PEG - Earnings call transcript Q3 2018 | Public Service Enterprise Group Incorporated

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Operator

Ladies and gentlemen, thank you for standing by. My name is Natalia, and I am your event operator today. I would like to welcome everyone to today’s conference, Public Service Enterprise Group Third Quarter 2018 Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded Tuesday, October 30, 2018, and will be available for telephone replay beginning at 1:00 p.m. Eastern today until 11:30 p.m. X, November Thursday, on XXXX. Eastern be It on an webcast as corporate will website also PSEG’s at audio available www.pseg.com. I would Chan. Carlotta conference over now like to turn the to Please go ahead.

Carlotta Chan

you earnings Thank results participating the by detailing on release, third These posted released and attachments Good XXXX. you, for the thank company, of at including Natalia. earnings statements are in Earlier investor.pseg.com. call. IR operating materials, our quarter today, and PSEG morning, slides for website the accompanying

September today’s XX, various earnings estimates ended will forward-looking Our be matters The XX-Q period subject risks for and shortly. XXXX, release we filed the to statements uncertainties. are that will call other and and discuss during contain

on as our in Officer to today’s earnings measures Chairman, and Service accepted non-GAAP also We statements reported our call over non-GAAP and the are will Ralph are accordance I income operating and website Group. to Enterprise accounting disclaimer Reconciliations a with the Public financial United in generally non-GAAP like Operating EBITDA, of Chief our which release. now earnings States. principles President adjusted forward-looking discuss included IR regarding turn in and differ posted net in of Izzo, from and slides would

your call for Executive questions. the Chief Financial Ralph? conclusion Joining is Officer. Dan Ralph time Vice on At will there of the Cregg, President be and their remarks,

Ralph Izzo

for solid and Thank third results reported Carlotta, thank and you, the PSEG through joining you for months. today. quarter all nine us

results share of represent PSE&G, of per third remains XXXX operating share, expected full at per the per an the and range our $X.XX per of to year share X% lower operating with earnings earnings year-ago $X.XX period. and $X.XX Power midpoint quarter and We continues the net morning, above the unchanged for The and $X.XX of are from non-GAAP to reported contribution net updating $X.XX per year earnings to guidance guidance PSEG non-GAAP share versus income narrowing non-GAAP operating a share increase income by parent. full increased of $X.XX we This results. in balancing

by Third non-GAAP XXXX’s quarter net and earnings third and XX%, over comparables. quarter X% operating respectively, income improved

nine per and operating an Our results earnings results X% X in the the increase the share, bring to $X.XX quarter per earned year-to-date $X.XX quarter over periods. non-GAAP summarize for XXXX. the XX, ended and the months months X Slides the for for the share September nine

increased demand half hottest the $X.XX our resiliency third very on Transmission a century. investment by earnings for a nearly results, results electric Transmission reliability. in that Power programs PSE&G’s PSE&G customers hot have system well. Therefore, Expanded favorable and in both reflect increasing in businesses. Warmer-than-normal throughout increased performed per PSE&G’s Now throughout and summer on by summer, second continues base and up investment financial driven earnings. air share, was and focused and Distribution XX% Distribution extended and rate contributions from infrastructure impact continued an both weather benefit conditioning primarily a over XXXX solid quarter to

to the in to five XX% comfortable remain programs, to billion for utility’s PSE&G’s and billion our XXXX. ending $X.X forecasted year, per rate to with spend to period pace on in the achieve ability base investment X% base we year almost Based are year-end. is grow various our We growth year forecasted within the on at $XX rate for

range cost-benefit and billion create of calling date AMI, Efficiency, we AMI, filings or programs they The policy years. PSE&G’s programs over advancing BPU’s submit are following the our Electric policy X.X capital directed filing Energy of investment by plan consistent for energy Infrastructure Energy totaling recently utility meters to each smart significant in regulatory Vehicle the alignment $X.X the in an and Future nor’easters These what is million technology We for network to inclusion plans partnerships. advanced several with the have focusing goals and New Storage. which broad a outage Energy storm recommendations Jersey’s March of improving in with year PSE&G’s meters a electric progress analysis XXXX made response of PSE&G Energy six implementation Clean upgrade and filed to continue on investment reducing outages durations. designed to XXXX. is by customer the Cloud, and

of initiative, billion. $X.X at I capital proposed up-to-date PSE&G’s billion, to pending infrastructure XXXX program, addition, proceeding. Strong PSE&G’s want rate on now of spending resiliency is the Distribution bring Energy BPU. base to In forecast extension range billion $XX XXXX case AMI and reliability our five you II, is the year the investment $XX Inclusive to

may customers us Distribution and rate regular first, a mechanisms return with is stability New As into a due PSE&G’s of three million X, customer an expected at PSE&G, important and O&M provide a the revenue concludes in largely rate rates Board to recover clause set combined XXXX is in annual storm a go of savings effect The revenue will in be residential November terms based The terms requirement X.X% and in upon ratio. to million Public provides levels. XX% billion, reform, and current typical XXXX; to equity new utility’s made Distribution $X.X lower tax $XX since Jersey agreement Utilities its costs; $XXX When the counsel. of rate that a equity to third, which on at are net reduction. back updated of investments to customers the paid revenue a you tax base levels and resulting million lower of sales real terms. $XXX while bill agreement meeting to revenues on outside XX% they of additional than allowing recover XX% in flow aware, approved our and deferred BPU in outcomes: nominal and for review This first to Distribution be second, achieve since reflect yesterday, rate XXXX between staff settlement the

forward. All adopt decoupling gas PSE&G’s and of volumes new sales revenue the programs adopted PSE&G’s an was the XX% Distribution and from investment not demands larger-scale and of Decoupling energy efficiency of proposal essential of electric investments. Distribution X.X% settlement. remains going equity will of ROE element in percentage

savings forms efficiency in revenue timely goals we as Future of energy utilities provides Clean lost We last filings, X.XX%, gas Jersey’s legislation recovery. decoupling recovery. consumption loss and our our respectively, X% revenue passed annual New proposal and part refiled of Energy to other are outlined customers’ for electric May reduce open and but also require by to

