Q - PUBLIC SERVICE ENTERPRISE GROUP

Previous wording

We are a public utility holding company that, acting through our wholly owned subsidiaries, is a predominantly regulated electric and gas utility and a nuclear generation business. Our business plan focuses on achieving growth by allocating capital primarily toward regulated investments in an effort to continue to improve the sustainability and predictability of our business and realizing the value of the consistent and reliable carbon free generation from our nuclear units. We are focused on investing to meet growing energy demand, modernize our energy infrastructure, improve reliability and resilience, increase EE and deliver clean energy to meet customer expectations and be well aligned with public policy objectives. With these investments and higher working capital recovery approved in the distribution rate case, our regulated rate base increased from approximately $30 billion as of December 31, 2023 to approximately $34 billion as of December 31, 2024. In addition, the passage of the Inflation Reduction Act of 2022 (IRA) established a production tax credit (PTC) for existing nuclear facilities from 2024 through 2032. The PTC is designed to provide downside price protection for our nuclear generation fleet as the tax credit value is directly linked to a nuclear facility’s gross receipts.

Current wording

We are a public utility holding company that, acting through our wholly owned subsidiaries, is a predominantly regulated electric and gas utility and a nuclear generation business. Our business plan focuses on achieving growth by allocating capital primarily toward regulated investments in an effort to continue to improve the sustainability and predictability of our business and realizing the value of the consistent and reliable carbon free generation from our nuclear units. We are focused on investing to meet growing energy demand, modernize our energy infrastructure, improve reliability and resilience, increase EE and deliver clean energy to meet customer expectations and be well aligned with public policy objectives. With these investments and higher working capital recovery approved in the distribution rate case, our regulated rate base increased from approximately $30 billion as of December 31, 2023 to approximately $34 billion as of December 31, 2024. In addition, our nuclear facilities retain the downside price protection of a production tax credit (PTC) from 2024 through 2032.

Previous wording

For the years 2025-2029, our regulated capital investment program is estimated to be in a range of $21 billion to $24 billion. We expect these capital investments to result in a compound annual growth rate in our regulated rate base in a range of 6% to 7.5% from year-end 2024 to year-end 2029. The regulated capital investments represent the majority of PSEG’s total capital investment program of $22.5 billion to $26 billion. The low end of the range includes an extension of our Gas System Modernization Program (GSMP) and Clean Energy Future (CEF)-EE program at their current average annual investment levels plus inflation, as these programs are expected to continue beyond their currently approved timeframes. The upper end of our capital investment range includes potential incremental investments to address continued demand growth and other investments to meet infrastructure needs and support New Jersey's clean energy goals.

Current wording

For the years 2025-2029, our regulated capital investment program is estimated to be in a range of $21 billion to $24 billion. We expect these capital investments to result in a compound annual growth rate in our regulated rate base in a range of 6% to 7.5%. The regulated capital investments represent the majority of PSEG’s total capital investment program of $22.5 billion to $26 billion. The low end of the range includes an extension of our Gas System Modernization Program (GSMP) and Clean Energy Future (CEF)-EE program at their current average annual investment levels plus inflation, as these programs are expected to continue beyond their currently approved timeframes. The upper end of our capital investment range includes potential incremental investments to address continued demand growth and other investments to meet infrastructure needs and support New Jersey's clean energy goals.

Previous wording

In 2023, the BPU approved a two-year extension of our current GSMP II program to replace at least 400 miles of cast iron and unprotected steel mains and services in our gas system. The GSMP II program extension provides for main replacement through December 2025 plus trailing services replacement and paving costs into 2026 and totals approximately $900 million of investment. Of the $900 million, $750 million is recovered through three periodic rate updates with the balance recovered through a future distribution base rate case. In addition, in January 2025 we re-started discussions regarding the GSMP III program which was initially filed in March 2023. PSE&G intends to begin the new program in 2026.

Current wording

In 2023, the BPU approved a two-year extension of our current GSMP II program to replace at least 400 miles of cast iron and unprotected steel mains and services in our gas system. The GSMP II program extension provides for main replacement through December 2025 plus trailing services replacement and paving costs into 2026 and totals approximately $900 million of investment. Of the $900 million, $750 million is recovered through three periodic rate updates with the balance recovered through a future distribution base rate case. PSE&G has re-started discussions regarding the GSMP III program with the objective of beginning the new program in 2026.

