Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — 2022 EEI Financial Conference
40 slides from Public Service Enterprise's conference presentation, Nov 13, 2022
Slide 1: Public Service Enterprise Group November 2022 Investor Update
Public Service Enterprise Group November 2022 Investor Update NYSE TICKER: 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 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 4: PSEG's Vision
PSEG’s Vision: To power a future where people use less energy, and it’s cleaner, safer and delivered more reliably than ever. 4
Slide 5: Continuation of regulated and contracted mindset with focus on predictability
PSEG: Continuation of regulated and contracted mindset with focus on increasing predictability of results PSEG 2022: 90% regulated business mix from stable, predictable operations of PSE&G and 10% from CFIO(1) Addressing long-term nuclear opportunity, offshore wind investments and near-term pens
Slide 6: PSEG Sustainability and ESG Summary
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-wide • MSCI raised PSEG’s corporate ESG rating to its Business Ambition for 1.5°C campaigns price on carbon and preservat
Slide 7: PSE&G – a best-in-class regulated utility and New Jersey's largest
PSE&G – a best-in-class regulated utility and New Jersey’s largest: Electric and gas distribution utility Transmission business Utility provider of energy efficiency Appliance service provider and renewable energy programs Electric Gas PSE&G YE 2021 Rate Base*** Number of Customers 2.3 Milli
Slide 8: Powering Progress investments aligned with New Jersey's energy policy goals
PSEG is focused on advancing Powering Progress investments aligned with New Jersey’s energy policy goals Past Programs (2009-present) New Jersey Energy Policies Ongoing & Opportunities • Transmission Expansion • 2021 Successor Solar Framework • Infrastructure Advancement Program • Last Mile Reliabil
Slide 9: PSE&G's planned investments align with NJ's clean energy goals
PSE&G’s planned investments align with NJ’s clean energy goals PSEG’s Capital Spending Program Aligns with PSEG’s Net-Zero 2030 Goal PSE&G Capital Spending Carbon-Free 2021 – 2025E Nuclear Other Generation 1% 3% 4,000 3,500 Clean Transmission 3,000 Unapproved Energy 23% Programs 13% Over 90% 2,500 d
Slide 10: Expanded investment program firms 6%-7.5% rate base growth
Expanded investment program firms 6% - 7.5% compound annual rate base growth from YE 2021 through 2025 PSE&G Year-End Rate Base 35,000 Unapproved 30,000 Programs 25,000 ($ Millions) 20,000 15,000 10,000 5,000 - 2021 2022E 2023E 2024E 2025E Transmission Electric Distribution Gas Distribution Clean En
Slide 11: Infrastructure Advancement Program
Infrastructure Advancement Program: 4-year investment program supporting both PSEG’s and NJ’s clean energy goals, focused on Last Mile reliability and job creation Investment Settlement Components • On June 29, BPU approved the settlement of PSE&G’s Electric Reliability focused Last Mile outside pla
Slide 12: Electric Distribution – Energy Strong program
Electric Distribution – Energy Strong program to replace and rebuild substations in flood zones has brought tremendous benefit to customers Somerville Withstood 56” of Flooding during Tropical Storm Ida, and Remained Operational • Superstorm Sandy & Hurricane Irene caused flooding at 29 substations
Slide 13: Electric Distribution – Last mile investment program
Electric Distribution – Last mile investment program is designed to modernize system and improve reliability for customers who are more dependent on the system than ever before Long runway of potential electric system modernization investments: • Targeted asset replacements – Poles, overhead equipme
Slide 14: Transmission: Investment program focused on reliability and resiliency
Transmission: Investment program focused on enhancing reliability and resiliency, and replacing aging infrastructure • 69 kV conversion effort to improve reliability and address aging system transitioning from large end-of-life projects • Load increases in certain areas, driven by electrification ef
Slide 15: Gas Distribution – Modernize infrastructure and reduce methane leaks
Gas Distribution – Investments to modernize infrastructure and drive reduction in methane leaks % Reduction of absolute methane (CH4) emissions from 2011 as reported to the EPA under 40 CFR 98, Subpart W Actual Forecast 0% PSE&G is on track to achieve its • GSMP II will replace ~875 ~22% methane red
