PEG - Earnings call transcript Q3 2019 | Public Service Enterprise Group Incorporated

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Operator

Ladies and gentlemen, thank you for standing by. My name is Sylvia and I will be your event operator today. I would like to welcome everyone to the Public Service Enterprise Group's Third Quarter 2019 Earnings Conference Call and Webcast. [Operator Instructions]

As a reminder, this conference is being recorded today, October 31, 2019 and will be available for telephone replay, beginning at 1:00 PM Eastern Standard Time today until 11:30 PM Eastern Standard Time on Friday, November 8, 2019. available www.pseg.com. audio be corporate on also at website will as webcast an PSEG's It

now to would Please I like go Carlotta over ahead. Chan. to turn the conference

Carlotta Chan

in and Thank Good thank our earnings you you, call. morning, for Sylvia. participating

estimates discussed PSEG's forward-looking shortly. detailing results are third uncertainties. and The that our at earnings by slides, XX-Q statements our matters on operating investor.pseg.com posted release quarter and various release during are will to and contain risks earnings website XXXX and today's attachments call company be subject other filed and

a EBITDA non-GAAP differ in our on We earnings Accounting States. financial also discuss and disclaimer operating website Generally IR and reconciliations with net and Principles today's reported regarding non-GAAP as forward-looking include earnings adjusted the material. United these We which statements income in in Accepted from of accordance measures

to call Chairman, turn over and now PSEG. Ralph I'll of Executive Chief Izzo, Officer the President

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

Ralph Izzo

Thank you joining morning. this all thank you, us for Carlotta, and

non-GAAP versus reported in per earnings PSEG year's of third last quarter. $X.XX third share per $X.XX for XXXX of quarter operating share the

$X.XX results quarter. the per Our quarter share compared third for per GAAP last with $X.XX the share third were in year's

in up for infrastructure. bring investment PSE&G's track is total op Our share That of for per $X.XX and operating the New to results nine to earnings of Jersey's contribute the year, reflect share third XXXX. compared with non-GAAP operations $X.XX XX% the for Regulated quarter for per earnings energy are ongoing approximately the year-to-date months X%. first on

approved of next September, Jersey, resiliency the summarize quarter PSE&G's improvements, the XXXX's in Energy third X settlement over continued BPU gas II them I'll investment and years. reliability electric Board year-to-date. and Slide four the authorizing In system Slide Utilities the to and and refer for Strong as and results New Public X,

first investments the quarter, the begin the PSE&G's We of infrastructure. continue expect these New economic which in energy current to will with in important Jersey's associated projects engine

Clean to scale, We Governor and base electric continue filings our Energy Infrastructure at consistent which AMI, entire vehicles, goals. the benefits Future energy is eagerly customer Murphy's clean pursue to efficiency, energy or storage to PSE&G's Advanced of Metering bring energy with

is filing X.XX% Jersey electric achieve New in our savings Program. Clean XXXX this level to in spending Our Efficiency Energy represents the And Act. designed of the order and X% existing the an increase Energy gas from of magnitude contained

the for to schedule In provide March September, the case to of procedural the in extension the BPU XXXX, the opportunity approved additional discussions.

that expect efficiency by energy targeted for review Clean which efficiency into process, and the Plan informed their conclusion and We BPU's Master be an Energy proceedings, our which Energy energy continue stakeholder XXXX. filing, will year-end, will ongoing are of at proposal

distribution companies to energy efficiency of BPU's In parallel, to Clean have of measure engage our prior energy role to Jersey Energy revenue that the stakeholders for requirements. occur those review develop to proceeding Efficiency will efficiency utilities, Because proposals, with metrics policy we to on recovery or to the and continue New yet the key key framework, ongoing, effectiveness. the decoupling Act Program loss Energy their file it supporting is satisfy

remains billion direct intact. the system planned to investment of PSEG's to to track distribution on five remains the years, $XX and PSE&G year, transmission of billion business to over this over Though invest the billion XX% $XX.X upgrades infrastructure to $X.X its next in regulated forecast capital

annual X.X% compound As base XXXX. and from starting X.X%, rate this level to at year-end PSE&G's growth the billion of $XX

by coal interest in and during continues the at when unit of fuel from XXX Power the megawatt we on Harbor. coal closed elimination only Conemaugh retire remaining generating mix located sale its of the our quarter, Bridgeport Power. And now will XXXX, over to Keystone mid sale PSEG units the Power's PSEG the

or what megawatts retired five low has PSEG already sold about Power carbon carbon X,XXX intensity of was years, of last has a coal-fired the fleets. In early reduced generation, the which

this Ocean agreement, a Wind Orsted's negotiations PSEG a approvals. earlier interest week, to resulting exclusive subject required an diligence exercised project, option for acquire of due and joint addition, a period regulatory potentially In the on in in XX% negotiation equity PSEG any toward project, venture to advanced

is and in of The project project Murphy's internationally. the US, part City of developing Wind and clean coast benefit wind Ocean offshore Governor energy will New to offshore Jersey's be wind the located scheduled come from was winner recent The an the in off of Atlantic will projects and XXXX, solicitation, agenda. experience important online Orsted's in

national the energy with goal New price opportunity zero in of emissions. for developing Jersey carbon resources the apply our advocate a pleased And PSEG's expanding to expertise carbon. PSEG continues in toward infrastructure of to emissions, carbon speaking on to state's of I'm reducing carbon generation,

climate challenges recognize on advancing congress, in the legislation understand focus we to we topic. current increasing While significant the this the

again consecutive how I to the So, Jones Sustainability Commerce meaningful House yesterday call for the Committee, address America hope growing year. and of PSEG Energy North change. the note, subcommittee for XXth climate named will the and thoughtful action made, remarks on that related only before pleased discussion, Energy I to add to I'm the to a report Index best On was that Dow

