Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — Investor Presentation (August 2023)
63 slides from Public Service Enterprise's investor presentation, August 2023
Slide 1: PSEG Investor Update
PSEG Investor Update Leading toward a sustainable future August 2023 1
Slide 2: Forward-Looking Statements
PSEG Investor Update August 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 Update August 2023 GAAP Disclaimer PSEG presents Operating Earnings in addition to its Net Income/(Loss) reported in presentation. Non-GAAP EBITDA excludes the same items as our non-GAAP Operating accordance with accounting principles generally accepted in the United States (GAAP). Ear
Slide 4: Public Service Enterprise Group
PSEG Investor Update August 2023 Public Service Enterprise Group Ralph LaRossa Dan Cregg Chair, President & CEO Executive Vice President & CFO
Slide 5: 2023: Increased Strategic Clarity
PSEG Investor Update August 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 Nuc
Slide 6: PSEG's Powering Progress Vision
PSEG Investor Update August 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 perf
Slide 7: Financial Outlook: More Predictability from an Improved Business Profile
PSEG Investor Update August 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 Completed
Slide 8: 2023: Growth Opportunities Aligned with Clean Energy Policies
PSEG Investor Update August 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 electrif
Slide 9: 2023: Key Assets and Leadership
PSEG Investor Update August 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 Update August 2023 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-
Slide 11: Provides Compelling Value for Our Customers
PSEG Investor Update August 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 Update August 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 lea
Slide 13: Provides Compelling Value for the Environment
PSEG Investor Update August 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 14: Sustainability and ESG Summary
PSEG Investor Update August 2023 PSEG Sustainability and ESG Summary PSEG Leadership Policies & Goals Recognition & Memberships • PSE&G’s Clean Energy Future programs • PSEG is a vocal advocate for an economy- • Named to Forbes List for America’s Best approved to invest $2B to decarbonize the wide p
Slide 15: Provides Compelling Value for Our Investors
PSEG Investor Update August 2023 PSEG Provides a Compelling Value for Our Investors P/E Rolling • average 2nd and 3rd year expectations We intend to continue improving our relative 22.5 valuation through a better business mix and 20.0 visible earnings growth: 17.5 • Regulated investment opportunitie
Slide 16: Public Service Electric & Gas
PSEG Investor Update August 2023 Public Service Electric & Gas
Slide 17: PSE&G – A Single State, Dual Jurisdiction Utility
PSEG Investor Update August 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*** Transmis
Slide 18: Top-Tier Safety and Reliability Performance Metrics
PSEG Investor Update August 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 19: PSE&G Residential Electric and Gas Bills vs. Region
PSEG Investor Update August 2023 PSE&G’s Residential Electric bills are lower than regional average and Residential Gas bills are among the lowest in the region $300 $300 Monthly Electric Bills Monthly Gas Bills $250 $250 $215 $205 $200 $190 $200 $192 Average = $148 $151 $153 $150 $137 $150 $141 $13
Slide 20: PSE&G Combined Bills Under 3% of Median NJ Income
PSEG Investor Update August 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 21: PSE&G's 5-Year Capital Investment Plan of $15.5B-$18B
PSEG Investor Update August 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 D
Slide 22: PSE&G's 10-Year Capital Plan
PSEG Investor Update August 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 electrif
Slide 23: Transmission Investment Focused on 69kV Upgrades
PSEG Investor Update August 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 e
Slide 24: Electric Distribution Investment Focused on System Modernization
PSEG Investor Update August 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 c
Slide 25: Gas Distribution Investment Focused on Infrastructure Replacement
PSEG Investor Update August 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% 6,000 -20% -12% GSMP main replacement unprotected steel main remaining % Re
Slide 26: Award-Winning Clean Energy Future Programs
PSEG Investor Update August 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 ~$1.3B investment since BPU approved $707M investment* in BPU approved $166M investment in Se
Slide 27: Opportunities Linked to NJ's Accelerated Electrification Goals
PSEG Investor Update August 2023 Incremental to PSE&G’s 10-Year Plan Are Opportunities Linked to New Jersey’s Accelerated Electrification Goals Governor Murphy’s February 2023 Incremental investments to support NJ’s Executive Orders increasing targets to decarbonize the economy • 100% clean energy b
Slide 28: PSE&G's Rate Base Growth
PSE&G’s Rate Base Growth Delivers Improved Reliability, Enhanced Resiliency, Increased Customer Satisfaction, and Lower Emissions PSE&G Year-End Rate Base 60 Strong pipeline of opportunities will allow 50 for continued rate base 2022YE - 2027YE growth comparable to CAGR: 6%-7.5% current growth rates
Slide 29: Effective Cost Control Keeps O&M CAGR ~1%
Effective Cost Control to Mitigate Inflation Impacts and Preserve Customer Affordability Keeps O&M CAGR ~1% PSE&G O&M Expense (1) • Demonstrated ability to control O&M 1,500 • 2023 cost reductions more than offset inflation and partially addresses the impact of Pension and OPEB ($ Millions) 1,000 •
