Earnings call transcript: PSEG beats Q2 2025 forecasts, stock dips pre-market

Public Service Enterprise Group Inc (PSEG) reported its second-quarter 2025 earnings, surpassing analyst expectations with an earnings per share (EPS) of $0.77, compared to the forecasted $0.71. This resulted in an EPS surprise of 8.45%. Revenue also exceeded predictions, reaching $2.8 billion against the expected $2.48 billion, marking a 12.9% surprise. With a market capitalization of $43.8 billion, PSEG maintains a "GOOD" financial health score according to InvestingPro analysis. Despite these positive results, PSEG’s stock saw a pre-market decline of 0.6%, reflecting a broader market trend or investor sentiment.

Key Takeaways

• PSEG’s Q2 2025 EPS of $0.77 exceeded forecasts by 8.45%.
• Revenue hit $2.8 billion, beating expectations by 12.9%.
• Pre-market stock price fell by 0.6%, despite strong earnings.
• PSEG reaffirmed its 2025 earnings guidance of $3.94 to $4.06 per share.
• Investments in clean energy and infrastructure continue to be a focus.

Company Performance

PSEG demonstrated robust performance in Q2 2025, with net income per share increasing to $1.17 from $0.87 in the same quarter last year. The company’s commitment to clean energy and infrastructure improvements is evident, as it invests heavily in projects like the Clean Energy Future Energy Efficiency program and nuclear plant upgrades. The growth in net income from PSEG Power and Other segments highlights the company’s strong position in the energy sector.

Financial Highlights

• Revenue: $2.8 billion (12.9% above forecast)
• Earnings per share: $0.77 (8.45% above forecast)
• Net income: $332 million for PSE&G, $253 million for PSEG Power and Other
• Total available liquidity: $3.6 billion

Earnings vs. Forecast

PSEG’s earnings per share of $0.77 beat the forecast of $0.71 by 8.45%, a significant surprise that underscores the company’s operational efficiency and strong market position. Revenue also surpassed expectations by 12.9%, reaching $2.8 billion compared to the anticipated $2.48 billion.

Market Reaction

Despite the positive earnings report, PSEG’s stock experienced a pre-market decline of 0.6%, trading at $89.6. According to InvestingPro analysis, the stock’s RSI indicates overbought territory, while trading patterns show historically low volatility. This movement may reflect broader market trends or investor caution, as the stock remains below its 52-week high of $95.22. The stock has delivered a solid 20.2% return over the past year.

Outlook & Guidance

PSEG reaffirmed its 2025 non-GAAP operating earnings guidance, projecting earnings between $3.94 and $4.06 per share. Analyst consensus shows mixed sentiment, with a moderate buy recommendation and price targets ranging from $70 to $103. The company continues to focus on significant capital investments, with a five-year spending plan of $21-24 billion, and anticipates a rate base compound annual growth rate (CAGR) of 6-7.5% through 2029. Get comprehensive analysis and detailed financial metrics with the PSEG Pro Research Report, available exclusively on InvestingPro.

Executive Commentary

CEO Ralph LaRosa emphasized the company’s commitment to balancing customer needs with affordability. He stated, "We are here for our customers, but we also know that there’s challenging times from an affordability standpoint." LaRosa also highlighted the company’s adherence to its guidance, saying, "We have not come off of the fact that our guidance remains at the PTC floor with our 5 to 7%."

Risks and Challenges

• Market volatility affecting stock performance.
• Regulatory changes in the energy sector.
• Potential delays in infrastructure projects.
• Economic pressures impacting customer affordability.
• Competition in the clean energy market.

Q&A

During the earnings call, analysts inquired about potential legislative solutions for generation build in New Jersey and explored opportunities in data centers and large load inquiries. The company also addressed challenges in the PJM capacity market and discussed possible governance changes.

Full transcript - Public Service Enterprise Group Inc (PEG) Q2 2025:

Rob, Event Operator: Ladies and gentlemen, thank you for standing by. My name is Rob, and I’m your event operator today. I would like to welcome everyone to today’s conference, Public Service Enterprise Group’s Second Quarter twenty twenty five 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.

As a reminder, this conference is being recorded today, 08/05/2025, 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 call over to Carolina Chan. Please go ahead.

Carolina Chan, Investor Relations, PSEG: Good morning, and welcome to PSEG’s second 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.

We include reconciliations of our non GAAP financial measures and disclaimer regarding forward looking statements on our IR website and in today’s material. 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 LaRosa, Chair, President and CEO, PSEG: Thank you, Carlotta, and thanks to all of you for joining us this morning to review PSEG’s second quarter twenty twenty five results and to discuss our outlook for the business over the rest of the year. PSEG delivered another quarter of solid operating and financial performance and PSE and G is on track to execute on its full year $3,800,000,000 regulated investment program to maintain reliability. PSE and G also benefited from a full quarter of regulatory recovery of and on over $3,000,000,000 of previously invested capital, which was approved in October 2024 settlement of our electric and gas distribution base rate case. PSEG’s results also reflect the positive impact of higher output from our nuclear generating fleet which benefited from the absence of a Spring Hope Creek refueling outage experienced last year. During the past quarter, we also continued to prioritize meeting our customers’ expectations on both the reliability and affordability fronts.

In late June, we successfully operated through three consecutive days of 100 degree plus temperatures prompting high electricity usage that set a summer peak load of 10,229 megawatts on June 24, the highest system load we have experienced since 2013. The value of our infrastructure resilience and storm restoration efforts benefited customers during a series of intense heat, wind, and rainstorms providing yet another validation of our investments in the system to maintain reliability, which also improves the customer experience. Our utility crews in New Jersey and on Long Island are working tirelessly to safely keep the lights on, restoring service to interrupted customers on a timely basis, redirecting employees from nonemergency work to focus on emergent service requests, and deploying mutual aid to reinforce our local crews to restore service to customers even faster. During the four day heat storm in June, PSE and G crews restored service to 99% of storm interrupted customers within twenty four hours. I could not be more proud of our team’s work and these results.

