Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — Investor Presentation (March 2022)
49 slides from Public Service Enterprise's investor presentation, March 2022
Slide 1: Public Service Enterprise Group March 2022 Investor Update
Public Service Enterprise Group March 2022 Investor Update NYSE TICKER: PEG
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain of the matters discussed in this presentation about our and our subsidiaries’ future performance, including, without limitation, future revenues, earnings, strategies, prospects, consequences and all other statements that are not purely historical constitute “forwa
Slide 3: GAAP Disclaimer
GAAP Disclaimer PSEG presents Operating Earnings and Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) in addition to its Net Income/(Loss) reported in accordance with accounting principles generally accepted in the United States (GAAP). Operating Earnings and Adjusted
Slide 4: PSEG's Vision
PSEG’s Vision: To power a future where people use less energy, and it’s cleaner, safer and delivered more reliably than ever. 44
Slide 5: Predominantly regulated with contracted, zero-carbon infrastructure and growth opportunities
PSEG: Predominantly regulated with contracted, zero-carbon infrastructure and a strong set of growth opportunities ● PSEG 2022: 90% regulated business mix from stable, predictable operations of PSE&G, 10% Carbon-free Generation, Infrastructure & Other ● PSE&G: Robust capital program aligned with sta
Slide 6: PSEG Sustainability and ESG Summary
PSEG Sustainability and ESG Summary PSEG Leadership Policies & Goals Recognition • Joined the U.N.-backed Race to Zero and • PSEG is a vocal advocate for an economy-wide • Member of 2022 Bloomberg Gender- Business Ambition for 1.5°C campaigns price on carbon and preserving our existing Equality Inde
Slide 7: PSEG has outpaced the industry in reducing carbon emissions intensity
PSEG has outpaced the industry in reducing carbon emissions intensity, and is getting recognized for ESG performance PSEG Generation Carbon Emission Intensity vs. U.S. Fleet Average (2005 – 2022E) PSEG’s ESG Vital Signs: Relative Scores 1,400 PSEG's generation fleet continues to be much less PEERS M
Slide 8: PSEG has accelerated its climate vision to Net-Zero 2030
PSEG has accelerated its climate vision to Net-Zero 2030 and joined the U.N.-backed Race to Zero campaign ~22% ~60% Methane New PSEG Original PSEG Original Methane Reduction Net-Zero Power 80% PSEG Power Reduction Target* GHG Vision GHG Reduction Net-Zero Vision Target Target 2023 2030 2030 2046 205
Slide 9: PSE&G – a best in class regulated utility and New Jersey's largest
PSE&G – a best in class regulated utility and New Jersey’s largest: Electric and gas distribution utility Transmission business Investor in renewables and energy efficiency Appliance service provider Electric Gas PSE&G YE 2021 Rate Base*** Customers 2.3 Million 1.9 Million 5-Year Annual >$24
Slide 10: PSE&G: Top decile safety and reliability performance
PSE&G: Top decile safety and reliability performance OSHA Incident Rate OSHA Recordable PSE&G SAIDI Open Leaks Better Better Better Better Days Away Rate 7.0 350 30,000 6.0 150.0 300 25,000 5.0 250 20,000 4.0 100.0 200 15,000 3.0 150 10,000 2.0 50.0 100 1.0 50 5,000 - - - - 2017 2018 2019 2020 2021
Slide 11: Achieving Highest Ever Customer Satisfaction Scores
Achieving Highest Ever Customer Satisfaction Scores for E&G J.D. Power Residential Satisfaction J.D. Power Business Satisfaction J.D. Power Electric Residential J.D. Power Gas Residential J.D. Power Electric Business J.D. Power Gas Business 1Q 2Q 1Q 1Q 742 767 770 736 743 748 759 766 802 806 795 804
Slide 12: PSE&G's 5-year, $14B-$16B capital program
PSE&G’s 5-year, $14B - $16B capital program focused on reliability, resiliency, grid modernization and clean energy PSE&G Capital Spending 2021 – 2025E 4,000 3,500 Unapproved Programs: • ES III, CEF-ES, electrification initiatives, and IAP 3,000 • GSMP and CEF-EE Program Extensions: Low-end ($ Milli
Slide 13: Expanded investment program firms compound annual rate base growth
Expanded investment program firms compound annual rate base growth over the five year period CAGR PSE&G Year-End Rate Base YE 2021- YE 2020- YE 2025E YE 2025E 7.5% 8% 35,000 6.% 6.5% Unapproved 30,000 Programs 25,000 ($ Millions) 20,000 15,000 10,000 5,000 - 2021 2022E 2023E 2024E 2025E Transmission