And to final Auction PJM with effort the one continue FERC last item, their reform approval Federal to order to the in from shorten Energy rules. of that Capacity to Commission we Regulatory our replacement the await

commissioners when of after FERC Commissioner Glick which XX could when FERC optimistic the on this achieves happen matter are quorum three occur to will docket, vote be eligible once We or a November confirms that this particular new the voting on this Senate will Commissioner. a

first to The our earnings PSEG's per X% the midpoint XXXX. in narrowing we're per to earnings $X.XX results our the operating on guidance growth of posted full-year to forecast is per represents in share. $X.XX $X.XX in the original and Given $X.XX share of months of share, over year, the the non-GAAP of $X.XX nine from guidance unchanged

plan earnings of continue a results, million, Utility raised benefit the to guidance original $X.X $X,XXX expected utility's relief from million of range range million. has pension $X,XXX PSE&G's re-measurement billion rate a full-year to up of $X,XXX from and to to the mid-year

Power's had $XXX a have Weak PSEG $XXX range of affected results million proposed of its million, been the power million. end to lowered which upper prices to million we've $XXX original $XXX guidance, where to originally

the full during summer. Guidance the year. million into employees you on generation for for another to Enterprise maintaining operations recognize for system work Other that the availability solid is the and goes to delivering and Thank front, tremendous reliability and our quarter $X

over on details I'm results, remarks. operating the make I'll call Dan questions to and available now your more for his turn for after our that sure

Daniel Cregg

everyone. morning Excellent. Thank Ralph you, and good

reported provided on earnings, operating third the by comparable XX and of major regarding of contribution changes you versus mentioned, $X.XX that non-GAAP information business quarter through the in periods you Ralph and and year's for XXXX for the year. business, earnings third per share waterfall non-GAAP non-GAAP with take XX versus contain last quarter. net the quarter slides year-to-date will prior operating As quarter the in the for slide $X.XX We've charts share PSEG to earnings, per XX operating by

quarter detail the Slide with PSE&G. shown $X.XX share, And as of company XXXX. of starting share more in for PSE&G of third now, compared net per on reported I'll XXXX each per XX the income with quarter review $X.XX third for

For first income the the $X.XX up XX% of earned $X.XX nine share from XXXX. net year, in per was share months per

X rate transmission, distribution settlement and review, half XXXX. third quarter our investments of lowers that to during the expanded of XXXX that on in expense PSE&G's July results the the by pension pension plan were effect driven changes second took

added including an $X.XX $X.XX year-end share estimate per weather higher ago to prior true normalized of the than significantly experienced to adjustment Electric summer was year Weather for higher rate the by share positive PSE&Gs by driven net than growth per driven in higher $X.XX was XXXX. in relief, the Income by And warmer transmission quarter, compared margin was relief. gas investment comparisons, up. quarter, rate lower margin year per share, $X.XX the volume. and $X.XX a quarter-over-quarter XXXX

or expenses expense, An interest pension as of was benefit well favorable third July on quarter. and at $X.XX income re-measurement net a effective the expense split of with the associated retirement plan as comparison, combined post capital OPEB prior versus reduced to pension per $X.XX increase the to to comparisons income a PSE&G's year a each, expanded of share expense changes in Lower O&M $X.XX year's positive quarter. related depreciation X impact per the and base, share ago compared share net per

flowback the fourth the between it excess is impact, rate based tax for effective will a quarters, quarter. and positive effective annual rate in in effect The average tax the upon timing the taxes deferred just recorded related reverse $X.XX it's per to share resulted this and quarter, of

rate New XX The to unemployment X,XXX growth experience positive reached economy in megawatts. July, state of continues peak X,XXX Jersey past compared the system megawatts low by to peak XXXX last years. a system XXXX this of evidenced PSE&G the

X% XX% THI gas. Index XX or on electric a in Weather relatively was the for which measure which of to sales was remain months, than trending flat used XX% higher XXXX is nearly normalized a or sales one Temperature impact ago Humidity than higher third normal. year weather the provides trailing The data the longer-term lower for summer and quarter for

including year. growth update Earlier trend increase to The improve an projects throughout the higher month, XX These update customer X, to includes projects and Residential electric that transmission state. continues expected is our its resiliency, capacity voltage per replacing this into gas annual address reliability, PSE&G KV XX filed investment rate and replace and of effect aging lines January through equipment, XXXX FERC X% will our with at on formula approximately infrastructure for transmission. issues the system. with many modern will KV to go power extend

And tax XXXX. in transmission completion plans, certain PSE&G total million the during investment lowered After these residential will I and reflecting reform to to in in customers excess by benefits over increase XXXX, by X%. distribution proactive and taxes highlight that incorporating $XXX deferred rates has cost returning returning customers, have approximately been should of which

$X invested gas for the XX nine PSE&G in approximately electric distribution and September ended billion and projects. capital months transmission

billion increase resiliency. For to reliability $X.X expects and enhance invest the to year, PSE&G

rate million income annual XXXX to spending translates based expected million. has XXXX applied updated the X.X% capital which at range a of to $XX $XX billion PSE&G's to to rate $X,XXX XXXX projected X.X% $X.X base. growth PSE&G's for a $X,XXX from billion range to $XX.X into forecast rate at remains to of range year-end compounded net billion million of period, to over $X,XXX of the been XXXX billion original

