--- ticker: PEG company: PEG filing_type: 10-K year_current: 2025 year_prior: 2024 risks_added: 1 risks_removed: 1 risks_modified: 18 risks_unchanged: 9 source: SEC EDGAR url: https://riskdiff.com/peg/2025-vs-2024/ markdown_url: https://riskdiff.com/peg/2025-vs-2024/index.md generated: 2026-06-01 --- # PEG: 10-K Risk Factor Changes 2025 vs 2024 > Source: U.S. Securities and Exchange Commission (EDGAR) > Generated: 2026-06-01 > All data extracted directly from official filings. No hallucinated content. ## Summary | Status | Count | |--------|-------| | New risks added | 1 | | Risks removed | 1 | | Risks modified | 18 | | Unchanged | 9 | --- ## New in Current Filing: An increasing demand for power and load growth, potentially compounded by a shift away from natural gas toward increased electrification could cause reliability issues and higher costs for customers, which could lead to potential pressure on fair and timely recovery of our investments and proposed programs. Substantial investments in generation, transmission and distribution will be required to meet current projections of increasing customer demand. Higher projected demand is driven by a number of factors, including data centers, reshoring manufacturing, port electrification, EV adoption, other electrification and a shift away from natural gas. Sustained distribution grid modernization will also be required to accommodate increased EE, EV infrastructure, increased penetration of distributed energy resources on the electric system, such as on-site solar generation and also potential deployment of 23 23 23 Table of Contents Table of Contents Table of Contents energy storage, fuel cells, and DR technologies. Higher electric demand could significantly increase the prices of energy and capacity, as well as raise resource adequacy and reliability concerns within PJM, particularly if that increased demand outpaces the addition of firm generation capacity and in transmission constrained zones. This resource adequacy challenge presents reliability concerns, as well as potential for increasing energy and capacity prices that could place pressure on customer bills, could attract political and regulatory scrutiny and increase regulatory uncertainty for utility investment initiatives and programs. --- ## No Match in Current: A material shift away from natural gas toward increased electrification and a reduction in the use of natural gas as a result of decarbonization measures could adversely impact our gas business and ability to execute on our overall PSE&G business strategy. *This section from the 2024 filing does not have a high-confidence textual match in 2025. It may have been removed, merged, or substantially reworded.* Various jurisdictions outside of New Jersey have enacted prohibitions or restrictions on the use and consumption of natural gas and the BPU has commenced stakeholder proceedings regarding the Future of Natural Gas as required by the New Jersey governor's EO issued in 2023. The CIP protects PSE&G's margin variances against changes in customer usage of gas and electricity, but not against a decrease in the gas customer base (number of customers on the system). If New Jersey were to enact similar prohibitions or restrictions, a reduction in the use of natural gas could lead to a reduction in the gas customer base, higher customer rates for those customers who remain, and a diminished need for gas infrastructure, which could potentially cause substantial investment value of gas assets to be stranded and removed from our rate base, resulting in a reduction in associated rate recovery. Our inability to recover through rates our investments into the natural gas system, while still ensuring gas system safety and reliability, could materially affect our financial condition, results of operations, liquidity, and cash flows. Further, these industry changes, costs associated with complying with new regulatory developments and initiatives and with technological advancements could materially affect our financial condition, results of operations, liquidity, and cash flows. If the above changes occurred, that would also require investment in the electric T&D system to accommodate higher loads. In addition, in order to enable the New Jersey clean energy economy, sustained grid modernization will be required to accommodate increased EE, EV infrastructure, increased penetration of distributed energy resources on the electric system, such as on-site solar generation and also anticipated increased deployment of energy storage, fuel cells, and DR technologies. If these changes progress rapidly in the near-term, our business model and our ability to execute on our overall PSE&G business strategy could be materially impacted. --- ## Modified: PSE&G's revenues, earnings and results of operations are dependent upon state laws and regulations that affect distribution and related activities. **Key changes:** - Reworded sentence: "PSE&G's base rates were most recently approved in October 2024." - Reworded sentence: "28 28 28 Table of Contents Table of Contents Table of Contents PSE&G also is pursuing a number of opportunities to expand its products and services to customers." - Reworded sentence: "Rejection or delay of such filings could have an adverse impact on our future growth, or our standing stakeholders." - Reworded sentence: "For information regarding PSE&G's most recent affiliate and management audit, see Item 8." - Reworded sentence: "The occurrence of such challenges may subject PSEG Power to a level of scrutiny not faced by other unaffiliated competitors in those markets and could even adversely affect retail rates received by PSE&G." **Prior (2024):** PSE&G is subject to regulation by the BPU. Such regulation affects almost every aspect of its businesses, including its retail rates. Failure to comply with these regulations could have a material adverse impact on PSE&G's ability to operate its business and could result in fines, penalties or sanctions. The retail rates for electric and gas distribution services are established in a distribution base rate proceeding and remain in effect until a new distribution base rate proceeding is filed and concluded. In December 2023, we filed a distribution base rate case, as required by the BPU. In addition, our utility has received approval for several clause recovery mechanisms, some of which provide for recovery of costs and earn returns on authorized investments in the periods between distribution base rate proceedings. These clause mechanisms require periodic updates to be reviewed and approved by the BPU and are subject to prudency reviews. Inability to obtain fair or timely recovery of all our costs pursuant to the distribution base rate case and/or these clause recovery mechanisms,, including a return of, or on, our investments in rates, could have a material adverse impact on our results of operations and cash flows. In addition, if legislative and regulatory structures were to evolve in such a way that PSE&G's exclusive rights to serve its regulated customers were eroded, its future earnings could be negatively impacted. PSE&G also is pursuing a number of opportunities to expand its products and services to customers to support clean energy goals. BPU approval is required for any new endeavor, and is not guaranteed. Rejection or delay of such filings could have an adverse impact on our future growth, or our standing with environmentally conscious investors or other stakeholders. In September 2020, the BPU ordered the commencement of a comprehensive affiliate and management audit of PSE&G. The BPU also conducts periodic combined management/competitive service audits of New Jersey utilities related to affiliate standard requirements, competitive services, cross-subsidization, cost allocation and other issues. A finding by the BPU of non-compliance with these requirements could potentially impact our business, results of operations and cash flows. For information regarding PSE&G's current affiliate and management audit, see Item 8. Note 13. Commitments and Contingent Liabilities. In addition, PSE&G procures the supply requirements of its default service BGSS gas customers through a full-requirements contract with PSEG Power. Government officials, legislators and advocacy groups are aware of the affiliation between PSE&G and PSEG Power. In periods of rising utility rates, those officials and advocacy groups may question or challenge costs and transactions incurred by PSE&G with PSEG Power, irrespective of any previous regulatory processes or approvals underlying those transactions. The occurrence of such challenges may subject PSEG Power to a level of scrutiny not faced by other unaffiliated competitors in those markets and could adversely affect retail rates received by PSE&G in an effort to offset any perceived benefit to PSEG Power from the affiliation. **Current (2025):** PSE&G is subject to regulation by the BPU. Such regulation affects almost every aspect of its businesses, including its retail rates. Failure to comply with these regulations could have a material adverse impact on PSE&G's ability to operate its business and could result in fines, penalties or sanctions. The retail rates for electric and gas distribution services are established in a distribution base rate proceeding and remain in effect until a new distribution base rate proceeding is filed and concluded. PSE&G's base rates were most recently approved in October 2024. In addition, our utility has received approval for several clause recovery mechanisms, some of which provide for recovery of costs and earn returns on authorized investments. These clause mechanisms require periodic financial reviews to update rates charged to customers which are independent of base rate proceedings and are subject to prudency reviews by the BPU. Inability to obtain fair or timely recovery of all our costs pursuant to the distribution base rate case and/or these clause recovery mechanisms, including a return of, or on, our investments in rates, could have a material adverse impact on our results of operations and cash flows. In addition, if legislative and regulatory structures were to evolve in such a way that PSE&G's exclusive rights to serve its regulated customers were eroded, its future earnings could be negatively impacted. 28 28 28 Table of Contents Table of Contents Table of Contents PSE&G also is pursuing a number of opportunities to expand its products and services to customers. BPU approval is required for any new endeavor, and is not guaranteed. Rejection or delay of such filings could have an adverse impact on our future growth, or our standing stakeholders. The BPU also conducts periodic combined management/competitive service audits of New Jersey utilities related to affiliate standard requirements, competitive services, cross-subsidization, cost allocation and other issues. A finding by the BPU of non-compliance with these requirements could potentially impact our business, results of operations and cash flows. For information regarding PSE&G's most recent affiliate and management audit, see Item 8. Note 13. Commitments and Contingent Liabilities. In addition, PSE&G procures the supply requirements of its default service BGSS gas customers through a full-requirements contract with PSEG Power. Government officials, legislators and advocacy groups are aware of the affiliation between PSE&G and PSEG Power. In periods of rising utility rates, those officials and advocacy groups may question or challenge costs and transactions incurred by PSE&G with PSEG Power, irrespective of any previous regulatory processes or approvals underlying those transactions. The occurrence of such challenges may subject PSEG Power to a level of scrutiny not faced by other unaffiliated competitors in those markets and could even adversely affect retail rates received by PSE&G. --- ## Modified: We are subject to physical, financial and transition risks related to climate change, including potentially increased legislative and regulatory burdens and changing customer preferences, and we may be subject to lawsuits, all of which could impact our businesses and results of operations. **Key changes:** - Reworded sentence: "Electric demand could also be impacted by electrification, including greater adoption of EVs, installation of distributed energy resources, such as behind the meter solar, installation of more energy efficient equipment, flexible load and/or energy storage, and other advances in technology." - Reworded sentence: "Any one or all of these factors could impact the need to invest in our electric and gas T&D systems and, therefore, our company growth rate." - Added sentence: "In addition, the effects of climate change will have increased the physical risks to our facilities and operations resulting from such climate hazards as more severe weather events (extreme wind, rainfall and flooding), such as experienced from Superstorm Sandy and Tropical Storms Isaias and Ida, sea level rise, and extreme heat and drought." - Reworded sentence: "Developing and implementing plans for compliance with GHG emissions reduction, clean/renewable energy requirements, or for achieving voluntary climate commitments can lead to additional capital and Operation and Maintenance (O&M) expenditures and could significantly affect the economic position of existing operations and proposed projects." - Reworded sentence: "On the other hand, in the event that the political, policy, regulatory or legislative support for clean energy projects declines, the benefits or feasibility of certain investments we could potentially make may be reduced." **Prior (2024):** Climate change may increasingly drive change to existing or additional legislation and regulation that may impact our business and shape our customers' energy preference and sustainability goals. While the CIP protects PSE&G's margin variances against changes in customer usage of gas and electricity, customer demand for natural gas could decrease as a result of changing customer preferences favoring electrification and advanced technologies that offer energy efficient options. Electric usage could also be impacted by greater adoption of EVs, installation of distributed energy resources, such as behind the meter solar, 17 17 17 17 17 17 Table of Contents Table of Contents Table of Contents installation of more energy efficient equipment, flexible load and/or energy storage, and other advances in technology. Further, climate change may adversely impact the economy and reduced economic and consumer activity in our service areas could lower demand for electricity and gas we deliver. Any one or all of these factors could impact the need to invest in our electric and gas T&D systems and, therefore, the rate of growth of our company. Severe weather or acts of nature, including hurricanes, winter storms, earthquakes, floods, wildfires