Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — Q3 2020 Earnings Presentation
38 slides from Public Service Enterprise's earnings presentation, Oct 30, 2020
Slide 1: PSEG Earnings Conference Call 3rd Quarter 2020
Public Service Enterprise Group PSEG Earnings Conference Call 3rd Quarter 2020 October 30, 2020
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 reported in accordance with accounting principles generally accepted in the United States (GAAP). Operating Earnings and Adjusted EBITDA
Slide 4: Q3 2020 Review
PSEG Q3 2020 Review Ralph Izzo Chairman, President and Chief Executive Officer
Slide 5: Q3 2020 Highlights
PSEG Q3 2020 Third Quarter Highlights Net Income per share of $1.14 in Q3 2020 vs. $0.79 in Q3 2019 Non-GAAP Operating Earnings* per share of $0.96 in Q3 2020 vs. $0.98 in Q3 2019 PSEG results on track for full-year 2020: non-GAAP Operating Earnings Guidance updated to remove $0.05 per share
Slide 6: Updating 2020 Full-Year Guidance and Adjusting Subsidiary Contribution Ranges
PSEG Updating 2020 Full-Year Guidance and Adjusting Subsidiary Contribution Ranges Raising the low end of guidance to reflect strong cost control at PSEG Power and overall results through the first three quarters Non-GAAP Operating Earnings* Contribution by Subsidiary 2019 Actual and 2020E Guidance
Slide 7: Regulatory and Policy Objectives
PSEG - Regulatory and Policy Objectives State Regulatory Proceedings NJBPU approved settlement of the CEF-EE filing on September 23, authorizing a $1 billion, 3-year program NJBPU completed first phase of EV stakeholder proceeding covering light-duty vehicles and public charging infrastructure
Slide 8: Q3 2020 Operating Company Review
PSEG Q3 2020 Operating Company Review Dan Cregg EVP and Chief Financial Officer
Slide 9: Q3 Results by Subsidiary
PSEG – Q3 Results by Subsidiary PSEG Q3 EPS Summary – Quarter ended September 30 Net Income 2020 2019 Change PSE&G $ 0.61 $ 0.68 $ (0.07) PSEG Power $ 0.51 $ 0.10 $ 0.41 PSEG Enterprise/Other $ 0.02 $ 0.01 $ 0.01 Total PSEG $ 1.14 $ 0.79 $ 0.35 Non-GAAP Operating Earnings* 2020 2019 Change PSE&G $ 0
Slide 10: EPS Reconciliation – Q3 2020 versus Q3 2019
PSEG EPS Reconciliation – Q3 2020 versus Q3 2019 $1.20 $1.14 $1.05 (0.07) $0.98 0.01 $0.96 0.04 $0.90 Lower Taxes $0.79 Transmission 0.04 Capacity 0.03 partially offset by Loss on Sale of $0.75 Electric Margin 0.01 Re-contracting & Investment Market Weather 0.01 (0.02) Weather Normalization $0.60 Vo
Slide 11: Year-to-Date Results by Subsidiary
PSEG – Year-to-Date Results by Subsidiary PSEG YTD EPS Summary – Nine Months ended September 30 Net Income/(Loss) 2020 2019 Change PSE&G $ 2.04 $ 1.92 $ 0.12 PSEG Power $ 0.87 $ 0.61 $ 0.26 PSEG Enterprise/Other $ - $ (0.06) $ 0.06 Total PSEG $ 2.91 $ 2.47 $ 0.44 Non-GAAP Operating Earnings* 2020 20
Slide 12: EPS Reconciliation – YTD 2020 versus YTD 2019
PSEG EPS Reconciliation – YTD 2020 versus YTD 2019 $3.00 $2.91 0.12 0.03 (0.01) $2.78 $2.64 $2.47 ZECs 0.10 $2.50 Loss on Sale of Investment and Transmission 0.15 Capacity (0.15) Higher Electric Margin 0.01 Re-contracting & Interest Expense Market $2.00 Gas Margin 0.06 (0.02) Weather & Weather Norma
Slide 13: PSE&G Q3 2020 Review
PSE&G Q3 2020 Review
Slide 14: PSE&G EPS Reconciliation – Q3 2020 versus Q3 2019
