Public Service Enterprise Group Incorporated (PEG): Business Model Canvas [11-2024 Updated]

Understanding the Business Model Canvas of Public Service Enterprise Group Incorporated (PEG) offers valuable insights into how this key player in the energy sector operates. From its robust key partnerships with regulatory bodies and technology providers to its commitment to sustainability through renewable energy investments, PEG exemplifies a well-structured approach to delivering reliable energy solutions. Discover how PEG’s diverse customer segments, strategic activities, and revenue streams shape its business model in the sections below.

Public Service Enterprise Group Incorporated (PEG) - Business Model: Key Partnerships

Collaborations with regulatory bodies

PSEG actively engages with regulatory bodies such as the New Jersey Board of Public Utilities (BPU) and the Federal Energy Regulatory Commission (FERC). In September 2024, BPU approved a provisional rate decrease for PSEG's Basic Gas Supply Service (BGSS) to approximately 33 cents per therm, effective October 1, 2024. Additionally, PSEG continues to earn a 50 basis point adder to its base Return on Equity (ROE) for its membership in PJM Interconnection, which translates to an annual impact of approximately $40 million.

Partnerships with energy suppliers

PSEG Power has established contracts with various energy suppliers to secure natural gas and electricity. As of September 30, 2024, PSEG Power entered into hedges for approximately 70 billion cubic feet of gas supply, which represents about 50% of its residential gas supply annual requirements. The pricing for electricity from the Basic Generation Service (BGS) auction for the year starting June 1, 2024, was set at $378.21 per MW-day.

Contracts with local governments

PSEG has significant contracts with local governments, including a service agreement with the Long Island Power Authority (LIPA) for the operation of its electric transmission and distribution system. As of May 2024, PSEG submitted proposals to continue providing these services post-2025. Additionally, PSEG's Infrastructure Advancement Program (IAP) seeks recovery of an annual revenue increase of $5 million for electric investments.

Alliances with technology providers

PSEG collaborates with various technology providers to enhance its operational efficiency and service delivery. The company has committed approximately $2.9 billion for energy efficiency projects from 2025 to 2027, which includes partnerships with technology firms to implement advanced energy management systems. Furthermore, PSEG is involved in the development of electric vehicle (EV) charging infrastructure, capping its program investment at $30 million.

Partnership Type	Details	Financial Impact
Regulatory Collaborations	Engagement with BPU and FERC for rate approvals	$40 million annual impact from ROE adder
Energy Suppliers	Hedges for gas supply requirements	Secured 70 billion cubic feet of gas supply annually
Local Government Contracts	Service agreement with LIPA	$5 million revenue increase from IAP
Technology Alliances	Investment in energy efficiency projects	$2.9 billion for projects from 2025-2027

Public Service Enterprise Group Incorporated (PEG) - Business Model: Key Activities

Electricity and gas distribution

Public Service Enterprise Group Incorporated (PSEG) operates through its subsidiary, Public Service Electric and Gas Company (PSE&G), which is primarily engaged in the transmission of electricity and distribution of natural gas. For the nine months ended September 30, 2024, PSE&G reported operating revenues of $6.335 billion, down from $6.392 billion in the same period in 2023. The net income for PSE&G for the same period was $1.169 billion, compared to $1.224 billion in 2023.

Infrastructure modernization projects

PSEG is heavily investing in infrastructure modernization to improve service reliability and meet regulatory requirements. The capital investment program for 2024-2028 is estimated to be in the range of $18 billion to $21 billion, focusing on enhancing the transmission and distribution (T&D) system. In 2023, the Board of Public Utilities (BPU) approved a $280 million extension of the Clean Energy Future-Energy Efficiency (CEF-EE) program.

Year	Investment ($ Billion)	Program Focus
2024-2028	18-21	Infrastructure modernization and clean energy programs
2023	0.280	CEF-EE program extension

Regulatory compliance and reporting

PSEG operates under strict regulatory oversight from various bodies including the New Jersey Board of Public Utilities (BPU) and the Federal Energy Regulatory Commission (FERC). In April 2024, PSEG submitted bids to the BPU for the Pre-Build Infrastructure (PBI) project, aimed at enhancing T&D infrastructure. The company is also subject to environmental regulations, which can incur substantial costs for compliance and remediation.

Customer service and engagement

PSE&G prioritizes customer engagement through various programs designed to enhance service delivery and satisfaction. The company reported a customer satisfaction score of 87% in its latest survey. Additionally, PSEG’s Solar Loan Programs assist customers in financing solar power systems, indicating a commitment to customer service and renewable energy initiatives.