and other natural disasters can stress systems, disrupt operation of our facilities and cause service outages, and property damage that require incurring additional expenses. These and other physical changes could result in changes in customer demand, increased costs associated with repairing and maintaining generation facilities and T&D systems, resulting in increased maintenance and capital costs (and potential increased financing needs), increased regulatory oversight, and lower customer satisfaction. Where recovery of costs to restore service and repair damaged equipment and facilities is available, any determination by the regulator not to permit timely and full recovery of the costs incurred could have a material adverse effect on our businesses, financial condition, results of operations and prospects. To the extent financial markets view climate change and greenhouse gas (GHG) emissions as a financial risk, our ability to access capital markets could be negatively affected or cause us to receive less than favorable terms and conditions. Climate change-related political action and state and federal policy goals, including but not limited to those related to energy efficient targets, solar targets, energy storage targets, encouragement of electrification through EV adoption, policies to restrict the use of natural gas in new or existing homes and businesses, or encourage electrification of end use equipment currently fueled by natural gas, and the associated legislative and regulatory responses, may create financial risk as our operations may be subject to additional regulation at either the state or federal level in the future. Increased regulation of GHG emissions could impose significant additional costs on our electric and natural gas operations, our suppliers and ultimately, our customers. Developing and implementing plans for compliance with GHG emissions reduction, clean/renewable energy requirements, or for achieving voluntary climate commitments can lead to additional capital, personnel, and Operation and Maintenance (O&M) expenditures and could significantly affect the economic position of existing operations and proposed projects. If our regulators do not allow us to recover all or a part of the cost of capital investment or the O&M costs incurred to comply with increasingly rigorous regulatory mandates, it could have a material adverse effect on our results of operations, financial condition or cash flows. On the other hand, in the event that the political, policy, regulatory or legislative support for clean energy projects declines, the benefits or feasibility of certain investments we may have made in such projects, including those in the development stage, may be reduced. We may be subject to climate change lawsuits that may seek injunctive relief, monetary compensation, penalties, and punitive damages, including but not limited to, for liabilities for damages related to mitigate harm caused by climate change. An adverse outcome could require substantial capital expenditures and possibly require payment of substantial penalties or damages. Defense costs associated with such litigation can also be significant and could affect results of operations, financial condition or cash flows if such costs are not recovered through regulated rates. Further, our business is subject to policy, regulatory, technology and economic uncertainties and contingencies, including regulatory approvals required for various of our clean energy initiatives, many of which are beyond our control and may affect our ability to implement our clean energy strategy and initiatives and achieve our goal of net zero GHG emissions by 2030 for Scopes 1 and 2 emissions, or other GHG emissions reduction or climate-related goals that we may set from time to time, in a cost-effective manner or at all. **Current (2025):** Climate change may increasingly drive change to existing or additional legislation and regulation that may impact our business and shape our customers' energy preference and sustainability goals. While the CIP protects PSE&G's margin variances against changes in customer usage of gas and electricity, customer demand for natural gas could decrease as a result of changing customer preferences favoring electrification and advanced technologies that offer energy efficient options. Electric demand could also be impacted by electrification, including greater adoption of EVs, installation of distributed energy resources, such as behind the meter solar, installation of more energy efficient equipment, flexible load and/or energy storage, and other advances in technology. Further, climate change may adversely impact the economy and reduced economic and consumer activity in our service areas could lower demand for electricity and gas we deliver. Any one or all of these factors could impact the need to invest in our electric and gas T&D systems and, therefore, our company growth rate. Severe weather or acts of nature, including hurricanes, winter storms, earthquakes, floods, wildfires and other natural disasters can stress systems, disrupt operation of our facilities and cause service outages, and property damage that require incurring additional expenses. In addition, the effects of climate change will have increased the physical risks to our facilities and operations resulting from such climate hazards as more severe weather events (extreme wind, rainfall and flooding), such as experienced from Superstorm Sandy and Tropical Storms Isaias and Ida, sea level rise, and extreme heat and drought. These and other physical changes could result in changes in customer demand, increased costs associated with repairing and maintaining generation facilities and T&D systems, resulting in increased maintenance and capital costs (and potential increased financing needs), increased regulatory oversight, and lower customer satisfaction. Where recovery of costs to restore service and repair damaged equipment and facilities is available, any determination by the regulator not to permit timely and full recovery of the costs incurred could have a material adverse effect on our businesses, financial condition, results of operations and prospects. To the extent financial markets view climate change and greenhouse gas (GHG) emissions as a financial risk, our ability to access capital markets could be negatively affected or cause us to receive less than favorable terms and conditions. Climate change-related political action and state and federal policy goals, including but not limited to those related to energy efficient targets, solar targets, energy storage targets, encouragement of electrification through EV adoption, policies to restrict the use of natural gas in new or existing homes and businesses, or encourage electrification of end use equipment currently fueled by natural gas, and the associated legislative and regulatory responses, may create financial risk as our operations may be subject to additional regulation at either the state or federal level in the future. Increased regulation of GHG emissions could impose significant additional costs on our electric and natural gas operations, our suppliers and ultimately, our customers. Developing and implementing plans for compliance with GHG emissions reduction, clean/renewable energy requirements, or for achieving voluntary climate commitments can lead to additional capital and Operation and Maintenance (O&M) expenditures and could significantly affect the economic position of existing operations and proposed projects. If our regulators do not allow us to recover all or a part of the cost of capital investment or the O&M costs incurred to comply with increasingly rigorous regulatory mandates, it could have a material adverse effect on our results of operations, financial condition or cash flows. On the other hand, in the event that the political, policy, regulatory or legislative support for clean energy projects declines, the benefits or feasibility of certain investments we could potentially make may be reduced. We may be subject to climate change lawsuits that may seek injunctive relief, monetary compensation, penalties, and punitive damages, including but not limited to, for liabilities for damages related to mitigate harm caused by climate change. An adverse outcome could require substantial capital expenditures and possibly require payment of substantial penalties or damages. Defense costs associated with such litigation can also be significant and could affect results of operations, financial condition or cash flows if such costs are not recovered through regulated rates. Further, our business is subject to policy, regulatory, technology and economic uncertainties and contingencies, including regulatory approvals required for our various investments, many of which are beyond our control and may affect planned 20 20 20 Table of Contents Table of Contents Table of Contents investments and our ability to meet our targets of net zero GHG emissions by 2030 for Scopes 1 and 2 emissions, or other GHG emissions reduction or climate-related goals that we may set from time to time, in a cost-effective manner or at all. --- ## Modified: The markets, PTC and/or ZEC program may not provide sufficient financial support for our New Jersey nuclear plants which could result in the retirement of all of these nuclear plants. **Key changes:** - Reworded sentence: "MD&A - Executive Overview of 2024 and Future Outlook, PSEG Power's Salem 1, Salem 2 and Hope Creek nuclear plants have been awarded ZECs by the BPU through May 2025." - Reworded sentence: "Treasury has not yet defined gross receipts." **Prior (2024):** As further described in Item 7. MD&A - Executive Overview of 2023 and Future Outlook, in April 2019, PSEG Power's Salem 1, Salem 2 and Hope Creek nuclear plants were awarded ZECs by the BPU through May 2022. In April 2021, these nuclear plants were awarded ZECs for the three-year period starting June 2022. In August 2022, the IRA was signed into law expanding incentives promoting carbon-free generation. The enacted legislation established a PTC for electricity generation using nuclear energy which begins January 1, 2024 and continues through 2032. The expected PTC rate is up to $15/MWh subject to adjustment based upon a facility's gross receipts. The PTC rate and the gross receipts threshold are subject to annual inflation adjustments. The U.S. Treasury is expected to clarify the definition of gross receipts. The ZEC payment may be adjusted by the BPU to offset environmental or fuel diversity payments that a selected nuclear plant may receive from another source. Until additional guidance is issued by the U.S. Treasury, we are unable to fully determine the impacts of the PTC. If the markets, PTC and/or the ZEC program do not provide sufficient financial support, 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 CWA and related state regulations, or other factors, PSEG Power may take all necessary steps to cease to operate all of these plants and will incur associated costs and accounting charges in the event that the financial condition of the plants is materially adversely impacted in the future. Ceasing operations of these plants would result in a material adverse impact on PSEG's results of operations. **Current (2025):** As further described in Item 7. MD&A - Executive Overview of 2024 and Future Outlook, PSEG Power's Salem 1, Salem 2 and Hope Creek nuclear plants have been awarded ZECs by the BPU through May 2025. 30 30 30 Table of Contents Table of Contents Table of Contents In August 2022, the IRA was signed into law expanding incentives promoting carbon-free generation. The enacted legislation established a PTC for electricity generation using nuclear energy which begins January 1, 2024 and continues through 2032. The expected PTC rate is up to $15/MWh subject to adjustment based upon a facility's gross receipts. The PTC rate and the gross receipts threshold are subject to annual inflation adjustments. The U.S. Treasury has not yet defined gross receipts. The ZEC payment will be adjusted by the BPU to offset environmental or fuel diversity payments that a selected nuclear plant may receive from another source. We continue to estimate the PTC while we await additional guidance from the U.S. Treasury. The U.S. Treasury may issue guidance related to the PTC and/or the Federal government could amend the IRA, either of which could have an adverse impact on our financial condition, results of operations and cash flows. If the markets, PTC and/or the ZEC program do not provide sufficient financial support, 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 CWA and related state regulations, or other factors, PSEG Power may take all necessary steps to cease to operate all of these plants and will incur associated costs and accounting charges in the event that the financial condition of the plants is materially adversely impacted in the future. Ceasing operations of these plants would result in a material adverse impact on PSEG's results of operations. --- ## Modified: We are subject to comprehensive federal regulation that affects, or may affect, our businesses. **Key changes:** - Reworded sentence: "Recovery of wholesale transmission rates - PSE&G's wholesale transmission rates are regulated by FERC and our project costs are recovered through a FERC-approved formula rate." - Reworded sentence: "Our formula rate and its components can be challenged at FERC in the future." - Reworded sentence: "PSE&G began receiving a 50 basis 29 29 29 Table of Contents Table of Contents Table of Contents point adder for RTO membership in 2008." - Reworded sentence: "Transmission Planning - FERC Order 1000 generally opened transmission development to competition from independent developers, allowing such developers to compete with incumbent utilities for the construction and operation of transmission facilities in its service territory." - Reworded sentence: "In January 2025, PJM adjusted its load forecast in the PSEG zone and across PJM to reflect increased expectations of large customer growth." **Prior (2024):** We are subject to regulation by federal authorities. Such regulation affects almost every aspect of our businesses, including management and operations; the terms and rates of transmission services; investment strategies; the financing of our operations and the payment of dividends. Failure to comply with these regulations could have a material adverse impact on our ability to operate our business and could result in fines, penalties or sanctions. Recovery of wholesale transmission rates - PSE&G's wholesale transmission rates are regulated by FERC and are recovered through a FERC-approved formula rate. The revenue requirements are reset each year through this formula. In 2021, FERC approved a settlement agreement effective August 1, 2021 that we reached with the BPU and the New Jersey