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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/