0000788784 pseg:PSEGPowerLLCMember ~~us-gaap:EstimateOfFairValueFairValueDisclosureMember~~ pseg:~~RabbiTrustsUSTreasuryObligationsMember 2018-12-31~~ElectricLoadDealsMember 2020-03-31

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED ~~September 30, 2019~~March 31, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO



Commission File Number	Name of Registrant, Address, and Telephone Number			State or other jurisdiction of Incorporation	I.R.S. Employer Identification Number
001-09120	Public Service Enterprise Group Incorporated			New Jersey	22-2625848
	80 Park Plaza
	Newark,	New Jersey	07102
	973	430-7000

001-00973	Public Service Electric and Gas Company			New Jersey	22-1212800
	80 Park Plaza
	Newark,	New Jersey	07102
	973	430-7000

001-34232	PSEG Power LLC			Delaware	22-3663480
	80 Park Plaza
	Newark,	New Jersey	07102
	973	430-7000

Securities registered pursuant to Section 12(b) of the Act:



Title of Each Class	Trading Symbol(s)	Name of Each Exchange On Which Registered
Public Service Enterprise Group Incorporated
Common Stock without par value	PEG	New York Stock Exchange
Public Service Electric and Gas Company
9.25% First and Refunding Mortgage Bonds, Series CC, due 2021	PEG21	New York Stock Exchange
8.00% First and Refunding Mortgage Bonds, due 2037	PEG37D	New York Stock Exchange
5.00% First and Refunding Mortgage Bonds, due 2037	PEG37J	New York Stock Exchange
PSEG Power LLC
8.625% Senior Notes, due 2031	PEG31	New York Stock Exchange

Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit such files). Yes ☒No ☐

(Cover continued on next page)

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(Cover continued from previous page)

Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Public Service Enterprise Group Incorporated	Large accelerated filer	☒	Accelerated filer	☐	Non-accelerated filer	☐	Smaller reporting company	☐	Emerging growth company	☐

Public Service Electric and Gas Company	Large accelerated filer	☐	Accelerated filer	☐	Non-accelerated filer	☒	Smaller reporting company	☐	Emerging growth company	☐

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

If any of the registrants is an emerging growth company, indicate by check mark if such registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether any of the registrants is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~October 15, 2019,~~April 21, 2020, Public Service Enterprise Group Incorporated had outstanding ~~505,726,465~~505,625,328 shares of its sole class of Common Stock, without par value.

As of ~~October 15, 2019,~~April 21, 2020, 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 privately held, beneficially and of record, by Public Service Enterprise Group Incorporated.

Public Service Electric and Gas Company and PSEG Power LLC are wholly owned subsidiaries of Public Service Enterprise Group Incorporated and meet the conditions set forth in General Instruction H(1) of Form 10-Q. Each is filing its Quarterly Report on Form 10-Q with the reduced disclosure format authorized by General Instruction H.

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		Page
FORWARD-LOOKING STATEMENTS		ii
FILING FORMAT		iii
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Public Service Enterprise Group Incorporated	1
	Public Service Electric and Gas Company	7
	PSEG Power LLC	13
	Notes to Condensed Consolidated Financial Statements
	Note 1. Organization, Basis of Presentation and Significant Accounting Policies	19
	Note 2. Recent Accounting Standards	20
	Note 3. Revenues	22
	Note 4. Early Plant Retirements/Asset Dispositions	27
	Note 5. Variable Interest Entity (VIE)	2728
	Note 6. Rate Filings	28
	Note 7. Leases	29
	Note 8. Financing Receivables	3429
	Note 9. Trust Investments	3531
	Note 10. Pension and Other Postretirement Benefits (OPEB)	4137
	Note 11. Commitments and Contingent Liabilities	4339
	Note 12. Debt and Credit Facilities	4944
	Note 13. Financial Risk Management Activities	5145
	Note 14. Fair Value Measurements	5650
	Note 15. Other Income (Deductions)	6356
	Note 16. Income Taxes	6356
	Note 17. Accumulated Other Comprehensive Income (Loss), Net of Tax	6558
	Note 18. Earnings Per Share (EPS) and Dividends	6961
	Note 19. Financial Information by Business Segment	7062
	Note 20. Related-Party Transactions	71
	~~Note 21. Guarantees of Debt~~	7362
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	7664
	Executive Overview of ~~2019~~2020 and Future Outlook	7664
	Results of Operations	8472
	Liquidity and Capital Resources	8975
	Capital Requirements	9178
	Accounting Matters	9179
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	9179
Item 4.	Controls and Procedures	9280

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	9380
Item 1A.	Risk Factors	9380
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	9381
Item 5.	Other Information	9381
Item 6.	Exhibits	9483
	Signatures	9684

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FORWARD-LOOKING STATEMENTS

Certain of the matters discussed in this report 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:

fluctuations in wholesale power and natural gas markets, including the potential impacts on the economic viability of our generation units;

our ability to obtain adequate fuel supply;

~~any inability to manage~~market risks impacting the operation of our ~~energy obligations with available supply;~~generating stations;


•	~~PSE&G’s proposed investment programs may not be fully approved by regulators and its capital investment may be lower than planned;~~

increases in competition in wholesale energy and capacity markets;

changes in technology related to energy generation, distribution and consumption and customer usage patterns;

economic downturns;

third-party credit risk relating to our sale of generation output and purchase of fuel;

adverse performance of our nuclear decommissioning and defined benefit plan trust fund investments and changes in funding requirements;

the impact of changes in state and federal legislation and regulations ~~and~~on our business, including PSE&G’s ability to recover costs and earn returns on authorized investments;

PSE&G’s proposed investment programs may not be fully approved by regulators and its capital investment may be lower than planned;


•	the impact on our New Jersey nuclear plants if such plants are not awarded Zero Emission Certificates (ZEC) in future periods, there is an adverse change in the amount of future ZEC payments, the ZEC program is overturned or modified through legal proceedings or if adverse changes are made to the capacity market construct;

adverse changes in energy industry laws, policies and regulations, including market structures and transmission planning;

the impact of ~~any future rate proceedings;~~state and federal actions aimed at combating climate change on our natural gas assets;

risks associated with our ownership and operation of nuclear facilities, including regulatory risks, such as compliance with the Atomic Energy Act and trade control, environmental and other regulations, as well as financial, environmental and health and safety risks;


•	the impact on our New Jersey nuclear plants if such plants are not selected to participate in future Zero Emission Certificate (ZEC) programs, ZEC programs are overturned or modified through legal proceedings or if adverse changes are made to the capacity market construct;

~~adverse changes in energy industry laws, policies and regulations, including market structures and transmission planning;~~

changes in federal and state environmental regulations and enforcement;

delays in receipt of, or an inability to receive, necessary licenses and permits;

the impact of any future rate proceedings;

adverse outcomes of any legal, regulatory or other proceeding, settlement, investigation or claim applicable to us and/or the energy industry;

changes in tax laws and regulations;

the impact of our holding company structure on our ability to meet our corporate funding needs, service debt and pay dividends;

lack of growth or slower growth in the number of customers or changes in customer demand;

any inability of PSEG Power to meet its commitments under forward sale obligations;

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reliance on transmission facilities that we do not own or control and the impact on our ability to maintain adequate transmission capacity;

any inability to successfully develop, obtain regulatory approval for, or construct generation, transmission and distribution projects;

any equipment failures, accidents, severe weather events or other incidents, including pandemics such as the ongoing coronavirus pandemic, that may impact our ability to provide safe and reliable service to our customers;

our inability to exercise control over the operations of generation facilities in which we do not maintain a controlling interest;

any inability to recover the carrying amount of our long-lived assets and leveraged leases;

any inability to maintain sufficient liquidity;

any inability to realize anticipated tax benefits or retain tax credits;

challenges associated with recruitment and/or retention of key executives and a qualified workforce;

the impact of our covenants in our debt instruments on our operations;

the impact of the ongoing coronavirus pandemic; and

the impact of acts of war, terrorism, cybersecurity attacks or intrusions.

All of the forward-looking statements made in this report 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 report apply only as of the date of this report. 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 report 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.

FILING FORMAT

This combined Quarterly Report on Form 10-Q is separately filed by Public Service Enterprise Group Incorporated (PSEG), Public Service Electric and Gas Company (PSE&G) and PSEG Power LLC (PSEG Power). Information relating to any individual company is filed by such company on its own behalf. PSE&G and PSEG Power are each only responsible for information about itself and its subsidiaries.

Discussions throughout the document refer to PSEG and its direct operating subsidiaries, PSE&G and PSEG Power. Depending on the context of each section, references to “we,” “us,” and “our” relate to PSEG or to the specific company or companies being discussed.

iii

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PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Millions, except per share data

(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
2019 2018 2019 2018
OPERATING REVENUES $ 2,302
$ 2,394
$ 7,598
$ 7,228

OPERATING EXPENSES
Energy Costs 753
804
2,581
2,356

Operation and Maintenance 745
742
2,251
2,221

Depreciation and Amortization 307
294
928
854

Loss on Asset Dispositions 7
—
402
—

Total Operating Expenses 1,812
1,840
6,162
5,431

OPERATING INCOME 490
554
1,436
1,797

Income from Equity Method Investments 3
5
10
12

Net Gains (Losses) on Trust Investments (3 ) 45
164
31

Other Income (Deductions) 35
33
101
99

Non-Operating Pension and OPEB Credits (Costs) 55
19
121
57

Interest Expense (147 ) (127 ) (417 ) (341 )
INCOME BEFORE INCOME TAXES 433
529
1,415
1,655

Income Tax Benefit (Expense) (30 ) (117 ) (159 ) (416 )
NET INCOME $ 403
$ 412
$ 1,256
$ 1,239

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC 504
504
504
504

DILUTED 507
507
507
507

NET INCOME PER SHARE:
BASIC $ 0.80
$ 0.82
$ 2.49
$ 2.46

DILUTED $ 0.79
$ 0.81
$ 2.47
$ 2.44




	Three Months Ended
	March 31,
	2020			2019
OPERATING REVENUES	$	2,781		$	2,980
OPERATING EXPENSES
Energy Costs	906			1,124
Operation and Maintenance	754			756
Depreciation and Amortization	324			314
Total Operating Expenses	1,984			2,194
OPERATING INCOME	797			786
Income from Equity Method Investments	3			2
Net Gains (Losses) on Trust Investments	(221		)	128
Other Income (Deductions)	4			33
Net Non-Operating Pension and Other Postretirement Benefit (OPEB) Credits (Costs)	62			33
Interest Expense	(153		)	(133		)
INCOME BEFORE INCOME TAXES	492			849
Income Tax Benefit (Expense)	(44		)	(149		)
NET INCOME	$	448		$	700
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC	504			504
DILUTED	507			507
NET INCOME PER SHARE:
BASIC	$	0.89		$	1.39
DILUTED	$	0.88		$	1.38

See Notes to Condensed Consolidated Financial Statements.

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PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Millions

(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
2019 2018 2019 2018
NET INCOME $ 403
$ 412
$ 1,256
$ 1,239

Other Comprehensive Income (Loss), net of tax
Unrealized Gains (Losses) on Available-for-Sale Securities, net of tax (expense) benefit of $(5), $2, $(30) and $15 for the three and nine months ended 2019 and 2018, respectively 10
(4 ) 49
(23 )
Unrealized Gains (Losses) on Cash Flow Hedges, net of tax (expense) benefit of $0, $0, $6 and $1 for the three and nine months ended 2019 and 2018, respectively 1
—
(16 ) (1 )
Pension/OPEB adjustment, net of tax (expense) benefit of $7, $(3), $1 and $(9) for the three and nine months ended 2019 and 2018, respectively (17 ) 7
(13 ) 22

Other Comprehensive Income (Loss), net of tax (6 ) 3
20
(2 )
COMPREHENSIVE INCOME $ 397
$ 415
$ 1,276
$ 1,237




	Three Months Ended
	March 31,
	2020			2019
NET INCOME	$	448		$	700
Other Comprehensive Income (Loss), net of tax
Unrealized Gains (Losses) on Available-for-Sale Securities, net of tax (expense) benefit of $(6) and $(13) for 2020 and 2019, respectively	8			21
Unrealized Gains (Losses) on Cash Flow Hedges, net of tax (expense) benefit of $1 for 2020 and 2019	(3		)	(4		)
Pension/OPEB adjustment, net of tax (expense) benefit of $(1) and $(4) for 2020 and 2019, respectively	3			—
Other Comprehensive Income (Loss), net of tax	8			17
COMPREHENSIVE INCOME	$	456		$	717

See Notes to Condensed Consolidated Financial Statements.

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PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

Millions

(Unaudited)

September 30,
2019 December 31,
2018
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 120
$ 177

Accounts Receivable, net of allowances of $61 in 2019 and $63 in 2018 1,184
1,435

Tax Receivable —
242

Unbilled Revenues 161
240

Fuel 346
331

Materials and Supplies, net 579
571

Prepayments 249
94

Derivative Contracts 18
11

Regulatory Assets 352
389

Other 50
17

Total Current Assets 3,059
3,507

PROPERTY, PLANT AND EQUIPMENT 45,500
44,201

Less: Accumulated Depreciation and Amortization (10,093 ) (9,838 )
Net Property, Plant and Equipment 35,407
34,363

NONCURRENT ASSETS
Regulatory Assets 3,593
3,399

Operating Lease Right-of-Use Assets 285
—

Long-Term Investments 812
896

Nuclear Decommissioning Trust (NDT) Fund 2,135
1,878

Long-Term Tax Receivable 150
—

Long-Term Receivable of Variable Interest Entity (VIE) 639
624

Rabbi Trust Fund 246
224

Goodwill 16
16

Other Intangibles 188
143

Derivative Contracts 27
1

Other 258
275

Total Noncurrent Assets 8,349
7,456

TOTAL ASSETS $ 46,815
$ 45,326




	March 31, 2020			December 31, 2019
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents	$	799		$	147
Accounts Receivable, net of allowance of $77 in 2020 and $60 in 2019	1,265			1,313
Tax Receivable	2			21
Unbilled Revenues, net of allowance of $3 in 2020	185			239
Fuel	181			310
Materials and Supplies, net	595			587
Prepayments	124			79
Derivative Contracts	169			113
Regulatory Assets	337			351
Assets Held for Sale	28			30
Other	42			41
Total Current Assets	3,727			3,231
PROPERTY, PLANT AND EQUIPMENT	46,577			45,944
Less: Accumulated Depreciation and Amortization	(10,372		)	(10,100		)
Net Property, Plant and Equipment	36,205			35,844
NONCURRENT ASSETS
Regulatory Assets	3,634			3,677
Operating Lease Right-of-Use Assets	275			282
Long-Term Investments	786			812
Nuclear Decommissioning Trust (NDT) Fund	2,027			2,216
Long-Term Tax Receivable	150			150
Long-Term Receivable of Variable Interest Entity (VIE)	825			813
Rabbi Trust Fund	244			246
Other Intangibles	165			149
Derivative Contracts	69			24
Other	258			286
Total Noncurrent Assets	8,433			8,655
TOTAL ASSETS	$	48,365		$	47,730

See Notes to Condensed Consolidated Financial Statements.

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PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

CONDENSED CONSOLIDATED BALANCE SHEETS

Millions

(Unaudited)

September 30,
2019 December 31,
2018
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES
Long-Term Debt Due Within One Year $ 1,056
$ 1,294

Commercial Paper and Loans 346
1,016

Accounts Payable 1,244
1,451

Derivative Contracts 32
11

Accrued Interest 174
110

Accrued Taxes 37
26

Clean Energy Program 187
143

Obligation to Return Cash Collateral 123
136

Regulatory Liabilities 346
311

Other 522
437

Total Current Liabilities 4,067
4,935

NONCURRENT LIABILITIES
Deferred Income Taxes and Investment Tax Credits (ITC) 6,143
5,713

Regulatory Liabilities 2,972
3,221

Operating Leases 275
—

Asset Retirement Obligations 1,073
1,063

OPEB Costs 695
704

OPEB Costs of Servco 525
501

Accrued Pension Costs 819
791

Accrued Pension Costs of Servco 98
109

Environmental Costs 361
327

Derivative Contracts 5
4

Long-Term Accrued Taxes 165
181

Other 244
232

Total Noncurrent Liabilities 13,375
12,846

COMMITMENTS AND CONTINGENT LIABILITIES (See Note 11)

CAPITALIZATION

LONG-TERM DEBT 14,448
13,168

STOCKHOLDERS’ EQUITY

Common Stock, no par, authorized 1,000 shares; issued, 2019 and 2018—534 shares 4,989
4,980

Treasury Stock, at cost, 2019 and 2018—30 shares (832 ) (808 )
Retained Earnings 11,206
10,582

Accumulated Other Comprehensive Loss (438 ) (377 )
Total Stockholders’ Equity 14,925
14,377

Total Capitalization 29,373
27,545

TOTAL LIABILITIES AND CAPITALIZATION $ 46,815
$ 45,326




	March 31, 2020			December 31, 2019
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES
Long-Term Debt Due Within One Year	$	1,665		$	1,365
Commercial Paper and Loans	1,062			1,115
Accounts Payable	1,172			1,358
Derivative Contracts	40			36
Accrued Interest	176			116
Accrued Taxes	113			41
Clean Energy Program	85			143
Obligation to Return Cash Collateral	118			119
Regulatory Liabilities	174			234
Other	555			520
Total Current Liabilities	5,160			5,047
NONCURRENT LIABILITIES
Deferred Income Taxes and Investment Tax Credits (ITC)	6,321			6,256
Regulatory Liabilities	2,955			3,002
Operating Leases	266			273
Asset Retirement Obligations	1,172			1,087
OPEB Costs	750			734
OPEB Costs of Servco	634			626
Accrued Pension Costs	922			952
Accrued Pension Costs of Servco	170			171
Environmental Costs	338			349
Derivative Contracts	3			1
Long-Term Accrued Taxes	180			182
Other	205			218
Total Noncurrent Liabilities	13,916			13,851
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 11)
CAPITALIZATION
LONG-TERM DEBT	14,040			13,743
STOCKHOLDERS’ EQUITY
Common Stock, no par, authorized 1,000 shares; issued, 2020 and 2019— 534 shares	4,994			5,003
Treasury Stock, at cost, 2020 and 2019—30 shares	(868		)	(831		)
Retained Earnings	11,604			11,406
Accumulated Other Comprehensive Loss	(481		)	(489		)
Total Stockholders’ Equity	15,249			15,089
Total Capitalization	29,289			28,832
TOTAL LIABILITIES AND CAPITALIZATION	$	48,365		$	47,730

See Notes to Condensed Consolidated Financial Statements.

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PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Millions

(Unaudited)

Nine Months Ended
September 30,
2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 1,256
$ 1,239

Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:
Depreciation and Amortization 928
854

Amortization of Nuclear Fuel 137
143

Loss on Asset Dispositions

402
—

Emission Allowances and Renewable Energy Credit (REC) Compliance Accrual

80
74

Provision for Deferred Income Taxes (Other than Leases) and ITC 139
510

Non-Cash Employee Benefit Plan (Credits) Costs (26 ) 52

Leveraged Lease (Income) Loss, Adjusted for Rents Received and Deferred Taxes (8 ) (27 )
Net (Gain) Loss on Lease Investments 32
14

Net Realized and Unrealized (Gains) Losses on Energy Contracts and Other Derivatives (201 ) 78

Cost of Removal (87 ) (121 )
Net Change in Regulatory Assets and Liabilities 54
(35 )
Net (Gains) Losses and (Income) Expense from NDT Fund (195 ) (62 )
Net Change in Certain Current Assets and Liabilities:
          Tax Receivable 77
(98 )
          Accrued Taxes (11 ) (12 )
          Margin Deposit 301
(77 )
          Other Current Assets and Liabilities (155 ) 12

Employee Benefit Plan Funding and Related Payments (33 ) (85 )
Other 19
33

Net Cash Provided By (Used In) Operating Activities 2,709
2,492

CASH FLOWS FROM INVESTING ACTIVITIES

Additions to Property, Plant and Equipment (2,383 ) (3,028 )
Purchase of Emission Allowances and RECs (73 ) (111 )
Proceeds from Sales of Trust Investments 1,374
1,085

Purchases of Trust Investments (1,402 ) (1,100 )
Other 125
41

Net Cash Provided By (Used In) Investing Activities (2,359 ) (3,113 )
CASH FLOWS FROM FINANCING ACTIVITIES
Net Change in Commercial Paper and Loans (670 ) (123 )
Issuance of Long-Term Debt 1,900
2,050

Redemption of Long-Term Debt (850 ) (750 )
Cash Dividends Paid on Common Stock (713 ) (682 )
Other (60 ) (83 )
Net Cash Provided By (Used In) Financing Activities (393 ) 412

Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash (43 ) (209 )
Cash, Cash Equivalents and Restricted Cash at Beginning of Period 199
315

Cash, Cash Equivalents and Restricted Cash at End of Period $ 156
$ 106

Supplemental Disclosure of Cash Flow Information:
Income Taxes Paid (Received) $ 31
$ 64

Interest Paid, Net of Amounts Capitalized $ 345
$ 292

Accrued Property, Plant and Equipment Expenditures $ 514
$ 543




	Three Months Ended
	March 31,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	448		$	700
Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:
Depreciation and Amortization	324			314
Amortization of Nuclear Fuel	47			47
Emission Allowances and Renewable Energy Credit (REC) Compliance Accrual	33			24
Provision for Deferred Income Taxes (Other than Leases) and ITC	18			102
Non-Cash Employee Benefit Plan (Credits) Costs	(26		)	(3		)
Leveraged Lease (Income) Loss, Adjusted for Rents Received and Deferred Taxes	18			(1		)
Net Realized and Unrealized (Gains) Losses on Energy Contracts and Other Derivatives	(106		)	(109		)
Cost of Removal	(24		)	(30		)
Net Change in Regulatory Assets and Liabilities	(80		)	69
Net (Gains) Losses and (Income) Expense from NDT Fund	209			(137		)
Net Change in Certain Current Assets and Liabilities:
Tax Receivable	16			77
Accrued Taxes	71			26
Cash Collateral	55			190
Other Current Assets and Liabilities	120			(67		)
Employee Benefit Plan Funding and Related Payments	10			(14		)
Other	20			30
Net Cash Provided By (Used In) Operating Activities	1,153			1,218
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to Property, Plant and Equipment	(720		)	(795		)
Purchase of Emission Allowances and RECs	(29		)	(21		)
Proceeds from Sales of Trust Investments	609			497
Purchases of Trust Investments	(619		)	(507		)
Other	35			10
Net Cash Provided By (Used In) Investing Activities	(724		)	(816		)
CASH FLOWS FROM FINANCING ACTIVITIES
Net Change in Commercial Paper and Loans	(353		)	135
Proceeds from Short-Term Loan	300			—
Issuance of Long-Term Debt	600			—
Redemption of Long-Term Debt	—			(350		)
Cash Dividends Paid on Common Stock	(248		)	(238		)
Other	(62		)	(52		)
Net Cash Provided By (Used In) Financing Activities	237			(505		)
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	666			(103		)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	176			199
Cash, Cash Equivalents and Restricted Cash at End of Period	$	842		$	96
Supplemental Disclosure of Cash Flow Information:
Income Taxes Paid (Received)	$	(14	)	$	(76	)
Interest Paid, Net of Amounts Capitalized	$	91		$	91
Accrued Property, Plant and Equipment Expenditures	$	378		$	456

See Notes to Condensed Consolidated Financial Statements.

