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F500 2020 317 Public Service Enterprise Group

The New Jersey-based energy company provides electricity and gas to portions of New Jersey and New York and is one of the 10 largest electric companies in the U.S.

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Public Service Enterprise Group (PEG): Company Profile, Stock Price, News, Rankings

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Public Service Enterprise Group

public service enterprise group

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 Third Quarter 2024 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.

As a reminder, this conference is being recorded today, November 4, 2024, and will be available for replay as an audio webcast on PSEG's Investor Relations website at https colon/investor.

I would now like to turn the conference over to Carlotta Chan. Please go ahead.

Good morning, and welcome to PSEG's Q3 2024 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 a disclaimer regarding forward looking statements on our IR website and in today's materials. Following the prepared remarks, we will conduct a 30 minute question and answer session. I will now turn the call over to Ralph LaRosa.

Thank you, Carlotta. Good morning to everyone and thanks for joining us on the call to review PSEG's Q3 results and update you on 2 important regulatory filings that we successfully resolved through the settlements that were approved by the New Jersey Board of Public Utilities last month. Let's start with our financial results. PSEG reported net income of $1.04 per share for the Q3 of 2024, bringing results for the 1st 9 months to $2.97 per share. This compares to net income of $0.27 per share and $4.03 per share for the Q3 and 1st 9 months of 2023 respectively, which was impacted by the pension lift out that occurred in August of 2023.

Our results for the quarter year to date periods are summarized on Slide 7 and 9 in the webcast slides. PSEG's non GAAP operating earnings were $0.90 per share for the Q3 of 2024 and $2.84 per share for the 1st 9 months of the year. This compares to non GAAP operating earnings of $0.85 per share $2.94 per share for the Q3 and 1st 9 months of 2023 respectively. As a reminder, our non GAAP results exclude the items shown in Attachments 89, which are included in the earnings release. Dan will provide a detailed financial review later in the call, but I want to note that the solid operating and financial results we have posted for the Q3 year to date period enable us to narrow our original full year 2024 non GAAP operating earnings guidance from $3.60 to $3.70 per share to a range of $3.64 to $3.68 per share.

This updated and narrow range reflects the implementation of PSE and G's new base distribution rates that went into effect on October 15 and PSEG Power's realization of a significant portion of its 2024 gross margin during the second half of this year. On the operating front, during the Q3, summer weather in New Jersey returned to normal following the Q2 that was the warmest we've experienced in more than 55 years. We have seen the devastating impacts of hurricanes and storms in many parts of the country. Fortunately, the hurricane season in our service territory has been quiet thus far and we have been pleased to send mutual aid to some of our southern peers. PSE and G met its 2024 summer peak load of 10,152 Megawatts on July 16 with temperatures of 98 degrees Fahrenheit and our transmission and distribution network operated as expected with high reliability and minimal outages.

At PSEG Power, our merchant nuclear fleet continues to perform well, supplying New Jersey and the PJM grid with reliable 20 fourseven carbon free energy. We also continue to pursue long term growth opportunities in nuclear, including incremental output and long term contracts at potentially higher prices. The attributes of these nuclear facilities is helping to attract new technology based businesses to the state and the results of those long term opportunities would be incremental to PSEG's stated 5% to 7% long term non GAAP operating earnings growth rate. In October, PSEG Nuclear began the coast down of Salem Unit 2, which had just completed a 5 27 day breaker to breaker run to begin its scheduled refueling. The Salem station also recently received 3rd consecutive exemplary rating from the Institute For Nuclear Power Operators, the peer to peer operations and safety benchmarking group.

Switching to regulatory activity, we are pleased to have successfully resolved 2 major regulatory filings last month. PSE and G's base rate case and the second phase of its clean energy future energy efficiency programs. First, the BPU approved PSE and G's multiparty settlement of its 1st base electric and gas distribution rate case since 2018 with new rates effective October 15. We appreciate the work done by all parties to achieve a balanced settlement that provides recovery of all of our prudent capital investments to reliably serve customers while also preserving affordability. The terms of the settlement provide for an additional $505,000,000 in annual revenues, including recovery of previously deferred costs and an incremental flow back to customers of tax benefits due to accelerated deductions and prior federal tax rate changes.

