PUBLIC SERVICE ENTERPRISE GROUP INC - FORM 8-K - EX-99.1

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8-K - FORM 8-K - PUBLIC SERVICE ENTERPRISE GROUP INC	d532537d8k.htm
EX-99 - EX-99 - PUBLIC SERVICE ENTERPRISE GROUP INC	d532537dex99.htm

PSEG Earnings Conference Call

Quarter

Full

Year

2017

February 23, 2018

Public Service Enterprise Group

EXHIBIT 99.1

Forward-Looking Statements

Certain of the matters discussed in this presentation about our and our subsidiaries’ future performance, including, without limitation, future revenues, earnings, strategies, prospects,

consequences and all other statements that are not purely historical constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such

forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those anticipated. Such statements are based on management’s beliefs

as well as assumptions made by and information currently available to management. When used herein, the words “anticipate,” “intend,” “estimate,” “believe,” “expect,” “plan,” “should,”

“hypothetical,” “potential,” “forecast,” “project,” variations of such words and similar expressions are intended to identify forward-looking statements. Factors that may cause actual results to differ

are often presented with the forward-looking statements themselves. Other factors that could cause actual results to differ materially from those contemplated in any forward-looking statements

made

herein

are

discussed

filings

make

with

the

United

States

Securities

and

Exchange

Commission

(SEC)

including

our

Annual

Report

Form

10-K

and

subsequent

reports

Form

10-Q and Form 8-K. These factors include, but are not limited to:

• fluctuations in wholesale power and natural gas markets, including the potential impacts on the economic viability of our generation units;

• our ability to obtain adequate fuel supply;

• any inability to manage our energy obligations with available supply;

• increases in competition in wholesale energy and capacity markets;

• changes in technology related to energy generation, distribution and consumption and customer usage patterns;

• economic downturns;

• third party credit risk relating to our sale of generation output and purchase of fuel;

• adverse performance of our decommissioning and defined benefit plan trust fund investments and changes in funding requirements;

• changes in state and federal legislation and regulations;

• the impact of pending rate case proceedings;

• regulatory, financial, environmental, health and safety risks associated with our ownership and operation of nuclear facilities;

• adverse changes in energy industry laws, policies and regulations, including market structures and transmission planning;

• changes in federal and state environmental regulations and enforcement;

• delays in receipt of, or an inability to receive, necessary licenses and permits;

• adverse outcomes of any legal, regulatory or other proceeding, settlement, investigation or claim applicable to us and/or the energy industry;

• changes in tax laws and regulations;

• the impact of our holding company structure on our ability to meet our corporate funding needs, service debt and pay dividends;

• lack of growth or slower growth in the number of customers or changes in customer demand;

• any inability of Power to meet its commitments under forward sale obligations;

• reliance on transmission facilities that we do not own or control and the impact on our ability to maintain adequate transmission capacity;

• any inability to successfully develop or construct generation, transmission and distribution projects;

• any

equipment

failures,

accidents,

severe

weather

events

other

incidents

that

impact

our

ability

provide

safe

and

reliable

service

our

customers;

• our inability to exercise control over the operations of generation facilities in which we do not maintain a controlling interest;

• any inability to recover the carrying amount of our long-lived assets and leveraged leases;

• any inability to maintain sufficient liquidity;

• any inability to realize anticipated tax benefits or retain tax credits;

• challenges associated with recruitment and/or retention of key executives and a qualified workforce;

• the impact of our covenants in our debt instruments on our operations; and

• the impact of acts of terrorism, cybersecurity attacks or intrusions.

All of the forward-looking statements made in this presentation are qualified by these cautionary statements and we cannot assure you that the results or developments anticipated by management

will be realized or even if realized, will have the expected consequences to, or effects on, us or our business, prospects, financial condition, results of operations or cash flows. Readers are

cautioned not to place undue reliance on these forward-looking statements in making any investment decision. Forward-looking statements made in this presentation apply only as of the date of

this presentation. While we may elect to update forward-looking statements from time to time, we specifically disclaim any obligation to do so, even in light of new information or future events,

unless otherwise required by applicable securities laws.

The forward-looking statements contained in this presentation are intended to qualify for the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E

of the Securities Exchange Act of 1934, as amended.

