Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — Investor Day (March 2023)
74 slides from Public Service Enterprise's investor day presentation, Mar 9, 2023
Slide 1: PSEG Investor Conference 2023
PSEG Investor Conference 2023 March 10, 2023 Leading toward a sustainable future EXHIBIT 99.1
Slide 2: 2023 PSEG Investor Conference Agenda
2023 PSEG Investor Conference Agenda 15 Minute Break PSEG Overview Ralph LaRossa Chair, President & CEO Public Service Electric and Gas Kim Hanemann President & Chief Operating Officer, PSE&G Dave Johnson VP Customer Care & Chief Customer Officer, PSE&G Scott Jennings SVP Finance, Planning & Strateg
Slide 3: Public Service Enterprise Group
Public Service Enterprise Group Ralph LaRossa Chair, President & CEO
Slide 4: 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 5: GAAP Disclaimer
GAAP Disclaimer PSEG presents Operating Earnings in addition to its Net Income/(Loss) 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/(Loss). Non-GAAP Operating Earnings
Slide 6: PSEG 2023: Increased Strategic Clarity
PSEG 2023: Increased Strategic Clarity * Renamed from “Carbon-Free, Infrastructure and Other, CFIO” to “PSEG Power & Other”. Includes PSEG Nuclear, Gas Operations, PSEG Long Island, Offshore wind investments, potential Hydrogen investments, Parent and other. PSE&G PSEG Power & Other* Regulated Opera
Slide 7: PSEG's Powering Progress Vision
Operational Excellence: Best-in-class utility and strong nuclear performance Financial Strength: Solid balance sheet to fund our growth objectives No new equity required to support 5-year capital plan Solid investment grade ratings supported by credit metrics that allow for incremental investment PT
Slide 8: More Predictability from an Improved Business Profile
Exited Merchant Fossil Generation Exiting Offshore Wind Generation Decision to Retain Nuclear Assets Approval of Pension Accounting Filing PSE&G Transmission Formula Rate PSE&G Conservation Incentive Program PSE&G’s Robust Capital Program PSEG Financial Strength PSEG Compelling Risk-Adjusted Return
Slide 9: PSEG 2023: Growth Opportunities Aligned with Clean Energy Policies
PSEG 2023: Growth Opportunities Aligned with Clean Energy Policies Significant events (i.e., the Northeast Blackout of 2003 and Superstorm Sandy) have driven policy changes and led to investment opportunities Future investment will address growing demand for electrification and need for an even more
Slide 10: PSEG 2023: Key Assets and Leadership
PSEG 2023: Key Assets and Leadership PSE&G – Best-in-Class Regulated Electric & Gas T&D Utility Top decile safety performance Most Reliable Electric Utility in Mid-Atlantic Metropolitan Service Area for 21 consecutive years #1 in Customer Satisfaction with both Residential Electric and Natural Gas S
Slide 11: PSEG 2023: Financial Strength to Achieve Strategic Plan
PSEG 2023: Financial Strength to Achieve Strategic Plan Re-Affirming Long-Term Growth Outlook of 5%-7% for 2023-2027 Primary contributor is PSE&G’s 5%-7% Net Income growth rate over this 5-year period Nuclear revenues at PTC threshold level offer stability that supports long-term growth outlook Addr
Slide 12: Delivering Highest Customer Reliability at Lowest Cost
Delivering Highest Customer Reliability at Lowest Cost: Achieving low SAIDI outage scores with Lowest Distribution O&M spend Lowest Cost, but More Leaks/Mile than Peers: Age of cast iron system drives need for GSMP program Achieving Highest Customer Satisfaction at Lowest Cost: For Overall Customer
Slide 13: Compelling Value for Our Customers: Lower Leaks
PSEG Provides Compelling Value for Our Customers We continuously target top quartile performance to deliver better service to our customers, at lower cost Lower Cost Lower Leaks Delivering Highest Customer Reliability at Lowest Cost: Achieving low SAIDI outage scores with Lowest Distribution O&M spe
Slide 14: Compelling Value for Our Customers: Higher Satisfaction
