PSEG's GAAP EPS fell to $0.67 from $1.17 on a $258M mark-to-market hedge loss, but non-GAAP operating EPS rose 11.7% to $0.86 on higher nuclear capacity prices; 2026 guidance of $4.28–$4.40 kept.
Revenue
$2.6B
-8.9% YoY
Net income
$334M
-42.9% YoY
Diluted EPS
$0.67
-42.7% YoY
Operating margin
18.0%
Overview
Public Service Enterprise Group (PSEG) owns PSE&G, New Jersey's largest electric and gas utility (about 2.4 million electric and 1.9 million gas customers), plus a 3,758 MW fleet of nuclear plants in New Jersey and Pennsylvania. Its second quarter of 2026 (three months to June 30) gives two very different pictures depending on which earnings line you read:
GAAP net income fell 43%, from $585 million to $334 million, and diluted EPS dropped from $1.17 to $0.67.
Non-GAAP operating earnings rose 11%, from $384 million to $425 million, or from $0.77 to $0.86 per share.
Almost the entire gap comes from one non-cash accounting item at the nuclear business: a $258 million pre-tax mark-to-market loss on power-sale hedges this quarter, against a $190 million gain a year earlier. The utility itself grew modestly and the nuclear fleet ran well. Management kept its full-year 2026 guidance of $4.28–$4.40 per share of non-GAAP operating earnings.
Key figures
Metric
Q2 2026
Q2 2025
YoY Change
Operating revenues
$2,554M
$2,805M
-8.9%
Operating income
$461M
$817M
-43.6%
Operating margin
18.0%
29.1%
-11.1 pts
Net income (GAAP)
$334M
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Operating margin is the share of revenue left after the costs of running the business (energy purchases, operations and maintenance, depreciation), before interest and tax. Non-GAAP operating earnings is PSEG's own measure: it strips out gains and losses on its nuclear decommissioning trust fund and mark-to-market swings on hedges. It is not a GAAP figure; PSEG's reconciliation is in its earnings release.
Why GAAP profit fell while "operating" profit rose
PSEG's nuclear business sells much of its future output in advance through hedge contracts. Accounting rules require those contracts to be re-valued every quarter at current forward power prices; this is "mark-to-market" (MTM). If forward prices move against the contracts, PSEG books a loss even though no cash has changed hands and the power hasn't been delivered yet.
According to the 10-Q, the PSEG Power & Other segment's generation revenues fell $387 million, and the main reason was "a net decrease of $450 million due to MTM losses in 2026 as compared to MTM gains in 2025": $370 million from changes in forward prices and $80 million from positions reclassified to realized as they settled. That is why consolidated revenue dropped 8.9% and operating income nearly halved.
The reconciliation from GAAP net income to operating earnings for the quarter:
Item (pre-tax unless noted)
Q2 2026
Q2 2025
Net income (GAAP)
$334M
$585M
(Gain) loss on nuclear decommissioning trust
($153M)
($108M)
(Gain) loss on mark-to-market
$258M
($190M)
Tax effect of these items
($14M)
$97M
Non-GAAP operating earnings
$425M
$384M
The decommissioning-trust line works in the opposite direction: that fund, which holds investments set aside to eventually dismantle the nuclear plants, produced a $153 million pre-tax gain this quarter versus $108 million a year ago, which is also excluded from operating earnings. Readers should weigh both measures. Operating earnings is the better guide to the recurring business, but MTM losses are not purely imaginary: they reflect that power already sold forward is now valued below where the forward market sits.
PSE&G: the regulated utility
The utility earned $342 million, up 3.0% from $332 million. PSE&G's revenue rose $106 million to $2,137 million, but much of that is pass-through: commodity revenues (+$64 million, mainly higher electric supply prices) and clause revenues (+$50 million) are offset dollar-for-dollar by matching costs, and PSE&G earns no margin on them.
What actually drives the utility's profit is delivery revenue: the return it is allowed to earn on money invested in poles, wires, gas mains and substations (its "rate base"). Delivery revenues rose $40 million, made up of a $17 million increase from delivery volumes, $13 million from its Green Program Recovery Charge programs (mainly energy efficiency) and $10 million more in transmission revenue from higher rate base.
Offsetting that:
Interest expense rose $13 million (to $174 million) from new debt and refinancing maturing debt at higher rates.
Depreciation rose $11 million as more new plant was placed in service.
