Q4 2024 Public Service Enterprise Group Inc Earnings Call
Ralph LaRossa: John Cranston, Ralph LaRossa, Carlotta Chan, Ralph LaRossa, Carlotta Chan, Ralph LaRossa,
Speaker Change: Chris Hemsworth, Mark D polygraph, Chris Mathews, Ralph LaRossa, Carlotta Chan, College Couple, aide
Rob: Ladies and gentlemen, thank you for standing by. My name is Rob, and I'm your event operator today. I would like to welcome everyone to today's conference, Public Service Enterprise Group's Fourth Quarter and Full Year Results 2024 Earnings Conference Call and Webcast.
Rob: At this time, all participants are in a listen-only 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 will 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.
Rob: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.
Rob: Just a reminder, this conference is being recorded today, February 25, 2025, and will be available for replay as an audio webcast on PSEG's Investor Relations website at https://www.pseg.org.
Investor.PSEG.com
Rob: I would now like to turn the conference over to Carlotta Chan. Please go ahead.
Carlotta Chan: Good morning and welcome to PSEG's fourth quarter and full year 2024 earnings presentation.
Speaker Change: 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-K 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 our prepared remarks, we will conduct a 30-minute question-and-answer session. I will now turn the call over to Ralph LaRossa.
Ralph LaRossa: Thank you Carlotta, and thank you everyone for joining us this morning to review PSEG's 2024 results and our outlook for the business going forward.
Let's start with our strong results.
Ralph LaRossa: PSEG reported net income of $0.57 per share for the fourth quarter of 2024 and $3.54 per share for the full year.
Ralph LaRossa: For non-GAAP operating earnings, PSEG reported results of $0.84 per share for the fourth quarter and $3.68 per share for the full year, which was at the top of our 2024 guidance range.
Ralph LaRossa: Our reported results for 2024 also mark the 20th consecutive year that we have met or exceeded management's non-GAAP operating earnings guidance to investors. We are proud of this track record and confident that our team will continue to build on it.
Ralph LaRossa: We were also successful in achieving our strategic and regulatory objectives for 2024.
Ralph LaRossa: First, we settled PSE&G's first electric and gas distribution rate case in six years, all with a balanced outcome that recovers prudent investments, maintains our favorable affordability profile, and mitigates variability for our customers.
Ralph LaRossa: Second, PSE&G received approval to invest 2.9 billion dollars in the Clean Energy Future Energy Efficiency II program over the upcoming six-year period.
Ralph LaRossa: This second phase of the BPU's statewide energy efficiency framework has resulted in a meaningful increase to the program, which will enable us to make investments at more customer premises to reduce energy usage, improve affordability, and reduce carbon emissions.
Ralph LaRossa: Third, we efficiently executed the Utilities Plan $3.6 billion capital spending program and notably completed the advanced metering infrastructure program on time and on budget, installing approximately 2.2 million smart meters in customers' homes and businesses.
Ralph LaRossa: And fourth, and I'm very happy to say, we implemented new deferral mechanisms for pension and storm expense coming out of the rate case. This increases the predictability of PSC&G's future financial results and stabilizes rates for customers.
Ralph LaRossa: Speaking of customer rates, the new base rates that were placed into effect last October represented an annual increase of about 1% per year since our last rate case in 2018.
Ralph LaRossa: Also, last October, PSE&G lowered its gas commodity charge to 33 cents per therm for the winter of 2025, the third supply charge reduction since January of 2023.
Ralph LaRossa: All of these steps will serve to moderate the recent outcome of the BGS auction results, which will increase customer electric bills this June 1st.
Ralph LaRossa: PSE&G's record of reliability, affordability, and customer satisfaction continues to be a valuable combination.
Ralph LaRossa: We were recently named number one in customer satisfaction with residential electric and gas service in the east among large utilities by J.D. Power in 2024.
Ralph LaRossa: The utility also received the PA Consulting 2024 Reliability One Award for the Mid-Atlantic region for the 23rd consecutive year.
Ralph LaRossa: I want to take a moment to recognize and thank all of our over 13,000 employees for the incredible teamwork and individual efforts that delivered 2024 strategic objectives and financial results.
Ralph LaRossa: So let's turn to our outlook for 2025 starting with slides five and six.
Ralph LaRossa: For the current year, we have initiated PSEG's Non-Gap Operating Earnings Guidance at $3.94 to $4.06 per share, which is up by 9% at the midpoint over our 2024 reported results.
Ralph LaRossa: Our 2025 Guidance Midpoint is the new base year for PSEG's 5-7% non-GAAP Operating Earnings Cater at the Nuclear Production Tax Credit threshold for the 2025-2029 period.
Ralph LaRossa: I would also note this CAGR, while unchanged as we pursue incremental revenue opportunities at PSEG Nuclear, starts from a $4 midpoint of 2025 guidance that is 9% higher than our 2024 non-GAAP results.
Ralph LaRossa: For 2025, we plan to invest $4 billion across enterprise, driven by regulated investments.
