Ladies and gentlemen, thank you for standing by. My name is Rob and I am your event operator today. I’d like to welcome everyone to today’s conference, Public Service Enterprise Group’s Fourth Quarter and Full Year Results 2023 Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded today, February 26, 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 fourth quarter and full year 2023 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 10-K 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 also discuss non-GAAP operating earnings, which differs from net income 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 the 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. Good morning to everyone and thanks for joining us to review PSEG’s 2023 fourth quarter and full year results. For the fourth quarter of 2023, PSEG reported net income of $1.10 per share compared to net income of $1.58 per share in the fourth quarter of 2022. Non-GAAP operating earnings for the fourth quarter of 2023 were $0.54 per share compared to $0.64 per share in the fourth quarter of 2022. Our non-GAAP results, excluding the items shown in attachments 8 and 9, which we provided with the earnings release. For the full year of 2023, PSEG reported net income of $5.13 per share compared to $2.06 per share for the full year of 2022. Our non-GAAP operating earnings of $3.48 per share for the full year came in at the high-end of our 2023 guidance range of $3.40 to $3.50 per share and marked the 19th consecutive year that we delivered results meeting or exceeding our guidance. Our fourth quarter 2023 financial results capped off a solid operating year. Building on this results, you can see on Slide 5 that we also reaffirm PSEG’s full year 2024 non-GAAP operating earnings guidance of $3.60 to $3.70 per share as well as our 5% to 7% earnings CAGR through 2028 and our $18 billion to $21 billion regulated CapEx plan that supports our rate base CAGR of 6% to 7.5% through 2028. In rolling forward our 5-year capital plan to 2028, we added approximately $3 billion of investments to the prior plan that started from a year end 2023 rate base of $29 billion. These are all unchanged from our January 2024 investor updates and we continue to identify potential investment opportunities for future rate base growth. Dan will discuss our financial results in greater detail following my…

Thank you, Ralph and good morning everyone. As Ralph mentioned earlier, PSEG reported net income of $5.13 per share for the full year of ‘23 compared to net income of $2.06 per share for 2022. Non-GAAP operating earnings for the full year of 2023 were $3.48 per share compared to $3.47 per share for 2022. For the fourth quarter of 2023, net income was $1.10 per share compared to $1.58 per share in 2022, and non-GAAP operating earnings were $0.54 per share for the fourth quarter of 2023, compared to $0.64 per share in 2022. We’ve provided you with information on Slide 7 and 9 regarding the contribution to non-GAAP operating earnings per share by business segment for the fourth quarter and full year of 2023. Slides 8 and 10 contain waterfall charts that take you through the net changes, the quarter-over-quarter and full year periods and non-GAAP operating earnings per share by major business. Starting with PSE&G, we reported fourth quarter 2023 net income of $0.58 per share compared to $0.70 per share in 2022. The PSE&G had non-GAAP operating earnings of $0.59 per share for the fourth quarter of 2023 compared to $0.70 per share in 2022. The main drivers for both net income and non-GAAP operating earnings results for the quarter were growth in investments in transmission and gas distribution. These favorable items were offset by the expected decline in pension income and lower OPEB-related credits as well as anticipated higher depreciation, amortization and interest expense resulting from higher investments, not yet reflected in rates and the timing of O&M in the quarter that was within our expectations for the full year. Compared to fourth quarter 2022, margin was $0.03 higher, driven by transmission at $0.01 per share, and gas margin also at $0.01 per share higher,…

[Operator Instructions] The first question is from Shahriar Pourreza with Guggenheim Partners. Please proceed with your question.

Hi, good morning, team. It’s actually Constantine here on for Shahriar. Congrats on a great quarter.

Hi, Constantine.

Hello, Constantine.

Good morning. Starting off on the power side of the business, do you see any further upside to earnings contribution from nuclear going beyond the sale of operates and refueling cycle adjustments like Hope Creek in ‘25 and maybe any pushes and takes as these could be accretive versus the utility growth on a consolidated basis?

Constantine, I think we’ve been mentioning for quite some time that we’ve got – we potentially have some upside down from PPAs or something similar to that. But we’re going to look at what the state – how the state moves from an economic development standpoint and then make some decisions from there. And let me give you a very specific kind of thought process. We’ve done a lot of work down and around the plan in anticipation of the wind port. And so that work progressed and the state has been very happy with it. They have got some manufacturers that are either in the process of moving into that area or still considering it. But if they don’t use all of that area, maybe we could look at electrolyzer set up that could be down in that vicinity that could provide us with an opportunity. Maybe there could be a data center down in that area. But all of those things really are driven by the growth that the state is looking to do from an economic development standpoint. And as we have done for many years here aligns with the policy of the state and that’s going to enable us to continue to excel. So I think there is some upside. None of that is in our plan. None of it has been in our plan, and we’re just going to keep our options open.

