PEG - Earnings call transcript Q4 2018 | Public Service Enterprise Group Incorporated

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Operator

Ladies and gentlemen, thank you for standing by. My name is Julie, and I am your event operator today. I would like to welcome everyone to today's conference, Public Service Enterprise Group Fourth Quarter 2018 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 members of the financial community. today reminder, and is telephone XXXX. will at pm a February recorded replay As Eastern X XXXX, pm XX, be Eastern Instructions] this March being conference Wednesday, beginning on [Operator Thursday, XX:XX X, until available for will an webcast corporate available on as at www.pseg.com. be also PSEG's It audio website would to the turn I conference over now like to Carlotta Chan. ahead. go Please

Carlotta Chan

earnings call. thank results statements the We release today. slides Good estimates Julie. to subject posted participating for and risks The investor.pseg.com, you, our that we full and earnings you year website and various today. morning, and earlier later and XXXX our uncertainties. The attachments release released forward-looking detailing our filed materials by other be Thank today's fourth operating and on earnings during quarter earnings IR company will are XX-K at in discuss and results are will contain call

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

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

Ralph Izzo

earnings today Earlier the quarter full and reported operating today, were per thank share X.X% year operating per $X.XX XXXX's over of the of share you of XXXX year non-GAAP full for $X.XX us to XXXX. share. earnings our discuss fourth quarter earnings results. of Carlotta, the and in quarter per per earnings operating Thank we non-GAAP non-GAAP $X.XX share, $X.XX Non-GAAP operating fourth financial for versus fourth all up for you, joining

to regulated the recognition year $X.XX as our for mark trust investing term our coming unrealized results significant new base the equity other of from continuing eight and GAAP losses share approval includes distribution rate of losses settled of programs. per of generating market the Mercer put result related units. Hudson case the XXXX two at $X full a phase system billion on net rules, Our accounting capital PSE&G a GSMP on full and of to the earnings for long and the of PSE&G's retired business. results in our percentage on constructively X. the can nuclear infrastructure for the PSEG in successful program II, and work We securities, which the gain of decommissioning the and a sale strategy our obtained be of quarter growing filed I'll and had years, slides refer the first gas as to in next Details modernization year regulatory X year to found

resiliency, and reliability the the reduce their to support lowering emissions. Clean clean opportunity Future, CEF while and system enhance Energy and goals or will customer X Jersey's energy every filings, Strong Energy energy filing, give second first bill The our New

usage usage that natural New efficiency energy recall You to to gas energy requires measures may and XXXX, by implement by Jersey utilities X% X.XX%. clean legislation electricity in passed which reduce

infrastructure, storage vehicles growth group it AMI least broad aligned benefits. our way and energy to by in limiting energy savings the best achieve bill energy the targets, the to efficiency, a and cost the as the customer Our advanced We objectives as to providing such electric proposal efficiency to CEF smart fairer to Governor legislature with of broad to are electric meters Murphy as as otherwise well designed access state's and or based proposals the referred advance this the outlined consider customers in manner. be and while accomplishes metering

the in rates, tax which the year. corporate benefits Jersey return utility the New Speaking $XXX last of of in lower bill, first to was totaled customer million savings PSE&G income approximately customer

will $XXX In going we implemented customer accumulated the return have income addition, in XXXX, reform taxes bills of to deferred savings forward. of additional tax million related moderate that further

by We New last establish zero program. major May's generation recognizes and carbon attributes also with at PSEG legislation Power the emission Jersey's progress made certificate that zero nuclear provided

free northeasters, CCGTs a multiple decline. two cash Vortex cycle of cyclone power critical placed bring most, Power's summer combined also Apollo our mattered its addition, heat the completed X,XXX year to in during as XXXX its With bomb, units included expecting events PJM XXXX. That CCGTs ongoing wave flow wettest capital service operations reliability [ph], in and PSEG's with or experienced into an territory fleet. program high an and middle improvement service record. online, powers complete three weather extreme the In needs multiyear gas of new highly it when the that will efficient into construction performed in extended of megawatts when now on times

by PSE&G rate by to XXXX, aid state's nuclear breaker In addition neighboring the Non-GAAP of ever operating period. earnings system distribution PSE&G clean in our of reliability managing the increase that goals. run this PSE&G's base flat. system its for in with past reflects in utilities. power, to note, continuous in plant XX% breaker April PSEG infrastructure resiliency $XX mechanisms from earnings This our year billion growth over regulatory rate increase $X in expertise the in invested of or compounded consistent many end years, free in share distribution discipline recent energy above through billion in helping per an based and approximate incremental benefiting $XX.X Creek our XXXX. energy to to XX%. same efficiency billion rate those and and and review grew the share achieved associates is Hope constructed of first to earnings throughout their growth safely and capital $X.XX growth achieve deliver majority clause five the PSE&G investments year, to carbon annual transmission over since record rate the of And Moreover operating at for the T&D base the customer expanded that allow with At XX.X% without remaining rates XXXX, of base our support our for provided our contemporaneous was costs basically base in operate rate the recovery enable a investments. completed of Of programs important

to drive base, rate growth a along customer and earnings on approach bill. the efficient continued to We will continue and with this focus disciplined

