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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SeptemberJune 30, 20202021
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM          TO
Commission
File Number		Name of Registrant, Address, and Telephone NumberState or other jurisdiction of Incorporation or OrganizationI.R.S. Employer
Identification  ��Number
001-09120  Public Service Enterprise Group IncorporatedNew Jersey22-2625848
80 Park Plaza
Newark,New Jersey07102
973430-7000
001-00973  Public Service Electric and Gas CompanyNew Jersey22-1212800
80 Park Plaza
Newark,New Jersey07102
973430-7000
001-34232  PSEG Power LLCDelaware22-3663480
80 Park Plaza
Newark,New Jersey07102
973430-7000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading Symbol(s)Name of Each Exchange
On Which Registered
Public Service Enterprise Group Incorporated
  Common Stock without par valuePEGNew York Stock Exchange
Public Service Electric and Gas Company
  9.25% First and Refunding Mortgage Bonds, Series CC, due 2021PEG21New York Stock Exchange
8.00% First and Refunding Mortgage Bonds, due 2037PEG37DNew York Stock Exchange
  5.00% First and Refunding Mortgage Bonds, due 2037PEG37JNew York Stock Exchange
PSEG Power LLC
  8.625% Senior Notes, due 2031PEG31New York Stock Exchange
Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrants have submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit such files). Yes ☒ No ☐
(Cover continued on next page)




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(Cover continued from previous page)
Indicate by check mark whether each registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Public Service Enterprise Group IncorporatedLarge accelerated filer☒Accelerated filer☐Non-accelerated filer☐Smaller reporting company☐Emerging growth company☐
Public Service Electric and Gas CompanyLarge accelerated filer☐Accelerated filer☐Non-accelerated filer☒Smaller reporting company☐Emerging growth company☐
PSEG Power LLCLarge accelerated filer☐Accelerated filer☐Non-accelerated filer☒Smaller reporting company☐Emerging growth company☐
If any of the registrants is an emerging growth company, indicate by check mark if such registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether any of the registrants is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of OctoberJuly 20, 2020,2021, Public Service Enterprise Group Incorporated had outstanding 505,847,992505,577,072 shares of its sole class of Common Stock, without par value.
As of OctoberJuly 20, 2020,2021, Public Service Electric and Gas Company had issued and outstanding 132,450,344 shares of Common Stock, without nominal or par value, all of which were privately held, beneficially and of record, by Public Service Enterprise Group Incorporated.
Public Service Electric and Gas Company and PSEG Power LLC are wholly owned subsidiaries of Public Service Enterprise Group Incorporated and meet the conditions set forth in General Instruction H(1) of Form 10-Q. Each is filing its Quarterly Report on Form 10-Q with the reduced disclosure format authorized by General Instruction H.


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Page
ii
FILING FORMAT
iii
PART I. FINANCIAL INFORMATION
Item 1.Financial Statements
Public Service Enterprise Group Incorporated
1
Public Service Electric and Gas Company
7
PSEG Power LLC
13
Notes to Condensed Consolidated Financial Statements
Note 1. Organization, Basis of Presentation and Significant Accounting Policies
19
Note 2. Recent Accounting Standards
20
Note 3. Revenues
2322
Note 4. Early Plant Retirements/Asset Dispositions and Impairments
28
Note 5. Variable Interest Entity (VIE)Entities (VIEs)
29
Note 6. Rate Filings
30
Note 7. Leases
3231
Note 8. Financing Receivables
3332
Note 9. Trust Investments
3533
Note 10. Pension and Other Postretirement Benefits (OPEB)
4039
Note 11. Commitments and Contingent Liabilities
4241
Note 12. Debt and Credit Facilities
47
Note 13. Financial Risk Management Activities
4948
Note 14. Fair Value Measurements
5453
Note 15. Other Income (Deductions)
6160
Note 16. Income Taxes
6261
Note 17. Accumulated Other Comprehensive Income (Loss), Net of Tax
6463
Note 18. Earnings Per Share (EPS) and Dividends
6867
Note 19. Financial Information by Business Segment
6968
Note 20. Related-Party Transactions
7069
Item 2.
7271
Executive Overview of 20202021 and Future Outlook
7271
8180
8786
9089
9089
Item 3.
9189
Item 4.
9290
PART II. OTHER INFORMATION
Item 1.
9291
Item 1A.
9291
Item 2.
9391
Item 5.
9391
Item 6.
9593
9695
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FORWARD-LOOKING STATEMENTS
Certain of the matters discussed in this report about our and our subsidiaries’ future performance, including, without limitation, future revenues, earnings, strategies, prospects, consequences and all other statements that are not purely historical constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those anticipated. Such statements are based on management’s beliefs as well as assumptions made by and information currently available to management. When used herein, the words “anticipate,” “intend,” “estimate,” “believe,” “expect,” “plan,” “should,” “hypothetical,” “potential,” “forecast,” “project,” variations of such words and similar expressions are intended to identify forward-looking statements. Factors that may cause actual results to differ are often presented with the forward-looking statements themselves. Other factors that could cause actual results to differ materially from those contemplated in any forward-looking statements made by us herein are discussed in filings we make with the United States Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K and subsequent reports on Form 10-Q and Form 8-K. These factors include, but are not limited to:
•any inability to successfully develop, obtain regulatory approval for, or construct generation, transmission and distribution projects;
•lack of growth or slower growth in the number of customers or the failure of our Conservation Incentive Program to fully address a decline in customer demand;
•any equipment failures, accidents, severe weather events, acts of war or terrorism or other incidents, including pandemics such as the ongoing coronavirus pandemic, that may impact our ability to provide safe and reliable service to our customers;
•any inability to recover the carrying amount of our long-lived assets;
•any inability to maintain sufficient liquidity;
•the impact of cybersecurity attacks or intrusions;
•the impact of the ongoing coronavirus pandemic;
•the impact of our covenants in our debt instruments on our operations;
•adverse performance of our nuclear decommissioning and defined benefit plan trust fund investments and changes in funding requirements;
•risks associated with the timeline and ultimate outcome of our exploration of strategic alternatives relating to PSEG Power’s non-nuclear generating fleet;
•the failure to complete, or delays in completing, our proposed investment in the Ocean Wind offshore wind project, or following the completion of our initial investment in the project, the failure to realize the anticipated strategic and financial benefits of the project;
•fluctuations in wholesale power and natural gas markets, including the potential impacts on the economic viability of our generation units;
•our ability to obtain adequate fuel supply;
•market risks impacting the operation of our generating stations;
•increases in competition in wholesale energy and capacity markets;
•changes in technology related to energy generation, distribution and consumption and changes in customer usage patterns;
•economic downturns;
•third-party credit risk relating to our sale of generation output and purchase of fuel;
•adverse performanceany inability of PSEG Power to meet its commitments under forward sale obligations;
•reliance on transmission facilities to maintain adequate transmission capacity for our nuclear decommissioning and defined benefit plan trust fund investments and changes in funding requirements;power generation fleet;
•the impact of changes in state and federal legislation and regulations on our business, including PSE&G’s ability to recover costs and earn returns on authorized investments;
•PSE&G’s proposed investment programs may not be fully approved by regulators and its capital investment may be lower than planned;
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•the impact onabsence of a long-term legislative or other solution for our New Jersey nuclear plants ifthat sufficiently values them for their carbon-free, fuel diversity and resilience attributes, or the impact of the current or subsequent payments for such plants are not awarded Zero Emission Certificates (ZEC) in future periods, there is an adverse change in the amount of future ZEC payments, the ZEC program is overturned orattributes being materially adversely modified through legal proceedings or if adverse changes are made to the capacity market construct;proceedings;
•adverse changes in energy industry laws, policies and regulations, including market structures and transmission planning;
•the impact of stateplanning and federal actions aimed at combating climate change on our natural gas assets;transmission returns;
•risks associated with our ownership and operation of nuclear facilities, including regulatory risks, such as compliance with the Atomic Energy Act and trade control, environmental and other regulations, as well as financial, environmental and health and safety risks;
•changes in federal and state environmental regulations and enforcement; and
•delays in receipt of, or an inability to receive, necessary licenses and permits;
•the impact of any future rate proceedings;
•adverse outcomes of any legal, regulatory or other proceeding, settlement, investigation or claim applicable to us and/or the energy industry;
•changes in tax laws and regulations;
•the impact of our holding company structure on our ability to meet our corporate funding needs, service debt and pay dividends;
•lack of growth or slower growth in the number of customers or changes in customer demand;
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•any inability of PSEG Power to meet its commitments under forward sale obligations;
•reliance on transmission facilities that we do not own or control and the impact on our ability to maintain adequate transmission capacity;
•any inability to successfully develop, obtain regulatory approval for, or construct generation, transmission and distribution projects;
•any equipment failures, accidents, severe weather events or other incidents, including pandemics such as the ongoing coronavirus pandemic, that may impact our ability to provide safe and reliable service to our customers;
•our inability to exercise control over the operations of generation facilities in which we do not maintain a controlling interest;
•any inability to recover the carrying amount of our long-lived assets and leveraged leases;
•any inability to maintain sufficient liquidity;
•any inability to realize anticipated tax benefits or retain tax credits;
•challenges associated with recruitment and/or retention of key executives and a qualified workforce;
•the impact of our covenants in our debt instruments on our operations;
•the impact of the ongoing coronavirus pandemic;
•the impact of acts of war, terrorism, cybersecurity attacks or intrusions; and
•failure to sell or otherwise dispose of all or a portion of PSEG Power’s non-nuclear generating fleet on terms that are favorable to us, or at all, or any delay of such transaction or transactions due to market conditions, the failure to satisfy conditions to closing or otherwise.permits.
All of the forward-looking statements made in this report are qualified by these cautionary statements and we cannot assure you that the results or developments anticipated by management will be realized or even if realized, will have the expected consequences to, or effects on, us or our business, prospects, financial condition, results of operations or cash flows. Readers are cautioned not to place undue reliance on these forward-looking statements in making any investment decision. Forward-looking statements made in this report apply only as of the date of this report. While we may elect to update forward-looking statements from time to time, we specifically disclaim any obligation to do so, even in light of new information or future events, unless otherwise required by applicable securities laws.
The forward-looking statements contained in this report are intended to qualify for the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

FILING FORMAT
This combined Quarterly Report on Form 10-Q is separately filed by Public Service Enterprise Group Incorporated (PSEG), Public Service Electric and Gas Company (PSE&G) and PSEG Power LLC (PSEG Power). Information relating to any individual company is filed by such company on its own behalf. PSE&G and PSEG Power are each only responsible for information about itself and its subsidiaries.
Discussions throughout the document refer to PSEG and its direct operating subsidiaries, PSE&G and PSEG Power. Depending on the context of each section, references to “we,” “us,” and “our” relate to PSEG or to the specific company or companies being discussed.

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PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Millions, except per share data
(Unaudited)
Three Months EndedNine Months Ended
September 30,September 30,
 2020201920202019
OPERATING REVENUES$2,370 $2,302 $7,201 $7,598 
OPERATING EXPENSES
Energy Costs775 753 2,276 2,581 
Operation and Maintenance767 745 2,254 2,251 
Depreciation and Amortization317 307 956 928 
(Gain) Loss on Asset Dispositions(122)7 (122)402 
Total Operating Expenses1,737 1,812 5,364 6,162 
OPERATING INCOME633 490 1,837 1,436 
Income from Equity Method Investments4 3 10 10 
Net Gains (Losses) on Trust Investments107 (3)87 164 
Other Income (Deductions)39 35 81 101 
Net Non-Operating Pension and Other Postretirement Benefit (OPEB) Credits (Costs)62 55 186 121 
Interest Expense(149)(147)(453)(417)
INCOME BEFORE INCOME TAXES696 433 1,748 1,415 
Income Tax Benefit (Expense)(121)(30)(274)(159)
NET INCOME$575 $403 $1,474 $1,256 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC504 504 504 504 
DILUTED507 507 507 507 
NET INCOME PER SHARE:
BASIC$1.15 $0.80 $2.93 $2.49 
DILUTED$1.14 $0.79 $2.91 $2.47 
Three Months EndedSix Months Ended
June 30,June 30,
 2021202020212020
OPERATING REVENUES$1,874 $2,050 $4,763 $4,831 
OPERATING EXPENSES
Energy Costs606 595 1,635 1,501 
Operation and Maintenance783 733 1,561 1,487 
Depreciation and Amortization322 315 663 639 
(Gains) Losses on Asset Dispositions and Impairments457 0 457 0 
Total Operating Expenses2,168 1,643 4,316 3,627 
OPERATING INCOME (LOSS)(294)407 447 1,204 
Income from Equity Method Investments6 3 9 6 
Net Gains (Losses) on Trust Investments81 201 141 (20)
Other Income (Deductions)33 38 58 42 
Net Non-Operating Pension and Other Postretirement Benefit (OPEB) Credits (Costs)82 62 164 124 
Interest Expense(147)(151)(293)(304)
INCOME (LOSS) BEFORE INCOME TAXES(239)560 526 1,052 
Income Tax Benefit (Expense)62 (109)(55)(153)
NET INCOME (LOSS)$(177)$451 $471 $899 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC504 504 504 504 
DILUTED504 507 507 507 
NET INCOME (LOSS) PER SHARE:
BASIC$(0.35)$0.89 $0.94 $1.78 
DILUTED$(0.35)$0.89 $0.93 $1.77 
See Notes to Condensed Consolidated Financial Statements.
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PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Millions
(Unaudited)
 
Three Months EndedNine Months Ended
 September 30,September 30,
 2020201920202019
NET INCOME$575 $403 $1,474 $1,256 
Other Comprehensive Income (Loss), net of tax
Unrealized Gains (Losses) on Available-for-Sale Securities, net of tax (expense) benefit of $3, $(5), $(15) and $(30) for the three and nine months ended 2020 and 2019, respectively(4)10 24 49 
Unrealized Gains (Losses) on Cash Flow Hedges, net of tax (expense) benefit of $(1), $0, $(1) and $6 for the three and nine months ended 2020 and 2019, respectively4 1 4 (16)
Pension/OPEB adjustment, net of tax (expense) benefit of $(1), $7, $(3) and $1 for the three and nine months ended 2020 and 2019, respectively3 (17)9 (13)
Other Comprehensive Income (Loss), net of tax3 (6)37 20 
COMPREHENSIVE INCOME$578 $397 $1,511 $1,276 
Three Months EndedSix Months Ended
 June 30,June 30,
 2021202020212020
NET INCOME (LOSS)$(177)$451 $471 $899 
Other Comprehensive Income (Loss), net of tax
Unrealized Gains (Losses) on Available-for-Sale Securities, net of tax (expense) benefit of $(10), $(12), $16 and $(18) for the three and six months ended 2021 and 2020, respectively16 20 (26)28 
Unrealized Gains (Losses) on Cash Flow Hedges, net of tax (expense) benefit of $(1), $(1), $(1) and $0 for the three and six months ended 2021 and 2020, respectively0 3 1 0 
Pension/OPEB adjustment, net of tax (expense) benefit of $(1), $(1), $(3) and $(2) for the three and six months ended 2021 and 2020, respectively4 3 7 6 
Other Comprehensive Income (Loss), net of tax20 26 (18)34 
COMPREHENSIVE INCOME (LOSS)$(157)$477 $453 $933 
See Notes to Condensed Consolidated Financial Statements.
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PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
Millions
(Unaudited)
 
September 30,
2020		December 31,
2019
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents$966 $147 
Accounts Receivable, net of allowance of $154 in 2020 and $60 in 20191,299 1,313 
Tax Receivable102 21 
Unbilled Revenues, net of allowance of $4 in 2020175 239 
Fuel309 310 
Materials and Supplies, net608 587 
Prepayments128 79 
Derivative Contracts46 113 
Regulatory Assets342 351 
Assets Held for Sale0 30 
Other48 41 
Total Current Assets4,023 3,231 
PROPERTY, PLANT AND EQUIPMENT47,949 45,944 
     Less: Accumulated Depreciation and Amortization(10,900)(10,100)
Net Property, Plant and Equipment37,049 35,844 
NONCURRENT ASSETS
Regulatory Assets3,669 3,677 
Operating Lease Right-of-Use Assets270 282 
Long-Term Investments608 812 
Nuclear Decommissioning Trust (NDT) Fund2,359 2,216 
Long-Term Tax Receivable0 150 
Long-Term Receivable of Variable Interest Entity (VIE)830 813 
Rabbi Trust Fund261 246 
Other Intangibles228 149 
Derivative Contracts17 24 
Other262 286 
Total Noncurrent Assets8,504 8,655 
TOTAL ASSETS$49,576 $47,730 
June 30,
2021		December 31,
2020
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents$107 $543 
Accounts Receivable, net of allowance of $251 in 2021 and $196 in 20201,408 1,410 
Tax Receivable9 63 
Unbilled Revenues, net of allowance of $9 in 2021 and $10 in 2020207 229 
Fuel207 277 
Materials and Supplies, net612 601 
Prepayments253 51 
Derivative Contracts35 60 
Regulatory Assets321 369 
Other42 27 
Total Current Assets3,201 3,630 
PROPERTY, PLANT AND EQUIPMENT48,270 48,569 
     Less: Accumulated Depreciation and Amortization(11,226)(10,984)
Net Property, Plant and Equipment37,044 37,585 
NONCURRENT ASSETS
Regulatory Assets3,945 3,872 
Operating Lease Right-of-Use Assets214 262 
Long-Term Investments593 536 
Nuclear Decommissioning Trust (NDT) Fund2,628 2,501 
Long-Term Tax Receivable47 0 
Long-Term Receivable of Variable Interest Entity (VIE)954 945 
Rabbi Trust Fund245 266 
Other Intangibles122 158 
Derivative Contracts8 9 
Other291 286 
Total Noncurrent Assets9,047 8,835 
TOTAL ASSETS$49,292 $50,050 
See Notes to Condensed Consolidated Financial Statements.
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PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
Millions
(Unaudited)

 
September 30,
2020		December 31,
2019
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES
Long-Term Debt Due Within One Year$2,093 $1,365 
Commercial Paper and Loans300 1,115 
Accounts Payable1,332 1,358 
Derivative Contracts8 36 
Accrued Interest171 116 
Accrued Taxes238 41 
Clean Energy Program187 143 
Obligation to Return Cash Collateral103 119 
Regulatory Liabilities306 234 
Other522 520 
Total Current Liabilities5,260 5,047 
NONCURRENT LIABILITIES
Deferred Income Taxes and Investment Tax Credits (ITC)6,334 6,256 
Regulatory Liabilities2,773 3,002 
Operating Leases260 273 
Asset Retirement Obligations1,198 1,087 
OPEB Costs737 734 
OPEB Costs of Servco649 626 
Accrued Pension Costs862 952 
Accrued Pension Costs of Servco159 171 
Environmental Costs316 349 
Derivative Contracts1 1 
Long-Term Accrued Taxes110 182 
Other289 218 
Total Noncurrent Liabilities13,688 13,851 
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 11)
CAPITALIZATION
LONG-TERM DEBT14,792 13,743 
STOCKHOLDERS’ EQUITY
Common Stock, no par, authorized 1,000 shares; issued, 2020 and 2019—534 shares5,016 5,003 
Treasury Stock, at cost, 2020 and 2019—30 shares(863)(831)
Retained Earnings12,135 11,406 
Accumulated Other Comprehensive Loss(452)(489)
Total Stockholders’ Equity15,836 15,089 
Total Capitalization30,628 28,832 
TOTAL LIABILITIES AND CAPITALIZATION$49,576 $47,730 
June 30,
2021		December 31,
2020
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES
Long-Term Debt Due Within One Year$345 $1,684 
Commercial Paper and Loans1,450 1,063 
Accounts Payable1,146 1,332 
Derivative Contracts34 21 
Accrued Interest126 126 
Accrued Taxes235 124 
Clean Energy Program231 143 
Obligation to Return Cash Collateral101 98 
Regulatory Liabilities301 294 
Other523 637 
Total Current Liabilities4,492 5,522 
NONCURRENT LIABILITIES
Deferred Income Taxes and Investment Tax Credits (ITC)6,219 6,502 
Regulatory Liabilities2,628 2,707 
Operating Leases204 252 
Asset Retirement Obligations1,270 1,212 
OPEB Costs722 730 
OPEB Costs of Servco714 699 
Accrued Pension Costs1,030 1,128 
Accrued Pension Costs of Servco220 226 
Environmental Costs237 286 
Derivative Contracts6 4 
Long-Term Accrued Taxes90 88 
Other232 214 
Total Noncurrent Liabilities13,572 14,048 
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 11)00
CAPITALIZATION
LONG-TERM DEBT15,350 14,496 
STOCKHOLDERS’ EQUITY
Common Stock, no par, authorized 1,000 shares; issued, 2021 and 2020—534 shares5,026 5,031 
Treasury Stock, at cost, 2021 and 2020—30 shares(899)(861)
Retained Earnings12,273 12,318 
Accumulated Other Comprehensive Loss(522)(504)
Total Stockholders’ Equity15,878 15,984 
Total Capitalization31,228 30,480 
TOTAL LIABILITIES AND CAPITALIZATION$49,292 $50,050 
See Notes to Condensed Consolidated Financial Statements.
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PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Millions
(Unaudited)
Nine Months Ended
September 30,
20202019
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income$1,474 $1,256 
Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:
Depreciation and Amortization956 928 
Amortization of Nuclear Fuel144 137 
(Gain) Loss on Asset Dispositions
(122)402 
Emission Allowances and Renewable Energy Credit (REC) Compliance Accrual
115 80 
Provision for Deferred Income Taxes (Other than Leases) and ITC40 139 
Non-Cash Employee Benefit Plan (Credits) Costs(79)(26)
Leveraged Lease (Income), (Gains) and Losses, Adjusted for Rents Received and Deferred Taxes(155)24 
Net Realized and Unrealized (Gains) Losses on Energy Contracts and Other Derivatives81 (201)
Cost of Removal(77)(87)
Net Change in Regulatory Assets and Liabilities4 54 
Net (Gains) Losses and (Income) Expense from NDT Fund(107)(195)
Net Change in Certain Current Assets and Liabilities:
          Tax Receivable68 77 
          Accrued Taxes228 (11)
           Cash Collateral(12)301 
          Other Current Assets and Liabilities19 (155)
Employee Benefit Plan Funding and Related Payments(12)(33)
Other(48)19 
Net Cash Provided By (Used In) Operating Activities2,517 2,709 
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to Property, Plant and Equipment(2,092)(2,383)
Purchase of Emission Allowances and RECs(94)(73)
Proceeds from Sales of Trust Investments1,796 1,374 
Purchases of Trust Investments(1,817)(1,402)
Proceeds from Sales of Long-Lived Assets and Lease Investments300 70 
Other52 55 
Net Cash Provided By (Used In) Investing Activities(1,855)(2,359)
CASH FLOWS FROM FINANCING ACTIVITIES
Net Change in Commercial Paper(1,115)(670)
Proceeds from Short-Term Loans800 0 
Payment of Short-Term Loans(500)0 
Issuance of Long-Term Debt2,450 1,900 
Redemption of Long-Term Debt(656)(850)
Cash Dividends Paid on Common Stock(743)(713)
Other(75)(60)
Net Cash Provided By (Used In) Financing Activities161 (393)
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash823 (43)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period176 199 
Cash, Cash Equivalents and Restricted Cash at End of Period$999 $156 
Supplemental Disclosure of Cash Flow Information:
Income Taxes Paid (Received)$176 $31 
Interest Paid, Net of Amounts Capitalized$384 $345 
Accrued Property, Plant and Equipment Expenditures$449 $514 
Six Months Ended
June 30,
20212020
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income$471 $899 
Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:
Depreciation and Amortization663 639 
Amortization of Nuclear Fuel94 93 
(Gains) Losses on Asset Dispositions and Impairments
457 0 
Emission Allowances and Renewable Energy Credit (REC) Compliance Accrual
82 65 
Provision for Deferred Income Taxes (Other than Leases) and ITC(205)104 
Non-Cash Employee Benefit Plan (Credits) Costs(89)(52)
Leveraged Lease (Income), (Gains) and Losses, Adjusted for Rents Received and Deferred Taxes6 9 
Net Realized and Unrealized (Gains) Losses on Energy Contracts and Other Derivatives331 (1)
Cost of Removal(60)(44)
Net Change in Regulatory Assets and Liabilities(24)(70)
Net (Gains) Losses and (Income) Expense from NDT Fund(158)5 
Net Change in Certain Current Assets and Liabilities:
          Tax Receivable56 16 
           Prepayments(200)(158)
          Accrued Taxes30 115 
           Cash Collateral(289)32 
          Other Current Assets and Liabilities(121)98 
Employee Benefit Plan Funding and Related Payments(8)(6)
Other13 (80)
Net Cash Provided By (Used In) Operating Activities1,049 1,664 
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to Property, Plant and Equipment(1,303)(1,414)
Purchase of Emission Allowances and RECs(34)(50)
Proceeds from Sales of Trust Investments1,229 1,163 
Purchases of Trust Investments(1,223)(1,184)
Proceeds from Sales of Long-Lived Assets and Lease Investments565 0 
Other(27)52 
Net Cash Provided By (Used In) Investing Activities(793)(1,433)
CASH FLOWS FROM FINANCING ACTIVITIES
Net Change in Commercial Paper and Loans(563)(750)
Proceeds from Short-Term Loans1,250 800 
Payment of Short-Term Loans(300)0 
Issuance of Long-Term Debt900 975 
Redemption of Long-Term Debt(1,384)(406)
Cash Dividends Paid on Common Stock(516)(495)
Other(71)(64)
Net Cash Provided By (Used In) Financing Activities(684)60 
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash(428)291 
Cash, Cash Equivalents and Restricted Cash at Beginning of Period572 176 
Cash, Cash Equivalents and Restricted Cash at End of Period$144 $467 
Supplemental Disclosure of Cash Flow Information:
Income Taxes Paid (Received)$143 $41 
Interest Paid, Net of Amounts Capitalized$279 $288 
Accrued Property, Plant and Equipment Expenditures$309 $331 
See Notes to Condensed Consolidated Financial Statements.
5

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PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Millions
(Unaudited)
 
 Common
Stock		 Treasury
Stock		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)
  Shs.Amount Shs.AmountTotal
Balance as of June 30, 2020 534 $5,003 (30)$(865)$11,808 $(455)$15,491 
Net Income — — — — 575 — 575 
Other Comprehensive Income (Loss), net of tax (expense) benefit of $1 — — — — — 3 3 
Comprehensive Income  578 
Cash Dividends at $0.49 per share on Common Stock — — — — (248)0 (248)
Other 0 13 0 2 0 0 15 
Balance as of September 30, 2020 534 $5,016  (30)$(863)$12,135 $(452)$15,836 
Balance as of June 30, 2019 534 $4,980 (30)$(835)$11,041 $(432)$14,754 
Net Income — — — — 403 — 403 
Other Comprehensive Income (Loss), net of tax (expense) benefit of $2 — — — — — (6)(6)
Comprehensive Income  397 
Cash Dividends at $0.47 per share on Common Stock — — — — (238)0 (238)
Other 0 9 0 3 0 0 12 
Balance as of September 30, 2019 534 $4,989  (30)$(832)$11,206 $(438)$14,925 
 
 Common
Stock		 Treasury
Stock		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)
  Shs.Amount Shs.AmountTotal
Balance as of March 31, 2021 534 $5,013 (30)$(902)$12,708 $(542)$16,277 
Net Loss — — — — (177)— (177)
Other Comprehensive Income (Loss), net of tax (expense) benefit of $(12) — — — — — 20 20 
Comprehensive Loss  (157)
Cash Dividends at $0.51 per share on Common Stock — — — — (258)0 (258)
Other 0 13 0 3 0 0 16 
Balance as of June 30, 2021 534 $5,026  (30)$(899)$12,273 $(522)$15,878 
Balance as of March 31, 2020 534 $4,994 (30)$(868)$11,604 $(481)$15,249 
Net Income — — — — 451 — 451 
Other Comprehensive Income (Loss), net of tax (expense) benefit of $(14) — — — — — 26 26 
Comprehensive Income  477 
Cash Dividends at $0.49 per share on Common Stock — — — — (247)0 (247)
Other 0 9 0 3 0 0 12 
Balance as of June 30, 2020 534 $5,003  (30)$(865)$11,808 $(455)$15,491 
 
 Common
Stock		 Treasury
Stock		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)
  Shs.Amount Shs.AmountTotal
Balance as of December 31, 2019 534 $5,003  (30)$(831)$11,406 $(489)$15,089 
Net Income — —  — — 1,474 — 1,474 
Other Comprehensive Income (Loss), net of tax (expense) benefit of $(19) — —  — — — 37 37 
Comprehensive Income  1,511 
Cumulative Effect Adjustment for Current Expected Credit Losses (CECL)— — — — (2)— (2)
Cash Dividends at $1.47 per share on Common Stock — —  — — (743)0 (743)
Other 0 13  0 (32)0 0 (19)
Balance as of September 30, 2020 534 $5,016  (30)$(863)$12,135 $(452)$15,836 
Balance as of December 31, 2018 534 $4,980  (30)$(808)$10,582 $(377)$14,377 
Net Income — —  — — 1,256 — 1,256 
Cumulative Effect Adjustment to Reclassify Stranded Tax Effects Resulting from the Change in the Federal Corporate Income Tax Rate— — — — 81 (81)— 
Other Comprehensive Income (Loss), net of tax (expense) benefit of $(23) — —  — — — 20 20 
Comprehensive Income  1,276 
Cash Dividends at $1.41 per share on Common Stock — —  — — (713)0 (713)
Other 0 9  0 (24)0 0 (15)
Balance as of September 30, 2019 534 $4,989  (30)$(832)$11,206 $(438)$14,925 
 
 Common
Stock		 Treasury
Stock		Retained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)
  Shs.Amount Shs.AmountTotal
Balance as of December 31, 2020 534 $5,031  (30)$(861)$12,318 $(504)$15,984 
Net Income — —  — — 471 — 471 
Other Comprehensive Income (Loss), net of tax (expense) benefit of $12 — —  — — — (18)(18)
Comprehensive Income  453 
Cash Dividends at $1.02 per share on Common Stock — —  — — (516)0 (516)
Other 0 (5) 0 (38)0 0 (43)
Balance as of June 30, 2021 534 $5,026  (30)$(899)$12,273 $(522)$15,878 
Balance as of December 31, 2019 534 $5,003  (30)$(831)$11,406 $(489)$15,089 
Net Income — —  — — 899 — 899 
Other Comprehensive Income (Loss), net of tax (expense) benefit of $(20) — —  — — — 34 34 
Comprehensive Income  933 
Cumulative Effect Adjustment for Current Expected Credit Losses (CECL)— — — — (2)— (2)
Cash Dividends at $0.98 per share on Common Stock — —  — — (495)0 (495)
Other 0 0  0 (34)0 0 (34)
Balance as of June 30, 2020 534 $5,003  (30)$(865)$11,808 $(455)$15,491 
See Notes to Condensed Consolidated Financial Statements.
6

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PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Millions
(Unaudited)

Three Months EndedNine Months Ended
September 30,September 30,
2020201920202019
OPERATING REVENUES$1,660 $1,604 $4,999 $5,018 
OPERATING EXPENSES
Energy Costs663 618 1,881 2,094 
Operation and Maintenance409 388 1,175 1,165 
Depreciation and Amortization218 206 657 620 
Total Operating Expenses1,290 1,212 3,713 3,879 
OPERATING INCOME370 392 1,286 1,139 
Net Gains (Losses) on Trust Investments1 0 2 1 
Other Income (Deductions)28 22 81 60 
Net Non-Operating Pension and OPEB Credits (Costs)51 46 154 105 
Interest Expense(97)(92)(291)(268)
INCOME BEFORE INCOME TAXES353 368 1,232 1,037 
Income Tax Benefit (Expense)(40)(24)(196)(63)
NET INCOME$313 $344 $1,036 $974 
Three Months EndedSix Months Ended
June 30,June 30,
2021202020212020
OPERATING REVENUES$1,514 $1,456 $3,587 $3,339 
OPERATING EXPENSES
Energy Costs509 510 1,358 1,218 
Operation and Maintenance393 380 817 766 
Depreciation and Amortization231 217 472 439 
Total Operating Expenses1,133 1,107 2,647 2,423 
OPERATING INCOME381 349 940 916 
Net Gains (Losses) on Trust Investments0 1 1 1 
Other Income (Deductions)24 26 52 53 
Net Non-Operating Pension and OPEB Credits (Costs)66 52 132 103 
Interest Expense(101)(98)(199)(194)
INCOME BEFORE INCOME TAXES370 330 926 879 
Income Tax Benefit (Expense)(61)(47)(140)(156)
NET INCOME$309 $283 $786 $723 
See disclosures regarding Public Service Electric and Gas Company included in the Notes to Condensed Consolidated Financial Statements.
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PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Millions
(Unaudited)

Three Months EndedNine Months Ended
September 30,September 30,
 2020201920202019
NET INCOME$313 $344 $1,036 $974 
Unrealized Gains (Losses) on Available-for-Sale Securities, net of tax (expense) benefit of $0, $0, $(1) and $(1) for the three and nine months ended 2020 and 2019, respectively0 1 1 3 
COMPREHENSIVE INCOME$313 $345 $1,037 $977 
Three Months EndedSix Months Ended
June 30,June 30,
 2021202020212020
NET INCOME$309 $283 $786 $723 
Unrealized Gains (Losses) on Available-for-Sale Securities, net of tax (expense) benefit of $0, $(1), $1 and $(1) for the three and six months ended 2021 and 2020, respectively1 1 (2)1 
COMPREHENSIVE INCOME$310 $284 $784 $724 
See disclosures regarding Public Service Electric and Gas Company included in the Notes to Condensed Consolidated Financial Statements.
8

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PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
Millions
(Unaudited)
September 30,
2020		December 31,
2019
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents$224 $21 
Accounts Receivable, net of allowance of $154 in 2020 and $60 in 2019948 901 
Accounts Receivable—Affiliated Companies0 1 
Unbilled Revenues, net of allowance of $4 in 2020175 239 
Materials and Supplies, net213 213 
Prepayments92 35 
Regulatory Assets342 351 
Other33 28 
Total Current Assets2,027 1,789 
PROPERTY, PLANT AND EQUIPMENT35,658 33,900 
Less: Accumulated Depreciation and Amortization(7,030)(6,623)
Net Property, Plant and Equipment28,628 27,277 
NONCURRENT ASSETS
Regulatory Assets3,669 3,677 
Operating Lease Right-of-Use Assets102 98 
Long-Term Investments225 248 
Rabbi Trust Fund51 48 
Other131 129 
Total Noncurrent Assets4,178 4,200 
TOTAL ASSETS$34,833 $33,266 
June 30,
2021		December 31,
2020
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents$40 $204 
Accounts Receivable, net of allowance of $251 in 2021 and $196 in 2020991 1,004 
Unbilled Revenues, net of allowance of $9 in 2021 and $10 in 2020207 229 
Materials and Supplies, net227 217 
Prepayments204 14 
Regulatory Assets321 369 
Other28 13 
Total Current Assets2,018 2,050 
PROPERTY, PLANT AND EQUIPMENT37,357 36,300 
Less: Accumulated Depreciation and Amortization(7,389)(7,149)
Net Property, Plant and Equipment29,968 29,151 
NONCURRENT ASSETS
Regulatory Assets3,945 3,872 
Operating Lease Right-of-Use Assets93 99 
Long-Term Investments202 222 
Rabbi Trust Fund44 51 
Other126 136 
Total Noncurrent Assets4,410 4,380 
TOTAL ASSETS$36,396 $35,581 
See disclosures regarding Public Service Electric and Gas Company included in the Notes to Condensed Consolidated Financial Statements.
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PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
Millions
(Unaudited)

September 30,
2020		December 31,
2019
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES
Long-Term Debt Due Within One Year$443 $259 
Commercial Paper and Loans0 362 
Accounts Payable713 639 
Accounts Payable—Affiliated Companies272 390 
Accrued Interest115 91 
Clean Energy Program187 143 
Obligation to Return Cash Collateral103 119 
Regulatory Liabilities306 234 
Other432 436 
Total Current Liabilities2,571 2,673 
NONCURRENT LIABILITIES
Deferred Income Taxes and ITC4,463 4,189 
Regulatory Liabilities2,773 3,002 
Operating Leases90 87 
Asset Retirement Obligations311 303 
OPEB Costs495 495 
Accrued Pension Costs441 501 
Environmental Costs266 294 
Long-Term Accrued Taxes20 115 
Other168 136 
Total Noncurrent Liabilities9,027 9,122 
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 11)
CAPITALIZATION
LONG-TERM DEBT10,472 9,568 
STOCKHOLDER’S EQUITY
Common Stock; 150 shares authorized; issued and outstanding, 2020 and 2019—132 shares892 892 
Contributed Capital1,095 1,095 
Basis Adjustment986 986 
Retained Earnings9,787 8,928 
Accumulated Other Comprehensive Income3 2 
Total Stockholder’s Equity12,763 11,903 
Total Capitalization23,235 21,471��
TOTAL LIABILITIES AND CAPITALIZATION$34,833 $33,266 
June 30,
2021		December 31,
2020
LIABILITIES AND CAPITALIZATION
CURRENT LIABILITIES
Long-Term Debt Due Within One Year$0 $434 
Commercial Paper and Loans0 100 
Accounts Payable525 671 
Accounts Payable—Affiliated Companies300 479 
Accrued Interest104 101 
Clean Energy Program231 143 
Obligation to Return Cash Collateral101 98 
Regulatory Liabilities301 294 
Other437 530 
Total Current Liabilities1,999 2,850 
NONCURRENT LIABILITIES
Deferred Income Taxes and ITC4,716 4,524 
Regulatory Liabilities2,628 2,707 
Operating Leases83 88 
Asset Retirement Obligations316 314 
OPEB Costs476 485 
Accrued Pension Costs546 612 
Environmental Costs187 236 
Long-Term Accrued Taxes4 7 
Other158 154 
Total Noncurrent Liabilities9,114 9,127 
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 11)00
CAPITALIZATION
LONG-TERM DEBT11,370 10,475 
STOCKHOLDER’S EQUITY
Common Stock; 150 shares authorized; issued and outstanding, 2021 and 2020—132 shares892 892 
Contributed Capital1,170 1,170 
Basis Adjustment986 986 
Retained Earnings10,864 10,078 
Accumulated Other Comprehensive Income1 3 
Total Stockholder’s Equity13,913 13,129 
Total Capitalization25,283 23,604 
TOTAL LIABILITIES AND CAPITALIZATION$36,396 $35,581 
See disclosures regarding Public Service Electric and Gas Company included in the Notes to Condensed Consolidated Financial Statements.
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PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Millions
(Unaudited)
Nine Months Ended
September 30,
 20202019
CASH FLOWS FROM OPERATING ACTIVITIES
  Net Income$1,036 $974 
Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:
Depreciation and Amortization657 620 
Provision for Deferred Income Taxes and ITC58 10 
Non-Cash Employee Benefit Plan (Credits) Costs(77)(39)
Cost of Removal(77)(87)
Net Change in Regulatory Assets and Liabilities4 54 
Net Change in Certain Current Assets and Liabilities:
Accounts Receivable and Unbilled Revenues8 105 
Materials and Supplies0 (16)
Prepayments(57)(97)
Accounts Payable46 (77)
Accounts Receivable/Payable—Affiliated Companies, net(88)8 
Other Current Assets and Liabilities(9)66 
Employee Benefit Plan Funding and Related Payments(1)(19)
Other(76)(21)
Net Cash Provided By (Used In) Operating Activities1,424 1,481 
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to Property, Plant and Equipment(1,777)(1,866)
Proceeds from Sales of Trust Investments32 27 
Purchases of Trust Investments(32)(25)
Solar Loan Investments5 2 
Other9 7 
Net Cash Provided By (Used In) Investing Activities(1,763)(1,855)
CASH FLOWS FROM FINANCING ACTIVITIES
Net Change in Commercial Paper and Loans(362)(262)
Issuance of Long-Term Debt1,350 1,150 
Redemption of Long-Term Debt(250)(500)
Cash Dividend Paid(175)0 
Other(17)(14)
Net Cash Provided By (Used In) Financing Activities546 374 
Net Increase (Decrease) In Cash, Cash Equivalents and Restricted Cash207 0 
Cash, Cash Equivalents and Restricted Cash at Beginning of Period50 61 
Cash, Cash Equivalents and Restricted Cash at End of Period$257 $61 
Supplemental Disclosure of Cash Flow Information:
Income Taxes Paid (Received)$143 $(82)
Interest Paid, Net of Amounts Capitalized$261 $240 
Accrued Property, Plant and Equipment Expenditures$366 $348 
Six Months Ended
June 30,
 20212020
CASH FLOWS FROM OPERATING ACTIVITIES
  Net Income$786 $723 
Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:
Depreciation and Amortization472 439 
Provision for Deferred Income Taxes and ITC63 74 
Non-Cash Employee Benefit Plan (Credits) Costs(78)(51)
Cost of Removal(60)(44)
Net Change in Regulatory Assets and Liabilities(24)(70)
Net Change in Certain Current Assets and Liabilities:
Accounts Receivable and Unbilled Revenues35 69 
Materials and Supplies(10)1 
Prepayments(190)(155)
Accounts Payable(62)39 
Accounts Receivable/Payable—Affiliated Companies, net(138)(5)
Other Current Assets and Liabilities(65)40 
Employee Benefit Plan Funding and Related Payments(1)0 
Other(48)(61)
Net Cash Provided By (Used In) Operating Activities680 999 
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to Property, Plant and Equipment(1,219)(1,190)
Proceeds from Sales of Trust Investments21 23 
Purchases of Trust Investments(15)(22)
Solar Loan Investments12 0 
Other7 7 
Net Cash Provided By (Used In) Investing Activities(1,194)(1,182)
CASH FLOWS FROM FINANCING ACTIVITIES
Net Change in Commercial Paper and Loans(100)(362)
Issuance of Long-Term Debt900 975 
Redemption of Long-Term Debt(434)0 
Cash Dividend Paid0 (175)
Other(8)(11)
Net Cash Provided By (Used In) Financing Activities358 427 
Net Increase (Decrease) In Cash, Cash Equivalents and Restricted Cash(156)244 
Cash, Cash Equivalents and Restricted Cash at Beginning of Period233 50 
Cash, Cash Equivalents and Restricted Cash at End of Period$77 $294 
Supplemental Disclosure of Cash Flow Information:
Income Taxes Paid (Received)$150 $51 
Interest Paid, Net of Amounts Capitalized$190 $179 
Accrued Property, Plant and Equipment Expenditures$240 $282 
See disclosures regarding Public Service Electric and Gas Company included in the Notes to Condensed Consolidated Financial Statements.
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PUBLIC SERVICE ELECTRIC AND GAS COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY
Millions
(Unaudited)
 
 Common StockContributed CapitalBasis AdjustmentRetained EarningsAccumulated
Other
Comprehensive
Income (Loss)
   Total
Balance as of June 30, 2020 $892 $1,095 $986 $9,474 $3 $12,450 
Net Income — — — 313 — 313 
Other Comprehensive Income (Loss), net of tax (expense) benefit of $0 — — — — 0 0 
Comprehensive Income 313 
Balance as of September 30, 2020 $892  $1,095 $986 $9,787 $3 $12,763 
Balance as of June 30, 2019 $892 $1,095 $986 $8,558 $1 $11,532 
Net Income — — — 344 — 344 
Other Comprehensive Income (Loss), net of tax (expense) benefit of $0 — — — — 1 1 
Comprehensive Income 345 
Balance as of September 30, 2019 $892  $1,095 $986 $8,902 $2 $11,877 

 
 Common StockContributed CapitalBasis AdjustmentRetained EarningsAccumulated
Other
Comprehensive
Income (Loss)
   Total
Balance as of December 31, 2019 $892 $1,095 $986 $8,928 $2 $11,903 
Net Income — — — 1,036 — 1,036 
Other Comprehensive Income (Loss), net of tax (expense) benefit of $(1) — — — — 1 1 
Comprehensive Income  1,037 
Cumulative Effect Adjustment for CECL— — — (2)— (2)
Cash Dividend Paid— — — (175)— (175)
Balance as of September 30, 2020 $892  $1,095 $986 $9,787 $3 $12,763 
Balance as of December 31, 2018 $892 $1,095 $986 $7,928 $(1)$10,900 
Net Income — — — 974 — 974 
Other Comprehensive Income (Loss), net of tax (expense) benefit of $(1) — — — — 3 3 
Comprehensive Income  977 
Balance as of September 30, 2019 $892  $1,095 $986 $8,902 $2 $11,877 
 
 Common StockContributed CapitalBasis AdjustmentRetained EarningsAccumulated
Other
Comprehensive
Income (Loss)
   Total
Balance as of March 31, 2021 $892 $1,170 $986 $10,555 $0 $13,603 
Net Income — — — 309 — 309 
Other Comprehensive Income (Loss), net of tax (expense) benefit of $0 — — — — 1 1 
Comprehensive Income  310 
Balance as of June 30, 2021 $892  $1,170 $986 $10,864 $1 $13,913 
Balance as of March 31, 2020 $892 $1,095 $986 $9,191 $2 $12,166 
Net Income — — — 283 — 283 
Other Comprehensive Income (Loss), net of tax (expense) benefit of $(1) — — — — 1 1 
Comprehensive Income  284 
Balance as of June 30, 2020 $892  $1,095 $986 $9,474 $3 $12,450 
 
 Common StockContributed CapitalBasis AdjustmentRetained EarningsAccumulated
Other
Comprehensive
Income (Loss)
   Total
Balance as of December 31, 2020 $892 $1,170 $986 $10,078 $3 $13,129 
Net Income — — — 786 — 786 
Other Comprehensive Income (Loss), net of tax (expense) benefit of $1 — — — — (2)(2)
Comprehensive Income  784 
Balance as of June 30, 2021 $892  $1,170 $986 $10,864 $1 $13,913 
Balance as of December 31, 2019 $892 $1,095 $986 $8,928 $2 $11,903 
Net Income — — — 723 — 723 
Other Comprehensive Income (Loss), net of tax (expense) benefit of $(1) — — — — 1 1 
Comprehensive Income  724 
Cumulative Effect Adjustment for CECL— — — (2)— (2)
Cash Dividend Paid— — — (175)— (175)
Balance as of June 30, 2020 $892  $1,095 $986 $9,474 $3 $12,450 
See disclosures regarding Public Service Electric and Gas Company included in the Notes to Condensed Consolidated Financial Statements.
12

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PSEG POWER LLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Millions
(Unaudited)

Three Months EndedNine Months Ended
September 30,September 30,
 2020201920202019
OPERATING REVENUES$746 $771 $2,649 $3,270 
OPERATING EXPENSES
Energy Costs290 359 1,289 1,556 
Operation and Maintenance213 233 679 736 
Depreciation and Amortization91 93 276 282 
(Gain) Loss on Asset Dispositions(122)7 (122)402 
Total Operating Expenses472 692 2,122 2,976 
OPERATING INCOME274 79 527 294 
Income from Equity Method Investments4 3 10 10 
Net Gains (Losses) on Trust Investments103 (4)79 160 
Other Income (Deductions)11 15 0 43 
Net Non-Operating Pension and OPEB Credits (Costs)8 8 25 14 
Interest Expense(28)(34)(92)(85)
INCOME BEFORE INCOME TAXES372 67 549 436 
Income Tax Benefit (Expense)(118)(14)(112)(127)
NET INCOME$254 $53 $437 $309 
Three Months EndedSix Months Ended
June 30,June 30,
 2021202020212020
OPERATING REVENUES$380 $683 $1,547 $1,903 
OPERATING EXPENSES
Energy Costs271 323 953 999 
Operation and Maintenance259 225 481 466 
Depreciation and Amortization83 91 175 185 
(Gains) Losses on Asset Dispositions and Impairments457 0 457 0 
Total Operating Expenses1,070 639 2,066 1,650 
OPERATING INCOME (LOSS)(690)44 (519)253 
Income from Equity Method Investments6 3 9 6 
Net Gains (Losses) on Trust Investments79 196 137 (24)
Other Income (Deductions)8 12 4 (11)
Net Non-Operating Pension and OPEB Credits (Costs)11 9 23 17 
Interest Expense(24)(30)(51)(64)
INCOME (LOSS) BEFORE INCOME TAXES(610)234 (397)177 
Income Tax Benefit (Expense)127 (64)75 6 
NET INCOME (LOSS)$(483)$170 $(322)$183 
See disclosures regarding PSEG Power LLC included in the Notes to Condensed Consolidated Financial Statements.
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PSEG POWER LLC
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Millions
(Unaudited)

Three Months EndedNine Months Ended
September 30,September 30,
2020201920202019
NET INCOME$254 $53 $437 $309 
Other Comprehensive Income (Loss), net of tax
Unrealized Gains (Losses) on Available-for-Sale Securities, net of tax (expense) benefit of $2, $(4), $(14) and $(26) for the three and nine months ended 2020 and 2019, respectively(2)7 20 38 
Pension/OPEB adjustment, net of tax (expense) benefit of $(1), $5, $(2) and $0 for the three and nine months ended 2020 and 2019, respectively2 (12)7 (9)
Other Comprehensive Income (Loss), net of tax0 (5)27 29 
COMPREHENSIVE INCOME$254 $48 $464 $338 
Three Months EndedSix Months Ended
June 30,June 30,
2021202020212020
NET INCOME (LOSS)$(483)$170 $(322)$183 
Other Comprehensive Income (Loss), net of tax
Unrealized Gains (Losses) on Available-for-Sale Securities, net of tax (expense) benefit of $(8), $(12), $14 and $(16) for the three and six months ended 2021 and 2020, respectively12 15 (20)22 
Pension/OPEB adjustment, net of tax (expense) benefit of $(1), $0, $(2) and $(1) for the three and six months ended 2021 and 2020, respectively3 3 5 5 
Other Comprehensive Income (Loss), net of tax15 18 (15)27 
COMPREHENSIVE INCOME (LOSS)$(468)$188 $(337)$210 
See disclosures regarding PSEG Power LLC included in the Notes to Condensed Consolidated Financial Statements.
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PSEG POWER LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
Millions
(Unaudited)