Slide 14: Transmission: Investment program focused on reliability and resiliency
Transmission: Investment program focused on enhancing reliability and resiliency, and replacing aging infrastructure • 69 kV conversion effort to improve reliability and address aging system transitioning from large end-of-life projects • Load increases in certain areas, driven by electrification ef
Slide 15: Electric Distribution – Energy Strong program
Electric Distribution – Energy Strong program to replace and rebuild substations in flood zones has brought tremendous benefit to customers Somerville Withstood 56” of Flooding during TS Ida, and Remained Operational • Superstorm Sandy & Hurricane Irene caused flooding at 29 substations and switchin
Slide 16: Electric Distribution – Last mile investment program
Electric Distribution – Last mile investment program will modernize the system and improve reliability for customers who are more dependent on the system than ever before Last mile electric system modernization investments: • Targeted asset replacements – Poles, overhead equipment, secondary lines,
Slide 17: Infrastructure Advancement Program
Infrastructure Advancement Program – 4-year distribution investment program to improve reliability, reduce emissions and create jobs Investment $ millions Components Based on current status of the filing, Underground cable replacement, spacer cable, pole upgrades, Last Mile - Reliability $206 BPU ac
Slide 18: Gas Distribution – Investments to modernize infrastructure and reduce methane leaks
Gas Distribution – Investments to modernize infrastructure and drive reduction in methane leaks % Reduction of absolute methane (CH4) emissions from 2011 as reported to the EPA under 40 CFR 98, Subpart W 0% • GSMP II will replace PSE&G is on track to achieve its 875 miles of ~22% methane reduction g
Slide 19: Clean Energy Future programs reduce customers' energy consumption
Clean Energy Future programs focus on reducing customers’ energy consumption Energy Energy Cloud (EC) Electric Energy Efficiency (EE) “AMI” Vehicles (EV) Storage (ES) Creating clean energy $1B $707M* $166M $109M jobs for under-employed Commitment Investment Investment Investment and diverse NJ resid
Slide 20: PSE&G investments create New Jersey job growth
PSE&G investments create New Jersey job growth and support diverse recruiting efforts Infrastructure Programs: Over 1,500 current direct jobs through GSMP II and ES II, and over 500 more through IAP filing Clean Energy: Over 3,000 direct jobs planned, with a focus on unemployed, under-employed, low/
Slide 21: Investments in technology are making us more efficient
Investments in technology are making us more efficient and reliable, and giving customers greater access to information and programs Advanced Metering Infrastructure Providing real time information to help customers manage their usage, improving operational Mobile Geographic efficiencies, and suppor
Slide 22: Successfully managing O&M costs
Successfully managing O&M costs, preserving customer affordability PSE&G O&M Expense (1) 2017 – 2022E CAGR = ~2.2% 1,400 • Demonstrated ability to control O&M, preserving earnings and returns in a 1,200 low sales growth environment • Cost increase primarily driven by 1,000 expansion of Transmission
Slide 23: PSE&G's residential customer bills compare favorably
PSE&G’s residential customer bills compare favorably Gas bills lowest among regional peers, Electric bills lower than average Based upon a calculation of monthly bills for an electric customer using 500 kilowatt-hours and a gas customer using 100 therms using rates as of December 1, 2021. Rates sour
Slide 24: PSE&G: Typical residential electric and gas bills are down
PSE&G: Typical residential electric and gas bills are down over 20% from over a decade ago, or over 35% adjusted for inflation Combined Monthly Typical Residential Electric and Gas Combined Typical Monthly Residential Electric and Gas Customer Bill* Comparison 2008 to 2022 with Inflation Customer 20
Slide 25: Typical residential bill relative to median income has declined
