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PSEG(PEG) - 2024 Q4 - Annual Report
PEGPSEG(PEG)2025-02-25 22:24
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Asset Retirement Obligations - As of December 31, 2024, PSEG's total Asset Retirement Obligations (ARO) related to nuclear decommissioning amounted to approximately 1,035million,representingnearly1001,035 million, representing nearly 100% of total AROs[419]. - A 1% decrease in the discount rate would lead to a 73 million increase in the Nuclear ARO, while a 1% increase in the inflation rate would result in a 346millionincrease[421].−Thecompanyrecognizesliabilitiesforexpectedcostsofretiringlong−livedassets,whicharerecordedatfairvalueandcapitalizedaspartoftherelatedasset[417].RisksandUncertainties−Thecompanyfacesrisksincludingequipmentfailures,naturaldisasters,andcybersecuritythreatsthatcouldimpactservicereliabilityandfinancialperformance[19].−Futureperformanceissubjecttouncertainties,includingregulatoryapprovalsandmarketconditions,whichmaycauseactualresultstodifferfrommanagement′sexpectations[21].−Changesinstateandfederallegislationmayimpactthecompany′sabilitytorecovercostsandearnreturnsonauthorizedinvestments[24].MarketandFinancialRisks−Thecompanyisexposedtomarketrisksfromchangesincommodityprices,interestrates,andequityprices,whichcouldaffectfinancialconditionandoperationalresults[405].−Ahypothetical10346 million increase[421]. - The company recognizes liabilities for expected costs of retiring long-lived assets, which are recorded at fair value and capitalized as part of the related asset[417]. Risks and Uncertainties - The company faces risks including equipment failures, natural disasters, and cybersecurity threats that could impact service reliability and financial performance[19]. - Future performance is subject to uncertainties, including regulatory approvals and market conditions, which may cause actual results to differ from management's expectations[21]. - Changes in state and federal legislation may impact the company's ability to recover costs and earn returns on authorized investments[24]. Market and Financial Risks - The company is exposed to market risks from changes in commodity prices, interest rates, and equity prices, which could affect financial condition and operational results[405]. - A hypothetical 10% increase in market interest rates would lead to an additional 4 million in pre-tax annual interest costs related to long-term debt[437]. - A hypothetical 10% change in the equity market would impact the value of equity securities in the NDT Fund by approximately 138million[438].FinancialManagementandReporting−Thecompany’sfinancialstatementscomplywithGAAPforrate−regulatedenterprises,whichmaydifferfromnon−regulatedbusinessesintermsofrevenueandexpenserecognition[420].−Thecompanyemphasizestheimportanceofmaintainingsufficientliquidityandaccesstocapitaloncommerciallyreasonabletermstosupportoperations[19].−ThecompanyrecognizesRegulatoryAssetsandLiabilitiesbasedonordersfromtheBPU,whichsignificantlyinfluenceitsfinancialreportingandcashflowmanagement[424].RiskManagement−TheValue−at−Risk(VaR)fortheyearendedDecember31,2024,ata95138 million[438]. Financial Management and Reporting - The company’s financial statements comply with GAAP for rate-regulated enterprises, which may differ from non-regulated businesses in terms of revenue and expense recognition[420]. - The company emphasizes the importance of maintaining sufficient liquidity and access to capital on commercially reasonable terms to support operations[19]. - The company recognizes Regulatory Assets and Liabilities based on orders from the BPU, which significantly influence its financial reporting and cash flow management[424]. Risk Management - The Value-at-Risk (VaR) for the year ended December 31, 2024, at a 95% confidence level is 36 million, down from 48millionin2023,indicatingadecreaseinpotentiallosses[435].−TheaverageValue−at−Risk(VaR)fortheperiodendedDecember31,2024,is48 million in 2023, indicating a decrease in potential losses[435]. - The average Value-at-Risk (VaR) for the period ended December 31, 2024, is 44 million, compared to 56millionin2023,reflectingimprovedriskmanagement[435].−ThehighValue−at−Risk(VaR)fortheyearendedDecember31,2024,reached56 million in 2023, reflecting improved risk management[435]. - The high Value-at-Risk (VaR) for the year ended December 31, 2024, reached 152 million, an increase from 127millionin2023,indicatingpotentialvolatilityinmarketconditions[435].−PSEGhasacreditmanagementprocessinplacetoassessandmitigatecounterpartycreditlosses,whichcouldmateriallyimpactfinancialconditionifamajorcounterpartydefaults[431].PensionandOPEBPlans−ThenetassetsintrustforpensionandOPEBplansamountto127 million in 2023, indicating potential volatility in market conditions[435]. - PSEG has a credit management process in place to assess and mitigate counterparty credit losses, which could materially impact financial condition if a major counterparty defaults[431]. Pension and OPEB Plans - The net assets in trust for pension and OPEB plans amount to 4.4 billion, with 1.4billioninequitysecuritiesand1.4 billion in equity securities and 1.3 billion in fixed income securities as of December 31, 2024[438]. - The fixed income portfolio has a duration of 6.08 years and a yield of 4.91%, with a 1% increase in interest rates resulting in a decline in market value of approximately $77 million[439].