Public Service Enterprise Group Q4 2024 Earnings Report

Public Service Enterprise Group EPS Results

• Actual EPS: $0.84
• Consensus EPS: $0.83
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: $0.54

Public Service Enterprise Group Revenue Results

• Actual Revenue: $2.47 billion
• Expected Revenue: $2.03 billion
• Beat/Miss: Beat by +$437.06 million
• YoY Revenue Growth: -5.40%

Public Service Enterprise Group Announcement Details

• Quarter: Q4 2024
• Date: 2/25/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, February 25, 2025
• Conference Call Time: 11:00AM ET

Public Service Enterprise Group (NYSE:PEG), through its subsidiaries, operates in electric and gas utility business in the United States. It operates through PSE&G and PSEG Power segments. The PSE&G segment transmits electricity; distributes electricity and natural gas to residential, commercial, and industrial customers; and appliance services and repairs to customers through its service territory, as well as invests in solar generation projects, and energy efficiency and related programs. The PSEG Power segment engages in nuclear generation businesses; and supplies power and natural gas to nuclear power plants and gas storage facilities activities. As of December 31, 2023, it had electric transmission and distribution system of 25,000 circuit miles and 866,600 poles; 56 switching stations with an installed capacity of 39,953 megavolt-amperes (MVA), and 235 substations with an installed capacity of 10,382 MVA; 109 MVA aggregate installed capacity for substations; four electric distribution headquarters and five electric sub-headquarters; 18,000 miles of gas mains, 12 gas distribution headquarters, two sub-headquarters, and one meter shop, as well as 56 natural gas metering and regulating stations; and 158 MegaWatts defined conditions of installed PV solar capacity. Public Service Enterprise Group Incorporated was founded in 1903 and is based in Newark, New Jersey.

Public Service Enterprise Group Q4 2024 Earnings Call Transcript

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by. My name is Rob, and I'm your event operator today. I would like to welcome everyone to today's conference, Public Service Enterprise Group's Fourth Quarter and Full Year Results twenty twenty four Earnings Conference Call and Webcast. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session for members of the financial community.

[Operator]

As a reminder, this conference is being recorded today, 02/25/2025, and will be available for replay as an audio webcast on PSEG's Investor Relations website at https:investor.pseg.com. I would now like to turn the conference over to Carlotta Chan. Please go ahead.

[Carlotta Chan, Investor Relations at Public Service Enterprise Group]

Good morning, and welcome to PSEG's fourth quarter and full year twenty twenty four earnings presentation. On today's call are Raul LaRosa, Chair, President and CEO and Dan Craig, Executive Vice President and CFO. The press release, attachments and slides for today's discussion are posted on our IR website at investor.pseg.com and our 10 K will be filed later today. PSEG's earnings release and other matters discussed during today's call contain forward looking statements and estimates that are subject to various risks and uncertainties. We will also discuss non GAAP operating earnings, which differs from net income as reported in accordance with Generally Accepted Accounting Principles or GAAP in The United States.

[Carlotta Chan, Investor Relations at Public Service Enterprise Group]

We include reconciliations of our non GAAP financial measures and a disclaimer regarding forward looking statements on our IR website and in today's materials. Following our prepared remarks, we will conduct a thirty minute question and answer session. I will now turn the call over to Ralph LaRosa.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Thank you, Carlotta, and thank you everyone for joining us this morning to review PSEG's twenty twenty four results and our outlook for the business going forward. Let's start with our strong results. PSEG reported net income of $0.57 per share for the fourth quarter of twenty twenty four and $3.54 per share for the full year. For non GAAP operating earnings, PSEG reported results of $0.84 per share for the fourth quarter and $3.68 per share for the full year, which was at the top of our 2024 guidance range. Our reported results for 2024 also marked the twentieth consecutive year that we have met or exceeded management's non GAAP operating earnings guidance to investors.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

We are proud of this track record and confident that our team will continue to build on it. We were also successful in achieving our strategic and regulatory objectives for 2024. First, we settled PSE and G's first electric and gas distribution rate case in six years, all with a balanced outcome that recovers prudent investments, maintains our favorable affordability profile and mitigates variability for our customers. Second, PSE and G received approval to invest $2,900,000,000 in its Clean Energy Future Energy Efficiency II program over the upcoming six year period. This second phase of the BPU's statewide energy efficiency framework has resulted in a meaningful increase to the program, which will enable us to make investments at more customer premises to reduce energy usage, improve affordability and reduce carbon emissions.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Third, we efficiently executed the utilities planned $3,600,000,000 capital spending program and notably completed the advanced metering infrastructure program on time and on budget, installing approximately 2,200,000 smart meters in customers' homes and businesses. And fourth, and I'm very happy to say, we implemented new deferral mechanisms for pension and storm expense coming out of the rate case. This increases the predictability of PSE and G's future financial results and stabilizes rates for customers. Speaking of customer rates, the new base rates that were placed into effect last October represented an annual increase of about 1% per year since our last rate case in 2018. Also, last October, PSE and G lowered its gas commodity charge to $0.33 per therm for the winter of twenty twenty five.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

