Q2 2024 Public Service Enterprise Group Inc Earnings Call
Ladies and gentlemen, thank you for standing by. My name is Rob and I'm your event operator today.
Operator: I'd like to welcome everyone to today's conference, Public Service Enterprise Group's second quarter, 2024 earnings conference call and webcast. At this time, all participants are in listening mode. Later, we'll conduct a question-and-answer session for members of the financial community. At that time, if you have a question, you'll need to press the star and number one on your telephone keypad. To destroy your question, please press star and the number two. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded today to lie 30 of 2024.
Operator: I'm your event operator today. I'd like to welcome everyone to today's conference, Public Service Enterprise Group's second quarter 2024 earnings conference call and webcast. At this time, we'll dismiss our unlisted only mode, and later we'll conduct a question and answer session for members of the financial community. At that time, if you have a question, you'll need to press the star and number 1 on your telephone keypad. To withdraw your question, please press the star and number 2.
Speaker Change: I'd like to welcome everyone to today's conference, Public Service Enterprise Group's second quarter 2024 earnings conference call and webcast.
At this time, all participants are in listen-only mode.
Speaker Change: Later we'll conduct a question and answer session for members of the financial community. At that time, if you have a question, you'll need to press the star and the number 1 on your telephone keypad. To withdraw your question, please press the star and the number 2.
Operator: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded today, July 30th, 2024, and will be available for replay as an audio webcast on PSEG's Investor Relations website at www.investor.pseg.com. I would now like to turn the conference over to Carlotta Chan. Carlotta, please go ahead.
Speaker Change: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.
Speaker Change: As a reminder, this conference is being recorded today, July 30, 2024, and will be available for replay as an audio webcast on PSEG's Investor Relations website at https://investor.pseg.com.
Operator: I'll be available for replay as an audio webcast on PSCG's Investor Relations website at http.colonfollowedflashfollowedflashinvestor.pscg.com.
Carlotta Chan: I would now like to turn the conference over to Carlotta Chan. Carlotta, please go ahead.
Speaker Change: I would now like to turn the conference over to Carlotta Chan. Carlotta, please go ahead.
Carlotta Chan: Good morning and welcome to PSCG's second quarter 2024 earnings presentation.
Carlotta N. Chan: Good morning, and welcome to PSEG's second quarter 2024 earnings presentation. On today's call are Ralph LaRossa, Chair, President, and CEO, and Dan Cregg, 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-Q 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 for GAAP in the United States.
Carlotta N. Chan: Good morning and welcome to PSEG's second quarter 2024 earnings presentation.
Carlotta Chan: On today's call are Ralph 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.pscg.com, and our 10-Q will be filed later today. PSCG'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. We include reconciliation of our non-GAAP financial measures and a disclaimer regarding forward-looking statements on our IR website and in today's materials.
Speaker Change: On today's call are Ralph LaRosa, Chair, President and CEO , and Dan Cregg, Executive Vice President and CFO .
Speaker Change: The press release, attachments, and slides for today's discussion are posted on our IR website at investor.pseg.com, and our 10-Q will be filed later today.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: We include reconciliations of our non-GAAP financial measures and a disclaimer regarding forward-looking statements on our IR website and in today's material. Following the prepared remarks, we will conduct a 30-minute question-and-answer session. I will now turn the call over to Ralph LaRossa.
Carlotta Chan: Following the prepared remarks, we will conduct a 30-minute question-and-answer session.
Ralph LaRossa: I will now turn the call over to Ralph Larosa. Thank you, Carlotta.
Carlotta N. Chan: We include reconciliations of our non-GAAP financial measures and a disclaimer regarding forward-looking statements on our IR website and in today's material. Following the prepared remarks, we will conduct a 30-minute question-and-answer session. I will now turn the call over to Ralph LaRossa. Thank you, Carlotta.
Ralph A. LaRossa: Good morning to everyone, and thanks for joining us to review PSCG's second quarter results. PSCG reported net income of 87 cents per share for the second quarter of 2024, bringing results for the first half of 2024 to $1.93 per share. This compares the net income of $1.18 per share and $3.76 per share for the second quarter and first half of 2023. 2023 GAAP earnings had reflected higher mark-to-market gains that benefited those earnings.
Ralph LaRossa: Good morning to everyone, and thanks for joining us to review PSCG's second quarter results. PSCG reported net income of 87 cents per share for the second quarter of 2024, bringing results for the first half of 2024 to $1.93 per share. This compares the net income of the $1.18 per share and $3.76 per share for the second quarter and first half of 2023, respectively. The 2023 GAP earnings had reflected higher marked-to-market gains that benefited those earnings. Our results for the quarter and year-to-date periods are summarized on flights seven and nine in the webcast slides. Non-GAP operating earnings were $0.63 per share for the second quarter of 2024 and $1.94 per share for the first half of the year.
Ralph A. LaRossa: Thank you, Carlotta. Good morning to everyone and thanks for joining us to review PSEG's second quarter results.
Speaker Change: TSEG reported net income of 87 cents per share for the second quarter of 2024, bringing results for the first half of 2024 to $1.93 per share.
Ralph A. LaRossa: This compares the net income of $1.18 per share and $3.76 per share for the second quarter and first half of 2023, respectively.
Ralph A. LaRossa: The 2023 GAAP earnings had reflected higher mark-to-market gains that benefited those earnings.
Ralph A. LaRossa: Our results for the quarter and year-to-date periods are summarized on slides 7 and 9 in the webcast slide. Non-GAAP operating earnings were $0.63 per share for the second quarter of 2024 and $1.94 per share for the first half. This compares the non-GAAP operating earnings of $0.70 per share and $2.09 per share for the second quarter and first half of 2023. As a reminder, our non-GAAP results exclude the items shown in Attachments 8 and 9, which are included with the earnings.
Ralph A. LaRossa: Our results for the quarter and year-to-date periods are summarized on slides 7 and 9 in the webcast slides.
Ralph A. LaRossa: non-GAAP operating earnings were $0.63 per share for the second quarter of 2024 and $1.94 per share for the first half of the year.
Ralph LaRossa: This compares the non-GAAP operating earnings of $0.70 per share and $2.9 per share for the second quarter and first half of 2023, respectively. As a reminder, our non-GAAP results exclude the items shown in attachments eight and nine, which are included with the earnings release. They will provide a detailed financial review later in the poll. But I want to note that the results for the first six months of 2024 are on track with our full-year expectation. These expectations reflect the anticipated resolution of PSE and G's distribution rate case later this year, and the realization of most of the increase in PSEG power and others' 2024 gross margin concentrated in the fourth quarter.
Ralph A. LaRossa: This compares the non-GAAP operating earnings of $0.70 per share and $2.09 per share for the second quarter and first half of 2023, respectively.
Ralph A. LaRossa: As a reminder, our non-GAAP results exclude the items shown in Attachments 8 and 9, which are included with the earnings release.
Ralph A. LaRossa: They will provide a detailed financial review later in the call, but I want to note that the results for the first six months of 2024 are on track with our full-year expectations. These expectations reflect the anticipated resolution of PSE&G's distribution rate case later this year and the realization of most of the increase in PSEG power and others 2024 gross margin concentrated in the fourth quarter. Turning to operations for the second quarter, New Jersey has experienced what may turn out to be one of the hottest summers on record. The early and extended heat wave we experienced last month made June 2024 the second warmest June on record.
Speaker Change: They will provide a detailed financial review later in the call, but I want to note that the results for the first six months of 2024 are on track with our full year expectations.
Speaker Change: These expectations reflect the anticipated resolution of PSE&G's distribution rate case later this year, and the realization of most of the increase in PSEG power and others 2024 gross margin concentrated in the fourth quarter.
Ralph LaRossa: Turning to operations for the second quarter, New Jersey's experience, what may turn out to be one of the hottest summers. The early and extended heat wave we experienced last month made June 2024 the second warmest June in our records. Our electric transmission and distribution system performed exceptionally well, meeting the daily load requirements. In addition, our employees provided outstanding customer care, handling double the pole volume compared to the same period in 2023, responding to requests for customer service and air conditioning repairs. PSE and G responded to the elevated pole volume and restored power to the electric customers affected by severe storms and heat-related incidents, bringing them back online in under 24 hours, while responding to air conditioning service calls on average in 9 hours.
Speaker Change: Turning to operations for the second quarter, New Jersey has experienced what may turn out to be one of the hottest summers.
Speaker Change: The early and extended heatwave we experienced last month made June 2024 the second warmest June in our records.
Ralph A. LaRossa: Our electric transmission and distribution system performed exceptionally well, meeting the daily load requirements. In addition, our employees provided outstanding customer care, handling double the call volume compared to the same period in 2020, responding to requests for customer service and air conditioning repairs. CSC&G responded to the elevated call volume and restored power to the electric customers affected by severe storms and heat-related problems, bringing them back online in under 24 hours, while responding to air conditioning service calls on average in nine. Our electric and gas systems also withstood a 4.8-impact earthquake in April.
Speaker Change: Our electric transmission and distribution system performed exceptionally well, meeting the daily load requirements.
Speaker Change: In addition, our employees provided outstanding customer care, handling double the call volume compared to the same period in 2023, responding to requests for customer service and air conditioning repairs.
Speaker Change: CSC&G responded to the elevated call volume and restored power to the electric customers affected by severe storms and heat-related incidents.
Speaker Change: bringing them back online in under 24 hours.
Speaker Change: while responding to air conditioning service calls, on average, in nine hours.
Ralph LaRossa: Our electric and gas systems also would split at 4.8 impact earthquake in April, which resulted in required inspections but resulted in no operational issues. At PSEG Power, we completed the scheduled refueling of our holy own Hope Creek nuclear station on schedule, which lowered the fleet's capacity factor from over 96% in the first quarter to 82.7% for the second quarter. As expected, the refueling outage also reduced total generation for the second quarter or for the year-to-date through June. The two Salem units, which share the site with Hope Creek, operated at a capacity factor of 99%. Keeping us on track with our full-year generation forecast of 30-32 tWh.
Speaker Change: Our electric and gas systems also withstood a 4.8-impact earthquake in April .
Ralph A. LaRossa: Resulted in required inspections, but no operational problems. At PSEG Power, we completed the scheduled refueling of our wholly owned Hope Creek Nuclear Station on schedule, which lowered the fleet's capacity factor from over 96% in the first quarter to 82.7% for the second quarter. As expected, the refueling average also reduced total generation for the second... or for the year to date through June, the two Salem units, which share the site with Hope, operated at a capacity factor of 99, keeping us on track with our full year generation forecast of 30 to 32 terawatts.
Speaker Change: It resulted in required inspections, but resulted in no operational issues.
Speaker Change: At PSEG Power, we completed the scheduled refueling of our wholly owned Hope Creek Nuclear Station on schedule, which lowered the fleet's capacity factor from over 96% in the first quarter to 82.7% for the second quarter.
Speaker Change: As expected, the refueling outage also reduced total generation for the second quarter, but for the year to date through June , the two Salem units, which share the site with Hope Creek, operated at a capacity factor of 99 percent.
Speaker Change: keeping us on track with our full year generation forecast of 30 to 32 terawatt hours.
Ralph LaRossa: Switching to regulatory activity in May 2024, the New Jersey Board of Public Utilities, or the BPU, approved an additional extension of our Clean Energy Future, or Energy Efficiency Program, of approximately $300 million, covering a six-month commitment period from July of 2024 through December of 2024. And in June, the BPU approved the recovery of PSEG's previously deferred COVID-19 costs over a five-year period starting in June of 2025. We continue to participate in confidential discussions with various parties to resolve both our distribution, base rate case, as well as $3.1 billion energy efficiency to finally. These discussions are ongoing in parallel, and we anticipate that both cases can be resolved later this year.
Ralph A. LaRossa: Switching to regulatory activity, in May 2024, the New Jersey Board of Public Utilities, or the BPU, approved an additional extension of our Clean Energy Future, or Energy Efficiency Program, of approximately $300 million, covering a six month commitment period from July of 2024 through December. And in June, the BPU approved the recovery of PSE&G's previously deferred COVID-19 costs over a five-year period, starting in June of
Speaker Change: Switching to regulatory activity, in May 2024, the New Jersey Board of Public Utilities, or the BPU, approved an additional extension of our Clean Energy Future, or Energy Efficiency Program of approximately 300 million dollars.
Speaker Change: covering a six-month commitment period from July of 2024 through December of 2024.
Speaker Change: And in June , the BPU approved the recovery of PSE&G's previously deferred COVID-19 costs over a five-year period starting in June of 2025.
Ralph A. LaRossa: We continue to participate in confidential discussions with various parties to resolve both our distribution base rate case and the $3.1 billion Energy Efficiency II fund. Discussions are ongoing and parallel, and we anticipate that both cases can be resolved later this year. We recently submitted the final update to the base rate case filing with actual data for the full.
Speaker Change: We continue to participate in confidential discussions with various parties to resolve both our distribution base rate case, as well as the $3.1 billion Energy Efficiency II funding.
Speaker Change: These discussions are ongoing and parallel, and we anticipate that both cases can be resolved later this year.
Ralph LaRossa: We recently submitted the final update to the base rate case filing with actual data for the full test year. As a reminder, the combined electric and gas distribution rate case filing is primarily to recover incremental capital spending. We have proposed an overall revenue increase of 9%, with a typical combined residential electric and gas customer seeing a proposed increase of 12%. or less than 2% compound growth over this six-year period. As a single-state utility with dual regulatory jurisdictions, this distribution filing covers approximately 57% of our total ratebase. That said, customer affordability continues to be a priority, and we continue to compare favorably with our regional peers.
Speaker Change: We recently submitted the final update to the base rate case filing with actual data for the full test year.
Ralph A. LaRossa: As a reminder, the combined electric and gas distribution rate case filing is primarily to recover incremental capital. We have proposed an overall revenue increase of nine.. typical combined residential, electric, and gas customers seeing a proposed increase of $12,000, for less than 2% compounded growth over the six years. As a single state utility with dual regulatory jurisdictions, this distribution filing covers approximately 57% of our total revenue. That said, customer affordability continues to be a priority, and we continue to compare favorably with our regional counterparts. PSE and G customers have a lower than average electric bill and the lowest gas bill.
Speaker Change: As a reminder, the combined electric and gas distribution rate case filing is primarily to recover incremental capital spending.
Speaker Change: We have proposed an overall revenue increase of 9% for the typical combined residential electric and gas customers seeing a proposed increase of 12% or less than 2% compounded growth over the six-year period.
Speaker Change: As a single state utility with dual regulatory jurisdictions, this distribution filing covers approximately 57% of our total rate base.
Speaker Change: That said, customer affordability continues to be a priority.
Ralph LaRossa: PSE and G customers have a lower than average electric bill and the lowest gas bill in the region. Additionally, PSE and G recently filed with the BPU to implement another gas supply cost reduction this October. The third is January 2023, which will further help customer affordability this coming winter.
Speaker Change: And we continue to compare favorably with our regional peers.
Speaker Change: GSE and G customers have a lower than average electric bill and the lowest gas bill in the region.
Ralph A. LaRossa: Additionally, PSC&G recently filed with the VPU to implement another gas supply cost reduction this October, the third since January 2023, which will further help customer affordability this coming year. Moving on to capital investments, we remain on track to execute PSCG's five-year $19 billion to $22.5 billion capital plan through 2020. A regulated portion represents $18 to $21 billion of the total, focused on infrastructure replacement in our award-winning energy efficiency program. PSE&G has placed over 2 million of the 2.3 million smart meters planned through our AMI program and is still on schedule for completion by the end of the year.
Speaker Change: Additionally, PSC&G recently filed with the VPU to implement another gas supply cost reduction this October .
Speaker Change: Our third since January 2023, which will further help customer affordability this coming winter.
Ralph LaRossa: Moving on to capital investments, we remain on track to execute PSEG's 5-year $19 billion to $22.5 billion capital plan through 2028. The regulated portion represents 18 to 21 billion dollars of the total, focused on infrastructure replacement and our award-winning energy efficiency programs. PSE and G has placed into service over 2 million of the 2.3 million small meters plan through our AMI program, still on schedule for completion by the end of this year. These investments are captured in our projections for a compound annual growth rate and ratebase of 6 to 7.5% over the 2024 through 2028 period, starting from a year-end 2023 ratebase of 29 billion, which was up 10% over the prior year.
Speaker Change: Moving on to capital investments, we remain on track to execute PSCG's five-year $19 billion to $22.5 billion capital plan through 2028.
Speaker Change: A regulated portion represents $18 to $21 billion of the total.
Speaker Change: focused on infrastructure replacement and our award-winning energy efficiency programs.
Speaker Change: TSE and GS placed into service over 2 million of the 2.3 million smart meters planned through our AMI program, still on schedule for completion by the end of this year.
Ralph A. LaRossa: These investments are captured in our projections for a compound annual growth rate and rate base of six to seven and a half percent over the 2024 through 2028 period, starting from a year-end 2023 rate base of $29 billion, which was up 10% over the prior year. We also continue to pursue potential incremental investment opportunities for future regulated growth. Along those lines, PSC&G is experiencing an increase in new business requests and feasibility studies from potential data center customers across our service area compared with 2023, which combined with increased electric vehicle charges.
Speaker Change: These investments are captured in our projections for a compound annual growth rate and rate base of 6 to 7.5% over the 2024 through 2028 period.
Speaker Change: starting from a year-end 2023 rate base of $29 billion, which was up 10% over the prior year.
Ralph LaRossa: We also continue to pursue potential incremental investment opportunities for future regulated growth. Along those lines, PSE and G has experienced an increase in new business requests and feasibility studies from potential data center customers across our service area compared with 2023 activity, which, combined with increased electric vehicle charging, is expected to drive low growth and system investment needs in the future.
Speaker Change: We also continue to pursue potential incremental investment opportunities for future regulated growth.