The updated revenue requirement is based upon a distribution rate base of $17,800,000,000 a return on equity of 9.6 percent and an equity ratio of 55% of total capitalization. PSE and G was also approved to implement new pension and storm deferral mechanisms going forward. This directly addresses one of our key objectives, which has been to increase the predictability of our financial results by reducing variability benefiting both the customer and our shareholders. You will recall back in 2022, we identified 3 paths to address the accounting impacts of pension costs. Combined with a regulatory accounting order we obtained in 2023 along with a lift out of a portion of the non regulated pension obligations, this new deferral mechanism will provide for the recovery of annual pension and OPEB expenses and should help to mitigate most of the remaining pension variability going forward.

The BPU also approved the settlement of PSE and G's energy efficiency filings that covers a commitment period from January of 2025 to June of 2027. The approval authorizes an investment program of $1,900,000,000 net of administrative expenses and an additional $1,000,000,000 program for customer on bill repayment for purchases of EE equipment. Both programs will be treated as rate base and will be completed through 10 energy efficiency programs over approximately 6 years. The 2nd phase of energy efficiency programs will continue New Jersey's efforts to help all customers save energy, reduce utility bills, lower carbon emissions and continue our EE related job training to focus on lower and middle income communities. Customer bill affordability remains a key focus alongside our energy efficiency and cost containment efforts.

Following this past distribution based rate increase, PSE and G retained its favorable bill comparison position versus regional peers on an electric and gas customer bills. A typical PSE and G residential customer will pay an electric bill consistent with the regional average and continue to have the lowest gas bill in the region. In addition, the BPU authorized on October 1 PSE and G's gas supply cost reduction, lowering the BGSS rate from $0.40 per therm to $0.33 per therm and time to help customers during the upcoming winter heating season. The BGSS gas cost reduction The BGSS gas cost reduction when combined with the base rate changes that occurred in October lower the bill impact of the base rate increase for a typical combined electric and gas customer from 7% to an increase of about 5%. On the capital investment side, PSE and G invested approximately $1,000,000,000 during the Q3 and is projected to complete 2024 with capital spending at $3,500,000,000 slightly higher than planned by about 100,000,000 dollars This is driven by higher new business requests and EEE spend.

Notably, within this year's capital expenditures, we are also on budget and on schedule to complete almost all of our AMI installations by year end. We continue to forecast PSEG's 5 year $19,000,000,000 to $22,500,000,000 capital plan through 2028, with the regulated portion representing $18,000,000,000 to $21,000,000,000 of the total. With the energy efficiency settlement approved, we will begin commitments under this new program this coming January. These energy efficiency investments are already captured in our projections that produce the compound annual growth rate in rate base of 6% to 7.5% over the 2024 through 2028 periods. Switching to regulated competitive transmission solicitations, the BPU selection of the winner or winners of the pre build offshore wind infrastructure is expected by year end.

We also submitted bids into PGM's 2024 Regional Transmission Expansion Plan Window 1. The solicitation took place in September. PJM is expected to recommend their preferred solutions in the next few months and then approve the selected projects in February of 2025. And as a reminder, none of these potential projects are included in our current capital investment forecast. PSE and G recently updated its load study as a part of an annual submission to PJM for use in its load forecast updates.

Our existing data center peak load currently stands at approximately 3 50 megawatts and these sites are expected to expand by about 170 megawatts over the next 10 years. We have also received formal applications to initiate nearly 400 megawatts of new data center load and inquiries over 1200 megawatts of data center feasibility studies in new business. These amounts do not represent firm commitments, but they provide an indication of the increase in interest. Last week, CoreWeave, a data center developer announced plans to invest $1,200,000,000 to convert a 280,000 square foot facility to build its 1st data center in New Jersey. New Jersey has numerous locations that can be reutilized in a similar fashion and the state's economic development efforts are focused on replicating this activity throughout the state.

We are aware of the FERC technical conference and decision on Friday. We will continue to look for clarity on this issue going forward. That said, we believe that data center demand will continue to grow and we anticipate the continued desire for carbon free dispatchable power. As such, at PSEG Power, we continue to pursue contracting of our nuclear output at long term attractive pricing with low execution risk that can also help attract new technology based businesses to New Jersey consistent with state policy. In addition, we are pursuing thermal and efficiency upgrades in our co owned Salem units that could potentially increase their combined output by approximately 200 megawatts and we believe would qualify for the technology neutral tax credits for new carbon free generation.