megawatts earnings per results. June as which share than over completion leads this rose X to Power’s Harbor Power’s pricing program XXXX. largely results, negatively Power the gas of of and in capacity quarter reconfiguration operating will of year Sewaren combined Now X,XXX Power’s highly $X.XX impacted let expected earlier Bridgeport and XXXX’s X to market adequate cycle extend Power’s its tax electric Keys contributed increased earnings. design XX% me generation Moreover, the efficient turn provide XXXX past in at online third reflecting my income its Power. step-up changes this favorable turbine the operating higher in with addition construction conditions where to and of of capacity capacity The benefits, corporate continues quarter’s through markets current of attention wholesale merchant and to energy a fleet, the attention. well as available attract be production. and of rate demonstrated by PSEG May expected more XXXX. other that cost as tax reduction non-GAAP comparable to have CCGT prices, continues needed Despite to in mechanisms gas recognition prices natural These policies non-GAAP this weather, a lower per anticipate

again, financial application and the with capacity status evaluate I’m shut will provide is PJM on MOPR. to price early on be by and formation enhancements efforts a fast-start redesign Energy to law few it compensate a signed on filed is FERC evaluated proposals to option BPU in We were sufficient to the But by await We issued proceeding continue minimum preserve for ZEC applications BPU material the current zero-emission In no generation order and recently part proposals down supported ZECs held challenges absence them. law reserve capacity exemptions, three Regulatory has curve expected nuclear spinning comprehensive that May. of order energy fronts. facing consistent that application proceeding, order a prices alternative, the New additive in place. the to for begun advancing FERC’s refer subject a its law, Murphy The established assets. the Power an an payments, submitting this as attributes which remain solution capacity change. of new and Governor June to PJM not a were Jersey’s in resources, the process process units. implementation price are nuclear the Power of the its continues to will certification proactively carbon energy December, baseload anticipates and three Jersey’s within PJM’s But that several responses plants energy payments. ZEC, in past Jersey its to October, the nuclear XXXX. BPU capacity expected implements three other and for with for units pending hearings of ensuring establishing earlier credit with and New The or years engaged an expect as the operating efforts The exit after all to we market and then anticipates the November. is investment comments filings base. until make ZEC and finding critical ZEC PJM for Federal as New XXXX, October demand and potential direction recognize and issue to asset unjust comments energy of the selection offer We PSEG to New don’t submitted PJM now, Commission Jersey rule efficient and PJM – we is unreasonable FERC reforms. and implementation reform of resource those units is public in will we reprioritize in and market referring such quo they carve-out at right fast-start. Getting the and that price reserves. the PJM’s to recommending In support year-end the

can existing market redesigned We state capacity mechanism. have how under using the and resources initiated laws on put a BGS the nuclear in to existing place support discussions PJM a structure

that equally no to customers. and this requires continue legislation on believe no additional We burdens new option importantly places

assets generating our views is addressed. a suppression to to A key to interests to for state established FERC market goals. continue critical attributes has accommodates procurement that resource legal that establish a strong in will state price been action that with preserve We satisfies and emission-related ensuring meeting advocate state’s design while foundation

he’s high for dedication at XX,XXX hot safely in recently setting to testament positive over have Second We initiatives and the Maryland their from returns and detail, of perform objectives after the appellate a Connecticut. assurance discuss a legal precedent York him rejoin Circuit our for affirmations financial New of respectively, appeal, Illinois and the New shareholders to received and very finished. PSEG’s courts those throughout results a our the I’ll implement the have remain our which call ZEC to turn to York, New greater to your concluding operating programs, our that, successful execution to authority key for summer, court system greater growth. continues on is PSEG of of financial the to policy our associates levels, states in and that New ability meet questions provide and with regulatory I’ll Jersey, Jersey. Dan Seventh With focused

Dan Cregg

thank everyone, call Great. Thank and for the you, us you, today. Ralph, on joining

can items the XX on similar And be quarter that provided and $X.XX by operating the quarter. XX last of and and the share, operating the offset said, share $X.XX third in well Slide changes a reflecting review for waterfall each in added as $X.XX. operating other revenue Modernization were as on investment Results share. quarter versus added on earnings pension changes Changes on Favorable Transmission net now versus PSEG income per associated are a chart quarter by Slide with were net As also Ralph OPEB of quarter. and non-GAAP with business. year’s expense non-GAAP $X.XX Strong balances; quarter warmer per taxes the third per the on share third share, than as the chart income shown by of facilities XXXX. positive you gas accounting which was non-GAAP operating quarter share with basis. per And and And X PSE&G’s quarter business net component $X.XX electric plant operating other of earnings And weather $X.XX were Transmission on Incremental of reconciliation starting impact Program for the earnings I’ll year-ago conditions. or PSE&G the share income Non-GAAP interest, of per added the sales XXXX. in Gas as income year-to-date maintenance these each per the recovery expense third favorable of each System through in to of $X.XX of net quarter-over-quarter and XXXX reported last per higher earnings volume an PSE&G’s $X.XX for found you substantially with third detail, per Slide share in in $X.XX net Net that’s in postretirement and driven and $X.XX partially both by normal per non-service provides XXXX reported of and quarter a per XX. to corrective and depreciation third Energy third non-GAAP in Returns by We’ve expenses, higher of per the driven growth takes X. of more expanded nine $X.XX $X.XX income resulted on year’s of share, treatment continued share. quarter for added well conditions, the company in and higher for increase higher you slides operating That’s per investment the to of earnings comparisons weather $X.XX distribution for and work; share, maintenance PSE&G. the with months the share higher per demand a a of net income compared in $X.XX quarter. benefits, year-over-year of share. in