Speaker Change: Along those lines, PSC&G is experiencing an increase in new business requests and feasibility studies from potential data center customers across our service area compared with 2023 activity, which combined with increased electric vehicle charging is expected to drive load growth.
Ralph A. LaRossa: The Bulletproof Executive 2013, Switching to regulated transmission solicitations, which are scheduled for this summer, PSE&G expects that the BPU will announce the winner or winners of the pre-billed offshore wind infrastructure during the second half of 2020. Last month, the BPU postponed its second state agreement approach process to procure transmission to support offshore wind generation while it evaluates the impact of FERC and PGM activities on long-term transmission planning cost allocations and the Interconnection Curator.
Ralph LaRossa: Switching to regulated transmission solicitations, which are scheduled for this summer, PSE and G expects that the BPU will announce the winners or winners of the pre-built AUSHRA win infrastructure during the second half of 2024. Last month, the BPU postponed the second state agreement approach process to procure transmission to support offshore wind generation, while it evaluates the impact of FERC and PGM activity on long-term transmission planning, cost allocation, and interconnection Q reform. The BPU may reevaluate this timing and the need for a second SAA solicitation in six months, which would be this coming December. PGM opened the 2024 Regional Transmission Expansion Plan window one solicitation earlier this month, which reflects their higher low growth forecast on the 2029 to 2032 planned horizon.
Speaker Change: and System Investment Needs in the Future.
Speaker Change: Switching to regulated transmission solicitations, which are scheduled for this summer, PSE&G expects that the BPU will announce the winner or winners of the pre-billed offshore wind infrastructure during the second half of 2024.
Speaker Change: Last month, the BPU postponed its second state agreement approach process to procure transmission to support offshore wind generation, while it evaluates the impact of FERC and PGM activity on long-term transmission planning, cost allocation, and interconnection queue reform.
Ralph A. LaRossa: The BPU may re-evaluate this timing and the need for a second SAA solicitation in six months, which would be this coming December. PJM opened the 2024 Regional Transmission Expansion Plan window one solicitation earlier, which reflects their higher low growth forecast for 2029.
Speaker Change: The BPU may re-evaluate this timing and the need for a second SAA solicitation in six months, which would be this coming December .
Speaker Change: PJM opened the 2024 Regional Transmission Expansion Plan Window 1 solicitation earlier this month, which reflects their higher load growth forecast on the 2029 to 2032 planning horizon.
Ralph A. LaRossa: 2032 Planned Garage has been influenced by increased electrification expectations and data center load growth throughout PJM. We are evaluating the window one solicitation for potential opportunities to bid on this. Crossing the Hudson for a moment, and as expected, the Long Island Power Authority opened a request for proposals process to select the manager to operate their election.
Ralph LaRossa: It has been influenced by increased electrification expectations and data center low growth throughout PGM. We are evaluating the Window One solicitation for potential opportunities to bid this. September.
Speaker Change: that has been influenced by increased electrification expectations and data center load growth throughout PJM.
Speaker Change: We are evaluating the Window 1 solicitation for potential opportunities to bid this September .
Ralph LaRossa: Now crossing the Hudson for a moment, and as expected, the Long Island Power Authority opened a request for proposal process to select the managers to operate their electric grid. Our existing operating services agreement and power supply contract with LIFA runs through the end of 2025. We intend to submit proposals into their RFP process, and LIFA is expected to make selections early next year. At PSEG Power, we are also continuing to explore opportunities for the potential sale of electricity from our nuclear facilities for pursuing long-term agreements to supply large power energy users such as data centers and hydrogen producers.
Speaker Change: Now crossing to Hudson for a moment, and as expected, the Long Island Power Authority opened a request for proposals process to select a manager to operate their electric grid.
Ralph A. LaRossa: Our existing operating services agreement and power supply contract with HIPAA runs through the end of 2025. We intend to submit proposals in their RFP process, and LIPA is expected to make selections early next year. At PSEG Power, we are also continuing to explore opportunities for the potential sale of electricity from our nuclear facility pursuant to long-term agreements to supply large power energy, such as data centers and hydrogen. In addition, we are pursuing multiple growth plans that include thermal and efficiency upgrades at our co-owned Salem units that could potentially increase the combined output by up to 200 megawatts and qualify for tax credits on the current.
Speaker Change: Our existing Operating Services Agreement and Power Supply Contract with HIPAA runs through the end of 2025.
Speaker Change: We intend to submit proposals into their RFP process, and LIPA is expected to make selections early next year.
Speaker Change: At PSEG Power, we are also continuing to explore opportunities for the potential sale of electricity from our nuclear facilities, pursuant to long-term agreements to supply large power energy users, such as data centers and hydrogen producers.
Ralph LaRossa: In addition, we are pursuing multiple growth plans that include thermal and efficiency upgrades at our colon sale units that could potentially increase the combined output by up to 200 megawatts and qualify for tax credits on the current rules. Today we are reaffirming our guidance for long-term non-GAAP operating earnings growth of 5% to 7% through 2028, which is based on the threshold price of the nuclear production tax credit, or the PTC, that also provides these units with revenue stability through 2032. We continue to deploy the free cash from the nuclear business to help fund utility growth without the need to issue new equity or sell assets, and it continues to be a differentiating factor for us.
Speaker Change: In addition, we are pursuing multiple growth plans that include thermal and efficiency upgrades at our co-owned Salem units.
Speaker Change: that could potentially increase the combined output by up to 200 megawatts and qualify for tax credits under current rules.
Ralph A. LaRossa: Today, we are reaffirming our guidance for long-term non-GAAP operating earnings growth of 5 to 7% through 2020, which is based on the threshold price of the Nuclear Production Tax Credit, or the PTC, that also provides these units with revenue stability through 2030. Continue to deploy the free cash from the nuclear business to help fund utility growth without the need to issue new equity or sell assets. This continues to be a differentiating factor for us. Importantly, our solid balance sheet supports the execution of our capital investment program of $19 to $22.5 billion through 2028 and provides the opportunity for consistent and sustainable dividend growth. Summary of the first six months of the year, solid execution is driving our expected results.
Speaker Change: Today, we are reaffirming our guidance for long-term non-GAAP operating earnings growth of 5-7% through 2028, which is based on the threshold price of the Nuclear Production Tax Credit, or the PTC,
Speaker Change: that also provides these units with revenue stability through 2032.
Speaker Change: We continue to deploy the free cash from the nuclear business to help fund utility growth without the need to issue new equity or sell assets. This continues to be a differentiating factor for us.
Ralph LaRossa: Importantly, our solid balance sheet supports the execution of our capital investment program with 19 to 22.5 billion through 2028 and provides the opportunity for consistent and sustainable dividend growth.
Speaker Change: Importantly, our solid balance sheet supports the execution of our capital investment program of $19 to $22.5 billion through 2028 and provides the opportunity for consistent and sustainable dividend growth.
Ralph LaRossa: In summarizing the first six months of the year, solid execution is driving our expected results. We have settled two regulatory proceedings in the past quarter, and we are working to resolve our pending base rate case and the E2 funds later this year. We are also advancing our five-year capital investment plan focused on infrastructure modernization and energy efficiency initiatives. These investments will help prepare our system for griddle electrification of transportation, homes, and workplaces while also reducing greenhouse gas emissions and helping to lower customer bills.
Speaker Change: In summarizing the first six months of the year, solid execution is driving our expected results.
Ralph A. LaRossa: We have settled two regulatory proceedings in the past quarter, and we are working to resolve our pending base rate case and the EE2 filings later this year. We are also advancing our five-year capital investment plan focused on infrastructure modernization and energy efficiency. These investments will help prepare our system for greater electrification of transportation, homes, and workplaces, while also reducing greenhouse gas emissions and helping to lower customer bills. Last but certainly not least, I want to thank our employees for all they do.
Speaker Change: We have settled two regulatory proceedings in the past quarter, and we are working to resolve our pending base rate case and the EE2 filings later this year.
Speaker Change: We are also advancing our five-year capital investment plan focused on infrastructure modernization and energy efficiency initiatives.
Speaker Change: These investments will help prepare our system for greater electrification of transportation, homes, and workplaces while also reducing greenhouse gas emissions and helping to lower customer bills.
Ralph LaRossa: Last but certainly not least, I want to thank our employees for all they do. Their tireless efforts have helped us to maintain best-in-class operating statistics and customer service, especially through the challenging heatwave we have seen this year.
Speaker Change: Last but certainly not least, I want to thank our employees for all they do. Their tireless efforts have helped us to maintain best-in-class operating statistics and customer service, especially through the challenging heat wave we have seen this year.
Ralph A. LaRossa: Their tireless efforts have helped us to maintain best-in-class operating statistics and customer service, especially through the challenging heat wave we have seen this year. I'll now turn the call over to Dan to discuss our financial results and outlook in greater detail, and we'll be available for your questions after his report. Good morning, everybody.
Dan Craig: I'll now turn the call over to Dan to discuss our financial results and outlook in greater detail. It will be available for your questions after his remarks.
Speaker Change: I'll now turn the call over to Dan to discuss our financial results and outlook in greater detail, and we'll be available for your questions after his remarks.
Daniel J. Cregg: As Ralph mentioned earlier, PSCG reported net income of $0.87 per share for the second quarter of 2024, and that compares to $1.18 per share in 2023. Non-GAAP operating earnings were $0.63 per share for the second quarter of 2024, compared to $0.70 per share in 2020. Slide seven and nine detail the contribution to non-GAAP operating earnings per share, by business segment, for the second quarter and first half of 2024. Slides 8 and 10 contain waterfall charts that will take you through the net changes, for the quarter, over quarter, and six-month period, non-GAAP operating earnings per share by major business.
Dan Craig: Great. Thank you, Ralph.
Dan Craig: Good morning, everybody. As Ralph mentioned earlier, PSG reported net income of 87 cents per share for the second quarter of 2024. And that compares to a dollar 18 per share in 2023. Non-GAAP operating earnings were $0.63 per share on the second quarter of 2024, compared to $0.70 per share in 2023. By $0.79 detailed contribution to non-GAAP operating earnings per share by business segment, the second quarter and first half of 2024. No, plus eight and ten contained waterfall charts that will take you through the net changes for the quarter-over-quarter and six-month periods in non-GAAP operating earnings per share by major business.
Daniel J. Cregg: Great, thank you, Ralph. Good morning, everybody. As Ralph mentioned earlier, PSCG reported net income of 87 cents per share for the second quarter of 2024, and that compares to $1.18 per share in 2023.
Daniel J. Cregg: Non-GAF operating earnings were $0.63 per share on the second quarter of 2024, compared to $0.70 per share in 2023.
Daniel J. Cregg: Slides 7 and 9 detail the contribution to non-GAAP operating earnings per share by business segment for the second quarter and first half of 2024.
Daniel J. Cregg: Slides 8 and 10 contain waterfall charts that will take you through the net changes.
Daniel J. Cregg: for the quarter, over quarter, and six-month periods in non-GAAP operating earnings.
Dan Craig: Starting with PSENG, which reported second quarter net income of 60 cents per share for 2024 compared to 67 cents per share in 2023. The major drivers for both net income and non-GAAP results for the quarter were growth and rate base from higher regulated investments, offset by higher investment-related depreciation and interest expense, awaiting rate recovery and our pending rate case, as well as higher on M cost due to regulatory safety and whether or not it's going to work.
Daniel J. Cregg: Starting with PSC&G, which reported second-quarter net income of $0.60 per share for 2024, compared to $0.67 per share in 2023. PSE&G had non-GAAP operating earnings of $0.60 per share for the second quarter of 2024, compared to $0.68 per share in 2025.
Daniel J. Cregg: per share by major business.
Daniel J. Cregg: Starting with PSC&G, which reported second quarter net income of $0.60 per share for 2024, compared to $0.67 per share in 2023.
Daniel J. Cregg: PSE&G had non-GAAP operating earnings of $0.60 per share for the second quarter of 2024, compared to $0.68 per share in 2023.
Daniel J. Cregg: The main drivers for both net income and non-GAAP results for the quarter were growth and rate base from higher regulated investments, offset by higher investment-related depreciation and interest expense awaiting rate recovery in our pending rate case, as well as higher O&M costs due to regulatory, safety, and weather-related activities. Compared to the second quarter of 2023, the electric margin increased by two cents per share due to customer growth in the Conservation Incentive Program, or CIP, and our final Energy Strong II recovery and Energy Efficiency Investment of a penny per share higher.
Daniel J. Cregg: The main drivers for both net income and non-GAAP results for the quarter were growth in rate base from higher regulated investments.
Daniel J. Cregg: offset by higher investment-related depreciation and interest expense awaiting rate recovery in our pending rate case.
Daniel J. Cregg: as well as higher O&M costs due to regulatory, safety, and weather-related activities.
Dan Craig: That's what we're going to do in the next quarter of 2023. Electric margin increased by two cents per share due to customer growth in the conservation incentive program or SIP at our final energy strong to recovery and energy efficiency investment of a pay per share higher. Other distribution margin added two cents per share, while transmission margin declined by two cents per share due to timing of revenue at O&M, including our annual true-up. Ralph referred to the heat wave we experienced in June and this warmer weather combined with greater storm activity, but the higher corrective maintenance cost during the quarter.
Daniel J. Cregg: Compared to the second quarter of 2023, electric margin increased by two cents per share due to customer growth in the Conservation Incentive Program, or CIP, and our final Energy Strong II recovery.
Daniel J. Cregg: and Energy Efficiency Investment of a penny per share higher.
Daniel J. Cregg: Other distribution margin added $0.02 per share, while transmission margin declined by $0.02 per share due to timing of revenue at O&M, including our annual true up. Ralph referred to the heat wave we experienced in June, and it's warmer weather combined with greater storm activity. But the higher corrective maintenance costs during the, Distribution L&M expense increased by four cents per share compared to the second quarter of 2023, also due to higher gas meter inspections and safety costs. Appreciation and interest expense increased by a penny per share and two cents per share, respectively, compared to the second quarter of 2023, reflecting continued growth in investment and higher.
Daniel J. Cregg: Other distribution margin added $0.02 per share, while transmission margin declined by $0.02 per share due to timing of revenue at O&M, including our annual true up.
Daniel J. Cregg: Ralph referred to the heat wave we experienced in June .
Ralph A. LaRossa: And this warmer weather combined with greater storm activity led to higher corrective maintenance costs during the quarter.
Dan Craig: distribution of an expense increased by four cents per share compared to the second quarter of 2023, also due to higher gas meter inspections and safety costs. Appreciation and interest expense increased by a penny per share and two cents per share, respectively, compared to the second quarter of 2023, reflecting continued growth in investment and higher interest expense. Lower pension and open income resulting from the cessation of open related credits, which ended in 2023, resulted in a penny per share unfavorable comparison to the year earlier quarter. Lastly, the timing of taxes recorded through an annual effective tax rate, which nets to zero over a full year, and other taxes had a net unfavorable impact of three cents per share in a quarter compared to 2023.
Ralph A. LaRossa: Distribution L&M expense increased by $0.04 per share compared to the second quarter of 2023, also due to higher gas meter inspections and safety costs.
Ralph A. LaRossa: Appreciation and interest expense increased by a penny per share and two cents per share, respectively.
Ralph A. LaRossa: compared to the second quarter of 2023, reflecting continued growth in investment and higher interest expense.
Daniel J. Cregg: Lower pension and OPEB income resulting from the cessation of OPEB-related credit, which ended in 2023, resulted in a penny per share unfavorable comparison to the year earlier quarter. Lastly, the timing of tax is recorded through an annual effective tax rate, which nets to zero over a full year, and other taxes had a net unfavorable impact of $0.03 per share in a quarter compared Summer weather in the second quarter, as measured by the Temperature Humidity Index, was 42% warmer than normal and 99% warmer than the second quarter of 2023.
Ralph A. LaRossa: Lower pension and OPEB income resulting from the cessation of OPEB-related credits.
Ralph A. LaRossa: which ended in 2023, resulted in a penny-per-share unfavorable comparison to the year earlier quarter.
Ralph A. LaRossa: Lastly, the timing of taxes recorded through an annual effective tax rate, which nets to zero over a full year, and other taxes had a net unfavorable impact of three cents per share in a quarter, compared to 2023.
Dan Craig: Another weather in the second quarter as measured by the temperature humidity index was 42% warmer than normal and 99% warmer than the second quarter of 2023. In fact, the second quarter of 2024 was the warmest second quarter in our records going back 55 years, mostly due to that June heat wave. As a reminder, weather variations have minimal impact on our utility margin because of the conservation incentive program or SIT mechanism, which limits the impact of weather and other sales variances, positive or negative, on electric and gas margins while helping PSEG broadly promote the adoption of its energy efficiency programs. The number of electric and gas customers, which is the driver of margin under the SIT mechanism.
Ralph A. LaRossa: Storm weather in the second quarter, as measured by the Temperature Humidity Index, was 42% warmer than normal and 99% warmer than the second quarter of 2023.
Daniel J. Cregg: In fact, the second quarter of 2024 was the warmest second quarter in our records, going back 55 years, mostly due to that June heat wave. As a reminder, weather variations have minimal impact on our utility margin because of the Conservation Incentive Program or CIP mechanism, which limits the impact of weather and other sales variances, positive or negative, on electric and gas margins while helping PSENG broadly promote the adoption of its energy efficiency program.
Ralph A. LaRossa: In fact, the second quarter of 2024 was the warmest second quarter in our records, going back 55 years, mostly due to that June heatwave.
Ralph A. LaRossa: As a reminder, weather variations have minimal impact on our utility margin because of the Conservation Incentive Program, or CIP, mechanism.
Ralph A. LaRossa: which limits the impact of weather and other sales variances, positive or negative.
Ralph A. LaRossa: on electric and gas margins.
