Public Service Enterprise Group Inc. has no plans to restructure or sell assets, the company's CEO said Nov. 13, expressing confidence in PSEG's standalone growth prospects despite a challenging landscape for its nuclear plants.
Speaking at the Edison Electric Institute Financial Conference in San Francisco, PSEG Chairman, President and CEO Ralph Izzo said the company is satisfied with the performance of its two main subsidiaries: regulated utility Public Service Electric and Gas Co. and competitive generator PSEG Power LLC. "I love all my children," he added.
"We pruned assets in many different places over many years," Izzo said. "We had big assets in South America; we had some socio-political challenges that we weren't the best at managing. We had some assets in Texas that seemed to be subject to barriers to entry and short commodity cycles. So no, I think we've done the pruning that we want to do."
Izzo was speaking in reference to PSEG Global LLC in 2008 selling its Chilean transmission and distribution unit for $887 million, and PSEG Power in 2011 selling two Texas gas plants for $335 million.
"I would say that there are some parts of the business that have more uncertainty and difficulty in terms of explaining than other parts of the business, and then try to have a conversation about the reliability pricing model and capacity reform for subsidized plants, and not have people have their hair catch fire," he continued. "But no, I think what we do is we just make sure that we retire inefficient units, and we build efficient units and we put them in places where we think the demand will grow strong. So I think we've done the pruning that we've wanted to do."
PSEG is optimistic that proposed PJM Interconnection capacity market reforms will be resolved in the company's favor, the CEO said on the company's Oct. 30 earnings call, and that additional state legislation to bolster PSEG's financially struggling nuclear plants is not needed.
Addressing the investment community, Izzo broadly emphasized that PSEG's capital plans, New Jersey laws and PJM auction results all help enhance the company's stability and mitigate risks through May 2022. PSE&G's target of rate base compound annual growth rate of 8% to 10% from 2018 through 2022 is among the highest in the industry, Izzo said.
Additionally, PSEG enjoys stable credit ratings and a strong funds from operation-to-debt ratio, with no plans to issue equity to finance its $14 billion to $17.5 billion capital program through 2022, he added.