Financing Receivables

3 Months Ended

Mar. 31, 2022

Schedule of Financial Receivables [Line Items]

Financing Receivables

Financing Receivables

PSE&G

PSE&G’s Solar Loan Programs are designed to help finance the installation of solar power systems throughout its electric service area. Interest income on the loans is recorded on an accrual basis. The loans are paid back with SRECs generated from the related installed solar electric system. PSE&G uses collection experience as a credit quality indicator for its Solar Loan Programs and conducts a comprehensive credit review for all prospective borrowers. As of March 31, 2022, none of the solar loans were impaired; however, in the event of a loan default, the basis of the solar loan would be recovered through a regulatory recovery mechanism. Therefore, no current credit losses have been recorded for Solar Loan Programs I, II and III. A substantial portion of these loan amounts are noncurrent and reported in Long-Term Investments on PSEG’s and PSE&G’s Condensed Consolidated Balance Sheets. The following table reflects the outstanding loans by class of customer, none of which would be considered “non-performing.”

	As of
Outstanding Loans by Class of Customers	March 31, 2022		December 31, 2021
	Millions
Commercial/Industrial	$	113	$	116
Residential	5		5
Total	118		121
Current Portion (included in Accounts Receivable)	(30)		(29)
Noncurrent Portion (included in Long-Term Investments)	$	88	$	92

The solar loans originated under three Solar Loan Programs are comprised as follows:

Programs	Balance as of March 31, 2022		Funding Provided	Residential Loan Term	Non-Residential Loan Term
	Millions
Solar Loan I	$	14	prior to 2013	10 years	15 years
Solar Loan II	55		prior to 2015	10 years	15 years
Solar Loan III	49		largely funded as of March 31, 2022	10 years	10 years
Total	$	118

The average life of loans paid in full is eight years, which is lower than the loan terms of 10 to 15 years due to the generation of SRECs being greater than expected and/or cash payments made to the loan. Payments on all outstanding loans were current as of March 31, 2022 and have an average remaining life of approximately four years. There are no remaining residential loans outstanding under the Solar Loan 1 program.

Energy Holdings

Energy Holdings, through its indirect subsidiaries, has investments in assets subject to leveraged lease accounting. A leveraged lease is typically comprised of an investment by an equity investor and debt provided by a third-party debt investor. The debt is recourse only to the assets subject to lease and is not included on PSEG’s Condensed Consolidated Balance Sheets. As an equity investor, Energy Holdings’ equity investments in the leases are comprised of the total expected lease receivables over the lease terms plus the estimated residual values at the end of the lease terms, reduced for any income not yet earned on the leases. This amount is included in Long-Term Investments on PSEG’s Condensed Consolidated Balance Sheets. The more rapid depreciation of the leased property for tax purposes creates tax cash flow that will be repaid to the taxing authority in later periods. As such, the liability for such taxes due is recorded in Deferred Income Taxes on PSEG’s Condensed Consolidated Balance Sheets.

Leveraged leases outstanding as of March 31, 2022 commenced in or prior to 2000. The following table shows Energy Holdings’ gross and net lease investment as of March 31, 2022 and December 31, 2021.

	As of
	March 31, 2022		December 31, 2021
	Millions
Lease Receivables (net of Non-Recourse Debt)	$	249	$	274
Unearned and Deferred Income	(84)		(87)
Gross Investments in Leases	165		187
Deferred Tax Liabilities	(40)		(42)
Net Investments in Leases	$	125	$	145

The corresponding receivables associated with the lease portfolio are reflected as follows, net of non-recourse debt. The ratings in the table represent the ratings of the entities providing payment assurance to Energy Holdings.

	Lease Receivables, Net of Non-Recourse Debt
Counterparties' Standard & Poor's (S&P) Credit Rating as of March 31, 2022
	As of March 31, 2022
	Millions
AA	$	8
A-	47
BBB+ to BBB	194
Total	$	249

PSEG recorded no credit losses for the leveraged leases existing on March 31, 2022. Upon the occurrence of certain defaults, indirect subsidiaries of Energy Holdings would exercise their rights and seek recovery of their investments, potentially including stepping into the lease directly to protect their investments. While these actions could ultimately protect or mitigate the loss of value, they could require the use of significant capital and trigger certain material tax obligations which could, for certain leases, wholly or partially be mitigated by tax indemnification claims against the counterparty. A bankruptcy of a lessee would likely delay and potentially limit any efforts on the part of the lessors to assert their rights upon default and could delay the monetization of claims.