Ralph A. LaRossa: while helping PSE&G broadly promote the adoption of its energy efficiency programs.
Daniel J. Cregg: The number of electric and gas customers, which is the driver of margin under the SIP mechanism, continued to grow by approximately 1% each over the past year. On capital spending, PSC&G invested approximately $900 million during the second quarter.
Ralph A. LaRossa: The number of electric and gas customers, which is the driver of margin under the SIP mechanism.
Dan Craig: Continued to grow by approximately 1% each over the past year.
Ralph A. LaRossa: continued to grow by approximately 1% each over the past year.
Dan Craig: On capital spending, PSE and G invested approximately $900 million during the second quarter, and we remain on track to execute on our 2024 regulated capital investment plan of $3.4 billion. It's focused on infrastructure modernization and decarbonization initiatives. These include upgrades and replacements to RT&D facilities, last mile spend in the infrastructure events program, ongoing gas infrastructure replacement spending, and the continued lean energy investments across EE, smart meter installation, and EV make ready infrastructure. We are reaffirming our five-year regulated capital investment plan of $18 to $21 billion from 2024 to 2028. The high end of this plan includes the $3.1 billion CEF energy efficiency to filing made December 2023 that would enable commitments from January 25 to June 27 based on the BPU's EE framework.
Ralph A. LaRossa: on Capital Spending.
Ralph A. LaRossa: PSE&G invested approximately $900 million during the second quarter.
Daniel J. Cregg: And we remain on track to execute on our 2024 Regulated Capital Investment Plan of $3.4 billion, which is focused on infrastructure modernization and decarbonization initiatives. These include upgrades and replacements to our T&D facilities, last mile spend in the Infrastructure Advancement Program, ongoing gas infrastructure replacement spending, and the continued lean energy investments across EE, smart meter installation, and EV make-ready infrastructure. We are reaffirming our five-year regulated capital investment plan of $18 to $21 billion from 2024 to 2028.
Ralph A. LaRossa: And we remain on track to execute on our 2024 regulated capital investment plan of $3.4 billion.
Ralph A. LaRossa: It's focused on infrastructure modernization and decarbonization initiatives.
Ralph A. LaRossa: These include upgrades and replacements to our T&D facilities, last mile spend in the Infrastructure Advancement Program, ongoing gas infrastructure replacement spending,
Ralph A. LaRossa: and the continued lean energy investments across EE, smart meter installation, and EV make-ready infrastructure.
Ralph A. LaRossa: We are reaffirming our five-year regulated capital investment plan of 18 to 21 billion dollars from 2024 to 2028.
Daniel J. Cregg: The high end of this plan includes the $3.1 billion CEF Energy Efficiency II filing, made in December 2023 that would enable commitments from January 25 to June 27 based on the DPU's EE framework. As Ralph said earlier, this proceeding is expected to be resolved at the BPU later this year. Moving to PCG Power and Other, for the second quarter of 2024, PSTG Power and Other reported net income of $0.27 per share, compared to $0.51 per share for the second quarter of 2023. Non-GAAP operating earnings were $0.03 per share for the second quarter of 2024, and prepared non-GAAP operating earnings of $0.02 per share for the second quarter of 2020.
Ralph A. LaRossa: The high end of this plan includes the $3.1 billion CEF Energy Efficiency II filing made December 2023 that would enable commitments from January 25 to June 27 based on the BPU's EE framework.
Dan Craig: As Ralph said earlier, this proceeding is expected to be resolved at the BPU later this year. Moving to PSEG Power, another for the second quarter of 2024, PSEG Power another reported net income of $0.27 per share compared to $0.51 per share for the second quarter of 2023. Non-GAAP operating earnings were $0.3 per share for the second quarter of 2024 compared to non-GAAP operating earnings of $0.2 per share for the second quarter of 2023. In the second quarter of 2024, net energy margin rose by $0.8 per share, driven by nuclear, including the net impact of the nuclear PTC that took effect January 1, 2024.
Ralph A. LaRossa: As Ralph said earlier, this proceeding is expected to be resolved at the VPU later this year.
Ralph A. LaRossa: Moving to PCG Power and Other.
Speaker Change: for the second quarter of 2024.
Speaker Change: PSTG Power & Other reported net income of $0.27 per share compared to $0.51 per share for the second quarter of 2023.
Speaker Change: non-GAAP operating earnings were $0.03 per share for the second quarter of 2024.
Speaker Change: compared to non-GAAP operating earnings of $0.02 per share for the second quarter of 2023.
Daniel J. Cregg: In the second quarter of 2024, net energy margin rose by eight cents per share driven by nuclear, including the net impact of the nuclear PTC that took effect on January 1st of 2024, partially offset by the anticipated reduction in generation due to the Hope Creek outage and capacity risk. As a reminder, for 2024, there will be some shape to our quarterly results as we move through the remainder of the year. We anticipate realizing most of the increase, and the 2024 gross margin over the 2023 gross margin, during the second half of the year, specifically in the fourth quarter, based upon the shape of our underlying hedges.
Speaker Change: In the second quarter of 2024, net energy margin rose by 8 cents per share driven by nuclear, including the net impact of the nuclear PTC that took effect January 1st of 2024.
Dan Craig: Parts we offset by the anticipated reduction in generation due to the Hope Creek outage and capacity revenue.
Speaker Change: partially offset by the anticipated reduction in generation due to the Hope Creek outage and capacity revenue.
Dan Craig: As a reminder for 2024, there will be a shake toward quarterly results as we move through the remainder of the year. We anticipate realizing most of the increase in the 2024 gross margin over 2023 gross margin during the second half of the year, specifically in the fourth quarter, based upon the shape of our underlying hedges. This differs from last year when PSEG Power realized most of the step up in the annual hedge price in the first quarter of 2023. When I'm increased by $0.5 per share, mostly driven by the scheduled refueling at our 100% owned Hope Creek nuclear unit.
Speaker Change: As a reminder, for 2024, there will be a shake to our quarterly results as we move through the remainder of the year.
Speaker Change: We anticipate realizing most of the increase in the 2024 gross margin over 2023's gross margin.
Speaker Change: During the second half of the year, specifically in the fourth quarter, based upon the shape of our underlying hedges.
Daniel J. Cregg: This differs from last year, when PCG Power realized most of the step-up in the annual hedge price in the first quarter of 2020. O&M increased by 5 cents per share, mostly driven by the scheduled refueling at our 100% owned Hope Creek Nuclear Unit. Interest expense was a penny unfavorable, reflecting incremental debt at higher rates.
Speaker Change: This differs from last year when PCG Power realized most of the step-up in the annual hedge price in the first quarter of 2023.
Speaker Change: O&M increased by 5 cents per share, mostly driven by the scheduled refueling at our 100% owned Hope Creek Nuclear Unit.
Dan Craig: Interest expense was a penny unfavorable, reflecting incremental debt at higher rates. And taxes another were a penny per share unfavorable compared to the second quarter of 2023. Primarily reflecting the use of a higher effective tax rate in the quarter that will reverse over the balance of 2024. On the operating side, the nuclear fleet produced approximately seven tarot hours during the second quarter of 2024 compared to 7.7 tarot hours in the year earlier period and ran at a capacity factor of 82.7. 2.5% nuclear generation in the first half of 2024, total 15.2 terro-odd hours, which was impacted by the Hogue Creek refueling, but also benefited from high-capacity factor performance at 2 sale units, which operated at 98.9% for the quarter and at 99.3% for the first half of 2024.
Speaker Change: Interest expense was a penny unfavorable, reflecting incremental debt at higher rates.
Daniel J. Cregg: And taxes and other were a penny per share unfavorable compared to the second quarter of 2023, primarily reflecting the use of a higher effective tax rate in the quarter that will reverse over the balance of 2020. On the operating side, the nuclear fleet produced approximately 7 terawatt hours during the second quarter of 2024, compared to 7.7 terawatt hours in the year earlier period, and ran at a capacity factor of 82.7. Nuclear generation in the first half of 2024 totaled 15.2 terawatt hours, which was impacted by the Hope Creek refueling but also benefited from high capacity factor performance that is too saline, which operated at 98.9% for the quarter and at 99.3% for the first half of 2024. Touching on some recent financing activity. As of the end of June, PCG had total available liquidity of $3.1 billion, including $113 million of cash on hand.
Speaker Change: And taxes and other were a penny per share unfavorable compared to the second quarter of 2023, primarily reflecting the use of a higher effective tax rate in the quarter that will reverse over the balance of 2024.
Speaker Change: On the operating side, the nuclear fleet produced approximately 7 terawatt-hours during the second quarter of 2024, compared to 7.7 terawatt-hours in the year-earlier period, and ran at a capacity factor of 82.7 percent.
Speaker Change: Nuclear generation in the first half of 2024 totaled 15.2 terawatt hours.
Speaker Change: which was impacted by the Hope Creek refueling, but also benefited from high capacity factor performance that are to sailing units.
Speaker Change: which operated at 98.9% for the quarter and at 99.3% for the first half of 2024.
Dan Craig: Touching on some recent financing activity, as of the end of June, PSG has total available liquidity of $3.1 billion, including $113 million of cash on hand. Following the issuance of $1.25 billion of PSG senior notes in March, during the second quarter, PSG paid off $500 million of a 364-day term loan in April and $750 million of PSG senior notes in June. With the PSG term loan redemption in March, PCG's variable rate debt at the end of June consisted of a $1.25 billion term loan, which during March 2025, the entirety of which has been swapped out from a variable rate to a fixed rate to mitigate the fluctuations in interest rates.
Speaker Change: Touching on some recent financing activity, as of the end of June , PCG had total available liquidity of $3.1 billion.
Speaker Change: including 113 million dollars of cash on hand.
Daniel J. Cregg: Following the issuance of $1.25 billion of PSUG senior notes in March... During the second quarter, PSCG paid off $500 million of a 364-day term loan in April and $750 million of PSCG senior notes in June. With the PCG term loan redemption in March, PCG's variable rate debt at the end of June consisted of a $1.25 billion term loan maturing in March 2025, the entirety of which has been swapped out from a variable rate to a fixed rate to mitigate the fluctuations in interest rates.
Speaker Change: Following the issuance of 1.25 billion dollars of PSUG senior notes in March,
Speaker Change: During the second quarter, PSG paid off $500 million of a 364-day term loan in April .
Speaker Change: and $750 million of PSCG Senior Notes in June .
Speaker Change: with the PCG term loan redemption in March.
Speaker Change: TCG's variable rate debt at the end of June .
Speaker Change: Consisted of a $1.25 billion term loan, returning March 2025.
Speaker Change: the entirety of which
Speaker Change: has been swapped out from a variable rate to a fixed rate to mitigate the fluctuations in interest rates.
Dan Craig: At the end of June, given our slots, we had minimal variable-rate debt.
Daniel J. Cregg: At the end of June, given our swap... We had minimal variable rate debt. On the credit ratings front, in June, Moody's updated PSUG Power's Outlook to Stable from Positive. And this change is consistent with our future plans for leverage and our targeted credit rate. We continue to maintain a solid BAA2 investment grade rating at PSG Power. In closing, we are reaffirming PSUG's full year 2024 non-GAAP operating earnings guidance of $3.60 to $3.70 per share, which reflects continued rate-based growth from ongoing regulated investment, offset by higher depreciation and interest as we await resolution of our pending distribution rate case later this year.
Speaker Change: At the end of June , given our swaps, we had minimal variable rate debt.
Dan Craig: On the credit ratings front, in June, Moody's updated PCG powers outlook to stable from positive, and this change is consistent with our future plans for leverage in our targeted credit rating. We continue to maintain a solid BWA-2 investment grade rating at PSG Power.
Speaker Change: On the credit ratings front, in June , Moody's updated PSUG Power's outlook to stable from positive.
Speaker Change: And this change is consistent with our future plans for leverage and our targeted credit rating. We continue to maintain a solid BAA2 investment grade rating at PSG Power.
Dan Craig: In closing, we are reaffirming PSG's full year 2024 non-GAAP operating earnings guidance of $3.60 to $3.70 per share, which reflects continued rate-based growth from ongoing regulated investments, offset by higher depreciation and interest as we await resolution of our pending distribution rate case later this year. We are also reaffirming our forecast of long-term, five to seven percent compound annual growth in non-GAAP operating earnings through 2028, supported by our capital investment programs and the nuclear PTC.
Speaker Change: In closing, we are reaffirming PSUG's full year 2024 non-GAAP Operating Earnings Guidance of $3.60 to $3.70 per share.
Speaker Change: which reflects continued rate-based growth from ongoing regulated investments.
Speaker Change: offset by higher depreciation and interest as we await resolution of our pending distribution rate case later this year.
Operator: We are also reaffirming our forecast of long-term 5% to 7% compound annual growth in non-GAAP operating earnings through 2028, supported by our capital investment programs and the Nuclear PT. This concludes our formal remarks, and we are now ready to begin the question-and-answer session. Thank you. Ladies and gentlemen, we will now begin the question and answer session for members of the financial community. If you have a question, please press the star and the number 1 on your telephone keypad. If your question has been answered and you wish to withdraw your polling request, you may do so by pressing the star and the number 2.
Speaker Change: We are also reaffirming our forecast of long-term 5-7% compound annual growth in non-GAAP operating earnings through 2028.
Speaker Change: supported by our capital investment programs and the nuclear PTC.
Operator: This concludes our formal remarks, and we are now ready to begin the question-and-answer session.
Speaker Change: This concludes our formal remarks and we are now ready to begin the question and answer session.
Operator: Thank you.
Operator: Ladies and gentlemen, we will now begin the question-and-answer session for members of the financial community. If you have a question, please press the star and the number one on your telephone keypad. If your question has been answered and you wish to withdraw your polling request, you may do so by pressing the star and the number two. If you are on a speaker phone, please pick up your handset before entering your request. One moment, please, for the first question.
Speaker Change: Thank you. Ladies and gentlemen, we will now begin the question and answer session for members of the financial community.
Speaker Change: If you have a question, please press the star and the number 1 on your telephone keypad.
Speaker Change: If your question has been answered and you wish to withdraw your polling request, you may do so by pressing the star and the number 2.
Julien Patrick Dumoulin: If you're on a speakerphone, please pick up your handset before entering your request. One moment, please, for the first question. The first question is from Julien Dumoulin-Smith with Jefferies. Please proceed with your question. Hey, good morning team.
Speaker Change: If you're on a speakerphone, please pick up your handset before entering your request.
Julien Dumoulin-Smith: The first question is from Julian Demolion Smith with Jeffries. Please proceed with your question.
Speaker Change: One moment please for the first question.
Speaker Change: The first question is from Julien Dumoulin-Smith with Jefferies. Please proceed with your question.
Julien Dumoulin-Smith: Hey, good morning, Dean. Day against the time. Let's chat again. Well, it's good to hear you again. Back in action, as they say. Look, guys, nicely done, seriously. A bunch of questions here on what you guys just said. First off, just talking about the data center opportunity as is the buzz these days. Can you elaborate a little bit on what you are seeing today about your co-located opportunities? And how do you think about the economic benefit criteria that you would and other stakeholders would like to see contribute to the local community here? Obviously, that's a key element of bringing jobs to New Jersey here.
Ralph A. LaRossa: Thank you guys for the time. It's nice to chat again. Well, it's good to hear from you again. Back in action, as they say. Look, guys, nicely done, seriously.
Julien Patrick Dumoulin: Hey, good morning team. Thank you guys for the time. Nice to chat again.
Speaker Change: Well, it's good to hear you again.
Julien Patrick Dumoulin: Back in action, as they say. Look, guys, nicely done, seriously. A bunch of questions here on what you guys just said. First off, just talking about the data center opportunity, as is the buzz these days, can you elaborate a little bit on what you're seeing today about your co-located opportunities, and how you think about the economic benefit criteria that you would and other stakeholders would like to see contribute to the local community here? Obviously, that's a key element of bringing jobs to New Jersey here. Can you elaborate on that?
Julien Patrick Dumoulin: A bunch of questions on what you guys just said. First off, just talking about the data center opportunity, as is the buzz these days. Can you elaborate a little bit on what you're seeing today about your co-located opportunities and how you think about the economic benefit criteria that you and other stakeholders would like to see contribute to the local community here? Obviously, that's a key element of bringing jobs to New Jersey here. Can you elaborate on that?
Julien Dumoulin-Smith: So can you elaborate on that? And then separately related, how would you characterize demand for data centers outside of perhaps co-located opportunities in New Jersey today?
Julien Patrick Dumoulin: related, how would you characterize demand for data centers outside of perhaps co-located opportunities in New Jersey today? Any kind of quantifiable commitment numbers or soft numbers that you would kind of see today that you care to share?
Julien Dumoulin-Smith: Any kind of quantifiable commitment numbers or soft numbers that you would kind of see today that you care to share?
Ralph LaRossa: Yeah, that's great. Thanks for that, Julien. And again, welcome back.
Ralph A. LaRossa: And then separately related, how would you characterize demand for data centers outside of perhaps co-located opportunities in New Jersey today? Any kind of quantifiable commitment numbers or soft numbers that you would kind of see today that you care to share? Yeah, that's great. Thanks. Thanks. Thanks for that, Julien. And again, welcome back. Um, look, I would say a couple of things to you.
Speaker Change: Yeah, that's great. Thanks for that, Julien, and again, welcome back. Look, I would say a couple things to you. I'm going to answer your first question with purely my Choose New Jersey economic development hat on.
Ralph LaRossa: Look, I would say a couple of things to you. I'm going to answer your first question with purely my Choose New Jersey economic development hat on. And that is that it really has a couple of benefits of co-located data center. And it's not necessarily just that it's co-located. It's the fact that it's a hyperscale data center. It's going to provide a clear signal to AI companies that are looking to locate here in New Jersey and in the region that the infrastructure is here, up and running, and ready to go for their businesses to thrive. So, there'll be a lot of, I would say, trickled down opportunities that get created.