GAAP Disclaimer

PSEG presents Operating Earnings and Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) in

addition to its Net Income reported in accordance with accounting principles generally accepted in the United States (GAAP).

Operating Earnings and Adjusted EBITDA are non-GAAP financial measures that differ from Net Income. Non-GAAP Operating

Earnings exclude the impact of returns (losses) associated with the Nuclear Decommissioning Trust (NDT), Mark-to-Market (MTM)

accounting and material one-time items. Non-GAAP Adjusted EBITDA excludes the same items as our non-GAAP Operating

Earnings measure as well as income tax expense, interest expense and depreciation and amortization. The last three slides in this

presentation (Slides A, B and C) include a list of items excluded from Net Income/(Loss) to reconcile to non-GAAP Operating

Earnings and non-GAAP Adjusted EBITDA with a reference to those slides included on each of the slides where the non-GAAP

information appears.

Management uses non-GAAP Operating Earnings in its internal analysis, and in communications with investors and analysts, as a

consistent measure for comparing PSEG’s financial performance to previous financial results. Management believes non-GAAP

Adjusted EBITDA is useful to investors and other users of our financial statements in evaluating operating performance because it

provides them with an additional tool to compare business performance across companies and across periods. Management also

believes that non-GAAP Adjusted EBITDA is widely used by investors to measure operating performance without regard to items

such as income tax expense, interest expense and depreciation and amortization, which can vary substantially from company to

company depending upon, among other things, the book value of assets, capital structure and whether assets were constructed or

acquired. Non-GAAP Adjusted EBITDA also allows investors and other users to assess the underlying financial performance of our

fleet before management’s decision to deploy capital. The presentation of non-GAAP Operating Earnings and non-GAAP Adjusted

EBITDA is intended to complement, and should not be considered an alternative to, the presentation of Net Income, which is an

indicator of financial performance determined in accordance with GAAP. In addition, non-GAAP Operating Earnings and non-GAAP

Adjusted EBITDA as presented in this release may not be comparable to similarly titled measures used by other companies.

Due to the forward looking nature of non-GAAP Operating Earnings and non-GAAP Adjusted EBITDA guidance, PSEG is unable to

reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measure. Management is unable to

project certain reconciling items, in particular MTM and NDT gains (losses), for future periods due to market volatility.

These

materials

and

other

financial

releases

can

found

the

PSEG

website

www.pseg.com,

under

the

Investors

tab.

From

time

time,

PSEG,

PSE&G

and

PSEG

Power

release

important

information

via

postings

their

corporate

website

http://investor.pseg.com.

Investors

and

other

interested

parties

are

encouraged

visit

the

corporate

website

review

new

postings.

The

“email

alerts”

link

http://investor.pseg.com

may

used

enroll

receive

automatic

alerts

and/or

really

simple

syndication

(RSS)

feeds

regarding

new

postings

http://investor.pseg.com/rss.

PSEG

2017 Q4 and Full Year Review

Ralph Izzo

Chairman, President and Chief Executive Officer

PSEG –

Exceeded mid-point of guidance in 2017,

well positioned for 2018

* See Slides A, B and C for Items excluded from Net Income (Loss) to reconcile to Operating Earnings (non-GAAP).

Highlights

Net Income of $1.88 vs. Net Loss of $(0.19) per share in Q4 2016; Net Income of $3.10 in 2017

vs. $1.75

per

2016

–

Tax reform and early retirement of Hudson & Mercer influenced results

Non-GAAP Operating Earnings* results of $0.57 vs. $0.54 per share in Q4 2016; Full-year, non-GAAP

Operating Earnings* of $2.93 vs. $2.90 per share in 2016 and 2017 guidance of $2.80 to $3.00 per share

PSE&G non-GAAP results up 8.6%, benefiting from increased investment in electric and gas T&D

PSEG Power results were at the top end of 2017 guidance, aided by cost control and improved

nuclear performance

Operational Excellence

Nuclear fleet capacity factor improved to 94%; Hope Creek attained 100% capacity factor & record output

PSE&G named most reliable Utility in the Mid-Atlantic region for the 16th year in a row