Slide 30: 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 31: Key Takeaways: Best-in-Class Operations
PSEG Investor Update August 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 mainta
Slide 32: PSEG Power & Other
PSEG Investor Update August 2023 PSEG Power & Other
Slide 33: PSEG Power & Other
PSEG Investor Update August 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 wi
Slide 34: Decision to Retain Nuclear Based on Several Drivers
PSEG Investor Update August 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 35: Nuclear — Key Fleet Data
PSEG Investor Update August 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 ope
Slide 36: Nuclear Is Critical to the Energy Transition
PSEG Investor Update August 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 Sou
Slide 37: Salem Capacity Uprate Growth Opportunity
PSEG Investor Update August 2023 Simplified Drawing of Secondary Side of 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 • Lo
Slide 38: Additional PSEG Nuclear Growth Opportunities
PSEG Investor Update August 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 increas
Slide 39: Hydrogen Opportunities
PSEG Investor Update August 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 awarde
Slide 40: Power & Other — Other Businesses
PSEG Investor Update August 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 •
Slide 41: Key Takeaways: Increasing Predictability
PSEG Investor Update August 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 L
Slide 42: Financial Review & Outlook
PSEG Investor Update August 2023 Financial Review & Outlook
Slide 43: Long-term Growth Outlook Driven by PSE&G's Regulated Earnings
PSEG Investor Update August 2023 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
Slide 44: Nuclear PTC Adds Stability and Visibility
PSEG Investor Update August 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 45: Power & Other Provides Significant Cash Flow
PSEG Investor Update August 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 F
Slide 46: No New Equity Needed through 2027
PSEG Investor Update August 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 47: Business Profile Supports Solid BBB Credit Ratings
PSEG Investor Update August 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
Slide 48: 2023 Indicative Annual Dividend Increase
PSEG Investor Update August 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 49: Meeting Takeaways: A Strong Business Mix and Platform
PSEG Investor Update August 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
Slide 50: Appendix
PSEG Investor Update August 2023 Appendix
Slide 51: PSE&G Recognized for Excellence
PSEG Investor Update August 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 Consult
Slide 52: 2022 DEI Recognitions
PSEG Investor Update August 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: • America
Slide 53: 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 – $1,200
Slide 54: PSEG O&M Expense
PSEG Investor Update August 2023 PSEG has Demonstrated Success in Controlling O&M, Keeping CAGR ~(3%) PSEG O&M Expense (1) 2,500 2,000 ($ Millions) 1,500 1,000 500 -0 2018 2019 2020 2021 2022 2023E PSEG Power PSEG Power & Other Distribution Transmission Other (1) Excludes Nuclear ARO, early retireme
Slide 55: 2023 Pension Update
PSEG 2nd Quarter 2023 2023 Pension Update PSEG ($ Millions) 2022 2021 Discount Rate 5.20% 2.94% • Focused on increasing the predictability of future earnings by mitigating pension impacts Expected Rate of Return 7.2% 7.7% • In February, the BPU approved an order authorizing on Plan Assets (EROA) PSE
Slide 56: PSEG Power & Other
PSEG Investor Update August 2023 PSEG Power & Other Nuclear Generation Measures Carbon-Free Contracted Energy Sales* Six Months Ended Year Ended Baseload June 30, December 31, 2023E 2024E Nuclear 2022 2023 2021 2022 Volume TWh 30 – 32 30 - 32 Capacity Factor 94.9% 95.8% 91.9% 92.2% % Hedged 95-100%
Slide 57: PSEG Maintains a Solid Financial Position
PSEG Investor Update August 2023 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 = St
Slide 58: EPS Reconciliation – First Half 2023 versus First Half 2022
PSEG Investor Update August 2023 PSEG EPS Reconciliation – First Half 2023 versus First Half 2022 $2.75 $4.00 $3.76 $3.75 $2.50 ~ ~ $2.25 0.07 $2.09 $1.97 0.05 $ / share $2.00 Transmission 0.03 Gross Margin 0.15 $1.75 Re-contracting/Market 0.22 Gas Margin 0.03 Capacity (0.03) Other Margin 0.03 Volum
Slide 59: Glossary of Terms/Reconciliation
PSEG Investor Update August 2023 Glossary of Terms/ Reconciliation
Slide 60: Glossary of Terms
PSEG Investor Update August 2023 Glossary of Terms A&G Administrative & General EMP Energy Master Plan P/E Price to Earnings Ratio AFUDC Allowance for Funds Used During Construction EPA Environmental Protection Agency PB Peach Bottom AGA American Gas Association EPS Earnings Per Share PJM Pennsylvan
Slide 61: Reconciliation of Non-GAAP Operating Earnings
PSEG Investor Update August 2023 Reconciliation of Non-GAAP Operating Earnings Public Service Enterprise Group Operating Earnings (non-GAAP) Reconciliation a) Effective January 1, 2018, unrealized gains (losses) on Public Service Enterprise Group IncorporatedSix - Consolidated Months Operating Earni
Slide 62: Reconciliation of Non-GAAP Operating Earnings
PSEG Investor Update August 2023 Reconciliation of Non-GAAP Operating Earnings PSE&G Operating Earnings (non-GAAP) Reconciliation PSEG Power & Other Operating Earnings (non-GAAP) Reconciliation Six Months Ended Six Months Ended Reconciling Items June 30, Reconciling Items June 30, 2023 2022 2023 202
Slide 63: Thank you
PSEG Investor Update August 2023 Thank you
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