Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — Investor Presentation (March 2020)
30 slides from Public Service Enterprise's investor presentation, March 2020
Slide 1: March 2020 PSEG Investor Update
March 2020 PSEG Investor Update • NYSE: PEG • BUILDING A SUSTAINABLE, FINANCIALLY SOUND ENERGY INFRASTRUCTURE COMPANY
Slide 2: Forward-Looking Statements
Forward-Looking Statements Certain of the matters discussed in this presentation about our and our subsidiaries’ future performance, including, without limitation, future revenues, earnings, strategies, prospects, consequences and all other statements that are not purely historical constitute “forwa
Slide 3: GAAP Disclaimer
GAAP Disclaimer PSEG presents Operating Earnings and, for PSEG Power, Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) in addition to its Net Income reported in accordance with accounting principles generally accepted in the United States (GAAP). Operating Earnings an
Slide 4: A 117-year Newark-based business investing in critical energy infrastructure
A 117-year Newark-based business investing in critical energy infrastructure, providing safe and increasingly clean energy through two strong businesses Electric & Gas Distribution and Transmission Strategy: Investments in energy infrastructure and clean energy support reliability and customer expec
Slide 5: Regulatory and Policy Initiatives - Update
Regulatory and Policy Initiatives - Update PSEG’s Priorities Aligned with New Jersey’s Clean Energy Agenda New Jersey Board of Public Utilities (NJBPU) approved extension of the Clean Energy Future (CEF) – Energy Efficiency (EE) procedural schedule to September 2020; investment in existing program
Slide 6: Climate Strategy – PSEG Power's fleet transformation is addressing climate change
Climate Strategy – PSEG Power’s fleet transformation is addressing climate change PSEG Power Generation Carbon Emission Intensity vs. PJM and USA (2005 - 2018) PSEG Power's generation 1,400 fleet continues to be much less carbon intensive than 1,200 PJM and USA averages CO2 Intensity (lbs/MWh) 1,000
Slide 7: PSEG is committed to real reductions in PSEG Power's CO2 intensity and emissions
PSEG is committed to real reductions in PSEG Power’s CO2 intensity and emissions and strengthening PSE&G’s system to withstand a climate challenged world PSEG is Powering Progress To find out more, visit www.pseg.com/poweringprogress Reducing CO2 Intensity/Emissions Clean Energy & Resiliency Governa
Slide 8: PSE&G – New Jersey's largest
PSE&G – New Jersey’s largest: • Electric and Gas Distribution utility • Transmission business • Investor in renewables and energy efficiency • Appliance service provider Electric Gas Customers 2.3 Million 1.9 Million 5-Year Annual Customer Growth* 0.8% 0.7% 40,684 2,589M PSE&G 2019 Rate Base*** 2019
Slide 9: Customer Focus – Customer bills have declined, supporting needed investment
Customer Focus – Customer bills have declined, supporting needed investment in the system Cost impact of approved and proposed programs GSMP II, ES II, and CEF over next five years ~2% annual increase, yielding flat bills in real terms NOTE: AVERAGE MONTHLY BILL FOR A TYPICAL RESIDENTIAL ELECTRIC CU
Slide 10: PSE&G's capital program of $11.5 billion to $15 billion
PSE&G’s capital program of $11.5 billion to $15 billion focused on reliability, resiliency, grid modernization and clean energy investments ~90% of investment PSE&G Capital Spending receiving contemporaneous 2020E – 2024E or near-contemporaneous regulatory treatment 3,500 3,000 2,500 CEF: EE, EC, EV
