PUBLIC SERVICE ENTERPRISE GROUP INC

Public Service Enterprise Group Incorporated (PSEG) is a public utility holding company that, acting through its wholly owned subsidiaries, is a predominantly regulated electric and gas utility and a nuclear generation business. PSEG's business plan focuses on achieving growth by allocating capital primarily toward regulated investments in an effort to continue to improve the sustainability and predictability of its business and realizing the value of the consistent and reliable carbon-free generation from its nuclear units. The company operates through two direct wholly owned subsidiaries: Public Service Electric and Gas Company (PSE&G), a franchised public utility in New Jersey that provides electric transmission and electric and natural gas distribution to residential, commercial and industrial customers, and PSEG Power LLC, an energy supply company that earns revenues primarily by selling energy and capacity from its nuclear generation units and from the sale of wholesale natural gas through a full-requirements contract with PSE&G. PSEG also owns PSEG Long Island LLC, which operates the Long Island Power Authority's electric transmission and distribution system under a contractual agreement, and PSEG Energy Holdings L.L.C., which primarily holds legacy lease investments and competitively bid, FERC regulated transmission.

PSE&G's transmission business is not affected when customers choose alternate electric or gas suppliers since it earns its return on its net investment in rate base to provide transmission and distribution service, not by supplying the commodity. Based on its transmission formula rate and the Conservation Incentive Program for electric and gas distribution, PSE&G is also minimally impacted by changes in customers' usage. PSEG Power's competitors include merchant generators, utility generators, energy marketers, retailers, private equity firms, and other financial entities. PSEG Power's nuclear generation assets are located within the PJM Interconnection, L.L.C. Regional Transmission Organization, where natural gas prices often have a major influence on the price that generators will receive for their output.

PSE&G earns revenues from its regulated rate tariffs under which it provides electric transmission and electric and natural gas distribution to residential, commercial and industrial customers in its service territory. It also offers appliance services and repairs to customers throughout its service territory and invests in regulated solar generation projects and regulated energy efficiency and related programs in New Jersey. PSEG Power earns revenues primarily by selling energy and capacity from its nuclear generation units and from the sale of wholesale natural gas through a full-requirements contract with PSE&G. PSEG Power also enters into bilateral contracts for energy, gas and other energy-related contracts to optimize the value of its portfolio of generating assets and its gas supply obligations.

PSE&G distributes electric energy and natural gas to customers within a designated service territory running diagonally across New Jersey where approximately 6.8 million people, or about 74% of New Jersey's population resides. PSE&G provides distribution service to 2.4 million electric customers and 1.9 million gas customers in a service area that covers approximately 2,600 square miles. PSE&G's current approved transmission rates provide for a base return on equity of 9.90% and a 50 basis point adder for its membership in PJM as an RTO. In October 2024, the BPU issued an Order approving the settlement of PSE&G's electric and gas distribution base rate case with new rates effective October 15, 2024, providing for a $17.8 billion rate base, a 9.6% return on equity for PSE&G's distribution business and a 55% equity component of its capitalization structure. As of December 31, 2025, PSEG Power had 3,758 MW of nuclear generation capacity. During 2025, PSEG Power's nuclear units generated approximately 30.9 terawatt hours and operated at a capacity factor of 91.2%. PSEG Power's Salem 1, Salem 2 and Hope Creek nuclear plants were awarded zero emission certificates by the BPU through May 2025, receiving ZEC revenue equivalent to approximately $10/MWh. The Inflation Reduction Act established a production tax credit for electricity generation using nuclear energy, which began January 1, 2024 and is available through 2032, with an expected PTC rate of up to $15 per megawatt hour subject to adjustment based upon a facility's gross receipts. PSEG did not record any PTCs for any of its nuclear units in 2025 as gross receipts exceeded the level at which it would receive PTCs.