Typical residential combined electric and gas bill relative to median income has declined from over 4% to ~2.5% over the past decade Affordability of the PSE&G Electric & Gas Combined Bill % of New Jersey Household Income combined bill has Including Low-income Customers After Assumed Credits improve
Slide 26: Sale of PSEG Fossil fleet
Sale of PSEG Fossil fleet • All required regulatory approvals obtained at the federal (FERC) and state (NY and CT) levels to close sale to ArcLight Capital Partners, LLC covering 6,750 MW – PJM portfolio transaction closed February 18, 2022 – NY and CT portfolio transaction closed February 23, 2022
Slide 27: Benefits of offshore wind development
Benefits of offshore wind development • Offshore Wind Strategic Plan to develop 7,500 MW by 2035 is a key component of New Jersey’s ‘100% clean energy by 2050’ target • Captures region’s best renewable resource • Supports economic growth engine for new supply chain, including the New Jersey Wind Por
Slide 28: PSEG current offshore wind opportunities
PSEG current offshore wind opportunities Ocean Wind Project GSOE/ Skipjack Offshore Transmission • Ocean Wind 1 is a 75/25 Joint Venture • PSEG owns 50% of Garden State • In April 2021, the BPU and PJM opened a between Ørsted NA and PSEG Offshore Energy (GSOE) with Ørsted competitive solicitation fo
Slide 29: PSEG regulatory & policy focus
PSEG regulatory & policy focus supports our low carbon infrastructure platform New Jersey Focus Federal Focus • PSE&G continuing investments in critical energy infrastructure to • Transmission formula rate settlement approved effective provide customer benefits; Energy Strong program improves August
Slide 30: PSEG is focused on advancing Powering Progress
PSEG is focused on advancing Powering Progress investments aligned with New Jersey’s energy policy goals Past Programs (2009-present) New Jersey Energy Policies Ongoing & Opportunities • IAP • Transmission Expansion • 2021 Successor Solar Framework • Last Mile Reliability • Energy Strong I • 2021 Ne
Slide 31: Pursuing long-term solutions to recognize zero-carbon attributes of nuclear fleet
Pursuing long-term solutions to recognize the zero-carbon attributes of our nuclear fleet Federal Focus Potential State Solutions Congress and the Biden Administration recognize the The Murphy Administration’s climate agenda importance of preserving existing nuclear units in order recognizes the imp
Slide 32: Sound governance and unwavering ethics
Sound governance and unwavering ethics are the foundation of our high-performing culture • Diverse Board of Directors – Assignment of key topics to full board or specific committee (climate, – Independent Lead Director – Dr. Shirley Ann Jackson cybersecurity, safety, human capital management) – 50%
Slide 33: Long-term focus on regulated utility growth
Long-term focus on regulated utility growth, improving our business mix and enhancing our ESG profile Before Non-Nuclear Divestiture After Non-Nuclear Divestiture PSE&G ~90% and Carbon-free, Business Mix Growing Regulated Contribution Infrastructure & Other ~10% 6,750 MW of PSEG Fossil Generation wi
Slide 34: Sale of non-nuclear assets generated cash flow for debt reduction and repurchases
Sale of non-nuclear assets generated significant cash flow for debt reduction and share repurchases Sources and (Uses) of Cash Net Solar Sale Proceeds ~$0.4B Net PSEG Fossil Sale Proceeds ~$1.75B Total After-Tax (Net) Proceeds ~$2.15B 2023 and 2031 Power Senior Note Redemptions and (~$1.6B) Make-Who
Slide 35: Targeting PSEG's credit ratings at 'Solid' BBB
Targeting PSEG’s credit ratings at ‘Solid’ BBB Target PSEG Issuer Moody’s S&P Credit Metric Senior Baa2 BBB Unsecured FFO / Debt PSEG Outlook Stable Stable ~Mid-Teens Minimum Baa2 @ 14% BBB @ 13% Threshold A1 Senior Secured Regulatory PSE&G A Equity Ratio ~55% Outlook Stable Stable Issuer Rating Baa
Slide 36: Enhanced business profile underpins solid credit ratings and debt capacity
Enhanced business profile underpins solid credit ratings and significant debt capacity PSEG 2022E – 2025E Funds from Operations / Debt Average Debt Capacity 20% $3.0 Financial flexibility Average utilized to fund $ Billions 15% 2022E – 2025E planned investments, ~Mid-Teens with significant debt Mini
Slide 37: PSEG has controlled O&M by focusing on continuous improvement
