The paragraph introduces the Public Service Enterprise Group’s (PSEG) Third Quarter 2024 Earnings Conference Call and Webcast. Rob, the event operator, explains that all participants are in listen-only mode with a question-and-answer session scheduled for later. The conference, recorded on November 4, 2024, will be available for replay on PSEG’s Investor Relations website. Carlotta Chan welcomes participants and introduces key speakers, Ralph LaRossa (Chair, President, and CEO) and Dan Cregg (Executive VP and CFO). She mentions that relevant materials and slides are available on the IR website and notes that PSEG’s 10-Q will be filed later. Carlotta also highlights that the discussion will cover forward-looking statements and non-GAAP operating earnings, with necessary reconciliations and disclaimers provided. Ralph LaRossa then takes over the call.

In the call, PSEG announced its third-quarter 2024 financial results, with a net income of $1.04 per share, bringing the nine-month total to $2.97 per share. This is a notable improvement compared to the same period in 2023, which was affected by a pension lift-out. Non-GAAP operating earnings for Q3 2024 were $0.90 per share, totaling $2.84 for the first nine months, slightly down from the previous year. The company has updated its full-year 2024 non-GAAP operating earnings guidance to a narrowed range of $3.64 to $3.68 per share, reflecting new base distribution rates effective October 15 and significant gross margin realization from PSEG Power. Detailed financial insights will be provided later in the call.

In the third quarter, PSEG experienced normal summer weather in New Jersey following an unusually warm second quarter. Despite severe weather affecting other parts of the U.S., their service area had a calm hurricane season, allowing them to assist other regions. PSEG met its peak summer demand with reliable network performance and minimal outages. Their nuclear fleet continues to provide carbon-free energy and is attracting tech-based businesses to New Jersey. The company is exploring growth in nuclear energy, which could boost long-term earnings. PSEG also began scheduled refueling of Salem Unit 2 and achieved high safety ratings. Additionally, they resolved two major regulatory filings, securing new electric and gas distribution rates and advancing energy efficiency programs.

The paragraph discusses the approved settlement for PSE&G, which includes an increase of $505 million in annual revenues to support capital investments, with considerations for tax benefits. The settlement is based on a $17.8 billion distribution rate base, 9.6% return on equity, and 55% equity ratio. It introduces pension and storm deferral mechanisms to stabilize financial outcomes. Additionally, a $1.9 billion investment and a $1 billion customer on-bill repayment program for energy efficiency, treated as rate-based, have been approved, spanning approximately six years.

The second phase of New Jersey's energy efficiency programs aims to help customers save on energy, reduce bills, and lower carbon emissions, focusing particularly on lower and middle-income communities. PSE&G continues to maintain competitive utility bill rates compared to regional peers, with low gas bills and average electric bills. The BPU has authorized a gas supply cost reduction effective October 1st, helping to mitigate the impact of recent rate increases. PSE&G invested around $1 billion in the third quarter of 2023 for capital improvements, and expects to complete 2024 with $3.5 billion in capital spending, exceeding initial plans due to increased new business and energy efficiency expenditures. The utility is on track to nearly complete its AMI installations by the end of the year. Looking ahead, PSE&G's five-year capital plan from 2023-2028 ranges from $19 billion to $22.5 billion, with the regulated portion being $18 billion to $21 billion. The energy efficiency settlement has been approved, with new program commitments starting in January.

The paragraph discusses energy efficiency investments and their impact on growth projections, expecting a 6% to 7.5% increase in rate base from 2024 to 2028. It outlines developments in regulated competitive transmission solicitations and bids submitted for PGM’s 2024 Regional Transmission Expansion Plan. PSE&G's load study indicates an expected increase in data center peak load by 170 megawatts over the next decade, with applications for an additional 400 megawatts and inquiries for 1,200 megawatts. CoreWeave plans to invest $1.2 billion to build a data center in New Jersey, highlighting the state’s economic focus on similar ventures. There is anticipation of increased data center demand and a push towards carbon-free power, with ongoing attention to regulatory decisions from FERC.

