PSEG is planning to retain the ownership of PSEG Power's existing nuclear fleet, which is required for New Jersey to meet its long-term carbon reduction goals
New Jersey-based utility Public Service Enterprise Group (PSEG) is exploring strategic alternatives for PSEG Power’s non-nuclear generating fleet.
The fleet includes over 6,750MW of fossil generation in New Jersey, Connecticut, New York and Maryland, and the 467MW of solar source portfolio in various states.
PSEG is planning to retain the ownership of PSEG Power’s existing nuclear fleet, which is required for New Jersey to meet its long-term carbon reduction goals.
It also helps to satisfy the state’s capacity obligations for resource adequacy with a cost-effective source of zero-carbon electricity.
For the strategic evaluation, PSEG has engaged Goldman Sachs and Wachtell, Lipton, Rosen & Katz as advisors.
The company said that while it is in the preliminary stage of this evaluation, the marketing of a potential transaction in one or a series of steps, which is expected to launch in the fourth quarter, is estimated to be concluded in 2021.
The sale to speed up PSEG’s transition to a primarily regulated and contracted business
PSEG chairman, president and CEO Ralph Izzo said: “Our intent is to accelerate the transformation of PSEG into a primarily regulated electric and gas utility — a plan we have been executing successfully for more than a decade.
“A separation of the non-nuclear assets would reduce overall business risk and earnings volatility, improve our credit profile, and enhance an already compelling ESG position driven by pending clean energy investments, methane reduction, and zero-carbon generation.
“We recognize the shift in investor preference toward owning regulated utility businesses without commodity exposure to merchant generation and related earnings volatility.”
The company said that an exit from the fossil generation business is expected to accelerate its transition to a primarily regulated and contracted business.
Furthermore, it also said that any decision regarding the non-nuclear assets, which is subject to customary regulatory approvals, will not impact PSE&G or PSEG Long Island customers, operations or tariffs.