NewJersey Resources Corporation

We wish to caution listeners of this call that the current expectations, assumptions, and beliefs forming the basis of our forward-looking statements include many factors that are beyond our ability to control or estimate precisely. financial margin, adjusted funds from operations, and adjusted debt provide a more complete understanding of our financial performance. However, these non-GAAP measures are not intended to be a substitute for GAAP. Our non-GAAP financial measures are discussed more fully in Item 7 of our 10-K. The slides for today's presentation are available on our website and were furnished on our Form 8-K filed yesterday. Steve will start with this year's highlights in a business unit overview, beginning on slide 5. Roberto will then review our financial results. Then we will open it up for your questions. With that said, I will turn the call over to our President and CEO, Steve Westhoven. Please go ahead, Steve.

Thanks, Adam, and good morning, everyone. I hope you all had a chance to review our earnings materials, which include detailed disclosures on our growth prospects. I wanted to start by discussing a few highlights. We delivered excellent results in fiscal 2025, driven by strong execution and performance. For the fifth year in a row, we exceeded initial earnings guidance and long-term growth targets. After a successful 2025, there are a few key themes as you look ahead for fiscal 2026 and beyond. First, consistency and execution. We're guiding to NFVPS at 303 to 318 per share in fiscal 2026. The range is consistent with our long-term 7% to 9% growth rate, while leaving additional room for upside. Second, targeted capital deployment. We expect to invest roughly $5 billion over the next five years across the whole company, with roughly 60% allocated to our utility, New Jersey Natural Gas. To put the $5 billion into context, this represents a 40% increase compared to the CapEx spent over the last five years. Third, a healthy balance sheet anchored in disciplined financial management. We expect credit metrics to remain strong with healthy cash flows, ample liquidity, and a balanced debt maturity profile that supports long-term stability. Importantly, NJR requires no block equity issuance to execute on its capital plan. On the next slide, we highlight a few of the key drivers that are business segments. To begin, New Jersey Natural Gas is positioned for high single-digit rate-based growth through 2030. S&T is expected to more than double net financial earnings by 2027, driven by favorable recontracting of both Adelphia and Leaf River. And looking ahead, we recently filed with FERC a plan to increase working gas capacity by over 70% at Leaf River. And at Clean Energy Ventures, we expect to expand capacity by more than 50% over the next two years with a robust pipeline of safe harbor projects. In short, through a disciplined capital investment strategy, we have visibility to deliver sustainable growth well into the future, supported by a solid balance sheet. And we're able to achieve all this with minimal dilution to shareholders. Let me turn to a brief discussion of each business unit, starting with New Jersey Natural Gas on slide seven. Our planned investments in New Jersey Natural Gas are expected to drive high single-digit rate-based growth through 2030. New Jersey Natural Gas operates within a constructive utility framework and continues to make responsible investments in safety and reliability while prioritizing affordability for our customers. Natural gas is by far the cheapest option for customers to heat their home. Energy efficiency programs such as Save Green further reduce usage and costs while aligning with environmental goals. For example, residential customers who fully participate in Save Green whole home offerings see a reduction of up to 30% in their energy usage, saving hundreds of dollars in utility costs every year. Moving to the next slide, storage and transportation is emerging as a key earnings growth driver for MJR. Over the next two years, we expect NFE to more than double at S&T, and this is largely driven by strong recontracting in both Adelphi and Leaf River. These are fixed-price contracts with quality, creditworthy counterparties. We've recently reached a settlement in our FERC rate case at Adelphia. This constructive outcome enables recovery of the substantial investments and operational improvements made in recent years. While near-term earnings are set to double, we are actively pursuing organic growth opportunities for additional off-site at Leaf River. which we outline on the next slide. When we acquired Leaf River in 2019, we positioned NJR as a leading service provider on the Gulf Coast, one of the highest growing energy demand centers in the United States. In addition to the prime location, the long-term value of the asset was enhanced by expansion options beyond the three existing operating caverns. Since our purchase of the asset, market demand has strengthened. Throughout fiscal 2025, we conducted a number of non-binding open seasons, which confirmed a high level of commercial interest in capacity expansion. Following this favorable response, we filed a FERC application at the end of October that included several complementary investments to increase Leaf River's working gas capacity by over 70%. They include the expansion of our existing caverns to a working gas capacity of 43 BCF by 2028. and the development of an additional fourth cavern that will bring total capacity to 55 BCF. Each phase of the investment is expected to be backed by long-term fee-based contracts, building on our already strong NFE growth. This phased approach has an inherent speed-to-market advantage that positions NJR ahead of greenfield development options. To conclude, we see considerable upside in both the near and long-term as S&T becomes a greater contributor to NJR's earnings profile. Moving to clean energy ventures on slide 10, we expect to grow in-service capacity by more than 50% over the next two years. Looking ahead, we have a strong project pipeline designed to maintain investment tax credits through strategic safe harboring. This positions CEV to deliver continued growth in five single-digit unlevered returns. So with that, I'll turn the call over to Roberto for a financial review.

