Asset Retirement Obligations (AROs)

12 Months Ended

Dec. 31, 2024

Asset Retirement Obligation [Line Items]

Asset Retirement Obligations (AROs)

Note 11. Asset Retirement Obligations (AROs)

PSEG and PSE&G recognize liabilities for the expected cost of retiring long-lived assets for which a legal obligation exists to remove or dispose of an asset or some component of an asset at retirement. These AROs are recorded at fair value in the period in which they are incurred and are capitalized as part of the carrying amount of the related long-lived assets. PSEG’s subsidiaries, except for PSE&G, accrete the ARO liability to reflect the passage of time with the corresponding expense recorded in O&M. PSE&G, as a rate-regulated entity, recognizes Regulatory Assets or Liabilities as a result of timing differences between the recording of costs and costs recovered through the rate-making process.

PSE&G has conditional AROs primarily for legal obligations related to the removal of treated wood poles and the requirement to seal natural gas pipelines at all sources of gas when the pipelines are no longer in service. PSE&G does not record an ARO for its protected steel and poly-based natural gas lines, as management believes that these categories of gas lines have an indeterminable life.

PSEG’s other ARO liability primarily relates to decommissioning of its nuclear power plants in accordance with NRC requirements. PSEG has an independent external trust that is intended to fund decommissioning of its nuclear facilities upon termination of operation. For additional information, see Note 10. Trust Investments. PSEG also identified conditional AROs related to PSEG’s retained fossil generation sites primarily related to liabilities for removal of asbestos. To estimate the fair value of its other AROs, PSEG uses a probability weighted, discounted cash flow model which, on a unit by unit basis, considers multiple outcome scenarios that include significant estimates and assumptions, and are based on third-party decommissioning cost estimates, cost escalation rates, inflation rates and discount rates.

Updated nuclear cost studies are obtained triennially unless new information necessitates more frequent updates. The most recent cost study was completed in 2024. When assumptions are revised to calculate fair values of existing AROs, generally, the ARO balance and corresponding long-lived asset are adjusted which impact the amount of accretion and depreciation expense recognized in future periods. For PSE&G, Regulatory Assets and Regulatory Liabilities result when accretion and amortization are adjusted to match rates established by regulators resulting in the regulatory deferral of any gain or loss.

The changes to the ARO liabilities for PSEG and PSE&G during 2023 and 2024 are presented in the following table:

	PSEG			PSE&G			PSEG Power & Other
	Millions
ARO Liability as of January 1, 2023	$	1,499		$	384		$	1,115
Liabilities Settled		(13	)		(13	)		—
Accretion Expense		51			—			51
Accretion Expense Deferred and Recovered in Rate Base (A)		16			16			—
Revision to Present Values of Estimated Cash Flows		(85	)		14			(99	)
ARO Liability as of December 31, 2023	$	1,468		$	401		$	1,067
Liabilities Settled	$	(26	)	$	(12	)	$	(14	)
Accretion Expense		49			—			49
Accretion Expense Deferred and Recovered in Rate Base (A)		16			16			—
Revision to Present Values of Estimated Cash Flows		(7	)		52			(59	)
ARO Liability as of December 31, 2024	$	1,500		$	457		$	1,043

(A)Not reflected as expense in Consolidated Statements of Operations.

In 2024, PSE&G recorded an increase to its ARO liabilities primarily due to the impact of increases in labor rates and other costs, partially offset by decreases from changes in inflation and discount rate assumptions. Those changes had no impact on PSE&G’s Consolidated Statement of Operations.

In February 2022, the NRC issued an order related to its review of the subsequent license renewal (SLR) application for the Peach Bottom nuclear units. While the NRC had previously granted the SLR to the Peach Bottom units, the NRC was responding to pending motions that had not previously been adjudicated. In its decision, the NRC concluded that the previous environmental

review required by the National Environmental Policy Act (NEPA) was incomplete because it did not adequately address environmental impacts resulting from extending the units’ licenses by 20 years. As a result, at the direction of the NRC, the NRC staff changed the expiration dates for the licenses back to 2033 and 2034, until the completion of the NEPA analysis. The NRC directed, however, that the subsequently renewed licenses themselves remain in effect. The NRC also stated that it fully expects that the staff will complete its update of the NEPA analysis before 2033. As such, at this time, PSEG has not adjusted the useful lives or the assumed shutdown probabilities assigned to the ARO of the units as PSEG believes that the licenses will be updated to reflect the approved 2053 and 2054 expiration dates within the current license period. PSEG will continue to monitor this matter for further developments and any change to the estimated useful lives and ARO probabilities could have an adverse financial statement impact, which may be material.

In December 2023, PSEG Power reassessed its asset retirement cost (ARC) and ARO assumptions related to its Hope Creek and Salem nuclear plants, based upon the expectation of PTCs beginning in 2024. As a result, PSEG Power decreased its ARC asset and ARO liability by $99 million, reflecting a decrease in the probability of early retirement and an increase in the probability the units would obtain additional license renewals.

In December 2024, PSEG Power reassessed its ARC and ARO assumptions related to its nuclear plants, as part of the triennial cost study update. As a result, PSEG Power decreased its ARC asset and ARO liability by $59 million, primarily reflected by an increase in the probability the units would obtain additional license renewals, partially offset by increases in inflation rates and other costs.

