PUBLIC SERVICE ELECTRIC & GAS CO

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 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.

Current wording

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 September 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 (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.

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

Previous wording

PSEG continues to evaluate additional investment opportunities in regulated transmission. In December 2023, PJM awarded us an approximately $424 million project to address increasing load and reliability issues in Maryland and northern Virginia as part of its 2022 Window 3 competitive solicitation. PJM has directed that the project be placed in service in 2027.

Current wording

PSEG continues to evaluate additional investment opportunities in regulated transmission. In December 2023, PJM awarded us an approximately $424 million project to address increasing load and reliability issues in Maryland and northern Virginia as part of its 2022 Window 3 competitive solicitation. PJM has directed that the project be placed in service in 2027. However, based on the procedural timeline established by order of the Maryland Public Service Commission, we do not currently believe a 2027 in-service date for the project is reasonably achievable. We are continuing to take all available steps to obtain approvals for timely project execution. We cannot predict the outcome.

Previous 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.

Current wording

PSEG's current contract as operations service provider for LIPA's electric transmission and distribution system runs through December 31, 2025. In September 2025, the LIPA board of trustees approved a five-year extension of the contract, which was approved by the New York State Attorney General in October 2025. The contract extension will also need to be approved by the New York State Comptroller. A competitor in the RFP process has filed litigation against LIPA challenging the contract bidding process. The outcome of this litigation is uncertain.

Previous 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:

Current wording

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

Previous 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.

Current wording

Net of tax (expense) benefit of $(28) million and $(36) million for the three months and $(77) million and $(79) million for the nine months ended September 30, 2025 and 2024, respectively.

Previous 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.

Current wording

Net of tax (expense) benefit of $(5) million and $(6) million for the three months and $(6) million and $21 million for the nine months ended September 30, 2025 and 2024, respectively.

Previous 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.

Current wording

Our Net Income variance for the three and nine months ended September 30, 2025 versus the comparable period in 2024 was driven primarily by higher earnings due to settlement of the distribution base rate case in October 2024 and continued investments in T&D at PSE&G, combined with MTM gains for the nine months ended September 30, 2025 compared to losses in the nine months ended September 30, 2024, as shown above.

Previous wording

In February 2023, the governor of New Jersey issued executive orders (EOs) that establish or accelerate previously established 2050 targets for clean-sourced energy, building decarbonization, and EV adoption goals, with new target dates of 2030 or 2035, as applicable. The EOs direct the BPU and other state agencies to collaborate with stakeholders to develop plans to reach the targets and the BPU has convened a stakeholder proceeding to develop a plan for gas distribution utilities to reach the target of 50% natural gas emissions reductions over 2006 levels by 2030. The BPU commenced proceedings to update the State’s EMP in 2024 that are continuing. We are unable to predict the outcomes of this proceeding, but it could have a material impact on our business, results of operations and cash flows.

Current wording

In February 2023, the governor of New Jersey issued executive orders (EOs) that establish or accelerate previously established 2050 targets for clean-sourced energy, building decarbonization, and EV adoption goals, with new target dates of 2030 or 2035, as applicable. The EOs direct the BPU and other state agencies to collaborate with stakeholders to develop plans to reach the targets and the BPU has convened a stakeholder proceeding to develop a plan for gas distribution utilities to reach the target of 50% natural gas emissions reductions over 2006 levels by 2030. The BPU commenced proceedings to update the State’s EMP in 2024 that are continuing. We are unable to predict the outcome of this proceeding, but it could have a material impact on our business, results of operations and cash flows.

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 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.

Current wording

As a result of the capacity market price increases, the costs of which are flowed through to customers, and per direction to EDCs from the BPU, PSE&G filed a petition in May 2025 that provided proposals to mitigate bill impacts to customers. In June 2025, the BPU approved a settlement under which PSE&G applied a credit to each residential electric customer’s monthly bill for July 2025 and August 2025, with the offset being charged 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 September 2025, the New Jersey Legislature enacted a law 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

Federal Executive Orders and State Legislative Activity

Current wording

Federal Executive Orders and State Legislative and Other Activity

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. 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.

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.

Previous wording

PSEG’s long-term financing plan is designed to replace maturities and support funding its capital program. Given our financing needs, the prevailing interest rate environment will be a key factor in determining interest expense on variable-rate debt and long-term rates on future financing plans. In order to increase the predictability of interest expense, we may use interest rate hedges to help limit our exposure to fluctuating interest rates. In addition, from time to time, we may enter into interest rate hedges to fix a portion of our interest rate exposure for anticipated long-term financing plans at PSEG and PSEG Power. PSE&G’s interest rate risk is moderated due to annual transmission rate filings and distribution recoveries through base rate filings and clause-based investment programs.

Current wording

PSEG’s long-term financing plan is designed to replace maturities and support funding its capital program. Given our financing needs, the prevailing interest rate environment will be a key factor in determining interest expense on variable-rate debt and long-term rates on future financing plans. In order to increase the predictability of interest expense, we may use interest rate hedges to help limit our exposure to fluctuating interest rates and fix a portion of our interest rate exposure for anticipated long-term financing plans at PSEG and PSEG Power. PSE&G’s interest rate risk is moderated due to annual transmission rate filings and distribution recoveries through periodic rate filings.

Previous 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;

Current wording

regulatory and political uncertainty with regard to Federal and State energy and related policies, including transmission planning and rates policy, the role of distribution utilities and decarbonization impacts, design of energy and capacity markets, resource adequacy and affordability, tax regulation 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, which could impact customer collections;

Current wording

continuing to manage costs and maintain affordable customer rates, which could impact customer collections, investment programs and have other impacts;

Previous 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;

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 and energy and/or emission credit sales with potential customers seeking consistent and reliable carbon-free power, as well as opportunities that may arise from our enabling of new nuclear projects, including providing services for these projects;

Previous wording

investments in competitive, regulated transmission investments through PJM processes and BPU solicitations that provide revenue predictability and reasonable risk-adjusted returns; and

Current wording

investments in competitive, regulated transmission and the potential enabling of investments in generation through PJM processes and BPU solicitations that provide revenue predictability and reasonable risk-adjusted returns; and