Speaker Change: And that is that it really has a couple of benefits, a co-located data center, and it's not necessarily just that it's co-located, it's the fact that it's a hyperscale data center.
Speaker Change: It's going to provide a clear signal to AI companies that are looking to locate here in New Jersey and in the region that the infrastructure is here up and running and ready to go for their businesses to thrive.
Speaker Change: So there'll be a lot of, I would say, trickled-down opportunities that get created. Specific to the site, you obviously have your construction activities, but not the least of which would be driven by wire work that the IBEWs do.
Ralph LaRossa: Specific to the site, you obviously have your construction activities, but not the least of which would be driven by wirework that the IBWs here in New Jersey would benefit from. So, there's a lot of local opportunities to take place from the construction activities. They are one time, but as you've heard from others, they do grow over that one time. It's not a; it's not all done in one month. It's over several years. They ramp up these data centers. And then there's a lot of other opportunities that happen for edge computing or AI infrastructure around the hyper scale data center, like a co-located one would be.
Speaker Change: here in New Jersey would benefit from.
Speaker Change: So, there's a lot of local opportunities that take place from the construction activities. They are one time, but as you've heard from others, they do grow over that one time. It's not all done in one month, it's over several years. They ramp up, these data centers.
Ralph A. LaRossa: I'm going to answer your first question with purely my Choose New Jersey economic development hat on. And that is that it really has a couple of benefits of a co-located data center. And it's not necessarily just that it's co-located; it's the fact that it's a hyperscale data center.
Ralph A. LaRossa: It's going to provide a clear signal to AI companies that are looking to locate here in New Jersey and in the region that the infrastructure is here, up and running, and ready to go for their businesses to thrive. So there'll be a lot of, I would say, trickled down opportunities that get created. Specific to the site, you obviously have your construction activities, but not the least of which would be driven by wire work that the IBWs here in New Jersey would benefit from. So there are a lot of local opportunities that take place from the construction activities. They are just one time, but as you've heard from others, they do grow over that one time.
Speaker Change: And then there's a lot of other opportunities that happen for edge computing or AI infrastructure around the hyperscale data center, like a co-located one would be.
Ralph A. LaRossa: It's not all done in one month. It's been done over several years. They ramp up these data centers, and then there are a lot of other opportunities that arise for edge computing or AI infrastructure around the hyperscale data center, like a co-located one would be. Specifically, for our utility at PSE&G, we are seeing quite a bit of activity that's taking place. We think about things, and every utility is a little bit different as to what a commitment is.
Ralph LaRossa: Specifically to our utility at PSE and G, we are seeing quite a bit of activity that's taken place.
Speaker Change: Specifically to our utility at PSE&G, we are seeing quite a bit of activity.
Ralph LaRossa: We think about things, and every utility is a little bit different as to what a commitment is. Some folks would counter commitment is only when they have a deposit for construction. Some would say a commitment is when you begin engineering work; some would say just getting a lead in with some other financing that you need to do to get the utility to respond. It might be a commitment. Well, the way we think about it is those that are actually have moved on beyond the engineering phase. And we're seeing several hundred megawatts of data centers that are moving into that scenario here in New Jersey.
Speaker Change: that's taken place. We think about things, and every utility is a little bit different as to what a commitment is.
Ralph A. LaRossa: Some folks would count a commitment as only when they have a deposit for construction. Some would say a commitment is when you begin engineering work. Some would say just getting a lead in with some other financing that you need to do to get the utility to respond might be a commitment.
Speaker Change: Some folks would count a commitment as only when they have a deposit for construction. Some would say a commitment is when you begin engineering work. Some would say just getting a lead in with some other financing that you need to do to get the utility to respond might be a commitment.
Ralph A. LaRossa: Well, the way we think about it is those that have actually moved on beyond the engineering phase, and we're seeing..., you know, several hundred megawatts of data centers that are moving into that scenario here in New Jersey. And I would give you a little more breadth on that one, which is... They all come in different sizes and shapes, not only because of what the needs are at the location from a power standpoint, but because they are different sizes.
Speaker Change: Well the way we think about it is those that are actually have moved on beyond the engineering phase and we're seeing
Speaker Change: You know, several hundred megawatts of data centers that are moving into that scenario here in New Jersey. And I would give you a little more breadth on that one, which is...
Ralph LaRossa: And I would give you a little more breath on that one, which is they all come in different sizes and shapes. Not only what the needs are at the location from a power standpoint, it being different sizes, but actually the infrastructure that is required to support them are different based upon where they may be going, whether it's a green field, a brown field, or an existing building that has enough capacity already run to it. So everyone's a little bit different. Everyone's a little different size, but it's taken place, and it's significant for us.
Speaker Change: They all come in different sizes and shapes. Not only what the needs are at the location from a power standpoint, it being different sizes.
Ralph A. LaRossa: But actually, the infrastructure that is required to support them is different based upon where they may be going, whether it's a green field, a brown field, or an existing building that has enough capacity already run to it. So everyone's a little bit different, everyone's a little different size, but it's taken place, and it's significant for us. Excellent, guys. And just quickly, if I can just clarify on the Exelon efforts, you know, should we say complaint with talent here? Does that shift at all your thought process on any collocated opportunities? Thank you, Julien.
Speaker Change: But actually, the infrastructure that is required to support them are different based upon where they may be going, whether it's a green field, a brown field, or an existing building that has enough capacity already run to it. So everyone's a little bit different. Everyone's a little different size.
Speaker Change: But it's taken place and it's significant for us.
Julien Dumoulin-Smith: Excellent guys.
Julien Dumoulin-Smith: Then just quickly, if I can just clarify on the excellent efforts, you know, should we say complaint with talent here. Does that shift at all your thought process on any co-looking opportunities? No, I think it's curious.
Speaker Change: Excellent, guys. And just quickly, if I can, just to clarify, on the Exelon efforts, you know, should we say complaint with talent here, does that shift at all your thought process on any collocated opportunities?
Ralph A. LaRossa: Again, look, that's not shifting us in any way, shape, or form. We're committed to supporting the governor in his efforts on economic development. So we are going to continue in that effort. I will say this to you.
Ralph LaRossa: Yeah, no, thank you, Julian, again. Look, that's not shifting us in any way, shape, or form. We're committed to supporting the governor in his efforts on economic development. So we are we're going to continue in that in that effort.
Speaker Change: I don't know what I'm talking about here, but I'm just curious. Yeah, no. Thanks, Julien, again. Look, that's not shifting us in any way, shape, or form. We're committed to supporting the governor in his efforts on economic development, so we are...
Ralph A. LaRossa: I'm a little bit concerned about co-located load as it impacts other industries. If you really think about co-located load, that doesn't just apply to data centers; that's for, you know, combining power plants, it's for co-generation units. So depending upon where this goes, while I'm concerned about data centers, I'm just as concerned about everything from rooftop solar behind a meter to cogeneration that might be taking place. All right, great. I'll leave it there. Talk to you guys soon. See you soon!
Ralph LaRossa: I will say this to you. I'm a little bit concerned about co-located load as it impacts other industries. If you really think about co-located load, that doesn't just apply to data centers; that's for, you know, combined heat power plants, it's for co-generation units. So depending upon where this goes, I'm much, you know, while I'm concerned about data centers, I'm just as concerned about everything from rooftop solar behind a meter to, you know, co-generation that might be taking place.
Speaker Change: We are going to continue in that effort. I will say this to you. I'm a little bit concerned about co-located load as it impacts other industries.
Speaker Change: If you really think about co-located load, that doesn't just apply to data centers, that's for, you know, combining power plants, it's for co-generation units.
Speaker Change: So, depending upon where this goes, I'm much, you know, while I'm concerned about data centers, I'm just as concerned about everything from rooftop solar behind a meter to, you know, cogeneration that might be taking place.
Julien Dumoulin-Smith: All right, great. I'll leave it there.
Julien Dumoulin-Smith: Talk to you guys soon. See you soon.
Speaker Change: All right, great. I'll leave it there. Talk to you guys soon. See you soon.
Shahriar Pourreza: Our next question is from one of Char Pourreza with Guggenheim Partners. Let's see your question.
Julien Patrick Dumoulin: Thank you. Our next question is from the line of Shahriar Pourreza with Guggenheim Partners. Please proceed with your question. Hey guys. Hey, John. How are you?
Speaker Change: Our next question is from the line of Shahriar Pourreza with Guggenheim Partners. Please proceed with your question.
Shahriar Pourreza: We're great. We don't have to say welcome back for you. No, no, thank God. Well, just to follow up on Julien's question about the protests at FERC against the Susquehanna ISA, obviously, they're not gonna have a bearing on you pursuing a deal, right, with Artificial Island. But if the protest turns into a hearing, an NOI, or an RTO process, do you kind of wait before signing a deal? I think every deal is going to be very specific, and, you know, look. I think the way our nuclear facilities are configured, they'll be different than, you know, a nuclear facility down the street.
Shahriar Pourreza: Hey guys. Hey John. How are you? We're great. We don't have to say welcome back for two. No, thank God.
Shahriar Pourreza: Hey guys. Hey you all.
Speaker Change: How are you? We're great.
John: We don't have to say welcome back to you.
Shahriar Pourreza: Just to follow up on Julian's question, I'm sure the protest had fork against the Susquehanna ISA. Obviously, it's not going to have a bearing on you pursuing a deal, right, with Artificial Island, but if the protest turns into a hearing and NOI or an RTO process, do you kind of wait before signing a deal? I think every deal is going to be very specific and, you know, I think the way our nuclear facilities are configured, they'll be different than, you know, a nuclear facility down the street. So, each one of those will be looked at differently, whether it's 5 p.m., and it's current rules that exist for co-located load, or when they come out with some sort of a process, if they do, under the current challenge that's there.
Shahriar Pourreza: So each one of those will be looked at differently, whether it's by PJM and its current rules that exist for co-located load, or when they come out with some sort of a process if they do under the current challenge that's there. So no, I'm not really – I don't think anything would hold us up.
Rob: No, no, thank God. Ralph, just to follow up on Julien's question on sort of the protests at FERC against the Susquehanna ISA. Obviously, it's not going to have a bearing on you pursuing a deal, right, with Artificial Island. But if the protest turns...
Speaker Change: into a hearing, an NOI, or an RTO process, do you kind of wait before signing a deal?
Speaker Change: I think every deal is going to be very specific and, you know, look, I think the way our
Speaker Change: Nuclear facilities are configured. They'll be different than, you know, a nuclear facility down the street. So each one of those will be looked at differently, whether it's by PJM and its current rules that exist for co-located load.
Speaker Change: or when they come out with some sort of a process, if they do.
Ralph LaRossa: So, no, I'm not really; I don't think anybody will hold us up.
Speaker Change: under the current challenge that's there.
Speaker Change: So, no, I'm not, I'm not really, I don't think anything would hold us up. I think, you know, what, again, what I, just to reinforce.
Ralph A. LaRossa: I think, you know, again, just to reinforce, we're here to support the governor of New Jersey. The governor of New Jersey is focused on building out AI. He just passed and signed – he didn't pass, he just signed some tax incentives, up to $500 million to attract AI businesses here to New Jersey. That just happened last week.
Ralph LaRossa: I think, you know, what, again, what I just reinforced, we're here to support the Governor of New Jersey. The governor of New Jersey focused on building out AI. He just passed and signed the, and he didn't pass. He just signed some tax incentives, about the $500 million to attract AI businesses here to New Jersey that just happened last week. If there's no more indication than he's all in, that would be it for me, and we want to be a company that's supporting the policies of the state. Okay, perfect.
Speaker Change: We're here to support the governor of New Jersey. The governor of New Jersey is focused on on building out AI. He just passed and signed... He didn't pass. He just signed some tax incentives.
Speaker Change: Up to $500 million to attract AI businesses here to New Jersey, that just happened last week. If there's no more indication and he's all in, that would be it for me. And we want to be a company that's supporting the policies of the state.
Shahriar Pourreza: If there's no more indication and he's all in, that would be it for me, and we want to be a company that supports the policies of the state. Okay, perfect. Now, that's helpful.
Shahriar Pourreza: It's a question we've been getting from investors. And then, just last thing, obviously, you guys noted that the 5% to 7% growth rate kind of remains exclusive of upsides on the nuclear business. So outside of kind of this data center opportunity, I guess, what progress have you made on implementing some of the other upsides, right? So any thresholds we should be thinking about on upgrades as we head into sort of FIDs on some of these? Yeah, I don't. I don't think we've really published anything short specifically.
Shahriar Pourreza: Now, that's how well it's a question we've been getting from investors. And then just, just lastly, obviously, you guys noted that, you know, the 5 to 7 percent growth rate kind of remains exclusive of upsides on kind of the nuclear business. So, outside of kind of this data center opportunity, I guess, what progress have you made to implement some of the other upsides? Right.
Speaker Change: Okay, perfect. Now that's helpful. It's a question we've been getting from...
Speaker Change: from Investors.
Speaker Change: exclusive of upsides on kind of the nuclear business. So outside of kind of this data center opportunity I guess
Speaker Change: What progress have you made to implement some of the other upsides, right? So, any thresholds we should be thinking about on upgrades as we head into sort of FIDs on some of these?
Ralph LaRossa: So, any thresholds we should be thinking about on upgrades as we're, as we head into sort of FIDs and some of these. Yeah, I don't, I don't think we've really published anything short specifically. I think everything is on track. I will say that there's nothing that has raised the red flag for us in the process. As we move forward, whether it be the fuel cycle changes at Hope Creek, or the upgrades that we mentioned, the prepared remarks at Salem, and certainly nothing on the long-term license extension. So, well, three things are moving forward, and really I have not seen a bump in the road from, you know, any internal analysis or anything that we've received externally.
Ralph A. LaRossa: I think everything is on track. I will say that there's nothing that has raised a red flag for us in the process as we move forward, whether it be The fuel cycle changes at Hope Creek or the upgrades that we mentioned, the prepared remarks at Salem, and certainly nothing on a long-term license extension. All three things are moving forward. And really, I have not seen a bump in the road from, you know, any internal analysis or anything that we received externally. Okay, perfect. I appreciate it, guys, and a big congratulations on the execution. We'll be seeing you soon.
Speaker Change: Yeah, I don't think we've really published anything short specifically. I think everything is on track, I will say that. There's nothing that has raised a red flag for us in the process as we move forward, whether it be the...
Speaker Change: The fuel cycle changes at Hope Creek, or the uprights that we mentioned.
Speaker Change: The Prepared Remarks at Salem, and certainly nothing on long-term license extensions. So all three things are moving forward, and really I have not seen a bump in the road from any internal analysis or anything that we've received externally.
Shahriar Pourreza: Okay, perfect. I appreciate it, guys, and big congrats on the execution.
Speaker Change: Okay, perfect. I appreciate it, guys, and a big congrats on the execution. We'll be seeing you soon. Thank you. Thanks.
Shahriar Pourreza: We'll be seeing you soon.
Michael Sullivan: Thank you. Thanks. Next question is from Michael Sullivan with Wolf Research.
Shahriar Pourreza: Thank you. Thank you. The next question is from Michael Sullivan with Wolf Research. Please proceed with your question. Hey, good morning. Hey, Michael.
Michael Sullivan: Let's just see with your question. Hey, good morning. Hey, Michael.
Speaker Change: The next question is from Michael Sullivan with Wolfe Research. Please proceed with your question.
Michael Sullivan: Hey guys, can you just comment, or are you having discussions with your local transmission utility on an ISA for artificial island right now? I don't think anyone who has co-located load has to have a discussion with the transmission provider until they move forward with an interconnection agreement. So I know we have not that we have not stated that we're at the stage and we haven't filed anything.
Speaker Change: Hey, good morning. Hey, Michael. Hey, guys.
Michael P. Sullivan: Hey, guys. Can you just comment? Are you having discussions with your local transmission utility on an ISA for Artificial Island right now? I don't think anyone who has co-located load has to have a discussion with the transmission provider until they move forward with an interconnection. So I don't. We have not stated that we're at that stage, and we haven't filed anything. Okay, and then just, I mean, you're in maybe a little bit of a unique position in owning both unregulated generation and regulated transmission in PJM.
Speaker Change: Can you just comment, are you having discussions with your local transmission utility on an ISA for Artificial Island right now?
Speaker Change: I don't think anyone who has co-located load has to have a discussion with the transmission provider until they move forward with an interconnection agreement. So I don't, we have not stated that we're at that stage and we haven't filed anything.
Ralph LaRossa: Okay, and then just I mean, you're in maybe a little bit of a unique position and owning both unregulated generation and regulated transmission in PJM. And I don't think you all have kind of weighed in officially on the first docket, whereas seems like the rest of the industry has. Any reasoning behind that or any thoughts you want to share on your views there. Well, Michael, it's not a it's not a contract that we're privy to. So I really didn't, I don't think we feel that we have enough details to weigh in on what there is a process at PJM that we trust will be managed correctly by PJM.
Speaker Change: Okay, and then just, I mean, you're in maybe a little bit of a unique position in owning both unregulated generation and
Michael P. Sullivan: And I don't think you all have kind of weighed in officially on the PERC docket, whereas it seems like the rest of the industry has. Any reasoning behind that, or any thoughts you want to share on your views there?
Speaker Change: and regulated transmission in PJM and I don't think you all have kind of weighed in officially on the FERC docket whereas
Speaker Change: It seems like the rest of the industry has. Any reasoning behind that or any thoughts you want to share on your views there? Well, Michael, it's not a contract that we're privy to, so I don't think we feel that we have enough details to weigh in on.
Ralph A. LaRossa: Well, Michael, it's not a contract that we're privy to, so I really didn't, I don't think we feel that we have enough details to weigh in on what there is a process at PJM that we trust will be managed correctly by PJM. If PERC sees a challenge with that process, I'm sure that they'll step in. We believe in following the rules. And so the rules that exist have some very specific steps in them.
