Leases

3 Months Ended

Mar. 31, 2019

PSEG and its subsidiaries, when acting as lessee or lessor, determine if an arrangement is a lease at inception. PSEG assesses contracts to determine if the arrangement conveys (i) the right to control the use of the identified property, (ii) the right to obtain substantially all of the economic benefits from the use of the property, and (iii) the right to direct the use of the property.

As of March 31, 2019, PSEG and subsidiaries were both a lessee and a lessor in Operating Leases. PSEG and subsidiaries were neither the lessee nor the lessor in any material non-operating leases.

Lessee

The current portion of Operating Lease Liabilities is included in Other Current Liabilities. Operating Lease Right-of-Use Assets and noncurrent Operating Lease Liabilities are included as separate captions in Noncurrent Assets and Noncurrent Liabilities, respectively, on the Condensed Consolidated Balance Sheets of PSEG, PSE&G and Power. PSEG and its subsidiaries have elected an accounting policy to exclude the application of ASC 842 requirements to recognize Operating Lease Right-of-Use Assets and Operating Lease Liabilities for leases where the term is twelve months or less.

Operating Lease Right-of-Use Assets represent the right to use an underlying asset for the lease term and Operating Lease Liabilities represent the obligation to make lease payments arising from the lease. Operating Lease Right-of-Use Assets and Operating Lease Liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.

PSEG and its subsidiaries recognize the lease payments in O&M Expense on a straight-line basis over the term of the leases and variable lease payments in the period in which the obligations for those payments are incurred.

As lessee, most of the Operating Leases of PSEG and its subsidiaries do not provide an implicit rate; therefore, incremental borrowing rates are used based on the information available at commencement date in determining the present value of lease payments. The implicit rate is used when readily determinable. PSE&G’s incremental borrowing rates are based on secured borrowing rates. PSEG’s and Power’s borrowing rates are generally unsecured rates. Having calculated simulated secured rates for each of PSEG and Power, it was determined that the difference between the unsecured borrowing rates and the simulated secured rates had an immaterial effect on their recorded Operating Lease Right-of-Use Assets and Operating Lease Liabilities.

Services, PSEG LI and other subsidiaries of PSEG that do not borrow funds or issue debt may enter into leases. Since these companies do not have credit ratings and related incremental borrowing rates, PSEG has determined that it is appropriate for these companies to use the incremental borrowing rate of PSEG, the parent company.

Lease terms may include options to extend or terminate the lease when it is reasonably certain that such options will be exercised.

PSEG and its subsidiaries have lease agreements with lease and non-lease components. For real estate, equipment and vehicle leases, the lease and non-lease components are accounted for as a single lease component.

PSE&G

PSE&G has Operating Leases for office space for customer service centers; rooftops and land for its Solar 4 All^® facilities; equipment; vehicles; and land for certain electric substations. These leases have remaining lease terms through 2039, some of which include options to extend the leases for terms of one to five years. Some leases have fixed rent payments that have escalations based on certain indices, such as the CPI. Certain leases contain variable payments.

Power

Power has Operating Leases for buildings; land leases for its solar generating facilities; and equipment. These leases have remaining terms through 2052, some of which include options to extend the leases for one or more five-year terms and certain other leases which include options to extend the leases for 15 to 20 year terms. Some leases have fixed rent payments that have escalations based on certain indices, such as the CPI.

Other

Services has Operating Leases for real estate and office equipment. These leases have remaining terms through 2030. Services’ lease for its headquarters, which ends in 2030, includes options to extend for two five-year terms. Energy Holdings has land leases with remaining lease terms through 2027, some of which include options to extend the leases for up to eight five-year terms. Some leases have fixed rent payments that have escalations based on certain indices, such as the CPI. Certain leases contain variable payments.

Operating Lease Costs

The following amounts relate to total Operating Lease costs, including both amounts recognized in the Condensed Consolidated Statements of Operations during the three months ended March 31, 2019 and any amounts capitalized as part of the cost of another asset, and the cash flows arising from lease transactions.




