Public Service Enterprise Group Incorporated

Ladies and gentlemen, thank you for standing by. My name is Rob, and I am your event operator today. I would like to welcome everyone to today's conference, Public Service Enterprise Group's Second Quarter 2026 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 draw your question, press star and the number two. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. As a reminder, this conference is being recorded today, August 4, 2026, and will be available for replay as an audio webcast on the 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 second quarter 2026 earnings presentation. On today's call are Ralph LaRossa, Chair, President, and CEO, and Dan Cregg, 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 10Q will be filed later today. 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 or loss, 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 our prepared remarks, we will conduct a 30-minute question and answer session. I will now turn the call over to Ralph LaRossa.

Thank you, Carlotta, and thank you for joining us to review PSEG's second quarter 2026 results. Starting with our financial results, PSEG reported net income of $0.67 per share and non-GAAP operating earnings of $0.86 per share, bringing our first half results to $2.15 per share of net income and $2.41 per share of non-GAAP operating earnings. Our ongoing investments in PSEG system replacement, reliability, and energy efficiency were the main drivers of growth in our financial results in the second quarter. And that PSCG power and increase in realized market prices, higher nuclear generation and gas operations more than offset the absence of the zero emission certificate programs that concluded in May of 2025. With results for the first half of 2026 coming in as expected, We are pleased to reaffirm our full year non-GAAP operating earnings guidance in the range of $4.28 to $4.40 per share. Now our operational results may have even been better as we successfully managed one of the most challenging storm restorations in our company's history. Over the July 4th holiday weekend, a series of heat waves and successive thunderstorms hit our service area. Accompanied by winds of over 70 miles per hour, PSE&G reconnected approximately 380,000 customers with nearly all customers restored within 24 hours of losing power, demonstrating the value of our system reliability investments and our crew's steadfast commitment to our customers. PSE&G's round-the-clock restoration efforts were led by over 330 crews, and were supported by over 10 million proactive customer communications. In addition to thanking our employees who participated in the storm response, I also want to highlight that we worked this multi-day restoration effort with an excellent safety record and provided PSE&G crews to help our neighboring utilities with their restorations. We support and welcome the upcoming review of our storm response by the New Jersey Port of Public Utilities, and we will be submitting a comprehensive post-event performance report to them tomorrow, August 5th. During the heat wave, PSE&G reached a peak summer load of 10,446 megawatts, the highest level in 14 years, and activated demand response, part of our Clean Energy Future programs, during three separate events in early July, helping to keep Our Clean Energy Future programs now generate more than $1 billion in annual customer savings, helping nearly 525,000 residential and business customers save energy and lower utility bills since we began the CFEE program back in October of 2020. Our EE investments have also supported approximately 9,300 jobs statewide over the past six years, including a network of more than 1,000 trade and union allies. We are proud of our strong performance to date in this program, including the success of our job programs, including the use of union labor for this work. We expect to file our proposal to implement the BPU's recently adopted framework for a one-year extension of the EE2 triennium by September 30th. And more good news for customers. This month, we are implementing residential bill credits consistent with Executive Order 1 and continuing the 12-month scheduled refund of approximately $166 million of the zero emission certificates that started back in June. PSE&G has also filed with the BPU to lower residential gas bills by more than 5% beginning October 1, continuing to benefit our customers with the lowest gas utility bills in New Jersey and the region. We are also pleased to mention that PJM made a filing at FERC in June to implement a favorable prospective change to transmission cost allocation rules effective June 1 of 2026. Based on public data from PJM, This prospective change will result in approximately $33 million benefit to our zonal transmission customers for the period running from June 1st through year-end 2026, when the expected prospective annual benefit of approximately $65 million. This is another example of how we continue to advocate on behalf of our customers. Since Governor Sherrill's inauguration, her administration has been focused on New Jersey affordability. The Governor's first executive order directed