Regulatory Assets And Liabilities

12 Months Ended

Dec. 31, 2022

Regulatory Assets And Liabilities [Line Items]

Regulatory Assets and Liabilities

Regulatory Assets and Liabilities

PSE&G prepares its financial statements in accordance with GAAP for regulated utilities as described in Note 1. Organization, Basis of Presentation and Significant Accounting Policies. PSE&G has deferred certain costs based on rate orders issued by the BPU or FERC or based on PSE&G’s experience with prior rate proceedings. Most of PSE&G’s Regulatory Assets and Liabilities as of December 31, 2022 are supported by written orders, either explicitly or implicitly through the BPU’s treatment of various cost items. These costs will be recovered and amortized over various future periods.

Regulatory Assets and other investments and costs incurred under our various infrastructure filings and clause mechanisms are subject to prudence reviews and can be disallowed in the future by regulatory authorities. To the extent that collection of any infrastructure or clause mechanism revenue, Regulatory Assets or payments of Regulatory Liabilities is no longer probable, the amounts would be charged or credited to income.

PSE&G had the following Regulatory Assets and Liabilities:

	As of December 31,
	2022		2021
	Millions
Regulatory Assets
Current
New Jersey Clean Energy Program	$	145	$	146
Electric Energy Costs—Basic Generation Service (BGS)	54		67
Tax Adjustment Credit (TAC)	52		44
Conservation Incentive Program (CIP)	51		36
2018 Distribution Base Rate Case Regulatory Assets (BRC)	47		56
Societal Benefits Clause (SBC)	20		—
Other	—		15
Total Current Regulatory Assets	369		364
Noncurrent
Pension and OPEB Costs	$	1,405	$	1,043
Deferred Income Tax Regulatory Assets	1,168		1,064
Green Program Recovery Charges (GPRC)	447		211
Manufactured Gas Plant (MGP) Remediation Costs	206		220
Asset Retirement Obligation (ARO)	200		191
Electric Transmission and Gas Cost of Removal	156		174
SBC (Electric Bad Debt)	145		139
COVID-19 Deferral	137		116
Remediation Adjustment Charge (RAC) (Other SBC)	134		156
Deferred Storm Costs	109		109
Clean Energy Future-Energy Cloud (CEF-EC) (Advanced Metering Infrastructure (AMI))	80		5
CIP	72		12
BRC	—		47
Other	145		118
Total Noncurrent Regulatory Assets	4,404		3,605
Total Regulatory Assets	$	4,773	$	3,969

	As of December 31,
	2022		2021
	Millions
Regulatory Liabilities
Current
Deferred Income Tax Regulatory Liabilities	$	302	$	288
Gas Costs—Basic Gas Supply Service (BGSS)	35		5
GPRC	24		19
Formula Rate True-up	1		42
Other	22		34
Total Current Regulatory Liabilities	384		388
Noncurrent
Deferred Income Tax Regulatory Liabilities	$	2,196	$	2,443
Formula Rate True-up	31		9
Other	13		45
Total Noncurrent Regulatory Liabilities	2,240		2,497
Total Regulatory Liabilities	$	2,624	$	2,885

All Regulatory Assets and Liabilities are excluded from PSE&G’s rate base unless otherwise noted. The Regulatory Assets and Liabilities in the table above are defined as follows:

•ARO: These costs represent the differences between rate-regulated cost of removal accounting and asset retirement accounting under GAAP. These costs will be recovered in future rates as assets are retired.

•BRC: Represents deferred costs, primarily comprised of storm costs incurred in the cleanup of major storms from 2010 through 2018, which are being amortized over five years pursuant to the 2018 Distribution Base Rate Case Settlement.

•CIP: The CIP reduces the impact on distribution revenues from changes in sales volumes and demand for most customers. The CIP, which is calculated annually, provides for a true-up of current period revenue as compared to revenue established in PSE&G’s most recent distribution base rate proceeding. Recovery under the CIP is subject to certain limitations, including an actual versus allowed return on equity test and ceilings on customer rate increases. The CIP became effective in June 2021 for electric revenues and October 2021 for gas revenues. The gas CIP replaced the Weather Normalization Clause.

•CEF-EC (AMI Initiative): In January 2021, the BPU approved PSE&G’s CEF-EC filing to provide its 2.3 million electric customers with smart meters. All of the capital and operating costs of the program will be recovered in PSE&G’s next base rate case, expected in the second half of 2024. From the start of the program until the commencement of new base rates, the return on and of the capital portion of the program is included for recovery in those rates, as well as operating and stranded costs associated with the accelerated retirement of the existing non-AMI electric meters which PSE&G expects to conclude by the end of 2024. As of December 31, 2022 and 2021, the net book value of these meters was $168 million and $192 million, respectively.

