NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Organization, Basis of Presentation and Significant Accounting Policies
Organization
Public Service Enterprise Group Incorporated (PSEG) is a holding company with a diversified business mix within the energy industry. Its operations are primarily in the Northeastern and Mid-Atlantic United States and in other select markets. PSEG’s principal direct wholly owned subsidiaries 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 a multi-regional energy supply company that integrates the operations of its merchant nuclear and fossil generating assets with its power marketing businesses and fuel supply functions through competitive energy sales in well-developed energy markets primarily in the Northeast and Mid-Atlantic United States through 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 Long Island LLC (PSEG LI), which operates the Long Island Power Authority’s (LIPA) electric transmission and distribution (T&D) system under an Amended and Restated Operations Services Agreement (OSA); PSEG Energy Holdings L.L.C. (Energy Holdings), which earns it revenues from its portfolio of lease investments and holds our investment in offshore wind ventures; and PSEG Services Corporation (Services), which provides certain management, administrative and general services to PSEG and its subsidiaries at cost.
In December 2020, PSEG entered into a definitive agreement with Ørsted North America to acquire a 25% equity interest in Ørsted’s Ocean Wind project. Ocean Wind 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 project is expected to achieve full commercial operation in 2025. On March 31, 2021, the BPU approved PSEG’s investment in Ocean Wind and the acquisition was completed in April 2021. Additionally, PSEG and Ørsted each owns 50% of Garden State Offshore Energy LLC which holds rights to an offshore wind lease area. PSEG and Ørsted are exploring other offshore wind opportunities.
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, 2020.
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, 2020.
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, 2020) and ending periods shown in the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2021. Restricted cash consists primarily of deposits received related to various construction projects at PSE&G.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSE&G
|
|
PSEG Power
|
|
Other (A)
|
|
Consolidated
|
|
|
|
|
Millions
|
|
|
|
As of December 31, 2020
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
$
|
204
|
|
|
$
|
27
|
|
|
$
|
312
|
|
|
$
|
543
|
|
|
|
|
Restricted Cash in Other Current Assets
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
|
|
Restricted Cash in Other Noncurrent Assets
|
22
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
|
|
Cash, Cash Equivalents and Restricted Cash
|
$
|
233
|
|
|
$
|
27
|
|
|
$
|
312
|
|
|
$
|
572
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents
|
$
|
40
|
|
|
$
|
2
|
|
|
$
|
65
|
|
|
$
|
107
|
|
|
|
|
Restricted Cash in Other Current Assets
|
21
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
|
|
Restricted Cash in Other Noncurrent Assets
|
16
|
|
|
—
|
|
|
—
|
|
|
16
|
|
|
|
|
Cash, Cash Equivalents and Restricted Cash
|
$
|
77
|
|
|
$
|
2
|
|
|
$
|
65
|
|
|
$
|
144
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A)Includes amounts applicable to PSEG (parent company), Energy Holdings and Services.
Property, Plant and Equipment
PSEG Power capitalizes costs, including those related to its jointly-owned facilities that increase the capacity, improve or extend the life of an existing asset; represent a newly acquired or constructed asset; or represent the replacement of a retired asset. The cost of maintenance, repair and replacement of minor items of property is charged to appropriate expense accounts as incurred. Environmental costs are capitalized if the costs mitigate or prevent future environmental contamination or if the costs improve existing assets’ environmental safety or efficiency. All other environmental expenditures are expensed as incurred. PSEG Power also capitalizes spare parts that meet specific criteria. Capitalized spares are depreciated over the remaining lives of their associated assets.
In April 2021, the BPU awarded Zero Emission Certificates (ZECs) to PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants for an additional three years through May 2025. Concurrent with the BPU’s decision, PSEG Power reassessed the Asset Retirement Cost (ARC) and Asset Retirement Obligation (ARO) assumptions related to the Salem and Hope Creek units. This resulted in an increase to the ARC asset and ARO liability of $51 million, primarily due to lower discount rates and higher inflation. See Note 4. Early Plant Retirements/Asset Dispositions and Impairments for additional information on ZECs.
Note 2. Recent Accounting Standards
New Standards Issued and Adopted
Simplifying the Accounting for Income Taxes—Accounting Standards Update (ASU) 2019-12
This accounting standard updates Accounting Standards Codification (ASC) 740 to simplify the accounting for income taxes, including the elimination of several exceptions and making other clarifications to the current guidance. Some of the more pertinent modifications include a change to the tax accounting related to franchise taxes that are partially based on income, an election to allocate the consolidated tax expense to a disregarded entity that is a member of a consolidated tax return filing group when those entities issue separate financial statements, and modifications and clarifications to interim tax reporting.
The standard is effective for fiscal years beginning after December 15, 2020. PSEG adopted this standard on January 1, 2021. PSEG has elected to allocate the consolidated tax expense to all eligible entities that are included in a consolidated tax filing on a prospective basis. This election is consistent with PSEG’s Tax Sharing Agreements with its affiliated subsidiaries. Adoption of this standard did not have an impact on the financial statements of PSEG, PSE&G, and PSEG Power.
Clarifying the Interactions between Investments-Equity Securities, Investments-Equity Method and Joint Ventures, and Derivatives and Hedging—ASU 2020-01
This accounting standard clarifies that an entity should consider transaction prices for purposes of measuring the fair value of certain equity securities immediately before applying or upon discontinuing the equity method. This accounting standard also clarifies that when accounting for contracts entered into to purchase equity securities, an entity should not consider whether, upon the settlement of the forward contract or exercise of the purchased option, the underlying securities would be accounted for under the equity method or the fair value option.
The standard is effective for fiscal years beginning after December 15, 2020. PSEG adopted this standard prospectively on
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
January 1, 2021. Adoption of this standard did not have an impact on the financial statements of PSEG, PSE&G and PSEG Power.
Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity—ASU 2020-06
This accounting standard simplifies the accounting for convertible debt and convertible preferred stock by removing the requirements to separately present certain conversion features in equity. In addition, the ASU eliminates certain criteria that must be satisfied in order to classify a contract as equity, which is expected to decrease the number of freestanding instruments and embedded derivatives accounted for as assets or liabilities. The ASU also revises the guidance on calculating earnings per share, requiring use of the if-converted method for all convertible instruments and rescinding the ability to rebut the presumption of share settlement for instruments that may be settled in cash or other assets.
The standard is effective for fiscal years beginning after December 15, 2021. PSEG early adopted this standard on January 1, 2021 on a modified retrospective basis. Adoption of this standard did not have an impact on the financial statements of PSEG, PSE&G and PSEG Power.
Codification Improvements to Callable Debt Securities—ASU 2020-08
This accounting standard clarifies that an entity should reevaluate for each reporting period whether a purchased callable debt security that has multiple call dates is within the scope of certain guidance on nonrefundable fees and other costs related to receivables.
The standard is effective for fiscal years beginning after December 15, 2020. PSEG adopted this standard prospectively on January 1, 2021. Adoption of this standard did not have an impact on the financial statements of PSEG, PSE&G and PSEG Power.
Codification Improvements—ASU 2020-10
This accounting standard conforms, clarifies, simplifies, and provides technical corrections to various codification topics.
The standard is effective for fiscal years beginning after December 15, 2020. PSEG adopted this standard on January 1, 2021. Adoption of this standard did not have an impact on the financial statements of PSEG, PSE&G and PSEG Power.
Reference Rate Reform Scope Refinement—ASU 2021-01
This accounting standard clarifies certain guidance related to derivative instruments affected by the market-wide change in the interest rates even if those derivatives do not reference the LIBOR or another rate that is expected to be discontinued as a result of reference rate reform. The accounting standard also clarifies other aspects of the relief provided in the reference rate reform GAAP guidance.
The standard is effective upon issuance and allows for retrospective or prospective application with certain conditions. PSEG adopted this standard prospectively in January 2021. Adoption of this standard did not have an impact on the financial statements of PSEG, PSE&G and PSEG Power.
New Standard Issued But Not Yet Adopted as of June 30, 2021
Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options—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 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.
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.
The standard is effective for fiscal years beginning after December 15, 2021 and early adoption is permitted. Amendments in this standard will be applied either retrospectively or prospectively. PSEG is currently analyzing the impact of this standard on its financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 3. Revenues
Nature of Goods and Services
The following is a description of principal activities by reportable segment from which PSEG, PSE&G and PSEG Power 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, weather normalization, green energy program true-ups and transmission formula rate true-ups, are not a material source of PSE&G revenues.
PSEG Power
Revenues from Contracts with Customers
Electricity and Related Products—Wholesale and retail load contracts are executed in the different Independent System Operator (ISO) regions for the bundled supply of energy, capacity, renewable energy credits (RECs) 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 Power also sells to the 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. PSEG Power 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.
In April 2019, PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants were awarded ZECs by the BPU. These nuclear plants are expected to receive ZEC revenue for approximately three years, through May 2022, from the electric distribution companies (EDCs) in New Jersey. In April 2021, PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants were awarded ZECs by the BPU for the three year eligibility period starting June 2022. PSEG Power recognizes revenue when the
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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 in effect unless terminated by either party with a two-year notice. The performance obligation is primarily delivery of gas which is satisfied over time. Revenue is recognized as gas is delivered. 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 under these contracts is satisfied over time upon delivery of the gas or capacity, and revenue is recognized accordingly.
Other Revenues from Contracts with Customers
Prior to the sale of PSEG Solar Source LLC (Solar Source), PSEG Power entered into bilateral contracts to sell solar power and solar RECs from its solar facilities. Contract terms ranged from 15 to 30 years. The performance obligations were generally solar power and RECs which were transferred to customers upon generation. Revenue was recognized upon generation of the solar power. 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. See Note 4. Early Plant Retirements/Asset Dispositions and Impairments.
Other
Revenues from Contracts with Customers
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.
Revenues Unrelated to Contracts with Customers
Energy Holdings generates lease revenues which are recorded pursuant to lease accounting guidance.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Disaggregation of Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSE&G
|
|
PSEG Power
|
|
Other
|
|
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 (A)
|
81
|
|
|
12
|
|
|
145
|
|
|
(1)
|
|
|
237
|
|
|
|
|
Total Revenues from Contracts with Customers
|
1,507
|
|
|
687
|
|
|
145
|
|
|
(175)
|
|
|
2,164
|
|
|
|
|
Revenues Unrelated to Contracts with Customers (B)
|
7
|
|
|
(307)
|
|
|
10
|
|
|
—
|
|
|
(290)
|
|
|
|
|
Total Operating Revenues
|
$
|
1,514
|
|
|
$
|
380
|
|
|
$
|
155
|
|
|
$
|
(175)
|
|
|
$
|
1,874
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSE&G
|
|
PSEG Power
|
|
Other
|
|
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 (A)
|
156
|
|
|
22
|
|
|
286
|
|
|
(2)
|
|
|
462
|
|
|
|
|
Total Revenues from Contracts with Customers
|
3,584
|
|
|
1,825
|
|
|
286
|
|
|
(677)
|
|
|
5,018
|
|
|
|
|
Revenues Unrelated to Contracts with Customers (B)
|
3
|
|
|
(278)
|
|
|
20
|
|
|
—
|
|
|
(255)
|
|
|
|
|
Total Operating Revenues
|
$
|
3,587
|
|
|
$
|
1,547
|
|
|
$
|
306
|
|
|
$
|
(677)
|
|
|
$
|
4,763
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSE&G
|
|
PSEG Power
|
|
Other
|
|
Eliminations
|
|
Consolidated
|
|
|
|
|
Millions
|
|
|
|
Three Months Ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from Contracts with Customers
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric Distribution
|
$
|
723
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
723
|
|
|
|
|
Gas Distribution
|
278
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
276
|
|
|
|
|
Transmission
|
378
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
378
|
|
|
|
|
Electricity and Related Product Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
PJM
|
|
|
|
|
|
|
|
|
|
|
|
|
Third-Party Sales
|
—
|
|
|
346
|
|
|
—
|
|
|
—
|
|
|
346
|
|
|
|
|
Sales to Affiliates
|
—
|
|
|
111
|
|
|
—
|
|
|
(111)
|
|
|
—
|
|
|
|
|
New York ISO
|
—
|
|
|
24
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
|
|
ISO New England
|
—
|
|
|
25
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|
|
|
Gas Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Third-Party Sales
|
—
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|
|
|
Sales to Affiliates
|
—
|
|
|
124
|
|
|
—
|
|
|
(124)
|
|
|
—
|
|
|
|
|
Other Revenues from Contracts with Customers (A)
|
83
|
|
|
14
|
|
|
141
|
|
|
—
|
|
|
238
|
|
|
|
|
Total Revenues from Contracts with Customers
|
1,462
|
|
|
659
|
|
|
141
|
|
|
(237)
|
|
|
2,025
|
|
|
|
|
Revenues Unrelated to Contracts with Customers (B)
|
(6)
|
|
|
24
|
|
|
7
|
|
|
—
|
|
|
25
|
|
|
|
|
Total Operating Revenues
|
$
|
1,456
|
|
|
$
|
683
|
|
|
$
|
148
|
|
|
$
|
(237)
|
|
|
$
|
2,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSE&G
|
|
PSEG Power
|
|
Other
|
|
Eliminations
|
|
Consolidated
|
|
|
|
|
Millions
|
|
|
|
Six Months Ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues from Contracts with Customers
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric Distribution
|
$
|
1,372
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,372
|
|
|
|
|
Gas Distribution
|
1,009
|
|
|
—
|
|
|
—
|
|
|
(4)
|
|
|
1,005
|
|
|
|
|
Transmission
|
744
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
744
|
|
|
|
|
Electricity and Related Product Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
PJM
|
|
|
|
|
|
|
|
|
|
|
|
|
Third-Party Sales
|
—
|
|
|
714
|
|
|
—
|
|
|
—
|
|
|
714
|
|
|
|
|
Sales to Affiliates
|
—
|
|
|
232
|
|
|
—
|
|
|
(232)
|
|
|
—
|
|
|
|
|
New York ISO
|
—
|
|
|
49
|
|
|
—
|
|
|
—
|
|
|
49
|
|
|
|
|
ISO New England
|
—
|
|
|
73
|
|
|
—
|
|
|
—
|
|
|
73
|
|
|
|
|
Gas Sales
|
|
|
|
|
|
|
|
|
|
|
|
|
Third-Party Sales
|
—
|
|
|
44
|
|
|
—
|
|
|
—
|
|
|
44
|
|
|
|
|
Sales to Affiliates
|
—
|
|
|
478
|
|
|
—
|
|
|
(478)
|
|
|
—
|
|
|
|
|
Other Revenues from Contracts with Customers (A)
|
165
|
|
|
24
|
|
|
285
|
|
|
(1)
|
|
|
473
|
|
|
|
|
Total Revenues from Contracts with Customers
|
3,290
|
|
|
1,614
|
|
|
285
|
|
|
(715)
|
|
|
4,474
|
|
|
|
|
Revenues Unrelated to Contracts with Customers (B)
|
49
|
|
|
289
|
|
|
19
|
|
|
—
|
|
|
357
|
|
|
|
|
Total Operating Revenues
|
$
|
3,339
|
|
|
$
|
1,903
|
|
|
$
|
304
|
|
|
$
|
(715)
|
|
|
$
|
4,831
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A)Includes primarily revenues from appliance repair services and the sale of solar renewable energy certificates (SRECs) at auction at PSE&G, solar power projects and energy management and fuel service contracts with LIPA at PSEG Power, and PSEG LI’s OSA with LIPA in Other.
