PUBLIC SERVICE ENTERPRISE GROUP INC

RESULTS OF OPERATIONS

(A)

PSEG Power & Other results in 2023 include a $239 million after-tax pension charge due to the settlement of a portion of the qualified pension plans. PSEG Power & Other results in 2022 include after-tax impairments of $92 million related to certain Energy Holdings investments and additional adjustments related to the sale of PSEG Power’s fossil generation assets. See Item 8. Note 3. Asset Dispositions and Impairments for additional information.

(B)

Other includes after-tax activities at the parent company, PSEG LI and Energy Holdings as well as intercompany eliminations.

PSEG Power’s results above include the Nuclear Decommissioning Trust (NDT) Fund activity and the impacts of non-trading commodity mark-to-market (MTM) activity, which consist of the financial impact from positions with future delivery dates.

The variances in our Net Income (Loss) attributable to changes related to the NDT Fund and MTM are shown in the following table:

(A)

NDT Fund activity includes gains and losses on NDT securities which are recorded in Net Gains (Losses) on Trust Investments. See Item 8. Note 10. Trust Investments for additional information. NDT Fund activity also includes interest and dividend income and other costs related to the NDT Fund recorded in Net Other Income (Deductions), interest accretion expense on PSEG Power’s nuclear Asset Retirement Obligation (ARO) recorded in Operation & Maintenance (O&M) Expense and the depreciation related to the ARO asset recorded in Depreciation and Amortization (D&A) Expense.

(B)

Net of tax (expense) benefit of $(56) million, $(74) million and $97 million for the years ended December 31, 2024, 2023 and 2022, respectively.

(C)

Net of tax (expense) benefit of $59 million, $(376) million and $178 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Our decrease in Net Income for 2024 as compared to 2023 was driven primarily by

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changes in the MTM gains (losses) as shown in the table above,

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higher earnings due to continued investments in T&D clause programs and settlement of the distribution base rate case at PSE&G and PTCs beginning in 2024 at PSEG Power, and

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the pension settlement charge in 2023 (see Item 8. Note 12. Pension, Other Postretirement Benefits (OPEB) and Savings Plans).

Our results of operations are primarily comprised of the results of operations of our principal operating segments, PSE&G and PSEG Power, excluding charges related to intercompany transactions, which are eliminated in consolidation. For additional information on intercompany transactions, see Item 8. Note 24. Related-Party Transactions.

PSEG

(A)

Includes amortization of EE programs regulatory investment expenditures of $125 million, $82 million and $48 million for the years ended December 31, 2024, 2023 and 2022, respectively.

The 2024, 2023 and 2022 amounts in the preceding table for Operating Revenues and O&M costs each include $592 million, $533 million and $516 million, respectively, for PSEG LI’s subsidiary, Long Island Electric Utility Servco, LLC (Servco). These amounts represent the O&M pass-through costs for the Long Island operations, the full reimbursement of which is reflected in Operating Revenues. See Item 8. Note 4. Variable Interest Entity for additional information. The following discussions for PSE&G and PSEG Power provide a detailed explanation of their respective variances.

PSE&G

(A) Includes amortization of EE programs regulatory investment expenditures of $125 million, $82 million and $48 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Year Ended December 31, 2024 as compared to 2023

Operating Revenues increased $642 million due to changes in delivery, clause, commodity and other operating revenues.

Delivery Revenues are primarily derived from revenues recovered on our regulated investments in rate base and costs through periodic filings of distribution rate cases, approved distribution investment recovery programs and the annual filing of transmission formula rates. Due to PSE&G’s electric and gas distribution CIP decoupling mechanism, there is minimal impact from sales volumes on most distribution delivery revenues. Also included in delivery revenues are revenue credits to customers to flowback tax benefits realized by PSE&G. These revenue credits are offset in Income Tax Expense.

Delivery revenues increased $321 million due primarily to $170 million from increased electric and gas revenues primarily as a result of the recently settled distribution base rate case, $99 million increase in transmission revenues due primarily to higher rate base investments, $26 million in increased revenues from Energy Strong II and IAP distribution rate roll ins, $42 million from increased GPRC revenues, $9 million from a reduction in revenue credits flowed back to customers as part of our TAC mechanism, offset by a decrease of $25 million in CIP decoupling revenues.

Clause Revenues are revenues from various pass through regulatory programs for which PSE&G earns no margin. These revenues are entirely offset by the amortization of related costs in O&M, D&A and Interest and Income Tax Expense, which were originally recognized as regulatory assets.

