Public Service Enterprise (NYSE:PEG) reported first-quarter financial results on Tuesday. The transcript from the company's first-quarter earnings call has been provided below.
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Summary
Public Service Enterprise reported Q1 2026 net income of $1.48 per share and non-GAAP operating earnings of $1.55 per share, reflecting strong utility infrastructure investments and energy efficiency programs.
The company maintained its full-year non-GAAP operating earnings guidance of $4.28 to $4.40 per share, supported by a $4.2 billion capital spending plan for 2026.
Operational highlights include excellent reliability during harsh winter conditions and successful storm response efforts, as well as a continued focus on gas infrastructure modernization.
Public Service Enterprise is engaging in new nuclear development in New Jersey following the lifting of a moratorium on nuclear construction, leveraging its existing site and expertise.
Management emphasized ongoing efforts to manage customer costs, including maintaining flat electric and gas rates and benefiting from a favorable FERC ruling on transmission cost allocations.
Full Transcript
OPERATOR
ladies and gentlemen thank you for standing by my name is Shamali and i am your event operator today i would like to welcome everyone to today's conference public service enterprise group's first quarter twenty twenty six earnings conference call and webcast at this time all participants are in a listen only mode later we will conduct a question and answer session for the members of the financial community at that time if you have a question you will need to press the star and the number one on your telephone keypad to withdraw your question please press star and the number two if anyone should require operator assistance during the conference please press star zero on your telephone keypad as a reminder this conference is being recorded today may fifth twenty twenty six and will be available for replay as an audio webcast on pseg's investing relations website at https://investor.pseg.com i would now like to turn the conference over to carlita chan please
Carlita Chan
go ahead good morning and welcome to pseg's first quarter twenty twenty six earnings presentation on today's call are ralph larosa chair president and ceo and dan craig executive vice president and cfo the press release attachments and slides for today's discussion are posted on our IR website and at investor dot pseg dot com and our 10-Q 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 material following our prepared remarks we will conduct a thirty minute question and answer session i will now turn the call over
Ralph Larosa
to ralph larosa thank you Carlita and thank you for joining us to review pseg's first quarter twenty twenty six results starting with our financial results pseg reported net income of one dollar forty eight cents per share and non GAAP operating earnings of one dollar fifty five cents per share our first quarter results reflect continued investment in utility infrastructure focused on reliability and cost savings energy efficiency programs at PSEG and at PSEG power higher gas volume and capacity revenues have more than offset the absence of the zero emissions certificate program that concluded last may with this solid start to twenty twenty six we are maintaining our full year non gaap operating earnings guidance in the range of four dollars twenty eight cents to four dollars forty cents per share on the operations front i'm very pleased to report that our utility and nuclear operations delivered excellent reliability during one of the harshest winters in decades in preparation for these extreme weather events that included high snow accumulation ice and arctic air temperatures pseg initiated its winter weather readiness procedures and ensured adequate staffing for timely storm response starting in january with winter storm fern through winter storm Hernando in late february that dropped thirty inches of snow on parts of northern new jersey pseg systems held up well during intense conditions but a relatively small group of customers that were affected by the weather PSEG was able to restore service to virtually all customers within twenty four hours i can't say enough about our employees who carry out PSEG's storm response work and who braved the elements to keep the lights on and homes warm for our customers the utility experienced peak winter gas send-out on february seventh following over a week of sub freezing temperatures these conditions underscore the need for continued investment in gas infrastructure modernization to address the impact that extreme temperatures have on our aging cast iron gas system despite the year's winter weather PSEG is on track with its 2026 capital spending plan of approximately four point two billion dollars investing in critical energy infrastructure cost saving energy efficiency and system modernization for reliability and to meet new demands during the same time we have worked with the governor's office and the new jersey board of public utilities to keep electric rates flat in 2026 in keeping with the executive orders one and two that are addressing utility costs and generation supply pseg's electric customers will also benefit from the update reflecting the latest basic generation service auction results which will go into effect on june first on february first we also kept residential natural gas rates flat for the remainder of the 2025 2026 winter heating season delivering to our customers the lowest gas bills in new jersey and in the region and there is more good news for pseg electric customers in early march FERC issued an order supporting PSEG and the state of new jersey's objection to to its PJM transmission cost allocations berks ruling reallocating these costs is expected to result in significant refunds of over one hundred million dollars based on our estimates to pseg customers after PJM's implementation while this matter is still being litigated at FERC it's another example of how pseg works in partnership with the state at the regional and federal levels to keep our customer bills as low as possible i'd also like to mention that we're ramping up pseg's technology driven conservation efforts pseg recently launched two new ways to reduce energy use during peak times to save customers money and help reduce