Ralph LaRossa: We also raised PSEG's 2025 to 2029 capital spending plan to $22.5 billion to $26 billion, which is up by $3.5 billion from the prior plan.
Ralph LaRossa: This increase is largely comprised of incremental investments at PSC&J that will meet growing customer demand, modernize infrastructure, and further execute on a previously mentioned energy efficiency programs.
Ralph LaRossa: Please see slides 14 and 15 for the updated regulated capital spending plan and rate-based projections for the 2025 to 2029 period.
Ralph LaRossa: This updated 5-year capital spending program is expected to support a PSE&G rate-based tailor that continues at 6-7.5% over the upcoming 5-year period.
Ralph LaRossa: which grows from a starting point of approximately 34 billion dollars, which is notably 12% higher than the year-end 2023 balance.
Ralph LaRossa: Something new for PSC&G this year has been a significant increase in inquiries from large load and data center customers.
Last year at this time, these totaled under 400 megawatts.
Ralph LaRossa: Today, the interest has grown to 4,700 megawatts, which includes both mature leads and initial inquiries.
Ralph LaRossa: This pipeline represents an over 12-fold increase over the last year.
Ralph LaRossa: The average size of these project leads is in the 100 megawatt range, which can often fit within PSE&G's existing robust utility transmission infrastructure.
Ralph LaRossa: We are responding to these inquiries in under four months on average.
Ralph LaRossa: Approximately 25% of the 4,700 megawatts of new business leads have been incorporated into PGM's 2025 system peak load forecast.
Ralph LaRossa: As I mentioned earlier, the basic generation service auction results will raise the residential electric bill starting June 1st.
Ralph LaRossa: This increase is being driven by the significant rise in the capacity prices coming out of PJM's latest RPM auction conducted last July, which reflects growing energy demand combined with the need for new power generation.
Ralph LaRossa: As a reminder, electric supplies have passed through a cost that PFC&G does not earn a profit on.
Ralph LaRossa: Even with this upcoming BGS increase, our combined bill still compares favorably to all other utilities in New Jersey, and we remain a leader across the nation on our low share of wallet comparison.
Ralph LaRossa: PSE&G's bill remains at about 3% of total income for medium income customers and even lower still, approximately 2%, for low to moderate income customers that take advantage of payment assistance programs.
Ralph LaRossa: Turning to PSEG power and other, while the PTC threshold provides sufficient support to meet PSEG's 5 to 7% long-term growth outlook, we continue to pursue nuclear revenue growth opportunities at PSEG Nuclear that would be incremental.
Ralph LaRossa: These opportunities to contract portions of our nuclear output under long-term contracts can also benefit the economic development interests of the state in helping to attract AI hubs to New Jersey.
Ralph LaRossa: We had an exceptional year in 2024. Continuing to execute on our business plan and in doing so have made our businesses more predictable and our earnings growth more visible.
Ralph LaRossa: These benefits will enhance our ability to drive our future performance that prioritizes maintaining our financial strength, making disciplined investments, and delivering operational excellence.
Ralph LaRossa: Another key PSEG distinction that we are proud to extend our ability to continue supporting another robust five-year capital program without the need to issue new equity or sell assets through 2029, even with the latest 3.5 billion dollar increase over the prior plan.
Ralph LaRossa: Before I conclude, I want to highlight that our Board of Directors recently announced a $0.12 per share increase in PSEG's annual common dividend to indicative annual rate of $2.52 per share for 2025.
Ralph LaRossa: This is PSEG's 14th consecutive annual increase, made possible by a long-standing commitment to financial discipline that has enabled us to pay a common dividend to our shareholders for 118 consecutive years.
Ralph LaRossa: I'll now turn the call over to Dan to walk you through the results for the quarter and our outlook for 2025 through 29 period and then rejoin the call for Q&A.
Speaker Change: Thank you, Ralph, and good morning, everybody. As Ralph mentioned earlier, PSCG reported net income of $3.54 per share for the full year of 2024.
Speaker Change: compared with net income of $5.13 per share for 2023 and non-GAAP operating earnings for the full year of 2024 were $3.68 per share compared to $3.48 per share for 2023.
Speaker Change: For the fourth quarter of 2024, net income was 57 cents per share compared to $1.10 per share in 2023.
Speaker Change: And non-GAAP operating earnings were $0.84 per share in the fourth quarter of 2024, compared to $0.54 per share in 2023.
Speaker Change: Slides 8 and 10 detail the contribution to non-GAAP operating earnings per share by business segment for the fourth quarter and full year of 2024.
Speaker Change: And slides 9 and 11 contain waterfall charts that take you through the net changes for the quarter-over-quarter and full-year periods in non-GAAP operating earnings per share by major business.
Speaker Change: Starting with PSE&G, which reported fourth quarter 2024 net income of $0.75 per share.
compared to $0.58 per share in 2023.
Speaker Change: CSC&G had non-GAAP operating earnings of $0.75 per share for the fourth quarter of 2024, compared to $0.59 per share in 2023.