(B)Includes primarily alternative revenues at PSE&G, derivative contracts and lease contracts at PSEG Power, and lease contracts in Other.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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, 2021 and December 31, 2020. 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 18% and 14% of accounts receivable (including unbilled revenues) as of June 30, 2021 and December 31, 2020, 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 in 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, 2021. PSE&G’s electric bad debt expense is recoverable through its Societal Benefits Clause mechanism. As of June 30, 2021, PSE&G deferred incremental gas bad debt expense for future regulatory recovery due to the impact of the ongoing pandemic. See Note 6. Rate Filings for additional information.
The following provides a reconciliation of PSE&G’s allowance for credit losses for the three months and six months ended June 30, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2021
|
|
|
|
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
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2020
|
|
|
|
Balance as of March 31, 2020
|
|
$
|
80
|
|
|
|
|
Utility Customer and Other Accounts
|
|
|
|
|
|
|
Provision
|
|
45
|
|
|
|
|
|
Write-offs, net of Recoveries of $1 million
|
|
(4)
|
|
|
|
|
Balance as of June 30, 2020
|
|
$
|
121
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2020
|
|
|
|
Balance as of January 1, 2020 (A)
|
|
$
|
68
|
|
|
|
|
Utility Customer and Other Accounts
|
|
|
|
|
|
|
Provision
|
|
77
|
|
|
|
|
|
Write-offs, net of Recoveries of $3 million
|
|
(24)
|
|
|
|
|
Balance as of June 30, 2020
|
|
$
|
121
|
|
|
|
|
|
|
|
|
|
(A)Includes an $8 million pre-tax increase upon adoption of ASU 2016-13.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
PSEG Power
PSEG Power generally collects consideration upon satisfaction of performance obligations, and therefore, PSEG Power had no material contract balances as of June 30, 2021 and December 31, 2020.
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, 2021 or December 31, 2020. PSEG Power monitors the status of its counterparties on an ongoing basis to assess whether there are any anticipated credit losses.
Other
PSEG LI did not have any material contract balances as of June 30, 2021 and December 31, 2020.
Remaining Performance Obligations under Fixed Consideration Contracts
PSEG Power and PSE&G primarily record 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:
PSEG Power
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 is expected to be held in December 2021. 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 2021 to May 2022
|
|
$166
|
|
7,700
|
|
|
|
|
June 2022 to May 2023
|
|
$98
|
|
6,300
|
|
|
|
|
|
|
|
|
|
|
Capacity Payments from the ISO New England Forward Capacity Market (FCM)—The FCM Auction is conducted annually three years in advance of the operating period. The table below includes PSEG Power’s cleared capacity in the FCM Auction for the Bridgeport Harbor Station 5 (BH5), which cleared the 2019/2020 auction at $231/MW-day for seven years, and the retirement of Bridgeport Harbor Station 3 effective May 31, 2021. PSEG Power expects to realize the following average capacity prices for capacity obligations to be satisfied resulting from the FCM Auctions which have been completed through May 2025 and the seven-year rate lock for BH5 through May 2026:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Delivery Year
|
|
$ per MW-Day (A)
|
|
MW Cleared
|
|
|
|
June 2021 to May 2022
|
|
$192
|
|
950
|
|
|
|
|
June 2022 to May 2023
|
|
$179
|
|
950
|
|
|
|
|
June 2023 to May 2024
|
|
$152
|
|
930
|
|
|
|
|
June 2024 to May 2025
|
|
$158
|
|
950
|
|
|
|
|
June 2025 to May 2026
|
|
$231
|
|
480
|
|
|
|
|
|
|
|
|
|
|
(A) Capacity cleared prices for BH5 through 2026 will be escalated based upon the Handy-Whitman Index. These adjustments are not included above.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Bilateral capacity contracts—Capacity obligations pursuant to contract terms through 2029 are anticipated to result in revenues totaling $138 million.
Other
The LIPA OSA is a 12-year services contract ending in 2025 with annual fixed and incentive components. The fixed fee for the provision of services thereunder in 2021 is $68 million and is updated each year based on the change in the Consumer Price Index. See Note 11. Commitments and Contingent Liabilities for additional information.
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 is expected 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 at the same approximate $10 per MWh received during the current ZEC period through May 2022 referenced above. As a result, each nuclear plant is expected to receive 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 current ZEC period as discussed above.
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.
The BPU’s April 2019 decision awarding ZECs through May 2022 and April 2021 decision awarding ZECs through May 2025 have been appealed by the New Jersey Rate Counsel (Rate Counsel). In May 2021, Rate Counsel filed an appeal with the New Jersey Appellate Division of the BPU’s April 2021 decision. In July 2021, the New Jersey Supreme Court denied the Rate Counsel’s petition for further appellate review of the BPU’s April 2019 decision. PSEG cannot predict the outcome of these matters.
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 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. Ceasing operations of these plants would result in a material adverse impact on PSEG’s and PSEG Power’s results of operations.
Non-Nuclear
In July 2020, PSEG announced that it is exploring strategic alternatives for PSEG Power’s non-nuclear generating fleet, which includes more than 6,750 MW of fossil generation located in New Jersey, Connecticut, New York and Maryland and, prior to the sale of Solar Source, included 467 MW Solar Source portfolio located in various states. PSEG intends to retain ownership of PSEG Power’s existing nuclear fleet.
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 Solar Source including its related assets and liabilities. The transaction closed in June 2021. As a result of
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
the sale, PSEG Power recorded a pre-tax gain on sale of approximately $62 million, which is inclusive of the recognition of previously deferred unamortized investment tax credits (ITC) of $185 million, and income tax expense of approximately $63 million primarily due to the recapture of ITC on units that operated for less than five years. Any potential transactions involving PSEG Power’s fossil generation are expected to be completed either in the fourth quarter of 2021 or the first quarter of 2022.
As a result of the strategic review of PSEG Power’s non-nuclear generating assets, and the launch in the fourth quarter of 2020 of an associated marketing process for their potential disposition, PSEG Power has performed an impairment assessment of its PJM, NYISO and ISO-NE asset groupings, as of each quarter end. The assessments included probability weightings assigned to undiscounted cash flow scenarios of retaining the assets through the end of their estimated useful lives and a successful disposition of the non-nuclear assets. Estimates of cash flows associated with a sale scenario were based on management’s expectations of the fair value of such assets. The probability weighted aggregation of undiscounted cash flows for the PJM and NYISO asset groupings expected to result from the use and potential disposition of the asset groups exceeded their carrying value at the assessment dates. As such, it demonstrated that no impairment exists for these asset groupings and they continue to remain classified as held-for-use as of June 30, 2021. However, 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 demonstrated that an impairment existed and PSEG Power recorded a pre-tax charge in (Gains) Losses on Asset Dispositions and Impairments of approximately $519 million for the ISO-NE asset grouping which has remained classified as held-for-use as of June 30, 2021.
There is no assurance that the strategic review will result in a sale or other disposition of all or any portion of the fossil generation assets. Any transaction would be subject to market conditions and customary closing conditions, including the receipt of all required regulatory approvals. Management expects that a change to a held-for-sale classification from a held-for-use classification would result in a pre-tax loss of approximately $2.5 billion related to additional impairments on the fossil assets being sold and other related fossil common fixed assets, employee severance and retention costs, environmental remediation costs, and debt redemption costs, including a make-whole premium among other things, and excluding any potential impacts on employee pension and other postretirement plans. This potential approximation of loss is a preliminary estimate and may change materially depending upon the ongoing marketing process and the terms of a final agreement, if any, to dispose of these assets.
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 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 and $125 million for the three months ended June 30, 2021 and 2020, respectively, and $252 million for each of the six months ended June 30, 2021 and 2020, 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 project that is expected to achieve full commercial operation in 2025. For additional information, see Note 1. Organization, Basis of Presentation and Significant Accounting Policies. 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
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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 will account for this investment under the equity method of accounting. PSEG’s maximum exposure to loss is currently limited to the $91 million carrying amount of its investment in OWH as of June 30, 2021, which is included in Long-Term Investments on PSEG’s Condensed Consolidated Balance Sheet.
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, 2020.
In addition to items previously reported in the Annual Report on Form 10-K, significant regulatory orders received and currently pending rate filings with FERC and the BPU are as follows:
BGSS—In March 2021, the BPU gave final approval to PSE&G’s request to maintain the current BGSS rate of 32 cents per therm which had been provisionally approved effective October 1, 2020.
In June 2021, PSE&G made its annual BGSS filing with the BPU requesting to maintain the current BGSS rate of 32 cents. If approved, the BGSS rate would remain in place beginning October 1, 2021. This matter is pending.
Community Solar Energy Pilot (CSEP) Program—In May 2021, PSE&G made its initial filing for recovery of costs related to the CSEP program. New Jersey’s Clean Energy Act provided for the establishment of a "Community Solar Energy Pilot Program” which permits electric customers to participate in a solar energy project that is remotely located from their properties but is within their electric public utility service territory. The program allows for a credit to the customer's utility bill equal to the electricity generated attributable to the customer's participation in the solar energy project. PSE&G’s filing proposes to recover an initial revenue requirement of $0.4 million associated with the CSEP Program as a new component of PSE&G’s existing electric Green Program Recovery Charge (GPRC). This matter is pending.
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, 2021 of approximately $82 million for net incremental costs, including $42 million for incremental gas bad debt expense associated with customer accounts receivable, which PSE&G expects are probable of recovery under the BPU order. In July 2021, PSE&G, joined by other New Jersey gas distribution companies, made a filing with the BPU noting that the current deferral period, which ends on September 30, 2021, does not allow for proper consideration and inclusion of all incremental COVID-19 related expenses in the Regulatory Asset, and requesting that the Board extend the deferral period through the end of 2023. This matter is pending.
Energy Strong (ES) II—In April 2021, the BPU approved PSE&G’s filing for a $13 million revenue increase under this investment program, effective May 2021. This increase represents the return on and of ES II electric investments placed in service through January 2021.
GPRC—In June 2021, the BPU approved as final the GPRC rates approved by the Board on a provisional basis in January 2021. In July 2021, PSE&G filed its 2021 GPRC cost recovery petition requesting BPU approval to recover a $2 million increase in each of electric and gas base rates annual revenues. This matter is pending.
Gas System Modernization Program II (GSMP II)—In May 2021, the BPU approved PSE&G’s December 2020 cost recovery petition to recover in gas base rates an annual revenue increase of approximately $21 million effective June 1, 2021. This increase represents the return on and of GSMP II investments placed in service through February 2021.
In June 2021, PSE&G filed a GSMP II cost recovery petition seeking BPU approval to recover in gas base rates an estimated annual revenue increase of $34 million effective December 1, 2021. This increase represents the return on and of GSMP II investments expected to be in service through August 31, 2021. This request will be updated in September 2021 for actual costs.
Remediation Adjustment Charge (RAC)—In July 2021, the BPU approved PSE&G’s RAC 28 filing requesting recovery of approximately $35 million in net manufactured gas plant remediation expenditures incurred from August 1, 2019 through July 31, 2020.
Transmission Formula Rates—In June 2021, PSE&G filed its 2020 true-up adjustment pertaining to its transmission formula rates in effect for 2020. This filing resulted in an additional annual revenue requirement of $13 million more than the 2020
originally filed revenue.