The third supply charge reduction since January of twenty twenty three. All of these steps will serve to moderate the recent outcome of the BGS auction results, which will increase customer electric bills this June 1. PSE and G's record of reliability, affordability and customer satisfaction continues to be a valuable combination. We were recently named number one in customer satisfaction with residential electric and gas service in the East among large utilities by J. D.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Power in 2024. The utility also received the PA Consulting twenty twenty four Reliability one Award for the Mid Atlantic Region for the twenty third consecutive year. I want to take a moment to recognize and thank all of our over 13,000 employees for the incredible teamwork and individual efforts that delivered 2024 strategic objectives and financial results. So let's turn to our outlook for 2025 starting with slides five and six. For the current year, we have initiated PSEG's non GAAP operating earnings guidance at $3.94 to $4.06 per share, which is up by 9% at the midpoint over our 2024 reported results.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Our 2025 guidance midpoint is the new base year for PSEG's five percent to 7% non GAAP operating earnings CAGR at the nuclear production tax credit threshold for the twenty twenty five to twenty twenty nine period. I would also note this CAGR, while unchanged as we pursue incremental revenue opportunities at PSEG nuclear, starts from a $4 midpoint of 2025 guidance that is 9% higher than our 2024 non GAAP results. For 2025, we plan to invest $4,000,000,000 across enterprise, driven by regulated investments. We also raised PSEG's twenty twenty five to twenty twenty nine capital spending plan to $22,500,000,000 to $26,000,000,000 which is up by $3,500,000,000 from the prior plan. This increase is largely comprised of incremental investments at PSE and G that will meet growing customer demand, modernize infrastructure and further execute on the previously mentioned energy efficiency programs.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Please see Slides fourteen and fifteen for the updated regulated capital spending plan and rate based projections for the twenty twenty five to twenty twenty nine period. This updated five year capital spending program is expected to support a PSE and G rate base CAGR that continues at 6% to 7.5% over the upcoming five year period, which grows from a starting point of approximately $34,000,000,000 which is notably 12% higher than the year end 2023 balance. Something new for PSE and G this year has been a significant increase in inquiries from large load and data center customers. Last year at this time, these totaled under 400 megawatts. Today, the interest has grown to 4,700 megawatts, which includes both mature leads and initial inquiries.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

This pipeline represents an over 12 fold increase over the last year. The average size of these project leads is in the 100 megawatt range, which can often fit within PSE and G's existing robust utility transmission infrastructure. We are responding to these inquiries in under four months on average. Approximately 25% of the 4,700 megawatts of new business leads have been incorporated into PGM's twenty twenty five system peak load forecast. As I mentioned earlier, the basic generation service auction results will raise the residential electric bill starting June 1.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

This increase is being driven by the significant rise in the capacity prices coming out of PJM's latest RPM auction conducted last July, which reflects growing energy demand combined with the need for new power generation. As a reminder, electric supplies are pass through cost that PSE and G does not earn a profit on. Even with this upcoming BGS increase, our combined bill still compares favorably to all other utilities in New Jersey and we remain a leader across the nation on our low share of wallet comparison. PSE and G's bill remains at about 3% of total income for medium income customers and even lower still approximately 2% for our low to moderate income customers that take advantage of payment assistant programs. Turning to PSEG Power and Other, while the PTC threshold provides sufficient support to meet PSEG's five percent to 7% long term growth outlook, we continue to pursue nuclear revenue growth opportunities at PSEG nuclear that would be incremental.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

These opportunities to contract portions of our nuclear output under long term contracts can also benefit the economic development interests of the state in helping to attract AI hubs to New Jersey. We had an exceptional year in 2024, continuing to execute visible. These benefits will enhance our ability to drive our future performance that prioritizes maintaining our financial strength, making disciplined investments and delivering operational excellence. Another key PSEG distinction that we are proud to extend our ability to continue supporting another robust five year capital program without the need to issue new equity or sell assets through 2029, even with the latest $3,500,000,000 increase over the prior plan. Before I conclude, I want to highlight that our Board of Directors recently announced a $0.12 per share increase in PSEG's annual common dividend to indicative annual rate of $2.52 per share for 2025.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

This is PSEG's fourteenth consecutive annual increase made possible by a longstanding commitment to financial discipline that has enabled us to pay a common dividend to our shareholders

