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PSEG Moves Forward With New Retail Supply Business, Focused on Organic Growth, Makes Hires

August 1, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Public Service Enterprise Group Inc. (PSEG) is moving forward with building a competitive retail supply business as a "defensive" play, and said that it is focused on organic growth for the retail effort

The company has said that it has been evaluating a retail play for about the last year, and during an earnings call on Friday, PSEG CEO Ralph Izzo said that the company has taken steps to launch such an effort.

PSEG has started to build some retail capability in-house, with Izzo stating, "our ambitions here are modest."

"They're defensive, and it's conceivable that an organic approach could be quite a bit more profitable from a point of view of return expectations," versus retail acquisitions, Izzo said

"We've hired some folks and we've started looking around at the kind of systems that we would need that are a little different from the systems we have now. We're preparing to file the necessary documents that one needs to be certified or licensed to engage in this [retail] business; it would be a separate and different function than our current wholesale trading arm," Izzo said

"We remain interested in retail for defensive purposes, managing basis risk, and not as a significant growth opportunity by any stretch of the imagination," Izzo said

While PSEG has looked at some boutique M&A opportunities in retail, as well as the recent sale of the ConEdison Solutions retail supply book, Izzo said that he expects the same challenges facing power plant acquisitions will challenge any retail tuck-in acquisitions -- namely, PSEG's disciplined focus on purchase price will preclude any such acquisitions

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