Public Service Enterprise Group Q1 2025 Earnings Report

Public Service Enterprise Group EPS Results

• Actual EPS: $1.43
• Consensus EPS: $1.43
• Beat/Miss: Met Expectations
• One Year Ago EPS: $1.31

Public Service Enterprise Group Revenue Results

• Actual Revenue: $3.22 billion
• Expected Revenue: $3.15 billion
• Beat/Miss: Beat by +$70.29 million
• YoY Revenue Growth: +16.70%

Public Service Enterprise Group Announcement Details

• Quarter: Q1 2025
• Date: 4/30/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, April 30, 2025
• Conference Call Time: 11:00AM ET

Public Service Enterprise Group (NYSE:PEG), through its subsidiaries, operates in electric and gas utility business in the United States. It operates through PSE&G and PSEG Power segments. The PSE&G segment transmits electricity; distributes electricity and natural gas to residential, commercial, and industrial customers; and appliance services and repairs to customers through its service territory, as well as invests in solar generation projects, and energy efficiency and related programs. The PSEG Power segment engages in nuclear generation businesses; and supplies power and natural gas to nuclear power plants and gas storage facilities activities. As of December 31, 2023, it had electric transmission and distribution system of 25,000 circuit miles and 866,600 poles; 56 switching stations with an installed capacity of 39,953 megavolt-amperes (MVA), and 235 substations with an installed capacity of 10,382 MVA; 109 MVA aggregate installed capacity for substations; four electric distribution headquarters and five electric sub-headquarters; 18,000 miles of gas mains, 12 gas distribution headquarters, two sub-headquarters, and one meter shop, as well as 56 natural gas metering and regulating stations; and 158 MegaWatts defined conditions of installed PV solar capacity. Public Service Enterprise Group Incorporated was founded in 1903 and is based in Newark, New Jersey.

Public Service Enterprise Group Q1 2025 Earnings Call Transcript

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by. My name is Shamali, and I am your event operator today. I would like to welcome everyone to today's conference Public Service Enterprise Group's First Quarter twenty twenty five Earnings Conference Call and Webcast. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session for members of the financial community.

[Operator]

As a reminder, this conference is being recorded today, 04/30/2025, and will be available for replay as an audio webcast on PSEG's Investor Relations website at investor.pseg.com. I would now like to turn the conference over to Carlotta Jain. Please go ahead.

[Carlotta Chan, Investor Relations at Public Service Enterprise Group]

Good morning, and welcome to PSEG's first quarter twenty twenty five earnings presentation. On today's call are Ralph LaRosa, Chair, President and CEO and Dan Craig, Executive Vice President and CFO. The press release attachments and slides for today's discussion are posted on our IR website at investor.pseg.com and our 10 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 as reported in accordance with Generally Accepted Accounting Principles or GAAP in The United States.

[Carlotta Chan, Investor Relations at Public Service Enterprise Group]

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 thirty minute question and answer session. I will now turn the call over to Ralph LaRosa.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Thank you, Carlotta, and thank you for joining us this morning to review PSEG's first quarter twenty twenty five results and discuss the outlook for the business. PSEG delivered a solid operating and financial performance at both our utility PSE and G and our nuclear units. Overall results for the first quarter benefited from a full quarter of regulatory recovery of and on our invested capital approved in the October 2024 base rate case settlement as well as the seasonality of gas revenues which are concentrated in the first quarter. Results also reflected the positive impact of our consistent and reliable nuclear generation performance which realized higher prices primarily driven by weather. Our service territory experienced multiple cold spells in January and February with temperatures remaining below 20 degrees Fahrenheit for several days in a row, which prompted our highest winter peak load for both gas and electric in the last six years.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

During these challenging conditions, PSE and G maintained high levels of reliability and efficient customer response times, while PSEG Nuclear generated and supplied the grid with approximately 8.4 terawatt hours of 20 fourseven carbon free power. PSEG's focus on increasing the predictability of our results continues to benefit both customers and the company aided by our conservation incentive program, which decouples revenues from volumes and deferral mechanisms for pension and storms from the recently concluded rate case. This predictability combined with PSE and G's predominantly residential and commercial customer profile also reinforces our stability as a utility investment with defensive characteristics in a turbulent equity market. We consistently manage our cost structure to keep bills as low as possible while maintaining PSEG's financial flexibility to deliver safe and reliable service. The domestic concentration of our supply chain also limits the amount of tariff related cost pressure on our O and M, combined with our multi year labor agreements with all of our New Jersey Unions extending into 2027 provides stability for our largest operating costs.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

As we've discussed previously, the Basic Generation Service or BGS default rate is scheduled to increase our residential electric bills by 17% starting June 1. As a reminder, BGS is a pass through cost for energy supply that PSE and G does not earn a profit on. The increase is largely due to July 2024 base residual auction result of $270 a megawatt day that was reflected in the latest BGS update as well as a true up for the prior two years of BGS auction, which had included proxy prices for capacity. Last week, the New Jersey Board of Public Utilities directed the state's electric companies to submit proposals to mitigate the customer bill impacts of the BGS increase. PSE and G continues to work with the BPU and state policymakers to develop a solution.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

We understand the real kitchen table difficulties these PGM related increases will have on our electric customers. However, until new generating supply is added to the grid given the existing resource adequacy imbalance, upward pressure on energy prices will persist. While these discussions are ongoing, PSE and G continues to offer an enviable record of reliability, affordability and customer satisfaction. PSE and G's combined electric and gas bill still compares favorably to all other utilities in New Jersey. Our reliability metrics continue to differentiate our service and our customer satisfaction rankings are second to none.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