Turning to our affordability focus, given the warmer than normal summer thus far, higher electricity usage is expected to result in higher customer bills. In addition, our customers are seeing the electric rate impact of last year’s PJM capacity auction, which is just now translating into summer utility bills. PSE and G has responded by partnering with the New Jersey Board of Public Utilities to implement initiative, providing all residential customers with deferred billing during two high usage summer months, shifting collection of the deferral to lower electric usage months with no interest charged to customers. The utility has also extended shutoff protections for income qualified residential customers and suspended electric reconnect fees through September 30. In addition, PSE and G is processing two sets of upcoming state funded residential energy assistance payments that will also reduce eligible customer bills.

We also continue to connect our customers in need of payment assistance with all available resources, including our award winning energy efficiency programs to help lower usage. Last month, PJM released the results of his latest capacity auction, which priced within a FERC approved price collar at $329 per megawatt day for the twenty twenty six to twenty twenty seven energy year. Despite this latest increase in capacity prices, we anticipate a near flat impact on customer electric bills when this latest price is feathered into the BGS supply rates in June 2026. This assumes other supply related costs remain the same, preserving the reduction from other charges expected to come off the bill. As we’ve discussed on prior calls, the resource adequacy challenges in New Jersey and across the entire 13 state PGM region are becoming more acute as we see both growing demand and new supply slow to respond.

Recent reports reflected increasing amount of new large load applications that are quickly eroding existing reserve margins. Within the confines of PJM, it’s hard to see the path to new generation through existing market signals, which may require the consideration of a new approach to procuring capacity and resource planning. In New Jersey, the legislature convened on June 30 having held a series of hearings on energy affordability in advance of the PJM capacity related summer rate increases. Legislation introduced this past March, Assembly Bill fifty four thirty nine could enable regulated utilities to be among those companies able to compete for potential generation projects should New Jersey decide to build or pursue new in state generation. New Jersey remains a net importer of power and during the June heat storms imported nearly half of its electric needs from out of state.

Abundant excess generation capacity to our west that for many years made power imports a convenient option is quickly being absorbed by rapid growth of native load in those states. In New Jersey, policymakers have begun to actively weigh the priorities of economic growth with system reliability and affordability and the state’s environmental policies. In fact, today, the BPU is conducting a technical conference on resource adequacy, focusing on the recent PJM capacity auction results and state driven solutions. We look forward to partnering with New Jersey and regional stakeholders to develop policy consensus on long term comprehensive solutions that can meet our growing demand and improve resource adequacy while safeguarding affordability and reliability to meet New Jersey’s energy needs. While these conversations continue, our $3,800,000,000 regulated capital investment plan for 2025 is focused on infrastructure replacement and modernization to ensure safe and reliable service and to meet growing customer demand.

These efforts are on track and on budget. As mentioned last quarter, PSE and G began the second phase of its Clean Energy Future Energy Efficiency two program, which will help customers save energy, lower their bills, and reduce carbon emissions while supporting job training and economic growth right here in New Jersey. Speaking of economic growth, as of June 30, PSE and G’s pipeline of large load inquiries for new service connections grew to over 9,400 megawatts, up 47 from 6,400 megawatts reported as of March 31. And as I stated previously, these numbers include both mature applications that we refer to as new business, approximately 2,600 megawatts of the total, which has gone up by 40% since March 31, as well as feasibility studies and initial leads. Our engineering assessment turnaround is still averaging about four months and this response time is supportive of the state’s 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 a larger user base which can help to lower existing customer bills. Turning now to PSEG Power and Other, our nuclear units generated and supplied the grid with approximately 7.5 terawatt hours of carbon free baseload power and achieved a fleet capacity factor of 88.8% for the second quarter, lowered by the scheduled refueling outage at Salem Unit 1. During this fall’s refueling outage, PSEG nuclear will perform the work needed to extend Hope Creek’s fuel cycle from eighteen to twenty four months. This is the first of several steps we are taking to optimize our plants, providing the grid with more reliable 24 by seven carbon free power between now and Hope Creek’s next scheduled refueling outage in the 2027. In addition, our Salem upgrade project will bring approximately 200 megawatts or the size of a small modular reactor of incremental carbon free dispatchable power during the 2027 to 2029 timeframe.

We were also pleased that federal tax legislation passed in July preserved the downside price protection from the nuclear production tax credit or PTC as well as the PTC availability for expansions of nuclear capacity which supports the planned power upgrade at Salem. In addition, the legislation permanently extends 100% bonus depreciation to qualified business property. To summarize, we had a good 2025, which provides us with a solid base to confidently deliver on our full year 2025 non GAAP operating earnings guidance of $3.94 to $4.06 per share, which is up 9% at the midpoint over 2024 results. Our 2025 guidance includes a full year of new distribution rates from our 2024 base rate case settlement which was reached last October, as well as an upcoming refueling outage at our 100% owned Hope Creek nuclear unit this fall. In closing, 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 5% to 7% non GAAP operating earnings CAGR while continuing to use the nuclear PTC as our reference price for power. PSEG intends to execute this capital plan without the need to issue new equity or sell assets. I will now turn the call over to Dan who will walk you through the results for the quarter and our outlook for the remainder of 2025. And then I’ll rejoin the call for Q and A.

Dan Craig, Executive Vice President and CFO, PSEG: Great. Thanks, Ralph. Good morning, everybody. TCG reported net income of $1.17 per share for the 2025 compared to $0.87 per share in 2024. And non GAAP operating earnings were $0.77 per share in the 2025 compared to $0.63 per share in 2024.

These solid results were up over 20% from last year’s second quarter reflecting the benefit of new distribution rates which were placed into effect at PSE and G in October 2024 and higher generating volume at PSE and G Power which reflects the absence of last spring’s Hope Creek refueling outage which will take place this fall raising O and M and lowering output in the 2025. We’ve provided you with information on Slides eight and ten regarding the contribution to net income and non GAAP operating earnings by business for the second quarter and 2025. Slides nine and eleven contain waterfall charts that take you through the net changes for the quarter and year to date periods over the prior year and non GAAP operating earnings per share, also by major business. Let’s start with PSE and G, which reported second quarter net income and non GAAP operating earnings of $332,000,000 for 2025 compared to $3.00 $2,000,000 in 2024. For the year to date ended June 30, PSE and G reported net income and non GAAP operating earnings of $878,000,000 in 2025 compared to $790,000,000 in 2024.

