Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — Investor Presentation (December 2020)
38 slides from Public Service Enterprise's investor presentation, December 2020
Slide 1: December 2020 PSEG Investor Update
December 2020 PSEG Investor Update • NYSE: PEG • BUILDING A SUSTAINABLE, FINANCIALLY SOUND ENERGY INFRASTRUCTURE COMPANY
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 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. Non-GAAP Operating Earnings excludes the i
Slide 4: A 117-year New Jersey-based business investing in critical energy infrastructure
A 117-year New Jersey-based business investing in critical energy infrastructure, providing safe and increasingly clean energy through two strong businesses Electric & Gas Distribution and Transmission Strategy: Investments in energy infrastructure and clean energy support reliability and customer e
Slide 5: PSE&G's Clean Energy focus drives top-tier, regulated growth
PSE&G’s Clean Energy focus drives top-tier, regulated growth PSE&G has invested more than PSE&G’s Solar 4 All® program has PSE&G’s Clean Energy Filing developed expands customer access to EE, EV charging, Smart Meters (AMI) and Energy Storage $480M 158MW in Energy Efficiency Programs of solar within
Slide 6: PSE&G deploys capital consistent with commitment to sustainability
PSE&G deploys capital consistent with a longstanding commitment to sustainability and environmental stewardship PSE&G’s response to climate change has led to several major investment programs: Supporting development of solar generation in NJ: Solar4All® and Solar Loans 298 MWDC Increasing system r
Slide 7: 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 decarbonize the New Jersey economy economy-wide price on carbo
Slide 8: PSEG to acquire 25% interest in Ørsted's Ocean Wind
PSEG to acquire 25% interest in Ørsted’s Ocean Wind; investment aligned with NJ’s clean energy goals PSEG Renewable Generation will initiate a new investment in contracted renewable generation via partnership with Ørsted, a global leader in Offshore Wind development PSEG will acquire a 25% inter
Slide 9: Regulatory and Policy Initiatives Update
Regulatory and Policy Initiatives Update State Regulatory Proceedings Continuing Online NJBPU approved settlement of the CEF-EE filing on September 23, authorizing a $1 billion, 3-year program Energy Cloud/AMI and Electric Vehicle Infrastructure evidentiary hearings suspended to pursue settlemen
Slide 10: PSE&G – New Jersey's largest
PSE&G – New Jersey’s largest: • Electric and Gas Distribution utility • Transmission business • Investor in renewables and energy efficiency • Appliance service provider Electric Gas Customers 2.3 Million 1.9 Million 5-Year Annual Customer Growth* 0.8% 0.7% 40,684 2,589M 2019 Electric and Gas Sales
Slide 11: PSE&G T&D Margin Allocation
PSE&G T&D Margin Allocation • Transmission and Residential segments PSE&G 2020E of Distribution expected to contribute Margin Illustration 75% of total PSE&G margin • Transmission is fixed with no variable/ volume risk • Distribution margin is ~60% Residential • Significant portion of remaining marg
Slide 12: 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 13: Customer bills have declined, supporting needed investment
Customer Focus – Customer bills have declined, supporting needed investment in the system Cost impact of approved and proposed programs GSMP II, ES II, and CEF over next five years ~2% annual increase, yielding flat bills in real terms NOTE: AVERAGE MONTHLY BILL FOR A TYPICAL RESIDENTIAL ELECTRIC CU
Slide 14: PSE&G: Lowest residential bills among regional gas utilities
PSE&G: Lowest residential bills among 12 regional Gas Utilities and below the average of 12 regional Electric Utilities Monthly Gas Bills Monthly Electric Bills Average $93 Average $129 BASED UPON A CALCULATION OF MONTHLY BILLS FOR AN ELECTRIC CUSTOMER USING 500 KILOWATT-HOURS AND A GAS CUSTOMER USI
Slide 15: PSE&G capital program of $12.5B to $14.7B