Public Service Electric and Gas Company

Asset Retirement Obligation [Line Items]

Asset Retirement Obligations (AROs)

Note 11. Asset Retirement Obligations (AROs)

PSEG and PSE&G recognize liabilities for the expected cost of retiring long-lived assets for which a legal obligation exists to remove or dispose of an asset or some component of an asset at retirement. These AROs are recorded at fair value in the period in which they are incurred and are capitalized as part of the carrying amount of the related long-lived assets. PSEG’s subsidiaries, except for PSE&G, accrete the ARO liability to reflect the passage of time with the corresponding expense recorded in O&M. PSE&G, as a rate-regulated entity, recognizes Regulatory Assets or Liabilities as a result of timing differences between the recording of costs and costs recovered through the rate-making process.

PSE&G has conditional AROs primarily for legal obligations related to the removal of treated wood poles and the requirement to seal natural gas pipelines at all sources of gas when the pipelines are no longer in service. PSE&G does not record an ARO for its protected steel and poly-based natural gas lines, as management believes that these categories of gas lines have an indeterminable life.

PSEG’s other ARO liability primarily relates to decommissioning of its nuclear power plants in accordance with NRC requirements. PSEG has an independent external trust that is intended to fund decommissioning of its nuclear facilities upon termination of operation. For additional information, see Note 10. Trust Investments. PSEG also identified conditional AROs related to PSEG’s retained fossil generation sites primarily related to liabilities for removal of asbestos. To estimate the fair value of its other AROs, PSEG uses a probability weighted, discounted cash flow model which, on a unit by unit basis, considers multiple outcome scenarios that include significant estimates and assumptions, and are based on third-party decommissioning cost estimates, cost escalation rates, inflation rates and discount rates.

Updated nuclear cost studies are obtained triennially unless new information necessitates more frequent updates. The most recent cost study was completed in 2024. When assumptions are revised to calculate fair values of existing AROs, generally, the ARO balance and corresponding long-lived asset are adjusted which impact the amount of accretion and depreciation expense recognized in future periods. For PSE&G, Regulatory Assets and Regulatory Liabilities result when accretion and amortization are adjusted to match rates established by regulators resulting in the regulatory deferral of any gain or loss.

The changes to the ARO liabilities for PSEG and PSE&G during 2023 and 2024 are presented in the following table:

	PSEG			PSE&G			PSEG Power & Other
	Millions
ARO Liability as of January 1, 2023	$	1,499		$	384		$	1,115
Liabilities Settled		(13	)		(13	)		—
Accretion Expense		51			—			51
Accretion Expense Deferred and Recovered in Rate Base (A)		16			16			—
Revision to Present Values of Estimated Cash Flows		(85	)		14			(99	)
ARO Liability as of December 31, 2023	$	1,468		$	401		$	1,067
Liabilities Settled	$	(26	)	$	(12	)	$	(14	)
Accretion Expense		49			—			49
Accretion Expense Deferred and Recovered in Rate Base (A)		16			16			—
Revision to Present Values of Estimated Cash Flows		(7	)		52			(59	)
ARO Liability as of December 31, 2024	$	1,500		$	457		$	1,043

(A)Not reflected as expense in Consolidated Statements of Operations.

In 2024, PSE&G recorded an increase to its ARO liabilities primarily due to the impact of increases in labor rates and other costs, partially offset by decreases from changes in inflation and discount rate assumptions. Those changes had no impact on PSE&G’s Consolidated Statement of Operations.

In February 2022, the NRC issued an order related to its review of the subsequent license renewal (SLR) application for the Peach Bottom nuclear units. While the NRC had previously granted the SLR to the Peach Bottom units, the NRC was responding to pending motions that had not previously been adjudicated. In its decision, the NRC concluded that the previous environmental

review required by the National Environmental Policy Act (NEPA) was incomplete because it did not adequately address environmental impacts resulting from extending the units’ licenses by 20 years. As a result, at the direction of the NRC, the NRC staff changed the expiration dates for the licenses back to 2033 and 2034, until the completion of the NEPA analysis. The NRC directed, however, that the subsequently renewed licenses themselves remain in effect. The NRC also stated that it fully expects that the staff will complete its update of the NEPA analysis before 2033. As such, at this time, PSEG has not adjusted the useful lives or the assumed shutdown probabilities assigned to the ARO of the units as PSEG believes that the licenses will be updated to reflect the approved 2053 and 2054 expiration dates within the current license period. PSEG will continue to monitor this matter for further developments and any change to the estimated useful lives and ARO probabilities could have an adverse financial statement impact, which may be material.

In December 2023, PSEG Power reassessed its asset retirement cost (ARC) and ARO assumptions related to its Hope Creek and Salem nuclear plants, based upon the expectation of PTCs beginning in 2024. As a result, PSEG Power decreased its ARC asset and ARO liability by $99 million, reflecting a decrease in the probability of early retirement and an increase in the probability the units would obtain additional license renewals.

In December 2024, PSEG Power reassessed its ARC and ARO assumptions related to its nuclear plants, as part of the triennial cost study update. As a result, PSEG Power decreased its ARC asset and ARO liability by $59 million, primarily reflected by an increase in the probability the units would obtain additional license renewals, partially offset by increases in inflation rates and other costs.