Daniel J. Cregg
executive vice president and chief financial officer at Public Service Enterprise Group
Thank you, Ralph, and good morning, everybody. As Ralph mentioned earlier, PCG 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 4th-quarter of 2024, net income was $0.57 per share compared to $1.10 per share in 2023 and non-GAAP operating earnings were $0.84 per share in the 4th-quarter of 2024 compared to $0.54 per share in 2023. Slides 8 and 10 detail the contribution to non-GAAP operating earnings per share by business segment for the 4th-quarter and full-year of 2024 and Slides nine and 11 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. Starting with PSE&G, which reported 4th-quarter 2024 net income of $0.75 per share compared to $0.58 per share in 2023. Had non-GAAP operating earnings of $0.75 per share for the 4th-quarter of 2024 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 4th-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. Compared to the 4th-quarter of 2023, 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 4th-quarter. Distribution O& expense was $0.10 per share favorable compared to the 4th-quarter of 2023, primarily due to the timing of spending. Depreciation and interest expense rose by $0.10 per share and $0.02 per share respectively, compared to the 4th-quarter of 2023, reflecting continued growth in investment and higher interest expense. Lower pension and OCEB income resulting from the cessation of related credits, which ended in 2023, resulted in a $0.02 per share unfavorable comparison to the year-earlier quarter. 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 4th-quarter compared to 2023. And for the full-year, PSE&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 4th-quarter, as measured by heating degree days, was 12% warmer-than-normal, but 3% cooler than the 4th-quarter of 2023 . And as I'm sure you know, weather variations have a minimal impact on PSENG'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&G promote the widespread adoption of its energy efficiency programs. Under the SIMP, 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&G invested approximately $0.9 billion or $900 million during the 4th-quarter. And for the full-year 2024, our capital spending totaled $3.6 billion, slightly higher than our original plan of $3.4 billion based on the continued execution of our 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 billion to $24 billion compared to our prior plan of $18 billion to $21 billion. The $3 billion increase in regulated investments is driven by incremental reliability and resiliency investments under TSE&G's existing infrastructure programs and the CES EE2 program. Our 2025 to 2029 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 billion, 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 PSCG Power and Other. For the 4th-quarter of 2024, PCG Power and Other reported a net loss of $0.18 per share compared to net income of $0.52 per share in the 4th-quarter of 2023, non-GAAP operating earnings or $0.09 per share for the 4th-quarter compared to a non-GAAP operating earnings loss of $0.05 per share in the 4th-quarter of 2023. For the 4th-quarter of 2024, 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 January 1, 2024. As anticipated, we realized a significant portion of the increase in the 2024 gross margin over 2023's gross margin during the second-half of the year based upon the shape of our underlying hedges. O&M was $0.10 per share unfavorable. Interest expense was $0.02 per share higher, reflecting incremental debt at higher rates and lower pension income and OPEV credits were $0.01 per share unfavorable versus the 4th-quarter of 2023. Taxes and other were $0.10 per share favorable compared to the year-earlier quarter. On the operating side, the nuclear fleet produced approximately 7.3 terawatt hours during the 4th-quarter and approximately 31 terawatt hours for the full-year, running at a capacity factor of approximately 86% and 90% for the quarter and full-year respectively. Touching on some recent financing activity, as of the end of December, PCG had total available liquidity of $2.6 billion, including approximately $100 million 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 million as of December 31, which supported our strong liquidity position. Last November, PSE&G repaid its $250 million, 3.05% secured medium-term notes or MTNs upon maturity. And in December of '24, PCG Power entered into a new 364-day variable-rate term-loan for $400 million, supported by the strength of its cash-flow. And also in December, PSEG Power amended its existing $1.25 billion variable-rate three-year term-loan agreement to extend the maturity from March to June of 2025, which just helps manage our cash position during the upcoming year. At the end of 2024, Power had $1.65 billion of debt outstanding with $1.25 billion swapped to a fixed-rate mitigating fluctuations in interest rates through March of 2025. And given our swaps, we continue to have a low-level of variable-rate debt, approximately just 7% of total debt at year end. 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 5. The most impactful driver will be the implementation of new distribution base rates in effect for the full-year. Recall that the 4th-quarter of 2024 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 3rd-quarter of this year. In addition, recoveries for investments in GSMP, the Infrastructure advancement Program or IAP and the CEF Energy Efficiency II program will also add to 2025 utility margin. Partly offsetting these positives are higher O&M, interest and depreciation expense, reflecting higher investment balances at PSE&G as well as higher interest expense at Power and Parent related to refinancing maturities at higher current interest costs. At PCG Nuclear, our 100% owned Hope Creek nuclear unit has a scheduled refueling set for the fall of 2025 that will include the fuel cycle extension work to extend its next scheduled refueling in 24 months-to the fall 2027. And as a reminder, the zero-emission certificate amounts earned by our New Jersey nuclear units will conclude In May of 2025. In closing, we delivered our 20th 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. We also extended our 5% to 7% non-GAAP operating earnings CAGR through 2029, starting with 2025 as the base year. And as Ralph mentioned, we're continuing to pursue incremental revenue opportunities at PCG Nuclear, which could enhance our long-term growth CAGR relative to the range that we provided based on the PTC. That concludes our formal remarks, and we are ready to begin the question-and-answer session.