PEGPublic Service Enterprise Group

Climate While the CIP protects PSE&G’s margin variances against changes in customer usage of gas and electricity, climate change-related political action and state and federal policy goals, including but not limited to those related to GHG emissions reductions, energy efficient efficiency targets, solar targets, energy storage targets, encouragement of electrification through EV adoption, policies to restrict the use of natural gas in new or existing homes and businesses, or encourage electrification of end use equipment currently fueled by natural gas, and the associated legislative and regulatory responses, may create financial risk as our operations may be subject to additional regulation at either the state or federal level in the future. Increased regulation of GHG emissions could impose significant additional costs on for our electric and natural gas operations, customers and/or our suppliers and ultimately, our customers. Developing and implementing plans for compliance with GHG emissions reduction, clean/renewable energy requirements, or for achieving voluntary climate commitments can lead to additional capital and Operation and Maintenance (O&M) expenditures and business, which could significantly affect the economic position of existing operations and proposed projects. If our regulators do not allow us to recover all or a part of the cost of capital investment or the O&M costs incurred to comply with increasingly rigorous regulatory mandates, it could have a material adverse effect on our results of operations, financial condition or cash flows. On the other hand, in the event that the political, policy, regulatory or legislative support for clean energy projects declines, the benefits or feasibility of certain investments we could potentially make may be reduced. material.

At PSEG Power, we seek to produce low-cost electricity by efficiently operating our nuclear generation assets, mitigate earnings volatility through hedging and the PTC mechanism and hedging, mechanism, and support public policies that preserve these existing carbon-free base load nuclear generating plants. During 2024, 2025, our nuclear units generated approximately 31 30.9 terawatt hours and operated at a capacity factor of approximately 90%. Beginning in 2024, 91.2%. Effective April 2025, PSEG Power revised the estimated useful lives for the Salem 1, Salem 2 and Hope Creek nuclear plants due to our hedging strategy incorporated an estimated range of risk reduction impacts expectation that a 20-year license extension will be approved for these facilities. In October 2025, we completed work to extend the refueling cycle at our Hope Creek facility from the PTCs on our nuclear generation portfolio while retaining the ability 18 months to benefit when market pricing exceeds the phase out threshold. As of December 31, 2024, we expect that our hedged position for 2025 in conjunction with the PTC and market price variability will result in the realized value of our nuclear generation output being at, or above, the PTC phase out. Our strategy will continue to evolve given PTC guidance uncertainty, and potential incremental changes upon final U.S. Treasury guidance. 24 months. In addition, we are exploring opportunities for the planning power uprates at Salem Units 1 and 2 that will increase generation capacity and reliability and support long-term operation of these units, including through a potential sale of power and/or emission credits from our nuclear facilities pursuant to long-term agreements. subsequent license renewal.

In 2022, the EPA announced it had has designated approximately 23 river miles of the Lower Hackensack River as a federal Superfund site. The site runs from the river's confluence with Newark Bay north to the Oradell Dam. PSE&G and certain of its predecessors conducted operations at properties in this area, including at the Hudson, Bergen and Kearny generating stations that were transferred to PSEG Power. PSEG Power subsequently contractually transferred all land rights and structures on the Hudson generating station site to a third-party purchaser, along with the assumption of the environmental liabilities for that site. In 2024, the EPA identified PSE&G and four other parties as PRPs for the site and requested that they voluntarily perform a technical study of a portion of the river designated as “Operable Unit 2.” The EPA estimates that the technical study will cost $55 million to complete and PSE&G and PSEG Power have agreed to participate in the technical study. PSE&G and PSEG Power do not believe participation in the technical study will have a material impact on their results of operations and financial condition based upon EPA’s estimate of the study costs; however, future costs related to this matter could be material.

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, natural gas 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 derivative and non-derivative instruments, such as financial options, futures and swaps to manage the exposure to fluctuations in commodity prices and optimize the value of PSEG Power’s expected generation. Changes in the fair market value PSEG Power also uses derivatives to hedge a portion of the derivative contracts are recorded in earnings. Cash flows related to derivative instruments are included as a component of operating, investing or financing cash flows in PSEG’s Consolidated Statements of Cash Flows, depending on the nature of hedges. its anticipated BGSS obligations with PSE&G.