In July 2021, PSE&G filed for FERC’s approval of a settlement agreement effective August 1, 2021 reached with the BPU Staff and the Rate Counsel with respect to the level of PSE&G’s base transmission return on equity (ROE) and other formula
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
rate matters. The settlement reduces PSE&G’s base ROE from 11.18% to 9.9% and provides that the settling parties will not seek changes to the transmission formula rate for three years. This matter is pending.
Weather Normalization Charge (WNC)—In June 2021, PSE&G filed its 2021-2022 WNC petition seeking to refund $2 million to customers over the 2020-2021 Winter Period. The overcollection will be refunded to PSE&G gas customers during the 2021-2022 Winter Period. This matter is pending.
Note 7. Leases
PSEG and its subsidiaries are both a lessor and a lessee in operating leases. As of June 30, 2021, 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, 2020 for operating leases in which PSE&G and Services are lessees. As a result of completion of the sale of the Solar Source units in June 2021, PSEG Power’s Operating Lease Right-of-Use Assets and Operating Lease Liabilities were both reduced by $33 million. See Note 4. Early Plant Retirements/Asset Dispositions and Impairments.
PSEG and its subsidiaries, as lessors, have lease agreements with lease and non-lease components, which are primarily related to generating facilities. Rental income from these leases is included in Operating Revenues.
PSEG Power
Prior to the sale of Solar Source, 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. PSEG Power has no remaining operating leases.
Other
Energy Holdings is the lessor in leveraged leases. See Note 8. Financing Receivables.
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.
The following is the operating lease income for PSEG Power and Energy Holdings for the three and six months ended June 30, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSEG Power
|
|
Energy Holdings
|
|
Total
|
|
|
|
|
Millions
|
|
|
|
Operating Lease Income
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2021
|
|
|
|
|
|
|
|
|
Fixed Lease Income
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
6
|
|
|
|
|
Variable Lease Income
|
7
|
|
|
—
|
|
|
7
|
|
|
|
|
Total Operating Lease Income
|
$
|
7
|
|
|
$
|
6
|
|
|
$
|
13
|
|
|
|
|
Six Months Ended June 30, 2021
|
|
|
|
|
|
|
|
|
Fixed Lease Income
|
$
|
—
|
|
|
$
|
11
|
|
|
$
|
11
|
|
|
|
|
Variable Lease Income
|
12
|
|
|
—
|
|
|
12
|
|
|
|
|
Total Operating Lease Income
|
$
|
12
|
|
|
$
|
11
|
|
|
$
|
23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2020
|
|
|
|
|
|
|
|
|
Fixed Lease Income
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
3
|
|
|
|
|
Variable Lease Income
|
8
|
|
|
—
|
|
|
8
|
|
|
|
|
Total Operating Lease Income
|
$
|
8
|
|
|
$
|
3
|
|
|
$
|
11
|
|
|
|
|
Six Months Ended June 30, 2020
|
|
|
|
|
|
|
|
|
Fixed Lease Income
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
8
|
|
|
|
|
Variable Lease Income
|
13
|
|
|
—
|
|
|
13
|
|
|
|
|
Total Operating Lease Income
|
$
|
13
|
|
|
$
|
8
|
|
|
$
|
21
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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, 2021, none of the solar loans were impaired; however, in the event of a loan default or if a loan becomes impaired, the basis of the solar loan would be recovered through a regulatory recovery mechanism. As of June 30, 2021, none of the solar loans were delinquent and no loans are currently expected to become delinquent in light of the payment mechanism. Therefore, no current credit losses have been recorded for Solar Loan Programs I, II and III. A substantial portion of these 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,
2021
|
|
December 31,
2020
|
|
|
|
|
|
Millions
|
|
|
|
Commercial/Industrial
|
|
$
|
133
|
|
|
$
|
145
|
|
|
|
|
Residential
|
|
5
|
|
|
6
|
|
|
|
|
Total
|
|
138
|
|
|
151
|
|
|
|
|
Current Portion (included in Accounts Receivable)
|
|
(30)
|
|
|
(29)
|
|
|
|
|
Noncurrent Portion (included in Long-Term Investments)
|
|
$
|
108
|
|
|
$
|
122
|
|
|
|
|
|
|
|
|
|
|
The solar loans originated under three Solar Loan Programs are comprised as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Programs
|
|
Balance as of June 30, 2021
|
|
Funding Provided
|
|
Residential Loan Term
|
|
Non-Residential Loan Term
|
|
|
|
|
|
Millions
|
|
|
|
|
|
|
|
|
|
Solar Loan I
|
|
$
|
17
|
|
|
prior to 2013
|
|
10 years
|
|
15 years
|
|
|
|
Solar Loan II
|
|
64
|
|
|
prior to 2015
|
|
10 years
|
|
15 years
|
|
|
|
Solar Loan III
|
|
57
|
|
|
largely funded as of June 30, 2021
|
|
10 years
|
|
10 years
|
|
|
|
Total
|
|
$
|
138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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, 2021 and have an average remaining life of approximately four years.
Energy Holdings
Energy Holdings, through several of its indirect subsidiaries, has investments in assets subject primarily 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, 2021 commenced in or prior to 2000. The following table shows Energy Holdings’ gross and net lease investment as of June 30, 2021 and December 31, 2020.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
|
|
June 30,
2021
|
|
December 31,
2020
|
|
|
|
|
Millions
|
|
|
|
Lease Receivables (net of Non-Recourse Debt)
|
$
|
274
|
|
|
$
|
299
|
|
|
|
|
Estimated Residual Value of Leased Assets
|
55
|
|
|
55
|
|
|
|
|
Total Investment in Rental Receivables
|
329
|
|
|
354
|
|
|
|
|
Unearned and Deferred Income
|
(96)
|
|
|
(104)
|
|
|
|
|
Gross Investments in Leases
|
233
|
|
|
250
|
|
|
|
|
Deferred Tax Liabilities
|
(57)
|
|
|
(64)
|
|
|
|
|
Net Investments in Leases
|
$
|
176
|
|
|
$
|
186
|
|
|
|
|
|
|
|
|
|
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, 2021
|
|
|
|
|
|
|
|
|
As of June 30, 2021
|
|
|
|
|
|
|
|
Millions
|
|
|
|
|
|
AA
|
|
$
|
8
|
|
|
|
|
|
|
A-
|
|
51
|
|
|
|
|
|
|
BBB+ to BBB
|
|
178
|
|
|
|
|
|
|
BB+
|
|
37
|
|
|
|
|
|
|
Total
|
|
$
|
274
|
|
|
|
|
|
|
|
|
|
|
|
|
The “BB+” rating in the preceding table represents a lease receivable related to Merrill Creek Reservoir. Metropolitan Edison Company (a subsidiary of First Energy) is the lease counterparty. As of June 30, 2021, the gross investment in this lease was $24 million ($19 million, net of deferred taxes).
PSEG recorded no credit losses for the leveraged leases existing on June 30, 2021. Upon the occurrence of certain defaults, indirect subsidiaries of Energy Holdings would exercise their rights and seek recovery of their investment, potentially including stepping into the lease directly to protect their investments. While these actions could ultimately protect or mitigate 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.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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, 2021
|
|
|
|
|
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
|
|
|
Millions
|
|
|
|
Equity Securities
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
$
|
483
|
|
|
$
|
330
|
|
|
$
|
—
|
|
|
$
|
813
|
|
|
|
|
International
|
338
|
|
|
134
|
|
|
(6)
|
|
|
466
|
|
|
|
|
Total Equity Securities
|
821
|
|
|
464
|
|
|
(6)
|
|
|
1,279
|
|
|
|
|
Available-for-Sale Debt Securities
|
|
|
|
|
|
|
|
|
|
|
Government
|
703
|
|
|
15
|
|
|
(6)
|
|
|
712
|
|
|
|
|
Corporate
|
613
|
|
|
25
|
|
|
(3)
|
|
|
635
|
|
|
|
|
Total Available-for-Sale Debt Securities
|
1,316
|
|
|
40
|
|
|
(9)
|
|
|
1,347
|
|
|
|
|
Total NDT Fund Investments (A)
|
$
|
2,137
|
|
|
$
|
504
|
|
|
$
|
(15)
|
|
|
$
|
2,626
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A)The NDT Fund Investments table excludes foreign currency of $2 million as of June 30, 2021, which is part of the NDT Fund.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2020
|
|
|
|
|
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
|
|
|
Millions
|
|
|
|
Equity Securities
|
|
|
|
|
|
|
|
|
|
|
Domestic
|
$
|
519
|
|
|
$
|
305
|
|
|
$
|
(3)
|
|
|
$
|
821
|
|
|
|
|
International
|
388
|
|
|
152
|
|
|
(9)
|
|
|
531
|
|
|
|
|
Total Equity Securities
|
907
|
|
|
457
|
|
|
(12)
|
|
|
1,352
|
|
|
|
|
Available-for-Sale Debt Securities
|
|
|
|
|
|
|
|
|
|
|
Government
|
555
|
|
|
27
|
|
|
(1)
|
|
|
581
|
|
|
|
|
Corporate
|
528
|
|
|
39
|
|
|
(1)
|
|
|
566
|
|
|
|
|
Total Available-for-Sale Debt Securities
|
1,083
|
|
|
66
|
|
|
(2)
|
|
|
1,147
|
|
|
|
|
Total NDT Fund Investments (A)
|
$
|
1,990
|
|
|
$
|
523
|
|
|
$
|
(14)
|
|
|
$
|
2,499
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A)The NDT Fund Investments table excludes foreign currency of $2 million as of December 31, 2020, which is part of the NDT Fund.
Net unrealized gains (losses) on debt securities of $18 million (after-tax) were included in Accumulated Other Comprehensive Loss on PSEG’s and PSEG Power’s Condensed Consolidated Balance Sheets as of June 30, 2021. The portion of net unrealized gains (losses) recognized in the second quarter and first half of 2021 related to equity securities still held as of June 30, 2021 was $61 million and $86 million, respectively.
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,
2021
|
|
December 31,
2020
|
|
|
|
|
Millions
|
|
|
|
Accounts Receivable
|
$
|
19
|
|
|
$
|
11
|
|
|
|
|
Accounts Payable
|
$
|
36
|
|
|
$
|
12
|
|
|
|
|
|
|
|
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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, 2021
|
|
As of December 31, 2020
|
|
|
|
|
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
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23
|
|
|
$
|
(2)
|
|
|
$
|
6
|
|
|
$
|
(1)
|
|
|
|
|
International
|
39
|
|
|
(4)
|
|
|
9
|
|
|
(2)
|
|
|
26
|
|
|
(2)
|
|
|
27
|
|
|
(7)
|
|
|
|
|
Total Equity Securities
|
51
|
|
|
(4)
|
|
|
9
|
|
|
(2)
|
|
|
49
|
|
|
(4)
|
|
|
33
|
|
|
(8)
|
|
|
|
|
Available-for-Sale Debt Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government (B)
|
277
|
|
|
(6)
|
|
|
6
|
|
|
—
|
|
|
72
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
|
|
Corporate (C)
|
156
|
|
|
(3)
|
|
|
8
|
|
|
—
|
|
|
31
|
|
|
(1)
|
|
|
7
|
|
|
—
|
|
|
|
|
Total Available-for-Sale Debt Securities
|
433
|
|
|
(9)
|
|
|
14
|
|
|
—
|
|
|
103
|
|
|
(2)
|
|
|
7
|
|
|
—
|
|
|
|
|
NDT Trust Investments
|
$
|
484
|
|
|
$
|
(13)
|
|
|
$
|
23
|
|
|
$
|
(2)
|
|
|
$
|
152
|
|
|
$
|
(6)
|
|
|
$
|
40
|
|
|
$
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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)
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,
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
Millions
|
|
|
|
Proceeds from NDT Fund Sales (A)
|
$
|
538
|
|
|
$
|
493
|
|
|
$
|
1,135
|
|
|
$
|
1,048
|
|
|
|
|
Net Realized Gains (Losses) on NDT Fund
|
|
|
|
|
|
|
|
|
|
|
Gross Realized Gains
|
$
|
83
|
|
|
$
|
32
|
|
|
$
|
162
|
|
|
$
|
70
|
|
|
|
|
Gross Realized Losses
|
(23)
|
|
|
(20)
|
|
|
(38)
|
|
|
(54)
|
|
|
|
|
Net Realized Gains (Losses) on NDT Fund (B)
|
60
|
|
|
12
|
|
|
124
|
|
|
16
|
|
|
|
|
Unrealized Gains (Losses) on Equity Securities
|
20
|
|
|
182
|
|
|
13
|
|
|
(39)
|
|
|
|
|
Impairment of Available-for-Sale Debt Securities (C)
|
—
|
|
|
—
|
|
|
—
|
|
|
(3)
|
|
|
|
|
Net Gains (Losses) on NDT Fund Investments
|
$
|
80
|
|
|
$
|
194
|
|
|
$
|
137
|
|
|
$
|
(26)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
(C)PSEG Power recognized an impairment of available-for-sale debt securities in 2020. PSEG Power’s policy is to sell all securities that are rated below investment grade.