PSEG Provides Compelling Value for Our Customers We continuously target top quartile performance to deliver better service to our customers, at lower cost Higher Satisfaction Lower Cost Delivering Highest Customer Reliability at Lowest Cost: Achieving low SAIDI outage scores with Lowest Distribution
Slide 15: Compelling Value for Our Customers: Lower Cost
PSEG Provides Compelling Value for Our Customers We continuously target top quartile performance to deliver better service to our customers, at lower cost Lower Cost Delivering Highest Customer Reliability at Lowest Cost: Achieving low SAIDI outage scores with Lowest Distribution O&M spend Lowest Co
Slide 16: Compelling Value for Our Communities
PSEG Provides a Compelling Value for Our Communities Corporate Citizenship & Economic Development Recognized as One of America’s Most Responsible Companies (Newsweek 2023) Choose NJ – Chair of leading NJ economic development group Clean Energy Jobs Program – On track for 2,000 hires from diverse com
Slide 17: Compelling Careers for Our Employees
PSEG Provides Compelling Careers for Our Employees PSEG 12,500 Employees Strong union partnerships with our six unions and the ~7,700 employees they represent, negotiating agreements in advance of 2023 contract expirations In the year of a war for talent - our voluntary turnover rate excluding retir
Slide 18: Compelling Value for the Environment
PSEG Provides a Compelling Value for the Environment Environmental Targets Carbon-free generation and net-zero for operations (Scope 1 and 2 emissions) by 2030 Methane emissions – 22% reduction from 2018 through GSMP Energy Efficiency – PSE&G on path to achieve EE savings targets established by the
Slide 19: PSEG Sustainability and ESG Summary
PSEG Sustainability and ESG Summary $3.00 -$3.05 $0.40 -$0.45 *These reports and disclosures should not be deemed incorporated into or part of these slides. Scope 1 are direct emissions from power generation, vehicle fleets and methane, SF6 and refrigerant leaks; Scope 2 are indirect emissions from
Slide 20: Long-term Growth Outlook Driven by PSE&G's Regulated Earnings
PSEG’s Long-term Growth Outlook Driven by PSE&G’s Regulated Earnings $3.40 to $3.50 PSE&G PSEG Power & Other 2023 – 2027 CAGR 5% – 7% $3.00 -$3.05 $0.40 -$0.45 Continuing on Path of Increasing Predictability Re-affirming PSEG’s 2023 non-GAAP Operating EPS guidance to a narrowed $0.10 range of $3.40
Slide 21: PSEG Provides Compelling Value for Our Investors
PSEG Provides a Compelling Value for Our Investors We intend to continue improving our relative valuation through a better business mix and visible earnings growth: Regulated investment opportunities in decarbonization of NJ economy and electrification of transportation and buildings Broader opportu
Slide 22: Meeting Takeaways: Strong Business Mix and Platform for Predictable Growth
Meeting Takeaways: A Strong Business Mix and Platform for Predictable Growth 5%-7% long-term earnings growth rate for 2023-2027 driven by PSE&G rate base growth and PTC threshold for Nuclear Best-in-class, customer-centric regulated Utility with robust 5-year capex of $15.5B–$18B Focused on infrastr
Slide 23: Public Service Electric & Gas
Public Service Electric & Gas Kim Hanemann President & COO Dave Johnson VP Customer Care & Chief Customer Officer Scott Jennings SVP Finance, Planning & Strategy
Slide 24: PSE&G Best-in-Class Operations
PSE&G Best-in-Class Operations Safety and Reliability Affordability Customer Satisfaction Compelling Capital Investment Program 5-year capital program 10-year capital program Review of key opportunities through each area: Transmission, Electric Distribution, Gas Distribution, and Clean Energy Increm
Slide 25: PSE&G's Robust Capital Program
PSE&G’s Robust Capital Program Executing ~$3.5B capital program in 2023 on schedule and on budget Additional investment opportunities: CEF-EE extension and GSMP III filings pending Long runway of system investments, decarbonization and electrification opportunities PSE&G Transmission Formula Rate Du