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

for

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

118 consecutive years. I'll now turn the call over to Dan to walk you through the results for the quarter and our outlook for 2025 through 2029 period and then rejoin the call for Q and A.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Thank you, Ralph, and good morning, everybody. As Ralph mentioned earlier, PSEG reported net income of $3.54 per share for the full year of 2024 compared with net income of $5.13 per share for 2023 and non GAAP operating earnings for the full year of 2024 were $3.68 per share compared to $3.48 per share for 2023. For the fourth quarter of twenty twenty four, net income was $0.57 per share compared to $1.1 per share in 2023 and non GAAP operating earnings were $0.84 per share in the fourth quarter of twenty twenty four compared to $0.54 per share in 2023. Slides eight and ten detail the contribution to non GAAP operating earnings per share, five business segments for the fourth quarter and full year of 2024. And slides nine and eleven contain waterfall charts that take you through the net changes for the quarter over quarter and full year periods in non GAAP operating earnings per share by major business.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Starting with PSE and G, which reported fourth quarter twenty twenty four net income of $0.75 per share compared to $0.58 per share in 2023. PSE and G had non GAAP operating earnings of $0.75 per share for the fourth quarter of twenty twenty four compared to $0.59 per share in 2023. Utilities results were driven by the implementation of new electric and gas based distribution rates. The new rates went into effect on October 15, and the fourth quarter results reflect the impact of seasonality of gas revenues during winter months. 2025 comparisons will benefit from a full year of new rates for both gas and electric revenues.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Compared to the fourth quarter of twenty twenty three, transmission margin was a benefit of $0.02 per share due to higher recovery of investment. Distribution margin increased by $0.16 per share and reflects the impacts of the rate case on gas revenues in the fourth quarter. Distribution O and M expense was $0.01 per share favorable compared to the fourth quarter of twenty twenty three, primarily due to the timing of spending. Depreciation and interest expense rose by $0.01 per share and $0.02 per share respectively compared to the fourth quarter of twenty twenty three, reflecting continued growth in investment and higher interest expense. Lower pension and OCAV income resulting from the cessation of OCAV related credits, which ended in 2023, resulted in a $0.02 per share unfavorable comparison to the year earlier quarter.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

And lastly, the timing of taxes recorded through an annual effective tax rate, which nets to zero over the full year, and other taxes had a net favorable impact of $0.02 per share in the fourth quarter compared to 2023. And for the full year, PSE and G results reflect higher earnings from increased investment in infrastructure replacement and energy efficiency as well as the rate case, partially offset by higher interest and depreciation expense from higher investment balances. Weather during the fourth quarter, as measured by heating degree days, was 12% warmer than normal, but 3% cooler than the fourth quarter of twenty twenty three. And as I'm sure you know, weather variations have a minimal impact on PSE and G's utility margin because of the conservation incentive program or SIP mechanism. This decoupling mechanism limits the impact of weather and other sales variances, positive or negative, on electric and gas margins, while helping PSE and G promote the widespread adoption of its energy efficiency program.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Under the SIP, the number of electric and gas customers is what drives margin and each segment grew by approximately 1% in 2024. On capital spending, as Ralph mentioned, PSE and G invested approximately $900,000,000 or $900,000,000 during the fourth quarter. And for the full year 2024, our capital spending totaled $3,600,000,000 slightly higher than our original plan of $3,400,000,000 based on the continued execution of our electric system reliability programs, including energy strong and last mile spend in the IAP, our ongoing gas infrastructure replacement spending as well as our energy efficiency programs. For 2025, we plan to invest approximately $3,800,000,000 in regulated investments focused on infrastructure modernization, energy efficiency and meeting growing demand and electrification initiatives. We've rolled forward our five year regulated capital investment plan through 2029 amounting to $21,000,000,000 to $24,000,000,000 compared to our prior plan of $18,000,000,000 to $21,000,000,000 The 3,000,000,000 increase in regulated investments is driven by incremental reliability and resiliency investments under PSE and G's existing infrastructure programs and the CESEE2 program.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Our twenty twenty five to twenty twenty nine regulated capital investment plan is expected to produce compound annual growth in rate base of 6% to 7.5% starting from a year end 2024 rate base of approximately $34,000,000,000 including construction work in progress and as Ralph mentioned is an increase of approximately 12% over the same number for year end 2023. Moving to PSEG Power and Other. For the fourth quarter of twenty twenty four, PSEG Power and Other reported a net loss of $0.18 per share compared to net income of $0.52 per share in the fourth quarter of twenty twenty three. Non GAAP operating earnings were $0.09 per share for the fourth quarter compared to a non GAAP operating earnings loss of $0.05 per share in the fourth quarter of twenty twenty three. For the fourth quarter of twenty twenty four, net energy margin rose by $0.18 per share, driven by higher recontracting prices at nuclear, which includes the net impact of the nuclear PTC that took effect 01/01/2024.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

As anticipated, we realized a significant portion of the increase in the 2024 gross margin over twenty twenty three's gross margin during the second half of the year based upon the shape of our underlying hedges. O and M was $0.01 per share unfavorable. Interest expense was $0.02 per share higher, reflecting incremental debt at higher rates. And lower pension income and OPEB credits were $0.01 per share unfavorable versus the fourth quarter of twenty twenty three. Taxes and other were $0.01 per share favorable compared to the year earlier quarter.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

