Ralph A. LaRossa
Chair, President and Chief Executive Officer at Public Service Enterprise Group
Thank you, Carlotta. Good morning to everyone, and thanks for joining us on the call to review PSEG's third quarter results and update you on two important regulatory filings that we successfully resolved through the settlements that were approved by the New Jersey Board of Public Utilities last month.
Let's start with our financial results. PSEG reported net income of $1.04 per share for the third quarter of 2024, bringing results for the first nine months to $2.97 per share. This compares to net income of $0.27 per share and $4.03 per share for the third quarter and first nine months of 2023 respectively, which was impacted by the pension lift-out that occurred in August of 2023. Our results for the quarter and year-to-date periods are summarized on Slides 7 and 9 in the webcast slides. PSEG's non-GAAP operating earnings were $0.90 per share for the third quarter of 2024 and $2.84 per share for the first nine months of the year. This compares to non-GAAP operating earnings of $0.85 per share and $2.94 per share for the third quarter and first nine months of 2023, respectively. As a reminder, our non-GAAP results exclude the items shown in Attachments 8 and 9, which are included in the earnings release.
Dan will provide a detailed financial review later in the call, but I want to note that the solid operating and financial results we have posted for the third quarter and year-to-date period enable us to narrow our original full-year 2024 non-GAAP operating earnings guidance from $3.60 to $3.70 per share to a range of $3.64 to $3.68 per share. This updated and narrow range reflects the implementation of PSE&G's new base distribution rates that went into effect on October 15 and PSEG Power's realization of a significant portion of its 2024 gross margin during the second-half of this year.
On the operating front, during the third quarter, summer weather in New Jersey returned to normal, following the second-quarter that was the warmest we've experienced in more than 55 years. We have seen the devastating impacts of hurricanes and storms in many parts of the country. Fortunately, the hurricane season in our service territory has been quiet thus far, and we have been pleased to send mutual aid to some of our southern peers. PSE&G met its 2024 summer peak load of 10,152 megawatts on July 16, with temperatures of 98-degrees Fahrenheit, and our transmission and distribution network operated as expected with high reliability and minimal outages.
At PSEG Power, our merchant nuclear fleet continues to perform well, supplying New Jersey and the PJM grid with reliable 24x7 carbon-free energy. We also continue to pursue long-term growth opportunities in nuclear, including incremental output and long-term contracts at potentially higher prices. The attributes of these nuclear facilities is helping to attract new technology-based businesses to the state. And the results of those long-term opportunities would be incremental to PSEG's stated 5% to 7% long-term non-GAAP operating earnings growth rate.
In October, PSEG Nuclear began the cost-down of Salem Unit 2, which had just completed a 527-day breaker-to-breaker run to begin its scheduled refueling. The Salem station also recently received its third consecutive exemplary rating from the Institute for Nuclear Power Operators, the peer-to-peer operations and safety benchmarking group.
Switching to regulatory activity, we are pleased to have successfully resolved two major regulatory filings last month: PSE&G's base rate case and the second phase of its clean-energy future energy efficiency programs. First, the BPU approved PSE&G's multi-party settlement of its first base electric and gas distribution rate case since 2018, with new rates effective October 15. We appreciate the work done by all parties to achieve a balanced settlement that provides recovery of all of our prudent capital investments to reliably serve customers, while also preserving affordability. The terms of the settlement provide for an additional $505 million in annual revenues, including recovery of previously deferred costs and an incremental flowback to customers of tax benefits due to accelerated deductions and prior federal tax rate changes. The updated revenue requirement is based upon a distribution rate base of $17.8 billion, a return-on-equity of 9.6% and an equity ratio of 55% of total capitalization.
PSE&G was also approved to implement new pension and storm deferral mechanisms going forward. This directly addresses one of our key objectives, which has been to increase the predictability of our financial results by reducing variability, benefiting both the customer and our shareholders. You will recall, back in 2022, we identified three paths to address the accounting impacts of pension costs. Combined with a regulatory accounting order we obtained in 2023, along with a lift-out of a portion of the non-regulated pension obligations, this new deferral mechanism will provide for the recovery of annual pension and OPEB expenses and should help to mitigate most of the remaining pension variability going forward.
The BPU also approved the settlement of PSE&G's energy efficiency filing, that covers a commitment period from January of 2025 to June of 2027. The approval authorizes an investment program of $1.9 billion, net of administrative expenses, and an additional $1 billion program for customer on-bill repayment for purchases of EE equipment. Both programs will be treated as rate base, and will be completed through 10 energy efficiency programs over approximately six years. The second phase of energy efficiency programs will continue New Jersey's efforts to help all customers save energy, reduce utility bills, lower carbon emissions and continue our EE-related job training, the [Phonetic] focus on lower and middle income communities.
