Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — Investor Presentation (October 2023)
62 slides from Public Service Enterprise's investor presentation, Oct 10, 2023
Slide 1: PSEG Investor Update: Leading toward a sustainable future
EXHIBIT 99 PSEG Investor Update Leading toward a sustainable future October 2023 1 1
Slide 2: Forward-Looking Statements
PSEG Investor Update October 2023 Forward-Looking Statements • our ability to obtain adequate nuclear fuel supply; Certain of the matters discussed in this presentation about our and our subsidiaries’ future • changes in technology related to energy generation, distribution and consumption and chang
Slide 3: GAAP Disclaimer
PSEG Investor Update October 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). Ea
Slide 4: Public Service Enterprise Group presenters
PSEG Investor Update October 2023 Public Service Enterprise Group Dan Cregg Ralph LaRossa Executive Vice President & CFO Chair, President & CEO
Slide 5: 2023: Increased Strategic Clarity
PSEG Investor Update October 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 Power & Other* PSEG • PSEG Will Retain Nu
Slide 6: PSEG's Powering Progress Vision
PSEG Investor Update October 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 per
Slide 7: Financial Outlook: More Predictability from an Improved Business Profile
PSEG Investor Update October 2023 PSEG Financial Outlook: More Predictability from an Improved Business Profile Well Positioned for the Future ü Eliminates market price volatility on earnings, proceeds used to pay down debt, Exited Merchant Fossil Generation return capital to shareholders ü Complete
Slide 8: 2023: Growth Opportunities Aligned with Clean Energy Policies
PSEG Investor Update October 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 electri
Slide 9: 2023: Key Assets and Leadership
PSEG Investor Update October 2023 PSEG 2023: Key Assets and Leadership PSEG Power & Other PSE&G – Best-in-Class Regulated Electric & Gas T&D Utility • Solid nuclear operations with exemplary ratings on all units, gas • Top decile safety performance operations benefiting PSE&G customers, and PSEG Lon
Slide 10: 2023: Financial Strength to Achieve Strategic Plan
PSEG Investor Update October 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 October 2023 PSEG Provides Compelling Value for Our Customers We continuously target top quartile performance to deliver better service, at lower cost Lowest Cost, but More Leaks/Mile than Peers: Age of cast iron system Delivering Highest Customer Reliability at Lowest Cost: Ach
Slide 12: Provides Compelling Value for Our Communities
PSEG Investor Update October 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 ~$1.8B ~$1.7B Substantial Companies (Newsweek 2023) investment in • Choose NJ – Chair of leading NJ ec
Slide 13: Provides Compelling Value for the Environment
PSEG Investor Update October 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 achiev
Slide 14: Sustainability and ESG Summary
PSEG Investor Update October 2023 PSEG Sustainability and ESG Summary PSEG Leadership Policies & Goals Recognition & Memberships • PSEG is a vocal advocate for an economy- • Named to Forbes List for America’s Best • PSE&G’s Clean Energy Future programs wide price on carbon and preservation of our Em
Slide 15: Provides Compelling Value for Our Investors
PSEG Investor Update October 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 opportuniti
Slide 16: Public Service Electric & Gas
PSEG Investor Update October 2023 Public Service Electric & Gas
Slide 17: PSE&G – A Single State, Dual Jurisdiction Utility
PSEG Investor Update October 2023 PSE&G – A Single State, Dual Jurisdiction Utility • Electric Transmission • Electric and Gas Distribution • Appliance Service Provider • Utility Provider of Energy Efficiency and Renewable Energy Programs *** PSE&G YE 2022 Rate Base As of YE 2022 Electric Gas Transm
Slide 18: Top-Tier Safety and Reliability Performance Metrics
PSEG Investor Update October 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 10.0 3.0 150.0 8.0 100.0 2.0 6.0 1.16 56.1 1.11 1.04 47.3 4.0 44.5 43.6 0.85 0.83 42.3 0.77 33.9 1.0
Slide 19: PSE&G Residential Electric and Gas Bills vs Peers
PSEG Investor Update October 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 $192 $190 $200 $200 $153 $151 Average = $148 $141 $150 $150 $137 $1
Slide 20: PSE&G Combined Bills Under 3% of Median NJ Income
PSEG Investor Update October 2023 PSE&G Combined Bills Under 3% of Median NJ Income, Favorable “Share of Wallet” vs. Lower-Cost Regions (1) PSE&G Electric & Gas Combined Bills % of New Jersey Household Income Including Low-Income Customers After Assumed Credits Affordability of the combined bill has
Slide 21: PSE&G 5-Year Capital Investment Plan of $15.5B-$18B
PSEG Investor Update October 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 2 1 0 2023E 2024E 2025E 2026E 2027E Transmission Electric Distribution Gas Distribution
Slide 22: PSE&G 10-Year Capital Plan
PSEG Investor Update October 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 electri
Slide 23: Transmission Investment Focused on 69kV Upgrades
