PUBLIC SERVICE ELECTRIC & GAS CO

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.

(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 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 9. 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 $(87) million, $(56) million, and $(74) million for the years ended December 31, 2025, 2024 and 2023, respectively.

(C)

Net of tax (expense) benefit of $21 million, $59 million, and $(376) million for the years ended December 31, 2025, 2024 and 2023, respectively.

Our increase in Net Income for 2025 as compared to 2024 was driven primarily by

•

higher earnings as a result of the 2024 distribution base rate case settlement and continued investments in T&D clause programs at PSE&G and higher energy and capacity prices at PSEG Power, and

•

changes in the NDT Fund and MTM gains (losses) as shown in the table above.

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 23. Related-Party Transactions.

PSEG

(A)

Includes amortization of EE programs regulatory investment expenditures of $169 million, $125 million and $82 million for the years ended December 31, 2025, 2024 and 2023, respectively.

The 2025, 2024 and 2023 amounts in the preceding table for Operating Revenues and O&M costs each include $644 million, $592 million and $533 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 3. 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 $169 million, $125 million and $82 million for the years ended December 31, 2025, 2024 and 2023, respectively.

Year Ended December 31, 2025 as compared to 2024

Operating Revenues increased $1,109 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 $584 million due primarily to $577 million from increased electric and gas revenues primarily as a result of the 2024 distribution base rate case, $87 million from higher GPRC revenues and a $44 million increase in transmission revenues due primarily to higher rate base investments, offset primarily by a $146 million increase in revenue credits flowed back to customers as part of our TAC mechanism.

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 decreased $94 million due primarily to a $186 million decrease in Tax Adjustment Credits (TAC) and Green Program Recovery Charge (GPRC) deferrals, offset by $91 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 or 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 $706 million due to higher electric BGS revenues of $575 million primarily from higher prices, and higher gas BGSS revenues of $131 million primarily from higher sales volumes.

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) and ZECs. The revenues from these programs offset costs included in Energy Costs. In addition, other operating revenues include revenues from our Appliance Service Business (ASB) which offers various appliance protection and repair plans to customers.

Other Operating revenues decreased $87 million due primarily to a decrease in ZECs as a result of the ZEC collection ending effective May 31, 2025.

Operating Expenses

Energy Costs increased $593 million. This is offset by changes in Commodity Revenues and Other Operating Revenues.

Operation and Maintenance increased $304 million due primarily to $178 million in higher clause and renewable expenditures, $72 million in higher distribution and transmission operational expenditures and $49 million in higher other operating and service company expenses.

Depreciation and Amortization increased $91 million due primarily to an increase in depreciation due to higher plant placed in service and increases in the amortization of software and Regulatory Assets and Liabilities.

Net Non-Operating Pension and OPEB Credits decreased $7 million due primarily to a decrease in the expected return on plan assets.

Interest Expense increased $62 million due primarily to incremental debt and the replacement of maturing debt at higher rates.

Income Tax Expense decreased $146 million primarily due to an increase in the flowback of excess deferred income tax benefits to customers, partially offset by higher pre-tax income.

Year Ended December 31, 2024 as compared to 2023

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, 2024 as filed with the SEC on February 25, 2025 for information related to the year ended December 31, 2024 as compared to 2023, which information is incorporated herein by reference.

Year Ended December 31, 2025 as compared to 2024

Operating Revenues increased $915 million due primarily to changes in generation and gas supply and other operating revenues.

Generation Revenues increased $493 million due primarily to

•

a net increase of $192 million due primarily to higher average realized energy prices and volumes sold in 2025,

•

a net increase of $153 million in capacity revenue due primarily to higher capacity prices, and

•

a net increase of $120 million due to lower MTM losses in 2025 as compared to 2024. Of this amount, there was a $101 million increase due to positions reclassified to realized upon settlement, coupled with a $19 million increase due to changes in forward prices in 2025 as compared to 2024.

Gas Supply Revenues increased $362 million due primarily to

•

a net increase of $246 million in sales under the BGSS contract due primarily to $126 million from higher sales prices, and $120 million from higher sales volumes,

•

a net increase of $97 million related to sales to third parties due primarily to $112 million from higher sales prices, partially offset by $15 million from lower sales volumes, and

•

a net increase of $19 million due primarily to MTM gains in 2025 as compared to MTM losses in 2024, primarily from positions reclassified to realized upon settlement.

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 increased $319 million due to

Gas costs increased $313 million due primarily to

•

a net increase of $231 million related to sales under the BGSS contract, of which $133 million was due to higher average prices, and $98 million was due to higher send out volumes, and

•

a net increase of $78 million related to sales to third parties due primarily to $81 million from higher average prices.

Generation costs increased $6 million due primarily to increased fuel costs at nuclear.

Operation and Maintenance increased $106 million due primarily to higher Servco operating costs, and increased planned refueling outage costs in 2025.

Depreciation and Amortization decreased $16 million due primarily to revised estimated useful lives in April 2025 for the Salem and Hope Creek nuclear plants based on the expectation that a 20-year license extension will be approved for these facilities.

Net Gains (Losses) on Trust Investments increased $62 million due primarily to NDT investments with a $59 million increase in net unrealized gains in 2025 on equity securities, and a $4 million increase in net realized gains in 2025.

Net Other Income (Deductions) decreased $11 million due primarily to an increase in donations, partially offset by higher NDT dividend income.

Interest Expense increased $59 million due primarily to incremental debt and the replacement of maturing long-term debt at higher rates.

Income Tax Expense (Benefit) variance of $356 million due primarily to the absence of the benefit from nuclear PTCs in 2025 and higher pre-tax income.

Year Ended December 31, 2024 as compared to 2023

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, 2024 as filed with the SEC on February 25, 2025 for information related to the year ended December 31, 2024 as compared to 2023, which information is incorporated herein by reference.