PSEG Investor Update Leading toward a sustainable future 1 March 2025 PSEG Investor Update March 2025 Forward-Looking Statements Certain of the matters discussed in this report 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-loo ...

Core Insights - PSE&G is preparing for an expected heat wave and is encouraging customers to take steps to manage energy use and bills during high temperatures [1][2][3] Energy Management and Customer Support - PSE&G emphasizes the importance of energy conservation during extreme heat, noting that electricity demand significantly increases as temperatures rise [6][7] - The company has implemented various programs to assist customers in reducing energy consumption and managing bills, including energy efficiency audits and payment assistance options [6][10] - PSE&G's Equal Payment Plan allows customers to spread their energy costs evenly over the year, while Deferred Payment Arrangements help manage past-due balances [10] Safety and Preparedness - Customers are advised to prepare for potential power outages and to notify PSE&G if they rely on electricity for medical equipment [5][9] - The company provides tips for staying safe during high temperatures, such as staying hydrated and avoiding overexertion [7] Infrastructure and Reliability - PSE&G invests annually to modernize its infrastructure, ensuring reliability during extreme weather events [3][4] - The company relies on the regional grid operator, PJM, to maintain adequate electric supply, especially since 35% of its power is sourced from outside New Jersey [4] Recognition and Achievements - PSE&G has received multiple awards for reliability and customer satisfaction, including the ReliabilityOne® Award and the ENERGY STAR Partner of the Year award [11]

Core Viewpoint - PSE&G has received approval from the New Jersey Board of Public Utilities (BPU) to implement a temporary credit for residential customers to alleviate the impact of rising electric supply prices due to PJM's capacity price auction, as part of its Summer Relief Initiative [1][3][5] Group 1: Immediate Relief Measures - For July and August 2025, PSE&G will provide a credit of $30, including taxes, to each residential electric customer's monthly bill [3] - PSE&G will waive all residential reconnection fees from July 1 to September 30, 2025, as part of the Summer Moratorium [4] - Customers will see a $10 charge on their monthly bills from September 2025 through February 2026 to recover the costs associated with the electricity provided during the summer [3] Group 2: Long-term Solutions - PSE&G emphasizes the need for long-term solutions to address the power supply-demand imbalance in New Jersey, advocating for new energy generation [2][6][7] - The company has been warning about the supply and demand imbalance for several years and stresses the importance of generating energy in-state to reduce costs for residents and businesses [6] Group 3: Customer Support and Assistance - PSE&G collaborates with nonprofits and community organizations to inform customers about energy assistance options, including programs like LIHEAP and SHARES [11] - The company offers additional bill payment tools such as the Equal Payment Plan and Deferred Payment Arrangements to help customers manage costs [12] Group 4: Company Background and Achievements - PSE&G is New Jersey's oldest and largest gas and electric delivery public utility and has received numerous awards for reliability and customer satisfaction [14] - The company has been recognized for its commitment to a clean energy future and has been included in the Dow Jones Sustainability Index for North America for 17 consecutive years [14]

Core Viewpoint - Public Service Enterprise Group, Inc. (PSEG) is prioritizing renewable energy expansion to enhance its position in the clean energy sector while investing in infrastructure to improve reliability [1][2] Investment Plans - PSEG plans to invest approximately $3.8 billion in 2025 for infrastructure upgrades, energy efficiency, electrification projects, and load growth, with a total capital investment of $21-24 billion projected between 2025 and 2029 [2][8] - The company anticipates a compounded annual rate-based growth of 6-7.5% over the same period due to its robust capital investment strategy [2] Clean Energy Initiatives - Significant investments are being made in utility-owned solar photovoltaic (PV) systems, with 158 megawatts of installed PV solar capacity in New Jersey as of December 31, 2024 [3] - PSEG aims to achieve net-zero carbon emissions by 2030, accelerating its original target by 20 years, and is modernizing its gas distribution infrastructure to reduce gas leaks [4][8] Environmental Remediation Costs - PSEG's PSE&G segment is working with the New Jersey Department of Environmental Protection to address environmental conditions at former manufactured gas plant sites, with 38 sites requiring remediation at an estimated cost of $199-$224 million [5] - These remediation costs may negatively impact PSEG's operating results [5] Financial Position - As of March 31, 2025, PSEG has a long-term debt of $20.40 billion and a cash balance of $0.89 billion, indicating a weak solvency position [6] Stock Performance - Over the past three months, PEG shares have increased by 1.5%, while the industry has seen a growth of 3.3% [7]