I would add that this last metric measures us against all of our large peers in the East, not just in New Jersey. Our regulated capital investment plan for 2025 remains focused on infrastructure replacement and modernization to ensure safe and and reliable service and to meet growing customer demand. These efforts are on track and on budget. PSE and G also began rolling out the second phase of its Clean Energy Future Energy Efficiency II program, which will help customers save energy, lower their bills and reduce carbon emissions, while supporting job training and economic growth here in New Jersey. In February, we mentioned a 12 fold increase in inquiries from large load or data center customers into

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

These numbers include both mature applications and initial leads. Our latest update now shows PSE and G experienced another quarterly increase in large load inquiries for new service connections and this pipeline now exceeds 6,400 megawatts of capacity requested as of March 31. Our engineers have been responding to these inquiries on a timely basis, still averaging about four months and our speed to response is supportive of the state objective to spur economic development. To the extent these large load prospects convert into new utility customers in the future, fixed costs are then spread over larger user base, which can help to lower existing customer bills. Turning now to PSEG Power and Other, our nuclear operations generated and supplied the grid with approximately 8.4 terawatt hours of clean and reliable baseload power and achieved a complete capacity factor of 99.9%.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Over the past quarter, there has been a lot of discussion in New Jersey about the need and potential for new generation in the region and potentially in the state. Specifically, legislation was introduced this past February that proposes to change the current New Jersey law that prohibits regulated utilities from building and owning new generation. We remain open to this possibility and we continue to work with New Jersey policymakers about this and other solutions to meet New Jersey energy needs. Regarding the ongoing discussion around the pending data center proceeding at FERC, we recently submitted PSEG's comments in support of colocation with the position that the behind the meter data center should pay for their actual use consistent with the treatment of other behind the meter customers on our system such as rooftop solar and universities. Several other large generators and data center developers have requested a ninety day settlement process, which could be a path towards timely establishment of rules for colocation.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

To recap, we are reiterating PSEG's full year non GAAP operating earnings guidance at $3.94 to $4.06 per share, which is up by approximately 9% at the $4 midpoint over our 2024 reported results. We are also reiterating PSE and G's updated five year capital spending program at 21,000,000,000 to $24,000,000,000 which supports an expected rate base CAGR of 6% to 7.5% through 2029. This in turn drives PSEG's five percent to 7% non GAAP operating earnings CAGR using the nuclear production tax credit as our reference price per power. Before I conclude, let me again thank our 13,000 employees across PSE and G, Nuclear, PS Long Island and Ed Services for their dedication and positive difference they make every day for our customers, our company and the communities where we live and work. I'll now turn the call over to Dan, who'll walk you through the results for the quarter and our outlook for the remainder of 2025 and then rejoin the call for our Q and A.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Thank you, Ralph. Good morning, everybody. PCG reported net income of $1.18 per share for the first quarter of twenty twenty five as compared to $1.06 per share in 2024. And non GAAP operating earnings were 1.43 per share in the first quarter of twenty twenty five compared to $1.31 per share in 2024. We've provided you with information on slide eight regarding the contribution to net income and non GAAP operating earnings by business for the first quarter.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

And slide nine contains a waterfall chart that takes you through the net changes quarter over quarter and non GAAP operating earnings per share also by major business. Starting with PSE and G, which reported first quarter net income and non GAAP operating earnings of $546,000,000 for 2025 compared to $488,000,000 in 2024. Utilities results were driven by the implementation of new electric and gas based distribution rates that went into effect 10/15/2024. And as Ralph mentioned, the recovery of previous capital investments totaling more than $3,000,000,000 Starting with the waterfall on slide nine, compared to the first quarter of twenty twenty four, transmission margin was $01 per share lower due to the timing of expense recovery. First quarter distribution margin increased by $0.20 per share compared to the year ago period and largely reflects the impact of the rate case, recovering return on and of our capital investments and in particular gas revenues as approximately half of our annual gas revenues are realized in the first quarter.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

And margin also benefited from recovery of energy efficiency investment. Distribution O and M expense was $05 per share unfavorable compared to the first quarter of twenty twenty four with the year over year increase driven primarily by timing as well as higher distribution operational costs due to inflation and the cold weather in January and February. Depreciation and interest expense rose by $01 per share and $02 per share respectively compared to the first quarter of twenty twenty four, reflecting growth in investment and higher interest expense. Weather during the first quarter as measured by heating degree days was four percent warmer than normal, but 13% colder than the first quarter of twenty twenty four. As a reminder, weather variations have a minimal impact on PSE and G's utility margin because of the Conservation Incentive Program or SIP mechanism.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

This decoupling mechanism limits the impact of weather and other sales variances positive or negative on electric and gas margins, while helping PSE and G promote the widespread adoption of energy conservation, including energy efficiency and solar programs. Under the SIP, the number of electric and gas customers is what drives margin and each segment grew by approximately 1% over the past year. On capital spending, as Ralph mentioned, PSE and G invested approximately $800,000,000 during the first quarter and we remain on track to execute on our 2025 regulated capital investment plan of $3,800,000,000 focused on infrastructure modernization, energy efficiency and meeting growing demand. We've maintained our five year regulated capital investment plan of 21,000,000,000 to $24,000,000,000 through 2029, representing a $3,000,000,000 increase from our previous plan, driven by reliability and resiliency investments, our expanded energy efficiency program and demand growth. As mentioned, we commenced this next phase of our energy efficiency program in the first quarter and we anticipate investing a total of $2,900,000,000 over a six year period.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

The energy efficiency program totals include approximately $1,000,000,000 of on bill repayment options to help customers finance their energy efficiency equipment and appliances. Moving to Power and Other. For the first quarter of twenty twenty five, Power and Other reported net income of $43,000,000 compared to $44,000,000 in the first quarter of twenty twenty four. Non GAAP operating earnings were $172,000,000 in the first quarter compared to $169,000,000 in the first quarter of twenty twenty four. Referring to the waterfall on slide nine.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

