Public Service Enterprise Group Incorporated

Company Overview

Business Model: Public Service Enterprise Group Incorporated is a public utility holding company operating primarily as a regulated electric and gas utility and a nuclear generation business through its wholly owned subsidiaries. The business model focuses on growth through regulated investments to enhance sustainability and predictability, while also leveraging consistent, reliable carbon-free generation from its nuclear units. Public Service Electric and Gas Company generates revenue from regulated tariffs for electric transmission and electric and natural gas distribution to residential, commercial, and industrial customers in New Jersey, alongside appliance services, regulated solar generation, and energy efficiency programs. PSEG Power LLC earns revenue by selling energy and capacity from its nuclear generation units and wholesale natural gas through a full-requirements contract with Public Service Electric and Gas Company, optimizing its portfolio through bilateral energy and gas contracts. PSEG Long Island LLC operates the Long Island Power Authority’s electric transmission and distribution system under a contractual agreement.

Market Position: Public Service Electric and Gas Company serves approximately 6.8 million people, or about 74% of New Jersey’s population, across a 2,600 square mile service area, including the state’s six largest cities. Its regulated transmission and distribution business is minimally impacted by customer choice of commodity suppliers or usage changes, as revenue is based on rate base investment and customer count. PSEG Power LLC operates 3,758 MW of nuclear generation capacity in New Jersey and Pennsylvania, providing over 80% of New Jersey's carbon-free energy from its base load units. The company competes in wholesale energy markets with various participants including merchant and utility generators, energy marketers, and financial entities.

Recent Strategic Developments:

• Capital Investment Program: Public Service Enterprise Group Incorporated projects regulated capital investments of $22.5 billion to $25.5 billion for 2026-2030, targeting a 6.0% to 7.5% compound annual growth rate in regulated rate base from year-end 2025 to year-end 2030.
• Public Service Electric and Gas Company Clean Energy Future-Energy Efficiency II: In October 2024, the New Jersey Board of Public Utilities approved $2.9 billion for energy efficiency projects from January 2025 through June 2027, to be completed over six years.
• Public Service Electric and Gas Company Gas System Modernization Program III: In November 2025, the New Jersey Board of Public Utilities approved $1.05 billion for capital investment to replace 525 miles of cast iron and unprotected steel gas mains, with investment starting in 2026 and continuing through 2028.
• Public Service Electric and Gas Company Distribution Rate Case: An October 2024 New Jersey Board of Public Utilities order approved a $17.8 billion rate base, a 9.6% return on equity, and a 55% equity component for Public Service Electric and Gas Company’s distribution business, effective October 15, 2024.
• PSEG Power LLC Nuclear Operations: Effective April 2025, estimated useful lives for Salem 1, Salem 2, and Hope Creek nuclear plants were revised based on expected 20-year license extensions. In October 2025, the refueling cycle at Hope Creek was extended from 18 to 24 months. Power uprates are planned for Salem Units 1 and 2 to increase capacity and reliability.
• PSEG Long Island LLC Contract Extension: In 2025, the Operations Services Agreement with Long Island Power Authority was extended for five years, through December 31, 2030.
• Competitively Bid, Federal Energy Regulatory Commission Regulated Transmission: In December 2023, PJM Interconnection, L.L.C. awarded Public Service Enterprise Group Incorporated a $424 million project for a 500 kV transmission line in Maryland and northern Virginia, with a directed in-service date of 2027, though this is not currently deemed achievable due to procedural timelines.

Geographic Footprint:

• New Jersey: Primary operational region for Public Service Electric and Gas Company (electric transmission and distribution, natural gas distribution, solar generation, energy efficiency programs) and PSEG Power LLC (nuclear generation).
• Pennsylvania: PSEG Power LLC has nuclear generation assets.
• Long Island, New York: PSEG Long Island LLC operates the electric transmission and distribution system.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Operating Margin: 24.49%
• Net Margin: 17.35%

Investment in Growth:

• Capital Expenditures: $3,272 million
• Strategic Investments:
  • Regulated capital investment program (2026-2030): $22.5 billion to $25.5 billion
  • Public Service Electric and Gas Company Clean Energy Future-Energy Efficiency II: $2.9 billion
  • Public Service Electric and Gas Company Gas System Modernization Program III: $1.05 billion
  • PJM Interconnection, L.L.C. awarded transmission project: $424 million