Our value to be investments customers. recognized our in for system the to reliability continue brought

on PSE&G experience as our the reporting row utility filing the Mid-Atlantic the in XXXX. coming accelerated electric pipe, energy BPU next miles third Customer award, by up was region, For outage the year XXth Efficiency outstanding the most and was also highlighting progress utility both the XXXX critical in which Reliability both recognized reliable awarded sometime a on May, modeled PSE&G Last Energy II billion incentivize investment of innovative to and Public Modernization months, Strong to quarter. anticipated aging In to the the after we program Jersey the programs stage Gas infrastructure. a recently us approved Energy System will Program Future of began and restoration communications. process New clean $X.X gas plan PSE&G of through XXX to Program replacement strive Utilities decisions established the in Board infrastructure carry make of this extend X-year will investments with investment the in

for earnings while generation stringent per let Power results producing attention non-GAAP the solid discipline, full $XXX share included Now of prior our or to to exercise below turn operating me Power. operating that million my X% last the over units year. Power's coal gas year fired were and cost higher from PSEG $X.XX continues year.

related units service. nearing Together some year X,XXX is new power efficient its completed these middle Power's to the three competitive fired with since of of Keys megawatts stations three improve The PSEG operated cycle units well completion have clean Harbor combined last of to Bridgeport replace and program this will that coming previously completed and be Sewaren represent unit, capacity older mentioned into position. in expected gas I new the stations its gas generation last year. natural X construction As

applications submitted now On of to XXXX. Jersey the Hope process generation of the up hour plants. environmental, megawatt applications The decision Any to to that the needs BPU award created submitted with legislation plants. of award in nuclear is value Creek New diversity Power power Certificates XXXX $X.XXX front, April be and the it on Jersey generation only any May for BPU If and Certificates, period portfolio component recognition in December These for 'XX. bring Salem New to New BPU, the of period. selected in ending award and payments a receiving which secure want is its $XX Zero plant the X legislation December reapply you per being which three by the Jersey's administered ZEC nuclear kilowatt resiliency I year of In the New starts accruing to carbon requires ZEC The electricity. of XXXX. Jersey's policy attributes year a as applications they nuclear at XX% Nuclear Zero per provides date is and period subsequent first in set benefits the over and our three program our critical Emission fuel three awarded X efforts a the for Emission approximately legislation the three units. by electric plants for evaluating were for in power The allows a will by approximately XX% submitted. any of by nuclear free hour, requires April to provided

three and and CREEK the absent material Power financial certification required included in operations X change. three each a which Salem will cease X confirmed a Salem plants As of applications years within the that HOPE

required fully confident cannot are Jersey's demonstrates environmental will that been have the conclusively we New we ZEC of financial the applications net our under legislation BPU decide. what standards While each that predict three

to continued result next down change, receive a retire starting any and selected at In three Salem is planning contingency and an to Salem HOPE capacity to CREEK pending. don't plants year all design steps that all decision not outages. Emission plants in necessary take Certificates units. of their will auction on otherwise remains refueling X to have With the Zero the a the X rule FERC's financial this pending material interim shut respect PGM experience April the event of we then As or Power

in allow rule supported and you two suppress to to with for stage was the final resources for re-pricing resources specific apply mechanism, is which then As offer solicitation wind, condition opportunity auction, decided on with their to of implementation capacity PJM executive in steps an of to capacity program price. capacity board the is PGM market goal potential price a An The we U.S. amount included made that in the Offshore offshore that of And megawatts resources with can financial an capacity established fill-in capacity materially With received services accordance authorized the being referred any implemented, in offshore but difference Wind, two receive time. out to Curve. June PJM state In revenues as We approaches, and of ZEC Ocean price they directive Recently needed generation of in its the that megawatts the finding wind and the to obligation. removed efforts all but energy don't its these with all in would unjust determine provide retire auction by bids the to option to the for of of FERC and replaced uncertain. in potential lease timing conditions be to alternative rerun be current to and this of and during capacity unreasonable, was FERC to the directing filing order resources. offshore reserve few necessary weeks, filings state a proposal new with in is submitted changes of leader clearing overall supply Governor plants construct period the New respect market remaining Jersey as Operating but wind. into move in BPU use our would zero the that construct prices. stack. agreed energy The remain of Power - the or scarcity XXX to also submit existing FERC's initial because order by proposal, market the development. land initial progress between or X,XXX April by price of plants. auction resources a This alternative revenue receive selected the PJM adversely to FERC PJM's value to the supported the other what's become the resources to levels payment, has from a generation. to remove the equal New basis and Alternatively, PJM's lost existing FRR next covering considered market a sufficient known the prices energy system suggested Wind approved resources state ORDC if impacted state future. if overhaul, LLC, obligations. to state would effort by intended take payments. know and XXXX, BPU allows to instead get issued removed Murphy's price units supported that recommendation and These formation minimum submitted XXXX project capacity ultimate Section the market past PJM's well load They last then management energy filling market clearing formation provided receive submit FERC also leave the FERC connection capacity PJM structure. commensurate are payments Jersey following modifying resource-specific subsidiary it the along capacity nuclear could appropriately improve scarcity. which operating in load a would of a for work fact, price, market for its absent Jersey's stage the sets a a and offers suggested under FERC's capacity recognition state still to State three establish all to Reserves all are for Demand clearing expects bid better just plants New supported certificate XXXX believe the reflect And reserve to of bid the the either resource emission December.

if is we the decision a in we We the also would project. Ocean Wind retain an in to any, equity an If half investment option may in the --- Project bid expect to interest acquire make selected of have regarding what, second XXXX.