•COVID-19 Deferral: These amounts represent incremental costs related to COVID-19 as authorized for deferral in an order issued by the BPU to all New Jersey regulated utilities in July 2020. The BPU authorized such utilities to create a COVID-19-related Regulatory Asset by deferring on their books and records the prudently incurred incremental costs related to COVID-19 during the Regulatory Asset period, 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. In December 2022, the BPU extended the deferral period to March 15, 2023. 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. Utilities must file quarterly reports of the costs incurred and offsets. Each participating utility may file a petition documenting its prudently incurred incremental COVID-19 costs within 60 days of the close of the extended March 15, 2023 Regulatory Asset period. 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.

•Deferred Income Tax Regulatory Assets: These amounts relate to deferred income taxes arising from utility operations that have not been included in customer rates relating to depreciation, ITCs and other flow-through items, including the flowback to customers of accumulated deferred income taxes related to tax repair deductions. As part of its base rate case settlement with the BPU and the establishment of the TAC mechanism in 2018, PSE&G agreed to a ten-year flowback to customers of its accumulated deferred income taxes from previously realized tax repair deductions which resulted in the recognition of a $581 million Regulatory Asset and Regulatory Liability as of September 30, 2018. In addition, PSE&G agreed to the current flowback of tax benefits from ongoing tax repair deductions as realized which results in the recording of a Regulatory Asset upon flowback. For the years ended December 31, 2022, 2021 and 2020, PSE&G had provided $35 million, $22 million and $31 million, respectively, in current tax repair flowbacks to customers. The recovery and amortization of the tax repair-related Deferred Income Tax Regulatory Assets is being recovered through the TAC regulatory mechanism.

•Deferred Income Tax Regulatory Liabilities: These liabilities primarily relate to amounts due to customers for excess deferred income taxes as a result of the reduction in the federal corporate income tax rate provided in the Tax Cuts and Jobs Act of 2017 (Tax Act), and accumulated deferred income taxes from previously realized distribution-related tax repair deductions. As part of its settlement with its regulators, PSE&G agreed to refund the excess deferred income taxes as follows:

•Unprotected distribution-related excess deferred income taxes are being refunded to customers over five years through PSE&G’s TAC mechanism as approved in its 2018 distribution base rate proceeding. As of December 31, 2022, the balance remaining to be flowed back to customers was approximately $203 million with the remaining flowback period through 2024.

•Protected distribution-related excess deferred income taxes are being refunded to customers over the remaining useful life of distribution property, plant and equipment through PSE&G’s TAC mechanism. As of December 31, 2022, the balance remaining to be flowed back to customers was approximately $882 million.

•Previously realized distribution-related tax repair deductions are being refunded to customers over ten years through PSE&G’s TAC mechanism. As of December 31, 2022, the balance remaining to be flowed back to customers was approximately $425 million through 2028.

•Protected transmission-related excess deferred income taxes are being refunded to customers over the remaining useful life of transmission property, plant and equipment through PSE&G’s transmission formula rate mechanism. As of December 31, 2022, the balance remaining to be flowed back to customers was approximately $933 million.

•Unprotected transmission-related deferred income taxes were fully refunded to customers in 2019 and 2020.

•Deferred Storm Costs: Incremental costs incurred in the restoration and related costs from major storms from 2019 through 2022 for which PSE&G will seek recovery in its next base rate proceeding.

•Electric and Gas Cost of Removal: PSE&G accrues and collects in rates for the cost of removing, dismantling and disposing of its T&D assets upon retirement. The Regulatory Asset or Liability for non-legally required cost of removal represents the difference between amounts collected in rates and costs actually incurred.

•Electric Energy Costs—BGS: These costs represent the over or under recovered amounts associated with BGS, as approved by the BPU. Pursuant to BPU requirements, PSE&G serves as the supplier of last resort for electric customers within its service territory that are not served by another supplier. Pricing for those services are set by the BPU as a pass-through, resulting in no margin for PSE&G’s operations. Over or under recovered balances with interest are returned or recovered through monthly filings.

•Formula Rate True-Up: PSE&G’s transmission revenues are earned under a FERC-approved annual formula rate mechanism which 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.

•Gas Costs—BGSS: These costs represent the over or under recovered amounts associated with BGSS, as approved by the BPU. Pursuant to BPU requirements, PSE&G serves as the supplier of last resort for gas customers within its service territory that are not served by another supplier. Pricing for those services are set by the BPU as a pass-through, resulting in no margin for PSE&G’s operations. Over or under collected balances are returned or recovered through an annual filing. Interest is accrued only on over recovered balances.