Business Segment Analysis

Public Service Electric and Gas Company

Financial Performance:

• Revenue: $9,558 million (+13.1% YoY)
• Operating Margin: 25.18%
• Key Growth Drivers: Higher earnings from the 2024 distribution base rate case settlement and continued investments in transmission and distribution clause programs. Delivery revenues increased $584 million, driven by $577 million from electric and gas rate case increases, $87 million from Green Program Recovery Charge revenues, and $44 million from higher transmission rate base investments. The regulated rate base increased from $34 billion in 2024 to $36 billion in 2025. Electric customers grew 0.9% annually (2021-2025) to 2.4 million, and gas customers grew 0.7% annually to 1.9 million. Electric sales increased 0.4% annually to 40,561 Gigawatt Hours, and firm gas sales increased 2.1% annually to 2,633 Million Therms. Over 90% of electric and gas distribution margin is now based on customer count due to the Conservation Incentive Program decoupling mechanism. Future load growth is anticipated from electric vehicle adoption, data centers, and other electrification factors.

Product Portfolio:

• Major product lines and services within segment: Electric transmission, electric and natural gas distribution, appliance services and repairs, regulated solar generation projects, and regulated energy efficiency programs.
• New product launches or major updates:
  • Clean Energy Future-Energy Efficiency II: $2.9 billion program, started 2025.
  • Clean Energy Future-Energy Efficiency: $1.6 billion program, started 2020.
  • Gas System Modernization Program III: $1.4 billion program, started 2026.
  • Gas System Modernization Program II Extension: $902 million program, started 2024.
  • Infrastructure Advancement Program: $511 million program, started 2022.
  • Clean Energy Future-Electric Vehicles: $166 million program, started 2021.
  • As of December 31, 2025, Public Service Electric and Gas Company owned 158 MW dc of installed photovoltaic solar capacity.

Market Dynamics: Public Service Electric and Gas Company's utility operations primarily earn margins from transmission and distribution services. Transmission revenues are based on Federal Energy Regulatory Commission-approved formula rates, providing a 9.90% base return on equity plus a 50 basis point adder for PJM Interconnection, L.L.C. membership. Distribution rates are set by the New Jersey Board of Public Utilities, with the latest rate case in October 2024 approving a 9.6% return on equity for the distribution business. The commodity portion of electric and gas sales is a pass-through with no margin for utility operations. Customer load requirements for 2025 were: Electric (Commercial 57%, Residential 34%, Industrial 9%) and Gas (Commercial 38%, Residential 58%, Industrial 4%).

PSEG Power LLC & Other

Financial Performance:

• Revenue: $3,722 million (+32.6% YoY)
• Operating Margin: 15.39%
• Key Growth Drivers: Increased generation revenues ($493 million) primarily from higher average realized energy prices and volumes sold ($192 million), higher capacity prices ($153 million), and lower mark-to-market losses ($120 million). Gas supply revenues increased $362 million due to higher sales prices ($126 million) and volumes ($120 million) under the Basic Gas Supply Service contract, and higher sales prices ($112 million) to third parties. Nuclear units generated 30.9 terawatt hours in 2025 with a 91.2% capacity factor. Strategic initiatives include extending estimated useful lives for Salem 1, Salem 2, and Hope Creek nuclear plants, extending the Hope Creek refueling cycle, and planning power uprates at Salem Units 1 and 2.

Product Portfolio:

• Major product lines and services within segment: Merchant nuclear generation assets, natural gas supply operations, and the Operations Services Agreement of PSEG Long Island LLC with Long Island Power Authority.
• Nuclear Generation Capacity (as of December 31, 2025):
  • Hope Creek (New Jersey): 1,174 MW (100% owned)
  • Salem 1 & 2 (New Jersey): 1,309 MW (57% owned of 2,280 MW total)
  • Peach Bottom 2 & 3 (Pennsylvania): 1,275 MW (50% owned of 2,549 MW total, operated by Constellation Energy Generation, LLC)
• PSEG Power LLC sells wholesale natural gas primarily through a full-requirements Basic Gas Supply Service contract with Public Service Electric and Gas Company.

