Public Service Enterprise Group (PEG) Q2 FY26 earnings call: guidance and Q&A

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

Given recent changes like the base rate review and RTO adder, where does PSEG see itself within its 6% to 8% EPS growth range?

Ralph LaRossa reaffirmed confidence in the 6% to 8% EPS growth range, noting that the RTO adder was one of the scenarios planned for. He highlighted other opportunities in the industry, including PJM's RBP and potential nuclear plant upgrades, as factors supporting the outlook.

“Yes, Nick, we see ourselves in the 6% to 8% as we've been saying. So that hasn't changed. We reaffirmed. We believe there's other opportunities that are presenting itself in the industry that we have opportunities to participate in.”

asked by Nicholas Campanella · answered by Ralph LaRossa

Can you provide more details on the project proposals submitted for PJM's RBP and the scale of the opportunity for PSEG Power?

Ralph LaRossa indicated that PSEG Power is exploring opportunities for new dispatchable generation within and outside New Jersey, leveraging its internal generation capabilities. He noted that PJM's RBP and IRAS processes, which offer more utility-like, long-term PPA agreements, present a suitable environment for PSEG to re-engage in generation development, but details are still evolving.

“Now as PJM is moving into this RBA and there's more opportunities for long-term PPA type or utility-like agreements, we see an opportunity that might present itself. So we've got a few opportunities, we think, inside New Jersey, if you outside New Jersey that we're taking a look at.”

asked by Unknown Analyst · answered by Ralph LaRossa

What sort of returns would PSEG target for opportunities pursued under the RBP, considering the $555 price cap?

Daniel Cregg stated that it would be premature to provide specific return expectations in a competitive situation. However, he emphasized that PSEG is interested in exploring opportunities that meet its criteria for being 'utility-like' or sufficiently contracted, where returns would be commensurate with the risk taken.

“It would be foolish to provide what an expectation would be of returns in a competitive situation, so I won't do that. But I do think that there's enough there for us to be interested in exploring getting into the process and seeing if it meets the criteria, which what we've talked about is whether it's going to be utility-like or contracted enough to be attractive to us.”

asked by Michael Sullivan · answered by Daniel Cregg

How does new nuclear fit into addressing new supply needs, and is it too far off to be a practical solution?

Ralph LaRossa acknowledged that new nuclear is a long-term solution, typically involving 12-year projects, and thus falls into the 'long-term bucket' for supply needs. While he believes new nuclear makes sense and aligns with state policies, he stressed the need for both short-term and long-term solutions, given the immediate demand for load connection.

“I do believe that new nuclear makes sense, as we said in the prepared remarks, I think it's aligned again with the policies of the state. So we've always done that. And so we're trying to enable that as best we can. Whether or not those units, whether it's in New Jersey or across the country come on quick enough for some of the load that's looking to connect, these are 12 years -- 12-year long projects.”

asked by Jeremy Tonet · answered by Ralph LaRossa

Is there a full understanding among policymakers regarding the potential cost and affordability impact of new nuclear, despite bipartisan support?

Ralph LaRossa stated that policymakers have access to levelized cost of energy reports, providing a clear line of sight into potential costs. However, the biggest open item is how to adequately allocate project risk and protect ratepayers from cost overruns, which is why PSEG focuses on 'enabling' new nuclear rather than direct development, to ensure it remains utility-like in its risk profile.

“I think there's a question about the timing of the projects coming online and when -- what the cost will be at that point, right? So that's always a conversation that you have with policymakers. I think the biggest open item for everyone is, while there's bipartisan support for building new nuclear, there's also bipartisan support to protect rate payers from cost overruns.”

asked by Paul Patterson · answered by Ralph LaRossa