Public Service Enterprise Group Incorporated (NYSE: PEG) FY2025 revenue ~$11-11.5B (+0-3%) with adj. EPS ~$3.50-4.20 reflecting continued post-2022 IRA Section 45U Nuclear Production Tax Credit (PTC) monetization (~$200-400M annualized contribution from ~3.7 GW Salem + Hope Creek + Peach Bottom nuclear capacity) + selected post-2024 PSE&G AI data center load growth pipeline ($10B+ FY2025-2030 capex investments) + selected ~20-year continuous dividend track under continued CEO Ralph LaRossa (~3-year tenure since January 2023). Leading New Jersey + selected merchant nuclear utility focused on PSE&G regulated electric + natural gas distribution + PSEG Power merchant nuclear generation. Founded 1903 in New Jersey as Public Service Corporation (~122-year heritage); current PSEG holding company structure formed 1986 reorganization. Headquartered in Newark New Jersey; ~13,000+ employees globally with ~$11-11.5B revenue. Two reporting segments: PSE&G ~80% revenue ($9-9.5B — Public Service Electric and Gas Company; ~2.4M+ electric + ~1.9M+ natural gas customers in New Jersey; ~$30B+ aggregate rate base), PSEG Power ~20% ($2-2.5B — merchant nuclear power generation including Salem Generating Station ~2.3 GW (PSEG ~57% + Exelon ~43%) + Hope Creek Generating Station ~1.2 GW (PSEG 100%) + Peach Bottom Atomic Power Station ~2.5 GW (PSEG ~50% + Constellation/Exelon ~50%); ~3.7 GW PSEG-owned nuclear capacity). Nuclear PTC catalyst: post-2022 IRA Section 45U Nuclear Production Tax Credit eligibility for ~3.7 GW PSEG Power nuclear capacity; ~$30/MWh effective nuclear floor pricing supporting cash flow stability through commodity price cycles; ~$200-400M annualized nuclear PTC contribution post-2024 (~$30/MWh × ~30,000 GWh ~$900M gross PTC offset by market price recovery); nuclear PTC eligibility through 2032 providing multi-year cash flow visibility; FY2026 catalyst: continued nuclear PTC monetization + potential nuclear uprate capex investment (~100-200 MW capacity additions via uprates) + nuclear license extensions through 2046-2050 timeframe. AI data center load growth pipeline: post-2024 PSE&G AI data center load growth pipeline driven by New Jersey + Northeast hyperscaler customer wins; ~$10B+ FY2025-2030 PSE&G AI data center capex investments; post-2024 NJBPU interconnection approvals; New Jersey strategic position as Northeast AI compute hub. CEO Ralph LaRossa since January 2023 (succeeded Ralph Izzo CEO 2007-January 2023 retired who led 2007-2023 PSEG strategic transformation; LaRossa ex-PSE&G Power president 2017-January 2023 + ~30-year company career). Capital return: ~$2.32-2.46 annual dividend FY2025 (~20+ year continuous track; ~5-7% annual increases); modest buybacks; investment-grade Baa1/BBB+ credit ratings; FCF $0.5-1B. FY2026 thesis: nuclear PTC continued monetization + AI data center load growth + ~21-year dividend track + NJBPU rate case approvals. Risks: nuclear PTC repeal, major nuclear plant outages, NJ regulatory disallowance, AI data center pipeline deceleration.

[PEG] PSEG Thesis 2026: Salem/Hope Creek Nuclear PTC Drives Capital Allocation Cycle

Key Takeaways

Nuclear Production Tax Credit (PTC) Catalyst: Selected post-2022 IRA Section 45U Nuclear Production Tax Credit eligibility for selected ~3.7 GW PSEG Power nuclear capacity (Salem + Hope Creek + Peach Bottom partnership); selected ~$200-400M annualized nuclear PTC contribution post-2024; FY2026 catalyst: continued nuclear PTC monetization + selected ~$30/MWh effective nuclear floor pricing supporting cash flow stability + selected potential nuclear capex investment.
AI Data Center Load Growth Pipeline: Selected post-2024 PSE&G AI data center load growth pipeline driven by New Jersey + selected Northeast hyperscaler customer wins; selected ~$10B+ FY2025-2030 PSE&G AI data center capex investments supporting load growth; FY2026 catalyst: continued AI data center customer onboarding + NJ Board of Public Utilities (NJBPU) interconnection approvals.
PSE&G Regulated Distribution Stability: PSE&G segment ~$9-9.5B FY2025 (~80% of total); ~2.4M+ electric + ~1.9M+ natural gas customers in New Jersey; ~$30B+ aggregate rate base; selected post-2024 NJBPU rate case approvals + Energy Strong II grid modernization investments; FY2026 expected PSE&G toward $9.5-10B (+5-7%).
20+ Year Dividend Track + Capital Return: ~~$2.32-2.46 annual dividend FY2025 (~~$0.58-0.615/quarter; ~20+ year continuous track); modest buybacks; investment-grade Baa1/BBB+ credit ratings; FCF $0.5-1B; FY2026 expected dividend toward $2.46-2.62 (+5-7%) maintaining ~21-year dividend track.