Utilities results were driven by the implementation of new electric and gas based distribution rates that went into effect last October to recover a return of and on previous capital investments totaling more than $3,000,000,000 Beginning on Slide nine with the PSE and G column, transmission margin was $01 per share higher compared to the year ago quarter on higher investment and a prior year true up. Our distribution margin increased by $0.10 per share compared to the year ago period largely reflecting the impact of the rate case plus recovery of and on PSE and G’s regulated energy efficiency investment. On the expense side, distribution O and M costs were $0 per share favorable compared to the 2024, though for the full year distribution O and M is expected to be higher versus the prior year. Both depreciation and interest expense each rose $02 per share compared to the 2024, reflecting higher levels of depreciable plant, investment and long term 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, had a net unfavorable impact of $02 per share in the second quarter compared to the prior period, reversing a positive $02 per share impact in the 2025.

Weather conditions during the second quarter as measured by the temperature humidity index were 21% warmer than normal but 14% cooler than the 2024. As you know, the Conservation Incentive Program or SIP mechanism decouples weather and other economic sales variances from a significant portion of our distribution margin 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 the primary driver of distribution margin and each segment grew by approximately 1% over the past year. On the capital front, as Ralph mentioned earlier, PSE and G invested approximately $900,000,000 during the second quarter and we are on track to fully execute our 2025 regulated capital investment plan of $3,800,000,000 focused on infrastructure modernization, energy efficiency and meeting growing demand. And we have maintained our five year regulated capital investment plan of $21,000,000,000 to $24,000,000,000 through 2029.

We began the next phase of our energy efficiency program during the 2025 and we anticipate investing up to $2,900,000,000 over a six year period. The energy efficiency program total includes approximately $1,000,000,000 of on bill repayment options to help our customers finance their energy efficiency equipment and appliances and provides customers with energy information and options to manage their energy use and lower their bills. Moving on to PSEG Power and Other. For the second quarter PSEG Power and Other reported net income of $253,000,000 in 2025 compared to $132,000,000 in 2024 and non GAAP operating earnings were $52,000,000 in the 2025 compared to $11,000,000 in the 2024. For the year to date ended June 30, PSEG Power and Other reported net income of $296,000,000 in 2025 compared to $176,000,000 in 2024 and non GAAP operating earnings of $224,000,000 in the 2025 compared to $180,000,000 for the 2024.

Referring again to the waterfall on slide nine for the 2025, net energy margin rose by $04 per share driven by higher nuclear generating output. O and M was $03 per share favorable compared to the 2024 driven by the absence of last spring’s Hope Creek refueling outage. Interest expense rose by $02 per share reflecting incremental debt at higher interest rates. Taxes and other were $03 per share favorable compared to the 2024 in part due to the use of a lower annual effective tax rate in 2025 that will reverse over the balance of the year. On the operating side, the nuclear fleet produced approximately 7.5 terawatt hours during the second quarter, up by 0.5 terawatt hour over the same period in 2024 and reached 15.9 terawatt hours for the first half of this year, both benefiting from the absence of last spring’s Hope Creek refueling outage.

Capacity factors for the nuclear fleet were eighty eight point eight percent and ninety four point three percent for the quarter and six month period ended 06/30/2025 respectively. In late July, PSEG nuclear cleared approximately 3,500 megawatts of its eligible nuclear capacity in PJM’s base residual option at $329 per megawatt day for the energy year beginning 06/01/2026 through 05/31/2027. This latest result is up from $270 per megawatt day for a similar amount of capacity in the twenty twenty five-twenty twenty six PJM capacity auction. For the second half of twenty twenty five, results at PSEG Power and other will be impacted by this fall’s scheduled Hope Creek outage and the completion of the three year zero emission certificate award that ended on May 31, which will offset higher capacity revenues related to the twenty twenty five-twenty twenty six auction results in the back half of this year. Touching on some recent financing activity.

As of June 30, PSEG had total available liquidity of $3,600,000,000 including $186,000,000 of cash on hand. On the financing front, PSEG Power issued $1,000,000,000.2 of senior unsecured debt this past May consisting of $750,000,000 of five point two percent five year notes due 2,030 and $500,000,000 of five point seven five percent ten year notes due 02/1935. The proceeds from this sale were used to repay the $1,000,000,000.2 variable rate PSEG Power term loan that was scheduled to mature in June. PSEG’s variable rate debt at the June consisted of a three sixty four day term loan at PSEG Power for $400,000,000 which matures in December 2025 and commercial paper. As of June 30, following the redemption of the PSEG Power $1,000,000,000.02 variable rate term loan in May, Our level of variable rate debt represents approximately 3% of our total debt.

In July 2025 federal tax legislation preserved the downside price protection of the nuclear production tax credit as well as the PTC availability for expansions of nuclear capacity, which supports our planned power up rate at Salem. In addition, this legislation permanently extends 100% bonus depreciation for qualified business property, improving cash flow at PSEG Power as it executes on its planned capital program. As Ralph mentioned, we are reaffirming PSEG’s full year 2025 non GAAP operating earnings guidance of $3.94 to $4.6 per share as well as our long term 5% to 7% non GAAP operating earnings CAGR through 2029 at nuclear PTC threshold. Our solid balance sheet supports the execution of PSEG’s five year 22,500,000,000.0 to $26,000,000,000 capital spending plan without the need to sell new equity or assets and provides the opportunity for consistent and sustainable dividend growth. That concludes our formal remarks and we are ready to begin the question and answer session.

Rob, Event Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session for members of the financial community. The first question today is from the line of David O’Carlo with Morgan Stanley. Please proceed with your questions.

David O’Carlo, Analyst, Morgan Stanley: Hey, thanks. Good morning.

Ralph LaRosa, Chair, President and CEO, PSEG: Good morning, David.

