Public Service Enterprise Group (PEG) 10-K risk factor changes: FY2021 vs FY2020

Inability to successfully develop, obtain regulatory approval for, or construct [removed: generation, transmission] [added: T&D,] and [removed: distribution] [added: solar and wind generation] projects could adversely impact our businesses.

Our business plan calls for extensive investment in capital improvements and additions, including the construction [removed: and/or acquisition] of T&D [removed: facilities and generation units; and] [added: facilities,] modernizing existing infrastructure pursuant to investment programs [removed: entitled to] [added: that provide for] current [removed: recovery.][added: recovery in rates, and our CEF programs, which include providing incentives for customers to install high-efficiency equipment at their premises, constructing EV infrastructure, and implementing our smart meter program.]

- [removed: at PSE&G,] recover the related costs through rates.

In addition, the successful operation of new [added: solar] or [added: wind or] upgraded generation facilities or transmission or distribution projects is subject to risks relating to supply interruptions; [added: labor availability,] work stoppages and labor disputes; weather interferences; unforeseen engineering and environmental problems, including those related to climate change; [added: opposition from local communities,] and the other risks described herein.

Any of these risks could cause our return on these investments to be lower than expected or they could cause these facilities to operate below [removed: expected capacity or availability levels,] [added: intended targets,] which [removed: would] [added: could] adversely impact our financial condition and results of operations through lost [removed: revenue,] [added: revenue and/or] increased [removed: expenses, higher maintenance costs and penalties.][added: expenses.]

We may be adversely affected by [added: asset and] equipment failures, [added: critical operating technology or business system failures,] accidents, [added: natural disasters,] severe weather events, acts of war or [removed: terrorism] [added: terrorism, sabotage, cyberattack,] or other incidents, including pandemics such as the ongoing coronavirus pandemic, that impact our ability to provide safe and reliable service to our customers and remain competitive and could result in substantial financial losses.

We are exposed to the risk of [added: asset and] equipment failures, accidents, [added: natural disasters,] severe weather events, acts of war or [removed: terrorism] [added: terrorism, sabotage, cyberattack] or other [removed: incidents] [added: incidents,] which could result in damage to or destruction of our facilities or damage to persons or [removed: property.][added: property and to gas supply interruptions.]

These events could result in increased political, [removed: economic and] [added: economic,] financial and insurance market instability and volatility in power and fuel markets, which could materially adversely affect our business and results of operations, including our ability to access capital on terms and conditions acceptable to us.

In addition, [added: climate change will exacerbate] the physical risks [removed: of] [added: to our facilities and operations resulting from such climate hazards as more] severe weather [removed: events,] [added: events (extreme wind, rainfall and flooding),] such as experienced from Superstorm Sandy and [removed: more recently] Tropical [removed: Storm Isaias,] [added: Storms Isaias] and [removed: of climate change, changes in] [added: Ida,] sea [removed: level, temperature and precipitation patterns] [added: level rise,] and [removed: other related phenomena have further exacerbated these risks.][added: extreme heat.]

Such issues experienced at our facilities, or by others in our industry, could adversely impact our revenues; increase costs to repair and maintain our systems; subject us to potential litigation and/or damage claims, fines or penalties; and increase the level of oversight of our utility and generation operations and infrastructure [removed: through investigations or through the imposition of additional regulatory or legislative requirements.]

In addition, the inability to restore power to our customers on a timely basis could [removed: also] [added: result in negative publicity and] materially damage our reputation.

Long-lived assets represent approximately [removed: 75%, 82%] [added: 70%] and [removed: 65%] [added: 83%] of the total assets of [removed: PSEG, PSE&G and] PSEG [removed: Power,] [added: and PSE&G,] respectively, as of December 31, [removed: 2020.][added: 2021.]

Management evaluates long-lived assets for impairment whenever events or changes in circumstances, such as significant adverse changes in regulation, [added: including a disallowance of certain costs,] business climate or market conditions, including prolonged periods of adverse commodity and capacity prices, could potentially indicate an asset’s or group of assets’ carrying amount may not be recoverable.

Funding for our investments in capital improvement and additions, scheduled payments of principal and interest on our existing indebtedness and the extension and refinancing of such indebtedness has been provided primarily by internally-generated cash flow and external [added: debt] financings.

We have significant capital requirements and depend on our ability to generate cash in the future from our operations and continued access to capital and [removed: credit] [added: bank] markets to efficiently fund our cash flow needs.

- general economic and capital market [removed: conditions;][added: conditions, including but not limited to, prevailing interest rates;]

Cybersecurity attacks or intrusions [added: or other disruptions to our information technology, operational or other systems] could adversely impact our businesses.

Cybersecurity threats to the [removed: U.S.] energy market infrastructure are increasing in sophistication, magnitude and frequency, particularly since [removed: the] COVID-19 [removed: pandemic] and the resulting shift to virtual operations began.

We rely on information technology systems [removed: that utilize sophisticated digital systems] and network infrastructure to operate our generation and T&D systems.

- disruption of the operation of our assets, the fuel supply [removed: chain and] [added: chain,] the power [removed: grid,][added: grid and gas T&D,]

- theft of confidential company, employee, shareholder, vendor or customer information, [added: and critical energy infrastructure information,] which may cause us to be in breach of certain covenants and contractual [added: or legal] obligations,

We and our third-party vendors have been and [removed: likely] will continue to be subject to [removed: attempted] cybersecurity [added: attacks, including but not limited to ransomware, denial of service, and malware] attacks.

[removed: While there has been no material impact on our business or operations from these attempted attacks, if] [added: If] a significant cybersecurity event or breach [removed: should occur] [added: occurs] within our company or with one of our material vendors, we could be exposed to significant loss of revenue, material repair costs to intellectual and physical property, significant fines and penalties for non-compliance with existing laws and regulations, significant litigation costs, increased costs to finance our businesses, [added: negative publicity,] damage to our reputation and loss of confidence from our customers, regulators, investors, vendors and employees.

Business—Regulatory [removed: Issues.][added: Issues—Cybersecurity.]

The pandemic’s potential impact will depend on a number of factors outside of our control, including the duration and severity of the outbreak as well as third-party [removed: actions] [added: actions, including governmental requirements,] taken to contain its spread and mitigate its public health effects.

However a prolonged [removed: outbreak,] [added: outbreak and associated government and regulatory responses,] including the long-term impact [removed: it] [added: they] may have on the economy, which could extend beyond the duration of the pandemic, could affect, among other things:

- PSE&G’s residential and C&I customer payment patterns, in part as residential customer [removed: service] non-safety related service disconnections for non-payment have been temporarily suspended, resulting in adverse impacts to accounts receivable and bad debt expense;

- the recovery of incremental costs incurred related to the pandemic, including higher [removed: gas] bad debts;

- [removed: our] financial [removed: assets recorded at fair value, including the impact on Net Income from adjustments to fair value of investments] [added: market performance that adversely impacts asset values] in our pension and Nuclear Decommissioning Trust (NDT) [removed: Fund,] [added: funds, adversely impacts Net Income] and [removed: potential] [added: potentially] increases [removed: in the] related funding requirements; and

Covenants in our debt instruments may adversely affect our [removed: operations.][added: business.]

[removed: PSEG’s, PSE&G’s] [added: PSEG’s] and [removed: PSEG Power’s] [added: PSE&G’s fixed income] debt instruments contain events of default customary for financings of their type, including cross accelerations to other debt of that entity and, in the case of [removed: PSEG’s] [added: PSEG’s, PSE&G’s] and PSEG Power’s bank credit agreements, certain change of control [removed: events.][added: events and certain limitations on the incurrence of liens.]

PSEG Power’s bank credit agreements [removed: and outstanding notes] also contain limitations on the incurrence of subsidiary [removed: debt and liens and certain of PSEG Power’s outstanding notes require PSEG Power to repurchase such notes upon certain change of control events.][added: debt.]

Financial market performance directly affects the asset values of our [removed: NDT] [added: Nuclear Decommissioning Trust (NDT)] Fund and defined benefit plan trust funds.

Increased costs could also lead to additional funding requirements for our [removed: decommissioning trust.]

Failure to [removed: adequately] manage [added: adequately] our investments in our NDT Fund and defined benefit plan trusts could result in the need for us to make significant cash contributions in the future to maintain our funding at sufficient levels, which would negatively impact our results of operations, cash flows and financial position.

Failure to complete, or delays in completing, our proposed investment in the Ocean Wind project could adversely [removed: affect] [added: impact] our [removed: business] [added: businesses] and [removed: prospects.][added: prospects.]

In December 2020, [removed: we] [added: PSEG] entered into a definitive agreement with Ørsted North America [removed: Inc. (“Ørsted”) pursuant] to [removed: which we agreed to] acquire a 25% [added: equity] interest in [removed: the 1,100-megawatt] [added: Ørsted’s] Ocean Wind [removed: project from Ørsted.][added: project.]

[removed: Following the completion of our initial investment in the Ocean Wind project, our] [added: Our] ability to realize the anticipated strategic and financial benefits of [removed: the project] [added: these projects] is subject to a number of risks, challenges and uncertainties, including, among others:

- the fact that, subject to certain investment decision milestones, we will be obligated to fund our proportionate share of future capital expenditures in respect of the project, and such future capital expenditures may be greater than expected as a result of, among other things, potential timing delays, cost overruns, labor disputes or unanticipated [removed: liabilities in connection with the project;][added: liabilities;]

- the risk that there may be changes to the tax laws, rules and interpretations applicable to [removed: the] [added: a] project, including the risk of any reduction, elimination or expiration of government incentives for wind energy or otherwise that may adversely affect [removed: the] [added: such] project’s ability to realize certain anticipated tax benefits and, by extension, our ability to realize a satisfactory return on our investment in the project, including in our capacity as a tax equity investor;

In August 2021, PSEG entered into two agreements to sell PSEG Power’s 6,750 MW fossil generating portfolio to newly formed subsidiaries of ArcLight Energy Partners Fund VII, L.P., a fund controlled by ArcLight Capital Partners, LLC.

In February 2022, we completed the sale of this fossil generating portfolio.

As a result, risks described in this Item 1A and otherwise in this document that relate solely to this 6,750 MW fossil generating portfolio, except for those related to certain assets and liabilities excluded from the sale transactions, primarily for obligations under environmental regulations, including possible remediation obligations under the New Jersey Industrial Site Recovery Act and the Connecticut Transfer Act, are no longer relevant to our business.

- obtain customer support for investments made at their premises;

- complete supporting information technology upgrades;

Further, negative public and political views on natural gas could result in diminishing political support for utility investments in gas infrastructure.

We are subject to physical, financial and transition risks related to climate change, including potentially increased legislative and regulatory burdens and changing customer preferences, and we may be subject to lawsuits, all of which could impact our businesses and results of operations.

Climate change may increasingly drive change to existing or additional legislation and regulation that may impact our business and shape our customers’ energy preference and sustainability goals.

While the CIP protects margin variances against changes in customer usage of gas and electricity, customer demand for our gas could decrease as a result of changing customer preferences favoring electrification and advanced technologies that offer energy efficient options.

Electric usage could also be impacted by greater adoption of EVs, installation of distributed energy resources, such as behind the meter solar, installation of

more energy efficient equipment, flexible load and/or energy storage, and other advances in technology.

Further, climate change may adversely impact the economy and reduced economic and consumer activity in our service areas could reduce demand for electricity and gas we deliver.

Fluctuations in weather can also affect demand for our services.

For example, milder than normal weather can reduce demand for electricity and gas distribution services.

All of these factors could impact the need to invest in our electric and gas T&D systems and, therefore, the rate of growth of our company.

Severe weather or acts of nature, including hurricanes, winter storms, earthquakes, floods and other natural disasters can stress systems, disrupt operation of our facilities and cause service outages, production delays and property damage that require incurring additional expenses.

These and other physical changes could result in changes in customer demand, increased costs associated with repairing and maintaining generation facilities and T&D systems, resulting in increased maintenance and capital costs (and potential increased financing needs), increased regulatory oversight, and lower customer satisfaction.

Where recovery of costs to restore service and repair damaged equipment and facilities is available, any determination by the regulator not to permit timely and full recovery of the costs incurred could have a material adverse effect on our businesses, financial condition, results of operations and prospects.

To the extent financial markets view climate change and GHG emissions as a financial risk, our ability to access capital markets could be negatively affected or cause us to receive less than ideal terms and conditions.

Climate change-related political pressure and policy goals, including but not limited to those related to energy efficient targets, solar targets, encouragement of electrification through EV adoption, home heating, and the associated legislative and regulatory responses, may create financial risk as our operations may be subject to additional regulation at either the state or federal level in the future.

Increased regulation of GHG emissions could impose significant additional costs on our electric and natural gas operations, and our suppliers.

Developing and implementing plans for compliance with GHG emissions reduction, clean/renewable energy requirements, or for achieving voluntary climate commitments can lead to additional capital, personnel, and Operation and Maintenance (O&M) expenditures and could significantly affect the economic position of existing operations and proposed projects.

If our regulators do not allow us to recover all or a part of the cost of capital investment or the O&M costs incurred to comply increasingly rigorous regulatory mandates, it could have a material adverse effect on our results of operations, financial condition or cash flows.

On the other hand, in the event that the political, policy, regulatory or legislative support for clean energy projects declines, the benefits or feasibility of certain investments we may have made in such projects, including those in the development stage, may be reduced.

We may be subject to climate change lawsuits that may seek injunctive relief, monetary compensation, and punitive damages, including but not limited to, for liabilities for personal injuries and property damage caused by climate change.

An adverse outcome could require substantial capital expenditures and possibly require payment of substantial penalties or damages.

Defense costs associated with such litigation can also be significant and could affect results of operations, financial condition or cash flows if such costs are not recovered through regulated rates.

Further, a major failure of availability or performance of a critical operating technology or business system, and inadequate preparation or execution of business continuity or disaster recovery plans for the loss of one or several critical systems, could result in extended disruption to operations or business processes, damage to systems and/or loss of data.

through investigations or through the imposition of additional regulatory or legislative requirements.

Disruptions or cost increases in our supply chain, including labor shortages, could materially impact our business.

The supply chain of goods and services is currently being negatively impacted by several factors, including manufacturing labor shortages, domestic and international shipping constraints, increases in demand, and shortages of raw materials and specialty components.

As a result, we are seeing price increases in some areas and delivery delays of certain goods.

These factors have increased our costs and have the potential to impact our operations.

