Public Service Enterprise Group, Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• PSEG reported solid third quarter and year-to-date operating and financial results, with the impact of new rates from the October 2024 distribution rate case settlement.
• Narrowed 2025 non-GAAP operating earnings guidance to the upper half of the range at $4 to $4.06 per share from prior guidance of $3.94 to $4.06 per share.
• PSE&G invested approximately $1 billion in the quarter and $2.7 billion over the first 9 months of 2025, with a full-year regulated capital investment plan of ~$3.8 billion focused on modernizing New Jersey's energy infrastructure.
• Hope Creek unit completed a 499-day continuous run and extended its fuel cycle from 18 to 24 months. Long Island Power Authority approved a 5-year contract extension for PSEG to continue as the operations service provider.
• Addressed resource adequacy imbalance in New Jersey and PJM region, collaborating with policymakers to develop solutions. Supported legislation for generation competition and have sites and expertise to build new supply in New Jersey.
• PSEG Nuclear implementing projects to optimize plants, including the Salem uprate project to add 200 megawatts, and supported by FERC-approved price collar and gradualism of generation supply mechanism.

Segment Performance

• PSE&G: Third quarter 2025 net income was $515 million compared to $379 million in 2024. Non-GAAP operating earnings were $515 million in 2025 versus $379 million in 2024. Distribution margin was impacted by new electric and gas base distribution rates, with distribution O&M costs, depreciation, and interest expense also playing roles. The Conservation Incentive Program decouples weather and economic variances from distribution margin, and PSE&G invested approximately $1 billion in the third quarter, totaling $2.7 billion for the first 9 months, with a full-year regulated capital investment plan of ~$3.8 billion.
• PSEG Power & Other: Third quarter 2025 net income was $107 million compared to $141 million in 2024. Non-GAAP operating earnings were $50 million in 2025 versus $69 million in 2024. Generation was affected by the Hope Creek refueling outage, but power pricing and market revenues were higher. Hope Creek unit transitioned to an 18- to 24-month refueling cycle, and PSEG Nuclear declared eligible nuclear capacity in PJM's base residual auction.

Guidance

• Narrowed full year 2025 non-GAAP operating earnings guidance to $4 to $4.06 per share from prior guidance of $3.94 to $4.06 per share.
• Reaffirmed 5% to 7% compound annual growth in non-GAAP operating earnings through 2029, supported by capital investment programs and nuclear PTC threshold.
• Plan to introduce 2026 non-GAAP operating earnings guidance, roll forward capital investment plans, update rate base and long-term earnings CAGRs during the year-end call in February 2026.

Risks

• Supply-demand imbalance in New Jersey and the PJM region, which could adversely impact reliability and affordability for customers if not addressed.
• Uncertainties related to regulatory and policy decisions in New Jersey, particularly regarding generation supply and grid modernization.
• Potential impact of changing market conditions and energy prices on financial results.

Question and Answer

• Q: Shar Pourreza with Wells Fargo on data centers in New Jersey A: Ralph LaRossa and Daniel Cregg discussed data center opportunities in New Jersey, noting they continue to move forward, with some jobs moving along in the queue but no big announcements yet. They expect smaller data center announcements and that policy decisions by the new governor will impact grid planning.
• Q: Jeremy Tonet with JPMorgan on New Jersey vs Pennsylvania assets A: Daniel Cregg noted different types of entities involved in New Jersey versus Pennsylvania, with more forward-leaning appetite in Pennsylvania enabling bigger projects, while New Jersey has smaller-scale interest.
• Q: Nicholas Campanella with Barclays on data center contracting and generation A: Ralph LaRossa and Daniel Cregg discussed dialogue around data centers bringing their own generation, but no mandatory requirements. Continued discussion around DOE letters and fast-tracking, but no set requirements for incumbent generators.
• Q: David Arcaro with Morgan Stanley on affordability and T&D rate outlook A: Ralph LaRossa emphasized that affordability is a long-standing consideration, with PSEG operating to keep rates down through O&M management and working with regulators to spread costs. Affordability is also tied to reliability and the need for more supply in the state.
• Q: William Appicelli with UBS on finding supply and legislation A: Ralph LaRossa discussed potential mechanisms like BPU auctions or FRR, emphasizing the need to figure out load, reliability targets, emissions profiles, and affordability definition for an integrated resource plan.
• Q: Nicholas Amicucci with Evercore ISI on Hope Creek fuel cycle extension A: Ralph LaRossa explained it was a matter of shuffling fuel and making design changes, not changing fuel suppliers, and noted similar industry practices, with potential for further extensions at other plants.
• Q: Paul Zimbardo with Jefferies on forward curve and hedging A: Daniel Cregg stated hedging profile is generally ratable with consideration of the PTC, varying slightly but not radically different from historical methods.
• Q: Carly Davenport with Goldman Sachs on GSMP II extension A: Ralph LaRossa said ongoing discussions with the BPU are taking place, but no front-running of details.
• Q: Anthony Crowdell with Mizuho on affordability and PJM exposure A: Ralph LaRossa noted candidates understand the difference between PJM wires exposure and merchant generation, and both understand the need for an integrated resource plan to address the supply challenge.
• Q: Andrew Weisel with Scotiabank on affordability and low-income customers A: Ralph LaRossa and Daniel Cregg discussed focus on low-income customers, with existing programs and analysis of customer impact, and both candidates considering different approaches based on customer needs.