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Item 8. Financial Statements and Supplementary Data

2024-02-26 compared with 2023-02-22 · 523 added, 700 removed, 2544 unchanged (32% of the section changed)

3 unchanged sentences

PSE&G makes representations only as to itself and makes no representations as to any other company.

Table of Conte n t s

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

21 unchanged sentences

Critical Audit Matter Description

PSEG’s subsidiary, Public Service Electric and Gas Company (PSE&G), is regulated by the New Jersey Board of Public Utilities (BPU) and the Federal Energy Regulatory Commission (FERC), which have jurisdiction with respect to PSE&G’s electric and gas distribution and electric transmission businesses, respectively.

Management believes that PSE&G’s transmission and distribution businesses continue to meet the accounting requirements for rate-regulated entities, and PSE&G’s financial statements reflect the economic effects of cost-based rate regulation.

As a utility subject to cost-based rate regulation, PSE&G is required to defer the recognition of costs as a regulatory asset or recognize obligations as a regulatory liability if the rates established are designed to recover the costs and if it is probable that such rates can be charged or collected in future periods.

This accounting can result in the recognition of revenues and expenses in different time periods than that of enterprises that are not regulated.

Further, regulatory assets and other investments and costs incurred under various filings and clause mechanisms are subject to prudence reviews and can be disallowed in the future by regulatory authorities.

To the extent that collection of revenue or regulatory assets or payments of regulatory liabilities is no

longer probable, the amounts would be charged or credited to income.

Significant judgment can be required to determine if otherwise recognizable revenues and incurred costs qualify to be presented as a regulatory asset or liability.

As of December 31, 2022, PSE&G has approximately $4.8 billion and $2.6 billion recorded as regulatory assets and regulatory liabilities, respectively.

PSEG’s subsidiary, Public Service Electric and Gas Company (PSE&G), prepares its financial statements to comply with GAAP for rate-regulated enterprises, which differs in some respects from accounting for non-regulated businesses.

PSE&G has deferred certain costs based on rate orders issued by the New Jersey Board of Public Utilities (“BPU”) or Federal Energy Regulatory Commission (“FERC”) or based on PSE&G’s experience with prior rate proceedings.

PSE&G defers the recognition of costs as a regulatory asset or records the recognition of obligations as a regulatory liability if it is probable that, through the rate-making process, there will be a corresponding increase or decrease in future rates.

This accounting results in the recognition of revenues and expenses in different time periods than that of enterprises that are not regulated.

Regulatory assets and other investments and costs incurred under various infrastructure filings and clause mechanisms are subject to prudence reviews and can be disallowed in the future by regulatory authorities.

To the extent that

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c ollection of any infrastructure or clause mechanism revenue, regulatory assets or payments of regulatory liabilities is no longer probable, the amounts would be charged or credited to income.

We identified the accounting for the effects of rate regulation as a critical audit matter due to the significant judgments made by management in assessing the probable recovery of regulatory assets and incurred costs or the likelihood of refunds of regulatory liabilities.

These judgments include assumptions regarding the outcome of future decisions by the BPU or FERC.

Auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities.

11 unchanged sentences

We have served as the Company's auditor since 1934.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

23 unchanged sentences

Critical Audit Matter Description

PSE&G is regulated by the New Jersey Board of Public Utilities (BPU) and the Federal Energy Regulatory Commission (FERC), which have jurisdiction with respect to PSE&G’s electric and gas distribution and electric transmission businesses, respectively.

This accounting can result in the recognition of revenues and expenses in different time periods than that of enterprises that are not regulated.

To the extent that collection of revenue or regulatory assets or payments of regulatory liabilities is no longer probable, the amounts would be charged or credited to income.

Significant judgment can be required to determine if

otherwise recognizable revenues and incurred costs qualify to be presented as a regulatory asset or liability.

As of December 31, 2022, PSE&G has approximately $4.8 billion and $2.6 billion recorded as regulatory assets and regulatory liabilities, respectively.

PSE&G prepares its financial statements to comply with GAAP for rate-regulated enterprises, which differs in some respects from accounting for non-regulated businesses.

This accounting results in the recognition of revenues and expenses in different time periods than that of enterprises that are not regulated.

To the extent that

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collection of any infrastructure or clause mechanism revenue, regulatory assets or payments of regulatory liabilities is no longer probable, the amounts would be charged or credited to income.

These judgments include assumptions regarding the outcome of future decisions by the BPU or FERC.

Auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities.

11 unchanged sentences

We have served as the Company's auditor since 1934.

Table of Conte n t s

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

8 unchanged sentences

Depreciation and Amortization 1,135 1,100 1,216

(Gains) Losses on Asset Dispositions and Impairments 123 2,637 ( 123 )

Losses on Asset Dispositions and Impairments 7 123 2,637

Total Operating Expenses 7,552 8,419 10,578

2 unchanged sentences

Net Gains (Losses) on Trust Investments 189 ( 265 ) 194

Other Income (Deductions) 124 98 115

Net Non-Operating Pension and Other Postretirement Benefit (OPEB) Credits (Costs) 376 328 249

Net Other Income (Deductions) 172 124 98

Net Non-Operating Pension and Other Postretirement Benefit (OPEB) (Costs) Credits ( 218 ) 376 328

Loss on Extinguishment of Debt — — ( 298 )

1 unchanged sentence

INCOME (LOSS) BEFORE INCOME TAXES 3,081 1,002 ( 1,089 )

Income Tax Benefit (Expense) 29 441 ( 396 )

Income Tax (Expense) Benefit ( 518 ) 29 441

NET INCOME (LOSS) $ 2,563 $ 1,031 $ ( 648 )

6 unchanged sentences

See Notes to Consolidated Financial Statements.

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PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

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See Notes to Consolidated Financial Statements.

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PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

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Rabbi Trust Fund 179 183

Intangibles 14 20

Derivative Contracts 29 15

3 unchanged sentences

See Notes to Consolidated Financial Statements.

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PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

11 unchanged sentences

Regulatory Liabilities 349 384

Liabilities Held for Sale — 144

Other 547 545

29 unchanged sentences

See Notes to Consolidated Financial Statements.

Table of Conte n t s

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

1 unchanged sentence

Years Ended December 31,

2022 2021 2020

CASH FLOWS FROM OPERATING ACTIVITIES 2023 2022 2021

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Emission Allowances and Renewable Energy Credit (REC) Compliance Accrual 3 55 138

Provision for Deferred Income Taxes (Other than Leases) and ITC ( 264 ) ( 817 ) 139

Provision for Deferred Income Taxes and ITC 355 ( 261 ) ( 845 )

Non-Cash Employee Benefit Plan (Credits) Costs 366 ( 239 ) ( 178 )

Leveraged Lease (Income), (Gains) and Losses, Adjusted for Rents Received and Deferred Taxes 15 ( 11 ) ( 135 )

Net Realized and Unrealized (Gains) Losses on Energy Contracts and Other Derivatives ( 1,333 ) 639 614

Cost of Removal ( 166 ) ( 129 ) ( 121 )

Net Change in Regulatory Assets and Liabilities ( 316 ) ( 271 ) ( 101 )

Energy Efficiency Programs Regulatory Investment Expenditures ( 466 ) ( 286 ) ( 117 )

Amortization of Energy Efficiency Programs Regulatory Investment Expenditures 82 48 31

Net Change in Other Regulatory Assets and Liabilities 2 ( 78 ) ( 185 )

Net (Gains) Losses and (Income) Expense from NDT Fund ( 248 ) 202 ( 229 )

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Proceeds from Sales of Long-Lived Assets and Lease Investments 37 1,918 569

Proceeds from Sales of Equity Method Investments 291 — —

Contributions to Equity Method Investments — ( 124 ) ( 111 )

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See Notes to Consolidated Financial Statements.

Table of Conte n t s

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

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Balance as of December 31, 2020 534 $ 5,031 ( 30 ) $ ( 861 ) $ 12,318 $ ( 504 ) $ 15,984

Net Income — — — — 1,905 — 1,905

Net Loss — — — — ( 648 ) — ( 648 )

Other Comprehensive Income (Loss), net of tax (expense) benefit of $( 51 )

— — — — — 154 154

Comprehensive Income 1,890

Cumulative Effect Adjustment for Current Expected Credit Losses (CECL) — — — — ( 2 ) — ( 2 )

Comprehensive Loss ( 494 )

Cash Dividends at $ 2.04 per share on Common Stock

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Balance as of December 31, 2021 534 $ 5,045 ( 30 ) $ ( 896 ) $ 10,639 $ ( 350 ) $ 14,438

Net Loss — — — — ( 648 ) — ( 648 )

Net Income — — — — 1,031 — 1,031

Other Comprehensive Income (Loss), net of tax (expense) benefit of $ 111

— — — — — ( 200 ) ( 200 )

Comprehensive Loss ( 494 )

Comprehensive Income 831

Cash Dividends at $ 2.16 per share on Common Stock

— — — ( 1,079 ) — ( 1,079 )

Payments for Share Repurchase Program — — ( 7 ) ( 500 ) — — ( 500 )

Other — 20 — 19 — — 39

6 unchanged sentences

— — — — ( 1,137 ) — ( 1,137 )

Payments for Share Repurchase Program — — ( 7 ) ( 500 ) — — ( 500 )

Other — ( 47 ) 1 ( 2 ) — — ( 49 )

1 unchanged sentence

See Notes to Consolidated Financial Statements.

Table of Conte n t s

PUBLIC SERVICE ELECTRIC AND GAS COMPANY

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Net Gains (Losses) on Trust Investments — ( 2 ) 2

Other Income (Deductions) 88 88 108

Non-Operating Pension and OPEB Credits (Costs) 281 264 205

Net Other Income (Deductions) 80 88 88

Net Non-Operating Pension and OPEB Credits 114 281 264

Interest Expense ( 493 ) ( 427 ) ( 402 )

INCOME BEFORE INCOME TAXES 1,675 1,832 1,770

Income Tax Benefit (Expense) ( 267 ) ( 324 ) ( 240 )

Income Tax Expense ( 160 ) ( 267 ) ( 324 )

NET INCOME $ 1,515 $ 1,565 $ 1,446

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

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PUBLIC SERVICE ELECTRIC AND GAS COMPANY

8 unchanged sentences

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

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PUBLIC SERVICE ELECTRIC AND GAS COMPANY

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

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PUBLIC SERVICE ELECTRIC AND GAS COMPANY

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Long-Term Debt Due Within One Year $ 750 $ 825

Commercial Paper and Loans 425 —

Accounts Payable 780 703

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Contributed Capital 2,156 2,156

Basis Adjustment 986 986

Retained Earnings 14,004 12,639

Accumulated Other Comprehensive Income (Loss) ( 5 ) 1

Accumulated Other Comprehensive Loss ( 4 ) ( 5 )

Total Stockholder’s Equity 17,048 15,682

2 unchanged sentences

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

Table of Conte n t s

PUBLIC SERVICE ELECTRIC AND GAS COMPANY

9 unchanged sentences

Cost of Removal ( 166 ) ( 129 ) ( 121 )

Energy Efficiency Programs Regulatory Investment Expenditures ( 466 ) ( 286 ) ( 117 )

Amortization of Energy Efficiency Programs Regulatory Investment Expenditures 82 48 31

Net Change in Other Regulatory Assets and Liabilities 2 ( 78 ) ( 185 )

21 unchanged sentences

Redemption of Long-Term Debt ( 825 ) — ( 434 )

Contributed Capital — — 75

Cash Dividends Paid ( 150 ) ( 450 ) —

9 unchanged sentences

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

Table of Conte n t s

PUBLIC SERVICE ELECTRIC AND GAS COMPANY

1 unchanged sentence

Common Stock Contributed

Capital Basis

Adjustment Retained

Capital Retained

Earnings Accumulated

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Other Comprehensive Income (Loss), net of tax (expense) benefit of $ 1

— — — ( 2 ) ( 2 )

Comprehensive Income 1,444

Cumulative Effect Adjustment for CECL — — — ( 2 ) — ( 2 )

Cash Dividends Paid — — — ( 175 ) — ( 175 )

Contributed Capital — 75 — — — 75

Balance as of December 31, 2021 $ 892 $ 2,156 $ 11,524 $ 1 $ 14,573

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Comprehensive Income 1,559

Cash Dividend Paid $ — $ — $ ( 450 ) $ — ( 450 )

Balance as of December 31, 2022 $ 892 $ 2,156 $ 12,639 $ ( 5 ) $ 15,682

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Other Comprehensive Income (Loss), net of tax (expense) benefit of $ 0

— — — — ( 6 ) ( 6 )

Comprehensive Income 1,516

7 unchanged sentences

• 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 is subject to regulation by the New Jersey Board of Public Utilities (BPU), the Federal Energy Regulatory Commission (FERC) and other federal and New Jersey state regulators.

PSE&G also invests in regulated solar generation projects and energy efficiency (EE) and related programs in New Jersey, which are regulated by the BPU.

• PSEG Power LLC (PSEG Power) —which is an energy supply company that integrates the operations of its merchant nuclear generating assets with its fuel supply functions through competitive energy sales via its principal direct wholly owned subsidiaries.

PSEG Power’s subsidiaries are subject to regulation by FERC, the Nuclear Regulatory Commission (NRC), the Environmental Protection Agency (EPA) and the states in which they operate.

PSEG Power’s subsidiaries are subject to regulation by FERC, the Nuclear Regulatory Commission (NRC), and other federal regulators and state regulators in the states in which they operate.

PSEG’s other direct wholly owned subsidiaries are:

PSEG Energy Holdings L.L.C.

(Energy Holdings), which holds investments in offshore wind ventures and legacy lease investments;

PSEG Long Island LLC (PSEG LI), which operates the Long Island Power Authority’s (LIPA) electric transmission and distribution (T&D) system under an Operations Services Agreement (OSA);

PSEG Energy Holdings L.L.C.

(Energy Holdings), which primarily holds legacy lease investments and competitively bid, FERC regulated transmission;

and PSEG Services Corporation (Services), which provides certain management, administrative and general services to PSEG and its subsidiaries at cost.

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

The transaction closed in June 2021.

In August 2021, PSEG entered into two agreements to sell PSEG Power’s 6,750 megawatts (MW) fossil generating portfolio to newly formed subsidiaries of ArcLight Energy Partners Fund VII, L.P., a fund controlled by ArcLight Capital Partners, LLC.

In February 2022, PSEG completed the sale of this fossil generating portfolio.

Early Plant Retirements/Asset Dispositions and Impairments for more details on the transactions.

Basis of Presentation

The respective financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) applicable to Annual Reports on Form 10-K and in accordance with accounting guidance generally accepted in the United States (GAAP).

Certain reclassifications have been made to prior year financial statements to conform with current year presentation.

These reclassifications had no impact on PSEG’s or PSE&G’s results of operations, financial condition or cash flows.

Significant Accounting Policies

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Each company consolidates those entities in which it has a controlling interest or is the primary beneficiary.

Variable Interest Entities.

Variable Interest Entity.

Entities over which the companies exhibit significant influence, but do not have a controlling interest and/or are not the primary beneficiary, are accounted for under the equity method of accounting.

For investments in which significant influence does not exist and the investor is not the primary beneficiary, the cost method of accounting is applied.

Equity investments that do not qualify for consolidation or equity method accounting are recorded at fair value or, if fair value is not readily determinable, are initially recognized at cost and subsequently remeasured if there is an orderly transaction in an identical or similar investment of the same issuer or if the investment is impaired.

All significant intercompany accounts and transactions are eliminated in consolidation.

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PSE&G defers the recognition of costs (a Regulatory Asset) or records the recognition of obligations (a Regulatory Liability) if it is probable that, through the rate-making process, there will be a corresponding increase or decrease in future rates.

Accordingly, PSE&G has deferred certain costs and recoveries, which are being amortized over various future

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accordingly, PSE&G has deferred certain costs and recoveries, which are being amortized over various future periods.

To the extent that collection of any such costs or payment of liabilities becomes no longer probable as a result of changes in regulation, the associated Regulatory Asset or Liability is charged or credited to income.

2 unchanged sentences

Regulatory Assets and Liabilities.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Cash, Cash Equivalents and Restricted Cash

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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.

PSEG Power is exposed to commodity price risk primarily relating to changes in the market price of electricity, natural gas and other commodities.

Fluctuations in market prices result from changes in supply and demand, fuel costs, market conditions, weather, state and federal regulatory policies, environmental policies, transmission availability and other factors.

PSEG Power uses a variety of derivative and non-derivative instruments, such as financial options, futures, swaps, fuel purchases and forward purchases and sales of electricity, to manage the exposure to fluctuations in commodity prices and optimize the value of PSEG Power’s expected generation.

PSEG Power uses a variety of derivative and non-derivative instruments, such as financial options, futures and swaps to manage the exposure to fluctuations in commodity prices and optimize the value of PSEG Power’s expected generation.

Changes in the fair market value of the derivative contracts are recorded in earnings.

1 unchanged sentence

PSEG has determined that contracts to purchase and sell certain products do not meet the definition of a derivative under the current authoritative guidance since they do not provide for net settlement, or the markets are not sufficiently liquid to conclude that physical forward contracts are readily convertible to cash.

Under current authoritative guidance, all derivatives are recognized on the balance sheet at their fair value, except for derivatives that are designated as normal purchases and normal sales (NPNS).

Under current authoritative guidance, all derivatives are recognized on the balance sheet at their fair value, except for derivatives that may be designated as normal purchases and normal sales (NPNS).

Further, derivatives that qualify for hedge accounting can be designated as fair value or cash flow hedges.

For fair value hedges, changes in fair values for both the derivative and the underlying hedged exposure are recognized in earnings each period.

Certain offsetting derivative assets and liabilities are subject to a master netting or similar agreement.

3 unchanged sentences

For derivative contracts that do not qualify or are not designated as cash flow or fair value hedges or as NPNS, changes in fair value are recorded in current period earnings.

PSEG does not currently elect fair value or cash flow hedge accounting on its commodity derivative positions.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Contracts that qualify for, and are designated, as NPNS are accounted for upon settlement.

Contracts which qualify for NPNS are contracts for which physical delivery is probable, they will not be financially settled, and the quantities under contract are expected to be used or sold in the normal course of business over a reasonable period of time.

If a contract no longer meets the requirements for NPNS designation, the changes in fair value since inception, and ongoing changes, of the contract and similar contracts in that portfolio, are recorded in current period earnings.

PSEG does not currently elect hedge accounting on its commodity derivative positions.

For additional information regarding derivative financial instruments, see Note 16.

3 unchanged sentences

PSE&G records unbilled revenues for the estimated amount customers will be billed for services rendered from the time meters were last read to the end of the respective accounting period.

The unbilled revenue is estimated each month based on usage per day, the number of unbilled days in the period, estimated seasonal loads based upon the time of year and the variance of actual degree-days and temperature-humidity-index hours of the unbilled period from expected norms.

The unbilled revenue is estimated each month based on usage per day, the number

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

of unbilled days in the period, estimated seasonal loads based upon the time of year and the variance of actual degree-days and temperature-humidity-index hours of the unbilled period from expected norms.

Regulated revenues from the transmission of electricity are recognized as services are provided based on a FERC-approved annual formula rate mechanism.

2 unchanged sentences

PSE&G records the estimated financial statement impact of the difference between the actual and the filed revenue requirement as a refund or deferral for future recovery when such amounts are probable and can be reasonably estimated in accordance with accounting guidance for rate-regulated entities.

