PSEG looking to unload non-nuclear fossil generation fleet & 475 MW of solar

Courtesy PSEG.

New Jersey-based Public Service Enterprise Group is seeking buyers for its power generation division’s non-nuclear plants.

This portfolio includes more than 6.75 GW of fossil-fired generation in New Jersey, Connecticut, New York and Maryland. PSEG also is looking to sell its 467-MW Solar Source assets in several states.

“Our intent is to accelerate the transformation of PSEG into a primarily regulated electric and gas utility — a plan we have been executing successfully for more than a decade,” PSEG CEO Ralph Izzo said in a statement. “A separation of the non-nuclear assets would reduce overall business risk and earnings volatility, improve our credit profile, and enhance an already compelling ESG position driven by pending clean energy investments, methane reduction, and zero-carbon generation. We recognize the shift in investor preference toward owning regulated utility businesses without commodity exposure to merchant generation and related earnings volatility.”

PSEG Power fossil fleet includes gas-fired generation with the Bergen, Bethlehem and Kalaeloa Cogeneration and other plants burning coal, gas and fuel oil.

The company intends to retain ownership of its existing nuclear fleet.  The carbon-free nuclear fleet is seen as necessary for New Jersey to meet its long-term carbon reduction goals and help satisfy the state’s capacity obligations for resource adequacy with a cost-effective source of zero-carbon electricity. 
While the company is in the preliminary stage of this evaluation, the marketing of a potential transaction in one or a series of steps, anticipated to launch in the fourth quarter, is expected to be completed sometime in 2021.  PSEG has engaged Goldman Sachs and Wachtell, Lipton, Rosen & Katz as advisors for this strategic evaluation.  An exit from the fossil generation business would accelerate PSEG’s transition to a primarily regulated and contracted business, with a zero-carbon generation platform.  Given the relatively small part of PSEG that the non-nuclear business represents, this decision will not have an impact on the company’s current shareholder dividend policy, which will continue to be subject to approval by the PSEG Board of Directors. 

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Gas-fired, coal-fired, nuclear and renewables all will be a part of the content sessions at POWERGEN International, which is happening March 30-April 1 in Orlando, Florida.

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