The operator welcomes participants to the Public Service Enterprise Group's Third Quarter 2023 Earnings Conference Call and Webcast. The call will be recorded and available for replay on PSEG's Investor Relations website. The speakers, Ralph LaRossa and Dan Cregg, will discuss the company's financial results and address any questions. The call may contain forward-looking statements and non-GAAP financial measures. After the speakers' remarks, there will be a 30-minute Q&A session.

PSEG reported third quarter 2020 net income of $0.27 per share, with non-GAAP operating earnings of $0.85 per share. They are on track to meet their full year 2023 earnings guidance and reaffirmed their long-term earnings growth outlook. PSE&G has invested $1 billion in energy infrastructure in the third quarter and is on track to spend $3.7 billion for the full year 2023. They have completed over half of the planned smart meter replacements and have seen strong demand for their energy efficiency solutions.

PSEG is committed to supporting the energy transition and decarbonization of New Jersey's economy by upgrading its distribution system and adding new electric infrastructure. This will contribute to a projected rate base growth of 6% to 7.5% through 2027. The BPU has reset the start date for the second three-year energy efficiency period and outlined a robust continuation of EE in the state, with specific targets for utilities to meet. Additionally, the BPU has approved a settlement to extend PSEG's current GSMP II program and invest $900 million to replace cast iron and unprotected steel main. This investment will be recovered through periodic rate update clauses and future rate cases.

Through the GSMP II program, PSEG has reduced methane emissions by 22% and is on track to meet its long-term reduction target of 60% by 2030. The company's broader GSMP II filing, which includes plans for renewable natural gas and hydrogen blending, will be restarted after stakeholder proceedings. PSEG has also recently reached new labor agreements with its unions, providing cost certainty and helping to keep customer bills affordable. The company's natural gas bills remain among the lowest in the region and the BPU has approved a lower gas commodity charge for the upcoming heating season. In terms of nuclear operations, PSEG's fleet has operated at a high capacity factor, producing 24.3 terawatt hours of carbon-free energy.

PSEG's Salem Unit 1 has completed a successful run and is now undergoing a scheduled refueling outage. The company is working towards transitioning Hope Creek's reactor to a 24-month refueling cycle. PSEG's competitive transmission proposal has been recommended by PJM and is awaiting a final decision in December. The company is also committed to sustainability and has submitted targets to the science-based targets initiative. PSEG's business risk profile has improved following the sale of their fossil business and exit from offshore wind generation. They have also reduced pension variability and plan to pursue further mitigation in their upcoming rate case.

In this paragraph, the speaker discusses the company's decision to retain their carbon-free nuclear fleet and the positive impact it will have on their financial stability. They also mention upcoming plans for providing earnings guidance and updates on their capital investment and rate base projections. The call will then be turned over to Dan for further details on the company's operating results.

In the third quarter of 2023, PSEG reported net income of $139 million or $0.27 per share, an increase from the third quarter of 2022. Non-GAAP operating earnings were $425 million or $0.85 per share, slightly lower than the previous year. PSE&G reported net income of $401 million or $0.80 per share, with non-GAAP operating earnings of $403 million or $0.80 per share. The increase in earnings was driven by growth in transmission and distribution margins and lower O&M expenses, offset by lower pension income and higher depreciation and interest expenses. Compared to the third quarter of 2022, electric and gas margins were higher due to investment returns and clause recovery.

The third quarter of 2023 saw an increase in depreciation and interest expenses, as well as a decrease in pension income and OPEB credits. The weather was warmer than normal but cooler than the same quarter in 2022. PSE&G continues to invest in its energy efficiency program and has seen growth in the number of customers. The company is on track to invest $3.7 billion in a single year and has taken steps to limit the impact of its pension on earnings.

In February 2023, the BPU approved a change in PSE&G's method for calculating amortization for ratemaking purposes. This did not affect their forecasted earnings for 2023. PSEG Power & Other reported a net loss in the third quarter of 2023 due to a pension settlement charge related to a lift-out transaction. However, this did not have a significant impact on their non-GAAP operating earnings. PSEG Power also saw an increase in average price for their hedged output, resulting in a rise in gross margin for the third quarter of 2023.

The gross margin for PSEG improved in the third quarter due to higher generation and lower expenses. However, there were also some negative factors, such as lower capacity revenues and higher interest expense. The nuclear fleet has been running at a high capacity factor and is expected to continue producing a high amount of energy in the future. PSEG has hedged a significant portion of this production at favorable prices. The forecast for non-GAAP operating earnings for PSEG Power & Other remains unchanged for the full year.

PSEG Power & Other results are expected to be impacted by higher interest expense for the rest of the year. PSEG had $3.8 billion in available liquidity as of September 30, with $57 million in cash. PSEG Power had $350 million in net cash collateral postings, lower than last year. PSE&G issued $500 million and $400 million of secured medium-term notes in August, and retired $325 million of notes in September. In October, PSEG issued $600 million and $400 million of senior notes, with a positive fair value of $14 million. The proceeds will be used for general corporate purposes and to repay $750 million of debt in November. PSEG and PSEG Power also have outstanding variable rate term loans, with PSEG having $900 million swapped to a fixed rate. As of September 30, only 5% of total debt was at a variable rate, down from 10% at the end of 2022.

PSEG maintains a strong financial position with limited exposure to variable rate debt and reaffirms its full year 2023 earnings guidance. The company has taken steps to reduce pension volatility and does not expect any issues for 2024.

