10q10k10q10k.net

What changed in Public Service Enterprise Group's 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of Public Service Enterprise Group's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+480 added−508 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-26)

Top changes in Public Service Enterprise Group's 2024 10-K

480 paragraphs added · 508 removed · 376 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

100 edited+49 added−59 removed65 unchanged
Biggest changeWhile there has been a recent decrease in load due to a decline in larger industrial customers, greater EE and other factors, PJM’s most recent forecast indicates an increase in load over the next several years due to the increasing adoption of EVs, the expansion of data centers and other large users in our area, ongoing growth in the number of customers, other sources of electrification and other factors, which will collectively drive the need for increased system investment in the future. 3 Table of Conte n t s Investment Clause Programs The following table lists our major approved investment clause programs that are in progress: Program Investment Approval Date Term of Investment Year Started Gas System Modernization Program II (GSMP II) Extension $902 million 2023 2 years (A) 2024 Energy Strong II Program $842 million 2019 4 years (B) 2019 CEF-EE $1 billion 2020 5 years (C) 2020 CEF-EE Extension $280 million 2023 9 months 2023 CEF-Energy Cloud (EC) $707 million 2021 4 years 2021 CEF-EV $166 million 2021 ~6 years 2021 Infrastructure Advancement Program (IAP) $511 million 2022 4 years 2022 (A) The program has a small amount of trailing costs expected to be spent in year 3.
Biggest changeInvestment Clause Programs The following table lists our major approved investment clause programs that are in progress: Program Investment Approval Date Term of Investment Year Started CEF-EE $1 billion 2020 5 years (A) 2020 CEF-EE Extension $280 million 2023 9 months 2023 CEF-EE Extension II $300 million 2024 6 months 2024 CEF-EE II $2.9 billion 2024 6 years 2025 CEF-EV $166 million 2021 ~6 years 2021 Energy Strong II Program $842 million 2019 4 years (B) 2019 Gas System Modernization Program II (GSMP II) Extension $902 million 2023 2 years (C) 2024 Infrastructure Advancement Program (IAP) $511 million 2022 4 years 2022 (A) Rolling three-year program with over 80% of spending within 5 years, with limited spending thereafter.
To date, we launched three of the four components of our CEF : • EE —designed to achieve EE targets required under New Jersey’s Clean Energy Act through a suite of ten programs for residential, C&I programs, including low-income, multi-family, small business and local government. • EC —driven by the implementation of “smart meters,” and new software and product solutions to improve our processes and better manage the electric grid. • EV —primarily relating to preparatory work to deliver infrastructure to the charging point for three programs: residential smart charging; Level-2 mixed use charging; and direct current (dc) fast charging.
To date, we launched three of the four components of our CEF : • EE —designed to achieve EE targets required under New Jersey’s Clean Energy Act through a suite of ten programs for residential, C&I programs, including low-income, multi-family, small business and local government. • Energy Cloud (EC) —driven by the implementation of “smart meters,” and new software and product solutions to improve our processes and better manage the electric grid. • EV —primarily relating to preparatory work to deliver infrastructure to the charging point for three programs: residential smart charging; Level-2 mixed use charging; and direct current (dc) fast charging.
Forward prices are volatile and there can be no assurance that current forward prices will remain in effect or that we will be able to contract output at these forward prices. The PTC is expected to mitigate our exposure to this volatility and provide support for the nuclear units. Nuclear Fuel Supply We have long-term contracts for nuclear fuel.
Forward prices are volatile and there can be no assurance that current forward prices will remain in effect or that we will be able to contract output at these forward prices. The PTC is expected to mitigate our downside exposure to this volatility and provide support for the nuclear units. Nuclear Fuel Supply We have long-term contracts for nuclear fuel.
Note 8. Long-Term Investments and Note 9. Financing Receivables for additional information. Energy Holdings also owns 50% of Garden State Offshore Energy LLC (GSOE) which holds rights to an offshore wind lease area just south of New Jersey. We are evaluating our options for the potential sale of our interest in GSOE .
Long-Term Investments and Note 9. Financing Receivables for additional information. Energy Holdings also owns 50% of Garden State Offshore Energy LLC (GSOE) which holds rights to an offshore wind lease area just south of New Jersey. We are evaluating our options for the potential sale of our interest in GSOE.
The BPU noted that its consultant’s analysis supports the argument against the need for additional interstate pipeline capacity and also supports the BPU’s aggressive policy approach to reduce New Jersey’s overall reliance on fossil fuels and achieve the New Jersey governor’s goal of 100% clean energy by 2050.
The BPU noted that its consultant’s analysis supported the argument against the need for additional interstate pipeline capacity and also supports the BPU’s aggressive policy approach to reduce New Jersey’s overall reliance on fossil fuels and achieve the New Jersey governor’s goal of 100% clean energy by 2050.
Note 2. Revenues. In addition, the PJM capacity market imposes rigorous performance obligations and non-performance penalties on resources during times of system stress. These rules provide an opportunity for bonus payments or require the payment of penalties depending on whether a unit is available during a performance interval.
Note 2. Revenues. In addition, the PJM capacity market imposes performance obligations and non-performance penalties on resources during times of system stress. These rules provide an opportunity for bonus payments or require the payment of penalties depending on whether a unit is available during a performance interval.
These products and services may also be transacted through exchange markets or bilaterally. In August 2022, the Inflation Reduction Act (IRA) was signed into law expanding incentives that promote carbon-free generation. The enacted legislation established the production tax credit (PTC) for electricity generation using nuclear energy, which begins January 1, 2024 and is available through 2032.
These products and services may also be transacted through exchange markets or bilaterally. In August 2022, the Inflation Reduction Act (IRA) was signed into law expanding incentives that promote carbon-free generation. The enacted legislation established the production tax credit (PTC) for electricity generation using nuclear energy, which began January 1, 2024 and is available through 2032.
REGULATORY ISSUES In the ordinary course of our business, we are subject to regulation by, and are party to various claims and regulatory proceedings with FERC, the BPU, the Commodity Futures Trading Commission (CFTC) and various state and federal environmental regulators, among others. For information regarding material matters, other than those discussed below, see Item 8. Note 13.
REGULAT ORY ISSUES In the ordinary course of our business, we are subject to regulation by, and are party to various claims and regulatory proceedings with FERC, the BPU, the Commodity Futures Trading Commission (CFTC) and various state and federal environmental regulators, among others. For information regarding material matters, other than those discussed below, see Item 8. Note 13.
While current costs and relative emission savings would limit any substantial change in the near term, technological advances for heat pumps, actions by certain jurisdictions in our service territory and other factors could accelerate these potential changes, which could result in a slowing in the growth of our gas distribution and an increase in the growth of our electric T&D business.
While current costs and relative emission savings would limit any substantial change in the near term, technological advances for heat pumps, actions by certain jurisdictions in our service territory and other factors could drive these potential changes, which could result in a slowing in the growth of our gas distribution and an increase in the growth of our electric T&D business.
Hedging Strategy The PTC is intended to provide sufficient and stable support for nuclear units and is effective January 1, 2024. To mitigate volatility in our results, we seek to contract in advance to hedge the price exposure for a significant portion of our anticipated electric output, capacity and fuel needs.
Hedging Strategy The PTC is intended to provide sufficient and stable support for nuclear units and was effective January 2024. To mitigate volatility in our results, we seek to contract in advance to hedge the price exposure for a significant portion of our anticipated electric output, capacity and fuel needs.
ENVIRONMENTAL MATTERS We are subject to federal, state and local laws and regulations with regard to environmental matters. Our associated obligations change as legislatures and regulators pass new laws and regulations and amend existing ones. Therefore, it is difficult to project future costs of compliance and their impact on competition.
ENVIRONMEN TAL MATTERS We are subject to federal, state and local laws and regulations with regard to environmental matters. Our associated obligations change as legislatures and regulators pass new laws and regulations and amend existing ones. Therefore, it is difficult to project future costs of compliance and their impact on competition.
LaRossa 60 Chair of the Board (COB), President and Chief Executive Officer (CEO) - PSEG January 2023 to present President and CEO -PSEG September 2022 to present Chief Operating Officer (COO) - PSEG January 2020 to August 2022 COB and CEO - PSE&G September 2022 to present COB, President and CEO - PSEG Power May 2023 to present COB and CEO - PSEG Power September 2022 to May 2023 COB and CEO - Energy Holdings September 2022 to present COB, CEO and President - Services September 2022 to present President and COO - PSEG Power October 2017 to August 2022 President and COO - PSE&G October 2006 to October 2017 COB - PSEG Long Island LLC December 2020 to August 2022 Daniel J.
LaRossa 61 Chair of the Board (COB), President and Chief Executive Officer (CEO) - PSEG January 2023 to present President and CEO -PSEG September 2022 to present Chief Operating Officer (COO) - PSEG January 2020 to August 2022 COB and CEO - PSE&G September 2022 to present COB, President and CEO - PSEG Power May 2023 to present COB and CEO - PSEG Power September 2022 to May 2023 COB and CEO - Energy Holdings September 2022 to present COB, CEO and President - Services September 2022 to present President and COO - PSEG Power October 2017 to August 2022 President and COO - PSE&G October 2006 to October 2017 COB - PSEG Long Island LLC December 2020 to August 2022 Daniel J.
Transmission Rate Proceedings and ROE —From time to time, various matters are pending before FERC relating to, among other things, transmission planning, reliability standards and transmission rates and returns, including incentives. Depending on their outcome, any of these matters could materially impact our results of operations and financial condition.
Transmission Rate Proceedings and ROE —From time to time, various matters are pending before FERC relating to, among other things, transmission planning and transmission rates and returns, including incentives. Depending on their outcome, any of these matters could materially impact our results of operations and financial condition.
For additional information related to environmental matters, including proceedings not discussed below, as well as anticipated expenditures for installation of compliance technology, hazardous substance liabilities and fuel and waste disposal costs, see Item 1A. Risk Factors and Item 8. Note 13.
For additional information related to environmental matters, including proceedings not discussed below, as well as anticipated expenditures for installation of compliance technology, hazardous substance liabilities and fuel and waste disposal costs, see Item 1A. Risk Factors and Item 8. Note 13. Commitments and Contingent Liabilities.
In 2022, the BPU approved an extension of the long-term BGSS contract to March 31, 2027, and thereafter the contract remains in effect unless terminated by either party with a two-year notice. PSEG Power supplies PSE&G’s peak daily gas requirements through its balanced portfolio of firm gas transportation capacity, storage contracts, contract peaking supply, and liquefied natural gas and propane.
In 2022, the BPU approved an extension of the long-term BGSS contract to March 31, 2027, and thereafter the contract remains in effect unless terminated by either party with a two-year notice. 5 Table of Contents PSEG Power supplies PSE&G’s peak daily gas requirements through its balanced portfolio of firm gas transportation capacity, storage contracts, contract peaking supply, and liquefied natural gas and propane.
(Energy Holdings), which primarily holds our legacy lease investments and competitively bid, FERC regulated transmission; and PSEG Services Corporation (Services), which provides us and our operating subsidiaries with certain management, administrative and general services at cost. 1 Table of Conte n t s OPERATIONS AND STRATEGY PSE&G Our regulated T&D public utility, PSE&G, distributes electric energy and natural gas to customers within a designated service territory running diagonally across New Jersey where approximately 6.8 million people, or about 74% of New Jersey’s population resides.
(Energy Holdings), which primarily holds our legacy lease investments and competitively bid, FERC regulated transmission; and PSEG Services Corporation (Services), which provides us and our operating subsidiaries with certain management, administrative and general services at cost. 1 Table of Contents OPERATIONS AND STRATEGY PSE&G Our regulated T&D public utility, PSE&G, distributes electric energy and natural gas to customers within a designated service territory running diagonally across New Jersey where approximately 6.8 million people, or about 74% of New Jersey’s population resides.
In addition, we continue to invest in and pursue opportunities in regulated clean energy, including EE, electric vehicle (EV) make-ready charging infrastructure, solar, energy storage and other potential investments. We also earn margins through competitive services, such as appliance repair, in our service territory. How PSE&G Operates We are a transmission owner in PJM Interconnection, L.L.C.
In addition, we continue to invest in and pursue opportunities in regulated clean energy programs, including EE, electric vehicle (EV) make-ready charging infrastructure and other potential investments. We also earn margins through competitive services, such as appliance repair, in our service territory. How PSE&G Operates We are a transmission owner in PJM Interconnection, L.L.C.
In February 2023, the governor of New Jersey issued three Executive Orders (EOs), one of which directs the BPU to immediately convene a stakeholder process on the future of gas to develop a plan to meet the State’s current EMP goal to reduce emissions by 50% versus 2006 levels by 2030.
In February 2023, the governor of New Jersey issued three Executive Orders (EOs), one of which directed the BPU to convene a stakeholder process on the future of gas to develop a plan to meet the State’s current EMP goal to reduce emissions by 50% versus 2006 levels by 2030.
Conversely, an increase in EV adoption and other factors could lead to an increase in system usage, require incremental investments to meet higher peak demands and result in a larger customer usage base. There is also an expected shift toward greater electrification and less gas usage in the coming decades.
Conversely, an increase in EV adoption and other factors could lead to an increase in system usage, require incremental investments to meet higher peak demands and result in a larger customer usage base. There could also be a shift toward greater electrification and less gas usage in the coming decades.
COMPETITIVE ENVIRONMENT PSE&G Our T&D business is not affected when customers choose alternate electric or gas suppliers since we earn our return on our net investment in rate base to provide T&D service, not by supplying the commodity.
COMPETIT IVE ENVIRONMENT PSE&G Our T&D business is not affected when customers choose alternate electric or gas suppliers since we earn our return on our net investment in rate base to provide T&D service, not by supplying the commodity.
Our current approved transmission rates provide for a base ROE of 9.90% and a 50 basis point adder for our membership in PJM as an RTO. See Item 7. MD&A—Executive Overview of 2023 and Future Outlook. Distribution PSE&G distributes electricity and natural gas to end users in our respective franchised service territories.
Our current approved transmission rates provide for a base ROE of 9.90% and a 50 basis point adder for our membership in PJM as an RTO. See Item 7. MD&A—Executive Overview of 2024 and Future Outlook for additional information. Distribution PSE&G distributes electricity and natural gas to end users in our respective franchised service territories.
Based upon the availability of natural gas beyond PSE&G’s actual daily needs, PSEG Power sells gas to other customers and shares these proceeds with PSE&G’s customers. How PSEG Power’s Nuclear Generation Operates As of December 31, 2023, PSEG Power had 3,761 MW of nuclear generation capacity. All of our nuclear generation capacity is located in New Jersey and Pennsylvania.
Based upon the availability of natural gas beyond PSE&G’s actual daily needs, PSEG Power sells gas to other customers and shares these proceeds with PSE&G’s customers. How PSEG Power’s Nuclear Generation Operates As of December 31, 2024, PSEG Power had 3,758 MW of nuclear generation capacity. All of our nuclear generation capacity is located in New Jersey and Pennsylvania.
Cregg 60 Executive Vice President (EVP) and Chief Financial Officer (CFO) - PSEG October 2015 to present EVP and CFO - PSE&G October 2015 to present EVP and CFO - PSEG Power October 2015 to present Kim C.
Cregg 61 Executive Vice President (EVP) and Chief Financial Officer (CFO) - PSEG October 2015 to present EVP and CFO - PSE&G October 2015 to present EVP and CFO - PSEG Power October 2015 to present Kim C.
For a requesting company to receive MBR authority, FERC must first determine that the requesting company lacks market power in the relevant markets and/or that market power in the relevant markets is sufficiently mitigated. Certain PSEG companies are public utilities and currently have MBR authority.
For a requesting company to receive MBR authority, FERC 11 Table of Contents must first determine that the requesting company lacks market power in the relevant markets and/or that market power in the relevant markets is sufficiently mitigated. Certain PSEG companies are public utilities and currently have MBR authority.
Typically, the bid price of the last unit dispatched by PJM establishes the energy market-clearing price. 5 Table of Conte n t s This method of determining supply and pricing creates a situation where natural gas prices often have a major influence on the price that generators will receive for their output, especially in periods of relatively strong or weak demand.
Typically, the bid price of the last unit dispatched by PJM establishes the energy market-clearing price. This method of determining supply and pricing creates a situation where natural gas prices often have a major influence on the price that generators will receive for their output, especially in periods of relatively strong or weak demand.
Our growth is driven by (i) our investment program to deliver energy more reliably by modernizing our electric transmission and electric and gas distribution system and (ii) investing in programs that help deliver cleaner energy, including our EE programs to help customers use less energy and investment programs to build EV infrastructure and solar generation.
Our growth is driven by (i) our investment program to deliver energy more reliably by investing to meet anticipated demand growth and modernizing our electric transmission and electric and gas distribution system and (ii) investing in programs that meet State targets to help deliver cleaner energy, including our EE programs to help customers use less energy and investment programs to build EV infrastructure and solar generation.
PSE&G is obligated to comply with the NERC Critical Infrastructure Protection standards. NERC Critical Infrastructure Protection standards do not apply to nuclear facilities which are instead governed by the NRC for purposes of physical and cyber security. NRC has a number of risk-informed, performance-based security programs in place to effectively protect U.S. commercial nuclear facilities.
NERC Critical Infrastructure Protection standards do not apply to nuclear facilities which are instead governed by the NRC for purposes of physical and cyber security. NRC has a number of risk-informed, performance-based security programs in place to effectively protect U.S. commercial nuclear facilities.
(PJM) which is an Independent System Operator (ISO) and Regional Transmission Organization (RTO) that operates the electric transmission system in the Mid-Atlantic Region, including 2 Table of Conte n t s New Jersey and the surrounding states.
(PJM) which is an Independent System Operator (ISO) and Regional Transmission Organization (RTO) that operates the electric transmission system in the Mid-Atlantic Region, 2 Table of Contents including New Jersey and the surrounding states.
Our CIP reduces the impact on our distribution revenues from changes in sales volumes and demand for most customers. The CIP, which is calculated annually, provides for a true-up of our current period revenue as compared to revenue 7 Table of Conte n t s thresholds established in our most recent distribution base rate proceeding.
Our CIP reduces the impact on our distribution revenues from changes in sales volumes and demand for most customers. The CIP, which is calculated annually, provides for a true-up of our current period revenue as compared to revenue thresholds established in our most recent 8 Table of Contents distribution base rate proceeding.
Additionally, there are on-site storage facilities for Salem, Hope Creek and Peach Bottom, which we believe have the capacity for at least five years of temporary storage for each facility. 15 Table of Conte n t s INFORMATION ABOUT OUR EXECUTIVE OFFICERS (PSEG) Name Age as of December 31, 2023 Office Effective Date First Elected to Present Position Ralph A.
Additionally, there are on-site storage facilities for Salem, Hope Creek and Peach Bottom, which we believe have the capacity for at least five years of temporary storage for each facility. 17 Table of Contents INFORMATION ABOUT OUR EXECUTIVE OFFICERS (PSEG) Name Age as of December 31, 2024 Office Effective Date First Elected to Present Position Ralph A.
State —T he BPU requires utilities, including PSE&G, to, among other things, implement a cybersecurity program that defines and implements organizational accountabilities and responsibilities for cyber risk management activities, and establishes policies, plans, processes and procedures for identifying and mitigating cyber risk to critical systems.
State —The BPU requires utilities, including PSE&G, to, among other things, implement a cybersecurity program that defines and implements organizational accountabilities and responsibilities for cyber risk management activities, and 15 Table of Contents establishes policies, plans, processes and procedures for identifying and mitigating cyber risk to critical systems.
These auctions take place annually in February. Once validated by the BPU, electricity prices for BGS service are set. Approximately one-third of PSE&G’s total BGS-RSCP eligible load is auctioned each year for a three-year term. For information on current prices, see Item 8. Note 13. Commitments and Contingent Liabilities.
Once approved by the BPU, electricity prices for BGS service are set. Approximately one-third of PSE&G’s total BGS-RSCP eligible load is auctioned each year for a three-year term. For information on current prices, see Item 8. Note 13. Commitments and Contingent Liabilities.
These payments are compensation for committing our generating units to PJM for dispatch at its discretion. Capacity payments reflect the value to PJM of assurance that there will be sufficient generating capacity available at all times to meet system reliability and energy requirements.
In addition to energy sales, we earn revenue from capacity payments for our generating assets. These payments are compensation for committing our generating units to PJM for dispatch at its discretion. Capacity payments reflect the value to PJM of assurance that there will be sufficient generating capacity available at all times to meet system reliability and energy requirements.
In PJM the market design for capacity payments provides for a structured, forward-looking, capacity pricing mechanism through the Reliability Pricing Model (RPM). For additional information regarding FERC actions related to the capacity market construct, see Regulatory Issues—Federal Regulation.
In PJM the market design for capacity payments provides for a forward-looking, capacity pricing mechanism through the Reliability Pricing Model (RPM). For additional information regarding auction delays, complaints against PJM regarding RPM, PJM and FERC actions related to the capacity market construct and resulting market uncertainty, see Regulatory Issues—Federal Regulation.
We believe that this agreement will provide for adequate low-level radioactive waste disposal for Salem and Hope Creek through the end of their current licenses including full decommissioning, although no assurances can be given. Low-Level Radioactive Waste is periodically being shipped to the South Carolina waste disposal facility from Salem and Hope Creek.
We believe that this agreement will provide for adequate low-level radioactive waste disposal for Salem and Hope Creek through the end of their current licenses including full decommissioning, although no assurances can be given.
The second type provides default supply for larger customers, with energy priced at hourly PJM real-time market prices for a contract term of 12 months (BGS-Commercial Industrial Energy Pricing). 4 Table of Conte n t s We procure the supply to meet our BGS obligations through auctions authorized by the BPU for New Jersey’s total BGS requirement.
The second type provides default supply for larger customers, with energy priced at hourly PJM real-time market prices for a contract term of 12 months (BGS-Commercial Industrial Energy Pricing). We procure the supply to meet our BGS obligations through auctions authorized by the BPU for New Jersey’s total BGS requirement. These auctions take place annually in February.
Environmental issues could also impact our competitiveness, including requirements regarding capital investments at our nuclear stations, such as cooling towers, could lead to a material adverse effect, while other actions to further regulate carbon dioxide emissions could better position our nuclear plants .
Environmental issues could also impact our competitiveness, including requirements regarding capital investments at our nuclear stations, such as cooling towers, and could lead to a material adverse effect, while other actions to further regulate carbon dioxide emissions could better position our nuclear plants. HUMAN CAPI TAL MANAGEMENT Our human capital management strategy is integrated with our overall business strategy.