Core Viewpoint - PSE&G is implementing a Summer Relief Initiative to assist residential electric customers in New Jersey amid a significant electric supply price increase resulting from PJM's capacity price auction, while seeking approval from the New Jersey Board of Public Utilities (BPU) for relief measures [1][2][3] Group 1: Summer Relief Initiative - The Summer Relief Initiative includes a Summer Moratorium and suspension of reconnection fees to protect qualified residential customers from disconnection during the summer months [1][9] - PSE&G filed for approval of this initiative on May 7, with additional support for residential customers added on May 15, pending BPU review [2] - The company will defer the effects of the June 1 supply increase for residential customers over the summer months, while still paying electricity suppliers the full cost of generation [1][3] Group 2: Customer Support and Assistance - PSE&G emphasizes the importance of customer support, encouraging those struggling to pay their bills to reach out for assistance [3][8] - The company provides various energy assistance options, including the Low Income Home Energy Assistance Program (LIHEAP) and SHARES for customers facing temporary financial crises [10] - Additional bill payment tools are available, such as the Equal Payment Plan, which divides annual energy costs into 12 equal monthly payments, and Deferred Payment Arrangements for past-due balances [11] Group 3: Long-term Solutions and Industry Context - PSE&G has been warning about the supply and demand imbalance in the region for several years and is committed to working with policymakers on long-term solutions to address significant rate increases [7] - The company highlights that the 17% rise in electric rates is not caused by PSE&G but acknowledges the need for more power generation in New Jersey to meet forecasted energy supply-demand imbalances [3][7] - PSE&G's electric and gas bills are nearly equivalent to their 2008 levels when adjusted for inflation, indicating a focus on maintaining affordability [4]

Core Investment Strategy - Value investing is highlighted as a reliable strategy during market volatility, allowing investors to purchase stocks at discounted prices when others sell [1][2] Value Investment Drawbacks - The concept of "value traps" is introduced, where stocks may underperform due to persistent issues rather than temporary problems [3] - Common metrics for value investing include dividend yield, P/E, and P/B ratios, which help identify discounted stocks [3] Importance of PEG Ratio - The PEG ratio, defined as (Price/Earnings)/Earnings Growth Rate, is emphasized as a crucial metric for assessing a stock's intrinsic value [4][5] - A low PEG ratio is preferred, but it has limitations, such as not accounting for changing growth rates over time [5] Screening Criteria for Value Stocks - Effective screening criteria for value stocks include: - PEG Ratio less than industry median - P/E Ratio less than industry median - Zacks Rank 1 (Strong Buy) or 2 (Buy) - Market Capitalization greater than $1 billion - Average 20-Day Volume greater than 50,000 - Percentage Change in F1 Earnings Estimate Revisions greater than 5% - Value Score of less than or equal to B [6] Selected Stocks - Urban Outfitters (URBN) is a lifestyle retailer with a Zacks Rank 1 and a five-year historical growth rate of 20% [9][8] - Dentsply Sirona (XRAY) is a leader in dental products with a Zacks Rank 2 and a long-term expected growth rate of 7.4% [10][11] - LATAM Airlines (LTM) offers extensive air transportation services with a Zacks Rank 1 and a five-year expected growth rate of 14.8% [11][12] - Exelixis (EXEL) focuses on cancer therapies with a long-term expected earnings growth rate of 21% and a Zacks Rank of 2 [12][13]

