Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — Investor Presentation (July 2020)
31 slides from Public Service Enterprise's investor presentation, July 2020
Slide 1: July 2020 PSEG Investor Update
July 2020 PSEG Investor Update • NYSE: PEG • BUILDING A SUSTAINABLE, FINANCIALLY SOUND ENERGY INFRASTRUCTURE COMPANY
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain of the matters discussed in this presentation about our and our subsidiaries’ future performance, including, without limitation, future revenues, earnings, strategies, prospects, consequences and all other statements that are not purely historical constitute “forwa
Slide 3: GAAP Disclaimer
GAAP Disclaimer PSEG presents Operating Earnings in addition to its Net Income reported in accordance with accounting principles generally accepted in the United States (GAAP). Operating Earnings is a non-GAAP financial measure that differs from Net Income. Non-GAAP Operating Earnings excludes the i
Slide 4: A 117-year Newark-based business investing in critical energy infrastructure
A 117-year Newark-based business investing in critical energy infrastructure, providing safe and increasingly clean energy through two strong businesses Electric & Gas Distribution and Transmission Strategy: Investments in energy infrastructure and clean energy support reliability and customer expec
Slide 5: PSEG powering New Jersey's response to COVID-19
PSEG powering New Jersey’s response to COVID-19 ❖ New Jersey Gradually “Re-Opens” from COVID-19 Stay-at-Home Order ✓ On June 9, Governor Murphy lifted the stay-at-home order in effect since March 21, gradually re-opening NJ economy ✓ NJ Board of Public Utilities (NJBPU) approved restart of in-home u
Slide 6: PSEG well positioned during COVID-19 challenges
PSEG well positioned during COVID-19 challenges ❖ Strong Liquidity Position ✓ Total credit facilities $4.2B; $4B of credit facilities extended through March 2024; Ended Q1 with ~$4B of liquidity ✓ In May 2020, PSE&G issued $375M MTNs, in addition to $600M MTNs issued in January ✓ PSEG closed on thre
Slide 7: Regulatory and Policy Initiatives Update
Regulatory and Policy Initiatives Update Investment Priorities Aligned with NJ’s Clean Energy Agenda ▪ NJBPU adopted a framework of rules to implement Energy Efficiency throughout NJ to achieve some of the highest EE savings in the country ▪ Energy Efficiency: NJBPU extended procedural schedule to S
Slide 8: ESG & Sustainability Summary
ESG & Sustainability Summary ESG Leadership ESG Policies & Goals ESG Recognition & Scores • Clean Energy Future PSE&G’s $3.5B • PSEG is a vocal advocate for an economy • Named to the Dow Jones Sustainability proposal for significant investments in wide price on CO2 emissions and Index North America
Slide 9: PSE&G's Clean Energy focus drives top-tier, regulated growth
PSE&G’s Clean Energy focus drives top-tier, regulated growth PSE&G has invested more than PSE&G’s Solar 4 All® program has PSE&G’s Clean Energy Filing developed expands customer access to EE, EV charging, Smart Meters (AMI) and Energy Storage $480M 158MW in Energy Efficiency Programs of solar within
Slide 10: PSE&G – New Jersey's largest
PSE&G – New Jersey’s largest: • Electric and Gas Distribution utility • Transmission business • Investor in renewables and energy efficiency • Appliance service provider Electric Gas Customers 2.3 Million 1.9 Million 5-Year Annual Customer Growth* 0.8% 0.7% 40,684 2,589M 2019 Electric and Gas Sales
Slide 11: PSE&G T&D Margin Allocation
