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PUBLIC SERVICE ENTERPRISE GROUP CHAIRMAN ADDRESSES SHAREHOLDERS

 PUBLIC SERVICE ENTERPRISE GROUP CHAIRMAN ADDRESSES SHAREHOLDERS
 NEWARK, N.J., April 21 /PRNewswire/ -- Public Service Enterprise Group Incorporated (Enterprise) (NYSE: PEG) overcame the impact of continued recession to register a financially successful 1991 and undertake initiatives that will improve New Jersey's environment, create jobs, and support economic recovery with efficient, low-cost energy, E. James Ferland, chairman, president, and chief executive officer told company shareholders today (April 21) at their annual meeting.
 Enterprise is the parent company of Public Service Electric and Gas Company (PSE&G), its primary subsidiary and Enterprise Diversified Holdings Incorporated (Holdings), parent company of Enterprise's non- utility businesses.
 Strong Financial Profile
 Ferland said Enterprise's financial outlook remains strong. Overall 1991 earnings increased $2 million over 1990's record earnings of $542.3 million. The common stock dividend was increased for the 16th consecutive year and Enterprise maintained solid credit ratings, a healthy cash flow and strong capital structure.
 These positive financial results, Ferland said, resulted from the strong effort of PSE&G employees plus favorable weather which resulted in increased electric and gas sales. PSE&G's 1991 earnings increased from $508.6 million in 1990 to $516.5 million in 1991.
 Ferland reported mixed but disappointing overall results for the non-utility businesses of Holdings; which were severely affected by the continued weak economy and the collapse of wholesale natural gas prices. Holdings non-utility businesses earned $27.8 million in 1991, down from $33.7 million in 1991.
 Need for Rate Relief
 Continued earnings growth as well as Enterprise's ability to provide future dividend increases will depend, in large part, Ferland said, on the outcome of PSE&G's request for higher electric and gas rates. "Whether the current recession drags on or whether we experience a positive rebound in 1992 will also have a significant bearing on future financial prospects," Ferland said.
 The $669 million rate increase petition filed by PSE&G in November, 1991, represented the first such request since 1986.
 "As anyone who has closely followed our annual reports and recent financial statements knows, we have been fighting the good fight to avoid seeking rate increases for a number of years," Ferland said. "We have trimmed our staffs. We have cut our expenses. We have found new, efficient, innovative ways to deliver electric and gas service to our customers. At the same time, we kept a close eye on the investment return we were offering and on the expectations of the financial community.
 "Today," Ferland continued, "with more customers and fever employees, we are providing reliable, safe, efficient service at rates that are lower than they were in 1985 -- even though the New Jersey Consumer Price Index has risen 30 percent during that time. We accomplished this through aggressive management of operating and maintenance costs and through the skill and dedication of PSE&G's 13,000-person employee body."
 Ferland said the cost control effort will continue but higher rates are necessary for the company to meet its obligations to customers and shareowners. The Board of Regulatory Commissioners (BRC) is not expected to reach a decision on the rate request earlier than late 1992.
 Economy, Gas Prices Affect Diversified Businesses
 A special challenge, Ferland said, involves the short-term financial performance of Energy Development Corporation, Holdings' oil and gas exploration and production subsidiary.
 While the long-term prospects for EDC remain strong, Ferland said the extended national recession and a two-year period of unusually mild winter weather have pushed natural gas prices to the lowest levels in 15 years.
 As a result, Ferland said the decision has been made to adopt a change in accounting-method employed by EDC "which will reduce the net book value of EDC's gas reserves by approximately $219 million through a restatement of prior years earnings. This restatement results in a reduction in reported earnings of calendar years 1987 through 1990, which, in total, amounts to approximately 97 cents per share of common stock."
 In addition to improving EDC's future earnings prospects, Ferland said the change to a more conservative accounting method "is appropriate given conditions in the oil and gas markets and will also bring EDC into conformance with industry practice for companies of similar size."
 Ferland said the management strategy for the diversified businesses is shifting from growth to increased profitability. "We will, in near- term, hold growth to existing capital commitments and, in certain cases, replacement strategies. With this strategy, we anticipate that these non-utility businesses will produce 10 percent to 15 percent of Enterprise's consolidated income within the next couple of years."
 Addressing BRC Concerns
 Ferland also noted the desire expressed by the BRC to ensure that Holdings' overall activities are not having an impact on PSE&G's credit standing and the cost or quality of service afforded customers of this regulated company.
 "The management of Enterprise shares each of these objectives totally," Ferland said. "We hope that the BRC would view as evidence that this is so, the solid credit ratings of PSE&G, which have remained unchanged despite the recent financial performance of the non-regulated businesses." Another clear indication, Ferland said, is the extremely favorable assessment of PSE&G's performance made by external analysts who conducted the BRC-directed audit of the company. The auditors said PSE&G is among the best-managed utility companies in the country.
 "We've worked hard," Ferland said, "to separate the activities of PSE&G and Holdings and I'm confident that we can demonstrate that to our regulators. If we are unable to do so, or if they have suggestions on how this could be better accomplished, we will work hard on trying to accommodate their suggestions."
