Public Service Enterprise Group Inc Profile
Public Service Enterprise Group Incorporated operates as a public utility holding company primarily consisting of a regulated electric and gas utility and a nuclear generation business.
The company principally conducts its business through two direct wholly owned subsidiaries, PSE&G and PSEG Power LLC (PSEG Power).
PSE&G—A New Jersey corporation, incorporated in 1924, which is a franchised public utility in New Jersey. It is also the provider of last resort for gas and electric commodity service for end users in its service territory. PSE&G earns revenues from its regulated rate tariffs under which it provides electric transmission and electric and natural gas distribution to residential, commercial and industrial (C&I) customers in its service territory. It also offers appliance services and repairs to customers throughout its service territory and invests in regulated solar generation projects and regulated energy efficiency (EE) and related programs in New Jersey.
PSEG Power—A Delaware limited liability company formed in 1999 as a result of the deregulation and restructuring of the electric power industry in New Jersey. PSEG Power earns revenues from its nuclear generation and marketing of power and natural gas to hedge business risks and the value of its portfolio of nuclear power plants, other contractual arrangements and gas storage facilities.
In February 2022, the company completed the sale of its 6,750 megawatt (MW) fossil generation portfolio, which represented an important milestone in the company’s strategy.
The company’s other direct wholly owned subsidiaries are PSEG Long Island LLC (PSEG LI), which operates the Long Island Power Authority’s (LIPA) electric transmission and distribution (T&D) system under a contractual agreement; PSEG Energy Holdings L.L.C. (Energy Holdings), which primarily holds the company’s legacy lease investments and competitively bid, FERC regulated transmission; and PSEG Services Corporation (Services).
Segments
PSEG’s business consists of two reportable segments, PSE&G and PSEG Power LLC (PSEG Power) & Other, primarily comprised the company’s principal direct wholly owned subsidiaries, which are:
PSE&G—which is a public utility engaged principally in the transmission of electricity and distribution of electricity and natural gas in certain areas of New Jersey. PSE&G is subject to regulation by the New Jersey Board of Public Utilities (BPU), the Federal Energy Regulatory Commission (FERC), and other federal and New Jersey state regulators. PSE&G also invests in regulated solar generation projects and energy efficiency (EE) and related programs in New Jersey, which are regulated by the BPU.
PSEG Power—which is an energy supply company that integrates the operations of its merchant nuclear generating assets with its fuel supply functions through competitive energy sales via its principal direct wholly owned subsidiaries. PSEG Power’s subsidiaries are subject to regulation by FERC, the Nuclear Regulatory Commission (NRC) and other federal regulators and state regulators in the states in which they operate.
Operations and Strategy
PSE&G
The company’s regulated T&D public utility, PSE&G, distributes electric energy and natural gas to customers within a designated service territory running diagonally across New Jersey where approximately 6.8 million people, or about 74% of New Jersey’s population resides.
Products and Services
The company’s utility operations primarily earn margins through:
Transmission—The movement of electricity at high voltage from generating plants to substations and transformers, where it is then reduced to a lower voltage for distribution to homes, businesses and industrial customers. The company’s revenues for these services are based upon tariffs approved by the Federal Energy Regulatory Commission (FERC).
Distribution—The delivery of electricity and gas to the retail customer’s home, business or industrial facility. The company’s revenues for these services are based upon tariffs approved by the New Jersey Board of Public Utilities (BPU).
The commodity portion of the company’s utility business’ electric and gas sales is managed by basic generation service (BGS) and basic gas supply service (BGSS) suppliers.
In addition, the company continues to invest in and pursue opportunities in regulated clean energy, including EE, electric vehicle (EV) make-ready charging infrastructure, solar, energy storage and other potential investments.
The company also earns margins through competitive services, such as appliance repair, in the company’s service territory.
The company is a transmission owner in PJM Interconnection, L.L.C. (PJM) which is an Independent System Operator (ISO) and Regional Transmission Organization (RTO) that operates the electric transmission system in the Mid-Atlantic Region, including New Jersey and the surrounding states. The company provides distribution service to 2.4 million electric customers and 1.9 million gas customers in a service area that covers approximately 2,600 square miles running diagonally across New Jersey. The company serves the most densely populated, commercialized and industrialized territory in New Jersey, including its six largest cities and approximately 300 suburban and rural communities.
Transmission
The company uses formula rates for its transmission cost of service and investments.
Distribution
PSE&G distributes electricity and natural gas to end users in the company’s respective franchised service territories. The company’s distribution rates are subject to periodic rate cases approved by the BPU. The BPU has also approved a series of PSE&G infrastructure, EE, EV and renewable energy investment programs with cost recovery through various clause mechanisms.
GSMP II Extension—designed to replace at least 400 miles of cast iron and unprotected steel mains and services in the company’s gas system.
Energy Strong II Program—structured to harden, modernize and improve the resiliency of the company’s electric and gas distribution systems.
To date, the company launched three of the four components of the company’s CEF:
EE—designed to achieve EE targets required under New Jersey’s Clean Energy Act through a suite of ten programs for residential, C&I programs, including low-income, multi-family, small business and local government.
EC—driven by the implementation of ‘smart meters,’ and new software and product solutions to improve the company’s processes and better manage the electric grid.
EV—primarily relating to preparatory work to deliver infrastructure to the charging point for three programs: residential smart charging; Level-2 mixed use charging; and direct current (dc) fast charging.
The company’s CEF-Energy Storage (ES) program, which was filed with the BPU in October 2018, is being held in abeyance.