September 30,
2020		December 31,
2019
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents$15 $21 
Accounts Receivable304 309 
Accounts Receivable—Affiliated Companies154 408 
Short-Term Loan to Affiliate333 149 
Fuel309 310 
Materials and Supplies, net392 372 
Prepayments22 11 
Derivative Contracts46 113 
Assets Held for Sale0 28 
Other2 5 
Total Current Assets1,577 1,726 
PROPERTY, PLANT AND EQUIPMENT11,949 11,699 
Less: Accumulated Depreciation and Amortization(3,644)(3,273)
Net Property, Plant and Equipment8,305 8,426 
NONCURRENT ASSETS
Operating Lease Right-of-Use Assets64 71 
 Long-Term Investments66 66 
NDT Fund2,359 2,216 
Rabbi Trust Fund65 62 
Other Intangibles228 149 
Derivative Contracts17 24 
Other38 65 
Total Noncurrent Assets2,837 2,653 
TOTAL ASSETS$12,719 $12,805 
June 30,
2021		December 31,
2020
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents$2 $27 
Accounts Receivable367 328 
Accounts Receivable—Affiliated Companies165 317 
Short-Term Loan to Affiliate0 161 
Fuel207 277 
Materials and Supplies, net382 382 
Prepayments18 16 
Derivative Contracts35 60 
Other1 2 
Total Current Assets1,177 1,570 
PROPERTY, PLANT AND EQUIPMENT10,500 11,872 
Less: Accumulated Depreciation and Amortization(3,599)(3,624)
Net Property, Plant and Equipment6,901 8,248 
NONCURRENT ASSETS
Operating Lease Right-of-Use Assets23 61 
NDT Fund2,628 2,501 
 Long-Term Investments67 64 
Other Intangibles122 158 
Rabbi Trust Fund64 66 
Derivative Contracts8 9 
Other41 27 
Total Noncurrent Assets2,953 2,886 
TOTAL ASSETS$11,031 $12,704 
See disclosures regarding PSEG Power LLC included in the Notes to Condensed Consolidated Financial Statements.
15

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PSEG POWER LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
Millions
(Unaudited)

September 30,
2020		December 31,
2019
LIABILITIES AND MEMBER’S EQUITY
CURRENT LIABILITIES
Long-Term Debt Due Within One Year$950 $406 
Accounts Payable458 505 
Accounts Payable—Affiliated Companies22 5 
Derivative Contracts6 31 
Accrued Interest39 21 
Other96 91 
Total Current Liabilities1,571 1,059 
NONCURRENT LIABILITIES
Deferred Income Taxes and ITC1,891 1,876 
Operating Leases54 62 
Asset Retirement Obligations885 781 
OPEB Costs194 192 
Accrued Pension Costs263 284 
Derivative Contracts1 1 
Long-Term Accrued Taxes58 115 
Other136 111 
Total Noncurrent Liabilities3,482 3,422 
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 11)
LONG-TERM DEBT1,487 2,434 
MEMBER’S EQUITY
Contributed Capital2,214 2,214 
Basis Adjustment(986)(986)
Retained Earnings5,325 5,063 
Accumulated Other Comprehensive Loss(374)(401)
Total Member’s Equity6,179 5,890 
TOTAL LIABILITIES AND MEMBER’S EQUITY$12,719 $12,805 
June 30,
2021		December 31,
2020
LIABILITIES AND MEMBER’S EQUITY
CURRENT LIABILITIES
Long-Term Debt Due Within One Year$45 $950 
Accounts Payable443 459 
Accounts Payable—Affiliated Companies199 13 
Short-Term Loan from Affiliate121 0 
Derivative Contracts34 21 
Accrued Interest11 16 
Other97 101 
Total Current Liabilities950 1,560 
NONCURRENT LIABILITIES
Deferred Income Taxes and ITC1,411 1,936 
Operating Leases13 51 
Asset Retirement Obligations951 895 
OPEB Costs197 197 
Accrued Pension Costs298 321 
Derivative Contracts6 4 
Long-Term Accrued Taxes64 57 
Other92 79 
Total Noncurrent Liabilities3,032 3,540 
COMMITMENTS AND CONTINGENT LIABILITIES (See Note 11)00
LONG-TERM DEBT1,349 1,392 
MEMBER’S EQUITY
Contributed Capital2,310 2,310 
Basis Adjustment(986)(986)
Retained Earnings4,810 5,307 
Accumulated Other Comprehensive Loss(434)(419)
Total Member’s Equity5,700 6,212 
TOTAL LIABILITIES AND MEMBER’S EQUITY$11,031 $12,704 
See disclosures regarding PSEG Power LLC included in the Notes to Condensed Consolidated Financial Statements.
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PSEG POWER LLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Millions
(Unaudited)

Nine Months Ended
September 30,
 20202019
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income$437 $309 
Adjustments to Reconcile Net Income to Net Cash Flows from Operating Activities:
Depreciation and Amortization276 282 
Amortization of Nuclear Fuel144 137 
(Gain) Loss on Asset Dispositions(122)402 
Emission Allowances and REC Compliance Accrual115 80 
Provision for Deferred Income Taxes and ITC(1)157 
Non-Cash Employee Benefit Plan (Credits) Costs(4)7 
Interest Accretion on Asset Retirement Obligation31 30 
Net Realized and Unrealized (Gains) Losses on Energy Contracts and Other Derivatives81 (201)
Net (Gains) Losses and (Income) Expense from NDT Fund(107)(195)
Net Change in Certain Current Assets and Liabilities:
Fuel, Materials and Supplies(30)(29)
Cash Collateral(12)301 
Accounts Receivable43 48 
Accounts Payable(51)(62)
Accounts Receivable/Payable—Affiliated Companies, net242 80 
Other Current Assets and Liabilities9 20 
Employee Benefit Plan Funding and Related Payments(6)(9)
Other(45)5 
Net Cash Provided By (Used In) Operating Activities1,000 1,362 
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to Property, Plant and Equipment(307)(507)
Purchase of Emission Allowances and RECs(94)(73)
Proceeds from Sales of Trust Investments1,673 1,277 
Purchases of Trust Investments(1,695)(1,306)
Proceeds from Sales of Long-Lived Assets151 70 
Short-Term Loan to Affiliate(184)(86)
Other32 40 
Net Cash Provided By (Used In) Investing Activities(424)(585)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Dividend Paid(175)(525)
Redemption of Long-Term Debt(406)0
Short-Term Loan from Affiliate0 (193)
Other(1)(1)
Net Cash Provided By (Used In) Financing Activities(582)(719)
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash(6)58 
Cash, Cash Equivalents and Restricted Cash at Beginning of Period21 22 
Cash, Cash Equivalents and Restricted Cash at End of Period$15 $80 
Supplemental Disclosure of Cash Flow Information:
Income Taxes Paid (Received)$83 $(37)
Interest Paid, Net of Amounts Capitalized$71 $60 
Accrued Property, Plant and Equipment Expenditures$83 $166 
Six Months Ended
June 30,
 20212020
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss)$(322)$183 
Adjustments to Reconcile Net Income (Loss) to Net Cash Flows from Operating Activities:
Depreciation and Amortization175 185 
Amortization of Nuclear Fuel94 93 
(Gains) Losses on Asset Dispositions and Impairments457 0 
Emission Allowances and REC Compliance Accrual82 65 
Provision for Deferred Income Taxes and ITC(328)7 
Non-Cash Employee Benefit Plan (Credits) Costs(10)(3)
Interest Accretion on Asset Retirement Obligation22 21 
Net Realized and Unrealized (Gains) Losses on Energy Contracts and Other Derivatives331 (1)
Net (Gains) Losses and (Income) Expense from NDT Fund(158)5 
Net Change in Certain Current Assets and Liabilities:
Fuel, Materials and Supplies68 70 
Cash Collateral(289)32 
Accounts Receivable(10)(14)
Accounts Payable(39)(92)
Accounts Receivable/Payable—Affiliated Companies, net300 131 
Other Current Assets and Liabilities(11)4 
Employee Benefit Plan Funding and Related Payments(4)(3)
Other(4)(57)
Net Cash Provided By (Used In) Operating Activities354 626 
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to Property, Plant and Equipment(82)(218)
Purchase of Emission Allowances and RECs(34)(50)
Proceeds from Sales of Trust Investments1,156 1,077 
Purchases of Trust Investments(1,163)(1,100)
Proceeds from Sales of Long-Lived Assets565 0 
Short-Term Loan to Affiliate161 45 
Other22 23 
Net Cash Provided By (Used In) Investing Activities625 (223)
CASH FLOWS FROM FINANCING ACTIVITIES
Cash Dividend Paid(175)0 
Redemption of Long-Term Debt(950)(406)
Short-Term Loan from Affiliate121 0 
Other0 (1)
Net Cash Provided By (Used In) Financing Activities(1,004)(407)
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash(25)(4)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period27 21 
Cash, Cash Equivalents and Restricted Cash at End of Period$2 $17 
Supplemental Disclosure of Cash Flow Information:
Income Taxes Paid (Received)$21 $3 
Interest Paid, Net of Amounts Capitalized$52 $65 
Accrued Property, Plant and Equipment Expenditures$69 $49 
See disclosures regarding PSEG Power LLC included in the Notes to Condensed Consolidated Financial Statements.
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PSEG POWER LLC
CONDENSED CONSOLIDATED STATEMENTS OF MEMBER’S EQUITY
Millions
(Unaudited)
 
 Contributed Capital Basis AdjustmentRetained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)
   Total
Balance as of June 30, 2020 $2,214 $(986)$5,246 $(374)$6,100 
Net Income — — 254 — 254 
Other Comprehensive Income (Loss), net of tax (expense) benefit of $1 — — — 0 0 
Comprehensive Income  254 
Cash Dividends Paid —  — (175)— (175)
Balance as of September 30, 2020 $2,214  $(986)$5,325 $(374)$6,179 
Balance as of June 30, 2019 $2,214 $(986)$5,126 $(354)$6,000 
Net Income — — 53 — 53 
Other Comprehensive Income (Loss), net of tax (expense) benefit of $1 — — — (5)(5)
Comprehensive Income  48 
Cash Dividends Paid — — (275)— (275)
Balance as of September 30, 2019 $2,214  $(986)$4,904 $(359)$5,773 
 
 Contributed Capital Basis AdjustmentRetained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)
   Total
Balance as of March 31, 2021 $2,310 $(986)$5,293 $(449)$6,168 
Net Loss — — (483)— (483)
Other Comprehensive Income (Loss), net of tax (expense) benefit of $(9) — — — 15 15 
Comprehensive Loss  (468)
Balance as of June 30, 2021 $2,310  $(986)$4,810 $(434)$5,700 
Balance as of March 31, 2020 $2,214 $(986)$5,076 $(392)$5,912 
Net Income — — 170 — 170 
Other Comprehensive Income (Loss), net of tax (expense) benefit of $(12) — — — 18 18 
Comprehensive Income  188 
Balance as of June 30, 2020 $2,214  $(986)$5,246 $(374)$6,100 
 
 Contributed Capital Basis AdjustmentRetained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)
   Total
Balance as of December 31, 2019 $2,214  $(986)$5,063 $(401)$5,890 
Net Income —  — 437 — 437 
Other Comprehensive Income (Loss), net of tax (expense) benefit of $(16) —  — — 27 27 
Comprehensive Income  464 
Cash Dividends Paid —  — (175)— (175)
Balance as of September 30, 2020 $2,214  $(986)$5,325 $(374)$6,179 
Balance as of December 31, 2018 $2,214  $(986)$5,051 $(319)$5,960 
Net Income —  — 309 — 309 
Cumulative Effect Adjustment to Reclassify Stranded Tax Effects Resulting from the Change in the Federal Corporate Income Tax Rate— — 69 (69)0 
Other Comprehensive Income (Loss), net of tax (expense) benefit of $(26) —  — — 29 29 
Comprehensive Income  338 
Cash Dividends Paid —  — (525)— (525)
Balance as of September 30, 2019 $2,214  $(986)$4,904 $(359)$5,773 
 
 Contributed Capital Basis AdjustmentRetained
Earnings		Accumulated
Other
Comprehensive
Income (Loss)
   Total
Balance as of December 31, 2020 $2,310  $(986)$5,307 $(419)$6,212 
Net Loss —  — (322)— (322)
Other Comprehensive Income (Loss), net of tax (expense) benefit of $12 —  — — (15)(15)
Comprehensive Loss  (337)
Cash Dividends Paid —  — (175)— (175)
Balance as of June 30, 2021 $2,310  $(986)$4,810 $(434)$5,700 
Balance as of December 31, 2019 $2,214  $(986)$5,063 $(401)$5,890 
Net Income —  — 183 — 183 
Other Comprehensive Income (Loss), net of tax (expense) benefit of $(17) —  — — 27 27 
Comprehensive Income  210 
Balance as of June 30, 2020 $2,214  $(986)$5,246 $(374)$6,100 
See disclosures regarding PSEG Power LLC included in the Notes to Condensed Consolidated Financial Statements.
18

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Table of Contents                    


Note 1. Organization, Basis of Presentation and Significant Accounting Policies
Organization
Public Service Enterprise Group Incorporated (PSEG) is a holding company with a diversified business mix within the energy industry. Its operations are primarily in the Northeastern and Mid-Atlantic United States and in other select markets. PSEG’s principal direct wholly owned subsidiaries are:
•Public Service Electric and Gas Company (PSE&G)—which is a public utility engaged principally in the transmission of electricity and distribution of electricity and natural gas in certain areas of New Jersey. PSE&G is subject to regulation by the New Jersey Board of Public Utilities (BPU) and the Federal Energy Regulatory Commission (FERC). PSE&G also invests in regulated solar generation projects and energy efficiency and related programs in New Jersey, which are regulated by the BPU.
•PSEG Power LLC (PSEG Power)—which is a multi-regional energy supply company that integrates the operations of its merchant nuclear and fossil generating assets with its power marketing businesses and fuel supply functions through competitive energy sales in well-developed energy markets primarily in the Northeast and Mid-Atlantic United States through its principal direct wholly owned subsidiaries. In addition, PSEG Power owns and operates solar generation in various states. PSEG Power’s subsidiaries are subject to regulation by FERC, the Nuclear Regulatory Commission (NRC), the Environmental Protection Agency (EPA) and the states in which they operate.
PSEG’s other direct wholly owned subsidiaries are: PSEG Long Island LLC (PSEG LI), which operates the Long Island Power Authority’s (LIPA) electric transmission and distribution (T&D) system under an Amended and Restated Operations Services Agreement (OSA); PSEG Energy Holdings L.L.C. (Energy Holdings), which primarily hasearns it revenues from its portfolio of lease investments and holds our investment in leveraged leases;offshore wind ventures; and PSEG Services Corporation (Services), which provides certain management, administrative and general services to PSEG and its subsidiaries at cost.
In December 2020, PSEG entered into a definitive agreement with Ørsted North America to acquire a 25% equity interest in Ørsted’s Ocean Wind project. Ocean Wind was selected by New Jersey to be the first offshore wind farm as part of the state’s intention to add 7,500 MW of offshore wind generating capacity by 2035. The Ocean Wind project is expected to achieve full commercial operation in 2025. On March 31, 2021, the BPU approved PSEG’s investment in Ocean Wind and the acquisition was completed in April 2021. Additionally, PSEG and Ørsted each owns 50% of Garden State Offshore Energy LLC which holds rights to an offshore wind lease area. PSEG and Ørsted are exploring other offshore wind opportunities.
Basis of Presentation
The respective financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) applicable to Quarterly Reports on Form 10-Q. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting guidance generally accepted in the United States (GAAP) have been condensed or omitted pursuant to such rules and regulations. These Condensed Consolidated Financial Statements and Notes to Condensed Consolidated Financial Statements (Notes) should be read in conjunction with, and update and supplement matters discussed in, the Annual Report on Form 10-K for the year ended December 31, 2019.2020.
The unaudited condensed consolidated financial information furnished herein reflects all adjustments which are, in the opinion of management, necessary to fairly state the results for the interim periods presented. All such adjustments are of a normal recurring nature. All significant intercompany accounts and transactions are eliminated in consolidation. The year-end Condensed Consolidated Balance Sheets were derived from the audited Consolidated Financial Statements included in the Annual Report on Form 10-K for the year ended December 31, 2019.2020.
Significant Accounting Policies
Cash, Cash Equivalents and Restricted Cash
The following provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts for the beginning (December 31, 2019)2020) and ending periods shown in the Condensed Consolidated Statements of Cash Flows for the ninesix months ended SeptemberJune 30, 2020.2021. Restricted cash consists primarily of deposits received related to various construction projects at PSE&G.
19

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Table of Contents                    

PSE&GPSEG PowerOther (A)Consolidated
 Millions
As of December 31, 2019
Cash and Cash Equivalents$21 $21 $105 $147 
Restricted Cash in Other Current Assets11 0 0 11 
Restricted Cash in Other Noncurrent Assets18 0 0 18 
Cash, Cash Equivalents and Restricted Cash$50 $21 $105 $176 
As of September 30, 2020
Cash and Cash Equivalents$224 $15 $727 $966 
Restricted Cash in Other Current Assets11 0 0 11 
Restricted Cash in Other Noncurrent Assets22 0 0 22 
Cash, Cash Equivalents and Restricted Cash$257 $15 $727 $999 
PSE&GPSEG PowerOther (A)Consolidated
 Millions
As of December 31, 2020
Cash and Cash Equivalents$204 $27 $312 $543 
Restricted Cash in Other Current Assets7 0 0 7 
Restricted Cash in Other Noncurrent Assets22 0 0 22 
Cash, Cash Equivalents and Restricted Cash$233 $27 $312 $572 
As of June 30, 2021
Cash and Cash Equivalents$40 $2 $65 $107 
Restricted Cash in Other Current Assets21 0 0 21 
Restricted Cash in Other Noncurrent Assets16 0 0 16 
Cash, Cash Equivalents and Restricted Cash$77 $2 $65 $144 
(A)Includes amounts applicable to PSEG (parent company), Energy Holdings and Services.
Fuel Inventory
Fuel inventory at PSEG Power is valued at the lower of average cost or market and includes stored natural gas, coal, fuel oil and propane used to generate power and to satisfy obligations under PSEG Power’s gas supply contracts with PSE&G. The costs of fuel, including initial transportation costs, are included in inventory when purchased and charged to Energy Costs when used or sold.
In the first quarter of 2020, PSEG Power recorded a $20 million lower of cost or market (LOCOM) adjustment to its fuel oil inventory due to the significant decline in market pricing. In the second quarter of 2020, PSEG Power reversed $9 million of the LOCOM adjustment recorded in the first quarter of 2020 due to recovery in the market price of oil. No adjustment was recorded in the third quarter of 2020. PSEG Power may continue to reverse the LOCOM adjustment in the fourth quarter of 2020, limited to the adjustment recorded in the three months ended March 31, 2020, if oil market pricing has additional recovery within the 2020 calendar year. However, downward adjustments in future quarters may be required if the market price of oil declines.
Property, Plant and Equipment
PSEG Power capitalizes costs, including those related to its jointly-owned facilities that increase the capacity, improve or extend the life of an existing asset; represent a newly acquired or constructed asset; or represent the replacement of a retired asset. The cost of maintenance, repair and replacement of minor items of property is charged to appropriate expense accounts as incurred. Environmental costs are capitalized if the costs mitigate or prevent future environmental contamination or if the costs improve existing assets’ environmental safety or efficiency. All other environmental expenditures are expensed as incurred. PSEG Power also capitalizes spare parts that meet specific criteria. Capitalized spares are depreciated over the remaining lives of their associated assets.
In March 2020,April 2021, the NRC approved Peach Bottom’s second license extensionBPU awarded Zero Emission Certificates (ZECs) to PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants for both units.an additional three years through May 2025. Concurrent with the license extensions,BPU’s decision, PSEG Power has extended the useful life of the asset to match the 80-year life expectation and reassessed the related Asset Retirement Cost (ARC) and Asset Retirement Obligation (ARO) assumptions.assumptions related to the Salem and Hope Creek units. This resulted in an increase to the ARC asset and ARO liability of $74$51 million, primarily due to lower discount rates offset by a longer discounting period as a result of the Peach Bottom units’ longer expected useful life.

and higher inflation. See Note 4. Early Plant Retirements/Asset Dispositions and Impairments for additional information on ZECs.
Note 2. Recent Accounting Standards
New Standards Issued and Adopted
Measurement of Credit Losses on Financial InstrumentsSimplifying the Accounting for Income Taxes—Accounting Standards Update (ASU) 2016-13, updated by ASU 2018-19, 2019-04, 2019-05, 2019-11 and 2020-02 (ASU) 2019-12
This accounting standard provides a new modelupdates Accounting Standards Codification (ASC) 740 to simplify the accounting for recognizing credit losses on financial assets. The new model requires entitiesincome taxes, including the elimination of several exceptions and making other clarifications to use an estimate of expected credit losses that will be recognized as an impairment allowance rather than a direct write-downthe current guidance. Some of the amortized cost basis. The estimate of expected credit losses ismore pertinent modifications include a change to the tax accounting related to franchise taxes that are partially based on past events, current conditionsincome, an election to allocate the consolidated tax expense to a disregarded entity that is a member of a consolidated tax return filing group when those entities issue separate financial statements, and supportable forecasts over a reasonable period. For purchased financial assets with credit deterioration, a similar model is used; however, the initial allowance is addedmodifications and clarifications to the purchase price rather than reported as an allowance. Credit losses on available-
20

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Table of Contents

for-sale debt securities are measured in a manner similar to current GAAP; however, this standard requires those credit losses be presented as an allowance, rather than a write-down. This new standard also requires additional disclosures of the allowance for credit losses by financial asset type, including disclosures of credit quality indicators for each class of financial asset disaggregated by year of origination.interim tax reporting.
The standard is effective for annual and interim periodsfiscal years beginning after December 15, 2019.2020. PSEG adopted this standard on January 1, 20202021. PSEG has elected to allocate the consolidated tax expense to all eligible entities that are included in a consolidated tax filing on a modified retrospectiveprospective basis. Upon adoption, PSE&G recorded an increase of $8 million toThis election is consistent with PSEG’s Tax Sharing Agreements with its allowance for credit losses, offset by a $6 million increase to Regulatory and Other Assets, and a $2 million cumulative effect charge to Retained Earnings. See Note 3. Revenues. There was no impact from adoption of this standard on the financial statements of PSEG Power.
Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement—ASU 2018-13
This accounting standard modifies the disclosure requirements for fair value measurements. Certain current disclosure requirements relating to Level 3 fair value measurements, and transfers between Level 1 and Level 2 fair value measurements have been eliminated. The standard also adds certain other disclosure requirements for Level 3 fair value measurements.
The standard is effective for annual and interim periods beginning after December 15, 2019. PSEG adopted this standard on January 1, 2020. Certain amendments in the standard have been applied prospectively in 2020. All other amendments of the standard were applied retrospectively to all periods presented.
Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract—ASU 2018-15
This accounting standard aligns the capitalization requirements for implementation costs incurred in a hosting arrangement that is a service contract with capitalization requirements for implementation costs incurred to develop or obtain internal-use software, including hosting arrangements that include an internal-use software license. The standard follows the guidance in Accounting Standard Codification 350—Intangibles—Goodwill and Other to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. The standard requires the amortization of capitalized costs to be presented in Operation and Maintenance (O&M) Expense. In addition, the standard also adds presentation requirements for these costs in the statements of cash flows and financial position.
The standard is effective for annual and interim periods beginning after December 15, 2019. PSEG adopted this standard prospectively on January 1, 2020. PSEG, PSE&G and PSEG Power do not expect a material impact on their respective financial statements.
Targeted Improvements to Related Party Guidance for Variable Interest Entities (VIE)—ASU 2018-17
This accounting standard improves the VIE guidance in the area of decision-making fees. Consistent with how indirect interests held through related parties under common control are considered for determining whether a reporting entity must consolidate a VIE, indirect interests held through related parties in common control arrangements are considered on a proportional basis for determining whether fees paid to decision makers and service providers are variable interests.
This standard is effective for annual and interim periods beginning after December 15, 2019. The standard is required to be applied retrospectively with a cumulative effect adjustment to Retained Earnings at the beginning of the earliest period presented. PSEG adopted this standard on January 1, 2020.affiliated subsidiaries. Adoption of this standard did not have an impact on the financial statements of PSEG, PSE&G, and PSEG Power.
Simplifying the Test for Goodwill Impairment—ASU 2017-04
This accounting standard requires an entity to perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable.
This standard requires application on a prospective basis and disclosure of the nature of and reason for the change in accounting principle upon transition. The new standard is effective for impairment tests for periods beginning January 1, 2020. PSEG early adopted this standard in the fourth quarter of 2019, and recorded an impairment loss of $16 million in O&M Expense.
Codification Improvements to Financial Instruments—ASU 2020-03
This accounting standard provides clarification of guidance for financial instruments and makes narrow scope amendments related to various issues. PSEG adopted this standard effective upon issuance. Adoption of this standard did not have an impact on the financial statements of PSEG, PSE&G and PSEG Power.
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Facilitation of the Effects of Reference Rate Reform on Financial Reporting—ASU 2020-04
This accounting standard provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The standard is effective from its issuance date, March 12, 2020, through December 31, 2022. PSEG adopted this standard effective upon issuance. Adoption of this standard did not have an impact on the financial statements of PSEG, PSE&G and PSEG Power.
New Standards Issued But Not Yet Adopted as of September 30, 2020
Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans—ASU 2018-14
This accounting standard modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans, including the elimination of certain current disclosure requirements. Certain other disclosure requirements related to interest crediting rates have been added and certain clarifications were made to other disclosure requirements.
The standard is effective for fiscal years ending after December 15, 2020 and early adoption is permitted. Amendments in this standard will be applied on a retrospective basis to all periods presented. PSEG is currently analyzing the impact of this standard on its disclosures.
Simplifying the Accounting for Income Taxes—ASU 2019-12
This accounting standard simplifies the accounting for income taxes, including the elimination of certain exceptions to current requirements. Certain other requirements related to franchise taxes that are partially based on income, step-up of tax basis of goodwill and allocation of consolidated taxes to legal entities have been added and certain clarifications were made to other requirements.
The standard is effective for fiscal years beginning after December 15, 2020 and early adoption is permitted. Certain amendments in this standard will be applied on a retrospective basis to all periods presented. Certain other amendments will be applied on either a retrospective basis for all periods presented or a modified retrospective basis through a cumulative effect adjustment to Retained Earnings as of the beginning of the fiscal year of adoption. All other amendments will be applied on a prospective basis. PSEG is currently analyzing the impact of this standard on its financial statements.
Clarifying the Interactions between Investments-Equity Securities, Investments-Equity Method and Joint Ventures, and Derivatives and Hedging—ASU 2020-01
This accounting standard clarifies that an entity should consider transaction prices for purposes of measuring the fair value of certain equity securities immediately before applying or upon discontinuing the equity method. This accounting standard also clarifies that when accounting for contracts entered into to purchase equity securities, an entity should not consider whether, upon the settlement of the forward contract or exercise of the purchased option, the underlying securities would be accounted for under the equity method or the fair value option.
The standard is effective for fiscal years beginning after December 15, 2020. Amendments inPSEG adopted this standard will be applied prospectively. PSEG is currently analyzing the impactprospectively on
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January 1, 2021. Adoption of this standard did not have an impact on itsthe financial statements.statements of PSEG, PSE&G and PSEG Power.
Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity—ASU 2020-06
This accounting standard simplifies the accounting for convertible debt and convertible preferred stock by removing the requirements to separately present certain conversion features in equity. In addition, the ASU eliminates certain criteria that must be satisfied in order to classify a contract as equity, which is expected to decrease the number of freestanding instruments and embedded derivatives accounted for as assets or liabilities. The ASU also revises the guidance on calculating earnings per share, requiring use of the if-converted method for all convertible instruments and rescinding the ability to rebut the presumption of share settlement for instruments that may be settled in cash or other assets.
The standard is effective for fiscal years beginning after December 15, 2020. Amendments in2021. PSEG early adopted this standard will be applied on either a retrospective basis for all periods presented orJanuary 1, 2021 on a modified retrospective basis through a cumulative effect adjustment to Retained Earnings asbasis. Adoption of this standard did not have an impact on the beginningfinancial statements of the fiscal year of adoption. Early adoption is permitted. PSEG, does not currently have any convertible debt or convertible preferred stock outstanding.PSE&G and PSEG Power.
Codification Improvements to Callable Debt Securities—ASU 2020-08
This accounting standard clarifies that an entity should reevaluate for each reporting period whether a purchased callable debt security that has multiple call dates is within the scope of certain guidance on nonrefundable fees and other costs related to receivables.
The standard is effective for fiscal years beginning after December 15, 20202020. PSEG adopted this standard prospectively on January 1, 2021. Adoption of this standard did not have an impact on the financial statements of PSEG, PSE&G and PSEG Power.
Codification Improvements—ASU 2020-10
This accounting standard conforms, clarifies, simplifies, and provides technical corrections to various codification topics.
The standard is effective for fiscal years beginning after December 15, 2020. PSEG adopted this standard on January 1, 2021. Adoption of this standard did not have an impact on the financial statements of PSEG, PSE&G and PSEG Power.
Reference Rate Reform Scope Refinement—ASU 2021-01
This accounting standard clarifies certain guidance related to derivative instruments affected by the market-wide change in the interest rates even if those derivatives do not reference the LIBOR or another rate that is expected to be discontinued as a result of reference rate reform. The accounting standard also clarifies other aspects of the relief provided in the reference rate reform GAAP guidance.
The standard is effective upon issuance and allows for retrospective or prospective application with certain conditions. PSEG adopted this standard prospectively in January 2021. Adoption of this standard did not have an impact on the financial statements of PSEG, PSE&G and PSEG Power.
New Standard Issued But Not Yet Adopted as of June 30, 2021
Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options—ASU 2021-04
This accounting standard clarifies an issuer’s accounting for certain modifications or exchanges of freestanding equity-classified written call options that remain equity-classified after modification or exchange. It provides guidance on how an issuer would determine whether it should recognize the modification or exchange as an adjustment to equity or an expense.
The standard is effective for fiscal years beginning after December 15, 2021 and early adoption is not permitted. Amendments in this standard will be applied prospectively. PSEG is currently analyzing the impact of this standard on its financial statements.
Lessors-Certain Leases with Variable Lease Payments—ASU 2021-05
This accounting standard improves an area of the lease guidance related to a lessor’s accounting for certain leases with variable lease payments. It amends the lessor lease classification requirements and, as a result, a lessor is now required to classify and account for a lease with variable payments as an operating lease if (i) the lease would have been classified as a sales-type lease or a direct financing lease and (ii) the lessor would have otherwise recognized a day-one loss. A day-one loss or profit is not recognized under operating lease accounting.
The standard is effective for fiscal years beginning after December 15, 2021 and early adoption is permitted. Amendments in this standard will be applied either retrospectively or prospectively. PSEG is currently analyzing the impact of this standard on its financial statements.
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in this standard will be applied prospectively. PSEG is currently analyzing the impact of this standard on its financial statements.

Note 3. Revenues
Nature of Goods and Services
The following is a description of principal activities by reportable segment from which PSEG, PSE&G and PSEG Power generate their revenues.
PSE&G
Revenues from Contracts with Customers
Electric and Gas Distribution and Transmission Revenues—PSE&G sells gas and electricity to customers under default commodity supply tariffs. PSE&G’s regulated electric and gas default commodity supply and distribution services are separate tariffs which are satisfied as the product(s) and/or service(s) are delivered to the customer. The electric and gas commodity and delivery tariffs are recurring contracts in effect until modified through the regulatory approval process as appropriate. Revenue is recognized over time as the service is rendered to the customer. Included in PSE&G’s regulated revenues are unbilled electric and gas revenues which represent the estimated amount customers will be billed for services rendered from the most recent meter reading to the end of the respective accounting period.
PSE&G’s transmission revenues are earned under a separate tariff using a FERC-approved annual formula rate mechanism. The performance obligation of transmission service is satisfied and revenue is recognized as it is provided to the customer. The formula rate mechanism provides for an annual filing of an estimated revenue requirement with rates effective January 1 of each year and a true-up to that estimate based on actual revenue requirements. The true-up mechanism is an alternative revenue which is outside the scope of revenue from contracts with customers.
Other Revenues from Contracts with Customers
Other revenues from contracts with customers, which are not a material source of PSE&G revenues, are generated primarily from appliance repair services and solar generation projects. The performance obligations under these contracts are satisfied and revenue is recognized as control of products is delivered or services are rendered.
Payment for services rendered and products transferred are typically due on average within 30 days of delivery.
Revenues Unrelated to Contracts with Customers
Other PSE&G revenues unrelated to contracts with customers are derived from alternative revenue mechanisms recorded pursuant to regulatory accounting guidance. These revenues, which include the Conservation Incentive Program, weather normalization, green energy program true-ups and transmission formula rate true-ups, are not a material source of PSE&G revenues.
PSEG Power
Revenues from Contracts with Customers
Electricity and Related Products—Wholesale and retail load contracts are executed in the different Independent System Operator (ISO) regions for the bundled supply of energy, capacity, renewable energy credits (RECs) and ancillary services representing PSEG Power’s performance obligations. Revenue for these contracts is recognized over time as the bundled service is provided to the customer. Transaction terms generally run from several months to three years. PSEG Power also sells to the ISOs energy and ancillary services which are separately transacted in the day-ahead or real-time energy markets. The energy and ancillary services performance obligations are typically satisfied over time as delivered and revenue is recognized accordingly. PSEG Power generally reports electricity sales and purchases conducted with those individual ISOs net on an hourly basis in either Operating Revenues or Energy Costs in its Condensed Consolidated Statements of Operations. The classification depends on the net hourly activity.
PSEG Power enters into capacity sales and capacity purchases through the ISOs. The transactions are reported on a net basis dependent on PSEG Power’s monthly net sale or purchase position through the individual ISOs. The performance obligations with the ISOs are satisfied over time upon delivery of the capacity and revenue is recognized accordingly. In addition to capacity sold through the ISOs, PSEG Power sells capacity through bilateral contracts and the related revenue is reported on a gross basis and recognized over time upon delivery of the capacity.
In April 2019, PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants were awarded Zero Emission Certificates (ZECs)ZECs by the BPU. These nuclear plants are expected to receive ZEC revenue for approximately three years, through May 2022, from the electric distribution companies (EDCs) in New Jersey. In April 2021, PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants were awarded ZECs by the BPU for the three year eligibility period starting June 2022. PSEG Power recognizes revenue when the
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2022, from the electric distribution companies (EDCs) in New Jersey. PSEG Power recognizes revenue when the units generate electricity, which is when the performance obligation is satisfied. These revenues are included in PJM Interconnection, L.L.C. (PJM) Sales in the following tables. See Note 4. Early Plant Retirements/Asset Dispositions and Impairments for additional information.
Gas Contracts—PSEG Power sells wholesale natural gas, primarily through an index based full-requirements Basic Gas Supply Service (BGSS) contract with PSE&G to meet the gas supply requirements of PSE&G’s customers. The BGSS contract remains in effect unless terminated by either party with a two-year notice. The performance obligation is primarily delivery of gas which is satisfied over time. Revenue is recognized as gas is delivered. Based upon the availability of natural gas, storage and pipeline capacity beyond PSE&G’s daily needs, PSEG Power also sells gas and pipeline capacity to other counterparties under bilateral contracts. The performance obligation under these contracts is satisfied over time upon delivery of the gas or capacity, and revenue is recognized accordingly.
Other Revenues from Contracts with Customers
Prior to the sale of PSEG Solar Source LLC (Solar Source), PSEG Power entersentered into bilateral contracts to sell solar power and solar RECs from its solar facilities. Contract terms rangeranged from 15 to 30 years. The performance obligations arewere generally solar power and RECs which arewere transferred to customers upon generation. Revenue iswas recognized upon generation of the solar power. See Note 4. Early Plant Retirements/Asset Dispositions and Impairments.
PSEG Power has entered into long-term contracts with LIPA for energy management and fuel procurement services. Revenue is recognized over time as services are rendered.
Revenues Unrelated to Contracts with Customers
PSEG Power’s revenues unrelated to contracts with customers include electric, gas and certain energy-related transactions accounted for in accordance with Derivatives and Hedging accounting guidance. See Note 13. Financial Risk Management Activities for further discussion. Prior to the sale of Solar Source, PSEG Power iswas also a party to solar contracts that qualifyqualified as leases and arewere accounted for in accordance with lease accounting guidance. See Note 4. Early Plant Retirements/Asset Dispositions and Impairments.
Other
Revenues from Contracts with Customers
PSEG LI has a contract with LIPA which generates revenues. PSEG LI’s subsidiary, Long Island Electric Utility Servco, LLC (Servco) records costs which are recovered from LIPA and records the recovery of those costs as revenues when Servco is a principal in the transaction.
Revenues Unrelated to Contracts with Customers
Energy Holdings generates lease revenues which are recorded pursuant to lease accounting guidance.
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Disaggregation of Revenues
PSE&GPSEG PowerOtherEliminationsConsolidated
Millions
Three Months Ended September 30, 2020
Revenues from Contracts with Customers
Electric Distribution$1,157 $0 $0 $0 $1,157 
Gas Distribution116 0 0 (4)112 
Transmission370 0 0 0 370 
Electricity and Related Product Sales
PJM
Third-Party Sales0 464 0 0 464 
Sales to Affiliates0 123 0 (123)0 
New York ISO0 36 0 0 36 
ISO New England0 13 0 0 13 
Gas Sales
Third-Party Sales0 14 0 0 14 
Sales to Affiliates0 50 0 (50)0 
Other Revenues from Contracts with Customers (A)76 13 162 (2)249 
Total Revenues from Contracts with Customers1,719 713 162 (179)2,415 
Revenues Unrelated to Contracts with Customers (B)(59)33 (19)0 (45)
Total Operating Revenues$1,660 $746 $143 $(179)$2,370 
PSE&GPSEG PowerOther EliminationsConsolidated
Millions
Three Months Ended June 30, 2021
Revenues from Contracts with Customers
Electric Distribution$765 $0 $0 $0 $765 
Gas Distribution256 0 0 (2)254 
Transmission405 0 0 0 405 
Electricity and Related Product Sales
 PJM
Third-Party Sales0 408 0 0 408 
         Sales to Affiliates0 62 0 (62)0 
New York ISO0 49 0 0 49 
ISO New England0 18 0 0 18 
Gas Sales
Third-Party Sales0 28 0 0 28 
Sales to Affiliates0 110 0 (110)0 
Other Revenues from Contracts with Customers (A)81 12 145 (1)237 
Total Revenues from Contracts with Customers1,507 687 145 (175)2,164 
Revenues Unrelated to Contracts with Customers (B)7 (307)10 0 (290)
Total Operating Revenues$1,514 $380 $155 $(175)$1,874 
PSE&GPSEG PowerOther EliminationsConsolidated
Millions
Six Months Ended June 30, 2021
Revenues from Contracts with Customers
Electric Distribution$1,472 $0 $0 $0 $1,472 
Gas Distribution1,152 0 0 (5)1,147 
Transmission804 0 0 0 804 
Electricity and Related Product Sales
 PJM
Third-Party Sales0 879 0 0 879 
         Sales to Affiliates0 150 0 (150)0 
New York ISO0 97 0 0 97 
ISO New England0 69 0 0 69 
Gas Sales
Third-Party Sales0 88 0 0 88 
Sales to Affiliates0 520 0 (520)0 
Other Revenues from Contracts with Customers (A)156 22 286 (2)462 
Total Revenues from Contracts with Customers3,584 1,825 286 (677)5,018 
Revenues Unrelated to Contracts with Customers (B)3 (278)20 0 (255)
Total Operating Revenues$3,587 $1,547 $306 $(677)$4,763 
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PSE&GPSEG PowerOther EliminationsConsolidated
Millions
Nine Months Ended September 30, 2020
Revenues from Contracts with Customers
Electric Distribution$2,529 $0 $0 $0 $2,529 
Gas Distribution1,125 0 0 (8)1,117 
Transmission1,114 0 0 0 1,114 
Electricity and Related Product Sales
 PJM
Third-Party Sales0 1,178 0 0 1,178 
         Sales to Affiliates0 355 0 (355)0 
New York ISO0 85 0 0 85 
ISO New England0 86 0 0 86 
Gas Sales
Third-Party Sales0 58 0 0 58 
Sales to Affiliates0 528 0 (528)0 
Other Revenues from Contracts with Customers (A)241 37 447 (3)722 
Total Revenues from Contracts with Customers5,009 2,327 447 (894)6,889 
Revenues Unrelated to Contracts with Customers (B)(10)322 0 0 312 
Total Operating Revenues$4,999 $2,649 $447 $(894)$7,201 
PSE&GPSEG PowerOther EliminationsConsolidated
Millions
Three Months Ended June 30, 2020
Revenues from Contracts with Customers
Electric Distribution$723 $0 $0 $0 $723 
Gas Distribution278 0 0 (2)276 
Transmission378 0 0 0 378 
Electricity and Related Product Sales
 PJM
Third-Party Sales0 346 0 0 346 
         Sales to Affiliates0 111 0 (111)0 
New York ISO0 24 0 0 24 
ISO New England0 25 0 0 25 
Gas Sales
Third-Party Sales0 15 0 0 15 
Sales to Affiliates0 124 0 (124)0 
Other Revenues from Contracts with Customers (A)83 14 141 0 238 
Total Revenues from Contracts with Customers1,462 659 141 (237)2,025 
Revenues Unrelated to Contracts with Customers (B)(6)24 7 0 25 
Total Operating Revenues$1,456 $683 $148 $(237)$2,050 
PSE&GPSEG PowerOther EliminationsConsolidated
Millions
Three Months Ended September 30, 2019
Revenues from Contracts with Customers
Electric Distribution$1,096 $0 $0 $0 $1,096 
Gas Distribution130 0 0 (5)125 
Transmission295 0 0 0 295 
Electricity and Related Product Sales
PJM
Third-Party Sales0 488 0 0 488 
Sales to Affiliates0 160 0 (160)0 
New York ISO0 38 0 0 38 
ISO New England0 37 0 0 37 
Gas Sales
Third-Party Sales0 12 0 0 12 
Sales to Affiliates0 58 0 (58)0 
Other Revenues from Contracts with Customers (A)64 13 141 (1)217 
Total Revenues from Contracts with Customers1,585 806 141 (224)2,308 
Revenues Unrelated to Contracts with Customers (B)19 (35)10 0 (6)
Total Operating Revenues$1,604 $771 $151 $(224)$2,302 
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PSE&GPSEG PowerOther EliminationsConsolidated
Millions
Nine Months Ended September 30, 2019
Revenues from Contracts with Customers
Electric Distribution$2,613 $0 $0 $0 $2,613 
Gas Distribution1,272 0 0 (11)1,261 
Transmission887 0 0 0 887 
Electricity and Related Product Sales
 PJM
Third-Party Sales0 1,426 0 0 1,426 
         Sales to Affiliates0 416 0 (416)0 
New York ISO0 108 0 0 108 
ISO New England0 85 0 0 85 
Gas Sales
Third-Party Sales0 70 0 0 70 
Sales to Affiliates0 639 0 (639)0 
Other Revenues from Contracts with Customers (A)196 37 406 (3)636 
Total Revenues from Contracts with Customers4,968 2,781 406 (1,069)7,086 
Revenues Unrelated to Contracts with Customers (B)50 489 (27)0 512 
Total Operating Revenues$5,018 $3,270 $379 $(1,069)$7,598 
PSE&GPSEG PowerOther EliminationsConsolidated
Millions
Six Months Ended June 30, 2020
Revenues from Contracts with Customers
Electric Distribution$1,372 $0 $0 $0 $1,372 
Gas Distribution1,009 0 0 (4)1,005 
Transmission744 0 0 0 744 
Electricity and Related Product Sales
 PJM
Third-Party Sales0 714 0 0 714 
         Sales to Affiliates0 232 0 (232)0 
New York ISO0 49 0 0 49 
ISO New England0 73 0 0 73 
Gas Sales
Third-Party Sales0 44 0 0 44 
Sales to Affiliates0 478 0 (478)0 
Other Revenues from Contracts with Customers (A)165 24 285 (1)473 
Total Revenues from Contracts with Customers3,290 1,614 285 (715)4,474 
Revenues Unrelated to Contracts with Customers (B)49 289 19 0 357 
Total Operating Revenues$3,339 $1,903 $304 $(715)$4,831 
(A)Includes primarily revenues from appliance repair services and the sale of solar renewable energy certificates (SRECs) at auction at PSE&G, solar power projects and energy management and fuel service contracts with LIPA at PSEG Power, and PSEG LI’s OSA with LIPA in Other.
(B)Includes primarily alternative revenues at PSE&G, derivative contracts and lease contracts at PSEG Power, and lease contracts in Other.
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Contract Balances
PSE&G
PSE&G did not have any material contract balances (rights to consideration for services already provided or obligations to provide services in the future for consideration already received) as of SeptemberJune 30, 20202021 and December 31, 2019.2020. Substantially all of PSE&G’s accounts receivable and unbilled revenues result from contracts with customers that are priced at tariff rates. Allowances represented approximately 12%18% and 6%14% of accounts receivable (including unbilled revenues in 2020)revenues) as of SeptemberJune 30, 20202021 and December 31, 2019,2020, respectively. As of December 31, 2019, there was no allowance for unbilled revenues. Effective January 1, 2020, PSE&G adopted ASU 2016-13 and recorded an allowance for unbilled revenues. See Note 2. Recent Accounting Standards.
Accounts Receivable—Allowance for Credit Losses
PSE&G’s accounts receivable, including unbilled revenues, is primarily comprised of utility customer receivables for the provision of electric and gas service and appliance services, and are reported in the balance sheet as gross outstanding amounts adjusted for an allowance for credit losses. The allowance for credit losses reflects PSE&G’s best estimate of losses on the account balances. The allowance is based on PSE&G’s projection of accounts receivable aging, historical experience, economic factors and other currently available evidence, including the estimated impact of the ongoing coronavirus pandemic (COVID-19) on the outstanding balances as of SeptemberJune 30, 2020.2021. PSE&G’s electric bad debt expense is recoverable through its Societal Benefits Clause mechanism. As of SeptemberJune 30, 2020,2021, PSE&G deferred approximately $19 million of incremental gas bad debt expense for future regulatory recovery due to the impact of the ongoing pandemic. See Note 6. Rate Filings for additional information.
The following provides a reconciliation of PSE&G’s allowance for credit losses for the three months and six months ended June 30, 2021 and 2020:
Three Months Ended June 30, 2021
Balance as of March 31, 2021$239 
Utility Customer and Other Accounts
Provision34 
 Write-offs, net of Recoveries of $5 million(13)
Balance as of June 30, 2021$260
Six Months Ended June 30, 2021
Balance as of January 1, 2021$206 
Utility Customer and Other Accounts
Provision78 
 Write-offs, net of Recoveries of $7 million(24)
Balance as of June 30, 2021$260
Three Months Ended June 30, 2020
Balance as of March 31, 2020$80 
Utility Customer and Other Accounts
Provision45 
 Write-offs, net of Recoveries of $1 million(4)
Balance as of June 30, 2020$121
Six Months Ended June 30, 2020
Balance as of January 1, 2020 (A)$68 
Utility Customer and Other Accounts
Provision77 
 Write-offs, net of Recoveries of $3 million(24)
Balance as of June 30, 2020$121
(A)Includes an $8 million pre-tax increase upon adoption of ASU 2016-13.     
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The following provides a reconciliation of PSE&G’s allowance for credit losses for the three months and nine months ended September 30, 2020:
Three Months Ended September 30, 2020
Millions
Balance as of June 30, 2020$121 
Utility Customer and Other Accounts
     Provision43 
     Write-offs, net of Recoveries of $1 million(6)
Balance as of September 30, 2020$158
Nine Months Ended September 30, 2020
Millions
Balance as of January 1, 2020 (A)$68 
Utility Customer and Other Accounts
     Provision120 
     Write-offs, net of Recoveries of $4 million(30)
Balance as of September 30, 2020$158
(A)Includes an $8 million pre-tax increase upon adoption of ASU 2016-13. See Note 2. Recent Accounting Standards.         
PSEG Power
PSEG Power generally collects consideration upon satisfaction of performance obligations, and therefore, PSEG Power had no material contract balances as of SeptemberJune 30, 20202021 and December 31, 2019.2020.
PSEG Power’s accounts receivable include amounts resulting from contracts with customers and other contracts which are out of scope of accounting guidance for revenues from contracts with customers. The majority of these accounts receivable are subject to master netting agreements. As a result, accounts receivable resulting from contracts with customers and receivables unrelated to contracts with customers are netted within Accounts Receivable and Accounts Payable on the Condensed Consolidated Balance Sheets.
PSEG Power’s accounts receivable consist mainly of revenues from wholesale load contracts and capacity sales which are executed in the different ISO regions. PSEG Power also sells energy and ancillary services directly to ISOs and other counterparties. In the wholesale energy markets in which PSEG Power operates, payment for services rendered and products transferred are typically due within 30 days of delivery. As such, there is little credit risk associated with these receivables. PSEG Power did not record an allowance for credit losses for these receivables as of SeptemberJune 30, 2021 or December 31, 2020. PSEG Power monitors the status of its counterparties on an ongoing basis to assess whether there are any anticipated credit losses.
Other
PSEG LI did not have any material contract balances as of SeptemberJune 30, 20202021 and December 31, 2019.2020.
Remaining Performance Obligations under Fixed Consideration Contracts
PSEG Power and PSE&G primarily record revenues as allowed by the guidance, which states that if an entity has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date, the entity may recognize revenue in the amount to which the entity has a right to invoice. PSEG has future performance obligations under contracts with fixed consideration as follows:
PSEG Power
As previously stated, capacity transactions with ISOs are reported on a net basis dependent on PSEG Power’s monthly net sale or purchase position through the individual ISOs.
Capacity Revenues from the PJM Annual Base Residual and Incremental Auctions—The Base Residual Auction is generally conducted annually three years in advance of the operating period. The 2022/2023 auction has yetwas held in June 2021 and the 2023/2024 auction is expected to be held and is not expected until mid-2021.in December 2021. PSEG Power expects to realize the following average capacity prices resulting from the base and incremental
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auctions, including unit specific bilateral contracts for previously cleared capacity obligations.
Delivery Year$ per MW-DayMW Cleared
June 2020 to May 2021$1677,600 
June 2021 to May 2022$1807,000 
Delivery Year$ per MW-DayMW Cleared
June 2021 to May 2022$1667,700 
June 2022 to May 2023$986,300 
Capacity Payments from the ISO New England Forward Capacity Market (FCM)—The FCM Auction is conducted annually three years in advance of the operating period. The table below includes PSEG Power’s cleared capacity in the FCM Auction for the Bridgeport Harbor Station 5 (BH5), which cleared the 2019/2020 auction at $231/MW-day for seven years, and the planned retirement of Bridgeport Harbor Station 3 (BH3) ineffective May 31, 2021. PSEG Power expects to realize the following average capacity prices for capacity obligations to be satisfied resulting from the FCM Auctions which have been completed through May 20242025 and the seven-year rate lock for BH5 through May 2026:
Delivery Year$ per MW-Day (A)MW Cleared
June 2020 to May 2021$1951,330 
June 2021 to May 2022$192950 
June 2022 to May 2023$179950 
June 2023 to May 2024$152930 
June 2024 to May 2025$231480 
June 2025 to May 2026$231480 
Delivery Year$ per MW-Day (A)MW Cleared
June 2021 to May 2022$192950 
June 2022 to May 2023$179950 
June 2023 to May 2024$152930 
June 2024 to May 2025$158950 
June 2025 to May 2026$231480 
(A)    Capacity cleared prices for BH5 through 2026 will be escalated based upon the Handy-Whitman Index. These adjustments are not included above.
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Bilateral capacity contracts—Capacity obligations pursuant to contract terms through 2029 are anticipated to result in revenues totaling $146$138 million.
Other
The LIPA OSA is a 12-year services contract ending in 2025 with annual fixed and incentive components. The fixed fee for the provision of services thereunder in 20202021 is $67$68 million and is updated each year based on the change in the Consumer Price Index. See Note 11. Commitments and Contingent Liabilities for additional information.
Note 4. Early Plant Retirements/Asset Dispositions and Impairments
Nuclear
In April 2019, PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants were awarded ZECs by the BPU. Pursuant to a process established by the BPU, ZECs are purchased from selected nuclear plants and recovered through a non-bypassable distribution charge in the amount of $0.004 per kilowatt-hour (KWh) used (which is equivalent to approximately $10 per megawatt hour (MWh) generated in payments to selected nuclear plants (ZEC payment)). TheseEach nuclear plants areplant is expected to receive ZEC revenue for approximately three years, through May 2022.
In April 2021, PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants were awarded ZECs for the three-year eligibility period starting June 2022 at the same approximate $10 per MWh received during the current ZEC period through May 2022 referenced above. As a result, each nuclear plant is expected to receive ZEC revenue for an additional three years starting June 2022. The terms and will be obligatedconditions of this April 2021 ZEC award are the same as the current ZEC period as discussed above.
The award of ZECs attaches certain obligations, including an obligation to maintainrepay the ZECs in the event that a plant ceases operations during the period that period,it was awarded ZECs, subject to certain exceptions specified in the ZEC legislation. PSEG Power has and will continue to recognize revenue monthly as the nuclear plants generate electricity and satisfy their performance obligations. TheFurther, the ZEC payment may be adjusted by the BPU (a) at any time to offset environmental or fuel diversity payments that a selected nuclear plant may receive from another source or (b) at certain times specified in the ZEC legislation if the BPU determines that the purposes of the ZEC legislation can be achieved through a reduced charge that will nonetheless be sufficient to achieve the state’s air quality and other environmental objectives by preventing the retirement of nuclear plants.source. For instance, the New Jersey Division of Rate Counsel (New Jersey Rate Counsel), in written comments filed with the BPU, has advocated for the BPU to offset market benefits resulting from New Jersey’s rejoining the Regional Greenhouse Gas Initiative from the ZEC payment. PSEG intends to vigorously defend against these arguments. Due to its preliminary nature, PSEG cannot predict the outcome of this matter.
The BPU’s April 2019 decision awarding ZECs hasthrough May 2022 and April 2021 decision awarding ZECs through May 2025 have been appealed by the New Jersey Rate Counsel.Counsel (Rate Counsel). In May 2021, Rate Counsel filed an appeal with the New Jersey Appellate Division of the BPU’s April 2021 decision. In July 2021, the New Jersey Supreme Court denied the Rate Counsel’s petition for further appellate review of the BPU’s April 2019 decision. PSEG cannot predict the outcome of this matter.
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In October 2020, PSEG Power filed with the BPU its ZEC applications for Salem 1, Salem 2 and Hope Creek for the three-year eligibility period starting in June 2022. No other plants applied for ZECs for this eligibility period. The BPU’s schedule to consider these applications includes the BPU Staff issuing their preliminary findings regarding ZEC eligibility and the value of ZEC payments for this period in December 2020, followed by public and evidentiary hearings and a final BPU decision by April 2021. PSEG Power is not aware of any changes from its ZEC application for the first eligibility period that would materially affect its ability to establish eligibility to be awarded ZECs during the second eligibility period. PSEG cannot predict the outcome of either the BPU Staff’s preliminary findings or the BPU’s final determination.matters.
In the event that (i) the ZEC program is overturned or is otherwise materially adversely modified through legal process; (ii) the amount of ZEC payments that may be awarded or other terms and conditions of the second ZEC eligibility period proposed by the BPU Staff in the December 2020 preliminary findings or by the BPU in its final decision differ from those of the current ZEC period; or (iii)(ii) any of the Salem 1, Salem 2 and Hope Creek plants is not awarded ZEC payments by the BPUsufficiently valued for its environmental, fuel diversity or resilience attributes in future periods and does not otherwise experience a material financial change that would remove the need for such attributes to be sufficiently valued, PSEG Power will take all necessary steps to cease to operate all of these plants. Alternatively, if alleven with sufficient valuation of the Salem 1, Salem 2 and Hope Creek plants are selected to continue to receive ZEC payments butthese attributes, if the financial condition of the plants is materially adversely impacted by changes in commodity prices, FERC’s changes to the capacity market construct (absent sufficient capacity revenues provided under a program approved by the BPU in accordance with a FERC-authorized capacity mechanism), or, in the case of the Salem nuclear plants, decisions by the EPA and state environmental regulators regarding the implementation of Section 316(b) of the Clean Water Act (CWA) and related state regulations, or other factors, PSEG Power will take all necessary steps to cease to operate all of these plants. Ceasing operations of these plants and will incur associated costs and accounting charges. These may include, among other things, one-time impairment charges or accelerated Depreciation and Amortization Expensewould result in a material adverse impact on the remaining carrying value of the plants, potential penalties associated with the early termination of capacity obligations and fuel contracts, accelerated asset retirement costs, severance costs, environmental remediation costs and, in certain circumstances potential additional funding of the Nuclear Decommissioning Trust Fund, which would be material to both PSEGPSEG’s and PSEG Power.Power’s results of operations.
Non-Nuclear
In July 2020, PSEG announced that it is exploring strategic alternatives for PSEG Power’s non-nuclear generating fleet, which includes more than 6,750 MW of fossil generation located in New Jersey, Connecticut, New York and Maryland as well asand, prior to the sale of Solar Source, included 467 MW Solar Source portfolio located in various states. PSEG intends to retain ownership of PSEG Power’s existing nuclear fleet. While
In May 2021, PSEG Power Ventures LLC (Power Ventures), a direct wholly owned subsidiary of PSEG Power, entered into a purchase agreement with Quattro Solar, LLC, an affiliate of LS Power, relating to the sale by Power Ventures of 100% of its ownership interest in Solar Source including its related assets and liabilities. The transaction closed in June 2021. As a result of
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the sale, PSEG Power recorded a pre-tax gain on sale of approximately $62 million, which is inclusive of the recognition of previously deferred unamortized investment tax credits (ITC) of $185 million, and income tax expense of approximately $63 million primarily due to the recapture of ITC on units that operated for less than five years. Any potential transactions involving PSEG Power’s fossil generation are expected to be completed either in the preliminary stagefourth quarter of this evaluation,2021 or the marketingfirst quarter of 2022.
As a potential transaction in one or a seriesresult of steps is anticipated tothe strategic review of PSEG Power’s non-nuclear generating assets, and the launch in the fourth quarter of this year, and any2020 of an associated marketing process for their potential transaction is expected to be completed sometime in 2021. As a result,disposition, PSEG Power has performed a recoverability test foran impairment assessment of its portfolio of generating assets in the PJM,, NYISO and NEPOOL regions using a weightedISO-NE asset groupings, as of each quarter end. The assessments included probability weightings assigned to undiscounted cash flow analysis that considers the likelihoodscenarios of a potential sale or disposition or continuing to operateretaining the assets through the end of their remaining estimated useful lives. Aslives and a successful disposition of September 30, 2020, the estimated undiscounted futurenon-nuclear assets. Estimates of cash flows associated with a sale scenario were based on management’s expectations of eachthe fair value of such assets. The probability weighted aggregation of undiscounted cash flows for the PJM and NYISO asset groupings expected to result from the use and potential disposition of the asset groups exceeded their carrying value at the carrying amount andassessment dates. As such, it demonstrated that no impairment was identified.exists for these asset groupings and they continue to remain classified as held-for-use as of June 30, 2021. However, certain assumptions are subject to changeneither the ISO-NE asset grouping’s probability weighted aggregation of undiscounted cash flows nor its fair value exceeded its carrying value as of June 30, 2021. This demonstrated that an impairment existed and PSEG Power recorded a pre-tax charge in (Gains) Losses on Asset Dispositions and Impairments of approximately $519 million for the potential sales and marketing process progresses.ISO-NE asset grouping which has remained classified as held-for-use as of June 30, 2021.
There is no assurance that the strategic review will result in a sale or other disposition of all or any portion of these assets on terms that are favorable to us, or at all.the fossil generation assets. Any transaction would be subject to market conditions and customary closing conditions, including the receipt of all required regulatory approvals. AManagement expects that a change in theto a held-for-sale classification from a held-for-use classification of the remaining fossil and solar units may have a material adverse impact on PSEG’s and PSEG Power’s future financial results.
In September 2020, PSEG Power completed the sale of its ownership interestwould result in the Yards Creek generation facility. PSEG Power recorded a pre-tax gain on disposition of approximately $122 million in the third quarter of 2020 as the sale price was greater than book value.
In September 2019, PSEG Power completed the sale of its ownership interests in the Keystone and Conemaugh generation plants and related assets and liabilities. PSEG Power recorded a pre-tax loss on disposition of approximately $400 million in$2.5 billion related to additional impairments on the second quarterfossil assets being sold and other related fossil common fixed assets, employee severance and retention costs, environmental remediation costs, and debt redemption costs, including a make-whole premium among other things, and excluding any potential impacts on employee pension and other postretirement plans. This potential approximation of 2019 asloss is a preliminary estimate and may change materially depending upon the sale price was less than book value.ongoing marketing process and the terms of a final agreement, if any, to dispose of these assets.