Income tax rose $18 million (to $51 million), mainly because a tax benefit being passed back to customers through rates (the flowback of historic "mixed service cost" deductions) shrank.
Operations and maintenance rose $41 million, but $28 million of that was clause and renewable spending recovered from customers; the other $13 million was higher operating and service-company costs.
The earnings release also cites a prior-year transmission true-up (a one-off adjustment in Q2 2025) as a drag on the comparison.
Other operating revenue fell $48 million because zero-emission certificate (ZEC) collections, a New Jersey charge on customer bills that supported the state's nuclear plants, ended on May 31, 2025. That item is matched by lower energy costs, so it doesn't hit utility profit.
PSEG Power & Other: nuclear
Stripping out MTM and trust results, this segment's operating earnings rose from $52 million to $83 million (+60%). The 10-Q's drivers for the quarter's generation revenue:
Capacity revenue +$51 million, from higher capacity prices in the PJM grid market (payments generators receive for being available to supply power).
Realized prices and volumes +$37 million. Nuclear output rose 3.7% to 7.8 TWh, all of the increase from the New Jersey units (4,952 GWh vs. 4,670); the fleet ran at a 92.0% capacity factor.
ZEC revenue -$25 million, the tail end of the state subsidy program that concluded in May 2025. PSEG chose not to apply for another ZEC period because existing nuclear plants now receive a federal production tax credit (PTC) of up to $15/MWh through 2032, which acts as a price floor.
Interest expense rose $7 million from new and refinanced debt.
A related settlement landed this quarter. In May 2026 New Jersey's Board of Public Utilities ruled that plants receiving both ZECs and 2024 PTCs had effectively been paid twice, and PSEG Power refunded about $207 million to the state's electric distribution companies. PSE&G, in turn, is returning $166 million (including interest) to its customers over roughly 12 months starting June 1, 2026. PSEG had already recorded ZEC revenue net of estimated PTCs, so the refund settles an existing adjustment rather than appearing as a separate new loss this quarter.
First half and balance sheet
For the six months, revenue rose 6.2% to $6,402 million (mostly higher pass-through commodity prices), GAAP EPS fell from $2.35 to $2.15, and non-GAAP operating EPS rose from $2.20 to $2.41. Operating cash flow improved to $1,821 million from $1,527 million.
Total debt was $24.5 billion at June 30, up from $24.1 billion at year-end 2025, with short-term commercial paper and loans cut from $1,529 million to $950 million as long-term debt rose. PSE&G spent $1,252 million on capital projects in the half, mainly for grid reliability, plus $263 million on energy-efficiency programs. The dividend paid was $0.67 per share for the quarter, up from $0.63.
Takeaway: The 43% drop in GAAP earnings is a hedge-accounting swing, not a weaker business. Strip out the $258 million mark-to-market loss and the trust gains, and PSEG earned 11.7% more per share than a year ago, driven by higher nuclear capacity prices and output. The real pressure point is inside the utility, where higher interest, depreciation and tax costs absorbed most of the delivery-revenue growth, leaving PSE&G's profit up only 3%.
Outlook
Management reaffirmed 2026 non-GAAP operating EPS guidance of $4.28–$4.40 and its 6%–8% annual operating-earnings growth outlook through 2030, backed by a $24–$28 billion five-year capital plan that it says needs no new equity or asset sales. First-half operating EPS of $2.41 is about 56% of the guidance midpoint ($4.34).
Things to watch into the second half:
Storm costs and peak demand. In early July PSE&G restored about 380,000 customers after what management called one of the most damaging storms in its history, and hit a 14-year peak load of 10,446 MW on July 2. How storm costs are recovered will matter for Q3.
Customer bills. PSE&G filed to cut residential gas bills by 5% from October 1, alongside the ZEC-related customer refund. Affordability is a live political issue in New Jersey.
Data centers. New Jersey's Data Center Fair Share Act, signed in July 2026, requires a separate rate class so large data centers pay the full cost of the grid upgrades they need. The regulator has yet to set the details.
Nuclear contracts. Management is pursuing multi-year contracts for its nuclear output, which it treats as upside beyond its current forecast. Until then, GAAP results will keep carrying MTM swings from hedging.
Our read: the regulated utility is growing slowly and predictably as it invests, while the nuclear side supplies the upside through capacity prices, with the PTC as a floor. First-half results put the guidance range within reach, but the second half carries storm-cost timing and the usual quarter-to-quarter noise from hedge accounting, so GAAP EPS will stay a poor guide to the underlying trend.