For the first quarter of twenty twenty five, net energy margin rose by $02 per share, driven by higher nuclear generation performance, coupled with higher realized prices due to the cold weather mentioned earlier. The weather conditions also contributed to a higher margin in our gas operations for the quarter. O and M increased by $03 per share compared to the first quarter of twenty twenty four, mostly driven by higher nuclear costs and interest expense rose by $02 per share, reflecting incremental debt at higher interest rates. Lastly, the timing of taxes recorded through an annual effective tax rate, which nets to zero over a full year and other items equally combined to have a net favorable impact of $04 per share in the quarter compared to 2024. Touching on some recent financing activity.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

As of the March, PSEG has total available liquidity of $4,600,000,000 including approximately $900,000,000 of cash on hand. While PSEG had significant available liquidity in the year end 2024 at $2,600,000,000 this represents a significant improvement as we access the bond markets at both PSE and G and PSEG during the first quarter. In total this quarter, we issued $1,900,000,000 of long term debt, which reduced commercial paper outstanding and increased cash on hand. Our liquidity position was further enhanced during the first quarter by extending the expiration of our existing $3,750,000,000 revolving credit facilities by one year to March of twenty twenty nine. PCG's variable rate debt at the March was at PCG Power consisting of a $1,250,000,000 term loan, which matures this coming June and a three sixty four day term loan for 400,000,000 which matures in December of twenty twenty five.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

As of March 31, we continue to have a low level of variable rate debt, representing approximately 7% of our total debt. On the financing front, in early March PSE and G issued a total of $900,000,000 of secured medium term notes, consisting of $400,000,000 of 5.05% medium term notes due March 2035 and $500,000,000 of 5.5% medium term notes due February. A portion of the proceeds will be used to repay $350,000,000 of 3% medium term notes due May 15. Later in March, CSEG issued $1,000,000,000 of senior notes consisting of $600,000,000 of 4.9% notes due March of 5.4% notes due March 2035. A portion of these proceeds will be used to repay $550,000,000 of 0.8% senior notes due August 15.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Looking ahead, our solid balance sheet supports the execution of PSEG's five year capital spending plan dominated by regulated CapEx without the need to sell new equity or assets and provides the opportunity for consistent and sustainable dividend growth. In closing, we delivered a solid operating and financial performance to begin the year and we are on track to deliver PSEG's full year 2025 non GAAP operating earnings guidance of $3.94 to $4.06 per share and we are also reaffirming our long term forecast of 5% to 7% compounded annual growth for non GAAP operating earnings through 2029 based upon the execution of our capital investment programs and the use of the nuclear PTC threshold as our reference price. That concludes our formal remarks. And operator, we are ready to begin the question and answer session.

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question and answer session for members of the financial community. Our first question comes from the line of Shar Pourreza with Guggenheim Partners. Please proceed with your question.

[Constantine Lednev, Vice President - Equity Research at Guggenheim Partners]

Hi, good morning team. It's actually Constantine here for Shar. Thanks for taking the questions.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Hey Constantine.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Hey Constantine.

[Constantine Lednev, Vice President - Equity Research at Guggenheim Partners]

Good morning. Maybe just starting off on the 6,400 megawatts of large load interconnection that you've noted in

[Constantine Lednev, Vice President - Equity Research at Guggenheim Partners]

the prepared remarks. Do you see

[Constantine Lednev, Vice President - Equity Research at Guggenheim Partners]

a timeline starting to form on the potential load inflection? And how is New Jersey thinking about resource adequacy with that load potential? You mentioned the legislative potential, but you envision a potential shift on gas generation policy or anything else?

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Yes, you broke up a little bit at the end there, Constantine. But I think what I heard was when do we see that load coming in at six thousand four hundred and also the how resource adequacy is being thought about in New Jersey as a result of that. Is that some yes, okay, great. So look, we have always said, take that June and you apply a factor 10%, twenty %, and we'll leave that to you all to think what the right amount is. Again, remembering for us, we're from an earnings standpoint, we're decoupled.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

So the way we think about it is more from a this good news for customers if we can spread any costs across additional megawatt hours, and that would certainly be a positive from a customer standpoint. For the timing of it, I think it's happening at different stages. We are seeing some interconnections take place already. Obviously, the ones that are a little bit larger in the couple of hundred megawatt requests we have, they still seem to be some folks that have been shopping for the best location for their particular application that they might have. But we just see that the state's economic development plan is taking hold and happy to see the amount of additional megawatts of requests that we've had come in.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

As it relates to resource adequacy, look, that's a big conversation that's taking place across the entire RTO footprint right now. And we just saw some new planning numbers come out from PJM that we have some questions about. There's an upcoming TEAC meeting. We're going to be asking some questions at that TEAC meeting regarding some of the assumptions that are in there. And the one thing that we heard from our legislators over the last week or two was to be more vocal about that.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

And you can certainly expect us to be more vocal with our questions as we move forward.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Yes. And the only the other part of your question, Constantine, is proposed legislation in New Jersey. We had some hearings last week. There's discussion of it. So I would say right now it's at the discussion point as opposed to certainly being active, but we are here and remain available as a resource to the state if they decide to take resource adequacy into their own hands through some legislation.

[Constantine Lednev, Vice President - Equity Research at Guggenheim Partners]

Understood. Appreciate that. And on the FERC two zero six with the comments that were filed last week and do you have a view on settlement process versus outright order kind of Any preferred route from your perspective? And how does that FERC process come up in your commercial discussions at all in artificial islands? And would you be able to kind of mitigate any of that through any kind of continued provisions?

[Constantine Lednev, Vice President - Equity Research at Guggenheim Partners]

Or are we kind of walking step by step there?