strain on the grid the first is our demand response program with over thirty two thousand residential and small business customers already enrolled to receive an upfront payment for reducing air conditioned use and other activities like ev charging during selected peak hours throughout the year the second program or a new residential time of use rate that can save customers money by shifting some of their usage to off peak time this new rate option leverages the more detailed electric usage made available by our ami investment in smarter meters combined with our energy efficiency programs pseg offers customers a variety of ways to reduce energy usage manage their bills and starting this summer participate in creating a more flexible energy grid through a virtual power plant pilot the bpu has started the process of implementing the directive in the first executive order to examine the regulation of the electric distribution utility business model we expect that bpu consultant will release a study this summer and that a stakeholder process on the topic will continue throughout the remainder of the year we intend to fully engage with the bpu throughout this process now turning to pseg power first i'd like to congratulate the pseg nuclear team for completing a second consecutive breaker to breaker operating run at Salem unit two to begin their refueling outage this april that notable accomplishment contributed to a ninety five point five percent capacity factor and supplied eight terawatt hours of reliable carbon free baseload energy to new jersey and the grid during the first quarter last week FERC approved the extension of the PJM capacity price collar through the twenty twenty nine to twenty thirty base residual auction this extension is expected to stabilize the effect of upcoming auctions on new jersey's bgs default prices even as regional demand growth advances with a limited supply response as part of an all of the above long term approach to increasing new jersey based generation supply governor Sherrill recently signed legislation lifting a decades long moratorium on new nuclear construction the announcement made at our three unit site in Salem county highlighted broad support from policymakers legislators and labor leaders pseg is engaging in efforts to advance new nuclear development at pseg site and we believe the site's unique strengths including an early site permit prime logistics access to a skilled workforce and opportunities to leverage our operating expertise through contractual arrangements make it a leading candidate for new nuclear deployment we have also been watching developments related to PJM's proposed reliability backstop procurement auction this is intended to be a one time procurement or emergency auction to accelerate new dispatchable generation that can be brought online by twenty thirty one to serve data center driven load growth more details from PJM are expected over the next month and we will continue our vigilance during the stakeholder process to advocate on behalf of pseg's customers wrapping up pseg had a strong operating and financial quarter to start the year by doing the right thing for our customers our communities and our shareholders with an eye towards a sustainable future our corporate reputation for excellence beyond our well known reliability and customer satisfaction awards was recognized again last week when pseg was named to the dow jones best in class north america index for the eighteenth year in a row we
Dan Craig (Executive Vice President and CFO)
are maintaining the broad set of financial projections that we shared with you late in february starting with our five year regulated capital investment plan of twenty two point five to twenty five point five billion dollars at pseg and twenty four to twenty eight billion dollars for pseg both through twenty thirty this investment program supports the utility's six to seven point five percent compound annual growth in rate base also through twenty thirty and helps drive a six to eight percent non gaap operating earnings CAGR at pseg over that same period and i would highlight again that items including nuclear revenue opportunities above current market prices winning additional competitive transmission solicitations or making incremental system investments to connect several thousand megawatts of solar and battery storage resources to the grid to meet new demand would be incremental to our six to eight percent non gaap operating earnings CAGR i will now turn the call over to dan who will review this quarter's results and then rejoin the call for our q and a session great thank you ralph and good morning everyone PSEG reported net income of one dollar forty eight cents per share for the first quarter of twenty twenty six compared to one dollar eighteen cents per share in twenty twenty five and non gaap operating earnings were one dollar fifty five cents per share for the first quarter of twenty twenty six compared to one dollar forty three cents per share in twenty twenty five we provided you with information on slide eight regarding the contribution to net income and non gaap operating earnings by business for the first quarter and slide nine contains a waterfall chart that takes you through the net changes quarter over quarter and non gaap operating earnings per share also by major business starting with PSEG which reported first quarter net income and non gaap operating earnings of five hundred seventy seven million dollars for twenty twenty six which compares to five hundred forty six million in twenty twenty five the utilities results reflect ongoing investment in energy efficiency gas system modernization and transmission the seasonality of gas demand and the continued gradual increase in the number of electric and gas customers starting with waterfall on slide nine compared to the first quarter of twenty twenty five transmission margin increased a penny per share due to higher investment the first quarter distribution margin increased by seven cents per share compared to the year ago period and largely reflects incremental gas margin from the third quarter twenty twenty five GSMP two extension roll in an increase in the number of customers in the quarter and higher gas demand outside of the decoupling mechanism higher investment in energy efficiency also contributed to distribution margin in the quarter distribution