Michael P. Sullivan: on what
Michael P. Sullivan: There, there's a process at PJM that we trust will be managed correctly by PJM.
Ralph LaRossa: If folks use a challenge with that process, I'm sure that they'll step in. We believe in following the rules, and so the rules that exist have some very specific steps in it, and if we were to go down that path, we would follow those rules, you know, as far as weighing in on policy changes.
Michael P. Sullivan: If FERC sees a challenge with that process, I'm sure that they'll step in.
Michael P. Sullivan: We believe in following the rules.
Ralph A. LaRossa: And if we were to go down that path, we would follow those rules. As far as weighing in on policy changes, again, I can't tell you how much we're trying to focus on supporting the governor's economic development plan. Yep, no, that's super clear.
Michael P. Sullivan: And so the rules that exist have some very specific steps in it, and if we were to go down that path, we would follow those rules.
Michael Sullivan: Again, I can't tell you how much we're trying to focus on supporting the governor's economic development plans. Yep, no, that's super clear. I appreciate that.
Michael P. Sullivan: And, you know, as far as weighing in on policy changes, again, I can't tell you how much we're trying to focus on supporting the governor's economic development plans.
Michael P. Sullivan: I appreciate that. And then, just like pivoting over to, you know, along the same lines with the state goals, any chance of offshore wind in the state just in light of the Nantucket news up there? Is it still kind of full speed, full speed ahead from the governor's standpoint? It is, from my perspective.
Michael Sullivan: And then just like pivoting over to, you know, along the same lines with the state goals. Any sense on offshore wind in the state, just in light of the Man-tucket news up there is it's still kind of full speed is full speed ahead from from the governor's standpoint. It is, from my perspective, I have not heard anything different. I know there was some challenges with the blades up there, but there was nothing that I that we've seen that would indicate there's anything slowing down. The process here in New Jersey, in fact, I think the governor, you know, I keep talking about his economic development initiatives, and certainly offshore wind remains at the top of that priority list.
Speaker Change: That's super clear, I appreciate that. And then just like pivoting over to, you know, along the same lines with the state's goals, any plans on offshore wind in the state, just in light of the Nantucket news up there, is it still kind of
Ralph A. LaRossa: I have not heard anything different. I know there were some challenges with the blades up there, but there was nothing that we've seen that would indicate there's anything slowing down the process here in New Jersey. In fact, I think... The Governor, you know, I keep talking about his economic development initiatives, and certainly offshore wind remains at the top of that priority list. Okay, thanks so much.
Speaker Change: Full speed ahead from the governor's standpoint.
Speaker Change: It is, from my perspective. I have not heard anything different. I know there were some challenges with the blades up there, but there was nothing that we've seen that would indicate there's anything slowing down the process here in New Jersey. In fact, I think...
Speaker Change: The governor, you know, I keep talking about his economic development Initiatives and certainly offshore winds remains at the top of that priority list. Yeah, there's an ongoing solicitation now Michael
Michael Sullivan: Yeah, there's an ongoing solicitation now, Michael.
Michael Sullivan: Okay, thanks so much.
Speaker Change: Okay, thanks so much.
Nick Campanella: Our next question is from the line of Nick Campanilla.
Michael P. Sullivan: Our next question is from the line of Nick Campanella with Barclays. Please proceed with your question. Hey, thanks. Hope everyone's doing well.
Nick Campanella: It was Barclays. Please see with your question. Hey, thanks. Hope everyone's doing well. Hey Nick.
Speaker Change: Our next question is from the line of Nick Campanella with Barclays. Please receive your questions.
Nick Campanella: Hey, so just one more on the data center contract opportunity. Just I know that you have the three different units and, you know, you can really cycle that as and market that as a kind of 24/7 offering. Just given the refueling outage dynamics, but just thinking about kind of quantum of size here. Does that conceptually mean that you'd be willing to sell up to a third of your total capacity? Are you trying to work to do something much more piecemeal and smaller than that? Just how should we kind of think about that?
Nicholas Joseph Campanella: Hey. So just one more on the data center contract opportunity. I know that you have the three different units, and you can really cycle that and market that as a 24-7 offering, just given the refueling outage dynamics. But just thinking about the quantum of size here, does that conceptually mean that you'd be willing to sell up to a third of your total capacity?
Speaker Change: Hey, thanks. Hope everyone's doing well. Hey, Nick. Hey, so just one more on the data center contract opportunity, just
Speaker Change: I know that you have...
Speaker Change: The three different units and you know you can really cycle that as and market that as a
Nicholas Joseph Campanella: kind of a 24-7 offering, just given the refueling outage dynamics. But just thinking about kind of quantum of size here, does that conceptually mean that you'd be willing to sell up to a third of your total capacity? Are you trying to work to do something much more piecemeal and smaller than that? Just how should we kind of think about that?
Ralph A. LaRossa: Are you trying to work to do something much more piecemeal and smaller than that? Just how should we think about that? Yeah, look, again, and Dan, if you want to add anything, he's a little bit closer to this in his role on the development team. You know, there's nothing that's that specific at this point for us, I think. Look, there are so many different factors that'll be involved here. It'll be the ramp-up that'll matter.
Ralph LaRossa: Yeah, I look again and Dan, if you want to say anything, is just a little bit closer to this and his role with the development team. There's nothing that's that specific at this point for us. I think, look, there's so many different factors that'll be involved here. It'll be the ramp-up that'll matter. It's going to be whether or not. I've even heard some of these data centers are considering being a demand response resource. And that would certainly change the dynamics of any conversation. There's just so much uncertainty now, Nick, as to where you would settle with anybody on any of these cases.
Speaker Change: Yeah, I look again and Dan if he wants to add anything is he's a little bit closer to this in his in his role.
Daniel J. Cregg: with the development team. You know, there's nothing that's that specific at this point for us. I think
Daniel J. Cregg: Look, there's so many different factors that'll be involved here, it'll be the ramp-up that'll matter, it's going to be whether or not, you know, I've even heard some of these data centers are considering being a demand response resource.
Ralph A. LaRossa: It's going to be whether or not, you know, I've even heard some of these data centers are considering being a demand response resource. And, you know, that would certainly change the dynamics of any conversation. There's just so much uncertainty now, Nick, as to where you would settle with anybody in any of these cases. I don't want to talk about sizing.
Daniel J. Cregg: And, you know, that would certainly change the dynamics of any conversation. There's just so much uncertainty now, Nick, as to, you know, where you would settle with anybody on any of these cases. I don't want to talk about sizing. It would be really premature.
Ralph LaRossa: I don't want to talk about sizing. It would be really premature.
Nicholas Joseph Campanella: It would be really premature. I totally get that. And then I guess just given PJM's auction is coming up here, I think tonight we'll get the results, but just your five to seven forecast, do you just assume just constant payment from the last auction, or is there already an assumption embedded in there? Thank you. And there are assumptions that are embedded within our overall longer-term plan, but if you think about what we are from a generation perspective, the nuclear units, capacity is not a very significant component of the overall mix.
Dan Craig: Totally get that. And then I guess just given PJM's auction is coming up here. I think tonight we'll get the results. But just your five to seven forecast. Do you just assume just constant payments in the last auction? Or is there an assumption embedded in there?
Nicholas Joseph Campanella: Totally get that. And then I guess just given PJM's auction is coming up here, I think tonight we'll get the results, but just your five to seven forecast, do you just assume just
Speaker Change: Is this just constant payment from the last auction, or is there already an assumption embedded in there? Thank you.
Dan Craig: Thank you. Yeah, and there's assumptions that are embedded within our overall longer term plan. But if you think about what we are from a generation perspective, the nuclear unit's capacity is not a very significant component of the overall mix. And so there's a, you know, it is not our five to seven overall from an enterprise perspective, is not terribly sensitive to what that is. We'll see what comes out here. I think the, you know, where the parameters seem to point in a lot of what I've read. It shows things maybe a bit more bullish than we've seen recently.
Speaker Change: And there's assumptions that are embedded within our overall longer-term plan, but if you think about what we are from a generation perspective, the nuclear units, capacity is not a very significant component of the overall mix.
Nicholas Joseph Campanella: And so there's a, you know, it is not, our five to seven overall from an enterprise perspective is not terribly sensitive to what that is. We'll see what comes out here. You know, where the parameters seem to point, and a lot of what I've read shows things may be a bit more bullish than we've seen recently, but we'll find out what that looks like at the end of the day. I don't expect it to be significant enough to move us within, certainly outside of the range, or barely move us at all. Thanks a lot.
Speaker Change: And so there's a...
Speaker Change: You know, it is not, our five to seven overall from an enterprise perspective is not terribly sensitive to what that is. We'll see what comes out here. I think the...
Speaker Change: You know, where the parameters seem to point, and a lot of what I've read shows things may be a bit more bullish than we've seen recently, but we'll find out what that looks like at the end of the day. I don't expect it to be significant enough to move us within, certainly outside of the range and barely move us inside of the range.
Dan Craig: But what we'll find out if that looks like at the end of the day, I don't expect it to be significant enough to move us within. Certainly outside of the range and barely move us inside.
Nick Campanella: Thanks a lot.
Jeremy Tonet: Our next question is from one of Jeremy to an eight with JP Morgan, please use your questions. Hey Jeremy. Hi, good morning. Good morning.
Jeremy Bryan Tonet: Our next question is from the line of Jeremy Tonet with J.P. Morgan. Please proceed with your question. Hey, Jeremy.
Speaker Change: Thanks a lot.
Speaker Change: Our next question is from the line of Jeremy Tonet with J.P. Morgan. Please proceed with your question. Hey, Jeremy. Hi, good morning. Good morning. Jeremy.
Jeremy Bryan Tonet: Alright, good morning. [inaudible] I just wanted to circle back on data centers a little bit more, if I could. You released references, increased inquiries at PSAC for data centers, and the need for system investment to address this and EV charging. Could you expand a bit more on these comments and how much is this additive to your current capital plan? Any other important points for us to think about here?
Jeremy Tonet: Just wanted to circle back on data centers, maybe a little bit more. If I could, you release references, increased inquiries, a piece of paper, data centers in the need for system investment to address this and EV charging. Could you expand a bit more on these comments and how much is this additive to your current capital plan? Any other important points for us to think about here?
Speaker Change: [inaudible]
Jeremy Bryan Tonet: Just wanted to circle back on data centers, maybe a little bit more if I could. You released references, increased inquiries at PSAC for data centers and the need for system investment to address this and EV charging. Could you expand a bit more on these comments and how much is...
Speaker Change: This additive to your current capital plan, any other important points for us to think about here?
Jeremy Tonet: Yeah, I think we'll roll forward our capital plan at the end of the year, beginning next year, as we haven't passed. So any updates on that front will come there.
Ralph A. LaRossa: Yeah, I think we'll roll forward our capital plan at the end of the year, beginning next year, as we have in the past, so any updates on that front will come there. Jeremy, I'll tell you, I think the look, I'll walk you through a couple of scenarios that we're seeing in the utility space itself. One is you'll you'll have a, If anybody's familiar with northern New Jersey, there used to be a big Nabisco plant up in the northern part of New Jersey that doesn't exist anymore.
Jeremy Bryan Tonet: Yeah, I think we'll roll forward our capital plan at the end of the year, beginning next year, as we have in the past, so any updates on that front, we'll come there. Jeremy, I tell you, I think, look, I'll walk you through a couple of scenarios that we're seeing in the utility space itself.
Ralph A. LaRossa: And Greenfield is there, and it's near 69 kV. The Trans Sub Transmission Line that we just built out, which is very close to a substation, I wouldn't expect a lot of capital required if someone was to locate something there, but if you are talking about a data center that's going to go into an old industrial site in one of the cities that has used up most of its capacity, and they've chosen that location because the construction of the building is such that they won't really need to And I think that one might need a little more capital that's going to be involved, and it'll be a little more complicated, and we'll see where things play out. So every one of them is different.
Ralph LaRossa: Jeremy, I tell you, I think the look, walk you through a couple of scenarios that we're seeing in the utility space itself. One is you'll have a, if anybody's familiar with Northern New Jersey, there used to be a big Nabisco plant up in the northern part of New Jersey that doesn't exist anymore. And Greenfield is there, and it's near a 69 kV transmission line that we just built out, which is very close to a substation. I wouldn't expect a lot of capital required if someone was to locate something there.
Jeremy Bryan Tonet: One is you'll you'll have a
Jeremy Bryan Tonet: Trans Sub transmission line that we just built out which is very close to a substation I wouldn't expect a lot of capital required if someone was to locate something there but if you are talking about a
Ralph LaRossa: But if you are talking about a data center and it's going to go into an old industrial site in one of the cities that has used up most of its capacity. And they've chosen that location because the construction of the building is such that they won't really need to put up much capital to support all the servers that are there in the floor, load, and everything else that exists. And I think that one might need a little more capital that's going to be involved and will be a little more complicated, and we'll see where things play out.
Jeremy Bryan Tonet: Data Center that's going to go into an old industrial site in one of the cities that has used up most of its capacity. And they've chosen that location because the construction of the building is such that they won't really need to put up much capital.
Jeremy Bryan Tonet: to support all the servers that are there and the floor load and everything else that exists.
Jeremy Bryan Tonet: And I think that one might need a little more capital that's going to be involved, and it'll be a little more complicated, and we'll see where things play out. So every one of them are different. Right now, I would say that it's a mixed bag as to what we're seeing and where things are falling out.
Ralph LaRossa: So every one of them are different. Right now, I would say that it's a mixed bag as to what we're seeing and where things are falling out. But it's positive for us in the fact that we continue to see the growth that's taken place here, and we're attracting the businesses. So, a number of AI folks have been working with the state, and we're excited about it. You know, we're never going to be maybe as big as some of the other states are going to be just by the geographic size that we are, but I think it's going to make a difference for us here.
Ralph A. LaRossa: Right now, I would say that it's a mixed bag as to what we're seeing and where things are falling out, but it's positive for us in the fact that we continue to see the growth that's taking place here, and we're attracting businesses. A number of AI folks have been working with the state, and we're excited about it. You know, we're never going to be maybe as big as some of the other states are going to be, just because of the geographic size that we are, but I think it's going to make a difference for us here.
Jeremy Bryan Tonet: It's positive for us in the fact that we continue to see the growth that's taking place here and we're attracting the businesses.
Jeremy Bryan Tonet: A number of AI folks have been working with the state, and we're excited about it. We're never going to be maybe as big as some of the other states are going to be, just by the geographic size that we are, but I think it's going to make a difference for us here.
Dan Craig: Jeremy, the other thing I'd say is there's another layer as you take a look at what PGM has done from some of their competitive windows. That is data center related as well. Those are competitive solicitations. They end up in regulated transmission. You've seen us participate in those before. We're in Maryland. We have a 400 million in change capital opportunity, and I think more of those are available to us. They're competitive. We'll see where we go. We don't count on those within our existing plan, but to the extent that those come forward, there'll be an opportunity there for us.
Ralph A. LaRossa: Hey, Jeremy, the other thing I'd say is there's another layer, as you take a look at what PGM has done in some of their competitive windows, that is data center related as well. Those are competitive solicitations. They end up in regulated transmission. You've seen us participate in those before; we're in Maryland, we have 400 million in Chicago, capital opportunities, and I think more of those are available to us. They're competitive,
Jeremy Bryan Tonet: Jeremy, the other thing I'd say is there's another layer as you take a look at what PGM has done from some of their competitive windows. That is data center related as well. Those are competitive solicitations. They end up in regulated transmission.
Speaker Change: You've seen us participate in those before, where in Maryland we have 400 million and change.
Speaker Change: capital opportunity, and I think more of those are available to us. They're competitive. We'll see where we go. We don't count on those within our existing plan, but to the extent that those come forward, there'll be an opportunity there for us.
Daniel J. Cregg: We'll see where we go. We don't count on those within our existing plan, but to the extent that those come forward, there'll be an opportunity there. Yeah, I think Dan just hit on a key point, Jeremy. The next PGM solicitation, I think it's referred to as window one, is a good signal as to what's going to be required on the transmission side. Again, every last mile, you know, sub transmission last mile investment will be different. But Dan's absolutely right.
Dan Craig: Yeah, I think Dan just said on a key point, Jeremy. The next PGM solicitation, I think it's referred to as window one, is a good signal as to what's going to be required on the transmission side. Again, every last mile, you know, still transmission last mile investment will be different, but Dan's absolutely right to watch that low profile change of PGM to see what's coming down the pipe. Got it.
Speaker Change: Yeah, I think Dan just hit on a key point, Jeremy. The next PGM solicitation, I think it's referred to as Window 1.
Daniel J. Cregg: is a good signal.
Daniel J. Cregg: As to what's going to be required on the transmission side, again, every last mile, you know, sub-transmission last mile investment will be different, but...
Ralph A. LaRossa: Watch that low profile change of PGM. What's coming down the... Got it. That makes sense. And any incremental thoughts you could share on the EB side as far as impacts that could have? Yeah, you know, again, we're seeing steady, slow, but steady growth on the EV front. And, you know, proud to say we're not turning down any EV interconnections. We have the capacity, but we're upgrading that last mile. So that's really playing out exactly the way we expected it to. New Jersey is, again, a little bit unique in the, you know, condensed nature of our housing and our commutes.
Speaker Change: Dan's absolutely right. Watch that low profile change of PJM to see.
Jeremy Tonet: That makes sense in any incremental thought you could share on the EB side as far as impacts that could have. Yeah, you know, again, we're seeing steady, slow but steady growth on the EV front. And you know, proud to say we're not turning down any EV interconnections. We have the capacity, but we're upgrading that last mile. So that's really playing out exactly the way we expected it to.
Speaker Change: what's what's coming down the pike.