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Yes. So I'll let Dan I think you asked a little bit about specific conversations. So I've always given that to Dan and I'll do that again as that is being led by his team. But generically, as it relates to the proceeding down at FERC, we would always like to see a settlement, right? I mean that to me is always the best solution.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

I would love to see the industry come together and find solutions to help the tech industry out. It's pretty clear based upon some information I continue to see tech needs for generation continue to grow. And we as an industry need to find a common solution to meet that. I certainly think that in doing that, we need to make sure that we're not discriminatory in one customer class versus the other. And that has been the single concern that we've had since this process started.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

But Dan, you want to talk a little bit about?

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Yes. No, I agree with Ralph. That's I think the non discriminatory aspect is really important. I think I'll just leave the commercial aspect to just a single comment that I think that the counterparties are looking for the flexibility, the most flexibility that they can have. But right now, there's some uncertainty related to how much they will have.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

And so they're waiting on this answer whether a settlement can get us the best answer, which it seems like it's going to be more representative of what the parties are looking for. I think that that would be ideal, but they're never easy to get. So, time will tell whether we can whether we'll have one of those.

[Constantine Lednev, Vice President - Equity Research at Guggenheim Partners]

Excellent. Appreciate that. Thanks for taking the questions.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Thanks, Scott. Thank you.

[Operator]

Our next question comes from the line of Durgesh Chopra with Evercore ISI. Please proceed with your question.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Hey, Durgesh.

[Durgesh Chopra, Managing Director at Evercore ISI]

Ralph, good morning. Thank you for taking my question. Good morning, Dan. Hey, just on the commercial arrangements related to nuclear, just understand there's a lot of moving pieces and the timeline is uncertain. But just from a demand perspective and the tone from your large load customer perspective, has that changed over the last few months, maybe since February when we spoke last on earnings?

[Durgesh Chopra, Managing Director at Evercore ISI]

Has that changed? Obviously, there's a lot of news in the market. There's tariffs. We've seen Microsoft, Amazon or some of the other hyperscalers sort of pull off of some of their contracts. Just seeing if you're seeing any softness there?

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

No, I would definitely would not call it softness. I think there's still a demand for power. I think there's still a demand for that type of power. I think there's also a desire to have answers to some of the questions that remain outstanding. But I would say there continues to be interest in the nature of the power and the scarcity of the power that nuclear provides.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Durgesh, overall, that's why we included those numbers that we did in the new business activity that we're seeing. It has not slowed down. And again, maybe it's the same person calling 50 locations and asking the same question. I don't see that as the case. These are unique, at least for us, they're unique requests that are coming in.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

And I continue to be surprised and impressed by the amount that we're seeing.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

That's 10,000 megawatt peak, Priyanka, so 6,400 is not all coming in. I mean, Ralph talked about some lower percentage of that, but the requests do continue.

[Durgesh Chopra, Managing Director at Evercore ISI]

Got it. That's very helpful color. Just switching gears quickly on LiPA. Just what to expect there? I believe there are some meetings here May.

[Durgesh Chopra, Managing Director at Evercore ISI]

Do you expect a decision then? Or what are kind of the data points or dates we need to track throughout the year as this as they make a decision on whether you're going to provide services there or not?

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

So Durgesh, I got to take a half step back for you. I don't know if you're aware of the meeting that just took place at LiPA on this subject. Are you up to speed on that?

[Durgesh Chopra, Managing Director at Evercore ISI]

The one the first I think there was a what I'm up to speed on is there was a first I guess you weren't awarded the first portion of the contract and then there's the bigger contract that's still Right.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Yes. No, there was actually so over the last twenty four hours, there's been a lot of activity on this front. So let me just try to summarize for everybody on the call what's taking place. There was a recommendation made by LIFO management to select a different service provider. That recommendation was just voted down by the Board.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

That took place within the last half hour or maybe within the last hour is a better way to say that after we started this call. So we are we're just we're happy to see that we're still in consideration, but I don't know any more than that. And all I can promise to anyone who's on the call who lives on Long Island or to any customers on Long Island, we will continue to do the right thing and provide high quality service to the customers on Long Island as long as we can. So there was this flurry of activity over the last twenty four hours and that culminated in within the last hour, as I said, with a no vote from the LIFO board on the management recommendation to select a different service provider.

[Durgesh Chopra, Managing Director at Evercore ISI]

Got it. Sorry, missed that. So what do we know what the next step is here? Do they go back to the drawing board or what?

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Yes. It gets right back to what you said. On May 22, there's going to be a next board meeting and I expect that we'll hear some next steps. They went into executive session after the public session. So I would imagine that that among other things are being addressed.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

So

[Durgesh Chopra, Managing Director at Evercore ISI]

Perfect. Okay. I'll leave it there. Get back in the queue. Thanks so much.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

All right. Thank you, Zugash.

[Operator]

Thank you. Our next question comes from the line of David Artaro with Morgan Stanley. Please proceed with your question.

[David Arcaro, Analyst at Morgan Stanley]

Hey, good morning. Thanks so much.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Hey, David.

[David Arcaro, Analyst at Morgan Stanley]

Maybe on New Jersey and affordability, I was just curious if you could elaborate on your strategy or approach to managing affordability, given some of the concerns, I think stemming from PJM capacity pricing. But what are approaches that you could take to manage some of the concerns that have popped up from both the governor and the commission?

