PUBLIC SERVICE ENTERPRISE GROUP INC 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA This combined Form 10-K is separately filed by PSEG and PSE&G. Information contained herein relating to any individual company is filed by such company on its own behalf. PSE&G makes representations only as to itself and makes no representations as to any other company. 55 Table of Conte n t s REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Public Service Enterprise Group Incorporated Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Public Service Enterprise Group Incorporated and subsidiaries (the “Company” or PSEG) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income (loss), stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2023, the related notes and the consolidated financial statement schedule listed in the Index at Item 15(B)(a) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 26, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Accounting for the Effects of Regulation – Refer to Notes 1 and 6 to the financial statements Critical Audit Matter Description 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. 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 regulation. 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 56 Table of Conte n t s 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. Auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures to evaluate the accounting for the effects of cost-based rate regulation, including the probable recovery or refund of regulatory assets and liabilities, included the following, among others: • We tested the effectiveness of management's controls over the evaluation of the likelihood of (1) the recovery in future rates of costs deferred as regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We tested the effectiveness of management's controls over the initial recognition of amounts as regulatory assets or liabilities and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates. • We obtained and read relevant regulatory orders issued by the BPU and FERC for PSE&G and other publicly available information to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset and liability balances for completeness. • For regulatory matters in process, we inspected associated documents and testimony filed with the BPU or FERC for any evidence that might contradict management's assertions. • We evaluated the financial statement presentation and disclosures related to the impacts of cost-based rate-regulation, including the balances recorded and regulatory developments. /s/ DELOITTE & TOUCHE LLP Morristown, New Jersey February 26, 2024 We have served as the Company's auditor since 1934. 57 Table of Conte n t s REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Sole Stockholder of Public Service Electric and Gas Company Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Public Service Electric and Gas Company and subsidiaries (the “Company” or PSE&G) as of December 31, 2023 and 2022, the related consolidated statements of operations, comprehensive income, common stockholder’s equity, and cash flows, for each of the three years in the period ended December 31, 2023, the related notes and the consolidated financial statement schedule listed in the Index at Item 15(B)(b) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Accounting for the Effects of Regulation – Refer to Notes 1 and 6 to the financial statements Critical Audit Matter Description 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. 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 regulation. 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 58 Table of Conte n t s 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. 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. Auditing these judgments required specialized knowledge of accounting for rate regulation and the ratemaking process due to its inherent complexities. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures to evaluate the accounting for the effects of cost-based rate regulation, including the probable recovery or refund of regulatory assets and liabilities, included the following, among others: • We tested the effectiveness of management's controls over the evaluation of the likelihood of (1) the recovery in future rates of costs deferred as regulatory assets, and (2) a refund or a future reduction in rates that should be reported as regulatory liabilities. We tested the effectiveness of management's controls over the initial recognition of amounts as regulatory assets or liabilities and the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates. • We obtained and read relevant regulatory orders issued by the BPU and FERC for PSE&G and other publicly available information to assess the likelihood of recovery in future rates or of a future reduction in rates based on precedents of the treatment of similar costs under similar circumstances. We evaluated the external information and compared it to management’s recorded regulatory asset and liability balances for completeness. • For regulatory matters in process, we inspected associated documents and testimony filed with the BPU or FERC for any evidence that might contradict management's assertions. • We evaluated the financial statement presentation and disclosures related to the impacts of cost-based rate-regulation, including the balances recorded and regulatory developments. /s/ DELOITTE & TOUCHE LLP Morristown, New Jersey February 26, 2024 We have served as the Company's auditor since 1934. 59 Table of Conte n t s PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED CONSOLIDATED STATEMENTS OF OPERATIONS Millions, except per share data Years Ended December 31, 2023 2022 2021 OPERATING REVENUES $ 11,237 $ 9,800 $ 9,722 OPERATING EXPENSES Energy Costs 3,260 4,018 3,499 Operation and Maintenance 3,150 3,178 3,226 Depreciation and Amortization 1,135 1,100 1,216 Losses on Asset Dispositions and Impairments 7 123 2,637 Total Operating Expenses 7,552 8,419 10,578 OPERATING INCOME (LOSS) 3,685 1,381 ( 856 ) Income from Equity Method Investments 1 14 16 Net Gains (Losses) on Trust Investments 189 ( 265 ) 194 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 ) Interest Expense ( 748 ) ( 628 ) ( 571 ) INCOME (LOSS) BEFORE INCOME TAXES 3,081 1,002 ( 1,089 ) Income Tax (Expense) Benefit ( 518 ) 29 441 NET INCOME (LOSS) $ 2,563 $ 1,031 $ ( 648 ) WEIGHTED AVERAGE COMMON SHARES OUTSTANDING: BASIC 498 498 504 DILUTED 500 501 504 NET INCOME (LOSS) PER SHARE: BASIC $ 5.15 $ 2.07 $ ( 1.29 ) DILUTED $ 5.13 $ 2.06 $ ( 1.29 ) See Notes to Consolidated Financial Statements. 60 Table of Conte n t s PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Millions Years Ended December 31, 2023 2022 2021 NET INCOME (LOSS) $ 2,563 $ 1,031 $ ( 648 ) Other Comprehensive Income (Loss), net of tax Unrealized Gains (Losses) on Available-for-Sale Securities, net of tax (expense) benefit of $( 27 ), $ 85 and $ 25 for the years ended 2023, 2022 and 2021, respectively 41 ( 132 ) ( 39 ) Unrealized Gains (Losses) on Cash Flow Hedges, net of tax (expense) benefit of $( 2 ), $( 2 ) and $( 1 ) for the years ended 2023, 2022 and 2021, respectively 6 3 3 Pension/OPEB adjustment, net of tax (expense) benefit of $( 127 ), $ 28 and $( 75 ) for the years ended 2023, 2022 and 2021, respectively 324 ( 71 ) 190 Other Comprehensive Income (Loss), net of tax 371 ( 200 ) 154 COMPREHENSIVE INCOME (LOSS) $ 2,934 $ 831 $ ( 494 ) See Notes to Consolidated Financial Statements. 61 Table of Conte n t s PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED CONSOLIDATED BALANCE SHEETS Millions December 31, 2023 2022 ASSETS CURRENT ASSETS Cash and Cash Equivalents $ 54 $ 465 Accounts Receivable, net of allowance of $ 279 in 2023 and $ 323 in 2022 1,482 1,944 Tax Receivable 10 79 Unbilled Revenues, net of allowance of $ 4 in 2023 and $ 16 in 2022 244 322 Fuel 264 420 Materials and Supplies, net 759 540 Prepayments 144 93 Derivative Contracts 112 18 Regulatory Assets 273 369 Assets Held for Sale — 20 Other 31 33 Total Current Assets 3,373 4,303 PROPERTY, PLANT AND EQUIPMENT 48,603 45,924 Less: Accumulated Depreciation and Amortization ( 10,572 ) ( 9,982 ) Net Property, Plant and Equipment 38,031 35,942 NONCURRENT ASSETS Regulatory Assets 5,157 4,404 Operating Lease Right-of-Use Assets 179 176 Long-Term Investments 295 624 Nuclear Decommissioning Trust (NDT) Fund 2,524 2,230 Long-Term Tax Receivable — 5 Long-Term Receivable of Variable Interest Entity 632 551 Rabbi Trust Fund 179 183 Derivative Contracts 29 15 Other 342 285 Total Noncurrent Assets 9,337 8,473 TOTAL ASSETS $ 50,741 $ 48,718 See Notes to Consolidated Financial Statements. 62 Table of Conte n t s PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED CONSOLIDATED BALANCE SHEETS Millions December 31, 2023 2022 LIABILITIES AND CAPITALIZATION CURRENT LIABILITIES Long-Term Debt Due Within One Year $ 1,500 $ 1,575 Commercial Paper and Loans 949 2,200 Accounts Payable 1,214 1,271 Derivative Contracts 86 124 Accrued Interest 170 134 Accrued Taxes 8 12 New Jersey Clean Energy Program 145 145 Obligation to Return Cash Collateral 89 290 Regulatory Liabilities 349 384 Other 547 545 Total Current Liabilities 5,057 6,680 NONCURRENT LIABILITIES Deferred Income Taxes and Investment Tax Credits (ITC) 6,671 5,725 Regulatory Liabilities 2,075 2,240 Operating Leases 173 169 Asset Retirement Obligations 1,468 1,499 Other Postretirement Benefit (OPEB) Costs 349 410 OPEB Costs of Servco 514 455 Accrued Pension Costs 606 705 Accrued Pension Costs of Servco 102 82 Environmental Costs 213 231 Derivative Contracts 6 33 Long-Term Accrued Taxes 45 66 Other 201 199 Total Noncurrent Liabilities 12,423 11,814 COMMITMENTS AND CONTINGENT LIABILITIES (See Note 13) CAPITALIZATION LONG-TERM DEBT 17,784 16,495 STOCKHOLDERS’ EQUITY Common Stock, no par, authorized 1,000 shares; issued, 2023 and 2022— 534 shares 5,018 5,065 Treasury Stock, at cost, 2023 and 2022— 36 and 37 shares, respectively ( 1,379 ) ( 1,377 ) Retained Earnings 12,017 10,591 Accumulated Other Comprehensive Loss ( 179 ) ( 550 ) Total Stockholders’ Equity 15,477 13,729 Total Capitalization 33,261 30,224 TOTAL LIABILITIES AND CAPITALIZATION $ 50,741 $ 48,718 See Notes to Consolidated Financial Statements. 63 Table of Conte n t s PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED CONSOLIDATED STATEMENTS OF CASH FLOWS Millions Years Ended December 31, CASH FLOWS FROM OPERATING ACTIVITIES 2023 2022 2021 Net Income (Loss) $ 2,563 $ 1,031 $ ( 648 ) Adjustments to Reconcile Net Income (Loss) to Net Cash Flows from Operating Activities: Depreciation and Amortization 1,135 1,100 1,216 Amortization of Nuclear Fuel 189 183 187 (Gains) Losses on Asset Dispositions and Impairments 7 123 2,637 Loss on Extinguishment of Debt — — 298 Emission Allowances and Renewable Energy Credit (REC) Compliance Accrual 3 55 138 Provision for Deferred Income Taxes and ITC 355 ( 261 ) ( 845 ) Non-Cash Employee Benefit Plan (Credits) Costs 366 ( 239 ) ( 178 ) Net Realized and Unrealized (Gains) Losses on Energy Contracts and Other Derivatives ( 1,333 ) 639 614 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 ) Net (Gains) Losses and (Income) Expense from NDT Fund ( 248 ) 202 ( 229 ) Net Change in Certain Current Assets and Liabilities: Cash Collateral 1,408 ( 677 ) ( 790 ) Obligation to Return Cash Collateral ( 201 ) 111 81 Accrued Taxes ( 10 ) ( 94 ) ( 127 ) Other Current Assets and Liabilities 110 ( 187 ) ( 263 ) Employee Benefit Plan Funding and Related Payments ( 40 ) ( 35 ) ( 25 ) Other 50 ( 3 ) 62 Net Cash Provided By (Used In) Operating Activities 3,806 1,503 1,736 CASH FLOWS FROM INVESTING ACTIVITIES Additions to Property, Plant and Equipment ( 3,325 ) ( 2,888 ) ( 2,719 ) Proceeds from Sales of Trust Investments 1,714 1,586 2,100 Purchases of Trust Investments ( 1,751 ) ( 1,611 ) ( 2,092 ) 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 ) Other 76 18 9 Net Cash Provided By (Used In) Investing Activities ( 2,958 ) ( 1,101 ) ( 2,244 ) CASH FLOWS FROM FINANCING ACTIVITIES Net Change in Commercial Paper 250 ( 819 ) 256 Proceeds from Short-Term Loans 750 2,000 2,500 Repayment of Short-Term Loans ( 2,250 ) ( 2,500 ) ( 300 ) Issuance of Long-Term Debt 2,800 2,850 2,825 Redemption of Long-Term Debt ( 1,575 ) ( 700 ) ( 3,082 ) Payments for Share Repurchase Program — ( 500 ) — Premium Paid on Early Extinguishment of Debt — — ( 294 ) Cash Dividends Paid on Common Stock ( 1,137 ) ( 1,079 ) ( 1,031 ) Other ( 98 ) ( 6 ) ( 75 ) Net Cash Provided By (Used In) Financing Activities ( 1,260 ) ( 754 ) 799 Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash ( 412 ) ( 352 ) 291 Cash, Cash Equivalents and Restricted Cash at Beginning of Period 511 863 572 Cash, Cash Equivalents and Restricted Cash at End of Period $ 99 $ 511 $ 863 Supplemental Disclosure of Cash Flow Information: Income Taxes Paid (Received) $ 144 $ 353 $ 425 Interest Paid, Net of Amounts Capitalized $ 683 $ 602 $ 547 Accrued Property, Plant and Equipment Expenditures $ 443 $ 366 $ 331 See Notes to Consolidated Financial Statements. 64 Table of Conte n t s PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY Millions Common Stock Treasury Stock Retained Earnings Accumulated Other Comprehensive Income (Loss) Shs. Amount Shs. Amount Total Balance as of December 31, 2020 534 $ 5,031 ( 30 ) $ ( 861 ) $ 12,318 $ ( 504 ) $ 15,984 Net Loss — — — — ( 648 ) — ( 648 ) Other Comprehensive Income (Loss), net of tax (expense) benefit of $( 51 ) — — — — — 154 154 Comprehensive Loss ( 494 ) Cash Dividends at $ 2.04 per share on Common Stock — — — — ( 1,031 ) — ( 1,031 ) Other — 14 — ( 35 ) — — ( 21 ) Balance as of December 31, 2021 534 $ 5,045 ( 30 ) $ ( 896 ) $ 10,639 $ ( 350 ) $ 14,438 Net Income — — — — 1,031 — 1,031 Other Comprehensive Income (Loss), net of tax (expense) benefit of $ 111 — — — — — ( 200 ) ( 200 ) 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 Balance as of December 31, 2022 534 $ 5,065 ( 37 ) $ ( 1,377 ) $ 10,591 $ ( 550 ) $ 13,729 Net Income — — — — 2,563 — 2,563 Other Comprehensive Income (Loss), net of tax (expense) benefit of $( 156 ) — — — — — 371 371 Comprehensive Income 2,934 Cash Dividends at $ 2.28 per share on Common Stock — — — — ( 1,137 ) — ( 1,137 ) Other — ( 47 ) 1 ( 2 ) — — ( 49 ) Balance as of December 31, 2023 534 $ 5,018 ( 36 ) $ ( 1,379 ) $ 12,017 $ ( 179 ) $ 15,477 See Notes to Consolidated Financial Statements. 65 Table of Conte n t s PUBLIC SERVICE ELECTRIC AND GAS COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS Millions Years Ended December 31, 2023 2022 2021 OPERATING REVENUES $ 7,807 $ 7,935 $ 7,122 OPERATING EXPENSES Energy Costs 3,010 3,270 2,688 Operation and Maintenance 1,843 1,838 1,692 Depreciation and Amortization 980 935 928 Gain on Asset Dispositions — — ( 4 ) Total Operating Expenses 5,833 6,043 5,304 OPERATING INCOME 1,974 1,892 1,818 Net Gains (Losses) on Trust Investments — ( 2 ) 2 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 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. 66 Table of Conte n t s PUBLIC SERVICE ELECTRIC AND GAS COMPANY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME Millions Years Ended December 31, 2023 2022 2021 NET INCOME $ 1,515 $ 1,565 $ 1,446 Other Comprehensive Income (Loss), net of tax Unrealized Gains (Losses) on Available-for-Sale Securities, net of tax (expense) benefit of $ 0 , $ 2 and $ 1 for the years ended 2023, 2022 and 2021, respectively 1 ( 6 ) ( 2 ) COMPREHENSIVE INCOME $ 1,516 $ 1,559 $ 1,444 See disclosures regarding Public Service Electric and Gas Company included in the Notes to Consolidated Financial Statements. 67 Table of Conte n t s PUBLIC SERVICE ELECTRIC AND GAS COMPANY CONSOLIDATED BALANCE SHEETS Millions December 31, 2023 2022 ASSETS CURRENT ASSETS Cash and Cash Equivalents $ 30 $ 220 Accounts Receivable, net of allowance of $ 279 in 2023 and $ 323 in 2022 1,076 1,075 Unbilled Revenues, net of allowance of $ 4 in 2023 and $ 16 in 2022 244 322 Materials and Supplies, net 519 307 Prepayments 57 7 Regulatory Assets 273 369 Other 31 32 Total Current Assets 2,230 2,332 PROPERTY, PLANT AND EQUIPMENT 43,753 41,045 Less: Accumulated Depreciation and Amortization ( 8,711 ) ( 8,215 ) Net Property, Plant and Equipment 35,042 32,830 NONCURRENT ASSETS Regulatory Assets 5,157 4,404 Operating Lease Right-of-Use Assets 99 86 Long-Term Investments 117 143 Rabbi Trust Fund 32 32 Other 196 133 Total Noncurrent Assets 5,601 4,798 TOTAL ASSETS $ 42,873 $ 39,960 See disclosures regarding Public Service Electric and Gas Company included in the Notes to Consolidated Financial Statements. 68 Table of Conte n t s PUBLIC SERVICE ELECTRIC AND GAS COMPANY CONSOLIDATED BALANCE SHEETS Millions December 31, 2023 2022 LIABILITIES AND CAPITALIZATION CURRENT LIABILITIES Long-Term Debt Due Within One Year $ 750 $ 825 Commercial Paper and Loans 425 — Accounts Payable 780 703 Accounts Payable—Affiliated Companies 504 485 Accrued Interest 139 113 New Jersey Clean Energy Program 145 145 Obligation to Return Cash Collateral 89 290 Regulatory Liabilities 349 384 Other 434 416 Total Current Liabilities 3,615 3,361 NONCURRENT LIABILITIES Deferred Income Taxes and ITC 5,813 5,348 Regulatory Liabilities 2,075 2,240 Operating Leases 89 77 Asset Retirement Obligations 401 384 OPEB Costs 210 255 Accrued Pension Costs 396 397 Environmental Costs 151 173 Long-Term Accrued Taxes 2 9 Other 160 163 Total Noncurrent Liabilities 9,297 9,046 COMMITMENTS AND CONTINGENT LIABILITIES (See Note 13) CAPITALIZATION LONG-TERM DEBT 12,913 11,871 STOCKHOLDER’S EQUITY Common Stock; 150 shares authorized; issued and outstanding, 2023 and 2022— 132 shares 892 892 Contributed Capital 2,156 2,156 Retained Earnings 14,004 12,639 Accumulated Other Comprehensive Loss ( 4 ) ( 5 ) Total Stockholder’s Equity 17,048 15,682 Total Capitalization 29,961 27,553 TOTAL LIABILITIES AND CAPITALIZATION $ 42,873 $ 39,960 See disclosures regarding Public Service Electric and Gas Company included in the Notes to Consolidated Financial Statements. 69 Table of Conte n t s PUBLIC SERVICE ELECTRIC AND GAS COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS Millions Years Ended December 31, 2023 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES Net Income $ 1,515 $ 1,565 $ 1,446 Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities: Depreciation and Amortization 980 935 928 Provision for Deferred Income Taxes and ITC 29 137 116 Non-Cash Employee Benefit Plan (Credits) Costs 8 ( 179 ) ( 156 ) 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 ) Net Change in Certain Current Assets and Liabilities Accounts Receivable and Unbilled Revenues 72 ( 132 ) ( 34 ) Materials and Supplies ( 211 ) ( 73 ) ( 16 ) Prepayments ( 50 ) 8 ( 1 ) Accounts Payable 13 96 ( 71 ) Accounts Receivable/Payable—Affiliated Companies, net ( 3 ) 18 ( 32 ) Obligation to Return Cash Collateral ( 201 ) 111 81 Other Current Assets and Liabilities 23 44 ( 71 ) Employee Benefit Plan Funding and Related Payments ( 20 ) ( 17 ) ( 10 ) Other ( 67 ) ( 40 ) ( 64 ) Net Cash Provided By (Used In) Operating Activities 1,540 2,028 1,724 CASH FLOWS FROM INVESTING ACTIVITIES Additions to Property, Plant and Equipment ( 2,998 ) ( 2,590 ) ( 2,447 ) Proceeds from Sales of Trust Investments 4 12 35 Purchases of Trust Investments ( 3 ) ( 10 ) ( 29 ) Solar Loan Investments 27 34 29 Other 6 11 16 Net Cash Provided By (Used In) Investing Activities ( 2,964 ) ( 2,543 ) ( 2,396 ) CASH FLOWS FROM FINANCING ACTIVITIES Net Change in Commercial Paper and Loans 425 — ( 100 ) Issuance of Long-Term Debt 1,800 900 1,325 Redemption of Long-Term Debt ( 825 ) — ( 434 ) Cash Dividends Paid ( 150 ) ( 450 ) — Other ( 17 ) ( 8 ) ( 13 ) Net Cash Provided By (Used In) Financing Activities 1,233 442 778 Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash ( 191 ) ( 73 ) 106 Cash, Cash Equivalents and Restricted Cash at Beginning of Period 266 339 233 Cash, Cash Equivalents and Restricted Cash at End of Period $ 75 $ 266 $ 339 Supplemental Disclosure of Cash Flow Information: Income Taxes Paid (Received) $ 77 $ 137 $ 266 Interest Paid, Net of Amounts Capitalized $ 449 $ 409 $ 383 Accrued Property, Plant and Equipment Expenditures $ 395 $ 331 $ 294 See disclosures regarding Public Service Electric and Gas Company included in the Notes to Consolidated Financial Statements. 70 Table of Conte n t s PUBLIC SERVICE ELECTRIC AND GAS COMPANY CONSOLIDATED STATEMENTS OF COMMON STOCKHOLDER’S EQUITY Millions Common Stock Contributed Capital Retained Earnings Accumulated Other Comprehensive Income (Loss) Total Balance as of December 31, 2020 $ 892 $ 2,156 $ 10,078 $ 3 $ 13,129 Net Income — — 1,446 — 1,446 Other Comprehensive Income (Loss), net of tax (expense) benefit of $ 1 — — — ( 2 ) ( 2 ) Comprehensive Income 1,444 Balance as of December 31, 2021 $ 892 $ 2,156 $ 11,524 $ 1 $ 14,573 Net Income — — 1,565 — 1,565 Other Comprehensive Income (Loss), net of tax (expense) benefit of $ 2 — — — ( 6 ) ( 6 ) Comprehensive Income 1,559 Cash Dividend Paid $ — $ — $ ( 450 ) $ — ( 450 ) Balance as of December 31, 2022 $ 892 $ 2,156 $ 12,639 $ ( 5 ) $ 15,682 Net Income — — 1,515 — 1,515 Other Comprehensive Income (Loss), net of tax (expense) benefit of $ 0 — — — 1 1 Comprehensive Income 1,516 Cash Dividends Paid — — ( 150 ) — ( 150 ) Balance as of December 31, 2023 $ 892 $ 2,156 $ 14,004 $ ( 4 ) $ 17,048 See disclosures regarding Public Service Electric and Gas Company included in the Notes to Consolidated Financial Statements. 71 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents Note 1. Organization, Basis of Presentation and Summary of Significant Accounting Policies Organization Public Service Enterprise Group Incorporated (PSEG) is a public utility holding company that, acting through its wholly owned subsidiaries, is a predominantly regulated electric and gas utility and a nuclear generation business. PSEG’s principal operating subsidiaries are: • Public Service Electric and Gas Company (PSE&G) —which is a public utility engaged principally in the transmission of electricity and distribution of electricity and natural gas in certain areas of New Jersey. PSE&G is subject to regulation by the New Jersey Board of Public Utilities (BPU), 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), and other federal regulators and state regulators in the states in which they operate. PSEG’s other direct wholly owned subsidiaries are: PSEG Long Island LLC (PSEG LI), which operates the Long Island Power Authority’s (LIPA) electric transmission and distribution (T&D) system under an 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. 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 Principles of Consolidation Each company consolidates those entities in which it has a controlling interest or is the primary beneficiary. See Note 4. 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. 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. PSE&G and PSEG Power also have undivided interests in certain jointly-owned facilities, with each responsible for paying its respective ownership share of construction costs, fuel purchases and operating expenses. PSE&G and PSEG Power consolidate their portion of any revenues and expenses related to their respective jointly-owned facilities in the appropriate revenue and expense categories. Accounting for the Effects of Regulation In accordance with accounting guidance for rate-regulated entities, PSE&G’s financial statements reflect the economic effects of regulation. 