Public Service Enterprise Group Inc Q2 FY2025 Earnings Call

Ladies and gentlemen, thank you for standing by. My name is Rob, and I'm your event operator today. I would like to welcome everyone to today's conference, Public Service Enterprise Group's Second Quarter 2025 Earnings Conference Call webcast. As a reminder, this conference is being recorded today, August 5, 2025, and will be available for replay as an audio webcast on PSEG's Investor Relations website. I would now like to turn the conference call over to Carlotta Chan. Please go ahead.

Good morning, and welcome to PSEG's Second Quarter 2025 Earnings Presentation. On today's call are Ralph LaRossa, Chair, President and CEO; and Dan Cregg, Executive Vice President and CFO. The press release, attachments and slides for today's discussion are posted on our Investor Relations website, and our 10-Q will be filed later today. PSEG's earnings release and other matters discussed during today's call contain forward-looking statements and estimates that are subject to various risks and uncertainties. We will also discuss non-GAAP operating earnings, which differs from net income as reported in accordance with generally accepted accounting principles, or GAAP, in the United States. We include reconciliations of our non-GAAP financial measures and a disclaimer regarding forward-looking statements on our Investor Relations website and in today's materials. Following our prepared remarks, we will conduct a 30-minute question-and-answer session. I will now turn the call over to Ralph LaRossa.

