ------------ ------------
DEFERRED CREDITS
Accumulated Deferred Income Taxes ................................... 2,484,400 2,317,805 2,368,778
Accumulated Deferred Investment Tax Credits ......................... 394,623 413,531 408,929
Deferred OPEB Costs ................................................. 126,658 41,043 58,593
Other ............................................................... 39,680 68,868 45,340
------------ ------------- ------------
Total Deferred Credits .......................................... 3,045,361 2,841,247 2,881,640
------------ ------------- ------------
COMMITMENTS AND CONTINGENT LIABILITIES (note 3)
Total ........................................................... $ 14,229,181 $ 13,716,670 $ 13,959,806
============ ============ ============
</TABLE>
<PAGE>
<PAGE> 13
<TABLE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Thousands of Dollars)
<CAPTION>
Nine Months Ended Twelve Months Ended
September 30, September 30,
-------------------------- -----------------------
CASH FLOWS FROM OPERATING ACTIVITIES: 1994 1993 1994 1993
------------ ------------ ----------- ----------
<S> <C> <C> <C> <C>
Net Income ............................................................... $ 539,930 $ 506,828 $ 647,970 $ 601,504
Adjustments to reconcile net income to net cash flows from
operating activities:
Depreciation and Amortization ......................................... 408,459 377,520 540,145 530,986
Amortization of Nuclear Fuel .......................................... 71,892 80,650 93,960 101,921
Deferral of Electric Energy and Gas Costs - net ....................... (149,749) (123,324) (211,195) (73,161)
Amortization of Discounts on Property Abandonments and Disallowance ... (5,140) (5,979) (6,962) (9,605)
Provision for Deferred Income Taxes - net ............................. 119,200 125,206 169,862 109,680
Investment Tax Credits - net .......................................... (14,306) (13,806) (18,908) (18,408)
Allowance for Funds Used During Construction - Debt and Equity ........ (21,928) (17,573) (31,435) (23,739)
Changes in certain current assets and liabilities:
Net decrease (increase) in Accounts Receivable and Unbilled Revenues .. 273,355 63,416 130,986 (1,945)
Net (increase) decrease in Inventory - Fuel and Materials and Supplies. (8,075) (18,322) 27,167 (7,518)
Net (decrease) increase in Accounts Payable ........................... (222,650) (15,329) (135,447) 60,562
Net change in Prepaid/Accrued Taxes ................................... (392,199) (436,206) (242,112) (285,297)
Net change in Other Current Assets and Liabilities .................... (20,626) (20,800) (27,616) (36,004)
Other ................................................................... (952) (24,028) (14,366) (22,181)
----------- ----------- ----------- -----------
Net cash provided by operating activities ......................... 577,211 478,253 922,049 926,795
----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Utility Plant, excluding AFDC ............................. (550,717) (534,448) (879,563) (800,623)
Net increase in Long-Term Investments .................................. (34,312) (20,024) (53,279) (28,888)
Increase in Decommissioning and Other Special Funds, excluding
interest .............................................................. (28,006) (45,498) (28,016) (49,354)
Cost of Plant Removal - net ............................................ (21,866) (17,776) (51,881) (31,437)
Other .................................................................. (90) (8,716) (4,981) (13,271)
----------- ----------- ----------- -----------
Net cash used in investing activities ............................. (634,991) (626,462) (1,017,720) (923,573)
----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in Short-Term Debt ........................................ 29,937 215,186 89,943 151,178
Increase in Book Overdrafts ............................................ 50,700 - 50,700 -
Issuance of Long-Term Debt ............................................. 752,245 1,827,500 961,445 1,827,500
Redemption of Long-Term Debt and Other Obligations ..................... (382,235) (1,421,635) (741,513) (1,419,512)
Deferral of Debt Expense - net ......................................... (10,100) (41,812) (26,421) (42,154)
Issuance of Preferred Stock ............................................ 75,000 75,000 75,000 75,000
Redemption of Preferred Stock .......................................... (45,000) - (45,000) -
Contributed Capital by Enterprise ...................................... - 174,670 211,370
Cash Dividends Paid .................................................... (409,168) (398,546) (541,936) (527,194)
Other .................................................................. (1,220) (644) (1,331) (645)
----------- ----------- ----------- -----------
Net cash provided by (used in) financing activities ............... 60,159 429,719 (179,113) 275,543
----------- ----------- ----------- -----------
Net increase (decrease) in Cash and Cash Equivalents ..................... 2,379 281,510 (274,784) 278,765
Cash and Cash Equivalents at Beginning of Period ......................... 17,673 13,326 294,836 16,071
----------- ----------- ----------- -----------
Cash and Cash Equivalents at End of Period ............................... $ 20,052 $ 294,836 $ 20,052 $ 294,836
=========== =========== =========== ===========
Income Taxes Paid ........................................................ $ 178,584 $ 143,769 $ 207,684 $ 213,325
Interest Paid ............................................................ $ 255,350 $ 268,118 $ 343,660 $ 368,583
</TABLE>
<PAGE>
<PAGE> 14
<TABLE>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS
(Thousands of Dollars)
Three Months Ended Nine Months Ended Twelve Months Ended
September 30, September 30, September 30,
--------------------- ---------------------- ----------------------
1994 1993 1994 1993 1994 1993
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at Beginning of Period .. $1,254,553 $1,152,689 $1,180,532 $1,097,734 $1,205,373 $1,131,707
Add Net Income .................. 190,378 188,575 539,930 506,828 647,970 601,504
---------- ---------- ---------- ---------- ---------- ----------
Total ...................... 1,444,931 1,341,264 1,720,462 1,604,562 1,853,343 1,733,211
---------- ---------- ---------- ---------- ---------- ----------
Deduct:
Dividends
Preferred Stock, at
required rates ............ 10,144 9,767 30,568 28,346 40,336 36,994
Common Stock ............... 124,700 126,000 378,600 370,200 501,600 490,200
Adjustments to Retained Earnings 13 124 1,220 643 1,333 644
---------- ----------- ---------- ---------- ---------- ----------
Total Deductions ........... 134,857 135,891 410,388 399,189 543,269 527,838
---------- ----------- ---------- ---------- ---------- ----------
Balance at End of Period ........ $1,310,074 $1,205,373 $1,310,074 $1,205,373 $1,310,074 $1,205,373
========== =========== ========== ========== ========== ==========
</TABLE>
<PAGE>
<PAGE> 15
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. RATE MATTERS
LEVELIZED GAS ADJUSTMENT CLAUSE (LGAC)
On July 1, 1994, PSE&G petitioned the New Jersey Board of Public Utilities
(BPU) to increase its LGAC rates to recover an additional $23.7 million, to be
effective October 1, 1994. On August 4, 1994, the matter was transmitted to
the Office of Administrative Law of the State of New Jersey (OAL) for
adjudication. Due to recent projections of lower gas prices, the parties
reached a stipulated settlement on October 6, 1994 which provides for the
implementation of the Gas Remediation Adjustment Charge (RAC) with an equal
corresponding offsetting adjustment to the current LGAC rate. These LGAC and
RAC rates, when combined, produce a charge which results in a zero increase to
the firm customers for the LGAC period ending September 30, 1995. The
settlement was reviewed and approved by the OAL and transmitted to the BPU for
approval on October 25, 1994. PSE&G cannot predict what action the BPU will
take regarding the OAL's decision.
ELECTRIC LEVELIZED ENERGY ADJUSTMENT CLAUSE (LEAC)
On July 1, 1994, PSE&G petitioned the BPU to increase its LEAC rates,
effective October 1, 1994, to recover an additional $130 million of energy
costs. A significant part of the need for an increase is the larger percentage
of power that PSE&G is obligated to purchase under prior BPU approved contracts
with non-regulated power producers. On August 4, 1994, the matter was
transmitted to the OAL for adjudication.
On November 1, 1994, the parties reached a stipulated settlement which
provides for the implementation of provisional LEAC rates, subject to refund,
designed to recover an additional $98 million over the period November 1994
through May 1995. The stipulation provides sufficient rate relief to recover
current fuel costs and begins reducing the accumulated underrecovered balance
while affording the parties the opportunity to continue litigating this matter
in full to its final conclusion. The stipulation also preserves the following
issues for litigation: a) rate treatment for the Bergen Phase I repowering
project (See Note 3, Commitments and Contingent Liabilities - Bergen Station
Repowering), b) litigation of alleged overearnings issue, c) recovery of the
costs related to the April 7, 1994 shutdown at Salem 1 nuclear unit and d) the
appropriateness of PSE&G's gas and electric transfer pricing caculations
pertaining to the Bayway agreement (PSE&G's largest industrial customer). The
stipulation was reviewed and approved by the OAL and transmitted to the BPU on
November 2, 1994 for approval. At its November 4, 1994 agenda meeting, the BPU
adopted the OAL's decision in full without modification and authorized the
settlement to become effective concurrent with its adoption. Additional
litigation of this matter is expected to conclude during the first quarter of
1995.
<PAGE>
<PAGE> 16
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 1. RATE MATTERS (Concluded)
LEAC - (Concluded)
On July 7, 1994, the BPU approved a stipulation which made permanent the
LEAC rates that went into effect on January 1, 1993 on an interim basis and
closed out the previous LEAC for the period ended December 31, 1992. The
stipulation also provided a credit of $2.5 million to the deferred fuel balance
for LEAC customers in resolution of all outstanding issues related to the
November 9, 1991 Salem 2 turbine generator outage and a credit of $1.3 million
to reflect an adjustment of partially estimated New Jersey Gross Receipts and
Franchise Tax (NJGRT) unit tax rates to actual unit tax rates.
NOTE 2. LONG-TERM DEBT
Enterprise's long-term debt aggregated $5.278 billion as of September 30,
1994, of which $4.486 billion was attributable to PSE&G and $792 million to
Enterprise Diversified Holdings Incorporated (EDHI), the parent of Enterprise's
nonutility businesses. During the nine months ended September 30, 1994, PSE&G
issued a total of $692 million principal amount of its First and Refunding
Bonds (Bonds) and $60 million principal amount of Medium Term Notes (MTNs).
The net proceeds from the sale of the Bonds and MTN's were used by PSE&G to
redeem $376 million aggregate principal amount of higher cost Bonds, including
sinking funds requirements, to defease in substance $122.5 million of higher
cost Bonds and to pay a portion of its current construction program.
NOTE 3. COMMITMENTS AND CONTINGENT LIABILITIES
NUCLEAR PERFORMANCE STANDARD
The BPU has established a nuclear performance standard (Standard) for
nuclear generating stations owned by New Jersey electric utilities, including
the five nuclear units in which PSE&G has an ownership interest: Salem 1&2 --
42.59%; Hope Creek -- 95%; and Peach Bottom 2&3 -- 42.49%. PSE&G operates Salem
and Hope Creek, while Peach Bottom is operated by PECO Energy Inc. (PECO).
The penalty/reward under the Standard is a percentage of replacement power
costs (see table below). The Standard provides that the penalties will be
calculated to the edge of each capacity factor range. For example, a 30%
penalty applies to replacement power costs incurred in the 55% to 65% range and
a 40% penalty applies to replacement power costs in the 45% to 55% range.
<PAGE>
<PAGE> 17
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 3. COMMITMENTS AND CONTINGENT LIABILITIES - (Continued)
NUCLEAR PERFORMANCE STANDARD - (Concluded)
<TABLE>
<CAPTION>
CAPACITY FACTOR RANGE REWARD PENALTY
- ------------------------------------------------------ ------ -------
<S> <C> <C>
Equal to or greater than 75%.......................... 30% --
Equal to or greater than 65% and less than 75%........ None None
Equal to or greater than 55% and less than 65%........ -- 30%
Equal to or greater than 45% and less than 55%........ -- 40%
Equal to or greater than 40% and less than 45%........ -- 50%
Below 40%............................................. BPU Intervenes
</TABLE>
Under the Standard, the capacity factor is calculated annually using
maximum dependable capability of the five nuclear units in which PSE&G owns an
interest. This method takes into account actual operating conditions of the
units.
While the Standard does not specifically have a gross negligence
provision, the BPU has indicated that it would consider allegations of gross
negligence brought upon a sufficient factual basis (See Note 1, Rate Matters
- - Electric Levelized Energy Adjustment Clause). A finding of gross negligence
could result in penalties other than those prescribed under the Standard.
During 1993, the five nuclear units in which PSE&G has an ownership interest
<PAGE>
<PAGE> 18
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 3. COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
NUCLEAR PERFORMANCE STANDARD (Concluded)
aggregated a 77% combined capacity factor. In accordance with the Standard,
PSE&G's combined capacity factor exceeded the 75% reward threshold, entitling
PSE&G to a reward of approximately $3.9 million. PSE&G has petitioned the BPU
to recover the 1993 reward through the next LEAC (See Note 1). PSE&G expects
that the 1994 combined capacity factor under the Standard will fall within the
capacity factor range equal to or greater than 65% and less than 75%, although
no assurances can be given.
NUCLEAR INSURANCE COVERAGES AND ASSESSMENTS
PSE&G's insurance coverages and maximum retrospective assessments for its
nuclear operations are as follows:
<TABLE>
<CAPTION>
PSE&G
MAXIMUM
ASSESSMENTS
TOTAL FOR A
SITE SINGLE
TYPE AND SOURCE OF COVERAGES COVERAGES INCIDENT
- -------------------------------------------------- --------- ----------
(MILLIONS OF DOLLARS)
<S> <C> <C>
Public Liability:
American Nuclear Insurers........................ $ 200.0 $ --
Indemnity(A)..................................... 8,799.5 210.2
-------- --------
$8,999.5 (B) $210.2
-------- --------
Nuclear Worker Liability:
American Nuclear Insurers(C)..................... $ 200.0 $ 8.2
-------- --------
Property Damage (D):
Nuclear Mutual Limited .......................... $ 500.0 $ 11.6
American Nuclear Insurers........................ 765.0 (E) --
Nuclear Electric Insurance Ltd. (NEIL I)......... 85.0 (F) --
Nuclear Electric Insurance Ltd. (NEIL II)........ 1,400.0 (G) 7.8 (H)
-------- --------
$2,750.0 $ 19.4
-------- --------
Replacement Power:
Nuclear Electric Insurance Ltd................... $ 3.5 (I) $ 12.4
</TABLE>
<PAGE>
<PAGE> 19
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 3. COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
NUCLEAR INSURANCE COVERAGES AND ASSESSMENTS (Continued)
(A) Retrospective premium program under the Price-Anderson liability
provisions of the Atomic Energy Act of 1954, as amended, (Price-Anderson).
Subject to retrospective assessment with respect to loss from an incident
at any licensed nuclear reactor in the United States. Assessment adjusted
for inflation effective August 20, 1993.
(B) Limit of liability for each nuclear incident under Price-Anderson.
(C) Industry aggregate limit representing the potential liability from workers
claiming exposure to the hazard of nuclear radiation. This policy includes
automatic reinstatements up to an aggregate of $200 million, thereby
providing total coverage of $400 million. This policy does not increase
PSE&G's obligation under Price-Anderson.
(D) Effective November 15, 1994, a new policy NEIL III issued by Nuclear
Electric Insurance, Inc. will replace the coverage currently afforded by
ANI and NEIL I. Under NEIL III and the new NEIL II policy (also effective
November 15), the potential assessment for a single incident rises to
$26.5 million.
(E) Includes $100 million sublimit for premature decommissioning costs.
(F) New policy effective January 1, 1994.
(G) Includes up to $250 million for premature decommissioning costs.
(H) In the event of a second industry loss triggering NEIL II - coverage, the
maximum retrospective premium assessment can increase to $16.7 million.
($17.5 million effective November 15, 1994).
(I) Weekly indemnity for 52 weeks which commences after the first 21 weeks of
an outage. Beyond the first 52 weeks of coverage, indemnity of $2.8
million per week for 104 weeks is afforded. Total coverage amounts to
$473.2 million over three years.
Price-Anderson sets the "limit of liability" for claims that could arise
from an incident involving any licensed nuclear facility in the nation. The
"limit of liability" is based on the number of licensed nuclear reactors and
is adjusted at least every five years based on the Consumer Price Index. The
current "limit of liability" is $9 billion. All utilities owning a nuclear
reactor, including PSE&G, have provided for this exposure through a combination
of private insurance and mandatory participation in a financial protection pool
as established by Price-Anderson. Under Price-Anderson, each party with an
ownership interest in a nuclear reactor can be assessed its share of $79.3 0.
million per reactor per incident, payable at $10 million per
<PAGE>
<PAGE> 20
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 3. COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
NUCLEAR INSURANCE COVERAGES AND ASSESSMENTS (Concluded)
reactor per incident per year. If the damages exceed the "limit of liability",
the President is to submit to Congress a plan for providing additional
compensation to the injured parties. Congress could impose further revenue
raising measures on the nuclear industry to pay claims. PSE&G's maximum
aggregate assessment per incident is $210.2 million (based on PSE&G's ownership
interests in Hope Creek, Peach Bottom and Salem) and its maximum aggregate
annual assessment per incident is $26.5 million.
PSE&G purchases property insurance, including decontamination expense
coverage and premature decommissioning coverage, with respect to loss or damage
to its nuclear facilities. PECO has advised PSE&G that it maintains similar
insurance coverage with respect to Peach Bottom. Under the terms of the various
insurance agreements, PSE&G could be subject to a maximum retrospective
assessment for a single incident of up to $19.4 million. Certain of the
policies also provide that the insurer may suspend coverage with respect to all
nuclear units on a site without notice if the Nuclear Regulatory Commission
(NRC) suspends or revokes the operating license for any unit on a site, issues
a shutdown order with respect to such unit or issues a confirmatory order
keeping such unit shut down.
PSE&G is a member of an industry mutual insurance company, NEIL, which
provides replacement power cost coverage in the event of a major accidental
outage at a nuclear station. The policies provide for a weekly indemnity
payment of $3.5 million for 52 weeks, subject to a 21-week waiting period. The
policies provide for weekly indemnity payments of $2.8 million for a 104 week
period beyond the first year's indemnity. The premium for this coverage is
subject to retrospective assessment for adverse loss experience. Under the
policies, PSE&G's present maximum share of any retrospective assessment in any
year is $12.4 million.
PSE&G URANIUM ENRICHMENT DECONTAMINATION AND DECOMMISSIONING FUND
In accordance with the National Energy Policy Act of 1992 (NEPA), domestic
utilities that own nuclear generating stations are required to pay a cumulative
total of $150 million each year (adjusted for inflation) into a decontamination
and decommissioning fund, based on their past purchases of enrichment services
from the United States Department of Energy (DOE) Uranium Enrichment Enterprise
(now a federal government corporation known as the United States Enrichment
Corporation (USEC)). These amounts are being collected over a period of 15
years or until $2.25 billion (adjusted for inflation) has been collected.
Under this legislation, PSE&G's obligation for the nuclear generating stations
in which it has an interest is $66.0 million. To date PSE&G has paid $13.0
million, resulting in a balance of $53.0 million. While PSE&G expects to
recover its costs in the next LEAC, it cannot predict the outcome, amount or
timing of any recovery associated with this matter. In addition, as of
September 30, 1994, PSE&G has recorded a liability of $1.3 million relating to
low level radioactive waste costs incurred at its nuclear generating stations.
<PAGE>
<PAGE> 21
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 3. COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
CONSTRUCTION AND FUEL SUPPLIES
PSE&G has substantial commitments as part of its ongoing construction
program which includes capital requirements for nuclear fuel. PSE&G's
construction program is continuously reviewed and periodically revised as a
result of changes in economic conditions, revised load forecasts, changes in
the scheduled retirement dates of existing facilities, changes in business
plans, site changes, cost escalations under construction contracts,
requirements of regulatory authorities and laws, the timing of and amount of
electric and gas rate changes and the ability of PSE&G to raise necessary
capital. Pursuant to an Integrated Electric Resource Plan (IRP), PSE&G
periodically reevaluates its forecasts of future customers, load and peak
growth, sources of electric generating capacity and Demand Side Management
(DSM) to meet such projected growth, including the need to construct new
electric generating capacity. The IRP takes into account assumptions concerning
future demands of customers, effectiveness of conservation and load management
activities, the long-term condition of PSE&G's plants, capacity available from
electric utilities and other suppliers and the amounts of cogeneration and
other nonutility capacity projected to be available.
Based on PSE&G's 1994-1998 construction program, construction expenditures
are expected to aggregate approximately $4.2 billion, which includes $483
million for nuclear fuel and $133 million of AFDC and capitalized interest
during the years 1994 through 1998. The estimate of construction requirements
is based on expected project completion dates and includes anticipated
escalation, due to inflation, of approximately 4%, annually. Therefore,
construction delays or higher inflation levels could cause significant
increases in these amounts. PSE&G expects to generate internally a majority of
the funds necessary to satisfy its construction expenditures over the next five
years. In addition, PSE&G does not presently anticipate any difficulties in
obtaining sufficient sources of fuel for electric generation or adequate gas
supplies during the years 1994 through 1998.
<PAGE>
<PAGE> 22
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
NOTE 3. COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
SALEM STATION
The NJDEP issued a draft New Jersey Pollutant Discharge Elimination System
(NJPDES) permit on October 3, 1990 pursuant to the Federal Water Pollution
Control Act with respect to Salem 1 and 2 which, if adopted as proposed, would
have required the immediate shutdown of both units pending retrofit with
cooling towers. On June 24, 1993, NJDEP issued a revised draft permit that
permitted Salem to continue to operate with once-through cooling and requires
PSE&G to make certain plant modifications and to take certain other actions to
enhance the ecology of the affected water body. The final five year permit,
with essentially the same provisions as the revised draft permit, was issued
on July 20, 1994. Certain environmental groups and other entities, including
the State of Delaware, have filed requests for hearings with the NJDEP
challenging the final permit. The NJDEP granted the hearing requests on
certain of the issues and PSE&G has been named as a respondent along with the
NJDEP in these matters which are pending in the OAL. The U.S. Environmental
Protection Agency (EPA), which has authority to review the final permit issued
by the NJDEP, completed its review and has not raised any objections. PSE&G
is implementing the final permit. Additional permits from various agencies are
required to be obtained to implement the permit. No assurances can be given
as to receipt of any such additional permits. Estimated capital cost of
compliance with the final permit is approximately $100 million, of which
PSE&G's share would be 42.59% and is included in PSE&G's 1994-1998 construction
program.
BERGEN STATION REPOWERING
PSE&G is presently engaged in Phase I of a construction project to
renovate (or "repower") the Bergen Station pursuant to an air pollution control
permit issued by the NJDEP on May 27, 1993. The current effort would maintain
the existing electric supply of the station (with a small increase from 629 MW
to 669 MW), improve operational reliability and efficiency and significantly
improve the environmental effects of operation of the facility. At this point
in time, it is highly unlikely that PSE&G will pursue Bergen Phase II; however,
in the event that this project is undertaken, it would increase the capacity
of Bergen by an additional 650 MW.
On July 12, 1993, the Independent Energy Producers of New Jersey (IEPNJ),
an association of competitors of PSE&G, appealed the NJDEP's issuance of the
air permit for Phase I of the project to the Appellate Division of the New
Jersey Superior Court, alleging that PSE&G is first required to obtain a
Certificate of Need (CON) under the New Jersey Need Assessment Act (NJNAA).
The NJDEP determined that the NJNAA was inapplicable to this renovation project
and, as more fully described below, the Appellate Division of New Jersey
Superior Court affirmed this determination on July 8, 1994. Obtaining a CON
would be a complex procedure entailing proceedings of at least a two year
duration before the NJDEP, the outcome of which could not be assured.
<PAGE>
<PAGE> 23
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
NOTE 3. COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
BERGEN STATION REPOWERING (Concluded)
As of September 30, 1994, Phase I of the renovation project was about 86%
complete and PSE&G had spent approximately $250 million on this effort. The
final cost is estimated to be approximately $400 million. In accordance with
PSE&G's BPU approved LEAC settlement of November 4, 1994, PSE&G intends to file
a proposal with the BPU seeking rate treatment for the Bergen Phase I
repowering project (See Note 1) no later than March 1, 1995. (See Note 1. Rate
Matters, Electric Levelized Energy Clause)
On July 8, 1994, the Appellate Division issued a decision affirming the
determination of the NJDEP that a CON was not required for Phase I of the
project. The Appellate Division, however, concluded that the NJDEP erred by
granting a conditional air pollution control permit for Phase II of the project
and, accordingly, remanded this matter to NJDEP for modification of the permit
to indicate that it only applies to Phase I. By Notice of Petition for
Certification dated July 27, 1994, IEPNJ petitioned the Supreme Court of New
Jersey for review of the Appellate Division decision that a CON was not
required for Phase I of the project. PSE&G has opposed this appeal. Review
by the Supreme Court of New Jersey of this matter is discretionary. PSE&G
believes that a CON is not required for Phase I of the project. However, if
a CON were ultimately required by the courts after exhaustion of all appeals,
the permits needed to operate the plant could not be issued until after a CON
was obtained. PSE&G intends to continue this renovation project and to
vigorously defend its position through all available means.
ENVIRONMENT
GENERAL
Certain Federal and State laws authorize the United States EPA and NJDEP,
among other agencies, to issue orders and bring enforcement actions to compel
responsible parties to take investigative and remedial actions at any site that
is determined to present an imminent and substantial danger to the public or
the environment because of an actual or threatened release of one or more
hazardous substances. Because of the nature of PSE&G's business, including the
production of electricity, the distribution of gas and, formerly, the
manufacture of gas, various by-products and substances are or were produced or
handled which contain constituents classified as hazardous. PSE&G generally
provides for the disposal or processing of such substances through licensed
independent contractors. However, these statutory provisions impose joint and
several responsibility without regard to fault on all responsible parties,
including the generators of the hazardous substances, for certain investigative
and remediation costs at sites where these substances were disposed of or
processed. PSE&G has been notified with respect to a number of such sites and
the remediation of these potentially hazardous sites is receiving greater
attention from the government agencies involved. Generally, actions directed
at funding such site investigations and remediation include all suspected or
known responsible parties. PSE&G does not expect its expenditures for any such
site to be material.
<PAGE>
<PAGE> 24
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Concluded)
NOTE 5. COMMITMENTS AND CONTINGENT LIABILITIES (Concluded)
ENVIRONMENT (Concluded)
PSE&G MANUFACTURED GAS PLANT REMEDIATION PROGRAM
In March 1988, NJDEP notified PSE&G that it had identified the need for
PSE&G, pursuant to a formal arrangement, to systematically investigate and, if
necessary, resolve environmental concerns extant at PSE&G's former manufactured
gas plant sites. To date, NJDEP and PSE&G have identified 38 former gas plant
sites. PSE&G is currently working with NJDEP under a program to assess,
investigate and, if necessary, remediate environmental concerns at its former
gas plant sites (Remediation Program). The Remediation Program is periodically
reviewed and revised by PSE&G based on regulatory requirements, experience with
the Remediation Program and available technologies. The cost of the Remediation
Program cannot be reasonably estimated, but experience to date indicates that
costs of at least $20 million per year could be incurred over a period of more
than 30 years and that the overall cost could be material.
Costs incurred through September 30, 1994 for the Remediation Program
amounted to $49.9 million, net of insurance recoveries. In addition, at
September 30, 1994, PSE&G's liability for estimated remediation costs, net of
insurance recoveries, through March 31, 1996 aggregated $105.5 million. In
accordance with a Stipulation approved by the BPU on January 21, 1992, PSE&G
is recovering $32 million of its actual remediation costs to reflect costs
incurred through September 30, 1992, net of insurance recoveries, over a six-
year period. PSE&G will recover $5.3 million in each of its next three LGAC
periods ending in 1996, net of insurance recoveries. The regulatory treatment
of the remediation costs covered by this Stipulation was not changed in the
BPU's September 15, 1993 written order, allowing continued collection under the
terms of the January 21, 1992 Stipulation. The decision of September 15, 1993
concluded that PSE&G had met its burden of proof for establishing the
reasonableness and prudence of remediation costs incurred in operating and
decommissioning these facilities in the past. The remediation costs incurred
during the period July 1, 1992 through September 30, 1992 were subject to audit
and verification in PSE&G's 1992-93 LGAC. The audit has been completed and
resulted in no disallowance of any costs. The order also approved a mechanism
for costs incurred since October 1, 1992, allowing the recovery of actual costs
plus carrying charges, net of insurance recoveries, over a seven-year period
through PSE&G's LEAC and LGAC, with 60% charged to gas customers and 40%
charged to electric customers. (See Note 1 - Rate Matters - Remediation
Adjustment Clause).
In November 1988, PSE&G filed suit against certain of its insurers to
recover the costs associated with addressing and resolving environmental issues
of the Remediation Program. PSE&G has settled its claim with one insurer and
there is a trial scheduled for January 1995 with the remaining insurers.
Pending full recovery of Remediation Program costs through rates or under its
insurance policies, neither of which can be assured, PSE&G will be required to
finance the unreimbursed costs of its Remediation Program.
<PAGE>
<PAGE> 25
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Following are the significant changes in or additions to information
reported in Enterprise's Annual Report to the SEC on Form 10-K for 1993 and
Quarterly Reports on Form 10-Q for March and June 1994, affecting the
consolidated financial condition and the results of operations of Enterprise
and its subsidiaries. This discussion refers to the Consolidated Financial
Statements and related Notes of Enterprise and should be read in conjunction
with such statements and notes.
As of September 30, 1994, PSE&G comprised 86% of Enterprise assets.
PSE&G's revenues were 93% of Enterprise's revenues for the three, nine, and
twelve month periods ended September 30, 1994, and PSE&G's earnings available
to Enterprise for such periods were 96%, 93%, and 98%, respectively, of
Enterprise's net income.
COMPETITION
Ongoing initiatives affecting PSE&G's electric and gas utility businesses
associated with the continuing transition to a competitive market environment
will have an increasingly significant impact on Enterprise and PSE&G. Federal
legislation, including the National Energy Policy Act (NEPA), as well as
regulatory initiatives at both the federal and state levels that are designed
to promote competition and lessen regulation of the energy supply industry can
be expected to result in additional pressures on customer retention due to
energy prices, especially with respect to larger industrial and commercial
customers. Growth potential is limited in PSE&G's mature service territory.
Currently, the BPU is addressing these issues in collaboration with the
State's utilities and other interested parties in the context of a revision of
the New Jersey Energy Master Plan. Phase 1 of the Energy Master Plan is
scheduled to be released in January 1995. The BPU has publicly stated that it
intends to recommend proposed legislation addressing the issue of regulatory
flexibility in December 1994.
The shifting of rate regulation from traditional concepts based upon rate
base rate of return to concepts based upon market competition and service
appears to be accelerating. As a result, added emphasis will be placed upon
cost containment, and utilities and their regulators will need to develop
flexible ratemaking strategies to minimize adverse impacts which might
otherwise occur to revenues and earnings and maximize potential opportunities
presented by deregulation. The manner in which regulators address evolving
competitive issues will also affect utility credit quality.
This transition to a competitive market environment may also affect
utilities' asset values as a result of changes from traditional utility
ratemaking. A shift to a market-price determination of asset values could
result in transition costs, including costs related to power purchase
contracts, and create "stranded assets". Such assets could include electric
generating units constituting excess capacity, less efficient units whose cost
may be too high to be fully supported by competitively set
<PAGE>
<PAGE> 26
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
COMPETITION - (Concluded)
rates and/or certain regulatory assets whose costs may not be fully recoverable
in a deregulated environment. If changes in rate regulation ultimately require
a recognition of any such stranded assets, write-downs for utilities, including
PSE&G, may occur. At this time management cannot predict the level of
transition costs or stranded assets resulting from industry deregulation, if
any, or whether utility regulators will allow recovery of any such transition
costs from customers. However, such amounts could be material.
PSE&G has signed each of its three existing wholesale electric customers,
aggregating 40 mw of load, to new 5-year full service agreements with mid-term
extension options. Two of these agreements, are pending approval by the
Federal Energy Regulatory Commission (FERC).
<PAGE>
<PAGE> 27
<TABLE>
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
ENTERPRISE EARNINGS
Earnings per share of Enterprise Common Stock were 76 cents, $2.24 and
$2.54 for the three, nine and twelve months ended September 30, 1994, a
decrease per share of 3 cents, an increase of 4 cents and a decrease of 6
cents, respectively, from the comparable 1993 periods after giving effect to
the issuance of additional shares of Common Stock. (See Liquidity and Capital
Resources - External Financing.) The changes are summarized as follows:
Increase or (Decrease) to Earnings
-----------------------------------
Three Months Ended Nine Months Ended Twelve Months Ended
September 30, September 30, September 30,
1994 vs. 1993 1994 vs. 1993 1994 vs. 1993
------------------ ----------------- -------------------
Per Per Per
Millions Share Millions Share Millions Share
-------- ----- -------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
PSE&G
Revenues (net of fuel costs
and gross receipts taxes) $ 6 $ 0.03 $110 $ 0.45 $169 $ 0.71
0ther operation expenses (2) (0.01) (13) (0.05) (51) (0.21)
Maintenance expenses - - (20) (0.08) (39) (0.16)
Depreciation and Amortization
expenses (8) (0.03) (22) (0.09) (26) (0.11)
Federal income taxes 10 0.04 (15) (0.06) (32) (0.14)
Peach Bottom Settlement - net
of Federal income taxes of
$7 million - - - - 14 0.06
Interest Charges (6) (0.03) 1 - 1 -
Other Income 3 0.01 2 0.01 (6) (0.03)
Other (2) (0.01) (10) (0.04) 16 0.07
Preferred Stock Dividend
Requirements - - (2) (0.01) (3) (0.01)
---- ------ ---- ------ ---- ------
Earnings available to
Enterprise 1 - 31 0.13 43 0.18
---- ------ ---- ------ ---- ------
EDHI (6) (0.03) (11) (0.05) (42) (0.18)
---- ------ ---- ------ ---- ------
Net Income $ (5) (0.03) $ 20 0.08 $ 1 -
==== ====== ==== ====== ==== ======
Effect of additional shares
of Enterprise Common Stock
issues - (0.04) (0.06)
------ ------ ------
Total $(0.03) $ 0.04 $(0.06)
====== ====== ======
Average Shares of Common Stock
Outstanding-1993 241,888,798 239,927,317 238,544,642
Average Shares of Common Stock
Outstanding-1994 244,697,930 244,394,250 244,004,619
/TABLE
<PAGE>
<PAGE> 28
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
ENTERPRISE EARNINGS - (Continued)
PSE&G
PSE&G's earnings available to Enterprise increased by $1 million, or 1%
for the quarter ended September 30, 1994 from the quarter ended September 30,
1993. The increase was due to lower operating expenses principally due to a
decrease in federal income taxes resulting from lower pre-tax operating income
and lower maintenance expenses, partially offset by higher amortization
expenses due to more utility plant in service and other operation expenses
(comprised primarily of labor and employee benefits). Also adversely affecting
earnings were higher interest expense resulting from an increase in long-term
debt outstanding and higher rates for commmercial paper.
PSE&G's earnings available to Enterprise increased by $31 million, or 6%
for the nine months ended September 30, 1994 from the comparable nine month
period ended September 30, 1993. The increase was primarily due to increased
electric commercial sales and firm gas residential and commercial sales.
Electric (kilowatthour) and gas (therm) sales increased 1.2% and 6.1%,
respectively, principally due to weather and a modest improvement in New
Jersey's economy. In addition, lower interest expense resulting from
refinancing debt also contributed to the increase in earnings. The major
factors adversely affecting earnings were higher depreciation and amortization
expenses due to more utility plant in service, higher maintenance expenses at
Hope Creek nuclear station due to the spring 1994 refueling outage, increased
federal income taxes due to higher pre-tax operating income and increased other
operation expenses (comprised primarily of labor and employee benefits costs).
