PSEG to explore strategic alternatives for PSEG Power’s non-nuclear fleet

Newark, N.J. (July 31, 2020) /PRNewswire/ — Public Service Enterprise Group (NYSE: PEG) announced today that it is exploring strategic alternatives for PSEG Power’s non-nuclear generating fleet, which includes more than 6,750 megawatts of fossil generation located in New Jersey, Connecticut, New York and Maryland, as well as the 467-megawatt Solar Source portfolio located in various states.

PSEG Chairman, President and CEO Ralph Izzo, said, “Our intent is to accelerate the transformation of PSEG into a primarily regulated electric and gas utility — a plan we have been executing successfully for more than a decade.”

“A separation of the non-nuclear assets would reduce overall business risk and earnings volatility, improve our credit profile, and enhance an already compelling ESG position driven by pending clean energy investments, methane reduction, and zero-carbon generation,” Izzo said. “We recognize the shift in investor preference toward owning regulated utility businesses without commodity exposure to merchant generation and related earnings volatility. We believe PSE&G is among the best utilities in the country and that our valuation should align with that profile.”

Looking Ahead: Focusing on New Jersey’s Clean Energy Agenda

PSE&G already is expected to comprise approximately 80% of PSEG’s 2020 Operating Earnings mix, and that percentage should increase as the company allocates the majority of its capital spend to meet system infrastructure needs and growing policy and customer expectations for clean energy investments. PSE&G’s $3.5 billion Clean Energy Future filing is built around helping New Jersey achieve the goals of the 2018 Clean Energy Act by expanding customer access to energy efficiency programs, enabling full access to electric vehicle infrastructure, enhancing services through Advanced Metering Infrastructure and Energy Cloud services and fulfilling the promise of energy storage.

PSEG continues to evaluate potential investments in offshore wind and expects to make a decision regarding the opportunity to invest in Ørsted’s Ocean Wind project later this year. In addition, the company is evaluating participation in upcoming offshore wind solicitations in New Jersey and other Mid-Atlantic states.

PSEG intends to retain ownership of PSEG Power’s existing nuclear fleet. The nuclear fleet is necessary for New Jersey to meet its long-term carbon reduction goals, and helps satisfy the state’s capacity obligations for resource adequacy with a cost-effective source of zero-carbon electricity.

While the company is in the preliminary stage of this evaluation, the marketing of a potential transaction in one or a series of steps, anticipated to launch in the fourth quarter, is expected to be completed sometime in 2021. PSEG has engaged Goldman Sachs and Wachtell, Lipton, Rosen & Katz as advisors for this strategic evaluation.

An exit from the fossil generation business would accelerate PSEG’s transition to a primarily regulated and contracted business, with a zero-carbon generation platform. Given the relatively small part of PSEG that the non-nuclear business represents, this decision will not have an impact on the company’s current shareholder dividend policy, which will continue to be subject to approval by the PSEG Board of Directors. PSEG will manage this process taking into account the interests of its diverse stakeholders, including its 13,000 valued employees. Any decision regarding the non-nuclear assets will not impact PSE&G or PSEG Long Island customers, operations or tariffs and would be subject to customary regulatory approvals.

“We are proud to have served the needs of our customers and key stakeholders for the last 117 years, and are excited to explore the opportunities that will shape PSEG’s future,” Izzo said.  “It is a future focused on advancing our business as a sustainable, customer-focused provider of essential electricity and natural gas service, delivered by a primarily regulated utility and contracted businesses.”

Source: PSEG

 

 

 

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