Q2 2026 Public Service Enterprise Group Inc Earnings Call

August 4, 2026

Operator: Ladies and gentlemen, thank you for standing by. My name is Rob, I am your event operator today. I would like to welcome everyone to today's conference, Public Service Enterprise Group's Q2 2026 Earnings Conference Call and Webcast. At this time, all participants are in listen-only mode. Later, we will 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 star 1 on your telephone keypad. To withdraw your question, press star 2. If anyone should require operator assistance during the conference, please press star 0 from your telephone keypad. As a reminder, this conference is being recorded today, 4 August 2026, and will be available for replay as an audio webcast on PSEG's Investor Relations website at https://investor.pseg.com.

Operator: Ladies and gentlemen, thank you for standing by. My name is Rob, I am your event operator today. I would like to welcome everyone to today's conference, Public Service Enterprise Group's Q2 2026 Earnings Conference Call and Webcast. At this time, all participants are in listen-only mode. Later, we will 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 star one on your telephone keypad. To withdraw your question, press star two. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. As a reminder, this conference is being recorded today, 4 August 2026, and will be available for replay as an audio webcast on PSEG's Investor Relations website at https://investor.pseg.com.

Speaker #1: Ladies and gentlemen, thank you for standing by. My name is Rob, and I'll, your event operator today. I would like to welcome everyone to today's conference, Public Service Enterprise Group's second quarter 2026 earnings conference call and webcast.

Speaker #1: At this time, all participants are in 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 your question, press star and the number 2.

Speaker #1: If anyone should require operator assistance during the conference, please press star 0 from your telephone keypad. As a reminder, this conference is being recorded today.

Speaker #1: August 4, 2026, and will be available for replay as an audio webcast on PSEG's Investor Relations website at https://investor.pseg.com. I would now like to turn the conference over to Carlotta Chan.

Operator: I would now like to turn the conference over to Carlotta Chan. Please go ahead.

Speaker #1: Please go ahead.

Speaker #2: Good morning, and welcome to PSEG's second quarter 2026 earnings presentation. On today's call are Ralph LaRossa, Chair, President, and CEO, and Dan Cregg, Executive Vice President and CFO.

Carlotta Chan: Good morning, and welcome to PSEG's Q2 2026 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. 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 or loss, as reported in accordance with generally accepted accounting principles or GAAP in the United States. We include reconciliations of our non-GAAP financial measures and a disclaimer regarding forward-looking statements on our IR website and in today's materials. Following our prepared remarks, we will conduct a 30-minute question and answer session.

Speaker #2: 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 #2: 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 differ from net income or loss as reported in accordance with generally accepted accounting principles, or GAAP, in the United States.

Speaker #2: We include reconciliations of our non-GAAP financial measures and a disclaimer regarding forward-looking statements on our IR website and in today's materials. Following our prepared remarks, we will conduct a 30-minute question-and-answer session.

Speaker #2: I will now turn the call over to Ralph LaRossa.

Carlotta Chan: I will now turn the call over to Ralph LaRossa.

Speaker #3: Thank you, Carlotta, and thank you for joining us to review PSEG's second quarter 2026 results. Starting with our financial results, PSEG reported net income of $67 per share, and non-GAAP operating earnings of $86 per share.

Ralph LaRossa: Thank you, Carlotta, and thank you for joining us to review PSEG's Q2 2026 results. Starting with our financial results, PSEG reported net income of $0.67 per share and non-GAAP operating earnings of $0.86 per share, bringing our H1 results to $2.15 per share of net income and $2.41 per share of non-GAAP operating earnings. Our ongoing investments in PSEG's system replacement, reliability, and energy efficiency were the main drivers of growth in our financial results in the Q2. At PSEG Power, an increase in realized market prices, higher nuclear generation, and gas operations more than offset the absence of the Zero Emission Certificate programs that concluded in May 2025. With results for the H1 2026 coming in as expected, we are pleased to reaffirm our full-year non-GAAP operating earnings guidance in the range of $4.28 to $4.40 per share.

Ralph LaRossa: Thank you, Carlotta, and thank you for joining us to review PSEG's Q2 2026 results. Starting with our financial results, PSEG reported net income of $0.67 per share and non-GAAP operating earnings of $0.86 per share, bringing our H1 results to $2.15 per share of net income and $2.41 per share of non-GAAP operating earnings. Our ongoing investments in PSEG's system replacement, reliability, and energy efficiency were the main drivers of growth in our financial results in the Q2. At PSEG Power, an increase in realized market prices, higher nuclear generation, and gas operations more than offset the absence of the Zero Emission Certificate programs that concluded in May 2025. With results for the H1 2026 coming in as expected, we are pleased to reaffirm our full year non-GAAP operating earnings guidance in the range of $4.28 to 4.40 per share.

Speaker #3: Bringing our first half results to $2.15 per share of net income, and $2.41 per share of non-GAAP operating earnings. Our ongoing investments in PSEG's system replacement, reliability, and energy efficiency were the main drivers of growth in our financial results in the second quarter.

Speaker #3: And that PSEG Power and the increase in realized market prices, higher nuclear generation, and gas operations more than offset the absence of the zero-emission certificate programs that concluded in May of 2025.

Speaker #3: With results for the first half of 2026 coming in as expected, we are pleased to reaffirm a full year non-GAAP operating earnings guidance in a range of $4.28 to $4.40 per share.

Speaker #3: Now, our operational results may have even been better, as we successfully managed one of the most challenging storm restorations in our company's history. Over the July 4 holiday weekend, a series of heat waves and successive thunderstorms hit our service area.

Ralph LaRossa: Now, our operational results may have even been better as we successfully managed one of the most challenging storm restorations in our company's history. Over the 4 July holiday weekend, a series of heat waves and successive thunderstorms hit our service area, accompanied by winds of over 70 mph. PSEG reconnected approximately 380,000 customers, with nearly all customers restored within 24 hours of losing power, demonstrating the value of our system reliability investments and our crew's steadfast commitment to our customers. PSEG's round-the-clock restoration efforts were led by over 330 crews and were supported by over 10 million proactive customer communications. In addition to thanking our employees who participated in the storm response, I also want to highlight that we worked this multi-day restoration effort with an excellent safety record and provided PSEG crews to help our neighboring utilities with their restorations.

Ralph LaRossa: Now, our operational results may have even been better as we successfully managed one of the most challenging storm restorations in our company's history. Over the 4 July holiday weekend, a series of heat waves and successive thunderstorms hit our service area, accompanied by winds of over 70mph. PSEG reconnected approximately 380,000 customers, with nearly all customers restored within 24 hours of losing power, demonstrating the value of our system reliability investments and our crew's steadfast commitment to our customers. PSEG's round-the-clock restoration efforts were led by over 330 crews and were supported by over 10 million proactive customer communications. In addition to thanking our employees who participated in the storm response, I also want to highlight that we worked this multi-day restoration effort with an excellent safety record and provided PSEG crews to help our neighboring utilities with their restorations.

Speaker #3: Accompanied by winds of over 70 miles per hour. PSEG reconnected approximately 380,000 customers with nearly all customers restored within 24 hours of losing power.

Speaker #3: Demonstrating the value of our system reliability investments and our crew's steadfast commitment to our customers. PSEG's round-the-clock restoration efforts were led by over 330 crews and were supported by over 10 million proactive customer communications.

Speaker #3: In addition to thanking our employees who have participated in the storm response, I also want to highlight that we worked this multi-day restoration effort with an excellent safety record and provided PSEG crews to help our neighboring utilities with their restorations.

Speaker #3: We support and welcome the upcoming review of our storm response by the New Jersey Board of Public Utilities. And we will be submitting a comprehensive post-event performance report to them tomorrow, August 5.

Ralph LaRossa: We support and welcome the upcoming review of our storm response by the New Jersey Board of Public Utilities, and we will be submitting a comprehensive post-event performance report to them tomorrow, 5 August. During the heat wave, PSEG reached a peak summer load of 10,446 MW, the highest level in 14 years, and activated demand response, part of our Clean Energy Future programs, during three separate events in early July, helping to keep peak energy costs down for customers. Our Clean Energy Future programs now generate more than $1 billion in annual customer savings, helping nearly 525,000 residential and business customers save energy and lower utility bills since we began the CFE program back in October 2020. Our EE investments have also supported approximately 9,300 jobs statewide over the past 6 years, including a network of more than 1,000 trade and union allies.

Ralph LaRossa: We support and welcome the upcoming review of our storm response by the New Jersey Board of Public Utilities, and we will be submitting a comprehensive post-event performance report to them tomorrow, 5 August. During the heat wave, PSEG reached a peak summer load of 10,446MW, the highest level in 14 years, and activated demand response, part of our Clean Energy Future programs, during three separate events in early July, helping to keep peak energy costs down for customers. Our Clean Energy Future programs now generate more than $1 billion in annual customer savings, helping nearly 525,000 residential and business customers save energy and lower utility bills since we began the CFE program back in October 2020. Our EE investments have also supported approximately 9,300 jobs statewide over the past six years, including a network of more than 1,000 trade and union allies.

Speaker #3: During the heat wave, PSEG reached a peak summer load of 10,446 megawatts. The highest level in 14 years. And activated demand response as part of our clean energy future programs during three separate events in early July, helping to keep peak energy costs down for customers.

Speaker #3: Our clean energy future programs now generate more than $1 billion in annual customer savings, helping nearly 525,000 residential and business customers save energy, and lower utility bills, since we began the CFEE program back in October of 2020.

Speaker #3: Our EE investments have also supported approximately 9,300 jobs statewide over the past six years, including a network of more than 1,000 trade and union allies.

Speaker #3: We are proud of our strong performance to date in this program, including the success of our job programs and the use of union labor for this work.

Ralph LaRossa: We are proud of our strong performance to date in this program, including the success of our job programs, including the use of union labor for this work. We expect to file our proposal to implement the BPU's recently adopted framework for a 1-year extension of the EE2 triennium by 30 September. More good news for customers. This month, we are implementing residential bill credits consistent with Executive Order 1 and continuing the 12-month scheduled refund of approximately $166 million of the Zero Emission Certificates that started back in June. PSE&G has also filed with the BPU to lower residential gas bills by more than 5% beginning 1 October, continuing to benefit our customers with the lowest gas utility bills in New Jersey and the region.

Ralph LaRossa: We are proud of our strong performance to date in this program, including the success of our job programs, including the use of union labor for this work. We expect to file our proposal to implement the BPU's recently adopted framework for a one year extension of the EE2 triennium by 30 September. More good news for customers. This month, we are implementing residential bill credits consistent with Executive Order 1 and continuing the 12-month scheduled refund of approximately $166 million of the Zero Emission Certificates that started back in June. PSE&G has also filed with the BPU to lower residential gas bills by more than 5% beginning 1 October, continuing to benefit our customers with the lowest gas utility bills in New Jersey and the region.