O&M expense was a penny per share higher compared to the first quarter of twenty twenty five reflecting an increase in operating costs due to inflation and extreme weather in january and february depreciation and interest each rose by a penny per share compared to the first quarter of twenty twenty five due to capital investments and higher long term debt interest rates and for utility taxes and other lower flow through taxes had a net favorable impact of a penny per share in the first quarter compared to the prior year period first quarter weather as measured by heating degree days was five percent colder than normal and eight percent colder than the first quarter of twenty twenty five but had a limited impact on utility margin as you know the conservation incentive program or sip mechanism decouples weather and other economic sales variances from a significant portion of our distribution margin while helping psemg promote the widespread adoption of energy conservation including energy efficiency and solar programs and under the sip the number of electric and gas customers drives margin and residential customer growth for both segments was about one percent over the past year on a regulated capital spending program psng invested approximately eight hundred million dollars during the first quarter and we remain on track to execute our full year twenty twenty six plan of approximately four point two billion dollars focused on continued investments in infrastructure modernization energy efficiency electrification initiatives and load growth we've also maintained our five year regulated capital investment plan of twenty two and a half to twenty five point five billion dollars through twenty thirty PSEG began the next phase of the GSMP three program in the first quarter and we anticipate investing a total of one point four billion over the three year period the GSMP three program total includes approximately a billion dollars in accelerated recovery and three hundred sixty million dollars in stipulated base also in the first quarter the bpu certified the results of the annual new jersey basic generation service or bgs auction that was held to secure electricity for customers that have not selected a third party supplier these auction results will have the effect of lowering the cost of electricity supply by one point eight percent on tseng residential electric bills for energy and capacity starting june first of this year moving to PSEG power and other for the first quarter of twenty twenty six we reported net income of one hundred sixty four million dollars compared to forty three million in the first quarter of twenty twenty five while non gaap operating earnings were two hundred one million for the first quarter compared to one hundred seventy two million for the first quarter of twenty twenty five referring again to the waterfall on slide nine the first quarter twenty twenty six net energy margin was flat compared to the year earlier quarter as higher gas operations and capacity prices were offset by the absence of zero emission certificates lower generation volume and the absence of fuel and energy management fees under the renewed LIPAa contract which commenced in january of twenty twenty six O&M costs declined in the quarter providing a six cent per share benefit compared to the same period in twenty twenty five primarily reflecting a net reduction in operational expenses and an adjustment to tax reserves the impact of higher interest costs and lower depreciation expense netted to a drag of one cent per share in the first quarter reflecting incremental debt at higher interest rates partly offset by lower depreciation expense reflecting our expectation that the nrc will approve a twenty year license extension for the new jersey nuclear units and lastly taxes and other items had a net favorable impact of one cent per share in the quarter compared to twenty twenty five touching on some recent financing activity psg had ample liquidity totaling three point nine billion dollars at the end of march this includes approximately four hundred million dollars of cash on hand primarily related to net PSEG financing activity during the quarter PSEG entered into a five hundred million dollars three hundred sixty four day variable rate term loan in february further supporting our liquidity position and also during the quarter all of our revolving credit facilities totaling three point seven five billion dollars were extended by two years through march of twenty thirty one on the financing front this past january pse and g issued a billion dollars of secured medium term notes or mtms consisting of five hundred million dollars of four point two percent mtns due twenty thirty one and five hundred million dollars of five point six three percent mtns due twenty fifty six a portion of these proceeds were used to repay four hundred fifty million dollars of mtns at just under a percent that matured in march twenty twenty six esg also has limited exposure to variable rate debt which totaled approximately nine hundred fifteen million dollars and consists of two three hundred sixty four day term loans and commercial paper and represented a low four percent of our total debt at the end of march looking ahead our solid balance sheet continues to support the execution of PSEG's five year capital spending plan directed mostly to regulated capex without the need to issue new equity or sell assets and provides for the opportunity for consistent and sustainable dividend growth as demonstrated by the twenty twenty six indicative annual rate of two dollars sixty eight cents per share established by our board in february this new dividend rate represents an annualized increase of approximately six percent for twenty twenty six and marks our fifteenth consecutive annual increase in closing we delivered solid operating and financial performance to begin the year and are maintaining PSEG's full year twenty twenty six non gaap operating earnings guidance of four dollars twenty eight cents to four dollars forty cents per share we are also reaffirming our six to eight percent compounded annual growth rate for non gaap operating earnings through twenty thirty based on the continued execution of our strategic plan that concludes our formal remarks and we are ready to begin the question and answer session
OPERATOR