PSEG Investor Update October 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
Slide 24: Electric Distribution Investment Focused on System Modernization
PSEG Investor Update October 2023 Electric Distribution Investment Is Focused on System Modernization Providing Long Runway of Investment Opportunities and Maintains Our Best-in-Class Reliability We will build on the success of programs like Energy Strong and Infrastructure Advancement Program to me
Slide 25: Gas Distribution Investment Focused on Infrastructure Replacement
PSEG Investor Update October 2023 Gas Distribution Investment Is Focused on Infrastructure Replacement Accelerating Emission Reduction Benefits th Pending NJBPU review and potential approval on October 11 : • GSMP II extension proposed settlement, - ~$900 million, 2-year extension (January 2024 – De
Slide 26: Award-Winning Clean Energy Future Programs
PSEG Investor Update October 2023 PSE&G’s 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
Slide 27: Opportunities Linked to NJ's Accelerated Electrification Goals
PSEG Investor Update October 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
Slide 28: PSE&G Rate Base Growth
PSEG Investor Update October 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
Slide 29: Effective Cost Control to Preserve Customer Affordability
PSEG Investor Update October 2023 Effective Cost Control to Mitigate Inflation Impacts and Preserve Customer Affordability Keeps O&M CAGR ~1% (1) PSE&G O&M Expense • Demonstrated ability to control O&M 1,500 • 2023 cost reductions more than offset inflation and partially addresses the impact of Pens
Slide 30: PSE&G Dual Jurisdiction Distribution Regulation
PSEG Investor Update October 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: - Contemporaneous recovery of EE and Solar programs Cost Recovery Mechanisms -
Slide 31: Key Takeaways: Best-in-Class Operations
PSEG Investor Update October 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 maint
Slide 32: Power & Other
PSEG Investor Update October 2023 PSEG Power & Other
Slide 33: PSEG Power & Other overview
PSEG Investor Update October 2023 PSEG Nuclear • Operates Salem 1 & 2 and Hope Creek • 50% owner of Peach Bottom 2 & 3 • Total 3,766 MW PSEG Power • Opportunities for growth & Other PSEG Gas Operations A more stable, predictable business Serves BGSS contract with Power & PSE&G, providing low-cost th
Slide 34: Decision to Retain Nuclear Based on Several Drivers
PSEG Investor Update October 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 generatio
Slide 35: Nuclear — Key Fleet Data
PSEG Investor Update October 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 op
Slide 36: Nuclear Is Critical to the Energy Transition
PSEG Investor Update October 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 by Fuel Source 2022* New Jersey’s cl
Slide 37: Salem Capacity Uprate Growth Opportunity
PSEG Investor Update October 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 • L
Slide 38: Additional PSEG Nuclear Growth Opportunities
PSEG Investor Update October 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 increa
Slide 39: Hydrogen Opportunities
PSEG Investor Update October 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 award
Slide 40: Power & Other — Other Businesses
PSEG Investor Update October 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 October 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
Slide 42: Financial Review & Outlook
PSEG Investor Update October 2023 Financial Review & Outlook
Slide 43: Long-term Growth Outlook Driven by PSE&G Regulated Earnings
PSEG Investor Update October 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 are from PSE&G PSEG Power & Other • >90% of capital program allocated to
Slide 44: Starting in 2024, Nuclear PTC Adds Stability and Visibility
PSEG Investor Update October 2023 Starting in 2024, Nuclear PTC Adds Stability and Visibility to PSEG Power & Other Illustrative EBITDA Contributions Illustrative Drivers of PSEG Power & Other 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 October 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 Return of market prices decline Collateral & (2022 YE balance of $1.5B) OSW Proceeds
Slide 46: No New Equity Needed through 2027
PSEG Investor Update October 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 retain equi
Slide 47: Business Profile Supports Solid BBB Credit Ratings and Debt Capacity
PSEG Investor Update October 2023 Our Business Profile Supports Solid BBB Credit Ratings and Meaningful Debt Capacity PSEG Projected Average (1) FFO/Debt Debt Capacity (2023E-2027E) 20% $3.0 Financial flexibility utilized to fund planned investments, Projected Average with meaningful debt 15% ~Mid-T
Slide 48: 2023 Indicative Annual Dividend Increase
PSEG Investor Update October 2023 PSEG’s 2023 Indicative Annual Dividend Increase Supported by Predictable Earnings Annual PSEG Dividend per Share * $2.28 • Opportunity for consistent and sustainable dividend growth $2.16 $2.04 • Dividend coverage by PSE&G $1.96 earnings exceeds 130% $1.88 $1.80 $1.
