PSEG Forecasts Higher Migration to Competitive Supply in N.J.

Customer migration away from Basic Generation Service in New Jersey negatively impacted fourth quarter earnings at PSEG Power by $10 million, parent Public Service Enterprise Group reported yesterday.

Customer migration represented an estimated 34% of BGS volumes at year-end. This level of migration was in line with PSEG's expectations, and compared with migration levels of 33% at the end of September 2011 and 27% at the end of 2010.

PSEG attributed the higher migration to warmer-than-normal temperatures in December 2011 compared with colder-than-normal temperatures experienced in the year-ago period, which increased the effective headroom in the fourth quarter compared to year-ago level.

Overall average migration for 2011 was approximately 32%.

In disclosing its forward hedging, PSEG forecast customer migration levels between 36% and 40% at the end of 2012, followed by a further expected small increase in 2013. An expansion in headroom forecast by PSEG is partially driving the forecasted increase in migration levels.

PSEG Power reported operating earnings of $134 million for the fourth quarter, versus $212 million a year ago. Aside from the negative impact from migration, 2011 fourth quarter earnings were challenged by lower capacity and energy prices (including lower BGS prices), and lower volumes due to weather.