PUBLIC SERVICE ENTERPRISE GROUP INC

PSEG

Our results of operations are comprised of the results of operations of our reportable segments, PSE&G and PSEG Power & Other, excluding charges related to intercompany transactions, which are eliminated in consolidation. For additional information on intercompany transactions, see Item 1. Note 18. Related-Party Transactions.

The following discussions for PSE&G and PSEG Power & Other provide a detailed explanation of their respective variances.

PSE&G

(A)

Includes amortization of EE programs regulatory investment expenditures of $33 million, $22 million, $90 million and $58 million for the three months and nine months ended September 30, 2024 and 2023, respectively.

Three Months Ended September 30, 2024 as Compared to Three Months Ended September 30, 2023

Operating Revenues increased $140 million due to changes in delivery, commodity, clause and other operating revenues.

Delivery Revenues increased $74 million due primarily to

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Electric and gas distribution revenues increased $61 million due primarily to a $24 million decrease in the flowback to customers of excess deferred tax liabilities and tax repair-related accumulated deferred income tax benefits resulting from rate reductions, which is offset in Income Tax Expense, $15 million from Energy Strong II (ESII) collections, a $15 million increase in Green Program Recovery Charge (GPRC) collections and a $11 million increase from higher sales volumes. These increases were partially offset by a $4 million decrease in CIP decoupling revenues.

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Transmission revenues were $13 million higher due primarily to an increase in revenue requirements attributable to higher rate base investment.

Commodity Revenues increased $71 million as a result of higher Electric revenues partially offset by lower Gas revenues. The changes in Commodity revenues for both electric and gas are entirely offset by the changes in Energy Costs. PSE&G earns no margin on the provision of BGS (basic generation service) and basic gas supply service (BGSS) to retail customers.

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Electric commodity revenues increased $78 million due primarily to $53 million from higher BGS prices and $25 million from higher BGS sales volumes.

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Gas commodity revenues decreased $7 million due primarily to lower BGSS prices.

Clause Revenues decreased $7 million due primarily to lower Societal Benefits Clause (SBC) revenues of $11 million and a $3 million decrease due to the absence of Margin Adjustment Clause revenues. These decreases were partially offset by a $7 million net increase in Tax Adjustment Credit (TAC) and GPRC deferrals. The changes in SBC and MAC revenues and TAC and GPRC deferral amounts are entirely offset by changes in the amortization of Regulatory Assets and Regulatory Liabilities and related costs in O&M, D&A, Interest and Income Tax Expenses. PSE&G does not earn margin on SBC or MAC revenues or on TAC and GPRC deferrals.

Energy Costs increased $74 million. This is entirely offset by changes in Commodity Revenues and Other Operating Revenues.

Operation and Maintenance increased $5 million due primarily to an increase in net distribution and transmission expenditures and higher billings from Services, partially offset by a reduction in clause and renewable costs.

Depreciation and Amortization increased $10 million due primarily to an increase in depreciation due to higher plant placed in service, partially offset by a decrease in the amortization of Regulatory Assets.

Net Non-Operating Pension and OPEB Credits decreased $10 million due primarily to a decrease in the amortization of net prior service credits.

Interest Expense increased $23 million due primarily to incremental debt and the replacement of maturing debt at higher rates.

Income Tax Expense increased $37 million due primarily to a decrease in the flowback of excess deferred income tax benefits.

Nine Months Ended September 30, 2024 as Compared to Nine Months Ended September 30, 2023

Operating Revenues increased $381 million due to changes in delivery, commodity, clause and other operating revenues.

Delivery Revenues increased $162 million due primarily to

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Electric and gas distribution revenues increased $106 million due primarily to an $80 million increase from higher volumes, a $30 million decrease in the flowback to customers of excess deferred tax liabilities and tax repair-related accumulated deferred income tax benefits resulting from rate reductions, which is offset in Income Tax Expense, a $26 million increase in GPRC collections and a $21 million increase from ESII collections. These increases were partially offset by a $51 million reduction from CIP decoupling.