Roberto? Thanks, Steve. Fiscal 2025 was an excellent year. with strong energy growth, a solid balance sheet, and continued investment across our businesses. Slide 12 highlights a few fiscal 2025 accomplishments. New Jersey Natural Gas achieved a constructive outcome in its recent rate case and delivered record investments for Safe Green. Clean Energy Ventures has a record new capacity. In fiscal 2025, CD placed 93 megawatts of new commercial solar capacity into service, expanding our portfolio to 479 megawatts. In addition, CV secured investment options for years to come through effective safe harboring. In storage and transportation, Adelphia received approval of settlement on its third rate case while leaving for advanced expansion initiatives. Energy services achieved strong cash flow generation, and our home services business was named a road top 20 prop partner for the ninth consecutive year. We also marked an important milestone. 30 consecutive years of dividend increases and restoring confidence in our long-term plan. On the next slide, we finish the year at the top end of our guidance range, which was raised earlier this year. With the leader financial results ahead of expectations, roughly two-thirds of total NFVPS came from the utility. And when you exclude the net impact of the sale of our residential solar assets, that figure raises to over 70%, underscoring the stability of our earnings. Drivers of our performance included the completion of a rate case and a record year of savings investment. Additional drivers included approximately 30 cents per share from the sale of our initial solar portfolio, improved performance from our storage and transportation business, and a solid winter results from energy services. Moving to the discussion of CAPEX on slide 14, we deployed $850 million across our businesses which I'll highlight in the next few slides. On slide 15, New Jersey natural gas represented approximately 64% of total capex, with investments directed towards strengthening core infrastructure, enhancing system safety and reliability, and supporting customer growth. Almost half of these investments earned recovery with minimal lag. As shown in slide 16, fiscal 2025 CAPEX for CB came in well above expectations, reflecting accelerated progress. Importantly, our capital deployment target is fully safe harbor, securing tax benefits for future capital expenditures. Building on this from 2025, I wanted to shift our CAPEX outlook on slide 17. We're sharing a five-year CAPEX outlook of $4.8 to $5.2 billion through fiscal 2030. This represents a 40% increase over the previous five years of capital spending across our businesses. We expect that more than 60% of our total projected capex will be dedicated to the utility, with CV and S&P representing the balance. Together, these investments support our 7% to 9% long-term NCPF growth target while maintaining a solid balance sheet, as discussed in the next slide. Strong cash generation across our businesses translating to an adjusted FFO to adjusted debt ratio is projected to remain at around 20% for the next five years with no block equity needed. Additionally, ample liquidity and a well-ladder debt maturity profile minimize near-term refinancing risk and preserve financial flexibility. And finally, we're initiating fiscal 2026 NFVPS guidance with a range of $3.03 to $3.18 per share. The range is consistent with our long-term 7% to 9% growth rate, while leaving additional room for upside. The utility is expected to contribute approximately 70% of fiscal 2026 NFVPS, complemented by earnings growth from CEB and S&P and a baseline outlook for energy services. With that, I'll turn it back to Steve for concluding remarks on slide 21. Thanks, Roberto.