Note 5. Variable Interest Entity (VIE)Entities (VIEs)
VIE for which PSEG LI is the Primary Beneficiary
PSEG LI consolidates Servco, a marginally capitalized VIE, which was created for the purpose of operating LIPA’s T&D system in Long Island, New York as well as providing administrative support functions to LIPA. PSEG LI is the primary beneficiary of Servco because it directs the operations of Servco, the activity that most significantly impacts Servco’s economic
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performance and it has the obligation to absorb losses of Servco that could potentially be significant to Servco. Such losses would be immaterial to PSEG.
Pursuant to the OSA, Servco’s operating costs are paid entirely by LIPA, and therefore, PSEG LI’s risk is limited related to the activities of Servco. PSEG LI has no current obligation to provide direct financial support to Servco. In addition to payment of Servco’s operating costs as provided for in the OSA, PSEG LI receives an annual contract management fee. PSEG LI’s annual contractual management fee, in certain situations, could be partially offset by Servco’s annual storm costs not approved by the Federal Emergency Management Agency, limited contingent liabilities and penalties for failing to meet certain performance metrics.
For transactions in which Servco acts as principal and controls the services provided to LIPA, such as transactions with its employees for labor and labor-related activities, including pension and OPEB-related transactions, Servco records revenues and the related pass-through expenditures separately in Operating Revenues and O&MOperation and Maintenance (O&M) Expense, respectively. Servco recorded $145$129 million and $124$125 million for the three months ended June 30, 2021 and $397 million2020, respectively, and $357$252 million for each of the ninesix months ended SeptemberJune 30, 20202021 and 2019, respectively,2020, of O&M costs, the full reimbursement of which was reflected in Operating Revenues. For transactions in which Servco acts as an agent for LIPA, it records revenues and the related expenses on a net basis, resulting in no impact on PSEG’s Condensed Consolidated Statement of Operations.
VIE for which PSEG is not the Primary Beneficiary
PSEG holds a 25% equity interest in Ocean Wind JV HoldCo, LLC (OWH), which holds the Ocean Wind project that is expected to achieve full commercial operation in 2025. For additional information, see Note 1. Organization, Basis of Presentation and Significant Accounting Policies. OWH is considered a VIE since its equity investments at risk are not sufficient to permit this entity to finance its activities without additional subordinated financial support. Since PSEG does not
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have voting control or the power to direct the activities of OWH that most significantly impact its economic performance, PSEG has determined that it is not the primary beneficiary and therefore will account for this investment under the equity method of accounting. PSEG’s maximum exposure to loss is currently limited to the $91 million carrying amount of its investment in OWH as of June 30, 2021, which is included in Long-Term Investments on PSEG’s Condensed Consolidated Balance Sheet.

Note 6. Rate Filings
This Note should be read in conjunction with Note 7. Regulatory Assets and Liabilities to the Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2019.2020.
In addition to items previously reported in the Annual Report on Form 10-K, significant regulatory orders received and currently pending rate filings with FERC and the BPU are as follows:
COVID-19 Deferral—BGSS—In July 2020,March 2021, the BPU authorized regulated utilitiesgave final approval to PSE&G’s request to maintain the current BGSS rate of 32 cents per therm which had been provisionally approved effective October 1, 2020.
In June 2021, PSE&G made its annual BGSS filing with the BPU requesting to maintain the current BGSS rate of 32 cents. If approved, the BGSS rate would remain in the Stateplace beginning October 1, 2021. This matter is pending.
Community Solar Energy Pilot (CSEP) Program—In May 2021, PSE&G made its initial filing for recovery of New Jersey to create a COVID-19-related Regulatory Asset by deferring on their books and records the prudently incurred incremental costs related to COVID-19 beginning on March 9, 2020 through September 30, 2021, or 60 days after the CSEP program. New Jersey governor determinesJersey’s Clean Energy Act provided for the establishment of a "Community Solar Energy Pilot Program” which permits electric customers to participate in a solar energy project that is remotely located from their properties but is within their electric public utility service territory. The program allows for a credit to the Public Health Emergency is no longer in effect, orcustomer's utility bill equal to the electricity generated attributable to the customer's participation in the absencesolar energy project. PSE&G’s filing proposes to recover an initial revenue requirement of such a determination, 60 days from$0.4 million associated with the time the Public Health Emergency automatically terminates by law, whichever is later. Deferred costs should be offset by any federal or state assistance that the utility may receiveCSEP Program as a direct resultnew component of the COVID-19 pandemic. Utilities must file quarterly reports of the costs incurred and offsets. In October 2020, the BPU broadened the scope of the docket to include all pandemic issues in a generic proceeding that will include submission of public comments and consideration of, among other things, the timing and scope of current and planned clean energy programs. other utility filings and mechanisms; utility financial strength; customer concerns; regulatory compliance and priorities; and ensuring the continued provision of safe and adequate service at just and reasonable rates, while recognizing the ramifications from the COVID-19 pandemic.PSE&G’s existing electric Green Program Recovery Charge (GPRC). This matter is pending.
Each New Jersey utility regulated by the BPU must file a petition documenting its prudently incurred incremental COVID-19 costs by December 31, 2021, or within 60 days of the close of the Regulatory Asset period as described above, whichever is later. Any potential rate recovery, including any prudency determinations and the appropriate period of recovery, will be addressed through that filing, or in the alternative, the utility may request that the BPU defer consideration of rate recovery for a future base rate case.
Deferral—PSE&G has made twocontinues to make quarterly filings as required by the BPU and has recorded a Regulatory Asset as of June 30, 2021 of approximately $82 million for net incremental costs, including $42 million for incremental gas bad debt expense associated with customer accounts receivable, which PSE&G expects are probable of recovery under the BPU order. In July2021, PSE&G, joined by other New Jersey gas distribution companies, made a filing with the BPU noting that the current deferral period, which ends on September 30, 2021, does not allow for proper consideration and inclusion of all incremental COVID-19 related expenses in the Regulatory Asset, and requesting that the Board extend the deferral period through the end of 2023.This matter is pending.
Energy Strong (ES) II—In April 2021, the BPU approved PSE&G’s filing for a $13 million revenue increase under this investment program, effective May 2021. This increase represents the return on and of ES II electric investments placed in service through January 2021.
GPRC—In June 2021, the BPU approved as final the GPRC rates approved by the Board on a provisional basis in January 2021. In July 2021, PSE&G filed its 2021 GPRC cost recovery petition requesting BPU approval to recover a $2 million increase in each of electric and gas base rates annual revenues. This matter is pending.
Gas System Modernization ProgramII (GSMP II)—In May 2021, the BPU approved PSE&G’s December 2020 cost recovery petition to recover in gas base rates an annual revenue increase of approximately $21 million effective June 1, 2021. This increase represents the return on and of GSMP II investments placed in service through February 2021.
In June 2021, PSE&G filed a GSMP II cost recovery petition seeking BPU approval to recover in gas base rates an estimated annual revenue increase of $34 million effective December 1, 2021. This increase represents the return on and of GSMP II investments expected to be in service through August 31, 2021. This request will be updated in September 2021 for actual costs.
Remediation Adjustment Charge (RAC)—In July 2021, the BPU approved PSE&G’s RAC 28 filing requesting recovery of approximately $35 million in the third quarter of 2020 for net incremental costs which PSE&G believes are recoverable under the BPU order.manufactured gas plant remediation expenditures incurred from August 1, 2019 through July 31, 2020.
Clean Energy Future-Energy Efficiency (CEF-EE), a New Component of the Green Program Recovery Charge (GPRC)Transmission Formula Rates—In SeptemberJune 2021, PSE&G filed its 2020 true-up adjustment pertaining to its transmission formula rates in effect for 2020. This filing resulted in an additional annual revenue requirement of $13 million more than the 2020
originally filed revenue.
In July 2021, PSE&G filed for FERC’s approval of a settlement agreement effective August 1, 2021 reached with the BPU approvedStaff and the Rate Counsel with respect to the level of PSE&G’s CEF-EE filing which provides for energy efficient investments of $1 billion over a three-year period. Costs will be recovered through the GPRC, with returns aligned with PSE&G’s most recent base rate casetransmission return on equity (ROE) and a ten-year amortization period.
The approval also included a Conservation Incentive Program (CIP), amechanism that will provide for recovery of lost electric and gas variable margin revenues. The CIP is effective in June 2021 for electric and October 2021 for gas. PSE&G will suspend its gas Weather Normalization Charge (WNC) when the gas CIP deferral period begins.
Transition Incentive Program, a New Component of the GPRC—In 2019, the BPU approved an order establishing a Transition Incentive Program to serve as a bridge between the existing Solar Renewable Energy Certificate (SREC) program and a to-be-established successor program and created a new incentive mechanism known as the Transition Renewable Energy Certificate (TRECs) Program. TRECs will be awarded to qualifying solar projects under the new program. In the TREC Order, the BPU directed the New Jersey EDCs to engage a TREC Administrator to acquire, on behalf of the EDCs, TRECs producedother formula
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by eligible solar projects, whichrate matters. The settlement reduces PSE&G’s base ROE from 11.18% to 9.9% and provides that the settling parties will be funded through a TREC chargenot seek changes to electric customers collected by the EDCs. The order allows the EDCs to recover their costs associated with the TREC program in an annual filing, subject to approval by the BPU. 
In August 2020, the BPU approved PSE&G’s request for increased rates of approximately $23 million annually for recovery of its expected share of TREC costs. These costs will be recovered as a new component of PSE&G’s existing electric GPRC, which is updated on an annual basis.
GPRC—In June 2020, PSE&G filed its 2020 GPRC cost recovery petition requesting recovery of approximately $67 million and $20 million in electric and gas revenues, respectively, on an annual basis. This matter is pending.
Transmission Formula Rates—In October 2020, PSE&G filed its 2020 Annual Transmission Formula Rate Update with FERC which will result in $119 million in increased annual transmission revenue effective January 1, 2021, subject to true-up.
In June 2020, PSE&G filed its 2019 true-up adjustment pertaining to its transmission formula rates in effectrate for 2019. This filing resulted in an additional annual revenue requirement of $24 million more than the 2019 originally filed revenue.
In April 2020, the Internal Revenue Service (IRS) issued a Private Letter Ruling (PLR) to PSE&G concluding that certain excess deferred taxes previously classified as protected should be classified as unprotected. Unprotected excess deferred income taxes are not subject to the normalization rules allowing them to be refunded to customers sooner as agreed to with FERC and the BPU. In July 2020, FERC approved PSE&G’s request to allow the entire amount of these unprotected excess deferred income taxes be returned to customers in the 2019 true-up filing. As a result of the FERC approval, PSE&G recorded a revenue reduction of approximately $38 million in the third quarter of 2020, fully offset by a reduction in Income Tax Expense. The refund will be provided to transmission ratepayers as a reduction to the 2021 transmission rates.
Basic Gas Supply Service (BGSS)—In September 2020, the BPU provisionally approved PSE&G’s request to maintain the current BGSS rate of 32 cents. This rate is subject to final approval.
Gas System Modernization Program II (GSMP II)—In July 2020, the BPU approved PSE&G’s GSMP II cost recovery petition requesting approximately $18 million in gas revenues on an annual basis, which included GSMP II investments in service as of February 29, 2020. The increase was effective July 16, 2020.
In September 2020, PSE&G updated its GSMP II cost recovery petition seeking BPU approval to recover in gas base rates an estimated annual revenue increase of approximately $20 million effective December 1, 2020. This increase represents the return on and of GSMP II investments placed in service through August 31, 2020.three years. This matter is pending.
Tax Adjustment Credit (TAC)Weather Normalization Charge (WNC)—In October 2020,June 2021, PSE&G madefiled its annual 2020 TAC filing. The TAC allows for the flowback2021-2022 WNC petition seeking to customers of excess accumulated deferred income taxes resulting from the reduction of the federal income tax rates provided in the Tax Cuts and Jobs Act of 2017 (Tax Act) as well as the accumulated deferred income taxes from previously realized tax repair deductions and tax benefits from future tax repair deductions as realized. The 2020 TAC filing requests BPU approvalrefund $2 million to reduce electric revenues by approximately $23 million and increase gas revenues by $49 million on an annual basis starting January 1, 2021. This matter is pending.
In July 2020, the BPU gave final approval to PSE&G’s 2019TAC filing that had been approved on a provisional basis in January 2020, with additional credits included in the final ruling. The final approval resulted in a reduction to electric and gas revenues of $25 million and $29 million, respectively, on an annual basis, effective July 16, 2020.
As discussed above, PSE&G received a PLR from the IRS in April 2020 that concluded thatcertain excess deferred taxes previously classified as protected should be classified as unprotected. Unprotected excess deferred income taxes are not subject to the tax normalization rules allowing them to be refunded to customers sooner as agreed to with the BPU. As part of a procedural discovery to obtain the BPU’s final approval, PSE&G proposed that it change its current provisional TAC rates to increase the credit and start flowing back these unprotected amounts starting in July 2020 through December 31, 2024, which the BPU approved. This resulted in a total additional credit to electric and gas customers of $50 million and $46 million, respectively, of which $10 million and $19 million will be flowed back in 2020 for electric and gas, respectively.
WNC—In September 2020, the BPU approved a provisional rate effective October 1, 2020 for the collection of $10 million from customers over the 2020-2021 Winter Period forPeriod. The overcollection will be refunded to PSE&G gas customers during the estimated undercollection resulting from the warmer-than-normal 2019-20202021-2022 Winter Period. This matter is pending.
Remediation Adjustment Charge (RAC)—In September 2020, the BPU approved PSE&G’s RAC 27 filing requesting recovery of approximately $53 million in net manufactured gas plant remediation expenditures from August 1, 2018 through July 31, 2019.
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Note 7. Leases
PSEG and its subsidiaries are both a lessor and a lessee in operating leases. As of SeptemberJune 30, 2020,2021, PSEG and its subsidiaries were lessors for leases classified as operating leases or leveraged leases. See Note 8. Financing Receivables. There was no significant change in amounts reported in Note 8. Leases in the Annual Report on Form 10-K for the year ended December 31, 20192020 for operating leases in which PSEGPSE&G and its subsidiariesServices are lessees. As a result of completion of the sale of the Solar Source units in June 2021, PSEG Power’s Operating Lease Right-of-Use Assets and Operating Lease Liabilities were both reduced by $33 million. SeeNote 4. Early Plant Retirements/Asset Dispositions and Impairments.
PSEG and its subsidiaries, as lessors, have lease agreements with lease and non-lease components, which are primarily related to generating facilities. Rental income from these leases is included in Operating Revenues.
PSEG Power
CertainPrior to the sale of Solar Source, certain of PSEG Power’s sales agreements related to its solar generating plants qualifyqualified as operating leases with remaining terms through 2043 with no extension terms.leases. Lease income iswas based on solar energy generation; therefore, all rental income is variablerecorded under these leases was variable. PSEG Power has no remaining operating leases.
Other
Energy Holdings is the lessor in leveraged leases. Leveraged lease accounting guidance is grandfathered for existing leveraged leases. If modified after January 1, 2019, such leveraged leases will be accounted for as operating, direct financing, or sales-type leases.See Note 8. Financing Receivables.
Energy Holdings is the lessor in antwo operating leaseleases for a domestic energy generation facilityfacilities with a remaining termterms through 2036. Energy Holdings was previously the lessor in operating leases for real estate assets2036, one of which were sold in March 2020.has an optional renewal period.
The following is the operating lease income for PSEG Power and Energy Holdings for the three and ninesix months ended SeptemberJune 30, 20202021 and 2019:2020:
PSEG PowerEnergy HoldingsTotal
Millions
Operating Lease Income
Three Months Ended September 30, 2020
Fixed Lease Income$0 $4 $4 
Variable Lease Income8 0 8 
Total Operating Lease Income$8 $4 $12 
Nine Months Ended September 30, 2020
Fixed Lease Income$0 $12 $12 
Variable Lease Income21 0 21 
Total Operating Lease Income$21 $12 $33 
Three Months Ended September 30, 2019
Fixed Lease Income$0 $6 $6 
Variable Lease Income7 0 7 
Total Operating Lease Income$7 $6 $13 
Nine Months Ended September 30, 2019
Fixed Lease Income$0 $17 $17 
Variable Lease Income19 0 19 
Total Operating Lease Income$19 $17 $36 

PSEG PowerEnergy HoldingsTotal
Millions
Operating Lease Income
Three Months Ended June 30, 2021
Fixed Lease Income$0 $6 $6 
Variable Lease Income7 0 7 
Total Operating Lease Income$7 $6 $13 
Six Months Ended June 30, 2021
Fixed Lease Income$0 $11 $11 
Variable Lease Income12 0 12 
Total Operating Lease Income$12 $11 $23 
Three Months Ended June 30, 2020
Fixed Lease Income$0 $3 $3 
Variable Lease Income8 0 8 
Total Operating Lease Income$8 $3 $11 
Six Months Ended June 30, 2020
Fixed Lease Income$0 $8 $8 
Variable Lease Income13 0 13 
Total Operating Lease Income$13 $8 $21 
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Note 8. Financing Receivables
PSE&G
PSE&G’s Solar Loan Programs are designed to help finance the installation of solar power systems throughout its electric service area. Interest income on the loans is recorded on an accrual basis. The loans are paid back with SRECs generated from the related installed solar electric system. PSE&G uses collection experience as a credit quality indicator for its Solar Loan Programs and conducts a comprehensive credit review for all prospective borrowers. As of SeptemberJune 30, 2020,2021, none of the solar loans were impaired; however, in the event of a loan default or if a loan becomes impaired, the basis of the solar loan would be recovered through a regulatory recovery mechanism. As of SeptemberJune 30, 2020,2021, none of the solar loans were delinquent and no loans are currently expected to become delinquent in light of the payment mechanism. Therefore, no current credit losses have been recorded for Solar Loan Programs I, II and III. A substantial portion of these amounts are noncurrent and reported in Long-Term Investments on PSEG’s and PSE&G’s Condensed Consolidated Balance Sheets. The following table reflects the outstanding loans by class of customer, none of which would be considered “non-performing.”
As ofAs of
Outstanding Loans by Class of CustomersSeptember 30,
2020		December 31,
2019
Millions
Commercial/Industrial$144 $156 
Residential7 8 
Total151 164 
Current Portion (included in Accounts Receivable)(28)(28)
Noncurrent Portion (included in Long-Term Investments)$123 $136 
As of
Outstanding Loans by Class of CustomersJune 30,
2021		December 31,
2020
Millions
Commercial/Industrial$133 $145 
Residential5 6 
Total138 151 
Current Portion (included in Accounts Receivable)(30)(29)
Noncurrent Portion (included in Long-Term Investments)$108 $122 
The solar loans originated under three Solar Loan Programs are comprised as follows:
ProgramsBalance as of SeptemberJune 30, 20202021Funding ProvidedResidential Loan TermNon-Residential Loan Term
Millions
Solar Loan I$2217 prior to 201310 years15 years
Solar Loan II7264 prior to 201510 years15 years
Solar Loan III57 largely funded as of December 31, 2019June 30, 202110 years10 years
Total$151138 
The average life of loans paid in full is eight years, which is lower than the loan terms of 10 to 15 years due to the generation of SRECs being greater than expected and/or cash payments made to the loan. Payments on all outstanding loans were current as of SeptemberJune 30, 20202021 and have an average remaining life of approximately four years.
Energy Holdings
Energy Holdings, through several of its indirect subsidiaries, has investments in domestic energy and real estate assets subject primarily to leveraged lease accounting. A leveraged lease is typically comprised of an investment by an equity investor and debt provided by a third-party debt investor. The debt is recourse only to the assets subject to lease and is not included on PSEG’s Condensed Consolidated Balance Sheets. As an equity investor, Energy Holdings’ equity investments in the leases are comprised of the total expected lease receivables over the lease terms plus the estimated residual values at the end of the lease terms, reduced for any income not yet earned on the leases. This amount is included in Long-Term Investments on PSEG’s Condensed Consolidated Balance Sheets. The more rapid depreciation of the leased property for tax purposes creates tax cash flow that will be repaid to the taxing authority in later periods. As such, the liability for such taxes due is recorded in Deferred Income Taxes on PSEG’s Condensed Consolidated Balance Sheets.
In the second quarterLeveraged leases outstanding as of 2020, Energy Holdings completed its annual review of estimated residual values embeddedJune 30, 2021 commenced in domestic energy leveraged leases and determined no impairments were necessary. During the second quarter of 2019, the outcome ofor prior to 2000. The following table shows Energy Holdings’ annual review indicated that the updated residual value estimategross and net lease investment as of the coal-fired Powerton lease was lower than the recorded residual valueJune 30, 2021 and the decline was deemed to be other than temporary as a result of expected future adverseDecember 31, 2020.
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market conditions. As a result, a pre-tax write-down of $58 million was reflected in Operating Revenues in the quarter ended June 30, 2019, calculated by comparing the gross investment in the leases before and after the revised residual estimates.
In September 2020, wholly owned subsidiaries of PSEG Energy Holdings L.L.C. (the Sellers) completed the sale to Midwest Generation, LLC (the Buyer) of the Sellers’ ownership interests in the Powerton and Joliet generation facilities and related assets, including the assumption by the Buyer of related liabilities. The loss, net of taxes, resulting from the transaction was immaterial.
Leveraged leases outstanding as of September 30, 2020 commenced in or prior to 2000. The following table shows Energy Holdings’ gross and net lease investment as of September 30, 2020 and December 31, 2019.
As ofAs of
September 30,
2020		December 31,
2019
Millions
Lease Receivables (net of Non-Recourse Debt)$334 $498 
Estimated Residual Value of Leased Assets124 202 
Total Investment in Rental Receivables458 700 
Unearned and Deferred Income(141)(203)
Gross Investments in Leases317 497 
Deferred Tax Liabilities(131)(328)
Net Investments in Leases$186 $169 
As of
June 30,
2021		December 31,
2020
Millions
Lease Receivables (net of Non-Recourse Debt)$274 $299 
Estimated Residual Value of Leased Assets55 55 
Total Investment in Rental Receivables329 354 
Unearned and Deferred Income(96)(104)
Gross Investments in Leases233 250 
Deferred Tax Liabilities(57)(64)
Net Investments in Leases$176 $186 
The corresponding receivables associated with the lease portfolio are reflected as follows, net of non-recourse debt. The ratings in the table represent the ratings of the entities providing payment assurance to Energy Holdings.
Lease Receivables, Net of
Non-Recourse Debt
Counterparties' Standard & Poor's (S&P) Credit Rating as of SeptemberJune 30, 20202021
As of SeptemberJune 30, 20202021
Millions
AA$98 
A-5451 
BBB+ to BBB236178 
NRBB+3537 
Total$334274 
The “NR”“BB+” rating in the preceding table representrepresents a lease receivablesreceivable related to Shawville Units 1, 2, 3 and 4. The Shawville Units, wholly owned by PSEG, are 596 MW gas-fired assets located in Pennsylvania and Shawville Power, LLCMerrill Creek Reservoir. Metropolitan Edison Company (a subsidiary of First Energy) is the lease counterparty. As of SeptemberJune 30, 2020,2021, the gross investment in thethis lease of Shawville assets, net of non-recourse debt, was $72$24 million ($419 million, net of deferred taxes). The credit exposure for that lease is partially mitigated through a letter of credit supporting the lease payments that are required within the lease structure.
PSEG believesrecorded no credit losses are necessary for the leveraged leases existing on SeptemberJune 30, 2020.2021. Upon the occurrence of certain defaults, indirect subsidiaries of Energy Holdings would exercise their rights and seek recovery of their investment, potentially including stepping into the lease directly to protect their investments. While these actions could ultimately protect or mitigate the loss of value, they could require the use of significant capital and trigger certain material tax obligations which could, for certain leases, wholly or partially be mitigated by tax indemnification claims against the counterparty. A bankruptcy of a lessee would likely delay and potentially limit any efforts on the part of the lessors to assert their rights upon default and could delay the monetization of claims.
Additional factors that may impact future lease cash flows include, but are not limited to, new environmental legislation and regulation regarding air quality, water and other discharges in the process of generating electricity, market prices for fuel, electricity and capacity, overall financial condition of lease counterparties and their affiliates and the quality and condition of assets under lease.
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Note 9. Trust Investments
Nuclear Decommissioning Trust (NDT) Fund
PSEG Power maintains an external master NDT to fund its share of decommissioning costs for its 5 nuclear facilities upon their respective termination of operation. The trust contains two separate funds: a qualified fund and a non-qualified fund. Section 468A of the Internal Revenue Code limits the amount of money that can be contributed into a qualified fund. The funds are managed by third-party investment managers who operate under investment guidelines developed by PSEG Power.
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The following tables show the fair values and gross unrealized gains and losses for the securities held in the NDT Fund.
 As of September 30, 2020
CostGross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
 Millions
Equity Securities
Domestic$517 $257 $(13)$761 
International381 101 (24)458 
Total Equity Securities898 358 (37)1,219 
Available-for-Sale Debt Securities
Government527 30 0 557 
Corporate550 35 (3)582 
Total Available-for-Sale Debt Securities1,077 65 (3)1,139 
Total NDT Fund Investments (A)$1,975 $423 $(40)$2,358 
 As of June 30, 2021
CostGross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
 Millions
Equity Securities
Domestic$483 $330 $0 $813 
International338 134 (6)466 
Total Equity Securities821 464 (6)1,279 
Available-for-Sale Debt Securities
Government703 15 (6)712 
Corporate613 25 (3)635 
Total Available-for-Sale Debt Securities1,316 40 (9)1,347 
Total NDT Fund Investments (A)$2,137 $504 $(15)$2,626 
(A)The NDT Fund Investments table excludes foreign currency of $1$2 million as of SeptemberJune 30, 2020,2021, which is part of the NDT Fund.
As of December 31, 2019
CostGross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
Millions
Equity Securities
Domestic$425 $238 $(4)$659 
International400 103 (11)492 
Total Equity Securities825 341 (15)1,151 
Available-for-Sale Debt Securities
Government563 16 (2)577 
Corporate470 17 (1)486 
Total Available-for-Sale Debt Securities1,033 33 (3)1,063 
Total NDT Fund Investments (A)$1,858 $374 $(18)$2,214 
As of December 31, 2020
CostGross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
Millions
Equity Securities
Domestic$519 $305 $(3)$821 
International388 152 (9)531 
Total Equity Securities907 457 (12)1,352 
Available-for-Sale Debt Securities
Government555 27 (1)581 
Corporate528 39 (1)566 
Total Available-for-Sale Debt Securities1,083 66 (2)1,147 
Total NDT Fund Investments (A)$1,990 $523 $(14)$2,499 
(A)The NDT Fund Investments table excludes foreign currency of $2 million as of December 31, 2019,2020, which is part of the NDT Fund.
Net unrealized gains (losses) on debt securities of $36$18 million (after-tax) were included in Accumulated Other Comprehensive Loss on PSEG’s and PSEG Power’s Condensed Consolidated Balance Sheets as of SeptemberJune 30, 2020. An impairment of debt securities of $(3) million was included in Net Gains (Losses) on Trust Investments on PSEG Power’s Condensed Consolidated Statement of Operations for the nine months ended September 30, 2020.2021. The portion of net unrealized gains (losses) recognized in the second quarter and first half of 2021 related to equity securities still held as of SeptemberJune 30, 2020 recognized during the third quarter2021 was $61 million and first nine months of 2020 was $48 million.$86 million, respectively.
The amounts in the preceding tables do not include receivables and payables for NDT Fund transactions which have not settled at the end of each period. Such amounts are included in Accounts Receivable and Accounts Payable on the Condensed Consolidated Balance Sheets as shown in the following table.
As ofAs of
June 30,
2021		December 31,
2020
Millions
Accounts Receivable$19 $11 
Accounts Payable$36 $12 
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As ofAs of
September 30,
2020		December 31,
2019
Millions
Accounts Receivable$13 $11 
Accounts Payable$26 $11 
The following table shows the value of securities in the NDT Fund that have been in an unrealized loss position for less than and greater than 12 months.
As of September 30, 2020As of December 31, 2019
Less Than 12
Months		Greater Than 12
Months		Less Than 12
Months		Greater Than 12
Months
Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses
Millions
Equity Securities (A)
Domestic$142 $(10)$4 $(3)$21 $(1)$6 $(3)
International68 (13)26 (11)28 (2)34 (9)
Total Equity Securities210 (23)30 (14)49 (3)40 (12)
Available-for-Sale Debt Securities
Government (B)63 0 0 0 99 (2)30 0 
Corporate (C)54 (2)9 (1)49 0 12 (1)
Total Available-for-Sale Debt Securities117 (2)9 (1)148 (2)42 (1)
NDT Trust Investments$327 $(25)$39 $(15)$197 $(5)$82 $(13)
As of June 30, 2021As of December 31, 2020
Less Than 12
Months		Greater Than 12
Months		Less Than 12
Months		Greater Than 12
Months
Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses
Millions
Equity Securities (A)
Domestic$12 $0 $0 $0 $23 $(2)$6 $(1)
International39 (4)9 (2)26 (2)27 (7)
Total Equity Securities51 (4)9 (2)49 (4)33 (8)
Available-for-Sale Debt Securities
Government (B)277 (6)6 0 72 (1)0 0 
Corporate (C)156 (3)8 0 31 (1)7 0 
Total Available-for-Sale Debt Securities433 (9)14 0 103 (2)7 0 
NDT Trust Investments$484 $(13)$23 $(2)$152 $(6)$40 $(8)
(A)Equity Securities—Investments in marketable equity securities within the NDT Fund are primarily in common stocks within a broad range of industries and sectors. Unrealized gains and losses on these securities are recorded in Net Income.
(B)Debt Securities (Government)—Unrealized gains and losses on these securities are recorded in Accumulated Other Comprehensive Income (Loss). The unrealized losses on PSEG Power’s NDT investments in U.S. Treasury obligations and Federal Agency mortgage-backed securities were caused by interest rate changes. PSEG Power also has investments in municipal bonds. It is not expected that these securities will settle for less than their amortized cost. PSEG Power does not intend to sell these securities nor will it be more-likely-than-not required to sell before recovery of their amortized cost. PSEG Power did not recognize credit losses for U.S. Treasury obligations and Federal Agency mortgage-backed securities because these investments are guaranteed by the U.S. government or an agency of the U.S. government. PSEG Power did not recognize credit losses for municipal bonds because they are primarily investment grade securities.
(C)Debt Securities (Corporate)—Unrealized gains and losses on these securities are recorded in Accumulated Other Comprehensive Income (Loss). Unrealized losses were due to market declines. It is not expected that these securities would settle for less than their amortized cost. PSEG Power does not intend to sell these securities nor will it be more-likely-than-not required to sell before recovery of their amortized cost. PSEG Power did not recognize credit losses for these corporate bonds because they are primarily investment grade securities.
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The proceeds from the sales of and the net gains (losses) on securities in the NDT Fund were:
Three Months EndedNine Months Ended
September 30,September 30,
2020201920202019
Millions
Proceeds from NDT Fund Sales (A)$583 $365 $1,631 $1,245 
Net Realized Gains (Losses) on NDT Fund
Gross Realized Gains$91 $27 $161 $90 
Gross Realized Losses(23)(11)(77)(43)
Net Realized Gains (Losses) on NDT Fund (B)68 16 84 47 
Unrealized Gains (Losses) on Equity Securities34 (21)(5)111 
Impairment of Available-for-Sale Debt Securities (C)0 0 (3)0 
Net Gains (Losses) on NDT Fund Investments$102 $(5)$76 $158 
Three Months EndedSix Months Ended
June 30,June 30,
2021202020212020
Millions
Proceeds from NDT Fund Sales (A)$538 $493 $1,135 $1,048 
Net Realized Gains (Losses) on NDT Fund
Gross Realized Gains$83 $32 $162 $70 
Gross Realized Losses(23)(20)(38)(54)
Net Realized Gains (Losses) on NDT Fund (B)60 12 124 16 
Unrealized Gains (Losses) on Equity Securities20 182 13 (39)
Impairment of Available-for-Sale Debt Securities (C)0 0 0 (3)
Net Gains (Losses) on NDT Fund Investments$80 $194 $137 $(26)
(A)Includes activity in accounts related to the liquidation of funds being transitioned to new managers.within the trust.
(B)The cost of these securities was determined on the basis of specific identification.
(C)PSEG Power recognized an impairment of available-for-sale debt securities that it intends to sell.in 2020. PSEG Power’s policy is to sell all such securities that are rated below investment grade.
The NDT Fund debt securities held as of SeptemberJune 30, 20202021 had the following maturities:
Time FrameFair Value
 Millions
Less than one year$2535 
1 - 5 years276344 
6 - 10 years205252 
11 - 15 years7986 
16 - 20 years7697 
Over 20 years478533 
Total NDT Available-for-Sale Debt Securities$1,1391,347 
PSEG Power periodically assesses individual debt securities whose fair value is less than amortized cost to determine whether the investments are impaired. For these securities, management considers its intent to sell or requirement to sell a security prior to expected recovery. In those cases where a sale is expected, any impairment would be recorded through earnings. For fixed income securities where there is no intent to sell or likely requirement to sell, management evaluates whether credit loss is a component of the impairment. If so, that portion is recorded through earnings while the noncredit loss component is recorded through Accumulated Other Comprehensive Income (Loss). Any subsequent recoveries of the noncredit loss component of the impairment would be recorded through Accumulated Other Comprehensive Income (Loss). Any subsequent recoveries of the credit loss component would be recognized through earnings. The assessment of fair market value compared to cost is applied on a weighted average basis taking into account various purchase dates and initial cost of the securities.

Rabbi Trust
PSEG maintains certain unfunded nonqualified benefit plans to provide supplemental retirement and deferred compensation benefits to certain key employees. Certain assets related to these plans have been set aside in a grantor trust commonly known as a “Rabbi Trust.”
The following tables show the fair values, gross unrealized gains and losses and amortized cost basis for the securities held in the Rabbi Trust.
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As of September 30, 2020
CostGross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
Millions
Domestic Equity Securities$20 $7 $0 $27 
Available-for-Sale Debt Securities
Government91 9 0 100 
Corporate124 10 0 134 
Total Available-for-Sale Debt Securities215 19 0 234 
Total Rabbi Trust Investments$235 $26 $0 $261 
As of June 30, 2021
CostGross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
Millions
Domestic Equity Securities$15 $11 $0 $26 
Available-for-Sale Debt Securities
Government99 3 (2)100 
Corporate111 7 0 118 
Total Available-for-Sale Debt Securities210 10 (2)218 
Other Securities1 0 0 1 
Total Rabbi Trust Investments$226 $21 $(2)$245 
As of December 31, 2019
CostGross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
Millions
Domestic Equity Securities$21 $7 $0 $28 
Available-for-Sale Debt Securities
Government100 4 0 104 
Corporate107 7 0 114 
Total Available-for-Sale Debt Securities207 11 0 218 
Total Rabbi Trust Investments$228 $18 $0 $246 
As of December 31, 2020
CostGross
Unrealized
Gains		Gross
Unrealized
Losses		Fair
Value
Millions
Domestic Equity Securities$21 $10 $0 $31 
Available-for-Sale Debt Securities
Government94 6 0 100 
Corporate123 12 0 135 
Total Available-for-Sale Debt Securities217 18 0 235 
Total Rabbi Trust Investments$238 $28 $0 $266 
Net unrealized gains (losses) on debt securities of $13$6 million (after-tax) were included in Accumulated Other Comprehensive Loss on PSEG’s Condensed Consolidated Balance Sheet as of SeptemberJune 30, 2020.2021. The portion of net unrealized gains recognized during the thirdsecond quarter and first nine months of 2020 related to equity securities still held as of SeptemberJune 30, 20202021 was $2$1 million and less than $1 million, respectively.was immaterial for the first half of 2021.
The amounts in the preceding tables do not include receivables and payables for Rabbi Trust Fund transactions which have not settled at the end of each period. Such amounts are included in Accounts Receivable and Accounts Payable on the Condensed Consolidated Balance Sheets as shown in the following table.
As ofAs of
September 30,
2020		December 31,
2019
 Millions
Accounts Receivable$3 $2 
Accounts Payable$3 $0 
As ofAs of
June 30,
2021		December 31,
2020
 Millions
Accounts Receivable$1 $1 
Accounts Payable$0 $1 
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The following table shows the value of securities in the Rabbi Trust Fund that have been in an unrealized loss position for less than 12 months and greater than 12 months.
 As of September 30, 2020As of December 31, 2019
 Less Than 12
Months		Greater Than 12
Months		Less Than 12
Months		Greater Than 12
Months
 Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses
 Millions
Available-for-Sale Debt Securities
Government (A)$21 $0 $1 $0 $26 $0 $3 $0 
Corporate (B)18 0 1 0 11 0 2 0 
Total Available-for-Sale Debt Securities39 0 2 0 37 0 5 0 
Rabbi Trust Investments$39 $0 $2 $0 $37 $0 $5 $0 
 As of June 30, 2021As of December 31, 2020
 Less Than 12
Months		Greater Than 12
Months		Less Than 12
Months		Greater Than 12
Months
 Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses		Fair
Value		Gross
Unrealized
Losses
 Millions
Available-for-Sale Debt Securities
Government (A)$56 $(2)$0 $0 $19 $0 $0 $0 
Corporate (B)23 0 1 0 2 0 1 0 
Total Available-for-Sale Debt Securities79 (2)1 0 21 0 1 0 
Rabbi Trust Investments$79 $(2)$1 $0 $21 $0 $1 $0 
(A)Debt Securities (Government)—Unrealized gains and losses on these securities are recorded in Accumulated Other Comprehensive Income (Loss). The unrealized losses on PSEG’s Rabbi Trust investments in U.S. Treasury obligations and Federal Agency mortgage-backed securities were caused by interest rate changes. PSEG also has investments in municipal bonds. It is not expected that these securities will settle for less than their amortized cost. PSEG does not intend to sell these securities nor will it be more-likely-than-not required to sell before recovery of their amortized cost. PSEG did not recognize credit losses for U.S. Treasury obligations and Federal Agency mortgage-backed securities because these investments are guaranteed by the U.S. government or an agency of the U.S. government. PSEG did not recognize credit losses for municipal bonds because they are primarily investment grade securities.
(B)Debt Securities (Corporate)—Unrealized gains and losses on these securities are recorded in Accumulated Other Comprehensive Income (Loss). Unrealized losses were due to market declines. It is not expected that these securities would settle for less than their amortized cost. PSEG does not intend to sell these securities nor will it be more-likely-than-not required to sell before recovery of their amortized cost. PSEG did not recognize credit losses for these corporate bonds because they are primarily investment grade.
The proceeds from the sales of and the net gains on securities in the Rabbi Trust Fund were:
Three Months EndedNine Months Ended
September 30,September 30,
2020201920202019
Millions
Proceeds from Rabbi Trust Sales (A)$50 $43 $165 $129 
Net Realized Gains (Losses) on Rabbi Trust:
Gross Realized Gains$4 $3 $14 $5 
Gross Realized Losses(1)(2)(4)(3)
Net Realized Gains (Losses) on Rabbi Trust (B)3 1 10 2 
Unrealized Gains (Losses) on Equity Securities2 1 1 4 
Net Gains (Losses) on Rabbi Trust Investments$5 $2 $11 $6 
Three Months EndedSix Months Ended
June 30,June 30,
2021202020212020
Millions
Proceeds from Rabbi Trust Sales$29 $61 $94 $115 
Net Realized Gains (Losses) on Rabbi Trust:
Gross Realized Gains$2 $5 $7 $10 
Gross Realized Losses(1)(2)(3)(3)
Net Realized Gains (Losses) on Rabbi Trust (A)1 3 4 7 
Unrealized Gains (Losses) on Equity Securities0 4 0 (1)
Net Gains (Losses) on Rabbi Trust Investments$1 $7 $4 $6 
(A)Includes activity in accounts related to the liquidation of funds being transitioned to new managers.
(B)The cost of these securities was determined on the basis of specific identification.