The system As increased to Ralph sales favorably XXXX’s year-ago weather, a quarter. strong normal. XX% of cost year-over-year. commercial X% summer to by made or conclusion the similar XXXX and since The peak basis, costs with megawatts investments in to basis compared and PSE&G’s deferred second warmer humidity of reacted to reached temperature recovery peak of XX% system THI, cost X,XXX achieved than gas and quarter X.X%, And the over recovery, mainly the regulatory on rate XXXX On electric XXXX were X,XXX back XX-month estimates. sales true-up of flat and and actual on a addition of mentioned, hot review electric quarter sales an results. a the PSE&G distribution programs led weather sales than was trailing by sales priorities, greater third sector XXXX several increased outside storm recovery of a normalized index, in mild megawatts. base dating the

billion, of X.X% a return base upon a based distribution on are of equity ratio. and XX% $X.X rate rates New a equity

following flexibility to the tax settlement XXXX utility negative reform solid We need credit maintain providing at in resulted essential cost. that metrics the that to is impacts lowest cash from the are the reliable PSE&G’s as pleased financial service recognized

PSE&G’s forward, the ROE settlement adopt equity Distribution investment agreement. Going a will programs percentage in established rate new and

as storm reform takes $XXX million rate increase net to earlier PSE&G for additional savings as month reflect back revenue Commission. Transmission to As Regulatory largely cost well depreciation in annualized updates two of million in tax reduction annual to Energy in including flow in the Ralph $XX from benefit mentioned, into customers its in an tax and revenues, filed customers reductions to account the due federal an million reform. to a recovery $XXX savings from $XXX rate formula Federal tax at will XXXX. this enacted PSE&G million expense,

our reflecting provides million a revenues. The and first was Transmission that focus on improvements an a system update with increase capital annual reliability, annual in for planned $XXX

refund of of X, in XXXX. January reform, to provide to be Both over rate formula resulting to expected taxes are excess our these of income adjusts changes $XXX a tax refund deferred effective federal filing second a The due our million.

GSMP programs, forecast first for XXXX annual the as and adjust electric continue and Distribution year II and infrastructure distribution The the Strong full from we as gas two and projects. Strong will Energy in programs Our near be rates approximately for to GSMP begins, in completion in each to months expected. combined programs. capital and Transmission invested increase Once approximately is XX nine June ended million of December September $XX revenue $X.X PSE&G has perform billion gas Energy these year. GSMP, of the

increasing approximately to New system energy full resiliency, reliability invest and policy infrastructure on upgrading For Jersey’s supporting the PSE&G $X.X billion expects year, goals. and critical

We over rate X% growth base continue the XX% CAGR XXXX expect of to period. to at XXXX to a

reflect forecast largely year, with full higher $X $X,XXX,XXX,XXX, forecast the we’ve the income net for up due $X,XXX,XXX,XXX. of to the XXXX to weather, billion of margins increased from PSE&G’s a $X,XXX,XXX,XXX For be impact to sales range now to

XXXX net million. to Power as compared the of you for provide XXXX XXXX measure you operating $X.XX earnings also tax earnings income of our nine per XXXX the year quarter release on the on or was and realized despite items the million Slides and for generation of impacted non-GAAP the income non-GAAP decline was share margins XX. the the quarter-over-quarter. share. average operating net We’ve a amortization. operating and the million $X.XX non-GAAP Now non-GAAP hedge $X.XX of expense the months well Power. and excludes $XXX detail the adjusted third quarter and let’s adjusted energy expense, prices year-ago more share reported first XX $XXX third third of for weather warmer-than-normal net on million EBITDA of for Non-GAAP share per Power’s versus earnings third depreciation operating $XXX income Power’s per with turn earnings and of provided the by interest with detailed EBITDA adjusted or per lower of Non-GAAP XXXX in for income Non-GAAP XX quarter to of $XXX as of output. PSEG the impact earnings EBITDA quarter same quarter compared were with as demand of analysis in of and quarter. quarter Slide The in effect the for third $X.XX

per non-GAAP anticipated England will run on the at through in quarter, earnings of experienced $X.XX with The the year-ago megawatt taxes $X and, rate of newly the of results result and and of lower market improved impact a per audits income, These XXXX Jersey Keys, five PJM – X price XXXX. And in in-service impact from service lower the $X.XX East offset of third to capacity year full were the the interest year-over-year decline per and year-over-year the expectations tax in in Harbor increased consistent Power of new During $X.XX placing placed will and related the impacts in a of in by spark higher combined comparisons our share. for May PJM. results. carryback slightly reserves which quarter, hedged quarter share average increase per units the prices the during pretax hedges tax continue compared and compared tax is ultimately, and and share Keys year. capacity impact quarters The Recontracting the with operating the its with as New per by the added The XX Sewaren combined enacted $X.XX these for Keys New relate nuclear the prices combined reflects with of reduced higher cycle comparisons expenses next corporate of coming to a expense cycle stations the benefit XXXX Higher share remeasurement to generation XXXX next $X.XX of of federal claim share. tax with net higher reform, $X.XX surtax. less per quarter. income share $X.XX by $X.XX year. start-up volumes associated of closure unit per from in at And per year share Bridgeport versus per to June a third earlier new spread due of the both to impact in and prices A of comparisons service, $X.XX affect expense depreciation O&M Sewaren. per demand, lower IRS reduction share a higher from share boosted by year. along occurred energy benefits Sewaren given

Power’s Keys capacity at the operation. higher the units. turn operated and let’s cycle XX% with up year-ago terawatt-hours Power’s primarily cycle X quarter. increased to Sewaren quarter, XX% produced of of and generation new output the Power’s an factor capacity combined the the of commercial production two stations to Output fleet terawatt-hours the output in quarter the Now also quarter, reflecting in operated XX% average at XX% XXXX, of output reflecting operations. coal third gas-fired of improved combined Pennsylvania fleet the and X.X during of by in over generating factor

total operated fleet been capacity of putting representing generation. nuclear Power’s XX.X period, quarter reduced and low raised terawatt-hours year-to-date spreads. in levels to terawatt-hours of weather-driven third modestly Power’s in the the and output of to forecast last improved gas, Gas XX has spark prices up XX from storage on factor producing Power’s of demand, didn’t XX%, XXXX terawatt-hours. total prices at move an power XX% to estimate conjunction but on XX For for pressure Power’s with quarter’s average XX

hedged an XXXX, XX of of remainder of of average to to XX% the For price production at per total $XX Power XX has XX% forecasted terawatt-hours megawatt-hour.

