pseg-20220630

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED June 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO


Commission File Number	Name of Registrant, Address, and Telephone Number			State or other jurisdiction of Incorporation or Organization	I.R.S. Employer Identification Number
001-09120	Public Service Enterprise Group Incorporated			New Jersey	22-2625848
	80 Park Plaza
	Newark,	New Jersey	07102
	973	430-7000

001-00973	Public Service Electric and Gas Company			New Jersey	22-1212800
	80 Park Plaza
	Newark,	New Jersey	07102
	973	430-7000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol(s)

Name of Each Exchange
On Which Registered

Public Service Enterprise Group Incorporated

Common Stock without par value

PEG

New York Stock Exchange

Public Service Electric and Gas Company

8.00% First and Refunding Mortgage Bonds, due 2037

PEG37D

New York Stock Exchange

5.00% First and Refunding Mortgage Bonds, due 2037

PEG37J

New York Stock Exchange

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit such files). Yes ☒ No ☐

Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Public Service Enterprise Group Incorporated

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

Public Service Electric and Gas Company

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller reporting company

☐

Emerging growth company

☐

(Cover continued on next page)

Table of Contents

(Cover continued from previous page)

If any of the registrants is an emerging growth company, indicate by check mark if such registrant has elected not to use

the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether any of the registrants is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of July 19, 2022, Public Service Enterprise Group Incorporated had outstanding 498,860,141 shares of its sole class of Common Stock, without par value.

As of July 19, 2022, Public Service Electric and Gas Company had issued and outstanding 132,450,344 shares of Common Stock, without nominal or par value, all of which were privately held, beneficially and of record, by Public Service Enterprise Group Incorporated.

Public Service Electric and Gas Company is a wholly owned subsidiary of Public Service Enterprise Group Incorporated and meets the conditions set forth in General Instruction H(1) of Form 10-Q. Public Service Electric and Gas Company is filing its Quarterly Report on Form 10-Q with the reduced disclosure format authorized by General Instruction H.

Table of Contents


		Page
FORWARD-LOOKING STATEMENTS		ii
FILING FORMAT		iii
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements
	Public Service Enterprise Group Incorporated	1
	Public Service Electric and Gas Company	7
	Notes to Condensed Consolidated Financial Statements
	Note 1. Organization, Basis of Presentation and Significant Accounting Policies	13
	Note 2. Recent Accounting Standards	14
	Note 3. Revenues	16
	Note 4. Early Plant Retirements/Asset Dispositions and Impairments	21
	Note 5. Variable Interest Entities (VIEs)	22

	Note 6. Rate Filings	23
	Note 7. Leases	24
	Note 8. Financing Receivables	25
	Note 9. Trust Investments	27
	Note 10. Pension and Other Postretirement Benefits (OPEB)	32
	Note 11. Commitments and Contingent Liabilities	34
	Note 12. Debt and Credit Facilities	39
	Note 13. Financial Risk Management Activities	41
	Note 14. Fair Value Measurements	45
	Note 15. Other Income (Deductions)	49
	Note 16. Income Taxes	50
	Note 17. Accumulated Other Comprehensive Income (Loss), Net of Tax	51
	Note 18. Earnings Per Share (EPS) and Dividends	53
	Note 19. Financial Information by Business Segment	55
	Note 20. Related-Party Transactions	56
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	57
	Executive Overview of 2022 and Future Outlook	57
	Results of Operations	65
	Liquidity and Capital Resources	71
	Capital Requirements	73
	Accounting Matters	73
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	73
Item 4.	Controls and Procedures	74
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	75
Item 1A.	Risk Factors	75
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	75
Item 5.	Other Information	76
Item 6.	Exhibits	77
	Signatures	78

Table of Contents

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-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those anticipated. Such statements are based on management’s beliefs as well as assumptions made by and information currently available to management. When used herein, the words “anticipate,” “intend,” “estimate,” “believe,” “expect,” “plan,” “should,” “hypothetical,” “potential,” “forecast,” “project,” variations of such words and similar expressions are intended to identify forward-looking statements. Factors that may cause actual results to differ are often presented with the forward-looking statements themselves. Other factors that could cause actual results to differ materially from those contemplated in any forward-looking statements made by us herein are discussed in filings we make with the United States Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K and subsequent reports on Form 10-Q and Form 8-K. These factors include, but are not limited to:

•any inability to successfully develop, obtain regulatory approval for, or construct transmission and distribution, and solar and wind generation projects;

•the physical, financial and transition risks related to climate change, including risks relating to potentially increased legislative and regulatory burdens, changing customer preferences and lawsuits;

•any equipment failures, accidents, critical operating technology or business system failures, severe weather events, acts of war, terrorism, sabotage, cyberattack or other incidents that may impact our ability to provide safe and reliable service to our customers;

•any inability to recover the carrying amount of our long-lived assets;

•disruptions or cost increases in our supply chain, including labor shortages;

•any inability to maintain sufficient liquidity or access sufficient capital on commercially reasonable terms;

•the impact of cybersecurity attacks or intrusions or other disruptions to our information technology, operational or other systems;

•the impact of the ongoing coronavirus pandemic;

•failure to attract and retain a qualified workforce;

•inflation, including increases in the costs of equipment, materials, fuel and labor;

•the impact of our covenants in our debt instruments on our business;

•adverse performance of our nuclear decommissioning and defined benefit plan trust fund investments and changes in funding requirements and pension costs;

•the failure to complete, or delays in completing, the Ocean Wind 1 offshore wind project and the failure to realize the anticipated strategic and financial benefits of this project;

•fluctuations in wholesale power and natural gas markets, including the potential impacts on the economic viability of our generation units;

•our ability to obtain adequate nuclear fuel supply;

•market risks impacting the operation of our nuclear generating stations;

•changes in technology related to energy generation, distribution and consumption and changes in customer usage patterns;

•third-party credit risk relating to our sale of nuclear generation output and purchase of nuclear fuel;

•any inability to meet our commitments under forward sale obligations;

•reliance on transmission facilities to maintain adequate transmission capacity for our nuclear generation fleet;

•the impact of changes in state and federal legislation and regulations on our business, including PSE&G’s ability to recover costs and earn returns on authorized investments;

Table of Contents

•PSE&G’s proposed investment programs may not be fully approved by regulators and its capital investment may be lower than planned;

•the absence of a long-term legislative or other solution for our New Jersey nuclear plants that sufficiently values them for their carbon-free, fuel diversity and resilience attributes, or the impact of the current or subsequent payments for such attributes being materially adversely modified through legal proceedings;

•adverse changes in and non-compliance with energy industry laws, policies, regulations and standards, including market structures and transmission planning and transmission returns;

•risks associated with our ownership and operation of nuclear facilities, including increased nuclear fuel storage costs, regulatory risks, such as compliance with the Atomic Energy Act and trade control, environmental and other regulations, as well as financial, environmental and health and safety risks;

•changes in federal and state environmental laws and regulations and enforcement;

•delays in receipt of, or an inability to receive, necessary licenses and permits; and

•changes in tax laws and regulations.

All of the forward-looking statements made in this report are qualified by these cautionary statements and we cannot assure you that the results or developments anticipated by management will be realized or even if realized, will have the expected consequences to, or effects on, us or our business, prospects, financial condition, results of operations or cash flows. Readers are cautioned not to place undue reliance on these forward-looking statements in making any investment decision. Forward-looking statements made in this report apply only as of the date of this report. While we may elect to update forward-looking statements from time to time, we specifically disclaim any obligation to do so, even in light of new information or future events, unless otherwise required by applicable securities laws.

The forward-looking statements contained in this report are intended to qualify for the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

FILING FORMAT

This combined Quarterly Report on Form 10-Q is separately filed by Public Service Enterprise Group Incorporated (PSEG) and Public Service Electric and Gas Company (PSE&G). Information relating to any individual company is filed by such company on its own behalf. PSE&G is only responsible for information about itself and its subsidiaries.

Discussions throughout the document refer to PSEG and its direct operating subsidiaries. Depending on the context of each section, references to “we,” “us,” and “our” relate to PSEG or to the specific company or companies being discussed.

iii

Table of Contents

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Millions, except per share data

(Unaudited)



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
OPERATING REVENUES	$	2,076	$	1,874	$	4,389	$	4,763
OPERATING EXPENSES
Energy Costs	765		606		2,010		1,635
Operation and Maintenance	751		783		1,545		1,561
Depreciation and Amortization	269		322		552		663
(Gains) Losses on Asset Dispositions and Impairments	(5)		457		38		457
Total Operating Expenses	1,780		2,168		4,145		4,316
OPERATING INCOME (LOSS)	296		(294)		244		447
Income from Equity Method Investments	7		6		11		9
Net Gains (Losses) on Trust Investments	(187)		81		(255)		141
Other Income (Deductions)	38		33		43		58
Net Non-Operating Pension and Other Postretirement Benefit (OPEB) Credits (Costs)	94		82		188		164
Interest Expense	(150)		(147)		(287)		(293)
INCOME (LOSS) BEFORE INCOME TAXES	98		(239)		(56)		526
Income Tax Benefit (Expense)	33		62		185		(55)
NET INCOME (LOSS)	$	131	$	(177)	$	129	$	471
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC	497		504		499		504
DILUTED	500		504		502		507
NET INCOME (LOSS) PER SHARE:
BASIC	$	0.26	$	(0.35)	$	0.26	$	0.94
DILUTED	$	0.26	$	(0.35)	$	0.26	$	0.93

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Millions

(Unaudited)



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
NET INCOME (LOSS)	$	131	$	(177)	$	129	$	471
Other Comprehensive Income (Loss), net of tax
Unrealized Gains (Losses) on Available-for-Sale Securities, net of tax (expense) benefit of $30, $(10), $69 and $16 for the three and six months ended 2022 and 2021, respectively	(46)		16		(107)		(26)
Unrealized Gains (Losses) on Cash Flow Hedges, net of tax (expense) benefit of $(1), $(1), $(1) and $(1) for the three and six months ended 2022 and 2021, respectively	—		—		1		1
Pension/OPEB adjustment, net of tax (expense) benefit of $0, $(1), $0 and $(3) for the three and six months ended 2022 and 2021, respectively	1		4		1		7
Other Comprehensive Income (Loss), net of tax	(45)		20		(105)		(18)
COMPREHENSIVE INCOME (LOSS)	$	86	$	(157)	$	24	$	453

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

Millions

(Unaudited)



	June 30, 2022		December 31, 2021
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents	$	2,207	$	818
Accounts Receivable, net of allowance of $324 in 2022 and $325 in 2021	1,998		1,859
Tax Receivable	8		9
Unbilled Revenues, net of allowance of $11 in 2022 and $12 in 2021	217		217
Fuel	250		296
Materials and Supplies, net	484		448
Prepayments	331		63
Derivative Contracts	131		72
Regulatory Assets	491		364
Assets Held for Sale	—		2,060
Other	50		44
Total Current Assets	6,167		6,250
PROPERTY, PLANT AND EQUIPMENT	44,890		43,684
Less: Accumulated Depreciation and Amortization	(9,731)		(9,318)
Net Property, Plant and Equipment	35,159		34,366
NONCURRENT ASSETS
Regulatory Assets	3,754		3,605
Operating Lease Right-of-Use Assets	189		201
Long-Term Investments	577		541
Nuclear Decommissioning Trust (NDT) Fund	2,266		2,637
Long-Term Tax Receivable	47		47
Long-Term Receivable of Variable Interest Entity (VIE)	839		828
Rabbi Trust Fund	197		242
Intangibles	38		20
Derivative Contracts	59		28
Other	316		234
Total Noncurrent Assets	8,282		8,383
TOTAL ASSETS	$	49,608	$	48,999

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

Millions

(Unaudited)



	June 30, 2022		December 31, 2021
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES
Long-Term Debt Due Within One Year	$	1,200	$	700
Commercial Paper and Loans	3,313		3,519
Accounts Payable	1,214		1,315
Derivative Contracts	220		17
Accrued Interest	127		121
Accrued Taxes	39		67
Clean Energy Program	230		146
Obligation to Return Cash Collateral	731		179
Regulatory Liabilities	341		388
Liabilities Held for Sale	—		144
Other	519		476
Total Current Liabilities	7,934		7,072
NONCURRENT LIABILITIES
Deferred Income Taxes and Investment Tax Credits (ITC)	5,474		5,759
Regulatory Liabilities	2,403		2,497
Operating Leases	179		191
Asset Retirement Obligations	1,600		1,573
OPEB Costs	558		572
OPEB Costs of Servco	655		640
Accrued Pension Costs	226		318
Accrued Pension Costs of Servco	169		174
Environmental Costs	231		245
Derivative Contracts	30		17
Long-Term Accrued Taxes	69		100
Other	181		184
Total Noncurrent Liabilities	11,775		12,270
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 11)
CAPITALIZATION
LONG-TERM DEBT	16,471		15,219
STOCKHOLDERS’ EQUITY
Common Stock, no par, authorized 1,000 shares; issued, 2022 and 2021—534 shares	5,038		5,045
Treasury Stock, at cost, 2022 and 2021—37 and 30 shares, respectively	(1,382)		(896)
Retained Earnings	10,227		10,639
Accumulated Other Comprehensive Loss	(455)		(350)
Total Stockholders’ Equity	13,428		14,438
Total Capitalization	29,899		29,657
TOTAL LIABILITIES AND CAPITALIZATION	$	49,608	$	48,999

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Millions (Unaudited)



	Six Months Ended
	June 30,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	129	$	471
Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:
Depreciation and Amortization	552		663
Amortization of Nuclear Fuel	93		94
Losses on Asset Dispositions and Impairments	38		457
Emission Allowances and Renewable Energy Credit (REC) Compliance Accrual	40		82
Provision for Deferred Income Taxes (Other than Leases) and ITC	(385)		(205)
Non-Cash Employee Benefit Plan (Credits) Costs	(120)		(89)
Leveraged Lease (Income), (Gains) and Losses, Adjusted for Rents Received and Deferred Taxes	25		6
Net Realized and Unrealized (Gains) Losses on Energy Contracts and Other Derivatives	951		331

Cost of Removal	(63)		(60)
Net Change in Regulatory Assets and Liabilities	(188)		(24)
Net (Gains) Losses and (Income) Expense from NDT Fund	222		(158)
Net Change in Certain Current Assets and Liabilities:
Tax Receivable	1		56
Prepayments	(199)		(200)
Accrued Taxes	(98)		30
Cash Collateral	(1,244)		(289)
Obligation to Return Cash Collateral	552		3
Other Current Assets and Liabilities	130		(124)
Employee Benefit Plan Funding and Related Payments	(16)		(8)
Other	(64)		13
Net Cash Provided By (Used In) Operating Activities	356		1,049
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to Property, Plant and Equipment	(1,291)		(1,303)

Proceeds from Sales of Trust Investments	862		1,229
Purchases of Trust Investments	(876)		(1,223)
Proceeds from Sales of Long-Lived Assets	1,890		565
Other	(54)		(61)
Net Cash Provided By (Used In) Investing Activities	531		(793)
CASH FLOWS FROM FINANCING ACTIVITIES
Net Change in Commercial Paper and Loans	(956)		(563)
Proceeds from Short-Term Loans	2,000		1,250
Payment of Short-Term Loans	(1,250)		(300)
Issuance of Long-Term Debt	1,750		900
Redemption of Long-Term Debt	—		(1,384)
Payments for Share Repurchase Program	(500)		—
Cash Dividends Paid on Common Stock	(541)		(516)
Other	(7)		(71)
Net Cash Provided By (Used In) Financing Activities	496		(684)
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	1,383		(428)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	863		572
Cash, Cash Equivalents and Restricted Cash at End of Period	$	2,246	$	144
Supplemental Disclosure of Cash Flow Information:
Income Taxes Paid (Received)	$	325	$	143
Interest Paid, Net of Amounts Capitalized	$	276	$	279
Accrued Property, Plant and Equipment Expenditures	$	381	$	309

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Millions

(Unaudited)



	Common Stock			Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Income (Loss)
	Shs.	Amount		Shs.	Amount						Total
Balance as of March 31, 2022	534	$	4,978	(37)	$	(1,336)	$	10,366	$	(410)	$	13,598
Net Income	—	—		—	—		131		—		131
Other Comprehensive Income (Loss), net of tax (expense) benefit of $29	—	—		—	—		—		(45)		(45)
Comprehensive Income											86
Cash Dividends at $0.54 per share on Common Stock	—	—		—	—		(270)		—		(270)
Payments for Share Repurchase Program	—	50		—	(50)		—		—		—
Other	—	10		—	4		—		—		14
Balance as of June 30, 2022	534	$	5,038	(37)	$	(1,382)	$	10,227	$	(455)	$	13,428

Balance as of March 31, 2021	534	$	5,013	(30)	$	(902)	$	12,708	$	(542)	$	16,277
Net Loss	—	—		—	—		(177)		—		(177)
Other Comprehensive Income (Loss), net of tax (expense) benefit of $(12)	—	—		—	—		—		20		20
Comprehensive Loss											(157)
Cash Dividends at $0.51 per share on Common Stock	—	—		—	—		(258)		—		(258)
Other	—	13		—	3		—		—		16
Balance as of June 30, 2021	534	$	5,026	(30)	$	(899)	$	12,273	$	(522)	$	15,878



	Common Stock			Treasury Stock			Retained Earnings		Accumulated Other Comprehensive Income (Loss)
	Shs.	Amount		Shs.	Amount						Total
Balance as of December 31, 2021	534	$	5,045	(30)	$	(896)	$	10,639	$	(350)	$	14,438
Net Income	—	—		—	—		129		—		129
Other Comprehensive Income (Loss), net of tax (expense) benefit of $68	—	—		—	—		—		(105)		(105)
Comprehensive Income											24
Cash Dividends at $1.08 per share on Common Stock	—	—		—	—		(541)		—		(541)
Payments for Share Repurchase Program	—	—		(7)	(500)		—		—		(500)
Other	—	(7)		—	14		—		—		7
Balance as of June 30, 2022	534	$	5,038	(37)	$	(1,382)	$	10,227	$	(455)	$	13,428

Balance as of December 31, 2020	534	$	5,031	(30)	$	(861)	$	12,318	$	(504)	$	15,984
Net Income	—	—		—	—		471		—		471
Other Comprehensive Income (Loss), net of tax (expense) benefit of $12	—	—		—	—		—		(18)		(18)
Comprehensive Income											453
Cash Dividends at $1.02 per share on Common Stock	—	—		—	—		(516)		—		(516)
Other	—	(5)		—	(38)		—		—		(43)
Balance as of June 30, 2021	534	$	5,026	(30)	$	(899)	$	12,273	$	(522)	$	15,878

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

PUBLIC SERVICE ELECTRIC AND GAS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Millions

(Unaudited)



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
OPERATING REVENUES	$	1,668	$	1,514	$	3,952	$	3,587
OPERATING EXPENSES
Energy Costs	630		509		1,598		1,358
Operation and Maintenance	434		393		897		817
Depreciation and Amortization	227		231		468		472

Total Operating Expenses	1,291		1,133		2,963		2,647
OPERATING INCOME	377		381		989		940
Net Gains (Losses) on Trust Investments	(2)		—		(2)		1
Other Income (Deductions)	22		24		41		52
Net Non-Operating Pension and OPEB Credits (Costs)	71		66		141		132
Interest Expense	(107)		(101)		(210)		(199)
INCOME BEFORE INCOME TAXES	361		370		959		926
Income Tax Benefit (Expense)	(56)		(61)		(145)		(140)
NET INCOME	$	305	$	309	$	814	$	786

See disclosures regarding Public Service Electric and Gas Company included in the Notes to Condensed Consolidated Financial Statements.

Table of Contents

PUBLIC SERVICE ELECTRIC AND GAS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Millions

(Unaudited)



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
NET INCOME	$	305	$	309	$	814	$	786
Unrealized Gains (Losses) on Available-for-Sale Securities, net of tax (expense) benefit of $1, $0, $2 and $1 for the three and six months ended 2022 and 2021, respectively	(1)		1		(4)		(2)
COMPREHENSIVE INCOME	$	304	$	310	$	810	$	784

See disclosures regarding Public Service Electric and Gas Company included in the Notes to Condensed Consolidated Financial Statements.

Table of Contents

PUBLIC SERVICE ELECTRIC AND GAS COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

Millions

(Unaudited)



	June 30, 2022		December 31, 2021
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents	$	953	$	294
Accounts Receivable, net of allowance of $324 in 2022 and $325 in 2021	989		1,050


Unbilled Revenues, net of allowance of $11 in 2022 and $12 in 2021	217		217
Materials and Supplies, net	261		233
Prepayments	216		15
Regulatory Assets	491		364

Other	32		33
Total Current Assets	3,159		2,206
PROPERTY, PLANT AND EQUIPMENT	39,725		38,588
Less: Accumulated Depreciation and Amortization	(7,927)		(7,640)
Net Property, Plant and Equipment	31,798		30,948
NONCURRENT ASSETS
Regulatory Assets	3,754		3,605
Operating Lease Right-of-Use Assets	90		92
Long-Term Investments	164		181
Rabbi Trust Fund	35		43
Other	181		123
Total Noncurrent Assets	4,224		4,044
TOTAL ASSETS	$	39,181	$	37,198

See disclosures regarding Public Service Electric and Gas Company included in the Notes to Condensed Consolidated Financial Statements.

Table of Contents

PUBLIC SERVICE ELECTRIC AND GAS COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

Millions

(Unaudited)



	June 30, 2022		December 31, 2021
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES
Long-Term Debt Due Within One Year	$	500	$	—

Accounts Payable	697		571
Accounts Payable—Affiliated Companies	251		418
Accrued Interest	111		107
Clean Energy Program	230		146

Obligation to Return Cash Collateral	731		179
Regulatory Liabilities	341		388
Other	426		376
Total Current Liabilities	3,287		2,185
NONCURRENT LIABILITIES
Deferred Income Taxes and ITC	5,117		4,874
Regulatory Liabilities	2,403		2,497
Operating Leases	81		83
Asset Retirement Obligations	364		363
OPEB Costs	339		354
Accrued Pension Costs	78		132
Environmental Costs	178		191

Long-Term Accrued Taxes	7		6
Other	150		145
Total Noncurrent Liabilities	8,717		8,645
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 11)
CAPITALIZATION
LONG-TERM DEBT	11,794		11,795
STOCKHOLDER’S EQUITY
Common Stock; 150 shares authorized; issued and outstanding, 2022 and 2021—132 shares	892		892
Contributed Capital	1,170		1,170
Basis Adjustment	986		986
Retained Earnings	12,338		11,524
Accumulated Other Comprehensive Income (Loss)	(3)		1
Total Stockholder’s Equity	15,383		14,573
Total Capitalization	27,177		26,368
TOTAL LIABILITIES AND CAPITALIZATION	$	39,181	$	37,198

See disclosures regarding Public Service Electric and Gas Company included in the Notes to Condensed Consolidated Financial Statements.

Table of Contents

PUBLIC SERVICE ELECTRIC AND GAS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Millions

(Unaudited)



	Six Months Ended
	June 30,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	814	$	786
Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:
Depreciation and Amortization	468		472

Provision for Deferred Income Taxes and ITC	80		63
Non-Cash Employee Benefit Plan (Credits) Costs	(90)		(78)
Cost of Removal	(63)		(60)
Net Change in Regulatory Assets and Liabilities	(188)		(24)
Net Change in Certain Current Assets and Liabilities:
Accounts Receivable and Unbilled Revenues	11		35
Materials and Supplies	(27)		(10)
Prepayments	(201)		(190)
Accounts Payable	71		(62)
Accounts Receivable/Payable—Affiliated Companies, net	(133)		(138)
Obligation to Return Cash Collateral	552		3
Other Current Assets and Liabilities	52		(68)
Employee Benefit Plan Funding and Related Payments	(8)		(1)
Other	(26)		(48)
Net Cash Provided By (Used In) Operating Activities	1,312		680
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to Property, Plant and Equipment	(1,171)		(1,219)
Proceeds from Sales of Trust Investments	9		21
Purchases of Trust Investments	(8)		(15)
Solar Loan Investments	13		12
Other	3		7
Net Cash Provided By (Used In) Investing Activities	(1,154)		(1,194)
CASH FLOWS FROM FINANCING ACTIVITIES
Net Change in Commercial Paper and Loans	—		(100)
Issuance of Long-Term Debt	500		900
Redemption of Long-Term Debt	—		(434)

Other	(5)		(8)
Net Cash Provided By (Used In) Financing Activities	495		358
Net Increase (Decrease) In Cash, Cash Equivalents and Restricted Cash	653		(156)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	339		233
Cash, Cash Equivalents and Restricted Cash at End of Period	$	992	$	77
Supplemental Disclosure of Cash Flow Information:
Income Taxes Paid (Received)	$	104	$	150
Interest Paid, Net of Amounts Capitalized	$	200	$	190
Accrued Property, Plant and Equipment Expenditures	$	349	$	240

See disclosures regarding Public Service Electric and Gas Company included in the Notes to Condensed Consolidated Financial Statements.

Table of Contents

PUBLIC SERVICE ELECTRIC AND GAS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY

Millions

(Unaudited)



	Common Stock		Contributed Capital		Basis Adjustment		Retained Earnings		Accumulated Other Comprehensive Income (Loss)
											Total
Balance as of March 31, 2022	$	892	$	1,170	$	986	$	12,033	$	(2)	$	15,079
Net Income	—		—		—		305		—		305
Other Comprehensive Income (Loss), net of tax (expense) benefit of $1	—		—		—		—		(1)		(1)
Comprehensive Income											304

Balance as of June 30, 2022	$	892	$	1,170	$	986	$	12,338	$	(3)	$	15,383

Balance as of March 31, 2021	$	892	$	1,170	$	986	$	10,555	$	—	$	13,603
Net Income	—		—		—		309		—		309
Other Comprehensive Income (Loss), net of tax (expense) benefit of $0	—		—		—		—		1		1
Comprehensive Income											310


Balance as of June 30, 2021	$	892	$	1,170	$	986	$	10,864	$	1	$	13,913



	Common Stock		Contributed Capital		Basis Adjustment		Retained Earnings		Accumulated Other Comprehensive Income (Loss)
											Total
Balance as of December 31, 2021	$	892	$	1,170	$	986	$	11,524	$	1	$	14,573
Net Income	—		—		—		814		—		814
Other Comprehensive Income (Loss), net of tax (expense) benefit of $2	—		—		—		—		(4)		(4)
Comprehensive Income											810

Balance as of June 30, 2022	$	892	$	1,170	$	986	$	12,338	$	(3)	$	15,383

Balance as of December 31, 2020	$	892	$	1,170	$	986	$	10,078	$	3	$	13,129
Net Income	—		—		—		786		—		786
Other Comprehensive Income (Loss), net of tax (expense) benefit of $1	—		—		—		—		(2)		(2)
Comprehensive Income											784


Balance as of June 30, 2021	$	892	$	1,170	$	986	$	10,864	$	1	$	13,913

See disclosures regarding Public Service Electric and Gas Company included in the Notes to Condensed Consolidated Financial Statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

Note 1. Organization, Basis of Presentation and Significant Accounting Policies

Organization

Public Service Enterprise Group Incorporated (PSEG) is a public utility holding company that, acting through its wholly owned subsidiaries, is a predominantly regulated electric and gas utility and a carbon-free generation and infrastructure company. PSEG’s two reportable segments are:

•Public Service Electric and Gas Company (PSE&G)—which is a public utility engaged principally in the transmission of electricity and distribution of electricity and natural gas in certain areas of New Jersey. PSE&G is subject to regulation by the New Jersey Board of Public Utilities (BPU) and the Federal Energy Regulatory Commission (FERC). PSE&G also invests in regulated solar generation projects and energy efficiency and related programs in New Jersey, which are regulated by the BPU.

•PSEG Power LLC (PSEG Power)—which is an energy supply company that integrates the operations of its merchant nuclear generating assets with its fuel supply functions through competitive energy sales via its principal direct wholly owned subsidiaries. PSEG Power’s subsidiaries are subject to regulation by FERC, the Nuclear Regulatory Commission (NRC), the Environmental Protection Agency (EPA) and the states in which they operate.