We cannot currently estimate the potential impact of continued supply chain disruptions but they could materially impact our business and results of operations.

Because of the inherent vulnerability of infrastructure and technology and operational systems to disability or failure due to hacking, viruses, malicious or destructive code, phishing attacks, denial of service attacks, ransomware, acts of war or terrorism, or other cybersecurity incidents, we face increased risk of cyberattack.

While there has been no material impact on our business or operations from these attacks to date, we may be unable to prevent all such attacks in the future from having such a material impact as such attacks continue to increase in sophistication and frequency.

The misappropriation, corruption or loss of personally identifiable information and other confidential data from us or one of our vendors could lead to significant breach notification expenses, mitigation expenses such as credit monitoring, and legal and regulatory fines and penalties.

Moreover, new or updated security laws or regulations or unforeseen threat sources could require changes in current measures taken by us and our business operations, which could result in increased costs and adversely affect our financial statements.

The amount and scope of insurance we maintain against losses that result from cybersecurity incidents may not be sufficient to cover losses or adequately compensate for resulting business disruptions.

Failure to attract and retain a qualified workforce could have an adverse effect on our business.

Modifications to existing facilities may require us to install the best available control technology or to achieve the lowest achievable emission rates required by then-current regulations, which would likely result in substantial additional capital expenditures.

Lack of growth or slower growth in the number of customers, or a decline in customer demand, which may not be fully addressed by our recently approved CIP, could adversely impact our financial condition, results of operations and cash flows.

Our CIP, which was recently approved by the BPU as part of our CEF-EE program, reduces the impact on our distribution revenues from changes in sales volumes and demand for most customers.

The CIP, which is calculated annually, provides for a true-up to our current period revenue as compared to revenue thresholds established in our most recent distribution base rate proceeding.

Recovery under the CIP is subject to certain limitations, including an actual versus allowed ROE test and ceilings on customer rate increases.

The CIP does not address changes in the number of customers.

Growth in customer accounts and growth of customer usage each directly influence the demand for electricity and the need for additional transmission and distribution facilities.

Customer growth and customer usage may be affected by a number of factors, including:

- the impacts of economic downturns, including increased unemployment and less demand from C&I customers;

- regulatory initiatives to reduce energy consumption or that favor certain fuel types;

- mandated energy efficiency measures;

- DSM tools;

- technological advances; and

- a shift in the composition of our customer base from C&I customers to residential customers.

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Some or all of these factors could result in a lack of growth or decline in customer demand for electricity and may prevent us from fully realizing the benefits from significant capital investments and expenditures, which could have a material adverse effect on our financial position, results of operations and cash flows.

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- decreased aggregate demand for generation and decreased C&I demand for PSE&G’s electric and gas service;

We continue to implement strong physical and cybersecurity measures to ensure that our systems remain functional in order to both serve our operational needs with a remote workforce and ensure uninterrupted service to our customers.

The timeline and ultimate outcome of our exploration of strategic alternatives relating to PSEG Power’s non-nuclear generating fleet is uncertain.

In July 2020, we announced that we were exploring strategic alternatives for PSEG Power’s non-nuclear generating fleet with the intention of accelerating the transformation of our business into a primarily regulated electric and gas utility, with a contracted generation business.

Since the announcement, we have engaged in preparatory activities relating to the potential divestiture of, and begun the marketing processes for these assets.

The timeline and ultimate outcome of this process are uncertain.

Our ability to divest all or

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a portion of these assets, and the applicable terms, conditions and timeline, will depend in large part on the participation of potentially interested parties and the value such parties place on the applicable assets.

It is possible that third parties may wish to acquire all, a portion or none of the applicable assets (or engage in another transaction not presently being pursued by us), and the value that such third parties may place on such assets is uncertain.

We may encounter difficulty in finding buyers or alternative exit strategies on acceptable terms in a timely manner, or we may dispose of a business at a price or on terms that are less desirable than we had anticipated.

The process may further be impacted by, among other things, global and domestic market and economic conditions, conditions generally impacting the fossil and solar generating industries and changes in the regulatory environment or other factors outside of our control.

Any transaction agreement that we may enter into will contain various terms and conditions, and it is possible that even if entered into, such transaction may fail to be completed in a timely manner or at all.

Any or all of these factors could have a material and adverse impact on our business prospects or results of operations.

PSEG Power’s existing credit agreements and senior notes contain covenants restricting the ability of PSEG Power and its subsidiaries that guarantee its indebtedness from consummating certain mergers, consolidations or asset sales.

The disposal of PSEG Power’s non-nuclear generating fleet could, depending on the structure of such transaction, among other factors, trigger a default under one or more of these provisions.

For these reasons, or for other reasons, PSEG Power may decide, or be required, to seek amendments or waivers under its credit agreements and may redeem its outstanding senior notes, at a price equal to the principal amount thereof plus a make-whole premium.

Whether such amendments, waivers or redemptions will be required will depend on a number of factors, including the structure of any transaction resulting from the strategic review, and any actual redemption price would depend on the applicable treasury rate in effect at such time.

It is likewise possible that the ultimate outcome of the process may result in a transaction, or may result in no transaction at all, where the Power notes are not redeemed.

If PSEG Power is required to redeem its senior notes, the cost of such redemption would be material.

PSEG Power performed a recoverability test for impairment of certain of its generating assets using a weighted probability cash flow analysis that considers the likelihood of a potential sale or disposition or continuing to operate the assets through their remaining estimated useful lives.

As of December 31, 2020, the estimated undiscounted future cash flows of each of the asset groups exceeded the carrying amount and no impairment was identified.

This combined MD&A is separately filed by Public Service Enterprise Group Incorporated [removed: (PSEG),] [added: (PSEG) and] Public Service Electric and Gas Company [removed: (PSE&G) and PSEG Power LLC (PSEG Power).][added: (PSE&G).]

PSEG’s business consists of two reportable segments, [added: PSE&G and PSEG Power LLC (PSEG Power),] our principal direct wholly owned subsidiaries, which are:

- PSEG Power—which is a multi-regional energy supply company that integrates the operations of its merchant nuclear and fossil generating assets with its [removed: power marketing businesses and] fuel supply functions through competitive energy sales in well-developed energy markets primarily in the Northeast and Mid-Atlantic United States through its principal direct wholly owned subsidiaries.

PSEG’s other direct wholly owned subsidiaries are: PSEG [added: Energy Holdings L.L.C. (Energy Holdings), which holds our investments in offshore wind ventures and legacy portfolio of lease investments; PSEG] Long Island LLC (PSEG LI), which operates the Long Island Power Authority’s (LIPA) transmission and distribution (T&D) system under an [removed: Amended and Restated] Operations Services Agreement (OSA); [removed: PSEG Energy Holdings L.L.C. (Energy Holdings), which earns it revenues from its portfolio of lease investments] and [removed: holds our investment in offshore wind ventures; and] PSEG Services Corporation (Services), which provides certain management, administrative and general services to PSEG and its subsidiaries at cost.

The following discussion provides an overview of the significant events and business developments that have occurred during [removed: 2020] [added: 2021] and key factors that we expect may drive our future performance.

For a discussion of [removed: 2018] [added: 2020] items and year-over-year comparisons of changes in our financial condition and results of operations as of and for the years ended December 31, [removed: 2019] [added: 2020] and December 31, [removed: 2018,] [added: 2019,] see Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, [removed: 2019 (2019] [added: 2020 (2020] Annual Report) as filed with the [removed: Securities and Exchange Commission] [added: SEC] on February 26, [removed: 2020.][added: 2021.]

EXECUTIVE OVERVIEW OF [removed: 2020] [added: 2021] AND FUTURE OUTLOOK

We are [removed: continuing our transformation into a primarily regulated electric and gas utility that is] focused on meeting customer expectations and [removed: is] [added: being well] aligned with public policy objectives [removed: promoting infrastructure investments] [added: by investing] to modernize [removed: and] [added: our energy infrastructure,] improve [removed: reliability and clean] [added: reliability, increase] energy [removed: investments.][added: efficiency and deliver cleaner energy.]

Our business plan focuses on achieving growth while controlling costs and managing the risks associated with regulatory [removed: changes, fluctuating commodity prices] and [added: policy] changes [removed: in customer demand.][added: and fluctuating commodity prices.]

In furtherance of these goals, over the past few years, our investments have altered our business mix to reflect a higher percentage of earnings contribution by [removed: PSE&G.][added: PSE&G, which improves]

Early Plant Retirements/Asset Dispositions [added: and Impairments] for additional information.

PSE&G, PSEG Power and PSEG LI [removed: continue to provide] [added: are providing] essential services during the [removed: ongoing] coronavirus (COVID-19) pandemic.

[removed: However, the] [added: The] potential future impact of the pandemic and the associated economic impacts, which could extend beyond the duration of the pandemic, will depend on a number of factors outside of our [removed: control, including the duration and severity of the outbreak as well as third-party actions taken to contain its spread and mitigate its public health effects.][added: control.]

For the [removed: five-year period ending December 31, 2025, PSE&G expects] [added: years 2021-2025, PSE&G’s capital investment program is estimated] to [removed: invest between $13] [added: be in a range of $14] billion to [removed: $15] [added: $16] billion, resulting in an expected compound annual [added: growth in] rate base [removed: growth] of 6.5% to 8%.

The low end of the range assumes an extension of our Gas System Modernization Program (GSMP) and Clean Energy Future (CEF)-Energy Efficiency (EE) program at their average annual investment levels, as these programs are expected to continue at least at those current rates beyond their currently approved [removed: timeframes] [added: timeframe] of [removed: 2023 and 2024, respectively.][added: 2023.]

The [added: upper end of the] range [removed: is driven by certain unapproved investment programs, including a to-be- filed] [added: also includes an] extension of [removed: the] [added: our] Energy Strong [removed: (ES)] program, which otherwise concludes in 2023, as well as the remaining portion of our CEF proposal (portion of Electric Vehicle (EV) and Energy Storage (ES) [removed: programs).][added: programs) and a potentially higher amount of investment for GSMP and CEF-EE beyond current levels.]

In September 2020, PSE&G reached a settlement with [removed: all] parties in the CEF-EE proceeding, which the BPU approved.

The approval also included a Conservation Incentive [removed: Program,] [added: Program (CIP),] a mechanism that [removed: will provide] [added: provides] for recovery of lost electric and gas variable margin revenues relative to a baseline of the test year [added: (July 2017 to June 2018) set] in [added: in] our last base rate [removed: case from July 2017 to June 2018.][added: case.]

The deferral period for this mechanism [removed: is] [added: became] effective in June 2021 for electric and October 2021 for gas.

PSE&G [removed: will suspend] [added: suspended] its gas Weather Normalization Charge (WNC) when the gas [removed: deferral period begins.][added: CIP began.]

The capital cost of the program, which [removed: includes] [added: is driven by the] implementation of [removed: AMI,] [added: advanced metering infrastructure (AMI),] is estimated to be [removed: approximately $700] [added: $707] million, invested over the next four years.

The approved investment under the program is for [added: approximately] $166 million, primarily relating to preparatory work to deliver infrastructure to the charging point for three programs: residential smart charging; Level-2 mixed use charging; and direct current fast charging.

All of the capital costs and expenses of the CEF-EC and CEF-EV programs [removed: will] [added: are expected to] be recovered in PSE&G’s next base rate case, expected [removed: in] [added: to be filed with] the [removed: second half] [added: BPU by the end] of [removed: 2024.][added: 2023.]

From the start of the program until the commencement of new base rates, the return on and of the capital portion of each of these programs, as well as expenses incurred to implement the CEF-EV program and operating costs and stranded costs associated with the retirement of existing meters under the CEF-EC program, will be included for recovery [added: as part of our next rate case expected to be concluded] in [removed: those rates.][added: the second half of 2024.]

[removed: The remaining component of our CEF-EV proposal, the vehicle innovation subprogram, as well as the overall] [added: Our] CEF-ES [removed: program, are] [added: program is] being held in abeyance pending future policy guidance from the BPU.

We also continue to invest in transmission infrastructure in order to (i) maintain and enhance system integrity and grid reliability, [removed: grid security and safety,] (ii) [added: ensure system resilience in the face of continued extreme weather conditions and cyber and physical security threats, (iii)] address an aging transmission infrastructure, [removed: (iii)] [added: (iv)] leverage technology to improve the operation of the system, [removed: (iv)] [added: (v)] reduce transmission constraints, [removed: (v) meet growing demand and] (vi) meet [removed: environmental requirements] [added: changing customer usage patterns] and [removed: standards set by various regulatory bodies.][added: the demand for 24/7 electricity, and (vii) satisfy state public policy goals, including aggressive decarbonization agendas.]

[removed: However, a prolonged outbreak] [added: - the continuing impact of the ongoing coronavirus pandemic] and the associated [added: regulations and] economic impacts, which could extend beyond the duration of the pandemic, [removed: could impact our ability to obtain necessary permits and approvals and could lead to shortages of necessary materials, supplies and labor.]

[removed: PSE&G] [added: The coronavirus] has [removed: experienced] [added: also impacted PSE&G’s sales, with] a reduction in demand from its commercial and industrial (C&I) customers, [removed: partially] [added: largely] offset by increases in residential [removed: demand, and adverse changes to residential and C&I payment patterns.][added: sales volumes.]

During the moratorium, [added: as previously discussed,] PSE&G has experienced a significant decrease in cash inflow and higher Accounts Receivable aging and an associated increase in bad debt expense, which we expect [removed: could] [added: will] extend beyond the duration of the coronavirus pandemic.

[added: | | | |] PSE&G [added: | | | | | | 117 | | | | | | 15 | | | | | | 22 | | | | | | 17 | | | | | | 63 | | | | | |]

[added: PSE&G] has deferred its incremental gas distribution bad debt expense as a result of COVID-19 as a Regulatory Asset and will seek recovery of that cost, as well as other net incremental COVID-19 costs, in its next base rate case.

In July 2020, the BPU authorized regulated utilities in New Jersey, including PSE&G, to create a COVID-19-related Regulatory Asset by deferring on their books and records [removed: the] prudently incurred incremental costs related to COVID-19 beginning on March 9, 2020 through September 30, [removed: 2021, or 60 days after the New Jersey governor determines that the Public Health Emergency is no longer in effect, or] [added: 2021 for recovery] in [removed: the absence of such] a [removed: determination, 60 days from the time the Public Health Emergency automatically terminates by law, whichever is later.][added: future rate case.]