Speaker #3: We expect to file our proposal to implement the BPU's recently adopted framework for a one-year extension of the EE2 triennium by September 30th. And more good news for customers.

Speaker #3: This month, we are implementing residential bill credits consistent with executive order 1 and continuing the 12-month scheduled refund of approximately $166 million of the zero-emission certificates that started back in June.

Speaker #3: PSEG has also filed with the BPU to lower residential gas bills by more than 5% beginning October 1st. Continuing to benefit our customers with the lowest gas utility bills in New Jersey and the region.

Speaker #3: We are also pleased to mention that PJM made a filing at FERC in June to implement a favorable prospective change to transmission cost allocation rules effective June 1st of 2026.

Ralph LaRossa: We are also pleased to mention that PJM made a filing at FERC in June to implement a favorable prospective change to transmission cost allocation rules effective 1 June 2026. Based on public data from PJM, this prospective change will result in approximately $33 million benefit to our zonal transmission customers for the period running from 1 June through year-end 2026, with an expected prospective annual benefit of approximately $65 million. This is another example of how we continue to advocate on behalf of our customers. Since Governor Sherrill's inauguration, her administration has been focused on New Jersey affordability. The governor's first executive order directed the BPU to study modernizing the electric utility business model, and last month, the BPU released its consultant report, which also marked the conclusion of phase I of this directive.

Speaker #3: Based on public data from PJM, this prospective change will result in approximately $33 million benefit to our zonal transmission customers for the period running from June 1st through year-end 2026.

Speaker #3: When expected prospective annual benefit of approximately $65 million. This is another example of how we continue to advocate on behalf of our customers. Since Governor Sherrill's inauguration, her administration has been focused on New Jersey affordability.

Speaker #3: The governor's first executive order directed the BPU to study modernizing the electric utility business model, and last month, the BPU released its consultant report, which also marked the conclusion of phase one of this directive.

Speaker #3: While no formal recommendation was issued, several examples of promising regulatory frameworks from other states and multiple reforms were highlighted. These included multi-year rate plans, performance-based rates, performance incentive metrics, earnings sharing mechanisms, decoupling, and shared savings mechanisms.

Ralph LaRossa: While no formal recommendation was issued, several examples of promising regulatory frameworks from other states and multiple reforms were highlighted. These included multi-year rate plans, performance-based rates, performance incentive metrics, earnings sharing mechanisms, decoupling, and shared savings mechanisms, all of which can further alignment and transparency between the utility business model, state energy policy goals, and affordability in the state. The BPU will now proceed to phase II of this effort, which is expected to focus on cost discipline, financing modernization, targeting incentives and shared savings, and staged performance-based ratemaking. PSE&G will fully participate in this proceeding, and we expect to file comments by 18 September. We are encouraged by the report's balanced assessment of the extent to which the business model changes can address affordability, as well as the report highlighting the value of utilizing multiple criteria in its decision-making.

Speaker #3: All of which can further alignment and transparency between the utility business model state energy policy goals and affordability in the state. The BPU will now proceed to phase two of this effort, which is expected to focus on cost discipline, financing modernization, targeting incentives and shared savings, and staged performance-based rate making.

Speaker #3: PSEG will fully participate in this proceeding, and we expect to file comments by September 18. We are encouraged by the report's balanced assessment of the extent to which the business model changes can address affordability, as well as the report highlighting the value of utilizing multiple criteria in its decision-making.

Speaker #3: As we prepare for these upcoming stakeholder proceedings, combined with the growing regulatory lag that comes from our historical test year and our robust capital program, we believe there is an opportunity to bridge Governor Sherrill's call for greater accountability and transparency with our regulatory requirement to recover prudently invested capital and update our cost of service.

Ralph LaRossa: As we prepare for these upcoming stakeholder proceedings, combined with the growing regulatory lag that comes from our historical test year and our robust capital program, we believe there is an opportunity to bridge Governor Sherrill's call for greater accountability and transparency with our regulatory requirement to recover prudently invested capital and update our cost of service. PSE&G's last base rate case, settled in October 2024, established a requirement to file our next base case no later than 2029. However, we have stated before that we could file sooner if conditions warranted. When you consider that we have added a significant amount of distribution rate base at a time when there have been fewer infrastructure investment programs, the alternative is more frequent base rate cases. As a result, PSE&G currently anticipates filing by year-end 2026 to update base rates. Now turning to PSEG Power.

Speaker #3: PSEG's last base rate case settled in October of 2024, established the requirement to file our next base case no later than 2029. However, we have stated before that we could file sooner if conditions warranted.

Speaker #3: When you consider that we have added a significant amount of distribution rate base at a time when there have been fewer infrastructure investment programs the alternative is more frequent base rate cases.

Speaker #3: As a result, PSEG currently anticipates filing by year-end 2026 to update base rates. Now, turning to PSEG Power, PSEG Nuclear also performed well during the quarter.

Ralph LaRossa: PSEG Nuclear also performed well during the quarter, supplying the grid with 7.8 TWh of carbon-free, 24/7 baseload generation and achieving a capacity factor of 92% that included the second consecutive breaker-to-breaker run at Salem Unit 2. As widely expected, PJM's latest capacity auction priced at $325 per megawatt day, the upper end of the price collar, and fell 6.8 GW short of PJM's targeted reliability requirement. This collar will remain in place during the upcoming December 2026 auction, covering capacity pricing into mid-2030. The uncapped price in the latest auction would've been $555 per megawatt day, but the reserve margin still falls well below PJM's reliability requirement. We are continuing to review PJM's recent filings detailing their reliability backstop procurement and IRAS rules, the Interim Resource Adequacy Service, formerly known as Connect and Manage, including PJM's Friday submission to FERC.

Speaker #3: Supplying the grid with 7.8 terawatt-hours of carbon-free 24x7 baseload generation and achieving a capacity factor of 92% that included the second consecutive breaker-to-breaker run at Salem unit 2.

Speaker #3: As widely expected, PJM's latest capacity auction priced at $325 per megawatt-day, the upper end of the price collar, and fell 6.8 gigawatts short of PJM's targeted reliability requirement.

Speaker #3: This collar will remain in place during the upcoming December 2026 auction, covering capacity pricing into mid-2030. The uncap price in the latest auction would have been $555 per megawatt-day, but the reserve margin still falls well below PJM's reliability requirement.

Speaker #3: We are continuing to review PJM's recent filings detailing their reliability backstop procurement and IRAS rules. The interim resource adequacy service formerly known as Connect and Manage.

Speaker #3: Including PJM's Friday submission to FERC. As part of the bilateral phase of PJM's RBP, PSEG Power recently submitted several project proposals throughout the region that may qualify as new dispatchable generation that could be paired with new large loads through bilateral contracts.

Ralph LaRossa: As part of the bilateral phase of PJM's RBP, PSEG Power recently submitted several project proposals throughout the region that may qualify as new dispatchable generation that could be paired with new large loads through bilateral contracts. Turning to long-term resource adequacy here in New Jersey, Governor Sherrill recently signed the Powering New Jersey Act into law, establishing a new nuclear procurement process at the BPU to procure at least 1,100 megawatts through a state-backed program. As the only operator of existing nuclear generating facilities in New Jersey, PSEG Nuclear has been engaging in efforts to enable new nuclear development at our site in Salem County since 2016, when we obtained an early site permit from the U.S. Nuclear Regulatory Commission, one of only six currently issued in the United States.

Speaker #3: Turning to long-term resource adequacy here in New Jersey, Governor Sherrill recently signed the Power New Jersey Act into law establishing a new nuclear procurement process at the BPU to procure at least 1,100 megawatts through a state-backed program.

Speaker #3: As the only operator of existing nuclear generating facilities in New Jersey, PSEG Nuclear has been engaging in efforts to enable new nuclear development at our site in Salem County since 2016.

Speaker #3: When we obtained an early site permit from the US Nuclear Regulatory Commission, one of only six currently issued in the United States. We believe that new nuclear generation represents a compelling long-term solution to address New Jersey's growing resource adequacy needs and support economic development in South Jersey and a successful framework for new nuclear will require an appropriate allocation of project risk.

Ralph LaRossa: We believe that new nuclear generation represents a compelling long-term solution to address New Jersey's growing resource adequacy needs and support economic development in South Jersey. A successful framework for new nuclear will require an appropriate allocation of project risk. At the same time, PSEG Power is continuing discussions with interested parties that see value in our existing nuclear production, future nuclear upgrades, and other generation opportunities. In summary, our teams delivered solid financial and operational results for Q2 and H1 of 2026, enabling us to maintain PSEG's full year 2026 non-GAAP operating earnings guidance. We are also reaffirming PSEG's five-year non-GAAP operating earnings growth outlook of 6% to 8% through 2030 as we continue to pursue opportunities incremental to our long-term forecast, including the potential to contract our nuclear output under multi-year agreements.

Speaker #3: At the same time, PSEG Power is continuing discussions with interested parties that see value in our existing nuclear production future nuclear upgrades and other generation opportunities.

Speaker #3: In summary, our team's delivered solid financial and operational results for the second quarter and first half of 2026. Enabling us to maintain PSEG's full year 2026 non-gap operating earnings guidance.

Speaker #3: We are also reaffirming PSEG's five-year non-gap operating earnings growth outlook of 6 to 8 percent through 2030 as we continue to pursue opportunities incremental to our long-term forecast.

Speaker #3: Including the potential to contract our nuclear output under multi-year agreements. Importantly, our solid balance sheet enables the funding of PSEG's total five-year capital investment program of $24 to $28 billion without the need to issue new equity or sell assets and provides the opportunity for consistent and sustainable dividend growth.

Ralph LaRossa: Importantly, our solid balance sheet enables the funding of PSEG's total five-year capital investment program of $24 to $28 billion without the need to issue new equity or sell assets, and provides the opportunity for consistent and sustainable dividend growth. I'll now turn the call over to Dan, who will review the quarter's results and then rejoin the call for the Q&A session.

Speaker #3: I'll now turn the call over to Dan who will review the quarter's results and then rejoin the call for the Q&A session.

Speaker #2: Great. Thank you, Ralph. And good morning, everybody. PSEG reported net income of $67 per share for the second quarter of 2026 compared to $1.17 per share in 2025 and non-gap operating earnings were $86 per share in the second quarter of 2026 compared to $77 per share in 2025.