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Transmission revenues were $56 million higher due primarily to an increase in revenue requirements attributable to higher rate base investment.

Commodity Revenues increased $116 million as a result of higher Electric revenues partially offset by lower Gas revenues. The changes in Commodity revenues for both electric and gas are entirely offset by the changes in Energy Costs. PSE&G earns no margin on the provision of BGS and BGSS to retail customers.

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Electric commodity revenues increased $225 million due to $124 million from higher BGS sales volumes and $101 million from higher BGS prices.

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Gas commodity revenues decreased $109 million due primarily to a decrease of $146 million from lower BGSS prices, partially offset by $37 million from higher BGSS sales volumes.

Clause Revenues increased $69 million due primarily to a $92 million increase in TAC and GPRC deferrals, partially offset by lower SBC revenues of $21 million. The changes in TAC and GPRC deferral amounts and SBC revenues are entirely offset by changes in the amortization of Regulatory Assets and Regulatory Liabilities and related costs in O&M, D&A, Interest and Income Tax Expenses. PSE&G does not earn margin on TAC and GPRC deferrals or on SBC revenue.

Other Operating Revenues increased $34 million due primarily to an increase in renewable energy certificates revenues.

Energy Costs increased $150 million. This is entirely offset by changes in Commodity Revenues and Other Operating Revenues.

Operation and Maintenance increased $47 million due primarily to an increase in net distribution and transmission expenditures and higher billings from Services partially offset by a reduction in clause and renewable costs.

Depreciation and Amortization increased $30 million due primarily to an increase in depreciation due to higher plant placed in service, partially offset by a decrease in the amortization of Regulatory Assets.

Net Other Income (Deductions)decreased $15 million due primarily to a decrease in Allowance for Funds Used During Construction and lower interest income.

Net Non-Operating Pension and OPEB Credits decreased $28 million due primarily to a decrease in the amortization of net prior service credits.

Interest Expense increased $66 million due primarily to incremental debt and the replacement of maturing debt at higher rates.

Income Tax Expense increased $100 million due primarily to a decrease in the flowback of excess deferred income tax benefits and higher pre-tax income.

Three Months Ended September 30, 2024 as Compared to Three Months Ended September 30, 2023

Operating Revenues increased $38 million due primarily to changes in generation and gas supply and other operating revenues.

Generation Revenues increased $40 million due primarily to

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a net increase of $51 million due primarily to higher average realized prices in 2024, and

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a net increase of $49 million due to MTM gains in 2024 as compared to MTM losses in 2023. Of this amount, there was a $33 million increase due to changes in forward prices in 2024 as compared to 2023 coupled with a $16 million increase due to positions reclassified to realized upon settlement,

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partially offset by a net decrease of $55 million due primarily to lower ZEC revenue related to the Production Tax Credits (PTCs).

Gas Supply Revenues decreased $18 million due primarily to

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a net decrease of $13 million in sales under the BGSS contract due primarily to $9 million from lower prices, and $4 million from lower sales volumes, and

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a net decrease of $4 million related to sales to third parties due to $12 million from lower sales volumes, partially offset by $8 million from higher sales prices.

Energy Costs represent the cost of generation, which includes fuel costs for generation as well as purchased energy in the market, and gas purchases to meet PSEG Power’s obligation under its BGSS contract with PSE&G. Energy Costs decreased $14 million due to

Gas costs decreased $14 million due primarily to

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a net decrease of $11 million related to sales under the BGSS contract due to the lower average cost of gas and volumes sold, and

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a net decrease of $3 million related to sales to third parties due primarily to $11 million from lower volumes sold, partially offset by $8 million due to higher average cost of gas.

