Forex

Public Service Enterprise Group Inc., owner of New Jersey's largest utility, posted a second- quarter loss on funds for potential $1.1 billion tax claims. PSEG also announced plans to repurchase $750 million of stock.

The loss was $150 million, or 29 cents a share, compared with profit of $275 million, or 54 cents, a year earlier, Newark, New Jersey-based Public Service said today in a statement. The year-ago figure includes a stock split.

PSEG had costs of $281 million, or 55 cents a share, to set aside reserves for a potential tax claim against PSEG Holdings, which generates power in Texas. The company said in May it might need a reserve because of court rulings against companies with similar lease-in, lease-out transactions.

``A share buyback is always a good sign,'' said Barry Abramson, who helps manage $30 billion at Gamco Investors Inc. in Rye, New York, including 493,660 Public Service shares as of March 31. ``It shows they think their stock price is cheap, and also that they have the cash.''

The buybacks will occur within 18 months, PSEG said.

Profit excluding reserve costs was 64 cents a share, or 4 cents better than the average of seven analyst estimates compiled by Bloomberg.

Chief Executive Officer Ralph Izzo, 50, is selling stakes in Latin American electricity companies to focus on the New Jersey utility and power generation in the U.S. northeast, where prices are climbing. The company in July sold Chile's Saesa Group for $870 million.

Public Service fell $1.49, or 3.6 percent, to $40.31 in New York Stock Exchange composite trading. The shares have six buy ratings and four holds from analysts.

Northeastern Prices

Profit at PSEG Power, which generates power in New Jersey and other northeastern states, rose 28 percent in the quarter to $240 million on higher prices and gains on contracts, or hedging, used to lock in future prices.

Utility profit fell 18 percent to $51 million as a warmer spring reduced natural-gas deliveries for heating and a cooler summer curbed power demand for cooling. Sales fell 5.4 percent to $2.56 billion on milder weather in the period.

Residential customers of the company's flagship utility PSE&G began paying 12 percent more for power starting in July, following on the heels of last year's 14 percent increase. The region's benchmark wholesale power price climbed 35 percent from a year earlier to average $100.77 a megawatt-hour, according to data compiled by Bloomberg.

PSE&G supplies power to 2.1 million homes and businesses and natural gas to 1.7 million. Its generation unit can produce 19,796 megawatts, enough electricity for 15.8 million average U.S. homes, according to an Energy Department estimate.

Morgan Stanley and the Ontario Teachers' Pension Plan agreed to buy Saesa, Chile's second-largest electricity distributor. They'll assume $400 million of debt in the transaction, which closed on July 24.