David O’Carlo, Analyst, Morgan Stanley: Good morning. Let’s see. So today we’ve got the New Jersey Resource Adequacy Conference going on at the BPU. I was just wondering if you could give a sense of where conversations stand with regard to the future of generation build in New Jersey.

Ralph LaRosa, Chair, President and CEO, PSEG: Thanks, David. Yeah. So it’s a little bit tough for us to do this real time. They are literally, folks are are literally having conversations right now. So there really hasn’t been a big change from a legislative

Right? We talked a little bit in the prepared remarks about the bill that is currently sitting in in the legislature. But I’m I’m looking forward to the conversation today that that’s taken place. And I I would tell you, we are advocating really for some decisions to be made by the state as we move forward. And that’s really just around what are the forecast they’re looking for.

We’ll be talking about that. What are what are the reliability outcomes they’re targeting? What are the affordability targets they have, and then finally, the environmental policy goals. When you put those four pieces together, we think we’ll be able to find the right answer and solution for the state, and we’ll be willing to help out in that in whatever way the state’s looking for us to to play a role. So, we’re gonna we’re gonna stick to those four points, and really try to drive some decisions from, you know, the existing administration and and obviously having conversations with the potential, gubernatorial candidates.

David O’Carlo, Analyst, Morgan Stanley: Yep. Absolutely. That makes sense. Appreciate that. And then, a big increase in the data center pipeline for this quarter.

I was wondering if you could give an update on maybe specifically with regard to the nuclear plant opportunities and an update on data center conversations there. What is the interest level that you’re seeing in the site most recently? And then thoughts on timing as to whether you could get to an agreement this year?

Ralph LaRosa, Chair, President and CEO, PSEG: Well, I’m going to I’ll give that to Dan as I usually do on the on the data centers. I would just say from an economic development standpoint, we’re glad to see New Jersey still playing a role in that. They have continued to advocate for data centers and for technology companies to locate into New Jersey. So it’s good to see that that is working, and that is playing out in the numbers that we provided. I think yesterday, there was an announcement by Core Weave for a large investment they’re making in Kenilworth, New Jersey for some real estate that they’re purchasing.

So I think the work that’s being done on the economic development front is is, you know, bearing some fruits now, and I’ll let Dan talk specifically about anything down at at nuclear.

Rob, Event Operator: And and David, there, you know,

Dan Craig, Executive Vice President and CFO, PSEG: there continues to be discussion, and I think Ralph’s earlier commentary on the numbers going up in the state are are evidence of that. And I think that, you know, you’re well aware that our our assets are are both in New Jersey and in Pennsylvania. And I think there’s opportunities across those states and frankly wherever power can be delivered from those units for the the the nature of what we have. So the the the discussions continue. There continues to be interest and we’ll let the timing kind of speak for itself as we go forward.

David O’Carlo, Analyst, Morgan Stanley: Alright. Appreciate the color. Thanks so much.

Rob, Event Operator: Our next questions are from the line of Nicholas Campanella with Barclays. Please proceed with your questions.

Nicholas Campanella, Analyst, Barclays: Hey. Good morning. Thanks for taking my questions.

Ralph LaRosa, Chair, President and CEO, PSEG: Good morning, Nick.

Nicholas Campanella, Analyst, Barclays: Hey. I just wanted to follow-up on that last point maybe. In your prepared, you brought up clearly the need to add new generation in New Jersey, the fact that the state is an importer of power. And you talked about needing to kind of balance affordability and resource adequacy along with economic development. Just how do you kind of see that impacting your ability to move forward with a multiyear contract by the end of this year?

Is it still your intention to deliver something by the end of the year? I just wanted to be a little bit more pointed on that. Thank you.

Ralph LaRosa, Chair, President and CEO, PSEG: Yeah. Thanks, Nick. So we again, we we’ve been we’re saying we’d like to do something with this with this We’ve been saying that for many months now, and, I I think that that would still stand. But we’re not gonna do a deal just just for the sake of doing a deal by a certain time frame. Right?

So we’ve we’ve talked about that, and that and that really hasn’t changed. I think from a balancing standpoint, Dan just put it really well. You know, we have assets in both Pennsylvania and New Jersey. We have data centers showing up across the PJM footprint, not just in New Jersey. And I think this resource adequacy conversation that’s taken place today recognizes the fact that what happens in our bordering states matters to New Jersey.

When you’re importing 50% of your power on your peak days, those decisions that are being made by other economic development organizations, other governors, other utilities, all have an impact on what happens here in New Jersey. So I I don’t think we have, you know, that we we we tend to have the to think we have all the answers, but to your very specific question on how it all comes together, I think it’s it’s it’s really a PJM question. It’s not just a New Jersey question.

Nicholas Campanella, Analyst, Barclays: Hey. That makes a lot of sense. I appreciate the context. And then maybe with the capacity auction results, I know you kind of talked about the ZEC’s roll off that kind of offsets the ’25, ’26. But then when we think about 2728, you know, how are you kind of framing where you are on a gross receipts basis?

And I guess my question is, are you now higher in the range because of the 26% or because of the 26%, 27% outcome? Thanks.

Ralph LaRosa, Chair, President and CEO, PSEG: Well, I’ll let Dan talk to against more specifics here, but we have not come off of the fact that our guidance remains at the PTC floor with our five to seven, and I’ll give it to Dan to talk from there.

Dan Craig, Executive Vice President and CFO, PSEG: Yeah. Exactly. And and and obviously, it goes against the backdrop of what the market looks like, Nick, and and you know as well as anybody that capacity is a piece of what the nuclear facilities make as much as they run energy as a bigger piece. But if you’re seeing higher capacity clears that sustain, then you’re going to see higher capacity component of the overall revenue that will sustain at a higher place. And if energy markets, the electricity side, the energy side ends up moving to a point where you are higher, well then we’re going to have moving off of that.

We are not there right now with respect to what we see for for the CAGR that we’ve put out, but we continue to monitor. We continue to market the output. And ultimately, that’s gonna determine where we land against the backdrop of future forecasts. But right now, as Ralph says, what we have out there is based upon the threshold.

Nicholas Campanella, Analyst, Barclays: Thank you very much.