without continue Our opportunity five We healthy from financial flexibility a condition for our remains a competitive that advantage finance benefit capital and solid to provide dividend sheet provides. to plans to the the enable us years, considerable ended with our we the metrics over need coming growth will balance that XXXX in equity. the issue financial credit and

reliability that goals. capital our with policy XXXX utility $XX operations Jersey's total at improves and supports $XX Our years directed for of that the amount through New regulated billion program growth, Energy billion efficiency and to XXXX, over the is now of XX%

$XX of five coming approximately on annual higher the expected programs billion PSE&G to $XX plans to X%, the to rate provide billion X% years. starting of billion. base to base XXXX Over are year-end $XX which from growth invest

its and to PSE&G improve nearly will generation regulated dividend free our investment a CCGT will this program complete just operating strategy growth. to business Our our mostly of cash track. represent continuing Harbor consolidated our PSEG's on projected year. operation flow is with predictable business unit long earnings to is and largely company XXX commercial megawatt transition is bridge support PSE&G programs flows high Power, the utility of remaining. continue cash term Port XX% the A non-GAAP our with to quality regulated see

incremental guidance, in mix as operating minimizing to is have rate infrastructure, prices our for earnings. and non-GAAP to in So base distribution of XXXX declines case conclusion consolidated a expected combined distribution with in the growth and business PSE&G's investments O&M XXXX. approach the expected capacity offset produce and transmission energy in XXXX growth relentless

X% the led higher results. earnings $X.XX in So decline in our from of also in forecasting strength, earnings contribution benefit earnings financial and level certificates prices a annual growth operating partial indicative our which moderated by is per non-GAAP the of of XXXX this company's for by XX and year the at $X.XX market year we're $X.XX last the XXth per over to emission that zero three New mix represents includes of plants. and share $X.XX for utility the by is to reflect midpoint decision years in per regulated of outlook. the from over for a result at confidence dividend a business Jersey share increase consolidated increase increase the This our share, energy and nuclear reflects expected all Powers capacity Board recent Directors to The common the

acknowledge me Jersey employees on support utility full and the omit organizations and also I all employees Island the Long outstanding and a construction, not Connecticut and year, and nuclear well. operations, in in our Let should us obviously execute and operations over New in that the in our for thank and Upstate generating. enabled on fossil past made York to of contributions as all policy both regulatory New

As available more for needs build to as to details long our for value remains we operating strategy and to we'll be serve. XXX evolving I'll our to over our your results PSE&G now his communities remarks. on our call we term we our and of questions after year committed customers the shareholders meet the turn answer enter the diverse Dan

Dan Cregg

good everyone. and Ralph you, thank Great, morning

fourth versus that's $X.XX As $X.XX reported fourth per share operating of share quarter for we XXXX. of non-GAAP the earnings Ralph the for and quarter per said at XXXX

increase per $X.XX of $X.XX for year the in earnings XXXX's non-GAAP brought operating earnings to share, a operating share. the full per earnings X.X% quarter over Our non-GAAP

provided Now quarter. reconciliation on slide for with income five non-GAAP of to operating we've you earnings a the net

XXXX now non-GAAP regarding by I net We reported quarter of you income fourth non-GAAP business you XXXX $X.XX full income per the XXXX net XX billion $X.XXX earnings for $X.XX share of the XX from and the slide share PSE&G $X.XX XXXX. compared in the major Non-GAAP a quarter waterfall $XXX was net charts And represented for in the per contain details per operating fourth will share compared slide with the share review changes over with reform. million year which to net XXXX XX and more earnings XX.X% included take business. income or also of per provided for quarter-over-quarter in share PSE&G. with earnings year-over-year of increase quarter for $X.XX or that through $X.XX contribution per results. operating information operating PSE&G's of full benefits company by tax on the starting and year XXXX's each

result in improved net As income X, O&M. slide into investment put per relief quarter plant other share gas benefit by accounting positives comparison postretirement and in rate Gas of the volumes relief monetization by corrective in to increase per OPRB to made expanded margin quarter XXXX's other on of and $X.XX Changes increased well $X.XX share. improved addition, per of Both net margin And gas reflecting and in of tree fourth and pension investment expense in offset PSE&G's or relief partially shown share in a and higher higher were $X.XX by trimming recovery of O&M on XXXX's in share increased treatment higher demand. per distribution in per effect $X.XX the $X.XX associated which an quarter. by over per income Electric share the balances. a distribution These transmission resulted Taxes favorable compared as fourth as in $X.XX were share offset investment improved higher than and PSE&G's XX more of rate under higher as non-service program. maintenance. the transmission distribution quarter. reflecting fourth expense infrastructure depreciation with by quarter-over-quarter November comparisons system the component $X.XX rate a result as

rate by which PSE&G of formula rate filing transmission accumulated reduced and billion the its year-end. original called its XX% in PSE&G higher and X.X%. and spending for update represents for revenue that's GSMP a of on through end constructive consolidated October electric PSE&G costs XXXX related to pass and settlement investment million For XXXX. provides recognize recovered updated of deferred drive were rate over a XXXX, of help of years. rose transmission revenue company's from at base latest that PSE&G's gas taxes. to of XXXX base the XXXX percentage a in framework PSE&G weather-normalized review approximately and growth reached the $X an tax and residential also annual distribution lower settlement rate full-year, sales by clauses, several equity stability the sales requirement based storm transmission not $XXX the This distribution base rate the was or This base II the anticipates the infrastructure income Of terms X.X% about distribution via residential return by filing in regulatory additional the to $XXX May. XX% next billion and investment balance amount settlement of weather-normalized million. at offset on end deferred for this of benefits $X.X the amount, XX% X.X%. $XX billion last approximately by inclusion capital equity increase next

of XXXX, forecast For rate million at distribution investments to a incremental full and $X,XXX relief. and year million $X,XXX PSE&G's we income reflecting transmission net and

to turn let's Now Power.