Disciplined Capital Investment

PSE&G’s investment program to upgrade transmission, replace cast-iron pipe and improve the resilience

of electric distribution system totaled $3.1 billion in 2017; PSEG Power invested ~$1 billion constructing

three new, highly efficient gas-fired CCGTs; Keys and Sewaren expected to be in-service mid-2018

Regulatory & Policy Focus

Filed PSE&G NJ distribution base rate review seeking a modest 1% increase in revenue

PSE&G to return expected benefits of ~$275 million to customers related to lower tax rates plus returning

excess deferred taxes

PSEG Power continues to work with key stakeholders in New Jersey on legislation supporting continued

operation of nuclear capacity as part of a broader bill that aligns with the state’s energy policy goals

PSEG Q4 Results Summary –

Solid quarterly results

Quarter ended December 31

*See Slide A for Items excluded from Net Income (Loss) to reconcile to Operating Earnings (non-GAAP).

$ millions (except EPS)

2017

2016

Change

Net Income/(Loss)

$ 956

$ (98)

$ 1,054

Reconciling Items

(667)

377

(1,044)

Operating Earnings (non-GAAP)*

$ 289

$ 279

$ 10

$ 1.88

$ (0.19)

$ 2.07

$ 0.57

$ 0.54

$ 0.03

EPS from Net Income/(Loss)

EPS from Operating Earnings (non-GAAP)*

Full Year Results –

Exceeded midpoint of guidance

Twelve Months ended December 31

*See Slide A for Items excluded from Net Income to reconcile to Operating Earnings (non-GAAP).

$ millions (except EPS)

2017

2016

Change

Net Income

$ 1,574

$ 887

$ 687

Reconciling Items

(86)

588

(674)

Operating Earnings (non-GAAP)*

$ 1,488

$ 1,475

$ 13

EPS from Net Income

$ 3.10

$ 1.75

$ 1.35

EPS from Operating Earnings (non-GAAP)*

$ 2.93

$ 2.90

$ 0.03

PSEG 2017 -

Executing on Regulatory and Policy Initiatives

Distribution

Base

Rate

Proceeding

Filed NJ base rate review January 12, 2018

Long-Term

Infrastructure

Investment

Platform

In July, PSE&G filed for a 5-year, $2.7 billion extension of the Gas System Modernization

Program (GSMP II)

In October, the BPU approved $69 million of PSE&G’s request to extend its investment

in Energy Efficiency (EE)

In December, the BPU finalized its rule on the Infrastructure Investment Program (IIP)

providing for 5-year investment programs

PSE&G preparing a multi-year filing for the extension of Energy Strong

PSE&G developing a large, multi-year EE investment program to bring benefits to

a broader group of customers

Preserving

the

Value

Nuclear

Supply

Advocating for legislative strategy to recognize the value of nuclear energy under terms

and conditions that provide proper incentives for long-term operation

Ensuring

Federal

Regulatory

and

Policy

Framework

PJM continuing reform of Price Formation on several issues

FERC focus on electric system resiliency ongoing through continuing dialogue with RTOs

Tax reform and growth in utility infrastructure investment

drives increase in earnings

PSEG –

2018 Non-GAAP Earnings Guidance +6% over 2017

Non-GAAP

Operating

Earnings*

Contribution

Subsidiary

(%)

2017

Actual

and

2018

Guidance

* See Slides A, B and C for Items excluded from Net Income (Loss) to reconcile to Operating Earnings (non-GAAP).

** Based

the

mid-point

2018

non-GAAP

Operating

Earnings

guidance

$3.00

$3.20

per

share.

Estimate.

2017

2018E**

$2.93

$3.00 -

$3.20E

PSE&G

represents

approximately

two-thirds of

2018

Operating

Earnings

Guidance

PSEG Annual Dividend –

Increased 4.7% to $1.80 per share

*INDICATIVE ANNUAL 2018 PSEG COMMON DIVIDEND RATE PER SHARE. E=ESTIMATE.

**2018E

PAYOUT

RATIO

REFLECTS

THE

INDICATIVE

ANNUAL

DIVIDEND

RATE

DIVIDED

THE

MID-POINT

2018

NON-GAAP

OPERATING

EARNINGS

GUIDANCE

$3.00

$3.20

PER

SHARE.

