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| Investor Information |
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| Transforming Worldwide |
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PSEG is playing a growing role in developing, owning and operating electric generation and gas and electric distribution facilities in select markets around the world. Our long-term planning and investment strategy bore fruit in 2001—as new international projects came on line and began producing new revenue streams. PSEG's international business has achieved scale — and continues to gain momentum. Along with the company's domestic generation business, it is a key driver of PSEG's long-term growth.
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PSEG's international development arm, PSEG Global, nearly tripled its earnings in 2001 — and is targeting a long-term growth rate of 15% a year as it completes major infrastructure projects.
PSEG's international electric generation operations are rapidly expanding in new markets. In 2001, the company completed or had underway generation projects on five continents: North America, South America, Asia, Europe and Africa.
The objective of PSEG's global strategy is to build sustainable businesses in carefully targeted growth markets. This is evident in several Latin American countries where PSEG Global has multiple investments — and is able to build on an established base of knowledge and operational experience. For example, in 2001
PSEG Global strengthened its position in Peru — a country where it is now the largest single U.S. investor — by purchasing Electroandes, a major generator of hydroelectric power. This acquisition complements PSEG Global's ownership interest in Luz del Sur, Peru's second largest electric distribution company.
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PSEG Global is building a new, efficient and environmentally advanced power plant at its Elcho site in Poland and retiring older, less efficient capacity that it acquired.
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In each market, PSEG Global draws on a reservoir of local expertise to complement its own experience in energy infrastructure issues. A decentralized organizational structure — built around local teams with in-depth knowledge of an area's specific economic, regulatory and political climate—has proven instrumental to PSEG Global's success.
Critical to PSEG Global's growth is the careful selection of projects — with the profit potential of each individual project evaluated not only in light of specific market dynamics, but also in a broader, strategic context of risk management and portfolio diversification.
PSEG Global is pursuing opportunities to become the sole or majority owner of more of its international businesses. In 2001, PSEG Global purchased SAESA, a major distribution and transmission group of companies operating primarily in Chile, one of South America's strongest national economies and the country where PSEG Global has its largest investment on that continent. In Argentina, where challenges are presented by that country's ongoing difficult situation, PSEG Global owns a majority interest in and operates EDEERSA, a distribution company. It signed an agreement in August 2001 to sell to AES Corporation its minority stake in three other distribution companies and two generation facilities, representing approximately two-thirds of PSEG Global's total investment of $632 million in that country. AES filed a notice to terminate the agreement, and PSEG is contesting the termination. PSEG Global's Argentine properties continue to operate but are faced with considerable fiscal and cash uncertainties, which the company is striving to limit. Its South American portfolio continues to be highly diversified to help mitigate risk.
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