Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — Investor Presentation (August 2021)
42 slides from Public Service Enterprise's investor presentation, August 2021
Slide 1: August 2021 PSEG Investor Update
A U G U S T 2 0 2 1 P S E G I N V E S T O R U P D AT E L E A D I N G TO WA R D A S U S TA I N A B L E F U T U R E WHERE CUSTOMERS UNIVERSALLY USE LESS ENERGY, THE ENERGY THEY USE IS CLEANER AND ITS DELIVERY IS MORE RELIABLE AND MORE RESILIENT • NYSE: PEG •
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 and Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) in addition to its Net Income/(Loss) reported in accordance with accounting principles generally accepted in the United States (GAAP). Operating Earnings and Adjusted
Slide 4: A 118-year New Jersey-based business investing in critical energy infrastructure
A 118-year New Jersey-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 e
Slide 5: Progress on strategic alternatives for non-nuclear fleet
Progress on strategic alternatives for non-nuclear fleet PSEG has completed the sale of Solar Source’s 467 MWDC portfolio Fossil sale process ongoing - completion expected to occur in Q4 '21 or Q1 '22 Furthers PSEG progression into a primarily regulated electric and gas utility, intended to:
Slide 6: PSEG accelerates its climate vision for Net Zero emissions to 2030
PSEG accelerates its climate vision for Net Zero emissions by 20 years to 2030 Original ~22% ~60% New PSEG PSEG Original Methane Methane Power PSEG Power Reduction Reduction Net Zero 80% GHG Net Zero Target Target* GHG Vision Reduction Vision Target 2023 2030 2030 2046 2050 PSEG’s Three-Pronged 2030
Slide 7: PSEG Sustainability & ESG Summary
PSEG Sustainability & ESG Summary Leadership Policies & Goals Recognition & Scores • Clean Energy Future (CEF): PSE&G received • PSEG is a vocal advocate for an economy- • Member of S&P Sustainability Yearbook regulatory approvals to invest $2 billion wide price on carbon emissions and 2021 to decar
Slide 8: PSE&G deploys capital consistent with commitment to sustainability
PSE&G deploys capital consistent with a longstanding commitment to sustainability and environmental stewardship PSE&G’s response to climate change has led to several major investment programs: Supporting development of solar generation in NJ: Solar4All® and Solar Loans $1.0 billion Increasing syst
Slide 9: PSEG's Investments are aligned with New Jersey's clean energy goals
PSEG’s Investments are aligned with New Jersey’s clean energy goals and stronger reliability to meet customers’ increasing expectations PSEG 2021-2025E Capex ~$16B PSEG Enterprise & Other Nuclear Reliability/Emission Reduction PSEG Power 50% • Energy Efficiency addresses • AMI • CEF – Electric Vehic
Slide 10: PSE&G's Clean Energy Future
PSE&G’s Clean Energy Future is doing right by the planet, focusing on the right things and done in the right way 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 $500M
Slide 11: Regulatory and Policy Initiatives Update
Regulatory and Policy Initiatives Update State Regulatory Proceedings NJBPU awarded continuation of $10/MWh Zero Emission Certificates (ZEC) for all three NJ nuclear plants through May 2025 NJBPU Staff’s Resource Adequacy (FRR) report recommends a pause on the exploration of leaving the PJM capa
Slide 12: PSEG completed acquisition of 25% interest in Ørsted's Ocean Wind
PSEG completed acquisition of 25% interest in Ørsted’s Ocean Wind; investment aligned with NJ’s clean energy goals PSEG Renewable Generation has acquired a 25% interest in the 1,100 MW Ocean Wind project, located off the coast of southern New Jersey via partnership with Ørsted, a global leader in
Slide 13: 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% 0.6% 39,666 2,370M 2020 Electric and Gas Sales
Slide 14: Transmission Rate Agreement Reached
Transmission Rate Agreement Reached Executed settlement agreement with NJBPU and NJ Division of Rate Counsel to reset PSE&G’s base ROE for its transmission formula rate to 9.90% from 11.18% PSE&G filed settlement agreement with FERC on July 14 seeking FERC approval and requesting effective date
Slide 15: PSE&G Clean Energy Future Program Overview
PSE&G Clean Energy Future Program Overview Energy Energy Cloud (EC) Electric Energy Efficiency (EE) “AMI” Vehicles (EV) Storage (ES) $1B $707M* $166M $109M Commitment Investment Investment Investment 3 years 4 years ~6 years Approved Sept 2020 Approved Jan 2021 Approved Jan 2021 Filed amount, outcom