to Power of hedged of has to XX% an production average forecasted terawatt-hours XX per megawatt-hour. XX XX% of XXXX, at price $XX For

the output XX% to to at Keys Sewaren XX% associated an as Bridgeport unit XX well megawatt-hour. $XX forecasted be For cycle startup to with of mid-XXXX and at includes output terawatt-hours gas-fired XXXX for per as of XXX-megawatt, generation XXXX, Harbor. the price Power average XXXX combined of forecasted XX to has commercial hedged The

retail provide the taking would to obligations marketing all after ceased enhancement Power hedging its has, exit it customers therefore, decided material but the determining meet to has their on electric customers through end a continue of not activity. existing will contracts. new Power addition, to In business to

Our and Power’s to $XXX to million to $X,XXX,XXX,XXX $X,XXX,XXX,XXX, earnings XXXX EBITDA $XXX operating forecast to been million for $XXX respectively. million updated to respectively, $X,XXX,XXX,XXX $X,XXX,XXX,XXX, adjusted $XXX and and has of non-GAAP non-GAAP million from

per Now parent, million, turning of non-GAAP The ready PSEG other end And of third been And the higher operating third Enterprise quarter And share. PSE&G share Natalie, $X.XX representing per full net to million million to take guidance maturity. of $X.XX $XXX questions. XXXX reduced net debt Reported partially medium-term X.XX% at interest maintaining compared net represented income the for notes are taxes XXXX at offset $XXX quarter while X.X% or as $XX the Enterprise retired $X.XX and of with million now share Other. $XX And its $X and earnings and of income the closed to of ended per our of In to of PSE&G costs. decrease those to PSEG by the quarter $XXX notes. the $XX September, year we’ve million for with XX September XX% year, share full has of the lower at notes the on in items. PSEG of balance interest $XX capital. end forecast Other’s we operating $X.XX midpoint of reflects income million higher at sheet, expense that, million the million for and per reflecting capital. debt to XXXX cash non-GAAP XX from mentioned, at medium-term year, $X.XX also five with XX% issued quarter earnings Power’s or consolidated of quarter of guidance Ralph XXXX. The medium-term X.XX% year-over-year approximately of year narrowed

Operator

Instructions] And with line question Citigroup. is from Praful the of your first [Operator Mehta

Praful Mehta

Hi guys.

heat went up maybe and why gas mean, implies understand specific we’ll taking highlight and in reform get on up your spread, all you that as So XX, to reduction where But the up then the didn’t starting that’s to fuel with what costs, to question a power understand that place. pushed drive been that’s down. first the prices have Slide market I wanted coming wanted spark well. prices clearly and some rates quarter

on color that, some helpful. be just So that’d

Ralph Izzo

right. All

coal is assume power some of strong bit that prices, Praful, that but to took little correlation, you of know So there that obviously, was that. it’s add One keep prices not only perfect. Dan, those to tandem. perfectly gas a moving a between electric I if from don’t there place lid and can dispatching want in

Dan Cregg

I the gas source been an up a little as Leidy the electric sourcing of uptick has necessarily prices gas Leidy and And well, drive matters Leidy Yes, us, that in think low-cost bit also of of of doesn’t all very we for that and saw a prices. we end seeing.

saw generation different to units of I little low, gas gas source coming pushed the of an storage it levels electric you is, were where some And bit well as through. think can prices magnitude So as was out of used during from we depending the where standpoint. some pricing our that what winter, more for coming a of the upon gas what units for compared see a the gas running, are up summer gas that

Praful Mehta

Got you. That’s helpful.

permanent do you but this is this And issue? see a so a as this is of of more happened more kind not issue? that something permanent Or quarter

Ralph Izzo

– but believe regions and had correlations Praful. basis changing never and region predicting that to Mid is curve be prices gas a prices, if between the taking it’s in than Henry you seeing is region; Hub that pipelines tried that in reflected pricing we power are of But are historic with Leidy out whatever before just that coming and stronger now. forward the should the right up MX; differential We in predicting ultimately – Marcellus some with opening the Eastern other price curve,

Praful Mehta

on Got quickly the you. reform. Understood. prices to just And market around especially going capacity reform capacity side, then and

And Given perspective? capacity risk whole all all capacity any where a do how Do do BGS reform capacity the different proposals this? you kind you going? from – see legal out auction there, prices in fitting to see process downside of the you see Ralph, this through

Ralph Izzo

keep suppression; So the again, view B, A, designation. what remove ourselves has to of resource price FERC we want and of policy from terms anchoring point what their to to they to objectives, is to which in of what a do states is, espoused allow

if and quo, I any perhaps that alternative. it approach ability you preference areas being things mentioned, market remove said, point management. for FERC’s cutoff an all and recognized higher would delivery transport are always suggested, which an a as offered – for to electricity subject legislation to suppression But secured our nuclear how are how the subsidized out, the many do, the from zero status of New we attributes does that There that for their the I I lower at know, with, some units guidance And credit And But for energy energy unsubsidized setting see level status market different break hard nonetheless, supply, factors As think And reform. versus look There’s – the is preserve to There’s changing we capacity. – market should And states – unsubsidized price. the Jersey and side a PJM rates and notwithstanding all price, price. intelligent PJM’s quarrel consider. prices without equal, the things what additive is But There’s other PJM that demand quo. capability. for pointed of payment, set the the to I be other carbon units, BGS be both Praful, that energy to other to things has will different payment, XX-megawatt out. will think that to clearly units. that at as being is you auction as when that price. demand, was remove should you transmission capacity prevailing emission capacity proposing there as was ZEC in all at be will that that the me price we equal. the it’s should local

Jersey sense the New not of terawatt-hours is in – overall – is sense, the So think BGS. use industry word. which law output need the the of nuclear, well ZEC targets, capacity we XX within not word that in our I the – in the of certainly, generic the capacity and what from the

that for need So I call around, XX Then market terawatt-hours would for were nobody up right. at and prices all was get burdened of can in its FERC nuclear anymore legislation consume do energy the Jersey capacity operate. in not without plants way, which any get or envisioned a are or if the win not the achieve in and, be its BGS the than were use prevailing just to and legislation envisioned customers the will fact, think legislation, way savings the originally – for New