	PSE&G			Power			Other			Total
	Millions
Three Months Ended March 31, 2019
Operating Lease Costs
Long-term Lease Costs	$	4		$	2		$	4		$	10
Short-term Lease Costs	5			2			—			7
Variable Lease Costs	—			—			3			3
Total Operating Lease Costs	$	9		$	4		$	7		$	20

Cash Paid for Amounts Included in the Measurement of Operating Lease Liabilities	$	4		$	2		$	4		$	10

Weighted Average Remaining Lease Term in Years	13			20			11			13
Weighted Average Discount Rate	3.7		%	5.0		%	4.2		%	4.2		%

Operating Lease commitments as of December 31, 2018 had the following maturities:




	PSE&G		Power		Other		Total
	Millions
2019	$	15	$	11	$	15	$	41
2020	11		13		16		40
2021	10		13		16		39
2022	8		14		16		38
2023	8		8		15		31
Thereafter	66		51		105		222
Total Minimum Lease Payments	$	118	$	110	$	183	$	411

Operating Lease Liabilities as of March 31, 2019 had the following maturities:




	PSE&G		Power		Other		Total
	Millions
2019	$	11	$	5	$	12	$	28
2020	11		4		16		31
2021	10		4		16		30
2022	8		5		16		29
2023	8		3		15		26
2024	7		3		14		24
Thereafter	60		46		90		196
Total Minimum Lease Payments	$	115	$	70	$	179	$	364

As of March 31, 2019, Power was a lessee in an operating lease that was executed but had not yet commenced and, therefore, no lease asset or liability was recognized. Fixed payments under this contract aggregating $35 million are due through 2023 and are not included in the above table.

The following is a reconciliation of the undiscounted cash flows to the discounted Operating Lease Liabilities recognized on the Condensed Consolidated Balance Sheets:




	As of March 31, 2019
	PSE&G			Power			Other			Total
	Millions
Undiscounted Cash Flows	$	115		$	70		$	179		$	364
Reconciling Amount due to Discount Rate	(25		)	(27		)	(37		)	(89		)
Total Discounted Operating Lease Liabilities	$	90		$	43		$	142		$	275

As of March 31, 2019, the current portions of Operating Lease Liabilities included in Other Current Liabilities were $25 million, $11 million and $4 million for PSEG, PSE&G and Power, respectively.

Lessor

Property subject to Operating Leases, where PSEG or one of its subsidiaries is the lessor, is included in Property, Plant and Equipment and rental income from these leases is included in Operating Revenues.

PSEG and its subsidiaries, as lessors, have lease agreements with lease and non-lease components, which are primarily related to real estate assets and solar generating facilities. PSEG and subsidiaries account for the lease and non-lease components as a single lease component. Energy Holdings’ leveraged leases are accounted for in Operating Revenues and in Noncurrent Long-Term Investments. See Note 8. Financing Receivables.

Power

Certain of Power’s sales agreements related to its solar generating plants qualify as Operating Leases with remaining terms through 2043 with no extension terms. Lease income is based on solar energy generation; therefore, all rental income is variable under these leases. As of March 31, 2019, Power’s solar generating plants subject to these leases had a total carrying value of $331 million.

Other

Energy Holdings is the lessor in leveraged leases. Leveraged lease accounting guidance is grandfathered for existing leveraged leases. If modified after January 1, 2019, those leveraged leases will be accounted for as operating or financing leases. See Note 8. Financing Receivables.

Energy Holdings is the lessor in various Operating Leases for real estate with remaining terms through 2033. As of March 31, 2019, Energy Holdings’ property subject to these leases had a total carrying value of $24 million.