39
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The Rabbi Trust debt securities held as of SeptemberJune 30, 20202021 had the following maturities:
Time FrameFair Value
 Millions
Less than one year$0 
1 - 5 years3543 
6 - 10 years3522 
11 - 15 years1411 
16 - 20 years3228 
Over 20 years118114 
Total Rabbi Trust Available-for-Sale Debt Securities$234218 
PSEG periodically assesses individual debt securities whose fair value is less than amortized cost to determine whether the investments are considered to be impaired. For these securities, management considers its intent to sell or requirement to sell a security prior to expected recovery. In those cases where a sale is expected, any impairment would be recorded through earnings. For fixed income securities where there is no intent to sell or likely requirement to sell, management evaluates whether credit loss is a component of the impairment. If so, that portion is recorded through earnings while the noncredit loss component is recorded through Accumulated Other Comprehensive Income (Loss). Any subsequent recoveries of the noncredit loss component of the impairment would be recorded through Accumulated Other Comprehensive Income (Loss). Any subsequent recoveries of the credit loss component would be recognized through earnings. The assessment of fair market value compared to cost is applied on a weighted average basis taking into account various purchase dates and initial cost of the securities.
The fair value of the Rabbi Trust related to PSEG, PSE&G, and PSEG Power and PSEG’s other subsidiaries is detailed as follows:
As ofAs of
September 30,
2020		December 31,
2019
 Millions
PSE&G$51 $48 
PSEG Power65 62 
Other145 136 
Total Rabbi Trust Investments$261 $246 
As ofAs of
June 30,
2021		December 31,
2020
 Millions
PSE&G$44 $51 
PSEG Power64 66 
Other137 149 
Total Rabbi Trust Investments$245 $266 

Note 10. Pension and Other Postretirement Benefits (OPEB)
PSEG sponsors qualified and nonqualified pension plans and OPEB plans covering PSEG’s and its participating affiliates’ current and former employees who meet certain eligibility criteria.
PSEG, PSE&G and PSEG Power are required to record the under or over funded positions of their defined benefit pension and OPEB plans on their respective balance sheets. Such funding positions of each PSEG company are required to be measured as of the date of their respective year-end Consolidated Balance Sheets.
The following table provides the components of net periodic benefit costscredits relating to all qualified and nonqualified pension and OPEB plans on an aggregate basis for PSEG, excluding Servco. Amounts shown do not reflect the impacts of capitalization and co-owner allocations. Only the service cost component is eligible for capitalization, when applicable.
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Pension BenefitsOPEBPension BenefitsOPEB
Three Months EndedThree Months EndedNine Months EndedNine Months Ended
September 30,September 30,September 30,September 30,
20202019202020192020201920202019
Millions
Components of Net Periodic Benefit (Credits) Costs
Service Cost (included in O&M Expense)$36 $33 $2 $2 $106 $90 $7 $7 
Non-Service Components of Pension and OPEB (Credits) Costs
Interest Cost48 51 8 12 144 167 25 34 
Expected Return on Plan Assets(111)(108)(10)(9)(332)(301)(29)(27)
Amortization of Net
Prior Service Credit(3)(4)(32)(32)(8)(13)(96)(96)
Actuarial Loss23 21 12 13 69 75 35 38 
Non-Service Components of Pension and OPEB (Credits) Costs(43)(40)(22)(16)(127)(72)(65)(51)
Total Benefit (Credits) Costs$(7)$(7)$(20)$(14)$(21)$18 $(58)$(44)
Pension BenefitsOPEBPension BenefitsOPEB
Three Months EndedThree Months EndedSix Months EndedSix Months Ended
June 30,June 30,June 30,June 30,
20212020202120202021202020212020
Millions
Components of Net Periodic Benefit (Credits) Costs
Service Cost (included in O&M Expense)$38 $35 $2 $3 $76 $70 $4 $5 
Non-Service Components of Pension and OPEB (Credits) Costs
Interest Cost35 48 6 8 70 96 11 17 
Expected Return on Plan Assets(119)(110)(11)(9)(238)(221)(21)(19)
Amortization of Net
Prior Service Credit0 (3)(32)(32)0 (5)(64)(64)
Actuarial Loss25 23 11 11 51 46 22 23 
Non-Service Components of Pension and OPEB (Credits) Costs(59)(42)(26)(22)(117)(84)(52)(43)
Total Benefit (Credits) Costs$(21)$(7)$(24)$(19)$(41)$(14)$(48)$(38)
Pension and OPEB (credits) costscredits for PSE&G, PSEG Power and PSEG’s other subsidiaries, excluding Servco, are detailed as follows:
Pension BenefitsOPEBPension BenefitsOPEB
Three Months EndedThree Months EndedNine Months EndedNine Months Ended
September 30,September 30,September 30,September 30,
20202019202020192020201920202019
Millions
PSE&G$(7)$(6)$(19)$(14)$(20)$7 $(57)$(46)
PSEG Power(1)(2)0 0 (4)5 0 2 
Other1 1 (1)0 3 6 (1)0 
Total Benefit (Credits) Costs$(7)$(7)$(20)$(14)$(21)$18 $(58)$(44)
Pension BenefitsOPEBPension BenefitsOPEB
Three Months EndedThree Months EndedSix Months EndedSix Months Ended
June 30,June 30,June 30,June 30,
20212020202120202021202020212020
Millions
PSE&G$(16)$(6)$(23)$(19)$(32)$(13)$(46)$(38)
PSEG Power(5)(2)0 0 (9)(3)(1)0 
Other0 1 (1)0 0 2 (1)0 
Total Benefit (Credits) Costs$(21)$(7)$(24)$(19)$(41)$(14)$(48)$(38)
PSEG does not plan to contribute to its pension and OPEB plans in 2020. IRS minimum funding requirements for pension plans are determined based on the fund’s assets and liabilities at the end of a calendar year for the subsequent calendar year. As a result, the market downturn associated with the ongoing coronavirus pandemic is not expected to impact PSEG’s pension contributions in 2020.2021.
Servco Pension and OPEB
At the direction of LIPA, Servco sponsors benefit plans that cover its current and former employees who meet certain eligibility criteria. Under the OSA, all of these and any future employee benefit costs are to be funded by LIPA. See Note 5. Variable Interest Entity.Entities. These obligations, as well as the offsetting long-term receivable, are separately presented on the Condensed Consolidated Balance Sheet of PSEG.
Servco amounts are not included in any of the preceding pension and OPEB cost disclosures. Pension and OPEB costs of Servco are accounted for according to the OSA. Servco recognizes expenses for contributions to its pension plan trusts and for OPEB payments made to retirees. Operating Revenues are recognized for the reimbursement of these costs. As of September 30, 2020, Servco completed its entire 2020 annual planned contributionplans to contribute $37 million into its pension plan. IRS minimum funding requirements for pension plans are determined based on the fund’s assetsplan during 2021.Servco’s pension-related revenues and liabilities at the end of a calendar yearcosts were $10 million and $7 million for the subsequent calendar year. As a result,three months ended June 30, 2021 and 2020, and $19 million and $15 million for the market downturn associated withsix months ended June 30, 2021 and 2020, respectively. The OPEB-related revenues earned and costs incurred were $2 million for each of the ongoing coronavirus pandemic did not impactthree months ended June 30, 2021 and 2020, and $5 million and $4 million for the six months ended June 30, 2021 and 2020, respectively.

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Servco’s pension contributions in 2020.Servco’s pension-related revenues and costs were $15 million and $14 million for the three months ended September 30, 2020 and 2019, respectively, and $30 million and $28 million for the nine months ended September 30, 2020 and 2019, respectively. The OPEB-related revenues earned and costs incurred were $3 million and $1 million for the three months ended September 30, 2020 and 2019, and $7 million and $4 million for the nine months ended September 30, 2020 and 2019, respectively.

Note 11. Commitments and Contingent Liabilities
Guaranteed Obligations
PSEG Power’s activities primarily involve the purchase and sale of energy and related products under transportation, physical, financial and forward contracts at fixed and variable prices. These transactions are with numerous counterparties and brokers that may require cash, cash-related instruments or guarantees as a form of collateral.
PSEG Power has unconditionally guaranteed payments to counterparties on behalf of its subsidiaries in commodity-related transactions in order to
•support current exposure, interest and other costs on sums due and payable in the ordinary course of business, and
•obtain credit.
PSEG Power is subject to
•counterparty collateral calls related to commodity contracts of its subsidiaries, and
•certain creditworthiness standards as guarantor under performance guarantees of its subsidiaries.
Under these agreements, guarantees cover lines of credit between entities and are often reciprocal in nature. The exposure between counterparties can move in either direction.
In order for PSEG Power to incur a liability for the face value of the outstanding guarantees,
•its subsidiaries would have to fully utilize the credit granted to them by every counterparty to whom PSEG Power has provided a guarantee, and
•the net position of the related contracts would have to be “out-of-the-money” (if the contracts are terminated, PSEG Power would owe money to the counterparties).
PSEG Power believes the probability of this result is unlikely. For this reason, PSEG Power believes that the current exposure at any point in time is a more meaningful representation of the potential liability under these guarantees. Current exposure consists of the net of accounts receivable and accounts payable and the forward value on open positions, less any collateral posted.
Changes in commodity prices can have a material impact on collateral requirements under such contracts, which are posted and received primarily in the form of cash and letters of credit. PSEG Power also routinely enters into futures and options transactions for electricity and natural gas as part of its operations. These futures contracts usually require a cash margin deposit with brokers, which can change based on market movement and in accordance with exchange rules.
In addition to the guarantees discussed above, PSEG Power has also provided payment guarantees to third parties and regulatory authorities on behalf of its affiliated companies. These guarantees support various other non-commodity related obligations.
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The following table shows the face value of PSEG Power’s outstanding guarantees, current exposure and margin positions as of SeptemberJune 30, 20202021 and December 31, 2019.2020.
As ofAs of
September 30, 2020December 31, 2019
Millions
Face Value of Outstanding Guarantees$1,828 $1,854 
Exposure under Current Guarantees$86 $171 
Letters of Credit Margin Posted$135 $121 
Letters of Credit Margin Received$42 $29 
Cash Deposited and Received:
Counterparty Cash Collateral Deposited$0 $0 
Counterparty Cash Collateral Received$(1)$(4)
  Net Broker Balance Deposited (Received)$57 $48 
Additional Amounts Posted:
Other Letters of Credit$52 $82 
As ofAs of
June 30, 2021December 31, 2020
Millions
Face Value of Outstanding Guarantees$1,830 $1,792 
Exposure under Current Guarantees$122 $128 
Letters of Credit Margin Posted$85 $128 
Letters of Credit Margin Received$28 $45 
Cash Deposited and Received
Counterparty Cash Collateral Deposited$5 $0 
Counterparty Cash Collateral Received$(1)$(5)
  Net Broker Balance Deposited (Received)$339 $59 
Additional Amounts Posted
Other Letters of Credit$42 $42 
As part of determining credit exposure, PSEG Power nets receivables and payables with the corresponding net fair values of energy contracts. See Note 13. Financial Risk Management Activities for further discussion. In accordance with PSEG’s accounting policy, where it is applicable, cash (received)/deposited is allocated against derivative asset and liability positions with the same counterparty on the face of the Condensed Consolidated Balance Sheet. The remaining balances of net cash (received)/deposited after allocation are generally included in Accounts Payable and Receivable, respectively.
In addition to amounts for outstanding guarantees, current exposure and margin positions, PSEG and PSEG Power have posted letters of credit to support PSEG Power’s various other non-energy contractual and environmental obligations. See the preceding table.
Environmental Matters
Passaic River
Lower Passaic River Study Area    
The U.S. Environmental Protection Agency (EPA) has determined that a 17-mile stretch of the Passaic River (Lower Passaic River Study Area (LPRSA)) in New Jersey is a “Superfund” site under the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA). PSE&G and certain of its predecessors conducted operations at properties in this area, including at 1 site that was transferred to PSEG Power.
Certain Potentially Responsible Parties (PRPs), including PSE&G and PSEG Power, formed a Cooperating Parties Group (CPG) and agreed to conduct a Remedial Investigation and Feasibility Study of the LPRSA. The CPG allocated, on an interim basis, the associated costs among its members. The interim allocation is subject to change. In June 2019, the EPA conditionally approved the CPG’s Remedial Investigation. In MayDecember 2020, the CPG submitted a revised draftEPA conditionally approved the CPG’s Feasibility Study (FS) to the EPA, which evaluated various adaptive management scenarios for the remediation of only the upper 9 miles of the LPRSA and incorporatedLPRSA. In April 2021, the EPA’s comments on an earlier FS draft. The EPA’sEPA announced the tentative selection of its preferred adaptive management scenario will be subject to public review and comment prior tofor the EPA’s announcement of aupper 9 miles from the options presented in the FS. A final selection which is expected in the latter half of 2021.
Separately, the EPA has released a Record of Decision (ROD) for the LPRSA’s lower 8.3 miles that requires the removal of sediments at an estimated cost of $2.3 billion (ROD Remedy). An EPA-commenced process to allocate the associated costs is underway and PSEG cannot predict the outcome. The allocation does not address certain costs incurred by the EPA for which they may be entitled to reimbursement and which may be material. Occidental Chemical Corporation, (OCC), one of the PRPs, has commenced the design of the ROD Remedy, but declined to participate in the allocation process. Instead, it filed suit against PSE&G and others seeking cost recovery and contribution under CERCLA but has not quantified alleged damages. The litigation is ongoing and PSEG cannot predict the outcome.
Two PRPs, Tierra Solutions, Inc. (Tierra) and Maxus Energy Corporation (Maxus), have filed for Chapter 11 bankruptcy. The trust representing the creditors in this proceeding has filed a complaint asserting claims against Tierra’s and Maxus’ current and former parent entities, among others. Any damages awarded may be used to fund the remediation of the LPRSA.
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As of SeptemberJune 30, 2020,2021, PSEG has approximately $65$66 million accrued for this matter. Of this amount, PSE&G has an Environmental Costs Liability of $52$53 million and a corresponding Regulatory Asset based on its continued ability to recover such costs in its rates. PSEG Power has an Other Noncurrent Liability of $13 million.
The outcome of this matter is uncertain, and until (i) a final remedy for the entire LPRSA is selected and an agreement is reached by the PRPs to fund it, (ii) PSE&G’s and PSEG Power’s respective shares of the costs are determined, and (iii) PSE&G’s ability to recover the costs in its rates is determined, it is not possible to predict this matter’s ultimate impact on PSEG’s financial statements. It is possible that PSE&G and PSEG Power will record additional costs beyond what they have accrued, and that such costs could be material, but PSEG cannot at the current time estimate the amount or range of any additional costs.
Natural Resource Damage Claims
New Jersey and certain federal regulators have alleged that PSE&G, PSEG Power and 56 other PRPs may be liable for natural resource damages within the LPRSA. In particular, PSE&G, PSEG Power and other PRPs received notice from federal regulators of the regulators’ intent to move forward with a series of studies assessing potential damages to natural resources at the Diamond Alkali Superfund Site, which includes the LPRSA and the Newark Bay Study Area. PSE&G and PSEG Power are unable to estimate their respective portions of any possible loss or range of loss related to this matter.
Newark Bay Study Area
The EPA has established the Newark Bay Study Area, which is an extension of the LPRSA and includes Newark Bay and portions of surrounding waterways. The EPA has notified PSEG and 11 other PRPs of their potential liability. PSE&G and PSEG Power are unable to estimate their respective portions of any loss or possible range of loss related to this matter. In December 2018, PSEG Power completed the sale of the site of the Hudson electric generating station. PSEG Power contractually transferred all land rights and structures on the Hudson site to a third-party purchaser, along with the assumption of the environmental liabilities for the site.
Natural Resource Damage Claims
New Jersey and certain federal regulators have alleged that PSE&G, PSEG Power and 56 other PRPs may be liable for natural resource damages within the LPRSA. In particular, PSE&G, PSEG Power and other PRPs received notice from federal regulators of the regulators’ intent to move forward with a series of studies assessing potential damages to natural resources at the Diamond Alkali Superfund Site, which includes the LPRSA and the Newark Bay Study Area. PSE&G and PSEG Power are unable to estimate their respective portions of any possible loss or range of loss related to this matter.
Manufactured Gas Plant (MGP) Remediation Program
PSE&G is working with the New Jersey Department of Environmental Protection (NJDEP) to assess, investigate and remediate environmental conditions at its former MGP sites. To date, 38 sites requiring some level of remedial action have been identified. Based on its current studies, PSE&G has determined that the estimated cost to remediate all MGP sites to completion could range between $339$271 million and $377$309 million on an undiscounted basis, through2023, including its $52$53 million share for the Passaic River as discussed above. Since no amount within the range is considered to be most likely, PSE&G has recorded a liability of $339$271 million as of SeptemberJune 30, 2020.2021. Of this amount, $78$89 million was recorded in Other Current Liabilities and $261$182 million was reflected as Environmental Costs in Noncurrent Liabilities. PSE&G has recorded a $339$271 million Regulatory Asset with respect to these costs. PSE&G periodically updates its studies taking into account any new regulations or new information which could impact future remediation costs and adjusts its recorded liability accordingly. PSE&G is conductingcompleted sampling in the Passaic River to delineate coal tar from certain MGP sites that abut the Passaic River Superfund site. PSEG cannot determine at this time whether this will have anthe magnitude of any impact on the Passaic River Superfund remedy.
Clean Water Act (CWA)CWA Section 316(b) Rule
The EPA’s CWA Section 316(b) rule establishes requirements for the regulation of cooling water intakes at existing power plants and industrial facilities with a design flow of more than two million gallons of water per day. The EPA requires that National Pollutant Discharge Elimination System permits be renewed every five years and that each state Permitting Director manage renewal permits for its respective power generation facilities on a case by case basis. The NJDEP manages the permits under the New Jersey Pollutant Discharge Elimination System (NJPDES) program. Connecticut and New York also have permits to manage their respective pollutant discharge elimination system programs.
In June 2016, the NJDEP issued a final NJPDES permit for Salem. In July 2016, the Delaware Riverkeeper Network (Riverkeeper) filed an administrative hearing request challenging certain conditions of the permit, including the NJDEP’s application of the 316(b) rule. If the Riverkeeper’s challenge is successful, PSEG Power may be required to incur additional costs to comply with the CWA. Potential cooling water and/or service water system modification costs could be material and could adversely impact the economic competitiveness of this facility. The NJDEP had granted the hearing request but no hearing date has been established.
Jersey City, New Jersey Subsurface Feeder Cable Matter
In October 2016, a discharge of dielectric fluid from subsurface feeder cables located in the Hudson River near Jersey City, New Jersey, was identified and reported to the NJDEP. The feeder cables are located within a subsurface easement granted to PSE&G by the property owners, Newport Associates Development Company (NADC) and Newport Associates Phase I
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Developer Limited Partnership. The feeder cables are subject to agreements between PSE&G and Consolidated Edison Company of New York, Inc. (Con Edison) and are jointly owned by PSE&G and Con Edison. The impacted cable was repaired in September 2017. A federal response was initially led by the U.S. Coast Guard. The U.S. Coast Guard transitioned control of the federal response to the EPA, and the EPA ended the federal response to the matter in 2018. The investigation of small amounts of residual dielectric fluid believed to be contained with the marina sediment is ongoing as part of the NJDEP site remediation program. In August 2020, PSE&G finalized a settlement with the federal government regarding the reimbursement of costs associated with the federal response to this matter and payment of civil penalties of an immaterial amount.
A lawsuit in federal court is pending to determine ultimate responsibility for the costs to address the leak among PSE&G, Con Edison and NADC. In addition, Con Edison filed counter claims against PSE&G and NADC, including seeking injunctive relief and damages. Based on the information currently available and depending on the outcome of the federal court action, PSE&G’s portion of the costs to address the leak may be material; however, PSE&G anticipates that it will recover its costs, other than civil penalties, through regulatory proceedings.
Basic Generation Service (BGS), BGSS and ZECs
Each year, PSE&G obtains its electric supply requirements through the annual New Jersey BGS auctions for two categories of customers whothat choose not to purchase electric supply from third-party suppliers. The first category, which represents about 80%82% of PSE&G’s load requirement, is residential and smaller commercial and industrial customers (BGS-Residential Small Commercial Pricing (RSCP)). The second category is larger customers that exceed a BPU-established load (kW) threshold (BGS-Commercial and Industrial Energy Pricing (CIEP)). Pursuant to applicable BPU rules, PSE&G enters into the Supplier Master AgreementAgreements with the winners of these RSCP and CIEP BGS auctions following the BPU’s approval of the auction results. PSE&G has entered into contracts with winning BGS suppliers, including PSEG Power, to purchase BGS for PSE&G’s load requirements. The winners of the auction (including PSEG Power) areRSCP and CIEP auctions have been responsible for fulfilling all the requirements of a PJM Load-Serving Entityload-serving entity including the provision of capacity, energy, ancillary services, transmission and any other services required by PJM. BGS suppliers assume all volume risk and customer migration risk and must satisfy New Jersey’s renewable portfolio standards. Beginning with the 2021 BGS auction, transmission became the responsibility of the New Jersey EDCs, and is no longer a component of the BGS auction product for either the RSCP or CIEP auctions. BGS suppliers serving load from the 2018, 2019 and 2020 BGS auctions had the option to transfer the transmission obligation to the New Jersey EDCs as of February 2021. Suppliers that did so have their total BGS payment from the EDCs reduced to reflect the transfer of the transmission obligation to the EDCs.
The BGS-CIEP auction is for a one-year supply period from June 1 to May 31 with the BGS-CIEP auction price measured in dollars per MW-day for capacity. The final price for the BGS-CIEP auction year commencing June 1, 20202021 is $359.98$351.06 per MW-day, replacing the BGS-CIEP auction year price ending May 31, 20202021 of $281.78$359.98 per MW-day. Energy for BGS-CIEP is priced at hourly PJM locational marginal prices for the contract period.
PSE&G contracts for its anticipated BGS-RSCP load on a three-year rolling basis, whereby each year one-third of the load is procured for a three-year period. The contract prices in dollars per MWh for the BGS-RSCP supply, as well as the approximate load, are as follows:
Auction Year
2017201820192020
36-Month Terms EndingMay 2020May 2021May 2022May 2023(A) 
Load (MW)2,8002,9002,8002,800
$ per MWh$90.78$91.77$98.04$102.16
Auction Year
2018201920202021
36-Month Terms EndingMay 2021May 2022May 2023May 2024(A) 
Load (MW)2,9002,8002,8002,900
$ per MWh$91.77$98.04$102.16$64.80
(A)Prices set in the 20202021 BGS auction became effective on June 1, 20202021 when the 20172018 BGS auction agreements expired.
PSEG Power seeks to mitigate volatility in its results by contracting in advance for the sale of most of its anticipated electric output as well as its anticipated fuel needs. As part of its objective, PSEG Power has entered into contracts to directly supply PSE&G and other New Jersey EDCs with a portion of their respective BGS requirements through the New Jersey BGS auction process, described above.
PSE&G has a full-requirements contract with PSEG Power to meet the gas supply requirements of PSE&G’s gas customers. PSEG Power has entered into hedges for a portion of these anticipated BGSS obligations, as permitted by the BPU. The BPU permits PSE&G to recover the cost of gas hedging up to 115 billion cubic feet or 80% of its residential gas supply annual requirements through the BGSS tariff. Current plans call for PSEG Power to hedge on behalf of PSE&G approximately 70 billion cubic feet or 50% of its residential gas supply annual requirements. For additional information, see Note 20. Related-Party Transactions.
Pursuant to a process established by the BPU, New Jersey EDCs, including PSE&G, are required to purchase ZECs from eligible nuclear plants selected by the BPU. In April 2019, PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants were selected to receive ZEC revenue for approximately three years, through May 2022. In April 2021, PSEG Power’s Salem 1,
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Salem 2 and Hope Creek nuclear plants were selected to receive ZEC revenueawarded ZECs for approximately three years, through Maythe three-year eligibility period starting June 2022. PSE&G has implemented a tariff to collect a non-bypassable distribution charge in the amount of $0.004 per KWh from its retail distribution customers to be used to purchase the ZECs from these plants. PSE&G will purchase the ZECs on a monthly basis with payment to be made annually following completion of each energy year. The legislation also requires nuclear plants to reapply for any subsequent three-year periods and allows the BPU to adjust prospective ZEC payments.
Minimum Fuel Purchase Requirements
PSEG Power’s nuclear fuel strategy is to maintain certain levels of uranium and to make periodic purchases to support such levels. As such, the commitments referred to in the following table may include estimated quantities to be purchased that deviate from contractual nominal quantities. PSEG Power’s nuclear fuel commitments cover approximately 100% of its estimated uranium, enrichment and fabrication requirements through 20212022 and a significant portion through 20222023 at Salem, Hope Creek and Peach Bottom.
PSEG Power has various multi-year contracts for natural gas and firm transportation and storage capacity for natural gas that are primarily used to meet its obligations to PSE&G. When there is excess delivery capacity available beyond the needs of PSE&G’s customers, PSEG Power can use the gas to supply its fossil generating stations in New Jersey.
As of SeptemberJune 30, 2020,2021, the total minimum purchase requirements included in these commitments were as follows:
Fuel TypePSEG Power’s Share of Commitments through 20242025
Millions
Nuclear Fuel
Uranium$180194 
Enrichment$279314 
Fabrication$152170 
Natural Gas$1,1641,196 
Pending FERC Matter
PSE&G has received requestssubpoenas for information and a Notice of Investigation from FERC’s Office of Enforcement concerning athe Roseland-Pleasant Valley transmission project. PSE&G retained outside counsel to assist with an internal investigation. PSE&G is fully cooperating with FERC’s requests for information and the investigation. It is not possible at this time to predict the outcome of this matter.
Pending Tropical Storm Matter
Following the effects of Tropical Storm Isaias, the New York Attorney General initiated an inquiry into PSEG LI’s preparation and response to the storm. In addition, the Department of Public Service (DPS) within the New York State Public Service Commission launched an investigation of statethe state’s electric service providers,providers’, including PSEG LI, and other state telephone, cable and internet providers into theirLI’s, preparation and restoration efforts following Tropical Storm Isaias.response to the storm. The DPS issued an interim storm investigation report finding that PSEG LI violated its Emergency Response Plan and DPS Regulations, and recommended that LIPA consider taking various actions, including terminating or renegotiating the OSA. LIPA also initiated its own review ofissued a report with recommendations for improvements to PSEG LI’s performance.structure and processes, and recommended that LIPA either renegotiate or terminate the OSA.
In agreement with LIPA, PSEG LI agreed with LIPA that it would fundfunded approximately $7 million in claims by customers for food and medication spoilage costs incurred as a result of being without electric service during the storm upstorm.
In December 2020, LIPA filed a complaint against PSEG LI in New York State court alleging multiple breaches of the OSA in connection with PSEG LI’s preparation for and response to Tropical Storm Isaias seeking specific performance and $70 million in damages. In June 2021, LIPA and PSEG LI executed a non-binding term sheet, which is expected to guide amendments to the amountOSA. The term sheet includes several changes to the OSA, including shifting a portion of PSEG LI’s fixed revenues to incentive compensation earnedand subjecting a portion of revenue to the potential imposition of penalties by the DPS due to certain performance failures by PSEG LI, in 2020. and resolves all of LIPA’s claims related to Tropical Storm Isaias and the DPS investigation. Any amendments to the OSA will require the approval of the New York Attorney General and the New York Comptroller. The OSA contract term will continue through 2025, with a mutual option to extend. No assurances can be given regarding reaching final settlement agreement, obtaining New York approvals and the closing of the inquiry by the Attorney General.
In the event that a final settlement with LIPA is not reached,PSEG LI does not expectintends to vigorously defend itself with regard to the claims to be material.allegations in LIPA’s complaint alleging breaches of the OSA. A decision in this proceeding requiring specific performance or
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the payment of damages by PSEG LI is fully cooperatingor resulting in eachthe termination of these inquiries, which remain ongoing. PSEG LI cannot predict their outcome.the OSA could have a material adverse effect on PSEG’s results of operations and financial condition.
Pending BPU Audit of PSE&G
In September 2020, the BPU ordered the commencement of a comprehensive affiliate and management audit of PSE&G. It has been more than ten years since the BPU last conducted a management and affiliate audit of this kind of PSE&G, which is initiated periodically as required by New Jersey statutes/regulations. Phase 1 of the planned audit will review affiliate relations and cost allocation between PSE&G and its affiliates, including an analysis of the relationship between PSE&G and PSEG Energy Resources & Trade, LLC, a wholly owned subsidiary of PSEG Power over the past ten years, and between PSE&G and PSEG LI. Phase 2 will be a comprehensive management audit, which will address, among other things, executive management, corporate governance, system operations, human resources, cyber security, compliance with customer protection requirements and customer safety. The audit officially began in late May 2021 and is in the data collection phase. It is not possible at this time to predict the outcome of this matter.
Litigation
Sewaren 7 Construction
In June 2018, a complaint was filed in federal court in Newark, New Jersey against PSEG Fossil LLC, a wholly owned
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subsidiary of PSEG Power, regarding an ongoing dispute with Durr Mechanical Construction, Inc. (Durr), a contractor on the Sewaren 7 project. Among other things, Durr seeks damages of $93 million and alleges that PSEG Power withheld money owed to Durr and that PSEG Power’s intentional conduct led to the inability of Durr to obtain prospective contracts. PSEG Power intends to vigorously defend against these allegations. In January 2021, the court partially granted PSEG Power’s motion to dismiss certain claims, reducing the amount claimed to $68 million. In December 2018, Durr filed for Chapter 11 bankruptcy in the federal court in the Southern District of New York (SDNY). The SDNY bankruptcy court has allowed the New Jersey litigation to proceed. PSEG Power has accrued an amount related to outstanding invoices which does not reflect an assessment of claims and potential counterclaims in this matter. Due to its preliminary nature, PSEG Power cannot predict the outcome of this matter.
Other Litigation and Legal Proceedings
PSEG and its subsidiaries are party to various lawsuits in the ordinary course of business. In view of the inherent difficulty in predicting the outcome of such matters, PSEG, PSE&G and PSEG Power generally cannot predict the eventual outcome of the pending matters, the timing of the ultimate resolution of these matters, or the eventual loss, fines or penalties related to each pending matter.
In accordance with applicable accounting guidance, a liability is accrued when those matters present loss contingencies that are both probable and reasonably estimable. In such cases, there may be an exposure to loss in excess of any amounts accrued. PSEG will continue to monitor the matter for further developments that could affect the amount of the accrued liability that has been previously established.
Based on current knowledge, management does not believe that loss contingencies arising from pending matters, other than the matters described herein, could have a material adverse effect on PSEG’s, PSE&G’s or PSEG Power’s consolidated financial position or liquidity. However, in light of the inherent uncertainties involved in these matters, some of which are beyond PSEG’s control, and the large or indeterminate damages sought in some of these matters, an adverse outcome in one or more of these matters could be material to PSEG’s, PSE&G’s or PSEG Power’s results of operations or liquidity for any particular reporting period.
Ongoing Coronavirus Pandemic
PSE&G, PSEG Power and PSEG LI are providing essential services during this national emergency related to the ongoing coronavirus (COVID-19) pandemic. The ongoing coronavirusCOVID-19 pandemic and associated government actions and economic effects continue to impact our businesses. PSEG and its subsidiaries have incurred additional expenses to protect our employees and customers, and PSE&G is experiencing significantly higher bad debts and lower cash collections from customers due to the moratorium on shutoffs for residential customers that has not had a materialbeen extended through December 31, 2021. PSE&G has deferred the impact on our results of operations, financial condition or cash flowsthese costs for the nine months ended September 30, 2020. However, thefuture recovery. The potential future impact of the pandemic and the associated economic impacts, which could extend beyond the duration of the pandemic, could have risks that drive certain accounting considerations. The ultimate impact of the ongoing coronavirus pandemic is highly uncertain and cannot be predicted at this time.
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Note 12. Debt and Credit Facilities
Long-Term Debt Financing Transactions
The following long-term debt transactions occurred in the ninesix months ended SeptemberJune 30, 2020:
PSEG
•issued $550 million of 0.80% Senior Notes due August 2025, and
•issued $550 million of 1.60% Senior Notes due August 2030.2021:
PSE&G
•issued $300$450 million of 2.45%0.95% Secured Medium-Term Notes, Series N, due January 2030,March 2026,
•issued $300$450 million of 3.15%3.00% Secured Medium-Term Notes, Series N, due January 2050,March 2051,
•issued $375retired $300 million of 2.70% Secured1.90% Medium-Term Notes, Series N, due May 2050,
•issued $375 million of 2.05% Secured Medium-Term Notes, Series N, due August 2050,K, at maturity, and
•retired $250$134 million of 3.50% Medium-Term Notes,9.25% Mortgage Bonds, Series G,CC, at maturity.
PSEG Power
•retired $406redeemed in May at par $700 million of 5.13%3.00% Senior Notes at maturity.
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•redeemed in June at par $250 million of 4.15% Senior Notes due to mature in September 2021.
In August 2021, PSEG Power redeemed its $44 million of Pennsylvania Economic Development Financing Authority Variable Rate Bonds.
Debt Covenants
PSEG Power’s existing credit agreements and senior notes contain covenants restricting the ability of PSEG Power and its subsidiaries that guarantee its indebtedness from consummating certain mergers, consolidations or asset sales. The disposal of PSEG Power’s non-nuclear generating fleet could trigger a default under one or more of these provisions. For these reasons, or for other reasons, PSEG Power would expect to redeem its outstanding senior notes, at a price equal to the principal amount thereof plus a make-whole premium. Any actual redemption price would depend on the applicable treasury rate in effect at such time and the cost of such redemption would be material. In March 2021, PSEG Power and its subsidiaries received waivers from the lenders and the administrative agent under their existing credit agreements permitting them to divest, in one or more transactions, some or all of its and its subsidiaries’ non-nuclear assets without breaching the terms of the agreements.
Short-Term Liquidity
PSEG meets its short-term liquidity requirements, as well as those of PSEG Power, primarily through the issuance of commercial paper and, from time to time, short-term loans. PSE&G maintains its own separate commercial paper program to meet its short-term liquidity requirements. Each commercial paper program is fully back-stopped by its own separate credit facilities.
The commitments under the $4.2 billion credit facilities are provided by a diverse bank group. As of SeptemberJune 30, 2020,2021, the total available credit capacity was $4.0$3.9 billion.
As of SeptemberJune 30, 2020,2021, no single institution represented more than 9% of the total commitments in the credit facilities.
As of SeptemberJune 30, 2020,2021, total credit capacity was in excess of the total anticipated maximum liquidity requirements over PSEG’s 12-month planning horizon.horizon, including access to external financing to meet redemptions.
Each of the credit facilities is restricted as to availability and use to the specific companies as listed in the following table; however, if necessary, the PSEG facilities can also be used to support its subsidiaries’ liquidity needs.
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The total credit facilities and available liquidity as of SeptemberJune 30, 20202021 were as follows:
As of September 30, 2020
Company/FacilityTotal
Facility		Usage (D)Available
Liquidity		Expiration
Date		Primary Purpose
Millions
PSEG
  5-year Credit Facilities (A)$1,500 $13 $1,487 Mar 2024Commercial Paper Support/Funding/Letters of Credit
Total PSEG$1,500 $13 $1,487 
PSE&G
  5-year Credit Facility (B)$600 $17 $583 Mar 2024Commercial Paper Support/Funding/Letters of Credit
Total PSE&G$600 $17 $583 
PSEG Power
  3-year Letter of Credit Facilities$200 $136 $64 Sept 2021Letters of Credit
  5-year Credit Facilities (C)1,900 39 1,861 Mar 2024Funding/Letters of Credit
Total PSEG Power$2,100 $175 $1,925 
Total$4,200 $205 $3,995 
As of June 30, 2021
Company/FacilityTotal
Facility		Usage (D)Available
Liquidity		Expiration
Date		Primary Purpose
Millions
PSEG
  5-year Credit Facilities (A)$1,500 $202 $1,298 Mar 2024Commercial Paper Support/Funding/Letters of Credit
Total PSEG$1,500 $202 $1,298 
PSE&G
  5-year Credit Facility (B)$600 $18 $582 Mar 2024Commercial Paper Support/Funding/Letters of Credit
Total PSE&G$600 $18 $582 
PSEG Power
  3-year Letter of Credit Facility (E)$100 $0 $100 Sept 2021Letters of Credit
  3-year Letter of Credit Facility100 86 14 Sept 2022Letters of Credit
  5-year Credit Facilities (C)1,900 39 1,861 Mar 2024Funding/Letters of Credit
Total PSEG Power$2,100 $125 $1,975 
Total$4,200 $345 $3,855 
(A)PSEG facilities will be reduced by $9 million in March 2022.
(B)PSE&G facility will be reduced by $4 million in March 2022.
(C)PSEG Power facilities will be reduced by $12 million in March 2022.
(D)The primary use of PSEG’s and PSE&G’s credit facilities is to support their respective Commercial Paper Programs, under which as of SeptemberJune 30, 2020,2021, PSEG andhad $200 million outstanding at a weighted average interest rate of 0.23%. PSE&G had no commercial paper outstanding.Commercial Paper outstanding as of June 30, 2021.
Except as otherwise noted in the table above, in March 2020, PSEG, PSE&G and (E)PSEG Power and their respective lenders agreed to extend the expiration dates on theirletter of credit agreements from March 2023 to March 2024.facility was terminated in July 2021.
Short-Term Loans
PSEG
In May and March 2021, PSEG entered into two 364-day variable rate term loan agreements for $750 million and $500 million, respectively. In March 2020, PSEG entered into a $300 million, 364-day variable rate term loan agreement. In April 2020, PSEG entered into two 364-day variable rate term loan agreements for $200 million and $300 millionagreement which werewas prepaid in August 2020.January 2021.
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Note 13. Financial Risk Management Activities
Derivative accounting guidance requires that a derivative instrument be recognized as either an asset or a liability at fair value, with changes in fair value of the derivative recognized in earnings each period. Other accounting treatments are available through special election and designation provided that the derivative instrument meets specific, restrictive criteria, both at the time of designation and on an ongoing basis. These alternative permissible treatments include normal purchases and normal sales (NPNS), cash flow hedge and fair value hedge accounting. PSEG, PSEG Power and PSE&G have applied the NPNS scope exception to certain derivative contracts for the forward sale of generation, power procurement agreements and fuel agreements. PSEG uses interest rate swaps and other derivatives, which are designated and qualifying as cash flow or fair value hedges. PSEG Power enters into additional contracts that are derivatives, but are not designated as either cash flow hedges or fair value hedges. These transactions are economic hedges and are recorded at fair market value with changes recognized in earnings.
Commodity Prices
Within PSEG and its affiliate companies, PSEG Power has the most exposure to commodity price risk. PSEG Power is exposed to commodity price risk primarily relating to changes in the market price of electricity, fossil fuels and other commodities. Fluctuations in market prices result from changes in supply and demand, fuel costs, market conditions, weather, state and federal regulatory policies, environmental policies, transmission availability and other factors. PSEG Power uses a variety of
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derivative and non-derivative instruments, such as financial options, futures, swaps, fuel purchases and forward purchases and sales of electricity, to manage the exposure to fluctuations in commodity prices and optimize the value of PSEG Power’s expected generation. PSEG Power also uses derivatives to hedge a portion of its anticipated BGSS obligations with PSE&G. For additional information see Note 11. Commitments and Contingent Liabilities. Changes in the fair market value of these derivative contracts are recorded in earnings.
Interest Rates
PSEG, PSEG Power and PSE&G are subject to the risk of fluctuating interest rates in the normal course of business. Exposure to this risk is managed by targeting a balanced debt maturity profile which limits refinancing in any given period or interest rate environment. In addition, they have used a mix of fixed and floating rate debt and interest rate swaps.
Fair Value Hedges
PSEG enters into fair value hedges to convert fixed-rate debt into variable-rate debt. The changes in fair value of the interest rate swaps are fully offset by changes in the fair value of the underlying forecasted interest payments of the debt. There were no outstanding fair value interest rate swaps as of September 30, 2020 and December 31, 2019.
Cash Flow Hedges
PSEG uses interest rate swaps and other derivatives, which are designated and effective as cash flow hedges, to manage its exposure to the variability of cash flows, primarily related to variable-rate debt instruments. As of September 30, 2020, PSEG had interest rate hedges outstanding totaling $700 million. These hedges convert PSEG’s $700 million variable-rate term loan due November 2020 into a fixed-rate loan.
The fair value of these hedges was $(2) million and $(5) million as of September 30, 2020 and December 31, 2019, respectively. The Accumulated Other Comprehensive Income (Loss) (after tax) related to outstanding and terminated interest rate derivatives designated as cash flow hedges was $(11)$(8) million and $(15)$(9) million as of SeptemberJune 30, 20202021 and December 31, 2019,2020, respectively. The after-tax unrealized losses on these hedges expected to be reclassified to earnings during the next 12 months are $(4)$(3) million.
Fair Values of Derivative Instruments
The following are the fair values of derivative instruments on the Condensed Consolidated Balance Sheets. The following tables also include disclosures for offsetting derivative assets and liabilities which are subject to a master netting or similar agreement. In general, the terms of the agreements provide that in the event of an early termination the counterparties have the right to offset amounts owed or owing under that and any other agreement with the same counterparty. Accordingly, and in accordance with PSEG’s accounting policy, these positions are offset on the Condensed Consolidated Balance Sheets of PSEG Power and PSEG. For additional information see Note 14. Fair Value Measurements. The following tabular disclosure does not include the offsetting of trade receivables and payables.
As of June 30, 2021
PSEG Power (A)Consolidated
Not Designated
Balance Sheet LocationEnergy-
Related
Contracts		Netting
(B)		Total
PSEG Power		Total
Derivatives
Millions
Derivative Contracts
Current Assets$682 $(647)$35 $35 
Noncurrent Assets247 (239)8 8 
Total Mark-to-Market Derivative Assets$929 $(886)$43 $43 
Derivative Contracts
Current Liabilities$(882)$848 $(34)$(34)
Noncurrent Liabilities(313)307 (6)(6)
Total Mark-to-Market Derivative (Liabilities)$(1,195)$1,155 $(40)$(40)
Total Net Mark-to-Market Derivative Assets (Liabilities)$(266)$269 $3 $3 
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As of September 30, 2020
PSEG Power (A)PSEG (A)Consolidated
Not DesignatedCash Flow Hedges
Balance Sheet LocationEnergy-
Related
Contracts		Netting
(B)		Total
PSEG Power		Interest
Rate
Swaps		Total
Derivatives
Millions
Derivative Contracts
Current Assets$383 $(337)$46 $0 $46 
Noncurrent Assets133 (116)17 0 17 
Total Mark-to-Market Derivative Assets$516 $(453)$63 $0 $63 
Derivative Contracts
Current Liabilities$(333)$327 $(6)$(2)$(8)
Noncurrent Liabilities(126)125 (1)0 (1)
Total Mark-to-Market Derivative (Liabilities)$(459)$452 $(7)$(2)$(9)
Total Net Mark-to-Market Derivative Assets (Liabilities)$57 $(1)$56 $(2)$54 
As of December 31, 2019
PSEG Power (A)PSEG (A)Consolidated
Not DesignatedCash Flow Hedges
Balance Sheet LocationEnergy-
Related
Contracts		Netting
(B)		Total
PSEG Power		Interest
Rate
Swaps		Total
Derivatives
 Millions
Derivative Contracts
Current Assets$636 $(523)$113 $0 $113 
Noncurrent Assets163 (139)24 0 24 
Total Mark-to-Market Derivative Assets$799 $(662)$137 $0 $137 
Derivative Contracts
Current Liabilities$(553)$522 $(31)$(5)$(36)
Noncurrent Liabilities(139)138 (1)0 (1)
Total Mark-to-Market Derivative (Liabilities)$(692)$660 $(32)$(5)$(37)
Total Net Mark-to-Market Derivative Assets (Liabilities)$107 $(2)$105 $(5)$100 
As of December 31, 2020
PSEG Power (A)Consolidated
Not Designated
Balance Sheet LocationEnergy-
Related
Contracts		Netting
(B)		Total
PSEG Power		Total
Derivatives
 Millions
Derivative Contracts
Current Assets$464 $(404)$60 $60 
Noncurrent Assets93 (84)9 9 
Total Mark-to-Market Derivative Assets$557 $(488)$69 $69 
Derivative Contracts
Current Liabilities$(412)$391 $(21)$(21)
Noncurrent Liabilities(109)105 (4)(4)
Total Mark-to-Market Derivative (Liabilities)$(521)$496 $(25)$(25)
Total Net Mark-to-Market Derivative Assets (Liabilities)$36 $8 $44 $44 
(A)Substantially all of PSEG Power’s and PSEG’s derivative instruments are contracts subject to master netting agreements. Contracts not subject to master netting or similar agreements are immaterial and did not have any collateral posted or received as of SeptemberJune 30, 20202021 and December 31, 2019.2020.
(B)Represents the netting of fair value balances with the same counterparty (where the right of offset exists) and the application of collateral. All cash collateral (received) posted that has been allocated to derivative positions, where the right of offset exists, has been offset on the Condensed Consolidated Balance Sheets. As of SeptemberJune 30, 20202021 and December 31, 2019,2020, PSEG Power had net cash collateral (receipts) payments to counterparties of $56$338 million and $44$54 million, respectively. Of these net cash collateral (receipts) payments, $(1)$269 million and $(2)$8 million as of SeptemberJune 30, 20202021 and December 31, 2019,2020, respectively, were netted against the corresponding net derivative contract positions. Of the $(1)$269 million as of SeptemberJune 30, 2020, $(11)2021, $(7) million was netted against current assets, $(1) million was netted against noncurrent assets, $208 million was netted against current liabilities and $11$69 million was netted against noncurrent liabilities. Of the $(2)$8 million as of December 31, 2019, $(1)2020, $(13) million was netted against current assets and $(1)$21 million was netted against noncurrent assets.liabilities.
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Certain of PSEG Power’s derivative instruments contain provisions that require PSEG Power to post collateral. This collateral may be posted in the form of cash or credit support with thresholds contingent upon PSEG Power’s credit rating from each of the major credit rating agencies. The collateral and credit support requirements vary by contract and by counterparty. These credit risk-related contingent features stipulate that if PSEG Power were to be downgraded to a below investment grade rating by S&P or Moody’s, it would be required to provide additional collateral. A below investment grade credit rating for PSEG Power would represent a three level downgrade from its current Moody’s rating and a two level downgrade from its current S&P or Moody’s ratings.rating. This incremental collateral requirement can offset collateral requirements related to other derivative instruments that are assets with the same counterparty, where the contractual right of offset exists under applicable master agreements. PSEG Power also enters into commodity transactions on the New York Mercantile Exchange (NYMEX) and Intercontinental Exchange (ICE). The NYMEX and ICE clearing houses act as counterparties to each trade. Transactions on the NYMEX and ICE must adhere to comprehensive collateral and margin requirements.
The aggregate fair value of all derivative instruments with credit risk-related contingent features in a liability position that are not fully collateralized (excluding transactions on the NYMEX and ICE that are fully collateralized) was $16 million and $35$45 million as of SeptemberJune 30, 20202021 and $28 million as of December 31, 2020. As of June 30, 2021 and December 31, 2019, respectively. As of September 30, 2020, and December 31, 2019, PSEG Power had the contractual right of offset of $11$6 million and $2$3 million, respectively, related to derivative instruments that are assets with the same counterparty under master agreements and net of margin posted. If PSEG Power had been downgraded to a below investment grade rating, it would have had additional collateral obligations of $5$39 million and $33$25 million as of SeptemberJune 30, 20202021 and December 31, 2019,2020, respectively, related to its derivatives, net of the contractual right of offset under master agreements and the application of collateral.
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The following shows the effect on the Condensed Consolidated Statements of Operations and on Accumulated Other Comprehensive Income (AOCI) of derivative instruments designated as cash flow hedges for the three months and ninesix months ended SeptemberJune 30, 20202021 and 2019:2020:
Derivatives in Cash Flow
Hedging Relationships		Amount of Pre-Tax
Gain (Loss)
Recognized in AOCI on Derivatives		Location of
Pre-Tax Gain (Loss) Reclassified from AOCI into Income		Amount of Pre-Tax
Gain (Loss)
Reclassified from AOCI into Income
Three Months EndedThree Months Ended
September 30,September 30,
2020201920202019
MillionsMillions
PSEG
Interest Rate Swaps$0 $0 Interest Expense$(5)$(1)
Total PSEG$0 $0 $(5)$(1)
Derivatives in Cash Flow
Hedging Relationships		Amount of Pre-Tax
Gain (Loss)
Recognized in AOCI on Derivatives		Location of
Pre-Tax Gain (Loss) Reclassified from AOCI into Income		Amount of Pre-Tax
Gain (Loss)
Reclassified from AOCI into Income
Three Months EndedThree Months Ended
June 30,June 30,
2021202020212020
MillionsMillions
PSEG
Interest Rate Swaps$0 $0 Interest Expense$(1)$(4)
Total PSEG$0 $0 $(1)$(4)
Derivatives in Cash Flow
Hedging Relationships		Amount of Pre-Tax
Gain (Loss)
Recognized in AOCI on Derivatives		Location of
Pre-Tax Gain (Loss) Reclassified from AOCI into Income		Amount of Pre-Tax
Gain (Loss)
Reclassified from AOCI into Income
Nine Months EndedNine Months Ended
September 30,September 30,
2020201920202019
MillionsMillions
PSEG
Interest Rate Swaps$(6)$(24)Interest Expense$(11)$(2)
Total PSEG$(6)$(24)$(11)$(2)
Derivatives in Cash Flow
Hedging Relationships		Amount of Pre-Tax
Gain (Loss)
Recognized in AOCI on Derivatives		Location of
Pre-Tax Gain (Loss) Reclassified from AOCI into Income		Amount of Pre-Tax
Gain (Loss)
Reclassified from AOCI into Income
Six Months EndedSix Months Ended
June 30,June 30,
2021202020212020
MillionsMillions
PSEG
Interest Rate Swaps$0 $(6)Interest Expense$(2)$(6)
Total PSEG$0 $(6)$(2)$(6)
The effect of interest rate cash flow hedges is recorded in Interest Expense in PSEG’s Condensed Consolidated Statement of Operations. For the three months and ninesix months ended SeptemberJune 30, 2020,2021, the amount of gain or loss on interest rate hedges reclassified from Accumulated Other Comprehensive Income (Loss) into income was $(4)$(1) million after-tax. For the three months and $(8) million after-tax, respectively. Thesix months ended June 30, 2020, the amount of gain or loss on interest rate hedges reclassified from Accumulated Other Comprehensive Income (Loss) into income for the three monthswas $(3) million and nine months ended September 30, 2019 was $(1) million.$(4) million after-tax, respectively.
The following reconciles the Accumulated Other Comprehensive Income (Loss) for derivative activity included in the Accumulated Other Comprehensive Loss of PSEG on a pre-tax and after-tax basis.
Accumulated Other Comprehensive Income (Loss)Pre-TaxAfter-Tax
Millions
Balance as of December 31, 2019$(21)$(15)
Loss Recognized in AOCI(6)(4)
Less: Loss Reclassified into Income14 10 
Balance as of December 31, 2020$(13)$(9)
Loss Recognized in AOCI0 0 
Less: Loss Reclassified into Income2 1 
Balance as of June 30, 2021$(11)$(8)
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Accumulated Other Comprehensive Income (Loss)Pre-TaxAfter-Tax
Millions
Balance as of December 31, 2018$(2)$(1)
Loss Recognized in AOCI(23)(17)
Less: Loss Reclassified into Income4 3 
Balance as of December 31, 2019$(21)$(15)
Loss Recognized in AOCI(6)(4)
Less: Loss Reclassified into Income11 8 
Balance as of September 30, 2020$(16)$(11)
The following shows the effect on the Condensed Consolidated Statements of Operations of derivative instruments not designated as hedging instruments or as NPNS for the three months and ninesix months ended SeptemberJune 30, 20202021 and 2019,2020, respectively. PSEG Power’s derivative contracts reflected in this table include contracts to hedge the purchase and sale of electricity and natural gas, and the purchase of fuel. The table does not include contracts that PSEG Power has designated as NPNS, such as its BGS contracts and certain other energy supply contracts that it has with other utilities and companies with retail load.
Derivatives Not Designated as HedgesLocation of Pre-Tax
Gain (Loss)
Recognized in Income
on Derivatives		Pre-Tax Gain (Loss) Recognized in Income on Derivatives
Three Months EndedNine Months Ended
September 30,September 30,
2020201920202019
Millions
PSEG and PSEG Power
Energy-Related ContractsOperating Revenues$(49)$(76)$155 $385 
Energy-Related ContractsEnergy Costs15 (3)(51)(77)
Total PSEG and PSEG Power$(34)$(79)$104 $308 
Derivatives Not Designated as HedgesLocation of Pre-Tax
Gain (Loss)
Recognized in Income
on Derivatives		Pre-Tax Gain (Loss) Recognized in Income on Derivatives
Three Months EndedSix Months Ended
June 30,June 30,
2021202020212020
Millions
PSEG and PSEG Power
Energy-Related ContractsOperating Revenues$(373)$(27)$(419)$204 
Energy-Related ContractsEnergy Costs75 2 81 (66)
Total PSEG and PSEG Power$(298)$(25)$(338)$138 
The following table summarizes the net notional volume purchases/(sales) of open derivative transactions by commodity as of SeptemberJune 30, 20202021 and December 31, 2019.2020.
TypeNotionalTotalPSEGPSEG PowerPSE&G
Millions
As of September 30, 2020
Natural GasDekatherm (Dth)266 0 266 0 
ElectricityMWh(58)0 (58)0 
Financial Transmission Rights (FTRs)MWh26 0 26 0 
Interest Rate SwapsU.S. Dollars700 700 0 0 
As of December 31, 2019
Natural GasDth341 0 341 0 
ElectricityMWh(62)0 (62)0 
FTRsMWh13 0 13 0 
Interest Rate SwapsU.S. Dollars700 700 0 0 
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TypeNotionalTotalPSEGPSEG PowerPSE&G
Millions
As of June 30, 2021
Natural GasDekatherm (Dth)232 0 232 0 
ElectricityMWh(70)0 (70)0 
Financial Transmission Rights (FTRs)MWh30 0 30 0 
As of December 31, 2020
Natural GasDth321 0 321 0 
ElectricityMWh(66)0 (66)0 
FTRsMWh20 0 20 0 
Credit Risk
Credit risk relates to the risk of loss that PSEG Power would incur as a result of non-performance by counterparties pursuant to the terms of their contractual obligations. PSEG has established credit policies that it believes significantly minimize credit risk. These policies include an evaluation of potential counterparties’ financial condition (including credit rating), collateral requirements under certain circumstances and the use of standardized agreements, which allow for the netting of positive and negative exposures associated with a single counterparty. In the event of non-performance or non-payment by a major counterparty, there may be a material adverse impact on PSEG Power’s and PSEG’s financial condition, results of operations or net cash flows.
The following table provides information on PSEG Power’s credit risk from wholesale counterparties, net of collateral, as of SeptemberJune 30, 2020.2021. It further delineates that exposure by the credit rating of the counterparties, which is determined by the lowest rating from S&P, Moody’s or an internal scoring model. In addition, it provides guidance on the concentration of credit risk to individual counterparties and an indication of the quality of PSEG Power’s credit risk by credit rating of the counterparties.
As of SeptemberJune 30, 2020,2021, 99% of the net credit exposure for PSEG Power’s wholesale operations was with investment grade counterparties. Credit exposure is defined as any positive results of netting accounts receivable/accounts payable and the forward value of open positions (which includes all financial instruments including derivatives, NPNS and non-derivatives).
RatingCurrent
Exposure		Securities Held as CollateralNet
Exposure		Number of
Counterparties
>10%		Net Exposure of
Counterparties
>10%
MillionsMillions
Investment Grade$244 $34 $210 3 $120 (A)
Non-Investment Grade2 0 2 0 0   
Total$246 $34 $212 3 $120 
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RatingCurrent
Exposure		Securities Held as CollateralNet
Exposure		Number of
Counterparties
>10%		Net Exposure of
Counterparties
>10%
MillionsMillions
Investment Grade$79 $15 $64 3 $41 (A)
Non-Investment Grade2 1 1 0 0 
Total$81 $16 $65 3 $41 
(A)Represents net exposure of $50$21 million with PSE&G and $70$20 million with two non-affiliated counterparties.
As of SeptemberJune 30, 2020,2021, collateral held from counterparties where PSEG Power had credit exposure included $1 million in cash collateral and $33$16 million in letters of credit.
As of SeptemberJune 30, 2020,2021, PSEG Power had 128127 active counterparties.
PSE&G’s supplier master agreements are approved by the BPU and govern the terms of its electric supply procurement contracts. These agreements define a supplier’s performance assurance requirements and allow a supplier to meet its credit requirements with a certain amount of unsecured credit. The amount of unsecured credit is determined based on the supplier’s credit ratings from the major credit rating agencies and the supplier’s tangible net worth. The credit position is based on the initial market price, which is the forward price of energy on the day the procurement transaction is executed, compared to the forward price curve for energy on the valuation day. To the extent that the forward price curve for energy exceeds the initial market price, the supplier is required to post a parental guaranty or other security instrument such as a letter of credit or cash, as collateral to the extent the credit exposure is greater than the supplier’s unsecured credit limit. As of SeptemberJune 30, 2020, primarily all of2021, the posted collateral was principally in the form of parental guarantees. The unsecured credit used by the suppliers represents PSE&G’s net credit exposure. PSE&G’s BGS suppliers’ credit exposure is calculated each business day.day As of SeptemberJune 30, 2020,2021, PSE&G had no net credit exposure with suppliers, including PSEG Power.
PSE&G is permitted to recover its costs of procuring energy through the BPU-approved BGS tariffs. PSE&G’s counterparty credit risk is mitigated by its ability to recover realized energy costs through customer rates.
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Note 14. Fair Value Measurements
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Accounting guidance for fair value measurement emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and establishes a fair value hierarchy that distinguishes between assumptions based on market data obtained from independent sources and those based on an entity’s own assumptions. The hierarchy prioritizes the inputs to fair value measurement into three levels:
Level 1—measurements utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that PSEG, PSE&G and PSEG Power have the ability to access. These consist primarily of listed equity securities and money market mutual funds, as well as natural gas futures contracts executed on NYMEX.
Level 2—measurements include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and other observable inputs such as interest rates and yield curves that are observable at commonly quoted intervals. These consist primarily of non-exchange traded derivatives such as forward contracts or options and most fixed income securities.
Level 3—measurements use unobservable inputs for assets or liabilities, based on the best information available and might include an entity’s own data and assumptions. In some valuations, the inputs used may fall into different levels of the hierarchy. In these cases, the financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. These consist primarily of certain electric load contracts and gas contracts.
Certain derivative transactions may transfer from Level 2 to Level 3 if inputs become unobservable and internal modeling techniques are employed to determine fair value. Conversely, measurements may transfer from Level 3 to Level 2 if the inputs become observable.
The following tables present information about PSEG’s, PSE&G’s and PSEG Power’s respective assets and (liabilities) measured at fair value on a recurring basis as of SeptemberJune 30, 20202021 and December 31, 2019,2020, including the fair value measurements and the levels of inputs used in determining those fair values. Amounts shown for PSEG include the amounts shown for PSE&G and PSEG Power.
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Recurring Fair Value Measurements as of June 30, 2021
DescriptionTotal
Netting (D)		Quoted Market Prices for Identical Assets
(Level 1)		Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Millions
PSEG
Assets:
Cash Equivalents (A)$60 $0 $60 $0 $0 
Derivative Contracts:
Energy-Related Contracts (B)$43 $(886)$96 $833 $0 
NDT Fund (C)
Equity Securities$1,279 $0 $1,279 $0 $0 
Debt Securities—U.S. Treasury$326 $0 $0 $326 $0 
Debt Securities—Govt Other$386 $0 $0 $386 $0 
Debt Securities—Corporate$635 $0 $0 $635 $0 
Rabbi Trust (C)
Equity Securities$26 $0 $26 $0 $0 
Debt Securities—U.S. Treasury$66 $0 $0 $66 $0 
Debt Securities—Govt Other$34 $0 $0 $34 $0 
Debt Securities—Corporate$118 $0 $0 $118 $0 
Other$1 $— $— $1 $— 
Liabilities:
Derivative Contracts:
Energy-Related Contracts (B)$(40)$1,155 $(55)$(1,132)$(8)
PSE&G
Assets:
Cash Equivalents (A)$30 $0 $30 $0 $0 
Rabbi Trust (C)
Equity Securities$5 $0 $5 $0 $0 
Debt Securities—U.S. Treasury$12 $0 $0 $12 $0 
Debt Securities—Govt Other$6 $0 $0 $6 $0 
Debt Securities—Corporate$21 $0 $0 $21 $0 
PSEG Power
Assets:
Derivative Contracts:
Energy-Related Contracts (B)$43 $(886)$96 $833 $0 
NDT Fund (C)
Equity Securities$1,279 $0 $1,279 $0 $0 
Debt Securities—U.S. Treasury$326 $0 $0 $326 $0 
Debt Securities—Govt Other$386 $0 $0 $386 $0 
Debt Securities—Corporate$635 $0 $0 $635 $0 
Rabbi Trust (C)
Equity Securities$7 $0 $7 $0 $0 
Debt Securities—U.S. Treasury$17 $0 $0 $17 $0 
Debt Securities—Govt Other$9 $0 $0 $9 $0 
Debt Securities—Corporate$31 $0 $0 $31 $0 
Liabilities:
Derivative Contracts:
Energy-Related Contracts (B)$(40)$1,155 $(55)$(1,132)$(8)
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Recurring Fair Value Measurements as of September 30, 2020
DescriptionTotal
Netting (E)		Quoted Market Prices for Identical Assets
(Level 1)		Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Millions
PSEG
Assets:
Cash Equivalents (A)$810 $0 $810 $0 $0 
Derivative Contracts:
Energy-Related Contracts (B)$63 $(453)$28 $486 $2 
NDT Fund (C)
Equity Securities$1,219 $0 $1,218 $1 $0 
Debt Securities—U.S. Treasury$203 $0 $0 $203 $0 
Debt Securities—Govt Other$354 $0 $0 $354 $0 
Debt Securities—Corporate$582 $0 $0 $582 $0 
Rabbi Trust (C)
Equity Securities$27 $0 $27 $0 $0 
Debt Securities—U.S. Treasury$57 $0 $0 $57 $0 
Debt Securities—Govt Other$43 $0 $0 $43 $0 
Debt Securities—Corporate$134 $0 $0 $134 $0 
Liabilities:
Derivative Contracts:
Energy-Related Contracts (B)$(7)$452 $(17)$(440)$(2)
Interest Rate Swaps (D)$(2)$0 $0 $(2)$0 
PSE&G
Assets:
Cash Equivalents (A)$135 $0 $135 $0 $0 
Rabbi Trust (C)
Equity Securities$5 $0 $5 $0 $0 
Debt Securities—U.S. Treasury$11 $0 $0 $11 $0 
Debt Securities—Govt Other$8 $0 $0 $8 $0 
Debt Securities—Corporate$27 $0 $0 $27 $0 
PSEG Power
Assets:
Derivative Contracts:
Energy-Related Contracts (B)$63 $(453)$28 $486 $2 
NDT Fund (C)
Equity Securities$1,219 $0 $1,218 $1 $0 
Debt Securities—U.S. Treasury$203 $0 $0 $203 $0 
Debt Securities—Govt Other$354 $0 $0 $354 $0 
Debt Securities—Corporate$582 $0 $0 $582 $0 
Rabbi Trust (C)
Equity Securities$7 $0 $7 $0 $0 
Debt Securities—U.S. Treasury$14 $0 $0 $14 $0 
Debt Securities—Govt Other$11 $0 $0 $11 $0 
Debt Securities—Corporate$33 $0 $0 $33 $0 
Liabilities:
Derivative Contracts:
Energy-Related Contracts (B)$(7)$452 $(17)$(440)$(2)
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Recurring Fair Value Measurements as of December 31, 2019
DescriptionTotalNetting  (E)Quoted Market Prices for Identical Assets
(Level 1)		Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Millions
PSEG
Assets:
Cash Equivalents (A)$50 $0 $50 $0 $0 
Derivative Contracts:
Energy-Related Contracts (B)$137 $(662)$19 $770 $10 
NDT Fund (C)
Equity Securities$1,151 $0 $1,150 $1 $0 
Debt Securities—U.S. Treasury$225 $0 $0 $225 $0 
Debt Securities—Govt Other$352 $0 $0 $352 $0 
Debt Securities—Corporate$486 $0 $0 $486 $0 
Rabbi Trust (C)
Equity Securities$28 $0 $28 $0 $0 
Debt Securities—U.S. Treasury$57 $0 $0 $57 $0 
Debt Securities—Govt Other$47 $0 $0 $47 $0 
Debt Securities—Corporate$114 $0 $0 $114 $0 
Liabilities:
Derivative Contracts:
Energy-Related Contracts (B)$(32)$660 $(43)$(646)$(3)
   Interest Rate Swaps (D)$(5)$0 $0 $(5)$0 
PSE&G
Assets:
Rabbi Trust (C)
Equity Securities$5 $0 $5 $0 $0 
Debt Securities—U.S. Treasury$11 $0 $0 $11 $0 
Debt Securities—Govt Other$9 $0 $0 $9 $0 
Debt Securities—Corporate$23 $0 $0 $23 $0 
PSEG Power
Assets:
Derivative Contracts:
Energy-Related Contracts (B)$137 $(662)$19 $770 $10 
NDT Fund (C)
Equity Securities$1,151 $0 $1,150 $1 $0 
Debt Securities—U.S. Treasury$225 $0 $0 $225 $0 
Debt Securities—Govt Other$352 $0 $0 $352 $0 
Debt Securities—Corporate$486 $0 $0 $486 $0 
Rabbi Trust (C)
Equity Securities$8 $0 $8 $0 $0 
Debt Securities—U.S. Treasury$14 $0 $0 $14 $0 
Debt Securities—Govt Other$12 $0 $0 $12 $0 
Debt Securities—Corporate$28 $0 $0 $28 $0 
Liabilities:
Derivative Contracts:
Energy-Related Contracts (B)$(32)$660 $(43)$(646)$(3)
Recurring Fair Value Measurements as of December 31, 2020
DescriptionTotalNetting  (D)Quoted Market Prices for Identical Assets
(Level 1)		Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs (Level 3)
Millions
PSEG
Assets:
Cash Equivalents (A)$312 $0 $312 $0 $0 
Derivative Contracts:
Energy-Related Contracts (B)$69 $(488)$26 $519 $12 
NDT Fund (C)
Equity Securities$1,352 $0 $1,351 $1 $0 
Debt Securities—U.S. Treasury$239 $0 $0 $239 $0 
Debt Securities—Govt Other$342 $0 $0 $342 $0 
Debt Securities—Corporate$566 $0 $0 $566 $0 
Rabbi Trust (C)
Equity Securities$31 $0 $31 $0 $0 
Debt Securities—U.S. Treasury$59 $0 $0 $59 $0 
Debt Securities—Govt Other$41 $0 $0 $41 $0 
Debt Securities—Corporate$135 $0 $0 $135 $0 
Liabilities:
Derivative Contracts:
Energy-Related Contracts (B)$(25)$496 $(33)$(483)$(5)
PSE&G
Assets:
Cash Equivalents (A)$50 $0 $50 $0 $0 
Rabbi Trust (C)
Equity Securities$6 $0 $6 $0 $0 
Debt Securities—U.S. Treasury$11 $0 $0 $11 $0 
Debt Securities—Govt Other$8 $0 $0 $8 $0 
Debt Securities—Corporate$26 $0 $0 $26 $0 
PSEG Power
Assets:
Derivative Contracts:
Energy-Related Contracts (B)$69 $(488)$26 $519 $12 
NDT Fund (C)
Equity Securities$1,352 $0 $1,351 $1 $0 
Debt Securities—U.S. Treasury$239 $0 $0 $239 $0 
Debt Securities—Govt Other$342 $0 $0 $342 $0 
Debt Securities—Corporate$566 $0 $0 $566 $0 
Rabbi Trust (C)
Equity Securities$8 $0 $8 $0 $0 
Debt Securities—U.S. Treasury$15 $0 $0 $15 $0 
Debt Securities—Govt Other$10 $0 $0 $10 $0 
Debt Securities—Corporate$33 $0 $0 $33 $0 
Liabilities:
Derivative Contracts:
Energy-Related Contracts (B)$(25)$496 $(33)$(483)$(5)
(A)Represents money market mutual funds.
(B)Level 1—These contracts represent natural gas futures contracts executed on NYMEX, and are being valued solely on settled pricing inputs which come directly from the exchange.
Level 2—Fair values for energy-related contracts are obtained primarily using a market-based approach. Most derivative contracts (forward purchase or sale contracts and swaps) are valued using settled prices from similar assets and liabilities from an exchange, such as NYMEX, ICE and Nodal Exchange, or auction prices. Prices used in
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the valuation process are also corroborated independently by management to determine that values are based on actual transaction data or, in the absence of transactions, bid and offers for the day. Examples may include certain exchange and non-exchange traded capacity and electricity contracts and natural gas physical or swap contracts based on market prices, basis adjustments and other premiums where adjustments and premiums are not considered significant to the overall inputs.
Level 3—Unobservable inputs are used for the valuation of certain contracts. See “Additional Information Regarding Level 3 Measurements” below for more information on the utilization of unobservable inputs.
(C)The fair value measurement table excludes foreign currency of $2 million in the NDT Fund of $1 million and $2 million as of Septemberboth June 30, 20202021 and December 31, 2019, respectively.2020. The NDT Fund maintains investments in various equity and fixed income securities. The Rabbi Trust maintains investments in a Russell 3000 index fund and various fixed income securities. These securities are generally valued with prices that are either exchange provided (equity securities) or market transactions for comparable securities and/or broker quotes (fixed income securities).
Level 1—Investments in marketable equity securities within the NDT Fund are primarily investments in common stocks across a broad range of industries and sectors. Most equity securities are priced utilizing the principal market close price or, in some cases, midpoint, bid or ask price. Certain other equity securities in the NDT and Rabbi Trust Funds consist primarily of investments in money market funds which seek a high level of current income as is consistent with the preservation of capital and the maintenance of liquidity. To pursue its goals, the funds normally invest in diversified portfolios of high quality, short-term, dollar-denominated debt securities and government securities. The funds’ net asset value is priced and published daily. The Rabbi Trust’s Russell 3000 index fund is valued based on quoted prices in an active market and can be redeemed daily without restriction.
Level 2—NDT and Rabbi Trust fixed income securities include investment grade corporate bonds, collateralized mortgage obligations, asset-backed securities and certain government and U.S. Treasury obligations or Federal Agency asset-backed securities and municipal bonds with a wide range of maturities. Since many fixed income securities do not trade on a daily basis, they are priced using an evaluated pricing methodology that varies by asset class and reflects observable market information such as the most recent exchange price or quoted bid for similar securities. Market-based standard inputs typically include benchmark yields, reported trades, broker/dealer quotes and issuer spreads. The preferred stocks are not actively traded on a daily basis and therefore, are also priced using an evaluated pricing methodology. Certain short-term investments are valued using observable market prices or market parameters such as time-to-maturity, coupon rate, quality rating and current yield.
(D)Interest rate swaps are valued using quoted prices on commonly quoted intervals, which are interpolated for periods different than the quoted intervals, as inputs to a market valuation model. Market inputs can generally be verified and model selection does not involve significant management judgment.
(E)Represents the netting of fair value balances with the same counterparty (where the right of offset exists) and the application of collateral. See Note 13. Financial Risk Management Activities for additional detail.
Additional Information Regarding Level 3 Measurements
For valuations that include both observable and unobservable inputs, if the unobservable input is determined to be significant to the overall inputs, the entire valuation is categorized in Level 3. This includes derivatives valued using indicative price quotations for contracts with tenors that extend into periods with no observable pricing. In instances where observable data is unavailable, consideration is given to the assumptions that market participants would use in valuing the asset or liability. This includes assumptions about market risks such as liquidity, volatility and contract duration. Such instruments are categorized in Level 3 because the model inputs generally are not observable. PSEG considers credit and nonperformancenon-performance risk in the valuation of derivative contracts categorized in Levels 2 and 3, including both historical and current market data, in its assessment of credit and nonperformancenon-performance risk by counterparty. The impacts of credit and nonperformancenon-performance risk were not material to the financial statements.
The fair value of PSEG Power’s electric load contracts in which load consumption may change hourly based on demand are measured using certain unobservable inputs, such as historic load variability and, accordingly, are categorized as Level 3. The fair value of PSEG Power’s gas physical contracts at certain illiquid delivery locations are measured using average historical basis and, accordingly, are categorized as Level 3. While these physical gas contracts have an unobservable component in their respective forward price curves, the fluctuations in fair value have been driven primarily by changes in the observable inputs.
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The following tables provide details surrounding significant Level 3 valuations as of SeptemberJune 30, 20202021 and December 31, 2019.2020.
Quantitative Information About Level 3 Fair Value Measurements
Significant
Level 3Fair Value as ofValuationUnobservableArithmetic
CommodityPositionSeptember 30, 2020Technique(s) InputRangeAverage
Assets(Liabilities)
Millions
PSEG Power
ElectricityElectric Load Contracts$2 $(1)Discounted Cash flowLoad Shaping Cost0% to 12%4%
GasGas Physical Contracts0 (1)Discounted Cash flowHistorical Basis Adjustment(50)% to (20)%(31)%
Total PSEG Power$2 $(2)
Total PSEG$2 $(2)
Quantitative Information About Level 3 Fair Value Measurements
Significant
Level 3Fair Value as ofValuationUnobservableArithmetic
CommodityPositionJune 30, 2021Technique(s) InputRangeAverage
Assets(Liabilities)
Millions
PSEG Power
ElectricityElectric Load Contracts$0 $(6)Discounted Cash FlowLoad Shaping Cost0% to 11%5%
Gas/ElectricOther (A)0 (2)00 0
Total PSEG Power$0 $(8)
Total PSEG$0 $(8)
Quantitative Information About Level 3 Fair Value Measurements
Significant
Fair Value as ofValuationUnobservable
CommodityLevel 3 PositionDecember 31, 2019Technique(s) InputRange
Assets(Liabilities)
Millions
PSEG Power
ElectricityElectric Load Contracts$10 $0 Discounted Cash flowHistoric Load Variability0% to 10%
GasGas Physical Contracts0 (3)Discounted Cash flowAverage Historical Basis(50)% to 0%
Total PSEG Power$10 $(3)
Total PSEG$10 $(3)
Quantitative Information About Level 3 Fair Value Measurements
Significant
Level 3Fair Value as ofValuationUnobservableArithmetic
CommodityPositionDecember 31, 2020Technique(s) InputRangeAverage
Assets(Liabilities)
Millions
PSEG Power
ElectricityElectric Load Contracts$12 $0 Discounted Cash FlowLoad Shaping Cost0% to 11%4%
GasGas Physical Contracts0 (2)Discounted Cash Flow Historical Basis Adjustment-60% to -30%-43%
ElectricityOther (A)0 (3)
Total PSEG Power$12 $(5)
Total PSEG$12 $(5)
(A)Other is comprised of primarily a heat rate call option and capacity swaps.
As of SeptemberJune 30, 2020,2021, significant unobservable inputs listed above would have a direct impact on the fair values of the above Level 3 instruments if they were adjusted. For energy-related contracts in cases where PSEG Power is a seller, an increase in the load variability would decrease the fair value. For gas-related contracts in cases where PSEG Power is a buyer, an increase in the average historical basis would increase the fair value.
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A reconciliation of the beginning and ending balances of Level 3 derivative contracts and securities for the three months and ninesix months ended SeptemberJune 30, 2021 and June 30, 2020, and September 30, 2019, respectively, follows:
Changes in Level 3 Assets and (Liabilities) Measured at Fair Value on a Recurring Basis