Speaker Change: The new rates went into effect on October 15th and the fourth quarter results reflect the impact of seasonality of gas revenues during winter months.
Speaker Change: 2025 comparisons will benefit from a full year of new rates for both gas and electric revenues.
Speaker Change: Compared to the fourth quarter of 2023, transmission margin was a benefit of two cents per share due to higher recovery of investment.
Speaker Change: Distribution margin increased by 16 cents per share and reflects the impacts of the rate case on gas revenues in the fourth quarter.
Speaker Change: Distribution O&M expense was a penny per share favorable compared to the fourth quarter of 2023, primarily due to the timing of spending.
Speaker Change: Depreciation and interest expense rose by a penny per share and two cents per share, respectively, compared to the fourth quarter of 2023, reflecting continued growth in investment and higher interest expense.
Speaker Change: Lower pension and OPEB income resulting from the cessation of OPEB-related credits, which ended in 2023.
Speaker Change: resulted in a two cent per share unfavorable comparison to the year earlier quarter.
Speaker Change: And lastly, the timing of taxes recorded through an annual effective tax rate, which nets to zero over the full year.
Speaker Change: And for the full year, PSENG results reflect higher earnings from increased investment in infrastructure replacement and energy efficiency.
as well as the Ray case.
Speaker Change: partially offset by higher interest and depreciation expense from higher investment balances.
Speaker Change: Weather during the fourth quarter, as measured by heating degree days, was 12% warmer than normal, but 3% cooler than the fourth quarter of 2023.
Speaker Change: And as I'm sure you know, weather variations have a minimal impact on PSENG's utility margin because of the Conservation Incentive Program, or CIP, mechanism.
Speaker Change: This decoupling mechanism limits the impact of weather and other sail variances, positive or negative.
Speaker Change: on electric and gas margins, while helping PSE&G promote the widespread adoption of its energy efficiency program.
Speaker Change: Under the SIPP, the number of electric and gas customers is what drives margin, and each segment grew by approximately 1% in 2024.
Speaker Change: Capital spending, as Ralph mentioned, PSE&G invested approximately $0.9 billion or $900 million during the fourth quarter.
Speaker Change: And for the full year 2024, our capital spending totaled $3.6 billion.
Speaker Change: slightly higher than our original plan of 3.4 billion dollars based on the continued execution of our electric system reliability programs including energy strong and last mile spend in the IAP.
Speaker Change: our ongoing gas infrastructure replacement spending, as well as our energy efficiency programs.
Speaker Change: For 2025, we plan to invest approximately $3.8 billion in regulated investments.
Speaker Change: focused on infrastructure modernization, energy efficiency, and meeting growing demand and electrification initiatives.
Speaker Change: We've rolled forward our five-year regulated capital investment plan through 2029.
Speaker Change: amounting to $21 billion to $24 billion compared to our prior plan of $18 billion to $21 billion.
Speaker Change: The $3 billion increase in regulated investments is driven by incremental reliability and resiliency investments under PSENG's existing infrastructure programs and the CES-EE2 program.
Speaker Change: Our 2025-2029 regulated capital investment plan is expected to produce compound annual growth in rate base of 6-7.5%, starting from a year-end 2024 rate base of approximately $34 billion, including construction work in progress, and as Ralph mentioned, is an increase of approximately 12% over the same number for year-end 2023.
Moving to PSUG Power and Other.
Speaker Change: For the fourth quarter of 2024, PCG Power & Other reported a net loss of $0.18 per share.
Speaker Change: compared to net income of 52 cents per share in the fourth quarter of 2023.
Speaker Change: Non-GAAP Operating Earnings were $0.09 per share for the fourth quarter compared to a Non-GAAP Operating Earnings loss of $0.05 per share in the fourth quarter of 2023.
Speaker Change: For the fourth quarter of 2024, net energy margin rose by 18 cents per share.
Speaker Change: driven by higher recontracting prices at nuclear, which includes the net impact of the nuclear PTC that took effect January 1st of 2024.
Speaker Change: As anticipated, we realized a significant portion of the increase in the 2024 gross margin over 2023's gross margin during the second half of the year based upon the shape of our underlying hedges.
O&M was a penny per share unfavorable.
Speaker Change: Interest expense was two cents per share higher, reflecting incremental debt at higher rates.
Speaker Change: And lower pension income and OPEB credits were one cent per share unfavorable versus the fourth quarter of 2023.
Speaker Change: Taxes and other were a penny per share favorable compared to the year earlier quarter.
Speaker Change: On the operating side, the nuclear fleet produced approximately 7.3 terawatt hours during the fourth quarter and approximately 31 terawatt hours for the full year.
Speaker Change: running at a capacity factor of approximately 86% and 90% for the quarter and full year respectively.
Touching on some recent financing activity.
Speaker Change: As of the end of December, PSAG had total available liquidity of $2.6 billion, including approximately $100 million of cash on hand.
Through December 2024, CASTROM Operations was strong.
Speaker Change: The well below the 2023 level, which is substantially helped by the return of cash collateral.