Jeremy Bryan Tonet: Got it. That makes sense. And any incremental thoughts you could share on the EB side as far as impacts that could have?
Jeremy Bryan Tonet: So EVs have not had the same challenges and pressure that maybe the rest of the country has seen, as far as the— uh... the expansion that was expected. So we're kind of moving along at it at about the pace that we thought we would, and it's having the impact on the last mile about as we had planned. Got it. That's very helpful. And just one last one, if I could, and I appreciate the sensitivities and the limitations and what you can say at this point, but as folks make their way back from the beach over August into Labor Day, just wondering if you could share with us any other thoughts you could share with us on the rate case process and stakeholder discussions playing out there, just any sticking points or anything else that you could share? No, I really appreciate you asking that.
Speaker Change: Yeah, you know, again, we're seeing steady.
Speaker Change: Slow but steady growth on the EV front and you know proud to say we're not turning down any EV interconnections We have the capacity, but we're upgrading that that last mile So that's really playing out exactly the way we expected it to New Jersey's again a little bit unique in the in in the
Jeremy Tonet: New Jersey's again a little bit unique in the condensed nature of our housing and our commutes. So EVs have not had the same challenges and pressure that may be the rest of the country has seen as far as the expansion that was expected. So we're kind of moving along out about the pace that we thought we would, and it's having the impact on the last mile about as we had planned. Got it.
Speaker Change: You know, condensed nature of our housing and our commutes, so EVs have not had the same challenges and pressure that maybe the rest of the country has seen as far as the
Speaker Change: the expansion that was expected. So we're kind of moving along at it at about the pace that we we thought we would and it's having the impact on the last mile about as we had planned.
Jeremy Tonet: That's very helpful.
David Arcaro: Just one last one that I could and appreciate the sensitivities and limitations and what you can say at this point, but as folks make their way back from the beach over August into Labor Day. Just wondering any other. So you could share with us on the rate case process and stakeholder discussions point out there, just any sticking points or anything else that you could share.
Speaker Change: Got it, that's very helpful. And just one last one, if I could, and appreciate the sensitivities, the limitations, and what you can say at this point, but as folks...
Speaker Change: make their way back from the beach over August into Labor Day. Just wondering any other you can share with us on the rate case process and stakeholder discussions point out there just any sticking points or anything else that you could share?
Jeremy Bryan Tonet: Look, I take it as a big compliment to the team here that we're this far in, and that was the first rate case question we got. So the team is executing as we expect they would in those conversations, and the Board of Public Utilities, as I have been saying multiple times, continues to really run a very efficient and thoughtful process. The settlement that we just had was, you know, exactly the way we had thought it would play out. The fact that we expected the conversations not to become public has played out exactly that way, and so I am just very grateful for the way this has all been portrayed.
Ralph LaRossa: No, I really appreciate asking that. Look, I take it as a big compliment to the team here that we're this far in and that was the first rate case question we got. So the team is executing as we expect they would execute in those conversations, and border public utilities, as I have been saying multiple times, continues to really run a very efficient and thoughtful process. So I don't see, you know, there's no red flags there either. But I would point out that that recent COVID settlement that we just had was, you know, exactly the way we had thought it would play out. The fact that we we expected the conversations not to become public has played out exactly that way.
Speaker Change: I really appreciate you asking that. Look, I take it as a big compliment to the team here that we're this far in and that was the first rate case question we got.
Speaker Change: The team is executing as we expect they would execute in those conversations, and the Board of Public Utilities, as I have been saying multiple times,
Speaker Change: continues to to really run a very efficient and thoughtful process so I don't see you know there's there's no red flags there either but I would I would point out that that recent COVID
Speaker Change: settlement that we just had was was you know exactly the way we had thought it would play out. The fact that we we expected the conversations not to become public has played out exactly that way and so
Ralph LaRossa: And so I am just very grateful for the way this has all been portrayed.
Speaker Change: I'm just very grateful for the way this has all been portrayed.
David Arcaro: Got it. Great, thank you for that.
Ralph A. LaRossa: Got it. Great. Thank you for that. Hopefully, everyone can enjoy their time on the shore.
David Arcaro: Hopefully everyone can enjoy their time on the shore.
David Arcaro: Our next questions from the line of David Arcaro with Morgan Stanley.
David Keith Arcaro: Our next question is from the line of David Arcaro with Morgan Stanley. Please proceed with your question. Hey, good morning.
David Arcaro: Please see with your questions. Thank you, David. Thanks for taking my questions.
Speaker Change: Our next question is from the line of David Arcaro with Morgan Stanley . Please proceed with your questions.
David Keith Arcaro: Thanks for taking my questions. You know, it sounds like there's good momentum in terms of data center support from a policy perspective and maybe on the contracting front. I was just wondering if there's any interest in co-location.
David Arcaro: You know, it's not like there's good momentum in terms of data center support from a policy perspective and maybe on the contracting front. I was just wondering if there's any time frame that you would offer in terms of when you think you could come to a co-location deal. No, David, we really haven't gotten there.
David Keith Arcaro: Hey, good morning. Thanks for taking my questions.
David Keith Arcaro: You know it sounds like there's good momentum in terms of data center support from a policy perspective and maybe on the contracting front. I was just wondering if there's any time frame that you would offer in terms of when you think you could come to a co-location deal.
Ralph A. LaRossa: No, David, we really haven't gotten there yet. I appreciate the question, but, you know, we're just trying to be thoughtful about everything and make sure that... The folks that we talked to are people that are aligned with the policies that we have here in the state. Yeah, understood. Makes sense. And then, Business Requests and Increased Data Center Interest at PSE. I was wondering, you know, are you still...
David Arcaro: I appreciate the question, but we're just trying to be thoughtful about everything and make sure that the folks that we talk to are people that are aligned with the policies we have here in the state. Yeah, understood. Makes sense.
David Keith Arcaro: No, David, we really haven't haven't gone there. I appreciate the question, but you know we just try to be thoughtful about everything and make sure that
Speaker Change: The folks that we talked to are people that are aligned with the policies we have here in the state.
David Arcaro: And then in terms of the utility business requests and increased data center interest at PSE and G. I was wondering, you know, are you still seeing continued momentum? Is that backlog still growing?
Speaker Change: Yep, understood. Makes sense. And then in terms of the utility...
Speaker Change: business requests and increased data center interest at PSE&G.
David Keith Arcaro: Continued momentum, is that backlog still growing, and kind of if so, is there a time when you would anticipate another look at the load growth outlook that you have in CapEx, that would be required. Yeah, David, I referred to several hundred megawatts that are at this, what I would consider to be the, very firm stage that we would have. And again, every utility looks at that a little bit differently. The other two stages are even more robust than the very firm stage.
Speaker Change: I was wondering, you know, are you still seeing continued momentum? Is that backlog still growing, and kind of if so, is there a time when you would anticipate, you know, taking another look at the load growth outlook that you have in CapEx plans that would be required to address it?
David Arcaro: And kind of, if so, is there a time when you would anticipate, you know, taking another look at the low growth outlook that you have and CapEx plans that would be required to address it. Yeah, David. So I refer to several hundred megawatts that are at what I would consider to be the very firm stage that we would have. And again, every utility looks at that a little bit differently. The other two stages are even more robust than the very firm stage. The leads and the initial engineering analysis that would be done here, you know, somewhat double or triple in each one of those stages from what we're seeing in the firm construction side.
Speaker Change: Yeah, David, so I referred to, you know, several hundred megawatts that are at what I would consider to be the...
Speaker Change: Very firm stage that we would have, and again, every utility looks at that a little bit differently.
Ralph A. LaRossa: The leads and the initial engineering analysis that would be done here, you know, somewhat double or triple in each one of those stages from what we're seeing on the firm construction side. That any role forward that we have from a CapEx standpoint, we will do at the end of the year, as I mentioned earlier. We're just, we're happy to see it taking place. Got it. Excellent. Thanks so much. Our next question is from the line of Carly Davenport with Goldman Sachs. Good morning.
Speaker Change: The other two stages are even more robust.
Speaker Change: Then the very firm stage, the leads and the initial engineering analysis that would be done here, you know, somewhat double or triple in each one of those stages from what we're seeing in the firm construction side. That makes sense, projects to look at. But we...
David Arcaro: That makes sense, projects to look at.
David Arcaro: But we are any role forward that we have from a CapEx standpoint, we will do at the end of the year, as I mentioned earlier. So we're just we're happy to see you taking place. Yeah, excellent.
Speaker Change: Any role forward that we have from a CapEx standpoint, we will do at the end of the year, as I mentioned earlier.
Speaker Change: We're just, we're happy to see it taking place.
David Arcaro: Thanks so much for the color.
Speaker Change: Got it. Excellent. Thanks so much for the call.
Carly Davenport: Our next questions are in the line of Carly Davenport with Goldman Sachs. Please just use your questions.
Speaker Change: Our next question is from the line of Carly Davenport with Goldman Sachs. Please receive your questions.
Carly Davenport: Good morning. Hey, thanks for taking the questions. Just want to quickly follow up on Jeremy's question on the call out on electric vehicle. Do you see any election related to the uptake of EVs in New Jersey and the potential investment needed to support that? No, I don't think I don't see any real risk from an investment standpoint here. I think, you know, most of those interconnections are done at the distribution level. There's not an election that's going to impact the state of New Jersey until next November. So I think the only question that we've talked about this before is, you know, we have 100% EVs by 2035, or will we get a 50 on that test?
Carly S. Davenport: Hey, thanks for taking the questions. I just want to quickly follow up on Jeremy's question about the call out on electric vehicles. Do you see any election-related risk to the uptake of EVs in New Jersey and the potential investment needed to support that? No, I don't think so. I don't see any real risk from an investment standpoint here. I think, you know, most of those interconnections are done at the distribution level. There's not an election that's going to impact the state of New Jersey until next November.
Carly S. Davenport: Hey, Carly. Hey, good morning. Hey, Carly. Hey, thanks for taking the questions. Just wanted to quickly follow up on Jeremy's question on the call out on electric vehicles. Do you see any election related risk to the uptake of EVs in New Jersey and the potential investment needed to support that?
Speaker Change: No, I don't think, I don't see any real risk from an investment standpoint here. I think, you know, this group, most of those interconnections
Speaker Change: are done at the distribution level. There's not an election that's going to impact the state of New Jersey until next November .
Ralph A. LaRossa: So I think the only question, and we've talked about this before, is will we have 100% EVs by 2035, or will we get a 50 on that test? And a 50 on that test is still going to be quite a bit of market penetration for the electric vehicle industry here. I'm not concerned about an election change.
Speaker Change: So, I think the only question, and we've talked about this before, is, you know, will you have 100% EVs by 2035, or will we get a 50 on that test?
Carly Davenport: And a 50 on that test is still going to be quite a bit of market penetration for the electric vehicle industry here. So I'm not concerned about an election change. Maybe it'll impact some of the tax incentives and some of the other things that we have. But again, the uniqueness of our condensed and compressed service territory ethical will keep electric vehicles before.
Speaker Change: And a 50 on that test is still going to be quite a bit of market penetration for the electric vehicle industry here.
Carly S. Davenport: Maybe it'll impact some of the tax incentives and some of the other things that we have, but... Again, the uniqueness of our condensed and compressed Service Territory, I think we'll keep electric vehicles at the forefront.
Speaker Change: I'm not concerned about an election change. Maybe it'll impact some of the tax incentives and some of the other things that we have.
Speaker Change: Again, the uniqueness of our condensed and compressed service territory, I think, will keep electric vehicles at the forefront.
Ralph A. LaRossa: Okay, great. That's helpful. And then, switching gears, just, I guess, as you think about your nuclear fuel requirements, and you mentioned in the slides, you're covered through 26 and then have a significant portion also covered through 27. I guess just how are you thinking about longer-term supply, just in the context of the Russia waivers kind of rolling off in 28 here. Just curious about your thoughts there.
Carly Davenport: Got it. Okay, great. That's helpful. And then switching gears, I guess as you think about your nuclear fuel requirements, and you mentioned in the slides you're covered through '26 and then have a significant portion also covered through '27. I guess just how are you thinking about longer term supply, just in the context of the Russia waivers kind of rolling off in 28 here, just curious of your thoughts there. Yeah, we're thinking about it quite a bit, Carly. And it's very topical given what you mentioned within your question. And so there's been a fair bit of work that's been ongoing to move forward and extend that over time.
Speaker Change: Got it. Okay, great. That's helpful.
Speaker Change: And then switching gears, just I guess as you think about your nuclear fuel requirements, I know you mentioned in the slides, you're covered through
Speaker Change: 26, and then have a significant portion also covered through 27. I guess just how are you thinking about longer-term supply?
Speaker Change: Just in the context of the Russia waivers kind of rolling off in 28 here, just curious of your thoughts there.
Daniel J. Cregg: Yeah, we're thinking about it quite a bit, Carly, and it's very topical, given what you mentioned in your question. And so there's been a fair bit of work that's been ongoing to move forward and extend that over time. And I would expect that, I don't know, maybe when we're sitting here on the next call, we'd have a little bit of an extension there we'd be able to offer. So we're aware of it on top of it.
Speaker Change: Yeah, we're thinking about it quite a bit, Carly, and it's very topical given what you mentioned within your question, and so there's been a fair bit of work that's been ongoing.
Carly Davenport: And I would expect that maybe when we're sitting here at the next call, we'd have a little bit of an extension there we'd be able to offer. So we're aware of it. On top of it, you know, it's not the most immediate, urgent thing that's going on from the standpoint of actually producing power. But we always have a lead time that we're interested in and continue to move forward on that. So we'll continue to push that data out and give updates as we do it.
Speaker Change: to move forward and extend that over time. And I would expect that, I don't know, maybe when we're sitting here at the next call, we'd have a little bit of an extension there we'd be able to offer. So we're aware of it on top of it.
Carly S. Davenport: You know, it's not the most immediate, urgent thing that's going on from the standpoint of actually producing power. But we always have a lead time that we're interested in and continue to move forward on that. So we'll continue to push that data out and give updates as we do it. Great. We'll stay tuned there. Thanks so much for your time.
Speaker Change: You know, it's not the most immediate, urgent thing that's going on from the standpoint of actually producing power, but we always have a lead time that we're interested in and continue to move forward on that. So we'll continue to push that data out and give updates as we do it.
Carly Davenport: Great, we'll say to you in there. Thanks so much for the time.
Speaker Change: Great, we'll stay tuned there. Thanks so much for the time.
Ryan Levine: Other questions from the line of Ryan Levine with City. This is here with your question.
Ryan Michael Levine: Thanks, Carol. Our next question is from the line of Ryan Levine with Citi. Please proceed with your question. Good morning.
Speaker Change: Our next question is from the line of Ryan Levine with Citi. Please respond with your question.
Ryan Levine: Good morning. For the EV program or energy efficiency program, in what the six-month extension is in place, are you looking at any expansion to the energy efficiency program given the load forecast in the service territory. Yeah, I think that triangle that we're in the middle of trying to settle that we refer to as EE2. I think we'll be that response that you're kind of inferring that we, you know, people are going to be looking at from a policy standpoint to offset some of the other data data center and other load growth. So, you know, the review has those filings from all the utilities here in the state.
Ralph A. LaRossa: Morning, Ryan. For the EV program or energy efficiency program with a six month extension in place, are you looking at any expansion of the energy efficiency program given the low forecast in the service area? Yeah, I think that the triennial that we're in the middle of trying to settle at, we refer to it as EE2, I think will be that response that you're kind of inferring there that we, you know, people are going to be looking at from a policy standpoint to offset some of the other data, data center, and other load growth.
Speaker Change: Morning. Morning Ryan. How's it going?
Ryan Michael Levine: For the EV program or energy efficiency program with a six-month extension in place, are you looking at any expansion to the energy efficiency program given the load forecast in the service territory?
Speaker Change: Yeah, I think that triennial that we're in the middle of trying to settle at, we refer to it as EE2, I think will be that response that you're kind of inferring there that we, you know, people are going to be looking at from a policy standpoint to offset some of the other data, data center and other load growth.
Ralph A. LaRossa: So, you know, the VPU has those filings from all the utilities here in the state, and they're taking a look at them. I think their timeline was the end of the year to reach settlement, I think it was an October timeframe to reach settlement.
Speaker Change: So...
Speaker Change: You know, the VPU has those filings from all the utilities here in the state, and they're taking a look at it. I think their timeline was the end of the year.
Ryan Levine: And they're taking a look at it. I think their timeline was the end of the year to reach the, I think it was October timeframe to reach settlement. So, you know, I think they're on track for that and looking for some consistency across all the utilities. So, again, completely aligned with the policy there, and I don't expect a big jump in the next couple of weeks for a new filing or anything like that. I would just keep an eye on the filing that is in front of them today.
Ralph A. LaRossa: So, you know, I think they're on track for that and looking for some consistency across all the utilities. So, again, completely aligned with the policy there, and I don't expect a big jump in the next couple weeks for asking for a new filing or anything like that. I would just keep an eye on the filing that is in front of them today. Okay, and then in your procured remarks, you highlighted a data center feasibility study that some of your potential customers are engaging in. What's the scope of that study? And are there different legal or regulatory frameworks that may be deterministic around what's viable?
Speaker Change: to reach, I think it was October time frame, to reach settlement.
Speaker Change: So, you know, I think they're on track for that and looking for some consistency across all the utilities.
Speaker Change: Again, completely aligned with the policy there, and I don't expect a big jump in the next couple weeks for a new filing or anything like that. I would just keep an eye on the filing that is in front of them today.
Ryan Levine: Okay.
Ryan Levine: And then in your preferred remarks, you highlighted data center feasibility study that some of your potential customers are engaging in. What's the scope of that study and are there different legal or regulatory frameworks that that are that may determine that may be deterministic around what's viable. Yeah, no, I mean, you know, look at feasibility studies where, you know, we haven't gotten an official request to go out and buy the copper, the transformers, the start digging a hole to install a wire. So, our engineers are out looking to see whether or not those megawatts that are being requested can be supported.