•GPRC: This amount represents costs of the over or under collected balances associated with various Energy Efficiency and Renewable Energy (EE & RE) Programs. PSE&G files annually with the BPU for recovery of amounts that include a return on and of its investment over the lives of the underlying investments and capital assets which range from five to ten years. Interest is accrued monthly on any over or under recovered balances. Approved components of the GPRC include: Carbon Abatement, Energy Efficiency Economic Stimulus Program (EEE), EEE Extension Program, EEE Extension II Program, Solar Generation Investment Program (Solar 4 All®), Solar 4 All® Extension, Solar 4 All® Extension II, Solar Loan II Program, Solar Loan III Program, Energy Efficiency (EE) 2017 Program, Clean Energy Future–Energy Efficiency (CEF-EE), the Transition Renewable Energy Certificate (TRECs) Program, Clean Energy Act Studies (CEAS), Community Solar Energy Program (CSEP) and the Successor Solar Incentive Program (SuSI).

•MGP Remediation Costs: Represents the low end of the range for the remaining environmental investigation and remediation program cleanup costs for MGPs that are probable of recovery in future rates. Once these costs are incurred, they are recovered through the RAC in the SBC over a seven year period with interest.

•New Jersey Clean Energy Program: The BPU approved future funding requirements for EE and RE Programs. The BPU funding requirements are recovered through the SBC.

•Pension and OPEB Costs: Pursuant to the adoption of accounting guidance for employers’ defined benefit pension and OPEB plans, PSE&G recorded the unrecognized costs for defined benefit pension and other OPEB plans on the balance sheet as a Regulatory Asset. These costs represent net actuarial gains or losses and prior service costs which have not been expensed. These costs are amortized and recovered in future rates.

•RAC (Other SBC): Costs incurred to clean up MGPs which are recovered over seven years with interest through an annual filing.

•SBC: The SBC, as authorized by the BPU and the New Jersey Electric Discount and Energy Competition Act, includes costs related to PSE&G’s electric and gas business as follows: (1) the Universal Service Fund; (2) EE & RE Programs; (3) Electric bad debt expense; and (4) the RAC for incurred MGP remediation expenditures. Over or under recovered balances with interest are to be returned or recovered through an annual filing.

•TAC: This represents the over or under collected balances associated with the return of excess accumulated deferred income taxes and the flowback of previously realized and current tax repair deductions under a mechanism approved by the BPU in PSE&G’s 2018 Distribution Base Rate Case Settlement. Over or under collected balances are returned or recovered through an annual filing. PSE&G includes a return component on the flowback of the excess accumulated deferred income taxes and the previously realized tax repairs. Interest is accrued monthly on any over or under recovered balances.

Significant 2022 regulatory orders received and currently pending rate filings with the BPU by PSE&G are as follows:

•BGS—In January 2022, the BPU approved changes to BGS rates as a result of the FERC-approved changes to transmission charges, primarily as a result of the decrease in PSE&G’s transmission formula rate of return on equity. PSE&G’s BGS customers are being credited over a 12-month period effective February 1, 2022.

•BGSS—In April 2022, the BPU gave final approval to PSE&G’s request to maintain the BGSS rate of approximately 41 cents per therm which had been provisionally approved effective February 1, 2022.

In September 2022, the BPU approved on a provisional basis PSE&G’s June 2022 request to increase its BGSS rate to approximately 65 cents per therm, effective October 1, 2022.

In January 2023, PSE&G filed a self-implementing BGSS rate reduction of 15 cents per therm with the BPU. This reduction resulted in a new BGSS rate of approximately 50 cents per therm effective February 1, 2023.

•CIP—In February 2023, the BPU gave final approval for PSE&G to recover approximately $52 million of deficient electric revenues over two years, with approximately $18 million approved for recovery for the first year starting on the effective date of June 15, 2022.

In September 2022, the BPU provisionally approved PSE&G’s initial gas CIP cost recovery petition to recover over a one year period deficient gas revenues of approximately $53 million with new rates effective October 1, 2022. The revenue deficiency is the result of lower estimated revenues as compared to a baseline established in PSE&G’s most recent distribution base rate proceeding.

In February 2023, PSE&G filed its annual electric CIP petition seeking BPU approval to recover estimated deficient electric revenues of approximately $54 million based on the twelve month period ending May 31, 2023 with new rates proposed to be effective June 1, 2023. This matter is pending.

•CSEP Program, a New Component of the GPRC—In June 2022, the BPU approved PSE&G’s filing to recover its initial electric revenue requirement of $0.4 million related to the CSEP Program with the new rate effective July 1, 2022.

•COVID-19 Deferral—PSE&G continues to make quarterly filings as required by the BPU and has recorded a Regulatory Asset as of December 31, 2022 of approximately $137 million for net incremental costs, including $68 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 December 2022, the BPU approved an extension of the COVID deferral period until March 15, 2023 and ordered all New Jersey regulated utilities to file petitions documenting its prudently incurred incremental COVID-19 costs no later than 60 days thereafter.