The NDT Fund debt securities held as of June 30, 2021 had the following maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time Frame
|
|
Fair Value
|
|
|
|
|
|
Millions
|
|
|
|
Less than one year
|
|
$
|
35
|
|
|
|
|
1 - 5 years
|
|
344
|
|
|
|
|
6 - 10 years
|
|
252
|
|
|
|
|
11 - 15 years
|
|
86
|
|
|
|
|
16 - 20 years
|
|
97
|
|
|
|
|
Over 20 years
|
|
533
|
|
|
|
|
Total NDT Available-for-Sale Debt Securities
|
$
|
1,347
|
|
|
|
|
|
|
|
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2021
|
|
|
|
|
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
|
|
|
Millions
|
|
|
|
Domestic Equity Securities
|
$
|
15
|
|
|
$
|
11
|
|
|
$
|
—
|
|
|
$
|
26
|
|
|
|
|
Available-for-Sale Debt Securities
|
|
|
|
|
|
|
|
|
|
|
Government
|
99
|
|
|
3
|
|
|
(2)
|
|
|
100
|
|
|
|
|
Corporate
|
111
|
|
|
7
|
|
|
—
|
|
|
118
|
|
|
|
|
Total Available-for-Sale Debt Securities
|
210
|
|
|
10
|
|
|
(2)
|
|
|
218
|
|
|
|
|
Other Securities
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
|
|
Total Rabbi Trust Investments
|
$
|
226
|
|
|
$
|
21
|
|
|
$
|
(2)
|
|
|
$
|
245
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2020
|
|
|
|
|
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
Losses
|
|
Fair
Value
|
|
|
|
|
Millions
|
|
|
|
Domestic Equity Securities
|
$
|
21
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
31
|
|
|
|
|
Available-for-Sale Debt Securities
|
|
|
|
|
|
|
|
|
|
|
Government
|
94
|
|
|
6
|
|
|
—
|
|
|
100
|
|
|
|
|
Corporate
|
123
|
|
|
12
|
|
|
—
|
|
|
135
|
|
|
|
|
Total Available-for-Sale Debt Securities
|
217
|
|
|
18
|
|
|
—
|
|
|
235
|
|
|
|
|
Total Rabbi Trust Investments
|
$
|
238
|
|
|
$
|
28
|
|
|
$
|
—
|
|
|
$
|
266
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net unrealized gains (losses) on debt securities of $6 million (after-tax) were included in Accumulated Other Comprehensive Loss on PSEG’s Condensed Consolidated Balance Sheet as of June 30, 2021. The portion of net unrealized gains recognized during the second quarter related to equity securities still held as of June 30, 2021 was $1 million and was immaterial for the first half of 2021.
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,
2021
|
|
December 31,
2020
|
|
|
|
|
Millions
|
|
|
|
Accounts Receivable
|
$
|
1
|
|
|
$
|
1
|
|
|
|
|
Accounts Payable
|
$
|
—
|
|
|
$
|
1
|
|
|
|
|
|
|
|
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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, 2021
|
|
As of December 31, 2020
|
|
|
|
|
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)
|
$
|
56
|
|
|
$
|
(2)
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
19
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
Corporate (B)
|
23
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
|
|
Total Available-for-Sale Debt Securities
|
79
|
|
|
(2)
|
|
|
1
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rabbi Trust Investments
|
$
|
79
|
|
|
$
|
(2)
|
|
|
$
|
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 on securities in the Rabbi Trust Fund were:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
Millions
|
|
|
|
Proceeds from Rabbi Trust Sales
|
$
|
29
|
|
|
$
|
61
|
|
|
$
|
94
|
|
|
$
|
115
|
|
|
|
|
Net Realized Gains (Losses) on Rabbi Trust:
|
|
|
|
|
|
|
|
|
|
|
Gross Realized Gains
|
$
|
2
|
|
|
$
|
5
|
|
|
$
|
7
|
|
|
$
|
10
|
|
|
|
|
Gross Realized Losses
|
(1)
|
|
|
(2)
|
|
|
(3)
|
|
|
(3)
|
|
|
|
|
Net Realized Gains (Losses) on Rabbi Trust (A)
|
1
|
|
|
3
|
|
|
4
|
|
|
7
|
|
|
|
|
Unrealized Gains (Losses) on Equity Securities
|
—
|
|
|
4
|
|
|
—
|
|
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Gains (Losses) on Rabbi Trust Investments
|
$
|
1
|
|
|
$
|
7
|
|
|
$
|
4
|
|
|
$
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A)The cost of these securities was determined on the basis of specific identification.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The Rabbi Trust debt securities held as of June 30, 2021 had the following maturities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time Frame
|
|
Fair Value
|
|
|
|
|
|
Millions
|
|
|
|
Less than one year
|
|
$
|
—
|
|
|
|
|
1 - 5 years
|
|
43
|
|
|
|
|
6 - 10 years
|
|
22
|
|
|
|
|
11 - 15 years
|
|
11
|
|
|
|
|
16 - 20 years
|
|
28
|
|
|
|
|
Over 20 years
|
|
114
|
|
|
|
|
Total Rabbi Trust Available-for-Sale Debt Securities
|
$
|
218
|
|
|
|
|
|
|
|
|
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 PSE&G, PSEG Power and PSEG’s other subsidiaries is detailed as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
As of
|
|
|
|
|
June 30,
2021
|
|
December 31,
2020
|
|
|
|
|
Millions
|
|
|
|
PSE&G
|
$
|
44
|
|
|
$
|
51
|
|
|
|
|
PSEG Power
|
64
|
|
|
66
|
|
|
|
|
Other
|
137
|
|
|
149
|
|
|
|
|
Total Rabbi Trust Investments
|
$
|
245
|
|
|
$
|
266
|
|
|
|
|
|
|
|
|
|
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, PSE&G and PSEG Power 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 of each PSEG company 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
Millions
|
|
|
|
Components of Net Periodic Benefit (Credits) Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service Cost (included in O&M Expense)
|
$
|
38
|
|
|
$
|
35
|
|
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
76
|
|
|
$
|
70
|
|
|
$
|
4
|
|
|
$
|
5
|
|
|
|
|
Non-Service Components of Pension and OPEB (Credits) Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Cost
|
35
|
|
|
48
|
|
|
6
|
|
|
8
|
|
|
70
|
|
|
96
|
|
|
11
|
|
|
17
|
|
|
|
|
Expected Return on Plan Assets
|
(119)
|
|
|
(110)
|
|
|
(11)
|
|
|
(9)
|
|
|
(238)
|
|
|
(221)
|
|
|
(21)
|
|
|
(19)
|
|
|
|
|
Amortization of Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior Service Credit
|
—
|
|
|
(3)
|
|
|
(32)
|
|
|
(32)
|
|
|
—
|
|
|
(5)
|
|
|
(64)
|
|
|
(64)
|
|
|
|
|
Actuarial Loss
|
25
|
|
|
23
|
|
|
11
|
|
|
11
|
|
|
51
|
|
|
46
|
|
|
22
|
|
|
23
|
|
|
|
|
Non-Service Components of Pension and OPEB (Credits) Costs
|
(59)
|
|
|
(42)
|
|
|
(26)
|
|
|
(22)
|
|
|
(117)
|
|
|
(84)
|
|
|
(52)
|
|
|
(43)
|
|
|
|
|
Total Benefit (Credits) Costs
|
$
|
(21)
|
|
|
$
|
(7)
|
|
|
$
|
(24)
|
|
|
$
|
(19)
|
|
|
$
|
(41)
|
|
|
$
|
(14)
|
|
|
$
|
(48)
|
|
|
$
|
(38)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension and OPEB credits for PSE&G, PSEG Power and PSEG’s other subsidiaries, excluding Servco, 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,
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
Millions
|
|
|
|
PSE&G
|
$
|
(16)
|
|
|
$
|
(6)
|
|
|
$
|
(23)
|
|
|
$
|
(19)
|
|
|
$
|
(32)
|
|
|
$
|
(13)
|
|
|
$
|
(46)
|
|
|
$
|
(38)
|
|
|
|
|
PSEG Power
|
(5)
|
|
|
(2)
|
|
|
—
|
|
|
—
|
|
|
(9)
|
|
|
(3)
|
|
|
(1)
|
|
|
—
|
|
|
|
|
Other
|
—
|
|
|
1
|
|
|
(1)
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
(1)
|
|
|
—
|
|
|
|
|
Total Benefit (Credits) Costs
|
$
|
(21)
|
|
|
$
|
(7)
|
|
|
$
|
(24)
|
|
|
$
|
(19)
|
|
|
$
|
(41)
|
|
|
$
|
(14)
|
|
|
$
|
(48)
|
|
|
$
|
(38)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSEG does not plan to contribute to its pension and OPEB plans in 2021.
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 plans to contribute $37 million into its pension plan during 2021. Servco’s pension-related revenues and costs were $10 million and $7 million for the three months ended June 30, 2021 and 2020, and $19 million and $15 million for the six months ended June 30, 2021 and 2020, respectively. The OPEB-related revenues earned and costs incurred were $2 million for each of the three months ended June 30, 2021 and 2020, and $5 million and $4 million for the six months ended June 30, 2021 and 2020, respectively.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following table shows the face value of PSEG Power’s outstanding guarantees, current exposure and margin positions as of June 30, 2021 and December 31, 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
As of
|
|
|
|
|
June 30, 2021
|
|
December 31, 2020
|
|
|
|
|
Millions
|
|
|
|
Face Value of Outstanding Guarantees
|
$
|
1,830
|
|
|
$
|
1,792
|
|
|
|
|
Exposure under Current Guarantees
|
$
|
122
|
|
|
$
|
128
|
|
|
|
|
|
|
|
|
|
|
|
Letters of Credit Margin Posted
|
$
|
85
|
|
|
$
|
128
|
|
|
|
|
Letters of Credit Margin Received
|
$
|
28
|
|
|
$
|
45
|
|
|
|
|
|
|
|
|
|
|
|
Cash Deposited and Received
|
|
|
|
|
|
|
Counterparty Cash Collateral Deposited
|
$
|
5
|
|
|
$
|
—
|
|
|
|
|
Counterparty Cash Collateral Received
|
$
|
(1)
|
|
|
$
|
(5)
|
|
|
|
|
Net Broker Balance Deposited (Received)
|
$
|
339
|
|
|
$
|
59
|
|
|
|
|
|
|
|
|
|
|
|
Additional Amounts Posted
|
|
|
|
|
|
|
Other Letters of Credit
|
$
|
42
|
|
|
$
|
42
|
|
|
|
|
|
|
|
|
|
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 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 December 2020, the EPA conditionally 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 April 2021, the EPA announced the tentative selection of its preferred adaptive management scenario for the upper 9 miles from the options presented in the FS. A final selection is expected in the latter half of 2021.
Separately, the EPA has released a Record of Decision (ROD) for the LPRSA’s lower 8.3 miles that requires the removal of sediments at an estimated cost of $2.3 billion (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 they may be entitled to reimbursement and which may be material. Occidental Chemical Corporation, one of the PRPs, has commenced the design of the 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.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
As of June 30, 2021, 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 11 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.
Manufactured Gas Plant (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, PSE&G has determined that the estimated cost to remediate all MGP sites to completion could range between $271 million and $309 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 $271 million as of June 30, 2021. Of this amount, $89 million was recorded in Other Current Liabilities and $182 million was reflected as Environmental Costs in Noncurrent Liabilities. PSE&G has recorded a $271 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 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. Connecticut and New York also have permits to manage their respective pollutant discharge elimination system programs.
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
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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.
Basic Generation Service (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, which represents about 82% of PSE&G’s load requirement, 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 have been responsible for fulfilling all the requirements of a PJM load-serving entity including the provision of capacity, energy, ancillary services, transmission 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. Beginning with the 2021 BGS auction, transmission became the responsibility of the New Jersey EDCs, and is no longer a component of the BGS auction product for either the RSCP or CIEP auctions. BGS suppliers serving load from the 2018, 2019 and 2020 BGS auctions had the option to transfer the transmission obligation to the New Jersey EDCs as of February 2021. Suppliers that did so have their total BGS payment from the EDCs reduced to reflect the transfer of the transmission obligation to the EDCs.
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, 2021 is $351.06 per MW-day, replacing the BGS-CIEP auction year price ending May 31, 2021 of $359.98 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
|
|
|
|
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
|
|
|
36-Month Terms Ending
|
May 2021
|
|
May 2022
|
|
May 2023
|
|
May 2024
|
(A)
|
|
|
|
Load (MW)
|
2,900
|
|
2,800
|
|
2,800
|
|
2,900
|
|
|
|
|
$ per MWh
|
$91.77
|
|
$98.04
|
|
$102.16
|
|
$64.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A)Prices set in the 2021 BGS auction became effective on June 1, 2021 when the 2018 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 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,
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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 2022 and a significant portion through 2023 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. When there is excess delivery capacity available beyond the needs of PSE&G’s customers, PSEG Power can use the gas to supply its fossil generating stations in New Jersey.
As of June 30, 2021, the total minimum purchase requirements included in these commitments were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuel Type
|
|
PSEG Power’s Share of Commitments through 2025
|
|
|
|
|
|
Millions
|
|
|
|
Nuclear Fuel
|
|
|
|
|
|
Uranium
|
|
$
|
194
|
|
|
|
|
Enrichment
|
|
$
|
314
|
|
|
|
|
Fabrication
|
|
$
|
170
|
|
|
|
|
Natural Gas
|
|
$
|
1,196
|
|
|
|
|
|
|
|
|
Pending FERC Matter
PSE&G has received subpoenas for information and a Notice of Investigation from FERC’s Office of Enforcement concerning the Roseland-Pleasant Valley transmission project. PSE&G is fully cooperating with FERC’s requests for information and the investigation. It is not possible at this time to predict the outcome of this matter.