thank you ladies and gentlemen we will now begin the question and answer session for members of the financial community if you have a question please press the star and the number one on your telephone keypad if your question has been answered and you wish to withdraw your polling request you may do so by pressing the star and the number two if you are on a speakerphone please pick up your handset before entering your request one moment please for the first question and the first question comes from the line of char pareza with wells fargo please proceed with your question hi good morning team
Constantine
it's constantine here for char thanks for taking the questions that's why i paused a little bit there konstantin i wasn't sure if it was you or him so i didn't want to say hello to char first how are you constantine oh doing quite well thank you so much just maybe a quick one starting on the bpu and the legislative process on utility constructs are the different branches finding their footing in terms of priorities is there anything in the cost of service model getting attention or i guess do the changes in are we move the needle on affordability or is there just a general recognition that the pressure is coming from the supply demand that's
Ralph Larosa
really outside the state look i totally agree with what you just said i think a lot of people are finding their footing and i think there's been a lot of constructive conversations both between the companies the administration and legislators and the bpu i think everybody's trying to do exactly what you said find their footings and i think everybody does recognize the challenge has been generated from outside the state but i also think we all know that we have some responsibility to do what we can from an affordability standpoint for our customers so everybody's trying to row in the same direction and i hope you hear my tone i feel positive about the way that we're trying to approach it as a team approach rather than a finger pointing approach at this point
Constantine
great appreciate that and just maybe shifting to the pjm capacity and reserve auction process some of the pjm neighbors have been vocal around it what could we see in terms of your participation in the rba from both the power side and as the edc and any concerns around capacity cost allocation for your zone yeah i mean
Dan Craig (Executive Vice President and CFO)
constantine i just you know i don't disagree with a lot of the comments that have been made out as you said there's a lot of people being pretty vocal about it i would just think that we should all just be a little bit calm and watch what happens here there's a lot of steps to go through and i don't want to overreact to anything obviously we need to protect the customers the utilities make sure that they're not being burdened with planning assumptions that are being driven outside of anybody's responsibility you know we've got some states that have irps they have their own planning assumptions we have pjm with its own planning assumption and then you have customers putting in requests all of that needs to be balanced and you know to put that on the backs of the utilities just doesn't seem to make a ton of sense for anybody so we'll see how that plays out over time but i feel like look it's a chance for us to bring more generation in we all know there's a resource adequacy problem i don't know how much we're going to get done we being the region by twenty thirty one but i think it's a good it's a good step that we're trying and hope it produces some results but i think the limiting factor of twenty thirty one is going to make it really tough for us to make this a game changer and constantine just inherent within your question you did talk about cost allocation and i think very consistent with some of our actions related to a ferc decision around cost allocation we're going to continue to look out for our customers and in this instance like in the one that i'm referencing and that we talked about within the prepared remarks we'll continue to make sure that those allocations to the best of our ability are going to be fair for our customers
Constantine
and maybe just to clarify do things like the capacity price cap extension provide any additional upsides on the power side kind of versus the
Ralph Larosa
six to eight plan well i think we had envisioned we had spoken in the past about the fact that we thought things were going to stay about where they were so i would leave the comment there okay appreciate it thanks
Constantine
so much for the time today
OPERATOR
thank you our next question comes from the line of carly davenport with goldman sachs please proceed with your question hey carly
Carly Davenport (Equity Analyst)
hey good morning thanks so much for taking the questions i knew it was
Ralph Larosa
going to be you carly so i was glad to make it easy for you maybe just starting off on new jersey i guess we do have a stakeholder meeting being held by the bpu this week on executive order one kind of focused mostly on the kind of utility business model i guess anything that you're expecting out of that meeting in terms of focus areas or kind of what you think is on the table to address as we think about the utility business model in new jersey yeah
Carly Davenport (Equity Analyst)
look i think consistent with what we've said in the past we expect performance to be one of the biggest issues that'll be on the table and we welcome that in the areas that we've seen focus in other states our performance we think has been exemplary and i would expect that to continue so you know i would as i've said in prior meetings in some ways welcome the
Ralph Larosa
recognition of our utility for the work that they've been able to accomplish from a reliability standpoint so certainly from the ability to hook up customers and customer satisfaction so you know those three areas areas that we think we have a lot of strength in and if that's where the performance conversation goes we would we would be supportive of that but i think that's where you know we'll we'll be at the meeting we'll be participating and we'll be constructive in the conversations got it okay great that's helpful
Carly Davenport (Equity Analyst)
and then maybe just sticking in new jersey but just on the nuclear side i know you mentioned the the lifting of the moratorium kind of in your prepared and just maybe talk a little bit about how you envision peg kind of participating on the nuclear task force in the state and maybe what some tangible updates could look like as we think about the opportunities around new nuclear