Speaker Change: Our cash collateral balance was approximately 250 million dollars as of December 31st.
which supported our strong liquidity position.
Speaker Change: Last November, PSE&G repaid its $250 million, 3.05% secured medium-term notes, or MTNs, upon maturity.
Speaker Change: And in December of 24, PSAG Power entered into a new 364-day variable rate term loan for $400 million, supported by the strength of its cash flow.
Speaker Change: and also in December PSG Power amended its existing 1.25 billion variable rate three-year term loan agreement to extend the maturity from March to June of 2025 which just helps manage our cash position during the upcoming year.
At the end of 2024.
Speaker Change: Power had $1.65 billion of debt outstanding, with $1.25 billion swapped to a fixed rate, mitigating fluctuations in interest rates through March of 2025.
Speaker Change: And given our swaps, we continue to have a low level of variable rate debt.
Approximately just 7% of total debt at year-end.
Speaker Change: Looking ahead, our solid balance sheet supports the execution of PSUG's five-year capital spending plan, dominated by regulated CapEx.
Speaker Change: without the need to sell new equity or assets and provides for the opportunity for consistent and sustainable dividend growth.
Speaker Change: Now, before I conclude my remarks, let's review some earnings drivers for 2025, and those are outlined on slide 5.
Speaker Change: The most impactful driver will be the implementation of new distribution base rates in effect for the full year.
Speaker Change: Recall that the fourth quarter of 2024 is a seasonal peak for gas.
Speaker Change: which comes into play in a projection of the new base rates over a full year.
Speaker Change: Also note electric seasonality will produce a similar impact from the third quarter of this year.
In addition, clause-based recoveries for investments in GSMT.
The Infrastructure Management Program, or IAP.
Speaker Change: and the CEF Energy Efficiency II program will also add the 2025 utility margin.
Speaker Change: Partly offsetting these positives are higher O&M interest and depreciation expense.
reflecting higher investment balances of PSE and G
Speaker Change: as well as higher interest expense at PSAG power and parent related to refinancing maturities at higher current interest costs.
Speaker Change: At PUCG Nuclear, our 100% owned Hope Creek Nuclear Unit has a scheduled refueling set for the fall of 2025.
Speaker Change: that will include the fuel cycle extension work to extend its next scheduled refueling in 24 months to the fall of 2027.
Speaker Change: And as a reminder, the Zero Emission Certificate amounts earned by our New Jersey Nuclear Units will conclude in May of 2025.
In closing.
Speaker Change: We delivered our 20th year in a row of meeting or exceeding our guidance.
Speaker Change: And we carry that confidence forward to our full year 2025 non-GAAP operating earnings guidance of $3.94 to $4.06 per share, approximately 9% higher at the midpoint over 2024 results.
Speaker Change: We also extended our 5 to 7% non-GAAP operating earnings CAGR through 2029, starting with 2025 as the base year.
Speaker Change: As Ralph mentioned, we're continuing to pursue incremental revenue opportunities at PCG Nuclear, which could enhance that long-term growth CAGR relative to the range that we've provided based on the PTC.
Speaker Change: That concludes our formal remarks and we are ready to begin the question and answer session.
Thank you.
Speaker Change: Ladies and gentlemen, we'll 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. 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. If you're on a speakerphone, please pick up your handset before entering your request.
One moment please for the first question.
Speaker Change: The first question comes from the line of Shahar Parusa with Guggenheim Partners. Pleased to see you with your questions.
Speaker Change: Hey guys, good morning. Good morning, sure. Morning, Ralph. Morning, Dan. So just, Ralph, starting off on the nuclear side with Artificial Island.
Shahar Parusa: Do you see sort of commercial discussions being delayed with the recent actions at FERC? Does the complexity of like behind the meter deals change the deal structure to potential opportunities around side of the meter and any sense on timing especially given the governor's ambitions? Thanks.
Speaker Change: I'm going to let Dan give you some details on that, but since you mentioned the governor, I would just say this on that front.
Speaker Change: Well, the New Jersey Economic Development Authority has made a few comments about their wind port and specifically that they're looking at alternative uses for that wind port. So that's...
Speaker Change: One thing that we just want to point out, the governor has also mentioned that he has
Speaker Change: in a recent call and show that they're looking at alternate uses for it. So you kind of put those pieces together and.
Speaker Change: We know that there's some interest from the governor's standpoint and from New Jersey's standpoint to continue for us to Look to pursue these opportunities and you know as far as so that's the timing issue that you they hit on a back end
and Dan will kind of address generically the upfront piece.
Speaker Change: Yeah, I think, sure, our messaging there is really fairly consistent. I think we've continued to see interest, we continue to have.
Speaker Change: discussions with multiple parties for various elements of what we're talking about and that interest remains strong so
Speaker Change: I think you touched on FERC as well. I think that while it would have been great to have complete answers throughout everything from what FERC said, I don't know that we necessarily expected that and we got to wait for some, but I think
Speaker Change: directionally what they said was favorable for the flexibility to do what you want to do and those details have yet to be written.