[removed: During 2020,] [added: As of December 31, 2021,] PSE&G [added: has] recorded a Regulatory Asset related to COVID-19 to defer incremental costs of [removed: $51] [added: $116] million, which [removed: PSE&G] [added: PSEG] believes are recoverable under the BPU [removed: order.][added: Order.]

[removed: PSEG Power][added: | | | | PSEG Power | | | | | | (2,056) | | | | | | 594 | | | | | |]

In July 2020, we announced that we [removed: are] [added: were] exploring strategic alternatives for PSEG Power’s non-nuclear generating fleet with the intention of accelerating the transformation of our business into a [removed: primarily] [added: predominantly] regulated electric and gas utility, with a [added: significantly] contracted generation business.

[removed: It is] [added: These transformative transactions are] expected to reduce overall business risk and earnings volatility, improve PSEG’s [removed: credit profile] [added: financial flexibility] and [removed: is] [added: are] consistent with PSEG’s climate strategy and sustainability efforts, which [removed: is] [added: are] to focus on clean energy investments, methane reduction, and [removed: zero-carbon] [added: the transition to carbon-free] generation.

[removed: At PSEG Power, we] [added: We] have sought to achieve operational excellence and manage costs in order to optimize cash flow generation from our fleet in light of low wholesale power and gas prices, environmental considerations and competitive market forces that reward efficiency and reliability.

During [removed: 2020,] [added: 2021,] our natural gas and nuclear units generated [removed: 22.1] [added: 22.5] and [removed: 30.8] [added: 31.2] terawatt hours and operated at a capacity factor of [removed: 48.3%] [added: 49.1%] and [removed: 90.3%,] [added: 91.9%,] respectively.

More than [removed: 70%] [added: 90%] of PSEG Power’s expected gross margin in [removed: 2021] [added: 2022 from the expected remaining generation assets after the sale of the fossil generation portfolio] relates to hedging of our energy margin, our expected revenues from the capacity market mechanisms, Zero Emission Certificate (ZEC) revenues [removed: and] [added: and,] certain [added: gas operations and] ancillary service payments such as reactive power.

PSEG Power is no longer a Securities and Exchange Commission (SEC) registrant; however, it continues to be consolidated and reported in PSEG’s financial statements as a wholly owned subsidiary and operating segment.

In August 2021, PSEG entered into two agreements to sell PSEG Power’s 6,750 megawatts (MW) fossil generating portfolio to newly formed subsidiaries of ArcLight Energy Partners Fund VII, L.P., a fund controlled by ArcLight Capital Partners, LLC.

In February 2022, we completed the sale of this fossil generating portfolio.

As a result, disclosures in this Item 7 and elsewhere in this document that relate solely to this 6,750 MW fossil generating portfolio, except for those related to certain assets and liabilities excluded from the sale transactions, primarily for obligations under environmental regulations, including possible remediation obligations under the New Jersey Industrial Site Recovery Act and the Connecticut Transfer Act, are no longer relevant to our business.

We are progressing on our strategy to become a predominantly regulated electric and gas utility and a contracted carbon-free energy infrastructure company.

the sustainability and predictability of our earnings and cash flows.

In June 2021, we completed the sale of PSEG Power’s solar portfolio and in August 2021 we entered into two agreements to sell PSEG Power’s 6,750 MW of fossil generation located in New Jersey, Connecticut, New York and Maryland.

In February 2022, we completed the sale of this fossil generation portfolio, which represented an important milestone in our strategy and has further altered our business mix, resulting in an even higher percentage of earnings contribution by PSE&G going forward and provides more financial flexibility.

The COVID-19 pandemic and associated government actions and economic effects continue to impact our businesses.

We have incurred additional expenses to protect our employees and customers, and PSE&G is experiencing significantly higher customer bad debts and lower cash collections, as discussed below.

These include the duration and severity of the outbreaks as well as third-party actions taken to contain their spread and mitigate their public health effects, and governmental or regulatory actions regarding customer collections, potential limitations on rate increases, recovery of incremental costs, and other matters.

The upper end of the range is driven by certain unapproved investment programs, including an Infrastructure Advancement Program (IAP) which we filed in November 2021.

The IAP is a proposed $848 million investment program made over four years to improve the reliability of the “last mile” of our electric distribution system, address aging substations and gas metering and regulating stations and invest in electric vehicle charging infrastructure at our facilities to support the electrification of our fleet over the coming years.

During 2022, we expect to file for extensions of our GSMP and CEF-EE program, which we expect will conclude in the first half of 2023.

A remaining component of our program related to medium and heavy duty charging infrastructure was the subject of a stakeholder process at the BPU in 2021.

We currently anticipate that this effort will conclude with PSE&G submitting a filing in mid-year 2022 targeting infrastructure investments for the medium and heavy duty EV market.

As part of a solicitation by the BPU, we also proposed two transmission projects to support the development of offshore wind which are being evaluated by the BPU and PJM Interconnection, L.L.C. (PJM), with project awards expected in late 2022.

As discussed further below, in October 2021, FERC approved PSE&G’s settlement with the BPU and the New Jersey Division of Rate Counsel (New Jersey Rate Counsel) regarding several amendments to our transmission formula rate, including the reduction of its base transmission return on equity (ROE) from 11.18% to 9.9%.

Under current FERC rules, we continue to earn a 50 basis point adder to that base ROE for our membership in PJM.

The ongoing coronavirus pandemic and associated impacts could have several negative consequences, including potential delays of our regulatory agencies’ review and approval of proposed programs or rate recovery.

As a result, there has been no substantive net margin impact and changes are now largely addressed through the CIP mechanism that became effective in 2021.

The most substantive impact of the pandemic on our financial position has been adverse changes to residential and C&I payment patterns.

The State of New Jersey issued an Executive Order in March 2020 that included a moratorium on non-safety related service disconnections for non-payment.

On June 30, 2021, the moratorium imposed by the State of New Jersey ended but the State had established a “grace period” prohibiting disconnections for residential customers through December 31, 2021.

On January 22, 2022, the State extended the grace period to March 15, 2022.

Consequently, collections and shut-offs will not be in full effect until mid-March 2022.

Since the start of the pandemic, PSE&G’s allowance for credit losses has increased by approximately $265 million.

Collection efforts with C&I customers recommenced in the fourth quarter of 2021 and residential customer collection efforts will recommence in March 2022, with a focus on enrolling customers in payment support programs.

Any further moratoriums on shut-offs or collection processes could have a material effect on our cash flows, and, to the extent not fully recovered through a rate-making process, on our financial results and condition.

In September 2021, the BPU extended the authorization to defer such costs through December 31, 2022.

In May 2021, PSEG Power Ventures LLC (Power Ventures), a direct wholly owned subsidiary of PSEG Power, entered into a purchase agreement with Quattro Solar, LLC, an affiliate of LS Power, relating to the sale by Power Ventures of 100% of its ownership interest in PSEG Solar Source LLC (Solar Source) including its related assets and liabilities.

The transaction closed in June 2021.

In August 2021, PSEG entered into two agreements to sell PSEG Power’s 6,750 MW fossil generating portfolio to newly formed subsidiaries of ArcLight Energy Partners Fund VII, L.P., a fund controlled by ArcLight Capital Partners, LLC.

In

February 2022, PSEG completed the sale of this fossil generating portfolio.

Early Plant Retirements/Asset Dispositions and Impairments for additional information.

While this limits our exposure to decreasing prices, our ability to realize benefits from rising market prices is also limited.

As a result of significantly rising energy prices, as experienced during the second half of 2021, PSEG Power experienced a substantial increase in net cash collateral postings related to hedge positions that are out-of-the-money.

As of December 31, 2021, net cash collateral postings were $844 million.

PJM’s proposal requested that FERC approve the new provisions for the next Reliability Pricing Model (RPM) auction.

PSE&G and PSEG Power each make representations only as to itself and make no representations whatsoever as to any other company.

In addition, PSEG Power owns and operates solar generation in various states.

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As announced in July 2020, we continue to explore strategic alternatives for PSEG Power’s non-nuclear generating fleet, which includes more than 6,750 megawatts (MW) of fossil generation located in New Jersey, Connecticut, New York and Maryland as well as the 467 MW dc Solar Source portfolio located in various states.

Employees who can perform their job duties remotely are doing so.

Those employees who must report to a work site are wearing personal protective equipment and practicing physical distancing measures.

The ongoing coronavirus pandemic has not had a material impact on our results of operations, financial condition or cash flows for the year ended December 31, 2020.

See below for a description of the CEF program.

In 2019, we commenced our BPU-approved GSMP II, an expanded, five-year program to invest $1.9 billion beginning in 2019 to replace approximately 875 miles of cast iron and unprotected steel mains in addition to other improvements to the gas system.

Approximately $1.6 billion will be recovered through periodic rate roll-ins, with the remaining $300 million to be recovered through a future base rate proceeding.

As part of the settlement approved by the BPU, PSE&G agreed to file for a

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base rate proceeding no later than December 2023, to maintain a base level of gas distribution capital expenditures of $155 million per year and to achieve certain leakage reduction targets.

As of December 31, 2020, we had installed 528 miles of cast iron and unprotected steel mains at an investment of $800 million.

Also in 2019, the BPU approved our ES II Program, an $842 million program to harden, modernize and improve the resiliency of our electric and gas distribution systems.

This program began in the fourth quarter of 2019 and is expected to be completed by the end of 2023.

Approximately $692 million of the program will be recovered through periodic rate recovery filings, with the balance to be recovered in our next distribution base rate case.

As of December 31, 2020, we had invested $156 million.

In January 2020, New Jersey released its Energy Master Plan (EMP) which, among other things, recognizes the importance of the State’s EE targets and supported EVs, ES, and advanced metering infrastructure (AMI).

Our planned capital spending for transmission in 2021-2023 is $2.5 billion.

As noted above, PSE&G has been deemed by New Jersey to provide essential services during the ongoing coronavirus pandemic.

Our capital programs, including GSMP II, ES II and our transmission infrastructure investments, have not been materially impacted to date.

In addition, a determination by any state or federal regulatory authority that one or all of our projects is non-essential could require us to temporarily halt work.

Any delay in our planned capital program could impact our operational performance and could materially impact our results of operations and financial condition through decreased cost recovery.

Further, the ongoing coronavirus pandemic has led many state and federal agencies to implement remote working protocols and divert resources to address the pandemic which, if prolonged, could impact regulatory agencies’ ability to review proposed programs and delay the timing of approvals for matters subject to regulatory approval, including the approval of various clause recovery mechanisms.

PSE&G expects these changes to continue during the prolonged coronavirus pandemic.

In October 2020, the state formally extended its moratorium on non-safety related service disconnections for non-payment for residential customers through March 15, 2021.

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While the impact on our results of operations, financial condition and cash flows for the year ended December 31, 2020 has not been material, a prolonged coronavirus pandemic and the associated economic impacts, which could extend beyond the duration of the pandemic, could materially impact cash from operations, Accounts Receivable and bad debt expense.

PSEG intends to retain ownership of PSEG Power’s existing nuclear fleet.

Since the announcement, we have engaged in proprietary activities relating to the potential divestiture of, and begun the marketing processes for these assets and any potential transactions are expected to be completed sometime in 2021.

There is no assurance that the strategic review will result in a sale or other disposition of all or any portion of these assets on terms that are favorable to us, or at all.

Any transaction would be subject to market conditions and customary closing conditions, including the receipt of all required regulatory approvals.

Our commitments for load, such as basic generation service (BGS) in New Jersey and other bilateral supply contracts, are backed by this generation or may be combined with the use of physical commodity purchases and financial instruments from the market to optimize the economic efficiency of serving our obligations.

In addition, as a result of FERC’s finding that default procurement auctions such as BGS could be considered subsidies, it is possible that other PSEG units could be subject to the MOPR.

The MOPR’s floor prices are not expected to prevent either our nuclear or gas-fired units from clearing in the next Reliability Pricing Model (RPM) auction.

We cannot predict whether additional changes will be made to the MOPR, or whether changes will occur in the PJM market that would impact our ability to clear any of these units in future RPM auctions.

During 2020, as a result of the ongoing coronavirus pandemic, PSEG Power experienced a decrease in aggregate wholesale electric demand.

An extended outbreak could have a material adverse impact on future results of operations and cash flows.

PSEG Power has also implemented protocols to ensure the safety and health of employees at its generation facilities and contractors working at the facilities during planned outages.

[added: We have a Risk Management] Committee comprised of executive officers who utilize a risk oversight function to ensure compliance with our corporate policies and risk management practices.

| | | | [removed: Years Ended December 31,] | | | | | | [removed: 2020] [added: Years Ended December 31,] | | | | | | [removed: 2019] | | | | | |

| | | | Period End | | | | | | $ | [removed: 16] [added: 71] | | | | | $ | [removed: 9] [added: 16] | | | | |

| | | | Average for the Period | | | | | | $ | [removed: 10] [added: 36] | | | | | $ | [removed: 12] [added: 10] | | | | |

| | | | High | | | | | | $ | [removed: 18] [added: 113] | | | | | $ | [removed: 35] [added: 18] | | | | |

| | | | Low | | | | | | $ | [removed: 5] [added: 7] | | | | | $ | 5 | | | | |

| | | | Period End | | | | | | $ | [removed: 24] [added: 112] | | | | | $ | [removed: 14] [added: 24] | | | | |

| | | | Average for the Period | | | | | | $ | [removed: 16] [added: 57] | | | | | $ | [removed: 19] [added: 16] | | | | |

| | | | High | | | | | | $ | [removed: 29] [added: 178] | | | | | $ | [removed: 54] [added: 29] | | | | |

| | | | Low | | | | | | $ | [removed: 8] [added: 11] | | | | | $ | 8 | | | | |

As of December 31, [removed: 2020,] [added: 2021,] a hypothetical 10% increase in market interest rates would result in

- a [removed: $357] [added: $421] million decrease in the fair value of debt, including a [removed: $16 million decrease at PSEG, a $328] [added: $385] million decrease at PSE&G and a [removed: $13] [added: $36] million decrease at [removed: PSEG Power.][added: PSEG.]

[removed: We have $6.9] [added: As of December 31, 2021, we had $7.5] billion of [added: net] assets in a trust for our pension and OPEB plans.

As of December 31, [removed: 2020,] [added: 2021,] the portfolio included [removed: $1.4] [added: $1.3] billion of equity securities and [removed: $1.1] [added: $1.3] billion in fixed income securities.