Slide 16: Clean Energy Future programs reduce customers' energy consumption
Clean Energy Future programs focus on reducing customers’ energy consumption Energy Electric Energy Efficiency Energy Cloud “AMI” Vehicles Storage Creating clean energy $1B $707M* $166M $109M jobs for under-employed Commitment Investment Investment Investment and diverse NJ residents 3 years 4 years
Slide 17: PSE&G investments create New Jersey job growth
PSE&G investments create New Jersey job growth and support diverse recruiting efforts Infrastructure Programs: Over 1,500 current direct jobs through GSMP II and Energy Strong II, and over 350 more through IAP Clean Energy: Over 3,000 direct jobs planned, with a focus on unemployed, under-employed,
Slide 18: Investments in technology make us more efficient and reliable
Investments in technology are making us more efficient and reliable, giving customers greater access to information and programs Advanced Metering Infrastructure Providing real time information to help customers Mobile Geographic manage their usage, improving operational Information System efficienc
Slide 19: PSE&G: Achieving Strong Customer Satisfaction Scores
PSE&G: Achieving Strong Customer Satisfaction Scores J.D. Power Residential Satisfaction J.D. Power Business Satisfaction J.D. Power Electric Residential J.D. Power Gas Residential J.D. Power Electric Business J.D. Power Gas Business 1Q 2Q 1Q 1Q 806 820 826 819 727 725 742 767 770 736 743 748 759 76
Slide 20: Managing costs to mitigate inflation impacts
Managing costs to mitigate inflation impacts and preserve customer affordability PSE&G O&M Expense (1) 2017 – 2022E CAGR = ~2.2% • Demonstrated ability to control O&M, 1,400 preserving earnings and returns in a low sales growth environment 1,200 • Cost increase primarily driven by 1,000 expansion of
Slide 21: PSE&G's residential customer bills compare favorably
PSE&G’s residential customer bills compare favorably Regional gas bills lowest among peers; Regional electric bills lower than average Monthly Gas Bills Monthly Electric Bills $300 $160 $266 $136 $137 $140 $133 $134 $250 $217 $120 $201 $110 $200 $200 $190 $193 $97 $98 $103 Average = $103 Average = $
Slide 22: Typical residential combined bill relative to median income
Typical residential combined electric and gas bill relative to median income has declined from 4.5% to 2.6% since 2009 PSE&G Electric & Gas Combined Bill (1) Affordability of the % of New Jersey Household Income combined bill has Including Low-income Customers After Assumed Credits improved by over
Slide 23: Inflation Reduction Act of 2022 nuclear production tax credit
Inflation Reduction Act (IRA) of 2022 establishes a nuclear power production tax credit, expands incentives and promotes carbon-free generation IRA 2022 Provision PSEG PSE&G Enacts a nuclear power production tax credit (PTC) for existing generation PSEG qualifies for up to $15/MWh subject to adjus
Slide 24: PSEG offshore wind opportunities
PSEG offshore wind opportunities Ocean Wind Project GSOE/Skipjack Offshore Transmission • Ocean Wind 1 is a 75/25 Joint Venture • PSEG owns 50% of Garden State • In October the BPU completed its review of offshore wind between Ørsted NA and PSEG Offshore Energy (GSOE) with Ørsted NA transmission and
Slide 25: Enhanced business profile underpins solid credit ratings
Enhanced business profile underpins solid credit ratings and significant debt capacity PSEG 2022E – 2025E FFO/Debt (1) Average Debt Capacity 20% $3.0 Financial flexibility Average utilized to fund planned investments, $ Billions 2022E – 2025E 15% ~Mid-Teens with significant debt Minimum Threshold ca
Slide 26: PSEG has controlled O&M by focusing on continuous improvement
PSEG has controlled O&M by focusing on continuous improvement and eliminating support costs related to the divested assets PSEG O&M Expense (1) 2017 – 2022E CAGR = ~(1.8%) 2,500 2,000 ($ Millions) 1,500 1,000 500 - 2017 2018 2019 2020 2021 2022E PSEG Power CFIO Distribution Transmission Other (1) Ex
Slide 27: Pension is measured annually, at year-end
Pension is measured annually, at year-end, in determining pension impact for the following year PSEG does not “smooth” the year-end asset value, instead, ($ Millions) 2021 2020 we will apply our EROA assumption (7.2% for 2022) to the Fair Value of Plan Assets at year-end in determining pension Dis