On the operating side, the nuclear fleet produced approximately 7.3 terawatt hours during the fourth quarter and approximately 31 terawatt hours for the full year, running at a capacity factor of approximately 8690% for the quarter and full year respectively. Touching on some recent financing activity. As of the December, PSEG had total available liquidity of $2,600,000,000 including approximately $100,000,000 of cash on hand. Through December 2024, cash from operations was strong, though well below the 2023 level, which is substantially helped by the return of cash collateral. Our cash collateral balance was approximately $250,000,000 as of December 31, which supported our strong liquidity position.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Last November, PSE and G repaid its $250,000,000 3 point 0 5 percent secured medium term notes or MTNs upon maturity. And in December of 'twenty four, PSEG Power entered into a new three sixty four day variable rate term loan for $400,000,000 supported by the strength of its cash flow. And also in December, PSEG Power amended its existing $1,250,000,000 variable rate three year term loan agreement to extend the maturity from March to June of twenty twenty five, which just helps manage our cash position during the upcoming year. At the end of twenty twenty four, Power had $1,650,000,000 of debt outstanding with $1,250,000,000 swapped to a fixed rate, mitigating fluctuations in interest rates through March of twenty twenty five. And given our swaps, we continue to have a low level of variable rate debt, approximately just 7% of total debt at year end.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Looking ahead, our solid balance sheet supports the execution of PSEG's five year capital spending plan dominated by regulated CapEx without the need to sell new equity or assets and provides for the opportunity for consistent and sustainable dividend growth. Now, before I conclude my remarks, let's review some earnings drivers for 2025 and those are outlined on slide five. The most impactful driver will be the implementation of new distribution base rates in effect for the full year. Recall that the fourth quarter of twenty twenty four is a seasonal peak for gas, which comes into play in a projection of the new base rates over a full year. Also note electric seasonality will produce a similar impact in the third quarter of this year.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

In addition, clause based recoveries for investments in GSMP, the Infrastructure Enhancement Program or IAP and the CEF Energy Efficiency II program will also add the 2025 utility margin. Partly offsetting these positives are higher O and M interest and depreciation expense, reflecting higher investment balances at PSE and G as well as higher interest expense at PSEG Power and Parent related to refinancing maturities at higher current interest costs. At PSEG Nuclear, our 100% owned Hope Creek nuclear unit has a scheduled refueling set for the fall of twenty twenty five that will include the fuel cycle extension work to extend its next scheduled refueling in twenty four months for the fall of twenty twenty seven. And as a reminder, the zero emission certificate amounts earned by our New Jersey nuclear units will conclude in May of twenty twenty five. In closing, we delivered our twentieth year in a row of meeting or exceeding our guidance, and we carry that confidence forward to our full year 2025 non GAAP operating earnings guidance of 3.94 to $4.06 per share, approximately 9% higher at the midpoint over 2024 results.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

We also extended our 5% to 7% non GAAP operating earnings CAGR through 2029, starting with 2025 as the base year. As Ralph mentioned, we're continuing to pursue incremental revenue opportunities at PCG nuclear, which could enhance that long term growth CAGR relative to the range that we've provided based off of PTC. That concludes our formal remarks and we are ready to begin the question and answer session.

[Operator]

Thank

[Operator]

The first question comes from the line of Shar Pourreza with Guggenheim Partners.

[Operator]

Please proceed with your questions.

[Shar Pourreza, Senior Managing Director at Guggenheim Partners]

Hey guys, good morning.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Good morning Shar.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Hi Shar.

[Shar Pourreza, Senior Managing Director at Guggenheim Partners]

Good morning, well. Good morning Dan. So just Ralph, starting off on the nuclear side with artificial island, do you see sort of commercial discussions being delayed with the recent actions at FERC? Does the complexity of like behind the meter deals change the deal structure to potential opportunities around side of the meter? And any sense on timing, especially given the Governor's ambitions?

[Shar Pourreza, Senior Managing Director at Guggenheim Partners]

Thanks.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Yes. Thanks, Shor. So I'm going to let Dan give you some details on that. But since you mentioned the Governor, I would just say this on that front. He well, New Jersey Economic Development Authority has made a few comments about their wind port and specifically that they're looking at alternative uses for that wind port.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

So that's one thing that we just want to point out. The governor has also mentioned that he has, in a recent call and show that they're looking at alternate uses for it. So you kind of put those pieces together and we know that there's some interest from the governor's standpoint and from New Jersey standpoint to continue for us to look to pursue these opportunities. And as far as so that's the timing issue that you hit on the back end. And Dan will kind of address generically the upfront piece.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Yes. I think, sure, our messaging there is really fairly consistent. I think, we've continued to see interest. We continue to have discussions with multiple parties for various elements of what we're talking about and that interest remains strong. So, I think you touched on FERC as well.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

I think that while it would have been great to have complete answers throughout everything from what FERC said, I don't know that we necessarily expected that and we got to wait for some. But I think directionally what they said was favorable for the flexibility to do what you want to do and those details have yet to be written. So we'll continue to see what happens there. But I think our messaging is really consistent with respect to what's going on related to nuclear.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

And the glass half full on the FERC, charges to reinforce that. The timing of it is pretty aggressive and it was a clear message from FERC on their need to get to a solution here. So we took that as a positive. We certainly could have been in a different place, at least for the one potential solution behind the meter is still in front of the meter and there's still other offload opportunities there.