Market Dynamics: PSEG Power LLC's revenue is primarily from energy, capacity, and ancillary services sold to PJM Interconnection, L.L.C. in spot markets, often hedged bilaterally. Natural gas prices significantly influence wholesale electricity prices. The Inflation Reduction Act established a Production Tax Credit for nuclear energy generation (2024-2032) of up to $15/MWh, subject to gross receipts and prevailing wage rules. Public Service Enterprise Group Incorporated did not record Production Tax Credits in 2025 as gross receipts exceeded the eligibility threshold, but the credit provides downside market volatility mitigation. Salem 1, Salem 2, and Hope Creek nuclear plants received Zero Emission Certificate revenue from New Jersey electric distribution companies through May 2025, equivalent to approximately $10/MWh, adjusted by estimated Production Tax Credits. PJM Interconnection, L.L.C.'s December 2025 capacity auction cleared at the Federal Energy Regulatory Commission-approved price cap of $333.44/MW-day, with PJM Interconnection, L.L.C. indicating a market clearing price of $529.80/MW-day without the cap, and a 6,625 MW shortfall in meeting reliability requirements. The hedging strategy aims to manage volatility, with the 2026 portfolio position expected to be above the Production Tax Credit eligibility level.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: 850,000 shares repurchased in December 2025 at an average price of $79.50 per share. An additional 865,000 shares remain available for repurchase under the plan for 2026 equity compensation and Employee Stock Purchase Plan purchases.
• Dividend Payments: $1,258 million paid in 2025 ($2.52 per share), up from $1,196 million in 2024 ($2.40 per share).
• Future Capital Return Commitments: The Board of Directors approved a $0.67 per share common stock dividend for Q1 2026, reflecting an indicative annual dividend rate of $2.68 per share.

Balance Sheet Position:

• Cash and Equivalents: $132 million (as of December 31, 2025)
• Total Debt: $24,074 million (as of December 31, 2025)
• Net Cash Position: -$23,942 million (Net Debt)
• Credit Rating:
  • Public Service Enterprise Group Incorporated: Senior Notes Baa2 (Moody's), BBB (Standard & Poor’s); Commercial Paper P2 (Moody's), A2 (Standard & Poor’s). Outlook: Stable.
  • Public Service Electric and Gas Company: Mortgage Bonds A1 (Moody's), A (Standard & Poor’s); Commercial Paper P2 (Moody's), A2 (Standard & Poor’s). Outlook: Stable.
  • PSEG Power LLC: Senior Notes Baa2 (Moody's), BBB (Standard & Poor’s). Outlook: Stable.
• Debt Maturity Profile:
  • Less than 1 year (2026): $875 million
  • 1-2 years (2027): $1,125 million
  • 2-3 years (2028): $1,300 million
  • 3-4 years (2029): $1,125 million
  • 4-5 years (2030): $2,200 million
  • Thereafter: $16,086 million

Cash Flow Generation:

• Operating Cash Flow: $3,298 million (2025), an increase of $1,165 million from 2024.
• Free Cash Flow: $26 million (2025).

Operational Excellence

Production & Service Model: Public Service Electric and Gas Company operates as a franchised public utility, providing electric transmission and electric and natural gas distribution services across New Jersey. It is a transmission owner in PJM Interconnection, L.L.C. and serves 2.4 million electric and 1.9 million gas customers. PSEG Power LLC operates base load nuclear generation units, selling energy, capacity, and ancillary services to PJM Interconnection, L.L.C. and wholesale natural gas to Public Service Electric and Gas Company. PSEG Long Island LLC manages the electric transmission and distribution system for Long Island Power Authority.

Supply Chain Architecture: Key Suppliers & Partners:

• Nuclear Fuel Suppliers: Multiple long-term contracts for uranium, conversion, enrichment, and fabrication, though certain aspects have limited suppliers. A single fuel fabrication services provider is used for each nuclear unit.
• Natural Gas Supplier: PSEG Power LLC is the full-requirements Basic Gas Supply Service contract supplier for Public Service Electric and Gas Company.
• Regional Transmission Organization: PJM Interconnection, L.L.C. operates the electric transmission system in the Mid-Atlantic Region.
• Joint Ownership Partner: Constellation Energy Generation, LLC co-owns Salem and Peach Bottom nuclear plants, operating Peach Bottom.