As of December 31, [removed: 2020,] [added: 2021,] a hypothetical 10% change in the equity market would impact the value of the equity securities in the NDT Fund by approximately [removed: $135] [added: $130] million.

The benchmark for the fixed income component of the NDT Fund currently has a duration of [removed: 6.22] [added: 6.78] years and a yield of [removed: 1.14%.][added: 1.76%.]

As of December 31, [removed: 2020,] [added: 2021,] a hypothetical 1% increase in interest rates would result in a decline in the market value for the fixed income portfolio of approximately [removed: $71] [added: $90] million.

| | | | | | | | | | 2021 | | | | | | 2020 | | | | | |

We have a Risk Management

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We principally conduct our business through two direct wholly owned subsidiaries, PSE&G and PSEG [removed: Power,] [added: Power LLC (PSEG Power),] each of which also has its principal executive offices at 80 Park Plaza, Newark, New Jersey 07102.

Below are descriptions of our two principal direct operating [removed: subsidiaries.][added: segments.]

Our other direct wholly owned subsidiaries are: PSEG [added: Energy Holdings L.L.C. (Energy Holdings), which holds our investments in offshore wind ventures and legacy portfolio of lease investments; PSEG] Long Island LLC (PSEG LI), which operates the Long Island Power Authority’s (LIPA) electric transmission and distribution (T&D) system under a contractual agreement; [removed: PSEG Energy Holdings L.L.C. (Energy Holdings), which earns its revenues primarily from its portfolio of lease investments] and [removed: holds our investments in offshore wind ventures; and] PSEG Services Corporation (Services), which provides us and our operating subsidiaries with certain management, administrative and general services at cost.

[removed: BUSINESS OPERATIONS] [added: OPERATIONS] AND STRATEGY

Our regulated T&D public utility, PSE&G, distributes electric energy and natural gas to customers within a designated service territory running diagonally across New Jersey where approximately [removed: 6.2] [added: 6.5] million people, or about 70% of New Jersey’s population resides.

[removed: ][added: ]

Our utility operations primarily earn margins [removed: through the T&D of electricity and the distribution of gas.][added: through:]

[removed: In addition to our current utility products and services, we] [added: We] have [added: also] implemented several programs to invest in regulated solar generation within New Jersey, [removed: including:][added: including programs to help finance the installation of solar power systems throughout our electric service area, and programs to develop, own and operate solar power systems.]

[removed: We] [added: In addition to our current utility products and services, we] have [removed: also] implemented a set of [removed: energy efficiency] programs to encourage conservation and energy efficiency by providing energy and cost-saving measures directly to businesses and families.

Formula rates provide a method of rate recovery where the transmission owner annually determines its revenue requirements through a fixed formula that [removed: considers Operation] [added: provides for a recovery of our operating costs] and [removed: Maintenance expenditures, rate base] [added: a return of] and [added: on our] capital investments [added: in the system, net of depreciation expense] and [removed: applies] [added: deferred taxes (also known as rate base) using] an approved return on equity (ROE) in developing the weighted average cost of capital.

MD&A—Executive Overview of [removed: 2020] [added: 2021] and Future Outlook.

These projects focus on reliability improvements and replacement of aging infrastructure with planned capital spending of [removed: $2.5] [added: $2.3] billion for transmission in [removed: 2021-2023] [added: 2022-2024] as disclosed in Item 7.

For a discussion of proposed and approved programs, see [added: Clean Energy Future Program below and] Item 7.

MD&A—Executive Overview of [removed: 2020] [added: 2021] and Future Outlook.

Our load requirements are split among residential, [removed: commercial and industrial (C&I)] [added: C&I] customers, as described in the following table for [removed: 2020:][added: 2021:]

| | | | Commercial | | | | | | 56% | | | | | | [removed: 36%] [added: 37%] | | | | | |

| | | | Residential | | | | | | 35% | | | | | | [removed: 60%] [added: 59%] | | | | | |

Our customer base has modestly increased since [removed: 2016,] [added: 2017,] with electric and gas loads changing as illustrated [removed: below:][added: in the following table:]

| | | | | | | Number of Customers | | | | | | | | | Electric Sales and Firm Gas Sales (A) | | | | | | | | | Historical Annual Load Growth [removed: 2016-2020] [added: 2017-2021] | | | | | |

| | | | Electric | | | 2.3 | | | Million | | | | | | [removed: 39,666] [added: 40,163] | | | Gigawatt hours (GWh) | | | | | | [removed: (1.0)%] [added: (0.7)%] | | | | | |

| | | | Gas | | | 1.9 | | | Million | | | | | | [removed: 2,370] [added: 2,422] | | | Million Therms | | | | | | [removed: (1.2)%] [added: 0.5%] | | | | | |

Electric sales declined due to the economic impact of the ongoing coronavirus pandemic (COVID-19) on commercial usage, greater conservation, more energy efficient appliances and increases in solar net metering installations, partially offset by an increase in residential sales due to [added: a significant number of] customers [removed: staying at] [added: working from] home during the pandemic and customer growth.

Firm gas sales [removed: decreased as a result of warmer weather in 2020 and lower commercial customer usage] [added: increased] due to [removed: the pandemic, partially offset by an increase in] [added: higher] residential sales due to the pandemic, customer growth and customer response to continued low gas prices.

The first [removed: type, which represents about 79% of PSE&G’s load requirements,] [added: type] provides default supply service for smaller C&I customers and residential customers at seasonally-adjusted fixed prices for a three-year term (BGS-Residential Small Commercial Pricing (RSCP)).

BGSS filings are made annually by June 1 of each year, with [removed: an] [added: a targeted] effective date of [added: provisional rates by] October 1.

Through PSEG Power, we have sought to produce low-cost electricity by efficiently operating our [removed: nuclear, gas, oil-fired] [added: nuclear] and [removed: renewable] [added: gas/oil-fired] generation assets while balancing generation output, fuel requirements and supply obligations through energy portfolio management.

Early Plant Retirements/Asset Dispositions [added: and Impairments] for further discussion.

As a merchant [removed: generator and power marketer,] [added: generator,] our revenue is derived from selling a range of products and services under contract to an array of customers, including utilities, [removed: other] power marketers, such as retail energy providers, or counterparties in the open market.

- [removed: Energy—the] [added: Energy—the] electrical output produced by generation plants that is ultimately delivered to customers for use in lighting, heating, air conditioning and operation of other electrical equipment.

PSEG Power also sells wholesale natural gas, primarily through a full-requirements BGSS contract with PSE&G to meet the [removed: gas supply requirements] [added: needs] of PSE&G’s customers.

Approximately [removed: 48%] [added: 47%] of PSE&G’s peak daily gas requirements is provided from PSEG Power’s firm gas transportation capacity.

For additional [removed: information] [added: information,] see Item 2.

- [removed: Capacity][added: Capacity]

[removed: This change, combined with the addition of new, more] efficient generation capacity, has altered the historical dispatch order of certain plants in the markets where we operate.

After considering the market-clearing price and the effect of transmission congestion and other factors, the ISO calculates the [removed: LMP] [added: Locational Marginal Price (LMP)] for every location in the system.

Therefore, changes in the price of natural gas will often translate into changes in the wholesale price of [removed: electricity.][added: electricity and will continue to have a strong influence on the price of electricity in the primary markets in which we operate.]

[removed: ][added: ]

Market wholesale prices may vary by location resulting from congestion or other factors, such as the availability of natural gas from the Marcellus (Leidy) and other shale-gas [removed: regions] [added: regions,] and do not necessarily reflect our contract prices.

In addition, we [removed: have firm gas transportation contracted for this winter season to serve a portion of the gas requirements for our Bethlehem Energy Center (BEC) in New York and] hold year-round firm gas transportation [added: capacity] to serve the majority of the requirements of Keys Energy Center in Maryland.

MD&A—Executive Overview of [removed: 2020] [added: 2021] and Future Outlook and Item 8.

- PSE&G—A New Jersey corporation, incorporated in 1924, which is a franchised public utility in New Jersey.

It is also the provider of last resort for gas and electric commodity service for end users in its service territory.

PSE&G earns revenues from its regulated rate tariffs under which it provides electric transmission and electric and natural gas distribution to residential, commercial and industrial (C&I) customers in its service territory.

It also offers appliance services and repairs to customers throughout its service territory and invests in regulated solar generation projects and regulated energy efficiency and related programs in New Jersey.

- PSEG Power—A Delaware limited liability company formed in 1999 as a result of the deregulation and restructuring of the electric power industry in New Jersey.

PSEG Power earns revenues from the generation and marketing of power and natural gas to hedge business risks and optimize the value of its portfolio of power plants, other contractual arrangements and oil and gas storage facilities.

PSEG Power is no longer an SEC registrant; however, it continues to be consolidated and reported in PSEG’s financial statements as a wholly owned subsidiary and operating segment.

As discussed below, in 2021 PSEG Power sold its solar facilities and entered into two agreements to sell PSEG Power’s 6,750 megawatts (MW) fossil generation asset portfolio.

In February 2022, we completed the sale of this fossil generation portfolio which represented an important milestone in our strategy.

Early Plant Retirements/Asset Dispositions and Impairments for additional information.

As a result, disclosures in this Item 1 and otherwise in this document that relate solely to this 6,750 MW fossil generation asset portfolio, except for those related to certain assets and liabilities excluded from the sale transactions, primarily for obligations under environmental regulations, including possible remediation obligations under the New Jersey Industrial Site Recovery Act and the Connecticut Transfer Act, are no longer relevant.

Over the past few years, our investments have altered our business mix to reflect a higher percentage of earnings contribution by PSE&G, which improves the sustainability and predictability of our earnings and cash flows.

The sale of the fossil generating portfolio further alters our business mix, resulting in an even higher percentage of earnings contribution by PSE&G going forward and provides more financial flexibility.

Our largest program, Clean Energy Future, as described below, encompasses four programs (i) Energy Efficiency; (ii) Electric Vehicle make ready charging infrastructure; (iii) Energy Cloud and (iv) Energy Storage, three of which we began implementing in 2021.

Our current approved rates provide for a base ROE of 9.90% and a 50 basis point adder for our membership in PJM as a Regional Transmission Operator (RTO).

| | | | | | | | | | % of 2021 Sales | | | | | | | | | | | |

| | | | | | | December 31, 2021 | | | | | | | | | | | | | | | | | | | | | | | |

Effective June 1 and October 1, 2021 for electric and gas, respectively, as part of the BPU’s approval of the Clean Energy Future-Energy Efficiency filing, we implemented the Conservation Incentive Program (CIP) that trues up PSE&G’s margin to a baseline per customer from our 2018 base rate case for the majority of our customers.

As a result, electric gas sales volumes and demands are no longer a driver of our margin and over 90% of our Electric and Gas Distribution margin will only vary based upon the number of customers.

Clean Energy Future (CEF) Program

We have launched three of the four components of our CEF program:

- Energy Efficiency (EE)—a $1 billion three-year commitment with the majority of the investment occurring over a five-year period, approved by the BPU in September 2020, is designed to achieve energy efficiency targets required under New Jersey’s Clean Energy Act through a suite of ten programs for residential, C&I programs, including low-income, multi-family, small business and local government.

- Energy Cloud (EC)— a $707 million four-year investment, approved by the BPU in January 2021, driven by the implementation of “smart meters,” and new software and product solutions to improve our processes and better manage the electric grid.

- Electric Vehicle (EV)—a $166 million six-year investment, approved by the BPU in January 2021, primarily relating to preparatory work to deliver infrastructure to the charging point for three programs: residential smart charging; Level-2 mixed use charging; and direct current (dc) fast charging.

A remaining component of our program related to medium and heavy duty charging infrastructure has been the subject of a stakeholder process at the BPU.

Our CEF-Energy Storage program is being held in abeyance pending future policy guidance from the BPU.

Our proposed Energy Storage program is for a $109 million investment that encompasses solar smoothing, whereby a battery energy solar system is used to neutralize fluctuations in solar output to facilitate its entry into the grid, distribution investment deferral, outage management, microgrids and peak reduction for municipal facilities.

For additional information on the recovery of revenues, capital costs and expenses related to the CEF program, see Item 7.

In both programs, our economics are driven by our net investment in solar, with a contemporaneous return on that rate base.

In June 2021, we completed the sale of PSEG Power’s solar portfolio.

In August 2021, we entered into two agreements to sell PSEG Power’s 6,750 MW of fossil generation located in New Jersey, Connecticut, New York and Maryland to newly formed subsidiaries of ArcLight Energy Partners Fund VII, L.P., a fund controlled by ArcLight Capital Partners, LLC.

In February 2022, we completed the sale of this fossil generation portfolio.

As of December 31, 2021, PSEG Power had 10,638 MW of nuclear and fossil generation capacity, including the fossil assets Held for Sale.

The sale of our 6,750 MW of fossil generation located in New Jersey, Connecticut, New York and Maryland was completed in February 2022.

Effective May 31, 2021, PSEG Power retired its 383 MW coal unit in Bridgeport, Connecticut.

PSEG Power has retired or exited all of its coal-fired generation.

Our nuclear generation is considered to be base load.

- Peaking Units run the least amount of time.

This change, combined with the addition of new, more

All of PSEG Power’s nuclear generation assets are located within the PJM RTO.

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | PSE&G | | | | | | PSEG Power | | | | | |

| | | | | | | | | | | | | | | |

| | | | A New Jersey corporation, incorporated in 1924, which is a franchised public utility in New Jersey. It is also the provider of last resort for gas and electric commodity service for end users in its service territory. Earns revenues from its regulated rate tariffs under which it provides electric transmission and electric and natural gas distribution to residential, commercial and industrial customers in its service territory. It also offers appliance services and repairs to customers throughout its service territory. Also invests in regulated solar generation projects and regulated energy efficiency and related programs in New Jersey. | | | | | | A Delaware limited liability company formed in 1999 as a result of the deregulation and restructuring of the electric power industry in New Jersey. It integrates the operations of its merchant nuclear and fossil generating assets with its power marketing businesses and fuel supply functions through competitive energy sales in well-developed energy markets. Earns revenues from the generation and marketing of power and natural gas to hedge business risks and optimize the value of its portfolio of power plants, other contractual arrangements and oil and gas storage facilities. This is achieved primarily by selling power and transacting in natural gas and other energy-related products, on the spot market or using short-term or long-term contracts for physical and financial products. Also earns revenues from solar generation facilities under long-term sales contracts for power and environmental products. | | | | | |

| | | | | | | | | | | | | | | |

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- programs to help finance the installation of solar power systems throughout our electric service area, and

- programs to develop, own and operate solar power systems.