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PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Millions

(Unaudited)

Common
Stock

Treasury
Stock

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Shs. Amount Shs. Amount Total
Balance as of June 30, 2019 534
$ 4,980
(30 ) $ (835 ) $ 11,041
$ (432 ) $ 14,754

Net Income —
—
—
—
403
—
403

Other Comprehensive Income (Loss), net of tax (expense) benefit of $2 —
—
—
—
—
(6 ) (6 )
Comprehensive Income 397

Cash Dividends at $0.47 per share on Common Stock —
—
—
—
(238 ) —
(238 )
Other —
9
—
3
—
—
12

Balance as of September 30, 2019 534
$ 4,989
(30 ) $ (832 ) $ 11,206
$ (438 ) $ 14,925

Balance as of June 30, 2018 534
$ 4,955
(30 ) $ (813 ) $ 10,426
$ (410 ) $ 14,158

Net Income —
—
—
—
412
—
412

Other Comprehensive Income (Loss), net of tax (expense) benefit of $(1) —
—
—
—
—
3
3

Comprehensive Income 415

Cash Dividends at $0.45 per share on Common Stock —
—
—
—
(227 ) —
(227 )
Other —
11
—
2
—
—
13

Balance as of September 30, 2018 534
$ 4,966
(30 ) $ (811 ) $ 10,611
$ (407 ) $ 14,359

Common
Stock

Treasury
Stock

Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Shs. Amount Shs. Amount Total
Balance as of December 31, 2018 534
$ 4,980
(30 ) $ (808 ) $ 10,582
$ (377 ) $ 14,377

Net Income —
—
—
—
1,256
—
1,256

Cumulative Effect Adjustment to Reclassify Stranded Tax Effects Resulting from the Change in the Federal Corporate Income Tax Rate —
—
—
—
81
(81 ) —

Other Comprehensive Income (Loss), net of tax (expense) benefit of $(23) —
—
—
—
—
20
20

Comprehensive Income 1,276

Cash Dividends at $1.41 per share on Common Stock —
—
—
—
(713 ) —
(713 )
Other —
9
—
(24 ) —
—
(15 )
Balance as of September 30, 2019 534
$ 4,989
(30 ) $ (832 ) $ 11,206
$ (438 ) $ 14,925

Balance as of December 31, 2017 534
$ 4,961
(29 ) $ (763 ) $ 9,878
$ (229 ) $ 13,847

Net Income —
—
—
—
1,239
—
1,239

Cumulative Effect Adjustment to Reclassify Unrealized Net Gains on Equity Investments —
—
—
—
176
(176 ) —

Other Comprehensive Income (Loss), net of tax (expense) benefit of $7 —
—
—
—
—
(2 ) (2 )
Comprehensive Income 1,237

Cash Dividends at $1.35 per share on Common Stock —
—
—
—
(682 ) —
(682 )
Other —
5
(1 ) (48 ) —
—
(43 )
Balance as of September 30, 2018 534
$ 4,966
(30 ) $ (811 ) $ 10,611
$ (407 ) $ 14,359




	Common Stock				Treasury Stock					Retained Earnings			Accumulated Other Comprehensive Income (Loss)
	Shs.	Amount			Shs.		Amount			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance as of December 31, 2019	534	$	5,003		(30	)	$	(831	)	$	11,406		$	(489	)	$	15,089
Net Income	—	—			—		—			448			—			448
Other Comprehensive Income (Loss), net of tax (expense) benefit of $(6)	—	—			—		—			—			8			8
Comprehensive Income																456
Cumulative Effect Adjustment for Current Expected Credit Losses (CECL)	—	—			—		—			(2		)	—			(2		)
Cash Dividends at $0.49 per share on Common Stock	—	—			—		—			(248		)	—			(248		)
Other	—	(9		)	—		(37		)	—			—			(46		)
Balance as of March 31, 2020	534	$	4,994		(30	)	$	(868	)	$	11,604		$	(481	)	$	15,249

Balance as of December 31, 2018	534	$	4,980		(30	)	$	(808	)	$	10,582		$	(377	)	$	14,377
Net Income	—	—			—		—			700			—			700
Cumulative Effect Adjustment to Reclassify Stranded Tax Effects Resulting from the Change in the Federal Corporate Income Tax Rate	—	—			—		—			81			(81		)	—
Other Comprehensive Income (Loss), net of tax (expense) benefit of $(16)	—	—			—		—			—			17			17
Comprehensive Income																717
Cash Dividends at $0.47 per share on Common Stock	—	—			—		—			(238		)	—			(238		)
Other	—	(11		)	—		(31		)	—			—			(42		)
Balance as of March 31, 2019	534	$	4,969		(30	)	$	(839	)	$	11,125		$	(441	)	$	14,814

See Notes to Condensed Consolidated Financial Statements.

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PUBLIC SERVICE ELECTRIC AND GAS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Millions

(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
2019 2018 2019 2018
OPERATING REVENUES $ 1,604
$ 1,595
$ 5,018
$ 4,826

OPERATING EXPENSES
Energy Costs 618
593
2,094
1,863

Operation and Maintenance 388
389
1,165
1,133

Depreciation and Amortization 206
192
620
569

Total Operating Expenses 1,212
1,174
3,879
3,565

OPERATING INCOME 392
421
1,139
1,261

Net Gains (Losses) on Trust Investments —
—
1
—

Other Income (Deductions) 22
21
60
61

Non-Operating Pension and OPEB Credits (Costs) 46
14
105
44

Interest Expense (92 ) (83 ) (268 ) (246 )
INCOME BEFORE INCOME TAXES 368
373
1,037
1,120

Income Tax Benefit (Expense) (24 ) (95 ) (63 ) (292 )
NET INCOME $ 344
$ 278
$ 974
$ 828




	Three Months Ended
	March 31,
	2020			2019
OPERATING REVENUES	$	1,883		$	2,032
OPERATING EXPENSES
Energy Costs	708			947
Operation and Maintenance	386			408
Depreciation and Amortization	222			212
Total Operating Expenses	1,316			1,567
OPERATING INCOME	567			465
Net Gains (Losses) on Trust Investments	—			1
Other Income (Deductions)	27			19
Net Non-Operating Pension and OPEB Credits (Costs)	51			30
Interest Expense	(96		)	(87		)
INCOME BEFORE INCOME TAXES	549			428
Income Tax Benefit (Expense)	(109		)	(25		)
NET INCOME	$	440		$	403

See disclosures regarding Public Service Electric and Gas Company included in the Notes to Condensed Consolidated Financial Statements.

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PUBLIC SERVICE ELECTRIC AND GAS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Millions

(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
2019 2018 2019 2018
NET INCOME $ 344
$ 278
$ 974
$ 828

Unrealized Gains (Losses) on Available-for-Sale Securities, net of tax (expense) benefit of $0, $0, $(1) and $0 for the three and nine months ended 2019 and 2018, respectively 1
(1 ) 3
(1 )
COMPREHENSIVE INCOME $ 345
$ 277
$ 977
$ 827




	Three Months Ended
	March 31,
	2020		2019
NET INCOME	$	440	$	403
Unrealized Gains (Losses) on Available-for-Sale Securities, net of tax (expense) benefit of $0 for 2020 and 2019	—		1
COMPREHENSIVE INCOME	$	440	$	404

See disclosures regarding Public Service Electric and Gas Company included in the Notes to Condensed Consolidated Financial Statements.

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PUBLIC SERVICE ELECTRIC AND GAS COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

Millions

(Unaudited)

September 30,
2019 December 31,
2018
ASSETS
CURRENT ASSETS

Cash and Cash Equivalents $ 25
$ 39

Accounts Receivable, net of allowances of $61 in 2019 and $63 in 2018 852
879

Tax Receivable —
20

Accounts Receivable—Affiliated Companies 12
123

Unbilled Revenues 161
240

Materials and Supplies, net 213
196

Prepayments 123
10

Regulatory Assets 352
389

Other 39
11

Total Current Assets 1,777
1,907

PROPERTY, PLANT AND EQUIPMENT 33,298
31,633

Less: Accumulated Depreciation and Amortization (6,532 ) (6,277 )
Net Property, Plant and Equipment 26,766
25,356

NONCURRENT ASSETS
Regulatory Assets 3,593
3,399

Operating Lease Right-of-Use Assets 97
—

Long-Term Investments 251
270

Rabbi Trust Fund 48
45

Other 120
132

Total Noncurrent Assets 4,109
3,846

TOTAL ASSETS $ 32,652
$ 31,109




	March 31, 2020			December 31, 2019
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents	$	83		$	21
Accounts Receivable, net of allowance of $77 in 2020 and $60 in 2019	924			901
Accounts Receivable—Affiliated Companies	—			1
Unbilled Revenues, net of allowance of $3 in 2020	185			239
Materials and Supplies, net	213			213
Prepayments	23			35
Regulatory Assets	337			351
Other	34			28
Total Current Assets	1,799			1,789
PROPERTY, PLANT AND EQUIPMENT	34,419			33,900
Less: Accumulated Depreciation and Amortization	(6,748		)	(6,623		)
Net Property, Plant and Equipment	27,671			27,277
NONCURRENT ASSETS
Regulatory Assets	3,634			3,677
Operating Lease Right-of-Use Assets	97			98
Long-Term Investments	245			248
Rabbi Trust Fund	47			48
Other	134			129
Total Noncurrent Assets	4,157			4,200
TOTAL ASSETS	$	33,627		$	33,266

See disclosures regarding Public Service Electric and Gas Company included in the Notes to Condensed Consolidated Financial Statements.

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PUBLIC SERVICE ELECTRIC AND GAS COMPANY

CONDENSED CONSOLIDATED BALANCE SHEETS

Millions

(Unaudited)

September 30,
2019 December 31,
2018
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES
Long-Term Debt Due Within One Year $ 250
$ 500

Commercial Paper and Loans 10
272

Accounts Payable 633
713

Accounts Payable—Affiliated Companies 208
321

Accrued Interest 106
84

Clean Energy Program 187
143

Obligation to Return Cash Collateral 123
136

Regulatory Liabilities 346
311

Other 422
345

Total Current Liabilities 2,285
2,825

NONCURRENT LIABILITIES
Deferred Income Taxes and ITC 4,132
3,830

Regulatory Liabilities 2,972
3,221

Operating Leases 85
—

Asset Retirement Obligations 300
302

OPEB Costs 476
486

Accrued Pension Costs 420
400

Environmental Costs 299
268

Long-Term Accrued Taxes 103
69

Other 127
124

Total Noncurrent Liabilities 8,914
8,700

COMMITMENTS AND CONTINGENT LIABILITIES (See Note 11)

CAPITALIZATION
LONG-TERM DEBT 9,576
8,684

STOCKHOLDER’S EQUITY
Common Stock; 150 shares authorized; issued and outstanding, 2019 and 2018—132 shares 892
892

Contributed Capital 1,095
1,095

Basis Adjustment 986
986

Retained Earnings 8,902
7,928

Accumulated Other Comprehensive Income (Loss) 2
(1 )
Total Stockholder’s Equity 11,877
10,900

Total Capitalization 21,453
19,584

TOTAL LIABILITIES AND CAPITALIZATION $ 32,652
$ 31,109




	March 31, 2020		December 31, 2019
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES
Long-Term Debt Due Within One Year	$	559	$	259
Commercial Paper and Loans	—		362
Accounts Payable	518		639
Accounts Payable—Affiliated Companies	403		390
Accrued Interest	111		91
Clean Energy Program	85		143
Obligation to Return Cash Collateral	118		119
Regulatory Liabilities	174		234
Other	469		436
Total Current Liabilities	2,437		2,673
NONCURRENT LIABILITIES
Deferred Income Taxes and ITC	4,286		4,189
Regulatory Liabilities	2,955		3,002
Operating Leases	86		87
Asset Retirement Obligations	305		303
OPEB Costs	509		495
Accrued Pension Costs	481		501
Environmental Costs	288		294
Long-Term Accrued Taxes	114		115
Other	136		136
Total Noncurrent Liabilities	9,160		9,122
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 11)
CAPITALIZATION
LONG-TERM DEBT	9,864		9,568
STOCKHOLDER’S EQUITY
Common Stock; 150 shares authorized; issued and outstanding, 2020 and 2019—132 shares	892		892
Contributed Capital	1,095		1,095
Basis Adjustment	986		986
Retained Earnings	9,191		8,928
Accumulated Other Comprehensive Income	2		2
Total Stockholder’s Equity	12,166		11,903
Total Capitalization	22,030		21,471
TOTAL LIABILITIES AND CAPITALIZATION	$	33,627	$	33,266

See disclosures regarding Public Service Electric and Gas Company included in the Notes to Condensed Consolidated Financial Statements.

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PUBLIC SERVICE ELECTRIC AND GAS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Millions

(Unaudited)

Nine Months Ended
September 30,
2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 974
$ 828

Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:
Depreciation and Amortization 620
569

Provision for Deferred Income Taxes and ITC 10
330

Non-Cash Employee Benefit Plan (Credits) Costs (39 ) 28

Cost of Removal (87 ) (121 )
Net Change in Regulatory Assets and Liabilities 54
(35 )
Net Change in Certain Current Assets and Liabilities:

Accounts Receivable and Unbilled Revenues 105
184

Materials and Supplies (16 ) (3 )
Prepayments (97 ) (73 )
Accounts Payable (77 ) (7 )
Accounts Receivable/Payable—Affiliated Companies, net 8
(232 )
Other Current Assets and Liabilities 66
10

Employee Benefit Plan Funding and Related Payments (19 ) (73 )
Other (21 ) (8 )
Net Cash Provided By (Used In) Operating Activities 1,481
1,397

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to Property, Plant and Equipment (1,866 ) (2,213 )
Proceeds from Sales of Trust Investments 27
15

Purchases of Trust Investments (25 ) (17 )
Solar Loan Investments 2
(15 )
Other 7
6

Net Cash Provided By (Used In) Investing Activities (1,855 ) (2,224 )
CASH FLOWS FROM FINANCING ACTIVITIES
Net Change in Commercial Paper and Loans (262 ) 40

Issuance of Long-Term Debt 1,150
1,350

Redemption of Long-Term Debt (500 ) (750 )
Other (14 ) (14 )
Net Cash Provided By (Used In) Financing Activities 374
626

Net Increase (Decrease) In Cash, Cash Equivalents and Restricted Cash —
(201 )
Cash, Cash Equivalents and Restricted Cash at Beginning of Period 61
244

Cash, Cash Equivalents and Restricted Cash at End of Period $ 61
$ 43

Supplemental Disclosure of Cash Flow Information:
Income Taxes Paid (Received) $ (82 ) $ 60

Interest Paid, Net of Amounts Capitalized $ 240
$ 223

Accrued Property, Plant and Equipment Expenditures $ 348
$ 375




	Three Months Ended
	March 31,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	440		$	403
Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:
Depreciation and Amortization	222			212
Provision for Deferred Income Taxes and ITC	53			(12		)
Non-Cash Employee Benefit Plan (Credits) Costs	(26		)	(9		)
Cost of Removal	(24		)	(30		)
Net Change in Regulatory Assets and Liabilities	(80		)	69
Net Change in Certain Current Assets and Liabilities:
Accounts Receivable and Unbilled Revenues	20			(119		)
Materials and Supplies	—			(5		)
Prepayments	12			3
Accounts Payable	(45		)	(108		)
Accounts Receivable/Payable—Affiliated Companies, net	14			87
Other Current Assets and Liabilities	48			35
Employee Benefit Plan Funding and Related Payments	12			(10		)
Other	(11		)	4
Net Cash Provided By (Used In) Operating Activities	635			520
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to Property, Plant and Equipment	(620		)	(625		)
Proceeds from Sales of Trust Investments	10			10
Purchases of Trust Investments	(10		)	(9		)
Solar Loan Investments	2			(5		)
Other	2			2
Net Cash Provided By (Used In) Investing Activities	(616		)	(627		)
CASH FLOWS FROM FINANCING ACTIVITIES
Net Change in Commercial Paper and Loans	(362		)	92
Issuance of Long-Term Debt	600			—
Cash Dividend Paid	(175		)	—
Other	(6		)	—
Net Cash Provided By (Used In) Financing Activities	57			92
Net Increase (Decrease) In Cash, Cash Equivalents and Restricted Cash	76			(15		)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	50			61
Cash, Cash Equivalents and Restricted Cash at End of Period	$	126		$	46
Supplemental Disclosure of Cash Flow Information:
Income Taxes Paid (Received)	$	11		$	(94	)
Interest Paid, Net of Amounts Capitalized	$	74		$	73
Accrued Property, Plant and Equipment Expenditures	$	262		$	273

See disclosures regarding Public Service Electric and Gas Company included in the Notes to Condensed Consolidated Financial Statements.

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PUBLIC SERVICE ELECTRIC AND GAS COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY

Millions

(Unaudited)

Common Stock Contributed Capital Basis Adjustment Retained Earnings
Accumulated
Other
Comprehensive
Income (Loss)

Total
Balance as of June 30, 2019 $ 892
$ 1,095
$ 986
$ 8,558
$ 1
$ 11,532

Net Income —
—
—
344
—
344

Other Comprehensive Income (Loss), net of tax (expense) benefit of $0 —
—
—
—
1
1

Comprehensive Income 345

Balance as of September 30, 2019 $ 892
$ 1,095
$ 986
$ 8,902
$ 2
$ 11,877

Balance as of June 30, 2018 $ 892
$ 1,095
$ 986
$ 7,411
$ —
$ 10,384

Net Income —
—
—
278
—
278

Other Comprehensive Income (Loss), net of tax (expense) benefit of $0 —
—
—
—
(1 ) (1 )
Comprehensive Income 277

Balance as of September 30, 2018 $ 892
$ 1,095
$ 986
$ 7,689
$ (1 ) $ 10,661

Common Stock Contributed Capital Basis Adjustment Retained Earnings
Accumulated
Other
Comprehensive
Income (Loss)

Total
Balance as of December 31, 2018 $ 892
$ 1,095
$ 986
$ 7,928
$ (1 ) $ 10,900

Net Income —
—
—
974
—
974

Other Comprehensive Income (Loss), net of tax (expense) benefit of $(1) —
—
—
—
3
3

Comprehensive Income 977

Balance as of September 30, 2019 $ 892
$ 1,095
$ 986
$ 8,902
$ 2
$ 11,877

Balance as of December 31, 2017 $ 892
$ 1,095
$ 986
$ 6,861
$ —
$ 9,834

Net Income —
—
—
828
—
828

Other Comprehensive Income (Loss), net of tax (expense) benefit of $0 —
—
—
—
(1 ) (1 )
Comprehensive Income 827

Balance as of September 30, 2018 $ 892
$ 1,095
$ 986
$ 7,689
$ (1 ) $ 10,661




	Common Stock		Contributed Capital		Basis Adjustment		Retained Earnings			Accumulated Other Comprehensive Income (Loss)
	Common Stock		Contributed Capital		Basis Adjustment		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance as of December 31, 2019	$	892	$	1,095	$	986	$	8,928		$	2		$	11,903
Net Income	—		—		—		440			—			440
Other Comprehensive Income (Loss), net of tax (expense) benefit of $0	—		—		—		—			—			—
Comprehensive Income													440
Cumulative Effect Adjustment for CECL	—		—		—		(2		)	—			(2		)
Cash Dividend Paid	—		—		—		(175		)	—			(175		)
Balance as of March 31, 2020	$	892	$	1,095	$	986	$	9,191		$	2		$	12,166

Balance as of December 31, 2018	$	892	$	1,095	$	986	$	7,928		$	(1	)	$	10,900
Net Income	—		—		—		403			—			403
Other Comprehensive Income (Loss), net of tax (expense) benefit of $0	—		—		—		—			1			1
Comprehensive Income													404
Balance as of March 31, 2019	$	892	$	1,095	$	986	$	8,331		$	—		$	11,304

See disclosures regarding Public Service Electric and Gas Company included in the Notes to Condensed Consolidated Financial Statements.

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PSEG POWER LLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Millions

(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
2019 2018 2019 2018
OPERATING REVENUES $ 771
$ 868
$ 3,270
$ 3,038

OPERATING EXPENSES
Energy Costs 359
431
1,556
1,550

Operation and Maintenance 233
231
736
745

Depreciation and Amortization 93
94
282
260

Loss on Asset Dispositions 7
—
402
—

Total Operating Expenses 692
756
2,976
2,555

OPERATING INCOME 79
112
294
483

Income from Equity Method Investments 3
5
10
12

Net Gains (Losses) on Trust Investments (4 ) 44
160
30

Other Income (Deductions) 15
14
43
38

Non-Operating Pension and OPEB Credits (Costs) 8
4
14
11

Interest Expense (34 ) (29 ) (85 ) (47 )
INCOME BEFORE INCOME TAXES 67
150
436
527

Income Tax Benefit (Expense) (14 ) (25 ) (127 ) (127 )
NET INCOME $ 53
$ 125
$ 309
$ 400




	Three Months Ended
	March 31,
	2020			2019
OPERATING REVENUES	$	1,220		$	1,416
OPERATING EXPENSES
Energy Costs	676			786
Operation and Maintenance	241			235
Depreciation and Amortization	94			94
Total Operating Expenses	1,011			1,115
OPERATING INCOME	209			301
Income from Equity Method Investments	3			2
Net Gains (Losses) on Trust Investments	(220		)	126
Other Income (Deductions)	(23		)	13
Net Non-Operating Pension and OPEB Credits (Costs)	8			3
Interest Expense	(34		)	(25		)
INCOME (LOSS) BEFORE INCOME TAXES	(57		)	420
Income Tax Benefit (Expense)	70			(124		)
NET INCOME	$	13		$	296

See disclosures regarding PSEG Power LLC included in the Notes to Condensed Consolidated Financial Statements.