Pending Tropical Storm Matter
Following the effects of Tropical Storm Isaias, the New York Attorney General initiated an inquiry into PSEG LI’s preparation and response to the storm. In addition, the Department of Public Service (DPS) within the New York State Public Service Commission launched an investigation of the state’s electric service providers’, including PSEG LI’s, preparation and response to the storm. The DPS issued an interim storm investigation report finding that PSEG LI violated its Emergency Response Plan and DPS Regulations, and recommended that LIPA consider taking various actions, including terminating or renegotiating the OSA. LIPA also issued a report with recommendations for improvements to PSEG LI’s structure and processes, and recommended that LIPA either renegotiate or terminate the OSA.
In agreement with LIPA, PSEG LI funded approximately $7 million in claims by customers for food and medication spoilage costs incurred as a result of being without electric service during the storm.
In December 2020, LIPA filed a complaint against PSEG LI in New York State court alleging multiple breaches of the OSA in connection with PSEG LI’s preparation for and response to Tropical Storm Isaias seeking specific performance and $70 million in damages. In June 2021, LIPA and PSEG LI executed a non-binding term sheet, which is expected to guide amendments to the OSA. The term sheet includes several changes to the OSA, including shifting a portion of PSEG LI’s fixed revenues to incentive compensation and subjecting a portion of revenue to the potential imposition of penalties by the DPS due to certain performance failures by PSEG LI, and resolves all of LIPA’s claims related to Tropical Storm Isaias and the DPS investigation. Any amendments to the OSA will require the approval of the New York Attorney General and the New York Comptroller. The OSA contract term will continue through 2025, with a mutual option to extend. No assurances can be given regarding reaching final settlement agreement, obtaining New York approvals and the closing of the inquiry by the Attorney General.
In the event that a final settlement with LIPA is not reached, PSEG LI intends to vigorously defend itself with regard to the allegations in LIPA’s complaint alleging breaches of the OSA. A decision in this proceeding requiring specific performance or
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
the payment of damages by PSEG LI or resulting in the termination of the OSA could have a material adverse effect on PSEG’s results of operations and financial condition.
Pending 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, a 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, PSE&G and PSEG Power 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, PSE&G’s or PSEG Power’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, PSE&G’s or PSEG Power’s results of operations or liquidity for any particular reporting period.
Ongoing Coronavirus Pandemic
PSE&G, PSEG Power and PSEG LI are providing essential services during this national emergency related to the ongoing coronavirus (COVID-19) pandemic. The 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 shutoffs for residential customers that has been extended through December 31, 2021. PSE&G has deferred the impact of these 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.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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, 2021:
PSE&G
•issued $450 million of 0.95% Secured Medium-Term Notes, Series N, due March 2026,
•issued $450 million of 3.00% Secured Medium-Term Notes, Series N, due March 2051,
•retired $300 million of 1.90% Medium-Term Notes, Series K, at maturity, and
•retired $134 million of 9.25% Mortgage Bonds, Series CC, at maturity.
PSEG Power
•redeemed in May at par $700 million of 3.00% Senior Notes due to mature in June 2021, and
•redeemed in June at par $250 million of 4.15% Senior Notes due to mature in September 2021.
In August 2021, PSEG Power redeemed its $44 million of Pennsylvania Economic Development Financing Authority Variable Rate Bonds.
Debt Covenants
PSEG Power’s existing credit agreements and senior notes contain covenants restricting the ability of PSEG Power and its subsidiaries that guarantee its indebtedness from consummating certain mergers, consolidations or asset sales. The disposal of PSEG Power’s non-nuclear generating fleet could trigger a default under one or more of these provisions. For these reasons, or for other reasons, PSEG Power would expect to redeem its outstanding senior notes, at a price equal to the principal amount thereof plus a make-whole premium. Any actual redemption price would depend on the applicable treasury rate in effect at such time and the cost of such redemption would be material. In March 2021, PSEG Power and its subsidiaries received waivers from the lenders and the administrative agent under their existing credit agreements permitting them to divest, in one or more transactions, some or all of its and its subsidiaries’ non-nuclear assets without breaching the terms of the agreements.
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.
The commitments under the $4.2 billion credit facilities are provided by a diverse bank group. As of June 30, 2021, the total available credit capacity was $3.9 billion.
As of June 30, 2021, no single institution represented more than 9% of the total commitments in the credit facilities.
As of June 30, 2021, total credit capacity was in excess of the total anticipated maximum liquidity requirements over PSEG’s 12-month planning horizon, including access to external financing to meet redemptions.
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.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The total credit facilities and available liquidity as of June 30, 2021 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2021
|
|
|
|
|
|
|
|
Company/Facility
|
|
Total
Facility
|
|
Usage (D)
|
|
Available
Liquidity
|
|
Expiration
Date
|
|
Primary Purpose
|
|
|
|
|
|
Millions
|
|
|
|
|
|
|
|
PSEG
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5-year Credit Facilities (A)
|
|
$
|
1,500
|
|
|
$
|
202
|
|
|
$
|
1,298
|
|
|
Mar 2024
|
|
Commercial Paper Support/Funding/Letters of Credit
|
|
|
|
Total PSEG
|
|
$
|
1,500
|
|
|
$
|
202
|
|
|
$
|
1,298
|
|
|
|
|
|
|
|
|
PSE&G
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5-year Credit Facility (B)
|
|
$
|
600
|
|
|
$
|
18
|
|
|
$
|
582
|
|
|
Mar 2024
|
|
Commercial Paper Support/Funding/Letters of Credit
|
|
|
|
Total PSE&G
|
|
$
|
600
|
|
|
$
|
18
|
|
|
$
|
582
|
|
|
|
|
|
|
|
|
PSEG Power
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3-year Letter of Credit Facility (E)
|
|
$
|
100
|
|
|
$
|
—
|
|
|
$
|
100
|
|
|
Sept 2021
|
|
Letters of Credit
|
|
|
|
3-year Letter of Credit Facility
|
|
100
|
|
|
86
|
|
|
14
|
|
|
Sept 2022
|
|
Letters of Credit
|
|
|
|
5-year Credit Facilities (C)
|
|
1,900
|
|
|
39
|
|
|
1,861
|
|
|
Mar 2024
|
|
Funding/Letters of Credit
|
|
|
|
Total PSEG Power
|
|
$
|
2,100
|
|
|
$
|
125
|
|
|
$
|
1,975
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
4,200
|
|
|
$
|
345
|
|
|
$
|
3,855
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A)PSEG facilities will be reduced by $9 million in March 2022.
(B)PSE&G facility will be reduced by $4 million in March 2022.
(C)PSEG Power facilities will be reduced by $12 million in March 2022.
(D)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, 2021, PSEG had $200 million outstanding at a weighted average interest rate of 0.23%. PSE&G had no Commercial Paper outstanding as of June 30, 2021.
(E)PSEG Power letter of credit facility was terminated in July 2021.
Short-Term Loans
PSEG
In May and March 2021, PSEG entered into two 364-day variable rate term loan agreements for $750 million and $500 million, respectively. In March 2020, PSEG entered into a $300 million, 364-day variable rate term loan agreement which was prepaid in January 2021.
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, PSEG Power 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, fossil fuels 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
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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, PSEG Power and PSE&G 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. In addition, they have used 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.
The Accumulated Other Comprehensive Income (Loss) (after tax) related to terminated interest rate derivatives designated as cash flow hedges was $(8) million and $(9) million as of June 30, 2021 and December 31, 2020, 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 Power and PSEG. For additional information see Note 14. Fair Value Measurements. The following tabular disclosure does not include the offsetting of trade receivables and payables.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2021
|
|
|
|
|
|
PSEG Power (A)
|
|
|
|
Consolidated
|
|
|
|
|
|
Not Designated
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Location
|
|
Energy-
Related
Contracts
|
|
Netting
(B)
|
|
Total
PSEG Power
|
|
|
|
Total
Derivatives
|
|
|
|
|
|
Millions
|
|
|
|
Derivative Contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
$
|
682
|
|
|
$
|
(647)
|
|
|
$
|
35
|
|
|
|
|
$
|
35
|
|
|
|
|
Noncurrent Assets
|
|
247
|
|
|
(239)
|
|
|
8
|
|
|
|
|
8
|
|
|
|
|
Total Mark-to-Market Derivative Assets
|
|
$
|
929
|
|
|
$
|
(886)
|
|
|
$
|
43
|
|
|
|
|
$
|
43
|
|
|
|
|
Derivative Contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
$
|
(882)
|
|
|
$
|
848
|
|
|
$
|
(34)
|
|
|
|
|
$
|
(34)
|
|
|
|
|
Noncurrent Liabilities
|
|
(313)
|
|
|
307
|
|
|
(6)
|
|
|
|
|
(6)
|
|
|
|
|
Total Mark-to-Market Derivative (Liabilities)
|
|
$
|
(1,195)
|
|
|
$
|
1,155
|
|
|
$
|
(40)
|
|
|
|
|
$
|
(40)
|
|
|
|
|
Total Net Mark-to-Market Derivative Assets (Liabilities)
|
|
$
|
(266)
|
|
|
$
|
269
|
|
|
$
|
3
|
|
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2020
|
|
|
|
|
|
PSEG Power (A)
|
|
|
|
Consolidated
|
|
|
|
|
|
Not Designated
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Location
|
|
Energy-
Related
Contracts
|
|
Netting
(B)
|
|
Total
PSEG Power
|
|
|
|
Total
Derivatives
|
|
|
|
|
|
Millions
|
|
|
|
Derivative Contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
$
|
464
|
|
|
$
|
(404)
|
|
|
$
|
60
|
|
|
|
|
$
|
60
|
|
|
|
|
Noncurrent Assets
|
|
93
|
|
|
(84)
|
|
|
9
|
|
|
|
|
9
|
|
|
|
|
Total Mark-to-Market Derivative Assets
|
|
$
|
557
|
|
|
$
|
(488)
|
|
|
$
|
69
|
|
|
|
|
$
|
69
|
|
|
|
|
Derivative Contracts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
$
|
(412)
|
|
|
$
|
391
|
|
|
$
|
(21)
|
|
|
|
|
$
|
(21)
|
|
|
|
|
Noncurrent Liabilities
|
|
(109)
|
|
|
105
|
|
|
(4)
|
|
|
|
|
(4)
|
|
|
|
|
Total Mark-to-Market Derivative (Liabilities)
|
|
$
|
(521)
|
|
|
$
|
496
|
|
|
$
|
(25)
|
|
|
|
|
$
|
(25)
|
|
|
|
|
Total Net Mark-to-Market Derivative Assets (Liabilities)
|
|
$
|
36
|
|
|
$
|
8
|
|
|
$
|
44
|
|
|
|
|
$
|
44
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A)Substantially all of PSEG Power’s and PSEG’s 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, 2021 and December 31, 2020.
(B)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, 2021 and December 31, 2020, PSEG Power had net cash collateral (receipts) payments to counterparties of $338 million and $54 million, respectively. Of these net cash collateral (receipts) payments, $269 million and $8 million as of June 30, 2021 and December 31, 2020, respectively, were netted against the corresponding net derivative contract positions. Of the $269 million as of June 30, 2021, $(7) million was netted against current assets, $(1) million was netted against noncurrent assets, $208 million was netted against current liabilities and $69 million was netted against noncurrent liabilities. Of the $8 million as of December 31, 2020, $(13) million was netted against current assets and $21 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 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 three level downgrade from its current Moody’s rating and a two level downgrade from its current S&P rating. 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 $45 million as of June 30, 2021 and $28 million as of December 31, 2020. As of June 30, 2021 and December 31, 2020, PSEG Power had the contractual right of offset of $6 million and $3 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 $39 million and $25 million as of June 30, 2021 and December 31, 2020, respectively, related to its derivatives, net of the contractual right of offset under master agreements and the application of collateral.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following shows the effect on the Condensed Consolidated Statements of Operations and on Accumulated Other Comprehensive Income (AOCI) of derivative instruments designated as cash flow hedges for the three months and six months ended June 30, 2021 and 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives in Cash Flow
Hedging Relationships
|
|
Amount of Pre-Tax
Gain (Loss)
Recognized in AOCI on Derivatives
|
|
Location of
Pre-Tax Gain (Loss) Reclassified from AOCI into Income
|
|
Amount of Pre-Tax
Gain (Loss)
Reclassified from AOCI into Income
|
|
|
|
|
Three Months Ended
|
|
|
|
Three Months Ended
|
|
|
|
|
June 30,
|
|
|
|
June 30,
|
|
|
|
|
2021
|
|
2020
|
|
|
|
2021
|
|
2020
|
|
|
|
|
|
Millions
|
|
|
|
Millions
|
|
|
|
PSEG
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Rate Swaps
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Interest Expense
|
|
$
|
(1)
|
|
|
$
|
(4)
|
|
|
|
|
Total PSEG
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
$
|
(1)
|
|
|
$
|
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives in Cash Flow
Hedging Relationships
|
|
Amount of Pre-Tax
Gain (Loss)
Recognized in AOCI on Derivatives
|
|
Location of
Pre-Tax Gain (Loss) Reclassified from AOCI into Income
|
|
Amount of Pre-Tax
Gain (Loss)
Reclassified from AOCI into Income
|
|
|
|
|
Six Months Ended
|
|
|
|
Six Months Ended
|
|
|
|
|
June 30,
|
|
|
|
June 30,
|
|
|
|
|
2021
|
|
2020
|
|
|
|
2021
|
|
2020
|
|
|
|
|
|
Millions
|
|
|
|
Millions
|
|
|
|
PSEG
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Rate Swaps
|
|
$
|
—
|
|
|
$
|
(6)
|
|
|
Interest Expense
|
|
$
|
(2)
|
|
|
$
|
(6)
|
|
|
|
|
Total PSEG
|
|
$
|
—
|
|
|
$
|
(6)
|
|
|
|
|
$
|
(2)
|
|
|
$
|
(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The effect of interest rate cash flow hedges is recorded in Interest Expense in PSEG’s Condensed Consolidated Statement of Operations. For the six months ended June 30, 2021, the amount of loss on interest rate hedges reclassified from Accumulated Other Comprehensive Income (Loss) into income was $(1) million after-tax. For the three months and six months ended June 30, 2020, the amount of loss on interest rate hedges reclassified from Accumulated Other Comprehensive Income (Loss) into income was $(3) million and $(4) million after-tax, respectively.