Excluding the $14 million net effect of the 1992 settlement of litigation
against PECO in connection with the 1987 shutdown of Peach Bottom by the NRC,
PSE&G's earnings available to Enterprise increased by $29 million or 5%, for
the twelve month period ended September 30, 1994 from the comparable twelve
month period ended September 30, 1993. The principal factors contributing to
the increase were PSE&G's increased weather-related electric and gas sales, a
modest improvement in New Jersey's economy and higher electric and gas base
rates that became effective January 1, 1993. In addition, lower interest
expense resulting from refinancing of debt also contributed to the increase in
earnings. Partially offsetting the increase in earnings were higher other
operation expenses (comprised primarily of labor, employee benefits costs and
miscellaneous nuclear production expenses), increased maintenance expenses at
the Mercer generating station, increased maintenance expenses at Hope Creek
nuclear station due to the spring 1994 refueling outage, higher federal income
taxes resulting from higher pre-tax operating income and higher depreciation
and amortization expenses.
<PAGE>
<PAGE> 29
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
ENTERPRISE EARNINGS - (Concluded)
EDHI
EDHI's decrease in net income of $6 million, or 48% for the quarter ended
September 30, 1994 compared to the quarter ended September 30, 1993 was
primarily due to lower gas volumes and prices and higher exploration and
development expenses due to increased drilling activities for EDC. Partially
offsetting the decrease were lower income taxes for EDHI due to the increase
in the Federal income tax rate in August 1993 and higher income from certain
CEA projects.
EDHI's net income for the nine month period ended September 30, 1994
decreased $11 million, or 23%, from the comparable nine month period ended
September 30, 1993. The primary factors contributing to the decrease were lower
gas volumes and lower gas and oil prices and higher exploration and
development expenses due to increased drilling activities for EDC. Partially
offsetting the decrease was higher income from PSRC due to lower interest
expense, higher partnership income and higher gains from marketable securities,
partially offset by lower interest and dividend income. CEA's income
increased due to higher income from various projects and EGDC's net loss
decreased due to lower interest expense. Also, EDHI experienced lower income
taxes due to the increase in the Federal income tax rate in August 1993.
Excluding the recorded 1993 impairment related to certain of EGDC's
properties, which reduced net income by $51 million, EDHI's net income for the
twelve month period ended September 30, 1994 increased by $9 million, or 16%,
compared to the twelve month period ended September 30, 1993. The increase was
due principally to PSRC's higher income from investments and increased
productivity at certain CEA projects, partially offset by lower EDC gas volumes
and lower gas and oil prices.
<PAGE>
<PAGE> 30
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
DIVIDENDS
Dividends paid to holders of Enterprise Common Stock during the three,
nine and twelve month periods ended September 30, 1994 increased $1.5 million,
$5.5 million and $10.1 million, respectively, over the comparable 1993 periods.
The increase in dividend payments was due to the issuance of additional shares
of Enterprise Common Stock. (See Liquidity and Capital Resources.)
Dividends paid to holders of PSE&G's Preferred Stock, during the three,
nine and twelve month periods ended September 30, 1994 increased $377 thousand,
$2.2 million and $3.3 million, respectively, over the comparable 1993 periods.
The increase in such dividends was due to the issuance of additional shares of
PSE&G's Preferred Stock, partially offset by reduced expense resulting from the
redemption of certain higher cost series of Preferred Stock. (See Liquidity
and Capital Resources.)
<PAGE>
<PAGE> 31
<TABLE>
<CAPTION>
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
REVENUES
PSE&G ELECTRIC
Revenues decreased $25 million, or 2%, during the three months ended September 30, 1994, increased $4 million,
or .1%, during the first nine months of 1994 and increased $33 million, or .9%, during the twelve months ended
September 30, 1994 compared to the same periods ended September 30, 1993. The significant components of these
changes follow:
Increase or (Decrease)
-----------------------------------------------------------
Three Months Ended Nine Months Ended Twelve Months Ended
September 30, September 30, September 30,
1994 vs. 1993 1994 vs. 1993 1994 vs. 1993
------------------ ---------------- --------------------
(Millions)
<S> <C> <C> <C>
Kilowatthour sales ............. $ (5) $ 48 $ 36
Base rate increase effective
January 1, 1993 .............. - - 59
Recovery of energy costs ....... (15) (44) (59)
NJGRT .......................... (5) (1) (3)
Other operating revenues ....... - 1 -
----- ----- -----
Total Electric Revenues ...... $ (25) $ 4 $ 33
===== ===== =====
Changes in kilowatthour sales by major customer category are described below:
<CAPTION>
Increase or (Decrease)
-------------------------------------------------------------
Three Months Ended Nine Months Ended Twelve Months Ended
September 30, September 30, September 30,
1994 vs. 1993 1994 vs. 1993 1994 vs. 1993
------------------ ---------------- --------------------
<S> <C> <C> <C>
Residential ................... (8.0)% (1.3)% (0.4)%
Commercial .................... 3.0 2.9 1.8
Industrial .................... 0.1 0.8 (0.1)
Total Sales of Electricity .... (3.6) (1.8) (1.5)
</TABLE>
<PAGE>
<PAGE> 32
<TABLE>
<CAPTION>
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
REVENUES - (Continued)
PSE&G ELECTRIC - (Concluded)
The 2% decrease in revenues during the three month period ended September 30, 1994, was primarily due to lower
sales to residential customers resulting from cooler 1994 weather conditions (THI down 11.3%). Commercial and
industrial sales increased due to an improving New Jersey economy, however, industrial sales were partially offset
by lost sales due to a maintenance shutdown at PSE&G's largest industrial customer. The decrease in the recovery
of energy costs for the quarter was primarily attributable to lower sales.
Revenues for the nine and twelve month periods ended September 30, 1994, remained relatively unchanged. Sales
to commercial customers increased due to an improving New Jersey economy, while industrial sales were partially
offset by lost sales due to a maintenance shutdown at PSE&G's largest industrial customer. Contributing to the
slight increase in revenues for the twelve month period was the base rate increase which became effective January
1, 1993. The decrease in the recovery of fuel costs for the nine and twelve months ended September 30, 1994, was
due to lower sales.
PSE&G GAS
Revenues increased $17 million, or 9% during the three months ended September 30, 1994, $210 million, or 19%,
during the first nine months of 1994 and $209 million or 13% during the twelve month period ended September 30,
1994 compared to the similar periods ended September 30, 1993. The significant components of these changes follow:
Increase or (Decrease)
-----------------------------------------------------------
Three Months Ended Nine Months Ended Twelve Months Ended
September 30, September 30, September 30,
1994 vs. 1993 1994 vs. 1993 1994 vs. 1993
------------------ ---------------- --------------------
(Millions)
<S> <C> <C> <C>
Therm sales ................... $ 10 $ 59 $ 47
Base rate increase effective
January 1, 1993 .............. - - 25
Recovery of fuel related costs. 5 139 130
NJGRT ......................... 1 10 9
Other operating revenues ...... 1 2 (2)
---- ---- ----
Total Gas Revenues ......... $ 17 $210 $209
==== ==== ====
/TABLE
<PAGE>
<PAGE> 33
<TABLE>
<CAPTION>
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
REVENUES - (Continued)
PSE&G GAS - (Concluded)
Changes in gas sold or transported by customer category are described below:
Increase or (Decrease)
-------------------------------------------------------------
Three Months Ended Nine Months Ended Twelve Months Ended
September 30, September 30, September 30,
1994 vs. 1993 1994 vs. 1993 1994 vs. 1993
------------------- ----------------- -------------------
<S> <C> <C> <C>
Residential ............ 10.3% 10.3% 7.5%
Commercial ............. (2.5) 3.2 1.8
Industrial ............. 7.7 9.0 8.9
Transportation Service . 7.6 (3.3) (3.3)
Total Gas Sold or
Transported ........... 6.0 6.1 4.7
The gas revenue increase of 9% for the quarter ended September 30, 1994 from the comparable quarter of 1993
is primarily attributable to an increase in industrial cogeneration sales as a result of increased average customer
usage due to an improving economy and recovery of fuel costs.
The gas revenue increase of 19% and 13% for the nine and twelve month periods ended September 30, 1994,
respectively, from the comparable periods of 1993 is primarily attributable to an increase in the recovery of fuel
costs principally due to higher fuel rates, higher sales and significantly lower customer refunds. Residential,
commercial and industrial sales increased due to favorable weather conditions and an improving economy. Sales to
cogenerators was the largest contributor to the increase in industrial sales as cogeneration average customer usage
for electric generation continues to increase. Also contributing to the increase in revenues for the twelve months
ended September 30, 1994, was the base rate revenue increase which became effective January 1, 1993.
/TABLE
<PAGE>
<PAGE> 34
<TABLE>
<CAPTION>
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
REVENUES - (Concluded)
EDHI
EDHI revenues decreased $20 million, or 17%, during the third quarter of 1994 from the third quarter of 1993,
revenues decreased $13 million, or 4%, during the first nine months of 1994 from the first nine months of 1993,
and revenues increased $9 million, or 2%, during the twelve month period ended September 30, 1994 from the twelve
month period ended September 30, 1993. The significant factors contributing to such results are as follows:
Increase or (Decrease)
-----------------------------------------------------------
Three Months Ended Nine Months Ended Twelve Months Ended
September 30, September 30, September 30,
1994 vs. 1993 1994 vs. 1993 1994 vs. 1993
------------------- ----------------- -------------------
(Millions)
<S> <C> <C> <C>
EDC .............. $(14) $(31) $(44)
PSRC ............. (9) 9 34
CEA .............. 5 12 21
EGDC ............. (2) (3) (2)
----- ----- ----
$(20) $(13) $ 9
===== ===== ====
EDC's revenues were lower compared to prior periods due to lower gas volumes and prices and lower oil prices.
PSRC's revenues were lower for the three months ended September 30, 1994 due to lower gains from security
investments and lower interest and dividend income and were higher for the nine and twelve months ended September
30, 1994 due to higher income from partnerships, leases and gains from security investments, partially offset by
lower interest and dividend income. CEA's revenues were higher for all 1994 periods due to increased productivity
at certain projects.
</TABLE>
<PAGE>
<PAGE> 35
<TABLE>
<CAPTION>
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
PSE&G - ELECTRIC ENERGY COSTS
Electric energy costs decreased $14 million or 7%, $43 million, or 8% and $64 million, or 9%, during the three,
nine and twelve month periods ended September 30, 1994, respectively, from the comparable 1993 periods. The
significant components of these changes follow:
Increase or (Decrease)
-----------------------------------------------------------
Three Months Ended Nine Months Ended Twelve Months Ended
September 30, September 30, September 30,
1994 vs. 1993 1994 vs. 1993 1994 vs. 1993
------------------ ---------------- -------------------
(Millions)
<S> <C> <C> <C>
Change in prices paid for
fuel and power purchases .......... $ - $ 40 $ 48
Kilowatthour generation ............ (3) 8 9
Adjustment of actual costs to match
recoveries through revenues (A) ... (11) (91) (121)
---- ---- ----
Total Electric Energy Costs......... $(14) $(43) $(64)
==== ==== ====
<FN>
(A) Reflects the change in deferred over(under) recovered energy costs.
The decrease in total costs during the third quarter of 1994 from the comparable 1993 quarter was principally
due to the underrecovery of energy costs and a 1% decrease in kilowatthour generation, partially offset by a 17%
increase in purchased power, principally from the PJM interconnection.
The decrease in total costs during the first nine months of 1994 from the comparable 1993 period was
principally due to the underrecovery of energy costs, partially offset by a 16% increase in purchased power costs
and a 1% increase in kilowatthour generation.
The decrease in total costs for the twelve month period ended September 30, 1994 from the comparable 1993
period was principally the result of an adjustment in the recovery of energy costs resulting from the BPU base rate
case decision effective January 1, 1993, partially offset by a 17% increase in purchased power costs and a 1%
increase in kilowatthour generation.
/TABLE
<PAGE>
<PAGE> 36
<TABLE>
<CAPTION>
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
GAS SUPPLY COSTS
Gas supply costs increased $5 million, or 4%, $142 million, or 23% and $140 million, or 16% during the three,
nine and twelve month periods ended September 30, 1994, respectively, from the comparable 1993 periods. The
significant components of these changes follow:
Increase or (Decrease)
-----------------------------------------------------------
Three Months Ended Nine Months Ended Twelve Months Ended
September 30, September 30, September 30,
1994 vs. 1993 1994 vs. 1993 1994 vs. 1993
------------------- ----------------- -------------------
(Millions)
<S> <C> <C> <C>
Change in prices paid for
gas supplies ...................... $(20) $ 24 $ 32
Therm sendout ...................... 9 58 66
Refunds from pipeline suppliers .... (4) (14) 7
Adjustment of actual costs to match
recoveries through revenues (A) .. 20 74 35
---- ---- ----
Total Gas Supply Costs ............. $ 5 $142 $140
==== ==== ====
<FN>
(A) Reflects the change in deferred over(under) recovered gas costs.
For the quarter ended September 30, 1994, lower gas prices were offset by greater sendout, increased sales
to Nonutility Generators (NUGS) and overrecovered gas costs. The increases in total costs for the nine and twelve
month periods ended September 30, 1994 compared to similar periods in 1993 were primarily attributable to increased
sendout as a result of the colder winter, higher gas prices and increased sales to NUGS.
/TABLE
<PAGE>
<PAGE> 37
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
LIQUIDITY AND CAPITAL RESOURCES
Enterprise's liquidity is affected by maturing debt (See Note 2 - Long-
Term Debt of Notes to Consolidated Financial Statements), investment and
acquisition activities, the capital requirements of PSE&G's construction
program and permitted regulatory recovery of expenses and collection of
revenues. (For additional information see Note 3 - Commitments and Contingent
Liabilities of Notes to Consolidated Financial Statements.)
PSE&G
For the nine month period ended September 30, 1994, PSE&G had utility
plant additions, excluding AFDC, of $551 million, an increase of $17 million
from the corresponding period in 1993. For the twelve month period ended
September 30, 1994, PSE&G had utility plant additions, excluding AFDC, of $880
million, an increase of $79 million from the corresponding period in 1993.
Construction expenditures were related to improvements in PSE&G's existing
power plants, transmission and distribution system, gas system and common
facilities.
PSE&G expects that it will be able to generate internally a majority of
its capital requirements, including construction expenditures, over the next
five years. (See Note 1 - Rate Matters and Note 3 - Commitments and Contingent
Liabilities of Notes to Consolidated Financial Statements.)
Legislation effective January 1, 1992 phased in an acceleration of payment
of the New Jersey Gross Receipts and Franchise Tax (NJGRT) during 1992-94, so
that for 1994 and for each year thereafter PSE&G will be paying its estimated
current year's NJGRT liability in April of each such year. In April 1993, PSE&G
paid $899 million (its 1992 NJGRT plus 50% of its estimated 1993 NJGRT). In
April 1994, PSE&G paid $847 million (the remainder of its 1993 NJGRT plus its
1994 estimated NJGRT). Such prepayment had been partially funded by PSE&G
through the issuance of short-term debt. On September 20, 1994, the BPU
approved a petition filed by PSE&G to replace a portion of such short-term
funding with $100 million of long-term debt. (See External Financing)
<PAGE>
<PAGE> 38
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
EDHI
During the next five years, a majority of EDHI's capital requirements are
expected to be provided from operational cash flows. EDHI intends to focus its
efforts on CEA and EDC, its energy-related core businesses. CEA is expected to
be the primary vehicle for its business growth and EDC is projected to attain
and maintain a reserve base, principally through exploration and drilling, at
approximately 900 billion cubic feet equivalent (BCFE), approximately 11% above
the December 1993 level. During 1994, EDC has expended approximately $121
million to acquire or discover domestic and international reserves. At
September 30, 1994, EDC had reserves of 808 BCFE. PSRC will make limited new
investments related to EDHI's core business, while EGDC will exit the real
estate business in a prudent manner. Over the next several years, EDHI and its
subsidiaries will also be required to refinance a portion of their maturing
debt in order to meet their capital requirements. Any inability to extend or
replace maturing debt at current levels and interest rates may affect future
earnings and result in an increase in EDHI's cost of capital.
A partnership, in which EGDC is an 80% partner ($21 million equity
investment), is currently negotiating to extend or replace a mortgage financing
of $40.2 million which is maturing on January 2, 1995. EGDC has guaranteed
$5.3 million of the financing. No assurances can be given that EGDC or the
partnership will be able to extend this loan or obtain a replacement loan in
the amount of the existing loan. Failure to extend or replace the existing
loan at the current outstanding loan balance, or at current interest rates, may
result in an increase in the amount of equity capital which EGDC will require.
PSRC is a limited partner in various limited partnerships and is committed
to make investments from time to time, upon the request of the respective
general partners. At September 30, 1994, $118 million remained as PSRC's
unfunded commitment subject to call.
<PAGE>
<PAGE> 39
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
EDHI and each of its subsidiaries are subject to restrictive business and
financial covenants contained in existing debt agreements and are required to
not exceed various debt to equity ratios which vary from 3:1 to 1.75:1. EDHI
is also required to maintain a twelve months earnings before interest and taxes
to interest (EBIT) coverage ratio of at least 1.35:1. As of September 30, 1994
and 1993, EDHI had consolidated debt to equity ratios of 1.15:1 and 1.63:1 and,
for the twelve months ended September 30, 1994 and 1993, EBIT coverage ratios,
as defined to exclude the effects of EGDC, of 2.01:1 and 1.90:1, respectively.
Compliance with applicable financial covenants will depend upon future levels
of earnings, among other things, as to which no assurance can be given. (See
Note 4 - Long-Term Debt of Notes to Consolidated Financial Statements.)
INTERNAL GENERATION OF CASH FROM OPERATIONS
Enterprise's cash provided by operating activities increased $81 million
to $728 million for the nine months ended September 30, 1994 compared to the
corresponding period in 1993. This increase was primarily due to a decrease
in accounts receivable, an increase in net income, an increase in depreciation
and amortization and a decrease in NJGRT payments, partially offset by a
decrease in accounts payable. (For more information see Enterprise Earnings
and Revenues.)
Enterprise's cash provided by operating activities for the twelve months
ended September 30, 1994 decreased $45 million to $1.089 billion when compared
to the corresponding period in 1993. This decrease was primarily due to the
lower recovery of electric energy and gas costs through PSE&G's LEAC and LGAC
and a decrease in accounts payable. Partially offsetting these cash outflows
were a decrease in accounts receivables, the loss from property impairments and
a decrease in inventories. (For additional information see Enterprise Earnings
and Revenues.)
<PAGE>
<PAGE> 40
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
LIQUIDITY AND CAPITAL RESOURCES (Continued)
EXTERNAL FINANCINGS
Cash Flows from Financing Activities:
Nine Months Ended Twelve Months Ended
September 30, September 30,
------------------ -------------------
1994 1993 1994 1993
------- -------- -------- ---------
(Millions)
Enterprise:
Issuance of Common Stock (A) $ 28 $ 241 $ 61 $ 276
------- -------- ------- -------
Cash Dividends Paid on
Common Stock (B) (396) (390) (527) (517)
------- -------- ------- -------
Increase in Book Overdrafts 51 - 51 -
------- -------- ------- -------
PSE&G: (C)
Net increase in Short-Term
Debt (D) 30 215 90 151
Issuance of Long-Term Debt 752 (E) 1,828 961 1,828
Redemption of Long-Term Debt and
Other Obligations (382)(E) (1422) (742) (1,420)
Deferral of Debt Expense - net (10) (42) (26) (42)
Issuance of Preferred Stock 75 (F) 75 75 75
Redemption of Preferred Stock (45)(F) - (45) -
Other (1) (1) (1) (1)
-------- -------- ------- -------
Total PSE&G 419 653 312 591
-------- -------- ------- -------
EDHI:
Net decrease in Short-Term
Debt (G) (45) (85) (50) (60)
Issuance of Long-Term Debt - 132 78 132
Redemption of Long-Term Debt and
Other Obligations (39) (153) (298) (154)
Other 1 1 (6) 2
-------- -------- ------- -------
Total EDHI (83) (105) (276) (80)
-------- -------- ------- -------
Net cash provided by (used in)
financing activities $ 19 $ 399 $ (379) $ 270
======== ======== ======= =======
(A) During the first nine months of 1994, Enterprise issued and sold
1,009,674 shares of Common Stock through its DRIP and Employee Stock Purchase
Plan. All such sales of Common Stock took place during the first quarter of
1994. The net proceeds from such sales, aggregated approximately $28 million
and were used by Enterprise to make equity investments in EDHI.
<PAGE>
<PAGE> 41
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
LIQUIDITY AND CAPITAL RESOURCES - (Continued)
EXTERNAL FINANCINGS - (Continued)
EDHI utilized such funds to repay outstanding debt at maturity. Book value per
share was $21.71 at September 30, 1994, compared to $21.26 at September 30,
1993 and $21.07 at December 31, 1993.
(B) See DIVIDENDS.
(C) Under the terms of PSE&G's Mortgage and Restated Certificate of
Incorporation at September 30, 1994, PSE&G would qualify to issue an additional
$4.204 billion of its Bonds at a rate of 8.875% or $3.668 billion of Preferred
Stock at a rate of 8.875%. PSE&G's Restated Certificate of Incorporation
limits the issuance of Preferred Stock to $1.0 billion, of which $610 million
is outstanding.
In addition, as a prerequisite to the issuance of additional Bonds,
PSE&G's Mortgage requires a 2:1 ratio of earnings to fixed charges as computed
thereunder. For the twelve months ended September 30, 1994 such ratio was
3.43:1.
On September 20, 1994, the BPU approved PSE&G's petition to replace a
portion of its short-term debt funding for NJGRT with $100 million of long-term
debt. Under authority previously granted by the BPU and expiring on December
31, 1994, PSE&G is authorized to issue an additional $441 million principal
amount of its Bonds or MTNs for the purpose of refunding higher cost
securities. PSE&G filed a Petition on October 11, 1994 for authority to issue
$370 million of Bonds/MTNs through 1996 for refunding purposes and to extend
the authority for the $100 million of Bonds/MTNs approved in the September 20th
Order.
The BPU has authorized PSE&G to issue not more than $800 million of its
short-term obligations at any one time outstanding, consisting of commercial
paper and other unsecured borrowings from banks and other lenders through
December 31, 1994. On November 2, 1994, PSE&G filed a Petition with the BPU
requesting authority to issue short-term interim obligations not exceeding $1
billion through January 1, 1997. On September 30, 1994, PSE&G had $563 million
of short-term debt outstanding.
PSE&G renewed and increased to $800 million a revolving credit agreement
with a group of commercial banks through September 30, 1995. On September 30,
1994, there was no short-term debt outstanding under this credit agreement.
<PAGE>
<PAGE> 42
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
LIQUIDITY AND CAPITAL RESOURCES - (Continued)
(D) Includes commercial paper issued and/or redeemed by PSE&G Fuel Corporation
(Fuelco) and guaranteed by PSE&G pursuant to a commercial paper program
supported by a bank revolving credit facility to finance the acquisition of a
42.49% undivided interest in the nuclear fuel for Peach Bottom. Fuelco has a
$150 million commercial paper program through September 1996. On September 30,
1994, Fuelco had $80 million of its commercial paper outstanding.
(E) Enterprise's long-term debt aggregated $5.278 billion as of September 30,
1994, of which $4.486 billion was attributable to PSE&G and $792 million to
EDHI.
During the nine months ended September 30, 1994, PSE&G issued a total of
$692 million principal amount of its Bonds and $60 million principal amount of
MTN's. The net proceeds from the sale of the Bonds and MTNs were used by PSE&G
to redeem $376 million principal amount, including sinking funds requirements,
of its higher cost Bonds, to defease in substance $122.5 million principal
amount of higher cost Bonds and to pay a portion of its current construction
program.
On October 31, 1994, PSE&G issued a total of $98 million principal amount
of its Bonds and on November 1, 1994 redeemed a total of $98 million principal
amount of its Bonds.
For additional detail see Note 2 - Long-Term Debt of Notes to Consolidated
Financial Statements.
(F) In February 1994, PSE&G issued and sold $75 million of its Cumulative
Preferred Stock. In March 1994, PSE&G used the funds from the above sale to
redeem $45 million of its higher priced Cumulative Preferred Stock. The
remaining funds were added to the general funds of PSE&G and used to pay a
portion of its then outstanding short-term debt obligations, which were
principally incurred to fund a portion of its construction expenditures.
On November 4, 1994, the BPU approved an Order extending through December
31, 1995 PSE&G's authority to issue an additional $330 million of Preferred
Stock, including the guarantee of $210 million of Monthly Income Preferred
Securities (MIPS) of Public Service Electric and Gas Capital, L. P., a limited
partnership of which PSE&G is general partner.
(G) Funding has a commercial paper program, supported by a commercial bank
letter of credit and credit facility, through November 18, 1995 in the amount
of $225 million. As of September 30, 1994, Funding had no borrowings
outstanding under this program.
<PAGE>
<PAGE> 43
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
LIQUIDITY AND CAPITAL RESOURCES - (Concluded)
Funding has a $225 million revolving credit facility which terminates on
November 18, 1995. As of September 30, 1994, Funding had no borrowings
outstanding under this facility.
NUCLEAR OPERATIONS
Salem
Salem Nuclear Generating Station, Unit 1 (Salem 1) experienced an
automatic reactor shutdown which occurred on April 7, 1994 due to excessive
grass from the Delaware River clogging the station's water intake structure.
Subsequent to the shutdown a Precautionary Alert was declared at 1:16 p.m. and
this emergency classification was terminated at 8:20 p.m. No abnormal releases
of radiation to the environment occurred during the event and there was no
threat to the public health and safety. Salem 1 remained out of service while
PSE&G and the NRC investigated the event and PSE&G implemented remedial
actions. PSE&G agreed not to restart the unit until approval was obtained from
the NRC.
On April 7, 1994, the NRC sent an Augmented Inspection Team (AIT) to Salem
to investigate the event. The AIT completed its on-site investigation on April
15, 1994 and presented its preliminary findings at a public meeting held at the
station site on April 26, 1994. The AIT concluded that the event had
challenged the reactor coolant system pressure boundary, that operator error
had occurred which complicated the event, that management had allowed equipment
problems to exist which made operations difficult for plant operators and that
some equipment was degraded by the event, but overall the plant performed as
designed. The AIT further concluded that operator use of emergency operating
procedures was good and that investigation and trouble-shooting efforts were
good. PSE&G's investigation of the event resulted in conclusions similar to
those of the AIT. On May 9, 1994, PSE&G and the NRC staff presented their
findings to the NRC Commissioners, and PSE&G described the actions it had taken
to prepare Salem 1 for restart. On May 11, 1994, Senator Joseph Biden of
Delaware wrote to the NRC expressing his concerns regarding early restart of
the unit and requested assurances "that all outstanding mechanical and
management problems have been resolved and that a fine in the maximum amount
will be levied upon the licensees". The unit returned to service on June 4,
1994.
PSE&G has continued to address matters to improve Salem's operations
identified by itself, the NRC and the Institute of Nuclear Power Operations
(INPO), an independent industry group consisting of utilities, including PSE&G,
that provides self critical analysis of nuclear operations to member utilities.
Actions are being taken to improve the plant's material condition, to upgrade
procedures and to enhance personnel performance, as well as other efforts to
such end, including appointment of a new station manager and senior plant
staff. In addition, PSE&G, effective September 29, 1994, established its
nuclear operations as a separate business unit reporting directly to the
<PAGE>
<PAGE> 44
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Concluded)
NUCLEAR OPERATIONS - (Concluded)
Chairman and Chief Executive Officer of PSE&G and hired Leon R. Eliason as its
Chief Nuclear Officer and President of its new Nuclear Business Unit.
On October 5, 1994, the NRC, as a result of the AIT inspection, as well
as a follow-up inspection, issued a Notice of Violation and Proposed Imposition
of Civil Penalty to PSE&G advising that it proposed to impose an aggregate fine
of $500,000 for violations relating to the April 7, 1994 event, including: the
failure to identify and correct significant conditions adverse to quality at
the facility related to spurious steam flow signals and inoperable atmospheric
relief valves, both of which, it concluded, led to unnecessary safety
injections during the event; the failure to identify and correct significant
conditions adverse to quality at the facility related to providing adequate
training, guidance and procedures for the operators to cope with the event; and
the failure by supervisors to exercise appropriate command and control of the
operations staff and the reactor during the event. In assessing its fine, the
NRC advised PSE&G that it "expects an aggressive and prompt response to this
matter as neither PSE&G nor the NRC can accept (1) such performance in the
future and (2) the large number of equipment related events that have recently
occurred at Salem." The NRC has stated that, after reviewing PSE&G's response
to the Notice, including PSE&G's proposed corrective actions and the results
of future inspections, it will determine whether further NRC enforcement action
is necessary to ensure compliance with NRC regulatory requirements.
PSE&G's own assessments, as well as those by the NRC and INPO, indicate
that additional efforts are required to further improve operating performance,
and PSE&G is committed to taking the necessary actions to address Salem's
performance needs. PSE&G has indicated that the proposed $500,000 fine will
be paid without challenge. No assurance can be given as to what, if any,
further or additional actions may be taken by the NRC or what further or
additional actions may be taken by PSE&G, or required by the NRC, to improve
Salem's performance.
Peach Bottom
PSE&G has been advised by PECO that, by letter dated October 18, 1994, the
NRC has approved PECO's request to rerate the authorized maximum reactor core
power levels of both Peach Bottom units by 5% to 3,458 megawatts thermal (Mwt)
from the current limits of 3,293 Mwt. The amendment of the Peach Bottom 2
facility operating license was effective upon the date of the NRC approval
letter. The amendment of the Peach Bottom 3 facility operating license will
be effective upon completion of the implementation of associated hardware
changes, which are to be completed during Peach Bottom 3's next refueling
outage scheduled for the fall of 1995.
<PAGE>
<PAGE> 45
<TABLE>
<CAPTION>
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Continued)
Following are changes in or additions to the significant factors reported in PSE&G's Annual Report to the SEC
on Form 10-K for 1993 and Quarterly Reports Form 10-Q for March and June 1994, affecting the consolidated financial
condition of PSE&G and its subsidiaries as reflected in their consolidated results of operations. This discussion
refers to the consolidated financial statements and related notes herein of PSE&G and should be read in conjunction
with such statements and notes.
Except as modified below, the information required by this item is incorporated herein by reference to the
following portions of Enterprise's MD&A, insofar as they relate to PSE&G and its subsidiaries: Net Income;
Dividends; Revenues -- PSE&G Electric; PSE&G Gas; PSE&G Electric Energy Costs; Liquidity and Capital Resources -
PSE&G and External Financings.
GAS SUPPLY COSTS
Gas supply costs increased $4 million, or 3%, $138 million, or 22% and $131 million, or 14% during the three,
nine and twelve month periods ended September 30, 1994, respectively, from the comparable 1993 periods. The
significant components of these changes follow:
Increase or (Decrease)
-------------------------------------------------------------
Three Months Ended Nine Months Ended Twelve Months Ended
September 30, September 30, September 30,
1994 vs. 1993 1994 vs. 1993 1994 vs. 1993
------------------ ----------------- --------------------
(Millions)
<S> <C> <C> <C>
Change in prices paid for
gas supplies ...................... $(21) $ 19 $ 20
Therm sendout ...................... 9 59 68
Refunds from pipeline suppliers .... (4) (14) 8
Adjustment of actual costs to match
recoveries through revenues (A) .. 20 74 35
---- ---- ----
Total Gas Supply Costs ............. $ 4 $138 $131
==== ==== ====
<FN>
(A) Reflects the change in deferred over(under) recovered gas costs.
For the quarter ended September 30, 1994, lower gas prices, were offset by greater sendout, increased sales
to NUGs and overrecovered gas costs. The increases in total costs for the nine and twelve month periods ended
September 30, 1994 compared to similar periods in 1993 were primarily attributable to increased sendout as a result
of the colder winter, higher gas prices and increased sales to NUGS.
/TABLE
<PAGE>
<PAGE> 46
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (Concluded)
LIQUIDITY AND CAPITAL RESOURCES
INTERNAL GENERATION OF CASH FROM OPERATIONS
PSE&G's cash provided by operating activities increased $99 million to
$577 million for the nine months ended September 30, 1994 compared to the
corresponding period in 1993. This increase was primarily due to an increase
in net income, an increase in depreciation and amortization, a decrease in
accounts receivable and a decrease in NJGRT payments, partially offset by a
decrease in accounts payable. (For additional information see PSE&G -
Earnings and Revenues.)
PSE&G's net cash provided by operating activities for the twelve months
ended September 30, 1994 decreased by $5 million to $922 million when compared
to the corresponding period in 1993. This decrease was primarily due to a
lower recovery of electric energy and gas costs through PSE&G's LEAC and LGAC
and a decrease in accounts payable. Substantially offsetting these cash
outflows were the increase in net income, an increase in deferred income taxes,
a decrease in accounts receivable, a decrease in inventories and a decrease in
NJGRT payments.
<PAGE>
<PAGE> 47
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
PART II. OTHER INFORMATION
Item 5. Other Information.
- ------ ------------------
Certain information reported under Item 1 of Part I of Enterprise's and
PSE&G's Annual Reports to the Securities and Exchange Commission on Form 10-K
for 1993 (Form 10-K) and Item 2 of Part II of Enterprise's and PSE&G's
Quarterly Reports to the SEC on Form 10-Q for the periods ended March 31, 1994
(March 10-Q) and June 30, 1994 (June 10-Q) are updated below. References are
to the related pages and paragraph(s) of the Form 10-K, March 10-Q and June 10-
Q.
Form 10-K, page 4, paragraph 2 and June 10-Q, page 51, paragraph 2
------------------------------------------------------------------
On March 31, 1994, PSE&G filed proposed new rate schedules to implement
the BPU guidelines on unbundled gas services. This will enable PSE&G's
remaining 175,000 industrial and commercial gas customers to participate in the
competitive market after regulatory approval is received. The proposed
transportation rate schedules produce the same non-fuel revenue per therm as
the customers' existing sales service rate schedules. Thus, PSE&G's earnings
would be unaffected whether the customers remain on sales service or convert
to transportation service. It is expected that the BPU will approve the
proposal in late 1994 and that interested customers would be transporting gas
soon thereafter. (See Note 1 - Rate Matters of Notes to Consolidated Financial
Statements)
Form 10-K, page 9, paragraph 5, March 10-Q and June 10-Q, page 46,
-------------------------------------------------------------------
paragraph 1
- -----------
For a discussion of the recent outage at the Salem Nuclear Generating
Station, Unit 1 see Management's Discussion and Analysis of Financial Condition
and Results of Operations - Nuclear Operations.
As by-products of their operations, nuclear generating units, including
those in which PSE&G owns an interest, produce low level radioactive waste
(LLRW). Such wastes include paper, plastics, protective clothing, water
purification materials and other materials which must be properly disposed.
Prior to July 1, 1994 such materials were accumulated on site and disposed of
at a federally licensed permanent disposal facility. However, in accordance
with the Low Level Radioactive Waste Policy Act, as amended, operating disposal
sites have exercised their authority to either cease operations or deny access
to states which are not members of their regional compact. For PSE&G and all
other New Jersey LLRW generators, this means that effective July 1, 1994 waste
must be temporarily stored on site until New Jersey provides for permanent
disposal.