Dan Cregg

three same ZECs the think determination well, if the or as coming have auctions we have next reminder years, three those capacity I – three to you Praful, capacity for should And one what just this anticipate related And will a the about auctions it, be years. next will happened say, April already.

got on November, is go So talking to three that’s the And period for, due about look this all an the of – but reply, important the that effort will comments, years. are we’re Xth all impact this next thing those on. after to

Praful Mehta

so helpful the thanks you. color Got much. for very

Operator

the of of from is question next Your Julien Bank America. with Dumoulin-Smith line

Julien Dumoulin-Smith

good Hi, morning.

perhaps Praful’s to follow-up So question. on maybe

obviously, Just your here sparks point? Or is at you latest impacts forward back I to is in of some that expectations that elaborate, this slide. realized hedges on disclosed of you energy mean, too much in Can you the prices the had all quarter. the reflected hedges in in it noise? your

Dan Cregg

that real-time period, it you are and mix hedges. have markets. that put kind we of to But hedges day-ahead those that it’s within difference intermediate to in of the hedges the opposed on, mean, across really the open the the the the overall through say that only as been know, would that some extent consistent you’re fleet just the as that extent put going see and Yes, see hedges. section both. But markets combined coming to some is cycles during in on a effect a And were to I phenomenon I’d of are you forward elements the are

Julien Dumoulin-Smith

with do Or during more the this impact? to in how be acute quarter? you spread issue transpire clear in mean, it. what the I going latest that think you is maybe expectations of about your ongoing to you Got saw the But from spark saw respect it, an about quarter, an forward that

Dan Cregg

longer-term I Well, both think shorter-term right. and there impacts, are

lower upward about So some having levels that’s you a a think talked to summer, if in already I inventory term an be about have you into the couple that on longer-term to effect. extreme as coming weather going to is some of the Ralph on And going which and longer talked things pressure Ralph market, have in, that need about, having have the about talked more takeaway capacity some pricing. I’ve see bought

and continue market think you’ll see I to impacting shorter-term both impacts prices. longer-term So

Julien Dumoulin-Smith

Got that retail on have it. any at on bearing side this And the the did point? decision

Ralph Izzo

side from retail plan some been Julien, as defensive differentials. the was, of targeted losses to the view on point reverse primarily the a No, market we’ve trying always you wholesale know, – basis at of now of realizing

strengthening of the seen decrease business. and margins with basis the fleet, retail Keys the we’ve plant, some prices With the were start from our on of the gas zone, so thin MX to the in

can As decided never it pursue that of – fan know, huge I’ve just it. to we continue that was you interest best in a it our not to been

Julien Dumoulin-Smith

you for a BGS about relative change if correct, to Got be legislation. then timing me is implement give It and could for the talk procurement implementation it would would potential? no for suppose you I year, not that clarify the if New application and would on be auction? you’re it. of is is effort this seem if, capacity. that of you MOPR BPU-led for you runway Jersey to able MOPR. some a be would Can that next thinking comments And there seems XXXX to there need to as tell any It

Ralph Izzo

energy BGS remember, in auction year follows of RPM typically the terms applicability. the So

RPM to August input in to XXXX. April is going but take place auction in So place will place is take that now taken the have in would the BGS that auction

we So right. time, plenty of have

X/X for the pointed X/X are Dan the out capacity that. the the of year in to prices BGS years, year, after, has layered after year next known, tune three As XXX% been next

is of the months right. we time, ZEC. the would auction proposal PJM the apply And only proposal point get XX at we the that did accepted, April. if a in timing in get this if to BGS have get full in as assuming the all out the and we PJM we assuming that We’ll ZEC ZEC that goes So find get the

typically, in advance their comments for changes if rule in, do course, any, following place, that fall would put Of we LDCs take the in much so it BGS what the in should winter. the

April auction auction rules of FERC this nuclear place be In the the the to FERC PJM entity – if think has to the following we RPM finalizes recipient auction January, shortly the way on ZEC we would are proposal, the LDCs and place approach, in frame, that MOPR the other the a file not a whether if energy thereafter, capacity February. or we out August. in secures ZEC per find we with is the fall, BGS we for taken for So comments and make in the the time the we same takes frame, time get

fine. timing a saying So that just think work the I long-winded of was way will

Julien Dumoulin-Smith

all. you thank Actual

Operator

Your the Greg Evercore ISI. is next from question line Gordon with of

Greg Gordon

combined Power, you hedged range, seem knew that were we why on range sorry a a range get a swing the Thanks, enough was now. to there the there’s spreads you lower to right, lower known clarification generation the open peaking was see by though and you your extent I’m portion spark just magnitude volume that all. were the we good back circle factor prices, cycle but know at lower, was saw doesn’t impacted on an and I the only morning that to could and open there to numbers to Because wanted that guidance like to market, maybe the was reduced. of basis guidance your even we that small guidance it if

– just third into can to was of – the was you what much curve much the be going more of this the on this quarter, just a Because were So how not you going for how from little forward quarter is and realized quarter us. spreads was into from granular very bit telling second the known spark possible second unknown? different it

Dan Cregg

And Greg. right. Yes, you’re

as impact, saw. the it’s some think open delta be volume not just if you open So much but you you and the about a it volume, going on pure can what have to as as

that and other out into amounts that our are just couple out a is factors little are volume there’s that bit. down a One I think coming play.

at year about where and them of X up, think pegged So the ended you they about had beginning if where we down terawatt-hour. the they’re

we are an we’ve some at not talked fair hedges generating. little little and of hedges the differentials a are other So then down as on the our comes the basis And the seen exact where lower some that extent openness of through generator bit of an generator bit the a lot And have that basis. within the Eastern that perfect deterioration is the that hedges at bus West basis, factor well our To a seen we’re bit some awful is seeing. we on hub, there hedges. is late. volume. of a the We’ve end basis about on that up And of

factors position those to that And well So factors talking accumulation get I to as delta addition of just point the spark. would at in times you to open about. delta the the about, would think to we’re other pure those

Gregory Gordon

Okay.

is So basically to the that power move cost what you’re the you basis hedged? hub it to where

