Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — Investor Presentation (December 2019)
32 slides from Public Service Enterprise's investor presentation, December 2019
Slide 1: December 2019 PSEG Investor Update
December 2019 PSEG Investor Update • NYSE: 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 in addition to Net Income reported in accordance with accounting principles generally accepted in the United States (GAAP). Operating Earnings is a non-GAAP financial measure that differs from Net Income. Non-GAAP Operating Earnings exclude the impact
Slide 4: PSEG Strategy: Building a Sustainable, Financially Sound Energy Infrastructure Company
PSEG STRATEGY: BUILDING A SUSTAINABLE, FINANCIALLY SOUND ENERGY INFRASTRUCTURE COMPANY Newark, NJ 4
Slide 5: 7.5% - 8.5% CAGR
PSE&G Represents $0.08 Increase in ~ 75% of Non-GAAP Operating Indicative 2019 Earnings Guidance Common Dividend Member of Dow Jones Sustainability Index for 12 Years in a Row Promoting Sound Energy Policy 116 5–Year Investment Program Years Investing Provides Opportunity for in NJ’s Critical 7.5% -
Slide 6: A 116 year Newark-based business investing in critical energy infrastructure
A 116 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 7: Regulatory and Policy Initiatives - Update
Regulatory and Policy Initiatives - Update ES II Settlement PSE&G Energy Strong II (ES II) settlement approved by NJ Board of Public Utilities (NJBPU); $842M Investment program began Q4 2019 and extends through 2023 PSEG’s Priorities Aligned with New Jersey’s Clean Energy Agenda NJBPU approved t
Slide 8: Climate Strategy – PSEG Power's fleet transformation is addressing climate change
Climate Strategy – PSEG Power’s fleet transformation is addressing climate change PSEG Generation Carbon Emission Intensity vs. PJM and USA (2005 - 2018) PSEG's generation fleet 1,400 continues to be much less carbon intensive than 1,200 PJM and USA averages CO2 Intensity (lbs/MWh) 1,000 Cleaner 800
Slide 9: 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 10: PSE&G – New Jersey's largest utility
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 1.8 Million 5-Year Annual Customer Growth* 0.7% 0.6% 41,889 2,630M PSE&G 2018 Rate Base 2018 El
Slide 11: 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 12: PSE&G's $12B - $14.5B investment program
PSE&G’s $12B - $14.5B investment program focused on reliability, resiliency, grid modernization and clean energy Over 90% of investment receiving contemporaneous 3,500 PSE&G Capital Spending or near-contemporaneous regulatory treatment 3,000 2,500 CEF 2,000 ($ Millions) 1,500 1,000 500 0 2019E 2020E
Slide 13: Investment program provides opportunity for ~7.5% - 8.5% compound annual rate base growth
Investment program provides opportunity for ~7.5% - 8.5% compound annual rate base growth 35,000 PSE&G Year-End Rate Base 30,000 8.5% - CEF 7.5% - 25,000 20,000 ($ Millions) 15,000 10,000 5,000 0 2018 2019E 2020E 2021E 2022E 2023E Transmission Electric Distribution Gas Distribution Clean Energy INCL
Slide 14: Transmission: ~$5 Billion investment program over 2019-2023
Transmission: ~$5 Billion investment program over 2019-2023 period focused on enhancing reliability and resiliency, and replacing aging infrastructure PJM’s Regional Transmission Expansion Plan (RTEP) identifies system enhancements needed for reliability • Reliability Criteria Violations: upgrades t
Slide 15: 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 GSMP I Program complete - replaced ~450 mi
Slide 16: Energy Strong II: Recent settlement continues critical energy infrastructure program
Energy Strong II: Recent settlement continues 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) ‒
Slide 17: 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 program filed in January 2019 providing cost-effective and innovative solutions supporting NJ’s clean energy goals • Energy Efficiency: Helps achieve the Clean Energy Act targets of 2%
Slide 18: 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 2019, 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 19: PSEG Long Island: Focused on improving customer service and reliability