Program	Customer Engagement Strategy	Satisfaction Score (%)
Solar Loan Programs	Financing solar installations	N/A
Customer Satisfaction Survey	Service delivery improvement	87

Public Service Enterprise Group Incorporated (PEG) - Business Model: Key Resources

Extensive utility infrastructure

PSEG operates a significant utility infrastructure comprising approximately 50,615 million in property, plant, and equipment as of September 30, 2024. This infrastructure includes electric transmission and distribution networks, gas distribution systems, and nuclear generation facilities. The company’s regulated capital investment program is estimated to be between $18 billion to $21 billion from 2024 to 2028, contributing to a projected compound annual growth rate in its regulated rate base of 6% to 7.5% over the same period.

Skilled workforce

PSEG employs a skilled workforce dedicated to maintaining and operating its extensive utility infrastructure. The company has a total of approximately 12,000 employees, with a focus on technical expertise in energy generation, transmission, and distribution. This skilled workforce is crucial for ensuring operational efficiency and compliance with regulatory standards.

Regulatory licenses and permits

PSEG holds various regulatory licenses and permits necessary for its operations. These include certifications from the New Jersey Board of Public Utilities (BPU) and the Federal Energy Regulatory Commission (FERC). The company is also engaged in ongoing regulatory processes, such as submitting proposals for service contracts and participating in transmission solicitation processes, to maintain and expand its operational capabilities.

Financial capital for investments

PSEG maintains a robust financial capital structure to support its ongoing investments and operational needs. As of September 30, 2024, the company had total committed credit facilities of $3.825 billion, with $3.161 billion available. The company's operating cash flows for the nine months ended September 30, 2024, amounted to $1,119 million, reflecting an increase from the previous year. Additionally, PSEG's net income for the same period was reported at $1,486 million.

Key Financial Metrics	As of September 30, 2024
Total Property, Plant, and Equipment	$50,615 million
Total Committed Credit Facilities	$3,825 million
Available Credit	$3,161 million
Operating Cash Flow (9 months)	$1,119 million
Net Income (9 months)	$1,486 million
Employee Count	~12,000

Public Service Enterprise Group Incorporated (PEG) - Business Model: Value Propositions

Reliable energy supply

PSEG operates a robust energy supply network that ensures consistent delivery to its customers. For the nine months ended September 30, 2024, PSEG reported operating revenues of $7.825 billion, highlighting its capability to maintain a stable income from energy services.

Commitment to sustainability

PSEG has made significant strides in sustainability, aligning with state and federal goals for cleaner energy. The company’s capital investment program is estimated to range from $18 billion to $21 billion for the years 2024-2028, focusing heavily on renewable energy projects and infrastructure improvements.

Investment in renewable energy projects

PSEG is actively investing in renewable energy, with plans to increase its renewable energy generation. The approved Clean Energy Future-Energy Efficiency program has a budget of approximately $2.9 billion for energy efficiency projects from 2025 to 2027.

Competitive pricing for services

PSEG’s pricing strategy is designed to be competitive within the energy market. The company has successfully managed to keep its energy costs relatively stable, with energy costs reported at $2.628 billion for the nine months ended September 30, 2024.

Value Proposition	Details	Financial Impact
Reliable energy supply	Consistent delivery of energy services to residential and commercial customers.	Operating revenues of $7.825 billion (9M 2024)
Commitment to sustainability	Investment in clean energy and infrastructure upgrades.	Estimated $18-$21 billion capital investment (2024-2028)
Investment in renewable energy projects	Focus on renewable energy generation and efficiency programs.	$2.9 billion budget for energy efficiency projects (2025-2027)
Competitive pricing for services	Stable pricing strategy in the energy market.	Energy costs of $2.628 billion (9M 2024)

Public Service Enterprise Group Incorporated (PEG) - Business Model: Customer Relationships

Personalized customer service

Public Service Enterprise Group (PSEG) emphasizes personalized customer service across its subsidiaries, particularly through Public Service Electric and Gas Company (PSE&G). In 2024, PSE&G reported a total of $2,642 million in operating revenues for the third quarter, reflecting the effectiveness of their customer engagement strategies.

Engagement through community programs

PSEG actively engages customers through various community programs aimed at enhancing customer relationships. In 2024, PSEG allocated $5 million for community initiatives, focusing on energy efficiency and renewable resources, which are crucial in building a loyal customer base.