Operation and Maintenance increased $11 million due primarily to higher Nuclear and Long Island Electric Utility Servco, LLC’s (Servco) operating costs, partially offset by higher Services billings to PSE&G. See Note 3. Variable Interest Entity for additional information on Servco and LIPA.

Net Gains (Losses) on Trust Investments increased $129 million due primarily to NDT investments with $70 million of net unrealized gains on equity securities in 2024 as compared to $42 million of net unrealized losses in 2023, and an increase of $15 million in net realized gains in 2024.

Net Non-Operating Pension and OPEB Costs decreased $330 million primarily due to the pension lift-out settlement charge in August 2023.

Interest Expense increased $18 million due primarily to the incremental debt and the replacement of maturing long-term debt at higher rates, partially offset by a reduction in term loans.

Income Tax Benefit decreased $76 million due primarily to higher pre-tax income in 2024 as compared to the prior year, partially offset by the benefit from Nuclear PTCs.

Nine Months Ended September 30, 2024 as Compared to Nine Months Ended September 30, 2023

Operating Revenues decreased $1,335 million due primarily to changes in generation and gas supply and other operating revenues.

Generation Revenues decreased $1,238 million due primarily to

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a net decrease of $1,142 million due to MTM losses in 2024 as compared to MTM gains in 2023. Of this amount, there was a $684 million decrease due to positions reclassified to realized upon settlement, coupled with $458 million decrease due to changes in forward prices in 2024 as compared to 2023,

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a net decrease of $136 million due primarily to lower ZEC revenue related to the PTCs,

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a net decrease of $30 million due primarily to electricity sold under the BGS contracts, which ended in May 2023, and lower volumes sold under other load contracts, and

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a net decrease of $28 million in capacity revenue due primarily to lower capacity prices, partially offset by decreases in capacity expenses due to lower load volumes served,

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partially offset by a net increase of $94 million due primarily to higher average realized prices, partially offset by lower volumes sold in 2024.

Gas Supply Revenues decreased $143 million due primarily to

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a net decrease of $178 million in sales under the BGSS contract due primarily to $226 million from lower prices, partially offset by $48 million from higher sales volumes,

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partially offset by a net increase of $22 million due primarily to lower MTM losses, primarily due to positions reclassified to realized upon settlement, partially offset by changes in forward prices, and

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a net increase of $13 million related to sales to third parties due primarily to higher sales prices.

Energy Costs represent the cost of generation, which includes fuel costs for generation as well as purchased energy in the market, and gas purchases to meet PSEG Power’s obligation under its BGSS contract with PSE&G. Energy Costs decreased $186 million due to

Gas costs decreased $172 million due primarily to

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a net decrease of $185 million related to sales under the BGSS contract, of which $225 million was due to the lower average cost of gas, partially offset by $40 million due to higher send out volumes,

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partially offset by a net increase of $14 million related to sales to third parties due primarily to higher average cost of gas.

Generation costs decreased $14 million due primarily to lower renewable energy credit requirements caused by decreases in load volumes served.

Operation and Maintenance increased $89 million due primarily to a refueling outage in 2024 at our 100%-owned Hope Creek nuclear plant as compared to an outage at our 57%-owned Salem 2 nuclear plant in 2023, and higher Servco operating costs, partially offset by higher Services billings to PSE&G. See Note 3. Variable Interest Entity for additional information on Servco and LIPA.

Net Gains (Losses) on Trust Investments increased $128 million due primarily to NDT investments with $64 million in net realized gains in 2024 as compared to $6 million of net realized losses in 2023 and $56 million of higher net unrealized gains on equity securities as compared to the prior year.

Net Non-Operating Pension and OPEB Costs decreased $328 million primarily due to the pension lift-out settlement charge in August 2023.

Interest Expense increased $34 million due primarily to incremental debt and the replacement of maturing long-term debt at higher rates, partially offset by a reduction in term loans.

Income Tax Expense decreased $338 million due primarily to lower pre-tax income in 2024 and the benefit from Nuclear PTCs.