Switching to the Long Island contract, as you know, our existing operating service agreement and power supply contract with LIFO runs through the end of 2025. LIFO began a process on the renewal and extension of both the OSA and fuel management contracts. We have submitted our proposals into Lifea's RFP process and anticipate an update on the status of both proposals during the Q1 of 2025. So wrapping things up on the quarter, Today, we are reaffirming our guidance for long term non GAAP operating earnings growth of 5% to 7% through 2028, which had incorporated an expected balanced rate case outcome consistent with the approved settlement recently implemented. We approved the E program and uses the threshold price of the nuclear production tax credit to price the output of our nuclear units.

In closing, through the 1st 9 months of the year, solid execution is driving our expected results. We have settled 4 regulatory proceedings in the past 6 months and we are also advancing our 5 year capital investment plan focused on infrastructure modernization and energy efficiency initiatives. PSEG has continued to focus on increasing the predictability of our financial results as we prioritize a solid balance sheet. This has enabled us to fund our 5 year capital investment plan totaling $19,000,000,000 to $22,500,000,000 without the need to issue new equity or sell assets and provides the opportunity for consistent and sustainable dividend growth. I'd like to close with a thank you to all our employees for all they do.

With a special shout out to the PSE and G crews who went to Florida and Georgia on mutual aid to assist with service restoration after hurricanes Milton and Helene. The mutual aid network is rather unique in our industry and we are very pleased to reciprocate the help we received from mutual aid crews after Superstorm Sandy. I will now turn the call over to Dan to discuss our financial results and outlook in greater detail and we'll be available for your questions after his remarks.

Thank you, Ralph. Good morning, everybody. As Ralph mentioned earlier, PSEG reported net income of $1.04 per share for the Q3 of 2024 compared to $0.27 per share in 2023. Non GAAP operating earnings were $0.90 per share in the Q3 of 2024 compared to $0.85 per share in 2023. Slides 7 and 9 detail the contribution to non GAAP operating earnings per share by business segment for the Q3 and 1st 9 months of 2024.

Slides 8 and 10 contain waterfall charts that take you through the net changes for the quarter over quarter 9 month periods and non GAAP operating earnings per share by major business. Starting with PSE and G, which reported 3rd quarter net income and non GAAP operating earnings of $0.76 per share for 20.24 compared to $0.80 per share in 2023. The main drivers for both net income and non GAAP results for the quarter were growth in rate base from higher regulated investments that was more than offset by higher investment related depreciation and interest expense in advance of the October rate effective date of our distribution rate case approval. Compared to the Q3 of 2023, transmission margin was flat due to higher recovery of investment offset by the timing of a formula rate true up. Energy efficiency margin was a penny per share favorable on higher investment and distribution margin increased by $0.06 per share, split between Energy Strong II and the Infrastructure Advancement Program or IAP recoveries and the absence of storm cost amortization from a year ago.

Distribution O and M expense was $0.04 per share unfavorable compared to the Q3 of 2023, primarily due to the timing of spending and higher cyber and IT spend. Depreciation and interest expense rose by $0.01 per share and $0.03 per share respectively compared to the Q3 of 2023 reflecting continued growth in investment and higher interest expense. Lower pension and OPEB income resulting from the cessation of OPEB related credits, which ended in 2023, resulted in a $0.01 per share unfavorable comparison to the year earlier quarter. Lastly, the timing of taxes recorded through an annual effective tax rate, which nets to 0 over a full year and other taxes had a net unfavorable impact of $0.02 per share in the quarter compared to 2023. Weather during the Q3 as measured by the temperature humidity index was 5% warmer than normal, but 5% cooler than the Q3 of 2023.

And just as a reminder, weather variations have minimal impact on our utility margin because of the Conservation Incentive Program or SIP mechanism, which limits the impact of weather and other sales variances positive or negative on electric and gas margins, while helping PSE and G promote the adoption of its energy efficiency programs. The number of electric and gas customers, which is the driver of margin under the SIP mechanism, continued to grow by approximately 1% each over the past year. On capital spending, PSE and G invested approximately $1,000,000,000 during the Q3, bringing year to date spend to $2,700,000,000 For the full year 2024, our capital spend is expected to total $3,500,000,000 slightly higher than our original plan of $3,400,000,000 based on the continued execution of our electric system reliability programs, including energy strong and last mile spend in the IAP, our ongoing gas infrastructure replacement spending, as well as our energy efficiency programs. We are reaffirming our 2024 to 2028 regulated capital investment plan of $18,000,000,000 to $21,000,000,000 as well as our rate base CAGR over the same period of 6% to 7.5%. Moving to PSEG Power and Other.