Okay, and any particular timeframe that you are looking at or now ongoing?

No, no. I think once we get a couple of years out here, we will be able to see – there is exert still in place through ‘25 and as all the companies are talking about a noise on the PTC rules need to come out. And once all of that comes together, we will be able to look at a plan to optimize the revenues from those plants.

Okay. Perfect. And maybe shifting to PSE&G for a little bit. Do you have any thoughts around any lessons learned around recent rate proceedings in the state? And just how are you thinking in terms of update filings through the process and maybe the activity around settlement negotiations like any deal breakers or settlement like ROE or anything else?

Yes. Constantine, I think the biggest lesson learned is that New Jersey has its act together. I really think that the state – if you look at what has happened recently with JCP&L and Atlantic City Electric, really good outcomes. And I wouldn’t say everybody is always – people are always looking for a little more here or there. But the process and the methodology that’s been used has been consistent with in the past. There hasn’t been any real deviations and we don’t expect there to be anything different with our case, going in with a case that’s not as big as some others have gone in with. And as we mentioned in the prepared remarks, if you look at Page 12 in the deck, we’ve done really well by our customers over a time period that has seen a lot of inflation. We’re really not anticipating this to be a very contentious case.

Excellent. I personally appreciate that. Thanks. Thanks for taking the questions.

Thanks, Constantine.

The next question is from the line of David Arcaro with Morgan Stanley. Please proceed with your question.

Hi, David.

Hi, thanks. Good morning. Hey, Ralph. Hey, Dan.

How are you?

Good, good. Ralph, I think in the past, you’ve thought that there could be some upside to the PJM load growth outlook in New Jersey, and we’ve obviously seen some of that get reflected in the latest load forecast. We’ve also seen some state initiatives pushing for AI and data centers. So I guess what are you seeing on the ground in terms of data center activity, any upside to latest load growth expectations?

Yes. So a couple of pieces there, David. First of all, on the state level, we were very happy to see the PJM listened to our recommendations and most importantly, to the state’s policy. And so they have reflected both of those things in their latest forecast. That being said, PJM is a lot bigger than the state of New Jersey. And so we’re hoping that PJM takes a look across its entire footprint and make sure that the same methodologies are being used and a consistent methodology in all the states. States have different policies. So they may have different outcomes, electric vehicles being a great example, but how that – how any of those loads are being looked at should be consistent in our opinion, across the entire footprint of PJM. And then specifically in our backyard, we are starting to see some data centers pop up here. I would say – so far, what we have seen is somewhere in the neighborhood of 50 megawatts to 100 megawatts, but those conversations are just starting. Again, if you think about what the state has been pushing from an economic development standpoint, there is a lot of AI activities. The Governor is trying to entice some companies to move into the area. Once that happens, there might be some more opportunities for us. And our system is really well positioned. We have talked for years about the build that we did on the transmission side and the self transmission upgrades that we have been doing. It’s driving some last mile investments for us, but that’s also, again, consistent with what we have talked about with you all in the past.

Yes. And David, just a reminder, we do have the conservation incentive program that’s in place, and so what this matters more from our perspective, it’s less about the particular road growth and the volumes that we would sell. It’s much more about the infrastructure needs to have these folks be able to set up shop here in New Jersey.

Yes. And the only – think about it this way, too, David, is if Dan is putting in a data center, he is going to use 100 megawatts, that’s 100 megawatts more to spread the costs over for all the customers. So, it also creates more headroom for our residential customers. So, all bits of it come together in a positive way.

Yes, that’s helpful. Got it. Thanks. And am I hearing you correctly that I am wondering about the potential T&D CapEx opportunity that could stem from this so far. Are you thinking it’s kind of within the programs that you are – that you are growing already. I am wondering if there is potential incremental upside if this becomes a bigger driver.

Yes. We would certainly signal that to you if we did. But I think what Dan and Carlotta and I have been saying wherever we have been going has been, right now, we have got our last mile investments that we need to make. And then if you look at our CapEx bar charts, we have a few – a little bit of upside that’s built into the high and the low, but there is nothing that I would say is incrementally driving us above those charts that we have provided in the past.