Ralph Larosa
in the state yeah we did you know thanks for that we've been obviously leaning in it's clear that the shell administration is supportive of additional generation it looks like nuclear is one of those areas that there's some momentum being gained in that area obviously the signing of that legislation we thought was a great event great signal from the administration of their support so we're going to continue to do what we've been doing which is try to enable it and advocate really really hard for the state we think we have a great site down at salem there's been port construction was completed it's going to make some construction activities easier we have some great labor in that area and we have the technical capabilities and operational performance to deliver additional megawatt hours out of that area so we're going to be advocating hard and try to stay lockstep with the administration on that great thank you so thanks carli
OPERATOR
thank you our next question comes from the line of jeremy tonay with jp morgan please proceed with your question hey jeremy
Jeremy Tonay (Equity Analyst)
hi good morning good morning was just wondering if i could start with large load inquiries here i was just wondering if you could provide a bit more color i guess on the current state of conversations and interest there and where does the total count stand you know versus last quarter or i think it was eleven point eight as of the
Ralph Larosa
end of december yeah jeremy that's about right and we've seen you know it's interesting last year if you go through the year we saw quite a significant increase as you step through time and i think the you know you kind of were seeing the knee of the curve as the interest more broadly was coming about in data centers i'd say directionally you've seen that kind of level off within the state that eleven thousand we always talked about as being somewhere i don't know maybe ten fifteen twenty percent of that may come to fruition if we look based upon history what we've seen within different new business coming forward hard to predict on that which is i think a broad topic across the sector but i'd say we're still kind of in that ballpark i think the change that we saw across last year had us put that forward so people could get an understanding and the leveling off there's a little bit less to talk about on that front you know we still pursue the ability to try to serve some of that load either here or in pennsylvania where we have the peach bottom units and that activity continues
Jeremy Tonay (Equity Analyst)
got it that's helpful and that kind of leads to my next question here if you might be able to provide some color bifurcating between the states as far as interest or type of activity type of conversations and at the same time just curious i guess as how does demand response currently factor into any of these discussions and has
Ralph Larosa
that changed over time no i don't think the doctor has changed the discussions over time but i do think the first part of your question is a little bit more pointed and provides a little bit more differentiation just literally by virtue of what type of data centers are interested in going where i would say that absent the significant tax incentives in new jersey you have not seen the sizable interest in new jersey that's been a consistent concept that we've talked about for a while and then in other states and there are plenty of them where some of the larger hyperscalers have the ability to derive some of the financial incentives to be able to go there and so they are following those incentives from everything we've seen and i would say that the opportunity set to serve them follow suit with that
Jeremy Tonay (Equity Analyst)
got it makes sense i'll leave it
Ralph Larosa
there thank you thanks jeremy
OPERATOR
thank you our next question comes from the line of nick amasucci with evercore isi please proceed with your question hey nick hey
Nick Amassucci
guys how are we just a couple quick couple quick ones for me if i could so when we just think about kind of the cadence at salem and the potential for the capacity upgrade is it pretty much assumed that you would be seeking the the extension first and then any kind of firm announcement on a potential upgrade you talk about
Ralph Larosa
the license extension first yeah yeah the license extension the salem units have current licenses that run through twenty thirty six and twenty forty anything we would do to extend that another twenty years would happen in advance of that but what we've talked about with respect to the upgrade by comparison we said either the outage in twenty seven or the outage in twenty nine is when we would anticipate those coming on so there'll be activity i think on the license extension but i think you'll see the upgrade come through within those two time frames
Nick Amassucci
that i mentioned yeah so very specifically
Dan Craig (Executive Vice President and CFO)
we're not counting on that license extension to be in before we do the upgrade that's not a gating factor right got it got it perfect and then if i could too just given kind of the strong performance obviously you know some somewhat weather driven in the first quarter but it's roughly thirty adjusted eps roughly thirty six percent of the midpoint and so that's you know pretty above seasonal just wanted to see i mean understanding that it's early still in the year but what kind of what would you need to see kind of going forward to then kind of move either kind of cut the guidance range to the upper half or kind of increase or increase guidance altogether yeah i think
Nick Amassucci
you know on a normal year even when you're decoupled just volumetrically you're going to see a lot more coming through
Dan Craig (Executive Vice President and CFO)
in the winters and the the summers and so i think there's a piece of that that you see coming through from this winter i think if i were to give you you know a one word answer it would be what the summer ends up looking like i mean we're decoupled so we don't have as much of an impact from that perspective but there are some elements you know whether it's weather driving demands a little bit higher on gas and that those demands moving things or even just the snow removals things along those nature have an impact on what the results look like and we have more of those types of events i think like everybod else in the winter and in the summer so i would say get through the summer and see what we look like i think you saw it