Rate Counsel about the level of PSE&G's base transmission ROE and other formula rate matters. The settlement reduced PSE&G's base ROE from 11.18% to 9.9% and made changes to recovery of certain costs. The agreement provided that the settling parties will not seek changes to our transmission formula rate for three years. In April 2021, FERC issued a supplemental notice of proposed rulemaking to eliminate the incentive for RTO membership for transmitting utilities that have already received the incentive for three or more years. PSE&G began receiving a 50 basis point adder for RTO membership in 2008. Elimination of the adder for RTO membership would reduce PSE&G's annual Net Income and annual cash inflows by approximately $40 million. Transmission Planning - FERC Order 1000 has generally opened transmission development to competition from independent developers, allowing such developers to compete with incumbent utilities for the construction and operation of transmission facilities in its service territory. While Order 1000 retains limited carve-outs for certain projects that will continue to default to incumbents for construction responsibility, including immediately needed reliability projects, upgrades to existing transmission facilities, and projects cost-allocated to a single transmission zone, increased competition for transmission projects could decrease the value of new investments that would be subject to recovery by PSE&G under its rate base, which could have a material adverse impact on our financial condition and results of operations. FERC is currently considering whether to modify Order 1000's competition rules to further limit competition in an effort to encourage collaborative planning of large regional and interregional transmission projects. FERC is also examining whether additional oversight is needed to control transmission costs. A significant input into PJM's transmission planning process is its regional load forecast, which is adjusted on an annual basis. In 2023, PJM adjusted its load forecast in the PSEG zone to reflect New Jersey's clean energy policies, including electrification requirements and projected EV penetration. Developing an accurate load forecast that reflects the clean energy targets of the state - and other states in PJM - is critical to ensure that transmission is planned and built where it is needed to maintain reliability. NERC Compliance - NERC, at the direction of FERC, has implemented mandatory NERC Operations and Planning and Critical Infrastructure Protection standards to ensure the reliability of the North American Bulk Electric System, which includes electric transmission and generation systems, and to prevent major system blackouts. NERC Critical Infrastructure Protection standards establish cybersecurity and physical security protections for critical systems and facilities. We have been, and will continue to be, periodically audited by NERC for compliance with both Operations and Planning and Critical Infrastructure Protection standards and are subject to penalties for non-compliance with applicable NERC standards. NERC is conducting more frequent audits than was the case in the past and we must always be in a state of audit readiness. Failure to comply with applicable NERC standards could result in penalties or increased costs to bring such facilities into compliance. Such penalties and costs could materially adversely impact our business, results of operations and cash flows. Adverse audit findings and/or penalties for non-compliance also pose reputational risk to us. MBR Authority and Other Regulatory Approvals - Under FERC regulations, public utilities that sell power at market rates must receive MBR authority before making power sales, and the majority of our businesses operate with such authority. Failure to maintain MBR authorization, or the effects of any severe mitigation measures that would be required if market power was 26 26 26 26 26 26 Table of Contents Table of Contents Table of Contents evaluated differently in the future, could have a material adverse effect on our business, financial condition and results of operations. In December 2022, all of PSEG's operating companies with MBR authority filed at FERC for acceptance of the companies' updated triennial market power analysis. This filing remains pending at FERC. Oversight by the CFTC relating to derivative transactions - The CFTC has regulatory oversight of the swap and futures markets and options, including energy trading, and licensed futures professionals such as brokers, clearing members and large traders. Changes to regulations or adoption of additional regulations by the CFTC, including any regulations relating to futures and other derivatives or margin for derivatives and increased investigations by the CFTC, could negatively impact PSEG Power's ability to hedge its portfolio in an efficient, cost-effective manner by, among other things, potentially decreasing liquidity in the forward commodity and derivatives markets or limiting PSEG Power's ability to utilize non-cash collateral for derivatives transactions. We may also be required to obtain various other regulatory approvals to, among other things, buy or sell assets, engage in transactions between our public utility and our other subsidiaries, and, in some cases, enter into financing arrangements, issue securities and allow our subsidiaries to pay dividends. Failure to obtain these approvals on a timely basis could materially adversely affect our results of operations and cash flows. **Current (2025):** We are subject to regulation by federal authorities. Such regulation affects almost every aspect of our businesses, including management and operations; the terms and rates of transmission services; investment strategies; the financing of our operations and the payment of dividends. Failure to comply with these regulations could have a material adverse impact on our ability to operate our business and could result in fines, penalties or sanctions. Recovery of wholesale transmission rates - PSE&G's wholesale transmission rates are regulated by FERC and our project costs are recovered through a FERC-approved formula rate. The revenue requirements are reset each year through this formula. Our formula rate and its components can be challenged at FERC in the future. In April 2021, FERC issued a supplemental notice of proposed rulemaking to eliminate the incentive for RTO membership for transmitting utilities that have already received the incentive for three or more years. PSE&G began receiving a 50 basis 29 29 29 Table of Contents Table of Contents Table of Contents point adder for RTO membership in 2008. Elimination of the adder for RTO membership would reduce PSE&G's annual Net Income and annual cash inflows by approximately $40 million. Transmission Planning - FERC Order 1000 generally opened transmission development to competition from independent developers, allowing such developers to compete with incumbent utilities for the construction and operation of transmission facilities in its service territory. While Order 1000 retains limited carve-outs for certain projects that will continue to default to incumbents for construction responsibility, increased competition for transmission projects could decrease the value of new investments that would be subject to recovery by PSE&G under its rate base, which could have a material adverse impact on our financial condition and results of operations. FERC has considered, and may in the future consider, whether to modify - either limit or expand - Order 1000's competition rules. FERC is also examining whether additional oversight is needed to control transmission costs. A significant input into PJM's transmission planning process is its regional load forecast, which is adjusted on an annual basis. In January 2025, PJM adjusted its load forecast in the PSEG zone and across PJM to reflect increased expectations of large customer growth. Developing an accurate load forecast that reflects customer demand of the state - and other states in PJM - is critical to ensure that transmission is planned and built where it is needed to maintain reliability and that sufficient generation is procured in the capacity market. NERC Compliance - NERC, at the direction of FERC, has implemented mandatory NERC Operations and Planning and Critical Infrastructure Protection standards to ensure the reliability of the North American Bulk Electric System, which includes electric transmission and generation systems, and to prevent major system blackouts. NERC Critical Infrastructure Protection standards establish cybersecurity and physical security protections for critical systems and facilities. We have been, and will continue to be, periodically audited by NERC for compliance with both Operations and Planning and Critical Infrastructure Protection standards and are subject to penalties for non-compliance with applicable NERC standards. Failure to comply with applicable NERC standards could result in penalties or increased costs to bring such facilities into compliance. Such penalties and costs could materially adversely impact our business, results of operations and cash flows. Adverse audit findings and/or penalties for non-compliance could also pose reputational risk to us. MBR Authority and Other Regulatory Approvals - Under FERC regulations, public utilities that sell power at market rates must receive MBR authority before making power sales, and the majority of our businesses operate with such authority. Failure to maintain MBR authorization, or the effects of any severe mitigation measures that would be required if market power was evaluated differently in the future, could have a material adverse effect on our business, financial condition and results of operations. In December 2022, all of PSEG's operating companies with MBR authority filed at FERC for acceptance of the companies' updated triennial market power analysis. This filing remains pending at FERC. Oversight by the CFTC relating to derivative transactions - The CFTC has regulatory oversight of the swap and futures markets and options, including energy trading, and licensed futures professionals such as brokers, clearing members and large traders. Changes to regulations or adoption of additional regulations by the CFTC, including any regulations relating to futures and other derivatives or margin for derivatives and increased investigations by the CFTC, could negatively impact PSEG Power's ability to hedge its portfolio in an efficient, cost-effective manner by, among other things, potentially decreasing liquidity in the forward commodity and derivatives markets or limiting PSEG Power's ability to utilize non-cash collateral for derivatives transactions. We may also be required to obtain various other regulatory approvals to, among other things, buy or sell assets, engage in transactions between our public utility and our other subsidiaries, and, in some cases, enter into financing arrangements, issue securities and allow our subsidiaries to pay dividends. Failure to obtain these approvals on a timely basis could materially adversely affect our results of operations and cash flows. --- ## Modified: The introduction or expansion of technologies related to energy generation, distribution and consumption and changes in customer usage patterns could adversely impact us. **Key changes:** - Reworded sentence: "Federal and state incentives for the development and operation of renewable sources of power have facilitated the penetration of competing technologies, such as wind, solar, and commercial-sized power storage." - Reworded sentence: "Further, a material shift away from natural gas due to customer preference or regulatory developments and initiatives could reduce the number of gas customers." **Prior (2024):** Federal and state incentives for the development and production of renewable sources of power have facilitated the penetration of competing technologies, such as wind, solar, and commercial-sized power storage. Additionally, the development of demand side management (DSM) and EE programs can impact demand requirements for some of our markets. The continued development of competing on-site power generation and storage technologies and significant development of DSM and EE programs could alter the market and price structure for power generation and could result in a reduction in load requirements, negatively impacting our financial condition, results of operations and cash flows. Federal or state laws mandating higher levels of efficiency in end-use electric devices or other improvements in, or applications of, technology could also lead to declines in per capita energy consumption. Advances in distributed generation technologies, such as fuel cells, micro turbines, micro grids, windmills and net-metered solar installations, coupled with subsidies, may reduce the cost of alternative methods of delivering electricity to customers to a level that is competitive with that of most central station electric production. Large customers, such as universities and hospitals, continue to explore potential micro grid installation. Certain states are also considering mandating the use of power storage resources to replace uneconomic or retiring generation facilities. Such developments could (i) affect the price of energy, (ii) reduce energy deliveries as customer-owned generation becomes more cost-effective, (iii) require further improvements to our distribution systems to address changing load demands, and (iv) make portions of our transmission and/or distribution facilities obsolete prior to the end of their useful lives. These technologies could also result in further declines in commodity prices or demand for delivered energy. Several states, cities and other stakeholders are also considering bans on natural gas connections to new buildings and transitioning away from natural gas in the future. Such actions could have a material adverse effect on our business. Some or all of these factors could result in a lack of growth or decline in customer demand for electricity or natural gas or of customers, and may cause us to fail to fully realize anticipated benefits from significant capital investments and expenditures, which could have a material adverse effect on our financial position, results of operations and cash flows. These factors could also materially affect our results of operations, cash flows or financial positions through, among other things, reduced operating revenues, increased O&M expenses, and increased capital expenditures, as well as potential asset impairment charges or accelerated depreciation and decommissioning expenses over shortened remaining asset useful lives. **Current (2025):** Federal and state incentives for the development and operation of renewable sources of power have facilitated the penetration of competing technologies, such