Thank you, Carlotta, and thanks to all of you for joining us this morning to review PSEG's second quarter 2025 results and to discuss our outlook for the business over the rest of the year. PSEG delivered another quarter of solid operating and financial performance. And PSE&G is on track to execute on its full year $3.8 billion regulated investment program to maintain reliability. PSE&G also benefited from a full quarter of regulatory recovery on over $3 billion of previously invested capital, which was approved in the October 2024 settlement of our electric and gas distribution base rate case. PSEG's results also reflect the positive impact of higher output from our nuclear generating fleet, which benefited from the absence of a Spring Hope Creek refueling outage experienced last year. During the past quarter, we also continued to prioritize meeting our customers' expectations on both the reliability and affordability fronts. In late June, we successfully operated through three consecutive days of temperatures above 100 degrees, prompting high electricity usage that set a summer peak load of 10,229 megawatts on June 24, the highest system load we have experienced since 2013. The value of our infrastructure resilience and storm restoration efforts benefited customers during a series of intense heat, wind, and rainstorms, providing yet another validation of our investments in the system to maintain reliability, which also improves the customer experience. Our utility crews in New Jersey and on Long Island are working tirelessly to safely keep the lights on, restoring service to interrupted customers in a timely manner. During the four-day heat storm in June, PSE&G crews restored service to 99% of storm-interrupted customers within 24 hours. I could not be more proud of our team's work and these results. Turning to our affordability focus, given the warmer-than-normal summer thus far, higher electricity usage is expected to result in higher customer bills. In addition, our customers are seeing the electric rate impact of last year's PJM capacity auction, which is just now translating into summer utility bills. PSE&G has responded by partnering with the New Jersey Board of Public Utilities to implement a summer relief initiative, providing all residential customers with deferred billing during two high-usage summer months. This deferral shifts the collection to lower electric usage months with no interest charged to customers. The utility has also extended cutoff protections for income qualified residential customers and suspended electric reconnect fees through September 30. In addition, PSE&G is processing two sets of upcoming state-funded residential energy assistance payments that will also reduce eligible customer bills. We also continue to connect our customers in need of payment assistance with all available resources, including our award-winning energy efficiency programs to help lower usage. Last month, PJM released the results of its latest capacity auction, which priced within a FERC-approved price collar at $329 per megawatt day for the energy year 2026 to 2027. Despite this increase in capacity prices, we anticipate a near flat impact on customer electric bills when this latest price is factored into the BGS supply rates in June of 2026. This assumes other supply-related costs remain the same, preserving the reduction from other charges expected to come off the bill. As we've discussed on prior calls, the resource adequacy challenges in New Jersey and across the entire 13-state PJM region are becoming more acute as we see both growing demand and new supply slow to respond. Recent reports reflect an increasing amount of new large load applications that are quickly eroding existing reserve margins. Within the confines of PJM, it's hard to see the path to new generation through existing market signals, which may require a consideration of a new approach to procuring capacity and resource planning. In New Jersey, the legislature convened on June 30, having held a series of hearings on energy affordability ahead of the PJM capacity-related summer rate increases. Legislation introduced this past March, Assembly Bill 5439, could enable regulated utilities to be among those companies able to compete for potential generation projects should New Jersey decide to build or pursue new in-state generation. New Jersey remains a net importer of power and during the June heat storms imported nearly half of its electric needs from out of state. Abundant excess generation capacity to our West, which for many years made power imports a convenient option is quickly being absorbed by rapid growth of native load in those states. In New Jersey, policymakers have begun to actively weigh the priorities of economic growth, system reliability, affordability, and the state's environmental policies. In fact, today, the BPU is conducting a technical conference on resource adequacy, focusing on the recent PJM capacity auction results and state-driven solutions. We look forward to partnering with New Jersey and regional stakeholders to develop policy consensus on long-term comprehensive solutions that can meet our growing demand and improve resource adequacy while safeguarding affordability and reliability to meet New Jersey's energy needs. While these conversations continue, our $3.8 billion regulated capital investment plan for 2025 is focused on infrastructure replacement and modernization to ensure safe and reliable service and to meet growing customer demand. These efforts are on track and on budget. As mentioned last quarter, PSE&G began the second phase of its Clean Energy Future-Energy Efficiency II program, which will help customers save energy, lower their bills, and reduce carbon emissions while supporting job training and economic growth in New Jersey. And speaking of economic growth, as of June 30, PSE&G's pipeline of large load inquiries for new service connections grew to over 9,400 megawatts, up 47% from 6,400 megawatts reported as of March 31. As stated previously, these numbers include both mature applications that we refer to as new business, approximately 2,600 megawatts of the total, which has increased by 40% since March 31, as well as feasibility studies and initial leads. Our engineering assessment turnaround is still averaging about four months, and this response time supports the state's objective to spur economic development. To the extent these large load prospects convert into new utility customers in the future, fixed costs will be spread over a larger user base, which can help to lower existing customer bills. Turning now to PSEG Power & Other. Our nuclear units generated and supplied the grid with approximately 7.5 terawatt hours of carbon-free baseload power and achieved a fleet capacity factor of 88.8% for the second quarter, lowered by the scheduled refueling outage at Salem Unit 1. During this fall's refueling outage, PSEG Nuclear will perform the work needed to extend Hope Creek's fuel cycle from 18 to 24 months. This is the first of several steps we are taking to optimize our plants, providing the grid with more reliable 24/7 carbon-free power until Hope Creek's next scheduled refueling outage in the fall of 2027. In addition, our Salem upgrade project will bring approximately 200 megawatts of incremental carbon-free dispatchable power during the 2027 to 2029 time frame. We were also pleased that federal tax legislation passed in July preserves the downside price protection from the nuclear production tax credit, or PTC, as well as the PTC availability for expansions of nuclear capacity, which supports the planned power upgrade at Salem. To summarize, we had a good quarter and first half of 2025, which provides us with a solid foundation to confidently deliver on our full year 2025 non-GAAP operating earnings guidance of $3.94 to $4.06 per share, which is up 9% at the midpoint over 2024 results. Our 2025 guidance includes a full year of new distribution rates from our 2024 base rate case settlement, which was reached last October, as well as an upcoming refueling outage at our 100% owned Hope Creek nuclear unit this fall. In closing, we are also reiterating PSE&G's updated 5-year capital spending program at $21 billion to $24 billion, which supports an expected rate base CAGR of 6% to 7.5% through 2029. This, in turn, drives PSEG's 5% to 7% non-GAAP operating earnings CAGR while continuing to use the nuclear PTC as our reference price for power. PSEG intends to execute this capital plan without the need to issue new equity or sell assets. I'll now turn the call over to Dan, who will walk you through the results for the quarter and our outlook for the remainder of 2025, and then I'll rejoin the call for Q&A.