Previous wording

Pursuant to our GSMP II and Energy Strong II programs, PSE&G filed a distribution base rate case as required by the BPU. In October 2024, the BPU issued an Order approving the settlement of that case with new rates effective October 15, 2024. The Order provides for a $17.8 billion rate base, a 9.6% return on equity for PSE&G’s distribution business and a 55% equity component of its capitalization structure. In addition, the Order approved mechanisms associated with the recovery of future storm costs as well as the recovery of annual pension and OPEB expenses beginning January 1, 2025.

Current wording

In October 2024, the BPU issued an Order approving the settlement of PSE&G's distribution rate case with new rates effective October 15, 2024. The Order provided for a $17.8 billion rate base, a 9.6% return on equity for PSE&G’s distribution business and a 55% equity component of its capitalization structure. In addition, the Order approved mechanisms beginning January 1, 2025 associated with the recovery of future storm costs as well as the recovery of annual pension and OPEB expenses.

Previous wording

At PSEG Power, we seek to produce low-cost electricity by efficiently operating our nuclear generation assets, mitigate earnings volatility through the PTC mechanism and hedging, and support public policies that preserve these existing carbon-free base load nuclear generating plants. During the first three months of 2025, our nuclear units generated approximately 8.4 terawatt hours and operated at a capacity factor of 99.9%. Effective April 2025, PSEG Power revised the estimated useful lives for the Salem 1, Salem 2 and Hope Creek nuclear plants due to our expectation that a 20-year license extension will be approved for these facilities. Our hedging strategy continues to incorporate an estimated range of risk reduction impacts from the PTCs on our nuclear generation portfolio while retaining the ability to benefit when market pricing exceeds the phase out threshold. As of March 31, 2025, we expect that our hedged position for 2025 in conjunction with the PTC and market price variability will result in the realized value of our nuclear generation output being at, or above, the PTC phase out. Our strategy will continue to evolve given PTC guidance uncertainty, and potential incremental changes upon final U.S. Treasury guidance. In addition, we are exploring opportunities for the potential sale of power and/or emission credits from our nuclear facilities pursuant to long-term agreements.

Current wording

At PSEG Power, we seek to produce low-cost electricity by efficiently operating our nuclear generation assets, mitigate earnings volatility through the PTC mechanism and hedging, and support public policies that preserve these existing carbon-free base load nuclear generating plants. During the first six months of 2025, our nuclear units generated approximately 15.9 terawatt hours and operated at a capacity factor of 94.3%. Effective April 2025, PSEG Power revised the estimated useful lives for the Salem 1, Salem 2 and Hope Creek nuclear plants due to our expectation that a 20-year license extension will be approved for these facilities. Our hedging strategy continues to incorporate an estimated range of risk reduction impacts from the PTCs on our nuclear generation portfolio while retaining the ability to benefit when market pricing exceeds the phase out threshold. As of June 30, 2025, we expect that our hedged position for 2025 in conjunction with the PTC and market price variability will result in the realized value of our nuclear generation output being at, or above, the PTC phase out. Our strategy will continue to evolve given PTC guidance uncertainty, and potential incremental changes upon final U.S. Treasury guidance. In addition, we are exploring opportunities for the potential sale of power and/or emission credits from our nuclear facilities pursuant to long-term agreements.

Previous wording

For more than a century, our purpose has been to provide safe access to an around-the-clock supply of reliable, affordable energy. Today, our vision is to power a future where people use less energy, and it is cleaner, safer and delivered more reliably than ever. We have established a net zero greenhouse gas (GHG) emissions by 2030 goal that includes direct GHG emissions

Current wording

For more than a century, our purpose has been to provide safe access to an around-the-clock supply of reliable, affordable energy. Today, our vision is to power a future where people use less energy, and it is cleaner, safer and delivered more reliably than ever. We have established a net zero greenhouse gas (GHG) emissions by 2030 goal that includes direct GHG emissions (Scope 1) and indirect GHG emissions from operations (Scope 2) across our business operations, assuming advances in technology, public policy and customer behavior, which goal supports New Jersey's clean energy and climate goals.

Previous wording

PSE&G has undertaken a number of initiatives that support the reduction of GHG emissions, including our implementation of New Jersey's EE program. PSE&G’s approved CEF-EE and EE II, CEF-Energy Cloud and CEF-EV programs and the proposed CEF-ES program are intended to support New Jersey’s Energy Master Plan (EMP) and Gubernatorial Executive Orders through programs designed to help customers use energy more efficiently, reduce GHG emissions, support the expansion of the EV infrastructure in New Jersey, install energy storage capacity to supplement solar generation and enhance grid resiliency, install smart meters and supporting infrastructure to allow for the integration of other clean energy technologies and to more efficiently respond to weather and other outage events.