Over the last 25 years, we've delivered industry-leading returns, reflecting both the quality of our utility investments and disciplined contributions from our non-utility businesses. While our infrastructure investments have been the foundation of this performance, Energy Services has complemented that strength, enhancing consolidated returns and providing flexibility to reinvest in our infrastructure businesses. To recap, fiscal 2025 was another year of solid execution, marking five consecutive years of exceeding initial earnings expectations. Our long-term growth remains anchored by our regulated utility, with clear visibility into capital spending at New Jersey Natural Gas. Storage and transportation is set for accelerated growth, with earnings expected more than double in the near term, before we even begin to factor in those capacity expansions we highlighted earlier. installed capacity, and our project pipeline is secured into the future through proactive, safe harboring. NJR today stands as a balanced, diversified energy infrastructure company built for long-term stability and value creation. The outlook for fiscal 2026 and beyond is clear, well-funded, and utility anchored. As we all know, New Jersey recently had a gubernatorial election. Electricity prices and affordability issues were front and center. We understand the challenge the state is facing today, and we look forward to working with the incoming governor to meet her call for swift deployment of clean energy solutions and to continue providing affordable natural gas service to families and businesses. And finally, a sincere thank you to all NJR employees for your dedication and hard work throughout the past year. Your commitment is the foundation for our continued success. So with that, let's open the line for questions.

Ladies and gentlemen, I will now turn the call over to Adam Pryor, Director of Investor Relations. Please go ahead.

Thank you, Kelvin. Well, for those of you on the call, I'm sure you noticed that we just ran through our fourth quarter script, which we read in November. And we want to give you an update for Q1. And so, we're going to go through our presentation for that script now, and I'll turn it over to Steve Westhoven, and he'll go through our first quarter results, and Roberto Bell will follow with our financial results, and then we'll be happy to take your questions, and thank you for your patience.