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 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. Management believes that PSE&G’s T&D businesses continue to meet the accounting requirements for rate-regulated entities. For additional information, see Note 6. Regulatory Assets and Liabilities. 72 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents Cash, Cash Equivalents and Restricted Cash The following provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Balance Sheets that sum to the total of the same such amounts in the Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2023. Restricted cash consists primarily of deposits received related to a construction project at PSE&G. PSE&G PSEG Power & Other (A) Consolidated Millions As of December 31, 2022 Cash and Cash Equivalents $ 220 $ 245 $ 465 Restricted Cash in Other Current Assets 27 — 27 Restricted Cash in Other Noncurrent Assets 19 — 19 Cash, Cash Equivalents and Restricted Cash $ 266 $ 245 $ 511 As of December 31, 2023 Cash and Cash Equivalents $ 30 $ 24 $ 54 Restricted Cash in Other Current Assets 23 — 23 Restricted Cash in Other Noncurrent Assets 22 — 22 Cash, Cash Equivalents and Restricted Cash $ 75 $ 24 $ 99 (A) Includes amounts applicable to PSEG Power, Energy Holdings, Services and PSEG (parent company). Derivative Instruments Each company uses derivative instruments to manage risk pursuant to its business plans and prudent practices. Within PSEG and its affiliate companies, PSEG Power has the most exposure to commodity price risk. PSEG Power is exposed to commodity price risk primarily relating to changes in the market price of electricity, natural gas and other commodities. Fluctuations in market prices result from changes in supply and demand, fuel costs, market conditions, weather, state and federal regulatory policies, environmental policies, transmission availability and other factors. PSEG Power uses a variety of derivative and non-derivative instruments, such as financial options, futures 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. Determining whether a contract qualifies as a derivative requires that management exercise significant judgment, including assessing the contract’s market liquidity. 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 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. Certain offsetting derivative assets and liabilities are subject to a master netting or similar agreement. In general, the terms of the agreements provide that in the event of an early termination the counterparties have the right to offset amounts owed or owing under that and any other agreement with the same counterparty. Accordingly, these positions are offset on the Consolidated Balance Sheets of PSEG. For cash flow hedges, the gain or loss on a derivative instrument designated and qualifying as a cash flow hedge is deferred in Accumulated Other Comprehensive Income (Loss) until earnings are affected by the variability of cash flows of the hedged transaction. 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 hedge accounting on its commodity derivative positions. For additional information regarding derivative financial instruments, see Note 16. Financial Risk Management Activities. Revenue Recognition PSE&G’s regulated electric and gas revenues are recorded primarily based on services rendered to customers. 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 73 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents 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. This mechanism provides for an annual filing of estimated revenue requirement with rates effective January 1 of each year. After completion of the annual period ending December 31, PSE&G files a true-up whereby it compares its actual revenue requirement to the original estimate to determine any over or under collection of revenue. 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. PSEG Power currently owns generation within PJM Interconnection, L.L.C. (PJM), which facilitates the dispatch of energy and energy-related products. 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. See Note 16. 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. See Note 4. Variable Interest Entity for further information. For additional information regarding Revenues, see Note 2. Revenues. Depreciation and Amortization PSE&G calculates depreciation under the straight-line method based on estimated average remaining lives of the several classes of property. These estimates are reviewed on a periodic basis and necessary adjustments are made as approved by the BPU or FERC. The average depreciation rate stated as a percentage of original cost of depreciable property was as follows: Average Rate 2023 2022 2021 Electric Transmission 2.09 % 2.18 % 2.29 % Electric Distribution 2.54 % 2.56 % 2.56 % Gas Distribution 1.84 % 1.93 % 1.84 % PSEG calculates depreciation on its nuclear generation-related assets under the straight-line method based on the assets’ estimated useful lives of approximately 60 years to 80 years. Allowance for Funds Used During Construction (AFUDC) and Interest Capitalized During Construction (IDC) AFUDC represents the cost of debt and equity funds used to finance the construction of new utility assets at PSE&G. IDC represents the cost of debt used to finance construction at PSEG’s other subsidiaries. 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. 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 2023 2022 2021 Millions Avg Rate Millions Avg Rate Millions Avg Rate PSE&G $ 83 7.13 % $ 84 7.39 % $ 93 7.37 % Other $ 9 5.66 % $ 4 2.24 % $ 9 4.90 % Income Taxes 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. 74 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents 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. If it is not more-likely-than-not that the benefit will be sustained on its technical merits, no benefit will be recorded. Uncertain tax positions that relate only to timing of when an item is included on a tax return are considered to have met the recognition threshold. See Note 20. Income Taxes for further discussion. Impairment of Long-Lived Assets Management evaluates long-lived assets for impairment whenever events or changes in circumstances, such as significant adverse changes in regulation, business climate, counterparty credit worthiness or market conditions, including prolonged periods of adverse commodity and capacity prices or a current expectation that a long-lived asset will be sold or disposed of significantly before the end of its previously estimated useful life, could potentially indicate an asset’s or asset group’s carrying amount may not be recoverable. In such an event, an undiscounted cash flow analysis is performed to determine if an impairment exists. When a long-lived asset’s or asset group’s carrying amount exceeds the associated undiscounted estimated future cash flows, the asset/asset group is considered impaired to the extent that its fair value is less than its carrying amount. An impairment would result in a reduction of the value of the long-lived asset/asset group through a non-cash charge to earnings. For PSEG, cash flows for long-lived assets and asset groups are determined at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. The cash flows from the nuclear generation units are evaluated at the portfolio level. See Note 3. Asset Dispositions and Impairments for more information on impairment assessments performed on PSEG’s long-lived assets. Accounts Receivable—Allowance for Credit Losses PSE&G’s accounts receivable, including unbilled revenues, are primarily comprised of utility customer receivables for the provision of electric and gas service and appliance services, and are reported in the balance sheet as gross outstanding amounts adjusted for an allowance for credit losses. The allowance for credit losses reflects PSE&G’s best estimate of losses on the account balances. The allowance is based on PSE&G’s projection of accounts receivable aging, historical experience, economic factors and other currently available evidence, including the estimated impact of the coronavirus pandemic on the outstanding balances as of December 31, 2023. PSE&G’s electric bad debt expense is recovered through the Societal Benefits Clause (SBC) mechanism and incremental gas bad debt has been deferred for future recovery through the coronavirus (COVID-19) Regulatory Asset. See Note 2. Revenues and Note 6. Regulatory Assets and Liabilities. Accounts receivable are charged off in the period in which the receivable is deemed uncollectible. Recoveries of accounts receivable are recorded when it is known they will be received. Materials and Supplies and Fuel 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 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. Property, Plant and Equipment PSE&G’s additions to and replacements of existing property, plant and equipment are capitalized at cost. The cost of maintenance, repair and replacement of minor items of property is charged to expense as incurred. At the time units of depreciable property are retired or otherwise disposed of, the original cost, adjusted for net salvage value, is charged to accumulated depreciation. PSEG capitalizes costs related to its generating assets, including those related to its jointly-owned facilities that increase the capacity, improve or extend the life of an existing asset; represent a newly acquired or constructed asset; or represent the replacement of a retired asset. The cost of maintenance, repair and replacement of minor items of property is charged to appropriate expense accounts as incurred. Environmental costs are capitalized if the costs mitigate or prevent future environmental contamination or if the costs improve existing assets’ environmental safety or efficiency. All other environmental expenditures are expensed as incurred. PSEG also capitalizes spare parts for its generating assets that meet specific criteria. Capitalized spare parts are depreciated over the remaining lives of their associated assets. 75 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents Leases PSEG and its subsidiaries, when acting as lessee or lessor, determine if an arrangement is a lease at inception. PSEG assesses contracts to determine if the arrangement conveys (i) the right to control the use of the identified property, (ii) the right to obtain substantially all of the economic benefits from the use of the property, and (iii) the right to direct the use of the property. PSEG and its subsidiaries are neither the lessee nor the lessor in any material leases that are not classified as operating leases. Lessee —Operating Lease Right-of-Use Assets represent the right to use an underlying asset for the lease term and Operating Lease Liabilities represent the obligation to make lease payments arising from the lease. Operating Lease Right-of-Use Assets and Operating Lease Liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The current portion of Operating Lease Liabilities is included in Other Current Liabilities. Operating Lease Right-of-Use Assets and noncurrent Operating Lease Liabilities are included as separate captions in Noncurrent Assets and Noncurrent Liabilities, respectively, on the Consolidated Balance Sheets of PSEG and PSE&G. PSEG and its subsidiaries do not recognize Operating Lease Right-of-Use Assets and Operating Lease Liabilities for leases where the term is twelve months or less. PSEG and its subsidiaries recognize the lease payments on a straight-line basis over the term of the leases and variable lease payments in the period in which the obligations for those payments are incurred. As lessee, most of the operating leases of PSEG and its subsidiaries do not provide an implicit rate; therefore, incremental borrowing rates are used based on the information available at commencement date in determining the present value of lease payments. The implicit rate is used when readily determinable. PSE&G’s incremental borrowing rates are based on secured borrowing rates. PSEG’s incremental borrowing rates are generally unsecured rates. Having calculated simulated secured rates for each of PSEG and PSEG Power, it was determined that the difference between the unsecured borrowing rates and the simulated secured rates had an immaterial effect on their recorded Operating Lease Right-of-Use Assets and Operating Lease Liabilities. Services, PSEG LI and other subsidiaries of PSEG that do not borrow funds or issue debt may enter into leases. Since these companies do not have credit ratings and related incremental borrowing rates, PSEG has determined that it is appropriate for these companies to use the incremental borrowing rate of PSEG, the parent company. Lease terms may include options to extend or terminate the lease when it is reasonably certain that such options will be exercised. PSEG and its subsidiaries have lease agreements with lease and non-lease components. For real estate, equipment and vehicle leases, the lease and non-lease components are accounted for as a single lease component. 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. PSEG and subsidiaries account for the lease and non-lease components as a single lease component. See Note 7. Leases for detailed information on leases. Energy Holdings is the lessor in leveraged leases. Leveraged lease accounting guidance is grandfathered for existing leveraged leases. Energy Holdings’ leveraged leases are accounted for in Operating Revenues and in Noncurrent Long-Term Investments. If modified after January 1, 2019, those leveraged leases will be accounted for as operating or financing leases. See Note 8. Long-Term Investments and Note 9. Financing Receivables. Trust Investments 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. The debt securities are classified as available-for-sale with the unrealized gains and losses recorded as a component of Accumulated Other Comprehensive Income (Loss). Realized gains and losses on both equity and available-for-sale debt security investments are recorded in earnings and are included with the unrealized gains and losses on equity securities in Net Gains (Losses) on Trust Investments. Other-than-temporary impairments on NDT and Rabbi Trust debt securities are also included in Net Gains (Losses) on Trust Investments. See Note 10. Trust Investments for further discussion. Pension and Other Postretirement Benefits (OPEB) Plans 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 76 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents 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. This receivable is presented separately on the Consolidated Balance Sheet of PSEG as a noncurrent asset. Pursuant to the OSA, Servco records expense for contributions to its pension plan trusts and for OPEB payments made to retirees. See Note 12. Pension, Other Postretirement Benefits (OPEB) and Savings Plans for further discussion. Basis Adjustment PSE&G has recorded a Basis Adjustment in its Consolidated Balance Sheet related to the generation assets that were transferred from PSE&G to PSEG Power in August 2000 at the price specified by the BPU. Because the transfer was between affiliates, the transaction was recorded at the net book value of the assets and liabilities rather than the transfer price. The difference between the total transfer price and the net book value of the generation-related assets and liabilities, $ 986 million, net of tax, was recorded as a Basis Adjustment on PSE&G’s and PSEG Power’s Consolidated Balance Sheets. The $ 986 million is an addition to PSE&G’s Common Stockholder’s Equity and a reduction of PSEG Power’s Member’s Equity. 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 The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Recent Accounting Standards 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. Note 2. Revenues Nature of Goods and Services The following is a description of principal activities by which PSEG and its subsidiaries generate their revenues. PSE&G Revenues from Contracts with Customers Electric and Gas Distribution and Transmission Revenues —PSE&G sells gas and electricity to customers under default commodity supply tariffs. PSE&G’s regulated electric and gas default commodity supply and distribution services are separate tariffs which are satisfied as the product(s) and/or service(s) are delivered to the customer. The electric and gas commodity and delivery tariffs are recurring contracts in effect until modified through the regulatory approval process as appropriate. Revenue is recognized over time as the service is rendered to the customer. Included in PSE&G’s regulated revenues are unbilled electric and gas revenues which represent the estimated amount customers will be billed for services rendered from the most recent meter reading to the end of the respective accounting period. PSE&G’s transmission revenues are earned under a separate tariff using a FERC-approved annual formula rate mechanism. The performance obligation of transmission service is satisfied and revenue is recognized as it is provided to the customer. The formula rate mechanism provides for an annual filing of an estimated revenue requirement with rates effective January 1 of 77 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents each year and a true-up to that estimate based on actual revenue requirements. The true-up mechanism is an alternative revenue which is outside the scope of revenue from contracts with customers. Other Revenues from Contracts with Customers Other revenues from contracts with customers, which are not a material source of PSE&G revenues, are generated primarily from appliance repair services and solar generation projects. The performance obligations under these contracts are satisfied and revenue is recognized as control of products is delivered or services are rendered. Revenues Unrelated to Contracts with Customers Other PSE&G revenues unrelated to contracts with customers are derived from alternative revenue mechanisms recorded pursuant to regulatory accounting guidance. These revenues, which include the Conservation Incentive Program (CIP), green energy program true-ups and transmission formula rate true-ups, are not a material source of PSE&G revenues. PSEG Power & Other Revenues from Contracts with Customers 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. 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 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. 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. These nuclear plants are expected to receive ZEC revenue from the electric distribution companies (EDCs) in New Jersey. PSEG Power recognizes revenue when the units generate electricity, which is when the performance obligation is satisfied. These revenues are included in PJM Sales in the following tables. 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. The BGSS contract remains in effect unless terminated by either party with a two-year notice. Based upon the availability of natural gas, storage and pipeline capacity beyond PSE&G’s daily needs, PSEG Power also sells gas and pipeline capacity to other counterparties under bilateral contracts. The performance obligation is primarily the delivery of gas which is satisfied over time. Revenue is recognized as gas is delivered or pipeline capacity is released. PSEG LI Contract —PSEG LI has a contract with LIPA which generates revenues. PSEG LI’s subsidiary, 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. 78 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents Other Revenues from Contracts with Customers PSEG Power has entered into long-term contracts with LIPA for energy management and fuel procurement services. Revenue is recognized over time as services are rendered. Revenues Unrelated to Contracts with Customers PSEG Power’s revenues unrelated to contracts with customers include electric, gas and certain energy-related transactions accounted for in accordance with Derivatives and Hedging accounting guidance. See Note 16. Financial Risk Management Activities for further discussion. Energy Holdings generates lease revenues which are recorded pursuant to lease accounting guidance. Disaggregation of Revenues PSE&G PSEG Power & Other (A) Eliminations Consolidated Millions Year Ended December 31, 2023 Revenues from Contracts with Customers Electric Distribution $ 3,494 $ — $ — $ 3,494 Gas Distribution 1,982 — — 1,982 Transmission 1,673 — — 1,673 Electricity and Related Product Sales PJM Third-Party Sales — 892 — 892 Sales to Affiliates — 114 ( 114 ) — ISO-NE — 13 — 13 Gas Sales Third-Party Sales — 206 — 206 Sales to Affiliates — 984 ( 984 ) — Other Revenues from Contracts with Customers (B) 368 631 ( 5 ) 994 Total Revenues from Contracts with Customers 7,517 2,840 ( 1,103 ) 9,254 Revenues Unrelated to Contracts with Customers (C) 290 1,693 — 1,983 Total Operating Revenues $ 7,807 $ 4,533 $ ( 1,103 ) $ 11,237 PSE&G PSEG Power & Other (A) Eliminations Consolidated Millions Year Ended December 31, 2022 Revenues from Contracts with Customers Electric Distribution $ 3,503 $ — $ — $ 3,503 Gas Distribution 2,357 — ( 1 ) 2,356 Transmission 1,589 — — 1,589 Electricity and Related Product Sales PJM Third-Party Sales — 2,152 — 2,152 Sales to Affiliates — 151 ( 151 ) — NYISO — 88 — 88 ISO-NE — 96 — 96 Gas Sales Third-Party Sales — 458 — 458 Sales to Affiliates — 1,243 ( 1,243 ) — Other Revenues from Contracts with Customers (B) 390 605 ( 6 ) 989 Total Revenues from Contracts with Customers 7,839 4,793 ( 1,401 ) 11,231 Revenues Unrelated to Contracts with Customers (C) 96 ( 1,527 ) — ( 1,431 ) Total Operating Revenues $ 7,935 $ 3,266 $ ( 1,401 ) $ 9,800 79 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents PSE&G PSEG Power & Other (A) Eliminations Consolidated Millions Year Ended December 31, 2021 Revenues from Contracts with Customers Electric Distribution $ 3,279 $ — $ — $ 3,279 Gas Distribution 1,875 — ( 13 ) 1,862 Transmission 1,611 — — 1,611 Electricity and Related Product Sales PJM Third-Party Sales — 2,003 — 2,003 Sales to Affiliates — 265 ( 265 ) — NYISO — 247 — 247 ISO-NE — 172 — 172 Gas Sales Third-Party Sales — 181 — 181 Sales to Affiliates — 886 ( 886 ) — Other Revenues from Contracts with Customers (B) 343 620 ( 3 ) 960 Total Revenues from Contracts with Customers 7,108 4,374 ( 1,167 ) 10,315 Revenues Unrelated to Contracts with Customers (C) 14 ( 607 ) — ( 593 ) Total Operating Revenues $ 7,122 $ 3,767 $ ( 1,167 ) $ 9,722 (A) Includes revenues applicable to PSEG Power, PSEG LI and Energy Holdings. (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. (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 PSE&G PSE&G did not have any material contract balances (rights to consideration for services already provided or obligations to provide services in the future for consideration already received) as of December 31, 2023 and 2022. Substantially all of PSE&G’s accounts receivable and unbilled revenues result from contracts with customers that are priced at tariff rates. Allowances represented approximately 18 % and 20 % of accounts receivable (including unbilled revenues) as of December 31, 2023 and 2022, respectively. Accounts Receivable — Allowance for Credit Losses PSE&G’s accounts receivable, including unbilled revenues, is primarily comprised of utility customer receivables for the provision of electric and gas service and appliance services, and are reported on the balance sheet as gross outstanding amounts adjusted for an allowance for credit losses. The allowance for credit losses reflects PSE&G’s best estimate of losses on the account balances. The allowance is based on PSE&G’s projection of accounts receivable aging, historical experience, economic factors and other currently available evidence, including the estimated impact of the COVID-19 pandemic on the outstanding balances as of December 31, 2023. PSE&G’s electric bad debt expense is recoverable through its SBC mechanism. As of December 31, 2023, PSE&G had a deferred balance of $ 149 million from electric bad debts recorded as a Regulatory Asset. In addition, as of December 31, 2023, PSE&G had deferred incremental gas bad debt expense of $ 68 million recorded as a Regulatory Asset for future regulatory recovery due to the impact of the coronavirus pandemic. See Note 6. Regulatory Assets and Liabilities for additional information. 