The majority of PSEG Power’s revenues relate to bilateral contracts, which are accounted for on the accrual basis as the energy is delivered.

PSEG Power’s revenue also includes changes in the value of energy derivative contracts that are not designated as NPNS.

Financial Risk Management Activities for further discussion.

As of December 31, 2022, PSEG Power owns generation within PJM Interconnection, L.L.C.

PSEG Power currently owns generation within PJM Interconnection, L.L.C.

(PJM), which facilitates the dispatch of energy and energy-related products.

Prior to the sale of the fossil generation assets, PSEG Power also had significant sales in the New York Independent System Operator (NYISO) and the New England Independent System Operator (ISO-NE) regions.

PSEG generally reports electricity sales and purchases conducted with the Independent System Operators (ISOs) at PSEG Power on a net hourly basis in either Revenues or Energy Costs in its Consolidated Statement of Operations, the classification of which depends on the net hourly activity.

Capacity revenue and expense are also reported net based on PSEG Power’s monthly net sale or purchase position in the individual ISOs.

PSEG generally reports electricity sales and purchases conducted with the PJM Independent System Operator (ISO) at PSEG Power on a net hourly basis in either Revenues or Energy Costs in its Consolidated Statement of Operations, the classification of which depends on the net hourly activity.

Capacity revenue and expense are also reported net based on PSEG Power’s monthly net sale or purchase position in PJM.

PSEG Power also has revenues that relate to bilateral contracts, which are accounted for on the accrual basis as the energy is delivered.

PSEG Power’s revenue also includes changes in the value of energy derivative contracts.

Financial Risk Management Activities for further discussion.

PSEG LI is the primary beneficiary of Long Island Electric Utility Servco, LLC (Servco).

For transactions in which Servco acts as principal, Servco records revenues and the related pass-through expenditures separately in Operating Revenues and Operation and Maintenance (O&M) Expense, respectively.

Variable Interest Entities for further information.

Variable Interest Entity for further information.

For additional information regarding Revenues, see Note 2.

Depreciation and Amortization (D&A)

Depreciation and Amortization

PSE&G calculates depreciation under the straight-line method based on estimated average remaining lives of the several classes of property.

2 unchanged sentences

2023 2022 2021

Avg Rate Avg Rate Avg Rate

Electric Transmission 2.09 % 2.18 % 2.29 %

6 unchanged sentences

The amount of AFUDC or IDC capitalized as Property, Plant and Equipment is included as a reduction of interest charges or other income for the equity portion.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

amounts and average rates used to calculate AFUDC or IDC for the years ended December 31, 2022, 2021 and 2020 were as follows:

The amounts and average rates used to calculate AFUDC or IDC for the years ended December 31, 2023, 2022 and 2021 were as follows:

AFUDC/IDC Capitalized

3 unchanged sentences

Other $ 9 5.66 % $ 4 2.24 % $ 9 4.90 %

PSEG and its subsidiaries file a consolidated federal income tax return and income taxes are allocated to PSEG’s subsidiaries based on the taxable income or loss of each subsidiary on a separate return basis in accordance with a tax-sharing agreement between PSEG and each of its affiliated subsidiaries.

PSEG and its subsidiaries file a consolidated federal income tax return and income taxes are allocated to PSEG’s subsidiaries based on the taxable income or loss of each subsidiary on a stand-alone basis in accordance with a tax-sharing agreement between PSEG and each of its affiliated subsidiaries.

Allocations between PSEG and its subsidiaries are recorded through intercompany accounts.

Investment tax credits (ITC) deferred in prior years are being amortized over the useful lives of the related property.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Uncertain income tax positions are accounted for using a benefit recognition model with a two-step approach, a more-likely-than-not recognition criterion and a measurement attribute that measures the position as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement.

9 unchanged sentences

The cash flows from the nuclear generation units are evaluated at the portfolio level.

Early Plant Retirements/Asset Dispositions and Impairments for more information on impairment assessments performed on PSEG’s long-lived assets.

Asset Dispositions and Impairments for more information on impairment assessments performed on PSEG’s long-lived assets.

Accounts Receivable—Allowance for Credit Losses

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PSEG and PSE&G’s materials and supplies are carried at average cost and charged to inventory when purchased and expensed or capitalized to Property, Plant and Equipment, as appropriate, when installed or used.

Fuel inventory at PSEG is valued at the lower of average cost or market and includes stored natural gas and propane used to generate power and to satisfy obligations under PSEG Power’s gas supply contracts with PSE&G.

Fuel inventory at PSEG is valued at the lower of average cost or market and primarily includes stored natural gas used to satisfy obligations under PSEG Power’s gas supply contracts with PSE&G.

The costs of fuel, including initial transportation costs, are included in inventory when purchased and charged to Energy Costs when used or sold.

The cost of nuclear fuel is capitalized within Property, Plant and Equipment and amortized to fuel expense using the units-of-production method.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Property, Plant and Equipment

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Capitalized spare parts are depreciated over the remaining lives of their associated assets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PSEG and its subsidiaries, when acting as lessee or lessor, determine if an arrangement is a lease at inception.

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Lessor —Property subject to operating leases, where PSEG or one of its subsidiaries is the lessor, is included in Property, Plant and Equipment and rental income from these leases is included in Operating Revenues.

PSEG and its subsidiaries have lease agreements with lease and non-lease components, which are primarily related to domestic energy generation, real estate assets and land.

PSEG and its subsidiaries have lease agreements with lease and non-lease components, which are primarily related to domestic energy generation.

PSEG and subsidiaries account for the lease and non-lease components as a single lease component.

7 unchanged sentences

Trust Investments

These securities comprise the Nuclear Decommissioning Trust (NDT) Fund, a master independent external trust account

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

maintained to provide for the costs of decommissioning upon termination of operations of PSEG’s nuclear facilities and amounts that are deposited to fund a Rabbi Trust which was established to meet the obligations related to non-qualified pension plans and deferred compensation plans.

These securities comprise the Nuclear Decommissioning Trust (NDT) Fund, a master independent external trust account maintained to provide for the costs of decommissioning upon termination of operations of PSEG’s nuclear facilities and amounts that are deposited to fund a Rabbi Trust which was established to meet the obligations related to non-qualified pension plans and deferred compensation plans.

Unrealized gains and losses on equity security investments are recorded in Net Income.

5 unchanged sentences

The market-related value of plan assets held for the qualified pension and OPEB plans is equal to the fair value of those assets as of year-end.

Fair value is determined using quoted market prices and independent pricing services based upon the security type as reported by the trustee at the measurement date (December 31) as well as investments in unlisted real estate which are valued via third-party appraisals.

Fair value is determined using quoted market prices and independent pricing services based upon the security

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

type as reported by the trustee at the measurement date (December 31) as well as investments in unlisted real estate which are valued via third-party appraisals.

PSEG recognizes a long-term receivable primarily related to future funding by LIPA of Servco’s recognized pension and OPEB liabilities.

1 unchanged sentence

Pursuant to the OSA, Servco records expense for contributions to its pension plan trusts and for OPEB payments made to retirees.

Pension and Other Postretirement Benefits (OPEB) and Savings Plans for further discussion.

Pension, Other Postretirement Benefits (OPEB) and Savings Plans for further discussion.

Basis Adjustment

4 unchanged sentences

These amounts are eliminated on PSEG’s consolidated financial statements.

On December 31, 2023, PSE&G reclassified certain stockholder’s equity amounts on its Consolidated Balance Sheets and Consolidated Statements of Common Stockholder's Equity.

The previously disclosed Basis Adjustment amount of $ 986 million was combined with Contributed Capital, based on the underlying nature of the Basis Adjustment.

This reclassification had no impact on previously reported total stockholder's equity amounts.

Use of Estimates

2 unchanged sentences

Recent Accounting Standards

New Standards Adopted in 2022

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

This accounting standard clarifies an issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options that remain equity-classified after modification or exchange.

It provides guidance on how an issuer would determine whether it should recognize the modification or exchange as an adjustment to equity or an expense.

The standard is effective for fiscal years beginning after December 15, 2021.

PSEG adopted this standard prospectively on January 1, 2022.

Adoption of this standard did not have an impact on the financial statements of PSEG and PSE&G.

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

This accounting standard improves an area of the lease guidance related to a lessor’s accounting for certain leases with variable lease payments.

It amends the lessor lease classification requirements and, as a result, a lessor is now required to classify and account for a lease with variable payments as an operating lease if (i) the lease would have been classified as a sales-type lease or a direct financing lease and (ii) the lessor would have otherwise recognized a day-one loss.

A day-one loss or profit is not recognized under operating lease accounting.

The standard is effective for fiscal years beginning after December 15, 2021.

PSEG adopted this standard prospectively on January 1, 2022.

Adoption of this standard did not have an impact on the financial statements of PSEG and PSE&G.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

This accounting standard increases transparency in financial reporting by requiring business entities to disclose, in notes to financial statements, certain information when they (i) have received government assistance and (ii) use a grant or contribution accounting model by analogy to other accounting guidance.

The standard is effective for fiscal years beginning after December 15, 2021.

PSEG adopted this standard prospectively on January 1, 2022.

Adoption of this standard did not have an impact on the financial statements of PSEG and PSE&G.

Reference Rate Reform—Deferral of the Sunset Date—ASU 2022-06

This accounting standard defers the sunset date for applying the relief in the reference rate reform guidance to December 31, 2024 from December 31, 2022.

It addresses entities’ concerns that without the deferral the relief may not cover the period when a significant number of modifications could take place, given the decision by the United Kingdom’s Financial Conduct Authority and the administrator of the London Interbank Offered Rate (LIBOR) to publish overnight USD LIBOR settings through June 30, 2023 rather than December 31, 2021.

The standard is effective upon its issuance in December 2022 and PSEG adopted this standard upon issuance.

Adoption of this standard did not have an impact on the financial statements of PSEG and PSE&G.

New Standards Issued But Not Yet Adopted as of December 31, 2022

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

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

The standard is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted.

Amendments in this standard will be applied prospectively to business combinations occurring on or after the effective date of the amendments.

PSEG adopted this standard prospectively on January 1, 2023.

Adoption of this standard did not have an impact on the financial statements of PSEG and PSE&G.

Derivative and Hedging:

Fair Value Hedging-Portfolio Layer Method—ASU 2022-01

This accounting standard amends the derivative and hedging guidance on fair value hedge accounting of interest rate risk for portfolios of financial assets.

The standard allows entities to expand their use of the portfolio layer method (previously known as the last of layer method) for fair value hedges of interest rate risk.

Under this guidance, entities can now hedge all financial assets under the portfolio layer method and designate multiple hedged layers within a single closed portfolio.

The standard also clarifies the accounting for fair value hedge basis adjustments in portfolio layer hedges and how these adjustments should be disclosed.

The standard is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted.

Amendments in this standard will be applied:

(i) prospectively to designation of multiple hedged layers of a single closed portfolio, (ii) on a modified retrospective basis for amendments related to hedge basis adjustments under the portfolio layer method, and (iii) on a prospective or retrospective basis for the amendments related to disclosures.

PSEG adopted this standard prospectively on January 1, 2023.

Adoption of this standard did not have an impact on the financial statements of PSEG and PSE&G.

Financial Instruments — Credit Losses:

Troubled Debt Restructurings and Vintage Disclosures—ASU 2022-02

This accounting standard eliminates the accounting guidance for troubled debt restructurings by creditors that have adopted the current expected credit losses guidance and enhances the disclosure requirements for certain loan refinancings and restructurings by creditors made to borrowers experiencing financial difficulty.

It also amends the guidance on vintage disclosures to require disclosure of current-period gross write-offs by year of origination for financing receivables and net investment in leases.

The standard is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted.

Amendments in this standard will be applied prospectively, except for the transition method related to the recognition and measurement of troubled debt restructurings where there is an option to apply a modified retrospective transition method.

PSEG adopted this standard prospectively on January 1, 2023.

Adoption of this standard did not have an impact on the financial statements of PSEG and PSE&G.

Fair Value Measurement:

Equity Securities Subject to Contractual Sale Restrictions—ASU 2022-03

This accounting standard improves financial reporting for investors and other financial statement users by increasing comparability of financial information across reporting entities that have investments in equity securities measured at fair value that are subject to contractual restrictions preventing the sale of those securities.

It clarifies that a contractual sale restriction

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

should not be considered in measuring fair value.

It also requires entities with investments in equity securities subject to contractual sale restrictions to disclose certain qualitative and quantitative information about such securities.

The standard is effective for fiscal years beginning after December 15, 2023 and early adoption is permitted.

Amendments in this standard will be applied prospectively.

PSEG is currently analyzing the impact of this standard on its financial statements.

Supplier Finance Programs—ASU 2022-04

This accounting standard enhances the transparency about the use of supplier finance programs for investors and other allocators of capital.

It requires the buyer in a supplier finance program to disclose information about the key terms of the program, outstanding confirmed amounts as of the end of the period, a rollforward of such amounts during each annual period, and a description of where in the financial statements outstanding amounts are presented.

The standard is effective for fiscal years beginning after December 15, 2022, except for the disclosure of rollforward information, which is effective for fiscal years beginning after December 15, 2023.

Early adoption is permitted.

Amendments in this standard will be applied retrospectively to each period in which a balance sheet is presented, except for the amendment on rollforward information, which will be applied prospectively.

PSEG adopted this standard retrospectively on January 1, 2023, except for the disclosure of rollforward information.

Adoption of this standard did not have an impact on the financial statements of PSEG and PSE&G .

Improvements to Reportable Segment Disclosures—Accounting Standards Update (ASU) 2023-07

This ASU requires disclosure of incremental segment information, including additional detail on certain significant segment expenses, on an annual and interim basis to enable investors to develop more decision-useful financial analyses.

The ASU is effective for fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024.

PSEG and PSE&G are currently analyzing the impact of this standard on their future disclosures.

Improvements to Income Tax Disclosures—ASU 2023-09

This ASU makes amendments to the current reconciliation disclosure to improve transparency by requiring consistent categories and greater jurisdictional disaggregation.

The ASU also provides for the inclusion of an income taxes paid disclosure by jurisdiction.

The ASU is effective for annual periods beginning after December 15, 2024.

PSEG and PSE&G are currently analyzing the impact of this ASU on their future disclosures.

Nature of Goods and Services

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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 formula rate mechanism provides for an annual filing of an estimated revenue requirement with rates effective January 1 of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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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

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Revenues from Contracts with Customers

Electricity and Related Products —PSEG Power sells to the ISOs energy and ancillary services which are separately transacted in the day-ahead or real-time energy markets.

Electricity and Related Products —PSEG Power owns generation solely within PJM, which facilitates the dispatch of energy and energy-related products.

Prior to the sale of the fossil generation assets in 2022, PSEG Power also had significant sales in the New York Independent System Operator (NYISO) and the New England Independent System Operator (ISO-NE) regions.

PSEG Power primarily sells to the PJM ISO energy and ancillary services which are separately transacted in the day-ahead or real-time energy markets.

The energy and ancillary services performance obligations are typically satisfied over time as delivered and revenue is recognized accordingly.

In addition, wholesale load contracts have been executed in the different ISO regions for the bundled supply of energy, capacity, renewable energy credits (RECs) and ancillary services representing PSEG Power’s performance obligations.

Revenue for these contracts is recognized over time as the bundled

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

service is provided to the customer.

Transaction terms generally run from several months to three years.

PSEG generally reports electricity sales and purchases conducted with those individual ISOs net on an hourly basis in either Operating Revenues or Energy Costs in its Consolidated Statements of Operations.

Historically, wholesale load contracts have been executed in PJM 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.

PSEG generally reports electricity sales and purchases conducted with PJM net on an hourly basis in either Operating Revenues or Energy Costs in its 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 December 2022, PJM called its first ISO-wide Maximum Generation Emergency Action, which triggered a Performance Assessment Interval (PAI) event.

PSEG Power enters into capacity sales and capacity purchases through PJM.

The transactions are reported on a net basis dependent on PSEG Power’s monthly net sale or purchase position through PJM.

The performance obligations with PJM are satisfied over time upon delivery of the capacity and revenue is recognized accordingly.

In addition to capacity sold through PJM, 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 late December 2022, PJM called its first ISO-wide Maximum Generation Emergency Action as a result of Winter Storm Elliott, which triggered a Performance Assessment Interval (PAI) event.

During the PAI, PSEG Power’s Salem 2 nuclear plant incurred penalties due to an unplanned outage during the second day of the event.

Our remaining nuclear plants earned bonus payments during the entire event.

The estimated net impact of Salem 2’s penalties and bonuses earned by the other units was not material to PSEG’s financial results.

Additional revenue has been recorded in 2023 upon clarification from the ISO on expected bonus payments and receipts to date.

The estimated impact of Salem 2’s penalties and bonuses earned by the other units was not material to PSEG’s financial results in 2022 or 2023.

PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants have been awarded zero emission certificates (ZECs) by the BPU through May 2025.

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These revenues are included in PJM Sales in the following tables.

Early Plant Retirements/Asset Dispositions and Impairments for additional information.

The number of ZECs purchased by each EDC from a selected nuclear power plant for an energy year is expected to be reduced by the number of ZECs equal in value to the dollar amount of production tax credits (PTCs) received by the same plants.

In May 2021, the New Jersey Rate Counsel filed an appeal with the New Jersey Appellate Division of the BPU’s decision in 2021 to award ZECs to the nuclear plants.

In December 2023, the Appellate Division rejected Rate Counsel’s appeal and affirmed the BPU’s April 2021 decision and the period during which Rate Counsel could appeal the Appellate Division decision to the New Jersey Supreme Court has expired.

No further appeals are permitted.

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.

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PSEG LI’s subsidiary, 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other Revenues from Contracts with Customers

Prior to the sale of Solar Source in June 2021, PSEG Power entered into bilateral contracts to sell solar power and solar renewable energy certificates (SRECs) from its solar facilities.

Contract terms ranged from 15 to 30 years.

The performance obligations were generally solar power and SRECs which were transferred to customers upon generation.

Revenue was recognized upon generation of the solar power.

These performance obligations were transferred as part of the sale of Solar Source.

Early Plant Retirements/Asset Dispositions and Impairments.

PSEG Power has entered into long-term contracts with LIPA for energy management and fuel procurement services.

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Financial Risk Management Activities for further discussion.

Prior to the sale of Solar Source, PSEG Power was also a party to solar contracts that qualified as leases and were accounted for in accordance with lease accounting guidance.

These performance obligations were transferred as part of the sale of Solar Source.

Early Plant Retirements/Asset Dispositions and Impairments.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Disaggregation of Revenues

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Third-Party Sales

— 2,152 — 2,152

Sales to Affiliates

— 114 ( 114 ) —

NYISO — 88 — 88

ISO-NE — 13 — 13

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(A) Includes revenues applicable to PSEG Power, PSEG LI and Energy Holdings.

(B) Includes primarily revenues from appliance repair services and the sale of SRECs at auction at PSE&G.

(B) Includes primarily revenues from appliance repair services and the sale of solar renewable energy credits (SRECs) at auction at PSE&G.

PSEG Power & Other includes PSEG Power’s energy management fee with LIPA and PSEG LI’s OSA with LIPA.

PSEG Power & Other also includes PSEG Power’s solar power projects in 2021 and 2020.