PSE&G EPS Reconciliation – Q3 2020 versus Q3 2019 $0.75 $0.68 0.03 (0.10) $0.61 $0.60 Transmission 0.04 Distribution O&M (0.03) Electric Margin Distribution $0.45 0.01 $ / share Depreciation Weather (0.01) 0.01 Distribution $0.30 Weather Non-Operating Normalization Pension/OPEB 0.01 Clause Reversal
Slide 15: PSE&G – Q3 Weather Summary
PSE&G – Q3 Weather Summary PSE&G Monthly Weather Summary Q3 2020 vs. Q3 2019 vs. Normal Monthly Temperature Humidity Index (THI) Total Hours at 90°F or Higher 8,000 140 0 7,000 120 30 6,000 5 100 9 7 5,000 80 34 6,710 4,000 6,854 60 3,000 5,307 5,315 96 92 4,522 4,743 40 2,000 64 2,216 1,000 2,198 2
Slide 16: Landmark CEF-Energy Efficiency Agreement Approved
Landmark CEF-Energy Efficiency Agreement Approved • CEF-EE settlement approved by the NJBPU September 23 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 EE by 10X to ~$350M/year •
Slide 17: 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 Offerings $1 Billion, 3-Year Program delivering universal access to Residential Commercial & lower customer bills through a Programs Industrial Programs comprehensive
Slide 18: PSE&G – Q3 Highlights
PSE&G – Q3 Highlights Operations Weather-normalized electric sales declined by 1% in Q3: Residential sales increased by 7%, more than offset by commercial and industrial sales decrease of 6% For the trailing 12 months ended September 30, weather-normalized electric and gas sales were ~3% and ~1%
Slide 19: Power Q3 2020 Review
PSEG Power Q3 2020 Review
Slide 20: Power EPS Reconciliation – Q3 2020 versus Q3 2019
PSEG Power EPS Reconciliation – Q3 2020 versus Q3 2019 $0.45 $0.55 $0.51 $0.50 $0.40 ~ ~ $0.35 0.03 $0.33 0.01 $0.30 $0.29 O&M 0.03 Capacity 0.03 $0.25 $ / share Depreciation & Interest Re-contracting & 0.01 Market (0.02) $0.20 Taxes & Other (0.01) Volume (0.02) $0.15 Gas Operations 0.02 $0.10 $0.10
Slide 21: Power – Q3 Generation Measures
PSEG Power – Q3 Generation Measures PSEG Power – Generation (GWh)* PSEG Power – Capacity Factors (%)* PSEG Power – Fuel Costs* Quarter ended Quarter ended 17,500 September 30 September 30 16,281 14,903 2019 2020 ($ millions) 2019 2020 15,000 Combined Gas*** $ 146 $ 115 63.4% 58.4% Cycle** 7,252 Coal
Slide 22: Power – YTD Generation Measures
PSEG Power – YTD Generation Measures PSEG Power – Generation (GWh)* PSEG Power – Capacity Factors (%)* PSEG Power – Fuel Costs* 43,511 Nine Months ended Nine Months ended 45,000 September 30 September 30 40,819 40,000 2019 2020 ($ millions) 2019 2020 Combined Gas*** $ 396 $ 310 16,504 51.3% 49.0% 35
Slide 23: Power – Gross Margin Performance
PSEG Power – Gross Margin Performance Capacity prices changed June 1: Average price now $168 MW/day in PJM and $195 MW/day in ISO-NE through May 31, 2021; Bridgeport Harbor 5 capacity locked in at $231 MW/day for 7 years* Re-contracting at lower market prices PSEG Power Gross Margin ($/MWh) Regi
Slide 24: Hedging Update
Hedging Update Contracted Energy* Oct - Dec 2020 2021 2022 Volume TWh 7 31 30 Nuclear % Hedged 100% 100% 60-65% Price $/MWh $36 $35 $34 Volume TWh 4-6 17-19 18-20 Combined Cycle % Hedged 85-90% 35-40% 0% Price $/MWh $36 $35 $- Volume TWh 11-13 48-50 48-50 Total % Hedged 95-100% 75-80% 35-40% Price $
Slide 25: Power – Q3 Highlights
PSEG Power – Q3 Highlights Operations Q3 output down 9% vs Q3 2019, reflecting sale of Keystone and Conemaugh, lower market demand Nuclear fleet capacity factor was 95.7% in Q3, producing 8.2 TWh; output up 5% vs Q3 2019 CCGT fleet capacity factor was 58% in Q3, producing 6.7 TWh; Keys, Seware