The following reconciles the Accumulated Other Comprehensive Income (Loss) for derivative activity included in the Accumulated Other Comprehensive Loss of PSEG on a pre-tax and after-tax basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Pre-Tax
|
|
After-Tax
|
|
|
|
|
|
Millions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2019
|
|
$
|
(21)
|
|
|
$
|
(15)
|
|
|
|
|
Loss Recognized in AOCI
|
|
(6)
|
|
|
(4)
|
|
|
|
|
Less: Loss Reclassified into Income
|
|
14
|
|
|
10
|
|
|
|
|
Balance as of December 31, 2020
|
|
$
|
(13)
|
|
|
$
|
(9)
|
|
|
|
|
Loss Recognized in AOCI
|
|
—
|
|
|
—
|
|
|
|
|
Less: Loss Reclassified into Income
|
|
2
|
|
|
1
|
|
|
|
|
Balance as of June 30, 2021
|
|
$
|
(11)
|
|
|
$
|
(8)
|
|
|
|
|
|
|
|
|
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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, 2021 and 2020, 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,
|
|
|
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
Millions
|
|
|
|
PSEG and PSEG Power
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy-Related Contracts
|
|
Operating Revenues
|
|
$
|
(373)
|
|
|
$
|
(27)
|
|
|
$
|
(419)
|
|
|
$
|
204
|
|
|
|
|
Energy-Related Contracts
|
|
Energy Costs
|
|
75
|
|
|
2
|
|
|
81
|
|
|
(66)
|
|
|
|
|
Total PSEG and PSEG Power
|
|
|
|
$
|
(298)
|
|
|
$
|
(25)
|
|
|
$
|
(338)
|
|
|
$
|
138
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table summarizes the net notional volume purchases/(sales) of open derivative transactions by commodity as of June 30, 2021 and December 31, 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Type
|
|
Notional
|
|
Total
|
|
PSEG
|
|
PSEG Power
|
|
PSE&G
|
|
|
|
|
|
|
|
Millions
|
|
|
|
As of June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural Gas
|
|
Dekatherm (Dth)
|
|
232
|
|
|
—
|
|
|
232
|
|
|
—
|
|
|
|
|
Electricity
|
|
MWh
|
|
(70)
|
|
|
—
|
|
|
(70)
|
|
|
—
|
|
|
|
|
Financial Transmission Rights (FTRs)
|
|
MWh
|
|
30
|
|
|
—
|
|
|
30
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Natural Gas
|
|
Dth
|
|
321
|
|
|
—
|
|
|
321
|
|
|
—
|
|
|
|
|
Electricity
|
|
MWh
|
|
(66)
|
|
|
—
|
|
|
(66)
|
|
|
—
|
|
|
|
|
FTRs
|
|
MWh
|
|
20
|
|
|
—
|
|
|
20
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 Power’s and 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, 2021. 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.
As of June 30, 2021, 99% 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).
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rating
|
|
Current
Exposure
|
|
Securities Held as Collateral
|
|
Net
Exposure
|
|
Number of
Counterparties
>10%
|
|
Net Exposure of
Counterparties
>10%
|
|
|
|
|
|
|
Millions
|
|
|
|
Millions
|
|
|
|
|
Investment Grade
|
|
$
|
79
|
|
|
$
|
15
|
|
|
$
|
64
|
|
|
3
|
|
|
$
|
41
|
|
(A)
|
|
|
|
Non-Investment Grade
|
|
2
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
|
|
|
Total
|
|
$
|
81
|
|
|
$
|
16
|
|
|
$
|
65
|
|
|
3
|
|
|
$
|
41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A)Represents net exposure of $21 million with PSE&G and $20 million with two non-affiliated counterparties.
As of June 30, 2021, collateral held from counterparties where PSEG Power had credit exposure included $16 million in letters of credit.
As of June 30, 2021, PSEG Power had 127 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 guaranty 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, 2021, the posted collateral was principally in the form of parental guarantees. The unsecured credit used by the suppliers represents PSE&G’s net credit exposure. PSE&G’s BGS suppliers’ credit exposure is calculated each business day As of June 30, 2021, PSE&G had no net credit exposure with suppliers, including 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, PSE&G and PSEG Power 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 and gas 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, PSE&G’s and PSEG Power’s respective assets and (liabilities) measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020, including the fair value measurements and the levels of inputs used in determining those fair values. Amounts shown for PSEG include the amounts shown for PSE&G and PSEG Power.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recurring Fair Value Measurements as of June 30, 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)
|
|
$
|
60
|
|
|
$
|
—
|
|
|
$
|
60
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
Derivative Contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy-Related Contracts (B)
|
|
$
|
43
|
|
|
$
|
(886)
|
|
|
$
|
96
|
|
|
$
|
833
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NDT Fund (C)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities
|
|
$
|
1,279
|
|
|
$
|
—
|
|
|
$
|
1,279
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—U.S. Treasury
|
|
$
|
326
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
326
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—Govt Other
|
|
$
|
386
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
386
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—Corporate
|
|
$
|
635
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
635
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rabbi Trust (C)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities
|
|
$
|
26
|
|
|
$
|
—
|
|
|
$
|
26
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—U.S. Treasury
|
|
$
|
66
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
66
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—Govt Other
|
|
$
|
34
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
34
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—Corporate
|
|
$
|
118
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
118
|
|
|
$
|
—
|
|
|
|
|
Other
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy-Related Contracts (B)
|
|
$
|
(40)
|
|
|
$
|
1,155
|
|
|
$
|
(55)
|
|
|
$
|
(1,132)
|
|
|
$
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSE&G
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Equivalents (A)
|
|
$
|
30
|
|
|
$
|
—
|
|
|
$
|
30
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rabbi Trust (C)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—U.S. Treasury
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—Govt Other
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—Corporate
|
|
$
|
21
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
21
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSEG Power
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy-Related Contracts (B)
|
|
$
|
43
|
|
|
$
|
(886)
|
|
|
$
|
96
|
|
|
$
|
833
|
|
|
$
|
—
|
|
|
|
|
NDT Fund (C)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities
|
|
$
|
1,279
|
|
|
$
|
—
|
|
|
$
|
1,279
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—U.S. Treasury
|
|
$
|
326
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
326
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—Govt Other
|
|
$
|
386
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
386
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—Corporate
|
|
$
|
635
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
635
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rabbi Trust (C)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—U.S. Treasury
|
|
$
|
17
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—Govt Other
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—Corporate
|
|
$
|
31
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
31
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy-Related Contracts (B)
|
|
$
|
(40)
|
|
|
$
|
1,155
|
|
|
$
|
(55)
|
|
|
$
|
(1,132)
|
|
|
$
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recurring Fair Value Measurements as of December 31, 2020
|
|
|
|
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)
|
|
$
|
312
|
|
|
$
|
—
|
|
|
$
|
312
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
Derivative Contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy-Related Contracts (B)
|
|
$
|
69
|
|
|
$
|
(488)
|
|
|
$
|
26
|
|
|
$
|
519
|
|
|
$
|
12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NDT Fund (C)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities
|
|
$
|
1,352
|
|
|
$
|
—
|
|
|
$
|
1,351
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—U.S. Treasury
|
|
$
|
239
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
239
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—Govt Other
|
|
$
|
342
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
342
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—Corporate
|
|
$
|
566
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
566
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rabbi Trust (C)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities
|
|
$
|
31
|
|
|
$
|
—
|
|
|
$
|
31
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—U.S. Treasury
|
|
$
|
59
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
59
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—Govt Other
|
|
$
|
41
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
41
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—Corporate
|
|
$
|
135
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
135
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy-Related Contracts (B)
|
|
$
|
(25)
|
|
|
$
|
496
|
|
|
$
|
(33)
|
|
|
$
|
(483)
|
|
|
$
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSE&G
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Equivalents (A)
|
|
$
|
50
|
|
|
$
|
—
|
|
|
$
|
50
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
Rabbi Trust (C)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—U.S. Treasury
|
|
$
|
11
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—Govt Other
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—Corporate
|
|
$
|
26
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
26
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSEG Power
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy-Related Contracts (B)
|
|
$
|
69
|
|
|
$
|
(488)
|
|
|
$
|
26
|
|
|
$
|
519
|
|
|
$
|
12
|
|
|
|
|
NDT Fund (C)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities
|
|
$
|
1,352
|
|
|
$
|
—
|
|
|
$
|
1,351
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—U.S. Treasury
|
|
$
|
239
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
239
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—Govt Other
|
|
$
|
342
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
342
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—Corporate
|
|
$
|
566
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
566
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rabbi Trust (C)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Securities
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—U.S. Treasury
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—Govt Other
|
|
$
|
10
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
10
|
|
|
$
|
—
|
|
|
|
|
Debt Securities—Corporate
|
|
$
|
33
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
33
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Contracts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy-Related Contracts (B)
|
|
$
|
(25)
|
|
|
$
|
496
|
|
|
$
|
(33)
|
|
|
$
|
(483)
|
|
|
$
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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 foreign currency of $2 million in the NDT Fund as of both June 30, 2021 and December 31, 2020. 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 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. The preferred stocks are not actively traded on a daily basis and therefore, are also priced using an evaluated pricing methodology. 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.
The fair value of PSEG Power’s electric load contracts in which load consumption may change hourly based on demand are measured using certain unobservable inputs, such as historic load variability and, accordingly, are categorized as Level 3. The fair value of PSEG Power’s gas physical contracts at certain illiquid delivery locations are measured using average historical basis and, accordingly, are categorized as Level 3. While these physical gas contracts have an unobservable component in their respective forward price curves, the fluctuations in fair value have been driven primarily by changes in the observable inputs.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The following tables provide details surrounding significant Level 3 valuations as of June 30, 2021 and December 31, 2020.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quantitative Information About Level 3 Fair Value Measurements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant
|
|
|
|
|
|
|
|
|
|
Level 3
|
|
Fair Value as of
|
|
Valuation
|
|
Unobservable
|
|
|
|
Arithmetic
|
|
|
|
Commodity
|
|
Position
|
|
June 30, 2021
|
|
Technique(s)
|
|
Input
|
|
Range
|
|
Average
|
|
|
|
|
|
|
|
Assets
|
|
(Liabilities)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSEG Power
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electricity
|
|
Electric Load Contracts
|
|
$
|
—
|
|
|
$
|
(6)
|
|
|
Discounted Cash Flow
|
|
Load Shaping Cost
|
|
0% to 11%
|
|
5%
|
|
|
|
Gas/Electric
|
|
Other (A)
|
|
—
|
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total PSEG Power
|
|
$
|
—
|
|
|
$
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total PSEG
|
|
|
|
$
|
—
|
|
|
$
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quantitative Information About Level 3 Fair Value Measurements
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant
|
|
|
|
|
|
|
|
|
|
Level 3
|
|
Fair Value as of
|
|
Valuation
|
|
Unobservable
|
|
|
|
Arithmetic
|
|
|
|
Commodity
|
|
Position
|
|
December 31, 2020
|
|
Technique(s)
|
|
Input
|
|
Range
|
|
Average
|
|
|
|
|
|
|
|
Assets
|
|
(Liabilities)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Millions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSEG Power
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electricity
|
|
Electric Load Contracts
|
|
$
|
12
|
|
|
$
|
—
|
|
|
Discounted Cash Flow
|
|
Load Shaping Cost
|
|
0% to 11%
|
|
4%
|
|
|
|
Gas
|
|
Gas Physical Contracts
|
|
—
|
|
|
(2)
|
|
|
Discounted Cash Flow
|
|
Historical Basis Adjustment
|
|
-60% to -30%
|
|
-43%
|
|
|
|
Electricity
|
|
Other (A)
|
|
—
|
|
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total PSEG Power
|
|
$
|
12
|
|
|
$
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
Total PSEG
|
|
|
|
$
|
12
|
|
|
$
|
(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A)Other is comprised of primarily a heat rate call option and capacity swaps.