Dan Cregg and Ralph LaRossa discuss the company's performance and plans for the future. They have been able to minimize the effect of market movements on their budget and are ahead of plan on CapEx. There are no plans for equity issuance or sale of assets. Shar Pourreza asks a question about 2024.

The speaker discusses the upcoming year for PSEG, including the rate case filing and PTC guidance for nuclear energy. They address how they plan to incorporate various scenarios into their 2024 guidance and mention the importance of a swift resolution of the GRC. They also mention potential changes to interest rate assumptions and regulatory lag. The speaker states that they will finalize their plans and make assumptions based on current market conditions.

The company will soon release an overall guidance range for 2024 and will take into account both tailwinds and tail risks. The business is set up to minimize weather movements and pension variability. The company is not counting on anything above the PTC floor for nuclear PTC guidance and the refueling cycle at Hope Creek is progressing as expected.

The company plans to give 2024 guidance in December after completing their business planning process with the board. They do not anticipate needing to raise equity for their capital needs due to the potential for growth in transmission and energy efficiency opportunities. An update on their capital raise will be provided as they receive more information from PJM and the state on energy efficiency in the next three-year period.

The speaker mentions that the company will update their range of capital and will be able to fund it without the need for incremental debt. They also discuss their hedging strategy for nuclear PTCs and mention that they are anticipating clarity on the issue. They do not expect significant changes to their hedging approach for 2025. The speaker also mentions the rate case, but does not provide any further details.

Ralph LaRossa and Dan Cregg discuss the upcoming rate case and any changes that may affect the revenue requirement. They mention the possibility of including interest rates and pension expenses in the case, but overall, there are no major changes to their plans. They also remind listeners that this is the first rate case filing since 2018 and the impact of higher interest rates will not significantly affect the overall revenue requirement.

The speaker is pleased with the new leadership at the commission and is confident in their priorities and approach to settlements. They point to the recent decision to move forward with the gas system modernization program as evidence of the commission's alignment with state policies and desire to reach settlements. The speaker also mentions the higher run rate for the next two years in the settlement and minimal investments in areas of concern.

The company has filed for two initiatives related to renewable natural gas and hydrogen blending, and is committed to reducing methane emissions. The capital plan is within the expected range, and the company is participating in a hydrogen hub evaluation in the Northeast and Mid-Atlantic regions. They are proud to be part of the selected MACT II hub and see it as a potential source of long-term growth and economic development for the state.

The speaker believes there is an opportunity to place an electrolyzer in South Jersey and make use of existing pipelines and storage for hydrogen. They are waiting to see what rules come out from the IRA and how the PTC will interact with other credits. They have no expectation of taking on any commodity risk for hydrogen. They will help the state achieve economic growth and will not be participating in any equity. There may be a CapEx update in December and again in 2024. The expected EE filing may align with last year's CapEx update.

The company will provide a partial update on CapEx through 2027 in December, with more details to come in January. The upcoming filings for GSMP and EE are expected to result in an increase in opportunities for the company. There are multiple moving pieces, including the rate case proposal, PJM transmission, and a new load growth update from PJM, that will contribute to the company's rate base CAGR of 6% or more. The company expects this to be on the lower end of the 5% to 7% range. More details will be provided in January.

The speaker clarifies that they are not at the low end of the rate base CAGR and there is a lot of positive momentum, but nothing is set in stone yet. They will provide more information in December and January. Another speaker adds that there will be some incremental transmission spend and EE could see a lift, but there will be more updates in the future. The speaker also asks for clarification on the 6% to 7.5% rate base CAGR and if the plan will be rolled forward to 2028.

In response to a question about the company's earnings growth, Dan Cregg affirms the previously stated 6% to 7.5% range and mentions that they will provide more information in December and January. He also confirms that the nuclear PTC level will be consistent with others. The company's credit outlook was also mentioned.

Ralph LaRossa and Dan Cregg discuss the potential impact of the nuclear PTC on their metrics and thresholds. They have not received any updates from the parent level, but Dan's team is working to explain the situation to the treasury department. They are pleased with Moody's recognition of their work. There are no updates on the Salem 1 refueling outage, and the team is performing well. There is no specific timeline for the nuclear PTC, but they hope for it to be resolved soon.

Travis Miller from Morningstar asks Dan Cregg about the $200 million CapEx and whether it is for new projects or inflation on existing ones. Cregg explains that it is a combination of both and that there may be some changes in the future. Ralph LaRossa adds that there is interest in energy efficiency and they are keeping up with the support from the BPU. Miller also asks about New Jersey's offshore wind plans, but LaRossa says they are just reading the same information as everyone else.

The speaker is pleased with the decision that was made and expects to provide updates on cadence rate filing, 2024 guidance, earnings growth, and rate base CAGR in December. They also discuss plans for refinancing and addressing a bond due in June of next year. They mention that the market conditions are within their expected range. There is a question about potential changes at the parent company in response to a change in PEG Power outlook at Moody's.

The speaker, Ralph LaRossa, thanks the audience for their interest and discusses the company's recent accomplishments, including a gas system monetization plan, recognition in awards, lowering gas bills for customers, and refreshing the Board of Directors. He expresses pride in the team's ability to consistently execute on their plans and states that the company can be counted on. He ends by wishing the audience a happy Halloween.

The speaker wishes everyone a safe and healthy Halloween for both themselves and their families, and concludes the teleconference.

This summary was generated with AI and may contain some inaccuracies.