PSEG(PEG) - 2025 Q4 - Annual Report

Cost and Financial Obligations - The company anticipates a significant increase in costs related to its Qualified Pension obligations, with a projected increase of $458 million in 2026 due to a 1% decrease in the discount rate [406]. - The Nuclear Asset Retirement Obligations (ARO) related to future decommissioning of nuclear facilities amount to approximately $916 million, representing nearly 100% of PSEG Power's total AROs as of December 31, 2025 [421]. - A 1% increase in the inflation rate would result in a $360 million increase in the Nuclear ARO, highlighting the sensitivity of the obligations to economic assumptions [423]. - The company recognizes liabilities for the expected cost of retiring long-lived assets, which are recorded at fair value and capitalized as part of the related long-lived assets [419]. Market and Regulatory Risks - The company faces risks associated with climate change, including potential increased regulatory burdens and changing customer preferences, which could materially impact its business and financial condition [21]. - The company is exposed to market risks from changes in commodity prices, interest rates, and equity prices, which could affect its financial condition and results of operations [407]. - The company’s ability to recover costs and earn returns on authorized investments may be impacted by changes in state and federal legislation and regulations [21]. - The company’s operations are subject to significant resource adequacy challenges that could affect affordability and reliability, potentially leading to adverse impacts on its business strategy and cash flows [21]. Regulatory Assets and Liabilities - PSE&G's Regulatory Assets and Liabilities are primarily supported by BPU orders, which are crucial for determining recoverability and refunds [426]. - The company considers past experiences and BPU orders from other utilities when determining regulatory asset or liability recognition [432]. - PSE&G's approach to regulatory assets includes prudence reviews by the BPU, ensuring that deferred costs are recoverable [426]. - Changes in assumptions regarding regulatory assets and liabilities could materially impact results of operations and cash flows [427]. Tax Positions and Income - The company recognizes uncertain tax positions using a two-step benefit recognition model, with a focus on positions that are more-likely-than-not to be sustained [429]. - Management's judgments regarding income tax benefits are influenced by uncertainties and authoritative guidance from the U.S. Treasury [430]. - Estimated benefits from Nuclear Production Tax Credits (PTCs) could lead to adjustments in consolidated financial statements, with potential impacts between approximately $89 million and $(89) million [431]. - ZEC revenue will be adjusted based on actual PTCs generated, potentially affecting Net Income by $(29) million to $44 million depending on tax position support [431]. - No PTCs were recorded for the year ended December 31, 2025, while recognition for 2024 is believed to be more-than-likely sustainable [431]. - Clarification of "gross receipts" by the U.S. Treasury could significantly affect the amount of PTCs recognized [430]. Asset Impairment - The company evaluates long-lived assets for impairment whenever significant adverse changes occur, which may lead to impairment charges or accelerated depreciation in future periods [413].