PSE&G has several major approved investment clause programs in progress, including the Clean Energy Future-Energy Efficiency II program with a $2.9 billion investment approved in 2024 for a 6-year term starting in 2025, the Clean Energy Future-Energy Efficiency program with a $1.6 billion investment approved in 2020 for a 5-year term starting in 2020, the Gas System Modernization Program III with a $1.4 billion investment approved in 2025 for a 3-year term starting in 2026, the GSMP II Extension with a $902 million investment approved in 2023 for a 2-year term starting in 2024, the Infrastructure Advancement Program with a $511 million investment approved in 2022 for a 4-year term starting in 2022, and the Clean Energy Future-Electric Vehicles program with a $166 million investment approved in 2021 for approximately a 6-year term starting in 2021. In December 2023, PJM awarded PSEG an approximately $424 million project to construct a 500 kV transmission line to address increasing load and reliability issues in Maryland and northern Virginia as part of its 2022 Window 3 competitive solicitation. In 2025, a five year extension of the LIPA Operations Services Agreement was approved. In November 2025, the BPU issued an Order approving PSE&G's GSMP III program, authorizing $1.05 billion of capital investment to replace 525 miles of high pressure cast iron gas mains and unprotected steel mains, and also authorized $360 million of investment to replace an additional 75 miles of gas main. In October 2025, PSEG Power completed work to extend the refueling cycle at its Hope Creek facility from 18 months to 24 months.

PSEG's Net Income for the year ended December 31, 2025 was $2.111 billion ¹, compared to $1.772 billion ² for the year ended December 31, 2024. PSEG's diluted earnings per share were $4.22 ³ for 2025, compared to $3.54 ⁴ for 2024. Operating Revenues increased to $12.168 billion ⁵ in 2025 from $10.290 billion ⁶ in 2024. Net Income for PSE&G was $1.745 billion ⁷ in 2025, compared to $1.547 billion ⁸ in 2024. Net Income for PSEG Power & Other was $366 million ⁹ in 2025, compared to $225 million ¹⁰ in 2024. The increase in Net Income for 2025 as compared to 2024 was driven primarily by higher earnings as a result of the 2024 distribution base rate case settlement and continued investments in T&D clause programs at PSE&G and higher energy and capacity prices at PSEG Power.

For the years 2026-2030, PSEG's regulated capital investment program is estimated to be in a range of $22.5 billion to $25.5 billion ¹¹. PSEG expects these capital investments to result in a compound annual growth rate in its regulated rate base in a range of 6.0% to 7.5% ¹² from year-end 2025 to year-end 2030. The regulated capital investments represent the majority of PSEG's total capital investment program of $24 billion to $28 billion ¹³. The low end of the range includes an extension of the Gas System Modernization Program and Clean Energy Future-EE program, as these programs are expected to continue beyond their currently approved timeframes. The upper end of the capital investment range includes potential incremental investments to address continued demand growth and other investments to meet infrastructure needs and support New Jersey's clean energy goals.

PSEG continues to evaluate additional investment opportunities in regulated transmission. In December 2023, PJM awarded PSEG an approximately $424 million ¹⁴ project to address increasing load and reliability issues in Maryland and northern Virginia as part of its 2022 Window 3 competitive solicitation. PJM has directed that the project be placed in service in 2027, though based on the procedural timeline established by order of the Maryland Public Service Commission, PSEG does not currently believe a 2027 in-service date for the project is reasonably achievable. PSEG will continue to evaluate opportunities to participate in transmission solicitation processes and may decide to submit bids for these opportunities, some of which could be material investments. PSEG also continues to explore opportunities for the potential sale of power, capacity and/or emission credits from its nuclear facilities pursuant to long-term agreements.

PSEG's regulated rate base increased from approximately $34 billion ¹⁵ as of December 31, 2024 to approximately $36 billion ¹⁶ as of December 31, 2025, driven by investments and higher working capital recovery approved in the distribution rate case. PSEG's nuclear facilities retain the downside price protection of a production tax credit from 2024 through 2032. The expected PTC rate is up to $15 per megawatt hour ¹⁷ subject to adjustment based upon a facility's gross receipts, and the PTC rate and the gross receipts threshold are subject to annual inflation adjustments. As of December 31, 2025, PSEG expects that its current portfolio position for 2026 will result in the realized value of its nuclear generation output being above the level at which it would receive PTCs.

PSEG's long-term financing plan is designed to replace maturities and support funding its capital program. In order to increase the predictability of interest expense, PSEG may use interest rate hedges to help limit its exposure to fluctuating interest rates and fix a portion of its interest rate exposure for anticipated long-term financing plans at PSEG and PSEG Power. PSE&G's interest rate risk is moderated due to annual transmission rate filings and distribution recoveries through periodic rate filings.