Core Viewpoint - PSE&G is amending its proposal to the New Jersey Board of Public Utilities (BPU) to provide additional short-term assistance in response to rising electric supply costs, while also preparing for long-term solutions to address these challenges [1][2]. Short-term Solutions - PSE&G has filed with the BPU to approve a Temporary Supply Offset Clause (TSOC) that would provide a temporary credit starting July 1, 2025, to mitigate electric bill increases due to high capacity market prices [4]. - The company is proposing options for the TSOC, including a 100%, 50%, and 25% offsetting credit based on BPU guidance [4]. - PSE&G is also implementing an expansion of the Winter Termination Program to protect low-income individuals from utility shut-offs and suspending reconnection fees [7]. Long-term Solutions - PSE&G has highlighted the need for long-term solutions to address the supply and demand imbalance in the PJM region, advocating for policy and legal changes to encourage new generation development [5]. Customer Assistance Programs - PSE&G has been actively working with customers and community organizations to raise awareness about energy assistance options, resulting in approximately 226,000 customers receiving over $265 million in support last year [9]. - The company offers various bill payment tools, including an Equal Payment Plan that allows customers to levelize their monthly payments and Deferred Payment Arrangements for past-due balances [11]. Energy Efficiency Initiatives - PSE&G's energy efficiency programs have benefited over 415,000 customers, leading to nearly $640 million in annual savings through reduced energy consumption [8]. - The company continues to promote affordability and bill management programs through multiple communication channels, ensuring customers are informed about available assistance [12]. Company Background - PSE&G is New Jersey's oldest and largest gas and electric delivery utility, recognized for its reliability and customer satisfaction, having won the ReliabilityOne® Award for 23 consecutive years [13].

Core Insights - The article discusses the investment strategy of GARP (Growth at a Reasonable Price) as a hybrid approach that combines elements of both value and growth investing, particularly in uncertain market conditions [2][3][5]. Investment Strategy - GARP investing prioritizes the PEG (Price/Earnings Growth) ratio, which relates a stock's P/E ratio to its future earnings growth rate, providing a more comprehensive view of a stock's potential [5][6]. - A lower PEG ratio, ideally below 1, indicates both undervaluation and future growth potential, making it attractive for GARP investors [6]. Stock Performance - Several stocks have shown significant success using the GARP strategy, including Takeda Pharmaceutical, Five9, LATAM Airlines, and Mizuho Financial Group [4]. - Takeda Pharmaceutical has a Zacks Rank of 1, a Value Score of A, and a long-term expected growth rate of 35% [11]. - Five9 holds a Zacks Rank of 2, a Value Score of B, and a historical growth rate of 19.3% [13]. - LATAM Airlines also has a Zacks Rank of 1, a Value Score of A, and an expected growth rate of 14.8% [14]. - Mizuho Financial has a Zacks Rank of 2, a Value Score of B, and a long-term expected growth rate of 15.9% [16]. Screening Criteria - Effective GARP investing involves screening for stocks with a PEG ratio less than the industry median, a P/E ratio below the industry median, a Zacks Rank of 1 or 2, a market capitalization greater than $1 billion, and an average 20-day trading volume exceeding 50,000 [8][9].