Great. Thanks, Ralph. Good morning, everybody. PSEG reported net income of $1.17 per share for the second quarter of 2025 compared to $0.87 per share in 2024, and non-GAAP operating earnings were $0.77 per share in the second quarter of 2025 compared to $0.63 per share in 2024. These solid results were up over 20% from last year's second quarter, reflecting the benefit of new distribution rates that were placed into effect at PSE&G in October of 2024 and higher generating volume at PSEG Power, which reflects the absence of last spring's Hope Creek refueling outage, which will take place this fall, raising O&M and lowering output in the second half of 2025. We've provided you with information on Slides 8 and 10 regarding the contribution to net income and non-GAAP operating earnings by business for the second quarter and first half of 2025. Let's start with PSE&G, which reported second quarter net income and non-GAAP operating earnings of $332 million for 2025 compared to $302 million in 2024. For the year-to-date ended June 30, PSE&G reported net income and non-GAAP operating earnings of $878 million in 2025 compared to $790 million in 2024. Utilities results were driven by the implementation of new electric and gas base distribution rates that went into effect last October to recover a return on previous capital investments totaling more than $3 billion. Beginning on Slide 9 with the PSE&G column, transmission margin was $0.01 per share higher compared to the year-ago quarter on higher investment and a prior year true-up. Our distribution margin increased by $0.10 per share compared to the year-ago period, largely reflecting the impact of the rate case plus recovery on PSE&G's regulated energy efficiency investment. On the expense side, distribution O&M costs were $0.01 per share favorable compared to the second quarter of 2024, though for the full year, distribution O&M is expected to be higher versus the prior year. Both depreciation and interest expense each rose $0.02 per share compared to the second quarter of 2024, reflecting higher levels of depreciable plant investment and long-term debt at higher interest rates. Lastly, the timing of taxes recorded through an annual effective tax rate, which nets to 0 over a full year, had a net unfavorable impact of $0.02 per share in the second quarter compared to the prior period, reversing a positive $0.02 per share impact in the first quarter of 2025. Weather conditions during the second quarter, as measured by the temperature humidity index were 21% warmer than normal, but 14% cooler than the second quarter of 2024. As you know, the Conservation Incentive Program or CIP mechanism decouples weather and other economic sales variances from a significant portion of our distribution margin, while helping PSE&G promote the widespread adoption of energy conservation, including energy efficiency and solar program. Under the CIP, the number of electric and gas customers is the primary driver of distribution margin, and each segment grew by approximately 1% over the past year. On the capital front, as Ralph mentioned earlier, PSE&G invested approximately $900 million during the second quarter, and we are on track to fully execute our 2025 regulated capital investment plan of $3.8 billion, focused on infrastructure modernization, energy efficiency, and meeting growing demand. We have maintained our 5-year regulated capital investment plan of $21 billion to $24 billion through 2029. We began the next phase of our energy efficiency program during the first quarter of 2025. We anticipate investing up to $2.9 billion over a 6-year period. The energy efficiency program total includes approximately $1 billion of ongoing repayment options to help our customers finance their energy efficiency equipment and appliances and provides customers with energy information and options to manage their energy use and lower their bills. Moving on to PSEG Power & Other. For the second quarter, PSEG Power & Other reported net income of $253 million in 2025 compared to $132 million in 2024, and non-GAAP operating earnings were $52 million in the second quarter of 2025 compared to $11 million in the second quarter of 2024. For the year-to-date ended June 30, PSEG Power & Other reported net income of $296 million in 2025 compared to $176 million in 2024, and non-GAAP operating earnings of $224 million in the first half of 2025 compared to $180 million for the first half of 2024. Referring again to the waterfall on Slide 9. For the second quarter of 2025, net energy margin rose by $0.04 per share, driven by higher nuclear generating output. O&M was $0.03 per share favorable compared to the second quarter of 2024, driven by the absence of last spring's Hope Creek refueling outage. Interest expense rose by $0.02 per share, reflecting incremental debt at higher interest rates. Taxes and other were $0.03 per share favorable compared to the second quarter of 2024, in part due to the use of a lower annual effective tax rate in 2025, that will reverse over the balance of the year. On the operating side, the nuclear fleet produced approximately 7.5 terawatt hours during the second quarter, up by 0.5 terawatt hours over the same period in 2024 and reached 15.9 terawatt hours for the first half of this year, both benefiting from the absence of last spring's Hope Creek refueling outage. Capacity factors for the nuclear fleet were 88.8% and 94.3% for the quarter and 6-month period ended June 30, 2025, respectively. In late July, PSEG Nuclear cleared approximately 3,500 megawatts of its eligible nuclear capacity in PJM's base residual auction, at $329 per megawatt a day for the energy year beginning June 1, 2026 through May 31, 2027. This latest result is up from $270 per megawatt day for a similar amount of capacity in the 2025-2026 PJM capacity auction. For the second half of 2025, results at PSEG Power & Other will be impacted by this fall's scheduled Hope Creek outage and the completion of the 3-year Zero Emission Certificate award that ended on May 31, which will offset higher capacity revenues related to the 2025-2026 auction results in the back half of this year. Touching on some recent financing activity. As of June 30, PSEG had total available liquidity of $3.6 billion, including $186 million of cash on hand. On the financing front, PSEG Power issued $1.5 billion of senior unsecured debt this past May, consisting of $750 million of 5.2% 5-year notes due 2030 and $500 million of 5.75% 10-year notes due 2035. The proceeds from this sale were used to repay the $1.25 billion variable rate PSEG Power term loan that was scheduled to mature. PSEG's variable rate debt at the end of June consisted of a 364-day term loan at PSEG Power for $400 million, which matures in December of 2025 and commercial paper. As of June 30, following the redemption of the PSEG Power's $1.25 billion variable rate term loan in May, our level of variable rate debt represents approximately 3% of our total debt. In July 2025, federal tax legislation preserved the downside price protection of the nuclear production tax credit as well as the PTC availability for expansions of nuclear capacity, supporting our planned power upgrade at Salem. In addition, this legislation permanently extends 100% bonus depreciation for qualified business property, improving cash flow at PSEG Power as it executes on its planned capital program. As Ralph mentioned, we are reaffirming PSEG's full year 2025 non-GAAP operating earnings guidance of $3.94 to $4.06 per share as well as a long-term 5% to 7% non-GAAP operating earnings CAGR through 2029 at nuclear PTC threshold. Our solid balance sheet supports the execution of PSEG's 5-year $22.5 billion to $26 billion capital spending plan without the need to sell new equity or assets and provides the opportunity for consistent and sustainable dividend growth. That concludes our formal remarks, and we are ready to begin the question-and-answer session.