Slide 28: 2022 indicative annual dividend increased $0.12 per share
2022 indicative annual dividend increased $0.12 per share, building on a 115-year history of returning cash to our shareholders PSEG Dividend per Share $2.16* $2.04 $1.96 $1.88 $1.80 Opportunity for consistent and $1.72 sustainable dividend growth - $1.64 now with a higher growth rate $1.56 $1.48 $1
Slide 29: PSEG has outpaced the industry in reducing carbon emissions intensity
PSEG has outpaced the industry in reducing carbon emissions intensity, and is getting recognized for ESG performance PSEG Generation Carbon Emissions Intensity vs. U.S. Fleet Average (2005 – 2023E) PSEG’s ESG Vital Signs: Relative Scores 1,400 PSEG's generation fleet continues to be much less PEERS
Slide 30: Sound governance and unwavering ethics
Sound governance and unwavering ethics are the foundation of our high-performing culture • Diverse Board of Directors • Effective oversight of ESG matters – New Independent Lead Director - Susan Tomasky – Sustainability & Corporate Citizenship function reports to CEO – 50% of current directors are g
Slide 31: Meeting Takeaways
Meeting Takeaways PSEG 2022: 90% regulated business mix from stable, predictable operations of PSE&G and 10% from CFIO Addressing long-term nuclear opportunity, offshore wind investments and near-term pension headwinds with goal of increasing predictability and reducing volatility in financial a
Slide 32: Appendix
x* PSEG Appendix
Slide 33: PSEG EPS Reconciliation – YTD 2022 versus YTD 2021
PSEG EPS Reconciliation – Year-to-Date 2022 versus Year-to-Date 2021 $3.20 0.10 (0.23) $2.96 $2.83 $2.80 Transmission (0.03) Renewables & Electric Gross Margin (0.83) $2.40 Energy Efficiency 0.01 Capacity (0.41) Gas Margin 0.11 Generation (0.28) $2.00 Electric Margin 0.06 Sale of Solar Source
Slide 34: PSEG – Narrowing Full Year-2022 Guidance
PSEG – Narrowing Full Year-2022 Guidance Non-GAAP Operating Earnings Guidance Prior Current $ millions (except EPS) 2022E 2022E Guidance Guidance PSE&G $1,510 - $1,560 $1,545 - $1,575 CFIO $170 - $220 $160 - $180 Operating Earnings (non-GAAP) $1,680 - $1,780 $1,705 - $1,755 Operating EPS (non-GAAP)
Slide 35: PSEG maintains a solid financial position
PSEG maintains a solid financial position PSEG Public Service Electric & Gas PSEG Senior Unsecured Credit Ratings PSE&G Senior Secured Credit Ratings Moody’s = Baa2 / Outlook = Stable S&P = BBB / Outlook = Stable Moody’s = A1 / Outlook = Stable S&P = A / Outlook = Stable PSEG 364-Day Term Loan Outst
Slide 36: Targeting PSEG's credit ratings at 'Solid' BBB
Targeting PSEG’s credit ratings at ‘Solid’ BBB Target PSEG Issuer Moody’s S&P Credit Metric Senior Unsecured Baa2 BBB FFO / Debt (1) PSEG Outlook Stable Stable ~Mid-Teens Minimum Baa2 @ 14% BBB @ 13% Threshold A1 Senior Secured Regulatory PSE&G A Equity Ratio ~55% Outlook Stable Stable Issuer Rating
Slide 37: Q3 Year-to-Date 2022 Generation Measures & Hedge Update
Q3 Year-to-Date 2022 Generation Measures & Hedge Update Nuclear Generation Nine Months ended Year ended Measures September 30 December 31 Carbon-Free Contracted Energy Sales* Oct – Dec 2022 2021 2021 2023E 2024E 2022E Capacity Factor 94.3% 93.0% 91.9% Fuel Nuclear Nuclear Nuclear Fuel Cost ($ millio
Slide 38: PSEG is transitioning to Net-Zero operations
PSEG is transitioning to Net-Zero operations, which will help enable a lower carbon, competitive New Jersey economy Reduce Scope 1 Carbon-Free Generation: PSEG will transition the generation portfolio to 100% GHG-free Maintain support for nuclear generation Increase investments in renewable gene
Slide 39: Glossary of Terms
Glossary of Terms AFUDC Allowance for Funds Used During Construction ESG Environmental, Social and Governance AMI Automated Metering Infrastructure FFO Funds from Operations ARO Asset Retirement Obligations GHG Greenhouse Gas BPU New Jersey Board of Public Utilities GSMP Gas System Modernization Pro
Slide 40: Reconciliation of Non-GAAP Operating Earnings
Reconciliation of Non-GAAP Operating Earnings Public Service Enterprise Group Incorporated - Consolidated Operating Earnings (non-GAAP) Reconciliation (a) Effective January 1, 2018, unrealized gains (losses) Nine Months Ended Year Ended on equity securities are recorded in Net Income/ Reconciling It
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