$X.XX of quarter to million. non-GAAP third earnings for non-GAAP This quarter $X.XX moving of per the per of Power million to adjusted and EBITDA of for the of share share $XXX Power. $XXX Now EBITDA operating and non-GAAP reported third compared earnings non-GAAP adjusted operating XXXX.

offset PSE&G lower Power's energy was income realized and quarter. decline that quarter partially emission zero the by in capacity certificate revenues, earned third impacted revenue were the by in net a in prices

PSEG resulted same items interest Power Conemaugh quarter, million third nine as our closed sale the non-GAAP Non-GAAP operating income expense. during the stations the earnings well of pre-tax Keystone the a in September amortization as measure, adjusted on and loss expense, tax coal-fired EBITDA $XXX its and XX. months interest depreciation of expense, the generating ended as which in excludes

more also the and Slide earnings, have period XX. and XX impact income, net on relative slides provided on the Power's analysis and you on to of items detailed year-to-date release the operating and you an quarter-over-quarter PSEG XX for non-GAAP with earnings generation for we quarter with The details having provides

reflect in Power's offset reduction PSEG results higher expected that the addition capacity of quarter the revenues of quarter's New full Harbor a in for X. revenues England third the from in capacity PJM impact Bridgeport

basis, On revenues third compared capacity quarter the by results per of $X.XX a net with XXXX. share lowered

price, Recontracting ZEC net ago approximately of hour revenues an quarter compared per the resulting spreads, share. impact. in by impact average offset full the your per megawatt in reflects to cost by lower spark results lower Our with which and This no share contributed decline hedge reduced quarter. were $X.XX per $X load, $X.XX serve

lower $XX from hour megawatt warmer New megawatt Gross across weather despite quarter the in was normal. PJM the that margin declined Maryland per quarter. ago to Power summer than were hour and and year prices per prices York natural in third $XX gas

at generation Total operations. by hours - market to quarter, which third Power's included lower XX.X of outage. and unit fall Hope XX.X terawatt down close PSEG declined demand the to that reflecting output in reduced Creek, output Turning into scheduled its total X% refueling a

the gas an from PJM We see of increasingly dispatch loads which continue price energy and lower in wholesale also of the prices, CCGTs limits in to older, weaker market. efficient resulting efficient declines less

year Power's of during at capacity quarter, the produced Harbor. operated gas three third terawatt fleet combined up new quarter Keys, hours Bridgeport the Sewaren third the by at primarily gas-fired X.X of factor quarter, CCGT the and from production cycle X% ago For XX% PSEG output over reflecting turbines and

year-to-date representing PSEG quarter-end nuclear year-to-date X.X operated XX% for of generation Power's a capacity the periods, fleet hours respectively, terawatt factor of hours the XX.X terawatt period. reducing XX% For at fleet and total

referenced to decline Hope I For the terawatt second production X.X month year-to-date of at quarter This output XX.X reflects reactor the output. outage terawatt partially earlier. by as in new as terawatt in the three lower replacements the hours, period difference by hours, for in generation units, by the increased higher bulk output one generation cycle Creek's largely X coal and hours driven that vessel volumes extension Salem well due to X.X offset combined nuclear

Lower continued gas to dampen volumes. power for and generation natural prices

completed addition, reflected XXXX, and interest of will volume were terawatt XXXX terawatt in second forecasted our volumes sale the XXXX by Keystone in and Conemaugh the X in In updates. hours in Power's by XXXX quarter hours of PSEG each units lower and generation and X.X

$XX megawatt continued an XX to to the for of output terawatt to hours year of is remainder approximately full at an megawatt hour. forecast XX production of terawatt terawatt XX% output XX% hour. XX XXXX to XXXX's terawatt of average is at to per XX $XX The price hours of hedged price hours. terawatt forecast for Power hedged terawatt PSEG XX hours average per expected of year XX

and of The Power consistent to production, forecast current hour. output terawatt per third of forecasted XX% XXXX Keystone the $XX hedged during to XXXX. includes The terawatt hours quarter Conemaugh PSEG of sale has volumes price megawatt conditions XXXX the with to for an XX% of XX market XX average at of and reflects XXXX

power lower a we offset our increment load saw balance and ago, while across cycle year spreads our than region. the more lower reflecting Spark across prices year's last portfolio, in in was the by And driven of region. the the in approximated volumes quarter third reductions the were across unit in by gas than the generation combined new Bridgeport levels, declines

generate The Power versus impact resides, power prices as declines lower locational where price as the load these where and and in power well resulted volumes of between margin at differences we expectations.

to we've forecast result for million million. of guidance Power's our million, $X.XX And $X the non-GAAP to million versus as of to $X.XX $XXX $XXX range to a earnings to non-GAAP the and original $XXX XXXX from PSEG have updated $XXX adjusted operating of our billion $X,XXX EBITDA original lowered Power's guidance billion million billion to

the from parent, ongoing contributions third the at expense PSEG reflects income a year-over-year of Island. Other, share briefly interest share, quarter net to Now, we of continues and Long Enterprise I'll or or in third to per from the address and And for results $X.XX income reported income operating decrease the quarter, $X million higher $X.XX in for per $X net XXXX. benefit million compared of

