PSEG (PEG) Q3 2026 earnings review
PSEG nuclear profit rises, but its utility earnings dip
PSEG, New Jersey's largest electric and gas utility and nuclear plant operator, leaned on its nuclear fleet in the third quarter while its regulated utility profit slipped. Profit per share excluding one-offs edged up 2% to $1.15, as a 36% jump in nuclear division profit covered a slight drop at the utility. Reported net income fell 40% on paper losses from power hedges. Chief executive Ralph LaRossa kept the full-year outlook unchanged, which by our math leaves fourth-quarter profit per share growing about 8%.
| Profit per share, excluding one-offs | $1.15 +1.8% from a year ago |
|---|---|
| PSE&G regulated utility net income | $506M -1.7% from a year ago |
| PSEG Power & Other profit, excluding one-offs | $68M +36% from a year ago |
| Full-year profit per share outlook | Unchanged $4.28–$4.40 (middle: +7.2%) |
⚖️ Verdict: ⚪ Neutral
The story is unchanged because the full-year plan and five-year growth targets held steady, even though the mix of earnings shifted in the quarter. The good news is that the nuclear plants ran at 95.5% capacity without a refueling outage, paying for the group's grid investments. The bad news is that depreciation and interest on new grid spending outran customer billing rates enough to push utility profit down from a year ago.
The question now is how much of that unbilled grid spending PSEG can recover when it files its New Jersey rate case by year-end. Either regulators approve a straightforward catch-up in customer rates that restores utility profit growth, or state affordability politics cap returns and hold earnings near the bottom of the 6% to 8% long-term plan. The year-end rate filing and the 2027 outlook on the fourth-quarter call will settle it.
🐂 Bull Case
Nuclear Fleet Carried the Quarter's Profit Growth
PSEG Power & Other, the unit that runs the company's nuclear power plants in New Jersey and Pennsylvania, lifted total profit this quarter. Excluding one-offs, the division earned $68 million, up 36% from $50 million a year ago. The New Jersey energy group said the gain came from "lower operating and maintenance costs from the absence of the Hope Creek refueling outage in last year's third quarter, as well as higher realized prices".
- Nuclear electricity output: 8,172 gigawatt-hours, up 3.4% from a year ago
- Fleet capacity factor (the share of maximum possible power generated): 95.5%, up from 92.4% a year ago
- Power & Other operation and maintenance cost: $375 million, down 2.3% from $384 million
This matters because the nuclear plants generated the cash and profit growth that the regulated utility could not deliver this quarter. Higher contracted power prices and the June step-up in regional grid capacity payments helped offset higher taxes. Still, chief executive Ralph LaRossa noted that the Salem 1 reactor "entered its fall refueling following a 491-day breaker to breaker run", which will weigh on fourth-quarter maintenance costs.
What to watch: fourth-quarter profit at PSEG Power & Other and the 2026 nuclear output total against the 30 to 32 terawatt-hour plan. A strong fourth quarter despite the Salem 1 outage would show that higher power prices are lifting baseline earnings.
Five-Year Spending Plan Needs No New Shares
PSEG reaffirmed its long-term target to grow profit per share, excluding one-offs, by 6% to 8% a year through 2030. To drive that growth, the utility group plans to spend $24 billion to $28 billion on its grid and power plants over five years. LaRossa said PSEG can fund this entire capital plan "without the need to issue new equity or sell assets".
That pledge protects existing shareholders fromhaving their ownership diluted while the regulated asset base expands. Nine-month profit per share excluding one-offs reached $3.56, up 6.9% from $3.33 a year ago, keeping the company on pace for its full-year target. What to watch: the roll-forward of the five-year capital spending plan on the fourth-quarter call in early 2027, which will show if rising grid costs force the budget higher.
Positives this quarter didn't test
Two long-term growth opportunities from prior quarters received no new details in the third-quarter earnings release.
- Regional grid reliability bids: PSEG previously proposed bilateral generation projects to help solve regional power shortages, and the conference call or filing will show if negotiations advanced.
- New nuclear generation at Salem and Hope Creek: after New Jersey passed a law backing at least 1,100 megawatts of new nuclear power, the next update on site permits and state rules will set the timeline.
🐻 Bear Case
Utility Profit Dipped While Waiting for New Rates
"Our financial results for the third quarter and year-to-date period align with our expectations for the full-year," chief executive Ralph LaRossa said. Yet profit at PSE&G, the regulated electric and gas utility that provides nearly 90% of group earnings, fell 1.7% from a year ago to $506 million. The utility spent heavily on grid upgrades after July and September storms, and its operation and maintenance expenses rose 1.3 percentage points of segment revenue to 22.7%.
PSEG said new revenue from energy efficiency and transmission upgrades was "more than offset by higher depreciation and interest costs related to incremental investments not reflected in current rates". At PSE&G, depreciation rose by $14 million (up 0.6 percentage points of segment revenue to 11.5%) and interest expense climbed by $21 million (up 0.9 percentage points to 7.2%). Because New Jersey sets delivery rates using historical costs, the utility pays for new equipment before it can bill customers for it.
This gap between spending and billing is widening: utility profit grew 5.7% in the first quarter, slowed to 3.0% in the second, and turned negative in the third. What to watch: the terms of PSE&G's distribution base rate case filing due by year-end 2026. The requested revenue increase will show how much of this cost lag the utility can recover in 2027.