Facility Network:

• Manufacturing (Nuclear Generation):
  • Hope Creek (New Jersey): 1,174 MW (100% owned)
  • Salem 1 & 2 (New Jersey): 1,309 MW (57% owned)
  • Peach Bottom 2 & 3 (Pennsylvania): 1,275 MW (50% owned)
• Distribution (Public Service Electric and Gas Company):
  • Electric: Approximately 25,000 circuit miles, 871,000 poles (64% jointly-owned), 58 switching stations (40,000 MVA aggregate capacity), 238 substations (10,890 MVA aggregate capacity).
  • Gas: Approximately 18,000 miles of gas mains, 12 gas distribution headquarters, 54 natural gas metering and regulating stations, one liquefied natural gas and three liquid petroleum air gas peaking facilities (2.9 million therms aggregate daily capacity).

Operational Metrics:

• Nuclear Capacity Factor (2025): 91.2% (30.9 terawatt hours generated).
• Methane Emissions Reduction: Over 30% system-wide reduction from 2018 through 2025.
• Public Service Electric and Gas Company Electric Customers: 2.4 million.
• Public Service Electric and Gas Company Gas Customers: 1.9 million.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Public Service Electric and Gas Company provides direct electric and natural gas distribution services to customers within its franchised territory.
• Channel Partners: Public Service Electric and Gas Company acts as the supplier of last resort for electric and gas customers in its service territory who do not choose alternative suppliers.
• Digital Platforms: The Energy Cloud project, completed in 2024, implemented smart meters and new software solutions to improve processes and manage the electric grid.

Customer Portfolio: Enterprise Customers:

• Public Service Electric and Gas Company Customer Mix (2025 Sales):
  • Electric: 57% Commercial, 34% Residential, 9% Industrial.
  • Gas: 38% Commercial, 58% Residential, 4% Industrial.
• Strategic Partnerships: PSEG Long Island LLC operates the electric transmission and distribution system for Long Island Power Authority under a contractual agreement.
• Customer Concentration: PSEG Power LLC's wholesale operations have over 98% of net credit exposure with investment grade counterparties, with Public Service Electric and Gas Company being a significant counterparty (eliminated in consolidation). Public Service Electric and Gas Company had $6 million in unsecured mark-to-market credit exposure with its Basic Generation Service suppliers as of December 31, 2025.

Geographic Revenue Distribution:

• New Jersey: Significant revenue from Public Service Electric and Gas Company's regulated utility operations and PSEG Power LLC's nuclear generation.
• Pennsylvania: Revenue from PSEG Power LLC's nuclear generation.
• New York: Revenue from PSEG Long Island LLC's operations.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The company operates in a predominantly regulated electric and gas utility market and a deregulated nuclear generation market. PJM Interconnection, L.L.C. serves as the Independent System Operator and Regional Transmission Organization for the Mid-Atlantic region. Natural gas prices significantly influence wholesale electricity prices. The market faces resource adequacy challenges due to increasing electric demand from data centers, electric vehicle adoption, and electrification, leading to higher energy and capacity prices. The December 2025 PJM Interconnection, L.L.C. capacity auction cleared at a Federal Energy Regulatory Commission-approved price cap of $333.44/MW-day, with PJM Interconnection, L.L.C. unable to procure enough generation to meet its reliability requirement, falling 6,625 MW short.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Public Service Electric and Gas Company: Not directly affected by customers choosing alternate electric or gas suppliers as revenue is based on rate base. No specific direct competitors are named for its regulated utility business.
• PSEG Power LLC: Competes with merchant generators, utility generators, energy marketers, retailers, private equity firms, and other financial entities in wholesale energy markets.

Emerging Competitive Threats: Federal Energy Regulatory Commission and PJM Interconnection, L.L.C. rule changes have eliminated the "right of first refusal" for incumbent utilities to construct new transmission projects, potentially leading to third-party construction in Public Service Enterprise Group Incorporated's service territory. The pace of demand growth relative to generation retirements and new additions (including subsidized intermittent and firm capacity) could impact future market prices. Advances in distributed generation technologies (e.g., fuel cells, micro turbines, micro grids, net-metered solar) and associated subsidies could reduce energy deliveries, affect energy prices, and potentially render existing transmission/distribution facilities obsolete.