Steve Westhoven Yeah, thanks, Adam. Yeah, sorry, everybody. We'll run through the scripts now reflecting this quarter. So, natural gas industry just navigated an extraordinary weather event with record-setting demand, and once again, NJR's diversified businesses responded with extraordinary performance. I want to start today's call by acknowledging our team's execution during this prolonged period of extreme cold weather, which hasn't been seen in decades. And thanks to all of our employees for your collective efforts on behalf of our customers. Our assets were operated safely and successfully across our entire natural gas portfolio. Looking at this event and at recent major winter storms, we consistently demonstrate that our systems and our people are prepared, resilient, and able to execute under pressure. At New Jersey Natural Gas, these past few weeks highlighted how critical our lifeline services are to our customers. The utility kept homes and businesses warm and supported emergency providers without interruption. Our non-utility businesses held true to the same level of performance. Both Adelphi and Leaf River experienced high utilization and continuously delivered despite regional disruptions. And our energy services team once again expertly executed. Our strategically located assets generated significant value from volatility created by the prolonged cold temperatures. And as a result of energy services performance, we're able to increase our fiscal 2026 NFVPS guidance by 25 cents a share to a range of 328 to 343 per share. This represents the sixth consecutive year of raising guidance as a result of the strength of our complementary portfolio of businesses. As I started, this was an extraordinary weather event met with NJR's extraordinary performance. I'll turn now to look how New Jersey Natural Gas took steps to protect customers against high natural gas prices during the recent cold weather. Over a seven-day stretch, New Jersey Natural Gas delivered the highest sendouts in its company's history. This demand underscores how all aspects of our local economy rely on natural gas. even more so under extreme conditions when our customers need it most. Sustained low temperatures likely will result in higher gas use by our customers, which will have an impact on bills. With a supportive regulatory framework approved by the New Jersey Board of Public Utilities, New Jersey Natural Gas is proactive in helping to protect customers against these high use increases. Each year, the utility purchases natural gas well in advance of the heating season, when commodity prices are more likely to increase in spike during the winter weather events. As a matter of policy, a minimum of 75% of the upcoming winter season's projected gas needs are secured in advance. Going into this winter, New Jersey natural gas was over 87% hedged, and this is impactful. Our average hedge prices are approximately $2.20 per decatherm for gas and storage and LNG, and that compares to a CityGate pricing that traded in excess of $135 per decatherm during the event. This disciplined approach prioritizes affordability as it allows us to secure cost-effective supply to serve our customers. In addition, throughout the year, our energy efficiency programs, namely Save Green, help customers reduce usage and lower bills. More than 110,000 customers have taken part in our programs to date, and those utilizing our whole home offerings realizing bill savings of roughly 30%. In addition to managing usage, we also provide support through financial assistance programs, equal payment plans, and proactive outreach. These efforts help connect customers with more than $16.5 million in energy assistance funding. Now let's turn to customer growth. Natural gas remains the cheapest option to heat homes and businesses, supporting New Jersey natural gas's strong customer growth rate. This growth also reflects favorable trends in new construction and conversions across our service territory. In our slide deck, we included a photo of the new housing development in Monmouth County that will add roughly 350 new customers once completed. It's a clear example of the meaningful customer-driven opportunity ahead. Now switching to a discussion of our storage and transportation business on slide 80. As we noted on our year-end earnings call, we expected double NFE over the next two years at S&T. This is driven by strong recontract in both Adelphi and Leaf River. These are fixed-price contracts with quality credit rating counter parties. During the first quarter, we filed the FERC application that includes several complementary businesses that would increase Leaf River's working capacity by more than 70% over the next few years. Today, we're announcing that we've already secured a long term contract that covers the initial capacity expansion at our existing caverns. The remaining phases of the project will be supported by long term fee based contracts. We're currently active in the FERC process with likely authorization decision coming by the end of the fiscal year. This is on track with our expectations and we'll provide updates as the project progresses. Moving to clean energy ventures on slide 9, we added approximately 10 megawatts of capacity during the quarter. Looking ahead, we expect to grow in-service capacity by more than 50% over the next two years. And our proactive state harboring initiatives to preserve federal tax incentives further strengthens our leading position in the marketplace. In a region where energy affordability concerns are driven in large part by supply shortages, CED's speed to market capability is a competitive advantage. Specifically, CEV is advancing significant wholesale PJM solar assets as PGA demand projects are trending upward. We expect these operating assets to continue to increase in values. At the same time, market shortages are opening up additional organic growth opportunities, including new technologies to optimize our existing interconnections. These technologies have the potential to unlock incremental value and add new supply to the grid at a time when New Jersey and PJM need to boast. So, with that, I'll turn the call over to Roberto for a financial review.