[Shar Pourreza, Senior Managing Director at Guggenheim Partners]

That's a fair point. I appreciate that Ralph. And then just I just want to make sure, does the PSE and G pipeline of opportunities and inquiries you just highlighted, it's over four gig, does that negate any of the artificial island opportunities? Like in other words, any chance that a potential deal with artificial island kind of shift towards the front of the meter with PS ENG or the artificial island counterparty is completely separate from the PS ENG conversations you just highlighted? Thanks.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Yes. So I think the message on the 4,700 megawatts which includes other things besides data centers. We were clear in there was data centers plus large load. And believe it or not, we're still seeing some large electric vehicle interconnections that are taking place. So it's a number of items.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

I think there's two takeaways though that we want to make sure. First of all, from a data center standpoint, there's interest from the industry in New Jersey when you see a 4,700 megawatt showing up. That's a request that is, that is showing up. So that's part one. And part two is, the state's marketing in this area has been working.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

They've got a helix that they've announced in New Brunswick. There are a number of Nokia Bell Labs just announced that they're going to be in New Brunswick. So there's a number of the efforts that are taking place or taking hold and we just look forward to the momentum continuing.

[Shar Pourreza, Senior Managing Director at Guggenheim Partners]

Fantastic. Thank you guys so much. Appreciate it and great execution.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Thanks, Shar.

[Operator]

The next question is from the line of David Arcaro with Morgan Stanley. Please proceed with your question.

[David Arcaro, Executive Director, Equity Research at Morgan Stanley]

Hey, thanks. Good morning.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Hey, David.

[David Arcaro, Executive Director, Equity Research at Morgan Stanley]

Hey, how are you doing?

[David Arcaro, Executive Director, Equity Research at Morgan Stanley]

Let me see. I guess, the PGM auction has been getting a lot of attention recently. FERC is going to be relooking at auction structures and a number of changes are underway now. I was wondering if you could comment on how you're thinking about the outlook for the PJM market. What could change?

[David Arcaro, Executive Director, Equity Research at Morgan Stanley]

Are there possibilities of structural changes here? And how do you navigate that, maybe both from a customer impact and for your nuclear fleet?

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Yes. So I think the way we are specifically addressing it is by setting all of our targets off the PTC four. We've been very clear about that, and the impacts there. Well, from a customer standpoint, we will do everything in our power to help keep customer costs down from an affordability standpoint. We have done that.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

We will continue to advocate on that behalf. I just don't know whether or not the premise of the question of the PJM market is valid because I don't know if there is a PJM market anymore and we've been talking to that for quite some time. So, my concern there is mostly from a reliability standpoint. Are we going to be able in this construct to attract generation to the PJM region as a whole? And if so, is it going to be in a timely enough fashion for everything that we have going on in the region?

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

So those are the questions at hand that's really focused on reliability and affordability for us. And, we're going to keep advocating on customers' behalf in both of those areas.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Yes. I think just to add on to that a little bit David, I think those are the longer term elements that are going to be really important for resource adequacy and it's vital to get that right. And I think there's still work to be done there. I think for the nearer term to the extent that this collar and pricing ends up being put forward for a couple of years, it can give you a little bit more stability as to where things are going to turn out. But I go back again to Ralph's first comment that, what we're basically putting out from a financial standpoint is the PTC floor.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

So to the extent that things move below that, that floor is there. If it moves above that, there could be some potential benefit for us. But I think job one is getting resource adequacy right.

[David Arcaro, Executive Director, Equity Research at Morgan Stanley]

Yes, absolutely. I appreciate that color. And maybe somewhat related, I guess, is the uncertainty in the outlook for PJM broadly a deterrent for new large load customers, new maybe new customers broadly looking at the market? There's been, I guess, with all these changes being considered for the auction construct and looking at the resource adequacy challenges ahead in the market. Are you seeing that lowering the interest levels from some of these customers?

[David Arcaro, Executive Director, Equity Research at Morgan Stanley]

Any perspective there would be helpful.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Yes. No, I'd point you back to the data in the prepared remarks where we talked about the increase from 400 megawatts to 4,700 megawatts of interest in large load in New Jersey alone. So, I really can't talk for the other jurisdictions, but certainly in New Jersey, we're still seeing that uptick that we reflected in those remarks.

[David Arcaro, Executive Director, Equity Research at Morgan Stanley]

Yes. Got it. That's fair. Great. I'll leave it there.

[David Arcaro, Executive Director, Equity Research at Morgan Stanley]

Thanks so much.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Thanks.

[Operator]

Our next question is from the line of Nick Campanella with Barclays. Please proceed with your questions.

[Nicholas Campanella, Director at Barclays]

Hey, good morning, everyone. Thanks for taking the time.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Good morning, Nick.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Good morning.

[Nicholas Campanella, Director at Barclays]

Hey, so I just want

[Nicholas Campanella, Director at Barclays]

to put a finer point on Shar's question. Just in terms of bringing a maybe a commercial deal forward for the nuclear fleet, are you still watching and waiting for the state at this point or is it really waiting on FERC? And then just a follow-up to that is just as we kind of think about the timeline if a large load customer was to be able to connect to the facility, what's the timeline for ramp? And can that affect earnings in 2027? Or is this more later data towards the end of the decade?

[Nicholas Campanella, Director at Barclays]

Thanks.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Yes. And Nick, I think that we're not waiting on anything on the state. And I think we're not waiting anything either from the standpoint of FERC. I think that some of the details with respect to what flexibility there can be may come out of where that goes. But I think there's the ability to continue work and we are continuing work with respect to the state that we're in right now.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

It's interesting. I do think that there was some expectation by some that we might see something more definitive come out of FERC. But I will say that they did highlight thirty days and another thirty days. They seem to have understood the urgency in what they said, even though we didn't get complete clarity in what they did. So I think that urgency will be helpful as we continue to go forward.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

But it's not stopping anything, I think, from the standpoint of some final details as to how some things can be done and may add some flexibility.

