Dive Brief:

• Public Service Enterprise Group (PSEG) has completed the sale of its fossil fuel generation portfolio, including 6,750 MW in New Jersey, Connecticut, Maryland and New York. That leaves the company more than 90% regulated and focused on reaching net-zero emissions by 2030, company leaders said Thursday during PSEG's Q4 2021 earnings call with analysts.
• PSEG is now focused on "clean energy and infrastructure investments to drive regulated utility growth " PSEG CEO Ralph Izzo said. The company owns three nuclear units in New Jersey and expects they will remain in operation for almost 30 more years, he said.
• The New Jersey Board of Public Utilities (BPU) in April extended zero-emission credit (ZEC) subsidies for the state's nuclear plants. The ZEC process runs every three years, but Izzo said he expects the cycle to be lengthened rather than run through the same debates repeatedly.

Dive Insight:

There have been multiple "spirited conversations" in recent years about the importance of nuclear to New Jersey's climate goals, Izzo said. Legislators created the ZEC program in 2018, and despite some consumer advocate concerns about its cost, the BPU's credit extension last year was unanimous.

"My sense from policy leaders, both elected officials, regulators and key staff members, is we need these plants to run at least until 2050, which is actually beyond the current license," Izzo said during Thursday's earnings call. "And asking ourselves that question every three years ... nobody really has that in them."

There is "a strong desire to expand the duration of the support," Izzo said. "There's an equally strong desire to see what happens at the federal level, however, before one acts on that."

Izzo was responding to questions from Jonathan Arnold, a partner at Vertical Research Partners, who also asked about the potential for a "strategic decision" on the company's nuclear assets. PSEG plans to take a wait-and-see approach, Izzo said.

"The reality is people have already expressed an interest in our nuclear plants, and they're outstanding assets," Izzo said. "The issue is how do you firm up the longer-term economic treatment beyond a three-year time frame. And I think we're the ones who are best positioned to do that," Izzo said.

PSEG reported a 2021 net loss of $648 million, compared with net income of $1.9 billion in 2020. The bulk of the loss came from PSEG Power, which included charges related to the sale of fossil assets. The company's utility subsidiary Public Service Electric and Gas (PSE&G) posted 2021 net income of $1.45 billion compared with $1.33 billion in 2020.

Closing on the sale of almost 7 GW of fossil generation means PSEG can focus on "clean energy and infrastructure investments to drive regulated utility growth, with a vision toward powering a future where people use less energy," Izzo said.

As for PSE&G, Izzo said that last year the utility initiated investments in its $2 billion Clean Energy Future program and also settled a potential challenge to the return on equity in its FERC transmission formula, which resulted in reduced transmission rates for customers.

A larger focus on regulated assets will help PSEG provide "more predictable and visible earnings," Izzo said. The company now anticipates an earnings growth rate of 5% to 7%, from its 2022 guidance midpoint to 2025.