Regular communication on service updates

Regular communication is vital for maintaining customer relationships. PSEG utilizes multiple channels to keep customers informed about service updates, which is reflected in their customer satisfaction ratings that have consistently exceeded 85%. In addition, PSEG reported a net income of $520 million for the third quarter of 2024, highlighting their commitment to effective communication strategies.

Support for energy efficiency initiatives

PSEG supports energy efficiency initiatives through various programs, including rebates and incentives for customers who adopt energy-efficient practices. In 2024, PSEG's energy efficiency programs led to savings of approximately $100 million for customers, demonstrating a significant impact on customer relations.

Program	Investment ($ Million)	Customer Savings ($ Million)	Customer Satisfaction (%)
Community Engagement	5	N/A	85
Energy Efficiency Initiatives	10	100	87
Personalized Service Enhancements	15	N/A	90

As PSEG continues to focus on these areas, the integration of personalized service and community engagement will remain pivotal in strengthening customer relationships and driving financial performance.

Public Service Enterprise Group Incorporated (PEG) - Business Model: Channels

Direct customer service centers

PSEG operates several customer service centers designed to handle inquiries, service requests, and support for both residential and commercial customers. As of September 30, 2024, PSEG reported a total of 1.5 million customer accounts serviced through these centers, facilitating direct communication and issue resolution.

Online platforms for billing and inquiries

PSEG has enhanced its online presence with a robust digital platform that allows customers to manage their accounts, view bills, and make payments. In 2024, approximately 60% of customers utilized online services for billing and inquiries, reflecting a shift towards digital engagement. The total online transactions recorded in Q3 2024 were approximately 1.2 million.

Community outreach programs

PSEG is actively involved in community outreach programs, aiming to educate and engage customers about energy efficiency and sustainability. In 2024, PSEG allocated $15 million to various community initiatives, including energy efficiency workshops and partnerships with local non-profits, reaching over 200,000 residents across New Jersey.

Partnerships with local businesses

PSEG has established partnerships with over 300 local businesses to promote energy efficiency programs and renewable energy solutions. These collaborations have resulted in a reported $25 million in energy savings for businesses participating in PSEG’s programs during the nine months ended September 30, 2024.

Channel Type	Details	Customer Engagement	Financial Impact
Direct customer service centers	1.5 million customer accounts	High	Cost of operations: $10 million annually
Online platforms	60% customer usage for billing/inquiries	Medium	Transaction volume: 1.2 million
Community outreach programs	$15 million allocated in 2024	High	Engagement of 200,000 residents
Partnerships with local businesses	Over 300 partnerships established	Medium	$25 million in energy savings reported

Public Service Enterprise Group Incorporated (PEG) - Business Model: Customer Segments

Residential energy consumers

Public Service Enterprise Group Incorporated (PEG), through its subsidiary Public Service Electric and Gas Company (PSE&G), serves approximately 2.3 million residential customers in New Jersey. This segment accounts for a significant portion of PSE&G's operating revenues, which reached $6.3 billion from residential electric and gas services for the nine months ended September 30, 2024.

Customer Segment	Number of Customers	Operating Revenues ($ Millions)
Residential Energy Consumers	2,300,000	6,300

Commercial and industrial clients

PSE&G also caters to approximately 300,000 commercial and industrial customers. This segment is crucial for PSEG's revenues, generating about $2.1 billion in operating revenues for the nine months ended September 30, 2024. The diverse needs of these clients require tailored energy solutions, including demand response programs and energy efficiency initiatives.

Customer Segment	Number of Customers	Operating Revenues ($ Millions)
Commercial and Industrial Clients	300,000	2,100

Local government and municipalities

PSEG partners with local governments and municipalities for energy services, particularly in managing public utilities and facilitating energy efficiency projects. The revenues from these partnerships are included in the broader commercial segment, contributing significantly to PSEG's operating income, which totaled $1.48 billion for the nine months ended September 30, 2024.

Customer Segment	Revenue Contribution ($ Millions)
Local Government and Municipalities	Included in Commercial Revenues

Renewable energy project participants

PSEG is actively involved in renewable energy initiatives, collaborating with project participants to expand its clean energy offerings. As of September 30, 2024, PSEG had invested approximately $1.9 billion in renewable energy projects, including solar and wind. This focus aligns with the increasing demand for sustainable energy solutions among consumers and businesses alike.

Customer Segment	Investment in Renewable Energy ($ Millions)
Renewable Energy Project Participants	1,900

Public Service Enterprise Group Incorporated (PEG) - Business Model: Cost Structure

Infrastructure maintenance and upgrades

The cost associated with infrastructure maintenance and upgrades for Public Service Enterprise Group (PSEG) is substantial. For the nine months ended September 30, 2024, the gross additions to long-lived assets amounted to $2,157 million. This investment is crucial for ensuring the reliability and efficiency of the energy distribution network.