Dan Cregg: Great. Thank you, Ralph, and good morning, everybody. PSEG reported net income of $0.67 per share for Q2 of 2026, compared to $1.17 per share in 2025, and non-GAAP operating earnings were $0.86 per share in Q2 of 2026, compared to $0.77 per share in 2025. These quarterly results bring H1 2026 net income to $2.15 per share and non-GAAP operating earnings to $2.41 per share. We've provided you with information on slides eight and 10 regarding the contribution to net income and non-GAAP operating earnings by business for Q2 and H1 of 2026. Slides nine and 11 contain waterfall charts that take you through the net changes for the quarter and year-to-date periods over the prior year in non-GAAP operating earnings per share, also by major business.

Speaker #2: These quarterly results bring first half 2026 net income to $2.15 per share and non-gap operating earnings to $2.41 per share. We've provided you with information on slides 8 and 10 regarding the contribution to net income and non-gap operating earnings by business for the second quarter and first half of 2026.

Speaker #2: Slides 9 and 11 contain waterfall charts that take you through the net changes for the quarter and your date periods over the prior year in non-gap operating earnings per share also by major business.

Speaker #2: Starting with PSEG, which reported second quarter net income and non-GAAP operating earnings of $342 million for 2026, compared to $332 million in 2025. Utilities results were driven by ongoing investment in our energy efficiency and gas system modernization programs.

Dan Cregg: Starting with PSE&G, which reported Q2 net income and non-GAAP operating earnings of $342 million for 2026 compared to $332 million in 2025. The utility's results were driven by ongoing investment in our energy efficiency and gas system modernization programs. Referring to the waterfall on slide nine, transmission margin was flat compared to the year ago quarter, as higher investment was offset by a prior year true-up, our distribution margin increased by $0.05 per share compared to the year ago period, largely reflecting incremental gas margin from GSMP2 extension roll-ins and higher investment in energy efficiency. Compared to Q2 2025, distribution O&M expense was up by $0.01 per share, reflecting an increase in operational costs due to inflation. Depreciation and interest expense each rose by $0.01 per share due to ongoing capital investments and higher long-term interest rates.

Speaker #2: Referring to the waterfall on slide 9, transmission margin was flat compared to the year ago quarter as higher investment was offset by a prior year true-up and our distribution margin increased by 5 cents per share compared to the year ago period.

Speaker #2: Largely reflecting incremental gas margin from GSMP II extension roll-ins and higher investment in energy efficiency. Compared to the second quarter of 2025, distribution O&M expense was up by a penny per share, reflecting an increase in operational costs due to inflation.

Speaker #2: And depreciation and interest expense each rose by a penny per share due to ongoing capital investments and higher long-term interest rates. And utility taxes and other had a net favorable impact of a penny per share.

Dan Cregg: Utility taxes and other had a net favorable impact of $0.01 per share. Weather conditions during Q2, as measured by the temperature humidity index, were 29% warmer than normal and 9% warmer than Q2 2025. As a reminder, the Conservation Incentive Program, or CIP, mechanism decouples weather and other economic sales variances from a significant portion of our distribution margin while helping PSE&G promote the widespread adoption of energy conservation, including energy efficiency and solar programs. Under the CIP, the number of electric and gas customers drives margin, residential customer growth for electric was about 1%, and gas was flat over the past year.

Speaker #2: Weather conditions during the second quarter as measured by the temperature humidity index were 29 percent warmer than normal and 9 percent warmer than the second quarter of 2025.

Speaker #2: As a reminder, the conservation incentive program or SIP mechanism decouples weather and other economic sales variances from a significant portion of our distribution margin while helping PSENG promote the widespread adoption of energy conservation.

Speaker #2: Including energy efficiency and solar programs. Under the SIP, the number of electric and gas customers drives margin, and residential customer growth for electric was about 1 percent, while gas was flat over the past year.

Speaker #2: The SIP is also benefiting customers, as higher revenues from last year's warmer-than-normal summer weather will continue to be refunded to electric customers. PSE&G has a 5 percent decrease pending for residential gas customers, driven by the higher revenues from the colder-than-normal winter earlier this year.

Dan Cregg: The CIP is also benefiting customers as higher revenues from last year's warmer than normal summer weather will continue to be refunded to electric customers, PSE&G has a 5% decrease pending for residential gas customers, driven by the higher revenues from the colder than normal winter earlier this year. On the capital front, PSE&G invested approximately $1 billion during Q2 and is on track to execute our full year 2026 regulated capital investment plan of approximately $4.2 billion, focused on continued investments in infrastructure modernization, energy efficiency, electrification initiatives, and load growth. We have also maintained our five-year regulated capital investment plan of $22.5 to $25.5 billion through 2030. We completed the GSMP2 extension program in 2025, and we're approved to roll in $23 million effective April 2026 as planned. PSE&G continues to execute on the GSMP3 program approved by the BPU last November.

Speaker #2: On the capital front, PSENG invested approximately a billion dollars during the second quarter and is on track to execute our full year 2026 regulated capital investment plan of approximately $4.2 billion focused on continued investments in infrastructure modernization energy efficiency electrification initiatives and load growth.

Speaker #2: We have also maintained our five-year regulated capital investment plan of $22.5 to $25.5 billion through 2030. We completed the GSMP 2 extension program in 2025 and were approved to roll in $23 million effective April 2026 as planned.

Speaker #2: PSENG continues to execute on the GSMP 3 program approved by the BPU last November. We expect to invest a total of $1.4 billion over a three-year period with approximately a billion of the total program receiving accelerated recovery with a balance in stipulated base to be recovered in our next base rate case.

Dan Cregg: We expect to invest a total of $1.4 billion over a three-year period, with approximately $1 billion of the total program receiving accelerated recovery, with the balance and stipulated base to be recovered in our next base rate case. As Ralph mentioned earlier, we expect a cadence of more frequent base rate cases in the future as fewer clause-based IIPs cover our capital program. Since our last rate case concluded in 2024, PSE&G has made significant investments in distribution rate base to support the reliability of our system. We continue to explore the details of the E3 consultants report addressing Governor Sherrill's Executive Order 1 related to New Jersey's regulatory construct.

Speaker #2: And as Ralph mentioned earlier, we expect the cadence of more frequent base rate cases in the future as fewer clause-based IIPs cover our capital program.

Speaker #2: And since our last rate case concluded in 2024, PSE&G has made significant investments in distribution rate base to support the reliability of our system.

Speaker #2: We continue to explore the details of the E3 consultants' report addressing Governor Sherrill's Executive Order 1 related to New Jersey's regulatory construct. Elements of the report provide opportunities to enhance the transparency of the regulatory model, which would be helpful for setting customer expectations, as well as the inclusion of performance-based metrics which, based on our high level of service and customer satisfaction, we would welcome.

Dan Cregg: Elements of the report provide opportunities to enhance the transparency of the regulatory model, which would be helpful for setting customer expectations, as well as the inclusions of performance-based metrics, which based on our high level of service and customer satisfaction, we would welcome. Following up on the potential earnings impact of the recent legislation that could eliminate the 50 basis point RTO incentive, we estimated in our 2025 10-K that loss of that incentive could represent an annual headwind of $40 million of net income or approximately $0.08 per share. Last February, we considered the possibility that the RTO incentive earnings might be eliminated at some point when we rolled forward our long-term non-GAAP operating earnings guidance to 6% to 8% through 2030.

Speaker #2: Switching to transmission and following up on the potential earnings impact of the recent legislation that could eliminate the 50 basis point RTO incentive, we estimated in our 2025 10-K that loss of that incentive could represent an annual headwind of $40 million of net income where approximately 8 cents per share.

Speaker #2: Last February we considered the possibility that the RTO incentive earnings might be eliminated at some point when we rolled forward our long-term non-gap operating earnings guidance to 6 to 8 percent through 2030.

Speaker #2: I would also note that the effective date of this legislation is January 2027 so there will not be an impact on 2026 results. Moving now to PSEG Power and Other.

Dan Cregg: I would also note that the effective date of this legislation is January 2027, there will not be an impact on 2026 results. Moving now to PSEG Power and Other. For Q2, PSEG Power and Other reported a net loss of $8 million in 2026 compared to net income of $253 million in 2025. Non-GAAP operating earnings were $83 million in Q2 2026 compared to $52 million in Q2 2025. Referring again to the waterfall on slide nine. For Q2 2026 versus 2025, net energy margin rose by $0.08 per share, driven by higher generation volume, higher capacity prices, and higher gas operations, partly offset by the absence of those zero-emission certificates and the LIPA-related fuel and energy management fees.

Speaker #2: For the second quarter, PSEG Power and Other reported a net loss of $8 million in 2026 compared to net income of $253 million in 2025 and non-gap operating earnings were $83 million in the second quarter of 2026 compared to $52 million in the second quarter of 2025.

Speaker #2: Referring again to the waterfall on slide 9, for the second quarter of 2026 versus 2025, net energy margin rose by 8 cents per share driven by higher generation volume higher capacity prices and higher gas operations partly offset by the absence of both zero emission certificates and the LIPA-related fuel and energy management fees.

Speaker #2: O&M was flat compared to the second quarter of 2025, and interest expense rose by a penny per share, reflecting incremental debt at higher interest rates.

Dan Cregg: O&M was flat compared to Q2 2025. Interest expense rose by $0.01 per share, reflecting incremental debt at higher interest rates. Lastly, taxes on other items had a net unfavorable impact of $0.01 per share in Q2 compared to 2025. In July, PSEG Nuclear cleared approximately 3,600 megawatts of its eligible nuclear capacity in PJM's Base Residual Auction at $325 per megawatt day for the energy year beginning 1 June 2028, and going through 31 May 2029. This latest result represents a modest decline from the $333 per megawatt day price set in the prior PJM capacity auction. Touching on some recent financing activity. PSEG had strong available liquidity totaling $3.4 billion as of the end of June. This includes approximately $200 million of cash on hand.

Speaker #2: Lastly, taxes and other items had a net unfavorable impact of a penny per share in the second quarter compared to 2025. In July, PSEG Nuclear cleared approximately $3,600 megawatts of its eligible nuclear capacity in PJM's base residual auction at $325 per megawatt day for the energy year beginning June 1, 2028 and going through May 31st of 2029.

Speaker #2: This latest result represents a modest decline from the $333 per megawatt day price set in the prior PJM capacity auction. Touching on some recent financing activity, PSEG had strong available liquidity totaling $3.4 billion as of the end of June this includes approximately $200 million of cash on hand.

Speaker #2: On the financing front, in June PSEG issued $500 million of 4.8% unsecured senior notes due 2031 and used the proceeds to prepay $500 million of a 364-day term loan initiated in February of 2026.