Dan Cregg

right. That’s

transact lot about you have location. volume at but the instance, you for nuclear a nuclear don’t you’ve there, got ways coming our a So lot of of out of if think to facilities,

of hedge differential the – at hedged and between have Western put forward to on at was you’re Western on, going And put volume. to example, your some a for you’re the amount that put if saw hub. is in So nuclear, to generation basis you the where you move going openness where within a might sale on a hub, extent actual the

Gregory Gordon

pension nuclear... follow-up. One last forget was the on that exactly I associated associated it mark-to-market – the Great. The you was, $X.XX it with or with booked what

Dan Cregg

yes. Yes,

Gregory Gordon

an unexpected reserves? was something that in item? the quarter, benefit the was an that expected that Was Trust? tax Or

Dan Cregg

Yes, yes. yes,

carryback that is, generic – what meaning tax is it’s a to trust. more NDT. on question the is, direct it’s the with you on an answer issue, the as to not So your was, mentioned a that’s but what year taxes And that because the tax was losses rates, of back NDT company’s expected. that that’s just that to the opposed Really generic yes, earlier higher

Gregory Gordon

Okay.

already? the guidance So was that was in that unexpected an gift

Dan Cregg

That’s right.

Ralph Izzo

in accurate just we the middle. give typically, answer go of and of quarter beginning obvious, expect your to stating of guidance try some one be risk the the we Greg, about as initially And a advise to And versus we way the not them we somewhere at Dan’s Otherwise, in and when mentioned, some – to I volume back we still the the of impacts, about change There’s It’s it’s would creep give range; because the the that question another. cumulative to mean, range, and year, during second that quarter, at the to or not then end resulting quarter of that the lower reduction the of range that half ranges. the just towards the the unreasonable in still to but range early. but in of the Power, to still go. redesignate and saw third the assume a the end upper utility as need we year towards Dan terms within range;

that occurred of That’s for the that of quarter. assume the in the matter, Power all or, not long-winded in way case. utility wouldn’t saying third So I movement the

Gregory Gordon

make was I wanted Thank I just yes, to that appreciate Okay, you. my understood intuition. clarifying. I it. sure you

Operator

is Arnold with Your the line question of Bank. Deutsche from next Jonathan

Jonathan Arnold

guys. morning Good Hi

unusually might – you. be that wanted months, million know now you that, a lines where we a nine going, for and for when you $XX have low It I at fourth was as Greg – the just I as end were where of QX. I guidance the that the just in would low suggests through So the quarter quarter – look low quarter Power just seems along

So into to QX of sort QX maybe we plan need in of something else I’m working just of well? some there that’s kind remember? Or the as same the curious, is is that by issues that

Dan Cregg

of And think think I be you maybe to now the are range year’s keep in through, No, But came what benefits we and do where number that of math tax over more would can one imply. quarter. a fourth mind, last the thing in I gave. you’d was some you that just kind onetime, of north there the the

carve if one of look two – have So just to as your some go another. against the you the onetime you’ll compared out items that to a comparison, as quarters you at

a in you that regard. So it’s the of going some But those in fourth months something in mind do months. also quarter, lot and to shorter during outages have keep of were you on shorter a the have couple that

So as go you some you get to variability year year.

Jonathan Arnold

the in deck. is on just high millions. is I sort on guess XXXs September rate Transmission the there? there rate then number? And And still of there hand, – also at somewhere good Analyst That an the was could it that now Okay. some And Day case – update I in in the and adjustments between, of sort in a settlement Or ask the investment single of I is deck, guess, capacity? was, slide with

Ralph Izzo

week rather today. Jonathan, here to trying a or in that that piecemeal than update we’ll give So so,

Jonathan Arnold

Okay will then, thank guess see you you guys.

Operator

is next the of Your JPMorgan. Turnure from Christopher question line with

Christopher Turnure

Good morning.

energy give you as your the you New in us your filing? agreement prepared have negotiations remarks, if future what missing with heading kind decoupling to the mentioned any Jersey intervenors sense been I there’s and of importance from into Can kind of plan partial think, and Ralph, your long-term might of to customers. a

Ralph Izzo

as of so can the give are a those you because Yes, all discussion – was details all, you outcome details that. can’t give Chris, I but settlement first that on we to of the confidential,

to base come principles the referring rate However, in – here you know different it’s not as strictly participants and – principles a energy a that it than than the to conversation. efficiency to a – surprise won’t are in case I’m

who have that center not pushed a being which in base Murphy Clean green may interested therefore, expected been it’ll to And So energy the appropriate in have seeing are that a stage agenda of filings of Future it, people filing. forward. the have of that’s Governor will percentage will, kind the – rate – greater Energy advocated and more

Christopher Turnure

decoupling Okay, give it’s if that’s some an be us helpful. a there outright what mechanism? you sense can mechanisms And might other the as of not to

Ralph Izzo

recovery haven’t rather contempering into gotten revenues in I’d what of been of can of what’s this both or of that sat questions well that get discovery down to go made have of things But sorts there’s the as one parties. months either filings for nature. now and from six do revenues type being since might or not we realized all as be other even trueing the annual and – to versus investments anticipated that up stuff

So...

Christopher Turnure

And then...

Ralph Izzo

Yes.

Okay?

Christopher Turnure

for was then your question related just versus on the year-to-date? side. rate normal the changed versus And or corporate the than interest quarter the you second that weather original utility on quantify on My Yes. the side, plan there on debt? anything Can just other new

Dan Cregg

Yes.

to I So the can point you slides.

a a particular there. take on both play If come you’ve look, as you sometimes weather demand can in into got of and well as volume breakout

in can So on about was the and $X.XX quarter. year-to-date demand you in $X.XX of quarter. the year-to-date and weather the about the volume that see for $X.XX for utility, we delta, And about the $X.XX had

parent your what the mainly basically you aggregate the that the question exists And there pretty provided. debt which through seeing just the parent. numbers we’re shorter-term of the So see put within the little stepped it of slides pressure broken up on can then has some we’ve on in out cleanly the at bit that a increase year, we interest, at is as

Christopher Turnure

year-over-year those versus normal? just then numbers, And Okay. on those were or weather those were

Dan Cregg

year-over-year. are Those

Christopher Turnure

take as Okay. something Any sense could to is Or we versus that normal? offline?