Speaker Change: So, we'll continue to see what happens there, but I think our messaging is really consistent with respect to what's going on related to nuclear.
Speaker Change: It's pretty aggressive and it was a clear message from FERC on their need to get to a solution here So we took that as a positive We certainly could have been in a different place at least for the know that One potential solution of behind a meter is still in front of the meter and there's still other
and other offload opportunities there.
Speaker Change: That's a fair point I appreciate that Ralph and then just just I just want to make sure it does
Speaker Change: The PST&G pipeline of opportunities and inquiries you just highlighted that's over four gigs
Does that negate any of the artificial island opportunities?
Speaker Change: Any chance that a potential deal with Artificial Island kind of shift towards the front of the meter With PSE&G or the Artificial Island counterparty is completely separate from the PSE&G conversations you just highlighted. Thanks
Speaker Change: Yeah, so so I think the message on the 4700 megawatts which includes other things besides data centers we were clearing there was data centers plus large load and
Speaker Change: You know, believe it or not, we're still seeing some large electric vehicle interconnections that are taking place. So it's a number of items. I think there's two takeaways, though, that we want to make sure, first of all, from a data center standpoint, there's interest from the industry in New Jersey.
Speaker Change: when you're seeing 4,700 megawatts showing up. That's a request, that is, that are showing up. So that's part one. And part two is the states
marketing in this area has been working.
Speaker Change: They've got a Helix that they've announced in New Brunswick, Nokia, Bell Labs just announced that they're going to be in New Brunswick. So there's a number of the efforts that are taking place or are taking hold.
We just look forward to the momentum continuing.
Speaker Change: Fantastic, thank you guys so much, appreciate it and great execution.
Thank you. Thanks, Charles.
Hey, thanks. Good morning. Hey, David.
Hey, how you doing?
Speaker Change: But let me see, I guess the PGM auction has been getting a lot of attention recently, FERC is going to be, you know, re-looking at auction structures and a number of changes are underway now. I was wondering if you could comment on
Speaker Change: How you're, you know, thinking about the outlook for the PJM market, you know, what could change, are there possibilities of structural changes here, and how do you navigate that, maybe both from a customer impact and for your nuclear fleet?
Speaker Change: Yeah, so I think the way we are specifically addressing this is by setting all of our targets off the PTC floor. We've been very clear about that.
and the impacts there.
Speaker Change: Well, from a customer standpoint, we will do everything in our power to help keep customer costs down from an affordability standpoint. We have done that. We will continue to advocate on that behalf.
Speaker Change: I just don't know whether or not the premise of the question of the PJM market is is valid because I don't know if
Speaker Change: I don't know if there is a PJM market anymore, and we've been talking to that for quite some time, so
Speaker Change: You know, my concern there is mostly from a reliability standpoint. Are we going to be able, in this construct, to attract generation?
to the PJM region as a whole.
Speaker Change: And if so, is it going to be in a timely enough fashion for everything that we have going on in the region?
Speaker Change: So, those are the questions at hand. It's really focused on reliability and affordability for us.
Speaker Change: We're going to keep advocating on customers' behalf in both of those areas. Yeah, I think, just to add on to that a little bit, David, I think those are the longer-term elements that are going to be really important for resource adequacy, and it's vital to get that right.
Speaker Change: And I think there's still work to be done there. I think for the nearer term, you know, to the extent that this collar in pricing ends up being put forth for a couple of years, it can give you a little bit more stability as to where things are going to turn out.
But I go back again to Ralph's first comment.
Speaker Change: What we're basically putting out from a financial standpoint is the PTC floor, so to the extent that things move below that, that floor is there. If it moves above that, there could be some potential benefit for us, but I think job one is getting resource adequacy right.
Yeah, absolutely. I appreciate that color.
and maybe somewhat related, I guess,
Speaker Change: Is the uncertainty in the outlook for PJM broadly a deterrent for new large load customers, maybe new customers broadly, looking at the market?
Speaker Change: I guess with all these changes being considered for the auction construct and looking at the resource adequacy challenges ahead in the market, are you seeing that, you know, lowering the interest levels from some of these customers? Any perspective there would be helpful.
Speaker Change: Yeah, no, I point you back to the data in the prepared remarks where we talked about the increase from 400 I think megawatts to 4,700 megawatts of interest and large load in New Jersey alone
Speaker Change: So, I really can't talk for the other jurisdictions, but certainly in New Jersey, we're still seeing that uptick that we reflected in those remarks.
Speaker Change: Yep, got it. That's fair. Great. I'll leave it there. Thanks so much. Thanks.
Speaker Change: Our next question is from the line of Nick Campanella with Barclays. Please receive your questions.
Nick Campanella: Hey, good morning, everyone. Thanks for taking the time. Morning, Nick. Morning. Hey, so I just want to put a finer point on Char's question just...