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Yes. No, I appreciate that question. Certainly, it has been a hot topic here. We look, our concern is trying to reach some consensus that helps customers over this peak that came in. We are listening to recommendations that come from the Board of Public Utilities.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

They have a couple of ideas about how they can help mitigate by through some deferral of charges to customers that are is under consideration from all the electric distribution companies here in New Jersey. We would certainly be supportive of anything that comes out from Board. There are legislators that have proposed a number of different bills. I think the most significant one would be the one that would be addressing the core problem here, which is supply. And another way to procure supply in the state, some of them in D'Angelo put a bill in to look to bring generation into the state and to open it back up to regulated utilities to have that opportunity.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Again, Dan mentioned it a little bit in the beginning. We would certainly be willing to participate in that and help find solutions for the state. We think we have some unique sites that could be helpful in meeting that, ones that have pipes and wires already to it. And obviously, we to take some different actions on the site to generate there. But we're listening to everyone.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

It's an issue that is going to face customers. And as I mentioned in the prepared remarks, it's going to hit every customer and we want to help our customers as best we can through this time. It's one piece of the affordability challenge that they're facing.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Yes. And the other things that are going on in the background, David, there's a lot of customer assistance like LIHEAP and we're making sure that customers are aware of the programs that are out there to help those in need that probably will be hit toughest from the standpoint of some of these increases. A lot of activity at the company and a lot of activity outside the company all addressing this particular issue.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

And not to mention the timing of our rollout of the energy efficiency program, which again I mentioned in the prepared remarks is very helpful on that front as well, because we can help customers use less. As I said to an earlier question from as we're decoupled, we can help the customer and be supportive without any financial impact to us as a result.

[David Arcaro, Analyst at Morgan Stanley]

Yes. Excellent. Okay, that's helpful. Thanks. And then on, I guess, your efforts to contract nuclear capacity with data centers, I was just curious where do things now stand like are your discussions and negotiations contingent on the FERC process and figuring out behind the meter colocation arrangements and frameworks or such that that timeframe is going to be important and then maybe critical to getting over the finish line here?

[David Arcaro, Analyst at Morgan Stanley]

Or are there other approaches that may not kind of have to wait for the full FERC process and potential settlement to play out?

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Yes. No, I'm going give that to Dan to give you any details he wants. I think he addressed a bunch of what you said before. But look, we think deferred process is helpful to show that the industry as a whole is meeting the needs. And again, I would encourage us to reach a settlement on that front so that we can show solidarity in meeting the customers' needs here and that customer being the technology companies that are so thirsty for generation.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

But Dan, you want to add anything The

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

simple answer is

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

no. It is not contingent upon that. I think it's helpful to have that move forward, but the simple answer is no.

[David Arcaro, Analyst at Morgan Stanley]

Okay. Got it. Thanks so much. I'll leave it there.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Thanks, David.

[Operator]

Thank you. Our next question comes from the line of Nick Campanella with Barclays. Please proceed with your question.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Good morning, Nick.

[Nicholas Campanella, Director at Barclays]

Hey, good morning. Thanks for that real time update on LIFO. That was impressive. Hey, I just wanted to follow-up on the prior line of questioning just in regards to the commercial agreement. And we kind of talked about this prior just being maybe a more realistic opportunity for 2025.

[Nicholas Campanella, Director at Barclays]

And just given everything that's transpired, can you I just wanted to be clear, like do you still see executing on a nuclear deal in 2025 as still on the table before the governor leaves office in your mind?

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Yes, no change, Nick. We are still what we've been saying with respect to how we are progressing and what we're doing is still where we are today.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Yes. And I don't have a real time update for you other than to tell you the following from the governor's standpoint. He is on another economic development mission in The Middle East and is talking about continued attraction of technology jobs to the state. So I'll get an update on that as that progresses and there's some news reports about what he's doing, but he is working until his last day here and one of the topics is to continue to attract technology companies.

[Nicholas Campanella, Director at Barclays]

Okay. That's helpful. And then just maybe remind us on like the quantum of megawatts that could potentially be part of a commercial agreement. Would you be open to doing more than a third of it at this point? Just trying to take your temperature on that.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Yes. There's not a target number, but I would say that there's no restriction on anything that we have within the portfolio to the extent that there's interest related to some kind of a commercial agreement.

[Nicholas Campanella, Director at Barclays]

All

[Nicholas Campanella, Director at Barclays]

right. Thanks. See you at AGA.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

See you then.

[Operator]

Thank

[Operator]

you. Our next question comes from the line of Jeremy Tonet with JPMorgan. Please proceed with your question.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Hey, Jeremy.

[Jeremy Tonet, Equity Research Analyst, Executive Director at JP Morgan]

Hi. Good morning.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Good morning.

[Jeremy Tonet, Equity Research Analyst, Executive Director at JP Morgan]

Just

[Jeremy Tonet, Equity Research Analyst, Executive Director at JP Morgan]

maybe building a little bit on prior comments here and appreciating PJM's color for the next capacity auction. How do you think about the potential capacity price outcome in the next auction as it relates to customer bill growth at this point? And do you see the price forward carries enough substance to incent ongoing investments in capacity supply? Just any other thoughts on the market there?

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Well, look, I'll we'll tag team this one again. I would say a couple of things. I'll turn around and make the comment. I've seen a bunch of reports that would indicate that the price that we could expect would be on the northern side of that collar and from a range standpoint, somewhere between the midpoint and the top, I think is what we continue to see in the consensus of documents that I've read. We have an internal opinion.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

We really don't talk about that. But I would say, turn it back around and mention what I've read from others. The good news from that standpoint for our customers, if there is good news in this, is that the because we have rolled in three years' worth of capacity increases because we had that proxy price in the BGS auction before, we would not expect to see a large increase for customers in the forward years as a result. So that's a positive. What's a negative is the prices are not coming down if that if those projections are right.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

It would kind of keep it in that same range, some percentage up or down, but not the double digit increases that we've all seen here in New Jersey. And again, that was a combination of delays at PJM and the capacity market as well as a lack of generation, which gets to your second question, which is do we think at those prices and Jeremy, I'd be way in front of my skis on that since we're not in the merchant generation business at the moment here and don't expect to be ever again in the merchant generation business. We have not done a lot of homework on costs and how that would wind up playing out and with tariff increases and so on. So look, if we have an opportunity to do something to rate base, I'll be able to answer that question in a lot more detail. But Dan, you want to add anything?