<PAGE>
<PAGE> 48
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
PART II. OTHER INFORMATION - (Continued)
Item 5. Other Information.
- ------ ------------------
Form 10-K, page 11, paragraph 1 and June 10-Q, page 52, paragraph 1 -
---------------------------------------------------------------------
In June 1991, New Jersey enacted legislation providing for funding of the
estimated $90 million cost of establishing a disposal facility. The state
recovers the costs through fees paid by LLRW generators. PSE&G's overall share
is expected to be about 40% of the total cost. New Jersey has introduced a
volunteer siting process as its plan for establishing a LLRW disposal facility
by the year 2000. Public meetings are being held across the state in an effort
to provide information to, and obtain feedback from the public. The plan is
to be approved by November 1994 and an official invitation to municipalities
to become volunteer hosts for a disposal facility will be announced sometime
in 1995.
Until New Jersey provides for disposal, PSE&G will temporarily store LLRW
in a newly constructed facility at the plant site. This facility was completed
in September 1994 at a total cost of $7.1 million. It will provide five years'
storage for LLRW from Hope Creek and Salem. PECO has advised PSE&G that: the
Peach Bottom plants located in Pennsylvania and operated by PECO are also
providing temporary on-site storage which began July 1, 1994; Pennsylvania is
pursuing site development via state selected candidate sites along with a
volunteer plan option; PECO has constructed an on-site storage facility at
Peach Bottom; and adequate space is available for its waste for at least five
years. PSE&G will continue to accrue monies for stored LLRW from Salem, Hope
Creek and Peach Bottom with a concurrent liability for the amount to be paid
at the time of ultimate disposal when New Jersey and Pennsylvania provide
storage facilities.
<PAGE>
<PAGE> 49
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
PART II. OTHER INFORMATION - (Continued)
Item 5. Other Information.
- ------ ------------------
Form 10-K, page 15, paragraph 5 and June 10-Q, page 54, paragraph 1
-------------------------------------------------------------------
On May 25, 1994, the DOE published a Notice of Inquiry indicating its
preliminary view on waste acceptance. The DOE stated that it has no statutory
obligation to accept spent nuclear fuel beginning in 1998 in the absence of an
operational repository or other facility constructed under the Nuclear Waste
Policy Act of 1982, as amended, although the DOE in implementing the standard
contract may have created an expectation that it would begin accepting such
spent nuclear fuel in 1998. The Notice of Inquiry is intended to elicit the
views of the affected parties on 1) The Department's preliminary view on the
1998 obligation issue, 2) the need for an interim, away-from-reactor storage
facility prior to repository operations, 3) options for offsetting, through the
use of a nuclear waste fund, a portion of the financial burden that may be
incurred by utilities to store spent fuel at reactor sites beyond 1998.
Moreover, with respect to safety, on October 18, 1990, the NRC determined that
spent nuclear fuel generated in any reactor can be stored safely and without
significant environmental impact in reactor facility storage pools or in
independent spent fuel storage installations located at reactor or away-from-
reactor sites for at least 30 years beyond the licensed life for operation
(which may include the term of a revised or renewed license).
In June 1994, two separate lawsuits were filed by a group of states and
a group of utilities, respectively, in the U. S. Court of Appeals for the
District of Columbia Circuit to compel DOE to accept spent fuel by 1998. On
July 19, 1994, the BPU voted to join the lawsuit brought by the group of
states. PSE&G is not a party to the lawsuit brought by the group of utilities.
Salem 1 and 2 have adequate on-site temporary storage capability through
March 1998 and March 2002, respectively, when operational full core discharge
capability requirements are considered. PSE&G has developed an integrated
strategy to meet the longer term Salem and Hope Creek spent fuel storage needs.
In May 1994, PSE&G received a license from the NRC to replace the existing high
density racks in the spent fuel pools of Salem 1 and 2 with maximum density
racks. The Salem re-racking project is ongoing and is expected to extend the
storage capability through March 2008 for Salem 1 and March 2012 for Salem 2,
considering operational full core discharge requirements. The Hope Creek pool
is fully racked and it has capacity to hold spent fuel through September 2007,
considering operational full core discharge requirements. PECO has advised
PSE&G that spent fuel racks at Peach Bottom 2 have storage capacity until 2000
for Unit 2 and 1999 for Unit 3 prior to loss of full core reserve occurring,
and that expansion of storage capacity beyond such dates is being investigated.
<PAGE>
<PAGE> 50
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
PART II. OTHER INFORMATION - (Continued)
Item 5. Other Information.
- ------ ------------------
Form 10-K, page 20, first paragraph 1, March 10-Q, page 47,
---------------------------------------------------------------
paragraph 1, June 10-Q, page 55, paragraph 1
--------------------------------------------
In response to a BPU directive, PSE&G surveyed EMF levels at 19 schools
located within 100 feet of its electric transmission lines. In April 1994, the
survey results were provided to the BPU and officials of such schools. The
survey has generated requests by five schools for additional information and
has resulted in a heightened concern about the emerging EMF issue. One Board
of Education has agreed to pay PSE&G to reconfigure certain transmission
facilities. That work has been completed. A second Board of Education
requested estimates of engineering costs to reconfigure transmission lines at
its expense.
Form 10-K, page 23, Salem Station
---------------------------------
For additional information see Note 3 - Commitments and Contingent
Liabilities of Notes to Consolidated Financial Statements.
Form 10-K, page 26, paragraph 5
-------------------------------
As a member of a group of utility companies against whom EPA has asserted
a claim for clean-up of the Metal Bank superfund site in Philadelphia,
Pennsylvania and pursuant to an Administrative Order on Consent, PSE&G has
participated in the funding and oversight of an Remedial Investment and
Feasibility Study (RI/FS) of the site. The RI/FS was recently completed and
the RI/FS Report was submitted to EPA on October 14, 1994. The RI/FS Report
proposes various remedial alternatives for consideration by EPA in its
selection of a remedy for the site. The alternatives proposed in the RI/FS
range in cost from approximately $2 million to approximately $90 million.
However, the RI/FS proposes a remedy ranging in cost from $15 to $30 million.
It is expected that during 1995 EPA will select a remedy and issue a Record of
Decision memorializing this remedy selection. At that time it is anticipated
that EPA will assess a claim against PSE&G and the other similarly situated
utility companies, and perhaps others as well, for the performance or funding
of the selected remedy. PSE&G's share of the costs of the proposed remedy may
approximate $7 million.
<PAGE>
<PAGE> 51
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
PART II. OTHER INFORMATION - (Continued)
Item 5. Other Information - (Concluded)
- ------ -------------------------------
June 10-Q, page 55, paragraph 3
--------------------------------
In October 1990, General Electric (GE) reported that crack indications
were discovered near the seam welds of the core shroud assembly in a GE Boiling
Water Reactor (BWR) located outside the United States. As a result, GE issued
a letter requesting that the owners of GE BWR plants take interim corrective
actions, including a review of fabrication records and visual examinations of
accessible areas of the core shroud seam welds. PSE&G (Hope Creek) and PECO
(Peach Bottom) are participating in a GE BWR Owners Group to evaluate this
issue and develop long-term corrective actions. During the spring 1994
refueling outage, PSE&G inspected the shroud of Hope Creek in accordance with
GE's recommendations and found no cracks. PSE&G is working closely with GE and
the BWR Owners Group on coordination of inspections, evaluations and repair
options, if required. PSE&G expects minimal impact due to the age and
materials of the Hope Creek shroud and the historical maintenance of low
conductivity water chemistry. For these reasons Hope Creek has been placed in
the lowest susceptibility category by the BWR Owner Group.
PECO has advised PSE&G that Peach Bottom 3 was examined in October
1993 during the last refueling outage and crack indications were identified at
two locations. In November 3, 1993, PECO presented its findings to the NRC and
provided justification for continued operation of Unit 3 for another two year
cycle with crack indications. PECO has also advised that Peach Bottom 2 was
examined in October 1994 during its recently completed refueling outage.
Although some crack indications were identified, they were considered to be
much less severe than those previously found on Unit 3, and no repairs were
required to operate Unit 2 for another two-year cycle.
<PAGE>
<PAGE> 52
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
PART II. OTHER INFORMATION - (Concluded)
Item 6. Exhibits and Reports on Form 8-K.
- ------ --------------------------------
(a) A listing of exhibits being filed with this document is as follows:
Exhibit
Number Document
------- --------------------------------------------------------------
4a(87) Supplemental Indenture dated May 1, 1994 between PSE&G
and First Fidelity Bank, National Association, New Jersey, as
Trustee, providing for the issue of Mortgage Bonds, Pollution
Control Series P
4a(88) Supplemental Indenture dated June 1, 1994 between PSE&G and
First Fidelity Bank, National Association, New Jersey, as
Trustee, providing for the issue of Mortgage Bonds, Pollution
Control Series Q
4a(89) Supplemental Indenture dated August 1, 1994 between PSE&G
and First Fidelity Bank, National Association, New Jersey,
as Trustee, providing for the issue of Mortgage Bonds,
Pollution Control Series R
4a(90) Supplemental Indenture dated October 1, 1994 (No. 1) between
PSE&G and First Fidelity Bank, National Association, New Jersey,
as Trustee, providing for the issue of Mortgage Bonds,
Pollution Control Series S
4a(91) Supplemental Indenture dated October 1, 1994 (No. 2) between
PSE&G and First Fidelity Bank, National Association, New Jersey,
as Trustee, providing for the issue of Mortgage Bonds,
Pollution Control Series T
12 Computation of Ratios of Earnings to Fixed Charges plus
Preferred Stock Dividend Requirements (Enterprise)
12(A) Computation of Ratios of Earnings to Fixed Charges (PSE&G)
12(B) Computation of Ratios of Earnings to Fixed Charges
plus Preferred Stock Dividend Requirements (PSE&G)
27 Financial Data Schedules
(b) The following report on Form 8-K was filed by Enterprise and
PSE&G during the Third quarter of 1994 under Item 5:
Date of Report Item Reported
--------------- -------------
October 6, 1994 NRC fine to Salem Unit 1 for the April 7,
1994 event and Electric Levelized Energy
Adjustment Clause.
<PAGE>
<PAGE> 53
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused these reports to be signed on their respective
behalf by the undersigned thereunto duly authorized.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
--------------------------------------------
(Registrants)
By PATRICIA A. RADO
--------------------------------------
Patricia A. Rado
Vice President and Controller
(Principal Accounting Officer)
Date: November 8, 1994
<PAGE>
<PAGE>
<PAGE> 1
SUPPLEMENTAL MORTGAGE
- ----------------------------------------------------------------------------
Supplemental Indenture
DATED September 1, 1994
------------------
SUPPLEMENTAL TO
FIRST AND REFUNDING MORTGAGE
DATED AUGUST 1, 1924
------------------
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
TO
FIRST FIDELITY BANK, NATIONAL ASSOCIATION,
TRUSTEE
765 BROAD STREET
NEWARK, NEW JERSEY 07101
------------------
PROVIDING FOR THE ISSUE OF
FIRST AND REFUNDING MORTGAGE BONDS,
POLLUTION CONTROL SERIES Q
- -----------------------------------------------------------------------------
RECORD IN MORTGAGE BOOK AND RETURN TO:
JAMES T. FORAN, ESQ.
80 PARK PLAZA, T5B
P.O. BOX 570
NEWARK, N.J. 07101
This instrument prepared by
DONALD S. LEIBOWITZ
(DONALD S. LEIBOWITZ, ESQ.)
<PAGE>
<PAGE> 2
TABLE OF CONTENTS
------------------
PAGE
-----------
RECITALS...................................................... 1
FORM OF BOND.................................................. 4
FORM OF CERTIFICATE OF AUTHENTICATION......................... 9
GRANTING CLAUSES.............................................. 9
ARTICLE I.
BONDS OF THE POLLUTION CONTROL SERIES Q.
DESCRIPTION OF POLLUTION CONTROL SERIES Q..................... 11
ARTICLE II.
REDEMPTION OF BONDS--POLLUTION CONTROL SERIES Q.
SECTION 2.01. Redemption--Redemption Prices................. 12
SECTION 2.02. Notice of Redemption.......................... 14
SECTION 2.03. Interest on Called Bonds to Cease............. 16
SECTION 2.04. Bonds Called in Part.......................... 16
SECTION 2.05. Provisions of Indenture not Applicable........ 16
ARTICLE III.
MISCELLANEOUS.
SECTION 3.01. Authentication of Bonds of Pollution Control
Series Q.................................... 16
SECTION 3.02. Additional Restrictions on Authentication of
Additional Bonds Under Indenture............ 17
SECTION 3.03. Restriction on Dividends...................... 17
SECTION 3.04. Use of Facsimile Seal and Signatures.......... 18
SECTION 3.05. Effective Period of Supplemental Indenture.... 18
SECTION 3.06. Credits with Respect to Payments.............. 18
SECTION 3.07. Time for Making of Payment.................... 19
SECTION 3.08. Effect of Approval of Board of Regulatory
Commissioners of the State of New Jersey.... 19
SECTION 3.09. Execution in Counterparts..................... 19
Acknowledgments............................................... 20
Certificate of Residence...................................... 22
<PAGE>
<PAGE> 3
SUPPLEMENTAL INDENTURE, dated the 1st day of September, 1994, for
convenience of reference and effective from the time of execution and delivery
hereof, between PUBLIC SERVICE ELECTRIC AND GAS COMPANY, a corporation
organized under the laws of the State of New Jersey, hereinafter called the
"Company", party of the first part, and FIRST FIDELITY BANK, NATIONAL
ASSOCIATION, a national banking association organized under the laws of the
United States of America, as Trustee under the indenture dated August 1, 1924,
below mentioned, hereinafter called the "Trustee", party of the second part.
WHEREAS, on July 25, 1924, the Company executed and delivered to Fidelity
Union Trust Company (now known as First Fidelity Bank, National Association),
a certain indenture dated August 1, 1924 (hereinafter called the "Indenture"),
to secure and to provide for the issue of First and Refunding Mortgage Gold
Bonds of the Company; and
WHEREAS, the Indenture has been recorded in the following counties of the
State of New Jersey, in the offices, and therein in the books and at the pages,
as follows:
PAGE
COUNTY OFFICE BOOK NUMBER NUMBER
- ------ ------ ----------- -------
Atlantic Clerk's 1955 of Mortgages 160
Bergen Clerk's 94 of Chattel Mortgages 123 etc.
693 of Mortgages 88 etc.
Burlington Clerk's 52 of Chattel Mortgages Folio 8 etc.
177 of Mortgages Folio 354 etc.
Camden Register's 45 of Chattel Mortgages 184 etc.
239 of Mortgages 1 etc.
Cumberland Clerk's 786 of Mortgages 638 & c.
Essex Register's 437 of Chattel Mortgages 1-48
T-51 of Mortgages 341-392
Gloucester Clerk's 34 of Chattel Mortgages 123 etc.
142 of Mortgages 7 etc.
Hudson Register's 453 of Chattel Mortgages 9 etc.
1245 of Mortgages 484 etc.
Hunterdon Clerk's 151 of Mortgages 344
Mercer Clerk's 67 of Chattel Mortgages 1 etc.
384 of Mortgages 1 etc.
Middlesex Clerk's 113 of Chattel Mortgages 3 etc.
437 of Mortgages 294 etc.
Monmouth Clerk's 951 of Mortgages 291 & c.
Morris Clerk's N-3 of Chattel Mortgages 446 etc.
F-10 of Mortgages 269 etc.
Ocean Clerk's 1809 of Mortgages 40
Passaic Register's M-6 of Chattel Mortgages 178 etc.
R-13 of Mortgages 268 etc.
Salem Clerk's 267 of Mortgages 249 & c.
<PAGE>
<PAGE> 4
PAGE
COUNTY OFFICE BOOK NUMBER NUMBER
- ------ ------ ----------- -------
Somerset Clerk's 46 of Chattel Mortgages 207 etc.
N-10 of Mortgages 1 etc.
Sussex Clerk's 123 of Mortgages 10 & c.
Union Register's 128 of Chattel Mortgages 28 & c.
664 of Mortgages 259 etc.
Warren Clerk's 124 of Mortgages 141 etc.
and
WHEREAS, the Indenture has also been recorded in the following counties
of the Commonwealth of Pennsylvania, in the offices, and therein in the books
and at the pages, as follows:
PAGE
COUNTY OFFICE BOOK NUMBER NUMBER
- ------ ------ ----------- -------
Adams Recorder's 22 of Mortgages 105
Armstrong Recorder's 208 of Mortgages 381
Bedford Recorder's 90 of Mortgages 917
Blair Recorder's 671 of Mortgages 430
Cambria Recorder's 407 of Mortgages 352
Cumberland Recorder's 500 of Mortgages 136
Franklin Recorder's 285 of Mortgages 373
Huntingdon Recorder's 128 of Mortgages 47
Indiana Recorder's 197 of Mortgages 281
Lancaster Recorder's 984 of Mortgages 1
Montgomery Recorder's 5053 of Mortgages 1221
Westmoreland Recorder's 1281 of Mortgages 198
York Recorder's 31-V of Mortgages 446
and
WHEREAS, the Indenture granted, bargained, sold, aliened, remised,
released, conveyed, confirmed, assigned, transferred and set over unto the
Trustee certain property of the Company, more fully set forth and described in
the Indenture, then owned or which might thereafter be acquired by the Company;
and
WHEREAS, the Company, by various supplemental indentures, supplemental
to the Indenture, the last of which was dated May 1, 1994, has granted,
bargained, sold, aliened, remised, released, conveyed, confirmed, assigned,
transferred and set over unto the Trustee certain property of the Company
acquired by it after the execution and delivery of the Indenture; and
WHEREAS, since the execution and delivery of said supplemental indenture
dated May 1, 1994, the Company has acquired property which, in
<PAGE>
<PAGE> 5
accordance with the provisions of the Indenture, is subject to the lien thereof
and the Company desires to confirm such lien; and
WHEREAS, the Indenture has been amended or supplemented from time to
time; and
WHEREAS, it is provided in the Indenture that no bonds other than those
of the 5 1/2% Series due 1959 therein authorized may be issued thereunder
unless a supplemental indenture providing for the issue of such additional
bonds shall have been executed and delivered by the Company to the Trustee; and
WHEREAS, The Industrial Pollution Control Financing Authority of Salem
County, New Jersey (now known as The Pollution Control Financing Authority of
Salem County, New Jersey) (the "Authority") has previously issued and sold its
Pollution Control Revenue Bonds, 1984 Series A (Public Service Electric and Gas
Company Project) (the "1984 Authority Bonds") to finance a portion of the
Company's respective interests in certain pollution control facilities
(collectively, the "Project") at the Hope Creek Generating Station and the
Salem Generating Station in Lower Alloways Creek Township, Salem County, New
Jersey; and
WHEREAS, the Authority is making provision for the issuance and sale of
its Pollution Control Revenue Refunding Bonds, 1994 Series B (Public Service
Electric and Gas Company Project) (the "1994 Series B Authority Bonds") to
provide funds for making a loan to the Company to provide for refinancing of
a portion of the costs of the Project, including the refunding and redemption
of the 1984 Authority Bonds; and
WHEREAS, the 1994 Series B Authority Bonds are to be issued under an
Indenture of Trust dated as of May 1, 1993, as supplemented and amended (as so
supplemented and amended, the "Authority Indenture"), between the Authority and
First Fidelity Bank, National Association, New Jersey (now known as First
Fidelity Bank, National Association) as trustee (the "Authority Trustee"); and
WHEREAS, the Company has entered into a Pollution Control Facilities Loan
Agreement dated as of May 1, 1993, as supplemented (the "Agreement"), with the
Authority providing, among other things, for the loan by the
<PAGE>
<PAGE> 6
Authority to the Company of funds to finance a portion of the costs of the
Project, including the refunding and redemption of the 1984 Authority Bonds,
and for the issuance by the Company to the Authority Trustee, as assignee of
the Authority, of First and Refunding Mortgage Bonds of the Company to evidence
the Company's obligation to repay said loan, and for such purposes the Company
desires to provide for the issue of $104,365,000 aggregate principal amount of
bonds secured by the Indenture of a series to be designated as "First and
Refunding Mortgage Bonds, Pollution Control Series Q" (hereinafter sometimes
called "Pollution Control Series Q"); and
WHEREAS, the text of the bonds of the Pollution Control Series Q and of
the certificate of authentication to be borne by the bonds of the Pollution
Control Series Q shall be substantially of the following tenor:
[FORM OF BOND]
This Bond is not transferable except as provided in the Indenture of Trust
dated as of May 1, 1993, as supplemented and amended, between The Pollution
Control Financing Authority of Salem County (New Jersey) and First Fidelity
Bank, National Association, New Jersey (now known as First Fidelity Bank,
National Association), as trustee (as so supplemented and amended, the
"Authority Indenture").
<PAGE>
<PAGE> 7
REGISTERED REGISTERED
NUMBER AMOUNT
R- $104,365,000
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
FIRST AND REFUNDING MORTGAGE BOND,
POLLUTION CONTROL SERIES Q
Public Service Electric and Gas Company (hereinafter called the
"Company"), a corporation of the State of New Jersey, for value received,
hereby promises to pay to First Fidelity Bank, National Association, as trustee
under the Authority Indenture, or registered assigns, the principal sum of One
Hundred Four Million Three Hundred Sixty-Five Thousand Dollars, on June 1,
2031, and to pay interest thereon from the date hereof, at the rate of 6.25%
per annum, and until payment of said principal sum, such interest to be payable
June 1 and December 1 in each year.
Both the principal hereof and interest hereon shall be paid at the
principal office of First Fidelity Bank, National Association in the City of
Newark, State of New Jersey, or at the corporate trust office of any paying
agent appointed by the Company, in such coin or currency of the United States
of America as at the time of payment shall constitute legal tender for the
payment of public and private debts.
This Bond is one of the First and Refunding Mortgage Bonds of the Company
issued and to be issued under and pursuant to, and all equally secured by, an
indenture of mortgage or deed of trust dated August 1, 1924, between the
Company and First Fidelity Bank, National Association (formerly known as
Fidelity Union Trust Company), a national banking association of the United
States of America, as Trustee, as supplemented and amended by the supplemental
indentures thereto, including the supplemental indenture dated June 1, 1994.
This Bond is one of the Bonds of the Pollution Control Series Q, which series
is limited to the aggregate principal amount of $104,365,000 and is issued
pursuant to said supplemental indenture dated June 1, 1994. Reference is hereby
made to said indenture and all supplements thereto for a specification of the
principal amount of Bonds from time to time issuable thereunder, and for a
description of the properties mortgaged and conveyed or assigned to said
Trustee or its successors, the nature and extent of
<PAGE>
<PAGE> 8
the security, and the rights of the holders of said Bonds and any coupons
appurtenant thereto, and of the Trustee in respect of such security.
In and by said indenture, as amended and supplemented, it is provided that
with the written approval of the Company and the Trustee, any of the provisions
of said indenture may from time to time be eliminated or modified and other
provisions may be added thereto provided the change does not alter the annual
interest rate, redemption price or date, date of maturity or amount payable on
maturity of any then outstanding Bond or conflict with the Trust Indenture Act
of 1939 as then in effect, and provided the holders of 85% in principal amount
of the Bonds secured by said indenture and then outstanding (including, if such
change affect the Bonds of one or more series but less than all series then
outstanding, a like percentage of the then outstanding Bonds of each series
affected by such change, and excluding Bonds owned or controlled by the Company
or by the parties owning at least 10% of the outstanding voting stock of the
Company, as more fully specified in said indenture) consent in writing thereto,
all as more fully set forth in said indenture, as amended and supplemented.
First and Refunding Mortgage Bonds issuable under said indenture are
issuable in series, and the Bonds of any series may be for varying principal
amounts and in the form of coupon Bonds and of registered Bonds without
coupons, and the Bonds of any one series may differ from the Bonds of any other
series as to date, maturity, interest rate and otherwise, all as in said
indenture provided and set forth. The Bonds of the Pollution Control Series Q,
in which this Bond is included, are designated "First and Refunding Mortgage
Bonds, Pollution Control Series Q".
In case of the happening of an event of default as specified in said
indenture and in the supplemental indenture dated March 1, 1942 supplemental
thereto, the principal sum of the Bonds of this issue may be declared or may
become due and payable forthwith, in the manner and with the effect in said
indenture provided.
The Bonds of this series are subject to redemption as provided in said
supplemental indenture dated June 1, 1994.
This Bond is transferable, but only as provided in the Indenture of Trust
dated as of May 1, 1993, as supplemented and amended, made by The
<PAGE>
<PAGE> 9
Pollution Control Financing Authority of Salem County (New Jersey) to First
Fidelity Bank, National Association, New Jersey (now known as First Fidelity
Bank, National Association), as trustee, upon surrender hereof, by the
registered owner in person or by attorney duly authorized in writing, at the
principal office of the Trustee; upon any such transfer a new Bond similar
hereto will be issued to the transferee. No service charge shall be made for
any such transfer, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto. The Company and the Trustee and any paying agent may deem and treat
the person in whose name this Bond is registered as the absolute owner hereof
for the purpose of receiving payment of or on account of the principal hereof
and the interest hereon and for all other purposes; and neither the Company nor
the Trustee nor any paying agent shall be affected by any notice to the
contrary.
The Bonds of this series are issuable only in fully registered form, in
any denomination authorized by the Company.
No recourse under or upon any obligation, covenant or agreement contained
in said indenture or in any indenture supplemental thereto, or in any Bond or
coupon issued thereunder, or because of any indebtedness arising thereunder,
shall be had against any incorporator, or against any past, present or future
stockholder, officer or director, as such, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, under any rule of law, statute or constitutional provision or by
the enforcement of any assessment or by any legal or equitable proceeding or
otherwise; it being expressly agreed and understood that said indenture, any
indenture supplemental thereto and the obligations issued thereunder, are
solely corporate obligations, and that no personal liability whatever shall
attach to, or be incurred by, such incorporators, stockholders, officers or
directors, as such, of the Company, or of any successor corporation, or any of
them, because of the incurring of the indebtedness thereby authorized, or under
or by reason of any of the obligations, covenants or agreements contained in
the indenture or in any indenture supplemental thereto or in any of the Bonds
or coupons issued thereunder, or implied therefrom.
This Bond shall not be entitled to any security or benefit under said
indenture, as amended and supplemented, and shall not become valid or
<PAGE>
<PAGE> 10
obligatory for any purpose, until the certificate of authentication, hereon
endorsed, shall have been signed by First Fidelity Bank, National Association,
as Trustee, or by its successor in trust under said indenture.
IN WITNESS WHEREOF, the Company has caused this Bond to be duly executed
by its proper officers under its corporate seal.
Dated
PUBLIC SERVICE ELECTRIC AND GAS
COMPANY,
By
(Vice) President
(Seal)
Attest:
(Assistant) Secretary
<PAGE>
<PAGE> 11
[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds of the series designated therein which are
described in the within-mentioned indenture and supplemental indenture dated
June 1, 1994, as secured thereby.
FIRST FIDELITY BANK, NATIONAL
ASSOCIATION, TRUSTEE,
BY
Authorized Signatory
-------------------
WHEREAS, the execution and delivery of this supplemental indenture have
been duly authorized by the Board of Directors of the Company; and
WHEREAS, the Company represents that all things necessary to make the
bonds of the Pollution Control Series Q hereinafter described, when duly
authenticated by the Trustee and issued by the Company, valid, binding and
legal obligations of the Company, and to make this supplemental indenture a
valid and binding agreement supplemental to the Indenture, have been done and
performed:
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH that the Company,
in consideration of the premises and the execution and delivery by the Trustee
of this supplemental indenture, and in pursuance of the covenants and
agreements contained in the Indenture and for other good and valuable
consideration, the receipt of which is hereby acknowledged, has granted,
bargained, sold, aliened, remised, released, conveyed, confirmed, assigned,
transferred and set over, and by these presents does grant, bargain, sell,
alien, remise, release, convey, confirm, assign, transfer and set over unto the
Trustee, its successors and assigns, forever, all the right, title and interest
of the Company in and to all property of every kind and description (except
cash, accounts and bills receivable and all merchandise bought, sold or
manufactured for sale in the ordinary course of the Company's business,
<PAGE>
<PAGE> 12
stocks, bonds or other corporate obligations or securities, other than such as
are described in Part V of the Granting Clauses of the Indenture, not acquired
with the proceeds of bonds secured by the Indenture, and except as in the
Indenture and herein otherwise expressly excluded) acquired by the Company
since the execution and delivery of the supplemental indenture dated May 1,
1994, supplemental to the Indenture (except any such property duly released
from, or disposed of free from, the lien of the Indenture, in accordance with
the provisions thereof) and all such property which at any time hereafter may
be acquired by the Company;
All of which property it is intended shall be included in and granted by
this supplemental indenture and covered by the lien of the Indenture as
heretofore and hereby amended and supplemented;
UNDER AND SUBJECT to any encumbrances or mortgages existing on property
acquired by the Company at the time of such acquisition and not heretofore
discharged of record; and
SUBJECT, also, to the exceptions, reservations and provisions in the
Indenture and in this supplemental indenture recited, and to the liens,
reservations, exceptions, limitations, conditions and restrictions imposed by
or contained in the several deeds, grants, franchises and contracts or other
instruments through which the Company acquired or claims title to the aforesaid
property; and SUBJECT, also, to existing leases, to liens on easements or
rights of way, to liens for taxes, assessments and governmental charges not in
default or the payment of which is deferred, pending appeal or other contest
by legal proceedings, pursuant to Section 4 of Article Five of the Indenture,
or the payment of which is deferred pending billing, transfer of title or final
determination of amount, to easements for alleys, streets, highways, rights of
way and railroads that may run across or encroach upon the said property, to
joint pole and similar agreements, to undetermined liens and charges, if any,
incidental to construction, and other encumbrances permitted by the Indenture
as theretofore and hereby amended and supplemented;
TO HAVE AND TO HOLD the property hereby conveyed or assigned, or intended
to be conveyed or assigned, unto the Trustee, its successor or successors and
assigns, forever;
<PAGE>
<PAGE> 13
IN TRUST, NEVERTHELESS, upon the terms, conditions and trusts set forth
in the Indenture as heretofore and hereby amended and supplemented, to the end
that the said property shall be subject to the lien of the Indenture as
heretofore and hereby amended and supplemented, with the same force and effect
as though said property had been included in the Granting Clauses of the
Indenture at the time of the execution and delivery thereof;
AND THIS SUPPLEMENTAL INDENTURE FURTHER WITNESSETH that for the
considerations aforesaid, it is hereby covenanted between the Company and the
Trustee as follows:
ARTICLE I.
BONDS OF THE POLLUTION CONTROL SERIES Q.
The series of bonds authorized by this supplemental indenture to be issued
under and secured by the Indenture shall be designated "First and Refunding
Mortgage Bonds, Pollution Control Series Q"; shall be limited to the aggregate
principal amount of $104,365,000; shall be issued initially to the Authority
Trustee, as assignee of the Authority, to evidence the Company's obligation to
repay the loan to finance a portion of the costs of the Project made pursuant
to the Agreement; and shall mature and bear interest as set forth in the form
of bond hereinbefore described; provided, however, that the Company shall
receive certain credits against principal and interest obligations as set forth
in Section 3.06 hereof. The date of each bond of the Pollution Control Series
Q shall be the semi-annual interest payment date next preceding the date of
authentication, unless such date of authentication be an interest payment date,
in which case the date shall be the date of authentication, or unless such date
of authentication be prior to the first semi-annual interest payment date, in
which case the date shall be June 1, 1994.
Bonds of the Pollution Control Series Q shall be issued as fully
registered bonds in any denomination authorized by the Company. Interest on
bonds of the Pollution Control Series Q shall be payable semi-annually on June
1 and December 1 of each year, payable initially on December 1, 1994, and shall
be payable as to both principal and interest in such coin or currency of the
United States of America as at the time of payment shall constitute legal
tender for
<PAGE>
<PAGE> 14
the payment of public and private debts, at the principal office of the
Trustee, or at the corporate trust office of any paying agent appointed by the
Company.
Bonds of the Pollution Control Series Q shall be transferable (but only
as provided in the Authority Indenture) upon surrender thereof for cancellation
by the registered owner in person or by attorney duly authorized in writing at
said office of the Trustee.
The Company hereby waives any right to make a charge for any transfer of
bonds of the Pollution Control Series Q, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto.
ARTICLE II.
REDEMPTION OF BONDS--POLLUTION CONTROL SERIES Q.
SECTION 2.01. Redemption--Redemption Prices. Bonds of the Pollution
Control Series Q shall be subject to redemption prior to maturity, but if in
part only in integral multiples of $5,000, under the conditions and upon the
payment of the amounts specified in the following subsections, together in each
case with interest accrued to the redemption date:
(a) at the option of the Company, on any date on or after June 1,
2004, either as a whole or in part, at the following redemption prices,
expressed in percentages of the principal amount of the bonds to be
redeemed:
REDEMPTION PERIOD REDEMPTION PRICE
- ----------------- -----------------
June 1, 2004 through May 31, 2005..................... 102%
June 1, 2005 through May 31, 2006..................... 101%
June 1, 2006 and thereafter........................... 100%
(b) at the option of the Company, as a whole at any time at 100% of
the principal amount thereof, if any of the following events shall have
occurred and if, within one year of the occurrence of any of the following
events, the Company shall have given evidence to the Trustee and the
Authority Trustee, in each case by a certificate signed by the
President or
<PAGE>
<PAGE> 15
a Vice President, and by the Secretary or an Assistant Secretary, of the
Company to the effect that one of such events has occurred and is
continuing, and describing the same:
(1) (i) the Hope Creek Generating Station or the Salem Generating
Station or a substantial portion of the facilities of the Project
shall have been damaged or destroyed to such extent that (a) the Hope
Creek Generating Station or the Salem Generating Station or the
facilities of the Project cannot be reasonably restored within a
period of six months from the date of such damage or destruction to
the condition thereof immediately preceding such damage or
destruction, or (b) the Company is thereby prevented or likely to be
prevented from carrying on its normal operation of the Hope Creek
Generating Station or the Salem Generating Station or the facilities
of the Project for a period of six months from the date of such damage
or destruction, or (c) it would not be practicable or desirable to
rebuild, repair or restore the Hope Creek Generating Station or the
Salem Generating Station or the facilities of the Project; or
(2) title to, or the temporary use of, all or substantially all
of the Hope Creek Generating Station or the Salem Generating Station
or a substantial portion of the facilities of the Project shall have
been taken or condemned by a competent authority which taking or
condemnation results or is likely to result in the Company being
thereby prevented or likely to be prevented from carrying on its
normal operation of the Hope Creek Generating Station or the Salem
Generating Station or the facilities of the Project for a period of
six months; or
(3) changes in the cost or availability of raw materials,
operating supplies, or facilities or technological or other changes
have made the continued operation of all or substantially all of the
Hope Creek Generating Station or the Salem Generating Station or a
substantial portion of the facilities of the Project uneconomical; or
(4) any laws, rules, regulations or orders of any governmental or
regulatory entity shall require a shutdown of the Hope Creek
Generating Station or the Salem Generating Station or a substantial
portion of the facilities of the Project or prevent the Company from
carrying on its normal operation of the Hope Creek Generating
<PAGE>
<PAGE> 16
Station or the Salem Generating Station or the facilities of the
Project, in each case for a period of six months.