PSEG’s other direct wholly owned subsidiaries are: PSEG Energy Holdings L.L.C. (Energy Holdings), which holds investments in offshore wind ventures and legacy lease investments; PSEG Long Island LLC (PSEG LI), which operates the Long Island Power Authority’s (LIPA) electric transmission and distribution (T&D) system under an Operations Services Agreement (OSA); and PSEG Services Corporation (Services), which provides certain management, administrative and general services to PSEG and its subsidiaries at cost.

In May 2021, PSEG Power Ventures LLC (Power Ventures), a direct wholly owned subsidiary of PSEG Power, entered into a purchase agreement with Quattro Solar, LLC, an affiliate of LS Power, relating to the sale by Power Ventures of 100% of its ownership interest in PSEG Solar Source LLC (Solar Source) including its related assets and liabilities. The transaction closed in June 2021.

In August 2021, PSEG entered into two agreements to sell PSEG Power’s 6,750 megawatts (MW) fossil generating portfolio to newly formed subsidiaries of ArcLight Energy Partners Fund VII, L.P., a fund controlled by ArcLight Capital Partners, LLC. In February 2022, PSEG completed the sale of this fossil generating portfolio. See Note 4. Early Plant Retirements/Asset Dispositions and Impairments for more details on the transactions.

Basis of Presentation

The respective financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) applicable to Quarterly Reports on Form 10-Q. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting guidance generally accepted in the United States (GAAP) have been condensed or omitted pursuant to such rules and regulations. These Condensed Consolidated Financial Statements and Notes to Condensed Consolidated Financial Statements (Notes) should be read in conjunction with, and update and supplement matters discussed in, the Annual Report on Form 10-K for the year ended December 31, 2021.

The unaudited condensed consolidated financial information furnished herein reflects all adjustments which are, in the opinion of management, necessary to fairly state the results for the interim periods presented. All such adjustments are of a normal recurring nature. All significant intercompany accounts and transactions are eliminated in consolidation. The year-end Condensed Consolidated Balance Sheets were derived from the audited Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2021.

Significant Accounting Policies

Cash, Cash Equivalents and Restricted Cash

The following provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts for the beginning (December 31, 2021) and ending periods shown in the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022. Restricted cash consists primarily of deposits received related to various construction projects at PSE&G.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents



	PSE&G		Other (A)		Consolidated
	Millions
As of December 31, 2021
Cash and Cash Equivalents	$	294	$	524	$	818
Restricted Cash in Other Current Assets	28		—		28
Restricted Cash in Other Noncurrent Assets	17		—		17
Cash, Cash Equivalents and Restricted Cash	$	339	$	524	$	863

As of June 30, 2022
Cash and Cash Equivalents	$	953	$	1,254	$	2,207
Restricted Cash in Other Current Assets	22		—		22
Restricted Cash in Other Noncurrent Assets	17		—		17
Cash, Cash Equivalents and Restricted Cash	$	992	$	1,254	$	2,246

(A)Includes amounts applicable to PSEG (parent company), PSEG Power, Energy Holdings and Services.

Property, Plant and Equipment

In February 2022, the NRC issued an order related to its review of the subsequent license renewal (SLR) application for the Peach Bottom nuclear units. While the NRC had previously granted the SLR to the Peach Bottom units, the NRC was responding to pending motions that had not previously been adjudicated. In its decision, the NRC concluded that the previous environmental review required by the National Environmental Policy Act (NEPA) was incomplete because it did not adequately address environmental impacts resulting from extending the units’ licenses by 20 years. As a result, at the direction of the NRC, the NRC staff changed the expiration dates for the licenses back to 2033 and 2034, until the completion of the NEPA analysis. The NRC directed, however, that the subsequently renewed licenses themselves remain in effect. The NRC also stated that it fully expects that the staff will complete its update of the NEPA analysis before 2033. As such, at this time, PSEG has not adjusted the useful lives or the assumed shutdown probabilities assigned to the Asset Retirement Obligations (ARO) of the units as PSEG believes that the licenses will be updated to reflect the approved 2053 and 2054 expiration dates within the current license period. PSEG will continue to monitor this matter for further developments and any change to the estimated useful lives and ARO probabilities could have an adverse financial statement impact, which may be material.

Note 2. Recent Accounting Standards

New Standards Issued and Adopted

Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options—Accounting Standards Update (ASU) 2021-04

This accounting standard clarifies an issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options that remain equity-classified after modification or exchange. It provides guidance on how an issuer would determine whether it should recognize the modification or exchange as an adjustment to equity or an expense.

The standard is effective for fiscal years beginning after December 15, 2021. PSEG adopted this standard prospectively on January 1, 2022. Adoption of this standard did not have an impact on the financial statements of PSEG and PSE&G.

Lessors-Certain Leases with Variable Lease Payments—ASU 2021-05

This accounting standard improves an area of the lease guidance related to a lessor’s accounting for certain leases with variable lease payments. It amends the lessor lease classification requirements and, as a result, a lessor is now required to classify and account for a lease with variable payments as an operating lease if (i) the lease would have been classified as a sales-type lease or a direct financing lease and (ii) the lessor would have otherwise recognized a day-one loss. A day-one loss or profit is not recognized under operating lease accounting.

Government Assistance —Disclosures by Business Entities about Government Assistance—ASU 2021-10

This accounting standard increases transparency in financial reporting by requiring business entities to disclose, in notes to

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

financial statements, certain information when they (i) have received government assistance and (ii) use a grant or contribution accounting model by analogy to other accounting guidance.

New Standards Issued But Not Yet Adopted as of June 30, 2022

Business Combinations—Accounting for Contract Assets and Contract Liabilities from Contracts with Customers—ASU 2021-08

This accounting standard amends the business combination guidance by requiring entities to apply the revenue recognition standard to recognize and measure contract assets and contract liabilities in a business combination.

The standard is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted. Amendments in this standard will be applied prospectively to business combinations occurring on or after the effective date of the amendments. PSEG is currently analyzing the impact of this standard on its financial statements.

Derivative and Hedging: Fair Value Hedging-Portfolio Layer Method—ASU 2022-01

This accounting standard amends the derivative and hedging guidance on fair value hedge accounting of interest rate risk for portfolios of financial assets. The standard allows entities to expand their use of the portfolio layer method (previously known as the last of layer method) for fair value hedges of interest rate risk. Under this guidance, entities can now hedge all financial assets under the portfolio layer method and designate multiple hedged layers within a single closed portfolio. The standard also clarifies the accounting for fair value hedge basis adjustments in portfolio layer hedges and how these adjustments should be disclosed.

The standard is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted. Amendments in this standard will be applied: (i) prospectively to designation of multiple hedged layers of a single closed portfolio, (ii) on a modified retrospective basis for amendments related to hedge basis adjustments under the portfolio layer method, and (iii) on a prospective or retrospective basis for the amendments related to disclosures. PSEG is currently analyzing the impact of this standard on its financial statements.

Financial Instruments—Credit Losses: Troubled Debt Restructurings and Vintage Disclosures—ASU 2022-02

This accounting standard eliminates the accounting guidance for troubled debt restructurings by creditors that have adopted the current expected credit losses guidance and enhances the disclosure requirements for certain loan refinancings and restructurings by creditors made to borrowers experiencing financial difficulty. It also amends the guidance on vintage disclosures to require disclosure of current-period gross write-offs by year of origination for financing receivables and net investment in leases.

The standard is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted. Amendments in this standard will be applied prospectively, except for the transition method related to the recognition and measurement of troubled debt restructurings where there is an option to apply a modified retrospective transition method. PSEG is currently analyzing the impact of this standard on its financial statements.

Fair Value Measurement: Equity Securities Subject to Contractual Sale Restrictions—ASU 2022-03

This accounting standard improves financial reporting for investors and other financial statement users by increasing comparability of financial information across reporting entities that have investments in equity securities measured at fair value that are subject to contractual restrictions preventing the sale of those securities. It clarifies that a contractual sale restriction should not be considered in measuring fair value. It also requires entities with investments in equity securities subject to contractual sale restrictions to disclose certain qualitative and quantitative information about such securities.

The standard is effective for fiscal years beginning after December 15, 2023 and early adoption is permitted. Amendments in this standard will be applied prospectively. PSEG is currently analyzing the impact of this standard on its financial statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

Note 3. Revenues

Nature of Goods and Services

The following is a description of principal activities by which PSEG and its subsidiaries generate their revenues.

PSE&G

Revenues from Contracts with Customers

Electric and Gas Distribution and Transmission Revenues—PSE&G sells gas and electricity to customers under default commodity supply tariffs. PSE&G’s regulated electric and gas default commodity supply and distribution services are separate tariffs which are satisfied as the product(s) and/or service(s) are delivered to the customer. The electric and gas commodity and delivery tariffs are recurring contracts in effect until modified through the regulatory approval process as appropriate. Revenue is recognized over time as the service is rendered to the customer. Included in PSE&G’s regulated revenues are unbilled electric and gas revenues which represent the estimated amount customers will be billed for services rendered from the most recent meter reading to the end of the respective accounting period.

PSE&G’s transmission revenues are earned under a separate tariff using a FERC-approved annual formula rate mechanism. The performance obligation of transmission service is satisfied and revenue is recognized as it is provided to the customer. The formula rate mechanism provides for an annual filing of an estimated revenue requirement with rates effective January 1 of each year and a true-up to that estimate based on actual revenue requirements. The true-up mechanism is an alternative revenue which is outside the scope of revenue from contracts with customers.

Other Revenues from Contracts with Customers

Other revenues from contracts with customers, which are not a material source of PSE&G revenues, are generated primarily from appliance repair services and solar generation projects. The performance obligations under these contracts are satisfied and revenue is recognized as control of products is delivered or services are rendered.

Payment for services rendered and products transferred are typically due on average within 30 days of delivery.

Revenues Unrelated to Contracts with Customers

Other PSE&G revenues unrelated to contracts with customers are derived from alternative revenue mechanisms recorded pursuant to regulatory accounting guidance. These revenues, which include the Conservation Incentive Program (CIP), green energy program true-ups and transmission formula rate true-ups, are not a material source of PSE&G revenues.

Other

Revenues from Contracts with Customers

Electricity and Related Products— PSEG Power sells to the Independent System Operators (ISOs) energy and ancillary services which are separately transacted in the day-ahead or real-time energy markets. The energy and ancillary services performance obligations are typically satisfied over time as delivered and revenue is recognized accordingly. In addition, wholesale load contracts have been executed in the different ISO regions for the bundled supply of energy, capacity, renewable energy credits and ancillary services representing PSEG Power’s performance obligations. Revenue for these contracts is recognized over time as the bundled service is provided to the customer. Transaction terms generally run from several months to three years. PSEG generally reports electricity sales and purchases conducted with those individual ISOs net on an hourly basis in either Operating Revenues or Energy Costs in its Condensed Consolidated Statements of Operations. The classification depends on the net hourly activity.

PSEG Power enters into capacity sales and capacity purchases through the ISOs. The transactions are reported on a net basis dependent on PSEG Power’s monthly net sale or purchase position through the individual ISOs. The performance obligations with the ISOs are satisfied over time upon delivery of the capacity and revenue is recognized accordingly. In addition to capacity sold through the ISOs, PSEG Power sells capacity through bilateral contracts and the related revenue is reported on a gross basis and recognized over time upon delivery of the capacity.

PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants have been awarded Zero Emission Certificates (ZECs) by the BPU through May 2025. These nuclear plants are expected to receive ZEC revenue from the electric distribution companies (EDCs) in New Jersey. PSEG Power recognizes revenue when the units generate electricity, which is when the performance obligation is satisfied. These revenues are included in PJM Sales in the following tables. See Note 4. Early Plant Retirements/Asset Dispositions and Impairments for additional information.

Gas Contracts—PSEG Power sells wholesale natural gas, primarily through an index based full-requirements Basic Gas Supply Service (BGSS) contract with PSE&G to meet the gas supply requirements of PSE&G’s customers. The BGSS contract remains

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

in effect unless terminated by either party with a two-year notice. Based upon the availability of natural gas, storage and pipeline capacity beyond PSE&G’s daily needs, PSEG Power also sells gas and pipeline capacity to other counterparties under bilateral contracts. The performance obligation is primarily the delivery of gas which is satisfied over time. Revenue is recognized as gas is delivered or pipeline capacity is released.

PSEG LI Contract—PSEG LI has a contract with LIPA which generates revenues. PSEG LI’s subsidiary, Long Island Electric Utility Servco, LLC (Servco) records costs which are recovered from LIPA and records the recovery of those costs as revenues when Servco is a principal in the transaction.

Other Revenues from Contracts with Customers

Prior to the sale of Solar Source in June 2021, PSEG Power entered into bilateral contracts to sell solar power and solar renewable energy certificates (SRECs) from its solar facilities. Contract terms ranged from 15 to 30 years. The performance obligations were generally solar power and SRECs which were transferred to customers upon generation. Revenue was recognized upon generation of the solar power. These performance obligations were transferred as part of the sale of Solar Source. See Note 4. Early Plant Retirements/Asset Dispositions and Impairments.

PSEG Power has entered into long-term contracts with LIPA for energy management and fuel procurement services. Revenue is recognized over time as services are rendered.

Revenues Unrelated to Contracts with Customers

PSEG Power’s revenues unrelated to contracts with customers include electric, gas and certain energy-related transactions accounted for in accordance with Derivatives and Hedging accounting guidance. See Note 13. Financial Risk Management Activities for further discussion. Prior to the sale of Solar Source, PSEG Power was also a party to solar contracts that qualified as leases and were accounted for in accordance with lease accounting guidance. These performance obligations were transferred as part of the sale of Solar Source. See Note 4. Early Plant Retirements/Asset Dispositions and Impairments.

Energy Holdings generates lease revenues which are recorded pursuant to lease accounting guidance.

Disaggregation of Revenues



	PSE&G		Other (A)		Eliminations		Consolidated
	Millions
Three Months Ended June 30, 2022
Revenues from Contracts with Customers
Electric Distribution	$	836	$	—	$	—	$	836
Gas Distribution	317		—		—		317
Transmission	396		—		—		396
Electricity and Related Product Sales
PJM
Third-Party Sales	—		475		—		475
Sales to Affiliates	—		35		(35)		—
New York ISO	—		—		—		—
ISO New England	—		3		—		3
Gas Sales
Third-Party Sales	—		77		—		77
Sales to Affiliates	—		202		(202)		—
Other Revenues from Contracts with Customers (B)	94		150		—		244
Total Revenues from Contracts with Customers	1,643		942		(237)		2,348
Revenues Unrelated to Contracts with Customers (C)	25		(297)		—		(272)
Total Operating Revenues	$	1,668	$	645	$	(237)	$	2,076

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents



	PSE&G		Other (A)		Eliminations		Consolidated
	Millions
Six Months Ended June 30, 2022
Revenues from Contracts with Customers
Electric Distribution	$	1,556	$	—	$	—	$	1,556
Gas Distribution	1,364		—		(1)		1,363
Transmission	788		—		—		788
Electricity and Related Product Sales
PJM
Third-Party Sales	—		1,057		—		1,057
Sales to Affiliates	—		91		(91)		—
New York ISO	—		88		—		88
ISO New England	—		89		—		89
Gas Sales
Third-Party Sales	—		213		—		213
Sales to Affiliates	—		728		(728)		—
Other Revenues from Contracts with Customers (B)	179		296		(1)		474
Total Revenues from Contracts with Customers	3,887		2,562		(821)		5,628
Revenues Unrelated to Contracts with Customers (C)	65		(1,304)		—		(1,239)
Total Operating Revenues	$	3,952	$	1,258	$	(821)	$	4,389



	PSE&G		Other (A)		Eliminations		Consolidated
	Millions
Three Months Ended June 30, 2021
Revenues from Contracts with Customers
Electric Distribution	$	765	$	—	$	—	$	765
Gas Distribution	256		—		(2)		254
Transmission	405		—		—		405
Electricity and Related Product Sales
PJM
Third-Party Sales	—		408		—		408
Sales to Affiliates	—		62		(62)		—
New York ISO	—		49		—		49
ISO New England	—		18		—		18
Gas Sales
Third-Party Sales	—		28		—		28
Sales to Affiliates	—		110		(110)		—
Other Revenues from Contracts with Customers (B)	81		157		(1)		237
Total Revenues from Contracts with Customers	1,507		832		(175)		2,164
Revenues Unrelated to Contracts with Customers (C)	7		(297)		—		(290)
Total Operating Revenues	$	1,514	$	535	$	(175)	$	1,874

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents



	PSE&G		Other (A)		Eliminations		Consolidated
	Millions
Six Months Ended June 30, 2021
Revenues from Contracts with Customers
Electric Distribution	$	1,472	$	—	$	—	$	1,472
Gas Distribution	1,152		—		(5)		1,147
Transmission	804		—		—		804
Electricity and Related Product Sales
PJM
Third-Party Sales	—		879		—		879
Sales to Affiliates	—		150		(150)		—
New York ISO	—		97		—		97
ISO New England	—		69		—		69
Gas Sales
Third-Party Sales	—		88		—		88
Sales to Affiliates	—		520		(520)		—
Other Revenues from Contracts with Customers (B)	156		308		(2)		462
Total Revenues from Contracts with Customers	3,584		2,111		(677)		5,018
Revenues Unrelated to Contracts with Customers (C)	3		(258)		—		(255)
Total Operating Revenues	$	3,587	$	1,853	$	(677)	$	4,763

(A)Other consists of revenues at PSEG Power, Energy Holdings and PSEG LI.

(B)Includes primarily revenues from appliance repair services and the sale of SRECs at auction at PSE&G, PSEG Power’s energy management fee with LIPA and PSEG LI’s OSA with LIPA in Other. Other also includes PSEG Power’s solar power projects in 2021.

(C)Includes alternative revenues at PSE&G primarily from the CIP program in 2022 and derivative contracts and lease contracts in 2022 and 2021 in Other.

Contract Balances

PSE&G

PSE&G did not have any material contract balances (rights to consideration for services already provided or obligations to provide services in the future for consideration already received) as of June 30, 2022 and December 31, 2021. Substantially all of PSE&G’s accounts receivable and unbilled revenues result from contracts with customers that are priced at tariff rates. Allowances represented approximately 22% and 21% of accounts receivable (including unbilled revenues) as of June 30, 2022 and December 31, 2021, respectively.

Accounts Receivable—Allowance for Credit Losses

PSE&G’s accounts receivable, including unbilled revenues, is primarily comprised of utility customer receivables for the provision of electric and gas service and appliance services, and are reported on the balance sheet as gross outstanding amounts adjusted for an allowance for credit losses. The allowance for credit losses reflects PSE&G’s best estimate of losses on the account balances. The allowance is based on PSE&G’s projection of accounts receivable aging, historical experience, economic factors and other currently available evidence, including the estimated impact of the ongoing coronavirus pandemic (COVID-19) on the outstanding balances as of June 30, 2022. PSE&G’s electric bad debt expense is recoverable through its Societal Benefits Clause mechanism. As of June 30, 2022, PSE&G had a deferred balance of $137 million from electric bad debts recorded as a Regulatory Asset. In addition, PSE&G had deferred incremental gas bad debt expense of $63 million as a Regulatory Asset for future regulatory recovery due to the impact of the ongoing pandemic. See Note 6. Rate Filings for additional information.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

The following provides a reconciliation of PSE&G’s allowance for credit losses for the three months and six months ended June 30, 2022 and 2021:









		Three Months Ended
		June 30, 2022
		Millions
Balance as of March 31, 2022		$	351
Utility Customer and Other Accounts
	Provision	6
	Write-offs, net of Recoveries of $14 million	(22)
Balance as of June 30, 2022		$	335

		Six Months Ended
		June 30, 2022
		Millions
Balance as of January 1, 2022		$	337
Utility Customer and Other Accounts
	Provision	39
	Write-offs, net of Recoveries of $22 million	(41)
Balance as of June 30, 2022		$	335









		Three Months Ended
		June 30, 2021
		Millions
Balance as of March 31, 2021		$	239
Utility Customer and Other Accounts
	Provision	34
	Write-offs, net of Recoveries of $5 million	(13)
Balance as of June 30, 2021		$	260

		Six Months Ended
		June 30, 2021
		Millions
Balance as of January 1, 2021		$	206
Utility Customer and Other Accounts
	Provision	78
	Write-offs, net of Recoveries of $7 million	(24)
Balance as of June 30, 2021		$	260

Other

PSEG Power generally collects consideration upon satisfaction of performance obligations, and therefore, PSEG Power had no material contract balances as of June 30, 2022 and December 31, 2021.

PSEG Power’s accounts receivable include amounts resulting from contracts with customers and other contracts which are out of scope of accounting guidance for revenues from contracts with customers. The majority of these accounts receivable are subject to master netting agreements. As a result, accounts receivable resulting from contracts with customers and receivables unrelated to contracts with customers are netted within Accounts Receivable and Accounts Payable on the Condensed Consolidated Balance Sheets.

PSEG Power’s accounts receivable consist mainly of revenues from wholesale load contracts and capacity sales which are executed in the different ISO regions. PSEG Power also sells energy and ancillary services directly to ISOs and other counterparties. In the wholesale energy markets in which PSEG Power operates, payment for services rendered and products transferred are typically due within 30 days of delivery. As such, there is little credit risk associated with these receivables. PSEG Power did not record an allowance for credit losses for these receivables as of June 30, 2022 or December 31, 2021.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

PSEG Power monitors the status of its counterparties on an ongoing basis to assess whether there are any anticipated credit losses.

PSEG LI did not have any material contract balances as of June 30, 2022 and December 31, 2021.

Remaining Performance Obligations under Fixed Consideration Contracts

PSEG primarily records revenues as allowed by the guidance, which states that if an entity has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date, the entity may recognize revenue in the amount to which the entity has a right to invoice. PSEG has future performance obligations under contracts with fixed consideration as follows:

As previously stated, capacity transactions with ISOs are reported on a net basis dependent on PSEG Power’s monthly net sale or purchase position through the individual ISOs.

Capacity Revenues from the PJM Annual Base Residual and Incremental Auctions—The Base Residual Auction is generally conducted annually three years in advance of the operating period. The 2022/2023 auction was held in June 2021 and the 2023/2024 auction was held in June 2022. PSEG Power expects to realize the following average capacity prices resulting from the base and incremental auctions, including unit specific bilateral contracts for previously cleared capacity obligations.



Delivery Year	$ per MW-Day	MW Cleared
June 2022 to May 2023	$97	3,300
June 2023 to May 2024	$49	3,700

Bilateral capacity contracts—Capacity obligations pursuant to contract terms through 2029 are anticipated to result in revenues totaling $47 million.

Amended OSA—In April 2022, PSEG LI entered into an amended OSA with LIPA. The OSA remains a 12-year services contract ending in 2025 with annual fixed and variable components. The fixed fee for the provision of services thereunder in 2022 is approximately $40 million and is updated each year based on the change in the Consumer Price Index.

Note 4. Early Plant Retirements/Asset Dispositions and Impairments

Nuclear

In April 2019, PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants were awarded ZECs by the BPU. Pursuant to a process established by the BPU, ZECs are purchased from selected nuclear plants and recovered through a non-bypassable distribution charge in the amount of $0.004 per kilowatt-hour (KWh) used (which is equivalent to approximately $10 per megawatt hour (MWh) generated in payments to selected nuclear plants (ZEC payment)). Each nuclear plant received ZEC revenue for approximately three years, through May 2022. That first eligibility period related to the award of ZECs from the April 2019 BPU Order has concluded.

In April 2021, PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants were awarded ZECs for the three-year eligibility period starting June 2022 at the same approximate $10 per MWh received during the prior ZEC period through May 2022 referenced above. As a result, each nuclear plant is receiving ZEC revenue for an additional three years starting June 2022. The terms and conditions of this April 2021 ZEC award are the same as the ZEC period through May 2022.

The award of ZECs attaches certain obligations, including an obligation to repay the ZECs in the event that a plant ceases operations during the period that it was awarded ZECs, subject to certain exceptions specified in the ZEC legislation. PSEG Power has and will continue to recognize revenue monthly as the nuclear plants generate electricity and satisfy their performance obligations. Further, the ZEC payment may be adjusted by the BPU at any time to offset environmental or fuel diversity payments that a selected nuclear plant may receive from another source. For instance, the New Jersey Division of Rate Counsel (New Jersey Rate Counsel), in written comments filed with the BPU, has advocated for the BPU to offset market benefits resulting from New Jersey’s rejoining the Regional Greenhouse Gas Initiative from the ZEC payment. PSEG intends to vigorously defend against these arguments. Due to its preliminary nature, PSEG cannot predict the outcome of this matter.

In May 2021, the New Jersey Rate Counsel filed an appeal with the New Jersey Appellate Division of the BPU’s April 2021 decision. PSEG cannot predict the outcome of this matter.

In the event that (i) the ZEC program is overturned or is otherwise materially adversely modified through legal process; or (ii) any of the Salem 1, Salem 2 and Hope Creek plants is not sufficiently valued for its environmental, fuel diversity or resilience attributes in future periods and does not otherwise experience a material financial change that would remove the need for such

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

attributes to be sufficiently valued, PSEG Power will take all necessary steps to cease to operate all of these plants. Alternatively, even with sufficient valuation of these attributes, if the financial condition of the plants is materially adversely impacted by changes in commodity prices, FERC’s changes to the capacity market construct (absent sufficient capacity revenues provided under a program approved by the BPU in accordance with a FERC-authorized capacity mechanism), or, in the case of the Salem nuclear plants, decisions by the EPA and state environmental regulators regarding the implementation of Section 316(b) of the Clean Water Act (CWA) and related state regulations, or other factors, PSEG Power will take all necessary steps to cease to operate all of these plants and will incur associated costs and accounting charges. These may include, among other things, one-time impairment charges or accelerated Depreciation and Amortization Expense on the remaining carrying value of the plants, potential penalties associated with the early termination of capacity obligations and fuel contracts, accelerated asset retirement costs, severance costs, environmental remediation costs and, in certain circumstances potential additional funding of the Nuclear Decommissioning Trust Fund, which would result in a material adverse impact on PSEG’s results of operations.

Non-Nuclear

In May 2021, Power Ventures, a direct wholly owned subsidiary of PSEG Power, entered into a purchase agreement with Quattro Solar, LLC, an affiliate of LS Power, relating to the sale by Power Ventures of 100% of its ownership interest in Solar Source including its related assets and liabilities. The transaction closed in June 2021. As a result of the sale, PSEG Power recorded a pre-tax gain on sale of approximately $63 million, which is inclusive of the recognition of previously deferred unamortized investment tax credits (ITC) of $185 million, and income tax expense of approximately $62 million primarily due to the recapture of ITC on units that operated for less than five years.

In June 2021, as a result of the review of PSEG Power’s fossil generating assets and the launch in the fourth quarter of 2020 of an associated marketing process for their disposition, PSEG Power performed an impairment assessment of its PJM, NYISO and ISO NE asset groupings. It demonstrated that neither the ISO NE asset grouping’s probability weighted aggregation of undiscounted cash flows nor its fair value exceeded its carrying value as of June 30, 2021. This indicated that an impairment existed and PSEG Power recorded a pre-tax charge of approximately $519 million.

In August 2021, PSEG entered into two agreements to sell PSEG Power’s 6,750 MW fossil generating portfolio, one agreement for the sale of assets in New Jersey and Maryland and another agreement for the sale of assets located in New York and Connecticut, to newly formed subsidiaries of ArcLight Energy Partners Fund VII, L.P., a fund controlled by ArcLight Capital Partners, LLC for aggregate consideration of approximately $1,920 million. In February 2022, PSEG completed the sale of this fossil generating portfolio. PSEG Power has retained ownership of certain assets and liabilities excluded from the transactions primarily related to obligations under certain environmental regulations, including possible remediation obligations under the New Jersey Industrial Site Recovery Act and the Connecticut Transfer Act. The amounts for any such environmental remediation are not currently estimable, but may be material.

In 2021, PSEG had recorded a pre-tax impairment loss on sale of approximately $2,691 million (inclusive of the $519 million recorded in June 2021) as the purchase price was lower than the carrying value. As defined in each agreement, further adjustments were required as a result of purchase price and working capital adjustments, including an adjustment for positive or negative cash flow of the fossil generating assets based on actual performance starting after December 31, 2021 through the respective closing dates. As a result, in 2022, PSEG Power recorded an additional pre-tax impairment of approximately $43 million. Further amounts may be recorded as a result of any additional purchase price or working capital adjustments as defined in each agreement; however, these adjustments are not expected to be material.