Slide 11: Investment program provides opportunity for ~6.5% to 8% compound annual growth in rate base
Investment program provides opportunity for ~ 6.5% to 8% compound annual growth in rate base 35,000 PSE&G Year-End Rate Base 8.0% - 30,000 CEF 6.5% - Identified IIP Extensions 25,000 20,000 ($ Millions) 15,000 10,000 5,000 0 2019 2020E 2021E 2022E 2023E 2024E Transmission Electric Distribution Gas D
Slide 12: Clean Energy Future program designed to achieve the goals of NJ's Clean Energy Act
Clean Energy Future program designed to achieve the goals of NJ’s Clean Energy Act ~$3.5 Billion, 6-year investment proposal providing cost-effective and innovative solutions supporting NJ’s clean energy goals • Energy Efficiency: Helps achieve the Clean Energy Act targets of 2% and Program Investme
Slide 13: Gas Distribution Investments
Gas Distribution Investments Gas System Modernization Program focused on modernizing and replacing cast iron and unprotected steel main, resulting in a reduction in methane leaks, safety enhancements and supports customer usage of high efficiency appliances. • 2019: Completed replacement of ~230 mil
Slide 14: Energy Strong II: Continuing critical energy infrastructure program
Energy Strong II: Continuing critical energy infrastructure program Old Station Below/New Station Raised New Equipment Raised Above Flood Elevations Above Flood Elevations Old – Below Flood Level New – Above Flood Level • $842M total spending (Clause $692M, Stipulated Base $150M) ‒ $741M Electric (C
Slide 15: Customer bills will remain in line with inflation
Customer bills will remain in line with inflation, even with inclusion of our active and proposed programs • Bills remained flat in real terms from 2016 to 2020, even with inclusion of GSMP I, ES I, 2018 Rate Case and ZECs • Over the next 5 years, the impact of GSMP II, ES II and proposed CEF progra
Slide 16: PSE&G: lowest residential bills among regional Gas Utilities
PSE&G: lowest residential bills among 12 regional Gas Utilities and below the average of 12 regional Electric Utilities Monthly Gas Bills Monthly Electric Bills Average $93 Average $129 BASED UPON A CALCULATION OF MONTHLY BILLS FOR AN ELECTRIC CUSTOMER USING 500 KILOWATT-HOURS AND A GAS CUSTOMER USI
Slide 17: PSEG Power's generating assets mainly located in three competitive markets
PSEG Power’s generating assets mainly located in three competitive markets S S S S S S New York ISO S S S S S S S SS SS S S SS S Bethlehem Energy S Center (BEC) S S Bridgeport Harbor New Haven Kalaeloa S = Solar ISO New England Solar Source assets: • Solar (467 MWDC /365 MWAC) PJM Bergen Kearny Esse
Slide 18: PJM and ISO-NE completed auctions provide a solid and continuing revenue stream
PJM and ISO-NE completed auctions provide a solid and continuing revenue stream PJM’s RPM Auction Results* PJM Capacity Revenue Delivery Year 2019/2020 2020/2021 2021/2022 PSEG Power’s Average Prices $116 $179 $182 ($/MW-day) $100/$80 $77 $140 Rest of Pool Prices ($/MW-day) (CP/Base) (CP) (CP) PSEG
Slide 19: Stable Gross Margin - Hedging strategy
Stable Gross Margin - Hedging strategy is designed to mitigate risk and secure free cash flow 2020 2021 2022 Volume TWh 31 31 31 Nuclear % Hedged 100% 80-85% 30-35% Price $/MWh $37 $36 $36 Volume TWh 19-21 19-21 19-21 Combined Cycle % Hedged 70-75% 0% 0% Price $/MWh $37 $- $- Volume TWh 50-52 50-52
Slide 20: Potential investment in Ørsted's Ocean Wind
