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Asset Retirement Obligations (AROs) | 12 Months Ended
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Dec. 31, 2023
Asset Retirement Obligation [Line Items] |
Asset Retirement Obligations (AROs) | Asset Retirement Obligations (AROs) PSEG and PSE&G recognize liabilities for the expected cost of retiring long-lived assets for which a legal obligation exists to remove or dispose of an asset or some component of an asset at retirement. These AROs are recorded at fair value in the period in which they are incurred and are capitalized as part of the carrying amount of the related long-lived assets. PSEG’s subsidiaries, except for PSE&G, accrete the ARO liability to reflect the passage of time with the corresponding expense recorded in O&M. PSE&G, as a rate-regulated entity, recognizes Regulatory Assets or Liabilities as a result of timing differences between the recording of costs and costs recovered through the rate-making process. PSE&G has conditional AROs primarily for legal obligations related to the removal of treated wood poles and the requirement to seal natural gas pipelines at all sources of gas when the pipelines are no longer in service. PSE&G does not record an ARO for its protected steel and poly-based natural gas lines, as management believes that these categories of gas lines have an indeterminable life. PSEG’s other ARO liability primarily relates to decommissioning of its nuclear power plants in accordance with NRC requirements. PSEG has an independent external trust that is intended to fund decommissioning of its nuclear facilities upon termination of operation. For additional information, see Note 10. Trust Investments. PSEG also identified conditional AROs related to PSEG’s retained fossil generation sites primarily related to liabilities for removal of asbestos. To estimate the fair value of its other AROs, PSEG uses a probability weighted, discounted cash flow model which, on a unit by unit basis, considers multiple outcome scenarios that include significant estimates and assumptions, and are based on third-party decommissioning cost estimates, cost escalation rates, inflation rates and discount rates. Updated nuclear cost studies are obtained triennially unless new information necessitates more frequent updates. The most recent cost study was done in 2021. When assumptions are revised to calculate fair values of existing AROs, generally, the ARO balance and corresponding long-lived asset are adjusted which impact the amount of accretion and depreciation expense recognized in future periods. For PSE&G, Regulatory Assets and Regulatory Liabilities result when accretion and amortization are adjusted to match rates established by regulators resulting in the regulatory deferral of any gain or loss. The changes to the ARO liabilities for PSEG and PSE&G during 2022 and 2023 are presented in the following table:
|  |  | PSEG |  | PSE&G |  | PSEG Power & Other |
|  |  | Millions |
| ARO Liability as of January 1, 2022 |  | $ | 1,573 |  |  | $ | 363 |  |  | $ | 1,210 |  |
| Liabilities Settled |  | (15) |  |  | (15) |  |  | — |  |
| Accretion Expense |  | 50 |  |  | — |  |  | 50 |  |
| Accretion Expense Deferred and Recovered in Rate Base (A) |  | 17 |  |  | 17 |  |  | — |  |
| Revision to Present Values of Estimated Cash Flows |  | (126) |  |  | 19 |  |  | (145) |  |
| ARO Liability as of December 31, 2022 |  | $ | 1,499 |  |  | $ | 384 |  |  | $ | 1,115 |  |
| Liabilities Settled |  | $ | (13) |  |  | $ | (13) |  |  | $ | — |  |
| Accretion Expense |  | 51 |  |  | — |  |  | 51 |  |
| Accretion Expense Deferred and Recovered in Rate Base (A) |  | 16 |  |  | 16 |  |  | — |  |
| Revision to Present Values of Estimated Cash Flows |  | (85) |  |  | 14 |  |  | (99) |  |
| ARO Liability as of December 31, 2023 |  | $ | 1,468 |  |  | $ | 401 |  |  | $ | 1,067 |  |
(A)Not reflected as expense in Consolidated Statements of Operations. In February 2022, the NRC issued an order related to its review of the subsequent license renewal (SLR) application for the Peach Bottom nuclear units. While the NRC had previously granted the SLR to the Peach Bottom units, the NRC was responding to pending motions that had not previously been adjudicated. In its decision, the NRC concluded that the previous environmental review required by the National Environmental Policy Act (NEPA) was incomplete because it did not adequately address environmental impacts resulting from extending the units’ licenses by 20 years. As a result, at the direction of the NRC, the NRC staff changed the expiration dates for the licenses back to 2033 and 2034, until the completion of the NEPA analysis. The NRC directed, however, that the subsequently renewed licenses themselves remain in effect. The NRC also stated that it fully expects that the staff will complete its update of the NEPA analysis before 2033. As such, at this time, PSEG has not adjusted the useful lives or the assumed shutdown probabilities assigned to the ARO of the units as PSEG believes that the licenses will be updated to reflect the approved 2053 and 2054 expiration dates within the current license period. PSEG will continue to monitor this matter for further developments and any change to the estimated useful lives and ARO probabilities could have an adverse financial statement impact, which may be material. In August 2022, the Inflation Reduction Act (IRA) was signed into law expanding incentives promoting carbon-free generation. The enacted legislation established a PTC for electricity generation using nuclear energy set to begin January 1, 2024 and continue through 2032. As a result, PSEG reassessed the Asset Retirement Cost (ARC) and ARO assumptions related to its nuclear units. This resulted in a decrease to the ARC asset and ARO liability of $145 million primarily due to an adjustment in the assumed estimated timing of cash flows associated with decommissioning the units.