Nick Amassucci
nick the other piece to this i just to remind you all we mentioned the gas ops there and that there was some value generated from our gas operations group just a reminder that also goes to offset customer rates pretty dramatically so another good news message for the customers in new jersey that we were able to transact in that area perfect
Ralph Larosa
thanks dan thanks ralph we'll see you guys in a couple weeks
OPERATOR
thank you our next question comes from the line of julian julian smith but jeffries please proceed with your question
Julian Smith (Equity Analyst)
hey good morning ralph team how you guys all doing
Ralph Larosa
good julian how are you quite well thank you guys very much appreciate it
Julian Smith (Equity Analyst)
looking forward to another video
Ralph Larosa
come on bring it on let's do it got to keep it you got to keep it lively look let's let me let me ask you guys about pj i'm here and i know people keep needling you about it and i want to just come back to it real quickly how do you think about your participation whether in a bilateral context or you know outright in some other permutation again we've heard comments this morning we've heard comments elsewhere i mean just how do you think about that coming together and just how would you set expectations around this process you all are keeping close tabs on this whole process at the state level and at the pgm level how would you set expectations about what ultimately happens in terms of backstop versus you know bilateral versus just capacity not getting procured on a timely basis yeah
Julian Smith (Equity Analyst)
so and in your questionnaires or participation you mean in new generation or the
Ralph Larosa
existing yeah in any flavor but i'm curious about the you're waxing about the process and then separately your participation in
Julian Smith (Equity Analyst)
any flavor yeah look i think the
Ralph Larosa
number one thing that we've been focused on and this goes back a long time before the words resource adequacy were popular is the reliability right and the reliability of the grid and we've been we've been on that since two thousand three since the lights went out so we start from there looking out for the customers and then looking out from a customer cost standpoint i think we need to make sure that we're protecting the customer number one and making sure that there's enough product to deliver to the customer number two and i'm not sure that the current the way it's currently drafted really does both of those things i think there's a little bit of a concern about putting that burden on the ldc's versus the lses and whatever other acronyms we want to throw in there but we will participate in the process and we're going to advocate strong we've got a new ceo at tjm that's just stepped into the role i want to i want to before we pass any judgment on what's going on at pjm let's give them a chance to get their feet under them and get the organization structured the way they want and the rules and proposals the way they'd like to see them so we'll continue to look at this from the customer's perspective and advocate on that behalf part two is you know when you think about generation and inheriting that as hey where's this supply going to come from and we inherently get we get the question all the time hey will you participate we've always said we'll participate in utility like generation we think we have some sites that make sense the question is the fuel supply and whether or not that's a fuel supply that makes sense for the state that you know those sites sit in but we're we're open to it but it's got to be utility like investments when we we have those conversations
Julian Smith (Equity Analyst)
got it okay fair enough and then just when you think about the you guys keep talking about new nuclear and obviously i get why how do you think about what that looks like in the state in terms of next steps i mean a lot of folks talk about it but obviously you know you've got to get the right risk construct i totally appreciate that but just tangibly what would the next step look like here just to show progress if there is
Ralph Larosa
to be something to happen i think it's going to be a combination of government supporting the effort right you're going to you're going to need to see some strong support from the federal government there's rumors around that in different ways shapes and forms that you hear being discussed from different departments in washington so number one i think we would need federal support number two you'd have to have state support that would be i think you need states looking for offtake agreements you need hyperscalers looking for offtake agreements you need companies supporting it you know i think there's a combination of things that would have to come together but it all to me starts with the government being aligned and that government being aligned from the long term right you need to ensure that not only do you have some financial support but that you have the permitting support and the siting support heard a lot of that from our governor that that's one of the things that they want to streamline here in new jersey so again aligned with building new generation but i don't see any state taken on new nuclear without the support of the federal sorry and just to elaborate on the last one real quickly your response there is there a timing on when you could follow through on contracted new gen whether that's gas or more specific
Julian Smith (Equity Analyst)
storage or solar no i mean i think you got to see what all the rules are that was my point you know you when you look at this reliability backstop i think i think we'll see what those rules are to come out but if that's a pure market solution that's not something we're interested in and that was the point i wanted to make we're not interested in markets in participating in that that's not what our core business is but if we're looking for rate based utility like we've done that in the past thirty year ppas those types of things but i don't know what will come out of this rba and then really remember it's only on the capacity side right you still got the whole energy side that you got to figure out how you get a contract for you all right i'll leave it there
