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    PEG
    Earnings call· Jun 2026(Q2 FY26)

    PUBLIC SERVICE ENTERPRISE GROUP Q2 FY26 earnings call PEG

    Aug 4, 2026 Source

    Executive summary

    Public Service Enterprise Group Q2 FY26 — Reaffirms Guidance Amidst Regulatory Evolution and Strong Operational Performance

    PSEG delivered solid Q2 FY26 financial and operational results, reaffirming its full-year operating earnings guidance and long-term growth outlook. The company is proactively engaging with evolving regulatory frameworks in New Jersey and PJM, including an anticipated base rate case filing by year-end 2026 and exploring new generation opportunities, all while maintaining a strong balance sheet to fund its extensive capital program.

    Highlights

    5

    • Non-GAAP operating earnings reached $0.86 per share in Q2, contributing to a strong first half performance of $2.41 per share.

    • Successfully restored power to approximately 380,000 customers within 24 hours following severe July 4th storms, demonstrating system reliability.

    • Clean Energy Future programs now generate over $1 billion in annual customer savings, benefiting nearly 525,000 customers.

    • PJM transmission cost allocation rules change will result in an expected prospective annual benefit of approximately $65 million for customers.

    • PSEG Nuclear achieved a 92% capacity factor, supplying 7.8 terawatt hours of carbon-free generation.

    Concerns

    3

    • The absence of Zero Emission Certificate programs, which concluded in May 2025, was offset by higher market prices and nuclear generation.

    • Potential elimination of the 50 basis point RTO incentive could represent an annual headwind of $40 million net income, or approximately $0.08 per share, effective January 2027.

    • Growing regulatory lag from historical test year and robust capital program necessitates an earlier base rate case filing.

    Guidance & targets

    4
    CategoryTargetConfidence
    Full-year non-GAAP operating earnings
    $4.28 to $4.40 per share
    high materiality
    High
    5-year non-GAAP operating earnings growth outlook
    6% to 8% compound annual growth rate
    high materiality
    High
    5-year regulated capital investment plan
    $22.5 billion to $25.5 billion
    high materiality
    High
    5-year rate base growth
    6% to 7.5% compound annual growth
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    PSE&G
    Utility results were driven by ongoing investment in energy efficiency and gas system modernization programs. Higher investment in transmission was offset by a prior year true-up. Distribution margin increased due to GSMP II extension roll-ins and higher energy efficiency investment. O&M, depreciation, and interest expenses rose due to operational costs, capital investments, and higher interest rates.
    Net income (Q2 FY26): $342MNet income (Q2 FY25): $332MNon-GAAP operating earnings (Q2 FY26): $342MNon-GAAP operating earnings (Q2 FY25): $332MTransmission margin (YoY): FlatDistribution margin (YoY): Up $0.05 per shareDistribution O&M expense (YoY): Up $0.01 per shareDepreciation (YoY): Up $0.01 per shareInterest expense (YoY): Up $0.01 per shareUtility taxes and other (YoY): Favorable $0.01 per shareElectric residential customer growth: ~1%Gas residential customer growth: Flat
    		———$342M
    PSEG Power & Other
    Net energy margin improved due to higher generation volume, higher capacity prices, and higher gas operations, partly offset by the absence of zero emission certificates and LIPA-related fees. Interest expense increased due to incremental debt at higher rates.
    Net loss (Q2 FY26): $8MNet income (Q2 FY25): $253MNon-GAAP operating earnings (Q2 FY26): $83MNon-GAAP operating earnings (Q2 FY25): $52MNet energy margin (YoY): Rose $0.08 per shareO&M (YoY): FlatInterest expense (YoY): Rose $0.01 per shareTaxes and other items (YoY): Unfavorable $0.01 per share
    		———$83M

    Operational metrics

    17
    Net income per share
    $0.67vs $1.17 in Q2 FY25
    Q2 FY26

    Reported net income for the second quarter.

    Net income per share
    $2.15
    H1 FY26

    Reported net income for the first half of the fiscal year.

    Peak summer load
    10,446highest in 14 years
    July 2026

    Reached during a heat wave in the service area.