Payout

Ratio

44%

43%

44%

50%

58%

56%

54%

57%

59%

58%**

Building on a 111-year history of returning cash to our shareholders

PSEG Annual Dividend Rate

5 year rate of growth: 4.6%

10 year rate of growth: 3.4%

PSEG

2017 Q4 Operating Company Review

Dan Cregg

EVP and Chief Financial Officer

PSEG –

Q4 Results by Subsidiary

GAAP Net Income/(Loss)

2017

2016

Change

PSE&G

$ 0.43

$ 0.38

$ 0.05

PSEG Power

$ 1.20

$ (0.59)

$ 1.79

PSEG Enterprise/Other

$ 0.25

$ 0.02

$ 0.23

Total PSEG

$ 1.88

$ (0.19)

$ 2.07

Non-GAAP Operating Earnings*

2017

2016

Change

PSE&G

$ 0.41

$ 0.38

$ 0.03

PSEG Power

$ 0.20

$ 0.13

$ 0.07

PSEG Enterprise/Other

$ (0.04)

$ 0.03

$ (0.07)

Total PSEG*

$ 0.57

$ 0.54

$ 0.03

*See Slides A, B and C for Items excluded from Net Income/(Loss) to reconcile to Operating Earnings (non-GAAP) for PSEG, PSE&G, PSEG Power

and PSEG Enterprise/Other.

PSEG Q4 EPS Summary –

Quarter ended December 31

$0.54

0.03

0.07

$0.57

$1.88

($0.19)

-$0.50

$0.00

$0.50

$1.00

$1.50

$2.00

(0.07)

PSEG EPS Reconciliation –

Q4 2017 versus Q4 2016

* See Slide A for Items excluded from Net Income (Loss) to reconcile to Operating Earnings (non-GAAP).

Q4 2017

Net

Income

Q4 2016

Net

(Loss)

PSEG

Power

PSE&G

Enterprise/

Other

Q4 2016

Operating

Earnings

(non-GAAP)*

Q4 2017

Operating

Earnings

(non-GAAP)*

Ongoing utility investment, cost control at Power and strong

operations contributed to Q4 results

Capacity 0.02

Volume 0.01

Gas Send-out

0.01

Re-contracting

(0.01)

O&M 0.03

Interest, Taxes

and Other 0.01

Transmission

0.03

Energy

Strong & GSMP

recovery 0.01

Weather 0.01

O&M (0.02)

PSEG

Foundation

Contribution

(0.03)

Tax Items

(0.02)

Interest and

Other (0.02)

PSEG –

Year-to-Date Results by Subsidiary

GAAP Net Income/(Loss)

2017

2016

Change

PSE&G

$ 1.92

$ 1.75

$ 0.17

PSEG Power

$ 0.94

$ 0.04

$ 0.90

PSEG Enterprise/Other

$ 0.24

$ (0.04)

$ 0.28

Total PSEG

$ 3.10

$ 1.75

$ 1.35

Non-GAAP Operating Earnings*

2017

2016

Change

PSE&G

$ 1.90

$ 1.75

$ 0.15

PSEG Power

$ 1.00

$ 1.01

$ (0.01)

PSEG Enterprise/Other

$ 0.03

$ 0.14

$ (0.11)

Total PSEG*

$ 2.93

$ 2.90

$ 0.03

*See Slides A, B and C for Items excluded from Net Income/(Loss) to reconcile to Operating Earnings (non-GAAP) for PSEG, PSE&G, PSEG Power

and PSEG Enterprise/Other.