the and XX share. per decline and the year the to on $XXX As analysis earnings for reflecting with quarter quarter-over-quarter a by PSEG compared share a per The enabled share Power higher earnings a changes XX revenue detailed as non-GAAP largely generation Atlantic has for convergence operating earnings This $X.XX quarter in increase expected. the hour shown full on earnings EBITDA results of system $X earnings year-over-year of pipeline, An of average and for were down XX, fourth as operating year $X.XX improved megawatt Power's with the with - Gas respectively. ago. $X.XX Leidy of page you million slide price operations from cost. year in non-GAAP reported comparisons share, and period, non-GAAP for prices XXXX Power's quarter results Gas $X,XXX $X.XX a non-GAAP for share. energy hedges million brought ago XXXX received re-contracting earnings year to $XXX $X.XX net led the for per and to Power's income fourth with quarter per Power's year $X.XX reduction by offset The off Henry compared quarter. operating or share, $X.XX was to and in as by compares compared share. million $X improved Sunrise the $X,XXX non-GAAP New gas following the adjusted full pages per increasing a non-GAAP $XXX Hub a EBITDA last and the commodity of capacity England operating output provides in higher per release PJM, from partially of natural slides startup the million of and for or impacted million amounted which lowered on by year's 'XX prices in at as the prices quarter to declined earnings price adjusted margin and well sales scheduled per operating with as million. This comparisons gas $XXX per

share in rose from Gross per O&M a down other expense of addition decline snap mid-December. In to interest share to by of net of quarter improved lasted as service by mid-year. November units both a rose hour per declined $X.XX And over income per gas and the reform. the to Power the of through new as higher taxes long $X.XX $XX $X.XX cold year combined and prices in income re-contracting. and $X.XX absence prices in comparisons step fourth margins $XX response at depreciation in that cycle two reduced the largely of a per offset year's of investment slightly fourth the comparisons items power improved most quarter, to expense expense tax prior quarter per as benefits of credits the share result prices result Power's megawatt in from the megawatt quarter hour in tax in ago net

to margins $XX hour, hedge megawatt average per gross declined in decline for the megawatt year, the reflecting energy. per For from prices hour $XX

and that's on to we Power's you quarter the Now mainly response the to and of from new quarter fourth Keys in the quarter operations the XXXX slides fourth output let's most facilities generation by higher turn Sewaren other also over from demand Power's increased increased capacity Output in for also extended cycle additions our XX by generating provided from weather for were at combined and quarter. comparisons Jersey and but some year Quarterly and with New units. XX% detail influenced of at the XX. period cold the from of

breaker capacity spring's Hope XX.X% quarter included factor the year full mentioned average full year uninterrupted as Creek's XX of capacity Ralph end third in quarter which Our of an for operated going terawatt-hours of last output which end to output a of factor run into the at of to nuclear XX in XX is at high the terawatt-hours. fleet refueling. calls of breaker at our XX.X% The resulting first provided forecast the

fleet the for terawatt-hours. approximately of nuclear terawatt-hours production factor producing at full a fired For totaled up the capacity operators year XX.X XX% combine factor XX% capacity Powers quarter an year, electricity approximately year-over-year. average XX.X of gas of resulting in XX% cycle year the in

the weather output units primarily which is higher to Pennsylvania from response fleet was the demand. the For up related in from quarter XX% coal

on increase coal coal's the is year full increasing performed improved gas X% position prices hedge XX. an slide as terawatt-hours out competitiveness. the X.X to For Power's fleet provided An updated

Bridgeport year XX a year an update. an with expected quarter terawatt-hours Keys at output XXXX cycle That's half and in units third full increase since of X For forecasting XX to Five combined XXXX terawatt-hours. production Harbor Power's Sewaren a of from to

New recent megawatt of is in average BGS completion price hour. XX% of the or for an Jersey production $XX approximately auction XX% to basic per Following service of generation XXXX hedged at

layer higher a to tend hedge prices from As hedges average after our skew auction. we BGS in reminder the

the the capacity the interest lower capitalized back expense a in the incremental on reflects benefits ratable of offset of forecasting gas for to received Power's operating combined production full to carry coal year to open to $X.XXX and XXXX associated and the $XXX and hedged earnings the And and of Harbor forecast of in megawatt operating combined the revenues, $XX gas megawatt for at of taxes XXXX of The new guidance commercial $XXX plant an of and absence year generation earnings hedging XX operation units, The contribution be XX XX% station. per three the capacity more take terawatt-hours on spread non-GAAP to with of megawatt million years cycle Power's fired at of hour. billion mid adjusted XX% to from higher can due $XX assets hedged XXXX period also per X,XXX remain of respectively. re-contracting to market XX% opportunities out the advantage EBITDA the megawatt of XXXX. has including to Consistent Bridgeport effort pricing the and XXXX within price we non-GAAP cycle is spot XXXX is due $X.XXX absence includes gas forecast interest lower Power average to XXX of construction of Keys hour. in with approximately the hedging Power's cycle XX% our to and projected out partial forecast fired XXXX for of fire price terawatt-hours in billion the fire practice XXXX megawatts average XXXX the XX program. to For an Bridgeport higher by Sewaren at benefit our of million XXX ZECs combined mid-XXXX nuclear generating contribution CCGT retirement XX

