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    PUBLIC SERVICE ENTERPRISE GROUP INC (PEG)

    Business Description

    Public Service Enterprise Group Incorporated (PSEG) is a diversified energy company operating primarily through its two main segments: Public Service Electric and Gas Company (PSE&G) and PSEG Power LLC. PSE&G is a public utility that provides electric transmission and electric and gas distribution services in New Jersey, regulated by the New Jersey Board of Public Utilities (BPU) and the Federal Energy Regulatory Commission (FERC) . PSEG Power is an energy supply company that operates merchant nuclear generating assets and engages in competitive energy sales, including bidding energy, capacity, and ancillary services into markets and entering bilateral contracts . The company focuses on regulated investments to improve sustainability and predictability, with a capital investment program estimated between $18 billion to $21 billion from 2024 to 2028 .

    1. Public Service Electric and Gas Company (PSE&G) - Provides electric transmission and electric and gas distribution services in New Jersey, investing in regulated solar generation projects and energy efficiency programs.
      • Electric Distribution - Delivers electricity to residential, commercial, and industrial customers.
      • Gas Distribution - Supplies natural gas to customers, ensuring safe and reliable service.
      • Transmission - Manages the high-voltage transmission of electricity across the region.
    2. PSEG Power LLC - Operates merchant nuclear generating assets and engages in competitive energy sales, including third-party sales and sales to affiliates.
      • Electricity Sales - Offers electricity and related products through market bidding and bilateral contracts.

    Q2 2024 Summary

    Initial Price$66.53April 1, 2024
    Final Price$73.63July 1, 2024
    Price Change$7.10
    % Change+10.67%

    What went well

    • PSEG is experiencing significant growth in data center demand, with several hundred megawatts moving into the firm stage, representing new capital investment opportunities.
    • Progress on nuclear business upsides is on track with no issues, including fuel cycle changes at Hope Creek, upgrades at Salem, and long-term license extensions, supporting earnings growth.
    • Strong outlook for EV adoption and electrification initiatives, with investments in infrastructure modernization and energy efficiency, and no anticipated election-related risks to EV investments.

    What went wrong

    • Uncertainty in Advancing Co-located Data Centers at Artificial Island: PSEG indicated that they are not yet at the stage of discussing an Interconnection Service Agreement (ISA) for co-located load at Artificial Island, suggesting potential delays or uncertainties in their data center expansion plans at this site.
    • Limited Contribution of Capacity Market to Earnings Growth: PSEG acknowledged that the upcoming PJM capacity auction results are not expected to significantly impact their 5% to 7% earnings growth forecast, indicating limited upside potential from capacity markets for their generation assets.
    • Noncommittal Stance on FERC Policy Developments: When asked about their position on the FERC docket affecting PJM, PSEG executives stated that they do not have enough details to weigh in and are focusing on supporting local economic development plans, potentially reflecting a passive approach to policy matters that could impact their operations.

    Q&A Summary

    1. Data Center Co-Location Opportunities
      Q: When will you finalize a co-location data center deal?
      A: We haven't set a time frame yet, but we're carefully considering potential deals to ensure alignment with state policies and economic development goals. We're seeing significant interest, with several hundred megawatts of data centers moving forward in New Jersey.

    2. Impact on Capital Expenditure Plans
      Q: How will data centers affect your CapEx plans?
      A: We're seeing steady growth in data center requests and EV charging, which may require system investments. We'll update our capital plan at the end of the year, but we're pleased with the positive developments and the potential opportunities they present.

    3. Assumptions for PJM Capacity Auctions
      Q: Are you assuming higher capacity payments in your forecast?
      A: Our long-term plan includes some assumptions, but capacity revenues are not a significant part of our overall mix. Our 5% to 7% growth rate isn't highly sensitive to capacity prices, and we don't expect the upcoming auction results to materially impact our outlook.

    4. Regulatory Perspective on Co-Located Load
      Q: Will FERC proceedings delay your co-location deals?
      A: We don't anticipate any delays. Each deal is specific, and we believe in following existing PJM rules. If FERC sees challenges, they'll step in, but we're committed to supporting New Jersey's economic development without holding up our plans.

    5. Nuclear Operations and Uprates
      Q: Any progress on nuclear uprates and license extensions?
      A: Everything is on track with no red flags. We're moving forward with fuel cycle changes at Hope Creek, upgrades at Salem, and pursuing long-term license extensions for our nuclear units.

    6. EV Growth and Investment
      Q: Any election risks to EV uptake and investments?
      A: We don't see any significant risks. Regardless of political changes, we expect continued EV adoption due to our compressed service territory, and we're investing accordingly in distribution infrastructure to support growth.

    7. Rate Case Process and Stakeholder Engagement
      Q: Any issues in your current rate case proceedings?
      A: The process is progressing efficiently with no red flags. Our team is executing well, and we appreciate the thoughtful approach of the Public Utilities commission.

    8. Potential Impact on Customer Bills
      Q: Will higher prices crowd out rate base investments?
      A: We don't foresee higher capacity or power prices impacting our investments. Customer income has been strong, and the share of wallet for utility bills remains consistent. Required utility investments will continue as planned.