Nick Campanella: In terms of bringing a, you know, maybe a commercial deal forward for the nuclear fleet, are you still watching and waiting for the state at this point, or is it really waiting on FERC? And then just to follow up to that is just,
Nick Campanella: As we kind of think about the timeline, if a large load customer was to be able to connect to the facility, what's the timeline for RAMP? And can that affect earnings in 2027, or is this more later data towards the end of the decade?
Nick Campanella: Yeah, and Nick, I think that we're not waiting on anything on the state, and I think we're not waiting anything either from the standpoint of FERC. I think that some of the details with respect to what flexibility there can be may come out of where that goes.
Nick Campanella: But I think there's the ability to continue work, and we are continuing work with respect to the state that we're in right now.
You know, we're
It's interesting. I do think that there was
Nick Campanella: Some expectation by some that we might see something more definitive come out of FERC, but I will say that they did
Nick Campanella: highlight the 30 days and another 30 days they seem to have understood the urgency in what they said
Nick Campanella: even though we didn't get complete clarity on what they did. So I think
Nick Campanella: That urgency will be helpful as we continue to go forward, but it's not stopping anything. I think from the standpoint of some final details as to how some things can be done, it may add some flexibility.
Okay, and then just like the, I guess the, the...
Nick Campanella: The ramp for a customer, it does take time for these data centers to ramp up, it seems like, and I'm just wondering, is this something that you think can impact the outlook on the five-year plan, or is it more longer-dated than that?
Nick Campanella: Yeah, think about it in a couple different ways, Nick. I would say that to the extent that there is a sale of what exists today, then something could happen quicker. To the extent that somebody needs to build a data center for that power to flow to, it's going to take a little bit longer. So I think depending upon the nature of where things go and there's a couple things that we're working towards, that's going to dictate the timing as to when you might see something in the bottom line.
Speaker Change: Okay, I appreciate that. And then just following up on the capacity auction commentary, just wanted to try to understand, you know, if we kind of continue to clear near the 270 level, how does that kind of impact your gross receipts calculation out to 27 and where you are in the range? Thanks.
Thanks for watching!
Speaker Change: Yeah, so I would say, you know, as you go out in time, you're going to have to take a look at what's in place from the standpoint of hedging and where the market goes. And then you're going to lay that capacity price on top of it. I'll remind you that at least in
Speaker Change: in the structural formation of how the capacity auction is set.
Speaker Change: It's based upon a net cone, which is net of energy and
Speaker Change: I think that as you do see one price rise, the other price should react in the opposite direction, the prices being energy and capacity. So, and we saw some of that when we saw the last clear go up, we saw a temporary decline in energy prices. And so there is a relationship there. I think that if I were you and I was looking out in time,
Speaker Change: I think to the extent that you saw increases in energy
Speaker Change: and you thought that we were going to clear higher, it would move us higher within the range or above the range, depending upon where you go with it, right? We have the comfort of the floor. I think the stability of that is really important to us and should be for you to think about how the results are going to go. But that upside is there to the extent that markets move up.
Speaker Change: and don't and don't the only thing I would add is not to forget in those calculations that you make that there's a there's an inflation adjustment to that floor
Speaker Change: So, in the out years, that will impact where those lines cross, which I think was the root of your question.
Speaker Change: Absolutely. Absolutely. And I appreciate the commentary on the range. That's helpful. Thank you. Thanks.
Speaker Change: Our next question is from the line of Paul Fremont with Bladenburg-Vellman. Please proceed with your questions.
Paul Fremont: Great. I guess first question, can you give us sort of any color on on hedges that you have at Peg Power?
Thank you.
Paul Fremont: has normally, I guess, you would be at 90% for this year. How should we think about sort of, you know, past guidance versus where you are right now?
Thank you.
Paul Fremont: If, Paul, what we have done and what we have said that we've done is try to balance the existing uncertainty of the definition of grocery seats.
Paul Fremont: in order to try to make sure that we're going forward in a way that minimizes our risk.
Paul Fremont: of results understanding that we do have a PTC floor. What I would tell you directionally is
Paul Fremont: That has not resulted in kind of radical shifts from the standpoint of what those hedging percentages.
Paul Fremont: would have been back when we had more of a three-year ratable so you know to your point if you want to think about being somewhere in the 90s and 25 and maybe two-thirds and 26 and a third and 27 is
Speaker Change: Great and then I guess you used to provide sort of a breakout of net income guidance between the utility and and Peg Power and other. Is there a reason why you've not done that for this year?
Speaker Change: It's just I think we made that change a year or two back, Paul, and we're comfortable with leaving it at the enterprise level.
Speaker Change: It's 90% utility. We've been pretty consistent about that, so give or take in that range, but we're comfortable discussing this at the enterprise level.
Speaker Change: And then just to sort of follow up on Nick's question, the gross margin sensitivity that you provide includes
capacity prices to the extent that the auctions continue.
Thanks for watching!
Speaker Change: Let's hear a question in there. Oh the question is should we, in other words, you give a dollar per megawatt hour as sensitivity. Does that include the dollar per megawatt hour equivalent of the capacity auction?