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PSEG POWER LLC

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Millions

(Unaudited)

Three Months Ended Nine Months Ended
September 30, September 30,
2019 2018 2019 2018
NET INCOME $ 53
$ 125
$ 309
$ 400

Other Comprehensive Income (Loss), net of tax
Unrealized Gains (Losses) on Available-for-Sale Securities, net of tax (expense) benefit of $(4), $2, $(26) and $13 for the three and nine months ended 2019 and 2018, respectively 7
(4 ) 38
(19 )
Pension/OPEB adjustment, net of tax (expense) benefit of $5, $(3), $0 and $(8) for the three and nine months ended 2019 and 2018, respectively (12 ) 7
(9 ) 19

Other Comprehensive Income (Loss), net of tax (5 ) 3
29
—

COMPREHENSIVE INCOME $ 48
$ 128
$ 338
$ 400




	Three Months Ended
	March 31,
	2020		2019
NET INCOME	$	13	$	296
Other Comprehensive Income (Loss), net of tax
Unrealized Gains (Losses) on Available-for-Sale Securities, net of tax (expense) benefit of $(4) and $(11) for 2020 and 2019, respectively	7		16
Pension/OPEB adjustment, net of tax (expense) benefit of $(1) and $(4) for 2020 and 2019, respectively	2		—
Other Comprehensive Income (Loss), net of tax	9		16
COMPREHENSIVE INCOME	$	22	$	312

See disclosures regarding PSEG Power LLC included in the Notes to Condensed Consolidated Financial Statements.

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PSEG POWER LLC

CONDENSED CONSOLIDATED BALANCE SHEETS

Millions

(Unaudited)

September 30,
2019 December 31,
2018
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents $ 80
$ 22

Accounts Receivable 279
477

Accounts Receivable—Affiliated Companies 233
274

Short-Term Loan to Affiliate 86
—

Fuel 346
331

Materials and Supplies, net 364
373

Prepayments 19
14

Derivative Contracts 18
11

Other 6
5

Total Current Assets 1,431
1,507

PROPERTY, PLANT AND EQUIPMENT 11,853
12,224

Less: Accumulated Depreciation and Amortization (3,358 ) (3,382 )
Net Property, Plant and Equipment 8,495
8,842

NONCURRENT ASSETS
Operating Lease Right-of-Use Assets 72
—

Long-Term Investments 67
86

NDT Fund 2,135
1,878

Rabbi Trust Fund 62
56

Goodwill 16
16

Other Intangibles 188
143

Derivative Contracts 27
1

Other 60
65

Total Noncurrent Assets 2,627
2,245

TOTAL ASSETS $ 12,553
$ 12,594




	March 31, 2020			December 31, 2019
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents	$	14		$	21
Accounts Receivable	284			309
Accounts Receivable—Affiliated Companies	359			408
Short-Term Loan to Affiliate	514			149
Fuel	181			310
Materials and Supplies, net	379			372
Prepayments	16			11
Derivative Contracts	169			113
Assets Held for Sale	28			28
Other	3			5
Total Current Assets	1,947			1,726
PROPERTY, PLANT AND EQUIPMENT	11,820			11,699
Less: Accumulated Depreciation and Amortization	(3,413		)	(3,273		)
Net Property, Plant and Equipment	8,407			8,426
NONCURRENT ASSETS
Operating Lease Right-of-Use Assets	69			71
Long-Term Investments	68			66
NDT Fund	2,027			2,216
Rabbi Trust Fund	61			62
Other Intangibles	165			149
Derivative Contracts	69			24
Other	34			65
Total Noncurrent Assets	2,493			2,653
TOTAL ASSETS	$	12,847		$	12,805

See disclosures regarding PSEG Power LLC included in the Notes to Condensed Consolidated Financial Statements.

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PSEG POWER LLC

CONDENSED CONSOLIDATED BALANCE SHEETS

Millions

(Unaudited)

September 30,
2019 December 31,
2018
LIABILITIES AND MEMBER’S EQUITY
CURRENT LIABILITIES
Long-Term Debt Due Within One Year $ 406
$ 44

Accounts Payable 448
498

Accounts Payable—Affiliated Companies 20
16

Short-Term Loan from Affiliate —
193

Derivative Contracts 26
11

Accrued Interest 49
21

Other 77
59

Total Current Liabilities 1,026
842

NONCURRENT LIABILITIES
Deferred Income Taxes and ITC 1,803
1,619

Operating Leases 63
—

Asset Retirement Obligations 770
758

OPEB Costs 177
176

Accrued Pension Costs 252
246

Derivative Contracts 4
4

Long-Term Accrued Taxes 101
76

Other 151
122

Total Noncurrent Liabilities 3,321
3,001

COMMITMENTS AND CONTINGENT LIABILITIES (See Note 11)

LONG-TERM DEBT 2,433
2,791

MEMBER’S EQUITY

Contributed Capital 2,214
2,214

Basis Adjustment (986 ) (986 )
Retained Earnings 4,904
5,051

Accumulated Other Comprehensive Loss (359 ) (319 )
Total Member’s Equity 5,773
5,960

TOTAL LIABILITIES AND MEMBER’S EQUITY $ 12,553
$ 12,594




	March 31, 2020			December 31, 2019
LIABILITIES AND MEMBER’S EQUITY
CURRENT LIABILITIES
Long-Term Debt Due Within One Year	$	406		$	406
Accounts Payable	470			505
Accounts Payable—Affiliated Companies	24			5
Derivative Contracts	30			31
Accrued Interest	49			21
Other	92			91
Total Current Liabilities	1,071			1,059
NONCURRENT LIABILITIES
Deferred Income Taxes and ITC	1,829			1,876
Operating Leases	60			62
Asset Retirement Obligations	864			781
OPEB Costs	193			192
Accrued Pension Costs	277			284
Derivative Contracts	3			1
Long-Term Accrued Taxes	113			115
Other	90			111
Total Noncurrent Liabilities	3,429			3,422
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 11)
LONG-TERM DEBT	2,435			2,434
MEMBER’S EQUITY
Contributed Capital	2,214			2,214
Basis Adjustment	(986		)	(986		)
Retained Earnings	5,076			5,063
Accumulated Other Comprehensive Loss	(392		)	(401		)
Total Member’s Equity	5,912			5,890
TOTAL LIABILITIES AND MEMBER’S EQUITY	$	12,847		$	12,805

See disclosures regarding PSEG Power LLC included in the Notes to Condensed Consolidated Financial Statements.

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PSEG POWER LLC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Millions

(Unaudited)

Nine Months Ended
September 30,
2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 309
$ 400

Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:
Depreciation and Amortization 282
260

Amortization of Nuclear Fuel 137
143

Loss on Asset Dispositions 402
—

Emission Allowances and REC Compliance Accrual 80
74

Provision for Deferred Income Taxes and ITC 157
177

Non-Cash Employee Benefit Plan (Credits) Costs 7
17

Interest Accretion on Asset Retirement Obligation 30
31

Net Realized and Unrealized (Gains) Losses on Energy Contracts and Other Derivatives (201 ) 78

Net (Gains) Losses and (Income) Expense from NDT Fund (195 ) (62 )
Net Change in Certain Current Assets and Liabilities:
Fuel, Materials and Supplies (29 ) (50 )
Margin Deposit 301
(77 )
Accounts Receivable 48
42

Accounts Payable (62 ) (22 )
Accounts Receivable/Payable—Affiliated Companies, net 80
65

Other Current Assets and Liabilities 20
(11 )
Employee Benefit Plan Funding and Related Payments (9 ) (7 )
Other 5
(53 )
Net Cash Provided By (Used In) Operating Activities 1,362
1,005

CASH FLOWS FROM INVESTING ACTIVITIES
Additions to Property, Plant and Equipment (507 ) (800 )
Purchase of Emission Allowances and RECs (73 ) (111 )
Proceeds from Sales of Trust Investments 1,277
1,024

Purchases of Trust Investments (1,306 ) (1,037 )
Short-Term Loan to Affiliate (86 ) (119 )
Other 110
33

Net Cash Provided By (Used In) Investing Activities (585 ) (1,010 )
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of Long-Term Debt —
700

Cash Dividend Paid (525 ) (400 )
Short-Term Loan from Affiliate (193 ) (281 )
Other (1 ) (5 )
Net Cash Provided By (Used In) Financing Activities (719 ) 14

Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash 58
9

Cash, Cash Equivalents and Restricted Cash at Beginning of Period 22
32

Cash, Cash Equivalents and Restricted Cash at End of Period $ 80
$ 41

Supplemental Disclosure of Cash Flow Information:
Income Taxes Paid (Received) $ (37 ) $ 31

Interest Paid, Net of Amounts Capitalized $ 60
$ 32

Accrued Property, Plant and Equipment Expenditures $ 166
$ 168




	Three Months Ended
	March 31,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	13		$	296
Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:
Depreciation and Amortization	94			94
Amortization of Nuclear Fuel	47			47
Emission Allowances and REC Compliance Accrual	33			24
Provision for Deferred Income Taxes and ITC	(52		)	121
Non-Cash Employee Benefit Plan (Credits) Costs	—			4
Interest Accretion on Asset Retirement Obligation	10			10
Net Realized and Unrealized (Gains) Losses on Energy Contracts and Other Derivatives	(106		)	(109		)
Net (Gains) Losses and (Income) Expense from NDT Fund	209			(137		)
Net Change in Certain Current Assets and Liabilities:
Fuel, Materials and Supplies	102			189
Cash Collateral	55			190
Accounts Receivable	20			34
Accounts Payable	(44		)	(57		)
Accounts Receivable/Payable—Affiliated Companies, net	68			(22		)
Other Current Assets and Liabilities	21			37
Employee Benefit Plan Funding and Related Payments	(1		)	(3		)
Other	15			8
Net Cash Provided By (Used In) Operating Activities	484			726
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to Property, Plant and Equipment	(97		)	(167		)
Purchase of Emission Allowances and RECs	(29		)	(21		)
Proceeds from Sales of Trust Investments	569			463
Purchases of Trust Investments	(579		)	(475		)
Short-Term Loan to Affiliate	(365		)	(87		)
Other	11			11
Net Cash Provided By (Used In) Investing Activities	(490		)	(276		)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Dividend Paid	—			(250		)
Short-Term Loan from Affiliate	—			(193		)
Other	(1		)	(1		)
Net Cash Provided By (Used In) Financing Activities	(1		)	(444		)
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash	(7		)	6
Cash, Cash Equivalents and Restricted Cash at Beginning of Period	21			22
Cash, Cash Equivalents and Restricted Cash at End of Period	$	14		$	28
Supplemental Disclosure of Cash Flow Information:
Income Taxes Paid (Received)	$	(16	)	$	11
Interest Paid, Net of Amounts Capitalized	$	7		$	6
Accrued Property, Plant and Equipment Expenditures	$	116		$	183

See disclosures regarding PSEG Power LLC included in the Notes to ~~the~~ Condensed Consolidated Financial Statements.

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PSEG POWER LLC

CONDENSED CONSOLIDATED STATEMENTS OF MEMBER’S EQUITY

Millions

(Unaudited)

Contributed Capital Basis Adjustment
Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Total
Balance as of June 30, 2019 $ 2,214
$ (986 ) $ 5,126
$ (354 ) $ 6,000

Net Income —
—
53
—
53

Other Comprehensive Income (Loss), net of tax (expense) benefit of $1 —
—
—
(5 ) (5 )
Comprehensive Income 48

Cash Dividends Paid —
—
(275 ) —
(275 )
Balance as of September 30, 2019 $ 2,214
$ (986 ) $ 4,904
$ (359 ) $ 5,773

Balance as of June 30, 2018 $ 2,214
$ (986 ) $ 5,161
$ (350 ) $ 6,039

Net Income —
—
125
—
125

Other Comprehensive Income (Loss), net of tax (expense) benefit of $(1) —
—
—
3
3

Comprehensive Income 128

Cash Dividends Paid —
—
(200 ) —
(200 )
Balance as of September 30, 2018 $ 2,214
$ (986 ) $ 5,086
$ (347 ) $ 5,967

Contributed Capital Basis Adjustment
Retained
Earnings

Accumulated
Other
Comprehensive
Income (Loss)

Total
Balance as of December 31, 2018 $ 2,214
$ (986 ) $ 5,051
$ (319 ) $ 5,960

Net Income —
—
309
—
309

Cumulative Effect Adjustment to Reclassify Stranded Tax Effects Resulting from the Change in the Federal Corporate Income Tax Rate —
—
69
(69 ) —

Other Comprehensive Income (Loss), net of tax (expense) benefit of $(26) —
—
—
29
29

Comprehensive Income 338

Cash Dividends Paid —
—
(525 ) —
(525 )
Balance as of September 30, 2019 $ 2,214
$ (986 ) $ 4,904
$ (359 ) $ 5,773

Balance as of December 31, 2017 $ 2,214
$ (986 ) $ 4,911
$ (172 ) $ 5,967

Net Income —
—
400
—
400

Cumulative Effect Adjustment to Reclassify Unrealized Net Gains on Equity Investments —
—
175
(175 ) —

Other Comprehensive Income (Loss), net of tax (expense) benefit of $5 —
—
—
—
—

Comprehensive Income 400

Cash Dividends Paid —
—
(400 ) —
(400 )
Balance as of September 30, 2018 $ 2,214
$ (986 ) $ 5,086
$ (347 ) $ 5,967




	Contributed Capital		Basis Adjustment			Retained Earnings			Accumulated Other Comprehensive Income (Loss)
	Contributed Capital		Basis Adjustment			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance as of December 31, 2019	$	2,214	$	(986	)	$	5,063		$	(401	)	$	5,890
Net Income	—		—			13			—			13
Other Comprehensive Income (Loss), net of tax (expense) benefit of $(5)	—		—			—			9			9
Comprehensive Income												22
Balance as of March 31, 2020	$	2,214	$	(986	)	$	5,076		$	(392	)	$	5,912

Balance as of December 31, 2018	$	2,214	$	(986	)	$	5,051		$	(319	)	$	5,960
Net Income	—		—			296			—			296
Cumulative Effect Adjustment to Reclassify Stranded Tax Effects Resulting from the Change in the Federal Corporate Income Tax Rate	—		—			69			(69		)	—
Other Comprehensive Income (Loss), net of tax (expense) benefit of $(15)	—		—			—			16			16
Comprehensive Income												312
Cash Dividends Paid	—		—			(250		)	—			(250		)
Balance as of March 31, 2019	$	2,214	$	(986	)	$	5,166		$	(372	)	$	6,022

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

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~~Note 21. Guarantees of Debt~~

PSEG Power’s Senior Notes are fully and unconditionally and jointly and severally guaranteed by its subsidiaries, PSEG Fossil LLC, PSEG Nuclear LLC and PSEG Energy Resources & Trade LLC. The following tables present condensed financial information for the guarantor subsidiaries, as well as PSEG Power’s non-guarantor subsidiaries, as of September 30, 2019 and December 31, 2018 and for the three months and nine months ended September 30, 2019 and 2018.

PSEG Power
Guarantor
Subsidiaries

Other
Subsidiaries

Consolidating
Adjustments
Total
Millions
Three Months Ended September 30, 2019
Operating Revenues $ —
$ 748
$ 78
$ (55 ) $ 771

Operating Expenses —
672
75
(55 ) 692

Operating Income (Loss) —
76
3
—
79

Equity Earnings (Losses) of Subsidiaries 69
(10 ) 3
(59 ) 3

Net Gains (Losses) on Trust Investments 1
(5 ) —
—
(4 )
Other Income (Deductions) 42
53
—
(80 ) 15

Non-Operating Pension and OPEB Credits (Costs) —
7
1
—
8

Interest Expense (71 ) (27 ) (16 ) 80
(34 )
Income Tax Benefit (Expense) 12
(30 ) 4
—
(14 )
Net Income (Loss) $ 53
$ 64
$ (5 ) $ (59 ) $ 53

Comprehensive Income (Loss) $ 48
$ 70
$ (5 ) $ (65 ) $ 48

Nine Months Ended September 30, 2019
Operating Revenues $ —
$ 3,212
$ 200
$ (142 ) $ 3,270

Operating Expenses 3
2,914
201
(142 ) 2,976

Operating Income (Loss) (3 ) 298
(1 ) —
294

Equity Earnings (Losses) of Subsidiaries 363
(28 ) 10
(335 ) 10

Net Gains (Losses) on Trust Investments 2
158
—
—
160

Other Income (Deductions) 134
166
—
(257 ) 43

Non-Operating Pension and OPEB Credits (Costs) —
13
1
—
14

Interest Expense (224 ) (82 ) (36 ) 257
(85 )
Income Tax Benefit (Expense) 37
(175 ) 11
—
(127 )
Net Income (Loss) $ 309
$ 350
$ (15 ) $ (335 ) $ 309

Comprehensive Income (Loss) $ 338
$ 384
$ (15 ) $ (369 ) $ 338

Nine Months Ended September 30, 2019

Net Cash Provided By (Used In)
   Operating Activities
$ 171
$ 1,345
$ 75
$ (229 ) $ 1,362

Net Cash Provided By (Used In)
   Investing Activities
$ 154
$ (708 ) $ (253 ) $ 222
$ (585 )

Net Cash Provided By (Used In)
   Financing Activities
$ (256 ) $ (640 ) $ 170
$ 7
$ (719 )

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

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PSEG Power
Guarantor
Subsidiaries

Other
Subsidiaries

Consolidating
Adjustments
Total
Millions
Three Months Ended September 30, 2018
Operating Revenues $ —
$ 849
$ 59
$ (40 ) $ 868

Operating Expenses 2
733
61
(40 ) 756

Operating Income (Loss) (2 ) 116
(2 ) —
112

Equity Earnings (Losses) of Subsidiaries 117
(7 ) 5
(110 ) 5

Net Gains (Losses) on Trust Investments —
45
(1 ) —
44

Other Income (Deductions) 40
45
—
(71 ) 14

Non-Operating Pension and OPEB Credits (Costs) —
4
—
—
4

Interest Expense (65 ) (28 ) (7 ) 71
(29 )
Income Tax Benefit (Expense) 35
(64 ) 4
—
(25 )
Net Income (Loss) $ 125
$ 111
$ (1 ) $ (110 ) $ 125

Comprehensive Income (Loss) $ 128
$ 107
$ (1 ) $ (106 ) $ 128

Nine Months Ended September 30, 2018
Operating Revenues $ —
$ 2,982
$ 161
$ (105 ) $ 3,038

Operating Expenses 5
2,493
162
(105 ) 2,555

Operating Income (Loss) (5 ) 489
(1 ) —
483

Equity Earnings (Losses) of Subsidiaries 406
(14 ) 12
(392 ) 12

Net Gains (Losses) on Trust Investments —
31
(1 ) —
30

Other Income (Deductions) 116
118
—
(196 ) 38

Non-Operating Pension and OPEB Credits (Costs) —
10
1
—
11

Interest Expense (161 ) (64 ) (18 ) 196
(47 )
Income Tax Benefit (Expense) 44
(179 ) 8
—
(127 )
Net Income (Loss) $ 400
$ 391
$ 1
$ (392 ) $ 400

Comprehensive Income (Loss) $ 400
$ 374
$ 1
$ (375 ) $ 400

Nine Months Ended September 30, 2018

Net Cash Provided By (Used In)
   Operating Activities
$ (255 ) $ 1,169
$ (26 ) $ 117
$ 1,005

Net Cash Provided By (Used In)
   Investing Activities
$ (417 ) $ (1,132 ) $ (290 ) $ 829
$ (1,010 )

Net Cash Provided By (Used In)
   Financing Activities
$ 672
$ (32 ) $ 320
$ (946 ) $ 14

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(UNAUDITED)~~

~~table of contents~~

PSEG Power
Guarantor
Subsidiaries

Other
Subsidiaries

Consolidating
Adjustments
Total
Millions
As of September 30, 2019
Current Assets $ 4,142
$ 1,459
$ 327
$ (4,497 ) $ 1,431

Property, Plant and Equipment, net 44
4,484
3,967
—
8,495

Investment in Subsidiaries 5,184
1,078
—
(6,262 ) —

Noncurrent Assets 289
2,526
116
(304 ) 2,627

Total Assets $ 9,659
$ 9,547
$ 4,410
$ (11,063 ) $ 12,553

Current Liabilities $ 903
$ 2,467
$ 2,153
$ (4,497 ) $ 1,026

Noncurrent Liabilities 550
2,216
859
(304 ) 3,321

Long-Term Debt 2,433
—
—
—
2,433

Member’s Equity 5,773
4,864
1,398
(6,262 ) 5,773

Total Liabilities and Member’s Equity $ 9,659
$ 9,547
$ 4,410
$ (11,063 ) $ 12,553

As of December 31, 2018
Current Assets $ 4,317
$ 1,479
$ 304
$ (4,593 ) $ 1,507

Property, Plant and Equipment, net 49
4,971
3,822
—
8,842

Investment in Subsidiaries 5,062
1,107
—
(6,169 ) —

Noncurrent Assets 273
2,109
101
(238 ) 2,245

Total Assets $ 9,701
$ 9,666
$ 4,227
$ (11,000 ) $ 12,594

Current Liabilities $ 437
$ 2,971
$ 2,027
$ (4,593 ) $ 842

Noncurrent Liabilities 513
1,996
730
(238 ) 3,001

Long-Term Debt 2,791
—
—
—
2,791

Member’s Equity 5,960
4,699
1,470
(6,169 ) 5,960

Total Liabilities and Member’s Equity $ 9,701
$ 9,666
$ 4,227
$ (11,000 ) $ 12,594

~~table of contents~~


ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)

This combined MD&A is separately filed by Public Service Enterprise Group Incorporated (PSEG), Public Service Electric and Gas Company (PSE&G) and PSEG Power LLC (PSEG Power). Information contained herein relating to any individual company is filed by such company on its own behalf. PSE&G and PSEG Power each make representations only as to itself and make no representations whatsoever as to any other company.

PSEG’s business consists of two reportable segments, our principal direct wholly owned subsidiaries, which are:

•

PSE&G—which is a public utility engaged principally in the transmission of electricity and distribution of electricity and natural gas in certain areas of New Jersey. PSE&G is subject to regulation by the New Jersey Board of Public Utilities (BPU) and the Federal Energy Regulatory Commission (FERC). PSE&G also invests in regulated solar generation projects and energy efficiency and related programs in New Jersey, which are regulated by the BPU, and

•

PSEG Power—which is a multi-regional energy supply company that 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 primarily in the Northeast and Mid-Atlantic United States through its principal direct wholly owned subsidiaries. In addition, PSEG Power owns and operates solar generation in various states. PSEG Power’s subsidiaries are subject to regulation by FERC, the Nuclear Regulatory Commission (NRC), the Environmental Protection Agency (EPA) and the states in which they operate.

PSEG’s other direct wholly owned subsidiaries are: PSEG Long Island LLC (PSEG LI), which operates the Long Island Power Authority’s (LIPA) transmission and distribution (T&D) system under an Operations Services Agreement; PSEG Energy Holdings L.L.C. (Energy Holdings), which primarily has investments in leveraged leases; and PSEG Services Corporation (Services), which provides certain management, administrative and general services to PSEG and its subsidiaries at cost.

