Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — Investor Presentation (March 2023)
60 slides from Public Service Enterprise's investor presentation, March 2023
Slide 1: PSEG Investor Update
PSEG Investor Update Leading toward a sustainable future March 2023 1
Slide 2: Forward-Looking Statements
PSEG | Investor Conference 2023 Forward-Looking Statements Certain of the matters discussed in this presentation about our and our subsidiaries’ future • our ability to obtain adequate nuclear fuel supply; performance, including, without limitation, future revenues, earnings, strategies, prospects,
Slide 3: GAAP Disclaimer
PSEG | Investor Conference 2023 GAAP Disclaimer PSEG presents Operating Earnings in addition to its Net Income/(Loss) reported in PSEG also includes forward-looking estimates of non-GAAP Operating Earnings, non- accordance with accounting principles generally accepted in the United States (GAAP). GA
Slide 4: Public Service Enterprise Group
Public Service Enterprise Group Ralph LaRossa Chair, President & CEO
Slide 5: 2023: Increased Strategic Clarity
PSEG | Investor Conference 2023 PSEG 2023: Increased Strategic Clarity PSE&G • Regulated Operations Represent ~85-90% of PSEG’s non-GAAP Operating Earnings Over Next 5 Years NJ’s Largest T&D Utility: 2.3 Million Electric and 1.9 Million Gas Customers PSEG PSEG Power & Other* • PSEG Will Retain Nucle
Slide 6: PSEG's Powering Progress Vision
PSEG | Investor Conference 2023 PSEG’s Powering Progress Vision: Powering a future where people use less energy, and it’s cleaner, safer and delivered more reliably than ever • Operational Excellence: Best-in-class utility • Disciplined Investment: >90% of capital allocation and strong nuclear perfo
Slide 7: Financial Outlook: More Predictability from an Improved Business Profile
PSEG | Investor Conference 2023 PSEG Financial Outlook: More Predictability from an Improved Business Profile Well Positioned for the Future Eliminates market price volatility on earnings, proceeds used to pay down debt, Exited Merchant Fossil Generation return capital to shareholders Proceeds f
Slide 8: 2023: Growth Opportunities Aligned with Clean Energy Policies
PSEG | Investor Conference 2023 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 electrifi
Slide 9: 2023: Key Assets and Leadership
PSEG | Investor Conference 2023 PSEG 2023: Key Assets and Leadership PSE&G – Best-in-Class Regulated Electric & Gas T&D Utility PSEG Power & Other • Top decile safety performance • Solid nuclear operations with exemplary ratings on all units, gas operations benefiting PSE&G customers, and PSEG Long
Slide 10: 2023: Financial Strength to Achieve Strategic Plan
PSEG | Investor Conference 2023 PSEG 2023: Financial Strength to Achieve Strategic Plan Re-Affirmed 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 sup
Slide 11: Provides Compelling Value for Our Customers
PSEG | Investor Conference 2023 PSEG Provides Compelling Value for Our Customers We continuously target top quartile performance to deliver better service, at lower cost. Delivering Highest Customer Reliability at Lowest Cost: Achieving Lowest Cost, but More Leaks/Mile than Peers: Age of cast iron s
Slide 12: Provides Compelling Value for Our Communities
PSEG | Investor Conference 2023 PSEG Provides a Compelling Value for Our Communities Corporate Citizenship & Economic Development NJ Spend ~$2.1B • Recognized as One of America’s Most Responsible ~$1.7B ~$1.8B Substantial Companies (Newsweek 2023) investment in NJ economy • Choose NJ – Chair of lead
Slide 13: Provides Compelling Careers for Our Employees
PSEG | Investor Conference 2023 PSEG Provides Compelling Careers for 2022 DEI Our Employees Recognitions PSEG 12,500 Employees • America’s Best Employers for Diversity • Strong union partnerships with our six unions and the ~7,700 employees • America’s Best Large Employers they represent, negotiatin
Slide 14: Provides Compelling Value for the Environment
PSEG | Investor Conference 2023 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
Slide 15: Sustainability and ESG Summary
