Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — Investor Presentation (April 2023)
60 slides from Public Service Enterprise's investor presentation, April 2023
Slide 1: PSEG Investor Update
PSEG Investor Update Leading toward a sustainable future April 2023 1
Slide 2: Forward-Looking Statements
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, • changes in technology related
Slide 3: GAAP Disclaimer
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). GAAP Earnings Before Interest, Tax
Slide 4: Public Service Enterprise Group
Public Service Enterprise Group Ralph LaRossa Dan Cregg Chair, President & CEO Executive Vice President & CFO
Slide 5: PSEG 2023: Increased Strategic Clarity
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 Nuclear Production Tax Credit makes N
Slide 6: PSEG's Powering Progress Vision
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 performance to PSE&G, aligned with cl
Slide 7: PSEG Financial Outlook: More Predictability from an Improved Business Profile
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 from sale of 25% stake in Ocean W
Slide 8: 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 9: PSEG 2023: Key Assets and Leadership
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 Island • Most Reliable Electric
Slide 10: PSEG 2023: Financial Strength to Achieve Strategic Plan
PSEG 2023: Financial Strength to Achieve Strategic Plan 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 • Addresses c
Slide 11: PSEG Provides 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. Delivering Highest Customer Reliability at Lowest Cost: Achieving Lowest Cost, but More Leaks/Mile than Peers: Age of cast iron system low SAIDI outage scores wi
Slide 12: PSEG Provides a Compelling Value for Our Communities
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 leading NJ economic development grou
Slide 13: PSEG Provides Compelling Careers for Our Employees
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: • America’s Best Employers for Women - In
Slide 14: PSEG Provides a 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 b
Slide 15: 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- • Named to 2023 JUST 100 list of Business Ambition for 1.5°C campaigns wide price on carbon and preservation of our Amer
Slide 16: PSEG Provides a Compelling Value for Our Investors
PSEG Provides a Compelling Value for Our Investors PSEG Peer Avg P/E Rolling • 2nd year expectations Prem Peer Avg 25.0 We intend to continue improving our relative valuation through a better business mix and visible earnings growth: 20.0 • Regulated investment opportunities in decarbonization of NJ
Slide 17: Public Service Electric & Gas
Public Service Electric & Gas
Slide 18: PSE&G – A Single State, Dual Jurisdiction Utility
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*** Transmission Total Customers 2.3 Million
Slide 19: Top-Tier Safety and Reliability Performance Metrics
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 42.3 43.6 44.5 1.0 0.77 50.0 33.
Slide 20: PSE&G's Residential Electric Bills Lower than Regional Average
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 $137 $150 $127 $130 Average = $1
Slide 21: PSE&G 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 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 has 4.5% improved by ~40% since 4
Slide 22: PSE&G Recognized for Excellence
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 Out
Slide 23: PSE&G's 5-Year Capital Investment Plan of $15.5B-$18B
PSE&G's 5-Year Capital Investment Plan of $15.5B-$18B is Driven by System Modernization and NJ's Decarbonization and Energy Policy Goals PSE&G Capital Spending 2023E – 2027E 4 3 ($ Billions) 2 1 0 2023E 2024E 2025E 2026E 2027E Transmission Electric Distribution Gas Distribution Clean Energy Low to H
Slide 24: PSE&G's 10-Year Capital Plan
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 electrification • Electric Distribution:
Slide 25: 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 • Lifecycl
Slide 26: 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 27: Gas Distribution Investment Focused on Infrastructure Replacement
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 steel main remaining -25% % Reducti
Slide 28: Award-Winning Clean Energy Future Programs
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 $166M investment in September 2020 January 2021 January
Slide 29: Opportunities Linked to NJ's Accelerated Electrification Goals
Incremental to PSE&G’s 10-Year Plan Are Opportunities Linked to New Jersey’s Accelerated Electrification Goals Governor Murphy’s February 2023 Incremental investments to support NJ’s Executive Orders increasing targets to decarbonize the economy: • 100% clean energy by 2035 • Incremental clean energ