(c) in, whole or in part (if, in the opinion of nationally
recognized bond counsel, such partial redemption will preserve the
exclusion from gross income for Federal income tax purposes of interest
on the 1994 Series B Authority Bonds) at 100% of the principal amount
thereof to be redeemed, within 180 days after a "final determination"
(i.e., the issuance of a published or private ruling or technical
advice) of the Internal Revenue Service or a judicial decision in a
proceeding by any court of competent jurisdiction in the United States
(from which ruling, advice or decision no further right of appeal
exists), in all cases in which the Company has participated or been a
party or has been given an opportunity to participate and has failed to
do so (no such decree or judgment by any court or action by the Internal
Revenue Service to be considered final unless the owner of the 1994
Series B Authority Bonds involved in such proceeding or action has given
the Company and the Authority Trustee prompt written notice of the
commencement thereof and offered the Company, at the Company's expense,
the opportunity to control the defense thereof) that, as a result of a
failure by the Company to observe any covenant, agreement, representation
or warranty in the Agreement, the interest payable on the 1994 Series B
Authority Bonds is includable in the gross income for Federal income tax
purposes of the holder thereof, other than a "substantial user" of the
Project or a "related person" as provided in Section 147(a) of the
Internal Revenue Code of 1986, as amended.
SECTION 2.02. Notice of Redemption. (a) The election of the Company under
subsection (a) or (b) of Section 2.01 hereof to redeem any of the bonds of the
Pollution Control Series Q shall be evidenced by a resolution of the Board of
Directors of the Company calling for redemption on a stated date of all or, in
the case of subsection (a), a stated principal amount thereof. To exercise its
option to redeem the bonds of the Pollution Control Series Q under subsection
(a) or (b) of Section 2.01 hereof, the Company shall deliver to the Trustee,
the Authority and the Authority Trustee a certified copy of said resolution
calling all or, in the case of subsection (a), a stated principal amount of the
bonds of the Pollution Control Series Q for redemption on a date not less than
40 days nor more than 90 days from the date said resolution is delivered. The
delivery to the Authority Trustee of a certified copy of such
<PAGE>
<PAGE> 17
resolution shall constitute notice to the Authority Trustee of the redemption
referred to therein, on the terms specified therein. The Company shall on or
before such redemption date deposit with the Trustee, as paying agent
hereunder, the total applicable redemption price of all the bonds so called,
with interest accrued thereon to the redemption date, less any credits to which
the Company may be entitled pursuant to Section 3.06 hereof, and the Trustee,
as such paying agent, shall apply such funds on the redemption date to the
redemption of the bonds so called.
(b) The Company shall, within 10 days after the occurrence of a "final
determination" under subsection (c) of Section 2.01 hereof, deliver to the
Trustee written notice of such "final determination". The Company shall, by
resolution of its Board of Directors, fix a redemption date for such redemption
and shall deliver to the Trustee, the Authority and the Authority Trustee a
certified copy of said resolution at least 40 days prior to the date so
selected for redemption. Such redemption date may be any day not more than 180
days after the occurrence of such "final determination". If the Trustee does
not receive written notice of such selection by the Company within 140 days
after the date of the occurrence of such "final determination", then the
redemption date shall be the 180th day after the occurrence of such "final
determination". On or before such redemption date, the Company shall deposit
with the Trustee, as paying agent hereunder, the total redemption price of the
bonds so called, with interest accrued thereon to the redemption date, less any
credits to which the Company may be entitled pursuant to Section 3.06 hereof,
and the Trustee, as such paying agent, shall apply such funds, on the
redemption date, to the redemption of the bonds so called. The delivery to the
Authority Trustee of a certified copy of such resolution shall constitute
notice to the Authority Trustee of the redemption referred to therein on the
terms specified therein.
<PAGE>
<PAGE> 18
SECTION 2.03. Interest on Called Bonds to Cease. Each bond or portion
thereof of the Pollution Control Series Q called for redemption under Section
2.02 hereof shall be due and payable at the office of the Trustee, as paying
agent hereunder, at the applicable redemption price and on the specified
redemption date, anything herein or in such bond to the contrary
notwithstanding. From and after the date when each bond or portion thereof of
the Pollution Control Series Q shall be due and payable as aforesaid (unless
upon said date the full amount due thereon shall not be held by or provided to
the Trustee, as paying agent hereunder, and be immediately available for
payment), all further interest shall cease to accrue on such bond or on such
portion thereof, as the case may be.
SECTION 2.04. Bonds Called in Part. If only a portion of any bond of the
Pollution Control Series Q shall be called for redemption pursuant to Section
2.02 hereof, the notice of redemption hereinbefore provided for shall specify
the portion of the principal amount thereof to be redeemed. Upon payment of the
portion so called for redemption, the Trustee, as paying agent hereunder, shall
give prompt written notice thereof to the Company.
SECTION 2.05. Provisions of Indenture Not Applicable. The provisions of
Article Four of the Indenture, as amended and supplemented, shall not apply to
the procedure for the exercise of any right of redemption reserved by the
Company, or to any mandatory redemption provided in this Article in respect of
the bonds of the Pollution Control Series Q. There shall be no sinking fund for
the bonds of the Pollution Control Series Q.
ARTICLE III.
MISCELLANEOUS.
SECTION 3.01. Authentication of Bonds of Pollution Control Series Q.
None of the bonds of the Pollution Control Series Q, the issue of which is
provided for by this supplemental indenture, shall be authenticated by the
Trustee except in accordance with the provisions of the Indenture, as amended
and supplemented, and this supplemental indenture, and upon compliance with the
conditions in that behalf therein contained.
<PAGE>
<PAGE> 19
SECTION 3.02. Additional Restrictions on Authentication of Additional
Bonds Under Indenture. The Company covenants that from and after the date of
execution of this supplemental indenture, no additional bonds (as defined in
Section 1 of Article Two of the Indenture) shall be authenticated and delivered
by the Trustee under Subdivision A of Section 4 of said Article Two on account
of additions or improvements to the mortgaged property
(1) unless the net earnings of the Company for the period required
by Subdivision C of Section 6 of said Article Two shall have been at least
twice the fixed charges (in lieu of 1 3/4 times such fixed charges, as
required by said Subdivision C); and for the purpose of this condition (a)
such fixed charges shall in each case include interest on the bonds
applied for, notwithstanding the parenthetical provision contained in
clause (4) of said Subdivision C, and (b) in computing such net earnings
there shall be included in expenses of operation (under paragraph (c) of
said Subdivision C) all charges against earnings for depreciation,
renewals or replacements, and all certificates with respect to net
earnings delivered to the Trustee in connection with any authentication
of additional bonds under said Article Two shall so state; and
(2) except to the extent of 60% (in lieu of 75% as permitted by
Subdivision A of Section 7 of said Article Two) of the cost or fair value
to the Company of the additions or improvements forming the basis for such
authentication of additional bonds.
SECTION 3.03. Restriction on Dividends. The Company will not declare or
pay any dividend on any shares of its common stock (other than dividends
payable in shares of its common stock) or make any other distribution on any
such shares, or purchase or otherwise acquire any such shares (except shares
acquired without cost to the Company) whenever such action would reduce the
earned surplus of the Company to an amount less than $10,000,000 or such lesser
amount as may remain after deducting from said $10,000,000 all amounts
appearing in the books of account of the Company on December 31, 1948, which
shall thereafter, pursuant to any order or rule of any regulatory body entered
after said date, be required to be removed, in whole or in part, from the books
of account of the Company by charges to earned surplus.
<PAGE>
<PAGE> 20
SECTION 3.04. Use of Facsimile Seal and Signatures. The seal of the
Company and any or all signatures of the officers of the Company upon any of
the bonds of the Pollution Control Series Q may be facsimiles.
SECTION 3.05. Effective Period of Supplemental Indenture. The preceding
provisions of Articles I, II and III of this supplemental indenture shall
remain in effect only so long as any of the bonds of the Pollution Control
Series Q shall remain outstanding.
SECTION 3.06. Credits with Respect to Payments. (a) The Company shall
be entitled to a credit against its obligation to pay interest on the bonds of
the Pollution Control Series Q equal to interest paid on the 1994 Series B
Authority Bonds out of the accrued interest received upon the original issuance
of the 1994 Series B Authority Bonds and the earnings on the investment
thereof, as provided in the Authority Indenture, which are held by the
Authority Trustee at the time of the interest payment date.
(b) The Company shall be entitled to credits against amounts otherwise
payable in respect of the bonds of the Pollution Control Series Q in an amount
corresponding to (i) the principal amount of any 1994 Series B Authority Bond
surrendered to the Authority Trustee by the Company or the Authority, or
purchased by the Authority Trustee, for cancellation and (ii) the amount of
money held by the Authority Trustee and available and designated for the
payment of principal or redemption price of and interest on the 1994 Series B
Authority Bonds, as the case may be, regardless of the source of payment to the
Authority Trustee of such moneys, and the Trustee, as paying agent hereunder,
shall give prompt written notice to the Company of any such credit with respect
to the payment of interest.
(c) The Trustee, as paying agent hereunder, shall (i) promptly notify the
Company of each deposit in the Debt Service Fund under the Authority Indenture,
(ii) provide evidence to the Company that such deposit has been credited to
such Fund and (iii) give prompt written notice to the Company of any credits
with respect to payment of principal or redemption price of and interest on the
bonds of the Pollution Control Series Q.
(d) A certificate of the Company signed by the President or any Vice
President, and by the Secretary or any Assistant Secretary, and consented to
<PAGE> 21
by the Authority Trustee, stating that the Company is entitled to a credit
under this Section 3.06 and setting forth the basis therefor in reasonable
detail, shall be conclusive evidence of such entitlement, and the Trustee shall
accept such certificate without further investigation or verification of the
matters stated therein.
<PAGE>
<PAGE> 21
SECTION 3.07. Time for Making of Payment. All payments of principal or
redemption price of and interest on the bonds of the Pollution Control Series
Q shall be made to the Authority Trustee in such funds as shall constitute
immediately available funds when payment is due. In any case where the date of
payment of the principal or redemption price of or interest on the bonds of the
Pollution Control Series Q or the date fixed for redemption of any such bonds
shall be in the city of payment a Saturday, Sunday or a legal holiday or a day
on which banking institutions are authorized by law to close, then such payment
need not be made on such date but may be made on the next succeeding business
day with the same force and effect as if made on the date of maturity or the
date fixed for redemption, and no interest on such payment shall accrue for the
period after such date.
SECTION 3.08. Effect of Approval of Board of Regulatory Commissioners of
the State of New Jersey. The approval of the Board of Regulatory Commissioners
of the State of New Jersey of the execution and delivery of these presents and
of the issue of any bonds of the Pollution Control Series Q shall not be
construed as approval of said Board of any other act, matter or thing which
requires approval of said Board under the laws of the State of New Jersey.
SECTION 3.09. Execution in Counterparts. For the purpose of facilitating
the recording hereof, this supplemental indenture has been executed in several
counterparts, each of which shall be and shall be taken to be an original, and
all collectively but one instrument.
<PAGE>
<PAGE> 22
IN WITNESS WHEREOF, Public Service Electric and Gas Company, party hereto
of the first part, after due corporate and other proceedings, has caused this
supplemental indenture to be signed and acknowledged or proved by its
President, one of its Vice Presidents and its corporate seal hereunto to be
affixed and to be attested by the signature of its Secretary or an Assistant
Secretary; and First Fidelity Bank, National Association, as Trustee, party
hereto of the second part, has caused this supplemental indenture to be signed
and acknowledged or proved by its President, one of its Vice Presidents or one
of its Assistant Vice Presidents and its corporate seal to be hereunto affixed
and to be attested by the signature of its Cashier, one of its Assistant
Cashiers, or one of its Corporate Trust Officers. Executed and delivered this
17th day of June, 1994.
PUBLIC SERVICE ELECTRIC AND GAS
COMPANY
By
F.J. RIEPL
(F.J. Riepl)
Vice President
Attest:
L.J. DECIBUS
(L.J. Decibus)
Assistant Secretary
FIRST FIDELITY BANK, NATIONAL
ASSOCIATION
By
F. GALLAGHER
(F. Gallagher)
Assistant Vice President
Attest:
D. DOWDELL
(D. Dowdell)
Corporate Trust Officer
<PAGE>
<PAGE> 23
STATE OF NEW JERSEY)
) ss.:
COUNTY OF ESSEX )
BE IT REMEMBERED, that on this 17th day of June, 1994, before me, the
subscriber, a Notary Public of the State of New Jersey, personally appeared
F.J. Riepl who, I am satisfied, is a Vice President of PUBLIC SERVICE ELECTRIC
AND GAS COMPANY, one of the corporations named in and which executed the
foregoing instrument, and is the person who signed the said instrument as such
officer for and on behalf of such corporation, and I having first made known
to him the contents thereof, he did acknowledge that he signed the said
instrument as such officer, that the said instrument was made by such
corporation and sealed with its corporate seal, that the said instrument is the
voluntary act and deed of such corporation, made by virtue of authority from
its Board of Directors, and that said corporation, the mortgagor, has received
a true copy of said instrument.
JEAN M. SIEZ
JEAN M. SIEZ
A NOTARY PUBLIC OF NEW JERSEY
My Commission Expires Nov. 28, 1995
(NOTARY SEAL)
STATE OF NEW JERSEY)
) ss.:
COUNTY OF ESSEX )
BE IT REMEMBERED, that on this 17th day of June, 1994, before me, the
subscriber, a Notary Public of the State of New Jersey, personally appeared F.
Gallagher who, I am satisfied, is an Assistant Vice President of FIRST FIDELITY
BANK, NATIONAL ASSOCIATION, one of the corporations named in and which executed
the foregoing instrument, and is the person who signed the said instrument as
such officer, for and on behalf of such corporation, and I having first made
known to him the contents thereof, he did acknowledge that he signed the said
instrument as such officer, that the said instrument was made by such
corporation and sealed with its corporate seal; and that the said instrument
is the voluntary act and deed of such corporation, made by virtue of authority
from its Board of Directors.
JACQUELYN E. ONUFER
JACQUELYN E. ONUFER
A NOTARY PUBLIC OF NEW JERSEY
My Commission Expires July 14, 1997
(NOTARY SEAL)
<PAGE>
<PAGE> 24
CERTIFICATE OF RESIDENCE
First Fidelity Bank, National Association, Mortgagee and Trustee within
named, hereby certifies that its precise residence is 765 Broad Street, Newark,
New Jersey 07101.
FIRST FIDELITY BANK, NATIONAL
ASSOCIATION
By F. GALLAGHER
(F. Gallagher)
Assistant Vice President
<PAGE>
<PAGE>
<PAGE> 1
SUPPLEMENTAL MORTGAGE
- ----------------------------------------------------------------------------
Supplemental Indenture
DATED MAY 1, 1994
-----------------
SUPPLEMENTAL TO
FIRST AND REFUNDING MORTGAGE
DATED AUGUST 1, 1924
------------------
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
TO
FIRST FIDELITY BANK, NATIONAL ASSOCIATION,
TRUSTEE
765 BROAD STREET
NEWARK, NEW JERSEY 07101
------------------
PROVIDING FOR THE ISSUE OF
FIRST AND REFUNDING MORTGAGE BONDS,
POLLUTION CONTROL Series P
- -----------------------------------------------------------------------------
RECORD IN MORTGAGE BOOK AND RETURN TO:
JAMES T. FORAN, ESQ.
80 PARK PLAZA, T5B
P.O. BOX 570
NEWARK, N.J. 07101
This instrument prepared by
EDWARD C. FEDAK
(EDWARD C. FEDAK, ESQ.)
<PAGE>
<PAGE> 2
TABLE OF CONTENTS
------------------
PAGE
-----------
RECITALS...................................................... 1
FORM OF BOND.................................................. 4
FORM OF CERTIFICATE OF AUTHENTICATION......................... 8
GRANTING CLAUSES.............................................. 8
ARTICLE I.
BONDS OF THE POLLUTION CONTROL Series P.
DESCRIPTION OF POLLUTION CONTROL Series P..................... 10
ARTICLE II.
REDEMPTION OF BONDS--POLLUTION CONTROL Series P.
SECTION 2.01. Redemption--Redemption Prices................. 11
SECTION 2.02. Notice of Redemption.......................... 13
SECTION 2.03. Interest on Called Bonds to Cease............. 14
SECTION 2.04. Bonds Called in Part.......................... 14
SECTION 2.05. Provisions of Indenture not Applicable........ 15
ARTICLE III.
MISCELLANEOUS.
SECTION 3.01. Authentication of Bonds of Pollution Control
Series P.................................... 15
SECTION 3.02. Additional Restrictions on Authentication of
Additional Bonds Under Indenture............ 15
SECTION 3.03. Restriction on Dividends...................... 15
SECTION 3.04. Use of Facsimile Seal and Signatures.......... 16
SECTION 3.05. Effective Period of Supplemental Indenture.... 16
SECTION 3.06. Credits with Respect to Payments.............. 16
SECTION 3.07. Time for Making of Payment.................... 17
SECTION 3.08. Effect of Approval of Board of Regulatory
Commissioners of the State of New Jersey.... 17
SECTION 3.09. Execution in Counterparts..................... 17
Acknowledgments............................................... 18
Certificate of Residence...................................... 20
<PAGE>
<PAGE> 3
SUPPLEMENTAL INDENTURE, dated the 1st day of May, 1994, for convenience
of reference and effective from the time of execution and delivery hereof,
between PUBLIC SERVICE ELECTRIC AND GAS COMPANY, a corporation organized under
the laws of the State of New Jersey, hereinafter called the "Company", party
of the first part, and FIRST FIDELITY BANK, NATIONAL ASSOCIATION, a national
banking association organized under the laws of the United States of America,
as Trustee under the indenture dated August 1, 1924, below mentioned,
hereinafter called the "Trustee", party of the second part.
WHEREAS, on July 25, 1924, the Company executed and delivered to Fidelity
Union Trust Company (now known as First Fidelity Bank, National Association),
a certain indenture dated August 1, 1924 (hereinafter called the "Indenture"),
to secure and to provide for the issue of First and Refunding Mortgage Gold
Bonds of the Company; and
WHEREAS, the Indenture has been recorded in the following counties of the
State of New Jersey, in the offices, and therein in the books and at the pages,
as follows:
PAGE
COUNTY OFFICE BOOK NUMBER NUMBER
- ------ ------ ----------- -------
Atlantic Clerk's 1955 of Mortgages 160
Bergen Clerk's 94 of Chattel Mortgages 123 etc.
693 of Mortgages 88 etc.
Burlington Clerk's 52 of Chattel Mortgages Folio 8 etc.
177 of Mortgages Folio 354 etc.
Camden Register's 45 of Chattel Mortgages 184 etc.
239 of Mortgages 1 etc.
Cumberland Clerk's 786 of Mortgages 638 & c.
Essex Register's 437 of Chattel Mortgages 1-48
T-51 of Mortgages 341-392
Gloucester Clerk's 34 of Chattel Mortgages 123 etc.
142 of Mortgages 7 etc.
Hudson Register's 453 of Chattel Mortgages 9 etc.
1245 of Mortgages 484 etc.
Hunterdon Clerk's 151 of Mortgages 344
Mercer Clerk's 67 of Chattel Mortgages 1 etc.
384 of Mortgages 1 etc.
Middlesex Clerk's 113 of Chattel Mortgages 3 etc.
437 of Mortgages 294 etc.
Monmouth Clerk's 951 of Mortgages 291 & c.
Morris Clerk's N-3 of Chattel Mortgages 446 etc.
F-10 of Mortgages 269 etc.
Ocean Clerk's 1809 of Mortgages 40
Passaic Register's M-6 of Chattel Mortgages 178 etc.
R-13 of Mortgages 268 etc.
Salem Clerk's 267 of Mortgages 249 & c.
<PAGE>
<PAGE> 4
PAGE
COUNTY OFFICE BOOK NUMBER NUMBER
- ------ ------ ----------- -------
Somerset Clerk's 46 of Chattel Mortgages 207 etc.
N-10 of Mortgages 1 etc.
Sussex Clerk's 123 of Mortgages 10 & c.
Union Register's 128 of Chattel Mortgages 28 & c.
664 of Mortgages 259 etc.
Warren Clerk's 124 of Mortgages 141 etc.
and
WHEREAS, the Indenture has also been recorded in the following counties
of the Commonwealth of Pennsylvania, in the offices, and therein in the books
and at the pages, as follows:
PAGE
COUNTY OFFICE BOOK NUMBER NUMBER
- ------ ------ ----------- -------
Adams Recorder's 22 of Mortgages 105
Armstrong Recorder's 208 of Mortgages 381
Bedford Recorder's 90 of Mortgages 917
Blair Recorder's 671 of Mortgages 430
Cambria Recorder's 407 of Mortgages 352
Cumberland Recorder's 500 of Mortgages 136
Franklin Recorder's 285 of Mortgages 373
Huntingdon Recorder's 128 of Mortgages 47
Indiana Recorder's 197 of Mortgages 281
Lancaster Recorder's 984 of Mortgages 1
Montgomery Recorder's 5053 of Mortgages 1221
Westmoreland Recorder's 1281 of Mortgages 198
York Recorder's 31-V of Mortgages 446
and
WHEREAS, the Indenture granted, bargained, sold, aliened, remised,
released, conveyed, confirmed, assigned, transferred and set over unto the
Trustee certain property of the Company, more fully set forth and described in
the Indenture, then owned or which might thereafter be acquired by the Company;
and
WHEREAS, the Company, by various supplemental indentures, supplemental
to the Indenture, the last of which was dated March 1, 1994 (No.2), has
granted, bargained, sold, aliened, remised, released, conveyed, confirmed,
assigned, transferred and set over unto the Trustee certain property of the
Company acquired by it after the execution and delivery of the Indenture; and
WHEREAS, since the execution and delivery of said supplemental indenture
dated March 1, 1994 (No.2), the Company has acquired property
<PAGE>
<PAGE> 5
which in accordance with the provisions of the Indenture, is subject to the
lien thereof and the Company desires to confirm such lien; and
WHEREAS, the Indenture has been amended or supplemented from time to
time; and
WHEREAS, it is provided in the Indenture that no bonds other than those
of the 5 1/2% Series due 1959 therein authorized may be issued thereunder
unless a supplemental indenture providing for the issue of such additional
bonds shall have been executed and delivered by the Company to the Trustee; and
WHEREAS, the New Jersey Economic Development Authority (the "Authority")
is making provision for the issuance and sale of its Pollution Control Revenue
Bonds, 1994 Series A (Public Service Electric and Gas Company Project) (the
"1994 Series A Authority Bonds") the proceeds of which will be loaned to the
Company to finance a portion of the Company's 95% share of the costs of certain
pollution control facilities (the "Project") at the Hope Creek Generating
Station (the "Station") in Lower Alloways Creek Township, Salem County, New
Jersey; and
WHEREAS, the 1994 Series A Authority Bonds are to be issued under an
Indenture of Trust dated as of May 1, 1994 (the "Authority Indenture"), between
the Authority and First Fidelity Bank, National Association, as trustee (the
"Authority Trustee"); and
WHEREAS, the Company has entered into a Pollution Control Facilities Loan
Agreement dated as of May 1, 1994, as supplemented (the "Agreement"), with the
Authority providing, among other things, for the loan by the
<PAGE>
<PAGE> 6
Authority to the Company of funds to finance a portion of the costs of the
Project, and for the the issuance by the Company to the Authority Trustee, as
assignee of the Authority, of First and Refunding Mortgage Bonds of the Company
to evidence the Company's obligation to repay said loan, and for such purposes
the Company desires to provide for the issue of $100,000,000 aggregate
principal amount of bonds secured by the Indenture of a series to be designated
as "First and Refunding Mortgage Bonds, Pollution Control Series P"
(hereinafter sometimes called "Pollution Control Series P"); and
WHEREAS, the text of the bonds of the Pollution Control Series P and of
the certificate of authentication to be borne by the bonds of the Pollution
Control Series P shall be substantially of the following tenor:
[FORM OF BOND]
This Bond is not transferable except as provided in the Indenture of Trust
dated as of May 1, 1994 between the New Jersey Economic Development Authority
and First Fidelity Bank, National Association, as trustee (the "Authority
Indenture").
<PAGE>
REGISTERED REGISTERED
NUMBER AMOUNT
R- $100,000,000
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
FIRST AND REFUNDING MORTGAGE BOND,
POLLUTION CONTROL Series P
Public Service Electric and Gas Company (hereinafter called the
"Company"), a corporation of the State of New Jersey, for value received,
hereby promises to pay to First Fidelity Bank, National Association, as trustee
under the Authority Indenture, or registered assigns, the principal sum of One
Hundred Million Dollars, on May 1, 2032, and to pay interest thereon from the
date hereof, at the rate of 6.40% per annum, and until payment of said
principal sum, such interest to be payable May 1 and November 1 in each year.
Both the principal hereof and interest hereon shall be paid at the
principal office of First Fidelity Bank, National Association in the City of
Newark, State of New Jersey, or at the corporate trust office of any paying
agent appointed by the Company, in such coin or currency of the United States
of America as at the time of payment shall constitute legal tender for the
payment of public and private debts.
This Bond is one of the First and Refunding Mortgage Bonds of the Company
issued and to be issued under and pursuant to, and all equally secured by, an
indenture of mortgage or deed of trust dated August 1, 1924, between the
Company and First Fidelity Bank, National Association (formerly known as
Fidelity Union Trust Company), a national banking association of the United
States of America, as Trustee, as supplemented and amended by the supplemental
indentures thereto, including the supplemental indenture dated May 1, 1994.
This Bond is one of the Bonds of the Pollution Control Series P, which series
is limited to the aggregate principal amount of $100,000,000 and is issued
pursuant to said supplemental indenture dated May 1, 1994. <PAGE>
<PAGE> 7
Reference is hereby made to said indenture and all supplements thereto for a
specification of the principal amount of Bonds from time to time issuable
thereunder, and for a description of the properties mortgaged and conveyed or
assigned to said Trustee or its successors, the nature and extent of
the security, and the rights of the holders of said Bonds and any coupons
appurtenant thereto, and of the Trustee in respect of such security.
In and by said indenture, as amended and supplemented, it is provided that
with the written approval of the Company and the Trustee, any of the provisions
of said indenture may from time to time be eliminated or modified and other
provisions may be added thereto provided the change does not alter the annual
interest rate, redemption price or date, date of maturity or amount payable on
maturity of any then outstanding Bond or conflict with the Trust Indenture Act
of 1939 as then in effect, and provided the holders of 85% in principal amount
of the Bonds secured by said indenture and then outstanding (including, if such
change affect the Bonds of one or more series but less than all series then
outstanding, a like percentage of the then outstanding Bonds of each series
affected by such change, and excluding Bonds owned or controlled by the Company
or by the parties owning at least 10% of the outstanding voting stock of the
Company, as more fully specified in said indenture) consent in writing thereto,
all as more fully set forth in said indenture, as amended and supplemented.
First and Refunding Mortgage Bonds issuable under said indenture are
issuable in series, and the Bonds of any series may be for varying principal
amounts and in the form of coupon Bonds and of registered Bonds without
coupons, and the Bonds of any one series may differ from the Bonds of any other
series as to date, maturity, interest rate and otherwise, all as in said
indenture provided and set forth. The Bonds of the Pollution Control Series P,
in which this Bond is included, are designated "First and Refunding Mortgage
Bonds, Pollution Control Series P".
In case of the happening of an event of default as specified in said
indenture and in the supplemental indenture dated March 1, 1942 supplemental
thereto, the principal sum of the Bonds of this issue may be declared or may
become due and payable forthwith, in the manner and with the effect in said
indenture provided.
The Bonds of this series are subject to redemption as provided in said
supplemental indenture dated May 1, 1994.
This Bond is transferable, but only as provided in the Indenture of Trust
dated as of May 1, 1994, made by the New Jersey Economic Development
<PAGE>
<PAGE> 8
Authority to First Fidelity Bank, National Association, as trustee, upon
surrender hereof, by the registered owner in person or by attorney duly
authorized in writing, at the principal office of the Trustee; upon any such
transfer a new Bond similar hereto will be issued to the transferee. No service
charge shall be made for any such transfer, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto. The Company and the Trustee and any paying agent
may deem and treat the person in whose name this Bond is registered as the
absolute owner hereof for the purpose of receiving payment of or on account of
the principal hereof and the interest hereon and for all other purposes; and
neither the Company nor the Trustee nor any paying agent shall be affected by
any notice to the contrary.
The Bonds of this series are issuable only in fully registered form, in
any denomination authorized by the Company.
No recourse under or upon any obligation, covenant or agreement contained
in said indenture or in any indenture supplemental thereto, or in any Bond or
coupon issued thereunder, or because of any indebtedness arising thereunder,
shall be had against any incorporator, or against any past, present or future
stockholder, officer or director, as such, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, under any rule of law, statute or constitutional provision or by
the enforcement of any assessment or by any legal or equitable proceeding or
otherwise; it being expressly agreed and understood that said indenture, any
indenture supplemental thereto and the obligations issued thereunder, are
solely corporate obligations, and that no personal liability whatever shall
attach to, or be incurred by, such incorporators, stockholders, officers or
directors, as such, of the Company, or of any successor corporation, or any of
them, because of the incurring of the indebtedness thereby authorized, or under
or by reason of any of the obligations, covenants or agreements contained in
the indenture or in any indenture supplemental thereto or in any of the Bonds
or coupons issued thereunder, or implied therefrom.
This Bond shall not be entitled to any security or benefit under said
indenture, as amended and supplemented, and shall not become valid or
<PAGE>
<PAGE> 9
obligatory for any purpose, until the certificate of authentication, hereon
endorsed, shall have been signed by First Fidelity Bank, National Association,
as Trustee, or by its successor in trust under said indenture.
IN WITNESS WHEREOF, the Company has caused this Bond to be duly executed
by its proper officers under its corporate seal.
Dated
PUBLIC SERVICE ELECTRIC AND GAS
COMPANY,
By
(Vice) President
(Seal)
Attest:
(Assistant) Secretary
<PAGE>
<PAGE> 10
[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds of the series designated therein which are
described in the within-mentioned indenture and supplemental indenture dated
May 1, 1994, as secured thereby.
FIRST FIDELITY BANK, NATIONAL
ASSOCIATION, TRUSTEE,
BY
Authorized Signatory
-------------------
WHEREAS, the execution and delivery of this supplemental indenture have
been duly authorized by the Board of Directors of the Company; and
WHEREAS, the Company represents that all things necessary to make the
bonds of the Pollution Control Series P hereinafter described, when duly
authenticated by the Trustee and issued by the Company, valid, binding and
legal obligations of the Company, and to make this supplemental indenture a
valid and binding agreement supplemental to the Indenture, have been done and
performed:
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH that the Company,
in consideration of the premises and the execution and delivery by the Trustee
of this supplemental indenture, and in pursuance of the covenants and
agreements contained in the Indenture and for other good and valuable
consideration, the receipt of which is hereby acknowledged, has granted,
bargained, sold, aliened, remised, released, conveyed, confirmed, assigned,
transferred and set over, and by these presents does grant, bargain, sell,
alien, remise, release, convey, confirm, assign, transfer and set over unto the
Trustee, its successors and assigns, forever, all the right, title and interest
of the Company in and to all property of every kind and description (except
cash, accounts and bills receivable and all merchandise bought, sold or
manufactured for sale in the ordinary course of the Company's business,
<PAGE>
<PAGE> 11
stocks, bonds or other corporate obligations or securities, other than such as
are described in Part V of the Granting Clauses of the Indenture, not acquired
with the proceeds of bonds secured by the Indenture, and except as in the
Indenture and herein otherwise expressly excluded) acquired by the Company
since the execution and delivery of the supplemental indenture dated March 1,
1994 (No.2), supplemental to the Indenture (except any such property duly
released from, or disposed of free from, the lien of the Indenture, in
accordance with the provisions thereof) and all such property which at any time
hereafter may be acquired by the Company;
All of which property it is intended shall be included in and granted by
this supplemental indenture and covered by the lien of the Indenture as
heretofore and hereby amended and supplemented;
UNDER AND SUBJECT to any encumbrances or mortgages existing on property
acquired by the Company at the time of such acquisition and not heretofore
discharged of record; and
SUBJECT, also, to the exceptions, reservations and provisions in the
Indenture and in this supplemental indenture recited, and to the liens,
reservations, exceptions, limitations, conditions and restrictions imposed by
or contained in the several deeds, grants, franchises and contracts or other
instruments through which the Company acquired or claims title to the aforesaid
property; and SUBJECT, also, to existing leases, to liens on easements or
rights of way, to liens for taxes, assessments and governmental charges not in
default or the payment of which is deferred, pending appeal or other contest
by legal proceedings, pursuant to Section 4 of Article Five of the Indenture,
or the payment of which is deferred pending billing, transfer of title or final
determination of amount, to easements for alleys, streets, highways, rights of
way and railroads that may run across or encroach upon the said property, to
joint pole and similar agreements, to undetermined liens and charges, if any,
incidental to construction, and other encumbrances permitted by the Indenture
as theretofore and hereby amended and supplemented;
TO HAVE AND TO HOLD the property hereby conveyed or assigned, or intended
to be conveyed or assigned, unto the Trustee, its successor or successors and
assigns, forever;
<PAGE>
<PAGE> 12
IN TRUST, NEVERTHELESS, upon the terms, conditions and trusts set forth
in the Indenture as heretofore and hereby amended and supplemented, to the end
that the said property shall be subject to the lien of the Indenture as
heretofore and hereby amended and supplemented, with the same force and effect
as though said property had been included in the Granting Clauses of the
Indenture at the time of the execution and delivery thereof;
AND THIS SUPPLEMENTAL INDENTURE FURTHER WITNESSETH that for the
considerations aforesaid, it is hereby covenanted between the Company and the
Trustee as follows:
ARTICLE I.
BONDS OF THE POLLUTION CONTROL Series P.
The series of bonds authorized by this supplemental indenture to be issued
under and secured by the Indenture shall be designated "First and Refunding
Mortgage Bonds, Pollution Control Series P"; shall be limited to the aggregate
principal amount of $100,000,000; shall be issued initially to the Authority
Trustee, as assignee of the Authority, to evidence the Company's obligation to
repay the loan to finance a portion of the costs of the Project made pursuant
to the Agreement; and shall mature and bear interest as set forth in the form
of bond hereinbefore described; provided, however, that the Company shall
receive certain credits against principal and interest obligations as set forth
in Section 3.06 hereof. The date of each bond of the Pollution Control Series
P shall be the semi-annual interest payment date next preceding the date of
authentication, unless such date of authentication be an interest payment date,
in which case the date shall be the date of authentication, or unless such date
of authentication be prior to the first semi-annual interest payment date, in
which case the date shall be May 1, 1994.
Bonds of the Pollution Control Series P shall be issued as fully
registered bonds in any denomination authorized by the Company. Interest on
bonds of the Pollution Control Series P shall be payable semi-annually on May
1 and November 1 of each year, payable initially on November 1, 1994, and shall
be payable as to both principal and interest in such coin or currency of the
United States of America as at the time of payment shall constitute
<PAGE>
<PAGE> 13
legal tender for the payment of public and private debts, at the principal
office of the Trustee, or at the corporate trust office of any paying agent
appointed by the Company.
Bonds of the Pollution Control Series P shall be transferable (but only
as provided in the Authority Indenture) upon surrender thereof for cancellation
by the registered owner in person or by attorney duly authorized in writing at
said office of the Trustee.
The Company hereby waives any right to make a charge for any transfer of
bonds of the Pollution Control Series P, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto.
