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Financing Receivables | 9 Months Ended
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Sep. 30, 2018
Schedule of Financial Receivables [Line Items] |
Financing Receivables | Financing Receivables PSE&G PSE&G sponsors a solar loan program designed to help finance the installation of solar power systems throughout its electric service area. Interest income on the loans is recorded on an accrual basis. The loans are generally paid back with solar renewable energy certificates (SRECs) generated from the installed solar electric system. In the event of a loan default, the basis of the solar loan would be recovered through a regulatory recovery mechanism. None of the solar loans are impaired; however, in the event a loan becomes impaired, the basis of the loan would be recovered through a regulatory recovery mechanism. A substantial portion of these amounts are noncurrent and reported in Long-Term Investments on PSEG’s and PSE&G’s Condensed Consolidated Balance Sheets. The following table reflects the outstanding loans by class of customer, none of which are considered “non-performing.”
| Outstanding Loans by Class of Customer |
|  |  | As of |  | As of |
| Consumer Loans |  | September 30, 2018 |  | December 31, 2017 |
|  |  | Millions |
| Commercial/Industrial |  | $ | 166 |  |  | $ | 158 |  |
| Residential |  | 9 |  |  | 10 |  |
| Total |  | $ | 175 |  |  | $ | 168 |  |
Energy Holdings Energy Holdings, through several of its indirect subsidiary companies, has investments in domestic energy and real estate assets subject primarily to leveraged lease accounting. A leveraged lease is typically comprised of an investment by an equity investor and debt provided by a third-party debt investor. The debt is recourse only to the assets subject to lease and is not included on PSEG’s Condensed Consolidated Balance Sheets. As an equity investor, Energy Holdings’ equity investments in the leases are comprised of the total expected lease receivables over the lease terms plus the estimated residual values at the end of the lease terms, reduced for any income not yet earned on the leases. This amount is included in Long-Term Investments on PSEG’s Condensed Consolidated Balance Sheets. The more rapid depreciation of the leased property for tax purposes creates tax cash flow that will be repaid to the taxing authority in later periods. As such, the liability for such taxes due is recorded in Deferred Income Taxes on PSEG’s Condensed Consolidated Balance Sheets. During the first quarter of 2017, due to continuing liquidity issues facing NRG REMA, LLC (REMA), economic challenges facing coal generation in PJM, and based upon an ongoing review of available alternatives as well as certain discussions with REMA management, Energy Holdings recorded a $55 million pre-tax charge for its current best estimate of loss related to the lease receivables. Additional pre-tax charges of $22 million (including $7 million related to residual value impairment) were recorded in the quarter ended June 30, 2017. B ased on an ongoing review of (i) the liquidity challenges facing REMA and (ii) available alternatives, Energy Holdings recorded an additional $20 million pre-tax charge in the three months ended June 30, 2018 for its current best estimate of loss related to lease receivables. Pre-tax charges were reflected in Operating Revenues in 2018 and 2017 and are included in Gross Investment in Leases as of September 30, 2018. In September 2018, certain subsidiaries of Energy Holdings (PSEG Entities) entered into a Restructuring Support Agreement (RSA) with REMA. Pursuant to the RSA, the PSEG Entities have agreed to support implementation of restructuring and related transactions with respect to REMA’s indebtedness. Such restructuring transactions will be implemented by REMA on an in-court basis under Chapter 11 of the Bankruptcy Code. The RSA outlines a plan of reorganization under which, in addition to other terms, the ownership interest in the leases relating to the Keystone and Conemaugh investments will be transferred to debtholders of REMA. Upon consummation of the restructuring transactions, the PSEG Entities will receive $31.5 million in cash in exchange for (a) the full satisfaction of all claims asserted against REMA and (b) approval of certain amendments to the Shawville lease. The Shawville lease amendments, among other things, will allow REMA to express tentative interest in a renewal on or after November 24, 2019, with similar changes to the other milestones in the lease renewal procedures. In addition, REMA has agreed to fund qualifying credit support up to $36 million. Energy Holdings will be required upon resolution of this matter to accelerate and pay approximately $40 million of state deferred tax liabilities and accelerate and pay and/or reduce $85 million of a forecasted federal tax loss to the IRS. As of September 30, 2018, no additional charges were recorded because the anticipated proceeds of $31.5 million from the transactions described above are in excess of the September 30, 2018 recorded amounts for the Keystone and Conemaugh lease investments. The following table shows Energy Holdings’ gross and net lease investment as of September 30, 2018 and December 31, 2017.