Hanemann 60 President and COO - PSE&G June 2021 to present Senior Vice President (SVP) and COO - PSE&G January 2020 to June 2021 SVP - Electric Transmission and Distribution - PSE&G September 2018 to January 2020 SVP - Delivery, Projects and Construction - PSE&G July 2014 to September 2018 Tamara L.
Hanemann 61 President and COO - PSE&G June 2021 to present Senior Vice President (SVP) and COO - PSE&G January 2020 to June 2021 SVP - Electric Transmission and Distribution - PSE&G September 2018 to January 2020 Tamara L.
See Item 8. Note 3. Asset Dispositions and Impairments for additional information. Our other direct wholly owned subsidiaries are: PSEG Long Island LLC (PSEG LI), which operates the Long Island Power Authority’s (LIPA) electric transmission and distribution (T&D) system under a contractual agreement; PSEG Energy Holdings L.L.C.
Our other direct wholly owned subsidiaries are: PSEG Long Island LLC (PSEG LI), which operates the Long Island Power Authority’s (LIPA) electric transmission and distribution (T&D) system under a contractual agreement; PSEG Energy Holdings L.L.C.
IAP —designed to improve the reliability of the “last mile” of our electric distribution system and address aging substations and gas metering and regulation stations. See Item 7. MD&A—Executive Overview of 2023 and Future Outlook for additional information.
Energy Strong II Program —structured to harden, modernize and improve the resiliency of our electric and gas distribution systems. IAP —designed to improve the reliability of the “last mile” of our electric distribution system and address aging substations and gas metering and regulation stations. See Item 7. MD&A—Executive Overview of 2024 and Future Outlook for additional information.
We currently have FERC-approved formula rates in effect to recover the costs of our transmission facilities. Under this formula, rates are put into effect in January of each year based upon our internal forecast of annual expenses and capital expenditures. Rates are subsequently trued up to reflect actual annual expenses and capital expenditures.
Under this formula, rates are put into effect in January of each year based upon our internal forecast of annual expenses and capital expenditures. Rates are subsequently trued up to reflect actual annual expenses and capital expenditures.
The PTC is designed to increase with inflation, and therefore, future inflation levels will impact the financial support of the nuclear units. In addition, market revenues in excess of the PTC threshold would provide incremental benefit.
Our nuclear generating units’ performance, market prices and the PTC, have a considerable effect on our profitability. The PTC is designed to increase with inflation, and therefore, future inflation levels will impact the financial support of the nuclear units. In addition, market revenues in excess of the PTC threshold would provide incremental benefit.
The EMP outlines several strategies, including statewide EE programs; expansion of renewable generation (solar and offshore wind), energy storage and other carbon-free technologies; preservation of existing nuclear generation; electrification of the transportation sector; and reduced reliance on natural gas.
The EMP outlines several strategies, including statewide EE programs; expansion of renewable generation (solar and offshore wind), energy storage and other carbon-free technologies; preservation of existing nuclear generation; electrification of the transportation sector; and reduced reliance on natural gas. The BPU began proceedings to update the State’s EMP via public input hearings in May and June 2024.
Sales in PJM generally reflect block energy sales at the liquid PJM Western Hub or other basis locations when available and other transactions that seek to secure price certainty for our energy output.
Generally, we seek to hedge the financial risks of our generation through sales at PJM West or other nodes corresponding to our generation portfolio. Our hedge transactions in PJM generally reflect energy sales at the liquid PJM Western Hub or other basis locations when available and other transactions that seek to secure price certainty for our energy output.
While the EMP does not have the force of law and does not impose any obligations on utilities, it outlines current expectations regarding the New Jersey’s role in the use, management, and development of energy.
New Jersey Energy Master Plan (EMP) and Future of Gas Stakeholder Proceeding —In January 2020, the State of New Jersey released its EMP. While the EMP does not have the force of law and does not impose any obligations on utilities, it outlines current expectations regarding New Jersey’s role in the use, management, and development of energy.
Linde 59 EVP and General Counsel - PSEG July 2014 to present EVP and General Counsel - PSE&G July 2014 to present EVP and General Counsel - PSEG Power July 2014 to present Charles V.
Linde 60 EVP and Chief Legal Officer - PSEG September 2024 to present EVP and General Counsel - PSEG July 2014 to September 2024 EVP and General Counsel - PSE&G July 2014 to September 2024 EVP and General Counsel - PSEG Power July 2014 to September 2024 Charles V.
To determine if we are being responsive to the needs of our employees, we routinely assess the impact of our work by soliciting employee feedback through focus groups, listening sessions, pulse surveys and a biennial employee engagement survey.
We seek to offer opportunities that are relevant and accessible to all employees, including community outreach, volunteerism, mentorship, recognition and professional development. To determine if we are being responsive to the needs of our employees, we routinely assess the impact of our work by soliciting employee feedback through focus groups, listening sessions, pulse surveys and a biennial employee engagement survey.
Safety metrics, such as Occupational Safety and Health Administration (OSHA) recordable incidence rate, OSHA days away from work rate, and serious injury incidence rate, are regularly monitored and reported to our Board.
It is updated regularly on matters related to culture, executive compensation, and leadership succession and development. Safety metrics, such as Occupational Safety and Health Administration (OSHA) recordable incidence rate, OSHA days away from work rate, and serious injury incidence rate, are regularly monitored and reported to our Board.
Solar Generation We have also undertaken solar initiatives at PSE&G, which primarily invest in utility-owned solar photovoltaic (PV) grid-connected solar systems installed on PSE&G property and third-party sites with our economics driven by our net investment in solar, with a contemporaneous return on that rate base.
Solar Generation We have also undertaken solar initiatives at PSE&G, which primarily invest in utility-owned solar photovoltaic (PV) grid-connected solar systems installed on PSE&G property and third-party sites with our economics driven by our net investment in solar, with a contemporaneous return on that rate base. 4 Table of Contents Supply We make no margin on the default supply of electricity and gas since the actual costs are passed through to our customers.
However, the ability to maintain an adequate fuel supply could be affected by several factors not within our control, including changes in prices and demand, curtailments by suppliers, severe weather, environmental regulations, war and hostilities, and other factors. For additional information and a discussion of risks, see Item 1A. Risk Factors, Item 7.
However, there are limited suppliers for certain aspects of this supply chain and the ability to maintain an adequate fuel supply could be affected by several factors not within our control, including changes in prices and demand, tariffs, curtailments by suppliers, severe weather, environmental regulations, war and hostilities, and other factors.
Our nuclear fuel commitments cover approximately 100% of our estimated uranium, enrichment and fabrication requirements through 2026 and a significant portion through 2027. LIPA Operations Services Agreement In accordance with a 12-year OSA entered into by PSEG LI and LIPA, PSEG LI commenced operating LIPA’s electric T&D system in Long Island, New York on January 1, 2014.
Our nuclear fuel commitments cover approximately 100% of our estimated uranium, enrichment and fabrication requirements through 2027 and a significant portion through 2028. 7 Table of Contents LIPA Operations Services Agreement (OSA) PSEG LI has been operating LIPA’s electric T&D system in Long Island, New York since 2014 under a 12-year OSA with LIPA that expires on December 31, 2025.
FERC has extensive oversight over such public utilities.
FERC has extensive oversight 10 Table of Contents over such public utilities.
We principally conduct our business through two direct wholly owned subsidiaries, PSE&G and PSEG Power LLC (PSEG Power), each of which also has its principal executive offices at 80 Park Plaza, Newark, New Jersey 07102. We are a public utility holding company consisting primarily of a regulated electric and gas utility and a nuclear generation business.
As a holding company, our profitability depends on our subsidiaries’ operating results. We principally conduct our business through two direct wholly owned subsidiaries, PSE&G and PSEG Power LLC (PSEG Power), described below, each of which also has its principal executive offices at 80 Park Plaza, Newark, New Jersey 07102.
FERC also regulates RTOs/ISOs, such as PJM, and their regional transmission planning processes as well as their energy and capacity markets. 9 Table of Conte n t s Transmission Regulation FERC has exclusive jurisdiction to establish the rates and terms and conditions of service for interstate transmission.
FERC also regulates RTOs/ISOs, such as PJM, and their regional transmission planning processes as well as their energy and capacity markets. Transmission Regulation FERC has exclusive jurisdiction to establish the rates and terms and conditions of service for interstate transmission. We currently have FERC-approved formula rates in effect to recover the costs of our transmission facilities.
We are unable to predict the final outcome of these reviews or the cost of any actions we would need to take to comply with any new regulations, including possible modifications to the Salem, Hope Creek and Peach Bottom facilities, but such costs could be material. 11 Table of Conte n t s The current operating licenses of our nuclear facilities expire in the years shown in the following table: Unit Year Salem Unit 1 2036 Salem Unit 2 2040 Hope Creek 2046 Peach Bottom Unit 2 (A) 2033 Peach Bottom Unit 3 (A) 2034 (A) Depreciation Expense and the Asset Retirement Obligation assume these units will operate through 2053 and 2054, respectively, given our expectation that previously approved operating license expiration dates will be restored by the NRC.
The current operating licenses of our nuclear facilities expire in the years shown in the following table: Unit Year Salem Unit 1 2036 Salem Unit 2 2040 Hope Creek 2046 Peach Bottom Unit 2 (A) 2033 Peach Bottom Unit 3 (A) 2034 (A) Depreciation Expense and the Asset Retirement Obligation assume these units will operate through 2053 and 2054, respectively, given our expectation that previously approved operating license expiration dates will be restored by the NRC.
PSEG Power’s Salem 1, Salem 2, Hope Creek, Peach Bottom 2 and Peach Bottom 3 nuclear plants are expected to benefit from the PTC. The expected PTC rate is up to $15 per megawatt hour (MWh) subject to adjustment based upon a facility’s gross receipts and meeting prevailing wage rules.
PSEG Power’s nuclear plants are expected to benefit from the PTC. The expected PTC rate is up to $15 per megawatt hour (MWh) subject to adjustment based upon a facility’s gross receipts and meeting prevailing wage rules. The PTC rate and the gross receipts threshold are subject to annual inflation adjustments. Until additional guidance is issued by the U.S.
The BPU is currently considering revising its interconnection rules to speed up the interconnection of renewable resources to the distribution grid. We cannot predict the impact on our business or results of operations from this Grid Modernization plan or any laws, rules or regulations promulgated as a result thereof, particularly as they may relate to PSE&G’s electric distribution assets.
Separately, in July 2024, BPU Staff convened a working group to develop recommendations for integrated distribution planning for distributed energy resources. We cannot predict the impact on our business or results of operations from this Grid Modernization plan or any laws, rules or regulations promulgated as a result thereof, particularly as they may relate to PSE&G’s electric distribution assets.
Our New Jersey utility operations are subject to comprehensive regulation by the BPU including, among other matters, regulation of retail electric and gas distribution rates and service, the issuance and sale of certain types of securities and compliance matters. In addition to base rates, we recover certain costs or earn on certain investments pursuant to mechanisms known as adjustment clauses.
We are also subject to various other states’ regulations due to our operations in those states. Our New Jersey utility operations are subject to comprehensive regulation by the BPU including, among other matters, regulation of retail electric and gas distribution rates and service, the issuance and sale of certain types of securities and compliance matters.
ITEM 1. BUSINESS We were incorporated under the laws of the State of New Jersey in 1985 and our principal executive offices are located at 80 Park Plaza, Newark, New Jersey 07102.
ITEM 1. BUSINESS We were incorporated under the laws of the State of New Jersey in 1985 and our principal executive offices are located at 80 Park Plaza, Newark, New Jersey 07102. We are a public utility holding company that, acting through our wholly owned subsidiaries, is a predominantly regulated electric and gas utility and a nuclear generation business.
Over 60% of our workforce is represented by six unions under various collective bargaining agreements that cover wages, benefits and other terms and conditions of employment. In 2023, we negotiated new agreements with all six of our unions in advance of contract expiration. These agreements contain four-year terms, expiring in 2027 and support strategic objectives and business goals.
Sixty percent of our workforce is represented by six unions under various collective bargaining agreements that cover wages, benefits and other terms and conditions of employment. Our current agreements with all six unions remain in place until 2027 and support strategic objectives and business goals.
PJM has a capacity market that has been approved by FERC. FERC regulates this market and continues to examine whether this market design is working optimally. For information regarding recent actions by FERC relating to capacity market design, see the discussion in Regulatory Issues—Federal Regulation.
FERC regulates this market and must approve market design rule changes proposed by PJM. For information regarding recent actions by FERC relating to capacity market design, see the discussion in Regulatory Issues—Federal Regulation.
These standards are also designed to promote coordination, threat sharing and interaction between utilities and various government agencies regarding potential cyber and physical threats against the nation’s electric grid. The scope of the Critical Infrastructure Protection standards is limited to Bulk Electric System (BES) Cyber Systems that would impact the reliable operation of the BES.
Cybersecurity Regulation Federal —NERC Critical Infrastructure Protection standards establish cybersecurity and physical security protections for critical systems and facilities. These standards are also designed to promote coordination, threat sharing and interaction between utilities and various government agencies regarding potential cyber and physical threats against the nation’s electric grid.
Our human capital management strategy is integrated with our overall business strategy. Relying on our core commitments and strong culture of inclusion, our focus is to attract, develop, and retain a high performing diverse workforce - one with the skill sets needed to succeed in a rapidly evolving environment.
Our Values and strong culture of inclusion support our goal to attract, develop and retain a high performing diverse workforce - one with the skill sets to succeed in a rapidly evolving environment.
McFeaters 64 President and Chief Nuclear Officer - PSEG Nuclear LLC May 2023 to present SVP - Nuclear Operations - PSEG Nuclear LLC November 2020 to May 2023 Vice President (VP) - Salem Generating Station - PSEG Nuclear LLC October 2016 to November 2020 Sheila J.
McFeaters 65 President and Chief Nuclear Officer - PSEG Nuclear LLC May 2023 to present SVP - Nuclear Operations - PSEG Nuclear LLC November 2020 to May 2023 Vice President (VP) - Salem Generating Station - PSEG Nuclear LLC October 2016 to November 2020 Grace Park 49 EVP and General Counsel - PSEG September 2024 to present EVP and General Counsel - PSE&G September 2024 to present EVP and General Counsel - PSEG Power September 2024 to present VP - Deputy General Counsel and Chief Litigation Counsel - Services July 2020 to September 2024 Sheila J.
The BPU retained a consultant and in June 2022 accepted the consultant’s key finding that, through 2030, New Jersey’s firm gas capacity can meet firm demand under normal design day conditions.
Gas Capacity Review —In September 2019, the BPU formally opened a stakeholder proceeding to explore gas capacity procurement service to all New Jersey natural gas customers and in June 2022 accepted a consultant’s finding that, through 2030, New Jersey’s firm gas capacity can meet firm demand under normal design day conditions.
Our load requirements are split among residential, C&I customers, as described in the following table for 2023: % of 2023 Sales Customer Type Electric Gas Commercial 58% 38% Residential 33% 58% Industrial 9% 4% Total 100% 100% Our customer base has modestly increased since 2019, with electric and gas loads changing as illustrated in the following table: Electric and Gas Distribution Statistics Number of Customers as of December 31, 2023 Historical Annual Customer Growth 2019-2023 Electric Sales and Firm Gas Sales as of December 31, 2023 (A) Historical Annual Load Decline 2019-2023 Electric 2.4 Million 0.9 % 39,085 Gigawatt hours (1.4)% Gas 1.9 Million 0.6 % 2,282 Million Therms (2.8)% (A) Excludes sales from Gas rate classes that do not impact margin, specifically Contract, Non-Firm Transportation, Cogeneration Interruptible and Interruptible Services.
Our load requirements are split among commercial, residential and industrial customers, as shown in the following table for 2024: % of 2024 Sales Customer Type Electric Gas Commercial 57 % 38 % Residential 34 % 58 % Industrial 9 % 4 % Total 100 % 100 % Our customer base has modestly increased since 2020, with electric and gas loads changing as illustrated in the following table: Electric and Gas Distribution Statistics Number of Customers as of December 31, 2024 Historical Annual Customer Growth 2020-2024 Electric Sales and Firm Gas Sales for the Year Ended December 31, 2024 (A) Historical Annual Load Decline 2020-2024 Electric 2.4 Million 0.9% 40,651 Gigawatt hours — Gas 1.9 Million 0.7% 2,371 Million Therms (1.7)% (A) Excludes sales from Gas rate classes that do not impact margin, specifically Contract, Non-Firm Transportation, Cogeneration Interruptible and Interruptible Services. 3 Table of Contents As part of the BPU's approval of the Clean Energy Future-Energy Efficiency (CEF-EE) filing in 2021, we implemented the Conservation Incentive Program (CIP) that trues up PSE&G’s distribution margin to a rate case-approved baseline per customer for the majority of our customers.
MD&A—Executive Overview of 2023 and Future Outlook and Item 8. Note 13. Commitments and Contingent Liabilities. Markets and Market Pricing All of PSEG Power’s nuclear generation assets are located within the PJM RTO. Our nuclear generating units’ performance, together with the PTC, have a considerable effect on our profitability.
For additional information and a discussion of risks, see Item 1A. Risk Factors, Item 7. MD&A—Executive Overview of 2024 and Future Outlook and Item 8. Note 13. Commitments and Contingent Liabilities. Markets and Market Pricing All of PSEG Power’s nuclear generation assets are located within the PJM RTO.
Commitments and Contingent Liabilities. 14 Table of Conte n t s Air Pollution Control Our facilities are subject to federal, state and local regulation that requires controls of emissions from sources of air pollution and imposes recordkeeping, reporting and permit requirements.
Air Pollution Control Our facilities are subject to federal, state and local regulation that requires controls of emissions from sources of air pollution and imposes recordkeeping, reporting and permit requirements. Water Pollution Control The Federal Water Pollution Control Act prohibits the discharge of pollutants from point sources to water, except pursuant to a duly issued permit.
We provide compensation to our workforce and a benefit program that is designed to support mental and physical health and emotional and financial wellness. In 2023, we performed a total rewards study, which included a comprehensive evaluation of our performance management process, compensation structure and design as well as pay fairness review.
Total Rewards Program We support the well-being of our employees through a comprehensive total rewards program. We provide competitive compensation to our workforce and a benefit program that is designed to support emotional and physical health as well as financial wellness and wellbeing.
Rostiac 53 SVP - Human Resources, Chief Human Resources and Chief Diversity Officer - Services January 2020 to present SVP - Human Resources and Chief Human Resources Officer - Services September 2019 to January 2020 VP - Talent, Development and Diversity October 2012 to September 2019 Richard T.
Rostiac 54 SVP - Human Resources, Chief Human Resources and Chief Diversity Officer - Services January 2020 to present SVP - Human Resources and Chief Human Resources Officer - Services September 2019 to January 2020 Richard T. Thigpen 64 SVP - Corporate Citizenship - Services July 2018 to present Rose M.
These clauses permit the flow-through of costs to, or the recovery of investments from, customers related to specific programs, outside the context of base rate proceedings. Recovery of these costs or investments is subject to BPU approval for which we make periodic filings.
In addition to base rates, we recover certain costs or earn on certain investments pursuant to mechanisms known as adjustment clauses. These clauses permit the flow-through of costs to, or the recovery of investments from, customers related to specific programs, outside the context of base rate proceedings.
BPU regulation can also have a direct or indirect impact on our power generation business as it relates to energy supply agreements and energy policy in New Jersey. New Jersey Energy Master Plan (EMP) and Future of Gas Stakeholder Proceeding —In January 2020, the State of New Jersey released its EMP.
PSE&G’s participation in solar, EV and EE programs is also regulated by the BPU, as the terms and conditions of these programs are approved by the BPU. BPU regulation can also have a direct or indirect impact on our power generation business as it relates to energy supply agreements and energy policy in New Jersey.
The PTC rate and the gross receipts threshold are subject to annual inflation adjustments. Until additional guidance is issued by the U.S. Treasury, we are unable to fully determine the impacts of the PTC. PSEG Power also sells wholesale natural gas, primarily through a full-requirements BGSS contract with PSE&G to meet the needs of PSE&G’s default service customers.
Treasury, the final realized value of the PTC is subject to adjustment, which may be material. PSEG Power also sells wholesale natural gas, primarily through a full-requirements BGSS contract with PSE&G to meet the needs of PSE&G’s default service customers.
We rely on our inclusive culture to support our many stakeholders including employees, customers, and the many diverse communities we serve. We believe in treating people with dignity and respect, protecting each of our fundamental human rights, and we strive to maintain the high standards of ethical conduct on which our business and reputation have been built.
We believe in treating people with dignity and respect, protecting each of our fundamental human rights, and striving to maintain the high standards of ethical conduct on which our business and reputation have been built. The Organization and Compensation Committee of the PSEG Board of Directors is responsible for the oversight of PSEG’s human capital management strategy and risks.
While there is not a substantial amount of net metered generation in our territory, a growing amount, and/or other changes in customer usage behavior could lead to a smaller base of customer usage to recover our costs, resulting in higher rates overall.
Further rate regulated recovery methods, such as net metered generation and/or changes in customer usage behavior could lead to a reduction in billed customer usage to recover our costs, resulting in higher rates overall.
They authorize the EPA, the New Jersey Department of Environmental Protection (NJDEP) and private parties to commence lawsuits to compel clean-ups or seek reimbursement for such remediation. The clean-ups can be more complicated and costly when the hazardous substances are in or under a body of water.
They also impose liability for damages to the environment, including cash penalties. Site Remediation —Federal and state environmental laws and regulations require the cleanup of discharged hazardous substances. They authorize the EPA, the New Jersey Department of Environmental Protection (NJDEP) and private parties to commence lawsuits to compel clean-ups or seek reimbursement for such remediation.
Our CEF-Energy Storage (ES) program, which was filed with the BPU in October 2018, is being held in abeyance.
Our CEF-Energy Storage (ES) program, which was filed with the BPU in October 2018, is being held in abeyance. GSMP II Extension —designed to replace at least 400 miles of cast iron and unprotected steel mains and services in our gas system.
These rates change annually on June 1 and are based on the average price obtained at auctions in the current year and two prior years.
The first type provides default supply service for smaller C&I customers and residential customers at seasonally-adjusted fixed prices for a three-year term (BGS-Residential Small Commercial Pricing (RSCP)). These rates change annually on June 1 and are based on the average price obtained at auctions in the current year and two prior years.
We historically have sold a portion of our anticipated generation over a multi-year forward horizon, normally over a period of two to three years. As of the end of 2023, we have hedged approximately 90% to 95% of its expected generation output for 2024.
Treasury, potential impacts on hedging strategies and overall financial support. We historically have sold a portion of our anticipated generation over a multi-year forward horizon, normally over a period of two to three years.
Our competitors include but are not limited to merchant generators, utility generators, energy marketers , retailers , private equity firms , and other financial entities. New additions of lower-cost or more efficient generation capacity, as well as subsidized generation capacity, or technological advances could impact forward market prices in the future.
Our competitors include but are not limited to merchant generators, utility generators, energy marketers, retailers, private equity firms, and other financial entities.