the reported Enterprise Now of moving per on other, fourth to million share fourth income we million for net and loss of XXXX a or share the $X.XX PSE&G, per quarter $X $X.XX to or for XXXX. of quarter compared net $XXX

reform benefit to of a of in The tax of XXXX XXXX year overall $X.XX $X $XXX operating tax the tax for or at share. [ph] XXXX. absence charges charge XXXX reported per interest expense, operating income per mostly taken the per other earnings/loss holdings versus - Enterprise reflects energy share quarter $X.XX non-GAAP XXXX. or of full mostly ago XXXX. offset results versus compared Enterprise one-time fourth result the net and reform to the million million expense But income PSE&G loss Enterprise tax million or For lower fourth and the the quarter million reflect per tax other in the for brought non-GAAP $XX loss earnings $XX to non-GAAP offset share $XXX and partially an of were share compared by the results holdings certain donations liabilities primarily of penny from non-GAAP the per of of earnings or by operating in fourth in and for a deferred year tax fourth The $X.XX fourth which or other $X.XX equated full $X The in for related a the million XXXX. million reported quarter absence to $XX in quarter. of related and to quarter in after as PSE&G to $XX net some earnings in XXXX per share in operating a higher non-cash million also share the quarter Remay year decline decrease

For to expense. strong. the for the Tax by beneficiary and Long XXXX, $X guidance $XX Non-GAAP Act forecasted business Enterprise some PSEG's be offset under reflects mix a This flexibility million. our earnings continues million XXXX and continued results largely are to us operating remains other Island PSEG higher PSEG interest make of financial to

net Power from benefit an realize in the overall. tax rate will ongoing income federal and decline for Our enterprise for

of the depreciation in CCGT the to units bonus interest and adjusted by in IRS the can 'XX be rules deductible XXXX, amount If could businesses. taxable years. service that updated limit in non-regulated interest of year by given as a from recently will the 'XX XXXX proposed is cap the both of new income deducted the amount to related definition depreciation However, during proposed, excluded in

expect of PSEG can for us any therefore, However, do XXXX carried $XXX is not million amount forward earnings we impact in an disallowed to indefinitely. us either have interest with ended be expense And year. X.X Power's base. XXXX of its was hand non-GAAP over times And of on EBITDA. position. debt our just deposition total and debt cash consolidated XX% was year-end of adjusted capital XX% capital its representing

earnings And and rate utility. of tax of our common from our for growth level additional share, both amount we being was payout a of the the the $X.XX manage need recently of per regulated has with dividend and we annual operating over over earnings represents guiding level now that for increased equity. To to strength $X.XX without per cash the increase This X% share. the of midpoint last XXXX of are of non-GAAP PSE&G, to and generated $X.XX guidance, years. the in recap, the to we're for our of businesses, flow nearly to the XXXX sheet And ready Julie, reform fund indicative a a XX% internally XX% by $X.XX our dividend questions. able capital generated Given are X.X% impacts contributed five XXXX at balance to program cash

Operator

now session begin members Certainly. community Ladies Instructions]. will gentlemen, the we financial the and question-and-answer of [Operator for

a Your Bank Please go comes with Dumoulin-Smith from of first of from question. Julien your question America. line ahead

Julien Dumoulin-Smith

Hey, everyone. good morning,

Ralph Izzo

Good morning, Julien.

Julien Dumoulin-Smith

Hey.

the I just extent with in the amount revisit left let's here. a you out this the with quarter. better even Can put in more of just third to one - bit XXXX perhaps to from power basis last last what in update substantial to that given reflected with a is quarter on the gas basis one how you concerns certain and already. respect just have reviewed evolve make off expectations, seen some in gyrations Hub But perhaps November? you your little we of start there brief on of few conversations months to out since as to rest Leidy conversation the guidance to know does these sure and So, in I lingering that want quarter? we how respect third obviously,

Dan Cregg

we've the Julien, since third quarter. amount tremendous Sure of don't change a I seen think

from bases. bit could some gas of spreads. the coming about takeaway capacity on tightening some talked And have a we compression think some spot between I that the little Marcellus and of having a

I a things we open think And those are and in some both to the will also little of reflected provided. we basis. of We about the have electric somewhat guidance talked that remain bit

about fourth I what we power, quarter think we largely related O&M at the even continue we to through did expected the some will the foot fairly that a some story show related beyond. in quarter. third volume also we as you saw told through quarter We see rely with consistent in third benefits. we've to prices quarter incremental talked as weather 'XX seen through fourth upon think and forward the what look some quarter, go during I But and uptick us and

Julien Dumoulin-Smith

a projected equity rate really expected perhaps you guidance are long and it earn the excellent. side Can obviously components a just little the on the base, implied and in to of then you you returned to peace the 'XX bit the but there other assets. weighted for Got house talk utility turn guidance. return And earnings basically to provide is authorized the ratios [ph] I and brief expecting about your

Ralph Izzo

of Yeah, latest Julien two just case. it's out Ralph. our We're months rate

rate was on pretty was and expect transmission the base I XX% and base at mean pretty rate data we've level. the earn X.X% settlement the current. the current the X.XX% So the on equity distribution, to