The first question today is from David Arcaro with Morgan Stanley.

So today, we've got the New Jersey Resource Adequacy conference going on at the BPU. I was just wondering if you could give a sense of where conversations stand with regard to the future of generation build in New Jersey?

Thanks, David. Yes, so it's a little bit tough for us to do this real time. They are literally having conversations right now. So there really hasn't been a big change from a legislative standpoint. We talked a little bit in the prepared remarks about the bill that is currently sitting in the legislature. But I'm looking forward to the conversation today that's taking place. We are advocating for some decisions to be made by the state as we move forward. That's really just around what are the forecasts they're looking for. We'll be talking about that. What are the reliability outcomes they're targeting? What are the affordability targets they have? And then finally, the environmental policy goals. When you put those four pieces together, we think we'll be able to find the right answer and solution for the state. And we'll be willing to help out in whatever way the state is looking for us to play a role. So we're going to stick to those four points and really try to drive some decisions from the existing administration and obviously have conversations with the potential gubernatorial candidates.

Yes, absolutely. That makes sense. Appreciate that. And then a big increase in the data center pipeline for this quarter. I was wondering if you could give an update specifically with regard to the nuclear plant opportunities and an update on data center conversations there, what is the interest level that you're seeing in the site most recently and then thoughts on timing as to whether you could get to an agreement this year?

Well, I'll turn that over to Dan, as I usually do regarding the data centers. From an economic development perspective, we are pleased to see New Jersey continuing to play an important role in this area. They have consistently supported initiatives for data centers and technology firms to establish themselves in New Jersey. It's encouraging to see that these efforts are reflected in the numbers we've shared. Recently, CoreWeave announced a significant investment in Kenilworth, New Jersey, where they are acquiring real estate. The progress being made in economic development is starting to show results, and I'll let Dan address anything specific about the nuclear opportunities.

