Public Service Enterprise Group Incorporated · NYSE:PEG
Public Service Enterprise — Investor Presentation (May 2022)
46 slides from Public Service Enterprise's investor presentation, May 2022
Slide 1: Public Service Enterprise Group May 2022 Investor Update
Public Service Enterprise Group May 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 in addition to its Net Income/(Loss) 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/(Loss). Non-GAAP Operating Earnings
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. 4
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 & Other1 ● PSE&G: Robust capital program aligned with st
Slide 6: PSEG Sustainability and ESG Summary
PSEG Sustainability and ESG Summary PSEG Leadership Policies & Goals Recognition & Memberships • Joined the U.N.-backed Race to Zero and • PSEG is a vocal advocate for an economy-wide • Named to Dow Jones Sustainability Index – Business Ambition for 1.5°C campaigns price on carbon and preserving our
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 Emissions Intensity vs. U.S. Fleet Average (2005 – 2023E) PSEG’s ESG Vital Signs: Relative Scores PEERS MSCI AA PSEG in top 20% of all MSCI rated companies SSGA
Slide 8: 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 >$24
Slide 9: PSE&G: Top decile safety and reliability performance
PSE&G: Top decile safety and reliability performance OSHA Incident Rate OSHA Recordable PSE&G SAIDI Open Leaks Better Better Better Better Days Away Rate 7.0 350 30,000 6.0 150.0 300 25,000 5.0 250 20,000 4.0 100.0 200 15,000 3.0 150 10,000 2.0 50.0 100 1.0 50 5,000 - - - - 2017 2018 2019 2020 2021
Slide 10: Achieving Strong Customer Satisfaction Scores for E&G
Achieving Strong Customer Satisfaction Scores for E&G J.D. Power Residential Satisfaction J.D. Power Business Satisfaction J.D. Power Electric Residential J.D. Power Gas Residential J.D. Power Electric Business J.D. Power Gas Business 1Q 2Q 1Q 1Q 742 767 770 743 748 759 766 802 806 795 804 820 826 7
Slide 11: PSE&G's planned investments align with NJ's clean energy goals
PSE&G’s planned investments align with NJ’s clean energy goals PSEG’s Capital Spending Program Aligns with PSEG’s Net-Zero 2030 Goal PSE&G Capital Spending Carbon-Free 2021 – 2025E Nuclear Other Generation 2% 3% 4,000 3,500 Clean Transmission 3,000 Unapproved Energy 22% Programs 13% Over 90% 2,500 P
Slide 12: Expanded investment program firms compound annual rate base growth
Expanded investment program firms compound annual rate base growth over the five year period CAGR PSE&G Year-End Rate Base YE 2021- YE 2020- YE 2025E YE 2025E 7.5% 8% 35,000 6% 6.5% Unapproved 30,000 Programs 25,000 ($ Millions) 20,000 15,000 10,000 5,000 - 2021 2022E 2023E 2024E 2025E Transmission
Slide 13: 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 14: 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 Tropical Storm Ida, and Remained Operational • Superstorm Sandy & Hurricane Irene caused flooding at 29 substations
Slide 15: 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 16: Infrastructure Advancement Program – 4-year distribution investment program
Infrastructure Advancement Program – 4-year distribution investment program to improve reliability, reduce emissions and create jobs Investment $ millions Components Underground cable replacement, spacer cable, pole upgrades, Based on the Last Mile - Reliability $206 open wire secondary, etc. to imp
Slide 17: 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 Actual Forecast 0% PSE&G is on track to achieve its • GSMP II will replace ~875 ~22% methane red
Slide 18: Clean Energy Future programs focus on reducing 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 $109M jobs for under-employed Commitment Investment Investment Investment and diverse NJ resid
Slide 19: PSE&G investments create New Jersey job growth and support diverse recruiting
PSE&G investments create New Jersey job growth and support diverse recruiting efforts Infrastructure Programs: Over 1,500 current direct jobs through GSMP II and ES II, and over 500 more through IAP filing Clean Energy: Over 3,000 direct jobs planned, with a focus on unemployed, under-employed, and
Slide 20: Investments in technology are making us more efficient and reliable
Investments in technology are making us more efficient and reliable, and giving customers greater access to information and programs Advanced Metering Infrastructure Providing real time information to help customers Mobile Geographic manage their usage, improving operational Information System effic
Slide 21: Managing costs to mitigate inflation impacts and preserve customer affordability
Managing costs to mitigate inflation impacts and preserve customer affordability PSE&G O&M Expense (1) 2017 – 2022E CAGR = ~2.2% 1,400 • Demonstrated ability to control O&M, preserving earnings and returns in a 1,200 low sales growth environment 1,000 • Cost increase primarily driven by ($ Millions)
Slide 22: PSE&G's residential customer bills compare favorably
PSE&G’s residential customer bills compare favorably Regional gas bills lowest among peers, Regional 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. R
Slide 23: 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 24: Typical residential combined 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% since 2009 PSE&G Electric & Gas Combined Bill (1) Affordability of the % of New Jersey Household Income combined bill has Including Low-income Customers After Assumed Credits improved by o