Note 5. Variable Interest Entities (VIEs)

VIE for which PSEG LI is the Primary Beneficiary

PSEG LI consolidates Servco, a marginally capitalized VIE, which was created for the purpose of operating LIPA’s T&D system in Long Island, New York as well as providing administrative support functions to LIPA. PSEG LI is the primary beneficiary of Servco because it directs the operations of Servco, the activity that most significantly impacts Servco’s economic performance and it has the obligation to absorb losses of Servco that could potentially be significant to Servco. Such losses would be immaterial to PSEG.

Pursuant to the OSA, Servco’s operating costs are paid entirely by LIPA, and therefore, PSEG LI’s risk is limited related to the activities of Servco. PSEG LI has no current obligation to provide direct financial support to Servco. In addition to payment of Servco’s operating costs as provided for in the OSA, PSEG LI receives an annual contract management fee. PSEG LI’s annual contractual management fee, in certain situations, could be partially offset by Servco’s annual storm costs not approved by the

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

Federal Emergency Management Agency, limited contingent liabilities and penalties for failing to meet certain performance metrics.

For transactions in which Servco acts as principal and controls the services provided to LIPA, such as transactions with its employees for labor and labor-related activities, including pension and OPEB-related transactions, Servco records revenues and the related pass-through expenditures separately in Operating Revenues and Operation and Maintenance (O&M) Expense, respectively. Servco recorded $129 million for each of the three months ended June 30, 2022 and 2021 and $252 million for each of the six months ended June 30, 2022 and 2021, of O&M costs, the full reimbursement of which was reflected in Operating Revenues. For transactions in which Servco acts as an agent for LIPA, it records revenues and the related expenses on a net basis, resulting in no impact on PSEG’s Condensed Consolidated Statement of Operations.

VIE for which PSEG is not the Primary Beneficiary

PSEG holds a 25% equity interest in Ocean Wind JV HoldCo, LLC (OWH), which holds the Ocean Wind 1 project that is expected to achieve full commercial operation in 2025. OWH is considered a VIE since its equity investments at risk are not sufficient to permit this entity to finance its activities without additional subordinated financial support. Since PSEG does not have voting control or the power to direct the activities of OWH that most significantly impact its economic performance, PSEG has determined that it is not the primary beneficiary and therefore accounts for this investment under the equity method. As of June 30, 2022 and December 31, 2021, PSEG’s carrying amount of its investment in OWH was $165 million and $111 million, respectively, which is included in Long-Term Investments on PSEG’s Condensed Consolidated Balance Sheets. PSEG’s maximum exposure to loss is limited to the carrying amount of its investment and additional planned funding of approximately $100 million to support continued project development to its final investment decision. At that time, if PSEG chooses not to proceed with the project, Ørsted North America Inc. has the option to repurchase PSEG’s 25% equity interest in order to proceed with the project.

Note 6. Rate Filings

This Note should be read in conjunction with Note 7. Regulatory Assets and Liabilities to the Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2021.

In addition to items previously reported in the Annual Report on Form 10-K, significant regulatory orders received and currently pending rate filings with the BPU or FERC are as follows:

Basic Generation Service (BGS)—In January 2022, the BPU approved changes to BGS rates as a result of the FERC-approved changes to transmission charges, primarily as a result of the decrease in PSE&G’s transmission formula rate return on equity. PSE&G’s BGS customers are being credited over a 12-month period effective February 1, 2022.

BGSS—In April 2022, the BPU gave final approval to PSE&G’s request to maintain the current BGSS rate of approximately 41 cents per therm which had been provisionally approved effective February 1, 2022.

In June 2022, PSE&G made its annual BGSS filing with the BPU requesting to increase its BGSS rate to approximately 65 cents per therm, effective October 1, 2022. This matter is pending.

CIP—In June 2022, the BPU provisionally approved PSE&G’s filing to recover over two years approximately $52 million of deficient electric revenues, with approximately $18 million approved for recovery for the first year starting on the effective date of June 15, 2022.

In June 2022, PSE&G filed its initial gas CIP cost recovery petition seeking BPU approval to recover estimated deficient gas revenues of approximately $53 million. The filing is based on a twelve month period ending September 30, 2022, with actual results through April 2022 and forecasted amounts through September 2022. The revenue deficiency is the result of lower estimated revenues as compared to a baseline established in PSE&G’s most recent distribution base rate proceeding. PSE&G expects to recover its $53 million request over a one year period. New rates are proposed to be effective October 1, 2022. This matter is pending.

Clean Energy Future (CEF)-Energy Cloud (EC) or Advanced Metering Infrastructure (AMI) Initiative—As a result of PSE&G’s approved CEF-EC filing in 2021 to provide smart meters to its electric customers, PSE&G expects to retire most of its current non-AMI electric meters by the end of 2024. As of June 30, 2022 and December 31, 2021, the net book value of these meters was $183 million and $192 million, respectively. The filing also approved the recovery on and of the stranded costs associated with the retirement of the existing meters.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

Community Solar Energy Pilot (CSEP) Program, a New Component of the Green Program Recovery Charges (GPRC)—In June 2022, the BPU approved PSE&G’s filing to recover its initial electric revenue requirement of $0.4 million related to the CSEP Program with the new rate effective July 1, 2022.

COVID-19 Deferral—PSE&G continues to make quarterly filings as required by the BPU and has recorded a Regulatory Asset as of June 30, 2022 of approximately $118 million for net incremental costs, including $63 million for incremental gas bad debt expense associated with customer accounts receivable, which PSE&G expects are probable of recovery under the BPU order.

Energy Strong II—In May 2022, the BPU approved PSE&G’s updated filing for annual electric and gas revenue increases of $17 million and $1 million, respectively, effective June 1, 2022. These increases represent the return on and of Energy Strong II investments placed in service through January 2022.

Gas System Modernization Program (GSMP II)—In May 2022, the BPU approved PSE&G’s filing for an annual gas revenue increase of $25 million effective June 1, 2022. This increase represents the return on and of GSMP II investments placed in service through February 2022.

In June 2022, PSE&G filed its next semi-annual GSMP II cost recovery petition seeking BPU approval to recover in gas base rates an estimated annual revenue increase of approximately $28 million effective December 1, 2022. The increase represents the return on and of GSMP II investments placed in service through August 31, 2022. This matter is pending.

GPRC—In June 2022, the BPU approved PSE&G’s updated filing for an annual electric revenue decrease of approximately $4 million and a gas revenue increase of approximately $1 million, with new rates effective June 15, 2022.

In July 2022, PSE&G filed its 2022 GPRC cost recovery petition requesting BPU approval to recover increases of $110 million and $8 million in annual electric and gas revenues, respectively. This matter is pending.

Remediation Adjustment Charge (RAC)—In March 2022, PSE&G filed its RAC 29 petition with the BPU seeking recovery of $44 million of net Manufactured Gas Plant (MGP) remediation expenditures incurred from August 1, 2020 through July 31, 2021. This matter is pending.

Solar Successor Incentive (SuSi) Program, a New Component of the GPRC—In June 2022, the BPU approved PSE&G’s filing to recover an annual electric revenue increase of $38 million effective June 15, 2022. These costs will be recovered as a new component of PSE&G’s existing electric GPRC.

Tax Adjustment Credit (TAC)—In June 2022, the BPU approved PSE&G’s annual 2021 TAC filing to increase annual electric and gas revenues by approximately $15 million and $31 million, respectively. The new rates were effective June 15, 2022.

Transmission Formula Rates—In June 2022, PSE&G filed its 2021 true-up adjustment pertaining to its transmission formula rates in effect for 2021. This filing resulted in a decrease in the 2021 annual revenue requirement of $1 million less than the 2021 original and updated filings, incorporating the FERC approved settlement agreement effective August 1, 2021.

ZEC Program—In April 2022, the BPU approved PSE&G’s petition to refund a total of $4 million to customers, including interest, for overcollections resulting from the ZEC program for the energy year ended May 31, 2021.

Note 7. Leases

PSEG and its subsidiaries are both a lessor and a lessee in operating leases. As of June 30, 2022, PSEG and its subsidiaries were lessors for leases classified as operating leases or leveraged leases. See Note 8. Financing Receivables. There was no significant change in amounts reported in Note 8. Leases in the Annual Report on Form 10-K for the year ended December 31, 2021 for operating leases in which PSEG and its subsidiaries are lessees.

PSEG and its subsidiaries, as lessors, have lease agreements with lease and non-lease components, which are primarily related to generating facilities and real estate assets. Rental income from these leases is included in Operating Revenues.

PSEG Nuclear, LLC, a wholly owned subsidiary of PSEG Power, is the lessor in an operating lease for certain parcels of land with terms of 28 years from commencement, plus five optional renewal periods of ten years.

Prior to the sale of Solar Source in June 2021, certain of PSEG Power’s sales agreements related to its solar generating plants qualified as operating leases. Lease income was based on solar energy generation; therefore, all rental income recorded under these leases was variable.

Energy Holdings is the lessor in leveraged leases. See Note 8. Financing Receivables.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

Energy Holdings is the lessor in two operating leases for domestic energy generation facilities with remaining terms through 2036, one of which has an optional renewal period and in real estate assets with remaining terms through 2049. As of June 30, 2022, Energy Holdings’ property subject to these leases had a total carrying value of $121 million.

The following is the operating lease income for the three months and six months ended June 30, 2022 and 2021:



Operating Lease Income
	Millions
Three Months Ended June 30, 2022
Fixed Lease Income	$	8
Total Operating Lease Income	$	8
Six Months Ended June 30, 2022
Fixed Lease Income	$	16
Total Operating Lease Income	$	16

Three Months Ended June 30, 2021
Fixed Lease Income	$	6
Variable Lease Income	7
Total Operating Lease Income	$	13
Six Months Ended June 30, 2021
Fixed Lease Income	$	11
Variable Lease Income	12
Total Operating Lease Income	$	23

Note 8. Financing Receivables

PSE&G

PSE&G’s Solar Loan Programs are designed to help finance the installation of solar power systems throughout its electric service area. Interest income on the loans is recorded on an accrual basis. The loans are paid back with SRECs generated from the related installed solar electric system. PSE&G uses collection experience as a credit quality indicator for its Solar Loan Programs and conducts a comprehensive credit review for all prospective borrowers. As of June 30, 2022, none of the solar loans were impaired; however, in the event of a loan default, the basis of the solar loan would be recovered through a regulatory recovery mechanism. Therefore, no current credit losses have been recorded for Solar Loan Programs I, II and III. A substantial portion of these loan amounts are noncurrent and reported in Long-Term Investments on PSEG’s and PSE&G’s Condensed Consolidated Balance Sheets. The following table reflects the outstanding loans by class of customer, none of which would be considered “non-performing.”



	As of
Outstanding Loans by Class of Customers	June 30, 2022		December 31, 2021
	Millions
Commercial/Industrial	$	103	$	116
Residential	5		5
Total	108		121
Current Portion (included in Accounts Receivable)	(29)		(29)
Noncurrent Portion (included in Long-Term Investments)	$	79	$	92

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

The solar loans originated under three Solar Loan Programs are comprised as follows:

Programs

Balance as of June 30, 2022

Funding Provided

Residential Loan Term

Non-Residential Loan Term

Millions

Solar Loan I

prior to 2013

10 years

15 years

Solar Loan II

prior to 2015

10 years

15 years

Solar Loan III

largely funded as of June 30, 2022

10 years

Total

108

The average life of loans paid in full is eight years, which is lower than the loan terms of 10 to 15 years due to the generation of SRECs being greater than expected and/or cash payments made to the loan. Payments on all outstanding loans were current as of June 30, 2022 and have an average remaining life of approximately four years. There are no remaining residential loans outstanding under the Solar Loan I program.

Energy Holdings

Energy Holdings, through its indirect subsidiaries, has investments in assets subject to leveraged lease accounting. A leveraged lease is typically comprised of an investment by an equity investor and debt provided by a third-party debt investor. The debt is recourse only to the assets subject to lease and is not included on PSEG’s Condensed Consolidated Balance Sheets. As an equity investor, Energy Holdings’ equity investments in the leases are comprised of the total expected lease receivables over the lease terms plus the estimated residual values at the end of the lease terms, reduced for any income not yet earned on the leases. This amount is included in Long-Term Investments on PSEG’s Condensed Consolidated Balance Sheets. The more rapid depreciation of the leased property for tax purposes creates tax cash flow that will be repaid to the taxing authority in later periods. As such, the liability for such taxes due is recorded in Deferred Income Taxes on PSEG’s Condensed Consolidated Balance Sheets.

Leveraged leases outstanding as of June 30, 2022 commenced in or prior to 2000. The following table shows Energy Holdings’ gross and net lease investment as of June 30, 2022 and December 31, 2021.



	As of
	June 30, 2022		December 31, 2021
	Millions
Lease Receivables (net of Non-Recourse Debt)	$	249	$	274
Unearned and Deferred Income	(81)		(87)
Gross Investments in Leases	168		187
Deferred Tax Liabilities	(37)		(42)
Net Investments in Leases	$	131	$	145

The corresponding receivables associated with the lease portfolio are reflected as follows, net of non-recourse debt. The ratings in the table represent the ratings of the entities providing payment assurance to Energy Holdings.



	Lease Receivables, Net of Non-Recourse Debt
Counterparties' Standard & Poor's (S&P) Credit Rating as of June 30, 2022
	As of June 30, 2022
	Millions
AA	$	8
A-	47
BBB+ to BBB	194
Total	$	249

PSEG recorded no credit losses for the leveraged leases existing on June 30, 2022. Upon the occurrence of certain defaults, indirect subsidiaries of Energy Holdings would exercise their rights and seek recovery of their investments, potentially including stepping into the lease directly to protect their investments. While these actions could ultimately protect or mitigate

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

the loss of value, they could require the use of significant capital and trigger certain material tax obligations which could, for certain leases, wholly or partially be mitigated by tax indemnification claims against the counterparty. A bankruptcy of a lessee would likely delay and potentially limit any efforts on the part of the lessors to assert their rights upon default and could delay the monetization of claims.

Note 9. Trust Investments

Nuclear Decommissioning Trust (NDT) Fund

PSEG Power maintains an external master NDT to fund its share of decommissioning costs for its five nuclear facilities upon their respective termination of operation. The trust contains two separate funds: a qualified fund and a non-qualified fund. Section 468A of the Internal Revenue Code limits the amount of money that can be contributed into a qualified fund. The funds are managed by third-party investment managers who operate under investment guidelines developed by PSEG Power.

The following tables show the fair values and gross unrealized gains and losses for the securities held in the NDT Fund.



	As of June 30, 2022
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	Millions
Equity Securities
Domestic	$	498	$	232	$	(17)	$	713
International	334		55		(37)		352
Total Equity Securities	832		287		(54)		1,065
Available-for-Sale Debt Securities
Government	679		—		(68)		611
Corporate	649		1		(63)		587
Total Available-for-Sale Debt Securities	1,328		1		(131)		1,198
Total NDT Fund Investments (A)	$	2,160	$	288	$	(185)	$	2,263

(A)The NDT Fund Investments table excludes cash and foreign currency of $3 million as of June 30, 2022, which is part of the NDT Fund.



	As of December 31, 2021
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	Millions
Equity Securities
Domestic	$	491	$	363	$	(3)	$	851
International	346		119		(15)		450
Total Equity Securities	837		482		(18)		1,301
Available-for-Sale Debt Securities
Government	683		12		(8)		687
Corporate	637		16		(6)		647
Total Available-for-Sale Debt Securities	1,320		28		(14)		1,334
Total NDT Fund Investments (A)	$	2,157	$	510	$	(32)	$	2,635

(A)The NDT Fund Investments table excludes foreign currency of $2 million as of December 31, 2021, which is part of the NDT Fund.

Net unrealized losses on debt securities of $(76) million (after-tax) were included in Accumulated Other Comprehensive Loss on PSEG’s Condensed Consolidated Balance Sheet as of June 30, 2022. The portion of net unrealized losses recognized in the second quarter and first half of 2022 related to equity securities still held as of June 30, 2022 was $(166) million and $(209) million, respectively.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

The amounts in the preceding tables do not include receivables and payables for NDT Fund transactions which have not settled at the end of each period. Such amounts are included in Accounts Receivable and Accounts Payable on the Condensed Consolidated Balance Sheets as shown in the following table.



	As of		As of
	June 30, 2022		December 31, 2021
	Millions
Accounts Receivable	$	12	$	11
Accounts Payable	$	14	$	11

The following table shows the value of securities in the NDT Fund that have been in an unrealized loss position for less than and greater than 12 months.



	As of June 30, 2022								As of December 31, 2021
	Less Than 12 Months				Greater Than 12 Months				Less Than 12 Months				Greater Than 12 Months
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	Millions
Equity Securities (A)
Domestic	$	185	$	(17)	$	1	$	—	$	69	$	(3)	$	—	$	—
International	129		(28)		18		(9)		76		(13)		9		(2)
Total Equity Securities	314		(45)		19		(9)		145		(16)		9		(2)
Available-for-Sale Debt Securities
Government (B)	475		(49)		109		(19)		332		(5)		67		(3)
Corporate (C)	484		(52)		66		(11)		306		(4)		30		(2)
Total Available-for-Sale Debt Securities	959		(101)		175		(30)		638		(9)		97		(5)
NDT Trust Investments	$	1,273	$	(146)	$	194	$	(39)	$	783	$	(25)	$	106	$	(7)

(A)Equity Securities—Investments in marketable equity securities within the NDT Fund are primarily in common stocks within a broad range of industries and sectors. Unrealized gains and losses on these securities are recorded in Net Income.

(B)Debt Securities (Government)—Unrealized gains and losses on these securities are recorded in Accumulated Other Comprehensive Income (Loss). The unrealized losses on PSEG Power’s NDT investments in U.S. Treasury obligations and Federal Agency mortgage-backed securities were caused by interest rate changes. PSEG Power also has investments in municipal bonds. It is not expected that these securities will settle for less than their amortized cost. PSEG Power does not intend to sell these securities nor will it be more-likely-than-not required to sell before recovery of their amortized cost. PSEG Power did not recognize credit losses for U.S. Treasury obligations and Federal Agency mortgage-backed securities because these investments are guaranteed by the U.S. government or an agency of the U.S. government. PSEG Power did not recognize credit losses for municipal bonds because they are primarily investment grade securities.

(C)Debt Securities (Corporate)—Unrealized gains and losses on these securities are recorded in Accumulated Other Comprehensive Income (Loss). Unrealized losses were due to market declines. It is not expected that these securities would settle for less than their amortized cost. PSEG Power does not intend to sell these securities nor will it be more-likely-than-not required to sell before recovery of their amortized cost. PSEG Power did not recognize credit losses for these corporate bonds because they are primarily investment grade securities.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

The proceeds from the sales of and the net gains (losses) on securities in the NDT Fund were:



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
	Millions
Proceeds from NDT Fund Sales (A)	$	341	$	538	$	814	$	1,135
Net Realized Gains (Losses) on NDT Fund
Gross Realized Gains	$	21	$	83	$	50	$	162
Gross Realized Losses	(31)		(23)		(65)		(38)
Net Realized Gains (Losses) on NDT Fund (B)	(10)		60		(15)		124
Net Unrealized Gains (Losses) on Equity Securities	(170)		20		(231)		13

Net Gains (Losses) on NDT Fund Investments	$	(180)	$	80	$	(246)	$	137

(A)Includes activity in accounts related to the liquidation of funds being transitioned within the trust.

(B)The cost of these securities was determined on the basis of specific identification.

The NDT Fund debt securities held as of June 30, 2022 had the following maturities:



Time Frame	Fair Value
	Millions
Less than one year	$	9
1 - 5 years	320
6 - 10 years	230
11 - 15 years	60
16 - 20 years	103
Over 20 years	476
Total NDT Available-for-Sale Debt Securities	$	1,198

PSEG Power periodically assesses individual debt securities whose fair value is less than amortized cost to determine whether the investments are impaired. For these securities, management considers its intent to sell or requirement to sell a security prior to expected recovery. In those cases where a sale is expected, any impairment would be recorded through earnings. For fixed income securities where there is no intent to sell or likely requirement to sell, management evaluates whether credit loss is a component of the impairment. If so, that portion is recorded through earnings while the noncredit loss component is recorded through Accumulated Other Comprehensive Income (Loss). Any subsequent recoveries of the noncredit loss component of the impairment would be recorded through Accumulated Other Comprehensive Income (Loss). Any subsequent recoveries of the credit loss component would be recognized through earnings. The assessment of fair market value compared to cost is applied on a weighted average basis taking into account various purchase dates and initial cost of the securities.

Rabbi Trust

PSEG maintains certain unfunded nonqualified benefit plans to provide supplemental retirement and deferred compensation benefits to certain key employees. Certain assets related to these plans have been set aside in a grantor trust commonly known as a “Rabbi Trust.”

The following tables show the fair values, gross unrealized gains and losses and amortized cost basis for the securities held in the Rabbi Trust.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents



	As of June 30, 2022
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	Millions
Domestic Equity Securities	$	14	$	6	$	—	$	20
Available-for-Sale Debt Securities
Government	114		—		(15)		99
Corporate	91		—		(13)		78
Total Available-for-Sale Debt Securities	205		—		(28)		177

Total Rabbi Trust Investments	$	219	$	6	$	(28)	$	197



	As of December 31, 2021
	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	Millions
Domestic Equity Securities	$	14	$	12	$	—	$	26
Available-for-Sale Debt Securities
Government	107		1		(1)		107
Corporate	105		5		(1)		109
Total Available-for-Sale Debt Securities	212		6		(2)		216
Total Rabbi Trust Investments	$	226	$	18	$	(2)	$	242

Net unrealized losses on debt securities of $(20) million (after-tax) were included in Accumulated Other Comprehensive Loss on PSEG’s Condensed Consolidated Balance Sheet as of June 30, 2022. The portion of net unrealized losses recognized during the second quarter and first half of 2022 related to equity securities still held as of June 30, 2022 was $(5) million and $(6) million, respectively.

The amounts in the preceding tables do not include receivables and payables for Rabbi Trust Fund transactions which have not settled at the end of each period. Such amounts are included in Accounts Receivable and Accounts Payable on the Condensed Consolidated Balance Sheets as shown in the following table.



	As of		As of
	June 30, 2022		December 31, 2021
	Millions
Accounts Receivable	$	1	$	1
Accounts Payable	$	—	$	—

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

The following table shows the value of securities in the Rabbi Trust Fund that have been in an unrealized loss position for less than 12 months and greater than 12 months.



	As of June 30, 2022								As of December 31, 2021
	Less Than 12 Months				Greater Than 12 Months				Less Than 12 Months				Greater Than 12 Months
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	Millions
Available-for-Sale Debt Securities
Government (A)	$	77	$	(11)	$	20	$	(4)	$	57	$	—	$	16	$	(1)
Corporate (B)	70		(12)		6		(1)		40		(1)		5		—
Total Available-for-Sale Debt Securities	147		(23)		26		(5)		97		(1)		21		(1)

Rabbi Trust Investments	$	147	$	(23)	$	26	$	(5)	$	97	$	(1)	$	21	$	(1)

(A)Debt Securities (Government)—Unrealized gains and losses on these securities are recorded in Accumulated Other Comprehensive Income (Loss). The unrealized losses on PSEG’s Rabbi Trust investments in U.S. Treasury obligations and Federal Agency mortgage-backed securities were caused by interest rate changes. PSEG also has investments in municipal bonds. It is not expected that these securities will settle for less than their amortized cost. PSEG does not intend to sell these securities nor will it be more-likely-than-not required to sell before recovery of their amortized cost. PSEG did not recognize credit losses for U.S. Treasury obligations and Federal Agency mortgage-backed securities because these investments are guaranteed by the U.S. government or an agency of the U.S. government. PSEG did not recognize credit losses for municipal bonds because they are primarily investment grade securities.

(B)Debt Securities (Corporate)—Unrealized gains and losses on these securities are recorded in Accumulated Other Comprehensive Income (Loss). Unrealized losses were due to market declines. It is not expected that these securities would settle for less than their amortized cost. PSEG does not intend to sell these securities nor will it be more-likely-than-not required to sell before recovery of their amortized cost. PSEG did not recognize credit losses for these corporate bonds because they are primarily investment grade.

The proceeds from the sales of and the net gains (losses) on securities in the Rabbi Trust Fund were:



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
	Millions
Proceeds from Rabbi Trust Sales	$	20	$	29	$	48	$	94
Net Realized Gains (Losses) on Rabbi Trust:
Gross Realized Gains	$	2	$	2	$	3	$	7
Gross Realized Losses	(4)		(1)		(6)		(3)
Net Realized Gains (Losses) on Rabbi Trust (A)	(2)		1		(3)		4
Net Unrealized Gains (Losses) on Equity Securities	(5)		—		(6)		—

Net Gains (Losses) on Rabbi Trust Investments	$	(7)	$	1	$	(9)	$	4

(A)The cost of these securities was determined on the basis of specific identification.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

The Rabbi Trust debt securities held as of June 30, 2022 had the following maturities:



Time Frame	Fair Value
	Millions
Less than one year	$	—
1 - 5 years	30
6 - 10 years	26
11 - 15 years	7
16 - 20 years	19
Over 20 years	95
Total Rabbi Trust Available-for-Sale Debt Securities	$	177

PSEG periodically assesses individual debt securities whose fair value is less than amortized cost to determine whether the investments are considered to be impaired. For these securities, management considers its intent to sell or requirement to sell a security prior to expected recovery. In those cases where a sale is expected, any impairment would be recorded through earnings. For fixed income securities where there is no intent to sell or likely requirement to sell, management evaluates whether credit loss is a component of the impairment. If so, that portion is recorded through earnings while the noncredit loss component is recorded through Accumulated Other Comprehensive Income (Loss). Any subsequent recoveries of the noncredit loss component of the impairment would be recorded through Accumulated Other Comprehensive Income (Loss). Any subsequent recoveries of the credit loss component would be recognized through earnings. The assessment of fair market value compared to cost is applied on a weighted average basis taking into account various purchase dates and initial cost of the securities.

The fair value of the Rabbi Trust related to PSEG and PSE&G is detailed as follows:



	As of		As of
	June 30, 2022		December 31, 2021
	Millions
PSE&G	$	35	$	43
Other	162		199
Total Rabbi Trust Investments	$	197	$	242

Note 10. Pension and Other Postretirement Benefits (OPEB)

PSEG sponsors qualified and nonqualified pension plans and OPEB plans covering PSEG’s and its participating affiliates’ current and former employees who meet certain eligibility criteria.

PSEG and PSE&G are required to record the under or over funded positions of their defined benefit pension and OPEB plans on their respective balance sheets. Such funding positions are required to be measured as of the date of their respective year-end Consolidated Balance Sheets.

The following table provides the components of net periodic benefit credits relating to all qualified and nonqualified pension and OPEB plans on an aggregate basis for PSEG, excluding Servco. Amounts shown do not reflect the impacts of capitalization and co-owner allocations. Only the service cost component is eligible for capitalization, when applicable.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents



	Pension Benefits				OPEB				Pension Benefits				OPEB
	Three Months Ended				Three Months Ended				Six Months Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
	2022		2021		2022		2021		2022		2021		2022		2021
	Millions
Components of Net Periodic Benefit (Credits) Costs
Service Cost (included in O&M Expense)	$	36	$	38	$	1	$	2	$	71	$	76	$	3	$	4
Non-Service Components of Pension and OPEB (Credits) Costs
Interest Cost	41		35		7		6		83		70		13		11
Expected Return on Plan Assets	(121)		(119)		(10)		(11)		(242)		(238)		(21)		(21)
Amortization of Net
Prior Service Credit	—		—		(32)		(32)		—		—		(64)		(64)
Actuarial Loss	15		25		3		11		30		51		7		22
Non-Service Components of Pension and OPEB (Credits) Costs	(65)		(59)		(32)		(26)		(129)		(117)		(65)		(52)
Total Benefit (Credits) Costs	$	(29)	$	(21)	$	(31)	$	(24)	$	(58)	$	(41)	$	(62)	$	(48)

Pension and OPEB credits for PSEG and PSE&G are detailed as follows:



	Pension Benefits				OPEB				Pension Benefits				OPEB
	Three Months Ended				Three Months Ended				Six Months Ended				Six Months Ended
	June 30,				June 30,				June 30,				June 30,
	2022		2021		2022		2021		2022		2021		2022		2021
	Millions
PSE&G	$	(17)	$	(16)	$	(28)	$	(23)	$	(35)	$	(32)	$	(55)	$	(46)
Other	(12)		(5)		(3)		(1)		(23)		(9)		(7)		(2)
Total Benefit (Credits) Costs	$	(29)	$	(21)	$	(31)	$	(24)	$	(58)	$	(41)	$	(62)	$	(48)

PSEG does not plan to contribute to its pension and OPEB plans in 2022.

