PSEG Power, PJM ISO to Discuss Future Availability of Seven Generating Units Being Considered for Retirement
September 20 2004 - 4:05PM
PR Newswire (US)
PSEG Power, PJM ISO to Discuss Future Availability of Seven
Generating Units Being Considered for Retirement PSEG Power Seeks
Adequate Revenue Structure for Units NEWARK, N.J., Sept. 20
/PRNewswire-FirstCall/ -- PSEG Power and the PJM Interconnection
today said they will hold discussions on the future availability of
seven generating units in New Jersey that have been earmarked for
retirement because they are viewed by Power as no longer
economically viable under the current market structure. PJM
coordinates and directs the operation of the region's transmission
grid; administers a competitive wholesale electricity market, the
world's largest; and plans regional transmission expansion
improvements to maintain grid reliability and relieve congestion.
PJM services 35 million people in all or parts of New Jersey,
Delaware, Illinois, Maryland, Ohio, Pennsylvania, Virginia, West
Virginia and the District of Columbia. Power filed notice with PJM
of its intention to retire the seven units in New Jersey. Today, in
response, PJM identified certain system reliability concerns
associated with the retirements and said it would initiate meetings
with Power on these and other issues designed to address these
concerns. Power agreed to the discussions. "Projected capacity and
energy revenues do not provide for adequate recovery of the going
forward costs of these units, let alone a reasonable return on
investment," Power stated in its notice to the PJM. "As these units
are no longer economically viable, absent an acceptable
compensatory arrangement with PJM, it is PSEG Power's intention to
retire these units effective December 7, 2004." The units being
considered for retirement are Sewaren 1, 2, 3 and 4 in Woodbridge
Township, Kearny 7 and 8 in Kearny and Hudson 1 in Jersey City.
These sites have other electric generating units that will remain
in operation. The seven units have a combined installed capacity of
1,132 megawatts, and their current combined book value is $23
million. If the units were retired, all affected employees would be
reassigned. "While we share the view that PJM is a model regional
transmission organization, the current market design does not
recognize and fairly compensate generators for the value of their
capacity," said Frank Cassidy, president of PSEG Power. "We
acknowledge that a new capacity market, including a locational
component, is under development in PJM," Cassidy said. "However,
PSEG Power can no longer afford to subsidize the availability of
these units." Cassidy explained that the notice filed by Power and
the proposed discussions are the first steps in a generator
retirement process outlined by PJM. PSEG Power, one of the nation's
largest independent power producers, is a subsidiary of Public
Service Enterprise Group Incorporated (PSEG) and currently owns
more than 14,000 MW of electric generating capacity. PSEG
(PEG/NYSE) is a diversified energy holding company with more than
$28 billion in assets and 2003 revenues of $11.1 billion. PSEG's
other primary subsidiaries are Public Service Electric and Gas
Company (PSE&G), New Jersey's oldest and largest energy
distribution utility company, and PSEG Energy Holdings, a holding
company for other unregulated businesses. PSEG and PSEG Power have
their headquarters in Newark, NJ. FORWARD-LOOKING STATEMENT Readers
are cautioned that statements contained in this press release about
our and our subsidiaries' future performance, including future
revenues, earnings, strategies, prospects and all other statements
that are not purely historical, are forward-looking statements for
purposes of the safe harbor provisions under The Private Securities
Litigation Reform Act of 1995. Although we believe that our
expectations are based on reasonable assumptions, we can give no
assurance they will be achieved. The results or events predicted in
these statements may differ materially from actual results or
events. Factors which could cause results or events to differ from
current expectations include, among other things: the effects of
weather; the performance of generating units and transmission
systems; the availability and prices for oil, gas, coal, nuclear
fuel, capacity and electricity; changes in the markets for
electricity and other energy-related commodities; changes in the
number of participants and the risk profile of such participants in
the energy marketing and trading business; the effectiveness of our
risk management and internal controls systems; the effects of
regulatory decisions and changes in law; changes in competition in
the markets we serve; the ability to recover regulatory assets and
other potential stranded costs; the outcomes of litigation and
regulatory proceedings or inquiries; the timing and success of
efforts to develop domestic and international power projects;
conditions of the capital markets and equity markets; advances in
technology; changes in accounting standards; changes in interest
rates and in financial and foreign currency markets generally; the
economic and political climate and growth in the areas in which we
conduct our activities; and changes in corporate strategies. For
further information, please refer to our Annual Report on Form 10-K
and subsequent reports on Form 10-Q and Form 8-K filed with the
Securities and Exchange Commission. These documents address in
further detail our business, industry issues and other factors that
could cause actual results to differ materially from those
indicated in this release. In addition, any forward-looking
statements included herein represent our estimates only as of today
and should not be relied upon as representing our estimates as of
any subsequent date. While we may elect to update forward-looking
statements from time to time, we specifically disclaim any
obligation to do so, even if our estimates change, unless otherwise
required by applicable securities laws. DATASOURCE: PSEG Power
CONTACT: Neil Brown, +1-973-430-6017, or +1-201-519-4323, for PSEG
Power Web site: http://www.pseg.com/
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