PUBLIC SERVICE ENTERPRISE GROUP INC SEC 10-K Report

Public Service Enterprise Group Inc. (PSEG), a leading energy company operating primarily through its subsidiaries PSE&G and PSEG Power, has released its annual 10-K report. The report provides a comprehensive overview of the company's financial performance, business operations, strategic initiatives, and the challenges and risks it faces in the energy sector.

Financial Highlights

• Operating Revenues: $10,290 million, reflecting a decrease from the previous year due to changes in generation and gas supply revenues.
• Operating Income: $2,353 million, a decrease from the prior year primarily due to changes in MTM gains and losses and higher operating expenses.
• Net Income: $1,772 million, down from $2,563 million in 2023, driven by changes in MTM gains and losses and the impact of pension settlement charges in 2023.
• Net Income Per Share (Diluted): $3.54, compared to $5.13 in 2023, reflecting the decrease in net income.

Business Highlights

• Business Structure: PSEG operates primarily through two subsidiaries: PSE&G, a regulated electric and gas utility, and PSEG Power, which focuses on nuclear generation and energy marketing.
• Operational Focus: PSE&G is concentrating on investments in transmission and distribution infrastructure and clean energy programs to enhance reliability and meet growing demand.
• Regulatory Developments: The BPU approved PSE&G's Clean Energy Future-Energy Efficiency II program, authorizing $2.9 billion for energy efficiency projects from 2025 to 2027.
• Infrastructure Programs: PSE&G's Gas System Modernization Program II was extended to replace 400 miles of gas mains, with a $900 million investment through 2025.
• Nuclear Operations: PSEG Power's nuclear units generated approximately 31 terawatt hours in 2024, operating at a 90% capacity factor, with a focus on efficient operations and market risk mitigation.
• Future Outlook: PSEG plans to invest $21 billion to $24 billion in regulated capital from 2025 to 2029, aiming for a 6% to 7.5% compound annual growth rate in its regulated rate base.
• Transmission Projects: PSEG was awarded a $424 million project by PJM to construct a transmission line in Maryland and Virginia, expected to be in service by 2027.
• Clean Energy Initiatives: PSE&G is implementing programs to support New Jersey's Energy Master Plan, including energy efficiency, electric vehicle infrastructure, and smart meter installations.
• Human Capital Management: PSEG emphasizes a diverse and inclusive workforce, with 60% of employees represented by unions, and ongoing efforts in talent development and safety.
• Environmental Strategy: PSEG is committed to achieving net zero greenhouse gas emissions by 2030, aligning with New Jersey's clean energy goals and focusing on reducing methane emissions through infrastructure improvements.

Strategic Initiatives

• Strategic Focus: PSEG is focused on achieving growth by allocating capital primarily toward regulated investments to improve sustainability and predictability. The company is investing in modernizing energy infrastructure, enhancing reliability and resilience, increasing energy efficiency, and delivering clean energy.
• Capital Management: PSEG's capital requirements are expected to be met through internally generated cash flows and external financings, including short-term debt for working capital and long-term debt for capital investments. PSE&G maintains a $1 billion revolving credit facility and uses a commercial paper program for liquidity needs. PSEG and PSEG Power have access to a $2.75 billion Master Credit Facility. PSEG's dividend payments are designed to maintain investment-grade credit ratings. The company declared a $0.63 per share dividend for the first quarter of 2025, reflecting an annual rate of $2.52 per share.
• Future Outlook: PSEG plans to invest $21 billion to $24 billion in regulated capital investments from 2025 to 2029, with an expected compound annual growth rate in the regulated rate base of 6% to 7.5%. The company aims to continue its utility capital investment program to modernize infrastructure and align with New Jersey’s energy policy. PSEG will also focus on controlling costs, managing risks and opportunities in clean energy policies, and engaging with stakeholders to support its strategic goals.

Challenges and Risks

• Regulatory Risks: The company faces significant regulatory risks, particularly with respect to obtaining necessary approvals for capital projects and recovering costs through rates. Changes in state and federal regulations, especially those related to climate change and energy efficiency, could impose additional costs or limit the company's ability to recover investments.
• Climate Change and Environmental Risks: The company is exposed to physical, financial, and transition risks related to climate change. This includes potential increased legislative and regulatory burdens, changing customer preferences towards electrification, and the risk of severe weather events impacting operations. The company may also face lawsuits related to climate change impacts.
• Operational Risks: The successful operation of new facilities and projects is subject to risks such as supply interruptions, labor disputes, and unforeseen engineering problems. Additionally, the company is vulnerable to asset and equipment failures, cybersecurity attacks, and natural disasters, which could disrupt operations and result in substantial financial losses.
• Market Risks: Fluctuations in the wholesale power and natural gas markets could negatively affect financial results. The company is particularly sensitive to changes in natural gas prices, which influence electricity prices and margins.
• Supply Chain and Inflation Risks: Disruptions or cost increases in the supply chain, including labor shortages and inflation, could materially impact the company's operations and financial performance.
• Credit and Liquidity Risks: The company relies on access to capital markets to fund operations and investments. Market disruptions or a downgrade in credit ratings could adversely affect the company's ability to secure financing on favorable terms.
• Technological Risks: The introduction or expansion of new technologies related to energy generation and distribution could impact the company's business model. Advances in distributed generation and energy storage technologies, coupled with regulatory changes, could reduce demand for traditional utility services.

SEC Filing: PUBLIC SERVICE ENTERPRISE GROUP INC [ PEG ] - 10-K - Feb. 25, 2025