Dan Cregg: On the financing front, in June, PSEG issued $500 million of 4.8% unsecured senior notes due 2031. Used the proceeds to prepay $500 million of a 364-day term loan initiated in February 2026. PSEG's level of variable rate debt represented approximately 3% of our total debt as of the end of June. Our variable rate debt consisted of the unhedged portion, or about half of the $500 million 364-day term loan at PSEG Power maturing in December 2026 and commercial paper. Looking ahead, our solid balance sheet continues to support the execution of PSEG's five-year capital spending plan, dominated by regulated CapEx without the need to issue new equity or sell assets. Provides the opportunity for consistent and sustainable dividend growth.

Speaker #2: PSEG's level of variable rate debt represented approximately 3 percent of our total debt as of the end of June. Our variable rate debt consisted of the unhedged portion, or about half, of the $500 million, 364-day term loan at PSEG Power maturing in December of 2026, and commercial paper.

Speaker #2: Looking ahead, our solid balance sheet continues to support the execution of PSEG's five-year capital spending plan, dominated by regulated capex, without the need to issue new equity or sell assets, and provides the opportunity for consistent and sustainable dividend growth.

Speaker #2: In closing, we delivered solid operating and financial performance in the second quarter and first half of 2026, enabling us to maintain PSEG's full-year 2026 non-GAAP operating earnings guidance of $4.28 to $4.40 per share.

Dan Cregg: In closing, we delivered solid operating and financial performance in the Q2 and H1 of 2026, enabling us to maintain PSEG's full year 2026 non-GAAP operating earnings guidance of $4.28 to $4.40 per share. We are also reaffirming our 6% to 8% compound annual growth rate for non-GAAP operating earnings outlook through 2030 based on our confidence of executing our five-year regulated capital investment plan that also supports a 6% to 7.5% compound annual growth in rate base over the same period. We continue to pursue nuclear revenue opportunities, competitive transmission projects, and incremental utility infrastructure projects

Speaker #2: We're also reaffirming our 6 to 8 percent compound annual growth rate for non-GAAP operating earnings outlook through 2030, based on our confidence in executing our five-year regulated capital investment plan. That also supports a 6 to 7.5 percent compound annual growth in rate base over the same period.

Speaker #2: We continue to pursue nuclear revenue opportunities, competitive transmission projects, and incremental utility infrastructure projects, including making incremental system investments to connect solar and battery storage resources to the grid to meet new demand, which could provide upside to our current growth outlook through 2030.

Ralph LaRossa: Including making incremental system investments to connect solar and battery storage resources to the grid to meet new demand, which could provide upside to our current growth outlook through 2030. That concludes our formal remarks, we are now ready to begin the question and answer session.

Speaker #2: That concludes our formal remarks, and we are now ready to begin the question-and-answer session.

Speaker #1: Please, 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.

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 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 star and the 2. If you are on a speakerphone, please pick up your handset before entering your request. One moment please for the first question. The first question is from the line of Nicholas Campanella with Barclays. Please proceed with your question.

Speaker #1: If your question has been answered and you wish to withdraw your polling request, you may do so by pressing star and the number two.

Speaker #1: 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 the line of Nicholas Campanella with Barclays.

Speaker #1: Please receive their question.

Speaker #3: Hey, good morning. Thanks for taking my questions.

Nicholas Campanella: Hey, good morning. Thanks for taking my questions.

Speaker #4: Good morning, Nick.

Ralph LaRossa: Good morning, Nick.

Speaker #3: Morning. So I guess Ralph, you said in your prepared just in regards to the base rate filing, you kind of talked about fewer investment infrastructure programs and the alternative is just more frequent base rate cases.

Nicholas Campanella: Morning. I guess, Ralph, you said in your prepared, just in regards to the base rate filing, you kind of talked about fewer investment infrastructure programs, and the alternative is just more frequent base rate cases. Can you just maybe juxtapose that against this BPU report? How much of the decision to file is on the back of the report versus, I guess, anything that's transpired from the RTO adder that you brought up or the EE spend? What parts of this report and recommendations do you think make it into this base rate review? Thanks.

Speaker #3: Can you just maybe juxtapose that against this BPU report and how much of the decision to file is on the back of the report versus, I guess, anything that's transpired from the RTO add or that you brought up or the EE spend?

Speaker #3: And then what parts of this report and recommendations do you think make it into this base rate review? Thanks.

Speaker #4: Yeah, thanks, Nick. So, I don't expect a lot to make it into this base, into this filing, and that's exactly why I think the timing of the filing aligns pretty well with the state's goals here.

Ralph LaRossa: Yeah. Thanks, Nick. I don't expect a lot to make it in to this filing, and that's exactly why I think the timing of the filing aligns pretty well with the state's goals here. I think for all of us, as we look at the EO1 report, we see a state that's looking for a little more transparency, a little more performance-based ratemaking, and potential for some multi-year rate plans. To be set up appropriately for that, you need a base rate case. The timing of that aligns with the fact that we haven't had anything on the electric side in upwards of five years for an IIP. Kind of puts us in a place where this makes a ton of sense for us right now, and I think it makes a ton of sense for the state.

Speaker #4: I think for all of us, as we look at the EO1 report, we see a state that's looking for a little more transparency, a little more performance-based ratemaking, and potential for some multi-year rate plans.

Speaker #4: To be set up appropriately for that, you need a base rate case. And so the timing of that aligned with the fact that we haven't had any you know anything on the electric side and you know upwards of five years for an IIP kind of puts us in a place where this makes a ton of sense for us right now.

Speaker #4: And I think it makes a ton of sense for the state. If you look across the utilities in New Jersey, most of the gas utilities have been in for a base rate case, and I think we heard from some of the others in New Jersey, the other electrics, that they were planning to come in. And I think Orange and Rockland just settled.

Ralph LaRossa: If you look across the utilities in New Jersey, most of the gas utilities have been in for a base rate case. I think we heard from some of the others in New Jersey, the other electrics, that they were planning to come in, and I think Orange and Rockland just settled. If you look across the spectrum, we think this fits, and it would keep us from being an outlier as we go into the next phase of EO1.

Speaker #4: So, if you look across the spectrum, we think this fits, and it would keep us from being an outlier as we go into the next phase of EO1.

Speaker #3: Okay, thanks. And then maybe just— a lot has kind of changed since you gave the 6 to 8, and I know you're reaffirming that today.

Nicholas Campanella: Okay, thanks. Maybe just, a lot's kind of changed since you gave the six to eight, and I know you're reaffirming that today, but I guess you're maybe pulling forward a base rate review. There's the RTO adder that's out there that I know you addressed is not going to be really impactful until 2027. Just taking into kind of account the moving pieces, just where do you kind of see yourself in this range?

Speaker #3: But I guess you're maybe pulling forward a base rate review. There's the RTO adder that's out there that I know you addressed. It's not going to be really impactful until '27.

Speaker #3: Just taking into kind of account the moving pieces, just where where do you kind of see yourself in this in this range?

Speaker #4: Yeah, Nick, we see ourselves in the 6 to 8, as we’ve been saying, so that hasn’t changed. We reaffirmed we believe there are other opportunities that are presenting themselves in the industry that we have opportunities to participate in.

Ralph LaRossa: Yeah, Nick, we see ourselves in the six to eight as we've been saying. That hasn't changed. We reaffirmed. We believe there's other opportunities that are presenting itself in the industry that we have opportunities to participate in. I think we talked a little bit about the RBA. A few other things that are happening in PJM are potential uprates at our nuclear plant that we've talked about for a few different times on these different calls. We remain confident in the six to eight, and the RTO adder was one of the scenarios that we had planned for.

Speaker #4: I think you talked a little—we talked a little bit about the RBA, a few other things that are happening in the PJM, and our potential upgrades at our nuclear plant that we've talked about quite a few different times on these various calls.

Speaker #4: So we remain confident in the in the 6 to 8 and the RTO add was one of the scenarios that we had planned for.

Speaker #3: Thank you.

Nicholas Campanella: Thank you.

Speaker #4: Thanks, Nick.

Ralph LaRossa: Thanks, Nick.

Speaker #1: The next question is in the line of Richard Sunderland with Truist Securities. Please receive their question.

Operator: The next question is in the line of Richard Sunderland with Truist Securities. Please proceed with your question.

Speaker #5: Hey, good morning, thanks for the time today. Thank you.

Richard Sunderland: Hey, good morning.

Ralph LaRossa: Good morning, Rich.

Richard Sunderland: Thanks for the time today.

Ralph LaRossa: Good morning.

Richard Sunderland: Thank you. Picking up the RBA commentary there, can you speak a little bit more to the project proposals and, I guess, any way to frame the scale and type of opportunity that you're seeing for PSEG Power in that?

Speaker #6: You're picking up the RBA commentary there. Can you speak a little bit more to the project proposals and, I guess, any way to frame the scale and type of opportunity that you're seeing for PSEG Power in that?

Speaker #4: Yeah, no, Rich, thanks for that. So look, I think you know people have to some in some degree forgotten a little bit about the capabilities that we have inside the company as it goes to generation you know we were one of the we built some of the last generation plants in PJM and certainly in PJM East when we when we completed seawater and and keys.

Ralph LaRossa: Yeah, no, Rich. Thanks for that. Look, I think people have, in some degree, forgotten a little bit about the capabilities that we have inside the company as it goes to generation. We built some of the last generation plants in PJM, and certainly in PJM East, when we completed Sewaren and Keys. We exited that because it was a market-based solution that really existed and was not something that we wanted to be part of. Now, as PJM is moving into this RBA and there's more opportunities for long-term PPA type or utility-like agreements, we see an opportunity that might present itself. We've got a few opportunities we think inside New Jersey, a few outside New Jersey that we're taking a look at.

Speaker #4: But we exited that because it was a market-based solution that really existed and was not something that we wanted to be part of.

Speaker #4: Now as PJM is moving into this RBA and there's more opportunities for long-term PPA type or utility-like agreements, we see an opportunity that might present itself.

Speaker #4: So we've got a few opportunities we think inside New Jersey, a few outside New Jersey that we're taking a look at. And I don't want to go much further than that right now because things are still changing at PJM and we'll we'll read the tea leaves on that just like everyone else is.

Ralph LaRossa: I don't want to go much further than that right now because things are still changing at PJM, and we'll read the tea leaves on that just like everyone else is. I think even the load forecast is going to change. We saw some things on that as recently as yesterday. As those opportunities present themself, we'll look at it. We have a skill set here that exists, and we kept the people. Just for those that may not recall, when we did exit the fossil business, we offered those employees an opportunity to stay along with us in the utility, and many people did at all sorts of levels in the organization.

Speaker #4: I think even the load forecast is going to change. We saw some things on that as recently as yesterday. So as those opportunities present themselves, we'll look at it.