Company Background

Public Service Enterprise Group Incorporated (NYSE: PEG) is the leading New Jersey + selected merchant nuclear utility focused on PSE&G regulated electric + natural gas distribution + PSEG Power merchant nuclear generation. Founded 1903 in New Jersey as Public Service Corporation (selected ~122-year heritage; selected initial focus on selected NJ trolley + electric utility); selected current PSEG holding company structure formed 1986 reorganization. Selected post-1986 transformation including selected various M&A through ~40-year history.

Headquartered in Newark New Jersey; ~13,000+ employees globally with FY2025 revenue ~$11-11.5B (+0-3% YoY) generating ~$1.5-1.8B net income (~13-16% net margin reflecting selected regulated utility + nuclear merchant model) and ~$3.50-4.20 EPS on ~498M diluted shares.

The company operates two reporting segments: PSE&G ~80% of revenue ($9-9.5B — Public Service Electric and Gas Company; selected ~2.4M+ electric + ~1.9M+ natural gas customers in New Jersey; ~$30B+ aggregate rate base); PSEG Power ~20% ($2-2.5B — selected merchant nuclear power generation including Salem Generating Station ~2.3 GW (PSEG ~57% + Exelon ~43%) + Hope Creek Generating Station ~1.2 GW (PSEG 100%) + Peach Bottom Atomic Power Station ~2.5 GW (PSEG ~50% + Constellation/Exelon ~50%); ~3.7 GW PSEG-owned nuclear capacity).

CEO Ralph LaRossa since January 2023 (~3-year tenure; succeeded Ralph Izzo CEO 2007-January 2023 retired who led 2007-2023 PSEG strategic transformation; LaRossa ex-PSE&G Power president 2017-January 2023 + ex-various PSEG roles + ~30-year company career). Selected internal succession reflected board's preference for operational continuity through nuclear PTC + AI data center load growth strategic capture.

Nuclear PTC Catalyst: $200-400M Annualized

Selected post-2022 Inflation Reduction Act Section 45U Nuclear Production Tax Credit eligibility represents PSEG's most differentiated catalyst vs traditional regulated utility peers. Selected key economics: (i) selected ~3.7 GW PSEG Power nuclear capacity eligible for Section 45U PTC; (ii) selected ~$30/MWh effective nuclear floor pricing supporting cash flow stability through commodity price cycles; (iii) selected ~~$200-400M annualized nuclear PTC contribution post-2024 (~~$30/MWh × ~30,000 GWh ~$900M gross PTC offset by selected market price recovery); (iv) selected nuclear PTC eligibility through 2032 providing multi-year cash flow visibility.

FY2026 catalyst: continued nuclear PTC monetization + selected potential nuclear uprate capex investment (selected ~100-200 MW capacity additions via uprates); selected nuclear license extensions through 2046-2050 timeframe.

Material change rule: nuclear PTC repeal or major rollback (would eliminate selected ~$200-400M annual contribution; ~$0.30-0.50 EPS at-risk) OR major nuclear plant operational issues (selected forced outage extension above 90 days) OR major nuclear safety incident.

AI Data Center Load Growth Pipeline

Selected post-2024 PSE&G AI data center load growth pipeline reflects: (i) selected New Jersey + selected Northeast hyperscaler customer wins (selected Microsoft + Google + Amazon + selected enterprise AI infrastructure); (ii) selected ~10B+ FY2025-2030 PSE&G AI data center capex investments; (iii) selected post-2024 NJBPU interconnection approvals supporting accelerated data center grid connections; (iv) selected New Jersey strategic position as Northeast AI compute hub.

FY2026 catalyst: continued AI data center customer onboarding + NJBPU interconnection approvals + selected ~1-2 GW AI data center load growth FY2026 contribution. Material change rule: AI data center pipeline below $5B (severe demand deceleration).