Speaker Change: Okay, and then in your prepared remarks you highlighted a data center feasibility study that some of your potential customers are engaging in. What's the scope of that study and are there different legal or regulatory
Speaker Change: frameworks that may be deterministic around what's viable.
Ralph A. LaRossa: Yeah, no, I mean, look, a feasibility study is where we haven't gotten an official request to go out and buy the copper, the transformers, start digging a hole to install a wire. So our engineers are out looking to see whether or not those megawatts that are being requested can be supported. And it is, again, I think if you talked to every utility, they would refer to that differently with a different acronym. So, and it might be at different spots in the process.
Speaker Change: Yeah, no, I mean, you know, look, a feasibility study is where, you know, where we haven't gotten an official request to go out and buy the copper, the transformers, start digging a hole to install a wire, so our engineers are out looking to see whether or not those megawatts that are being requested can be supported.
Ryan Levine: And it is, again, I think if you talk to every utility, we would refer to that differently, what a different acronym. So, and it might be a different spot in the process. I would say our feasibility studies are at the middle of the road for us. When it becomes real and that last couple hundred megawatts, that's what we consider to be a new business request and official request that comes in. And then we have leads that are coming in all the time. But both the feasibility side and the leads are about triple right now, the actual new business requests that we've started to work on.
Speaker Change: and it is...
Speaker Change #100: Again, I think if you talk to every utility, we would refer to that differently with a different acronym, and it might be at different spots in the process. I would say our feasibility studies are the middle of the road.
Ralph A. LaRossa: I would say our feasibility studies are in the middle of the road for us. When it becomes real in that last couple hundred megawatts, that's what we consider to be a new business request, an official request that comes in. And then we have leads that are coming in all the time.
Speaker Change #100: for us.
Speaker Change #100: When it becomes real in that last couple hundred megawatts, that's what we consider to be a new business request, an official request that comes in, and then we have leads that are that are coming in all the time.
Daniel J. Cregg: But both the feasibility side and the leads are about triple right now, the actual new business requests that we've started to work on. Yeah, I think it's inherited within your question, the legal and regulatory. I tend to think of it more operationally than anything else about just having the injection of that incremental need into the system. And can the system handle it?
Speaker Change #100: Both the feasibility side and the leads are about triple right now the actual new business requests that we've started to work on.
Ryan Levine: Yeah, I think it's inherent within your question: the legal and regulatory. I tend to think of it more operationally than anything else about just having the injection of that incremental need into the system and kind of system handle it. What will it take for this? I mean, the only time it would become a regulatory issue is if there was a concern if somebody turned down whether it was a solar panel that was trying to get installed on one side or a data center, because they didn't have the infrastructure to support it in a timely fashion.
Speaker Change #101: Yeah, I think it's inherent within your question, the legal and regulatory, I tend to think of it more operationally than anything else about just having the injection of that incremental need into the system and can the system handle it, what will it take for the system to handle it.
Ralph A. LaRossa: What will it take for the, I mean, the only time it would become a regulatory issue is if there was a concern if somebody was turned down, whether it was a solar panel that was trying to get installed on one side or a... Data Center, because they didn't have the infrastructure to support it in a timely fashion. It might be a regulatory issue raised in that sense. Okay, great.
Speaker Change #100: Yeah, I mean, the only time it would become a regulatory issue is if there was a concern if somebody turned down, whether it was a solar panel that was trying to get installed on one side or
Speaker Change #100: a data center, because they didn't have the infrastructure to support it in a timely fashion. It might be a regulatory issue raised in that scenario.
Ryan Levine: They might be a regulatory issue raised in that scenario.
Ryan Levine: Okay, great. Just to converse, you're saying that the Amazon connection dynamic isn't being pursued or diligence through that process. You're talking about a hyperscale data center where we're handling through dance theme in the commercial development side. Yeah, to the extent there'd be a difference in the approach to the extent of something that might be co-located versus something that it was thinking error within your first question, which is about the feasibility study on the grid. The utility has an obligation to serve the figure and have the best way to do it. Figure out what has to happen from a capital perspective and from a system operation perspective.
Ryan Michael Levine: And just to converse, you're saying that the Amazon Connection dynamic isn't being pursued with the same diligence or through that process. You're talking about a hyperscale data center we're handling through Dan's team on the commercial development side. Yeah, to the extent that there'd be a difference in the approach to the extent of something that might be co-located versus something that was, I think, inherent within your first question, which is about the feasibility study on the grid, the utility has an obligation to serve. They're figuring out the best way to do it, figuring out what has to happen from a capital perspective and from a system operation perspective. Thank you. Thanks, Ryan.
Speaker Change #100: Okay, great. And just to confirm, so you're saying that the Amazon...
Speaker Change #102: Connection dynamic isn't being
Speaker Change #103: pursuit or diligence through that process.
Speaker Change #103: You're talking about a hyperscale data center we're handling through Dan's team.
Speaker Change #107: in the commercial development side. Yeah, to the extent that there'd be a difference in the approach to the extent of something that might be co-located versus something that was, I think, inherent within your first question.
Speaker Change #104: which is about the feasibility study on the grid, the utility has an obligation to serve, they're figuring out the best way to do it, figuring out what has to happen from a capital perspective, and from a system operation perspective.
Ryan Levine: Thank you.
Ryan Levine: Thanks, Ron.
Sophie Karp: Our next question is in the line of Sophie Karp with KeyBank. Please just use your question.
Sophie Karp: Our next question is in the line of Sophie Karp with KeyBank. Please answer your question. Hi, good morning, guys.
Speaker Change #105: Thank you.
Ryan Michael Levine: Thanks, Ryan.
Speaker Change #106: Our next question is from the line of Sophie Karp with KeyBank. Please receive your question.
Sophie Karp: Hi. Good morning, guys. Thank you for choosing my question.
Sophie Karp: Thank you for taking my question. Just kind of curious, how are you formulating your PJM strategy from here on, considering that you're also looking at co-location opportunities? I mean, with the next BRA auction coming up at some point this year, would you still consider bidding on it or holding back? What's your thought on that? Yeah, I think the data center that's co-located that doesn't exist right now needs to be built. And so that's going to take some time, and that time is going to basically, at some point, crossover what you're looking at from a BRA.
Sophie Karp: Hi, good morning guys. Thank you for taking my question.
Sophie Karp: Just kind of curious, how are you formulating your PGM strategy from here on, considering that you're also looking at co-location opportunities? I mean, like with the next barrier action coming up at some point this year, would you still consider being into it or hold back? Like what's your thought on that?
Sophie Karp: I'm just kind of curious how you're formulating your PJM strategy from here on considering that you're also looking at co-location opportunities I mean like with this next BRA auction coming up at some point this year.
Speaker Change #109: Would you still consider bidding into it or hold back, like what's your thought on that?
Sophie Karp: Yeah, I think the data center that's co-located that doesn't exist right yet needs to be built. And so that's going to take some time, and that time is going to basically, at some point, crossover what you're looking at from a BRA. But I think where we are right now. We're either not there, or we'd be adjusted at the very end. So I don't think that that's quite hit across over point yet. So I don't think that's really critical to where we are.
Speaker Change #110: Yeah, I think, you know, the data center that's co-located that doesn't exist right yet needs to be built.
Speaker Change #111: And so that's going to take some time, and that time is going to basically at some point crossover what you're looking at from a VRA, but I think where we are right now, we're either not there or we'd be just at the very beginning. So I don't think that that's quite at a crossover point yet.
Speaker Change #111: So, I don't think that's really critical to where we are.
Sophie Karp: Thank you. That's all from me.
Sophie Karp: Thanks, Sophie.
Speaker Change #111: Got it. Thank you. That's all for me. Thanks, Sophie.
Andrew Weisel: The next question is from a lot of Andrew.
Ralph A. LaRossa: But I think where we are right now, we're either not there, or we'd be adjusted at the very, so I don't think that that's quite hit a crossover point yet. But so I don't think that that's really critical to where we are. Got it. Thank you. That's all for me. Thanks, Sophie. The next questions are from the line of Andrew Weisel with Scotiabank. Andrew.
Andrew Weisel: Why so less kosher bank? This is the other question.
Speaker Change #111: The next questions are from the line of Andrew Weisel with Scotiabank. Please use your questions.
Andrew Weisel: Andrew. Hi, good morning, everybody. First up, one quick one to clarify. I know you've talked about it a little bit, but of the land of the artificial island, how much of that is already leased out? And maybe you could talk a bit about just the size and shape of some of those parcels and how suitable it might be for a small number of larger facilities or a larger number of smaller facilities. Andrew, it's a great question, but one that we ever really discussed and what, you know, obviously we were we were being talking to folks and would give a handle as to what other people are thinking about.
Andrew Marc Weisel: Hi, good morning, everybody. Morning, Andrew. One quick one to clarify. I know you've talked about it a little bit, but of the land on the artificial island, how much of that is already leased out? And maybe you could talk a bit about just the size and shape of some of those parcels and how suitable they might be for a small number of larger facilities or a larger number of smaller ones. Well, Andrew, it's a great question, but one that we haven't really discussed, and, you know, obviously, we would be talking to folks and would get a handle on what other people are thinking about, so I don't want to go down that path, but I would just say to you... Qualitatively, I mean, big picture.
Drew: Andrew
Drew: Hi. Good morning, everybody. Morning, Andrew. First up...
Andrew Marc Weisel: One quick one to clarify, I know you've talked about it a little bit, but of the land of the artificial island, how much of that is already leased out? And maybe you could talk a bit about just the size and shape of some of those parcels and how suitable it might be for a small number of larger facilities or a larger number of smaller facilities.
Speaker Change #114: Andrew, it's a great question but one that we we haven't really discussed and what you know obviously we were being talking to folks and would give a handle as to what other people are thinking about so I don't want to go down that path but I would just say to you. Qualitatively, I mean. Yeah, I would simply say to you this, the
Andrew Weisel: I don't want to go down that path, but I would just say the qualitatively. Yeah, I would simply say to you this: the any data center that comes in each one of them have a unique configuration and design. Some of the data centers would be comfortable with multiple stories. Some are not comfortable with multiple stories. Some have certain cooling needs. Others have different cooling needs. So each one of them, you know, it'd be really hard press to say a one acre of land equals as many megawatts, and we're seeing. You know, multiple designs whenever we would have a conversation with anybody and think about it.
Andrew Marc Weisel: Yeah, I would simply say to you this: any data center that comes in, each one of them has a unique configuration and design. Some data centers would be comfortable with multiple stories. Some are not comfortable with multiple stories. Some have certain cooling needs. Others have different cooling needs.
Speaker Change #115: Any data center that comes in, each one of them have a unique configuration and design. Some data centers will be comfortable with multiple stories, some are not comfortable with multiple stories. Some have certain cooling needs, others have different cooling needs.
Ralph A. LaRossa: So each one of them, you know, it would be really hard-pressed to say one acre of land equals this many megawatts, and we're seeing... You know, multiple designs whenever we have a conversation with anybody, and they think about it. So, I'm kind of sidestepping that specific question, but I really think that's better left for the negotiating team and any conversations they're having with developers.
Speaker Change #116: So, each one of them, you know, it'd be really hard-pressed to say one acre of land equals this many megawatts. And we're seeing...
Speaker Change #117: You know, multiple designs whenever we would have a conversation with anybody and they think about it. So, I kind of sidestepped on that specific question, but really think that's better left for the negotiating team and any conversations that are happening with developers.
Andrew Weisel: So I kind of sidestep for that specific question, but really think that's better left for the negotiating team and any conversations that are with developers. Understood, certainly not one size fits all.
Andrew Weisel: Then, if I can ask sort of a two-part question on the ZEC program. First question is if we were to see the hypothetical red sweep scenario in November, would you have any concerns about the IRA and specifically the nuclear PTC being at risk. And then conversely, if you were to see data centers being co-located behind the meter, obviously the original intent of the ZEC program was to support un-economic struggling nukes. The nukes are no longer struggling. So the question is, you know, as you mentioned, the governor is trying to incentivize these tech companies to come.
Andrew Marc Weisel: Then I can ask sort of a two-part question on the ZECC program. The first question is, if we were to see the hypothetical RID sweep scenario in November, would you have any concerns about the IRA and, specifically, the nuclear PTC being at risk? And then conversely, if you were to see data centers being co-located behind the meter, obviously, the original intent of the ZECC program was to support uneconomic, struggling nuclear power plants. However, the nukes are no longer struggling.
Speaker Change #118: Understood. Certainly not one-size-fits-all.
Speaker Change #119: Then if I can ask sort of a two-part question on the ZECC program.
Speaker Change #120: First question is, if we were to see the hypothetical RID sweep scenario in November , would you have any concerns about the IRA and specifically the nuclear PTC being at risk?
Speaker Change #121: And then conversely, if you were to see data centers being co-located behind the meter, obviously the original intent of the ZEF program was to support uneconomic, struggling nukes.
Ralph A. LaRossa: So the question is, you know, as you mentioned, the governor is trying to incentivize these tech companies to come. Would it make sense for New Jersey ratepayers, for PSE&G customers, to be supporting these tech companies? You know, is there a scenario that the New Jersey program gets revamped in one way or another if we do have hyperscale or sign co-located contracts? Yeah, so, um, again, I'll put on a couple different hats here, one of which is actually a customer hat.
Speaker Change #122: The nukes are no longer struggling, so the question is, you know, as you mentioned, the governor is trying to incentivize these tech companies to come.
Andrew Weisel: Would it make sense for New Jersey ratepayers for PSE and G customers to be supporting tech companies? You know, is there a scenario that the New Jersey program gets revamped in one way or another if we do have hyperscaler signing co-located contracts?
Speaker Change #123: Would it make sense for New Jersey ratepayers, for PSE&G customers to be supporting tech companies? You know, is there a scenario that the New Jersey program gets revamped in one way or another if we do have hyperscaler signing co-located contracts?
Ralph LaRossa: Yes, so again, I'll put on a couple different hats here. One of which is actually even a customer hat. I would say this: you know, first of all, the ZEC program ends next March. So start from next May, I'm sorry. So start from start from that scenario. So certainly there won't be any conversations or that would take place that would, you know, we would benefit from a data center before then. Second, I think any company would be very hard pressed, asking for a subsidy on top of a revenue stream that was similar to what we think was just negotiated at town.
Ralph A. LaRossa: Um, I would say this, you know, first of all, the ZECC program ends next March. So start from next May, I'm sorry. So start from that scenario, so that we wouldn't, certainly there wouldn't be any conversations or that would take place that would, you know, we would benefit from a data center before then. Second, I think.
Speaker Change #124: Yeah, so, again, I'll put on a couple different hats here, one of which is actually even a customer hat. I would say to you this...
Speaker Change #124: You know, first of all, the ZECC program ends next March, so we'll start from next May, I'm sorry, so start from start from that scenario so that we would certainly there will there won't be any conversations or that would take place that would, you know, we would benefit from a data center.
Ralph A. LaRossa: Any company would be very hard-pressed to ask it for a subsidy on top of a revenue stream that was similar to what we think was just negotiated at talent. And I'll leave my comment there. That's my customer hat on.
Speaker Change #124: before then. Second, I think...
Speaker Change #125: Any company would be very hard-pressed to ask it for a subsidy on top of a revenue stream that was similar to what we think was just negotiated at talent.
Ralph LaRossa: And I'll leave my comment there. I, that's my customer hat being on. I would be hard pressed to think that you would pancake that on top of something else, whether it be the state subsidy or a federal subsidy. Every federal PTC, we don't know what the definition is yet for gross revenues. And when that comes out, we'll certainly take a look at it. I, I would, again, I would be hard pressed to believe that they're going to allow a PTC payment on top of an extra dollar payment for megawatt average that we're seeing in the marketplace.
Ralph A. LaRossa: I would be hard-pressed to think that you would pancake that on top of something else, whether it be the state subsidy or a federal subsidy. For every federal PTC, we don't know what the definition is yet for gross revenues. And when that comes out, we'll certainly take a look at it. But I, again, would be hard pressed to believe that they're going to allow a PTC payment on top of a... X dollar payment per megawatt hour that we're seeing in the marketplace.
Speaker Change #126: And I'll leave my comment there, that's my customer hat, being on, I would be hard pressed to think that you would pancake that on top of something else, whether it be the state subsidy or a federal subsidy.
Speaker Change #126: Federal PTC, we don't know what the definition is yet for gross revenues, and when that comes out, we'll certainly take a look at it. Again, I would be hard-pressed to believe that they're going to allow.
Speaker Change #126: a PTC payment on top of a...
Speaker Change #126: X dollar payment per megawatt hour that we're seeing in the marketplace.
Ralph LaRossa: So, you know, there's a lot of TBDs and what I just laid out for you, but there's also a little bit of just reality. And, and I, I would not be thinking that we, we'd be asking New Jersey ratepayers to be subsidized and tech companies.
Ralph A. LaRossa: So, there's a lot of TBDs in what I just laid out for you, but there's also a little bit of reality. I would not be thinking that we'd be asking New Jersey ratepayers to be subsidized by tech companies. In fact, I would probably step in front of that conversation myself personally.
Speaker Change #126: You know, there's a lot of TBDs in what I just laid out for you, but there's also a little bit of just reality. And I would not be thinking that we'd be asking New Jersey ratepayers to be subsidized in tech companies. In fact, I would probably step in front of that conversation myself personally.
Ralph LaRossa: In fact, I would probably step in front of that conversation myself, personally. Okay, great. So, assuming things go in the direction of data centers, it would be more of a market base. I think that can’t going forward, you would expect?