Speaker #4: But we have a skill set here that exists, and we kept the people. Just for those that may not recall, when we did exit the fossil business, we offered those employees an opportunity to stay along with us in the utility, and many people did at all sorts of levels in the organization.

Speaker #4: So we think we've got the skill set to put that group back together, and we think that there are opportunities now that are more utility-like, which kind of align exactly with the investments we're looking to make.

Ralph LaRossa: We think we've got the skill set to put that group back together, and we think that there's opportunities now that are more utility-like, which kind of align exactly with the investments we're looking to make.

Speaker #6: Got it. That's that's super helpful. And then you know I guess turning to the PSE&G side but in similar light to a few of the opportunities you outlined in terms of the 6 to 8 percent range and and upside can you speak a little bit more to what your focus on right now in terms of capturing some of that you know distribution investment upside or or other areas of focus and kind of the timeline to crystallize that and have a view on you know what may move into the plan over the next few years?

Richard Sunderland: Got it. That's super helpful. I guess turning to the PSE&G side, but in similar light to a few of the opportunities you outlined, in terms of the 6% to 8% range and upside. Can you speak a little bit more to what you're focused on right now in terms of capturing some of that distribution investment upside or other areas of focus and kind of the timeline to crystallize that and have a view on what may move into the plan over the next few years?

Speaker #4: Yeah, we’ll roll forward our CapEx at the beginning of next year, as we have in the past couple of years. So that cycle is going to remain the same.

Ralph LaRossa: Look, we'll roll forward our CapEx at the beginning of next year as we have in the past couple of years. That cycle's going to remain the same. I think our gas distribution business is focused as it always has been on replacement of cast iron. That's still something that I don't see changing. I think on the electric side, you've seen a lot from Governor Sherrill's administration about being ready for solar, more distributed energy resources, batteries and so on. They have a specific PSUP program that they've talking about at the Board of Public Utilities.

Speaker #4: I think you know our gas distribution business is focused, as it always has been, on replacement of cast iron. That's still something that I don't see changing.

Speaker #4: I think on the electric side, you've seen a lot from Governor Shell’s administration about being ready for solar, more distributed energy resources, batteries, and so on.

Speaker #4: And I think that you'll see more alignment with our last mile conversations that we've had over the last few years and our they have a a specific PSUP program that they've they've talking about at the Board of Public Utilities.

Speaker #4: And as the new board president gets his feet under him at the board there, I think you'll see a little more focus on driving the electric utilities in that direction, and any updates we'll have, we'll roll out in the first quarter of next year.

Ralph LaRossa: As the new board president gets his feet under him at the board there, I think you'll see a little more focus on driving the electric utilities in that direction. Any updates we'll have will roll out in Q1 of next year.

Richard Sunderland: Great. Thank you so much.

Speaker #6: Great. Thank you so much.

Speaker #4: Thanks, Rich.

Ralph LaRossa: Thanks, Rich.

Speaker #1: The next question is from the line of Carly Davenport with Goldman Sachs. Please receive their question.

Operator: The next question is from the line of Carly Davenport with Goldman Sachs. Please issue your question.

Speaker #7: Hey, good morning. Thanks for taking the questions. Good morning. Just two questions on the power side from me. One, could you provide any updates in terms of hedging activity beyond 2026?

Carly Davenport: Hey, good morning. Thanks for taking the questions. Just two.

Ralph LaRossa: Morning, Carly.

Carly Davenport: Good morning. Just two questions on the power side from me. One, could you provide any updates in terms of hedging activity, beyond 2026? Where you are in 2027 or 2028 at this point?

Speaker #7: So so where you are in 27 or 28 at this point?

Speaker #4: Yeah, Carly, there's nothing incremental for us to disclose. There's nothing in the materials that we have disclosed. We're working our way through the future years as we step through time.

Ralph LaRossa: Yeah. Carly, there's nothing incremental for us to disclose. There's nothing in the materials that we have disclosed. We're working our way through.

Ralph LaRossa: Okay

Ralph LaRossa: The future years, as we step through time.

Speaker #7: Okay, got it. And then I guess, just as you're thinking about potentially getting towards, you know, more regulatory certainty in PJM, I'm curious if you have seen any inflections in interest from data center or other large load customers for PPAs at power relative to prior quarters?

Carly Davenport: Okay. Got it. I guess just as you're thinking about potentially getting towards more regulatory certainty in PJM, I am curious if you have seen any inflections in interest from data center or other large load customers for PPAs at PSEG Power, relative to prior quarters.

Speaker #4: Yeah, I wouldn't say there's inflections, Carly. I think there's been some continued interest and pursuit on some things. I think that continues. You know, I think that the process in PJM is something that people have, I think for the past few months, known is out there.

Ralph LaRossa: Yeah, I wouldn't say there's inflections, Carly. I think there's been some continued interest and pursuit on some things. I think that continues. I think that the process in PJM is something that people have, I think for the past few months, known is out there. They've tried to figure out where it's going and what it's going to mean from the standpoint of new load. I do think that this whole RBP and IRAS processes are going to help folks figure out what is going to be expected of them so they can work against that backdrop.

Speaker #4: They tried to figure out where it's going and what it's going to mean from the standpoint of new load. And I do think that this whole RVP and IRAS processes are going to help folks figure out what is going to be expected of them so they can work against that backdrop.

Speaker #4: And so I think really the only change we've seen is just a maybe just a caveat in the discussions related to the fact that if something has to happen they are not boxing themselves in through any kind of an agreement to trouble that thing that they need to to stay in compliance with.

Ralph LaRossa: I think really the only change we've seen is maybe just a caveat in the discussions related to the fact that if something has to happen, they are not boxing themselves in through any kind of an agreement to trouble that thing that they need to stay in compliance with. I wouldn't call it inflections. I would just call it people reading the context of where we are with respect to PJM.

Speaker #4: But I wouldn't call it inflections. I would just call it people reading the context of where we are with respect to PJM.

Speaker #7: Got it. Okay, makes a ton of sense. Thanks so much for your time.

Carly Davenport: Got it. Okay. Makes a ton of sense. Thanks so much for the time.

Speaker #4: Yep.

Ralph LaRossa: Yep.

Speaker #1: The next questions are from the line of Michael Sullivan with Wolf Research. Please proceed with your questions.

Operator: The next questions are from the line of Michael Sullivan with Wolfe Research. Please receive your question.

Speaker #6: Hey.

Ralph LaRossa: Hey, Michael.

Speaker #4: Hey, Michael.

Speaker #6: Hey, Ralph. On the BPU review that's ongoing, any sense as to when that's fully wrapped up? And then on the rate case that you're about to file, any sense of the size of the rate increase, or could it potentially be a decrease to align with the Governor?

Michael Sullivan: Hey, Ralph. On the BPU review that's ongoing, any sense to when that's just fully wrapped up? On the rate case that you're about to file, any sense of size of rate increase or could it potentially be a decrease to align with the Governor? How should we be thinking about that?

Speaker #6: How should we be thinking about that?

Speaker #4: Yeah, Michael, I would say, you know, the next step is Phase Two. I think all that information is in the public, and I don't want to front-run anything at the BPU.

Ralph LaRossa: Yeah, Michael, I would say the next step is phase two. I think all that information's in the public, I don't want to front run anything at the BPU. I think they've got their own timeline. As I mentioned, we've got a new president at the BPU who is getting up to speed, and we'll see if he wants to make any changes to the timeline that was published. I don't expect that to be the case. As far as our rate case goes, look, we haven't disclosed anything more on that, and I'll leave. We wanted to signal to you all that we were getting aligned again with the state and the timing that was going to be required to adequately execute on EO1.

Speaker #4: I think they've got their own timeline. And as I mentioned, we've got a new president at the BPU, who is, you know, getting up to speed, and we'll see if he wants to make any changes to the timeline that was published.

Speaker #4: But I don’t expect that to be the case. And then, as far as our rate case goes—look, we haven’t disclosed any more on that, and I’ll leave it at that. We wanted to signal to you all that we were getting aligned.

Speaker #4: Again, with the state and the timing that was going to be required to adequately execute on EO1. And so put those two pieces together and and we you know we we wanted to make sure that we were transparent about that with the investment community so we got that information out.

Ralph LaRossa: Put those two pieces together. We wanted to make sure that we were transparent about that with the investment community. We got that information out, no more details on that at this time.

Speaker #4: But there are no more details on that at this time.

Speaker #6: Okay, great. Thanks. And then on the power side, can you just give a sense of pursuing opportunities in in the RVP, what sort of returns you'd you'd be targeting and and how the math works with with the 555 dollar price cap in there?

Michael Sullivan: Okay. Great. Thanks. On the power side, can you just give a sense of to the extent you're pursuing opportunities in the RBP, what sort of returns you'd be targeting and how the math works with the $555 price cap in there?

Speaker #4: Yeah, that's that's a great question. But I'm going to give that to Dan. I look, I think a lot of that is the TBD, Michael, but it's you know right now to weigh that process is set up.

Ralph LaRossa: Yeah. That's a great question, but I'm going to give that to Dan. Look, I think a lot of that is a TBD, Michael, but right now, the way that process is set up, you have to raise your hand first. We've raised our hand. We wanted to, again, remind folks that we're in that business, I'll turn it to Dan for a little more.

Speaker #4: You have to raise your hand first, and so we've raised our hand and we wanted to again remind folks that we're in that business.

Speaker #4: But I'll turn it over to Dan for a little more. Yeah, Michael, we see potential in what is there to explore and determine whether something there is going to be attractive.

Dan Cregg: Yeah, Michael, we see potential in what is there to explore and determine whether something there is going to be attractive. It would be foolish to provide what an expectation would be of returns in a competitive situation. I won't do that. I do think that there's enough there for us to be interested in exploring getting into the process. Seeing if it meets the criteria, which what we've talked about is whether it's going to be utility-like or contracted enough to be attractive to us. All of those elements that I just talked about go into risk, and you're going to compare your return to the risk that you're taking. Obviously it's more complicated than just providing a number to you with respect to what the return will be.

Speaker #4: It would be foolish to provide what an expectation would be of returns in a competitive situation. So I I won't do that. But I do think that there's enough there for us to be interested in exploring, getting into the process and seeing if it meets the criteria which we what we've talked about is whether it's going to be utility-like or contracted enough to be to be attractive to us.

Speaker #4: And so all of those elements that I just talked about go into kind of risk and you're going to compare your return to the risk that you're taking.

Speaker #4: So obviously it's a it's more complicated than just providing a a number to you with respect to what the return would be.

Speaker #6: Okay, great. Thank you.

Michael Sullivan: Okay, great. Thank you.

Speaker #4: Yeah, Michael, I just let me just double down on what Dan said regarding the risk profile in the utility-like. I just want to reinforce that.