 A Year of Accomplishment
 While 1991 brought challenges it also brought significant accomplishments. These included:
 -- Providing excellent system reliability despite extraordinary demand. Extended service interruptions were at their lowest since PSE&G started keeping such records more than a decade ago.
 -- Reducing the number of customer complaints to the BRC or directly to the company to the lowest level since documentation of these complaints began in 1978.
 -- Registering high levels of customer satisfaction as measured by annual customer surveys. In discussing the management audit of PSE&G, Ferland said "we were very pleased that the 12-month,B?RC-directed audit concluded that compared to other leading electric and gas utilities, 'PSE&G is among the best.' This objective view affirms that we are on the right track in our efforts to achieve excellence."
 A Good Year for Nuclear Operations
 A further example of this trend, Ferland said is the excellent performance of PSE&G's nuclear generating units during the year.
 "Despite having Salem Unit 1 forced off line in June by a lightning strike, and the significant equipment damage that resulted when a turbine failure and fire struck the non-nuclear side of Salem Unit 2 in November, our nuclear operations turned in outstanding results in 1991. The three units operated by PSE&G -- Salem 1 and 2 and Hope Creek -- operated with a record-setting capacity factor of 78 percent for the year, the highest in the history of these plants. During the critical May-to-September tine period, when a record-setting heat wave was straining electrical resources, these units performed at an 89 percent capacity factor."
 Ferland told shareowners that repairs have been completed at Salem 2 and the unit in expected to return to service later this month, far ahead of the earlier anticipated schedule and well in time for mid- summer's peak demand.
 Emphasis on the Environment
 Ferland said PSE&G is also proud of the growing number of initiatives under way that will minimize the impact of company operations on the environment while assuring customers of reliable, low- cost supplies of energy. These include: establishing a company-wide set of environmental principles that will articulate PSE&G's concern for the environment and provide a guide for the company's expanding environmental programs; offering conservation initiatives that will allow PSE&G and its customers to share in the financial benefits of energy efficiency; and continued progress in bringing clean-fueled electric and natural gas vehicles to New Jersey streets.
 Burlington/Bergen Projects Benefit New Jersey
 Rehabilitation of PSE&G's Burlington and Bergen electric generating stations, initiatives that will help meet energy needs of customers and New Jersey's economy while improving efficiency and drastically reducing air emissions, was discussed with shareowners by PSE&G President and Chief Operating Office Lawrence R. Codey.
 The Burlington and Bergen projects, Codey said, are part of "numerous system upgrades from both electric and gas perspectives. These upgrades have been designed to enhance the energy infrastructure while providing significant environmental benefits to the state. They have also resulted in the creation of thousands of craft engineering, and support jobs."
 The $140 million Burlington station modernization, now well under way, and the $430 million Bergen project, for which permit applications have been filed, utilize state-of-the-art, natural-gas fired combined- cycle technology. "Compared with other options," Codey said, "these projects are highly energy efficient and will provide environmentally clean electric power at the lowest possible cost to our customers. At the same time, they are providing a needed "shot in the arm' to New Jersey's economy." The Burlington and Bergen projects alone, Codey said, are creating about 1,000 construction jobs over the non two-to- three years, and enjoy broad support in their host communities.
 Codey said the new units at Burlington and Bergen will be about 50 percent more efficient than the equipment being replaced. Because the projects are fueled by clean-burning natural gas, they will produce significantly less sulfur dioxide and nitrogen oxide emissions, which is important because of the concern about the contribution of sulfur dioxide to acid rain and nitrogen oxide to ground-level ozone and smog.
 More Power, Cleaner Air
 The work at Burlington will result in 73 more megawatts (MW) of power with a 99 percent reduction in sulfur dioxide, a 94 percent reduction in nitrogen oxide, 85 percent reduction in carbon monoxide, and 89 percent reduction in particulates. The first phase of the Burlington project, Codey said, should be operational in June, in time to meet this summer's heavy demand for electricity. The second phase should be completed by June 1993.
 The rehabilitation at Bergen station will increase the plant's existing 570 MW capacity to 650 MW. Sulfur dioxide emissions will be reduced by 84 percent, nitrogen oxide by as much as 97 percent, and carbon monoxide by 66 percent.
 Codey also announced another major effort to improve the environment. PSE&G, he said, will burn natural gas instead of coal at two generating facilities this summer.
 "As you are aware, New Jersey does not meet federal requirements for ground level ozone during the summer period. Carbon monoxide and nitrogen oxide contribute to the creation of ozone. As a result of that fuel switch to natural gas, we will reduce nitrogen oxide emissions from the units we operate by 20 percent. This action is part of our overall program to enhance the environment consistent with the desires of our customers."
 -0- 4/21/92
 /CONTACT: Neil Brown of Public Service Enterprise Group, 201-430-6017/
 (PEG) CO: Public Service Enterprise Group Inc. ST: New Jersey IN: UTI SU:


KD -- NY103 -- 0928 04/21/92 17:42 EDT
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