PSE&G Rate Case Settlement Approved

Rhea-AI Summary

The New Jersey Board of Public Utilities (BPU) has approved a settlement agreement for PSE&G's electric and gas distribution base rate case. This marks PSE&G's first base rate increase since 2018, representing less than half the rate of inflation during that time. The settlement will result in a typical combined residential electric and gas customer bill increase of 7%, or $15 per month. However, considering recent rate changes, the net impact for a typical customer will be about 5%, or $11 per month.

The rate increase aims to recover prior investments in distribution systems and address increasing costs. PSE&G emphasizes its focus on managing costs while improving service reliability and resiliency. The company also highlights available assistance programs for customers struggling with utility bills, including LIHEAP and the New Jersey Universal Service Fund. In 2023, over 200,000 PSE&G customers received $218 million in energy assistance. The new rates will take effect on October 15, 2024.

Positive

• First base rate increase in six years, representing less than half the rate of inflation
• Recognition of investments made to improve system reliability and resiliency
• Recent 5% reduction in PSE&G gas bills partially offsets the new rate increase
• $218 million in energy assistance provided to over 200,000 customers in 2023
• $92 million in outstanding balances forgiven through the Fresh Start Program

Negative

• 7% increase in typical combined residential electric and gas customer bills
• Net bill impact of about 5% or $11 per month for typical customers after recent rate changes

Insights

Financial Analyst

The BPU's approval of PSE&G's rate case settlement is a significant development for the utility. This is the first base rate increase in six years, reflecting accumulated investments and rising costs. The $15 monthly increase for typical residential customers represents a 7% rise in bills, which is notable but not excessive given the timeframe.

Importantly, the 5% reduction in gas bills effective October 1 partially offsets this increase, resulting in a net 5% ($11) monthly increase for combined customers. This moderated impact may help mitigate potential customer backlash.

The rate increase should positively impact PSE&G's revenue and profitability, supporting its ability to maintain infrastructure and invest in future improvements. However, investors should monitor any potential regulatory or public pushback, as well as the company's ability to manage costs and maintain customer satisfaction in light of the price increase.

Utility Industry Expert

This rate case settlement is a balanced outcome for PSE&G, reflecting the regulatory environment's recognition of necessary infrastructure investments. The approval demonstrates constructive regulatory relations, which is important for utility companies.

The six-year gap between rate increases is unusually long in the utility sector, indicating PSE&G's strong cost management. However, this also suggests potential for more frequent future rate cases to keep pace with ongoing investments and inflation.

PSE&G's focus on energy efficiency programs and customer assistance is strategically important, potentially mitigating negative reactions to the rate increase. The company's awards for reliability and customer satisfaction provide a strong foundation for justifying the rate increase to stakeholders.

Investors should view this as a positive signal for PSE&G's ability to recover costs and maintain financial health while balancing customer impacts.

First Base Rate Increase in Six Years, an Annual Increase of About One Percent

NEWARK, N.J., Oct. 9, 2024 /PRNewswire/ -- Today, the New Jersey Board of Public Utilities (BPU) approved a settlement agreement that PSE&G had reached with BPU staff, the New Jersey Division of Rate Counsel and other parties to PSE&G's electric and gas distribution base rate case filed in December 2023. The settlement advances PSE&G's ability to continue providing customers with affordable, award-winning service and customer care while also providing the financial strength necessary to maintain a reliable and resilient energy grid. 

This rate case filing was required by an earlier settlement and sought recovery of prior investments made to our distribution systems, and recognition of increasing costs over time including wages and benefits. Over the last six years, PSE&G has made significant investments in strengthening our distribution system, modernizing our infrastructure to meet customer needs and other previously authorized capital expenditures that were not reflected in current rates.

More information is available in the BPU order. 

"PSE&G provides safe, affordable and reliable service to our customers, which is all the more important as people become more dependent on electricity to power their lives," said Kim Hanemann, President and COO of PSE&G. "We remain focused on managing costs while also working to deliver the level of service our customers expect. This agreement recognizes the much-needed investments in our system that will both improve resiliency and help prepare us for the future. I want to acknowledge the BPU for their consideration and their approval of this settlement."

This base rate increase approved by the BPU will be PSE&G's first since 2018 and represents less than half the rate of inflation during that time. The settlement will result in a typical combined residential electric and gas customer bill increase of 7%, or $15 per month. Of note, this settlement follows the BPU's approval of certain rate changes that just went into effect October 1, 2024, primarily a 5% reduction in PSE&G gas bills. The combined effect of the October 1 changes would reduce the bill impact from this settlement for a typical combined residential electric and gas customer to about 5%, or $11 per month. New rates will go into effect Oct. 15, 2024.

PSE&G recognizes there are customers who need assistance paying utility bills. We encourage eligible customers to take advantage of all available assistance programs including LIHEAP and the New Jersey Universal Service Fund. In 2023, over 200,000 PSE&G customers received energy assistance, totaling $218 million. Through the Fresh Start Program, $92 million in outstanding balances were forgiven.

Information on payment assistance programs is available at pseg.com/help

PSE&G also encourages customers to take advantage of our energy efficiency programs, tips and tools to help reduce energy use and manage monthly bills.

Media Relations:	Investor Relations:
Media Relations 973-430-7734	Carlotta Chan 973-430-6565 Carlotta.Chan@pseg.com

 

PSE&G 

Public Service Electric & Gas Co. is New Jersey's oldest and largest gas and electric delivery public utility, as well as one of the nation's largest utilities. PSE&G has won the ReliabilityOne® Award for superior electric system reliability in the Mid-Atlantic region for 22 consecutive years. For the second consecutive year, PSE&G is the recipient of the ENERGY STAR Partner of the Year award in the Energy Efficiency Program Delivery category. In addition, in 2023 J.D. Power named PSE&G number one in customer satisfaction with residential and business electric service in the east among large utilities. PSE&G is a subsidiary of Public Service Enterprise Group Inc., (PSEG) (NYSE:PEG), a predominantly regulated infrastructure company focused on a clean energy future and has been named to the Dow Jones Sustainability Index for North America for 16 consecutive years (www.pseg.com).