Servco Pension and OPEB

At the direction of LIPA, Servco sponsors benefit plans that cover its current and former employees who meet certain eligibility criteria. Under the OSA, all of these and any future employee benefit costs are to be funded by LIPA. See Note 5. Variable Interest Entities. These obligations, as well as the offsetting long-term receivable, are separately presented on the Condensed Consolidated Balance Sheet of PSEG.

Servco amounts are not included in any of the preceding pension and OPEB cost disclosures. Pension and OPEB costs of Servco are accounted for according to the OSA. Servco recognizes expenses for contributions to its pension plan trusts and for OPEB payments made to retirees. Operating Revenues are recognized for the reimbursement of these costs. Servco’s pension-related revenues and costs were $7 million and $10 million for the three months ended June 30, 2022 and 2021, respectively, and $15 million and $19 million for the six months ended June 30, 2022 and 2021, respectively. The OPEB-related revenues earned and costs incurred were $3 million and $2 million for the three months ended June 30, 2022 and 2021, respectively, and $5 million for each of the six months ended June 30, 2022 and 2021.

Servco plans to contribute $30 million into its pension plan during 2022.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

Note 11. Commitments and Contingent Liabilities

Guaranteed Obligations

PSEG Power’s activities primarily involve the purchase and sale of energy and related products under transportation, physical, financial and forward contracts at fixed and variable prices. These transactions are with numerous counterparties and brokers that may require cash, cash-related instruments or guarantees as a form of collateral.

PSEG Power has unconditionally guaranteed payments to counterparties on behalf of its subsidiaries in commodity-related transactions in order to

•support current exposure, interest and other costs on sums due and payable in the ordinary course of business, and

•obtain credit.

PSEG Power is subject to

•counterparty collateral calls related to commodity contracts of its subsidiaries, and

•certain creditworthiness standards as guarantor under performance guarantees of its subsidiaries.

Under these agreements, guarantees cover lines of credit between entities and are often reciprocal in nature. The exposure between counterparties can move in either direction.

In order for PSEG Power to incur a liability for the face value of the outstanding guarantees,

•its subsidiaries would have to fully utilize the credit granted to them by every counterparty to whom PSEG Power has provided a guarantee, and

•the net position of the related contracts would have to be “out-of-the-money” (if the contracts are terminated, PSEG Power would owe money to the counterparties).

PSEG Power believes the probability of this result is unlikely. For this reason, PSEG Power believes that the current exposure at any point in time is a more meaningful representation of the potential liability under these guarantees. Current exposure consists of the net of accounts receivable and accounts payable and the forward value on open positions, less any collateral posted.

Changes in commodity prices can have a material impact on collateral requirements under such contracts, which are posted and received primarily in the form of cash and letters of credit. PSEG Power also routinely enters into futures and options transactions for electricity and natural gas as part of its operations. These futures contracts usually require a cash margin deposit with brokers, which can change based on market movement and in accordance with exchange rules.

In addition to the guarantees discussed above, PSEG Power has also provided payment guarantees to third parties and regulatory authorities on behalf of its affiliated companies. These guarantees support various other non-commodity related obligations.

The following table shows the face value of PSEG Power’s outstanding guarantees, current exposure and margin positions as of June 30, 2022 and December 31, 2021.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents



	As of		As of
	June 30, 2022		December 31, 2021
	Millions
Face Value of Outstanding Guarantees	$	1,637	$	1,959
Exposure under Current Guarantees	$	148	$	176

Letters of Credit Margin Posted	$	521	$	80
Letters of Credit Margin Received	$	10	$	242

Cash Deposited and Received
Counterparty Cash Collateral Deposited	$	3	$	60
Counterparty Cash Collateral Received	$	(1)	$	(1)
Net Broker Balance Deposited (Received)	$	2,086	$	785

Additional Amounts Posted
Other Letters of Credit	$	61	$	67

As part of determining credit exposure, PSEG Power nets receivables and payables with the corresponding net fair values of energy contracts. See Note 13. Financial Risk Management Activities for further discussion. In accordance with PSEG’s accounting policy, where it is applicable, cash (received)/deposited is allocated against derivative asset and liability positions with the same counterparty on the face of the Condensed Consolidated Balance Sheet. The remaining balances of net cash (received)/deposited after allocation are generally included in Accounts Payable and Accounts Receivable, respectively.

In addition to amounts for outstanding guarantees, current exposure and margin positions, PSEG and PSEG Power have posted letters of credit to support PSEG Power’s various other non-energy contractual and environmental obligations. See the preceding table.

Environmental Matters

Passaic River

Lower Passaic River Study Area

The U.S. Environmental Protection Agency (EPA) has determined that a 17-mile stretch of the Passaic River (Lower Passaic River Study Area (LPRSA)) in New Jersey is a “Superfund” site under the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA). PSE&G and certain of its predecessors conducted operations at properties in this area, including at one site that was transferred to PSEG Power.

Certain Potentially Responsible Parties (PRPs), including PSE&G and PSEG Power, formed a Cooperating Parties Group (CPG) and agreed to conduct a Remedial Investigation and Feasibility Study of the LPRSA. The CPG allocated, on an interim basis, the associated costs among its members. The interim allocation is subject to change. In June 2019, the EPA conditionally approved the CPG’s Remedial Investigation. In September 2021, the EPA approved the CPG’s Feasibility Study (FS), which evaluated various adaptive management scenarios for the remediation of only the upper 9 miles of the LPRSA. In October 2021, the EPA announced a Record of Decision (ROD) outlining its selection of an adaptive management scenario for the upper 9 miles from the options presented in the FS (the Upper 9 ROD Remedy). Specifically, the Upper 9 ROD Remedy calls for dredging and capping contaminated sediments from certain areas of the upper 9 miles at an estimated cost of $550 million, and then assessing the results. Based on the results, the EPA may determine that additional remediation work will be required in the future.

Separately, the EPA has released a ROD for the LPRSA’s lower 8.3 miles that requires the removal of sediments at an estimated cost of $2.3 billion (the Lower 8.3 ROD Remedy). An EPA-commenced process to allocate the associated costs is underway and PSEG cannot predict the outcome. The allocation does not address certain costs incurred by the EPA for which it may be entitled to reimbursement and which may be material. The allocation currently involves settlement discussions among various parties and the EPA. Certain parties have announced a settlement in principle with the EPA, but the identity of the parties and the terms of the settlement in principle are unknown. It is also unknown whether the settlement in principle will be successfully consummated. PSE&G and PSEG Power were not included in the settlement in principle, but the EPA sent PSE&G, Occidental Chemical Corporation, and several other PRPs a letter in March 2022 inviting them to submit to the EPA individually or jointly an offer to fund or participate in the next stages of the remediation. In June 2022, PSEG submitted a good faith offer to the EPA on behalf of PSE&G and PSEG Power. Depending on the parties’ responses, the EPA may commence the remediation itself and seek to recover the costs from PSE&G or others, or it may take enforcement action to compel PSE&G or others to fund or participate in the remediation.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

Occidental Chemical Corporation has commenced the design of the Lower 8.3 ROD Remedy, but declined to participate in the allocation process. Instead, it filed suit against PSE&G and others seeking cost recovery and contribution under CERCLA but has not quantified alleged damages. The litigation is ongoing and PSEG cannot predict the outcome.

Two PRPs, Tierra Solutions, Inc. (Tierra) and Maxus Energy Corporation (Maxus), have filed for Chapter 11 bankruptcy. The trust representing the creditors in this proceeding has filed a complaint asserting claims against Tierra’s and Maxus’ current and former parent entities, among others. Any damages awarded may be used to fund the remediation of the LPRSA.

As of June 30, 2022, PSEG has approximately $66 million accrued for this matter. Of this amount, PSE&G has an Environmental Costs Liability of $53 million and a corresponding Regulatory Asset based on its continued ability to recover such costs in its rates. PSEG Power has an Other Noncurrent Liability of $13 million.

The outcome of this matter is uncertain, and until (i) a final remedy for the entire LPRSA is selected and an agreement is reached by the PRPs to fund it, (ii) PSE&G’s and PSEG Power’s respective shares of the costs are determined, and (iii) PSE&G’s ability to recover the costs in its rates is determined, it is not possible to predict this matter’s ultimate impact on PSEG’s financial statements. It is possible that PSE&G and PSEG Power will record additional costs beyond what they have accrued, and that such costs could be material, but PSEG cannot at the current time estimate the amount or range of any additional costs.

Newark Bay Study Area

The EPA has established the Newark Bay Study Area, which is an extension of the LPRSA and includes Newark Bay and portions of surrounding waterways. The EPA has notified PSEG and 21 other PRPs of their potential liability. PSE&G and PSEG Power are unable to estimate their respective portions of any loss or possible range of loss related to this matter. In December 2018, PSEG Power completed the sale of the site of the Hudson electric generating station. PSEG Power contractually transferred all land rights and structures on the Hudson site to a third-party purchaser, along with the assumption of the environmental liabilities for the site.

Natural Resource Damage Claims

New Jersey and certain federal regulators have alleged that PSE&G, PSEG Power and 56 other PRPs may be liable for natural resource damages within the LPRSA. In particular, PSE&G, PSEG Power and other PRPs received notice from federal regulators of the regulators’ intent to move forward with a series of studies assessing potential damages to natural resources at the Diamond Alkali Superfund Site, which includes the LPRSA and the Newark Bay Study Area. PSE&G and PSEG Power are unable to estimate their respective portions of any possible loss or range of loss related to this matter.

Hackensack River

In March 2022, the EPA announced it had nominated the Hackensack River for inclusion on the list of federal Superfund sites. The EPA’s nomination is subject to public review and comment. The ultimate impact of this action on PSE&G and PSEG Power is currently unknown, but could be material.

MGP Remediation Program

PSE&G is working with the New Jersey Department of Environmental Protection (NJDEP) to assess, investigate and remediate environmental conditions at its former MGP sites. To date, 38 sites requiring some level of remedial action have been identified. Based on its current studies, sites requiring some level of remedial action have been identified. Based on its current studies, PSE&G has determined that the estimated cost to remediate all MGP sites to completion could range between $209 million and $237 million on an undiscounted basis, including its $53 million share for the Passaic River as discussed above. Since no amount within the range is considered to be most likely, PSE&G has recorded a liability of $209 million as of June 30, 2022. Of this amount, $34 million was recorded in Other Current Liabilities and $175 million was reflected as Environmental Costs in Noncurrent Liabilities. PSE&G has recorded a $209 million Regulatory Asset with respect to these costs. PSE&G periodically updates its studies taking into account any new regulations or new information which could impact future remediation costs and adjusts its recorded liability accordingly. PSE&G completed sampling in the Passaic River in 2020 to delineate coal tar from certain MGP sites that abut the Passaic River Superfund site. PSEG cannot determine at this time the magnitude of any impact on the Passaic River Superfund remedy.

CWA Section 316(b) Rule

The EPA’s CWA Section 316(b) rule establishes requirements for the regulation of cooling water intakes at existing power plants and industrial facilities with a design flow of more than two million gallons of water per day. The EPA requires that National Pollutant Discharge Elimination System permits be renewed every five years and that each state Permitting Director manage renewal permits for its respective power generation facilities on a case by case basis. The NJDEP manages the permits under the New Jersey Pollutant Discharge Elimination System (NJPDES) program.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

In June 2016, the NJDEP issued a final NJPDES permit for Salem. In July 2016, the Delaware Riverkeeper Network (Riverkeeper) filed an administrative hearing request challenging certain conditions of the permit, including the NJDEP’s application of the 316(b) rule. If the Riverkeeper’s challenge is successful, PSEG Power may be required to incur additional costs to comply with the CWA. Potential cooling water and/or service water system modification costs could be material and could adversely impact the economic competitiveness of this facility. The NJDEP granted the hearing request but no hearing date has been established.

Jersey City, New Jersey Subsurface Feeder Cable Matter

In October 2016, a discharge of dielectric fluid from subsurface feeder cables located in the Hudson River near Jersey City, New Jersey, was identified and reported to the NJDEP. The feeder cables are located within a subsurface easement granted to PSE&G by the property owners, Newport Associates Development Company (NADC) and Newport Associates Phase I Developer Limited Partnership. The feeder cables are subject to agreements between PSE&G and Consolidated Edison Company of New York, Inc. (Con Edison) and are jointly owned by PSE&G and Con Edison. The impacted cable was repaired in September 2017. A federal response was initially led by the U.S. Coast Guard. The U.S. Coast Guard transitioned control of the federal response to the EPA, and the EPA ended the federal response to the matter in 2018. The investigation of small amounts of residual dielectric fluid believed to be contained with the marina sediment is ongoing as part of the NJDEP site remediation program. In August 2020, PSE&G finalized a settlement with the federal government regarding the reimbursement of costs associated with the federal response to this matter and payment of civil penalties of an immaterial amount.

A lawsuit in federal court is pending to determine ultimate responsibility for the costs to address the leak among PSE&G, Con Edison and NADC. In addition, Con Edison filed counter claims against PSE&G and NADC, including seeking injunctive relief and damages. Based on the information currently available and depending on the outcome of the federal court action, PSE&G’s portion of the costs to address the leak may be material; however, PSE&G anticipates that it will recover its costs, other than civil penalties, through regulatory proceedings.

BGS, BGSS and ZECs

Each year, PSE&G obtains its electric supply requirements through annual New Jersey BGS auctions for two categories of customers that choose not to purchase electric supply from third-party suppliers. The first category is residential and smaller commercial and industrial customers (BGS-Residential Small Commercial Pricing (RSCP)). The second category is larger customers that exceed a BPU-established load (kW) threshold (BGS-Commercial and Industrial Energy Pricing (CIEP)). Pursuant to applicable BPU rules, PSE&G enters into the Supplier Master Agreements with the winners of these RSCP and CIEP BGS auctions to purchase BGS for PSE&G’s load requirements. The winners of the RSCP and CIEP auctions are responsible for fulfilling all the requirements of a PJM load-serving entity including the provision of capacity, energy, ancillary services and any other services required by PJM. BGS suppliers assume all volume risk and customer migration risk and must satisfy New Jersey’s renewable portfolio standards.

The BGS-CIEP auction is for a one-year supply period from June 1 to May 31 with the BGS-CIEP auction price measured in dollars per MW-day for capacity. The final price for the BGS-CIEP auction year commencing June 1, 2022 is $276.26 per MW-day, replacing the BGS-CIEP auction year price ending May 31, 2022 of $351.06 per MW-day. Energy for BGS-CIEP is priced at hourly PJM locational marginal prices for the contract period.

PSE&G contracts for its anticipated BGS-RSCP load on a three-year rolling basis, whereby each year one-third of the load is procured for a three-year period. The contract prices in dollars per MWh for the BGS-RSCP supply, as well as the approximate load, are as follows:



	Auction Year
	2019	2020	2021	2022
36-Month Terms Ending	May 2022	May 2023	May 2024	May 2025	(A)
Load (MW)	2,800	2,800	2,900	2,800
$ per MWh	$98.04	$102.16	$64.80	$76.30

(A)Prices set in the 2022 BGS auction became effective on June 1, 2022 when the 2019 BGS auction agreements expired.

PSE&G has a full-requirements contract with PSEG Power to meet the gas supply requirements of PSE&G’s gas customers. PSEG Power has entered into hedges for a portion of these anticipated BGSS obligations, as permitted by the BPU. The BPU permits PSE&G to recover the cost of gas hedging up to 115 billion cubic feet or 80% of its residential gas supply annual requirements through the BGSS tariff. Current plans call for PSEG Power to hedge on behalf of PSE&G approximately 70

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

billion cubic feet or 50% of its residential gas supply annual requirements. For additional information, see Note 20. Related-Party Transactions.

Pursuant to a process established by the BPU, New Jersey EDCs, including PSE&G, are required to purchase ZECs from eligible nuclear plants selected by the BPU. In April 2019, PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants were selected to receive ZEC revenue for approximately three years, through May 2022. In April 2021, PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants were awarded ZECs for the three-year eligibility period starting June 2022. PSE&G has implemented a tariff to collect a non-bypassable distribution charge in the amount of $0.004 per KWh from its retail distribution customers to be used to purchase the ZECs from these plants. PSE&G will purchase the ZECs on a monthly basis with payment to be made annually following completion of each energy year. The legislation also requires nuclear plants to reapply for any subsequent three-year periods and allows the BPU to adjust prospective ZEC payments.

Minimum Fuel Purchase Requirements

PSEG Power’s nuclear fuel strategy is to maintain certain levels of uranium and to make periodic purchases to support such levels. As such, the commitments referred to in the following table may include estimated quantities to be purchased that deviate from contractual nominal quantities. PSEG Power’s nuclear fuel commitments cover approximately 100% of its estimated uranium, enrichment and fabrication requirements through 2023 and a significant portion through 2024 at Salem, Hope Creek and Peach Bottom.

PSEG Power has various multi-year contracts for natural gas and firm transportation and storage capacity for natural gas that are primarily used to meet its obligations to PSE&G.

As of June 30, 2022, the total minimum purchase requirements included in these commitments were as follows:



Fuel Type	PSEG Power’s Share of Commitments through 2026
	Millions
Nuclear Fuel
Uranium	$	312
Enrichment	$	311
Fabrication	$	174
Natural Gas	$	1,255

Pending FERC Matter

FERC has been conducting a non-public investigation of the Roseland-Pleasant Valley transmission project. In November 2021, FERC staff presented PSE&G with its non-public preliminary findings, alleging that PSE&G violated a FERC regulation. PSE&G disagrees with FERC staff’s allegations and believes it has factual and legal defenses that refute these allegations. PSE&G has the opportunity to respond to these preliminary findings. The matter is pending and the investigation is ongoing. PSE&G is unable to predict the outcome or estimate the range of possible loss related to this matter; however, depending on the success of PSE&G’s factual and legal arguments, the potential financial and other penalties that PSE&G may incur could be material to PSEG’s and PSE&G’s results of operations and financial condition.

BPU Audit of PSE&G

In September 2020, the BPU ordered the commencement of a comprehensive affiliate and management audit of PSE&G. It has been more than ten years since the BPU last conducted a management and affiliate audit of this kind of PSE&G, which is initiated periodically as required by New Jersey statutes/regulations. Phase 1 of the planned audit will review affiliate relations and cost allocation between PSE&G and its affiliates, including an analysis of the relationship between PSE&G and PSEG Energy Resources & Trade, LLC, a wholly owned subsidiary of PSEG Power over the past ten years, and between PSE&G and PSEG LI. Phase 2 will be a comprehensive management audit, which will address, among other things, executive management, corporate governance, system operations, human resources, cyber security, compliance with customer protection requirements and customer safety. The audit officially began in late May 2021 and is in the data collection phase. It is not possible at this time to predict the outcome of this matter.

Litigation

Sewaren 7 Construction

In June 2018, a complaint was filed in federal court in Newark, New Jersey against PSEG Fossil LLC, which at the time was a

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

wholly owned subsidiary of PSEG Power, regarding an ongoing dispute with Durr Mechanical Construction, Inc. (Durr), a contractor on the Sewaren 7 project. Among other things, Durr seeks damages of $93 million and alleges that PSEG Power withheld money owed to Durr and that PSEG Power’s intentional conduct led to the inability of Durr to obtain prospective contracts. PSEG Power intends to vigorously defend against these allegations. In January 2021, the court partially granted PSEG Power’s motion to dismiss certain claims, reducing the amount claimed to $68 million. In December 2018, Durr filed for Chapter 11 bankruptcy in the federal court in the Southern District of New York (SDNY). The SDNY bankruptcy court has allowed the New Jersey litigation to proceed. PSEG Power has accrued an amount related to outstanding invoices which does not reflect an assessment of claims and potential counterclaims in this matter. Due to its preliminary nature, PSEG Power cannot predict the outcome of this matter.

Other Litigation and Legal Proceedings

PSEG and its subsidiaries are party to various lawsuits in the ordinary course of business. In view of the inherent difficulty in predicting the outcome of such matters, PSEG and PSE&G generally cannot predict the eventual outcome of the pending matters, the timing of the ultimate resolution of these matters, or the eventual loss, fines or penalties related to each pending matter.

In accordance with applicable accounting guidance, a liability is accrued when those matters present loss contingencies that are both probable and reasonably estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. PSEG will continue to monitor the matter for further developments that could affect the amount of the accrued liability that has been previously established.

Based on current knowledge, management does not believe that loss contingencies arising from pending matters, other than the matters described herein, could have a material adverse effect on PSEG’s or PSE&G’s consolidated financial position or liquidity. However, in light of the inherent uncertainties involved in these matters, some of which are beyond PSEG’s control, and the large or indeterminate damages sought in some of these matters, an adverse outcome in one or more of these matters could be material to PSEG’s or PSE&G’s results of operations or liquidity for any particular reporting period.

Ongoing Coronavirus Pandemic

The ongoing coronavirus (COVID-19) pandemic and associated government actions and economic effects continue to impact our businesses. PSEG and its subsidiaries have incurred additional expenses to protect our employees and customers, and PSE&G is experiencing significantly higher bad debts and lower cash collections from customers due to the moratorium on shut-offs for residential customers that was extended through March 15, 2022. Although collections and shut-offs re-commenced in mid-March 2022, in late March 2022, New Jersey passed legislation that provided protection from shut-offs to customers who applied for payment assistance programs by June 15, 2022. Those applying for assistance are protected from shut-offs while awaiting their application determination. PSE&G has deferred the impact of the COVID-19 costs for future recovery. The potential future impact of the pandemic and the associated economic impacts, which could extend beyond the duration of the pandemic, could have risks that drive certain accounting considerations. The ultimate impact of the ongoing coronavirus pandemic is highly uncertain and cannot be predicted at this time.

Note 12. Debt and Credit Facilities

Long-Term Debt Financing Transactions

The following long-term debt transactions occurred in the six months ended June 30, 2022:

PSE&G

•issued $500 million of 3.10% Secured Medium-Term Notes (Green Bond), Series P, due March 2032.

PSEG Power

•entered into a $1.25 billion variable rate term loan agreement due March 2025.

Short-Term Liquidity

PSEG meets its short-term liquidity requirements, as well as those of PSEG Power, primarily through the issuance of commercial paper and, from time to time, short-term loans. PSE&G maintains its own separate commercial paper program to meet its short-term liquidity requirements. Each commercial paper program is fully back-stopped by its own separate credit facilities.

In March 2022, PSEG and PSEG Power amended and consolidated revolving credit agreements with total borrowing capacity of $3.4 billion into a single revolving credit agreement (Master Credit Facility). The Master Credit Facility extends the maturity

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

of the existing credit agreements through March 2027 and provides for $2.75 billion of credit capacity, with an initial PSEG sub-limit of $1.5 billion and an initial PSEG Power sub-limit of $1.25 billion. Sub-limits can be adjusted subject to the terms of the Master Credit Facility. The PSEG sub-limit includes a sustainability linked pricing based mechanism with potential increases or decreases, which are not expected to be material, depending on performance relative to targeted methane emission reductions. In March 2022, PSE&G amended its existing $600 million revolving credit agreement to extend the maturity through March 2027 and provide for $1.0 billion of credit capacity.

In April 2022, PSEG Power entered into two $100 million letter of credit facilities expiring in April 2024 and 2025, respectively.

The commitments under the $4.1 billion credit facilities are provided by a diverse bank group. As of June 30, 2022, the total available credit capacity was $3.4 billion.

As of June 30, 2022, no single institution represented more than 9% of the total commitments in the credit facilities.

As of June 30, 2022, PSEG’s liquidity position, including credit facilities and access to external financing, was expected to be sufficient to meet its projected stressed requirements over a 12 month planning horizon.

Each of the credit facilities is restricted as to availability and use to the specific companies as listed in the following table; however, if necessary, the PSEG facilities can also be used to support its subsidiaries’ liquidity needs.

The total credit facilities and available liquidity as of June 30, 2022 were as follows:



	As of June 30, 2022
Company/Facility	Total Facility		Usage (B)		Available Liquidity		Expiration Date	Primary Purpose
	Millions
PSEG
Revolving Credit Facility (A)	$	1,500	$	65	$	1,435	Mar 2027	Commercial Paper Support/Funding/Letters of Credit
Total PSEG	$	1,500	$	65	$	1,435
PSE&G
Revolving Credit Facility	$	1,000	$	18	$	982	Mar 2027	Commercial Paper Support/Funding/Letters of Credit
Total PSE&G	$	1,000	$	18	$	982
PSEG Power
Revolving Credit Facility (A)	$	1,250	$	306	$	944	Mar 2027	Funding/Letters of Credit
Letter of Credit Facility	100		99		1		Sept 2023	Letters of Credit
Letter of Credit Facility	100		75		25		Apr 2024	Letters of Credit
Letter of Credit Facility	100		100		—		Apr 2025	Letters of Credit
Total PSEG Power	$	1,550	$	580	$	970
Total	$	4,050	$	663	$	3,387

(A)Master Credit Facility with sub-limits of $1.5 billion for PSEG and $1.25 billion for PSEG Power.

(B)The primary use of PSEG’s and PSE&G’s credit facilities is to support their respective Commercial Paper Programs, under which as of June 30, 2022, PSEG had $63 million outstanding at a weighted average interest rate of 1.25%. PSE&G had no Commercial Paper outstanding as of June 30, 2022.

Net Cash Collateral Postings

During the second half of 2021 and continuing into 2022, forward energy prices have demonstrated considerable price volatility and have increased dramatically. This has led to significantly higher variation in PSEG Power’s daily collateral requirements which have also increased substantially over that time period for hedge positions that are out-of-the money. PSEG Power’s net cash collateral postings related to these hedge positions increased from $343 million at the end of June 2021 to $2.1 billion at the end of June 2022. Subsequent to June 2022, collateral postings continued to increase and PSEG Power continued to experience significantly higher variation in its daily collateral requirements. Net cash collateral postings were $2.5 billion at the end of July 2022. The majority of this collateral relates to hedges in place through the end of 2023 and is expected to be returned as PSEG Power satisfies its obligations under those contracts. Proceeds from the sale of Fossil, the closing of a $1.25 billion term loan in March 2022 at PSEG Power, and short-term borrowings at PSEG have contributed to available liquidity to help support PSEG Power’s current collateral requirements in 2022.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

Short-Term Loans

PSEG

In March and May 2021, PSEG entered into two 364-day variable rate term loan agreements for $500 million and $750 million, respectively. In August 2021, PSEG entered into a $1.25 billion, 364-day variable rate term loan agreement. In March 2022, the $500 million term loan matured and PSEG repaid the $750 million term loan due in May 2022. In July 2022, PSEG repaid the $1.25 billion term loan due in August 2022.

In April 2022 and May 2022, PSEG entered into 364-day variable rate term loan agreements for $1.5 billion and $500 million, respectively.

Note 13. Financial Risk Management Activities

Derivative accounting guidance requires that a derivative instrument be recognized as either an asset or a liability at fair value, with changes in fair value of the derivative recognized in earnings each period. Other accounting treatments are available through special election and designation provided that the derivative instrument meets specific, restrictive criteria, both at the time of designation and on an ongoing basis. These alternative permissible treatments include normal purchases and normal sales (NPNS), cash flow hedge and fair value hedge accounting. PSEG and PSE&G have applied the NPNS scope exception to certain derivative contracts for the forward sale of generation, power procurement agreements and fuel agreements. PSEG uses interest rate swaps and other derivatives, which are designated and qualifying as cash flow or fair value hedges. PSEG Power enters into additional contracts that are derivatives, but are not designated as either cash flow hedges or fair value hedges. These transactions are economic hedges and are recorded at fair market value with changes recognized in earnings.