… 128 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

90 edited+17 added−28 removed111 unchanged
Biggest changeFactors that may cause market price fluctuations include: 22 Table of Conte n t s • increases and decreases in generation capacity, including the addition of new supplies of power as a result of the development of new power plants, expansion of existing power plants or additional transmission capacity; • severe weather conditions; • power supply disruptions, including power plant outages and transmission disruptions; • climate change, and weather conditions, particularly unusually mild summers or warm winters in our market areas; • seasonal fluctuations; • economic and political conditions that could negatively impact the demand for power or PTCs on our nuclear generation units; • changes in the supply of, and demand for, energy commodities; • development of new fuels or new technologies for the production or storage of power; • incurring penalties due to generation performance failure when called on by PJM during emergency situations; • federal and state regulations and actions of PJM and changing PJM market rules; and • federal and state power, market and environmental regulation and legislation, including financial incentives for new renewable energy generation capacity that could lead to oversupply and price suppression.
Biggest changeFactors that may cause market price fluctuations include: • changes in demand on the system, which could be impacted by new large customers, including data centers, electrification and other factors; • increases and decreases in generation capacity, including the addition of new supplies of power as a result of the development of new power plants, expansion of existing power plants, continuing retirement of existing generation units, inability of new generating units to be placed online, the retention of power plants that were expected to be retired or recently retired units being returned to service, the extent to which those generating units are firm or intermittent, or additional transmission capacity; • severe weather conditions; • power supply disruptions, including power plant outages and transmission disruptions; • climate change, and weather conditions, particularly unusually mild summers or warm winters in our market areas; • seasonal fluctuations; • economic and political conditions that could negatively impact the demand for power or PTCs on our nuclear generation units; • changes in the supply of, and demand for, energy commodities; • development of new fuels or new technologies for the production or storage of power; • incurring penalties due to generation performance failure when called on by PJM during emergency situations; • federal and state regulations and actions of PJM and changing PJM market rules, including capacity market auction delays and/or rule changes that could materially impact prices; and • federal and state power, market and environmental regulation and legislation, including financial incentives for new renewable energy generation capacity that could lead to oversupply and price suppression.
Further, climate change may adversely impact the economy and reduced economic and consumer activity in our service areas could lower demand for electricity and gas we deliver. Any one or all of these factors could impact the need to invest in our electric and gas T&D systems and, therefore, the rate of growth of our company.
Further, climate change may adversely impact the economy and reduced economic and consumer activity in our service areas could lower demand for electricity and gas we deliver. Any one or all of these factors could impact the need to invest in our electric and gas T&D systems and, therefore, our company growth rate.
In the competitive markets where we operate, natural gas prices have a major impact on the price that generators receive for their output and participants are not guaranteed any specific rate of return on their capital investments.
In the competitive markets where we operate, participants are not guaranteed any specific rate of return on their capital investments and natural gas prices have a major impact on the price that generators receive for their output.
For a discussion of recent changes in energy regulatory policies that may affect our business and results of operations, see Item 1. Regulatory Issues—Federal Regulation. Further, some of the market-based mechanisms in which we participate are at times the subject of review or discussion by some of the participants in the New Jersey and federal arenas.
For a discussion of recent changes in energy regulatory policies that may affect our business and results of operations, see Item 1. Business—Regulatory Issues—Federal Regulation. Further, some of the market-based mechanisms in which we participate are at times the subject of review or discussion by some of the participants in the New Jersey and federal arenas.
If we determine that it is necessary to retire one of our nuclear generating stations before the end of its useful life, there is a risk that it will no longer meet the NRC minimum funding requirements due to the earlier commencement of decommissioning activities and a shorter time period over which the NDT investments could appreciate in value.
If we determine that it is necessary to retire one of our nuclear generating stations before the end of its useful life, there is a higher risk that it will no longer meet the NRC minimum funding requirements due to the earlier commencement of decommissioning activities and a shorter time period over which the NDT investments could appreciate in value.
The successful construction and development of these projects will depend, in part, on our ability to: • obtain necessary governmental and regulatory approvals; • obtain environmental permits and approvals; • obtain community support for such projects to avoid delays in the receipt of permits and approvals from regulatory authorities; • obtain customer support for investments made at their premises; • obtain property/land rights in property-constrained areas and at a reasonable cost; • complete such projects within budgets and on commercially reasonable terms and conditions; • complete supporting information technology (IT), cybersecurity and physical security upgrades; • obtain any necessary debt financing on acceptable terms and/or necessary governmental financial incentives; • ensure that contracting parties, including suppliers, perform under their contracts in a timely and cost-effective manner; and • timely recovery of these investments through rates.
The successful construction and development of these projects will depend, in part, on our ability to: • obtain necessary governmental and regulatory approvals; • obtain environmental permits and approvals; • obtain governmental and community support for such projects to avoid delays in the receipt of permits and approvals from regulatory authorities; • obtain customer support for investments made at their premises; • obtain property/land rights in property-constrained areas and for greenfield locations, and at a reasonable cost; • complete such projects within budgets and on commercially reasonable terms and conditions; • complete supporting information technology (IT), cybersecurity and physical security upgrades; • obtain any necessary debt financing on acceptable terms and/or necessary governmental financial incentives; • ensure that contracting parties, including suppliers, perform under their contracts in a timely and cost-effective manner; and • timely recovery of these investments through rates.
In addition, the effects of climate change will have increased the physical risks to our facilities and operations resulting from such climate hazards as more severe weather events (extreme wind, rainfall and flooding), such as experienced from Superstorm Sandy and Tropical Storms Isaias and Ida, sea level rise, and extreme heat.
In addition, the effects of climate change will have increased the physical risks to our facilities and operations resulting from such climate hazards as more severe weather events (extreme wind, rainfall and flooding), such as experienced from Superstorm Sandy and Tropical Storms Isaias and Ida, sea level rise, and extreme heat and drought.
Developing and implementing plans for compliance with GHG emissions reduction, clean/renewable energy requirements, or for achieving voluntary climate commitments can lead to additional capital, personnel, and Operation and Maintenance (O&M) expenditures and could significantly affect the economic position of existing operations and proposed projects.
Developing and implementing plans for compliance with GHG emissions reduction, clean/renewable energy requirements, or for achieving voluntary climate commitments can lead to additional capital and Operation and Maintenance (O&M) expenditures and could significantly affect the economic position of existing operations and proposed projects.
Failure to hire and adequately train and retain employees, including the transfer of significant historical knowledge and expertise to new employees, may adversely affect our results of operations, financial position and cash flows. Increases in the costs of equipment and materials, fuel, services and labor could adversely affect our operating results.
Failure to hire and adequately train and retain employees, including the transfer of significant historical knowledge and expertise to new employees, may adversely affect our results of operations, financial position and cash flows. Inflation, including increases in the costs of equipment and materials, fuel, services and labor could adversely affect our operating results.
Although our fuel contract portfolio provides a degree of hedging against these market risks, such hedging may not be effective and future increases in our fuel costs could materially and adversely affect our liquidity, financial condition and results of operations.
Although our fuel contract portfolio provides a degree of hedging against these market risks, such hedging may not be effective and future increases in our fuel costs could materially and adversely affect our financial condition and results of operations.
Transmission Planning —FERC Order 1000 has generally opened transmission development to competition from independent developers, allowing such developers to compete with incumbent utilities for the construction and operation of transmission facilities in its service territory.
Transmission Planning —FERC Order 1000 generally opened transmission development to competition from independent developers, allowing such developers to compete with incumbent utilities for the construction and operation of transmission facilities in its service territory.
In addition, we face risks with regard to the delivery to, and the use of nuclear fuel by, our power plants including the following: • creditworthiness of third-party suppliers, defaults by third-party suppliers on supply obligations and our ability to replace supplies currently under contract may delay or prevent timely delivery; • market liquidity for physical supplies of such fuels or availability of related services (e.g., fabrication) may be insufficient or available only at prices that are not acceptable to us; • variation in the quality of such fuels may adversely affect our power plant operations; • domestic and foreign legislative or regulatory actions or requirements may increase the cost of such fuels; and • the loss of critical infrastructure, acts of war or terrorist attacks (including cybersecurity breaches) or catastrophic events such as fires, earthquakes, explosions, floods, severe storms or other similar occurrences could impede the delivery of such fuels.
In addition, we face risks with regard to the delivery to, and the use of nuclear fuel by, our power plants including the following: • creditworthiness of third-party suppliers, defaults by third-party suppliers on supply obligations and our ability to replace supplies currently under contract may delay or prevent timely delivery; 26 Table of Contents • market liquidity for physical supplies of such fuels or availability of related services (e.g., fabrication) may be insufficient or available only at prices that are not acceptable to us; • variation in the quality of such fuels may adversely affect our power plant operations; • domestic and foreign legislative or regulatory actions or requirements may impact the availability of and/or increase the cost of such fuels; and • the loss of critical infrastructure, acts of war or terrorist attacks (including cybersecurity breaches) or catastrophic events such as fires, earthquakes, explosions, floods, severe storms or other similar occurrences could impede the delivery of such fuels.
Cybersecurity risks to our operations include: • disruption of the operation of our assets, the fuel supply chain, the power grid and gas T&D, • theft of confidential company, employee, shareholder, vendor or customer information, and critical energy infrastructure information, which may cause us to be in breach of certain covenants and contractual or legal obligations and pose risk to our system and our customers, • general business system and process interruption or compromise, including preventing us from servicing our customers, collecting revenues or the ability to record, process and/or report financial information correctly, and • breaches of vendors’ infrastructures where our confidential information is stored.
Cybersecurity risks to our operations include: • disruption of the operation of our assets, the fuel supply chain, the power grid and gas T&D, • theft of confidential company, employee, shareholder, vendor or customer information, and critical energy infrastructure information, which may cause us to be in breach of certain covenants and contractual, legal or regulatory obligations and pose risk to our system and our customers, • general business system and process interruption or compromise, including preventing us from servicing our customers, working remotely, collecting revenues or the ability to record, process and/or report financial information correctly, and • breaches of vendors’ infrastructures where our confidential information is stored.
The introduction or expansion of technologies related to energy generation, distribution and consumption and changes in customer usage patterns could adversely impact us. Federal and state incentives for the development and production of renewable sources of power have facilitated the penetration of competing technologies, such as wind, solar, and commercial-sized power storage.
The introduction or expansion of technologies related to energy generation, distribution and consumption and changes in customer usage patterns could adversely impact us. Federal and state incentives for the development and operation of renewable sources of power have facilitated the penetration of competing technologies, such as wind, solar, and commercial-sized power storage.
Such actions could adversely affect our costs, competitiveness and future investments, which could be material to our financial position, results of operations and cash flow. For our T&D business, the cost of storm restoration efforts may not be fully recoverable through the regulatory process.
Such actions could adversely affect our costs, competitiveness, future investments and customer rates, which could be material to our financial position, results of operations and cash flow. For our T&D business, the cost of storm restoration efforts may not be fully recoverable through the regulatory process.
Cybersecurity attacks or intrusions or other disruptions to our IT, operational or other systems could adversely impact our businesses. Cybersecurity threats to the energy market infrastructure are increasing in sophistication, magnitude and frequency, particularly with the regularity of virtual operations.
Cybersecurity attacks, data breaches, or intrusions or other disruptions to our IT, operational or other systems could adversely impact our businesses. Cybersecurity threats to the energy market infrastructure are increasing in sophistication, magnitude and frequency, particularly with the regularity of virtual operations.
Our and third-party operational and IT systems and products may be vulnerable to cybersecurity attacks involving fraud, malice or oversight on the part of our employees, other insiders or third parties, whether domestic or foreign sources.
Our and Nth-party operational and IT systems and products may be vulnerable to cybersecurity attacks involving fraud, malice or oversight on the part of our employees, other insiders or Nth parties, whether domestic or foreign sources.
Additional funding requirements for our defined benefit plans could be caused by changes in required or voluntary contributions, an increase in the number of employees becoming eligible to retire and changes in life expectancy assumptions. A decline in the market value of our NDT Fund could increase PSEG Power’s funding requirements to decommission its nuclear plants.
Additional funding requirements for our defined benefit plans could be 24 Table of Contents caused by changes in required or voluntary contributions, an increase in the number of employees becoming eligible to retire and changes in life expectancy assumptions. A decline in the market value of our NDT Fund could increase PSEG Power’s funding requirements to decommission its nuclear plants.
ITEM 1A. RISK FACTORS The following factors should be considered when reviewing our business. These factors could have a material adverse impact on our business, prospects, financial position, results of operations or cash flows and could cause results to differ materially from those expressed elsewhere in this report.
ITEM 1A. RIS K FACTORS The following factors should be considered when reviewing our business. These factors could have a material adverse impact on our business, prospects, financial position, results of operations or cash flows and could cause results to differ materially from those expressed elsewhere in this report.
We and our third-party vendors have been and will continue to be subject to cybersecurity attacks, including but not limited to ransomware, denial of service, business email compromises, and malware attacks.
We and our Nth-party vendors have been and will continue to be subject to cybersecurity attacks, including but not limited to ransomware, denial of service, business email compromises, and malware attacks.
We may be adversely affected by asset and equipment failures, accidents, critical operating technology or business system failures, natural disasters, severe weather events, acts of war or terrorism or other acts of violence, sabotage, physical attacks or security breaches, cyberattacks, or other incidents, including pandemics such as the coronavirus pandemic, that impact our ability to provide safe and reliable service to our customers and remain competitive and could result in substantial financial losses.
We may be adversely affected by asset and equipment failures, accidents, critical operating technology or business system failures, natural disasters, severe weather events, acts of war or terrorism or other acts of violence, sabotage, physical attacks or security breaches, cyberattacks, or other incidents, including pandemics, that impact our ability to provide safe and reliable service to our customers and remain competitive and could result in substantial financial losses.
Some issues that could impact the operation of our facilities are: • breakdown or failure of equipment, IT, processes or management effectiveness; • disruptions in the transmission of electricity; • labor disputes or work stoppages; • fuel supply interruptions; 24 Table of Conte n t s • limitations which may be imposed by environmental or other regulatory requirements; and • operator error, acts of war or terrorist attacks (including physical or cybersecurity breaches) or catastrophic events such as fires, earthquakes, explosions, floods, severe weather or other similar occurrences.
Some issues that could impact the operation of our facilities are: • breakdown or failure of equipment, IT, processes or management effectiveness; • disruptions in the transmission of electricity; • labor disputes or work stoppages; • fuel supply interruptions; • limitations which may be imposed by environmental or other regulatory requirements; and • operator error, acts of war or terrorist attacks (including physical or cybersecurity breaches) or catastrophic events such as fires, earthquakes, explosions, floods, severe weather or other similar occurrences.
The amount of such payments could be substantial and could have a material adverse effect on our financial condition, results of operations and cash flows. In addition, changing capacity performance rules and/or failure to follow existing rules – by PJM or market participants – creates regulatory uncertainty and reliability risk.
The amount of such payments could be substantial and could have a material adverse effect on our financial condition, results of operations and cash flows. In addition, changing market design rules, including capacity performance rules and timing of capacity market auctions, and/or failure to follow existing rules – by PJM or market participants – creates regulatory uncertainty and reliability risk.
Further, new types of cyberattacks, whether directed at our own infrastructure and technology and operational systems or that of third parties, may be generated or enhanced through the use of Artificial Intelligence (AI). A successful cybersecurity attack may result in unauthorized use of our systems to cause disruptions at a third party.
Further, new types of cyberattacks, whether directed at our own infrastructure and technology and operational systems or that of third parties, may be generated or enhanced through the use of Artificial Intelligence (AI) and/or cloud-based infrastructure. A successful cybersecurity attack may result in unauthorized use of our systems to cause disruptions at an Nth party.
PSE&G began receiving a 50 basis point adder for RTO membership in 2008. Elimination of the adder for RTO membership would reduce PSE&G’s annual Net Income and annual cash inflows by approximately $40 million.
PSE&G began receiving a 50 basis 29 Table of Contents point adder for RTO membership in 2008. Elimination of the adder for RTO membership would reduce PSE&G’s annual Net Income and annual cash inflows by approximately $40 million.
Over the past several years, there have been various changes to existing environmental laws and regulations and this trend may continue.
Over the past several years, there have been various changes to make existing environmental laws and regulations stricter and this trend may continue.
We may also be unable to successfully recover certain of these cost increases through our existing regulatory rate structures, in the case of PSE&G, or our contracts with our customers, in the case of PSEG Power.
We may also be unable to successfully recover certain 32 Table of Contents of these cost increases through our existing regulatory rate structures, in the case of PSE&G, or our contracts with our customers, in the case of PSEG Power.
PSEG’s, PSE&G’s and PSEG Power’s bank credit agreements, contain certain limitations on the incurrence of liens and PSEG Power’s bank credit agreements also contain limitations on the incurrence of certain subsidiary debt. The PSEG Power term loan agreement contains a change-of-control clause, which includes PSEG Power ceasing to be a wholly owned subsidiary of PSEG.
PSEG’s, PSE&G’s and PSEG Power’s bank credit agreements, contain certain limitations on the incurrence of liens and PSEG Power’s bank credit agreements also contain limitations on the incurrence of certain subsidiary debt. PSEG Power's term loan agreements contain a change-of-control clause, which includes under certain circumstances, PSEG Power ceasing to be a wholly owned subsidiary of PSEG.
The ability to arrange financing and to refinance existing debt and the costs of such financing or refinancing depend on numerous factors including, among other things: • general economic and capital market conditions, including but not limited to, prevailing interest rates; • the availability of credit from banks and other financial institutions; • tax, regulatory and securities law developments; • for PSE&G, our ability to obtain necessary regulatory approvals for the incurrence of additional indebtedness; • investor confidence in us and our industry; 19 Table of Conte n t s • our current level of indebtedness and compliance with covenants in our debt agreements; • the success of current projects and the quality of new projects; • our current and future capital structure; • our financial performance and the continued reliable operation of our business; and • maintenance of our investment grade credit ratings.
The ability to arrange financing and to refinance existing debt and the costs of such financing or refinancing depend on numerous factors including, among other things: • general economic and capital market conditions, including but not limited to, prevailing interest rates; • the availability of credit from banks and other financial institutions; • tax, regulatory and securities law developments; • for PSE&G, our ability to obtain necessary regulatory approvals for the incurrence of additional indebtedness; • investor confidence in us, our regulatory environment and our industry; • our current level of indebtedness and compliance with covenants in our debt agreements; • the success of current projects and the quality of new projects; • the predictability of our cash flows; • our current and future capital structure; • our financial performance and the continued reliable operation of our business; and • maintenance of our investment grade credit ratings.
These events could result in increased political, economic, financial and insurance market instability, a lack of available insurance and volatility in power and fuel markets, which could materially adversely affect our business and results of operations, including our ability to access capital on terms and conditions acceptable to us.
These events could result in increased political, economic, financial and insurance market instability, a lack of available insurance or the availability of insurance on commercially reasonable terms, and volatility in power and fuel markets, which could materially adversely affect our business and results of operations, including our ability to access capital on terms and conditions acceptable to us.
Our ability to comply with these covenants may be affected by events beyond our control.
Our ability to comply with these and future covenants may be affected by events beyond our control.
Moreover, new or updated security laws or regulations , including laws and regulations that respond to evolving application of AI, or unforeseen threat sources could require changes in current measures taken by us and our business operations, which could result in increased costs and 20 Table of Conte n t s adversely affect our financial statements.
Moreover, new or updated security laws or regulations , including laws and regulations that respond to evolving application of AI, or unforeseen threat sources could require changes in current measures taken by us and our business operations, which could result in increased costs and adversely affect our financial statements.
Failure to maintain MBR authorization, or the effects of any severe mitigation measures that would be required if market power was 26 Table of Conte n t s evaluated differently in the future, could have a material adverse effect on our business, financial condition and results of operations.
Failure to maintain MBR authorization, or the effects of any severe mitigation measures that would be required if market power was evaluated differently in the future, could have a material adverse effect on our business, financial condition and results of operations.
Note 13. Commitments and Contingent Liabilities. In addition, PSE&G procures the supply requirements of its default service BGSS gas customers through a full-requirements contract with PSEG Power. Government officials, legislators and advocacy groups are aware of the affiliation between PSE&G and PSEG Power.
In addition, PSE&G procures the supply requirements of its default service BGSS gas customers through a full-requirements contract with PSEG Power. Government officials, legislators and advocacy groups are aware of the affiliation between PSE&G and PSEG Power.
We may not be able to obtain waivers, amendments or alternative financing, or if obtainable, it could be on terms that 21 Table of Conte n t s are not acceptable to us. Any of these events could adversely impact our financial condition, results of operations and cash flows.
We may not be able to obtain waivers, amendments or alternative financing, or if obtainable, it could be on terms that are not acceptable to us. Any of these events could adversely impact our financial condition, results of operations and cash flows.
In addition, if legislative and regulatory structures were to evolve in such a way that PSE&G’s exclusive rights to serve its regulated customers were eroded, its future earnings could be negatively impacted. PSE&G also is pursuing a number of opportunities to expand its products and services to customers to support clean energy goals.
In addition, if legislative and regulatory structures were to evolve in such a way that PSE&G’s exclusive rights to serve its regulated customers were eroded, its future earnings could be negatively impacted. 28 Table of Contents PSE&G also is pursuing a number of opportunities to expand its products and services to customers.
Any such event could have a material adverse effect on our financial condition or results of operations. Operational Risk —Operations and equipment reliability at any of our nuclear facilities could degrade to the point where an affected unit needs to be shut down or operated at less than full capacity.
Any such event could have a material adverse effect on our financial condition or results of operations. 31 Table of Contents Operational Risk —Operations and equipment reliability at any of our nuclear facilities, whether operated by us or our co-owner, could degrade to the point where an affected unit needs to be shut down or operated at less than full capacity.
AI algorithms that we or our third-party vendors use may be flawed or may be based on datasets that are biased or insufficient. These limitations or failures could result in reputational damage and legal liabilities. Developing, testing, and deploying resource-intensive AI systems may require additional investment and increase our costs.
AI algorithms that we or our Nth-party vendors use may be flawed or may be based on data sets that are biased or insufficient. These limitations or failures could result in reputational damage, unauthorized disclosure of data, and legal liabilities. Developing, testing, and deploying resource-intensive AI systems may require additional investment and increase our costs.
While Order 1000 retains limited carve-outs for certain projects that will continue to default to incumbents for construction responsibility, including immediately needed reliability projects, upgrades to existing transmission facilities, and projects cost-allocated to a single transmission zone, increased competition for transmission projects could decrease the value of new investments that would be subject to recovery by PSE&G under its rate base, which could have a material adverse impact on our financial condition and results of operations.
While Order 1000 retains limited carve-outs for certain projects that will continue to default to incumbents for construction responsibility, increased competition for transmission projects could decrease the value of new investments that would be subject to recovery by PSE&G under its rate base, which could have a material adverse impact on our financial condition and results of operations.
Failure to comply with these regulations could have a material adverse impact on our ability to operate our business and could result in fines, penalties or sanctions. Recovery of wholesale transmission rates —PSE&G’s wholesale transmission rates are regulated by FERC and are recovered through a FERC-approved formula rate. The revenue requirements are reset each year through this formula.
Failure to comply with these regulations could have a material adverse impact on our ability to operate our business and could result in fines, penalties or sanctions. Recovery of wholesale transmission rates —PSE&G’s wholesale transmission rates are regulated by FERC and our project costs are recovered through a FERC-approved formula rate.
Further, our business is subject to policy, regulatory, technology and economic uncertainties and contingencies, including regulatory approvals required for various of our clean energy initiatives, many of which are beyond our control and may affect our ability to implement our clean energy strategy and initiatives and achieve our goal of net zero GHG emissions by 2030 for Scopes 1 and 2 emissions, or other GHG emissions reduction or climate-related goals that we may set from time to time, in a cost-effective manner or at all.
Further, our business is subject to policy, regulatory, technology and economic uncertainties and contingencies, including regulatory approvals required for our various investments, many of which are beyond our control and may affect planned 20 Table of Contents investments and our ability to meet our targets of net zero GHG emissions by 2030 for Scopes 1 and 2 emissions, or other GHG emissions reduction or climate-related goals that we may set from time to time, in a cost-effective manner or at all.
Further, the BPU could take positions to exclude or limit utility participation in certain areas, such as renewable generation, EE, EV infrastructure, or energy storage programs, renewable natural gas or hydrogen projects, which would limit our relationship with customers and narrow our future growth prospects. We are subject to comprehensive federal regulation that affects, or may affect, our businesses.
Further, the BPU could take positions to exclude or limit utility participation in certain areas, such as renewable generation, EE, EV infrastructure, or energy storage programs, renewable natural gas or hydrogen projects, which would limit our relationship with customers and narrow our future growth prospects.
The occurrence of such challenges may subject PSEG Power to a level of scrutiny not faced by other unaffiliated competitors in those markets and could adversely affect retail rates received by PSE&G in an effort to offset any perceived benefit to PSEG Power from the affiliation.
The occurrence of such challenges may subject PSEG Power to a level of scrutiny not faced by other unaffiliated competitors in those markets and could even adversely affect retail rates received by PSE&G.
Electric usage could also be impacted by greater adoption of EVs, installation of distributed energy resources, such as behind the meter solar, 17 Table of Conte n t s installation of more energy efficient equipment, flexible load and/or energy storage, and other advances in technology.
Electric demand could also be impacted by electrification, including greater adoption of EVs, installation of distributed energy resources, such as behind the meter solar, installation of more energy efficient equipment, flexible load and/or energy storage, and other advances in technology.
Currently, we have several significant projects underway or being contemplated.
Currently, we have several significant capital investments underway or being contemplated.
Higher collateral requirements reduce available short-term liquidity and increase working capital costs. We may be unable to obtain an adequate nuclear fuel supply in the future. We obtain substantially all of our nuclear fuel supply from third parties pursuant to arrangements that vary in term, pricing structure, firmness and delivery flexibility.
We may be unable to obtain an adequate nuclear fuel supply in the future. We obtain substantially all of our nuclear fuel supply from third parties pursuant to arrangements that vary in term, pricing structure, firmness and delivery flexibility.
We have historically benefited from access to mutual aid, a voluntary and reciprocal arrangement with other utilities that provides access to a trained and flexible labor force which has helped to reduce outage restoration times during extreme weather events.
We have historically benefited from access to mutual aid, a voluntary and reciprocal arrangement with other utilities that provides access to a trained and flexible labor force which has helped to reduce outage restoration times during extreme weather events. There is no guarantee that we will have continued access to mutual aid as the frequency of severe weather events rises.
On the other hand, in the event that the political, policy, regulatory or legislative support for clean energy projects declines, the benefits or feasibility of certain investments we may have made in such projects, including those in the development stage, may be reduced.
On the other hand, in the event that the political, policy, regulatory or legislative support for clean energy projects declines, the benefits or feasibility of certain investments we could potentially make may be reduced.
Developing an accurate load forecast that reflects the clean energy targets of the state – and other states in PJM – is critical to ensure that transmission is planned and built where it is needed to maintain reliability.
Developing an accurate load forecast that reflects customer demand of the state – and other states in PJM – is critical to ensure that transmission is planned and built where it is needed to maintain reliability and that sufficient generation is procured in the capacity market.
Our generation business currently involves the establishment of forward sale positions in the wholesale energy markets on long-term and short-term bases. To the extent that we have produced or purchased energy in excess of our contracted obligations, a reduction in market prices could reduce profitability.
Our generation business currently involves the establishment of forward sale positions in the wholesale energy markets on long-term and short-term bases. If the realized value of our generation falls outside of the PTC thresholds, to the extent that we have contracted obligations in excess of energy we have produced, an increase in market prices could reduce profitability.
Long-lived assets represent approximately 75% and 82% of the total assets of PSEG and PSE&G, respectively, as of December 31, 2023.
Long-lived assets represent approximately 73% and 80% of the total assets of PSEG and PSE&G, respectively, as of December 31, 2024.
Transmission projects are subject to a FERC-approved transmission expansion planning process while distribution and clean 25 Table of Conte n t s energy projects are subject to approval by the BPU. The costs of PSE&G’s transmission projects are subject to prudency challenge at FERC and PSE&G’s rates themselves may also be challenged at FERC.
Transmission projects are subject to the rules governing PJM's FERC-approved transmission expansion planning process as well as other FERC rules, while distribution and clean energy projects are subject to approval by the BPU. The costs of PSE&G’s transmission projects are subject to prudency challenge at FERC and PSE&G’s rates themselves may also be challenged at FERC.
In addition, in order to enable the New Jersey clean energy economy, sustained grid modernization will be required to accommodate increased EE, EV infrastructure, increased penetration of distributed energy resources on the electric system, such as on-site solar generation and also anticipated increased deployment of energy storage, fuel cells, and DR technologies.
Sustained distribution grid modernization will also be required to accommodate increased EE, EV infrastructure, increased penetration of distributed energy resources on the electric system, such as on-site solar generation and also potential deployment of 23 Table of Contents energy storage, fuel cells, and DR technologies.
Failure to comply with applicable NERC standards could result in penalties or increased costs to bring such facilities into compliance. Such penalties and costs could materially adversely impact our business, results of operations and cash flows. Adverse audit findings and/or penalties for non-compliance also pose reputational risk to us.
Such penalties and costs could materially adversely impact our business, results of operations and cash flows. Adverse audit findings and/or penalties for non-compliance could also pose reputational risk to us.
Further, certain negative public and political views on natural gas could result in diminishing political support for utility investments in gas infrastructure.
Further, certain negative public and political views by certain stakeholders on natural gas and other types of energy infrastructure could result in diminishing support for those investments.
In addition, the operation of our business is dependent upon the IT systems of third parties, including our vendors, regulators, RTOs and ISOs, among others.
In addition, the operation of our business is dependent upon the IT systems of Nth parties (i.e., our third parties and other business relationships, including fourth parties, etc.), including our 22 Table of Contents vendors, regulators, RTOs and ISOs, among others.
The amount and scope of insurance we maintain against losses that result from cybersecurity incidents may not be sufficient to cover losses or adequately compensate for resulting business disruptions. For a discussion of state and federal cybersecurity regulatory requirements and information regarding our cybersecurity program, see Item 1C. Cybersecurity.
The amount and scope of insurance we maintain against losses that result from cybersecurity incidents may not be sufficient to cover losses or adequately compensate for resulting business disruptions.
MD&A—Executive Overview of 2023 and Future Outlook, in April 2019, PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants were awarded ZECs by the BPU through May 2022. In April 2021, these nuclear plants were awarded ZECs for the three-year period starting June 2022. In August 2022, the IRA was signed into law expanding incentives promoting carbon-free generation.
MD&A—Executive Overview of 2024 and Future Outlook, PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants have been awarded ZECs by the BPU through May 2025. 30 Table of Contents In August 2022, the IRA was signed into law expanding incentives promoting carbon-free generation.
The enactment of additional federal or state tax legislation and clarification of previously enacted tax laws, including anticipated U.S. Treasury guidance relating to the 15% corporate alternative minimum tax and energy tax credit provisions, could have a material impact on our effective tax rate and cash tax position. 29 Table of Conte n t s ITEM 1B.
The enactment, amendment or repeal of federal or state tax legislation and/or the clarification of previously enacted tax laws, including U.S. Treasury guidance relating to the 15% CAMT, the nuclear PTC and other energy tax credit provisions, could have a material impact on our effective tax rate and cash tax position.
In the spot markets, we are exposed to the risks of the default sharing mechanisms that exist in those markets, some of which attempt to spread the risk across all participants. Therefore, a default by a third party could increase our costs, which could negatively impact our results of operations and cash flows.
Any failure of these counterparties to perform could have a material adverse impact on our results of operations, cash flows and financial position. In the spot markets, we are exposed to the risks of the default sharing mechanisms that exist in those markets, some of which attempt to spread the risk across all participants.
If we are unable to extend certain significant contracts on terms acceptable to us, this may negatively affect our financial condition and operating results We are party to several contracts from which we derive significant revenues.
If we are unable to enter into or extend certain significant contracts, this may negatively affect our financial condition and operating results We are party to, and are also exploring opportunities to enter into, several contracts from which we currently or may in the future derive significant revenues.
Increases in market prices also affect our ability to hedge generation output and fuel requirements as the obligation to post margin increases with increasing prices. In addition, the volatility and potential for higher natural gas prices may have a material impact on collateral requirements related to the forward value of our open futures contracts.
In addition, the volatility and potential for higher natural gas or energy prices may have a material impact on collateral requirements related to the forward value of our open futures contracts. Higher collateral requirements reduce available short-term liquidity and increase working capital costs and may affect our ability to hedge generation output and fuel.
Higher costs from suppliers of equipment and materials, fuel, services and labor costs to attract and retain our workforce, could lead to increased costs, which could reduce our earnings.
Higher costs from suppliers of equipment and materials, fuel and services and labor and health care costs to attract and retain our workforce, as well as policy matters such as tax rates, tariffs and other policies impacting costs, could lead to increased costs, which could reduce our earnings.
Inability to maintain sufficient liquidity in the amounts and at the times needed or access sufficient capital at reasonable rates or on commercially reasonable terms could adversely impact our business.
This could cause price increases in some areas and delivery delays of certain goods, which could increase our costs and impact our operations. Inability to maintain sufficient liquidity in the amounts and at the times needed or access sufficient capital at reasonable rates or on commercially reasonable terms could adversely impact our business.
These contracts are subject to credit risk, which relates to the ability of our counterparties to meet their contractual obligations to us.
We are subject to third-party credit risk relating to our sale of nuclear generation output. We sell generation output through the execution of bilateral contracts. These contracts are subject to credit risk, which relates to the ability of our counterparties to meet their contractual obligations to us.
Treasury is expected to clarify the definition of gross receipts. The ZEC payment may be adjusted by the BPU to offset environmental or fuel diversity payments that a selected nuclear plant may receive from another source. Until additional guidance is issued by the U.S. Treasury, we are unable to fully determine the impacts of the PTC.
Treasury has not yet defined gross receipts. The ZEC payment will be adjusted by the BPU to offset environmental or fuel diversity payments that a selected nuclear plant may receive from another source. We continue to estimate the PTC while we await additional guidance from the U.S. Treasury. The U.S.
Our business plan calls for extensive investment in capital improvements and additions, including the construction of T&D facilities, modernizing and expanding existing infrastructure pursuant to investment programs that provide for current recovery in rates, and our CEF programs, which include providing incentives for customers to install high-efficiency equipment at their premises, constructing EV infrastructure, and implementing our smart meter program.
Our business plan calls for extensive investment in capital improvements and additions, including the construction of T&D facilities, modernizing and expanding existing infrastructure pursuant to investment programs that provide for current recovery in rates, addressing needs of new customers and increasing demand on the system, and our CEF programs, particularly our energy efficiency program which provides incentives for customers to install high-efficiency equipment at their premises and transmission capital investments outside of our utility service territory, as well as uprates and other potential investments at our nuclear facilities.
Artificial Intelligence is an emerging area of technology that has the potential to impact various aspects of our business operations and customer interactions. The development, adoption, and use for generative AI technologies are still in their early stages and ineffective or inadequate AI development or deployment practices by PSEG or third-party vendors could result in unintended consequences.
The development, adoption, and use for generative AI technologies are still in their early stages and ineffective or inadequate AI development or deployment practices by PSEG or Nth-party vendors could result in unintended consequences.
Any of these risks could cause the amounts of our investments and/or our return on these investments to be lower than expected, which could adversely impact our financial condition and results of operations through lower investment opportunities and/or lower returns.
Any of these risks could cause the amounts of our investments and/or our return on these investments to be lower than expected, which could adversely impact our financial condition and results of operations through lower investment opportunities and/or lower returns. 19 Table of Contents We are subject to physical, financial and transition risks related to climate change, including potentially increased legislative and regulatory burdens and changing customer preferences, and we may be subject to lawsuits, all of which could impact our businesses and results of operations.
The agreement provided that the settling parties will not seek changes to our transmission formula rate for three years. In April 2021, FERC issued a supplemental notice of proposed rulemaking to eliminate the incentive for RTO membership for transmitting utilities that have already received the incentive for three or more years.
The revenue requirements are reset each year through this formula. Our formula rate and its components can be challenged at FERC in the future. In April 2021, FERC issued a supplemental notice of proposed rulemaking to eliminate the incentive for RTO membership for transmitting utilities that have already received the incentive for three or more years.
Forward financial sales offset physical sales in the PJM RTO spot market. Our forward sales of energy and capacity assume sustained, acceptable levels of operating performance. Operations at any of our plants could degrade to the point where the plant has to shut down or operate at less than full capacity.
Operations at any of our plants could degrade to the point where the plant has to shut down or operate at less than full capacity.
Under these rules, generators located in constrained areas are paid more for their capacity so there is an incentive to locate in those areas where generation capacity is most needed. PJM’s capacity market design rules continue to evolve, including in response to efforts to integrate public policy initiatives into the wholesale markets, and recent extreme weather events in PJM.
Under these rules, generators located in constrained areas are paid more for their capacity so there is an incentive to locate in those areas where generation capacity is most needed.
Changes in prevailing market prices below the PTC threshold could have a material adverse effect on our financial condition and results of operations.
Lower natural gas prices often result in lower electricity prices, which could reduce our margins where our nuclear generation costs may not have declined similarly. 25 Table of Contents Changes in prevailing market prices below the PTC threshold could have a material adverse effect on our financial condition and results of operations.
The BPU also conducts periodic combined management/competitive service audits of New Jersey utilities related to affiliate standard requirements, competitive services, cross-subsidization, cost allocation and other issues. A finding by the BPU of non-compliance with these requirements could potentially impact our business, results of operations and cash flows. For information regarding PSE&G’s current affiliate and management audit, see Item 8.
A finding by the BPU of non-compliance with these requirements could potentially impact our business, results of operations and cash flows. For information regarding PSE&G’s most recent affiliate and management audit, see Item 8. Note 13. Commitments and Contingent Liabilities.
The supply chain of goods and services is currently being negatively impacted by several factors, including manufacturing labor shortages, domestic and international shipping constraints, increases in demand, and shortages of raw materials and specialty components. As a result, we are seeing price increases in some areas and delivery delays of certain goods.
The supply chain of goods and services could be impacted by several factors, including sanctions, tariffs, manufacturing labor shortages, domestic and international shipping constraints, increases in demand, and shortages of raw materials and 21 Table of Contents specialty components.
The continued development of competing on-site power generation and storage technologies and significant development of DSM and EE programs could alter the market and price structure for power generation and could result in a reduction in load requirements, negatively impacting our financial condition, results of operations and cash flows.
Additionally, the development of demand side management (DSM) and EE programs can impact demand requirements for electricity and natural gas markets. The development of competing on-site power generation could also result in a reduction in anticipated growth which could negatively impact our financial condition, results of operations and cash flows.
However, each of our nuclear units has contracted with a single fuel fabrication services provider, and transitioning to an alternative provider could take an extended period of time. This could have a material adverse impact on our business, the financial results of specific plants and on our results of operations.
The nuclear units we operate have a diversified portfolio of contracts and inventory that provide a substantial portion of our fuel raw material needs over the next several years. However, each of the nuclear units we operate has contracted with a single fuel fabrication services provider, and transitioning to an alternative provider could take an extended period of time.
Recently, the natural gas market and, therefore, energy markets have become more volatile due to higher domestic demand, increased natural gas exports and impacts from the global liquefied natural gas market, among other things. The price of natural gas is the primary driver of energy pricing in PJM.
The natural gas market and energy markets have been, and may continue to be, volatile due to higher domestic demand, increased natural gas exports and impacts from the global liquefied natural gas market, weather and other factors.
Significant changes in the price of nuclear fuel could affect our future results and impact our liquidity needs.
We must also comply with laws and regulations governing the transportation of such fuels. We are exposed to increases in the price of nuclear fuel, and significant changes in the price of nuclear fuel could affect our cash flow, future results and impact our liquidity needs.
We have been, and will continue to be, periodically audited by NERC for compliance with both Operations and Planning and Critical Infrastructure Protection standards and are subject to penalties for non-compliance with applicable NERC standards. NERC is conducting more frequent audits than was the case in the past and we must always be in a state of audit readiness.
We have been, and will continue to be, periodically audited by NERC for compliance with both Operations and Planning and Critical Infrastructure Protection standards and are subject to penalties for non-compliance with applicable NERC standards. Failure to comply with applicable NERC standards could result in penalties or increased costs to bring such facilities into compliance.

