Last year at this time I reported that PSEG (Public Service Enterprise Group) was entering the 21st century with the brightest future in its nearly 100-year history — the result of our transformation from a regulated New Jersey utility to a competitive global energy company.
In 2001, our transformation attained greater depth and breadth across the energy value chain, as we completed a company restructuring and continued to expand our operations domestically and internationally.
In 2001, we earned $3.70 per share in the face of a difficult business environment — our fifth consecutive year of record earnings. Over this five-year period, earnings per share increased at a compound annual growth rate of 11.3%, demonstrating our ability to deliver shareholder value, allocate resources effectively, and manage a strong, diverse and growing asset base.
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"PSEG has been transformed into a diversified, growing energy company through a well-managed restructuring process achieved in tandem with five consecutive years of record earnings."
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We also had our safest year ever, with the frequency of employee injuries reduced by half from five years ago. This is a tribute to the many employees who focus each day on making our workplace safer.
In keeping with our long-term growth objective, we remain confident in our ability to increase earnings per share by a compound annual growth rate of 7% over the next five years. Our restructuring gives us greater opportunity and flexibility to execute our growth strategy. Only a few years ago, 95% of our earnings came from Public Service Electric and Gas Company (PSE&G), our New Jersey regulated utility. With PSE&G's generation assets transferred to our new unregulated subsidiary, PSEG Power, we have transformed ourselves from a New Jersey vertically-integrated utility into a diversified, growing energy company—with approximately 70% of our earnings coming from unregulated businesses.
Our mix of companies has enabled us to achieve strong earnings growth within a framework that balances risk and return. We are expanding both our U.S. generation fleet and our international generation and distribution operations, while also benefiting from the steady earnings of PSE&G, one of the nation's leading combined electric and gas distribution companies.
PSEG Power — our unregulated domestic generation and energy trading subsidiary— is a key driver of our growth, contributing approximately 50% of PSEG's earnings in 2001. With approximately 11,500 megawatts in operation and more than 3,500 megawatts under construction, PSEG Power is pursuing a carefully targeted plan to enhance an already solid position as one of the largest and most diversified wholesale generators in the eastern United States. We anticipate PSEG Power's base earnings will grow by approximately 15% a year over the next five years.