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

No. I'll just add two things. On your last point, the concept of bullet prompt incremental generation, honestly, it's less about the price and more about the duration and the timeframe that you're talking about. So, given the periods that the auction covers and given the timeframe that it takes to build something new, the price that they're putting out is not something that you're going to get if it prompts you to build a new unit. So I think the timing continues to be the challenge at PJM.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

And then just kind of maybe pile on what Ralph talked about before with respect to the overall pricing and customer bill. The BPU set up a good process so that you could gradually see changes over time. That good process was it kind of lost some of its benefits by virtue of PJM's delays in the capacity auction. So that proxy price amplified the effect of a price move because there was a catch up. We're still not caught up with respect to timing of capacity auctions.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

And so that proxy price, which was in the last go round, the previous auction, as we move forward is currently the previous auction. So that proxy price is the $270 price we saw last time. And so for us, we don't expect to see a big move by virtue of whatever happens within this auction is because we're sitting at that higher proxy price. So, there could be smaller moves, but nothing the magnitude of what we've seen And the collar surrounds that $270,000,000 So as Ralph said, it probably leaves you closer to where we are now, but without another jump like we are addressing right now within the state.

[Jeremy Tonet, Equity Research Analyst, Executive Director at JP Morgan]

Got it. That's helpful context there. Thank you for that. And maybe pivoting to offshore wind and fully appreciating that Peg has exited offshore wind, but maybe just any thoughts as far as recent frictions offshore wind that we're seeing today? And how you think that impacts maybe the transmission planning opportunity set?

[Jeremy Tonet, Equity Research Analyst, Executive Director at JP Morgan]

Are there any knock on effects to you guys that we should think about?

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Well, no knock on effects for us to the East Of New Jersey because we did not have anything in the plan as we've spoken about quite a bit. Maybe opportunities now to the West depending upon how we solve for the resource adequacy concerns and the capacity. I think, look, we again, I'm going to be a little bit repetitive here. We have to be very loud about any concerns that we have regarding that process and parameters that exist because five years from now, we'll be dealing with the results of it. So it's pretty clear to us to help customers.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

We need to either build more wires or build some generation in the state. And it's important to have the accurate parameters built into the PJM process now so that we get it right in the out years.

[Jeremy Tonet, Equity Research Analyst, Executive Director at JP Morgan]

Got it. That's helpful. I'll leave it there. Thank you.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Thanks, Jeremy.

[Operator]

Thank you. Our next question comes from the line of Julien Dumoulin Smith with Jefferies. Please proceed with your question.

[Julien Dumoulin-Smith, II-Ranked & 'Hall of Fame' Research Analyst covering Power, Utilities & Clean Energy at Jefferies]

Hey, good morning team. Good to chat with you guys again. Hey, pleasure. Hey, so just following

[Julien Dumoulin-Smith, II-Ranked & 'Hall of Fame' Research Analyst covering Power, Utilities & Clean Energy at Jefferies]

up on this affordability area, I'd love to hear a

[Julien Dumoulin-Smith, II-Ranked & 'Hall of Fame' Research Analyst covering Power, Utilities & Clean Energy at Jefferies]

little bit more specifically. I know you guys alluded to kind of guiding customers as to what's out there. But just want to make sure I'm hearing from you guys right, especially as you think about proposals and trying to assuage concerns out there. I mean, what would you say specifically you all bring to the table or would potentially bring to the table in a long term and short term sense here? I mean, I just wanted to understand the scope of how far this affordability narrative is going in the state and what you're hearing from the stakeholders, whether it's the governor or BPU on this?

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Yes. Look, again, this is, I think what we're hearing Julian is what the whole country is hearing. Affordability is a concern and it goes from eggs to energy. So from our standpoint, we want to do our part. And the conversation here in New Jersey was magnified quite a bit by everything we just talked about with the inadequacy of the PJM capacity market process being delayed as long as it was and having this compounding effect.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

So we can't change that. That's a governance issue that PJM needs to deal with and they'll do what they need to do. But what we can do is what we've been trying to do at PJM, which is advocate for some stability, so we don't have this happen again. That's a long term solution. I think another long term solution is to get more generation, more supply that could show up as new generation in the state.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

We've talked a lot about the fact that we'd be more than willing to do it in rate base. If we can play a role there and be helpful, we'll certainly do that. And of course, it could show up by new wires being built and bringing in generation from another location. What I hear from policymakers in the state is that they would like to have more control over their destiny. And that would lead me to believe that we would want to have more generation in the state.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

But those conversations are ongoing and you've seen some of that in the press. What we can do in the short term is three things, right? We can help from an affordability standpoint, providing customers with access to some of these programs that are out there, assistance programs. We can help with energy efficiency, just continue to help people use less. And we've talked about that quite a bit over the years.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

And the new thing that was an idea that was put forth by the BPU was to try to get more people on a plan that would levelize the cost over a twelve month period. We have a program called the equal payment plan. This would be a little bit different than that, but not very different as I currently read it. It would be more of a short term solution so that customers are still incented to lose use less electricity in the long term and that count on an equal payment plan. So that's a policy decision that will be continue to be discussed at the Board.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

But we have said and we want to be part of the solution and we've always been that way in the state and I don't see that being any different. So whether it's the long term, the rules, the supply or the short term where we're trying to help customers out and in the three ways that we mentioned, we're going to be here as best we can.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

And on that short term item two, kind of an obvious statement, Julien, but our energy year starts June 1. So you'll see volume increases at the same time you're starting to see that price increase. And so part of that design and part of that thinking is take this thing out of the summer months.