•Energy Strong II (ES II)—In May 2022, the BPU approved PSE&G’s updated filing for annual electric and gas revenue increases of $17 million and $1 million, respectively, effective June 1, 2022. These increases represent the return on and of Energy Strong II investments placed in service through January 2022.

In November 2022, PSE&G filed its annual petition seeking BPU approval to recover the annualized increases in electric and gas revenue requirements associated with capitalized investment costs of the ES II Program, with rates to be effective May 1, 2023. In February 2023, PSE&G updated its petition for actual investments through January 31, 2023 requesting annual electric and gas revenue increases of $16 million and $4 million, respectively. This matter is pending.

•Gas System Modernization Program (GSMP II)—In May 2022, the BPU approved PSE&G’s filing for an annual gas revenue increase of $25 million effective June 1, 2022. This increase represents the return on and of GSMP II investments placed in service through February 2022.

In November 2022, the BPU approved PSE&G’s updated GSMP II cost recovery filing to recover an annual gas revenue increase of $23 million effective December 1, 2022. This increase represents the return on and of GSMP II investments placed in service through August 31, 2022.

In December 2022, PSE&G filed its next semiannual GSMP II cost recovery petition seeking BPU approval to recover in gas base rates an estimated annual revenue increase of approximately $11 million effective June 1, 2023.

•GPRC—In June 2022, the BPU approved PSE&G’s updated filing for an annual electric revenue decrease of approximately $4 million and a gas revenue increase of approximately $1 million, with new rates effective June 15, 2022.

In July 2022, PSE&G filed its 2022 GPRC cost recovery petition requesting BPU approval to recover increases of $110 million and $8 million in annual electric and gas revenues, respectively. This matter is pending.

In September 2022, PSE&G filed a petition which requested an increase of $320 million in its total program investment spending for the CEF-EE component of GPRC and a nine month extension to the program to make the investments. This matter is pending.

•Pension—In February 2023, the BPU approved an accounting order authorizing PSE&G to modify its method for calculating the amortization of the net actuarial gain or loss component of pension expense for ratemaking purposes. This methodology change for ratemaking purposes is effective for the calendar year ending December 31, 2023 and forward.

•RAC—In September 2022, the BPU approved PSE&G’s RAC 29 filing allowing recovery of approximately $44 million of net MGP remediation expenditures incurred from August 1, 2020 through July 31, 2021.

In January 2023, PSE&G filed its RAC 30 petition with the BPU seeking recovery of approximately $44 million of net MGP expenditures incurred from August 1, 2021 through July 31, 2022. This matter is pending.

•SuSI Program, a New Component of the GPRC—In June 2022, the BPU approved PSE&G’s filing to recover an annual electric revenue increase of $38 million effective June 15, 2022. These costs will be recovered as a new component of PSE&G’s existing electric GPRC.

•SBC—In January 2023, PSE&G filed a petition to increase its annual electric and gas rates by approximately $52 million and $32 million, respectively, in order to recover electric and gas costs incurred or expected to be incurred through February 2024 under its EE and Renewable Energy and Social Programs. The increase to electric rates includes the impact of increased bad debt expense as a result of the negative economic impact of the coronavirus pandemic and the resulting impact of moratoriums on collections. This matter is pending.

•TAC—In June 2022, the BPU approved PSE&G’s annual 2021 TAC filing to increase annual electric and gas revenues by approximately $15 million and $31 million, respectively. The new rates were effective June 15, 2022.

In October 2022, PSE&G made its annual 2022 TAC filing requesting BPU approval to increase electric revenues and decrease gas revenues by approximately $17 million and $70 million, respectively, on an annual basis starting January 1, 2023. This matter is pending.

•Transmission Formula Rates—In June 2022, PSE&G filed its 2021 true-up adjustment pertaining to its transmission formula rates in effect for 2021. This filing resulted in a decrease in the 2021 annual revenue requirement of $1 million less than the 2021 original and updated filings, incorporating the FERC-approved settlement agreement effective August 1, 2021.

In October 2022, PSE&G filed its Annual Transmission Formula Rate Update with FERC which will result in $69 million in increased annual transmission revenue effective January 1, 2023, subject to true-up.

•ZEC Program—In April 2022, the BPU approved PSE&G’s petition to refund a total of $4 million to customers,

including interest, for overcollections resulting from the ZEC program for the energy year ended May 31, 2021.

In January 2023, the BPU approved PSE&G’s petition to set the ZEC refund component of the tariff rate to zero effective February 1, 2023. For the ZEC Energy Year ended May 31, 2022, PSE&G purchased approximately $161 million in ZECs including interest, from the eligible nuclear plants selected by the BPU with the final payment made in August 2022. As a result of the collections and required ZEC payments, there were overcollected revenues, including interest totaling $1.3 million, which PSE&G refunded to customers over the remainder of 2022 through January 2023 through its existing rates.