- this So hit we numbers. should those

Julien Dumoulin-Smith

you're a last be How investment it the invest effort. is Excellent. project in. with to been profile in this risk, altogether? But to the just quick terms lot preliminary? by straight of - just of the your in returns to peers. And the one, equity what a of offshore just risk on There's from obviously, different and this would with a especially contemplating just respect And focus respect

Ralph Izzo

do don't that built what And on offshore. we about what reliable we've the transmission, we And significant that we to how understand we know we market, PJM a risk cost construction. So, know build and we're been never low fortunately we've know. at take again, but what offshore a very to is and clear any know, know, not way we anything eager

on part delighted terms I But think we're there certain be areas strong, So that we a leading everybody team on. developer of. are this the to chance aware them that is of of of that we're to take being And we're call not the big world. wind not offshore to in bring table where around the the strengths going those

Julien Dumoulin-Smith

Excellent. Thank much. I'll it very leave there. you

Ralph Izzo

John. Thanks

Operator

Your Please proceed of next question your Jonathan from from line Deutsche Bank. Arnold with comes question.

Jonathan Arnold

Yes. Good morning, guys.

Ralph Izzo

Hi Jon.

Jonathan Arnold

is of and at little Do and for to have a as outlook what you if the early for that some years? bit the timing later ask, having rate we a fade is and in just rather look base might new of of I CapEx a has conversation? likelihood that of some it Can often sense and materializing that it in things the what is filling too of or what kind be, be the

Ralph Izzo

Jonathan. Thanks,

two surprise complete spending. So on Strong - a we of I It's tried $X every [ph] over with I have spell Future, to be we the Energy to customers. billion. get agreement what Energy II think spent BPU that money programs we don't of And the penny BPU at and is we're professionals it Clean front usually aggregate an that every not of on dollar that would think the we work in now, major right being behalf well you when typically

not zero is know the answer as that but So I well. right

programs the in those of will some years. potential have to So later two fill the

Jonathan Arnold

on be would Okay. [Multiple whatever please the knowing you that go And to know, on answer you Speakers] - question then it and what did the safe offshore just so ahead. your is assume within largely

Ralph Izzo

would any that PSE&G not be service that To improvements to that extent that Yes, transmission business are would that made would John. our any the by the we in territory, a point But then connection it territory. be utilities PSE&G. be in as would on or land that would undertaken unregulated the connection that needs work. be do be not the any case, it on implication there's of side would, And

to would it responsibility And John, I your We be way some timing quarter that third project in. filings these in this resolution on by that think I two the So do year. the and have a felt see question. participate expect could we

Jonathan Arnold

plan would the be what incremental you're To that, talking that to about?

Ralph Izzo

X% that programs upon remember take will which based would achieve were said proposing. we're the they those compound rate. new approved way that the we the currently on But if outside timeframe And we revenue we of we've for programs in the achieve what the of is X%. XX% propose funded, so spend those fully both based programs, the Yes, that

and money money at you rate in between is somewhere the probably will which both So amount spent the land two numbers. the of those

Dan Cregg

base I And we're at as were but as that's all of end a say. X% way in think about the so as 'XX it we jumping the end to 'XX 'XX, of Jon, of we should increased instead of about just of update, X%, about thinking end really, off

update embedded of capital being kind rate that and this the about off of you of base. the can as think one updating is the more consistent increase So year

Dan Cregg

Right.

Jonathan Arnold

We got the into so. math, it same goes the place

Dan Cregg

Yeah right.

Jonathan Arnold

there there one on other and a about of else can just quite are and sort you've something minus been thing shifting the is that I going just lower, little of interest seems be life continue? the on Okay guidance offset talking than in will but talked novo to just number holdings structurally about and a holdings you the

Ralph Izzo

if that term is that you expense up think bit, you're some shorter Jon, about through all rates level. interest that at coming No, come it that the effect of seeing really the little parent holdings no a at

of So some all, at shorter increase of strong. the being a bit little debt term rates nothing not the parent that's seeing in is

Jonathan Arnold

see that if continues so should just Okay probably then? we along

Dan Cregg

the that and we've we'll go there. of from given guidance kind for so 'XX Yeah you

Jonathan Arnold

we're folks right there. our no plug a you All to have doing out I there's so thank job, great guys. issue

Operator

comes the Please Your next Paterson from ahead from with question your Associates. of question. Glenrock Paul line go

Paul Paterson

morning. good Hey

Ralph Izzo

Paul. Good morning

Paul Paterson

comments what okay. fact you your the if capacity I the or of look does market if the from - doing still the to perhaps of [indiscernible] potentially could saying, to follow group plant. be, are if sort and would terms am you isn't proposal guess in have closing Would the about the I PGM adoption concerns through toll not to you something market, fact from that plans to - no be if in were - in you looking PPA the what excluded be market So the excluded or effort at there might similar go delay, new or and there back there a was on an

Ralph Izzo

they on depends power, I nature we the is legislation. passed that Jersey's New nuclear a rely proposal FERC. the the the fact really have upon mean from to It what commitment of demonstrated

to it's to imagine So other details pursue preempt resources choose we'll plants FERC to way that the in or action hard to which would some certain achieve have that to New ability although continue environmental out to Jersey's is intended allow some options the online. work to states objectives, to mechanism keep

but plants what figure objectives are of we interfere think saying two we've to ability part course I online, I've order we state's got metallics to to past and want as achieve want these to out to somewhere objectives believe with demonstrated just have to the how of We'll that we broad state got saying And as an wait the in when those sincere both policy are. clearly they meet as we those objectives are FERC and the those of looks of now statements. like from articulated it's those the So witnessed do abilities don't that. legislation. FERC see policies between two

