Public Service Enterprise Group Incorporated (PEG) Business Profile

What it does

Public Service Enterprise Group, or PSEG, is a utility holding company based in Newark, New Jersey. Its businesses deliver electricity and natural gas, generate nuclear power and provide related services. PSEG was founded in 1903 and incorporated in New Jersey in 1985. Ralph A. LaRossa is its chair, president and chief executive.

Its main utility, Public Service Electric and Gas Company, known as PSE&G, transmits electricity and distributes electricity and gas to homes, businesses and industrial customers in New Jersey. It also acts as the supplier of last resort for customers in its territory who do not choose another energy supplier. PSE&G invests in energy efficiency, solar projects and infrastructure that helps connect electric-vehicle chargers.

A separate subsidiary, PSEG Power, owns nuclear generating assets and sells electricity and generating capacity in wholesale markets. Capacity payments compensate a generator for committing its plants to be available when the grid operator needs them. PSEG Power also supplies wholesale natural gas, principally for PSE&G’s default-service customers.

PSEG Long Island operates the Long Island Power Authority’s electric transmission and distribution system under a contract. Other subsidiaries hold legacy lease investments and competitively bid transmission projects, or provide services to the group. As a holding company, PSEG depends on its subsidiaries’ operating results for its profitability.

How it makes money

PSEG reports two segments: PSE&G and PSEG Power & Other. PSE&G earns revenue under regulated tariffs for transmitting electricity and distributing electricity and natural gas. Federal regulators approve transmission tariffs, while New Jersey regulators approve distribution tariffs and investment programs.

Transmission rates use a formula designed to recover operating costs and provide a return on capital invested in the system. Rates initially reflect forecast expenses and capital spending, then are adjusted to actual amounts. Distribution rates are subject to periodic rate cases. The New Jersey regulator has also approved mechanisms for recovering costs or investments associated with specific infrastructure and clean-energy programs.

PSE&G does not earn a margin on default electricity and gas supply: the commodity costs are passed through to customers. It also earns margins on competitive services such as appliance repair. A conservation incentive program adjusts distribution margin for most customers to an approved baseline per customer, reducing the effect of changes in energy usage.

PSEG Power sells energy, capacity and ancillary services, primarily into the PJM wholesale market, and can hedge output through exchange markets or bilateral contracts. It also sells wholesale natural gas under a contract serving PSE&G’s default-service customers. PSEG Long Island receives a fixed management fee and can earn an incentive fee for meeting performance measures; its operating expenditures are prefunded.

For the third quarter of 2026, PSEG recorded net income of $0.76 per share and non-GAAP operating earnings of $1.15 per share. Its regulated rate base was approximately $36 billion as of December 31, 2025.

PSEG Power’s nuclear plants are eligible for a federal production tax credit, subject to conditions and gross receipts. PSEG recorded no such credits for its nuclear units in 2025 because gross receipts exceeded the applicable level.

Customers and how it sells

PSE&G serves residential, commercial and industrial customers in a designated territory running diagonally across New Jersey. The area includes cities and suburban and rural communities. As of December 31, 2025, it had 2.4 million electric customers and 1.9 million gas customers across approximately 2,600 square miles. Approximately 6.8 million people, or about 74% of New Jersey’s population, lived in its service territory.

In 2025, commercial customers accounted for 57% of electric sales, residential customers 34%, and industrial customers 9%. New Jersey customers can choose their electricity or gas supplier, while PSE&G continues to deliver the energy through its network.

PSEG Power sells into the PJM regional wholesale market and through contracts. Its nuclear generating capacity is located in New Jersey and Pennsylvania. PSEG Long Island operates a transmission and distribution system for the Long Island Power Authority in New York.

Over the 12 months before the third quarter of 2026, PSE&G’s residential electric customer count grew about 1%, while its gas customer count was flat. The company’s conservation incentive mechanism makes customer numbers, rather than usage alone, relevant to much of its distribution margin.

Suppliers and costs

PSE&G obtains default electricity supply through regulator-authorized auctions. It obtains gas for default-service customers through a full-requirements contract with PSEG Power. PSEG Power uses transportation capacity, storage contracts, contract peaking supply, liquefied natural gas and propane to meet PSE&G’s peak daily gas requirements.

PSEG Power has long-term nuclear fuel contracts covering uranium purchases, conversion, enrichment and fuel assembly fabrication. The company expects to meet its fuel needs, but says there are limited suppliers for certain parts of the supply chain. Changes in prices and demand, tariffs, supplier curtailments and other factors outside its control could affect supply.