The paragraph outlines PSEG Power's ongoing efforts to secure long-term contracts for its nuclear output, pursue thermal upgrades at its Salem units for increased efficiency, and participate in contract renewal processes with LIPA. The company reaffirms its long-term earnings growth guidance, highlights its settlement of regulatory proceedings, and emphasizes its $19 to $22.5 billion five-year capital investment plan focused on infrastructure and energy efficiency. PSEG aims to maintain financial stability without issuing new equity or selling assets, supporting consistent dividend growth.

The paragraph starts with a thank you to PSEG employees, especially those who assisted with power restoration efforts in Florida and Georgia after hurricanes, emphasizing the importance of the mutual aid network. The discussion then shifts to Dan Cregg presenting PSEG's financial results for the third quarter of 2024. PSEG reported a net income of $1.04 per share, up from $0.27 in 2023, and non-GAAP operating earnings of $0.90 per share, a slight increase from $0.85 in 2023. The financial report includes detailed slides showing contributions by business segment and changes in earnings. Key factors affecting income included growth in rate base investments, increased depreciation, and interest expenses. Transmission margin remained flat, while energy efficiency margin increased slightly, and distribution margin rose by $0.06 per share.

The paragraph discusses PSE&G's financial performance and operational updates for the third quarter, highlighting several factors that impacted per-share earnings compared to the same period in 2023. These factors included unfavorable distribution O&M expenses due to deferred spending and increased cyber and IT costs, higher depreciation and interest expenses due to continued investment and rising interest rates, and lower pension and OPEB income following the end of credits in 2023. Tax timing also had a negative impact. Weather was noted as 5% warmer than average but cooler than in 2023, with minimal impact on margins due to the Conservation Incentive Program. Electric and gas customer growth remained at about 1%. PSE&G's capital spending reached $1 billion in the third quarter, with a year-to-date total of $2.7 billion.

The paragraph discusses PSEG's financial and operational performance in 2024. The company anticipates a capital expenditure of $3.5 billion for the year, slightly above their original plan, due to investments in electric system reliability, gas infrastructure, and energy efficiency programs. They reaffirm their regulated capital investment plan of $18 billion to $21 billion from 2024 to 2028, with an expected rate-based CAGR of 6% to 7.5%. PSEG Power and Other reported a net income of $0.28 per share for Q3 2024, an improvement over a net loss in Q3 2023, with non-GAAP operating earnings also rising. The net energy margin increased primarily due to higher nuclear re-contracting prices and the nuclear PTC effective January 2024. Costs for operations and maintenance were slightly unfavorable, and interest expenses rose due to incremental debt at higher rates. The nuclear fleet maintained strong performance with 8.1 terawatt hours produced and a 94.5% capacity factor.

As of the end of September, PSEG had strong liquidity with $3.4 billion available, including $200 million in cash. The company had minimal variable rate debt due to swaps on its $1.25 billion term loan. PSEG issued $1.1 billion in medium-term notes in August, using some proceeds to repay existing debt. The company maintains a solid balance sheet, allowing for a five-year capital spending program without selling new equity or assets, while supporting dividend growth. PSEG updated its 2024 non-GAAP operating earnings guidance to $3.64-$3.68 per share and reaffirmed a 5-7% annual growth target through 2028. Recent rate case and energy efficiency approvals will inform the upcoming financial guidance update for 2025.

Ralph LaRossa addresses a question from Shar Pourreza regarding the impact of a recent FERC decision on commercial discussions involving the Artificial Island project and interconnection capacity. Ralph clarifies that the FERC decision was specific and hasn't affected their progress. Although they weren't directly involved, they're committed to supporting New Jersey's economic goals and believe that various solutions can address interconnection challenges. He emphasizes the unique positioning of their 3-unit site due to its redundancy.

The paragraph discusses the potential benefits and unique aspects of a site with an early site permit and planned upgrades, particularly in increasing megawatt hours from the Hope Creek facility. Despite a FERC rejection, Ralph LaRossa remains optimistic about finding a solution through various possible scenarios like rehearing requests, outcomes from a technical conference, Exelon’s 205 proceeding, or new interconnection agreements. The emphasis is on supporting New Jersey’s economic goals. Shar Pourreza questions LaRossa about the timeline for these developments, indicating the urgency due to the governor's impending departure and the initiative’s importance.