The following is the Operating Lease Income for Power and Energy Holdings for the three months ended March 31, 2019:




	Power		Energy Holdings		Total
	Millions
Operating Lease Income
Fixed Lease Income	$	—	$	5	$	5
Variable Lease Income	4		—		4
Total Operating Lease Income	$	4	$	5	$	9

Energy Holdings’ Operating Leases had the following minimum future fixed lease receipts as of March 31, 2019:




	Millions
2019	$	19
2020	20
2021	18
2022	17
2023	17
2024	16
Thereafter	165
Total Minimum Future Lease Receipts	$	272

Leases

As of March 31, 2019, PSEG and subsidiaries were both a lessee and a lessor in Operating Leases. PSEG and subsidiaries were neither the lessee nor the lessor in any material non-operating leases.

Lessee

Lease terms may include options to extend or terminate the lease when it is reasonably certain that such options will be exercised.

PSE&G

Power

Other

Operating Lease Costs




	PSE&G			Power			Other			Total
	Millions
Three Months Ended March 31, 2019
Operating Lease Costs
Long-term Lease Costs	$	4		$	2		$	4		$	10
Short-term Lease Costs	5			2			—			7
Variable Lease Costs	—			—			3			3
Total Operating Lease Costs	$	9		$	4		$	7		$	20

Cash Paid for Amounts Included in the Measurement of Operating Lease Liabilities	$	4		$	2		$	4		$	10

Weighted Average Remaining Lease Term in Years	13			20			11			13
Weighted Average Discount Rate	3.7		%	5.0		%	4.2		%	4.2		%

Operating Lease commitments as of December 31, 2018 had the following maturities:




	PSE&G		Power		Other		Total
	Millions
2019	$	15	$	11	$	15	$	41
2020	11		13		16		40
2021	10		13		16		39
2022	8		14		16		38
2023	8		8		15		31
Thereafter	66		51		105		222
Total Minimum Lease Payments	$	118	$	110	$	183	$	411

Operating Lease Liabilities as of March 31, 2019 had the following maturities:




	PSE&G		Power		Other		Total
	Millions
2019	$	11	$	5	$	12	$	28
2020	11		4		16		31
2021	10		4		16		30
2022	8		5		16		29
2023	8		3		15		26
2024	7		3		14		24
Thereafter	60		46		90		196
Total Minimum Lease Payments	$	115	$	70	$	179	$	364

The following is a reconciliation of the undiscounted cash flows to the discounted Operating Lease Liabilities recognized on the Condensed Consolidated Balance Sheets:




	As of March 31, 2019
	PSE&G			Power			Other			Total
	Millions
Undiscounted Cash Flows	$	115		$	70		$	179		$	364
Reconciling Amount due to Discount Rate	(25		)	(27		)	(37		)	(89		)
Total Discounted Operating Lease Liabilities	$	90		$	43		$	142		$	275

As of March 31, 2019, the current portions of Operating Lease Liabilities included in Other Current Liabilities were $25 million, $11 million and $4 million for PSEG, PSE&G and Power, respectively.

Lessor

Power

Other

The following is the Operating Lease Income for Power and Energy Holdings for the three months ended March 31, 2019:




	Power		Energy Holdings		Total
	Millions
Operating Lease Income
Fixed Lease Income	$	—	$	5	$	5
Variable Lease Income	4		—		4
Total Operating Lease Income	$	4	$	5	$	9

Energy Holdings’ Operating Leases had the following minimum future fixed lease receipts as of March 31, 2019:




	Millions
2019	$	19
2020	20
2021	18
2022	17
2023	17
2024	16
Thereafter	165
Total Minimum Future Lease Receipts	$	272

PSE And G [Member]

Leases

As of March 31, 2019, PSEG and subsidiaries were both a lessee and a lessor in Operating Leases. PSEG and subsidiaries were neither the lessee nor the lessor in any material non-operating leases.

Lessee

Lease terms may include options to extend or terminate the lease when it is reasonably certain that such options will be exercised.

