01—Abstract
Summary
Summary of the 10-K filed March 1, 2021. Cited figures are marked; the original filing is the authoritative source.
Public Service Enterprise Group Incorporated (PSEG) reported 2020 Net Income of $1,905 milliona, or $3.76 diluted EPS, up from $1,693 million and $3.33 in 2019.
The increase was driven primarily by a gain on the sale of PSEG Power's interest in the Yards Creek generation facility, the absence of a 2019 loss on the Keystone and Conemaugh fossil plant sales, higher T&D earnings at PSE&G, and higher pension and OPEB credits, partly offset by mark-to-market losses and lower energy and capacity prices at PSEG Power. PSE&G contributed $1,327 millionb of Net Income and PSEG Power $594 million. Operating revenues fell to $9,603 million from $10,076 million.
The company is transforming into a primarily regulated electric and gas utility. PSE&G expects to invest between $13 billionc and $15 billion over the five years ending December 31, 2025, and PSEG Power is exploring strategic alternatives for its non-nuclear generating fleet of more than 6,750 MW, with any transaction expected in 2021. PSEG plans to retain its nuclear fleet, whose Salem 1, Salem 2 and Hope Creek plants depend on Zero Emission Certificate (ZEC) payments that run through May 2022, and the second ZEC eligibility decision is expected in April 2021.
PSEG also plans to acquire a 25% interest in the Ocean Wind offshore project, expected to close in the first half of 2021. Key risks flagged include the ZEC program's outcome, the outcome of the strategic review, the LIPA complaint against PSEG LI seeking $70 milliond in damages, the Passaic River superfund matter with a $2.3 billion EPA remedy estimate, and continued coronavirus-related effects on collections and bad debt. Cash dividends were $1.96 per share in 2020, and the Board approved a $0.51 quarterly dividend for the first quarter of 2021.
02—Key points
Key Highlights
- 2020 Net Income of $1,905 million ($3.76 diluted EPS) versus $1,693 million ($3.33) in 2019
- PSE&G Net Income of $1,327 million and PSEG Power Net Income of $594 million in 2020
- PSE&G plans $13 billion to $15 billion of investment over the five years ending 2025, with expected compound annual rate base growth of 6.5% to 8%
- Strategic review of PSEG Power's non-nuclear generating fleet (more than 6,750 MW fossil plus 467 MW dc solar), with any transaction expected in 2021
- Salem 1, Salem 2 and Hope Creek ZEC payments run through May 2022; PSEG Power filed for a second eligibility period starting June 2022
- Agreement to acquire a 25% equity interest in the 1,100-megawatt Ocean Wind project, closing expected in the first half of 2021
- LIPA filed a December 2020 complaint against PSEG LI seeking $70 million in damages related to Tropical Storm Isaias response
- Quarterly dividend of $0.51 per share approved for the first quarter of 2021, an indicative annual rate of $2.04
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, Public Service Enterprise Group kept $0.20.
- Revenue$9.60B100.0%
- Cost of revenue−$3.06B31.8%
- Gross profit$6.55B68.2%
- Operating costs−$4.28B44.5%
- Operating income$2.27B23.6%
- Interest, other & tax−$365.0M3.8%
- Net income$1.91B19.8%
Where FY2020 revenue went
$9.60B- Operating costs: $4.28B, 45% of revenue
- Cost of revenue: $3.06B, 32% of revenue
- Net income: $1.91B, 20% of revenue
- Interest, other & tax: $365.0M, 3.8% of revenue
Kept 20% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2020filed March 1, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $9.60B$10.08B | −4.7% |
| Cost of Revenue | $3.06B$3.37B | −9.4% |
| Gross Profit | $6.55B$6.70B | −2.3% |
| Operating Expenses | $7.33B$8.13B | −9.8% |
| Operating Income | $2.27B$1.94B | +16.8% |
| Interest Expense | $600.00M$569.00M | +5.4% |
| Net Income | $1.91B$1.69B | +12.5% |
| EPS (Basic) | $3.78$3.35 | +12.8% |
| EPS (Diluted) | $3.76$3.33 | +12.9% |
| Shares Outstanding (Basic) | 504.00M504.00M | 0.0% |
| Shares Outstanding (Diluted) | 507.00M507.00M | 0.0% |
05—Questions
Frequently Asked Questions
How did PSEG's earnings change in 2020?
Net Income rose to $1,905 million, or $3.76 per diluted share, from $1,693 million, or $3.33, in 2019. The increase was driven mainly by a gain on the sale of the Yards Creek interest, the absence of a 2019 loss on the Keystone and Conemaugh sales, higher PSE&G T&D earnings and higher pension and OPEB credits. Mark-to-market losses and lower energy and capacity prices at PSEG Power partly offset these gains.
What is the status of the non-nuclear generation sale?
PSEG announced in July 2020 that it is exploring strategic alternatives for PSEG Power's non-nuclear fleet, and the marketing process launched in the fourth quarter of 2020. The filing expects any potential transaction to be completed sometime in 2021, but states there is no assurance of a sale on favorable terms. PSEG intends to retain the existing nuclear fleet.
What risks could affect the nuclear plants?
The Salem and Hope Creek plants were awarded ZECs through May 2022, and the Rate Counsel has appealed the award. If the ZEC program is overturned or materially modified, or the plants are not awarded payments, PSEG Power will take steps to cease operating them. The BPU's final decision on the second eligibility period is expected in April 2021, and the filing notes that ceasing operations would materially affect PSEG's and PSEG Power's results.
What is the outlook for PSE&G's investment?
PSE&G expects to invest between $13 billion and $15 billion over the five years ending December 31, 2025, with expected compound annual rate base growth of 6.5% to 8%. Planned capital expenditures are $2,850 million in 2021, $3,075 million in 2022 and $3,260 million in 2023 for the total company. The filing notes that the low end of the range assumes certain unapproved programs are not extended.
06—Continue