Our business discussion in Part I, Item 1. Business of our ~~2018~~2019 Annual Report on 10-K (Form 10-K) provides a review of the regions and markets where we operate and compete, as well as our strategy for conducting our businesses within these markets, focusing on operational excellence, financial strength and making disciplined investments. Our risk factor discussion in Part I, Item 1A. Risk Factors of Form 10-K provides information about factors that could have a material adverse impact on our businesses. The following supplements that discussion and the discussion included in the Executive Overview of ~~2018~~2019 and Future Outlook provided in Item 7 in our Form 10-K by describing significant events and business developments that have occurred during ~~2019~~2020 and changes to the key factors that we expect may drive our future performance. The following discussion refers to the Condensed Consolidated Financial Statements (Statements) and the Related Notes to Condensed Consolidated Financial Statements (Notes). This discussion should be read in conjunction with such Statements, Notes and the Form 10-K.

EXECUTIVE OVERVIEW OF ~~2019~~2020 AND FUTURE OUTLOOK

Our business plan is designed to achieve growth while managing the risks associated with regulatory changes, fluctuating commodity prices and changes in customer demand. Over the past few years, our investments have altered our business mix to reflect a higher percentage of earnings contribution by PSE&G.

PSE&G, PSEG Power and PSEG LI are providing essential services during the ongoing coronavirus (COVID-19) pandemic. We have implemented a comprehensive set of enhanced safety actions to help protect our employees, customers and communities, and we will continue to closely monitor developments and adjust as needed to ensure that we continue to provide reliable service while protecting the safety and health of our workforce and the communities we serve. We continue to be guided by the recommendations of health authorities at the federal, state and local levels. 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. Extensive cleaning protocols are also in place. We have suspended nonessential work activities, while continuing to respond to customer outages and requests for emergency service as well as infrastructure maintenance and upgrades that have been deemed essential. The ongoing coronavirus pandemic has not had a material impact on our results of operations, financial condition or cash flows for the quarter ended March 31, 2020. However, 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 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. While we currently cannot estimate the potential

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impact to our results of operations, financial condition and cash flows, this MD&A includes a discussion of potential effects of a prolonged outbreak.

PSE&G

At PSE&G, our focus is on enhancing reliability and resiliency of our T&D system, meeting customer expectations and supporting public policy objectives by investing capital in T&D infrastructure and clean energy programs. ~~Over~~For the ~~past few years, our investments have altered our business mix~~five-year period ending December 31, 2024, PSE&G expects to reflect a higher percentage of earnings contribution by PSE&G. Based upon the settlement of the Energy Strong Program II (ES II) noted below, PSE&G has narrowed its five-year capital expenditure range to $12invest between $11.5 billion to ~~$14.5~~$15 billion, resulting in an expected compound annual rate base growth of ~~7.5%~~6.5% to ~~8.5%~~8%. These ranges are driven by certain unapproved investment programs, including the Clean Energy Future (CEF) program and incremental reliability and resiliency investments anticipated in the 2024 timeframe that we intend to seek approval for under the third phase of existing infrastructure programs. See below for a description of the CEF program.

In 2019, we commenced our BPU-approved Gas System Modernization Program II (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 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 ~~leak~~leakage reduction targets.

~~In June 2018, we filed for~~Also in 2019, the BPU approved our ESEnergy Strong II ~~a proposed five-year $2.5 billion~~Program (ES II), an $842 million program to harden, modernize and improve the resiliency of our electric and gas distribution systems. ~~In September 2019, the BPU approved an $842 million~~This program ~~for gas and electric projects which will begin~~began in the fourth quarter of 2019 and is expected to be completed atby the end of 2023. ~~As part of the settlement agreement, approximately~~Approximately $692 million of the program will be recovered through periodic rate recovery filings,

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with the balance to be recovered in our next distribution base rate ~~case, which is required to be filed no later than December 2023.~~case.

In October 2018, we filed our proposed ~~Clean Energy Future (CEF)~~CEF program with the BPU, a six-year estimated $3.5 billion investment covering four programs; (i) an Energy Efficiency (EE) program totaling $2.5 billion of investment designed to achieve energy efficiency targets required under New Jersey’s Clean Energy law; (ii) an Electric Vehicle (EV) infrastructure program; (iii) an Energy Storage (ES) program, which was submitted to the BPU together with the EV infrastructure program in a single filing; and (iv) an Energy Cloud (EC) program which will include installing approximately two million electric smart meters and associated infrastructure. The BPU is reviewing the CEF-EE program concurrently with its efforts to complete a stakeholder process to define key terms and policy parameters regarding returns, amortization and lost revenue recovery related to implementing ~~provisions of~~energy efficiency programs statewide. Additionally, the ~~Clean Energy Act related to energy efficiency. The BPU is also addressing stakeholder input as it works to finalize New Jersey’s~~State released its Energy Master Plan ~~currently scheduled to be released~~(EMP) in ~~December 2019. As a result, the CEF-EE filing remains pending before the BPU. In September 2019,~~January 2020, which is supportive of energy efficiency but gives the BPU ~~approved a settlement~~discretion in implementation between state-and utility-operated programs. The EMP is also supportive of EVs, ES, and advanced metering infrastructure (AMI). In February 2020, PSE&G reached an agreement with ~~the~~ parties in the CEF-EE ~~that extends~~matter which was approved by the ~~matter into March 2020, and that authorizes, in the interim, an additional $27 million investment for PSE&G~~BPU to ~~continue delivering four of its~~(a) extend several existing EE programs for six months, with an additional ~~year.~~

$111 million investment over the course of the programs, and (b) extend the timeline for review of the CEF-EE filing through September 2020. The BPU has issued procedural schedules for the CEF-EC and CEF-EV/ES investment programs, both providing for evidentiary hearings in the fourth quarter of 2020. In ~~November 2018,~~April 2020, the New Jersey Division of Rate Counsel ~~(Rate Counsel)~~ filed a motion to dismiss the ~~CEF-EC~~electric vehicles portion of PSE&G’s proposed CEF-EV/ES filing on ~~the basis that~~regulatory and statutory grounds; PSE&G intends to oppose Rate Counsel’s motion. In April 2020, PSE&G filed with the BPU ~~announced a moratorium~~an update of its CEF-EC petition to revise certain assumptions, including an updated deployment schedule based on ~~electric distribution companies’ advanced meter infrastructure programs. In December 2018, Rate Counsel filed a motion to stay~~ the CEF-EV/ES filing, arguing that the BPU should conclude other regulatory proceedings addressing EVs and ES, including the new Energy Master Plan and initiatives required by the Clean Energy Act, before it rules on PSE&G’s program. We opposed Rate Counsel’s motions, asking for the BPU to permit these filings to proceed. There is no timetable for the BPU to decide on Rate Counsel’s motions. We continue to pursue procedural ~~schedules to initiate the BPU’s review of our proposed CEF-EV/ES and CEF-EC programs.~~schedule.

We also continue to invest in transmission infrastructure in order to (i) maintain and enhance system integrity and grid reliability, grid security and safety, (ii) address an aging transmission infrastructure, (iii) leverage technology to improve the operation of the system, (iv) reduce transmission constraints, (v) meet growing demand and (vi) meet environmental requirements and standards set by various regulatory bodies. Our planned capital spending for transmission in ~~2019-2021~~2020-2022 is ~~$3.6~~$2.8 billion.

As noted above, PSE&G has been deemed by the State of 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. However, a prolonged outbreak and the associated economic impacts, which could extend beyond the duration of the pandemic, could impact our ability to obtain necessary permits and approvals and could lead to shortages of necessary materials, supplies and labor. 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 our CEF program that is currently before the BPU.

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PSE&G has experienced a reduction in demand from its commercial and industrial (C&I) customers and adverse changes to residential, C&I payment patterns, which would be expected to continue during a prolonged coronavirus pandemic. In addition, PSE&G has informed both its residential customers and state regulators that all non-safety related service disconnections for non-payment will be temporarily suspended. Further, the implementation of actions to protect customers and employees, including physical distancing, mandatory personal protective equipment, and realignment of work crews, may have an adverse impact on operations and maintenance costs. While the impact on our results of operations, financial condition and cash flows for the quarter ended March 31, 2020 have 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. PSE&G’s electric distribution bad debt expense is recoverable through its Societal Benefits Clause (SBC) mechanism. Gas distribution bad debt expense in excess of what is included in base rates could adversely impact PSE&G’s utility results from operations.

PSEG Power

At PSEG Power, we strive to improve performance and ~~reduce~~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. PSEG Power continues to move its fleet toward improved efficiency and believes that its recently completed investment program enhances its competitive position with the addition of efficient, clean, reliable combined cycle gas turbine capacity. In the first three months of 2020, our natural gas and nuclear units generated 5.1 and 8.0 terawatt hours and operated at a capacity factor of 44.9% and 94.9%, respectively. 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. PSEG Power’s hedging practices and ability to capitalize on market opportunities help it to balance some of the volatility of the merchant power business. ~~Approximately 75%~~More than 70% of PSEG Power’s expected gross margin in ~~2019~~2020 relates to hedging of our energy margin, our expected revenues from the capacity market mechanisms, Zero Emission Certificate (ZEC) revenues that commenced in April 2019 and certain ancillary service payments such as reactive power.

~~We commenced commercial operations~~As discussed further below under “Wholesale Power Market Design,” FERC issued an order establishing new rules for PJM’s capacity market, extending the PJM Minimum Offer Price Rule (MOPR) to include both new and existing resources that receive or are entitled to receive certain out-of-market payments, with certain exemptions. PSEG Power’s New Jersey nuclear plants that receive ZEC payments will be subject to the new MOPR. In addition, as a result of ~~Keys Energy Center (Keys)~~FERC’s finding that default procurement auctions such as BGS can also confer subsidies, it is possible that other PSEG units could be subject to the MOPR. Based on PJM’s March 2020 compliance filings, if PJM’s proposals for nuclear unit floor prices are accepted by FERC, the floor prices are not expected to prevent the nuclear units receiving ZECs, as well as PSEG Power’s Peach Bottom units if the MOPR applies to it as a result of payments from BGS auctions, from clearing in the next Reliability Pricing Model (RPM) auction. Further, if any gas-fired units are deemed to be subject to the MOPR, they are also not expected to be affected. However, FERC has not yet acted on this filing and ~~Sewaren 7~~the impact in ~~mid-2018. Upon the start of commercial operation of Bridgeport Harbor Station Unit 5 (BH5) in June 2019,~~ future RPM auctions may differ.

PSEG Power completed its 1,800 MW combined cycle gas turbine construction ~~program.~~program with the addition of the Keys Energy Center (Keys) in Maryland and Sewaren 7 in New Jersey in 2018 and Bridgeport Harbor Station Unit 5 (BH5) in Connecticut in 2019. These additions to our fleet ~~both expand~~expanded our geographic diversity, ~~and adjust~~adjusted our fuel mix and ~~enhance~~enhanced the environmental profile and overall efficiency of PSEG Power’s generation fleet.

In the first quarter of 2020, as a result of the ongoing coronavirus pandemic, PSEG Power has seen 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. A prolonged unavailability of employees and contractors due to the ongoing coronavirus pandemic could materially and adversely impact our ability to operate our generation facilities, which would have a material impact on our business, results of operations and cash flows.

Operational Excellence

We emphasize operational performance while developing opportunities in both our competitive and regulated businesses. Flexibility in our generating fleet has allowed us to take advantage of opportunities in a rapidly evolving market as we remain diligent in managing costs. In the first ~~nine~~three months of ~~2019,~~2020, our

utility continued its efforts to control costs while maintaining strong operational performance ~~including ranking~~and has implemented protocols to ensure that we are providing essential services to our customers during the ongoing coronavirus pandemic in ~~the top quartile among large utilities in the East in JD Power’s 2019 Electric Utility Residential Customer Satisfaction Study,~~

~~diverse fuel mix~~a safe and ~~dispatch flexibility allowed us to generate approximately 43 terawatt hours while addressing fuel availability and price volatility,~~reliable manner, and

~~total nuclear fleet achieved a~~efficient combined cycle gas units benefited our capacity factor ~~of 91.0%.~~across the natural gas fleet and were readily available to operate when needed, all while diligently adhering to our cost control programs.

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Financial Strength

Our financial strength is predicated on a solid balance sheet, positive operating cash flow and reasonable risk-adjusted returns on increased investment. Our financial position remained strong during the first ~~nine~~three months of ~~2019~~2020 as we

maintained sufficient liquidity,

maintained solid investment grade credit ratings, and

increased our indicative annual dividend for ~~2019~~2020 to ~~$1.88~~$1.96 per share.

In March 2020, PSEG entered into a $300 million, 364-day term loan agreement and in April 2020 it entered into two 364-day term loan agreements for $200 million and $300 million. These term loans provide an additional source of liquidity for our operations as we continue to monitor the impact of the ongoing coronavirus pandemic on the volatility and availability of the capital and commercial paper markets.

We expect to be able to fund our planned capital requirements, as described in Liquidity and Capital Resources, and the impacts of the Tax Cuts and Jobs Act of 2017 (Tax Act) without the issuance of new equity. ~~For additional information on the impacts of the Tax Act, see Tax Legislation below.~~

Financial Results

As a result of the settlement of PSE&G’s distribution base rate proceeding in October 2018, with new rates effective November 1, 2018, PSE&G’s overall annual revenues were reduced by approximately $13 million, comprised of a $212 million increase in base revenues, including recovery of deferred storm costs, offset by the return of tax benefits of approximately $225 million. The tax benefits include the flowback to customers of excess accumulated deferred income taxes resulting from the reduction of the federal income tax rates provided in the Tax Act as well as the accumulated deferred income taxes from previously realized tax repair deductions and tax benefits from future tax repair deductions as realized.

PSE&G also filed a revised 2019 Annual Transmission Formula Rate Update to include the refund of the approved excess deferred income tax benefits. The revised 2019 Annual Transmission Formula Rate, as filed with FERC in January 2019, decreases overall annual transmission revenues by approximately $54 million, subject to true-up.

The results for PSEG, PSE&G and PSEG Power for the three months ended March 31, 2020 and ~~nine months ended September 30,~~ 2019 ~~and 2018~~ are presented as follows:

Three Months Ended Nine Months Ended
September 30, September 30,
Earnings (Losses) 2019 2018 2019 2018
Millions
PSE&G $ 344
$ 278
$ 974
$ 828

PSEG Power (A) 53
125
309
400

Other (B) 6
9
(27 ) 11

PSEG Net Income $ 403
$ 412
$ 1,256
$ 1,239

PSEG Net Income Per Share (Diluted) $ 0.79
$ 0.81
$ 2.47
$ 2.44




	Three Months Ended
	March 31,
Earnings (Losses)	2020			2019
	Millions
PSE&G	$	440		$	403
PSEG Power	13			296
Other (A)	(5		)	1
PSEG Net Income	$	448		$	700

PSEG Net Income Per Share (Diluted)	$	0.88		$	1.38


(A)	Includes an after-tax loss of $286 million in the nine months ended September 30, 2019 related to the sale of PSEG Power’s ownership interests in the Keystone and Conemaugh fossil generation plants. See Item 1. Note 4. Early Plant Retirements/Asset Dispositions for additional information.


~~(B)~~	Other includes after-tax activities at the parent company, PSEG LI, and Energy Holdings as well as intercompany eliminations. Energy Holdings recorded after-tax charges related to its investments in leveraged leases of $32 million and $14 million in the nine months ended September 30, 2019 and 2018, respectively. See Item 1. Note 8. Financing Receivables for additional information.

PSEG Power’s results above include the Nuclear Decommissioning Trust (NDT) Fund activity and the impacts of non-trading commodity mark-to-market (MTM) activity, which consist of the financial impact from positions with future delivery dates.

The variances in our Net Income attributable to changes related to the NDT Fund and MTM are shown in the following table:

Three Months Ended Nine Months Ended
September 30, September 30,
2019 2018 2019 2018
Millions, after tax
NDT Fund Income (Expense) (A) (B) $ (4 ) $ 27
$ 97
$ 16

Non-Trading MTM Gains (Losses) (C) $ (88 ) $ (96 ) $ 140
$ (59 )

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	Three Months Ended
	March 31,
	2020			2019
	Millions, after tax
NDT Fund Income (Expense) (A) (B)	$	(135	)	$	76
Non-Trading MTM Gains (Losses) (C)	$	77		$	76

(A)

NDT Fund Income (Expense) includes gains and losses on NDT securities which are recorded in Net Gains (Losses) on Trust Investments. See Item 1. Note 9. Trust Investments for additional information. NDT Fund Income (Expense) also includes interest and dividend income and other costs related to the NDT Fund recorded in Other Income (Deductions), interest accretion expense on PSEG Power’s nuclear Asset Retirement Obligation (ARO) recorded in Operation and Maintenance (O&M) Expense and the depreciation related to the ARO asset recorded in Depreciation and Amortization (D&A) Expense.


(B)	Net of tax (expense) benefit of $0$84 million and ~~$(16)~~$(51) million for the three months ended March 31, 2020 and ~~$(67) million and $(12) million for the nine months ended September 30,~~ 2019, ~~and 2018,~~ respectively.


(C)	Net of tax (expense) benefit of ~~$33~~$(30) million ~~and $37 million~~ for each of the three months ended March 31, 2020 and ~~$(55) million and $23 million for the nine months ended September 30,~~ 2019, ~~and 2018,~~ respectively.

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Our $9$252 million decrease in Net Income for the three months ended ~~September 30, 2019 was driven largely by~~


•	~~unrealizedlosses in 2019 as compared to unrealized gains in 2018 on equity securities on the NDT Fund at PSEG Power,~~

~~lower volumes of electricity sold at lower average prices in the PJM region and under the BGS contracts as well as a decrease in capacity revenue at PSEG Power, and~~

an income tax benefit in 2018 resulting from the reserve for uncertain tax positions in connection with a nuclear carryback claim and closure of the 2011 and 2012 federal tax audit at PSEG Power, partially offset by

higher earnings due to investments in T&D programs and the favorable impact of new rates effective November 1, 2018 as a result of the BPU’s approval of our distribution base rate proceeding at PSE&G,

~~the favorable impact of retiree medical plan benefit changes implemented in 2019, and~~

~~revenue from Zero Emissions Certificates (ZECs) starting in mid-April 2019 at PSEG Power.~~

~~Our $17 million increase in Net Income for the nine months ended September 30, 2019~~March 31, 2020 was driven primarily by

~~MTM gains~~net losses in ~~2019~~2020 as compared to ~~MTM losses in 2018 at PSEG Power,~~

net gains ~~in 2019~~ on equity securities in the NDT Fund at PSEG Power,

~~the favorable impact~~generally lower volumes of ~~retiree medical plan benefit changes implemented in 2019,~~electricity and gas sold at lower average prices, reduced capacity revenues and a lower of cost or market (LOCOM) adjustment of oil inventory at PSEG Power,

partially offset by higher earnings due to investments in T&D programs ~~and the favorable impact of new rates effective November 1, 2018 as a result of the BPU’s approval of our distribution base rate proceeding~~ at PSE&G, and

~~revenue from ZECs starting~~ZEC revenues that started in ~~mid-April~~April 2019 ~~at PSEG Power, largely offset by~~

and a ~~loss related to the sale of PSEG Power’s ownership interests~~net decrease in the ~~Keystone~~volume and ~~Conemaugh~~average prices of gas purchases and generation ~~plants in 2019.~~fuels.

The greater emphasis on capital spending in recent years for projects on which we receive contemporaneous returns at PSE&G has yielded strong results, which when combined with the cash flow generated by PSEG Power, has allowed us to ~~increase our dividend annually. These actions to~~ meet customer needs and address market conditions and investor expectations, ~~reflect~~reflecting our long-term approach to managing our company. We continue our focus on operational excellence, financial strength and disciplined investment. These guiding principles have provided the base from which we have been able to execute our strategic initiatives.

Disciplined Investment

We utilize rigorous criteria and consider a number of external factors, including the economic impact of the ongoing coronavirus pandemic, when ~~deploying capital~~determining how and ~~seek~~when to ~~invest~~efficiently deploy capital. We principally explore opportunities for investment in areas that complement our existing business and provide reasonable risk-adjusted returns. ~~These areas include upgrading our energy infrastructure and improving our environmental footprint to align with public policy objectives.~~ In the first ~~nine~~three months of ~~2019,~~2020, we

made additional investments in T&D infrastructure projects on time and on budget,

continued to execute our Energy Efficiency and other existing BPU-approved utility programs, and

~~completed construction and placed into service our BH5 generation project, the final stage of our~~continued to evaluate a potential investment ~~program~~ in ~~combined cycle gas turbines.~~offshore wind.

Regulatory, Legislative and Other Developments

In our pursuit of operational excellence, financial strength and disciplined investment, we closely monitor and engage with stakeholders on significant regulatory and legislative developments. Transmission planning rules and wholesale power market

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design are of particular importance to our results and we continue to advocate for policies and rules that promote fair and efficient electricity markets. For additional information about regulatory, legislative and other developments that may affect us, see Part I, Item 1. Business—Regulatory Issues in our Form 10-K and Item 5. Other Information in ~~our Quarterly Reports on Form 10-Q for the periods ending March 31, 2019 and June 30, 2019 (first and second quarter 2019 10-Qs) and~~ this Quarterly Report on Form 10-Q.

Transmission ~~Planning~~

There are several matters pending before FERC that may impact the allocation of costs associated with transmission projects, including those being constructed by PSE&G. Regardless of how these proceedings are resolved, PSE&G’s ability to recover the costs of these projects will not be affected. However, the result of these proceedings could ultimately impact the amount of costs borne by customers in New Jersey. In addition, as a BGS supplier, PSEG Power provides services that include specified transmission costs. If the allocation of the costs associated with the transmission projects were to increase these BGS-related transmission costs, BGS suppliers would be entitled to recovery, subject to BPU approval. We do not believe that these matters will have a material effectRate Proceedings and Return on ~~PSEG Power’s business or results of operations.~~

Several complaints have been filed and several remain pending at FERC against transmission owners around the country, challenging those transmission owners’ base return on equity (ROE). Certain of those complaints have resulted in decisions and others have been settled, resulting in reductions of those transmission owners’ base ROEs. The results of these other proceedings could set precedents for other transmission owners with formula rates in place, including PSE&G.Equity

In ~~October 2018,~~March 2020, FERC issued a Notice of Proposed Rulemaking (NOPR) proposing to revise its electric transmission incentive policy to encourage the development of infrastructure needed to ensure grid reliability and reduce congestion to lower the cost of power for consumers. The NOPR proposes to shift the focus in granting incentives from an approach based on the risks and challenges faced by a project to an approach based on economic and reliability benefits to consumers. The NOPR proposes to retain several existing incentives, increase the 50 basis point adder for Regional Transmission Organization (RTO) participation to 100 basis points and provide incentives for transmission technologies that enhance reliability, efficiency and capacity.