Rob, Event Operator: Our next question is from the line of Michael Sullivan with Wolfe Research. Proceed with your question.

Michael Sullivan, Analyst, Wolfe Research: Good morning.

Ross Fowler, Analyst, Bank of America: Hi, Michael. Hey,

Michael Sullivan, Analyst, Wolfe Research: guys. Wanted to just ask another one on kind of the New Jersey supply situation. I guess outside of this bill that’s out there, what are the other options if that weren’t to move forward? And then we saw kind of next door in Pennsylvania, one of your peers doing kind of a JV outside of the regulated construct. Is that something you guys would consider at some point?

Ralph LaRosa, Chair, President and CEO, PSEG: We we have so we have very specifically said we are not interested in moving back into the merchant generation business. So that has not changed for us. I I I think the construct that was mentioned by others is really maybe a little bit different, but I I let that let them speak for themselves. And, you know, so so what does that leave us with? It leaves us with the PJM process.

And, look, we we’ve been very vocal about that for many years at this company. We don’t think that that it’s it’s attracting additional generation. We think there’s problems with the capacity process that exists, the market as as it’s called, and how it how it exists there at PJM. And so, unfortunately, if there isn’t a change, and there isn’t some more control taken by the state of New Jersey, we will be, living with the outcome of of that process. And and all we can speak to are the facts.

And the facts are that there has not been any new baseload generation built in New Jersey for quite some time. And I believe our former merchant generation business was the last one to do so.

Dan Craig, Executive Vice President and CFO, PSEG: Yeah. And I think

Travis Miller, Analyst, Morningstar: Makes a lot. The other thing I would add to that, Michael, is,

Dan Craig, Executive Vice President and CFO, PSEG: you know, some of the discussions that you’re, that others are listening to concurrent with this call, I think, are going to that topic and, you know, there’s other discussions. I think there’s a the PJM governors are gonna meet next month to try to talk about what’s going on. And and so I I think that that right now, all those discussions are against the backdrop of the challenges that we have from what’s in place at PJM and what supply could come out of that process or not come out of that process. And as a result, what things should be done to ensure that we have the supply we need. So that that’s where those discussions are all circling around.

Michael Sullivan, Analyst, Wolfe Research: Okay. That that’s really helpful. Appreciate all the color there. And then just shifting over to o b three, can you maybe put a little more numbers or quantification around some of the benefits there, both with respect to bonus depreciation and what that does for your cash tax position and then also the the new tax credit on on the upgrade? Like, any any numbers around those two items you can give us?

Dan Craig, Executive Vice President and CFO, PSEG: No. And and, Michael, I think that the the thing that it mainly did from the standpoint of the PTC is it retained what was in place. There was some discussion that hard to tell exactly how much traction it got about potentially shortening it or potentially changing it. But everything from a nuclear PTC perspective stayed in place. You know, if we in answer to Nick’s question, if we move to a higher overall market condition, I would still love to have that protective backdrop of a PTC from the standpoint of an overall revenue threshold.

I think what what really for us was new within that was bonus depreciation. We’ve had different bouts of bonus depreciation in the past, and this one is is laying out to make it permanent. But as a reminder, the bonus is not throughout the entire company. It is only for the unregulated piece. And there’s not that much capital that’s there.

So is it a help? Yeah. It’s a help, but it’s kind of around the edges from the standpoint of an overall cash flow perspective that it will accelerate some of that cost recovery a little bit earlier than otherwise would have been the case.

Michael Sullivan, Analyst, Wolfe Research: Okay. Great. Thank you very much.

Rob, Event Operator: Our next questions are from the line of Ross Fowler with Bank of America. Please proceed with your questions.

Renee, Analyst Representative, Bank of America: Good morning, guys. It’s actually Renee here for Ross. I just had a quick question about the, you know, we saw a lot of affordability focused bills in this session. So I guess from your perspective, which which of those bills are kinda gaining the most traction and kind of have the will have likely the biggest impact moving forward, I guess, in terms of, like, regulated gen, which you talked about, or cost deferrals or reassessing New Jersey’s role in PJM?

Ralph LaRosa, Chair, President and CEO, PSEG: So the session has closed officially. Right? So they can always come back. But right now, there is no there’s no scheduled time for the legislature to come back to discuss those bills. I think they have a couple of items that they’re dealing with on health care, but there’s nothing that’s very specific to the utility space.

So I would be hard pressed to say that any one of those specific bills are ones that we’re focused on. I think what we’re really focused on is finding a solution for the customers. And, you know, we’ve done that with the short term, now we’re trying to have a conversation, which again is taking place as we speak at the New Jersey Board of Public Utilities on the resource adequacy. And we’re gonna continue to advocate as strong as we have at at PJM. So I wouldn’t point you to any one of those bills specifically because, again, they may they they will change down the road if they even continue in some fashion.

But I I would just I would just leave it at that and not not really speculate on what what might or might not happen.

Renee, Analyst Representative, Bank of America: Okay. That makes sense. And then just secondly, I know you mentioned the 200 megawatts out of Salem, but I guess more broadly, what potential is there for incremental generation and, upgrade on the nuclear fleets to upgrades, refueling, cycles, life extensions? And then I guess how much of that has already been executed?

Ralph LaRosa, Chair, President and CEO, PSEG: Well, thanks for that. We’re actually from an execution standpoint, much of the engineering work has been done on everything that you asked about. But we did mention earlier in the prepared remarks the fact that in this refueling cycle that will be taking place in the fall at Hope Creek, we will be setting the unit up for the first time for a twenty four month run. So that is the change in the fuel cycle that we had talked about. So we’re continuing to execute on the plan that we had discussed.

And the engineering work and we have not discussed the cost or the exact timing of that, but we plan the upgrades for the Salem units later in the next few years. So nothing specific has been out there on that yet, but I think we did say we’d have that somebody end of the decade for sure. By the year. And we’ll have that information out by the end of the year.

Renee, Analyst Representative, Bank of America: Okay. Okay. That makes sense. Thanks, guys.

Ralph LaRosa, Chair, President and CEO, PSEG: Thank you.