Clause Revenues increased $141 million due primarily to a $132 million net increase in Tax Adjustment Credits (TAC) and Green Program Recovery Charge (GPRC) deferrals and $10 million in higher Societal Benefits Clause (SBC) collections.

Commodity Revenuesare revenues from customers choosing default electric (basic generation service or BGS) and gas supply (basic gas supply service of BGSS) from PSE&G. PSE&G procures the BGS and BGSS on behalf of these retail customers and earns no margin on this service as all costs are passed back to the BGS and BGSS customers. The changes in Commodity Revenues for both electric and gas are entirely offset by changes in Energy Costs.

Commodity Revenues increased $143 million due to higher electric BGS revenues of $276 million from higher prices and sales volumes, offset by lower gas BGSS revenues of $133 million primarily from lower prices.

Other Operating Revenues are primarily comprised of revenues derived from various GPRC programs including Transition Renewable Energy Certificates (TREC) revenues, Community Solar collections and the Successor Solar Incentive Program (SuSI). The revenues from these programs offset costs included in Energy Costs. In addition, other operating revenues include revenues from our appliance service business which offers various appliance protection and repair plans to customers.

Other Operating revenues increased $37 million due primarily to net increases in GPRC related other operating revenues of $35 million.

Operating Expenses

Energy Costs increased $179 million. This is offset by changes in Commodity Revenues and Other Operating Revenues.

Operation and Maintenance increased $106 million due primarily to higher T&D expenditures and net increases in various other operational expenses.

Depreciation and Amortization increased $45 million due primarily to an increase in depreciation due to higher plant placed in service, partially offset by a net decrease in the amortization of Regulatory Assets and Liabilities.

Net Other Income (Deductions) decreased $16 million due primarily to lower Allowance for Funds Used During Construction.

Net Non-Operating Pension and OPEB Credits decreased $37 million due primarily to a $43 million decrease in the amortization of prior service credits and a $6 million increase in amortization of the net actuarial loss, partially offset by a $7 million decrease in interest cost, $3 million in settlement charges in 2023 and a $2 million increase in the expected return on plan assets.

Interest Expense increased $89 million due primarily to long-term debt net issuances at higher rates in 2024 and 2023.

Income Tax Expense increased $138 million due primarily to higher pre-tax income and a decrease in the flowback of excess deferred income tax benefits.

Year Ended December 31, 2023 as compared to 2022

See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on February 26, 2024 for information related to the year ended December 31, 2023 as compared to 2022, which information is incorporated herein by reference.

Year Ended December 31, 2024 as compared to 2023

Operating Revenues decreased $1,726 million due primarily to changes in generation and gas supply and other operating revenues.

Generation Revenues decreased $1,623 million due primarily to

•

a net decrease of $1,559 million due to MTM losses in 2024 as compared to MTM gains in 2023. Of this amount, there was a $798 million decrease due to positions reclassified to realized upon settlement, coupled with $761 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 $31 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 $29 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 $144 million due primarily to higher average realized prices, partially offset by lower volumes sold in 2024.

Gas Supply Revenues decreased $153 million due primarily to

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a net decrease of $172 million in sales under the BGSS contract due primarily to $228 million from lower prices, partially offset by $56 million from higher sales volumes,

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partially offset by a net increase of $14 million due primarily to lower MTM losses in 2024 as compared to 2023. Of this amount, there was a $26 million increase from positions reclassified to realized upon settlement, partially offset by a $12 million decrease from changes in forward prices, and

•

a net increase of $6 million related to sales to third parties due primarily to $22 million from higher sales prices, partially offset by $16 million from lower sales volumes.

Operating Expenses

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 $183 million due to

Gas costs decreased $173 million due primarily to

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a net decrease of $176 million related to sales under the BGSS contract, of which $223 million was due to the lower average cost of gas, partially offset by $47 million due to higher send out volumes,

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partially offset by a net increase of $4 million related to sales to third parties due primarily to $20 million from higher average cost of gas, partially offset by $16 million due to lower volumes sold.

Generation costs decreased $10 million due primarily to lower renewable energy credit requirements caused by decreases in load volumes served.

Operation and Maintenance increased $100 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 Item 8. Note 4. Variable Interest Entity for additional information on Servco and LIPA.

Net Gains (Losses) on Trust Investments decreased $62 million due primarily to NDT investments with $99 million of lower unrealized gains on equity securities as compared to the prior year, partially offset by $35 million of higher net realized gains in 2024.

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 $46 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 $603 million due primarily to lower pre-tax income in 2024 and the benefit from PTCs.

Year Ended December 31, 2023 as compared to 2022

See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on February 26, 2024 for information related to the year ended December 31, 2023 as compared to 2022, which information is incorporated herein by reference.