80 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents The following provides a reconciliation of PSE&G’s allowance for credit losses for the years ended December 31, 2023 and 2022. Years Ended December 31, 2023 2022 Millions Balance at Beginning of Year $ 339 $ 337 Utility Customer and Other Accounts Provision 100 114 Write-offs, net of Recoveries of $ 25 million and $ 46 million for 2023 and 2022, respectively ( 156 ) ( 112 ) Balance at End of Year $ 283 $ 339 PSEG Power & Other PSEG Power generally collects consideration upon satisfaction of performance obligations, and therefore, PSEG Power had no material contract balances as of December 31, 2023 and 2022. PSEG Power’s accounts receivable include amounts resulting from contracts with customers and other contracts which are out of scope of accounting guidance for revenues from contracts with customers. The majority of these accounts receivable are subject to master netting agreements. As a result, accounts receivable resulting from contracts with customers and receivables unrelated to contracts with customers are netted within Accounts Receivable and Accounts Payable on the Consolidated Balance Sheets. 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. As such, there is little credit risk associated with these receivables. PSEG Power did not record an allowance for credit losses for these receivables as of December 31, 2023 and 2022. PSEG Power monitors the status of its counterparties on an ongoing basis to assess whether there are any anticipated credit losses. PSEG LI did not have any material contract balances as of December 31, 2023 and 2022. Remaining Performance Obligations under Fixed Consideration Contracts PSEG primarily records revenues as allowed by the guidance, which states that if an entity has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date, the entity may recognize revenue in the amount to which the entity has a right to invoice. PSEG has future performance obligations under contracts with fixed consideration as follows: 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 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 MW-Day MW Cleared June 2023 to May 2024 $ 50 3,700 June 2024 to May 2025 $ 55 3,500 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. Amended OSA —In April 2022, PSEG LI entered into an amended OSA with LIPA. The OSA remains a 12-year services contract ending in 2025 with annual fixed and variable components. The fixed fee for the provision of services thereunder in 2024 is approximately $ 44 million and is updated each year based on the change in the Consumer Price Index (CPI). 81 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents Note 3. 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 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 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 prior to completing the sale of this fossil generating portfolio in February 2022 . 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 (ISRA) and the Connecticut Transfer Act (CTA). The amounts for any such environmental remediation are not currently estimable, but will likely be material in the aggregate. 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. 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. Note 4. Variable Interest Entity (VIE) VIE for which PSEG LI is the Primary Beneficiary PSEG LI consolidates Servco, a marginally capitalized VIE, which was created for the purpose of operating LIPA’s T&D system in Long Island, New York as well as providing administrative support functions to LIPA. PSEG LI is the primary beneficiary of Servco because it directs the operations of Servco, the activity that most significantly impacts Servco’s economic performance and it has the obligation to absorb losses of Servco that could potentially be significant to Servco. Such losses would be immaterial to PSEG. Pursuant to the OSA, Servco’s operating costs are paid entirely by LIPA, and therefore, PSEG LI’s risk is limited related to the activities of Servco. PSEG LI has no current obligation to provide direct financial support to Servco. In addition to payment of Servco’s operating costs as provided for in the OSA, PSEG LI receives an annual contract management fee. PSEG LI’s annual contractual management fee, in certain situations, could be partially offset by Servco’s annual storm costs not approved by the Federal Emergency Management Agency, limited contingent liabilities and penalties for failing to meet certain performance metrics. For transactions in which Servco acts as principal and controls the services provided to LIPA, such as transactions with its employees for labor and labor-related activities, including pension and OPEB-related transactions, Servco records revenues and the related pass-through expenditures separately in Operating Revenues and O&M Expense, respectively. In 2023, 2022 and 2021, Servco recorded $ 533 million, $ 516 million and $ 511 million, respectively, of O&M costs, the full reimbursement of 82 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents 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. Note 5. Property, Plant and Equipment and Jointly-Owned Facilities Information related to Property, Plant and Equipment as of December 31, 2023 and 2022 is detailed below: 2023 2022 Millions PSE&G Electric Transmission $ 17,379 $ 16,393 Electric Distribution 11,554 10,785 Gas Distribution and Transmission 11,545 10,616 Construction Work in Progress 1,283 1,336 Other 1,992 1,915 Total PSE&G 43,753 41,045 Nuclear Production 3,496 3,567 Nuclear Fuel in Service 772 758 Construction Work in Progress 224 177 Other 358 377 Total $ 48,603 $ 45,924 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. As of December 31, 2023 2022 Ownership Accumulated Accumulated Interest Plant Depreciation Plant Depreciation Millions PSE&G: Transmission Facilities Various $ 164 $ 69 $ 164 $ 67 PSEG Power: Nuclear Generating: Peach Bottom 50 % $ 1,451 $ 534 $ 1,444 $ 506 Salem 57 % $ 1,461 $ 534 $ 1,455 $ 516 Nuclear Support Facilities Various $ 178 $ 77 $ 228 $ 119 Other 14 % $ 1 $ — $ 1 $ — PSEG Power holds undivided ownership interests in the jointly-owned facilities above. PSEG Power is entitled to shares of the generating capability and output of each unit equal to its respective ownership interests. PSEG Power also pays its ownership share of additional construction costs, fuel inventory purchases and operating expenses. PSEG Power’s share of expenses for the jointly-owned facilities is included in the appropriate expense category. Each owner is responsible for any financing with respect to its pro rata share of capital expenditures. PSEG Power co-owns Salem and Peach Bottom with Constellation Energy Generation, LLC. PSEG Power is the operator of Salem and Constellation Energy Generation, LLC is the operator of Peach Bottom. A committee appointed by the co-owners provides oversight. Proposed O&M budgets and requests for major capital expenditures are reviewed and approved as part of the normal PSEG Power governance process. 83 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents Note 6. 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 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. Most of PSE&G’s Regulatory Assets and Liabilities as of December 31, 2023 are supported by written orders, either explicitly or implicitly through the BPU’s treatment of various cost items. These costs will be recovered and amortized over various future periods. Regulatory Assets and other investments and costs incurred under our 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 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. PSE&G had the following Regulatory Assets and Liabilities: As of December 31, 2023 2022 Millions Regulatory Assets Current 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 2018 Distribution Base Rate Case Regulatory Assets (BRC) — 47 Total Current Regulatory Assets 273 369 Noncurrent Pension and OPEB Costs $ 1,427 $ 1,405 Deferred Income Tax Regulatory Assets 1,343 1,168 Green Program Recovery Charges (GPRC) 827 447 Asset Retirement Obligations (ARO) 210 200 Manufactured Gas Plant (MGP) Remediation Costs 199 206 Cost of Removal 172 156 Clean Energy Future-Energy Cloud (CEF-EC) (Advanced Metering Infrastructure (AMI)) 153 80 SBC (Electric Bad Debt) 149 145 COVID-19 Deferral 131 137 CIP 129 72 Remediation Adjustment Charge (RAC) (Other SBC) 110 134 Deferred Storm Costs 109 109 Other 198 145 Total Noncurrent Regulatory Assets 5,157 4,404 Total Regulatory Assets $ 5,430 $ 4,773 84 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents As of December 31, 2023 2022 Millions Regulatory Liabilities Current Deferred Income Tax Regulatory Liabilities $ 170 $ 302 Gas Costs—Basic Gas Supply Service (BGSS) 97 35 Formula Rate True-up 22 1 GPRC 20 24 TAC 18 — Other 22 22 Total Current Regulatory Liabilities 349 384 Noncurrent Deferred Income Tax Regulatory Liabilities $ 2,075 $ 2,196 Formula Rate True-up — 31 Other — 13 Total Noncurrent Regulatory Liabilities 2,075 2,240 Total Regulatory Liabilities $ 2,424 $ 2,624 All Regulatory Assets and Liabilities are excluded from PSE&G’s rate base unless otherwise noted. The Regulatory Assets and Liabilities in the table above are defined as follows: • ARO: These costs represent the differences between rate-regulated cost of removal accounting and asset retirement accounting under GAAP. These costs will be recovered in future rates as assets are retired. • BRC: 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. 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 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. • CIP: 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 as defined by the BPU. 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. 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. 85 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents • 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 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. For the years ended December 31, 2023, 2022 and 2021, PSE&G had provided $ 80 million, $ 35 million and $ 22 million, respectively, in current tax repair flowbacks to customers. The recovery and amortization of the tax repair-related Deferred Income Tax Regulatory Assets is being recovered through the TAC regulatory mechanism. • Deferred Income Tax Regulatory Liabilities: These liabilities primarily relate to amounts due to customers for excess deferred income taxes as a result of the reduction in the federal corporate income tax rate provided in the Tax Cuts and Jobs Act of 2017 (Tax Act), and accumulated deferred income taxes from previously realized distribution-related tax repair deductions. As part of its settlement with its regulators, PSE&G agreed to refund the excess deferred income taxes as follows: • 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 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. • Previously realized distribution-related tax repair deductions are being refunded to customers over ten years through PSE&G’s TAC mechanism. As of December 31, 2023, the balance remaining to be flowed back to customers was approximately $ 387 million through 2028. • Protected transmission-related excess deferred income taxes are being refunded to customers over the remaining useful life of transmission property, plant and equipment through PSE&G’s transmission formula rate mechanism. As of December 31, 2023, the balance remaining to be flowed back to customers was approximately $ 931 million. • Deferred Storm Costs: 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: These costs represent the over or under recovered amounts associated with BGS, as approved by the BPU. Pursuant to BPU requirements, PSE&G serves as the supplier of last resort for electric customers within its service territory that are not served by another supplier. Pricing for those services are set by the BPU as a pass-through, resulting in no margin for PSE&G’s operations. Over or under recovered balances with interest are returned or recovered through monthly filings. • Formula Rate True-Up: PSE&G’s transmission revenues are earned under a FERC-approved annual formula rate mechanism which 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. • Gas Costs — BGSS: These costs represent the over or under recovered amounts associated with BGSS, as approved by the BPU. Pursuant to BPU requirements, PSE&G serves as the supplier of last resort for gas customers within its service territory that are not served by another supplier. Pricing for those services are set by the BPU as a pass-through, resulting in no margin for PSE&G’s operations. Over or under collected balances are returned or recovered through an annual filing. Interest is accrued only on over recovered balances. • GPRC: 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. The GPRC 86 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents 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: 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, EE 2017 Program and Clean Energy Future–Energy Efficiency (CEF-EE). 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. 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: Represents the low end of the range for the remaining environmental investigation and remediation program cleanup costs for MGPs that are probable of recovery in future rates. Once these costs are incurred, they are recovered through the RAC in the SBC over a seven year period with interest. • New Jersey Clean Energy Program: The BPU approved future funding requirements for EE and RE Programs. The BPU funding requirements are recovered through the SBC. • Pension and OPEB Costs: 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. These costs are amortized and recovered in future rates. • RAC (Other SBC): Costs incurred to clean up MGPs which are recovered over seven years with interest through an annual filing. • SBC: The SBC, as authorized by the BPU and the New Jersey Electric Discount and Energy Competition Act, includes costs related to PSE&G’s electric and gas business as follows: (1) the Universal Service Fund; (2) EE & RE Programs; (3) Electric bad debt expense; and (4) the RAC for incurred MGP remediation expenditures. Over or under recovered balances with interest are to be returned or recovered through an annual filing. • TAC: 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 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. 87 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents • 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. • 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. 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 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. • 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. • 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. 88 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents • 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. 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. • 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 RE 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 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. Note 7. Leases As of December 31, 2023, PSEG and its subsidiaries were both a lessee and a lessor in operating leases. Lessee PSE&G PSE&G has operating leases for office space for customer service centers, rooftops and land for its Solar 4 All ® facilities, equipment, vehicles and land for certain electric substations. These leases have remaining lease terms through 2040, some of which include options to extend the leases for up to four 5-year terms or one 10-year term; and two include options to extend the leases for one 45-year and one 48-year term, respectively. Some leases have fixed rent payments that have escalations based on certain indices, such as the CPI. Certain leases contain variable payments. PSEG Power & Other 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. One lease has fixed rent payments that has escalations based on the CPI. Certain leases contain variable payments. Services has operating leases for real estate and office equipment. These leases have remaining terms through 2030. Services’ lease for its headquarters, which ends in 2030, includes options to extend for two 5-year terms. 89 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents Operating Lease Costs The following amounts relate to total operating lease costs, including both amounts recognized in the Consolidated Statements of Operations during the years ended December 31, 2023, 2022 and 2021 and any amounts capitalized as part of the cost of another asset, and the cash flows arising from lease transactions. PSE&G PSEG Power & Other Total Millions Operating Lease Costs Year Ended December 31, 2023 Long-term Lease Costs $ 34 $ 19 $ 53 Short-term Lease Costs 21 6 27 Variable Lease Costs 2 13 15 Total Operating Lease Costs $ 57 $ 38 $ 95 Year Ended December 31, 2023 Cash Paid for Amounts Included in the Measurement of Operating Lease Liabilities $ 17 $ 17 $ 34 Weighted Average Remaining Lease Term in Years 10 7 8 Weighted Average Discount Rate 4.0 % 4.2 % 4.1 % PSE&G PSEG Power & Other Total Millions Operating Lease Costs Year Ended December 31, 2022 Long-term Lease Costs $ 31 $ 25 $ 56 Short-term Lease Costs 21 5 26 Variable Lease Costs 2 11 13 Total Operating Lease Costs $ 54 $ 41 $ 95 Year Ended December 31, 2022 Cash Paid for Amounts Included in the Measurement of Operating Lease Liabilities $ 17 $ 25 $ 42 Weighted Average Remaining Lease Term in Years 11 7 9 Weighted Average Discount Rate 3.5 % 4.1 % 3.9 % 90 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents PSE&G PSEG Power & Other Total Millions Operating Lease Costs Year Ended December 31, 2021 Long-term Lease Costs $ 24 $ 26 $ 50 Short-term Lease Costs 36 6 42 Variable Lease Costs 2 18 20 Total Operating Lease Costs $ 62 $ 50 $ 112 Year Ended December 31, 2021 Cash Paid for Amounts Included in the Measurement of Operating Lease Liabilities $ 17 $ 26 $ 43 Weighted Average Remaining Lease Term in Years 12 8 9 Weighted Average Discount Rate 3.4 % 4.1 % 3.8 % Operating lease liabilities as of December 31, 2023 had the following maturities on an undiscounted basis: PSE&G PSEG Power & Other Total Millions 2024 $ 18 $ 17 $ 35 2025 15 17 32 2026 13 16 29 2027 12 17 29 2028 10 16 26 Thereafter 57 28 85 Total Minimum Lease Payments $ 125 $ 111 $ 236 The following is a reconciliation of the undiscounted cash flows to the discounted Operating Lease Liabilities recognized on the Consolidated Balance Sheets: As of December 31, 2023 PSE&G PSEG Power & Other Total Millions Undiscounted Cash Flows $ 125 $ 111 $ 236 Reconciling Amount due to Discount Rate ( 21 ) ( 15 ) ( 36 ) Total Discounted Operating Lease Liabilities $ 104 $ 96 $ 200 As of December 31, 2022 PSE&G PSEG Power & Other Total Millions Undiscounted Cash Flows $ 109 $ 126 $ 235 Reconciling Amount due to Discount Rate ( 20 ) ( 18 ) ( 38 ) Total Discounted Operating Lease Liabilities $ 89 $ 108 $ 197 As of December 31, 2023, the current portions of Operating Lease Liabilities included in Other Current Liabilities were $ 27 million and $ 15 million for PSEG and PSE&G, respectively. 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. 91 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents Lessor PSEG Power & Other Energy Holdings is the lessor in leveraged leases. See Note 8. Long-Term Investments and Note 9. Financing Receivables. 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. 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. Lease income was based on solar energy generation; therefore, all rental income recorded under these leases was variable. The following is the operating lease income for the years ended December 31, 2023, 2022 and 2021: Operating Lease Income Millions Year Ended December 31, 2023 Fixed Lease Income $ 24 Variable Lease Income — Total Operating Lease Income $ 24 Year Ended December 31, 2022 Fixed Lease Income $ 31 Variable Lease Income — Total Operating Lease Income $ 31 Year Ended December 31, 2021 Fixed Lease Income $ 23 Variable Lease Income 12 Total Operating Lease Income $ 35 Operating leases had the following minimum future fixed lease receipts as of December 31, 2023: Millions 2024 $ 14 2025 14 2026 14 2027 14 2028 13 Thereafter 110 Total Minimum Future Lease Receipts $ 179 92 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents Note 8. Long-Term Investments Long-Term Investments as of December 31, 2023 and 2022 included the following: As of December 31, 2023 2022 Millions PSE&G Life Insurance and Supplemental Benefits $ 77 $ 81 Solar Loans 40 62 PSEG Power & Other Lease Investments 161 175 Equity Method Investments (A) 17 306 Total Long-Term Investments $ 295 $ 624 (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. See Note 3. Asset Dispositions and Impairments for information regarding the sales of our ownership interest in the Ocean Wind 1 project and Kalaeloa. Leases Energy Holdings, through its indirect subsidiaries, has investments in assets subject primarily to leveraged lease accounting. A leveraged lease is typically comprised of an investment by an equity investor and debt provided by a third-party debt investor. The debt is recourse only to the assets subject to lease and is not included on PSEG’s Consolidated Balance Sheets. As an equity investor, Energy Holdings’ equity investments in the leases are comprised of the total expected lease receivables over the lease terms, reduced for any income not yet earned on the leases. 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 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. Leveraged leases outstanding as of December 31, 2023 commenced in or prior to 2000. The following table shows Energy Holdings’ gross and net lease investment as of December 31, 2023 and 2022. As of December 31, 2023 2022 Millions Lease Receivables (net of Non-Recourse Debt) $ 223 $ 249 Estimated Residual Value of Leased Assets — — Total Investment in Rental Receivables 223 249 Unearned and Deferred Income ( 62 ) ( 74 ) Gross Investments in Leases 161 175 Deferred Tax Liabilities ( 36 ) ( 39 ) Net Investments in Leases $ 125 $ 136 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. Note 9. Financing Receivables PSE&G PSE&G’s Solar Loan Programs are designed to help finance the installation of solar power systems throughout its electric service area. Interest income on the loans is recorded on an accrual basis. The loans are paid back with SRECs generated from the related installed solar electric system. PSE&G uses collection experience as a credit quality indicator for its Solar Loan Programs and conducts a comprehensive credit review for all prospective borrowers. As of December 31, 2023, none of the solar loans were impaired; 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 93 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents and III. 