And David, there continues to be discussion and I think Ralph's earlier commentary on the numbers going up in the state are evidence of that. And I think that you're well aware that our assets are both in New Jersey and Pennsylvania. And I think there's opportunities across those states and frankly, wherever power can be delivered from those units for the nature of what we have. So the discussions continue. There continues to be interest, and we'll let the timing kind of speak for itself as we go forward.

Our next question is from the line of Nicholas Campanella with Barclays.

I just wanted to follow up on that last point maybe. In your prepared remarks you kind of brought up clearly the need to add new generation in New Jersey. The fact that the state is an importer of power, and you talked about needing to balance affordability and resource adequacy along with economic development. Just how do you see that impacting your ability to move forward with a multiyear contract by the end of this year? And is it still your intention to deliver something by the end of the year? I just wanted to be a little bit more pointed on that.

We would like to work with this administration, and that desire remains. However, we are not going to pursue a deal just for the sake of meeting a deadline. Our position on that has not changed. Dan summarized it well: we have resources in both Pennsylvania and New Jersey, with data centers emerging throughout the PJM area, not limited to just New Jersey. The resource adequacy dialogue acknowledges that the circumstances in neighboring states affect New Jersey. Given that we import 50% of our power during peak periods, decisions made by other economic development entities, governors, and utilities influence New Jersey's situation. Therefore, I don’t believe we have all the solutions to how everything will fit together. This really is a question for the PJM, not solely for New Jersey.

That makes a lot of sense. I appreciate the context. And then maybe with the capacity auction results, I know you talked about the ZEC roll-off, that offsets the '25, '26. But when we think about '27, '28, how are you framing where you are on a gross receipt basis? Are you now higher in the range because of the '26, '27 outcome?

Well, I'll let Dan talk to some more specifics here, but we have not come off the fact that our guidance remains at the PTC threshold with our 5% to 7% growth targets.

Yes, exactly. And obviously, it goes against the backdrop of what the market looks like, Nick, and you know as well as anybody that capacity is a piece of what the nuclear facilities make as much as they run; energy is a bigger piece. But if you're seeing higher capacity clears that sustain then you're going to see higher capacity component of the overall revenue sustained at a higher place. And if energy markets, the electricity side, the energy side moves to a point where you are higher, well, then we're going to have movement off of that. We are not there right now with respect to what we see for the CAGR that we've put out. But we continue to monitor, we continue to market the output. Ultimately, that's going to determine where we land against the backdrop of future forecasts. But right now, what we have out there is based upon the threshold.

Our next question is from the line of Michael Sullivan with Wolfe Research.

I wanted to just ask another one on kind of the New Jersey supply situation. I guess outside of this bill that's out there, what are the other options if that weren't to move forward? And then we saw kind of next door in Pennsylvania, one of your peers doing a JV outside of the regulated construct. Is that something you guys would consider at some point?

We have clearly stated that we are not interested in returning to the merchant generation business, and that position remains unchanged. The concept mentioned by others is somewhat different, but I'll let them elaborate. So, what does this mean for us? It leads us back to the PJM process, which we have been carefully considering for many years. We believe it is not attracting new generation and has issues with its existing capacity process. If there are no changes and the state of New Jersey does not gain more control, we will have to accept the results of that process. The facts indicate that there has not been any new baseload generation built in New Jersey for a significant period, with our previous merchant generation business being the last one to do so.

I think the only thing I would add to that, Michael, is some discussions that others are listening to concurrent with this call, I think are going to that topic. And there's other discussions. The PJM governors are going to meet next month to try to talk about what's going on. There’s currently challenging discussions about what supply could come out of that process or not and, as a result, what needs to be done to ensure supply.

Okay. That's really helpful. I appreciate all the color there. Just shifting over to OB3, can you maybe put a little more quantification around some of the benefits there, both with respect to bonus depreciation and what that does for your cash tax position and also the new tax credit on the uprate? Any numbers around those two items you can give us?

No, and Michael, I think the main impact from the standpoint of the PTC is that it retained what was already established. There was some conversation about possibly shortening or changing it, but from a nuclear PTC perspective, everything remained unchanged. If market conditions improve, I would still prefer to have the protective aspect of the PTC related to overall revenue thresholds. What is new in this context is bonus depreciation. We've had various instances of bonus depreciation in the past, and this one is aiming to make it permanent. The bonus applies only to the unregulated segment of the business, and there isn’t a significant amount of capital there. Is it beneficial? Yes, it helps, but it's more of a minor improvement in overall cash flow, allowing for some cost recovery to occur a bit sooner than it would have otherwise.