ARTICLE II.
REDEMPTION OF BONDS--POLLUTION CONTROL Series P.
SECTION 2.01. Redemption--Redemption Prices. Bonds of the Pollution
Control Series P shall be subject to redemption prior to maturity, but if in
part only in integral multiples of $5,000, under the conditions and upon the
payment of the amounts specified in the following subsections, together in each
case with interest accrued to the redemption date:
(a) at the option of the Company, on any date on or after May 1,
2004, either as a whole or in part, at the following redemption prices,
expressed in percentages of the principal amount of the bonds to be
redeemed:
REDEMPTION PERIOD REDEMPTION PRICE
- ----------------- -----------------
May 1, 2004 through April 30, 2005..................... 102%
May 1, 2005 through April 30, 2006..................... 101%
May 1, 2006 and thereafter........................... 100%
(b) at the option of the Company, as a whole at any time at 100% of
the principal amount thereof, if any of the following events shall have
occurred and if, within one year of the occurrence of any of the following
events, the Company shall have given evidence to the Trustee and the
Authority Trustee, in each case by a certificate signed by the President
<PAGE>
<PAGE> 14
or a Vice President, and by the Secretary or an Assistant Secretary, of
the Company to the effect that one of such events has occurred and is
continuing, and describing the same:
(1) (i) the Station or a substantial portion of the facilities of
the Project shall have been damaged or destroyed to such extent that (a)
the Station or such facilities cannot be reasonably restored within a
period of six months from the date of such damage or destruction to
the condition thereof immediately preceding such damage or
destruction, or (b) the Company is thereby prevented or likely to be
prevented from carrying on its normal operation of the Station or such
facilities for a period of six months from the date of such damage or
destruction, or (c) it would not be practicable or desirable to
rebuild, repair or restore the Station or such facilities or (ii) the
Salem Nuclear Generating Station, adjacent to the Station, or a
substantial portion of the Salem Nuclear Generating Station shall have
been damaged or destroyed to such extent that the Company is thereby
prevented or likely to be prevented from carrying on its normal operation
of the Station or such facilities for a period of six months from the date
of such damage or destruction; or
(2) title to, or the temporary use of, all or substantially all
of the Station or a substantial portion of the facilities of the Project
shall have been taken or condemned by a competent authority which taking
or condemnation results or is likely to result in the Company being
thereby prevented or likely to be prevented from carrying on its normal
operation of Station or such facilities for a period of six months; or
(3) changes in the cost or availability of raw materials,
operating supplies, or facilities or technological or other changes
have made the continued operation of all or substantially all of the
Station or a substantial portion of the facilities of the Project
uneconomical; or
(4) any laws, rules, regulations or orders of any governmental or
regulatory entity shall require a shutdown of the Station or a substantial
portion of the facilities of the Project or prevent the Company from
carrying on its normal operation of the Station or the facilities of the
Project, in each case for a period of six months.
<PAGE>
<PAGE> 15
(c) in, whole or in part (if, in the opinion of nationally
recognized bond counsel, such partial redemption will preserve the
exclusion from gross income for Federal income tax purposes of interest
on the 1994 Series B Authority Bonds) at 100% of the principal amount
thereof to be redeemed, within 180 days after a "final determination"
(i.e., the issuance of a published or private ruling or technical
advice) of the Internal Revenue Service or a judicial decision in a
proceeding by any court of competent jurisdiction in the United States
(from which ruling, advice or decision no further right of appeal
exists), in all cases in which the Company has participated or been a
party or has been given an opportunity to participate and has failed to
do so (no such decree or judgment by any court or action by the Internal
Revenue Service to be considered final unless the owner of the 1994
Series B Authority Bonds involved in such proceeding or action has given
the Company and the Authority Trustee prompt written notice of the
commencement thereof and offered the Company, at the Company's expense,
the opportunity to control the defense thereof) that, as a result of a
failure by the Company to observe any covenant, agreement, representation
or warranty in the Agreement, the interest payable on the 1994 Series B
Authority Bonds is includable in the gross income for Federal income tax
purposes of the holder thereof, other than a "substantial user" of the
Project or a "related person" as provided in Section 147(a) of the
Internal Revenue Code of 1986.
SECTION 2.02. Notice of Redemption. (a) The election of the Company under
subsection (a) or (b) of Section 2.01 hereof to redeem any of the bonds of the
Pollution Control Series P shall be evidenced by a resolution of the Board of
Directors of the Company calling for redemption on a stated date of all or, in
the case of subsection (a), a stated principal amount thereof. To exercise its
option to redeem the bonds of the Pollution Control Series P under subsection
(a) or (b) of Section 2.01 hereof, the Company shall deliver to the Trustee,
the Authority and the Authority Trustee a certified copy of said resolution
calling all or, in the case of subsection (a), a stated principal amount of the
bonds of the Pollution Control Series P for redemption on a date not less than
40 days nor more than 90 days from the date said resolution is delivered. The
delivery to the Authority Trustee of
<PAGE>
<PAGE> 16
a certified copy of such resolution shall constitute notice to the Authority
Trustee of the redemption referred to therein, on the terms specified therein.
The Company shall on or before such redemption date deposit with the Trustee,
as paying agent hereunder, the total applicable redemption price of all the
bonds so called, with interest accrued thereon to the redemption date, less any
credits to which the Company may be entitled pursuant to Section 3.06 hereof,
and the Trustee, as such paying agent, shall apply such funds on the redemption
date to the redemption of the bonds so called.
(b) The Company shall, within 10 days after the occurrence of a "final
determination" under subsection (c) of Section 2.01 hereof, deliver to the
Trustee written notice of such "final determination". The Company shall, by
resolution of its Board of Directors, fix a redemption date for such redemption
and shall deliver to the Trustee, the Authority and the Authority Trustee a
certified copy of said resolution at least 40 days prior to the date so
selected for redemption. Such redemption date may be any day not more than 180
days after the occurrence of such "final determination". If the Trustee does
not receive written notice of such selection by the Company within 140 days
after the date of the occurrence of such "final determination", then the
redemption date shall be the 180th day after the occurrence of such "final
determination". On or before such redemption date, the Company shall deposit
with the Trustee, as paying agent hereunder, the total redemption price of the
bonds so called, with interest accrued thereon to the redemption date, less any
credits to which the Company may be entitled pursuant to Section 3.06 hereof,
and the Trustee, as such paying agent, shall apply such funds, on the
redemption date, to the redemption of the bonds so called. The delivery to the
Authority Trustee of a certified copy of such resolution shall constitute
notice to the Authority Trustee of the redemption referred to therein on the
terms specified therein.
<PAGE>
<PAGE> 17
SECTION 2.03. Interest on Called Bonds to Cease. Each bond or portion
thereof of the Pollution Control Series P called for redemption under Section
2.02 hereof shall be due and payable at the office of the Trustee, as paying
agent hereunder, at the applicable redemption price and on the specified
redemption date, anything herein or in such bond to the contrary
notwithstanding. From and after the date when each bond or portion thereof of
the Pollution Control Series P shall be due and payable as aforesaid (unless
upon said date the full amount due thereon shall not be held by or provided to
the Trustee, as paying agent hereunder, and be immediately available for
payment), all further interest shall cease to accrue on such bond or on such
portion thereof, as the case may be.
SECTION 2.04. Bonds Called in Part. If only a portion of any bond of the
Pollution Control Series P shall be called for redemption pursuant to Section
2.02 hereof, the notice of redemption hereinbefore provided for shall specify
the portion of the principal amount thereof to be redeemed. Upon payment of the
portion so called for redemption, the Trustee, as paying agent hereunder, shall
give prompt written notice thereof to the Company.
SECTION 2.05. Provisions of Indenture Not Applicable. The provisions of
Article Four of the Indenture, as amended and supplemented, shall not apply to
the procedure for the exercise of any right of redemption reserved by the
Company, or to any mandatory redemption provided in this Article in respect of
the bonds of the Pollution Control Series P. There shall be no sinking fund for
the bonds of the Pollution Control Series P.
ARTICLE III.
MISCELLANEOUS.
SECTION 3.01. Authentication of Bonds of Pollution Control Series P.
None of the bonds of the Pollution Control Series P, the issue of which is
provided for by this supplemental indenture, shall be authenticated by the
Trustee except in accordance with the provisions of the Indenture, as amended
and supplemented, and this supplemental indenture, and upon compliance with the
conditions in that behalf therein contained.
<PAGE>
<PAGE> 18
SECTION 3.02. Additional Restrictions on Authentication of Additional
Bonds Under Indenture. The Company covenants that from and after the date of
execution of this supplemental indenture, no additional bonds (as defined in
Section 1 of Article Two of the Indenture) shall be authenticated and delivered
by the Trustee under Subdivision A of Section 4 of said Article Two on account
of additions or improvements to the mortgaged property
(1) unless the net earnings of the Company for the period required
by Subdivision C of Section 6 of said Article Two shall have been at least
twice the fixed charges (in lieu of 1 3/4 times such fixed charges, as
required by said Subdivision C); and for the purpose of this condition (a)
such fixed charges shall in each case include interest on the bonds
applied for, notwithstanding the parenthetical provision contained in
clause (4) of said Subdivision C, and (b) in computing such net earnings
there shall be included in expenses of operation (under paragraph (c) of
said Subdivision
C) all charges against earnings for depreciation, renewals or
replacements, and all certificates with respect to net earnings delivered
to the Trustee in connection with any authentication of additional bonds
under said Article Two shall so state; and
(2) except to the extent of 60% (in lieu of 75% as permitted by
Subdivision A of Section 7 of said Article Two) of the cost or fair value
to the Company of the additions or improvements forming the basis for such
authentication of additional bonds.
SECTION 3.03. Restriction on Dividends. The Company will not declare or
pay any dividend on any shares of its common stock (other than dividends
payable in shares of its common stock) or make any other distribution on any
such shares, or purchase or otherwise acquire any such shares (except shares
acquired without cost to the Company) whenever such action would reduce the
earned surplus of the Company to an amount less than $10,000,000 or such lesser
amount as may remain after deducting from said $10,000,000 all amounts
appearing in the books of account of the Company on December 31, 1948, which
shall thereafter, pursuant to any order or rule of any regulatory body entered
after said date, be required to be removed, in whole or in part, from the books
of account of the Company by charges to earned surplus.
<PAGE>
<PAGE> 19
SECTION 3.04. Use of Facsimile Seal and Signatures. The seal of the
Company and any or all signatures of the officers of the Company upon any of
the bonds of the Pollution Control Series P may be facsimiles.
SECTION 3.05. Effective Period of Supplemental Indenture. The preceding
provisions of Articles I, II and III of this supplemental indenture shall
remain in effect only so long as any of the bonds of the Pollution Control
Series P shall remain outstanding.
SECTION 3.06. Credits with Respect to Payments. (a) The Company shall
be entitled to a credit against its obligation to pay interest on the bonds of
the Pollution Control Series P equal to interest paid on the 1994 Series A
Authority Bonds out of the accrued interest received upon the original issuance
of the 1994 Series A Authority Bonds and the earnings on the investment
thereof, as provided in the Authority Indenture, which are held by the
Authority Trustee at the time of the interest payment date.
(b) The Company shall be entitled to credits against amounts otherwise
payable in respect of the bonds of the Pollution Control Series P in an amount
corresponding to (i) the principal amount of any 1994 Series A Authority Bond
surrendered to the Authority Trustee by the Company or the Authority, or
purchased by the Authority Trustee, for cancellation and (ii) the amount of
money held by the Authority Trustee and available and designated for the
payment of principal or redemption price of and interest on the 1994 Series A
Authority Bonds, as the case may be, regardless of the source of payment to the
Authority Trustee of such moneys, and the Trustee, as paying agent hereunder,
shall give prompt written notice to the Company of any such credit with respect
to the payment of interest.
(c) The Trustee, as paying agent hereunder, shall (i) promptly notify the
Company of each deposit in the Debt Service Fund under the Authority Indenture,
(ii) provide evidence to the Company that such deposit has been credited to
such Fund and (iii) give prompt written notice to the Company of any credits
with respect to payment of principal or redemption price of and interest on the
bonds of the Pollution Control Series P.
(d) A certificate of the Company signed by the President or any Vice
President, and by the Secretary or any Assistant Secretary, and consented to
<PAGE>
<PAGE> 20
by the Authority Trustee, stating that the Company is entitled to a credit
under this Section 3.06 and setting forth the basis therefor in reasonable
detail, shall be conclusive evidence of such entitlement, and the Trustee shall
accept such certificate without further investigation or verification of the
matters stated therein.
SECTION 3.07. Time for Making of Payment. All payments of principal or
redemption price of and interest on the bonds of the Pollution Control Series
P shall be made to the Authority Trustee in such funds as shall constitute
immediately available funds when payment is due. In any case where the date of
payment of the principal or redemption price of or interest on the bonds of the
Pollution Control Series P or the date fixed for redemption of any such bonds
shall be in the city of payment a Saturday, Sunday or a legal holiday or a day
on which banking institutions are authorized by law to close, then such payment
need not be made on such date but may be made on the next succeeding business
day with the same force and effect as if made on the date of maturity or the
date fixed for redemption, and no interest on such payment shall accrue for the
period after such date.
SECTION 3.08. Effect of Approval of Board of Regulatory Commissioners of
the State of New Jersey. The approval of the Board of Regulatory Commissioners
of the State of New Jersey of the execution and delivery of these presents and
of the issue of any bonds of the Pollution Control Series P shall not be
construed as approval of said Board of any other act, matter or thing which
requires approval of said Board under the laws of the State of New Jersey.
SECTION 3.09. Execution in Counterparts. For the purpose of facilitating
the recording hereof, this supplemental indenture has been executed in several
counterparts, each of which shall be and shall be taken to be an original, and
all collectively but one instrument.
<PAGE>
<PAGE> 21
IN WITNESS WHEREOF, Public Service Electric and Gas Company, party hereto
of the first part, after due corporate and other proceedings, has caused this
supplemental indenture to be signed and acknowledged or proved by its
President, one of its Vice Presidents and its corporate seal hereunto to be
affixed and to be attested by the signature of its Secretary or an Assistant
Secretary; and First Fidelity Bank, National Association, as Trustee, party
hereto of the second part, has caused this supplemental indenture to be signed
and acknowledged or proved by its President, one of its Vice Presidents or one
of its Assistant Vice Presidents and its corporate seal to be hereunto affixed
and to be attested by the signature of its Secretary, Cashier or an Assistant
Cashier or a Corporate Trust Officer, Executed and delivered this 19th day of
May, 1994.
PUBLIC SERVICE ELECTRIC AND GAS
COMPANY
By
P. A. RADO
(P. A. RADO)
Vice President
Attest:
E.J. BIGGIN, JR.
(E.J. BIGGIN, JR.)
Assistant Secretary
FIRST FIDELITY BANK, NATIONAL
ASSOCIATION
By
F. GALLAGHER
(F. Gallagher)
Assistant Vice President
Attest:
D. DOWDELL
(D. Dowdell)
(Corporate Seal)
<PAGE>
<PAGE> 22
STATE OF NEW JERSEY)
) ss.:
COUNTY OF ESSEX )
BE IT REMEMBERED, that on this 19th day of May, 1994, before me, the
subscriber, a Notary Public of the State of New Jersey, personally appeared P.
A. Rado who, I am satisfied, is a Vice President of PUBLIC SERVICE ELECTRIC AND
GAS COMPANY, one of the corporations named in and which executed the foregoing
instrument, and is the person who signed the said instrument as such officer
for and on behalf of such corporation, and I having first made known to her the
contents thereof, she did acknowledge that she signed the said instrument as
such officer, that the said instrument was made by such corporation and sealed
with its corporate seal, that the said instrument is the voluntary act and deed
of such corporation, made by virtue of authority from its Board of Directors,
and that said corporation, the mortgagor, has received a true copy of said
instrument.
JEAN M. SIEZ
JEAN M. SIEZ
A NOTARY PUBLIC OF NEW JERSEY
My Commission Expires Nov. 28, 1995
(NOTARY SEAL)
STATE OF NEW JERSEY)
) ss.:
COUNTY OF ESSEX )
BE IT REMEMBERED, that on this 19th day of May, 1994, before me, the
subscriber, a Notary Public of the State of New Jersey, personally appeared F.
Gallagher who, I am satisfied, is an Assistant Vice President of FIRST FIDELITY
BANK, NATIONAL ASSOCIATION, one of the corporations named in and which executed
the foregoing instrument, and is the person who signed the said instrument as
such officer, for and on behalf of such corporation, and I having first made
known to him the contents thereof, he did acknowledge that he signed the said
instrument as such officer, that the said instrument was made by such
corporation and sealed with its corporate seal; and that the said instrument
is the voluntary act and deed of such corporation, made by virtue of authority
from its Board of Directors.
JACQUELYN E. ONUFER
JACQUELYN E. ONUFER
A NOTARY PUBLIC OF NEW JERSEY
My Commission Expires July 14, 1997
(NOTARY SEAL)
<PAGE>
<PAGE> 23
CERTIFICATE OF RESIDENCE
First Fidelity Bank, National Association, Mortgagee and Trustee within
named, hereby certifies that its precise residence is 765 Broad Street, Newark,
New Jersey 07101.
FIRST FIDELITY BANK, NATIONAL
ASSOCIATION
By F. GALLAGHER
(F. Gallagher)
Assistant Vice President
<PAGE>
<PAGE>
<PAGE>
SUPPLEMENTAL MORTGAGE
- --------------------------------------------------------------------------
Supplemental Indenture
DATED AUGUST 1, 1994
------------------
SUPPLEMENTAL TO
FIRST AND REFUNDING MORTGAGE
DATED AUGUST 1, 1924
------------------
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
TO
FIRST FIDELITY BANK, NATIONAL ASSOCIATION,
TRUSTEE
765 BROAD STREET
NEWARK, NEW JERSEY 07101
------------------
PROVIDING FOR THE ISSUE
OF
FIRST AND REFUNDING MORTGAGE BONDS,
POLLUTION CONTROL SERIES R
- --------------------------------------------------------------------------
RECORD IN MORTGAGE BOOK AND RETURN TO:
JAMES T. FORAN, ESQ.
80 PARK PLAZA, T5B
P.O. BOX 570
NEWARK, N.J. 07101
This instrument prepared by
EDWARD C. FEDAK, ESQ.
(EDWARD C. FEDAK, ESQ.)
<PAGE>
<PAGE> 2
TABLE OF CONTENTS
------------------
PAGE
----
RECITALS................................................... 1
FORM OF BOND............................................... 4
FORM OF CERTIFICATE OF AUTHENTICATION...................... 9
GRANTING CLAUSES........................................... 9
ARTICLE I.
BONDS OF THE POLLUTION CONTROL SERIES R.
DESCRIPTION OF POLLUTION CONTROL SERIES R.................. 11
ARTICLE II.
REDEMPTION OF BONDS--POLLUTION CONTROL SERIES R.
SECTION 2.01. Redemption--Redemption Prices.............. 12
SECTION 2.02. Notice of Redemption....................... 14
SECTION 2.03. Interest on Called Bonds to Cease.......... 16
SECTION 2.04. Bonds Called in Part....................... 16
SECTION 2.05. Provisions of Indenture not Applicable..... 16
ARTICLE III.
MISCELLANEOUS.
SECTION 3.01. Authentication of Bonds of Pollution Control
Series R................................. 16
SECTION 3.02. Additional Restrictions on Authentication
of Additional Under Indenture............ 17
SECTION 3.03. Restriction on Dividends................... 17
SECTION 3.04. Use of Facsimile Seal and Signatures....... 18
SECTION 3.05. Effective Period of Supplemental Indenture. 18
SECTION 3.06. Credits with Respect to Payments........... 18
SECTION 3.07. Time for Making of Payment................. 19
SECTION 3.08. Effect of Approval of Board of Public Utilities
of the State of New Jersey............... 19
SECTION 3.09. Execution in Counterparts.................. 19
Acknowledgments............................................ 20
Certificate of Residence................................... 22
<PAGE>
<PAGE> 3
SUPPLEMENTAL INDENTURE, dated the 1st day of August, 1994, for convenience
of reference and effective from the time of execution and delivery hereof,
between PUBLIC SERVICE ELECTRIC AND GAS COMPANY, a corporation organized under
the laws of the State of New Jersey, hereinafter called the "Company", party
of the first part, and FIRST FIDELITY BANK, NATIONAL ASSOCIATION, a national
banking association organized under the laws of the United States of America,
as Trustee under the indenture dated August 1, 1924, below mentioned,
hereinafter called the "Trustee", party of the second part.
WHEREAS, on July 25, 1924, the Company executed and delivered to Fidelity
Union Trust Company (now known as First Fidelity Bank, National Association),
a certain indenture dated August 1, 1924 (hereinafter called the "Indenture"),
to secure and to provide for the issue of First and Refunding Mortgage Gold
Bonds of the Company; and
WHEREAS, the Indenture has been recorded in the following counties of the
State of New Jersey, in the offices, and therein in the books and at the pages,
as follows:
PAGE
COUNTY OFFICE BOOK NUMBER NUMBER
- ------ ------ -------------------------- --------
Atlantic Clerk's 1955 of Mortgages 160
Bergen Clerk's 94 of Chattel Mortgages 123 etc.
693 of Mortgages 88 etc.
Burlington Clerk's 52 of Chattel Mortgages Folio 8 etc.
177 of Mortgages Folio 354 etc.
Camden Register's 45 of Chattel Mortgages 184 etc.
239 of Mortgages 1 etc.
Cumberland Clerk's 786 of Mortgages 638 & c.
Essex Register's 437 of Chattel Mortgages 1-48
T-51 of Mortgages 341-392
Gloucester Clerk's 34 of Chattel Mortgages 123 etc.
142 of Mortgages 7 etc.
Hudson Register's 453 of Chattel Mortgages 9 etc.
1245 of Mortgages 484 etc.
Hunterdon Clerk's 151 of Mortgages 344
Mercer Clerk's 67 of Chattel Mortgages 1 etc.
384 of Mortgages 1 etc.
Middlesex Clerk's 113 of Chattel Mortgages 3 etc.
437 of Mortgages 294 etc.
Monmouth Clerk's 951 of Mortgages 291 & c.
Morris Clerk's N-3 of Chattel Mortgages 446 etc.
F-10 of Mortgages 269 etc.
Ocean Clerk's 1809 of Mortgages 40
Passaic Register's M-6 of Chattel Mortgages 178 etc.
R-13 of Mortgages 268 etc.
Salem Clerk's 267 of Mortgages 249 & c.
<PAGE>
<PAGE> 4
PAGE
COUNTY OFFICE BOOK NUMBER NUMBER
- ------ ------ -------------------------- --------
Somerset Clerk's 46 of Chattel Mortgages 207 etc.
N-10 of Mortgages 1 etc.
Sussex Clerk's 123 of Mortgages 10 & c.
Union Register's 128 of Chattel Mortgages 28 & c.
664 of Mortgages 259 etc.
Warren Clerk's 124 of Mortgages 141 etc.
and
WHEREAS, the Indenture has also been recorded in the following counties
of the Commonwealth of Pennsylvania, in the offices, and therein in the books
and at the pages, as follows:
PAGE
COUNTY OFFICE BOOK NUMBER NUMBER
- ------ ------ -------------------------- --------
Adams Recorder's 22 of Mortgages 105
Armstrong Recorder's 208 of Mortgages 381
Bedford Recorder's 90 of Mortgages 917
Blair Recorder's 671 of Mortgages 430
Cambria Recorder's 407 of Mortgages 352
Cumberland Recorder's 500 of Mortgages 136
Franklin Recorder's 285 of Mortgages 373
Huntingdon Recorder's 128 of Mortgages 47
Indiana Recorder's 197 of Mortgages 281
Lancaster Recorder's 984 of Mortgages 1
Montgomery Recorder's 5053 of Mortgages 1221
Westmoreland Recorder's 1281 of Mortgages 198
York Recorder's 31-V of Mortgages 446
and
WHEREAS, the Indenture granted, bargained, sold, aliened, remised,
released, conveyed, confirmed, assigned, transferred and set over unto the
Trustee certain property of the Company, more fully set forth and described in
the Indenture, then owned or which might thereafter be acquired by the Company;
and
WHEREAS, the Company, by various supplemental indentures, supplemental
to the Indenture, the last of which was dated June 1, 1994, has granted,
bargained, sold, aliened, remised, released, conveyed, confirmed, assigned,
transferred and set over unto the Trustee certain property of the Company
acquired by it after the execution and delivery of the Indenture; and
WHEREAS, since the execution and delivery of said supplemental indenture
dated June 1, 1994, the Company has acquired property which, in accordance with
the provisions of the Indenture, is subject to the lien thereof and the Company
desires to confirm such lien; and
<PAGE>
<PAGE> 5
WHEREAS, the Indenture has been amended or supplemented from time to
time; and
WHEREAS, it is provided in the Indenture that no bonds other than those
of the 5 1/2% Series due 1959 therein authorized may be issued thereunder
unless a supplemental indenture providing for the issue of such additional
bonds shall have been executed and delivered by the Company to the Trustee; and
WHEREAS, The Industrial Pollution Control Financing Authority of Salem
County, New Jersey (now known as The Pollution Control Financing Authority of
Salem County, New Jersey) (the "Authority") has previously issued and sold its
Pollution Control Revenue Bonds, 1984 Series B (Public Service Electric and Gas
Company Project) (the "1984 Authority Bonds") to finance a portion of the
Company's respective interests in certain pollution control facilities
(collectively, the "Project") at the Hope Creek Generating Station and the
Salem Generating Station in Lower Alloways Creek Township, Salem County, New
Jersey; and
WHEREAS, the Authority is making provision for the issuance and sale of
its Pollution Control Revenue Refunding Bonds, 1994 Series C (Public Service
Electric and Gas Company Project) (the "1994 Series C Authority Bonds") to
provide funds for making a loan to the Company to provide for refinancing of
a portion of the costs of the Project, including the refunding and redemption
of the 1984 Authority Bonds; and
WHEREAS, the 1994 Series C Authority Bonds are to be issued under an
Indenture of Trust dated as of May 1, 1993, as supplemented and amended (as so
supplemented and amended, the "Authority Indenture"), between the Authority and
First Fidelity Bank, National Association, New Jersey (now known as First
Fidelity Bank, National Association) as trustee (the "Authority Trustee"); and
WHEREAS, the Company has entered into a Pollution Control Facilities Loan
Agreement dated as of May 1, 1993, as supplemented (the "Agreement"), with the
Authority providing, among other things, for the loan by the Authority to the
Company of funds to finance a portion of the costs of the
Project, including the refunding and redemption of the 1984 Authority Bonds,
and for the issuance by the Company to the Authority Trustee, as assignee of
the Authority, of First and Refunding Mortgage Bonds of the Company to evidence
the Company's obligation to repay said loan, and for such purposes the Company
desires to provide for the issue of $87,880,000 aggregate principal amount of
bonds secured by the Indenture of a series to be designated as "First and
Refunding Mortgage Bonds, Pollution Control Series R" (hereinafter sometimes
called "Pollution Control Series R"); and
WHEREAS, the text of the bonds of the Pollution Control Series R and of
the certificate of authentication to be borne by the bonds of the Pollution
Control Series R shall be substantially of the following tenor:
<PAGE>
<PAGE> 6
[FORM OF BOND]
This Bond is not transferable except as provided in the Indenture of Trust
dated as of May 1, 1993, as supplemented and amended, between The Pollution
Control Financing Authority of Salem County (New Jersey) and First Fidelity
Bank, National Association, New Jersey (now known as First Fidelity Bank,
National Association), as trustee (as so supplemented and amended, the
"Authority Indenture").
REGISTERED REGISTERED
NUMBER AMOUNT
R- $87,880,000
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
FIRST AND REFUNDING MORTGAGE BOND,
POLLUTION CONTROL SERIES R
Public Service Electric and Gas Company (hereinafter called the
"Company"), a corporation of the State of New Jersey, for value received,
hereby promises to pay to First Fidelity Bank, National Association, as trustee
under the Authority Indenture, or registered assigns, the principal sum of
Eighty-Seven Million Eight Hundred Eighty Thousand Dollars, on August 1, 2030,
and to pay interest thereon from the date hereof, at the rate of 6.2% per
annum, and until payment of said principal sum, such interest to be payable
February 1 and August 1 in each year.
Both the principal hereof and interest hereon shall be paid at the
principal office of First Fidelity Bank, National Association in the City of
Newark, State of New Jersey, or at the corporate trust office of any paying
agent appointed by the Company, in such coin or currency of the United States
of America as at the time of payment shall constitute legal tender for the
payment of public and private debts.
This Bond is one of the First and Refunding Mortgage Bonds of the Company
issued and to be issued under and pursuant to, and all equally recured by, an
indenture of mortgage or deed of trust dated August 1, 1924, between the
Company and First Fidelity Bank, National Association (formerly known as
Fidelity Union Trust Company), a national banking association of the United
States of America, as Trustee, as supplemented and amended by the supplemental
indentures thereto, including the supplemental indenture dated August 1, 1994.
This Bond is one of the Bonds of the Pollution Control Series R, which series
is limited to the aggregate principal amount of $87,880,000 and is issued
pursuant to said supplemental indenture dated August 1, 1994. Reference is
hereby made to said indenture and all supplements thereto for a specification
of the principal amount of Bonds from time to time issuable thereunder, and for
a description of the properties mortgaged and conveyed or assigned to said
Trustee or its successors, the nature and extent of the <PAGE>
<PAGE> 7
security, and the rights of the holders of said Bonds and any coupons
appurtenant thereto, and of the Trustee in respect of such security.
In and by said indenture, as amended and supplemented, it is provided that
with the written approval of the Company and the Trustee, any of the provisions
of said indenture may from time to time be eliminated or modified and other
provisions may be added thereto provided the change does not alter the annual
interest rate, redemption price or date, date of maturity or amount payable on
maturity of any then outstanding Bond or conflict with the Trust Indenture Act
of 1939 as then in effect, and provided the holders of 85% in principal amount
of the Bonds secured by said indenture and then outstanding (including, if such
change affect the Bonds of one or more series but less than all series then
outstanding, a like percentage of the then outstanding Bonds of each series
affected by such change, and excluding Bonds owned or controlled by the Company
or by the parties owning at least 10% of the outstanding voting stock of the
Company, as more fully specified in said indenture) consent in writing thereto,
all as more fully set forth in said indenture, as amended and supplemented.
First and Refunding Mortgage Bonds issuable under said indenture are
issuable in series, and the Bonds of any series may be for varying principal
amounts and in the form of coupon Bonds and of registered Bonds without
coupons, and the Bonds of any one series may differ from the Bonds of any other
series as to date, maturity, interest rate and otherwise, all as in said
indenture provided and set forth. The Bonds of the Pollution Control Series R,
in which this Bond is included, are designated "First and Refunding Mortgage
Bonds, Pollution Control Series R".
In case of the happening of an event of default as specified in said
indenture and in the supplemental indenture dated March 1, 1942 supplemental
thereto, the principal sum of the Bonds of this issue may be declared or may
become due and payable forthwith, in the manner and with the effect in said
indenture provided.
The Bonds of this series are subject to redemption as provided in said
supplemental indenture dated August 1, 1994.
<PAGE>
<PAGE> 8
This Bond is transferable, but only as provided in the Indenture of Trust
dated as of May 1, 1993, as supplemented and amended, made by The Pollution
Control Financing Authority of Salem County (New Jersey) to First Fidelity
Bank, National Association, New Jersey (now known as First Fidelity Bank,
National Association), as trustee, upon surrender hereof, by the registered
owner in person or by attorney duly authorized in writing, at the principal
office of the Trustee; upon any such transfer a new Bond similar hereto will
be issued to the transferee. No service charge shall be made for any such
transfer, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto. The
Company and the Trustee and any paying agent may deem and treat the person in
whose name this Bond is registered as the absolute owner hereof for the purpose
of receiving payment of or on account of the principal hereof and the interest
hereon and for all other purposes; and neither the Company nor the Trustee nor
any paying agent shall be affected by any notice to the contrary.
The Bonds of this series are issuable only in fully registered form, in
any denomination authorized by the Company.
No recourse under or upon any obligation, covenant or agreement contained
in said indenture or in any indenture supplemental thereto, or in any Bond or
coupon issued thereunder, or because of any indebtedness arising thereunder,
shall be had against any incorporator, or against any past, present or future
stockholder, officer or director, as such, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, under any rule of law, statute or constitutional provision or by
the enforcement of any assessment or by any legal or equitable proceeding or
otherwise; it being expressly agreed and understood that said indenture, any
indenture supplemental thereto and the obligations issued thereunder, are
solely corporate obligations, and that no personal liability whatever shall
attach to, or be incurred by, such incorporators, stockholders, officers or
directors, as such, of the Company, or of any successor corporation, or any of
them, because of the incurring of the indebtedness thereby authorized, or under
or by reason of any of the obligations, covenants or agreements contained in
the indenture or in any indenture supplemental thereto or in any of the Bonds
or coupons issued thereunder, or implied therefrom.
<PAGE>
<PAGE> 9
This Bond shall not be entitled to any security or benefit under said
indenture, as amended and supplemented, and shall not become valid or
obligatory for any purpose, until the certificate of authentication, hereon
endorsed, shall have been signed by First Fidelity Bank, National Association,
as Trustee, or by its successor in trust under said indenture.
IN WITNESS WHEREOF, the Company has caused this Bond to be duly executed
by its proper officers under its corporate seal.
Dated
PUBLIC SERVICE ELECTRIC AND GAS
COMPANY,
By
(Vice) President
(Seal)
Attest:
(Assistant) Secretary
<PAGE>
[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds of the series designated therein which are
described in the within-mentioned indenture and supplemental indenture dated
August 1, 1994, as secured thereby.