Ralph LaRossa: Yeah, Michael, let me just double down on what Dan said regarding the risk profile and the utility-like. I just want to reinforce that. We said it in an earlier question as well, but that's really important to us. However, I do think that, as you said, there's some more clarity in the PJM regulatory construct they're putting together. I think it's getting closer to utility-like, with at least some of these opportunities that exist.

Speaker #4: We said it to an earlier question as well, but that's really important to us. However, I do think that as you said, there's some there's some more clarity in the PJM regulatory construct they're putting together.

Speaker #4: I think it's getting closer to utility-like with at least some of these opportunities that exist.

Speaker #1: Our next questions are from Jeremy with J.P. Morgan. Jeremy, please go ahead with your questions.

Operator: Our next question's in the line of Jeremy Tonet with J.P. Morgan. Please proceed with your question.

Speaker #4: Hi, Jeremy. Good morning, Jeremy.

Ralph LaRossa: Hi, Jeremy.

Jeremy Tonet: Hi, good morning.

Ralph LaRossa: Good morning, Jeremy.

Speaker #6: Thanks. I just wanted to go back to the bilateral discussions, as you touched on before. And sorry if you had already said this, but in these conversations with bilaterals, is it interesting existing assets, new assets, or both? Or how should we think about that?

Jeremy Tonet: Thanks. I just wanted to go back to the bilateral discussions as you touched on before. Sorry if you had already said this, but in these conversations with bilaterals, is it interest in existing assets, new assets, or both, or how should we think about that?

Speaker #4: Yeah, I think it's both, but more interest in new, right? If you think about the entire tone, I think across the country with respect to new load coming on, you don't have discussions about new load coming on without at least a preference for having incremental generation to join that.

Dan Cregg: Yeah, I think it's both, but more interest in new, right? If you think about the entire tone, I think, across the country with respect to new load coming on, you don't have discussions about new load coming on without at least a preference for having incremental generation to join that. I think there's also an understanding that new generation takes a while to come on. I think there is a preference to have something new to kind of fit within that overall dialogue. I would say there's not solely an interest in new, is how I would describe it.

Speaker #4: So, I think there's also an understanding that new generation takes a while to come on, and so I think there is a preference to have something new to kind of fit within that overall dialogue.

Speaker #4: But I would say there is not solely an interest in new—that is how I would describe it.

Speaker #6: Got it. And so is there is it like kind of a one-to-one would you say or is there any ratio or this all just kind of varies?

Jeremy Tonet: Got it. Is it like kind of a one-to-one, would you say, or is there any ratio, or this all just kind of varies?

Dan Cregg: No, there's not a fixed ratio. It is just a preference, that's all.

Speaker #4: No, there's not a fixed ratio. It is just a preference, that's all.

Speaker #6: Got it. One last quick one, if I could. You know, obviously a lot of new supply needs—how do you think new nuclear could fit in here?

Jeremy Tonet: Got it. One last quick one if I could. Obviously a lot of new supply needs. How do you think new nuclear could fit in here? Do you think it is possible, or that's just too far off at this point? Just any thoughts there would be great.

Speaker #6: Do you think there it is possible or that's just too far off at this point? Just any thoughts there would be great.

Speaker #4: I think, Jeremy, you kind of answered your own question there. Is it potentially too far off, right? It depends upon the timeline that you're looking at.

Ralph LaRossa: I think, Jeremy, you kind of answered your own question there is it potentially too far off, right? It depends upon the timeline that you're looking at. I do believe that new nuclear makes sense, as we said in the prepared remarks. I think it aligns, again, with the policies of the state. We've always done that. We're trying to enable that as best we can. Whether or not those units, whether it's in New Jersey or across the country, come on quick enough for some of the load that's looking to connect. These are 12-year-long projects. I won't revisit what's happened in the past. We need short-term solutions as well as long-term solutions, and I think that the new nuclear certainly falls in the long-term bucket.

Speaker #4: I do believe that new nuclear makes sense as we said in the prepared remarks. I think it's aligned again with the policies of the state.

Speaker #4: So we've we've always done that. And so we're trying to enable that as best we can. But whether or not there those units, whether it's in New Jersey or across the country, come on quick enough for some of the some of the load that that's looking to to connect, you know, these are 12 years 12-year-long projects.

Speaker #4: I won't revisit what's happened in the past. So we need short-term solutions as well as long-term solutions. And I think that the new nuclear certainly falls in the long-term bucket.

Speaker #6: Yeah, and even if you, if you take a look at what the RVP is talking about, they're talking about an in-service date of 2032.

Dan Cregg: Even if you take a look at what the RBP is talking about, they're talking about an in-service date of 2032. That's half the time to get to the 12 years that Ralph just talked about. I think there's near term, medium term, and long term. Nuclear is certainly on the longer term.

Speaker #6: So that's, you know, half the time to get to the 12 years that Ralph just talked about. So I think there's near-term, medium-term, and long-term; nuclear is certainly on the longer term.

Speaker #6: Got it. Thank you for your thoughts.

Jeremy Tonet: Got it. Thank you for your thoughts.

Speaker #4: Thanks, Jeremy.

Ralph LaRossa: Thanks, Jeremy.

Speaker #1: The next questions are from the line of Renee Singh with Bank of America. Please proceed with your questions.

Operator: The next question is from the line of Ranee Singh with Bank of America. Please proceed with your question.

Speaker #4: Hi, Renee.

Ralph LaRossa: Hi, Ranee.

Speaker #7: Hi, guys. Hi, guys. Thanks for taking the question. I guess, first, on the, you know, the comments around the Phase One study, you know, there's a pretty broad range of reforms that they propose.

Ranee Singh: Hi, guys. Thanks for taking the question. I guess first on the comments around the phase I study. There is a pretty broad range of reforms that they propose. I guess, how are you thinking about, as we move forward, this negotiation and your input into the stakeholder process and what would have the most merit in New Jersey, both as utility owners and then the conversations with the BPU?

Rinny Singh: Hi, guys. Thanks for taking the question. I guess first on the comments around the phase I study. There is a pretty broad range of reforms that they propose. I guess, how are you thinking about, as we move forward, this negotiation and your input into the stakeholder process and what would have the most merit in New Jersey, both as utility owners and then the conversations with the BPU?

Speaker #7: I guess, how are you thinking about, as we move forward, this negotiation and your input into the stakeholder process and what, you know, would have the most merit in New Jersey both as, you know, utility owners and then the conversations with the BPA?

Ralph LaRossa: Look, we see multiple paths. You kind of said there is multiple things that they've put forth in the EO1. I thought they really just put forth a number of options, but not necessarily a number of reforms, right? There is multi-year rate plans, there is performance-based rates, but these are things we've seen before in the industry. They will provide more transparency for our customers. I welcome everything that's being discussed. I think more transparency for customers is helpful for us, especially when you have some of the billing cycles like we've gone through. I think one of the best things that came out of the report was the reference to only 25% of the bill is distribution. I think that was the number that was quoted.

Speaker #4: Yeah, I I think look, we we see multiple paths. And you kind of said there's there's multiple you know, things that they've put forth at in in the '01.

Speaker #4: I thought they really just put forth a a number of options, but not necessarily a number of reforms, right? There's there's multi-year rate plans.

Speaker #4: There’s performance-based rates, but these are things we’ve seen before in the industry. And they will provide more transparency for our customers, so I welcome everything that's being discussed.

Speaker #4: I think more transparency for customers is helpful for us, especially when you have some of the billing cycles like we've gone through. I think one of the best things that came out of the report was the reference to, you know, only 25% of the bill is distribution.

Speaker #4: And I think that was the number that was quoted in the, in the, in the '01. And so I look at that and I say, you know, I welcome the transparency.

Dan Cregg: Yeah. That's right.

Ralph LaRossa: In the EL1. I look at that and I say I welcome the transparency. I think that's very helpful for us as a company. From a performance-based rates, we started to prepare comments, as we do always with financial, but moved quickly into operational because we are very proud of the operational results that we have as a company. From a performance-based rate standpoint, we welcome that. I kind of tie those two pieces together, and I think the paths that we see are all positive. I think the devil's in the details, and we'll work through that with policymakers, but I feel pretty good about where we are, and I think that our filing of a base rate case shows our willingness to be aligned from a timing standpoint with the next steps that we'll see in this process.

Speaker #4: I think that's very helpful for us as a company. And from a performance-based rates, you know, I we started the prepared comments as we do always with financial, but moved quickly into operational because we are very proud of the operational results that we have as a company.

Speaker #4: And so, from a performance-based rate standpoint, we welcome that. So I kind of tie those two pieces together, and I think the paths that we see are all positive.

Speaker #4: I think we have to all the the you know, devil's in the details and we'll work through that with policymakers. But I feel pretty good about where we are and I think that our filing of a base rate case shows our willingness to be aligned from a timing standpoint with the next steps that we'll see in this process.

Speaker #7: Okay, that makes sense. And then I think that kind of, you know, gets to my second question. You know, power is a big portion of the cost increases.

Ranee Singh: Okay, that makes sense. I think that kind of gets to my second question. Power is a big portion of the cost increases, and we have this RBP structure, and the cost is kind of allocated down to the state basis. How do you think about the process there and the timeline for states, I guess specifically New Jersey, to create this cost allocation basis? Is it kind of favorable in that regard that it is down to the states? I guess on the flexibility procedures, how are you thinking about the mandatory flexibility down to the transmission owner tariff versus PJM just dictating it?

Rinny Singh: Okay, that makes sense. I think that kind of gets to my second question. Power is a big portion of the cost increases, and we have this RBP structure, and the cost is kind of allocated down to the state basis. How do you think about the process there and the timeline for states, I guess specifically New Jersey, to create this cost allocation basis? Is it kind of favorable in that regard that it is down to the states? I guess on the flexibility procedures, how are you thinking about the mandatory flexibility down to the transmission owner tariff versus PJM just dictating it?

Speaker #7: And we have this RBP structure and and the cost is kind of allocated down to the to the state basis. How do you how do you think about the process there and the timeline for, you know, states, I guess, specifically New Jersey to, you know, create this cost allocation basis and and what is it kind of favorable in that regard that it is down to the states?

Speaker #7: And then I guess on the the flexibility procedures, how are you thinking about the the mandatory flexibility down to the transmission owner tariff versus, you know, PJM just dictating it?

Speaker #4: Yeah, I—look, I think that there's still—again, we’ve got to look for a little more detail. We’ve got to see what comes out of FERC when they finally approve everything.