Our next question is from the line of Ross Fowler with Bank of America.

It's actually Randy here for Ross. I just had a quick question about the affordability-focused bills we saw in this session. Which of those bills are gaining the most traction and could have the biggest impact moving forward on regulated generation, cost deferrals, or reassessing New Jersey's role in PJM?

The session has closed officially, right? So they can always come back, but right now, there’s no scheduled time for the legislature to come back to discuss those bills. I would be hard-pressed to say that any specific bill is one that we're focused on. I think what we're really focused on is finding a solution for the customers. We have done that in the short term, and now we're trying to have a conversation, which is taking place as we speak at the New Jersey Board of Public Utilities on the resource adequacy. We will continue to advocate strongly as we have at PJM. So I wouldn't point you to any single bill specifically because, again, they may change down the road if they continue in any fashion. But I would just leave it at that and not really speculate on what might or might not happen.

That makes sense. And then just secondly, I know you've mentioned the 200 megawatts out of Salem, but what potential is there for incremental generation and upgrades on the nuclear fleet to upgrade refueling cycles, license extensions, and how much of that has already been executed?

From an execution standpoint, much of the engineering work has been done on everything that you asked about. We did mention earlier in the prepared remarks that in this refueling cycle that will take place in the fall at Hope Creek, we will be setting the unit up for the first time for a 24-month run. So that is the change in the fuel cycle that we had talked about. We’re continuing to execute on the plan that we had discussed and the engineering work. We have not discussed the cost or the exact timing of that. We plan the upgrades for the Salem units later in the next few years. Nothing specific has been announced yet, but we plan to have that done by the end of the decade for sure, and we will have that information out by the end of the year.

Our next questions are from the line of Carly Davenport with Goldman Sachs.

Maybe just to start on the update on the large load inquiries at the utility level. Is that sort of 10% to 20% conversion rate still hold in your view on that 9,400 megawatts? Is that all data centers at this point? Or are there any other customers in that bucket?

There's a few other customers in that bucket, but I would say the bulk of that, if not over 90%, is all data center related. The 9,600 megawatts sort of encompasses everything together, and then you apply the 10% to 20%, it aligns with our what we call new business number that’s out there. So the short answer is yes, it’s sticking with the 10% to 20%. And the longer answer shows that in the details we’ve provided.

Perfect. And then maybe just thinking about 2025 earnings growth, as you think about first half growth tracking above your full year 9% expectations. I know the Hope Creek outage in the fall will be a drag, but I would love your thoughts on execution within the full year guidance range at this point in the year?

We feel confident about being within the range for sure, and we reiterated that. I don't think we're going to go anywhere beyond that at this point.

Carly, we're at the halfway point. We are slightly above that range. The Hope Creek outage is the reason we did highlight that it was coming at the back end because it's 100% owned by us. When it occurs, it has a bigger impact as we move through quarter by quarter.

Our next questions are from the line of Ryan Levine with Citi.

Would you seek the customer bill deferral mechanism for an additional year as a result of the higher PJM capacity prices during peak load months? Is that something you're contemplating given the recent events?

Well, first of all, that conversation will take place with the new administration and the new BPU. So right now, there's nothing in the plan for the state of New Jersey to pursue that.

Ryan, just to clarify, the capacity auction that just happened and its impact on the bill. What we saw in June reflected what I'll describe as a catch-up. Because the PJM auctions were delayed, you're seeing the cumulative effect of catching up from prior auction results to $270. What happened in June brought everything up to $270. You would not expect a jump as we saw in June from the $329 effect. If you check our normal BGS process, the auction rolling off the bill and the auction rolling on, you'd see not only do we not expect a jump like we saw in June, we don’t expect much movement at all because what's coming off the bill is a little bit higher than what will roll on at current prices. Not saying that something couldn't be done. That's not in place now, and we will work with regulators as we need to implement it. But it would not come from an increase like in June, as that is not forecasted ahead.

Just one follow-up in terms of the large load request additions. Is there color around how many customers or individual projects represent that large increase to assess the chunkiness of that add?

