Long-Term Investments

Long-Term Investments as of December 31, 2012 and 2011 included the following:




	As of December 31,
	2012		2011
	Millions
Power
Partnerships and Corporate Joint Ventures (Equity Method Investments)	$	40	$	32
PSE&G
Life Insurance and Supplemental Benefits	161		162
Solar Loan Investments	180		111
Other Investments	7		7
Energy Holdings
Leveraged Leases	840		881
Partnerships and Corporate Joint Ventures:
Equity Method Investments (A)	94		106
Cost Method Investments (B)	2		4
Total Long-Term Investments	$	1,324	$	1,303


(A)	During the three years ended December 31, 2012, 2011 and 2010, the amount of dividends from these investments was $17 million, $3 million and $5 million, respectively. Energy Holdings’ share of income and cash flow distribution percentages were at 50% as of December 31, 2012.


(B)	Reflects Energy Holdings' investments in certain companies in which it does not have the ability to exercise significant influence. Such investments are accounted for under the cost method.

Leases

Energy Holdings has investments in domestic energy and real estate assets subject primarily to leveraged lease accounting. A leveraged lease is typically comprised of an investment by an equity investor and debt provided by a third party debt investor. The debt is recourse only to the assets subject to lease and is not included on PSEG’s Consolidated Balance Sheets. As an equity investor, Energy Holdings’ equity investments in the leases are comprised of the total expected lease receivables over the lease terms plus the estimated residual values at the end of the lease terms, reduced for any income not yet earned on the leases. This amount is included in Long-Term Investments on PSEG’s Consolidated Balance Sheets. The more rapid depreciation of the leased property for tax purposes creates tax cash flow that will be repaid to the taxing authority in later periods. As such, the liability for such taxes due is recorded in Deferred Income Taxes on PSEG’s Consolidated Balance Sheets. The following table shows Energy Holdings’ gross and net lease investment as of December 31, 2012 and 2011, respectively.




	As of December 31,
	2012			2011
	Millions
Lease Receivables (net of Non-Recourse Debt)	$	721		$	763
Estimated Residual Value of Leased Assets	535			553
	1,256			1,316
Unearned and Deferred Income	(416		)	(435		)
Gross Investments in Leases	840			881
Deferred Tax Liabilities	(723		)	(716		)
Net Investments in Leases	$	117		$	165

The pre-tax income and income tax effects, excluding gains and losses on sales, related to investments in leases were as follows:




	Years Ended December 31,
	2012		2011			2010
	Millions
Pre-Tax Income (Loss) from Leases	$	78	$	(228	)	$	45
Income Tax Expense (Benefit) on Pre-Tax Income from Leases	$	34	$	(77	)	$	14

Equity Method Investments

Power and Energy Holdings had the following equity method investments as of December 31, 2012:




		%
Name	Location	Owned
Power
Keystone Fuels, LLC	PA	23	%
Conemaugh Fuels, LLC	PA	23	%
Energy Holdings
Kalaeloa	HI	50	%
GWF	CA	50	%
Hanford L. P. (Hanford)	CA	50	%

Long-Term Investments

Long-Term Investments as of December 31, 2012 and 2011 included the following:




	As of December 31,
	2012		2011
	Millions
Power
Partnerships and Corporate Joint Ventures (Equity Method Investments)	$	40	$	32
PSE&G
Life Insurance and Supplemental Benefits	161		162
Solar Loan Investments	180		111
Other Investments	7		7
Energy Holdings
Leveraged Leases	840		881
Partnerships and Corporate Joint Ventures:
Equity Method Investments (A)	94		106
Cost Method Investments (B)	2		4
Total Long-Term Investments	$	1,324	$	1,303


(A)	During the three years ended December 31, 2012, 2011 and 2010, the amount of dividends from these investments was $17 million, $3 million and $5 million, respectively. Energy Holdings’ share of income and cash flow distribution percentages were at 50% as of December 31, 2012.


(B)	Reflects Energy Holdings' investments in certain companies in which it does not have the ability to exercise significant influence. Such investments are accounted for under the cost method.

Leases

Energy Holdings has investments in domestic energy and real estate assets subject primarily to leveraged lease accounting. A leveraged lease is typically comprised of an investment by an equity investor and debt provided by a third party debt investor. The debt is recourse only to the assets subject to lease and is not included on PSEG’s Consolidated Balance Sheets. As an equity investor, Energy Holdings’ equity investments in the leases are comprised of the total expected lease receivables over the lease terms plus the estimated residual values at the end of the lease terms, reduced for any income not yet earned on the leases. This amount is included in Long-Term Investments on PSEG’s Consolidated Balance Sheets. The more rapid depreciation of the leased property for tax purposes creates tax cash flow that will be repaid to the taxing authority in later periods. As such, the liability for such taxes due is recorded in Deferred Income Taxes on PSEG’s Consolidated Balance Sheets. The following table shows Energy Holdings’ gross and net lease investment as of December 31, 2012 and 2011, respectively.