    Annual customer savings from EE programs
    $1B
    Annual

    Generated by Clean Energy Future programs since October 2020.

    Customers benefiting from EE programs
    525,000
    Since Oct 2020

    Residential and business customers saving energy and lowering utility bills.

    Jobs supported by EE investments
    9,300
    Past 6 years

    Including a network of over 1,000 trade and union allies.

    Residential gas bill decrease
    >5%
    Beginning Oct 1

    Filed with the BPU, driven by higher revenues from colder-than-normal winter.

    PJM transmission cost allocation benefit
    $33M
    June 1 - Year-end 2026

    Resulting from favorable prospective change to transmission cost allocation rules.

    PJM transmission cost allocation benefit
    $65M
    Annual prospective

    Expected annual benefit from favorable prospective change to transmission cost allocation rules.

    RTO incentive elimination headwind
    $40M
    Annual

    Estimated net income headwind from potential loss of 50 basis point RTO incentive.

    PSEG Nuclear capacity factor
    92%
    Q2 FY26

    Achieved while supplying 7.8 terawatt hours of carbon-free generation.

    PSEG Nuclear cleared capacity in PJM auction
    3,600
    June 1, 2028 - May 31, 2029

    Cleared in PJM's base residual auction for the specified energy year.

    Available liquidity
    $3.4B
    End of June

    Total available liquidity, including cash on hand.

    Cash on hand
    $200M
    End of June

    Included in total available liquidity.

    Variable rate debt
    3%
    End of June

    Percentage of total debt.

    GSMP II extension roll-ins
    $23M
    Effective April 2026

    Approved and rolled in as planned after program completion in 2025.

    Unsecured senior notes issued
    $500M
    June 2026

    Part of recent financing activity.

    Industry KPIs

    7
    MetricValueDetails
    Adjusted operating EPS$0.86per share
    Multi year capital plan$24B-$28BUSD
    Dividend per share growthConsistent and sustainable
    Regulatory rate base growth6% to 7.5%CAGR
    Allowed ROE equity layer rate casesAnticipates filing by year-end 2026
    Combined electric gas framework mandatesPower New Jersey Act
    Major regulated project construction progress92%capacity factor

    Capital programs

    4
    PSEG's Total 5-year Capital Investment Programunderway$24B-$28B
    Funding: No new equity or asset sales

    Solid balance sheet enables funding without new equity or asset sales, supporting consistent dividend growth.

    PSE&G 5-year Regulated Capital Investment Planunderway$22.5B-$25.5B

    Maintained plan, supporting 6% to 7.5% compound annual growth in rate base.

    PSE&G Full Year 2026 Regulated Capital Investment Planon track$4.2B
    Period spend: $1B

    Benefit: infrastructure modernization, energy efficiency, electrification, load growth

    PSE&G invested approximately $1 billion during Q2 2026 and is on track to execute the full year plan.

    GSMP III Programunderway$1.4B

    Benefit: gas system modernization

    Approved by the BPU last November. Approximately $1 billion of the total program will receive accelerated recovery.

    Risks & headwinds

    4
    Absence of Zero Emission Certificate (ZEC) programsOngoing

    Concluded in May 2025

    Mitigation: Offset by increased realized market prices, higher nuclear generation, and gas operations.

    Potential elimination of 50 basis point RTO incentiveEffective January 2027

    $40M net income / $0.08 per share annual headwind

    Mitigation: Considered in the long-term non-GAAP operating earnings guidance (6%-8% through 2030).

    Growing regulatory lagCurrent

    From historical test year and robust capital program

    Mitigation: Anticipating filing a base rate case by year-end 2026 to update base rates and align with state's regulatory modernization goals.

    New nuclear project risk allocationLong-term

    Unquantified

    Mitigation: Seeking appropriate allocation of project risk to ensure utility-like risk profile; engaging in efforts to enable new nuclear development.

    What to watch in Q3 FY26

    5

    BPU EO1 Phase 2 Outcomes

    Next quarter / Q4 FY26
    CurrentPhase 1 report released, no formal recommendations
    TargetClarity on cost discipline, financing modernization, performance-based ratemaking

    Why it matters

    These outcomes will shape the future regulatory construct in New Jersey and impact PSEG's operational and financial planning.