Slide 26: PSE&G – A Single State, Dual Jurisdiction Utility
PSE&G – A Single State, Dual Jurisdiction Utility *Annual customer growth uses 2017 as base year. **Gas Firm sales only. *** Excludes CWIP. Year-end CWIP 2022 balance was ~$1.3B. Electric and Gas Distribution Utility Provider of Energy Efficiency and Renewable Energy Programs As of YE 2022 Electric
Slide 27: Top-Tier Safety and Reliability Performance Metrics
Top-Tier Safety and Reliability Performance Metrics Driven by Nonstop Focus on Continuous Improvement Open Leaks, OSHA and SAIDI compared to their respective national panels. Better Top decile performance in OSHA recordable incidence Sustained top decile performance in electric reliability results O
Slide 28: Residential Electric and Gas Bills vs Regional Peers
Monthly Gas Bills PSE&G’s Residential Electric Bills Are Lower than Regional Average and Gas Bills Are the Lowest Among Regional Peers Based upon a calculation of monthly bills for an electric customer using 500 kilowatt-hours using rates as of December 1, 2022 and a gas customer using 100 therms us
Slide 29: Combined Bills Under 3% of Median NJ Income
PSE&G Combined Bills Under 3% of Median NJ Income, Favorable “Share of Wallet” vs. Lower-Cost Regions (1) Based on a typical residential electric customer using 740 kilowatt-hours per summer month and 6,920 kilowatt-hours on an annual basis using rates as of June 1 for each year and a typical reside
Slide 30: PSE&G Recognized for Excellence
PSE&G was honored on numerous fronts for best-in-class operations 2022 PSE&G ranked #1 in Customer Satisfaction with both Residential Electric and Natural Gas Service in the East among Large Utilities by J.D. Power* 2022 PA Consulting ReliabilityOne® Award for Outstanding Reliability Performance in
Slide 31: 5-Year Capital Investment Plan of $15.5B-$18B
PSE&G's 5-Year Capital Investment Plan of $15.5B-$18B is Driven by System Modernization and NJ's Decarbonization and Energy Policy Goals Includes AFUDC. CEF-EC/AMI is included in Electric LDC. *The low end of the range includes extensions of GSMP and CEF-EE at current annual spending levels plus inf
Slide 32: 10-Year Capital Plan Focuses on System Modernization
PSE&G's 10-Year Capital Plan Focuses on System Modernization, Climate Mitigation and Adaptation Includes AFUDC. CEF-EC/AMI is included in Electric LDC. Note: The low end of the range includes extensions of GSMP and CEF-EE at current annual spending levels plus inflation. The hashed portion of the ch
Slide 33: Transmission Investment Focused on 69kV Upgrades
Transmission Investment Is Focused on 69kV Upgrades to Support Future Electrification Efforts Transitioning from large end-of-life projects to 69kV conversion/expansion and new stations to improve reliability, address aging system and load growth including future electrification efforts Lifecycle in
Slide 34: Electric Distribution Investment Focused on System Modernization
Electric Distribution Investment Is Focused on System Modernization Providing Long Runway of Investment Opportunities, Maintains Our Best-in-Class Reliability We will build on the success of programs like Energy Strong and Infrastructure Advancement Program to meet current and future needs of our cu
Slide 35: Gas Distribution Investment Focused on Infrastructure Replacement
GSMP I GSMP II GSMP III + Gas Distribution Investment Is Focused on Infrastructure Replacement that Accelerates Emission Reduction Benefits GSMP III+=Assumption GSMP III run rate continues until all eligible remaining CI/US mileage is replaced. * Methane reductions starting from 2011 when greenhouse
Slide 36: Clean Energy Future Programs
Our Award-Winning Clean Energy Future Programs Are Delivering Benefits to Customers, and Rate Base Growth ENERGY EFFICIENCY BPU approved over $1B investment in September 2020 Programs for Residential and C&I Customers including low-income, multi-family, small business and local government ENERGY CLO
