Public Service Enterprise Group Incorporated (PEG) Earnings

Management highlights

### Storm Response and System Reliability - Successfully managed a major July 4th 2026 storm event featuring 70+ mph winds and a regional heat wave, restoring power to ~380,000 customers with nearly all service restored within 24 hours. - Led restoration with 330+ crews, sent 10 million+ proactive customer communications, maintained an excellent safety record, and provided mutual aid to neighboring utilities. A full post-event performance report was submitted to the New Jersey Board of Public Utilities (BPU) August 5, 2026. - PSE&G hit a peak summer load of 10,446 megawatts, the highest in 14 years, and successfully activated demand response programs during three separate heat events in early July. ### Clean Energy and Customer Affordability Initiatives - The Clean Energy Future energy efficiency (EE) program has generated over $1 billion in annual customer savings, benefited nearly 525,000 residential and business customers, and supported ~9,300 New Jersey jobs since October 2020, including a network of over 1,000 trade and union partners. - PSE&G is implementing residential bill credits per Executive Order 1 and continuing a 12-month $166 million refund of zero emission certificate revenues that began in June 2026. A filing with BPU to lower residential natural gas bills by over 5% effective October 1, 2026 is also complete, maintaining PSE&G's status as having the lowest residential gas rates in New Jersey and the region. - A recent PJM transmission cost allocation rule change approved by FERC will deliver an estimated $33 million benefit to PSE&G zonal customers from June 1 to December 31 2026, with an ongoing annual benefit of ~$65 million starting in 2027. - PSEG plans to file a proposal for a one-year extension of the EE2 triennium by September 30, 2026, consistent with the recently adopted BPU framework. ### New Jersey Regulatory Update - Phase 1 of the BPU's electric utility business model review (mandated by Governor Sherrill's Executive Order 1) concluded with a consultant report highlighting potential reforms including multi-year rate plans, performance-based rates, earnings sharing mechanisms, and decoupling. PSEG will file comments on the report by September 18, 2026, as the BPU moves into Phase 2 focused on cost discipline, performance incentives, and performance-based rate design. - While the last base rate case was settled in October 2024 with a required filing deadline of 2029, PSE&G now anticipates filing an updated base rate case by the end of 2026, driven by significant accumulated distribution rate base investment from recent infrastructure programs and the need to align with the BPU's new regulatory timeline. ### PSEG Power Update - The most recent PJM capacity auction cleared at $325/MW-day (the upper end of the price collar), and left PJM 6.8 gigawatts short of its reliability target. PSEG is reviewing PJM's reliability backstop procurement and Interim Resource Adequacy Service (IRAS) rules, including a recent FERC filing. - PSEG Power has submitted multiple bilateral dispatchable generation project proposals across the PJM region, which can be paired with new large loads under bilateral contracts as part of PJM's RBA process. - The newly signed Power in New Jersey Act establishes a BPU procurement process for at least 1,100 megawatts of new nuclear generation. PSEG Nuclear holds an early site permit for new development at its Salem County site (one of only six issued in the U.S.) and has been engaging stakeholders on new nuclear development as a long-term solution for New Jersey's resource adequacy needs, noting that appropriate risk allocation is required for project advancement.

Guidance

- Full year 2026 non-GAAP operating earnings guidance is maintained at $4.28 to $4.40 per share, unchanged from prior guidance. - The 6% to 8% compound annual growth rate (CAGR) target for non-GAAP operating earnings through 2030 is reaffirmed, with the potential for upside from multi-year nuclear output contracts, incremental utility infrastructure investments, and competitive transmission projects. - PSEG's total five-year capital investment plan through 2030 is maintained at $24 to $28 billion. Management confirms the company's strong balance sheet allows funding of this plan without issuing new equity or selling assets, and supports consistent, sustainable dividend growth. Rate base is expected to grow at a 6% to 7.5% CAGR through 2030, consistent with prior guidance. - The potential elimination of the 50 basis point RTO incentive (effective January 2027) was already incorporated into the 6% to 8% long-term growth guidance when it was updated earlier in 2026, so no change to guidance is required.