and Other reported net income of $0.28 per share compared to a net loss of $0.53 per share for the Q3 of 2023. The non GAAP operating earnings were $0.14 per share for the Q3 of 2024 compared to non GAAP operating earnings of $0.05 per share for the Q3 of 2023. For the Q3 of 2024, net energy margin rose by $0.16 per share, driven by higher recontracting prices at nuclear, which includes the net impact of the nuclear PTC that took effect January 1, 2024. As a reminder for 2024, we mentioned that we anticipated realizing a significant portion of the increase in the 2024 gross margin over 2023's gross margin during the second half of the year based upon the shape of our underlying hedges. This differs from last year when PSEG Power realized most of the step up in the annual hedge price in the Q1 of 2023.

O and M was $0.03 per share unfavorable, mostly driven by higher costs from the Peach Bottom units and the absence of a one time benefit last year. Interest expense was $0.04 per share higher, reflecting incremental debt at higher interest rates and taxes and other were $0.01 per share favorable compared to the Q3 of 2023. On the operating side, the nuclear fleet produced approximately 8.1 terawatt hours during the Q3 of 2024 in line with the year earlier period and ran at a capacity factor of 94.5%. Touching on some recent financing activity. As of the end of September, PSEG had total available liquidity of $3,400,000,000 including $200,000,000 of cash on hand.

Through September 30, 2024, cash from operations was strong and our cash collateral balance was below $200,000,000 supporting our strong liquidity position. PSEG's variable rate debt at the end of September consisted of a $1,250,000,000 term loan maturing March of 2025, the entirety of which has been swapped to a fixed rate, which mitigates fluctuations in interest rates. As of the end of September, given our swaps, we had minimal variable rate debt. In August, PSE and G issued $1,100,000,000 of secured medium term notes or MTMs, comprised of $600,000,000 of 4.85 percent MTNs due August 2034 $500,000,000 of 5.3 percent MTNs due August of 2,054. A portion of the proceeds were used to repay the $250,000,000 August 15 maturity of 3.15 percent MTNs.

Looking ahead, our solid balance sheet supports the execution of PSEG's 5 year capital spending program 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 are narrowing PSEG's full year 2024 non GAAP operating earnings guidance to $3.64 to $3.68 per share from $3.60 to $3.70 per share prior. This update reflects PSEG's solid results through the 1st 3 quarters of 2024 and PSENG's new distribution base rates, which took effect October 15. We are also reaffirming our long term 5% to 7% compound annual growth in non GAAP operating earnings through 2028, supported by our capital investment programs and the nuclear PTC. With the rate case and energy efficiency filings now approved, we will look to finalize our annual business planning process, which will position us to update our financial guidance disclosures with our Q4 and full year 2024 earnings release.

We will introduce PSEG's non GAAP operating earnings guidance for 2025. We will refresh and roll forward our capital investment plans. We will update our rate base and long term earnings CAGRs and discuss the details during our year end call in February of 2025. That concludes our formal remarks and we are ready to begin the question and answer session.

Ladies and gentlemen, we will now begin the question and answer session for members of the financial community. The first question is from Shahriar Pourreza with Guggenheim Partners. Please proceed with your question.

Hey, good morning guys. Good morning, Ralph. Good morning, Dan.

Good morning. So just, Ralph, starting off on the ISA issues at FERC and sort of the risks behind the meter nuclear deals, Does this kind of change the calculus on your commercial discussions with artificial island? Does this push the conversations to more conventional deal with transmission interconnections? So any changes with your discussions there? And do you have the interconnection capacity to present

a in front of the meter option to a potential

Hey, Shar, thanks. Yes, so look, I'll try to hit on that whole interconnection agreement issue upfront here a little bit. First of all, we think that was a very narrow decision that was made by FERC. So very specific to what was submitted by the parties there. We're not part of that.

We were not party to that agreement. So I don't want to talk in a lot of details about it. But it has not slowed us down and will not slow us down for trying to help the state of New Jersey meet their economic development goals. There's a lot of different ways to come to a solution. I think Talend had one solution.

We've seen Constellation with another solution. I think each individual customer and each individual site will bring a different solution to the table. We still think we're very uniquely positioned because of our 3 unit site and the redundancy that exists there. We like the additionality that our early site permit could provide to somebody else. We like the additionality that our upgrades are going to provide and we like the additional megawatt hours that we're going to get from our Hope Creek facility when we change the fuel cycle.

So there's a lot of things that are a little bit different about our site than others. And I think when we continue to have our conversations, all of those things will come to light and play itself out.