Competitive Response Strategy: Public Service Electric and Gas Company's growth strategy focuses on capital investments in transmission and distribution infrastructure to meet demand, enhance reliability, and modernize systems, alongside clean energy programs (energy efficiency, electric vehicle infrastructure, solar generation) aligned with state targets. PSEG Power LLC aims to efficiently operate nuclear assets, mitigate earnings volatility through hedging and the Production Tax Credit, and advocate for policies that support carbon-free nuclear generation, including exploring long-term power sale agreements.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Resource Adequacy Challenges: Significant supply shortages relative to increasing electric demand (driven by data centers, electric vehicle adoption, electrification) in PJM Interconnection, L.L.C. pose affordability and reliability concerns, potentially leading to adverse policy measures and increased regulatory uncertainty for utility investments.
• Climate Change Risks: Physical risks (severe weather, sea level rise, extreme heat) can damage facilities and increase costs. Transition risks (legislation, regulation, changing customer preferences) may impact natural gas and electricity use, affecting investment needs and growth rates. Potential climate change lawsuits could result in substantial capital expenditures, penalties, or damages.
• Technology Disruption: Introduction or expansion of competing generation, distribution, and consumption technologies (e.g., distributed generation, energy storage) could reduce demand, impact energy prices, and potentially lead to asset obsolescence or impairment.

Operational & Execution Risks

Supply Chain Vulnerabilities:

• Supplier Dependency: Disruptions, cost increases, and labor shortages in the supply chain (e.g., sanctions, tariffs, shipping constraints, raw material shortages) could impact operations and costs. Nuclear fuel supply relies on limited suppliers, and a single fuel fabrication provider for each nuclear unit poses a risk if an alternative is needed.
• Capacity Constraints: Inability to successfully develop, obtain regulatory approval for, or construct transmission and distribution, and nuclear generation projects could adversely impact business. PJM Interconnection, L.L.C. recently failed to procure sufficient generation capacity to meet reliability requirements in its December 2025 auction.

Financial & Regulatory Risks

Market & Financial Risks:

• Demand Volatility: Fluctuations in wholesale power and natural gas markets (due to supply/demand changes, weather, policy) can negatively affect financial condition, especially if nuclear generation costs do not decline with lower electricity prices.
• Credit & Liquidity: Inability to maintain sufficient liquidity or access capital on reasonable terms could adversely impact the business. A downgrade of PSEG Power LLC's credit rating to below investment grade by Standard & Poor’s or Moody’s would require approximately $703 million in additional collateral as of December 31, 2025, materially affecting liquidity and cash flows.

Regulatory & Compliance Risks:

• Industry Regulation: Public Service Electric and Gas Company's revenues and earnings are highly dependent on state and federal regulations (New Jersey Board of Public Utilities, Federal Energy Regulatory Commission). Failure to comply or adverse regulatory outcomes (e.g., disallowance of costs, changes in rate incentives) could materially impact financial results.
• Export Controls: Operations of nuclear facilities are subject to trade control regulations.
• Data Privacy: Cybersecurity threats and evolving data protection laws (e.g., New York’s Stop Hacks and Improve Electronic Data Security Act) require ongoing compliance efforts and may lead to increased costs, litigation, or reputational damage.

Geopolitical & External Risks

Geopolitical Exposure:

• Geographic Dependencies: Operations are concentrated in New Jersey, Pennsylvania, and Long Island, New York, exposing the company to regional geopolitical and economic risks.
• Trade Relations: Supply chain disruptions from sanctions, tariffs, and international shipping constraints.
• Sanctions & Export Controls: Nuclear facility operations are subject to trade control regulations.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas:

• Energy Efficiency: Significant investment in Clean Energy Future-Energy Efficiency programs ($2.9 billion for CEF-EE II, $1.6 billion for CEF-EE) to meet New Jersey's clean energy targets.
• Electric Vehicles: Investment in Clean Energy Future-Electric Vehicles program ($166 million) to build charging infrastructure.
• Smart Grid Technology: Completion of the Energy Cloud project in 2024, implementing smart meters and new software for grid management.
• Nuclear Generation Enhancement: Planning power uprates at Salem Units 1 and 2 to increase generation capacity and reliability.