As of June 30, 2021, significant unobservable inputs listed above would have a direct impact on the fair values of the above Level 3 instruments if they were adjusted. For energy-related contracts in cases where PSEG Power is a seller, an increase in the load variability would decrease the fair value. For gas-related contracts in cases where PSEG Power is a buyer, an increase in the average historical basis would increase the fair value.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
A reconciliation of the beginning and ending balances of Level 3 derivative contracts and securities for the three months and six months ended June 30, 2021 and June 30, 2020, respectively, follows:
Changes in Level 3 Assets and (Liabilities) Measured at Fair Value on a Recurring Basis
for the Three Months and Six Months Ended June 30, 2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2021
|
|
|
|
Description
|
|
Balance as of March 31, 2021
|
|
Total Gains or (Losses)
Realized/Unrealized Included in Income (A)
|
|
Purchases
(Sales)
|
|
Issuances/
Settlements
(B)
|
|
Transfers
In/Out (C)
|
|
Balance as of June 30, 2021
|
|
|
|
|
|
Millions
|
|
|
|
PSEG and PSEG Power
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Derivative Assets (Liabilities)
|
|
$
|
(1)
|
|
|
$
|
(9)
|
|
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2021
|
|
|
|
Description
|
|
Balance as of December 31, 2020
|
|
Total Gains or (Losses)
Realized/Unrealized Included in Income (A)
|
|
Purchases
(Sales)
|
|
Issuances/
Settlements
(B)
|
|
Transfers
In/Out (C)
|
|
Balance as of June 30, 2021
|
|
|
|
|
|
Millions
|
|
|
|
PSEG and PSEG Power
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Derivative Assets (Liabilities)
|
|
$
|
7
|
|
|
$
|
(13)
|
|
|
$
|
—
|
|
|
$
|
(2)
|
|
|
$
|
—
|
|
|
$
|
(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in Level 3 Assets and (Liabilities) Measured at Fair Value on a Recurring Basis
for the Three Months and Six Months Ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2020
|
|
|
|
Description
|
|
Balance as of March 31, 2020
|
|
Total Gains or (Losses)
Realized/Unrealized Included in Income (A)
|
|
Purchases
(Sales)
|
|
Issuances/
Settlements
(B)
|
|
Transfers
In/Out
(C)
|
|
Balance as of June 30, 2020
|
|
|
|
|
|
Millions
|
|
|
|
PSEG and PSEG Power
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Derivative Assets (Liabilities)
|
|
$
|
19
|
|
|
$
|
(4)
|
|
|
$
|
—
|
|
|
$
|
(5)
|
|
|
$
|
—
|
|
|
$
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30, 2020
|
|
|
|
Description
|
|
Balance as of December 31, 2019
|
|
Total Gains or (Losses)
Realized/Unrealized Included in Income (A)
|
|
Purchases
(Sales)
|
|
Issuances/
Settlements
(B)
|
|
Transfers
In/Out (C)
|
|
Balance as of June 30, 2020
|
|
|
|
|
|
Millions
|
|
|
|
PSEG and PSEG Power
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Derivative Assets (Liabilities)
|
|
$
|
7
|
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
(6)
|
|
|
$
|
—
|
|
|
$
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A)Unrealized gains (losses) in the following table represent the change in derivative assets and liabilities still held as of June 30, 2021 and 2020.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
Total Gains (Losses)
|
|
Unrealized Gains (Losses)
|
|
Total Gains (Losses)
|
|
Unrealized Gains (Losses)
|
|
Total Gains (Losses)
|
|
Unrealized Gains (Losses)
|
|
Total Gains (Losses)
|
|
Unrealized Gains (Losses)
|
|
|
|
|
|
Millions
|
|
|
|
PSEG and PSEG Power
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Revenues
|
|
$
|
(7)
|
|
|
$
|
(7)
|
|
|
$
|
(4)
|
|
|
$
|
(9)
|
|
|
$
|
(12)
|
|
|
$
|
(16)
|
|
|
$
|
14
|
|
|
$
|
2
|
|
|
|
|
Energy Costs
|
|
(2)
|
|
|
(2)
|
|
|
—
|
|
|
—
|
|
|
(1)
|
|
|
(1)
|
|
|
(5)
|
|
|
1
|
|
|
|
|
Total
|
|
$
|
(9)
|
|
|
$
|
(9)
|
|
|
$
|
(4)
|
|
|
$
|
(9)
|
|
|
$
|
(13)
|
|
|
$
|
(17)
|
|
|
$
|
9
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(B)Includes settlements of $2 million and $(2) million for the three months and six months ended June 30, 2021 and $(5) million and $(6) million for the three months and six months ended June 30, 2020.
(C)There were no transfers into or out of Level 3 during the three months and six months ended June 30, 2021 and 2020.
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 net liabilities were measured using unobservable inputs and classified as Level 3 within the fair value hierarchy were immaterial.
As of June 30, 2020, PSEG carried $2.9 billion of net assets that are measured at fair value on a recurring basis, of which $10 million of net assets was measured using unobservable inputs and classified as Level 3 within the fair value hierarchy.
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, 2021 and December 31, 2020 are included in the following table and accompanying notes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
As of
|
|
|
|
|
June 30, 2021
|
|
December 31, 2020
|
|
|
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
|
|
|
|
Millions
|
|
|
|
Long-Term Debt:
|
|
|
|
|
|
|
|
|
|
|
PSEG (A)
|
$
|
2,931
|
|
|
$
|
3,031
|
|
|
$
|
2,929
|
|
|
$
|
3,092
|
|
|
|
|
PSE&G (A)
|
11,370
|
|
|
13,090
|
|
|
10,909
|
|
|
13,372
|
|
|
|
|
PSEG Power (A)
|
1,394
|
|
|
1,679
|
|
|
2,342
|
|
|
2,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Long-Term Debt
|
$
|
15,695
|
|
|
$
|
17,800
|
|
|
$
|
16,180
|
|
|
$
|
19,143
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 that is based on a conventional discounted cash flow 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.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 15. Other Income (Deductions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSE&G
|
|
PSEG Power
|
|
Other (A)
|
|
Consolidated
|
|
|
|
|
Millions
|
|
|
|
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
|
|
|
(3)
|
|
|
1
|
|
|
(1)
|
|
|
|
|
Total Other Income (Deductions)
|
$
|
24
|
|
|
$
|
8
|
|
|
$
|
1
|
|
|
$
|
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
|
|
|
(4)
|
|
|
2
|
|
|
1
|
|
|
|
|
Total Other Income (Deductions)
|
$
|
52
|
|
|
$
|
4
|
|
|
$
|
2
|
|
|
$
|
58
|
|
|
|
|
Three Months Ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
NDT Fund Interest and Dividends
|
$
|
—
|
|
|
$
|
14
|
|
|
$
|
—
|
|
|
$
|
14
|
|
|
|
|
Allowance for Funds Used During Construction
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
|
|
Solar Loan Interest
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
|
|
Purchases of Tax Losses under New Jersey Technology Tax Benefit Transfer Program
|
—
|
|
|
(1)
|
|
|
—
|
|
|
(1)
|
|
|
|
|
Other
|
2
|
|
|
(1)
|
|
|
—
|
|
|
1
|
|
|
|
|
Total Other Income (Deductions)
|
$
|
26
|
|
|
$
|
12
|
|
|
$
|
—
|
|
|
$
|
38
|
|
|
|
|
Six Months Ended June 30, 2020
|
|
|
|
|
|
|
|
|
|
|
NDT Fund Interest and Dividends
|
$
|
—
|
|
|
$
|
27
|
|
|
$
|
—
|
|
|
$
|
27
|
|
|
|
|
Allowance for Funds Used During Construction
|
41
|
|
|
—
|
|
|
—
|
|
|
41
|
|
|
|
|
Solar Loan Interest
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|
|
|
Purchases of Tax Losses under New Jersey Technology Tax Benefit Transfer Program
|
—
|
|
|
(36)
|
|
|
—
|
|
|
(36)
|
|
|
|
|
Other
|
4
|
|
|
(2)
|
|
|
—
|
|
|
2
|
|
|
|
|
Total Other Income (Deductions)
|
$
|
53
|
|
|
$
|
(11)
|
|
|
$
|
—
|
|
|
$
|
42
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A)Other consists of activity at PSEG (as parent company), Energy Holdings, Services, PSEG LI and intercompany eliminations.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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,
|
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
Millions
|
|
|
|
Pre-Tax Income (Loss)
|
|
$
|
(239)
|
|
|
$
|
560
|
|
|
$
|
526
|
|
|
$
|
1,052
|
|
|
|
|
Tax Computed at Statutory Rate @ 21%
|
|
$
|
(50)
|
|
|
$
|
118
|
|
|
$
|
110
|
|
|
$
|
221
|
|
|
|
|
Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
State Income Taxes (net of federal income tax)
|
|
(24)
|
|
|
25
|
|
|
18
|
|
|
32
|
|
|
|
|
NDT Fund
|
|
9
|
|
|
24
|
|
|
18
|
|
|
(2)
|
|
|
|
|
Tax Credit Amortization/ITC Recapture
|
|
35
|
|
|
(4)
|
|
|
31
|
|
|
(8)
|
|
|
|
|
Tax Adjustment Credit
|
|
(42)
|
|
|
(45)
|
|
|
(121)
|
|
|
(88)
|
|
|
|
|
Other
|
|
10
|
|
|
(9)
|
|
|
(1)
|
|
|
(2)
|
|
|
|
|
Subtotal
|
|
(12)
|
|
|
(9)
|
|
|
(55)
|
|
|
(68)
|
|
|
|
|
Total Income Tax Expense (Benefit)
|
|
$
|
(62)
|
|
|
$
|
109
|
|
|
$
|
55
|
|
|
$
|
153
|
|
|
|
|
Effective Income Tax Rate
|
|
25.9
|
%
|
|
19.5
|
%
|
|
10.5
|
%
|
|
14.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
Millions
|
|
|
|
Pre-Tax Income
|
|
$
|
370
|
|
|
$
|
330
|
|
|
$
|
926
|
|
|
$
|
879
|
|
|
|
|
Tax Computed at Statutory Rate @ 21%
|
|
$
|
78
|
|
|
$
|
69
|
|
|
$
|
194
|
|
|
$
|
185
|
|
|
|
|
Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
State Income Taxes (net of federal income tax)
|
|
25
|
|
|
17
|
|
|
63
|
|
|
54
|
|
|
|
|
Tax Adjustment Credit
|
|
(42)
|
|
|
(45)
|
|
|
(121)
|
|
|
(88)
|
|
|
|
|
Other
|
|
—
|
|
|
6
|
|
|
4
|
|
|
5
|
|
|
|
|
Subtotal
|
|
(17)
|
|
|
(22)
|
|
|
(54)
|
|
|
(29)
|
|
|
|
|
Total Income Tax Expense (Benefit)
|
|
$
|
61
|
|
|
$
|
47
|
|
|
$
|
140
|
|
|
$
|
156
|
|
|
|
|
Effective Income Tax Rate
|
|
16.5
|
%
|
|
14.2
|
%
|
|
15.1
|
%
|
|
17.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
A reconciliation of reported income tax expense for PSEG Power 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 Power
|
|
June 30,
|
|
June 30,
|
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
Millions
|
|
|
|
Pre-Tax Income (Loss)
|
|
$
|
(610)
|
|
|
$
|
234
|
|
|
$
|
(397)
|
|
|
$
|
177
|
|
|
|
|
Tax Computed at Statutory Rate @ 21%
|
|
$
|
(128)
|
|
|
$
|
49
|
|
|
$
|
(83)
|
|
|
$
|
37
|
|
|
|
|
Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
State Income Taxes (net of federal income tax)
|
|
(49)
|
|
|
10
|
|
|
(45)
|
|
|
(21)
|
|
|
|
|
NDT Fund
|
|
9
|
|
|
24
|
|
|
18
|
|
|
(2)
|
|
|
|
|
Tax Credit Amortization/ITC Recapture
|
|
38
|
|
|
(2)
|
|
|
36
|
|
|
(4)
|
|
|
|
|
Audit Settlement
|
|
—
|
|
|
(20)
|
|
|
(2)
|
|
|
(22)
|
|
|
|
|
Other
|
|
3
|
|
|
3
|
|
|
1
|
|
|
6
|
|
|
|
|
Subtotal
|
|
1
|
|
|
15
|
|
|
8
|
|
|
(43)
|
|
|
|
|
Total Income Tax Expense (Benefit)
|
|
$
|
(127)
|
|
|
$
|
64
|
|
|
$
|
(75)
|
|
|
$
|
(6)
|
|
|
|
|
Effective Income Tax Rate
|
|
20.8
|
%
|
|
27.4
|
%
|
|
18.9
|
%
|
|
(3.4)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In March 2021, the White House released an overview of the American Jobs Plan. In April 2021, the Treasury Department issued The Made in America Tax Plan and in June 2021, the General Explanations of the Administration’s Fiscal Year 2022 Revenue Proposals in the Fiscal Year 2022 Budget. Each include several tax raising provisions that have not yet been enacted. Further, a prolonged economic recovery may result in additional federal and state tax legislation that can have a material impact on PSEG’s, PSE&G’s and PSEG Power’s effective tax rate and cash tax position.
Amounts recorded under the Tax Cuts and Jobs Act of 2017, Coronavirus Aid, Relief, and Economic Security Act and Consolidated Appropriations Act, 2021 are subject to change based on several factors, including, among other things, whether the Internal Revenue Service or state taxing authorities issue additional guidance and/or further clarification. Any further guidance or clarification could impact PSEG’s, PSE&G’s and PSEG Power’s financial statements.