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.” As of December 31, Outstanding Loans by Class of Customer 2023 2022 Millions Commercial/Industrial $ 60 $ 85 Residential 3 4 Total 63 89 Current Portion (included in Accounts Receivable) ( 23 ) ( 27 ) Noncurrent Portion (included in Long-Term Investments) $ 40 $ 62 The solar loans originated under three Solar Loan Programs are comprised as follows: Programs Balance as of December 31, 2023 Funding Provided Residential Loan Term Non-Residential Loan Term Millions Solar Loan I $ 4 prior to 2013 10 years 15 years Solar Loan II 30 prior to 2015 10 years 15 years Solar Loan III 29 largely funded as of December 31, 2023 10 years 10 years Total $ 63 The average life of loans paid in full is eight years , which is lower than the loan terms of 10 to 15 years due to the generation of SRECs being greater than expected and/or cash payments made to the loan. Payments on all outstanding loans were current as of December 31, 2023 and have an average remaining life of approximately three years. There are no remaining residential loans outstanding under the Solar Loan I program. Energy Holdings Energy Holdings had net investments in assets subject to leveraged lease accounting of $ 125 million as of December 31, 2023 and $ 136 million as of December 31, 2022 (see Note 8. Long-Term Investments). The corresponding receivables associated with the lease portfolio are reflected as follows, net of non-recourse debt. The ratings in the table represent the ratings of the entities providing payment assurance to Energy Holdings. Lease Receivables, Net of Non-Recourse Debt Counterparties’ Credit Rating Standard & Poor’s (S&P) as of December 31, 2023 As of December 31, 2023 Millions AA $ 7 A- 43 BBB+ to BBB 173 Total $ 223 PSEG recorded no credit losses for the leveraged leases existing on December 31, 2023. Upon the occurrence of certain defaults, indirect subsidiaries of Energy Holdings would exercise their rights and seek recovery of their investments, potentially including stepping into the lease directly to protect their investments. While these actions could ultimately protect or mitigate the loss of value, they could require the use of significant capital and trigger certain material tax obligations which could, for certain leases, wholly or partially be mitigated by tax indemnification claims against the counterparty. A bankruptcy of a lessee would likely delay and potentially limit any efforts on the part of the lessors to assert their rights upon default and could delay the monetization of claims. 94 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents Note 10. Trust Investments NDT Fund In accordance with NRC regulations, entities owning an interest in nuclear generating facilities are required to determine the costs and funding methods necessary to decommission such facilities upon termination of operation. As a general practice, each nuclear owner places funds in independent external trust accounts it maintains to provide for decommissioning. 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. The trust contains two separate funds: a qualified fund and a non-qualified fund. Section 468A of the Internal Revenue Code limits the amount of money that can be contributed into a qualified fund. PSEG Power’s share of decommissioning costs related to its five nuclear units was estimated to be between $ 3.0 billion and $ 3.4 billion, including contingencies. The liability for decommissioning recorded on a discounted basis as of December 31, 2023 was approximately $ 1.1 billion and is included in the ARO. The funds are managed by third-party investment managers who operate under investment guidelines developed by PSEG Power. The following tables show the fair values and gross unrealized gains and losses for the securities held in the NDT Fund. As of December 31, 2023 Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Millions Equity Securities Domestic $ 482 $ 300 $ ( 2 ) $ 780 International 423 118 ( 11 ) 530 Total Equity Securities 905 418 ( 13 ) 1,310 Available-for-Sale Debt Securities Government 759 4 ( 72 ) 691 Corporate 555 6 ( 39 ) 522 Total Available-for-Sale Debt Securities 1,314 10 ( 111 ) 1,213 Total NDT Fund Investments (A) $ 2,219 $ 428 $ ( 124 ) $ 2,523 (A) The NDT Fund Investments table excludes cash and foreign currency of $ 1 million as of December 31, 2023, which is part of the NDT Fund. As of December 31, 2022 Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Millions Equity Securities Domestic $ 476 $ 232 $ ( 12 ) $ 696 International 336 68 ( 28 ) 376 Total Equity Securities 812 300 ( 40 ) 1,072 Available-for-Sale Debt Securities Government 721 — ( 94 ) 627 Corporate 597 1 ( 69 ) 529 Total Available-for-Sale Debt Securities 1,318 1 ( 163 ) 1,156 Total NDT Fund Investments (A) $ 2,130 $ 301 $ ( 203 ) $ 2,228 (A) The NDT Fund Investments table excludes cash and foreign currency of $ 2 million as of December 31, 2022, which is part of the NDT Fund. 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 95 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents 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. As of December 31, 2023 2022 Millions Accounts Receivable $ 19 $ 14 Accounts Payable $ 6 $ 6 The following table shows the value of securities in the NDT Fund that have been in an unrealized loss position for less than and greater than 12 months. As of December 31, 2023 As of December 31, 2022 Less Than 12 Months Greater Than 12 Months Less Than 12 Months Greater Than 12 Months Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Millions Equity Securities (A) Domestic $ 44 $ ( 1 ) $ 4 $ — $ 90 $ ( 10 ) $ 9 $ ( 2 ) International 35 ( 4 ) 28 ( 8 ) 88 ( 12 ) 38 ( 16 ) Total Equity Securities 79 ( 5 ) 32 ( 8 ) 178 ( 22 ) 47 ( 18 ) Available-for-Sale Debt Securities Government (B) 90 ( 1 ) 432 ( 71 ) 301 ( 27 ) 292 ( 67 ) Corporate (C) 19 — 329 ( 39 ) 221 ( 21 ) 249 ( 48 ) Total Available-for-Sale Debt Securities 109 ( 1 ) 761 ( 110 ) 522 ( 48 ) 541 ( 115 ) NDT Trust Investments $ 188 $ ( 6 ) $ 793 $ ( 118 ) $ 700 $ ( 70 ) $ 588 $ ( 133 ) (A) Equity Securities—Investments in marketable equity securities within the NDT Fund are primarily in common stocks within a broad range of industries and sectors. Unrealized gains and losses on these securities are recorded in Net Income. (B) Debt Securities (Government)—Unrealized gains and losses on these securities are recorded in Accumulated Other Comprehensive Income (Loss). The unrealized losses on PSEG Power’s NDT investments in U.S. Treasury obligations and Federal Agency mortgage-backed securities were caused by interest rate changes. PSEG Power also has investments in municipal bonds. It is not expected that these securities will settle for less than their amortized cost. PSEG Power does not intend to sell these securities nor will it be more-likely-than-not required to sell before recovery of their amortized cost. PSEG Power did not recognize credit losses for U.S. Treasury obligations and Federal Agency mortgage-backed securities because these investments are guaranteed by the U.S. government or an agency of the U.S. government. PSEG Power did not recognize credit losses for municipal bonds because they are primarily investment grade securities. (C) Debt Securities (Corporate)—Unrealized gains and losses on these securities are recorded in Accumulated Other Comprehensive Income (Loss). Unrealized losses were due to market declines. It is not expected that these securities would settle for less than their amortized cost. PSEG Power does not intend to sell these securities nor will it be more-likely-than-not required to sell before recovery of their amortized cost. PSEG Power did not recognize credit losses for corporate bonds because they are primarily investment grade securities. 96 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents The proceeds from the sales of and the net gains (losses) on securities in the NDT Fund were: Years Ended December 31, 2023 2022 2021 Millions Proceeds from Sales (A) $ 1,685 $ 1,521 $ 1,930 Net Realized Gains (Losses): Gross Realized Gains $ 142 $ 86 $ 236 Gross Realized Losses ( 100 ) ( 136 ) ( 70 ) Net Realized Gains (Losses) on NDT Fund (B) 42 ( 50 ) 166 Net Unrealized Gains (Losses) on Equity Securities 146 ( 205 ) 19 Net Gains (Losses) on NDT Fund Investments $ 188 $ ( 255 ) $ 185 (A) Includes activity in accounts related to the liquidation of funds being transitioned within the trust. (B) The cost of these securities was determined on the basis of specific identification. The NDT Fund debt securities held as of December 31, 2023 had the following maturities: Time Frame Fair Value Millions Less than one year $ 17 1 - 5 years 314 6 - 10 years 214 11 - 15 years 62 16 - 20 years 101 Over 20 years 505 Total NDT Available-for-Sale Debt Securities $ 1,213 PSEG Power periodically assesses individual debt securities whose fair value is less than amortized cost to determine whether the investments are impaired. For these securities, management considers its intent to sell or requirement to sell a security prior to expected recovery. In those cases where a sale is expected, any impairment would be recorded through earnings. For fixed income securities where there is no intent to sell or likely requirement to sell, management evaluates whether credit loss is a component of the impairment. If so, that portion is recorded through earnings while the noncredit loss component is recorded through Accumulated Other Comprehensive Income (Loss). Any subsequent recoveries of the noncredit loss component of the impairment would be recorded through Accumulated Other Comprehensive Income (Loss). Any subsequent recoveries of the credit loss component would be recognized through earnings. The assessment of fair market value compared to cost is applied on a weighted average basis taking into account various purchase dates and initial cost of the securities. Rabbi Trust PSEG maintains certain unfunded nonqualified benefit plans to provide supplemental retirement and deferred compensation benefits to certain key employees. Certain assets related to these plans have been set aside in a grantor trust commonly known as a “Rabbi Trust.” 97 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents The following tables show the fair values, gross unrealized gains and losses and amortized cost basis for the securities held in the Rabbi Trust. As of December 31, 2023 Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Millions Domestic Equity Securities $ 10 $ 8 $ — $ 18 Available-for-Sale Debt Securities Government 110 — ( 19 ) 91 Corporate 80 — ( 10 ) 70 Total Available-for-Sale Debt Securities 190 — ( 29 ) 161 Total Rabbi Trust Investments $ 200 $ 8 $ ( 29 ) $ 179 As of December 31, 2022 Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Millions Domestic Equity Securities $ 14 $ 6 $ — $ 20 Available-for-Sale Debt Securities Government 110 — ( 21 ) 89 Corporate 89 — ( 15 ) 74 Total Available-for-Sale Debt Securities 199 — ( 36 ) 163 Total Rabbi Trust Investments $ 213 $ 6 $ ( 36 ) $ 183 Net unrealized gains (losses) on debt securities of $( 21 ) 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 2023 related to equity securities still held at the end of December 31, 2023 was $ 2 million. The amounts in the preceding tables do not include receivables and payables for Rabbi Trust Fund transactions which have not settled at the end of each period. Such amounts are included in Accounts Receivable and Accounts Payable on the Consolidated Balance Sheets as shown in the following table. As of December 31, 2023 2022 Millions Accounts Receivable $ 1 $ 1 Accounts Payable $ — $ — 98 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents The following table shows the value of securities in the Rabbi Trust Fund that have been in an unrealized loss position for less than and greater than 12 months: As of December 31, 2023 As of December 31, 2022 Less Than 12 Months Greater Than 12 Months Less Than 12 Months Greater Than 12 Months Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Millions Available-for-Sale Debt Securities Government (A) $ 3 $ — $ 83 $ ( 19 ) $ 32 $ ( 5 ) $ 57 $ ( 16 ) Corporate (B) 3 — 60 ( 10 ) 35 ( 5 ) 39 ( 10 ) Total Available-for-Sale Debt Securities 6 — 143 ( 29 ) 67 ( 10 ) 96 ( 26 ) Rabbi Trust Investments $ 6 $ — $ 143 $ ( 29 ) $ 67 $ ( 10 ) $ 96 $ ( 26 ) (A) Debt Securities (Government)—Unrealized gains and losses on these securities are recorded in Accumulated Other Comprehensive Income (Loss). The unrealized losses on PSEG’s Rabbi Trust investments in U.S. Treasury obligations and Federal Agency mortgage-backed securities were caused by interest rate changes. PSEG also has investments in municipal bonds. It is not expected that these securities will settle for less than their amortized cost. PSEG does not intend to sell these securities nor will it be more-likely-than-not required to sell before recovery of their amortized cost. PSEG did not recognize credit losses for U.S. Treasury obligations and Federal Agency mortgage-backed securities because these investments are guaranteed by the U.S. government or an agency of the U.S. government. PSEG did not recognize credit losses for municipal bonds because they are primarily investment grade securities. (B) Debt Securities (Corporate)—Unrealized gains and losses on these securities are recorded in Accumulated Other Comprehensive Income (Loss). Unrealized losses were due to market declines. It is not expected that these securities would settle for less than their amortized cost. PSEG does not intend to sell these securities nor will it be more-likely-than-not required to sell before recovery of their amortized cost. PSEG did not recognize credit losses for corporate bonds because they are primarily investment grade. The proceeds from the sales of and the net gains (losses) on securities in the Rabbi Trust Fund were: Years Ended December 31, 2023 2022 2021 Millions Proceeds from Rabbi Trust Sales $ 29 $ 65 $ 170 Net Realized Gains (Losses): Gross Realized Gains $ 5 $ 5 $ 16 Gross Realized Losses ( 6 ) ( 9 ) ( 8 ) Net Realized Gains (Losses) on Rabbi Trust (A) ( 1 ) ( 4 ) 8 Net Unrealized Gains (Losses) on Equity Securities 2 ( 6 ) 1 Net Gains (Losses) on Rabbi Trust Investments $ 1 $ ( 10 ) $ 9 (A) The cost of these securities was determined on the basis of specific identification. 99 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents The Rabbi Trust debt securities held as of December 31, 2023 had the following maturities: Time Frame Fair Value Millions Less than one year $ 8 1 - 5 years 27 6 - 10 years 16 11 - 15 years 10 16 - 20 years 20 Over 20 years 80 Total Rabbi Trust Available-for-Sale Debt Securities $ 161 PSEG periodically assesses individual debt securities whose fair value is less than amortized cost to determine whether the investments are considered to be impaired. For these securities, management considers its intent to sell or requirement to sell a security prior to expected recovery. In those cases where a sale is expected, any impairment would be recorded through earnings. For fixed income securities where there is no intent to sell or likely requirement to sell, management evaluates whether credit loss is a component of the impairment. If so, that portion is recorded through earnings while the noncredit loss component is recorded through Accumulated Other Comprehensive Income (Loss). Any subsequent recoveries of the noncredit loss component of the impairment would be recorded through Accumulated Other Comprehensive Income (Loss). Any subsequent recoveries of the credit loss component would be recognized through earnings. The assessment of fair market value compared to cost is applied on a weighted average basis taking into account various purchase dates and initial cost of the securities. The fair value of the Rabbi Trust related to PSEG and PSE&G are detailed as follows: As of December 31, As of December 31, 2023 2022 Millions PSE&G $ 32 $ 32 PSEG Power & Other 147 151 Total Rabbi Trust Investments $ 179 $ 183 Note 11. Asset Retirement Obligations (AROs) PSEG and PSE&G recognize liabilities for the expected cost of retiring long-lived assets for which a legal obligation exists to remove or dispose of an asset or some component of an asset at retirement. These AROs are recorded at fair value in the period in which they are incurred and are capitalized as part of the carrying amount of the related long-lived assets. PSEG’s subsidiaries, except for PSE&G, accrete the ARO liability to reflect the passage of time with the corresponding expense recorded in O&M. PSE&G, as a rate-regulated entity, recognizes Regulatory Assets or Liabilities as a result of timing differences between the recording of costs and costs recovered through the rate-making process. PSE&G has conditional AROs primarily for legal obligations related to the removal of treated wood poles and the requirement to seal natural gas pipelines at all sources of gas when the pipelines are no longer in service. PSE&G does not record an ARO for its protected steel and poly-based natural gas lines, as management believes that these categories of gas lines have an indeterminable life. PSEG’s other ARO liability primarily relates to decommissioning of its nuclear power plants in accordance with NRC requirements. PSEG has an independent external trust that is intended to fund decommissioning of its nuclear facilities upon termination of operation. For additional information, see Note 10. Trust Investments. PSEG also identified conditional AROs related to PSEG’s retained fossil generation sites primarily related to liabilities for removal of asbestos. To estimate the fair value of its other AROs, PSEG uses a probability weighted, discounted cash flow model which, on a unit by unit basis, considers multiple outcome scenarios that include significant estimates and assumptions, and are based on third-party decommissioning cost estimates, cost escalation rates, inflation rates and discount rates. Updated nuclear cost studies are obtained triennially unless new information necessitates more frequent updates. 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 100 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents 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. The changes to the ARO liabilities for PSEG and PSE&G during 2022 and 2023 are presented in the following table: PSEG PSE&G PSEG Power & Other Millions ARO Liability as of January 1, 2022 $ 1,573 $ 363 $ 1,210 Liabilities Settled ( 15 ) ( 15 ) — Accretion Expense 50 — 50 Accretion Expense Deferred and Recovered in Rate Base (A) 17 17 — Revision to Present Values of Estimated Cash Flows ( 126 ) 19 ( 145 ) ARO Liability as of December 31, 2022 $ 1,499 $ 384 $ 1,115 Liabilities Settled $ ( 13 ) $ ( 13 ) $ — Accretion Expense 51 — 51 Accretion Expense Deferred and Recovered in Rate Base (A) 16 16 — Revision to Present Values of Estimated Cash Flows ( 85 ) 14 ( 99 ) ARO Liability as of December 31, 2023 $ 1,468 $ 401 $ 1,067 (A) Not reflected as expense in Consolidated Statements of Operations. In February 2022, the NRC issued an order related to its review of the subsequent license renewal (SLR) application for the Peach Bottom nuclear units. While the NRC had previously granted the SLR to the Peach Bottom units, the NRC was responding to pending motions that had not previously been adjudicated. In its decision, the NRC concluded that the previous environmental review required by the National Environmental Policy Act (NEPA) was incomplete because it did not adequately address environmental impacts resulting from extending the units’ licenses by 20 years. As a result, at the direction of the NRC, the NRC staff changed the expiration dates for the licenses back to 2033 and 2034, until the completion of the NEPA analysis. The NRC directed, however, that the subsequently renewed licenses themselves remain in effect. The NRC also stated that it fully expects that the staff will complete its update of the NEPA analysis before 2033. As such, at this time, PSEG has not adjusted the useful lives or the assumed shutdown probabilities assigned to the 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 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. 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. 101 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents Note 12. 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 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. In addition, represented and non-represented employees are eligible for participation in PSEG’s two defined contribution plans. PSEG and PSE&G are required to record the under or over funded positions of their defined benefit pension and OPEB plans on their respective balance sheets. Such funding positions are required to be measured as of the date of their respective year-end Consolidated Balance Sheets. For underfunded plans, the liability is equal to the difference between the plan’s benefit obligation and the fair value of plan assets. For defined benefit pension plans, the benefit obligation is the projected benefit obligation. For OPEB plans, the benefit obligation is the accumulated postretirement benefit obligation. In addition, GAAP requires that the total unrecognized costs for defined benefit pension and OPEB plans be recorded as an after-tax charge to Accumulated Other Comprehensive Income (Loss), a separate component of Stockholders’ Equity. However, for PSE&G, because the amortization of the unrecognized costs is being collected from customers, the accumulated unrecognized costs are recorded as a Regulatory Asset. The unrecognized costs represent actuarial gains or losses and prior service costs which have not been expensed. 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. The following table provides a roll-forward of the changes in the benefit obligation and the fair value of plan assets during each of the two years in the periods ended December 31, 2023 and 2022. 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. 102 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents Pension Benefits Other Benefits 2023 2022 2023 2022 Millions Change in Benefit Obligation Benefit Obligation at Beginning of Year (A) $ 5,628 $ 7,240 $ 851 $ 1,197 Service Cost 90 142 3 6 Interest Cost 259 167 41 26 Actuarial (Gain) Loss (B) 103 ( 1,517 ) ( 30 ) ( 314 ) Gross Benefits Paid ( 352 ) ( 382 ) ( 68 ) ( 61 ) Settlements ( 970 ) — — — Other — ( 22 ) 5 ( 3 ) Benefit Obligation at End of Year (A) $ 4,758 $ 5,628 $ 802 $ 851 Change in Plan Assets Fair Value of Assets at Beginning of Year $ 4,911 $ 6,906 $ 429 $ 606 Actual Return on Plan Assets 539 ( 1,606 ) 51 ( 139 ) Employer Contributions 12 11 28 23 Gross Benefits Paid ( 352 ) ( 382 ) ( 68 ) ( 61 ) Settlements ( 970 ) — — — Other — ( 18 ) — — Fair Value of Assets at End of Year $ 4,140 $ 4,911 $ 440 $ 429 Funded Status Funded Status (Plan Assets less Benefit Obligation) $ ( 618 ) $ ( 717 ) $ ( 362 ) $ ( 422 ) Additional Amounts Recognized in the Consolidated Balance Sheets 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 (C) Prior Service Cost (Credit) $ — $ — $ 6 $ ( 52 ) Net Actuarial Loss (Gain) 1,656 2,151 ( 6 ) 41 Total $ 1,656 $ 2,151 $ — $ ( 11 ) (A) Represents projected benefit obligation for pension benefits and the accumulated postretirement benefit obligation for other benefits. 