… 55 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

26 edited+0 added−3 removed9 unchanged
Biggest changeThe CISO has served in this role since September 2018. Our CISO has over 20 years of experience in IT security management and served as the director of information security and chief security architect in the insurance sector prior to joining PSEG.
Biggest changeThe CISO served in this role since July 2024. Our CISO has over 20 years of experience in cybersecurity and served as a VP, CISO in the manufacturing/chemicals sector prior to joining PSEG. Our CISO also started her career at the Department of Defense and led cyber teams in the financial and retail sectors.
Such physical security measures may include access control systems, video surveillance, around-the-clock command center monitoring, and physical barriers (such as fencing, walls, and bollards). Additional features of PSEG’s physical security program include threat intelligence, insider threat mitigation, background checks, a threat level advisory system, a business interruption management model, and active coordination with federal, state, and local law enforcement officials.
Physical security measures may include access control systems, video surveillance, around-the-clock command center monitoring, and physical barriers (such as fencing, walls, and bollards). Additional features of PSEG’s physical security program include threat intelligence, insider threat mitigation, background checks, a threat level advisory system, a business interruption management model, and active coordination with federal, state, and local law enforcement officials.
In addition, PSEG maintains a Risk Management Committee (RMC), responsible for assessing exposure to and determining PSEG's overall risk management strategy, including with respect to cybersecurity. The RMC, supported by the ERM function, is chaired by the SVP – AERC and consists of members of senior management including the CIDO and six other of the CEO’s direct reports.
In addition, PSEG maintains a Risk Management Committee (RMC), responsible for assessing exposure to and determining PSEG's overall risk management strategy, including with respect to cybersecurity. The RMC, supported by the ERM function, is chaired by the SVP, AERC and consists of members of senior management including the CIDO and six of the CEO’s other direct reports.
These efforts better enable all employees to identify potential cybersecurity risks and escalate them appropriately. • Incident Response Plans —We maintain and periodically update a cyber incident response plan that addresses the life cycle of a cybersecurity incident from a technical perspective (i.e., detection, response, and recovery), as well as a data breach response plan (with a focus on external communication/disclosure and legal compliance); and conduct regular tabletop exercises to test plan effectiveness (both internally and through external exercises). • Mobile Security —We maintain controls to prevent loss of data through mobile device channels. • Physical Security —We also maintain physical security measures to protect our OT systems, consistent with a defense in-depth and risk-tiered approach.
These efforts better enable all employees to identify potential cybersecurity risks and escalate them appropriately. • Incident Response Plans —We maintain and periodically update a cyber incident response plan that addresses the life cycle of a cybersecurity incident from a technical perspective (i.e., detection, response, and recovery), and a data breach response plan (with a focus on external communication/disclosure and legal compliance); and conduct regular tabletop exercises to test plan effectiveness (both internally and through external exercises). • Mobile Security —We maintain controls to prevent loss of data through mobile device channels. • Physical Security —We also maintain physical security measures to protect our OT systems, consistent with a defense in-depth and risk-tiered approach.
The CIDO has served in that position since August 2020 and is a direct report of the CEO. The CIDO has over 25 years of energy experience inclusive of leading technology compliance with cybersecurity regulations for nuclear, transmission, gas and corporate assets.
The CIDO has served in that position since August 2020 and is a direct report to the CEO . The CIDO has over 25 years of energy experience inclusive of leading technology compliance with cybersecurity regulations for nuclear, transmission, gas and corporate assets.
Audit Committee members have a courtesy invitation to all IOC meetings, have full access to IOC meeting materials, and receive the summary of IOC meetings from the IOC Chair noted above. • Governance, Nominating and Sustainability Committee and Audit Committee —These committees are briefed at least annually on enterprise-level risks and emerging risks, including those related to cybersecurity, and receive regular updates on PSEG RMC activities, including those related to cybersecurity. • Board of Directors, IOC, and Audit Committee —In providing oversight of risks from cybersecurity threats, the Board, IOC and Audit Committee are informed of cybersecurity risks by way of frequent reports on such topics as personnel and resources to monitor and address cybersecurity threats, technological advances in cybersecurity protection, rapidly evolving cybersecurity threats that may affect us and our industry, cybersecurity incident response and applicable cybersecurity laws, regulations and standards, as well as collaboration mechanisms with intelligence and enforcement agencies and industry groups to assure timely threat awareness and response coordination.
Audit Committee members have a courtesy invitation to all IOC meetings, have full access to IOC meeting materials, and receive the summary of IOC meetings from the IOC Chair as noted above. • Governance, Nominating and Sustainability Committee and Audit Committee —These committees are briefed at least annually on enterprise-level risks and emerging risks, including those related to cybersecurity, and receive regular updates on PSEG RMC activities, including those related to cybersecurity. • Board of Directors, IOC, and Audit Committee —In providing oversight of risks from cybersecurity threats, the Board, IOC, and Audit Committee are informed of cybersecurity risks through frequent reports on such topics as personnel and resources to monitor and address cybersecurity threats, technological advances in cybersecurity protection, rapidly evolving cybersecurity threats that may affect us and our industry, cybersecurity incident response and applicable cybersecurity laws, regulations and standards, as well as collaboration mechanisms with intelligence and enforcement agencies and industry groups to assure timely threat awareness and response coordination .
The IOC is informed about cybersecurity risks by the CIDO and/or the CISO, during the IOC’s four regularly scheduled meetings a year, which each include cybersecurity as a standing agenda item.
The IOC is informed about cybersecurity risks by the CIDO and/or the CISO, during the IOC’s four regularly scheduled meetings per year, which each include cybersecurity as a standing agenda item.
The CISO remains informed about the monitoring, prevention, detection, mitigation, and remediation of cybersecurity incidents through the members of the CISO’s cybersecurity, risk and compliance team, who are tasked with these responsibilities on a day-to-day basis. • Cybersecurity Council —The Cybersecurity Council, chaired by the CISO, ensures that senior management, and ultimately, the Board, are given the information required to exercise proper oversight over cybersecurity risks and that escalation procedures are followed.
The CISO remains informed about the monitoring, prevention, detection, mitigation, and remediation of cybersecurity incidents through the members of the CISO’s cybersecurity team, who are tasked with these responsibilities on a day-to-day basis. • Cybersecurity Council —The Cybersecurity Council, chaired by the CISO, ensures that senior management, and ultimately, the Board, are given the information required to exercise proper oversight over cybersecurity risks and that escalation procedures are followed.
The CIDO remains informed about the monitoring, prevention, detection, mitigation, and remediation of cybersecurity incidents through the CISO and other members of the cybersecurity, risk and compliance team, as appropriate, who are tasked with these responsibilities on a day-to-day basis. • CISO —The CISO has day-to-day responsibility for PSEG’s cybersecurity, including the assessment and management of material risks to PSEG from cybersecurity threats, and leads the cybersecurity, risk and compliance team.
The CIDO remains informed about the monitoring, prevention, detection, mitigation, and remediation of cybersecurity incidents through the CISO and other members of the cybersecurity team, as appropriate, who are tasked with these responsibilities on a day-to-day basis. • CISO — The CISO has day-to-day responsibility for PSEG’s cybersecurity, including the assessment and management of material risks to PSEG from cybersecurity threats, and leads the cybersecurity team.
In discharging its responsibilities related to cybersecurity threats, the RMC has received presentations from the CISO. To date, there has been no material impact or reasonably likely material impact on our business strategy, results of operations or financial condition from these attacks or other cybersecurity incidents, including as a result of prior cybersecurity incidents.
In discharging its responsibilities related to cybersecurity threats, the RMC has received presentations from the CISO. To date, there has been no material impact or reasonably likely material impact on our business strategy, results of operations or financial condition from cybersecurity attacks or incidents, including as a result of prior cybersecurity incidents .
This includes a risk-based vendor management program, which incorporates robust security contractual provisions, vendor security assessments and, if appropriate, periodic audits. • Technical Safeguards —We manage controls to protect our network perimeter, internal IT and Operational Technology (OT) environments, such as internal and external firewalls, network intrusion detection and prevention, penetration testing, vulnerability assessments, threat intelligence, anti-malware and access controls. • Training and Awareness —We provide mandatory annual cybersecurity training for all personnel with network access, as well as additional education for personnel with access to industrial control systems or customer information systems; and conduct phishing exercises with progressive consequences for failures.
This includes a risk-based vendor management program, which incorporates robust cybersecurity contractual provisions, vendor security assessments and, if appropriate, periodic audits. • Technical Safeguards —We manage controls to protect our network perimeter, internal IT and Operational Technology (OT) environments, such as internal and external firewalls, network intrusion detection and prevention, penetration testing, vulnerability assessments, threat intelligence, endpoint security and access controls. • Training and Awareness —We provide mandatory annual cybersecurity training for all personnel with network access, and additional education for personnel with access to industrial control systems and/or customer information systems; and conduct phishing exercises with progressive consequences for failures.
The ERM team, led by the SVP – Audit, Enterprise, Risk and Compliance (AERC) considers cybersecurity risks alongside other PSEG risks, and facilitates discussion with PSEG subject matter experts to identify cybersecurity risks, evaluate their potential severity and likelihood, identify mitigations, including those identified above, and assess the impact of those mitigations on residual risk.
The ERM team, led by the SVP, Audit, Enterprise, Risk and Compliance (AERC) considers cybersecurity risks alongside other PSEG risks, and facilitates discussion 34 Table of Contents with PSEG subject matter experts to identify cybersecurity risks, evaluate their potential severity and likelihood, identify mitigations, including those identified above, and assess the impact of those mitigations on residual risk .
Employees also receive periodic cybersecurity awareness messages and each October, in recognition of Cybersecurity Awareness Month, are invited to presentations throughout the month from internal and external cyber experts covering diverse cyber topics.
Employees also receive periodic cybersecurity awareness messages and each year, in recognition of Cybersecurity Awareness Month, are invited to presentations throughout October from internal and external cyber experts covering diverse cyber topics.
Regulatory agencies, including but not limited to the NRC and Transportation Security Administration, as well as NERC, inspect applicable components of our cybersecurity program. • Third-Party Service Provider Management —We maintain processes to oversee and identify risks from cybersecurity threats associated with our use of third-party service providers.
Regulatory agencies, including but not limited to the NRC and Transportation Security Administration (TSA), as well as NERC, inspect applicable components of our cybersecurity program. • Nth-Party Service Provider Management — We maintain processes to oversee and identify risks from cybersecurity threats associated with our use of Nth-party service providers .
Risk Management and Strategy Our processes for assessing, identifying, and managing material risks from cybersecurity threats include the following: • Ongoing Assessment —The Cybersecurity Risk and Compliance department, led by the Managing Director, Chief Information Security Officer (CISO), and reporting to the SVP, Chief Information and Digital Officer (CIDO) is staffed with cyber professionals tasked with the day-to-day responsibility of assessing material risks from cybersecurity threats.
Risk Management and Strategy Our processes for assessing, identifying, and managing material risks from cybersecurity threats include: • Ongoing Assessment —The Cybersecurity department, led by the VP, Chief Information Security Officer (CISO), and reporting to the SVP, Chief Information and Digital Officer (CIDO) is staffed with cyber professionals tasked with the day-to-day responsibility of assessing material risks from cybersecurity threats.
As noted above, the CIDO provides cybersecurity updates to the Board or its Committees twice per year, regularly attends and provides updates with the CISO to the IOC, and has met with the IOC, without other members of management present, during the IOC executive sessions.
As noted above, the CIDO provides cybersecurity updates to the Board or its Committees, regularly attends and provides updates with the CISO to the IOC, and has met with the IOC, without other members of management present, during the IOC executive sessions.
The Audit Committee receives a cybersecurity update twice a year from the CIDO, either with the full Board or the IOC in attendance.
The Audit Committee receives a cybersecurity update twice a year from the CISO, either with the full Board or the IOC in attendance.
PSEG’s Managing Counsel – Cybersecurity serves as counsel to the Cybersecurity Council. In providing oversight of risks from cybersecurity threats, Senior Management is informed of cybersecurity risks by way of updates shared during Cybersecurity Council meetings, as well as through notifications or updates by the CISO, pursuant to PSEG’s Cybersecurity Event Escalation and Incident Response Practice.
PSEG’s Corporate Secretary and Managing Counsel – Cybersecurity serves as counsel to the Cybersecurity Council. In providing oversight of risks from cybersecurity threats, Senior Management is informed of cybersecurity risks through updates shared during Cybersecurity Council meetings and through notifications or updates by the CISO, pursuant to PSEG’s Cybersecurity Event Escalation and Incident Response Practice .
In addition, risks associated with cybersecurity incidents, or potential incidents, are escalated by senior management promptly to the Board outside of regularly scheduled meetings, if appropriate. 31 Table of Conte n t s – Management’s Role in Assessing and Managing Material Cybersecurity Risks: The assessment and management of material risks from cyber threats is managed by the CIDO, CISO and Cybersecurity Council, as further described below. • CIDO —The CIDO has had the overall responsibility for PSEG’s cybersecurity since September 2022, including the assessment and management of materials risks to PSEG from cybersecurity threats.
In addition, risks associated with cybersecurity incidents, or potential incidents, are escalated by senior management promptly to the Board outside of regularly scheduled meetings, if appropriate. 35 Table of Contents – Management’s Role in Assessing and Managing Material Cybersecurity Risks: The assessment and management of material risks from cyber threats is managed by the CIDO, CISO and Cybersecurity Council, as further described below. • CIDO —The CIDO has had the overall responsibility for PSEG’s cybersecurity since September 2022, including the assessment and management of material risks to PSEG from cybersecurity threats .
ITEM 1C. CYBERSECURITY In an effort to reduce the likelihood and severity of cybersecurity incidents, we have established a comprehensive cybersecurity program designed to protect and preserve the confidentiality, integrity and availability of our technology systems and our business operations more broadly. For a discussion of the risks associated with cybersecurity threats, see Item 1A. Risk Factors.
ITEM 1C. CYB ERSECURITY To reduce the likelihood and severity of cybersecurity incidents, we established a comprehensive cybersecurity program designed to protect and preserve the confidentiality, integrity and availability of our technology systems and business operations more broadly. For a discussion of the risks associated with cybersecurity threats, see Item 1A. Risk Factors.
In addition, the Cyber Security Council, comprised of senior management, is kept apprised of the state of PSEG’s cybersecurity program, including any emerging risks, and provides guidance on the strategic directions of the program. • Engagement of Third Parties —We engage third parties, such as security service providers, risk management firms and external legal counsels to assess material risks from cybersecurity threats and report on our internal incident response preparedness and cyber posture, support incident response, conduct tabletop exercises, and comply with applicable laws and regulations.
In addition, the Cybersecurity Council, comprised of senior management, is kept apprised of the state of PSEG’s cybersecurity program, including any emerging risks, and provides guidance on the strategic directions of the program. • Engagement of Nth Parties —We engage Nth parties (third parties and other business relationships, including fourth parties, etc.), such as cybersecurity service providers, risk management firms, and external legal counsel, to assess material risks from cybersecurity threats and assess our internal incident response preparedness and cyber posture, support incident response, conduct tabletop exercises, and comply with applicable laws and regulations.
The Cybersecurity Council receives presentations from the CISO, members of the Cybersecurity Risk and Compliance Team cybersecurity managing counsel, and external cybersecurity experts, and participates in tabletop exercises led by external consultants.
The Cybersecurity Council receives presentations from the CISO, members of the Cybersecurity team, other IT domain experts, cybersecurity managing counsel and external cybersecurity experts, and participates in tabletop exercises led by external consultants.
For a discussion of regulatory requirements relating to cybersecurity matters, see Item 1. Business—Regulatory Issues. 32 Table of Conte n t s
For a discussion of regulatory requirements relating to cybersecurity matters, see Item 1. Business—Regulatory Issues. 36 Table of Contents
See Item 1. Business. Regulatory Issues—Federal Regulation for a discussion of Critical Infrastructure Protection standards that the NERC has promulgated that mitigate risk associated with both cybersecurity and physical security of PSEG’s critical facilities.
See Item 1. Business. Regulatory Issues—Federal Regulation for a discussion of Critical Infrastructure Protection standards that the NERC promulgated that mitigate risk associated with both cybersecurity and physical security of PSEG’s critical facilities. These processes are integral to our overall risk management system/processes and inform the identification and assessment of risks and mitigations through our Enterprise Risk Management (ERM) program.
Cybersecurity updates to the IOC include discussions on OT and IT cyber risk, a cybersecurity update from the CISO and/or CIDO, and review of a corporate cybersecurity scorecard and other performance indicators. The CIDO and CISO are regular attendees at IOC meetings.
Cybersecurity updates to the IOC include discussions on OT and IT cyber risks, cybersecurity updates from the CISO and/or CIDO, and reviews of a corporate cybersecurity scorecard and other performance indicators. The CIDO and CISO regularly attend IOC meetings. In addition, the IOC meets with the CISO in executive session with no other members of management present.
As noted above, the CISO provides cybersecurity updates during the four regularly scheduled IOC meetings and meets with the IOC, without other members of management present, during each meeting’s executive session.
Our CISO holds an MBA in strategy, an MSE in Computer Science, a BS in Computer Science, and multiple cybersecurity certifications, including Certified Information Systems Security Professional . As noted above, the CISO provides cybersecurity updates during the four regularly scheduled IOC meetings and regularly meets with the IOC, without other members of management present, during executive sessions.
Removed
These processes are integral to our overall risk management system or processes and inform the identification and assessment 30 Table of Conte n t s of risks and mitigations through our Enterprise Risk Management (ERM) program.
Removed
In addition, the IOC meets with the CISO in executive session at each meeting with no other members of management present, and has also met with the CIDO, to whom the CISO directly reports, in executive session with no other members of management present.
Removed
Our CISO has a bachelor’s degree in electrical engineering and holds multiple security certifications, including Certificate of Cloud Security Knowledge, Certified Information Systems Security Professional, Certified Information Systems Auditor, Information Systems Security Architecture Professional, and National Institute of Standards and Technology Cyber Security Professional Practitioner.