Our current approved rates provide for a base ROE of 11.18% on existing and new transmission investment, while certain investments are entitled to earn an additional incentive rate.

| | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | % of 2020 Sales | | | | | | | | | | | |

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| | | | | | | December 31, 2020 | | | | | | | | | | | | | | | | | | | | | | | |

Only firm gas sales impact margin.

Results of these auctions determine which energy suppliers are authorized to supply BGS to New Jersey’s electric distribution companies (EDCs).

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Our commitments for load, such as BGS in New Jersey and other bilateral supply contracts, are backed by the generation we own and may be combined with the use of physical commodity purchases and financial instruments from the market to optimize the economic efficiency of serving the load.

In July 2020, we announced that we are exploring strategic alternatives for PSEG Power’s non-nuclear generating fleet with the intention of accelerating the transformation of our business into a primarily regulated electric and gas utility, with a contracted generation business.

- Congestion and Renewable Energy Credits—Congestion credits (or Financial Transmission Rights) are financial instruments that entitle the holder to a stream of revenues (or charges) based on the hourly congestion price differences across a transmission path.

Renewable Energy Credits (RECs) are obtained through PSEG Power’s owned renewable generation or purchased in the open market.

Electric suppliers of load are required to deliver a certain amount or percentage of their delivered power from renewable resources as mandated by applicable regulatory requirements.

PSEG Power also owns and operates 467 MW direct current (dc) of PV solar generation facilities.

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As of December 31, 2020, our fuel mix was comprised of 57% gas, 34% nuclear, 4% coal, and 5% oil.

Our total generating output in 2020 was approximately 52,900 GWh.

PSEG Power has announced the early retirement of its 383 MW coal unit in Bridgeport, Connecticut in 2021.

Including this planned retirement in 2021, PSEG Power will have retired or exited through sales over 2,400 MW of coal-fired generation since 2017.

- Peaking Units run the least amount of time and in some cases may utilize higher-priced fuels.

During periods when one or more parts of the transmission grid are operating at full capability, thereby resulting in a constraint on the transmission system, it may not be possible to dispatch units in merit order without violating transmission reliability standards.

Under such circumstances, the ISO may dispatch higher-cost generation out of merit order within the congested area, and power suppliers will be paid an increased Locational Marginal Price (LMP) in congested areas, reflecting the bid prices of those higher-cost generation units.

This can be seen in the following graphs which present historical annual spot prices and forward calendar prices as averaged over each year at two liquid trading hubs.

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We expect that the price of natural gas will continue to have a strong influence on the price of electricity in the primary markets in which we operate.

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The vast majority of PSEG Power’s generation assets are located in three centralized, competitive electricity markets operated by ISO organizations all of which are subject to the regulatory oversight of FERC:

The majority of our generating stations operate in PJM.

- New York—The New York ISO (NYISO) is the market coordinator for New York State and is responsible for managing the New York Power Pool and for administering its energy marketplace.

Our BEC generating station operates in New York.

FOR THE FISCAL YEAR ENDED December 31, [removed: 2020][added: 2021]

[removed: *(Cover] [added: *Cover] continued on next page)*

The aggregate market value of the Common Stock of Public Service Enterprise Group Incorporated held by non-affiliates as of June 30, [removed: 2020] [added: 2021] was [removed: $24,648,067,675] [added: $29,934,856,297] based upon the New York Stock Exchange Composite Transaction closing price.

The number of shares outstanding of Public Service Enterprise Group Incorporated’s sole class of Common Stock as of February [removed: 19, 2021] [added: 18, 2022] was [removed: 505,093,089.][added: 502,077,935.]

As of February [removed: 19, 2021,] [added: 18, 2022,] Public Service Electric and Gas Company had issued and outstanding 132,450,344 shares of Common Stock, without nominal or par value, all of which were held, beneficially and of record, by Public Service Enterprise Group Incorporated.

Public Service Electric and Gas Company [removed: and PSEG Power LLC are] [added: is a] wholly owned [removed: subsidiaries] [added: subsidiary] of Public Service Enterprise Group Incorporated and [removed: each meet] [added: meets] the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K.

[removed: Each] [added: Public Service Electric and Gas Company] is filing its Annual Report on Form 10-K with the reduced disclosure format authorized by General Instruction I.

| III | | | | | | Portions of the definitive Proxy Statement for the [removed: 2021] [added: 2022] Annual Meeting of Stockholders of Public Service Enterprise Group Incorporated, which definitive Proxy Statement is expected to be filed with the Securities and Exchange Commission on or about March [removed: 15, 2021,] [added: 10, 2022,] as specified herein. | | |

| FORWARD-LOOKING STATEMENTS | | | | | | [removed: [iii](#ieddaa1dd3f3948d99b51f43c4e363095_10)] [added: [iii](#i8f9ab1108fd247938596ceae8439dec7_10)] | | |

| FILING FORMAT | | | | | | [removed: [1](#ieddaa1dd3f3948d99b51f43c4e363095_13)] [added: [1](#i8f9ab1108fd247938596ceae8439dec7_13)] | | |

| WHERE TO FIND MORE INFORMATION | | | | | | [removed: [1](#ieddaa1dd3f3948d99b51f43c4e363095_16)] [added: [1](#i8f9ab1108fd247938596ceae8439dec7_16)] | | |

| Item 1. | | | Business | | | [removed: [1](#ieddaa1dd3f3948d99b51f43c4e363095_25)] [added: [1](#i8f9ab1108fd247938596ceae8439dec7_25)] | | |

| | | | Regulatory Issues | | | [removed: [12](#ieddaa1dd3f3948d99b51f43c4e363095_43)] [added: [12](#i8f9ab1108fd247938596ceae8439dec7_43)] | | |

| | | | Environmental Matters | | | [removed: [18](#ieddaa1dd3f3948d99b51f43c4e363095_46)] [added: [18](#i8f9ab1108fd247938596ceae8439dec7_46)] | | |

| | | | Information About Our Executive Officers (PSEG) | | | [removed: [21](#ieddaa1dd3f3948d99b51f43c4e363095_49)] [added: [21](#i8f9ab1108fd247938596ceae8439dec7_49)] | | |

| Item 1A. | | | Risk Factors | | | [removed: [22](#ieddaa1dd3f3948d99b51f43c4e363095_55)] [added: [22](#i8f9ab1108fd247938596ceae8439dec7_55)] | | |

| Item 1B. | | | Unresolved Staff Comments | | | [removed: [34](#ieddaa1dd3f3948d99b51f43c4e363095_61)] [added: [35](#i8f9ab1108fd247938596ceae8439dec7_61)] | | |

| Item 2. | | | Properties | | | [removed: [34](#ieddaa1dd3f3948d99b51f43c4e363095_67)] [added: [35](#i8f9ab1108fd247938596ceae8439dec7_67)] | | |

| Item 3. | | | Legal Proceedings | | | [removed: [35](#ieddaa1dd3f3948d99b51f43c4e363095_73)] [added: [36](#i8f9ab1108fd247938596ceae8439dec7_73)] | | |

| Item 4. | | | Mine Safety Disclosures | | | [removed: [35](#ieddaa1dd3f3948d99b51f43c4e363095_79)] [added: [36](#i8f9ab1108fd247938596ceae8439dec7_79)] | | |

| Item 5. | | | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | | | [removed: [36](#ieddaa1dd3f3948d99b51f43c4e363095_88)] [added: [37](#i8f9ab1108fd247938596ceae8439dec7_88)] | | |

| Item 7. | | | Management’s Discussion and Analysis of Financial Condition and Results of Operations | | | [removed: [37](#ieddaa1dd3f3948d99b51f43c4e363095_100)] [added: [39](#i8f9ab1108fd247938596ceae8439dec7_100)] | | |

| | | | Executive Overview of [removed: 2020] [added: 2021] and Future Outlook | | | [removed: [38](#ieddaa1dd3f3948d99b51f43c4e363095_103)] [added: [39](#i8f9ab1108fd247938596ceae8439dec7_103)] | | |

| | | | Results of Operations | | | [removed: [46](#ieddaa1dd3f3948d99b51f43c4e363095_109)] [added: [48](#i8f9ab1108fd247938596ceae8439dec7_109)] | | |

| | | | Liquidity and Capital Resources | | | [removed: [51](#ieddaa1dd3f3948d99b51f43c4e363095_118)] [added: [53](#i8f9ab1108fd247938596ceae8439dec7_118)] | | |

| | | | Capital Requirements | | | [removed: [55](#ieddaa1dd3f3948d99b51f43c4e363095_121)] [added: [57](#i8f9ab1108fd247938596ceae8439dec7_121)] | | |

| | | | Critical Accounting Estimates | | | [removed: [57](#ieddaa1dd3f3948d99b51f43c4e363095_127)] [added: [59](#i8f9ab1108fd247938596ceae8439dec7_127)] | | |

| Item 7A. | | | Quantitative and Qualitative Disclosures About Market Risk | | | [removed: [61](#ieddaa1dd3f3948d99b51f43c4e363095_133)] [added: [63](#i8f9ab1108fd247938596ceae8439dec7_133)] | | |

| Item 8. | | | Financial Statements and Supplementary Data | | | [removed: [63](#ieddaa1dd3f3948d99b51f43c4e363095_139)] [added: [64](#i8f9ab1108fd247938596ceae8439dec7_139)] | | |

| | | | Report of Independent Registered Public Accounting Firm [added: (PCAOB ID No. 34)] | | | [removed: [64](#ieddaa1dd3f3948d99b51f43c4e363095_142)] [added: [65](#i8f9ab1108fd247938596ceae8439dec7_142)] | | |

| | | | Consolidated Financial Statements | | | [removed: [74](#ieddaa1dd3f3948d99b51f43c4e363095_148)] [added: [70](#i8f9ab1108fd247938596ceae8439dec7_148)] | | |

| | | | Note 1. Organization, Basis of Presentation and Summary of Significant Accounting Policies | | | [removed: [92](#ieddaa1dd3f3948d99b51f43c4e363095_238)] [added: [82](#i8f9ab1108fd247938596ceae8439dec7_214)] | | |

| | | | Note 2. Recent Accounting Standards | | | [removed: [97](#ieddaa1dd3f3948d99b51f43c4e363095_244)] [added: [88](#i8f9ab1108fd247938596ceae8439dec7_217)] | | |

| | | | Note 4. Early Plant Retirements/Asset Dispositions [added: and Impairments] | | | [removed: [105](#ieddaa1dd3f3948d99b51f43c4e363095_250)] [added: [94](#i8f9ab1108fd247938596ceae8439dec7_223)] | | |

| | | | Note 6. Property, Plant and Equipment and Jointly-Owned Facilities | | | [removed: [107](#ieddaa1dd3f3948d99b51f43c4e363095_259)] [added: [97](#i8f9ab1108fd247938596ceae8439dec7_229)] | | |

| | | | Note 7. Regulatory Assets and Liabilities | | | [removed: [108](#ieddaa1dd3f3948d99b51f43c4e363095_262)] [added: [98](#i8f9ab1108fd247938596ceae8439dec7_232)] | | |

| | | | Note 9. Long-Term Investments | | | [removed: [117](#ieddaa1dd3f3948d99b51f43c4e363095_271)] [added: [107](#i8f9ab1108fd247938596ceae8439dec7_238)] | | |

| | | | Note 10. Financing Receivables | | | [removed: [118](#ieddaa1dd3f3948d99b51f43c4e363095_274)] [added: [108](#i8f9ab1108fd247938596ceae8439dec7_241)] | | |

| | | | Note 11. Trust Investments | | | [removed: [119](#ieddaa1dd3f3948d99b51f43c4e363095_277)] [added: [109](#i8f9ab1108fd247938596ceae8439dec7_244)] | | |

| | | | Note 13. Asset Retirement Obligations (AROs) | | | [removed: [126](#ieddaa1dd3f3948d99b51f43c4e363095_283)] [added: [116](#i8f9ab1108fd247938596ceae8439dec7_250)] | | |

| | | | Operations and Strategy | | | [2](#i8f9ab1108fd247938596ceae8439dec7_28) | | |

| | | | Competitive Environment | | | [9](#i8f9ab1108fd247938596ceae8439dec7_37) | | |

| | | | Human Capital Management | | | [10](#i8f9ab1108fd247938596ceae8439dec7_40) | | |

| Item 6. | | | \[Reserved\] | | | [38](#i8f9ab1108fd247938596ceae8439dec7_91) | | |

| | | | Note 3. Revenues | | | [89](#i8f9ab1108fd247938596ceae8439dec7_220) | | |

| | | | Note 5. Variable Interest Entities (VIEs) | | | [96](#i8f9ab1108fd247938596ceae8439dec7_226) | | |

| | | | Note 8. Leases | | | [104](#i8f9ab1108fd247938596ceae8439dec7_235) | | |

| | | | Note 12. Intangibles | | | [115](#i8f9ab1108fd247938596ceae8439dec7_247) | | |

| Item 9C. | | | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | | | [164](#i8f9ab1108fd247938596ceae8439dec7_3258) | | |

| | | | Signatures | | | [176](#i8f9ab1108fd247938596ceae8439dec7_370) | | |

- the physical, financial and transition risks related to climate change, including risks relating to potentially increased legislative and regulatory burdens, changing customer preferences and lawsuits;

- disruptions or cost increases in our supply chain, including labor shortages;

- failure to attract and retain a qualified workforce;

- inflation, including increases in the costs of equipment, materials, fuel and labor;

- the absence of a long-term legislative or other solution for our New Jersey nuclear plants that sufficiently values them for their carbon-free, fuel diversity and resilience attributes, or the impact of the current or subsequent payments for such attributes being materially adversely modified through legal proceedings;

- changes in tax laws and regulations.

In August 2021, PSEG entered into two agreements to sell PSEG Power’s 6,750 MW fossil generating portfolio to newly formed subsidiaries of ArcLight Energy Partners Fund VII, L.P., a fund controlled by ArcLight Capital Partners, LLC.

In February 2022, PSEG completed the sale of this fossil generating portfolio.

As a result, risks highlighted in these forward-looking statements that relate solely to this 6,750 MW fossil generating portfolio, except for those related to certain assets and liabilities excluded from the sale transactions, primarily for obligations under environmental regulations, including possible remediation obligations under the New Jersey Industrial Site Recovery Act and the Connecticut Transfer Act, are no longer relevant to our business.