Yes, I'll provide some color without any details. The numbers we see in New Jersey would be smaller than in some other places. We're not talking about 1,000-megawatt hyperscale projects. It's a different type of environment here, with a lot of edge computing and backup locations. But it's large; our peak load is not much north of 10,000, and we’re nearing that in inquiries we are receiving. It’s a game changer for us. We’re seeing it across the PJM footprint, and we are getting our fair share is how I would put it, but smaller projects than what some of the other states are seeing. Yes. The CoreWeave development from earlier in the week is incorporated into this updated forecast and projection.

Our next questions are from the line of Travis Miller with Morningstar.

Following up on this resource adequacy discussion. At a high level, can you characterize if the concern among New Jersey, the legislators, BPU, etc. is that there aren't enough electrons, either energy or capacity in New Jersey, i.e., that 50% import? Or is it just that the economics aren't good for the customer bill? If that makes sense, how is that debate characterized?

I would say in the near term, it’s focused on affordability. That's where the conversation has been with the capacity price increases and what customers are perceiving. But it’s not too far in the recent past that you can look back and talk about reliability concerns. Not too long ago, it was about environmental concerns regarding what we were importing or not importing into the state. We continue to remind everyone of the big picture, exploring the policy solutions we can bring together to solve these policy issues. I don’t want to say it’s solely affordability. It’s a combination of factors.

If the state were to go to a regulated generation option, would that need FERC approval? Would that have to go through FERC or some other federal entity?

No, I don't believe it would. I think as long as the state goes through a regulator, there will have to be a question about whether it’s an FRR or how they would go about the process. But I do not believe it would require any FERC approvals.

Our next question is from the line of Paul Fremont with Ladenburg Thalmann.

Congratulations on a strong quarter. I wanted to better understand CoreWeave; would the relationship there be with the utility or with PSEG Power if there is a relationship between Public Service and the new data center?

The only thing that's been out there with CoreWeave has been the utility, and that's what we spoke to, and that's what we've included here. Anything else from a relationship standpoint will come out when Dan talks about whatever Dan talks about down the road at future conversations.

The purchase they made involves some cogeneration facilities. Is it contemplated that there would be a need for additional generation at the site? And if so, how much in terms of megawatts?

Yes, that’s a question for their site management; I wouldn't be able to tell you. There is a cogeneration facility there. It's behind the meter generation; there’s cogeneration in New Jersey across multiple sites. So a lot remains to be determined on how that’s used and what needs they may have.

The next question is from the line of Julien Dumoulin-Smith with Jefferies.

You are performing very well this year, at $0.26 year-to-date. I heard your comments about being confident in the range, but I’m interested to know where you expect to be next quarter regarding that guidance. Perhaps a bit more insight beyond just the statement would be appreciated.

We appreciate your comments. We are exploring various approaches to resource adequacy. I don't want to go too deep until we have more data, as we discuss battery solutions and other options for the state's needs.

With respect to PJM and this conversation on governance and engagement here, how do you think we could look at the auction in just PJM and New Jersey's relationship going forward? I know they're asking for board seats, changes in government, but also talking about shifting the nature of the auction.

The governance at PJM doesn’t allow for a lot of things that people are discussing to be implemented unilaterally. There has to be a member vote on whether or not to allow governors to participate or their representatives. If not, governors might need to take action, and that could go down to FERC for discussion. This governance process is the core problem right now and has been for years, as we have indicated.

At this time, I'd like to turn the floor back to Mr. LaRossa for closing comments.

Thank you. I'll end where I started, which is to thank our employees for the work that was done; this has been an intense weather period for us over the past couple of months. While we talk about storms and heat, we don't speak of when all that occurs. This has disrupted people's lives consistently through Fridays. I just want to take a moment to pause and thank everyone for the work they've done during that time. I also want to thank our customers for engaging with us and having these conversations. We are here for our customers. We know there are challenging times from an affordability standpoint, not just with utility bills, but across the board. We are bringing solutions in the near term and fighting hard for long-term solutions. You'll continue to see more of our advocacy in the future, and expect to see us out there in the upcoming months. Thank you for calling in, and have a great rest of your summer.

Ladies and gentlemen, this concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.