PSEG | Investor Conference 2023 PSEG Sustainability and ESG Summary PSEG Leadership Policies & Goals Recognition & Memberships • Joined the U.N.-backed Race to Zero and • PSEG is a vocal advocate for an economy- • Named to 2023 JUST 100 list of Business Ambition for 1.5°C campaigns wide price on car
Slide 16: Provides Compelling Value for Our Investors
PSEG | Investor Conference 2023 PSEG Provides a Compelling Value for Our Investors P/E Rolling • 2nd year expectations We intend to continue improving our relative valuation through a better business mix and visible earnings growth: • Regulated investment opportunities in decarbonization of NJ econo
Slide 17: Public Service Electric & Gas
Public Service Electric & Gas
Slide 18: PSE&G – A Single State, Dual Jurisdiction Utility
PSEG | Investor Conference 2023 PSE&G – A Single State, Dual Jurisdiction Utility • Electric and Gas Distribution • Electric Transmission • Utility Provider of Energy Efficiency • Appliance Service Provider and Renewable Energy Programs As of YE 2022 Electric Gas PSE&G YE 2022 Rate Base*** Transmiss
Slide 19: Top-Tier Safety and Reliability Performance Metrics
PSEG | Investor Conference 2023 Top-Tier Safety and Reliability Performance Metrics Driven by Nonstop Focus on Continuous Improvement OSHA Recordable SAIDI Open Leaks Incidence Rate 4.0 200.0 12.0 Better Better Better 10.0 3.0 150.0 8.0 Thousands 2.0 100.0 6.0 1.11 1.16 56.1 1.04 47.3 4.0 0.85 0.83
Slide 20: PSE&G Residential Bills Lower than Regional Average
PSEG | Investor Conference 2023 PSE&G’s Residential Electric Bills Are Lower than Regional Average and Gas Bills Are the Lowest Among Regional Peers $300 $300 Monthly Electric Bills Monthly Gas Bills $268 $250 $250 $212 $207 $200 $200 $186 $190 $184 Average = $181 $180 $182 $183 $157 $144 $149 $150
Slide 21: PSE&G Combined Bills Under 3% of Median NJ Income
PSEG | Investor Conference 2023 PSE&G Combined Bills Under 3% of Median NJ Income, Favorable “ Share of Wallet” vs. Lower-Cost Regions PSE&G Electric & Gas Combined Bills(1) % of New Jersey Household Income Including Low-Income Customers After Assumed Credits Affordability of the 5.0% combined bill
Slide 22: PSE&G Recognized for Excellence
PSEG | Investor Conference 2023 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 Consulti
Slide 23: PSE&G's 5-Year Capital Investment Plan
PSEG | Investor Conference 2023 PSE&G's 5-Year Capital Investment Plan of $15.5B-$18B is Driven by System Modernization and NJ's Decarbonization and Energy Policy Goals PSE&G Capital Spending 2023E – 2027E 4 3 ($ Billions) 2 1 0 2023E 2024E 2025E 2026E 2027E Transmission Electric Distribution Gas Di
Slide 24: PSE&G's 10-Year Capital Plan
PSEG | Investor Conference 2023 PSE&G's 10-Year Capital Plan Focuses on System Modernization, Climate Mitigation and Adaptation PSE&G’s Capital Spending Program Investment in the 10-year Period Primarily Driven by: 2023E-2032E Range $34B-$40B • Transmission: 69kV upgrades to support future electrifi
Slide 25: Transmission Investment Focused on 69kV Upgrades
PSEG | Investor Conference 2023 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 el
Slide 26: Electric Distribution Investment Focused on System Modernization
PSEG | Investor Conference 2023 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 cu
Slide 27: Gas Distribution Investment Focused on Infrastructure Replacement
PSEG | Investor Conference 2023 Gas Distribution Investment Is Focused on Infrastructure Replacement that Accelerates Emission Reduction Benefits Impact of GSMP on Methane Reduction*, Mileage of CI/US Inventory Remaining 0% 0% -4% -8% 6,000 5,259 -16% -20% 5,077 GSMP main replacement unprotected ste
Slide 28: Clean Energy Future Programs
PSEG | Investor Conference 2023 Our Award-Winning Clean Energy Future Programs Are Delivering Benefits to Customers, and Rate Base Growth ENERGY EFFICIENCY ENERGY CLOUD “AMI” ELECTRIC VEHICLES BPU approved over $1B investment in BPU approved $707M investment* in BPU approved $166M investment in Sept
Slide 29: Opportunities Linked to NJ's Accelerated Electrification Goals
PSEG | Investor Conference 2023 Incremental to PSE&G’s 10-Year Plan Are Opportunities Linked to New Jersey’s Accelerated Electrification Goals Governor Murphy’s February 2023 Incremental investments to support NJ’s Executive Orders increasing targets to decarbonize the economy: • 100% clean energy b