Enterprise XXXX, range has $X income the For to and of forecast other a $X of been million $XX million. million PSEG narrowed simply to net from

financial PSEG the sheet closed quarter XX% end consolidated representing debt capital. Our $XXX of cash strong. position with million September remains at of the with our on the of balance

at quarter. capital end the XX% its PSEG at Power represented Debt of of the

medium PSE&G rate term and of the notes of term $XXX at million of issued During medium $XXX notes. X% retired XX-year, X.X% interest quarter, million maturing secured an

$XX billion XXXX capital need the without XXXX billion existing continue program investment expect fund issue the to PSEG's fully period to equity. to five to We to year $XX.X over

for non-GAAP keeping $X.XX operating earnings narrowed As at to year share full midpoint the per $X.XX we've our Ralph of the forecast unchanged. PSEG's mentioned,

That comments. concludes my

to So, we are ready now answer questions.

Operator

[Operator from Your Dumoulin-Smith of Instructions] Julien first America. Bank question from comes Please proceed.

Julien Dumoulin-Smith

and the the questions, about typical of could you out would first think curious of a how I media you on strategically, fate couple curious just reinvesting the se, - per about articles there down but the assets, practice address back of articles to as investment how of this of or - evidenced business, you if and some media some you some the the assets that know least I'm do So, investment? do strategically, it isn't the about offshore any there of you off, potentially business, in be think about by talk extent evaluate in think paying how you at Power some versus future to wind debt inaugural

Ralph Izzo

going used in but Julien, we think like a fate electricity mean to be environmental business, the and Power it's point value from around on while, view still regarded and Well, strong really proximity bleed and a I seems of by flip, of signature. I'm the load, I highly it have is of to the sorry, to people don't

generation we suggestion So, performance. be cash its assets greater able flow quite overall happy I that and that talk we're value to aware. open that's its as commercial of may always terms well Keystone/Conemaugh interesting, we We're with they they us with operational suggest kind the our come think from than find the happened and when to and to extract others can, that's case, you're and what's

good open mean, they sound to your we're whether and they're how not help the got quite here. maximize can They financially fleet. sure value. we a can others out about you I'm to to value well, But, always run discussions maximize question. commercial Dan, operationally else I can the they're sound, me respond we've or with

Daniel Cregg

that is, think Ralph recognizing if of you're kind referencing it Yes, out. Julien, it I specific exactly I laid has article we're there mean but not is a what

Julien Dumoulin-Smith

quarter on following to your the - Key/Con. perhaps, about this respect asset first we in it asset way, I frame can interest should thinking respect the this sales, to sale if with more Or with be

Ralph Izzo

fleet We purchase engage in to always candidly, look we we net or past, As change. look that building in have pledge any engaged time. we've we market. can be said the fossil in and commercial although the a way envision in not that mean our that But, we both discussions zero parties. will in doesn't with this others, with I interested point we're yeah, active expanding are at Julien, said, to made always

Ralph Izzo

could like business. right, wind, the side think then On stake all the will, involved. But, Okay, where pivot other being you do in narrowly on details if of of how the be be do you without how potentially our transmission move about you outright want a pivot I the the think about more ownership bit quickly, of terms to risk versus just interest? decision sort all this of to offshore side. if let's you in well, involved a It of profile seems little on side, the to involved,

Ralph Izzo

Yes.

States, of looked gigawatts, forgot this out I announced estimates NOAA, there a at growth So, comes potential there and along for so this desire and I And XX exactly developable has that's or of that a is can best XX wind a that we've Eastern are we to United an is up the which. there industry. industry, gigawatts develop offshore an as to potential about believe in EIA for been number

the experienced you're We're offshore appear It a have that that to does not completely full right, we us year cannot with of of diligence and associated further in and due Julien analysis terms in the the from wind themselves building one ahead do. oneself one protect it's timing the construction. that cost conceivable associated still with But, construction. the from extricate risk could of

build case. going able it's we're learning you're to where others, wire a I paid but and for risk along not components. versus us. to project But available Maybe yeah, don't go is total available we of that as That how that option know think to the to the the an be that's to get to it. So, isn't balance

From do to So, us of projects, to an to and think I is a from going teaching. we're person leader help and various in this the that we a we're wind workforce grow, offshore point a well in the measured continue to of part project learn permitting view market in the a know point point characteristics mean, this. to industry way view, some willing of we and other fairly of proud trying learn of that like world matter from of a they are is think view. we lot and a pretty country, a that

Daniel Cregg

this skills of Yeah. in that And referenced - bring are project, prepared not this are the Julien, all Ralph we but kind that I of his skills obviously for project. can think are to a that remarks they there needed

oriented So, solicitation see reason that certainly that interest think the about you that, is that, from. forward that's that be if of more at that step partnering, an that work Orsted the to all we New for more think are basis, X that I done the on Jersey there things in a a extent case, transmission linked. as potentially existing from I And, think differentiated you could may come standpoint specific

Operator

from Mehta proceed comes Citi. Please Your from next question Praful with question. your

Praful Mehta

So, little understand just of a side. offshore to I bit maybe on agreement. wanted just the the the more wind nature

the is transmission your investment XX% and into transmission XX% reflective the will of cash outflow a upfront that be payment subsequently, get of invest then So, the the in there side. to is ownership or to XX%

give out? have How could on that play us actually option you that that if you will right color you how now. any can Just,

Daniel Cregg

sea, that the line represent between a What think the represented is mean would Praful about the whole. solicitation that I think it did in on the by at way the land. Yes, New turbines substation the I and substation represent project - to at it it Jersey as would that sea,

- indistinguishable put all is are was an Orsted. to was Jersey So, awarded forth those and New to it of project that

diligence due be of type interest with an the in of that the would front respect is that in have to the an investment. interest us what structuring and partnership we project, So advanced still

Praful Mehta

then XX% would that a XX%, the of out money build So, put an get to upfront you're kind to as in as you paying and project, something partner - approved?