Slide 37: Opportunities Linked to NJ's Accelerated Electrification Goals
Incremental to PSE&G’s 10-Year Plan Are Opportunities Linked to New Jersey’s Accelerated Electrification Goals Incremental investments to support NJ’s increasing targets to decarbonize the economy: Incremental clean energy investments (Solar, EE, EV, Battery storage) Enhanced “Last Mile” reliability
Slide 38: PSE&G's Rate Base Growth
PSE&G’s Rate Base Growth Delivers Improved Reliability, Enhanced Resiliency, Increased Customer Satisfaction, and Lower Emissions Chart excludes CWIP. Year-end 2022 CWIP balance was ~$1.3B. *The low end of the range includes extension of GSMP and CEF-EE at current annual spending levels plus inflati
Slide 39: Effective Cost Control to Preserve Customer Affordability
Effective Cost Control to Mitigate Inflation Impacts and Preserve Customer Affordability Keeps O&M CAGR ~1% (1) Excludes certain regulatory balance account items. Demonstrated ability to control O&M 2023 cost reductions more than offset inflation and partially addresses the impact of Pension and OPE
Slide 40: Dual Jurisdiction Regulation and Cost Recovery Mechanisms
PSE&G Dual Jurisdiction Regulation Provides for a Mixture of Investment and Cost Recovery Mechanisms Transmission Federal Regulatory Entity: Federal Energy Regulatory Commission (FERC) Annual Formula Rate filing provides for contemporaneous recovery with forward-looking test year Current Transmissio
Slide 41: Key Takeaways: Best-in-Class Operations
Key Takeaways: Best-in-Class Operations with Important System Investment Needs Driving a Predictable Earnings Growth Platform Operational Excellence: Delivering top-tier safety, reliability and customer service, while maintaining customer bill affordability Financial Strength: Strong track record of
Slide 42: PSEG Power & Other
PSEG Power & Other Eric Carr President & Chief Nuclear Officer Lathrop Craig SVP & Chief Commercial Officer Charles McFeaters SVP Nuclear Operations
Slide 43: PSEG Power & Other
PSEG Power & Other A more stable, predictable business that generates significant free cash flow to support PSEG’s investment program PSEG Power & Other PSEG Nuclear Gas Operations Other Operates Salem 1 & 2 and Hope Creek 50% owner of Peach Bottom 2 & 3 Total 3,766 MW Opportunities for growth Serve
Slide 44: PSEG Power & Other: More Predictability
PSEG Power & Other: More Predictability from an Improved Business Profile Exited Merchant Fossil Generation Eliminates market exposure and risk Exiting Offshore Wind Generation Eliminates large project risk Decision to Retain Nuclear Assets PTC provides nuclear assets with downside price protection
Slide 45: Decision to Retain Nuclear Units
Decision to Retain Nuclear Units Clarified with Passage of the IRA, and Anticipated Start of PTC in 2024 PSEG Decision to Retain Nuclear Based on Several Drivers Key Strategic Drivers: Unique asset class of existing, low-cost, carbon-free, 24x7 base load generation, providing reliable energy integra
Slide 46: PSEG Nuclear — Key Fleet Data
* Both Peach Bottom units have received subsequent license renewals for an additional 20 years from the NRC. However, the NRC is revisiting the environmental review and the license expiration dates were reverted back to 2033 and 2034 pending this review. PSEG Nuclear — Key Fleet Data 100% PSEG owner
Slide 47: PSEG Nuclear Fleet Demonstrates Strong Performance
PSEG Nuclear Fleet Demonstrates Strong Performance PSEG Nuclear is one of the top operators in the industry The index is a composite of 10 INPO indicators related to safety and production performance INPO Performance Indicator Index PSEG NJ Nuclear - January 2023 Predictable generation through focus
Slide 48: Nuclear Is Critical to the Energy Transition