Regulatory compliance costs

PSEG incurs significant expenses related to regulatory compliance. In 2024, the company reported an increase in income tax expense of $100 million, which was primarily driven by changes in the flowback of excess deferred income tax benefits. Additionally, PSEG's operational costs related to compliance with various regulations, including those enforced by the Federal Energy Regulatory Commission (FERC) and the New Jersey Board of Public Utilities (BPU), are embedded in the operational and maintenance costs.

Employee salaries and benefits

Employee compensation is a major component of PSEG's cost structure. For the nine months ended September 30, 2024, the operation and maintenance expenses totaled $2,415 million, reflecting a $136 million increase compared to the previous year. This increase includes salaries, benefits, and other employee-related costs, which are essential for maintaining a skilled workforce to support operations.

Energy procurement and operational costs

Energy costs represent a significant portion of PSEG's overall expenses. For the three months ended September 30, 2024, energy costs were reported at $899 million, an increase from $831 million in the prior year. Over the nine-month period, energy costs totaled $2,628 million, up from $2,517 million in the previous year. This increase is attributed to fluctuations in commodity prices and the costs associated with energy procurement, which are critical for meeting customer demand.

Cost Category	Q3 2024 ($ Millions)	Q3 2023 ($ Millions)	Change ($ Millions)	Nine Months 2024 ($ Millions)	Nine Months 2023 ($ Millions)	Change ($ Millions)
Energy Costs	899	831	68	2,628	2,517	111
Operation and Maintenance	808	792	16	2,415	2,279	136
Depreciation and Amortization	294	282	12	874	843	31
Interest Expense	227	185	42	650	550	100

Public Service Enterprise Group Incorporated (PEG) - Business Model: Revenue Streams

Tariffs from Electricity and Gas Sales

Public Service Enterprise Group (PSEG) generates significant revenue through tariffs associated with electricity and gas sales. For the nine months ended September 30, 2024, operating revenues from electricity and gas sales totaled approximately $6.335 billion, up from $5.954 billion in the same period of the previous year, reflecting a growth of 6%.

In the third quarter of 2024 alone, PSEG reported operating revenues of $2.139 billion, indicating an increase of $140 million compared to the same quarter in 2023.

Service Fees for Energy Efficiency Programs

PSEG also generates revenue through service fees associated with energy efficiency programs. For the nine months ended September 30, 2024, operation and maintenance expenses, which include costs related to energy efficiency programs, were $1.395 billion, slightly up from $1.348 billion in the same period of 2023. The increase in these expenses is indicative of PSEG's ongoing investment in energy efficiency initiatives, which are designed to enhance customer savings and reduce overall energy demand.

For the three months ended September 30, 2024, PSEG reported a $33 million amortization of regulatory investment expenditures related to energy efficiency programs.

Revenue from Renewable Energy Projects

PSEG is actively expanding its revenue streams through investments in renewable energy projects. The company has seen an increase in revenues from renewable energy certificates, contributing $783 million to revenues from contracts with customers for the nine months ended September 30, 2024. This is part of PSEG's broader strategy to enhance its portfolio in renewable energy, aligning with market trends toward clean energy solutions.

Furthermore, revenues from renewable energy projects have been bolstered by federal and state incentives, which are critical for the financial viability of these projects.

Government Incentives and Grants for Clean Energy Initiatives

PSEG benefits from various government incentives and grants aimed at promoting clean energy initiatives. These incentives significantly impact the company's financial performance and support its transition to a more sustainable energy portfolio. For instance, the company recorded net income of $1.486 billion for the nine months ended September 30, 2024, which includes the impact of these incentives.

In addition, PSEG's total operating revenues have been positively influenced by regulatory frameworks that support clean energy initiatives, allowing the company to capitalize on government programs.

Revenue Stream	Q3 2024 Revenue (in millions)	YTD Revenue 2024 (in millions)	YTD Revenue 2023 (in millions)	Growth (%)
Electricity and Gas Sales	$2,139	$6,335	$5,954	6%
Energy Efficiency Programs		$1,395	$1,348	3.5%
Renewable Energy Projects		$783
Government Incentives/Grants		$1,486 (Net Income)	$2,017	-26.3%

Updated on 16 Nov 2024

Resources:

1. Public Service Enterprise Group Incorporated (PEG) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Public Service Enterprise Group Incorporated (PEG)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Public Service Enterprise Group Incorporated (PEG)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.