as wind, solar, and commercial-sized power storage. Additionally, the development of demand side management (DSM) and EE programs can impact demand requirements for electricity and natural gas markets. The development of competing on-site power generation could also result in a reduction in anticipated growth which could negatively impact our financial condition, results of operations and cash flows. Advances in distributed generation technologies, such as fuel cells, micro turbines, micro grids, windmills and net-metered solar installations, coupled with subsidies, may reduce the cost of alternative methods of delivering electricity to customers to a level that is competitive with that of most central station electric production. Large customers, such as universities and hospitals, continue to explore potential micro grid installation. Certain states are also considering mandating the use of power storage resources to replace uneconomic or retiring generation facilities. Such developments could (i) affect the price of energy, (ii) reduce energy deliveries as customer-owned generation becomes more cost-effective, (iii) require further improvements to our distribution systems to address changing load demands, and (iv) make portions of our transmission and/or distribution facilities obsolete prior to the end of their useful lives. These technologies could also result in further declines in commodity prices or demand for delivered energy. Further, a material shift away from natural gas due to customer preference or regulatory developments and initiatives could reduce the number of gas customers. Some or all of these factors could result in a lack of growth or decline in customer demand for electricity or natural gas or of customers, and may cause us to fail to fully realize anticipated benefits from significant capital investments and expenditures, which could have a material adverse effect on our financial position, results of operations and cash flows. These factors could also materially affect our results of operations, cash flows or financial positions through, among other things, reduced operating revenues, increased O&M expenses, and increased capital expenditures, as well as potential asset impairment charges or accelerated depreciation and decommissioning expenses over shortened remaining asset useful lives. --- ## Modified: There may be periods when PSEG Power generation may not operate and/or may not be able to meet its commitments under forward sale obligations and PJM rules at a reasonable cost or at all. **Key changes:** - Reworded sentence: "A portion of PSEG Power's nuclear generation output has been sold forward under fixed price financial power sales contracts." - Reworded sentence: "Some issues that could impact the operation of our facilities are: •breakdown or failure of equipment, IT, processes or management effectiveness; breakdown or failure of equipment, IT, processes or management effectiveness; •disruptions in the transmission of electricity; disruptions in the transmission of electricity; •labor disputes or work stoppages; labor disputes or work stoppages; •fuel supply interruptions; fuel supply interruptions; •limitations which may be imposed by environmental or other regulatory requirements; and limitations which may be imposed by environmental or other regulatory requirements; and •operator error, acts of war or terrorist attacks (including physical or cybersecurity breaches) or catastrophic events such as fires, earthquakes, explosions, floods, severe weather or other similar occurrences." - Reworded sentence: "In addition, changing market design rules, including capacity performance rules and timing of capacity market auctions, and/or failure to follow existing rules - by PJM or market participants - creates regulatory uncertainty and reliability risk." **Prior (2024):** A substantial portion of PSEG Power's nuclear generation output has been sold forward under fixed price financial power sales contracts. Forward financial sales offset physical sales in the PJM RTO spot market. Our forward sales of energy and capacity assume sustained, acceptable levels of operating performance. Operations at any of our plants could degrade to the point where the plant has to shut down or operate at less than full capacity. Some issues that could impact the operation of our facilities are: •breakdown or failure of equipment, IT, processes or management effectiveness; •disruptions in the transmission of electricity; •labor disputes or work stoppages; •fuel supply interruptions; 24 24 24 24 24 24 Table of Contents Table of Contents Table of Contents •limitations which may be imposed by environmental or other regulatory requirements; and •operator error, acts of war or terrorist attacks (including physical or cybersecurity breaches) or catastrophic events such as fires, earthquakes, explosions, floods, severe weather or other similar occurrences. Identifying and correcting any of these issues may require significant time and expense. Depending on the materiality of the issue, we may choose to close a plant rather than incur the expense of restarting it or returning it to full capacity. Because the obligations under most of these forward sale agreements are not contingent on a unit being available to generate power, PSEG Power's results of operations and cash flows are at risk even in the event of a plant outage, or a reduction in the available capacity of the unit. To the extent that PSEG Power does not meet its expected nuclear generation output, PSEG Power would be required to pay the difference between the market price and the contract price on its financial contracts without receiving the physical spot energy revenue or be required to purchase energy at higher prices to cover its shortfall. In addition, as capacity performance resources in PJM, PSEG's nuclear units have been and will in the future be required to pay penalties if a forced outage at a plant occurs during a declared emergency event within PJM and that plant's expected performance exceeds its actual performance during such event. The amount of such payments could be substantial and could have a material adverse effect on our financial condition, results of operations and cash flows. In addition, changing capacity performance rules and/or failure to follow existing rules - by PJM or market participants - creates regulatory uncertainty and reliability risk. In addition, as market prices for energy and fuel fluctuate, our forward energy sale and forward fuel purchase contracts could require us to post substantial additional collateral, thus requiring us to obtain additional sources of liquidity during periods when our ability to do so may be limited. **Current (2025):** A portion of PSEG Power's nuclear generation output has been sold forward under fixed price financial power sales contracts. Forward financial sales offset physical sales in the PJM RTO spot market. Our forward sales of energy and capacity assume sustained, acceptable levels of operating performance. Operations at any of our plants could degrade to the point where the plant has to shut down or operate at less than full capacity. Some issues that could impact the operation of our facilities are: •breakdown or failure of equipment, IT, processes or management effectiveness; breakdown or failure of equipment, IT, processes or management effectiveness; •disruptions in the transmission of electricity; disruptions in the transmission of electricity; •labor disputes or work stoppages; labor disputes or work stoppages; •fuel supply interruptions; fuel supply interruptions; •limitations which may be imposed by environmental or other regulatory requirements; and limitations which may be imposed by environmental or other regulatory requirements; and •operator error, acts of war or terrorist attacks (including physical or cybersecurity breaches) or catastrophic events such as fires, earthquakes, explosions, floods, severe weather or other similar occurrences. operator error, acts of war or terrorist attacks (including physical or cybersecurity breaches) or catastrophic events such as fires, earthquakes, explosions, floods, severe weather or other similar occurrences. Identifying and correcting any of these issues may require significant time and expense. Depending on the materiality of the issue, we may choose to close a plant rather than incur the expense of restarting it or returning it to full capacity. Because the obligations under most of these forward sale agreements are not contingent on a unit being available to generate power, PSEG Power's results of operations and cash flows are at risk even in the event of a plant outage, or a reduction in the available capacity of the unit. To the extent that PSEG Power does not meet its expected nuclear generation output, PSEG Power would be required to pay the difference between the market price and the contract price on its financial contracts without receiving the physical spot energy revenue or be required to purchase energy at higher prices to cover its shortfall. In addition, as capacity performance resources in PJM, PSEG's nuclear units have been and will in the future be required to pay penalties if a forced outage at a plant occurs during a declared emergency event within PJM and that plant's expected performance exceeds its actual performance during such event. The amount of such payments could be substantial and could have a material adverse effect on our financial condition, results of operations and cash flows. In addition, changing market design rules, including capacity performance rules and timing of capacity market auctions, and/or failure to follow existing rules - by PJM or market participants - creates regulatory uncertainty and reliability risk. --- ## Modified: Cybersecurity attacks, data breaches, or intrusions or other disruptions to our IT, operational or other systems could adversely impact our businesses. **Key changes:** - Reworded sentence: "In addition, the operation of our business is dependent upon the IT systems of Nth parties (i.e., our third parties and other business relationships, including fourth parties, etc.), including our 22 22 22 Table of Contents Table of Contents Table of Contents vendors, regulators, RTOs and ISOs, among others." - Reworded sentence: "Moreover, new or updated security laws or regulations, including laws and regulations that respond to evolving application of AI, or unforeseen threat sources could require changes in current measures taken by us and our business operations, which could result in increased costs and adversely affect our financial statements." - Added sentence: "To address the risks to our information and operational technology systems, we maintain a cybersecurity program that includes policies and controls, cybersecurity insurance, cybersecurity governance and compliance, awareness training, table-top exercises, logging and monitoring, and testing." - Added sentence: "These preventative actions minimize the likelihood and potential impact of cybersecurity breaches." - Added sentence: "Further, we are subject to changing data protection laws in the U.S." **Prior (2024):** Cybersecurity threats to the energy market infrastructure are increasing in sophistication, magnitude and frequency, particularly with the regularity of virtual operations. Because of the inherent vulnerability of infrastructure and technology and operational systems to disability or failure due to hacking, viruses, malicious or destructive code, phishing and other social engineering attacks, denial of service attacks, ransomware, acts of war or terrorism, or other cybersecurity incidents, we face increased risk of cyberattack. We rely on information and operational technology systems and network infrastructure to operate our generation and T&D systems. We also store sensitive data, intellectual property and proprietary or personally identifiable information regarding our business, infrastructure, employees, shareholders, customers and vendors on our IT systems and conduct power marketing and hedging activities. In addition, the operation of our business is dependent upon the IT systems of third parties, including our vendors, regulators, RTOs and ISOs, among others. Our and third-party operational and IT systems and products may be vulnerable to cybersecurity attacks involving fraud, malice or oversight on the part of our employees, other insiders or third parties, whether domestic or foreign sources. Further, new types of cyberattacks, whether directed at our own infrastructure and technology and operational systems or that of third parties, may be generated or enhanced through the use of Artificial Intelligence (AI). A successful cybersecurity attack may result in unauthorized use of our systems to cause disruptions at a third party. Cybersecurity risks to our operations include: •disruption of the operation of our assets, the fuel supply chain, the power grid and gas T&D, •theft of confidential company, employee, shareholder, vendor or customer information, and critical energy infrastructure information, which may cause us to be in breach of certain covenants and contractual or legal obligations and pose risk to our system and our customers, •general business system and process interruption or compromise, including preventing us from servicing our customers, collecting revenues or the ability to record, process and/or report financial information correctly, and •breaches of vendors' infrastructures where our confidential information is stored. We and our third-party vendors have been and will continue to be subject to cybersecurity attacks, including but not limited to ransomware, denial of service, business email compromises, and malware attacks. To date, there has been no material impact or reasonably likely material impact on our business strategy, results of operations or financial condition from these attacks or other cybersecurity incidents, including as a result of prior cybersecurity incidents. However, we may be unable to prevent all such attacks in the future from having such a material impact as such attacks continue to increase in sophistication and frequency. If a significant cybersecurity event or breach occurs within our company or with one of our material vendors, we could be exposed to significant loss of revenue, material repair costs to intellectual and physical property, significant fines and penalties if determined that we were in non-compliance with existing laws and regulations, significant litigation costs, increased costs to finance our businesses, negative publicity, damage to our reputation and loss of confidence from our customers, regulators, investors, vendors and employees. The misappropriation, corruption or loss of personally identifiable information and other confidential data from us or one of our vendors could lead to significant breach notification