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| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | 80 Park Plaza | | | | | | | | | | | | | | | | | | | | |

| | | | | | | Newark, | | | New Jersey | | | 07102 | | | | | | | | | | | | | | |

| | | | | | | 973 | | | 430-7000 | | | | | | | | | | | | | | | | | |

| 001-34232 | | | | | | PSEG Power LLC | | | | | | | | | | | | Delaware | | | | | | 22-3663480 | | |

| 9.25% First and Refunding Mortgage Bonds, Series CC, due 2021 | | | | | | PEG21 | | | | | | New York Stock Exchange | | |

| PSEG Power LLC | | | | | | | | | | | | | | |

| 8.625% Senior Notes, due 2031 | | | | | | PEG31 | | | | | | New York Stock Exchange | | |

| | | | | | | | | |

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| PSEG Power LLC | | | ☐ | | | Yes | | | ☒ | | | No | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| PSEG Power LLC | | | Large Accelerated Filer | | | ☐ | | | Accelerated Filer | | | ☐ | | | Non-accelerated Filer | | | ☒ | | | Smaller reporting company | | | ☐ | | | Emerging growth company | | | ☐ | | |

| PSEG Power LLC | | | | | | ☐ | | |

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| Item 6. | | | Selected Financial Data | | | [37](#ieddaa1dd3f3948d99b51f43c4e363095_3875) | | |

| | | | Off-Balance Sheet Arrangements | | | [57](#ieddaa1dd3f3948d99b51f43c4e363095_124) | | |

| | | | Note 3. Revenues | | | [100](#ieddaa1dd3f3948d99b51f43c4e363095_247) | | |

| | | | Note 5. Variable Interest Entity (VIE) | | | [106](#ieddaa1dd3f3948d99b51f43c4e363095_253) | | |

| | | | Note 8. Leases | | | [114](#ieddaa1dd3f3948d99b51f43c4e363095_265) | | |

| | | | Note 12. Goodwill and Other Intangibles | | | [125](#ieddaa1dd3f3948d99b51f43c4e363095_280) | | |

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| | | | Signatures | | | [196](#ieddaa1dd3f3948d99b51f43c4e363095_415) | | |

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- lack of growth or slower growth in the number of customers or the failure of our Conservation Incentive Program to fully address a decline in customer demand;

- risks associated with the timeline and ultimate outcome of our exploration of strategic alternatives relating to PSEG Power’s non-nuclear generating fleet;

[T](#ieddaa1dd3f3948d99b51f43c4e363095_7)[able of Contents](#ieddaa1dd3f3948d99b51f43c4e363095_7)

- the impact if our New Jersey nuclear plants are not awarded Zero Emission Certificates (ZECs) in future periods, or the current or subsequent ZEC program period is materially adversely modified through legal proceedings;

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[removed: PSEG, PSE&G] [added: PSEG] and [removed: PSEG Power][added: PSE&G]

We believe that we and our subsidiaries maintain adequate insurance coverage against loss or damage to plants and properties, subject to certain [removed: exceptions,] [added: exceptions and deductibles,] to the extent such property is usually insured and insurance is available at a reasonable cost.

As of December 31, [removed: 2020,] [added: 2021,] PSE&G’s electric T&D system included approximately 25,000 circuit miles, and [removed: 860,000] [added: 862,000] poles, of which 64% are jointly-owned.

In addition, PSE&G owns and operates [removed: 54] [added: 56] switching stations with an aggregate installed capacity of [removed: 38,353] [added: 39,353] megavolt-amperes (MVA) and [removed: 245] [added: 235] substations with an aggregate installed capacity of [removed: 8,647] [added: 9,285] MVA.

As of December 31, [removed: 2020,] [added: 2021,] PSE&G’s gas system included approximately 18,000 miles of gas mains, 12 gas distribution headquarters, two sub-headquarters, and one meter shop serving all of its gas territory in New Jersey.

The daily gas capacity of these peaking facilities (the maximum daily gas delivery available during the three peak winter months) is approximately [removed: 2.5] [added: 2.8] million therms in the aggregate.

As of December 31, [removed: 2020,] [added: 2021,] PSE&G owned 158 MW dc of installed PV solar capacity throughout New Jersey.

As of December 31, [removed: 2020,] [added: 2021,] PSEG Power’s share of installed fossil and nuclear generating capacity is shown in the following

| | | | Total Steam | | | | | | | | | | | | [removed: 831] [added: 448] | | | | | | | | | | | | [removed: 831] [added: 448] | | | | | | | | | | | | | | | | | |

| | | | Hope Creek | | | | | | NJ | | | | | | [removed: 1,180] [added: 1,185] | | | | | | 100% | | | | | | [removed: 1,180] [added: 1,185] | | | | | | Nuclear | | | | | | | | | | | |

| | | | Peach Bottom 2 & 3 [removed: (B)] [added: (A)] | | | | | | PA | | | | | | 2,549 | | | | | | 50% | | | | | | 1,275 | | | | | | Nuclear | | | | | | | | | | | |

| | | | Bethlehem | | | | | | NY | | | | | | [removed: 817] [added: 816] | | | | | | 100% | | | | | | [removed: 817] [added: 816] | | | | | | Gas | | | | | | | | | | | |

| | | | Total Combined Cycle | | | | | | | | | | | | [removed: 5,353] [added: 5,352] | | | | | | | | | | | | [removed: 5,249] [added: 5,248] | | | | | | | | | | | | | | | | | |

| | | | Total Combustion Turbine | | | | | | | | | | | | [removed: 1,188] [added: 1,171] | | | | | | | | | | | | [removed: 1,188] [added: 1,171] | | | | | | | | | | | | | | | | | |

| | | | Total PSEG Power Plants | | | | | | | | | | | | [removed: 13,386] [added: 12,990] | | | | | | | | | | | | [removed: 11,034] [added: 10,638] | | | | | | | | | | | | | | | | | |

[removed: (B)Operated] [added: (A)Operated] by Exelon Generation.

| | | | Total Nuclear | | | | | | | | | | | | 6,019 | | | | | | | | | | | | 3,771 | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

Effective May 31, 2021, PSEG Power retired its Bridgeport Harbor 3 coal plant.

In June 2021, PSEG Power completed the sale of its 467 MW dc of PV solar generation facilities located in various states.

In February 2022, PSEG Power’s fossil generating plants in New Jersey, Connecticut, Maryland and Pennsylvania were sold.

See Item 8.

Note 4.

Early Plant Retirements/Asset Dispositions and Impairments for additional information.

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| | | | Bridgeport Harbor 3 (A) | | | | | | CT | | | | | | 383 | | | | | | 100% | | | | | | 383 | | | | | | Coal | | | | | | | | | | | |

| | | | Total Nuclear | | | | | | | | | | | | 6,014 | | | | | | | | | | | | 3,766 | | | | | | | | | | | | | | | | | |

| | | | Bridgeport Harbor 4 | | | | | | CT | | | | | | 17 | | | | | | 100% | | | | | | 17 | | | | | | Oil | | | | | | | | | | | |

(A)Plan to early retire in 2021.

As of December 31, 2020, PSEG Power also owned and operated 467 MW dc of PV solar generation facilities in various states.

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Our common stock is listed on the New York Stock Exchange, Inc. under the trading symbol “PEG.” As of February [removed: 19, 2021,] [added: 18, 2022,] there were [removed: 54,220] [added: 52,145] registered holders.

The following graph shows a comparison of the five-year cumulative return assuming $100 invested on December 31, [removed: 2015] [added: 2016] in our common stock and the subsequent reinvestment of quarterly dividends, the S&P Composite Stock Price Index, the Dow Jones Utilities Index and the S&P Electric Utilities Index.

| | | | | | | | | | [removed: 2015] [added: 2016] | | | | | | [removed: 2016] [added: 2017] | | | | | | [removed: 2017] [added: 2018] | | | | | | [removed: 2018] [added: 2019] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2020] [added: 2021] | | | | | |

[removed: ][added: ]

On February [removed: 16, 2021,] [added: 15, 2022,] our Board of Directors approved a [removed: $0.51] [added: $0.54] per share common stock dividend for the first quarter of [removed: 2021.][added: 2022.]

This reflects an indicative annual dividend rate of [removed: $2.04] [added: $2.16] per share.

There were no common share repurchases [removed: in the open market] during the fourth quarter of [removed: 2020.][added: 2021.]

The following table indicates the securities authorized for issuance under equity compensation plans as of December 31, [removed: 2020:][added: 2021:]

| | | | Equity Compensation Plans Approved by Security Holders | | | | | | — | | | | | | $ | — | | | | | [removed: 15,279,588] [added: 10,121,383] | | | | | |

The number of shares available for future issuance includes amounts remaining under our [removed: Amended and Restated 2004] [added: 2021] Long-Term Incentive Plan [removed: (LTIP), 2007] [added: (2021 LTIP) and 2021] Equity Compensation Plan for Outside Directors and Employee Stock Purchase Plan and reflect a reduction for non-vested restricted stock units and performance share units (PSUs) (assumed at target [removed: payout), including accrued dividend equivalent units.][added: payout).]

The number of shares available for future issuance may be increased or decreased depending on actual payouts for the PSUs based on achievement of targets and is [removed: also] increased by the number of shares that are [removed: withheld to satisfy tax withholding obligations relating to any plan awards as well as shares subject to awards that are] forfeited, canceled or otherwise terminated without the issuance of shares.

| | | | PSEG | | | | | | $ | 100.00 | | | | | $ | 121.77 | | | | | $ | 127.46 | | | | | $ | 149.23 | | | | | $ | 152.79 | | | | | $ | 180.80 | | | | |

| | | | S&P 500 | | | | | | $ | 100.00 | | | | | $ | 121.82 | | | | | $ | 116.47 | | | | | $ | 153.13 | | | | | $ | 181.29 | | | | | $ | 233.28 | | | | |

| | | | DJ Utilities | | | | | | $ | 100.00 | | | | | $ | 113.35 | | | | | $ | 115.60 | | | | | $ | 147.16 | | | | | $ | 149.63 | | | | | $ | 175.76 | | | | |

| | | | S&P Utilities | | | | | | $ | 100.00 | | | | | $ | 112.10 | | | | | $ | 116.71 | | | | | $ | 147.46 | | | | | $ | 148.24 | | | | | $ | 174.43 | | | | |

In late September 2021, PSEG announced a $500 million share repurchase program to be implemented upon the close of the sale of the fossil generation assets.

In November 2021, the Board of Directors authorized senior management to implement the share repurchase program at such time as senior management deemed appropriate in its discretion, whether before or after the closing of the fossil sale.

In December 2021, under this authorization PSEG entered into an open market share repurchase plan

for $250 million of our common shares that complies with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended.

During January and through February 16, 2022, we purchased the full $250 million of common shares under the open market share repurchase plan.

| | | | Total | | | | | | — | | | | | | $ | — | | | | | 10,121,383 | | | | | |

The Amended and Restated 2004 LTIP, and the 2007 Equity Compensation Plan for Outside Directors were closed as of April 20, 2021 and all available shares under these plans as of that date or that will become available in the future are cancelled.

| | | | PSEG | | | | | | $ | 100.00 | | | | | $ | 117.78 | | | | | $ | 143.42 | | | | | $ | 150.12 | | | | | $ | 175.77 | | | | | $ | 179.96 | | | | |

| | | | S&P 500 | | | | | | $ | 100.00 | | | | | $ | 111.95 | | | | | $ | 136.38 | | | | | $ | 130.39 | | | | | $ | 171.44 | | | | | $ | 202.96 | | | | |

| | | | DJ Utilities | | | | | | $ | 100.00 | | | | | $ | 118.18 | | | | | $ | 133.95 | | | | | $ | 136.61 | | | | | $ | 173.90 | | | | | $ | 176.83 | | | | |

| | | | S&P Utilities | | | | | | $ | 100.00 | | | | | $ | 116.29 | | | | | $ | 130.36 | | | | | $ | 135.72 | | | | | $ | 171.48 | | | | | $ | 172.38 | | | | |

In December 2020, we entered into a share repurchase plan that complies with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, solely with respect to the repurchase of shares to satisfy obligations under equity compensation awards that are expected to be issued in 2021 and the repurchase of shares to satisfy purchases by employees under the Employee Stock Purchase Plan during 2021.

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| | | | Total | | | | | | — | | | | | | $ | — | | | | | 15,279,588 | | | | | |

MD&A—Liquidity and Capital Resources.

PSEG Power

We own all of PSEG Power’s outstanding limited liability company membership interests.

For additional information regarding PSEG Power’s ability to pay dividends, see Item 7.

Omitted pursuant to SEC Release 33-10890.

This combined Form 10-K is separately filed by [removed: PSEG, PSE&G and] PSEG [removed: Power.][added: and PSE&G.]

PSE&G [removed: and PSEG Power each make] [added: makes] representations only as to itself and [removed: make] [added: makes] no representations as to any other company.

We have audited the accompanying consolidated balance sheets of Public Service Enterprise Group Incorporated and subsidiaries (the “Company” or PSEG) as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] the related consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows, for each of the three years in the period ended December 31, [removed: 2020,] [added: 2021,] the related notes and the consolidated financial statement schedule listed in the Index at Item 15(B)(a) (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2020,] [added: 2021,] in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in *Internal Control — Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February [removed: 26, 2021,] [added: 24, 2022,] expressed an unqualified opinion on the Company's internal control over financial reporting.

Critical Audit [removed: Matters][added: Matter Description]

The critical audit [removed: matters] [added: matter] communicated below [removed: are matters] [added: is a matter] arising from the current-period audit of the financial statements that [removed: were] [added: was] communicated or required to be communicated to the audit committee and that (1) [removed: relate] [added: relates] to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit [removed: matters] [added: matter] below, providing [added: a] separate [removed: opinions] [added: opinion] on the critical audit [removed: matters] [added: matter] or on the accounts or disclosures to which [removed: they relate.][added: it relates.]

[removed: Early Plant Retirements] [added: Asset Retirement Obligations (“AROs”)] - Nuclear [removed: —] [added: Decommissioning-] Refer to Notes 4 and 13 to the financial statements

PSEG’s wholly-owned subsidiary PSEG Power LLC (PSEG Power) owns and operates nuclear plants [removed: in New Jersey] and has recorded associated asset retirement obligations [removed: (ARO)] [added: (AROs)] for their eventual decommissioning.