for the Three MonthsandSix Months Ended June 30, 2021
Three Months Ended June 30, 2021
DescriptionBalance as of March 31, 2021Total Gains or (Losses)
Realized/Unrealized Included in Income (A)		Purchases
(Sales)		Issuances/
Settlements
(B)		Transfers
In/Out (C)		Balance as of June 30, 2021
Millions
PSEG and PSEG Power
Net Derivative Assets (Liabilities)$(1)$(9)$0 $2 $0 $(8)
Six Months Ended June 30, 2021
DescriptionBalance as of December 31, 2020Total Gains or (Losses)
Realized/Unrealized Included in Income (A)		Purchases
(Sales)		Issuances/
Settlements
(B)		Transfers
In/Out (C)		Balance as of June 30, 2021
Millions
PSEG and PSEG Power
Net Derivative Assets (Liabilities)$7 $(13)$0 $(2)$0 $(8)
Changes in Level 3 Assets and (Liabilities) Measured at Fair Value on a Recurring Basis
for the Three Months and Six Months Ended June 30, 2020
Three Months Ended June 30, 2020
DescriptionBalance as of March 31, 2020Total Gains or (Losses)
Realized/Unrealized Included in Income (A)		Purchases
(Sales)		Issuances/
Settlements
(B)		Transfers
In/Out
(C)		Balance as of June 30, 2020
Millions
PSEG and PSEG Power
Net Derivative Assets (Liabilities)$19 $(4)$0 $(5)$0 $10 
Six Months Ended June 30, 2020
DescriptionBalance as of December 31, 2019Total Gains or (Losses)
Realized/Unrealized Included in Income (A)		Purchases
(Sales)		Issuances/
Settlements
(B)		Transfers
In/Out (C)		Balance as of June 30, 2020
Millions
PSEG and PSEG Power
Net Derivative Assets (Liabilities)$7 $9 $0 $(6)$0 $10 
(A)Unrealized gains (losses) in the following table represent the change in derivative assets and liabilities still held as of June 30, 2021 and 2020.
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Changes in Level 3 Assets and (Liabilities) Measured at Fair Value on a Recurring Basis
for the Three Months and Nine Months Ended September 30, 2020
Three Months Ended September 30, 2020
DescriptionBalance as of June 30, 2020Total Gains or (Losses)
Realized/Unrealized Included in Income (A)		Purchases
(Sales)		Issuances/
Settlements
(B)		Transfers
In/Out (C)		Balance as of September 30, 2020
Millions
PSEG and PSEG Power
Net Derivative Assets (Liabilities)$10 $(2)$0 $(8)$0 $0 
Nine Months Ended September 30, 2020
DescriptionBalance as of December 31, 2019Total Gains or (Losses)
Realized/Unrealized Included in Income (A)		Purchases
(Sales)		Issuances/
Settlements
(B)		Transfers
In/Out (C)		Balance as of September 30, 2020
Millions
PSEG and PSEG Power
Net Derivative Assets (Liabilities)$7 $7 $0 $(14)$0 $0 
Changes in Level 3 Assets and (Liabilities) Measured at Fair Value on a Recurring Basis
for the Three Months and Nine Months Ended September 30, 2019
Three Months Ended September 30, 2019
DescriptionBalance as of June 30, 2019Total Gains or (Losses)
Realized/Unrealized Included in Income (A)		Purchases
(Sales)		Issuances/
Settlements
(B)		Transfers
In/Out
(C)		Balance as of September 30, 2019
Millions
PSEG and PSEG Power
Net Derivative Assets (Liabilities)$4 $1 $0 $(4)$0 $1 
Nine Months Ended September 30, 2019
DescriptionBalance as of December 31, 2018Total Gains or (Losses)
Realized/Unrealized Included in Income (A)		Purchases
(Sales)		Issuances/
Settlements
(B)		Transfers
In/Out (C)		Balance as of September 30, 2019
Millions
PSEG and PSEG Power
Net Derivative Assets (Liabilities)$1 $10 $0 $(10)$0 $1 
(A)Unrealized gains (losses) in the following table represent the change in derivative assets and liabilities still held as of September 30, 2020 and 2019.
.




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Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Total Gains (Losses)Unrealized Gains (Losses)Total Gains (Losses)Unrealized Gains (Losses)Total Gains (Losses)Unrealized Gains (Losses)Total Gains (Losses)Unrealized Gains (Losses)
Millions
PSEG and PSEG Power
Operating Revenues$(2)$(11)$(2)$(4)$12 $(9)$14 $5 
Energy Costs0 1 4 2 (5)2 (4)(4)
Total$(2)$(10)$2 $(2)$7 $(7)$10 $1 
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
Total Gains (Losses)Unrealized Gains (Losses)Total Gains (Losses)Unrealized Gains (Losses)Total Gains (Losses)Unrealized Gains (Losses)Total Gains (Losses)Unrealized Gains (Losses)
Millions
PSEG and PSEG Power
Operating Revenues$(7)$(7)$(4)$(9)$(12)$(16)$14 $2 
Energy Costs(2)(2)0 0 (1)(1)(5)1 
Total$(9)$(9)$(4)$(9)$(13)$(17)$9 $3 
(B)Includes settlements of $(8)$2 million and $(14)$(2) million for the three months and ninesix months ended SeptemberJune 30, 2020, respectively,2021 and $(3)$(5) million and $(9)$(6) million for the three months and ninesix months ended SeptemberJune 30, 2019, respectively.2020.
(C)There were no transfers into or out of Level 3 during the three months and ninesix months ended SeptemberJune 30, 20202021 and 2019.2020.
As of SeptemberJune 30, 2020,2021, PSEG carried $3.5$2.9 billion of net assets that are measured at fair value on a recurring basis, of which balances$(8) million of net liabilities were measured using unobservable inputs and classified as Level 3 within the fair value hierarchy were immaterial.
As of SeptemberJune 30, 2019,2020, PSEG carried $2.4$2.9 billion of net assets that are measured at fair value on a recurring basis, of which $1$10 million of net assets was measured using unobservable inputs and classified as Level 3 within the fair value hierarchy.
Fair Value of Debt
The estimated fair values, were determined using the market quotations or valuescarrying amounts and methods used to determine fair value of instruments with similar terms, credit ratings, remaining maturities and redemptionslong-term debt as of SeptemberJune 30, 20202021 and December 31, 2019.2020 are included in the following table and accompanying notes.
As ofAs of
September 30, 2020December 31, 2019
Carrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
Millions
Long-Term Debt:
PSEG (A) (B)$3,533 $3,629 $2,441 $2,479 
PSE&G (B)10,915 13,328 9,827 11,107 
PSEG Power (B)2,437 2,842 2,840 3,137 
Total Long-Term Debt$16,885 $19,799 $15,108 $16,723 
As ofAs of
June 30, 2021December 31, 2020
Carrying
Amount		Fair
Value		Carrying
Amount		Fair
Value
Millions
Long-Term Debt:
PSEG (A)$2,931 $3,031 $2,929 $3,092 
PSE&G (A)11,370 13,090 10,909 13,372 
PSEG Power (A)1,394 1,679 2,342 2,679 
Total Long-Term Debt$15,695 $17,800 $16,180 $19,143 
(A)Includes floating-rate term loan of $700 million at PSEG as of September 30, 2020 and December 31, 2019. The fair value of the term loan debt (Level 2 measurement) approximates the carrying value because the interest payments are based on LIBOR rates that are reset monthly and the debt is redeemable at face value by PSEG at any time.
(B)Given that these bonds do not trade actively, the fair value amounts of taxable debt securities (primarily Level 2 measurements) are generally determined by a valuation model that is based on a conventional discounted cash flow methodology. The fair value amounts above do not represent the price at which the outstanding debt may be called for redemption by each issuer under their respective debt agreements.

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Note 15. Other Income (Deductions)
PSE&GPSEG PowerOther (A)Consolidated
Millions
Three Months Ended September 30, 2020
NDT Fund Interest and Dividends$0 $12 $0 $12 
Allowance for Funds Used During Construction24 0 0 24 
Solar Loan Interest3 0 0 3 
Purchases of Tax Losses under New Jersey Technology Tax Benefit Transfer Program0 0 0 0 
Other1 (1)0 0 
  Total Other Income (Deductions)$28 $11 $0 $39 
Nine Months Ended September 30, 2020
NDT Fund Interest and Dividends$0 $39 $0 $39 
Allowance for Funds Used During Construction65 0 0 65 
Solar Loan Interest11 0 0 11 
Purchases of Tax Losses under New Jersey Technology Tax Benefit Transfer Program0 (36)0 (36)
Other5 (3)0 2 
  Total Other Income (Deductions)$81 $0 $0 $81 
Three Months Ended September 30, 2019
NDT Fund Interest and Dividends$0 $14 $0 $14 
Allowance for Funds Used During Construction14 0 0 14 
Solar Loan Interest4 0 0 4 
Other4 1 (2)3 
  Total Other Income (Deductions)$22 $15 $(2)$35 
Nine Months Ended September 30, 2019
NDT Fund Interest and Dividends$0 $44 $0 $44 
Allowance for Funds Used During Construction41 0 0 41 
Solar Loan Interest12 0 0 12 
Other7 (1)(2)4 
Total Other Income (Deductions)$60 $43 $(2)$101 
(A)Other consists of activity at PSEG (as parent company), Energy Holdings, Services, PSEG LI and intercompany eliminations.

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Note 16. Income Taxes
PSEG’s, PSE&G’s and PSEG Power’s effective tax rates for the three months and nine months ended September 30, 2020 and 2019 were as follows:
Three Months EndedNine Months Ended
September 30,September 30,
2020201920202019
PSEG17.4%6.9%15.7%11.2%
PSE&G11.3%6.5%15.9%6.1%
PSEG Power31.7%20.9%20.4%29.1%
For the three months and nine months ended September 30, 2020, the differences in PSEG’s effective tax rates as compared to the same periods in the prior year were due primarily to the reduction in the 2020 flowback of PSE&G’s excess deferred income tax (EDIT) liabilities as PSE&G refunded all FERC-approved transmission-related EDIT liabilities that are not subject to thenormalization rules in 2019. For the three months ended September 30, 2020, the difference in PSEG’s effective tax rate as compared to the statutory tax rate of 28.11% was due primarily to the flowback of PSE&G’s EDIT liabilities and tax repair-related accumulated deferred income taxes. For the nine months ended September 30, 2020, the difference in PSEG’s effective tax rate as compared to the statutory tax rate of 28.11% was due primarily to the flowback of PSE&G’s EDIT liabilities and tax repair-related accumulated deferred income taxes, the benefit of purchasing 2019 net operating losses (NOLs) under the New Jersey Technology Tax Benefit Transfer Program in the first quarter of 2020, and the tax benefit from changes in uncertain tax positions as a result of the settlement of the 2011-2016 federal income tax audits.
For the three months and nine months ended September 30, 2020, the differences in PSE&G’s effective tax rates as compared to the same periods in the prior year were due primarily to the reduction in the 2020 flowback of PSE&G’s EDIT liabilities, as PSE&G refunded all FERC-approved transmission-related EDIT liabilities that are not subject to the normalization rules in 2019, and bad debt related flow-through. For the three months and nine months ended September 30, 2020, the differences in PSE&G’s effective tax rates as compared to the statutory tax rate of 28.11% were due primarily to the flowback of PSE&G’s EDIT liabilities and tax repair-related accumulated deferred income taxes, which increased in the third quarter of 2020 as a result of PSE&G’s IRS PLR, discussed below, offset by bad debt related flow-through.
For the three months ended September 30, 2020, the differences in PSEG Power’s effective tax rate as compared to the same period in the prior year and the statutory tax rate of 28.11% were due primarily to higher pre-tax income from the NDT qualified fund, which is subject to an additional trust tax, and the impact of the retroactive increase in the 2020 New Jersey temporary surtax discussed below. For the nine months ended September 30, 2020 the differences in PSEG Power’s effective tax rate as compared to the same period in the prior year and the statutory tax rate of 28.11% were due primarily to the benefit of purchasing 2019 NOLs under the New Jersey Technology Tax Benefit Transfer Program in 2020 and the tax benefit from changes in uncertain tax positions as a result of the settlement of the 2011-2016 federal income tax audits.
Tax Cuts and Jobs Act of 2017 (Tax Act)
Effective January 1, 2018, the Tax Act established tax laws including, but not limited to, a limitation on deductible interest and limitations on the utilization of NOLS, such as eliminating carrybacks.
In November 2018, the IRS issued proposed regulations addressing the interest disallowance rules contained in the Tax Act. For non-regulated businesses, these rules set a cap on the amount of interest that can be deducted in a given year. Any amount that is disallowed can be carried forward indefinitely. For 2018 and 2019, the tax deductibility of a portion of PSEG’s and PSEG Power’s interest expense was disallowed and was recorded as a deferred tax asset. Amounts recorded under the Tax Act and relevant statutes, including but not limited to depreciation and interest disallowance, are subject to change based on several factors, including but not limited to, the IRS and state taxing authorities issuing additional guidance and/or further clarification.
In July 2020, the IRS issued final and proposed regulations addressing the limitation on deductible business interest expense contained in the Tax Act. These regulations retroactively allow depreciation to be added back in computing the 30% adjusted taxable income (ATI) cap, increasing the amount of interest that can be deducted by unregulated businesses in years before 2022. For years after 2021, the regulations continue to disallow the addback of depreciation in the computation of ATI, effectively lowering the cap on the amount of deductible business interest. The portion of PSEG’s and PSEG Power’s business interest expense that was disallowed in 2018 and 2019 will now be deductible in those respective years. PSEG is still in the process of analyzing these regulations, which may impact PSEG’s, PSE&G’s and PSEG Power’s financial condition and cash flows.
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Note 15. Other Income (Deductions)
PSE&GPSEG PowerOther (A)Consolidated
Millions
Three Months Ended June 30, 2021
NDT Fund Interest and Dividends$0 $14 $0 $14 
Allowance for Funds Used During Construction19 0 0 19 
Solar Loan Interest4 0 0 4 
Purchases of Tax Losses under New Jersey Technology Tax Benefit Transfer Program0 (3)0 (3)
Other1 (3)1 (1)
  Total Other Income (Deductions)$24 $8 $1 $33 
Six Months Ended June 30, 2021
NDT Fund Interest and Dividends$0 $27 $0 $27 
Allowance for Funds Used During Construction42 0 0 42 
Solar Loan Interest7 0 0 7 
Purchases of Tax Losses under New Jersey Technology Tax Benefit Transfer Program0 (19)0 (19)
Other3 (4)2 1 
  Total Other Income (Deductions)$52 $4 $2 $58 
Three Months Ended June 30, 2020
NDT Fund Interest and Dividends$0 $14 $0 $14 
Allowance for Funds Used During Construction20 0 0 20 
Solar Loan Interest4 0 0 4 
Purchases of Tax Losses under New Jersey Technology Tax Benefit Transfer Program0 (1)0 (1)
Other2 (1)0 1 
  Total Other Income (Deductions)$26 $12 $0 $38 
Six Months Ended June 30, 2020
NDT Fund Interest and Dividends$0 $27 $0 $27 
Allowance for Funds Used During Construction41 0 0 41 
Solar Loan Interest8 0 0 8 
Purchases of Tax Losses under New Jersey Technology Tax Benefit Transfer Program0 (36)0 (36)
Other4 (2)0 2 
Total Other Income (Deductions)$53 $(11)$0 $42 
(A)Other consists of activity at PSEG (as parent company), Energy Holdings, Services, PSEG LI and intercompany eliminations.
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Note 16. Income Taxes
A reconciliation of reported income tax expense for PSEG with the amount computed by multiplying pre-tax income by the statutory federal income tax rate of 21% is as follows:
 Three Months EndedSix Months Ended
PSEGJune 30,June 30,
2021202020212020
 Millions
Pre-Tax Income (Loss)$(239)$560 $526 $1,052 
Tax Computed at Statutory Rate @ 21%$(50)$118 $110 $221 
Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments:
State Income Taxes (net of federal income tax)(24)25 18 32 
NDT Fund9 24 18 (2)
Tax Credit Amortization/ITC Recapture35 (4)31 (8)
Tax Adjustment Credit(42)(45)(121)(88)
Other10 (9)(1)(2)
Subtotal(12)(9)(55)(68)
Total Income Tax Expense (Benefit)$(62)$109 $55 $153 
Effective Income Tax Rate25.9 %19.5 %10.5 %14.5 %
A reconciliation of reported income tax expense for PSE&G with the amount computed by multiplying pre-tax income by the statutory federal income tax rate of 21% is as follows:
 Three Months EndedSix Months Ended
PSE&GJune 30,June 30,
2021202020212020
 Millions
Pre-Tax Income$370 $330 $926 $879 
Tax Computed at Statutory Rate @ 21%$78 $69 $194 $185 
Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments:
State Income Taxes (net of federal income tax)25 17 63 54 
Tax Adjustment Credit(42)(45)(121)(88)
Other0 6 4 5 
Subtotal(17)(22)(54)(29)
Total Income Tax Expense (Benefit)$61 $47 $140 $156 
Effective Income Tax Rate16.5 %14.2 %15.1 %17.7 %
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A reconciliation of reported income tax expense for PSEG Power with the amount computed by multiplying pre-tax income by the statutory federal income tax rate of 21% is as follows:
 Three Months EndedSix Months Ended
PSEG PowerJune 30,June 30,
2021202020212020
 Millions
Pre-Tax Income (Loss)$(610)$234 $(397)$177 
Tax Computed at Statutory Rate @ 21%$(128)$49 $(83)$37 
Increase (Decrease) Attributable to Flow-Through of Certain Tax Adjustments:
State Income Taxes (net of federal income tax)(49)10 (45)(21)
NDT Fund9 24 18 (2)
Tax Credit Amortization/ITC Recapture38 (2)36 (4)
Audit Settlement0 (20)(2)(22)
Other3 3 1 6 
Subtotal1 15 8 (43)
Total Income Tax Expense (Benefit)$(127)$64 $(75)$(6)
Effective Income Tax Rate20.8 %27.4 %18.9 %(3.4)%
In March 2021, the White House released an overview of the American Jobs Plan. In April 2021, the Treasury Department issued The Made in America Tax Plan and in June 2021, the General Explanations of the Administration’s Fiscal Year 2022 Revenue Proposals in the Fiscal Year 2022 Budget. Each include several tax raising provisions that have not yet been enacted. Further, a prolonged economic recovery may result in additional federal and state tax legislation that can have a material impact on PSEG’s, PSE&G’s and PSEG Power’s effective tax rate and cash tax position.
Amounts recorded under the Tax Cuts and Jobs Act of 2017, Coronavirus Aid, Relief, and Economic Security Act (CARES Act)
In March 2020,and Consolidated Appropriations Act, 2021 are subject to change based on several factors, including, among other things, whether the CARES Act was signed into federal law. As applicable to PSEG and PSEG Power, the CARES Act favorably increases the limitation on the amount of interest that can be deducted in 2020. The increased limitation will allow a portion of the previously disallowed amounts to reduceInternal Revenue Service or state taxing authorities issue additional guidance and/or further clarification. Any further guidance or clarification could impact PSEG’s, PSE&G’s and PSEG Power’s 2020 taxable income. The CARES Act also reversed certain NOL provisions from thefinancial statements.
As of June 30, 2021, PSE&G had a $23 million New Jersey Corporate Business Tax Act such as allowing five-year carrybacks of 2018, 2019 and 2020 NOLs.
IRS PLR
In April 2020, the IRS issued a PLR to PSE&G concludingnet operating loss (NOL) that certain excess deferred taxes previously classified as protected should be classified as unprotected. Unprotected excess deferred income taxes are not subject to the normalization rules allowing them to be refunded to customers sooner as agreed to with FERC and the BPU. In July 2020, FERC and the BPU approved PSE&G’s requests to refund these unprotected excess deferred income taxes to customers. FERC approved the refund of these unprotected excess deferred income taxes within the 2019 true-up filing. The BPU approved the refund of these unprotected excess deferred income taxes within the next five years beginning in July 2020. See Note 6. Rate Filings for additional information.
Unrecognized Tax Benefits
In April 2020, the Joint Committee on Taxation approved PSEG’s nuclear carryback claim and federal tax returns for the years 2011 and 2012. In June 2020, the federal income tax audits for years 2011 through 2016 and the nuclear carryback claim were concluded. As a result, in the second quarter of 2020, PSEG, PSE&G, and PSEG Power decreased their total unrecognized tax benefits by $149 million, $83 million, and $63 million, respectively. As these unrecognized tax benefits primarily relate to temporary differences for which there are associated accumulated deferred income taxes, PSEG, PSE&G, and PSEG Power recorded $37 million, $9 million, and $25 million, respectively, of income statement benefits. The final cash settlement is expected to be completed withinfully realized in the next twelve months.future. There are no other material tax carryforwards in other jurisdictions.
New Jersey State Tax Reform
In September 2020, New Jersey enacted its State Fiscal Year 2021 Budget, which amended the temporary surtax originally enacted into law in 2018, from 1.5% to 2.5% for 2020 and 2021 and extended the 2.5% surtax to 2023. PSE&G continues to be exempt and this amendment will not have a material impact on PSEG’s and PSEG Power’s financial statements.
In July 2018, New Jersey made changes to its income tax laws, including imposing the aforementioned temporary surtax, as well as requiring corporate taxpayers to file in a combined reporting group as defined under New Jersey law starting in 2019. Both provisions include an exemption for public utilities. PSEG believes PSE&G meets the definition of a public utility and, therefore, will not be impacted by the temporary surtax or be included in the combined reporting group. PSEG anticipates New Jersey will be issuing clarifying guidance regarding combined reporting rules. Any further guidance or clarification could impact PSEG’s and PSEG Power’s financial statements.