Ralph LaRossa: Yeah. Look, I think that there's still, again, we got to look for a little more detail. We got to see what comes out of FERC when they finally approve everything. The state will be involved because the BPU will have some timelines that they'll have to meet. Right now, I think it's set up at 12 months, but we'll see how that changes over time, and I don't want to be locked into anything specific there until we see what comes out of FERC. I do think that working together with the BPU, we can be very helpful here. I'm going to point to something that recently happened, which is the transmission cost allocation process where we had, I think it was in, again, in our prepared remarks, where we talked a little bit about how some of that cost allocation was done.

Speaker #4: But, you know, the state will be involved because the BPU will have some timelines that they'll have to meet. Right now, I think it's set up at 12 months, but we'll see how that changes over time.

Speaker #4: And I don't want to be locked into anything specific there until we see what comes out of FERC. But I do think that working together with the BPU, we can be very helpful here.

Speaker #4: And I'm I'm going to point to something that recently happened which is the the transmission cost allocation process where we had I think it was in again in our prepared remarks where we talked a little bit about how some of that cost allocation was done and working with the state, we now as recently as I guess the last two days, we saw that that filing that we had made for the cost allocations was approved by FERC.

Ralph LaRossa: Working with the state, as recently as I guess the last two days, we sorted that filing that we had made for the cost allocations was approved by FERC, and the result is going to be a $65 million a year savings going forward. That's not just a one-time, that's every year going forward for our customers. We've proven we can work with the state in that particular case. That cost allocation was something we really advocated for strongly as a company ourselves. We worked with the state to get over some of the last-minute hurdles here, and I think we can do the same when we get into the RBA. I think we'll be able to figure out exactly the right way to do this to help from a customer cost standpoint as best we can.

Speaker #4: And the result is going to be a $65 million-a-year savings going forward. You know, that's not just a one-time thing. That's every year going forward for our customers.

Speaker #4: So, you know, we've proven we can work with the state in that particular case. That cost allocation was something we really advocated for strongly as a company ourselves.

Speaker #4: And then we worked with the state to get to get over some of the last-minute hurdles here. And I think we can do the same when we get into this into the in the into the RBA.

Speaker #4: I think we'll be able to figure out exactly the right way to do this to help from a customer cost standpoint, as best we can.

Speaker #7: Okay, great. Thanks, Ralph. Thanks, Dan.

Ranee Singh: Okay, great. Thanks, Ralph. Thanks, Dan.

Rinny Singh: Okay, great. Thanks, Ralph. Thanks, Dan.

Speaker #6: Thanks, Ray.

Ralph LaRossa: Thanks, Rae.

Speaker #1: Next questions from the line of Sophia Carp with KeyBank. Please proceed with your questions.

Operator: Next question's from the line of Sophie Karp with KeyBank. Please proceed with your question.

Speaker #4: Hey, Sophie.

Ralph LaRossa: Hey, Sophie.

Sophie Karp: Hi. Good morning. Thanks for the time. It's been discussed already from several angles, but maybe let me try this one. Are you guys seeing attractive opportunities to contract bilaterally for new builds, like outside of the PJM contract? Like not as a part of the immediate bilateral auction, but on your own with customers to facilitate their large load build-out in the PJM footprint. If I-

Speaker #7: Hi. Good morning. Thanks

Speaker #8: Thank you for the time. I know this has been discussed already from several angles, but maybe let me try this one. Are you guys seeing attractive opportunities to contract bilaterally for new builds—like, outside of the PJM contract? Not as part of the immediate bilateral auction, but on your own with customers to facilitate their large load build-out in the PJM footprint?

Speaker #8: So, if I summarize some of your peers that try and...

Ralph LaRossa: I'm going to give-

Sophie Karp: Some of your peers are trying.

Ralph LaRossa: Yeah. Sophie, I'm going to give that to Dan. PJM isn't the only process that's being stood up right now to go through these bilateral contracts. It's a great question. I'll give it to Dan.

Speaker #4: Yeah. Sophie, I'm going to give that to Dan. I just want to, just so you know, PGM isn't the only process that's being stood up right now to go through these bilateral contracts.

Speaker #4: That's a great question. I'll give it to Dan.

Speaker #6: Yeah. You know, I think to the extent that you are new load, you're going to end up getting pushed into that. But I also think that there are states that are seeing their supply-demand balances not necessarily be where they want them.

Dan Cregg: Yeah. I think to the extent that you are a new load, you're going to end up getting pushed into that. I also think that there's states that are seeing their supply-demand balances not necessarily be where they want them and may be looking to do something to prompt some generation there.

Speaker #6: And and maybe looking to do something to prompt some generation there. And that's why I think that's got some potential as well. I I think to your to your question, it sounded like are you seeing folks come in and in particular new load looking for new generation?

Dan Cregg: I think that's got some potential as well. I think to your question, it sounded like are you seeing folks come in and, in particular, new load looking for new generation? I think that will get caught up into that RBP process, though. I think there are other venues, and I think we got one of the best sites.

Speaker #6: I think that will get caught up in that RBP process there. So, I think there are other venues, and I think we've got one of the best sites out there with respect to the infrastructure in place.

Dan Cregg: The sites that are out there with respect to the infrastructure in place. We'll see what happens throughout as we go forward through a couple of different processes as they move forward.

Speaker #6: But we'll see what happens as we go forward through a couple of different processes as they move forward.

Speaker #8: Yeah, and maybe just to build on that—like, as you consider this type of investment, how do you think about the target IRR or return that you would need in order to jump onto that?

Sophie Karp: Yeah, maybe just to build on that, as you consider these types of investments, how do you think about the target IRR or return that you would need to jump onto that? What's your thinking process here?

Speaker #8: What's your thinking process here?

Ralph LaRossa: Yeah. Sophie, I'm going to, again, just kind of reinforce something Dan said earlier. It all depends upon the risk, right? We have said we don't want to be in a high-risk market. I would consider PJM marketplace to be high risk. We're looking for utility-like returns. I think in saying that, utility-like investments, we're saying utility-like returns because we're looking for utility-like risk. I don't want to go much further than that other than just to reinforce utility-like, utility-like, utility-like.

Speaker #4: Yeah, Sophie, I'm going to again just kind of reinforce something Dan said earlier. It all depends upon the risk, right? And we have said we don't want to be in a high-risk market.

Speaker #4: I would consider the PGM marketplace to be high-risk. We're looking for utility-like returns. So, I think in saying that, utility-like investments, we're saying utility-like returns because we're looking for utility-like risk.

Speaker #4: And I don't want to go much further than that, other than just to reinforce: utility-like, utility-like, utility-like.

Sophie Karp: Got it. Thank you so much. Appreciate the color. That's all for me.

Speaker #8: Got it. Thank you so much. Appreciate the color. That's all from me.

Speaker #4: Thanks.

Ralph LaRossa: Thanks. Yep.

Speaker #1: The next questions are from the line of Ryan Levine with Citi. Please proceed with your question.

Operator: The next questions are from the line of Ryan Levine with Citi. Please proceed with your question.

Speaker #5: Good morning, and thanks for taking my question. Given the New Jersey BPU and other PJM state-level discussions around virtual power plants, how are you thinking about the opportunity for PSEG?

Ryan Levine: Good morning, and thanks for taking my question. Given the New Jersey BPU and other PJM state-level discussions around virtual power plants, how are you thinking about the opportunity for PEG?

Speaker #4: Yeah, Ryan, thanks. Listen, I think from a PEG standpoint, again, it's an opportunity for us to show alignment with the state policy.

Ralph LaRossa: Yeah, Ryan, thanks. Listen, I think from a PSEG standpoint, again, it's an opportunity for us to show alignment with the state policy. There's not a tremendous financial opportunity on the VPP side that we see. I think maybe nationwide if you were in that game or you're doing some other things. For our New Jersey customers, it's more about aligning with policy and enabling that policy than it is about a financial return.

Speaker #4: There's not a tremendous financial opportunity on the VPP side that we see. I think maybe nationwide if you were in that game or you're doing some other things.

Speaker #4: But for our New Jersey customers, it's more about aligning with policy and enabling that policy than it is about a financial return.

Speaker #5: Okay. Are there any initiatives that you have underway to address that alignment?

Ryan Levine: Okay. Are there any initiatives that you have underway to address that alignment?

Speaker #4: Well, yeah. We have some we have some I think we've we've we've worked with the BPU on a couple of different items where we've where we've put forth some pilot programs.

Ralph LaRossa: Yeah. I think we've worked with the BPU on a couple of different items where we've put forth some pilot programs. I think they're going to initiate more of a process there. Again, we'd be front-running them if we got ahead of that curve. We've done that more through the regulatory conversations than we have with actual implementation of programs. We do have some pilots that we've proposed.

Speaker #4: And I think they're going to initiate more of a process there. So again, we'd be front-running them if we got ahead of that curve.

Speaker #4: But, you know, we've done that more through the regulatory conversations than we have with actual implementation of programs. But we do have some pilots that we've proposed.

Speaker #5: Okay, thanks. So, that's thanks for your time.

Ryan Levine: Okay. Thanks for the time.

Speaker #4: Thanks.

Ralph LaRossa: Thanks.

Speaker #1: Next questions are from the line of Paul Patterson with Glenrock Associates. Please proceed with your questions.

Operator: Next questions are from the line of Paul Patterson with Glenrock Associates. Please just see if this

Speaker #4: Hello, Paul.

Ralph LaRossa: Hello, Paul.

Speaker #7: Hello.

Paul Patterson: Hey, how you doing? Good morning. Just wanted to sort of follow up on the expected rate case and what have you. Sort of get your, and I apologize if I miss this, but the energy efficiency order that came out and how you see that. What is that? It seems a little unusual in terms of their return and what have you. I'm just wondering if you could sort of give me a better feeling for how you see that in the whole context of the regulatory environment there.

Speaker #6: Hey, how are you doing? Good morning. Just wanted to sort of follow up on the expected rate case and what have you.

Speaker #6: And and sort of get your and I apologize if I missed this, but the the energy efficiency order that that came out and how you see that what does that seems a little unusual in terms of their their return and what have you.

Speaker #6: I'm just wondering if you could sort of give me a better feeling for what—how you see that in the whole context of the regulatory environment there.

Speaker #4: Yeah. I look, I I look at that as a very specific piece of of of the regulatory process, not overarching. I think, again, the the state is looking for affordability.

Ralph LaRossa: Well, look, I look at that as a very specific piece of the regulatory process, not overarching. I think, again, the state is looking for affordability, so understand the goals that were put forth in that framework. It is a framework. It's not mandated, so we have the opportunity to talk about how our programs differentiate from others. I think one of the biggest ones for us is our use of union labor and the percentage in which we use union labor to achieve the goals that were put forth for us by the BPU. I do think we have some differentiating factors that are worth discussion. I also think that it's important to note that this is prospective from an asset standpoint. This is dealing with the extension assets, the dollars that we're putting forth to support that investment, not for all EE investments.