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

For the years ended December 31, 2021 and 2020, PSEG Power & Other includes losses of $ 9 million and $ 26 million, respectively, related to Energy Holdings’ investments in leases.

For additional information, see Note 9.

Long-Term Investments.

(C) Includes primarily alternative revenues at PSE&G principally from the CIP program in 2022 and 2023 and net realized and unrealized gains (losses) on derivative contracts and lease contracts at PSEG Power & Other.

Contract Balances

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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 Consolidated Balance Sheets.

PSEG Power’s accounts receivable consist mainly of revenues from energy and ancillary services sold directly to ISOs, wholesale load contracts and capacity sales which are executed in the different ISO regions, and other counterparties.

PSEG Power’s accounts receivable consist mainly of revenues from energy and ancillary services sold 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.

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Capacity Revenues from the PJM Annual Base Residual and Incremental Auctions —The Base Residual Auction is generally conducted annually three years in advance of the operating period.

The 2022/2023 auction was held in June 2021 and the 2023/2024 auction was held in June 2022.

The 2023/2024 auction was held in June 2022.

In February 2023, the results of the 2024/2025 auction held in December 2022 were released.

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 Megawatt (MW)-Day MW Cleared

Delivery Year $ per MW-Day MW Cleared

June 2023 to May 2024 $ 50 3,700

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Capacity transactions with the PJM Regional Transmission Organization are reported on a net basis dependent on PSEG Power’s monthly net sale or purchase position.

Bilateral capacity contracts —Capacity obligations pursuant to contract terms through 2028 are anticipated to result in revenues totaling $ 36 million.

Amended OSA —In April 2022, PSEG LI entered into an amended OSA with LIPA.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Early Plant Retirements/Asset Dispositions and Impairments

In April 2019, PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants were awarded ZECs by the BPU.

Pursuant to a process established by the BPU, ZECs are purchased from selected nuclear plants and recovered through a non-bypassable distribution charge in the amount of $ 0.004 per kilowatt-hour (KWh) used (which is equivalent to approximately $ 10 per megawatt hour (MWh) generated in payments to selected nuclear plants (ZEC payment)).

Each nuclear plant received ZEC revenue for approximately three years, through May 2022.

That first eligibility period related to the award of ZECs from the April 2019 BPU Order has concluded.

In April 2021, PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants were awarded ZECs for the three-year eligibility period starting June 2022 at the same approximate $ 10 per MWh received during the prior ZEC period through May 2022 referenced above.

As a result, each nuclear plant is receiving ZEC revenue for an additional three years starting June 2022.

The terms and conditions of this April 2021 ZEC award are the same as the ZEC period through May 2022.

In May 2021, the New Jersey Division of Rate Counsel filed an appeal with the New Jersey Appellate Division of the BPU’s April 2021 decision.

PSEG cannot predict the outcome of this matter.

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.

In August 2022, the Inflation Reduction Act (IRA) was signed into law expanding incentives promoting carbon-free generation.

The enacted legislation established the production tax credit (PTC) for electricity generation using nuclear energy set to begin in 2024 through 2032.

The expected PTC rate is up to $ 15 /MWh subject to adjustment based upon a facility’s gross receipts.

The PTC rate and the gross receipts cap are subject to annual inflation adjustments.

Treasury is expected to clarify the definition of gross receipts prior to when the eligibility period begins in 2024.

We are continuing to analyze the impact of the IRA on our nuclear units, including additional future guidance from the U.S.

Treasury and the interactions with PTCs on expected ZEC payments.

PSEG Power may take all necessary steps to cease to operate all of these plants and will incur associated costs and accounting charges in the event that the financial condition of the plants is materially adversely impacted in the future.

This decision may be based upon market conditions, including energy and capacity revenues, insufficient government financial support, 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.

The associated costs and accounting charges may include, among other things, one-time impairment charges or accelerated D&A Expense on the remaining carrying value of the plants, potential penalties associated with the early termination of capacity obligations and fuel contracts, accelerated asset retirement costs, severance costs, environmental remediation costs and, in certain circumstances potential additional funding of the NDT Fund, which would result in a material adverse impact on PSEG’s results of operations.

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

The transaction closed in June 2021.

As a result of the sale, PSEG Power recorded a pre-tax gain on sale of approximately $ 63 million, which is inclusive of the recognition of previously deferred unamortized ITCs of $ 185 million, and income tax expense of approximately $ 62 million primarily due to the recapture of ITC on units that operated for less than five years.

Asset Dispositions and Impairments

In May 2023, PSEG sold its 25% equity interest in Ocean Wind JV HoldCo, LLC.

The sale proceeds approximated PSEG’s carrying value of the investment;

therefore, no material gain or loss was recognized upon disposition.

In July 2023, PSEG Power completed the sale of its 50% ownership interest in Kalaeloa.

The sale proceeds approximated PSEG Power's carrying value of the investment;

therefore, no material gain or loss was recognized upon disposition.

In 2022, Energy Holdings recorded pre-tax impairments of $ 78 million related to one of its domestic energy generating facilities and its real estate assets.

In March 2023, Energy Holdings completed the sale of its domestic energy generating facility and recorded an immaterial pre-tax gain.

In December 2023, Energy Holdings completed the sale of its real estate assets and recorded an immaterial pre-tax gain.

In August 2021, PSEG entered into two agreements to sell PSEG Power’s 6,750 MW fossil generating portfolio, one agreement for the sale of assets in New Jersey and Maryland and another agreement for the sale of assets located in New York and Connecticut, to newly formed subsidiaries of ArcLight Energy Partners Fund VII, L.P., a fund controlled by ArcLight Capital Partners, LLC for aggregate consideration of approximately $ 1,920 million.

In February 2022, PSEG completed the sale of this fossil generating portfolio.

As a result of the Board of Directors’ approval of the transactions, PSEG’s fossil generating assets and liabilities to be disposed were reclassified to Assets and Liabilities Held for Sale in August 2021, and accordingly, PSEG ceased recording depreciation expense for these assets.

In 2021, PSEG recorded a pre-tax impairment loss on sale of approximately $ 2,691 million as the purchase price was lower than the carrying value in 2021.

In addition to the impairment loss, all of PSEG Power’s outstanding debt obligations were redeemed and PSEG incurred a pre-tax loss of $ 298 million for the make-whole provision payable upon

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

early redemption and other non-cash debt extinguishment costs and also recorded approximately $ 13 million in pre-tax severance and retention charges, environmental accruals and other adjustments.

In addition to the impairment loss, all of PSEG Power’s outstanding debt obligations were redeemed and PSEG incurred a pre-tax loss of $ 298 million for the make-whole provision payable upon early redemption and other non-cash debt extinguishment costs and also recorded approximately $ 13 million in pre-tax severance and retention charges, environmental accruals and other adjustments.

As defined in each agreement, further adjustments were required as a result of any purchase price or working capital adjustments, including an adjustment for positive or negative cash flow of the fossil generating assets based on actual performance starting after December 31, 2021 through the closing dates.

As a result, in 2022 PSEG Power recorded an additional pre-tax impairment of approximately $ 50 million.

As of December 31, 2021, PSEG Power’s fossil generation assets and liabilities Held for Sale, including anticipated working capital, were $ 2,060 million and $ 144 million, respectively, as follows:

As of December 31, 2021

Current Assets (A) $ 264

Property, Plant and Equipment 1,742

Noncurrent Assets 54

Total Assets Held for Sale $ 2,060

Current Liabilities (B) $ 57

Noncurrent Liabilities (C) 87

Total Liabilities Held for Sale $ 144

(A) Primarily includes Fuel, Materials and Supplies, Prepayments and Other Current Assets.

(B) Primarily includes Accounts Payable and Other Current Liabilities.

These Held for Sale balances represent all of the assets and liabilities that were transferred to the buyer at closing.

PSEG Power has retained ownership of certain liabilities excluded from the transactions primarily related to obligations under certain environmental regulations, including remediation obligations under the New Jersey Industrial Site Recovery Act and the Connecticut Transfer Act.

It will require multiple years and comprehensive environmental sampling to understand the extent of and to carry out the required remediation.

The full remediation costs are not estimable, but will likely be material.

In 2022, Energy Holdings recorded pre-tax impairments of $ 78 million related to one of its domestic energy generating facilities and its real estate assets.

In 2020, PSEG Power completed the sale of its ownership interest in the Yards Creek generation facility and recorded a pre-tax gain on disposition of approximately $ 122 million as the sale price was greater than book value.

Variable Interest Entities (VIEs)

As a result, in 2022 PSEG Power recorded an additional pre-tax impairment of approximately $ 50 million prior to completing the sale of this fossil generating portfolio in February 2022 .

The amounts for any such environmental remediation are not currently estimable, but will likely be material in the aggregate.

The transaction closed in June 2021.

Variable Interest Entity (VIE)

VIE for which PSEG LI is the Primary Beneficiary

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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 O&M Expense, respectively.

In 2022, 2021 and

In 2023, 2022 and 2021, Servco recorded $ 533 million, $ 516 million and $ 511 million, respectively, of O&M costs, the full reimbursement of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2020, Servco recorded $ 516 million, $ 511 million and $ 520 million, respectively, of O&M costs, the full reimbursement of which was reflected in Operating Revenues.

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 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 Ørsted North America Inc.’s (Ørsted) Ocean Wind 1 project that is expected to achieve full commercial operation in 2025.

OWH is considered a VIE since its equity investments at risk are not sufficient to permit this entity to finance its activities without additional subordinated financial support.

Since PSEG does not have voting control or the power to direct the activities of OWH that most significantly impact its economic performance, PSEG has determined that it is not the primary beneficiary and therefore accounts for this investment under the equity method.

As of December 31, 2022 and 2021, PSEG’s carrying amount of its investment in OWH was $ 225 million and $ 111 million, respectively, which is included in Long-Term Investments on PSEG’s Consolidated Balance Sheet.

PSEG’s maximum exposure to loss is limited to the carrying amount of its investment.

In January 2023, PSEG agreed to sell to Ørsted its 25% equity interest in OWH.

The sale proceeds approximate PSEG’s carrying value of the investment and no material gain or loss is expected upon disposition nor is the sale contingent upon Ørsted electing to proceed to the construction phase of the project.

The sale is contingent upon finalization of a purchase and sale agreement with Ørsted as well as other closing conditions and any potential state regulatory approval that may be required to close on the transaction.

The sale is expected to close in the first half of 2023.

PSEG has no further obligation to make any capital contributions to the project prior to closing on the transaction.

Property, Plant and Equipment and Jointly-Owned Facilities

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Total $ 48,603 $ 45,924

The above table excludes amounts as of December 31, 2021 which were classified as Held for Sale.

For additional information see Note 4.

Early Plant Retirements/Asset Dispositions and Impairments.

PSE&G and PSEG Power have ownership interests in and are responsible for providing their respective shares of the necessary financing for the following jointly-owned facilities to which they are a party.

All amounts reflect PSE&G’s or PSEG Power’s share of the jointly-owned projects and the corresponding direct expenses are included in the Consolidated Statements of Operations as Operating Expenses.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31,

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Proposed O&M budgets and requests for major capital expenditures are reviewed and approved as part of the normal PSEG Power governance process.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Regulatory Assets and Liabilities

PSE&G prepares its financial statements in accordance with GAAP for regulated utilities as described in Note 1.

Organization, Basis of Presentation and Significant Accounting Policies.

Organization, Basis of Presentation and Summary of Significant Accounting Policies.

PSE&G has deferred certain costs based on rate orders issued by the BPU or FERC or based on PSE&G’s experience with prior rate proceedings.

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To the extent that collection of any infrastructure or clause mechanism revenue, Regulatory Assets or payments of Regulatory Liabilities is no longer probable, the amounts would be charged or credited to income.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PSE&G had the following Regulatory Assets and Liabilities:

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New Jersey Clean Energy Program $ 145 $ 145

Conservation Incentive Program (CIP) 103 51

Electric Energy Costs—Basic Generation Service (BGS) 19 54

Societal Benefits Clause (SBC) 6 20

Tax Adjustment Credit (TAC) — 52

Conservation Incentive Program (CIP) 51 36

2018 Distribution Base Rate Case Regulatory Assets (BRC) — 47

Societal Benefits Clause (SBC) 20 —

Total Current Regulatory Assets 273 369

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Green Program Recovery Charges (GPRC) 827 447

Asset Retirement Obligations (ARO) 210 200

Manufactured Gas Plant (MGP) Remediation Costs 199 206

Asset Retirement Obligation (ARO) 200 191

Electric Transmission and Gas Cost of Removal 156 174

Cost of Removal 172 156

Clean Energy Future-Energy Cloud (CEF-EC) (Advanced Metering Infrastructure (AMI)) 153 80

SBC (Electric Bad Debt) 149 145

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Deferred Storm Costs 109 109

Clean Energy Future-Energy Cloud (CEF-EC) (Advanced Metering Infrastructure (AMI)) 80 5

Other 198 145

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Total Regulatory Assets $ 5,430 $ 4,773

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31,

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Total Regulatory Liabilities $ 2,424 $ 2,624

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

All Regulatory Assets and Liabilities are excluded from PSE&G’s rate base unless otherwise noted.

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Represents deferred costs, primarily comprised of storm costs incurred in the cleanup of major storms from 2010 through 2018, which are being amortized over five years pursuant to the 2018 Distribution Base Rate Case Settlement.

The CIP reduces the impact on distribution revenues from changes in sales volumes and demand for most customers.

The CIP, which is calculated annually, provides for a true-up of current period revenue as compared to revenue established in PSE&G’s most recent distribution base rate proceeding.

Recovery under the CIP is subject to certain limitations, including an actual versus allowed return on equity test and ceilings on customer rate increases.

The CIP became effective in June 2021 for electric revenues and October 2021 for gas revenues.

The gas CIP replaced the Weather Normalization Clause.

These costs were fully recovered as of December 31, 2023.

• CEF-EC (AMI Initiative):

In January 2021, the BPU approved PSE&G’s CEF-EC filing to provide its 2.3 million electric customers with smart meters.

All of the capital and operating costs of the program will be recovered in PSE&G’s next base rate case, expected in the second half of 2024.

In January 2021, the BPU approved PSE&G’s CEF-EC filing to provide its electric customers with smart meters.

All of the capital and operating costs of the program are included for recovery in PSE&G’s recently filed distribution base rate case.

From the start of the program until the commencement of new base rates, the return on and of the capital portion of the program is included for recovery in those rates, as well as operating and stranded costs associated with the accelerated retirement of the existing non-AMI electric meters which PSE&G expects to conclude by the end of 2024.

As of December 31, 2022 and 2021, the net book value of these meters was $ 168 million and $ 192 million, respectively.

The CIP reduces the impact on electric and gas distribution revenues from changes in sales volumes and demand for most customers.

The CIP provides for a true-up of current period revenue as compared to revenue established in PSE&G’s most recent distribution base rate proceeding.

Recovery under the CIP is subject to certain limitations, including an actual versus allowed return on equity test and ceilings on customer rate increases.

• Cost of Removal:

PSE&G accrues and collects in rates for the cost of removing, dismantling and disposing of its electric distribution, electric transmission and gas distribution upon retirement.

The Regulatory Asset or Liability for non-legally required cost of removal represents the difference between amounts collected in rates and costs actually incurred.

• COVID-19 Deferral:

These amounts represent incremental costs related to COVID-19 as authorized for deferral in an order issued by the BPU to all New Jersey regulated utilities in July 2020.

The BPU authorized such utilities to create a COVID-19-related Regulatory Asset by deferring on their books and records the prudently incurred incremental costs related to COVID-19 during the Regulatory Asset period, beginning on March 9, 2020 through September 30, 2021, or 60 days after the New Jersey governor determines that the Public Health Emergency is no longer in effect, or in the absence of such a determination, 60 days from the time the Public Health Emergency automatically terminates by law, whichever is later.

In December 2022, the BPU extended the deferral period to March 15, 2023.

Deferred costs are to be offset by any federal or state assistance that the utility may receive as a direct result of the COVID-19 pandemic.

Utilities must file quarterly reports of the costs incurred and offsets.

Each participating utility may file a petition documenting its prudently incurred incremental COVID-19 costs within 60 days of the close of the extended March 15, 2023 Regulatory Asset period.

Any potential rate recovery, including any prudency determinations and the appropriate period of recovery, will be addressed through that filing, or in the alternative, the utility may request that the BPU defer consideration of rate recovery for a future base rate case.

As directed by the BPU, in July 2023, PSE&G filed a petition documenting its prudently incurred incremental COVID-19 costs.

Rate recovery, including any prudency determinations and the appropriate period of recovery, will be addressed through that filing which is currently pending.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• Deferred Income Tax Regulatory Assets:

These amounts relate to deferred income taxes arising from utility operations that have not been included in customer rates relating to depreciation, ITCs and other flow-through items, including the flowback to customers of accumulated deferred income taxes related to tax repair deductions.

As part of its base rate case settlement with the BPU and the establishment of the TAC mechanism in 2018, PSE&G agreed to a ten-year flowback to customers of its accumulated deferred income taxes from previously realized tax repair deductions which resulted in the recognition of a $ 581 million Regulatory Asset and Regulatory Liability as of September 30, 2018.

As part of its distribution base rate case settlement with the BPU and the establishment of the TAC mechanism in 2018, PSE&G agreed to a ten-year flowback to customers of its accumulated deferred income taxes from previously realized tax repair deductions which resulted in the recognition of a $ 581 million Regulatory Asset and Regulatory Liability as of September 30, 2018.

In addition, PSE&G agreed to the current flowback of tax benefits from ongoing tax repair deductions as realized which results in the recording of a Regulatory Asset upon flowback.

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As part of its settlement with its regulators, PSE&G agreed to refund the excess deferred income taxes as follows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• Unprotected distribution-related excess deferred income taxes are being refunded to customers over five years through PSE&G’s TAC mechanism as approved in its 2018 distribution base rate proceeding.

As of December 31, 2023, the balance remaining to be flowed back to customers was approximately $ 20 million with the remaining flowback period through 2024.

• Protected distribution-related excess deferred income taxes are being refunded to customers over the remaining useful life of distribution property, plant and equipment through PSE&G’s TAC mechanism.

• Protected distribution-related excess deferred income taxes are being refunded to customers over the remaining useful lives of distribution property, plant and equipment through PSE&G’s TAC mechanism.

As of December 31, 2023, the balance remaining to be flowed back to customers was approximately $ 862 million.

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As of December 31, 2023, the balance remaining to be flowed back to customers was approximately $ 931 million.

• Unprotected transmission-related deferred income taxes were fully refunded to customers in 2019 and 2020.

• Deferred Storm Costs:

Incremental costs incurred in the restoration and related costs from major storms from 2019 through 2022 for which PSE&G will seek recovery in its next base rate proceeding.

• Electric and Gas Cost of Removal:

PSE&G accrues and collects in rates for the cost of removing, dismantling and disposing of its T&D assets upon retirement.

The Regulatory Asset or Liability for non-legally required cost of removal represents the difference between amounts collected in rates and costs actually incurred.

Incremental costs incurred in the restoration and related costs from major storms from 2019 through 2022 for which PSE&G is seeking recovery in its current distribution base rate proceeding.

• Electric Energy Costs — BGS:

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Interest is accrued only on over recovered balances.

This amount represents costs of the over or under collected balances associated with various Energy Efficiency and Renewable Energy (EE & RE) Programs.