In November 2019, FERC issued an order establishing a new ~~framework~~Return on Equity (ROE) policy for ~~determining whether a company’s~~reviewing existing transmission ROEs. FERC applied the methodology outlined in the new policy to two complaints filed against the Midcontinent Independent System Operator (MISO) transmission owners and found that the MISO transmission owners’ ROE iswas unjust and ~~unreasonable. FERC proposes to rely on financial models to establish a composite zone of reasonableness~~unreasonable and directed that ~~will be used to determine whether an ROE complaint should be dismissed. If FERC determines that an ROE for a company is not just and reasonable, it intends to reset~~ the ROE ~~based on averaging~~be lowered. Other ROE complaints have been pending before FERC regarding the ~~results of various financial models.~~ISO New England Inc. Transmission Owners and utilities in other jurisdictions. In parallel to these proceedings, over the past few years, several companies have negotiated settlements that have resulted in reduced ROEs. We continue to analyze the potential impact of these methodologies and cannot predict the outcome of ongoing ROE proceedings.

In ~~March 2019,~~addition, the New Jersey EMP anticipates the BPU will increasingly engage in transmission ROE and cost allocation proceedings at FERC ~~issued two Notices of Inquiry (NOI) that could affect a company’s ROE: (i) an NOI seeking comment on improvements~~ to ~~FERC’s electric transmission incentives policy~~address costs to ensure that it appropriately encourages the development of the infrastructure needed to ensure grid reliability and reduce congestion to lower the cost of power for consumers (Incentive NOI), and (ii) an NOI seeking comments whether, and if so how, FERC should change its policies for establishing just and reasonable ROEs. The Incentive NOI is intended to examine whether existing incentives, such as the 50 basis point adder for Regional Transmission Organization membership, shouldNew Jersey ratepayers. We continue to work with the BPU on these matters. An adverse change to PSE&G’s base transmission ROE or ROE incentives could be ~~granted and whether new incentives should be established.~~material.

Wholesale Power Market Design

In June 2018, FERC issued an order finding that PJM’s current capacity market is not just and reasonable because it enabled state-supported resources to bid below their costs which resulted in suppressed clearing prices. In particular, FERC found that nuclear generating units that receive zero emission certificate payments were of concern. Depending on the outcome of this matter, our generating stations could be impacted.

~~In late July~~December 2019, FERC issued an order ~~directing~~establishing new rules for PJM’s capacity market, extending the PJM Minimum Offer Price Rule (MOPR) to ~~delay its~~include both new and existing resources that receive or are entitled to receive certain out-of-market payments, with certain exemptions.

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that other PSEG units could be subject to the MOPR. Based on PJM’s March 2020 compliance filings, if PJM’s proposals for nuclear unit floor prices are accepted by FERC, the floor prices are not expected to prevent the nuclear units receiving ZECs, as well as PSEG Power’s Peach Bottom units if the MOPR applies to it as a result of payments from BGS auctions, from clearing in the next RPM auction. Further, if any gas-fired units are deemed to be subject to the MOPR, they are also not expected to be affected. However, FERC has not yet acted on this filing and the impact on future RPM auctions may differ.

States that have clean energy programs designed to achieve public policy goals that support such resources as solar, offshore wind and nuclear, are not prevented from pursuing those programs by the expanded MOPR and could choose to utilize the existing fixed resource requirement (FRR) approach authorized under the PJM tariff. Subsidized units that cannot clear in a RPM capacity auction until it can approve replacement auction rules and provide greater certainty to the market than conducting the auction under existing rules. FERC also denied PJM’s request to clarify that any just and reasonable replacement auction rules ultimately adopted would operate prospectively. FERC held that it would not rule prematurely on the issue of an appropriate remedy prior to rendering a determination on the meritsbecause of the ~~replacement auction rules. Since one~~expanded MOPR could still count as capacity resources to a load serving entity using the FRR approach. In a March 2020 order, the BPU initiated an investigation to examine whether New Jersey can achieve its long-term clean energy and environmental objectives under the current resource adequacy procurement paradigm and potential alternatives. One of the ~~Commissioners is recused from this matter, FERC does not have a quorum to issue an order. We do not anticipate an order in this matter until~~areas of inquiry concerns the ~~earlier~~potential creation of ~~either the end of Commissioner Glick’s recusal on November 29, 2019 or when James Danly is confirmed by the Senate and sworn in as a Commissioner.~~ FRR service areas within New Jersey. See Part II, Item 5. Other Information.

We cannot predict ~~when FERC will issue replacement auction rules and~~ what impact ~~those~~these rules or any measures taken by the BPU will have on the capacity market or our generating stations.

In ~~October 2018, PJM filed with FERC to revise the shape of the Variable Resource Requirement (VRR) curve that~~addition, we cannot predict whether there will be implemented in the next capacity auction. The VRR curve is the administratively determined demand curve that serves as one of the key elements for establishing the amount of generation capacity to be procured in the auction. PJM’s proposed tariff revisions will result in lower Cost of New Entry values as comparedchallenges to the ~~currently effective VRR curve. PSEG protested PJM’s proposal~~FERC order and, if so, the impact of such challenges on the ~~grounds~~MOPR and other capacity market rules.

In January 2020, New Jersey rejoined the Regional Greenhouse Gas Initiative (RGGI). As a result, generating plants operating in New Jersey, including those owned by PSEG Power, that ~~it would result~~emit carbon dioxide (CO₂) emissions will be required to procure credits for each ton they emit. In response to RGGI, PJM initiated a process in ~~understated prices for capacity relative~~2019 to investigate the development of a carbon pricing mechanism that may mitigate the environmental and financial distortions that could occur when emissions “leak” from non-participating states to the ~~cost~~RGGI states. If the process leads to a market solution, it could have a material impact on the value of ~~constructing a new reference~~PSEG Power’s generating unit and will result in prices that are unjust and unreasonable. In April 2019, FERC issued an Order approving PJM’s filing without modification and these changes are expected to be in place for the 2022/2023 PJM capacity auction, which has been delayed until FERC approves new auction rules. In mid-May 2019, PSEG filed a request for rehearing which remains pending before FERC.fleet.

Environmental Regulation

We are subject to liability under environmental laws for the costs of remediating environmental contamination of property now

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or formerly owned by us and of property contaminated by hazardous substances that we generated. In particular, the historic operations of PSEG companies and the operations of numerous other companies along the Passaic and Hackensack Rivers are alleged by Federal and State agencies to have discharged substantial contamination into the Passaic River/Newark Bay Complex in violation of various statutes. We are also currently involved in a number of proceedings relating to sites where other hazardous substances may have been discharged and may be subject to additional proceedings in the future, and the costs of any such remediation efforts could be material.

For further information regarding the matters described above, as well as other matters that may impact our financial condition and results of operations, see Item 1. Note 11. Commitments and Contingent Liabilities.

Nuclear

In April 2019, PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants were awarded ZECs by the BPU. Pursuant to a process established by the BPU, ZECs are purchased from selected nuclear plants and recovered through a non-bypassable distribution charge in the amount of $0.004 per kilowatt-hour used (which is equivalent to approximately $10 per megawatt hour ~~(MWh)~~generated in payments to selected nuclear plants (ZEC payment)). These nuclear plants are expected to receive ZEC revenue for approximately three years, through May 2022, and will be obligated to maintain operations during that period, subject to exceptions specified in the ZEC legislation. PSEG Power ~~anticipates it~~has and will continue to recognize revenue monthly as the nuclear plants generate electricity and satisfy their performance obligations. ~~The ZEC legislation requires nuclear plants to reapply for any subsequent three year periods.~~ The ZEC payment may be adjusted by the BPU (a) at any time to offset environmental or fuel diversity payments that a selected nuclear plant may receive from another source or (b) at certain times specified in the ZEC legislation if the BPU determines that the purposes of the ZEC legislation can be achieved through a reduced charge that will nonetheless be sufficient to achieve the state’s air quality and other environmental objectives by preventing the retirement of nuclear plants. The BPU’s decision awarding ZECs has been appealed by the New Jersey Division of Rate Counsel. PSEG cannot predict the outcome of this matter. The BPU is expected to issue an order in May 2020 outlining the process for applying for ZECs for the next three-year eligibility period and is expected to issue a decision regarding any ZEC applications and any change in the amount of future ZEC payments by April 2021. PSEG Power is not aware of any changes that would materially affect its ability to establish eligibility to be awarded ZECs under the application requirements that resulted in the award of ZECs to Salem 1, Salem 2 and Hope Creek in April 2019. However, PSEG Power cannot predict whether the BPU will change the application requirements or whether other plants besides Salem 1, Salem 2 and Hope Creek will apply for ZECs in the future. In the event that (i) the ZEC program is overturned or otherwise materially adversely modified through legal process, (ii) the terms and conditions of the subsequent period under the ZEC program, including the amount of ZEC payments that may be awarded, materially differ from those of the current ZEC period, or (iii) any of the Salem 1, Salem 2 and Hope Creek plants is not awarded ZEC payments by the BPU and does not otherwise experience a material financial change, PSEG Power will take all necessary steps to retire all of these plants subsequent to the

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initial ZEC period at or prior to a scheduled refueling outage. Alternatively, if all of the Salem 1, Salem 2 and Hope Creek plants are selected to continue to receive ZEC payments but the financial condition of the plants ~~may nonetheless be~~is materially adversely impacted by ~~potential~~changes in commodity prices, FERC’s changes to the capacity market construct ~~being considered by FERC~~ (absent sufficient capacity revenues provided under a program approved by the BPU in accordance with a ~~FERC authorized~~FERC-authorized capacity mechanism), ~~and,~~or, in the case of the Salem nuclear plants, decisions by the EPA and state environmental regulators regarding the implementation of Section 316(b) of the Clean Water Act and related state regulations, or other ~~factors. Absent a material financial change, these adverse impacts could still result in~~factors, PSEG Power ~~taking~~would still take all necessary steps to retire all of these ~~plants following the end of the initial three year term of the ZECs program.~~plants. Retirement of these plants would result in a material adverse impact on PSEG’s and PSEG Power’s financial results.

~~Fossil~~

In September 2019, PSEG Power completed the sale of its ownership interests in the Keystone and Conemaugh generation plants and related assets and liabilities. PSEG Power recorded a pre-tax loss on disposition of approximately $400 million in the second quarter of 2019 as the sale price was less than book value.

California Solar Facilities

As part of its solar production portfolio, PSEG Power owns and operates two California-based solar facilities with an aggregate capacity of approximately 30 MW direct current whose output is sold to Pacific Gas and Electric Company (PG&E) under power purchase agreements (PPAs) with twenty year terms. The net book value of these solar facilities was approximately ~~$56~~$54 million as of ~~September 30, 2019.~~March 31, 2020. In January 2019, PG&E and its parent company PG&E Corporation filed for Chapter 11 bankruptcy ~~protection.~~protection; however, they continue to perform under the current PPAs. PSEG Power cannot predict the ultimate outcome that this bankruptcy proceeding will have on our ability to collect all of the revenues from these facilities due under the PPAs; however, any adverse changes to the terms of PSEG Power’s PPAs as a result of this bankruptcy proceeding could result in the future impairment of these assets in amounts up to their current net book value.

Offshore Wind

In June 2019, the BPU selected Ørsted US Offshore Wind’s Ocean Wind project as the winning bid in New Jersey’s initial solicitation for 1,100 MW of offshore wind generation. In ~~connection with the Ocean Wind bid, PSEG agreed to provide energy management services and the potential lease of land for use in project development. In~~ October 2019, PSEG exercised its option on Ørsted’s Ocean Wind project, resulting in a period of exclusive negotiation for PSEG to potentially acquire a 25% equity interest in the project, subject to negotiations toward a joint venture agreement, advanced due diligence and any required regulatory approvals.

Leveraged Leases

In December 2018, NRG REMA, LLC emerged from its in-court proceeding under Chapter 11 of the Bankruptcy Code. As a result of the restructuring, the remaining deferred tax liabilities related to the Keystone and Conemaugh lease investments were reclassified to current tax liabilities. PSEG will realize the remaining tax liability related to the restructuring of approximately $85 million with the filing of the consolidated federal income tax return by the end of 2019.

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~~Additional facilities~~Facilities in our leveraged lease portfolio include the Shawville, Joliet and Powerton generating facilities. Converted natural gas units such as Shawville and Joliet may have higher operating costs and fuel consumption, as well as longer start-up times, compared to newer combined cycle gas units. Powerton is a coal-fired generating facility in Illinois.

Each of these three facilities may not be as economically competitive as newer combined cycle gas units and could continue to be adversely impacted by the same economic conditions experienced by other less efficient natural gas and coal generation facilities, which could require ~~Energy Holdings to write down~~additional write-downs of the residual ~~value~~values of ~~the~~Energy Holdings’ leveraged lease receivables associated with these facilities.

~~During~~Tax Legislation

In March 2020, the ~~second quarter of 2019, Energy Holdings completed its annual review of estimated residual values embedded in~~federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted. We continue to assess the ~~leveraged leases. The outcome indicated that the updated residual value estimate~~impact of the ~~coal-fired Powerton lease was lower than~~tax aspects of the ~~recorded residual value~~CARES Act on our results of operations and cash flow. We expect that a prolonged coronavirus pandemic, the ~~decline was deemed to be other than temporary as~~tax provisions of the CARES Act and any future coronavirus-related federal or state legislation could have a result of expected future adverse market conditions. As a result, a pre-tax write-down of $58 million was reflected in Operating Revenues in the quarter ended June 30, 2019, calculated by comparing the gross investment in the leases before and after the revised residual estimates.

~~Tax Legislation~~

~~The Tax Act, among other things, decreased the statutory U.S. corporate income~~material impact on our effective tax rate ~~from a maximum of 35% to 21%, effective January 1, 2018,~~ and ~~made certain changes to the bonus depreciation and interest disallowance rules.~~cash tax position.

~~In November 2018, the IRS issued proposed regulations addressing the interest disallowance rules contained in the Tax Act.~~ For non-regulated businesses, ~~these~~the Tax Act enacted rules that set a cap on the amount of interest that can be deducted in a given year. Any amount that is disallowed can be carried forward indefinitely. For 2018 and 2019, ~~PSEG and PSEG Power expect that~~the tax deductibility of a portion of ~~their~~PSEG’s and PSEG Power’s interest ~~will~~was disallowed but is expected to be ~~disallowed in the current period but~~ realized in future periods. However, certain aspects of the ~~proposed regulations~~law are unclear. Therefore, we recorded taxes based on our interpretation of the relevant statute. The CARES Act favorably increased the limitation on the amount of interest that can deducted in 2019 and 2020. While this will not impact 2019, the increased limitation will allow a portion of the previously disallowed amounts to reduce PSEG’s and PSEG Power’s 2020 taxable income. Amounts recorded under the Tax Act ~~including but not limited to~~and the CARES Act, such as depreciation and interest disallowance, are subject to change based on several factors, including but not limited to, the ~~IRS~~Internal Revenue Service and state taxing authorities issuing additional guidance and/or further clarification. Any further guidance or clarification could impact PSEG’s, PSE&G’s and PSEG Power’s financial statements. For additional information, see Item 1. Note 16. Income Taxes.

In September 2019 the IRS released final and additional proposed regulations regarding the application of tax depreciation rules as amended by the Tax Act. We do not believe the final or proposed regulations materially impact our application of the rules.

In July 2018, the State of New Jersey made changes to its income tax laws, including imposing a temporary surtax of 2.5% effective January 1, 2018 and 2019 and 1.5% in 2020 and 2021, as well as requiring corporate taxpayers to file in a combined reporting group as defined under New Jersey law starting in 2019. Both provisions include an exemption for public utilities. We believe PSE&G meets the definition of a public utility and, therefore, will not be impacted by the temporary surtax or be included in the combined reporting group. There are certain aspects of the law that are not clear. We ~~expect these new provisions to unfavorably affect our non-utility business. In accordance with accounting principles generally accepted in~~anticipate the United States for income taxes, deferred taxes are required to be measured at the enacted tax rate expected to apply to taxable income in the periods in which the deferred taxes are expected to settle. The newly enactedState of New Jersey ~~tax legislation did not have a material~~will be issuing clarifying guidance regarding combined reporting rules. Any further guidance or clarification could impact on PSEG’s ~~deferred income tax balance.~~and PSEG Power’s financial statements.

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Future Outlook

For more than a century, our mission has been to provide universal access to an around-the-clock supply of reliable, affordable power. Building on this mission, we believe in a future where customers universally use less energy, the energy they use is cleaner, and its delivery is more reliable and more resilient. In July 2019, we announced that we expect to cut carbon emissions at PSEG Power’s generation fleet by 80% by 2046, from 2005 levels. We have also announced our vision of attaining net-zero CO₂emissions by 2050, assuming advances in technology, public policy and ~~public policy.~~customer behavior.

Our future success will depend on our ability to continue to maintain strong operational and financial performance in an environment with low gas prices, to capitalize on or otherwise address regulatory and legislative developments that impact our business and to respond to the issues and challenges described below. In order to do this, we must continue to:

focus on controlling costs while maintaining safety, reliability and customer satisfaction and complying with applicable standards and requirements,

successfully manage our energy obligations and re-contract our open supply positions in response to changes in prices and demand,

obtain approval of and execute our utility capital investment program, including ~~ES II, GSMP II,~~ our CEF program ~~and transmission~~ and other investments that yield contemporaneous and reasonable risk-adjusted returns, while enhancing the resiliency of our infrastructure and maintaining the reliability of the service we provide to our customers,

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advocate for the continuation of the ZEC program and measures to ensure the implementation by PJM, FERC and ~~FERC~~state regulators of market design and transmission planning rules that continue to promote fair and efficient electricity markets, including recognition of the cost of emissions,

engage multiple stakeholders, including regulators, government officials, customers and investors, and

successfully operate the LIPA T&D system and manage LIPA’s fuel supply and generation dispatch obligations.

In addition to the risks described elsewhere in this Form 10-Q ~~the first and second quarter 2019 10-Qs~~ and in our Form 10-K, for ~~2019~~2020 and beyond, the key issues and challenges we expect our business to confront include:

regulatory and political uncertainty, both with regard to future energy policy, design of energy and capacity markets, transmission policy and environmental regulation, as well as with respect to the outcome of any legal, regulatory or other proceedings,

the continuing impact of the ongoing coronavirus pandemic and the associated economic impact, which could extend beyond the duration of the pandemic,

the continuing impacts of the Tax Act, coronavirus-related tax legislation and changes in state tax laws, and

the impact of reductions in demand and lower natural gas and electricity prices and increasing environmental compliance costs.

We continually assess a broad range of strategic options to maximize long-term stockholder value. In assessing our options, we consider a wide variety of factors, including the performance and prospects of our businesses; the views of investors, regulators, customers and rating agencies; our existing indebtedness and restrictions it imposes; and tax considerations, among other things. Strategic options available to us include:

the acquisition, construction or disposition of T&D facilities, clean energy investments and/or generation projects, including offshore wind opportunities,

the disposition or reorganization of our merchant generation business or other existing businesses or the acquisition or development of new businesses,

the expansion of our geographic footprint, ~~including the operation of T&D facilities outside of our traditional service territory,~~ and

investments in capital improvements and additions, including the installation of environmental upgrades and retrofits, improvements to system resiliency, modernizing existing infrastructure and participation in transmission projects through FERC’s “open window” solicitation process.

There can be no assurance, however, that we will successfully develop and execute any of the strategic options noted above, or any additional options we may consider in the future. The execution of any such strategic plan may not have the expected benefits or may have unexpected adverse consequences.

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RESULTS OF OPERATIONS

PSEG

Our results of operations are primarily comprised of the results of operations of our principal operating subsidiaries, PSE&G and PSEG Power, excluding charges related to intercompany transactions, which are eliminated in consolidation. For additional information on intercompany transactions, see Item 1. Note 20. Related-Party Transactions.

Three Months Ended
Increase/
(Decrease)
Nine Months Ended
Increase/
(Decrease)

September 30, September 30,
2019 2018 2019 vs. 2018 2019 2018 2019 vs. 2018
Millions Millions % Millions Millions %
Operating Revenues $ 2,302
$ 2,394
$ (92 ) (4 ) $ 7,598
$ 7,228
$ 370
5

Energy Costs 753
804
(51 ) (6 ) 2,581
2,356
225
10

Operation and Maintenance 745
742
3
—
2,251
2,221
30
1

Depreciation and Amortization 307
294
13
4
928
854
74
9

Loss on Asset Dispositions 7
—
7
N/A
402
—
402
N/A

Income from Equity Method Investments 3
5
(2 ) (40 ) 10
12
(2 ) (17 )
Net Gains (Losses) on Trust Investments (3 ) 45
(48 ) N/A
164
31
133
N/A

Other Income (Deductions) 35
33
2
6
101
99
2
2

Non-Operating Pension and OPEB Credits (Costs) 55
19
36
N/A
121
57
64
N/A

Interest Expense 147
127
20
16
417
341
76
22

Income Tax (Benefit) Expense 30
117
(87 ) (74 ) 159
416
(257 ) (62 )




	Three Months Ended					Increase/ (Decrease)
	March 31,					Increase/ (Decrease)
	2020			2019		2020 vs. 2019
	Millions					Millions			%
Operating Revenues	$	2,781		$	2,980	$	(199	)	(7	)
Energy Costs	906			1,124		(218		)	(19	)
Operation and Maintenance	754			756		(2		)	—
Depreciation and Amortization	324			314		10			3
Income from Equity Method Investments	3			2		1			50
Net Gains (Losses) on Trust Investments	(221		)	128		(349		)	N/A
Other Income (Deductions)	4			33		(29		)	(88	)
Net Non-Operating Pension and OPEB Credits (Costs)	62			33		29			88
Interest Expense	153			133		20			15
Income Tax (Benefit) Expense	44			149		(105		)	(70	)

The following discussions for PSE&G and PSEG Power provide a detailed explanation of their respective variances.