[Julien Dumoulin-Smith, II-Ranked & 'Hall of Fame' Research Analyst covering Power, Utilities & Clean Energy at Jefferies]

Yes, absolutely. And guys just to clarify here real quickly on LiPA, you guys have commented that you see offsetting potentially this headwind to the extent of which you may or may not get it. Would that be effective here as soon as the start of next year as far as your ability to offset the full ramp, right, the $06 to $08 ballpark that we're talking about here?

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Yes. Well, it's not that high. I think we've been saying $05 to $06 but I won't get into back and forth on that. I think that look, first of all, it's immediate, we would have to manage costs. And any of the costs that were associated with LIFO, we would have to remove those costs and there's multiple ways to do that.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

And then on the revenue side, we're always looking for other opportunities and we always have oars in the water on that front. And I would hope that we could bring one or two of those opportunities we're looking at to fruition in a timely enough fashion to offset it. So that's the goal here and that's why we're confident that we'd be able to offset it and remain with our earnings projections that we've put out there to five to seven

[Julien Dumoulin-Smith, II-Ranked & 'Hall of Fame' Research Analyst covering Power, Utilities & Clean Energy at Jefferies]

Got it. All right. Excellent guys. Thank you so much. Appreciate it.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Thanks, Thank

[Operator]

you. Our next question comes from the line of Carly Davenport with Goldman Sachs. Please proceed with your question.

[Carly Davenport, Analyst at Goldman Sachs]

Hey, good morning. Thanks for taking the questions.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Carly.

[Carly Davenport, Analyst at Goldman Sachs]

Hey, just a follow-up on the large load pipeline comments from earlier. Any indications you can share on the breakdown of that 6,400 megawatts in terms of what are more geared towards initial applications versus those that are more mature in the process?

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Yes. Carly, we it continues to morph as you go through time, right? You'll have some drop off, you'll have some come on in. But we've generally characterized the number as trying to do two things. The first thing we're trying to do is give an indication of total interest that has come forward, while at the same time also trying to bring some reality to it because we've said as a 10,000 megawatt peaking system, we don't expect 6,400 megawatts to come on.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

And so Ralph mentioned earlier, 10% to 20. I think we continue to try to do some guesswork. Obviously, you don't know when someone starts to initiate an interest exactly where they're going to go. But as time goes on, their continued interest, how far they go in the process, how often they communicate and what they're doing gives us some sign that we can get some kind of a gauge as to which are going to be more likely and which are not. And so, I don't know if you're in that 10% to 20%, twenty five %, somewhere within there, I think is a reasonable expectation as to what's going to come forward.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

And that's also used for planning purposes. We don't plan our system around 6,400 megawatts coming onto the system. We plan for a subset of that based upon that experience. And so it's probably in that ballpark. It's an imperfect estimate, but it is an estimate.

[Carly Davenport, Analyst at Goldman Sachs]

Got it. Okay. Very clear. That's helpful. Thank you.

[Carly Davenport, Analyst at Goldman Sachs]

And then maybe just as you think about the current five year capital plan, any color you can provide in terms of where you see potential exposure on the tariff front and any risk mitigation tactics that you see as necessary there?

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Carly, I don't want to completely dismiss it because what we don't know, we don't know. But I am very comfortable that we do not have any real problems around the quarter because of the type of work that we are planning over the near term, right? It's kind of the very straightforward replacement activities that we have in that last mile. We are not planning on large transmission projects in this cycle. We're not planning on that.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

We have a little bit of substation and switching station work to do, but no major efforts like we had after Superstorm Sandy. So since that major work is behind us, large project risk is behind us and we're really focused on this last mile activity. And the only project that we have of any magnitude is the Maryland project. And I've had no indications yet that we have any supply chain concerns on that front.

[Carly Davenport, Analyst at Goldman Sachs]

Great. Thank you so much.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Thanks, Carla.

[Operator]

Thank you. Our next question comes from the line of Michael Sullivan with Wolfe Research. Please proceed with your question.

[Michael Sullivan, Director - Equity Research at Wolfe Research]

Hey, Michael. Hey, Ralph. I know you kind of just hit this in one of the recent questions just in terms of short term and long term solutions. But do you think the short term solutions are sufficient enough to kind of tamp down some of the political rhetoric here just given like the long term solution, how long term are we talking? Like if you were able to bring regulated generation online, how long would that take?

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Yes, Michael, I don't want to front run something that isn't there yet. So it'll be hard pressed to say that. I would simply be thinking about this way. We're seeing five to six year lead times on some of the turbines. And you could call that four, you could call it eight, depends upon who you talk to, but I'll say five to six on that front.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

So what we need is we need the decision to pay. You know by law, we cannot move into this area right now because of ADECA. And if the law has changed in the state of New Jersey, we will be there for the customers and for the policymakers. So it's a little bit of the chicken and the egg, when does the law get changed and then when do we actually get to place orders to try to find some solutions. That's so to give you a timeline when we could actually have additional supply on the system would be, I think, disingenuous on my part to do that.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

So I think what we're doing in the near term is the best we can do with the cards that were dealt. And I say we, the state of New Jersey, we're all working together on this, the policymakers and the companies.

[Michael Sullivan, Director - Equity Research at Wolfe Research]

Okay. Understood. And just kind of tied to that, just wanted to get your thoughts on the governor's challenge of the previous PJM auction results and how that factors into the dynamic?

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Yes. Look, I think

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

policymakers are rightfully concerned about the spike that they saw. And so I think you're seeing questions get asked in a number of different ways by a number of different policy leaders. We've had some assembly leaders, some senate leaders here in the state asking those questions, either in public hearings or by sending letters as well. So it's not a surprise. This is something you would expect leadership to do is to ask some questions when you have something like this take place.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

What took place here, as I think we've said multiple times is we've had this governance challenge that has caused the three year all three of these auctions to pile up on top of each other. And as a result, the customers have seen the spike.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Mean, they're going to Michael, they're

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

going to do their investigation. They're going to find out what they find out. We're not aware of anything that's problematic, but I think there's nothing wrong with that check going on just to validate what has happened.