PSE&G files annually with the BPU for recovery of amounts that include a return on and of its investment over the lives of the underlying investments and capital assets which range from five to ten years.

PSE&G files an annual GPRC petition with the BPU for recovery of amounts associated with the BPU Board-approved energy efficiency (EE) and solar (renewable) energy (RE) programs that include a return on and of investments and capital assets, as well as recovery for deferred expenses and incremental costs.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

investment program component is recovered over the lives of the underlying investments and capital assets which range from five to twenty years.

The approved GPRC components receiving recovery for the return on and of investments include:

In addition, the GPRC components receiving cost recovery for deferred expenses include:

the Transition Renewable Energy Certificate Program, Community Solar Energy Program and the Successor Solar Incentive Program.

The Regulatory Asset balances represent the deferred investment and related undercollected balances with a Regulatory Liability recorded for any overrecovered balance.

Interest is accrued monthly on any over-or under- recovered balances.

Approved components of the GPRC include:

Carbon Abatement, Energy Efficiency Economic Stimulus Program (EEE), EEE Extension Program, EEE Extension II Program, Solar Generation Investment Program (Solar 4 All ® ), Solar 4 All ® Extension, Solar 4 All ® Extension II, Solar Loan II Program, Solar Loan III Program, Energy Efficiency (EE) 2017 Program, Clean Energy Future–Energy Efficiency (CEF-EE), the Transition Renewable Energy Certificate (TRECs) Program, Clean Energy Act Studies (CEAS), Community Solar Energy Program (CSEP) and the Successor Solar Incentive Program (SuSI).

Amortization of deferred investment and expenses are recorded in O&M expense.

The capital asset portion of GPRC investments primarily in company-owned solar facilities is included in Property, Plant and Equipment, with depreciation recorded in Depreciation and Amortization Expense.

• MGP Remediation Costs:

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The BPU funding requirements are recovered through the SBC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• Pension and OPEB Costs:

Pursuant to the adoption of accounting guidance for employers’ defined benefit pension and OPEB plans, PSE&G recorded the unrecognized costs for defined benefit pension and other OPEB plans on the balance sheet as a Regulatory Asset.

PSE&G records the unrecognized costs for defined benefit pension and other OPEB plans on the balance sheet as Regulatory Assets pursuant to the adoption of accounting guidance for employers’ defined benefit pension and OPEB plans, and relevant BPU orders.

These costs represent net actuarial gains or losses and prior service costs which have not been expensed.

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Over or under recovered balances with interest are to be returned or recovered through an annual filing.

This represents the over or under collected balances associated with the return of excess accumulated deferred income taxes and the flowback of previously realized and current tax repair deductions under a mechanism approved by the BPU in PSE&G’s 2018 Distribution Base Rate Case Settlement.

Over or under collected balances are returned or recovered through an annual filing.

This represents the over or under collected electric and gas balances associated with the return of excess accumulated deferred income taxes and the flowback of previously realized and current tax repair deductions under a mechanism approved by the BPU in PSE&G’s 2018 Distribution Base Rate Case Settlement.

Over or under collected electric and gas balances are returned or recovered through an annual filing.

PSE&G includes a return component on the flowback of the excess accumulated deferred income taxes and the previously realized tax repairs.

Interest is accrued monthly on any over or under recovered balances.

Significant 2022 regulatory orders received and currently pending rate filings with the BPU by PSE&G are as follows:

• BGS — In January 2022, the BPU approved changes to BGS rates as a result of the FERC-approved changes to transmission charges, primarily as a result of the decrease in PSE&G’s transmission formula rate of return on equity.

PSE&G’s BGS customers are being credited over a 12-month period effective February 1, 2022.

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

In September 2022, the BPU approved on a provisional basis PSE&G’s June 2022 request to increase its BGSS rate to approximately 65 cents per therm, effective October 1, 2022.

In January 2023, PSE&G filed a self-implementing BGSS rate reduction of 15 cents per therm with the BPU.

This reduction resulted in a new BGSS rate of approximately 50 cents per therm effective February 1, 2023.

• CIP — In February 2023, the BPU gave final approval for PSE&G to recover approximately $ 52 million of deficient electric revenues over two years, with approximately $ 18 million approved for recovery for the first year starting on the effective date of June 15, 2022.

In September 2022, the BPU provisionally approved PSE&G’s initial gas CIP cost recovery petition to recover over a one year period deficient gas revenues of approximately $ 53 million with new rates effective October 1, 2022.

The revenue deficiency is the result of lower estimated revenues as compared to a baseline established in PSE&G’s most recent distribution base rate proceeding.

In February 2023, PSE&G filed its annual electric CIP petition seeking BPU approval to recover estimated deficient electric revenues of approximately $ 54 million based on the twelve month period ending May 31, 2023 with new rates proposed to be effective June 1, 2023.

Significant 2023 regulatory orders received and currently pending rate filings with the BPU or FERC by PSE&G are as follows:

• Electric and Gas Distribution Base Rate Filing— In December 2023, PSE&G filed a distribution base rate case as required as a condition of approval of previous PSE&G programs.

This distribution base rate case requests an overall revenue increase of approximately $ 826 million which includes the recovery of approximately $ 3 billion in capital investments made by PSE&G to strengthen and modernize its electric and gas infrastructure since its last distribution base rate case in 2018.

PSE&G anticipates this base rate case will be finalized later in 2024.

• BGSS— In January and February 2023, PSE&G filed with the BPU two self-implementing BGSS rate reductions of 15 cents and 3 cents per therm, effective February 1, 2023 and March 1, 2023, respectively.

These reductions resulted in a new BGSS rate of approximately 47 cents per therm effective March 1, 2023.

In April 2023, the BPU gave final approval to PSE&G’s BGSS rate of 47 cents per therm.

In September 2023, the BPU approved on a provisional basis PSE&G’s June 2023 request to decrease its BGSS rate to approximately 40 cents per therm, effective October 1, 2023.

The BGSS rate has decreased a total of 25 cents from approximately 65 cents per therm as of January 1, 2023 to 40 cents per therm as of October 1, 2023.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• CIP — In February 2023, the BPU gave final approval for PSE&G to recover approximately $ 52 million of deficient electric revenues that resulted from the 12-month period ended May 31, 2022, with approximately $ 18 million approved for recovery for the first year starting on the effective date of June 15, 2022 and the remaining $ 34 million to be recovered starting in June 2023.

In April 2023, the BPU gave final approval for PSE&G to recover approximately $ 53 million of deficient gas revenues that resulted from the 12-month period ended September 30, 2022, over one year effective October 1, 2022.

In September 2023, the BPU provisionally approved PSE&G’s gas CIP petition to recover $ 110 million of deficient gas revenues comprised of approximately $ 99 million for the most recent gas CIP annual period ended September 30, 2023, and an additional $ 11 million carryover underrecovery from the prior CIP period.

The revenue deficiency is the result of lower revenues as compared to a baseline established in PSE&G’s most recent distribution base rate proceeding.

New rates were effective October 1, 2023 and PSE&G expects to recover the full $ 110 million deficiency over a 12-month period.

In December 2023, the BPU gave final approval for PSE&G’s updated electric CIP petition to recover approximately $ 75 million of deficient electric revenues over two years that resulted from the 12-month period ended May 31, 2023, with new rates effective June 1, 2023.

In February 2024, PSE&G filed its annual electric CIP petition seeking BPU approval to recover estimated deficient electric revenues of approximately $ 99 million based on the 12-month period ending May 31, 2024 with new rates proposed to be effective June 1, 2024.

This matter is pending.

• CSEP Program, a New Component of the GPRC— In June 2022, the BPU approved PSE&G’s filing to recover its initial electric revenue requirement of $ 0.4 million related to the CSEP Program with the new rate effective July 1, 2022.

• COVID-19 Deferral— PSE&G continues to make quarterly filings as required by the BPU and has recorded a Regulatory Asset as of December 31, 2022 of approximately $ 137 million for net incremental costs, including $ 68 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 December 2022, the BPU approved an extension of the COVID deferral period until March 15, 2023 and ordered all New Jersey regulated utilities to file petitions documenting its prudently incurred incremental COVID-19 costs no later than 60 days thereafter.

• Energy Strong II (ES II)— In May 2022, the BPU approved PSE&G’s updated filing for annual electric and gas revenue increases of $ 17 million and $ 1 million, respectively, effective June 1, 2022.

• COVID-19 Deferral— In May and June 2023, the BPU issued two Orders to all public utilities in New Jersey that stipulated a filing deadline for recovery of COVID-19 Regulatory Asset balances, and set forth certain filing requirements primarily related to recovery proposals to be included by each utility in their COVID-19 filings.

In July 2023, PSE&G filed a petition with the BPU in compliance with those Orders requesting recovery of its prudently incurred incremental costs associated with the COVID-19 pandemic.

This matter is pending.

As of December 31, 2023, PSE&G has deferred approximately $ 131 million as a Regulatory Asset for its net incremental costs, including $ 68 million for incremental gas bad debt expense associated with customer accounts receivable.

PSE&G expects its COVID-19 Regulatory Asset balance is probable of recovery under the BPU orders.

• Energy Strong II— In April 2023, the BPU approved PSE&G’s updated filing for annual electric and gas revenue increases of $ 16 million and $ 4 million, respectively, effective May 1, 2023.

These increases represent the return on and of Energy Strong II investments placed in service through January 2023.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In November 2022, PSE&G filed its annual petition seeking BPU approval to recover the annualized increases in electric and gas revenue requirements associated with capitalized investment costs of the ES II Program, with rates to be effective May 1, 2023.

In February 2023, PSE&G updated its petition for actual investments through January 31, 2023 requesting annual electric and gas revenue increases of $ 16 million and $ 4 million, respectively.

In October 2023, the BPU approved PSE&G’s updated filing for an annual increase in electric revenues of approximately $ 9 million associated with capitalized electric investment costs of the Energy Strong II program, with new rates effective November 1, 2023.

This increase represents the return on and of actual investments through July 31, 2023.

In February 2024, PSE&G filed an updated petition seeking BPU approval to recover an annualized increase in electric revenue requirement of $ 13 million associated with capitalized investment costs of the Energy Strong II Program, with rates to be effective May 1, 2024.

The requested electric revenue increase represents the return of and on actual Energy Strong II investments placed in service through December 31, 2023.

This matter is pending.

• Gas System Modernization Program (GSMP II)— In May 2022, the BPU approved PSE&G’s filing for an annual gas revenue increase of $ 25 million effective June 1, 2022.

• Gas System Modernization Program II (GSMP II)— In May 2023, the BPU approved PSE&G’s updated GSMP II cost recovery filing to recover an annual gas revenue increase of approximately $ 11 million effective June 1, 2023.

This increase represents the return on and of GSMP II investments placed in service through February 2023.

In November 2022, the BPU approved PSE&G’s updated GSMP II cost recovery filing to recover an annual gas revenue increase of $ 23 million effective December 1, 2022.

This increase represents the return on and of GSMP II investments placed in service through August 31, 2022.

In December 2022, PSE&G filed its next semiannual GSMP II cost recovery petition seeking BPU approval to recover in gas base rates an estimated annual revenue increase of approximately $ 11 million effective June 1, 2023.

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

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

• GPRC— In May 2023, the BPU approved PSE&G’s 2022 updated GPRC filing for annual electric and gas revenue increases of $ 87 million and $ 5 million, respectively, with new rates effective June 1, 2023.

Additionally in May 2023, the BPU approved PSE&G’s petition to increase its CEF-EE sub program investment (a component of GPRC) by $ 280 million and approved a nine-month extension to make investments.

In February 2024, PSE&G updated its 2023 GPRC cost recovery petition requesting BPU approval for recovery of increases of $ 49 million and $ 15 million in annual electric and gas revenues, respectively.

This matter is pending.

In September 2022, PSE&G filed a petition which requested an increase of $ 320 million in its total program investment spending for the CEF-EE component of GPRC and a nine month extension to the program to make the investments.

• Infrastructure Advancement Program (IAP)— In February 2024, PSE&G filed an updated IAP cost recovery petition seeking BPU approval to recover in electric base rates an annual revenue increase of $ 5 million effective May 1, 2024.

This increase represents the return of and on investment for IAP electric investments in service through January 31, 2024.

This matter is pending.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• Pension— In February 2023, the BPU approved an accounting order authorizing PSE&G to modify its method for calculating the amortization of the net actuarial gain or loss component of pension expense for ratemaking purposes.

This methodology change for ratemaking purposes is effective for the calendar year ending December 31, 2023 and forward.

• RAC— In September 2022, the BPU approved PSE&G’s RAC 29 filing allowing recovery of approximately $ 44 million of net MGP remediation expenditures incurred from August 1, 2020 through July 31, 2021.

In January 2023, PSE&G filed its RAC 30 petition with the BPU seeking recovery of approximately $ 44 million of net MGP expenditures incurred from August 1, 2021 through July 31, 2022.

As of December 31, 2023, PSE&G has deferred $ 55 million as a Regulatory Asset under this methodology.

• RAC— In January 2023, PSE&G filed its RAC 30 petition with the BPU seeking recovery of approximately $ 44 million of net MGP expenditures incurred from August 1, 2021 through July 31, 2022.

This matter is pending.

• SuSI Program, a New Component of the GPRC— In June 2022, the BPU approved PSE&G’s filing to recover an annual electric revenue increase of $ 38 million effective June 15, 2022.

These costs will be recovered as a new component of PSE&G’s existing electric GPRC.

• SBC— In January 2023, PSE&G filed a petition to increase its annual electric and gas rates by approximately $ 52 million and $ 32 million, respectively, in order to recover electric and gas costs incurred or expected to be incurred through February 2024 under its EE and Renewable Energy and Social Programs.

The increase to electric rates includes the impact of increased bad debt expense as a result of the negative economic impact of the coronavirus pandemic and the resulting impact of moratoriums on collections.

This matter is pending.

• TAC— In June 2022, the BPU approved PSE&G’s annual 2021 TAC filing to increase annual electric and gas revenues by approximately $ 15 million and $ 31 million, respectively.

The new rates were effective June 15, 2022.

In October 2022, PSE&G made its annual 2022 TAC filing requesting BPU approval to increase electric revenues and decrease gas revenues by approximately $ 17 million and $ 70 million, respectively, on an annual basis starting January 1, 2023.

This matter is pending.

• Transmission Formula Rates— In June 2022, PSE&G filed its 2021 true-up adjustment pertaining to its transmission formula rates in effect for 2021.

This filing resulted in a decrease in the 2021 annual revenue requirement of $ 1 million less than the 2021 original and updated filings, incorporating the FERC-approved settlement agreement effective August 1, 2021.

In October 2022, PSE&G filed its Annual Transmission Formula Rate Update with FERC which will result in $ 69 million in increased annual transmission revenue effective January 1, 2023, subject to true-up.

• ZEC Program— In April 2022, the BPU approved PSE&G’s petition to refund a total of $ 4 million to customers,

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

including interest, for overcollections resulting from the ZEC program for the energy year ended May 31, 2021.

In January 2023, the BPU approved PSE&G’s petition to set the ZEC refund component of the tariff rate to zero effective February 1, 2023.

For the ZEC Energy Year ended May 31, 2022, PSE&G purchased approximately $ 161 million in ZECs including interest, from the eligible nuclear plants selected by the BPU with the final payment made in August 2022.

As a result of the collections and required ZEC payments, there were overcollected revenues, including interest totaling $ 1.3 million, which PSE&G refunded to customers over the remainder of 2022 through January 2023 through its existing rates.

• TAC— In July 2023, the BPU approved PSE&G’s updated 2022 TAC filing to increase annual electric revenues by approximately $ 17 million and decrease annual gas revenues by approximately $ 42 million, with new rates effective August 1, 2023.

In February 2024, the BPU approved PSE&G’s 2023 TAC filing to increase annual electric and gas revenues by approximately $ 61 million and $ 40 million, respectively, with new rates effective March 1, 2024.

• Transmission Formula Rates— In June 2023, PSE&G filed with FERC its 2022 true-up adjustment pertaining to its transmission formula rates in effect for calendar year 2022, as established by its 2022 annual forecast filing.

The June 2023 true-up filing resulted in an approximate $ 21 million decrease in the 2022 annual revenue requirement from the revenue requirement numbers contained in the forecast filing.

PSE&G had previously recognized the majority of the lower revenue requirement in its 2022 Consolidated Statement of Operations.

In October 2023, PSE&G filed its Annual Transmission Formula Rate Update with FERC, which will result in a $ 58 million increase in annual transmission revenue effective January 1, 2024, subject to true-up.

• ZEC Program— In January 2023, the BPU approved PSE&G’s petition to set the ZEC refund component of the tariff rate to zero effective February 1, 2023 as overcollections for the ZEC Energy Year ended May 31, 2022 totaling $ 1.3 million, including interest, were refunded to customers in 2022 through January 2023.

In August 2023, the BPU approved the final ZEC price of $ 9.88 per megawatt hour (MWh) for the energy year ended May 31, 2023.

As a result, PSE&G purchased approximately $ 165 million in ZECs including interest, from the eligible nuclear plants selected by the BPU with the final payment made in August 2023.

As total customer collections equaled the required ZEC payments, there were no overcollected revenues from customers for the Energy Year ended May 31, 2023 and the ZEC refund component of the rate remains at zero.

As of December 31, 2023, PSEG and its subsidiaries were both a lessee and a lessor in operating leases.

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PSEG Power & Other

PSEG Power has operating leases for buildings, merchant transmission and equipment.

PSEG Power has operating leases for buildings and equipment.

These leases have remaining terms through 2028, one of which includes an option to extend the lease for up to one 5-year term.

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Services’ lease for its headquarters, which ends in 2030, includes options to extend for two 5-year terms.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Operating Lease Costs

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Weighted Average Discount Rate 4.0 % 4.2 % 4.1 %

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PSE&G PSEG Power & Other Total

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Weighted Average Discount Rate 3.5 % 4.1 % 3.9 %

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PSE&G PSEG Power & Other Total

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2026 13 16 29

2027 12 17 29

2028 10 16 26

Thereafter 57 28 85

Total Minimum Lease Payments $ 125 $ 111 $ 236

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following is a reconciliation of the undiscounted cash flows to the discounted Operating Lease Liabilities recognized on the Consolidated Balance Sheets:

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As of December 31, 2022, the current portions of Operating Lease Liabilities included in Other Current Liabilities were $ 28 million and $ 12 million for PSEG and PSE&G, respectively.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PSEG Power & Other

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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, and in real estate assets with remaining terms through 2049.

Energy Holdings is the lessor in an operating lease for a domestic energy generation facility with a remaining term through 2036.

As of December 31, 2023, Energy Holdings’ property subject to this lease had a total carrying value of $ 10 million.

In 2022, Energy Holdings recorded pre-tax impairments of $ 78 million related to one of its domestic energy generating facilities and its real estate assets.

As of December 31, 2022, Energy Holdings’ property subject to these leases had a total carrying value of $ 51 million, including Assets Held for Sale of $ 20 million.

Energy Holdings was previously the lessor in operating leases for real estate assets which were sold in March 2020.

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

In March 2023, Energy Holdings completed the sale of one of its domestic energy generating facilities and recorded an immaterial pre-tax gain.

In December 2023, Energy Holdings completed the sale of its real estate assets and recorded an immaterial pre-tax gain.