Item 2. Properties

Properties — owned and leased real estate

6 edited+0 added−1 removed3 unchanged
Biggest changePSEG Power Generation Facilities As of December 31, 2023, PSEG Power’s share of installed nuclear generating capacity is shown in the following table: Name Location Total Capacity (MW) % Owned Owned Capacity (MW) Nuclear: Hope Creek NJ 1,174 100% 1,174 Salem 1 & 2 NJ 2,287 57% 1,312 Peach Bottom 2 & 3 (A) PA 2,549 50% 1,275 Total Nuclear 6,010 3,761 (A) Operated by Constellation Energy Generation, LLC.
Biggest changePSEG Power Generation Facilities As of December 31, 2024, PSEG Power’s share of installed nuclear generating capacity is shown in the following table: Name Location Total Capacity (MW) % Owned Owned Capacity (MW) Nuclear: Hope Creek NJ 1,172 100 % 1,172 Salem 1 & 2 NJ 2,285 57 % 1,311 Peach Bottom 2 & 3 (A) PA 2,549 50 % 1,275 Total Nuclear 6,006 3,758 (A) Operated by Constellation Energy Generation, LLC. 37 Table of Contents
ITEM 2. PROPERTIES All of our owned physical property is held by our subsidiaries. We believe that we and our subsidiaries maintain adequate insurance coverage against loss or damage to plants and properties, subject to certain exceptions and deductibles, to the extent such property is usually insured and insurance is available at a reasonable cost.
ITEM 2. PR OPERTIES All of our owned physical property is held by our subsidiaries. We believe that we and our subsidiaries maintain adequate insurance coverage against loss or damage to plants and properties, subject to certain exceptions and deductibles, to the extent such property is usually insured and insurance is available at a reasonable cost.
In addition, PSE&G operates 56 natural gas metering and regulating stations, of which 26 are located on land owned by customers or natural gas pipeline suppliers and are operated under lease, easement or other similar arrangement. In some instances, the pipeline companies own portions of the metering and regulating facilities.
In addition, PSE&G operates 54 natural gas metering and regulating stations, of which 25 are located on land owned by customers or natural gas pipeline suppliers and are operated under lease, easement or other similar arrangement. In some instances, the pipeline companies own portions of the metering and regulating facilities.
Solar As of December 31, 2023, PSE&G owned 158 MW dc of installed PV solar capacity throughout New Jersey.
Solar As of December 31, 2024, PSE&G owned 158 MW dc of installed PV solar capacity throughout New Jersey.
Electric Property and Facilities As of December 31, 2023, PSE&G’s electric T&D system included approximately 25,000 circuit miles, and 866,000 poles, of which 64% are jointly-owned. In addition, PSE&G owns and operates 56 switching stations with an aggregate installed capacity of 39,953 megavolt-amperes (MVA) and 235 substations with an aggregate installed capacity of 10,382 MVA.
Electric Property and Facilities As of December 31, 2024, PSE&G’s electric T&D system included approximately 25,000 circuit miles and 869,000 poles, of which 64% are jointly-owned. In addition, PSE&G owns and operates 57 switching stations with an aggregate installed capacity of approximately 40,000 megavolt-amperes (MVA) and 234 substations with an aggregate installed capacity of approximately 10,750 MVA.
Gas Property and Facilities As of December 31, 2023, PSE&G’s gas system included approximately 18,000 miles of gas mains, 12 gas distribution headquarters, two sub-headquarters, and one meter shop serving all of its gas territory in New Jersey.
In addition, PSE&G owns four electric distribution headquarters and five electric sub-headquarters. Gas Property and Facilities As of December 31, 2024, PSE&G’s gas system included approximately 18,000 miles of gas mains, 12 gas distribution headquarters, two sub-headquarters, and two meter shops serving all of its gas territory in New Jersey.
Removed
Four of those substations, having an aggregate installed capacity of 109 MVA are operated on leased property. In addition, PSE&G owns four electric distribution headquarters and five electric sub-headquarters.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed0 unchanged
Biggest changeITEM 3. LEGAL PROCEEDINGS We are party to various lawsuits and environmental and regulatory matters, including in the ordinary course of business. For information regarding material legal proceedings, see Item 1. Business—Regulatory Issues and Environmental Matters and Item 8. Note 13. Commitments and Contingent Liabilities. 33 Table of Conte n t s ITEM 4. MINE SAFETY DISCLOSURES Not applicable.
Biggest changeITEM 3. LEGAL PROCEEDINGS We are party to various lawsuits and environmental and regulatory matters, including in the ordinary course of business. For information regarding material legal proceedings, see Item 1. Business—Regulatory Issues and Environmental Matters and Item 8. Note 13. Commitments and Contingent Liabilities. ITEM 4. MINE S AFETY DISCLOSURES Not applicable. PA RT II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−0 removed1 unchanged
Biggest changeWe expect to continue to pay cash dividends on our common stock; however, the declaration and payment of future dividends to holders of our common stock will be at the discretion of the Board of Directors and will depend upon many factors, including our financial condition, earnings, capital requirements of our businesses, alternate investment opportunities, legal requirements, regulatory constraints, industry practice and other factors that the Board of Directors deems relevant. 34 Table of Conte n t s The following table indicates the securities authorized for issuance under equity compensation plans as of December 31, 2023: Plan Category Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (a) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b) Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding securities reflected in column (a)) (c) Equity Compensation Plans Approved by Security Holders — $ — 8,162,450 Equity Compensation Plans Not Approved by Security Holders — — — Total — $ — 8,162,450 The number of shares available for future issuance includes amounts remaining under our 2021 Long-Term Incentive Plan (2021 LTIP) and 2021 Equity Compensation Plan for Outside Directors and the Employee Stock Purchase Plan and reflect a reduction for non-vested restricted stock units and performance share units (PSUs) (assumed at target payout).
Biggest changeThe following table indicates the securities authorized for issuance under equity compensation plans as of December 31, 2024: Plan Category Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights (a) Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b) Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (excluding securities reflected in column (a)) (c) Equity Compensation Plans Approved by Security Holders — $ — 7,082,420 Equity Compensation Plans Not Approved by Security Holders — — — Total — $ — 7,082,420 The number of shares available for future issuance includes amounts remaining under our 2021 Long-Term Incentive Plan (2021 LTIP) and 2021 Equity Compensation Plan for Outside Directors and the Employee Stock Purchase Plan and reflect a reduction for non-vested restricted stock units and performance share units (PSUs) (assumed at target payout).
Stock Based Compensation. PSE&G We own all of the common stock of PSE&G. For additional information regarding PSE&G’s ability to continue to pay dividends, see Item 7. MD&A—Liquidity and Capital Resources. ITEM 6. [RESERVED]
Stock Based Compensation. PSE&G We own all of the common stock of PSE&G. For additional information regarding PSE&G’s ability to continue to pay dividends, see Item 7. MD&A—Liquidity and Capital Resources.
This reflects an indicative annual dividend rate of $2.40 per share.
This reflects an indicative annual dividend rate of $2.52 per share.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the New York Stock Exchange, Inc. under the trading symbol “PEG.” As of February 16, 2024, there were 47,943 registered holders.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSU ER PURCHASES OF EQUITY SECURITIES Our common stock is listed on the New York Stock Exchange, Inc. under the trading symbol “PEG.” As of February 21, 2025, there were 45,779 registered holders.
The following graph shows a comparison of the five-year cumulative return assuming $100 invested on December 31, 2018 in our common stock and the subsequent reinvestment of quarterly dividends, the S&P Composite Stock Price Index, the Dow Jones Utilities Index and the S&P Electric Utilities Index. 2018 2019 2020 2021 2022 2023 PSEG $ 100.00 $ 117.08 $ 119.88 $ 141.85 $ 134.62 $ 139.49 S&P 500 $ 100.00 $ 131.47 $ 155.65 $ 200.29 $ 163.98 $ 207.04 DJ Utilities $ 100.00 $ 127.30 $ 129.44 $ 152.04 $ 155.15 $ 146.94 S&P Utilities $ 100.00 $ 126.35 $ 127.01 $ 149.46 $ 151.79 $ 141.05 On February 13, 2024, our Board of Directors approved a $0.60 per share common stock dividend for the first quarter of 2024.
The following graph shows a comparison of the five-year cumulative return assuming $100 invested on December 31, 2019 in our common stock and the subsequent reinvestment of quarterly dividends, the S&P Composite Stock Price Index, the Dow Jones Utilities Index and the S&P Electric Utilities Index. 2019 2020 2021 2022 2023 2024 PSEG $ 100.00 $ 102.37 $ 121.14 $ 114.98 $ 119.14 $ 169.91 S&P 500 $ 100.00 $ 118.39 $ 152.34 $ 124.73 $ 157.48 $ 196.85 DJ Utilities $ 100.00 $ 101.68 $ 119.44 $ 121.88 $ 115.43 $ 133.53 S&P Utilities $ 100.00 $ 100.52 $ 118.29 $ 120.14 $ 111.63 $ 137.79 On February 11, 2025, our Board of Directors approved a $0.63 per share common stock dividend for the first quarter of 2025.
Added
We expect to continue to pay cash dividends on our common stock; however, the declaration and payment of future dividends to holders of our common stock will be at the 38 Table of Contents discretion of the Board of Directors and will depend upon many factors, including our financial condition, earnings, capital requirements of our businesses, alternate investment opportunities, legal requirements, regulatory constraints, industry practice and other factors that the Board of Directors deems relevant.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