Segment performance

1. **PSE&G (Regulated Utility Segment)**: Reported Q2 2026 non-GAAP operating earnings and net income of $342 million, up from $332 million in Q2 2025. This segment contributed approximately 81% of total company non-GAAP operating earnings for the quarter. Distribution margin increased $0.05 per share year-over-year, driven by incremental gas margin from the GSMP2 extension and higher energy efficiency investments. Transmission margin was flat year-over-year, as higher planned investment offset a prior-year true-up. Capital investment for the segment totaled ~$1 billion in Q2 2026, putting it on track to hit the full-year 2026 target of $4.2 billion. The five-year regulated capital investment plan for the segment is maintained at $22.5 to $25.5 billion through 2030. 2. **PSEG Power and Other**: Reported a Q2 2026 net loss of $8 million, compared to net income of $253 million in Q2 2025. Non-GAAP operating earnings for the segment were $83 million in Q2 2026, up from $52 million in Q2 2025, making up approximately 19% of total company non-GAAP operating earnings for the quarter. Net energy margin rose $0.08 per share year-over-year, driven by higher nuclear generation volume, higher capacity prices, and stronger gas operations; this gain was partially offset by the expiration of zero emission certificate programs in 2025 and the absence of LIPA-related fuel and energy management fees. PSEG Nuclear achieved a 92% capacity factor in Q2 2026, delivering 7.8 terawatt-hours of carbon-free baseload generation, with the second consecutive breaker-to-breaker run at Salem Unit 2.

Risks & headwinds

- The latest PJM capacity auction failed to meet the system's reliability target, with reserve margins remaining well below required levels, creating uncertainty around long-term resource adequacy and market pricing in the region. - Proposed elimination of the 50 basis point RTO transmission incentive is expected to create an annual headwind of $40 million in net income (approximately $0.08 per share) starting in 2027, though this impact was already incorporated into existing long-term guidance. - New nuclear development requires significant long lead times (10+ years) and carries substantial cost overrun risk, with project advancement dependent on reaching an acceptable framework for risk allocation between project stakeholders, policymakers, and ratepayers. - Ongoing New Jersey regulatory reform introduces uncertainty around future rate-making structures, cost recovery terms, and allowed returns on energy efficiency and infrastructure investment. - PJM's IRAS/RBA regulatory framework is still evolving, creating uncertainty around the final structure of bilateral generation opportunities and associated project risk profiles.

Analyst Q&A

• Q: What is the driver for moving the base rate filing forward, and how much will the new BPU EO1 framework impact this filing? /

  A: Management expects few elements of the new BPU framework to be included in the upcoming year-end 2026 filing. A base rate case is needed to establish a current baseline to support the state's planned transition to more transparency and performance-based rate making under EO1. Significant accumulated distribution investment since the last 2024 base rate case, and alignment with other New Jersey utilities that have already completed recent base rate filings, also make the earlier timeline appropriate. The 6% to 8% long-term growth guidance remains on track even with the earlier filing and the potential loss of the RTO incentive, which was already priced into guidance. (378 characters)

• Q: What types of bilateral generation opportunities is PSEG Power pursuing in PJM's RBA process, and what return profile does the company target? /

  A: PSEG is evaluating multiple potential new dispatchable generation projects both inside and outside New Jersey, leveraging retained in-house generation development expertise that was kept after exiting the competitive fossil generation business. Management will only pursue opportunities that have a utility-like risk profile, aligned with the company's low-risk business model, so no specific return targets are disclosed at this early competitive stage. Management is waiting for further clarity on PJM's load forecast and final rules before advancing projects. (352 characters)

• Q: How does PSEG view proposed regulatory reforms under EO1, and which reforms have the most merit for New Jersey? /

  A: Management welcomes the proposed reforms, particularly increased transparency for customers, which helps clarify that only ~25% of a customer's bill covers distribution costs. Performance-based rate making is also welcomed, as PSEG has a strong track record of operational performance and customer satisfaction. The BPU report correctly presented a menu of options rather than mandated reforms, and PSEG will work constructively with policymakers to work through details and align with the state's affordability and clean energy goals. (341 characters)

• Q: What role can new nuclear play in meeting PJM's near-term resource adequacy needs for new large loads like data centers? /

  A: New nuclear is a strong long-term solution aligned with New Jersey's clean energy and resource adequacy goals, but it has a 10-12 year development timeline. Most near-term and medium-term load needs (the earliest RBA projects target 2032 in-service dates) will require shorter-term generation solutions. PSEG is continuing to enable new nuclear development at its pre-permitted Salem County site, and remains focused on getting appropriate risk allocation in place to move the project forward. (326 characters)

• Q: What is the size of the requested rate increase in the upcoming base rate filing, and when will the BPU EO1 process conclude? /

  A: Management has not disclosed details on the size of a potential rate adjustment, and does not intend to front-run the BPU's EO1 phase two timeline. The BPU has a publicly outlined process, and PSEG will participate fully as the new BPU president finalizes the timeline and framework. The base rate filing by end of 2026 aligns PSEG with the BPU's timeline for adopting the new regulatory framework in 2027. (298 characters)