Slide 26: PSEG
PSEG
Slide 27: Financial Highlights
PSEG Financial Highlights Narrowing full-year 2020 non-GAAP Operating Earnings guidance to $3.35 - $3.50 per share from $3.30 - $3.50 per share PSE&G contribution approaches 80% of Operating Earnings in 2020 PSEG’s 5-year capital spending forecast of $13 billion - $15.7 billion, with over 90%
Slide 28: Narrowing PSEG 2020 Guidance - By Subsidiary
Narrowing PSEG 2020 Guidance - By Subsidiary Updated Segment Operating Earnings Guidance and Prior Year Results (non-GAAP, except as noted)* $ millions (except EPS) 2020E 2019 PSE&G (Net Income) $1,325 - $1,355 $1,250 PSEG Power $385 - $430 $409 PSEG Enterprise/Other ($10) $7 Operating Earnings (non
Slide 29: Appendix
APPENDIX
Slide 30: ESG & Sustainability Summary
ESG & Sustainability Summary ESG Leadership ESG Policies & Goals ESG Recognition & Scores • Clean Energy Future PSE&G positioned • PSEG is a vocal advocate for an • Named to the Dow Jones Sustainability to make significant investments to economy-wide price on CO2 emissions Index North America 12 yea
Slide 31: PSE&G Capital Program of $12.5B to $14.7B
PSE&G’s capital program of $12.5B to $14.7B focused on reliability, resiliency, grid modernization and clean energy investments ~90% of investment PSE&G Capital Spending receiving contemporaneous 2020E – 2024E or near-contemporaneous regulatory treatment 3,500 3,000 Unapproved Programs: 2,500 • CEF–
Slide 32: Investment program provides ~7% to 8% rate base growth
Investment program provides opportunity for ~7% to 8% compound annual growth in rate base following approval of CEF-EE 35,000 PSE&G Year-End Rate Base 8.0% - Unapproved 30,000 Programs 7.0% - 25,000 20,000 ($ Millions) 15,000 10,000 5,000 0 2019 2020E 2021E 2022E 2023E 2024E Transmission Electric Di
Slide 33: PSE&G T&D Margin Allocation
PSE&G T&D Margin Allocation PSE&G 2020E Margin Allocation • 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 margin
Slide 34: PSEG maintains a solid financial position
PSEG maintains a solid financial position PSE&G Senior Secured Credit Ratings PSEG Senior Unsecured Credit Ratings Moody’s = Aa3 / Outlook = Stable Moody’s = Baa1 / Outlook = Stable S&P = A / Outlook = Stable S&P = BBB / Outlook = Stable 2020 PSE&G Debt Issuances HoldCo Term Loans and Sr. Notes Outs
Slide 35: Liquidity as of September 30, 2020
PSEG Liquidity as of September 30, 2020 35
Slide 36: 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 NJ stay-at-home order lifted June 9; NJ continues phased re-opening of its economy NJBPU approved restart of in-home utility services May 20 with COVID-19 safety protocols PSEG Response
Slide 37: Reconciliation of Non-GAAP Operating Earnings
Reconciliation of Non-GAAP Operating Earnings PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED Consolidated Operating Earnings (non-GAAP) Reconciliation Three Months Ended Nine Months Ended Year Ended Reconciling Items September 30, September 30, December 31, 2020 2019 2020 2019 2019 ($ millions, Unaudi
Slide 38: Non-GAAP Adjusted EBITDA
Reconciliation of Non-GAAP Operating Earnings and Non-GAAP Adjusted EBITDA PSEG Power Operating Earnings (non-GAAP) and Adjusted EBITDA (non-GAAP) Reconciliation Three Months Ended Nine Months Ended Year Ended Reconciling Items September 30, September 30, December 31, 2020 2019 2020 2019 2019 ($ mil
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