135 edited+36 added−39 removed66 unchanged
Biggest changeRelated-Party Transactions. 41 Table of Conte n t s PSEG Increase / (Decrease) Increase / (Decrease) Years Ended December 31, 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Millions Millions % Millions % Operating Revenues $ 11,237 $ 9,800 $ 9,722 $ 1,437 15 $ 78 1 Energy Costs 3,260 4,018 3,499 (758) (19) 519 15 Operation and Maintenance 3,150 3,178 3,226 (28) (1) (48) (1) Depreciation and Amortization 1,135 1,100 1,216 35 3 (116) (10) Losses on Asset Dispositions and Impairments 7 123 2,637 (116) (94) (2,514) (95) Income from Equity Method Investments 1 14 16 (13) (93) (2) (13) Net Gains (Losses) on Trust Investments 189 (265) 194 454 N/A (459) N/A Net Other Income (Deductions) 172 124 98 48 39 26 27 Net Non-Operating Pension and OPEB (Costs) Credits (218) 376 328 (594) N/A 48 15 Loss on Extinguishment of Debt — — (298) — N/A 298 N/A Interest Expense 748 628 571 120 19 57 10 Income Tax Expense (Benefit) 518 (29) (441) 547 N/A 412 (93) The 2023, 2022 and 2021 amounts in the preceding table for Operating Revenues and O&M costs each include $533 million, $516 million and $511 million, respectively, for PSEG LI’s subsidiary, Long Island Electric Utility Servco, LLC (Servco).
Biggest changePSEG Increase / Increase / Years Ended December 31, (Decrease) (Decrease) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Millions Millions % Millions % Operating Revenues $ 10,290 $ 11,237 $ 9,800 $ (947 ) (8 ) $ 1,437 15 Energy Costs 3,393 3,260 4,018 133 4 (758 ) (19 ) Operation and Maintenance (A) 3,356 3,150 3,178 206 7 (28 ) (1 ) Depreciation and Amortization 1,182 1,135 1,100 47 4 35 3 Losses on Asset Dispositions and Impairments 6 7 123 (1 ) (14 ) (116 ) (94 ) Income from Equity Method Investments 1 1 14 — — (13 ) (93 ) Net Gains (Losses) on Trust Investments 127 189 (265 ) (62 ) (33 ) 454 N/A Net Other Income (Deductions) 153 172 124 (19 ) (11 ) 48 39 Net Non-Operating Pension and OPEB (Costs) Credits 73 (218 ) 376 291 N/A (594 ) N/A Interest Expense 882 748 628 134 18 120 19 Income Tax Expense (Benefit) 53 518 (29 ) (465 ) (90 ) 547 N/A (A) Includes amortization of EE programs regulatory investment expenditures of $125 million, $82 million and $48 million for the years ended December 31, 2024, 2023 and 2022, respectively.
New Jersey Stakeholder Proceedings In February 2023, the governor of New Jersey issued executive orders (EOs) that establish or accelerate previously established 2050 targets for clean-sourced energy, building decarbonization, and EV adoption goals, with new target dates of 2030 or 2035, as applicable.
New Jersey Clean Energy Stakeholder Proceedings In February 2023, the governor of New Jersey issued executive orders (EOs) that establish or accelerate previously established 2050 targets for clean-sourced energy, building decarbonization, and EV adoption goals, with new target dates of 2030 or 2035, as applicable.
Treasury issued Revenue Procedure 2023-15 that provides a safe harbor method of accounting to determine the annual repair tax deduction for gas T&D property. The impact, if any, this may have on PSEG and PSE&G’s financial statements has not yet been determined.
Treasury issued Revenue Procedure 2023-15 that provides a safe harbor method of accounting to determine the annual repair tax deduction for gas T&D property. The impact, if any, that this may have on PSEG and PSE&G’s financial statements has not yet been determined.
The current PSEG sub-limit is $1.5 billion and current PSEG Power sub-limit is $1.25 billion. Sub-limits can be adjusted subject to the terms of the Master Credit Facility. PSEG’s available sources of external liquidity may include the issuance of long-term debt securities and the incurrence of additional indebtedness through our commercial paper program back-stopped by our credit facilities.
The current PSEG sub-limit is $1.5 billion and current PSEG Power sub-limit is $1.25 billion. Sub-limits can be adjusted subject to the terms of the Master Credit Facility. PSEG’s available sources of external liquidity may include the issuance of long-term debt securities and the incurrence of additional indebtedness through our commercial paper program back-stopped by our credit facility.
NDT Fund Income (Expense) also includes interest and dividend income and other costs related to the NDT Fund recorded in Net Other Income (Deductions), interest accretion expense on PSEG Power’s nuclear Asset Retirement Obligation (ARO) recorded in Operation & Maintenance (O&M) Expense and the depreciation related to the ARO asset recorded in Depreciation and Amortization (D&A) Expense.
NDT Fund activity also includes interest and dividend income and other costs related to the NDT Fund recorded in Net Other Income (Deductions), interest accretion expense on PSEG Power’s nuclear Asset Retirement Obligation (ARO) recorded in Operation & Maintenance (O&M) Expense and the depreciation related to the ARO asset recorded in Depreciation and Amortization (D&A) Expense.
The PSE&G and PSEG Power bank credit agreements include similar default provisions; however, such provisions only relate to the respective borrower under such agreement and its subsidiaries and do not contain cross default provisions to each other. The PSE&G and PSEG Power bank credit agreements do not include cross default provisions relating to PSEG.
The PSE&G and PSEG Power bank credit agreements include certain similar default provisions; however, such provisions only relate to the respective borrower under such agreement and its subsidiaries and do not contain cross default provisions to each other. The PSE&G and PSEG Power bank credit agreements do not include cross default provisions relating to PSEG.
PSEG Power & Other PSEG’s other projected expenditures are primarily comprised of investments to maintain and enhance current nuclear operations and opportunities to increase nuclear generation at PSEG Power and to purchase software and office equipment at Services.
PSEG Power & Other PSEG’s other projected expenditures are primarily comprised of investments to maintain and enhance current nuclear operations and opportunities to increase nuclear generation at PSEG Power and to purchase hardware, software and office equipment at Services.
We obtain updated nuclear decommissioning cost studies triennially unless new information necessitates more frequent updates. The most recent cost study was done in 2021. When we revise any assumptions used to calculate fair values of existing AROs, we adjust the ARO balance and corresponding long-lived asset which generally impacts the amount of accretion and depreciation expense recognized in future periods.
We obtain updated nuclear decommissioning cost studies triennially unless new information necessitates more frequent updates. The most recent cost study was done in 2024. When we revise any assumptions used to calculate fair values of existing AROs, we adjust the ARO balance and corresponding long-lived asset which generally impacts the amount of accretion and depreciation expense recognized in future periods.
Each of PSE&G’s and PSEG Power’s bank credit agreements also contain limitations on the incurrence of liens by it and certain of its subsidiaries and PSEG Power’s bank credit agreements contain restrictions on the incurrence of certain subsidiary debt.
Each of PSEG's, PSE&G’s and PSEG Power’s bank credit agreements also contain limitations on the incurrence of liens by it and certain of its subsidiaries and PSEG Power’s bank credit agreements contain restrictions on the incurrence of certain subsidiary debt.
Significant inputs may include, but are not limited to, forward power prices, expectation of PTCs, ZEC payments for the New Jersey nuclear assets, fuel costs, other operating and capital expenditures, the cost of borrowing and asset sale prices and probabilities associated with any potential sale prior to the end of the estimated useful life or the early retirement of assets .
Significant inputs may include, but are not limited to, forward power prices, the impact of PTCs, ZEC payments for the New Jersey nuclear assets, fuel costs, other operating and capital expenditures, the cost of borrowing and asset sale prices and probabilities associated with any potential sale prior to the end of the estimated useful life or the early retirement of assets .
PSE&G’s approved CEF-EE, CEF-Energy Cloud and CEF-EV programs and the proposed CEF-ES and CEF-EE II programs are intended to support New Jersey’s Energy Master Plan and recent Gubernatorial Executive Orders through programs designed to help customers use energy more efficiently, reduce GHG emissions, support the expansion of the EV infrastructure in New Jersey, install energy storage capacity to supplement solar generation and enhance grid resiliency, install smart meters and supporting infrastructure to allow for the integration of other clean energy technologies and to more efficiently respond to weather and other outage events.
PSE&G’s approved CEF-EE and EE II, CEF-Energy Cloud and CEF-EV programs and the proposed CEF-ES program are intended to support New Jersey’s Energy Master Plan (EMP) and Gubernatorial Executive Orders through programs designed to help customers use energy more efficiently, reduce GHG emissions, support the expansion of the EV infrastructure in New Jersey, install energy storage capacity to supplement solar generation and enhance grid resiliency, install smart meters and supporting infrastructure to allow for the integration of other clean energy technologies and to more efficiently respond to weather and other outage events.
Other Material Cash Requirements The following table reflects our other material cash requirements which include debt maturities and interest payments, operating lease payments and energy related purchase commitments in the respective periods in which they are due. For additional information, see Item 8. Note 14. Debt and Credit Facilities, Note 7. Leases and Note 13. Commitments and Contingent Liabilities.
Other Material Cash Requirements The following table reflects our other material cash requirements which include debt maturities and interest payments, operating lease payments and energy related purchase commitments in the respective periods in which they are due. For additional information, see Item 8. Note 14. Debt and Credit Facilities, Note 7. Leases and Note 13.
The following discussion provides an overview of the significant events and business developments that have occurred during 2023 and key factors that we expect may drive our future performance. This discussion refers to the Consolidated Financial Statements (Statements) and the related Notes to the Consolidated Financial Statements (Notes). This discussion should be read in conjunction with such Statements and Notes.
The following discussion provides an overview of the significant events and business developments that have occurred during 2024 and key factors that we expect may drive our future performance. This discussion refers to the Consolidated Financial Statements (Statements) and the related Notes to the Consolidated Financial Statements (Notes). This discussion should be read in conjunction with such Statements and Notes.
CAPITAL REQUIREMENTS We expect that all of our capital requirements over the next three years will come from a combination of internally generated funds and external debt financing. Projected capital construction and investment expenditures, excluding nuclear fuel purchases, for the next three years are presented in the following table.
CAPITAL REQ UIREMENTS We expect that all of our capital requirements over the next three years will come from a combination of internally generated funds and external debt financing. Projected capital construction and investment expenditures, excluding nuclear fuel purchases, for the next three years are presented in the following table.
Generally, PSE&G uses either secured medium-term notes or first mortgage bonds to raise long-term capital. PSEG, PSEG Power, Energy Holdings, PSEG LI and Services participate in a corporate money pool, an aggregation of daily cash balances designed to efficiently manage their respective short-term liquidity needs, which are accounted for as intercompany loans.
Generally, PSE&G uses either secured medium-term notes or first mortgage bonds to raise long-term capital. 51 Table of Contents PSEG, PSEG Power, Energy Holdings, PSEG LI and Services participate in a corporate money pool, an aggregation of daily cash balances designed to efficiently manage their respective short-term liquidity needs, which are accounted for as intercompany loans.
PSE&G At PSE&G, our focus is on investing capital in T&D infrastructure and clean energy programs to enhance the reliability and resiliency of our T&D system, meet customer expectations and support public policy objectives.
PSE&G At PSE&G, our focus is on investing capital in T&D infrastructure and clean energy programs to meet growing demand, enhance the reliability and resiliency of our T&D system, meet customer expectations and support public policy objectives.
In addition, PSE&G is committed to the safe and reliable delivery of natural gas to approximately 1.9 million customers throughout New Jersey and we are equally committed to reducing GHG emissions associated with such operations.
PSE&G is committed to the safe and reliable delivery of natural gas to approximately 1.9 million customers throughout New Jersey and we are equally committed to reducing GHG emissions associated with such operations.
In addition, PSEG Power has retained ownership of certain liabilities excluded from the sale of its fossil generation portfolio, primarily related to obligations under New Jersey and Connecticut state law to investigate and remediate the sites.
In addition, PSEG Power has retained ownership of certain liabilities excluded from the sale of its fossil generation portfolio, primarily related to obligations under New Jersey and Connecticut state laws to investigate and remediate the sites.
CRITICAL ACCOUNTING ESTIMATES Under accounting guidance generally accepted in the United States (GAAP), many accounting standards require the use of estimates, variable inputs and assumptions (collectively referred to as estimates) that are subjective in nature.
CRITICAL AC COUNTING ESTIMATES Under accounting guidance generally accepted in the United States (GAAP), many accounting standards require the use of estimates, variable inputs and assumptions (collectively referred to as estimates) that are subjective in nature.
PSE&G uses internally generated cash flow and its commercial paper program to meet seasonal, intra-month and temporary working capital needs. PSE&G does not engage in any intercompany borrowing or lending arrangements. PSE&G maintains back-up credit facilities in an amount sufficient to cover the commercial paper and letters of credit outstanding.
PSE&G uses internally generated cash flow and its commercial paper program to meet seasonal, intra-month and temporary working capital needs. PSE&G does not engage in any intercompany borrowing or lending arrangements. PSE&G maintains a back-up credit facility in an amount sufficient to cover the commercial paper and letters of credit outstanding.
As of December 31, 2023, our liquidity position, including our credit facilities and access to external financing, was expected to be sufficient to meet our projected stressed requirements over our 12-month planning horizon.
As of December 31, 2024, our liquidity position, including our credit facilities and access to external financing, was expected to be sufficient to meet our projected stressed requirements over our 12-month planning horizon.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A) This combined MD&A is separately filed by Public Service Enterprise Group Incorporated (PSEG) and Public Service Electric and Gas Company (PSE&G). Information contained herein relating to any individual company is filed by such company on its own behalf.
ITEM 7. MANAGEMENT’S DI SCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A) This combined MD&A is separately filed by Public Service Enterprise Group Incorporated (PSEG) and Public Service Electric and Gas Company (PSE&G). Information contained herein relating to any individual company is filed by such company on its own behalf.
Pursuant to a process established by the BPU, ZECs are purchased from selected nuclear plants and recovered through a non-bypassable distribution charge in the amount of $0.004 per kilowatt-hour used (which is equivalent to approximately $10 per MWh generated in payments to selected nuclear plants (ZEC payment)).
Pursuant to a process established by the BPU, ZECs are purchased 43 Table of Contents from selected nuclear plants and recovered through a non-bypassable distribution charge in the amount of $0.004 per kilowatt-hour used (which is equivalent to approximately $10 per MWh generated in payments to selected nuclear plants (ZEC payment)).
As a result, a regulated utility is required to defer the recognition of costs (Regulatory Asset) or recognize obligations (Regulatory Liability) if the rates established are designed to recover the costs and if the competitive environment makes it probable that such rates can be charged or collected.
As a result, a regulated utility is required to defer the recognition of costs (Regulatory Asset) 60 Table of Contents or recognize obligations (Regulatory Liability) if the rates established are designed to recover the costs and if the competitive environment makes it probable that such rates can be charged or collected.
LIQUIDITY AND CAPITAL RESOURCES The following discussion of our liquidity and capital resources is on a consolidated basis, noting the uses and contributions, where material, of our two direct major operating subsidiaries.
LIQUIDITY AND C APITAL RESOURCES The following discussion of our liquidity and capital resources is on a consolidated basis, noting the uses and contributions, where material, of our two direct major operating subsidiaries.
The potential additional collateral that we would be required to post under these agreements if PSEG Power were to lose its investment grade credit rating was approximately $751 million and $878 million as of December 31, 2023 and 2022, respectively. See Item 8. Note 13. Commitments and Contingent Liabilities for additional discussion of PSEG Power’s agreements.
The potential additional collateral that we would be required to post under these agreements if PSEG Power were to lose its investment grade credit rating was approximately $618 million and $751 million as of December 31, 2024 and 2023, respectively. See Item 8. Note 13. Commitments and Contingent Liabilities for additional discussion of PSEG Power’s agreements.
In addition to the risks described elsewhere in this Form 10-K for 2023 and beyond, the key issues and challenges we expect our business to confront include: • regulatory and political uncertainty, both with regard to transmission planning and rates policy, the role of distribution utilities and decarbonization impacts, future energy policy, tax regulations, design of energy and capacity markets, and environmental regulation, as well as with respect to the outcome of any legal, regulatory or other proceedings, • performance of the financial markets, including the impact on our pension and interest rates on our future financing plans, • continuing to manage costs and maintain affordable customer rates in an inflationary environment, which could impact customer collections and future regulatory proceedings, • the increasing frequency, sophistication and magnitude of cybersecurity attacks against us and our respective vendors and business partners who may have our sensitive information and/or access to our environment, and the increasing frequency and magnitude of physical attacks on electric and gas infrastructure, • future changes in federal and state tax laws or any other associated tax guidance, and • the impact of changes in demand, natural gas and electricity prices, and expanded efforts to decarbonize several sectors of the economy.
In addition to the risks described elsewhere in this Form 10-K for 2024 and beyond, the key issues and challenges we expect our business to confront include: • regulatory and political uncertainty, both with regard to transmission planning and rates policy, the role of distribution utilities and decarbonization impacts, future energy policy, tax regulations, design of energy and capacity markets, and environmental regulation, as well as with respect to the outcome of any legal, regulatory or other proceedings, • performance of the financial markets, including the impact on our pension funding requirements and interest rates on our future financing plans, • continuing to manage costs and maintain affordable customer rates in an inflationary environment, which could impact customer collections and future regulatory proceedings, • the increasing frequency, sophistication and magnitude of cybersecurity attacks against us and our respective vendors and business partners who may have our sensitive information and/or access to our environment, and the increasing frequency and magnitude of physical attacks on electric and gas infrastructure, • future changes in federal and state tax laws or any other associated tax guidance, and • the impact of changes in energy demand, natural gas and electricity prices, PJM’s challenge to ensure resource adequacy to meet demand growth, and expanded efforts to decarbonize several sectors of the economy.
Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the SEC on February 22, 2023 for information related to the year ended December 31, 2022 as compared to 2021, which information is incorporated herein by reference.
Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on February 26, 2024 for information related to the year ended December 31, 2023 as compared to 2022, which information is incorporated herein by reference.
EXECUTIVE OVERVIEW OF 2023 AND FUTURE OUTLOOK We are a public utility holding company that, acting through our wholly owned subsidiaries, is a predominantly regulated electric and gas utility and a nuclear generation business.
EXECUTIVE OVERVIEW OF 2 024 AND FUTURE OUTLOOK We are a public utility holding company that, acting through our wholly owned subsidiaries, is a predominantly regulated electric and gas utility and a nuclear generation business.
PSE&G also invests in regulated solar generation projects and energy efficiency (EE) and related programs in New Jersey, which are regulated by the BPU, and • PSEG Power —which is an energy supply company that integrates the operations of its merchant nuclear generating assets with its fuel supply functions through competitive energy sales via its principal direct wholly owned subsidiaries.
PSE&G also invests in regulated solar generation projects and energy efficiency (EE) and related programs in New Jersey, which are regulated by the BPU, and • PSEG Power —which is an energy supply company that consists of the operations of merchant nuclear generating assets and fuel supply functions engaged in competitive energy sales via its principal direct wholly owned subsidiaries.
Many aspects of the IRA remain unclear and in need of further guidance; therefore, we continue to analyze the impact the IRA will have on PSEG’s and PSE&G’s results of operations, financial condition and cash flows, which could be material.
Many aspects of the IRA, including the CAMT and PTC, remain unclear and are in need of further guidance; therefore, we continue to analyze the impact the IRA will have on PSEG’s and PSE&G’s results of operations, financial condition and cash flows, which could be material.
In order to do this, we will continue to: • seek approval of and execute on our utility capital investment program to modernize our infrastructure, improve the reliability and resilience of the service we provide to our customers, and align our sustainability and climate goals with New Jersey’s energy policy, 39 Table of Conte n t s • seek a fair return for our T&D investments through our transmission formula rate, existing rate incentives, distribution infrastructure and clean energy investment programs and periodic distribution base rate case proceedings, • focus on controlling costs while maintaining safety, reliability and customer satisfaction and complying with applicable standards and requirements, • manage the risks and opportunities in federal and state clean energy policies, • advocate for appropriate regulatory guidance on the federal nuclear PTC to ensure long-term support for New Jersey’s largest carbon-free generation resource, and adapt our hedging program accordingly, • engage constructively with our multiple stakeholders, including regulators, government officials, customers, employees, investors, suppliers and the communities in which we do business, and • deliver on our human capital management strategy to attract, develop and retain a diverse, high-performing workforce.
In order to do this, we will continue to: • seek approval of and execute on our utility capital investment program to modernize our infrastructure, improve the reliability and resilience of the service we provide to our customers, and align our sustainability and climate goals with New Jersey’s energy policy, • seek a fair return for our T&D investments through our transmission formula rate, existing rate incentives, distribution infrastructure and clean energy investment programs and periodic distribution base rate case proceedings, 44 Table of Contents • focus on controlling costs while maintaining safety, reliability and customer satisfaction and complying with applicable standards and requirements, • manage the risks and opportunities in federal and state clean energy policies, • advocate for appropriate regulatory guidance on the PTC to ensure long-term support for New Jersey’s largest carbon-free generation resource, and adapt our hedging program accordingly, and realize the value of our consistent and reliable, carbon-free nuclear output, • engage constructively with our multiple stakeholders, including regulators, government officials, customers, employees, investors, suppliers and the communities in which we do business or are seeking to do business, and • deliver on our human capital management strategy to attract, develop and retain a high-performing diverse workforce.
(B) S&P ratings range from AAA (highest) to D (lowest) for long-term securities and A1 (highest) to D (lowest) for short-term securities. Other Comprehensive Income For the year ended December 31, 2023, we had Other Comprehensive Income of $371 million on a consolidated basis.
(B) S&P ratings range from AAA (highest) to D (lowest) for long-term securities and A1 (highest) to D (lowest) for short-term securities. Other Comprehensive Income For the year ended December 31, 2024, we had Other Comprehensive Income of $46 million on a consolidated basis.
Under the PSEG bank credit agreements, it would also be an event of default if either PSE&G or PSEG Power ceases to be wholly owned by PSEG.
Under the PSEG bank credit agreements, it would also be an event of default if, in certain circumstances, either PSE&G or PSEG Power ceases to be wholly owned by PSEG.
The table below does not reflect any anticipated cash payments for pension and OPEB or AROs due to uncertain timing of payments. See Item 8. Note 12. Pension, Other Postretirement Benefits (OPEB) and Savings Plans and Note 11. Asset Retirement Obligations (AROs) for additional information.
Commitments and Contingent Liabilities. 56 Table of Contents The table below does not reflect any anticipated cash payments for pension and OPEB or AROs due to uncertain timing of payments. See Item 8. Note 12. Pension, Other Postretirement Benefits (OPEB) and Savings Plans and Note 11. Asset Retirement Obligations (AROs) for additional information.
PSEG Power determines its AROs for its nuclear units by assigning probability weighting to various discounted cash flow outcomes for each of its nuclear units that incorporate the assumptions above as well as: • license renewals, • SAFSTOR alternative, which assumes the nuclear facility can be safely stored and subsequently decommissioned in a period within 60 years after operations, • DECON alternative, which assumes decommissioning activities begin after operations, • recovery from the federal government of assumed specific costs incurred for spent nuclear fuel, and • financial feasibility and impacts on potential early shutdown.
PSEG Power determines its AROs for its nuclear units by assigning probability weighting to various discounted cash flow outcomes for each of its nuclear units that incorporate the assumptions above as well as: • potential retirement dates including the probability of license renewals, • SAFSTOR alternative, which assumes the nuclear facility can be safely stored and subsequently decommissioned in a period within 60 years after operations, • DECON alternative, which assumes decommissioning activities begin after operations, and • recovery from the federal government of assumed specific costs incurred for spent nuclear fuel.
Note 13. Commitments and Contingent Liabilities. Nuclear In April 2021, PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants were awarded zero emission certificates (ZECs) for the three-year eligibility period starting June 2022 at the same approximate $10 per megawatt hour (MWh) received during the prior ZEC period through May 2022.
Nuclear In April 2021, PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants were awarded zero emission certificates (ZECs) for the three-year eligibility period starting June 2022 at the same approximate $10 per megawatt hour (MWh) received during the prior ZEC period through May 2025.
PSE&G’s dividend payments to/capital contributions from PSEG are consistent with its capital structure objectives which have been established to maintain investment grade credit ratings. PSE&G’s long-term financing plan is designed to replace maturities, fund a portion of its capital program 45 Table of Conte n t s and manage short-term debt balances.
PSE&G’s dividend payments to/capital contributions from PSEG are consistent with its capital structure objectives which have been established to maintain investment grade credit ratings. PSE&G’s long-term financing plan is designed to replace maturities, fund a portion of its capital program and manage short-term debt balances.
The variances in our Net Income (Loss) attributable to changes related to the NDT Fund and MTM are shown in the following table: Years Ended December 31, 2023 2022 2021 Millions, after tax NDT Fund and Related Activity (A) (B) $ 109 $ (174) $ 108 Non-Trading MTM Gains (Losses) (C) $ 959 $ (457) $ (446) (A) NDT Fund Income (Expense) includes gains and losses on NDT securities which are recorded in Net Gains (Losses) on Trust Investments.