|  | As of |  | As of |
|  | September 30, 2018 |  | December 31, 2017 |
|  | Millions |
| Lease Receivables (net of Non-Recourse Debt) | $ | 524 |  |  | $ | 546 |  |
| Estimated Residual Value of Leased Assets | 326 |  |  | 326 |  |
| Total Investment in Rental Receivables | 850 |  |  | 872 |  |
| Unearned and Deferred Income | (294 | ) |  | (307 | ) |
| Gross Investment in Leases | 556 |  |  | 565 |  |
| Deferred Tax Liabilities | (470 | ) |  | (480 | ) |
| Net Investment in Leases | $ | 86 |  |  | $ | 85 |  |
The corresponding receivables associated with the lease portfolio are reflected as follows, net of non-recourse debt. The ratings in the table represent the ratings of the entities providing payment assurance to Energy Holdings.
|  |  | Lease Receivables, Net of Non-Recourse Debt |
| Counterparties’ Credit Rating Standard & Poor’s (S&P) as of September 30, 2018 |  |  |
|  | As of September 30, 2018 |
|  |  | Millions |
| AA |  | $ | 13 |  |
| BBB+ — BBB- |  | 316 |  |
| BB |  | 133 |  |
| NR |  | 62 |  |
| Total |  | $ | 524 |  |
The “BB” and the “NR” ratings in the preceding table represent lease receivables related to coal and gas-fired assets in Illinois and Pennsylvania, respectively. As of September 30, 2018, the gross investment in the leases of such assets, net of non-recourse debt, was $316 million ($(83) million, net of deferred taxes). A more detailed description of such assets under lease is presented in the following table.
| Asset |  | Location |  | Gross Investment |  | % Owned |  | Total MW |  | Fuel Type |  | Counterparties’ S&P Credit Ratings |  | Counterparty |
|  |  |  |  | Millions |  |  |  |  |  |  |  |  |  |  |
| Powerton Station Units 5 and 6 |  | IL |  | $ | 133 |  |  | 64 | % |  | 1,538 |  |  | Coal |  | BB |  | NRG Energy, Inc. |
| Joliet Station Units 7 and 8 |  | IL |  | $ | 85 |  |  | 64 | % |  | 1,036 |  |  | Gas |  | BB |  | NRG Energy, Inc. |
| Keystone Station Units 1 and 2 |  | PA |  | $ | 10 |  |  | 17 | % |  | 1,711 |  |  | Coal |  | NR |  | REMA (A) |
| Conemaugh Station Units 1 and 2 |  | PA |  | $ | 9 |  |  | 17 | % |  | 1,711 |  |  | Coal |  | NR |  | REMA (A) |
| Shawville Station Units 1, 2, 3 and 4 |  | PA |  | $ | 79 |  |  | 100 | % |  | 596 |  |  | Gas |  | NR |  | REMA (A) |
(A) | REMA filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code. See above for a discussion of the RSA entered into by REMA and the PSEG Entities relating to certain restructuring transactions by REMA.
The credit exposure for lessors is partially mitigated through various credit enhancement mechanisms within the lease structures. These credit enhancement features vary from lease to lease. Upon the occurrence of certain defaults, indirect subsidiary companies of Energy Holdings would exercise their rights and seek recovery of their investment, potentially including stepping into the lease directly to protect their investments. While these actions could ultimately protect or mitigate the loss of value, they could require the use of significant capital and trigger certain material tax obligations which could, for certain leases, wholly or partially be mitigated by tax indemnification claims against the counterparty. A bankruptcy of a lessee would likely delay and potentially limit any efforts on the part of the lessors to assert their rights upon default and could delay the monetization of claims. Failure to recover adequate value could ultimately lead to a foreclosure on the assets under lease by the lenders. Additional factors that may impact future lease cash flows include, but are not limited to, new environmental legislation and regulation regarding air quality, water and other discharges in the process of generating electricity, market prices for fuel, electricity and capacity, overall financial condition of lease counterparties and their affiliates and the quality and condition of assets under lease.