Rising Debt and Interest Costs Squeeze Utility Margins
Funding PSEG's capital program without issuing stock requires steady borrowing. Total debt reached $25.63 billion on September 30, up $1.56 billion since the start of the year and up 9.7% from $23.37 billion a year ago. Long-term debt rose by $2.01 billion over the first nine months to $24.56 billion, while short-term commercial paper and loans fell by $454 million.
That larger debt load is costing more to service as older bonds mature. Consolidated interest expense rose 10.7% from a year ago to $280 million in the third quarter, taking 9.3% of total revenue compared with 7.8% last year. What to watch: full-year 2027 profit guidance on the fourth-quarter call. It will show whether rate base growth can outrun higher interest bills and the January 2027 loss of a $40 million transmission return bonus.
Risks this quarter didn't answer
Five standing regulatory, market and legal concerns could not be read from the third-quarter press release and await the conference call or quarterly Form 10-Q filing.
- New Jersey utility business-model review (Executive Order 1): PSEG was due to file comments by September 18 on potential earnings-sharing or return caps, and its rate case proposal by year-end will test the political climate.
- Energy efficiency extension and transmission return cut: the company was due to file its energy efficiency plan by September 30 under a lower allowed return, ahead of a 0.5 percentage point transmission return cut in January 2027.
- Regional capacity market rules: grid operator price caps limit nuclear revenue upside through 2030, while potential charges for new grid power plants could raise customer utility bills.
- Nuclear power hedges for 2027 and 2028: management has not disclosed what share of future nuclear output is locked in or at what prices relative to federal tax credit floors.
- Environmental and rate disputes: the quarterly filing will update federal hearings on Roseland-Pleasant Valley transmission costs and cleanup liabilities at Passaic River and former coal sites.
👓 Other Themes
Paper Losses on Power Hedges Cut Reported Profit
Reported net income fell 40% from a year ago to $376 million, or $0.76 per share. The drop came from $251 million of pre-tax mark-to-market losses — paper adjustments on forward power sales contracts as wholesale electricity prices moved — and $21 million of losses in the nuclear decommissioning trust fund. PSEG strips both out of its operating earnings measure because the contracts settle over future periods.
Grid Supply and Affordability Pressure in New Jersey
Hot summer weather lifted third-quarter residential electric sales by 2%, while commercial and industrial electric volumes stayed flat. In its risk disclosures, PSEG highlighted "significant resource adequacy challenges that present affordability and reliability concerns" across the regional grid. Tight power supply and higher customer bills have made New Jersey policymakers sensitive to utility rate increases just as PSE&G prepares its year-end rate filing.
💲 Other KPIs
Revenue fell 6.4% from $3,226 million a year ago, after falling 8.9% in the second quarter and rising 19.4% in the first. PSE&G utility revenue edged down 0.4% to $2,526 million, while PSEG Power & Other revenue dropped 29.0% to $532 million on mark-to-market contract swings. Retail electric volume rose 1% to 11,898 million kilowatt-hours.
Cash generated from operations over the first nine months slipped 1.6% from $2,577 million a year ago, slowing from a 19.3% gain at the half-year mark. Cash used in investing activities — mainly grid and plant construction — rose 10.8% over the nine months to $2,282 million, with $831 million spent in the third quarter alone by our math.
Average diluted shares dipped 0.4% from 501 million a year ago and stayed level with the second quarter. The New Jersey utility group neither issued equity to fund its capital budget nor ran a major share buyback, returning cash instead through a $0.67 quarterly dividend per share, up 6.3% from $0.63 last year.
🔮 Guidance
Unchanged. The plan still calls for profit per share excluding one-offs to grow about 7.2% at the $4.34 middle of the range from $4.05 in 2025. By our math, after earning $3.56 in the first nine months, the middle of the range leaves $0.78 for the fourth quarter, up 8.3% from $0.72 a year ago. PSEG has met or beaten its annual target for 21 straight years.
Unchanged. The utility group kept its target to grow annual profit per share excluding one-offs by 6% to 8% a year through 2030. First set at the end of 2025 when management raised it from 5% to 7%, the target rests on growing the regulated utility asset base and keeping nuclear cash flows steady.
Unchanged. Management kept its five-year capital spending plan at $24 billion to $28 billion through 2030, funded without issuing new stock or selling power plants. Over 90% of the budget goes to regulated grid upgrades in New Jersey.
❓ Key Questions
What will the year-end utility rate case request?
PSE&G's profit dipped 1.7% in Q3 because depreciation and interest on new grid spending are not yet in customer bills. Investors need the size of the revenue request, the test year and the target return in the upcoming filing.
How much of 2027 and 2028 nuclear output is hedged?
PSEG Power carried the quarter's profit growth, and its 2026 output was roughly 95% hedged. With regional capacity prices capped through 2030, future profit growth depends on the locked-in prices and hedge percentages for 2027 and 2028.
What did PSEG propose in the September regulatory filings?
The company was scheduled to file comments on New Jersey's electric utility business-model review by September 18 and its energy efficiency extension plan by September 30. The release did not mention how those filings affect allowed returns.
Did data-center power inquiries grow or stay flat?
PSEG stopped updating its gigawatt pipeline of large-load data-center inquiries last quarter after citing data centers to justify its higher five-year spending plan. Did any inquiries convert into signed grid construction commitments in the third quarter?