PSEG has controlled O&M by focusing on continuous improvement and controlling support costs related to non-nuclear divestiture PSEG O&M Expense (1) 2017 – 2022E CAGR = ~(1.8%) 2,500 2,000 ($ Millions) 1,500 Support costs related to PSEG Fossil have been 1,000 eliminated with successful just transiti
Slide 38: PSE&G earnings growth drives long-term earnings growth rate
PSE&G earnings growth drives PSEG’s long-term earnings growth rate PSEG non-GAAP Operating Earnings per Share • Earnings growth driven by robust utility capital program aligned with state Clean Energy PSEG goals, supportive recovery mechanisms and CAGR 5% to 7% rate case, and cost control including
Slide 39: 2022 indicative annual dividend increased $0.12 per share
2022 indicative annual dividend increased $0.12 per share, building on a 115-year history of returning cash to our shareholders PSEG Dividend per Share $2.16* $2.04 $1.96 $1.88 $1.80 Opportunity for consistent and $1.72 sustainable dividend growth - $1.64 now with a higher growth rate $1.56 $1.48 $1
Slide 40: Meeting Takeaways
Meeting Takeaways ● PSEG 2022: 90% regulated business mix from stable, predictable operations of PSE&G, 10% Carbon-free Generation, Infrastructure & Other ● PSE&G: Robust capital program aligned with state clean energy goals, increased by $1B to $14B-$16B through 2025, at our best-in-class utility ●
Slide 41: Appendix
x* PSEG Appendix 4
Slide 42: PSEG EPS Reconciliation – FY 2021 versus FY 2020
PSEG EPS Reconciliation – FY 2021 versus FY 2020 $4.00 $3.76 0.23 0.02 (0.03) $3.65 $3.50 $3.43 Capacity 0.03 Higher O&M, Contributions $3.00 Transmission 0.03 Re-contracting & to PSEG Electric Margin 0.07 Market (0.19) Foundation and Other $2.50 Gas Margin 0.09 Volume 0.04 Distribution Sale of Sola
Slide 43: PSEG – Narrowing Full Year 2022 Guidance
PSEG – Narrowing Full Year 2022 Guidance Operating Earnings Guidance and Prior Year Results (non-GAAP)* 2022E 2021 $ millions (except EPS) Guidance Actual PSE&G $1,510 - $1,560 $1,446 Carbon-Free, Infrastructure & Other $170 - $220 N/A PSEG Power N/A $438 PSEG Enterprise/Other N/A ($31) Operating Ea
Slide 44: Carbon-Free, Infrastructure and Other – 2022E Assumptions
Carbon-Free, Infrastructure and Other – 2022E Assumptions Carbon-Free Contracted Energy Sales* Other 2022 Financial Considerations • Capacity Revenue for 2022: ~$150 million 2022E 2023E 2024E June 2021 - May 2022 auction price: $166/MW-Day for EMAAC Fuel Nuclear Nuclear Nuclear June 2022 - May 2
Slide 45: PSEG maintains a solid financial position
PSEG maintains a solid financial position PSEG Public Service Electric & Gas Senior Unsecured Credit Ratings Senior Secured Credit Ratings Moody’s = Baa2 / Outlook = Stable S&P = BBB / Outlook = Stable Moody’s = A1 / Outlook = Stable S&P = A / Outlook = Stable PSEG 364-DayTerm Loans 2021 PSE&G Debt
Slide 46: PSEG is transitioning to Net-Zero operations
PSEG is transitioning to Net-Zero operations Reduce Scope 1 Carbon-Free Generation: PSEG will transition the generation portfolio to 100% GHG-free Maintain support for nuclear generation Increase investments in renewable generation that will further reduce the carbon footprint of Reduce Scopes 1
Slide 47: Glossary of Terms
Glossary of Terms AFUDC Allowance for Funds Used During Construction GSMP Gas System Modernization Program AMI Automated Metering Infrastructure IAP Infrastructure Advancement Program BPU New Jersey Board of Public Utilities LIHEAP Low Income Home Energy Assistance Program BOEM Bureau of Energy Mana
Slide 48: Reconciliation of Non-GAAP Operating Earnings
Reconciliation of Non-GAAP Operating Earnings Public Service Enterprise Group Incorporated - Consolidated Operating Earnings (non-GAAP) Reconciliation Year Ended Reconciling Items December 31, 2021 2020 2019 2018 2017 2016 2015 2014 2013 (a) Effective January 1, 2018, unrealized gains (losses) ($ mi
Slide 49: Reconciliation of Non-GAAP Operating Earnings and Adjusted EBITDA
Reconciliation of Non-GAAP Operating Earnings and Non-GAAP Adjusted EBITDA PSEG Power Operating Earnings (non-GAAP) and Adjusted EBITDA (non-GAAP) Reconciliation Year Ended (a) Includes the financial impact from positions with forward delivery Reconciling Items December 31, months. 2021 (b) Full yea
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