Financial Performance - PSE&G's net income for the three months ended March 31, 2025, was $546 million, compared to $488 million for the same period in 2024, indicating a year-over-year increase of approximately 11.9%[259]. - PSEG's net income for the three months ended March 31, 2025, was $589 million, compared to $532 million for the same period in 2024, reflecting a year-over-year increase of approximately 10.7%[259]. - Operating Revenues for PSEG increased by $462 million (17%) to $3,222 million for the three months ended March 31, 2025, compared to $2,760 million in the same period of 2024[279]. - Operating Revenues increased by $220 million, or 25%, to $1,092 million for the three months ended March 31, 2025, compared to the same period in 2024[292]. - Operating Cash Flow increased by $388 million, with PSE&G's operating cash flow rising from $408 million to $632 million, a $224 million increase[299][300]. Capital Investments - PSEG's regulated rate base increased from approximately $30 billion as of December 31, 2023 to approximately $34 billion as of December 31, 2024, reflecting a focus on capital investments to meet growing energy demand[242]. - The estimated regulated capital investment program for 2025-2029 is projected to be between $21 billion and $24 billion, with a compound annual growth rate in the regulated rate base expected to be between 6% and 7.5%[244]. - The approved distribution base rate case settlement includes a $17.8 billion rate base and a 9.6% return on equity for PSE&G's distribution business[248]. - Capital Expenditures for PSE&G were $605 million, primarily for T&D system reliability, and $42 million for PSEG Power & Other, excluding nuclear fuel[315][316]. Energy Costs and Revenues - Energy Costs rose by $189 million (19%) to $1,186 million for the same period, reflecting increased demand and higher prices[279]. - Energy Costs rose by $112 million, or 22%, primarily due to increased gas costs of $111 million[293]. - Delivery Revenues increased by $147 million, primarily due to a $163 million increase in electric and gas revenues from a recently settled distribution base rate case[284]. - Commodity Revenues increased by $162 million, with electric BGS revenues rising by $105 million and gas BGSS revenues increasing by $57 million due to higher prices and sales volumes[287]. Operational Efficiency - PSEG Power's nuclear units generated approximately 8.4 terawatt hours during the first three months of 2025, operating at a capacity factor of 99.9%[249]. - Operation and Maintenance expenses increased by $136 million (17%) to $919 million, largely due to rising clause and renewable costs[279]. - Interest Expense increased by $36 million (18%) to $241 million, influenced by the prevailing interest rate environment[279]. - Interest Expense increased by $17 million, or 25%, due to incremental debt and the replacement of maturing debt at higher rates[296]. Regulatory and Environmental Initiatives - The New Jersey Board of Public Utilities approved approximately $2.9 billion for energy efficiency projects from January 1, 2025, through June 30, 2027, marking a significant increase from prior filings[246]. - The GSMP II program extension, approved in 2023, involves an investment of approximately $900 million to replace at least 400 miles of cast iron and unprotected steel mains and services in the gas system[247]. - PSEG aims to achieve net zero greenhouse gas emissions by 2030, supporting New Jersey's clean energy and climate goals[250]. - PSEG Power's Salem nuclear plants were awarded zero emission certificates (ZECs) at approximately $10 per megawatt hour (MWh) for the eligibility period starting June 2022, continuing through May 2025[268]. - The Inflation Reduction Act (IRA) established a Production Tax Credit (PTC) for existing nuclear generation facilities, expected to be up to $15/MWh, impacting future ZEC applications and revenue[268]. Market Conditions - The anticipated PJM capacity market auction prices for July 2024 were approximately 10 times higher than those from the 2023 auction, raising concerns about electricity costs for customers[269]. - The total committed credit facilities as of March 31, 2025, amounted to $3.825 billion, with available liquidity of $3.704 billion[304]. - The company expects to meet its capital requirements over the next three years through a combination of internally generated funds and external debt financing[314]. - The Value-at-Risk (VaR) for the three months ended March 31, 2025, ranged from a low of $31 million to a high of $55 million at the 95% confidence level[322]. Dividends - The Board of Directors approved a common stock dividend of $0.63 per share for the second quarter of 2025, reflecting an annual rate of $2.52 per share[310].

Core Viewpoint - In times of market volatility, value investing becomes a preferred strategy as investors seek to buy undervalued stocks when others are selling at lower prices [1][2]. Value Investing Strategy - Value investors capitalize on market uncertainty by purchasing stocks at discounted prices when other investors sell [1]. - The strategy can lead to "value traps" if not understood properly, where stocks underperform due to persistent issues rather than temporary problems [3]. Importance of PEG Ratio - The PEG ratio, defined as (Price/Earnings)/Earnings Growth Rate, is a crucial metric for value investors, as a low PEG ratio indicates better value [5]. - Unlike P/E alone, the PEG ratio helps identify a stock's intrinsic value, although it has limitations regarding changing growth rates [5]. Screening Criteria for Value Stocks - Effective screening for value stocks includes criteria such as: - PEG Ratio less than industry median - P/E Ratio less than industry median - Zacks Rank 1 (Strong Buy) or 2 (Buy) - Market Capitalization greater than $1 billion - Average 20-Day Volume greater than 50,000 - Percentage Change in F1 Earnings Estimate Revisions greater than 5% - Value Score of A or B combined with a Zacks Rank of 1, 2, or 3 [6]. Selected Stocks - **Barrick Gold (GOLD)**: A leading gold mining company with 3.9 million ounces of gold and 195,000 tons of copper produced in 2024, holding 89 million ounces of proven and probable gold reserves. It has a Zacks Rank 2 and a Value Score of A, with a five-year expected growth rate of 33.5% [8][9]. - **StoneCo (STNE)**: A financial technology company in Brazil providing various financial services. It has a Zacks Rank 1 and a Value Score of B, with a long-term expected growth rate of 26.3% [9][10]. - **Synovus Financial (SNV)**: A diverse financial services company with a Zacks Rank 2 and a Value Score of A, boasting a five-year expected growth rate of 10.2% [11][12]. - **BGC Group, Inc. (BGC)**: A financial brokerage and technology company with a long-term expected earnings growth rate of 24.7%, holding a Value Score of B and a Zacks Rank of 1 [12][13].