Commodity Prices

Within PSEG and its affiliate companies, PSEG Power has the most exposure to commodity price risk. PSEG Power is exposed to commodity price risk primarily relating to changes in the market price of electricity, natural gas and other commodities. Fluctuations in market prices result from changes in supply and demand, fuel costs, market conditions, weather, state and federal regulatory policies, environmental policies, transmission availability and other factors. PSEG Power uses a variety of derivative and non-derivative instruments, such as financial options, futures, swaps, fuel purchases and forward purchases and sales of electricity, to manage the exposure to fluctuations in commodity prices and optimize the value of PSEG Power’s expected generation. PSEG Power also uses derivatives to hedge a portion of its anticipated BGSS obligations with PSE&G. For additional information see Note 11. Commitments and Contingent Liabilities. Changes in the fair market value of these derivative contracts are recorded in earnings.

Interest Rates

PSEG, PSE&G and PSEG Power are subject to the risk of fluctuating interest rates in the normal course of business. Exposure to this risk is managed by targeting a balanced debt maturity profile which limits refinancing in any given period or interest rate environment. PSEG, PSE&G and PSEG Power may use a mix of fixed and floating rate debt and interest rate swaps.

Cash Flow Hedges

PSEG uses interest rate swaps and other derivatives, which are designated and effective as cash flow hedges, to manage its exposure to the variability of cash flows, primarily related to variable-rate debt instruments. There were no outstanding interest rate hedges as of June 30, 2022 and December 31, 2021.

The Accumulated Other Comprehensive Income (Loss) (after tax) related to terminated interest rate derivatives designated as cash flow hedges was $(5) million and $(6) million as of June 30, 2022 and December 31, 2021, respectively. The after-tax unrealized losses on these hedges expected to be reclassified to earnings during the next 12 months are $(3) million.

Fair Values of Derivative Instruments

The following are the fair values of derivative instruments on the Condensed Consolidated Balance Sheets. The following tables also include disclosures for offsetting derivative assets and liabilities which are subject to a master netting or similar agreement. In general, the terms of the agreements provide that in the event of an early termination the counterparties have the right to offset amounts owed or owing under that and any other agreement with the same counterparty. Accordingly, and in accordance with PSEG’s accounting policy, these positions are offset on the Condensed Consolidated Balance Sheets of PSEG. For additional information see Note 14. Fair Value Measurements.

Substantially all derivative instruments are contracts subject to master netting agreements. Contracts not subject to master netting or similar agreements are immaterial and did not have any collateral posted or received as of June 30, 2022 and

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

December 31, 2021. The following tabular disclosure does not include the offsetting of trade receivables and payables.



	As of June 30, 2022
	Not Designated
Balance Sheet Location	Energy- Related Contracts		Netting (A)		Total Derivatives
	Millions
Derivative Contracts
Current Assets	$	2,942	$	(2,811)	$	131
Noncurrent Assets	874		(815)		59
Total Mark-to-Market Derivative Assets	$	3,816	$	(3,626)	$	190
Derivative Contracts
Current Liabilities	$	(3,878)	$	3,658	$	(220)
Noncurrent Liabilities	(1,404)		1,374		(30)
Total Mark-to-Market Derivative (Liabilities)	$	(5,282)	$	5,032	$	(250)
Total Net Mark-to-Market Derivative Assets (Liabilities)	$	(1,466)	$	1,406	$	(60)



	As of December 31, 2021
	Not Designated
Balance Sheet Location	Energy- Related Contracts		Netting (A)		Total Derivatives
	Millions
Derivative Contracts
Current Assets	$	816	$	(744)	$	72
Noncurrent Assets	546		(518)		28
Total Mark-to-Market Derivative Assets	$	1,362	$	(1,262)	$	100
Derivative Contracts
Current Liabilities	$	(1,055)	$	1,038	$	(17)
Noncurrent Liabilities	(856)		839		(17)
Total Mark-to-Market Derivative (Liabilities)	$	(1,911)	$	1,877	$	(34)
Total Net Mark-to-Market Derivative Assets (Liabilities)	$	(549)	$	615	$	66

(A)Represents the netting of fair value balances with the same counterparty (where the right of offset exists) and the application of collateral. All cash collateral (received) posted that has been allocated to derivative positions, where the right of offset exists, has been offset on the Condensed Consolidated Balance Sheets. As of June 30, 2022 and December 31, 2021, PSEG Power had net cash collateral (receipts) payments to counterparties of $2,088 million and $844 million, respectively. Of these net cash collateral (receipts) payments, $1,406 million and $615 million as of June 30, 2022 and December 31, 2021, respectively, were netted against the corresponding net derivative contract positions. Of the $1,406 million as of June 30, 2022, $(92) million was netted against current assets, $(39) million was netted against noncurrent assets, $939 million was netted against current liabilities and $598 million was netted against noncurrent liabilities. Of the $615 million as of December 31, 2021, $(30) million was netted against current assets, $(13) million was netted against noncurrent assets, $323 million was netted against current liabilities and $335 million was netted against noncurrent liabilities.

Certain of PSEG Power’s derivative instruments contain provisions that require PSEG Power to post collateral. This collateral may be posted in the form of cash or credit support with thresholds contingent upon PSEG Power’s credit rating from each of the major credit rating agencies. The collateral and credit support requirements vary by contract and by counterparty. These credit risk-related contingent features stipulate that if PSEG Power were to be downgraded to a below investment grade rating

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

by S&P or Moody’s, it would be required to provide additional collateral. A below investment grade credit rating for PSEG Power would represent a two level downgrade from its current Moody’s and S&P ratings. This incremental collateral requirement can offset collateral requirements related to other derivative instruments that are assets with the same counterparty, where the contractual right of offset exists under applicable master agreements. PSEG Power also enters into commodity transactions on the New York Mercantile Exchange (NYMEX) and Intercontinental Exchange (ICE). The NYMEX and ICE clearing houses act as counterparties to each trade. Transactions on the NYMEX and ICE must adhere to comprehensive collateral and margin requirements.

The aggregate fair value of all derivative instruments with credit risk-related contingent features in a liability position that are not fully collateralized (excluding transactions on the NYMEX and ICE that are fully collateralized) was $320 million as of June 30, 2022 and $75 million as of December 31, 2021. As of June 30, 2022 and December 31, 2021, PSEG Power had the contractual right of offset of $81 million and $29 million, respectively, related to derivative instruments that are assets with the same counterparty under master agreements and net of margin posted. If PSEG Power had been downgraded to a below investment grade rating, it would have had additional collateral obligations of $239 million and $46 million as of June 30, 2022 and December 31, 2021, respectively, related to its derivatives, net of the contractual right of offset under master agreements and the application of collateral.

The following shows the effect on the Condensed Consolidated Statements of Operations and on Accumulated Other Comprehensive Loss (AOCL) of derivative instruments designated as cash flow hedges for the three months and six months ended June 30, 2022 and 2021:



Derivatives in Cash Flow Hedging Relationships	Amount of Pre-Tax Gain (Loss) Recognized in AOCL on Derivatives				Location of Pre-Tax Gain (Loss) Reclassified from AOCL into Income	Amount of Pre-Tax Gain (Loss) Reclassified from AOCL into Income
	Three Months Ended					Three Months Ended
	June 30,					June 30,
	2022		2021			2022		2021
	Millions					Millions
PSEG

Interest Rate Swaps	$	—	$	—	Interest Expense	$	(1)	$	(1)
Total PSEG	$	—	$	—		$	(1)	$	(1)



Derivatives in Cash Flow Hedging Relationships	Amount of Pre-Tax Gain (Loss) Recognized in AOCL on Derivatives				Location of Pre-Tax Gain (Loss) Reclassified from AOCL into Income	Amount of Pre-Tax Gain (Loss) Reclassified from AOCL into Income
	Six Months Ended					Six Months Ended
	June 30,					June 30,
	2022		2021			2022		2021
	Millions					Millions
PSEG

Interest Rate Swaps	$	—	$	—	Interest Expense	$	(2)	$	(2)
Total PSEG	$	—	$	—		$	(2)	$	(2)

The effect of interest rate cash flow hedges is recorded in Interest Expense in PSEG’s Condensed Consolidated Statement of Operations. For each of the six months ended June 30, 2022 and 2021, the amount of loss on interest rate hedges reclassified from Accumulated Other Comprehensive Loss into income was $(1) million after-tax.

The following reconciles the Accumulated Other Comprehensive Income (Loss) for derivative activity included in AOCL of PSEG on a pre-tax and after-tax basis.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents



Accumulated Other Comprehensive Income (Loss)	Pre-Tax		After-Tax
	Millions



Balance as of December 31, 2020	$	(13)	$	(9)
Loss Recognized in AOCL	—		—
Less: Loss Reclassified into Income	4		3
Balance as of December 31, 2021	$	(9)	$	(6)
Loss Recognized in AOCL	—		—
Less: Loss Reclassified into Income	2		1
Balance as of June 30, 2022	$	(7)	$	(5)

The following shows the effect on the Condensed Consolidated Statements of Operations of derivative instruments not designated as hedging instruments or as NPNS for the three months and six months ended June 30, 2022 and 2021, respectively. PSEG Power’s derivative contracts reflected in this table include contracts to hedge the purchase and sale of electricity and natural gas, and the purchase of fuel. The table does not include contracts that PSEG Power has designated as NPNS, such as its BGS contracts and certain other energy supply contracts that it has with other utilities and companies with retail load.



Derivatives Not Designated as Hedges	Location of Pre-Tax Gain (Loss) Recognized in Income on Derivatives	Pre-Tax Gain (Loss) Recognized in Income on Derivatives
		Three Months Ended				Six Months Ended
		June 30,				June 30,
		2022		2021		2022		2021
		Millions				Millions
Energy-Related Contracts	Operating Revenues	$	(354)	$	(373)	$	(1,398)	$	(419)
Energy-Related Contracts	Energy Costs	(1)		75		(1)		81
Total		$	(355)	$	(298)	$	(1,399)	$	(338)

The following table summarizes the net notional volume purchases/(sales) of open derivative transactions by commodity as of June 30, 2022 and December 31, 2021.

As of

Type

Notional

June 30, 2022

December 31, 2021

Millions

Natural Gas

Dekatherm (Dth)

Electricity

MWh

(69)

(76)

Financial Transmission Rights (FTRs)

MWh

Credit Risk

Credit risk relates to the risk of loss that PSEG Power would incur as a result of non-performance by counterparties pursuant to the terms of their contractual obligations. PSEG has established credit policies that it believes significantly minimize credit risk. These policies include an evaluation of potential counterparties’ financial condition (including credit rating), collateral requirements under certain circumstances and the use of standardized agreements, which allow for the netting of positive and negative exposures associated with a single counterparty. In the event of non-performance or non-payment by a major counterparty, there may be a material adverse impact on PSEG’s financial condition, results of operations or net cash flows.

The following table provides information on PSEG Power’s credit risk from wholesale counterparties, net of collateral, as of June 30, 2022. It further delineates that exposure by the credit rating of the counterparties, which is determined by the lowest rating from S&P, Moody’s or an internal scoring model. In addition, it provides guidance on the concentration of credit risk to individual counterparties and an indication of the quality of PSEG Power’s credit risk by credit rating of the counterparties.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

As of June 30, 2022, nearly 100% of the net credit exposure for PSEG Power’s wholesale operations was with investment grade counterparties. Credit exposure is defined as any positive results of netting accounts receivable/accounts payable and the forward value of open positions (which includes all financial instruments including derivatives, NPNS and non-derivatives).



Rating	Current Exposure		Securities Held as Collateral		Net Exposure		Number of Counterparties >10%	Net Exposure of Counterparties >10% (A)
	Millions							Millions
Investment Grade	$	123	$	5	$	118	2	$	49
Non-Investment Grade	1		1		—		—	—
Total	$	124	$	6	$	118	2	$	49

(A)Represents net exposure of $36 million with PSE&G and $13 million with a non-affiliated counterparty.

As of June 30, 2022, collateral held from counterparties where PSEG Power had credit exposure included $6 million in letters of credit.

As of June 30, 2022, PSEG Power had 90 active counterparties.

PSE&G’s supplier master agreements are approved by the BPU and govern the terms of its electric supply procurement contracts. These agreements define a supplier’s performance assurance requirements and allow a supplier to meet its credit requirements with a certain amount of unsecured credit. The amount of unsecured credit is determined based on the supplier’s credit ratings from the major credit rating agencies and the supplier’s tangible net worth. The credit position is based on the initial market price, which is the forward price of energy on the day the procurement transaction is executed, compared to the forward price curve for energy on the valuation day. To the extent that the forward price curve for energy exceeds the initial market price, the supplier is required to post a parental guarantee or other security instrument such as a letter of credit or cash, as collateral to the extent the credit exposure is greater than the supplier’s unsecured credit limit. As of June 30, 2022, PSEG held parental guarantees, letters of credit and cash as security. PSE&G’s BGS suppliers’ credit exposure is calculated each business day. As of June 30, 2022, PSE&G had unsecured credit exposure of $82 million with its suppliers. PSE&G had no credit exposure with PSEG Power.

PSE&G is permitted to recover its costs of procuring energy through the BPU-approved BGS tariffs. PSE&G’s counterparty credit risk is mitigated by its ability to recover realized energy costs through customer rates.

Note 14. Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Accounting guidance for fair value measurement emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and establishes a fair value hierarchy that distinguishes between assumptions based on market data obtained from independent sources and those based on an entity’s own assumptions. The hierarchy prioritizes the inputs to fair value measurement into three levels:

Level 1—measurements utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that PSEG and PSE&G have the ability to access. These consist primarily of listed equity securities and money market mutual funds, as well as natural gas futures contracts executed on NYMEX.

Level 2—measurements include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and other observable inputs such as interest rates and yield curves that are observable at commonly quoted intervals. These consist primarily of non-exchange traded derivatives such as forward contracts or options and most fixed income securities.

Level 3—measurements use unobservable inputs for assets or liabilities, based on the best information available and might include an entity’s own data and assumptions. In some valuations, the inputs used may fall into different levels of the hierarchy. In these cases, the financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. These consist primarily of certain electric load contracts.

Certain derivative transactions may transfer from Level 2 to Level 3 if inputs become unobservable and internal modeling techniques are employed to determine fair value. Conversely, measurements may transfer from Level 3 to Level 2 if the inputs become observable.

The following tables present information about PSEG’s and PSE&G’s respective assets and (liabilities) measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021, including the fair value measurements and the levels of inputs

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

used in determining those fair values. Amounts shown for PSEG include the amounts shown for PSE&G.



	Recurring Fair Value Measurements as of June 30, 2022
Description	Total		Netting (D)		Quoted Market Prices for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	Millions
PSEG
Assets:
Cash Equivalents (A)	$	2,050	$	—	$	2,050	$	—	$	—
Derivative Contracts:
Energy-Related Contracts (B)	$	190	$	(3,626)	$	33	$	3,783	$	—

NDT Fund (C)
Equity Securities	$	1,065	$	—	$	1,065	$	—	$	—
Debt Securities—U.S. Treasury	$	270	$	—	$	—	$	270	$	—
Debt Securities—Govt Other	$	341	$	—	$	—	$	341	$	—
Debt Securities—Corporate	$	587	$	—	$	—	$	587	$	—

Rabbi Trust (C)
Equity Securities	$	20	$	—	$	20	$	—	$	—
Debt Securities—U.S. Treasury	$	66	$	—	$	—	$	66	$	—
Debt Securities—Govt Other	$	33	$	—	$	—	$	33	$	—
Debt Securities—Corporate	$	78	$	—	$	—	$	78	$	—

Liabilities:
Derivative Contracts:
Energy-Related Contracts (B)	$	(250)	$	5,032	$	(37)	$	(5,235)	$	(10)

PSE&G
Assets:
Cash Equivalents (A)	$	865	$	—	$	865	$	—	$	—


Rabbi Trust (C)
Equity Securities	$	4	$	—	$	4	$	—	$	—
Debt Securities—U.S. Treasury	$	12	$	—	$	—	$	12	$	—
Debt Securities—Govt Other	$	6	$	—	$	—	$	6	$	—
Debt Securities—Corporate	$	13	$	—	$	—	$	13	$	—

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents



	Recurring Fair Value Measurements as of December 31, 2021
Description	Total		Netting (D)		Quoted Market Prices for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	Millions
PSEG
Assets:
Cash Equivalents (A)	$	615	$	—	$	615	$	—	$	—
Derivative Contracts:
Energy-Related Contracts (B)	$	100	$	(1,262)	$	25	$	1,336	$	1

NDT Fund (C)
Equity Securities	$	1,301	$	—	$	1,301	$	—	$	—
Debt Securities—U.S. Treasury	$	314	$	—	$	—	$	314	$	—
Debt Securities—Govt Other	$	373	$	—	$	—	$	373	$	—
Debt Securities—Corporate	$	647	$	—	$	—	$	647	$	—

Rabbi Trust (C)
Equity Securities	$	26	$	—	$	26	$	—	$	—
Debt Securities—U.S. Treasury	$	73	$	—	$	—	$	73	$	—
Debt Securities—Govt Other	$	34	$	—	$	—	$	34	$	—
Debt Securities—Corporate	$	109	$	—	$	—	$	109	$	—

Liabilities:
Derivative Contracts:
Energy-Related Contracts (B)	$	(34)	$	1,877	$	(26)	$	(1,880)	$	(5)

PSE&G
Assets:
Cash Equivalents (A)	$	250	$	—	$	250	$	—	$	—
Rabbi Trust (C)
Equity Securities	$	5	$	—	$	5	$	—	$	—
Debt Securities—U.S. Treasury	$	13	$	—	$	—	$	13	$	—
Debt Securities—Govt Other	$	6	$	—	$	—	$	6	$	—
Debt Securities—Corporate	$	19	$	—	$	—	$	19	$	—

(A)Represents money market mutual funds.

(B)Level 1—These contracts represent natural gas futures contracts executed on NYMEX, and are being valued solely on settled pricing inputs which come directly from the exchange.

Level 2—Fair values for energy-related contracts are obtained primarily using a market-based approach. Most derivative contracts (forward purchase or sale contracts and swaps) are valued using settled prices from similar assets and liabilities from an exchange, such as NYMEX, ICE and Nodal Exchange, or auction prices. Prices used in the valuation process are also corroborated independently by management to determine that values are based on actual transaction data or, in the absence of transactions, bid and offers for the day. Examples may include certain exchange and non-exchange traded capacity and electricity contracts and natural gas physical or swap contracts based on market prices, basis adjustments and other premiums where adjustments and premiums are not considered significant to the overall inputs.

Level 3—Unobservable inputs are used for the valuation of certain contracts. See “Additional Information Regarding Level 3 Measurements” below for more information on the utilization of unobservable inputs.

(C)The fair value measurement table excludes cash and foreign currency of $3 million and $2 million in the NDT Fund as of June 30, 2022 and December 31, 2021, respectively. The NDT Fund maintains investments in various equity and fixed income securities. The Rabbi Trust maintains investments in a Russell 3000 index fund and various fixed income securities. These securities are generally valued with prices that are either exchange provided (equity securities) or market transactions for comparable securities and/or broker quotes (fixed income securities).

Level 1—Investments in marketable equity securities within the NDT Fund are primarily investments in common stocks across a broad range of industries and sectors. Most equity securities are priced utilizing the principal market close price or, in some cases, midpoint, bid or ask price. Certain other equity securities in the NDT and Rabbi Trust Funds consist primarily of investments in money market funds which seek a high level

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

of current income as is consistent with the preservation of capital and the maintenance of liquidity. To pursue its goals, the funds normally invest in diversified portfolios of high quality, short-term, dollar-denominated debt securities and government securities. The funds’ net asset value is priced and published daily. The Rabbi Trust’s Russell 3000 index fund is valued based on quoted prices in an active market and can be redeemed daily without restriction.

Level 2—NDT and Rabbi Trust fixed income securities include investment grade corporate bonds, collateralized mortgage obligations, asset-backed securities and certain government and U.S. Treasury obligations or Federal Agency asset-backed securities and municipal bonds with a wide range of maturities. Since many fixed income securities do not trade on a daily basis, they are priced using an evaluated pricing methodology that varies by asset class and reflects observable market information such as the most recent exchange price or quoted bid for similar securities. Market-based standard inputs typically include benchmark yields, reported trades, broker/dealer quotes and issuer spreads. Certain short-term investments are valued using observable market prices or market parameters such as time-to-maturity, coupon rate, quality rating and current yield.

(D)Represents the netting of fair value balances with the same counterparty (where the right of offset exists) and the application of collateral. See Note 13. Financial Risk Management Activities for additional detail.

Additional Information Regarding Level 3 Measurements

For valuations that include both observable and unobservable inputs, if the unobservable input is determined to be significant to the overall inputs, the entire valuation is categorized in Level 3. This includes derivatives valued using indicative price quotations for contracts with tenors that extend into periods with no observable pricing. In instances where observable data is unavailable, consideration is given to the assumptions that market participants would use in valuing the asset or liability. This includes assumptions about market risks such as liquidity, volatility and contract duration. Such instruments are categorized in Level 3 because the model inputs generally are not observable. PSEG considers credit and non-performance risk in the valuation of derivative contracts categorized in Levels 2 and 3, including both historical and current market data, in its assessment of credit and non-performance risk by counterparty. The impacts of credit and non-performance risk were not material to the financial statements.

As of June 30, 2022, PSEG carried $4.5 billion of net assets that are measured at fair value on a recurring basis, of which $10 million of liabilities were measured using unobservable inputs and classified as Level 3 within the fair value hierarchy and are considered immaterial.

As of June 30, 2021, PSEG carried $2.9 billion of net assets that are measured at fair value on a recurring basis, of which $8 million of liabilities were measured using unobservable inputs and classified as Level 3 within the fair value hierarchy and are considered immaterial.

There were no transfers to or from Level 3 during the six months ended June 30, 2022 and 2021, respectively.

Fair Value of Debt

The estimated fair values, carrying amounts and methods used to determine fair value of long-term debt as of June 30, 2022 and December 31, 2021 are included in the following table and accompanying notes.



	As of				As of
	June 30, 2022				December 31, 2021
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	Millions
Long-Term Debt:
PSEG (A)	$	4,127	$	3,837	$	4,124	$	4,172
PSE&G (A)	12,294		11,329		11,795		13,374
PSEG Power (B)	1,250		1,250		—		—
Total Long-Term Debt	$	17,671	$	16,416	$	15,919	$	17,546

(A)Given that these bonds do not trade actively, the fair value amounts of taxable debt securities (primarily Level 2 measurements) are generally determined by a valuation model using market-based measurements that are processed

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

through a rules-based pricing methodology. The fair value amounts above do not represent the price at which the outstanding debt may be called for redemption by each issuer under their respective debt agreements.

(B)Private term loan with book value approximating fair value (Level 2 measurement).

Note 15. Other Income (Deductions)



	PSE&G		Other (A)		Consolidated
	Millions
Three Months Ended June 30, 2022
NDT Fund Interest and Dividends	$	—	$	16	$	16
Allowance for Funds Used During Construction	15		—		15
Solar Loan Interest	3		—		3

Other	4		—		4
Total Other Income (Deductions)	$	22	$	16	$	38
Six Months Ended June 30, 2022
NDT Fund Interest and Dividends	$	—	$	30	$	30
Allowance for Funds Used During Construction	30		—		30
Solar Loan Interest	6		—		6
Purchases of Tax Losses under New Jersey Technology Tax Benefit Transfer Program	—		(27)		(27)
Other	5		(1)		4
Total Other Income (Deductions)	$	41	$	2	$	43
Three Months Ended June 30, 2021
NDT Fund Interest and Dividends	$	—	$	14	$	14
Allowance for Funds Used During Construction	19		—		19
Solar Loan Interest	4		—		4
Purchases of Tax Losses under New Jersey Technology Tax Benefit Transfer Program	—		(3)		(3)
Other	1		(2)		(1)
Total Other Income (Deductions)	$	24	$	9	$	33
Six Months Ended June 30, 2021
NDT Fund Interest and Dividends	$	—	$	27	$	27
Allowance for Funds Used During Construction	42		—		42
Solar Loan Interest	7		—		7
Purchases of Tax Losses under New Jersey Technology Tax Benefit Transfer Program	—		(19)		(19)
Other	3		(2)		1
Total Other Income (Deductions)	$	52	$	6	$	58

(A)Other consists of activity at PSEG (as parent company), PSEG Power, Energy Holdings, Services, PSEG LI and intercompany eliminations.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

Note 16. Income Taxes

A reconciliation of reported income tax expense for PSEG with the amount computed by multiplying pre-tax income by the statutory federal income tax rate of 21% is as follows:



	Three Months Ended						Six Months Ended
PSEG	June 30,						June 30,
	2022			2021			2022			2021
	Millions
Pre-Tax Income (Loss)	$	98		$	(239)		$	(56)		$	526
Tax Computed at Statutory Rate @ 21%	$	21		$	(50)		$	(12)		$	110
Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments:
State Income Taxes (net of federal income tax)	6			(24)			(22)			18
NDT Fund	(18)			9			(24)			18

GPRC-CEF-Energy Efficiency (EE)	(8)			(2)			(14)			(3)
Tax Credit Amortization/ITC Recapture	(2)			35			(4)			31
TAC	(32)			(40)			(106)			(118)
Other	—			10			(3)			(1)
Subtotal	(54)			(12)			(173)			(55)
Total Income Tax Expense (Benefit)	$	(33)		$	(62)		$	(185)		$	55
Effective Income Tax Rate	(33.7)		%	25.9		%	330.4		%	10.5		%

A reconciliation of reported income tax expense for PSE&G with the amount computed by multiplying pre-tax income by the statutory federal income tax rate of 21% is as follows:



	Three Months Ended						Six Months Ended
PSE&G	June 30,						June 30,
	2022			2021			2022			2021
	Millions
Pre-Tax Income	$	361		$	370		$	959		$	926
Tax Computed at Statutory Rate @ 21%	$	76		$	78		$	201		$	194
Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments:
State Income Taxes (net of federal income tax)	25			25			67			63
GPRC-CEF-EE	(8)			(2)			(14)			(3)
TAC	(32)			(40)			(106)			(118)
Other	(5)			—			(3)			4
Subtotal	(20)			(17)			(56)			(54)
Total Income Tax Expense (Benefit)	$	56		$	61		$	145		$	140
Effective Income Tax Rate	15.5		%	16.5		%	15.1		%	15.1		%

A prolonged economic recovery can result in the enactment of additional federal and state tax legislation. Enactment of additional legislation and clarification of prior enacted tax laws could impact PSEG’s and PSE&G’s financial statements.

