01—Abstract
Summary
Summary of the 10-Q filed November 4, 2024. Cited figures are marked; the original filing is the authoritative source.
Public Service Enterprise Group Incorporated (PSEG) and its subsidiary Public Service Electric and Gas Company (PSE&G) filed this combined Quarterly Report on Form 10-Q for the period ended September 30, 2024.
PSEG reported third-quarter 2024 net income of $520 milliona ($1.04 per diluted share), up from $139 million ($0.27 per diluted share) a year earlier, which had included a $332 million pre-tax pension settlement charge. For the nine months, net income was $1.49 billion ($2.97 per diluted share) versus $2.02 billion ($4.03 per diluted share) in 2023. Nine-month operating revenues were $7.83 billion, down from $8.63 billion, driven mainly by lower PSEG Power & Other generation revenues from mark-to-market losses in 2024 compared with gains in 2023.
PSE&G, the regulated utility, posted nine-month net income of $1.17 billionb versus $1.22 billion a year earlier, with operating revenues rising to $6.34 billion from $5.95 billion. In October 2024 the New Jersey Board of Public Utilities approved a settlement in PSE&G's distribution base rate case, providing for a $17.8 billion rate base, a 9.6% return on equity and a 55% equity component, with a net increase in annual revenues of approximately $505 million, effective October 15, 2024. Management plans regulated capital investments of $18 billion to $21 billion for 2024-2028.
Key risks disclosed include a pending FERC non-public investigation of PSE&G's Roseland-Pleasant Valley transmission project, which could result in material penalties, environmental remediation liabilities at Passaic River and other sites, pending state and federal capacity-market and nuclear-related proceedings, and the expiration of the nuclear Zero Emission Certificate program in favor of the federal production tax credit. Long-term debt rose to $18.96 billionc at PSEG from $17.78 billion at year-end 2023.
02—Key points
Key Highlights
- PSEG third-quarter 2024 net income was $520 million, or $1.04 per diluted share, compared with $139 million, or $0.27 per diluted share, in the third quarter of 2023, which included a $332 million pre-tax pension settlement charge.
- Nine-month 2024 PSEG net income was $1.49 billion ($2.97 per diluted share), versus $2.02 billion ($4.03 per diluted share) in the prior-year period; operating revenues fell to $7.83 billion from $8.63 billion.
- PSE&G's distribution base rate case settlement, approved in October 2024, provides a $17.8 billion rate base, a 9.6% return on equity and a net annual revenue increase of approximately $505 million effective October 15, 2024.
- PSEG's regulated capital investment program is estimated at $18 billion to $21 billion for 2024-2028, with a projected compound annual rate base growth of 6% to 7.5% from year-end 2023 to year-end 2028.
- PSEG Power's nuclear units generated approximately 23.3 terawatt hours in the first nine months of 2024 at a 91.4% capacity factor, and nuclear plants are expected to receive production tax credits from 2024 through 2032.
- Long-term debt rose to $18.96 billion at September 30, 2024 from $17.78 billion at December 31, 2023, and PSEG's cash dividend was $0.60 per share for the third quarter.
- FERC's non-public investigation alleging PSE&G violated regulations related to the Roseland-Pleasant Valley transmission project could result in material penalties, and PSEG Power's Passaic River remediation accrual totals approximately $66 million at PSEG.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed November 4, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $2.64B$2.46B | +7.6% |
| Operating Expenses | $2.00B$1.91B | +5.0% |
| Operating Income | $641.00M$551.00M | +16.3% |
| Interest Expense | $227.00M$185.00M | +22.7% |
| Net Income | $520.00M$139.00M | +274.1% |
| EPS (Basic) | $1.04$0.28 | +271.4% |
| EPS (Diluted) | $1.04$0.27 | +285.2% |
| Shares Outstanding (Basic) | 498.00M498.00M | 0.0% |
| Shares Outstanding (Diluted) | 500.00M500.00M | 0.0% |
05—Questions
Frequently Asked Questions
Why did PSEG's third-quarter net income rise so sharply compared with 2023?
The 2023 quarter included a $332 million pre-tax pension settlement charge ($239 million after tax) from the August 2023 lift-out transaction. In 2024, net non-operating pension and OPEB credits were $18 million, and net gains on trust investments rose to $89 million from a loss of $40 million, with higher income tax benefits from nuclear production tax credits also contributing.
What drove the decline in nine-month operating revenues at PSEG?
PSEG Power & Other operating revenues fell by $1.34 billion, primarily because of mark-to-market losses in 2024 compared with gains in 2023, along with lower production tax credit-related ZEC revenue. PSE&G revenues increased to $6.34 billion from $5.95 billion, partly offsetting the decline.
What does the PSE&G rate case settlement mean for future earnings?
The BPU-approved settlement sets a 9.6% return on equity for PSE&G's distribution business on a $17.8 billion rate base, with a 55% equity component. It results in a net increase in annual revenues of approximately $505 million, comprising a $711 million base revenue increase offset by about $206 million in returned tax benefits, with rates effective October 15, 2024.
What are the main legal and regulatory uncertainties disclosed?
The filing discloses a pending FERC non-public investigation of PSE&G's Roseland-Pleasant Valley project that could lead to material penalties, Superfund cleanup exposure in the Lower Passaic River where costs could be material beyond amounts accrued, a Sewaren 7 contractor lawsuit seeking $68 million, and a BPU audit of PSE&G whose outcome cannot be predicted. The company also cites uncertainty over the Coal Combustion Residuals rule and the Cooling Water Intake (316(b)) permit challenge at Salem.
How much liquidity do PSEG and its subsidiaries have available?
As of September 30, 2024, total committed credit facilities were $3.83 billion, with $664 million in usage and $3.16 billion of available liquidity across PSEG, PSE&G and PSEG Power. PSEG stated that its liquidity position was expected to be sufficient to meet projected stressed requirements over a 12-month planning horizon.
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