PSE&G reported non-GAAP operating earnings for the fourth quarter of $0.65 per share.
Non-GAAP operating earnings for the full year rose by 4.6% to $3.43 per share, and mark the 16th year in a row that PSE&G delivered results within our original earnings guidance.
PSE&G GAAP results were $0.85 per share for the fourth quarter of 2020 compared with $0.86 per share for the fourth quarter of 2019.
In addition for the full year PSE&G reported 2020 net income of $3.76 per share compared with $3.33 per share in 2019.
Details on the results for the quarter and the full year can be found on slides 12 and 14.
In the past six months, we've announced the exploration of strategic alternatives for PSEG Power's 7,200 plus megawatts of non Nuclear Generating assets, and received initial indications of interest for both the fossil and solar source assets.
PSE&G successfully initiated its landmark clean energy future program, securing approval to spend nearly $2 billion in energy efficiency, smart meter installations and electric vehicle charging infrastructure, all of which will enhance New Jersey's environmental profile for years to come.
Regarding whether normalized sales for the year, while total electric sales volume declined by 2%.
Gas sales rose by 1%.
In both the electric and gas businesses higher residential usage of approximately 5% largely offset declines in commercial and industrial sales resulting in stable margins overall.
Working with COVID-19 health and safety protocols since last March, PSE&G was able to execute on its plan $2.7 billion capital spending program in 2020.
The energy cloud investment program is estimated to be approximately $707 million over the next four years, and will result in the replacement of over 2 million electric meters with smart meters.
The electric vehicle program will direct $166 million into EV charging infrastructure over the next six years.
With these recent settlements, the BPU has constructively addressed the vast majority of the clean energy future filings and has approved nearly $2 billion of investment to help realize New Jersey's energy goals.
The Energy Efficiency Program will also be established clean energy job training for over 3,200 direct jobs, while enabling the avoidance of 8 million metric tons of carbon emissions through the year 2015.
We expect the balance of the clean energy future filing, which includes our request to spend under $200 million on energy storage, and a few remaining EV programs will be addressed following future stakeholder proceeding.
In the fourth quarter of last year, we launched the formal sales processes of the 1,467 megawatt solar source, and over 6,750 megawatt thoughtful portfolios.
PSE&G nuclear Zero Mission certificate application and the extension of the current ZEC is currently under consideration at the BPU.
It is clear that New Jersey recognizes the need for nuclear power in order to achieve its short and long-term clean energy goals, as laid out in states on an energy master plan and DEP'S 80 by 60 report.
Over the next few weeks, you will hear as mentioned that our confidential filings show that these units are actually in need of more than $10 per megawatt hour, partly due to the fact that PGM forward market prices are lower versus 2018, which was the year that first ZEC application.
With the final decision on the ZEC application expected on April 27, we are hopeful that the BPU will act to extend the $10 per megawatt hour attribute payment to preserve nuclear units and their 3,400 megawatts of zero carbon base load generation through May of 2025.
We are introducing non-GAAP operating earnings guidance of $3.35 to $3.55 per share with the utility expected to contribute between one $1,410 million and $1,470 million.
PSEG Power between $280 million and $370 million and parent others expected to post a loss of $15 million.
This year we expect PSE&G to contribute just over 80% of consolidated non-GAAP operating earnings at the midpoint of guidance.
Going forward, we expect that the utility earnings will represent 80% to 90% of PSE&G non-GAAP results, with the remaining balance expected to be comprised of long-term agreements for zero carbon offshore wind generation, and as ZEC supported New Jersey nuclear units.
For PSEG Power, over 70% of its 2021 gross margin has been secured by the way of energy hedges, capacity revenues established prior auctions, zero emission certificates, and ancillary service payments.
Our PSE&G five-year capital spending forecast has been updated to $14 billion to $16 billion for 2021 through 2025 and includes approximately $2 billion of clean energy future investments, as well as the expected extension of the gas system modernization program and Energy Efficiency Program at their average annual run rates for the last two years of the period that being 2024 and 2025.
Consistent with test years approximately 90% or $13 billion to $15 billion this capital program will be directed to grow regulated operations at PSE&G.
This ongoing investment in essential energy infrastructure and clean energy programs is expected to produce 6.5% to 8% compound annual growth and rate base over the five-year period starting from $22 billion at year-end 2020.
As a sidebar, any spend for offshore wind will be incremental to these totals and is not included in the $14 billion to $16 billion capital plan.
And by the Dow Jones Sustainability Index was named PSE&G to the North American index for 13 years in a row.
The Board of Directors recent decision to increase the company's common dividend to the indicative annual level of $2.04 per share is the 17th increase in the last 18 years, and reflects our ongoing commitment to returning capital to our shareholders to enhance our total return profile as we also pursue growth.
We are confident that pursuing this strategy will enhance our ability to provide our customers with essential energy services, which has been our core mission for the last 118 years.