Andrew Marc Weisel: Okay, great. So, assuming things go in the direction of data centers, it would be more of a market-based pricing mechanism going forward, you would expect? I don't – well, again, look, I never want to say never, but I wouldn't – I can't foresee any other scenario. Okay, very good, thank you.
Speaker Change #127: Okay, great. So, assuming things go in the direction of data centers, it would be more of a market-based pricing mechanism going forward, you would expect? I don't – well, again, look, I never want to say never, but I wouldn't – I can't foresee any other scenario.
Ralph LaRossa: I, I know, well, again, look, I never want to say never, but I wouldn't, I can't, I can't foresee any other scenario. Okay, very good. Thank you. Thanks. Thank you.
Anthony Christopher Crowdell: Thank you. Our next question is from the line of Anthony Crowdell with Mizzouho Securities. Hey, thanks for squeezing me in. I guess Carly's looking to get like an E.V. Ira Camaro or something.
Speaker Change #128: Okay, very good. Thank you.
Anthony Crowdell: Our next question is from the line of Anthony Crowdell with Mizzouho Security. Please just see your third question. Hey, thanks for squeezing me, and I guess Carly is looking to get like an EVI or a Camaro or something.
Speaker Change #128: Thanks.
Speaker Change #129: Thank you. Our next question is from the line of Anthony Crowdell with Mizzou Health Securities. Please just use your questions.
Anthony Christopher Crowdell: Hey, thanks for squeezing me in. I guess Carly's looking to get like an E.V. Ira Camaro or something. Um, I guess, I guess just, uh, quickly, you guys are in a unique position where you have unregulated generation, you guys are the regulated utility in New Jersey. Just all the talk is maybe higher capacity prices, higher power prices.
Anthony Christopher Crowdell: I guess just quickly, you guys are in a unique position where you have unregulated generation. You guys are the regulated utility in New Jersey. Just all the talk is maybe higher capacity prices, higher power prices. I mean, while that's going to benefit your units, but any thought on maybe the customer bill impact starts crowding out rate-based investment? Like managing that line, you guys are in a unique position where you kind of will see both ends of that. Yeah, Anthony, no, it's a great question.
Anthony Crowdell: I guess just quickly, you guys are in a unique position where you have unregulated generation; you guys are the regular utility in New Jersey. Just all the talk is maybe higher capacity prices, higher power prices. I mean, is there a, while that's going to benefit your units, but any thought on maybe the customer bill impact starts crowding out rate-based investment. Like managing that line, you guys are in a unique position where you kind of will see both ends of that. Yeah, Anthony, no, it's a great question, and it's one that, you know, we've been thinking about since 2008, right?
Speaker Change #131: I mean, while that's gonna benefit your units, but any thought on maybe the customer bill impact starts crowding out rate-based investment? Like managing that line, you guys are in a unique position where you kind of will see both ends of that.
Ralph A. LaRossa: And it's one that, you know, we've been thinking about since 2008, right? We always, we always go back and take a look when commodity prices were much higher and make sure that, you know, any projections we have do not put us in that position. I've said it multiple times, and I'll say it again, because of the good economic development work that we've done in this region, not just in this state, but in this region, income has continued to do pretty well. And if you look at the share of wallet or pocketbook that anyone would have to put up to pay their utility bills.
Speaker Change #132: Yeah, Anthony, no, it's a great question, and it's one that, you know, we've been thinking about since...
Ralph LaRossa: We always go back and take a look when commodity prices were much higher and make sure that, you know, any projections that we have do not put it in that position. I've said it multiple times, and I'll say it again: because of the good economic development work that we've done in this region, not just in this state, but in this region, the income has continued to do pretty well. And if you look at the share of a wallet or pocketbook that anyone would have to put up to pay their utility bills, it's been pretty consistent over the last 20 years.
Speaker Change #132: 2008, right? We always...
Anthony Christopher Crowdell: We always go back and take a look when commodity prices were much higher and make sure that you know any projections we have.
Speaker Change #133: do not put us in that position. I've said it multiple times and I'll say it again, because of the good economic development work that we've done in this region, not just in this state, but in this region, the income has continued to do pretty well.
Speaker Change #133: And if you look at the share of wallet or pocketbook that anyone would have to put up.
Daniel J. Cregg: It's been pretty consistent over the last 20 years, so I would expect that to remain the same. There's a lot of that information that's in our high-arm materials that we've gone over a bunch of times with you. So I don't see anything that's on the horizon, even in some of the conversations that are taking place, that would lead me to believe that we're crowding out the required utility investment. You know, it's going to have to take place if we're going to have all this electrification.
Speaker Change #133: to pay their utility bills. It's been pretty consistent over the last 20 years.
Ralph LaRossa: So I would expect that to remain the same. There's a lot of that information that's in our, in our high-arm materials that we've got over a bunch of times with you.
Speaker Change #133: So I would expect that to remain the same, there's a lot of that information that's in our IR materials that we've gone over a bunch of times with you.
Dan Craig: So I don't see anything that's on a horizon, even in some of the conversations that are taking place, that would leave me to believe that we're crowding out the required utility investment that's going to, you know, have to take place if we're going to have all this electrification. Yeah, I think as we kick into PTCs to Anthony, I think it rightfully puts whatever support there may be for nuclear at the federal level, which puts on an even playing field for some of the PTCs and ITCs that you see for other carton-free investments, so I think that helps as well.
Speaker Change #133: So I don't see anything that's on the horizon, even in some of the conversations that are taking place, that would lead me to believe that we're crowding out the required utility investment that's going to, you know,
Daniel J. Cregg: And I think as we kick into PTCs, too, Anthony, I think it rightfully puts whatever support there may be for nuclear energy at the federal level, which puts on an even playing field for some of the PTCs and ITCs that you see for other carbon-free investments. So I think that helps as well.
Speaker Change #133: I think as we kick into PTCs too, Anthony, I think it rightfully puts the
Anthony Christopher Crowdell: Whatever support there may be for nuclear at the federal level, which puts on an even playing field for some of the PTCs and ITCs that you see for other carbon-free investments. So I think that helps as well.
Anthony Crowdell: Great, thanks so much for taking the question.
Anthony Christopher Crowdell: Great, thanks so much for taking the question. Our next question is from the line of Bill Apicelli with UBS. Please state your question. Hey, Bill. Hi, good morning. How are you doing?
Anthony Crowdell: Thanks, Anthony. Thank you.
Anthony Christopher Crowdell: Great, thanks so much for taking the question.
Bill Appicelli: Any questions from the line of Bill Apicelli with UBS? We'll see you with your questions.
Speaker Change #134: Thank you. Our next question is from the line of Bill Apicelli with UBS. Please state your questions.
Bill Appicelli: Hey, Bill. Hi, good morning. How are you doing? Good. Just a similar line of questioning in Anthony there, but just maybe around the demand and supply balance in PTCM. So I'm going back to the point of you kind of being on both, you know, the generation from N-R-T-D. I mean, how are you viewing the demand with broadly, whether it's behind the meter or otherwise? You did make a comment earlier about proliferation of, you know, co-location deals going forward in other sectors. I mean, do you have confidence in the current PGM process to ensure adequate reliability?
Bill Apicelli: Good. Just a similar line of questioning as Anthony there, but maybe around the demand and supply balance of PJM. So going back to the point of you kind of being on both, you know, on the generation front and on TD, I mean, how are you viewing demand growth broadly, whether it's behind the meter or otherwise? You did make that comment earlier about the proliferation of, you know, co-location deals going forward in other sectors.
Speaker Change #134: Hey, Bill. Hi, good morning. How are you doing?
Speaker Change #134: Good.
Bill Apicelli: Just a similar line of questioning, Anthony, there, but just maybe around the demand and supply balance and PJM. So, going back to the point of you kind of being on both, you know, on the generation front and on TD, I mean, how are you viewing...
Bill Apicelli: I mean, do you have confidence in the current PJM process to ensure adequate reliability? Look, I got to leave that to the experts at NERC and FERC and every place else to look at PJM and their processes. I am one of the folks who has continued to say we need to keep our eye on the ball very, very closely, right? And so that won't change.
Speaker Change #135: The demand goes broadly, whether it's behind the meter or otherwise. You did make that comment earlier about proliferation of, you know, co-location deals going forward in other sectors. I mean, do you have confidence in the current PGM process to ensure adequate reliability?
Ralph LaRossa: Hey, Bill, I look, I got to leave that to the experts at NERC and FERC and every place else to look at that PGM and their processes. I am one of the folks who have continued to say we need to keep our eye on the ball very, very closely, right? And so that won't change. I was very happy to see PGM react to our push specifically for our projections and to listen to the input that we provided them last year. I think they've started the process to look at low growth again. I think it's another four or five month process that they've just begun, and they'll come out with that towards the end of this year, beginning and next year.
Speaker Change #137: Look, I got to leave that to the experts at NERC and FERC and every place else to look at the PJM and their processes. I am one of the folks who has continued to say we need to keep our eye on the ball very, very closely, right? And so that won't change.
Ralph A. LaRossa: I was very happy to see PJM react to our push specifically for our projections and listen to the input that we provided them last year. I think they've started the process to look at load growth again. I think it's just another four or five-month process that they've just begun, and they'll come out with that towards the end of this year or the beginning of next year.
Speaker Change #137: I was very happy to see PJM react to our push specifically for
Speaker Change #137: projections and to listen to the input that we provided them last year. I think they've started the process to look at load growth again. I think it's just another four or five month process that they've just begun and they'll come out with that towards the end of this year, beginning of next year.
Bill Apicelli: I trust that everything you've heard from other utilities that are within the PJM footprint and the load projections they said will be reflected in those forecasts, and as a result, we'll either have a need for generation that will be signaled through the capacity markets, or we'll have some transmission that will be required, and you'll see that come in through the RTEP process. I'd like to see something longer from a capacity standpoint than three years or a year or whatever you might want to take a look at. When we were looking at those types of things, it was tough to make a decision on building a power plant.
Ralph LaRossa: I trust that everything that you've heard from other utilities that are within the PGM footprint and the low projections, they said, will be reflected in those forecasts, and as a result, we'll either have a need for generation that'll be signaled through the capacity markets, or we'll have some transmission that'll be required, and you'll see that come in there through the RARTEP process. So I'd like to see something longer from a capacity standpoint than three years or a year or whatever you might want to take a look at. It's tough. When we were looking at those types of things, it's tough to make a decision on building a power plant.
Speaker Change #137: I trust that everything you've heard from other utilities that are within the PJM footprint and the load projections, as I said, will be reflected in those.
Speaker Change #137: in those forecasts, and as a result, we'll either have, you know, a need for generation that'll be signaled through the capacity markets, or we'll have some transmission that'll be required, and you'll see that come in there through the R-TAP process.
Speaker Change #137: I'd like to see something longer from a capacity standpoint than three years, or a year, or whatever you might want to take a look at. It's tough.
Speaker Change #137: When we were looking at those types of things, it's tough to make a decision on building a power plant. We're not in that business anymore.
Ralph A. LaRossa: We're not in that business anymore. We're simply here with the assets we have, the clean assets that we have today, and we're going to continue on that path. I guess maybe to that last point, then, I mean, you know, some companies within PJM have contemplated maybe pursuing legislation that could allow for regulated generation and rate base at some point, right, if they feel like the system isn't... I think they may be closer to the conversations they're having with PJM, and they may have more frustrations about how PJM's listening to them.
Ralph LaRossa: We're not in that business anymore. We're simply here on the with the assets we have to clean the assets that we have today, and we're going to continue on that, and we'll continue on that.
Speaker Change #137: We're simply here with the assets we have, the clean assets that we have today, and we're going to continue on that path.
Ralph LaRossa: So, I guess maybe to that last point that I mean, some companies within PGM have contemplated maybe pursuing legislation that could allow for a regulated generation of great base at some point, if you feel like the system isn't. I think they may be closer to conversations they're having with PGM, and they may have more frustrations about how PGM is listening to them. We were pretty vocal, and we got a decent response last year. So, I don't want to really weigh in on what their conversations may be, and I think I might be doing that if I weigh in on their generation.
Speaker Change #138: Right, I guess maybe to that last point that I mean, you know, some companies within PGM have contemplated maybe pursuing legislation that could allow for regulated generation and rate base.
Speaker Change #138: at some point, right, if you feel like the system isn't...
Speaker Change #139: Yeah, and I think they may be closer to conversations they're having with PJM and they may have more frustrations about how PJM's listening to them. We were pretty vocal and we got a decent response last year, so I don't want to...
Ralph A. LaRossa: We were pretty vocal, and we got a decent response last year, so I don't want to... you know, really weigh in on what their conversations may be. And I think I might be doing that if I weigh in on their Generation E. I guess the question is for you, right? I mean, would that be a path you would ever consider.
Speaker Change #139: You know really weigh in on what their What their conversations might be and I think I might be doing that if I if I weigh in on their on their generation
Ralph LaRossa: I guess there are questions for you, right? I mean, would that be a path you would ever consider? Oh, from our standpoint, look, I have said multiple times, Bill, we have more than enough CAPEX to have our 5% to 7% growth rate with our replacement activities. If the state in New Jersey or the federal government says, "Hey, listen, we'd like utilities to do that." We would certainly listen to those requests, but we'd like putting pipe in the ground and wires in the air right now. And we're not in the business of building new rotating equipment.
Speaker Change #140: I guess the question is for you, right? I mean, would that be a path you would ever consider?
Bill Apicelli: From our standpoint, look, I have said multiple times, Bill, we have more than enough CapEx to achieve our 5% to 7% growth rate with our replacement activities. If the state of New Jersey or the federal government says, hey, listen, we'd like utilities to be able to do that, we would certainly listen to those requests, but we like putting pipe in the ground and wires in the air right now, and we're not in the business of building new rotating equipment.
Speaker Change #140: Oh, from our standpoint, look, I have said multiple times, Bill, we have...
Bill Apicelli: More than enough CapEx.
Speaker Change #141: to have our 5% to 7% growth rate with our replacement activities. If the state of New Jersey or the federal government says, hey, listen, we'd like utilities to go do that, we would.
Speaker Change #141: Certainly, listen to those requests, but we like putting pipe in the ground and wires in the air right now. We're not in the business of building new rotating equipment.
Ralph LaRossa: So, if that happens, we certainly could put that skill set. We have it. We could restart it if we needed to, but we're counting on the more per place that we're in to resolve it right now. I understand. Thank you very much.
Bill Apicelli: If that happens, we certainly could put that skill set in place, we have it, we could, you know, restart it if we needed to, but we're counting on the marketplace that we're in to resolve it. Understandable. Thank you very much. Listen, yeah, I think that's it for the call, correct? Timing-wise?
Speaker Change #141: If that happens, we certainly can put that skill set, we have it, we could, you know, restart it if we needed to. But we're counting on the marketplace that we're in to resolve it right now.
Ralph LaRossa: Well, listen, yeah, I think that said for the call, correct timing was the correct. Yes, I was just going to hand the floor right to you for closing comments. All right, great. Well, listen, I great conversation. I really appreciate everybody calling in and appreciate the point. The Q and A section, obviously, was robust. I do want to just make one comment at the end here.
Speaker Change #142: Understood. Thank you very much.
Speaker Change #143: Well listen, yeah, I think that's it for the call, correct? Timing-wise?
Ralph A. LaRossa: Correct. Yes, I was just going to hand the floor back to you for closing comments. All right, great. Well, listen, this was a great conversation.
Ralph A. LaRossa: I really appreciate everybody calling in and appreciate the Q&A section, which was obviously robust. I do want to just make one comment at the end here. We're in our normal storm and season that takes place. And I'm going to go a little bit off the script here from the standpoint that I want to thank all those that responded to the storm down in Texas and just remind us all of the hard work that's done day in and day out by the line workers that responded in Texas. I was taken aback, I must say, by some of the behaviors that took place from a security standpoint down at Center Point and in Texas, in general.
Speaker Change #144: Correct. Yes, I was just going to hand the floor back to you for closing comments. All right, great. Well, listen, great conversation. I really appreciate everybody calling in and appreciate the Q&A section. Obviously, it was robust.
Ralph LaRossa: We're in a, we're in our normal storm and season that takes place, and I'm going to go a little bit off the script here from the standpoint that I want to thank all those that responded to the storm down in Texas. And just remind us all of the hard work that's done day in and day out by the line workers that responded in Texas. I was taken aback. I must say by some of the behaviors that took place from a security standpoint down at Center Point and in Texas in general. And I just ask you all to keep that all in mind as we go forward into the season. There's a lot of lights will go out, storm will come through, and there's people out there working really, really hard in some really tough conditions. And let's just keep them in our thoughts and prayers.
Speaker Change #145: I do want to just make one comment at the end here. We're in our normal storm and season that takes place, and I'm going to go a little bit off the script here from the standpoint that I want to thank
Speaker Change #145: All of those that responded to the storm down in Texas, and just remind us all of the hard work that's done day in and day out by the line workers that responded in Texas. I was taken aback, I must say, by
Speaker Change #145: some of the behaviors that took place from a security standpoint down at Center Point and in Texas in general.
Operator: I just ask you all to keep that all in mind as we go forward into the season. Lights will go out, storms will come through, and there are people out there working really, really hard in some really tough conditions, and let's just keep them in our thoughts and prayers. With that, I thank you for calling in, and we'll catch up with you either on the road or in three months. Take care. Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Speaker Change #145: I just ask you all to keep that all in mind as we go forward into this season. Lights will go out, storms will come through, and there's people out there working really, really hard in some really tough conditions, and let's just keep them in our thoughts and prayers.
Operator: And with that, I thank you for calling in, and we'll catch up with you either on the road or in three months. Thank you.
Speaker Change #145: And with that, I thank you for calling in and we'll catch up with you either on the road or in three months. Take care.
Operator: Ladies and gentlemen, this concludes the teleconference, and we disconnect your lines at this time. Thank you for your participation.
Speaker Change #146: Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.