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 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. As of December 31, 2023, PSEG had funded approximately 87 % of its projected pension benefit obligation. This percentage does not include $ 179 million of assets in the Rabbi Trust as of December 31, 2023, which provide funding for the nonqualified pension plans and certain deferred compensation. The nonqualified pension plans included in the projected benefit obligation in the above table were $ 140 million. 103 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents Accumulated Benefit Obligation The accumulated benefit obligation for all PSEG’s defined benefit pension plans was $ 4.7 billion as of December 31, 2023 and $ 5.5 billion as of December 31, 2022. 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, co-owner allocations and the 2023 BPU accounting order. Only the service cost component is eligible for capitalization, when applicable. Pension Benefits Years Ended December 31, Other Benefits Years Ended December 31, 2023 2022 2021 2023 2022 2021 Millions Components of Net Periodic Benefit (Credits) Costs Service Cost (included in O&M Expense) $ 90 $ 142 $ 151 $ 3 $ 6 $ 9 Non-Service Components of Pension and OPEB (Credits) Costs Interest Cost 259 167 140 41 26 22 Expected Return on Plan Assets ( 361 ) ( 484 ) ( 476 ) ( 33 ) ( 42 ) ( 42 ) Amortization of Net Prior Service Credit — — — ( 52 ) ( 129 ) ( 129 ) 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 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 Years Ended December 31, Other Benefits Years Ended December 31, 2023 2022 2021 2023 2022 2021 Millions PSE&G $ 50 $ ( 70 ) $ ( 64 ) $ ( 42 ) $ ( 109 ) $ ( 92 ) PSEG Power & Other 359 ( 45 ) ( 18 ) ( 1 ) ( 15 ) ( 4 ) 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. 104 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents The following table provides the pre-tax changes recognized in Accumulated Other Comprehensive Income (Loss), Regulatory Assets and Deferred Assets: Pension Other Benefits 2023 2022 2023 2022 Millions 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 — Amortization of Prior Service Credit — — 52 129 Total $ ( 495 ) $ 508 $ 11 $ ( 23 ) The following assumptions were used to determine the benefit obligations and net periodic benefit costs: Pension Benefits Other Benefits 2023 2022 2021 2023 2022 2021 Weighted-Average Assumptions Used to Determine Benefit Obligations as of December 31 Discount Rate 5.02 % 5.20 % 2.94 % 4.96 % 5.16 % 2.82 % Rate of Compensation Increase 4.60 % 4.40 % 4.40 % 4.60 % 4.40 % 4.40 % Cash Balance Interest Crediting Rate 6.00 % 6.00 % 6.00 % N/A N/A N/A Weighted-Average Assumptions Used to Determine Net Periodic Benefit Cost for Years Ended December 31 Discount Rate 5.20 % 2.94 % 2.61 % 5.16 % 2.82 % 2.46 % Service Cost Interest Rate 5.31 % 3.19 % 2.94 % 5.23 % 3.06 % 2.76 % Interest Cost Interest Rate 5.09 % 2.37 % 1.91 % 5.07 % 2.21 % 1.70 % Expected Return on Plan Assets 8.10 % 7.20 % 7.70 % 8.10 % 7.20 % 7.69 % Rate of Compensation Increase 4.40 % 4.40 % 4.40 % 4.40 % 4.40 % 4.40 % Cash Balance Interest Crediting Rate 6.00 % 6.00 % 6.00 % N/A N/A N/A Assumed Health Care Cost Trend Rates as of December 31 Health Care Costs Immediate Rate 8.89 % 6.98 % 6.14 % Ultimate Rate 4.75 % 4.75 % 4.75 % Year Ultimate Rate Reached 2033 2032 2029 Plan Assets The investments of pension and OPEB plans are held in a trust account by the Trustee and consist of an undivided interest in an investment account of the Master Trust. The investments in the pension and OPEB plans are measured at fair value within a hierarchy that prioritizes the inputs to fair value measurements into three levels. See Note 17. Fair Value Measurements for more information on fair value guidance. Use of the Master Trust permits the commingling of pension plan assets and OPEB plan assets for investment and administrative purposes. Although assets of the plans are commingled in the Master Trust, the Trustee maintains supporting records for the purpose of allocating the net gain or loss of the investment account to the respective participating plans. The net investment income of the investment assets is allocated by the Trustee to each participating plan based on the relationship of the interest of each plan to the total of the interests of the participating plans. As of December 31, 2023, the pension plan interest and OPEB plan interest in such assets of the Master Trust were approximately 90 % and 10 %, respectively. The following tables present information about the investments measured at fair value on a recurring basis as of December 31, 2023 and 2022, including the fair value measurements and the levels of inputs used in determining those fair values. 105 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents Recurring Fair Value Measurements as of December 31, 2023 Quoted Market Prices for Identical Assets Significant Other Observable Inputs Description Total (Level 1) (Level 2) Millions Cash Equivalents (A) $ 39 $ 39 $ — Equity Securities Common Stock (B) 748 748 — Commingled (C) 1,376 — 1,376 Debt Securities (D) U.S. Treasury 1,299 — 1,299 Commingled 4 4 — Subtotal Fair Value $ 3,466 $ 791 $ 2,675 Measured at net asset value practical expedient Commingled—Equities (E) 745 Real Estate Investment (F) 365 Other 2 Total Fair Value (G) $ 4,578 Recurring Fair Value Measurements as of December 31, 2022 Quoted Market Prices for Identical Assets Significant Other Observable Inputs Description Total (Level 1) (Level 2) Millions Cash Equivalents (A) $ 36 $ 36 $ — Equity Securities Common Stock (B) 1,231 1,231 — Commingled (C) 1,346 — 1,346 Debt Securities (D) U.S. Treasury 1,351 — 1,351 Commingled 4 4 — Subtotal Fair Value $ 3,968 $ 1,271 $ 2,697 Measured at net asset value practical expedient Commingled—Equities (E) 965 Real Estate Investment (F) 395 Other 3 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 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 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 106 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents 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. (F) The unlisted real estate fund invests in office, apartment, industrial and retail space. The fund is valued using the NAV per unit of funds. The investment value of the real estate properties is determined on a quarterly basis by independent market appraisers engaged by the board of directors of the fund. The ability to redeem funds is subject to the availability of cash arising from net investment income, allocations and the sale of investments in the normal course of business. The fund’s NAV is published quarterly. In addition, redemptions require one quarter advance notice prior to redemption and are fulfilled quarterly. The fund, therefore, does not meet the definition of readily determinable fair value. 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) 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: As of December 31, Investments 2023 2022 Equity Securities 63 % 67 % Debt Securities 28 25 Other Investments 9 8 Total Percentage 100 % 100 % PSEG utilizes forecasted returns, risk, and correlation of all asset classes in order to develop an efficient portfolio. PSEG’s long-term target asset allocation of 54 % equities, 18 % real assets and 28 % fixed income is consistent with the funds’ financial objectives. Certain investments in real assets ( 13 % as of 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 allocation. 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 8.1 % for 2023 and will remain at 8.1 % for 2024. This expected return includes a premium for active management. Plan Contributions 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. Estimated Future Benefit Payments The following pension benefit and postretirement benefit payments are expected to be paid to plan participants. Year Pension Benefits Other Benefits Millions 2024 $ 364 $ 74 2025 325 73 2026 331 71 2027 338 69 2028 343 67 2029-2033 1,758 288 Total $ 3,459 $ 642 107 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents 401(k) Plans PSEG sponsors two 401(k) plans, which are defined contribution retirement plans subject to the Employee Retirement Income Security Act (ERISA). Eligible represented employees of PSEG’s subsidiaries participate in the PSEG Employee Savings Plan (Savings Plan), while eligible non-represented employees of PSEG’s subsidiaries participate in the PSEG Thrift and Tax-Deferred Savings Plan (Thrift Plan). Eligible employees may contribute up to 50 % of their annual eligible compensation to these plans, not to exceed the IRS maximums, including any catch-up contributions for those employees age 50 and above. PSEG matches 50 % of such employee contributions up to 7 % of pay for Savings Plan participants and up to 8 % of pay for Thrift Plan participants. The amounts paid for employer matching contributions to the plans for PSEG and PSE&G are detailed as follows: Thrift Plan and Savings Plan Years Ended December 31, 2023 2022 2021 Millions PSE&G $ 29 $ 28 $ 28 PSEG Power & Other 14 14 16 Total Employer Matching Contributions $ 43 $ 42 $ 44 Servco Pension and OPEB Servco sponsors a qualified pension plan and OPEB plan covering its employees who meet certain eligibility criteria. Under the OSA, employee benefit costs for these plans are funded by LIPA. See Note 4. Variable Interest Entity. These obligations, as well as the offsetting long-term receivable, are separately presented on the Consolidated Balance Sheet of PSEG. The following table provides a roll-forward of the changes in Servco’s benefit obligation and the fair value of its plan assets during the years ended December 31, 2023 and 2022. 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. Pension Benefits Other Benefits 2023 2022 2023 2022 Millions Change in Benefit Obligation Benefit Obligation at Beginning of Year (A) $ 452 $ 596 $ 455 $ 640 Service Cost 24 38 12 21 Interest Cost 23 17 24 19 Actuarial (Gain) Loss (B) 31 ( 189 ) 35 ( 215 ) Plan Amendment 16 — — — Gross Benefits Paid ( 11 ) ( 10 ) ( 12 ) ( 10 ) Benefit Obligation at End of Year (A) $ 535 $ 452 $ 514 $ 455 Change in Plan Assets Fair Value of Assets at Beginning of Year $ 370 $ 422 $ — $ — Actual Return on Plan Assets 56 ( 72 ) — — Employer Contributions 18 30 12 10 Gross Benefits Paid ( 11 ) ( 10 ) ( 12 ) ( 10 ) Fair Value of Assets at End of Year $ 433 $ 370 $ — $ — Funded Status Funded Status (Plan Assets less Benefit Obligation) $ ( 102 ) $ ( 82 ) $ ( 514 ) $ ( 455 ) Additional Amounts Recognized in the Consolidated Balance Sheets Accrued Pension Costs of Servco $ ( 102 ) $ ( 82 ) N/A N/A OPEB Costs of Servco N/A N/A ( 514 ) ( 455 ) Amounts Recognized (C) $ ( 102 ) $ ( 82 ) $ ( 514 ) $ ( 455 ) (A) Represents projected benefit obligation for pension benefits and the accumulated postretirement benefit obligation for other benefits. 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. 108 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents (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. Pension and OPEB costs of Servco are accounted for according to the OSA. Servco recognizes expenses for contributions to its pension plan trusts and for OPEB payments made to retirees. Operating Revenues are recognized for the reimbursement of these costs. The pension-related revenues and costs for 2023, 2022 and 2021 were $ 18 million, $ 30 million and $ 37 million, respectively. Servco has contributed its entire planned contribution amount to its pension plan trusts during 2023. The OPEB-related revenues earned and costs incurred were $ 12 million, $ 10 million and $ 11 million in 2023, 2022 and 2021, respectively. The following assumptions were used to determine the benefit obligations of Servco: Pension Benefits Other Benefits 2023 2022 2021 2023 2022 2021 Weighted-Average Assumptions Used to Determine Benefit Obligations as of December 31 Discount Rate 5.13 % 5.30 % 3.21 % 5.16 % 5.34 % 3.28 % Rate of Compensation Increase 5.54 % 3.95 % 3.95 % 5.54 % 3.95 % 3.95 % Cash Balance Interest Crediting Rate 4.13 % 4.30 % 3.75 % N/A N/A N/A Assumed Health Care Cost Trend Rates as of December 31 Health Care Costs Immediate Rate 6.84 % 6.71 % 6.48 % Ultimate Rate 4.75 % 4.75 % 4.75 % Year Ultimate Rate Reached 2033 2032 2029 Plan Assets 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. The investments in the pension are measured at fair value within a hierarchy that prioritizes the inputs to fair value measurements into three levels. See Note 17. Fair Value Measurements for more information on fair value guidance. The following tables present information about Servco’s investments measured at fair value on a recurring basis as of December 31, 2023 and 2022, including the fair value measurements and the levels of inputs used in determining those fair values. Recurring Fair Value Measurements as of December 31, 2023 Quoted Market Prices for Identical Assets Significant Other Observable Inputs Description Total (Level 1) (Level 2) Millions Cash Equivalents $ 2 $ 2 $ — Equity Securities Common Stock (A) 32 32 — Commingled (B) 294 — 294 Commingled Bonds (B) 105 — 105 Total Fair Value $ 433 $ 34 $ 399 109 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents Recurring Fair Value Measurements as of December 31, 2022 Quoted Market Prices for Identical Assets Significant Other Observable Inputs Description Total (Level 1) (Level 2) Millions Cash Equivalents $ 1 $ 1 $ — Equity Securities Common Stock (A) 25 25 — Commingled (B) 251 — 251 Commingled Bonds (B) 93 — 93 Total Fair Value $ 370 $ 26 $ 344 (A) Common stocks are measured using observable data in active markets and considered Level 1. (B) Investments in commingled equity and bond funds have a readily determinable fair value as they publish a daily NAV available to investors which is the basis for current transactions and contain certain redemption restrictions requiring advance notice of one to two days for withdrawals (Level 2). 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 of Servco as of the measurement date, December 31: As of December 31, Investments 2023 2022 Equity Securities 76 % 75 % Debt Securities 24 25 Total Percentage 100 % 100 % Servco utilizes forecasted returns, risk, and correlation of all asset classes in order to develop an efficient portfolio. Servco’s long-term target asset allocation of 60 % equities, 15 % real assets and 25 % fixed income is consistent with the funds’ financial objectives. 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 allocation. The expected long-term rate of return on plan assets was 8.0 % for 2023 and will be 8.0 % for 2024. This expected return includes a premium for active management. Plan Contributions Servco plans to contribute $ 25 million into its pension plan during 2024. 110 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents Estimated Future Benefit Payments The following pension benefit and postretirement benefit payments are expected to be paid to Servco’s plan participants: Year Pension Benefits Other Benefits Millions 2024 $ 15 $ 12 2025 17 14 2026 20 16 2027 23 18 2028 25 20 2029-2033 167 125 Total $ 267 $ 205 Servco 401(k) Plans Servco sponsors two 401(k) plans, which are defined contribution retirement plans subject to ERISA. Eligible non-represented employees of Servco participate in the Long Island Electric Utility Servco LLC Incentive Thrift Plan I (Thrift Plan I), and eligible represented employees of Servco participate in the Long Island Electric Utility Servco LLC Incentive Thrift Plan II (Thrift Plan II). Participants in the plans may contribute up to 50 % of their eligible compensation to these plans, not to exceed the IRS maximums, including any catch-up contributions for those employees age 50 and above. Servco does not provide an employer match or core contribution for employees in Thrift Plan II. 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 $ 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. Note 13. Commitments and Contingent Liabilities Guaranteed Obligations PSEG Power’s activities primarily involve the purchase and sale of energy and related products under transportation, physical, financial and forward contracts at fixed and variable prices. These transactions are with numerous counterparties and brokers that may require cash, cash-related instruments or guarantees as a form of collateral. PSEG Power has unconditionally guaranteed payments to counterparties on behalf of its subsidiaries in commodity-related transactions in order to • support current exposure, interest and other costs on sums due and payable in the ordinary course of business, and • obtain credit. PSEG Power is subject to • counterparty collateral calls related to commodity contracts of its subsidiaries, and • certain creditworthiness standards as guarantor under performance guarantees of its subsidiaries. Under these agreements, guarantees cover lines of credit between entities and are often reciprocal in nature. The exposure between counterparties can move in either direction. In order for PSEG Power to incur a liability for the face value of the outstanding guarantees, • its subsidiaries would have to fully utilize the credit granted to them by every counterparty to whom PSEG Power has provided a guarantee, and • the net position of the related contracts would have to be “out-of-the-money” (if the contracts are terminated, PSEG Power would owe money to the counterparties). PSEG Power believes the probability of this result is unlikely. For this reason, PSEG Power believes that the current exposure at any point in time is a more meaningful representation of the potential liability under these guarantees. Current exposure 111 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents consists of the net of accounts receivable and accounts payable and the forward value on open positions, less any collateral posted. Changes in commodity prices can have a material impact on collateral requirements under such contracts, which are posted and received primarily in the form of cash and letters of credit. PSEG Power also routinely enters into futures and options transactions for electricity and natural gas as part of its operations. These futures contracts usually require a cash margin deposit with brokers, which can change based on market movement and in accordance with exchange rules. In addition to the guarantees discussed above, PSEG Power has also provided payment guarantees to third parties and regulatory authorities on behalf of its affiliated companies. These guarantees support various other non-commodity related obligations. The following table shows the face value of PSEG Power’s outstanding guarantees, current exposure and margin positions as of December 31, 2023 and 2022. As of December 31, 2023 2022 Millions Face Value of Outstanding Guarantees $ 1,381 $ 1,601 Exposure under Current Guarantees $ 118 $ 198 Letters of Credit Margin Posted $ 10 $ 87 Letters of Credit Margin Received $ 91 $ 38 Cash Deposited and Received Counterparty Cash Collateral Deposited $ — $ — Counterparty Cash Collateral Received $ ( 2 ) $ ( 1 ) Net Broker Balance Deposited (Received) $ 115 $ 1,522 Additional Amounts Posted Other Letters of Credit $ 180 $ 156 As part of determining credit exposure, PSEG Power nets receivables and payables with the corresponding net fair values of energy contracts. See Note 16. Financial Risk Management Activities for further discussion. In accordance with PSEG’s accounting policy, where it is applicable, cash (received)/deposited is allocated against derivative asset and liability positions with the same counterparty on the face of the Consolidated Balance Sheet. The remaining balances of net cash (received)/deposited after allocation are generally included in Accounts Payable and Receivable, respectively. In addition to amounts for outstanding guarantees, current exposure and margin positions, PSEG and PSEG Power have posted letters of credit to support PSEG Power’s various other non-energy contractual and environmental obligations. See the preceding table. Environmental Matters Passaic River Lower Passaic River Study Area The U.S. Environmental Protection Agency (EPA) has determined that a 17 -mile stretch of the Passaic River (Lower Passaic River Study Area (LPRSA)) in New Jersey is a “Superfund” site under the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA). PSE&G and certain of its predecessors conducted operations at properties in this area, including at one site that was transferred to PSEG Power. The EPA has announced two separate cleanup plans for the Lower 8.3 miles and Upper 9 miles of the LPRSA. The EPA’s plan for the Lower 8.3 miles involves dredging and capping sediments at an estimated cost of $ 2.3 billion, and its plan for the Upper 9 miles involves dredging and capping sediments at an estimated cost of $ 550 million. 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. 112 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents 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. 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 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. It is possible that PSE&G and PSEG Power will record additional costs beyond what they have accrued, and that such costs could be material, but PSEG cannot at the current time estimate the amount or range of any additional costs. Newark Bay Study Area The EPA has established the Newark Bay Study Area, which is an extension of the LPRSA and includes Newark Bay and portions of surrounding waterways. The EPA has notified PSEG and 21 other PRPs of their potential liability. PSE&G and PSEG Power are unable to estimate their respective portions of any loss or possible range of loss related to this matter. In December 2018, PSEG Power completed the sale of the site of the Hudson electric generating station. PSEG Power contractually transferred all land rights and structures on the Hudson site to a third-party purchaser, along with the assumption of the environmental liabilities for the site. Natural Resource Damage Claims New Jersey and certain federal regulators have alleged that PSE&G, PSEG Power and 56 other PRPs may be liable for natural resource damages within the LPRSA. In particular, PSE&G, PSEG Power and other PRPs received notice from federal regulators of the regulators’ intent to move forward with a series of studies assessing potential damages to natural resources at the Diamond Alkali Superfund Site, which includes the LPRSA and the Newark Bay Study Area. PSE&G and PSEG Power are unable to estimate their respective portions of any possible loss or range of loss related to this matter. Hackensack River In 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. 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 PSE&G is working with the New Jersey Department of Environmental Protection (NJDEP) to assess, investigate and remediate environmental conditions at its former MGP sites. To date, 38 sites requiring some level of remedial action have been identified. Based on its current studies, PSE&G has determined that the estimated cost to remediate all MGP sites to completion could range between $ 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. Of this amount, $ 52 million was recorded in Other Current Liabilities and $ 147 million was reflected as Environmental Costs in Noncurrent Liabilities. PSE&G has recorded a $ 199 million Regulatory Asset with respect to these costs. PSE&G periodically updates its studies taking into account any new regulations or new information which could impact future remediation costs and adjusts its recorded liability accordingly. PSE&G completed sampling in the Passaic River in 2020 to delineate coal tar from certain MGP sites that abut the Passaic River Superfund site. PSEG cannot determine at this time the magnitude of any impact on the Passaic River Superfund remedy. 