In April [removed: 2019,] [added: 2021,] the [removed: New Jersey Board of Public Utilities (BPU)] [added: BPU] awarded [removed: Zero Emission Certificates (ZEC)] [added: ZECs] to PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants for an [removed: initial period of approximately] [added: additional] three years through May [removed: 2022.][added: 2025.]

In the event that (i) the ZEC program is overturned or is otherwise materially adversely modified through legal process; [removed: (ii) the amount of ZEC payments that may be awarded] or [removed: other terms and conditions of the second ZEC eligibility period proposed by the BPU in its final decision differ from those of the current ZEC period; or (iii)] [added: (ii)] any of the Salem 1, Salem 2 and Hope Creek plants is not [removed: awarded ZEC payments by the BPU] [added: sufficiently valued for its environmental, fuel diversity or resilience attributes in future periods] and does not otherwise experience a material financial [removed: change,] [added: change that would remove the need for such attributes to be sufficiently valued,] PSEG Power [removed: has disclosed that it] will take all necessary steps to cease to operate [added: all of] these [removed: nuclear] plants.

We identified [removed: the potential early retirement of the] nuclear [removed: plants] [added: decommissioning AROs] as a critical audit matter because of the significant estimates and assumptions [removed: management] made [removed: in determining the useful lives of the nuclear plants] [added: by management] and [added: management’s specialist] in [removed: evaluating] [added: determining] the recorded [removed: investments in the nuclear plants for potential impairment.][added: AROs.]

[removed: *How] [added: How] the Critical Audit Matter Was Addressed in the [removed: Audit*][added: Audit]

Our audit procedures related to the [removed: potential early retirement of the] nuclear [removed: plants and the related impact on the recorded investments in the nuclear plants and the related] [added: decommissioning] ARO included the following, among others:

- We tested the effectiveness of controls over [removed: the evaluation of retirement date] assumptions used in the [removed: calculation of the ARO,] [added: calculation,] including the [added: evaluation of retirement date assumptions, cost estimates, and the] probability weighting of the various cash flow scenarios.

Asset Dispositions [removed: - Potential Sale] [added: –Sale] of [removed: Non-Nuclear] [added: Fossil] Assets [removed: – Impairment Tests] — Refer to Note 4 to the financial statements

In July 2020, PSEG [removed: Power] announced that it [removed: is] [added: was] exploring strategic alternatives for [removed: its] [added: PSEG Power’s] non-nuclear generating fleet, which [removed: includes more than] [added: included] 6,750 MW of fossil generation located in New Jersey, Connecticut, New York and [removed: Maryland.][added: Maryland and, prior to the sale of Solar Source in June 2021, included a 467 MW Solar Source portfolio located in various states.]

[removed: Those] [added: Additionally, with the assistance of our fair value specialists, we evaluated the significant] inputs [removed: include estimated] [added: and assumptions utilized within management’s impairment tests, including] forward power prices, fuel [removed: costs and] [added: costs,] dispatch rates [removed: as well as] [added: and] estimates of [added: the] fair value to be received upon any disposition of assets.

Auditing [added: each of] these [removed: estimates and] assumptions required a high degree of auditor judgment [added: and, for certain assumptions] and [added: cost studies,] the [removed: involvement] [added: use] of [removed: our] [added: environmental and] fair value specialists.

- We tested the effectiveness of controls over management’s impairment [removed: tests] [added: tests,] including considerations of asset groupings, the [added: timing of impairment charges recorded, the] significant inputs utilized to determine estimated undiscounted cash flows, and the weighted probabilities assigned to the outcome of various scenarios.

Regulatory Assets and Liabilities [removed: -] [added: –] Income [removed: Taxes—Refer] [added: Taxes —Refer] to Notes 1, [removed: 7] [added: 7,] and 22 to the financial statements

PSEG’s subsidiary, Public Service Electric and Gas Company (PSE&G), is an electric and gas transmission and distribution utility regulated by the [removed: BPU] [added: Board of Public Utilities (BPU)] and the Federal Energy Regulatory Commission.

The flow through of the tax benefits results in lower revenues and lower income tax expense, as well as the recognition of a regulatory [removed: asset,] [added: asset] as management believes it is probable that the accumulated tax [removed: benefits,] [added: benefits] treated as a flow-through item to PSE&G [removed: customers,] [added: customers] will be recovered from customers in the future.

Further, the determination of the estimated benefit of current tax-deductible repairs under the Internal Revenue Code, and the resulting impacts on the TAC regulatory asset and income tax expense recorded in the financial [removed: statements] [added: statements,] is [removed: complex] [added: complex,] and required a high degree of auditor judgment and the involvement of our income tax specialists.

- We evaluated the financial statement presentation and [removed: related] disclosures [removed: for consistency with our understanding.][added: related to TAC, including the balances recorded and regulatory developments.]

[removed: The] [added: Separately, the] EPA has released a [removed: Record of Decision (ROD)] [added: ROD] for the LPRSA’s lower 8.3 miles that requires the removal of sediments at an estimated cost of $2.3 billion [added: (the Lower 8.3 ROD Remedy).]

[removed: The outcome of this matter is uncertain, and] PSEG [removed: cannot predict this matter’s ultimate] [added: is currently analyzing the] impact [added: of this standard] on its financial statements.

Our audit procedures related to the [removed: Passaic River environmental liability] [added: accounting for the sale of the fossil assets] included the following, among others:

| [removed: Parsippany,] [added: | | |] New Jersey | | | [added: | | | 2011-2020 | | | | | | 2011-2020 | | | | | |]

| [added: | | |] February [removed: 26,] [added: 16,] 2021 | | | [added: | | | 0.22% | | | | | | 27.31% | | | | | |]

We have audited the accompanying consolidated balance sheets of Public Service Electric and Gas Company and subsidiaries (the [removed: “Company”] [added: "Company"] or PSE&G) as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] the related consolidated statements of operations, comprehensive income, common stockholder’s equity, and cash flows, for each of the three years in the period ended December 31, [removed: 2020,] [added: 2021,] the related notes and the consolidated financial statement schedule listed in the Index at Item 15(B)(b) (collectively referred to as the [removed: “financial statements”).][added: "financial statements").]

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2020,] [added: 2021,] in conformity with accounting principles generally accepted in the United States of America.

- We evaluated the financial statement presentation and [removed: related] disclosures [removed: for consistency with our understanding.][added: related to TAC, including the balances recorded and regulatory developments.]

[removed: As of December 31, 2020,] PSE&G [removed: recorded] [added: has] an [removed: environmental liability] [added: Environmental Costs Liability] of [removed: $52] [added: $53] million [removed: for its estimated share of the remediation of the environmental contamination,] and a corresponding [removed: regulatory asset] [added: Regulatory Asset] based on [removed: PSE&G’s assessment that it will] [added: its continued ability to] recover such costs in [removed: future] [added: its] rates.

In April [removed: 2019, the New Jersey Board of Public Utilities (BPU) awarded Zero Emission Certificates (ZEC) to] [added: 2021,] PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants [added: were awarded ZECs by the BPU] for [removed: an initial period of approximately] [added: the] three [removed: years through May] [added: year eligibility period starting June] 2022.

| | | | | | | [removed: | | |] Years Ended December 31, | | | | | | | | | | | | | | | [removed: | | |]

| | | | | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2018] [added: 2019] | | | | | |

| | | | OPERATING REVENUES | | | | | | $ | [removed: 9,603] [added: 9,722] | | | | | $ | [removed: 10,076] [added: 9,603] | | | | | $ | [removed: 9,696] [added: 10,076] | | | | |

| | | | Energy Costs | | | | | | [removed: 3,056] [added: 3,499] | | | | | | [removed: 3,372] [added: 3,056] | | | | | | [removed: 3,225] [added: 3,372] | | | | | |

In estimating its AROs for the nuclear plants, PSEG Power develops probability-weighted cash flow scenarios which, on a unit-by-unit basis, consider multiple outcome scenarios that include significant estimates and assumptions, and are based on third-party decommissioning cost estimates, cost escalation rates, inflation rates, and discount rates.

Management updates its cost studies triennially unless circumstances warrant more frequent updates.

The most recent cost study was performed in 2021.

- We evaluated management’s assumptions used in calculating the recorded nuclear decommissioning ARO balance including estimates of spent fuel cost reimbursements and weighted probabilities of various cash flow scenarios considering potential early retirement of the New Jersey nuclear plants and decommissioning methods.

- With the assistance of our environmental specialists and internal fair value specialists, we evaluated management’s judgments related to significant assumptions used in calculating the ARO including estimated decommissioning costs, discount rate, and inflation rate by:

◦Evaluating the experience, qualifications, and objectivity of management’s specialist;

◦Understanding the methodology used by management in developing estimates of the nuclear ARO;

◦Assessing the basis of and supporting evidence for information used in the determination of significant ARO assumptions;

◦Testing the mathematic accuracy of the models used to calculate the ARO;

- We evaluated the disclosures related to the estimated nuclear decommissioning costs, including the balances recorded.

As disclosed in Note 4, in August 2021, PSEG entered into agreements to sell PSEG Power’s entire portfolio of fossil generating assets to newly formed subsidiaries of ArcLight Energy Partners Fund VII, L.P. As a result of the Board of Directors’ approval of the transactions, PSEG fossil generating assets and liabilities to be disposed were reclassified to Assets and Liabilities Held for Sale.

During 2021, PSEG recorded impairment losses of approximately $2,691 million associated with the planned disposition of the fossil assets.

We identified the accounting for the sale of the fossil assets as a critical audit matter because the transaction relates to accounts and disclosures that are material to the financial statements and the evaluation of the applicable accounting guidance was complex.

Further, auditing the transactions involved extensive audit effort, including the use of professionals with specialized skill and knowledge to assist in performing procedures related to the timing of recognition of the impairments and in the evaluation of the presentation and disclosure in the financial statements.

- We tested the effectiveness of controls over management’s evaluation for the accounting for sale of the assets, including considerations as to the timing of meeting the classification of assets and liabilities held for sale, the amounts recorded as assets and liabilities held for sale, impairment charges recorded, and evaluation of the presentation and disclosure in the financial statements.

- For impairment tests performed prior to the signing of the sale agreements, we evaluated the weighted probabilities assigned to the outcomes of various cash flow scenarios.

- We obtained and read the sale agreements and, with the assistance of professionals with specialized skills and knowledge, evaluated management’s conclusions on the accounting treatment for the sale agreements.

- We evaluated the disclosures related to the sale of fossil assets, including the balances recorded.

| February 24, 2022 | | |

| | | | (Gains) Losses on Asset Dispositions and Impairments | | | | | | 2,637 | | | | | | (123) | | | | | | 402 | | | | | |

| | | | Loss on Extinguishment of Debt | | | | | | (298) | | | | | | — | | | | | | — | | | | | |

| | | | Liabilities Held for Sale | | | 144 | | | | | | — | | | | | |

| | | | (Gains) Losses on Asset Dispositions and Impairments | | | | | | 2,637 | | | | | | (123) | | | | | | 402 | | | | | |

| | | | Loss on Extinguishment of Debt | | | | | | 298 | | | | | | — | | | | | | — | | | | | |

| | | | Premium Paid on Early Extinguishment of Debt | | | | | | (294) | | | | | | — | | | | | | — | | | | | |

| | | | Net Loss | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (648) | | | | | | — | | | | | | (648) | | | | | |

| | | | Comprehensive Loss | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | (494) | | | | | |

| | | | Balance as of December 31, 2021 | | | | | | 534 | | | | | | $ | 5,045 | | | | | (30) | | | | | | $ | (896) | | | | | $ | 10,639 | | | | | $ | (350) | | | | | $ | 14,438 | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | Balance as of December 31, 2021 | | | | | | $ | 892 | | | | | $ | 1,170 | | | | | $ | 986 | | | | | $ | 11,524 | | | | | $ | 1 | | | | | $ | 14,573 | | | | |

In August 2021, PSEG entered into two agreements to sell PSEG Power’s 6,750 megawatts (MW) fossil generating portfolio to newly formed subsidiaries of ArcLight Energy Partners Fund VII, L.P., a fund controlled by ArcLight Capital Partners, LLC.

In February 2022, PSEG completed the sale of this fossil generating portfolio.

Early Plant Retirements/Asset Dispositions and Impairments for more details on the transactions.

In May 2021, PSEG Power Ventures LLC (Power Ventures), a direct wholly owned subsidiary of PSEG Power, entered into a purchase agreement with Quattro Solar, LLC, an affiliate of LS Power, relating to the sale by Power Ventures of 100% of its ownership interest in PSEG Solar Source LLC (Solar Source) including its related assets and liabilities.

The transaction closed in June 2021.

In December 2020, PSEG entered into a definitive agreement with Ørsted North America Inc. (Ørsted) to acquire a 25% equity interest in Ørsted’s Ocean Wind project which is currently in development.

Ocean Wind was selected by New Jersey to be the first offshore wind farm as part of the State’s intention to add 7,500 MW of offshore wind generating capacity by 2035.

The Ocean Wind project is expected to achieve full commercial operation in 2025.

On March 31, 2021, the BPU approved PSEG’s investment in Ocean Wind and the acquisition was completed in April 2021.

Additionally, PSEG and Ørsted each owns 50% of Garden State Offshore Energy LLC which holds rights to an offshore wind lease area.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Opinion on the Financial Statements

Basis for Opinion

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

*Critical Audit Matter Description*

The initial ZEC award has been appealed by the New Jersey Rate Counsel and PSEG Power cannot predict the outcome of this matter.

In October, 2020, PSEG Power filed its application for the second eligibility period beginning in June 2022.

This would result in material charges

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associated with accelerated depreciation and amortization, impairment charges, and accelerated asset retirement costs, among other costs.

Further, management’s estimates used in recording the ARO included a number of assumptions, including the timing of cash flows associated with the eventual decommissioning of the nuclear plants following the retirement of the assets.

Auditing each of these assumptions required a high degree of auditor judgment.

- We tested the effectiveness of controls over the evaluation of potential impairment indicators, including management’s consideration of legal and regulatory matters related to ZECs.

- We evaluated management’s judgments over the probability of early retirement of the nuclear plants and impairment triggers including considerations of regulatory matters for the second ZEC eligibility period.

- We evaluated management’s assumptions over the weighted-probability of early retirement of the nuclear plants used in calculating the recorded nuclear ARO balance.

- We requested and received a written response from internal counsel and external legal firms representing PSEG and evaluated the legal conclusions for consistency with those used in management’s accounting judgments and disclosures.

