PSEG reported non-GAAP operating earnings of $0.70 per share for the second quarter of 2021 versus $0.79 per share in last year's second quarter.
GAAP results for the second quarter were $0.35 per share net loss related to transition charges at PSEG Power, and that compares with $0.89 per share of net income for the second quarter of 2020.
Also in the quarter, PSEG Power recorded a pre-tax impairment of $519 million at its New England Asset Group, partly offset by a pre-tax gain of $62 million from the sale of the Solar Source portfolio.
Our results for the second quarter bring non-GAAP operating earnings for the first half of 2021 to $1.98 per share.
This 9% increase over non-GAAP results of $1.82 per share for the first half of 2020 reflects the growing contribution from our regulated operations and continued derisking at PSEG Power.
Slides 13 and 15 summarize the results for the quarter and the first half of the year.
PSE&G has agreed to voluntarily reduce its annual transmission revenue requirement, which includes a reduction in its base return on equity to 9.9% from 11.18%.
If approved by the FERC, a typical electric residential customer will save 3% on their monthly bills.
Electric sales overall adjusted for weather were up nearly 4% over the second quarter of 2020, led by an 11% increase in commercial sales, which was partly offset by a 5% decline in residential sales as people gradually returned to work outside the home.
The warmer-than-normal summer has also increased PSE&G's average daily peak load for the quarter to 5,480 megawatts compared to last year's second-quarter average of 5,100 megawatts and the 5,330 megawatts experienced in the pre-COVID second quarter of 2019.
And so far this summer, PSE&G's load has peaked at 10,064 megawatts on June 30, exceeding the 10,000-megawatt mark for the first time since July 19 of the year 2013, eight years ago.
Turning to clean energy developments in New Jersey, the BPU in June awarded a second round of Offshore Wind projects totaling 2,658 megawatts and is now halfway toward the state's goal of procuring 7,500 megawatts of Offshore Wind generation by 2035.
The award was split between the 1,510 megawatt Atlantic Shores project and Orsted's 1,148 megawatt Ocean Wind 2.
The OREC price is set in the second round range from about $86 to $84 for the Atlantic Shores and Ocean Wind projects, respectively.
Incentive levels for the administratively determined segment range from $90 per megawatt-hour for net-metered residential projects to $70 to $100 per megawatt-hour for the commercial and community solar segments and up to $120 per megawatt-hour for certain public entity projects.
You will recall that the prior program consisting of solar renewable energy credits or as we frequently refer to them as SRECs, average well above $200 per megawatt-hour over the past decade.
And combined with net metering subsidies and federal tax credits provided later incentives topping $300 per megawatt-hour.
In the second quarter alone, we closed on our 25% equity stake in the 1,100-megawatt Ocean Wind project in New Jersey, that's the Ocean Wind one project, obviously.
We retired our last coal unit at Bridgeport Harbor in Connecticut, making our generating fleet coal-free, and moved up our net-zero vision by 20 years to 2030.
This solicitation is intended to procure transmission solutions to this important New Jersey 7,500-megawatt Offshore Wind target by 2035.
New Jersey's recent endorsement of the environmental benefits provided by our New Jersey nuclear plants through the second zero-emission certificates, I'll refer to that as ZEC for the rest of this conversation, extends the $10 per megawatt-hour carbon-free attribute recognition through May of 2025.
Also in June, PSEG was named to JUST Capital's Top 100 companies supporting healthy families and communities.
We are raising by $0.05 per share at the bottom end of PSEG's non-GAAP operating earnings guidance for full-year 2021 to a range of $3.40 to $3.55 per share, based on favorable results of PSE&G and Power through the first six months of the year.
We're on track to achieve the Utilities 2021 planned capital spending of $2.7 billion on schedule and on budget.
This spend is part of PSEG's consolidated five-year, $14 billion to $16 billion capital plan, which we still intend to execute without the need to issue new equity, while also continuing to offer the opportunity for consistent and sustainable growth in our dividend.
Before closing, I do want to recognize the contributions of Dave Daly, who will be retiring on January 4, 2022, after 35 years of dedicated service to the company.
Many of you know Kim is the power behind the transmission buildout over the past 10 years, and I hope all of you will have the opportunity to meet here in the near future.
As Ralph said, PSEG reported non-GAAP operating earnings for the second quarter of 2021 at $0.70 per share versus $0.79 per share in last year's second quarter.
