Public Service Enterprise Group, Inc. Q1 FY2025 earnings call

Management Statement and Operational Highlights

• PSEG benefited from regulatory recovery of invested capital from the 2024 rate case settlement and seasonality of gas revenues. Nuclear generation provided clean power, and PSE&G maintained high reliability during cold spells.
• The Conservation Incentive Program ensures revenue predictability. Cost structure is managed to keep bills low. The BGS default rate increase will affect residential electric bills, and PSE&G is working with the BPU to mitigate impacts.
• PSE&G's 2025 regulated capital investment plan is $3.8 billion, with $800 million invested in the first quarter. The energy efficiency program was rolled out, and large load inquiries into PSE&G's new business pipeline grew to over 6,400 MW.
• PSEG Nuclear supplied carbon-free power, and the company remains open to new generation solutions in New Jersey.

Segment Performance

• PSE&G: In the first quarter of 2025, PSE&G reported net income of $546 million compared to $488 million in 2024, and non-GAAP operating earnings of $1.43 per share vs $1.31 per share in 2024. The distribution margin increased by $0.20 per share due to the rate case, recovering return on capital investments, with gas revenues concentrated in the first quarter. Distribution O&M expense was $0.05 per share unfavorable due to timing, inflation, and cold weather. Depreciation and interest expense rose. Weather had minimal impact on margin due to the Conservation Incentive Program. Capital spending for 2025 is on track to $3.8 billion, focused on infrastructure modernization, etc.
• PSEG Power & Other: Nuclear operations generated 8.4 terawatt hours of carbon-free power with a fleet capacity factor of 99.9%. Net income was $43 million vs $44 million in 2024, and non-GAAP operating earnings were $172 million vs $169 million. Net energy margin rose due to higher nuclear generation and prices, O&M increased, interest expense rose, and taxes had a net favorable impact.

Guidance

• Reiterated full-year non-GAAP operating earnings guidance of $3.94 to $4.06 per share, a 9% increase from 2024 results.
• Reiterated the five-year capital spending program of $21 billion to $24 billion, supporting a rate base CAGR of 6% to 7.5% through 2029, and non-GAAP operating earnings CAGR of 5% to 7% using the nuclear production tax credit as the reference price for power.

Risks

• Supply chain risks limiting tariff-related cost pressure on O&M.
• Uncertainty in PJM capacity market outcomes affecting customer bills.
• Legislative and policy uncertainties around New Jersey generation policy.
• Potential risks related to large transmission projects and tariff exposure.

Question and Answer

Q: On large load interconnection timeline and New Jersey resource adequacy.

A: Ralph LaRossa and Dan Cregg discussed that load interconnection is happening at different stages, and there's a big conversation about resource adequacy in the RTO footprint. They mentioned being more vocal in TAC meetings regarding PJM assumptions.

Q: On FERC 206 comments and settlement vs order.

A: Ralph LaRossa and Dan Cregg stated preference for a settlement, emphasizing non-discriminatory aspects, and that counterparties seek flexibility amid uncertainty.

Q: On LIPA and next steps.

A: Ralph LaRossa reported that LIPA management's recommendation to select a different service provider was voted down, with the next Board meeting in late May to address next steps.

Q: On affordability and short-term vs long-term solutions.

A: Ralph LaRossa and Dan Cregg discussed short-term programs like energy efficiency and customer assistance, and long-term solutions like regulated generation, competitive generators, and imports.