PSEG(PEG)2025-02-25 22:24Asset Retirement Obligations - As of December 31, 2024, PSEG's total Asset Retirement Obligations (ARO) related to nuclear decommissioning amounted to approximately $1,035 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 $346 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 $138 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 $48 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 $56 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 $127 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 $1.4 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].