FIRST FIDELITY BANK, NATIONAL
ASSOCIATION, TRUSTEE,
BY
Authorized Signatory
------------------------
WHEREAS, the execution and delivery of this supplemental indenture have
been duly authorized by the Board of Directors of the Company; and
WHEREAS, the Company represents that all things necessary to make the
bonds of the Pollution Control Series R hereinafter described, when duly
authenticated by the Trustee and issued by the Company, valid, binding and
legal obligations of the Company, and to make this supplemental indenture a
valid and binding agreement supplemental to the Indenture, have been done and
performed:
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH that the Company,
in consideration of the premises and the execution and delivery by the Trustee
of this supplemental indenture, and in pursuance of the covenants and
agreements contained in the Indenture and for other good and valuable
consideration, the receipt of which is hereby acknowledged, has granted,
bargained, sold, aliened, remised, released, conveyed, confirmed, assigned,
transferred and set over, and by these presents does grant, bargain, sell,
alien, remise, release, convey, confirm, assign, transfer and set over unto the
Trustee, its successors and assigns, forever, all the right, title and interest
of the Company in and to all property of every kind and description (except
cash, accounts and bills receivable and all merchandise bought, sold or
manufactured for sale in the ordinary course of the Company's business, stocks,
bonds or other corporate obligations or securities, other than such as are
described in Part V of the Granting Clauses of the Indenture, not acquired with
the proceeds of bonds secured by the Indenture, and except as in the Indenture
and herein otherwise expressly excluded) acquired by the Company since the
execution and delivery of the supplemental indenture dated June 1, 1994,
supplemental to the Indenture (except any such property duly released from, or
disposed of free from, the lien of the Indenture, in accordance with the
provisions thereof) and all such property which at any time hereafter may be
acquired by the Company;
All of which property it is intended shall be included in and granted by
this supplemental indenture and covered by the lien of the Indenture as
heretofore and hereby amended and supplemented;
<PAGE>
UNDER AND SUBJECT to any encumbrances or mortgages existing on property
acquired by the Company at the time of such acquisition and not heretofore
discharged of record; and
SUBJECT, also, to the exceptions, reservations and provisions in the
Indenture and in this supplemental indenture recited, and to the liens,
reservations, exceptions, limitations, conditions and restrictions imposed by
or contained in the several deeds, grants, franchises and contracts or other
instruments through which the Company acquired or claims title to the aforesaid
property; and SUBJECT, also, to existing leases, to liens on easements or
rights of way, to liens for taxes, assessments and governmental charges not in
default or the payment of which is deferred, pending appeal or other contest
by legal proceedings, pursuant to Section 4 of Article Five of the Indenture,
or the payment of which is deferred pending billing, transfer of title or final
determination of amount, to easements for alleys, streets, highways, rights of
way and railroads that may run across or encroach upon the said property, to
joint pole and similar agreements, to undetermined liens and charges, if any,
incidental to construction, and other encumbrances permitted by the Indenture
as heretofore and hereby amended and supplemented;
TO HAVE AND TO HOLD the property hereby conveyed or assigned, or intended
to be conveyed or assigned, unto the Trustee, its successor or successors and
assigns, forever;
IN TRUST, NEVERTHELESS, upon the terms, conditions and trusts set forth
in the Indenture as heretofore and hereby amended and supplemented, to the end
that the said property shall be subject to the lien of the Indenture as
heretofore and hereby amended and supplemented, with the same force and effect
as though said property had been included in the Granting Clauses of the
Indenture at the time of the execution and delivery thereof;
AND THIS SUPPLEMENTAL INDENTURE FURTHER WITNESSETH that for the
considerations aforesaid, it is hereby covenanted between the Company and the
Trustee as follows:
<PAGE>
ARTICLE I.
BONDS OF THE POLLUTION CONTROL SERIES R.
The series of bonds authorized by this supplemental indenture to be issued
under and secured by the Indenture shall be designated "First and Refunding
Mortgage Bonds, Pollution Control Series R"; shall be limited to the aggregate
principal amount of $87,880,000; shall be issued initially to the Authority
Trustee, as assignee of the Authority, to evidence the Company's obligation to
repay the loan to finance a portion of the costs of the Project made pursuant
to the Agreement; and shall mature and bear interest as set forth in the form
of bond hereinbefore described; provided, however, that the Company shall
receive certain credits against principal and interest obligations as set forth
in Section 3.06 hereof. The date of each bond of the Pollution Control Series
R shall be the semi-annual interest payment date next preceding the date of
authentication, unless such date of authentication be an interest payment date,
in which case the date shall be the date of authentication, or unless such date
of authentication be prior to the first semi-annual interest payment date, in
which case the date shall be August 1, 1994.
Bonds of the Pollution Control Series R shall be issued as fully
registered bonds in any denomination authorized by the Company. Interest on
bonds of the Pollution Control Series R shall be payable semi-annually on
February 1 and August 1 of each year, payable initially on February 1, 1995,
and shall be payable as to both principal and interest in such coin or currency
of the United States of America as at the time of payment shall constitute
legal tender for the payment of public and private debts, at the principal
office of the Trustee, or at the corporate trust office of any paying agent
appointed by the Company.
Bonds of the Pollution Control Series R shall be transferable (but only
as provided in the Authority Indenture) upon surrender thereof for cancellation
by the registered owner in person or by attorney duly authorized in writing at
said office of the Trustee.
The Company hereby waives any right to make a charge for any transfer of
bonds of the Pollution Control Series R, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto.
<PAGE>
ARTICLE II.
REDEMPTION OF BONDS--POLLUTION CONTROL SERIES R.
SECTION 2.01. Redemption--Redemption Prices. Bonds of the Pollution
Control Series R shall be subject to redemption prior to maturity, but if in
part only in integral multiples of $5,000, under the conditions and upon the
payment of the amounts specified in the following subsections, together in each
case with interest accrued to the redemption date:
(a) at the option of the Company, on any date on or after August 1,
2004, either as a whole or in part, at the following redemption prices,
expressed in percentages of the principal amount of the bonds to be
redeemed:
REDEMPTION PERIOD REDEMPTION PRICE
- --------------------------------------------------------- -----------------
August 1, 2004 through July 31, 2005..................... 102%
August 1, 2005 through July 31, 2006..................... 101%
August 1, 2006 and thereafter............................ 100%
(b) at the option of the Company, as a whole at any time at 100% of
the principal amount thereof, if any of the following events shall have
occurred and if, within one year of the occurrence of any of the following
events, the Company shall have given evidence to the Trustee and the
Authority Trustee, in each case by a certificate signed by the President
or a Vice President, and by the Secretary or an Assistant Secretary, of
the Company to the effect that one of such events has occurred and is
continuing, and describing the same:
(1) the Hope Creek Generating Station or the Salem Generating
Station or a substantial portion of the facilities of the Project
shall have been damaged or destroyed to such extent that (a) the Hope
Creek Generating Station or the Salem Generating Station or the
facilities of the Project cannot be reasonably restored within a
period of six months from the date of such damage or destruction to
the condition thereof immediately preceding such damage or
destruction, or (b) the Company is thereby prevented or likely to be
prevented from carrying on its normal operation of the Hope Creek
Generating Station or the Salem Generating Station or the facilities
of the Project for a period of six months from the date of such
damage or destruction, or (c) it would not be practicable or
desirable to rebuild, repair or restore the Hope Creek Generating
Station or the Salem Generating Station or the facilities of the
Project; or
<PAGE>
(2) title to, or the temporary use of, all or substantially all
of the Hope Creek Generating Station or the Salem Generating Station
or a substantial portion of the facilities of the Project shall have
been taken or condemned by a competent authority which taking or
condemnation results or is likely to result in the Company being
hereby prevented or likely to be prevented from carrying on its
normal operation of the Hope Creek Generating Station or the Salem
Generating Station or the facilities of the Project for a period of
six months; or
(3) changes in the cost or availability of raw materials,
operating supplies, or facilities or technological or other changes
have made the continued operation of all or substantially all of the
Hope Creek Generating Station or the Salem Generating Station or a
substantial portion of the facilities of the Project uneconomical;
or
(4) any laws, rules, regulations or orders of any governmental
or regulatory entity shall require a shutdown of the Hope Creek
Generating Station or the Salem Generating Station or a substantial
portion of the facilities of the Project or prevent the Company from
carrying on its normal operation of the Hope Creek Generating
Station or the Salem Generating Station or the facilities of the
Project, in each case for a period of six months.
(c) in, whole or in part (if, in the opinion of nationally
recognized bond counsel, such partial redemption will preserve the
exclusion from gross income for Federal income tax purposes of
interest on the remaining 1994 Series C Authority Bonds) at any time
at 100% of the principal amount thereof to be redeemed, within 180
days after a "final determination" (i.e., the issuance of a published
or private ruling or technical advice) of the Internal Revenue
Service or a judicial decision in a proceeding by any court of
competent jurisdiction in the United States (from which ruling,
advice or decision no further right of appeal exists), in all cases
in which the Company has participated or been a party or has been
given an opportunity to participate and has failed to do so (no such
decree or judgment by any court or action by the Internal Revenue
Service to be considered final unless the owner of the 1994 Series
C Authority Bonds involved in such proceeding or action has given the
Company and the Authority Trustee prompt written notice of the
commencement thereof and offered the Company, at the Company's
expense, the opportunity to control the defense thereof) that, as a
result of a failure by the Company to observe any covenant,
agreement, representation or warranty in the Agreement, the interest
payable on the 1994 Series C Authority Bonds is includable in the
gross income for Federal income tax purposes of the holder thereof,
other than a "substantial user" of the Project or a "related person"
as provided in Section 147(a) of the Internal Revenue Code of 1986,
as amended, and the applicable regulations thereunder.
<PAGE>
SECTION 2.02. Notice of Redemption. (a) The election of the Company
under subsection (a) or (b) of Section 2.01 hereof to redeem any of the bonds
of the Pollution Control Series R shall be evidenced by a resolution of the
Board of Directors of the Company calling for redemption on a stated date of
all or, in the case of subsection (a), a stated principal amount thereof. To
exercise its option to redeem the bonds of the Pollution Control Series R under
subsection (a) or (b) of Section 2.01 hereof, the Company shall deliver to the
Trustee, the Authority and the Authority Trustee a certified copy of said
resolution calling all or, in the case of subsection (a), a stated principal
amount of the bonds of the Pollution Control Series R for redemption on a date
not less than 40 days nor more than 90 days from the date said resolution is
delivered. The delivery to the Authority Trustee of a certified copy of such
resolution shall constitute notice to the Authority Trustee of the redemption
referred to therein, on the terms specified therein. The Company shall on or
before such redemption date deposit with the Trustee, as paying agent
hereunder, the total applicable redemption price of all the bonds so called,
with interest accrued thereon to the redemption date, less any credits to which
the Company may be entitled pursuant to Section 3.06 hereof, and the Trustee,
as such paying agent, shall apply such funds on the redemption date to the
redemption of the bonds so called.
(b) The Company shall, within 10 days after the occurrence of a "final
determination" under subsection (c) of Section 2.01 hereof, deliver to the
Trustee written notice of such "final determination". The Company shall, by
resolution of its Board of Directors, fix a redemption date for such redemption
and shall deliver to the Trustee, the Authority and the Authority Trustee a
certified copy of said resolution at least 40 days prior to the date so
selected for redemption. Such redemption date may be any day not more than 180
days after the occurrence of such "final determination". If the Trustee does
not receive written notice of such selection by the Company within 140 days
after the date of the occurrence of such "final determination", then the
redemption date shall be the 180th day after the occurrence of such "final
determination". On or before such redemption date, the Company shall deposit
with the Trustee, as paying agent hereunder, the total redemption price of the
bonds so called, with interest accrued thereon to the redemption date, less any
credits to which the Company may be entitled pursuant to Section 3.06 hereof,
and the Trustee, as such paying agent, shall apply such funds, on the
redemption date, to the redemption of the bonds so called. The delivery to the
Authority Trustee of a certified copy of such resolution shall constitute
notice to the Authority Trustee of the redemption referred to therein on the
terms specified therein.
<PAGE>
SECTION 2.03. Interest on Called Bonds to Cease. Each bond or portion
thereof of the Pollution Control Series R called for redemption under Section
2.02 hereof shall be due and payable at the office of the Trustee, as paying
agent hereunder, at the applicable redemption price and on the specified
redemption date, anything herein or in such bond to the contrary
notwithstanding. From and after the date when each bond or portion thereof of
the Pollution Control Series R shall be due and payable as aforesaid (unless
upon said date the full amount due thereon shall not be held by or provided to
the Trustee, as paying agent hereunder, and be immediately available for
payment), all further interest shall cease to accrue on such bond or on such
portion thereof, as the case may be.
SECTION 2.04. Bonds Called in Part. If only a portion of any bond of the
Pollution Control Series R shall be called for redemption pursuant to Section
2.02 hereof, the notice of redemption hereinbefore provided for shall specify
the portion of the principal amount thereof to be redeemed. Upon payment of the
portion so called for redemption, the Trustee, as paying agent hereunder, shall
give prompt written notice thereof to the Company.
SECTION 2.05. Provisions of Indenture Not Applicable. The provisions of
Article Four of the Indenture, as amended and supplemented, shall not apply to
the procedure for the exercise of any right of redemption reserved by the
Company, or to any mandatory redemption provided in this Article in respect of
the bonds of the Pollution Control Series R. There shall be no sinking fund for
the bonds of the Pollution Control Series R.
ARTICLE III.
MISCELLANEOUS.
SECTION 3.01. Authentication of Bonds of Pollution Control Series R.
None of the bonds of the Pollution Control Series R, the issue of which is
provided for by this supplemental indenture, shall be authenticated by the
Trustee except in accordance with the provisions of the Indenture, as amended
and supplemented, and this supplemental indenture, and upon compliance with the
conditions in that behalf therein contained.
SECTION 3.02. Additional Restrictions on Authentication of Additional
Bonds Under Indenture. The Company covenants that from and after the date of
execution of this supplemental indenture, no additional bonds (as defined in
Section 1 of Article Two of the Indenture) shall be authenticated and delivered
by the Trustee under Subdivision A of Section 4 of said Article Two on account
of additions or improvements to the mortgaged property
<PAGE>
(1) unless the net earnings of the Company for the period required
by Subdivision C of Section 6 of said Article Two shall have been at least
twice the fixed charges (in lieu of 1 3/4 times such fixed charges, as
required by said Subdivision C); and for the purpose of this condition (a)
such fixed charges shall in each case include interest on the bonds
applied for, notwithstanding the parenthetical provision contained in
clause (4) of said Subdivision C, and (b) in computing such net earnings
there shall be included in expenses of operation (under paragraph (c) of
said Subdivision C) all charges against earnings for depreciation,
renewals or replacements, and all certificates with respect to net
earnings delivered to the Trustee in connection with any authentication
of additional bonds under said Article Two shall so state; and
(2) except to the extent of 60% (in lieu of 75% as permitted by
Subdivision A of Section 7 of said Article Two) of the cost or fair value
to the Company of the additions or improvements forming the basis for such
authentication of additional bonds.
SECTION 3.03. Restriction on Dividends. The Company will not declare or
pay any dividend on any shares of its common stock (other than dividends
payable in shares of its common stock) or make any other distribution on any
such shares, or purchase or otherwise acquire any such shares (except shares
acquired without cost to the Company) whenever such action would reduce the
earned surplus of the Company to an amount less than $10,000,000 or such lesser
amount as may remain after deducting from said $10,000,000 all amounts
appearing in the books of account of the Company on December 31, 1948, which
shall thereafter, pursuant to any order or rule of any regulatory body entered
after said date, be required to be removed, in whole or in part, from the books
of account of the Company by charges to earned surplus.
SECTION 3.04. Use of Facsimile Seal and Signatures. The seal of the
Company and any or all signatures of the officers of the Company upon any of
the bonds of the Pollution Control Series R may be facsimiles.
SECTION 3.05. Effective Period of Supplemental Indenture. The preceding
provisions of Articles I, II and III of this supplemental indenture shall
remain in effect only so long as any of the bonds of the Pollution Control
Series R shall remain outstanding.
SECTION 3.06. Credits with Respect to Payments. (a) The Company shall
be entitled to a credit against its obligation to pay interest on the bonds of
the Pollution Control Series R equal to interest paid on the 1994 Series C
Authority Bonds out of the accrued interest received upon the original issuance
of the 1994 Series C Authority Bonds and the earnings on the investment
thereof, as provided in the Authority Indenture, which are held by the
Authority Trustee at the time of the interest payment date.
<PAGE>
(b) The Company shall be entitled to credits against amounts otherwise
payable in respect of the bonds of the Pollution Control Series R in an amount
corresponding to (i) the principal amount of any 1994 Series C Authority Bond
surrendered to the Authority Trustee by the Company or the Authority, or
purchased by the Authority Trustee, for cancellation and (ii) the amount of
money held by the Authority Trustee and available and designated for the
payment of principal or redemption price of and interest on the 1994 Series C
Authority Bonds, as the case may be, regardless of the source of payment to the
Authority Trustee of such moneys, and the Trustee, as paying agent hereunder,
shall give prompt written notice to the Company of any such credit with respect
to the payment of interest.
(c) The Trustee, as paying agent hereunder, shall (i) promptly notify the
Company of each deposit in the Debt Service Fund under the Authority Indenture,
(ii) provide evidence to the Company that such deposit has been credited to
such Fund and (iii) give prompt written notice to the Company of any credits
with respect to payment of principal or redemption price of and interest on the
bonds of the Pollution Control Series R.
(d) A certificate of the Company signed by the President or any Vice
President, and by the Secretary or any Assistant Secretary, and consented to
by the Authority Trustee, stating that the Company is entitled to a credit
under this Section 3.06 and setting forth the basis therefor in reasonable
detail, shall be conclusive evidence of such entitlement, and the Trustee shall
accept such certificate without further investigation or verification of the
matters stated therein.
SECTION 3.07. Time for Making of Payment. All payments of principal or
redemption price of and interest on the bonds of the Pollution Control Series
R shall be made to the Authority Trustee in such funds as shall constitute
immediately available funds when payment is due. In any case where the date of
payment of the principal or redemption price of or interest on the bonds of the
Pollution Control Series R or the date fixed for redemption of any such bonds
shall be in the city of payment a Saturday, Sunday or a legal holiday or a day
on which banking institutions are authorized by law to close, then such payment
need not be made on such date but may be made on the next succeeding business
day with the same force and effect as if made on the date of maturity or the
date fixed for redemption, and no interest on such payment shall accrue for the
period after such date.
SECTION 3.08. Effect of Approval of Board of Public Utilities of the
State of New Jersey. The approval of the Board of Public Utilities of the
State of New Jersey of the execution and delivery of these presents and of the
issue of any bonds of the Pollution Control Series R shall not be construed as
approval of said Board of any other act, matter or thing which requires
approval of said Board under the laws of the State of New Jersey.
SECTION 3.09. Execution in Counterparts. For the purpose of facilitating
the recording hereof, this supplemental indenture has been executed in several
counterparts, each of which shall be and shall be taken to be an original, and
all collectively but one instrument.
<PAGE>
IN WITNESS WHEREOF, Public Service Electric and Gas Company, party hereto
of the first part, after due corporate and other proceedings, has caused this
supplemental indenture to be signed and acknowledged or proved by its President
or one of its Vice Presidents and its corporate seal hereunto to be affixed and
to be attested by the signature of its Secretary or an Assistant Secretary; and
First Fidelity Bank, National Association, as Trustee, party hereto of the
second part, has caused this supplemental indenture to be signed and
acknowledged or proved by its President, one of its Vice Presidents or one of
its Assistant Vice Presidents and its corporate seal to be hereunto affixed and
to be attested by the signature of its Cashier, one of its Assistant Cashiers,
or one of its Corporate Trust Officers. Executed and delivered this 18th day
of August, 1994.
PUBLIC SERVICE ELECTRIC AND GAS
COMPANY
By
F.E. DELANY, JR.
(F.E. Delany, Jr.)
Vice President
Attest:
L.J. DECIBUS
(L.J. Decibus)
Assistant Secretary
(Corporate Seal)
FIRST FIDELITY BANK, NATIONAL
ASSOCIATION
By
F. GALLAGHER
(F. Gallagher)
Assistant Vice President
Attest:
D. DOWDELL
(D. Dowdell)
Corporate Trust Officer
(Corporate Seal)
<PAGE>
STATE OF NEW JERSEY )
) ss.:
COUNTY OF ESSEX )
BE IT REMEMBERED, that on this 18th day of August, 1994, before me, the
subscriber, a Notary Public of the State of New Jersey, personally appeared
F.E. Delany, Jr. who, I am satisfied, is a Vice President of PUBLIC SERVICE
ELECTRIC AND GAS COMPANY, one of the corporations named in and which executed
the foregoing instrument, and is the person who signed the said instrument as
such officer for and on behalf of such corporation, and I having first made
known to him the contents thereof, he did acknowledge that he signed the said
instrument as such officer, that the said instrument was made by such
corporation and sealed with its corporate seal, that the said instrument is the
voluntary act and deed of such corporation, made by virtue of authority from
its Board of Directors, and that said corporation, the mortgagor, has received
a true copy of said instrument.
JEAN M. SEIZ
(Jean M. Seiz)
Notary Public of New Jersey
My Commission Expires Nov 28, 1995
(Notary Seal)
STATE OF NEW JERSEY)
) ss.:
COUNTY OF ESSEX
BE IT REMEMBERED, that on this 18th day of August, 1994, before me, the
subscriber, a Notary Public of the State of New Jersey, personally appeared F.
Gallagher who, I am satisfied, is an Assistant Vice President of FIRST FIDELITY
BANK, NATIONAL ASSOCIATION, one of the corporations named in and which executed
the foregoing instrument, and is the person who signed the said instrument as
such officer, for and on behalf of such corporation, and I having first made
known to him the contents thereof, he did acknowledge that he signed the said
instrument as such officer, that the said instrument was made by such
corporation and sealed with its corporate seal; and that the said instrument
is the voluntary act and deed of such corporation, made by virtue of authority
from its Board of Directors.
JACQUELYN E. ONUFER
(Jacquelyn E. Onufer)
Notary Public of New Jersey
My Commission Expires July 14, 1997
(Notary Seal)
<PAGE>
CERTIFICATE OF RESIDENCE
First Fidelity Bank, National Association, Mortgagee and Trustee within
named, hereby certifies that its precise residence is 765 Broad Street, Newark,
New Jersey 07101.
FIRST FIDELITY BANK, NATIONAL
ASSOCIATION
By F. GALLAGHER
(F. Gallagher)
Assistant Vice President
<PAGE>
<PAGE>
SUPPLEMENTAL MORTGAGE
- -----------------------------------------------------------------------------
Supplemental Indenture
Dated October 1, 1994 (No. 1)
------------------
SUPPLEMENTAL TO
FIRST AND REFUNDING MORTGAGE
DATED AUGUST 1, 1924
------------------
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
To
FIRST FIDELITY BANK, NATIONAL ASSOCIATION,
Trustee
765 Broad Street
Newark, New Jersey 07101
------------------
Providing for the issue
of
First and Refunding Mortgage Bonds,
Pollution Control Series S
- ---------------------------------------------------------------------------
RECORD IN MORTGAGE BOOK AND RETURN TO:
JAMES T. FORAN, ESQ.
80 PARK PLAZA, T5B
P.O. BOX 570
NEWARK, N.J. 07101
This instrument prepared by
(DONALD S. LEIBOWITZ, ESQ.)
<PAGE>
<PAGE> 2
TABLE OF CONTENTS
------------------
Page
----
RECITALS................................................... 1
FORM OF BOND............................................... 4
FORM OF CERTIFICATE OF AUTHENTICATION...................... 9
GRANTING CLAUSES........................................... 9
ARTICLE I.
BONDS OF THE POLLUTION CONTROL SERIES S.
DESCRIPTION OF POLLUTION CONTROL SERIES S.................. 11
ARTICLE II.
REDEMPTION OF BONDS--POLLUTION CONTROL SERIES S.
SECTION 2.01. Redemption--Redemption Prices.............. 12
SECTION 2.02. Notice of Redemption....................... 14
SECTION 2.03. Interest on Called Bonds to Cease.......... 16
SECTION 2.04. Bonds Called in Part....................... 16
SECTION 2.05. Provisions of Indenture not Applicable..... 16
ARTICLE III.
MISCELLANEOUS.
SECTION 3.01. Authentication of Bonds of Pollution Control
Series S................................. 16
SECTION 3.02. Additional Restrictions on Authentication of Additional
Bonds Under Indenture.................... 17
SECTION 3.03. Restriction on Dividends................... 17
SECTION 3.04. Use of Facsimile Seal and Signatures....... 18
SECTION 3.05. Effective Period of Supplemental Indenture. 18
SECTION 3.06. Credits with Respect to Payments........... 18
SECTION 3.07. Time for Making of Payment................. 19
SECTION 3.08. Effect of Approval of Board of Public Utilities
of the State of New Jersey............... 19
SECTION 3.09. Execution in Counterparts.................. 19
Acknowledgments............................................ 20
Certificate of Residence................................... 22
<PAGE>
<PAGE> 3
SUPPLEMENTAL INDENTURE, dated the 1st day of October, 1994, for
convenience of reference and effective from the time of execution and delivery
hereof, between PUBLIC SERVICE ELECTRIC AND GAS COMPANY, a corporation
organized under the laws of the State of New Jersey, hereinafter called the
"Company", party of the first part, and FIRST FIDELITY BANK, NATIONAL
ASSOCIATION, a national banking association organized under the laws of the
United States of America, as Trustee under the indenture dated August 1, 1924,
below mentioned, hereinafter called the "Trustee", party of the second part.
WHEREAS, on July 25, 1924, the Company executed and delivered to Fidelity
Union Trust Company (now known as First Fidelity Bank, National Association),
a certain indenture dated August 1, 1924 (hereinafter called the "Indenture"),
to secure and to provide for the issue of First and Refunding Mortgage Gold
Bonds of the Company; and
WHEREAS, the Indenture has been recorded in the following counties of the
State of New Jersey, in the offices, and therein in the books and at the pages,
as follows:
Page
County Office Book Number Number
- -------------- ----------- -------------------------------- ---------------
Atlantic Clerk's 1955 of Mortgages 160
Bergen Clerk's 94 of Chattel Mortgages 123 etc.
693 of Mortgages 88 etc.
Burlington Clerk's 52 of Chattel Mortgages Folio 8 etc.
177 of Mortgages Folio 354 etc.
Camden Register's 45 of Chattel Mortgages 184 etc.
239 of Mortgages 1 etc.
Cumberland Clerk's 786 of Mortgages 638 & c.
Essex Register's 437 of Chattel Mortgages 1-48
T-51 of Mortgages 341-392
Gloucester Clerk's 34 of Chattel Mortgages 123 etc.
142 of Mortgages 7 etc.
Hudson Register's 453 of Chattel Mortgages 9 etc.
1245 of Mortgages 484 etc.
Hunterdon Clerk's 151 of Mortgages 344
Mercer Clerk's 67 of Chattel Mortgages 1 etc.
384 of Mortgages 1 etc.
Middlesex Clerk's 113 of Chattel Mortgages 3 etc.
437 of Mortgages 294 etc.
Monmouth Clerk's 951 of Mortgages 291 & c.
Morris Clerk's N-3 of Chattel Mortgages 446 etc.
F-10 of Mortgages 269 etc.
Ocean Clerk's 1809 of Mortgages 40
Passaic Register's M-6 of Chattel Mortgages 178 etc.
R-13 of Mortgages 268 etc.
Salem Clerk's 267 of Mortgages 249 & c.
2
<PAGE>
<PAGE> 4 Page
County Office Book Number Number
- -------- --------- -------------------------- ---------------
Somerset Clerk's 46 of Chattel Mortgages 207 etc.
N-10 of Mortgages 1 etc.
Sussex Clerk's 123 of Mortgages 10 & c.
Union Register's 128 of Chattel Mortgages 28 & c.
664 of Mortgages 259 etc.
Warren Clerk's 124 of Mortgages 141 etc.
and
WHEREAS, the Indenture has also been recorded in the following counties
of the Commonwealth of Pennsylvania, in the offices, and therein in the books
and at the pages, as follows:
Page
County Office Book Number Number
- ------------- ----------- -------------------------------- ---------------
Adams Recorder's 22 of Mortgages 105
Armstrong Recorder's 208 of Mortgages 381
Bedford Recorder's 90 of Mortgages 917
Blair Recorder's 671 of Mortgages 430
Cambria Recorder's 407 of Mortgages 352
Cumberland Recorder's 500 of Mortgages 136
Franklin Recorder's 285 of Mortgages 373
Huntingdon Recorder's 128 of Mortgages 47
Indiana Recorder's 197 of Mortgages 281
Lancaster Recorder's 984 of Mortgages 1
Montgomery Recorder's 5053 of Mortgages 1221
Westmoreland Recorder's 1281 of Mortgages 198
York Recorder's 31-V of Mortgages 446
and
WHEREAS, the Indenture granted, bargained, sold, aliened, remised,
released, conveyed, confirmed, assigned, transferred and set over unto the
Trustee certain property of the Company, more fully set forth and described in
the Indenture, then owned or which might thereafter be acquired by the Company;
and
WHEREAS, the Company, by various supplemental indentures, supplemental
to the Indenture, the last of which was dated August 1, 1994, has granted,
bargained, sold, aliened, remised, released, conveyed, confirmed, assigned,
transferred and set over unto the Trustee certain property of the Company
acquired by it after the execution and delivery of the Indenture; and
WHEREAS, since the execution and delivery of said supplemental indenture
dated August 1, 1994, the Company has acquired property which, in
3
<PAGE>
<PAGE> 5
accordance with the provisions of the Indenture, is subject to the lien thereof
and the Company desires to confirm such lien; and
WHEREAS, the Indenture has been amended or supplemented from time to
time;
and
WHEREAS, it is provided in the Indenture that no bonds other than those
of the 5 1/2% Series due 1959 therein authorized may be issued thereunder
unless a supplemental indenture providing for the issue of such additional
bonds shall have been executed and delivered by the Company to the Trustee; and
WHEREAS, The Industrial Pollution Control Financing Authority of Salem
County, New Jersey (now known as The Pollution Control Financing Authority of
Salem County, New Jersey) (the "Authority") has previously issued and sold its
Pollution Control Revenue Bonds, 1984 Series C (Public Service Electric and Gas
Company Project) (the "1984 Authority Bonds") to finance a portion of the
Company's respective interests in certain pollution control facilities
(collectively, the "Project") at the Hope Creek Generating Station and the
Salem Generating Station in Lower Alloways Creek Township, Salem County, New
Jersey; and
WHEREAS, the Authority is making provision for the issuance and sale of
its Pollution Control Revenue Refunding Bonds, 1994 Series D (Public Service
Electric and Gas Company Project) (the "1994 Series D Authority Bonds") to
provide funds for making a loan to the Company to provide for refinancing of
a portion of the costs of the Project, including the refunding and redemption
of the 1984 Authority Bonds; and
WHEREAS, the 1994 Series D Authority Bonds are to be issued under an
Indenture of Trust dated as of May 1, 1993, as supplemented and amended (as so
supplemented and amended, the "Authority Indenture"), between the Authority and
First Fidelity Bank, National Association, New Jersey (now known as First
Fidelity Bank, National Association) as trustee (the "Authority Trustee"); and
WHEREAS, the Company has entered into a Pollution Control Facilities Loan
Agreement dated as of May 1, 1993, as supplemented (the "Agreement"), with the
Authority providing, among other things, for the loan by the
4
<PAGE>
<PAGE> 6
Authority to the Company of funds to finance a portion of the costs of the
Project, including the refunding and redemption of the 1984 Authority Bonds,
and for the issuance by the Company to the Authority Trustee, as assignee of
the Authority, of First and Refunding Mortgage Bonds of the Company to evidence
the Company's obligation to repay said loan, and for such purposes the Company
desires to provide for the issue of $92,955,000 aggregate principal amount of
bonds secured by the Indenture of a series to be designated as "First and
Refunding Mortgage Bonds, Pollution Control Series S" (hereinafter sometimes
called "Pollution Control Series S"); and
WHEREAS, the text of the bonds of the Pollution Control Series S and of
the certificate of authentication to be borne by the bonds of the Pollution
Control Series S shall be substantially of the following tenor:
[FORM OF BOND]
This Bond is not transferable except as provided in the Indenture of Trust
dated as of May 1, 1993, as supplemented and amended, between The Pollution
Control Financing Authority of Salem County (New Jersey) and First Fidelity
Bank, National Association, New Jersey (now known as First Fidelity Bank,
National Association), as Trustee (as so supplemented and amended, the
"Authority Indenture").
5
<PAGE>
<PAGE> 7
Registered Registered
Number Amount
R- $92,955000
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
FIRST AND REFUNDING MORTGAGE BOND,
POLLUTION CONTROL SERIES S
Public Service Electric and Gas Company (hereinafter called the
"Company"), a corporation of the State of New Jersey, for value received,
hereby promises to pay to First Fidelity Bank, National Association, as trustee
under the Authority Indenture, or registered assigns, the principal sum of
Ninety-Two Million Nine Hundred Fifty-Five Thousand Dollars, on October 1,
2029, and to pay interest thereon from the date hereof, at the rate of 6.55%
per annum, and until payment of said principal sum, such interest to be payable
April 1 and October 1 in each year.
Both the principal hereof and interest hereon shall be paid at the
principal office of First Fidelity Bank, National Association in the City of
Newark, State of New Jersey, or at the corporate trust office of any paying
agent appointed by the Company, in such coin or currency of the United States
of America as at the time of payment shall constitute legal tender for the
payment of public and private debts.
This Bond is one of the First and Refunding Mortgage Bonds of the Company
issued and to be issued under and pursuant to, and all equally secured by, an
indenture of mortgage or deed of trust dated August 1, 1924, between the
Company and First Fidelity Bank, National Association (formerly known as
Fidelity Union Trust Company), a national banking association of the United
States of America, as Trustee, as supplemented and amended by the supplemental
indentures thereto, including the supplemental indenture dated October 1, 1994
(No. 1). This Bond is one of the Bonds of the Pollution Control Series S, which
series is limited to the aggregate principal amount of $92,955,000 and is
issued pursuant to said supplemental indenture dated October 1, 1994 (No. 1).
Reference is hereby made to said indenture and all supplements thereto for a
specification of the principal amount of Bonds from time to time issuable
thereunder, and for a description of the
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<PAGE> 8
properties mortgaged and conveyed or assigned to said Trustee or its
successors, the nature and extent of the security, and the rights of the
holders of said Bonds and any coupons appurtenant thereto, and of the Trustee
in respect of such security.
In and by said indenture, as amended and supplemented, it is provided that
with the written approval of the Company and the Trustee, any of the provisions
of said indenture may from time to time be eliminated or modified and other
provisions may be added thereto provided the change does not alter the annual
interest rate, redemption price or date, date of maturity or amount payable on
maturity of any then outstanding Bond or conflict with the Trust Indenture Act
of 1939 as then in effect, and provided the holders of 85% in principal amount
of the Bonds secured by said indenture and then outstanding (including, if such
change affect the Bonds of one or more series but less than all series then
outstanding, a like percentage of the then outstanding Bonds of each series
affected by such change, and excluding Bonds owned or controlled by the Company
or by the parties owning at least 10% of the outstanding voting stock of the
Company, as more fully specified in said indenture) consent in writing thereto,
all as more fully set forth in said indenture, as amended and supplemented.
First and Refunding Mortgage Bonds issuable under said indenture are
issuable in series, and the Bonds of any series may be for varying principal
amounts and in the form of coupon Bonds and of registered Bonds without
coupons, and the Bonds of any one series may differ from the Bonds of any other
series as to date, maturity, interest rate and otherwise, all as in said
indenture provided and set forth. The Bonds of the Pollution Control Series S,
in which this Bond is included, are designated "First and Refunding Mortgage
Bonds, Pollution Control Series S".
In case of the happening of an event of default as specified in said
indenture and in the supplemental indenture dated March 1, 1942 supplemental
thereto, the principal sum of the Bonds of this issue may be declared or may
become due and payable forthwith, in the manner and with the effect in said
indenture provided.
The Bonds of this series are subject to redemption as provided in said
supplemental indenture dated October 1, 1994 (No. 1).
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This Bond is transferable, but only as provided in the Indenture of Trust
dated as of May 1, 1993, as supplemented and amended, made by The Pollution
Control Financing Authority of Salem County (New Jersey) to First Fidelity
Bank, National Association, New Jersey (now known as First Fidelity Bank,
National Association), as Trustee, upon surrender hereof, by the registered
owner in person or by attorney duly authorized in writing, at the principal
office of the Trustee; upon any such transfer a new Bond similar hereto will
be issued to the transferee. No service charge shall be made for any such
transfer, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto. The
Company and the Trustee and any paying agent may deem and treat the person in
whose name this Bond is registered as the absolute owner hereof for the purpose
of receiving payment of or on account of the principal hereof and the interest
hereon and for all other purposes; and neither the Company nor the Trustee nor
any paying agent shall be affected by any notice to the contrary.
The Bonds of this series are issuable only in fully registered form, in
any denomination authorized by the Company.