Intellectual Property Portfolio: The filing does not provide specific details on patent strategy, licensing programs, or IP litigation.

Technology Partnerships: The company contracts with third-party vendors that utilize Artificial Intelligence in their products and services.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: The company regularly conducts talent reviews and succession discussions for leadership and critical positions, utilizing tailored development opportunities to build a strong internal pipeline.

Board Composition: The Board of Directors oversees risk management, including cybersecurity. The Governance, Nominating and Sustainability Committee reviews enterprise risks and allocates them to appropriate committees. The Industrial Operations Committee holds primary responsibility for overseeing the cybersecurity program, while the Audit Committee oversees cybersecurity risks related to financial reporting and internal controls.

Human Capital Strategy

Workforce Composition:

• Total Employees: 59% of the workforce is represented by six unions under collective bargaining agreements valid until 2027.
• Diversity Metrics (as of December 31, 2025): Women constitute approximately 28% of non-represented employees and 19% of the total workforce. Racially/ethnically diverse individuals constitute approximately 36% of non-represented employees and 31% of the total workforce.

Talent Management: Acquisition & Retention:

• Hiring Strategy: Focused on meeting business objectives, including critical skilled trades roles, through workforce planning, community outreach, development programs, and strategic sourcing with external partners (trade schools, colleges, workforce development boards, non-profits).
• Employee Value Proposition: A comprehensive total rewards program provides competitive compensation and benefits supporting physical, emotional, social, and financial well-being.

Diversity & Development:

• Development Programs: Offers various opportunities for skill enhancement, talent reviews, and succession discussions for leadership and critical positions. Focuses on upskilling roles for evolving technologies.
• Culture & Engagement: The "Inclusion for All" program promotes diversity, supported by Employee Business Resource Groups and Local Inclusion Teams. Employee feedback is routinely solicited through focus groups, listening sessions, pulse surveys, and biennial engagement surveys.

Environmental & Social Impact

Environmental Commitments: Climate Strategy:

• Emissions Targets: Adjusted net zero greenhouse gas emissions goal (Scope 1 and Scope 2) from 2030 to 2050, aligning with New Jersey's clean energy and climate goals.
• Methane Emissions: Reduced reported methane emissions by over 30% system-wide from 2018 through 2025 through programs like the Gas System Modernization Program.
• Renewable Energy: Supports accelerated deployment of clean energy generation sources, including solar, wind, and advanced nuclear.

Social Impact Initiatives:

• Community Investment: Engages in community outreach and volunteerism.
• Product Impact: Implements energy efficiency programs to help customers use energy more efficiently, reduces greenhouse gas emissions, supports electric vehicle infrastructure expansion, and installs energy storage capacity and smart meters.
• Customer Assistance: In 2025, provided residential electric customers with bill credits, extended shut-off protections, offered deferred payment arrangements, and waived reconnection fees. New Jersey legislation enacted a summer shut-off moratorium for qualified electric and gas customers starting in 2026.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Basic Generation Service electric supply is procured through annual auctions in February, with rates changing annually on June 1. Basic Gas Supply Service filings are made annually by June 1, with provisional rates targeted for October 1.
• Economic Sensitivity: Macroeconomic factors, including inflation and commodity costs, can influence regulatory approvals for investment programs and cost recovery.
• Industry Cycles: Demand growth, generation retirements, new capacity additions (intermittent, firm, subsidized), and technological advances can impact forward market prices.

Planning & Forecasting: The company's hedging strategy for nuclear generation incorporates estimated risk reduction from Production Tax Credits, while retaining upside potential when market pricing exceeds Production Tax Credit eligibility. PJM Interconnection, L.L.C.'s regional load forecast, updated in January 2026, reflects increasing expectations of large customer growth, which is critical for transmission planning and capacity procurement.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations:

• Federal Energy Regulatory Commission (FERC): Regulates interstate electric energy and natural gas transmission, wholesale sales, and Regional Transmission Organizations/Independent System Operators like PJM Interconnection, L.L.C. Public Service Electric and Gas Company's transmission rates are Federal Energy Regulatory Commission-approved formula rates.
• New Jersey Board of Public Utilities (BPU): Principal state regulator overseeing electric and natural gas distribution companies in New Jersey, including retail rates, securities issuance, and compliance.
• Nuclear Regulatory Commission (NRC): Provides comprehensive regulation for nuclear generating facilities, covering safety, security, cybersecurity, and environmental requirements.
• Commodity Futures Trading Commission (CFTC): Regulates swap and futures markets, including energy trading, imposing recordkeeping, data reporting, margin, and clearing requirements.