So Ralph, it sounds like despite the FERC rejection, it doesn't sound like the messaging, the conversations, anything has changed from before the event happened?

Yes. Sure, again, it's been 72 hours or so since that all came out. Look, I think there's a number of different paths where we can see an ultimate solution come out. But for our specific scenario, I stick to what I said a couple of minutes ago. You could look, you could see somebody in that proceeding asking for rehearing and trying to get a different solution there.

You could see something coming out of the federal, I mean, not the federal, the technical conference and what they have going on. You could see something coming out of the 205 proceeding that Exelon has or you could see somebody put together an interconnection agreement that is a little different than the one it exists and comes out with a solution that the FERC supports. So any of those scenarios are possible. And I just think we're dead focused on supporting the state of New Jersey's economic development goals.

And just lastly for me, Ralph, is just I don't want to put you in a corner and just ask about timing, but maybe I'll give it a shot. Do you have any sense on the timeline? I know when we've had conversations in the past, it's been hopefully by this year, by the end of this year, governors obviously leaving next year. This is an important initiative for him. Can you just maybe give us a sense on timing and where you are with the discussions?

Yes. Sorry if that was misunderstood or I misspoke, but we always have said in our conversations that we would like to get this done during this Governor's term. He turns out at the end of next year. Obviously, there'll be an election in November and different policies will be discussed, but we've been focused on that timeline since we've started the discussions.

Thanks for the names. And supporting his initiatives would make a ton of sense for us.

Appreciate it. See you guys in a few days in Florida. Thanks again.

Our next question is from Nicholas Campanella with Barclays. Please proceed with your question.

Good morning. So, I wanted to ask, when you kind of outlined the prior kind of 5% to 7% growth rate, we talked about it not being linear. And as we're kind of getting to the end of the year here, there's been a lot that's happened, right? Like you have new rates in New Jersey, presumably you were under earning your ROE there. We also kind of have this capacity auction print.

Can you just kind of talk about how that positions you within that 5% to 7% and any drivers we should kind of consider as we get to 25%? Thanks.

Yes, sure. I'm going to let Dan give you some details there.

give the 25% or any particular year's guidance as we step forward. I think that range is where we are. I do think to your point, you're looking at elements that will come into play. We had assumed all along we would see the result of this rate case in the second half of the year. So the kind of the timing is as expected and one of the key elements that we look at for that rate case was being able to fully recover the capital that we had prudently deployed during that period and that was also where the rate case came out.

So I think we got a good outcome and I think it was where we expected it to be, but that's been baked into how we've been thinking about where we're going. To your point, I do think on capacity, it's unfortunate that we do have a delay, but we will continue to step through those auctions as we go through time. There's a little bit of a balancing for those auctions. If you think about the auctions may go up and down, they do split years, right, Nick. So you've got a kind of a June to May timeframe.

And so to the extent that you see some ups and downs throughout where those auctions may go, you will see a moderating effect on the year over year results that we see. So I think if you just think about that range of 5% to 7% that we've given, you'd be in pretty good shape as you step through the timeframe that we've talked about.

Okay, great. And then I guess just thinking about like if you were to move artificial island front of the meter in any scenario, how impactful is that to the overall economics? Is there any kind of level that you would kind of guide to on what a grid charge actually looks like in that region on a dollar per megawatt basis or otherwise? I appreciate it.

Well, Nick, so a couple of things there. Let me go back to the capacity auction for a second. And Dan correctly said, we're sorry to see that the auction didn't proceed, right? But we're also happy that PJM is going to take a step back and get that right. So we filed some comments to that effect.

And it was really just based upon getting the reference unit right and figuring out this RMR piece that I would encourage you all to take a look at the some of the filings that were made around that RMR that RMR complaint that went in. There were some pieces there about Brandon Shores that might be helpful for people to take a look at. And then look from a pricing standpoint, if you just take a look at the transmission rate that exists within the A service territory. It's just under $7 a megawatt hour right now. And I think if you step back and look at that full rate on a network service basis and net it, it could really put in context the amount of dollars that we're talking about here that is at risk in any way shape or form and how whether it's made up in the pricing deal or tax breaks or something else, the state of New Jersey could still meet its economic goals.

Hey, that's super helpful. Thanks for the color. I'll see you in a few days here. Thank you.

The next question is from the line of Paul Zimbardo with Jefferies. Please proceed with your questions.

