PSEG To Sell $2 Billion ‘Fossil Generating Portfolio’

NEWARK, NJ — Public Service Enterprise Group (PSEG) will be selling its massive “fossil generating portfolio” of natural gas-fired power plants for nearly $2 billion, the company announced Thursday.

The deal is part of a larger plan to transition into a “clean energy, infrastructure-focused company,” spokespeople said.

PSEG has a headquarters in Newark and serves three-quarters of the state's population.

According to a news release, PSEG has entered into an agreement to sell its 6,750-megawatt fossil-generating portfolio to newly formed subsidiaries of ArcLight Energy Partners Fund VII, LP, a fund controlled by ArcLight Capital Partners, LLC.

The deal is expected to be completed late in the fourth quarter of 2021 or the first quarter of 2022, PSEG said.

Together with the sale of its Solar Source assets in June, PSEG expects to receive about $2.15 billion of after-tax net proceeds.

The sale of PSEG Fossil, part of PSEG’s Strategic Alternatives process announced in July 2020, comprises 13 generation units in New Jersey, Connecticut, Maryland and New York. The transactions are subject to the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, approval by the Federal Energy Regulatory Commission and certain state regulatory bodies, and other customary closing conditions.

According to PSEG:

“In connection with the transaction, beginning in the third quarter of 2021, the assets and liabilities of PSEG Fossil will be classified as assets held for sale. As a result, PSEG expects to record a pre-tax impairment charge of approximately $2,150 million to $2,225 million, employee severance and retention costs up to $25 million, debt redemption costs including a make-whole premium of approximately $280 million - $340 million, and potential impacts on employee pension and other post retirement plans, environmental remediation costs and other items.”

Spokespeople added:

“Also today, PSEG is updating its full-year 2021 non-GAAP operating earnings guidance to $3.50 to $3.65 per share, from $3.40 to $3.55 per share, reflecting the cessation of depreciation expense and lower interest expense related to the sale of the PSEG Fossil assets and repayment of PSEG Power’s outstanding debt. All other assumptions related to full-year 2021 guidance are unchanged, including the assumption of normal weather and plant operations, and that the portfolio is expected to continue to contribute to consolidated full-year 2021 financial results through the end of the year.”

“With today’s agreement, which is the result of a robust sale process, PSEG is on track to realize a more predictable earnings profile,” said Ralph Izzo, PSEG chair, president and CEO.

“Further, this transaction continues our evolution toward a clean energy, infrastructure-focused company that will enable our increasingly low-carbon economy,” Izzo said.

• See related article: PSEG To Invest $166M In Electric Vehicle Charging Stations In NJ
• See related article: PSEG Gets Green Light From NJ To Roll Out $700M Smart Meter Plan
• See related article: PSE&G Invests In Massive 'Wind Farm' Off New Jersey Coast

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