Daniel Cregg

to determination, a make project over an in of a interest opportunity of year's or that is XX% the and Ralph period ensuing we would What is the something whether referenced we have want roughly an number do. not No. to months

So, is that's not immediate, the about are currently what ultimate a what the would the - interest anything exploring, but XX% more is we project it be could become. it in

Praful Mehta

then look on for but XXXX challenging. example going a at $X great, is are you know. hour a Ralph, from you clearly down perspective, last generation curve's baseload side, quarter's the - hedging if generation the Capacity is mentioned, your for just versus down And factors disclosure. I everything just like about markets are and megawatt

given So, the more like more better business so think just is with wanted understand, current that current than else? so to the been for and in or help or you've there retail this situation; for be to current done else of is long to market blip and that these quarter different needs long, of this deal assets plan anything anything you anything kind is a would

Ralph Izzo

whole the business for to has fair terms to that great. we're essential think, retail, that's in didn't headed and I we're is the we to it a we society, namely good customer I that more that. our is specific. in a future quite from I years scale wanted; are stepped X.X is we and couldn't So, away profitability me - and let We still effort and say where tried strong it's collective Praful. going meant the to two-years be that of particular putting business as a gave get suggest natural the mean what that population that meant to I assets segment,

the is the and to objectives market. the two reliability reasonable. oppression than, resolution they've states has continue two, that going need be current something price have they not something replace eliminate meet with replace Clearly, and served to that They forth; PJM the to the of that PJM supply, is to. capacity is point access they with If say, RPM, to we other resources the just rules to set then FERC namely do from to have want to hopefully to will rules allow of number

different attributes society most recognition value, market that a for that of to is need happen Another carbon. to one glaring to The thing the get price that's the power doesn't needs plants we but is in. appears the

one our we're to the use for I can make can the things, of, healthy some do better if to those extremely meantime, use both of of make to listen. positioned; it think generate flows positive well in but if then them, we is utility willing or fleet somebody cash else continues

in to to on Until formation, run and side and observations progress await market was on markets pricing spot these further progress everything quite that and expanded, assets wholesale further fixed that on. I carbon. price further are happy good that mean But, time, not spark capacity we're suggest progress your the design. did power of in

Operator

next Your Please question Greg comes from Gordon proceed. from Evercore.

Greg Gordon

equity questions. of that evolution last of correct of to that if Not Orsted, me, this be we in weren't power infrastructure in time and the wind. wrong interest the offshore horse direct had side with would enter your I'm to primarily to - a The kind interests interested thinking a said investment on house. and in support wrong. publicly, lie, you may a an negotiation about building Two dead I in willingness to position bit beat primarily and project take you taking your into the mainly talked of in that the like itself, The that feels

I'll So, can utility then - be a the vision given of there, that to evolution over the potential you just quoted forward, bigger and switch your side. and talk about that, of size think strategic the of the your you that market quantum of going do part the you thinking could

Ralph Izzo

Yes.

recognition the The particular been of the to there, there's is what skills it to that our don't is really did, the think I this but way definitely fair is are table, say I evolution brings fair been evolution. skills evolution and some it in Greg, to you characterize terms been there it know some has whatever So evolution. say there's would that about I no project. one

course other is, It stand their is and skills expectations successfully schedule doesn't, the how yourself an risk, table, - and doesn't side from you do the whole. what's brings one extricate financial example. the for meet the project most of side integrated to if doesn't And challenging it its own

I the succeed we'll on the end time, and don't do returns ways, a if from project all risks at relative wind versa. transmission but online, out get calculation we there If oneself turbine every on forward year turbines may them aren't there of and to these the time but transmission vice build and transmission going if are there they and mean, then Orsted on earth the paid? risk, part is we - day explore So, builds on of time, now. line does protect the year be how how from cost build

yes, we've to But of further and and us.. more as to that this well, had fair this partner we've is about discussions what in risk say skills a in ability little project open-minded confidence overall that the and and been that means do bit grown do it our for

Greg Gordon

just can the have the why level is, into question line accretion second detail on adjustment bottom pension, the that to My made us flows - take that you've little a you you articulated? on more and and how now

Ralph Izzo

of volatility a different the What of changing this to benefits one during and pension come split within remeasurement. that outcropping - the it all year the a expense, a Kind is in it did year among the - mid-year without we I of what overall that participants, process enabled the was that was pension Greg. little - off simple of bit concept, being prompted of and Yes. that, the - think a any of

come remeasurement and looked And kind from what components overall about it within in of markets a back think impact the a recovery, recognition that of an ended of standpoint generally so little overall fact of returns of total the like P&L the or of from year-end a the that more you increase what bit, from standpoint market looked prompted like if of had pension standpoint. a uptick and from so, income the that the reduction in pension up expense overall

the than outcropping remeasurement general, from back the because they more the nothing of really that lift the management year. it's market where at pension, were come overall So, had a prices prompted which the turn but in was of of a