Public Service Electric and Gas Company

Regulatory Assets And Liabilities [Line Items]

Regulatory Assets and Liabilities

Regulatory Assets and Liabilities

PSE&G prepares its financial statements in accordance with GAAP for regulated utilities as described in Note 1. Organization, Basis of Presentation and Significant Accounting Policies. PSE&G has deferred certain costs based on rate orders issued by the BPU or FERC or based on PSE&G’s experience with prior rate proceedings. Most of PSE&G’s Regulatory Assets and Liabilities as of December 31, 2022 are supported by written orders, either explicitly or implicitly through the BPU’s treatment of various cost items. These costs will be recovered and amortized over various future periods.

Regulatory Assets and other investments and costs incurred under our various infrastructure filings and clause mechanisms are subject to prudence reviews and can be disallowed in the future by regulatory authorities. To the extent that collection of any infrastructure or clause mechanism revenue, Regulatory Assets or payments of Regulatory Liabilities is no longer probable, the amounts would be charged or credited to income.

PSE&G had the following Regulatory Assets and Liabilities:

	As of December 31,
	2022		2021
	Millions
Regulatory Assets
Current
New Jersey Clean Energy Program	$	145	$	146
Electric Energy Costs—Basic Generation Service (BGS)	54		67
Tax Adjustment Credit (TAC)	52		44
Conservation Incentive Program (CIP)	51		36
2018 Distribution Base Rate Case Regulatory Assets (BRC)	47		56
Societal Benefits Clause (SBC)	20		—
Other	—		15
Total Current Regulatory Assets	369		364
Noncurrent
Pension and OPEB Costs	$	1,405	$	1,043
Deferred Income Tax Regulatory Assets	1,168		1,064
Green Program Recovery Charges (GPRC)	447		211
Manufactured Gas Plant (MGP) Remediation Costs	206		220
Asset Retirement Obligation (ARO)	200		191
Electric Transmission and Gas Cost of Removal	156		174
SBC (Electric Bad Debt)	145		139
COVID-19 Deferral	137		116
Remediation Adjustment Charge (RAC) (Other SBC)	134		156
Deferred Storm Costs	109		109
Clean Energy Future-Energy Cloud (CEF-EC) (Advanced Metering Infrastructure (AMI))	80		5
CIP	72		12
BRC	—		47
Other	145		118
Total Noncurrent Regulatory Assets	4,404		3,605
Total Regulatory Assets	$	4,773	$	3,969

	As of December 31,
	2022		2021
	Millions
Regulatory Liabilities
Current
Deferred Income Tax Regulatory Liabilities	$	302	$	288
Gas Costs—Basic Gas Supply Service (BGSS)	35		5
GPRC	24		19
Formula Rate True-up	1		42
Other	22		34
Total Current Regulatory Liabilities	384		388
Noncurrent
Deferred Income Tax Regulatory Liabilities	$	2,196	$	2,443
Formula Rate True-up	31		9
Other	13		45
Total Noncurrent Regulatory Liabilities	2,240		2,497
Total Regulatory Liabilities	$	2,624	$	2,885

All Regulatory Assets and Liabilities are excluded from PSE&G’s rate base unless otherwise noted. The Regulatory Assets and Liabilities in the table above are defined as follows:

•ARO: These costs represent the differences between rate-regulated cost of removal accounting and asset retirement accounting under GAAP. These costs will be recovered in future rates as assets are retired.

•BRC: Represents deferred costs, primarily comprised of storm costs incurred in the cleanup of major storms from 2010 through 2018, which are being amortized over five years pursuant to the 2018 Distribution Base Rate Case Settlement.

•CIP: The CIP reduces the impact on distribution revenues from changes in sales volumes and demand for most customers. The CIP, which is calculated annually, provides for a true-up of current period revenue as compared to revenue established in PSE&G’s most recent distribution base rate proceeding. Recovery under the CIP is subject to certain limitations, including an actual versus allowed return on equity test and ceilings on customer rate increases. The CIP became effective in June 2021 for electric revenues and October 2021 for gas revenues. The gas CIP replaced the Weather Normalization Clause.

•CEF-EC (AMI Initiative): In January 2021, the BPU approved PSE&G’s CEF-EC filing to provide its 2.3 million electric customers with smart meters. All of the capital and operating costs of the program will be recovered in PSE&G’s next base rate case, expected in the second half of 2024. From the start of the program until the commencement of new base rates, the return on and of the capital portion of the program is included for recovery in those rates, as well as operating and stranded costs associated with the accelerated retirement of the existing non-AMI electric meters which PSE&G expects to conclude by the end of 2024. As of December 31, 2022 and 2021, the net book value of these meters was $168 million and $192 million, respectively.