PSE&G

Power

Other

Operating Lease Costs




	PSE&G			Power			Other			Total
	Millions
Three Months Ended March 31, 2019
Operating Lease Costs
Long-term Lease Costs	$	4		$	2		$	4		$	10
Short-term Lease Costs	5			2			—			7
Variable Lease Costs	—			—			3			3
Total Operating Lease Costs	$	9		$	4		$	7		$	20

Cash Paid for Amounts Included in the Measurement of Operating Lease Liabilities	$	4		$	2		$	4		$	10

Weighted Average Remaining Lease Term in Years	13			20			11			13
Weighted Average Discount Rate	3.7		%	5.0		%	4.2		%	4.2		%

Operating Lease commitments as of December 31, 2018 had the following maturities:




	PSE&G		Power		Other		Total
	Millions
2019	$	15	$	11	$	15	$	41
2020	11		13		16		40
2021	10		13		16		39
2022	8		14		16		38
2023	8		8		15		31
Thereafter	66		51		105		222
Total Minimum Lease Payments	$	118	$	110	$	183	$	411

Operating Lease Liabilities as of March 31, 2019 had the following maturities:




	PSE&G		Power		Other		Total
	Millions
2019	$	11	$	5	$	12	$	28
2020	11		4		16		31
2021	10		4		16		30
2022	8		5		16		29
2023	8		3		15		26
2024	7		3		14		24
Thereafter	60		46		90		196
Total Minimum Lease Payments	$	115	$	70	$	179	$	364

The following is a reconciliation of the undiscounted cash flows to the discounted Operating Lease Liabilities recognized on the Condensed Consolidated Balance Sheets:




	As of March 31, 2019
	PSE&G			Power			Other			Total
	Millions
Undiscounted Cash Flows	$	115		$	70		$	179		$	364
Reconciling Amount due to Discount Rate	(25		)	(27		)	(37		)	(89		)
Total Discounted Operating Lease Liabilities	$	90		$	43		$	142		$	275

As of March 31, 2019, the current portions of Operating Lease Liabilities included in Other Current Liabilities were $25 million, $11 million and $4 million for PSEG, PSE&G and Power, respectively.

Lessor

Power

Other

The following is the Operating Lease Income for Power and Energy Holdings for the three months ended March 31, 2019:




	Power		Energy Holdings		Total
	Millions
Operating Lease Income
Fixed Lease Income	$	—	$	5	$	5
Variable Lease Income	4		—		4
Total Operating Lease Income	$	4	$	5	$	9

Energy Holdings’ Operating Leases had the following minimum future fixed lease receipts as of March 31, 2019:




	Millions
2019	$	19
2020	20
2021	18
2022	17
2023	17
2024	16
Thereafter	165
Total Minimum Future Lease Receipts	$	272

Leases

As of March 31, 2019, PSEG and subsidiaries were both a lessee and a lessor in Operating Leases. PSEG and subsidiaries were neither the lessee nor the lessor in any material non-operating leases.

Lessee

Lease terms may include options to extend or terminate the lease when it is reasonably certain that such options will be exercised.

PSE&G

Power

Other

Operating Lease Costs




	PSE&G			Power			Other			Total
	Millions
Three Months Ended March 31, 2019
Operating Lease Costs
Long-term Lease Costs	$	4		$	2		$	4		$	10
Short-term Lease Costs	5			2			—			7
Variable Lease Costs	—			—			3			3
Total Operating Lease Costs	$	9		$	4		$	7		$	20

Cash Paid for Amounts Included in the Measurement of Operating Lease Liabilities	$	4		$	2		$	4		$	10

Weighted Average Remaining Lease Term in Years	13			20			11			13
Weighted Average Discount Rate	3.7		%	5.0		%	4.2		%	4.2		%

Operating Lease commitments as of December 31, 2018 had the following maturities:




	PSE&G		Power		Other		Total
	Millions
2019	$	15	$	11	$	15	$	41
2020	11		13		16		40
2021	10		13		16		39
2022	8		14		16		38
2023	8		8		15		31
Thereafter	66		51		105		222
Total Minimum Lease Payments	$	118	$	110	$	183	$	411