Nuclear Is Critical to the Energy Transition Nuclear is a unique asset class providing reliable 24x7, carbon-free energy and price stabilization PSEG Nuclear provides ~40% of New Jersey’s energy and ~85% of New Jersey’s clean energy New Jersey’s energy goals can only be met through preserving our nu
Slide 49: Nuclear Fuel Costs Consistent and Predictable
*PSEG procures nuclear fuel for Hope Creek, Salem 1 and Salem 2. Nuclear Fuel Costs Have Been Consistent and Are Predictable over the Five-Year Plan Period PSEG procures no nuclear fuel from Russian sources* Nuclear fuel is contracted years in advance, with costs amortized as fuel is used, increasin
Slide 50: Salem Capacity Uprate
PSEG Nuclear Has Compelling Growth Opportunities: Salem Capacity Uprate ~45-60 MW PSEG-share (4%-5%) thermal increase targeted Lowers $/MWh generating cost (same O&M, more MWh) Targeting in service in 2027-2029 Low-cost investment — Capital is ~$100M PSEG-share for upgrades on the secondary side of
Slide 51: Additional PSEG Nuclear Growth Opportunities
*Amounts reflect 2023 dollars. Additional PSEG Nuclear Growth Opportunities Transition from 18-month to 24-month Refueling Cycles An extended fuel cycle eliminates refueling outages over the life of the plant, reducing O&M by eliminating one refueling outage every 6 years (~$50M O&M) and increasing
Slide 52: Hydrogen Opportunities
Hydrogen Opportunities Federal Government Created Programs to Incentivize the Development of a Hydrogen Economy to Drive Decarbonization Efforts Toward Some of the Hardest Sectors to Abate Infrastructure Investment and Jobs Act, 2021 — Up to $8 billion to be awarded to at least 4 hydrogen hubs acros
Slide 53: PSEG Power & Other — Other Businesses
PSEG Power & Other — Other Businesses Gas Operations — the Next Largest Component of PSEG Power & Other Broad portfolio of pipeline and storage contracts providing access to low-cost gas and optionality Serves Basic Gas Supply Service (BGSS) to PSE&G customers Multiple value streams from gas commodi
Slide 54: Key Takeaways: Increasing Predictability
Key Takeaways: Increasing Predictability Operational Excellence: Solid nuclear operations with exemplary ratings on all units, gas operations benefiting PSE&G customers, and PSEG Long Island Financial Strength: Nuclear long-term price stability through PTC threshold into the next decade Nuclear oper
Slide 55: Financial Review & Outlook
Financial Review & Outlook Dan Cregg Executive Vice President & CFO
Slide 56: PSEG Financial Outlook: More Predictability
PSEG Financial Outlook: More Predictability from an Improved Business Profile Well Positioned for the Future Exited Merchant Fossil Generation Eliminates market price volatility on earnings, proceeds used to pay down debt, return capital to shareholders Exiting Offshore Wind Generation Proceeds from
Slide 57: Long-term Growth Outlook Driven by PSE&G's Regulated Earnings
PSEG’s Long-term Growth Outlook Driven by PSE&G’s Regulated Earnings Continuing on Path of Increasing Predictability ~85%-90% of PSEG’s non-GAAP operating earnings are from PSE&G >90% of capital program allocated to PSE&G Execution of robust capital plan Growth CAGR reflects Nuclear at PTC threshold
Slide 58: PSE&G's Earnings Driven by Capital Investment Program
PSE&G’s Earnings Are Driven by Robust Capital Investment Program $3.00 -$3.05 $0.40 -$0.45 Earnings Drivers: Capital spending plan of $15.5B-$18B over 2023-2027 drives outlook for annual rate base growth of 6%-7.5% over the 5-year period Near-contemporaneous regulatory recovery of and on investment
Slide 59: Nuclear PTC Adds Stability and Visibility to PSEG Power & Other
At the PTC threshold, average annual nuclear EBITDA is estimated in the range of ~$500M in 2024, growing to ~$600M in 2027, as PTC adjusts annually for inflation after 2024 Remaining components of PSEG Power & Other expected to generate average annual EBITDA estimated at ~$225M over the same period
Slide 60: PSEG Power & Other Provides Significant Cash Flow
