01—Abstract
Summary
Summary of the 10-K filed February 24, 2022. Cited figures are marked; the original filing is the authoritative source.
Public Service Enterprise Group Incorporated (PSEG) reported a 2021 net loss of $648 milliona, compared with net income of $1,905 million in 2020, driven primarily by a $2,637 million loss on asset dispositions and impairments tied to the sale of PSEG Power's fossil generation fleet.
PSE&G, the regulated utility, earned $1,446 millionb in net income in 2021, up from $1,327 million, and the filing describes it as an increasing share of earnings. Diluted EPS was a loss of $1.29 per share versus earnings of $3.76 per share in 2020. In February 2022 PSEG completed the sale of its 6,750 MW fossil generation portfolio to subsidiaries of ArcLight Energy Partners Fund VII, L.P., which management calls an important milestone toward becoming a predominantly regulated electric and gas utility.
The company plans PSE&G capital investment of $14 billion to $16 billionc for 2021-2025, with expected compound annual rate base growth of 6.5% to 8%. Consolidated operating cash flow fell to $1,736 million from $3,102 million, largely due to $844 million of net cash collateral postings at PSEG Power.
Key risks include the nuclear fleet's dependence on New Jersey Zero Emission Certificate payments, pending FERC and BPU proceedings, collection pressures from the COVID-19 shutoff moratorium at PSE&G, and a pending New York Comptroller decision on the amended Long Island (LIPA) operations agreement. The Board approved a $2.16d indicative annual dividend rate for 2022, and PSEG bought back the full $250 million authorized under its open market repurchase plan.
02—Key points
Key Highlights
- Net loss of $648 million in 2021 versus net income of $1,905 million in 2020; diluted EPS of $(1.29) versus $3.76, driven by a $2,637 million loss on asset dispositions and impairments.
- PSE&G net income rose to $1,446 million in 2021 from $1,327 million in 2020, while PSEG Power posted a net loss of $2,056 million.
- Completed the sale of the 6,750 MW fossil generation portfolio to ArcLight-controlled subsidiaries in February 2022, with the company describing it as an important milestone in its strategy.
- PSE&G capital investment program estimated at $14 billion to $16 billion for 2021-2025, with expected compound annual rate base growth of 6.5% to 8%.
- Operating cash flow decreased to $1,736 million from $3,102 million, reflecting a $780 million reduction tied to net cash collateral postings at PSEG Power.
- Dividend of $2.04 per share paid in 2021; the Board approved a $0.54 quarterly dividend for Q1 2022, an indicative annual rate of $2.16 per share.
- $250 million share repurchase plan under Rule 10b5-1 was fully executed in January through February 16, 2022.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 24, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $9.72B$9.60B | +1.2% |
| Operating Expenses | $10.58B$7.33B | +44.3% |
| Operating Income | -$856.00M$2.27B | −137.7% |
| Interest Expense | $571.00M$600.00M | −4.8% |
| Net Income | -$648.00M$1.91B | −134.0% |
| EPS (Basic) | $-1.29$3.78 | −134.1% |
| EPS (Diluted) | $-1.29$3.76 | −134.3% |
| Shares Outstanding (Basic) | 504.00M504.00M | 0.0% |
| Shares Outstanding (Diluted) | 504.00M507.00M | −0.6% |
05—Questions
Frequently Asked Questions
Why did PSEG report a net loss in 2021?
The net loss of $648 million was driven primarily by an impairment loss and related charges taken on the sale of PSEG Power's fossil generation assets, which totaled $2,158 million on an after-tax basis, including debt extinguishment costs. Higher mark-to-market losses at PSEG Power also contributed.
How much did the regulated utility, PSE&G, contribute to earnings?
PSE&G reported net income of $1,446 million in 2021, compared with $1,327 million in 2020, supported by continued investment in transmission and distribution programs.
What is the outlook for PSE&G's investment program?
For 2021-2025, PSE&G's capital investment program is estimated at $14 billion to $16 billion, with expected compound annual growth in rate base of 6.5% to 8%. Projected capital expenditures are $3,060 million for PSEG in 2022, $3,645 million in 2023 and $2,740 million in 2024.
What risks could affect the nuclear fleet's economics?
The filing says that Salem 1, Salem 2 and Hope Creek receive Zero Emission Certificate revenue through May 2022 and were awarded ZECs for the three-year period starting June 2022 at about $10 per MWh. The Rate Counsel has advocated offsetting the ZEC payment, and an appeal of the BPU's decision is pending. If the ZEC program is materially modified or the plants are not sufficiently valued, PSEG Power would cease operating the plants.
What are the near-term cash and liquidity considerations?
PSEG had $2,915 million of total available liquidity across its credit facilities as of December 31, 2021. PSEG Power's net cash collateral postings rose to $844 million by year-end, and the filing states that PSE&G's residential collections will resume in March 2022 following the state's grace period extension, with the company expecting bad debt impacts to persist for several years.
06—Continue