Operating Lease Liabilities as of March 31, 2019 had the following maturities:




	PSE&G		Power		Other		Total
	Millions
2019	$	11	$	5	$	12	$	28
2020	11		4		16		31
2021	10		4		16		30
2022	8		5		16		29
2023	8		3		15		26
2024	7		3		14		24
Thereafter	60		46		90		196
Total Minimum Lease Payments	$	115	$	70	$	179	$	364

The following is a reconciliation of the undiscounted cash flows to the discounted Operating Lease Liabilities recognized on the Condensed Consolidated Balance Sheets:




	As of March 31, 2019
	PSE&G			Power			Other			Total
	Millions
Undiscounted Cash Flows	$	115		$	70		$	179		$	364
Reconciling Amount due to Discount Rate	(25		)	(27		)	(37		)	(89		)
Total Discounted Operating Lease Liabilities	$	90		$	43		$	142		$	275

As of March 31, 2019, the current portions of Operating Lease Liabilities included in Other Current Liabilities were $25 million, $11 million and $4 million for PSEG, PSE&G and Power, respectively.

Lessor

Power

Other

The following is the Operating Lease Income for Power and Energy Holdings for the three months ended March 31, 2019:




	Power		Energy Holdings		Total
	Millions
Operating Lease Income
Fixed Lease Income	$	—	$	5	$	5
Variable Lease Income	4		—		4
Total Operating Lease Income	$	4	$	5	$	9

Energy Holdings’ Operating Leases had the following minimum future fixed lease receipts as of March 31, 2019:




	Millions
2019	$	19
2020	20
2021	18
2022	17
2023	17
2024	16
Thereafter	165
Total Minimum Future Lease Receipts	$	272

Power [Member]

Leases

As of March 31, 2019, PSEG and subsidiaries were both a lessee and a lessor in Operating Leases. PSEG and subsidiaries were neither the lessee nor the lessor in any material non-operating leases.

Lessee

Lease terms may include options to extend or terminate the lease when it is reasonably certain that such options will be exercised.

PSE&G

Power

Other

Operating Lease Costs




	PSE&G			Power			Other			Total
	Millions
Three Months Ended March 31, 2019
Operating Lease Costs
Long-term Lease Costs	$	4		$	2		$	4		$	10
Short-term Lease Costs	5			2			—			7
Variable Lease Costs	—			—			3			3
Total Operating Lease Costs	$	9		$	4		$	7		$	20

Cash Paid for Amounts Included in the Measurement of Operating Lease Liabilities	$	4		$	2		$	4		$	10

Weighted Average Remaining Lease Term in Years	13			20			11			13
Weighted Average Discount Rate	3.7		%	5.0		%	4.2		%	4.2		%

Operating Lease commitments as of December 31, 2018 had the following maturities:




	PSE&G		Power		Other		Total
	Millions
2019	$	15	$	11	$	15	$	41
2020	11		13		16		40
2021	10		13		16		39
2022	8		14		16		38
2023	8		8		15		31
Thereafter	66		51		105		222
Total Minimum Lease Payments	$	118	$	110	$	183	$	411

Operating Lease Liabilities as of March 31, 2019 had the following maturities:




	PSE&G		Power		Other		Total
	Millions
2019	$	11	$	5	$	12	$	28
2020	11		4		16		31
2021	10		4		16		30
2022	8		5		16		29
2023	8		3		15		26
2024	7		3		14		24
Thereafter	60		46		90		196
Total Minimum Lease Payments	$	115	$	70	$	179	$	364

The following is a reconciliation of the undiscounted cash flows to the discounted Operating Lease Liabilities recognized on the Condensed Consolidated Balance Sheets:




	As of March 31, 2019
	PSE&G			Power			Other			Total
	Millions
Undiscounted Cash Flows	$	115		$	70		$	179		$	364
Reconciling Amount due to Discount Rate	(25		)	(27		)	(37		)	(89		)
Total Discounted Operating Lease Liabilities	$	90		$	43		$	142		$	275

As of March 31, 2019, the current portions of Operating Lease Liabilities included in Other Current Liabilities were $25 million, $11 million and $4 million for PSEG, PSE&G and Power, respectively.