Speaker Change: Yeah, think about that as an all-in price that you would see for a megawatt hour. And yes, you'd have to variable that fixed charge, but yes, that's the right way to think.
Great. Thank you very much.
Speaker Change: The next question is from the line of Paul Zimbardo with Jeffries. Please proceed with your question.
Thanks for watching!
Be their wall.
Speaker Change: We might have lost Paul. Might have lost him. Our next question is from the line of Paul Patterson with Klonrock Associates. Hey Paul, we're on a four-on-four roll right now, so we'll keep it going. Hey, Paul. There you go. He's a charm.
Speaker Change: Just, I mean, back to the, I'm sorry, back to the original question about
The timing on the co-location, I noticed the
Speaker Change: the language that the Chair reiterated on Friday and what have you, but what does that actually mean in terms of when you think that an actual order might come out?
Speaker Change: Well I have to take it at their at their face value and that they said they want to come out shortly thereafter and it was the words that came out in the last statement so
Speaker Change: You know, I mean we could guess at what shortly means But I think they've been pretty consistent in delivering on what they've said they're going to do so I wouldn't expect it to be much beyond the 60 days if That is the path that's taken
Speaker Change: Okay, and then you also said something that was interesting about the PGM market or the lack thereof.
Speaker Change: This is something that obviously is being, you know, there's just a lot of activity, a lot of discussion, a lot of apprehension, I think, about reliability and pricing and what have you. Do you have any, anything you'd like to share in terms of what potentially might
Speaker Change: What you might be looking for, I mean, in terms of maybe a longer term set up or something, or just what are your thoughts about it? I mean, I'd just be curious as to what you think.
might come out of a
Speaker Change: of all the examination of this market, quote-unquote, and how it might evolve.
Speaker Change: Well, I think it's going to depend upon what state you're in and what the economic policies of that state is. I, you know, you certainly hear a certain...
Speaker Change: The utilities are not involved in that process. We do have... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ...
Speaker Change: PSC gene nuclear which is involved right now in the generation.
Speaker Change: side of the business, but New Jersey is at a crossroads, and I think right now we're all trying to figure out the best way to move forward. I don't think there's a clear answer on it, so I don't want to front run any policy decisions that are being made in the state.
Speaker Change: But it's certainly it's certainly something we need to continue to discuss For the two reasons that we stated up front affordability for customers and the reliability
Speaker Change: Absolutely. Any idea when we might see something of a proposal or anything? Yeah, there's some talk about an energy master plan coming out, but look, Paul, to be honest about all of this, I think there's some...
Speaker Change: the decisions that have to be made that will probably bridge administrations here in New Jersey, right? So I think what we're trying to do as a company is continue to educate everyone on on the issue and and try to help people think through
Speaker Change: You know different different opportunities that the state of New Jersey could pursue
Okay, great. I really appreciate it. Thanks a lot.
Thank you. Thank you.
Speaker Change: The next question is from the line of Carly Davenport with Goldman Sachs. Pleasure to see you, Carly.
Speaker Change: Hey Carly. Hey, thanks for taking the question. Sorry to put a stop to the Paul train there but Thanks for all the colors so far on the power side Maybe just one from me on the the regulated side just on the the GSM p3
Speaker Change: filing, do you still expect to revisit that this quarter, and then would that be upside to the plan in 26-plus, or are there already assumptions kind of baked in after the GSMP-2 extension kind of runs itself out?
Speaker Change: Yeah, Carly, yeah, we are starting to have those conversations and it is in the plan, is the simple answer to both of those things. So...
Speaker Change: You know that that work is is part of our core business activities and something that you know, we expect to continue so Those conversations have started
Speaker Change: Great, thank you for that. I'll leave it there. Thanks Carly.
Thanks for watching!
Speaker Change: The next question is from the line of Paul Zimbardo with Jeffrey. Please proceed with your question.
Speaker Change: Back on the Paul train. Hey, can you hear me? Hopefully we're on the train. We got it. We got it. Well, we got there we go Yeah, no, thank you that the neighborhood reception is not always the best
Speaker Change: Thank you very much. I wanted to follow up on a little bit on the balance sheet side. I saw the no additional equity in the outlook, even with the cashback increase. Could you level set what was the actual 2024 FFO to debt? Where do you envision the credit measures going throughout the plan?
Speaker Change: You know, we continue, as we look forward, and as we're putting forward the forward-looking guidance for the next few years, we continue to be in that mid-teens range and are in a pretty good place from that perspective, which is the reason it gives us the comfort to...
Speaker Change: to say exactly what we did say within our prepared remarks.
Okay.
Speaker Change: Got it. I'll follow up on that one. And then shifting a little bit, going back to the BGS, looking at the one-year results for commercial industrial, for a year zone it was very high on a dollar per megawatt day basis, almost $700.
Speaker Change: and I know that you do not participate in that with your unregulated sleep. Is there any thoughts or kind of takeaways of what that indicates for what New Jersey could look like without a robust supply response for customers?
