新泽西仍具挑战PJM电力走高：维持持有

NORTH AMERICA | Power & UtilitiesPSEG Equity ResearchJuly 20, 2026 NJ Remains Challenged While PJM PowersHigher: Maintain Hold. Maintain Neutral and lower PT -12% with shares fairly valued. Cutting utilityEPS ~$0.15 for transmission RTO loss and energy efficiency order. Theutility negatives are largely offset by higher merchant power in the long-term.NJ affordability rhetoric is turning to actions with an overhang on shares.Consultant report describes ROE and equity ratio cuts as "low regret" optionsfor near-term affordability benefits. 2Q26 -5% miss with FY26 in-line. We maintain Neutral on PEG shares and are net more cautious, despite the underperformance.Utility earnings have been directly impaired by the RTO adder removal bill and BPU order on energyefficiency. The consultant report describing lower authorized ROEs and equity ratio as a “lowregrets” option further is an overhang. While merchant power earnings are clearly higher, these areless durable and potentially peaking. After New Jersey had been one of the most vocally negativejurisdictions in 2025 during the election, investors expected there to be more rhetoric than actionafter the election. On the contrary, NJ utility earnings power has been negatively impacted in 2026,potentially more than any state we cover.NJ earnings power has been negatively impacted and theconsultant report represents an overhang. We do not see a probable positive catalyst for PEG sharesin 2026. Energy efficiency (EE) order cuts ROEs -150bp for lower risk spending and introduces anearnings test.Electric utilities will shift to a Lost Revenue Adjustment Mechanism (LRAM) with anearnings test; PSE&G described the earnings test as "obviously inappropriate".The EE proceedinghas largely flown under-the-radar from our investor discussions but was a troubling update. The directimpact of the EE Order are notable but the implications are potentially more meaningful. The BPU remainshyper-focused on affordability and there is now evidence of a lower ROE for lower risk investment whichcould spread to other areas. Yet further cautious datapoints drive EPSlower - offset by Power outlook improving.Expect shares to be further pressured as NJremains near epicenter of the affordabilitydebatenationally.All is not resolved asnew BPU leadership coupled with emergingscrutiny of spend and returns in legislationleave yet further avenues of scrutiny. We cut 2029/2030 PSE&G utility EPS -3%: -$0.14 and -$0.17.This represents ~$0.08 impactfor lower transmission ROE and ~$0.07 for reduced energy efficiency investments at a -150bplower assumed ROE.Ournew$4.42 2029 utility EPS is essentially the same as ourprior$4.41 2028,highlighting that the regulated utility effectively lost a year of EPS growth. Paul Zimbardo * | Equity Analyst+1 (212) 778-8497 | pzimbardo@jefferies.comJulien Dumoulin-Smith * | Equity AnalystExhibit 1 - New Jersey Energy Efficiency: PlanYear (PY) 7 Performance Incentive MechanismThe Energy Efficiency Order is a directlynegative update for earnings power and hasadverse implications on prospective regulation. We increase Power and other EPS +13-21%: +$0.12 and +$0.16.Blended power prices haveincreased ~$4/MWh since our last refresh, representing ~+$0.20 on a fully open basis, before thefinancing impacts. Note that the weaker utility cash flows have an adverse impact on financing. The2030 earnings mix shifts -3pp to 84% utility.This is a net negative update for valuation as we apply alower P/E multiple to merchant earnings versus regulated earnings. 2Q26 EPS miss:We forecast $0.79 vs $0.83 Consensus. FY26 +/-1% Consensus/guidance. +1 (212) 284-2175 | iergovic@jefferies.comJamieson Ward, CFA * | Equity Analyst+1 (281) 774-2081 | jamieson.ward@jefferies.com.Source: New Jersey Board of Public Utilities & Jefferies LLC.Docket: QO26070382 Luke Fenker * | Equity Associate+1 (713) 308-4523 | lfenker@jefferies.com Qudrat Qureshi * | Equity Associate(646) 530-5925 | qqureshi@jefferies.com The Long View: PSEG Investment Thesis PEG is 80%+ regulated New Jersey-oriented utility with the balance related tovaluable merchant nuclear plants in NJ/PA. PEG's strong story was derailedby high electric rates in 2025 and becoming the center of the election cyclewith the New Jersey Governor Mikie Sherrill focusing her attention on a utilityrate freeze. A solid utility story now needs to work within the confines of a lessaccommodating regime, leading to a slower pace of investments, lower ratesof returns, and increasing reliance on unregulated earnings growth. Additionalconsiderations have reduced the probability of the nuclear plants securingpremium data center contracts. More upside than downside purely from anuclear deal, but low conviction. Downside Scenario,$68, -14% Upside Scenario,$99, +26% Base Case,$78, -1% Upon successful announcement of data centeroff-takers for the nuclear portfolio, the associatedPower cash flows should re-rate higher. Additional,after a successful PSE&G rate c