PSEG YTD EPS Summary –

Twelve Months ended December 31

PSEG EPS Reconciliation –

YTD 2017 versus YTD 2016

* See

Slide

for

Items

excluded

from

Net

Income

reconcile

Operating

Earnings

(non-GAAP).Year-to-date

columns

**Prior quarter results may not add to year-to-date totals due to rounding.

Capacity 0.05

Gas

Send-out 0.02

Volume (0.01)

Re-contracting

(0.19)

O&M 0.10

Interest 0.04

Taxes and

Other (0.02)

Transmission

0.14

Energy Strong &

GSMP recovery

0.06

Weather (0.02)

Distribution

O&M 0.01

Distribution

D&A (0.03)

Taxes and Other

(0.01)

YTD 2017

Net

Income

YTD 2016

Net

Income

PSEG**

Power

PSE&G**

Enterprise/

Other**

YTD 2016

Operating

Earnings

(non-GAAP)*

YTD 2017

Operating

Earnings

(non-GAAP)*

Taxes

and Other

(0.05)

Interest

Expense

(0.03)

PSEG

Foundation

Contribution

(0.03)

Utility investment and cost control drove full year 2017 results

(0.01)

0.15

(0.11)

(0.01)

0.15

(0.11)

$1.75

$2.90

$2.93

$3.10

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

PSE&G

2017 Q4 Review

PSE&G EPS Reconciliation –

Q4 2017

versus Q4 2016

* See Slide B for Items excluded from Net Income to reconcile to non-GAAP Operating Earnings for PSE&G.

Continued investment in reliability and resiliency offset higher O&M

Transmission 0.03

Energy Strong

& GSMP

recovery 0.01

Weather 0.01

O&M

$0.38

0.05

$0.41

$0.43

(0.02)

0.00

0.10

0.20

0.30

0.40

0.50

0.60

Q4 2016

Operating

Earnings*

(non-GAAP)

Q4 2017

Operating

Earnings*

(non-GAAP)

Q4 2017

Net

Income

Q4 2016

Net

Income

2017

vs.

2016

vs.

Normal

Monthly

Heating

Degree

Days

(HDD)

October

November

December

Q4 2017 winter weather, as defined by

heating degree days, was ~5% colder than

Q4 2016 and on par with a Normal Q4

FY 2017 Summer weather was ~14% cooler

than 2016 and 3% warmer than Normal

Winter

Weather

Summary

(HHD)

2017

vs.

2016

vs.

Normal

Summer Weather Summary (THI)

2017

vs.

2016

vs.

Normal

FY 2017 Winter weather was similar to 2016

and ~6% warmer than Normal.

110

552

934

223

460

844

252

526

815

100

200

300

400

500

600

700

800

900

1,000

2017

2016

Normal

4,670

4,365

4,385

2,000

3,000

4,000

5,000

2017

2016

Normal

16,126

19,453

16,644

5,000

10,000

15,000

20,000

2017

2016

Normal

PSE&G – Q4 & Full Year Weather Summary

PSE&G 2018 Distribution Rate Case Filing Summary

•

Dockets

ER 18010029 (Electric) and GR 18010030 (Gas)

•

Filed

January 12, 2018; Anticipate new rates Fourth Quarter 2018

•

Test year –

July 1, 2017 through June 30, 2018 (with certain pro forma adjustments)

•

Rate base of $9.6B ($5.6B E; $4B G) as of December 31, 2018

•

ROE

request of 10.3%; Capitalization structure with 54% equity

•

Requested Increase:

~1% relative to overall revenue

•

O&M and Sales are roughly flat to last rate case eight years ago

•

Capital

recovery

beyond

clauses

and

$125M

increase

Depreciation

rate

•

Decoupling

of revenues from sales volumes

•

Taxes –

lower tax rate and flow back of deferred taxes to offset storm costs and

reduce impact on customer bills

•

Pending updates:

•

Taxes -

BPU order to lower rates effective April 1 will accelerate savings planned

in rate case; update for other tax impacts such as loss of bonus depreciation

•

9x3 update to be filed in May

Overall bill for the typical PSE&G residential customer, even after consideration

of the ~1% request, would remain >15% lower than bills after last base rate case

PSE&G –

Q4 Highlights

PSE&G filed its distribution base rate case in mid-January

BPU finalized rules related to the Infrastructure Investment Program (IIP) in December

2018

FERC

transmission

formula

rates

placed

into

effect

January

were

adjusted

lower

$148

million to

reflect benefits of tax reform; PSE&G anticipates returning $130 million to distribution customers resulting in

a total of ~$275 million to be returned to customers related to tax reform

Residential gas customers receiving BGSS bill credits totaling ~$100 million during Winter 2017-18

Anticipate filing an Energy Strong extension and a sizable Clean Energy program during 2018