Speaker Change: Yeah, so, Paul, we were, I think, around 17% all-in in the numbers that were generated by the state and published, and I think that there were other ones that were up in the 20s. These are residential provider last resort rates.
Speaker Change: that are in that BGS, right? So, first of all, customers certainly have the opportunity to shop.
Speaker Change: I would expect some of that to happen from third-party suppliers.
Speaker Change: But for those customers that are relying on BGS, it is something that we have to lean in on, certainly from a payment assistance standpoint, which we're working on, and then also from our energy efficiency program and continuing to get the energy efficiency.
Speaker Change: message out for customers and helping them gain access to those programs. So those are the two pieces that I would say it means, what it means to us in the state of New Jersey, but
Speaker Change: We are higher, but not as high as some other areas in the state. Yeah, I mean just a reminder on that BGS contract that that's not something that that we profit from, that's a pass-through coming from the supply.
Speaker Change: providers and you know the biggest element related to the increase that we are seeing is coming from the auctions that happen at PJM and so that
Speaker Change: I do think you probably will see more interest in shopping, but I think at the end of the day the providers are going to have to go back to that same well which had some higher prices in the last auction.
Speaker Change: Okay, and to clarify, we're specifically commercial and industrial, like they're already so clear that $696 a megawatt day for PSC and G, just if you have any thoughts on that.
and I'll see you there. Take care.
Speaker Change: Yeah, I mean, I think it's still coming from the same supplier base, just with a different calculation going to them, and I think the same ability to shop is going to exist there. So I think you've got a parallel dynamic that's going on within that sector as well.
Okay, thank you all very much
Thanks, Paul.
Speaker Change: Thank you. Our final question is from the line of Anthony Crowdell with Mizuho. Please proceed with your question.
Speaker Change: Hey, hey, good morning, Dan. Good morning, Ralph. Just a quick follow-up.
Anthony Crowdell: Quick follow-up to Paul Patterson and kind of the comment you're making about maybe the PGM market, I don't know if you said it doesn't exist or whatever, just is the state of New Jersey in a net long position on generation, and if so, what's the reserve margin there, or do you have a reserve margin?
Anthony Crowdell: Yeah, so the state of New Jersey does not have an integrated resource plan. So there is not a You know, there's not a reserve margin set for the state of New Jersey that anybody
Anthony Crowdell: quote you, but we are short, right? So if you look at some of the information that's out there, New Jersey is a net importer, especially on the peak days.
Anthony Crowdell: So we we look to PJM and PJM has still every the last numbers I saw were we had about two percent but
Anthony Crowdell: more margin than what their target was right it's a question is as this load comes in
Speaker Change: where do we move to and where does that reserve margin get to which is the need for the additional generation and a resource adequacy conversation we keep having. Right so as Ralph said it you know peak times are going to be different than off-peak seasonal it matters a lot when you are talking about it but across the year we are a net importer.
Speaker Change: He is one of the options that just is just a question.
Speaker Change: you know obviously you say they need a resource adequacy plan but is it similar to maybe other states that have gone maybe like a
Speaker Change: Was it an, I forgot the acronym, I think maybe FRR, or just pulled out the generation and the load? Is that one of the multitude of options that the state could face, or should I be thinking about something different?
Speaker Change: Yeah, no I absolutely believe that that's something that the state could consider, right? The state could go in a bunch of different paths, but ADECA is the, you know, I keep referring back to that from, you know, back in 2000 time frame.
Speaker Change: when we deregulated and the rules were put in place, and we count on PJM.
Speaker Change: Right? And that's the market that's out there. So when I say I'm not sure about what...
Speaker Change: what kind of market it is. It's a market that has been influenced by a number of factors, and so they're trying to balance affordability and reliability with a free market, and that's a tough thing to do.
Speaker Change: So we'll see where it goes But it's certainly something that from a state of New Jersey standpoint We're going to keep banging the desk about because we've got to get it right as we participate in that market
Thanks for watching!
Great, thanks for taking my questions. Thanks, Anthony.
Ralph LaRossa: Thank you. I'd like to turn the floor back to Ms. LaRossa for closing comments.
Ralph LaRossa: Well, thank you Rob. So look, I think we had a lot of conversation about where we
Ralph LaRossa: Where we expected it to be, which was on a lot of a lot of the nuclear output and the potential data centers and so on and so forth. But I don't want to lose sight for 1 minute of all the good work that was completed back in 2024 and.
Ralph LaRossa: And that's not a complaint about what we talked about, but simply a statement of a fact that the team executed on everything that it had in front of it last year, not the least of which was the rate case.
Ralph LaRossa: The storms that came through this area the cold weather snaps that we had and so on and so forth So I want to end with a comment that was made in the beginning of in the middle of my prepared remarks Which is a thank you to the employees
Ralph LaRossa: that are here at PSEG. We do a fantastic job day in and day out, and that shows up in a multitude of areas. So, thank you. Thank you. Thank you. We look forward to seeing you at one of the roadshows. Thanks.
Ralph LaRossa: Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.