Public Service Enterprise Group, Inc. Q3 FY2024 earnings call

• Financial results: Net income per share for Q3 2024 was $1.04, YTD $2.97; non-GAAP operating earnings Q3 2024 $0.90 per share, YTD $2.84 per share.
• Regulatory activity: Successfully resolved PSE&G’s base rate case and Clean Energy Future-Energy Efficiency programs. Base rates effective Oct 15th, energy efficiency program approved for 2025-2027.
• Operating performance: Summer weather normal after record warm Q2; PSEG Power’s merchant nuclear fleet performed well; Salem Unit 2 coast down for refueling; received exemplary nuclear safety rating.
• Capital investment: PSE&G invested ~$1B in Q3, on track to complete AMI installations by year-end; 5-year capital plan $19B-$22.5B.
• Data center activity: CoreWeave plans $1.2B data center in NJ; data center load expected to grow, seeking carbon-free power.

PSEG reported net income of $1.04 per share for the third quarter of 2024. For the PSEG segment, third quarter 2024 net income was $0.76 per share, and non-GAAP operating earnings were $0.76 per share. For PSEG Power and Other, third quarter 2024 net income was $0.28 per share, with non-GAAP operating earnings of $0.14 per share. Revenue contributions are integrated within the overall financial performance discussed for each segment.

• Narrowed full-year 2024 non-GAAP operating earnings guidance to $3.64 per share to $3.68 per share from prior range $3.60 to $3.70, due to new base distribution rates and PSEG Power’s gross margin realization.
• Reaffirmed long-term non-GAAP operating earnings growth rate of 5% to 7% through 2028, supported by capital investment programs and nuclear PTC.

• FERC technical conference and decision on data center power interconnection; uncertainty around grid reliability impacts.
• Capacity market delays and potential impacts on earnings and generation investment.
• Pension variability mitigation still in progress, though new deferral mechanisms aimed to reduce it.

Q: Good morning, guys. So just, Ralph, starting off on the ISA issues at FERC and sort of the risks behind the meat or nuclear deals, does this kind of change the calculus on your commercial discussions with Artificial Island? Does this push the conversations to a more conventional deal with transmission interconnections?

A: Hey, Char. Thanks. Yeah. So, look, I’ll try to hit on that whole interconnection agreement issue up front here a little bit. First of all, we think that was a very narrow decision that was made by FERC, so very specific to what was submitted by the parties there. We’re not part of that. We were not party to that agreement, so I don’t want to talk in a lot of details about it, but it has not slowed us down and will not slow us down from trying to help the State of New Jersey meet their economic development goals. There’s a lot of different ways to come to a solution. I think Talon had one solution. We’ve seen Constellation with another solution. I think each individual customer and each individual site will bring a different solution to the table. We still think we’re very uniquely positioned because of our 3-unit site and the redundancy that exists there. We like the additionality that our early site permit could provide to somebody else. We like the additionality that our upgrades are going to provide and we like the additional megawatt hours that we’re going to get from our Hope Creek facility when we change the fuel cycle. So there’s a lot of things that are a little bit different about our site than others and I think when we continue to have our conversations, all of those things will come to light and play itself out.

Q: Hi. Good morning. Thank you, team. If I could follow up on Nick’s question, I don’t mean to nitpick, but when you answered, do you expect to be within that 5% to 7% CAGR every year on an annual basis, because I know we’ve talked about the production tax credits a little lumpy, the rate case dynamics. So do you expect to be within that range every year? Is that more like a CAGR we should think of?

A: I think you ought to be thinking about it as kind of how the business will run on a go-forward. Could we be in situations where we could move around within that period? Absolutely, Paul. But I think that’s a good way to think about it as longer term on a CAGR basis.