PSE&G

2018

non-GAAP

Operating

Earnings

guidance

range

$1,000

$1,030

million,

increase

over 2017 results of $963 million

PSE&G invested $3.1 billion in 2017 capital expenditures to upgrade, expand and enhance the reliability

and resiliency of the electric and gas T&D system

Consolidated rate base grew by 12.5% to $17 billion

PSE&G

named

“Most

Reliable

Utility”

the

Mid-Atlantic

region

ReliabilityOne

for

year

row

On a weather normalized basis, total electric sales were down (0.4%) for the year, as declines in Residential

and Industrial sales more than offset growth in the Commercial segment

Gas sales, adjusted for weather, were up 1.2%, led by the Commercial and Industrial segments

Operations

Regulatory and Market

Environment

Financial

PSEG Power

2017 Q4 Review

Capacity 0.02

Volume 0.01

Gas

Send-out 0.01

Re-contracting (0.01)

PSEG Power EPS Reconciliation –

Q4 2017 versus Q4 2016

O&M

* See Slide B for Items excluded from Net Income (Loss) to reconcile to Operating Earnings (non-GAAP) for PSEG Power.

Interest,

Taxes and

Other

Q4 2017

Net

Income

Q4 2016

Net (Loss)

Q4 2016

Operating

Earnings

(non-GAAP)*

Q4 2017

Operating

Earnings

(non-GAAP)*

1.20

0.00

0.30

0.20

0.10

-0.60

($0.59)

Late Q4 weather, fewer outage-related days

and stringent cost control drove results

$1.20

$0.13

0.03

0.01

$0.20

Total Nuclear

Total Coal**

Natural Gas

* Excludes solar and Kalaeloa. ** Includes figures for Pumped Storage.

PSEG Power –

Generation (GWh)*

11,755

11,999

PSEG Power –

Capacity Factors (%)

PSEG

Power

–

Fuel

Costs

7,288

7,675

1,343

1,301

3,124

3,023

2,000

4,000

6,000

8,000

10,000

12,000

2016

2017

Quarter ended

December 31,

2016

2017

Combined

Cycle

PJM and NY

41.5%

39.6%

Coal**

74.5%

71.3%

10.1%

12.2%

Nuclear

85.3%

89.9%

Quarter ended

December 31,

($ millions)

2016

2017

Gas

$ 58

$ 75

Coal

Total Fossil

106

Nuclear

Total Fuel

Cost

$ 138

$ 153

Total

Generation

(GWh)

11,755

11,999

$ / MWh

11.74

12.75

PSEG Power – Q4 Generation up 2% on improved nuclear output

Total Nuclear

Total Coal**

Natural Gas

* Excludes solar and Kalaeloa. ** Includes figures for Pumped Storage.

PSEG Power –

Generation (GWh)*

51,510

51,089

PSEG Power –

Capacity Factors (%)

Twelve months

ended

December 31,

2016

2017

Combined

Cycle

PJM and NY

57.2%

46.9%

Coal**

65.1%

77.5%

5.4%

6.0%

Nuclear

86.9%

93.9%

Twelve months ended

December 31,

($ millions)

2016

2017

Gas

$ 272

$ 300

Coal

109

123

Total Fossil

381

423

Nuclear

203

200

Total Fuel

Cost

$ 584

$ 623

Total

Generation

(GWh)

51,510

51,089

$ / MWh

11.34

12.19

PSEG Power –

Fuel Costs

29,553

31,805

4,776

5,337

17,181

13,947

10,000

20,000

30,000

40,000

50,000

60,000

2016

2017

PSEG

Power – YTD Generation down ~1%

on mild Q1/Q3

weather

PSEG Power –

Gross Margin Performance

Market prices improved across PJM, NE and NY

Capacity revenues step up June 2017 through May 2018

Regional Performance

Region

Q4 Gross

Margin ($M)

Q4 2017 Performance

PJM

$414

Higher market prices and generation

output

New

England

$27

Higher prices

New York

$13

Higher prices

PSEG Power Gross Margin ($/MWh)

$39

$37

$38

$42

$40

$38

$10

$20

$30

$40

$50

2015

2016

2017

$10

2015

2016

2017

$20

$30

$40

$50

Quarter ended

December 31

Twelve Months ended

December 31

Increase in Full Requirements Component Due to:

Growing Renewable Energy/Transmission

Component for Market Risk

Offset by Decline in Energy and Capacity Prices

NJ Basic Generation Service (BGS) 2018 Auction Results

The BGS auction is a critical component of Power’s annual

hedging strategy, accounting for ~ 10 TWh

Note: BGS prices are quoted in $/MWh and reflect PSE&G Zone; results from the 2016-2018 auctions will be the new blended prices beginning June 1, 2018.