Operator

from Christopher comes question next JPMorgan. from Your Turnure

Christopher Turnure

on the here. update Plan a us Energy give finalization can Master up you if wondering, coming was pretty I soon

might discussions and year? where kind impact this next what the Energy and Just, CEF stakeholder maybe on finalization the of Efficiency be are around

Ralph Izzo

conclusion think know, been publicly So fuels. we the future the to with because Chris, allowed we're we and B, some of say, what fossil continued stick probably that's of end to I'm a A, over know. we're as expecting debate reported, year master as to plan. use I going has been what's still There all far

to very as role is about in fossil would infrastructure state. that building the in recognition continued fuels has given the immediately reasonable moving and And There housing soon as possible, desire therefore, One itself gas. play to the be natural is users from a as heating but various gas not natural to other and lend use. greatly that decrease infrastructure, particular, in important away a that a there its

available some aggressive bit that was end the by how it So, be the announced the of for that and did review that. they state the it in be There's the I details public there for a to a of just would think BPU repeat little there of plan, and year. last enthusiasm electric discussion encouraging be should around vehicles, seems the been week

draft to and is we've importance every espouse which important nuclear, the us. seen But, to of continues

I we've paying attention think level matter issues a that at high the are and those careful been that to.

Christopher Turnure

stated a discussions impact an debate York you're having guess which pipeline clearly, State governor his or has of availability part longer PennEast And, on the position far? Plan no more broadly, Master Energy the New on on I the I is the in but the mean so gas

Ralph Izzo

Yes.

fuels continued New my of not conversation has that, New a what its on ability specific projects of general to up not and hook general I topic in Plan, permitting New in it specific is when made timeframe, interpretation, Jersey. as in Jersey fossil reliance in comes So, witnessing that customers. in New immediate But quite Jersey we're witnessing this York the in versus what way into we're that to given York Master Energy New think is

Christopher Turnure

or in out on And like you what opposed is have as have behind a an wind day. second question coming of things just to this you my the other follow-up It was keeping then, on final negotiations, kind the announcement going looks option exclusive a why if a the to year from make you have kind do to now, now impetus just to background? the had offshore of decision did

Ralph Izzo

Yes.

negotiations that So, exercised indeed or option a for we yes I'm no an strange, we the where have not phase, stuttering still that there, to option for preserve something articulating required it option but there's exclusive - to it through accurately, select I'm whether or option an that option an to had it's at point, we participate know, have option next exclusive option, we decide through just and believe option, we an this wanted this actually for frightening. little chose. negotiations third that so option. does I not, we

Christopher Turnure

that you to with XX%. had specify the And

Ralph Izzo

was entering this specify, chose we that this measured that, had more focus in an - point. a than we we higher once option, space way, you have No, at gone to on could but

Christopher Turnure

the for Okay. Ralph. color Thanks

Ralph Izzo

And be Chris about space, mean I that different, that we'll obviously, number keep I can mean right. as the we getting more learn educated.

Operator

next from Pourreza Partners. comes Shahriar from Your proceed. Guggenheim Please question

Shahriar Pourreza

the a Course XX. couple quarter you the strength versus it Cal downward Sparks on you the had follow-ups hedges. just hedges. move Looked more quarter, just in a only prior questions, the for a on of pronounced was what of some disclosed like, hedges So, on this modestly your first the guys and power kind of second in in bit XX, increased

than curious should any that be So, quarter. pronounced other dynamics regional I'm move, and third little dictate which Is think be kind bit drove to of the what downward a second more there we looks thinking about as markets, the what about? you

Daniel Cregg

extent are what's part those think offset mean, the to through there, of low because that see the thing to are of deals Shahriar, I think you're one revenue I within a mix. to coming up some included about going bigger is end they costs

we to you'll then and So, see contracts of bit a a we go of little a maybe of have, bit that and there. you're as so which go uptick, decline, BGS that's load a that the little bit little biggest of more we tend perspective, as sawtooth seeing an what through one we year, a from it's is see through the

Shahriar Pourreza

so and in has confirm reports I'm of been you there around any And York, sales Can of exposure? updates And sort assets, how specifically there is about then, sort and asset thinking Energy that you asset of Bethlehem Dan, on marketing only you're New kind that? left Center your curious there? so just the then it's

Daniel Cregg

of as with And captured concept a It's single that think the right. well. you're think, that that actually just question, to I follow on in you some your area. I asset

So, years was thought there expanding ago, did little that processes a happen. maybe further, around not

to a really it with are coming that, we situation go process. is make So, to the value where we checking as through or what something to do not want see we process we will respect and a determination out of and based out that whether upon

Shahriar Pourreza

Thanks it. got it, Got helpful.