As Ralph said, PSE&G reported non-GAAP operating earnings for the fourth quarter of 2020 of $0.65 per share.
And we provided you with information on slides 12 and 14 regarding the contribution of non-GAAP operating earnings by business for the fourth quarter, and for the full year of 2020.
Slide 13 and 15 contained waterfall charts that take you through the net changes quarter-over-quarter and year-over-year, and non-GAAP operating earnings by major business.
PSE&G's net income for the fourth quarter of 2020 increased by $0.04 to $0.58 per share, compared with net income of $0.54 per share for the fourth quarter of 2019 as shown on slide 17.
For the full year PSE&G's net income increased by $0.16 per share, or 6.5% compared to 2019 results.
This improvement reflects an 8% increase in rate base at year end 2020 to just over $22 billion, which as we note on slide 22 does not include approximately $1.8 billion of construction work in progress or see what that's mostly a transmission.
The continued growth in utility earnings resulting from investments in transmission added $0.2 per share versus the fourth quarter of 2019.
Gas margin was $0.02 favorable, reflecting GS&NT roll in and higher weather normalized volume.
Mild temperatures during the quarter had a negative $0.03 per share impact, mostly reflecting recovery limitations under the earnings test of the gas weather normalization clause.
Higher distribution depreciation expense of a $0.01 per share offset lower pension expense of a $0.01 per share in the quarter.
Taxes and other were $0.03 per share favorable, partly reversing the negative $0.07 per share impact that the timing of taxes had on third quarter of 2020.
Recall in the third quarter flow through taxes and other items lower net income by $0.07 per share compared to the third quarter of 2019.
And we indicated at that time that about half of the $0.07 would reverse in the fourth quarter.
Early winter weather in the fourth quarter as measured by the heating degree days was 9% milder than normal and 14% milder than in the fourth quarter of 2019.
The full year PSE&G weather-normalized residential electric sales increased by 5.6% due to the COVID-19 work from home impact, but a larger decline in commercial sales resulted in total electric sales declining by 2%.
Total weather-normalized gas sales were up 1.2% for 2020 by a 4.9% increase in residential use partially offset by a smaller decline in the commercial and industrial segment.
PSE&G invested $700 million in the fourth quarter as part of its 2020 Capital Investment Program of approximately $2.7 billion directed to infrastructure upgrades of transmission and distribution facilities to maintain reliability, increase resiliency, make lifecycle replacements and clean energy investments.
PSE&G updated five-year capital spending plan includes investing $2.7 billion in 2021.
And as detailed on slide 21, approximately $960 million is allocated to transmission; $700 million to electric distribution, which includes approximately $200 million for Energy Strong Two, $875 million to gas distribution, which includes over $400 million for GSMP2 and $200 million for new clean energy future EV programs and the beginning of the AMI rollout.
The clean energy future EV investment will ramp up to approximately $125 million in 2021 before reaching a full annual run rate of about $350 million in 2023.
As Ralph mentioned the BPU approved two CF settlements in January, totaling approximately $875 million covering energy cloud and electric vehicle investments.
Of these amounts, the vast majority about 90% received contemporaneous or near contemporaneous regulatory treatment either through the first formula rate, or clause recovery mechanisms or recovered and rates as replacement spend or new business.
PSE&G net income for 2021 is forecasted at $1,410 million to $1,470 million which reflects an assumed reduction of our transmission formula rate, as well as incremental investment in EV infrastructure and energy efficiency.
So moving to power, PSEG Power reported non-GAAP operating earnings of $0.10 per share in the fourth quarter unchanged from the non-GAAP results in the fourth quarter of 2019.
Results for the quarter brought Power's full year non-GAAP operating earnings to $430 million or $0.84 per share.
Compared with 2019 non-GAAP results of $09 million or $0.81per share.
Non-GAAP adjusted EBITDA total to $182 million for the quarter and $990 million for the full year of 2020.
And this compares to non-GAAP adjusted EBITDA of $198 million, and $1,035 million for the fourth quarter and full year 2019 respectively.
PSEG Power's fourth quarter non-GAAP operating earnings were aided by the scheduled increase in PSEG Power's average capacity prices in PJM, covering the second half of 2020 and higher gas operations, which resulted in improved non-GAAP operating earnings comparisons of $0.04 and $0.01 per share respectively, compared to the fourth quarter of 2019.
However, lower generation output and recontracting at lower market prices reduced non-GAAP operating earnings by a total of $0.08 per share versus the year ago quarter.
The decline in O&M expenses in the quarter improve results by a $0.01 per share and reflects the absence of the Hope Creek refueling outage that occurred in the fourth quarter of 2019.
The extension of the Peach Bottom Nuclear operating licenses contributed to lower depreciation expense of a $0.01 per share and lower taxes improve non-GAAP operating earnings by a $0.01 over the year ago quarter.