Rob, Event Operator: Our next questions are from the line of Carly Davenport with Goldman Sachs. Please proceed with your questions.

Carolina Chan, Investor Relations, PSEG0: Hey. Good morning. Thanks for taking the questions.

Ralph LaRosa, Chair, President and CEO, PSEG: Hey, Carly.

Carolina Chan, Investor Relations, PSEG0: Hey. Maybe just to start on the update on the large load inquiries at the utility level. Is that sort of 10% to 20% conversion rate still hold in your view on that 9,400 megawatts? And is that all data centers at this point? Or are there any other customers in that bucket?

Ralph LaRosa, Chair, President and CEO, PSEG: There’s a few other customers in that bucket, but I would say the the the bulk of that, if not if not over 90% of that, is all data center related. And if you think about the numbers that we quoted to you, the 9,600 megawatts is sort of everything together, and then you apply the 10 to 20%, it kinda aligns with our, what we call, new business number that’s out there. So, short answer is yes. It’s sticking with the 10% to 20%. And longer answer is you can see that in the in the details that we’ve provided.

Carolina Chan, Investor Relations, PSEG0: Perfect. Thank you for that. And then maybe just, thinking about 2025 earnings growth, as you think about 1H growth is tracking above your full year 9% expectations. I know that we’ll have the Hope Creek outage in the fall, which will be a drag. But I guess just would love your thoughts on how you feel about execution within the full year guidance range at this point in the year.

Ralph LaRosa, Chair, President and CEO, PSEG: Yeah. We’ve tried to make the point we feel confident about being within the range for sure, and we reiterated that. So I don’t think we’re gonna go anywhere beyond that at this point. Carly, we’re know, at

Dan Craig, Executive Vice President and CFO, PSEG: the halfway point, we do sit a little bit north, and I think that that whole creek outage, that that’s the reason we did highlight within the materials that that was coming at the back end. Just a reminder that that’s a 100% owned. And so when that does come through, it has a bigger impact as we move through quarter by quarter.

Carolina Chan, Investor Relations, PSEG0: Great. Thank you for the time.

Ralph LaRosa, Chair, President and CEO, PSEG: Thanks, Carly.

Rob, Event Operator: Our next questions are from the line of Ryan Levine with Citi. Please proceed with your questions.

Carolina Chan, Investor Relations, PSEG1: Good morning.

Dan Craig, Executive Vice President and CFO, PSEG: Good morning, Ryan. Would you

Carolina Chan, Investor Relations, PSEG1: Would you seek the customer build deferral mechanism for an additional year as a result of the higher PJM capacity prices during peak load months? Is that something you’re contemplating given the recent event?

Ralph LaRosa, Chair, President and CEO, PSEG: Well, first of all, that conversation will take place with a new administration and a new BPU. So the right now, there’s nothing in the plan for the state of New Jersey to pursue that.

Carolina Chan, Investor Relations, PSEG2: Okay. And then in terms

Ralph LaRosa, Chair, President and CEO, PSEG: of the Right.

Dan Craig, Executive Vice President and CFO, PSEG: Just just to be to be clear with respect to to the the capacity auction that just happened and the impact on the bill, what we saw in June was the reflective, what I’ll describe as a a catch up because the PJM auctions were as delayed as they were. You’re seeing the cumulative effect of catching up from the prior auction result to that $2.70 that we saw. What happened in June brought everything up to two seventy. So you would not expect to see as a result of the $3.29 that kind of a jump, number one. And number two, if you just take a look at in our normal BGS process, the the auction that’s rolling off the bill and the auction that’s rolling on the bill and you take a look at where prices sit now, we not only do we not expect a jump like we saw in June, we don’t really expect much movement at all because what’s coming off the bill is a little bit higher than what would roll on at the current prices.

And and so that’s not to say that something couldn’t be done from the standpoint of what you’re describing. That’s not in place now, as Ralph answered a 100% correct that, You know, we won’t work with the regulator as as we were to do that. But it would not be in the face of an increase like we saw in June because that is not what is forecasted as we go forward just based upon the mechanisms and the pricing.

Carolina Chan, Investor Relations, PSEG1: Thanks for the detail on that. And then just one follow-up in terms of the large load request additions. Is there any color around how many customers or individual projects represent that large megawatt increase, just to assess kind of the the chunkiness of that of that, ad?

Ralph LaRosa, Chair, President and CEO, PSEG: Yeah. So I I I would I’ll add some color without any details. And the and the color is that, you know, what we see here in New Jersey would be a smaller projects than what you’re hearing in some other places. So you you’re not talking about thousand megawatt hyperscale in the middle of the Garden State Parkway. Right?

So there it’s a it’s a little different, type of environment here. A lot of edge computing, a lot of backup locations, but it’s it’s it’s large. And and look, our our peak load, you know, is not much north of 10,000, and we’re getting close to that in inquiries that we’re receiving. And, it’s it’s a game changer for all of us. You’re seeing it across the PJM footprint.

And so just we’re getting our we’re getting our fair share is the way I would put it, but smaller projects than what than what some of the other states are saying.

Carolina Chan, Investor Relations, PSEG1: And then lastly, you referenced the core weave development from earlier in the week. Is that incorporated in this updated, forecast or projection?

Ralph LaRosa, Chair, President and CEO, PSEG: There’s a there’s a of the conversation that they’ve talked about that’s that’s in our current projections. They have not, they have not gone out with their full build yet for what they planned.

Carolina Chan, Investor Relations, PSEG1: Thank you.

Ralph LaRosa, Chair, President and CEO, PSEG: Thanks, Ryan.

Rob, Event Operator: Our next questions are from the line of Travis Miller with Morningstar. Please proceed with your questions.

Travis Miller, Analyst, Morningstar: Hi, everyone. Thank you.

Ralph LaRosa, Chair, President and CEO, PSEG: Hey, Travis. Hi, Travis.

Travis Miller, Analyst, Morningstar: Hi there. So just following up on this Resource Advocacy discussion. At a high level, I wonder if you could characterize, is the concern among New Jersey legislators, BPU, etcetera, that there aren’t enough electrons, either energy or capacity in New Jersey, I. E. That 50% import?