expenses, mitigation expenses such as credit monitoring, and legal and regulatory fines and penalties. Moreover, new or updated security laws or regulations, including laws and regulations that respond to evolving application of AI, or unforeseen threat sources could require changes in current measures taken by us and our business operations, which could result in increased costs and 20 20 20 20 20 20 Table of Contents Table of Contents Table of Contents adversely affect our financial statements. Similarly, a significant cybersecurity event or breach experienced by a competitor, regulatory authority, RTO, ISO, or vendor could also materially impact our business and results of operations via enhanced legal and regulatory requirements. The amount and scope of insurance we maintain against losses that result from cybersecurity incidents may not be sufficient to cover losses or adequately compensate for resulting business disruptions. For a discussion of state and federal cybersecurity regulatory requirements and information regarding our cybersecurity program, see Item 1C. Cybersecurity. **Current (2025):** Cybersecurity threats to the energy market infrastructure are increasing in sophistication, magnitude and frequency, particularly with the regularity of virtual operations. Because of the inherent vulnerability of infrastructure and technology and operational systems to disability or failure due to hacking, viruses, malicious or destructive code, phishing and other social engineering attacks, denial of service attacks, ransomware, acts of war or terrorism, or other cybersecurity incidents, we face increased risk of cyberattack. We rely on information and operational technology systems and network infrastructure to operate our generation and T&D systems. We also store sensitive data, intellectual property and proprietary or personally identifiable information regarding our business, infrastructure, employees, shareholders, customers and vendors on our IT systems and conduct power marketing and hedging activities. In addition, the operation of our business is dependent upon the IT systems of Nth parties (i.e., our third parties and other business relationships, including fourth parties, etc.), including our 22 22 22 Table of Contents Table of Contents Table of Contents vendors, regulators, RTOs and ISOs, among others. Our and Nth-party operational and IT systems and products may be vulnerable to cybersecurity attacks involving fraud, malice or oversight on the part of our employees, other insiders or Nth parties, whether domestic or foreign sources. Further, new types of cyberattacks, whether directed at our own infrastructure and technology and operational systems or that of third parties, may be generated or enhanced through the use of Artificial Intelligence (AI) and/or cloud-based infrastructure. A successful cybersecurity attack may result in unauthorized use of our systems to cause disruptions at an Nth party. Cybersecurity risks to our operations include: •disruption of the operation of our assets, the fuel supply chain, the power grid and gas T&D, disruption of the operation of our assets, the fuel supply chain, the power grid and gas T&D, •theft of confidential company, employee, shareholder, vendor or customer information, and critical energy infrastructure information, which may cause us to be in breach of certain covenants and contractual, legal or regulatory obligations and pose risk to our system and our customers, theft of confidential company, employee, shareholder, vendor or customer information, and critical energy infrastructure information, which may cause us to be in breach of certain covenants and contractual, legal or regulatory obligations and pose risk to our system and our customers, •general business system and process interruption or compromise, including preventing us from servicing our customers, working remotely, collecting revenues or the ability to record, process and/or report financial information correctly, and general business system and process interruption or compromise, including preventing us from servicing our customers, working remotely, collecting revenues or the ability to record, process and/or report financial information correctly, and •breaches of vendors' infrastructures where our confidential information is stored. breaches of vendors' infrastructures where our confidential information is stored. We and our Nth-party vendors have been and will continue to be subject to cybersecurity attacks, including but not limited to ransomware, denial of service, business email compromises, and malware attacks. To date, there has been no material impact or reasonably likely material impact on our business strategy, results of operations or financial condition from these attacks or other cybersecurity incidents, including as a result of prior cybersecurity incidents. However, we may be unable to prevent all such attacks in the future from having such a material impact as such attacks continue to increase in sophistication and frequency. If a significant cybersecurity event or breach occurs within our company or with one of our material vendors, we could be exposed to significant loss of revenue, material repair costs to intellectual and physical property, significant fines and penalties if determined that we were in non-compliance with existing laws and regulations, significant litigation costs, increased costs to finance our businesses, negative publicity, damage to our reputation and loss of confidence from our customers, regulators, investors, vendors and employees. The misappropriation, corruption or loss of personally identifiable information and other confidential data from us or one of our vendors could lead to significant breach notification expenses, mitigation expenses such as credit monitoring, and legal and regulatory fines and penalties. Moreover, new or updated security laws or regulations, including laws and regulations that respond to evolving application of AI, or unforeseen threat sources could require changes in current measures taken by us and our business operations, which could result in increased costs and adversely affect our financial statements. Similarly, a significant cybersecurity event or breach experienced by a competitor, regulatory authority, RTO, ISO, or vendor could also materially impact our business and results of operations via enhanced legal and regulatory requirements. The amount and scope of insurance we maintain against losses that result from cybersecurity incidents may not be sufficient to cover losses or adequately compensate for resulting business disruptions. To address the risks to our information and operational technology systems, we maintain a cybersecurity program that includes policies and controls, cybersecurity insurance, cybersecurity governance and compliance, awareness training, table-top exercises, logging and monitoring, and testing. These preventative actions minimize the likelihood and potential impact of cybersecurity breaches. For a discussion of state and federal cybersecurity regulatory requirements and information regarding our cybersecurity program, see Item 1C. Cybersecurity. Further, we are subject to changing data protection laws in the U.S. and abroad. Legal requirements and regulatory scrutiny for the collection, storage, handling, use, disclosure, transfer, and security of personal data continue to evolve and expand, which may present material obligations and risks to our business, including expanded compliance burdens, restrictions on transfer of personal data, costs, and enforcement risks. --- ## Modified: PSE&G's proposed investment projects or programs may not be fully approved by regulators and actual capital investment by PSE&G may be lower than planned, which would cause lower than anticipated rate base. **Key changes:** - Reworded sentence: "Transmission projects are subject to the rules governing PJM's FERC-approved transmission expansion planning process as well as other FERC rules, while distribution and clean energy projects are subject to approval by the BPU." - Added sentence: "In addition, PSE&G's Clean Energy Future - Energy Efficiency II Program provides nearly $1 billion of funding to continue the on-bill repayment program, which allows customers to repay their cost of equipment upgrades over time directly through their PSE&G bill." - Added sentence: "While the deployment of this capital in the form of on-bill repayment is subject to customers meeting acceptable credit standard and bad debt expense is a recoverable cost in this program, any such recovery is subject to prudency review and approval by the BPU." **Prior (2024):** PSE&G is a regulated public utility that operates and invests in an electric T&D system and a gas distribution system as well as certain regulated clean energy investments, including solar and EE within New Jersey. PSE&G invests in capital projects to maintain and improve its existing T&D system and to address various public policy goals and meet customer expectations. Transmission projects are subject to a FERC-approved transmission expansion planning process while distribution and clean 25 25 25 25 25 25 Table of Contents Table of Contents Table of Contents energy projects are subject to approval by the BPU. The costs of PSE&G's transmission projects are subject to prudency challenge at FERC and PSE&G's rates themselves may also be challenged at FERC. FERC has also proposed elimination of certain transmission rate incentives, including the incentive that PSE&G receives for being a transmission owner member of PJM and accepting the related risk of RTO membership. We cannot be certain that any proposed project or program will be approved as requested or at all. If the projects or programs that PSE&G may file from time to time are only approved in part, or not at all, or if the approval fails to allow for the timely recovery of all of PSE&G's costs, including a return of, or on, its investment, PSE&G will have a lower than anticipated rate base, thus causing its future earnings to be lower than anticipated. Further, the BPU could take positions to exclude or limit utility participation in certain areas, such as renewable generation, EE, EV infrastructure, or energy storage programs, renewable natural gas or hydrogen projects, which would limit our relationship with customers and narrow our future growth prospects. **Current (2025):** PSE&G is a regulated public utility that operates and invests in an electric T&D system and a gas distribution system as well as certain regulated clean energy investments, including solar and EE within New Jersey. PSE&G invests in capital projects to maintain and improve its existing T&D system and to address various public policy goals and meet customer expectations. Transmission projects are subject to the rules governing PJM's FERC-approved transmission expansion planning process as well as other FERC rules, while distribution and clean energy projects are subject to approval by the BPU. The costs of PSE&G's transmission projects are subject to prudency challenge at FERC and PSE&G's rates themselves may also be challenged at FERC. FERC has also proposed elimination of certain transmission rate incentives, including the incentive that PSE&G receives for being a transmission owner member of PJM and accepting the related risk of RTO membership. We cannot be certain that any proposed project or program will be approved as requested or at all. If the projects or programs that PSE&G may file from time to time are only approved in part, or not at all, or if the approval fails to allow for the timely recovery of all of PSE&G's costs, including a return of, or on, its investment, PSE&G will have a lower than anticipated rate base, thus causing its future earnings to be lower than anticipated. Further, the BPU could take positions to exclude or limit utility participation in certain areas, such as renewable generation, EE, EV infrastructure, or energy storage programs, renewable natural gas or hydrogen projects, which would limit our relationship with customers and narrow our future growth prospects. In addition, PSE&G's Clean Energy Future - Energy Efficiency II Program provides nearly $1 billion of funding to continue the on-bill repayment program, which allows customers to repay their cost of equipment upgrades over time directly through their PSE&G bill. While the deployment of this capital in the form of on-bill repayment is subject to customers meeting acceptable credit standard and bad debt expense is a recoverable cost in this program, any such recovery is subject to prudency review and approval by the BPU. --- ## Modified: Inability to successfully develop, obtain regulatory approval for, or construct T&D, and our nuclear generation projects could adversely impact our businesses. **Key changes:** - Reworded sentence: "Our business plan calls for extensive investment in capital improvements and additions, including the construction of T&D facilities, modernizing and expanding existing infrastructure pursuant to investment programs that provide for current recovery in rates, addressing needs of new customers and increasing demand on the system, and our CEF programs, particularly our energy efficiency program which provides incentives for customers to install high-efficiency equipment at their premises and transmission capital investments outside of our utility service territory, as well as uprates and other potential investments at our nuclear facilities." - Reworded sentence: "Further, certain negative public and political views by certain stakeholders on natural gas and other types of energy infrastructure could result in diminishing support for those investments." - Added sentence: "19 19 19 Table of Contents Table of Contents Table of Contents" **Prior (2024):** Our business plan calls for extensive investment in capital improvements and additions, including the construction of T&D facilities, modernizing and expanding existing infrastructure pursuant to investment programs that provide for current recovery in rates, and our CEF programs, which include providing incentives for customers to install high-efficiency equipment at their premises, constructing EV infrastructure, and implementing our smart meter program. Currently, we have several significant projects underway or being contemplated. The successful construction and development of these projects will depend, in part, on our ability to: •obtain necessary governmental and regulatory approvals; •obtain environmental permits and approvals; •obtain community support for such projects to avoid delays in the receipt of permits and approvals from regulatory authorities; •obtain customer support for investments made at their premises; •obtain property/land rights in property-constrained areas and at a reasonable cost; •complete such projects within budgets and on