	As of December 31,
	2012			2011
	Millions
Lease Receivables (net of Non-Recourse Debt)	$	721		$	763
Estimated Residual Value of Leased Assets	535			553
	1,256			1,316
Unearned and Deferred Income	(416		)	(435		)
Gross Investments in Leases	840			881
Deferred Tax Liabilities	(723		)	(716		)
Net Investments in Leases	$	117		$	165

The pre-tax income and income tax effects, excluding gains and losses on sales, related to investments in leases were as follows:




	Years Ended December 31,
	2012		2011			2010
	Millions
Pre-Tax Income (Loss) from Leases	$	78	$	(228	)	$	45
Income Tax Expense (Benefit) on Pre-Tax Income from Leases	$	34	$	(77	)	$	14

Equity Method Investments

Power and Energy Holdings had the following equity method investments as of December 31, 2012:




		%
Name	Location	Owned
Power
Keystone Fuels, LLC	PA	23	%
Conemaugh Fuels, LLC	PA	23	%
Energy Holdings
Kalaeloa	HI	50	%
GWF	CA	50	%
Hanford L. P. (Hanford)	CA	50	%

Long-Term Investments

Long-Term Investments as of December 31, 2012 and 2011 included the following:




	As of December 31,
	2012		2011
	Millions
Power
Partnerships and Corporate Joint Ventures (Equity Method Investments)	$	40	$	32
PSE&G
Life Insurance and Supplemental Benefits	161		162
Solar Loan Investments	180		111
Other Investments	7		7
Energy Holdings
Leveraged Leases	840		881
Partnerships and Corporate Joint Ventures:
Equity Method Investments (A)	94		106
Cost Method Investments (B)	2		4
Total Long-Term Investments	$	1,324	$	1,303


(A)	During the three years ended December 31, 2012, 2011 and 2010, the amount of dividends from these investments was $17 million, $3 million and $5 million, respectively. Energy Holdings’ share of income and cash flow distribution percentages were at 50% as of December 31, 2012.


(B)	Reflects Energy Holdings' investments in certain companies in which it does not have the ability to exercise significant influence. Such investments are accounted for under the cost method.

Leases

Energy Holdings has investments in domestic energy and real estate assets subject primarily to leveraged lease accounting. A leveraged lease is typically comprised of an investment by an equity investor and debt provided by a third party debt investor. The debt is recourse only to the assets subject to lease and is not included on PSEG’s Consolidated Balance Sheets. As an equity investor, Energy Holdings’ equity investments in the leases are comprised of the total expected lease receivables over the lease terms plus the estimated residual values at the end of the lease terms, reduced for any income not yet earned on the leases. This amount is included in Long-Term Investments on PSEG’s Consolidated Balance Sheets. The more rapid depreciation of the leased property for tax purposes creates tax cash flow that will be repaid to the taxing authority in later periods. As such, the liability for such taxes due is recorded in Deferred Income Taxes on PSEG’s Consolidated Balance Sheets. The following table shows Energy Holdings’ gross and net lease investment as of December 31, 2012 and 2011, respectively.




	As of December 31,
	2012			2011
	Millions
Lease Receivables (net of Non-Recourse Debt)	$	721		$	763
Estimated Residual Value of Leased Assets	535			553
	1,256			1,316
Unearned and Deferred Income	(416		)	(435		)
Gross Investments in Leases	840			881
Deferred Tax Liabilities	(723		)	(716		)
Net Investments in Leases	$	117		$	165

The pre-tax income and income tax effects, excluding gains and losses on sales, related to investments in leases were as follows:




	Years Ended December 31,
	2012		2011			2010
	Millions
Pre-Tax Income (Loss) from Leases	$	78	$	(228	)	$	45
Income Tax Expense (Benefit) on Pre-Tax Income from Leases	$	34	$	(77	)	$	14

Equity Method Investments

Power and Energy Holdings had the following equity method investments as of December 31, 2012:




		%
Name	Location	Owned
Power
Keystone Fuels, LLC	PA	23	%
Conemaugh Fuels, LLC	PA	23	%
Energy Holdings
Kalaeloa	HI	50	%
GWF	CA	50	%
Hanford L. P. (Hanford)	CA	50	%