Public Service Electric and Gas Company |
Asset Retirement Obligation [Line Items] |
Asset Retirement Obligations (AROs) | Asset Retirement Obligations (AROs) PSEG and PSE&G recognize liabilities for the expected cost of retiring long-lived assets for which a legal obligation exists to remove or dispose of an asset or some component of an asset at retirement. These AROs are recorded at fair value in the period in which they are incurred and are capitalized as part of the carrying amount of the related long-lived assets. PSEG’s subsidiaries, except for PSE&G, accrete the ARO liability to reflect the passage of time with the corresponding expense recorded in O&M. PSE&G, as a rate-regulated entity, recognizes Regulatory Assets or Liabilities as a result of timing differences between the recording of costs and costs recovered through the rate-making process. PSE&G has conditional AROs primarily for legal obligations related to the removal of treated wood poles and the requirement to seal natural gas pipelines at all sources of gas when the pipelines are no longer in service. PSE&G does not record an ARO for its protected steel and poly-based natural gas lines, as management believes that these categories of gas lines have an indeterminable life. PSEG’s other ARO liability primarily relates to decommissioning of its nuclear power plants in accordance with NRC requirements. PSEG has an independent external trust that is intended to fund decommissioning of its nuclear facilities upon termination of operation. For additional information, see Note 10. Trust Investments. PSEG also identified conditional AROs related to PSEG’s retained fossil generation sites primarily related to liabilities for removal of asbestos. To estimate the fair value of its other AROs, PSEG uses a probability weighted, discounted cash flow model which, on a unit by unit basis, considers multiple outcome scenarios that include significant estimates and assumptions, and are based on third-party decommissioning cost estimates, cost escalation rates, inflation rates and discount rates. Updated nuclear cost studies are obtained triennially unless new information necessitates more frequent updates. The most recent cost study was done in 2021. When assumptions are revised to calculate fair values of existing AROs, generally, the ARO balance and corresponding long-lived asset are adjusted which impact the amount of accretion and depreciation expense recognized in future periods. For PSE&G, Regulatory Assets and Regulatory Liabilities result when accretion and amortization are adjusted to match rates established by regulators resulting in the regulatory deferral of any gain or loss. The changes to the ARO liabilities for PSEG and PSE&G during 2022 and 2023 are presented in the following table:
|  |  | PSEG |  | PSE&G |  | PSEG Power & Other |
|  |  | Millions |
| ARO Liability as of January 1, 2022 |  | $ | 1,573 |  |  | $ | 363 |  |  | $ | 1,210 |  |
| Liabilities Settled |  | (15) |  |  | (15) |  |  | — |  |
| Accretion Expense |  | 50 |  |  | — |  |  | 50 |  |
| Accretion Expense Deferred and Recovered in Rate Base (A) |  | 17 |  |  | 17 |  |  | — |  |
| Revision to Present Values of Estimated Cash Flows |  | (126) |  |  | 19 |  |  | (145) |  |
| ARO Liability as of December 31, 2022 |  | $ | 1,499 |  |  | $ | 384 |  |  | $ | 1,115 |  |
| Liabilities Settled |  | $ | (13) |  |  | $ | (13) |  |  | $ | — |  |
| Accretion Expense |  | 51 |  |  | — |  |  | 51 |  |
| Accretion Expense Deferred and Recovered in Rate Base (A) |  | 16 |  |  | 16 |  |  | — |  |
| Revision to Present Values of Estimated Cash Flows |  | (85) |  |  | 14 |  |  | (99) |  |
| ARO Liability as of December 31, 2023 |  | $ | 1,468 |  |  | $ | 401 |  |  | $ | 1,067 |  |
(A)Not reflected as expense in Consolidated Statements of Operations. In February 2022, the NRC issued an order related to its review of the subsequent license renewal (SLR) application for the Peach Bottom nuclear units. While the NRC had previously granted the SLR to the Peach Bottom units, the NRC was responding to pending motions that had not previously been adjudicated. In its decision, the NRC concluded that the previous environmental review required by the National Environmental Policy Act (NEPA) was incomplete because it did not adequately address environmental impacts resulting from extending the units’ licenses by 20 years. As a result, at the direction of the NRC, the NRC staff changed the expiration dates for the licenses back to 2033 and 2034, until the completion of the NEPA analysis. The NRC directed, however, that the subsequently renewed licenses themselves remain in effect. The NRC also stated that it fully expects that the staff will complete its update of the NEPA analysis before 2033. As such, at this time, PSEG has not adjusted the useful lives or the assumed shutdown probabilities assigned to the ARO of the units as PSEG believes that the licenses will be updated to reflect the approved 2053 and 2054 expiration dates within the current license period. PSEG will continue to monitor this matter for further developments and any change to the estimated useful lives and ARO probabilities could have an adverse financial statement impact, which may be material. In August 2022, the Inflation Reduction Act (IRA) was signed into law expanding incentives promoting carbon-free generation. The enacted legislation established a PTC for electricity generation using nuclear energy set to begin January 1, 2024 and continue through 2032. As a result, PSEG reassessed the Asset Retirement Cost (ARC) and ARO assumptions related to its nuclear units. This resulted in a decrease to the ARC asset and ARO liability of $145 million primarily due to an adjustment in the assumed estimated timing of cash flows associated with decommissioning the units.

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- Definition The entire disclosure for an asset retirement obligation and the associated long-lived asset. An asset retirement obligation is a legal obligation associated with the disposal or retirement from service of a tangible long-lived asset that results from the acquisition, construction or development, or the normal operations of a long-lived asset, except for certain obligations of lessees. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 410 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 1 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147481850/410-20-50-1 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 410 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//410-20/tableOfContent Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Section 50 -Paragraph 2 -SubTopic 20 -Topic 410 -Publisher FASB -URI https://asc.fasb.org//1943274/2147481850/410-20-50-2 + Details
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