Roberto Rodriguez- Thanks, Keith. I'll start with a brief walk for the quarter on slide 11. We reported NSE of $118.2 million, or $1.17 per share for the quarter, reflecting execution and solid performance across our businesses. We saw high contributions from the utility this period, largely due to new base rates being in place for an entire quarter in fiscal 2026. This was offset by a lower city contribution given the gain on the sale of our residential solar assets in the prior year period. Let's move to the discussion of our capital plan on the next slide. We deployed approximately $119 million across our businesses during that quarter. New Jersey natural gas represented approximately 70% of total capex for the period, which investments directed towards strengthening core infrastructure, enhancing system safety and reliability, and supporting continued customer growth. We're reaffirming our five-year capex outlook of $4.8 to $5.2 billion through fiscal 2030. We expect that more than 60% of our total projected capex will be dedicated to the utility, with CV and S&T representing the balance. At CV, our total deployment target is fully safe harbor, securing a future size of benefits. Together, these investments support our 7% to 9% long-term initiative growth targets while maintaining a solid balance sheet as discussed in the next slide. On slide 13, we highlight the strengths of our balance sheet. Strong cash generation across our businesses translates into an adjusted FFO to adjusted debt ratio that's projected to remain around 20% for the next five years. Energy service health performance this quarter provides meaningful additional cash flow enhances our ability to manage capital spending and maintain strong credit metrics, and reinforces that we have no need for slow equity in the foreseeable future. Additionally, ample liquidity and a well-ladder debt maturity profile minimize near-term refinancing risk and preserve financial flexibility. And finally, as a result of the outperformance from energy services during the winter today, we're raising our NFVPS guidance range by 25 cents to a higher range of $3.28 to $3.43 per share. We're also revising our expected segment NFVPS contribution percentages as a result of this outperformance. The utility will remain the majority of the company's NFVPS for fiscal 2026, with energy services percentage rising as a result of capturing additional financial margin during this period of volatility. With that, I'll turn it back to Steve for concluding remarks on slide 15.

Thanks Roberto. Last month we issued NJR's fiscal 2020 corporate sustainability report, which reflects our commitment to transparency with our stakeholders. The focus of this year's report is appropriately on affordability. The report brings greater detail around our energy efficiency and customer assistance efforts. Lower natural gas prices are effectively helping reduce overall household energy costs, an important factor when addressing affordability. As many of you know, New Jersey welcomed a new governor last month. Governor Sherrill moved quickly to outline her priorities, signing two executive orders aimed at addressing rising electric utility costs and New Jersey's broader energy supply challenges. These actions are consistent with what she emphasized during the campaign, focusing on affordability for customers. These discussions are an important issue for the state, and we look forward to continuing our dialogue and working with the new administration to help drive solutions forward while growing our business. To conclude, our long-term growth remains anchored by our regulated utility with clear visibility into capital spending at New Jersey Natural Gas. Our top priority is making sure our system operates reliable when it's needed most. Storage and transportation is set for accelerated growth with earnings expected to more than double in the near term before we begin to factor in capacity expansions at Leaf River. Over the next two years, Clean Energy Ventures expects 50% increase in installed capacity active safe harboring. Overall, the momentum across all of our businesses reinforces our confidence in the path ahead. And finally, I want to thank everyone again, our NJR employees, for your dedication and hard work. So with that, let's open up the line for questions.

Ladies and gentlemen, we will now begin the question and answer session. As a reminder, to ask a question, please press the star button followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. One moment, please, for your first question. Your first question comes from the line of Gabe Marine of Mizuho. Please go ahead.

Hey, good morning, everybody. I guess the story was so good. Hey, I guess the story was so good, you have to tell it twice. So I wanted to start off on energy services. Clearly, outstanding performance here. It's supposed to be Justin Fields , City of Boulder OSMP, single digit weather again up and down the eastern seaboard this upcoming weekend for a couple days he just talked about the extent your revision here. Justin Fields , City of Boulder OSMP, may capture weather events for the rest of the quarter or there's the potential for further upside should you know volatility continue to materialize.

Yeah, thanks, Dave. Thanks for the question. Yeah, sorry about the double repeat there. The Energy Services Group and our guidance that we issued last night, based on results to date or kind of our estimates through the end of January. So, obviously, we've got a lot of fiscal year that's left and not able to incorporate events that haven't happened yet. So, you know, we'll see how those, you know, continue to play out. But certainly, you know, January was obviously very constructive, you know, for our results here at NJR.