Slide 30: PSE&G's Rate Base Growth
PSEG | Investor Conference 2023 PSE&G’s Rate Base Growth Delivers Improved Reliability, Enhanced Resiliency, Increased Customer Satisfaction, and Lower Emissions PSE&G Year-End Rate Base 60 Strong pipeline of opportunities will allow 50 for continued rate base 2022YE - 2027YE growth comparable to CA
Slide 31: Effective Cost Control Keeps O&M CAGR ~1%
PSEG | Investor Conference 2023 Effective Cost Control to Mitigate Inflation Impacts and Preserve Customer Affordability Keeps O&M CAGR ~1% PSE&G O&M Expense (1) • Demonstrated ability to control O&M 1,500 • 2023 cost reductions more than offset inflation and partially addresses the impact of Pensio
Slide 32: PSE&G Dual Jurisdiction Regulation
PSEG | Investor Conference 2023 PSE&G Dual Jurisdiction Distribution Regulation Provides for a • State Regulatory Entity: NJ Board of Public Utilities Mixture of Investment and • Timely recovery of investment programs: Cost Recovery Mechanisms - - Contemporaneous recovery of EE and Solar programs Cl
Slide 33: Key Takeaways: Best-in-Class Operations
PSEG | Investor Conference 2023 Key Takeaways: Best-in-Class Operations with Important System Investment Needs Driving a Predictable Earnings Growth Platform Operational Excellence: Delivering top-tier safety, Disciplined Investment: Programs driven by reliability and customer service, while maintai
Slide 34: PSEG Power & Other
PSEG Power & Other
Slide 35: PSEG Power & Other
PSEG | Investor Conference 2023 PSEG Nuclear • Operates Salem 1 & 2 and Hope Creek PSEG Power • • • 50% owner of Peach Bottom 2 & 3 Total 3,766 MW Opportunities for growth & Other PSEG Gas Operations A more stable, predictable business that generates significant free Power & Serves BGSS contract wit
Slide 36: Decision to Retain Nuclear Based on Several Drivers
PSEG | Investor Conference 2023 PSEG Decision to Retain Nuclear Based on Several Drivers Decision to Retain Nuclear Units Clarified with Passage of the IRA, and Anticipated Start of PTC in 2024 Key Strategic Drivers: • Unique asset class of existing, low-cost, carbon-free, 24x7 base load generation,
Slide 37: Nuclear — Key Fleet Data
PSEG | Investor Conference 2023 PSEG Nuclear — Key Fleet Data 2022 Fleet Average Capacity Factor 92.2% • 57% PSEG ownership • 50% PSEG ownership • 659 MW owned capacity • 637.5 MW owned capacity • Current license expires 2036 • Current license expires 2053* • 18-month operating cycle • 24-month oper
Slide 38: Nuclear Fleet Demonstrates Strong Performance
PSEG | Investor Conference 2023 PSEG Nuclear Fleet Demonstrates Strong Performance INPO Performance Indicator Index INPO Equipment Performance Index PSEG NJ Nuclear - January 2023 PSEG NJ Nuclear - January 2023 100.0 PSEG Nuclear 100 PSEG 92.7 92.3 Nuclear 91.6 99.8 99.6 90.0 99.2 85.6 96.3 85.0 96
Slide 39: Nuclear Is Critical to the Energy Transition
PSEG | Investor Conference 2023 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 NJ Electric Generation New Jersey’s clean energy by Fuel Sour
Slide 40: Nuclear Fuel Costs Consistent and Predictable
PSEG | Investor Conference 2023 Nuclear Fuel Costs Have Been Consistent and Are Predictable over the Five-Year Plan Period Nuclear Fuel Amortization 7 • PSEG procures no nuclear fuel from Russian sources* 6 • Nuclear fuel is contracted years in advance, 5 with costs amortized as fuel is used, increa
Slide 41: Nuclear Growth Opportunities: Salem Capacity Uprate
PSEG | Investor Conference 2023 Simplified Drawing of Secondary Plant 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 in
Slide 42: Additional PSEG Nuclear Growth Opportunities
PSEG | Investor Conference 2023 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 increasi
Slide 43: Hydrogen Opportunities
PSEG | Investor Conference 2023 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
Slide 44: Power & Other — Other Businesses
PSEG | Investor Conference 2023 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 • M
Slide 45: Key Takeaways: Increasing Predictability