The paragraph features a discussion about the timing and progress of certain initiatives within a specific political timeline. Ralph LaRossa clarifies that they aim to complete certain discussions and actions during the current governor's term, which ends next year, aligning with the upcoming election in November. Shar Pourreza acknowledges understanding and notes upcoming meetings in Florida. Next, Nicholas Campanella from Barclays inquires about the company's growth projections and factors affecting them, such as new rates in New Jersey and capacity auctions. Ralph LaRossa introduces Dan Cregg to provide more details, who explains that while exact guidance for 2025 isn't given, the company remains within a 5% to 7% growth range, influenced by factors like the recent rate case outcome.

The paragraph discusses the outcomes and expectations from a rate case, emphasizing the recovery of prudently deployed capital. It acknowledges a delay in capacity auctions but expects a balancing effect on year-over-year results within a 5% to 7% range. Nicholas Campanella questions how moving the Artificial Island to front-of-the-meter could impact overall economics and grid charges. Ralph LaRossa explains the importance of getting the capacity auction process right, noting their comments on the matter and encouraging review of related filings, particularly concerning the Reference Unit and Reliability Must Run (RMR) issues.

The paragraph involves a discussion about transmission rates and economic goals in New Jersey. Nicholas Campanella finds the information about Brandon Shores and pricing within the ACE service territory valuable. Paul Zimbardo from Jefferies asks follow-up questions about expected compound annual growth rates (CAGR) within a 5% to 7% range and whether this is consistent annually, considering factors like production tax credits and rate case dynamics. Dan Cregg responds that the CAGR should be viewed as a long-term goal, with potential variability. Zimbardo also inquires about PGM RTEP transmission proposals, specifically mentioning a $400 million greenfield project in PSEG, seeking further insights into transmission needs.

In the paragraph, Dan Cregg discusses their current projects and strategic approach. They have a successful project in Maryland and a proposal in front of PJM similar in size. They anticipate more opportunities related to data centers and plan to evaluate each to determine their next steps with confidence in their competitive bidding capabilities. He mentions that competitively bid transmission is not part of their capital program, indicating they can meet their capital budget without winning these bids. In response to a question from Jeremy Tonet of JP Morgan, Ralph LaRossa confirms they are still looking at a 200-megawatt opportunity, despite changes in pricing outlook.

In the paragraph, Jeremy Tonet and Ralph LaRossa discuss the priorities and challenges related to 200 megawatts of power capacity. Ralph explains that customer preferences vary, with some focused on clean energy, speed, and market timing, while others prioritize reliability. He assures that their organization is well-positioned to address these concerns and is committed to not backing down from their plans. Durgesh Chopra then asks about grid reliability and how power can be diverted from the grid to the data center, seeking more insight into handling such a transition.

The paragraph consists of a discussion about the uncertainties surrounding grid reliability in a particular region, involving various factors such as the status of the Brandon Shores unit and its connection to the grid. There are considerations about grid stability, particularly in the context of New Jersey's extra capacity after past events like the 2003 blackout and Superstorm Sandy. Dan Cregg and Durgesh Chopra discuss the importance of data centers and the consistent need to address supply and demand, regardless of whether it’s managed behind or in front of the meter. Ralph’s views are referenced, emphasizing the need to meet increasing demand with adequate supply.

Ralph LaRossa discusses the factors influencing the decision to support co-location of data centers near nuclear plants, highlighting the importance of energy, transmission, and tax costs in attracting companies to New Jersey. He mentions the state's existing tax incentives and suggests that adjustments in transmission services might be needed, depending on the data center's operational model. He remains open to both co-location and front-of-the-meter setups, emphasizing the need to choose the option that best attracts businesses to the state.

In the paragraph, Michael Sullivan from Wolfe Research questions Ralph LaRossa about Exelon's load forecast for PJM and its relationship to ACE and Artificial Island. LaRossa declines to comment specifically on ACE's calculations but mentions that there is significant load growth within the PJM footprint, aligning with earlier projections. When asked about LIPA, LaRossa indicates that the organization is likely to maintain its service provider model rather than transitioning to a publicly owned solution, with a potential financial risk of $0.07 to $0.08 being clearly communicated over the past six months.

