US Electric Utilities: New Jersey to Remove Transmission ROE Adder to Manage Affordability

Research evidence excerpt

US Electric Utilities: New Jersey to Remove Transmission ROE Adder to Manage Affordability

dividend paying utility, the value of the stock is likely to move with interest rates.

Capital Markets – The financial outlook for PEG is dependent on access to financial market to fund its growth at reasonable

pricing. In addition, the value of its assets to third parties is also dependent on the state of the capital markets.

Politics – The nuclear business outlook is dependent on the US federal government’s policy change regarding production tax

credits, geopolitical relationships which impact uranium prices and quark spreads, and US general support for nuclear over

other forms of generation.

Regulatory – PSE&G is subject to regulation by the BPU. Such regulation affects almost every aspect of their business. Failure

to comply with regulations could have a material adverse impact on their ability to operate and could result in fines, penalties,

and sanctions. The retail rates for electric and gas distribution services are established in a base rate proceeding and remain in

effect until a new base rate proceeding is filed and concluded. In addition, the utility has received approval for several clause

recovery mechanisms, some of which provide for recovery of costs and earn returns on authorized investments. These clause

mechanisms require periodic updates to be reviewed and approved by the BPU and are subject to prudency reviews. Inability

to obtain fair or timely recovery of all its costs, including a return of, or on, investments in rates, could have a material adverse

impact on its results of operations and cash flows. In addition, if legislative and regulatory structures were to evolve in such a