Yes. Okay. Got it. Thanks. Then I was just wondering, as we think about affordability in the state, I was wondering if you could run through just the elements of rate headroom that you see looking forward, things that fall off of the rate plan, I am thinking storms, ZECs, etcetera, just to put the rate case increase into perspective.

Yes, David, I am going to let Dan walk you through that, but because there is a lot of puts and takes that we have been taking people through, but start with Page 12 and take it from there.

Ralph, these were up exactly, right. I think – I tend to not think about it as headroom as available dollars. I would just try to think about it as maintaining an affordable bill for the State of New Jersey. And if you take a look at Page 12, it shows that we have done a very good job of doing exactly that over the last 5 years. And this is on a relative scale, but I think we have been able to manage the system very well at an affordable rate. And also with the reliability that Ralph talked about in his prepared remarks and also the customers Ralph that you talked about within those remarks. You do mention something that I think is important as well. If we take a look at the ZECs that will roll off in May of 2025, you will see a couple of hundred million dollars that will come off of PSEG customers and closer to $300 million across the state. So, that is I think a benefit from an affordability perspective to the extent that there is capital that’s needed for the reliability of the system and some of the energy transition that can help in that regard. But we don’t really think about it as headroom, we think about just trying to maintain as affordable bills we can while we are still providing quality service to customers.

Great. Thanks so much. Appreciate it.

Thanks David.

[Operator Instructions] Our next question comes from the line of Durgesh Chopra with Evercore ISI. Please proceed with your question.

Hey team. Good morning. Thanks for letting me.

Good morning.

Good morning Ralph. Just on the $3.1 billion energy efficiency filing, maybe can you just clarify, is that the spending, is that over a 6-year period, or is that from ‘25 to ‘27, that’s part one. And then part two, when should we expect a decision from the commission on that?

Yes. So, great questions, Durgesh. And it can be a little confusing because they do talk about the period as a triennial period. And so that ‘25 to ‘27, it’s actually 2.5 years, which is the reason for some of the extensions that you have seen and that we remarked upon earlier in our prepared remarks. Think about that 3-year period as being the period during which you are going to get the commitments to actually have the work get done. But we have described for folks, and it’s important given the magnitude of the numbers that it’s understood that the actual spending to satisfy those commitments is going to be done closer to a 5-year to 6-year period. So, I think that’s how to think about it. It is described as a triennial period, but that’s more about getting the commitments. The spend will be over a little bit longer period. And the schedule that’s in place right now is for us to move forward. We made that filing, if you recall, December 1st. We did that at the same time as all of the utilities in the state. And you should see in the third quarter to fourth quarter. I think it’s October of this year coming up is the estimated date for us to get an outcome there.

Got it. And that process is separate and independent from the rate case, right? Just to be clear.

Yes, that is correct.

Okay. Perfect. Thank you. And then can I just quickly follow-up, Dan, just latest thoughts and your discussions on the nuclear PTC and where do we stand on getting guidance in terms of timeline and what to expect there?

Yes. We are still in a waiting game to guess. I wish I had a different answer for you. Treasury, as we have spoken to them last, which is just a couple of months ago, we made them aware as we do every time that we can, that it’s important for them is try to get the rules out sooner rather than later. But as we sit here today, they have not issued a date by which that they will provide that guidance. So, we are just awaiting their answer. I don’t have anything more specific, I wish I did.

Thank you very much. Excellent. Thanks guys.

You bet.

Our next question comes from the line of Carly Davenport with Goldman Sachs. Please proceed with your question.

Hey. Good morning. Thanks for taking the questions.

Good morning Carly.

Maybe just to quickly follow-up on Durgesh’s question there. As we think about the interim before we get the PTC guidance, how should we think about the hedge program in the meantime, should we expect to see any potential incremental ‘24 hedges or starting to layer in ‘25 hedges between now and then?

Yes. Carly, so we have provided some data with respect to where 2024 is. And we do have some hedges out for ‘25, obviously, at this juncture. I mean it is a little bit more challenging, but you don’t know exactly how they are going to come out with that definition of gross receipts. And so what we have tried to do internally is just take a look at what some of the potential most logical outcomes could be and try to triangulate off of that to try to basically do exactly what we have always done is try to minimize the overall risk inherent with that business. And so if under different scenarios, you could see a moderation of risk by moderating our hedges a little bit. That’s basically what we are going to try to do, again the objective of being identical to where it has been in the past to minimize the overall risk. And if there is a little bit of a different hedge position we might want to put on to do that, that’s what we would end up doing.