•COVID-19 Deferral: These amounts represent incremental costs related to COVID-19 as authorized for deferral in an order issued by the BPU to all New Jersey regulated utilities in July 2020. The BPU authorized such utilities to create a COVID-19-related Regulatory Asset by deferring on their books and records the prudently incurred incremental costs related to COVID-19 during the Regulatory Asset period, 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. In December 2022, the BPU extended the deferral period to March 15, 2023. 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. Utilities must file quarterly reports of the costs incurred and offsets. Each participating utility may file a petition documenting its prudently incurred incremental COVID-19 costs within 60 days of the close of the extended March 15, 2023 Regulatory Asset period. 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.

•Deferred Income Tax Regulatory Assets: These amounts relate to deferred income taxes arising from utility operations that have not been included in customer rates relating to depreciation, ITCs and other flow-through items, including the flowback to customers of accumulated deferred income taxes related to tax repair deductions. As part of its base rate case settlement with the BPU and the establishment of the TAC mechanism in 2018, PSE&G agreed to a ten-year flowback to customers of its accumulated deferred income taxes from previously realized tax repair deductions which resulted in the recognition of a $581 million Regulatory Asset and Regulatory Liability as of September 30, 2018. In addition, PSE&G agreed to the current flowback of tax benefits from ongoing tax repair deductions as realized which results in the recording of a Regulatory Asset upon flowback. For the years ended December 31, 2022, 2021 and 2020, PSE&G had provided $35 million, $22 million and $31 million, respectively, in current tax repair flowbacks to customers. The recovery and amortization of the tax repair-related Deferred Income Tax Regulatory Assets is being recovered through the TAC regulatory mechanism.

•Deferred Income Tax Regulatory Liabilities: These liabilities primarily relate to amounts due to customers for excess deferred income taxes as a result of the reduction in the federal corporate income tax rate provided in the Tax Cuts and Jobs Act of 2017 (Tax Act), and accumulated deferred income taxes from previously realized distribution-related tax repair deductions. As part of its settlement with its regulators, PSE&G agreed to refund the excess deferred income taxes as follows:

•Unprotected distribution-related excess deferred income taxes are being refunded to customers over five years through PSE&G’s TAC mechanism as approved in its 2018 distribution base rate proceeding. As of December 31, 2022, the balance remaining to be flowed back to customers was approximately $203 million with the remaining flowback period through 2024.

•Protected distribution-related excess deferred income taxes are being refunded to customers over the remaining useful life of distribution property, plant and equipment through PSE&G’s TAC mechanism. As of December 31, 2022, the balance remaining to be flowed back to customers was approximately $882 million.

•Previously realized distribution-related tax repair deductions are being refunded to customers over ten years through PSE&G’s TAC mechanism. As of December 31, 2022, the balance remaining to be flowed back to customers was approximately $425 million through 2028.

•Protected transmission-related excess deferred income taxes are being refunded to customers over the remaining useful life of transmission property, plant and equipment through PSE&G’s transmission formula rate mechanism. As of December 31, 2022, the balance remaining to be flowed back to customers was approximately $933 million.

•Unprotected transmission-related deferred income taxes were fully refunded to customers in 2019 and 2020.

•Deferred Storm Costs: Incremental costs incurred in the restoration and related costs from major storms from 2019 through 2022 for which PSE&G will seek recovery in its next base rate proceeding.

•Electric and Gas Cost of Removal: PSE&G accrues and collects in rates for the cost of removing, dismantling and disposing of its T&D assets upon retirement. The Regulatory Asset or Liability for non-legally required cost of removal represents the difference between amounts collected in rates and costs actually incurred.

•Electric Energy Costs—BGS: These costs represent the over or under recovered amounts associated with BGS, as approved by the BPU. Pursuant to BPU requirements, PSE&G serves as the supplier of last resort for electric customers within its service territory that are not served by another supplier. Pricing for those services are set by the BPU as a pass-through, resulting in no margin for PSE&G’s operations. Over or under recovered balances with interest are returned or recovered through monthly filings.

•Formula Rate True-Up: PSE&G’s transmission revenues are earned under a FERC-approved annual formula rate mechanism which 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.

•Gas Costs—BGSS: These costs represent the over or under recovered amounts associated with BGSS, as approved by the BPU. Pursuant to BPU requirements, PSE&G serves as the supplier of last resort for gas customers within its service territory that are not served by another supplier. Pricing for those services are set by the BPU as a pass-through, resulting in no margin for PSE&G’s operations. Over or under collected balances are returned or recovered through an annual filing. Interest is accrued only on over recovered balances.