As of June 30, 2022, PSEG had a $59 million state net operating loss (NOL) and PSE&G had a $21 million state NOL that are both expected to be fully realized in the future.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

Note 17. Accumulated Other Comprehensive Income (Loss), Net of Tax



	Three Months Ended June 30, 2022
Accumulated Other Comprehensive Income (Loss)	Cash Flow Hedges		Pension and OPEB Plans		Available-for-Sale Securities		Total
	Millions
Balance as of March 31, 2022	$	(5)	$	(355)	$	(50)	$	(410)
Other Comprehensive Income (Loss) before Reclassifications	—		—		(53)		(53)
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	—		1		7		8
Net Current Period Other Comprehensive Income (Loss)	—		1		(46)		(45)
Balance as of June 30, 2022	$	(5)	$	(354)	$	(96)	$	(455)

	Three Months Ended June 30, 2021
Accumulated Other Comprehensive Income (Loss)	Cash Flow Hedges		Pension and OPEB Plans		Available-for-Sale Securities		Total
	Millions
Balance as of March 31, 2021	$	(8)	$	(542)	$	8	$	(542)
Other Comprehensive Income (Loss) before Reclassifications	—		—		16		16
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	—		4		—		4
Net Current Period Other Comprehensive Income (Loss)	—		4		16		20
Balance as of June 30, 2021	$	(8)	$	(538)	$	24	$	(522)


	Six Months Ended June 30, 2022
Accumulated Other Comprehensive Income (Loss)	Cash Flow Hedges		Pension and OPEB Plans		Available-for-Sale Securities		Total
	Millions
Balance as of December 31, 2021	$	(6)	$	(355)	$	11	$	(350)
Other Comprehensive Income (Loss) before Reclassifications	—		—		(118)		(118)
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	1		1		11		13
Net Current Period Other Comprehensive Income (Loss)	1		1		(107)		(105)
Balance as of June 30, 2022	$	(5)	$	(354)	$	(96)	$	(455)

	Six Months Ended June 30, 2021
Accumulated Other Comprehensive Income (Loss)	Cash Flow Hedges		Pension and OPEB Plans		Available-for-Sale Securities		Total
	Millions
Balance as of December 31, 2020	$	(9)	$	(545)	$	50	$	(504)
Other Comprehensive Income (Loss) before Reclassifications	—		—		(24)		(24)
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	1		7		(2)		6
Net Current Period Other Comprehensive Income (Loss)	1		7		(26)		(18)
Balance as of June 30, 2021	$	(8)	$	(538)	$	24	$	(522)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents



		Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) to Income Statement
		Three Months Ended						Six Months Ended
		June 30, 2022						June 30, 2022
Description of Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	Location of Pre-Tax Amount In Statement of Operations	Pre-Tax Amount		Tax (Expense) Benefit		After-Tax Amount		Pre-Tax Amount		Tax (Expense) Benefit		After-Tax Amount
		Millions
Cash Flow Hedges
Interest Rate Swaps	Interest Expense	$	(1)	$	1	$	—	$	(2)	$	1	$	(1)
Total Cash Flow Hedges		(1)		1		—		(2)		1		(1)
Pension and OPEB Plans
Amortization of Prior Service (Cost) Credit	Non-Operating Pension and OPEB Credits (Costs)	5		(2)		3		10		(3)		7
Amortization of Actuarial Loss	Non-Operating Pension and OPEB Credits (Costs)	(6)		2		(4)		(11)		3		(8)
Total Pension and OPEB Plans		(1)		—		(1)		(1)		—		(1)
Available-for-Sale Debt Securities
Realized Gains (Losses)	Net Gains (Losses) on Trust Investments	(12)		5		(7)		(18)		7		(11)
Total Available-for-Sale Debt Securities		(12)		5		(7)		(18)		7		(11)
Total		$	(14)	$	6	$	(8)	$	(21)	$	8	$	(13)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents



		Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) to Income Statement
		Three Months Ended						Six Months Ended
		June 30, 2021						June 30, 2021
Description of Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)	Location of Pre-Tax Amount In Statement of Operations	Pre-Tax Amount		Tax (Expense) Benefit		After-Tax Amount		Pre-Tax Amount		Tax (Expense) Benefit		After-Tax Amount
		Millions
Cash Flow Hedges
Interest Rate Swaps	Interest Expense	$	(1)	$	1	$	—	$	(2)	$	1	$	(1)
Total Cash Flow Hedges		(1)		1		—		(2)		1		(1)
Pension and OPEB Plans
Amortization of Prior Service (Cost) Credit	Non-Operating Pension and OPEB Credits (Costs)	6		(2)		4		11		(3)		8
Amortization of Actuarial Loss	Non-Operating Pension and OPEB Credits (Costs)	(11)		3		(8)		(21)		6		(15)
Total Pension and OPEB Plans		(5)		1		(4)		(10)		3		(7)
Available-for-Sale Debt Securities
Realized Gains (Losses)	Net Gains (Losses) on Trust Investments	1		(1)		—		4		(2)		2
Total Available-for-Sale Debt Securities		1		(1)		—		4		(2)		2
Total		$	(5)	$	1	$	(4)	$	(8)	$	2	$	(6)

Note 18. Earnings Per Share (EPS) and Dividends

EPS

Basic EPS is calculated by dividing Net Income (Loss) by the weighted average number of shares of common stock outstanding. Diluted EPS is calculated by dividing Net Income (Loss) by the weighted average number of shares of common stock outstanding, plus dilutive potential shares related to PSEG’s stock based compensation. The following table shows the effect of these dilutive potential shares on the weighted average number of shares outstanding used in calculating diluted EPS:



	Three Months Ended June 30,								Six Months Ended June 30,
	2022				2021				2022				2021
	Basic		Diluted		Basic		Diluted		Basic		Diluted		Basic		Diluted
EPS Numerator (Millions):
Net Income (Loss)	$	131	$	131	$	(177)	$	(177)	$	129	$	129	$	471	$	471
EPS Denominator (Millions):
Weighted Average Common Shares Outstanding	497		497		504		504		499		499		504		504
Effect of Stock Based Compensation Awards	—		3		—		—		—		3		—		3
Total Shares	497		500		504		504		499		502		504		507

EPS
Net Income (Loss)	$	0.26	$	0.26	$	(0.35)	$	(0.35)	$	0.26	$	0.26	$	0.94	$	0.93

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

Approximately 3 million potentially dilutive shares were excluded from total shares used to calculate the diluted loss per share for the three months ended June 30, 2021 as their impact was antidilutive.

In September 2021, PSEG announced a $500 million share repurchase program, authorized by the Board of Directors. In December 2021, under this authorization PSEG entered into an open market share repurchase plan for $250 million of its common shares. During January and through mid-February 2022, PSEG purchased the full $250 million of common stock under the open market share repurchase plan.

In March 2022, under this authorization, PSEG entered into a Master Confirmation and Supplemental Confirmation with an investment banking firm to effect an accelerated share repurchase agreement (ASR Agreement) for the remaining authorized $250 million of shares of PSEG’s outstanding common stock. Under the ASR Agreement, PSEG received initial delivery of approximately 3.0 million shares of common stock in mid-March, representing approximately 80% of the total number of shares of common stock initially underlying the ASR Agreement. In mid-May 2022, the investment banking firm exercised its right to accelerate the termination of the contract pursuant to the terms of the ASR Agreement and PSEG received approximately 0.6 million shares, representing the balance of the shares owed to PSEG under the ASR Agreement.

Dividends



	Three Months Ended				Six Months Ended
	June 30,				June 30,
Dividend Payments on Common Stock	2022		2021		2022		2021
Per Share	$	0.54	$	0.51	$	1.08	$	1.02
In Millions	$	270	$	258	$	541	$	516

On July 19, 2022, PSEG’s Board of Directors approved a $0.54 per share common stock dividend for the third quarter of 2022.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

Note 19. Financial Information by Business Segment



	PSE&G		PSEG Power		Other (A)		Eliminations (B)		Consolidated Total
	Millions
Three Months Ended June 30, 2022
Operating Revenues	$	1,668	$	488	$	157	$	(237)	$	2,076
Net Income (Loss) (C)	305		(162)		(12)		—		131
Gross Additions to Long-Lived Assets	543		60		2		—		605
Six Months Ended June 30, 2022
Operating Revenues	$	3,952	$	948	$	310	$	(821)	$	4,389
Net Income (Loss) (C)	814		(681)		(4)		—		129
Gross Additions to Long-Lived Assets	1,171		116		4		—		1,291
Three Months Ended June 30, 2021
Operating Revenues	$	1,514	$	380	$	155	$	(175)	$	1,874
Net Income (Loss) (C)	309		(483)		(3)		—		(177)
Gross Additions to Long-Lived Assets	633		36		1		—		670
Six Months Ended June 30, 2021
Operating Revenues	$	3,587	$	1,547	$	306	$	(677)	$	4,763
Net Income (Loss) (C)	786		(322)		7		—		471
Gross Additions to Long-Lived Assets	1,219		82		2		—		1,303
As of June 30, 2022
Total Assets	$	39,181	$	7,425	$	3,755	$	(753)	$	49,608
Investments in Equity Method Subsidiaries	$	—	$	71	$	174	$	—	$	245
As of December 31, 2021
Total Assets	$	37,198	$	9,777	$	5,150	$	(3,126)	$	48,999
Investments in Equity Method Subsidiaries	$	—	$	62	$	111	$	—	$	173

(A)Includes amounts applicable to Energy Holdings and PSEG LI, which are below the quantitative threshold for separate disclosure as reportable segments. Other also includes amounts applicable to PSEG (parent company) and Services.

(B)Intercompany eliminations primarily relate to intercompany transactions between PSE&G and PSEG Power. For a further discussion of the intercompany transactions between PSE&G and PSEG Power, see Note 20. Related-Party Transactions.

(C)Includes a $373 million after-tax impairment of the ISO NE asset grouping at PSEG Power in the three and six months ended June 30, 2021. See Note 4. Early Plant Retirements/Asset Dispositions and Impairments for additional information. Also includes net after-tax losses of $74 million and $206 million for the three months ended June 30, 2022 and 2021, respectively, and $682 million and $240 million for the six months ended June 30, 2022 and 2021, respectively, related to the impacts of non-trading commodity mark-to-market activity, which consist of the financial impact from positions with future delivery dates.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Table of Contents

Note 20. Related-Party Transactions

The following discussion relates to intercompany transactions, which are eliminated during the PSEG consolidation process in accordance with GAAP.

PSE&G

The financial statements for PSE&G include transactions with related parties presented as follows:



	Three Months Ended				Six Months Ended
	June 30,				June 30,
Related-Party Transactions	2022		2021		2022		2021
	Millions
Billings from Affiliates:
Net Billings from PSEG Power (A)	$	232	$	172	$	812	$	667
Administrative Billings from Services (B)	113		92		212		179
Total Billings from Affiliates	$	345	$	264	$	1,024	$	846



	As of		As of
Related-Party Transactions	June 30, 2022		December 31, 2021
	Millions



Payable to PSEG Power (A)	$	144	$	244
Payable to Services (B)	81		111
Payable to PSEG (C)	26		63
Accounts Payable—Affiliated Companies	$	251	$	418
Noncurrent Payable to PSEG Power (A)	$	9	$	—
Working Capital Advances to Services (D)	$	33	$	33
Long-Term Accrued Taxes Payable	$	7	$	6

(A)PSE&G has entered into a requirements contract with PSEG Power under which PSEG Power provides the gas supply services needed to meet PSE&G’s BGSS and other contractual requirements. PSEG Power has also entered into contracts to supply energy, capacity and ancillary services to PSE&G through the BGS auction process and sells ZECs to PSE&G under the ZEC program. As of June 1, 2022, PSEG Power has no BGS contracts supplying PSE&G. The rates in the BGS and BGSS contracts and for the ZEC sales are prescribed by the BPU. BGS and BGSS sales are billed and settled on a monthly basis. ZEC sales are billed on a monthly basis and settled annually following completion of each energy year. In addition, PSEG Power and PSE&G provide certain technical services for each other generally at cost in compliance with FERC and BPU affiliate rules.

(B)Services provides and bills administrative services to PSE&G at cost. In addition, PSE&G has other payables to Services, including amounts related to certain common costs, which Services pays on behalf of PSE&G.

(C)PSEG files a consolidated federal income tax return with its affiliated companies. A tax allocation agreement exists between PSEG and each of its affiliated companies. The general operation of these agreements is that the subsidiary company will compute its taxable income on a stand-alone basis. If the result is a net tax liability, such amount shall be paid to PSEG. If there are NOLs and/or tax credits, the subsidiary shall receive payment for the tax savings from PSEG to the extent that PSEG is able to utilize those benefits.

(D)PSE&G has advanced working capital to Services. The amount is included in Other Noncurrent Assets on PSE&G’s Condensed Consolidated Balance Sheets.

Table of Contents

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)

This combined MD&A is separately filed by Public Service Enterprise Group Incorporated (PSEG) and Public Service Electric and Gas Company (PSE&G). Information contained herein relating to any individual company is filed by such company on its own behalf.

PSEG’s business consists of two reportable segments, PSE&G and PSEG Power LLC (PSEG Power), our principal direct wholly owned subsidiaries, which are:

•PSE&G—which is a public utility engaged principally in the transmission of electricity and distribution of electricity and natural gas in certain areas of New Jersey. PSE&G is subject to regulation by the New Jersey Board of Public Utilities (BPU) and the Federal Energy Regulatory Commission (FERC). PSE&G also invests in regulated solar generation projects and energy efficiency and related programs in New Jersey, which are regulated by the BPU, and

•PSEG Power—which is an energy supply company that integrates the operations of its merchant nuclear generating assets with its fuel supply functions through competitive energy sales via its principal direct wholly owned subsidiaries. PSEG Power’s subsidiaries are subject to regulation by FERC, the Nuclear Regulatory Commission (NRC), the Environmental Protection Agency (EPA) and the states in which they operate.

PSEG’s other direct wholly owned subsidiaries are: PSEG Energy Holdings L.L.C. (Energy Holdings), which holds our investments in offshore wind ventures and legacy lease investments; PSEG Long Island LLC (PSEG LI), which operates the Long Island Power Authority’s (LIPA) transmission and distribution (T&D) system under an Operations Services Agreement (OSA); and PSEG Services Corporation (Services), which provides certain management, administrative and general services to PSEG and its subsidiaries at cost.

Our business discussion in Part I, Item 1. Business of our 2021 Annual Report on 10-K (Form 10-K) provides a review of the regions and markets where we operate and compete, as well as our strategy for conducting our businesses within these markets, focusing on operational excellence, financial strength and making disciplined investments. Our risk factor discussion in Part I, Item 1A. Risk Factors of Form 10-K provides information about factors that could have a material adverse impact on our businesses. The following supplements that discussion and the discussion included in the Executive Overview of 2021 and Future Outlook provided in Item 7 in our Form 10-K by describing significant events and business developments that have occurred during 2022 and changes to the key factors that we expect may drive our future performance. The following discussion refers to the Condensed Consolidated Financial Statements (Statements) and the Related Notes to Condensed Consolidated Financial Statements (Notes). This discussion should be read in conjunction with such Statements, Notes and the Form 10-K.

EXECUTIVE OVERVIEW OF 2022 AND FUTURE OUTLOOK

We are a public utility holding company that, acting through our wholly owned subsidiaries, is a predominantly regulated electric and gas utility and a carbon-free generation and infrastructure company. We are focused on meeting customer expectations and being well aligned with public policy objectives by investing to modernize our energy infrastructure, improve reliability, increase energy efficiency and deliver cleaner energy. Our business plan focuses on achieving growth by allocating capital primarily toward regulated and contracted investments in an effort to improve the sustainability and predictability of our business and reduce the impact of fluctuating commodity prices. In furtherance of these goals, over the past few years, our investments have altered our business mix to reflect a higher percentage of earnings contribution by PSE&G, which improves the sustainability and predictability of our earnings and cash flows. In February 2022, we completed the sale of PSEG Power’s 6,750 MW of fossil generation located in New Jersey, Connecticut, New York and Maryland, which represented an important milestone in our strategy and has further altered our business mix, resulting in an even higher percentage of earnings contribution by PSE&G going forward and provides more financial flexibility.

The ongoing coronavirus (COVID-19) pandemic and associated government actions and economic effects continue to impact our businesses as discussed further below.

PSE&G

At PSE&G, our focus is on enhancing reliability and resiliency of our T&D system, meeting customer expectations and supporting public policy objectives by investing capital in T&D infrastructure and clean energy programs. For the years 2021-2025, PSE&G’s capital investment program is estimated to be in a range of $14 billion to $16 billion, resulting in an expected compound annual growth in rate base of 6% to 7.5% from year-end 2021 to year-end 2025. The low end of this range includes the Infrastructure Advancement Program (IAP) which the BPU approved in June 2022 and an extension of our Gas System Modernization Program (GSMP) and Clean Energy Future (CEF)-Energy Efficiency (EE) program at their average annual investment levels, as these programs are expected to continue at least at those current rates beyond their currently

Table of Contents

approved timeframe of 2023. The IAP is a $511 million investment program made over four years to improve the reliability of the “last mile” of our electric distribution system and address aging substations and gas metering and regulating stations, with $351 million of the investment being recovered through periodic rate updates and the remaining $160 million recovered through future base rate cases. The upper end of our capital investment range includes an extension of our Energy Strong program, which otherwise concludes in 2023, as well as the remaining portion of our CEF proposal (portion of Electric Vehicle (EV) and Energy Storage (ES) programs) and a potentially higher amount of investments for GSMP and CEF-EE beyond current levels. During 2022, we expect to file for extensions of our GSMP and CEF-EE program, which we expect will be resolved in 2023. A remaining component of our CEF-EV program related to medium and heavy duty charging infrastructure is the subject of a stakeholder process that the BPU began in 2021. We currently anticipate that this effort will conclude with PSE&G submitting a filing later in 2022 targeting infrastructure investments for the medium and heavy duty EV market. Our CEF-ES program is being held in abeyance pending a future written framework from the BPU.

PSEG Power

In August 2021, PSEG entered into two agreements to sell PSEG Power’s 6,750 MW fossil generating portfolio to newly formed subsidiaries of ArcLight Energy Partners Fund VII, L.P., a fund controlled by ArcLight Capital Partners, LLC. In February 2022, PSEG completed the sale of this fossil generating portfolio. These transformative transactions reduce overall business risk and earnings volatility, improve PSEG’s financial flexibility and are consistent with PSEG’s climate strategy and sustainability efforts, which are to focus on clean energy investments, methane reduction, and reducing emissions from our operations in order to transition to carbon-free generation.

We seek to achieve operational excellence and manage costs in order to optimize cash flow generation from our nuclear fleet in light of volatile wholesale power and gas prices, environmental considerations and competitive market forces that reward efficiency and reliability. During the first six months of 2022, our nuclear units generated 16.0 terawatt hours and operated at a capacity factor of 95.1%. PSEG Power’s hedging practices help to manage a significant amount of the earnings volatility of the merchant nuclear power business. More than 90% of PSEG Power’s expected gross margin in 2022 relates to hedging of our energy margin, our expected revenues from the capacity market mechanisms, Zero Emission Certificate (ZEC) revenues and, certain gas operations and ancillary service payments such as reactive power. While this limits our exposure to decreasing prices, our ability to realize benefits from rising market prices is also limited. During the second half of 2021 and continuing into 2022, forward energy prices have demonstrated considerable price volatility and have increased dramatically. This has led to significantly higher variation in our daily collateral requirements, which have also increased substantially over that time period for hedge positions that are out-of-the money. PSEG Power’s net cash collateral postings related to these hedge positions increased from $343 million at the end of June 2021 to $2.1 billion at the end of June 2022. Subsequent to June 2022, collateral postings continued to increase and we continued to experience significantly higher variation in our daily collateral requirements. Net cash collateral postings were $2.5 billion at the end of July 2022. The majority of this collateral relates to hedges in place through the end of 2023 and is expected to be returned as we satisfy our obligations under those contracts. PSEG continues to maintain sufficient liquidity as described in Liquidity and Capital Resources.

Climate Strategy and Sustainability Efforts

For more than a century, our purpose has been to provide safe access to an around-the-clock supply of reliable, affordable energy. Today, our vision is to power a future where people use less energy, and it is cleaner, safer and delivered more reliably than ever. We have established a net zero greenhouse gas (GHG) emissions by 2030 goal that includes direct GHG emissions (Scope 1) and indirect GHG emissions from operations (Scope 2) across our operations, assuming advances in technology, public policy and customer behavior. Scope 1 emissions include power generation, methane leaks, vehicle fleet emissions, sulfur hexafluoride and refrigerant leaks. Scope 2 emissions include both gas and electric purchased energy for our PSE&G facilities and line losses. We have also committed to the United Nations-backed Race to Zero campaign. We have agreed to develop and submit science-based emission reduction targets following the criteria and recommendations of the Science Based Targets Initiative by September 2023. Targets will encompass Scopes 1, 2, and 3 (which includes downstream/customer use of energy products as well as purchased goods and services for our own operations) and must be in line with 1.5oC emissions scenarios.

PSE&G has undertaken a number of initiatives that support the reduction of GHG emissions and the implementation of energy efficiency initiatives. PSE&G’s approved CEF-EE, CEF-Energy Cloud and CEF-EV programs and the proposed CEF-ES program are intended to support New Jersey’s Energy Master Plan through programs designed to help customers increase their energy efficiency, support the expansion of the EV infrastructure in the State, install energy storage capacity to supplement

Table of Contents

solar generation and enhance grid resiliency, install smart meters and supporting infrastructure to allow for the integration of other clean energy technologies and to more efficiently respond to weather and other outage events.

In addition, PSE&G is committed to the safe and reliable delivery of natural gas to almost two million customers throughout New Jersey and we are equally committed to reducing GHG emissions associated with such operations. The first phase of our GSMP replaced approximately 450 miles of cast-iron and unprotected steel gas main infrastructure, and the second phase of this program is expected to replace an additional 875 miles of gas pipes through 2023. The GSMP is designed to significantly reduce natural gas leaks in our distribution system, which would reduce the release of methane, a potent GHG, into the air. Through GSMP II, from 2018 through 2023 we expect to reduce methane leaks by approximately 22% system wide and assuming a continuation of GSMP, we expect to achieve an overall reduction in methane emissions of approximately 60% over the 2011 through 2030 period. As noted previously, later in 2022 we will file for an extension of GSMP which would continue and accelerate these methane reductions. We also continue to assess physical risks of climate change and adapt our capital investment program to improve the reliability and resiliency of our system in an environment of increasing frequency and severity of weather events, notably through our investments in our Energy Strong program. These investments have proven effective in recent severe weather events, including Tropical Storm Ida in August 2021, which brought significant flooding to our service territory but did not result in the loss of any of our electric distribution substations.

We also continue to focus on providing cleaner energy for our customers. Our priority is to preserve the economic viability of our nuclear units, which provide over 90% of the carbon-free energy in New Jersey, by advocating for state and federal policies that recognize the value of carbon-free generation and reduce market risk. We also continue to explore investment opportunities in offshore wind, both generation and transmission to support the cost-efficient connection of offshore wind generation projects to the New Jersey electric system.

Offshore Wind

In April 2021, PSEG completed its acquisition of a 25% equity interest in Ørsted North America Inc.’s (Ørsted) Ocean Wind 1 project which is currently in development. Ocean Wind 1 was selected by New Jersey to be the first offshore wind farm as part of the State’s intention to add 7,500 MW of offshore wind generating capacity by 2035. The Ocean Wind 1 project is expected to achieve full commercial operation in 2025.

Additionally, PSEG and Ørsted each owns 50% of Garden State Offshore Energy LLC (GSOE) which holds rights to an offshore wind lease area just south of New Jersey. In December 2021, the Maryland Public Service Commission awarded Ørsted’s 846 MW Skipjack 2 project Offshore Renewable Energy Credits under Maryland’s second round of offshore wind solicitations. Skipjack 2 utilizes a portion of the GSOE lease area, and PSEG has an option to purchase 50% of Skipjack 2 and the previously awarded 120 MW Skipjack 1 project, which will be constructed concurrently. PSEG expects to determine whether to exercise this option during 2022. PSEG and Ørsted are also exploring further opportunities to develop the remaining GSOE lease area.

In April 2021, PJM announced the opening of the first public policy Order 1000 bid window that would utilize the state agreement approach for transmission projects to support New Jersey’s planned offshore wind generation. The state agreement approach requires customers in the requesting state - in this case New Jersey - to pay for the costs of these public policy transmission projects. In September 2021, PSEG and Ørsted jointly submitted several proposals in response to the solicitation, including multi-spur options and an offshore network proposal. If awarded, the projects would be developed through a 50/50 joint venture with Ørsted. The BPU has announced that it will select the winning proposals in the second half of 2022 with likely in-service dates by 2030.

Ongoing Coronavirus Pandemic

As a result of the COVID-19 pandemic, we have incurred additional expenses to protect our employees and customers. The pandemic has also impacted PSE&G’s sales, with a reduction in demand from its commercial and industrial (C&I) customers, largely offset by increases in residential sales volumes. As a result, there has been no substantive net margin impact and changes are now largely addressed through the Conservation Incentive Program (CIP) that became effective in 2021. The most substantive impact of the pandemic has been adverse changes to residential and C&I payment patterns as the State of New Jersey has imposed a moratorium on non-safety related service disconnections for non-payment since March 2020 through mid-March 2022. While collections and shut-offs re-commenced after the moratorium ended, the State passed legislation that provides protection from shut-offs to customers who apply for payment assistance programs by June 15, 2022. Those applying for assistance will be protected from shut-offs while awaiting their application determination. As a result, since March 2020, PSE&G experienced a significant decrease in cash inflow and higher Accounts Receivable aging and an associated increase in bad debt expense, which we expect will take the next several years to fully return to normal levels. Over that time, PSE&G’s allowance for credit losses has increased by approximately $275 million. PSE&G’s electric distribution bad debt expense is recoverable through its Societal Benefits Clause (SBC) mechanism. PSE&G has deferred its incremental gas distribution bad

Table of Contents

debt expense as a result of COVID-19 as a Regulatory Asset and will seek recovery of that cost, as well as other net incremental COVID-19 costs, in its next base rate case.

The BPU has authorized regulated utilities in New Jersey, including PSE&G, to defer prudently incurred incremental costs related to COVID-19 beginning on March 9, 2020 through December 31, 2022 for recovery in a future rate case. Deferred costs are to be offset by any federal or state assistance that the utility may receive as a direct result of the COVID-19 pandemic. As of June 30, 2022, PSE&G has recorded a Regulatory Asset related to COVID-19 to defer incremental costs of $118 million, which PSE&G believes are recoverable under the BPU Order.

The potential future impact of the pandemic and the associated economic impacts, which could extend beyond the duration of the pandemic, will depend on a number of factors outside of our control. These include the duration and severity of the outbreaks as well as third-party actions taken to contain their spread and mitigate their public health effects, and governmental or regulatory actions regarding customer collections, potential limitations on rate increases, recovery of incremental costs, and other matters. We cannot estimate the ultimate impact to our results of operations, financial condition and cash flows.

Operational Excellence

We emphasize excellence in operational performance while developing opportunities in both our regulated and contracted businesses. In 2022, PSE&G continued its efforts to control costs while maintaining strong operational performance. PSE&G’s safety and reliability metrics continue to achieve top decile results as compared to our peer group.

Financial Strength

Our financial strength is predicated on a solid balance sheet, positive operating cash flow and reasonable risk-adjusted returns on increased investment. Our financial position remained strong during the first six months of 2022 as we

•maintained sufficient liquidity, including the extension of the expiration of our revolving credit facilities from March 2024 to March 2027,

•completed the sale of PSEG Power’s 6,750 MW portfolio of fossil generation assets,

•maintained solid investment grade credit ratings, and

•increased our indicative annual dividend per share for 2022 to $2.16.

In 2021, the Board of Directors authorized senior management to implement a $500 million share repurchase program. In December 2021, under this authorization, we entered into an open market share repurchase plan for $250 million of our common shares. During January and through mid-February 2022, we purchased the full $250 million of common shares under the open market share repurchase plan. In March 2022, under this authorization, PSEG entered into an accelerated share repurchase agreement for $250 million of our common shares which was completed in May 2022. See Item 1. Note 18. Earnings Per Share (EPS) and Dividends for additional information.

We expect to be able to fund our planned capital requirements, as described in Liquidity and Capital Resources without the issuance of new equity. Our planned capital requirements, which are driven by growth in our regulated utility, and the sale of our fossil generating fleet enhances our business profile and underpins solid investment grade credit ratings with improved financial flexibility.

The current inflationary environment has prompted the Federal Reserve to tighten monetary policy resulting in higher interest rates, which have impacted financial markets, reducing the value of fixed income investments and created uncertainty about the future economic outlook weakening equity markets. These factors have resulted in negative returns on our pension assets during 2022. As our pension costs are set at the beginning of the calendar year, there is no impact on pension costs for 2022 resulting from asset performance during the year. However, pension costs in future years may be materially impacted, depending on pension fund performance for 2022. The higher interest rates translate into a higher discount rate for our pension obligations, which would lower our pension liability and positively affect our funded ratio, which is expected to remain strong. Further, higher interest rates on borrowings will contribute to higher interest expense on variable rate debt, which has increased due to cash collateral postings, and to long-term rates on future financing plans. Inflation will also result in upward pressure on operating costs and capital spending. In addition, energy supply costs are a pass-through putting upward pressure on utility customer bills, which could be an area of focus with regulators.

Table of Contents

Financial Results

The results for PSEG, PSE&G and PSEG Power for the three months and six months ended June 30, 2022 and 2021 are presented as follows:



	Three Months Ended				Six Months Ended
	June 30,				June 30,
Earnings (Losses)	2022		2021		2022		2021
	Millions
PSE&G	$	305	$	309	$	814	$	786
PSEG Power (A)	(162)		(483)		(681)		(322)
Other (B)	(12)		(3)		(4)		7
PSEG Net Income (Loss)	$	131	$	(177)	$	129	$	471

PSEG Net Income (Loss) Per Share (Diluted)	$	0.26	$	(0.35)	$	0.26	$	0.93

(A)Includes a $373 million after-tax impairment of the Fossil generating assets for the three and six months ended June 30, 2021. See Item 1. Note 4. Early Plant Retirements/Asset Dispositions and Impairments.

(B)Other includes after-tax activities at the parent company, PSEG LI, and Energy Holdings as well as intercompany eliminations.

