Asked About Strategic Direction, PSEG CEO Says "Quite Happy" With Merchant Power Unit

In response to an analyst question during an earnings call on Friday concerning the strategic direction for the company's merchant unit, Public Service Enterprise Group CEO Ralph Izzo said that the company is, "quite happy" with the cash generated from PSEG Power

An analyst highlighted trends in the merchant power sector, from utilities divesting their competitive businesses to pure-play IPPs going private, and noted PSEG's pursuit of nuclear subsidies in New Jersey. The analyst asked about the strategic direction for the company and long-term vision for the company

Izzo replied, "I think the best way to look at strategic direction is to look at how we're allocating our investment dollars. And if you look back over the past 10 years, you'll probably see a 75/25 split utility/PSEG Power. And if you look ahead five years, that ratio has changed a little bit. Now, it's 82% PSE&G at the utility, and 18% at Power."

"So, the strength of the company and its growth is clearly at PSE&G, but we are not making VCRs or buggy whips, right? We're producing electricity and power, and people still need that, so we're constantly optimizing that portfolio. We retired 4,000 megawatts of uncompetitive assets. We're now building 1,800 megawatts of competitive assets, and we're warning people about 3,500 megawatts that are in some peril that, actually, is a greater peril to the customer and policymakers than it is to our shareholders, that being nuclear," Izzo said

"If there is a strategic opportunity to do something different, we'll entertain it. But right now, we're quite happy with the cash being generated by Power and the utility's ability to deploy it very, very productively, which gives us an extremely healthy balance sheet, one that the rating agencies are looking more favorably upon, and robust growth of the utility without any need for additional equity and solid support for a dividend that continues to grow at 4% a year. So, we're in a good place," Izzo said