Public Service Electric and Gas Company [Member]

Schedule of Financial Receivables [Line Items]

Financing Receivables

Financing Receivables

PSE&G

PSE&G’s Solar Loan Programs are designed to help finance the installation of solar power systems throughout its electric service area. Interest income on the loans is recorded on an accrual basis. The loans are paid back with SRECs generated from the related installed solar electric system. PSE&G uses collection experience as a credit quality indicator for its Solar Loan Programs and conducts a comprehensive credit review for all prospective borrowers. As of March 31, 2022, none of the solar loans were impaired; however, in the event of a loan default, the basis of the solar loan would be recovered through a regulatory recovery mechanism. Therefore, no current credit losses have been recorded for Solar Loan Programs I, II and III. A substantial portion of these loan amounts are noncurrent and reported in Long-Term Investments on PSEG’s and PSE&G’s Condensed Consolidated Balance Sheets. The following table reflects the outstanding loans by class of customer, none of which would be considered “non-performing.”

	As of
Outstanding Loans by Class of Customers	March 31, 2022		December 31, 2021
	Millions
Commercial/Industrial	$	113	$	116
Residential	5		5
Total	118		121
Current Portion (included in Accounts Receivable)	(30)		(29)
Noncurrent Portion (included in Long-Term Investments)	$	88	$	92

The solar loans originated under three Solar Loan Programs are comprised as follows:

Programs	Balance as of March 31, 2022		Funding Provided	Residential Loan Term	Non-Residential Loan Term
	Millions
Solar Loan I	$	14	prior to 2013	10 years	15 years
Solar Loan II	55		prior to 2015	10 years	15 years
Solar Loan III	49		largely funded as of March 31, 2022	10 years	10 years
Total	$	118

The average life of loans paid in full is eight years, which is lower than the loan terms of 10 to 15 years due to the generation of SRECs being greater than expected and/or cash payments made to the loan. Payments on all outstanding loans were current as of March 31, 2022 and have an average remaining life of approximately four years. There are no remaining residential loans outstanding under the Solar Loan 1 program.

Energy Holdings

Energy Holdings, through its indirect subsidiaries, has investments in assets subject to leveraged lease accounting. A leveraged lease is typically comprised of an investment by an equity investor and debt provided by a third-party debt investor. The debt is recourse only to the assets subject to lease and is not included on PSEG’s Condensed Consolidated Balance Sheets. As an equity investor, Energy Holdings’ equity investments in the leases are comprised of the total expected lease receivables over the lease terms plus the estimated residual values at the end of the lease terms, reduced for any income not yet earned on the leases. This amount is included in Long-Term Investments on PSEG’s Condensed Consolidated Balance Sheets. The more rapid depreciation of the leased property for tax purposes creates tax cash flow that will be repaid to the taxing authority in later periods. As such, the liability for such taxes due is recorded in Deferred Income Taxes on PSEG’s Condensed Consolidated Balance Sheets.

Leveraged leases outstanding as of March 31, 2022 commenced in or prior to 2000. The following table shows Energy Holdings’ gross and net lease investment as of March 31, 2022 and December 31, 2021.

	As of
	March 31, 2022		December 31, 2021
	Millions
Lease Receivables (net of Non-Recourse Debt)	$	249	$	274
Unearned and Deferred Income	(84)		(87)
Gross Investments in Leases	165		187
Deferred Tax Liabilities	(40)		(42)
Net Investments in Leases	$	125	$	145

The corresponding receivables associated with the lease portfolio are reflected as follows, net of non-recourse debt. The ratings in the table represent the ratings of the entities providing payment assurance to Energy Holdings.

	Lease Receivables, Net of Non-Recourse Debt
Counterparties' Standard & Poor's (S&P) Credit Rating as of March 31, 2022
	As of March 31, 2022
	Millions
AA	$	8
A-	47
BBB+ to BBB	194
Total	$	249

PSEG recorded no credit losses for the leveraged leases existing on March 31, 2022. Upon the occurrence of certain defaults, indirect subsidiaries of Energy Holdings would exercise their rights and seek recovery of their investments, potentially including stepping into the lease directly to protect their investments. While these actions could ultimately protect or mitigate the loss of value, they could require the use of significant capital and trigger certain material tax obligations which could, for certain leases, wholly or partially be mitigated by tax indemnification claims against the counterparty. A bankruptcy of a lessee would likely delay and potentially limit any efforts on the part of the lessors to assert their rights upon default and could delay the monetization of claims.