PSEG's capital allocation strategy includes significant regulated capital investments. For the years 2026-2030, the regulated capital investment program is estimated to be in a range of $22.5 billion to $25.5 billion ¹⁸, representing the majority of PSEG's total capital investment program of $24 billion to $28 billion ¹⁹. On February 24, 2026, PSEG's Board of Directors approved a $0.67 per share common stock dividend for the first quarter of 2026, reflecting an indicative annual dividend rate of $2.68 per share ²⁰.

PSEG faces significant resource adequacy challenges in PJM, driven by a lack of sufficient supply to meet electric demand, which has increased significantly over the past several years and is expected to continue to increase going forward. Increasing demand is caused by data centers, EV adoption, electrification and other factors. Insufficient supply to meet forecasted demand has caused increases in energy and capacity prices which, in turn, have caused the customer rates by which PSEG recovers electric supply costs to materially increase. This has resulted in continuing affordability concerns that have caused regulators and other policymakers to consider ways to reduce utility rates, including proposing to mitigate electric rate increases, and create increased regulatory uncertainty for utility investment initiatives and programs. In PJM's most recent capacity auction run in December 2025, the auction cleared at the FERC-approved price cap of $333.44/MW-day ²¹, and PJM indicated that without the price cap the clearing price would have been $529.80/MW-day ²². Furthermore, for the first time, PJM was unable to procure enough generation to meet its reliability requirement, which incorporates a 20% reserve margin to meet demand during times of system stress, falling 6,625 MW ²³ short of meeting this reliability requirement.

PSEG is subject to physical, financial and transition risks related to climate change, including potentially increased legislative and regulatory burdens and changing customer preferences. Climate change may drive change to existing or additional legislation and regulation that may impact PSEG's business and shape its customers' energy preference and sustainability goals, including impacts of potential changes in use of natural gas and electricity due to electrification over the long-term and the impact on need for additional generation to meet those electric needs. Severe weather or acts of nature, including hurricanes, winter storms, earthquakes, floods, wildfires and other natural disasters can stress systems, disrupt operation of facilities and cause service outages, and property damage that require incurring additional expenses. PSEG has adjusted its net zero greenhouse gas emissions goal that includes direct GHG emissions and indirect GHG emissions from operations across its business operations from 2030 to 2050 ²⁴.

PSEG faces significant resource adequacy challenges in PJM, where the December 2025 capacity auction cleared at the FERC-approved price cap of $333.44/MW-day ²⁵, and PJM fell 6,625 MW ²⁶ short of meeting its reliability requirement, creating regulatory uncertainty for utility investment initiatives and programs. The company is subject to the risk that elimination of the 50 basis point adder for RTO membership, which would reduce PSE&G's annual Net Income and annual cash inflows by approximately $40 million ²⁷, could be enacted by FERC. PSEG's nuclear generation business is exposed to fluctuations in wholesale power and natural gas markets, where lower natural gas prices often result in lower electricity prices, potentially reducing margins. The company also faces risks related to the inability to recover the carrying amount of long-lived assets, which represent approximately 73% ²⁸ of PSEG's total assets as of December 31, 2025, and cybersecurity attacks, which are increasing in sophistication, magnitude and frequency. Additionally, PSEG Power's ability to maintain sufficient liquidity could be materially adversely affected if it were to lose its investment grade credit rating, as it would be required under certain agreements to provide a significant amount of additional collateral in the form of letters of credit or cash.

Management's message emphasizes a focus on achieving growth by allocating capital primarily toward regulated investments to improve the sustainability and predictability of the business and realizing the value of the consistent and reliable carbon-free generation from nuclear units. Key strategic priorities include investing to meet growing energy demand, modernizing energy infrastructure, improving reliability and resilience, increasing energy efficiency to meet customer expectations, and aligning with public policy objectives. Management highlights the increase in regulated rate base from approximately $34 billion ²⁹ as of December 31, 2024 to approximately $36 billion ³⁰ as of December 31, 2025, and the downside price protection of a production tax credit for nuclear facilities from 2024 through 2032. For the years 2026-2030, the regulated capital investment program is estimated to be in a range of $22.5 billion to $25.5 billion ³¹, expected to result in a compound annual growth rate in regulated rate base in a range of 6.0% to 7.5% ³² from year-end 2025 to year-end 2030. Management also notes that PSEG did not record any PTCs for any of its nuclear units in 2025 as gross receipts exceeded the level at which it would receive PTCs, but the PTC continues to provide a benefit by helping to mitigate the exposure to potential downside market volatility.