We've provided you with an information on Slides 13 and 15 regarding the contribution to non-GAAP operating earnings by business for the quarter and the year-to-date periods, and Slides 14 and 16 contain corresponding waterfall charts that take you through the net changes in non-GAAP operating earnings by major business.
PSE&G reported net income of $309 million or $0.61 per share for the second quarter of 2021 compared with net income of $283 million or $0.56 per share for the second quarter of 2020.
Growth in transmission added $0.01 per share to second-quarter net income, reflecting continued infrastructure investment as well as the timing of transmission O&M in the quarter and true-ups from prior year filings.
Electric margin added $0.02 per share to net income compared to the year-earlier quarter, driven by commercial and industrial demand, reflecting higher margins in April and May compared to the COVID-19 restrictions that affected prior year results; and the implementation of the Conservation Incentive Program or CIP mechanism in June.
Gas margin added $0.01 per share, driven by the Gas System Modernization Program rate rollings.
Gas-related bad debt expense and O&M expense were both $0.01 per share favorable compared to the year-earlier quarter, driven by the timing of COVID-related deferrals since the issuance of the BPU's order in the third quarter of last year.
An increase in distribution-related depreciation due to higher rate base lowered net income by $0.01 per share.
Nonoperating pension expense was $0.02 per share favorable compared to the second quarter of 2020, reflecting the continued recognition of strong asset returns experienced last year.
Tax expense was $0.02 unfavorable compared to the second quarter of 2020, driven by the timing of adjustments to reflect PSE&G's estimated annual effective tax rate.
The agreement would reset the base ROE for PSE&G's formula rate to 9.9% from 11.18%, which lowers the annual transmission revenue requirement by about $100 million per year on a pre-tax basis.
Other key elements of the settlement lower annual depreciation expense by approximately $42 million, which has a corresponding reduction in revenue that results in no net impact on earnings and an improved cost recovery methodology for our administrative and general costs and investments in materials and supplies.
The agreement also includes an increase of PSE&G's equity ratio from 54% to 55% of total capitalization.
The financial impact of the settlement agreement is expected to lower PSE&G's net income by approximately $50 million to $60 million or $0.10 to $0.12 per share on an annual basis in the first 12 months once implemented.
Weather for the second quarter was significantly warmer than the second quarter of 2020, with the temperature-humidity index that was 34% higher than normal and a significantly higher than normal number of hours at 90 degrees or greater.
The New Jersey economy continued to recover in the second quarter, increased by total weather-normalized electric sales by approximately 4% compared to the second quarter of 2020, which was at the height of the COVID-19 economic restrictions.
On a trailing 12-month basis, weather-normalized electric and gas sales were each higher by approximately 1%, with residential electric and gas usage up by 4% and 2%, respectively.
PSE&G invested approximately $700 million in the second quarter and $1.3 billion year-to-date through June.
This capital was part of 2021's $2.7 billion Electric and Gas Infrastructure Program to upgrade transmission and distribution facilities and enhance reliability and increase resiliency.
We continue to forecast over 90% of PSEG's planned capital investment will be directed to the utility over the 2021 to 2025 time frame.
PSE&G's forecast of net income in 2021 has been updated to $1.42 billion to $1.47 billion from $1.41 billion to $1.47 billion.
PSEG Power reported non-GAAP operating earnings for the second quarter of $0.10 per share and non-GAAP adjusted EBITDA of $159 million.
This compares to non-GAAP operating earnings of $0.24 per share and non-GAAP adjusted EBITDA of $258 million for the second quarter of 2020.
PSEG Power's second-quarter non-GAAP operating earnings were affected by several items that combined lowered results by $0.14 per share below the quarter from a year ago.
Recontracting and market impacts reduced results by $0.09 per share, reflecting seasonal shape of hedging activity and higher cost to serve load versus the year-ago quarter.
Generating volume and zero-emission certificates were each down by $0.01 per share, affected by lower nuclear output related to the spring refueling outage at the 100% owned Hope Creek Nuclear Plant.
PJM capacity revenue added $0.02 per share to the year-ago quarterly comparison.
For the year ended June 30 -- for the year-to-date ended June 30, capacity is $0.05 per share favorable compared to the first half of 2020, reflecting the scheduled higher price of approximately $167 per megawatt day for the majority of the first half of 2021 versus the $116 per megawatt day for the same period in 2020.