    Key Metrics

    View all financials →
    Revenue by Segment - in Millions of USDQ3 2024
    PSE&G2,139
    PSEG Power & Other583
    Eliminations-80
    Electric Distribution1,406
    Gas Distribution162
    Transmission441
    Electricity and Related Product Sales-
    - Third-Party Sales (PJM)206
    - Sales to Affiliates0
    Gas Sales-
    - Third-Party Sales45
    - Sales to Affiliates0
    Other Revenues from Contracts267
    Revenues Unrelated to Contracts115
    Total Revenue2,642

    Executive Team

    NamePositionStart DateShort Bio
    Ralph A. LaRossaChair of the Board, President & CEOSeptember 2022Ralph A. LaRossa is the Chair of the Board, President, and CEO of PSEG. He has been serving as Chair of the Board since January 2023 and as President and CEO since September 2022. He joined PSE&G in 1985 .
    Daniel J. CreggExecutive Vice President & CFONovember 13, 2023Daniel J. Cregg serves as the Executive Vice President and CFO of PEG. He has been in this role since at least November 13, 2023, as indicated by his signature on the registration statement filed on that date .
    Tamara L. LindeExecutive Vice President & Chief Legal OfficerSeptember 16, 2024Tamara L. Linde has been with PSEG since 1990 and has served as the company's General Counsel for the past ten years. She was appointed as Executive Vice President and Chief Legal Officer effective September 16, 2024 .
    Kim C. HanemannPresident & COO, PSE&GN/AKim C. Hanemann serves as the President and COO of PSE&G. She was listed as one of the Named Executive Officers in the 2022 and 2023 proxy statements for PSEG. Specific details on her start date are not provided .
    Charles V. McFeatersPresident & Chief Nuclear Officer (CNO)May 20, 2023Charles V. McFeaters was promoted to the position of President and CNO of PSEG Nuclear on May 20, 2023. Prior to this role, he served as the Senior Vice President of Nuclear Operations at PSEG Nuclear .
    Grace ParkExecutive Vice President & General CounselSeptember 16, 2024Grace Park was appointed as the Executive Vice President and General Counsel of PSEG effective September 16, 2024. She joined PSEG in 2017 and was promoted to Vice President, Deputy General Counsel, and Chief Litigation Counsel in 2020 .

    Questions to Ask Management

    1. Given the postponement of the second state agreement approach by the BPU and potential changes in FERC and PJM transmission planning, how is PSE&G adjusting its strategy for future regulated transmission investments, and what impact might this have on your capital plan?
    2. With the Russia waivers on nuclear fuel supply expiring in 2028 and your current coverage only through 2027, what specific steps are you taking to secure long-term fuel supply beyond 2027, and how might potential supply constraints or cost increases affect your nuclear operations?
    3. You've highlighted significant opportunities in co-located data centers and increased data center load growth; what challenges do you foresee in realizing these opportunities, particularly regarding infrastructure investment and regulatory hurdles, and how might they impact your capital expenditure plans?
    4. As higher capacity and power prices could benefit your unregulated generation units, are you concerned that rising customer bills might crowd out necessary rate base investments, and how do you plan to balance these factors to ensure customer affordability while funding utility growth?
    5. Regarding the Long Island Power Authority's RFP for grid management beyond 2025, what competitive pressures do you face in retaining this contract, and what strategies are you implementing to ensure PSEG remains the preferred operator in a potentially more competitive selection process?

    Share Repurchase Program

    Program DetailsProgram 1
    Approval DateN/A
    End Date/DurationN/A
    Total additional amount$500 million
    Remaining authorizationN/A
    DetailsPart of a strategic initiative to return capital to shareholders. Completed through open market purchases and an accelerated share repurchase program.

    Past Guidance

    Q4 2023 Earnings Call

    • Issued Period: Q4 2023
    • Guided Period: FY 2024
    • Guidance:
      1. Full Year 2024 Non-GAAP Operating Earnings Guidance: $3.60 to $3.70 per share .
      2. Earnings CAGR: 5% to 7% compounded annual growth rate for operating earnings through 2028 .
      3. Regulated Capital Expenditure Plan: $18 billion to $21 billion through 2028, supporting a rate base CAGR of 6% to 7.5% through 2028 .

    Q1 2024 Earnings Call

    • Issued Period: Q1 2024
    • Guided Period: FY 2024
    • Guidance:
      1. Full Year 2024 Non-GAAP Operating Earnings Guidance: $3.60 to $3.70 per share .
      2. Long-term Non-GAAP Operating Earnings Growth: 5% to 7% compound annual growth through 2028 .
      3. Capital Investment Plan: $19 billion to $22.5 billion through 2028, with the regulated portion being $18 billion to $21 billion .
      4. Rate Base Growth: 6% to 7.5% compound annual growth through 2024 to 2028, based on a year-end 2023 rate base of $29 billion .

    Q2 2024 Earnings Call

    • Issued Period: Q2 2024
    • Guided Period: FY 2024
    • Guidance:
      1. Long-term Non-GAAP Operating Earnings Growth: 5% to 7% through 2028 .
      2. Capital Investment Plan: $18 billion to $21 billion from 2024 to 2028 .
      3. Full Year 2024 Non-GAAP Operating Earnings Guidance: $3.60 to $3.70 per share .
      4. Rate Base Growth: 6% to 7.5% compound annual growth over 2024 through 2028, starting from a year-end 2023 rate base of $29 billion .

    Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: N/A
    • Guidance: The documents do not contain information about the Q3 2024 earnings call for PSEG (PEG). Therefore, I cannot provide the guidance metrics from that specific earnings call.