PSE And G [Member] |
Schedule of Financial Receivables [Line Items] |
Financing Receivables | Financing Receivables PSE&G PSE&G sponsors a solar loan program designed to help finance the installation of solar power systems throughout its electric service area. Interest income on the loans is recorded on an accrual basis. The loans are generally paid back with solar renewable energy certificates (SRECs) generated from the installed solar electric system. In the event of a loan default, the basis of the solar loan would be recovered through a regulatory recovery mechanism. None of the solar loans are impaired; however, in the event a loan becomes impaired, the basis of the loan would be recovered through a regulatory recovery mechanism. A substantial portion of these amounts are noncurrent and reported in Long-Term Investments on PSEG’s and PSE&G’s Condensed Consolidated Balance Sheets. The following table reflects the outstanding loans by class of customer, none of which are considered “non-performing.”
| Outstanding Loans by Class of Customer |
|  |  | As of |  | As of |
| Consumer Loans |  | September 30, 2018 |  | December 31, 2017 |
|  |  | Millions |
| Commercial/Industrial |  | $ | 166 |  |  | $ | 158 |  |
| Residential |  | 9 |  |  | 10 |  |
| Total |  | $ | 175 |  |  | $ | 168 |  |
Energy Holdings Energy Holdings, through several of its indirect subsidiary companies, has investments in domestic energy and real estate assets subject primarily to leveraged lease accounting. A leveraged lease is typically comprised of an investment by an equity investor and debt provided by a third-party debt investor. The debt is recourse only to the assets subject to lease and is not included on PSEG’s Condensed Consolidated Balance Sheets. As an equity investor, Energy Holdings’ equity investments in the leases are comprised of the total expected lease receivables over the lease terms plus the estimated residual values at the end of the lease terms, reduced for any income not yet earned on the leases. This amount is included in Long-Term Investments on PSEG’s Condensed Consolidated Balance Sheets. The more rapid depreciation of the leased property for tax purposes creates tax cash flow that will be repaid to the taxing authority in later periods. As such, the liability for such taxes due is recorded in Deferred Income Taxes on PSEG’s Condensed Consolidated Balance Sheets. During the first quarter of 2017, due to continuing liquidity issues facing NRG REMA, LLC (REMA), economic challenges facing coal generation in PJM, and based upon an ongoing review of available alternatives as well as certain discussions with REMA management, Energy Holdings recorded a $55 million pre-tax charge for its current best estimate of loss related to the lease receivables. Additional pre-tax charges of $22 million (including $7 million related to residual value impairment) were recorded in the quarter ended June 30, 2017. B ased on an ongoing review of (i) the liquidity challenges facing REMA and (ii) available alternatives, Energy Holdings recorded an additional $20 million pre-tax charge in the three months ended June 30, 2018 for its current best estimate of loss related to lease receivables. Pre-tax charges were reflected in Operating Revenues in 2018 and 2017 and are included in Gross Investment in Leases as of September 30, 2018. In September 2018, certain subsidiaries of Energy Holdings (PSEG Entities) entered into a Restructuring Support Agreement (RSA) with REMA. Pursuant to the RSA, the PSEG Entities have agreed to support implementation of restructuring and related transactions with respect to REMA’s indebtedness. Such restructuring transactions will be implemented by REMA on an in-court basis under Chapter 11 of the Bankruptcy Code. The RSA outlines a plan of reorganization under which, in addition to other terms, the ownership interest in the leases relating to the Keystone and Conemaugh investments will be transferred to debtholders of REMA. Upon consummation of the restructuring transactions, the PSEG Entities will receive $31.5 million in cash in exchange for (a) the full satisfaction of all claims asserted against REMA and (b) approval of certain amendments to the Shawville lease. The Shawville lease amendments, among other things, will allow REMA to express tentative interest in a renewal on or after November 24, 2019, with similar changes to the other milestones in the lease renewal procedures. In addition, REMA has agreed to fund qualifying credit support up to $36 million. Energy Holdings will be required upon resolution of this matter to accelerate and pay approximately $40 million of state deferred tax liabilities and accelerate and pay and/or reduce $85 million of a forecasted federal tax loss to the IRS. As of September 30, 2018, no additional charges were recorded because the anticipated proceeds of $31.5 million from the transactions described above are in excess of the September 30, 2018 recorded amounts for the Keystone and Conemaugh lease investments. The following table shows Energy Holdings’ gross and net lease investment as of September 30, 2018 and December 31, 2017.