PSE&G T&D Margin Allocation PSE&G 2020E Margin Illustration • Transmission and Residential segments of Distribution expected to contribute 75% of total PSE&G margin • Transmission is fixed with no variable/ volume risk • Distribution margin is ~60% Residential • Significant portion of remaining marg
Slide 12: Customer Focus – Customer bills have declined
Customer Focus – Customer bills have declined, supporting needed investment in the system Cost impact of approved and proposed programs GSMP II, ES II, and CEF over next five years ~2% annual increase, yielding flat bills in real terms NOTE: AVERAGE MONTHLY BILL FOR A TYPICAL RESIDENTIAL ELECTRIC CU
Slide 13: PSE&G's capital program of $11.5B to $15B
PSE&G’s capital program of $11.5B to $15B focused on reliability, resiliency, grid modernization and clean energy investments ~90% of investment PSE&G Capital Spending receiving contemporaneous 2020E – 2024E or near-contemporaneous 3,500 regulatory treatment 3,000 2,500 CEF: EE, EC, EV & ES ($ Milli
Slide 14: Investment program provides ~6.5% to 8% compound annual growth in rate base
Investment program provides opportunity for ~6.5% to 8% compound annual growth in rate base 35,000 PSE&G Year-End Rate Base 8.0% - 30,000 CEF 6.5% - Identified IIP Extensions 25,000 20,000 ($ Millions) 15,000 10,000 5,000 0 2019 2020E 2021E 2022E 2023E 2024E Transmission Electric Distribution Gas Di
Slide 15: Clean Energy Future program supports economic recovery
Clean Energy Future program supports economic recovery, helps lower bills and sized to achieve NJ’s Clean Energy Act targets PSE&G’s ~$3.5 Billion, 6-year investment proposal offers cost-effective, innovative and ready-to-implement solutions supporting NJ’s clean energy goals • Energy Efficiency: He
Slide 16: Gas Distribution Investments
Gas Distribution Investments Gas System Modernization Program focused on modernizing and replacing cast iron and unprotected steel main, resulting in a reduction in methane leaks, safety enhancements and supports customer usage of high efficiency appliances. • 2019: Completed replacement of ~230 mil
Slide 17: Energy Strong II: Continuing critical energy infrastructure program
Energy Strong II: Continuing critical energy infrastructure program Old Station Below/New Station Raised New Equipment Raised Above Flood Elevations Above Flood Elevations Old – Below Flood Level New – Above Flood Level • $842M total spending (Clause $692M, Stipulated Base $150M) ‒ $741M Electric (C
Slide 18: Customer bills will remain in line with inflation
Customer bills will remain in line with inflation, even with inclusion of our active and proposed programs Combined Typical Monthly Residential Electric and Gas Customer 2024E Bill Impacts* of Projected Program Asks • Bills remained flat in real terms from 2016 to 2020, even with inclusion of GSMP I
Slide 19: PSE&G: Lowest residential bills among regional gas utilities
PSE&G: Lowest residential bills among 12 regional Gas Utilities and below the average of 12 regional Electric Utilities Monthly Gas Bills Monthly Electric Bills Average $93 Average $129 BASED UPON A CALCULATION OF MONTHLY BILLS FOR AN ELECTRIC CUSTOMER USING 500 KILOWATT-HOURS AND A GAS CUSTOMER USI
Slide 20: PSEG Power's generating assets in three competitive markets
PSEG Power’s generating assets mainly located in three competitive markets S S S S S S New York ISO S S S S S S S SS SS S S SS S Bethlehem Energy S Center (BEC) S S Bridgeport Harbor New Haven Kalaeloa S = Solar ISO New England Solar Source assets: • Solar (467 MWDC /365 MWAC) PJM Bergen Kearny Esse
Slide 21: Capacity markets provide a solid and continuing revenue stream