Slide 25: 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 goal of 100% clean energy by 2050 • Captures region’s best renewable resource • Supports economic growth engine for new supply chain, including the New Jersey Wind Port
Slide 26: 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 NA, competitive solicitatio
Slide 27: PSEG regulatory & policy focus supports our low carbon infrastructure platform
PSEG regulatory & policy focus supports our low carbon infrastructure platform New Jersey Focus Federal Focus • PSE&G continuing investments in critical energy infrastructure to • FERC RTO incentive ROE adder continues in place while FERC provide customer benefits; Energy Strong program improves res
Slide 28: 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 • Transmission Expansion • 2021 Successor Solar Framework • IAP • Last Mile Reliability • Energy Strong I • 2021 Ne
Slide 29: 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 30: Sound governance and unwavering ethics
Sound governance and unwavering ethics are the foundation of our high-performing culture • Diverse Board of Directors – New Independent Lead Director - Susan Tomasky – Regular reports and continuing education for directors on key topics – 55% of current directors are gender and/or ethnically diverse
Slide 31: Long-term focus on regulated utility growth and improving business mix
Long-term focus on regulated utility growth, improving our business mix and enhancing our ESG profile Before PSEG Fossil & Solar Source Sales After PSEG Fossil and Solar Source Sales PSE&G ~90% and Carbon-free, Business Mix Growing Regulated Contribution Infrastructure & Other ~10% 6,750 MW of PSEG
Slide 32: Sale of PSEG Fossil and Solar Source generated significant cash flow
Sale of PSEG Fossil and Solar Source 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
Slide 33: 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 34: 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 planned investments, $ Billions 2022E – 2025E 15% ~Mid-Teens with significant debt Mini
Slide 35: PSEG has controlled O&M by focusing on continuous improvement
PSEG has controlled O&M by focusing on continuous improvement and eliminating support costs related to the divested assets PSEG O&M Expense (1) 2017 – 2022E CAGR = ~(1.8%) 2,500 2,000 ($ Millions) 1,500 Support costs related to asset divestitures have been eliminated 1,000 with successful just trans
Slide 36: 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 37: 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 38: Appendix
* PSEG Appendix 38
Slide 39: PSEG EPS Reconciliation – Q1 2022 versus Q1 2021
PSEG EPS Reconciliation – Q1 2022 versus Q1 2021 $1.40 0.07 (0.02) $1.33 $1.28 $1.28 Electric Gross Margin (0.27) Transmission (0.03) $1.20 Capacity (0.13) Gas Margin 0.08 Generation (0.08) Electric Margin 0.02 Sale of Solar Source (0.02) $1.00 Other Margin 0.02 Re-contracting & Market Distr
Slide 40: PSEG maintains a solid financial position
PSEG maintains a solid financial position PSEG Public Service Electric & Gas PSEG Senior Unsecured Credit Ratings PSE&G Senior Secured Credit Ratings Moody’s = Baa2 / Outlook = Stable S&P = BBB / Outlook = Stable Moody’s = A1 / Outlook = Stable S&P = A / Outlook = Stable PSEG 364-Day Term Loan Outst
Slide 41: PSEG Liquidity as of March 31, 2022
PSEG Liquidity as of March 31, 2022 Expiration Total Available Company Facility Usage Date Facility Liquidity ($ millions) PSE&G Revolving Credit Facility March 2027 $1,000 $18 $982 PSEG Money Pool (A,B) PSEG/PSEG Power Revolving Credit Facility (PSEG) March 2027 $1,500 $428 $1,072 (A) Revolving Cre
Slide 42: Q1 2022 Generation Measures & Hedge Update
Q1 2022 Generation Measures & Hedge Update Quarter ended Year ended March 31 December 31 Carbon-Free Contracted Energy Sales* Nuclear Generation Apr – Dec 2022 2021 2021 2023E 2024E Measures 2022E Capacity Factor 100.0% 98.6% 91.9% Fuel Nuclear Nuclear Nuclear Fuel Cost ($ millions) $49 $49 $188 Vol
Slide 43: PSEG is transitioning to Net-Zero operations
PSEG is transitioning to Net-Zero operations, which will help enable a lower carbon, competitive New Jersey economy 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 gene
Slide 44: Glossary of Terms
Glossary of Terms AFUDC Allowance for Funds Used During Construction GHG Greenhouse Gas AMI Automated Metering Infrastructure GSMP Gas System Modernization Program ARO Asset Retirement Obligations IAP Infrastructure Advancement Program BPU New Jersey Board of Public Utilities LIHEAP Low Income Home
Slide 45: Reconciliation of Non-GAAP Operating Earnings
Reconciliation of Non-GAAP Operating Earnings Public Service Enterprise Group Incorporated - Consolidated Operating Earnings (non-GAAP) Reconciliation Three Months Ended Year Ended (a) Effective January 1, 2018, unrealized gains (losses) on Reconciling Items March 31, December 31, equity securities
Slide 46: Reconciliation of Non-GAAP Operating Earnings
Reconciliation of Non-GAAP Operating Earnings Carbon-Free, Infrastructure & Other Operating Earnings (non-GAAP) Reconciliation (a) Includes the financial impact from positions with forward delivery months. Three Months Ended Year Ended (b) Amount for the three months ended March 31, 2022 includes th
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