PSEG Power’s results above include the Nuclear Decommissioning Trust (NDT) Fund activity and the impacts of non-trading commodity mark-to-market (MTM) activity, which consist of the financial impact from positions with future delivery dates.

The variances in our Net Income (Loss) attributable to changes related to the NDT Fund and MTM are shown in the following table:



	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
	Millions, after tax
NDT Fund Income (Expense) (A) (B)	$	(117)	$	47	$	(163)	$	79
Non-Trading MTM Gains (Losses) (C)	$	(74)	$	(206)	$	(682)	$	(240)

(A)NDT Fund Income (Expense) includes gains and losses on NDT securities which are recorded in Net Gains (Losses) on Trust Investments. See Item 1. Note 9. Trust Investments for additional information. NDT Fund Income (Expense) also includes interest and dividend income and other costs related to the NDT Fund recorded in Other Income (Deductions), interest accretion expense on PSEG Power’s nuclear Asset Retirement Obligation (ARO) recorded in Operation and Maintenance (O&M) Expense and the depreciation related to the ARO asset recorded in Depreciation and Amortization (D&A) Expense.

(B)Net of tax (expense) benefit of $68 million and $(30) million for the three months and $94 million and $(53) million for the six months ended June 30, 2022 and 2021, respectively.

(C)Net of tax (expense) benefit of $30 million and $79 million for the three months and $267 million and $92 million for the six months ended June 30, 2022 and 2021, respectively.

Our Net Income for the three months ended June 30, 2022 as compared to the Net Loss in the comparable period in 2021 was driven primarily by:

•an impairment of the New England (NE) fossil asset grouping at PSEG Power in 2021 (see Item 1. Note 4. Early Plant Retirements/Asset Dispositions and Impairments for additional information), and

•lower MTM losses in 2022 due to a more significant increase in energy prices in 2021,

•partially offset by net losses on NDT Fund equity securities in 2022 as compared to net gains in 2021.

The decrease in our Net Income for the six months ended June 30, 2022 as compared to the same period in 2021 was driven primarily by

•higher MTM losses in 2022 at PSEG Power due to rising energy prices principally in the first quarter of 2022, and

Table of Contents

•unrealized losses on equity securities in 2022 in the NDT Fund as compared to realized gains in 2021,

•partially offset by an impairment in the second quarter of 2021 of the NE fossil asset grouping at PSEG Power (see Item 1. Note 4. Early Plant Retirements/Asset Dispositions and Impairments for additional information),

•higher earnings in 2022 due to continued investments in T&D programs at PSE&G, and

•the favorable impact of the CIP in 2022 at PSE&G.

Disciplined Investment

We utilize rigorous criteria and consider a number of external factors, focusing on the value for our investors and other key stakeholders, as well as other impacts, when determining how and when to efficiently deploy capital. We principally explore opportunities for investment in areas that complement our existing business and provide reasonable risk-adjusted returns and continuously assess and optimize our business mix as appropriate. In the first six months of 2022, we

•made additional investments in T&D infrastructure projects on time and on budget,

•continued to execute our Energy Efficiency and other existing BPU-approved utility programs, and

•continued to evaluate potential offshore wind opportunities.

Regulatory, Legislative and Other Developments

In our pursuit of operational excellence, financial strength and disciplined investment, we closely monitor and engage with stakeholders on significant regulatory and legislative developments. Transmission planning rules and wholesale power market design are of particular importance to our results and we continue to advocate for policies and rules that promote fair and efficient electricity markets. For additional information about regulatory, legislative and other developments that may affect us, see Part I, Item 1. Business—Regulatory Issues in our Form 10-K and Item 5. Other Information in this Quarterly Report on Form 10-Q.

Transmission Rate Proceedings and Return on Equity (ROE)

In October 2021, FERC approved a settlement agreement effective August 1, 2021 that we reached with the BPU and the New Jersey Division of Rate Counsel about the level of PSE&G’s base transmission ROE and other formula rate matters. The settlement reduces PSE&G’s base ROE from 11.18% to 9.9% and makes several other changes regarding the recovery of certain costs. The agreement provides that the settling parties will not seek changes to our transmission formula rate for three years. We have implemented the terms of the agreement and PJM issued refunds to customers in January 2022.

Under current FERC rules, we continue to earn a 50 basis point adder to that base ROE for our membership in PJM. Elimination of the adder for Regional Transmission Organization membership could reduce PSE&G’s annual Net Income and annual cash inflows by approximately $30 million to $40 million.

Wholesale Power Market Design

FERC issued a notice effective September 2021 that essentially put into effect a new Minimum Offer Price Rule (MOPR) that would accommodate certain state public policy programs. PSEG Power’s New Jersey nuclear plants that receive ZEC payments were not subject to the MOPR in the June 2022 Base Residual Auction. These new MOPR rules are being challenged by a group of generators in the Court of Appeals for the Third Circuit. PSEG has intervened in the proceeding in support of the new MOPR rules. We cannot predict the outcome of this proceeding.

A factor that influenced the results of the June base residual auction was FERC’s 2021 order related to the Market Seller Offer Cap which ultimately eliminated the default offer cap. In its place, FERC adopted a unit-specific approach to reviewing certain capacity market offers. These new rules, which require market offers for many resource types to be approved by the Independent Market Monitor and PJM resulted in lower capacity prices in the June auction.

In July 2021, the BPU issued a report on its investigation related to whether New Jersey can achieve its long-term clean energy and environmental objectives under the current resource adequacy procurement paradigm. The report found that participating in the regional market is the most efficient way for New Jersey to achieve its clean energy goals and therefore consideration of leaving the regional market is paused while market reforms are being considered at the regional and national level. We cannot predict whether the BPU will ultimately take any measures in the future that will have an impact on the capacity market or our generating stations.

Environmental Regulation

We are subject to liability under environmental laws for the costs and penalties of remediating contamination of property now or formerly owned by us and of property contaminated by hazardous substances that we generated. In particular, the historic operations of PSEG companies and the operations of numerous other companies along the Passaic and Hackensack Rivers are

Table of Contents

alleged by federal and state agencies to have discharged substantial contamination into the Passaic River/Newark Bay Complex in violation of various statutes. In addition, PSEG Power has retained ownership of certain assets and liabilities excluded from the sale of its fossil generation business, primarily related to obligations under certain environmental regulations, including possible remediation obligations under the New Jersey Industrial Site Recovery Act and the Connecticut Transfer Act. The amounts for any such environmental remediation are not estimable, but may be material. We are also currently involved in a number of proceedings relating to sites where other hazardous substances may have been discharged and may be subject to additional proceedings in the future, and the costs and penalties of any such remediation efforts could be material.

For further information regarding the matters described above, as well as other matters that may impact our financial condition and results of operations, see Item 1. Note 11. Commitments and Contingent Liabilities.

Nuclear

In April 2021, PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants were awarded ZECs for the three-year eligibility period starting June 2022 at the same approximate $10 per megawatt hour (MWh) received during the prior ZEC period through May 2022. Pursuant to a process established by the BPU, ZECs are purchased from selected nuclear plants and recovered through a non-bypassable distribution charge in the amount of $0.004 per kilowatt-hour used (which is equivalent to approximately $10 per MWh generated in payments to selected nuclear plants (ZEC payment)). While the ZEC program has preserved these units to date, PSEG will simultaneously seek long-term legislative or other solutions for our New Jersey nuclear plants that sufficiently values them for their carbon-free, fuel diversity and resilience attributes. No assurances can be given regarding future ZEC awards or other long-term solutions. See Note 4. Early Plant Retirements/Asset Dispositions and Impairments for additional information.

Tax Legislation

A prolonged pandemic, further economic stimulus, or future federal and state tax legislation could have a material impact on our effective tax rate and cash tax position.

The Consolidated Appropriations Act, 2021 (CAA), enacted in late December 2020, provides a 30% investment tax credit (ITC) for offshore wind projects that begin construction before December 31, 2025. In addition, on December 31, 2020, Notice 2021-05 was issued. For qualifying offshore wind projects, the notice extends the four year continuity safe harbor to ten calendar years commencing the calendar year after which construction of the project begins. Subject to potential additional legislation, the CAA and the associated Notice will impact our offshore wind investment.

In July 2020, the Internal Revenue Service (IRS) issued final and proposed regulations addressing the limitation on deductible business interest expense contained in the Tax Cuts and Jobs Act. These regulations retroactively allow depreciation to be added back in computing the 30% adjusted taxable income (ATI) cap, increasing the amount of interest that can be deducted by unregulated businesses in years before 2022. The portion of PSEG’s and PSEG Power’s business interest expense that was disallowed in 2018 and 2019 is now deductible in those respective years. For 2022 and after, the regulations disallow the addback of depreciation in the computation of ATI, effectively lowering the cap on the amount of deductible business interest. We do not believe this change will result in limitations on the deductible business interest expense of PSEG and PSEG Power.

In March 2020, the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted. The CARES Act allows a five-year carryback of any net operating loss (NOL) generated in a taxable year beginning after December 31, 2017 and before January 1, 2021. The CARES Act allowed us to carry back the 2018 tax NOL generated by the final Section 163(j) regulations, which will provide a future tax benefit, subject to approval by the IRS and the Joint Committee on Taxation.

Future Outlook

Our future success will depend on our ability to continue to maintain strong operational and financial performance to capitalize on or otherwise address regulatory and legislative developments that impact our business and to respond to the issues and challenges described below. In order to do this, we will continue to:

•obtain approval of and execute on our utility capital investment program to modernize our infrastructure, improve the reliability of the service we provide to our customers, and align our sustainability and climate goals with New Jersey’s energy policy,

•manage the risks and opportunities in environmental, social and governance (ESG) matters, which is an integral part of our long-term strategy to be a clean energy leader for the benefit of all stakeholders,

•focus on controlling costs while maintaining safety, reliability and customer satisfaction and complying with applicable standards and requirements,

•deliver on our human capital management strategy to attract, develop and retain a diverse, high-performing workforce,

Table of Contents

•successfully manage our energy obligations and re-contract our open supply positions in response to changes in prices and demand,

•advocate for federal and state programs to properly value New Jersey’s largest carbon-free generation resource in nuclear and measures that promote fair and efficient electricity markets, including recognition of the cost of emissions,

•engage constructively with our multiple stakeholders, including regulators, government officials, customers, employees, investors, suppliers and the communities in which we do business,

•seek a fair return for our T&D investments through our transmission formula rate, distribution infrastructure and clean energy investment programs and periodic distribution base rate case proceedings, and

•successfully operate the LIPA T&D system and manage LIPA’s fuel supply and generation dispatch obligations.

In addition to the risks described elsewhere in this Form 10-Q and in our Form 10-K, for 2022 and beyond, the key issues and challenges we expect our business to confront include:

•regulatory and political uncertainty, both with regard to future energy policy, design of energy and capacity markets, transmission policy, the role of distribution utilities and decarbonization impacts, and environmental regulation, as well as with respect to the outcome of any legal, regulatory or other proceedings,

•the continuing impact of the ongoing coronavirus pandemic and the associated regulations and economic impacts, including continued supply chain constraints and increases in the cost of goods and services, which could extend beyond the duration of the pandemic,

•the current inflationary environment and associated volatility in the financial and commodity markets,

•increases in commodity prices and customer rates, which may adversely affect customer collections and future regulatory proceedings,

•future changes in federal and state tax laws or any other associated tax guidance, and

•the impact of changes in demand, natural gas and electricity prices, and expanded efforts to decarbonize several sectors of the economy.

We continually assess a broad range of strategic options to maximize long-term stockholder value and address the interests of our multiple stakeholders. In assessing our options, we consider a wide variety of factors, including the performance and prospects of our businesses; the views of investors, regulators, rating agencies, customers and employees; our existing indebtedness and restrictions it imposes; and tax considerations, among other things. Strategic options available to us include:

•investments in PSE&G, including T&D facilities to enhance reliability, resiliency and modernize the system to meet the growing needs and increasingly higher expectations of customers, and clean energy investments such as CEF-EE, CEF-EV, CEF-ES and Solar,

•investments in regional offshore wind with long-term contracts or regulated transmission returns that provide revenue predictability and a reasonable risk-adjusted return,

•continued operation of our nuclear generation facilities, to the extent there is sufficient certainty that their operation will render an acceptable risk-adjusted return, and

•acquisitions, dispositions, development and other transactions involving our common stock, assets or businesses that could provide value to customers and shareholders.

There can be no assurance, however, that we will successfully develop and execute any of the strategic options noted above, or any additional options we may consider in the future. The execution of any such strategic plan may not have the expected benefits or may have unexpected adverse consequences.

Table of Contents

RESULTS OF OPERATIONS

PSEG

Our results of operations are primarily comprised of the results of operations of our principal operating segments, PSE&G and PSEG Power, excluding charges related to intercompany transactions, which are eliminated in consolidation. For additional information on intercompany transactions, see Item 1. Note 20. Related-Party Transactions.



	Three Months Ended				Increase/ (Decrease)			Six Months Ended				Increase/ (Decrease)
	June 30,							June 30,
	2022		2021		2022 vs. 2021			2022		2021		2022 vs. 2021
	Millions				Millions		%	Millions				Millions		%
Operating Revenues	$	2,076	$	1,874	$	202	11	$	4,389	$	4,763	$	(374)	(8)
Energy Costs	765		606		159		26	2,010		1,635		375		23
Operation and Maintenance	751		783		(32)		(4)	1,545		1,561		(16)		(1)
Depreciation and Amortization	269		322		(53)		(16)	552		663		(111)		(17)
(Gains) Losses on Asset Dispositions and Impairments	(5)		457		(462)		N/A	38		457		(419)		(92)
Income from Equity Method Investments	7		6		1		17	11		9		2		22
Net Gains (Losses) on Trust Investments	(187)		81		(268)		N/A	(255)		141		(396)		N/A
Other Income (Deductions)	38		33		5		15	43		58		(15)		(26)
Net Non-Operating Pension and OPEB Credits (Costs)	94		82		12		15	188		164		24		15
Interest Expense	150		147		3		2	287		293		(6)		(2)
Income Tax (Benefit) Expense	(33)		(62)		29		(47)	(185)		55		(240)		N/A

The following discussions for PSE&G and PSEG Power provide a detailed explanation of their respective variances.

PSE&G



	Three Months Ended				Increase/ (Decrease)			Six Months Ended				Increase/ (Decrease)
	June 30,							June 30,
	2022		2021		2022 vs. 2021			2022		2021		2022 vs. 2021
	Millions				Millions		%	Millions				Millions		%
Operating Revenues	$	1,668	$	1,514	$	154	10	$	3,952	$	3,587	$	365	10
Energy Costs	630		509		121		24	1,598		1,358		240		18
Operation and Maintenance	434		393		41		10	897		817		80		10
Depreciation and Amortization	227		231		(4)		(2)	468		472		(4)		(1)

Net Gains (Losses) on Trust Investments	(2)		—		(2)		N/A	(2)		1		(3)		N/A
Other Income (Deductions)	22		24		(2)		(8)	41		52		(11)		(21)
Net Non-Operating Pension and OPEB Credits (Costs)	71		66		5		8	141		132		9		7
Interest Expense	107		101		6		6	210		199		11		6
Income Tax Expense (Benefit)	56		61		(5)		(8)	145		140		5		4

Three Months Ended June 30, 2022 as Compared to Three Months Ended June 30, 2021

Operating Revenues increased $154 million due to changes in delivery, commodity, clause and other operating revenues.

Delivery Revenues increased $19 million due primarily to

Table of Contents

•Gas distribution revenues increased $13 million due primarily to increases of $7 million in GSMP II collections, $5 million from CIP decoupling and $1 million due to higher sales volumes.

•Electric distribution revenues increased $12 million due primarily to $12 million from CIP decoupling and $9 million from Energy Strong II, partially offset by a decrease of $9 million from lower sales volumes.

•Electric and Gas distribution revenues also increased $2 million due to a net decrease in the flowback to customers of excess deferred tax liabilities and tax repair-related accumulated deferred income tax benefits resulting from rate reductions, which is offset in Income Tax Expense.

•Transmission revenues were $8 million lower due primarily to the estimated impact of the ROE settlement, partially offset by an increase in revenue requirements attributable to higher rate base investment.

Commodity Revenues increased $118 million as a result of higher Electric revenues and higher Gas revenues. The changes in Commodity revenues for both electric and gas are entirely offset by the changes in Energy Costs. PSE&G earns no margin on the provision of basic generation service (BGS) to retail customers and basic gas supply service (BGSS).

•Electric commodity revenues increased $62 million due to a $49 million increase from higher BGS prices and a $13 million increase in sales volumes.

•Gas commodity revenues increased $56 million due to $49 million from higher BGSS prices and $6 million from higher BGSS sales volumes

Clause Revenues increased $3 million due primarily to higher SBC revenues of $7 million partially offset by a $3 million decrease in Tax Adjustment Credit (TAC) deferrals. The changes in SBC revenues and in TAC deferral amounts are entirely offset by changes in the amortization of Regulatory Assets and Regulatory Liabilities and related costs in O&M, D&A, Interest and Income Tax Expenses. PSE&G does not earn margin on SBC revenue or TAC deferrals.

Other Operating Revenues increased $14 million due primarily to revenue increases of $7 million in appliance services, $2 million in Solar Renewable Energy Certificates (SREC) and $1 million from the Successor Solar Incentive (SuSi) Program. Transition Renewable Energy Certificate (TREC) and ZEC revenues were unchanged. The SREC, SuSi, TREC and ZEC components of other operating revenues are entirely offset by changes to Energy Costs.

Operating Expenses

Energy Costs increased $121 million. This is entirely offset by changes in Commodity Revenues and Other Operating Revenues.

Operation and Maintenance increased $41 million due primarily to increases of $19 million in clause and renewable-related expenses, $6 million in Electric distribution corrective and preventative expenditures, $5 million in injuries and damages, $5 million in gas tariff expenditures, $1 million in appliance service competitive services costs and $12 million in other operating expenses. These increases were partially offset by a $7 million decrease in transmission expenditures.

Depreciation and Amortization decreased $4 million due primarily to a $12 million decrease from new lower transmission depreciation rates that became effective in August 2021 and a $6 million decrease in the amortization of Regulatory Assets, partially offset by a $14 million increase related to additional plant in service.

Other Income (Deductions) decreased $2 million primarily due to a $4 million decrease in the equity portion of the allowance for funds used during construction (AFUDC), partially offset by a $2 million increase in investment interest and dividend income.

Net Non-Operating Pension and OPEB Credits (Costs) increased $5 million due primarily to a $13 million decrease in the amortization of the net actuarial loss, partially offset by a $5 million decrease in the expected return on plan assets and a $3 million increase in interest cost.

Interest Expense increased $6 million due primarily to a $4 million increase from the 2022 debt issuance and a $2 million increase from other.

Income Tax Expense decreased $5 million due primarily to lower pre-tax income.

Table of Contents

Six Months Ended June 30, 2022 as Compared to Six Months Ended June 30, 2021

Operating Revenues increased $365 million due to changes in delivery, commodity, clause and other operating revenues.

Delivery Revenues increased $111 million due primarily to

•Gas distribution revenues increased $75 million due primarily to increases of $33 million from CIP decoupling, $33 million in GSMP II collections, $7 million due to higher sales volumes and $2 million in Green Program Recovery Charge (GPRC) collections.

•Electric distribution revenues increased $30 million due primarily to $28 million from CIP decoupling, $9 million from Energy Strong II, and $1 million in GPRC collections, partially offset by a decrease of $8 million from lower sales volumes.

•Electric and Gas distribution revenues also increased $18 million due to a net decrease in the flowback to customers of excess deferred tax liabilities and tax repair-related accumulated deferred income tax benefits resulting from rate reductions, which is offset in Income Tax Expense.

•Transmission revenues were $12 million lower due primarily to the estimated impact of the ROE settlement, partially offset by an increase in revenue requirements attributable to higher rate base investment.

Commodity Revenues increased $238 million as a result of higher Gas revenues and higher Electric revenues. The changes in Commodity revenues for both gas and electric are entirely offset by the changes in Energy Costs. PSE&G earns no margin on the provision of BGSS and BGS to retail customers.

•Gas commodity revenues increased $176 million due primarily to $164 million from higher BGSS prices and $12 million from higher BGSS sales volumes.

•Electric commodity revenues increased $62 million due primarily to $37 million in higher BGS prices and a $27 million increase from higher sales volumes.

Clause Revenues decreased $8 million due primarily to an $18 million decrease in TAC deferrals and a $4 million decrease in GPRC deferrals, partially offset by higher SBC revenues of $15 million. The changes in TAC and GPRC deferral amounts and SBC revenues are entirely offset by changes in the amortization of Regulatory Assets and Regulatory Liabilities and related costs in O&M, D&A, Interest and Income Tax Expenses. PSE&G does not earn margin on TAC and GPRC deferrals or SBC revenue.

Other Operating Revenues increased $24 million due primarily to revenue increases of $14 million in appliance services, $2 million in SRECs, $1 million in ZECs and $1 million from the SuSi Program. These increases were partially offset by a $2 million decrease in TREC revenues. The SREC, ZEC, SuSi and TREC components of other operating revenues are entirely offset by changes to Energy Costs.

Operating Expenses

Energy Costs increased $240 million. This is entirely offset by changes in Commodity Revenues and Other Operating Revenues.

Operation and Maintenance increased $80 million due primarily to increases of $37 million in clause and renewable-related expenses, $10 million in Electric distribution corrective and preventative expenditures, $9 million in injuries and damages, $6 million in gas tariff expenditures, $3 million in appliance service competitive services costs and $20 million in other operating expenses. These increases were partially offset by a $5 million decrease in transmission expenditures.

Depreciation and Amortization decreased $4 million due primarily to a $24 million decrease due to new lower transmission depreciation rates that became effective in August 2021 and a $12 million decrease in the amortization of Regulatory Assets, partially offset by a $30 million increase related to additional plant in service.

Other Income (Deductions) decreased $11 million primarily due to a $12 million decrease in the equity portion of the AFUDC, partially offset by a $2 million increase in investment interest and dividend income.

Net Non-Operating Pension and OPEB Credits (Costs) increased $9 million due primarily to a $26 million decrease in the amortization of the net actuarial loss, partially offset by a $10 million decrease in the expected return on plan assets and a $7 million increase in interest cost.

Interest Expense increased $11 million due primarily to a $5 million increase from the 2022 debt issuance, a $3 million increase in AFUDC and a $1 million increase from net debt issuances in 2021.

Income Tax Expense increased $5 million due primarily to higher pre-tax income.

Table of Contents

PSEG Power



	Three Months Ended				Increase/ (Decrease)			Six Months Ended				Increase/ (Decrease)
	June 30,							June 30,
	2022		2021		2022 vs. 2021			2022		2021		2022 vs. 2021
	Millions				Millions		%	Millions				Millions		%
Operating Revenues	$	488	$	380	$	108	28	$	948	$	1,547	$	(599)	(39)
Energy Costs	372		271		101		37	1,233		953		280		29
Operation and Maintenance	182		259		(77)		(30)	386		481		(95)		(20)
Depreciation and Amortization	35		83		(48)		(58)	69		175		(106)		(61)
(Gains) Losses on Asset Dispositions and Impairments	(5)		457		(462)		N/A	38		457		(419)		(92)
Income from Equity Method Investments	6		6		—		—	10		9		1		11
Net Gains (Losses) on Trust Investments	(182)		79		(261)		N/A	(248)		137		(385)		N/A
Other Income (Deductions)	15		8		7		88	—		4		(4)		N/A
Net Non-Operating Pension and OPEB Credits (Costs)	18		11		7		64	35		23		12		52
Interest Expense	10		24		(14)		(58)	15		51		(36)		(71)
Income Tax Expense (Benefit)	(87)		(127)		40		(31)	(315)		(75)		(240)		N/A

Three Months Ended June 30, 2022 as Compared to Three Months Ended June 30, 2021

Operating Revenues increased $108 million due primarily to changes in generation and gas supply revenues.

Gas Supply Revenues increased $198 million due primarily to

•a net increase of $87 million in sales under the BGSS contract due primarily to higher average prices of $79 million and higher sales volumes of $8 million,

•a net increase of $82 million related to sales to third parties, primarily due to higher average sales prices, and

•an increase of $29 million due to changes in forward prices.

Generation Revenues decreased $89 million due primarily to

•a net decrease of $207 million due primarily to lower volumes sold in the PJM, NE and New York (NY) regions primarily due to the sale of the fossil generating plants, coupled with lower average realized prices in the PJM regions,

•a net decrease of $56 million in capacity revenue due primarily to the sale of the fossil generating plants coupled with lower capacity prices in the PJM region, partially offset by decreases in capacity expenses due to lower load volumes served,

•a net decrease of $47 million due primarily to lower volumes of electricity sold under the BGS contracts, and

•a net decrease of $13 million in solar revenues due to the sale of the solar plants in June 2021,

•partially offset by a net increase of $241 million due to lower MTM losses in 2022 as compared to 2021. Of this amount, there was a $170 million increase due to gains on positions reclassified to realized upon settlement in 2022 as compared to losses in 2021 coupled with a $71 million increase due to changes in forward prices.

Other Operating Revenues decreased $1 million due primarily to changes in generation and gas supply revenues.

Operating Expenses

Energy Costs represent the cost of generation, which includes fuel costs for generation as well as purchased energy in the market, and gas purchases to meet PSEG Power’s obligation under its BGSS contract with PSE&G. Energy Costs increased $101 million due to

Table of Contents

Gas costs increased $175 million due mainly to

•a net increase of $91 million primarily related to sales under the BGSS contract, of which $84 million was due to higher prices and $7 million to higher sales volumes, and

•a net increase of $82 million related to sales to third parties, primarily due to an increase in the average cost of gas.

Generation costs decreased $74 million due primarily to

•a net decrease of $130 million in fuel costs due to the sale of the fossil generating plants, and

•a net decrease of $30 million in energy purchases due primarily to lower renewable energy credit (REC) requirements and lower ancillary charges caused by decreases in load served in the PJM and NE regions,

•partially offset by a net increase of $86 million due to net MTM losses in 2022 as compared to net MTM gains in 2021. Of this amount, there was a $73 million increase due to changes in forward prices coupled with a $13 million increase due to less gains on positions reclassified to realized upon settlement in 2022 as compared to 2021.

Operation and Maintenance decreased $77 million due primarily to the sales of the fossil generating plants and our ownership interest in the solar plants in February 2022 and June 2021, respectively. The decrease was also due to an outage at our 57%-owned Salem 2 nuclear plant in 2022 as compared to a refueling outage at our 100%-owned Hope Creek nuclear plant in 2021.

Depreciation and Amortization decreased $48 million due primarily to ceasing depreciation expense on the then pending sales of the solar and fossil generating plants since May and August 2021, respectively, and the retirement of Bridgeport Harbor 3 (BH3) effective May 31, 2021.

(Gains) Losses on Asset Dispositions and Impairments reflects a $519 million impairment loss of the ISO NE fossil asset grouping in 2021, partially offset by a $62 million gain from the sale of Solar Source in 2021. See Item 1. Note 4. Early Plant Retirements/Asset Dispositions and Impairments.

Net Gains (Losses) on Trust Investments decreased $261 million due primarily to NDT investments with $171 million of unrealized losses on equity securities and $10 million of net realized losses in 2022 as compared to $19 million of unrealized gains on equity securities and $60 million of net realized gains in 2021.

Other Income (Deductions) increased $7 million due primarily to lower purchases of NOL tax benefits under the New Jersey Technology Tax Benefit Transfer Program in 2022.

Non-Operating Pension and OPEB Credits (Costs) increased $7 million due to an increase in the expected return on plan assets and a decrease in the amortization of the net actuarial loss, partially offset by an increase in interest cost and co-owner charges.

Interest Expense decreased $14 million due primarily to the early redemption of all outstanding Senior Notes in 2021, partially offset by a term loan entered into in March 2022.

Income Tax (Benefit) decreased $40 million due primarily to a lower pre-tax loss in 2022, partially offset by the recapture of ITCs related to the sale of Solar Source in 2021 and increased tax benefits in 2022 on losses from the NDT qualified fund.

Six Months Ended June 30, 2022 as Compared to Six Months Ended June 30, 2021

Operating Revenues decreased $599 million due primarily to changes in generation and gas supply revenues.