the BPU to study modernizing the electric utility business model and last month the BPU released its consultant report which also marked the conclusion of phase one of this directive. While no formal recommendation was issued, several examples of promising regulatory frameworks from other states and multiple reforms were highlighted. These included multi-year rate plans, performance-based rates, Performance Incentive Metrics, Earnings Sharing Mechanisms, Decoupling, and Shared Saving Mechanisms, all of which can further alignment and transparency between the utility business model, state energy policy goals, and affordability in the state. The BP will now proceed to phase two of this effort, which is expected to focus on cost discipline, financing modernization, targeting incentives and shared savings, and Stage Performance-Based Rate Making. BSE&G will fully participate in this proceeding and we expect to file comments by September 18th. We are encouraged by the report's balance assessment of the extent to which the business model changes can address affordability as well as the report highlighting the value of utilizing multiple criteria in its decision making. As we prepare for these upcoming stakeholder proceedings, combined with the growing regulatory lag that comes from our historical test year and our robust capital program, we believe there is an opportunity to bridge Governor Sherrill's call for greater accountability and transparency with our regulatory requirement to recover prudently invested capital and update our cost of service. PSE&G's last base rate case, settled in October of 2024, established the requirement to file our next base case no later than 2029. However, we have stated before that we could file sooner if conditions warranted. When you consider that we have added a significant amount of distribution rate base at a time when there have been fewer infrastructure investment programs, the alternative is more frequent base rate cases. As a result, PSE&G currently anticipates filing by year-end 2026 to update base rates. Now turning to PSEG power. PSEG nuclear also performed well during the quarter, supplying the grid with 7.8 terawatt hours of carbon-free 24 by 7 baseload generation and achieving a capacity factor of 92% that included the second consecutive breaker-to-breaker run at Salem Unit 2. As widely expected, PGM's latest capacity auction priced at $325 per megawatt day, the upper end of the price collar, and fell 6.8 gigawatts short of PGM's targeted reliability requirement. This collar will remain in place during the upcoming December 2026 auction, covering capacity pricing into mid 2030. The uncapped price in the latest auction would have been $555 per megawatt day, but the reserve margin still falls well below PGM's reliability requirement. We are continuing to review PGM's recent filings detailing their reliability backstop procurement and IRAS rules, the Interim Resource Adequacy Service, formerly known as Connect and Manage, including PGM's Friday submission to FERC. As part of the bilateral phase of PGM's RBP, PSEG Power recently submitted several project proposals throughout the region that may qualify as new, dispatchable generation that could be paired with new, large loads through bilateral contracts. Turning to long-term resource adequacy here in New Jersey, Governor Sherrill recently signed the Power in New Jersey Act into law establishing a new nuclear procurement process at the BPU to procure at least 1,100 megawatts through a state-backed program. As the only operator of existing nuclear generating facilities in New Jersey, PSEG Nuclear has been engaging in efforts to enable new nuclear development at our site in Salem County since 2016. when we obtained an early site permit from the U.S. Nuclear Regulatory Commission, one of only six currently issued in the United States. We believe that new nuclear generation represents a compelling long-term solution to address New Jersey's growing resource adequacy needs and support economic development in South Jersey, and a successful framework for new nuclear will require an appropriate allocation of project risk. At the same time, PSEG powers continuing discussions with interested parties that see value in our existing nuclear production, future nuclear upgrades, and other generation opportunities. In summary, our teams delivered solid financial and operational results for the second quarter and first half of 2026, enabling us to maintain PSEG's full year 2026 non-GAAP operating earnings guidance. We are also reaffirming PSEG's five-year non-GAAP operating earnings growth outlook of 6% to 8% through 2030 as we continue to pursue opportunities incremental to our long-term forecast, including the potential to contract our nuclear output under multi-year agreements. Importantly, our solid balance sheet enables the funding of PSEG's total five-year capital investment program of $24 to $28 billion without the need to issue new equity or sell assets and provides the opportunity for consistent and sustainable dividend growth. I'll now turn the call over to Dan, who will review the quarter's results and then rejoin the call for the Q&A session. Great.