Current wording

PSE&G has undertaken a number of initiatives that support the reduction of GHG emissions, including our implementation of New Jersey's EE and related programs that are intended to support New Jersey’s Energy Master Plan (EMP) and Gubernatorial Executive Orders through programs designed to help customers use energy more efficiently, reduce GHG emissions, support the expansion of the EV infrastructure in New Jersey, install energy storage capacity to supplement solar generation and enhance grid resiliency, install smart meters and supporting infrastructure to allow for the integration of other clean energy technologies and to more efficiently respond to weather and other outage events.

Previous wording

We also continue to focus on providing cleaner energy for our customers by working to preserve the economic viability of our nuclear units, which provide over 85% of the carbon-free energy in New Jersey. These efforts include reducing market risk by advocating for state and federal policies, such as the PTC established by the IRA, and capacity market reform and related generator interconnection policies at PJM Interconnection, L.L.C. (PJM) that recognize the value of our nuclear fleet’s carbon-free generation and its contribution to grid reliability, and potential long-term contracts that recognize the value of its consistent and reliable carbon-free energy.

Current wording

We also continue to focus on providing cleaner energy for our customers by working to preserve the economic viability of our nuclear units, which provide over 85% of the carbon-free energy in New Jersey. These efforts include reducing market risk by advocating for state and federal policies, such as the PTC established by the IRA, and capacity market reform and related generator interconnection policies at PJM Interconnection, L.L.C. (PJM) that recognize the value of our nuclear fleet’s carbon-free generation and its contribution to grid reliability and resource adequacy, and potential long-term contracts that recognize the value of its consistent and reliable carbon-free energy.

Previous wording

PSEG's current contract as operations service provider for LIPA's electric transmission and distribution system runs through December 31, 2025. At an April 30, 2025 LIPA board meeting, the LIPA board of trustees voted against the recommendation from LIPA management to award the operations services agreement to a different electric service provider. PSEG awaits further information from LIPA regarding next steps in this process, the outcome of which is uncertain.

Current wording

PSEG's current contract as operations service provider for LIPA's electric transmission and distribution system runs through December 31, 2025. At a recent LIPA board meeting, the LIPA board of trustees voted to begin negotiations to extend our current contract, however, the ultimate outcome remains uncertain.

Previous wording

The results for PSEG, PSE&G and PSEG Power & Other for the three months ended March 31, 2025 and 2024 are presented as follows:

Current wording

The results for PSEG, PSE&G and PSEG Power & Other for the three and six months ended June 30, 2025 and 2024 are presented as follows:

Previous wording

Net of tax expense of $6 million and $38 million for the three months ended March 31, 2025 and 2024, respectively.

Current wording

Net of tax (expense) benefit of $(43) million and $(5) million for the three months and $(49) million and $(43) million for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

Net of tax benefit of $53 million and $72 million for the three months ended March 31, 2025 and 2024, respectively.

Current wording

Net of tax (expense) benefit of $(54) million and $(45) million for the three months and $(1) million and $27 million for the six months ended June 30, 2025 and 2024, respectively.

Previous wording

Our Net Income for the three months ended March 31, 2025 variance versus the comparable period in 2024 was driven primarily by higher earnings due to continued investments in T&D clause programs and settlement of the distribution base rate case in October 2024 at PSE&G combined with changes related to MTM and NDT Fund activity, as discussed above.

Current wording

Our Net Income variance for the three and six months ended June 30, 2025 versus the comparable period in 2024 was driven primarily by higher earnings due to continued investments in T&D clause programs and settlement of the distribution base rate case in October 2024 at PSE&G combined with changes related to MTM and NDT Fund activity, as discussed above.

Previous wording

Under current FERC rules, PSE&G continues to earn a 50 basis point adder to its base ROE for its membership in PJM as a transmission owner. In April 2021, FERC proposed eliminating this ROE adder for Regional Transmission Owner participation. FERC has not acted on the proposal. If the adder was eliminated, it would reduce PSE&G’s annual Net Income and annual cash inflows by approximately $40 million.

Current wording

Under current FERC rules, PSE&G continues to earn a 50 basis point adder to its base ROE for its membership in PJM as a transmission owner. However, certain regulatory or legislative actions could potentially lead to the loss of this adder which, if eliminated, would prospectively reduce PSE&G’s annual Net Income and annual cash inflows by approximately $40 million.