As of June 30, 2021, PSE&G had a $23 million New Jersey Corporate Business Tax net operating loss (NOL) that is expected to be fully realized in the future. There are no other material tax carryforwards in other jurisdictions.
New Jersey State Tax Reform
In September 2020, New Jersey enacted its State Fiscal Year 2021 Budget, which amended the temporary surtax originally enacted into law in 2018, from 1.5% to 2.5% for 2020 and 2021 and extended the 2.5% surtax to 2023. PSE&G continues to be exempt and this amendment will not have a material impact on PSEG’s and PSEG Power’s financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 17. Accumulated Other Comprehensive Income (Loss), Net of Tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSEG
|
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSEG
|
|
Three Months Ended June 30, 2020
|
|
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Cash Flow Hedges
|
|
Pension and OPEB Plans
|
|
Available-for-Sale Securities
|
|
Total
|
|
|
|
|
|
Millions
|
|
|
|
Balance as of March 31, 2020
|
|
$
|
(18)
|
|
|
$
|
(496)
|
|
|
$
|
33
|
|
|
$
|
(481)
|
|
|
|
|
Other Comprehensive Income (Loss) before Reclassifications
|
|
—
|
|
|
—
|
|
|
30
|
|
|
30
|
|
|
|
|
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)
|
|
3
|
|
|
3
|
|
|
(10)
|
|
|
(4)
|
|
|
|
|
Net Current Period Other Comprehensive Income (Loss)
|
|
3
|
|
|
3
|
|
|
20
|
|
|
26
|
|
|
|
|
Balance as of June 30, 2020
|
|
$
|
(15)
|
|
|
$
|
(493)
|
|
|
$
|
53
|
|
|
$
|
(455)
|
|
|
|
|
|
|
|
|
|
|
PSEG
|
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSEG
|
|
Six Months Ended June 30, 2020
|
|
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Cash Flow Hedges
|
|
Pension and OPEB Plans
|
|
Available-for-Sale Securities
|
|
Total
|
|
|
|
|
|
Millions
|
|
|
|
Balance as of December 31, 2019
|
|
$
|
(15)
|
|
|
$
|
(499)
|
|
|
$
|
25
|
|
|
$
|
(489)
|
|
|
|
|
Other Comprehensive Income (Loss) before Reclassifications
|
|
(4)
|
|
|
—
|
|
|
44
|
|
|
40
|
|
|
|
|
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)
|
|
4
|
|
|
6
|
|
|
(16)
|
|
|
(6)
|
|
|
|
|
Net Current Period Other Comprehensive Income (Loss)
|
|
—
|
|
|
6
|
|
|
28
|
|
|
34
|
|
|
|
|
Balance as of June 30, 2020
|
|
$
|
(15)
|
|
|
$
|
(493)
|
|
|
$
|
53
|
|
|
$
|
(455)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSEG Power
|
|
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
|
|
$
|
—
|
|
|
$
|
(457)
|
|
|
$
|
8
|
|
|
$
|
(449)
|
|
|
|
|
Other Comprehensive Income (Loss) before Reclassifications
|
|
—
|
|
|
—
|
|
|
13
|
|
|
13
|
|
|
|
|
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)
|
|
—
|
|
|
3
|
|
|
(1)
|
|
|
2
|
|
|
|
|
Net Current Period Other Comprehensive Income (Loss)
|
|
—
|
|
|
3
|
|
|
12
|
|
|
15
|
|
|
|
|
Balance as of June 30, 2021
|
|
$
|
—
|
|
|
$
|
(454)
|
|
|
$
|
20
|
|
|
$
|
(434)
|
|
|
|
|
|
|
|
|
|
|
PSEG Power
|
|
Three Months Ended June 30, 2020
|
|
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Cash Flow Hedges
|
|
Pension and OPEB Plans
|
|
Available-for-Sale Securities
|
|
Total
|
|
|
|
|
|
Millions
|
|
|
|
Balance as of March 31, 2020
|
|
$
|
—
|
|
|
$
|
(418)
|
|
|
$
|
26
|
|
|
$
|
(392)
|
|
|
|
|
Other Comprehensive Income (Loss) before Reclassifications
|
|
—
|
|
|
—
|
|
|
24
|
|
|
24
|
|
|
|
|
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)
|
|
—
|
|
|
3
|
|
|
(9)
|
|
|
(6)
|
|
|
|
|
Net Current Period Other Comprehensive Income (Loss)
|
|
—
|
|
|
3
|
|
|
15
|
|
|
18
|
|
|
|
|
Balance as of June 30, 2020
|
|
$
|
—
|
|
|
$
|
(415)
|
|
|
$
|
41
|
|
|
$
|
(374)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSEG Power
|
|
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
|
|
$
|
—
|
|
|
$
|
(459)
|
|
|
$
|
40
|
|
|
$
|
(419)
|
|
|
|
|
Other Comprehensive Income (Loss) before Reclassifications
|
|
—
|
|
|
—
|
|
|
(18)
|
|
|
(18)
|
|
|
|
|
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)
|
|
—
|
|
|
5
|
|
|
(2)
|
|
|
3
|
|
|
|
|
Net Current Period Other Comprehensive Income (Loss)
|
|
—
|
|
|
5
|
|
|
(20)
|
|
|
(15)
|
|
|
|
|
Balance as of June 30, 2021
|
|
$
|
—
|
|
|
$
|
(454)
|
|
|
$
|
20
|
|
|
$
|
(434)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSEG Power
|
|
Six Months Ended June 30, 2020
|
|
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Cash Flow Hedges
|
|
Pension and OPEB Plans
|
|
Available-for-Sale Securities
|
|
Total
|
|
|
|
|
|
Millions
|
|
|
|
Balance as of December 31, 2019
|
|
$
|
—
|
|
|
$
|
(420)
|
|
|
$
|
19
|
|
|
$
|
(401)
|
|
|
|
|
Other Comprehensive Income (Loss) before Reclassifications
|
|
—
|
|
|
—
|
|
|
35
|
|
|
35
|
|
|
|
|
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)
|
|
—
|
|
|
5
|
|
|
(13)
|
|
|
(8)
|
|
|
|
|
Net Current Period Other Comprehensive Income (Loss)
|
|
—
|
|
|
5
|
|
|
22
|
|
|
27
|
|
|
|
|
Balance as of June 30, 2020
|
|
$
|
—
|
|
|
$
|
(415)
|
|
|
$
|
41
|
|
|
$
|
(374)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSEG
|
|
|
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) to Income Statement
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
Description of Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)
|
|
Location of Pre-Tax Amount In Statement of Operations
|
June 30, 2021
|
|
June 30, 2021
|
|
|
|
|
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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSEG
|
|
|
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) to Income Statement
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
Description of Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)
|
|
Location of Pre-Tax Amount In Statement of Operations
|
June 30, 2020
|
|
June 30, 2020
|
|
|
|
|
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
|
$
|
(4)
|
|
|
$
|
1
|
|
|
$
|
(3)
|
|
|
$
|
(6)
|
|
|
$
|
2
|
|
|
$
|
(4)
|
|
|
|
|
Total Cash Flow Hedges
|
(4)
|
|
|
1
|
|
|
(3)
|
|
|
(6)
|
|
|
2
|
|
|
(4)
|
|
|
|
|
Pension and OPEB Plans
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of Prior Service (Cost) Credit
|
|
Non-Operating Pension and OPEB Credits (Costs)
|
6
|
|
|
(1)
|
|
|
5
|
|
|
12
|
|
|
(3)
|
|
|
9
|
|
|
|
|
Amortization of Actuarial Loss
|
|
Non-Operating Pension and OPEB Credits (Costs)
|
(10)
|
|
|
2
|
|
|
(8)
|
|
|
(20)
|
|
|
5
|
|
|
(15)
|
|
|
|
|
Total Pension and OPEB Plans
|
(4)
|
|
|
1
|
|
|
(3)
|
|
|
(8)
|
|
|
2
|
|
|
(6)
|
|
|
|
|
Available-for-Sale Debt Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized Gains (Losses) and Impairments
|
|
Net Gains (Losses) on Trust Investments
|
17
|
|
|
(7)
|
|
|
10
|
|
|
26
|
|
|
(10)
|
|
|
16
|
|
|
|
|
Total Available-for-Sale Debt Securities
|
17
|
|
|
(7)
|
|
|
10
|
|
|
26
|
|
|
(10)
|
|
|
16
|
|
|
|
|
Total
|
|
|
$
|
9
|
|
|
$
|
(5)
|
|
|
$
|
4
|
|
|
$
|
12
|
|
|
$
|
(6)
|
|
|
$
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSEG Power
|
|
|
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) to Income Statement
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
Description of Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)
|
|
Location of Pre-Tax Amount In Statement of Operations
|
June 30, 2021
|
|
June 30, 2021
|
|
|
|
|
Pre-Tax Amount
|
|
Tax (Expense) Benefit
|
|
After-Tax Amount
|
|
Pre-Tax Amount
|
|
Tax (Expense) Benefit
|
|
After-Tax Amount
|
|
|
|
|
|
|
Millions
|
|
|
|
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)
|
(9)
|
|
|
3
|
|
|
(6)
|
|
|
(17)
|
|
|
5
|
|
|
(12)
|
|
|
|
|
Total Pension and OPEB Plans
|
(4)
|
|
|
1
|
|
|
(3)
|
|
|
(7)
|
|
|
2
|
|
|
(5)
|
|
|
|
|
Available-for-Sale Debt Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized Gains (Losses)
|
|
Net Gains (Losses) on Trust Investments
|
1
|
|
|
—
|
|
|
1
|
|
|
3
|
|
|
(1)
|
|
|
2
|
|
|
|
|
Total Available-for-Sale Debt Securities
|
1
|
|
|
—
|
|
|
1
|
|
|
3
|
|
|
(1)
|
|
|
2
|
|
|
|
|
Total
|
|
|
$
|
(3)
|
|
|
$
|
1
|
|
|
$
|
(2)
|
|
|
$
|
(4)
|
|
|
$
|
1
|
|
|
$
|
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PSEG Power
|
|
|
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) to Income Statement
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
Description of Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)
|
|
Location of Pre-Tax Amount In Statement of Operations
|
June 30, 2020
|
|
June 30, 2020
|
|
|
|
|
Pre-Tax Amount
|
|
Tax (Expense) Benefit
|
|
After-Tax Amount
|
|
Pre-Tax Amount
|
|
Tax (Expense) Benefit
|
|
After-Tax Amount
|
|
|
|
|
|
|
Millions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
(9)
|
|
|
2
|
|
|
(7)
|
|
|
(17)
|
|
|
4
|
|
|
(13)
|
|
|
|
|
Total Pension and OPEB Plans
|
(3)
|
|
|
—
|
|
|
(3)
|
|
|
(6)
|
|
|
1
|
|
|
(5)
|
|
|
|
|
Available-for-Sale Debt Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Realized Gains (Losses) and Impairments
|
|
Net Gains (Losses) on Trust Investments
|
14
|
|
|
(5)
|
|
|
9
|
|
|
21
|
|
|
(8)
|
|
|
13
|
|
|
|
|
Total Available-for-Sale Debt Securities
|
14
|
|
|
(5)
|
|
|
9
|
|
|
21
|
|
|
(8)
|
|
|
13
|
|
|
|
|
Total
|
|
|
$
|
11
|
|
|
$
|
(5)
|
|
|
$
|
6
|
|
|
$
|
15
|
|
|
$
|
(7)
|
|
|
$
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
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,
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
Basic
|
|
Diluted
|
|
Basic
|
|
Diluted
|
|
Basic
|
|
Diluted
|
|
Basic
|
|
Diluted
|
|
|
|
EPS Numerator (Millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
$
|
(177)
|
|
|
$
|
(177)
|
|
|
$
|
451
|
|
|
$
|
451
|
|
|
$
|
471
|
|
|
$
|
471
|
|
|
$
|
899
|
|
|
$
|
899
|
|
|
|
|
EPS Denominator (Millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Common Shares Outstanding
|
504
|
|
|
504
|
|
|
504
|
|
|
504
|
|
|
504
|
|
|
504
|
|
|
504
|
|
|
504
|
|
|
|
|
Effect of Stock Based Compensation Awards
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
|
|
|
Total Shares
|
504
|
|
|
504
|
|
|
504
|
|
|
507
|
|
|
504
|
|
|
507
|
|
|
504
|
|
|
507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
$
|
(0.35)
|
|
|
$
|
(0.35)
|
|
|
$
|
0.89
|
|
|
$
|
0.89
|
|
|
$
|
0.94
|
|
|
$
|
0.93
|
|
|
$
|
1.78
|
|
|
$
|
1.77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Approximately three million potentially dilutive shares were excluded from total shares used to calculate the diluted loss per share for the quarter ended June 30, 2021 as their impact was antidilutive.
Dividends
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
Dividend Payments on Common Stock
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
Per Share
|
$
|
0.51
|
|
|
$
|
0.49
|
|
|
$
|
1.02
|
|
|
$
|
0.98
|
|
|
|
|
In Millions
|
$
|
258
|
|
|
$
|
247
|
|
|
$
|
516
|
|
|
$
|
495
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On July 20, 2021, the PSEG Board of Directors approved a $0.51 per share common stock dividend for the third quarter of 2021.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)