Slide 16: Landmark $1 Billion CEF-Energy Efficiency program
Landmark $1 Billion CEF-Energy Efficiency program opens new opportunities for customers and PSE&G • NJBPU approved CEF-EE settlement to commit $1B in energy efficiency investments over the next 3 years through a suite of 10 utility-led programs • Increases annual investment spend on new and existing
Slide 17: CEF-Energy Cloud/AMI Settlement Approved
CEF-Energy Cloud/AMI Settlement Approved • NJBPU approved settlement of the CEF-EC filing between NJBPU Staff and Rate Counsel • Total investment of $707 million over four years* • PSE&G will defer earnings and cash return of and on CEF-EC investment until its next base rate case; Roll-in will inclu
Slide 18: CEF-Electric Vehicle Infrastructure Approved
CEF-Electric Vehicle Infrastructure Approved Investment $166M ~6-Year Program CEF-EV Subprograms: 1. Residential Smart Charging Development of smart charging infrastructure to facilitate EV 2. Level 2 Mixed-Use Charging adoption across a broad range of 3. Public DC Fast Charging customers and segmen
Slide 19: Customer Focus – Customer bills have declined
Customer Focus – Customer bills have declined, supporting needed investment in the system NOTE: AVERAGE MONTHLY BILL FOR A TYPICAL RESIDENTIAL ELECTRIC CUSTOMER THAT USES 6,920 KILOWATT-HOURS PER YEAR AND A TYPICAL RESIDENTIAL GAS HEATING CUSTOMER THAT USES 1,040 THERMS PER YEAR. 19
Slide 20: 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 BASED UPON A CALCULATION OF MONTHLY BILLS FOR AN ELECTRIC CUSTOMER USING 500 KILOWATT-HOURS AS OF DECEMBER 15, 2020 AND A GAS CUSTOMER USIN
Slide 21: PSE&G's capital program of $13 billion to $15 billion
PSE&G’s capital program of $13 billion to $15 billion focused on reliability, resiliency, grid modernization and clean energy investments ~90% of our capital investments PSE&G Capital Spending receive earnings and cash recovery 2021E – 2025E within one year 3,500 Unapproved Programs: 3,000 • Energy
Slide 22: Investment program provides ~6.5% to 8% rate base growth
PSE&G’s investment program provides opportunity for ~6.5% to 8% compound annual growth in rate base PSE&G Year-End Rate Base 35,000 Unapproved Programs 30,000 25,000 20,000 ($ Millions) 15,000 10,000 5,000 0 2020 2021E 2022E 2023E 2024E 2025E Transmission Electric Distribution Gas Distribution Clean
Slide 23: 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. • 2020: Completed replacement of ~175 mil
Slide 24: GSMP drives PSE&G's methane reduction goals
GSMP drives PSE&G’s methane reduction goals 0% PSE&G is on track to achieve its ~22% methane (CH4) reduction goal by 2023 from 2018 levels, with -10% GSMP I ongoing GSMP II replacement of cast iron and unprotected steel main -20% GSMP II -30% Targeting ~60% cumulative methane -40% reduction by 2030
Slide 25: 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 26: Bill Impacts expected to remain in line with inflation
Bill Impacts from our infrastructure and clean energy programs are expected to remain in line with inflation Combined Typical Monthly Residential Electric and Gas Customer 2024E Bill Impacts* of Projected Program Asks • Bills remained flat in real terms from 2016 to 2021, even with inclusion of GSMP
Slide 27: PSEG Power's generating assets in three competitive markets
PSEG Power’s generating assets mainly located in three competitive markets New York ISO • Major assets located near key load centers • Completed construction program of three Bethlehem Energy new, highly efficient combined-cycle units Center (BEC) Bridgeport Harbor* • Positioned to benefit from mark
Slide 28: Capacity markets provide a solid and continuing revenue stream
Capacity markets provide a solid and continuing revenue stream PJM’s Capacity Auction Results* PJM Capacity Revenue Delivery Year 2020/2021 2021/2022 2022/2023 PSEG Power’s Average Prices $167 $166 $98 ($/MW-day) Rest of Pool Prices ($/MW-day) $77 $140 $50 PSEG Power’s Cleared Capacity (MW) 7,700 7,
Slide 29: PSEG has controlled O&M with actions focused on continuous improvement
PSEG has controlled O&M with actions focused on continuous improvement PSEG O&M Expense (1) 5-year CAGR: (3.7%) 2,500 Cost control actions • ‘Best practices’ teams focused on improving 2,000 performance while managing costs • Technology investments ($ Millions) to improve productivity 1,500 • Power