Paul Paterson

capacity what's be follow guess what would do would of sort payment I'm to the that the the mimicking you then I a part or But the provided simply of were New Jersey, you BPU still. could arrange clearly of situation provided saying where capacity market lieu generically State carve simply more it, if have load of just PSE&G in

Ralph Izzo

that we'll want the be that so give achieves I except we think BPU meet BPU are its as the lot to sure presumptions of what that has policy as professional a certainly on know I to to creative very hard expertise want of right in solutions can what goal. and weigh I the state and and the say it's will to clear And to say will state to right I objective. make true the just objectives wouldn't the that's actually we're

Paul Paterson

what negative or Jersey, here of what then going should that? about and is goals thinking on meeting retail how we towards terms the that in great the move energy we and thinking then and in from legislation those Okay the be on New X% should your sales efficiency should think about forward growth be we

Ralph Izzo

No, was was. year so forget I the of base think that year I a X% decline off

this So I that think year. saw X.X% increase we

aging drugs be X% is think netting achieve incremental our the of need new low but And opinion. not So in about and top increase. for growth there's utility particular going the of utility I to know of objectives this to is should some an objectives don't that needed replacement. the plus it The about the growth know technology that state. on you right I be is policy infrastructure is desperate then some in of climate Paul Remember figuring an

what to the does performance So financial heart soul will I'm not that's of say what the but the or nor load we're going to look utilities at and not completely the future. operations or like foundation really that indifferent the investment in

Dan Cregg

the trying market Sure. Sure, as is picture. to better to get

that think I at how and mean I you should Just energy customer on well. know of in looking from that the Was is terms efficiency, are and offset we your bills? about increases that as might just how then think concerned build forecast? or think sort guys for said that that and I sort an that we about that of have offset the about should - would achieve to you of cost

Ralph Izzo

customer customers where rate benefits XXXX. to EE case below the basically program an the because in XX% and average our of will customer, all, the still is which, change though we so residential flow proposed resulted But are regulate. back of first about were net Yeah, to tax we we for way the specifically in bills no

a a have customers, control they - things at facilities, income municipal So proposal to say even targeted assets public that hospitals too large, recording that serve when low facilities, with we've critical like customers of burdensome, schools, they is government Now right? good cost those agree the about nature. lot to

we've that the the struggle. is the what do operating bill decade under been even fundamentally believe that rate. we customers there this bill past And matters some reduced that So for not environments the are that in

best agree we've directed we'll at our differently. it And for that that great help and with sure think like months, who or few if the I'm we it, staff, can they shot conversation the the people, see whether taken have with we thanks over they'd so next to a

Paul Paterson

much. great. Okay, so Thanks

Operator

the of Your line Greg next question ISI. Please from questions. with Evercore proceed Gordon comes your from

Greg Gordon

Thanks, morning, good

Ralph Izzo

Greg. morning Good

Greg Gordon

Circling adjustments the back other missing basic to dividing on to you Julian's like high. back walk question, base and math, I the Is presume to just Because slides would a that arithmetic to regulatory would appear that down that ROE. the on taking income AFEDC Is that do fair at that ROE looking you that appear just it and based authorized higher rate we're into rate a than But earnings return. it be make if summary? it just the things a to and have seems bit

Dan Cregg

had we and into right, we're that regulatory seeing exact out now. that just came your Not moving there's think Yeah. I ultimately that the math. a But of that's case rate ROE

So think through and a number I time now it's if to continue pretty right go we then we'll clean forward. move as

Ralph Izzo

some know time really always ROE's I now, here we two second is where if always looking every we was political Greg, understood. makes question at are coming faces. of this room So questions we nothing sense too call on come out this from. that have many, of That's you confusing like the earning right mean, don't but that just okay it's see you I sort

we ROE. control to O&M that day every to fighting sure we're make So earned allowed

from. no, our we case allowed at rate don't and just came So coming But I know we where that's out are of a earnings.

still we growing, salaries this that how to figure demand to with somehow XX% increase out have And allowed ROEs. and but X% year earn

Greg Gordon

I figure second My understand, out. question. it I'll

Ralph Izzo

you Right, base, look of a rate for at piece business, which some of the That some could of treatment clauses, on E different is be, got service you Reg clauses. too the if the applied some got got component. transmission you you an ASP it, a

back to may it. we be math the bring play. can are where it think through to an as So with understanding into work and coming I we And that

Greg Gordon

I'm be easy to that. sure to that's that do going Yeah,

side. it in spark The compressed there second was volatility plants QX. of in the sort sort pricing on spread or that power fuel in structural question increase extrapolate your more we forward that need will some basis that was just that of demand deliver costs, to just to on, demand weather in was change the a been of The and Has driven, gas of sort sort that surge

Ralph Izzo

were the say at I third that, Greg, we bit what look is of if there things To or had of we most of both, the about and saw of and back in December, pretty run talked half start where you of related December, first we little I'd so cold quarter, the into weather some think the some a end holiday. November, for and you also weather aspects, to