- We obtained written representations from management regarding their intent to cease to operate the nuclear plants in the event that certain legal, regulatory, and economic matters are not favorably resolved.

- We evaluated the related disclosures for consistency with our understanding.

*Critical Audit Matter Description*

As a result, PSEG Power performed impairment tests for its portfolio of assets in the PJM, NYISO and NEPOOL regions.

The assessments included probability weightings assigned to undiscounted cash flow scenarios of retaining the assets through their estimated useful lives and a potential disposition of the assets.

As of December 31, 2020, the estimated undiscounted future cash flows of each of the asset groups exceeded the carrying amount and no impairment was identified.

We identified the impairment tests over the PJM, NYISO and NEPOOL asset groupings as a critical audit matter because of the significant management judgements and estimates related to asset grouping conclusions, the probability weighting of the outcomes of various scenarios, and the significant inputs utilized in the impairment test to determine the estimated undiscounted cash flows.

*How the Critical Audit Matter Was Addressed in the Audit*

Our audit procedures related to the impairment tests over the PJM, NYISO and NEPOOL asset groupings included the following, among others:

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- We evaluated management’s conclusions regarding the asset groupings utilized for the purposes of the impairment tests.

- With the assistance of our fair value specialists, we evaluated the significant inputs utilized within management’s impairment tests including forward power prices, fuel costs, dispatch rates and estimates of the fair value to be received upon any disposition of assets.

- We evaluated management’s assumptions related to the weighted probabilities assigned to the outcome of various scenarios.

- We evaluated the related disclosures for consistency with our understanding.

*Critical Audit Matter Description*

*How the Critical Audit Matter Was Addressed in the Audit*

[removed: PSEG, PSE&G] [added: PSEG] and [removed: PSEG Power][added: PSE&G]

We have established a disclosure committee which includes several key management employees and which reports directly to the CFO and CEO of each of [removed: PSEG, PSE&G and] PSEG [removed: Power.][added: and PSE&G.]

The CFO and CEO of each of [removed: PSEG, PSE&G and] PSEG [removed: Power] [added: and PSE&G] have evaluated the effectiveness of the disclosure controls and procedures and, based on this evaluation, have concluded that disclosure controls and procedures at each respective company were effective at a reasonable assurance level as of the end of the period covered by the report.

[removed: PSEG, PSE&G] [added: PSEG] and [removed: PSEG Power][added: PSE&G]

We have conducted assessments of our internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] as required by Section 404 of the Sarbanes-Oxley Act, using the framework promulgated by the Committee of Sponsoring Organizations of the Treadway Commission, commonly referred to as “COSO.” Managements’ reports on [removed: PSEG’s, PSE&G’s] [added: PSEG’s] and [removed: PSEG Power’s] [added: PSE&G’s] internal control over financial reporting are included on pages [removed: 183, 184] [added: 165] and [removed: 185,] [added: 166,] respectively.

The Independent Registered Public Accounting Firm’s report with respect to the effectiveness of PSEG’s internal control over financial reporting is included on page [removed: 186.][added: 167.]

Management has concluded that internal control over financial reporting is effective as of December 31, [removed: 2020.][added: 2021.]

There have been no changes in internal control over financial reporting that occurred during the fourth quarter of [removed: 2020] [added: 2021] that have materially affected, or are reasonably likely to materially affect, each registrant’s internal control over financial reporting.

MANAGEMENT REPORT ON INTERNAL CONTROL OVER

FINANCIAL REPORTING—PSEG

Management of Public Service Enterprise Group Incorporated (PSEG) is responsible for establishing and maintaining effective internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting.

As defined by the SEC in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and implemented by the company’s management and other personnel, with oversight by the Audit Committee of the Board of Directors to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (generally accepted accounting principles).

PSEG’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of PSEG’s assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of PSEG are being made only in accordance with authorizations of PSEG’s management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of PSEG’s assets that could have a material effect on the financial statements.

In connection with the preparation of PSEG’s annual financial statements, management of PSEG has undertaken an assessment, which includes the design and operational effectiveness of PSEG’s internal control over financial reporting based on criteria established in the *Internal Control - Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission, commonly referred to as “COSO”.

The COSO framework is based upon five integrated components of control: control environment, risk assessment, control activities, information and communications and ongoing monitoring.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projection of any evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Based on the assessment performed, management has concluded that PSEG’s internal control over financial reporting is effective and provides reasonable assurance regarding the reliability of PSEG’s financial reporting and the preparation of its financial statements as of December 31, 2020 in accordance with generally accepted accounting principles.

Further, management has not identified any material weaknesses in internal control over financial reporting as of December 31, 2020.

PSEG’s external auditors, Deloitte & Touche LLP, have audited PSEG’s financial statements for the year ended December 31, 2020 included in this annual report on Form 10-K and, as part of that audit, have issued a report on the effectiveness of PSEG’s internal control over financial reporting, a copy of which is included in this annual report on Form 10-K.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | | | | | |

| /s/ RALPH IZZO | | | | | |

| Chief Executive Officer | | | | | |

| | | | | | |

| /s/ DANIEL J. CREGG | | | | | |

| Chief Financial Officer | | | | | |

| February 26, 2021 | | | | | |

MANAGEMENT REPORT ON INTERNAL CONTROL OVER

FINANCIAL REPORTING—PSE&G

Management of Public Service Electric and Gas Company (PSE&G) is responsible for establishing and maintaining effective internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting.

As defined by the SEC in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and implemented by the company’s management and other personnel, with oversight by the Audit Committee of the Board of Directors of its parent, Public Service Enterprise Group Incorporated, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (generally accepted accounting principles).

PSE&G’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of PSE&G’s assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of PSE&G are being made only in accordance with authorizations of PSE&G’s management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of PSE&G’s assets that could have a material effect on the financial statements.

In connection with the preparation of PSE&G’s annual financial statements, management of PSE&G has undertaken an assessment, which includes the design and operational effectiveness of PSE&G’s internal control over financial reporting based on criteria established in the *Internal Control - Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission, commonly referred to as “COSO”.

The COSO framework is based upon five integrated components of control: control environment, risk assessment, control activities, information and communications and ongoing monitoring.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projection of any evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Based on the assessment performed, management has concluded that PSE&G’s internal control over financial reporting is effective and provides reasonable assurance regarding the reliability of PSE&G’s financial reporting and the preparation of its financial statements as of December 31, 2020 in accordance with generally accepted accounting principles.

Further, management has not identified any material weaknesses in internal control over financial reporting as of December 31, 2020.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | | | | | |

| /s/ RALPH IZZO | | | | | |

| Chief Executive Officer | | | | | |

| | | | | | |

| /s/ DANIEL J. CREGG | | | | | |

| Chief Financial Officer | | | | | |

Not applicable.

MANAGEMENT REPORT ON INTERNAL CONTROL OVER

FINANCIAL REPORTING—PSEG

Management of Public Service Enterprise Group Incorporated (PSEG) is responsible for establishing and maintaining effective internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting.

As defined by the SEC in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and implemented by the company’s management and other personnel, with oversight by the Audit Committee of the Board of Directors to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (generally accepted accounting principles).

PSEG’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of PSEG’s assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of PSEG are being made only in accordance with authorizations of PSEG’s management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of PSEG’s assets that could have a material effect on the financial statements.

In connection with the preparation of PSEG’s annual financial statements, management of PSEG has undertaken an assessment, which includes the design and operational effectiveness of PSEG’s internal control over financial reporting based on criteria established in the *Internal Control - Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission, commonly referred to as “COSO”.

The COSO framework is based upon five integrated components of control: control environment, risk assessment, control activities, information and communications and ongoing monitoring.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projection of any evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Based on the assessment performed, management has concluded that PSEG’s internal control over financial reporting is effective and provides reasonable assurance regarding the reliability of PSEG’s financial reporting and the preparation of its financial statements as of December 31, 2021 in accordance with generally accepted accounting principles.

Further, management has not identified any material weaknesses in internal control over financial reporting as of December 31, 2021.

PSEG’s external auditors, Deloitte & Touche LLP, have audited PSEG’s financial statements for the year ended December 31, 2021 included in this annual report on Form 10-K and, as part of that audit, have issued a report on the effectiveness of PSEG’s internal control over financial reporting, a copy of which is included in this annual report on Form 10-K.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | | | | | |

| /s/ RALPH IZZO | | | | | |

| Chief Executive Officer | | | | | |

| | | | | | |

| /s/ DANIEL J. CREGG | | | | | |

| Chief Financial Officer | | | | | |

| February 24, 2022 | | | | | |

MANAGEMENT REPORT ON INTERNAL CONTROL OVER

FINANCIAL REPORTING—PSE&G

Management of Public Service Electric and Gas Company (PSE&G) is responsible for establishing and maintaining effective internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting.

As defined by the SEC in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, internal control over financial reporting is a process designed by, or under the supervision of, the company’s principal executive and principal financial officers, or persons performing similar functions, and implemented by the company’s management and other personnel, with oversight by the Audit Committee of the Board of Directors of its parent, Public Service Enterprise Group Incorporated, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (generally accepted accounting principles).

PSE&G’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of PSE&G’s assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of PSE&G are being made only in accordance with authorizations of PSE&G’s management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of PSE&G’s assets that could have a material effect on the financial statements.

In connection with the preparation of PSE&G’s annual financial statements, management of PSE&G has undertaken an assessment, which includes the design and operational effectiveness of PSE&G’s internal control over financial reporting based on criteria established in the *Internal Control - Integrated Framework (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission, commonly referred to as “COSO”.

The COSO framework is based upon five integrated components of control: control environment, risk assessment, control activities, information and communications and ongoing monitoring.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projection of any evaluation of effectiveness to future periods is subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Based on the assessment performed, management has concluded that PSE&G’s internal control over financial reporting is effective and provides reasonable assurance regarding the reliability of PSE&G’s financial reporting and the preparation of its financial statements as of December 31, 2021 in accordance with generally accepted accounting principles.

Further, management has not identified any material weaknesses in internal control over financial reporting as of December 31, 2021.

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | | | | | |

| /s/ RALPH IZZO | | | | | |

| Chief Executive Officer | | | | | |

| | | | | | |

| /s/ DANIEL J. CREGG | | | | | |

The information required by Item 10 of Form 10-K with respect to (i) present directors of PSEG who are nominees for election as directors at PSEG’s [removed: 2021] [added: 2022] Annual Meeting of Stockholders, (ii) the director nomination process, and (iii) the composition of the Audit Committee of the Board, is set forth under the headings “Nominees For Director-Biographical Information,” “Overview of Board Nominees-Board Refreshment and Tenure,” and “-Board Membership Selection,” and “Corporate Governance-Board Committees,” respectively, in PSEG’s definitive Proxy Statement for such Annual Meeting of Stockholders, which definitive Proxy Statement is expected to be filed with the U.S. Securities and Exchange Commission (SEC) on or about March [removed: 15, 2021] [added: 10, 2022] and which information set forth under said heading is incorporated herein by this reference thereto.

In [removed: 2020,] [added: 2021,] we did not grant any waivers to the Standards.

PSE&G

PSE&G

PSEG

PSE&G and PSEG Power

Omitted pursuant to conditions set forth in General Instruction I of Form 10-K.

PSE&G and PSEG Power

Section 16(a) Beneficial Ownership Reporting Compliance

The information required by Item 10 of Form 10-K with respect to compliance with Section 16(a) of the Securities Exchange Act of 1934, as amended, is set forth under the heading “Security Ownership of Directors, Management and Certain Beneficial Owners-Delinquent Section 16(a) Reports” in PSEG’s definitive Proxy Statement for the 2021 Annual Meeting of Stockholders, which definitive Proxy Statement is expected to be filed with the SEC on or about March 15, 2021 and which information set forth under said heading is incorporated herein by this reference thereto.

PSE&G and PSEG Power

The information required by Item 11 of Form 10-K is set forth in PSEG’s definitive Proxy Statement for the [removed: 2021] [added: 2022] Annual Meeting of Stockholders which definitive Proxy Statement is expected to be filed with the SEC on or about March [removed: 15, 2021] [added: 10, 2022] and such information set forth under such heading is incorporated herein by this reference thereto.

PSE&G

PSE&G and PSEG Power

The information required by Item 12 of Form 10-K with respect to directors, executive officers and certain beneficial owners is set forth under the heading “Security Ownership of Directors, Management and Certain Beneficial Owners” in PSEG’s definitive Proxy Statement for the [removed: 2021] [added: 2022] Annual Meeting of Stockholders which definitive Proxy Statement is expected to be filed with the SEC on or about March [removed: 15, 2021] [added: 10, 2022] and such information set forth under such heading is incorporated herein by this reference thereto.

PSE&G

PSE&G and PSEG Power

The information required by Item 13 of Form 10-K is set forth under the heading “Corporate Governance-Certain Relationships and Related Person Transactions” in PSEG’s definitive Proxy Statement for the [removed: 2021] [added: 2022] Annual Meeting of Stockholders which definitive Proxy Statement is expected to be filed with the SEC on or about March [removed: 15, 2021] [added: 10, 2022] and such information set forth under such heading is incorporated herein by this reference thereto.

PSE&G

PSE&G and PSEG Power

The information required by Item 14 of Form 10-K is set forth under the heading [removed: “Fees] [added: “Oversight of the Independent Auditor-Fees] Billed by Deloitte for [removed: 2020] [added: 2021] and [removed: 2019”] [added: 2020”] in PSEG’s definitive Proxy Statement for the [removed: 2021] [added: 2022] Annual Meeting of Stockholders which definitive Proxy Statement is expected to be filed with the SEC on or about March [removed: 15, 2021.][added: 10, 2022.]

a.Public Service Enterprise Group Incorporated’s Consolidated Balance Sheets as of December 31, [removed: 2020] [added: 2021] and [removed: 2019] [added: 2020] and the related Consolidated Statements of Operations, Comprehensive Income, Cash Flows and Stockholders’ Equity for the three years ended December 31, [removed: 2020] [added: 2021] on pages [removed: 74] [added: 70] through [removed: 79.][added: 75.]

b.Public Service Electric and Gas Company’s Consolidated Balance Sheets as of December 31, [removed: 2020] [added: 2021] and [removed: 2019] [added: 2020] and the related Consolidated Statements of Operations, Comprehensive Income, Cash Flows and Common Stockholder’s Equity for the three years ended December 31, [removed: 2020] [added: 2021] on pages [removed: 80] [added: 76] through [removed: 85.][added: 81.]