Ralph Larosa
more to go thanks julian see you see you in a little bit in may
OPERATOR
thank you our next question comes from the line of michael sullivan with wolf research please proceed with your question
Michael Sullivan (Equity Analyst)
hey guys hey ralph picking up on
Dan Craig (Executive Vice President and CFO)
the kind of your last comment there just the energy side of the equation any color you can give on just this pretty sharp move in pjm pricing and how you're thinking about that on kind of both sides of the house like any any color on longer term hedges and then how you're thinking about kind of the bill impact from that on the on the utility side michael this is dan the most immediate impact on a bill is going to be the bgs that we just procured in february so from a from from a bill perspective we know what things are going to look like and for pseg customers they're going to see their bill go down one point eight percent by june fifteenth first because of what happened on bgs and again from a customer perspective that will change again next june first so there's a lot of stability inherent within the bgs construct that the state put together many many years ago that still does exist and i think you know more broadly if you think about markets one of the things i do think that markets are trying to figure out is where this rba does go to and what it does bring in from a from a supply perspective people are weighing their own individual views as to how much load is going to come on the system and what generation is going to be there to meet it and that's ultimately through the market construct how prices are going to be set and so i think those are the bigger questions that people will continue to digest like in any other market they'll use the available data but in this instance it's how much load is going to actually come online when it's going to come online and the same two questions around supply and i think you've seen some movement over time as people try to think that through but in general i think you're going to have a tighter market because i think the path to incremental demand is a little bit clearer from a volumetric perspective than the path to incremental okay that's helpful any color on how much you're hedging into this in the out years
Michael Sullivan (Equity Analyst)
no i mean the thing that we've said is that for the prompt year we're pretty close to fully hedged and then as you look through the next couple of years that'll
Dan Craig (Executive Vice President and CFO)
cascade off a little bit okay and
Michael Sullivan (Equity Analyst)
then just next last thing just kind of next couple months here into kind of the summer recess at the legislature anything you expect or are focused on getting done between now and then no
Dan Craig (Executive Vice President and CFO)
i look i'll weigh in there a little bit michael i think that affordability remains a hot topic here in the state i think we're prepared for those conversations as they continue to take place and we continue to be supportive i think there's possibility for people to be talking about resource adequacy solutions that's something else that might be out there and again we're just monitoring and once those once those issues if there's any legislation introduced we'll assess them and comment on
Michael Sullivan (Equity Analyst)
them okay great thank you very much
OPERATOR
thank you our next question comes from the line of sophie karp with keybanc capital markets please proceed with your
Sophie Karp (Equity Analyst)
question morning sophie hi good morning good
Dan Craig (Executive Vice President and CFO)
morning thank you for taking my question i'm curious if you see any opportunities potentially for yourselves in the upcoming pgm transmission open window
Sophie Karp (Equity Analyst)
yeah sophie i think that we even referenced a little bit of that on the prepared remarks we on an ongoing basis do take a look at what comes through those open windows we will do exactly the same thing this summer when the next window opens i think i would call it a careful look at what we think makes the most sense for things for us to do i think we have a pretty deep well of experience in building transmission and that doesn't mean that everything is going to make sense for us and so we go through pretty carefully taking a look at what we do think makes sense and we will put in a competitive bid to the extent that we think something does and so i'll remind you the capital plan that's in place doesn't have anything that we have not already won through a competitive process but i absolutely think we have the skill set to be able to expand in that area and then we will just increment the capital plan to the extent that we do win
Dan Craig (Executive Vice President and CFO)
as we go forward thank you and
Sophie Karp (Equity Analyst)
then on kind of data centers i appreciate your comment that absent the incentives they're not necessarily looking to locate in new jersey but is it an option for your new jersey assets to have virtual ppa virtual offtake with facilities elsewhere or is that not the major focus
Dan Craig (Executive Vice President and CFO)
right now no we are deliverable to beyond new jersey and even today that power flows on the grid in the region and so there is absolutely the potential for us to do something with the new jersey units or the pennsylvania units beyond the node that they're at and beyond the zone that they're in so yes that is possible okay thank
OPERATOR
you thanks sophie thank you our next
Rennie Singh
question comes from the line of rennie singh with bank of america please proceed
Dan Craig (Executive Vice President and CFO)
with your question hi guys thanks for
Rennie Singh
taking the question you know first on the bgs auction obviously you got the one point eight percent reduction that's going to go into effect june so i guess how are you thinking about the repeatability of that you know with capacity prices either staying at the same level or going lower and you know potentially power prices going up but i guess do you think you can kind of keep up the same decreases year over year
Dan Craig (Executive Vice President and CFO)