A wholly owned subsidiary of PSEG Power is the lessor in an operating lease for certain parcels of land with terms through 2050, plus five optional renewal periods of ten years.

Prior to the sale of Solar Source in June 2021, certain of PSEG Power’s sales agreements related to its solar generating plants qualified as operating leases.

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therefore, all rental income recorded under these leases was variable.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following is the operating lease income for the years ended December 31, 2023, 2022 and 2021:

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Total Minimum Future Lease Receipts $ 179

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Long-Term Investments

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Total Long-Term Investments $ 295 $ 624

(A) During the three years ended December 31, 2022, 2021 and 2020, dividends from these investments were $ 8 million, $ 17 million and $ 15 million, respectively.

(A) During the year ended December 31, 2023, there were no dividends from these investments.

During the years ended December 31, 2022 and 2021, dividends from these investments were $ 8 million and $ 17 million, respectively.

Asset Dispositions and Impairments for information regarding the sales of our ownership interest in the Ocean Wind 1 project and Kalaeloa.

Energy Holdings, through its indirect subsidiaries, has investments in assets subject primarily to leveraged lease accounting.

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This amount is included in Long-Term Investments on PSEG’s Consolidated Balance Sheets.

The more rapid depreciation of the leased property for tax purposes creates tax cash flow

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

that will be repaid to the taxing authority in later periods.

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 Consolidated Balance Sheets.

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Net Investments in Leases $ 125 $ 136

The pre-tax income and income tax effects related to investments in leases, excluding gains and losses on sales and the impacts of the Tax Act, were as follows:

Years Ended December 31,

2022 2021 2020

Pre-Tax Income from Leases $ 13 $ 13 $ 18

Income Tax Expense on Income from Leases $ 3 $ 3 $ 2

Equity Method Investment

PSEG had a 25% equity interest in Ørsted’s Ocean Wind 1 project of $ 225 million and $ 111 million as of December 31, 2022 and 2021, respectively.

For additional information see Note 5.

Variable Interest Entities.

PSEG also had a 50 % ownership interest in Kalaeloa, a combined-cycle generation facility in Hawaii of $ 71 million and $ 62 million as of December 31, 2022 and 2021, respectively.

PSEG has also invested in certain funds sponsored by Energy Impact Partners LP, totaling $ 10 million as of December 31, 2022.

The pre-tax income and income tax effects related to investments in leases were immaterial for the years ended December 31, 2023, 2022 and 2021.

Financing Receivables

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As of December 31, 2023, none of the solar loans were impaired;

however, in the event of a loan default, the basis of the solar loan would be recovered through a regulatory recovery mechanism.

Therefore, no current credit losses have been recorded for Solar Loan Programs I, II and III.

however, in the event a loan becomes impaired, the basis of the solar loan would be recovered through a regulatory recovery mechanism.

Therefore, no current credit losses have been recorded for Solar Loan Programs I, II

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A substantial portion of these loan amounts are noncurrent and reported in Long-Term Investments on PSEG’s and PSE&G’s Consolidated Balance Sheets.

The following table reflects the outstanding loans by class of customer, none of which would be considered “non-performing.”

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31,

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Non-Recourse Debt

Counterparties’ Credit Rating Standard & Poor’s (S&P) as of December 31, 2022 As of December 31, 2022

Counterparties’ Credit Rating Standard & Poor’s (S&P) as of December 31, 2023

As of December 31, 2023

BBB+ to BBB 173

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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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Trust Investments

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As a general practice, each nuclear owner places funds in independent external trust accounts it maintains to provide for decommissioning.

PSEG Power is

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

required to file periodic reports with the NRC demonstrating that its NDT Fund meets the formula-based minimum NRC funding requirements.

PSEG Power is required to file periodic reports with the NRC demonstrating that its NDT Fund meets the formula-based minimum NRC funding requirements.

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.

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Net unrealized gains (losses) on debt securities of $( 59 ) million (after-tax) were included in Accumulated Other Comprehensive Loss on PSEG’s Consolidated Balance Sheet as of December 31, 2023.

The portion of net unrealized gains (losses) recognized during 2022 related to equity securities still held at the end of December 31, 2022 was $( 163 ) million.

The portion of net unrealized gains (losses) recognized

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

during 2023 related to equity securities still held at the end of December 31, 2023 was $ 166 million.

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 Consolidated Balance Sheets as shown in the following table.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31,

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Net Unrealized Gains (Losses) on Equity Securities 146 ( 205 ) 19

Impairment of Available-for-Sale Debt Securities (C) — — ( 3 )

Net Gains (Losses) on NDT Fund Investments $ 188 $ ( 255 ) $ 185

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

PSEG Power’s policy is to sell all securities that are rated below investment grade.

The NDT Fund debt securities held as of December 31, 2023 had the following maturities:

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Total Rabbi Trust Investments $ 179 $ 183

As of December 31, 2022 and 2021, PSEG had intangible assets of $ 14 million and $ 20 million, respectively, related to RECs, which are recorded at cost and evaluated for impairment at least annually.

As load is served under contracts requiring energy from renewable sources, the related expense is recorded.

The changes to PSEG’s intangible assets during 2021 and 2022 are as follows:

Emissions Allowances RECs Total Intangibles

Balance as of January 1, 2021 $ 112 $ 46 $ 158

Retirements ( 58 ) ( 114 ) ( 172 )

Purchases 9 89 98

Sales and Transfers (A) ( 62 ) ( 1 ) ( 63 )

Impairments ( 1 ) — ( 1 )

Balance as of December 31, 2021 $ — $ 20 $ 20

Retirements — ( 76 ) ( 76 )

Purchases — 70 70

Balance as of December 31, 2022 $ — $ 14 $ 14

(A) Includes $ 52 million classified as Assets Held for Sale.

Early Plant Retirements/Asset Dispositions and Impairments.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Asset Retirement Obligations (AROs)

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The most recent cost study was done in 2021.

When assumptions are revised to calculate fair values of existing AROs, generally, the ARO balance and corresponding long-lived asset are adjusted which impact the amount of accretion and depreciation expense recognized in future periods.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

recognized in future periods.

For PSE&G, Regulatory Assets and Regulatory Liabilities result when accretion and amortization are adjusted to match rates established by regulators resulting in the regulatory deferral of any gain or loss.

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Liabilities Settled ( 15 ) ( 15 ) —

Adjustments (B) ( 37 ) — ( 37 )

Accretion Expense 50 — 50

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(A) Not reflected as expense in Consolidated Statements of Operations.

(B) Represents amounts related to the sale of the solar plants and the fossil generating assets classified as Held for Sale.

In February 2022, the NRC issued an order related to its review of the subsequent license renewal (SLR) application for the Peach Bottom nuclear units.

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The NRC directed, however, that the subsequently renewed licenses themselves remain in effect.

The NRC also stated that it

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

fully expects that the staff will complete its update of the NEPA analysis before 2033.

The NRC also stated that it fully expects that the staff will complete its update of the NEPA analysis before 2033.

As such, at this time, PSEG has not adjusted the useful lives or the assumed shutdown probabilities assigned to the ARO of the units as PSEG believes that the licenses will be updated to reflect the approved 2053 and 2054 expiration dates within the current license period.

PSEG will continue to monitor this matter for further developments and any change to the estimated useful lives and ARO probabilities could have an adverse financial statement impact, which may be material.

In August 2022, the IRA was signed into law expanding incentives promoting carbon-free generation.

The enacted legislation established a PTC for electricity generation using nuclear energy set to begin in 2024 through 2032.

In August 2022, the Inflation Reduction Act (IRA) was signed into law expanding incentives promoting carbon-free generation.

The enacted legislation established a PTC for electricity generation using nuclear energy set to begin January 1, 2024 and continue through 2032.

As a result, PSEG reassessed the Asset Retirement Cost (ARC) and ARO assumptions related to its nuclear units.

This resulted in a decrease to the ARC asset and ARO liability of $ 145 million primarily due to an adjustment in the assumed estimated timing of cash flows associated with decommissioning the units.

Early Plant Retirements/Asset Dispositions and Impairments for additional information on PTCs.

During 2021, PSE&G recorded an increase to its ARO liabilities primarily due to the impact of increases in labor rates and other costs, partially offset by decreases from changes in inflation and discount rate assumptions.

Those changes had no impact on PSE&G’s Consolidated Statement of Operations.

In April 2021, the BPU awarded 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 reassessed the ARC and 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.

Early Plant Retirements/Asset Dispositions and Impairments for additional information on ZECs.

In December 2021, PSEG recorded an additional increase to its ARO liabilities primarily due to changes in decommissioning assumptions related to its nuclear units of $ 255 million.

The changes in the decommissioning assumptions relate to the inclusion of certain spent fuel costs and previously assumed levels of reimbursement by the federal government as prescribed under the Nuclear Waste Policy Act.

These changes had an immaterial impact on PSEG’s Consolidated Statement of Operations.

In addition, PSEG reviewed its probabilities of early retirement on its nuclear units and concluded that no adjustments were necessary as of December 31, 2021.

In December 2023, PSEG Power reassessed its ARC and ARO assumptions related to its Hope Creek and Salem nuclear plants, based upon the expectation of PTCs beginning in 2024.

As a result, PSEG Power decreased its ARC asset and ARO liability by $ 99 million, reflecting a decrease in the probability of early retirement and an increase in the probability the units would obtain additional license renewals.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Pension, Other Postretirement Benefits (OPEB) and Savings Plans

PSEG sponsors and Services administers 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’s qualified pension plans consist of two qualified defined benefit pension plans, Pension Plan and Pension Plan II.

PSEG’s qualified pension plans consist of two qualified defined benefit pension plans, Pension Plan of Public Service Enterprise Group Incorporated (Pension Plan I) and Pension Plan of Public Service Enterprise Group Incorporated II (Pension Plan II and, together, the Plans).

Each of the qualified pension plans include a Final Average Pay and two Cash Balance components.

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The charge to Accumulated Other Comprehensive Income (Loss) and the Regulatory Asset for PSE&G are amortized and recorded as net periodic pension cost in the Consolidated Statements of Operations.

In July 2023, PSEG and Fiduciary Counselors Inc,.

as independent fiduciary of the Plans, entered into a commitment agreement (for a “lift-out”) with The Prudential Insurance Company of America (the Insurer) under which the Plans agreed to purchase a nonparticipating single premium group annuity contract that has transferred to the Insurer approximately $ 1 billion of the Plans’ defined benefit pension obligations and associated Plan assets related to certain pension benefits.

The contract covers approximately 2,000 retirees from PSEG Power & Other, excluding Services (Participants).

In August 2023, assets were transferred to the Insurer and the transaction was closed.

Under the contract, the Insurer made an irrevocable commitment, and is solely responsible, to pay benefits of each Participant that are due on and after December 31, 2023.

The transaction resulted in no changes to the amount of benefits payable to Participants.

Amounts for Servco are not included in any of the following pension and OPEB benefit information for PSEG and its affiliates but rather are separately disclosed later in this note.

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Gross Benefits Paid ( 352 ) ( 382 ) ( 68 ) ( 61 )

Settlements ( 970 ) — — —

Other — ( 22 ) 5 ( 3 )

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Gross Benefits Paid ( 352 ) ( 382 ) ( 68 ) ( 61 )

Settlements ( 970 ) — — —

Other — ( 18 ) — —

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Additional Amounts Recognized in the Consolidated Balance Sheets

Current Accrued Benefit Cost (C) $ ( 12 ) $ ( 16 ) $ ( 12 ) $ ( 19 )

Current Accrued Benefit Cost $ ( 12 ) $ ( 12 ) $ ( 13 ) $ ( 12 )

Noncurrent Accrued Benefit Cost ( 606 ) ( 705 ) ( 349 ) ( 410 )

Amounts Recognized $ ( 618 ) $ ( 717 ) $ ( 362 ) $ ( 422 )

Additional Amounts Recognized in Accumulated Other Comprehensive Income (Loss), Regulated Assets and Deferred Assets (D)

Prior Service Credit $ — $ — $ ( 52 ) $ ( 181 )

Net Actuarial Loss 2,151 1,643 41 193

Additional Amounts Recognized in Accumulated Other Comprehensive Income (Loss), Regulated Assets and Deferred Assets (C)

Prior Service Cost (Credit) $ — $ — $ 6 $ ( 52 )

Net Actuarial Loss (Gain) 1,656 2,151 ( 6 ) 41

Total $ 1,656 $ 2,151 $ — $ ( 11 )

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The vested benefit obligation is the actuarial present value of the vested benefits to which the employee is currently entitled but based on the employee’s expected date of separation or retirement.

(B) For pension benefits, the net actuarial gains in 2022 and 2021 were due primarily to an increase in the discount rate.

For OPEB, the net actuarial gain in 2022 was due primarily to an increase in the discount rate and other assumption updates.

For OPEB, the net actuarial gain in 2021 was due primarily to an increase in the discount rate coupled with lower than expected claims experience.

(C) Includes ($ 5 ) million and ($ 7 ) million for pension benefits and other benefits, respectively, as of December 31, 2021 classified as Held for Sale.

For additional information, see Note 4.

Early Plant Retirements/Asset Dispositions and Impairments.

(D) Includes $ 594 million ($ 426 million, after-tax) and $ 495 million ($ 355 million, after-tax) in Accumulated Other Comprehensive Loss related to Pension and OPEB as of December 31, 2022 and 2021, respectively.

(B) For pension benefits, the net actuarial loss in 2023 was due primarily to a decrease in the discount rate.

The net actuarial gain in 2022 was due primarily to an increase in the discount rate.

For OPEB, the net actuarial gain in 2023 was due primarily to assumption updates.

The net actuarial gain in 2022 was due primarily to an increase in the discount rate and other assumption updates.

(C) Includes $ 143 million ($ 102 million, after-tax) and $ 594 million ($ 426 million, after-tax) in Accumulated Other Comprehensive Loss related to Pension and OPEB as of December 31, 2023 and 2022, respectively.

Also includes Regulatory Assets of $ 1,427 million and Deferred Assets of $ 141 million as of December 31, 2023 and Regulatory Assets of $ 1,405 million and Deferred Assets of $ 141 million as of December 31, 2022.

This amount does not include $ 55 million as a result of modifying the method for calculating pension expense for ratemaking purposes, approved by the BPU effective January 1, 2023.

The pension benefits table above provides information relating to the funded status of the qualified and nonqualified pension and OPEB plans on an aggregate basis.

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The following table provides the components of net periodic benefit relating to all qualified and nonqualified pension and OPEB plans on an aggregate basis for PSEG, excluding Servco for the years ended December 31, 2023, 2022 and 2021.

Amounts shown do not reflect the impacts of capitalization and co-owner allocations.

Amounts shown do not reflect the impacts of capitalization, co-owner allocations and the 2023 BPU accounting order.

Only the service cost component is eligible for capitalization, when applicable.

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Actuarial Loss 83 60 103 ( 2 ) 15 44

Settlement Charge Resulting from Pension Lift-Out 338 — — — — —

Non-Service Components of Pension and OPEB (Credits) Costs 319 ( 257 ) ( 233 ) ( 46 ) ( 130 ) ( 105 )

Total Benefit (Credits) Costs $ ( 115 ) $ ( 82 ) $ ( 28 ) $ ( 124 ) $ ( 96 ) $ ( 77 )

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

Total Net Benefit (Credits) Costs $ 409 $ ( 115 ) $ ( 82 ) $ ( 43 ) $ ( 124 ) $ ( 96 )

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

Pension Benefits

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PSEG Power & Other 359 ( 45 ) ( 18 ) ( 1 ) ( 15 ) ( 4 )

Total Benefit (Credits) Costs $ ( 115 ) $ ( 82 ) $ ( 28 ) $ ( 124 ) $ ( 96 ) $ ( 77 )

Total Net Benefit (Credits) Costs $ 409 $ ( 115 ) $ ( 82 ) $ ( 43 ) $ ( 124 ) $ ( 96 )

PSEG completed the above mentioned “lift-out” transaction in August 2023.

As a result of the transaction, PSEG recognized a settlement charge of $ 332 million ($ 239 million, net of tax) in the third quarter of 2023 related to the immediate recognition of unamortized net actuarial loss associated with the portion of the pension involved in the transaction.

Additionally, a settlement charge of $ 6 million ($ 4 million, net of tax) related to lump sum payments to participants was recognized in the fourth quarter of 2023.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table provides the pre-tax changes recognized in Accumulated Other Comprehensive Income (Loss), Regulatory Assets and Deferred Assets:

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2023 2022 2023 2022

Net Actuarial (Gain) Loss in Current Period $ 568 $ ( 608 ) $ ( 138 ) $ ( 127 )

Net Actuarial (Gain) Loss in Current Period due to Plan Experience and Assumption Changes $ ( 35 ) $ 568 $ ( 49 ) $ ( 138 )

Net Actuarial (Gain) Loss due to Settlements/Curtailments ( 39 ) — — —

Amortization of Net Actuarial Gain (Loss) ( 83 ) ( 60 ) 2 ( 14 )

Recognition of Net Actuarial (Gain) Loss due to Settlements/Curtailments ( 338 ) — — —

Prior Service Cost (Credit) in Current Period — — 6 —

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Total $ ( 495 ) $ 508 $ 11 $ ( 23 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following assumptions were used to determine the benefit obligations and net periodic benefit costs:

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Real Estate Investment (F) 365

Private Equity (G) 3

Total Fair Value (H) $ 5,331

Total Fair Value (G) $ 4,578

Recurring Fair Value Measurements as of December 31, 2022

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Commingled (C) 1,346 — 1,346

Preferred Stock (B) 2 2 —

Other (I) 2 2 —

Debt Securities (D)

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Real Estate Investment (F) 395

Private Equity (G) 3

Total Fair Value (H) $ 7,499

Total Fair Value (G) $ 5,331

(A) The Collective Investment Fund publishes a daily net asset value (NAV) which participants may use for daily redemptions without restrictions (Level 1).

(B) Common stocks and preferred stocks are measured using observable data in active markets and considered Level 1.

(C) Commingled Funds that allow daily redemption at their daily published NAV without restrictions are classified as Level 1.

Commingled Funds that publish daily NAV but with certain near-term redemption restrictions which prevent redemption at the published daily NAV are classified as Level 2.

(B) Common stocks are measured using observable data in active markets and considered Level 1.

(C) Commingled Funds that publish daily NAV but with certain near-term redemption restrictions which prevent redemption at the published daily NAV are classified as Level 2.

(D) Debt securities include mainly U.S.

Treasury obligations.

These investments are valued using an evaluated pricing approach that varies by asset class and reflects observable market information such as the most recent exchange price

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

or quoted bid for similar securities.

These investments are valued using an evaluated pricing approach 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 or the most recent quotes for similar securities which are a Level 2 measure.

(E) Certain commingled equity funds are not included in the fair value hierarchy as they are measured at fair value using the NAV per share (or its equivalent) practical expedient.

These funds do not meet the definition of readily determinable fair value due to the frequency of publishing NAV (monthly).

These funds do not meet the definition of readily

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

determinable fair value due to the frequency of publishing NAV (monthly).

The objectives of these funds are mainly tracking the S&P Index or achieving long-term growth through investment in foreign equity securities and the Morgan Stanley Capital International Index.

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The purpose of the fund is to acquire, own, hold for investment and ultimately dispose of investments in real estate and real estate-related assets with the intention of achieving current income, capital appreciation or both.