[Michael Sullivan, Director - Equity Research at Wolfe Research]

Okay. That's all. And just last one, just back to the long term solutions, is regulated generation in New Jersey the only solution that's being considered? Or are there any other that we should

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

No, no,

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

no. I think look, I think there's three solutions, right, we've talked about. And I say generation without picking a source or technology. You could the first is you could have rate base, which I mentioned. The second is you could have you could somehow incent a competitive generator to site here.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

And the third is you can import. I mean, that is the simple way we think about it. Any imports, we're going to probably need some bigger wires or more wires if we go that route. Again, we'd be in the state. If we come up with a solution for a competitive generator, we will be there from an interconnection standpoint.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

We've been very vocal about the fact that we've been very responsive to those types of requests as they come in regardless of the technology. And if it becomes a regulated solution, we think we have a couple of sites that might make some sense for us. So we just look forward to the continuing conversation and try to push it so we can avoid this can't get kicked too far.

[Michael Sullivan, Director - Equity Research at Wolfe Research]

Very helpful. Thank you.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Thanks.

[Operator]

Thank you. Our next question comes from the line of Bill Apicelli with UBS. Please proceed with your question.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Hey, Bill.

[Bill Appicelli, Executive Director, Head of North America Power & Utilities Research at UBS Group]

Hi, Just one quick question here. Just going back to something Dan said earlier about the commercial opportunities and flexibility being key. I mean, just maybe a little bit more color around what that means? Is that flexibility around being on grid or the time line of how quickly things can ramp?

[Bill Appicelli, Executive Director, Head of North America Power & Utilities Research at UBS Group]

I mean, what exactly is sort of the flexibility aspect they're looking for?

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Well, this is a follow-up on something Dan said. I'll let Dan answer it.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

Yes. Look, just think about trying to strike a commercial deal when there is uncertainty around rules that are going to be met urgently and that work continues to go on and on and on. And so I think really just trying to get in line how this is going to work and how it can work and what the optionality is with respect to how you would interconnect. It's nothing more complicated than that. And we've said before, given where we are and given the transmission rates where we are, it is not as critical as it is in some other areas.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

But I think all parties would prefer a situation where they have all the rules and they know exactly what they're dealing with. And I think it's taken us a long time as an industry and as the regulators within the industry to come to that final answer. Now, we had a question before about settlement. And I think that would be a great answer because it would be the participants that are actually devising where things are going to go that would ultimately get approved. But that doesn't happen overnight either.

[Daniel Cregg, EVP & CFO at Public Service Enterprise Group]

And so I think there's a general desire to move more quickly and get this done, but it's lingered for a while. So that's really all it is. Bill is trying to solidify exactly what the landscape is that we're working at.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Yes. And Bill, would just say, look, if you think about where we have our generation right now, we can satisfy a bunch of things, whether it's redundancy, accessibility, extra capacity, location and I could go on and on. So we still feel very, very good about the opportunity set that's in front of us.

[Bill Appicelli, Executive Director, Head of North America Power & Utilities Research at UBS Group]

Okay. Then just lastly on what are you guys seeing on the adoption for demand response, right?

[Bill Appicelli, Executive Director, Head of North America Power & Utilities Research at UBS Group]

That's obviously been something that's been gotten more attention here as the price signals has gone up. Is that something you're seeing an increasing level of interest in from your customers?

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Yes. I think you see it in a couple of different ways, right? But we don't have as much as you might hear from other companies because of the low industrial load that we have.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

From a residential standpoint, we do see it. We see

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

it show up from mostly in that case from

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

a thermostat standpoint and from some pools that are not running and so on at certain times. And that has continued in our energy efficiency programs that we talk about all the time address exactly that issue for mostly again, mostly the residential customers.

[Bill Appicelli, Executive Director, Head of North America Power & Utilities Research at UBS Group]

Okay. All right, great. Thanks very much.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Thanks, Bill.

[Operator]

Thank you. And there are no further questions at this time. I would like to turn the floor back to Mr. LaRosa for closing comments.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

Well, thank you so much. Listen, I think the conversation has rightfully been a lot today around affordability and what customers are facing. And again, we are not depth to that issue. We know what's going on around kitchen tables. And that's because of the 13,000 employees that we have here who are not only doing the job that they do day in and day out, but are those people that are having those same conversations around the table regardless of the cause of the affordability challenges they might be having.

[Ralph LaRossa, Chair, President & CEO at Public Service Enterprise Group]

So we're very well aware of that. We're going to be here to be a solution provider to the state and we hope to continue to be a solution provider to the people of Long Island as well as we've discussed. So we appreciate all of your interest and we will see you at AGA in May. Thanks for calling in.

[Operator]

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

Participants

Executives

• Carlotta Chan, Investor Relations
• Ralph LaRossa, Chair, President & CEO
• Daniel Cregg, EVP & CFO

Analysts

• Constantine Lednev, Vice President - Equity Research at Guggenheim Partners
• Durgesh Chopra, Managing Director at Evercore ISI
• David Arcaro, Analyst at Morgan Stanley
• Nicholas Campanella, Director at Barclays
• Jeremy Tonet, Equity Research Analyst, Executive Director at JP Morgan
• Julien Dumoulin-Smith, II-Ranked & 'Hall of Fame' Research Analyst covering Power, Utilities & Clean Energy at Jefferies
• Carly Davenport, Analyst at Goldman Sachs
• Michael Sullivan, Director - Equity Research at Wolfe Research
• Bill Appicelli, Executive Director, Head of North America Power & Utilities Research at UBS Group