•GPRC: This amount represents costs of the over or under collected balances associated with various Energy Efficiency and Renewable Energy (EE & RE) Programs. PSE&G files annually with the BPU for recovery of amounts that include a return on and of its investment over the lives of the underlying investments and capital assets which range from five to ten years. Interest is accrued monthly on any over or under recovered balances. Approved components of the GPRC include: Carbon Abatement, Energy Efficiency Economic Stimulus Program (EEE), EEE Extension Program, EEE Extension II Program, Solar Generation Investment Program (Solar 4 All®), Solar 4 All® Extension, Solar 4 All® Extension II, Solar Loan II Program, Solar Loan III Program, Energy Efficiency (EE) 2017 Program, Clean Energy Future–Energy Efficiency (CEF-EE), the Transition Renewable Energy Certificate (TRECs) Program, Clean Energy Act Studies (CEAS), Community Solar Energy Program (CSEP) and the Successor Solar Incentive Program (SuSI).

•MGP Remediation Costs: Represents the low end of the range for the remaining environmental investigation and remediation program cleanup costs for MGPs that are probable of recovery in future rates. Once these costs are incurred, they are recovered through the RAC in the SBC over a seven year period with interest.

•New Jersey Clean Energy Program: The BPU approved future funding requirements for EE and RE Programs. The BPU funding requirements are recovered through the SBC.

•Pension and OPEB Costs: Pursuant to the adoption of accounting guidance for employers’ defined benefit pension and OPEB plans, PSE&G recorded the unrecognized costs for defined benefit pension and other OPEB plans on the balance sheet as a Regulatory Asset. These costs represent net actuarial gains or losses and prior service costs which have not been expensed. These costs are amortized and recovered in future rates.

•RAC (Other SBC): Costs incurred to clean up MGPs which are recovered over seven years with interest through an annual filing.

•SBC: The SBC, as authorized by the BPU and the New Jersey Electric Discount and Energy Competition Act, includes costs related to PSE&G’s electric and gas business as follows: (1) the Universal Service Fund; (2) EE & RE Programs; (3) Electric bad debt expense; and (4) the RAC for incurred MGP remediation expenditures. Over or under recovered balances with interest are to be returned or recovered through an annual filing.

•TAC: This represents the over or under collected balances associated with the return of excess accumulated deferred income taxes and the flowback of previously realized and current tax repair deductions under a mechanism approved by the BPU in PSE&G’s 2018 Distribution Base Rate Case Settlement. Over or under collected balances are returned or recovered through an annual filing. PSE&G includes a return component on the flowback of the excess accumulated deferred income taxes and the previously realized tax repairs. Interest is accrued monthly on any over or under recovered balances.

Significant 2022 regulatory orders received and currently pending rate filings with the BPU by PSE&G are as follows:

•BGS—In January 2022, the BPU approved changes to BGS rates as a result of the FERC-approved changes to transmission charges, primarily as a result of the decrease in PSE&G’s transmission formula rate of return on equity. PSE&G’s BGS customers are being credited over a 12-month period effective February 1, 2022.

•BGSS—In April 2022, the BPU gave final approval to PSE&G’s request to maintain the BGSS rate of approximately 41 cents per therm which had been provisionally approved effective February 1, 2022.

In September 2022, the BPU approved on a provisional basis PSE&G’s June 2022 request to increase its BGSS rate to approximately 65 cents per therm, effective October 1, 2022.

In January 2023, PSE&G filed a self-implementing BGSS rate reduction of 15 cents per therm with the BPU. This reduction resulted in a new BGSS rate of approximately 50 cents per therm effective February 1, 2023.

•CIP—In February 2023, the BPU gave final approval for PSE&G to recover approximately $52 million of deficient electric revenues over two years, with approximately $18 million approved for recovery for the first year starting on the effective date of June 15, 2022.

In September 2022, the BPU provisionally approved PSE&G’s initial gas CIP cost recovery petition to recover over a one year period deficient gas revenues of approximately $53 million with new rates effective October 1, 2022. The revenue deficiency is the result of lower estimated revenues as compared to a baseline established in PSE&G’s most recent distribution base rate proceeding.

In February 2023, PSE&G filed its annual electric CIP petition seeking BPU approval to recover estimated deficient electric revenues of approximately $54 million based on the twelve month period ending May 31, 2023 with new rates proposed to be effective June 1, 2023. This matter is pending.

•CSEP Program, a New Component of the GPRC—In June 2022, the BPU approved PSE&G’s filing to recover its initial electric revenue requirement of $0.4 million related to the CSEP Program with the new rate effective July 1, 2022.

•COVID-19 Deferral—PSE&G continues to make quarterly filings as required by the BPU and has recorded a Regulatory Asset as of December 31, 2022 of approximately $137 million for net incremental costs, including $68 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 December 2022, the BPU approved an extension of the COVID deferral period until March 15, 2023 and ordered all New Jersey regulated utilities to file petitions documenting its prudently incurred incremental COVID-19 costs no later than 60 days thereafter.

