Public Service Enterprise Group Incorporated (NYSE:PEG) is a leading energy company that provides electric and gas services to millions of customers in New Jersey. With a diverse portfolio of regulated utility and competitive generation assets, Public Service Enterprise Group Incorporated is well-positioned to capitalize on the state's growing demand for reliable, affordable, and sustainable energy solutions.

Financials

In the first quarter of 2024, Public Service Enterprise Group Incorporated reported net income of $532 million, or $1.06 per share, compared to $1.287 billion, or $2.58 per share, in the same period of 2023. The company's non-GAAP operating earnings were $1.31 per share in the first quarter of 2024, compared to $1.39 per share in the prior-year quarter. The decrease in net income was primarily driven by the absence of mark-to-market gains that benefited the first quarter of 2023.

For the full year 2023, Public Service Enterprise Group Incorporated reported annual net income of $2.563 billion, annual revenue of $11.237 billion, annual operating cash flow of $3.806 billion, and annual free cash flow of $481 million. These strong financial results demonstrate the company's ability to consistently deliver value to its shareholders.

Business Overview

Public Service Enterprise Group Incorporated's business is divided into two main segments: Public Service Electric and Gas Company (PSE&G) and PSEG Power LLC (PSEG Power) & Other. PSE&G, the company's regulated utility, earns revenues from its tariffs, under which it provides electric transmission and electric and gas distribution services to residential, commercial, and industrial customers in New Jersey. PSEG Power & Other primarily generates revenues by bidding energy, capacity, and ancillary services into the wholesale markets and selling energy, capacity, and ancillary services on a wholesale basis under contract.

In the first quarter of 2024, PSE&G reported net income of $488 million, compared to $487 million in the same period of 2023. The utility's non-GAAP operating earnings were $0.98 per share in the first quarter of 2024, compared to $0.99 per share in the prior-year quarter. The slight increase in net income was driven by growth in rate-based investments, offset by higher distribution, investment-related depreciation, and interest expense, as well as higher operation and maintenance (O&M) costs.

PSEG Power & Other reported net income of $44 million in the first quarter of 2024, compared to $800 million in the same period of 2023. The decrease in net income was primarily due to the absence of mark-to-market gains that benefited the first quarter of 2023. Non-GAAP operating earnings for PSEG Power & Other were $0.33 per share in the first quarter of 2024, compared to $0.40 per share in the prior-year quarter.

Recent Developments

Public Service Enterprise Group Incorporated's regulated utility, PSE&G, continues to invest in infrastructure modernization and clean energy initiatives to enhance reliability, resilience, and sustainability. In the first quarter of 2024, PSE&G invested approximately $800 million, primarily in transmission and distribution (T&D) system upgrades, energy efficiency (EE) programs, and advanced metering infrastructure (AMI) deployment. The company is on track to execute its five-year, $18 billion to $21 billion regulated capital investment plan through 2028, which is expected to result in a compound annual growth rate in rate base of 6% to 7.5% over the same period.

One of the key drivers of Public Service Enterprise Group Incorporated's growth is its investment in clean energy initiatives. PSE&G's approved Clean Energy Future (CEF) programs, including CEF-EE, CEF-Energy Cloud, and CEF-EV, as well as the proposed CEF-ES and CEF-EE II programs, are designed to support New Jersey's Energy Master Plan and recent Gubernatorial Executive Orders by helping customers use energy more efficiently, reduce greenhouse gas emissions, expand the EV infrastructure, install energy storage capacity, and enhance grid resilience.

In addition to its regulated utility investments, Public Service Enterprise Group Incorporated is also exploring opportunities in the competitive transmission market. In December 2023, a subsidiary of the company's Energy Holdings business was awarded a $424 million project by PJM Interconnection to address increasing load and reliability issues in Maryland and northern Virginia. Public Service Enterprise Group Incorporated is also evaluating upcoming transmission solicitations, including the BPU's second public policy solicitation for offshore wind transmission infrastructure and PJM's 2024 Regional Transmission Expansion Plan window.

On the nuclear generation side, Public Service Enterprise Group Incorporated's PSEG Power segment continues to focus on optimizing the performance of its nuclear fleet, which provides over 85% of the carbon-free energy in New Jersey. In the first quarter of 2024, the nuclear fleet generated approximately 8.2 terawatt hours and operated at a capacity factor of 96.8%. PSEG Power is also pursuing opportunities to increase the capacity of its nuclear units, including thermal uprates at the Salem nuclear station, which could potentially add up to 200 megawatts of additional capacity.

Furthermore, PSEG Power has notified the Nuclear Regulatory Commission of its intention to pursue subsequent 20-year license renewals for its three nuclear reactors in New Jersey. This would extend the operational capabilities of the Salem and Hope Creek units from 2036, 2040, and 2046 to 2056, 2060, and 2066, respectively.

Public Service Enterprise Group Incorporated is also exploring potential opportunities to sell power directly to data centers from its nuclear facilities. The company has had discussions with both data center developers seeking to build new facilities in New Jersey, as well as those interested in co-locating behind-the-meter facilities to prioritize highly reliable, carbon-free baseload power. While these opportunities are still in the early stages, Public Service Enterprise Group Incorporated believes they have the potential to create a nexus between economic development and energy policy in the state.

Outlook

Looking ahead, Public Service Enterprise Group Incorporated is reaffirming its full-year 2024 non-GAAP operating earnings guidance of $3.60 to $3.70 per share. The company is also reaffirming its forecast of long-term 5% to 7% compound annual growth in non-GAAP operating earnings through 2028, supported by its regulated capital investment programs and the new nuclear production tax credit (PTC) established by the Inflation Reduction Act of 2022.

Liquidity

Public Service Enterprise Group Incorporated's strong financial position, with ample liquidity and access to external financing, is expected to support the execution of its $19 billion to $22.5 billion capital investment plan over the next five years, the majority of which is allocated to regulated utility investments. The company's considerable cash generation, combined with the enhanced cash flow visibility from the nuclear PTC, is expected to enable Public Service Enterprise Group Incorporated to fund its capital program without the need for new equity issuances or asset sales.

Conclusion

Public Service Enterprise Group Incorporated is well-positioned to capitalize on New Jersey's growing demand for reliable, affordable, and sustainable energy solutions. The company's regulated utility investments, clean energy initiatives, and nuclear generation assets position it as a leader in the state's transition to a low-carbon future. With a strong financial foundation and a clear strategic vision, Public Service Enterprise Group Incorporated is poised to deliver long-term value for its shareholders.