Gas Supply Revenues increased $377 million due primarily to

•a net increase of $234 million in sales under the BGSS contract due primarily to higher average prices of $219 million and higher sales volumes of $15 million,

•a net increase of $124 million related to sales to third parties, primarily due to higher average sales prices, and

•an increase of $19 million due to changes in forward prices.

Generation Revenues decreased $974 million due primarily to

•a net decrease of $540 million due to higher MTM losses in 2022 as compared to 2021. Of this amount, there was a $745 million decrease due to changes in forward prices, partially offset by a $205 million increase due to gains on positions reclassified to realized upon settlement in 2022 as compared to losses in 2021,

•a net decrease of $230 million due primarily to lower volumes sold in the PJM, NE and NY regions primarily due to the sale of the fossil generating plants, coupled with lower average realized prices in the PJM region, partially offset by higher average realized prices in the NE and NY regions,

Table of Contents

•a net decrease of $115 million due primarily to lower volumes of electricity sold under the BGS contracts,

•a net decrease of $60 million in capacity revenue due primarily to the sale of the fossil generating plants coupled with lower capacity prices in the PJM region, partially offset by decreases in capacity expenses due to lower load volumes served, and

•a net decrease of $24 million in solar revenues due to the sale of the solar plants in June 2021.

Other Operating Revenues decreased $2 million due primarily to changes in generation and gas supply revenues.

Operating Expenses

Gas costs increased $350 million due mainly to

•a net increase of $241 million primarily related to sales under the BGSS contract, of which $230 million was due to the higher average cost of gas and $11 million to higher send out volumes, and

•a net increase of $108 million related to sales to third parties, primarily due to an increase in the average cost of gas.

Generation costs decreased $70 million due primarily to

•a net decrease of $96 million in fuel costs, primarily due to lower volumes of gas in the PJM, NY, and NE regions caused by the sale of the fossil generating plants, partially offset by higher gas prices. Additionally, there was a decrease in coal costs in the NE region due to the retirement of the BH3 plant in 2021,

•a net decrease of $50 million in energy purchases due primarily to lower REC requirements and lower ancillary charges caused by decreases in load served in the PJM and NE regions, and

•a net decrease of $13 million in transmission costs due primarily to the impact from transfer of responsibility for firm transmission services under BGS contracts from BGS suppliers to the electric distribution companies,

•partially offset by a net increase of $93 million due to net MTM losses in 2022 as compared to net MTM gains in 2021. Of this amount, there was a $69 million increase in losses due to changes in forward prices coupled with a $24 million increase in losses due to higher gains on positions reclassified to realized upon settlement in 2022 as compared to 2021.

Operation and Maintenance decreased $95 million due primarily to the sale of the fossil generating plants in February 2022 and the sale of our ownership interest in the solar plants in June 2021. The decrease was also due to an outage at our 57%-owned Salem 2 nuclear plant in 2022 as compared to a refueling outage at our 100%-owned Hope Creek nuclear plant in 2021.

Depreciation and Amortization decreased $106 million due primarily to ceasing depreciation expense on the then pending sales of the solar and fossil generating plants since May and August 2021, respectively, and the retirement of BH3 in 2021.

(Gains) Losses on Asset Dispositions and Impairments in 2022 primarily reflects an impairment loss due to the sale of the fossil generating plants in February 2022. The $457 million net loss in 2021 reflects a $597 million impairment loss of the ISO NE fossil asset grouping in 2021, partially offset by a $62 million gain from the sale of Solar Source in 2021. See Item 1. Note 4. Early Plant Retirements/Asset Dispositions and Impairments.

Net Gains (Losses) on Trust Investments decreased $385 million due primarily to NDT investments with $232 million of unrealized losses on equity securities and $15 million of net realized losses in 2022 as compared to $13 million of unrealized gains on equity securities and $124 million of net realized gains in 2021.

Non-Operating Pension and OPEB Credits (Costs) increased $12 million due to an increase in the expected return on plan assets and a decrease in the amortization of the net actuarial loss, partially offset by an increase in interest cost and co-owner charges.

Interest Expense decreased $36 million due primarily to the early redemption of all outstanding Senior Notes in 2021, partially offset by a term loan entered into in March 2022.

Income Tax (Benefit) increased $240 million due primarily to a higher pre-tax loss in 2022, the recapture of ITCs related to the sale of Solar Source in June 2021 and increased tax benefits on losses from the NDT qualified fund.

Table of Contents

LIQUIDITY AND CAPITAL RESOURCES

The following discussion of our liquidity and capital resources is on a consolidated basis, noting the uses and contributions, where material, of our two direct major operating subsidiaries.

Operating Cash Flows

We continue to expect our operating cash flows combined with cash on hand and financing activities to be sufficient to fund planned capital expenditures and shareholder dividends.

For the six months ended June 30, 2022, our operating cash flow decreased $693 million as compared to the same period in 2021. The net decrease was primarily due to a $955 million reduction related to net cash collateral posting requirements and higher tax payments in 2022 at PSEG Power and a net change at PSE&G, as discussed below. In addition, there were tax payments in 2022 as compared to tax refunds in 2021 at Energy Holdings and the parent company.

Current economic conditions have adversely impacted residential and C&I customer payment patterns. During the moratorium, as previously discussed, PSE&G has experienced a significant decrease in cash inflow and higher Accounts Receivable aging and an associated increase in bad debt expense, which we expect will extend beyond the duration of the coronavirus pandemic.

PSE&G

PSE&G’s operating cash flow increased $632 million from $680 million to $1,312 million for the six months ended June 30, 2022, as compared to the same period in 2021, due primarily to higher cash collateral postings received from BGS suppliers, decreases in electric energy and vendor payments, higher tax payments in 2021 and higher earnings in 2022, partially offset by a net increase in regulatory deferrals in 2022.

Short-Term Liquidity

Each of our credit facilities is restricted as to availability and use to the specific companies as listed below; however, if necessary, the PSEG facilities can also be used to support our subsidiaries’ liquidity needs.

During the second half of 2021 and continuing into 2022, forward energy prices have demonstrated considerable price volatility and have increased dramatically. This has led to significantly higher variation in our daily collateral requirements which have also increased substantially over that time period for hedge positions that are out-of-the money. PSEG Power’s net cash collateral postings related to these hedge positions increased from $343 million at the end of June 2021 to $2.1 billion at the end of June 2022. Subsequent to June 2022, collateral postings continued to increase and PSEG Power continued to experience significantly higher variation in our daily collateral requirements. Net cash collateral postings were $2.5 billion at the end of July 2022. The majority of this collateral relates to hedges in place through the end of 2023 and is expected to be returned as we satisfy our obligations under those contracts. Proceeds from the sale of Fossil, the closing of a $1.25 billion term loan in March 2022 at PSEG Power, and short-term borrowings at PSEG have contributed to available liquidity to help support PSEG Power’s current collateral requirements in 2022.

In March and May 2021, PSEG entered into two 364-day variable rate term loan agreements for $500 million and $750 million, respectively. In August 2021, PSEG entered into a $1.25 billion, 364-day variable rate term loan agreement. In March 2022, the $500 million term loan matured and PSEG prepaid the $750 million term loan due in May 2022. In July 2022, PSEG repaid the $1.25 billion term loan due in August 2022. These term loans are not included in the credit facility amounts presented in the following table.

In April 2022 and May 2022, PSEG entered into 364-day variable rate term loan agreements for $1.5 billion and $500 million, respectively.

Table of Contents

Our total credit facilities and available liquidity as of June 30, 2022 were as follows:



Company/Facility	As of June 30, 2022
	Total Facility		Usage		Available Liquidity
	Millions
PSEG	$	1,500	$	65	$	1,435
PSE&G	1,000		18		982
PSEG Power	1,550		580		970
Total	$	4,050	$	663	$	3,387

We continually monitor our liquidity and seek to add capacity as needed to meet our liquidity requirements, including to satisfy any additional collateral requirements. As of June 30, 2022, our liquidity position, including our credit facilities and access to external financing, was expected to be sufficient to meet our projected stressed requirements over our 12 month planning horizon. PSEG analyzes its liquidity requirements using stress scenarios that consider different events, including changes in commodity prices and the potential impact of PSEG Power losing its investment grade credit rating from S&P or Moody’s, which would represent a two level downgrade from its current Moody’s and S&P ratings. In the event of a deterioration of PSEG Power’s credit rating, certain of PSEG Power’s agreements allow the counterparty to demand further performance assurance. The potential additional collateral that we would be required to post under these agreements if PSEG Power were to lose its investment grade credit rating was approximately $976 million and $1,151 million as of June 30, 2022 and December 31, 2021, respectively.

For additional information, see Item 1. Note 12. Debt and Credit Facilities.

Long-Term Debt Financing

During the next twelve months,

•PSEG has $700 million of 2.65% Senior Notes maturing in November 2022, and

•PSE&G has $500 million of 2.38% Medium-Term Notes, Series I, due May 2023.

PSEG, PSEG Power, Energy Holdings, PSEG LI and Services participate in a corporate money pool, an aggregation of daily cash balances designed to efficiently manage their respective short-term liquidity needs, which are accounted for as intercompany loans. Long Island Electric Utility Servco, LLC (Servco) does not participate in the corporate money pool. Servco’s short-term liquidity needs are met through an account funded and owned by LIPA.

For additional information see Item 1. Note 12. Debt and Credit Facilities.

Common Stock Dividends

On July 19, 2022, PSEG’s Board of Directors approved a $0.54 per share common stock dividend for the third quarter of 2022. This reflects an indicative annual dividend rate of $2.16 per share. We expect to continue to pay cash dividends on our common stock; however, the declaration and payment of future dividends to holders of our common stock will be at the discretion of the Board of Directors and will depend upon many factors, including our financial condition, earnings, capital requirements of our businesses, alternate investment opportunities, legal requirements, regulatory constraints, industry practice and other factors that the Board of Directors deems relevant. For additional information related to cash dividends on our common stock, see Item 1. Note 18. Earnings Per Share (EPS) and Dividends.

Credit Ratings

If the rating agencies lower or withdraw our credit ratings, such revisions may adversely affect the market price of our securities and serve to materially increase our cost of capital and limit access to capital. Credit Ratings shown are for securities that we typically issue. Outlooks are shown for the credit ratings at each entity and can be Stable, Negative, or Positive. There is no assurance that the ratings will continue for any given period of time or that they will not be revised by the rating agencies, if in their respective judgments, circumstances warrant. Each rating given by an agency should be evaluated independently of the other agencies’ ratings. The ratings should not be construed as an indication to buy, hold or sell any security.

Table of Contents

Moody’s (A)

S&P (B)

PSEG

Outlook

Stable

Senior Notes

Baa2

BBB

Commercial Paper

PSE&G

Outlook

Stable

Mortgage Bonds

Commercial Paper

PSEG Power

Outlook

Stable

Issuer Rating

Baa2

BBB

(A)Moody’s ratings range from Aaa (highest) to C (lowest) for long-term securities and P1 (highest) to NP (lowest) for short-term securities.

(B)S&P ratings range from AAA (highest) to D (lowest) for long-term securities and A1 (highest) to D (lowest) for short-term securities.

CAPITAL REQUIREMENTS

We expect that all of our capital requirements over the next three years will come from a combination of internally generated funds and external debt financing. There were no material changes to our projected capital expenditures as compared to amounts disclosed in our 2021 Form 10-K.

PSE&G

During the six months ended June 30, 2022, PSE&G made capital expenditures of $1,171 million, primarily for T&D system reliability. This does not include expenditures for energy efficiency and electric vehicle programs of approximately $105 million and cost of removal, net of salvage, of $63 million, which are included in operating cash flows.

Other

During the six months ended June 30, 2022, PSEG made capital expenditures of $47 million, excluding $73 million for nuclear fuel, primarily related to various nuclear projects.

ACCOUNTING MATTERS

For information related to recent accounting matters, see Item 1. Note 2. Recent Accounting Standards.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The risk inherent in our market-risk sensitive instruments and positions is the potential loss arising from adverse changes in commodity prices, equity security prices and interest rates as discussed in the Notes to the Condensed Consolidated Financial Statements. It is our policy to use derivatives to manage risk consistent with business plans and prudent practices. We have a Risk Management Committee comprised of executive officers who utilize a risk oversight function to ensure compliance with our corporate policies and risk management practices.

Additionally, we are exposed to counterparty credit losses in the event of non-performance or non-payment. We have a credit management process, which is used to assess, monitor and mitigate counterparty exposure. In the event of non-performance or non-payment by a major counterparty, there may be a material adverse impact on our financial condition, results of operations or net cash flows.

Commodity Contracts

The availability and price of energy-related commodities are subject to fluctuations from factors such as weather, environmental policies, changes in supply and demand, state and federal regulatory policies, market rules and other events. To reduce price risk caused by market fluctuations, we enter into supply contracts and derivative contracts, including forwards, futures, swaps

Table of Contents

and options with approved counterparties. These contracts, in conjunction with physical sales and other services, help reduce risk and optimize the value of owned electric generation capacity.

Value-at-Risk (VaR) Models

VaR represents the potential losses, under normal market conditions, for instruments or portfolios due to changes in market factors, for a specified time period and confidence level. We estimate VaR across our commodity businesses.

MTM VaR consists of MTM derivatives that are economic hedges. The MTM VaR calculation does not include market risks associated with activities that are subject to accrual accounting, primarily our generating facilities and some load-serving activities.

The VaR models used are variance/covariance models adjusted for the change of positions with 95% and 99.5% confidence levels and a one-day holding period for the MTM activities. The models assume no new positions throughout the holding periods; however, we actively manage our portfolio.

From April through June 2022, MTM VaR varied between a low of $76 million and a high of $365 million at the 95% confidence level. The range of VaR was wider for the three months ended June 30, 2022 as compared with the year ended December 31, 2021.



	MTM VaR
	Three Months Ended June 30, 2022		Year Ended December 31, 2021
	Millions
95% Confidence Level, Loss could exceed VaR one day in 20 days
Period End	$	200	$	71
Average for the Period	$	247	$	36
High	$	365	$	113
Low	$	76	$	7
99.5% Confidence Level, Loss could exceed VaR one day in 200 days
Period End	$	314	$	112
Average for the Period	$	386	$	57
High	$	572	$	178
Low	$	120	$	11

See Item 1. Note 13. Financial Risk Management Activities for a discussion of credit risk.

ITEM 4.CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

PSEG and PSE&G

We have established and maintain disclosure controls and procedures as defined under Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to provide reasonable assurance that information required to be disclosed in the reports that are filed or submitted under the Exchange Act is recorded, processed, summarized and reported and is accumulated and communicated to the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) of each respective company, as appropriate, by others within the entities to allow timely decisions regarding required disclosure. We have established a disclosure committee which includes several key management employees and which reports directly to the CFO and CEO of each of PSEG and PSE&G. The committee monitors and evaluates the effectiveness of these disclosure controls and procedures. The CFO and CEO of each of PSEG and PSE&G have evaluated the effectiveness of the disclosure controls and procedures and, based on this evaluation, have concluded that disclosure controls and procedures at each respective company were effective at a reasonable assurance level as of the end of the period covered by the report.

Internal Controls

PSEG and PSE&G

There have been no changes in internal control over financial reporting that occurred during the second quarter of 2022 that have materially affected, or are reasonably likely to materially affect, each registrant’s internal control over financial reporting.

Table of Contents

PART II. OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

We are party to various lawsuits and environmental and regulatory matters, including in the ordinary course of business. For information regarding material legal proceedings, including updates to information reported in Item 3 of Part I of the Form 10-K, see Part I, Item 1. Note 11. Commitments and Contingent Liabilities.

ITEM 1A.RISK FACTORS

The discussion of our business and operations in this Quarterly Report on Form 10-Q should be read together with the risk factors contained in Part I, Item 1A of our Form 10-K, which describes various risks and uncertainties that could have a material adverse impact on our business, prospects, financial position, results of operations or cash flows and could cause results to differ materially from those expressed elsewhere in this report. We expect that the risks and uncertainties described in this Form 10-Q and our Form 10-K will be further adversely impacted by the ongoing coronavirus pandemic and any related, sustained economic downturn, which could extend beyond the duration of the pandemic.

Financial market performance directly affects the asset values of our Nuclear Decommissioning Trust (NDT) Fund and defined benefit plan trust funds. Market performance and other factors could decrease the value of trust assets and could result in the need for significant additional funding.

The performance of the financial markets will affect the value of the assets that are held in trust to satisfy our future obligations under our defined benefit plans and to decommission our nuclear generating plants. A decline in the market value of our NDT Fund could increase PSEG Power’s funding requirements to decommission its nuclear plants. A decline in the market value of the defined benefit plan trust funds could increase our pension plan funding requirements and result in increased pension costs in future years. The market value of our trusts could be negatively impacted by adverse financial market conditions that reduce the rate of return on trust assets, decreased interest rates used to measure the required minimum funding levels and future government regulation. Additional funding requirements for our defined benefit plans could be caused by changes in required or voluntary contributions, an increase in the number of employees becoming eligible to retire and changes in life expectancy assumptions. Increased costs could also lead to additional funding requirements for our decommissioning trust. Failure to manage adequately our investments in our NDT Fund and defined benefit plan trusts could result in the need for us to make significant cash contributions in the future to maintain our funding at sufficient levels, which would negatively impact our results of operations, cash flows and financial position.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table indicates our common share repurchases during the second quarter of 2022:



Three Months Ended June 30, 2022		Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as Part of Publicly Announced Program (A)	Approximate Dollar Value of Shares That May Yet be Purchased Under the Program
					Millions
April 1 - April 30		—	$—	—	$—
May 1 - May 31	(B)	541,476	$69.74	541,476	$—
June 1 - June 30		—	$—	—	$—
Total		541,476	$69.74	541,476	$—

(A)In September 2021, PSEG announced a $500 million share repurchase program authorized by the Board of Directors. In December 2021, under this $500 million share repurchase program authorization, PSEG entered into an open market share repurchase plan for $250 million of our common stock. During January and through mid-February 2022, we purchased the full $250 million of common stock under the open market share repurchase plan.

(B)In March 2022, PSEG entered into a Master Confirmation and Supplemental Confirmation with an investment banking firm to effect an accelerated share repurchase agreement (ASR Agreement) of the remaining authorized $250 million of shares of PSEG’s outstanding common stock under PSEG’s $500 million share repurchase program

Table of Contents

authorization. Under the ASR Agreement, PSEG paid $250 million and received initial delivery of approximately 3.0 million shares of common stock in mid-March, representing approximately 80% of the total number of shares of common stock initially underlying the ASR Agreement. In mid-May 2022, the investment banking firm exercised its right to accelerate the termination of the ASR agreement and PSEG received the balance of the shares owed under the ASR Agreement, as presented in the above table.

During the entire term of the ASR Agreement, PSEG purchased an aggregate of 3,584,690 shares under the ASR Agreement at an average price paid per share of $69.74.

ITEM 5. OTHER INFORMATION

Certain information reported in the Form 10-K is updated below. Additionally, certain information is provided for new matters that have arisen subsequent to the filing of the Form 10-K and first quarter 2022 10-Q. References are to the related pages on the Form 10-K.

State Regulation

Gas Capacity Review

December 31, 2021 Form 10-K page 16. In September 2019, the BPU formally opened a stakeholder proceeding to explore gas capacity procurement service to all New Jersey natural gas customers. The BPU retained a consultant and conducted public hearings. PSE&G and other interested parties responded to the BPU’s questions. In June 2022, the BPU accepted the consultant’s key finding that, through 2030, New Jersey’s firm gas capacity can meet firm demand under normal design day conditions. The only potential gas supply shortfall was found during a “1-in-90 design day” (i.e., a 24-hour period in which the temperature is colder than every day, except one in 90 years) and/or a “perfect storm,” which occurs when there is an outage on a transcontinental pipeline during a design day. The BPU noted that its consultant’s analysis - detailing the nature of the pipeline infrastructure, including the numerous receipt and delivery points capable of supporting the State’s GDCs - supports the argument against the need for additional interstate pipeline capacity, including projects like PennEast, and also supports the BPU’s aggressive policy approach to reduce the State’s overall reliance on fossil fuels, and achieve the Governor’s goal of 100% clean energy by 2050.

Grid Modernization

December 31, 2021 Form 10-K page 16. In October 2021, the BPU commenced a stakeholder proceeding to develop and implement a systemic Grid Modernization plan in accordance with strategies outlined in the New Jersey Energy Master Plan. The BPU retained a consultant that gathered detailed and comprehensive information from the State’s electric distribution companies (EDCs), including PSE&G, regarding resource issues and policy changes needed to interconnect the clean energy capacity required under state policy. In June 2022, the BPU’s consultant issued a draft report with its findings and recommendations to update the BPU’s interconnection regulations and processes. We cannot predict the impact on our business or results of operations from this Grid Modernization plan or any laws, rules or regulations promulgated as a result thereof, particularly as they may relate to PSE&G’s electric distribution assets.

Environmental Matters

New Jersey Protecting Against Climate Threats

December 31, 2021 Form 10-K page 19. In June 2022, the NJDEP adopted the Greenhouse Gas Monitoring and Reporting Rule. The NJDEP requires gas utilities to submit an annual report on replacement of mains and service lines in the State and to quantify maintenance-venting events, referred to as blowdown events. In addition, the NJDEP requires registration, recordkeeping, and reporting requirements for facilities with a refrigeration system requiring 50 pounds or more of a refrigerant with high global warming potential. A “refrigeration system” includes industrial process refrigeration utilized at PSE&G and our nuclear facilities.

Table of Contents

ITEM 6.EXHIBITS

A listing of exhibits being filed with this document is as follows:


a. PSEG:
Exhibit 31:						Certification by Ralph Izzo Pursuant to Rules 13a-14 and 15d-14 of the 1934 Act
Exhibit 31.1:						Certification by Daniel J. Cregg Pursuant to Rules 13a-14 and 15d-14 of the 1934 Act
Exhibit 32:						Certification by Ralph Izzo Pursuant to Section 1350 of Chapter 63 of Title 18 of the U.S. Code
Exhibit 32.1:						Certification by Daniel J. Cregg Pursuant to Section 1350 of Chapter 63 of Title 18 of the U.S. Code
Exhibit 101.INS:						Inline XBRL Instance Document - The Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Exhibit 101.SCH:						Inline XBRL Taxonomy Extension Schema
Exhibit 101.CAL:						Inline XBRL Taxonomy Extension Calculation Linkbase
Exhibit 101.LAB:						Inline XBRL Taxonomy Extension Labels Linkbase
Exhibit 101.PRE:						Inline XBRL Taxonomy Extension Presentation Linkbase
Exhibit 101.DEF:						Inline XBRL Taxonomy Extension Definition Document
Exhibit 104:						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

b. PSE&G:
Exhibit 31.2:						Certification by Ralph Izzo Pursuant to Rules 13a-14 and 15d-14 of the 1934 Act
Exhibit 31.3:						Certification by Daniel J. Cregg Pursuant to Rules 13a-14 and 15d-14 of the 1934 Act
Exhibit 32.2:						Certification by Ralph Izzo Pursuant to Section 1350 of Chapter 63 of Title 18 of the U.S. Code
Exhibit 32.3:						Certification by Daniel J. Cregg Pursuant to Section 1350 of Chapter 63 of Title 18 of the U.S. Code
Exhibit 101.INS:						Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Exhibit 101.SCH:						Inline XBRL Taxonomy Extension Schema
Exhibit 101.CAL:						Inline XBRL Taxonomy Extension Calculation Linkbase
Exhibit 101.LAB:						Inline XBRL Taxonomy Extension Labels Linkbase
Exhibit 101.PRE:						Inline XBRL Taxonomy Extension Presentation Linkbase
Exhibit 101.DEF:						Inline XBRL Taxonomy Extension Definition Document
Exhibit 104:						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Table of Contents

SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.


PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
(Registrant)

By:			/S/ ROSE M. CHERNICK
			Rose M. Chernick Vice President and Controller (Principal Accounting Officer)

Date: August 2, 2022

SIGNATURE


PUBLIC SERVICE ELECTRIC AND GAS COMPANY
(Registrant)

By:			/S/ ROSE M. CHERNICK
			Rose M. Chernick Vice President and Controller (Principal Accounting Officer)

Date: August 2, 2022

Document

EXHIBIT 31

Certification Pursuant to Rules 13a-14 and 15d-14

of the 1934 Securities Exchange Act

I, Ralph Izzo, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Public Service Enterprise Group Incorporated;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date:	August 2, 2022	/s/ Ralph Izzo
		Ralph Izzo
		Public Service Enterprise Group Incorporated
		Chief Executive Officer

Document

EXHIBIT 31.1

Certification Pursuant to Rules 13a-14 and 15d-14

of the 1934 Securities Exchange Act

I, Daniel J. Cregg, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Public Service Enterprise Group Incorporated;

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date:	August 2, 2022	/s/ Daniel J. Cregg
		Daniel J. Cregg
		Public Service Enterprise Group Incorporated
		Chief Financial Officer

Document

EXHIBIT 31.2

Certification Pursuant to Rules 13a-14 and 15d-14

of the 1934 Securities Exchange Act

I, Ralph Izzo, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Public Service Electric and Gas Company;

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date:	August 2, 2022	/s/ Ralph Izzo
		Ralph Izzo
		Public Service Electric and Gas Company
		Chief Executive Officer

Document

EXHIBIT 31.3

Certification Pursuant to Rules 13a-14 and 15d-14

of the 1934 Securities Exchange Act

I, Daniel J. Cregg, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Public Service Electric and Gas Company;

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date:	August 2, 2022	/s/ Daniel J. Cregg
		Daniel J. Cregg
		Public Service Electric and Gas Company
		Chief Financial Officer

Document

EXHIBIT 32

Certification Pursuant to Section 1350 of Chapter 63 of Title 18

of the United States Code

I, Ralph Izzo, Chief Executive Officer of Public Service Enterprise Group Incorporated, to the best of my knowledge, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that (i) the Quarterly Report of Public Service Enterprise Group Incorporated on Form 10-Q for the quarter ended June 30, 2022 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Public Service Enterprise Group Incorporated.


/s/ Ralph Izzo
Ralph Izzo
Public Service Enterprise Group Incorporated
Chief Executive Officer
August 2, 2022

Document

EXHIBIT 32.1

Certification Pursuant to Section 1350 of Chapter 63 of Title 18

of the United States Code

I, Daniel J. Cregg, Chief Financial Officer of Public Service Enterprise Group Incorporated, to the best of my knowledge, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that (i) the Quarterly Report of Public Service Enterprise Group Incorporated on Form 10-Q for the quarter ended June 30, 2022 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Public Service Enterprise Group Incorporated.


/s/ Daniel J. Cregg
Daniel J. Cregg
Public Service Enterprise Group Incorporated
Chief Financial Officer
August 2, 2022

Document

EXHIBIT 32.2

Certification Pursuant to Section 1350 of Chapter 63 of Title 18

of the United States Code

I, Ralph Izzo, Chief Executive Officer of Public Service Electric and Gas Company, to the best of my knowledge, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that (i) the Quarterly Report of Public Service Electric and Gas Company on Form 10-Q for the quarter ended June 30, 2022 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Public Service Electric and Gas Company.


/s/ Ralph Izzo
Ralph Izzo
Public Service Electric and Gas Company
Chief Executive Officer
August 2, 2022

Document

EXHIBIT 32.3

Certification Pursuant to Section 1350 of Chapter 63 of Title 18

of the United States Code

I, Daniel J. Cregg, Chief Financial Officer of Public Service Electric and Gas Company, to the best of my knowledge, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that (i) the Quarterly Report of Public Service Electric and Gas Company on Form 10-Q for the quarter ended June 30, 2022 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended and (ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Public Service Electric and Gas Company.


/s/ Daniel J. Cregg
Daniel J. Cregg
Public Service Electric and Gas Company
Chief Financial Officer
August 2, 2022

pseg-20220630.xsd
Attachment: XBRL TAXONOMY EXTENSION SCHEMA DOCUMENT

pseg-20220630_cal.xml
Attachment: XBRL TAXONOMY EXTENSION CALCULATION LINKBASE DOCUMENT

pseg-20220630_def.xml
Attachment: XBRL TAXONOMY EXTENSION DEFINITION LINKBASE DOCUMENT

pseg-20220630_lab.xml
Attachment: XBRL TAXONOMY EXTENSION LABEL LINKBASE DOCUMENT

pseg-20220630_pre.xml
Attachment: XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE DOCUMENT