Thanks, Steve. And maybe if I can follow up on S&T, you know, the capacity going from 43 to 55, I just want to confirm you've got contracts for that portion of the expansion. And then also, but maybe you should also speak to some of the blue sky opportunities around expanding beyond the 55? Are you getting reverse customer inquiries? Is there potential for that capacity growth to accelerate either in size or timeline? And then also, are the economics there? You talked last quarter about some of the economics behind your contracts and how that's stepped up, but are those supportive now in your mind of full greenfield development around Leith River?

Yeah, so, you know, the whole story at least forever, you know, we're going to double earnings and that's largely through, you know, contract upgrades at the gateway and the further through 27 through 2027. the filing shows compression expansion, existing, cavern expansion and then a 4th cavern expansion, which is what you're referring to. the 55, you know, BCF. So, what we have contracted for now and what we were talking about on today's call is that compression expansion and existing capacity expansion. That fourth cavern, we do not have contracts for yet, but as you can imagine, you know, the market has been very constructive, but we're still, you know, working through that. We held an open season and certainly, like I said, constructive to that point of expanding going forward. Um, there is additional expansion, you know, um, both at Adelphia gateway and we've been on what we've talked about here today. Um, you know, we'll continue to work, you know, um, you know, the markets and see what they're willing to pay for. Remember we get signed contracts and then those will. drive, you know, our investment at those facilities. So, we'll back-to-back those, and as those come in, you know, we'll certainly share it, you know, with our investors. But, you know, good news to date, and certainly the market and even recent conditions, you know, drive for the need for more storage and capacity in the Northeast, Southeast, you know, really all over the U.S.

Thanks, Keith. Appreciate it.

Your next question comes from the line of Eli Yosen of JP Morgan. Please go ahead.

Hey, good morning, everyone. Just want to start on the evolving regulatory backdrop. So how should we think about the New Jersey affordability efforts that you highlighted in the release, you know, particularly as it pertains to future rate case filings and the overall regulatory strategy at the utility? Thanks.

Thanks Eli. Yeah, affordability has always been important for us at NJR. We talked in our narrative about the way that we've hedged our gas, driving energy efficiency, reducing customer usage in order to lower their bills. distance, you know, for those that need it. So that's not a new narrative for us. You know, we'll continue, you know, to drive that forward. Remember, you know, we completed a rate case which went into effect about 14 months ago or so, 15 months ago or so. So we don't have any pressing needs to jump into the regulatory process. You know, we're going to continue to, you know, work with the administration, take advantage of the opportunities that will present themselves. You know, we do have state of New Jersey, and we're going to work proactively with the administration to achieve our shared goals. So, you know, that's the way that we're looking at it.

Awesome. But then, you know, maybe just pivoting more towards the second executive order, EO2, and the opportunity set that it offers you at CEV, can you just talk about the, you know, the plan for that business moving forward, thinking about, you know, the backlog of installs that you guys have and the safe harboring. I know you're kind of substantially through that, but just the outlook for that segment and whether or not there's any impact from recent regulation or legislation. Thanks.

Yeah, it's encouraging, you know, thanks for asking the question, you know, permit reform, you know, ways to accelerate interconnects ways to accelerate the, our ability to develop our safe harbored assets in the state of New Jersey are the quickest capacity that can be brought to market. So all those things are encouraging. You know, we're going to work with the administration. You know, they've got some work to do in order to effectuate all that. But, you know, those tailwinds are clearly in the making in order to develop more. And, you know, when we are able to achieve, you know, some, you know, evidence that we're able to move forward, then we'll certainly share that with the investing community.

Awesome. Thanks.

Your next question comes from the line of Julian DeMolin Smith of Jefferies. Please go ahead.

Hi, guys. We've actually got James Ward on here for Julian. How are you?

Hello, James.

Hey. Great color that you've given on affordability, the executive orders. So I really appreciate that. as well on the fourth cavern heading to 55 BCF. You mentioned not having contracts yet, but can you characterize the level of commercial interest you're seeing? Give us a sense of the expected capital intensity relative to the existing expansion. Maybe help us think about the timing of any associated earnings contributions. Kind of helps give clarity on the longer term run, right, into 29, 30, and so on. Thank you.