Forward-Looking Statements

Certain of the matters discussed in this release about our and our subsidiaries' future performance, including, without limitation, future revenues, earnings, strategies, prospects, consequences, and all other statements that are not purely historical constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those anticipated. Such statements are based on management's beliefs as well as assumptions made by and information currently available to management. When used herein, the words "anticipate," "intend," "estimate," "believe," "expect," "plan," "should," "hypothetical," "potential," "forecast," "project," variations of such words and similar expressions are intended to identify forward-looking statements. Factors that may cause actual results to differ are often presented with the forward-looking statements themselves. Other factors that could cause actual results to differ materially from those contemplated in any forward-looking statements made by us herein are discussed in filings we make with the United States Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K and subsequent reports on Form 10-Q and Form 8-K. These factors include, but are not limited to:

• any inability to successfully develop, obtain regulatory approval for, or construct transmission and distribution, and our nuclear generation projects;
• 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;
• any equipment failures, accidents, critical operating technology or business system failures, natural disasters, severe weather events, acts of war, terrorism or other acts of violence, sabotage, physical attacks or security breaches, cyberattacks or other incidents that may impact our ability to provide safe and reliable service to our customers;
• any inability to recover the carrying amount of our long-lived assets;
• disruptions or cost increases in our supply chain, including labor shortages;
• any inability to maintain sufficient liquidity or access sufficient capital on commercially reasonable terms;
• the impact of cybersecurity attacks or intrusions or other disruptions to our information technology, operational or other systems;
• a material shift away from natural gas toward increased electrification and a reduction in the use of natural gas;
• failure to attract and retain a qualified workforce;
• increases in the costs of equipment, materials, fuel, services and labor;
• the impact of our covenants in our debt instruments and credit agreements on our business;
• adverse performance of our defined benefit plan trust funds and Nuclear Decommissioning Trust Fund and increases in funding requirements and pension costs;
• any inability to extend certain significant contracts on terms acceptable to us;
• development, adoption and use of Artificial Intelligence by us and our third-party vendors;
• fluctuations in, or third-party default risk in wholesale power and natural gas markets, including the potential impacts on the economic viability of our generation units;
• our ability to obtain adequate nuclear fuel supply;
• changes in technology related to energy generation, distribution and consumption and changes in customer usage patterns;
• third-party credit risk relating to our sale of nuclear generation output and purchase of nuclear fuel;
• any inability to meet our commitments under forward sale obligations and Regional Transmission Organization rules;
• the impact of changes in state and federal legislation and regulations on our business, including PSE&G's ability to recover costs and earn returns on authorized investments;
• PSE&G's proposed investment projects or programs may not be fully approved by regulators and its capital investment may be lower than planned;
• our ability to receive sufficient financial support for our New Jersey nuclear plants from the markets, production tax credit and/or zero emission certificates program;
• adverse changes in and non-compliance with energy industry laws, policies, regulations and standards, including market structures and transmission planning and transmission returns;
• risks associated with our ownership and operation of nuclear facilities, including increased nuclear fuel storage costs, regulatory risks, such as compliance with the Atomic Energy Act and trade control, environmental and other regulations, as well as operational, financial, environmental and health and safety risks;
• changes in federal and state environmental laws and regulations and enforcement;
• delays in receipt of, or an inability to receive, necessary licenses and permits and siting approvals; and
• changes in tax laws and regulations.

All of the forward-looking statements made in this release are qualified by these cautionary statements and we cannot assure you that the results or developments anticipated by management will be realized or even if realized, will have the expected consequences to, or effects on, us or our business, prospects, financial condition, results of operations or cash flows. Readers are cautioned not to place undue reliance on these forward-looking statements in making any investment decision. Forward-looking statements made in this release apply only as of the date of this release. While we may elect to update forward-looking statements from time to time, we specifically disclaim any obligation to do so, even in light of new information or future events, unless otherwise required by applicable securities laws.

The forward-looking statements contained in this release are intended to qualify for the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

From time to time, PSEG and PSE&G release important information via postings on their corporate Investor Relations website at https://investor.pseg.com. Investors and other interested parties are encouraged to visit the Investor Relations website to review new postings.  You can sign up for automatic email alerts regarding new postings at the bottom of the webpage at https://investor.pseg.com or by navigating to the Email Alerts webpage here.  The information on https://investor.pseg.com and https://investor.pseg.com/resources/email-alerts/default.aspx is not incorporated herein.

 

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SOURCE PSEG

FAQ

What is the percentage increase in PSE&G's base rate for 2024?

PSE&G's base rate increase for 2024 is approximately 7% for a typical combined residential electric and gas customer, or $15 per month. However, considering recent rate changes, the net impact is about 5% or $11 per month.

When will PSE&G's new rates go into effect?

PSE&G's new rates will go into effect on October 15, 2024.

How long has it been since PSE&G's last base rate increase?

This is PSE&G's first base rate increase since 2018, a period of six years.

What assistance programs are available for PSE&G customers struggling with utility bills?

PSE&G customers can access assistance programs such as LIHEAP (Low Income Home Energy Assistance Program), the New Jersey Universal Service Fund, and the Fresh Start Program.

How much energy assistance did PSE&G provide to customers in 2023?

In 2023, PSE&G provided $218 million in energy assistance to over 200,000 customers.