[Nicholas Campanella, Director at Barclays]

Okay. And then just like the I guess the ramp, for a customer, just it does take time for these data centers to ramp up, it seems like. And I'm just wondering, is this something that you think, can impact the outlook on the five year plan or is it more longer data than that?

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Yes. Think about it in a couple of different ways, Nick. I would say that to the extent that there is a sale of what exists today, then something could happen quicker. To the extent that somebody needs to build a data center for that power to flow to, it's going to take a little bit longer. So I think depending upon the nature of where things go and there's a couple of things that we're working towards, that's going to dictate the timing as to when you might see some in the bottom line.

[Nicholas Campanella, Director at Barclays]

Okay. I appreciate that. And then just following up on the capacity auction commentary, just wanted to try to understand if we kind of continue to clear near the 2.7% level, how does that kind of impact your gross receipts calculation out to 27% and where you are in the range? Thanks.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Yes. So I would say, as you go out in time, you're going to have to take a look at what's in place from the standpoint of hedging and where the market goes. And then you're going to lay that capacity price on top of it. I'll remind you that at least in the structural formation of how the capacity auction is set, it's based upon a net cone, which is net of energy. And I think that as you do see one price rise, the other price should react in the opposite direction, the prices being energy and capacity.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

So and we saw some of that when we saw the last clear go up, we saw a temporary decline in energy prices. And so there is a relationship there. I think that if I were you and I was looking out in time, I think to the extent that you saw increases in energy and you thought that we were going to clear higher, it would move us higher within the range or above the range depending upon where you go with it, right? We have the comfort of the floor. I think the stability of that is really important to us and should be for you to think about how the results are going to go.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

But that upside is there to the extent that markets move up.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

And don't the only thing I would add is not to forget in those calculations that you make that there's an inflation adjustment to that floor. So, in the out years that will impact where those lines cross, which I think was the root of your question.

[Nicholas Campanella, Director at Barclays]

Absolutely. Absolutely. And I appreciate the commentary on the range. That's helpful. Thank you.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Thanks.

[Operator]

Our next question is from the line of Paul Fremont with Ladenburg Thalmann. Please proceed with your question.

[Paul Fremont, Managing Director at Ladenburg Thalmann]

Great. I guess, first question, can you give us sort of any color on hedges that you have at Peg Power? Has normally, I guess, you would be at 90% for this year. What how should we think about sort of past guidance versus where you are right now?

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Yes. Paul, what we have done and what we have said that we've done is try to balance the existing uncertainty of the definition of gross receipts in order to try to make sure that we're going forward in a way that minimizes our risk of results, understanding that we do have a PTC floor. What I would tell you directionally is, that has not resulted in kind of radical shifts from the standpoint of what those hedging percentages would have been back when we had more of a three year ratable. So to your point, if you want to think about being somewhere in the 90s and 25% and maybe two thirds in 26% and a third in 27% is what we would have told you based upon a more ratable approach. And while we've made some movements to that, don't think of that as being very radically different than the ratable approach.

[Paul Fremont, Managing Director at Ladenburg Thalmann]

Great. And then, I guess, you used to provide sort of a breakout of net income guidance between the utility and PEG Power and other. Is there a reason why you've not done that for this year?

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

It's just I think we made that change a year or two back, Paul, and we're comfortable with leaving it at the enterprise level. It's 90% utility. We've been pretty consistent about that. So, give or takes in that range, but we're comfortable discussing this at the enterprise level.

[Paul Fremont, Managing Director at Ladenburg Thalmann]

And then just to sort of follow-up on Nick's question. The gross margin sensitivity that you provide includes capacity prices to the extent that the auctions continue?

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

I'm not sure if there's

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

a question in there.

[Paul Fremont, Managing Director at Ladenburg Thalmann]

The question is, should we in other words, you give $1 per megawatt hour as sensitivity. Does that include the $1 per megawatt hour equivalent of the capacity auctions?

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Yes. Think about that as an all in price that you would see for a megawatt hour. And yes, you'd have to variableize that fixed charge. But yes, that's right with me.

[Paul Fremont, Managing Director at Ladenburg Thalmann]

Yes.

[Paul Fremont, Managing Director at Ladenburg Thalmann]

Great. Thank you very much.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Thanks, Paul.

[Operator]

The next question is from the line of Paul Zimbardo with Jefferies. Please proceed with your question.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

We might have lost Paul.

[Operator]

Our next question is from the line of Paul Patterson with Glenrock Associates.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Paul, we're on a 4.4 roll

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

right now, so we'll keep it going. Hey Paul.

[Paul Patterson, Analyst at Glenrock Associates LLC]

There you go. Three is the charm. So,

[Paul Patterson, Analyst at Glenrock Associates LLC]

just, I mean, it's back to the

[Paul Patterson, Analyst at Glenrock Associates LLC]

sort of the sorry, back to the original question about the timing on the co location. I noticed the language that the Chair reiterated on Friday and what have you. But what does that actually mean in terms of when you think that actual order might come out?