Yeah, I think the open seasons that we've had to date have been constructive. The things that we need to do are to be able to turn those open seasons and the pricing and the terms into an agreement that we can then turn it and build upon. Um, you know, right now, you know, the timing is perfect. You know, we're able to put in the compression. We can expand our existing facilities. You know, that, uh, obviously that more brownfield expansion, uh, a little bit, um, cheaper to come to market than a greenfield. But the pricing we're seeing, um, you know, gives us confidence that being able to, you know, develop this fourth cabin, you know, is, uh, In the future, and we're working towards that, you know, as far as timelines go, you know, we've already said, you know, we're going to double earnings through 2027. then, you know, we're working after we get our 1st certificate construction through the facility. So then you see, you know. the existing cavern expansion and capacity, you know, come to market with that matching contract in like a 2028 timeframe. And then fourth cavern expansion as this market develops, you know, like I said, you know, certainly recent events are supportive. Looks like, you know, 2029 timeframe, starting construction obviously sometime prior to that so we'll have to uh you know we'll see how that ends up playing out but like i said the open season's recent market you know volatility all points towards the need for more storage in that area and know that we're pursuing that aggressive aggressively that's great thank you very much another really strong start to the year guys impressive thanks back in the case

Your next question comes from the line of Chris Ellinghouse of Siebert Williams-Shank. Please go ahead.

Hey, good morning, everybody. Another great quarter. Thanks. Steve, can you talk about sort of what you're seeing in the solar pipeline outside of New Jersey and sort of given the EOs, you know, has that changed your thought process about Uh, sort of geographic diversity at this point.

No, I mean, we're still moving forward. You know, we've got about, I guess, 50% of our forward looking projects are outside the state of New Jersey. 50% obviously inside the state of New Jersey. Um, you know, we're continuing to pursue projects that, you know, meet our rate of return. And, you know, build in an area that it's friendly from a regulatory perspective. And there's a number of states that are around us that are friendly from a regulatory perspective. So, you know, we see those markets continuing. And remember, PJM is big. Right. And, you know, certainly any. Power grid isn't independent from those adjacent to it. If you've got a capacity shortage in one, it usually means there's capacity shortage in others. So, you know, this trend and the ability to quickly bring, you know, solar capacity to market, you know, more quickly than, you know, other forms, you know, nuclear, you know, some larger gas. fire generations and instances like that, you know, is important. So all these are constructive. You couple on, you know, the EO and potential permitting reform and things like that, you know, hopefully we see some acceleration, you know, in the near future trying to solve this problem of being short capacity in the short term.

Okay. As far as storage and transmission goes, The growth is great. Can you, outside of the Adelphia Gateway outcome, can you sort of give us any color vis-a-vis sort of the proportionality of the recontracting price improvement versus, say, the capacity? I think it's slide eight. How should we think about the timing of the growth to the new target, you know, price versus volume?

Yeah, you know, it's hard to kind of differentiate that, but I think it's, you know, pretty clear if you go back to what our historical earnings are, we're going to double earnings from that segment by 2027. And, you know, in that is, you know, quite a bit of recontracting, you know. When purchasing Leaf River, you know, part of our investment thesis that, you know, storage rates were going to go up, and you see that being executed. At Delta, you gave way, you know, like a normal interstate pipeline going through rate cases, being able to, you know, raise rates to reflect capital that was invested on the pipeline in the future, you know, certainly being reflected as well. You know, I think, you know, this recent weather event continues to reinforce the you know, how short our region is. And we're already talking about that from an electric perspective, you know, for quite some time. So this infrastructure is very needed. The easiest way to expand infrastructure is to expand already existing infrastructure, which we have in both, you know, southeast in the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the East and the

CEV having some technology opportunities for upside. Can you elaborate on that a little bit?