The paragraph discusses potential utility investment opportunities arising from new data center demand. Michael Sullivan acknowledges an upcoming transition by the end of 2025, while David Arcaro from Morgan Stanley inquires about potential higher capital expenditures (CapEx) due to increased demand. Ralph LaRossa and Dan Cregg respond, indicating that current infrastructure can accommodate the new data centers, like the CoreWeave development on a former pharmaceutical headquarters site, and no major new transmission lines are required. There may be some necessary upgrades, but they don't anticipate significant changes to capital programs. Overall, the system is in a good state to handle incremental data center demand.

The paragraph is a conversation during an investor call, where Ralph LaRossa suggests looking at the CETO/CETL analysis by PJM to understand excess transmission capacity. Anthony Crowdell from Mizuho Securities shifts the focus to a different topic, humorously mentioning hockey season and his hoarse voice from coaching, then asks about the competitiveness of the LIPA contract. Ralph responds modestly, highlighting his company's successful track record in terms of safety, reliability, and customer satisfaction, without appearing overly confident.

The discussion involves a series of questions and answers between Anthony Crowdell, Ralph LaRossa, and Paul Fremont during a meeting or conference call. They talk about the potential uprating of the Salem power plant, which could add 200 megawatts, though exact costs are yet to be detailed and will be included in future presentations. Paul Fremont inquires about the CoreWeave lease and power requirements, which are expected to start at 125 megawatts and rise to over 300 megawatts. Ralph LaRossa states they are unsure who will supply the power but are prepared to support it if necessary, even potentially involving merchant nuclear power.

The paragraph discusses the involvement of Ralph LaRossa and his personal commitment to Choose New Jersey, an economic development arm of the governor's office, in bringing data center developers to New Jersey, while clarifying that his interactions are not at an enterprise level with the Governor’s Office. Paul Fremont inquires about the final interpretation from the Department of Energy (DOE) regarding Production Tax Credits (PTCs) and market prices. Dan Cregg responds that they are awaiting regulations from the Treasury and are making internal estimates in the meantime, with the expectation of progress before the current administration ends.

In the discussion, Carly Davenport from Goldman Sachs asks about the company's approach to managing nuclear fuel purchases, particularly in relation to capacity additions expected from 2028 onwards. Dan Cregg responds by acknowledging the current market volatility and suggests that they may look to extend their timeframe for fuel contracts if suitable commercial terms are available. He emphasizes that they won’t extend their contracts just for the sake of it if the commercial conditions aren’t favorable. However, the company is considering longer timeframes due to market dynamics and will provide updates as deals are finalized. Carly appreciates the response and indicates she has a follow-up question related to earlier discussions on up rates.

In a conversation involving data center customer discussions, Dan Cregg indicates that aggregate output and additionality are key topics. The Microsoft deal highlights the importance of additionality in such conversations. Paul Patterson from Glenrock Associates inquires about tax and transmission cost issues in New Jersey, to which Ralph LaRossa confirms the situation, mentioning state-offered tax breaks and transmission costs. When asked about commissioners' absence from an order, LaRossa states they had recused themselves but did not provide reasons. Lastly, Patterson notes ongoing correspondence between OPSI, which includes NJBPU, and PJM concerning capacity market and pricing concerns.

In the paragraph, Ralph LaRossa discusses the concerns around market conditions, high prices, and the potential lack of new generation in the energy sector. He notes that state regulators are appropriately focused on customer interests and reliability. LaRossa expresses concern for the future, emphasizing the need for long-term price signals to ensure sufficient generation. He supports a pause to accurately address issues like reference units and RMR contracts. He believes that efforts from state regulators are aligned with the industry's goals of achieving reliability and affordability. Paul Patterson acknowledges LaRossa's comments, and the operator thanks them.

In the closing remarks of a teleconference, Ralph LaRossa acknowledges questions about co-location, particularly following a recent FERC decision. However, he focuses on the team's strong performance in the last quarter, highlighting financial and operational achievements, utility and nuclear unit reliability, and mutual aid efforts. He also emphasizes successful regulatory outcomes that ensured affordability and reliability for customers, as well as energy efficiency savings. LaRossa remains optimistic about the future, noting competitive transmission rates and plans to provide further details at an upcoming event in Florida. The operator then concludes the teleconference.

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