    The BPU will now proceed to Phase 2 of this effort, which is expected to focus on cost discipline, financing modernization, targeting incentives and share savings and stage performance-based rate making.

    Q&A highlights

    6

    How does the decision to file a base rate case align with the BPU report, and what aspects of the report might be incorporated into this review?

    Ralph LaRossa stated that the timing of the base rate case filing aligns well with the state's goals for transparency and performance-based ratemaking, as a base rate case is needed to appropriately set up for these reforms. He does not expect many of the BPU report's recommendations to be incorporated into this specific filing, but it positions PSEG to participate effectively in Phase 2 of the EO1 process.

    “To be set up appropriately for that, you need a base rate case. And so the timing of that aligns with the fact that we haven't had anything on the electric side and upwards of 5 years for an IIP kind of puts us in a place where this makes a ton of sense for us right now.”

    asked by Nicholas Campanella · answered by Ralph LaRossa

    2 min read6 chapters

    Detailed Narrative

    01

    Operational Resilience and Storm Response

    PSEG demonstrated strong operational resilience during the July 4th holiday weekend, successfully restoring approximately 380,000 customers within 24 hours after severe heatwaves and thunderstorms with 70+ mph winds hit its service area. The restoration effort involved over 330 crews and 10 million proactive customer communications, maintaining an excellent safety record. The company welcomes an upcoming review of its storm response by the New Jersey Board of Public Utilities (BPU) and will submit a comprehensive post-event performance report.

    02

    Clean Energy Future and Customer Affordability Initiatives

    The Clean Energy Future programs continue to deliver significant benefits, generating over $1 billion in annual customer savings for nearly 525,000 residential and business customers since October 2020. These investments have also supported approximately 9,300 jobs statewide. PSEG plans to file a proposal by September 30 for a one-year extension of the EE II Trinium framework and is implementing residential bill credits and a greater than 5% decrease in residential gas bills starting October 1. Additionally, a favorable change in PJM transmission cost allocation rules, effective June 1, 2026, is expected to provide an annual prospective benefit of $65 million to customers.

    03

    Evolving Regulatory Landscape in New Jersey

    The BPU recently concluded Phase 1 of its directive to modernize the electric utility business model, highlighting promising regulatory frameworks such as multi-year rate plans, performance-based rates, and earnings sharing mechanisms. PSEG views these as opportunities to enhance transparency and align with state energy policy goals. The company will fully participate in Phase 2, which will focus on cost discipline, financing modernization, and performance-based ratemaking, and expects to file comments by September 18.

    04

    Anticipated Base Rate Case Filing

    PSE&G anticipates filing a base rate case by year-end 2026 to update base rates. This decision is driven by the growing regulatory lag from its historical test year (last settled in October 2024) and significant investments in distribution rate base. The company believes an earlier filing aligns with the state's goals for greater accountability and transparency, setting the stage for potential future multi-year rate plans and performance-based ratemaking.

    05

    PJM Market Dynamics and Generation Opportunities

    PJM's latest capacity auction priced at $325 per megawatt day, with the reserve margin still falling below reliability requirements. PSEG Power is actively reviewing PJM's reliability backstop procurement (RBP) and interim resource adequacy service (IRAS) rules. The company has submitted several project proposals for new dispatchable generation that could be paired with new large loads through bilateral contracts, leveraging its internal generation capabilities and skill sets for utility-like opportunities.

    06

    New Nuclear Development and Long-Term Resource Adequacy

    New Jersey's Power New Jersey Act establishes a new nuclear procurement process to secure at least 1,100 megawatts. PSEG Nuclear, as the only operator of existing nuclear facilities in the state and holding an early site permit, is actively engaged in enabling new nuclear development at its Salem County site. The company believes new nuclear represents a compelling long-term solution for resource adequacy and economic development, emphasizing the need for appropriate project risk allocation.

    AI-generated summary of the company’s earnings call. Not investment advice.