Ralph Izzo
Chairman of the Board, President and Chief Executive Officer at Public Service Enterprise Group
Thank you, Carlotta, and thank you, everyone, for joining us this morning. 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 pretax impairment of $519 million at its New England Asset Group, partly offset by a pretax gain of $62 million from the sale of the Solar Source portfolio. We continue to make great progress on a number of fronts to position ourselves for the future. We had a strong operating quarter that, once again, produced non-GAAP operating earnings in line with our expectations for the year. 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. It's been a year since we announced our intentions to explore strategic alternatives for our non-nuclear generation assets, and I'm pleased with the progress to date in what I believe is a compelling platform for future regulated growth at PSE&G. Our utility, a clean energy infrastructure-focused business, will be complemented by a significantly contracted, carbon-free generating portfolio, consisting of our nuclear fleet and investments and opportunities in regional Offshore Wind. The marketing of the fossil assets has garnered a significant level of interest from numerous qualified buyers in a competitive process, which is advancing as expected. And we expect to provide you with more information on this process in the very near future.
I'm pleased that we've reached a balanced agreement with the New Jersey Board of Public Utilities and the Division of Rate Counsel on PSE&G's transmission rate, which, if approved by FERC, will resolve a significant regulatory uncertainty for us and provide a timely rate reduction for customers. 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.
New Jersey continues to experience positive economic activity since Governor Murphy lifted the Public Health Emergency Order in June. Our largest customer class in terms of sales, the commercial segment, has shown a rebound in electricity demand. 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 towards 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. And last week, the BPU approved a new solar successor incentive framework that consists of two programs: an administratively determined incentive; and a competitive solicitation incentive, which would apply to larger projects defined as five megawatts and above. 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. So this successor program is a positive step towards balancing the need for clean energy while recognizing the importance of affordability for our customers. PSEG's existing solar programs are essentially fully subscribed. We'll continue to work with the state MBP on programs that can help meet the solar goals in the Energy Master Plan.
PSEG continues to make tangible progress on our own decarbonization and ESG goals. 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. But not only do we accelerate the net-zero vision, we also expanded it to include Scope one direct greenhouse gas emissions, and Scope two indirect greenhouse gas emissions from operations at both PSEG Power and PSE&G. Expanding the net-zero vision to include both the utility and power operations is a significant move forward in our decarbonization efforts and one that will both inspire and challenge us to do more and do it better.
Coming up, PSEG is preparing to bid into a competitive process to build Offshore Wind transmission infrastructure. This solicitation is intended to procure transmission solutions to this important New Jersey 7,500-megawatt Offshore Wind target by 2035. The potential projects can cover onshore upgrades, new onshore transmission connection facilities, new offshore transmission connection facilities, and a network to offshore transmission system. Proposals may address any or all of these four components. The decision-making criteria is expected to include, among other things: an evaluation of reliability and economic benefits; cost; constructability; environmental benefits; permitting risks; and other "New Jersey benefits".
This competitive transmission open window will be jointly conducted by PJM and the New Jersey Board of Public Utilities. PJM will lead the technical analysis of the proposed transmission solutions, and the BP will be the ultimate decision-maker. We support the state's efforts to procure transmission in a manner that is most reliable, constructible, and cost-effective for our customers. All of this is great progress on our decarbonization efforts and continues to demonstrate our alignment with the state's Clean Energy agenda and our industry leadership on environmental stewardship.
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. This extension will allow us, along with stakeholders in New Jersey and at the federal level, the time we need to work on a long-term economic solution to keep our merchant nuclear fleet economically viable and preserve its currently unmatched contribution of reliable, carbon-free baseload generation, the most cost-effective clean generation source available.
During the ZEC deliberations, a growing recognition of these nuclear units were economically at risk, but vitally important to New Jersey's ability to reach its clean energy and carbon goals gain further traction. The importance of the New Jersey nuclear units to the state's climate goals was also recognized in the BPU Staff's recent resource adequacy report. The report recommends that New Jersey should continue exploring a region-wide or New Jersey-only integrated clean capacity market, with the fixed resource requirement, often, we refer to that as an FRR. We expect that the BPU will be closely watching to see whether FERC accepts PJM's just filed modifications to the minimum offer price rule which appears to better align the PJM capacity market with New Jersey's clean energy goals.
The results of the first PJM capacity auction in three years, influenced by a COVID-19 pandemic stifled demand curve, served as further evidence of the market risks faced by our nuclear units. This sentiment is shared by Biden administration officials, including DOE Secretary Granholm and White House Domestic Climate Advisor Gina McCarthy, who have both spoken publicly on the importance of nuclear energy as a clean energy resource. We continue to work on promoting a federal nuclear production tax credit proposal where the value of the credit declines as market revenue increases. This is the primary federal policy that would help prevent premature closing of merchant plants whose market revenues are not currently covering cost and risk.
Other options, such as the federal nuclear grant program administered by the Department of Energy are also being discussed. However, we and others in the industry share the view that a competitive grant program will not provide timely relief nor the certainty these plants need to remain operational. Nonetheless, we're encouraged by the attention that at-risk nuclear plants are getting in Washington. And we especially appreciate the efforts of New Jersey Congressman Bill Pascrell, who's leading this effort in the House of Representatives, and Senators Cardin, Manchin, and Booker in the Senate. That said, we do expect the federal infrastructure effort to take the better part of the rest of the year to unfold.
On the social side of ESG during the second quarter, we recognized the Juneteenth holiday by giving employees paid time off to commemorate and celebrate this important day in our nation's history and supported our LBGTQ+ community with numerous events for Pride Month. Also in June, PSEG was named to JUST Capital's Top 100 companies supporting healthy families and communities.
Overall, we had a solid quarter and results for the first half of the year have positioned us to update our full-year guidance somewhat earlier than has been our practice. 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. This update also incorporates an August one effective date to implement the transmission rate settlement and the expectation that the fossil assets will contribute to consolidated results through the end 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. Kim Hanemann, who had been named PSE&G's Senior Vice President and Chief Operating Officer, was promoted to succeed Dave as President and COO of PSE&G effective June 30. In support of a seamless transition of leadership at PSE&G, Dave is serving as an executive adviser through the end of the year.
With her promotion, Kim is the first woman to lead New Jersey's largest electric and gas utility in our 118-year history. 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.
Speaking of meeting, New Jersey has among the highest rates of fully vaccinated people in the country, but vaccination rates in the state have recently plateaued. So we're carefully monitoring the impact that highly contagious variants are having on updated health and safety protocols. So whether in person or virtually, we are looking forward to hosting an investor-owned -- an investor event in the fall when we expect to share with you the many good things that are happening at PSEG regarding our improved business mix, increased financial flexibility, and solid growth opportunities.
So now I'll turn the call over to Dan for more details on our operating results and we'll rejoin you at the end of this for your questions.