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Note 17. Accumulated Other Comprehensive Income (Loss), Net of Tax
PSEGThree Months Ended June 30, 2021
Accumulated Other Comprehensive Income (Loss)Cash Flow HedgesPension and OPEB PlansAvailable-for-Sale SecuritiesTotal
Millions
Balance as of March 31, 2021$(8)$(542)$8 $(542)
Other Comprehensive Income (Loss) before Reclassifications0 0 16 16 
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)0 4 0 4 
Net Current Period Other Comprehensive Income (Loss)0 4 16 20 
Balance as of June 30, 2021$(8)$(538)$24 $(522)
PSEGThree Months Ended June 30, 2020
Accumulated Other Comprehensive Income (Loss)Cash Flow HedgesPension and OPEB PlansAvailable-for-Sale SecuritiesTotal
Millions
Balance as of March 31, 2020$(18)$(496)$33 $(481)
Other Comprehensive Income (Loss) before Reclassifications0 0 30 30 
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)3 3 (10)(4)
Net Current Period Other Comprehensive Income (Loss)3 3 20 26 
Balance as of June 30, 2020$(15)$(493)$53 $(455)
PSEGSix Months Ended June 30, 2021
Accumulated Other Comprehensive Income (Loss)Cash Flow HedgesPension and OPEB PlansAvailable-for-Sale SecuritiesTotal
Millions
Balance as of December 31, 2020$(9)$(545)$50 $(504)
Other Comprehensive Income (Loss) before Reclassifications0 0 (24)(24)
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)1 7 (2)6 
Net Current Period Other Comprehensive Income (Loss)1 7 (26)(18)
Balance as of June 30, 2021$(8)$(538)$24 $(522)
PSEGSix Months Ended June 30, 2020
Accumulated Other Comprehensive Income (Loss)Cash Flow HedgesPension and OPEB PlansAvailable-for-Sale SecuritiesTotal
Millions
Balance as of December 31, 2019$(15)$(499)$25 $(489)
Other Comprehensive Income (Loss) before Reclassifications(4)0 44 40 
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)4 6 (16)(6)
Net Current Period Other Comprehensive Income (Loss)0 6 28 34 
Balance as of June 30, 2020$(15)$(493)$53 $(455)
PSEGThree Months Ended September 30, 2020
Accumulated Other Comprehensive Income (Loss)Cash Flow HedgesPension and OPEB PlansAvailable-for-Sale SecuritiesTotal
Millions
Balance as of June 30, 2020$(15)$(493)$53 $(455)
Other Comprehensive Income before Reclassifications0 0 3 3 
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)4 3 (7)0 
Net Current Period Other Comprehensive Income (Loss)4 3 (4)3 
Balance as of September 30, 2020$(11)$(490)$49 $(452)
PSEGThree Months Ended September 30, 2019
Accumulated Other Comprehensive Income (Loss)Cash Flow HedgesPension and OPEB PlansAvailable-for-Sale SecuritiesTotal
Millions
Balance as of June 30, 2019$(18)$(437)$23 $(432)
Other Comprehensive Income (Loss) before Reclassifications0 (20)13 (7)
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)1 3 (3)1 
Net Current Period Other Comprehensive Income (Loss)1 (17)10 (6)
Balance as of September 30, 2019$(17)$(454)$33 $(438)
PSEGNine Months Ended September 30, 2020
Accumulated Other Comprehensive Income (Loss)Cash Flow HedgesPension and OPEB PlansAvailable-for-Sale SecuritiesTotal
Millions
Balance as of December 31, 2019$(15)$(499)$25 $(489)
Other Comprehensive Income (Loss) before Reclassifications(4)0 47 43 
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)8 9 (23)(6)
Net Current Period Other Comprehensive Income (Loss)4 9 24 37 
Balance as of September 30, 2020$(11)$(490)$49 $(452)
PSEGNine Months Ended September 30, 2019
Accumulated Other Comprehensive Income (Loss)Cash Flow HedgesPension and OPEB PlansAvailable-for-Sale SecuritiesTotal
Millions
Balance as of December 31, 2018$(1)$(360)$(16)$(377)
Cumulative Effect Adjustment to Reclassify Stranded Tax Effects Resulting in the Change in the Federal Corporate Income Tax to Retained Earnings0 (81)0 (81)
Current Period Other Comprehensive Income (Loss)
Other Comprehensive Income (Loss) before Reclassifications(17)(23)54 14 
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)1 10 (5)6 
Net Current Period Other Comprehensive Income (Loss)(16)(13)49 20 
Net Change in Accumulated Other Comprehensive Income (Loss)(16)(94)49 (61)
Balance as of September 30, 2019$(17)$(454)$33 $(438)
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PSEG PowerThree Months Ended June 30, 2021
Accumulated Other Comprehensive Income (Loss)Cash Flow HedgesPension and OPEB PlansAvailable-for-Sale SecuritiesTotal
Millions
Balance as of March 31, 2021$0 $(457)$8 $(449)
Other Comprehensive Income (Loss) before Reclassifications0 0 13 13 
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)0 3 (1)2 
Net Current Period Other Comprehensive Income (Loss)0 3 12 15 
Balance as of June 30, 2021$0 $(454)$20 $(434)
PSEG PowerThree Months Ended June 30, 2020
Accumulated Other Comprehensive Income (Loss)Cash Flow HedgesPension and OPEB PlansAvailable-for-Sale SecuritiesTotal
Millions
Balance as of March 31, 2020$0 $(418)$26 $(392)
Other Comprehensive Income (Loss) before Reclassifications0 0 24 24 
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)0 3 (9)(6)
Net Current Period Other Comprehensive Income (Loss)0 3 15 18 
Balance as of June 30, 2020$0 $(415)$41 $(374)
PSEG PowerSix Months Ended June 30, 2021
Accumulated Other Comprehensive Income (Loss)Cash Flow HedgesPension and OPEB PlansAvailable-for-Sale SecuritiesTotal
Millions
Balance as of December 31, 2020$0 $(459)$40 $(419)
Other Comprehensive Income (Loss) before Reclassifications0 0 (18)(18)
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)0 5 (2)3 
Net Current Period Other Comprehensive Income (Loss)0 5 (20)(15)
Balance as of June 30, 2021$0 $(454)$20 $(434)
PSEG PowerSix Months Ended June 30, 2020
Accumulated Other Comprehensive Income (Loss)Cash Flow HedgesPension and OPEB PlansAvailable-for-Sale SecuritiesTotal
Millions
Balance as of December 31, 2019$0 $(420)$19 $(401)
Other Comprehensive Income (Loss) before Reclassifications0 0 35 35 
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)0 5 (13)(8)
Net Current Period Other Comprehensive Income (Loss)0 5 22 27 
Balance as of June 30, 2020$0 $(415)$41 $(374)
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PSEG PowerThree Months Ended September 30, 2020
Accumulated Other Comprehensive Income (Loss)Cash Flow HedgesPension and OPEB PlansAvailable-for-Sale SecuritiesTotal
Millions
Balance as of June 30, 2020$0 $(415)$41 $(374)
Other Comprehensive Income before Reclassifications0 0 3 3 
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)0 2 (5)(3)
Net Current Period Other Comprehensive Income (Loss)0 2 (2)0 
Balance as of September 30, 2020$0 $(413)$39 $(374)
PSEG PowerThree Months Ended September 30, 2019
Accumulated Other Comprehensive Income (Loss)Cash Flow HedgesPension and OPEB PlansAvailable-for-Sale SecuritiesTotal
Millions
Balance as of June 30, 2019$0 $(372)$18 $(354)
Other Comprehensive Income before Reclassifications0 (14)10 (4)
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)0 2 (3)(1)
Net Current Period Other Comprehensive Income (Loss)0 (12)7 (5)
Balance as of September 30, 2019$0 $(384)$25 $(359)
PSEG PowerNine Months Ended September 30, 2020
Accumulated Other Comprehensive Income (Loss)Cash Flow HedgesPension and OPEB PlansAvailable-for-Sale SecuritiesTotal
Millions
Balance as of December 31, 2019$0 $(420)$19 $(401)
Other Comprehensive Income before Reclassifications0 0 38 38 
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)0 7 (18)(11)
Net Current Period Other Comprehensive Income (Loss)0 7 20 27 
Balance as of September 30, 2020$0 $(413)$39 $(374)
PSEG PowerNine Months Ended September 30, 2019
Accumulated Other Comprehensive Income (Loss)Cash Flow HedgesPension and OPEB PlansAvailable-for-Sale SecuritiesTotal
Millions
Balance as of December 31, 2018$0 $(306)$(13)$(319)
Cumulative Effect Adjustment to Reclassify Stranded Tax Effects Resulting in the Change in the Federal Corporate Income Tax to Retained Earnings0 (69)0 (69)
Current Period Other Comprehensive Income (Loss)
Other Comprehensive Income (Loss) before Reclassifications0 (17)42 25 
Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)0 8 (4)4 
Net Current Period Other Comprehensive Income (Loss)0 (9)38 29 
Net Change in Accumulated Other Comprehensive Income (Loss)0 (78)38 (40)
Balance as of September 30, 2019$0 $(384)$25 $(359)
PSEG Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) to Income Statement
Three Months EndedSix Months Ended
Description of Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)Location of Pre-Tax Amount In Statement of OperationsJune 30, 2021June 30, 2021
Pre-Tax AmountTax (Expense) BenefitAfter-Tax AmountPre-Tax AmountTax (Expense) BenefitAfter-Tax Amount
Millions
Cash Flow Hedges
Interest Rate SwapsInterest Expense$(1)$1 $0 $(2)$1 $(1)
Total Cash Flow Hedges(1)1 0 (2)1 (1)
Pension and OPEB Plans
Amortization of Prior Service (Cost) CreditNon-Operating Pension and OPEB Credits (Costs)6 (2)4 11 (3)8 
Amortization of Actuarial LossNon-Operating Pension and OPEB Credits (Costs)(11)3 (8)(21)6 (15)
Total Pension and OPEB Plans(5)1 (4)(10)3 (7)
Available-for-Sale Debt Securities
Realized Gains (Losses)Net Gains (Losses) on Trust Investments1 (1)0 4 (2)2 
Total Available-for-Sale Debt Securities1 (1)0 4 (2)2 
Total$(5)$1 $(4)$(8)$2 $(6)
PSEG Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) to Income Statement
Three Months EndedSix Months Ended
Description of Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)Location of Pre-Tax Amount In Statement of OperationsJune 30, 2020June 30, 2020
Pre-Tax AmountTax (Expense) BenefitAfter-Tax AmountPre-Tax AmountTax (Expense) BenefitAfter-Tax Amount
Millions
Cash Flow Hedges
Interest Rate SwapsInterest Expense$(4)$1 $(3)$(6)$2 $(4)
Total Cash Flow Hedges(4)1 (3)(6)2 (4)
Pension and OPEB Plans
Amortization of Prior Service (Cost) CreditNon-Operating Pension and OPEB Credits (Costs)6 (1)5 12 (3)9 
Amortization of Actuarial LossNon-Operating Pension and OPEB Credits (Costs)(10)2 (8)(20)5 (15)
Total Pension and OPEB Plans(4)1 (3)(8)2 (6)
Available-for-Sale Debt Securities
Realized Gains (Losses) and ImpairmentsNet Gains (Losses) on Trust Investments17 (7)10 26 (10)16 
Total Available-for-Sale Debt Securities17 (7)10 26 (10)16 
Total$9 $(5)$4 $12 $(6)$6 
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PSEG Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) to Income Statement
Three Months EndedNine Months Ended
Description of Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)Location of Pre-Tax Amount In Statement of OperationsSeptember 30, 2020September 30, 2020
Pre-Tax AmountTax (Expense) BenefitAfter-Tax AmountPre-Tax AmountTax (Expense) BenefitAfter-Tax Amount
Millions
Cash Flow Hedges
Interest Rate SwapsInterest Expense$(5)$1 $(4)$(11)$3 $(8)
Total Cash Flow Hedges(5)1 (4)(11)3 (8)
Pension and OPEB Plans
Amortization of Prior Service (Cost) CreditNon-Operating Pension and OPEB Credits (Costs)6 (2)4 18 (5)13 
Amortization of Actuarial LossNon-Operating Pension and OPEB Credits (Costs)(10)3 (7)(30)8 (22)
Total Pension and OPEB Plans(4)1 (3)(12)3 (9)
Available-for-Sale Debt Securities
Realized Gains (Losses) and ImpairmentsNet Gains (Losses) on Trust Investments11 (4)7 37 (14)23 
Total Available-for-Sale Debt Securities11 (4)7 37 (14)23 
Total$2 $(2)$0 $14 $(8)$6 
PSEG Power Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) to Income Statement
Three Months EndedSix Months Ended
Description of Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)Location of Pre-Tax Amount In Statement of OperationsJune 30, 2021June 30, 2021
Pre-Tax AmountTax (Expense) BenefitAfter-Tax AmountPre-Tax AmountTax (Expense) BenefitAfter-Tax Amount
Millions
Pension and OPEB Plans
Amortization of Prior Service (Cost) CreditNon-Operating Pension and OPEB Credits (Costs)$5 $(2)$3 $10 $(3)$7 
Amortization of Actuarial LossNon-Operating Pension and OPEB Credits (Costs)(9)3 (6)(17)5 (12)
Total Pension and OPEB Plans(4)1 (3)(7)2 (5)
Available-for-Sale Debt Securities
Realized Gains (Losses)Net Gains (Losses) on Trust Investments1 0 1 3 (1)2 
Total Available-for-Sale Debt Securities1 0 1 3 (1)2 
Total$(3)$1 $(2)$(4)$1 $(3)
PSEG Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) to Income Statement
Three Months EndedNine Months Ended
Description of Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)Location of Pre-Tax Amount In Statement of OperationsSeptember 30, 2019September 30, 2019
Pre-Tax AmountTax (Expense) BenefitAfter-Tax AmountPre-Tax AmountTax (Expense) BenefitAfter-Tax Amount
Millions
Cash Flow Hedges
Interest Rate SwapsInterest Expense$(1)$0 $(1)$(2)$1 $(1)
Total Cash Flow Hedges(1)0 (1)(2)1 (1)
Pension and OPEB Plans
Amortization of Prior Service (Cost) CreditNon-Operating Pension and OPEB Credits (Costs)7 (2)5 20 (6)14 
Amortization of Actuarial LossNon-Operating Pension and OPEB Credits (Costs)(10)2 (8)(33)9 (24)
Total Pension and OPEB Plans(3)0 (3)(13)3 (10)
Available-for-Sale Debt Securities
Realized Gains (Losses)Net Gains (Losses) on Trust Investments6 (3)3 9 (4)5 
Total Available-for-Sale Debt Securities6 (3)3 9 (4)5 
Total$2 $(3)$(1)$(6)$0 $(6)
PSEG Power Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) to Income Statement
Three Months EndedSix Months Ended
Description of Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)Location of Pre-Tax Amount In Statement of OperationsJune 30, 2020June 30, 2020
Pre-Tax AmountTax (Expense) BenefitAfter-Tax AmountPre-Tax AmountTax (Expense) BenefitAfter-Tax Amount
Millions
Pension and OPEB Plans
Amortization of Prior Service (Cost) CreditNon-Operating Pension and OPEB Credits (Costs)$6 $(2)$4 $11 $(3)$8 
Amortization of Actuarial LossNon-Operating Pension and OPEB Credits (Costs)(9)2 (7)(17)4 (13)
Total Pension and OPEB Plans(3)0 (3)(6)1 (5)
Available-for-Sale Debt Securities
Realized Gains (Losses) and ImpairmentsNet Gains (Losses) on Trust Investments14 (5)9 21 (8)13 
Total Available-for-Sale Debt Securities14 (5)9 21 (8)13 
Total$11 $(5)$6 $15 $(7)$8 
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PSEG Power Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) to Income Statement
Three Months EndedNine Months Ended
Description of Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)Location of Pre-Tax Amount In Statement of OperationsSeptember 30, 2020September 30, 2020
Pre-Tax AmountTax (Expense) BenefitAfter-Tax AmountPre-Tax AmountTax (Expense) BenefitAfter-Tax Amount
Millions
Pension and OPEB Plans
Amortization of Prior Service (Cost) CreditNon-Operating Pension and OPEB Credits (Costs)$5 $(2)$3 $16 $(5)$11 
Amortization of Actuarial LossNon-Operating Pension and OPEB Credits (Costs)(8)3 (5)(25)7 (18)
Total Pension and OPEB Plans(3)1 (2)(9)2 (7)
Available-for-Sale Debt Securities
Realized Gains (Losses) and ImpairmentsNet Gains (Losses) on Trust Investments9 (4)5 30 (12)18 
Total Available-for-Sale Debt Securities9 (4)5 30 (12)18 
Total$6 $(3)$3 $21 $(10)$11 

PSEG Power Amounts Reclassified from Accumulated Other Comprehensive Income (Loss) to Income Statement
Three Months EndedNine Months Ended
Description of Amounts Reclassified from Accumulated Other Comprehensive Income (Loss)Location of Pre-Tax Amount In Statement of OperationsSeptember 30, 2019September 30, 2019
Pre-Tax AmountTax (Expense) BenefitAfter-Tax AmountPre-Tax AmountTax (Expense) BenefitAfter-Tax Amount
Millions
Pension and OPEB Plans
Amortization of Prior Service (Cost) CreditNon-Operating Pension and OPEB Credits (Costs)$6 $(2)$4 $17 $(5)$12 
Amortization of Actuarial LossNon-Operating Pension and OPEB Credits (Costs)(9)3 (6)(28)8 (20)
Total Pension and OPEB Plans(3)1 (2)(11)3 (8)
Available-for-Sale Debt Securities
Realized Gains (Losses)Net Gains (Losses) on Trust Investments5 (2)3 7 (3)4 
Total Available-for-Sale Debt Securities5 (2)3 7 (3)4 
Total$2 $(1)$1 $(4)$0 $(4)
Note 18. Earnings Per Share (EPS) and Dividends
EPS
Basic EPS is calculated by dividing Net Income (Loss) by the weighted average number of shares of common stock outstanding. Diluted EPS is calculated by dividing Net Income (Loss) by the weighted average number of shares of common stock outstanding, plus dilutive potential shares related to PSEG’s stock based compensation. The following table shows the effect of these dilutive potential shares on the weighted average number of shares outstanding used in calculating diluted EPS:
Three Months Ended June 30,Six Months Ended June 30,
2021202020212020
BasicDilutedBasicDilutedBasicDilutedBasicDiluted
EPS Numerator (Millions):
Net Income (Loss)$(177)$(177)$451 $451 $471 $471 $899 $899 
EPS Denominator (Millions):
Weighted Average Common Shares Outstanding504 504 504 504 504 504 504 504 
Effect of Stock Based Compensation Awards0 0 0 3 0 3 0 3 
Total Shares504 504 504 507 504 507 504 507 
EPS
Net Income (Loss)$(0.35)$(0.35)$0.89 $0.89 $0.94 $0.93 $1.78 $1.77 
Approximately three million potentially dilutive shares were excluded from total shares used to calculate the diluted loss per share for the quarter ended June 30, 2021 as their impact was antidilutive.
Dividends
Three Months EndedSix Months Ended
 June 30,June 30,
Dividend Payments on Common Stock2021202020212020
Per Share$0.51 $0.49 $1.02 $0.98 
In Millions$258 $247 $516 $495 
On July 20, 2021, the PSEG Board of Directors approved a $0.51 per share common stock dividend for the third quarter of 2021.

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Note 18. Earnings Per Share (EPS) and Dividends
EPS
Diluted EPS is calculated by dividing Net Income by the weighted average number of shares of common stock outstanding, including shares issuable upon exercise of stock options outstanding or vesting of restricted stock awards granted under PSEG’s stock compensation plans and upon payment of performance share units or restricted stock units. The following table shows the effect of these stock options, performance share units and restricted stock units on the weighted average number of shares outstanding used in calculating diluted EPS:
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
BasicDilutedBasicDilutedBasicDilutedBasicDiluted
EPS Numerator (Millions):
Net Income$575 $575 $403 $403 $1,474 $1,474 $1,256 $1,256 
EPS Denominator (Millions):
Weighted Average Common Shares Outstanding504 504 504 504 504 504 504 504 
Effect of Stock Based Compensation Awards0 3 0 3 0 3 0 3 
Total Shares504 507 504 507 504 507 504 507 
EPS
Net Income$1.15 $1.14 $0.80 $0.79 $2.93 $2.91 $2.49 $2.47 
Dividends
Three Months EndedNine Months Ended
 September 30,September 30,
Dividend Payments on Common Stock2020201920202019
Per Share$0.49 $0.47 $1.47 $1.41 
In Millions$248 $238 $743 $713 


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Note 19. Financial Information by Business Segment
PSE&GPSEG PowerOther (A)Eliminations (B)Consolidated Total
Millions
Three Months Ended September 30, 2020
Total Operating Revenues$1,660 $746 $143 $(179)$2,370 
Net Income (Loss) (C)313 254 8 0 575 
Gross Additions to Long-Lived Assets587 89 2 0 678 
Nine Months Ended September 30, 2020
Operating Revenues$4,999 $2,649 $447 $(894)$7,201 
Net Income (Loss) (C)1,036 437 1 0 1,474 
Gross Additions to Long-Lived Assets1,777 307 8 0 2,092 
Three Months Ended September 30, 2019
Total Operating Revenues$1,604 $771 $151 $(224)$2,302 
Net Income (Loss)344 53 6 0 403 
Gross Additions to Long-Lived Assets608 168 3 0 779 
Nine Months Ended September 30, 2019
Operating Revenues$5,018 $3,270 $379 $(1,069)$7,598 
Net Income (Loss) (C)974 309 (27)0 1,256 
Gross Additions to Long-Lived Assets1,866 507 10 0 2,383 
As of September 30, 2020
Total Assets$34,833 $12,719 $2,952 $(928)$49,576 
Investments in Equity Method Subsidiaries$0 $66 $1 $0 $67 
As of December 31, 2019
Total Assets$33,266 $12,805 $2,715 $(1,056)$47,730 
Investments in Equity Method Subsidiaries$0 $66 $1 $0 $67 
PSE&GPSEG PowerOther (A)Eliminations (B)Consolidated Total
Millions
Three Months Ended June 30, 2021
Total Operating Revenues$1,514 $380 $155 $(175)$1,874 
Net Income (Loss) (C)309 $(483)(3)0 (177)
Gross Additions to Long-Lived Assets633 $36 1 0 670 
Six Months Ended June 30, 2021
Operating Revenues$3,587 $1,547 $306 $(677)$4,763 
Net Income (Loss) (C)786 (322)7 0 471 
Gross Additions to Long-Lived Assets1,219 82 2 0 1,303 
Three Months Ended June 30, 2020
Total Operating Revenues$1,456 $683 $148 $(237)$2,050 
Net Income (Loss)283 170 (2)0 451 
Gross Additions to Long-Lived Assets570 121 3 0 694 
Six Months Ended June 30, 2020
Operating Revenues$3,339 $1,903 $304 $(715)$4,831 
Net Income (Loss)723 183 (7)0 899 
Gross Additions to Long-Lived Assets1,190 218 6 0 1,414 
As of June 30, 2021
Total Assets$36,396 $11,031 $2,669 $(804)$49,292 
Investments in Equity Method Subsidiaries$0 $67 $91 $0 $158 
As of December 31, 2020
Total Assets$35,581 $12,704 $2,692 $(927)$50,050 
Investments in Equity Method Subsidiaries$0 $64 $0 $0 $64 
(A)Includes amounts applicable to Energy Holdings and PSEG LI, which are below the quantitative threshold for separate disclosure as reportable segments. Other also includes amounts applicable to PSEG (parent company) and Services.
(B)Intercompany eliminations primarily relate to intercompany transactions between PSE&G and PSEG Power. For a further discussion of the intercompany transactions between PSE&G and PSEG Power, see Note 20. Related-Party Transactions.
(C)Includes ana $373 million after-tax gainimpairment of $86 millionthe ISO NE asset grouping at PSEG Power in the three months and ninesix months ended SeptemberJune 30, 2020 related to the sale of PSEG Power’s interest in the Yards Creek generation facility and an after-tax loss of $286 million in the nine months ended September 30, 2019 related to the sale of PSEG Power’s ownership interests in the Keystone and Conemaugh fossil generation plants.2021. See Item 1. Note 4. Early Plant Retirements/Asset Dispositions and Impairments for additional information.

 Also includes net after-tax losses of $(206) million and $(77) million for the three months ended June 30, 2021 and 2020, respectively, and $(240) million for the six months ended June 30, 2021 related to the impacts of non-trading commodity mark-to-market activity, which consist of the financial impact from positions with future delivery dates.
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Note 20. Related-Party Transactions
The following discussion relates to intercompany transactions, which are eliminated during the PSEG consolidation process in accordance with GAAP.
PSE&G
The financial statements for PSE&G include transactions with related parties presented as follows:
Three Months EndedNine Months Ended
September 30,September 30,
Related-Party Transactions2020201920202019
Millions
Billings from Affiliates:
Net Billings from PSEG Power (A)$148 $220 $865 $1,099 
Administrative Billings from Services (B)82 72 238 227 
Total Billings from Affiliates$230 $292 $1,103 $1,326 
Three Months EndedSix Months Ended
June 30,June 30,
Related-Party Transactions2021202020212020
Millions
Billings from Affiliates:
Net Billings from PSEG Power (A)$172 $227 $667 $717 
Administrative Billings from Services (B)92 78 179 156 
Total Billings from Affiliates$264 $305 $846 $873 
As ofAs of
Related-Party TransactionsSeptember 30, 2020December 31, 2019
Millions
Receivable from PSEG (C)$0 $1 
Payable to PSEG Power (A)$128 $307 
Payable to Services (B)88 83 
Payable to PSEG (C)56 0 
Accounts Payable—Affiliated Companies$272 $390 
Working Capital Advances to Services (D)$33 $33 
Long-Term Accrued Taxes Payable
$20 $115 
As ofAs of
Related-Party TransactionsJune 30, 2021December 31, 2020
Millions
Payable to PSEG Power (A)$163 $273 
Payable to Services (B)82 95 
Payable to PSEG (C)55 111 
Accounts Payable—Affiliated Companies$300 $479 
Noncurrent Payable to PSEG Power (A)$10 $0 
Working Capital Advances to Services (D)$33 $33 
Long-Term Accrued Taxes Payable
$4 $7 
PSEG Power
The financial statements for PSEG Power include transactions with related parties presented as follows:
Three Months EndedNine Months Ended
 September 30,September 30,
Related-Party Transactions2020201920202019
Millions
Billings to Affiliates:
Net Billings to PSE&G (A)$148 $220 $865 $1,099 
Billings from Affiliates:
Administrative Billings from Services (B)$40 $41 $127 $132 
As ofAs of
Related-Party TransactionsSeptember 30, 2020December 31, 2019
Millions
Receivable from PSE&G (A)$128 $307 
Receivable from PSEG (C)26 101 
Accounts Receivable—Affiliated Companies$154 $408 
Payable to Services (B)$22 $5 
Accounts Payable—Affiliated Companies$22 $5 
Short-Term Loan to (from) Affiliate (E)$333 $149 
Working Capital Advances to Services (D)$17 $17 
Long-Term Accrued Taxes Payable
$58 $115 

Three Months EndedSix Months Ended
 June 30,June 30,
Related-Party Transactions2021202020212020
Millions
Billings to Affiliates:
Net Billings to PSE&G (A)$172 $227 $667 $717 
Billings from Affiliates:
Administrative Billings from Services (B)$46 $42 $89 $87 
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As ofAs of
Related-Party TransactionsJune 30, 2021December 31, 2020
Millions
Receivable from PSE&G (A)$163 $273 
Receivable from PSEG (C)0 44 
Receivable from Other2 0 
Accounts Receivable—Affiliated Companies$165 $317 
Payable to Services (B)$21 $13 
Payable to PSEG (C)178 0 
Accounts Payable—Affiliated Companies$199 $13 
Short-Term Loan to (from) Affiliate (E)$(121)$161 
Noncurrent Receivable from PSE&G (A)$10 $0 
Working Capital Advances to Services (D)$17 $17 
Long-Term Accrued Taxes Payable
$64 $57 
(A)PSE&G has entered into a requirements contract with PSEG Power under which PSEG Power provides the gas supply services needed to meet PSE&G’s BGSS and other contractual requirements. PSEG Power has also entered into contracts to supply energy, capacity and ancillary services to PSE&G through the BGS auction process and sells ZECs to PSE&G under the ZEC program. The rates in the BGS and BGSS contracts and for the ZEC sales are prescribed by the BPU. BGS and BGSS sales are billed and settled on a monthly basis. ZEC sales are billed on a monthly basis and settled annually following completion of each energy year. In addition, PSEG Power and PSE&G provide certain technical services for each other generally at cost in compliance with FERC and BPU affiliate rules.
(B)Services provides and bills administrative services to PSE&G and PSEG Power at cost. In addition, PSE&G and PSEG Power have other payables to Services, including amounts related to certain common costs, which Services pays on behalf of each of the operating companies.
(C)PSEG files a consolidated federal income tax return with its affiliated companies. A tax allocation agreement exists between PSEG and each of its affiliated companies. The general operation of these agreements is that the subsidiary company will compute its taxable income on a stand-alone basis. If the result is a net tax liability, such amount shall be paid to PSEG. If there are NOLs and/or tax credits, the subsidiary shall receive payment for the tax savings from PSEG to the extent that PSEG is able to utilize those benefits.
(D)PSE&G and PSEG Power have advanced working capital to Services. The amounts are included in Other Noncurrent Assets on PSE&G’s and PSEG Power’s Condensed Consolidated Balance Sheets.
(E)PSEG Power’s short-term loans with PSEG are for working capital and other short-term needs. Interest Income and Interest Expense relating to these short-term funding activities were immaterial.