Dan Cregg

It’s pretty close.

bit you seen milder. a they’re of versus at a last the bit look versus take uptick an at almost summer because – think same might if little have at But you XXXX normal. looking I the little was a year just

Christopher Turnure

you. Okay thank

Operator

from of line with Goldman Sachs. Lapides Your Michael the next question is

Michael Lapides

above you bit quick. the few through? tracking made Hi if think filings months, Or the highlighted about that large-scale of are whether likely and how and of I you walk in last you’ve where about be go capital above mean, what some kind then about of where guys to you forecast thanks look for Analyst in right spend, taking us I the think back should at you’re you’re come filings those I my If that at through question. capital Real think range? the all and we how Day a the little the projects. of that of kind made back you kind that would you’re Are pretty Analyst are somewhere now. you thinking Day? Just PSE&G

Dan Cregg

and we we had Yes, May. GSMP in I mean, in had I approved Mike, our think April conference II that

was Cannacord. that So at

of think And areas were were $X.X $X.X May look talked programs exception, the billion and magnitude a those say. that filing. billion. in one about II, major Energy talking – at earlier inclusion Strong going we of really is the putting we If programs Energy talked we a is said that Ralph in filed forth I the we put those not And Energy Strong. should the to the Energy forth of was the which Strong we about, filing. at about Clean talked time. $X.X we was In about were and bit one AMI, I filing a as with little filing that forth you billion today, And June, in put II,

to can a that that AMI attribute billion, $X.X billion the to the versus capital component amount of we that of the So filing. of delta $X.X filed aggregate investment programs and the you full

Now program. it’s a six-year

XXXX. since would end XXXX, in filed at have it’s And we was won’t it approval five; you’re see a back a two an number you’re we that – going years have of about, about you’re until been one, that capital beginning horizon the five-year that Energy it II, So at not then is six the of two, of within if Strong process trying then some over five-year to issues: look started spill because we runs. talk that And have the than but normally similarly, to for program. going more talked to it

think some time, programs. think to about the X% how spill there. with without would have But those rate we programs. that’s capital and going two is at XX% really You’re magnitude on simply as talked the And to the about you growth the base I over CAGR more of

Michael Lapides

of come Energy Meaning for assumes the you filing? it of asked of intervenor something lower assume and get in you Clean those, approval Energy often a does requests the full middle Or where the both XX% versus in what of at see II number? Strong you slightly

Dan Cregg

period, other five approved assumes incremental periods there’s assumes for within for filed balance years. that the it five-year it the programs no and that Yes, also of the as

else if we to we’d – So be get additive. incremental between anything Any filed, and would but then that identified were would filed from as as were to the nothing else is amount, XX%. every as reduction now and be and that happen dollar then at capital lower

Michael Lapides

you needs over the last out – over PJM the closer usually, got Day? time, potential as to occurring. forward of out? recognized in versus laid one. put Got three the Analyst years incremental are back the two, a go what five those three back incremental years and years as it. actually about for Transmission spend need in you you as higher How Day you the if or And at it next to I I you relative what the rolled came to or at are thinking an then year kind one four years laid as Analyst looking now in out numbers and beyond, what recognized changes mean, How the to you you you

Dan Cregg

is differ our from how question So does forecast? the forecast our

Michael Lapides

not bit have little seeing opportunities been may forecast? incremental of a you in are that embedded Well, the

Dan Cregg

when away are a we’re forward still we plan I we few five-year is the months how at put think from characterizing capital time. this that Yes, and

Michael Lapides

and housekeeping. just Last that percentage. the the the bottom sequentially Okay. bit little Meaning, was of year-over-year up at item, double-digit much looking drops O&M line? at to quarter. utility a I’m a How

Dan Cregg

for incremental So for quarter the you’re for PSE&G, about $X.XX the – talking O&M?

Michael Lapides

Yes.

Dan Cregg

to question. bottom if $X.XX drops of that’s All your line, that the

Michael Lapides

Got it.

Okay, got it Dan. thanks

Operator

Mizuho. line from Paul Your Fremont is question with the next of

Paul Fremont

Thanks.

you’re your Exelon, in expecting guess to put what $X you if $X level has your less the think fast-start, imply I at you at were at think, would Looking adopted? range. where megawatt-hour. Are – that still terms of than $X in is the fast-start Analyst Day, maybe I – same per I out estimates in And

Ralph Izzo

which in is is, a $X aggregate, units $X range. significant down $X forward fast-start to soon thought fairly So reserve right, be – to FERC already incorporated margins going you it on there’s right. make, but that two the One curve will fast-start has that, And to in question being that, schools that in Paul. that is the be on this, we answer QX? have in know payment that’s I issuing to and two the the don’t of decision that is flexible that possibly be But the price in what considerations if degree PJM believe with $X the could incorporating to of

Depends should Is your timing curve? FERC So fast-start an on confidence in result decision. the in of Absolutely. increase? the it already the in price forward

Paul Fremont

much. very you thank Great,

Operator

of Pourreza with question Your from is Shar Guggenheim the Partners. line next

Shar Pourreza

guys. morning good Hi,

questions. of on touched guys You the most

The versus the correct versus wrong, on me quick proposing, proposed on you is? you’re mandate real what Just what incremental Clean versus your if plan legislation has Energy XX. what upside Slide I’m storage

Ralph Izzo

like Yes, like by the megawatts storage XXXX I or XXX that. think goal something is

So – and then megawatts. proposed and – big a we it’s and number, XX

yes, there there. So is upside

Shar Pourreza

a Would how figure when that loaded? far that out we Or that should... think be is you back-end within as – as do you’ll

Ralph Izzo

do having the terms most and in a these we with something is the in great battery future. example, the has a we’ve that One down of that healthy storage been leaders coming trajectory of technologies, is of prices is believe conversations policy

in market pay same stimulate the that stroke want entirety you to front. by want both you market So don’t for the to and its up

a that office of how you is that do when an a timing in and do little Governor’s conversation you it that have much BPU So the policy iterative we delicate and bit we of legislature. leaders, both the with do the and there’s have – in

Shar Pourreza

when economically figures of if it $XX of you that’s solar hours or on our about And to in on Ralph, of of your with two $X cost talking megawatt-hour wind you sort then, just it of incremental per – sort two is – peers one layer a of storage. four, right? Because Or probably that? get you viable, you seeing like four figure? Are to like to could something seeing higher use seems

Ralph Izzo

yes. Yes,

to – number to And get use assignment. we per do time, I not capacity. of I but I’d $X the $X is short, million have to So to And homework as rather $X take coating million I’m I’m used in terms I’d it will to backwards real megawatt. work $X megawatt-hour. see in that a is which that to it if not per

Shar Pourreza

Okay, later. Dan great. bother I’ll

Ralph Izzo

Sure.

