Public Service Enterprise Group Incorporated

Welcome, everyone, to today's conference, Public Service Enterprise Group's First Quarter 2024 Earnings Conference Call and Webcast. At this time, all participants are in listen-only mode. Later, we'll 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 the number one on your telephone keypad. To withdraw your question, please press the star and the number two. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded today, April 30, 2024, 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 over to Carlotta Chan. Please go ahead.

Good morning, and welcome to PSEG's first quarter 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 discuss non-GAAP operating earnings, which differs 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 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 to review PSEG's first quarter 2024 results. PSEG's financial results for the first quarter are in line with our full-year expectations for 2024, and we are reaffirming our non-GAAP operating earnings guidance of $3.60 to $3.70 per share. We are also continuing to execute on our long-term strategy to grow PSEG's non-GAAP operating earnings by 5% to 7% through 2028, which we are also reaffirming today. This will be accomplished by investing in energy infrastructure and energy efficiency programs, which support greater electrification of transportation, homes, and workplaces, while also reducing greenhouse gas emissions while helping our customers lower their bills. Turning to the first quarter of 2024, TSEG reported net income of $1.06 per share compared to $2.58 per share in 2023, which reflects the absence of mark-to-market gains that benefited first quarter GAAP earnings in 2023. Non-GAAP operating earnings were $1.31 per share in the first quarter of 2024 compared to $1.39 per share in 2023. As a reminder, our non-GAAP results exclude the items shown in attachments 7 and 8, which we provide with the earnings release. The main driver for the quarter was continued rate-based growth from investments focused on infrastructure replacement, which was offset by higher investment-related expense. These expenses will build over the balance of 2024 as we await the resolution of our pending distribution rate case later this year. In addition, the Nuclear Production Tax Credit went into effect on January 1st of 2024, which provides our nuclear fleet with downside price protection through 2032, an important contributor to the increasing predictability of PSEG's results. Dan will provide a detailed financial review later in the call, but I want to note for PSEG Power & Other, some margin contribution will be skewed to the back half of 2024 as we expect to realize most of the increase in 2024's gross margin versus 2023 during the second half of the year. Turning to operations, we are pleased to report that both our utility and nuclear businesses continue to exemplify operational excellence. PSE&G and PSEG Long Island met the challenge of quickly restoring service to tens of thousands of customers following severe rain and wind storms early in the year. And at PSEG Power, our nuclear fleet also operated well during the quarter, achieving a capacity factor of 96.8% and supplying New Jersey and the region with over 8 terawatt hours of reliable, carbon-free baseload energy. Shifting to an update of our pending rate case, our combined electric and gas base distribution case covering 57% of our rate base is progressing as expected at the BPU. We are currently working through the discovery and documentation phase, responding to requests for information from parties to the case, and we recently submitted updated test year financials. The procedural schedule for the case includes several weeks of built-in settlement discussions beginning later in the second quarter. Based on recent and prior rate case timelines, we anticipate that this rate case will be settled later in 2024. As a reminder, this combined electric and gas filing proposes an overall revenue increase of 9%, with a typical combined residential electric and gas customer seeing a proposed increase of 12%, or less than 2% compounded growth over this six-year period. During this same period, we have consistently delivered on our reputation for reliability, affordability, and nationally top-tier customer satisfaction scores. With a nonstop focus on cost containment, PSEG continues to manage its O&M to minimize customer bills while continuing to compare favorably to regional peers for residential electric and gas service and are among the lowest in national comparisons on a share of wallet basis. And moving on to capital investments, we are on track to execute PSEG's five-year $19 to $22.5 billion capital plan through 2028. The regulated portion of that program is $18 to $21 billion, and it's focused on infrastructure replacement, as well as our Clean Energy Future EE program. PSE&G has installed and placed into service about 1.8 million of the planned 2.3 million smart meters for our AMI program. Still on schedule, it's still on budget for completion by the year end. These investments are projected to result in a compound annual growth in rate base of 6% to 7.5% through the 2024 through 2028 period, premised on PSE&G's year-end 2023 rate base of $29 billion, which was up 10% over the prior year. And we continue to pursue potential investment opportunities for future regulated growth. Among those opportunities we are currently evaluating are competitive transmission solicitations in the Mid-Atlantic region, similar to PSEG's award of a $424 million project from PJM's 2022 Window 3 process. In April of 2024, PSEG submitted bids to the New Jersey Board of Public Utilities, or the BPU, for its pre-built infrastructure project to support offshore wind. The BPU is expected to announce the winner or winners of the pre-built infrastructure solicitation in the second half of 2024. BSEG is also evaluating two other upcoming regulated transmission solicitations this July. The first is the BPU's second public policy solicitation for offshore wind transmission infrastructure utilized in the state agreement approach. The second is PJM's 2024 Regional Transmission Expansion Plan window one solicitation, which is expected to include the impacts of higher load growth forecasts that have been influenced by increased electrification expectations and data center load growth throughout PJM. At power, our nuclear fleet is also pursuing multiple growth paths with modest capital spending needs. We have previously commented on our plans for thermal upgrades at the Salem Nuclear Station, which could potentially add up to 200 megawatts of additional capacity and would qualify for clean hydrogen tax credits under current rules for both additionality and hourly matching. TSEG Nuclear has also notified the Nuclear Regulatory Commission of its intention to pursue subsequent 20-year license renewals for our three reactors in New Jersey, This would extend the operational capabilities from 2036, 2040, and 2046 for Salem Units 1 and 2 in Hope Creek to 2056, 2060, and 2066, respectively. Beyond these opportunities in nuclear, there has been discussion lately about the potential for direct power sales to data centers from our three-unit artificial island site. We have had discussions related to both sides of the meter in recent months. in a form of new business inquiries at PSE&G for mid-sized data center construction of approximately 50 to 100 megawatts, and behind-the-meter inquiries for co-located facilities that prioritize highly reliable, carbon-free baseload power from existing facilities, all without the challenges faced by non-dispatchable generation. PSE&G has had a long history of aligning with New Jersey policy goals. This data center opportunity has the potential to create a nexus between economic development and energy policy, and we stand ready to support New Jersey in its recent efforts to create an in-state artificial intelligence hub. Our New Jersey nuclear units could provide access to a highly reliable carbon-free source of baseload power and infrastructure consideration that is increasingly mission critical for the large data center developers and hyperscalers. One thing that is certain at this point is that all these opportunities in nuclear would be incremental to our long-term forecasted growth rate guidance of 5% to 7% through 2028, based upon that PTC threshold price. Another differentiating factor for PSEG overall is that our nuclear operations provide the business with the added flexibility to fund its current regulated investment plan without the need to issue new equity or sell assets. I'd like to close my remarks by thanking our employees for all they do and their dedication to safety, reliability, and our customers. I'll now turn the call over to Dan to discuss our financial results and outlook in greater detail, and I will be available for your questions after his remarks.