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ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)
This combined MD&A is separately filed by Public Service Enterprise Group Incorporated (PSEG), Public Service Electric and Gas Company (PSE&G) and PSEG Power LLC (PSEG Power). Information contained herein relating to any individual company is filed by such company on its own behalf. PSE&G and PSEG Power each make representations only as to itself and make no representations whatsoever as to any other company.
PSEG’s business consists of two reportable segments, our principal direct wholly owned subsidiaries, which are:
•PSE&G—which is a public utility engaged principally in the transmission of electricity and distribution of electricity and natural gas in certain areas of New Jersey. PSE&G is subject to regulation by the New Jersey Board of Public Utilities (BPU) and the Federal Energy Regulatory Commission (FERC). PSE&G also invests in regulated solar generation projects and energy efficiency and related programs in New Jersey, which are regulated by the BPU, and
•PSEG Power—which is a multi-regional energy supply company that integrates the operations of its merchant nuclear and fossil generating assets with its power marketing businesses and fuel supply functions through competitive energy sales in well-developed energy markets primarily in the Northeast and Mid-Atlantic United States through its principal direct wholly owned subsidiaries. In addition, PSEG Power owns and operates solar generation in various states. PSEG Power’s subsidiaries are subject to regulation by FERC, the Nuclear Regulatory Commission (NRC), the Environmental Protection Agency (EPA) and the states in which they operate.
PSEG’s other direct wholly owned subsidiaries are: PSEG Long Island LLC (PSEG LI), which operates the Long Island Power Authority’s (LIPA) transmission and distribution (T&D) system under an Amended and Restated Operations Services Agreement (OSA); PSEG Energy Holdings L.L.C. (Energy Holdings), which primarily hasearns it revenues from its portfolio of lease investments and holds our investment in leveraged leases;offshore wind ventures; and PSEG Services Corporation (Services), which provides certain management, administrative and general services to PSEG and its subsidiaries at cost.
Our business discussion in Part I, Item 1. Business of our 20192020 Annual Report on 10-K (Form 10-K) provides a review of the regions and markets where we operate and compete, as well as our strategy for conducting our businesses within these markets, focusing on operational excellence, financial strength and making disciplined investments. Our risk factor discussion in Part I, Item 1A. Risk Factors of Form 10-K provides information about factors that could have a material adverse impact on our businesses. The following supplements that discussion and the discussion included in the Executive Overview of 20192020 and Future Outlook provided in Item 7 in our Form 10-K by describing significant events and business developments that have occurred during 20202021 and changes to the key factors that we expect may drive our future performance. The following discussion refers to the Condensed Consolidated Financial Statements (Statements) and the Related Notes to Condensed Consolidated Financial Statements (Notes). This discussion should be read in conjunction with such Statements, Notes and the Form 10-K.
EXECUTIVE OVERVIEW OF 20202021 AND FUTURE OUTLOOK
We are continuingprogressing on our transformation intostrategy to become a primarily regulated electric and gas utility that isand a contracted carbon-free energy infrastructure company. We are focused on meeting customer expectations and isbeing well aligned with public policy objectives promoting clean energy investments.by investing to modernize our infrastructure, improve reliability and deliver cleaner energy. Our business plan focuses on achieving growth while controlling costs and managing the risks associated with regulatory and policy changes, fluctuating commodity prices and changes in customer demand. In furtherance of these goals, over the past few years, our investments have altered our business mix to reflect a higher percentage of earnings contribution by PSE&G. We also announced in July 2020 that&G, which improves the sustainability and predictability of our earnings and cash flows and provides more financial flexibility. In June 2021, we completed the sale of PSEG Power’s solar portfolio and we are exploring strategic alternatives forcontinuing to advance the potential sale of PSEG Power’s non-nuclear generating fleet, which includes more than 6,750 megawatts (MW) of fossil generation located in New Jersey, Connecticut, New York and Maryland as well as the 467 MW Solar Source portfolio located in various states.Maryland. See Item 1. Note 4. Early Plant Retirements/Asset Dispositions and Impairments for additional information.
PSE&G, PSEG Power and PSEG LI continue to provideare providing essential services during the ongoing coronavirus (COVID-19) pandemic. We have implemented a comprehensive set of enhanced safety actions to help protect our employees, customers and communities, and we will continue to closely monitor developments and adjust as needed to ensure that we continue to provide reliable service while protecting the safety and health of our workforce and the communities we serve. We continue to be guided by the recommendations of health authorities at the federal, state and local levels. Employees who can perform their job duties remotely are doing so. Those employees who must report to a work site are wearing personal protective equipment (PPE)
The COVID-19 pandemic and practicing physical distancing measures. Extensive cleaning protocols are also in place. Earlier this year, we suspended non-essential work activities, while continuing to respond to customer outagesassociated government actions and requests for emergency service as well as infrastructure maintenance and upgrades. As New Jersey has relaxed its coronavirus response protocols over the past few months, we have initiated a phased re-starting of certain of these activities (i.e., inside premises appliance repair and monthly meter reading activities), while maintaining protocols for physical distancing and PPE. Similarly, we have also begun to formulate policies and protocols for the responsible reopening of our offices and work sites. Our “responsible reentry” policies
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and protocols willeconomic effects continue to focus on the health and safety ofimpact our businesses. We have incurred additional expenses to protect our employees and customers, and the communities we serve while also taking a cautiousPSE&G is experiencing significantly higher bad debts and measured approach toward reopening. We are continuing to assess the appropriate timeline for this process. In connection with their reopening plans, New Jersey, New York and Connecticut have issued advisories for anyone returning from states that have a significant degree of community-wide spread of COVID-19, referred tolower cash collections, as “designated states.” These advisories include exceptions for essential employees and we are assessing what impact this may have on members of our workforce who may live in a designated state. We are also using enhanced physical distancing and safety protocols where there are impacts on members of our workforce who may live in or travel from a designated state.
discussed below. The ongoing coronavirus pandemic has not had a material impact on our results of operations, financial condition or cash flows for the nine months ended September 30, 2020. However, the potential future impact of the pandemic and the associated economic impacts, which could extend beyond the duration of the pandemic, will depend on a number of factors outside of our control, includingcontrol.
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These include the duration and severity of the outbreak as well as third-party actions taken to contain its spread and mitigate its public health effects.effects, and governmental or regulatory actions regarding customer collections, potential limitations on rate increases, recovery of incremental costs, and other matters. While we currently cannot estimate the potential impact to our results of operations, financial condition and cash flows, this MD&A includes a discussion of potential effects of a prolonged outbreak.
PSE&G
At PSE&G, our focus is on enhancing reliability and resiliency of our T&D system, meeting customer expectations and supporting public policy objectives by investing capital in T&D infrastructure and clean energy programs. For the five-year period ending December 31, 2024,2025, PSE&G expects to invest between $12.5$13 billion to $14.7$15 billion, resulting in an expected compound annual growth in rate base growth of 7%6.5% to 8%. These rangesThe low end of the range assumes an extension of our Gas System Modernization Program (GSMP) and Clean Energy Future (CEF)-Energy Efficiency (EE) program at their average annual investment levels, as these programs are expected to continue at least at those current rates beyond their currently approved timeframe of 2023. The upper end of the range is driven by certain unapproved investment programs, including a to-be-filed extension of the Energy Cloud (EC) andStrong program, which otherwise concludes in 2023, as well as the remaining portion of our CEF proposal (portion of Electric Vehicle (EV)/ and Energy Storage (ES) portions of the Clean Energy Future (CEF) program, any extension of the CEF Energy Efficiency (EE) program beyond the initial three-years approved by the BPU in September 2020,programs) and incremental reliability and resiliency investments anticipated in the 2024 timeframe that we intend to seek approval for under the third phase of existing infrastructure programs. See below for a description of the CEF program.
In 2019, we commenced our BPU-approved Gas System Modernization Program II (GSMP II), an expanded, five-year program to invest $1.9 billion beginning in 2019 to replace approximately 875 miles of cast iron and unprotected steel mains in addition to other improvements to the gas system. Approximately $1.6 billion will be recovered through periodic rate roll-ins, with the remaining $300 million to be recovered through a future base rate proceeding. As part of the settlement approved by the BPU, PSE&G agreed to file for a base rate proceeding no later than December 2023, to maintain a base level of gas distribution capital expenditures of $155 million per year and to achieve certain leakage reduction targets.
Also in 2019, the BPU approved our Energy Strong II Program (ES II), an $842 million program to harden, modernize and improve the resiliency of our electric and gas distribution systems. This program began in the fourth quarter of 2019 and is expected to be completed by the end of 2023. Approximately $692 million of the program will be recovered through periodic rate recovery filings, with the balance to be recovered in our next distribution base rate case.
In October 2018, we filed our proposed CEF program with the BPU, a six-year estimated $3.5 billion investment covering four programs; (i) an EE program totaling $2.5 billionpotentially higher amount of investment designed to achieve energy efficiency targets required under New Jersey’s Clean Energy law; (ii) an EV infrastructure program; (iii) an ES program, which was submitted to the BPU together with the EV infrastructure program in a single filing;for GSMP and (iv) an EC program which will include installing approximately two million electric smart meters and associated infrastructure. CEF-EE beyond current levels.
In January 2020, New Jersey released its Energy Master Plan (EMP) which, among other things, recognizesrecognized the importance of the State’s EE targets and supported EVs, ES, and advanced metering infrastructure (AMI).
In September 2020, PSE&G reached a settlement with all parties in the CEF-EE proceeding, which the BPU approved. The settlement provides for an investment ofcommits $1 billion over a three-year period, with the majority of the investment occurring over a five-year period. Costs will be recovered through annual rate-making, with returns aligned with our most recent base rate case and a ten-year amortization period.
The approval also included a Conservation Incentive Program (CIP), a mechanism that will provide for recovery of lost electric and gas variable margin revenues.revenues relative to a baseline of the test year in our last base rate case from July 2017 to June 2018. The CIP isdeferral period for this mechanism became effective in June 2021 for electric and will become effective in October 2021 for gas. PSE&G will suspend its gas Weather Normalization Charge (WNC) when the gas CIP deferral period begins.
In January 2021, the BPU approved a settlement with PSE&G and other parties in the CEF-Energy Cloud (EC) proceeding. The capital cost of the program, which includes implementation of AMI, is estimated to be approximately $700 million, invested over the next four years.
Also in January 2021, the BPU has also issued procedural schedulesapproved a settlement with PSE&G and other parties in the CEF-EV proceeding for a majority of the components of the program. The approved investment under the program is for $166 million, primarily relating to preparatory work to deliver infrastructure to the charging point for three programs: residential smart charging; Level-2 mixed use charging; and direct current fast charging.
All of the capital costs and expenses of the CEF-EC and CEF-EV/ES investmentCEF-EV programs are expected to be recovered in PSE&G’s next base rate case, expected in the second half of 2024. From the start of the program filings, with evidentiary hearings scheduled foruntil the fourth quartercommencement of 2020. In April 2020, PSE&G filednew base rates, the return on and of the capital portion of each of these programs, as well as expenses incurred to implement the CEF-EV program and operating costs and stranded costs associated with the BPU an updateretirement of itsexisting meters under the CEF-EC petitionprogram, will be deferred and included for recovery as part of our next rate case expected to revise certain assumptions, including an updated deployment schedule based onbe concluded in 2024. The remaining component of our CEF-EV proposal, the procedural schedule.vehicle innovation subprogram, as well as the overall CEF-ES program, are being held in abeyance pending future policy guidance from the BPU.
We also continue to invest in transmission infrastructure in order to (i) maintain and enhance system integrity and grid reliability, grid(ii) ensure system resilience in the face of continued extreme weather conditions and cyber and physical security and safety, (ii)threats, (iii) address an aging transmission infrastructure, (iii)(iv) leverage technology to improve the operation of the system, (iv)(v) reduce transmission constraints, (v) meet growing demand and (vi) meet environmental requirementschanging customer usage patterns and standards set by various regulatory bodies.the demand for 24/7 electricity, and (vii) satisfy state public policy goals, including aggressive decarbonization agendas. Our planned capital spending for transmission in 2020-20222021-2023 is $2.9$2.5 billion. As discussed further below, PSE&G has reached a settlement with the BPU, pending FERC approval, to reduce its base transmission ROE from 11.18% to 9.9%.
The ongoing coronavirus pandemic and associated impacts could have several negative consequences, including potential delays of our regulatory agencies’ review and approval of proposed programs or rate recovery.
The coronavirus has also impacted PSE&G’s sales, with a reduction in demand from its commercial and industrial (C&I) customers, largely offset by increases in residential sales volumes. As a result, there has been no substantive net margin impact and future changes are largely addressed through the CIP mechanism that is effective in 2021. The most substantive impact of the pandemic on our financial position has been adverse changes to residential and C&I payment patterns. The State of New Jersey issued an Executive Order in March 2020 that included a moratorium on non-safety related service disconnections for
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As noted above, PSE&G has been deemednon-payment. On June 30, 2021, the moratorium imposed by the State of New Jersey to provide essential services duringended but the ongoing coronavirus pandemic. Our capital programs, including GSMP II, ES II and our transmission infrastructure investments, have not been materially impacted to date. However,State has established a prolonged outbreak and the associated economic impacts, which could extend beyond the duration of the pandemic, could impact our ability to obtain necessary permits and approvals and could lead to shortages of necessary materials, supplies and labor. In addition, a determination by any state or federal regulatory authority that one or all of our projects is non-essential could require us to temporarily halt work. Any delay in our planned capital program could impact our operational performance and could materially impact our results of operations and financial condition through decreased cost recovery.
Further, the ongoing coronavirus pandemic has led many state and federal agencies to implement remote working protocols and divert resources to address the pandemic which, if prolonged, could impact regulatory agencies’ ability to review proposed programs and delay the timing of approvals for matters subject to regulatory approval, including parts ofour CEF program that is currently before the BPU and the approval of various clause recovery mechanisms.
PSE&G has experienced a reduction in demand from its commercial and industrial (C&I) customers, partially offset by increases in residential demand, and adverse changes to residential and C&I payment patterns, and expects these changes to continue during a prolonged coronavirus pandemic. In October 2020, the state formally extended its moratorium on non-safety related service“grace period” prohibiting disconnections for non-payment for residential customers through March 15,December 31, 2021. Given the annual wintermoratorium on residential shut-offs, collections and shut-offs will not be in full effect until mid-March 2022. During the moratorium, PSE&G has experienced a significant decrease in cash inflow and higher Accounts Receivable aging and an associated increase in bad debt expense, which we expect could extend beyondwill continue through the duration ofgrace period and winter moratorium and take the coronavirus pandemic.next several years to fully return to normal levels. PSE&G’s electric distribution bad debt expense is recoverable through its Societal Benefits Clause (SBC) mechanism. PSE&G has deferred its incremental gas distribution bad debt expense as a result of COVID-19 as a Regulatory Asset and will seek recovery of that cost, as well as other net incremental COVID-19 costs, in its next base rate case as discussed below.case. 
In July 2020, the BPU authorized regulated utilities in New Jersey, including PSE&G, to create a COVID-19-related Regulatory Asset by deferring on their books and records the prudently incurred incremental costs related to COVID-19 beginning on March 9, 2020 through September 30, 2021, or 60 days after the New Jersey governor determines that the Public Health Emergency is no longer in effect, or in the absence of such a determination, 60 days from the time the Public Health Emergency automatically terminates by law, whichever is later.2021. Deferred costs are to be offset by any federal or state assistance that the utility may receive as a direct result of the COVID-19 pandemic. During the third quarterAs of 2020,June 30, 2021, PSE&G has recorded a Regulatory Asset related to COVID-19 to defer incremental costs of $35 million. There is no assurance that$82 million, which PSE&G expects are probable of recovery under the BPU order. While we expect to continue to defer and ultimately recover these costs will ultimatelyunder the July BPU Order, no assurances can be recovered.given.
Given the ongoing prohibition on residential shut-offs, in July 2021, PSE&G, joined by other New Jersey gas distribution companies, made a filing with the BPU, noting that the current deferral period does not allow for proper consideration and inclusion of all incremental related expenses in a Regulatory Asset and requesting that the BPU extend the deferral of bad debt and related costs through the end of 2023.
While the impact on our results of operations, financial condition and cash flows for the ninesix months ended SeptemberJune 30, 20202021 has not been material, a prolonged coronavirus pandemic and the associated economic impacts, which could extend beyond the duration of the pandemic, could materially impact cash from operations, Accounts Receivable and bad debt expense.
PSEG Power
In July 2020, we announced that we are exploring strategic alternatives for PSEG Power’s non-nuclear generating fleet with the intention of accelerating the transformation of our business into a primarily regulated electric and gas utility, with a significantlycontracted generation business. It is expected to reduce overall business risk and earnings volatility, improve PSEG’s business and financial profile and is consistent with PSEG’s climate strategy and sustainability efforts, which is to focus on clean energy investments, methane reduction, and carbon-free generation. PSEG intends to retain ownership of PSEG Power’s existing nuclear fleet.
In May 2021, PSEG Power Ventures LLC (Power Ventures), a direct wholly owned subsidiary of PSEG Power, entered into a purchase agreement with Quattro Solar, LLC, an affiliate of LS Power, relating to the sale by Power Ventures of 100% of its ownership interest in PSEG Solar Source LLC (Solar Source) including its related assets and liabilities. The transaction closed in June 2021. Any potential transaction involving PSEG Power’s more than 6,750 MW of fossil generation is expected to be completed either in the fourth quarter of 2021 or the first quarter of 2022.
There is no assurance that the strategic review will result in a sale or other disposition of all or any portion of the fossil generation assets on terms that are favorable to us, or at all. Any transaction would be subject to market conditions and customary closing conditions, including the receipt of all required regulatory approvals. See Note 4. Early Plant Retirements/Asset Dispositions and Impairments.
At PSEG Power, we strivehave sought to achieve operational excellence and manage costs in order to optimize cash flow generation from our fleet in light of low wholesale power and gas prices, environmental considerations and competitive market forces that reward efficiency and reliability. In the first ninesix months of 2020,2021, our natural gas and nuclear units generated 16.810.1 and 24.015.5 terawatt hours and operated at a capacity factor of 49.0%44.3% and 94.2%92.1%, respectively. Our commitments for load, such as basic generation service (BGS) in New Jersey and other bilateral supply contracts, are backed by this generation or may be combined with the use of physical commodity purchases and financial instruments from the market to optimize the economic efficiency of serving our obligations. PSEG Power’s hedging practices and ability to capitalize on market opportunities help it to manage some of the volatility of the merchant power business. More than 70%75% of PSEG Power’s expected gross margin in 20202021 relates to hedging of our energy margin, our expected revenues from the capacity market mechanisms, Zero Emission Certificate (ZEC) revenues that commenced in April 2019 and certain ancillary service payments such as reactive power.
As discussed further below under “Wholesale Power Market Design,” FERC issued an order establishing new rules for PJM’s capacity market, extending the PJM Minimum Offer Price Rule (MOPR) to include both new and existing resources that receive or are entitled to receive certain out-of-market payments, with certain exemptions. However, in July 2021, PJM submitted to FERC a proposal to replace the expanded MOPR with new provisions that accommodate state public policy programs that do not attempt to set the price of capacity. Under the PJM proposal, PSEG Power’s New Jersey nuclear plants that receive ZEC payments will be subject to the new MOPR. In addition, as a result of FERC’s finding that default procurement auctions such as BGS could be considered subsidies, it is possible that other PSEG units could be subject to the MOPR. The MOPR’s floor prices are not expected to prevent either our nuclear or gas-fired units from clearing in the next Reliability Pricing Model (RPM) auction. We cannot predict whether additional changes will be made to the MOPR, or whether changes will occur in the PJM market that would impact our ability to clear any of these units in future RPM auctions.
In the first nine months of 2020, as a result of the ongoing coronavirus pandemic, PSEG Power experienced a decrease in aggregate wholesale electric demand. An extended outbreak could have a material adverse impact on future results of operations and cash flows.
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PSEG Power has also implemented protocols to ensure the safety and health of employees at its generation facilities and contractors working at the facilities during planned outages. A prolonged unavailability of employees and contractors duethat receive ZEC payments will not be subject to the ongoing coronavirus pandemic could materially and adversely impact our abilitynew MOPR. PJM’s proposal requests that FERC approve the new provisions for the Reliability Pricing Model (RPM) auction that is scheduled to operate our generation facilities, which would have a material impact on our business, resultsbe held in December 2021. We cannot predict the outcome of operations and cash flows.the FERC proceeding.
PSEG LI
Following the effects of Tropical Storm Isaias, the New York Attorney General initiated an inquiry into PSEG LI’s preparation and response to the storm. In addition, the Department of Public Service (DPS) within the New York State Public Service Commission launched an investigation of statethe state’s electric service providers,providers’, including PSEG LI’s, preparation and response to the storm. The DPS issued an interim storm investigation report finding that PSEG LI violated its Emergency Response Plan and DPS Regulations, and recommended that LIPA consider taking various actions, including terminating or renegotiating the OSA. LIPA also issued a report with recommendations for improvements to PSEG LI’s structure and processes and recommended that LIPA either renegotiate or terminate the OSA.
In December 2020, LIPA filed a complaint against PSEG LI in New York State court alleging multiple breaches of the OSA in connection with PSEG LI’s preparation for and response to Tropical Storm Isaias seeking specific performance and $70 million in damages. In June 2021, LIPA and PSEG LI executed a non-binding term sheet, which is expected to guide amendments to our OSA. The term sheet includes several changes to the OSA, including shifting a portion of our fixed revenues to incentive compensation and subjecting a portion of revenue to the potential imposition of penalties by the DPS due to certain performance failures by PSEG LI, and other state telephone, cable and internet providers into their preparation and restoration efforts followingresolves all of LIPA’s claims related to Tropical Storm Isaias.Isaias and the DPS investigation. Any amendments to the OSA will require the approval of the New York Attorney General and the New York Comptroller. The OSA contract term will continue through 2025, with a mutual option to extend. No assurances can be given regarding reaching final settlement agreement, obtaining New York approvals and the closing of the inquiry by the Attorney General.
In the event that a final settlement with LIPA also initiated its own review of PSEG LI’s performance.is not reached, PSEG LI agreedintends to vigorously defend itself with LIPA that it would fund claims by customers for food and medication spoilage costs incurred as a result of being without electric service during the storm upregard to the amountallegations in LIPA’s complaint alleging breaches of incentive compensation earnedthe OSA. A decision in this proceeding requiring specific performance or the payment of damages by PSEG LI in 2020. PSEG LI does not expect the claims to be material. PSEG LI is fully cooperating in each of these inquiries, which remain ongoing. We cannot predict their outcome.
Strategic Alternatives for PSEG Power’s Non-Nuclear Fleet
On July 31, 2020, PSEG announced that it is exploring strategic alternatives for PSEG Power’s non-nuclear generating fleet, which includes more than 6,750 MW of fossil generation located in New Jersey, Connecticut, New York and Maryland as well as the 467 MW Solar Source portfolio located in various states. An exit from the fossil generation business would accelerate PSEG’s transition to a primarily regulated and contracted business, with a zero-carbon generation platform. It is expected to reduce overall business risk and earnings volatility, improve PSEG’s credit profile and is consistent with PSEG’s climate strategy and sustainability efforts, which is to focus on clean energy investments, methane reduction, and zero-carbon generation. PSEG intends to retain ownership of PSEG Power’s existing nuclear fleet. While PSEG isor resulting in the preliminary stagetermination of this evaluation, the marketingOSA could have a material adverse effect on PSEG’s results of a potential transaction in one or a series of steps is anticipated to launch in the fourth quarter of this year,operations and any potential transaction is expected to be completed sometime in 2021. There is no assurance that the strategic review will result in a sale or other disposition of all or any portion of these assets on terms that are favorable to us, or at all. Any transaction would be subject to market conditions and customary closing conditions, including the receipt of all required regulatory approvals.financial condition.
Climate Strategy and Sustainability Efforts
For more than a century, our mission has been to provide safe access to an around-the-clock supply of reliable, affordable power.energy. Building on this mission, we believe inare working toward a future where customers universally use less energy, the energy they use is cleaner, and its delivery is more reliable and more resilient.In July 2019,June 2021, we announced that we expect to cut carbon emissions at PSEG Power’s generation fleetaccelerated and expanded our net zero vision by 80% by 2046, from 2005 levels. We have also announced our vision of attaining20 years, establishing a net zero-zero carbon emissions by 2050,2030 goal that includes direct greenhouse gas (GHG) emissions (Scope 1) and indirect GHG emissions from operations (Scope 2) at both PSEG Power and PSE&G, assuming advances in technology, public policy and customer behavior. Scope 1 emissions include power generation, methane leaks, vehicle fleet emissions, sulfur hexafluoride and refrigerant leaks. Scope 2 emissions include both gas and electric purchased energy for our PSE&G facilities and line losses.
PSE&G has also undertaken a number of initiatives that support the reduction of greenhouse gas (GHG)GHG emissions and the implementation of energy efficiency initiatives. The first phase of our GSMP replaced approximately 450 miles of cast-iron and unprotected steel gas infrastructure, and the second phase of this program is expected to replace an additional 875 miles of gas pipes through 2023. The GSMP is designed to significantly reduce gas leaks in our distribution system, which would reduce the release of methane, a potent GHG, into the air. Through GSMP II, from 2018 through 2023 we expect an approximate 22% reduction in methane, and assuming a continuation of GSMP, we expect an approximate 60% reduction in methane emissions from 2011 through 2030. In addition, PSE&G’s recently approved CEF-EE, program, which was approved byCEF-EC and CEF-EV programs and the BPU in September 2020 and CEF-EV/ES and EC proposals, which are under review by the BPU,proposed CEF-ES program are intended to support New Jersey’s EMP through programs designed to help customers increase their energy efficiency, support the expansion of the electric vehicle infrastructure in the State, install energy storage capacity to supplement solar generation and enhance grid resiliency, install smart meters and supporting infrastructure to allow for the integration of other clean energy technologies and to more efficiently respond to weather and other outage events. We also continue to assess physical risks of climate change and adapt our capital investment program to improve the reliability and resiliency of our system in an environment of increasing frequency and severity of weather events, notably through our investments in Energy Strong.
Offshore Wind
In December 2020, PSEG entered into a definitive agreement with Ørsted North America to acquire a 25% equity interest in Ørsted’s Ocean Wind project. Ocean Wind was selected by New Jersey to be the first offshore wind farm as part of the State’s intention to add 7,500 MW of offshore wind generating capacity by 2035. The Ocean Wind project is expected to achieve full commercial operation in 2025. On March 31, 2021, the BPU approved PSEG’s investment in Ocean Wind and the acquisition was completed in April 2021. Additionally, PSEG and Ørsted each owns 50% of Garden State Offshore Energy LLC (GSOE) which holds rights to an offshore wind lease area just south of New Jersey. PSEG and Ørsted are exploring opportunities to
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develop the GSOE lease area. In April 2021, PJM announced the opening of the first public policy Order 1000 bid window that would utilize the state agreement approach for transmission projects to support the full 7,500 MW of offshore wind generation that New Jersey plans to procure. The state agreement approach requires customers in the requesting state - in this case New Jersey - to pay for the costs of these public policy transmission projects. Bids for this opportunity are due in the third quarter of 2021 and PSEG is evaluating opportunities to bid in this open window.
Operational Excellence
We emphasize operational performance while developing opportunities in both our regulated and competitive and regulated businesses. Flexibility in our generating fleet has allowed us to take advantage of opportunities in a rapidly evolving market as we remain diligent in managing costs. In the first ninesix months of 2020,2021, our utility continued its efforts to control costs while maintaining strong operational performance and has implemented protocols to ensure that we are providing essential services to our customers during the ongoing coronavirus pandemic in a safe and reliable manner.performance.
Financial Strength
Our financial strength is predicated on a solid balance sheet, positive operating cash flow and reasonable risk-adjusted returns on increased investment. Our financial position remained strong during the first ninesix months of 20202021 as we
•maintained sufficient liquidity,
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•maintained solid investment grade credit ratings, and
•increased our indicative annual dividend for 20202021 to $1.96$2.04 per share.
We expect to be able to fund our planned capital requirements, as described in Liquidity and Capital Resources and the impacts of the Tax Cuts and Jobs Act of 2017 (Tax Act) without the issuance of new equity. Our planned capital requirements, which are driven by growth in our regulated utility, and the potential sale of our fossil generatingfleet are expected to improve our business and financial profile.
Financial Results
The results for PSEG, PSE&G and PSEG Power for the three months and ninesix months ended SeptemberJune 30, 20202021 and 20192020 are presented as follows:
Three Months EndedNine Months Ended
September 30,September 30,
Earnings (Losses)2020201920202019
Millions
PSE&G$313 $344 $1,036 $974 
PSEG Power (A)254 53 437 309 
Other (B)8 6 1 (27)
PSEG Net Income$575 $403 $1,474 $1,256 
PSEG Net Income Per Share (Diluted)$1.14 $0.79 $2.91 $2.47 
Three Months EndedSix Months Ended
June 30,June 30,
Earnings (Losses)2021202020212020
Millions
PSE&G$309 $283 $786 $723 
PSEG Power (A)(483)170 (322)183 
Other (B)(3)(2)7 (7)
PSEG Net Income (Loss)$(177)$451 $471 $899 
PSEG Net Income (Loss) Per Share (Diluted)$(0.35)$0.89 $0.93 $1.77 
(A)Includes ana $373 million after-tax gainimpairment of $86 million in the three and nine months ended September 30, 2020 related to the sale of PSEG Power’s interest in the Yards Creek generation facility and an after-tax loss of $286 million in the nine months ended September 30, 2019 related to the sale of PSEG Power’s ownership interests in the Keystone and Conemaugh fossil generation plants.New England (NE) asset grouping. See Item 1. Note 4. Early Plant Retirements/Asset Dispositions and Impairments for additional information.
(B)Other includes after-tax activities at the parent company, PSEG LI, and Energy Holdings as well as intercompany eliminations. Energy Holdings recorded an after-tax charge of $32 million in the nine months ended September 30, 2019 related to its investment in leveraged leases. See Item 1. Note 8. Financing Receivables for additional information.
PSEG Power’s results above include the Nuclear Decommissioning Trust (NDT) Fund activity and the impacts of non-trading commodity mark-to-market (MTM) activity, which consist of the financial impact from positions with future delivery dates.
The variances in our Net Income attributable to changes related to the NDT Fund and MTM are shown in the following table:
Three Months EndedNine Months Ended
September 30,September 30,
2020201920202019
Millions, after tax
NDT Fund Income (Expense) (A) (B)$60 $(4)$43 $97 
Non-Trading MTM Gains (Losses) (C)$(59)$(88)$(59)$140 
Three Months EndedSix Months Ended
June 30,June 30,
2021202020212020
Millions, after tax
NDT Fund Income (Expense) (A) (B)$47 $118 $79 $(17)
Non-Trading MTM Gains (Losses) (C)$(206)$(77)$(240)$— 
(A)NDT Fund Income (Expense) includes gains and losses on NDT securities which are recorded in Net Gains (Losses) on Trust Investments. See Item 1. Note 9. Trust Investments for additional information. NDT Fund Income (Expense) also includes interest and dividend income and other costs related to the NDT Fund recorded in Other Income
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(Deductions), interest accretion expense on PSEG Power’s nuclear Asset Retirement Obligation (ARO) recorded in O&MOperation and Maintenance (O&M) Expense and the depreciation related to the ARO asset recorded in Depreciation and Amortization (D&A) Expense.
(B)Net of tax (expense) benefit of $(40)$(30) million and $0$(74) million for the three months and $(30)$(53) million and $(67)$10 million for the ninesix months ended SeptemberJune 30, 20202021 and 2019,2020, respectively.
(C)Net of tax (expense) benefit of $23$79 million and $33$30 million for the three months ended June 30, 2021 and $23 million2020, respectively, and $(55)$92 million for the ninesix months ended SeptemberJune 30, 2020 and 2019, respectively.2021.
Our $172$628 million increaseand $428 million decreases in Net Income for the three months and six months ended SeptemberJune 30, 2020 was2021, respectively, were driven primarily by
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•a gain onan impairment of the sale ofNE fossil asset grouping at PSEG Power��s ownership interest in the Yards Creek generating facility in 2020Power (see Item 1. Note 4. Early Plant Retirements/Asset Dispositions)Dispositions and Impairments for additional information),
•Net unrealized gains in 2020 on equity securities in the NDT Fund as compared to net unrealized losses in 2019 at PSEG Power, and
•higher earnings due to investments in T&D programsMTM losses at PSE&G.
Our $218 million increase in Net Income for the nine months ended September 30, 2020 was driven primarily by
•a gain on sale of PSEG Power’s ownership interest in the Yards Creek generating facility in 2020,Power,
•an asset impairment in 2019 related to the sale of PSEG Power’s interests in the Keystone and Conemaugh fossil generation plants (see Item 1. Note 4. Early Plant Retirements/Asset Dispositions),
•partially offset by higher earnings due to continued investments in T&D programs at PSE&G, and
•higher pension and OPEB credits,credits.
•The decrease in Net Income for the three month period was also due to lower net gains on NDT Fund equity securities whereas the decrease in Net Income for the six month period was partially offset by MTMnet gains on NDT Fund equity securities as compared to net losses in 2020 as compared to gains in 2019 at PSEG Power, and
•a decrease at PSEG Power due to lower average realized prices on lower volumes of electricity sold in PJM and under the BGS contracts, as well as lower capacity revenues, partially offset by a net decrease in fuel costs and higher ZEC revenues starting in mid-April 2020.
The greater emphasis on capital spending in recent years for projects at PSE&G relative to PSEG Power, particularly those on which we receive contemporaneous returns at PSE&G has yielded strong results, which when combined with the cash flow generated by PSEG Power, has allowed us to meet customer needs and address market conditions and investor expectations. We continue our focus on operational excellence, financial strength and disciplined investment. These guiding principles have provided the base from which we have been able to execute our strategic initiatives.Power.
Disciplined Investment
We utilize rigorous criteria and consider a number of external factors, includingfocusing on the economic impact of the ongoing coronavirus pandemic,value for our stakeholders, as well as other impacts, when determining how and when to efficiently deploy capital. We principally explore opportunities for investment in areas that complement our existing business and provide reasonable risk-adjusted returns.returns and continuously assess and optimize our business mix as appropriate. In the first ninesix months of 2020,2021, we
•made additional investments in T&D infrastructure projects on time and on budget,
•continued to execute our Energy Efficiency and other existing BPU-approved utility programs, and
•closed on our acquisition of a 25% equity interest in the Ocean Wind project,
•continued to evaluate potential additional offshore wind opportunities.opportunities, and
•completed the sale of PSEG Power’s Solar Source units and continue the process to potentially sell the fossil generation business.
Regulatory, Legislative and Other Developments
In our pursuit of operational excellence, financial strength and disciplined investment, we closely monitor and engage with stakeholders on significant regulatory and legislative developments. Transmission planning rules and wholesale power market design are of particular importance to our results and we continue to advocate for policies and rules that promote fair and efficient electricity markets. For additional information about regulatory, legislative and other developments that may affect us, see Part I, Item 1. Business—Regulatory Issues in our Form 10-K and Item 5. Other Information in our Quarterly ReportsReport on Form 10-Q for the periodsperiod ending March 31, 2020 and June 30, 20202021 (first and second quarter 2020 10-Qs)2021 10-Q) and this Quarterly Report on Form 10-Q.
Transmission Rate Proceedings and Return on Equity (ROE)
In March 2020,2019, FERC issued a Notice of Proposed Rulemaking (NOPR) proposingInquiry seeking comments on improvements to revise itsFERC’s electric transmission incentives policy. Subsequently, in April 2021, FERC issued a supplemental notice of proposed rulemaking to eliminate the incentive policy to encouragefor Regional Transmission Organization (RTO) membership for transmitting utilities that have already received the development of infrastructure needed to ensure grid reliability and reduce congestion to lower the cost of powerincentive for consumers. The NOPR proposes to shift the focus in granting incentives from an approach based on the risks and challenges faced bythree or more years. PSE&G began receiving a project to an approach based on economic and reliability benefits to consumers. The NOPR proposes to retain several existing incentives, increase the 50 basis point adder for Regional Transmission Organization (RTO) participation to 100 basis pointsRTO membership in 2008. Elimination of the adder for RTO membership could reduce PSE&G’s annual Net Income and provide incentives for transmission technologies that enhance reliability, efficiency and capacity.annual cash inflows by approximately $30 million.
In May 2020, FERC issued an order revising an earlier order that established a new ROE policy for reviewing existing transmission owners’ ROEs. The revised methodology uses the Discounted Cash Flow (DCF) model, the Capital Asset Pricing model(CAPM) and the risk premiumRisk Premium model to determine if an existing base ROE is unjust and unreasonable and, if so, what replacement ROE is appropriate. FERC’s order indicated that it would not be bound by this revised methodology when
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considering the just and reasonableness of a utility’s ROE in future proceedings. We continue to analyze the potential impact of these methodologies.
ROE complaints have been pending before FERC regarding MISO transmission owners, the ISO New England Inc.
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transmission owners and utilities in other jurisdictions. In addition, over the past few years, several companies have negotiated settlements that have resulted in reduced ROEs.
We are engaged inIn July 2021, we submitted for FERC’s approval a settlement discussionsagreement effective August 1, 2021 that we reached with the BPU Staff and the New Jersey Division of Rate Counsel (New Jersey Rate Counsel) about the level of PSE&G’s base transmission ROE; however, weROE and other formula rate matters. The settlement reduces PSE&G’s base ROE from 11.18% to 9.9%. As a result of this settlement, PSE&G’s annual Net Income would decrease by approximately $50 million to $60 million, with a total decrease in cash flows of approximately $100 million. The settlement provides that the settling parties will not seek changes to our transmission formula rate for three years. We cannot predict the outcome of these settlement discussions. An adverse change to PSE&G’s base transmission ROE or ROE incentives could be material. We estimate that for each 25 basis point reduction in PSE&G’s base transmission ROE, and all other factors unchanged, PSE&G’s annual Net Income and annual cash inflows would decrease by approximately $15 million.the FERC proceeding.
Wholesale Power Market Design
In December 2019, FERC issued an order establishing new rules for PJM’s capacity market, extending the PJM MOPR to include both new and existing resources that receive or are entitled to receive certain out-of-market payments, with certain exemptions.
PSEG Power’s New Jersey However, in July 2021, PJM submitted to FERC a proposal to replace the expanded MOPR with new provisions that accommodate state public policy programs if they do not attempt to set the price of capacity. PJM states that nuclear plants that receive ZEC payments such as PSEG Power’s New Jersey units will not be subject to the new MOPR. In addition, as a result of FERC’s findingMOPR provisions. PJM requests that default procurement auctions such as BGS could be considered subsidies, it is possible that other PSEG units could be subject to the MOPR. Resources that are subject to the MOPR continue to have the ability to justify a bid below the MOPR floor price under the unit-specific exemption. The MOPR floor prices are not expected to prevent either our nuclear units or gas-fired units from clearing in the next RPM auction. A FERC order issued in May 2020 authorizing enhancements to the methodology used by PJM to price energy reserves has created additional uncertainty regarding the impact of the MOPR expansion in future RPM auctions on PSEG Power’s nuclear units that receive ZECs. One of the findings made by FERC in that order will affect how the MOPR offer floors are calculated and could have the effect, in the future, of increasing the price floorsapprove its proposal for the plants and thereby increasing the risk of being unable to clear in annew RPM auction. In addition, if one or more electric distribution zones in New Jersey (or another state) were to become fixed resource requirement (FRR) alternativeservice areas, procurements neededauction scheduled for that area could provide an alternate means for nuclear units whose ability to clear in RPM auctions was affected by the MOPR to provide capacity within PJM.December 2021. We cannot predict whether additional changes will be made to the MOPR, or whether changes will occur in the PJM market that would impact our ability to clear any of these units in future RPM auctions.
States that have clean energy programs designed to achieve public policy goals that support such resources as solar, offshore wind and nuclear, are not prevented from pursuing those programs by the expanded MOPR and could choose to utilize the existing FRR approach authorized under the PJM tariff. Subsidized units that cannot clear in a RPM capacity auction becauseoutcome of the expanded MOPR could still count as capacity resources to a load serving entity (LSE) using the FRR approach. FERC proceeding.
In a March 2020 order,July 2021, the BPU initiated anissued a report on its investigation related to examine whether New Jersey can achieve its long-term clean energy and environmental objectives under the current resource adequacy procurement paradigmparadigm. 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 important market reforms are being considered at the regional and national level. However, the report recommends that New Jersey continue to explore a New Jersey-only or regional competitive auction design if potential alternatives. One ofreforms at the areas of inquiry concerns the potential creation of FRR service areas withinregional and national level are not sufficient to allow New Jersey.Jersey to achieve its clean energy goals. We cannot predict the impact these rules or any measures taken bywhether the BPU will take any measures in the future that will have an impact on the capacity market or our generating stations.
In January 2020, New Jersey rejoined the Regional Greenhouse Gas Initiative (RGGI). As a result, generating plants operating in New Jersey, including those owned by PSEG Power, that emit CO2 emissions will be required to procure credits for each ton they emit. In response to RGGI, PJM initiated a process in 2019 to investigate the development of a carbon pricing mechanism that may mitigate the environmental and financial distortions that could occur when emissions “leak” from non-participating states to the RGGI states. If the process leads to a market solution, it could have a material impact on the value of PSEG Power’s generating fleet.
Environmental Regulation
We are subject to liability under environmental laws for the costs and penalties of remediating environmental contamination of property now or formerly owned by us and of property contaminated by hazardous substances that we generated. In particular, the historic operations of PSEG companies and the operations of numerous other companies along the Passaic and Hackensack Rivers are alleged by Federal and State agencies to have discharged substantial contamination into the Passaic River/Newark Bay Complex in violation of various statutes. We are also currently involved in a number of proceedings relating to sites where other hazardous substances may have been discharged and may be subject to additional proceedings in the future, and the costs and penalties of any such remediation efforts could be material.
For further information regarding the matters described above, as well as other matters that may impact our financial condition and results of operations, see Item 1. Note 11. Commitments and Contingent Liabilities.
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Nuclear
In April 2019, PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants were awarded ZECs by the BPU. Pursuant to a process established by the BPU, ZECs are purchased from selected nuclear plants and recovered through a non-bypassable distribution charge in the amount of $0.004 per kilowatt-hour used (which is equivalent to approximately $10 per megawatt hour (MWh) generated in payments to selected nuclear plants (ZEC payment)). TheseEach nuclear plants areplant is expected to receive ZEC revenue for approximately three years, through May 2022.
In April 2021, PSEG Power’s Salem 1, Salem 2 and Hope Creek nuclear plants were awarded ZECs for the three-year eligibility period starting June 2022 at the same approximate $10 per MWh received during the current ZEC period through May 2022 referenced above. As a result, each nuclear plant is expected to receive ZEC revenue for an additional three years starting June 2022. The terms and conditions of this April 2021 ZEC award are the same as the current ZEC period as discussed above. While the ZEC program has preserved these units to date, PSEG will seek a long-term legislative or other solution for our New Jersey nuclear plants that sufficiently values them for their carbon-free, fuel diversity and resilience attributes. No assurances can be obligatedgiven regarding future ZEC awards or other long-term solutions.
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The award of ZECs attaches certain obligations, including an obligation to maintainrepay the ZECs in the event that a plant ceases operations during the period that period,it was awarded ZECs, subject to certain exceptions specified in the ZEC legislation. PSEG Power has and will continue to recognize revenue monthly as the nuclear plants generate electricity and satisfy their performance obligations. TheFurther, the ZEC payment may be adjusted by the BPU (a) at any time to offset environmental or fuel diversity payments that a selected nuclear plant may receive from another source or (b) at certain times specified in the ZEC legislation if the BPU determines that the purposes of the ZEC legislation can be achieved through a reduced charge that will nonetheless be sufficient to achieve the State’s air quality and other environmental objectives by preventing the retirement of nuclear plants.source. For instance, the New Jersey Rate Counsel, in written comments filed with the BPU, has advocated for the BPU to offset market benefits resulting from New Jersey’s rejoining the RGGI from the ZEC payment. PSEG intends to vigorously defend against these arguments. Due to its preliminary nature, PSEG cannot predict the outcome of this matter.
The BPU’s April 2019 decision awarding ZECs hasthrough May 2022 and April 2021 decision awarding ZECs through May 2025 have been appealed by the New Jersey Rate Counsel. In May 2021, Rate Counsel filed an appeal with the New Jersey Appellate Division of the BPU’s April 2021 decision. In July 2021, the New Jersey Supreme Court denied the New Jersey Rate Counsel’s petition for further appellate review of the BPU’s April 2019 decision. PSEG cannot predict the outcome of this matter.
In October 2020, PSEG Power filed with the BPU its ZEC applications for Salem 1, Salem 2 and Hope Creek for the three-year eligibility period starting in June 2022. No other plants applied for ZECs for this eligibility period. The BPU’s schedule to consider these applications includes the BPU Staff issuing their preliminary findings regarding ZEC eligibility and the value of ZEC payments for this period in December 2020, followed by public and evidentiary hearings and a final BPU decision by April 2021. PSEG Power is not aware of any changes from its ZEC application for the first eligibility period that would materially affect its ability to establish eligibility to be awarded ZECs during the second eligibility period. We cannot predict the outcome of either the BPU Staff’s preliminary findings or the BPU’s final determination.matters.
In the event that (i) the ZEC program is overturned or is otherwise materially adversely modified through legal process; (ii) the amount of ZEC payments that may be awarded or other terms and conditions of the second ZEC eligibility period proposed by the BPU Staff in the December 2020 preliminary findings or by the BPU in its final decision differ from those of the current ZEC period; or (iii)(ii) any of the Salem 1, Salem 2 and Hope Creek plants is not awarded ZEC payments by the BPUsufficiently valued for its environmental, fuel diversity or resilience attributes in future periods and does not otherwise experience a material financial change that would remove the need for such attributes to be sufficiently valued, PSEG Power will take all necessary steps to cease to operate all of these plants. Alternatively, if alleven with sufficient valuation of the Salem 1, Salem 2 and Hope Creek plants are selected to continue to receive ZEC payments butthese attributes, if the financial condition of the plants is materially adversely impacted by changes in commodity prices, FERC’s changes to the capacity market construct (absent sufficient capacity revenues provided under a program approved by the BPU in accordance with a FERC-authorized capacity mechanism), or, in the case of the Salem nuclear plants, decisions by the EPA and state environmental regulators regarding the implementation of Section 316(b) of the Clean Water Act and related state regulations, or other factors, PSEG Power will take all necessary steps to cease to operate all of these plants. Ceasing operations of these plants would result in a material adverse impact on PSEG’s and PSEG Power’s results of operations.
Nuclear Refueling OutageTax Legislation
The Salem 1 nuclear generating plant entered a scheduled refueling outage in October 2020, which is expected to continue through mid-December 2020. In lightMarch 2021, the White House released an overview of the COVID-19American Jobs Plan. In April 2021, the Treasury Department issued The Made in America Tax Plan and in June 2021, the General Explanations of the Administration’s Fiscal Year 2022 Revenue Proposals in the Fiscal Year 2022 Budget. Each includes several tax-raising provisions that have not yet been enacted. The Made in America Tax Plan includes an increase in the federal corporate tax rate and a minimum tax levied on book earnings. If these provisions are enacted, it would have an unfavorable impact on PSEG’s and PSEG Power’s financial statements and would increase PSE&G’s customers’ bills.
A prolonged coronavirus pandemic we have implemented additional health protocols to protect the health and safety of our employees and contractors, including daily health screenings, increased hygiene, physical distancing, PPE requirements and close-contact monitoring. During this outage, the plant’s main generator stator, which has reached the end of its useful life, is being replaced. The process for replacing Salem 1’s generator stator is highly complex. During the outage, we are also performing additional reactor vessel inspections and upgrades. Limitations due to additional health protocols, delays in replacing the main generator stator due to its complexity, or adverse findings from the reactor vessel inspectionsfurther economic stimulus could result in an extended outage and in turn, lower revenues and increased costs, whichfuture federal or state legislation that could have a material impact on our effective tax rate and cash tax position.
The Consolidated Appropriations Act, 2021 (CAA) was enacted in late December 2020. The CAA provides a 30% investment tax credit (ITC) for offshore wind projects that begin construction before December 31, 2025. In addition, on December 31, 2020, Notice 2021-05 was issued. For qualifying offshore wind projects, the results of operationsnotice extends the four year continuity safe harbor to ten calendar years commencing the calendar year after which construction of the plant and PSEG Power.project begins.
Offshore Wind
In June 2019, the BPU selected Ørsted US Offshore Wind’s Ocean Wind project as the winning bid in New Jersey’s initial solicitation for 1,100 MW of offshore wind generation. In October 2019, PSEG exercised its option on Ørsted’s Ocean Wind project, resulting in a period of exclusive negotiation for PSEG to potentially acquire a 25% equity interest in the project, subject to negotiations toward a joint venture agreement, advanced due diligence and any required regulatory approvals. Additionally, PSEG and Ørsted each owns 50% of Garden State Offshore Energy LLC (GSOE) which holds rights to an offshore wind lease area. PSEG and Ørsted are exploring other offshore wind opportunities through GSOE.
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Tax Legislation
In July 2020, the Internal Revenue Service (IRS) issued final and proposed regulations addressing the limitation on deductible business interest expense contained in the Tax Cuts and Jobs Act. These regulations retroactively allow depreciation to be added back in computing the 30% adjusted taxable income (ATI) cap, increasing the amount of interest that can be deducted by unregulated businesses in years before 2022. For years2022 and after, 2021 the regulations continue to disallow the addback of depreciation in the computation of ATI, effectively lowering the cap on the amount of deductible business interest. The portion of PSEG’s and PSEG Power’s business interest expense that was disallowed in 2018 and 2019 will now be deductible in those respective years. PSEG is still in the process of analyzing these regulations, which may impact the financial condition and cash flows of PSEG, PSE&G and PSEG Power.
In March 2020, the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted. We continue to assess the impact of the tax aspects of theThe CARES Act on our resultsallows a five-year carryback of operationsany net operating loss (NOL) generated in a taxable year beginning after December 31, 2017 and cash flow. We expect that a prolonged coronavirus pandemic, the tax provisions of the CARES Act and any future coronavirus-related federal or state legislation could have a material impact on our effective tax rate and cash tax position.
Effectivebefore January 1, 2018, the Tax Act established tax laws including, but not limited to, a limitation on deductible interest and limitations on the utilization of net operating losses (NOLs), such as eliminating carrybacks.
In November 2018, the IRS issued proposed regulations addressing the interest disallowance rules contained in the Tax Act. For non-regulated businesses, the Tax Act enacted rules that set a cap on the amount of business interest that can be deducted in a given year. Any amount that is disallowed can be carried forward indefinitely. Amounts recorded under the Tax Act and the CARES Act, such as depreciation and business interest disallowance, are subject to change based on several factors, including but not limited to, the IRS and state taxing authorities issuing additional guidance and/or further clarification. Any such further guidance or clarification could impact PSEG’s, PSE&G’s and PSEG Power’s financial statements. For additional information, see Item 1. Note 16. Income Taxes.
In July 2018, New Jersey made changes to its income tax laws, including requiring corporate taxpayers to file in a combined reporting group as defined under New Jersey law starting in 2019. This provision includes an exemption for public utilities. We believe PSE&G meets the definition of a public utility and, therefore, will not be included in the combined reporting group. We anticipate New Jersey will be issuing clarifying guidance regarding combined reporting rules. Any further guidance or clarification could impact PSEG’s and PSEG Power’s financial statements.2021.
Future Outlook
Our future success will depend on our ability to continue to maintain strong operational and financial performance to capitalize on or otherwise address regulatory and legislative developments that impact our business and to respond to the issues and challenges described below. In order to do this, we mustwill continue to:
•obtain approval of and execute on our utility capital investment program including the remainder of our CEF program and other investments that yield contemporaneous and reasonable risk-adjusted returns, while enhancingto enhance the resiliency of our infrastructure, and maintainingmaintain the reliability of the service we provide to our customers, and align our sustainability and climate goals with New Jersey’s energy policy,
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•focus on controlling costs while maintaining safety, reliability and customer satisfaction and complying with applicable standards and requirements,
•deliver on our Human Capital Management strategy to attract, develop and retain a diverse, high-performing workforce,
•successfully manage our energy obligations and re-contract our open supply positions in response to changes in prices and demand, mindful of the cost and affordability impacts to our electric and gas distribution customers,
•advocate for the continuation of the ZEC programfederal and state programs to properly value New Jersey’s largest carbon-free generation resource and measures to ensure the implementation by PJM, FERC and state regulators of market design and transmission planning rules that continue to promote fair and efficient electricity markets, including recognition of the cost of emissions,
•engage constructively with our multiple stakeholders, including regulators, government officials, customers, employees, investors, suppliers and suppliers,the communities in which we do business,
•finalize our analysis of our strategic alternatives review for PSEG Power’s non-nuclearfossil generating assets and successfully execute any transactions involving those assets as we shift our business mix to a primarily regulated utility and contracted generating company with a carbon-free nuclear and regional offshore wind fleet,
•seek a fair return for our T&D investments through our transmission formula rate, distribution infrastructure and clean energy investment programs and periodic distribution base rate case proceedings,
•successfully operate the LIPA T&D system and manage LIPA’s fuel supply and generation dispatch obligations.obligations, and
•manage the risks and opportunities in environmental, social and governance (ESG) matters, which is an integral part of our long-term strategy to be a clean energy leader for the benefit of all stakeholders.
In addition to the risks described elsewhere in this Form 10-Q the first and second quarter 2020 10-Qs and in our Form 10-K, for 20202021 and beyond, the key issues and challenges we expect our business to confront include:
•regulatory and political uncertainty, both with regard to future energy policy, design of energy and capacity markets, transmission policy and environmental regulation, as well as with respect to the outcome of any legal, regulatory or other proceedings,
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•the continuing impact of the ongoing coronavirus pandemic and the associated regulations and economic impact,impacts, which could extend beyond the duration of the pandemic,
•the continuing impacts of the Tax and CARES Acts and future changes in federal and state tax laws, including The American Jobs Plan and Made in America Tax Plan, and
•the impact of changes in demand, natural gas and electricity prices, and increasing environmental compliance costs.expanded efforts to decarbonize several sectors of the economy.
We continually assess a broad range of strategic options to maximize long-term stockholder value.value and address the interests of our multiple stakeholders. In assessing our options, we consider a wide variety of factors, including the performance and prospects of our businesses; the views of employees, investors, regulators, customers and rating agencies; our existing indebtedness and restrictions it imposes; and tax considerations, among other things. Strategic options available to us include:
•the acquisition, construction or disposition ofinvestments in T&D facilities to enhance reliability, resiliency and modernize the system to meet the growing needs and increasingly higher expectations of customers, and clean energy investments and/or offshore wind opportunities,such as CEF-EE, CEF-EV and CEF-ES,
•the disposition or reorganizationrestructuring of our merchant generation business or portions thereof or other existing businesses or the acquisition or development of new businesses, and
•investments in capital improvementsregional offshore wind with long-term contracts that provide revenue predictability and additions, includinga reasonable risk-adjusted return,
•continued operation of our nuclear generation facilities, to the installation of environmental upgradesextent there is sufficient certainty that their operation will render an acceptable risk-adjusted return, and retrofits, improvements
•acquisitions, dispositions and other transactions involving assets or businesses that could provide value to system resiliency, modernizing existing infrastructurecustomers and participation in transmission projects through FERC’s “open window” solicitation process.shareholders.
There can be no assurance, however, that we will successfully develop and execute any of the strategic options noted above, or any additional options we may consider in the future. The execution of any such strategic plan may not have the expected benefits or may have unexpected adverse consequences.
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RESULTS OF OPERATIONS
PSEG
Our results of operations are primarily comprised of the results of operations of our principal operating subsidiaries, PSE&G and PSEG Power, excluding charges related to intercompany transactions, which are eliminated in consolidation. For additional information on intercompany transactions, see Item 1. Note 20. Related-Party Transactions.
Three Months EndedIncrease/
(Decrease)		Nine Months EndedIncrease/
(Decrease)
September 30,September 30,
202020192020 vs. 2019202020192020 vs. 2019
MillionsMillions%MillionsMillions%
Operating Revenues$2,370 $2,302 $68 3 $7,201 $7,598 $(397)(5)
Energy Costs775 753 22 3 2,276 2,581 (305)(12)
Operation and Maintenance767 745 22 3 2,254 2,251 3 — 
Depreciation and Amortization317 307 10 3 956 928 28 3 
(Gain) Loss on Asset Dispositions(122)7 (129)N/A(122)402 (524)N/A
Income from Equity Method Investments4 3 1 33 10 10 — — 
Net Gains (Losses) on Trust Investments107 (3)110 N/A87 164 (77)(47)
Other Income (Deductions)39 35 4 11 81 101 (20)(20)
Net Non-Operating Pension and OPEB Credits (Costs)62 55 7 13 186 121 65 54 
Interest Expense149 147 2 1 453 417 36 9 
Income Tax (Benefit) Expense121 30 91 N/A274 159 115 72 
Three Months EndedIncrease/
(Decrease)		Six Months EndedIncrease/
(Decrease)
June 30,June 30,
202120202021 vs. 2020202120202021 vs. 2020
MillionsMillions%MillionsMillions%
Operating Revenues$1,874 $2,050 $(176)(9)$4,763 $4,831 $(68)(1)
Energy Costs606 595 11 2 1,635 1,501 134 9 
Operation and Maintenance783 733 50 7 1,561 1,487 74 5 
Depreciation and Amortization322 315 7 2 663 639 24 4 
(Gains) Losses on Asset Dispositions and Impairments457 — 457 N/A457 — 457 N/A
Income from Equity Method Investments6 3 3 100 9 6 3 50 
Net Gains (Losses) on Trust Investments81 201 (120)(60)141 (20)161 N/A
Other Income (Deductions)33 38 (5)(13)58 42 16 38 
Net Non-Operating Pension and OPEB Credits (Costs)82 62 20 32 164 124 40 32 
Interest Expense147 151 (4)(3)293 304 (11)(4)
Income Tax (Benefit) Expense(62)109 (171)N/A55 153 (98)(64)
The following discussions for PSE&G and PSEG Power provide a detailed explanation of their respective variances.
PSE&G
Three Months EndedIncrease/
(Decrease)		Six Months EndedIncrease/
(Decrease)
June 30,June 30,
202120202021 vs. 2020202120202021 vs. 2020
MillionsMillions%MillionsMillions%
Operating Revenues$1,514 $1,456 $58 4 $3,587 $3,339 $248 7 
Energy Costs509 510 (1)— 1,358 1,218 140 11 
Operation and Maintenance393 380 13 3 817 766 51 7 
Depreciation and Amortization231 217 14 6 472 439 33 8 
Net Gains (Losses) on Trust Investments— 1 (1)N/A1 1 — — 
Other Income (Deductions)24 26 (2)(8)52 53 (1)(2)
Net Non-Operating Pension and OPEB Credits (Costs)66 52 14 27 132 103 29 28 
Interest Expense101 98 3 3 199 194 5 3 
Income Tax Expense (Benefit)61 47 14 30 140 156 (16)(10)
Three Months Ended June 30, 2021as Compared to 2020
Operating Revenues increased $58 million due to changes in delivery, commodity, clause and other operating revenues.
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PSE&G
Three Months EndedIncrease/
(Decrease)		Nine Months EndedIncrease/
(Decrease)
September 30,September 30,
202020192020 vs. 2019202020192020 vs. 2019
MillionsMillions%MillionsMillions%
Operating Revenues$1,660 $1,604 $56 3 $4,999 $5,018 $(19)— 
Energy Costs663 618 45 7 1,881 2,094 (213)(10)
Operation and Maintenance409 388 21 5 1,175 1,165 10 1 
Depreciation and Amortization218 206 12 6 657 620 37 6 
Net Gains (Losses) on Trust Investments1 — 1 N/A2 1 1 100 
Other Income (Deductions)28 22 6 27 81 60 21 35 
Net Non-Operating Pension and OPEB Credits (Costs)51 46 5 11 154 105 49 47 
Interest Expense97 92 5 5 291 268 23 9 
Income Tax Expense (Benefit)40 24 16 67 196 63 133 N/A
Three Months Ended September 30, 2020 as Compared to 2019
OperatingDelivery Revenues increased $56 million due to changes in delivery, commodity, clause and other operating revenues.
Delivery Revenues decreased $1$53 million due primarily to
•GasTransmission revenues were $30 million higher due to an increase in revenue requirements attributable to higher rate base investment.
•Electric distribution revenues decreased by $24increased $21 million due primarily to a $27$17 million decreaseincrease attributable to higher sales volumes and a $4 million increase in Green Program Recovery Charge (GPRC) collections.
•Gas distribution revenues increased $4 million due primarily to a $15 million increase related to WNC revenue accruals, a $6 million increase due to a rate roll-in for the WNC,GSMP II and a $1 million increase in GPRC revenues, partially offset by a $3an $18 million increase from the GSMP I and GSMP II.decrease due to lower sales volumes in 2021.
•Electric and Gas revenues decreased by $11$2 million due to ana net increase in the flowback to customers of excess deferred tax liabilities and tax repair-related accumulated deferred income tax benefits resulting from rate reductions, which is offset in Income Tax Expense.
•Transmission revenues were $25 million higher due primarily to an increase in 2020 revenue requirements attributable to higher rate base investment.
•Electric distribution revenues increased by $9 million due to a $13 million increase from higher volumes, partially offset by a $4 million decrease in the collection of Green Program Recovery Charges (GPRC).
Commodity Revenues increased $42 millionwere flat as a result of higher Electric revenues partially offset by lower Gas revenues. The changes in Commodity revenues for both electric and gas are entirely offset by the changes in Energy Costs. PSE&G earns no margin on the provision of BGS orto retail customers and basic gas supply service (BGSS) to retail customers..
•Electric commodity revenues increased $52$10 million due primarily to $31a $22 million from higher BGSincrease in sales volumes, and $20partially offset by $12 million in higherlower BGS prices.
•Gas commodity revenues decreased $10 million due primarily to $6 million from lower BGSS sales volumes and a $3of $17 million, decrease in prices.partially offset by higher BGSS prices of $7 million.
Clause Revenues increased $15decreased $1 million due primarily to a $7 million net decrease in the Tax Adjustment Credit (TAC) and GPRC deferrals, partially offset by higher SBC revenues of $9$4 million a $6 million increase in GPRC deferrals and a $2 million increase inof higher Margin Adjustment Clause (MAC) collections. These increases were partially offset by a $2 million decrease in Tax Adjustment Credit (TAC) deferrals. The changes in theTAC and GPRC deferral amounts and SBC and MAC amounts and the GPRC and TAC deferralsrevenues are entirely offset by changes in the amortization of Regulatory Assets and Regulatory Liabilities and related costs in O&M, D&A, Interest and Income Tax Expenses. PSE&G does not earn margin on TAC and GPRC deferrals or SBC orand MAC revenues or GPRC and TAC deferrals.revenues.
Other Operating Revenues was flat over the prior year. A $3increased $6 million due to a $7 million increase primarily due to appliance service revenues, $5 million from Transition Renewable Energy Certificate (TREC) revenues and a $2 million increase in solar renewable energy creditsZEC revenues. These increases were partially offset by an $8 million decrease in Solar Renewable Energy Certificate (SREC) includedrevenues. The changes in this componentTREC, ZEC and SREC components of revenues isare entirely offset by changes toin Energy Costs.
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Operating Expenses
Energy Costs increased $45decreased $1 million. This is entirely offset by changes in Commodity Revenues and Other Operating Revenues.
Operation and Maintenance increased $21$13 million due primarily to a $10$13 million increase in gas maintenance costs, a $10transmission expenditures, an $8 million increase in appliance service costs and a net $6$7 million increase in clause and renewable-related expenses, partially offset by a $10 million decrease in net COVID-19 costs due to the timing of the 2020 deferrals and a $5 million increasedecrease in storm costs, a $4 million increase in vegetation management and a $9 million increase in other operating expenses. These increases were partially offset by reductions of $12 million and $11 million for COVID-19 related costs and gas bad debt expense, respectively, due primarily to the deferrals recorded in the third quarter as authorized by the BPU. See Note 6. Rate Filings for additional information.distribution operations maintenance.
Depreciation and Amortization increased $12$14 million due primarily to additional plant placed in service.
Other Income (Deductions) increased $6 million due primarily to an increase in the allowance for funds used during construction (AFUDC).
Net Non-Operating Pension and OPEB Credits (Costs) increased $5$14 million due primarily to an $11 million decrease in interest cost and a $4$7 million increase in the expected return on plan assets, and a $3 million decrease in interest cost, partially offset by a $1$2 million increase in the amortization of the net actuarial loss and a $1$2 million decreaseincrease in the amortization of net prior service credit.cost.
Interest Expense increased $5$3 million due primarily to a $7$2 million increase from newnet debt issuances in 20202021 and a $1 million increase from net debt issuances in August 2019. These increases were partially offset by a $2 million decrease due to a reduction in short-term borrowings and AFUDC.2020.
Income Tax Expense increased $16$14 million due primarily to an increase in bad debt flow-through and the reduction in the 2020 flowback of PSE&G’s excess deferred income tax liabilities.higher pre-tax income.
NineSix Months Ended SeptemberJune 30, 20202021 as Compared to 20192020
Operating Revenues decreased $19increased $248 million due to changes in delivery, commodity, clause and other operating revenues.
Delivery Revenues increased $156$81 million due primarily to
•Transmission revenues were $163$56 million higher due to an increase of $89 million in 2020 revenue requirements attributable to higher rate base investment and a decrease in the net flowback to customers of $74 million of certain excess deferred taxes.investment.
•Electric distribution revenues increased $7$34 million due primarily to a $13 million increase attributable to higher sales volumes, partially offset by a $6 million decrease in GPRC collections.volumes.
•Gas distribution revenues decreased $1increased $18 million due primarily to a $28$26 million reductionincrease due to lowerhigher sales volumes, a
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$24 million increase due to a rate roll-in for GSMP II and a $3$4 million decreaseincrease in GPRC revenues. These decreasesincreases were partially offset by a $21$36 million increase from the GSMP I and GSMP II and a $9 million increase in WNC.decrease related to WNC revenue accruals.
•Electric and Gas revenues decreased by $13$27 million due to a net increase in the flowback to customers of excess deferred tax liabilities and tax repair-related accumulated deferred income tax benefits resulting from rate reductions,which is offset in Income Tax Expense.
Commodity Revenues decreased $285increased $145 million as a result of lowerhigher Gas revenues and lowerhigher Electric revenues. The changes in Commodity revenues for both gas and electric are entirely offset by the changes in Energy Costs. PSE&G earns no margin on the provision of BGSS and BGS to retail customers.
•Gas commodity revenues decreased $146increased $92 million due primarily to lowerhigher BGSS prices of $87$51 million and lowerhigher BGSS sales volumes of $59$41 million.
•Electric commodity revenues decreased $139increased $53 million due primarily to $143an $88 million increase in sales volumes, partially offset by $35 million in lower BGS prices, partially offset by a $5 million increase in non-utility generation charges.prices.
Clause Revenues increased $40$17 million due primarily to a $32 million increase in TAC and GPRC deferrals and higher SBC revenues of $15 million.$19 million and a $3 million increase in MAC credits. These increases were partially offset by a $6$4 million net decrease in MAC revenues. The changes in TAC and GPRC deferral amounts,deferrals. The changes in SBC and MAC revenues and TAC and GPRC deferral amounts are entirely offset by changes in the amortization of Regulatory Assets and Regulatory Liabilities and related costs in O&M, D&A, Interest and Income Tax Expenses. PSE&G does not earn margin on SBC and MAC revenues or TAC and GPRC deferrals, SBC and MAC revenues.deferrals.
Other Operating Revenues increased by $70$5 million due primarily to $44 million in ZEC revenues billed since mid-April 2019 and a $28$13 million increase in TREC revenues, a $10 million increase primarily from appliance service revenues and a $1 million increase in ZEC revenues. These increases were partially offset by a $19 million decrease in SREC revenues. See Item 1. Note 4. Early Plant Retirements/Asset Disposition. The changes in theseTREC, ZEC and SREC components of revenues are entirely offset by changes to Energy Costs.
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Operating Expenses
Energy Costs decreased $213increased $140 million. This is entirely offset by changes in Commodity Revenues and Other Operating Revenues.
Operation and Maintenance increased $10$51 million due primarily to a $27 million increase in clause and renewable-related expenses, a $15 million increase in appliance service costs, a $17 million increase in gas maintenance costs,transmission expenditures and a $12$3 million increase in vegetation management and a $7 million increase in storm costs.grounds maintenance for snow removal. These increases were partially offset by a $6$12 million decrease in distribution corrective and preventative maintenance, a $5 million decrease in injuries and damages, a $4 million net decrease in clause and renewable-related expenses and an $11 million reduction in other operating expenses.COVID-19 costs due to the timing of the 2020 deferrals.
Depreciation and Amortization increased $37$33 million due primarily to a $32$26 million increase related to additional plant in service and a $3$5 million increase in the amortization of Regulatory Assets.
Other Income (Deductions) increased $21 million due primarily to an increase in AFUDC.
Net Non-Operating Pension and OPEB Credits (Costs) increased $49$29 million due primarily to a $27$22 million decrease in interest cost and a $13 million increase in the expected return on plan assets, partially offset by a $20$3 million decrease in interest cost and a $6 million decreaseincrease in the amortization of the net actuarial loss partially offset byand a $4$3 million decreaseincrease in the amortization of net prior service credit.cost.
Interest Expense increased $23$5 million due primarily to a $16$3 million increase from net debt issuances in 20202021 and a $12$3 million increase from net debt issuances in May and August 2019.2020. These increases were partially offset by a decrease of $6$1 million due to a reduction in short-term borrowings and AFUDC.borrowings.
Income Tax Expense increased $133decreased $16 million due primarily to higher pre-tax income, the reductionan increase in the 20202021 flowback of PSE&G’s excess deferred income tax liabilities and an increase in bad debt flow-through.CEF program investments, partially offset by higher pre-tax income.