yeah i mean you understand the pieces as well as we do and the way that auction works is that it's going to be for a three year period for the third of the load so what you're doing is taking a look at at least by design unless there are delays at pjm capacity auctions that have already transpired so that's a known item and we don't know what they all are now but we'll know what they are by the time that auction comes around and then a forecast of what energy prices look like and that's probably your biggest variable as you go forward what will those energy prices look like the other thing i would say though is it being an auction for a third of the total demand any impact if you were to see a dollar three impact in the price of energy you would see a dollar one impact come through towards the bill because of the gradual effect of that you'd see that dollar one increase across three years but the gradualism of that mechanism is going to provide gradualism and the impact on rates to customers but beyond that trying to estimate exactly where things are going to go is
Rennie Singh
kind of tough to do obviously okay
Dan Craig (Executive Vice President and CFO)
yeah that makes sense and then yeah
Rennie Singh
just to reinforce something dan said there just a reminder the last time we had sticker shock was due to the fact that there was a capacity market delay so even if prices are incrementally up a little bit you're not going to have that same sticker shock situation that we experienced a year ago when the bgs price came in so high because the capacity prices had piled up for three years and those increases sitting there caused the challenge that we had it wasn't necessarily incremental especially in what we believe is a very good mechanism in the bgs where you have this
Dan Craig (Executive Vice President and CFO)
third third yeah it's a great point
Rennie Singh
but for the delay in the capacity auction you would not have seen the magnitude of year over year increase that
Dan Craig (Executive Vice President and CFO)
you saw yeah i think that is very clear it makes sense and then on the rbp i know we've talked a lot about it on this call but i saw the proposal that you filed jointly with some other edcs i guess how are you thinking about what you know what what's the ideal things that need to be solved and you know would be in your favor for that like in terms of i said that the load serving entity you know should be the cost responsibility but anything else that you would point out no
Rennie Singh
what i said earlier i think is the key is the planning process right you've really got to make sure that the planning process is a solid one and there's consensus around it and then whoever is the planner is the one that winds up with the accountability right that's the key to have the have the planning done by you know a town and then the the accountability sit at the county level doesn't make a ton of sense right it just i'm just using some sort of parallel there so i just really think we got to get all of that aligned and as i said earlier states have irp requirements in addition to the states having the irp requirements pjm has been granted by the edcs the responsibility for transmission planning so you put those pieces together and it's kind of odd for that to wind up back with the edcs therefore the low serving entities that are the entities that have been identified with the responsibility is where we believe the
Dan Craig (Executive Vice President and CFO)
burden should sit i think that all makes sense very clear thanks so much
Rennie Singh
guys thanks
OPERATOR
thank you and our last question comes from the line of anthony crowder with mizuho securities please proceed with
Anthony Crowder
your question hey ralph dan thanks for
Ralph Larosa
squeezing me in on a busy morning just to follow up to i think nick's question earlier on the nuclear upgrades and maybe the timing of them just if you could tell me when do you file for the timing but also approval for the uprights is that an additional capex opportunity or it's further out in the five year plan or you're already having included in your current plan
Anthony Crowder
yeah we've got the capital that's included there and the timing of it is going to depend upon which outage it goes into anthony so it's that's when i said twenty seven or twenty nine we'll have an outage for those units in twenty twenty seven outage in twenty twenty nine and depending upon as that thing how it moves forward that's when we'll end up seeing that upgrade go
Ralph Larosa
through you're asking about the upgrade not
Anthony Crowder
the license extension right no i no
Ralph Larosa
no more the license extension i'm sorry
Anthony Crowder
if i wasn't clear just so the license extension we'll get information back over the next x amount of years right i know nrc is trying to move that a little bit quicker than they have in the past and at that point they'll let us know whether or not we have to change the oil change the tires what needs to be done and at the end and we'll be able to forecast the capex at that point
Ralph Larosa
and again i know the timing is not clear with the nrc is that within the five year period could be or it could also be
Anthony Crowder
outside the five year period i think we would certainly get we would gain consensus with nrc of the work that needs to be done in the five year timeline and i think the work would be completed outside the five year timeline great that's all i had thanks
Ralph Larosa
so much thanks anthony thanks anthony
OPERATOR
thank you and there are no further questions at this time i would like to turn the floor back to mister la rossa for closing comments well thank you
Ralph Larosa
all for your interest in dialing in today i know it's a busy day for many of you on the call so i appreciate you taking the time and looking forward to speaking to everybody at aga and i'll end with another thank you to our team here for the work that was completed through this past winter the weather was not an easy it was not easy for us and people continued to work above and beyond our expectations so thank you to the team and thank you all for calling in and looking forward to seeing you all at aga later this month take care
OPERATOR
ladies and gentlemen this concludes today's teleconference you may disconnect your line
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