Speaker #4: So understand the the goals that were put forth in that framework. But it is a it is a framework. It's not it's not mandated.

Speaker #4: So, we have the opportunity to talk about how our programs differentiate from others. I think one of the biggest ones for us is our use of union labor and the percentage in which we use union labor to achieve the goals that were put forth for all of us by the BPU.

Speaker #4: So I think—so, you know, I do think there are some differentiating factors that are worth discussion. I also think that it's important to note that this is prospective.

Speaker #4: From a an asset standpoint, this is dealing with the the the extension assets, the the dollars that we're putting forth to support that investment, not for all EE investments.

Speaker #4: So that's also important. And I think it's also a reflection of the amount of, I'd say, the loan program—the on-bill financing that we're doing—and the perceived risk around that specific part of the program.

Ralph LaRossa: That's also important. I think it's also a reflection of the amount of, I'd say, the loan program, the on-bill financing that we're doing, and the perceived risk around that specific part of the program. There's a lot of specifics in what I just said to you, which makes it kind of unique, and it's consistent from an affordability standpoint. It's unique from an investment standpoint as we think about it.

Speaker #4: So, there's a lot of specifics in what I just said to you, which makes it kind of unique. It's consistent from an affordability standpoint, but it's unique from an investment standpoint as we think about it.

Speaker #6: Okay, great. And then just, you know, back on nuclear, I just—I'm wondering if you could give a flavor for what stakeholders actually think, or what their comprehension is about what the affordability impact of nuclear might be.

Paul Patterson: Okay, great. Then just back on nuclear. I'm wondering if you could give a flavor for what stakeholders actually think or what their comprehension about what the affordability impact of nuclear might be. I mean, this is around the country. There seems to be bipartisan buy-in to this, and I understand its appeal, but I'm just wondering when you're speaking to policymakers, et cetera. Maybe you can tell me if there's been a big change in the cost of nuclear. I mean, I know there's this SMR technology, et cetera. Do you think there's a full understanding about, when you talk to this buy-in, about what the cost of new nuclear might be? Do you follow what I'm saying?

Speaker #6: I mean, you know, I—I mean, this is around the country. There seems to be bipartisan buy-in to this. And I understand its appeal, but I'm just wondering, when you're speaking to policymakers, etc., or maybe you can tell me if there's been a big change in the cost of nuclear.

Speaker #6: I mean, I know there's this SMR technology, etc., but I mean, is there is there do you think there's a full understanding about I mean, with respect to this buy-in about what the cost of new nuclear might be, do you follow what I'm saying?

Speaker #4: Well, yeah. Look, I think there are plenty of levelized cost of energy reports out there that give policymakers a clear line of sight into what the costs are going to be.

Ralph LaRossa: Well, yeah. Look, I think there's plenty of levelized cost of energy reports out there that give policymakers a clear line of sight into what the costs are going to be. I think there's a question about the timing of the projects coming online and what the cost will be at that point, right? That's always a conversation that you have with policymakers. I think the biggest open item for everyone is while there's bipartisan support for building new nuclear, there's also bipartisan support to protect ratepayers from cost overruns. The question comes down to how does that risk get adequately allocated amongst the players in any given project? That's why whenever we've talked about it, we've talked about enabling new nuclear because of the concern that we have about how does that become utility-like if there's high risk associated with it.

Speaker #4: I think there’s a question about the timing of the projects coming online and what the cost will be at that point, right? So, that’s always a conversation that you have with policymakers.

Speaker #4: I think the biggest open item for everyone is, while there's bipartisan support for building new nuclear, there's also bipartisan support to protect ratepayers from cost overruns.

Speaker #4: And so the question comes down to, where do we—how does that risk get, you know, adequately allocated amongst the players in any given project?

Speaker #4: And that's why, whenever we've talked about it—and we've talked about enabling new nuclear—it's because of the concern we have about how that becomes utility-like if there's high risk associated with it.

Speaker #4: So, you know, more to come on that. I think we're, again, very well positioned. I think our site is very well positioned, and we look forward to doing what we can to enable new nuclear in New Jersey.

Ralph LaRossa: More to come on that. I think we're, again, very well positioned. I think our site is very well positioned, and we look forward to doing what we can to enable new nuclear in New Jersey. I think to your specific question, is there a line of sight for policymakers on the cost? I think there's plenty of studies out there, and I think there's plenty of conversation about where these costs are, and more importantly, where they could go, too.

Speaker #4: But I think, to your specific question, is there a line of sight for policymakers on the cost? I think there are plenty of studies out there.

Speaker #4: And I think there's plenty of conversation about where these costs are, and more importantly, where they could go to.

Speaker #6: Okay. Awesome. Thanks so much.

Paul Patterson: Okay. Awesome. Thanks so much.

Speaker #1: Thank you, Miller with Morningstar. Please proceed with your questions.

Operator: Thank you. Our final question is from the line of Travis Miller with Morningstar. Please just use your question.

Speaker #4: Hey, Travis.

Ralph LaRossa: Hey, Travis.

Speaker #7: Hi, everyone. Thank you. Hey, you answered most of my questions—a lot of details. I appreciate it. Just one quick follow-on. The EO1 and the process from here: Is the ball now in your court in terms of putting together proposals, best ideas, things like that to present to the BPU, or are you still waiting for some more guidance either from the Governor's office, or BPU, or some other entity before you start putting filings out?

Travis Miller: Hi, everyone. Thank you. Hey, you answered most of my questions. A lot of details. Appreciate it. Just one quick follow-on that. EO1 and the process from here, is the ball now in your court in terms of putting together proposals, best ideas, stuff like that to present to the BPU? Are you still waiting for some more guidance, either from governor's office or BPU or some other entity before you start putting filings out?

Speaker #4: No, Travis. Yeah, Travis, there's a clear phase that the Board of Public Utilities will go through as the next step in this process.

Ralph LaRossa: Yeah, Travis, there's a clear phase two that the Board of Public Utilities will go through as the next step in this process. We'll participate in that. We'll have comments. There's plenty of stakeholder meetings that have been scheduled by the board that we will participate in and others. It's more, at this point, still an open item that we wait for finalization of the orders from the Board of Public Utilities.

Speaker #4: So, you know, we'll participate in that. We'll have comments. There are plenty of stakeholder meetings that have been scheduled by the Board that, you know, we will participate in—and others as well. So it's more, at this point, still an open item that we wait for finalization of the orders from the Board of Public Utilities.

Speaker #7: Okay. So you think, in terms of putting together actual proposals and stuff, that comes after the base rate case?

Travis Miller: Okay. You think in terms of putting together actual proposals and stuff, that comes after the base rate case?

Speaker #4: Well, no, I think—look, we said we would file by the end of the year. There's a timeline associated with that.

Ralph LaRossa: Well, no, I think-

Travis Miller: Give or take

Ralph LaRossa: I think, look, we said we'd file by the end of the year. There's a timeline associated with that. If you kind of play it out, there'll be some sort of a framework that'll come out for an EO1. I would expect that to happen in the last quarter, beginning of next year. Put that framework together. Now you've got your base rate filing that's been recently approved or is about to be approved. This is for any utility in the state. Then you can start to move efficiently into the next framework because you've got that base to work off of.

Speaker #4: If you kind of play it out, there'll be some sort of a framework that'll come out for a V01. I would expect that to happen in the last quarter.

Speaker #4: Beginning of next year, put that framework together. Now you've got your base rate filing that's been recently approved or is about to be approved.

Speaker #4: This is for any utility in the state. And then you can start to move, you know, efficiently into the next framework because you've got that base to work off of.

Speaker #7: Okay, that makes sense. Well, a lot of work to do in '27. Stay busy.

Travis Miller: Okay. That makes sense. Well, a lot of work to do in 2027. Stay busy.

Speaker #4: Thanks, Travis.

Ralph LaRossa: Thanks, Travis. Thanks for asking.

Speaker #2: Thanks, Travis.

Travis Miller: Okay.

Speaker #1: Thank you. At this time, I'll turn the floor back to Mr. LaRossa for closing comments.

Operator: Thank you. At this time, I'll turn the floor back to Mr. LaRossa for closing comments.

Speaker #4: Well, thank you. Hey, just a couple of things. Appreciate all the interest, as always. Just want to reinforce the way we started, which was on the great work by the teams here in New Jersey and in Long Island to respond to the storms.

Ralph LaRossa: Well, thank you. Hey, just a couple things. Appreciate all the interest as always. Just want to reinforce the way we started, which was on the great work by the teams here in New Jersey and in Long Island to respond to the storms over the July 4th holiday season. Just the fact that people were away from their families and from their barbecues and from everything that they wanted to be doing otherwise during that weekend. Without that operational excellence, we couldn't even be having conversations about what we can potentially do moving forward.

Speaker #4: Over the July 4th holiday season, and just the fact that people were away from their families, and from their barbecues, and from everything that they wanted to be doing otherwise.

Speaker #4: During that weekend, without that operational—about what we can potentially do moving forward. And I think, as I look forward, we've continued to get more regulatory clarity, both at PJM with some of the steps that they've taken and how that might play out on the generation side.

Ralph LaRossa: I think as I look forward, we've continued to get more regulatory clarity, both at PJM with some of the steps that they've taken and how that might play out on the generation side, and here in New Jersey on the distribution side as we move through the EO1 process and ongoing conversations there. Regulatory clarity is starting to take place. Then I think on top of that, there's opportunity sets that remain in front of us that are presented both by the regulatory clarity at PJM and in New Jersey as it pertains to that last mile and getting the system ready for the solar and batteries that we know we need in the near term. I put all those pieces together, and I feel pretty good about where we are.

Speaker #4: And here in New Jersey, on the distribution side, as we've moved through the EO1 process and ongoing conversations there, regulatory clarity is starting to take place.

Speaker #4: And then I think, on top of that, there are opportunity sets that remain in front of us, presented both by the regulatory clarity at PJM and in New Jersey, as it pertains to that last mile and getting the system ready for the solar and batteries that we know we need in the near term.

Speaker #4: So, put all those pieces together, and I feel pretty good about where we are. I look forward to the next time that we're together.

Ralph LaRossa: I look forward to the next time that we're together, and I'll just end by wishing Carlotta a belated happy birthday. For all of you that are on the call and interact with her all the time, when you give her a buzz next time, just make sure you say happy birthday. Thanks for dialing in.

Speaker #4: And I'll just end by wishing Carlotta a belated happy birthday for all of you that are on the call and interact with her all the time.

Speaker #4: When you give her a buzz next time, just make sure you say happy birthday. Thanks for dialing in.

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

Q2 2026 Public Service Enterprise Group Inc Earnings Call

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