Gross margin for the quarter was $32 a megawatt hour, a $1 per megawatt hour improvement over the fourth quarter of 2019, mainly reflecting the scheduled increase in capacity prices that began June 1, 2020 and remain in place through May of 2021.
For the full year 2020 gross margin was flat at $32 per megawatt hour compared to full year 2019.
Total output from Power's generating facilities declined 9% in the fourth quarter of 2020, compared to the fourth quarter of 2019.
However, full year 2020 output of 53 terawatt hours came in above our 50 to 52 terawatt hour forecast.
The nuclear fleet operated at an average capacity factor of 78.9% in the quarter, and 90.3% for the full year, producing nearly 31 terawatt hours of zero carbon base load power.
The combined cycle fleet operated an average capacity factor of 46.2% in the quarter, and 48.3% for the full year, generating approximately 22 terawatt hours in 2020.
The three new combined cycle generating units, Keys, Sewaren and Bridgeport Harbor five posted an average capacity factor of over 75% for the full year 2020.
And this coming June PSEG Power will complete the planned early retirement of the 383 megawatt coal fired Bridgeport Harbor three generating station, eliminating the last coal unit in power's fleet.
For 2021, Power has hedged approximately 90% to 95% of its expected output of 48 to 50 terawatt hours, at an average price of $32 per megawatt hour, which represents an approximately $2 per megawatt hour decline from 2012.
This change further reduces revenues by approximately $3 per megawatt hour starting on February 1 of 2021.
We're forecasting 2021 non-GAAP operating earnings and non-GAAP adjusted EBITDA PSEG Power to be $280 million to $370 million and $850 million to $950 million, respectively.
Now, let me briefly address operating results from enterprise and other which reported a net loss that increased by $0.03 per share, compared to the fourth quarter of 2019.
For 2021, PSEG Enterprise and other are forecasted to have a net loss of $15 million as parent financing and other costs exceed earnings from PSEG volume.
PSEG ended 2020 with approximately $3.8 billion of available liquidity, including cash on hand of $543 million, and debt representing 52% of our consolidated capital.
In December PSEG issued $96 million of 8.63% senior notes due April 2031, in exchange for like amount of 8.63% senior notes due April 2031, originally issued at Power, which were cancelled following the completion of the exchange.
PSEG also retired a $700 million term loan at maturity.
Power's debt as a percentage of capital declined to 27% on December 31 from 28%, at September 30.
To summarize non-GAAP results for the quarter was $0.65 per share; full year non-GAAP operating earnings were $3.43 per share.
And as we move into 2021, our guidance for the year is $3.35 to $3.55 per share, with regulated operations expected to contribute over 80% of consolidated results, arranged for 2021 reflects incremental investment in our T&D infrastructure, and a ramp up of a new clean energy future programs, as well as an assumed reduction return on equity of our transmission formula rate during the year at PSE&G.
PSE&G also raised its common dividend by $0.08 per share for the indicative annual level of $2.04, a 4% increase over 2020.
The 2021 indicative rate continues to represent a conservative 59% payout of consolidated earnings at the midpoint of 2021 guidance and utility earnings alone are expected to cover 140% of the dividend at the midpoint of 2021 guidance.
We still expect our strong cash flow will enable us to fully fund PSE&G's five year $14 million to $16 billion capital investment program, as well as our plan to offer when investment during the 2021 to 2025 period without the need to issue new equity.

Summary:
PSE&G GAAP results were $0.85 per share for the fourth quarter of 2020 compared with $0.86 per share for the fourth quarter of 2019.
PSE&G nuclear Zero Mission certificate application and the extension of the current ZEC is currently under consideration at the BPU.
We are introducing non-GAAP operating earnings guidance of $3.35 to $3.55 per share with the utility expected to contribute between one $1,410 million and $1,470 million.
Our PSE&G five-year capital spending forecast has been updated to $14 billion to $16 billion for 2021 through 2025 and includes approximately $2 billion of clean energy future investments, as well as the expected extension of the gas system modernization program and Energy Efficiency Program at their average annual run rates for the last two years of the period that being 2024 and 2025.
As a sidebar, any spend for offshore wind will be incremental to these totals and is not included in the $14 billion to $16 billion capital plan.
And as we move into 2021, our guidance for the year is $3.35 to $3.55 per share, with regulated operations expected to contribute over 80% of consolidated results, arranged for 2021 reflects incremental investment in our T&D infrastructure, and a ramp up of a new clean energy future programs, as well as an assumed reduction return on equity of our transmission formula rate during the year at PSE&G.
We still expect our strong cash flow will enable us to fully fund PSE&G's five year $14 million to $16 billion capital investment program, as well as our plan to offer when investment during the 2021 to 2025 period without the need to issue new equity.