~ $59

~ $62

~ $63

$37

$38

$33

$34

$38

$39

$32

$33

$30

$31

$99.54

$97.39

$96.38

$90.78

$91.77

~ $61

~ $58

Capacity

Load shape

Transmission

Congestion

Ancillary services

Risk premium

Green

Three-Year Average

Round the Clock

PJM West Forward

Energy Price

Hedging Update –

Reflects recent BGS auction

Contracted Energy*

* HEDGE

PERCENTAGES

AND

PRICES

FEBRUARY

2018

AND

REFLECT

REVENUES

FULL

REQUIREMENT

LOAD

DEALS

BASED

CONTRACT

PRICE,

INCLUDING

RENEWABLE

ENERGY

CREDITS,

ANCILLARY,

AND

TRANSMISSION

COMPONENTS

BUT

EXCLUDING

CAPACITY.

HEDGES

INCLUDE

POSITIONS WITH MTM ACCOUNTING

TREATMENT AND OPTIONS.

2018

2019

2020

Volume TWh

Base Load

% Hedged

100%

95-100%

50-55%

(Nuclear and Base Load Coal)

Price $/MWh

$40

$38

Volume TWh

20-22

25-27

28-30

Intermediate, Combined Cycle,

% Hedged

50-60%

10-15%

Peaking

Price $/MWh

$40

$38

Volume TWh

55-57

59-61

63-65

Total

% Hedged

80-85%

55-60%

25-30%

Price $/MWh

$40

$38

Financial

Regulatory and Market

Environment

Operations

PSEG Power –

Q4 Highlights

Q4 output up 2% on higher nuclear production and higher energy prices; full-year 2017 generation

of 51 TWh exceeded projected output of 49-50 TWh

Nuclear fleet’s average capacity factor was ~90% in Q4, producing 7.7 TWh of energy; Full-year 2017

capacity factor was ~94%, producing an all-time peak output of 31.8 TWh; Hope Creek achieved

a 100% capacity factor for 2017

CCGT fleet capacity factor was ~47% for the year, reflecting lower NJ market demand

Coal production was up 12% for the full year, as competitiveness improved with higher gas prices

NJ Legislature continues to evaluate supportive action to preserve nuclear’s economic viability

PJM price formation reform discussions continue on multiple issues

BGS load for 2018 projected at 10 TWh; Recent BGS auction set a $91.77/MWh price for the PS Zone

Keys Energy Center and Sewaren 7 targeted for mid-2018 in-service; Bridgeport Harbor 5 targeted

for mid-2019 in-service

Power invested $1,040 million in 2017 on construction projects at Keys, Sewaren 7 & Bridgeport Harbor 5

Power’s total debt as a percentage of capitalization at December 31 was 29%

Power increased its ARO liability by $276 million to reflect increased risk of nuclear plant closure

Power’s

2018

non-GAAP

Operating

Earnings

guidance

range

$485

$560

million;

non-GAAP

Adjusted EBITDA guidance for 2018 is $1,075 to $1,180 million

PSEG

Tax Cuts and Jobs Act: PSEG well positioned

Our estimates and analysis are preliminary. The SEC has provided companies one year to finalize 2017 accounting requirements.

Further adjustments in 2018 may be required.