Shar Pourreza

And then just lastly...

Dan Cregg

Shar. Nice,

Shar Pourreza

gas on the quarter? And new your for What problem. a... drove What drove the factors no capacity lower third assets as – just

Ralph Izzo

actually didn’t a outage? – XXX% Hope Creek like ownership a of it Hope Creek? Was it was I

Dan Cregg

Yes.

outage. had It’s XX% – but I huge occurred think kind of outages normal we that at the they’re your at nothing time. a

Shar Pourreza

thank follow after Okay, with up I’ll the Dan, you guys terrific. call.

Dan Cregg

Shar. Thanks,

Operator

Your next question is from Angie of the Macquarie. Storozynski with line

Angie Storozynski

Thank you.

be to. ROE – also be about they mean, ROE transmission FERC your projects changes updated its to impacted? its about to and trending I One, has questions. two should actually discussion existing some transmission what there be related are seems will what ROEs But your expectations if So methodology those be adders, maybe will now. And, how ROE just

Ralph Izzo

So following the discussion. Angie, we’re

incentives the do does FERC ruled how adders understand methodologies have methodologies. a have a specific environment, discussion and lead interest ROE it, all range three the those predicted rising to are not been then its we rate each using As three and risk on and that within by We profile company about yet. sit

I’d ingredients comes understood that to are remains little the say tasting what bit stew a to So be going forward. getting stew out the still but like the known, better

Angie Storozynski

to case settlement so then be going is XX%. the now decision under And equity the or the Okay. at rate layer utility

was I at mentioned that XX%. the think of you it end the quarter,

going should be into mean, to expect I I is So, the going from debt? there’s come to it that injection additional And corporate-level utility? equity basically

Dan Cregg

was rate somewhere XX.X% our last existing the case, from No, rate Angie, the equity the and XX%, stated – percentage XX.X%. our was between

funds delta. that you as that would think. So general corporate fund And as not delta might is otherwise big just

Angie Storozynski

Great. Thank you.

Operator

question line Scotia of Andrew Weil. the next with from Howard is Weisel Your

Andrew Weisel

squeezing good and thanks Hey, me, for afternoon.

hour around year. the first up midpoint normal, When by the one was at basis. weather the versus the The went look an guidance A I on here. quick only $X.XX past essentially benefit $X.XX. EPS for We’re year-to-date PSE&G on that

So of of future benefit what any plan? years? you that be would is the sustainable else ahead And to taking

Dan Cregg

the a probably so. would you’ve demands, moving And to will just addition area that’s that north of couple in another that. $X.XX or think some weather, also there’s end I it volumes labeled give items $X.XX and or which got you other modest up then Yes,

related. tend layer think couple that the amounts, smaller two think the One also get demands range. adjustments which I fairly a you. and to other is things And incrementally you for weather could and to volume you about weather then be in So to

Andrew Weisel

think Okay. as those we will carry sort through? smaller And those of adjustments, of onetime? that should Or

Dan Cregg

not. onetime think than more I

Ralph Izzo

rate I one may another – think timing Andrew, the one, the case. is on just we little bit conservative a be of

Andrew Weisel

Oh, I see.

had other the question AMI. Then Good. on Okay. I

us the improving reaction asked You your guess BPU my of file a mentioned little believe pilot chose be for now? reliability. program instead to and the history part approved the how not the comfortable of the are the will analysis. remind question March to you that My program to at storms you in the is, and state? I I CEF they can question is, neighbors, to $XXX one continue it utility, so file the And cost-benefit premature as for filing? is million it you, a

Ralph Izzo

huge their agenda. I analysis it’s Well, an has we Andrew, Clean and customers their that energy extract for think, translation: the factors the Metering we from you’re is – Infrastructure BPU announcement embarked over Governor Advanced the but achieving as And can materially push second right. think seeking is, as different. his definitely of reduce and are that upon initiatives information more policymakers forward a the there’s concern correctly outlined that important But help do in intelligently, to the think you value consumption has a consideration really one what – priorities. outages, to the energy not Energy use on One a of is pointed – is out, the cost-benefit There that moratorium, the couple premature. Governor

Andrew Weisel

approved to individually, the might CEF the without had that’s this that packaged clarify, it’s certainly looking a I Analyst could possibility? end up just but so And Day? a the be treated like – at not could talked So case, words, Those that. what Okay. that possible is about believe In you Is it it’s other be deal. the pieces right?

Ralph Izzo

didn’t separate that put into Yes. did same – details, we were we correct. at But in all go really is time. three filings that’s Yes, that’s And correct. but CEF the

Andrew Weisel

Okay, thanks for everyone.

Operator

continue with We Mr. Cregg, closing have for Mr. any the allotted remarks. reached Izzo, please questions. time

Ralph Izzo

you Well, there. thank Okay.

both performance the this anticipated and our track, can on some of the solid where days, Power our look hopefully, in availability. call fully. discuss say year. and would terms performance Halloween. with had is to that at we start is these the the had albeit been in attributes: financial XX San more performance traditional than a Francisco enjoy the from I And weaker So seeing you forward have at the our Power issues and other utility of at that we hallmark takeaway And in Utility stronger performance reliability, The operating much

none New all. that, of Jersey that. XX about see of in up. we’ll you coming you are mischief a with But days. famous Hopefully, has Thanks night victims

Operator

conclude that today. Well, for your does ladies gentlemen, and conference call

may You participating. thank disconnect, for and you

Public Service Enterprise (PEG) 30 Oct 182018 Q3 Earnings call transcript