PSEG Long Island: Focused on improving customer service and reliability while managing costs • Focused on safety, reliability, customer satisfaction and stakeholder relationships • 6th year of 12-year contract (with option to extend 8 years) • 2018: Earned $0.10 per share* Fixed fee of $65 Million
Slide 20: 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 S S S S SS S Bethlehem Energy S Center (BEC) Bridgeport Harbor S S New Haven Kalaeloa S = Solar Yards Creek ISO New England Solar Source assets: • Solar (414 MWDC /325 MWAC) PJM Bergen K
Slide 21: Capacity markets provide a solid and continuing revenue stream
Capacity markets provide a solid and continuing revenue stream PJM’s RPM Auction Results* Delivery Year 2018/2019 2019/2020 2020/2021 2021/2022 PSEG Power’s Average Prices $205 $116 $179 $182 ($/MW-day) $165/$150 $100/$80 $77 $140 Rest of Pool Prices ($/MW-day) (CP/Base) (CP/Base) (CP) (CP) PSEG Pow
Slide 22: Stable Gross Margin - Hedging strategy designed to mitigate risk
Stable Gross Margin - Hedging strategy is designed to mitigate risk and secure free cash flow Oct - Dec 2019 2020 2021 Volume TWh 7 31 31 Base Load volumes lowered Base Load by ~1.2 TWh in 2019 and % Hedged 100% 100% 70-75% ~5 TWh in 2020 and 2021 (Nuclear and Base Load Coal) each due to Keystone &
Slide 23: Potential investment in Ørsted's Ocean Wind is aligned with NJ's clean energy policy
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 24: 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 – 2019E CAGR: (1.4%) $2,500 Cost control actions • Continued focus on $2,000 vendors to ensure maximum value ($ Millions) • Frequent organizational $1,500 reviews to drive efficiency and cost optimizatio
Slide 25: PSEG Power's free cash flow improves post CCGT construction
PSEG Power’s free cash flow improves post CCGT construction, increasing support of utility investments PSEG Power PSE&G 2019E – 2023E Capital Spending (1,2) 2019E – 2023E Capital Spending (1,3) $400 $3,500 $3,000 $300 $2,500 CEF ($ Millions) ($ Millions) $2,000 $200 $1,500 $1,000 $100 $500 $0 $0 201
Slide 26: Strategic focus continues to deliver solid results
Strategic focus continues to deliver solid results +4%** 2019E PSEG non-GAAP Operating Earnings per Share* Guidance $3.12 $3.20 – $3.30 $2.91 $2.90 $2.93 $2.76 $2.58 2013 2014 2015 2016 2017 2018 2019E *SEE SLIDE A FOR ITEMS EXCLUDED FROM NET INCOME TO RECONCILE TO NON-GAAP OPERATING EARNINGS. **BAS
Slide 27: Opportunity for consistent and sustainable dividend growth
Opportunity for consistent and sustainable dividend growth Annual Dividend Per Share PSE&G (2014-2019E CAGR: 4.9%) 2019 $2.40 Net Income Guidance PSE&G Range $2.20 EPS $2.00 $1.88* $1.80 $1.80 ($/Share) $1.72 $1.64 $1.60 $1.56 $1.48 $1.40 $1.20 $1.00 2014 2015 2016 2017 2018 2019E *INDICATIVE ANNUAL
Slide 28: PSEG Value Proposition
PSEG Value Proposition Operational Financial Disciplined Excellence Strength Investment • • • Excellence Assuring Aligned with in Balanced NJ’s Regulatory/ Results in Energy & Policy Regulatory/ Environmental Arena Policy Matters Goals • PSE&G – Delivering on promise for rate base growth through ali
Slide 29: PSEG Meeting Takeaways
PSEG Meeting Takeaways Regulatory & Policy Focus De-risks/Presents Opportunities Enhanced • Next distribution base rate case not required before year-end 2023 Stability, Risk • ZEC award preserves nuclear and supports stable gross margin Mitigated • New CCGTs improve PSEG Power’s fleet efficiency/ge
Slide 30: PSEG Appendix
PSEG We make things work for you.
Slide 31: Reconciliation of Non-GAAP Operating Earnings
Reconciliation of Non-GAAP Operating Earnings Public Service Enterprise Group Incorporated - Consolidated Operating Earnings (Non-GAAP) Reconciliation Year Ended Reconciling Items D ecember 3 1 , 2018 2017 2016 2015 2014 2013 ($ millions, Unaudited) Net Income $ 1 ,4 3 8 $ 1 ,5 7 4 $ 887 $ 1 ,6 7 9
Slide 32: Reconciliation of non-GAAP Operating Earnings for PSE&G, PSEG Power and PSEG Enterprise/Other
Reconciliation of non-GAAP Operating Earnings for PSE&G, PSEG Power and PSEG Enterprise/Other PSE&G Operating Earnings (Non-GAAP) Reconciliation Year Ended Reconciling Items D ecember 3 1 , 2018 2017 2016 2015 2014 2013 ($ millions, Unaudited) Net Income $ 1 ,0 6 7 $ 973 $ 889 $ 787 $ 725 $ 612 Tax
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