Yeah. You know, we own, you know, a number of great connected facilities. You know, those interconnections are very valuable. Being able to use those at a much higher load factor through capacity to the grid, and you can bring capacity to the grid in that way, you know, very quickly. And, you know, being able to deploy capacity quickly is exactly what the market needs. So now it's just a matter of, you know, how do we put together the regulatory constructs aligned with the economics of being able to make the investments to make all this work. But we think we've got a leg up because we have brownfield, you know, infrastructure, right, infrastructure that's already in place, the ability to expand the without the need to build, you know, pure greenfield, gives us that advantage and should make us a first mover in this space. So those are the things we're thinking about and certainly trying to drive forward. Again, all the things are outside of our plan, so that would be upside to our plan. So our plans show exactly what we know is going to, you know, make the investments on outside of the plan are the things that we're talking about here. You know, trying to drive as a management team to execute.

That sort of suggests some storage opportunities, which are certainly high-ticket items. So, you know, you sort of alluded to that possibility in terms of maybe some capex upside. Is that what your thought process is?

Yeah. Yeah, exactly it. Exactly it.

Okay. One last question. Obviously, you're hedging strategy has really paid off handsomely in the first quarter. You know, do regulators fully appreciate the benefit that you bring there and or how do you sort of capitalize on that by, you know, reinforcing the value proposition that you bring with your hedging strategy?

Yeah, I mean, the regulators were part of the construct and putting that together. So they certainly are aware of it. We talk about it and, you know, we file our BGSS, you know, that can be recognized. You know, certainly they see, you know, our rates in the ground, you know, having a average price of storage of $2.27 when city gate prices were over $100. Even if you look at some of the supplier pricing, $30, $40 down in those areas, being able to avoid those purchases you know, has, you know, just a huge benefit to our customers not having to pay spot prices for that natural gas. So, yeah, they're certainly aware of it. You know, we talk about it. And, you know, those programs are in place for a reason. They work and mitigate, you know, costs to our customers longer term. All right. Thanks. I appreciate it. Thank you.

Your next question comes from the line of Travis Miller of Morningstar. Please go ahead.

Good morning, everyone. Thank you. Thanks, Travis. Just a quick clarification on the guidance raised at $0.25. Was that all from what you're anticipating in Q2, or was there some of that outperformance in Q1 relative to what you were expecting?

Yeah, Travis, you know, we looked at our book and we saw the performance in January and decided that it was significant enough to warrant a raise during this call. So, really, this is an estimate, you know, through the end of January at this point.

Okay. Okay. That's clear. And then in terms of CapEx for the contracted compression and existing expansion, When are we going to see that flow through? I'm assuming that's not in your capex guidance right now, so would we see that in the coming quarters?

Yeah, it actually is in our capex guidance right now, so you'll see that on the schedule. There's an appendix schedule to what we posted last night and you can go through that. So that is part of our capital schedule right now.

OK, for the Leaf River line. That's right. In 2027, I assume, right? Yes, 2026 and 2027. 2027 probably. Okay. Okay. Okay. Makes sense. And then higher level question in New Jersey, positive, et cetera. Would you be interested in rate-based solar or rate-based any kind of generation or energy other than natural gas distribution?

We would certainly work with the administration and do anything to be able to lower customer costs, improve the amount of capacity within the state of New Jersey to lower cost to consumers. So there's a number of items that are on the table. We're not part of any kind of rate-based generation discussions at this point, but if it made sense, had the right risk profile, and we're able to deploy capital in the energy

we would consider it okay great i appreciate the thought all right thanks travis there are no further questions at this time and with that i will now turn the call back over to adam pryor director of investor relations for closing remarks please go ahead thanks so much i'd like to thank all of you for your patience and for joining us this morning we appreciate your interest and investment in njr and have a good day and the rest of your thank you so much

Ladies and gentlemen, this concludes today's call. We thank you for participating. You may now disconnect your lines.