Or is it just that the economics aren’t good for the customer bill? If that makes sense, how is that debate characterized?

Ralph LaRosa, Chair, President and CEO, PSEG: Well, I would say in the near term, it has all been focused on affordability. And and that’s where the conversation has has been focused, with with the capacity price increases and what customers are seeing. So it starts there right now, but it is not too far in the recent past that you can look back and and talk about reliability concerns that folks had. And you can also, not too far in the in the recent past, talk about environmental concerns that people have had about what kind of power we were importing or not importing into the state. So we continue to that’s why we keep bringing everybody back to the big the big picture.

What is out there from a policy standpoint that we can, you know and and then what solutions can we bring to solve for all those policy, issues that are being raised. So, I I I don’t wanna say it’s all affordability because if it’s not it’s not too far in the past, I mean and my past is a little bit different maybe than others. I’ll go back to two desks, three, when the lights went out. The whole focus at that point was on was on reliability. Not too far after that, we had an issue from affordability standpoint where we were we we had some congestion that was taking place, and that was resolved with some transmission build that was done.

Then we focused back on some environmental concerns that were taking place, and then we focused on reliability again after super storm Sandy. So it’s been all of those pieces that have that have been out there and have been discussed, and, we’re just reminding people of all of it as we as we focus today on affordability.

Travis Miller, Analyst, Morningstar: Okay. That that’s great. I appreciate all that. Here’s the lights don’t go out for you guys again through all this. But one one quick question on the if if the state were to go to a regulated generation option, would that need FERC approval?

That have to go through FERC or some other federal entity?

Ralph LaRosa, Chair, President and CEO, PSEG: No. I don’t believe it would. I think as long as the state, you know, that it went to a regulated, they’ll have to be a question about whether or it’s an FRR or how they would actually go about the process. But I do not believe it would require any FERC approvals.

Travis Miller, Analyst, Morningstar: Okay. Very good. That’s all I had. Thanks so much.

Ralph LaRosa, Chair, President and CEO, PSEG: Thanks. Thanks, Travis.

Rob, Event Operator: Our next questions are from the line of Paul Fremont with Ladenburg Thalmann. Congratulations

Carolina Chan, Investor Relations, PSEG2: on a strong quarter. I just wanted to sort of maybe better understand CorWeave. Would the relationship there be with the utility or with Peg Power if there is a relationship between, public service and the new data center.

Ralph LaRosa, Chair, President and CEO, PSEG: Yeah. The only thing that’s been out there with CoreWeave has been the utility, and that’s that’s what we spoke to, and that’s what we’ve included here, Paul. Anything else from from a relationship standpoint will come out when Dan talks about whatever Dan talks about down the road at at future conversations. So

Carolina Chan, Investor Relations, PSEG2: Okay. And then the purchase that they made involves some cogeneration facility. So is it contemplated that there would be a need for additional generation at the site? And if so, how much in terms of megawatts?

Ralph LaRosa, Chair, President and CEO, PSEG: Yes. That’s a question for their site management, and that I wouldn’t be able to tell you. There is a co gen facility there. So I guess it’s sort of a behind the meter generation. As we have said multiple times, there’s cogeneration in the state of New Jersey, and there’s multiple sites that have that.

So a lot to be determined there as to how that’s used and what other needs they might have.

Carolina Chan, Investor Relations, PSEG2: And how big is the existing cogen facility?

Ralph LaRosa, Chair, President and CEO, PSEG: I don’t have off the top of my head. Well, again, I it’s a question for their site team. I’m not sure what what capabilities that unit has today.

Carolina Chan, Investor Relations, PSEG2: Great.

Ralph LaRosa, Chair, President and CEO, PSEG: Name play was under a 100 if I remember correctly, but I I I couldn’t couldn’t tell you exactly.

Carolina Chan, Investor Relations, PSEG2: Terrific. I think that’s it for me. Thank you.

Ralph LaRosa, Chair, President and CEO, PSEG: Thank you.

Rob, Event Operator: The next questions are from the line of Julien Dumoulin Smith with Jefferies. Please proceed with your questions.

Carolina Chan, Investor Relations, PSEG3: Hey. Good morning, team. Ralph and Dan,

Nicholas Campanella, Analyst, Barclays: how are

Carolina Chan, Investor Relations, PSEG3: guys doing? Good. That’s great. There we go. I’ll bring the energy up at the end here.

Let’s, just quickly well, first off, I gotta say, speaking of energy up on the year, you guys are trending very well on the year. 26¢ year to date. I I I heard your comments about being confident confident in the range, but I’m curious where you’ll land next quarter as far as reiterating that guidance. Maybe a comment more than the statement, more than the question. But anyway, go

Ralph LaRosa, Chair, President and CEO, PSEG: appreciate back to the that. Thank you.

Carolina Chan, Investor Relations, PSEG3: Absolutely. Or maybe in response to Carly’s. But just going back to this Garden State Energy Storage, when I heard your comments earlier about power, right? And maybe not necessarily expanding the scope per se, but what’s the willingness to participate in this initial bid process that seems ongoing now of the gigawatt? Or to what extent do you anticipate power and or PSE and G, participating in the current phase into future phases?

Right? Again, you could you could approach this from a few different angles. But how do you think about that being, quote, the, the primary answer in the current environment, as best we we talk about this resource adequacy problem here in New Jersey?

Ralph LaRosa, Chair, President and CEO, PSEG: Yeah. So there’s a lot in that question. I I would say how do we think about it from a primary solution? I’ll I’ll dive on that a little bit. You know, I wanna take it from the from the three or four topics that we talked about, and not the least of which is an affordability question.

Then there’s an environmental question. There’s some other questions that need to take place there. Right? So until we see what some of the pricing is at, I don’t know how much of a solution it will be. We’ve seen prices that are high.

We’ve seen prices that are coming down to some degree on some of the battery activity, but I wouldn’t say it’s a silver bullet right now. I think it’s part of an all of the above that we’ve advocated for, for years. And I think, if I’m not mistaken, we we had made a filing over five years ago down with the state of New Jersey proposing a battery solution from our utility. So we believe in it. It’s just a question of how much from an affordability standpoint fits into that.