(G) Private equity investments primarily include various limited partnerships that invest in either operating companies through acquisitions or developing a portfolio of non-U.S.

distressed investments to maximize total return on capital.

These investments are valued at NAV (or its equivalent) on a quarterly basis and have significant redemption restrictions preventing redemption until fund liquidation and limited ability to sell these investments.

Fund liquidation is not expected to occur for several more years.

These investments are not included in the fair value hierarchy in accordance with the guidance on NAV practical expedient.

(H) Excludes net receivables of $ 7 million and $ 11 million as of December 31, 2022 and 2021, respectively, which consist of interest, dividends and receivables and payables related to pending securities sales and purchases.

In addition, the table excludes cash and foreign currency of $ 2 million as of each of December 31, 2022 and 2021.

(I) Investment in a publicly traded limited partnership.

(G) Excludes net receivables of $ 2 million and $ 7 million as of December 31, 2023 and 2022, respectively, which consist of interest, dividends and receivables and payables related to pending securities sales and purchases.

In addition, the table excludes cash and foreign currency of $ 2 million as of December 31, 2022.

The following table provides the percentage of fair value of total plan assets for each major category of plan assets held for the qualified pension and OPEB plans as of the measurement date, December 31:

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Derivative financial instruments are used by the plans’ investment managers primarily to adjust the fixed income duration of the portfolio and hedge the currency risk component of foreign investments.

The expected long-term rate of return on plan assets was 7.2 % for 2022 and will be 8.1 % for 2023.

The expected long-term rate of return on plan assets was 8.1 % for 2023 and will remain at 8.1 % for 2024.

This expected return includes a premium for active management.

Plan Contributions

PSEG does not plan to contribute to its pension and OPEB plans in 2023.

PSEG plans to contribute $ 5 million to its OPEB plan and does not plan to contribute to its pension plans in 2024.

Internal Revenue Service (IRS) minimum funding requirements for pension plans are determined based on the fund’s assets and liabilities at the end of a calendar year for the subsequent calendar year.

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The following pension benefit and postretirement benefit payments are expected to be paid to plan participants.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Benefits Other Benefits

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Total $ 3,459 $ 642

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PSEG sponsors two 401(k) plans, which are defined contribution retirement plans subject to the Employee Retirement Income Security Act (ERISA).

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Under the OSA, employee benefit costs for these plans are funded by LIPA.

Variable Interest Entities.

Variable Interest Entity.

These obligations, as well as the offsetting long-term receivable, are separately presented on the Consolidated Balance Sheet of PSEG.

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It also provides the funded status of the plans and the amounts recognized and amounts not recognized on the Consolidated Balance Sheets at the end of both years.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Pension Benefits Other Benefits

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Actuarial (Gain) Loss (B) 31 ( 189 ) 35 ( 215 )

Plan Amendment 16 — — —

Gross Benefits Paid ( 11 ) ( 10 ) ( 12 ) ( 10 )

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(B) For pension benefits and OPEB, the net actuarial gains in 2022 were due primarily to an increase in the discount rate.

For pension benefits, the net actuarial gain in 2021 was due primarily to an increase in the discount rate.

For OPEB, the net actuarial gain in 2021 was due primarily to updated assumptions.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(B) For pension and OPEB benefits, the net actuarial losses in 2023 were due primarily to a decrease in the discount rate and other assumption updates.

For pension benefits and OPEB, the net actuarial gains in 2022 were due primarily to an increase in the discount rate.

(C) Amounts equal to the accrued pension and OPEB costs of Servco are offset in Long-Term Receivable of VIE on PSEG’s Consolidated Balance Sheets.

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Year Ultimate Rate Reached 2033 2032 2029

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

All the investments of Servco’s pension plans are held in a trust account by the Trustee and consist of an undivided interest in an investment account of the Servco Master Trust.

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Commingled Bonds (B) 105 — 105

Total $ 370 $ 26 $ 344

Total Fair Value $ 433 $ 34 $ 399

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recurring Fair Value Measurements as of December 31, 2022

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Commingled Bonds (B)

Total $ 422 $ 35 $ 387

Total Fair Value $ 370 $ 26 $ 344

(A) Common stocks are measured using observable data in active markets and considered Level 1.

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Certain investments in real assets ( 15 % at December 31, 2023) are made through investing in equity securities and tracked as equities when reporting fair value;

however, they are viewed by their asset class, real assets, in our target asset

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

however, they are viewed by their asset class, real assets, in our target asset allocation.

The expected long-term rate of return on plan assets was 8.0 % for 2023 and will be 8.0 % for 2024.

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Servco plans to contribute $ 25 million into its pension plan during 2024.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Estimated Future Benefit Payments

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For employees in Thrift Plan I, Servco matches 50 % of such employee contributions up to 8 % of eligible compensation and provides core contributions (based on years of service and age) to employees who do not participate in Servco’s Retirement Income Plan.

The amount expensed by Servco for employer matching contributions was $ 9 million for each of the years ended December 31, 2022, 2021 and 2020.

The amount expensed by Servco for employer matching contributions was $ 10 million for the year ended December 31, 2023, and $ 9 million for each of the years ended December 31, 2022 and 2021.

Pursuant to the OSA, Servco recognizes Operating Revenues for the reimbursement of these costs.

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• 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).

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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.

Current exposure

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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The following table shows the face value of PSEG Power’s outstanding guarantees, current exposure and margin positions as of December 31, 2023 and 2022.

As of December 31, 2022 As of December 31, 2021

As of December 31,

Face Value of Outstanding Guarantees $ 1,381 $ 1,601

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Additional cleanup work may be required depending on the results of these initial phases of work.

Occidental Chemical Corporation (Occidental) has voluntarily commenced design of the cleanup plan for the Lower 8.3 miles, and has received an EPA Unilateral Administrative Order directing it to design the cleanup plan for the Upper 9 miles.

It has filed two lawsuits against PSE&G and others to attempt to recover costs associated with this work and to obtain a declaratory judgement of parties’ shares of any future costs.

PSEG cannot predict the outcome of the litigation.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In December 2022, the EPA announced a proposed settlement with 85 parties who have agreed to pay $ 150 million to resolve their LPRSA CERCLA liability, in whole or in part.

The EPA has explained that the settlement was the outcome of an EPA-sponsored process where the EPA hired a cost allocator to recommend shares of LPRSA cleanup costs.

The allocator’s Final Allocation Recommendation Report is available on the EPA’s website, and the proposed settlement is subject to public comment and judicial review.

It is uncertain whether the settlement will be finalized as currently proposed, and the allocation did not address certain costs incurred by the EPA for which it may be entitled to reimbursement and which may be material.

PSE&G and PSEG Power are not included in the proposed settlement, but the EPA sent PSE&G, Occidental Chemical Corporation, and several other PRPs a letter in March 2022 inviting them to submit to the EPA individually or jointly an offer to fund or participate in the next stages of the remediation.

The EPA has announced a proposed settlement with 82 parties who have agreed to pay $ 150 million to resolve their LPRSA CERCLA liability, in whole or in part.

It is uncertain whether the settlement will be finalized as currently proposed.

PSE&G and PSEG Power are not included in the proposed settlement, but the EPA sent PSE&G, Occidental, and several other Potentially Responsible Parties (PRPs) a letter in March 2022 inviting them to submit to the EPA individually or jointly an offer to fund or participate in the next stages of the remediation.

PSEG submitted a good faith offer to the EPA in June 2022 on behalf of PSE&G and PSEG Power.

PSEG understands that the EPA is evaluating its offer.

The EPA may commence the next phases of remediation itself and seek to recover the costs from PSE&G or others, or it may take enforcement action to compel PSE&G or others to fund or participate in the remediation.

Occidental Chemical Corporation has commenced the design of the Lower 8.3 Record of Decision 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 Potentially Responsible Parties (PRPs), Tierra Solutions, Inc.

(Tierra) and Maxus Energy Corporation (Maxus), have filed for Chapter 11 bankruptcy.

The trust representing the creditors in this proceeding has filed a complaint asserting claims against Tierra’s and Maxus’ current and former parent entities, among others.

Any damages awarded may be used to fund the remediation of the LPRSA.

As of December 31, 2023, PSEG has approximately $ 66 million accrued for this matter.

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.

PSEG Power has an Environmental Costs 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.

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Hackensack River

In September 2022, the EPA announced it had designated the lower 18.75 miles of the Hackensack River a federal Superfund site.

In 2022, the EPA announced it had designated approximately 23 river miles of the Lower Hackensack River as a federal Superfund site.

PSE&G and certain of its predecessors conducted operations at properties in this area, including at the Hudson, Bergen and Kearny generating stations that were transferred to PSEG Power.

PSEG Power subsequently contractually transferred all land rights and structures on the Hudson generating station site to a third-party purchaser, along with the assumption of the environmental liabilities for that site.

The ultimate impact of this action on PSE&G and PSEG Power is currently unknown, but could be material.

In 2024, the EPA identified PSE&G and four other parties as PRPs for the site and requested that they voluntarily perform a technical study of a portion of the river designated as “Operable Unit 2.” The EPA estimates that the technical study will cost $55 million to complete.

The EPA may take enforcement action against parties that do not cooperate.

PSE&G and PSEG Power do not believe participation in the technical study will have a material impact on their results of operations and financial condition based upon EPA’s estimate of the study costs, however, future costs related to this matter could be material.

MGP Remediation Program

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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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

could range between $ 206 million and $ 226 million on an undiscounted basis, including its $ 53 million share for the Passaic River as discussed above.

Based on its current studies, PSE&G has determined that the estimated cost to remediate all MGP sites to completion could range between $ 199 million and $ 219 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 $ 199 million as of December 31, 2023.

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PSEG cannot determine at this time the magnitude of any impact on the Passaic River Superfund remedy.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Legacy Environmental Obligations at Former Fossil Generating Sites

PSEG Power has retained ownership of certain liabilities excluded from the 2022 sale of its fossil generation portfolio.

These liabilities primarily relate to obligations under the New Jersey Industrial Site Recovery Act (ISRA) and the Connecticut Transfer Act (CTA) to investigate and remediate PSEG Power’s two formerly owned generating station sites in Connecticut, and six formerly owned generating station sites in New Jersey.

These liabilities primarily relate to obligations under the New Jersey ISRA and the CTA to investigate and remediate PSEG Power’s two formerly owned generating station sites in Connecticut, and six formerly owned generating station sites in New Jersey.

In addition, PSEG Power still owns two former generating station sites in New Jersey that triggered ISRA in 2015.

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It will require multiple years and comprehensive environmental sampling to understand the extent of and to carry out the required remediation.

The full remediation costs at each of the ten sites are not estimable, but will likely be material.

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.

In June 2016, the NJDEP issued a final NJPDES permit for Salem.

At this stage in the remediation process, the full remediation costs are not estimable, but given the number and operating history of the facilities in the portfolio, the full remediation costs will likely be material in the aggregate.

The costs could potentially include costs for, among other things, excavating soil, implementation of institutional controls, and the construction, operation and maintenance of engineering controls.

Clean Water Act (CWA) Section 316(b) Rule

The EPA’s CWA Section 316(b) rule establishes requirements for the design and operation of cooling water intake structures at existing power plants and industrial facilities with a design flow of more than two million gallons of water per day.

In June 2016, the NJDEP issued a final New Jersey Pollutant Discharge Elimination System 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.

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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 and scheduled a hearing in September 2023.

The NJDEP granted the hearing request and may schedule a hearing after considering dispositive motions.

Jersey City, New Jersey Subsurface Feeder Cable Matter

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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.

The lawsuit in federal court to determine ultimate responsibility for the costs to address the leak among PSE&G, Con Edison and NADC has been resolved and is now dismissed.

BGS, BGSS and ZECs

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Pursuant to applicable BPU rules, PSE&G enters into the Supplier Master Agreements with the winners of these RSCP and CIEP BGS auctions to purchase BGS for PSE&G’s load requirements.

The winners of the RSCP and CIEP auctions are responsible for fulfilling all the requirements of a PJM load-serving entity including the provision of capacity, energy, ancillary

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

services and any other services required by PJM.

The winners of the RSCP and CIEP auctions are responsible for fulfilling all the requirements of a PJM load-serving entity including the provision of capacity, energy, ancillary services and any other services required by PJM.

BGS suppliers assume all volume risk and customer migration risk and must satisfy New Jersey’s renewable portfolio standards.

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The contract prices in dollars per MWh for the BGS-RSCP supply, as well as the approximate load, are as follows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2021 2022 2023 2024

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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 2024 and a significant portion through 2025 at Salem, Hope Creek and Peach Bottom.

PSEG Power’s minimum nuclear fuel commitments cover approximately 100 % of its estimated uranium, enrichment and fabrication requirements through 2026 and a significant portion through 2027 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.

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Natural Gas $ 1,329

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Pending FERC Matters

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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.

In 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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

periodically as required by New Jersey statutes/regulations.

Phase 1 of the audit reviews 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 is 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 data collection (written discovery and interviews) has concluded.

The BPU Audit Staff are in the process of finalizing their report.

Phase 2 is a comprehensive management audit, which addresses, 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.

The BPU Audit Staff submitted the final audit report to the BPU in June 2023.

The BPU is currently considering public comments on the audit report and has not yet determined which audit recommendations it will require PSE&G to implement.

It is not possible at this time to predict the outcome of this matter.

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However, in light of the inherent uncertainties involved in these matters, some of which are beyond PSEG’s control, and the large or indeterminate damages sought in some of these matters, an adverse outcome in one or more of these matters could be material to PSEG’s or PSE&G’s results of operations or liquidity for any particular reporting period.

Coronavirus 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 shut-offs for residential customers that was extended through March 15, 2022.

Although collections and shut-offs re-commenced in mid-March 2022, in late March 2022, New Jersey passed legislation that provided protection from shut-offs to customers who applied for payment assistance programs with those applying for assistance protected from shut-offs while awaiting their application determination.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PSE&G has deferred the impact of the COVID-19 costs for future recovery, and in December 2022, the BPU determined that the deferral period will end on March 15, 2023.

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 coronavirus pandemic is highly uncertain and cannot be predicted at this time.

Nuclear Insurance Coverages and Assessments

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As of December 31, 2023, nuclear sites were required to purchase $ 450 million of primary liability coverage for each site through ANI.

This coverage increased to $ 500 million effective January 1, 2024.

The primary layer is supplemented by an excess layer, which is an industry self-insurance pool.

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The current maximum aggregate annual retrospective premium obligation for PSEG Power is approximately $ 48 million.

NEIL requires its members to maintain an investment grade credit rating or to ensure collectability of their annual retrospective premium obligation by providing a financial guarantee, letter of credit, deposit premium, or some other means of assurance.

NEIL requires its members to maintain an

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

investment grade credit rating or to ensure collectability of their annual retrospective premium obligation by providing a financial guarantee, letter of credit, deposit premium, or some other means of assurance.

Certain provisions in the NEIL policies provide that the insurer may suspend coverage with respect to all nuclear units on a site without notice if the NRC suspends or revokes the operating license for any unit on that site, issues a shutdown order with respect to such unit or issues a confirmatory order keeping such unit down.

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However, NEIL policies are subject to an industry aggregate limit of $ 3.24 billion plus such additional amounts as NEIL recovers for such losses from reinsurance, indemnity and any other source applicable to such losses.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Debt and Credit Facilities

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1.60 % 2030 550 550

2.45 % 2031 750 750

8.63 % (A) 2031 96 96

2.45 % 2031 750 750

6.13 % 2033 400 —

Total Senior Notes 4,396 4,146

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2.70 % 2050 375 375

2.05 % 2050 375 375

3.00 % 2051 450 450

5.13 % 2053 400 —

5.45 % 2053 400 —

Total MTNs 13,750 12,775

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Long-Term Debt Financing Transactions

During 2022, PSEG and its subsidiaries had the following Long-Term Debt issuances and maturity:

• issued $ 700 million of 5.85 % Senior Notes due November 2027, and

During 2023, the following long-term debt transactions occurred:

• issued $ 600 million of 5.88 % Senior Notes due October 2028,

• issued $ 400 million of 6.13 % Senior Notes due October 2033, and

• retired $ 750 million of 0.84 % Senior Notes at maturity.

• issued $ 500 million of 3.10 % Secured Medium-Term Notes, Series P, due March 2032, and

• issued $ 400 million of 4.90 % Secured Medium-Term Notes, Series P, due December 2032.

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

• issued $ 500 million of 4.65 % Secured Medium-Term Notes (Green Bond), Series P, due March 2033,

• issued $ 400 million of 5.13 % Secured Medium-Term Notes (Green Bond), Series P, due March 2053,

• issued $ 500 million of 5.20 % Secured Medium-Term Notes, Series P, due August 2033,

• issued $ 400 million of 5.45 % Secured Medium-Term Notes, Series P, due August 2053,

• retired $ 500 million of 2.38 % Secured Medium-Term Notes, Series I, at maturity, and

• retired $ 325 million of 3.25 % Secured Medium-Term Notes, Series M, at maturity.

Short-Term Liquidity

PSEG meets its short-term liquidity requirements, as well as those of PSEG Power, primarily through the issuance of commercial paper and, from time to time, short-term loans.

PSE&G maintains its own separate commercial paper program to meet its short-term liquidity requirements.

Each commercial paper program is fully back-stopped by its own separate credit facilities.

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

The Master Credit Facility extends the maturity

PSE&G maintains its own separate commercial paper program to

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

of the existing credit agreements through March 2027 and provides for $ 2.75 billion of credit capacity, with an initial PSEG sub-limit of $ 1.5 billion and an initial PSEG Power sub-limit of $ 1.25 billion.

Sub-limits can be adjusted subject to the terms of the Master Credit Facility.

The PSEG sub-limit includes a sustainability linked pricing based mechanism with potential increases or decreases, which are not expected to be material, depending on performance relative to targeted methane emission reductions.

meet its short-term liquidity requirements.

Each commercial paper program is fully back-stopped by its own separate credit facility.

The commitments under the $ 4.0 billion credit facilities are provided by a diverse bank group.

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As of December 31, 2023, no single institution represented more than 10 % of the total commitments in the credit facilities.

As of December 31, 2022, the total credit capacity was in excess of the anticipated maximum liquidity requirements over PSEG’s 12-month planning horizon, including access to external financing to meet redemptions.

As of December 31, 2023, PSEG’s liquidity position, including credit facilities and access to external financing, was expected to be sufficient to meet its projected stressed requirements over a 12-month planning horizon.

Each of the credit facilities is restricted as to availability and use to the specific companies as listed in the following table;

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Letter of Credit Facility 200 83 117 Sept 2024 Letters of Credit

Letter of Credit Facility 100 26 $ 74 Apr 2025 Letters of Credit

Total PSEG Power $ 1,525 $ 188 $ 1,337

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

sub-limits can be adjusted pursuant to the terms of the Master Credit Facility agreement.

(B) The primary use of PSEG’s and PSE&G’s credit facilities is to support their respective Commercial Paper Programs, under which as of December 31, 2023, PSEG had $ 25 million outstanding at a weighted average interest rate of 5.60 %.

PSE&G had no Commercial Paper outstanding as of December 31, 2022.

PSE&G had $ 425 million Commercial Paper outstanding at a weighted average interest rate of 5.57 %.

In September 2022, a subsidiary of PSEG Power entered into an uncommitted credit facility for $ 200 million, which can be drawn to fund its cash collateral postings.