IAP—designed to improve the reliability of the ‘last mile’ of the company’s electric distribution system and address aging substations and gas metering and regulation stations.
Solar Generation
The company has also undertaken solar initiatives at PSE&G, which primarily invest in utility-owned solar photovoltaic (PV) grid-connected solar systems installed on PSE&G property and third-party sites with the company’s economics driven by its net investment in solar, with a contemporaneous return on that rate base.
Supply
The company makes no margin on the default supply of electricity and gas since the actual costs are passed through to the company’s customers.
All electric and gas customers in New Jersey have the ability to choose their electric energy and/or gas supplier. Pursuant to BPU requirements, the company serves as the supplier of last resort for two types of electric and gas customers within the company’s service territory that are not served by another supplier.
The company procures the supply to meet its BGS obligations through auctions authorized by the BPU for New Jersey’s total BGS requirement. These auctions take place annually in February. Once validated by the BPU, electricity prices for BGS service are set. Approximately one-third of PSE&G’s total BGS-RSCP eligible load is auctioned each year for a three-year term.
PSE&G procures the supply requirements of its default service BGSS gas customers through a full-requirements contract with PSEG Power. The BPU has approved a mechanism designed to recover all gas commodity costs related to BGSS for residential customers.
PSEG Power & Other
PSEG Power & Other is predominantly consisted of its nuclear generation assets, its natural gas supply operations, the Operating Services Agreement (OSA) of PSEG LI with LIPA, and other legacy investments. PSEG Power is a public utility within the meaning of the Federal Power Act (FPA) and the payments it receives and how it operates are subject to FERC regulation.
PSEG Power
Products and Services
As a nuclear generation owner and operator, the company’s revenue has been derived primarily from energy, capacity and ancillary services sold to PJM in the spot markets. These products and services may also be transacted through exchange markets or bilaterally.
In August 2022, the Inflation Reduction Act (IRA) was signed into law expanding incentives that promote carbon-free generation. The enacted legislation established the production tax credit (PTC) for electricity generation using nuclear energy, which begins January 1, 2024 and is available through 2032. PSEG Power’s Salem 1, Salem 2, Hope Creek, Peach Bottom 2 and Peach Bottom 3 nuclear plants are expected to benefit from the PTC.
PSEG Power also sells wholesale natural gas, primarily through a full-requirements BGSS contract with PSE&G to meet the needs of PSE&G’s default service customers. In 2022, the BPU approved an extension of the long-term BGSS contract to March 31, 2027, and thereafter the contract remains in effect unless terminated by either party with a two-year notice.
PSEG Power supplies PSE&G’s peak daily gas requirements through its balanced portfolio of firm gas transportation capacity, storage contracts, contract peaking supply, and liquefied natural gas and propane. Based upon the availability of natural gas beyond PSE&G’s actual daily needs, PSEG Power sells gas to other customers and shares these proceeds with PSE&G’s customers.
As of December 31, 2023, PSEG Power had 3,761 MW of nuclear generation capacity. All of the company’s nuclear generation capacity is located in New Jersey and Pennsylvania.
Generation Dispatch
The company’s nuclear generation is considered to be base load. Base load units run the most and typically are called to operate whenever they are available.
Nuclear Fuel Supply
The company has long-term contracts for nuclear fuel. These contracts provide for purchase of uranium (concentrates and uranium hexafluoride), conversion of uranium concentrates to uranium hexafluoride, enrichment of uranium hexafluoride, and fabrication of nuclear fuel assemblies.
The company expects to be able to meet the nuclear fuel supply demands of its operations.
Markets
All of PSEG Power’s nuclear generation assets are located within the PJM RTO.
PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants have also been awarded zero emission certificates (ZECs) by the BPU through May 2025.
Energy Holdings
Energy Holdings maintains the company’s portfolio of legacy lease investments.
Energy Holdings also owns 50% of Garden State Offshore Energy LLC (GSOE) which holds rights to an offshore wind lease area just south of New Jersey. The company is evaluating its options for the potential sale of the company’s interest in GSOE.
In December 2023, PJM awarded a subsidiary of Energy Holdings a project to construct a 500 kV transmission line in Maryland. PSEG’s project was part of a larger set of projects designed to address reliability issues driven by load growth and retirement of fossil generation. The company’s project is expected to be placed in service in 2027.
Regulation
In the ordinary course of the company’s business, the company is subject to regulation by, and are party to various claims and regulatory proceedings with FERC, the BPU, the Commodity Futures Trading Commission (CFTC) and various state and federal environmental regulators, among others.
PSE&G and certain operating subsidiaries of PSEG Power are public utilities as defined by the FPA.
The company’s operation of nuclear generating facilities is subject to comprehensive regulation by the NRC, a federal agency established to regulate nuclear activities to ensure the protection of public health and safety, as well as the environment. Such regulation involves testing, evaluation and modification of all aspects of plant operation in light of NRC safety, security, cybersecurity, and environmental requirements.
The company’s principal state regulator is the BPU, which oversees electric and natural gas distribution companies in New Jersey. The company is also subject to various other states’ regulations due to the company’s operations in those states.
The company’s New Jersey utility operations are subject to comprehensive regulation by the BPU including, among other matters, regulation of retail electric and gas distribution rates and service, the issuance and sale of certain types of securities and compliance matters.
Environmental Matters
The Environmental Protection Agency’s (EPA) Clean Water Act (CWA) Section 316(b) rule establishes requirements for the regulation of cooling water intakes at existing power plants, such as Salem.
History
Public Service Electric and Gas Company was founded in 1903. The company was incorporated under the laws of the state of New Jersey in 1985.
