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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 24, 1999
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
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(Exact name of registrant as specified in its charter)
State of New Jersey 1-9120 22-2625848
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
80 Park Plaza, P.O. Box 1171
Newark, New Jersey 07101-1171
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 973-430-7000
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
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(Exact name of registrant as specified in its charter)
State of New Jersey 1-973 22-1212800
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
80 Park Plaza, P.O. Box 570
Newark, New Jersey 07101-0570
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 973-430-7000
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Item 5. Other Events
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The following information updates certain matters previously reported to
the Securities and Exchange Commission under Item 1-Business and Item 3 - Legal
Proceedings of Part I and Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations (MD&A) and Item 8 - Financial
Statements and Supplementary Data of Part II of the Annual Reports on Form 10-K
for the year ended December 31, 1998, the Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1999 and June 30, 1999, and the Current Reports on Form
8-K filed March 18, 1999, April 26, 1999, and July 21, 1999 of Public Service
Electric and Gas Company (PSE&G) and its parent, Public Service Enterprise Group
Incorporated (PSEG).
Energy Master Plan Proceedings
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On August 24, 1999, the New Jersey Board of Public Utilities (BPU) issued a
Final Decision and Order (Final Order) in PSE&G's rate unbundling, stranded
costs and restructuring filings. This Final Order provides the reasoning for the
action taken by the BPU in the above matters. The Final Order affirmed in all
material respects the decisions and actions previously approved in the BPU's
Summary Order issued April 21, 1999, with the exception of PSE&G's treatment of
investment tax credits (ITC) of $235 million related to PSE&G's generation
assets.
The BPU has directed PSE&G to seek a private letter ruling from the
Internal Revenue Service (IRS) to determine if the ITC can be credited to
customers without violating the tax normalization policies of the IRS. In the
event that the IRS issues a ruling which supports the proposition that the ITC
cannot be passed on to the customers of PSE&G without violating the IRS's
normalization rules, then no further action is required on this matter by the
BPU.
Conversely, if the IRS's private letter ruling determines that the ITC
could be passed on to customers of PSE&G without violating the IRS's
normalization rules, then the BPU in year four of the transition period will
consider any action which it may deem appropriate regarding the treatment of the
ITC, giving consideration to the issues resolved in the stipulation of March 17,
1999, the BPU's modifications of the stipulation and other relevant
considerations. PSE&G accounted for the ITC as a reduction to the extraordinary
charge recorded in the second quarter of 1999. PSE&G believes accounting for the
ITC as a credit to stockholders was appropriate, as any flow-through of such ITC
to its customers would violate the IRS's normalization rules. PSE&G cannot
predict the outcome of the ruling from the IRS or any subsequent potential
actions which may be taken by the BPU. However, an adverse resolution to this
matter would result in an additional extraordinary charge to income up to the
amount of the ITC, which would have a material adverse impact on PSEG's and
PSE&G's financial condition, results of operations and net cash flows.
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Securitization
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On September 10, 1999, the BPU issued a verbal order approving PSE&G's
petition for an irrevocable Bondable Stranded Costs Rate Order (Finance Order)
to authorize, among other things, the imposition of a non-bypassable transition
bond charge on PSE&G's customers; the sale of PSE&G's property right in such
charge created by the New Jersey Electric Discount and Energy Competition Act to
a bankruptcy-remote financing entity; the issuance and sale of $2.525 billion of
transition bonds by such entity in payment therefor, including an estimated $125
million of transaction costs; and the application by PSE&G of the transition
bond proceeds to retire outstanding debt and/or equity.
The verbal order was consistent with the provisions of the New Jersey
Electric Discount and Energy Competition Act and the Summary and Final Orders in
PSE&G's rate unbundling, stranded costs and restructuring filings. A written
order finalizing this proceeding is expected in September 1999 and the issuance
of the bonds is expected in the fourth quarter of 1999.
PSEG Global Inc. (Global) Assets and Development Activities
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Global is currently performing a comprehensive review of its existing
assets and development activities focusing on rationalizing the portfolio to
ensure efficient capital deployment. As part of this review, Global assessed the
present carrying value of its equity investments in such activities. Global's
management has decided that it will not commit additional resources to its
investments in Thailand and the Philippines and will focus its current Asian
development activities in China. As a result, Global will record a write-down,
which is not expected to exceed $10 million after-tax, in the third quarter of
1999 to adjust the carrying value of these assets to net realizable value. In
addition, the projected substantial decline in revenue related to energy
contracts for six generation facilities in California will result in a third
quarter 1999 write-down of Global's equity investment in such facilities, which
is not expected to exceed $21 million after-tax. Global expects to finalize the
review in the third quarter of 1999, and does not anticipate that any additional
changes in carrying value, other than those described above, will result.
Global is a wholly owned subsidiary of PSEG Energy Holdings Inc., which is
a wholly owned subsidiary of PSEG.
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SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned hereunto duly authorized.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
(Registrant)
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
(Registrant)
By: PATRICIA A. RADO
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Patricia A. Rado
Vice President and Controller
(Principal Accounting Officer)
Date: September 14, 1999