Potential investment in Ørsted’s Ocean Wind is aligned with New Jersey’s clean energy policy goals PSEG exercised an option to potentially acquire a 25% equity interest in the 1,100 MW Ocean Wind project Ocean Wind was the winner of NJ’s first offshore wind solicitation in June 2019 The Ocean
Slide 21: PSEG has controlled O&M with actions focused on continuous improvement
PSEG has controlled O&M with actions focused on continuous improvement PSEG O&M Expense (1) 2014 – 2019 CAGR: (2.1%) $2,500 Cost control actions $2,000 • Continued focus on vendors to ensure ($ Millions) maximum value $1,500 • Frequent organizational reviews to drive efficiency and cost $1,000 optim
Slide 22: Strategic focus continues to deliver solid results
Strategic focus continues to deliver solid results PSEG non-GAAP Operating Earnings per Share* +4%** 2020E Guidance $3.28 $3.30 – $3.50 $3.12 $2.91 $2.90 $2.93 $2.76 2014 2015 2016 2017 2018 2019 2020E *SEE SLIDE A FOR ITEMS EXCLUDED FROM NET INCOME TO RECONCILE TO NON-GAAP OPERATING EARNINGS. **BAS
Slide 23: Opportunity for consistent and sustainable dividend growth
Opportunity for consistent and sustainable dividend growth Annual Dividend Per Share (2015-2020E CAGR: 4.7%) $2.80 PSE&G 2020E $2.60 Net Income PSE&G Guidance EPS Range $2.40 $2.20 $1.96* ($/Share) $2.00 $1.88 $1.80 $1.80 $1.72 $1.56 $1.64 $1.60 $1.40 $1.20 $1.00 2015 2016 2017 2018 2019 2020E *INDI
Slide 24: PSEG Value Proposition
PSEG Value Proposition Operational Financial Disciplined Excellence Strength Investment • • • Safe, Reliable Assuring Aligned with Operations with Balanced NJ’s Commitment Results in Energy & to Continuous Regulatory/ Environmental Improvement Policy Matters Goals • PSE&G – Delivering on promise for
Slide 25: PSEG Meeting Takeaways
PSEG Meeting Takeaways Regulatory Stability & Opportunities Consistent with NJ Energy Policy • CEF updates: AMI moratorium lifted; draft procedural schedules exist for EC, EV and ES; extension of existing EE programs and authorization for additional $111 million of investment • Next distribution bas
Slide 26: PSEG Appendix
«> PSEG We make things work for you.
Slide 27: PSEG 2020 Guidance - By Subsidiary
PSEG 2020 Guidance - By Subsidiary Segment Operating Earnings Guidance and Prior Year Results (non-GAAP, except as noted)* $ millions (except EPS) 2020E 2019 PSE&G (Net Income) $1,310 - $1,370 $1,250 PSEG Power $345 - $435 $409 PSEG Enterprise/Other ($5) $7 Operating Earnings (non-GAAP)* $1,675 - $1
Slide 28: PSEG EPS Reconciliation – FY 2019 versus FY 2018
PSEG EPS Reconciliation – FY 2019 versus FY 2018 0.36 (0.18) $3.50 (0.02) $3.33 $3.28 $3.12 ZECs 0.18 Interest Expense $3.00 $2.83 Transmission 0.17 partially offset by Capacity (0.17) Lower Taxes Gas Margin 0.16 Re-contracting, $2.50 Electric Margin 0.04 Lower Cost to Serve (0.09) Weather (0.02) Vo
Slide 29: Reconciliation of Non-GAAP Operating Earnings
Reconciliation of Non-GAAP Operating Earnings Public Service Enterprise Group Incorporated - Consolidated Operating Earnings (Non-GAAP) Reconciliation Year Ended Reconciling Items December 31, 2019 2018 2017 2016 2015 2014 ($ millions, Unaudited) Net Income $ 1,693 $ 1,438 $ 1,574 $ 887 $ 1,679 $ 1,
Slide 30: Reconciliation of non-GAAP Operating Earnings and Adjusted EBITDA
Reconciliation of non-GAAP Operating Earnings for PSE&G, PSEG Power and PSEG Enterprise/Other and non-GAAP Adjusted EBITDA for PSEG Power PSE&G Operating Earnings (Non-GAAP) Reconciliation Year Ended Reconciling Items December 31, 2019 2018 2017 2016 2015 2014 ($ millions, Unaudited) Net Income $ 1,
Public Service Enterprise Group — Investor Presentation (March 2020) on 6ix