NEWARK – The New Jersey Board of Public Utilities (BPU) has approved a base rate increase for Public Service Electric & Gas Co. (PSE&G), marking the company’s first rate hike since 2018. The increase, which is set at approximately one percent annually, will take effect on October 15, 2024, and is expected to raise the typical combined residential electric and gas customer bill by 7%, or $15 per month.

The settlement, reached between PSE&G, the BPU staff, the New Jersey Division of Rate Counsel, and other parties, aims to allow PSE&G to continue providing dependable service while maintaining the financial stability needed to support a resilient energy grid. These adjustments follow a 5% reduction in PSE&G gas bills that began on October 1, 2024. When combined with the earlier reduction, the net impact on a typical residential bill will be around a 5% increase, or an additional $11 per month.

This rate adjustment is a response to the capital investments PSE&G has made over the past six years to enhance the distribution system, modernize infrastructure, and cover increasing operational costs such as wages and benefits. The company has emphasized its commitment to cost management and service quality in light of the growing reliance on electricity.

PSE&G is also pointing customers towards available assistance programs, such as the Low Income Home Energy Assistance Program (LIHEAP) and the New Jersey Universal Service Fund, to help manage utility costs. In 2023, over 200,000 PSE&G customers received energy assistance totaling $218 million, with $92 million in outstanding balances forgiven through the Fresh Start Program.

The company continues to encourage customers to utilize energy efficiency programs and tools to help reduce consumption and manage expenses. PSE&G, a subsidiary of Public Service Enterprise Group Inc. (NYSE:), is recognized for its reliable service, having won multiple awards including the ReliabilityOne Award and the ENERGY STAR Partner of the Year award.

The information in this article is based on a press release statement from PSE&G.

In other recent news, Public Service Enterprise Group (PSEG) has seen a series of analyst upgrades and downgrades. BofA Securities raised its price target from $88 to $97, maintaining a Buy rating, citing a recent settlement agreement with the New Jersey Board of Public Utilities. Evercore ISI also raised its target to $95, while Ladenburg Thalmann upgraded the stock to ‘Buy’, increasing their 2026 and 2027 earnings per share estimates for PSEG to $4.55 and $4.82, respectively. Jefferies initiated coverage with a Hold rating and a price target of $85.00, and JPMorgan reduced its price target to $102.

The company reported decreased earnings for the second quarter of 2024, with earnings falling to $0.87 per share from $1.18 per share in the same quarter of the previous year. Despite the decrease, PSEG maintains its full-year expectations, anticipating an increase in gross margin in the fourth quarter.

In other company developments, PSEG is expanding its involvement in data centers and clean energy initiatives in New Jersey. These ventures have the potential to lead to further capacity expansion, particularly in nuclear power. The company plans to update its capital plan by the end of the year or the beginning of the next year, with confidence in meeting its long-term compound annual growth forecast.

InvestingPro Insights

As Public Service Enterprise Group Inc. (NYSE:PEG), the parent company of PSE&G, navigates this regulatory approval for a rate increase, investors may find additional context from InvestingPro data particularly relevant.

The company’s market capitalization stands at $44.61 billion, reflecting its significant presence in the utility sector. PEG’s P/E ratio of 27.19 suggests that investors are willing to pay a premium for its shares, possibly due to its stable business model and consistent dividend payments.

Speaking of dividends, InvestingPro Tips highlight that PEG “has maintained dividend payments for 54 consecutive years” and “has raised its dividend for 12 consecutive years.” This impressive track record of dividend consistency aligns well with the company’s emphasis on financial stability mentioned in the article. The current dividend yield is 2.64%, which may be attractive to income-focused investors.

The company’s focus on infrastructure investments and modernization, as outlined in the article, is reflected in its financial performance. InvestingPro data shows that PEG’s revenue for the last twelve months as of Q2 2024 was $10.24 billion, with an operating income of $2.28 billion. The operating income margin of 22.25% indicates efficient management of operational costs, which is crucial given the rate increase’s partial aim to cover rising operational expenses.

Another InvestingPro Tip notes that the “stock generally trades with low price volatility,” which could be appealing to risk-averse investors seeking stability in the utility sector. This characteristic is particularly relevant given the regulatory environment and the company’s focus on long-term infrastructure investments.

For investors interested in a more comprehensive analysis, InvestingPro offers 12 additional tips for PEG, providing a deeper understanding of the company’s financial health and market position.

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