PSE&G

Three Months Ended
Increase/
(Decrease)
Nine Months Ended
Increase/
(Decrease)

September 30, September 30,
2019 2018 2019 vs. 2018 2019 2018 2019 vs. 2018
Millions Millions % Millions Millions %
Operating Revenues $ 1,604
$ 1,595
$ 9
1
$ 5,018
$ 4,826
$ 192
4

Energy Costs 618
593
25
4
2,094
1,863
231
12

Operation and Maintenance 388
389
(1 ) —
1,165
1,133
32
3

Depreciation and Amortization 206
192
14
7
620
569
51
9

Net Gains (Losses) on Trust Investments —
—
—
—
1
—
1
N/A

Other Income (Deductions) 22
21
1
5
60
61
(1 ) (2 )
Non-Operating Pension and OPEB Credits (Costs) 46
14
32
N/A
105
44
61
N/A

Interest Expense 92
83
9
11
268
246
22
9

Income Tax Expense (Benefit) 24
95
(71 ) (75 ) 63
292
(229 ) (78 )




	Three Months Ended				Increase/ (Decrease)
	March 31,				Increase/ (Decrease)
	2020		2019		2020 vs. 2019
	Millions				Millions			%
Operating Revenues	$	1,883	$	2,032	$	(149	)	(7	)
Energy Costs	708		947		(239		)	(25	)
Operation and Maintenance	386		408		(22		)	(5	)
Depreciation and Amortization	222		212		10			5
Net Gains (Losses) on Trust Investments	—		1		(1		)	N/A
Other Income (Deductions)	27		19		8			42
Net Non-Operating Pension and OPEB Credits (Costs)	51		30		21			70
Interest Expense	96		87		9			10
Income Tax Expense (Benefit)	109		25		84			N/A

Three Months Ended ~~September 30, 2019~~March 31, 2020 as Compared to ~~2018~~

~~Operating Revenues~~ ~~increased $9 million due to changes in delivery, commodity, clause and other operating revenues.~~

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~~Delivery Revenues~~ ~~increased $8 million due to~~


•	~~Transmission revenues were~~ ~~$32 million~~ ~~higher due to increased~~ 2019 ~~revenue requirements primarily attributable to higher rate base investment.~~


•	~~Electric distribution revenues increased~~ ~~$26 million~~ ~~due to a $26 million increase resulting from the favorable impact of the distribution base rate tariff and a~~ ~~$6 million~~ ~~increase in Green Program Recovery Charge (GPRC) revenues, partially offset by a~~ ~~$6 million~~ ~~decrease due to~~ ~~lower sales volumes~~.


•	~~Gas distribution revenues increased~~ ~~$22 million~~ ~~due primarily to a~~ ~~$19 million~~ ~~increase from the favorable impact of the distribution base rate tariff effective November 2018 and a~~ ~~$2 million~~ ~~increase in revenues from GSMP I.~~


•	~~Gas, Electric and Transmission revenue requirements were reduced by~~ ~~$72 million~~ due to the flowback of excess deferred tax liabilities and tax repair-related accumulated deferred income tax benefits as a result of settlements with the BPU and FERC. This reduction is offset in Income Tax Expense.

~~Commodity Revenues~~ ~~decreased$23 million~~ as a result of lower Electric revenues, partly offset by higher Gas revenues. The changes in Commodity revenues for both electric and gas are entirely offset by changes in Energy Costs. PSE&G earns no margin on the provision of BGS and basic gas supply service (BGSS) to retail customers.


•	~~Electric commodity revenues~~ ~~decreased$26 million~~ ~~due primarily to a~~ ~~$205 million~~ ~~decrease in BGS prices, partially offset by $178 million in higher sales volumes.~~


•	~~Gas commodity revenues~~ ~~increased$3 million~~ ~~due primarily to higher BGSS prices.~~

~~Clause Revenuesdecreased$31 million~~ ~~due primarily to~~ ~~$22 million~~ of ~~lower~~ ~~Tax Adjustment Credit (TAC) deferrals, a $5 million reduction in GPRC deferrals and lower Societal Benefit Charge (SBC) revenues of~~ ~~$3 million~~. The changes in TAC and GPRC deferrals and SBC revenues are entirely offset by changes in the amortization of Regulatory Assets and Regulatory Liabilities and related costs in O&M, D&A and Interest Expenses. PSE&G does not earn margin on TAC or GPRC deferrals or on SBC revenues.

~~Other Operating Revenues~~ ~~increased$55 million~~ due primarily to ZEC revenues billed after the ZEC program was approved by the BPU in April 2019. See Item 1. Note 11. Commitments and Contingent Liabilities. These revenues are entirely offset by changes to Energy Costs.

~~Operating Expenses~~

~~Energy Costs~~ ~~increased $25 million. This is entirely offset by changes in Commodity Revenues and Other Operating Revenues.~~

~~Operation and Maintenance~~ ~~decreased $1 million due primarily to a~~ ~~$5 million~~ ~~reduction in distribution preventative and corrective maintenance expenditures, a~~ ~~$3 million~~ ~~reduction in transmission expenditures, a~~ ~~$3 million~~ ~~decrease in injuries and damages and a $5 million net reduction in other operating expenses. These decreases were partially offset by a net~~ ~~$11 millionincrease~~ ~~in clause and renewable-related expenditures and a~~ ~~$5 million~~ ~~increase in storm costs.~~

~~Depreciation and Amortization~~ ~~increased $14 million due primarily to additional plant and software placed into service.~~

~~Non-Operating Pension and OPEB Credits (Costs)~~ ~~increased $32 million due primarily to~~a ~~$26 million~~ ~~increase in the amortization of the prior service credit mainly related to the December 2018 OPEB plan amendment, a~~ ~~$4 million~~ ~~decrease in interest cost and a~~ ~~$3 million~~ ~~decrease in the amortization of the net unrecognized loss, partially offset by a reduction of~~ ~~$2 million~~ ~~in the long-term expected return on plan assets.~~

~~Interest Expense~~ ~~increased $9 million due primarily to increases of~~ ~~$7 million~~ ~~from net debt issuances in the second and third quarters of 2019 and~~ ~~$2 million~~ ~~from net debt issuances in 2018.~~

~~Income Tax Expense~~ ~~decreased $71 million due primarily to the flowback to ratepayers of excess deferred income tax liabilities and tax repair-related accumulated deferred income taxes.~~

~~Nine Months Ended September 30, 2019 as Compared to 2018~~

Operating Revenues ~~increased $192~~decreased $149 million due to changes in delivery, commodity, clause and other operating revenues.

Delivery Revenues ~~decreased $30~~increased $89 million due primarily to


•	Transmission revenues were $73 million higher due to increased 2020 revenue requirements attributable to higher rate base investment and the prior year flowback of certain excess deferred taxes that ended at year-end 2019.

~~Gas,~~ Electric ~~and Transmission revenue requirements were reduced by $277~~distribution revenues decreased $9 million due primarily to the flowback of excess deferred tax liabilities and tax repair-related accumulated deferred income tax benefits as a result of settlements with the BPU and FERC. This reduction is offset in Income Tax Expense.an $8 million decrease attributable to lower sales volumes.

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Gas distribution revenues increased ~~$92~~$15 million due primarily to ~~an $89~~a $56 million increase ~~from the favorable impact of the distribution base rate tariff effective November 2018.~~

~~Transmission revenues were $90 million higher due to increased 2019 revenue requirements primarily attributable to higher rate base investment.~~

~~Electric distribution revenues increased $65 million due to a $67 million increase resulting from the favorable impact of the distribution base rate tariff~~in Weather Normalization Charges and a $14 million increase ~~in GPRC revenues.~~from the Gas System Modernization Program I (GSMP I) and GSMP II. These increases were partially offset by a ~~$16~~$54 million ~~decrease~~reduction due to lower ~~sales~~ volumes.


•	Gas revenues further increased by $10 million due to a reduction in the flowback to customers of excess deferred tax liabilities and tax repair-related accumulated deferred income tax benefits resulting from rate reductions,which is offset in Income Tax Expense.

Commodity Revenues ~~increased $153~~decreased $290 million as a result of ~~higher~~lower Gas and Electric revenues. The changes in Commodity revenues for both gas and electric are entirely offset by the changes in Energy Costs. PSE&G earns no margin on the provision of ~~BGSS~~basic gas supply service (BGSS) and BGS to retail customers.

Gas commodity revenues ~~increased $129~~decreased $162 million due primarily to ~~higher BGSS prices of $106 million and higher~~lower BGSS sales volumes of ~~$23~~$94 million and lower BGSS prices of $68 million.

Electric commodity revenues ~~increased $24~~decreased $128 million due primarily to ~~$47~~$96 million in ~~higher~~lower BGS sales volumes ~~partially offset by $24~~and $34 million in lower BGS prices.

Clause Revenues decreased ~~$11~~$2 million due primarily to ~~a $15~~lower SBC revenues of $10 million ~~reduction for TAC deferrals~~ and a $6$2 million decrease ~~for GPRC deferrals.~~in Margin Adjustment Clause (MAC) revenues. These decreases were partially offset by a $7$10 million ~~increase~~reduction in ~~Margin~~Tax Adjustment ~~Clause (MAC) revenues, a $2 million increase in Solar Pilot Recovery Charges (SPRC) and higher SBC revenues of $1 million.~~Credit (TAC) deferrals. The changes in the ~~MAC, SPRC~~SBC and ~~SBC~~MAC revenues and TAC ~~and GPRC~~ deferral amounts are entirely offset by changes in the amortization of Regulatory Assets and Regulatory Liabilities and related costs in O&M, D&A and Interest Expenses. PSE&G does not earn margin on SBC and MAC ~~SPRC or SBC~~ revenues or on TAC ~~or GPRC~~ deferrals.

Other Operating Revenues increased by $8054 million due primarily to $38 million in ZEC revenues billed since mid-April ~~2019.~~2019 and a $14 million increase in SREC revenues. See Item 1. Note 11. Commitments and Contingent Liabilities. ~~These~~The changes in these revenues are entirely offset by changes to Energy Costs.

Operating Expenses

Energy Costs ~~increased $231~~decreased $239 million. This is entirely offset by changes in Commodity Revenues and Other Operating Revenues.

Operation and Maintenance ~~increased $32~~decreased $22 million due primarily to a net ~~$45~~$12 million ~~increase~~decrease in clause and renewable-related expenditures, ~~and~~ a $43 million ~~increase~~decrease in injuries and ~~damages. These increases were partially offset by an $8~~damages, a $2 million decrease in distribution ~~preventative and~~ corrective maintenance expenditures, a $6$2 million reduction in seasonal storm costs and a $1 million decrease in transmission-related expenditures.

Depreciation and Amortization increased ~~$51~~$10 million due primarily to ~~a $44 million~~an increase related to additional plant ~~and software placed into service and a $7 million increase due to updated depreciation rates put into effect~~ in ~~November 2018.~~service.

Other Income (Deductions) increased $8 million due primarily to an increase in the allowance for funds used during construction (AFUDC).

Net Non-Operating Pension and OPEB Credits (Costs) increased ~~$61~~$21 million due primarily to ~~a $77~~an $11 million increase ~~in the amortization of prior service credit mainly related to the December 2018 OPEB plan amendment and a $3 million decrease in interest cost, partially offset by a $16 million reduction~~ in the long-term expected return on plan assets, an $8 million decrease in interest cost and a $4$3 million ~~increase~~decrease in the amortization of the net unrecognized ~~loss.~~loss, partially offset by a $1 million decrease in the amortization of prior service credit.

Interest Expense increased ~~$22~~$9 million due primarily to a ~~$12~~$7 million increase from net debt issuances in ~~May and September 2018~~2019 and a ~~$10~~$4 million increase from net debt issuances in ~~2019.~~January 2020.These increases were partially offset by a decrease of $2 million due to a reduction in short-term borrowings.

Income Tax Expense ~~decreased $229~~increased $84 million due primarily to higher pre-tax income and the reduction in the 2020 flowback ~~to ratepayers~~ of PSE&G’s excess deferred income tax liabilities, ~~and tax repair-related accumulated~~as PSE&G refunded all FERC approved, transmission-related excess deferred income ~~taxes.~~taxes that are not subject to the normalization rules in 2019.

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PSEG Power

Three Months Ended
Increase/
(Decrease)
Nine Months Ended
Increase/
(Decrease)

September 30, September 30,
2019 2018
2019 vs. 2018 2019 2018 2019 vs. 2018
Millions Millions % Millions Millions %
Operating Revenues $ 771
$ 868
$ (97 ) (11 ) $ 3,270
$ 3,038
$ 232
8

Energy Costs 359
431
(72 ) (17 ) 1,556
1,550
6
—

Operation and Maintenance 233
231
2
1
736
745
(9 ) (1 )
Depreciation and Amortization 93
94
(1 ) (1 ) 282
260
22
8

Loss on Asset Dispositions 7
—
7
N/A
402
—
402
N/A

Income from Equity Method Investments 3
5
(2 ) (40 ) 10
12
(2 ) (17 )
Net Gains (Losses) on Trust Investments (4 ) 44
(48 ) N/A
160
30
130
N/A

Other Income (Deductions) 15
14
1
7
43
38
5
13

Non-Operating Pension and OPEB Credits (Costs) 8
4
4
100
14
11
3
27

Interest Expense 34
29
5
17
85
47
38
81

Income Tax Expense (Benefit) 14
25
(11 ) (44 ) 127
127
—
—




	Three Months Ended					Increase/ (Decrease)
	March 31,					Increase/ (Decrease)
	2020			2019		2020 vs. 2019
	Millions					Millions			%
Operating Revenues	$	1,220		$	1,416	$	(196	)	(14	)
Energy Costs	676			786		(110		)	(14	)
Operation and Maintenance	241			235		6			3
Depreciation and Amortization	94			94		—			—
Income from Equity Method Investments	3			2		1			50
Net Gains (Losses) on Trust Investments	(220		)	126		(346		)	N/A
Other Income (Deductions)	(23		)	13		(36		)	N/A
Net Non-Operating Pension and OPEB Credits (Costs)	8			3		5			N/A
Interest Expense	34			25		9			36
Income Tax Expense (Benefit)	(70		)	124		(194		)	N/A

Three Months Ended ~~September 30, 2019~~March 31, 2020 as Compared to ~~2018~~2019

Operating Revenues decreased ~~$97~~$196 million due primarily to changes in generation and gas supply revenues.

Gas Supply Revenuesdecreased $131 million due primarily to

a decrease of $123 million in sales under the BGSS contract, of which $90 million was due to lower volumes sold and $33 million was due to lower average sales prices, and

a net decrease of $4 million related to sales to third parties, of which $34 million was due to lower average sales prices, partially offset by an increase of $30 million due to higher volumes sold.

Generation Revenues decreased ~~$59~~$65 million due primarily to

a net decrease of ~~$50~~$113 million due primarily to lower ~~volumes of electricity sold~~average realized prices in the PJM and New York (NY) regions coupled with lower ~~average realized prices~~volumes sold in the PJM ~~NY,~~region, primarily due to the sale of PSEG Power’s ownership interests in the Keystone and ~~New England (NE) regions,~~Conemaugh generation plants. This was partially offset by higher volumes of electricity sold in the NENew England (NE) region,

~~a decrease of $25 million in electricity sold under our BGS contracts~~ primarily due to ~~lower volumes coupled with lower prices,~~the commencement of commercial operations of BH5 in June 2019,

a net decrease of $20 million due to higher MTM losses in 2019 as compared to 2018. Of this amount, there was a $57 million decrease due to more losses on positions reclassified to realized upon settlement, partially offset by a $37 million increase from changes in forward prices in 2019 as compared to 2018, and

~~a net decrease of $19~~$34 million in capacity revenues due primarily to decreases in auction prices ~~for cleared capacity~~ in the PJM region, partially offset by ~~increased capacity payments in~~ the ~~NE region due to BH5 beginning~~commencement of commercial operations ~~in June 2019,~~

~~partially offset by an increase~~ of ~~$51 million due to ZEC revenues earned since mid-April 2019.~~

~~Gas Supply Revenues~~ ~~decreased $39 million due primarily to~~BH5, and

a ~~net~~ decrease of ~~$45~~$31 million ~~related to sales to third parties, of which $48 million was~~in electricity sold under our BGS contracts due to lower volumes ~~sold, modestly offset by a $3 million increase due to higher average sales~~and lower prices,

partially offset by a net increase of $5$67 million ~~in sales under the BGSS contract, of which $3 million was~~ due to higher ~~sales volumes~~MTM gains in 2020 as compared to 2019. Of this amount, there was a $133 million increase due to changes in forward prices this year as compared to last year, partially offset by a $66 million decrease due to less gains on positions reclassified to realized upon settlement, and $2

$51 million due to ~~higher average sales prices during~~ZEC revenues that started in mid-April 2019.

Operating Expenses

Energy Costs represent the cost of generation, which includes fuel costs for generation as well as purchased energy in the market, and gas purchases to meet PSEG Power’s obligation under its BGSS contract with PSE&G. Energy Costs decreased ~~$72~~$110 million due to

Gas costsdecreased $100 million due mainly to

a decrease of $98 million related to sales under the BGSS contract, of which $76 million was due to lower volumes and $22 million was due to lower average gas costs, and

a net decrease of $2 million related to sales to third parties, of which $29 million was due to a decrease in the average cost of gas largely offset by an increase of $27 million in volumes sold.

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Generation costs decreased ~~$39~~$10 million due primarily to

a net decrease of ~~$30~~$85 million in fuel costs reflecting lower prices of gas in the PJM and NY regions coupled with the utilization of lower volumes of coal in the PJM region, primarily due to ~~MTM gains~~the sale of PSEG Power’s ownership interests in ~~2019, as compared~~Keystone and Conemaugh generation plants, and lower volumes of gas in the PJM region. This was partially offset by utilization of higher volumes of gas in the NE region due to ~~MTM losses~~the commencement of commercial operations at BH5 in ~~2018, due primarily to positions reclassified as realized upon settlement,~~June 2019, and

a net decrease of ~~$10~~$6 million due primarily ~~due~~ to decreases in energy ~~purchases~~purchased in the NE region due to BH5 beginning commercial operations, ~~in June 2019.~~

~~Gas costs~~ ~~decreased $33 million due primarily to~~

~~a decrease of $42 million related to sales to third parties due primarily to lower volumes sold,~~

partially offset by a net increase of ~~$10~~$62 million ~~related to sales under the BGSS contract, of which $5 million was~~ due to ~~higher volumes~~MTM losses in 2020 as compared to MTM gains in 2019. Of this amount, there was a $48 million increase due to changes in forward prices this year as compared to last year coupled with a $14 million increase due to losses on positions reclassified to realized upon settlement in 2020 as compared to gains in 2019, and $5

a $20 million increase due to ~~higher average gas costs.~~a LOCOM adjustment on oil inventory caused by a decrease in oil demand and pricing.

~~Depreciation~~Operation and ~~Amortization~~ ~~decreased~~Maintenance $1increased $6 million due primarily to ~~the sale of PSEG Power’s ownership interests in the Keystone and Conemaugh generation plants, largely offset by the BH5 station being placed into service in June 2019.~~outage costs at our nuclear plants.

Net Gains (Losses) on Trust Investments decreased ~~$48~~$346 million due primarily to a ~~$55~~$320 million decrease resulting from net unrealized losses in ~~2019~~2020 as compared to net unrealized gains in ~~2018~~2019 on equity investments in the NDT Fund ~~partially offset by~~and a $6$22 million ~~increase~~decrease in net realized gains on NDT Fund ~~investments.~~

~~Non-Operating Pension and OPEB Credits (Costs)~~ ~~increased $4 million due~~investments attributable to a $5 million increase in the amortization of prior service credit mainly related to the December 2018 OPEB plan amendment, a $2 million decrease in the amortization of the net unrecognized loss and a $1 million decrease in interest cost, largely offset by a $4 million reduction in the long-term expected return on plan assets.

~~Interest Expense~~ ~~increased $5 million due primarily to lower capitalized interest as a result of BH5 being placed into service in June 2019.~~

~~Income Tax Expense (Benefit)~~ ~~decreased~~ ~~$11 million due primarily to lower pre-tax income in 2019, partially offset by benefits~~market volatility associated with the ~~remeasurement of uncertain tax positions recorded in 2018.~~

~~Nine Months Ended September 30, 2019 as Compared to 2018~~

~~Operating Revenues~~ ~~increased $232 million due primarily to changes in generation and gas supply revenues.~~

~~Generation Revenues~~ ~~increased $277 million due primarily to~~

a net increase of $272 million due to MTM gains in 2019 as compared to MTM losses in 2018. Of this amount, there was a $268 million increase from changes in forward prices in 2019 as compared to 2018, coupled with a $4 million increase due to more gains on positions reclassified to realized upon settlement,

~~an increase of $85 million due to ZEC revenues earned since mid-April 2019,~~

a net increase of $12 million in capacity revenues due primarily to the commencement of commercial operations of Keys and Sewaren 7 in in mid-2018 and BH5 in June 2019, partially offset by a decrease in auction prices in the PJM region, and

a net increase of $5 million due primarily to higher volumes of electricity sold in the PJM and NE regions, somewhat offset by lower volumes sold in the NY region and lower average realized prices in the PJM, NE and NY regions,

~~partially offset by a decrease of $93 million in electricity sold under our BGS contracts due to lower volumes and lower prices.~~

~~Gas Supply Revenuesdecreased~~ ~~$47 million due primarily to~~

~~a decrease of $93 million related to sales to third parties, primarily due to lower volumes sold,~~

~~partially offset by an increase of $41 million in sales under the BGSS contract, primarily due to higher average sales prices.~~

~~Operating Expenses~~

~~Energy Costs~~ represent the cost of generation, which includes fuel costs for generation as well as purchased energy in the market, and gas purchases to meet PSEG Power’s obligation under its BGSS contract with PSE&G. Energy Costs increased $6 million due to

~~Generation costs~~ increased $33 million due primarily to higher fuel costs reflecting utilization of higher volumes of gas at the new Keys and Sewaren 7 fossil stations and BH5, coupled with higher prices of gas in the PJM region, partially offset by

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utilization of lower volumes and prices of gas in the NY region, lower prices of gas in the NE region, utilization of lower volumes of oil in the PJM region, and lower coal costs in the PJM and NE regions.

~~Gas costsdecreased~~ ~~$27 million due mainly to~~

~~a net decrease of $76 million related to sales to third parties due primarily to lower volumes sold,~~

~~partially offset by a net increase of $51 million related to sales under the BGSS contract primarily resulting from an increase in the average cost of gas.~~

~~Operation and Maintenance~~ decreased $9 million due primarily to a net decrease related to our nuclear plants due to planned outage costs incurred in 2019 for our 57%-owned Salem Unit 1 as compared to planned outage costs at our 100%-owned Hope Creek nuclear plant in 2018.

~~Depreciation and Amortization~~ ~~increased$22 milliondue primarily to the new Keys and Sewaren 7 fossil stations and BH5 station, partially offset by the sale of PSEG Power’s ownership interests in the Keystone and Conemaugh generation plants.~~

~~Loss on Asset Dispositions~~ isa~~$402 millionloss in 2019 related to the sale of PSEG Power’s ownership interests in the Keystone and Conemaugh generation plants.~~

~~Net Gains (Losses) on Trust Investments~~ ~~increased $130 million due primarily to a $127 million increase resulting from net unrealized gains in 2019 as compared to net unrealized losses in 2018 on equity investments in the NDT Fund.~~ongoing coronavirus pandemic.