Previous wording

In April 2021, PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants were awarded zero emission certificates (ZECs) for the three-year eligibility period starting June 2022 at the same approximate $10 per megawatt hour (MWh) received during the prior ZEC period through May 2025. Pursuant to a process established by the BPU, ZECs are purchased from selected nuclear plants and recovered through a non-bypassable distribution charge in the amount of $0.004 per kilowatt-hour used (which is equivalent to approximately $10 per MWh generated in payments to selected nuclear plants (ZEC payment)). As previously noted, in August 2022, the IRA was signed into law expanding incentives promoting carbon-free generation. The enacted legislation established a PTC for electricity generated using existing nuclear energy, which began January 2024 and continues through 2032 and impacted PSEG Power's decision not to apply for the next ZEC three-year eligibility period starting June 2025. The expected PTC rate is up to $15/MWh subject to adjustment based upon a facility’s gross receipts. The PTC rate and the gross receipts threshold are subject to annual inflation adjustments. ZEC revenue recorded is reduced by the estimated PTCs generated from PSEG Power’s Salem 1, Salem 2, and Hope Creek nuclear plants. The PTC amounts recorded to date are subject to change based on several factors, including but not limited to, adjustments to estimated market prices and generation and the issuance of authoritative guidance by Treasury/the Internal Revenue Service, including clarification of the definition of “gross receipts” used to determine the phase out. Any adjustments to amounts previously recorded could be material. We continue to analyze the impact of the IRA on our nuclear units, and will analyze any future guidance from the U.S. Treasury to assess any impact of PTCs on expected ZEC payments and/or any future ZEC application periods.

Current wording

In May 2025, PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants zero emission certificate (ZEC) sales concluded. Pursuant to a process established by the BPU, ZECs were purchased from these nuclear plants by the electric distribution companies (EDCs) in New Jersey. As previously noted, the Federal government established a PTC for electricity generated using existing nuclear energy, which began January 2024 and continues through 2032 and impacted PSEG Power's decision not to apply for the next ZEC three-year eligibility period starting June 2025. The expected PTC rate is up to $15/MWh subject to adjustment based upon a facility’s gross receipts. The PTC rate and the gross receipts threshold are subject to annual inflation adjustments. ZEC revenue recorded has been reduced by the estimated PTCs generated from these nuclear plants. The PTC amounts recorded to date are subject to change based on several factors, including but not limited to, adjustments to estimated market prices and generation and the issuance of authoritative guidance by Treasury/the Internal Revenue Service, including clarification of the definition of “gross receipts” used to determine the phase out. Any adjustments to amounts previously recorded could be material. We continue to analyze the impact of the PTC, including any future guidance from the U.S. Treasury to assess any impact of PTCs on expected ZEC payments and/or any future ZEC application periods.

Previous wording

An increasing demand for power and a lack of sufficient new generation resources in PJM and in New Jersey, has raised resource adequacy concerns and will result in higher electricity costs for our customers this year. Prices from the July 2024 PJM annual capacity market auction, which were approximately 10 times higher than prices from the 2023 auction and which will be reflected in customer bills, have provoked concern from state regulators and legislators and could create regulatory uncertainty. In April 2025, citing the anticipated rate impacts from the PJM capacity auction results, the BPU directed the state’s EDCs, including PSE&G, to file petitions in the near future, providing proposals to mitigate bill impacts to customers. PSE&G is preparing its required filing.

Current wording

An increasing demand for power and a lack of sufficient new generation resources in PJM and in New Jersey, has raised resource adequacy concerns and is resulting in higher electricity costs for our customers this year. Prices from the July 2024 PJM annual capacity market auction, which were approximately 10 times higher than prices from the 2023 auction and which is impacting customer bills, have provoked concern from state regulators and legislators and could create regulatory uncertainty. Per direction to EDCs from the BPU, PSE&G filed a petition that provided proposals to mitigate bill impacts to customers. In June 2025, the BPU approved a settlement providing that for July 2025 and August 2025, PSE&G will apply a credit to each residential electric customer’s monthly bill, with offsetting charges on monthly bills for September 2025 through February 2026. PSE&G agreed to waive carrying costs on the outstanding credit amount. In addition, PSE&G agreed to: extend protections precluding the shut-off of eligible residential customers, normally available during the winter months, to the period from July 1, 2025 through September 30, 2025; offer residential customers deferred payment arrangements with terms of up to twenty-four months for the payment of overdue billed amounts; and waive all reconnection fees for residential customers during the period from July 1, 2025 through September 30, 2025. In July 2025, the New Jersey Legislature passed a law, that is currently pending signature by the governor of New Jersey, prohibiting disconnection for non-payment during the period June 15 through August 31, beginning in 2026, and for such period annually thereafter, for certain qualified electric and gas customers. This new requirement for a summer shutoff moratorium and the extended deferred payment arrangements are likely to increase our Accounts Receivable and bad debt expense in the future.