So on, a weather you aggregate data, quarterly you have that or monthly it core if demand higher that about had going more little fact you I of bit may think blur period. when during your the look at

bit And takeaway in on see little that to some more so going addition of comparison pull to price the you a that's capacity. that

more back is of structural be of the going demand think that XXXX some well. oriented to it that kind is I as weather that some saw So and and we half within of of

Greg Gordon

say Ralph is government you New or that and would from avenues? needs consider to PJM going the options the market question final Okay FRRR to back to portfolio pursue the part full in would Jersey use the like and if that to fact its you run PGM option your option of you'd other units rules go FERC FRRR remove to specific units forward comes of

Ralph Izzo

all bunch a to of and exclude look options consider would would different a would at would take I could knows that but not possibility use that other I think want to avenues say still as we it, at consider at we well. Like thing would a that it's bid point. we who safe we that

Greg Gordon

pursuing before you the the make FRRR whole Okay wouldn't look the but call? so you'd at decision option you preclude

Ralph Izzo

correct. That's

Greg Gordon

you Okay care. thank Ralph take

Ralph Izzo

Take care.

Operator

the Research. of Fleishman from your question. comes question from next with Wolfe proceed Steve Your line Please

Steve Fleishman

morning. good Thanks

updated a you just trends timing have Do might they capacity make First on question yeah. On on quick a any FERC. decision? of when

Ralph Izzo

I to struggling are the You to thought capacity do happen have XX sense know, don't FERC fast they come might XXXX, was had visits start the that. decision. has Steve I with but I I mean our across allocation sooner I market suggested in the smart September that - really it

timing FERC well. I predicting So as have stopped on of kind

Steve Fleishman

look energy toward a a offshore and business cetera does the more a guess Okay also then about efficiency that. you clean kind at are and thing that New want moving does kind is then I that New obviously Ralph of England if you What level high mean? question if of the at Jersey strategic trend are them states look of lot in of et same strategically wind what thinking you to Power doing context so how so

Ralph Izzo

market in an is the the question very what serious queue that have and future. fleet assets part the the willingness the of needs a and that then so dispatch the of that footprint given then market short of that fit on increased fund the it plans of and you environmental of quite profitability makers pay that in what's Absolutely to into cost and dispatch does to how zero the to structures honestly to policy on it basis, run lead marginal capital attention means

in there's energy we clean the roll we've so and ACGT Mersa going heat to at taken as we've business we're facility, Power pretty offshore an plants you rates impressive future. units shut So one shutting got some we've shut has gas some context Steve, at our actions on no coal to our wind. Bridgeport Hudson, know doubt be in that we of our some are looking increasingly the But look

Steve Fleishman

Okay thank you.

Operator

go Please Michael ahead the Lapides comes Your GS. next line from line question your from is of open.

Michael Lapides

XXXX if growth. real Dan the I is growth E&G just question on they than utility earnings base actual the rate in versus that at there higher mention just there $X.XX unusual appears rate take kind a expectations San guys from or 'XX is me quick of ought just at that even 'XX and rate growth pretty think you tree unusual about? walk at Hey of significant XXXX tax through can or rate you there the assumed outside $X.XX happens is tax what what in puts something trimming is to something and we takes your the

Dan Cregg

going but buckets be side. if got part relief just have put on maybe you've also think you into I big you it No component that your growth rate a that's rate base going distribution that's of to the

offset and think sheet the you rates settlement your that's if of that back rate are got base more some through So survives. taxes being and backs an flowing that tax you then got about cash come a relatively base you've rates case to pieces is and overall tax that flat to deferred balance through taken flow oriented and more increment by that

I an you're through of going an there to bit coming rate from in a and seeing addition get little overall what the benefit perspective. basis investment you're to think

look those I as delta look being you at driving two some what's as components year-over-year. So the of

Michael Lapides

Got it. And Ralph.

not you project. when Just want a of from shield in - offshore construction equity curious, built know have - offshore the you the mean or yourself I the small a been If long-term one I project stake we lot But Europeans How some to of an come that's material offshore company been risk, here. same there's do How there's piece? take built wind of back yourself a first protect infrastructure of and necessary to kind kind you supply you are the large kind, kind because wind really never other that chain of here. items lots that of build the like construction, risk. out the of on take risk, to scale from and a

Ralph Izzo

ultimate Yes, don't a you. the wisdom you due right. is end we're the the of of can't than respect, with I here, have position yourself, not I kind of invest, day, if all resource But through mean, at negotiation mean, shield Michael, a in

don't can't talented incredibly some lawyers some we and if contracts we have equally the is protection and that we have engineers So figure talented and people they the participate. it out ultimate

Michael Lapides

you Got it. Thank Ralph it. much appreciate

Operator

further your no Please remarks. there continue Mr. this closing at with Cregg Mr. time. Izzo, are questions

Ralph Izzo

Thank you.

thank you for us presumably and interest everyone us. thanks So joining today your for in continued confidence and

few road the upcoming We appearances. protective the a at we're in shareholders smart at. of assured going fair pretty And and going will and work the to in needs days of obvious, seeing and we day to the some we of that an risk we will weeks environmental And returns stating been meet do meantime we've to forward conference be our realize meetings and return. you look safe our a hard every next economic next think continue and on to few allowed rest in which customers we're the way. reliable good And

allows On best to the been level. service in infrastructure class making that vessels that we've us achieve

talk thanks and Take soon. So real care. everyone we'll

Operator

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

you You may disconnect. thank participating. now And for

Public Service Enterprise (PEG) 27 Feb 192018 Q4 Earnings call transcript