commercially reasonable terms and conditions; •complete supporting information technology (IT), cybersecurity and physical security upgrades; •obtain any necessary debt financing on acceptable terms and/or necessary governmental financial incentives; •ensure that contracting parties, including suppliers, perform under their contracts in a timely and cost-effective manner; and •timely recovery of these investments through rates. Failure to obtain regulatory or other approvals, delays, cost escalations or otherwise unsuccessful construction and development could materially affect our financial position, results of operations and cash flows. Macroeconomic considerations, including inflationary levels, gas and electric supply prices that are passed through to customers and other pressures could factor into our regulators' assessment in approving the size, duration and timing of cost recovery of certain of these programs. Further, certain negative public and political views on natural gas could result in diminishing political support for utility investments in gas infrastructure. In addition, the successful operation of new facilities or transmission or distribution projects is subject to risks relating to supply interruptions; labor availability, work stoppages and labor disputes; weather interferences; unforeseen engineering and environmental problems, including those related to climate change; opposition from local communities, and the other risks described herein. Any of these risks could cause the amounts of our investments and/or our return on these investments to be lower than expected, which could adversely impact our financial condition and results of operations through lower investment opportunities and/or lower returns. **Current (2025):** Our business plan calls for extensive investment in capital improvements and additions, including the construction of T&D facilities, modernizing and expanding existing infrastructure pursuant to investment programs that provide for current recovery in rates, addressing needs of new customers and increasing demand on the system, and our CEF programs, particularly our energy efficiency program which provides incentives for customers to install high-efficiency equipment at their premises and transmission capital investments outside of our utility service territory, as well as uprates and other potential investments at our nuclear facilities. Currently, we have several significant capital investments underway or being contemplated. The successful construction and development of these projects will depend, in part, on our ability to: •obtain necessary governmental and regulatory approvals; obtain necessary governmental and regulatory approvals; •obtain environmental permits and approvals; obtain environmental permits and approvals; •obtain governmental and community support for such projects to avoid delays in the receipt of permits and approvals from regulatory authorities; obtain governmental and community support for such projects to avoid delays in the receipt of permits and approvals from regulatory authorities; •obtain customer support for investments made at their premises; obtain customer support for investments made at their premises; •obtain property/land rights in property-constrained areas and for greenfield locations, and at a reasonable cost; obtain property/land rights in property-constrained areas and for greenfield locations, and at a reasonable cost; •complete such projects within budgets and on commercially reasonable terms and conditions; complete such projects within budgets and on commercially reasonable terms and conditions; •complete supporting information technology (IT), cybersecurity and physical security upgrades; complete supporting information technology (IT), cybersecurity and physical security upgrades; •obtain any necessary debt financing on acceptable terms and/or necessary governmental financial incentives; obtain any necessary debt financing on acceptable terms and/or necessary governmental financial incentives; •ensure that contracting parties, including suppliers, perform under their contracts in a timely and cost-effective manner; and ensure that contracting parties, including suppliers, perform under their contracts in a timely and cost-effective manner; and •timely recovery of these investments through rates. timely recovery of these investments through rates. Failure to obtain regulatory or other approvals, delays, cost escalations or otherwise unsuccessful construction and development could materially affect our financial position, results of operations and cash flows. Macroeconomic considerations, including inflationary levels, gas and electric supply prices that are passed through to customers and other pressures could factor into our regulators' assessment in approving the size, duration and timing of cost recovery of certain of these programs. Further, certain negative public and political views by certain stakeholders on natural gas and other types of energy infrastructure could result in diminishing support for those investments. In addition, the successful operation of new facilities or transmission or distribution projects is subject to risks relating to supply interruptions; labor availability, work stoppages and labor disputes; weather interferences; unforeseen engineering and environmental problems, including those related to climate change; opposition from local communities, and the other risks described herein. Any of these risks could cause the amounts of our investments and/or our return on these investments to be lower than expected, which could adversely impact our financial condition and results of operations through lower investment opportunities and/or lower returns. 19 19 19 Table of Contents Table of Contents Table of Contents --- ## Modified: We may be adversely affected by asset and equipment failures, accidents, critical operating technology or business system failures, natural disasters, severe weather events, acts of war or terrorism or other acts of violence, sabotage, physical attacks or security breaches, cyberattacks, or other incidents, including pandemics, that impact our ability to provide safe and reliable service to our customers and remain competitive and could result in substantial financial losses. **Key changes:** - Reworded sentence: "There is no guarantee that we will have continued access to mutual aid as the frequency of severe weather events rises." - Reworded sentence: "Such actions could adversely affect our costs, competitiveness, future investments and customer rates, which could be material to our financial position, results of operations and cash flow." **Prior (2024):** The success of our businesses is dependent on our ability to continue providing safe and reliable service to our customers while minimizing service disruptions. We are exposed to the risk of asset and equipment failures, gas explosions, accidents, natural disasters, severe weather events, acts of war or terrorism or other acts of violence, including active shooter situations, sabotage, physical attacks or security breaches, cyberattacks or other incidents, which could result in damage to or destruction of our substations or other facilities or infrastructure, or damage to persons or property and to electric and gas supply interruptions. Further, a major failure of availability or performance of a critical operating technology or business system, and inadequate preparation or execution of business continuity or disaster recovery plans for the loss of one or several critical systems, could result in extended disruption to operations or business processes, damage to systems and/or loss of data. We have historically benefited from access to mutual aid, a voluntary and reciprocal arrangement with other utilities that provides access to a trained and flexible labor force which has helped to reduce outage restoration times during extreme weather events. There is no guarantee that we will have continued access to mutual aid as the utility industry consolidates and the frequency of severe weather events rises. 18 18 18 18 18 18 Table of Contents Table of Contents Table of Contents We are also exposed to the risk of pandemics, such as the coronavirus pandemic, which could result in service disruptions and delays or otherwise impair our ability to timely provide service to our customers or complete our investment projects. In response to the coronavirus pandemic, New Jersey and the BPU implemented a number of expanded customer protection measures, such as an extended moratorium on shut-offs of residential service for non-payment, and more extensive processes to be taken prior to any shut-off of service. These actions negatively affected customer payment patterns, leading to an elevated aged accounts receivable balance. Our ability to manage our accounts receivable balance, and obtain recovery in rates for our carrying costs and any associated bad debts could have a material impact on our business. These events could result in increased political, economic, financial and insurance market instability, a lack of available insurance and volatility in power and fuel markets, which could materially adversely affect our business and results of operations, including our ability to access capital on terms and conditions acceptable to us. In addition, the effects of climate change will have increased the physical risks to our facilities and operations resulting from such climate hazards as more severe weather events (extreme wind, rainfall and flooding), such as experienced from Superstorm Sandy and Tropical Storms Isaias and Ida, sea level rise, and extreme heat. Any of the issues described above, if experienced at our facilities or otherwise in our business, or by others in our industry, could adversely impact our revenues; increase costs to repair and maintain our systems; subject us to potential litigation and/or damage claims, fines or penalties; and increase the level of oversight of our utility and generation operations and infrastructure through investigations or through the imposition of additional regulatory or legislative requirements. Such actions could adversely affect our costs, competitiveness and future investments, which could be material to our financial position, results of operations and cash flow. For our T&D business, the cost of storm restoration efforts may not be fully recoverable through the regulatory process. In addition, the inability to restore power to our customers on a timely basis could result in negative publicity and materially damage our reputation. **Current (2025):** The success of our businesses is dependent on our ability to continue providing safe and reliable service to our customers while minimizing service disruptions. We are exposed to the risk of asset and equipment failures, gas explosions, accidents, natural disasters, severe weather events, acts of war or terrorism or other acts of violence, including active shooter situations, sabotage, physical attacks or security breaches, cyberattacks or other incidents, which could result in damage to or destruction of our substations or other facilities or infrastructure, or damage to persons or property and to electric and gas supply interruptions. Further, a major failure of availability or performance of a critical operating technology or business system, and inadequate preparation or execution of business continuity or disaster recovery plans for the loss of one or several critical systems, could result in extended disruption to operations or business processes, damage to systems and/or loss of data. We have historically benefited from access to mutual aid, a voluntary and reciprocal arrangement with other utilities that provides access to a trained and flexible labor force which has helped to reduce outage restoration times during extreme weather events. There is no guarantee that we will have continued access to mutual aid as the frequency of severe weather events rises. We are also exposed to the risk of pandemics, which could result in service disruptions and delays or otherwise impair our ability to timely provide service to our customers, complete our investment projects or obtain timely recovery of our costs. These events could result in increased political, economic, financial and insurance market instability, a lack of available insurance or the availability of insurance on commercially reasonable terms, and volatility in power and fuel markets, which could materially adversely affect our business and results of operations, including our ability to access capital on terms and conditions acceptable to us. Any of the issues described above, if experienced at our facilities or otherwise in our business, or by others in our industry, could adversely impact our revenues; increase costs to repair and maintain our systems; subject us to potential litigation and/or damage claims, fines or penalties; and increase the level of oversight of our utility and generation operations and infrastructure through investigations or through the imposition of additional regulatory or legislative requirements. Such actions could adversely affect our costs, competitiveness, future investments and customer rates, which could be material to our financial position, results of operations and cash flow. For our T&D business, the cost of storm restoration efforts may not be fully recoverable through the regulatory process. In addition, the inability to restore power to our customers on a timely basis could result in negative publicity and materially damage our reputation. --- ## Modified: We may be unable to obtain an adequate nuclear fuel supply in the future. **Key changes:** - Reworded sentence: "We are exposed to increases in the price of nuclear fuel, and significant changes in the price of nuclear fuel could affect our cash flow, future results and impact our liquidity needs." - Reworded sentence: "Although our fuel contract portfolio provides a degree of hedging against these market risks, such hedging may not be effective and future increases in our fuel costs could materially and adversely affect our financial condition and results of operations." **Prior (2024):** We obtain substantially all of our nuclear fuel supply from third parties pursuant to arrangements that vary in term, pricing structure, firmness and delivery flexibility. Our fuel supply arrangements must be coordinated with storage services and other contracts to ensure that the nuclear fuel is delivered to our power plants at the times, in the quantities and otherwise in a manner that meets the needs of our generation portfolio and our customers. We must also comply with laws and regulations governing the transportation of such fuels. We are exposed to increases in the price of nuclear fuel, and it is possible that sufficient supplies to operate our generating facilities profitably may