Higher O&M expense reduced results by $0.04 per share compared to last year's second quarter, primarily reflecting the planned Hope Creek refueling outage and higher fossil operating expenses.
Lower depreciation expense, reflecting the sale of the solar source portfolio and the early retirement of the Bridgeport Harbor coal-fired generating station, combined with lower interest expense, to add $0.02 per share versus the year-ago quarter.
Taxes and other items were $0.03 per share unfavorable, reflecting the absence of a multi-year tax audit settlement included in the second quarter 2020 results.
Gross margin in the second quarter of 2020 was $28 per megawatt-hour compared with $33 per megawatt-hour for last year's second quarter.
The decline quarter-over-quarter reflects the seasonal price impact of recontracting, that is anticipated to result in a negative $2 per megawatt-hour price decline in the hedge portfolio for the full year.
We expect recontracting results in the third quarter of 2021 to be similarly negative, as we mentioned last quarter, will more than offset the $0.03 per share benefit seen in the first quarter of this year.
Total generation output declined by 1% to 12.6 terawatt-hours in the second quarter as the refueling outage at Hope Creek and subsequent forced out its lower nuclear output versus the second quarter of 2020.
The nuclear fleet operated at an average capacity factor of 86% for the quarter, producing 7.2 terawatt-hours, down by 7% versus last year, which represented 57% of total generation.
Power's combined-cycle fleet produced 5.3 terawatt-hours of output, up 8% in response to higher market demand helped by warm weather.
Power is forecasting generation output of 25 to 27 terawatt-hours for the remaining two quarters of 2021 and has hedged 95% to 100% of its production at an average price of $30 per megawatt-hour.
As a result, Power recorded a pre-tax charge of $519 million for this asset group.
In June of 2021, PSEG completed the sale of PSEG's Solar Source, which resulted in a pre-tax gain of approximately $62 million and income tax expense of approximately $63 million, primarily due to the recapture of investment tax credits on units that operated for less than five years.
For the remainder of the year, depreciation expense will also decline by approximately $0.03 per share as a result of the Solar Source sale.
Forecast of PSEG Power's non-GAAP operating earnings for 2021 has been updated to $295 million to $370 million, from $280 million to $370 million, while our estimated non-GAAP adjusted EBITDA remains unchanged at $850 million to $950 million.
For the second quarter of 2021, PSEG Enterprise and Other reported a net loss of $3 million or $0.01 per share for the second quarter of 2021, which was flat compared to a net loss of $2 million or $0.01 per share for the second quarter of 2020.
For 2021, the forecast for PSEG Enterprise and Other remains unchanged at a net loss of $15 million.
At June 30, we had approximately $4 billion of available liquidity, including cash on hand of about $107 million, and debt represented 52% of our consolidated capital.
During the first half of 2021, PSEG entered into 2,364-day variable rate term loan agreements totaling $1.25 billion.
During the second quarter, PSEG Power retired $950 million of senior notes maturing in June and September 2021 and ended June with debt as a percentage of capital of 20%.
We still expect to fund PSEG's $14 billion to $16 billion capital investment program over the 2021 to 2025 period without the need to issue new equity, while also continuing to offer consistent and sustainable growth in our dividend payment.
As Ralph mentioned, we've raised the bottom end of our forecast of non-GAAP operating earnings for the full year to $3.40 to $3.55 per share, up by $0.05 per share based on the solid results we have seen in the first half of the year that give us confidence that we can deliver results at the upper end of our original guidance.

Summary:
PSEG reported non-GAAP operating earnings of $0.70 per share for the second quarter of 2021 versus $0.79 per share in last year's second quarter.
GAAP results for the second quarter were $0.35 per share net loss related to transition charges at PSEG Power, and that compares with $0.89 per share of net income for the second quarter of 2020.
We are raising by $0.05 per share at the bottom end of PSEG's non-GAAP operating earnings guidance for full-year 2021 to a range of $3.40 to $3.55 per share, based on favorable results of PSE&G and Power through the first six months of the year.
As Ralph mentioned, we've raised the bottom end of our forecast of non-GAAP operating earnings for the full year to $3.40 to $3.55 per share, up by $0.05 per share based on the solid results we have seen in the first half of the year that give us confidence that we can deliver results at the upper end of our original guidance.