Public Service Enterprise Group Incorporated

Ladies and gentlemen, thank you for standing by. My name is Maria, and I am your event operator today. I would like to welcome everyone to today's conference, Public Service Enterprise Group Second Quarter 2019 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. At that time, if you have a question, you will need to press the star and then the number one on your telephone keypad. To withdraw your question, please press the pound key. As a reminder, this conference is being recorded today, July 30, 2019, and will be available for telephone replay beginning at 1 p.m. Eastern today until 11.30 p.m. Eastern on August 8, 2019. It will also be available as an audio webcast on PSEG's corporate website at www.pseg.com. I would now like to turn the conference over to Carlotta Chen. Please go ahead.

Thank you, Maria. Good morning, and thank you for participating in our earnings call. PSEG's second quarter 2019 earnings release attachments and slides detailing operating results by company are posted on our website at investor.pseg.com, and our 10-Q will be filed shortly. The 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 also discuss non-GAAP operating earnings and non-GAAP adjusted EBITDA, which differ from net income as reported in accordance with generally accepted accounting principles 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 earnings materials. I will now turn the call over to Ralph Izzo, Chairman, President, and Chief Executive Officer of PSEG. Joining Ralph on today's call is Dan Craig, Executive Vice President and Chief Financial Officer. At the conclusion of their remarks, there will be time for your questions.