not continue to be available to us. Significant changes in the price of nuclear fuel could affect our future results and impact our liquidity needs. In addition, we face risks with regard to the delivery to, and the use of nuclear fuel by, our power plants including the following: •creditworthiness of third-party suppliers, defaults by third-party suppliers on supply obligations and our ability to replace supplies currently under contract may delay or prevent timely delivery; •market liquidity for physical supplies of such fuels or availability of related services (e.g., fabrication) may be insufficient or available only at prices that are not acceptable to us; •variation in the quality of such fuels may adversely affect our power plant operations; •domestic and foreign legislative or regulatory actions or requirements may increase the cost of such fuels; and •the loss of critical infrastructure, acts of war or terrorist attacks (including cybersecurity breaches) or catastrophic events such as fires, earthquakes, explosions, floods, severe storms or other similar occurrences could impede the delivery of such fuels. Our nuclear units have a diversified portfolio of contracts and inventory that provide a substantial portion of our fuel raw 23 23 23 23 23 23 Table of Contents Table of Contents Table of Contents material needs over the next several years. However, each of our nuclear units has contracted with a single fuel fabrication services provider, and transitioning to an alternative provider could take an extended period of time. This could have a material adverse impact on our business, the financial results of specific plants and on our results of operations. Although our fuel contract portfolio provides a degree of hedging against these market risks, such hedging may not be effective and future increases in our fuel costs could materially and adversely affect our liquidity, financial condition and results of operations. **Current (2025):** We obtain substantially all of our nuclear fuel supply from third parties pursuant to arrangements that vary in term, pricing structure, firmness and delivery flexibility. Our fuel supply arrangements must be coordinated with storage services and other contracts to ensure that the nuclear fuel is delivered to our power plants at the times, in the quantities and otherwise in a manner that meets the needs of our generation portfolio and our customers. We must also comply with laws and regulations governing the transportation of such fuels. We are exposed to increases in the price of nuclear fuel, and significant changes in the price of nuclear fuel could affect our cash flow, future results and impact our liquidity needs. In addition, we face risks with regard to the delivery to, and the use of nuclear fuel by, our power plants including the following: •creditworthiness of third-party suppliers, defaults by third-party suppliers on supply obligations and our ability to replace supplies currently under contract may delay or prevent timely delivery; creditworthiness of third-party suppliers, defaults by third-party suppliers on supply obligations and our ability to replace supplies currently under contract may delay or prevent timely delivery; 26 26 26 Table of Contents Table of Contents Table of Contents •market liquidity for physical supplies of such fuels or availability of related services (e.g., fabrication) may be insufficient or available only at prices that are not acceptable to us; market liquidity for physical supplies of such fuels or availability of related services (e.g., fabrication) may be insufficient or available only at prices that are not acceptable to us; •variation in the quality of such fuels may adversely affect our power plant operations; variation in the quality of such fuels may adversely affect our power plant operations; •domestic and foreign legislative or regulatory actions or requirements may impact the availability of and/or increase the cost of such fuels; and domestic and foreign legislative or regulatory actions or requirements may impact the availability of and/or increase the cost of such fuels; and •the loss of critical infrastructure, acts of war or terrorist attacks (including cybersecurity breaches) or catastrophic events such as fires, earthquakes, explosions, floods, severe storms or other similar occurrences could impede the delivery of such fuels. the loss of critical infrastructure, acts of war or terrorist attacks (including cybersecurity breaches) or catastrophic events such as fires, earthquakes, explosions, floods, severe storms or other similar occurrences could impede the delivery of such fuels. The nuclear units we operate have a diversified portfolio of contracts and inventory that provide a substantial portion of our fuel raw material needs over the next several years. However, each of the nuclear units we operate has contracted with a single fuel fabrication services provider, and transitioning to an alternative provider could take an extended period of time. This could have a material adverse impact on our business, the financial results of specific plants and on our results of operations. Although our fuel contract portfolio provides a degree of hedging against these market risks, such hedging may not be effective and future increases in our fuel costs could materially and adversely affect our financial condition and results of operations. --- ## Modified: Inflation, including increases in the costs of equipment and materials, fuel, services and labor could adversely affect our operating results. **Key changes:** - Reworded sentence: "Higher costs from suppliers of equipment and materials, fuel and services and labor and health care costs to attract and retain our workforce, as well as policy matters such as tax rates, tariffs and other policies impacting costs, could lead to increased costs, which could reduce our earnings." **Prior (2024):** Higher costs from suppliers of equipment and materials, fuel, services and labor costs to attract and retain our workforce, could lead to increased costs, which could reduce our earnings. Also, seeking recovery of higher costs in future distribution base rate cases could pressure customer rates, resulting in a potentially adverse outcome of such proceedings, or in other proceedings, including the proposal of certain investment programs or other proceedings that impact customer rates. **Current (2025):** Higher costs from suppliers of equipment and materials, fuel and services and labor and health care costs to attract and retain our workforce, as well as policy matters such as tax rates, tariffs and other policies impacting costs, could lead to increased costs, which could reduce our earnings. Also, seeking recovery of higher costs in future distribution base rate cases could pressure customer rates, resulting in a potentially adverse outcome of such proceedings, or in other proceedings, including the proposal of certain investment programs or other proceedings that impact customer rates. --- ## Modified: Disruptions or cost increases in our supply chain, including labor shortages, could materially impact our business. **Key changes:** - Reworded sentence: "The supply chain of goods and services could be impacted by several factors, including sanctions, tariffs, manufacturing labor shortages, domestic and international shipping constraints, increases in demand, and shortages of raw materials and 21 21 21 Table of Contents Table of Contents Table of Contents specialty components." **Prior (2024):** The supply chain of goods and services is currently being negatively impacted by several factors, including manufacturing labor shortages, domestic and international shipping constraints, increases in demand, and shortages of raw materials and specialty components. As a result, we are seeing price increases in some areas and delivery delays of certain goods. These factors have increased our costs and have the potential to impact our operations. We cannot currently estimate the potential impact of continued supply chain disruptions but they could materially impact our business and results of operations. **Current (2025):** The supply chain of goods and services could be impacted by several factors, including sanctions, tariffs, manufacturing labor shortages, domestic and international shipping constraints, increases in demand, and shortages of raw materials and 21 21 21 Table of Contents Table of Contents Table of Contents specialty components. This could cause price increases in some areas and delivery delays of certain goods, which could increase our costs and impact our operations. --- ## Modified: Fluctuations in the wholesale power and natural gas markets could negatively affect our financial condition, results of operations and cash flows. **Key changes:** - Reworded sentence: "In the competitive markets where we operate, participants are not guaranteed any specific rate of return on their capital investments and natural gas prices have a major impact on the price that generators receive for their output." - Reworded sentence: "If the realized value of our generation falls outside of the PTC thresholds, to the extent that we have contracted obligations in excess of energy we have produced, an increase in market prices could reduce profitability." - Reworded sentence: "In addition, the volatility and potential for higher natural gas or energy prices may have a material impact on collateral requirements related to the forward value of our open futures contracts." **Prior (2024):** In the competitive markets where we operate, natural gas prices have a major impact on the price that generators receive for their output and participants are not guaranteed any specific rate of return on their capital investments. Recently, the natural gas market and, therefore, energy markets have become more volatile due to higher domestic demand, increased natural gas exports and impacts from the global liquefied natural gas market, among other things. The price of natural gas is the primary driver of energy pricing in PJM. As such, the volatility in the natural gas market and potential lower natural gas prices may impact our results of operations and cash flows. Lower natural gas prices result in lower electricity prices, which reduce our margins where our nuclear generation costs may not have declined similarly. Changes in prevailing market prices below the PTC threshold could have a material adverse effect on our financial condition and results of operations. Factors that may cause market price fluctuations include: 22 22 22 22 22 22 Table of Contents Table of Contents Table of Contents •increases and decreases in generation capacity, including the addition of new supplies of power as a result of the development of new power plants, expansion of existing power plants or additional transmission capacity; •severe weather conditions; •power supply disruptions, including power plant outages and transmission disruptions; •climate change, and weather conditions, particularly unusually mild summers or warm winters in our market areas; •seasonal fluctuations; •economic and political conditions that could negatively impact the demand for power or PTCs on our nuclear generation units; •changes in the supply of, and demand for, energy commodities; •development of new fuels or new technologies for the production or storage of power; •incurring penalties due to generation performance failure when called on by PJM during emergency situations; •federal and state regulations and actions of PJM and changing PJM market rules; and •federal and state power, market and environmental regulation and legislation, including financial incentives for new renewable energy generation capacity that could lead to oversupply and price suppression. Our generation business currently involves the establishment of forward sale positions in the wholesale energy markets on long-term and short-term bases. To the extent that we have produced or purchased energy in excess of our contracted obligations, a reduction in market prices could reduce profitability. Conversely, to the extent that we have contracted obligations in excess of energy we have produced or purchased, an increase in market prices could reduce profitability. If the strategy we utilize to hedge our exposure to these various risks or if our internal policies and procedures designed to monitor the exposure to these various risks are not effective, we could incur material losses. Our market positions can also be adversely affected by the level of volatility in the energy markets that, in turn, depends on various factors, including weather in various geographical areas, short-term supply and demand imbalances, and pricing differentials at various geographic locations. These risks cannot be predicted with certainty. Increases in market prices also affect our ability to hedge generation output and fuel requirements as the obligation to post margin increases with increasing prices. In addition, the volatility and potential for higher natural gas prices may have a material impact on collateral requirements related to the forward value of our open futures contracts. Higher collateral requirements reduce available short-term liquidity and increase working capital costs. **Current (2025):** In the competitive markets where we operate, participants are not guaranteed any specific rate of return on their capital investments and natural gas prices have a major impact on the price that generators receive for their output. The natural gas market and energy markets have been, and may continue to be, volatile due to higher domestic demand, increased natural gas exports and impacts from the global liquefied natural gas market, weather and other factors. Lower natural gas prices often result in lower electricity prices, which could reduce our margins where our nuclear generation costs may not have declined similarly. 