Lessor

Power

Other

The following is the Operating Lease Income for Power and Energy Holdings for the three months ended March 31, 2019:




	Power		Energy Holdings		Total
	Millions
Operating Lease Income
Fixed Lease Income	$	—	$	5	$	5
Variable Lease Income	4		—		4
Total Operating Lease Income	$	4	$	5	$	9

Energy Holdings’ Operating Leases had the following minimum future fixed lease receipts as of March 31, 2019:




	Millions
2019	$	19
2020	20
2021	18
2022	17
2023	17
2024	16
Thereafter	165
Total Minimum Future Lease Receipts	$	272

Leases

As of March 31, 2019, PSEG and subsidiaries were both a lessee and a lessor in Operating Leases. PSEG and subsidiaries were neither the lessee nor the lessor in any material non-operating leases.

Lessee

Lease terms may include options to extend or terminate the lease when it is reasonably certain that such options will be exercised.

PSE&G

Power

Other

Operating Lease Costs




	PSE&G			Power			Other			Total
	Millions
Three Months Ended March 31, 2019
Operating Lease Costs
Long-term Lease Costs	$	4		$	2		$	4		$	10
Short-term Lease Costs	5			2			—			7
Variable Lease Costs	—			—			3			3
Total Operating Lease Costs	$	9		$	4		$	7		$	20

Cash Paid for Amounts Included in the Measurement of Operating Lease Liabilities	$	4		$	2		$	4		$	10

Weighted Average Remaining Lease Term in Years	13			20			11			13
Weighted Average Discount Rate	3.7		%	5.0		%	4.2		%	4.2		%

Operating Lease commitments as of December 31, 2018 had the following maturities:




	PSE&G		Power		Other		Total
	Millions
2019	$	15	$	11	$	15	$	41
2020	11		13		16		40
2021	10		13		16		39
2022	8		14		16		38
2023	8		8		15		31
Thereafter	66		51		105		222
Total Minimum Lease Payments	$	118	$	110	$	183	$	411

Operating Lease Liabilities as of March 31, 2019 had the following maturities:




	PSE&G		Power		Other		Total
	Millions
2019	$	11	$	5	$	12	$	28
2020	11		4		16		31
2021	10		4		16		30
2022	8		5		16		29
2023	8		3		15		26
2024	7		3		14		24
Thereafter	60		46		90		196
Total Minimum Lease Payments	$	115	$	70	$	179	$	364

The following is a reconciliation of the undiscounted cash flows to the discounted Operating Lease Liabilities recognized on the Condensed Consolidated Balance Sheets:




	As of March 31, 2019
	PSE&G			Power			Other			Total
	Millions
Undiscounted Cash Flows	$	115		$	70		$	179		$	364
Reconciling Amount due to Discount Rate	(25		)	(27		)	(37		)	(89		)
Total Discounted Operating Lease Liabilities	$	90		$	43		$	142		$	275

As of March 31, 2019, the current portions of Operating Lease Liabilities included in Other Current Liabilities were $25 million, $11 million and $4 million for PSEG, PSE&G and Power, respectively.

Lessor

Power

Other

The following is the Operating Lease Income for Power and Energy Holdings for the three months ended March 31, 2019:




	Power		Energy Holdings		Total
	Millions
Operating Lease Income
Fixed Lease Income	$	—	$	5	$	5
Variable Lease Income	4		—		4
Total Operating Lease Income	$	4	$	5	$	9

Energy Holdings’ Operating Leases had the following minimum future fixed lease receipts as of March 31, 2019:




	Millions
2019	$	19
2020	20
2021	18
2022	17
2023	17
2024	16
Thereafter	165
Total Minimum Future Lease Receipts	$	272