Ralph Izzo

Shahriar, these referring always we're mean on as conversations, necessarily doesn't or Dan that's but there of to sort about, decision assets. engaged commitment that requirement was commercial is or in made earlier that been any

Shahriar Pourreza

bit some much has seen the we've of sort a downward who around in want this more to of and your thanks rating sort bigger specific. concept been of some New some ventures pun little negative be England know have movement and toes a wind region sort then I process. there just taken ratings just peers proof kind dipping the of lastly, helpful, of water, intended. agencies, with But, and a your in dialog the taking in around That's you're offshore role no from of And certainly

or I'm concept there, bit in of right had rating whether how kick and there conversations and you? to I'm from more the coming there forward, a - agencies, with proof bigger especially now, it's take agencies curious, we kind transmission any dialog as you is as take concerns is with any a step are you've curious start to the little So, rating if potentially have the end? their going the starts of what piece, eventually could if

Daniel Cregg

that I number we about Yes. - you're as next are what into into described aspect now obviously dialog Ralph; going determination what talking and ultimate the the would of Shah, exposure, year is in as clearly right continue to about situation say a is from what the by months is we the current make of standpoint will we be. to understand where next of where that that to path a

relative come broader the financial where category magnitude of understanding well. a are falls from awareness, for the possibility to So, us as an this nature the - we of it nature, of investment There we is as that the of to total, make there and in magnitude is is where standpoint and the that from, into investment. strength relative

as or to, it's agencies, and of we as So, next are but that's not go aware our something we're rating of through we're blind that part diligence, overall so. year the the

Operator

your comes Your Miller with from Travis next question Morningstar. from Please proceed question.

Travis Miller

leave not, about? XX% risk I'm options, of you there? XX% project it your I a that What follow on offshore a at thinking open XX% Why percentage that what's your you're I The the on liked options think how and options as follow-on, a are wondering dollar thoughts the capital amount? wind or and here. as have or more on - about on follow-on a the to

Ralph Izzo

Yes.

some say, we done and and of that with to we've course the have if we then all. is agreement, the percentage financial isn't upon that therefore the XX% out expectation project dollar project promising, what project the and next has total that that built value we the not the based Travis is to return, a the year, option that So, during participate expected cost find - at we in suffice that Orsted a have analysis related

still those negotiated terms being are with So, Orsted.

we're dollars what of expectations as and that spend in amounts yes, a XX% have that good with basically done. to we'll would sure in cents, that walk already, But fair do solid year can as and making work to realities faith we amount expectations a be, are those a and don't that lot away. but possibly be some other and they cause to us some that, more done isn't there anticipate We of

Travis Miller

even the about more do putting into buying utility two then, capital Power? And across that returns in terms return versus returns of capital capital of on put relative terms in back utility, you amount offshore corporate the of level of think into say, when think you versus you about other bucketing to, wind, The kind would that or here? stock or that businesses how

Ralph Izzo

as the able to is We value and share changed. on if the view we of is capital the market repurchase whack destroying you accurate, And market therefore the so of capital an might purchase create therefore, out dislocation be or time. operations, regulated ourselves that and we So, unregulated cost to there right of that that then then is because unless market apply operation, that be not value neutral risk. higher our hurdle philosophy creating subject is operations. through the of you we than too rate a the a have at lower the one, would unregulated value, This cost is the which if hasn't in greater

like well and cycle their don't know It's like received and compare order, experience we business the regulatory the a merchant for risk but say writ When we Jersey. risk. that to New know, Power business, large, combined as has off of would offshore base. some Orsted business State I nuclear we business actually the from We the contract just the as that we it are we trading operational wind

versus the operational course So, diligence comfort of are have speech, risk the at a risk expectations the that that But greater point a is, utility. wind enter as the even lengthy to is turn this would into result to that into comfortable the option on offshore partner commercial yes, trade taking, expectations was with and needs this done. of but that to year, be return of answer return the we next enough exceed that we over agreement worth of this says off

job deployment possible, that all have that, of capital utility, still over of very are Dan over the much sure representing to and great are years. of these the And potential finance of our next we committed said the the making five the things done XX% investment a within Having team enterprise.

Travis Miller

Master on table And the big a you a Plan, just But, your general rate of given rate on got case? just plan quick side. case. utility spending other know, what's and of of obviously timing outside Energy the general separate what possible through guys real rate in case, terms thinking on the is I -

Ralph Izzo

I a which XXXX years and So, have XXXX our we go have buy is December to - what is think. from of would GSMP five in requirement we

before got years need we more we've worry about that. So, four to

Travis Miller

And nothing before that?

Ralph Izzo

Correct.

Operator

Your next Please Associates. comes your Glenrock from Patterson Paul from proceed with question. question

Paul Patterson

long about of the I when ago, the think that do variety in been how you stuff, just I not and about orders it's seeing, possible, I'm thinking think competition couple expand months, have concern potential a PJM development, out if being put at question competition we've actions, guys guess about that filing, transmission; know the last containment a few cost look and some I voice of I put areas you these filed have FERC in the to or orders. trying a impact out you of you think I actually on also guys, specific transmission

but I mean, to terms of I impact guess initially these any development pass your filed? in what transmission as might potential the I'm things from come I be guess, not perspective, asking if granularity for or

Ralph Izzo

into referring life what outspoken been FERC critic think to is breathe I maybe I So, to some XXXX, which FERC by even and Order an of, an attempt others Paul you're have issues. reliability very solutions terms and upon very, administrative valuable for burden, transmission exchange little in of imposed creative and the tremendous benefit it a in cost customers, has in terms of to

is will we our to we available potentially territories, where what and service is today to to upon, we extent, allowed would compete. competition would said when introduces territory it say which make will own FERC ourselves XXXX other out, the I be then to projects we first that Order embark came What

fixed. long that as don't that be skillsets I then get as an to is level issue, extent as of field as our playing ability to field at open compete raise it RTOs Now, kind to we'd that RTOs, indeed PJM have like FERC across our perhaps will the playing other and and a a make might,

more solution created else. that of FERC has Having done said, I all Order has still was of anything search a XXXX problem, believe and in that, a it problems than

exceeded than through in fix trying - namely FERC and project transmission better construction. to So, to be that how power continue certain actual figuring to costs costs, notion time wholesale broken, its will that is administrative burdens fix have out and FERC to we would markets spending to far just try out something isn't where point overall this jurisdictions cases, off

