PSEG seeks alternatives for fossil fuel fleet

The Public Service Enterprise Group (PSEG) announced last week that it would pursue alternatives for its non-nuclear generating fleet to grow into a primarily regulated electric and gas utility, as well as improve its credit and clean energy efforts.

While this could impact its 467 MW of operations under Solar Source, this could represent a significant shake-up for the company’s more than 6,750 MW of fossil generation located in New Jersey, Connecticut, New York, and Maryland. PSEG is currently evaluating offshore wind investments and is participating in upcoming offshore wind solicitations in the Mid-Atlantic region.

To that same end, PSEG’s utility, PSE&G, has also filed a $3.5 billion Clean Energy Future filing with the state of New Jersey in an effort to reach the state’s goals created by the 2018 Clean Energy Act.

“A separation of the non-nuclear assets would reduce overall business risk and earnings volatility, improve our credit profile, and enhance an already compelling ESG position driven by pending clean energy investments, methane reduction, and zero-carbon generation,” Ralph Izzo, PSEG chairman, president and CEO, said. “We recognize the shift in investor preference toward owning regulated utility businesses without commodity exposure to merchant generation and related earnings volatility. We believe PSE&G is among the best utilities in the country and that our valuation should align with that profile.”

Under PSE&G’s new plans, energy efficiency programs will be expanded to reach more people, elective vehicle infrastructure and energy storage will be pursued, and services will be enhanced through technology like advanced meters and energy cloud services.

Despite the changes underway, PSEG has no intention of giving up its existing nuclear fleet, as managed by PSEG Power. That sector of energy is already a cost-effective source of zero-carbon electricity, in the company’s view. PSEG seeks to move its whole operation to such a zero-carbon platform, though.

“We are proud to have served the needs of our customers and key stakeholders for the last 117 years, and are excited to explore the opportunities that will shape PSEG’s future,” Izzo said. “It is a future focused on advancing our business as a sustainable, customer-focused provider of essential electricity and natural gas service, delivered by a primarily regulated utility and contracted businesses.”

What this all will end up looking is very much up in the air. PSEG is still in its preliminary stage of evaluation, and it has engaged Goldman Sachs and Wachtell, Lipton, Rosen & Katz as advisors for its strategic evaluation.