PSEG Power & Other Provides Significant Cash Flow, Including Nuclear PTC Starting in 2024 LI & Other Gas Ops Collateral rolls off as hedges satisfied, or as market prices decline (2022 YE balance of $1.5B) Other EBITDA Capital Free Cash Flow Annual capital spend ~$150M, consisting of primarily Nucle
Slide 61: No New Equity Needed through 2027
PSE&G Cash Ops (1) Incremental PSE&G Debt PSE&G Dividend to Parent PSE&G Capital Expenditures PSEG Power & Other FCF Incremental PSEG Power & Other LTD PSEG Shareholder Dividend Short Term Debt/Loans Dividend from PS&EG PSE&G PSEG Power & Other PSEG Consolidated No New Equity Needed through 2027 to
Slide 62: Business Profile Supports Solid BBB Credit Ratings
FFO/Debt is an internal estimate of a non-GAAP measure. FFO reflects cash from operations excluding working capital and adjusts for certain items including taxes on asset sales, cost of removal and energy efficiency investments. Debt consists of long-term debt, short-term debt and other imputed debt
Slide 63: 2023 Indicative Annual Dividend Increase
*Indicative annual 2023 PSEG common dividend rates per share. **Payout Ratios reflect the dividend rate divided by non-GAAP Operating Earnings. 2023E Payout Ratio reflects the indicative annual dividend rate divided by the mid-point of non-GAAP Operating Earnings guidance of $3.40-$3.50 per share. S
Slide 64: Meeting Takeaways: Strong Business Mix and Platform for Growth
Meeting Takeaways: A Strong Business Mix and Platform for Predictable Growth 5%-7% long-term earnings growth rate for 2023-2027 driven by PSE&G rate base growth and PTC threshold for Nuclear Best-in-class, customer-centric regulated Utility with robust 5-year capex of $15.5B–$18B Focused on infrastr
Slide 65: Appendix
@ PSEG Appendix
Slide 66: PSE&G Capital Spending Detail
PSE&G Capital Spending Detail $3.00 -$3.05 $0.40 -$0.45 $ Millions 2023E 2024E 2025E 2026E 2027E Total ’23E-’27E Transmission $725 $490 – $570 $545 – $635 $500 – $580 $440 – $530 $2,700 – $3,040 Electric $1,270 $960 – $1,120 $840 – $980 $1,015 – $1,180 $1,140 – $1,375 $5,225 – $5,925 Gas $1,140 $925
Slide 67: PSEG Has Demonstrated Success in Controlling O&M
(1) Excludes Nuclear ARO, early retirement of Hudson/Mercer coal plants, Bethlehem Energy Center goodwill write-off, write-offs related to Strategic Alternatives and certain regulatory balance account and pass-through items. Excludes PSEG Fossil and PSEG Power Ventures as of 2022. PSEG has Demonstra
Slide 68: Compelling Value for Our Customers
PSEG Provides Compelling Value for Our Customers We continuously target top quartile performance to deliver better service, at lower cost. Lowest Cost, but More Leaks/Mile than Peers: Age of cast iron system drives need for GSMP program Delivering Highest Customer Reliability at Lowest Cost: Achievi
Slide 69: Speaker Profiles
@ PSEG Speaker Profiles
Slide 70: Today's Speakers
Today’s Speakers: Link to bio page Ralph LaRossa Chair, President & CEO PSEG Overview Dan Cregg EVP & Chief Financial Officer PSEG Financial Review & Outlook Kim Hanemann President, PSE&G & Chief Operating Officer PSE&G Update Eric Carr President & Chief Nuclear Officer PSEG Power & Other Update Lat
Slide 71: Glossary of Terms/ Reconciliation
Glossary of Terms/ Reconciliation
Slide 72: Glossary of Terms
Glossary of Terms PSEG Investor Relations 80 Park Plaza Newark NJ 07102 PSEG-IR-GeneralInquiry@pseg.com Link to PSEG Investor Relations Website Link to PSEG ESG Webpages A&GAdministrative & General AFUDCAllowance for Funds Used During Construction AMIAutomated Metering Infrastructure BGSSBasic Gas S
Slide 73: Reconciliation of Non-GAAP Operating Earnings
Reconciliation of Non-GAAP Operating Earnings Effective January 1, 2018, unrealized gains (losses) on equity securities are recorded in Net Income (Loss) instead of Other Comprehensive Income (Loss). Includes the financial impact from positions with forward delivery months. Full year 2022 includes t
Slide 74: Thank you
Thank you
Public Service Enterprise Group — Investor Day (March 2023) on 6ix