PSE&G’s capital program of $12.5B to $14.7B focused on reliability, resiliency, grid modernization and clean energy investments ~90% of investment PSE&G Capital Spending receiving contemporaneous 2020E – 2024E or near-contemporaneous regulatory treatment 3,500 3,000 Unapproved Programs: 2,500 • CEF–
Slide 16: Investment program provides ~7% to 8% rate base growth
Investment program provides opportunity for ~7% to 8% compound annual growth in rate base following approval of CEF-EE 35,000 PSE&G Year-End Rate Base 8.0% - Unapproved 30,000 Programs 7.0% - 25,000 20,000 ($ Millions) 15,000 10,000 5,000 0 2019 2020E 2021E 2022E 2023E 2024E Transmission Electric Di
Slide 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 (EE) Offerings $1 Billion, 3-Year Program delivering universal access to Residential Commercial & lower customer bills through a Programs Industrial Programs comprehe
Slide 18: Clean Energy Future programs support economic recovery
Clean Energy Future programs support economic recovery, help lower bills and sized to achieve NJ’s Clean Energy Act targets PSE&G’s cost-effective, innovative and ready-to-implement solutions support clean energy goals and create needed jobs for New Jersey’s economy • Energy Efficiency: $1 billion a
Slide 19: Gas Distribution Investments
Gas Distribution Investments Gas System Modernization Program focused on modernizing and replacing cast iron and unprotected steel main, resulting in a reduction in methane leaks, safety enhancements and supports customer usage of high efficiency appliances. • 2019: Completed replacement of ~230 mil
Slide 20: Energy Strong II: Continuing critical energy infrastructure program
Energy Strong II: Continuing critical energy infrastructure program Old Station Below/New Station Raised New Equipment Raised Above Flood Elevations Above Flood Elevations Old – Below Flood Level New – Above Flood Level • $842M total spending (Clause $692M, Stipulated Base $150M) ‒ $741M Electric (C
Slide 21: Customer bills expected to remain in line with inflation
Customer bills expected to remain in line with inflation, even with inclusion of our active and proposed programs Combined Typical Monthly Residential Electric and Gas Customer 2024E Bill Impacts* of Projected Program Asks • Bills remained flat in real terms from 2016 to 2020, even with inclusion of
Slide 22: PSEG exploring strategic alternatives for non-nuclear fleet
PSEG exploring strategic alternatives for non-nuclear fleet Accelerate transformation into primarily regulated electric and gas utility and contracted business Reduce overall business risk and earnings volatility Improve credit profile Enhance ESG position Focus on New Jersey’s Clean Energ
Slide 23: PSEG Power's generating assets in three competitive markets
PSEG Power’s generating assets mainly located in three competitive markets S S S S S S New York ISO S S S S S S S SS SS S S SS S Bethlehem Energy S Center (BEC) S S Bridgeport Harbor New Haven Kalaeloa S = Solar ISO New England Solar Source assets: • Solar (467 MWDC /365 MWAC) PJM Bergen Kearny Esse
Slide 24: Capacity markets provide a solid and continuing revenue stream
Capacity markets provide a solid and continuing revenue stream PJM’s RPM Auction Results* PJM Capacity Revenue Delivery Year 2019/2020 2020/2021 2021/2022 PSEG Power’s Average Prices $116 $167 $180 ($/MW-day) $100/$80 $77 $140 Rest of Pool Prices ($/MW-day) (CP/Base) (CP) (CP) PSEG Power’s Cleared C
Slide 25: Stable Gross Margin - Hedging strategy
Stable Gross Margin - Hedging strategy is designed to mitigate risk and secure free cash flow 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 $- Volume TWh 11-1
Slide 26: PSEG has controlled O&M with continuous improvement
PSEG has controlled O&M with actions focused on continuous improvement PSEG O&M Expense (1) 2014 – 2019 CAGR: (2.1%) 2,500 Cost control actions 2,000 • Continued focus on vendors to ensure ($ Millions) maximum value 1,500 • Frequent organizational reviews to drive efficiency and cost 1,000 optimizat