Paul Patterson

of to hear might say think? some just these I I to it out, guess you you as do might of fall how or early there. - how things Any sense is too these some maybe

Ralph Izzo

early I to think too Paul. it's say,

Operator

Michael from Please Goldman from Sachs. Your comes question. proceed with question next your Lapides

Michael Lapides

question. basic very Ralph,

First of rate lag growth rate about anyhow growth PSE&G case move a that quarters impact the and rate after based are in thinking you thinking are think now the few of behind the all, you're will how case, or regulatory about, and whether earnings you in the at how lockstep? years, coming you

Ralph Izzo

Yes.

do return get going more there's will about of O&M. am I I employees, remember modesty, contemporaneous I the do no does CapEx - Michael, modesty, forget think actually they but XX% a the the risk - of EI, So it's in the know great - to studying I job at to exact time number, of controlling our by I'll about I our get some - boast

get candidly, does to is year. that return. rate is and enough XX% CapEx load case get isn't that So our enough about of have doesn't lag not up the back-end contemporaneous end we closer make with test it it, help to growth some back the all recovery, have us the do It combat to and EMEC for associated but regulatory clauses clause the

if return rate and believe on happen. always team of Daly job too good if our at But, are much. deck earning a allowed for the the Dave darn candidly, file ability making are the we to lag quite utility hands became on doing we have sooner, So, all that the needed to, and me focused

So...

Daniel Cregg

other business of has as the rate that a contemporaneous well well. Michael, which the as through side And formula filing, thing the to transmission is remember is

Michael Lapides

for you in can January - And formula Right. us, XXXX the dollar the increase What's remind amount for rate what XXXX? in is that? transmission starting

Daniel Cregg

a that's you there bit little last a It's there. year, bigger the about think was particular year-over-year number. if million jump than approximately Aggregate tax norm, was $XXX the the some backs, think flow are amount, because I which in not

conclude So, higher little the a end at from of standpoint, will because the of bit that's norm, of year-over-year this that year. which absence the than giveback, a

Michael Lapides

it. Got

$XXX XXXX? million step roughly to So from up XXXX

Daniel Cregg

Yes.

Operator

question Mizuho. next comes Fremont Your from Paul from

Paul Fremont

not up If the spending equity were you to to idea project, us can an in how your project take of much give connect the you on interest capital wind involved be offshore would side? an

Ralph Izzo

change to Paul, don't yet So a would not I than FERC-regulated, which bigger is what like base been lead our capital the treatment has any of not much are transmission kind in doesn't of materially of not connect lead assume think any it made. this say be would to it's given area it's territory else's rate on that budget. is done land And, - It to that land probably analysis adjustments someone service something that need the get RTEP - unreasonable that, suffice impacts our on would project. impact generator be into be a that the type the

Paul Fremont

then, replace to wouldn't sort you replace on of instance Conemaugh the just I net-zero guess assume, for or say that, you? earlier that be And I capacity up for you you're you to mentioned of follow shouldn't wanted let's Bethlehem, that and Keystone pledge, and looking would if that to we to were dispose looking something

Ralph Izzo

but not I I'm think understood there the XXX% your I sure is No. question, no. answer

Daniel Cregg

Yes.

said not of acquiring would that we've is the generation. fossil almost opposite what fact, driven we be In

would replacing So, that those would that happen. not imply

Paul Patterson

you to understood sort by what I wanted just I that. of make that sure meant

you. thank Okay,

Operator

from Your question final proceed Sophie Please your comes KeyBanc. with from Karp question.

Sophie Karp

you a to I involved, if would XX% stake in to project, to real the sizable a back as wind chunk be I'm that cash eventually wanted just presuming offshore there go of investment. take quick, and an were

on your updates how you equity well mix and think as, as to it how cetera? get fund CapEx plan as et would as when should plan debt So, about and that, far we evolving we

Daniel Cregg

Yes.

timeframe right those the for over that think about make about details. to ultimate as time year, number to and about the way investment to an months that, the determination and think I think may that's is of a the we've frame the next of make, I some we talking to incremental think been Sophie,

Sophie Karp

is headroom that and some that So, little you at you Strong point, at a you original the - took on plan, Day? Analyst maybe say bit your to Energy decision, that took II there fair so, your the contemplated plan, down some have there down versus CapEx you

Daniel Cregg

think that's to I think Yes, a it. way fair

Operator

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

Ralph Izzo

a us. Lots questions joining leave I to of the continue for on we've we performance we're that, years. just about track make wasn't big about, you offshore message But, about extremely where for to everyone Thanks deliver earlier you sure telling that we and surprise. want real wind, guess you with we everything with the many steady on have year in told been is

with the offshore and our preserving opportunities, still energy much clean of filing us option. discussed This future Future strength. those being Energy alive Clean very to now some that pursue we're everything solid, BPU exercised option is the is sat wind, to an pursue is are and opportunity we've giving which Customer from expanded the the financial

you. where leave really we So, to want that's

in a Halloween. on call. holiday, look safe you all and enjoyable joining we days everyone Happy Have seeing and the a XX Florida. about in Thanks to you us Wish for forward

Operator

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

you may and participating. thank You disconnect, for

Public Service Enterprise (PEG) 31 Oct 192019 Q3 Earnings call transcript