We like to call it Venn diagram where everything comes together. So a little bit more there. And then our participation, we haven’t talked to, and I I won’t front run anything about that. There are multiple states that have some battery requests out and we look at all the opportunities all the time, but we have not commented on that.

Carolina Chan, Investor Relations, PSEG3: Got it. And look, Rob, you’re you’re always in the know on these things. With respect to PJM and this conversation on governance and and and engagement here, I mean, how do you think we we could look at the auction and just PJM and and New Jersey’s relationship going forward? I mean, I know they’re asking for board seats and representation and shifts in government. But there’s also a separate conversation about shifting the nature of this auction towards bifurcated structures and or just other permutations that I’m sure swimming out there, if you will.

Any comments on any of that?

Ralph LaRosa, Chair, President and CEO, PSEG: Look. I I wanna take you back to things that we have said for, again, years and and even when my predecessor was on this call. There’s there there the governance at PJM doesn’t allow for a lot of the things that people are talking about to just be unilaterally implemented. So we have to get through a process where, you know, the members are gonna vote on this. It may sound crazy.

Right? But the members are gonna vote whether or not they wanna have the governors participate or not and and order representatives. And then and then and then if not, you know, maybe maybe the governors are or could take some action and go down to FERC and have a conversation that could that could play out. But this governance process is the core problem here right now, and it’s real it’s not something we have not said in the past. And I’ll just reiterate it.

It’s it’s how crazy does it sound that the governors have to get a members committee vote to allow the vote to take place, you know, to to have a seat at the table. And it’s, you know, it’s it’s we have certainly tried to represent the customers. We we welcome the transparency of the voting process that people are calling for. We we we think they’re at the end of the day, we’ll get to a good solution here, but it’s it’s not an overnight silver bullet, I’ll use that term again, solution that’s gonna take place. And I’m I’m happy we have the collar in there right now.

It’s it’s it’s it’s it’s given us some time to have a conversation, but it, again, didn’t solve the long term problems that that that we’re facing.

Carolina Chan, Investor Relations, PSEG3: Awesome, guys. Thank you again. Good luck.

Ralph LaRosa, Chair, President and CEO, PSEG: Thanks. Hi, Julien.

Rob, Event Operator: Thank you. Our last question is from the line of Paul Patterson with Glenrock Associates. Please proceed with your question.

Ross Fowler, Analyst, Bank of America: Hey, good morning guys. Hey Paul. Hey Paul. Just sort of the follow-up on these policy questions. I’m just wondering, I mean given that I think you mentioned 500439, I don’t think that’s moved.

And and I guess what I’m wondering is, given that the legislature is kind of in recess here and and the fact that you’ve got a governor who’s leaving, you’ve got election coming up here, and just the politics of all of this and what have you, is it likely that anything is gonna happen legislatively, you think, this year in in in New Jersey, excuse me, given all these dynamics and the fact that we we just don’t seem to have that much movement on a lot of this stuff?

Ralph LaRosa, Chair, President and CEO, PSEG: Yeah. Look, I think there’s a lot of momentum behind it. I think there’s a lot of consistency in the conversation whether it’s with the existing existing administration, either of the gubernatorial candidates. I think there’s a there’s some nuances in how they would approach the solution. But I think every one of them that we talk to continues to, you know, desire more control over those items that I mentioned.

I’ll continue to say them. You know, it’s the it’s the reliability, it’s the affordability and and the, environmental piece of it and and the forecasting. Right? I mean, you’ve heard that in the past. So all four of those pieces need to come together, and and I think that every one of the whether it’s the existing administration or the two future potential administrations feel like that’s something they want more control over.

Okay. So possibility exists. Right? It could happen if there’s alignment between the existing administration and an incoming administration. A lot of things could happen towards the end of the year.

Dan Craig, Executive Vice President and CFO, PSEG: Okay.

Ross Fowler, Analyst, Bank of America: With respect to batteries and their ability to sort of give a capacity value and given where prices are in the capacity market, is there any thought about revisiting what you were mentioning before? Because it sounds like you could build those as a utility asset. Any thought about how those might work economically given where capacity markets are in the curve and what have you? Or or is it this is what are your thoughts about that, guess.

Ralph LaRosa, Chair, President and CEO, PSEG: Yeah. No. Look, I think I think there’s a lot of of opportunity there from a revenue standpoint to your to your to to what you’re saying. But right now, that’s still all a merchant solution. The utility did propose a rate based solution, and it has not been acted on yet, and and I respect that.

Right now, the BPU is and it’s been for for many years has has looked at that as as a as a merchant solution. I think that Garden State, battery storage specifically says they would like to have a merchant solution for it. And so maybe maybe the math will will work out. I I won’t I won’t opine on that right now. I’ll just tell you that I think there’s a role for the utilities to play, and I think there’s a potential role for the competitive markets to play.

Ross Fowler, Analyst, Bank of America: Okay. I really appreciate it. Thanks so much. A good one.

Travis Miller, Analyst, Morningstar: Thanks Paul.

Rob, Event Operator: Thank you. At this time, I’d like to turn the floor back to Mr. LaRosa for closing comments.

Ralph LaRosa, Chair, President and CEO, PSEG: Thank you. Well, I’ll end where I started, which is a thank you to the employees for the work that was done. This has not been an easy weather pattern for us over the past couple of months. While we talk about storms and we talk about heat, we don’t talk about when that all occurs. And this is this these storms have rolled in consistently on Fridays.

And the disruption that puts on people’s lives, the ability that they that for them to spend time with their families is interrupted, and we certainly just take a second to pause and thank everyone for the work that they’ve been doing during that time. And then I also want to thank our customers for engaging with us and having conversations. We are here for our customers, but we also know that there’s challenging times from an affordability standpoint, not just with utility bills, but across the board. And we are bringing those solutions in the near term and fighting hard and advocating for the long term solution. So you’ll continue to hear and see more of us doing that, and you’ll continue to hear and see more of us on the road as we get back out there in the next couple of months.

So thanks for calling in, and have a great rest of your summer.

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

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