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PSEG considers selling solar and fossil-fuel based generating assets to enhance its valuation

Public Service Enterprise Group announced last week that it is exploring alternatives for PSEG Power’s non-nuclear generating fleet, which includes more than 6,750 megawatts of fossil generation located in New Jersey, Connecticut, New York and Maryland, as well as the 467-megawatt Solar Source portfolio located in various states.  President and CEO Ralph Izzo said the intent is to “accelerate the transformation of PSEG into a primarily regulated electric and gas utility.”

He added that divesting from its non-nuclear generating assets would reduce business risk and improve the company’s credit profile, adding also that the company sees investor sentiment shifting in favor of regulated utilities that do not have exposure to merchant generation volatility.  In addition, removing non-nuclear generation assets would “enhance an already compelling ESG position driven by pending clean energy investments, methane reduction, and zero-carbon generation.” Izzo said.

New Jersey’s Clean Energy Agenda

PSEG’s energy delivery utility PSE&G is already expected to comprise approximately 80% of PSEG’s 2020 Operating Earnings mix, and that percentage should increase as the company allocates the majority of its capital spend to meet system infrastructure needs and growing policy and customer expectations for clean energy investments, it said.  

PSE&G’s $3.5 billion Clean Energy Future filing is built around expanding customer access to energy efficiency programs, enabling full access to electric vehicle infrastructure, enhancing services through Advanced Metering Infrastructure (AMI) and Energy Cloud services and using more energy storage.

PSEG continues to evaluate potential investments in offshore wind and expects to make a decision regarding the opportunity to invest in Ørsted’s Ocean Wind project later this year. In addition, the company is evaluating participation in upcoming offshore wind solicitations in New Jersey and other Mid-Atlantic states.  

Of the nuclear fleet that PSEG will retain ownership, the company said it is necessary for New Jersey to meet its long-term carbon reduction goals and helps satisfy the state’s capacity obligations for resource adequacy. He said the plants are a cost-effective source of zero-carbon electricity.

PSEG expects to begin marketing its assets this year and hopes to button up the transaction in 2021. The company has hired Goldman Sachs and law firm Wachtell, Lipton, Rosen & Katz as advisors for this strategic evaluation.

Any decision regarding the non-nuclear assets will not impact PSE&G or PSEG Long Island customers, operations or tariffs and would be subject to customary regulatory approvals.  “We are proud to have served the needs of our customers and key stakeholders for the last 117 years, and are excited to explore the opportunities that will shape PSEG’s future,” Izzo said, adding “We believe