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Well, I have to take it at their face value in that they said they want to come out shortly thereafter. I think it was the words that came out in the last statement. So, I mean, we could guess at what shortly means, but I think they've been pretty consistent in delivering on what they've said they're going to do. So I wouldn't expect it to be much beyond the sixty days if that is the path that's taken.

[Paul Patterson, Analyst at Glenrock Associates LLC]

Okay. And then, you also said something

[Paul Patterson, Analyst at Glenrock Associates LLC]

that was interesting about the PGM market or the lack thereof. This is something that obviously is being there's just a lot of activity, a lot of discussion, a lot of apprehension I think about reliability and pricing and what have you. Do you have anything you'd like to share in terms of what potentially might what you might be looking for? I mean in terms of maybe a longer term setup or something or just what are your thoughts about it? I mean, I'd just be curious as to what you think might come out of all the examination of this market and what how it might evolve?

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Well, I think it's going to depend upon what state you're in and what the economic policies of that state is. You certainly hear certain positions being taken in Pennsylvania. You see positions being taken in other states. I've just talked specifically to New Jersey. We have the DECA, which is the law of the land here from a generation standpoint.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

And the utilities are not involved in that process. We do have PSEG nuclear, which is involved right now in the generation side of the business. But New Jersey is at a crossroads. And I think right now, we're all trying to figure out the best way to move forward. I don't think there's a clear answer on it.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

So, I don't want to front run any policy decisions that are being made in the state. But it's certainly something we need to continue to discuss for the two reasons that we stated upfront, affordability for customers and the reliability.

[Paul Patterson, Analyst at Glenrock Associates LLC]

Absolutely. Any idea when we might see something of a proposal or anything?

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Yes.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

There's some talk about an Energy Master Plan coming out. But look, Paul, to be honest about all of this, I think there's some decisions that have to be made that will probably bridge administrations here in New Jersey, right? So, I think what we're trying to do as a company is continue to educate everyone on the issue and try to help people think through different opportunities that the state of New Jersey could pursue.

[Paul Patterson, Analyst at Glenrock Associates LLC]

Okay, great. I really appreciate it. Thanks so much.

[Operator]

The next question is from the line of Carly Davenport with Goldman Sachs.

[Operator]

Please proceed with your question.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Hello.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Hey, Carly.

[Carly Davenport, Vice President, Equity Research at Goldman Sachs]

Hey, thanks for taking the question. Sorry to put a stop to the Paul train there. But thanks for all the color so far on the Power side. Maybe just one from me on the regulated side. Just on the GSMP3 filing, do you still expect to revisit that this quarter?

[Carly Davenport, Vice President, Equity Research at Goldman Sachs]

And then would that be upside to the plan in '26 plus or are there already assumptions kind of baked in after the GSMP2 extension kind of runs itself out?

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Yes, Carly. Yes, we are starting to have those conversations and it is in the plan is the simple answer to both of those things. So that work is part of our core business activities and it's something that we expect to continue. So, those conversations have started.

[Carly Davenport, Vice President, Equity Research at Goldman Sachs]

Great. Thank you for that. I'll leave it there.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Thanks, Carly.

[Operator]

The next question is from the line of Paul Zimbardo with Jefferies. Please

[Operator]

proceed with your question.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Back on the Paul train.

[Paul Zimbardo, Managing Director at Jefferies]

Can you hear me? Hopefully, we're on the train.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

We got it. We got it, Paul. We got it.

[Paul Zimbardo, Managing Director at Jefferies]

There we go. Thank you. The neighborhood reception is not always the best. But thank you very much. I want to follow-up on a little bit just on the balance sheet side.

[Paul Zimbardo, Managing Director at Jefferies]

So I saw the no additional equity in the outlook even with the

[Paul Zimbardo, Managing Director at Jefferies]

CapEx increase. Could you level us at

[Paul Zimbardo, Managing Director at Jefferies]

what was the actual 2024 FFO to debt and kind of where do you envision the credit metrics going throughout the plan?

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Yes. Paul, I don't have that in my fingertips. And I think you'll be able to pull that together when the K comes out. So I won't jump that. But we continue as we look forward and as we're putting forward the forward looking guidance for the next few years.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

We continue to be in that mid teens range and are in a pretty good place from that perspective, which is the reason it gives us the comfort to say exactly what we did say within our prepared remarks.

[Paul Zimbardo, Managing Director at Jefferies]

Okay. Got it. I'll follow-up on that one. And then shifting a little bit on going back to the BGS, looking at the one year results for Commercial and Industrial, through your zone it was very high on a dollar per megawatt day basis, almost $700 a megawatt day. And I know that you do not participate in that with your unregulated fleet.

[Paul Zimbardo, Managing Director at Jefferies]

But just is there any thoughts or kind of takeaways of what that indicates to what New Jersey could look like without, robust supply response for customers?