As of December 31, 2022, there were no amounts outstanding under this facility.

PSEG Power has an uncommitted credit facility for $ 100 million, which can be utilized for letters of credit.

A subsidiary of PSEG Power has an uncommitted credit facility for $ 150 million, which can be utilized for cash collateral postings.

As of December 31, 2023, there was an immaterial amount outstanding under these facilities.

Debt Covenants

PSEG Power’s existing credit agreements contain covenants restricting the ability of PSEG Power and its subsidiaries that guarantee its indebtedness from consummating certain mergers, consolidations or asset sales.

Net Cash Collateral Postings

During the second half of 2021 and continuing throughout 2022, forward energy prices have demonstrated considerable price volatility and have increased dramatically.

This has led to significantly higher variation in PSEG Power’s daily collateral requirements which have also increased substantially over that time period for hedge positions that are out-of-the money.

PSEG Power’s net cash collateral postings related to these hedge positions increased from $ 343 million at the end of June 2021 to $ 1.5 billion at the end of December 2022.

Subsequent to December 2022, collateral postings have decreased but PSEG Power continued to experience significant fluctuations in its daily collateral requirements.

Net cash collateral postings were approximately $ 700 million as of February 17, 2023.

As historical lower-priced trades continue to settle through 2024,

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

collateral is expected to be returned as PSEG Power satisfies its obligations under those contracts.

Proceeds from the sale of Fossil, the closing of a $ 1.25 billion term loan in March 2022 at PSEG Power, and short-term borrowings at PSEG have contributed to available liquidity to help support PSEG Power’s collateral requirements in 2022.

Short-Term Loans

In March and May 2021, PSEG entered into two 364-day variable rate term loan agreements for $ 500 million and $ 750 million, respectively.

In August 2021, PSEG entered into a $ 1.25 billion 364-day variable rate term loan agreement.

In March 2022, the $ 500 million term loan matured and PSEG repaid the $ 750 million term loan due in May 2022.

In July 2022, PSEG repaid the $ 1.25 billion term loan due in August 2022.

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

In January 2023, PSEG repaid $ 750 million of the $ 1.5 billion term loan due in April 2023.

In January 2023, PSEG repaid $ 750 million of the $ 1.5 billion 364-day variable rate term loan that was issued in April 2022 and in April 2023 the remaining $ 750 million matured.

In April 2023, PSEG entered into a new 364-day variable rate term loan agreement for $ 750 million.

In May 2023, PSEG’s $ 500 million 364-day variable rate term loan matured.

In August 2023, PSEG repaid $ 250 million of the $ 750 million 364-day variable rate term loan that was issued in April 2023.

Fair Value of Debt

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

The estimated fair values, carrying amounts and methods used to determine the fair values of long-term debt as of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023 and 2022 are included in the following table and accompanying notes as of December 31, 2023 and 2022.

Fair Value Measurements for more information on fair value guidance and the hierarchy that prioritizes the inputs to fair value measurements into three levels.

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As of December 31, 2023, PSE&G had an aggregate of 7.5 million shares of $ 100 par value and 10 million shares of $ 25 par value Cumulative Preferred Stock, which were authorized and unissued and which, upon issuance, may or may not provide for mandatory sinking fund redemption.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Financial Risk Management Activities

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These alternative permissible treatments include NPNS cash flow hedge and fair value hedge accounting.

PSEG and PSE&G have applied the NPNS scope exception to certain derivative contracts for the forward sale of generation, power procurement agreements and fuel agreements.

PSEG uses interest rate swaps and other derivatives, which are designated and qualifying as cash flow or fair value hedges.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

expected generation.

PSEG Power also uses derivatives to hedge a portion of its anticipated BGSS obligations with PSE&G.

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Commitments and Contingent Liabilities.

In December 2022, PSEG sold seven tranches of a physical load transaction that previously had qualified for NPNS resulting in a taint of our physical load portfolio since it was determined that the transaction no longer met the scope exception.

As such, the fair value of the remaining open positions resulted in a loss of $ 38 million recorded in earnings.

Additionally, prospective changes in the fair market value of these derivative contracts are recorded in earnings.

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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.

As of December 31, 2022, PSEG had interest rate hedges outstanding totaling $ 1.05 billion that were executed during the latter half of 2022.

PSEG executed these interest rate swaps to convert PSEG Parent’s $ 500 million variable rate term loan due May 2023 and a portion of PSEG Power’s $ 1.25 billion variable rate term loan due March 2025 into fixed rate loans.

The fair value of these hedges was $1 million as of December 31, 2022 and there were no outstanding interest rate hedges as of December 31, 2021.

In October 2022, PSEG also entered into three Treasury lock agreements with a notional amount of $ 350 million to fix the Treasury yield component of the interest cost of financing associated with a then anticipated long-term debt issuance.

The associated long-term debt of $ 700 million was priced on November 4, 2022, and PSEG elected, in accordance with the terms of the Treasury lock agreements, to settle these agreements with an immaterial cash payment to the counterparties which PSEG expensed.

As of December 31, 2023, PSEG had interest rate hedges outstanding totaling $ 1.4 billion which were executed to convert $ 900 million of PSEG Power’s $ 1.25 billion variable rate term loan due March 2025 and PSEG’s $ 500 million variable rate term loan due April 2024 into fixed rate loans.

The fair value of these hedges was a net $ 5 million and $ 1 million as of December 31, 2023 and 2022, respectively.

In the third quarter of 2023, PSEG entered into interest rate treasury locks totaling $ 800 million to fix the interest rate for a portion of an anticipated $1 billion long-term debt issuance that occurred in October 2023.

The settlement payment of $ 17 million for these treasury locks was recorded in Accumulated Other Comprehensive Income (Loss) and will be amortized into earnings to match the term and timing of the hedged debt.

In the fourth quarter of 2023, PSEG entered into interest rate treasury locks totaling $ 600 million to fix the interest rate for a portion of an anticipated long-term debt issuance.

As of December 31, 2023, these treasury locks had a fair value of $( 16 ) million.

The Accumulated Other Comprehensive Income (Loss) (after tax) related to outstanding and terminated interest rate derivatives designated as cash flow hedges was $ 3 million and $( 3 ) million as of December 31, 2023 and December 31, 2022, respectively.

The after-tax unrealized losses on these hedges expected to be reclassified to earnings during the next 12 months are immaterial.

The after-tax unrealized gains on these hedges expected to be reclassified to earnings during the next 12 months are $ 3 million.

Fair Values of Derivative Instruments

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Substantially all derivative instruments are contracts subject to master netting agreements.

Contracts not subject to master

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

netting or similar agreements are immaterial and did not have any collateral posted or received as of December 31, 2022 and 2021.

Contracts not subject to master netting or similar agreements are immaterial and did not have any collateral posted or received as of December 31, 2023 and 2022.

The following tabular disclosure does not include the offsetting of trade receivables and payables.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2023

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Balance Sheet Location Interest

Swaps Energy-

Derivatives Energy-

Contracts Netting

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As of December 31, 2022

PSEG Power Consolidated

Not Designated

Balance Sheet Location Energy-

PSEG PSEG Power Consolidated

Hedges Not Designated

Balance Sheet Location Interest

Derivatives Energy-

Contracts Netting

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Of these net cash collateral (receipts) payments, $ 22 million as of December 31, 2023 and $ 1,111 million as of December 31, 2022 were netted against the corresponding net derivative contract positions.

Of the $ 22 million as of December 31, 2023, $( 1 ) million was netted against current assets, $ 15 million was netted against current liabilities and $ 8 million was netted against noncurrent liabilities.

Of the $ 1,111 million as of December 31, 2022, $ 616 million was netted against current liabilities and $ 495 million was netted against noncurrent liabilities.

Of the $ 615 million as of December 31, 2021, $( 30 ) million was netted against current assets, $(13) million was netted against non-current assets, $323 million was netted against current liabilities and $ 335 million was netted against noncurrent liabilities.

Certain of PSEG Power’s derivative instruments contain provisions that require PSEG Power to post collateral.

This collateral may be posted in the form of cash or credit support with thresholds contingent upon PSEG Power’s credit rating from each of

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

the major credit rating agencies.

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 two level downgrade from its current Moody’s and S&P ratings.

A below investment grade credit rating for PSEG

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Power would represent a two level downgrade from its current Moody’s and S&P ratings.

This incremental collateral requirement can offset collateral requirements related to other derivative instruments that are assets with the same counterparty, where the contractual right of offset exists under applicable master agreements.

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Millions Millions

Interest Rate Swaps $ — $ — $ ( 6 ) Interest Expense $ ( 5 ) $ ( 4 ) $ ( 14 )

Interest Rate Derivatives $ 13 $ — $ — Interest Expense $ 5 $ ( 5 ) $ ( 4 )

Total $ 13 $ — $ — $ 5 $ ( 5 ) $ ( 4 )

The effect of interest rate cash flow hedges is recorded in Interest Expense in PSEG’s Consolidated Statement of Operations.

For the year ended December 31, 2022, the amount of loss on interest rate hedges reclassified from Accumulated Other Comprehensive Income (Loss) into income was $ 3 million, $ 3 million and $ 10 million after tax as of December 31, 2022, 2021 and 2020, respectively.

The amount of gain (loss) on interest rate hedges reclassified from Accumulated Other Comprehensive Income (Loss) into income was $ 3 million, $( 3 ) million and $( 3 ) million after tax as of December 31, 2023, 2022 and 2021, respectively.

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

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Balance as of December 31, 2022 $ ( 4 ) $ ( 3 )

Loss Recognized in AOCI — —

Loss Reclassified into Income 5 3

Gain Recognized in AOCI 13 9

Gain Reclassified into Income ( 5 ) ( 3 )

Balance as of December 31, 2023 $ 4 $ 3

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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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Total $ 1,567 $ ( 1,746 ) $ ( 867 )

The amounts for the year ended December 31, 2021 in the above table have been revised from amounts reported in our December 31, 2021 Form 10-K to correct a typographical error for which Operating Revenues were inadvertently presented as a gain and Operating Expenses as a loss.

This correction has no impact on the previously reported consolidated financial statements as of and for the year ended December 31, 2021.

The following table summarizes the net notional volume purchases/(sales) of open derivative transactions by commodity as of December 31, 2023 and 2022.

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Type Notional 2023 2022

Natural Gas Dekatherm (Dth) 49 47

Natural Gas Dekatherm 66 49

Electricity MWh ( 60 ) ( 60 )

Financial Transmission Rights (FTRs) MWh 24 27

Interest Rate Swaps U.S.

Financial Transmission Rights MWh 19 24

Interest Rate Derivatives U.S.

Dollars 2,000 1,050

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PSE&G’s BGS suppliers’ credit exposure is calculated each business day.

As of December 31, 2022, PSE&G had unsecured credit exposure of $ 102 million with its suppliers.

As of December 31, 2022, PSE&G had no net credit exposure with PSEG Power.

As of December 31, 2023, PSE&G had no unsecured mark-to-market credit exposure with its suppliers.

PSE&G is permitted to recover its costs of procuring energy through the BPU-approved BGS tariffs.

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Energy-Related Contracts (B) $ 135 $ ( 1,217 ) $ 13 $ 1,339 $ —

Interest Rate Swaps (C) $ 4 $ — $ — $ 4 $ —

Interest Rate Derivatives (C) $ 6 $ — $ — $ 6 $ —

Equity Securities $ 1,310 $ — $ 1,310 $ — $ —

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Energy-Related Contracts (B) $ ( 75 ) $ 1,239 $ ( 1 ) $ ( 1,311 ) $ ( 2 )

Interest Rate Swaps (C) $ ( 3 ) $ — $ — $ ( 3 ) $ —

Interest Rate Derivatives (C) $ ( 17 ) $ — $ — $ ( 17 ) $ —

Cash Equivalents (A) $ 20 $ — $ 20 $ — $ —

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Energy-Related Contracts (B) $ 29 $ ( 2,321 ) $ 42 $ 2,307 $ 1

Interest Rate Derivatives (C) $ 4 $ — $ — $ 4 $ —

Equity Securities $ 1,072 $ — $ 1,072 $ — $ —

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Energy-Related Contracts (B) $ ( 154 ) $ 3,432 $ ( 3 ) $ ( 3,537 ) $ ( 46 )

Interest Rate Derivatives $ ( 3 ) $ — $ — $ ( 3 ) $ —

Cash Equivalents (A) $ 165 $ — $ 165 $ — $ —

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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) Interest rate swaps are valued using quoted prices on commonly quoted intervals, which are interpolated for periods different than the quoted intervals, as inputs to a market valuation model.

See “Additional Information Regarding Level 3 Measurements” for more information on the utilization of unobservable inputs.

(C) Interest rate derivatives are valued using quoted prices on commonly quoted intervals, which are interpolated for periods different than the quoted intervals, as inputs to a market valuation model.

Market inputs can generally be verified and model selection does not involve significant management judgement.

(D) As of December 31, 2022 and 2021, the fair value measurement table excludes cash and foreign currency of $ 2 million in the NDT Fund.

The NDT Fund maintains investments in various equity and fixed income securities.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Rabbi Trust maintains investments in a Russell 3000 index fund and various fixed income securities.

(D) As of December 31, 2023 and 2022, the fair value measurement table excludes cash and foreign currency of $ 1 million and $ 2 million, respectively, in the NDT Fund.

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).

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The type of equity award that is granted and the details of that award may vary from time to time and is subject to the approval of the Organization and Compensation Committee of PSEG’s Board of Directors (O&CC), the LTIP’s administrative committee.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The 2021 LTIP currently provides for the issuance of equity awards with respect to 8 million shares of common stock.

As of December 31, 2023, approximately 7 million shares were available for future awards under the 2021 LTIP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In addition, on April 20, 2021 shareholders approved the PSEG 2021 Equity Compensation Plan for Outside Directors (2021 BOD Plan) and the PSEG 2007 Equity Compensation Plan for Outside Directors (2007 BOD Plan) was closed to new awards.

Under the 2021 BOD Plan, the only equity instrument which may be granted are Restricted Stock Units (RSUs) and the Board member must defer the award until they have achieved their stock ownership requirement.

Under the 2021 BOD Plan, the only equity instrument which may be granted are RSUs and the Board member must defer the award until they have achieved their stock ownership requirement.

Stock Options

Under the 2021 LTIP, non-qualified options to acquire shares of PSEG common stock may be granted to officers and other key employees selected by the O&CC.

Option awards are granted with an exercise price equal to the market price of PSEG’s common stock at the grant date.

The options generally vest over four years of continuous service.

Vesting schedules may be accelerated upon the occurrence of certain events, such as a change-in-control (unless substituted with an equity award of equal value), retirement, death or disability.

Options are exercisable over a period of time designated by the O&CC (but not prior to one year or longer than ten years from the date of grant) and are subject to such other terms and conditions as the O&CC determines.

Payment by option holders upon exercise of an option may be made in cash or, with the consent of the O&CC, by delivering previously acquired shares of PSEG common stock.

No options have been granted since 2009.

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Under the LTIPs, PSEG has granted PSUs to officers and other key employees.

These provide for distribution in shares of PSEG common stock based on achievement of certain financial goals over a performance period of three years .

Following the end of the performance period, the payout varies from 0 % to 200 % of the number of PSUs granted depending on PSEG’s performance with respect to certain financial targets, including targets related to comparative performance against other companies in a peer group of energy companies.

These provide for distribution in shares of PSEG common stock based on achievement of certain goals over a performance period of three years .

Following the end of the performance period, the payout varies from 0 % to 200 % of the number of PSUs granted depending on PSEG’s performance with respect to those goals.

The PSUs are credited with DEUs proportionate to the dividends paid on PSEG common stock.

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Stock-Based Compensation

PSEG recognizes compensation expense for stock options based on their grant date fair values, which are determined using the Black-Scholes option-pricing model.

Stock option awards are expensed on a tranche-specific basis over the requisite service period of the award.

Ultimately, compensation expense for stock options is recognized for awards that vest.

PSEG recognizes compensation expense for RSUs over the vesting period based on the grant date fair value of the shares, which is equal to the closing market price of PSEG’s common stock on the date of the grant.

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The accrual of compensation cost is based on the probable achievement of the performance conditions, which result in a payout from 0 % to 200 % of the initial grant.

PSEG recognizes compensation expense for the return on invested capital target for its PSUs based on the grant date fair value of the awards, which is equal to the market price of PSEG’s common stock on the date of the grant.

PSEG recognizes compensation expense for all other components of its PSUs based on the grant date fair value of the awards, which is equal to the market price of PSEG’s common stock on the date of the grant.

The accrual during the year of grant is estimated at 100 % of the original grant.

Such accrual may be adjusted to reflect the actual outcome.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2023 2022 2021

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Income Tax Benefit Recognized in Consolidated Statement of Operations $ 5 $ 8 $ 8

For each of the years 2022, 2021 and 2020, PSEG also recorded excess tax benefits of $ 2 million.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For each of the years 2023, 2022 and 2021, PSEG also recorded excess tax benefits of $ 22 million, $ 2 million and $ 2 million, respectively.

PSEG recognizes compensation cost of awards issued over the shorter of the original vesting period or the period beginning on the date of grant and ending on the date an individual is eligible for retirement and the award vests.

Stock Options

There were no stock options granted or vested in 2022, 2021 and 2020.

Changes in RSUs for the year ended December 31, 2023 are summarized as follows:

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Outside Directors

Under the closed 2007 BOD Plan and the new 2021 BOD Plan, annually, on the first business day of May, each non-employee member of the Board of Directors is awarded stock units based on the amount of annual compensation to be paid at the closing

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

price of PSEG common stock on that date.

DEUs are credited quarterly and distributions will occur as specified by their election in accordance with the provisions of the BOD Plan.

The fair value of these awards is recorded as compensation expense in the Consolidated Statements of Operations.

Compensation expense for the plan was $ 2 million for the year ended December 31, 2022, and immaterial for each of the years ended December 31, 2021 and 2020.

Compensation expense for the plan was $ 2 million for the years ended December 31, 2023 and 2022, and immaterial for the year ended December 31, 2021.

PSEG maintains an ESPP for all eligible employees of PSEG and its subsidiaries.

Under the ESPP, shares of PSEG common stock may be purchased at 95 % of the fair market value for represented employees and 90 % for non-represented employees through payroll deductions.

Under the ESPP, shares of PSEG common stock may be purchased at 95 % of the fair market value for represented employees and 90 % for non-represented employees

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

through payroll deductions.

Dividends are to be paid out in cash unless the participant elects the dividends to be reinvested at fair market price.

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In any year, employees may purchase shares having a value not exceeding 10 % of their base pay.

Compensation expense recognized under this program was $ 2 million for each of the years ended December 31, 2022 and 2021 and $ 1 million for the year ended December 31, 2020.

Compensation expense recognized under this program was $ 2 million for each of the years ended December 31, 2023, 2022 and 2021.

During the years ended December 31, 2023, 2022 and 2021, employees purchased 339,807 shares, 321,429 shares and 326,634 shares, respectively, at an average price of $ 55.84 , $ 57.72 and $ 56.87 per share, respectively.

As of December 31, 2023, 1.2 million shares were available for future issuance under this plan.