Thank you, Carlotta, and thank you all for joining us. PSEG reported non-GAAP operating earnings for the second quarter of 2019 of $0.58 per share versus $0.64 per share in last year's second quarter. is EG's GAAP results for the second quarter with 30 cents per share compared with 53 cents per share in last year's second quarter. Our results for the second quarter bring non-GAAP operating earnings for the first half of 2019 to $1.66 per share. This is a 3.1% increase over non-GAAP operating earnings of $1.61 per share for the first half of 2018 and reflects the growing contribution from our regulated operations. Earnings at PSENG reflect the benefits of our continued investment in New Jersey's energy infrastructure and rate relief from the 2018 settlement of our distribution rate review. Slide six and seven summarize the results for the quarter and the first half of 2019. We've had a constructive quarter with respect to several regulatory and policy matters that will advance our long-term strategy on several fronts. PSE&G has reached an agreement in principle with key parties in the Energy Strong II infrastructure filing that will enable the continuation of increasing the resiliency and improving the reliability of critical energy infrastructure in New Jersey. PSE&G is working with the New Jersey Board of Public Utilities staff with rate council and other parties on finalizing a stipulation of settlement, which we will then submit to the New Jersey Board of Public Utilities for approval in September. The agreement provides for $842 million of investment for projects that commence in the fourth quarter of this year and which are expected to be completed by December of 2023. providing an annual level of spend that is comparable to that of Energy Strong I. PSE&G would be eligible to recover $692 million on an accelerated basis, with the remaining $150 million recovered in a future rate case. The program is split $741 million to electric, which is approximately one-half of our requested amount, and $101 million to gas. PSE&G's original filing of the Energy Strong II infrastructure plan outlined $2.5 billion of capital spend through the end of 2024, with $1.5 billion for electric infrastructure and $1 billion for gas infrastructure. The energy efficiency component of PSE&G's Clean Energy Future filing, different from Energy Strong II, remains pending before the New Jersey Board of Public Utilities. We have reached an agreement in principle that extends the matter into 2020 in anticipation of finalization of the state's energy master plan that authorizes in the interim PSE&G to continue work on four of its existing award-winning energy efficiency programs for an additional year. The clean energy filing is designed to achieve the electricity and gas energy savings goals outlined in 2018's Clean Energy Act, which requires the state's utilities to implement energy efficiency programs to achieve annual savings of 2% and three-quarters of a percent for electric and gas usage, respectively. The agreement covering an extension of both the clean energy filing matter and the four existing energy efficiency programs will require New Jersey BPU approval. With these recent updates, PSE&G remains on track to invest $2.7 billion in electric and gas infrastructure upgrades to its transmission and distribution facilities during 2019 to improve reliability and increase resiliency. We continue to forecast over 90% of PSE&G's planned capital investment will be directed to the utility over the 2019 to 2023 timeframe. Updating for the recent Energy Strong II agreement, PSE&G is narrowing its estimated capital spending range to $12 to $14.5 billion from what had been an estimate of $11 to $16 billion, which translates to a compound annual growth rate and rate base of 7.5 to 8.5% from the starting point of $19 billion at year-end 2018. New Jersey continues to advance its clean energy agenda and recently issued a draft energy master plan to reach 100% clean energy by 2050. The Board of Public Utilities announced a total of six stakeholder meetings through early September and expects to finalize the draft energy master plan in December. PSE&G believes our clean energy future filings are aligned with the broad goals of the energy master plan. and notes the Master Plan's recognition of the benefits of electrifying transportation, energy storage, and advanced meter infrastructure, or smart meters, and their importance to providing customers and utilities with essential information to facilitate energy efficiency and outage restoration. This type of data will accelerate service restoration times for customers during storms, such as those we experienced last week in New Jersey. Another part of Governor Murphy's clean energy agenda includes the development of a robust offshore wind industry in the state. In June, the Board of Public Utilities awarded the first of three planned solicitations to ORSED's 1,100 megawatt ocean wind project. We expect to make a decision on our option to pursue an equity interest in the ocean wind project in the coming months. At PSEG Power, the BPU awarded zero-emission certificates, or ZECs, to Power's three New Jersey nuclear units on April 18th to help preserve the state's largest source of zero-carbon generation. ESEG Power also completed its 1,800-megawatt combined cycle gas turbine construction program during the quarter with the commercial operation of the Bridgeport Harbor 5 generating station in early June. In late June, PSTG Power announced the sale of its 776 megawatt interest in the Keystone and Conama coal-fired generating units in Pennsylvania. The sale, expected to close later this year, subject to customer closing conditions and regulatory approvals, resulted in an after-tax impairment charge of $284 million that reduced net income in the second quarter. The transaction will allow us to dispose of a non-core asset and move PSEG power closer to eliminating coal from its fuel mix. This process will be complete by mid-2021 when the Bridgeport Harbor 3 coal-fired generating plant is scheduled to be retired. The sale announcement is part of the 2,400 megawatts of total coal-fired generation that PSEG power will have either retired early or sold between 2017 and 2021. and further reduces the intensity of our carbon dioxide emissions. This move is on top of the fact that PSEG already has one of the lowest carbon emission rates among large U.S. power producers. PSEG Power's fleet has reduced its carbon emission intensity by more than 40% since 2005 and is about half the emission intensity compared to the country overall. This has been achieved by maintaining its nuclear units, investing in highly efficient gas fire generation units and renewables, and exiting coal-fired generation assets. As outlined during our May 29th investor conference of just a few months ago, PSEG continues to advance its climate strategy. Last week, we proactively established plans to reduce the carbon emissions of PSEG Power's generating fleet 80% by the year 2046 from 2005 levels, with a vision of net zero emissions by 2050. In support of these carbon reduction goals, PSEG also announced that it has no plans to build or acquire new fossil fuel power plants. However, we do plan to operate existing assets through their useful lives. PSEG also committed to reporting annually on sustainability and climate using the Task Force on Climate-Related Financial Disclosures framework, starting in 2020, which is when we will also issue our first climate report. We continue to await a final order from the Federal Energy Regulatory Commission in their effort to reform the PJM capacity auction toward a just and reasonable construct. As I'm sure you know, on July 25th, the FERC issued an order directing PJM to delay its August capacity auction until it can approve replacement auction rules. Given our second quarter results, we are affirming the full year forecast of PSEG's non-GAAP operating earnings at $3.15 to $3.35 per share. At the midpoint of our guidance, this represents over 4% growth in earnings over 2018's full year non-GAAP operating results of $3.12 per share. A higher percentage contribution from regulated earnings at PSE&G, which is approximately 75%, is driving this increase and offsetting challenging market conditions in the power and natural gas markets. And just as a reminder, our 2019 Operating Earnings Guidance includes the benefits from a partial year of ZEC payments covering all three of our New Jersey nuclear plants. I'd like to thank our employees for their tireless efforts to restore service to our customers in New Jersey, who lost power as a result of severe storms last week. It's their commitment and ability to safely restore customers that continues to provide me with the confidence in our operating excellence model. I'll now turn the call over to Dan for more details on our operating results, and we'll be available for your questions after his remarks.