113 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents 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 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. PSEG Power is in the process of fulfilling its obligations under ISRA and the CTA to investigate these sites. It will require multiple years and comprehensive environmental sampling to understand the extent of and to carry out the required remediation. 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. If the Riverkeeper’s challenge is successful, PSEG Power may be required to incur additional costs to comply with the CWA. Potential cooling water and/or service water system modification costs could be material and could adversely impact the economic competitiveness of this facility. The NJDEP granted the hearing request and may schedule a hearing after considering dispositive motions. Jersey City, New Jersey Subsurface Feeder Cable Matter In October 2016, a discharge of dielectric fluid from subsurface feeder cables located in the Hudson River near Jersey City, New Jersey, was identified and reported to the NJDEP. The feeder cables are located within a subsurface easement granted to PSE&G by the property owners, Newport Associates Development Company (NADC) and Newport Associates Phase I Developer Limited Partnership. The feeder cables are subject to agreements between PSE&G and Consolidated Edison Company of New York, Inc. (Con Edison) and are jointly owned by PSE&G and Con Edison. The impacted cable was repaired in September 2017. A federal response was initially led by the U.S. Coast Guard. The U.S. Coast Guard transitioned control of the federal response to the EPA, and the EPA ended the federal response to the matter in 2018. The investigation of small amounts of residual dielectric fluid believed to be contained with the marina sediment is ongoing as part of the NJDEP site remediation program. In August 2020, PSE&G finalized a settlement with the federal government regarding the reimbursement of costs associated with the federal response to this matter and payment of civil penalties of an immaterial amount. 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 Each year, PSE&G obtains its electric supply requirements through annual New Jersey BGS auctions for two categories of customers that choose not to purchase electric supply from third-party suppliers. The first category is residential and smaller commercial and industrial customers (BGS-Residential Small Commercial Pricing (RSCP)). The second category is larger customers that exceed a BPU-established load (kW) threshold (BGS-Commercial and Industrial Energy Pricing (CIEP)). Pursuant to applicable BPU rules, PSE&G enters into the Supplier Master Agreements with the winners of these RSCP and CIEP BGS auctions to purchase BGS for PSE&G’s load requirements. The winners of the RSCP and CIEP auctions are responsible for fulfilling all the requirements of a PJM load-serving entity including the provision of capacity, energy, ancillary services and any other services required by PJM. BGS suppliers assume all volume risk and customer migration risk and must satisfy New Jersey’s renewable portfolio standards. The BGS-CIEP auction is for a one-year supply period from June 1 to May 31 with the BGS-CIEP auction price measured in dollars per MW-day for capacity. The final price for the BGS-CIEP auction year commencing June 1, 2024 is $ 378.21 per MW-day, replacing the BGS-CIEP auction year price ending May 31, 2024 of $ 330.72 per MW-day. Energy for BGS-CIEP is priced at hourly PJM locational marginal prices for the contract period. PSE&G contracts for its anticipated BGS-RSCP load on a three-year rolling basis, whereby each year one-third of the load is procured for a three-year period. The contract prices in dollars per MWh for the BGS-RSCP supply, as well as the approximate load, are as follows: 114 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents Auction Year 2021 2022 2023 2024 36-Month Terms Ending May 2024 May 2025 May 2026 May 2027 (A) Load (MW) 2,900 2,800 2,800 2,900 $ per MWh $ 64.80 $ 76.30 $ 93.11 $ 80.88 (A) Prices set in the 2024 BGS auction will become effective on June 1, 2024 when the 2021 BGS auction agreements expire. PSE&G has a full-requirements contract with PSEG Power to meet the gas supply requirements of PSE&G’s gas customers. PSEG Power has entered into hedges for a portion of these anticipated BGSS obligations, as permitted by the BPU. The BPU permits PSE&G to recover the cost of gas hedging up to 115 billion cubic feet or 80 % of its residential gas supply annual requirements through the BGSS tariff. Current plans call for PSEG Power to hedge on behalf of PSE&G approximately 70 billion cubic feet or 50 % of its residential gas supply annual requirements. For additional information, see Note 24. Related-Party Transactions. Pursuant to a process established by the BPU, New Jersey EDCs, including PSE&G, are required to purchase ZECs from eligible nuclear plants selected by the BPU. In April 2019, PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants were selected to receive ZEC revenue for approximately three years, through May 2022. In April 2021, PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants were awarded ZECs for the three-year eligibility period starting June 2022. PSE&G has implemented a tariff to collect a non-bypassable distribution charge in the amount of $ 0.004 per KWh from its retail distribution customers to be used to purchase the ZECs from these plants. PSE&G will purchase the ZECs on a monthly basis with payment to be made annually following completion of each energy year. The legislation also requires nuclear plants to reapply for any subsequent three-year periods and allows the BPU to adjust prospective ZEC payments. Minimum Fuel Purchase Requirements PSEG Power’s nuclear fuel strategy is to maintain certain levels of uranium and to make periodic purchases to support such levels. As such, the commitments referred to in the following table may include estimated quantities to be purchased that deviate from contractual nominal quantities. PSEG Power’s 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. As of December 31, 2023, the total minimum purchase requirements included in these commitments were as follows: Fuel Type PSEG Power’s Share of Commitments through 2028 Millions Nuclear Fuel Uranium $ 392 Enrichment $ 344 Fabrication $ 185 Natural Gas $ 1,329 Pending FERC Matters FERC has been conducting a non-public investigation of the Roseland-Pleasant Valley transmission project. In November 2021, FERC staff presented PSE&G with its non-public preliminary findings, alleging that PSE&G violated a FERC regulation. PSE&G disagrees with FERC staff’s allegations and believes it has factual and legal defenses that refute these allegations. PSE&G has the opportunity to respond to these preliminary findings. The matter is pending and the investigation is ongoing. PSE&G is unable to predict the outcome or estimate the range of possible loss related to this matter; however, depending on the success of PSE&G’s factual and legal arguments, the potential financial and other penalties that PSE&G may incur could be material to PSEG’s and PSE&G’s results of operations and financial condition. BPU Audit of PSE&G In 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 115 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents 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 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. Litigation Sewaren 7 Construction In June 2018, a complaint was filed in federal court in Newark, New Jersey against PSEG Fossil LLC, which at the time was a wholly owned subsidiary of PSEG Power, regarding an ongoing dispute with Durr Mechanical Construction, Inc. (Durr), a contractor on the Sewaren 7 project. Among other things, Durr seeks damages of $ 93 million and alleges that PSEG Power withheld money owed to Durr and that PSEG Power’s intentional conduct led to the inability of Durr to obtain prospective contracts. PSEG Power intends to vigorously defend against these allegations. In January 2021, the court partially granted PSEG Power’s motion to dismiss certain claims, reducing the amount claimed to $ 68 million. In December 2018, Durr filed for Chapter 11 bankruptcy in the federal court in the Southern District of New York (SDNY). The SDNY bankruptcy court has allowed the New Jersey litigation to proceed. PSEG Power has accrued an amount related to outstanding invoices which does not reflect an assessment of claims and potential counterclaims in this matter. Due to its preliminary nature, PSEG Power cannot predict the outcome of this matter. Other Litigation and Legal Proceedings PSEG and its subsidiaries are party to various lawsuits in the ordinary course of business. In view of the inherent difficulty in predicting the outcome of such matters, PSEG and PSE&G generally cannot predict the eventual outcome of the pending matters, the timing of the ultimate resolution of these matters, or the eventual loss, fines or penalties related to each pending matter. In accordance with applicable accounting guidance, a liability is accrued when those matters present loss contingencies that are both probable and reasonably estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. PSEG will continue to monitor the matter for further developments that could affect the amount of the accrued liability that has been previously established. Based on current knowledge, management does not believe that loss contingencies arising from pending matters, other than the matters described herein, could have a material adverse effect on PSEG’s or PSE&G’s consolidated financial position or liquidity. However, in light of the inherent uncertainties involved in these matters, some of which are beyond PSEG’s control, and the large or indeterminate damages sought in some of these matters, an adverse outcome in one or more of these matters could be material to PSEG’s or PSE&G’s results of operations or liquidity for any particular reporting period. Nuclear Insurance Coverages and Assessments PSEG Power is a member of the joint underwriting association, American Nuclear Insurers (ANI), which provides nuclear liability insurance coverage at the Salem and Hope Creek site and the Peach Bottom site. The ANI policies are designed to satisfy the financial protection requirements outlined in the Price-Anderson Act, which sets the limit of liability for claims that could arise from an incident involving any licensed nuclear facility in the United States. The limit of liability per incident per site is composed of primary and excess layers. 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. In the event a nuclear site, which is part of the industry self-insurance pool, has a claim that exceeds the primary layer, each licensee would be assessed a prorated share of the excess layer. The excess layer limit is $ 15.8 billion. PSEG Power’s maximum aggregate assessment per incident is $ 522 million based on PSEG Power’s ownership interests in Salem, Hope Creek and Peach Bottom and its maximum aggregate annual assessment per incident is $ 78 million. If the damages exceed the limit of liability, Congress could impose further revenue-raising measures on the nuclear industry to pay claims. Further, a decision by the U.S. Supreme Court, not involving PSEG Power, held that the Price-Anderson Act did not preclude punitive damage awards based on state law claims. PSEG Power is also a member of an industry mutual insurance company, Nuclear Electric Insurance Limited (NEIL), which provides the property, decontamination and decommissioning liability insurance at the Salem and Hope Creek site and the Peach Bottom site. NEIL also provides replacement power coverage through its accidental outage policy. NEIL policies may make retrospective premium assessments in the case of adverse loss experience. The current maximum aggregate annual retrospective premium obligation for PSEG Power is approximately $ 48 million. NEIL requires its members to maintain an 116 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents 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. The ANI and NEIL policies all include coverage for claims arising out of acts of terrorism. 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. Note 14. Debt and Credit Facilities Long-Term Debt As of December 31, Maturity 2023 2022 Millions PSEG Senior Notes: 0.84 % 2023 $ — $ 750 2.88 % 2024 750 750 0.80 % 2025 550 550 5.85 % 2027 700 700 5.88 % 2028 600 — 1.60 % 2030 550 550 8.63 % (A) 2031 96 96 2.45 % 2031 750 750 6.13 % 2033 400 — Total Senior Notes 4,396 4,146 Principal Amount Outstanding 4,396 4,146 Amounts Due Within One Year ( 750 ) ( 750 ) Net Unamortized Discount and Debt Issuance Costs ( 25 ) ( 22 ) Total Long-Term Debt of PSEG $ 3,621 $ 3,374 117 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents As of December 31, Maturity 2023 2022 Millions PSE&G First and Refunding Mortgage Bonds (B): 8.00 % 2037 $ 7 $ 7 5.00 % 2037 8 8 Total First and Refunding Mortgage Bonds 15 15 Medium-Term Notes (B): 2.38 % 2023 — 500 3.25 % 2023 — 325 3.75 % 2024 250 250 3.15 % 2024 250 250 3.05 % 2024 250 250 3.00 % 2025 350 350 0.95 % 2026 450 450 2.25 % 2026 425 425 3.00 % 2027 425 425 3.70 % 2028 375 375 3.65 % 2028 325 325 3.20 % 2029 375 375 2.45 % 2030 300 300 1.90 % 2031 425 425 3.10 % 2032 500 500 4.90 % 2032 400 400 4.65 % 2033 500 — 5.20 % 2033 500 — 5.25 % 2035 250 250 5.70 % 2036 250 250 5.80 % 2037 350 350 5.38 % 2039 250 250 5.50 % 2040 300 300 3.95 % 2042 450 450 3.65 % 2042 350 350 3.80 % 2043 400 400 4.00 % 2044 250 250 4.05 % 2045 250 250 4.15 % 2045 250 250 3.80 % 2046 550 550 3.60 % 2047 350 350 4.05 % 2048 325 325 3.85 % 2049 375 375 3.20 % 2049 400 400 3.15 % 2050 300 300 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 Principal Amount Outstanding 13,765 12,790 Amounts Due Within One Year ( 750 ) ( 825 ) Net Unamortized Discount and Selling Expense ( 102 ) ( 94 ) Total Long-Term Debt of PSE&G $ 12,913 $ 11,871 118 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents As of December 31, Maturity 2023 2022 Millions PSEG Power Term Loan: Variable Rate 2025 $ 1,250 $ 1,250 Total Term Loan 1,250 1,250 Total Long-Term Debt of PSEG Power $ 1,250 $ 1,250 (A) In December 2020, PSEG issued $ 96 million principal amount of 8.63 % Senior Notes due 2031 to holders of a like principal amount of 8.63 % Senior Notes due 2031 originally issued by PSEG Power who validly tendered their notes pursuant to an offer to exchange. Upon consummation of the offer to exchange, the PSEG Power notes accepted in the exchange were cancelled. The transaction resulted in a non-cash financing activity for both PSEG and PSEG Power. (B) Secured by essentially all property of PSE&G pursuant to its First and Refunding Mortgage. Long-Term Debt Maturities The aggregate principal amounts of maturities for each of the five years following December 31, 2023 are as follows: Year PSEG PSE&G PSEG Power Total Millions 2024 $ 750 $ 750 $ — $ 1,500 2025 550 350 1,250 2,150 2026 — 875 — 875 2027 700 425 — 1,125 2028 600 700 — 1,300 Thereafter 1,796 10,665 — 12,461 Total $ 4,396 $ 13,765 $ 1,250 $ 19,411 Long-Term Debt Financing Transactions During 2023, the following long-term debt transactions occurred: PSEG • 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. PSE&G • 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 119 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents 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. As of December 31, 2023, the total available credit capacity was $ 3.4 billion. As of December 31, 2023, no single institution represented more than 10 % of the total commitments in the credit facilities. 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; however, if necessary, the PSEG facilities can also be used to support its subsidiaries’ liquidity needs. The total credit facilities and available liquidity as of December 31, 2023 were as follows: As of December 31, 2023 Company/Facility Total Facility Usage (B) Available Liquidity Expiration Date Primary Purpose Millions PSEG Revolving Credit Facility (A) $ 1,500 $ 27 $ 1,473 Mar 2027 Commercial Paper Support/Funding/Letters of Credit Total PSEG $ 1,500 $ 27 $ 1,473 PSE&G Revolving Credit Facility $ 1,000 $ 445 $ 555 Mar 2027 Commercial Paper Support/Funding/Letters of Credit Total PSE&G $ 1,000 $ 445 $ 555 PSEG Power Revolving Credit Facility (A) $ 1,250 $ 39 $ 1,211 Mar 2027 Funding/Letters of Credit Letter of Credit Facility 75 66 9 Apr 2026 Letters of Credit Letter of Credit Facility 200 83 117 Sept 2024 Letters of Credit Total PSEG Power $ 1,525 $ 188 $ 1,337 Total (C) $ 4,025 $ 660 $ 3,365 (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. 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. (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 $ 425 million Commercial Paper outstanding at a weighted average interest rate of 5.57 %. (C) Amounts do not include uncommitted credit facilities. 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. Short-Term Loans 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 120 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents December 31, 2023 and 2022 are included in the following table and accompanying notes as of December 31, 2023 and 2022. See Note 17. Fair Value Measurements for more information on fair value guidance and the hierarchy that prioritizes the inputs to fair value measurements into three levels. December 31, 2023 December 31, 2022 Carrying Amount Fair Value Carrying Amount Fair Value Millions Long-Term Debt: PSEG (A) $ 4,371 $ 4,240 $ 4,124 $ 3,808 PSE&G (A) 13,663 12,460 12,696 11,106 PSEG Power (B) 1,250 1,250 1,250 1,250 Total Long-Term Debt $ 19,284 $ 17,950 $ 18,070 $ 16,164 (A) Given that these bonds do not trade actively, the fair value amounts of taxable debt securities (primarily Level 2 measurements) are generally determined by a valuation model using market-based measurements that are processed through a rules-based pricing methodology. The fair value amounts above do not represent the price at which the outstanding debt may be called for redemption by each issuer under their respective debt agreements. (B) Private term loan with book value approximating fair value (Level 2 measurement) . Note 15. Schedule of Consolidated Capital Stock As of December 31, Outstanding Shares Book Value 2023 2022 2023 2022 Millions PSEG Common Stock (no par value) (A) Authorized 1,000 shares 498 497 $ 3,639 $ 3,688 (A) PSEG did not issue any new shares under the Dividend Reinvestment and Stock Purchase Plan or the Employee Stock Purchase Plan (ESPP) in 2023 or 2022. 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. Note 16. Financial Risk Management Activities Derivative accounting guidance requires that a derivative instrument be recognized as either an asset or a liability at fair value, with changes in fair value of the derivative recognized in earnings each period. Other accounting treatments are available through special election and designation provided that the derivative instrument meets specific, restrictive criteria, both at the time of designation and on an ongoing basis. These alternative permissible treatments include NPNS cash flow hedge and fair value hedge accounting. PSEG uses interest rate swaps and other derivatives, which are designated and qualifying as cash flow or fair value hedges. PSEG Power enters into additional contracts that are derivatives, but are not designated as either cash flow hedges or fair value hedges. These transactions are economic hedges and are recorded at fair market value with changes recognized in earnings. Commodity Prices Within PSEG and its affiliate companies, PSEG Power has the most exposure to commodity price risk. PSEG Power is exposed to commodity price risk primarily relating to changes in the market price of electricity, natural gas and other commodities. Fluctuations in market prices result from changes in supply and demand, fuel costs, market conditions, weather, state and federal regulatory policies, environmental policies, transmission availability and other factors. PSEG Power uses a variety of derivative and non-derivative instruments, such as financial options, futures, swaps, fuel purchases and forward purchases and sales of electricity, to manage the exposure to fluctuations in commodity prices and optimize the value of PSEG Power’s 121 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents expected generation. PSEG Power also uses derivatives to hedge a portion of its anticipated BGSS obligations with PSE&G. For additional information see Note 13. Commitments and Contingent Liabilities. Additionally, prospective changes in the fair market value of these derivative contracts are recorded in earnings. Interest Rates PSEG, PSE&G and PSEG Power are subject to the risk of fluctuating interest rates in the normal course of business. Exposure to this risk is managed by targeting a balanced debt maturity profile which limits refinancing in any given period or interest rate environment. PSEG, PSE&G and PSEG Power may use a mix of fixed and floating rate debt, interest rate swaps and interest rate lock agreements. Cash Flow Hedges PSEG uses interest rate swaps and other derivatives, which are designated and effective as cash flow hedges, to manage its exposure to the variability of cash flows, primarily related to variable-rate debt instruments. 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 gains on these hedges expected to be reclassified to earnings during the next 12 months are $ 3 million. Fair Values of Derivative Instruments The following are the fair values of derivative instruments on the Consolidated Balance Sheets. The following tables also include disclosures for offsetting derivative assets and liabilities which are subject to a master netting or similar agreement. In general, the terms of the agreements provide that in the event of an early termination the counterparties have the right to offset amounts owed or owing under that and any other agreement with the same counterparty. Accordingly, and in accordance with PSEG’s accounting policy, these positions are offset on the Consolidated Balance Sheets of PSEG. For additional information see Note 17. Fair Value Measurements. Substantially all derivative instruments are contracts subject to master netting agreements. Contracts not subject to master netting or similar agreements are immaterial and did not have any collateral posted or received as of December 31, 2023 and 2022. The following tabular disclosure does not include the offsetting of trade receivables and payables. 