Previous wording

There have been a number of federal executive orders over the recent months, including but not limited to orders addressing power generation in the energy industry and orders imposing widespread and substantial tariffs on imports. Although certain of these tariffs have been temporarily stayed, the situation is fluid and subject to rapid change. We are continuing to monitor the federal executive orders, certain of which will require the enactment of regulations to implement, and whether tariffs and any resulting retaliatory trade measures taken against the U.S., could disrupt or impact our supply chain, business, cash flow, results of operations and or financial condition.

Current wording

There have been a number of federal executive orders over the recent months, including but not limited to orders addressing power generation in the energy industry and orders imposing widespread and substantial tariffs on imports. We are continuing to monitor the federal executive orders, certain of which will require the enactment of regulations to implement, and their impacts on our supply chain, business, cash flow, results of operations and financial condition. Further, since early 2025, New Jersey state legislative activity focused on addressing energy affordability has accelerated. Legislation has been proposed on various energy policy and regulatory topics, the impacts of which are uncertain at this time but, if enacted, could have a material impact on us.

Previous wording

The IRA enacted a new 15% corporate alternative minimum tax (CAMT), which is based on adjusted financial statement income, a PTC for existing nuclear generation facilities, discussed above, and allows energy tax credits to be transferable. Many aspects of the IRA, including the CAMT and PTC, remain unclear and are in need of further guidance; therefore, we continue to analyze the impact the IRA will have on PSEG’s and PSE&G’s results of operations, financial condition and cash flows, which could be material.

Current wording

In August 2022, the IRA enacted a 15% corporate alternative minimum tax (CAMT), which is based on adjusted financial statement income, and a PTC for existing qualified nuclear facilities. These provisions remain unclear; therefore, the issuance of authoritative guidance can materially impact PSEG’s and PSE&G’s results of operations, financial condition and cash flows.

Previous wording

obtain approval of and execute on our utility capital investment program to modernize our infrastructure, improve the reliability and resilience of the service we provide to our customers, and align our sustainability and climate goals with New Jersey’s energy policy,

Current wording

obtain approval of and execute on our utility capital investment program to meet increasing customer demand, modernize our infrastructure, improve the reliability and resilience of the service we provide to our customers, and align our sustainability and climate goals with New Jersey’s energy policy;

Previous wording

regulatory and political uncertainty, both with regard to transmission planning and rates policy, the role of distribution utilities and decarbonization impacts, future energy policy, tax regulations, design of energy and capacity markets, and environmental regulation, as well as with respect to the outcome of any legal, regulatory or other proceedings,

Current wording

regulatory and political uncertainty with regard to transmission planning and rates policy, the role of distribution utilities and decarbonization impacts, future energy policy, tax regulations, design of energy and capacity markets, and environmental regulation, as well as with respect to the outcome of any legal, regulatory or other proceedings;

Previous wording

continuing to manage costs and maintain affordable customer rates in an inflationary environment, which could impact customer collections and future regulatory proceedings,

Current wording

continuing to manage costs and maintain affordable customer rates, which could impact customer collections;

Previous wording

the impact of changes in energy demand, natural gas and electricity prices, PJM’s challenge to ensure resource adequacy to meet demand growth, and expanded efforts to decarbonize several sectors of the economy.

Current wording

the impact of changes in energy demand, natural gas and electricity prices and PJM’s challenge to ensure resource adequacy to meet demand growth amidst efforts to decarbonize several sectors of the economy.

Previous wording

continued operation of our nuclear generation facilities that are expected to be supported by the PTC through 2032 and can enable certain investments to increase the capacity of the units as well as potential license extensions, nuclear capacity uprates, transition from an 18-month to 24-month refueling cycle at our Hope Creek facility and energy and/or emission credit sales with potential customers seeking consistent and reliable carbon-free power,

Current wording

continued operation of our nuclear generation facilities that are expected to be supported by the PTC through 2032, nuclear capacity uprates, such as our planned Salem power uprate supported by a clean energy PTC, as well as obtaining license extensions, transition from an 18-month to 24-month refueling cycle at our Hope Creek facility and energy and/or emission credit sales with potential customers seeking consistent and reliable carbon-free power;