PSEG | Investor Conference 2023 Key Takeaways: Increasing Predictability • Operational Excellence: Solid nuclear operations with • Disciplined Investment: exemplary ratings on all units, gas operations benefiting - The PTC is a game-changer, providing LT price stability, PSE&G customers, and PSEG Lo
Slide 46: Financial Review & Outlook
Financial Review & Outlook Dan Cregg Executive Vice President & CFO
Slide 47: Long-term Growth Outlook Driven by PSE&G Regulated Earnings
PSEG | Investor Conference 2023 PSEG’s Long-term Growth Outlook Driven by PSE&G’s Regulated Earnings Non-GAAP Operating Earnings Continuing on Path of Increasing Predictability $3.40 to $3.50 • ~85%-90% of PSEG’s non-GAAP operating earnings PSEG Power are from PSE&G $0.40 -$0.45 & Other • >90% of ca
Slide 48: Nuclear PTC Adds Stability and Visibility
PSEG | Investor Conference 2023 Starting in 2024, Nuclear PTC Adds Stability and Visibility to PSEG Power & Other Illustrative Drivers of PSEG Power & Other Illustrative EBITDA Contributions for PSEG Power & Other + • At the PTC threshold, average annual nuclear EBITDA is estimated in the range of ~
Slide 49: Power & Other Provides Significant Cash Flow
PSEG | Investor Conference 2023 PSEG Power & Other Provides Significant Cash Flow, Including Nuclear PTC Starting in 2024 2023E – 2027E PSEG Power & Other Cash Flow Collateral rolls off as hedges satisfied, or as market prices decline Return of (2022 YE balance of $1.5B) Collateral & OSW Proceeds Fr
Slide 50: No New Equity Needed through 2027
PSEG | Investor Conference 2023 No New Equity Needed through 2027 to Fund PSE&G Capital Program 2023E – 2027E PSEG Sources and Uses of Cash PSEG Consolidated Funding PSE&G Growth PSE&G • Internally generated PSE&G cash flow • Incremental PSE&G debt • PSEG Power & Other enables PSE&G to PSE&G retain
Slide 51: Solid BBB Credit Ratings and Debt Capacity
PSEG | Investor Conference 2023 Our Business Profile Supports Solid BBB Credit Ratings and Meaningful Debt Capacity PSEG Projected Average FFO/Debt (1) Debt Capacity (2023E-2027E) 20% $3.0 Financial flexibility utilized to fund planned investments, Projected Average with meaningful debt $ Billions 1
Slide 52: 2023 Indicative Annual Dividend Increase
PSEG | Investor Conference 2023 PSEG’s 2023 Indicative Annual Dividend Increase Supported by Predictable Earnings Annual PSEG Dividend per Share $2.28* • Opportunity for consistent and $2.16 sustainable dividend growth $2.04 $1.96 • Dividend coverage by PSE&G $1.88 earnings exceeds 130% $1.80 $1.72
Slide 53: Meeting Takeaways: A Strong Business Mix and Platform
PSEG | Investor Conference 2023 Meeting Takeaways: A Strong Business Mix and Platform for Predictable Growth • 5%-7% long-term earnings growth rate for 2023-2027 driven by • Retaining Nuclear fleet with PTC stabilized, predictable cash PSE&G rate base growth and PTC threshold for Nuclear flows and m
Slide 54: Appendix
# PSEG Appendix
Slide 55: PSE&G Capital Spending Detail
PSEG | Investor Conference 2023 PSE&G Capital Spending Detail $ 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 $1,14
Slide 56: PSEG O&M Expense
PSEG | Investor Conference 2023 PSEG has Demonstrated Success in Controlling O&M, Keeping CAGR ~(3%) PSEG O&M Expense (1) 2,500 2,000 ($ Millions) 1,500 1,000 500 -0 2018 2019 2020 2021 2022 2023E PSEG Power CFIO/PSEG Power & Other Distribution Transmission Other (1) Excludes Nuclear ARO, early reti
Slide 57: Glossary of Terms / Reconciliation
Glossary of Terms/ Reconciliation
Slide 58: Glossary of Terms
PSEG | Investor Conference 2023 Glossary of Terms A&G Administrative & General EPS Earnings Per Share P/E Price to Earnings Ratio AFUDC Allowance for Funds Used During Construction ESG Environmental, Social and Governance PJM Pennsylvania Jersey Maryland AMI Automated Metering Infrastructure EV Elec
Slide 59: Reconciliation of Non-GAAP Operating Earnings
PSEG | Investor Conference 2023 Reconciliation of Non-GAAP Operating Earnings Public Service Enterprise Group Incorporated - Consolidated Operating Earnings (non-GAAP) Reconciliation Year Ended December 31, a) Effective January 1, 2018, unrealized gains (losses) on equity securities Reconciling Item
Slide 60: Thank you
Thank you
Public Service Enterprise Group — Investor Presentation (March 2023) on 6ix