01—Abstract
Summary
Summary of the 10-K filed February 26, 2024. Cited figures are marked; the original filing is the authoritative source.
Public Service Enterprise Group Incorporated (PSEG) reported 2023 net income of $2.56 billiona, or $5.13 per diluted share, up from $1.03 billion ($2.06 per diluted share) in 2022.
The increase was driven primarily by a $2.02 billionb net increase from mark-to-market gains in PSEG Power, changes in the Nuclear Decommissioning Trust Fund, and higher earnings from T&D clause programs at PSE&G, partially offset by a $239 million after-tax pension settlement charge. PSE&G net income was $1.515 billion in 2023 versus $1.565 billion in 2022, while PSEG Power & Other net income was $1.048 billion versus a loss of $534 million. Operating revenues rose to $11.24 billion from $9.80 billion.
The company describes itself as a public utility holding company, predominantly regulated, with a plan to invest $18 billion to $21 billionc in regulated capital from 2024 to 2028, projecting a 6% to 7.5% compound annual growth rate in regulated rate base from year-end 2023 to year-end 2028. The filing notes the 2022 sale of the 6,750 MW fossil portfolio, the expected nuclear production tax credit beginning January 1, 2024, and a December 2023 distribution base rate case proposing a 9% overall revenue increase. Liquidity is described as sufficient for a 12-month stressed planning horizon, with $3.37 billion of available liquidity under committed facilities.
Key risks flagged include regulatory outcomes on PSE&G recovery and approved investment programs, nuclear revenue sensitivity to natural gas prices and PTC guidance, potential collateral calls if PSEG Power lost investment-grade ratings, environmental remediation liabilities such as the Passaic River matter, and cybersecurity exposure. Long-term debt was $17.78 billiond at year-end 2023, and the Board approved a $0.60 quarterly dividend for the first quarter of 2024, an indicative annual rate of $2.40 per share.
02—Key points
Key Highlights
- Net income of $2,563 million ($5.13 diluted EPS) in 2023, up from $1,031 million ($2.06) in 2022, driven mainly by mark-to-market gains and NDT Fund changes at PSEG Power.
- PSE&G net income was $1,515 million in 2023 versus $1,565 million in 2022; PSEG Power & Other net income was $1,048 million versus a $534 million loss in 2022.
- Regulated capital investment program estimated at $18 billion to $21 billion for 2024-2028, with a projected 6% to 7.5% compound annual growth in regulated rate base from year-end 2023 to 2028.
- December 2023 PSE&G distribution base rate case filed, proposing an overall revenue increase of 9% (12% for a typical combined residential electric and gas customer).
- Nuclear production tax credit of up to $15/MWh begins January 1, 2024 and runs through 2032; PSEG Power had hedged approximately 90% to 95% of expected 2024 generation output.
- Pension lift-out of approximately $1 billion of obligations to Prudential in August 2023 resulted in a $239 million after-tax settlement charge.
- Dividend of $0.60 per share approved for the first quarter of 2024, an indicative annual rate of $2.40 per share; 2023 dividends paid were $2.28 per share.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2023filed February 26, 2024Financial Statements
FY2023 against FY2022
| Line item | FY2023FY2022 | Change |
|---|---|---|
| Revenue | $11.24B$9.80B | +14.7% |
| Operating Expenses | $7.55B$8.42B | −10.3% |
| Operating Income | $3.69B$1.38B | +166.8% |
| Interest Expense | $748.00M$628.00M | +19.1% |
| Net Income | $2.56B$1.03B | +148.6% |
| EPS (Basic) | $5.15$2.07 | +148.8% |
| EPS (Diluted) | $5.13$2.06 | +149.0% |
| Shares Outstanding (Basic) | 498.00M498.00M | 0.0% |
| Shares Outstanding (Diluted) | 500.00M501.00M | −0.2% |
05—Questions
Frequently Asked Questions
What drove the large increase in PSEG's 2023 net income?
The filing attributes the increase primarily to changes in mark-to-market activity and the Nuclear Decommissioning Trust Fund, which together contributed $959 million and $109 million after tax, respectively, in 2023 compared with losses in 2022. Higher earnings from PSE&G transmission and distribution clause programs also contributed, partly offset by the $239 million after-tax pension settlement charge and lower pension and OPEB credits.
How much capital does PSEG plan to invest, and what growth does it expect?
PSEG estimates regulated capital investment of $18 billion to $21 billion for 2024 through 2028, within a total capital program of $19 billion to $22.5 billion. It expects a compound annual growth rate of 6% to 7.5% in its regulated rate base from year-end 2023 to year-end 2028. The projected capital expenditures are $3.63 billion for 2024, $3.92 billion for 2025 and $4.07 billion for 2026.
What are the main risks to PSEG Power's nuclear business?
The filing highlights exposure to wholesale power and natural gas price volatility, the uncertainty around the nuclear production tax credit pending further U.S. Treasury guidance, possible collateral requirements if PSEG Power lost its investment-grade rating (approximately $751 million potential additional collateral as of year-end 2023), nuclear fuel supply risk, and operational and decommissioning risks. The New Jersey zero emission certificate program runs through May 2025.
How is PSEG's liquidity position at year-end 2023?
Total committed credit facilities were $4.03 billion, with $660 million in usage and $3.37 billion of available liquidity across PSEG, PSE&G and PSEG Power. Management states the liquidity position is expected to be sufficient to meet projected stressed requirements over a 12-month planning horizon. Near-term long-term debt maturities total $1.5 billion in 2024, and PSEG had $17.78 billion of noncurrent long-term debt on its balance sheet.
06—Continue