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Yes. So Paul, that we were I think around 17% all in in the numbers that were generated by the state and published. And I think that there were other ones that were up in the 20%. These are residential provider last resort rates that are in that BGS, right? So first of all customers are certainly have the opportunity to shop.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

I would expect some of that to happen from third party suppliers. But for those customers that are relying on BGS, it is something that we have to lean in on certainly from a payment assistance standpoint which we're working on and then also from our energy efficiency program and continuing to get the energy efficiency message out for customers and helping them gain access to those programs. So, those are the two pieces that I would say it means what it means to us in the state of New Jersey. But we are higher, but not as high as some other areas in the state.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Yes. I mean, just a reminder on that BGS contract that that's not something that we profit from. That's a pass through coming from the supply, providers. And the biggest element related to the increase that we are seeing is coming from the auctions that happened at PJM. And so that I do think you probably will see more interest in shopping, but I think at the end of the day, the providers are going to have to go back to that same well, which had some higher prices in the last auction.

[Paul Zimbardo, Managing Director at Jefferies]

Okay. And just to clarify, mostly for commercial and industrial, like there I saw clear that $696 a megawatt day for PSE and G, just did you have any delta on that? Thank you.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Yes. I mean, I think it's still coming from the same supplier base just with a different calculation going to them. And I think the same ability to shop is going to exist there. So I think you've got a parallel dynamic that's going on within that sector as well.

[Paul Zimbardo, Managing Director at Jefferies]

Thank you all very much.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Thanks, Paul.

[Operator]

Thank you. Our final question is from the line of Anthony Crowdell with Mizuho.

[Operator]

Please proceed with your question.

[Anthony Crowdell, Managing Director at Mizuho Financial Group]

Hey, good morning, Dan. Good morning, Ralph. Just

[Anthony Crowdell, Managing Director at Mizuho Financial Group]

a quick follow-up to

[Anthony Crowdell, Managing Director at Mizuho Financial Group]

Paul Patterson and kind of the comment you're making about maybe the PGM market. I don't know if you said it doesn't exist or whatever. Just is the state of New Jersey in a net long position on generation? And if so, what's the reserve margin there? Or do you

[Anthony Crowdell, Managing Director at Mizuho Financial Group]

have a reserve margin?

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Yes. So, the state of New Jersey does not have an integrated resource plan. So there is not a reserve margin set for the state of New Jersey that anybody can quote you. But we are short, right? So if you look at some of the information that's out there, New Jersey is a net importer, especially on the peak days.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

So we look to PJM, and PJM has still the last numbers I saw were we had about 2%, but more margin than what their target was, right? The question is, as this load comes in, where do we move to and where does that reserve margin get to, which is the need for the additional generation and the resource adequacy conversation we keep having.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Right. So as Ralph said, peak times are going to be different than off peak seasonal. It matters a lot when you are talking about it, but across the year, we are a net importer.

[Anthony Crowdell, Managing Director at Mizuho Financial Group]

Is one of the options that just is just a question, obviously, you said they need a resource adequacy plan, but is it similar to maybe other states that have gone maybe like a was it an I think maybe FRR or just pulled out the generation and the load? Is that one of the multitude of options that the state could face or should I be thinking about something different?

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Yes. No, I absolutely believe that, that's something that the state could consider, right? The state could go in a bunch of different paths, but Adeccah is the I keep referring back to that from back in February timeframe when we deregulated and the rules were put in place. And we count on PJM, right? And that's the market that's out there.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

So when I say I'm not sure about what kind of market it is, it's a market that has been influenced by a number of factors. And so they're trying to balance affordability and reliability with a free market and that's a tough thing to do. So we'll see where it goes. But it's certainly something that from a state of New Jersey standpoint, we're going to keep banging the desk about because we've got to get it right as we participate in that market.

[Anthony Crowdell, Managing Director at Mizuho Financial Group]

Great. Thanks for taking my questions.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Thanks, Anthony.

[Operator]

Thank you. I'd like to turn the floor back to Mr. LaRosa for closing comments.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Well, thank you, Rob. So, look, I think we had a lot of conversation about where we expected it to be which was on a lot of the nuclear output and the potential data centers and so on and so forth. But I don't want to lose sight for one minute of all the good work that was completed back in 2024. And that's not a complaint about what we talked about, but simply a statement of fact that the team executed on everything that it had in front of it last year, not the least of which was the rate case, the storms that came through this area, the cold weather snaps that we had and so on and so forth. So I want to end with a comment that was made in the beginning of in the middle of my prepared remarks, which is a thank you to the employees that are here at PSEG.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

We do a fantastic job day in and day out and that shows up in a multitude of areas. So thank you, thank you, thank you. We look forward to seeing you at one of the roadshows. Thanks.

[Operator]

Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Carlotta Chan, Investor Relations
• Ralph LaRossa, Chair, President & CEO
• Daniel Cregg, EVP & CFO

Analysts

• Shar Pourreza, Senior Managing Director at Guggenheim Partners
• David Arcaro, Executive Director, Equity Research at Morgan Stanley
• Nicholas Campanella, Director at Barclays
• Paul Fremont, Managing Director at Ladenburg Thalmann
• Paul Patterson, Analyst at Glenrock Associates LLC
• Carly Davenport, Vice President, Equity Research at Goldman Sachs
• Paul Zimbardo, Managing Director at Jefferies
• Anthony Crowdell, Managing Director at Mizuho Financial Group