No recourse under or upon any obligation, covenant or agreement contained
in said indenture or in any indenture supplemental thereto, or in any Bond or
coupon issued thereunder, or because of any indebtedness arising thereunder,
shall be had against any incorporator, or against any past, present or future
stockholder, officer or director, as such, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, under any rule of law, statute or constitutional provision or by
the enforcement of any assessment or by any legal or equitable proceeding or
otherwise; it being expressly agreed and understood that said indenture, any
indenture supplemental thereto and the obligations issued thereunder, are
solely corporate obligations, and that no personal liability whatever shall
attach to, or be incurred by, such incorporators, stockholders, officers or
directors, as such, of the Company, or of any successor corporation, or any of
them, because of the incurring of the indebtedness thereby authorized, or under
or by reason of any of the obligations, covenants or agreements contained in
the indenture or in any indenture supplemental thereto or in any of the Bonds
or coupons issued thereunder, or implied therefrom.
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This Bond shall not be entitled to any security or benefit under said
indenture, as amended and supplemented, and shall not become valid or
obligatory for any purpose, until the certificate of authentication, hereon
endorsed, shall have been signed by First Fidelity Bank, National Association,
as Trustee, or by its successor in trust under said indenture. IN WITNESS
WHEREOF, the Company has caused this Bond to be duly executed by its proper
officers under its corporate seal.
Dated
PUBLIC SERVICE ELECTRIC AND GAS
COMPANY,
By
(Vice) President
(Seal)
Attest:
(Assistant) Secretary
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[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds of the series designated therein which are
described in the within-mentioned indenture and supplemental indenture dated
October 1, 1994 (No. 1), as secured thereby.
FIRST FIDELITY BANK, NATIONAL
ASSOCIATION, TRUSTEE,
BY
Authorized Signatory
------------------------
WHEREAS, the execution and delivery of this supplemental indenture have
been duly authorized by the Board of Directors of the Company; and
WHEREAS, the Company represents that all things necessary to make the
bonds of the Pollution Control Series S hereinafter described, when duly
authenticated by the Trustee and issued by the Company, valid, binding and
legal obligations of the Company, and to make this supplemental indenture a
valid and binding agreement supplemental to the Indenture, have been done and
performed:
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH that the Company,
in consideration of the premises and the execution and delivery by the Trustee
of this supplemental indenture, and in pursuance of the covenants and
agreements contained in the Indenture and for other good and valuable
consideration, the receipt of which is hereby acknowledged, has granted,
bargained, sold, aliened, remised, released, conveyed, confirmed, assigned,
transferred and set over, and by these presents does grant, bargain, sell,
alien, remise, release, convey, confirm, assign, transfer and set over unto the
Trustee, its successors and assigns, forever, all the right, title and interest
of the Company in and to all property of every kind and description (except
cash, accounts and bills receivable and all merchandise bought, sold or
manufactured for sale in the ordinary course of the Company's business,
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stocks, bonds or other corporate obligations or securities, other than such as
are described in Part V of the Granting Clauses of the Indenture, not acquired
with the proceeds of bonds secured by the Indenture, and except as in the
Indenture and herein otherwise expressly excluded) acquired by the Company
since the execution and delivery of the supplemental indenture dated August 1,
1994, supplemental to the Indenture (except any such property duly released
from, or disposed of free from, the lien of the Indenture, in accordance with
the provisions thereof) and all such property which at any time hereafter may
be acquired by the Company;
All of which property it is intended shall be included in and granted by
this supplemental indenture and covered by the lien of the Indenture as
heretofore and hereby amended and supplemented;
UNDER AND SUBJECT to any encumbrances or mortgages existing on property
acquired by the Company at the time of such acquisition and not heretofore
discharged of record; and
SUBJECT, also, to the exceptions, reservations and provisions in the
Indenture and in this supplemental indenture recited, and to the liens,
reservations, exceptions, limitations, conditions and restrictions imposed by
or contained in the several deeds, grants, franchises and contracts or other
instruments through which the Company acquired or claims title to the aforesaid
property; and SUBJECT, also, to existing leases, to liens on easements or
rights of way, to liens for taxes, assessments and governmental charges not in
default or the payment of which is deferred, pending appeal or other contest
by legal proceedings, pursuant to Section 4 of Article Five of the Indenture,
or the payment of which is deferred pending billing, transfer of title or final
determination of amount, to easements for alleys, streets, highways, rights of
way and railroads that may run across or encroach upon the said property, to
joint pole and similar agreements, to undetermined liens and charges, if any,
incidental to construction, and other encumbrances permitted by the Indenture
as heretofore and hereby amended and supplemented;
TO HAVE AND TO HOLD the property hereby conveyed or assigned, or intended
to be conveyed or assigned, unto the Trustee, its successor or successors and
assigns, forever;
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IN TRUST, NEVERTHELESS, upon the terms, conditions and trusts set forth
in the Indenture as heretofore and hereby amended and supplemented, to the end
that the said property shall be subject to the lien of the Indenture as
theretofore and hereby amended and supplemented, with the same force and effect
as though said property had been included in the Granting Clauses of the
Indenture at the time of the execution and delivery thereof;
AND THIS SUPPLEMENTAL INDENTURE FURTHER WITNESSETH that for the
considerations aforesaid, it is hereby covenanted between the Company and the
Trustee as follows:
ARTICLE I.
BONDS OF THE POLLUTION CONTROL SERIES S.
The series of bonds authorized by this supplemental indenture to be issued
under and secured by the Indenture shall be designated "First and Refunding
Mortgage Bonds, Pollution Control Series S"; shall be limited to the aggregate
principal amount of $92,955,000; shall be issued initially to the Authority
Trustee, as assignee of the Authority, to evidence the Company's obligation to
repay the loan to finance a portion of the costs of the Project made pursuant
to the Agreement; and shall mature and bear interest as set forth in the form
of bond hereinbefore described; provided, however, that the Company shall
receive certain credits against principal and interest obligations as set forth
in Section 3.06 hereof. The date of each bond of the Pollution Control Series
S shall be the semi-annual interest payment date next preceding the date of
authentication, unless such date of authentication be an interest payment date,
in which case the date shall be the date of authentication, or unless such date
of authentication be prior to the first semi-annual interest payment date, in
which case the date shall be October 1, 1994.
Bonds of the Pollution Control Series S shall be issued as fully
registered bonds in any denomination authorized by the Company. Interest on
bonds of the Pollution Control Series S shall be payable semi-annually on April
1 and October 1 of each year, payable initially on April 1, 1995, and shall be
payable as to both principal and interest in such coin or currency of the
United States of America as at the time of payment shall constitute legal
tender for
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the payment of public and private debts, at the principal office of the
Trustee, or at the corporate trust office of any paying agent appointed by the
Company.
Bonds of the Pollution Control Series S shall be transferable (but only
as provided in the Authority Indenture) upon surrender thereof for cancellation
by the registered owner in person or by attorney duly authorized in writing at
said office of the Trustee.
The Company hereby waives any right to make a charge for any transfer of
bonds of the Pollution Control Series S, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto.
ARTICLE II.
REDEMPTION OF BONDS--POLLUTION CONTROL SERIES S.
SECTION 2.01. Redemption--Redemption Prices. Bonds of the Pollution
Control Series S shall be subject to redemption prior to maturity, but if in
part only in integral multiples of $5,000, under the conditions and upon the
payment of the amounts specified in the following subsections, together in each
case with interest accrued to the redemption date:
(a) at the option of the Company, on any date on or after October 1,
2004, either as a whole or in part, at the following redemption prices,
expressed in percentages of the principal amount of the bonds to be
redeemed:
Redemption Period Redemption Price
- -------------------------------------------------------- -----------------
October 1, 2004 through September 30, 2005.............. 102%
October 1, 2005 through September 30, 2006.............. 101%
October 1, 2006 and thereafter.......................... 100%
(b) at the option of the Company, as a whole at any time at 100% of
the principal amount thereof, if any of the following events shall have
occurred and if, within one year of the occurrence of any of the following
events, the Company shall have given evidence to the Trustee and the
Authority Trustee, in each case by a certificate signed by the President
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a Vice President, and by the Secretary or an Assistant Secretary, of the
Company to the effect that one of such events has occurred and is
continuing, and describing the same:
(1) the Hope Creek Generating Station or the Salem Generating
Station or a substantial portion of the facilities of the Project
shall have been damaged or destroyed to such extent that (a) the Hope
Creek Generating Station or the Salem Generating Station or the
facilities of the Project cannot be reasonably restored within a
period of six months from the date of such damage or destruction to
the condition thereof immediately preceding such damage or
destruction, or (b) the Company is thereby prevented or likely to be
prevented from carrying on its normal operation of the Hope Creek
Generating Station or the Salem Generating Station or the facilities
of the Project for a period of six months from the date of such
damage or destruction, or (c) it would not be practicable or
desirable to rebuild, repair or restore the Hope Creek Generating
Station or the Salem Generating Station or the facilities of the
Project; or
(2) title to, or the temporary use of, all or substantially all
of the Hope Creek Generating Station or the Salem Generating Station
or a substantial portion of the facilities of the Project shall have
been taken or condemned by a competent authority which taking or
condemnation results or is likely to result in the Company being
thereby prevented or likely to be prevented from carrying on its
normal operation of the Hope Creek Generating Station or the Salem
Generating Station or the facilities of the Project for a period of
six months; or
(3) changes in the cost or availability of raw materials,
operating supplies, or facilities or technological or other changes
have made the continued operation of all or substantially all of the
Hope Creek Generating Station or the Salem Generating Station or a
substantial portion of the facilities of the Project uneconomical;
or
(4) any laws, rules, regulations or orders of any governmental or
regulatory entity shall require a shutdown of the Hope Creek
Generating Station or the Salem Generating Station or a substantial
portion of the facilities of the Project or prevent the Company from
carrying on its normal operation of the Hope Creek Generating
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Station or the Salem Generating Station or the facilities of the
Project, in each case for a period of six months.
(c) in, whole or in part (if, in the opinion of nationally recognized
bond counsel, such partial redemption will preserve the exclusion from
gross income for Federal income tax purposes of interest on the remaining
1994 Series D Authority Bonds) at any time at 100% of the principal amount
thereof to be redeemed, within 180 days after a "final determination"
(i.e., the issuance of a published or private ruling or technical advice)
of the Internal Revenue Service or a judicial decision in a proceeding by
any court of competent jurisdiction in the United States (from which
ruling, advice or decision no further right of appeal exists), in all cases
in which the Company has participated or been a party or has been given an
opportunity to participate and has failed to do so (no such decree or
judgment by any court or action by the Internal Revenue Service to be
considered final unless the owner of the 1994 Series D Authority Bonds
involved in such proceeding or action has given the Company and the
Authority Trustee prompt written notice of the commencement thereof and
offered the Company, at the Company's expense, the opportunity to control
the defense thereof) that, as a result of a failure by the Company to
observe any covenant, agreement, representation or warranty in the
Agreement, the interest payable on the 1994 Series D Authority Bonds is
includable in the gross income for Federal income tax purposes of the
holder thereof, other than a "substantial user" of the Project or a
"related person" as provided in Section 147(a) of the Internal Revenue Code
of 1986, as amended, and the applicable regulations thereunder.
SECTION 2.02. Notice of Redemption. (a) The election of the Company
under subsection (a) or (b) of Section 2.01 hereof to redeem any of the bonds
of the Pollution Control Series S shall be evidenced by a resolution of the
Board of Directors of the Company calling for redemption on a stated date of
all or, in the case of subsection (a), a stated principal amount thereof. To
exercise its option to redeem the bonds of the Pollution Control Series S under
subsection (a) or (b) of Section 2.01 hereof, the Company shall deliver to the
Trustee, the Authority and the Authority Trustee a certified copy of said
resolution calling all or, in the case of subsection (a), a stated principal
amount of the bonds of the Pollution Control Series S for redemption on a date
not less than 40 days nor more than 90 days from the date said resolution
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is delivered. The delivery to the Authority Trustee of a certified copy of such
resolution shall constitute notice to the Authority Trustee of the redemption
referred to therein, on the terms specified therein. The Company shall on or
before such redemption date deposit with the Trustee, as paying agent
hereunder, the total applicable redemption price of all the bonds so called,
with interest accrued thereon to the redemption date, less any credits to which
the Company may be entitled pursuant to Section 3.06 hereof, and the Trustee,
as such paying agent, shall apply such funds on the redemption date to the
redemption of the bonds so called.
(b) The Company shall, within 10 days after the occurrence of a "final
determination" under subsection (c) of Section 2.01 hereof, deliver to the
Trustee written notice of such "final determination". The Company shall, by
resolution of its Board of Directors, fix a redemption date for such redemption
and shall deliver to the Trustee, the Authority and the Authority Trustee a
certified copy of said resolution at least 40 days prior to the date so
selected for redemption. Such redemption date may be any day not more than 180
days after the occurrence of such "final determination". If the Trustee does
not receive written notice of such selection by the Company within 140 days
after the date of the occurrence of such "final determination", then the
redemption date shall be the 180th day after the occurrence of such "final
determination". On or before such redemption date, the Company shall deposit
with the Trustee, as paying agent hereunder, the total redemption price of the
bonds so called, with interest accrued thereon to the redemption date, less any
credits to which the Company may be entitled pursuant to Section 3.06 hereof,
and the Trustee, as such paying agent, shall apply such funds, on the
redemption date, to the redemption of the bonds so called. The delivery to the
Authority Trustee of a certified copy of such resolution shall constitute
notice to the Authority Trustee of the redemption referred to therein on the
terms specified therein.
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SECTION 2.03. Interest on Called Bonds to Cease. Each bond or portion
thereof of the Pollution Control Series S called for redemption under Section
2.02 hereof shall be due and payable at the office of the Trustee, as paying
agent hereunder, at the applicable redemption price and on the specified
redemption date, anything herein or in such bond to the contrary
notwithstanding. From and after the date when each bond or portion thereof of
the Pollution Control Series S shall be due and payable as aforesaid (unless
upon said date the full amount due thereon shall not be held by or provided to
the Trustee, as paying agent hereunder, and be immediately available for
payment), all further interest shall cease to accrue on such bond or on such
portion thereof, as the case may be.
SECTION 2.04. Bonds Called in Part. If only a portion of any bond of the
Pollution Control Series S shall be called for redemption pursuant to Section
2.02 hereof, the notice of redemption hereinbefore provided for shall specify
the portion of the principal amount thereof to be redeemed. Upon payment of the
portion so called for redemption, the Trustee, as paying agent hereunder, shall
give prompt written notice thereof to the Company.
SECTION 2.05. Provisions of Indenture Not Applicable. The provisions of
Article Four of the Indenture, as amended and supplemented, shall not apply to
the procedure for the exercise of any right of redemption reserved by the
Company, or to any mandatory redemption provided in this Article in respect of
the bonds of the Pollution Control Series S. There shall be no sinking fund for
the bonds of the Pollution Control Series S.
ARTICLE III.
MISCELLANEOUS.
SECTION 3.01. Authentication of Bonds of Pollution Control Series S.
None of the bonds of the Pollution Control Series S, the issue of which is
provided for by this supplemental indenture, shall be authenticated by the
Trustee except in accordance with the provisions of the Indenture, as amended
and supplemented, and this supplemental indenture, and upon compliance with the
conditions in that behalf therein contained.
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SECTION 3.02. Additional Restrictions on Authentication of Additional
Bonds Under Indenture. The Company covenants that from and after the date of
execution of this supplemental indenture, no additional bonds (as defined in
Section 1 of Article Two of the Indenture) shall be authenticated and delivered
by the Trustee under Subdivision A of Section 4 of said Article Two on account
of additions or improvements to the mortgaged property
(1) unless the net earnings of the Company for the period required by
Subdivision C of Section 6 of said Article Two shall have been at least
twice the fixed charges (in lieu of 1 3/4 times such fixed charges, as
required by said Subdivision C); and for the purpose of this condition (a)
such fixed charges shall in each case include interest on the bonds
applied for, notwithstanding the parenthetical provision contained in
clause (4) of said Subdivision C, and (b) in computing such net earnings
there shall be included in expenses of operation (under paragraph (c) of
said Subdivision
C) all charges against earnings for depreciation, renewals or replacements,
and all certificates with respect to net earnings delivered to the Trustee
in connection with any authentication of additional bonds under said
Article Two shall so state; and
(2) except to the extent of 60% (in lieu of 75% as permitted by
Subdivision A of Section 7 of said Article Two) of the cost or fair value
to the Company of the additions or improvements forming the basis for such
authentication of additional bonds.
SECTION 3.03. Restriction on Dividends. The Company will not declare or
pay any dividend on any shares of its common stock (other than dividends
payable in shares of its common stock) or make any other distribution on any
such shares, or purchase or otherwise acquire any such shares (except shares
acquired without cost to the Company) whenever such action would reduce the
earned surplus of the Company to an amount less than $10,000,000 or such lesser
amount as may remain after deducting from said $10,000,000 all amounts
appearing in the books of account of the Company on December 31, 1948, which
shall thereafter, pursuant to any order or rule of any regulatory body entered
after said date, be required to be removed, in whole or in part, from the books
of account of the Company by charges to earned surplus.
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SECTION 3.04. Use of Facsimile Seal and Signatures. The seal of the
Company and any or all signatures of the officers of the Company upon any of
the bonds of the Pollution Control Series S may be facsimiles.
SECTION 3.05. Effective Period of Supplemental Indenture. The preceding
provisions of Articles I, II and III of this supplemental indenture shall
remain in effect only so long as any of the bonds of the Pollution Control
Series S shall remain outstanding.
SECTION 3.06. Credits with Respect to Payments. (a) The Company shall
be entitled to a credit against its obligation to pay interest on the bonds of
the Pollution Control Series S equal to interest paid on the 1994 Series D
Authority Bonds out of the accrued interest received upon the original issuance
of the 1994 Series D Authority Bonds and the earnings on the investment
thereof, as provided in the Authority Indenture, which are held by the
Authority Trustee at the time of the interest payment date.
(b) The Company shall be entitled to credits against amounts otherwise
payable in respect of the bonds of the Pollution Control Series S in an amount
corresponding to (i) the principal amount of any 1994 Series D Authority Bond
surrendered to the Authority Trustee by the Company or the Authority, or
purchased by the Authority Trustee, for cancellation and (ii) the amount of
money held by the Authority Trustee and available and designated for the
payment of principal or redemption price of and interest on the 1994 Series D
Authority Bonds, as the case may be, regardless of the source of payment to the
Authority Trustee of such moneys, and the Trustee, as paying agent hereunder,
shall give prompt written notice to the Company of any such credit with respect
to the payment of interest.
(c) The Trustee, as paying agent hereunder, shall (i) promptly notify the
Company of each deposit in the Debt Service Fund under the Authority Indenture,
(ii) provide evidence to the Company that such deposit has been credited to
such Fund and (iii) give prompt written notice to the Company of any credits
with respect to payment of principal or redemption price of and interest on the
bonds of the Pollution Control Series S.
(d) A certificate of the Company signed by the President or any Vice
President, and by the Secretary or any Assistant Secretary, and consented to
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by the Authority Trustee, stating that the Company is entitled to a credit
under this Section 3.06 and setting forth the basis therefor in reasonable
detail, shall be conclusive evidence of such entitlement, and the Trustee shall
accept such certificate without further investigation or verification of the
matters stated therein.
SECTION 3.07. Time for Making of Payment. All payments of principal or
redemption price of and interest on the bonds of the Pollution Control Series
S shall be made to the Authority Trustee in such funds as shall constitute
immediately available funds when payment is due. In any case where the date of
payment of the principal or redemption price of or interest on the bonds of the
Pollution Control Series S or the date fixed for redemption of any such bonds
shall be in the city of payment a Saturday, Sunday or a legal holiday or a day
on which banking institutions are authorized by law to close, then such payment
need not be made on such date but may be made on the next succeeding business
day with the same force and effect as if made on the date of maturity or the
date fixed for redemption, and no interest on such payment shall accrue for the
period after such date.
SECTION 3.08. Effect of Approval of Board of Public Utilities of the
State of New Jersey. The approval of the Board of Public Utilities of the
State of New Jersey of the execution and delivery of these presents and of the
issue of any bonds of the Pollution Control Series S shall not be construed as
approval of said Board of any other act, matter or thing which requires
approval of said Board under the laws of the State of New Jersey.
SECTION 3.09. Execution in Counterparts. For the purpose of facilitating
the recording hereof, this supplemental indenture has been executed in several
counterparts, each of which shall be and shall be taken to be an original, and
all collectively but one instrument.
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IN WITNESS WHEREOF, Public Service Electric and Gas Company, party hereto
of the first part, after due corporate and other proceedings, has caused this
supplemental indenture to be signed and acknowledged or proved by its President
or one of its Vice Presidents and its corporate seal hereunto to be affixed and
to be attested by the signature of its Secretary or an Assistant Secretary; and
First Fidelity Bank, National Association, as Trustee, party hereto of the
second part, has caused this supplemental indenture to be signed and
acknowledged or proved by its President, one of its Vice Presidents or one of
its Assistant Vice Presidents and its corporate seal to be hereunto affixed and
to be attested by the signature of its Cashier, one of its Assistant Cashiers,
or one of its Corporate Trust
Officers. Executed and delivered this 19th day of October, 1994.
PUBLIC SERVICE ELECTRIC AND GAS
COMPANY
By
(F. J. Riepl)
Vice President
Attest:
E. J. BIGGINS, JR.
(E. J. Biggins, Jr.)
Assistant Secretary
FIRST FIDELITY BANK, NATIONAL
ASSOCIATION
By
F. GALLAGHER
(F. Gallagher)
Assistant Vice President
Attest:
D.DOWDELL
(D. Dowdell)
Corporate Trust Officer
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STATE OF NEW JERSEY
ss.:
COUNTY OF ESSEX
BE IT REMEMBERED, that on this 19th day of October, 1994, before me, the
subscriber, a Notary Public of the State of New Jersey, personally appeared F.
J. Riepl who, I am satisfied, is a Vice President of PUBLIC SERVICE ELECTRIC
AND GAS COMPANY, one of the corporations named in and which executed the
foregoing instrument, and is the person who signed the said instrument as such
officer for and on behalf of such corporation, and I having first made known
to him the contents thereof, he did acknowledge that he signed the said
instrument as such officer, that the said instrument was made by such
corporation and sealed with its corporate seal, that the said instrument is the
voluntary act and deed of such corporation, made by virtue of authority from
its Board of Directors, and that said corporation, the mortgagor, has received
a true copy of said instrument.
JEAN M. SEIZ
(Jean M. Seiz)
Notary Public of New Jersey
My Commission xpries Nov 28, 1995
(Notary Seal)
<PAGE>
<PAGE> 24
STATE OF NEW JERSEY
ss.:
COUNTY OF ESSEX
BE IT REMEMBERED, that on this 19th day of October, 1994, before me, the
subscriber, a Notary Public of the State of New Jersey, personally appeared F.
Gallagher who, I am satisfied, is an Assistant Vice President of FIRST FIDELITY
BANK, NATIONAL ASSOCIATION, one of the corporations named in and which executed
the foregoing instrument, and is the person who signed the said instrument as
such officer, for and on behalf of such corporation, and I having first made
known to him the contents thereof, he did acknowledge that he signed the said
instrument as such officer, that the said instrument was made by such
corporation and sealed with its corporate seal; and that the said instrument
is the voluntary act and deed of such corporation, made by virtue of authority
from its Board of Directors.
JEAN M. SEIZ
(Jean M. Seiz)
Notary Public of New Jersey
My Commission xpries Nov 28, 1995
(Notary Seal)
<PAGE>
<PAGE> 25
CERTIFICATE OF RESIDENCE
First Fidelity Bank, National Association, Mortgagee and Trustee within
named, hereby certifies that its precise residence is 765 Broad Street, Newark,
New Jersey 07101.
FIRST FIDELITY BANK, NATIONAL
ASSOCIATION
By
F. GALLAGHER
(F. Gallagher)
Assistant Vice President
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SUPPLEMENTAL MORTGAGE
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Supplemental Indenture
Dated October 1, 1994 (No. 2)
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SUPPLEMENTAL TO
FIRST AND REFUNDING MORTGAGE
DATED AUGUST 1, 1924
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PUBLIC SERVICE ELECTRIC AND GAS COMPANY
To
FIRST FIDELITY BANK, NATIONAL ASSOCIATION,
Trustee
765 Broad Street
Newark, New Jersey 07101
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Providing for the issue
of
First and Refunding Mortgage Bonds,
Pollution Control Series T
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RECORD IN MORTGAGE BOOK AND RETURN TO:
JAMES T. FORAN, ESQ.
80 PARK PLAZA, T5B
P.O. BOX 570
NEWARK, N.J. 07101
This instrument prepared by
(EDWARD C. FEDAK, ESQ.)
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TABLE OF CONTENTS
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Page
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RECITALS.................................................... 1
FORM OF BOND................................................ 4
FORM OF CERTIFICATE OF AUTHENTICATION....................... 9
GRANTING CLAUSES............................................ 9
ARTICLE I.
BONDS OF THE POLLUTION CONTROL SERIES T.
DESCRIPTION OF POLLUTION CONTROL SERIES T................... 11
ARTICLE II.
REDEMPTION OF BONDS--POLLUTION CONTROL SERIES T.
SECTION 2.01. Redemption--Redemption Prices............... 12
SECTION 2.02. Notice of Redemption........................ 14
SECTION 2.03. Interest on Called Bonds to Cease........... 15
SECTION 2.04. Bonds Called in Part........................ 16
SECTION 2.05. Provisions of Indenture not Applicable...... 16
ARTICLE III.
MISCELLANEOUS.
SECTION 3.01. Authentication of Bonds of Pollution Control
Series T.................................. 16
SECTION 3.02. Additional Restrictions on Authentication of Additional
Bonds Under Indenture..................... 16
SECTION 3.03. Restriction on Dividends.................... 17
SECTION 3.04. Use of Facsimile Seal and Signatures........ 17
SECTION 3.05. Effective Period of Supplemental Indenture.. 17
SECTION 3.06. Credits with Respect to Payments............ 17
SECTION 3.07. Time for Making of Payment.................. 18
SECTION 3.08. Effect of Approval of Board of Public Utilities
of the State of New Jersey................ 19
SECTION 3.09. Execution in Counterparts................... 19
Acknowledgments............................................. 20
Certificate of Residence.................................... 22
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SUPPLEMENTAL INDENTURE, dated the 1st day of October, 1994, for
convenience of reference and effective from the time of execution and delivery
hereof, between PUBLIC SERVICE ELECTRIC AND GAS COMPANY, a corporation
organized under the laws of the State of New Jersey, hereinafter called the
"Company", party of the first part, and FIRST FIDELITY BANK, NATIONAL
ASSOCIATION, a national banking association organized under the laws of the
United States of America, as Trustee under the indenture dated August 1, 1924,
below mentioned, hereinafter called the "Trustee", party of the second part.
WHEREAS, on July 25, 1924, the Company executed and delivered to Fidelity
Union Trust Company (now known as First Fidelity Bank, National Association),
a certain indenture dated August 1, 1924 (hereinafter called the "Indenture"),
to secure and to provide for the issue of First and Refunding Mortgage Gold
Bonds of the Company; and
WHEREAS, the Indenture has been recorded in the following counties of the
State of New Jersey, in the offices, and therein in the books and at the pages,
as follows:
Page
County Office Book Number Number
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Atlantic Clerk's 1955 of Mortgages 160
Bergen Clerk's 94 of Chattel Mortgages 123 etc.
693 of Mortgages 88 etc.
Burlington Clerk's 52 of Chattel Mortgages Folio 8 etc.
177 of Mortgages Folio 354 etc.
Camden Register's 45 of Chattel Mortgages 184 etc.
239 of Mortgages 1 etc.
Cumberland Clerk's 786 of Mortgages 638 & c.
Essex Register's 437 of Chattel Mortgages 1-48
T-51 of Mortgages 341-392
Gloucester Clerk's 34 of Chattel Mortgages 123 etc.
142 of Mortgages 7 etc.
Hudson Register's 453 of Chattel Mortgages 9 etc.
1245 of Mortgages 484 etc.
Hunterdon Clerk's 151 of Mortgages 344
Mercer Clerk's 67 of Chattel Mortgages 1 etc.
384 of Mortgages 1 etc.
Middlesex Clerk's 113 of Chattel Mortgages 3 etc.
437 of Mortgages 294 etc.
Monmouth Clerk's 951 of Mortgages 291 & c.
Morris Clerk's N-3 of Chattel Mortgages 446 etc.
F-10 of Mortgages 269 etc.
Ocean Clerk's 1809 of Mortgages 40
Passaic Register's M-6 of Chattel Mortgages 178 etc.
R-13 of Mortgages 268 etc.
Salem Clerk's 267 of Mortgages 249 & c.
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Page
County Office Book Number Number
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Somerset Clerk's 46 of Chattel Mortgages 207 etc.
N-10 of Mortgages 1 etc.
Sussex Clerk's 123 of Mortgages 10 & c.
Union Register's 128 of Chattel Mortgages 28 & c.
664 of Mortgages 259 etc.
Warren Clerk's 124 of Mortgages 141 etc.
and
WHEREAS, the Indenture has also been recorded in the following counties
of the Commonwealth of Pennsylvania, in the offices, and therein in the books
and at the pages, as follow
Page
County Office Book Number Number
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Adams Recorder's 22 of Mortgages 105
Armstrong Recorder's 208 of Mortgages 381
Bedford Recorder's 90 of Mortgages 917
Blair Recorder's 671 of Mortgages 430
Cambria Recorder's 407 of Mortgages 352
Cumberland Recorder's 500 of Mortgages 136
Franklin Recorder's 285 of Mortgages 373
Huntingdon Recorder's 128 of Mortgages 47
Indiana Recorder's 197 of Mortgages 281
Lancaster Recorder's 984 of Mortgages 1
Montgomery Recorder's 5053 of Mortgages 1221
Westmoreland Recorder's 1281 of Mortgages 198
York Recorder's 31-V of Mortgages 446
and
WHEREAS, the Indenture granted, bargained, sold, aliened, remised,
released, conveyed, confirmed, assigned, transferred and set over unto the
Trustee certain property of the Company, more fully set forth and described in
the Indenture, then owned or which might thereafter be acquired by the Company;
and
WHEREAS, the Company, by various supplemental indentures, supplemental
to the Indenture, the last of which was dated August 1, 1994, has granted,
bargained, sold, aliened, remised, released, conveyed, confirmed, assigned,
transferred and set over unto the Trustee certain property of the Company
acquired by it after the execution and delivery of the Indenture; and
WHEREAS, since the execution and delivery of said supplemental indenture
dated August 1, 1994, the Company has acquired property which, in
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accordance with the provisions of the Indenture, is subject to the lien thereof
and the Company desires to confirm such lien; and
WHEREAS, the Indenture has been amended or supplemented from time to
time; and
WHEREAS, it is provided in the Indenture that no bonds other than those
of the 5 1/2% Series due 1959 therein authorized may be issued thereunder
unless a supplemental indenture providing for the issue of such additional
bonds shall have been executed and delivered by the Company to the Trustee; and
WHEREAS, the York County Industrial Development Authority (Pennsylvania)
(the "Authority") has previously issued and sold its Pollution Control Revenue
Bonds, 1984 Series A (Public Service Electric and Gas Company Peach Bottom
Project) (the "1984 Authority Bonds") to finance the acquisition and
construction of the Company's 42.49% undivided interest, as a tenant in common
without right of partition, in certain pollution control facilities (the
"Project") at the Peach Bottom Atomic Power Station, Units 2 and 3, (the
"Plant") located principally in Peach Bottom Township, York County,
Pennsylvania, which Project is more fully described in the Pollution Control
Facilities Agreement hereinafter mentioned; and
WHEREAS, the Authority is making provision for the issuance and sale of
its Pollution Control Revenue Refunding Bonds, 1994 Series A (Public Service
Electric and Gas Company Peach Bottom Project) (the "1994 Authority Bonds") to
provide funds to pay a portion of the costs of refunding through redemption the
1984 Authority Bonds; and
WHEREAS, the 1994 Authority Bonds are to be issued under an Indenture of
Trust to be dated as of October 1, 1994 (the "Authority Indenture"), between
the Authority and First Fidelity Bank, National Association, as trustee (the
"Authority Trustee"); and
WHEREAS, the Company has entered into a Pollution Control Facilities
Agreement dated as of October 1, 1976, (the "Agreement"), with the Authority
and the other owners of the Peach Bottom Atomic Power Station, Units 2 and 3,
providing, among other things, for the sale and conveyance by the Authority to
the Company of the Project, and for the issuance by the
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Company to the Authority Trustee, as assignee of the Authority, of First and
Refunding Mortgage Bonds of the Company to evidence the Company's obligation
to pay the purchase price for the Project, and for such purposes, in connection
with the issuance of the 1994 Authority Bonds, the Company desires to provide
for the issue of $4,600,000 aggregate principal amount of bonds secured by the
Indenture of a series to be designated as "First and Refunding Mortgage Bonds,
Pollution Control Series T" (hereinafter sometimes called "Pollution Control
Series T'); and
WHEREAS, the text of the bonds of the Pollution Control Series T and of
the certificate of authentication to be borne by the bonds of the Pollution
Control Series T shall be substantially of the following tenor:
[FORM OF BOND]
This Bond is not transferable except as provided in the Indenture of Trust
dated as of October 1, 1994, between the York County Industrial Development
Authority (Pennsylvania) and First Fidelity Bank, National Association as
trustee (the "Authority Indenture").
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Registered Registered
Number Amount
R- $4,600,000
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
FIRST AND REFUNDING MORTGAGE BOND,
POLLUTION CONTROL SERIES T
Public Service Electric and Gas Company (hereinafter called the
"Company"), a corporation of the State of New Jersey, for value received,
hereby promises to pay to First Fidelity Bank, National Association, as trustee
under the Authority Indenture, or registered assigns, the principal sum of Four
Million Six Hundred Thousand Dollars, on October 1, 2019, and to pay interest
thereon from the date hereof, at the rate of 6.45% per annum, and until payment
of said principal sum, such interest to be payable April 1 and October 1 in
each year.
Both the principal hereof and interest hereon shall be paid at the
principal office of First Fidelity Bank, National Association in the City of
Newark, State of New Jersey, or at the corporate trust office of any paying
agent appointed by the Company, in such coin or currency of the United States
of America as at the time of payment shall constitute legal tender for the
payment of public and private debts.
This Bond is one of the First and Refunding Mortgage Bonds of the Company
issued and to be issued under and pursuant to, and all equally secured by, an
indenture of mortgage or deed of trust dated August 1, 1924, between the
Company and First Fidelity Bank, National Association (formerly known as
Fidelity Union Trust Company), a national banking association of the United
States of America, as Trustee, as supplemented and amended by the supplemental
indentures thereto, including the supplemental indenture dated October 1, 1994
(No. 2). This Bond is one of the Bonds of the Pollution Control Series T, which
series is limited to the aggregate principal amount of $4,600,000 and is issued
pursuant to said supplemental indenture dated October 1, 1994 (No. 2).
Reference is hereby made to said indenture and all supplements thereto for a
specification of the principal amount of Bonds from time to time issuable
thereunder, and for a description of the
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properties mortgaged and conveyed or assigned to said Trustee or its
successors, the nature and extent of the security, and the rights of the
holders of said Bonds and any coupons appurtenant thereto, and of the Trustee
in respect of such security.