Got it. Okay. That’s really helpful. And then maybe just as you think about managing O&M, can you just talk about some of the moving pieces we should be keeping in mind for 2024. I know that there might be some upward pressure from some of the nuclear outages that you have, but anything that you would flag on O&M for ‘24?

Yes. No, there is nothing really. Just a reminder, though, for everyone, we really have that great outcome that we had with our union negotiations where we have labor certainty starting last May and continuing where we had – we negotiated a 4-year deal with our unions at 4% increase than 3%, 3% and 3% in the subsequent year. So, there is no surprises that we see on the horizon from that aspect and there is a lot of talk certainly about fuel prices on the nuclear side, which we can give you some more about if you are interested. But it’s such a small percentage of the overall O&M that we have that it’s really – it doesn’t become a material conversation for us at this point. So, we don’t really see anything that’s coming at us there is always storms and there is other activities, but nothing that we specifically are concerned about.

And even just to follow-on Ralph’s comments for ‘24 the nuclear fuel comment, most of what we will incur for 2024 is what’s in the reactor already. And so as we do step through the time, you have seen some increment in those markets. But for 2024, you shouldn’t expect anything very different.

Got it. Okay. Great. Thanks so much for the time.

Thanks.

Thank you. Our next question is from the line of Ryan Levine with Citi. Please proceed with your question.

Good morning everybody.

Hi Ryan.

One follow-up on nuclear, should we expect that there is a plan in place on what you would do once you get the treasury regulation around tax policy that you could roll out shortly thereafter or is there a more delayed timeline in terms of response that we should look for?

Yes. Ryan, I can’t say enough about Dan and his team as far as how much they have done as far as looking at a bunch of different options right now. So, I think we are very well positioned to act when we need to act and they have been very thoughtful about that. But I will give it to Dan to give you any more specifics.

Yes. I mean I think Ralph said it, we have done a lot of work trying to understand where this could come out. I guess I would say the treasury has given us the time to do that work by not having some guidance out as early as we might have liked. So, in those situations, what you do is you try to think about where they may come out with guidance and to prepare yourself to be ready for any of those outcomes. And so that’s what we have been doing. To your – the other part of your question, yes, we would let you know what our response will be after it does come out, we are able to thoroughly read through everything and make sure that we understand all the nuances that may or may not be in what comes out. I hope when it does come out, it will be won [ph] and done. Instead of guidance that we will have incremental guidance to follow, it would be great if it was – if it comes out on full form, but we will definitely share how we are approaching things once we know what the final rules are.

Great. And unrelated, I think you were touching on time of use rates as being important for the data center potential opportunity in New Jersey. Is that – am I hearing that right? And is there any rate design mechanisms that are being discussed to maybe further attract that industry development in the state?

Yes. So, maybe a little bit less from a data center perspective, but certainly from a broader perspective, if you think about EVs, one of the things that we did touch on was that time of use rates is a topic that we would anticipate that we would work through within this rate case. And I think in Ralph’s prepared remarks, you talked about that being helpful to those that ultimately have EVs and could encourage some incremental adoption there. But that’s more where you would find it in the rate case and less about data centers more about electrification and EV.

Great. Thank you very much…

Which is really well positioned, Ryan, between the SIP that we have had in place for some time and where we are from a rate structure standpoint that Dan’s comments were bid on.

Thank you.

Thanks Ryan.

[Operator Instructions] There are no further questions at this time. And I would like to turn the floor back to Mr. LaRossa for closing comments.

Great. Thanks. Listen, this – I think the fact that we have got, we only have five questions on this call, folks asking questions that at the end of the day, it was another uneventful call for us. And that is just really what we are hoping to put in place as we have worked really hard as a team to close out our first full year together. 2023 was the year of execution that came across from a number of different areas in our company. But it’s all built on the base of a utility that’s really uniquely positioned. It’s got – it’s provided affordable service for its customers, it’s provided reliable service for its customers and its continued to deliver high-quality service based upon the results of all the polling that we do with our customers and J.D. Power just being one of those examples. And then you just combine that with a nuclear fleet now has continued to be more predictable, not only because of what we are seeing from the revenues side and the PTCs, but from an operating standpoint, you see in our deck, we went from 92% capacity factored and 93% capacity factors this year, and we will continue to improve on that. That’s our expectation. We want to continue to provide that great revenues from those plants that’s going to provide us with the opportunity to continue to not issue equity, and not sell any assets and continue the growth that we have had on the utility side. So, we thank you for all the support that you have given us over 2023, and you can expect from us the same consistent and uneventful progress that we have made throughout this past year. So, thanks and have a great day.

Ladies and gentlemen, this concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.