Capacity markets provide a solid and continuing revenue stream PJM’s RPM Auction Results* PJM Capacity Revenue Delivery Year 2019/2020 2020/2021 2021/2022 PSEG Power’s Average Prices $116 $168 $180 ($/MW-day) $100/$80 $77 $140 Rest of Pool Prices ($/MW-day) (CP/Base) (CP) (CP) PSEG Power’s Cleared C
Slide 22: Stable Gross Margin - Hedging strategy
Stable Gross Margin - Hedging strategy is designed to mitigate risk and secure free cash flow Apr-Dec 2020 2021 2022 Volume TWh 22 31 30 Nuclear % Hedged 100% 95-100% 40-45% Price $/MWh $36 $35 $35 Volume TWh 15-17 19-21 20-22 Combined Cycle % Hedged 90-95% 0% 0% Price $/MWh $36 $- $- Volume TWh 37-
Slide 23: Potential investment in Ørsted's Ocean Wind
Potential investment in Ørsted’s Ocean Wind is aligned with New Jersey’s clean energy policy goals ▪ PSEG exercised an option to potentially acquire a 25% equity interest in the 1,100 MW Ocean Wind project ▪ Ocean Wind was the winner of NJ’s first offshore wind solicitation in June 2019 ▪ The Ocean
Slide 24: PSEG has controlled O&M with actions focused on continuous improvement
PSEG has controlled O&M with actions focused on continuous improvement PSEG O&M Expense (1) 2014 – 2019 CAGR: (2.1%) 2,500 Cost control actions 2,000 • Continued focus on vendors to ensure ($ Millions) maximum value 1,500 • Frequent organizational reviews to drive efficiency and cost 1,000 optimizat
Slide 25: Strategic focus continues to deliver solid results
Strategic focus continues to deliver solid results PSEG non-GAAP Operating Earnings per Share* $3.28 $3.12 $2.91 $2.90 $2.93 $2.76 2014 2015 2016 2017 2018 2019 *SEE SLIDE A FOR ITEMS EXCLUDED FROM NET INCOME TO RECONCILE TO NON-GAAP OPERATING EARNINGS. 25
Slide 26: Opportunity for consistent and sustainable dividend growth
Opportunity for consistent and sustainable dividend growth Annual Dividend Per Share (2015-2020E CAGR: 4.7%) $2.00 $1.96* $1.88 $1.80 $1.80 $1.72 $1.64 $1.60 $1.56 ($/Share) $1.40 $1.20 $1.00 2015 2016 2017 2018 2019 2020E *INDICATIVE ANNUAL 2020 PSEG COMMON DIVIDEND RATE PER SHARE. E=ESTIMATE. NOTE
Slide 27: PSEG Value Proposition
PSEG Value Proposition Operational Financial Disciplined Excellence Strength Investment • • • Safe, Reliable Assuring Aligned with Operations with Balanced NJ’s Commitment Results in Energy & to Continuous Regulatory/ Environmental Improvement Policy Matters Goals • PSE&G – Delivering on promise for
Slide 28: PSEG Meeting Takeaways
PSEG Meeting Takeaways Regulatory Stability & Opportunities Consistent with NJ Energy Policy • NJBPU adopted framework to implement EE throughout NJ; CEF-EE decision set for September 2020 • Next distribution base rate case not required before year-end 2023 • ZEC award supports nuclear through May 2
Slide 29: APPENDIX
APPENDIX «> PSEG We make things work for you.
Slide 30: Reconciliation of Non-GAAP Operating Earnings
Reconciliation of Non-GAAP Operating Earnings Public Service Enterprise Group Incorporated - Consolidated Operating Earnings (Non-GAAP) Reconciliation Year Ended Reconciling Items December 31, 2019 2018 2017 2016 2015 2014 ($ millions, Unaudited) Net Income $ 1,693 $ 1,438 $ 1,574 $ 887 $ 1,679 $ 1,
Slide 31: Reconciliation of non-GAAP Operating Earnings for PSE&G, PSEG Power and PSEG Enterprise/Other
Reconciliation of non-GAAP Operating Earnings for PSE&G, PSEG Power and PSEG Enterprise/Other PSE&G Operating Earnings (Non-GAAP) Reconciliation Year Ended Reconciling Items December 31, 2019 2018 2017 2016 2015 2014 ($ millions, Unaudited) Net Income $ 1,250 $ 1,067 $ 973 $ 889 $ 787 $ 725 Tax Refo
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