Other Income (Deductions)

Net Other Income (Deductions)

PSE&G PSEG Power & Other (A) Consolidated

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Solar Loan Interest 7 — 7

Other Interest 12 34 46

Donations ( 1 ) — ( 1 )

Purchases of Tax Losses under New Jersey Technology Tax Benefit Transfer Program — ( 27 ) ( 27 )

Other 2 ( 10 ) ( 8 )

Total Other Income (Deductions) $ 88 $ 36 $ 124

Total Net Other Income (Deductions) $ 80 $ 92 $ 172

Year Ended December 31, 2022

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Solar Loan Interest 10 — 10

Other Interest 9 12 21

Donations — ( 1 ) ( 1 )

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Other 4 ( 10 ) ( 6 )

Total Other Income (Deductions) $ 88 $ 10 $ 98

Total Net Other Income (Deductions) $ 88 $ 36 $ 124

Year Ended December 31, 2021

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Solar Loan Interest 13 — 13

Other Interest 1 6 7

Donations ( 1 ) ( 21 ) ( 22 )

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Other 4 ( 15 ) ( 11 )

Total Other Income (Deductions) $ 108 $ 7 $ 115

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

Total Net Other Income (Deductions) $ 88 $ 10 $ 98

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

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Operating Income:

Current (Benefit) Expense:

Current Expense (Benefit):

Federal $ 144 $ 262 $ 407

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Bad Debt 57 66

Related to Uncertain Tax Positions 1 30

Corporate Alternative Minimum Tax (CAMT) Credit Carryforward 44 —

Operating Leases 42 42

Other 129 379

Total Noncurrent Assets $ 951 $ 944

Total Assets $ 669 $ 951

Plant-Related Items $ 4,850 $ 4,663

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Other 430 324

Total Noncurrent Liabilities $ 6,606 $ 6,626

Total Liabilities $ 7,277 $ 6,606

Summary of Accumulated Deferred Income Taxes:

Net Noncurrent Deferred Income Tax Liabilities $ 5,655 $ 5,682

Net Total Noncurrent Deferred Income Taxes and ITC $ 5,725 $ 5,759

Net Deferred Income Tax Liabilities $ 6,608 $ 5,655

Net Total Deferred Income Taxes and ITC $ 6,671 $ 5,725

The deferred tax effect of certain assets and liabilities is presented in the table above net of the deferred tax effect associated with the respective regulatory deferrals.

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Operating Income:

Current (Benefit) Expense:

Current Expense (Benefit):

Federal $ 127 $ 130 $ 208

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Tax Credits ( 9 ) ( 9 ) ( 8 )

Audit Settlement — ( 1 ) ( 2 )

GPRC-CEF-EE ( 52 ) ( 37 ) ( 13 )

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Bad Debt Flow-Through ( 9 ) ( 1 ) 27

Other — 1 ( 2 )

Subtotal ( 192 ) ( 118 ) ( 48 )

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

T he following is an analysis of deferred income taxes for PSE&G:

The following is an analysis of deferred income taxes for PSE&G:

As of December 31,

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Regulatory Liability Excess Deferred Tax $ 339 $ 390

Related to Uncertain Tax Positions 3 —

CAMT Credit Carryforward 106 —

Bad Debt 57 66

Operating Leases 22 19

Total Noncurrent Assets $ 573 $ 644

Total Assets $ 612 $ 573

Plant-Related Items $ 4,396 $ 4,174

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Operating Leases 21 18

Related to Uncertain Tax Positions — 1

Other 297 223

Total Noncurrent Liabilities $ 5,851 $ 5,442

Total Liabilities $ 6,361 $ 5,851

Summary of Accumulated Deferred Income Taxes:

Net Noncurrent Deferred Income Tax Liabilities $ 5,278 $ 4,798

Net Total Noncurrent Deferred Income Taxes and ITC $ 5,348 $ 4,874

Net Deferred Income Tax Liabilities $ 5,749 $ 5,278

Net Total Deferred Income Taxes and ITC $ 5,813 $ 5,348

The deferred tax effect of certain assets and liabilities is presented in the table above net of the deferred tax effect associated with the respective regulatory deferrals.

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Among other provisions, the CARES Act allows a five-year carryback of any net operating loss (NOL) generated in a taxable year beginning after December 31, 2017, and before January 1, 2021.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In April 2020, the IRS issued a private letter ruling to PSE&G concluding that certain excess deferred taxes previously classified as protected should be classified as unprotected.

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In July 2020, FERC and the BPU approved PSE&G’s requests to refund these unprotected excess deferred income taxes to customers.

FERC approved the refund of these unprotected excess deferred income taxes within the 2019 true-up filing.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

approved the refund of these unprotected excess deferred income taxes within the 2019 true-up filing.

The BPU approved the refund of these unprotected excess deferred income taxes beginning in July 2020 through December 31, 2024.

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In August 2022, the IRA was signed into law.

The IRA made certain changes to existing energy tax credit laws and enacted a new 15% corporate alternative minimum tax, effective in 2023.

The IRA made certain changes to existing energy tax credit laws and enacted a new 15% CAMT, effective in 2023.

For 2023, PSEG and PSE&G have recorded its best estimate of the impact of the CAMT.

To the extent the CAMT exceeds the regular tax liability, the difference can be indefinitely carried forward to reduce regular tax liability in years that it exceeds the CAMT.

PSEG and PSE&G anticipate the excess CAMT will be used in the future and will not result in an impact to PSEG’s or PSE&G’s income statement.

Changes to the energy tax credit laws include:

increases to the PTC rate, a new PTC for electricity generation using nuclear energy, expanded technologies that are eligible for energy tax credits, and the transferability of the energy tax credits.

Early Plant Retirements/Asset Dispositions and Impairments for additional information on the nuclear PTC.

Since the enactment of the IRA, the U.S.

Treasury issued various Notices that provide interim guidance on several provisions of the IRA.

The Notices state that the U.S.

Treasury anticipates issuing additional guidance and proposed and final regulations.

Until the U.S.

Treasury issues additional clarity to many of the provisions, the impact that the IRA will have on PSEG’s and PSE&G’s financial statements is not determinable.

effective 2024 through 2032 a new PTC for existing nuclear generation facilities, effective 2025 a new technology neutral energy tax credit, which includes new nuclear units and increases to nuclear generation capacity, and effective 2023 the transferability of the energy tax credits.

The PTC is designed to phase down as the nuclear facilities’ gross receipts increase.

The PTC can be increased by five times if the prevailing wages rules are met.

The PTC rate and phase down amount are subject to the IRS’ determination of annual inflation.

Despite the issuance of proposed regulations and various Notices that provide interim guidance on several provisions of the IRA many aspects of the IRA, including the PTC for existing nuclear generation facilities and the CAMT, remain unclear and are in need of further guidance;

therefore, the impact of several provisions of the IRA will have on PSEG's and PSE&G's financial statements is subject to continued evaluation.

The enactment of additional federal or state tax legislation and clarification of previously enacted tax laws could impact PSEG’s and PSE&G’s financial statements.

In April 2023, the U.S.

Treasury issued Revenue Procedure 2023-15 that provides a safe harbor method of accounting to determine the annual repair tax deduction for gas T&D property.

The impact, if any, this may have on PSEG and PSE&G’s financial statements is subject to continued evaluation and has not yet been determined.

As of December 31, 2023, PSEG had a $ 33 million state NOL and PSE&G had a $ 71 million New Jersey Corporate Business Tax NOL that are both expected to be fully realized in the future.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PSEG recorded the following amounts related to its unrecognized tax benefits, which were primarily comprised of amounts recorded for PSE&G and PSEG’s other subsidiaries:

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Total Amount of Unrecognized Tax Benefits that if Recognized, would Impact the Effective Tax Rate (including Interest and Penalties) $ 79 $ 2

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2022 PSEG PSE&G

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Total Amount of Unrecognized Tax Benefits that if Recognized, would Impact the Effective Tax Rate (including Interest and Penalties) $ 85 $ 6

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2021 PSEG PSE&G

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Total Amount of Unrecognized Tax Benefits that if Recognized, would Impact the Effective Tax Rate (including Interest and Penalties) $ 109 $ 5

In 2020, the IRS approved PSEG’s nuclear carryback claim and federal tax returns for the years 2011 through 2016.

In 2022, the IRS approved PSEG’s 2018 carryback claim, which resulted in the closure of PSEG’s federal tax years through 2018.

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These potential increases or decreases are as follows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Possible Decrease in Total Unrecognized Tax Benefits Over the next

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New York 2017-2022 N/A

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accumulated Other Comprehensive Income (Loss), Net of Tax

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Balance as of December 31, 2023 $ 3 $ ( 102 ) $ ( 80 ) $ ( 179 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PSEG Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) to Income Statement

PSEG Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) to Statement of Operations

Year Ended December 31, 2021

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Cash Flow Hedges

Interest Rate Swaps Interest Expense $ ( 14 ) $ 4 $ ( 10 )

Interest Rate Derivatives Interest Expense $ ( 4 ) $ 1 $ ( 3 )

Total Cash Flow Hedges ( 4 ) 1 ( 3 )

Pension and OPEB Plans

Amortization of Prior Service (Cost) Credit Non-Operating Pension and OPEB Credits (Costs) 24 ( 7 ) 17

Amortization of Actuarial Loss Non-Operating Pension and OPEB Credits (Costs) ( 40 ) 11 ( 29 )

Amortization of Prior Service (Cost) Credit Net Non-Operating Pension and OPEB Credits (Costs) 21 ( 6 ) 15

Amortization of Actuarial Loss Net Non-Operating Pension and OPEB Credits (Costs) ( 41 ) 12 ( 29 )

Total Pension and OPEB Plans ( 20 ) 6 ( 14 )

Available-for-Sale Securities

Realized Gains (Losses) and Impairments Net Gains (Losses) on Trust Investments 42 ( 16 ) 26

Realized Gains (Losses) Net Gains (Losses) on Trust Investments 9 ( 3 ) 6

Total Available-for-Sale Securities 9 ( 3 ) 6

Total $ ( 15 ) $ 4 $ ( 11 )

PSEG Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) to Income Statement

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PSEG Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) to Statement of Operations

Year Ended December 31, 2022

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Cash Flow Hedges

Interest Rate Swaps Interest Expense $ ( 4 ) $ 1 $ ( 3 )

Interest Rate Derivatives Interest Expense $ ( 5 ) $ 2 $ ( 3 )

Total Cash Flow Hedges ( 5 ) 2 ( 3 )

Pension and OPEB Plans

Amortization of Prior Service (Cost) Credit Non-Operating Pension and OPEB Credits (Costs) 21 ( 6 ) 15

Amortization of Actuarial Loss Non-Operating Pension and OPEB Credits (Costs) ( 41 ) 12 ( 29 )

Amortization of Prior Service (Cost) Credit Net Non-Operating Pension and OPEB Credits (Costs) 21 ( 6 ) 15

Amortization of Actuarial Loss Net Non-Operating Pension and OPEB Credits (Costs) ( 22 ) 6 ( 16 )

Total Pension and OPEB Plans ( 1 ) — ( 1 )

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Total $ ( 49 ) $ 19 $ ( 30 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PSEG Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) to Income Statement

PSEG Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) to Statement of Operations

Year Ended December 31, 2023

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Cash Flow Hedges

Interest Rate Swaps Interest Expense $ ( 5 ) $ 2 $ ( 3 )

Interest Rate Derivatives Interest Expense $ 5 $ ( 2 ) $ 3

Total Cash Flow Hedges 5 ( 2 ) 3

Pension and OPEB Plans

Amortization of Prior Service (Cost) Credit Non-Operating Pension and OPEB Credits (Costs) 21 ( 6 ) 15

Amortization of Actuarial Loss Non-Operating Pension and OPEB Credits (Costs) ( 22 ) 6 ( 16 )

Amortization of Prior Service (Cost) Credit Net Non-Operating Pension and OPEB Credits (Costs) 8 ( 2 ) 6

Amortization of Actuarial Loss Net Non-Operating Pension and OPEB Credits (Costs) ( 20 ) 6 ( 14 )

Pension Settlement Charge Net Non-Operating Pension and OPEB Credits (Costs) ( 334 ) 94 ( 240 )

Total Pension and OPEB Plans ( 346 ) 98 ( 248 )

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Total $ ( 307 ) $ 82 $ ( 225 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Earnings Per Share (EPS) and Dividends

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Net Income (Loss) $ 5.15 $ 5.13 $ 2.07 $ 2.06 $ ( 1.29 ) $ ( 1.29 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Approximately 3 million potentially dilutive shares were excluded from total shares used to calculate the diluted loss per share for the year ended December 31, 2021, as their impact was antidilutive.

From time to time, PSEG may repurchase shares to satisfy obligations under equity compensation awards and repurchase shares to satisfy purchases by employees under the ESPP.

For additional information on all the types of long-term incentive awards, see Note 18.

Stock Based Compensation.

From time to time, PSEG may repurchase shares to satisfy obligations under equity compensation awards and repurchase shares to satisfy purchases by employees under the ESPP.

In December 2022, for such purposes, PSEG entered into a share repurchase plan that complies with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended.

There were no common share repurchases in the open market during the fourth quarter of 2022.

In September 2021, PSEG announced a $ 500 million share repurchase program, authorized by the Board of Directors.

In December 2021, under this authorization PSEG entered into an open market share repurchase plan for $ 250 million of its common shares.

During January and through mid-February 2022, PSEG purchased the full $ 250 million of common stock under the open market share repurchase plan, representing approximately 3.8 million shares.

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

Under the ASR Agreement, PSEG received initial delivery of approximately 3.0 million shares of common stock in mid-March, representing approximately 80 % of the total number of shares of common stock initially underlying the ASR Agreement.

In mid-May 2022, the investment banking firm exercised its right to accelerate the termination of the contract pursuant to the terms of the ASR Agreement and PSEG received approximately 0.6 million shares, representing the balance of the shares owed to PSEG under the ASR Agreement.

Through the open market share repurchase plan and an accelerated share repurchase program, the $ 500 million share repurchase program authorized in September 2021 was completed, resulting in an aggregate repurchase of approximately 7.4 million shares.

During 2022, PSEG completed a $ 500 million share repurchase program authorized by the Board of Directors in September 2021 resulting in an aggregate repurchase of approximately 7.4 million shares.

Common Stock Dividends

Years Ended December 31,

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These segments were determined based on how the Chief Operating Decision Maker (CODM) (the Chief Executive Officer (CEO) for PSEG and PSE&G), measures performance based on segment Net Income and how resources are allocated to each business.

Following completion of the sale of the PSEG Power Fossil portfolio in February 2022 and as a result of the transition to a new CEO, our designated CODM, effective September 1, 2022, various changes have been made to the content and manner in which the new CEO reviews financial information for purposes of assessing business performance and allocating resources.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

which the new CEO reviews financial information for purposes of assessing business performance and allocating resources.

Based on management’s analysis, PSE&G and PSEG Power were determined to remain operating segments of PSEG.

However, PSEG has revised its reportable segments for the year ended December 31, 2022 to PSE&G and PSEG Power & Other.

However, PSEG revised its reportable segments to PSE&G and PSEG Power & Other.

PSE&G continues to be PSEG’s principal reportable segment.

The PSEG Power & Other reportable segment includes amounts related to the PSEG Power operating segment as well as amounts applicable to Energy Holdings, PSEG LI, PSEG (parent corporation) and Services, which do not meet the definition of operating segments individually or in the aggregate and are immaterial to PSEG’s consolidated assets and results.

All prior period comparative information has been restated to reflect the change in segment presentation.

All periods presented in the following tables reflect the change in segment presentation.

PSE&G earns revenues from its tariffs, under which it provides electric transmission and electric and gas distribution services to residential, commercial and industrial customers in New Jersey.

The rates charged for electric transmission are regulated by FERC while the rates charged for electric and gas distribution are regulated by the BPU.

Revenues are also earned from several

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

other activities such as investments in EE equipment on customers’ premises, solar investments, the appliance service business and other miscellaneous services.

Revenues are also earned from several other activities such as investments in EE equipment on customers’ premises, solar investments, the appliance service business and other miscellaneous services.

PSEG Power & Other

This reportable segment is comprised primarily of PSEG Power which earns revenues primarily by bidding energy, capacity and ancillary services into the markets for these products and by selling energy, capacity and ancillary services on a wholesale basis under contract to power marketers and to load-serving entities.

PSEG Power also enters into bilateral contracts for energy, capacity, FTRs, gas, emission allowances and other energy-related contracts to optimize the value of its portfolio of generating assets and its electric and gas supply obligations.

This reportable segment is comprised primarily of PSEG Power which earns revenues primarily by selling energy, capacity and ancillary services into the markets for these products.

PSEG Power also enters into bilateral contracts for energy, gas and other energy-related contracts to optimize the value of its portfolio of generating assets and its gas supply obligations.

In addition, PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants receive ZEC revenue from the EDCs in New Jersey including PSE&G.

This reportable segment also includes amounts applicable to PSEG LI, which generates revenues under its contract with LIPA, primarily for the recovery of costs when Servco is a principal in the transaction (see Note 4.

Variable Interest Entities for additional information) as well as fixed and variable fee components under the contract, and Energy Holdings which holds an immaterial portfolio of remaining lease investments.

Variable Interest Entity for additional information) as well as fixed and variable fee components under the contract, and Energy Holdings which holds an immaterial portfolio of remaining lease investments.

Other also includes amounts applicable to PSEG (parent corporation) and Services.

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Related-Party Transactions.

(B) Include after-tax impairments of $ 92 million related to certain Energy Holdings investments and additional adjustments related to the sale of PSEG Power’s fossil generation assets in the year ended December 31, 2022.

(B) Includes a $ 239 million after-tax pension charge due to the remeasurement of the qualified pension plans as a result of the pension settlement transaction in the third quarter of 2023.

Includes after-tax impairments of $ 92 million related to certain Energy Holdings investments and additional adjustments related to the sale of PSEG Power’s fossil generation assets in the year ended December 31, 2022.

Includes after-tax impairment losses and other charges, including debt extinguishment costs, related to the sale of the fossil generating assets at PSEG Power of $ 2,158 million in the year ended December 31, 2021.

Includes an after-tax gain of $ 86 million in the year ended December 31, 2020 related to the sale of PSEG Power’s interest in the Yards Creek generation facility.

Early Plant Retirements/Asset Dispositions and Impairments for additional information.

(C) Includes net after-tax losses of $ 457 million, $ 446 million and $ 58 million in the years ended December 31, 2022, 2021 and 2020, respectively at PSEG Power related to the impacts of non-trading commodity mark-to-market activity, which consists of the financial impact from positions with future delivery dates.

Asset Dispositions and Impairments for additional information.

(C) Includes net after-tax gain (loss) of $ 959 million, $( 457 ) million and $( 446 ) million in the years ended December 31, 2023, 2022 and 2021, respectively at PSEG Power related to the impacts of non-trading commodity mark-to-market activity, which consists of the financial impact from positions with future delivery dates.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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(A) PSE&G has entered into a requirements contract with PSEG Power under which PSEG Power provides the gas supply services needed to meet PSE&G’s BGSS and other contractual requirements.

As of June 1, 2022, PSEG Power had no contracts to supply energy, capacity and ancillary services to PSE&G through the BGS auction process.

Since June 1, 2022, PSEG Power had no contracts to supply electric energy, capacity and ancillary services to PSE&G through the BGS auction process.

In addition, PSEG Power sells ZECs to PSE&G from its nuclear units under the ZEC program as approved by the BPU.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data