Slide 30: PSE&G's Rate Base Growth
PSE&G’s Rate Base Growth Delivers Improved Reliability, Enhanced Resiliency, Increased Customer Satisfaction, and Lower Emissions PSE&G Year-End Rate Base 60 Strong pipeline of opportunities will allow 50 for continued rate base 2022YE - 2027YE growth comparable to CAGR: 6%-7.5% current growth rates
Slide 31: Effective Cost Control Keeps O&M CAGR ~1%
Effective Cost Control to Mitigate Inflation Impacts and Preserve Customer Affordability Keeps O&M CAGR ~1% PSE&G O&M Expense (1) • Demonstrated ability to control O&M 1,500 • 2023 cost reductions more than offset inflation and partially addresses the impact of Pension and OPEB ($ Millions) 1,000 •
Slide 32: PSE&G Dual Jurisdiction Regulation
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 Clause investment recovered via pe
Slide 33: 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, Disciplined Investment: Programs driven by reliability and customer service, while maintaining infrastructure modernizatio
Slide 34: PSEG Power & Other
# PSEG PSEG Power & Other
Slide 35: PSEG Power & Other
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 with PSE&G, providing low-cost gas
Slide 36: PSEG Decision to Retain Nuclear Based on Several Drivers
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, providing reliable energy integ
Slide 37: PSEG Nuclear — Key Fleet Data
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 operating cycle • Next refueling sch
Slide 38: PSEG Nuclear Fleet Demonstrates Strong Performance
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 84.0 96.4 81.0 95.6 78.9 95.3 78
Slide 39: 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 NJ Electric Generation New Jersey’s clean energy by Fuel Source 2022* • New Jersey’s energy g
Slide 40: Nuclear Fuel Costs Consistent and Predictable
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, increasing predictability of fuel cost
Slide 41: Nuclear Growth Opportunities: Salem Capacity Uprate
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 investment — Capital is ~$100M PSE
Slide 42: Additional PSEG Nuclear Growth Opportunities
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 generation ~25 days every six
Slide 43: 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 acr
Slide 44: 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 c
Slide 45: Key Takeaways: Increasing Predictability
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 Long Island driving our strategic
Slide 46: Financial Review & Outlook
# PSEG Financial Review & Outlook
Slide 47: Long-term Growth Outlook Driven by PSE&G's Regulated Earnings
PSEG’s Long-term Growth Outlook Driven by PSE&G’s Regulated Earnings Non-GAAP Operating Earnings Continuing on Path of Increasing Predictability • ~85%-90% of PSEG’s non-GAAP operating earnings PSEG Power are from PSE&G & Other • >90% of capital program allocated to PSE&G • Execution of robust capit
Slide 48: Starting in 2024, Nuclear PTC Adds Stability
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 ~$500M in 2024, growing to ~$600M
Slide 49: PSEG Power & Other Provides Significant Cash Flow
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 Free Other EBITDA Cash LI & Other
Slide 50: No New Equity Needed through 2027
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 equity to maintain capital struc
Slide 51: Solid BBB Credit Ratings and Meaningful Debt Capacity
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 15% ~Mid-Teens capacity remaining
Slide 52: 2023 Indicative Annual Dividend Increase
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 $1.64 $1.56 $1.48 2014 2015 2016
Slide 53: Meeting Takeaways: A Strong Business Mix and Platform
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 multiple growth paths with modest
Slide 54: Appendix
# PSEG Appendix
Slide 55: PSE&G Capital Spending Detail
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 $1,140 $925 – $1,080 $1,035 – $1,200
Slide 56: PSEG Has Demonstrated Success in Controlling O&M
PSEG has Demonstrated Success in Controlling O&M, Keeping CAGR ~(3%) PSEG O&M Expense (1) 2,500 2,000 ($ 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 retirement of Hudson/Mercer coal pla
Slide 57: Glossary of Terms/Reconciliation
Glossary of Terms/ Reconciliation
Slide 58: Glossary of Terms
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 Electric Vehicle PTC Production Tax
Slide 59: Reconciliation of Non-GAAP Operating Earnings
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 Items are recorded in Net Income (Lo
Slide 60: Thank you
PSEG ” Thank J thane
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