Other Income (Deductions) ~~increased $5~~decreased $36 million primarily due to ~~higher interest and dividend income on NDT Fund investments.~~greater purchases of NOLs under New Jersey’s Technology Tax Benefit Transfer Program.

Net Non-Operating Pension and OPEB Credits (Costs) increased $3$5 million due to a ~~$14~~$2 million increase in the ~~amortization of prior service credit mainly related to the December 2018 OPEB~~expected return on plan ~~amendment,~~assets, a $4$2 million decrease in interest cost and a $1 million decrease in the amortization of the net unrecognized ~~loss, largely offset by a $16 million decrease in the long-term expected return on plan assets.~~loss.

Interest Expense increased ~~$38~~$9 million due primarily to lower capitalized interest as a result of ~~Keys~~BH5 being place into service.

Income Tax Expense decreased $194 million due primarily to lower pre-tax income, including lower pre-tax income from the NDT qualified fund, which is subject to an additional trust tax, and ~~Sewaren 7 fossil stations being placed into service~~the benefit from the 2019 NOLs purchased under the New Jersey Technology Tax Benefit Transfer Program in ~~mid-2018.~~2020.

LIQUIDITY AND CAPITAL RESOURCES

The following discussion of our liquidity and capital resources is on a consolidated basis, noting the uses and contributions, where material, of our two direct major operating subsidiaries.

Operating Cash Flows

We continue to expect our operating cash flows combined with cash on hand and financing activities to be sufficient to fund capital expenditures and shareholder dividend payments.

For the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020, our operating cash flow ~~increased~~decreased $~~217~~65 million as compared to the same period in ~~2018.~~2019. The net ~~changes were~~decrease was primarily due to the net changes from our subsidiaries as discussed ~~below, partially offset by tax payments at PSEG~~below.

Given the current economic challenges, PSE&G has informed both our residential customers and ~~its other subsidiaries in 2019 compared~~state regulators that all non-safety related service disconnections for non-payment will be temporarily suspended. In addition, the current economic conditions have adversely impacted C&I customer payment patterns. While the negative impact on customer payment patterns, including reduced cash inflow and higher Accounts Receivable aging and associated increasing bad debt expense did not have a material impact on our cash flows for the quarter ended March 31, 2020, a prolonged adverse change to ~~tax refunds in 2018.~~customer payment patterns due to the ongoing coronavirus pandemic could materially and adversely impact our cash flows from operations.

PSE&G

PSE&G’s operating cash flow increased $84115 million from $~~1,397~~520 million to $~~1,481~~635 million for the ~~nine~~three months ended ~~September 30, 2019~~March 31, 2020, as compared to the same period in ~~2018~~2019, due primarily to ~~tax refunds in 2019 as compared to tax payments in 2018, and~~ an increase of ~~$89~~$139 million related to accounts receivable resulting primarily from ~~a change~~higher outstanding billings in ~~regulatory deferrals,~~2019, higher earnings in 2020 and $63 million in decreased payments to third party BGS suppliers in 2020 due to lower demand. These increases were partially offset by a decrease of ~~$79~~$149 million ~~relating~~in regulatory deferrals due to lower sales volumes attributable to a ~~lower reduction~~milder winter weather and BGSS credits awarded to customers in ~~accounts receivable and unbilled revenues~~2020, as well as tax payments in ~~2019, and $70 million~~2020 as compared to tax refunds in ~~increased vendor payments.~~2019.

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PSEG Power

PSEG Power’s operating cash flow ~~increased $357~~decreased $242 million from ~~$1,005~~$726 million to ~~$1,362~~$484 million for the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, as compared to the same period in ~~2018,~~2019, due to a ~~$378~~$135 million ~~higher~~ reduction related to counterparty cash collateral posting requirements, lower earnings, and an $87 milliondecreasein ~~margin deposit requirements,~~the usage of fuels, materials and supplies, partially offset by tax refunds in ~~2019~~2020 as compared to tax payments in ~~2018, partially offset by an increase of $40 million in payments to counterparties.~~2019.

Short-Term Liquidity

PSEG meets its short-term liquidity requirements, as well as those of PSEG Power, primarily with cash and through the issuance of commercial ~~paper.~~paper and, from time to time, short-term loans. PSE&G maintains its own separate commercial paper program to meet its short-term liquidity requirements. Each commercial paper program is fully back-stopped by its own separate credit facilities.

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We continually monitor our liquidity and seek to add capacity as needed to meet our liquidity requirements. Each of our credit facilities is restricted as to availability and use to the specific companies as listed below; however, if necessary, the PSEG facilities can also be used to support our subsidiaries’ liquidity needs.

Our total credit facilities and available liquidity as of ~~September 30, 2019~~March 31, 2020 were as follows:

Company/Facility As of September 30, 2019

Total
Facility
Usage
Available
Liquidity

Millions
PSEG $ 1,500
$ 349
$ 1,151

PSE&G 600
26
574

PSEG Power 2,100
176
1,924

Total $ 4,200
$ 551
$ 3,649




Company/Facility	As of March 31, 2020
Company/Facility	Total Facility		Usage		Available Liquidity
	Millions
PSEG	$	1,500	$	806	$	694
PSE&G	600		17		583
PSEG Power	2,100		154		1,946
Total	$	4,200	$	977	$	3,223

As of ~~September 30, 2019,~~March 31, 2020, our credit facility capacity was in excess of our projected maximum liquidity requirements over our 12 month planning ~~horizon.~~horizon as we continue to monitor the impact and volatility of the ongoing coronavirus pandemic on cash flows and capital market conditions. Our maximum liquidity requirements are based on stress scenarios that incorporate changes in commodity prices and the potential impact of PSEG Power losing its investment grade credit rating from S&P or Moody’s, which would represent a three level downgrade from its current S&P or Moody’s ratings. In the event of a deterioration of PSEG Power’s credit rating, certain of PSEG Power’s agreements allow the counterparty to demand further performance assurance. The potential additional collateral that we would be required to post under these agreements if PSEG Power were to lose its investment grade credit rating was approximately ~~$872~~$916 million and ~~$857~~$974 million as of ~~September 30, 2019~~March 31, 2020 and December 31, ~~2018,~~2019, respectively.

For additional information, see Item 1. Note 12. Debt and Credit Facilities.

Long-Term Debt Financing

During the next twelve months,

PSEG has ~~$400~~a $700 million ~~of 1.60% Senior Notes~~floating rate term loan maturing in November ~~2019.~~ 2020, and


•	PSE&G has $250 million of 3.50% Medium-Term Notes (MTN), Series G, maturing in August 2020, $9 million of 7.04% MTN, Series A, maturing in November 2020 and $300 million of 1.90% MTN, Series K, maturing in March 2021.

PSEG, PSEG Power, Energy Holdings, PSEG LI and Services participate in a corporate money pool, an aggregation of daily cash balances designed to efficiently manage their respective short-term liquidity needs, which are accounted for as intercompany loans. In April 2020, PSEG utilized external sources of liquidity, including the commercial paper markets and term loans, to repay a loan to PSEG Power through the money pool and PSEG Power used the proceeds from this loan repayment to redeem its $406 million of ~~3.50%~~5.13% ~~Medium Term Notes maturing in August 2020 and PSEG Power has $406 million of 5.13%~~ Senior Notes ~~maturing in April 2020.~~at maturity.

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For additional information see Item 1. Note 12. Debt and Credit Facilities.

Guarantor Financial Information

PSEG Power’s Senior Notes are fully and unconditionally guaranteed on a joint and several basis by its subsidiaries, PSEG Fossil LLC, PSEG Nuclear LLC and PSEG Energy Resources & Trade LLC. Each guarantor subsidiary is a consolidated subsidiary of PSEG Power.

In March 2020, the United States Securities and Exchange Commission adopted amendments to the financial disclosure requirements applicable to certain registered debt offerings. PSEG Power adopted these amendments on March 31, 2020. Accordingly, summarized financial information is being presented, on a combined basis, only for PSEG Power (parent company) and the guarantors of PSEG Power’s Senior Notes, excluding investments in, and earnings (losses) from, subsidiaries that are not guarantors. All transactions between PSEG Power (parent company) and the guarantor subsidiaries are eliminated in the combined summarized financial information. The required disclosures for the year-to-date interim period and the most recent fiscal year have been moved outside the Notes to Condensed Consolidated Financial Statements and are provided in the tables below.




	Three Months Ended			Year Ended
	March 31, 2020			December 31, 2019
		Millions
Operating Revenues (A)		$	1,205	$	4,315
Operating Income (Loss)		$	209	$	451
Net Income		$	22	$	484


(A)	Operating Revenues include sales to affiliates of $475 million and $1,463 million, respectively for the three months ended March 31, 2020 and year ended December 31, 2019, respectively.




	As of		As of
	March 31, 2020		December 31, 2019
	Millions
Current Receivables from Subsidiaries and Affiliates	$	2,773	$	2,456
Total Current Assets	$	3,780	$	3,559
Noncurrent Receivables from Affiliates	$	17	$	17
Total Noncurrent Assets	$	6,882	$	7,025

Current Payables to Subsidiaries and Affiliates	$	245	$	218
Total Current Liabilities	$	1,176	$	1,155
Noncurrent Payables to Affiliates	$	113	$	115
Total Noncurrent Liabilities	$	4,946	$	4,934

Pension and NDT Fund Obligations

As a result of the market downturn due to the ongoing coronavirus pandemic, the fair market value of assets in our pension trust decreased from $5.9 billion as of December 31, 2019 to $5.0 billion as of March 31, 2020. Internal Revenue Service (IRS) minimum funding requirements for pension plans are determined based on the fund assets and liabilities at the end of a calendar year for the subsequent calendar year. As a result, the market downturn associated with the ongoing coronavirus pandemic is not expected to impact our pension contributions in 2020. In the event of a prolonged economic downturn associated with the ongoing coronavirus pandemic, our contributions to the pension plans may increase in future periods to meet IRS minimum funding requirements. PSEG hadaccumulated funding credits totaling approximately $600 million, which represent historical contributions in excess of IRS minimum funding requirements, and these credits can be applied to offset any future cash contribution obligations.

In addition, the NRC requires a biennial filing of the NDT fund balances against the decommissioning liability estimate. Any funding shortfalls are required to be cured prior to the next NRC reporting period. The market downturn associated with the ongoing coronavirus pandemic is not currently expected to result in any supplemental required funding of the NDT Fund. To the extent of a prolonged economic downturn associated with the ongoing coronavirus pandemic, our funding requirements may increase in future periods to meet NRC minimum funding requirements.

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Common Stock Dividends

On ~~July 16, 2019,~~April 21, 2020, our Board of Directors declared a ~~$0.47~~$0.49 dividend per share of common stock for the ~~third~~second quarter of ~~2019.~~2020. This reflects an indicative annual dividend rate of ~~$1.88~~$1.96 per share. We expect to continue to pay cash dividends on our common stock; however, the declaration and payment of future dividends to holders of our common stock will be at the discretion of the Board of Directors and will depend upon many factors, including our financial condition, earnings, capital requirements of our businesses, alternate investment opportunities, legal requirements, regulatory constraints, industry practice, the impact of the ongoing coronavirus pandemic on our business and the capital and credit markets and other factors that the Board of Directors deems relevant. For additional information related to cash dividends on our common stock, see Item 1. Note 18. Earnings Per Share (EPS) and Dividends.

Credit Ratings

If the rating agencies lower or withdraw our credit ratings, such revisions may adversely affect the market price of our securities and serve to materially increase our cost of capital and limit access to capital. Credit Ratings shown are for securities that we typically issue. Outlooks are shown for Issuer Credit Ratings (Moody’s) and Corporate Credit Ratings (S&P) and can be Stable, Negative, or Positive. There is no assurance that the ratings will continue for any given period of time or that they will not be revised by the rating agencies, if in their respective judgments, circumstances warrant. Each rating given by an agency should be evaluated independently of the other agencies’ ratings. The ratings should not be construed as an indication to buy, hold or sell any security.

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	Moody’s (A)	S&P (B)
PSEG
Outlook	Stable	Stable
Senior Notes	Baa1	BBB
Commercial Paper	P2	A2
PSE&G
Outlook	Stable	Stable
Mortgage Bonds	Aa3	A
Commercial Paper	P1	A2
PSEG Power
Outlook	Stable	Stable
Senior Notes	Baa1	BBB+


(A)	Moody’s ratings range from Aaa (highest) to C (lowest) for long-term securities and P1 (highest) to NP (lowest) for short-term securities.


(B)	S&P ratings range from AAA (highest) to D (lowest) for long-term securities and A1 (highest) to D (lowest) for short-term securities.

CAPITAL REQUIREMENTS

We expect that all of our capital requirements over the next three years will come from a combination of internally generated funds and external debt financing. There were no material changes to our projected capital expenditures as compared to amounts disclosed in our Form 10-K. See Executive Overview of ~~2019~~2020 and Future Outlook for additional information.

PSE&G

During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, PSE&G made capital expenditures of ~~$1,866~~$620 million, primarily for T&D system reliability. This does not include expenditures for cost of removal, net of salvage, of ~~$87~~$24 million, which are included in operating cash flows.

PSEG Power

During the ~~nine~~three months ended ~~September 30, 2019,~~March 31, 2020, PSEG Power made capital expenditures of ~~$406~~$39 million, excluding $~~101~~58 million for nuclear fuel, primarily related to ~~our BH5~~various projects at Fossil and ~~other generation projects.~~Nuclear.

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ACCOUNTING MATTERS

For information related to recent accounting matters, see Item 1. Note 2. Recent Accounting Standards.


ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The risk inherent in our market-risk sensitive instruments and positions is the potential loss arising from adverse changes in commodity prices, equity security prices and interest rates as discussed in the ~~Notes.~~Notes to Condensed Consolidated Financial Statements. It is our policy to use derivatives to manage risk consistent with business plans and prudent practices. 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.

Additionally, we are exposed to counterparty credit losses in the event of non-performance or non-payment. We have a credit management process, which is used to assess, monitor and mitigate counterparty exposure. In the event of non-performance or non-payment by a major counterparty, there may be a material adverse impact on our financial condition, results of operations or net cash flows.

Commodity Contracts

The availability and price of energy-related commodities are subject to fluctuations from factors such as weather, environmental policies, changes in supply and demand, state and federal regulatory policies, market rules and other events. To reduce price

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risk caused by market fluctuations, we enter into supply contracts and derivative contracts, including forwards, futures, swaps and options with approved counterparties. These contracts, in conjunction with physical sales and other services, help reduce risk and optimize the value of owned electric generation capacity.

Value-at-Risk (VaR) Models

VaR represents the potential losses, under normal market conditions, for instruments or portfolios due to changes in market factors, for a specified time period and confidence level. We estimate VaR across our commodity businesses.

MTM VaR consists of MTM derivatives that are economic hedges. The MTM VaR calculation does not include market risks associated with activities that are subject to accrual accounting, primarily our generating facilities and some ~~load serving~~load-serving activities.

The VaR models used are variance/covariance models adjusted for the change of positions with 95% and 99.5% confidence levels and a one-day holding period for the MTM activities. The models assume no new positions throughout the holding periods; however, we actively manage our portfolio.

From ~~July~~January through ~~September 2019,~~March 2020, MTM VaR was relatively stable between a low of ~~$10~~$7 million and a high of ~~$26~~$12 million at the 95% confidence level. The range of VaR was narrower for the three months ended ~~September 30, 2019~~March 31, 2020 as compared with the year ended December 31, ~~2018.~~2019.

MTM VaR
Three Months Ended September 30, 2019 Year Ended December 31, 2018
Millions
95% Confidence Level, Loss could exceed VaR one day in 20 days
Period End $ 10
$ 21

Average for the Period $ 16
$ 14

High $ 26
$ 46

Low $ 10
$ 6

99.5% Confidence Level, Loss could exceed VaR one day in 200 days
Period End $ 16
$ 32

Average for the Period $ 25
$ 22

High $ 41
$ 72

Low $ 15
$ 9




	MTM VaR
	Three Months Ended March 31, 2020		Year Ended December 31, 2019
	Millions
95% Confidence Level, Loss could exceed VaR one day in 20 days
Period End	$	11	$	9
Average for the Period	$	9	$	12
High	$	12	$	35
Low	$	7	$	5
99.5% Confidence Level, Loss could exceed VaR one day in 200 days
Period End	$	17	$	14
Average for the Period	$	13	$	19
High	$	19	$	54
Low	$	11	$	8

See Item 1. Note 13. Financial Risk Management Activities for a discussion of credit risk.

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ITEM 4.	CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

PSEG, PSE&G and PSEG Power

We have established and maintain disclosure controls and procedures as defined under Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to provide reasonable assurance that information required to be disclosed in the reports that are filed or submitted under the Exchange Act is recorded, processed, summarized and reported and is accumulated and communicated to the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) of each respective company, as appropriate, by others within the entities to allow timely decisions regarding required disclosure. We have established a disclosure committee which includes several key management employees and which reports directly to the CFO and CEO of each of PSEG, PSE&G and PSEG Power. The committee monitors and evaluates the effectiveness of these disclosure controls and procedures. The CFO and CEO of each of PSEG, PSE&G and PSEG Power 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.

Internal Controls

PSEG, PSE&G and PSEG Power

There have been no changes in internal control over financial reporting that occurred during the ~~third~~first quarter of ~~2019~~2020 that have materially affected, or are reasonably likely to materially affect, each registrant’s internal control over financial reporting.

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PART II. OTHER INFORMATION


ITEM 1.	LEGAL PROCEEDINGS

We are party to various lawsuits and environmental and regulatory matters, including in the ordinary course of business. For information regarding material legal proceedings, including updates to information reported in Item 3 of Part I of the Form 10-K, see Part I, Item 1. Note 11. Commitments and Contingent Liabilities and Item 5. Other ~~Information in the first and second quarter 2019 10-Qs and in this Quarterly Form 10-Q.~~Information.


ITEM 1A.	RISK FACTORS

The discussion of our business and operations in this Quarterly Report on Form 10-Q should be read together with the risk factors contained in Part I, Item 1A of our Form 10-K, which describes various risks and uncertainties that could have a material adverse impact on our business, prospects, financial position, results of operations or cash flows and could cause results to differ materially from those expressed elsewhere in this report. ~~There have been no material changes~~We expect that the risks and uncertainties described in our Form 10-K will be further adversely impacted by the ongoing coronavirus pandemic and any related, sustained economic downturn, which could extend beyond the duration of the pandemic. In addition to the foregoing, the following risk factor should be read together with the risk factors in our Form 10-K.

Our financial condition and results of operations could be adversely affected by the ongoing coronavirus pandemic.

In response to the ongoing global coronavirus pandemic, we have implemented a comprehensive set ~~forth~~of actions to help our customers, communities and employees, and will continue to closely monitor developments and adjust as needed to ensure reliable service while protecting the safety and health of our workforce and the communities we serve.

PSE&G, PSEG Power and PSEG LI are providing essential services during this national emergency related to the coronavirus pandemic. The pandemic has not had a material impact on our results of operations, financial condition or cash flows for the three months ended March 31, 2020. However, the potential future 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 actions taken to contain its spread and mitigate its public health effects. We currently cannot estimate the potential impact the ongoing coronavirus pandemic may have on our business, results of operations, financial condition, liquidity and cash flows. However a prolonged outbreak, including the long-term impact it may have on the economy, which could extend beyond the duration of the pandemic, could affect, among other things:

the timing of our planned capital programs, including the ability to obtain necessary permits and approvals for our capital programs;

PSE&G’s residential and C&I customer payment patterns, in part as residential customer service non-safety related service disconnections for non-payment have been temporarily suspended, resulting in adverse impacts to accounts

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receivable and bad debt expense;

decreased aggregate demand for generation and decreased commercial and industrial demand for PSE&G’s electric and gas service;

the availability of capital markets and credit from banks and other financial institutions to fund our operations and capital programs and the cost of borrowing and available terms.

the availability and productivity of skilled workers and contractors to operate our facilities;

the ability of our counterparties to meet their contractual obligations to us;

the potential for assessment of impairment of our long-lived assets;

our financial assets recorded at fair value, including the impact on Net Income from adjustments to fair value of investments in our pension and NDT Fund, and potential increases in the ~~above-referenced filing as~~related funding requirements; and

the availability of ~~September 30, 2019.~~materials and supplies due to supply chain interruptions.

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. Any failure or breach of these systems would have a material impact on our business and results of operations.


ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In ~~December 2018,~~November 2019, we entered into a share repurchase plan that complies with Rule 10b5-1 of the Exchange Act, as amended, solely with respect to the repurchase of shares to satisfy obligations under equity compensation awards that are expected to vest ~~or be exercised~~ in ~~2019. There were no~~2020. The following table indicates our common share repurchases in the open market during the ~~third~~first quarter of ~~2019.~~2020. There are no remaining shares available for repurchase under the plan.




Three Months Ended March 31, 2020	Total Number of Shares Purchased	Average Price Paid per Share
January 1 - January 31	840,000	$	58.50
February 1 - February 29	—	—
March 1 - March 31	—	—

ITEM 5. OTHER INFORMATION

Certain information reported in the Form 10-K is updated below. Additionally, certain information is provided for new matters that have arisen subsequent to the filing of the Form ~~10-K and first and second quarter 2019 10-Qs.~~10-K. References are to the related pages on the Form ~~10-K and the first and second quarter 2019 10-Qs.~~10-K.

Federal Regulation

~~Energy Clearing Prices~~Capacity Market Issues—PJM

December 31, ~~2018~~2019 Form 10-K page ~~16 and March 31, 2019 Form 10-Q page 83.~~16. In ~~April~~December 2019, FERC issued an order ~~directing~~establishing new rules for PJM’s capacity market. In this new order, FERC extended the PJM MOPR, which currently applies to new natural gas-fired generators, to include both new and existing resources that receive or are entitled to receive certain out-of-market payments, with certain exemptions.

PSEG Power’s New Jersey nuclear plants that receive ZEC payments will be subject to the new MOPR. In addition, as a result of FERC’s finding that default procurement auctions such as BGS can also confer subsidies, it is possible that other PSEG units could be subject to the MOPR. Based on PJM’s March 2020 compliance filings, if PJM’s proposals for nuclear unit floor prices are accepted by FERC, the floor prices are not expected to prevent the nuclear units receiving ZECs, as well as PSEG Power’s Peach Bottom units if the MOPR applies to it as a result of payments from BGS auctions, from clearing in the next RPM auction. Further, if any gas-fired units are deemed to be subject to the MOPR, they are also not expected to be affected. However, FERC has not yet acted on this filing and the impact in future RPM auctions may differ. In addition, if one or more electric distribution zones in New Jersey (or another state) were to become FRR service areas, procurements needed for that area could provide an alternate means for nuclear units whose ability to clear in RPM auctions was affected by the MOPR to provide capacity within PJM.