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PSEG Power
Three Months EndedIncrease/
(Decrease)		Nine Months EndedIncrease/
(Decrease)
September 30,September 30,
202020192020 vs. 2019202020192020 vs. 2019
MillionsMillions%MillionsMillions%
Operating Revenues$746 $771 $(25)(3)$2,649 $3,270 $(621)(19)
Energy Costs290 359 (69)(19)1,289 1,556 (267)(17)
Operation and Maintenance213 233 (20)(9)679 736 (57)(8)
Depreciation and Amortization91 93 (2)(2)276 282 (6)(2)
(Gain) Loss on Asset Dispositions(122)7 (129)N/A(122)402 (524)N/A
Income from Equity Method Investments4 3 1 33 10 10 — — 
Net Gains (Losses) on Trust Investments103 (4)107 N/A79 160 (81)(51)
Other Income (Deductions)11 15 (4)(27)— 43 (43)(100)
Net Non-Operating Pension and OPEB Credits (Costs)8 8 — — 25 14 11 79 
Interest Expense28 34 (6)(18)92 85 7 8 
Income Tax Expense (Benefit)118 14 104 N/A112 127 (15)(12)
Three Months Ended September 30, 2020 as Compared to 2019
Operating Revenues decreased $25 million due primarily to changes in generation revenues.
Generation Revenues decreased $24 million due primarily to
•a net decrease of $30 million due to lower generation in the PJM region primarily due to the sale of our ownership interests in Keystone and Conemaugh generation plants in 2019 coupled with lower prices in the PJM region. This was partially offset by higher volumes sold under our load contract obligations in the PJM and New England (NE) regions, and
•a decrease of $18 million in electricity sold under our BGS contracts primarily due to lower volumes coupled with
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lower prices,PSEG Power
Three Months EndedIncrease/
(Decrease)		Six Months EndedIncrease/
(Decrease)
June 30,June 30,
202120202021 vs. 2020202120202021 vs. 2020
MillionsMillions%MillionsMillions%
Operating Revenues$380 $683 $(303)(44)$1,547 $1,903 $(356)(19)
Energy Costs271 323 (52)(16)953 999 (46)(5)
Operation and Maintenance259 225 34 15 481 466 15 3 
Depreciation and Amortization83 91 (8)(9)175 185 (10)(5)
(Gains) Losses on Asset Dispositions and Impairments457 — 457 N/A457 — 457 N/A
Income from Equity Method Investments6 3 3 100 9 6 3 50 
Net Gains (Losses) on Trust Investments79 196 (117)(60)137 (24)161 N/A
Other Income (Deductions)8 12 (4)(33)4 (11)15 N/A
Net Non-Operating Pension and OPEB Credits (Costs)11 9 2 22 23 17 6 35 
Interest Expense24 30 (6)(20)51 64 (13)(20)
Income Tax Expense (Benefit)(127)64 (191)N/A(75)(6)(69)N/A
Three Months Ended June 30, 2021as Compared to 2020
Operating Revenues decreased $303 million due primarily to changes in generation and gas supply revenues.
Generation Revenues decreased $290 million due primarily to
•partially offset by a net increasedecrease of $23$218 million due to lessmore MTM losses in 20202021 as compared to 2019.2020. Of this amount, there was a $41$295 million increasedecrease due to changes in forward prices this year as compared to last year, partially offset by an $18a $77 million decreaseincrease due to moreless losses on positions reclassified to realized upon settlement.settlement in 2021 as compared to 2020,
•a net decrease of $61 million in electricity sold primarily due to a $29 million impact from the transfer of responsibility for firm transmission services under the BGS contracts from the BGS suppliers to the Electric Distribution Companies (EDCs), coupled with lower volumes sold, and
•a net decrease of $8 million due to lower prices in the PJM region, partially offset by higher volumes sold in the NE region.
Gas Supply Revenues decreased $1$13 million due primarily to
•a net decrease of $6$10 million in sales under the BGSS contract primarily due to lower average sales prices,volumes, and
•a decrease of $5$10 million due to MTM losses in 2021 as compared to MTM gains in 2020, primarily due to changes in forward prices,
•partially offset by a net increase of $10$7 million related to sales to third parties, of which $23$10 million was due to higher volumes sold,average sales prices, partially offset by $13a decrease of $3 million due to lower volumes sold.
Operating Expenses
Energy Costs represent the cost of generation, which includes fuel costs for generation as well as purchased energy in the market, and gas purchases to meet PSEG Power’s obligation under its BGSS contract with PSE&G. Energy Costs decreased $52 million due to
Generation costs decreased $47 million due primarily to
•a net decrease of $48 million due to more MTM gains in 2021 as compared to 2020. Of this amount, there was a $63 million decrease due to changes in forward prices this year as compared to last year, partially offset by a $15 million decrease due to less gains on positions reclassified to realized upon settlement in 2021 as compared to 2020, and
•a net decrease of $39 million in transmission costs primarily due to a $29 million impact from the transfer of
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responsibility for firm transmission services under BGS contracts from BGS suppliers to the EDCs, coupled with a $10 million decrease from changes in BGS and other load,
•partially offset by a net increase of $21 million in fuel costs due to higher gas prices in the NE region coupled with the utilization of higher volumes of gas in the PJM and New York (NY) regions,
•a net increase of $9 million due to the reversal in the second quarter of 2020 of a lower of cost or market (LOCOM) adjustment on oil inventory that resulted from a recovery in oil prices, and
•a net increase of $9 million primarily due to higher costs for Renewable Energy Credit (RECs) related to load contracts in NE region.
Gas costs decreased $5 million due mainly to
•a net decrease of $11 million related to sales under the BGSS contract, primarily due to lower sendout volumes,
•partially offset by a net increase of $6 million related to sales to third parties, of which $9 million was due to an increase in the average cost of gas, partially offset by a decrease of $3 million due to lower volumes sold.
Operation and Maintenance increased $34 million due primarily to higher outage costs in 2021 at our Hope Creek nuclear plant.
Depreciation and Amortization decreased $8 million due primarily to the sale of Solar Source in June 2021 and to the retirement of the Bridgeport Harbor Station 3 (BH3) effective May 31, 2021.
(Gains) Losses on Asset Dispositions and Impairments of $457 millionreflects a $519 million impairment of the ISO-NE fossil asset grouping, offset by a $62 million gain from the sale of Solar Source.
Net Gains (Losses) on Trust Investments decreased $117 million due primarily to a $162 million decrease in net unrealized gains on equity investments in the NDT Fund, partially offset by a $48 million increase in net realized gains on NDT Fund investments.
Other Income (Deductions) decreased $4 million primarily due to higher purchases of NOL tax benefits in 2021 under the New Jersey Technology Tax Benefit Transfer Program.
Interest Expense decreased $6 million due primarily to $950 million of debt maturities in 2021 and $406 million of debt maturities and $96 million in PSEG Power notes that were redeemed as part of the debt exchange with PSEG in 2020.
Income Tax Expense decreased $191 million due primarily to lower pre-tax income, partially offset by the recapture of ITCs related to the sale of Solar Source.
Six Months Ended June 30, 2021 as Compared to 2020
Operating Revenues decreased $356 million due primarily to changes in generation and gas supply revenues.
Generation Revenues decreased $418 million due primarily to
•a net decrease of $420 million due to MTM losses in 2021 as compared to MTM gains in 2020. Of this amount, there was a $404 million decrease due to changes in forward prices this year as compared to last year coupled with a $16 million decrease due to more losses on positions reclassified to realized upon settlement in 2021 as compared to 2020, and
•a net decrease of $84 million in electricity sold primarily due to a $51 million impact from the transfer of responsibility for firm transmission services under the BGS contracts from the BGS suppliers to the EDCs, coupled with lower volumes sold,
•partially offset by a net increase of $73 million due primarily to higher average realized prices in the PJM, NE and NY regions coupled with higher volumes of electricity sold in the NE region. This was partially offset by lower volumes of electricity sold in the PJM region, and
•a net increase of $17 million in capacity revenues due primarily to increases in auction prices in the PJM region, partially offset by decreases in capacity prices and higher load obligations in the NE region.
Gas Supply Revenues increased $62 million due primarily to
•a net increase of $53 million in sales under the BGSS contract primarily due to higher sales volumes, and
•a net increase of $19 million related to sales to third parties, of which $34 million was due to higher average sales prices, partially offset by $15 million due to lower volumes sold,
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•partially offset by a decrease of $10 million due to higher MTM losses in 2021 as compared to 2020, primarily due to changes in forward prices.
Operating Expenses
Energy Costs represent the cost of generation, which includes fuel costs for generation as well as purchased energy in the market, and gas purchases to meet PSEG Power’s obligation under its BGSS contract with PSE&G. Energy Costs decreased $69$46 million due to
Generation costs decreased $57$89 million due primarily to
•a net decrease of $51 million in fuel costs primarily in the PJM region reflecting utilization of lower gas volumes and lower gas prices coupled with the utilization of lower volumes of coal due to the sale of our ownership interests in Keystone and Conemaugh generation plants, and
•a net decrease of $21$97 million due to highernet MTM gains in 2020 as2021 compared to 2019.MTM losses in 2020. Of this amount, there was a $15$79 million decrease due to changes in forward prices this year as compared to last year coupled with a $6an $18 million decrease due to more gains on positions reclassified to realized upon settlement
•partially offset by a net increase of $10 million primarily due in 2021 as compared to increased renewable energy credit obligations in the PJM and NE regions.
Gas costs decreased $12 million due mainly to2020,
•a net decrease of $20$68 million related to sales under the BGSS contract, which wasin transmission costs primarily due to a net decrease in$51 million impact from the average costtransfer of gas. Included in the average cost of gas were $11 million of interstate gas pipeline refunds due to a settlement on pipeline ratesresponsibility for firm transmission services under BGS contracts from prior periods,
•partially offset by a net increase of $8 million related to sales to third parties, of which $21 million was due to higher volumes sold, partially offset by $13 million due to a decrease in the average cost of gas.
Operation and Maintenance decreased $20 million due primarily to a net decrease at our fossil plants dueBGS suppliers to the sale of our ownership interests in the Keystone and Conemaugh generation plants in 2019 and our ownership interest in the Yards Creek generation facility in September 2020, coupled with higher planned outage costs in 2019.
Depreciation and Amortization decreased $2 million due primarily to a net decrease at our nuclear plants due to the Peach Bottom License Renewal that was approved by the NRC in March 2020, partially offset by an increased asset base. 
(Gain) Loss on Asset Dispositions reflects a gain on the sale of our ownership interest in the Yards Creek generation facility in September 2020 and a loss related to the sale of our ownership interests in the Keystone and Conemaugh generation plants in 2019. (see Item 1. Note 4. Early Plant Retirements/Asset Dispositions).
Net Gains (Losses) on Trust Investments increased $107 million due primarily to a $55 million increase resulting from net unrealized gains in 2020 as compared to net unrealized losses in 2019 on equity investments in the NDT Fund and a $52 million increase in net realized gains on NDT Fund investments.
Interest Expense decreased $6 million due primarily to an April 2020 debt maturity.
Income Tax Expense increased $104 million due primarily to higher pre-tax income, including higher pre-tax income from the NDT qualified fund, which is subject to an additional trust tax, and the impact of the increase in the 2020 New Jersey temporary surtax.    
Nine Months Ended September 30, 2020 as Compared to 2019
Operating Revenues decreased $621 million due primarily to changes in generation and gas supply revenues.
Generation Revenues decreased $524 million due primarily to
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•a net decrease of $313 million due to MTM losses in 2020 as compared to MTM gains in 2019. Of this amount, there was a $164 million decrease due to losses on positions reclassified to realized upon settlement in 2020 compared to gains in 2019EDCs, coupled with a $149$17 million decrease due tofrom changes in forward prices this year as compared to last year,
•a net decrease of $143 million due primarily to lower average realized prices in PJM, NEBGS and NY regions coupled with lower volumes sold in the PJM region primarily due to the sale of our ownership interests in Keystone and Conemaugh generation plants. This was partially offset by higher volumes of electricity sold in the NE region, primarily due to the commencement of commercial operations of Bridgeport Harbor Unit 5 (BH5) in Connecticut in June 2019 and higher volumes of electricity sold in the NY region,
•a net decrease of $67 million in capacity revenues due primarily to decreases in auction prices in the PJM region coupled with lower volumes due to the sale of our ownership interests in the Keystone and Conemaugh generation plants,other load, and
•a decrease of $66 million in electricity sold under our BGS contracts primarily due to lower volumes coupled with lower prices,
•partially offset by an increase of $70$11 million due to ZEC revenues that started in mid-April 2019.
Gas Supply Revenues decreased $97 million due primarily to
•a decrease of $107 million in sales under the BGSS contract, of which $64 million was due to a decrease in sales volumes and $43 million was due to lower average sales prices, and
•a decrease of $9 million due to MTM losses in 2020, primarily due to changes in forward prices,
•partially offset by a net increase of $19 million related to sales to third parties, of which $80 million was due to higher volumes sold, partially offset by $61 million due to lower average sales prices.
Operating Expenses
Energy Costs represent the cost of generation, which includes fuel costs for generation as well as purchased energy in the market, and gas purchases to meet PSEG Power’s obligation under its BGSS contract with PSE&G. Energy Costs decreased $267 million due to
Generation costs decreased $180 million due primarily to
•a net decrease of $159 million in fuel costs, reflecting lower gas prices in the PJM and NY regions coupled with the utilization of lower volumes of coal in the PJM region primarily due to the sale of our ownership interests in Keystone and Conemaugh generation plants, and lower volumes of gas in the PJM region. This was partially offset by utilization of higher volumes of gas in the NE region at higher prices due to the commencement of commercial operations of BH5 in June 2019 coupled with utilization of higher volumes of gas in the NY region, and
•a net decrease of $46 million due to higher MTM gains in 2020 as compared to 2019. Of this amount, there was a $34 million decrease due to changes in forward prices this year as compared to last year coupled with a $12 million decrease due to higher gains on positions reclassified to realized upon settlement in 2020 as compared to 2019,
•partially offset by a net increase of $21 million in emission costs primarily due to New Jersey reentering the RGGI program beginning in 2020, and
•an $11 million increase due to a net lower of cost or marketLOCOM adjustment on oil inventory caused by a decrease in oil demand and pricing earlier in 2020.
Gas costs decreased $87 million due mainly to
•a decrease of $106 million related to sales under the BGSS contract, of which $58 million was due to a decrease in the average cost of gas and $48 million was due to a decrease in send out volumes. Included in the average cost of gas were $18 million of interstate gas pipeline refunds due to a settlement on pipeline rates from prior periods,2020,
•partially offset by a net increase of $19$68 million in fuel costs reflecting higher gas prices in the PJM, NY, and NE regions coupled with the utilization of higher volumes of coal in the NE region, and
•a net increase of $13 million due to higher costs for RECs related to load contracts in the PJM and NE regions.
Gas costs increased $43 million due mainly to
•a net increase of $29 million in costs related to sales under the BGSS contract, of which $42 million was due to higher sendout volumes, partially offset by a decrease of $13 million due to the lower average cost of gas, and
•a net increase of $14 million related to sales to third parties, of which $74$27 million was due to higher volumes sold, partially offset by $55 million due to a decreasean increase in the average cost of gas.gas, partially offset by a decrease of $13 million due to lower volumes sold.
Operation and Maintenance decreased $57increased $15 million due primarily to a net decreaserefueling outage in 2021 at our 100%-owned Hope Creek nuclear plant as compared to an outage in 2020 at our 57%-owned Salem 2 nuclear plant, partially offset by lower outage costs in 2021 at our fossil plants due to the sale of our ownership interests in the Keystone and Conemaugh generation plants in 2019 and our ownership interest in the Yards Creek generation facility in September 2020, coupled with lower planned outage costs in 2020.plants.
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Depreciation and Amortization decreased $6$10 million due primarily to a $6 million net decrease at our nuclear plants due to the Peach Bottom License Renewal that was approved by the NRC in March 2020, partially offset by an increased asset base. This decrease was coupled with a $1 million net decrease at our fossil plants, primarily due to the sale of our ownership interestsSolar Source and the retirement of BH3 in the Keystone and Conemaugh generation plants in 2019, partially offset by an increase due to BH5 being placed into service in June 2019.2021.
(Gain) Loss(Gains) Losses on Asset Dispositionsand Impairments of $457 million reflects a $519 million impairment of the ISO-NE fossil asset grouping, offset by a $62 million gain onfrom the sale of our ownership interest in the Yards Creek generation facility in September 2020 and a loss on the sale of our ownership interests in the Keystone and Conemaugh generation plants in 2019. (see Item 1. Note 4. Early Plant Retirements/Asset Dispositions).Solar Source.
Net Gains (Losses) on Trust Investments decreased $81increased $161 million due primarily to a $116 million decrease resulting from net unrealized losses in 2020 as compared to net unrealized gains in 2019 on equity investments in the NDT Fund, partially offset by a $37$108 million increase in net realized gains on NDT Fund investments.investments and a $52 million increase due to $13 million of net unrealized gains in 2021 as compared to $39 million of net unrealized losses on NDT Fund equity securities.
Other Income (Deductions) decreased $43increased $15 million due primarily due to lower purchases of net operating lossesNOL tax benefits in 20202021 under the New Jersey’sJersey Technology Tax Benefit Transfer Program and lower interest and dividend income on NDT Fund investments.Program.
Net Non-Operating Pension and OPEB Credits (Costs)increased $11$6 million due to a $7 million decrease in interest cost and a $5$3 million increase in the expected return on plan assets, and a $3 million decrease in the amortization of the net actuarial loss, partially offset by a $3$2 million increase in co-owner charges and a $1$2 million decreaseincrease in the amortization of net actuarial loss and net prior service credit.cost.
Interest Expense increased $7decreased $13 million due primarily to lower capitalized interest expense due to $950 million of debt maturities in 2021 and $406 million of debt maturities and $96 million in PSEG Power notes that were redeemed as a resultpart of BH5 being placed into servicethe debt exchange with PSEG in 2019, partially offset by an April 2020 debt maturity.2020.
Income Tax Expense decreased $15$69 million due primarily to lower pre-tax income, partially offset by the benefit fromrecapture of ITCs related to the 2019sale of Solar Source, an additional trust tax on the NDT qualified fund net operating losses purchased under the New Jersey Technology Tax Benefit Transfer Program in 2020, andgains, the tax benefit in 2020 from changes in uncertain tax positions as a result of the settlement of the 2011-2016 federal income tax audits offset by higher pre-tax income and changesthe purchase of less New Jersey NOL tax benefits in uncertain tax positions unrelated2021 as compared to the settlement of the 2011-2016 federal income tax audits.     2020.

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LIQUIDITY AND CAPITAL RESOURCES
The following discussion of our liquidity and capital resources is on a consolidated basis, noting the uses and contributions, where material, of our two direct major operating subsidiaries.
Operating Cash Flows
We continue to expect our operating cash flows combined with cash on hand and financing activities to be sufficient to fund planned capital expenditures and provide opportunities for shareholder dividends.
For the ninesix months ended SeptemberJune 30, 2020,2021, our operating cash flow decreased $192$615 million as compared to the same period in 2019.2020. The net decrease was primarily due to the net changes from our subsidiaries, as discussed below, offset by net tax refunds in 20202021 as compared to net tax payments in 2019 at the parent company and lower tax payments in 2020 at Energy Holdings.
Given the current economic challenges, PSE&G has informed both our residential customers and state regulators that all non-safety related service disconnections for non-payment will be temporarily suspended. In addition, the currentCurrent economic conditions have adversely impacted residential and C&I customer payment patterns. During the moratorium, as previously discussed, PSE&G has experienced a significant decrease in cash inflow and higher Accounts Receivable aging and an associated increase in bad debt expense, which we expect will extend beyond the duration of the coronavirus pandemic. While the impact on our results of operations, financial condition and cash flows for the ninesix months ended SeptemberJune 30, 2020 has2021 was not been material, a prolonged coronavirus pandemic and the associated economic impacts, which could extend beyond the duration of the pandemic, is expected tocould materially impact cash from operations, Accounts Receivable and bad debt expense.
PSE&G
PSE&G’s operating cash flow decreased $57$319 million from $1,481$999 million to $1,424$680 million for the ninesix months ended SeptemberJune 30, 2020,2021, as compared to the same period in 2019,2020, due primarily to increases in electric energy and vendor payables, higher tax payments in 2020 as compared to tax refunds2021 and a lower reduction in 2019, a decrease of $97 million from higher accounts receivable and unbilled revenues in 2020 and a net decrease of $50 million deferred as Regulatory Assets due to storm and COVID-19 costs, reduced revenues from a warmer than normal winter, and an increase in the TAC with a partial offsetting decrease in transmission formula rate true-ups. These decreases were2021, partially offset by a $123 million increase largely due to lower BGS payments from decreased salesnet decrease in regulatory deferrals and higher earnings.
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PSEG Power
PSEG Power’s operating cash flow decreased $362$272 million from $1,362$626 million to $1,000$354 million for the ninesix months ended SeptemberJune 30, 2020,2021, as compared to the same period in 2019,2020, due to lower earnings and a $313$321 million reduction resulting from an increase in counterpartyrelated to cash collateral posting requirements, in 2020 as compared to a significant reduction in postings in 2019, and tax payments in 2020 as compared to tax refunds in 2019, partially offset by higher earnings.a decrease of $53 million in payments to counterparties.
Short-Term Liquidity
PSEG meets its short-term liquidity requirements, as well as those of PSEG Power, primarily through the issuance of commercial paper and, from time to time, short-term loans. PSE&G maintains its own separate commercial paper program to meet its short-term liquidity requirements. Each commercial paper program is fully back-stopped by its own separate credit facilities.
We continually monitor our liquidity and seek to add capacity as needed to meet our liquidity requirements. Each of our credit facilities is restricted as to availability and use to the specific companies as listed below; however, if necessary, the PSEG facilities can also be used to support our subsidiaries’ liquidity needs.
In March 2020, PSEG entered into a $300 million, 364-day term loan agreement.agreement which was prepaid in January 2021. In April 2020,May and March 2021, PSEG entered into two 364-day variable rate term loan agreements for $200$750 million and $300$500 million, which were prepaid in August 2020.respectively. These term loans are not included in the credit facility amounts presented in the following table.
Our total credit facilities and available liquidity as of SeptemberJune 30, 20202021 were as follows:
Company/FacilityAs of September 30, 2020
Total
Facility		UsageAvailable
Liquidity
Millions
PSEG$1,500 $13 $1,487 
PSE&G600 17 583 
PSEG Power2,100 175 1,925 
Total$4,200 $205 $3,995 
Company/FacilityAs of June 30, 2021
Total
Facility		UsageAvailable
Liquidity
Millions
PSEG$1,500 $202 $1,298 
PSE&G600 18 582 
PSEG Power2,100 125 1,975 
Total$4,200 $345 $3,855 
As of SeptemberJune 30, 2020,2021, our credit facility capacity was in excess of our projected maximum liquidity requirements over our 12 month planning horizon, as we continueincluding access to monitor the impact and volatility of the ongoing coronavirus pandemic on cash flows and capital market conditions.external financing to meet redemptions. Our maximum liquidity requirements are based on stress scenarios that incorporate changes in commodity prices and the potential impact of PSEG Power losing its investment grade credit rating from S&P or Moody’s, which would represent a three level downgrade from its current Moody’s rating and a two level downgrade from its current S&P or Moody’s ratings.rating. In the event of a deterioration of PSEG Power’s credit rating,
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certain of PSEG Power’s agreements allow the counterparty to demand further performance assurance. The potential additional collateral that we would be required to post under these agreements if PSEG Power were to lose its investment grade credit rating was approximately $844$862 million and $974$840 million as of SeptemberJune 30, 20202021 and December 31, 2019,2020, respectively.
For additional information, see Item 1. Note 12. Debt and Credit Facilities.
Long-Term Debt Financing
•In May 2021, PSEG Power redeemed at par $700 million of 3.00% Senior Notes due to mature in June 2021,
•In June 2021, PSE&G retired $134 million of 9.25% Mortgage Bonds, Series CC at maturity, and
•In June 2021, PSEG Power redeemed at par $250 million of 4.15% Senior Notes due to mature in September 2021.
During the next twelve months,
•PSEG has a $700 million floating rate term loan maturing in November 2020,
•PSE&G has $9Power redeemed its $44 million of 7.04% Medium-Term Notes (MTN), Series A, maturingPennsylvania Economic Development Financing Authority Variable Rate Bonds in November 2020, $300 million of 1.90% MTN, Series K, maturing in March 2021 and $134 million of 9.25% Mortgage Bonds Series CC maturing in JuneAugust 2021, and
•PSEG Power has a $700$300 million 3.00%of 2.00% Senior NoteNotes maturing in June 2021 and a $250 million 4.15% Senior Note maturing in SeptemberNovember 2021.
PSEG, PSEG Power, Energy Holdings, PSEG LI and Services participate in a corporate money pool, an aggregation of daily cash balances designed to efficiently manage their respective short-term liquidity needs, which are accounted for as intercompany loans. Servco does not participate in the corporate money pool. Servco’s short-term liquidity needs are met through an account funded and owned by LIPA.
For additional information see Item 1. Note 12. Debt and Credit Facilities.
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Guarantor Financial Information
PSEG Power’s Senior Notes are fully and unconditionally guaranteed on a joint and several basis by its subsidiaries, PSEG Fossil LLC, PSEG Nuclear LLC and PSEG Energy Resources & Trade LLC. Each guarantor subsidiary is a wholly owned consolidated subsidiary of PSEG Power.
Summarized financial information is being presented, on a combined basis, only for PSEG Power (parent company) and the guarantors of PSEG Power’s Senior Notes, excluding investments in, and earnings (losses) from, subsidiaries that are not guarantors. All transactions between PSEG Power (parent company) and the guarantor subsidiaries are eliminated in the combined summarized financial information. The required disclosures for the year-to-date interim period and the most recent fiscal year have been moved outside the Notes to Condensed Consolidated Financial Statements and are provided in the following tables.
Nine Months EndedYear Ended
September 30, 2020December 31, 2019
Millions
Operating Revenues (A)$2,592 $4,315 
Operating Income$518 $451 
Net Income$440 $484 
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Six Months EndedYear Ended
June 30, 2021December 31, 2020
Millions
Operating Revenues (A)$1,512 $3,564 
Operating Income (Loss)$(587)$598 
Net Income (Loss)$(331)$597 
(A)Operating Revenues include sales to affiliates of $883$670 million and $1,463$1,218 million, respectively for the ninesix months ended SeptemberJune 30, 20202021 and year ended December 31, 2019,2020, respectively.
As ofAs of
September 30, 2020December 31, 2019
Millions
Current Receivables from Subsidiaries and Affiliates$2,380 $2,456 
Total Current Assets$3,395 $3,559 
Noncurrent Receivables from Affiliates$17 $17 
Total Noncurrent Assets$7,194 $7,025 
Current Payables to Subsidiaries and Affiliates$259 $218 
Total Current Liabilities$1,740 $1,155 
Noncurrent Payables to Affiliates$58 $115 
Total Noncurrent Liabilities$4,052 $4,934 
As ofAs of
June 30, 2021December 31, 2020
Millions
Current Receivables from Subsidiaries and Affiliates$1,418 $2,350 
Total Current Assets$2,388 $3,365 
Noncurrent Receivables from Affiliates$27 $17 
Total Noncurrent Assets$7,260 $7,228 
Current Payables to Subsidiaries and Affiliates$582 $258 
Total Current Liabilities$1,155 $1,734 
Noncurrent Payables to Affiliates$64 $57 
Total Noncurrent Liabilities$3,846 $4,027 
Pension and NDT Fund Obligations
IRS minimum funding requirements for pension plans are determined based on the fundfund’s assets and liabilities at the end of a calendar year for the subsequent calendar year. As a result, the market downturn associated with the ongoing coronavirus pandemic is not expected to impact our pension contributions in 2020. In the event of a prolonged economic downturn, associated with the ongoing coronavirus pandemic, our contributions to the pension plans may increase in future periods to meet IRS minimum funding requirements. PSEG had accumulated funding credits totaling approximately $600 million through 2019,2020, which represent historical contributions in excess of IRS minimum funding requirements, and these credits can be applied to offset any future cash contribution obligations.
In addition, the NRC requires a biennial filing of the NDT fund balances against the decommissioning liability estimate. Any funding shortfalls are required to be cured prior to the next NRC reporting period. The market downturn associated with the ongoing coronavirus pandemic is not currently expected to result in any supplemental required funding of the NDT Fund. To the extent of a prolonged economic downturn, associated with the ongoing coronavirus pandemic, our funding requirements may increase in future periods to meet NRC minimum funding requirements.
Common Stock Dividends
On July 21, 2020,20, 2021, our Board of Directors declared a $0.49$0.51 dividend per share of common stock for the third quarter of 2020.2021. This reflects an indicative annual dividend rate of $1.96$2.04 per share. We expect to continue to pay cash dividends on our common stock; however, the declaration and payment of future dividends to holders of our common stock will be at the discretion of the Board of Directors and will depend upon many factors, including our financial condition, earnings, capital requirements of our
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businesses, alternate investment opportunities, legal requirements, regulatory constraints, industry practice the impact of the ongoing coronavirus pandemic on our business and the capital and credit markets and other factors that the Board of Directors deems relevant. For additional information related to cash dividends on our common stock, see Item 1. Note 18. Earnings Per Share (EPS) and Dividends.
Credit Ratings
If the rating agencies lower or withdraw our credit ratings, such revisions may adversely affect the market price of our securities and serve to materially increase our cost of capital and limit access to capital. Credit Ratings shown are for securities that we typically issue. Outlooks are shown for Issuer Credit Ratings (Moody’s) and Corporate Credit Ratings (S&P) and can be Stable, Negative, or Positive. In May 2021, Moody’s changed PSE&G’s outlook to Negative from Stable. There is no assurance that the ratings will continue for any given period of time or that they will not be revised by the rating agencies, if in their respective judgments, circumstances warrant. Each rating given by an agency should be evaluated independently of the other agencies’ ratings. The ratings should not be construed as an indication to buy, hold or sell any security. In August 2020, S&P lowered PSEG Power’s Senior Note rating to BBB from BBB+.
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Moody’s (A)S&P (B)
PSEG
OutlookStableStable
Senior NotesBaa1BBB
Commercial PaperP2A2
PSE&G
OutlookStableNegativeStable
Mortgage BondsAa3A
Commercial PaperP1A2
PSEG Power
OutlookStableStable
Senior NotesBaa1BBB
(A)Moody’s ratings range from Aaa (highest) to C (lowest) for long-term securities and P1 (highest) to NP (lowest) for short-term securities.
(B)S&P ratings range from AAA (highest) to D (lowest) for long-term securities and A1 (highest) to D (lowest) for short-term securities.

CAPITAL REQUIREMENTS
We expect that all of our capital requirements over the next three years will come from a combination of internally generated funds and external debt financing. There were no material changes to our projected capital expenditures at PSEG Power and Services as compared to amounts disclosed in our 20192020 Form 10-K.
In September 2020, the BPU issued an Order approving our CEF-EE program, authorizing PSE&G to spend $1 billion to achieve energy efficiency targets required under New Jersey’s Clean Energy law over a three-year period. The CEF-EE program was not included in PSE&G’s projected capital expenditures disclosed in our 2019 Form 10-K. See Executive Overview of 2020 and Future Outlook for additional information.
PSE&G
During the ninesix months ended SeptemberJune 30, 2020,2021, PSE&G made capital expenditures of $1,777$1,219 million, primarily for T&D system reliability. This does not include expenditures for cost of removal, net of salvage, of $77$60 million, which are included in operating cash flows.
PSEG Power
During the ninesix months ended SeptemberJune 30, 2020,2021, PSEG Power made capital expenditures of $147$61 million, excluding $160$21 million for nuclear fuel, primarily related to various nuclear solar and fossil projects.
ACCOUNTING MATTERS
For information related to recent accounting matters, see Item 1. Note 2. Recent Accounting Standards.

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ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The risk inherent in our market-risk sensitive instruments and positions is the potential loss arising from adverse changes in commodity prices, equity security prices and interest rates as discussed in the Notes to Condensed Consolidated Financial Statements. It is our policy to use derivatives to manage risk consistent with business plans and prudent practices. We have a Risk Management Committee comprised of executive officers who utilize a risk oversight function to ensure compliance with our corporate policies and risk management practices.
Additionally, we are exposed to counterparty credit losses in the event of non-performance or non-payment. We have a credit management process, which is used to assess, monitor and mitigate counterparty exposure. In the event of non-performance or non-payment by a major counterparty, there may be a material adverse impact on our financial condition, results of operations or net cash flows.
Commodity Contracts
The availability and price of energy-related commodities are subject to fluctuations from factors such as weather, environmental policies, changes in supply and demand, state and federal regulatory policies, market rules and other events. To reduce price risk caused by market fluctuations, we enter into supply contracts and derivative contracts, including forwards, futures, swaps
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and options with approved counterparties. These contracts, in conjunction with physical sales and other services, help reduce risk and optimize the value of owned electric generation capacity.
Value-at-Risk (VaR) Models
VaR represents the potential losses, under normal market conditions, for instruments or portfolios due to changes in market factors, for a specified time period and confidence level. We estimate VaR across our commodity businesses.
MTM VaR consists of MTM derivatives that are economic hedges. The MTM VaR calculation does not include market risks associated with activities that are subject to accrual accounting, primarily our generating facilities and some load-serving activities.
The VaR models used are variance/covariance models adjusted for the change of positions with 95% and 99.5% confidence levels and a one-day holding period for the MTM activities. The models assume no new positions throughout the holding periods; however, we actively manage our portfolio.
From JulyApril through September 2020,June 2021, MTM VaR was relatively stablevaried between a low of $5$7 million and a high of $12$33 million at the 95% confidence level. The range of VaR was narrowerwider for the three months ended SeptemberJune 30, 20202021 as compared with the year ended December 31, 2019.2020.
MTM VaR
Three Months Ended September 30, 2020Year Ended December 31, 2019
Millions
95% Confidence Level, Loss could exceed VaR one day in 20 days
Period End$7 $9 
Average for the Period$8 $12 
High$12 $35 
Low$5 $5 
99.5% Confidence Level, Loss could exceed VaR one day in 200 days
Period End$11 $14 
Average for the Period$12 $19 
High$19 $54 
Low$8 $8 
MTM VaR
Three Months Ended June 30, 2021Year Ended December 31, 2020
Millions
95% Confidence Level, Loss could exceed VaR one day in 20 days
Period End$31 $16 
Average for the Period$15 $10 
High$33 $18 
Low$7 $5 
99.5% Confidence Level, Loss could exceed VaR one day in 200 days
Period End$48 $24 
Average for the Period$24 $16 
High$52 $29 
Low$12 $8 
See Item 1. Note 13. Financial Risk Management Activities for a discussion of credit risk.
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ITEM 4.CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
PSEG, PSE&G and PSEG Power
We have established and maintain disclosure controls and procedures as defined under Rule 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to provide reasonable assurance that information required to be disclosed in the reports that are filed or submitted under the Exchange Act is recorded, processed, summarized and reported and is accumulated and communicated to the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) of each respective company, as appropriate, by others within the entities to allow timely decisions regarding required disclosure. We have established a disclosure committee which includes several key management employees and which reports directly to the CFO and CEO of each of PSEG, PSE&G and PSEG Power. The committee monitors and evaluates the effectiveness of these disclosure controls and procedures. The CFO and CEO of each of PSEG, PSE&G and PSEG Power have evaluated the effectiveness of the disclosure controls and procedures and, based on this evaluation, have concluded that disclosure controls and procedures at each respective company were effective at a reasonable assurance level as of the end of the period covered by the report.
Internal Controls
PSEG, PSE&G and PSEG Power
There have been no changes in internal control over financial reporting that occurred during the thirdsecond quarter of 20202021 that have materially affected, or are reasonably likely to materially affect, each registrant’s internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS
We are party to various lawsuits and environmental and regulatory matters, including in the ordinary course of business. For information regarding material legal proceedings, including updates to information reported in Item 3 of Part I of the Form 10-K, see Part I, Item 1. Note 11. Commitments and Contingent Liabilities and Item 5. Other Information in the first and second quarter 2020 10-Qs2021 10-Q and in this Quarterly Report on Form 10-Q.

ITEM 1A.RISK FACTORS
The discussion of our business and operations in this Quarterly Report on Form 10-Q should be read together with the risk factors contained in Part I, Item 1A of our Form 10-K, and Part II, Item 1A in the first quarter 2020 10-Q, which describes various risks and uncertainties that could have a material adverse impact on our business, prospects, financial position, results of operations or cash flows and could cause results to differ materially from those expressed elsewhere in this report. We expect that the risks and uncertainties described in this Form 10-Q our first quarter 2020 10-Q and our Form 10-K will be further adversely impacted by the ongoing coronavirus pandemic and any related, sustained economic downturn, which could extend beyond the duration of the pandemic. In addition to the foregoing, the following risk factor should be read together with the risk factors in our first quarter 2020 10-Q and our Form 10-K.
The timeline and ultimate outcome of PSEG’s exploration of strategic alternatives relating to its non-nuclear generating fleet is uncertain.
In July 2020, PSEG announced that it was exploring strategic alternatives for PSEG Power’s non-nuclear generating fleet with the intention of accelerating the transformation of PSEG into a primarily regulated electric and gas utility, with a contracted generation business. PSEG further announced that it was then in the preliminary stages of this process and it anticipated beginning the marketing process in the fourth quarter of 2020, with the expectation that the process would be completed sometime in 2021.
The timeline and ultimate outcome of this process are uncertain. The ability of PSEG to divest all or a portion of these assets, and the applicable terms, conditions and timeline, will depend in large part on the participation of potentially interested parties and the value such parties place on the applicable assets. It is possible that third parties may wish to acquire all, a portion or none of the applicable assets, and the value that such third parties may place on such assets is uncertain. The process may further be impacted by, among other things, global and domestic market and economics conditions, conditions generally impacting the fossil and solar generating industries and changes in the regulatory environment. Any transaction agreement that
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PSEG may enter into will contain various terms and conditions, and it is possible that even if entered into, such transaction may fail to be completed. It is also possible that such a transaction could be completed on a shorter timeline than currently anticipated.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
In November 2019,December 2020, we entered into a share repurchase plan that complies with Rule 10b5-1 of the Exchange Act, as amended, solely with respect to the repurchase of shares to satisfy obligations under equity compensation awards that are expected to vestbe issued in 2020.2021 and the repurchase of shares to satisfy purchases by employees under the Employee Stock Purchase Plan during 2021. There are no remaining shares available for repurchase under the plan.

ITEM 5. OTHER INFORMATION
Certain information reported in the Form 10-K is updated below. Additionally, certain information is provided for new matters that have arisen subsequent to the filing of the Form 10-K and first and second quarter 2020 10-Qs.2021 10-Q. References are to the related pages on the Form 10-K and the first quarter and second quarter 2020 10-Qs.2021 Form 10-Q.
StateFederal Regulation
Energy Efficiency InitiativesClearing Prices
December 31, 20192020 Form 10-K page 1913 and June 30, 2020March 31, 2021 Form 10-Q page 92.82. In April 2019, FERC issued an order directing PJM and NYISO to change their rules governing pricing for fast-start resources. In its Order, FERC found that current fast-start pricing practices are unjust and unreasonable because they do not allow prices to reflect the marginal cost of serving load. FERC required PJM and NYISO to make various changes to their respective tariffs to allow the start-up costs of fast-start resources to be reflected in prices, among other things. In August 2019, PJM stated that new tariff provisions would apply fast-start pricing to all eligible fast-start resources. However, in January 2020, FERC decided to hold the proceeding in abeyance in order to allow PJM and its stakeholders to address FERC’s concern that PJM’s pricing and dispatch are misaligned. In December 2020, FERC issued an order accepting aspects of PJM’s proposed reforms, but also directed PJM to submit an additional filing, including an implementation date. In February 2021, PJM submitted the additional filing. In May 2018,2021, FERC accepted PJM’s compliance filing. Separately, FERC accepted an effective date of September 1, 2021 for implementation of the fast-start pricing rules.
Capacity Market Issues
December 31, 2020 Form 10-K page 13. In July 2021, PJM submitted to FERC a proposal to replace the expanded MOPR with new provisions that accommodate state public policy programs that do not attempt to set the price of capacity. Under the PJM proposal, PSEG Power’s New Jersey nuclear plants that receive ZEC payments will not be subject to the new MOPR. PJM’s proposal requests that FERC approve the new provisions for the RPM auction that is scheduled to be held in December 2021. We cannot predict the outcome of the FERC proceeding.
Transmission Rate Proceedings and Return on Equity
December 31, 2020 Form 10-K page 14. In July 2021, PSE&G submitted for FERC’s approval a settlement agreement effective August 1, 2021 that it reached with the BPU and the New Jersey governor signed legislation that requiresRate Counsel about the State’s electriclevel of PSE&G’s base transmission ROE and gas utilities to implement energy efficiency programs that are expected to achieve energy savings targets for electric and gas usage within five years of the utilities’ implementation of those BPU-approved energy efficiency programs. In June 2020, the BPU issued an order finalizing this stakeholder process, setting forth its conclusions and directives regarding utility energy efficiency programs, including the appropriate scope of utility programs versus programs run by the State, as well as utility cost recovery and the measurement of utility performance in achieving the State’s energy savings goals. In September 2020, PSE&G reached a settlement with all parties in the CEF-EE proceeding, which the BPU approved.other formula rate matters. The settlement provides for an investment of $1 billion over a three-year period. Costs will be recovered through annual rate-making, with returns aligned with our most recent base rate case and a ten-year amortization period.
In May 2020, the BPU initiated a stakeholder proceeding to consider the role of the State’s electric utilities in developing an EV ecosystem. In September 2020, the Board issued an order adopting a “shared responsibility model” pursuant to which the utilities’ role would be primarily to prepare sites for publicly accessible charging infrastructure. The order does not require PSE&G to refile its pending CEF–EV proposal.
New Jersey Solar Initiatives
December 31, 2019 Form 10-K page 19 and March 31, 2020 Form 10-Q pg. 82. Pursuant to New Jersey’s Clean Energy Act of 2018, the BPU was required to undertake several initiatives in connection with New Jersey’s solar energy market.
The BPU established a “Community Solar Energy Pilot Program,” permitting customers to participate in solar energy projects remotely located from their properties, and allowing for bill credits related to that participation effective in February 2019. The BPU is currently engaged in a stakeholder process with the State’s EDCs and others regarding issues including minor modifications to the community solar pilot program, discussions regarding the potential implementation of consolidated billing for the benefit of project developers and participants, and developing a cost recovery mechanism for the EDCs.
The New Jersey Clean Energy Act of 2018 required the BPU to close the existing solar renewable energy certificate (SREC) program to new applications at the earlier of June 1, 2021 or the date at which 5.1% of New Jersey retail electric sales are derived from solar. The 5.1% threshold was attained and the SREC market was closed to new applications on April 30, 2020, with limited exceptions related to the impact of COVID-19 on projects under development. Solar projects that failed to achieve commercial operation before April 30, 2020 may be entitled to receive transition renewable energy certificates (TRECs) for each megawatt hour of solar production. The New Jersey electric distribution companies (EDCs), including PSE&G, are required to purchase, using the services of a TREC administrator, TRECs from solar projects at rates set by the BPU. PSE&G filed for rate recovery of these costs in April 2020. In August 2020, the BPU approvedreduces PSE&G’s rate recovery filing. The BPU is continuingbase ROE from 11.18% to work with the state’s EDCs to establish the mechanisms for implementing the transition incentive program.
Environmental Matters
Environmental Justice9.9%. As a
In September 2020, the New Jersey governor signed legislation that enacted an environmental justice process for applicants seeking environmental permits, including those emission permits regulated under Title V of the Clean Air Act, for facilities
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locatedresult of this settlement, PSE&G’s annual Net Income would decrease by approximately $50 million to $60 million, with a total decrease in whatcash flows of approximately $100 million. The settlement provides that the law defines as overburdened communities. With this law, settling parties will not seek changes to PSE&G’s transmission formula rate for three years. PSEG cannot predict the outcome of the FERC proceeding.
Reliability Standards
December 31, 2021 Form 10-K page 15. TheNorth American Electric Reliability Corporation is currently examining revised criteria for low-impact cyber systems, which could result in expanding the Critical Infrastructure Protection standards to a larger set of applicable cyber assets. This examination is expected to be completed in late 2021 or early 2022.
State Regulation
New Jersey has embarkedSolar Initiatives
December 31, 2020 Form 10-K page 16. In April 2021, the BPU released a proposal for a permanent solar financial incentive program, designated the Successor Program, drawing heavily from the current TREC fixed incentive program. Under this proposal, a Successor Program REC will be awarded for each MWh produced by an eligible solar project. During the second quarter of 2021, the BPU conducted a series of stakeholder workshops and a public meeting on the proposal. In July 2021, the BPU issued an order formally establishing the Successor Solar Incentive (SuSI) Program to serve as the permanent program for providing solar incentives to qualified solar electric generation facilities. The program provides for administratively-set incentive payments applicable to net-metered projects of 5 MW or less and an annual competitive solicitation applicable to grid-supply projects and net-metered C&I projects in excess of 5 MW.
Environmental Matters
CO2 Regulation under theClean Air Act
December 31, 2020 Form 10-K page 19. In June 2019, the EPA issued its final Affordable Clean Energy (ACE) rule as a path towardreplacement for the repealed Clean Power Plan, a declared legislative goal that no community should bear “a disproportionate shareGHG emission regulation for existing power plants. The ACE rule narrowly defines the “best system of emissions reductions” (BSER) as heat improvements to be applied only to an individual unit, excluding other potential mechanisms to address climate change. In September 2019, a coalition of power companies, including PSEG, filed a Petition for Review of the adverse environmentalACE rule with the D.C. Circuit challenging the EPA’s narrow interpretation of BSER. In January 2021, the D.C. Circuit vacated the ACE rule and public health consequences that accompany remanded the rulemaking to the EPA for further consideration. In April 2021, a 19-state coalition, led by West Virginia, filed a petition with the U.S. Supreme Court to review the D.C. Circuit’s decision to vacate the ACE Rule. We cannot predict the outcome of this matter or estimate its impact on our business or results of operations.
New Jersey’s economic growth.” Jersey Protecting Against Climate Threats (NJ PACT)
December 31, 2020 Form 10-K page 19. In some cases, this process may result in permit denials, and in others, the imposition of permit conditionsresponse to alleviate adverse impacts. The law does not go into effect untila New Jersey Executive Order, the New Jersey Department of Environmental Protection (NJDEP) adopts implementing regulations.has undertaken a regulatory reform effort that is designed to modernize environmental laws, referred to as New Jersey Protecting Against Climate Threats (NJ PACT). When fully implemented, NJ PACT is expected to result in changes to existing environmental regulation, modernizing air quality and environmental land use regulations that will enable governments, businesses and residents to effectively respond to current climate threats and reduce future climate damages. In June 2021, the NJDEP took the first step by publishing the Proposed Greenhouse Gas Monitoring and Reporting Rule. The NJDEP’s initial actionNJDEP proposes to require gas utilities to submit an annual report on replacement of mains and service lines in the State and to quantify maintenance-venting events, referred to as blowdown events. In addition, the NJDEP is proposing registration, recordkeeping, and reporting requirements for facilities with a refrigeration system requiring 50 pounds or more of a refrigerant with high global warming potential. A “refrigeration system” includes industrial process refrigeration utilized at our nuclear facility. We continue to publish a list of environmental justice communities within 120 days of passageassess the potential impact of the law. PSEG has multipleNJ PACT, which could have cost implications for business operations, including the construction of new facilities with Title V permits that would potentially be subjector upgrades to existing utility infrastructure. Such expenditures could materially affect the requirements of the regulations depending on the final structure of the rules and list of overburdened communities. We cannot estimate the impact of this action on our business continued economic viability and/or operations at this time.

cost to construct one or more such facilities.

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ITEM 6.EXHIBITS
A listing of exhibits being filed with this document is as follows:
a. PSEG:
Exhibit 101.INS:Inline XBRL Instance Document - The Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Exhibit 101.SCH:Inline XBRL Taxonomy Extension Schema
Exhibit 101.CAL:Inline XBRL Taxonomy Extension Calculation Linkbase
Exhibit 101.LAB:Inline XBRL Taxonomy Extension Labels Linkbase
Exhibit 101.PRE:Inline XBRL Taxonomy Extension Presentation Linkbase
Exhibit 101.DEF:Inline XBRL Taxonomy Extension Definition Document
Exhibit 104:Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
b. PSE&G:
Exhibit 101.INS:Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Exhibit 101.SCH:Inline XBRL Taxonomy Extension Schema
Exhibit 101.CAL:Inline XBRL Taxonomy Extension Calculation Linkbase
Exhibit 101.LAB:Inline XBRL Taxonomy Extension Labels Linkbase
Exhibit 101.PRE:Inline XBRL Taxonomy Extension Presentation Linkbase
Exhibit 101.DEF:Inline XBRL Taxonomy Extension Definition Document
Exhibit 104:Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
c. PSEG Power:
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Exhibit 101.INS:Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
Exhibit 101.SCH:Inline XBRL Taxonomy Extension Schema
Exhibit 101.CAL:Inline XBRL Taxonomy Extension Calculation Linkbase
Exhibit 101.LAB:Inline XBRL Taxonomy Extension Labels Linkbase
Exhibit 101.PRE:Inline XBRL Taxonomy Extension Presentation Linkbase
Exhibit 101.DEF:Inline XBRL Taxonomy Extension Definition Document
Exhibit 104:Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


(1)Filed as Exhibit 99.1 with Current Report on Form 8-K, File No. 001-09120, on April 22, 2021 and incorporated herein by reference.
(2)Filed as Exhibit 4.6 to Registration Statement on Form S-8, File No. 001-09120, on April 23, 2021 and incorporated herein by reference.
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SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
 
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
(Registrant)
By:
/S/ ROSE M. CHERNICK
Rose M. Chernick
Vice President and Controller
(Principal Accounting Officer)
Date: October 30, 2020August 9, 2021

SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
 
PUBLIC SERVICE ELECTRIC AND GAS COMPANY
(Registrant)
By:
/S/ ROSE M. CHERNICK
Rose M. Chernick
Vice President and Controller
(Principal Accounting Officer)
Date: October 30, 2020August 9, 2021

SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.
 
PSEG POWER LLC
(Registrant)
By:
/S/ ROSE M. CHERNICK
Rose M. Chernick
Vice President and Controller
(Principal Accounting Officer)
Date: October 30, 2020August 9, 2021

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