PSE&G Regulated Distribution Stability + Capital Return

PSE&G ~$9-9.5B FY2025 (~80%) reflects ~2.4M+ electric + ~1.9M+ natural gas customers + ~$30B+ aggregate rate base + post-2024 NJBPU rate case approvals + Energy Strong II grid modernization investments. FY2026 expected PSE&G toward $9.5-10B (+5-7%) on rate base growth + AI data center customer additions.

Capital return: ~$2.32-2.46 annual dividend FY2025 (~20-year continuous track; ~5-7% annual increases); modest buybacks; investment-grade Baa1/BBB+ credit ratings.

Key Core Metrics

Metric	FY2022	FY2023	FY2024	FY2025E	FY2026E
Total Revenue	$9.80B	$11.24B	$10.94B	$11-11.5B	$11.5-12B
PSE&G	$7.5B	$9.0B	$9.0B	$9-9.5B	$9.5-10B
PSEG Power	$2.3B	$2.2B	$1.9B	$2-2.5B	$2.0-2.5B
Nuclear Capacity (GW)	3.7	3.7	3.7	3.7	3.7-3.9 (uprates)
Adj. EPS	$3.50	$3.48	$3.68	$3.50-4.20	$3.85-4.50
FCF	-$0.5B	-$0.5B	$0.5B	$0.5-1B	$0.7-1.2B
Rate Base ($B)	~$25	~$28	~$30	~$32-34	~$35-37

Capital Return	FY2024	FY2025E	FY2026E
Dividend per Share	$2.28	$2.32-2.46	$2.46-2.62
Dividend Continuous Years	~19	~20	~21
Buybacks	$0	$0-200M	$100-300M
Total Capital Return	$1.13B	$1.16-1.43B	$1.32-1.60B
Credit Rating	Baa1/BBB+	Baa1/BBB+	Baa1/BBB+

Market Evaluation

PEG currently trades at ~17-22x earnings reflecting: (i) selected nuclear PTC monetization optionality; (ii) selected AI data center load growth pipeline; (iii) selected ~20-year continuous dividend track; (iv) selected investment-grade Baa1/BBB+ credit; offset by (v) selected merchant nuclear cyclicality; (vi) selected NJ regulatory exposure.

Selected peer comparison: Constellation Energy (CEG ~17-22x P/E nuclear + retail premium), Exelon (EXC ~17-20x P/E Mid-Atlantic utility + nuclear), Talen Energy (TLN ~15-20x P/E nuclear + retail), Vistra Energy (VST ~10-15x P/E Texas retail + nuclear). PEG valuation reflects mid-tier NJ utility + nuclear PTC optionality positioning.

FY2026 catalysts: (i) nuclear PTC continued monetization; (ii) AI data center load growth; (iii) ~21-year dividend track; (iv) NJBPU rate case approvals. Risks: (i) nuclear PTC repeal; (ii) major nuclear plant outages; (iii) NJ regulatory disallowance; (iv) AI data center pipeline deceleration.

Salem/Hope Creek Nuclear PTC and Capital Allocation

The FY2026 thesis hinges on PSEG's ability to monetize Salem + Hope Creek + Peach Bottom nuclear PTC + capture AI data center load growth + sustain ~21-year dividend track. Nuclear PTC at ~$200-400M annualized supports cash flow stability + selected potential nuclear capex investment.

PSE&G trajectory toward $9.5-10B FY2026 (+5-7%) + PSEG Power $2.0-2.5B reflects continued regulated growth + nuclear stability. Total revenue $11.5-12B FY2026 (+3-5%) + adj. EPS $3.85-4.50 (+10-15%) reflects selected operational leverage + nuclear PTC + buyback compounding.

Material risks: (i) nuclear PTC repeal; (ii) major nuclear plant outages above 90 days; (iii) NJ regulatory disallowance > $500M; (iv) AI data center pipeline below $5B.

FY2026-2027 base case: revenue $11.5-12B (+3-5%) + $12-13B (+5-7%); adj. EPS $3.85-4.50 + $4.10-4.80 (+5-10% growth); rate base $35-37B + $38-41B; capital return $1.32-1.60B + $1.40-1.75B; dividend $2.46-2.62 + $2.62-2.78 maintaining 21-22 consecutive year dividend track. Selected NJ regulated utility + selected nuclear PTC optionality + selected AI data center growth support continued strategic positioning through FY2027.