PSEG makes investments in cleaner energy, infrastructure upgrades, CEO says

Published on November 12, 2019 by Kevin Randolph

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The Public Service Enterprise Group (PSEG) is increasingly focusing its investments on replacing aging infrastructure, as well as clean energy, PSEG Chairman, President and CEO Ralph Izzo told investors in a presentation on Tuesday at the Edison Electric Institute (EEI) Financial Conference in Orlando, Fla.

In the past, Izzo noted, the company’s investments had a significant focus on transmission expansion and the construction of combined cycle units. The company’s current program shifts the focus to replacing aging infrastructure and transitioning to cleaner energy, along with ongoing efforts related to storm hardening.

“Looking into the future, you will see a continuation of this aging infrastructure replacement program as well as a greatly expanded effort in the clean energy space, largely at the regulated utility, however,” Izzo said.

Izzo noted that the company’s investments in storm hardening and reliability enhancements will result in a 7.5 percent rate base growth and that the company’s Clean Energy Future program, which is pending approval by regulators, could increase rate base growth by an additional one percent.

The Clean Energy Future program includes approximately $3.5 billion in investments, including $2.5 billion in energy efficiency, $600 million in advanced meter infrastructure, $300 million in electric vehicle infrastructure, and $100 million in energy storage.

Izzo also discussed PSEG’s history and goals related to carbon emissions reduction. PSEG has achieved a more than 40 percent reduction in carbon emissions over the past 10 years, Izzo said, due largely to coal plant retirements, increased efficiency at the company’s gas units, and the use of nuclear energy.

PSEG has committed to achieving net zero carbon emissions by 2050. Izzo discussed what he believes it will take to achieve that goal.

“We know how we can get to 80 percent reduction by 2046,” Izzo said. “We’re going to need a little help closing that last 20 percent gap over those final few years, and the help that we need involves the active participation of federal lawmakers in setting a price on carbon…”

A price on carbon, Izzo said, could create market incentives for developing technologies that could be used to further reduce emissions.

Izzo also discussed the company’s potential investment in Ørsted U.S. Offshore Wind’s Ocean Wind project, a 1,100 megawatt (MW) offshore wind project located off the coast of Atlantic City, N.J., that is expected to come online in 2024. PSEG has exercised an option to enter into an option to acquire 25 percent equity interest in the project.

Izzo also said that the company was not issuing any new guidance at the meeting and noted that PSEG’s operating earnings are expected to continue to grow at an approximately 4 percent compound annual growth rate (CAGR). He also noted that the annual dividend per share is averaging 4.9 percent.

PSEG recently announced net income for the third quarter of 2019 of $403 million, or $0.79 per share. Net Income for the third quarter of 2018 was $412 million, or $0.81 per share. Non-GAAP operating earnings for the third quarter of 2019 were $495 million, or $0.98 per share, as compared to $481 million, or $0.95 per share for the third quarter of 2018.