|  | As of |  | As of |
|  | September 30, 2018 |  | December 31, 2017 |
|  | Millions |
| Lease Receivables (net of Non-Recourse Debt) | $ | 524 |  |  | $ | 546 |  |
| Estimated Residual Value of Leased Assets | 326 |  |  | 326 |  |
| Total Investment in Rental Receivables | 850 |  |  | 872 |  |
| Unearned and Deferred Income | (294 | ) |  | (307 | ) |
| Gross Investment in Leases | 556 |  |  | 565 |  |
| Deferred Tax Liabilities | (470 | ) |  | (480 | ) |
| Net Investment in Leases | $ | 86 |  |  | $ | 85 |  |
The corresponding receivables associated with the lease portfolio are reflected as follows, net of non-recourse debt. The ratings in the table represent the ratings of the entities providing payment assurance to Energy Holdings.
|  |  | Lease Receivables, Net of Non-Recourse Debt |
| Counterparties’ Credit Rating Standard & Poor’s (S&P) as of September 30, 2018 |  |  |
|  | As of September 30, 2018 |
|  |  | Millions |
| AA |  | $ | 13 |  |
| BBB+ — BBB- |  | 316 |  |
| BB |  | 133 |  |
| NR |  | 62 |  |
| Total |  | $ | 524 |  |
The “BB” and the “NR” ratings in the preceding table represent lease receivables related to coal and gas-fired assets in Illinois and Pennsylvania, respectively. As of September 30, 2018, the gross investment in the leases of such assets, net of non-recourse debt, was $316 million ($(83) million, net of deferred taxes). A more detailed description of such assets under lease is presented in the following table.
| Asset |  | Location |  | Gross Investment |  | % Owned |  | Total MW |  | Fuel Type |  | Counterparties’ S&P Credit Ratings |  | Counterparty |
|  |  |  |  | Millions |  |  |  |  |  |  |  |  |  |  |
| Powerton Station Units 5 and 6 |  | IL |  | $ | 133 |  |  | 64 | % |  | 1,538 |  |  | Coal |  | BB |  | NRG Energy, Inc. |
| Joliet Station Units 7 and 8 |  | IL |  | $ | 85 |  |  | 64 | % |  | 1,036 |  |  | Gas |  | BB |  | NRG Energy, Inc. |
| Keystone Station Units 1 and 2 |  | PA |  | $ | 10 |  |  | 17 | % |  | 1,711 |  |  | Coal |  | NR |  | REMA (A) |
| Conemaugh Station Units 1 and 2 |  | PA |  | $ | 9 |  |  | 17 | % |  | 1,711 |  |  | Coal |  | NR |  | REMA (A) |
| Shawville Station Units 1, 2, 3 and 4 |  | PA |  | $ | 79 |  |  | 100 | % |  | 596 |  |  | Gas |  | NR |  | REMA (A) |
(A) | REMA filed a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code. See above for a discussion of the RSA entered into by REMA and the PSEG Entities relating to certain restructuring transactions by REMA.
The credit exposure for lessors is partially mitigated through various credit enhancement mechanisms within the lease structures. These credit enhancement features vary from lease to lease. Upon the occurrence of certain defaults, indirect subsidiary companies of Energy Holdings would exercise their rights and seek recovery of their investment, potentially including stepping into the lease directly to protect their investments. While these actions could ultimately protect or mitigate the loss of value, they could require the use of significant capital and trigger certain material tax obligations which could, for certain leases, wholly or partially be mitigated by tax indemnification claims against the counterparty. A bankruptcy of a lessee would likely delay and potentially limit any efforts on the part of the lessors to assert their rights upon default and could delay the monetization of claims. Failure to recover adequate value could ultimately lead to a foreclosure on the assets under lease by the lenders. Additional factors that may impact future lease cash flows include, but are not limited to, new environmental legislation and regulation regarding air quality, water and other discharges in the process of generating electricity, market prices for fuel, electricity and capacity, overall financial condition of lease counterparties and their affiliates and the quality and condition of assets under lease.

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- Definition The entire disclosure for financing receivables. Examples of financing receivables include, but are not limited to, loans, trade accounts receivables, notes receivable, credit cards, and receivables relating to a lessor's right(s) to payment(s) from a lease other than an operating lease that is recognized as assets. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -URI http://asc.fasb.org/topic&trid=2196771 + Details
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