122 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents As of December 31, 2023 PSEG PSEG Power Consolidated Cash Flow Hedges Not Designated Balance Sheet Location Interest Rate Derivatives Energy- Related Contracts Netting (A) Total PSEG Power Total Derivatives Millions Derivative Contracts Current Assets $ 6 $ 912 $ ( 806 ) $ 106 $ 112 Noncurrent Assets — 440 ( 411 ) 29 29 Total Mark-to-Market Derivative Assets $ 6 $ 1,352 $ ( 1,217 ) $ 135 $ 141 Derivative Contracts Current Liabilities $ ( 16 ) $ ( 890 ) $ 820 $ ( 70 ) $ ( 86 ) Noncurrent Liabilities ( 1 ) ( 424 ) 419 ( 5 ) ( 6 ) Total Mark-to-Market Derivative (Liabilities) $ ( 17 ) $ ( 1,314 ) $ 1,239 $ ( 75 ) $ ( 92 ) Total Net Mark-to-Market Derivative Assets (Liabilities) $ ( 11 ) $ 38 $ 22 $ 60 $ 49 As of December 31, 2022 PSEG PSEG Power Consolidated Cash Flow Hedges Not Designated Balance Sheet Location Interest Rate Derivatives Energy- Related Contracts Netting (A) Total PSEG Power Total Derivatives Millions Derivative Contracts Current Assets $ 4 $ 1,721 $ ( 1,707 ) $ 14 $ 18 Noncurrent Assets — 629 ( 614 ) 15 15 Total Mark-to-Market Derivative Assets $ 4 $ 2,350 $ ( 2,321 ) $ 29 $ 33 Derivative Contracts Current Liabilities $ — $ ( 2,447 ) $ 2,323 $ ( 124 ) $ ( 124 ) Noncurrent Liabilities ( 3 ) ( 1,139 ) 1,109 ( 30 ) ( 33 ) Total Mark-to-Market Derivative (Liabilities) $ ( 3 ) $ ( 3,586 ) $ 3,432 $ ( 154 ) $ ( 157 ) Total Net Mark-to-Market Derivative Assets (Liabilities) $ 1 $ ( 1,236 ) $ 1,111 $ ( 125 ) $ ( 124 ) (A) Represents the netting of fair value balances with the same counterparty (where the right of offset exists) and the application of cash collateral. All cash collateral (received) posted that has been allocated to derivative positions, where the right of offset exists, has been offset on the Consolidated Balance Sheets. As of December 31, 2023 and 2022, PSEG Power had net cash collateral payments to counterparties of $ 113 million and $ 1,521 million, respectively. 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. Certain of PSEG Power’s derivative instruments contain provisions that require PSEG Power to post collateral. This collateral may be posted in the form of cash or credit support with thresholds contingent upon PSEG Power’s credit rating from each of the major credit rating agencies. The collateral and credit support requirements vary by contract and by counterparty. These credit risk-related contingent features stipulate that if PSEG Power were to be downgraded to a below investment grade rating by S&P or Moody’s, it would be required to provide additional collateral. A below investment grade credit rating for PSEG 123 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents Power would represent a two level downgrade from its current Moody’s and S&P ratings. This incremental collateral requirement can offset collateral requirements related to other derivative instruments that are assets with the same counterparty, where the contractual right of offset exists under applicable master agreements. PSEG Power also enters into commodity transactions on the New York Mercantile Exchange (NYMEX) and Intercontinental Exchange (ICE). The NYMEX and ICE clearing houses act as counterparties to each trade. Transactions on the NYMEX and ICE must adhere to comprehensive collateral and margin requirements. The aggregate fair value of all derivative instruments with credit risk-related contingent features in a liability position that are not fully collateralized (excluding transactions on the NYMEX and ICE that are fully collateralized) was $ 77 million and $ 190 million as of December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, PSEG Power had the contractual right of offset of $ 3 million and $ 41 million, respectively, related to derivative instruments that are assets with the same counterparty under master agreements and net of margin posted. If PSEG Power had been downgraded to a below investment grade rating, it would have had additional collateral obligations of $ 74 million and $ 149 million as of December 31, 2023 and 2022, respectively, related to its derivatives, net of the contractual right of offset under master agreements and the application of collateral. The following shows the effect on the Consolidated Statements of Operations and on Accumulated Other Comprehensive Loss (AOCL) of derivative instruments designated as cash flow hedges for the years ended December 31, 2023, 2022 and 2021. Amount of Pre-Tax Gain (Loss) Recognized in AOCL on Derivatives Location of Pre-Tax Gain (Loss) Reclassified from AOCL into Income Amount of Pre-Tax Gain (Loss) Reclassified from AOCL into Income Derivatives in Cash Flow Hedging Relationships Years Ended December 31, Years Ended December 31, 2023 2022 2021 2023 2022 2021 Millions Millions 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. 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. Accumulated Other Comprehensive Income (Loss) Pre-Tax After-Tax Millions Balance as of December 31, 2021 $ ( 9 ) $ ( 6 ) Loss Recognized in AOCI — — Less: Loss Reclassified into Income 5 3 Balance as of December 31, 2022 $ ( 4 ) $ ( 3 ) Gain Recognized in AOCI 13 9 Less: Gain Reclassified into Income ( 5 ) ( 3 ) Balance as of December 31, 2023 $ 4 $ 3 The following shows the effect on the Consolidated Statements of Operations of derivative instruments not designated as hedging instruments or as NPNS for the years ended December 31, 2023, 2022 and 2021. 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. 124 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents Derivatives Not Designated as Hedges Location of Pre-Tax Gain (Loss) Recognized in Income on Derivatives Pre-Tax Gain (Loss) Recognized in Income on Derivatives Years Ended December 31, 2023 2022 2021 Millions Energy-Related Contracts Operating Revenues $ 1,567 $ ( 1,748 ) $ ( 993 ) Energy-Related Contracts Energy Costs — 2 126 Total $ 1,567 $ ( 1,746 ) $ ( 867 ) The following table summarizes the net notional volume purchases/(sales) of open derivative transactions by commodity as of December 31, 2023 and 2022. As of December 31, Type Notional 2023 2022 Millions Natural Gas Dekatherm 66 49 Electricity MWh ( 60 ) ( 60 ) Financial Transmission Rights MWh 19 24 Interest Rate Derivatives U.S. Dollars 2,000 1,050 Credit Risk Credit risk relates to the risk of loss that PSEG Power would incur as a result of non-performance by counterparties pursuant to the terms of their contractual obligations. PSEG has established credit policies that it believes significantly minimize credit risk. These policies include an evaluation of potential counterparties’ financial condition (including credit rating), collateral requirements under certain circumstances and the use of standardized agreements, which allow for the netting of positive and negative exposures associated with a single counterparty. In the event of non-performance or non-payment by a major counterparty, there may be a material adverse impact on PSEG’s financial condition, results of operations or net cash flows. As of December 31, 2023, nearly 100 % of the net credit exposure for PSEG Power’s wholesale operations was with investment grade counterparties and there was only one counterparty with credit exposure that was greater than 10% of the total. This credit exposure was with PSE&G, which eliminates in consolidation. See Note 24. Related-Party Transactions for additional information. PSE&G’s supplier master agreements are approved by the BPU and govern the terms of its electric supply procurement contracts. These agreements define a supplier’s performance assurance requirements and allow a supplier to meet its credit requirements with a certain amount of unsecured credit. The amount of unsecured credit is determined based on the supplier’s credit ratings from the major credit rating agencies and the supplier’s tangible net worth. The credit position is based on the initial market price, which is the forward price of energy on the day the procurement transaction is executed, compared to the forward price curve for energy on the valuation day. To the extent that the forward price curve for energy exceeds the initial market price, the supplier is required to post a parental guarantee or other security instrument such as a letter of credit or cash, as collateral to the extent the credit exposure is greater than the supplier’s unsecured credit limit. As of December 31, 2023, PSEG held parental guarantees, letters of credit and cash as security. PSE&G’s BGS suppliers’ credit exposure is calculated each business day. As of 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. PSE&G’s counterparty credit risk is mitigated by its ability to recover realized energy costs through customer rates. 125 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents Note 17. Fair Value Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Accounting guidance for fair value measurement emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and establishes a fair value hierarchy that distinguishes between assumptions based on market data obtained from independent sources and those based on an entity’s own assumptions. The hierarchy prioritizes the inputs to fair value measurement into three levels: Level 1—measurements utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that PSEG and PSE&G have the ability to access. These consist primarily of listed equity securities and money market mutual funds, as well as natural gas futures contracts executed on NYMEX. Level 2—measurements include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and other observable inputs such as interest rates and yield curves that are observable at commonly quoted intervals. These consist primarily of non-exchange traded derivatives such as forward contracts or options and most fixed income securities. Level 3—measurements use unobservable inputs for assets or liabilities, based on the best information available and might include an entity’s own data and assumptions. In some valuations, the inputs used may fall into different levels of the hierarchy. In these cases, the financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. These consist primarily of certain electric load contracts. Certain derivative transactions may transfer from Level 2 to Level 3 if inputs become unobservable and internal modeling techniques are employed to determine fair value. Conversely, measurements may transfer from Level 3 to Level 2 if the inputs become observable. The following tables present information about PSEG’s and PSE&G’s respective assets and (liabilities) measured at fair value on a recurring basis as of December 31, 2023 and December 31, 2022, including the fair value measurements and the levels of inputs used in determining those fair values. Amounts shown for PSEG include the amounts shown for PSE&G. 126 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents Recurring Fair Value Measurements as of December 31, 2023 Description Total Netting (E) Quoted Market Prices for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Millions PSEG Assets: Cash Equivalents (A) $ 20 $ — $ 20 $ — $ — Derivative Contracts: Energy-Related Contracts (B) $ 135 $ ( 1,217 ) $ 13 $ 1,339 $ — Interest Rate Derivatives (C) $ 6 $ — $ — $ 6 $ — NDT Fund (D) Equity Securities $ 1,310 $ — $ 1,310 $ — $ — Debt Securities—U.S. Treasury $ 293 $ — $ — $ 293 $ — Debt Securities—Govt Other $ 398 $ — $ — $ 398 $ — Debt Securities—Corporate $ 522 $ — $ — $ 522 $ — Rabbi Trust (D) Equity Securities $ 18 $ — $ 18 $ — $ — Debt Securities—U.S. Treasury $ 59 $ — $ — $ 59 $ — Debt Securities—Govt Other $ 32 $ — $ — $ 32 $ — Debt Securities—Corporate $ 70 $ — $ — $ 70 $ — Liabilities: Derivative Contracts: Energy-Related Contracts (B) $ ( 75 ) $ 1,239 $ ( 1 ) $ ( 1,311 ) $ ( 2 ) Interest Rate Derivatives (C) $ ( 17 ) $ — $ — $ ( 17 ) $ — PSE&G Assets: Cash Equivalents (A) $ 20 $ — $ 20 $ — $ — Rabbi Trust (D) Equity Securities $ 3 $ — $ 3 $ — $ — Debt Securities—U.S. Treasury $ 11 $ — $ — $ 11 $ — Debt Securities—Govt Other $ 6 $ — $ — $ 6 $ — Debt Securities—Corporate $ 12 $ — $ — $ 12 $ — 127 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents Recurring Fair Value Measurements as of December 31, 2022 Description Total Netting (E) Quoted Market Prices for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Millions PSEG Assets: Cash Equivalents (A) $ 385 $ — $ 385 $ — $ — Derivative Contracts: Energy-Related Contracts (B) $ 29 $ ( 2,321 ) $ 42 $ 2,307 $ 1 Interest Rate Derivatives (C) $ 4 $ — $ — $ 4 $ — NDT Fund (D) Equity Securities $ 1,072 $ — $ 1,072 $ — $ — Debt Securities—U.S. Treasury $ 288 $ — $ — $ 288 $ — Debt Securities—Govt Other $ 339 $ — $ — $ 339 $ — Debt Securities—Corporate $ 529 $ — $ — $ 529 $ — Rabbi Trust (D) Equity Securities $ 20 $ — $ 20 $ — $ — Debt Securities—U.S. Treasury $ 57 $ — $ — $ 57 $ — Debt Securities—Govt Other $ 32 $ — $ — $ 32 $ — Debt Securities—Corporate $ 74 $ — $ — $ 74 $ — Liabilities: Derivative Contracts: Energy-Related Contracts (B) $ ( 154 ) $ 3,432 $ ( 3 ) $ ( 3,537 ) $ ( 46 ) Interest Rate Derivatives $ ( 3 ) $ — $ — $ ( 3 ) $ — PSE&G Assets: Cash Equivalents (A) $ 165 $ — $ 165 $ — $ — Rabbi Trust (D) Equity Securities $ 3 $ — $ 3 $ — $ — Debt Securities—U.S. Treasury $ 10 $ — $ — $ 10 $ — Debt Securities—Govt Other $ 6 $ — $ — $ 6 $ — Debt Securities—Corporate $ 13 $ — $ — $ 13 $ — (A) Represents money market mutual funds. (B) Level 1—These contracts represent natural gas futures contracts executed on NYMEX, and are being valued solely on settled pricing inputs which come directly from the exchange. Level 2—Fair values for energy-related contracts are obtained primarily using a market-based approach. Most derivative contracts (forward purchase or sale contracts and swaps) are valued using settled prices from similar assets and liabilities from an exchange, such as NYMEX, ICE and Nodal Exchange, or auction prices. Prices used in the valuation process are also corroborated independently by management to determine that values are based on actual transaction data or, in the absence of transactions, bid and offers for the day. Examples may include certain exchange and non-exchange traded capacity and electricity contracts and natural gas physical or swap contracts based on market prices, basis adjustments and other premiums where adjustments and premiums are not considered significant to the overall inputs. Level 3—Unobservable inputs are used for the valuation of certain contracts. See “Additional Information Regarding Level 3 Measurements” 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. 128 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents (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). Level 1—Investments in marketable equity securities within the NDT Fund are primarily investments in common stocks across a broad range of industries and sectors. Most equity securities are priced utilizing the principal market close price or, in some cases, midpoint, bid or ask price. Certain other equity securities in the NDT and Rabbi Trust Funds consist primarily of investments in money market funds which seek a high level of current income as is consistent with the preservation of capital and the maintenance of liquidity. To pursue its goals, the funds normally invest in diversified portfolios of high quality, short-term, dollar-denominated debt securities and government securities. The funds’ net asset value is priced and published daily. The Rabbi Trust’s Russell 3000 index fund is valued based on quoted prices in an active market and can be redeemed daily without restriction. Level 2—NDT and Rabbi Trust fixed income securities include investment grade corporate bonds, collateralized mortgage obligations, asset-backed securities and certain government and U.S. Treasury obligations or Federal Agency asset-backed securities and municipal bonds with a wide range of maturities. Since many fixed income securities do not trade on a daily basis, they are priced using an evaluated pricing methodology that varies by asset class and reflects observable market information such as the most recent exchange price or quoted bid for similar securities. Market-based standard inputs typically include benchmark yields, reported trades, broker/dealer quotes and issuer spreads. Certain short-term investments are valued using observable market prices or market parameters such as time-to-maturity, coupon rate, quality rating and current yield. (E) Represents the netting of fair value balances with the same counterparty (where the right of offset exists) and the application of collateral. See Note 16. Financial Risk Management Activities for additional detail. Additional Information Regarding Level 3 Measurements For valuations that include both observable and unobservable inputs, if the unobservable input is determined to be significant to the overall inputs, the entire valuation is categorized in Level 3. This includes derivatives valued using indicative price quotations for contracts with tenors that extend into periods with no observable pricing. In instances where observable data is unavailable, consideration is given to the assumptions that market participants would use in valuing the asset or liability. This includes assumptions about market risks such as liquidity, volatility and contract duration. Such instruments are categorized in Level 3 because the model inputs generally are not observable. PSEG considers credit and non-performance risk in the valuation of derivative contracts categorized in Levels 2 and 3, including both historical and current market data, in its assessment of credit and non-performance risk by counterparty. The impacts of credit and non-performance risk were not material to the financial statements. As of December 31, 2023, PSEG carried $ 2.8 billion of net assets that were measured at fair value on a recurring basis, of which $ 2 million of net liabilities were measured using unobservable inputs and classified as Level 3 within the fair value hierarchy and are considered immaterial. As of December 31, 2022, PSEG carried $ 2.7 billion of net assets that were measured at fair value on a recurring basis, of which $ 45 million of net liabilities were measured using unobservable inputs and classified as Level 3 within the fair value hierarchy and are considered immaterial. There were no transfers in 2023 and 2022 to or from Level 3. Note 18. Stock Based Compensation PSEG’s 2021 Long-Term Incentive Plan (2021 LTIP), approved by shareholders on April 20, 2021 and the Amended and Restated 2004 Long-Term Incentive Plan ((2004 LTIP) under which no new grants have been made effective April 20, 2021), are broad-based equity compensation programs that provide for grants of various long-term incentive compensation awards, such as stock options, stock appreciation rights, performance share units (PSUs), restricted stock, restricted stock units (RSUs), cash awards or any combination thereof. The types of long-term incentive awards that have been granted under the LTIP are non-qualified options to purchase shares of PSEG’s common stock, restricted stock unit awards and performance share unit awards. 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. 129 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents 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. 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 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. No options have been granted since 2009. RSUs Under both the 2021 LTIP and 2004 LTIP (LTIPs), PSEG has granted RSU awards to officers and other key employees. These awards, which are bookkeeping entries only, are subject to risk of forfeiture until vested by continued employment. Until distributed, the units are credited with dividend equivalent units (DEUs) proportionate to the dividends paid on PSEG common stock. Distributions are made in shares of common stock. The RSU grants for 2023 and 2022 generally vest at the end of three years . Vesting may be accelerated (pro-rated basis or full vesting) upon certain events such as change-in-control, retirement, disability or death. PSUs 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 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. Distributions are made in shares of common stock. Vesting may be accelerated on a pro-rated basis for the period of the employee’s service during the performance period as a result of certain events, such as change-in-control, retirement, death or disability. Stock-Based Compensation 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. PSEG recognizes compensation expense for the total shareholder return (TSR) target for its PSU awards based on the grant date fair values of the award, which are determined using the Monte Carlo model. The following table provides the assumptions used to calculate the grant date fair value of the TSR portion of the PSU awards for 2023, 2022 and 2021: Grant Date Risk-Free Interest Rate Volatility February 14, 2023 4.24 % 25.09 % February 15, 2022 1.76 % 27.34 % February 16, 2021 0.22 % 27.31 % 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 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. 2023 2022 2021 Millions Compensation Cost included in O&M Expense $ 18 $ 29 $ 28 Income Tax Benefit Recognized in Consolidated Statement of Operations $ 5 $ 8 $ 8 130 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents 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. RSUs Changes in RSUs for the year ended December 31, 2023 are summarized as follows: Shares Weighted Average Grant Date Fair Value Weighted Average Remaining Years Contractual Term Aggregate Intrinsic Value Non-vested as of January 1, 2023 216,240 $ 61.02 Granted 286,059 $ 61.44 Vested 213,504 $ 60.61 Canceled/Forfeited 25,614 $ 61.21 Non-vested as of December 31, 2023 263,181 $ 61.79 1.2 $ 16,093,498 The weighted average grant date fair value per share for RSUs during the years ended December 31, 2023, 2022 and 2021 was $ 61.44 , $ 64.44 and $ 58.02 per share, respectively. The total intrinsic value of RSUs distributed during the years ended December 31, 2023, 2022 and 2021 was $ 54 million, $ 19 million and $ 17 million, respectively. As of December 31, 2023, there was approximately $ 7 million of unrecognized compensation cost related to the RSUs, which is expected to be recognized over a weighted average period of 1.2 years. DEUs of 29,174 accrued on the RSUs during the year. PSUs Changes in PSUs for the year ended December 31, 2023 are summarized as follows: Shares Weighted Average Grant Date Fair Value Weighted Average Remaining Years Contractual Term Aggregate Intrinsic Value Non-vested as of January 1, 2023 397,010 $ 67.65 Granted 388,658 $ 67.99 Vested 253,289 $ 66.81 Canceled/Forfeited 49,963 $ 68.20 Non-vested as of December 31, 2023 482,416 $ 68.31 1.6 $ 29,499,703 The weighted average grant date fair value per share for PSUs during the years ended December 31, 2023, 2022 and 2021 was $ 67.99 , $ 68.90 and $ 65.57 per share, respectively. The total intrinsic value of PSUs distributed during the years ended December 31, 2023, 2022 and 2021 was $ 95 million, $ 18 million and $ 28 million, respectively. As of December 31, 2023, there was approximately $ 25 million of unrecognized compensation cost related to the PSUs, which is expected to be recognized over a weighted average period of 1.6 years. DEUs of 40,329 accrued on the PSUs during the year. 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 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 years ended December 31, 2023 and 2022, and immaterial for the year ended December 31, 2021. ESPP 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 131 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents through payroll deductions. Dividends are to be paid out in cash unless the participant elects the dividends to be reinvested at fair market price. All employees are required to hold the shares purchased under the ESPP for at least three months from the purchase date. 