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States that have clean energy programs designed to achieve public policy goals that support such resources as solar, offshore wind and nuclear are not prevented from pursuing those programs by the expanded MOPR and could choose to utilize the existing FRR approach authorized under the PJM tariff. The FRR provides a means other than PJM’s capacity auction for an entity obligated to supply customers to satisfy its capacity obligation. Accordingly, subsidized units that cannot clear in an RPM capacity auction because of the expanded MOPR could still count as capacity resources to a load serving entity using the FRR approach. In a March 2020 order, the BPU initiated an investigation to examine whether New Jersey can achieve its long-term clean energy and environmental objectives under the current resource adequacy procurement paradigm and potential alternatives. One of the areas of inquiry concerns the potential creation of FRR service areas within New Jersey.

We cannot predict the impact that PJM capacity rules or any measures taken by the BPU will have on the capacity market or our generating stations.

Capacity Market Issues—New York Independent System Operator ~~Inc.~~ (NYISO) to change their rules governing pricing for fast-start resources. In its Order FERC found that current fast-start pricing practices are unjust and unreasonable because they do not allow prices to reflect the marginal cost of serving load. FERC required PJM and NYISO to make various changes to their respective tariffs to allow the start-up costs of fast-start resources to be reflected in prices, among other things. In August 2019, PJM stated that new tariff provisions would apply fast-start pricing to all eligible fast-start resources; however, the new rules would not be implemented until FERC issues an order approving them. We will continue to participate in this process before FERC.

~~Environmental Matters~~

~~Climate Change~~—CO₂ ~~Regulation under theClean Air Act~~

December 31, ~~2018~~2019 Form 10-K page 2116. In March 2015, FERC issued an order which held that units receiving special reliability payments could properly take those payments into account in formulating capacity market bids. At the request of FERC, in December 2015, NYISO issued a report concluding that buyer-side mitigation measures were not needed for new entry occurring in the “Rest of State” region and ~~June 30,~~for uneconomic retention and repowering anywhere in the state. In February 2020, FERC declined to expand mitigation to the “Rest of State” region.

In addition, in May 2015, the New York Public Service Commission and other New York agencies filed a complaint at FERC requesting certain exemptions from the NYISO rules that prevent capacity suppliers from submitting bids that are not market competitive. In October 2015, FERC granted in part, certain of the requested exemptions for renewable resources and resources being used by the owner for self-supply. In February 2020, FERC rejected the NYISO’s proposed implementation plan and directed NYISO to prepare a narrow plan focused on the two mitigated regions, New York City and the Lower-Hudson Valley, and that takes into account the price impacts of the proposed renewables cap. FERC also ruled in February 2020 that storage resources should not be exempt from buyer-side mitigation rules.

The NYISO is also engaged in reviewing the reliability and market implications of achieving New York State’s Climate Leadership and Community Protection Act (CLCPA), which was enacted in 2019 and requires New York to procure 70% of its electricity from renewable resources by 2030 and 100% of its electricity from zero-emitting resources by 2040. The CLCPA also requires the procurement of large quantities of renewable resources and storage over the next decade. A Climate Council was created by the CLCPA to establish a plan for implementing its requirements and met for the first time in early March. We are monitoring the Council’s activities and cannot predict the timing of any new requirements that may be forthcoming or the near-term impact those requirements may have on the capacity market or our generating station located in New York.

Transmission Rate Proceedings and Return on Equity

December 31, 2019 Form ~~10-Q~~10-K page ~~89.~~17. In ~~June~~March 2020, FERC issued a NOPR proposing to revise its electric transmission incentive to encourage the development of infrastructure needed to ensure grid reliability and reduce congestion to lower the cost of power for consumers. The NOPR proposes to shift the focus in granting incentives from an approach based on the risks and challenges faced by a project to an approach based on economic and reliability benefits to consumers. Among other items, the NOPR proposes to increase the ROE incentive for joining and remaining a member of an RTO/ISO from 50 basis points to 100 basis points. The NOPR further proposes a 100-basis point incentive for transmission technologies that enhance reliability, efficiency and capacity, as well as improve the operation of new or existing transmission facilities. FERC also proposed to retain several existing non-ROE incentives, including those related to Construction Work In Progress, hypothetical capital structure, and accelerated depreciation for rate recovery and regulatory asset treatment. We cannot predict the outcome of this matter.

State Regulation

New Jersey Solar Initiatives

December 31, 2019 ~~the EPA issued its final Affordable~~Form 10-K page 19. The New Jersey Clean Energy ~~(ACE) rule as~~Act of 2018 requires that the BPU close the existing solar renewable energy certificate (SREC) program to new applications at the earlier of June 1, 2021 or the date at which 5.1% of New Jersey retail electric sales are derived from solar. According to recent BPU orders, the 5.1% threshold will be attained before May 2020 and therefore the SREC market was closed to new applications effective April 30, 2020, with limited exceptions. Solar projects that failed to achieve commercial operation before April 30, 2020 may be entitled to receive transition renewable energy certificates (TRECs) for each megawatt hour of solar production. The New Jersey electric distribution companies (EDCs), including PSE&G, are required to purchase, using the services of a ~~replacement~~TREC administrator, TRECs from solar projects at rates set by the BPU. PSE&G intends to file for rate recovery of these costs in the ~~repealed Clean Power Plan, a greenhouse gas emission regulation~~near future. PSE&G filed for ~~existing power plants.~~rate recovery of these costs in April 2020. The ~~ACE rule narrowly defines the “best system of emissions reductions” (BSER) as heat improvements~~BPU is continuing to be applied only to an individual unit, excluding other potential mechanisms to address climate change. In September 2019, a coalition of power companies, including PSEG, filed a Petition for Review of the ACE Rulework with the ~~United States Court of Appeals~~state’s EDCs to establish the mechanisms for implementing the ~~District of Columbia Circuit challenging the EPA’s narrow interpretation of BSER. We cannot estimate the impact of this action on our business or results of operations.~~transition incentive program.

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ITEM 6.	EXHIBITS

A listing of exhibits being filed with this document is as follows:



a. PSEG:
~~Exhibit 10.1:~~		~~Supplemental Executive Retirement Income Plan, amended effective July 1, 2019~~
~~Exhibit 10.2:~~		~~Retirement Income Reinstatement Plan for Non-Represented Employees, amended effective July 1, 2019~~
~~Exhibit 10.3:~~		~~Key Executive Severance Plan of Public Service Enterprise Group Incorporated, amended effective July 1, 2019~~
Exhibit 31:		Certification by Ralph Izzo Pursuant to Rules 13a-14 and 15d-14 of the 1934 Act
Exhibit 31.1:		Certification by Daniel J. Cregg Pursuant to Rules 13a-14 and 15d-14 of the 1934 Act
Exhibit 32:		Certification by Ralph Izzo Pursuant to Section 1350 of Chapter 63 of Title 18 of the U.S. Code
Exhibit 32.1:		Certification by Daniel J. Cregg Pursuant to Section 1350 of Chapter 63 of Title 18 of the U.S. Code
Exhibit 101.INS:		Inline XBRL Instance Document - The Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Exhibit 101.SCH:		Inline XBRL Taxonomy Extension Schema
Exhibit 101.CAL:		Inline XBRL Taxonomy Extension Calculation Linkbase
Exhibit 101.LAB:		Inline XBRL Taxonomy Extension Labels Linkbase
Exhibit 101.PRE:		Inline XBRL Taxonomy Extension Presentation Linkbase
Exhibit 101.DEF:		Inline XBRL Taxonomy Extension Definition Document
Exhibit 104:		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

b. PSE&G:
~~Exhibit 10.1:~~		~~Supplemental Executive Retirement Income Plan, amended effective July 1, 2019~~
~~Exhibit 10.2:~~		~~Retirement Income Reinstatement Plan for Non-Represented Employees, amended effective July 1, 2019~~
~~Exhibit 10.3:~~		~~Key Executive Severance Plan of Public Service Enterprise Group Incorporated, amended effective July 1, 2019~~
Exhibit 31.2:		Certification by Ralph Izzo Pursuant to Rules 13a-14 and 15d-14 of the 1934 Act
Exhibit 31.3:		Certification by Daniel J. Cregg Pursuant to Rules 13a-14 and 15d-14 of the 1934 Act
Exhibit 32.2:		Certification by Ralph Izzo Pursuant to Section 1350 of Chapter 63 of Title 18 of the U.S. Code
Exhibit 32.3:		Certification by Daniel J. Cregg Pursuant to Section 1350 of Chapter 63 of Title 18 of the U.S. Code
Exhibit 101.INS:		Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Exhibit 101.SCH:		Inline XBRL Taxonomy Extension Schema
Exhibit 101.CAL:		Inline XBRL Taxonomy Extension Calculation Linkbase
Exhibit 101.LAB:		Inline XBRL Taxonomy Extension Labels Linkbase
Exhibit 101.PRE:		Inline XBRL Taxonomy Extension Presentation Linkbase
Exhibit 101.DEF:		Inline XBRL Taxonomy Extension Definition Document
Exhibit 104:		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

c. PSEG Power:
Exhibit ~~10.1:~~		~~Supplemental Executive Retirement Income Plan, amended effective July 1, 2019~~
~~Exhibit 10.2:~~		~~Retirement Income Reinstatement Plan for Non-Represented Employees, amended effective July 1, 2019~~
~~Exhibit 10.3:~~		~~Key Executive Severance Plan of Public Service Enterprise Group Incorporated, amended effective July 1, 2019~~
~~Exhibit~~ 31.4:		Certification by Ralph Izzo Pursuant to Rules 13a-14 and 15d-14 of the 1934 Act
Exhibit 31.5:		Certification by Daniel J. Cregg Pursuant to Rules 13a-14 and 15d-14 of the 1934 Act
Exhibit 32.4:		Certification by Ralph Izzo Pursuant to Section 1350 of Chapter 63 of Title 18 of the U.S. Code
Exhibit 32.5:		Certification by Daniel J. Cregg Pursuant to Section 1350 of Chapter 63 of Title 18 of the U.S. Code

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Exhibit 101.INS:		Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Exhibit 101.SCH:		Inline XBRL Taxonomy Extension Schema
Exhibit 101.CAL:		Inline XBRL Taxonomy Extension Calculation Linkbase
Exhibit 101.LAB:		Inline XBRL Taxonomy Extension Labels Linkbase
Exhibit 101.PRE:		Inline XBRL Taxonomy Extension Presentation Linkbase
Exhibit 101.DEF:		Inline XBRL Taxonomy Extension Definition Document
Exhibit 104:		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.



PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
(Registrant)

By:	/S/ ROSE M. CHERNICK
	Rose M. Chernick Vice President and Controller (Principal Accounting Officer)

Date: ~~October 31, 2019~~May 4, 2020

SIGNATURE



PUBLIC SERVICE ELECTRIC AND GAS COMPANY
(Registrant)

By:	/S/ ROSE M. CHERNICK
	Rose M. Chernick Vice President and Controller (Principal Accounting Officer)

Date: ~~October 31, 2019~~May 4, 2020

SIGNATURE



PSEG POWER LLC
(Registrant)

By:	/S/ ROSE M. CHERNICK
	Rose M. Chernick Vice President and Controller (Principal Accounting Officer)

Date: ~~October 31, 2019~~May 4, 2020

9684




	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019			2018			2019			2018
OPERATING REVENUES	$	2,302		$	2,394		$	7,598		$	7,228
OPERATING EXPENSES
Energy Costs	753			804			2,581			2,356
Operation and Maintenance	745			742			2,251			2,221
Depreciation and Amortization	307			294			928			854
Loss on Asset Dispositions	7			—			402			—
Total Operating Expenses	1,812			1,840			6,162			5,431
OPERATING INCOME	490			554			1,436			1,797
Income from Equity Method Investments	3			5			10			12
Net Gains (Losses) on Trust Investments	(3		)	45			164			31
Other Income (Deductions)	35			33			101			99
Non-Operating Pension and OPEB Credits (Costs)	55			19			121			57
Interest Expense	(147		)	(127		)	(417		)	(341		)
INCOME BEFORE INCOME TAXES	433			529			1,415			1,655
Income Tax Benefit (Expense)	(30		)	(117		)	(159		)	(416		)
NET INCOME	$	403		$	412		$	1,256		$	1,239
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC	504			504			504			504
DILUTED	507			507			507			507
NET INCOME PER SHARE:
BASIC	$	0.80		$	0.82		$	2.49		$	2.46
DILUTED	$	0.79		$	0.81		$	2.47		$	2.44




	September 30, 2019			December 31, 2018
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents	$	120		$	177
Accounts Receivable, net of allowances of $61 in 2019 and $63 in 2018	1,184			1,435
Tax Receivable	—			242
Unbilled Revenues	161			240
Fuel	346			331
Materials and Supplies, net	579			571
Prepayments	249			94
Derivative Contracts	18			11
Regulatory Assets	352			389
Other	50			17
Total Current Assets	3,059			3,507
PROPERTY, PLANT AND EQUIPMENT	45,500			44,201
Less: Accumulated Depreciation and Amortization	(10,093		)	(9,838		)
Net Property, Plant and Equipment	35,407			34,363
NONCURRENT ASSETS
Regulatory Assets	3,593			3,399
Operating Lease Right-of-Use Assets	285			—
Long-Term Investments	812			896
Nuclear Decommissioning Trust (NDT) Fund	2,135			1,878
Long-Term Tax Receivable	150			—
Long-Term Receivable of Variable Interest Entity (VIE)	639			624
Rabbi Trust Fund	246			224
Goodwill	16			16
Other Intangibles	188			143
Derivative Contracts	27			1
Other	258			275
Total Noncurrent Assets	8,349			7,456
TOTAL ASSETS	$	46,815		$	45,326


(A)	Includes amounts applicable to PSEG (parent company), Energy Holdings and Services.


(A)	Includes primarily revenues from appliance repair services at PSE&G, solar power projects and energy management and fuel service contracts with LIPA at PSEG Power, and PSEG LI’s OSA with LIPA in Other.


(B)	Includes primarily alternative revenues at PSE&G, derivative contracts and lease contracts at PSEG Power, and lease contracts in Other. ~~For the nine months ended September 30, 2019, Other includes a~~ ~~$58 million~~ ~~pre-tax charge related to one of Energy Holdings’ lease investments. See Note 8. Financing Receivables for additional information.~~




	Three Months Ended March 31, 2020
	Millions
Balance as of January 1, 2020 (A)	$	68
Utility Customer Accounts
Provision for Expected Credit Losses	32
Write-offs, net of Recoveries of $2 million	(20		)
Balance as of March 31, 2020	$	80


(A)	Includes an $8 million pre-tax increase at adoption of ASU 2016-13. See Note 2. Recent Accounting Standards.




Delivery Year	$ per MW-Day	MW Cleared
June 2019 to May 2020	$116	8,300
June 2020 to May 2021	$179	7,300
June 2021 to May 2022	$182	6,900




Delivery Year	$ per MW-Day (A)	MW Cleared
June 2019 to May 2020	$231	1,330
June 2020 to May 2021	$195	1,330
June 2021 to May 2022	$192	950
June 2022 to May 2023	$179	950
June 2023 to May 2024	$231	480
June 2024 to May 2025	$231	480
June 2025 to May 2026	$231	480


(A)	Capacity cleared prices for BH5 through 2026 will be escalated based upon the Handy-Whitman Index. These adjustments are not included above.




	As of September 30, 2019
	PSE&G			PSEG Power			Other			Total
	Millions
Undiscounted Cash Flows	$	124		$	102		$	171		$	397
Reconciling Amount due to Discount Rate	(27		)	(29		)	(33		)	(89		)
Total Discounted Operating Lease Liabilities	$	97		$	73		$	138		$	308




	PSEG Power		Energy Holdings		Total
	Millions
Operating Lease Income
Three Months Ended September 30, 2019
Fixed Lease Income	$	—	$	6	$	6
Variable Lease Income	7		—		7
Total Operating Lease Income	$	7	$	6	$	13
Nine Months Ended September 30, 2019
Fixed Lease Income	$	—	$	17	$	17
Variable Lease Income	19		—		19
Total Operating Lease Income	$	19	$	17	$	36




Outstanding Loans by Class of Customer
	As of			As of
Consumer Loans	September 30, 2019			December 31, 2018
	Millions
Commercial/Industrial	$	153		$	164
Residential	8			9
Total	$	161		$	173
Current Portion (included in Accounts Receivable)	(24		)	(24		)
Noncurrent Portion (included in Long-Term Investments)	$	137		$	149




	Lease Receivables, Net of Non-Recourse Debt
Counterparties’ Credit Rating Standard and Poor’s (S&P) as of September 30, 2019
	As of September 30, 2019
	Millions
AA	$	12
A-	58
BBB+ — BBB-	258
BB	133
NR	39
Total	$	500




	As of March 31, 2020
	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	Millions
Equity Securities
Domestic	$	445	$	147	$	(27	)	$	565
International	386		33		(48		)	371
Total Equity Securities	831		180		(75		)	936
Available-for-Sale Debt Securities
Government	526		39		(1		)	564
Corporate	525		13		(11		)	527
Total Available-for-Sale Debt Securities	1,051		52		(12		)	1,091
Total NDT Fund Investments	$	1,882	$	232	$	(87	)	$	2,027




	As of December 31, 2019
	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	Millions
Equity Securities
Domestic	$	425	$	238	$	(4	)	$	659
International	400		103		(11		)	492
Total Equity Securities	825		341		(15		)	1,151
Available-for-Sale Debt Securities
Government	563		16		(2		)	577
Corporate	470		17		(1		)	486
Total Available-for-Sale Debt Securities	1,033		33		(3		)	1,063
Total NDT Fund Investments (A)	$	1,858	$	374	$	(18	)	$	2,214


(A)	The NDT Fund Investments table excludes foreign currency of $1$2 million as of ~~September 30,~~December 31, 2019, which is part of the NDT Fund.




	As of December 31, 2018
	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	Millions
Equity Securities
Domestic	$	447	$	153	$	(29	)	$	571
International	323		36		(30		)	329
Total Equity Securities	770		189		(59		)	900
Available-for Sale Debt Securities
Government	498		2		(9		)	491
Corporate	501		1		(15		)	487
Total Available-for-Sale Debt Securities	999		3		(24		)	978
Total NDT Fund Investments	$	1,769	$	192	$	(83	)	$	1,878




	As of September 30, 2019										As of December 31, 2018
	Less Than 12 Months					Greater Than 12 Months					Less Than 12 Months					Greater Than 12 Months
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses
	Millions
Equity Securities (A)
Domestic	$	69	$	(5	)	$	6	$	(2	)	$	147	$	(26	)	$	5	$	(3	)
International	45		(4		)	39		(14		)	131		(28		)	5		(2		)
Total Equity Securities	114		(9		)	45		(16		)	278		(54		)	10		(5		)
Available-for Sale Debt Securities
Government (B)	36		—			43		—			51		—			317		(9		)
Corporate (C)	36		—			19		(2		)	150		(5		)	222		(10		)
Total Available-for-Sale Debt Securities	72		—			62		(2		)	201		(5		)	539		(19		)
NDT Trust Investments	$	186	$	(9	)	$	107	$	(18	)	$	479	$	(59	)	$	549	$	(24	)


(A)	Equity Securities—Investments in marketable equity securities within the NDT Fund are primarily in common stocks within a broad range of industries and sectors. Unrealized gains and losses on these securities are recorded in Net Income.


(C)	PSEG Power recognized an impairment of available-for-sale debt securities that it intends to sell. PSEG Power’s policy is to sell all such securities that are rated below investment grade.




Time Frame	Fair Value
	Millions
Less than one year	$	26
1 - 5 years	267
6 - 10 years	192
11 - 15 years	55
16 - 20 years	74
Over 20 years	448
Total NDT Available-for-Sale Debt Securities	$	1,062




	Pension Benefits						OPEB						Pension Benefits						OPEB
	Three Months Ended						Three Months Ended						Nine Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,						September 30,
	2019			2018			2019			2018			2019			2018			2019			2018
	Millions
Components of Net Periodic Benefit (Credits) Costs
Service Cost (included in O&M Expense)	$	33		$	32		$	2		$	4		$	90		$	97		$	7		$	13
Non-Service Components of Pension and OPEB (Credits) Costs
Interest Cost	51			52			12			16			167			156			34			49
Expected Return on Plan Assets	(108		)	(111		)	(9		)	(9		)	(301		)	(331		)	(27		)	(30		)
Amortization of Net
Prior Service Credit	(4		)	(4		)	(32		)	(1		)	(13		)	(13		)	(96		)	(1		)
Actuarial Loss	21			22			13			16			75			64			38			48
Non-Service Components of Pension and OPEB (Credits) Costs	(40		)	(41		)	(16		)	22			(72		)	(124		)	(51		)	66
Total Benefit (Credits) Costs	$	(7	)	$	(9	)	$	(14	)	$	26		$	18		$	(27	)	$	(44	)	$	79




	As of			As of
	September 30, 2019			December 31, 2018
	Millions
Face Value of Outstanding Guarantees	$	1,827		$	1,772
Exposure under Current Guarantees	$	134		$	198

Letters of Credit Margin Posted	$	137		$	115
Letters of Credit Margin Received	$	34		$	26

Cash Deposited and Received:
Counterparty Cash Margin Deposited	$	—		$	—
Counterparty Cash Margin Received	$	(3	)	$	(10	)
Net Broker Balance Deposited (Received)	$	95		$	403

Additional Amounts Posted:
Other Letters of Credit	$	53		$	52




	Auction Year
	2016	2017	2018	2019
36-Month Terms Ending	May 2019	May 2020	May 2021	May 2022	(A)
Load (MW)	2,800	2,800	2,900	2,800
$ per MWh	$96.38	$90.78	$91.77	$98.04


(A)	Prices set in the ~~2019~~2020 BGS auction ~~became~~will become effective on June 1, ~~2019~~2020 when the ~~2016~~2017 BGS auction agreements ~~expired.~~expire.




Fuel Type	PSEG Power's Share of Commitments through 2023
	Millions
Nuclear Fuel
Uranium	$	203
Enrichment	$	328
Fabrication	$	141
Natural Gas	$	1,082




Fuel Type	PSEG Power’s Share of Commitments through 2024
	Millions
Nuclear Fuel
Uranium	$	189
Enrichment	$	336
Fabrication	$	175
Natural Gas	$	1,214


•	~~issued $750 million of~~ ~~2.875%~~ ~~Senior Notes due June 2024, and~~


•	issued $~~400~~300 million of ~~3.20%~~2.45% Secured Medium-Term Notes, Series M,N, due ~~August 2049~~,