Release Date: November 04, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Public Service Enterprise Group Inc (PEG, Financial) reported strong financial results with net income of $1.04 per share for Q3 2024, a significant increase from $0.27 per share in Q3 2023.
- The company successfully resolved two major regulatory filings, including PSE&G's base rate case and the second phase of its clean energy future energy efficiency programs.
- PSEG Power's merchant nuclear fleet continues to perform well, supplying New Jersey with reliable 24/7 carbon-free energy.
- PSE&G invested approximately $1 billion during the third quarter and is projected to complete 2024 with capital spending at $3.5 billion, slightly higher than planned.
- The company reaffirmed its guidance for long-term non-GAAP operating earnings growth of 5% to 7% through 2028, supported by its capital investment programs and the nuclear PTC.
Negative Points
- PSE&G's third-quarter net income and non-GAAP operating earnings were slightly lower than the previous year, primarily due to higher investment-related depreciation and interest expense.
- The delay in the PJM capacity auction could impact future earnings, although the company supports the pause to get the reference unit and RMR contracts right.
- There is uncertainty regarding the renewal of the Long Island contract, which represents $0.07 to $0.08 of earnings at risk.
- The company faces challenges in balancing affordability and reliability, especially with the potential increase in data center demand.
- The final interpretation of the PTCs and market price by the DOE is still pending, creating some uncertainty in financial planning.
Q & A Highlights
Q: Does the FERC decision on interconnection agreements affect your commercial discussions with Artificial Island?
A: Ralph LaRossa, CEO, stated that the FERC decision was narrow and specific to the parties involved, and it does not slow down PSEG's efforts to support New Jersey's economic development goals. PSEG remains uniquely positioned due to its site characteristics and continues to explore various solutions for interconnection agreements.
Q: How does the recent rate case outcome and capacity auction delay affect your 5% to 7% growth rate guidance?
A: Daniel Cregg, CFO, explained that the rate case outcome was as expected, allowing full recovery of capital investments. The capacity auction delay is unfortunate, but PSEG is focused on maintaining its growth trajectory within the 5% to 7% range over the long term.
Q: What is the impact of moving Artificial Island to a front-of-the-meter scenario on overall economics?
A: Ralph LaRossa noted that the transmission rate in the A service territory is just under $7 per megawatt hour. The impact on economics would depend on how transmission services are priced and the potential for tax incentives, allowing New Jersey to meet its economic goals.
Q: Can you provide more details on the potential for data center demand and related transmission needs?
A: Daniel Cregg mentioned that PSEG has submitted proposals for competitive transmission projects and sees opportunities due to data center demand. However, these are not included in the current capital investment forecast, and PSEG is confident in its ability to handle incremental demand with existing infrastructure.
Q: How does PSEG view the potential for co-location deals with data centers near nuclear plants?
A: Ralph LaRossa emphasized that PSEG is open to various solutions, whether co-located or in front of the meter, depending on what best attracts hyperscalers to New Jersey. The focus is on a combination of energy pricing, transmission charges, and tax incentives to create an attractive package.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