Customer bill affordability remains a key focus alongside our energy efficiency and cost-containment efforts. Following this past distribution-based rate increase, PSE&G retained its favorable bill comparison position versus regional peers on an electric and gas customer bills. A typical PSE&G residential customer will pay an electric bill consistent with the regional average and continue to have the lowest gas bill in the region. In addition, the BPU authorized, on October 1, PSE&G's gas supply cost-reduction, lowering the BGSS rate from $0.40 per therm to $0.33 per therm in time to help customers during the upcoming winter heating season. The BGSS gas cost-reduction, when combined with the base rate changes that occurred in October, lowered the bill impact of the base rate increase for a typical combined electric and gas customer from 7% to an increase of about 5%.
On the capital investment side, PSE&G invested approximately $1 billion during the third quarter and is projected to complete 2024 with capital spending at $3.5 billion, slightly higher than planned by about $100 million. This is driven by higher new business requests and EE spend. Notably, within this year's capital expenditures, we are also on-budget and on-schedule to complete almost all of our AMI installations by year-end. We continue to forecast PSEG's five-year $19.0 billion to $22.5 billion capital plan through 2028, with the regulated portion representing $18 billion to $21 billion of the total. With the energy efficiency settlement approved, we will begin commitments under this new program this coming January. These energy efficiency investments are already captured in our projections that produced a compound annual growth rate in rate base of 6.0% to 7.5% over the 2024 through 2028 periods.
Switching to regulated competitive transmission solicitations, the BPU selection of the winner or winners of the pre-build offshore wind infrastructure is expected by year-end. We also submitted bids into PJM's 2024 Regional Transmission Expansion Plan Window Number 1. The solicitation took place in September. PJM is expected to recommend their preferred solutions in the next few months and then approve the selective projects in February of 2025. And as a reminder, none of these potential projects are included in our current capital investment forecast.
PSE&G recently updated its load study as a part of an annual submission to PJM for use in its load forecast updates. Our existing data center peak load currently stands at approximately 350 megawatts and these sites are expected to expand by about 170 megawatts over the next 10 years. We have also received formal applications to initiate nearly 400 megawatts of new data center load and inquiries over 1,200 megawatts of data center feasibility studies in new business. These amounts do not represent firm commitments, but they provide an indication of the increase in interest.
Last week, CoreWeave, a data center developer, announced plans to invest $1.2 billion to convert a 280,000 square-foot facility to build its first data center in New Jersey. New Jersey has numerous locations that can be reutilized in a similar fashion, and the state's economic development efforts are focused on replicating this activity throughout the state. We are aware of the FERC Technical Conference and decision on Friday. We will continue to look for clarity on this issue going forward. That said, we believe that data center demand will continue to grow and we anticipate the continued desire for carbon-free dispatchable power. As such, at PSEG Power, we continue to pursue contracting of our nuclear output at long-term attractive pricing, with low execution risk that can also help attract new technology-based businesses to New Jersey, consistent with state policy. In addition, we are pursuing thermal and efficiency upgrades at our co-owned Salem units that could potentially increase their combined output by approximately 200 megawatts and we believe would qualify for the technology-neutral tax credits for new carbon-free generation.
Switching to the Long Island contract. As you know, our existing operating service agreement and power supply contract with LIPA runs through the end of 2025. LIPA began a process on the renewal and extension of both the OSA and fuel management contracts. We have submitted our proposals into LIPA's RFP process and anticipate an update on the status of both proposals during the first quarter of 2025.
So, wrapping things up on the quarter. Today, we are reaffirming our guidance for long-term non-GAAP operating earnings growth of 5% to 7% through 2028, which had incorporated an expected balanced rate case outcome consistent with the approved settlement recently implemented, the approved EE program and uses the threshold price of the nuclear production tax credit to price the output of our nuclear units.
In closing, through the first nine months of the year, solid execution is driving our expected results. We have settled four regulatory proceedings in the past six months, and we are also advancing our five-year capital investment plan focused on infrastructure modernization and energy efficiency initiatives. PSEG has continued to focus on increasing the predictability of our financial results as we prioritize a solid balance sheet. This has enabled us to fund our five-year capital investment plan totaling $19.0 billion to $22.5 billion without the need to issue new equity or sell assets and provides the opportunity for consistent and sustainable dividend growth.
I'd like to close with a thanks to all our employees for all they do, with a special shout-out to the PSE&G crews who went to Florida and Georgia on mutual aid to assist with service restoration after Hurricanes Milton and Helene. The mutual aid network is rather unique in our industry, and we are very pleased to reciprocate the help we received from mutual aid crews after Superstorm Sandy.
I will now turn the call over to Dan to discuss our financial results and outlook in greater detail, and will be available for your questions after his remarks.