In and by said indenture, as amended and supplemented, it is provided that
with the written approval of the Company and the Trustee, any of the provisions
of said indenture may from time to time be eliminated or modified and other
provisions may be added thereto provided the change does not alter the annual
interest rate, redemption price or date, date of maturity or amount payable on
maturity of any then outstanding Bond or conflict with the Trust Indenture Act
of 1939 as then in effect, and provided the holders of 85% in principal amount
of the Bonds secured by said indenture and then outstanding (including, if such
change affect the Bonds of one or more series but less than all series then
outstanding, a like percentage of the then outstanding Bonds of each series
affected by such change, and excluding Bonds owned or controlled by the Company
or by the parties owning at least 10% of the outstanding voting stock of the
Company, as more fully specified in said indenture) consent in writing thereto,
all as more fully set forth in said indenture, as amended and supplemented.
First and Refunding Mortgage Bonds issuable under said indenture are
issuable in series, and the Bonds of any series may be for varying principal
amounts and in the form of coupon Bonds and of registered Bonds without
coupons, and the Bonds of any one series may differ from the Bonds of any other
series as to date, maturity, interest rate and otherwise, all as in said
indenture provided and set forth. The Bonds of the Pollution Control Series T,
in which this Bond is included, are designated "First and Refunding Mortgage
Bonds, Pollution Control Series T".
In case of the happening of an event of default as specified in said
indenture and in the supplemental indenture dated March 1, 1942 supplemental
thereto, the principal sum of the Bonds of this issue may be declared or may
become due and payable forthwith, in the manner and with the effect in said
indenture provided.
The Bonds of this series are subject to redemption as provided in said
supplemental indenture dated October 1, 1994 (No. 2).
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This Bond is transferable, but only as provided in the Indenture of Trust
dated as of October 1, 1994, made by the York County Industrial Development
Authority (Pennsylvania) to First Fidelity Bank, National Association as
Trustee, upon surrender hereof, by the registered owner in person or by
attorney duly authorized in writing, at the principal office of the Trustee;
upon any such transfer a new Bond similar hereto will be issued to the
transferee. No service charge shall be made for any such transfer, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto. The Company and
the Trustee and any paying agent may deem and treat the person in whose name
this Bond is registered as the absolute owner hereof for the purpose of
receiving payment of or on account of the principal hereof and the interest
hereon and for all other purposes; and neither the Company nor the Trustee nor
any paying agent shall be affected by any notice to the contrary.
The Bonds of this series are issuable only in fully registered form, in
any denomination authorized by the Company.
No recourse under or upon any obligation, covenant or agreement contained
in said indenture or in any indenture supplemental thereto, or in any Bond or
coupon issued thereunder, or because of any indebtedness arising thereunder,
shall be had against any incorporator, or against any past, present or future
stockholder, officer or director, as such, of the Company or of any successor
corporation, either directly or through the Company or any successor
corporation, under any rule of law, statute or constitutional provision or by
the enforcement of any assessment or by any legal or equitable proceeding or
otherwise; it being expressly agreed and understood that said indenture, any
indenture supplemental thereto and the obligations issued thereunder, are
solely corporate obligations, and that no personal liability whatever shall
attach to, or be incurred by, such incorporators, stockholders, officers or
directors, as such, of the Company, or of any successor corporation, or any of
them, because of the incurring of the indebtedness thereby authorized, or under
or by reason of any of the obligations, covenants or agreements contained in
the indenture or in any indenture supplemental thereto or in any of the Bonds
or coupons issued thereunder, or implied therefrom.
This Bond shall not be entitled to any security or benefit under said
indenture, as amended and supplemented, and shall not become valid or
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obligatory for any purpose, until the certificate of authentication, hereon
endorsed, shall have been signed by First Fidelity Bank, National Association,
as Trustee, or by its successor in trust under said indenture.
IN WITNESS WHEREOF, the Company has caused this Bond to be duly executed
by its proper officers under its corporate seal.
Dated
PUBLIC SERVICE ELECTRIC AND GAS
COMPANY,
By
(Vice) President
(Seal)
Attest:
(Assistant) Secretary
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[FORM OF CERTIFICATE OF AUTHENTICATION]
CERTIFICATE OF AUTHENTICATION
This Bond is one of the Bonds of the series designated therein which are
described in the within-mentioned indenture and supplemental indenture dated
October 1, 1994 (No. 2), as secured thereby.
FIRST FIDELITY BANK, NATIONAL
ASSOCIATION, TRUSTEE,
BY
Authorized Signatory
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WHEREAS, the execution and delivery of this supplemental indenture have
been duly authorized by the Board of Directors of the Company; and
WHEREAS, the Company represents that all things necessary to make the
bonds of the Pollution Control Series T hereinafter described, when duly
authenticated by the Trustee and issued by the Company, valid, binding and
legal obligations of the Company, and to make this supplemental indenture a
valid and binding agreement supplemental to the Indenture, have been done and
performed:
NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH that the Company,
in consideration of the premises and the execution and delivery by the Trustee
of this supplemental indenture, and in pursuance of the covenants and
agreements contained in the Indenture and for other good and valuable
consideration, the receipt of which is hereby acknowledged, has granted,
bargained, sold, aliened, remised, released, conveyed, confirmed, assigned,
transferred and set over, and by these presents does grant, bargain, sell,
alien, remise, release, convey, confirm, assign, transfer and set over unto the
Trustee, its successors and assigns, forever, all the right, title and interest
of the Company in and to all property of every kind and description (except
cash, accounts and bills receivable and all merchandise bought, sold or
manufactured for sale in the ordinary course of the Company's business,
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stocks, bonds or other corporate obligations or securities, other than such as
are described in Part V of the Granting Clauses of the Indenture, not acquired
with the proceeds of bonds secured by the Indenture, and except as in the
Indenture and herein otherwise expressly excluded) acquired by the Company
since the execution and delivery of the supplemental indenture dated August 1,
1994, supplemental to the Indenture (except any such property duly released
from, or disposed of free from, the lien of the Indenture, in accordance with
the provisions thereof) and all such property which at any time hereafter may
be acquired by the Company;
All of which property it is intended shall be included in and granted by
this supplemental indenture and covered by the lien of the Indenture as
heretofore and hereby amended and supplemented;
UNDER AND SUBJECT to any encumbrances or mortgages existing on property
acquired by the Company at the time of such acquisition and not heretofore
discharged of record; and
SUBJECT, also, to the exceptions, reservations and provisions in the
Indenture and in this supplemental indenture recited, and to the liens,
reservations, exceptions, limitations, conditions and restrictions imposed by
or contained in the several deeds, grants, franchises and contracts or other
instruments through which the Company acquired or claims title to the aforesaid
property; and SUBJECT, also, to existing leases, to liens on easements or
rights of way, to liens for taxes, assessments and governmental charges not in
default or the payment of which is deferred, pending appeal or other contest
by legal proceedings, pursuant to Section 4 of Article Five of the Indenture,
or the payment of which is deferred pending billing, transfer of title or final
determination of amount, to easements for alleys, streets, highways, rights of
way and railroads that may run across or encroach upon the said property, to
joint pole and similar agreements, to undetermined liens and charges, if any,
incidental to construction, and other encumbrances permitted by the Indenture
as heretofore and hereby amended and supplemented;
TO HAVE AND TO HOLD the property hereby conveyed or assigned, or intended
to be conveyed or assigned, unto the Trustee, its successor or successors and
assigns, forever;
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IN TRUST, NEVERTHELESS, upon the terms, conditions and trusts set forth
in the Indenture as heretofore and hereby amended and supplemented, to the end
that the said property shall be subject to the lien of the Indenture as
heretofore and hereby amended and supplemented, with the same force and effect
as though said property had been included in the Granting Clauses of the
Indenture at the time of the execution and delivery thereof;
AND THIS SUPPLEMENTAL INDENTURE FURTHER WITNESSETH that for the
considerations aforesaid, it is hereby covenanted between the Company and the
Trustee as follows:
ARTICLE I.
BONDS OF THE POLLUTION CONTROL SERIES T.
The series of bonds authorized by this supplemental indenture to be issued
under and secured by the Indenture shall be designated "First and Refunding
Mortgage Bonds, Pollution Control Series T"; shall be limited to the aggregate
principal amount of $4,600,000; shall be issued initially to the Authority
Trustee, as assignee of the Authority, to evidence the Company's obligation
under the Agreement with respect to the 1994 Authority Bonds; and shall mature
and bear interest as set forth in the form of bond hereinbefore described;
provided, however, that the Company shall receive certain credits against
principal and interest obligations as set forth in Section 3.06 hereof. The
date of each bond of the Pollution Control Series T shall be the semi-annual
interest payment date next preceding the date of authentication, unless such
date of authentication be an interest payment date, in which case the date
shall be the date of authentication, or unless such date of authentication be
prior to the first semi-annual interest payment date, in which case the date
shall be October 1, 1994.
Bonds of the Pollution Control Series T shall be issued as fully
registered bonds in any denomination authorized by the Company. Interest on
bonds of the Pollution Control Series T shall be payable semi-annually on April
1 and October 1 of each year, payable initially on April 1, 1995, and shall be
payable as to both principal and interest in such coin or currency of the
United States of America as at the time of payment shall constitute legal
tender for
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the payment of public and private debts, at the principal office of the
Trustee, or at the corporate trust office of any paying agent appointed by the
Company.
Bonds of the Pollution Control Series T shall be transferable (but only
as provided in the Authority Indenture) upon surrender thereof for cancellation
by the registered owner in person or by attorney duly authorized in writing at
said office of the Trustee.
The Company hereby waives any right to make a charge for any transfer of
bonds of the Pollution Control Series T, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto.
ARTICLE II.
REDEMPTION OF BONDS--POLLUTION CONTROL SERIES T.
SECTION 2.01. Redemption--Redemption Prices. Bonds of the Pollution
Control Series T shall be subject to redemption prior to maturity, but if in
part only in integral multiples of $5,000, under the conditions and upon the
payment of the amounts specified in the following subsections, together in each
case with interest accrued to the redemption date:
(a) at the option of the Company, on any date on or after October 1,
2004, either as a whole or in part, at the following redemption prices,
expressed in percentages of the principal amount of the bonds to be
redeemed:
Redemption Period Redemption Price
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October 1, 2004 through September 30, 2005............... 102%
October 1, 2005 through September 30, 2006............... 101%
October 1, 2006 and thereafter........................... 100%
(b) at the option of the Company, as a whole at any time at 100% of
the principal amount thereof, if any of the following events shall have
occurred and if, within one year of the occurrence of any of the following
events, the Company shall have given evidence to the Trustee and the
Authority Trustee, in each case by a certificate signed by the President
or
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a Vice President, and by the Secretary or an Assistant Secretary, of the
Company to the effect that one of such events has occurred and is
continuing, and describing the same:
(1) the Peach Bottom Atomic Power Station Units 2 and 3 or a
substantial portion of the facilities of the Project shall have been
damaged or destroyed to such extent that (a) such Station or the
facilities of the Project cannot be reasonably restored within a
period of six months from the date of such damage or destruction to
the condition thereof immediately preceding such damage or
destruction, or (b) the Company is thereby prevented or likely to be
prevented from carrying on its normal operation of such Station or the
facilities of the Project for a period of six months from the date of
such damage or destruction, or (c) it would not be practicable or
desirable to rebuild, repair or restore such Station or the facilities
of the Project; or
(2) title to, or the temporary use of, all or substantially all
of the Peach Bottom Atomic Power Station Units 2 and 3 or a
substantial portion of the facilities of the Project shall have been
taken or condemned by a competent authority which taking or
condemnation results or is likely to result in the Company being
thereby prevented or likely to be prevented from carrying on its
normal operation of such Station or the facilities of the Project for
a period of six months; or
(3) changes in the cost or availability of raw materials,
operating supplies, or facilities or technological or other changes
have made the continued operation of all or substantially all of the
Peach Bottom Atomic Power Station Units 2 and 3 or a substantial
portion of the facilities of the Project uneconomical; or
(4) any laws, rules, regulations or orders of any governmental or
regulatory entity shall require a shutdown of the Peach Bottom Atomic
Power Station Units 2 and 3 or a substantial portion of the facilities
of the Project or prevent the Company from carrying on its normal
operation of such Station or the facilities of the Project, in each
case for a period of six months.
(c) in, whole or in part (if, in the opinion of nationally recognized
bond counsel, such partial redemption will preserve the exclusion from
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gross income for Federal income tax purposes of interest on the remaining
1994 Authority Bonds) at any time at 100% of the principal amount thereof
to be redeemed, within 180 days after a "final determination" (i.e., the
issuance of a published or private ruling or technical advice) of the
Internal Revenue Service or a judicial decision in a proceeding by any
court of competent jurisdiction in the United States (from which ruling,
advice or decision no further right of appeal exists), in all cases in
which the Company has participated or been a party or has been given an
opportunity to participate and has failed to do so (no such decree or
judgment by any court or action by the Internal Revenue Service to be
considered final unless the owner of the 1994 Authority Bonds involved in
such proceeding or action has given the Company and the Authority Trustee
prompt written notice of the commencement thereof and offered the Company,
at the Company's expense, the opportunity to control the defense thereof)
that, as a result of a failure by the Company to observe any covenant,
agreement, representation or warranty in the Agreement, the interest
payable on the 1994 Authority Bonds is includable in the gross income for
Federal income tax purposes of the holder thereof, other than a
"substantial user" of the Project or a "related person" as provided in
Section 147(a) of the Internal Revenue Code of 1986, as amended, and the
applicable regulations thereunder.
SECTION 2.02. Notice of Redemption. (a) The election of the Company
under subsection (a) or (b) of Section 2.01 hereof to redeem any of the bonds
of the Pollution Control Series T shall be evidenced by a resolution of the
Board of Directors of the Company calling for redemption on a stated date of
all or, in the case of subsection (a), a stated principal amount thereof. To
exercise its option to redeem the bonds of the Pollution Control Series T under
subsection (a) or (b) of Section 2.01 hereof, the Company shall deliver to the
Trustee, the Authority and the Authority Trustee a certified copy of said
resolution calling all or, in the case of subsection (a), a stated principal
amount of the bonds of the Pollution Control Series T for redemption on a date
not less than 40 days nor more than 90 days from the date said resolution is
delivered. The delivery to the Authority Trustee of a certified copy of such
resolution shall constitute notice to the Authority Trustee of the redemption
referred to therein, on the terms specified therein. The Company shall on or
before such redemption date deposit with the Trustee, as paying agent
hereunder, the total applicable redemption price of all the bonds so called,
with interest accrued thereon to the redemption date, less any credits to which
the
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Company may be entitled pursuant to Section 3.06 hereof, and the Trustee, as
such paying agent, shall apply such funds on the redemption date to the
redemption of the bonds so called.
(b) The Company shall, within 10 days after the occurrence of a "final
determination" under subsection (c) of Section 2.01 hereof, deliver to the
Trustee written notice of such "final determination". The Company shall, by
resolution of its Board of Directors, fix a redemption date for such redemption
and shall deliver to the Trustee, the Authority and the Authority Trustee a
certified copy of said resolution at least 40 days prior to the date so
selected for redemption. Such redemption date may be any day not more than 180
days after the occurrence of such "final determination". If the Trustee does
not receive written notice of such selection by the Company within 140 days
after the date of the occurrence of such "final determination", then the
redemption date shall be the 180th day after the occurrence of such "final
determination". On or before such redemption date, the Company shall deposit
with the Trustee, as paying agent hereunder, the total redemption price of the
bonds so called, with interest accrued thereon to the redemption date, less any
credits to which the Company may be entitled pursuant to Section 3.06 hereof,
and the Trustee, as such paying agent, shall apply such funds, on the
redemption date, to the redemption of the bonds so called. The delivery to the
Authority Trustee of a certified copy of such resolution shall constitute
notice to the Authority Trustee of the redemption referred to therein on the
terms specified therein.
SECTION 2.03. Interest on Called Bonds to Cease. Each bond or portion
thereof of the Pollution Control Series T called for redemption under Section
2.02 hereof shall be due and payable at the office of the Trustee, as paying
agent hereunder, at the applicable redemption price and on the specified
redemption date, anything herein or in such bond to the contrary
notwithstanding. From and after the date when each bond or portion thereof of
the Pollution Control Series T shall be due and payable as aforesaid (unless
upon said date the full amount due thereon shall not be held by or provided to
the Trustee, as paying agent hereunder, and be immediately available for
payment), all further interest shall cease to accrue on such bond or on such
portion thereof, as the case may be.
16
<PAGE>
<PAGE> 18
SECTION 2.04. Bonds Called in Part. If only a portion of any bond of the
Pollution Control Series T shall be called for redemption pursuant to Section
2.02 hereof, the notice of redemption hereinbefore provided for shall specify
the portion of the principal amount thereof to be redeemed. Upon payment of the
portion so called for redemption, the Trustee, as paying agent hereunder, shall
give prompt written notice thereof to the Company.
SECTION 2.05. Provisions of Indenture Not Applicable. The provisions of
Article Four of the Indenture, as amended and supplemented, shall not apply to
the procedure for the exercise of any right of redemption reserved by the
Company, or to any mandatory redemption provided in this Article in respect of
the bonds of the Pollution Control Series T. There shall be no sinking fund for
the bonds of the Pollution Control Series T.
ARTICLE III.
MISCELLANEOUS.
SECTION 3.01. Authentication of Bonds of Pollution Control Series T.
None of the bonds of the Pollution Control Series T, the issue of which is
provided for by this supplemental indenture, shall be authenticated by the
Trustee except in accordance with the provisions of the Indenture, as amended
and supplemented, and this supplemental indenture, and upon compliance with the
conditions in that behalf therein contained.
SECTION 3.02. Additional Restrictions on Authentication of Additional
Bonds Under Indenture. The Company covenants that from and after the date of
execution of this supplemental indenture, no additional bonds (as defined in
Section 1 of Article Two of the Indenture) shall be authenticated and delivered
by the Trustee under Subdivision A of Section 4 of said Article Two on account
of additions or improvements to the mortgaged property
(1) unless the net earnings of the Company for the period required by
Subdivision C of Section 6 of said Article Two shall have been at least
twice the fixed charges (in lieu of 1 3/4 times such fixed charges, as
required by said Subdivision C); and for the purpose of this condition (a)
such fixed charges shall in each case include interest on the bonds
17
<PAGE>
<PAGE> 19
applied for, notwithstanding the parenthetical provision contained in
clause (4) of said Subdivision C, and (b) in computing such net earnings
there shall be included in expenses of operation (under paragraph (c) of
said Subdivision C) all charges against earnings for depreciation, renewals
or replacements, and all certificates with respect to net earnings
delivered to the Trustee in connection with any authentication of
additional bonds under said Article Two shall so state; and
(2) except to the extent of 60% (in lieu of 75% as permitted by
Subdivision A of Section 7 of said Article Two) of the cost or fair value
to the Company of the additions or improvements forming the basis for such
authentication of additional bonds.
SECTION 3.03. Restriction on Dividends. The Company will not declare or
pay any dividend on any shares of its common stock (other than dividends
payable in shares of its common stock) or make any other distribution on any
such shares, or purchase or otherwise acquire any such shares (except shares
acquired without cost to the Company) whenever such action would reduce the
earned surplus of the Company to an amount less than $10,000,000 or such lesser
amount as may remain after deducting from said $10,000,000 all amounts
appearing in the books of account of the Company on December 31, 1948, which
shall thereafter, pursuant to any order or rule of any regulatory body entered
after said date, be required to be removed, in whole or in part, from the books
of account of the Company by charges to earned surplus.
SECTION 3.04. Use of Facsimile Seal and Signatures. The seal of the
Company and any or all signatures of the officers of the Company upon any of
the bonds of the Pollution Control Series T may be facsimiles.
SECTION 3.05. Effective Period of Supplemental Indenture. The preceding
provisions of Articles I, II and III of this supplemental indenture shall
remain in effect only so long as any of the bonds of the Pollution Control
Series T shall remain outstanding.
SECTION 3.06. Credits with Respect to Payments. (a) The Company shall
be entitled to a credit against its obligation to pay interest on the bonds of
the Pollution Control Series T equal to interest paid on the 1994 Authority
18
<PAGE>
<PAGE> 20
Bonds out of the accrued interest received upon the original issuance of the
1994 Authority Bonds and the earnings on the investment thereof, as provided
in the Authority Indenture, which are held by the Authority Trustee at the time
of the interest payment date.
(b) The Company shall be entitled to credits against amounts otherwise
payable in respect of the bonds of the Pollution Control Series T in an amount
corresponding to (i) the principal amount of any 1994 Authority Bond
surrendered to the Authority Trustee by the Company or the Authority, or
purchased by the Authority Trustee, for cancellation and (ii) the amount of
money held by the Authority Trustee and available and designated for the
payment of principal or redemption price of and interest on the 1994 Authority
Bonds, as the case may be, regardless of the source of payment to the Authority
Trustee of such moneys, and the Trustee, as paying agent hereunder, shall give
prompt written notice to the Company of any such credit with respect to the
payment of interest.
(c) The Trustee, as paying agent hereunder, shall (i) promptly notify the
Company of each deposit in the Debt Service Fund under the Authority Indenture,
(ii) provide evidence to the Company that such deposit has been credited to
such Fund and (iii) give prompt written notice to the Company of any credits
with respect to payment of principal or redemption price of and interest on the
bonds of the Pollution Control Series T.
(d) A certificate of the Company signed by the President or any Vice
President, and by the Secretary or any Assistant Secretary, and consented to
by the Authority Trustee, stating that the Company is entitled to a credit
under this Section 3.06 and setting forth the basis therefor in reasonable
detail, shall be conclusive evidence of such entitlement, and the Trustee shall
accept such certificate without further investigation or verification of the
matters stated therein.
SECTION 3.07. Time for Making of Payment. All payments of principal or
redemption price of and interest on the bonds of the Pollution Control Series
T shall be made to the Authority Trustee in such funds as shall constitute
immediately available funds when payment is due. In any case where the date of
payment of the principal or redemption price of or interest on the bonds of the
Pollution Control Series T or the date fixed for redemption
19
<PAGE>
<PAGE> 21
of any such bonds shall be in the city of payment a Saturday, Sunday or a legal
holiday or a day on which banking institutions are authorized by law to close,
then such payment need not be made on such date but may be made on the next
succeeding business day with the same force and effect as if made on the date
of maturity or the date fixed for redemption, and no interest on such payment
shall accrue for the period after such date.
SECTION 3.08. Effect of Approval of Board of Public Utilities of the
State of New Jersey. The approval of the Board of Public Utilities of the
State of New Jersey of the execution and delivery of these presents and of the
issue of any bonds of the Pollution Control Series T shall not be construed as
approval of said Board of any other act, matter or thing which requires
approval of said Board under the laws of the State of New Jersey.
SECTION 3.09. Execution in Counterparts. For the purpose of facilitating
the recording hereof, this supplemental indenture has been executed in several
counterparts, each of which shall be and shall be taken to be an original, and
all collectively but one instrument.
20
<PAGE>
<PAGE> 22
IN WITNESS WHEREOF, Public Service Electric and Gas Company, party hereto
of the first part, after due corporate and other proceedings, has caused this
supplemental indenture to be signed and acknowledged or proved by its President
or one of its Vice Presidents and its corporate seal hereunto to be affixed and
to be attested by the signature of its Secretary or an Assistant Secretary; and
First Fidelity Bank, National Association, as Trustee, party hereto of the
second part, has caused this supplemental indenture to be signed and
acknowledged or proved by its President, one of its Vice Presidents or one of
its Assistant Vice Presidents and its corporate seal to be hereunto affixed and
to be attested by the signature of its Cashier, one of its Assistant Cashiers,
or one of its Corporate Trust Officers. Executed and delivered this 19th day
of October, 1994.
PUBLIC SERVICE ELECTRIC AND GAS
COMPANY
By
(F. J. Riepl)
Vice President
Attest:
(L. J. Decibus.)
Assistant Secretary
FIRST FIDELITY BANK, NATIONAL
ASSOCIATION
By
(F. Gallagher)
Assistant Vice President
Attest:
(D. Dowdell)
Corporate Trust Officer
21
<PAGE>
STATE OF NEW JERSEY
ss.:
COUNTY OF ESSEX
BE IT REMEMBERED, that on this 19th day of October, 1994, before me, the
subscriber, a Notary Public of the State of New Jersey, personally appeared F.
J. Riepl who, I am satisfied, is a Vice President of PUBLIC SERVICE ELECTRIC
AND GAS COMPANY, one of the corporations named in and which executed the
foregoing instrument, and is the person who signed the said instrument as such
officer for and on behalf of such corporation, and I having first made known
to him the contents thereof, he did acknowledge that he signed the said
instrument as such officer, that the said instrument was made by such
corporation and sealed with its corporate seal, that the said instrument is the
voluntary act and deed of such corporation, made by virtue of authority from
its Board of Directors, and that said corporation, the mortgagor, has received
a true copy of said instrument.
JEAN M. SEIZ
(Jean M. Seiz)
Notary Public of New Jersey
My Commission xpries Nov 28, 1995
(Notary Seal)
<PAGE>
STATE OF NEW JERSEY
ss.:
COUNTY OF ESSEX
BE IT REMEMBERED, that on this 19th day of October, 1994, before me, the
subscriber, a Notary Public of the State of New Jersey, personally appeared F.
Gallagher who, I am satisfied, is an Assistant Vice President of FIRST FIDELITY
BANK, NATIONAL ASSOCIATION, one of the corporations named in and which executed
the foregoing instrument, and is the person who signed the said instrument as
such officer, for and on behalf of such corporation, and I having first made
known to him the contents thereof, he did acknowledge that he signed the said
instrument as such officer, that the said instrument was made by such
corporation and sealed with its corporate seal; and that the said instrument
is the voluntary act and deed of such corporation, made by virtue of authority
from its Board of Directors.
JEAN M. SEIZ
(Jean M. Seiz)
Notary Public of New Jersey
My Commission xpries Nov 28, 1995
(Notary Seal)
<PAGE>
CERTIFICATE OF RESIDENCE
First Fidelity Bank, National Association, Mortgagee and Trustee within
named, hereby certifies that its precise residence is 765 Broad Street, Newark,
New Jersey 07101.
FIRST FIDELITY BANK, NATIONAL
ASSOCIATION
By F. GALLAGHER
(F. Gallagher)
Assistant Vice President
<PAGE>
<PAGE> 1
<TABLE>
<CAPTION>
EXHIBIT 12
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
PLUS PREFERRED STOCK DIVIDEND REQUIREMENTS
12 MONTHS
YEAR ENDED DECEMBER 31, ENDED
------------------------------------------------------------- SEPTEMBER 30,
1989 1990 1991 1992 1993 1994
--------- --------- --------- --------- --------- ---------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
Net Income....................... $ 523,435 $ 403,662 $ 543,035 $ 504,117 $ 595,519(A) $ 620,692
Plus Income Taxes................ 207,644 144,652 274,146 253,276 316,010 325,525
--------- --------- --------- --------- --------- ---------
Net Income Before Income Taxes... 731,079 548,314 817,181 757,393 911,529 946,217
--------- --------- --------- --------- --------- ---------
Fixed Charges and Preferred Stock
Dividend Requirements:
Interest Charges............... 408,661 457,017 478,321 524,025 502,534 492,636
Interest Factor in Rentals..... 8,908 9,162 9,311 9,591 11,090 11,864
Preferred Stock Dividend
Requirements (Pre-tax)...... 39,729 38,544 42,676 46,748 58,112 59,987
--------- --------- --------- --------- --------- ---------
Total.................. 457,298 504,723 530,308 580,364 571,736 564,487
--------- --------- --------- --------- --------- ---------
Earnings Before Fixed Charges and
Preferred Stock Dividend
Requirements................... $1,188,377 $1,053,037 $1,347,489 $1,337,757 $1,483,265 $1,510,704
========== ========== ========== ========== ========== ==========
Ratio............................ 2.60 2.09 2.54 2.30 2.59 2.68
==== ==== ==== ==== ==== ====
(A) Excludes cumulative effect of $5.4 million credit to income in accounting reflecting a
change in income taxes.
1
</TABLE>
<PAGE> 1
<TABLE>
<CAPTION> EXHIBIT 12(A)
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
12 MONTHS
YEAR ENDED DECEMBER 31, ENDED
------------------------------------------------------------- SEPTEMBER 30,
1989 1990 1991 1992 1993 1994
--------- --------- --------- --------- --------- ---------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
Net Income....................... $ 544,374 $ 537,619 $ 545,479 $ 475,936 $ 614,868 $ 647,970
Plus Income Taxes................ 214,299 209,360 261,912 223,782 307,414 325,148
---------- ---------- ---------- ---------- ---------- ----------
Net Income Before Income Taxes... 758,673 746,979 807,391 699,718 922,282 973,118
---------- ---------- ---------- ---------- ---------- ----------
Fixed Charges
Interest Charges............... 333,717 346,020 358,517 401,902 389,956 388,990
Interest Factor in Rentals..... 8,908 9,162 9,311 9,591 11,090 11,864
---------- ---------- ---------- ---------- ---------- ----------
Total.................. 342,625 355,182 367,828 411,493 401,046 400,854
---------- ---------- ---------- ---------- ---------- ----------
Earnings Before Fixed Charges.... $1,101,298 $1,102,161 $1,175,219 $1,111,211 $1,323,328 $1,373,972
========== ========== ========== ========== ========== ==========
Ratio............................ 3.21 3.10 3.20 2.70 3.30 3.43
==== ==== ==== ==== ==== ====
</TABLE>
2
<PAGE> 1
<TABLE>
<CAPTION> EXHIBIT 12(B)
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
PLUS PREFERRED STOCK DIVIDEND REQUIREMENTS
12 MONTHS
YEAR ENDED DECEMBER 31, ENDED
-------------------------------------------------------------- SEPTEMBER 30,
1989 1990 1991 1992 1993 1994
---------- ---------- ---------- ---------- ---------- ---------
(THOUSANDS OF DOLLARS)
<S> <C> <C> <C> <C> <C> <C>
Net Income........................... $ 544,374 $ 537,619 $ 545,479 $ 475,936 $ 614,868 $ 647,970
Plus Income Taxes.................... 214,299 209,361 261,912 223,782 307,414 325,148
---------- ---------- ---------- ---------- ---------- ----------
Net Income Before Income Taxes....... 758,673 746,980 807,391 699,718 922,282 973,118
---------- ---------- ---------- ---------- ---------- ----------
Fixed Charges and Preferred Stock
Dividend Requirements:
Interest Charges................... 333,717 346,020 358,517 401,902 389,956 388,990
Interest Factor in Rentals......... 8,908 9,162 9,311 9,591 11,090 11,864
Preferred Stock Dividend
Requirements (Pre-tax).......... 40,236 40,116 42,703 46,675 56,957 60,360
---------- ---------- ---------- ---------- ---------- ----------
Total...................... 382,861 395,298 410,531 458,168 458,003 461,214
---------- ---------- ---------- ---------- ---------- ----------
Earnings Before Fixed Charges and
Preferred Stock Dividend
Requirements....................... $1,101,298 $1,102,162 $1,175,219 $1,111,211 $1,323,328 $1,373,972
========== ========== ========== ========== ========== ==========
Ratio................................ 2.88 2.79 2.86 2.43 2.89 2.98
==== ==== ==== ==== ==== ====
</TABLE>
3
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from SEC Form
10-Q and is qualified in its entirety by reference to such financial
statements. The referenced financial statements are unaudited but, in the
opinion of Enterprise's management, reflect all adjustments, consisting only
of normal recurring accruals.
</LEGEND>
<CIK> 0000788784
<NAME> PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 10928335
<OTHER-PROPERTY-AND-INVEST> 2668906
<TOTAL-CURRENT-ASSETS> 1365041
<TOTAL-DEFERRED-CHARGES> 1663861
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 16626143
<COMMON> 3801157
<CAPITAL-SURPLUS-PAID-IN> 109357
<RETAINED-EARNINGS> 1401697
<TOTAL-COMMON-STOCKHOLDERS-EQ> 5312211
150000
459994
<LONG-TERM-DEBT-NET> 5277722
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 562665
<LONG-TERM-DEBT-CURRENT-PORT> 478399
0
<CAPITAL-LEASE-OBLIGATIONS> 52054
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 4333098
<TOT-CAPITALIZATION-AND-LIAB> 16626143
<GROSS-OPERATING-REVENUE> 4447764
<INCOME-TAX-EXPENSE> 294341<F1>
<OTHER-OPERATING-EXPENSES> 3243055
<TOTAL-OPERATING-EXPENSES> 3534171
<OPERATING-INCOME-LOSS> 913593
<OTHER-INCOME-NET> 10163
<INCOME-BEFORE-INTEREST-EXPEN> 923756
<TOTAL-INTEREST-EXPENSE> 368715
<NET-INCOME> 547190
30568
<EARNINGS-AVAILABLE-FOR-COMM> 547190
<COMMON-STOCK-DIVIDENDS> 395934
<TOTAL-INTEREST-ON-BONDS> 343978
<CASH-FLOW-OPERATIONS> 727581
<EPS-PRIMARY> 2.24
<EPS-DILUTED> 2.24
<FN>
<CAPTION>
<F1>State Income Taxes $5,700 and Federal Income Taxes for Other Income $3,225
were incorporated into this line item for FDS purposes. In the referenced
financial statements, State Income Taxes are part of Taxes - Other and Federal
Income Taxes for Other Income are included in Other Income - Miscellaneous.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from SEC form
10-Q and is qualified in its entirety by reference to such financial
statements. The financial statements are unaudited but, in the opinion of
PSE&G's management, reflect all adjustments, consisting only of normal
recurring accruals.
</LEGEND>
<CIK> 0000081033
<NAME> PUBLIC SERVICE ELECTRIC AND GAS COMPANY
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> SEP-30-1994
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 10928335
<OTHER-PROPERTY-AND-INVEST> 407319
<TOTAL-CURRENT-ASSETS> 1232379
<TOTAL-DEFERRED-CHARGES> 1661148
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 14229181
<COMMON> 2563003
<CAPITAL-SURPLUS-PAID-IN> 534395
<RETAINED-EARNINGS> 1310074
<TOTAL-COMMON-STOCKHOLDERS-EQ> 4407472
150000
459994
<LONG-TERM-DEBT-NET> 4486371
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 562665
<LONG-TERM-DEBT-CURRENT-PORT> 310826
0
<CAPITAL-LEASE-OBLIGATIONS> 52054
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 3799799
<TOT-CAPITALIZATION-AND-LIAB> 14229181
<GROSS-OPERATING-REVENUE> 4154574
<INCOME-TAX-EXPENSE> 278480<F1>
<OTHER-OPERATING-EXPENSES> 3073299
<TOTAL-OPERATING-EXPENSES> 3348554
<OPERATING-INCOME-LOSS> 806020
<OTHER-INCOME-NET> 10086<F1>
<INCOME-BEFORE-INTEREST-EXPEN> 816106
<TOTAL-INTEREST-EXPENSE> 292618
<NET-INCOME> 539930
30568
<EARNINGS-AVAILABLE-FOR-COMM> 509362
<COMMON-STOCK-DIVIDENDS> 378600
<TOTAL-INTEREST-ON-BONDS> 273838
<CASH-FLOW-OPERATIONS> 577211
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<FN>
<CAPTION>
<F1>State Income Taxes $1,562 and Federal Income Taxes for Other Income $3,225
were incorporated into this line item for FDS purposes. In the referenced
financial statements, State Income Taxes are included in Taxes - Other
and Federal Income Taxes for Other Income are included in Other
Income - Miscellaneous.
</FN>
</TABLE>