25 25 25 Table of Contents Table of Contents Table of Contents Changes in prevailing market prices below the PTC threshold could have a material adverse effect on our financial condition and results of operations. Factors that may cause market price fluctuations include: •changes in demand on the system, which could be impacted by new large customers, including data centers, electrification and other factors; changes in demand on the system, which could be impacted by new large customers, including data centers, electrification and other factors; •increases and decreases in generation capacity, including the addition of new supplies of power as a result of the development of new power plants, expansion of existing power plants, continuing retirement of existing generation units, inability of new generating units to be placed online, the retention of power plants that were expected to be retired or recently retired units being returned to service, the extent to which those generating units are firm or intermittent, or additional transmission capacity; increases and decreases in generation capacity, including the addition of new supplies of power as a result of the development of new power plants, expansion of existing power plants, continuing retirement of existing generation units, inability of new generating units to be placed online, the retention of power plants that were expected to be retired or recently retired units being returned to service, the extent to which those generating units are firm or intermittent, or additional transmission capacity; •severe weather conditions; severe weather conditions; •power supply disruptions, including power plant outages and transmission disruptions; power supply disruptions, including power plant outages and transmission disruptions; •climate change, and weather conditions, particularly unusually mild summers or warm winters in our market areas; climate change, and weather conditions, particularly unusually mild summers or warm winters in our market areas; •seasonal fluctuations; seasonal fluctuations; •economic and political conditions that could negatively impact the demand for power or PTCs on our nuclear generation units; economic and political conditions that could negatively impact the demand for power or PTCs on our nuclear generation units; •changes in the supply of, and demand for, energy commodities; changes in the supply of, and demand for, energy commodities; •development of new fuels or new technologies for the production or storage of power; development of new fuels or new technologies for the production or storage of power; •incurring penalties due to generation performance failure when called on by PJM during emergency situations; incurring penalties due to generation performance failure when called on by PJM during emergency situations; •federal and state regulations and actions of PJM and changing PJM market rules, including capacity market auction delays and/or rule changes that could materially impact prices; and federal and state regulations and actions of PJM and changing PJM market rules, including capacity market auction delays and/or rule changes that could materially impact prices; and •federal and state power, market and environmental regulation and legislation, including financial incentives for new renewable energy generation capacity that could lead to oversupply and price suppression. federal and state power, market and environmental regulation and legislation, including financial incentives for new renewable energy generation capacity that could lead to oversupply and price suppression. Our generation business currently involves the establishment of forward sale positions in the wholesale energy markets on long-term and short-term bases. If the realized value of our generation falls outside of the PTC thresholds, to the extent that we have contracted obligations in excess of energy we have produced, an increase in market prices could reduce profitability. If the strategy we utilize to hedge our exposure to these various risks or if our internal policies and procedures designed to monitor the exposure to these various risks are not effective, we could incur material losses. Our market positions can also be adversely affected by the level of volatility in the energy markets that, in turn, depends on various factors, including weather in various geographical areas, short-term supply and demand imbalances, and pricing differentials at various geographic locations. These risks cannot be predicted with certainty. In addition, the volatility and potential for higher natural gas or energy prices may have a material impact on collateral requirements related to the forward value of our open futures contracts. Higher collateral requirements reduce available short-term liquidity and increase working capital costs and may affect our ability to hedge generation output and fuel. --- ## Modified: We are subject to third-party credit risk relating to our sale of nuclear generation output. **Key changes:** - Reworded sentence: "We sell generation output through the execution of bilateral contracts." - Reworded sentence: "Any failure of these counterparties to perform could have a material adverse impact on our results of operations, cash flows and financial position." - Added sentence: "27 27 27 Table of Contents Table of Contents Table of Contents" **Prior (2024):** We sell generation output and buy fuel through the execution of bilateral contracts. We also seek to contract in advance for a significant proportion of our anticipated output capacity and fuel needs. These contracts are subject to credit risk, which relates to the ability of our counterparties to meet their contractual obligations to us. Any failure of these counterparties to perform could require PSEG Power to purchase or sell energy or fuel in the wholesale markets at less favorable prices and incur additional losses, which could have a material adverse impact on our results of operations, cash flows and financial position. In the spot markets, we are exposed to the risks of the default sharing mechanisms that exist in those markets, some of which attempt to spread the risk across all participants. Therefore, a default by a third party could increase our costs, which could negatively impact our results of operations and cash flows. **Current (2025):** We sell generation output through the execution of bilateral contracts. These contracts are subject to credit risk, which relates to the ability of our counterparties to meet their contractual obligations to us. Any failure of these counterparties to perform could have a material adverse impact on our results of operations, cash flows and financial position. In the spot markets, we are exposed to the risks of the default sharing mechanisms that exist in those markets, some of which attempt to spread the risk across all participants. Therefore, a default by a third party could increase our costs, which could negatively impact our results of operations and cash flows. 27 27 27 Table of Contents Table of Contents Table of Contents --- ## Modified: Changes in tax laws and regulations may adversely affect our financial condition, results of operations and cash flows. **Key changes:** - Reworded sentence: "The enactment, amendment or repeal of federal or state tax legislation and/or the clarification of previously enacted tax laws, including U.S." **Prior (2024):** The enactment of additional federal or state tax legislation and clarification of previously enacted tax laws, including anticipated U.S. Treasury guidance relating to the 15% corporate alternative minimum tax and energy tax credit provisions, could have a material impact on our effective tax rate and cash tax position. 29 29 29 29 29 29 Table of Contents Table of Contents Table of Contents **Current (2025):** The enactment, amendment or repeal of federal or state tax legislation and/or the clarification of previously enacted tax laws, including U.S. Treasury guidance relating to the 15% CAMT, the nuclear PTC and other energy tax credit provisions, could have a material impact on our effective tax rate and cash tax position. --- ## Modified: We may be adversely affected by changes in energy regulatory policies, including energy and capacity market design rules and developments affecting transmission. **Key changes:** - Reworded sentence: "PJM's capacity market design rules continue to evolve and change, including in response to projections of higher demand, efforts to integrate public policy initiatives into the wholesale markets, lack of sufficient generation capacity and extreme weather events." - Reworded sentence: "Business - Regulatory Issues - Federal Regulation." - Removed sentence: "In July 2021, the BPU issued a report on its investigation related to whether New Jersey can achieve its long-term clean energy and environmental objectives under the current resource adequacy procurement paradigm." - Removed sentence: "The report found that participating in the regional market is the most efficient way for New Jersey to achieve its clean energy goals and therefore consideration of leaving the regional market is paused while market reforms are being considered at the regional and national level." - Removed sentence: "In September 2022, the BPU issued a Progress Report expanding on the recommendations contained in the 2021 report." **Prior (2024):** The energy industry continues to be regulated and the rules to which our businesses are subject are always at risk of being changed. Our business has been impacted by established rules that create locational capacity markets in PJM. Under these rules, generators located in constrained areas are paid more for their capacity so there is an incentive to locate in those areas where generation capacity is most needed. PJM's capacity market design rules continue to evolve, including in response to efforts to integrate public policy initiatives into the wholesale markets, and recent extreme weather events in PJM. For a discussion of recent changes in energy regulatory policies that may affect our business and results of operations, see Item 1. Regulatory Issues - Federal Regulation. Further, some of the market-based mechanisms in which we participate are at times the subject of review or discussion by some of the participants in the New Jersey and federal arenas. We can provide no assurance that these mechanisms will continue to exist in their current form, nor otherwise be modified. In July 2021, the BPU issued a report on its investigation related to whether New Jersey can achieve its long-term clean energy and environmental objectives under the current resource adequacy procurement paradigm. The report found that participating in the regional market is the most efficient way for New Jersey to achieve its clean energy goals and therefore consideration of leaving the regional market is paused while market reforms are being considered at the regional and national level. In September 2022, the BPU issued a Progress Report expanding on the recommendations contained in the 2021 report. The Progress Report found that it is in New Jersey's best interest to pursue a voluntary independent clean energy market and the BPU Staff sought the BPU's authorization to evaluate various options that would serve as alternatives to the PJM capacity market or work in conjunction with it. The BPU is currently examining whether and how to implement a forward clean energy attributes market that could involve several states in PJM and work in tandem with PJM's capacity and energy markets. We 27 27 27 27 27 27 Table of Contents Table of Contents Table of Contents cannot predict whether the BPU will ultimately take any measures in the future that will have an impact on the capacity market or our generating stations. **Current (2025):** The energy industry continues to be regulated and the rules to which our businesses are subject are always at risk of being changed. Our business has been impacted by established rules that create locational capacity markets in PJM. Under these rules, generators located in constrained areas are paid more for their capacity so there is an incentive to locate in those areas where generation capacity is most needed. PJM's capacity market design rules continue to evolve and change, including in response to projections of higher demand, efforts to integrate public policy initiatives into the wholesale markets, lack of sufficient generation capacity and extreme weather events. These changes have led to capacity market auction delays. For a discussion of recent changes in energy regulatory policies that may affect our business and results of operations, see Item 1. Business - Regulatory Issues - Federal Regulation. Further, some of the market-based mechanisms in which we participate are at times the subject of review or discussion by some of the participants in the New Jersey and federal arenas. We can provide no assurance that these mechanisms will continue to exist in their current form, nor otherwise be modified. --- ## Modified: If we are unable to enter into or extend certain significant contracts, this may negatively affect our financial condition and operating results **Key changes:** - Reworded sentence: "We are party to, and are also exploring opportunities to enter into, several contracts from which we currently or may in the future derive significant revenues." - Reworded sentence: "The OSA continues through 2025 and LIPA is currently conducting a process for provision of these services after 2025." **Prior (2024):** We are party to several contracts from which we derive significant revenues. PSEG Power sells wholesale natural gas, primarily through a full-requirements BGSS contract with PSE&G to meet the needs of PSE&G's default gas supply service customers. In 2022, the BPU approved an extension of the long-term BGSS contract to March 31, 2027, and thereafter the contract remains in effect unless terminated by either party with a two-year notice. PSEG LI has an OSA with LIPA to operate LIPA's electric T&D system in Long Island. The OSA continues through 2025, but can be extended by mutual agreement of the parties. Further, PSEG Power provides fuel procurement and power management services to LIPA under separate agreements that expire at the end of 2025. It is uncertain whether any of these contracts and agreements will be extended on terms acceptable to us or at all, which may negatively affect our financial condition and operating results. For additional information, see Item 1. Business - PSEG Power & Other. **Current (2025):** We are party to, and are also exploring opportunities to enter into, several contracts from which we currently or may in the future derive significant revenues. PSEG Power sells wholesale natural gas, primarily through a full-requirements BGSS contract with PSE&G to meet the needs of PSE&G's default gas supply service customers. In 2022, the BPU approved an extension of the long-term BGSS contract to March 31, 2027, and thereafter the contract remains in effect unless terminated by either party with a two-year notice. PSEG LI has an OSA with LIPA to operate LIPA's electric T&D system in Long Island. The OSA continues through 2025 and LIPA is currently conducting a process for provision of these services after 2025. It is uncertain whether these contracts will be extended or renewed, which may negatively affect our financial condition and operating results. In addition, we are exploring opportunities for the potential sale of power from our nuclear facilities pursuant to long-term agreements with large power users, such as data centers. It is uncertain whether we will be successful in entering into any of such contracts, including without limitation in connection with various ongoing regulatory proceedings. --- *Data sourced from SEC EDGAR. Last updated 2026-06-01.*