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, 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. Note 19. Net Other Income (Deductions) PSE&G PSEG Power & Other (A) Consolidated Millions Year Ended December 31, 2023 NDT Fund Interest and Dividends $ — $ 68 $ 68 AFUDC 60 — 60 Solar Loan Interest 7 — 7 Other Interest 12 34 46 Donations ( 1 ) — ( 1 ) Other 2 ( 10 ) ( 8 ) Total Net Other Income (Deductions) $ 80 $ 92 $ 172 Year Ended December 31, 2022 NDT Fund Interest and Dividends $ — $ 62 $ 62 AFUDC 65 — 65 Solar Loan Interest 10 — 10 Other Interest 9 12 21 Donations — ( 1 ) ( 1 ) Purchases of Tax Losses under New Jersey Technology Tax Benefit Transfer Program — ( 27 ) ( 27 ) Other 4 ( 10 ) ( 6 ) Total Net Other Income (Deductions) $ 88 $ 36 $ 124 Year Ended December 31, 2021 NDT Fund Interest and Dividends $ — $ 59 $ 59 AFUDC 71 — 71 Solar Loan Interest 13 — 13 Other Interest 1 6 7 Donations ( 1 ) ( 21 ) ( 22 ) Purchases of Tax Losses under New Jersey Technology Tax Benefit Transfer Program — ( 19 ) ( 19 ) Other 4 ( 15 ) ( 11 ) 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. 132 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents Note 20. Income Taxes A reconciliation of reported income tax expense for PSEG with the amount computed by multiplying pre-tax income by the statutory federal income tax rate of 21 % is as follows: Years Ended December 31, PSEG 2023 2022 2021 Millions Net Income (Loss) $ 2,563 $ 1,031 $ ( 648 ) Income Taxes: Operating Income: Current Expense (Benefit): Federal $ 144 $ 262 $ 407 State 19 ( 30 ) ( 3 ) Total Current 163 232 404 Deferred Expense (Benefit): Federal 109 ( 335 ) ( 700 ) State 253 80 ( 136 ) Total Deferred 362 ( 255 ) ( 836 ) ITC ( 7 ) ( 6 ) ( 9 ) Total Income Tax Expense (Benefit) $ 518 $ ( 29 ) $ ( 441 ) Pre-Tax Income (Loss) $ 3,081 $ 1,002 $ ( 1,089 ) Tax Computed at Statutory Rate @ 21% $ 647 $ 210 $ ( 229 ) Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments: State Income Taxes (net of federal income tax) 215 41 ( 109 ) Uncertain Tax Positions ( 14 ) ( 22 ) 19 NDT Fund 26 ( 22 ) 23 Plant-Related Items ( 7 ) ( 6 ) ( 7 ) Tax Credits ( 10 ) ( 10 ) 29 Audit Settlement ( 7 ) — ( 8 ) Leasing Activities ( 22 ) — ( 1 ) GPRC-CEF-EE ( 52 ) ( 37 ) ( 13 ) TAC ( 232 ) ( 193 ) ( 171 ) Bad Debt Flow-Through ( 9 ) ( 1 ) 27 Other ( 17 ) 11 ( 1 ) Subtotal ( 129 ) ( 239 ) ( 212 ) Total Income Tax Expense (Benefit) $ 518 $ ( 29 ) $ ( 441 ) Effective Income Tax Rate 16.8 % ( 2.9 ) % 40.5 % 133 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents The following is an analysis of deferred income taxes for PSEG: As of December 31, PSEG 2023 2022 Millions Deferred Income Taxes Assets: Regulatory Liability Excess Deferred Tax $ 339 $ 390 OPEB 58 74 Bad Debt 57 66 Corporate Alternative Minimum Tax (CAMT) Credit Carryforward 44 — Operating Leases 42 42 Other 129 379 Total Assets $ 669 $ 951 Liabilities: Plant-Related Items $ 4,850 $ 4,663 New Jersey Corporate Business Tax 1,284 1,009 Leasing Activities 35 99 AROs and NDT Fund 250 161 Taxes Recoverable Through Future Rates (net) 201 149 Pension Costs 189 164 Operating Leases 38 37 Other 430 324 Total Liabilities $ 7,277 $ 6,606 Summary of Accumulated Deferred Income Taxes: Net Deferred Income Tax Liabilities $ 6,608 $ 5,655 ITC 63 70 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. 134 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents A reconciliation of reported income tax expense for PSE&G with the amount computed by multiplying pre-tax income by the statutory federal income tax rate of 21 % is as follows: Years Ended December 31, PSE&G 2023 2022 2021 Millions Net Income $ 1,515 $ 1,565 $ 1,446 Income Taxes: Operating Income: Current Expense (Benefit): Federal $ 127 $ 130 $ 208 State 4 — 1 Total Current 131 130 209 Deferred Expense (Benefit): Federal ( 113 ) ( 17 ) ( 33 ) State 149 159 153 Total Deferred 36 142 120 ITC ( 7 ) ( 5 ) ( 5 ) Total Income Tax Expense $ 160 $ 267 $ 324 Pre-Tax Income $ 1,675 $ 1,832 $ 1,770 Tax Computed at Statutory Rate @ 21% $ 352 $ 385 $ 372 Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments: State Income Taxes (net of federal income tax) 121 126 122 Uncertain Tax Positions ( 9 ) 2 2 Plant-Related Items ( 7 ) ( 6 ) ( 7 ) Tax Credits ( 9 ) ( 9 ) ( 8 ) GPRC-CEF-EE ( 52 ) ( 37 ) ( 13 ) TAC ( 232 ) ( 193 ) ( 171 ) Bad Debt Flow-Through ( 9 ) ( 1 ) 27 Other 5 — — Subtotal ( 192 ) ( 118 ) ( 48 ) Total Income Tax Expense $ 160 $ 267 $ 324 Effective Income Tax Rate 9.6 % 14.6 % 18.3 % 135 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents The following is an analysis of deferred income taxes for PSE&G: As of December 31, PSE&G 2023 2022 Millions Deferred Income Taxes Assets: Regulatory Liability Excess Deferred Tax $ 339 $ 390 OPEB 28 42 CAMT Credit Carryforward 106 — Bad Debt 57 66 Operating Leases 22 19 Other 60 56 Total Assets $ 612 $ 573 Liabilities: Plant-Related Items $ 4,396 $ 4,174 New Jersey Corporate Business Tax 1,160 1,011 Pension Costs 198 195 Taxes Recoverable Through Future Rates (net) 201 149 Conservation Costs 88 81 Operating Leases 21 18 Other 297 223 Total Liabilities $ 6,361 $ 5,851 Summary of Accumulated Deferred Income Taxes: Net Deferred Income Tax Liabilities $ 5,749 $ 5,278 ITC 64 70 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. PSEG and PSE&G each provide deferred taxes at the enacted statutory tax rate for all temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities irrespective of the treatment for rate-making purposes. Management believes that it is probable that the accumulated tax benefits that previously have been treated as a flow-through item to PSE&G customers will be recovered from or refunded to PSE&G’s customers in the future. See Note 6. Regulatory Assets and Liabilities. The 2018 decrease in the federal tax rate resulted in PSE&G recording excess deferred income taxes. As of December 31, 2023, the balance was approximately $ 1.3 billion with a Regulatory Liability of approximately $ 1.8 billion. In 2023, PSE&G returned approximately $ 323 million of excess deferred income taxes and previously realized and current period deferred income taxes related to tax repair deductions to its customers with a reduction to tax expense of approximately $ 232 million. The flowback to customers of the excess deferred income taxes and previously realized tax repair deductions resulted in a decrease of approximately $ 243 million in the Regulatory Liability. The current period tax repair deduction reduces tax expense and revenue and recognizes a Regulatory Asset as PSE&G believes it is probable that the current period tax repair deductions flowed through to the customers will be recovered from customers in the future. See Note 6. Regulatory Assets and Liabilities for additional information. In March 2020, the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted. 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. 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. Unprotected excess deferred income taxes are not subject to the normalization rules allowing them to be refunded to customers sooner as agreed to with FERC and the BPU. In July 2020, FERC and the BPU approved PSE&G’s requests to refund these unprotected excess deferred income taxes to customers. FERC 136 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents 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. In July 2020, the IRS issued final and proposed regulations addressing the limitation on deductible business interest expense contained in the Tax Act. These regulations retroactively allow depreciation to be added back in computing the 30% adjusted taxable income (ATI) cap, increasing the amount of interest that can be deducted by unregulated businesses in years before 2022. For 2022 and after, the regulations continue to disallow the addback of depreciation in the computation of ATI, effectively lowering the cap on the amount of deductible business interest and contain special rules in allocating interest between regulated and non-regulated businesses. The portion of PSEG’s and PSEG Power’s business interest expense that was disallowed in 2018 and 2019 under the previously issued proposed regulations will now be deductible in those respective years. In March 2021, PSEG amended its 2018 federal income tax return to deduct the previously disallowed business interest expense in accordance with the final and proposed regulations issued in July 2020. The 2018 amended return generated a NOL that was carried back to 2013 as provided by the CARES Act. In December 2022, the carryback claim was approved by the IRS, which resulted in a $ 28 million income statement benefit and the closure of PSEG’s federal tax years through 2018. 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% 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: 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. 137 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents 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: 2023 PSEG PSE&G Millions Total Amount of Unrecognized Tax Benefits as of January 1, 2023 $ 130 $ 29 Increases as a Result of Positions Taken in a Prior Period 16 2 Decreases as a Result of Positions Taken in a Prior Period ( 25 ) ( 12 ) Increases as a Result of Positions Taken during the Current Period — — Decreases as a Result of Positions Taken during the Current Period — — Decreases as a Result of Settlements with Taxing Authorities ( 10 ) ( 7 ) Decreases due to Lapses of Applicable Statute of Limitations ( 1 ) ( 1 ) Total Amount of Unrecognized Tax Benefits as of December 31, 2023 $ 110 $ 11 Accumulated Deferred Income Taxes Associated with Unrecognized Tax Benefits ( 29 ) ( 7 ) Regulatory Asset—Unrecognized Tax Benefits ( 2 ) ( 2 ) Total Amount of Unrecognized Tax Benefits that if Recognized, would Impact the Effective Tax Rate (including Interest and Penalties) $ 79 $ 2 2022 PSEG PSE&G Millions Total Amount of Unrecognized Tax Benefits as of January 1, 2022 $ 192 $ 27 Increases as a Result of Positions Taken in a Prior Period 9 2 Decreases as a Result of Positions Taken in a Prior Period ( 40 ) ( 2 ) Increases as a Result of Positions Taken during the Current Period 1 1 Decreases as a Result of Positions Taken during the Current Period — — Decreases as a Result of Settlements with Taxing Authorities ( 28 ) — Decreases due to Lapses of Applicable Statute of Limitations ( 4 ) 1 Total Amount of Unrecognized Tax Benefits as of December 31, 2022 $ 130 $ 29 Accumulated Deferred Income Taxes Associated with Unrecognized Tax Benefits ( 37 ) ( 15 ) Regulatory Asset—Unrecognized Tax Benefits ( 8 ) ( 8 ) Total Amount of Unrecognized Tax Benefits that if Recognized, would Impact the Effective Tax Rate (including Interest and Penalties) $ 85 $ 6 138 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents 2021 PSEG PSE&G Millions Total Amount of Unrecognized Tax Benefits as of January 1, 2021 $ 147 $ 30 Increases as a Result of Positions Taken in a Prior Period 58 8 Decreases as a Result of Positions Taken in a Prior Period ( 19 ) ( 12 ) Increases as a Result of Positions Taken during the Current Period 6 1 Decreases as a Result of Positions Taken during the Current Period — — Decreases as a Result of Settlements with Taxing Authorities — — Decreases due to Lapses of Applicable Statute of Limitations — — Total Amount of Unrecognized Tax Benefits as of December 31, 2021 $ 192 $ 27 Accumulated Deferred Income Taxes Associated with Unrecognized Tax Benefits ( 76 ) ( 15 ) Regulatory Asset—Unrecognized Tax Benefits ( 7 ) ( 7 ) Total Amount of Unrecognized Tax Benefits that if Recognized, would Impact the Effective Tax Rate (including Interest and Penalties) $ 109 $ 5 In 2022, the IRS approved PSEG’s 2018 carryback claim, which resulted in the closure of PSEG’s federal tax years through 2018. PSEG and its subsidiaries include accrued interest and penalties related to uncertain tax positions required to be recorded as Income Tax Expense in the Consolidated Statements of Operations. Accumulated interest and penalties that are recorded on the Consolidated Balance Sheets on uncertain tax positions were as follows: Accumulated Interest and Penalties on Uncertain Tax Positions as of December 31, 2023 2022 2021 Millions PSEG $ 25 $ 38 $ 31 PSE&G $ 1 $ 8 $ 9 It is reasonably possible that total unrecognized tax benefits will significantly increase or decrease within the next twelve months due to either agreements with various taxing authorities upon audit, the expiration of the Statute of Limitations, or other pending tax matters. These potential increases or decreases are as follows: Possible Decrease in Total Unrecognized Tax Benefits Over the next 12 Months Millions PSEG $ 17 PSE&G $ 2 A description of income tax years that remain subject to examination by material jurisdictions, where an examination has not already concluded are: PSEG PSE&G United States Federal 2020-2022 N/A New Jersey 2011-2022 2015-2022 Pennsylvania 2017-2022 2019-2022 Connecticut 2019-2022 N/A Maryland 2020-2022 N/A New York 2017-2022 N/A 139 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents Note 21. Accumulated Other Comprehensive Income (Loss), Net of Tax PSEG Other Comprehensive Income (Loss) Accumulated Other Comprehensive Income (Loss) Cash Flow Hedges Pension and OPEB Plans Available-for -Sale Securities Total Millions Balance as of December 31, 2020 $ ( 9 ) $ ( 545 ) $ 50 $ ( 504 ) Current Period Other Comprehensive Income (Loss) Other Comprehensive Income (Loss) before Reclassifications — 176 ( 33 ) 143 Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) 3 14 ( 6 ) 11 Net Current Period Other Comprehensive Income (Loss) 3 190 ( 39 ) 154 Balance as of December 31, 2021 $ ( 6 ) $ ( 355 ) $ 11 $ ( 350 ) Other Comprehensive Income (Loss) before Reclassifications — ( 72 ) ( 158 ) ( 230 ) Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) 3 1 26 30 Net Current Period Other Comprehensive Income (Loss) 3 ( 71 ) ( 132 ) ( 200 ) Balance as of December 31, 2022 $ ( 3 ) $ ( 426 ) $ ( 121 ) $ ( 550 ) Other Comprehensive Income (Loss) before Reclassifications 9 76 61 146 Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) ( 3 ) 248 ( 20 ) 225 Net Current Period Other Comprehensive Income (Loss) 6 324 41 371 Balance as of December 31, 2023 $ 3 $ ( 102 ) $ ( 80 ) $ ( 179 ) PSEG Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) to Statement of Operations Year Ended December 31, 2021 Description of Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) Location of Pre-Tax Amount in Statement of Operations Pre-Tax Amount Tax (Expense) Benefit After-Tax Amount Millions Cash Flow Hedges 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 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) Net Gains (Losses) on Trust Investments 9 ( 3 ) 6 Total Available-for-Sale Securities 9 ( 3 ) 6 Total $ ( 15 ) $ 4 $ ( 11 ) 140 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents PSEG Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) to Statement of Operations Year Ended December 31, 2022 Description of Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) Location of Pre-Tax Amount in Statement of Operations Pre-Tax Amount Tax (Expense) Benefit After-Tax Amount Millions Cash Flow Hedges 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 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 ) Available-for-Sale Securities Realized Gains (Losses) Net Gains (Losses) on Trust Investments ( 43 ) 17 ( 26 ) Total Available-for-Sale Securities ( 43 ) 17 ( 26 ) Total $ ( 49 ) $ 19 $ ( 30 ) PSEG Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) to Statement of Operations Year Ended December 31, 2023 Description of Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) Location of Pre-Tax Amount in Statement of Operations Pre-Tax Amount Tax (Expense) Benefit After-Tax Amount Millions Cash Flow Hedges 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 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 ) Available-for-Sale Securities Realized Gains (Losses) Net Gains (Losses) on Trust Investments 34 ( 14 ) 20 Total Available-for-Sale Securities 34 ( 14 ) 20 Total $ ( 307 ) $ 82 $ ( 225 ) 141 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents Note 22. Earnings Per Share (EPS) and Dividends EPS Basic EPS is calculated by dividing Net Income (Loss) by the weighted average number of shares of common stock outstanding. Diluted EPS is calculated by dividing Net Income (Loss) by the weighted average number of shares of common stock outstanding, plus dilutive potential shares related to PSEG’s stock based compensation. For additional information on PSEG’s stock compensation plans see Note 18. Stock Based Compensation. The following table shows the effect of these dilutive potential shares on the weighted average number of shares outstanding used in calculating diluted EPS: Years Ended December 31, 2023 2022 2021 Basic Diluted Basic Diluted Basic Diluted EPS Numerator: (Millions) Net Income (Loss) $ 2,563 $ 2,563 $ 1,031 $ 1,031 $ ( 648 ) $ ( 648 ) EPS Denominator: (Millions) Weighted Average Common Shares Outstanding 498 498 498 498 504 504 Effect of Stock Based Compensation Awards — 2 — 3 — — Total Shares 498 500 498 501 504 504 EPS: Net Income (Loss) $ 5.15 $ 5.13 $ 2.07 $ 2.06 $ ( 1.29 ) $ ( 1.29 ) 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. 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, Dividend Payments on Common Stock 2023 2022 2021 Per Share $ 2.28 $ 2.16 $ 2.04 in Millions $ 1,137 $ 1,079 $ 1,031 On February 13, 2024, PSEG’s Board of Directors approved a $ 0.60 per share common stock dividend for the first quarter of 2024. Note 23. Financial Information by Business Segment Basis of Organization PSEG’s and PSE&G’s operating segments were determined by management in accordance with GAAP. 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 142 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents 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 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 periods presented in the following tables reflect the change in segment presentation. PSE&G 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 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 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 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. PSE&G PSEG Power & Other Eliminations (A) Consolidated Total Millions Year Ended December 31, 2023 Operating Revenues $ 7,807 $ 4,533 $ ( 1,103 ) $ 11,237 Depreciation and Amortization 980 155 — 1,135 Operating Income (Loss) 1,974 1,711 — 3,685 Income from Equity Method Investments — 1 — 1 Interest Income 19 38 ( 4 ) 53 Interest Expense 493 259 ( 4 ) 748 Income (Loss) before Income Taxes 1,675 1,406 — 3,081 Income Tax Expense (Benefit) 160 358 — 518 Net Income (Loss) (B) (C) $ 1,515 $ 1,048 $ — $ 2,563 Gross Additions to Long-Lived Assets $ 2,998 $ 327 $ — $ 3,325 As of December 31, 2023 Total Assets $ 42,873 $ 8,407 $ ( 539 ) $ 50,741 Investments in Equity Method Subsidiaries $ — $ 17 $ — $ 17 143 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents PSE&G PSEG Power & Other Eliminations (A) Consolidated Total Millions Year Ended December 31, 2022 Operating Revenues $ 7,935 $ 3,266 $ ( 1,401 ) $ 9,800 Depreciation and Amortization 935 165 — 1,100 Operating Income (Loss) 1,892 ( 511 ) — 1,381 Income from Equity Method Investments — 14 — 14 Interest Income 19 13 ( 1 ) 31 Interest Expense 427 202 ( 1 ) 628 Income (Loss) before Income Taxes 1,832 ( 830 ) — 1,002 Income Tax Expense (Benefit) 267 ( 296 ) — ( 29 ) Net Income (Loss) (B) (C) $ 1,565 $ ( 534 ) $ — $ 1,031 Gross Additions to Long-Lived Assets $ 2,590 $ 298 $ — $ 2,888 As of December 31, 2022 Total Assets $ 39,960 $ 9,285 $ ( 527 ) $ 48,718 Investments in Equity Method Subsidiaries $ — $ 306 $ — $ 306 PSE&G PSEG Power & Other Eliminations (A) Consolidated Total Millions Year Ended December 31, 2021 Operating Revenues $ 7,122 $ 3,767 $ ( 1,167 ) $ 9,722 Depreciation and Amortization 928 288 — 1,216 Operating Income (Loss) 1,818 ( 2,674 ) — ( 856 ) Income from Equity Method Investments — 16 — 16 Interest Income 14 6 — 20 Interest Expense 402 169 — 571 Income (Loss) before Income Taxes 1,770 ( 2,859 ) — ( 1,089 ) Income Tax Expense (Benefit) 324 ( 765 ) — ( 441 ) Net Income (Loss) (B) (C) $ 1,446 $ ( 2,094 ) $ — $ ( 648 ) Gross Additions to Long-Lived Assets $ 2,447 $ 272 $ — $ 2,719 As of December 31, 2021 Total Assets $ 37,198 $ 12,258 $ ( 457 ) $ 48,999 Investments in Equity Method Subsidiaries $ — $ 173 $ — $ 173 (A) Intercompany eliminations primarily relate to intercompany transactions between PSE&G and PSEG Power. For a further discussion of the intercompany transactions between PSE&G and PSEG Power, see Note 24. Related-Party Transactions. (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. See Note 3. 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. 144 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Table of Contents Note 24. Related-Party Transactions The following discussion relates to intercompany transactions, which are eliminated during the PSEG consolidation process in accordance with GAAP. PSE&G The financial statements for PSE&G include transactions with related parties presented as follows: Years Ended December 31, Related Party Transactions 2023 2022 2021 Millions Billings from Affiliates: Net Billings from PSEG Power (A) $ 1,065 $ 1,388 $ 1,144 Administrative Billings from Services (B) 443 $ 445 394 Total Billings from Affiliates $ 1,508 $ 1,833 $ 1,538 Years Ended December 31, Related Party Transactions 2023 2022 Millions Payable to PSEG Power (A) $ 264 $ 313 Payable to Services (B) 121 98 Payable to PSEG (C) 119 74 Accounts Payable—Affiliated Companies $ 504 $ 485 Working Capital Advances to Services (D) $ 33 $ 33 Long-Term Accrued Taxes Payable $ 2 $ 9 (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. 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. The rates in the BGS and BGSS contracts and for the ZEC sales are prescribed by the BPU. BGS and BGSS sales are billed and settled on a monthly basis. ZEC sales are billed on a monthly basis and settled annually following completion of each energy year. In addition, PSEG Power and PSE&G provide certain technical services for each other generally at cost in compliance with FERC and BPU affiliate rules . (B) Services provides and bills administrative services to PSE&G at cost. In addition, PSE&G has other payables to Services, including amounts related to certain common costs, which Services pays on behalf of PSE&G. (C) PSEG pays all payroll taxes and receives reimbursement from its affiliated companies for their respective portions. In addition, PSEG files a consolidated federal income tax return with its affiliated companies. A tax allocation agreement exists between PSEG and each of its affiliated companies. The general operation of these agreements is that the subsidiary company will compute its taxable income on a stand-alone basis. If the result is a net tax liability, such amount shall be paid to PSEG. If there are NOLs and/or tax credits, the subsidiary shall receive payment for the tax savings from PSEG to the extent that PSEG is able to utilize those benefits. (D) PSE&G has advanced working capital to Services. The amount is included in Other Noncurrent Assets on PSE&G’s Consolidated Balance Sheets. 145 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None.