Slide 30: Strategic focus continues to deliver solid results
Strategic focus continues to deliver solid results PSEG non-GAAP Operating Earnings per Share* $3.55E $3.43 to $3.28 $3.40E $3.12 $2.93 2017 2018 2019 2020 2021E E=ESTIMATE NOTE: CAGR REFLECTS THE MID-POINT OF 2021 NON-GAAP OPERATING EARNINGS GUIDANCE OF $3.40 - $3.55 PER SHARE. *SEE SLIDE A FOR ITE
Slide 31: Opportunity for consistent and sustainable dividend growth
Opportunity for consistent and sustainable dividend growth Annual Dividend Per Share (2017-2021E CAGR: 4.4%) $3.00 PSE&G 2021E Net Income $2.80 Guidance Range $2.60 PSE&G $2.40 EPS $2.20 * $2.04 ($/Share) $2.00 $1.96 $1.88 $1.80 $1.80 $1.72 $1.60 $1.40 $1.20 $1.00 2017 2018 2019 2020 2021E *INDICATI
Slide 32: PSEG Value Proposition
PSEG Value Proposition Operational Financial Disciplined Excellence Strength Investment • • • Safe, Reliable Aligned with Operations with Supports NJ’s Commitment Investment Energy & to Continuous Program and Environmental Improvement Dividend Goals • PSE&G – Delivering on promise for rate base grow
Slide 33: PSEG Meeting Takeaways
PSEG Meeting Takeaways Regulatory Stability & Opportunities Consistent with NJ Energy Policy • NJBPU approved $1B in CEF-EE investments and ~$875M in CEF-Energy Cloud/AMI* and EV infrastructure • Next distribution base rate case not required before year-end 2023 • Settlement agreement executed to re
Slide 34: Appendix
APPENDIX «> PSEG We make things work for you.
Slide 35: PSEG EPS Reconciliation – First Half 2021 versus First Half 2020
PSEG EPS Reconciliation – First Half 2021 versus First Half 2020 0.01 0.03 $1.98 $2.00 0.12 $1.82 Tax Benefits $1.77 Capacity 0.05 $1.75 Transmission 0.03 Re-contracting & Market Electric Margin 0.02 (0.07) $1.50 Gas Margin 0.03 Gas Operations Gas Bad Debt 0.02 0.04 O&M (0.01) $1.25 Distribution Dep
Slide 36: PSEG maintains a solid financial position
PSEG maintains a solid financial position PSE&G Senior Secured Credit Ratings Moody’s = Aa3 / Outlook = Negative PSEG Senior Unsecured Credit Ratings S&P = A / Outlook = Stable Moody’s = Baa1 / Outlook = Stable S&P = BBB / Outlook = Stable 2021 PSE&G Debt Issuances Secured 0.95% MTNs due March 2026
Slide 37: PSE&G to invest $1B of capital in Energy Efficiency
PSE&G to invest $1B of capital in Energy Efficiency, one of the largest efforts in the U.S. PSE&G Investment: PSE&G Energy Efficiency (EE) Offerings $1 Billion, 3-Year Commitment delivering universal access to Residential Commercial & lower customer bills through a Programs Industrial Programs compr
Slide 38: PSE&G's Energy Efficiency Offerings
PSE&G’s Energy Efficiency Offerings: A Suite of Ten Residential, Commercial & Industrial Programs Program Description Efficient Products Rebates and on-bill repayment for HVAC, smart thermostats, appliances, lighting, and other equipment Residential Programs* Rebates and on-bill repayment for energy
Slide 39: CEF-EV Program Descriptions
CEF-EV Program Descriptions Residential Smart Charging Single-Family Homes $80M investment ~40,000 chargers • PSE&G will provide funding towards the installation of Level 2 networked EV Chargers at residences in the PSE&G territory. • PSE&G will also provide customer incentives to encourage charging
Slide 40: Communities
PSEG’s COVID-19 Response & Support PSEG and the PSEG Foundation pledged over $4 million in support to communities for pandemic response and relief efforts: Website Communities devoted to PSEG philanthropic response developed and live, Request-for-proposal applications for Grassroots/Local initiati
Slide 41: Reconciliation of Non-GAAP Operating Earnings
Reconciliation of Non-GAAP Operating Earnings Public Service Enterprise Group Incorporated - Consolidated Operating Earnings (Non-GAAP) Reconciliation Six Months Ended Year Ended Reconciling Items June 30, December 31, 2021 2020 2020 2019 2018 2017 ($ millions, Unaudited) Net Income $ 471 $ 899 $ 1,
Slide 42: Reconciliation of non-GAAP Operating Earnings and Adjusted EBITDA
Reconciliation of non-GAAP Operating Earnings and non-GAAP Adjusted EBITDA as non-GAAP Financial Measures PSEG Power LLC - Operating Earnings (Non-GAAP) and Adjusted EBITDA (non-GAAP) Reconciliation Six Months Ended Year Ended Reconciling Items June 30, December 31, 2021 2020 2020 ($ millions, Unaud
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