The utility’s costs include operating and maintaining its networks, financing investments and depreciating assets. Its transmission formula rates provide for recovery of operating costs and a return of and on capital investments; distribution cost recovery is subject to New Jersey regulatory mechanisms. Default energy commodity costs are passed through to customers without a utility margin.

In the third quarter of 2026, PSE&G’s depreciation and interest expenses increased compared with the year-earlier quarter. The company attributed the increases to continuing capital investments, additional debt and replacement of maturing debt at higher long-term interest rates.

Competitive position

PSE&G operates a franchised utility in New Jersey, while customers can choose alternative suppliers for their electricity and gas. The utility says its transmission and distribution business is not affected when customers switch commodity suppliers because its return comes from investment in the delivery network, not from supplying the commodity.

Our reading: The franchise and established delivery network are meaningful sources of protection for the utility business, although rates and investment recovery depend on regulatory approval. Our reading: The transmission formula and distribution conservation mechanism also support that position by reducing the effect of changes in customer usage on revenue or margin.

PSEG Power competes in wholesale energy markets and for bilateral contracts. Competitors include merchant and utility generators, energy marketers, retailers, private equity firms and other financial entities. PSEG does not identify specific competing companies in these markets. Nuclear output can be sold or hedged in advance, but wholesale energy and capacity prices remain relevant to the business.

Our reading: PSEG Power’s nuclear assets give it generating capacity in the PJM market, but this is a less protected position than the utility franchise because market prices and plant performance affect results. Transmission development is also open to competition: rule changes can allow third parties to construct projects in PSEG’s service territory and permit PSEG to seek projects elsewhere.

Growth opportunities

PSEG plans to allocate capital primarily to regulated investments, including electric transmission, electric and gas distribution, and energy efficiency. The company expects growing customer numbers, electrification, electric vehicles, data centers and other large users to increase demand and require additional system investment.

For 2026–2030, PSEG estimates regulated capital investment of $22.5 billion to $25.5 billion. It expects those investments to support regulated rate base compound annual growth of 6.0% to 7.5% from year-end 2025 to year-end 2030. Its plan includes extensions of gas modernization and energy efficiency programs, while the upper end includes potential additional investments for demand growth and infrastructure needs. PSEG maintained the five-year regulated capital plan in the third quarter of 2026.

Approved programs include energy efficiency projects and replacement of cast iron and unprotected steel gas mains. PSEG is also pursuing transmission opportunities outside its existing service territory. It does not believe the directed 2027 in-service date for its Maryland and northern Virginia transmission project is reasonably achievable given the regulatory timetable.

In generation, PSEG plans power uprates at its Salem nuclear units and is exploring potential long-term sales of power, capacity or emission credits. The company has also considered subsequent license renewals for Salem and Hope Creek. PSEG Power cleared approximately 3.6 thousand MW of existing capacity in PJM’s July 2026 auction for the energy year beginning June 2028 through May 2029.

Structural risks

• Regulation and recovery: Utility rates, returns and investment recovery depend on federal and New Jersey regulators. Delays in recovering costs or investments can change PSE&G’s cash flow, while regulatory proceedings can affect transmission rates and returns.
• Project execution: Transmission, distribution and nuclear projects depend on approvals, permits, property rights, financing and contractors. Delays or an inability to complete projects within budget or recover investments through rates could adversely affect the business.
• Wholesale markets and plant performance: PSEG Power’s profitability is affected by nuclear generation performance and market prices. Natural gas prices often influence wholesale electricity prices, and PJM capacity market rules can impose penalties when a unit is unavailable during a performance interval.
• Fuel and operations: Nuclear fuel has limited suppliers in some parts of its supply chain. Supplier disruptions, changes in fuel availability, equipment failures, severe weather and labor disputes can impede generation or fuel delivery.
• Financing and customer costs: Interest rates, credit ratings and access to financing affect the company’s ability to fund its plans. Higher commodity, supply and operating costs can also put pressure on customers and affect investment programs.
• Cybersecurity and physical disruption: Cyber or physical attacks and other disruptions can affect the grid, fuel supply, vendors’ systems or the company’s ability to serve customers and collect revenue.

Bottom line

Our reading

PSEG combines a regulated New Jersey delivery utility with a nuclear generation business exposed to wholesale markets. The utility’s franchise and rate mechanisms support recurring revenue, but its investment plans depend on regulatory approvals, cost recovery and financing. Nuclear generation adds a separate source of earnings whose results depend on plant performance, power prices and market rules.