Slide 49: Meeting Takeaways: Strong Business Mix and Platform
PSEG Investor Update October 2023 Meeting Takeaways: A Strong Business Mix and Platform for Predictable Growth • 5%-7% long-term earnings growth rate for 2023-2027 driven by • Retaining Nuclear fleet with PTC stabilized, predictable cash PSE&G rate base growth and PTC threshold for Nuclear flows and
Slide 50: Appendix
PSEG Investor Update October 2023 Appendix
Slide 51: PSE&G Recognized for Excellence
PSEG Investor Update October 2023 PSE&G Recognized for Excellence PSE&G was honored on numerous fronts for best-in-class operations • 2022 PSE&G ranked #1 in Customer Satisfaction with both Residential Electric and Natural Gas Service in the East among Large Utilities by J.D. Power* ® • 2022 PA Cons
Slide 52: Provides Compelling Careers for Our Employees
PSEG Investor Update October 2023 PSEG Provides Compelling Careers for 2022 DEI Our Employees Recognitions PSEG 12,500 Employees • America’s Best Employers for Diversity • Strong union partnerships with our six unions and the ~7,700 employees • America’s Best Large Employers they represent: • Americ
Slide 53: Demonstrated Success in Controlling O&M
PSEG Investor Update October 2023 PSEG has Demonstrated Success in Controlling O&M, Keeping CAGR ~(3%) (1) PSEG O&M Expense 2,500 2,000 1,500 1,000 500 0 - 2018 2019 2020 2021 2022 2023E PSEG Power PSEG Power & Other Distribution Transmission Other (1) Excludes Nuclear ARO, early retirement of Hudso
Slide 54: 2023 Pension Update
PSEG Investor Update October 2023 2023 Pension Update PSEG ($ Millions) 2022 2021 • Focused on increasing the predictability of future earnings Discount Rate 5.20% 2.94% by mitigating pension impacts Expected Rate of Return 7.2% 7.7% • In February, the BPU approved an order authorizing on Plan Asset
Slide 55: Power & Other Nuclear Generation Measures
PSEG Investor Update October 2023 PSEG Power & Other * Nuclear Generation Measures Carbon-Free Contracted Energy Sales Six Months Ended Year Ended Baseload 2023E 2024E June 30, December 31, 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 56: PSEG Maintains a Solid Financial Position
PSEG Investor Update October 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 = S
Slide 57: EPS Reconciliation – First Half 2023 versus First Half 2022
PSEG Investor Update October 2023 PSEG EPS Reconciliation – First Half 2023 versus First Half 2022 $4. $2.00 75 $3.76 $3.75 $2.50 $2.25 0.07 $2.09 0.05 $1.97 $2.00 Gross Margin 0.15 Transmission 0.03 $1.75 Re-contracting/Market 0.22 Gas Margin 0.03 Capacity (0.03) Volume 0.01 Other Margin 0.03 $1.50
Slide 58: Glossary of Terms / Reconciliation
PSEG Investor Update October 2023 Glossary of Terms/ Reconciliation
Slide 59: Glossary of Terms
PSEG Investor Update October 2023 Glossary of Terms EPA Environmental Protection Agency PB Peach Bottom A&G Administrative & General AFUDC Allowance for Funds Used During Construction EPS Earnings Per Share PHMSA Pipeline and Hazardous Materials AGA American Gas Association Safety Administration ESG
Slide 60: Reconciliation of Non-GAAP Operating Earnings
PSEG Investor Update October 2023 Reconciliation of Non-GAAP Operating Earnings a) Effective January 1, 2018, unrealized gains (losses) on Public Service Enterprise Group Incorporated - Consolidated Operating Earnings (non-GAAP) Reconciliation equity securities are recorded in Net Income (Loss) Six
Slide 61: Reconciliation of Non-GAAP Operating Earnings: PSE&G and Power & Other
PSEG Investor Update October 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
Slide 62: Thank you
PSEG Investor Update October 2023 Thank you
Public Service Enterprise Group — Investor Presentation (October 2023) on 6ix