The variances in our Net Income (Loss) attributable to changes related to the NDT Fund and MTM are shown in the following table: Years Ended December 31, 2024 2023 2022 Millions, after tax NDT Fund and Related Activity (A) (B) $ 81 $ 109 $ (174 ) Non-Trading MTM Gains (Losses) (C) $ (151 ) $ 959 $ (457 ) (A) NDT Fund activity includes gains and losses on NDT securities which are recorded in Net Gains (Losses) on Trust Investments.
As of December 31, 2023, PSE&G’s Mortgage coverage ratio was 3.8 to 1 and the Mortgage would permit up to approximately $9.3 billion aggregate principal amount of new Mortgage Bonds to be issued against additions and improvements to its property.
As of December 31, 2024, PSE&G’s Mortgage coverage ratio was 3.3 to 1 and the Mortgage would permit up to approximately $11 billion aggregate principal amount of new Mortgage Bonds to be issued against additions and improvements to its property.
Depreciation and Amortization increased $45 million due primarily to an increase in depreciation due to higher plant placed in service, partially offset by a net decrease in the amortization of Regulatory Assets and Liabilities. Net Other Income (Deductions) decreased $8 million due primarily to lower Allowance for Funds Used During Construction and a reduction in solar loan interest income.
Depreciation and Amortization increased $45 million due primarily to an increase in depreciation due to higher plant placed in service, partially offset by a net decrease in the amortization of Regulatory Assets and Liabilities. Net Other Income (Deductions) decreased $16 million due primarily to lower Allowance for Funds Used During Construction.
Because of this, differences between the actual measure realized versus the estimate can have a material impact on results of operations, 50 Table of Conte n t s financial position and cash flows. We have determined that the following estimates are considered critical to the application of rules that relate to the respective businesses.
Because of this, differences between the actual measure realized versus the estimate can have a material impact on results of operations, financial position and cash flows. We have determined that the following estimates are considered critical to the application of rules that relate to the respective businesses.
In the even t of a deterioration of PSEG Power’s credit rating, certain of PSEG Power’s agreements allow the counterparty to demand further performance assurance.
In the event of a deterioration of PSEG Power’s credit rating, certain of PSEG Power’s agreements allow the counterparty to demand further performance assurance.
We expect these capital investments to result in a compound annual growth rate in our regulated rate base in a range of 6% to 7.5% from year-end 2023 to year-end 2028. The regulated capital investments represent the majority of PSEG’s total capital investment program of $19 billion to $22.5 billion.
We expect these capital investments to result in a compound annual growth rate in our regulated rate base in a range of 6% to 7.5% from year-end 2024 to year-end 2029. The regulated capital investments represent the majority of PSEG’s total capital investment program of $22.5 billion to $26 billion.
This reflects an indicative annual dividend rate of $2.40 per share.
This reflects an indicative annual dividend rate of $2.52 per share.
Future Outlook Our future success will depend on our ability to continue to maintain strong operational and financial performance, address regulatory and legislative developments that impact our business and respond to the issues and challenges described below.
Future Outlook Our future success will be influenced by our ability to continue to maintain strong operational and financial performance, address regulatory and legislative developments that impact our business and respond to the issues and challenges described below.
PSE&G’s projected expenditures for the various items reported above are primarily comprised of the following: • Transmission—investments focused on reliability improvements and replacement of aging infrastructure. 49 Table of Conte n t s • Electric and Gas Distribution—investments for new business, reliability improvements, flood mitigation, and modernization and replacement of equipment that has reached the end of its useful life. • Clean Energy—investments associated with customer EE programs, infrastructure supporting EVs and grid-connected solar.
PSE&G’s projected expenditures for the various items reported above are primarily comprised of the following: • Transmission—investments focused on growing demand, reliability improvements and replacement of aging infrastructure. • Electric and Gas Distribution—investments for new business and demand, reliability improvements and modernization and replacement of equipment that has reached the end of its useful life. • Clean Energy—investments associated with customer EE programs, infrastructure supporting EVs and grid-connected solar.
(Energy Holdings), which primarily holds legacy lease investments and competitively bid, FERC regulated transmission; and PSEG Services Corporation (Services), which provides certain management, administrative and general services to PSEG and its subsidiaries at cost. 35 Table of Conte n t s Our business discussion in Item 1.
(Energy Holdings), which primarily holds legacy lease investments and competitively bid, FERC regulated transmission; and PSEG Services Corporation (Services), which provides certain management, administrative and general services to PSEG and its subsidiaries at cost. Our business discussion in Item 1.
These decisions may have a direct impact on the estimated remaining useful lives of our assets and will be influenced by the financial outlook of the assets, including future market conditions such as forward energy and capacity prices, operating and capital investment costs and any state or federal legislation and regulations, among other items.
These decisions may have a direct impact on the estimated remaining useful lives of our assets and will be influenced by the financial outlook of the assets, including future market conditions such as forward energy, capacity prices, and long-term agreements to supply large power users, such as data centers, operating and capital investment costs and any state or federal legislation and regulations, among other items.
Effect if Different Assumptions Used : As part of the business planning process, we have modeled future costs assuming an 8.10% expected rate of return and a 5.02% discount rate for 2024 pension costs/credits and a 4.96% discount rate for 2024 OPEB costs/credits.
Effect if Different Assumptions Used : As part of the business planning process, we have modeled future costs assuming an 8.10% expected rate of return and a 5.68% discount rate for 2025 pension costs/credits and a 5.59% discount rate for 2025 OPEB costs/credits.
This EE filing is a significant increase from our prior filings, driven by an increase in the savings targets required under the BPU Energy Efficiency Framework and higher costs to achieve those targeted savings. The filing also includes demand response programs and building decarbonization programs.
This EE filing is a significant increase from our prior filings, driven by an increase in the savings targets required under the BPU Energy Efficiency Framework and higher costs to achieve those targeted savings.
Credit capacity is primarily used to provide collateral in support of PSEG Power’s forward energy sale and forward fuel purchase contracts as the market prices for energy and fuel fluctuate, and to meet potential collateral postings in the event that PSEG Power is downgraded to below investment grade by Standard & Poor’s ( S&P) or Moody’s.
Credit capacity is primarily used to provide collateral in support of PSEG Power’s sales and purchases of electricity and natural gas as the market prices for energy and fuel fluctuate, and to meet potential collateral postings in the event that PSEG Power is downgraded to below investment grade by Standard & Poor’s ( S&P) or Moody’s.
The Other Comprehensive Income was due primarily to $324 million related to pension and other postretirement benefits, $41 million of net unrealized gains related to available-for-sale debt securities, and $6 million of unrealized gains on derivative contracts accounted for as hedges. See Item 8. Note 21. Accumulated Other Comprehensive Income (Loss), Net of Tax for additional information.
The Other Comprehensive Income was due primarily to $33 million of unrealized gains on derivative contracts accounted for as hedges, $26 million related to pension and other postretirement benefits, offset by $13 million of net unrealized losses related to available-for-sale debt securities. See Item 8. Note 21. Accumulated Other Comprehensive Income (Loss), Net of Tax for additional information.
We have established a net zero greenhouse gas (GHG) emissions by 2030 goal that includes direct GHG emissions (Scope 1) and indirect GHG emissions from operations (Scope 2) across our business operations, assuming advances in technology, public policy and customer behavior.
We have established a net zero greenhouse gas (GHG) emissions by 2030 goal that includes direct GHG emissions (Scope 1) and indirect GHG emissions from operations (Scope 2) across our business operations, assuming advances in technology, public policy and customer behavior, which goal supports New Jersey's clean energy and climate goals.
In 2023, PSE&G made $2,998 million of capital expenditures, primarily for T&D system reliability. In addition, PSE&G had cost of removal, net of salvage, of $166 million associated with capital replacements, and expenditures for EE programs of approximately $466 million, which are included in operating cash flows.
In 2024, PSE&G made $2,921 million of capital expenditures, primarily for T&D system reliability. In addition, PSE&G had cost of removal, net of salvage, of $170 million associated with capital replacements, and expenditures for EE programs of approximately $544 million, which are included in operating cash flows.
(B) Net of tax (expense) benefit of $(74) million, $97 million and $(70) million for the years ended December 31, 2023, 2022 and 2021, respectively. (C) Net of tax (expense)benefit of $(376) million, $178 million and $174 million for the years ended December 31, 2023, 2022 and 2021, respectively.
(B) Net of tax (expense) benefit of $(56) million, $(74) million and $97 million for the years ended December 31, 2024, 2023 and 2022, respectively. (C) Net of tax (expense) benefit of $59 million, $(376) million and $178 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Operating Cash Flows We continue to expect our operating cash flows combined with cash on hand and financing activities to be sufficient to fund planned capital expenditures and shareholder dividends. For the year ended December 31, 2023, our operating cash flow increased $2,303 million.
Operating Cash Flows We continue to expect our operating cash flows combined with cash on hand and financing activities to be sufficient to fund planned capital expenditures and shareholder dividends. For the year ended December 31, 2024, our operating cash flow decreased $1,673 million, as compared to 2023.
Common Stock Dividends Years Ended December 31, Dividend Payments on Common Stock 2023 2022 2021 Per Share $ 2.28 $ 2.16 $ 2.04 in Millions $ 1,137 $ 1,079 $ 1,031 On February 13, 2024, our Board of Directors approved a $0.60 per share common stock dividend for the first quarter of 2024.
Common Stock Dividends Years Ended December 31, Dividend Payments on Common Stock 2024 2023 2022 Per Share $ 2.40 $ 2.28 $ 2.16 in Millions $ 1,196 $ 1,137 $ 1,079 On February 11, 2025, our Board of Directors approved a $0.63 per share common stock dividend for the first quarter of 2025.
Nuclear Decommissioning AROs AROs related to the future decommissioning of PSEG Power’s nuclear facilities comprised approximately 72% or $1,057 million of PSEG’s total AROs as of December 31, 2023.
Nuclear Decommissioning AROs AROs related to the future decommissioning of PSEG Power’s nuclear facilities comprised approximately 100% or $1,035 million of PSEG’s total AROs as of December 31, 2024.
Assumption 2023 2022 2021 Pension Discount Rate 5.02 % 5.20 % 2.94 % Expected Rate of Return on Plan Assets 8.10 % 7.20 % 7.70 % OPEB Discount Rate 4.96 % 5.16 % 2.82 % Expected Rate of Return on Plan Assets 8.10 % 7.20 % 7.69 % The discount rate used to calculate PSEG’s pension and OPEB obligations is determined as of December 31 each year, our measurement date.
Assumption 2024 2023 2022 Pension Discount Rate 5.68 % 5.02 % 5.20 % Expected Rate of Return on Plan Assets 8.10 % 8.10 % 7.20 % OPEB Discount Rate 5.59 % 4.96 % 5.16 % Expected Rate of Return on Plan Assets 8.10 % 8.10 % 7.20 % 57 Table of Contents The discount rate used to calculate PSEG’s pension and OPEB obligations is determined as of December 31 each year, our measurement date.
The net increase was primarily due to an inflow of $1,408 million in net cash collateral postings in 2023 as compared to a $677 million outflow in 2022 at PSEG Power and lower tax payments in 2023, partially offset by a net change at PSE&G, as discussed below.
The net decrease was primarily due to an outflow of $131 million in net cash collateral postings in 2024 as compared to a $1,408 million inflow in 2023 at PSEG Power, partially offset by a net change at PSE&G, as discussed below.
The PTC is expected to provide downside price protection for our nuclear generation fleet as the tax credit value is directly linked to a nuclear facility’s gross receipts. For the years 2024-2028, our regulated capital investment program is estimated to be in a range of $18 billion to $21 billion.
The PTC is designed to provide downside price protection for our nuclear generation fleet as the tax credit value is directly linked to a nuclear facility’s gross receipts. 40 Table of Contents For the years 2025-2029, our regulated capital investment program is estimated to be in a range of $21 billion to $24 billion.
PSEG Power & Other results in 2022 include after-tax impairments of $92 million related to certain Energy Holdings investments and additional adjustments related to the sale of PSEG Power’s fossil generation assets.
PSEG Power & Other results in 2022 include after-tax impairments of $92 million related to certain Energy Holdings investments and additional adjustments related to the sale of PSEG Power’s fossil generation assets. See Item 8. Note 3. Asset Dispositions and Impairments for additional information.
The execution of any such strategic plan may not have the expected benefits or may have unexpected adverse consequences. 40 Table of Conte n t s RESULTS OF OPERATIONS Years Ended December 31, 2023 2022 2021 Earnings (Losses) Millions, except per share data PSE&G $ 1,515 $ 1,565 $ 1,446 PSEG Power & Other (A)(B) 1,048 (534) (2,094) PSEG Net Income (Loss) $ 2,563 $ 1,031 $ (648) PSEG Net Income (Loss) Per Share (Diluted) $ 5.13 $ 2.06 $ (1.29) (A) PSEG Power & Other results in 2023 include a $239 million after-tax pension charge due to the settlement of a portion of the qualified pension plans.
The execution of any such strategic plan may not have the expected benefits or may have unexpected adverse consequences. 45 Table of Contents RESULTS OF O PERATIONS Years Ended December 31, 2024 2023 2022 Earnings (Losses) Millions, except per share data PSE&G $ 1,547 $ 1,515 $ 1,565 PSEG Power & Other (A)(B) 225 1,048 (534 ) PSEG Net Income $ 1,772 $ 2,563 $ 1,031 PSEG Net Income Per Share (Diluted) $ 3.54 $ 5.13 $ 2.06 (A) PSEG Power & Other results in 2023 include a $239 million after-tax pension charge due to the settlement of a portion of the qualified pension plans.
Each of our credit facilities is restricted as to availability and use to the specific companies as listed below; however, if necessary, the PSEG facilities can also be used to support our subsidiaries’ liquidity needs.
Each of our credit facilities is restricted as to availability and use to the specific companies as listed below; however, if necessary, the PSEG facilities can also be used to support our subsidiaries’ liquidity needs. PSEG Power has uncommitted credit facilities totaling $200 million, which can be utilized for letters of credit.
We also continue to assess physical risks of climate change and adapt our capital investment program to improve the reliability and resiliency of our system in an environment of increasing frequency and severity of weather events, notably through our investments in our Energy Strong program and Infrastructure Advancement Program and our investments in transmission infrastructure upgrades.
We continue to assess physical risks of climate change and adapt our capital investment program to improve the reliability and resiliency of our system in an environment of increasing frequency and severity of weather events.
Strategic options available to us include: • investments in PSE&G, including T&D facilities to enhance reliability, resiliency and modernize the system to meet the growing needs and increasingly higher expectations of customers, and clean energy investments such as CEF-EE, CEF-EV, CEF-ES and solar, • continued operation of our nuclear generation facilities that are expected to be supported through the PTC through 2032 and can enable certain investments to increase the capacity of the units as well as potential license extensions, • investments in competitive, regulated transmission investments through PJM processes and BPU solicitations that provide revenue predictability and reasonable risk-adjusted returns, and • acquisitions, dispositions, development and other transactions involving our common stock, assets or businesses that could provide value to customers and shareholders.
Strategic options available to us include: • investments in PSE&G, including T&D facilities to enhance reliability, resiliency and modernize the system to meet the growing needs and increasingly higher expectations of customers, and clean energy investments, particularly our EE programs, • continued operation of our nuclear generation facilities that are expected to be supported by the PTC through 2032 and can enable certain investments to increase the capacity of the units as well as potential license extensions, transition from an 18-month to 24-month refueling cycle at our Hope Creek facility and energy and/or emission credit sales with potential customers seeking consistent and reliable carbon-free power, • investments in competitive, regulated transmission investments through PJM processes and BPU solicitations that provide revenue predictability and reasonable risk-adjusted returns, and • acquisitions, dispositions, development and other transactions involving our common stock, assets or businesses that could provide value to customers and shareholders.
PSE&G has undertaken a number of initiatives that support the reduction of GHG emissions and the implementation of EE initiatives.
PSE&G has undertaken a number of initiatives that support the reduction of GHG emissions, including our implementation of New Jersey's EE program.
Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the SEC on February 22, 2023 for information related to the year ended December 31, 2022 as compared to 2021, which information is incorporated herein by reference. 43 Table of Conte n t s PSEG Power & Other Years Ended December 31, Increase / (Decrease) Increase / (Decrease) 2023 2022 2021 2023 vs. 2022 2022 vs. 2021 Millions Millions % Millions % Operating Revenues $ 4,533 $ 3,266 $ 3,767 $ 1,267 39 $ (501) (13) Energy Costs 1,353 2,149 1,978 (796) (37) 171 9 Operation and Maintenance 1,307 1,340 1,534 (33) (2) (194) (13) Depreciation and Amortization 155 165 288 (10) (6) (123) (43) Losses on Asset Dispositions and Impairments 7 123 2,641 (116) (94) (2,518) (95) Income from Equity Method Investments 1 14 16 (13) (93) (2) (13) Net Gains (Losses) on Trust Investments 189 (263) 192 452 N/A (455) N/A Net Other Income (Deductions) 96 36 10 60 N/A 26 N/A Net Non-Operating Pension and OPEB (Costs) Credits (332) 95 64 (427) N/A 31 48 Loss on Extinguishment of Debt — — (298) — N/A 298 N/A Interest Expense 259 201 169 58 29 32 19 Income Tax Expense (Benefit) 358 (296) (765) 654 N/A 469 (61) Year Ended December 31, 2023 as compared to 2022 Operating Revenues increased $1,267 million due primarily to changes in generation and gas supply and other operating revenues.
Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023 as filed with the SEC on February 26, 2024 for information related to the year ended December 31, 2023 as compared to 2022, which information is incorporated herein by reference. 49 Table of Contents PSEG Power & Other Years Ended December 31, Increase / (Decrease) Increase / (Decrease) 2024 2023 2022 2024 vs. 2023 2023 vs. 2022 Millions Millions % Millions % Operating Revenues $ 2,807 $ 4,533 $ 3,266 $ (1,726 ) (38 ) $ 1,267 39 Energy Costs 1,170 1,353 2,149 (183 ) (14 ) (796 ) (37 ) Operation and Maintenance 1,407 1,307 1,340 100 8 (33 ) (2 ) Depreciation and Amortization 157 155 165 2 1 (10 ) (6 ) Losses on Asset Dispositions and Impairments 6 7 123 (1 ) (14 ) (116 ) (94 ) Income from Equity Method Investments 1 1 14 — — (13 ) (93 ) Net Gains (Losses) on Trust Investments 127 189 (263 ) (62 ) (33 ) 452 N/A Net Other Income (Deductions) 94 96 36 (2 ) (2 ) 60 N/A Net Non-Operating Pension and OPEB (Costs) Credits (4 ) (332 ) 95 328 (99 ) (427 ) N/A Interest Expense 305 259 201 46 18 58 29 Income Tax Expense (Benefit) (245 ) 358 (296 ) (603 ) N/A 654 N/A Year Ended December 31, 2024 as compared to 2023 Operating Revenues decreased $1,726 million due primarily to changes in generation and gas supply and other operating revenues.
In particular, PSEG’s bank credit agreements contain provisions under which certain events, including an acceleration of material indebtedness under PSE&G’s and PSEG Power’s respective financing agreements, a failure by PSE&G or PSEG Power to satisfy certain final judgments and certain bankruptcy events by PSE&G or PSEG Power, would constitute an event of 47 Table of Conte n t s default under the PSEG bank credit agreements.
Default Provisions Our bank credit agreements and indentures contain various, customary default provisions that could result in the potential acceleration of indebtedness under the defaulting company’s agreement. 53 Table of Contents In particular, PSEG’s bank credit agreement contains provisions under which certain events, including an acceleration of material indebtedness under PSE&G’s and PSEG Power’s respective financing agreements, a failure by PSEG, PSE&G or PSEG Power to satisfy certain final judgments and certain bankruptcy events by PSEG, PSE&G or PSEG Power, would constitute an event of default under the PSEG bank credit agreements.
For additional information, see Item 8. Note 14. Debt and Credit Facilities. NDT Fund Obligation The NRC requires a biennial filing of the NDT fund balances against the decommissioning liability estimate. Any funding shortfalls are required to be cured prior to the next NDT reporting period.
Debt and Credit Facilities. NDT Fund Obligation The NRC requires a biennial filing of the NDT fund balances against the decommissioning liability estimate. Any funding shortfalls are required to be cured prior to the next NDT reporting period. We do not currently expect to be required to provide supplemental funding of the NDT Fund.
Of this amount, there was a $1,539 million increase due to changes in forward prices in 2023 as compared to 2022 coupled with a $484 million increase due to positions reclassified to realized upon settlement, and • a net increase of $99 million due primarily to higher average realized prices and volumes sold in 2023 in the PJM region, partially offset by volumes sold in the New England and New York regions in 2022 related to the fossil generating plants sold in February 2022 and lower ZEC revenue, • partially offset by a net decrease of $190 million due primarily to electricity sold under the BGS contracts, which ended in May 2023, and lower volumes of other load contracts, and • a net decrease of $57 million in capacity revenue due primarily to the sale of the fossil generating plants coupled with lower capacity prices in the PJM region, partially offset by decreases in capacity expenses due to lower load volumes served.
Of this amount, there was a $798 million decrease due to positions reclassified to realized upon settlement, coupled with $761 million decrease due to changes in forward prices in 2024 as compared to 2023, • a net decrease of $136 million due primarily to lower ZEC revenue related to the PTCs, • a net decrease of $31 million due primarily to electricity sold under the BGS contracts, which ended in May 2023, and lower volumes sold under other load contracts, and • a net decrease of $29 million in capacity revenue due primarily to lower capacity prices, partially offset by decreases in capacity expenses due to lower load volumes served, • partially offset by a net increase of $144 million due primarily to higher average realized prices, partially offset by lower volumes sold in 2024.
Net Non-Operating Pension and OPEB Credits decreased $167 million due primarily to an $86 million increase in interest cost, a $63 million decrease in the expected return on plan assets and a $62 million decrease in the amortization of service credits, partially offset by a $47 million decrease in amortization of the net actuarial loss.
Net Non-Operating Pension and OPEB Credits decreased $37 million due primarily to a $43 million decrease in the amortization of prior service credits and a $6 million increase in amortization of the net actuarial loss, partially offset by a $7 million decrease in interest cost, $3 million in settlement charges in 2023 and a $2 million increase in the expected return on plan assets.
This was partially offset by a decrease in net accounts receivable due to improved collections following the delays from COVID-19 moratoriums. Short-Term Liquidity PSEG meets its short-term liquidity requirements, as well as those of PSEG Power, primarily through the issuance of commercial paper and, from time to time, short-term loans.
This was partially offset by a net increase in regulatory deferrals and accounts receivable, as well as lower unbilled revenues due primarily to higher volumes and lower prices. Short-Term Liquidity PSEG meets its short-term liquidity requirements, as well as those of PSEG Power, primarily through the issuance of commercial paper and, from time to time, short-term loans.
Beginning in 2023, our net periodic pension amounts include the impact of the accounting order approved by the BPU authorizing PSE&G to modify its pension accounting for ratemaking purposes. See a discussion in Item 7. MD&A—Executive Overview of 2023 and Future Outlook for further details .
Beginning in 2023, our net periodic pension amounts include the impact of the accounting order approved by the BPU authorizing PSE&G to modify its pension accounting for ratemaking purposes.
Based upon these assumptions, we have estimated a net periodic pension expense in 2024 of approximately $21 million, or a net periodic pension credit of $19 million, net of amounts capitalized, and a net periodic OPEB expense in 2024 of approximately $6 million, or $5 million, net of amounts capitalized.
Based upon these assumptions, we have estimated a net periodic pension expense in 2025 of approximately $37 million, or $0 million, net of amounts capitalized, and a net periodic OPEB expense in 2025 of approximately $3 million, or $2 million, net of amounts capitalized.
The ratings should not be construed as an indication to buy, hold or sell any security. 48 Table of Conte n t s Moody’s (A) S&P (B) PSEG Outlook Stable Stable Senior Notes Baa2 BBB Commercial Paper P2 A2 PSE&G Outlook Stable Stable Mortgage Bonds A1 A Commercial Paper P2 A2 PSEG Power Outlook Positive Stable Issuer Rating Baa2 BBB (A) Moody’s ratings range from Aaa (highest) to C (lowest) for long-term securities and P1 (highest) to NP (lowest) for short-term securities.
Moody’s (A) S&P (B) PSEG Outlook Stable Stable Senior Notes Baa2 BBB Commercial Paper P2 A2 PSE&G Outlook Stable Stable Mortgage Bonds A1 A Commercial Paper P2 A2 PSEG Power Outlook Stable Stable Issuer Rating Baa2 BBB (A) Moody’s ratings range from Aaa (highest) to C (lowest) for long-term securities and P1 (highest) to NP (lowest) for short-term securities.
As of December 31, 2023, PSEG had entered into floating-to-fixed interest rate swaps totaling $1.4 billion in order to reduce the volatility in interest expense related to $900 million of a $1.25 billion variable rate term loan at PSEG Power due March 2025 and PSEG’s $500 million variable rate term loan due April 2024.
As of December 31, 2024, PSEG had entered into floating-to-fixed interest rate hedges totaling $1.25 billion through March 2025 in order to reduce the volatility in interest expense related to PSEG Power’s variable rate term loan due June 2025. PSEG Power also entered into a 364-day variable rate term loan for $400 million in December 2024.
Pension, Other Postretirement Benefits (OPEB) and Savings Plans, and • lower pension and other postretirement benefit (OPEB) credits in 2023. Our results of operations are primarily comprised of the results of operations of our principal operating segments, PSE&G and PSEG Power, excluding charges related to intercompany transactions, which are eliminated in consolidation.
Note 12. Pension, Other Postretirement Benefits (OPEB) and Savings Plans). 46 Table of Contents Our results of operations are primarily comprised of the results of operations of our principal operating segments, PSE&G and PSEG Power, excluding charges related to intercompany transactions, which are eliminated in consolidation. For additional information on intercompany transactions, see Item 8. Note 24. Related-Party Transactions.
We expect to conclude the distribution base rate case later in 2024. PSEG Power At PSEG Power, we seek to produce low-cost, reliable and resilient electricity by efficiently operating our nuclear generation assets, mitigate earnings volatility through the PTC mechanism and hedging, and support public policies that preserve these existing carbon-free base load nuclear generating plants.
PSEG Power At PSEG Power, we seek to produce low-cost electricity by efficiently operating our nuclear generation assets, mitigate earnings volatility through the PTC mechanism and hedging, and support public policies that preserve these existing carbon-free base load nuclear generating plants. During 2024, our nuclear units generated approximately 31 terawatt hours and operated at a capacity factor of approximately 90%.