Positive non-utility contribution to earnings, strong balance sheet maintained

and lower customer bills mitigate the impact of T&D investment

Federal Tax Reform

PSE&G

PSEG Power

Enterprise/Other

Reduction of

Corporate

Tax Rate to 21%

Customer rates lowered

with reduction in tax rate

Return of excess deferred

tax liability –

impact on

cash and rate base growth

dependent on payback

period

Estimated excess

deferred tax balance of

$2.1 Billion at YE 2017

After-tax earnings and cash

flow increase

One-time, non-cash earnings

benefit from reduction in

deferred tax liability reflected

in 2017 GAAP results: $588

Million

After-tax earnings and cash

flow increase

One-time, non-cash

earnings benefit from

reduction in deferred tax

liability reflected in 2017

GAAP results: $147 Million

Expensing

Capital Expenditures

Bonus

depreciation

eliminated post 2017

Rate base growth

increases by ~1%/year

through 2022 relative to

prior tax rules

100% expensing --

cash flow

increases

Interest Disallowance

Rule

30% Limitation

Based on Tax –

EBITDA

Not applicable

Well positioned given

low debt balance

Well positioned given

low debt balance

Initiating PSEG 2018 Guidance -

By Subsidiary

$ millions (except EPS)

2018E

2017

PSE&G

$1,000 -

$1,030

$963

PSEG Power

$485 -

$560

$505

PSEG Enterprise/Other

$35 -

$35

$20

Operating Earnings (non-GAAP)*

$1,520 -

$1,625

$1,488

Operating EPS (non-GAAP)*

$3.00 -

$3.20E

$2.93

Segment Operating Earnings Guidance and Prior Results

(non-GAAP, except as noted)*

$ millions

2018E

2017

PSEG Power

$1,075 -

$1,180

$1,172

PSEG Power Adjusted EBITDA (non-GAAP)*

* See Slides A and C for Items excluded from Net Income to reconcile to Operating Earnings (non-GAAP) and Slide B for Items excluded from Net Income/(Loss) to reconcile to Operating

Earnings (non-GAAP) and Adjusted EBITDA (non-GAAP). E = Estimate.

PSEG Financial Highlights

Initiating 2018 non-GAAP Operating Earnings guidance of $3.00 -

$3.20 per share

PSE&G’s return of tax benefits reduces the customer bill

PSEG’s 5-Year capital spending forecast of $13 -

$15 billion over the 2018 –

2022

period mainly directed at PSE&G capital program

PSE&G capital spend forecast of $11.5 -

$13.2 billion (GSMP II, Transmission,

upcoming filings for Energy Strong and Clean Energy, as well as benefits from tax

reform) supports its five-year, 7 -

9% annual growth in rate base over 2018 –

2022

PSEG Power’s capital program, including completion of new generation,

will improve fleet efficiency and geographic diversity

Increased 2018 indicative common dividend by 4.7% to $1.80 per share

Financial position remains strong:

PSEG is a net beneficiary from the Tax Act

Cash from Power and increasing cash flow from operations at PSE&G supports

dividend growth and funds capital spending program without the need to issue equity

Debt as a percentage of capitalization was 50% at December 31

PSEG Liquidity as of December 31, 2017

Expiration

Total

Available

Company

Facility

Date

Facility

Usage

Liquidity

($ Millions)

PSE&G

5-year Credit Facility

Mar-22

$600

$15

$585

PSEG

Money

Pool

PSEG / Power

5-year Credit Facilities (PSEG)

Mar-22

$1,500

$556

$944

5-Year Credit Facilities (Power)

Mar-22

$1,900

$39

$1,861

3-year LC Facilities (Power)

Mar-20

$200

$112

$88

Total Money Pool

$3,600

$707

$2,893

Total

$4,200

$722

$3,478

PSE&G ST Investment

$223

Total Liquidity Available

$3,701

PSEG Money Pool ST Investment

Reconciliation of Non-GAAP Operating Earnings

Please see Slide 2 for an explanation of PSEG’s use of Operating Earnings as a non-GAAP financial measure

and how it differs from Net Income.

Reconciliation of Non-GAAP Operating Earnings and Non-GAAP

Adjusted EBITDA

Please see Slide 2 for an explanation of PSEG’s use of Operating Earnings and Adjusted EBITDA as non-GAAP financial measures and how they differ from Net Income/(Loss).

Reconciliation of Non-GAAP Operating Earnings

Please see Slide 2 for an explanation of PSEG’s use of Operating Earnings and Adjusted EBITDA as non-GAAP financial measures and how they differ from Net Income/(Loss).

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