If I could follow-up on Nick's question, I don't mean to nitpick, but when you answered, do you expect to be within that 5% to 7% CAGR every year on an annual basis? Because I know we've talked about the production tax credit is a little lumpy, the rate case dynamics. So do you expect to be within that range every year? Is that more like a CAGR we should think of?

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

Okay, understood. And then shifting to the transmission side of the house, could you give a little scope or quantification of some of the PGM RTEP proposals? I saw there was that roughly $400,000,000 greenfield project in PSAG, but just any other perspective or transmission needs would be helpful. Thanks.

I think I'd first start by just if you go backwards, we were successful in Maryland and have a project that's moving along there. Ralph referenced on the call, in window 1, we've got a proposal sitting in front of PJM that's kind of comparably sized, which we'll find out in short order. I think what you're going to continue to see, Paul, given the other topic that's been kicked around and will continue to be on the data centers, more of these opportunities that will come forward. I think we'll analyze them all. We'll try to figure out what makes sense for us to move forward on.

But I can tell you that we do move forward with some confidence in our ability to do the work and to put in competitive bids to continue to move forward. The other thing I would say is just as you take a look at the capital program, incremental competitively bid transmission is not in that program. So we don't need to be able to win some of these competitive programs to be able to hit the capital budget.

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

Surprisingly, I want to come back to the data center conversation here. And just want to start off, I guess, when you look at the power market opportunity set, can you talk more about the potential upside related to thermal operates or other opportunities? I think you had mentioned 200

the past, but that was predicated on certain pricing outlook and maybe that's changed. And so just wondering given everything that we have in front of us now, how you think about that?

Yes. No, we're still in that 200 range right now. Our teams continue to look at what opportunity sets might be out there and are going to continue to refine it, but we have not moved off that 200 megawatts at this point.

Got it. Understood. And then just thinking more broadly as well, is time to power something your customers care about the most? Or is it about carbon free? And your objectives being to support the New Jersey state economic development here?

And if it is time to power that's most important, does the FERC delay hurt those conversations?

No, Jeremy, I think it's look, it's all of the above and it depends upon which customer you're talking to. Some are really focused on additionality from a clean generation standpoint. Some are focused on the time, the speed, the market. There's no doubt about that. And then I think you have people that are looking at the reliability of the units and how everyone operates them.

So we believe we're in pretty good shape on all three of those factors and that's why we haven't indicated at all that we're backing down.

Got it. Understood. That's very helpful. Thanks.

Next question is from the line of Durgesh Chopra with Evercore ISI. Please proceed with your question.

Hey, team, good morning and thank you for taking your time. Good morning. Ralph, good morning.

Good morning. Good morning. Good morning.

Good morning. Hey, just Ralph, you kind of went through the tariff implications of the Q4 in a lot of detail. Thank you for that. Maybe just address grid reliability. I mean, that was one of the things that was brought up in the order you just mentioned it.

But just maybe a little bit more color as to how do you overcome that, this notion of taking power away from the grid and then giving it to the data center? Any color you can share that would be helpful. Thank you.

Yes. So, Takesh, I don't think we could really state anything there with any sense of certainty right now, right? You've got so many different things that are going on with the topology and the grid down in that region. Brandon Shores, as an example, it's a large unit. That unit stays on.

It will have one impact on the region. If it comes off, it will have another. Where TMI ultimately connects into the grid in that region is going to have another impact on it. So I'd begin way ahead of our skis if I was to tell you exactly what the grid reliability issues are. I can tell you this from a stability standpoint on our system overall, we have extra capacity here in New Jersey, because of the work that we did after the blackout in 2003 and after Superstorm Sandy.

But I don't want to tell you for sure that there won't be any upgrades that will be needed until I know how a lot of the other generators are going to play out in that part of PJM.

I mean, that's a big guess that just is I think important to keep sight of and it came out of some of Friday's discussions. The data center stuff in the aggregate is a pretty important element for a whole host of reasons and I know National Security has referenced and it's going to come. And a lot of the discussions related to whether it's behind the meter and from the meter doesn't ultimately change the supply demand needs, right. I mean, it's been that's been stated numerous times, but I think people can lose sight of that as you're looking at some of the details as to how some of this thing may come to pass. At the end of the day, you're going to have incremental demand and supply is going to be needed to meet it.

Public Service Enterprise Group Q3 2024 Earnings Call Transcript | Fortune

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Public Service Enterprise Group (PEG) Q3 2024 Earnings Call Transcript

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