… 130 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

13 edited+1 added−2 removed3 unchanged
Biggest changeValue-at-Risk (VaR) Models VaR represents the potential losses, under normal market conditions, for instruments or portfolios due to changes in market factors, for a specified time period and confidence level. We estimate VaR across our commodity businesses. 54 Table of Conte n t s MTM VaR consists of MTM derivatives that are economic hedges.
Biggest changeThese contracts, in conjunction with physical sales and other services, help reduce risk and optimize the value of owned electric generation capacity. Value-at-Risk (VaR) Models VaR represents the potential losses, under normal market conditions, for instruments or portfolios due to changes in market factors, for a specified time period and confidence level. We estimate VaR across our commodity businesses.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The risk inherent in our market-risk sensitive instruments and positions is the potential loss arising from adverse changes in commodity prices, equity security prices and interest rates as discussed in the Notes to Consolidated Financial Statements.
ITEM 7A. QUANTITATIVE AND Q UALITATIVE DISCLOSURES ABOUT MARKET RISK The risk inherent in our market-risk sensitive instruments and positions is the potential loss arising from adverse changes in commodity prices, equity security prices and interest rates as discussed in the Notes to Consolidated Financial Statements.
As of December 31, 2023, a hypothetical 10% increase in market interest rates would result in an additional $2 million in pre-tax annual interest costs related to either the current or the long-term portion of long-term debt, and term loan agreements.
As of December 31, 2024, a hypothetical 10% increase in market interest rates would result in an additional $4 million in pre-tax annual interest costs related to either the current or the long-term portion of long-term debt, and term loan agreements.
We use duration to measure the interest rate sensitivity of the fixed income portfolio. Duration is a summary statistic of the effective average maturity of the fixed income portfolio. The benchmark for the fixed income component of the NDT Fund currently has a duration of 6.24 years and a yield of 4.53%.
We use duration to measure the interest rate sensitivity of the fixed income portfolio. Duration is a summary statistic of the effective average maturity of the fixed income portfolio. The benchmark for the fixed income component of the NDT Fund currently has a duration of 6.08 years and a yield of 4.91%.
The portfolio’s value will appreciate or depreciate by the duration with a 1% change in interest rates. As of December 31, 2023, a hypothetical 1% increase in interest rates would result in a decline in the market value for the fixed income portfolio of approximately $76 million.
The portfolio’s value will appreciate or depreciate by the duration with a 1% change in interest rates. As of December 31, 2024, a hypothetical 1% increase in interest rates would result in a decline in the market value for the fixed income portfolio of approximately $77 million.
The fair market value of the assets in the NDT Fund will fluctuate primarily depending upon the performance of equity markets. As of December 31, 2023, a hypothetical 10% change in the equity market would impact the value of the equity securities in the NDT Fund by approximately $131 million.
The fair market value of the assets in the NDT Fund will fluctuate primarily depending upon the performance of equity markets. As of December 31, 2024, a hypothetical 10% change in the equity market would impact the value of the equity securities in the NDT Fund by approximately $138 million.
Debt and Equity Securities As of December 31, 2023, we had $4.6 billion of net assets in trust for our pension and OPEB plans.
Debt and Equity Securities As of December 31, 2024, we had $4.4 billion of net assets in trust for our pension and OPEB plans.
The NDT Fund is comprised primarily of fixed income and equity securities. As of December 31, 2023, the portfolio included $1.3 billion of equity securities inclusive of $0.3 billion of investments in listed real assets, and $1.2 billion in fixed income securities.
The NDT Fund is comprised primarily of fixed income and equity securities. As of December 31, 2024, the portfolio included $1.4 billion of equity securities inclusive of $0.3 billion of investments in listed real assets, and $1.3 billion in fixed income securities.
MTM VaR Years Ended December 31, 2023 2022 Millions 95% Confidence Level, Loss could exceed VaR one day in 20 days Period End $ 48 $ 122 Average for the Period $ 56 $ 152 High $ 127 $ 365 Low $ 24 $ 70 99.5% Confidence Level, Loss could exceed VaR one day in 200 days Period End $ 75 $ 191 Average for the Period $ 87 $ 239 High $ 198 $ 572 Low $ 38 $ 110 See Item 8.
MTM VaR Years Ended December 31, 2024 2023 Millions 95% Confidence Level, Loss could exceed VaR one day in 20 days Period End $ 36 $ 48 Average for the Period $ 44 $ 56 High $ 152 $ 127 Low $ 25 $ 24 99.5% Confidence Level, Loss could exceed VaR one day in 200 days Period End $ 57 $ 75 Average for the Period $ 69 $ 87 High $ 238 $ 198 Low $ 39 $ 38 See Item 8.
Commodity Contracts The availability and price of energy-related commodities are subject to fluctuations from factors such as weather, environmental policies, changes in supply and demand, state and federal regulatory policies, market rules and other events.
Commodity Contracts The availability and price of energy-related commodities are subject to fluctuations from factors such as weather, environmental policies, changes in supply and demand, state and federal regulatory policies, market rules and other events. To reduce price risk caused by market fluctuations, we enter into supply contracts and derivative contracts, including forwards, futures, swaps, and options with approved counterparties.
The calculation does not include market risks associated with activities that are subject to accrual accounting, primarily our generating facilities and some load-serving activities. The VaR models used are variance/covariance models adjusted for the change of positions with 95% and 99.5% confidence levels and a one-day holding period for the MTM activities.
MTM VaR consists of MTM derivatives that are economic hedges. The calculation does not include market risks associated with activities that are subject to accrual accounting, primarily our generating facilities and some load-serving activities.
Note 16. Financial Risk Management Activities for a discussion of credit risk. Interest Rates We are subject to the risk of fluctuating interest rates in the normal course of business. We manage interest rate risk by targeting a balanced debt maturity profile which limits refinancing in any given period or interest rate environment.
Note 16. Financial Risk Management Activities for a discussion of credit risk. Interest Rates PSEG, PSE&G and PSEG Power are subject to the risk of fluctuating interest rates in the normal course of business.
The models assume no new positions throughout the holding periods; however, we actively manage our portfolio.
The VaR models used are variance/covariance models adjusted for the change of positions with 95% and 99.5% confidence levels and a one-day holding period for the MTM activities. The models assume no new positions throughout the holding periods; however, we actively manage our portfolio.
Removed
To reduce price risk caused by market fluctuations, we enter into supply contracts and derivative contracts, including forwards, futures, swaps, treasury locks, and options with approved counterparties. These contracts, in conjunction with physical sales and other services, help reduce risk and optimize the value of owned electric generation capacity.
Added
Exposure to this risk is managed by targeting a balanced debt maturity profile which limits refinancing in any given period or 62 Table of Contents interest rate environment. PSEG, PSE&G and PSEG Power may also use a mix of fixed and floating rate debt and interest rate hedges.
Removed
In addition, we use a mix of fixed and floating rate debt, interest rate swaps and interest rate lock agreements.

Other PEG 10-K year-over-year comparisons