Slide 27: Strategic focus continues to deliver solid results
Strategic focus continues to deliver solid results PSEG non-GAAP Operating Earnings per Share* $3.28 $3.12 $2.91 $2.90 $2.93 $2.76 2014 2015 2016 2017 2018 2019 *SEE SLIDE A FOR ITEMS EXCLUDED FROM NET INCOME TO RECONCILE TO NON-GAAP OPERATING EARNINGS. 27
Slide 28: Opportunity for consistent and sustainable dividend growth
Opportunity for consistent and sustainable dividend growth Annual Dividend Per Share (2015-2020 CAGR: 4.7%) $2.60 PSE&G $2.40 EPS $2.20 $2.00 $1.96 $1.88 ($/Share) $1.80 $1.80 $1.72 $1.64 $1.56 $1.60 $1.40 $1.20 $1.00 2015 2016 2017 2018 2019 2020 NOTE: ALL FUTURE DECISIONS REGARDING DIVIDENDS ON TH
Slide 29: PSEG Value Proposition
PSEG Value Proposition Operational Financial Disciplined Excellence Strength Investment • • • Safe, Reliable Assuring Aligned with Operations with Balanced NJ’s Commitment Results in Energy & to Continuous Regulatory/ Environmental Improvement Policy Matters Goals • PSE&G – Delivering on promise for
Slide 30: PSEG Meeting Takeaways
PSEG Meeting Takeaways Regulatory Stability & Opportunities Consistent with NJ Energy Policy • NJBPU approved to commit $1B in CEF-EE investments over three years to expand energy efficiency in NJ • Next distribution base rate case not required before year-end 2023 • Exploring strategic alternatives
Slide 31: APPENDIX
APPENDIX «> PSEG We make things work for you.
Slide 32: PSE&G EE Offerings – Residential Programs
PSE&G EE Offerings – Residential Programs Program Description Rebates and on-bill repayment for HVAC, smart thermostats, Efficient Products appliances, lighting, and other equipment Rebates and on-bill repayment for energy audit, direct install of Existing Homes efficient equipment, and broader weat
Slide 33: PSE&G EE Offerings – Commercial & Industrial Programs
PSE&G EE Offerings – Commercial & Industrial Programs Program Description Rebates & on-bill repayment for HVAC, lighting, motors and drives, Prescriptive refrigeration, water heaters, air compressors, and food service equipment Custom incentives for large energy efficiency projects, including Custom
Slide 34: PSEG's COVID-19 Response Tracker
PSEG’s COVID-19 Response Tracker Suspension of Residential shut-offs due to non-payment extended into Q1 2021 Maintaining customer service staffing levels and call center operations Continued emergency service calls to customer premises during NJ/LI stay-at- Customers home orders using full pe
Slide 35: PSEG Debt to Capitalization
PSEG Debt to Capitalization As of September 30, 2020 ($ Billions) PSEG Consolidated PSE&G PSEG Power Short-Term Debt $0.3 $- $- Long-Term Debt 16.9 10.9 2.4 Common Equity 15.8 12.8 6.2 Total Capitalization $33.0 $23.7 $8.6 Total Debt/Capitalization 52% 46% 28% TOTALS MAY NOT ADD DUE TO ROUNDING 35
Slide 36: PSEG maintains a solid financial position
PSEG maintains a solid financial position PSE&G Senior Secured Credit Ratings Moody’s = Aa3 / Outlook = Stable PSEG Senior Unsecured Credit Ratings S&P = A / Outlook = Stable Moody’s = Baa1 / Outlook = Stable S&P = BBB / Outlook = Stable 2020 PSE&G Debt Issuances Secured 2.45% MTNs due January 2030
Slide 37: Reconciliation of Non-GAAP Operating Earnings
Reconciliation of Non-GAAP Operating Earnings Public Service Enterprise Group Incorporated - Consolidated Operating Earnings (Non-GAAP) Reconciliation Year Ended Reconciling Items December 31, 2019 2018 2017 2016 2015 2014 ($ millions, Unaudited) Net Income $ 1,693 $ 1,438 $ 1,574 $ 887 $ 1,679 $ 1,
Slide 38: Reconciliation of non-GAAP Operating Earnings for PSE&G, PSEG Power and Enterprise/Other
Reconciliation of non-GAAP Operating Earnings for PSE&G, PSEG Power and PSEG Enterprise/Other PSE&G Operating Earnings (Non-GAAP) Reconciliation Year Ended Reconciling Items December 31, 2019 2018 2017 2016 2015 2014 ($ millions, Unaudited) Net Income $ 1,250 $ 1,067 $ 973 $ 889 $ 787 $ 725 Tax Refo
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