Trade & Export Controls: Nuclear facility operations are subject to trade control regulations. Supply chain is exposed to risks from sanctions and tariffs.

Legal Proceedings:

• Newark Bay Complex: Designated as a federal Superfund site by the U.S. Environmental Protection Agency. Public Service Enterprise Group Incorporated has accrued approximately $66 million for this matter as of December 31, 2025, with Public Service Electric and Gas Company having a $53 million Environmental Costs Liability (offset by a Regulatory Asset) and PSEG Power LLC having a $13 million Environmental Costs Liability. The ultimate impact is uncertain and could be material.
• Lower Passaic River Study Area: U.S. Environmental Protection Agency cleanup plans for the Lower 8.3 miles and Upper 9 miles are estimated at $2.3 billion and $550 million, respectively. Occidental Chemical Corporation is involved in lawsuits against Public Service Enterprise Group Incorporated and others for cost recovery and declaratory judgment.
• MGP Remediation Program: Public Service Electric and Gas Company is remediating 38 former manufactured gas plant sites, with estimated costs ranging from $179 million to $196 million (undiscounted). A $179 million liability and corresponding Regulatory Asset were recorded as of December 31, 2025.
• Sewaren 7 Construction: Durr Mechanical Construction, Inc. filed a lawsuit seeking $68 million in damages from PSEG Fossil LLC (a former PSEG Power LLC subsidiary) related to a construction dispute.
• Sherman Act Antitrust Matter: A class action complaint filed in July 2025 against Public Service Enterprise Group Incorporated and other nuclear generation companies alleges conspiracy to fix compensation for nuclear generation workers, seeking treble damages.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: 11.1% in 2025 (compared to 2.9% in 2024).
• Geographic Tax Planning: Public Service Enterprise Group Incorporated and its subsidiaries file consolidated federal and certain combined/unitary state income tax returns. Income taxes are allocated to subsidiaries on a stand-alone basis.
• Tax Reform Impact:
  • Inflation Reduction Act: Enacted a 15% Corporate Alternative Minimum Tax (CAMT) and a Production Tax Credit (PTC) for nuclear facilities. Public Service Enterprise Group Incorporated is subject to CAMT in 2025, but the impact was not material.
  • Production Tax Credit: Public Service Enterprise Group Incorporated did not record a PTC benefit in 2025 as nuclear operations' gross receipts exceeded the eligibility threshold. In 2024, a $350 million income tax benefit was recorded from PTCs.
  • Natural Gas Safe Harbor: Public Service Electric and Gas Company intends to adopt the Natural Gas Safe Harbor method for gas distribution assets in its 2025 Federal tax return, expecting reduced taxable income and cash taxes.
  • Bonus Depreciation: The Act permanently extended 100% bonus depreciation to qualified business property retroactive to January 19, 2025.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: The company and its subsidiaries maintain adequate insurance coverage for plants and properties, subject to exceptions and deductibles.
• Nuclear Insurance: PSEG Power LLC is a member of American Nuclear Insurers, providing $500 million in primary nuclear liability coverage per site, supplemented by a $15.8 billion industry self-insurance pool. PSEG Power LLC's maximum aggregate assessment per incident is $522 million, with an annual maximum of $78 million. PSEG Power LLC is also a member of Nuclear Electric Insurance Limited, providing property, decontamination, and decommissioning liability insurance, and replacement power coverage. The maximum aggregate annual retrospective premium obligation for PSEG Power LLC is approximately $63 million.
• Cybersecurity Insurance: The company carries cybersecurity insurance to protect against losses from cybersecurity incidents.
• Risk Transfer Mechanisms: PSEG Power LLC provides unconditional guarantees to counterparties for commodity-related transactions to support credit exposure and obtain unsecured credit thresholds. Derivatives are used to manage commodity price and interest rate risks.