•Energy Strong II (ES II)—In May 2022, the BPU approved PSE&G’s updated filing for annual electric and gas revenue increases of $17 million and $1 million, respectively, effective June 1, 2022. These increases represent the return on and of Energy Strong II investments placed in service through January 2022.

In November 2022, PSE&G filed its annual petition seeking BPU approval to recover the annualized increases in electric and gas revenue requirements associated with capitalized investment costs of the ES II Program, with rates to be effective May 1, 2023. In February 2023, PSE&G updated its petition for actual investments through January 31, 2023 requesting annual electric and gas revenue increases of $16 million and $4 million, respectively. This matter is pending.

•Gas System Modernization Program (GSMP II)—In May 2022, the BPU approved PSE&G’s filing for an annual gas revenue increase of $25 million effective June 1, 2022. This increase represents the return on and of GSMP II investments placed in service through February 2022.

In November 2022, the BPU approved PSE&G’s updated GSMP II cost recovery filing to recover an annual gas revenue increase of $23 million effective December 1, 2022. This increase represents the return on and of GSMP II investments placed in service through August 31, 2022.

In December 2022, PSE&G filed its next semiannual GSMP II cost recovery petition seeking BPU approval to recover in gas base rates an estimated annual revenue increase of approximately $11 million effective June 1, 2023.

•GPRC—In June 2022, the BPU approved PSE&G’s updated filing for an annual electric revenue decrease of approximately $4 million and a gas revenue increase of approximately $1 million, with new rates effective June 15, 2022.

In July 2022, PSE&G filed its 2022 GPRC cost recovery petition requesting BPU approval to recover increases of $110 million and $8 million in annual electric and gas revenues, respectively. This matter is pending.

In September 2022, PSE&G filed a petition which requested an increase of $320 million in its total program investment spending for the CEF-EE component of GPRC and a nine month extension to the program to make the investments. This matter is pending.

•Pension—In February 2023, the BPU approved an accounting order authorizing PSE&G to modify its method for calculating the amortization of the net actuarial gain or loss component of pension expense for ratemaking purposes. This methodology change for ratemaking purposes is effective for the calendar year ending December 31, 2023 and forward.

•RAC—In September 2022, the BPU approved PSE&G’s RAC 29 filing allowing recovery of approximately $44 million of net MGP remediation expenditures incurred from August 1, 2020 through July 31, 2021.

In January 2023, PSE&G filed its RAC 30 petition with the BPU seeking recovery of approximately $44 million of net MGP expenditures incurred from August 1, 2021 through July 31, 2022. This matter is pending.

•SuSI Program, a New Component of the GPRC—In June 2022, the BPU approved PSE&G’s filing to recover an annual electric revenue increase of $38 million effective June 15, 2022. These costs will be recovered as a new component of PSE&G’s existing electric GPRC.

•SBC—In January 2023, PSE&G filed a petition to increase its annual electric and gas rates by approximately $52 million and $32 million, respectively, in order to recover electric and gas costs incurred or expected to be incurred through February 2024 under its EE and Renewable Energy and Social Programs. The increase to electric rates includes the impact of increased bad debt expense as a result of the negative economic impact of the coronavirus pandemic and the resulting impact of moratoriums on collections. This matter is pending.

•TAC—In June 2022, the BPU approved PSE&G’s annual 2021 TAC filing to increase annual electric and gas revenues by approximately $15 million and $31 million, respectively. The new rates were effective June 15, 2022.

In October 2022, PSE&G made its annual 2022 TAC filing requesting BPU approval to increase electric revenues and decrease gas revenues by approximately $17 million and $70 million, respectively, on an annual basis starting January 1, 2023. This matter is pending.

•Transmission Formula Rates—In June 2022, PSE&G filed its 2021 true-up adjustment pertaining to its transmission formula rates in effect for 2021. This filing resulted in a decrease in the 2021 annual revenue requirement of $1 million less than the 2021 original and updated filings, incorporating the FERC-approved settlement agreement effective August 1, 2021.

In October 2022, PSE&G filed its Annual Transmission Formula Rate Update with FERC which will result in $69 million in increased annual transmission revenue effective January 1, 2023, subject to true-up.

•ZEC Program—In April 2022, the BPU approved PSE&G’s petition to refund a total of $4 million to customers,

including interest, for overcollections resulting from the ZEC program for the energy year ended May 31, 2021.

In January 2023, the BPU approved PSE&G’s petition to set the ZEC refund component of the tariff rate to zero effective February 1, 2023. For the ZEC Energy Year ended May 31, 2022, PSE&G purchased approximately $161 million in ZECs including interest, from the eligible nuclear plants selected by the BPU with the final payment made in August 2022. As a result of the collections and required ZEC payments, there were overcollected revenues, including interest totaling $1.3 million, which PSE&G refunded to customers over the remainder of 2022 through January 2023 through its existing rates.