Public Service Enterprise (NYSE:PEG) reported third-quarter financial results on Monday. The transcript from the company’s third-quarter earnings call has been provided below.
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Summary
Public Service Enterprise Group (PSEG) reported strong financial results for Q3 2026, with net income of $0.76 per share and non-GAAP operating earnings of $1.15 per share. Year-to-date non-GAAP operating earnings stood at $3.56 per share.
The company reaffirmed its full-year 2026 non-GAAP operating earnings guidance of $4.28 to $4.40 per share and expects a 6% to 8% growth outlook through 2030.
PSEG’s energy efficiency programs and transmission investments were key growth drivers, though offset by higher depreciation and interest costs.
Operationally, the company demonstrated resilience during severe weather, efficiently restoring services and maintaining stable gas operations.
PSEG is actively participating in regulatory discussions in New Jersey to align with state energy policies and address regulatory lag in capital investments.
The company is focused on expanding nuclear generation opportunities, highlighted by stable nuclear operations and participation in regional power market developments.
PSEG maintained a strong liquidity position with $3.9 billion available as of September 2026 and completed significant financing activities to support its capital spending plan.
Full Transcript
Shomali (Event Operator)
Ladies and gentlemen, thank you for standing by. My name is Shomali and I am your event operator. Today, I would like to welcome everyone to Public Service Enterprise Group’s third quarter 2026 earnings conference call and webcast. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session for members of the financial community. At that time, if you have a question, you will need to press the star and the number one on your telephone keypad.
To withdraw your question, please press star and the number two. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded today, November 2, 2026, and it will be available for replay as an audio webcast on PSEG’s investor relations website at investor.pseg.com. I would now like to turn the conference over to our host, Carlotta Chan. Please go ahead.
Carlotta Chan (Investor Relations)
Good morning and welcome to PSEG’s third quarter 2026 earnings presentation. On today’s call, Ralph LaRosa, Chair, President and CEO, and Dan Craig, Executive Vice President and CFO. The press release, attachments, and slides for today’s discussion are posted on our IR website at investor.pseg.com, and our 10‑Q will be filed later today. PSEG’s earnings release and other matters discussed during today’s call contain forward-looking statements and estimates that are subject to various risks and uncertainties. We will also discuss non‑GAAP operating earnings, which differs from net income or loss as reported in accordance with generally accepted accounting principles, or GAAP, in the United States.
We include reconciliations of our non‑GAAP financial measures and a disclaimer regarding forward‑looking statements on our IR website and in today’s materials. Following our prepared remarks, we will conduct a 30‑minute question‑and‑answer session. I will now turn the call over to Ralph LaRosa.
Ralph LaRosa (Chair, President and Chief Executive Officer)
Thank you, Carlotta, and thank you for joining us to review PSEG’s results for the third quarter of 2026. Starting with our financials, PSEG reported net income of $0.76 per share and non‑GAAP operating earnings of $1.15 per share for the third quarter, bringing our results for the first nine months of 2026 to $2.91 per share of net income and $3.56 per share of non‑GAAP operating earnings. PSEG continues to achieve solid operational and financial results enabling us to deliver reliable utility service and generate the carbon‑free baseload generation our customers.
Our financial results for the third quarter and year‑to‑date period align with our expectations for the full year and we are reaffirming PSEG’s guidance for 2026 non‑GAAP operating earnings in the range of $4.28 to $4.40 per share. Continuing investments in PSEG’s energy efficiency programs and transmission were the main contributors of growth in utility margin and were offset by higher depreciation and interest costs as well as the timing of taxes. In PSEG Power and Other, the absence of last fall’s Hope Creek refueling outage resulted in lower O&M, which, combined with an increase in realized market prices, higher nuclear generation, and gas operations, drove the improvement in PSEG Power’s results.
Turning to our third quarter operations, PSEG faced severe weather throughout the third quarter which highlighted our best‑in‑class storm response, our commitment to service excellence, and the customer value of our investments in resilience, reliability, and the modernization of our electric and gas systems. A nor’easter hit our service territory in September bringing severe wind gusts and heavy rain and affected approximately 70,000 PSE&G Electric customers.
Despite widespread tree damage and challenging conditions, nearly all affected customers were efficiently restored within 24 hours. Our gas operations also remained stable throughout this multi‑day event, with no storm‑related customer outages. I’m also pleased to report that PSEG Long Island is on track for its most reliable year on record since LIPA started. The operating service management model and customer satisfaction metrics are all continuing to move in the right direction.
Back in New Jersey, PSE&G filed its Clean Energy Future EE 2.5 proposal in late September in response to the BPU’s recently adopted framework for a one‑year extension of the EE2 triennium. Our filing highlights the success and efficacy of our EE programs, which generate over $1 billion in annual customer savings, having helped nearly 525,000 residential and business customers save energy and lower utility bills since the program began in October of 2020.
PSE&G’s EE investments have also supported approximately 9,300 jobs statewide over the past six years, and we continue to expand the use of union labor in these EE roles. And an update on some good news for customers is that PJM has prospectively reduced wholesale transmission rates for PSE&G customers. This was due to our collaboration with the state which resulted in a FERC ruling earlier this year on transmission cost allocation favorable to our customers, and we expect to file in early 2027 to credit the dollars back to those retail customers.
Also on a state level, we note several constructive regulatory actions the BPU has taken over the past quarter. That includes, one, the BPU’s approval of our gas filing to lower residential gas bills by 5% effective October 1, 2026. Second was the approval of our GSMP2 extension petition to recover investments made through May of 2026, which was also effective on October 1. Third was the approval of our Clean Energy Future Electric Vehicle recoveries for investments made through year‑end 2025, and fourth was the approval of our Infrastructure Advancement Program, or IAP, request to recover the remaining investments through year‑end 2025.
For these last two items, a reduction in another filing was used to offset the bill impacts of these recoveries. During our second quarter call, we mentioned that PSEG was planning to file for updated base rates by year‑end 2026. Over the past several months, we have worked constructively with the Sheryl Administration to help meet the goals of the two executive orders issued earlier this year. In line with the spirit of those executive orders and the Governor’s affordability agenda, we anticipate filing a proposal with the New Jersey BPU to address the regulatory lag of capital investments made since our last distribution rate case.
We look forward to providing you with more details shortly. Also at the BPU, the ongoing study on modernizing New Jersey’s electric utility business model has progressed to its second phase and we are actively participating in the Board stakeholder proceedings. This initiative is focusing on cost discipline, financing modernization, targeted incentives and shared savings, and staged performance‑based ratemaking. We believe these and other options mentioned in the Phase One report, including multi‑year rate plans, performance‑based rates, performance incentive metrics, earnings sharing mechanisms, decoupling, and shared savings mechanisms, offer constructive paths to strengthen the connection between customer value, cost accountability, and timely recovery of prudent investment.
Now turning to PSEG Power. At PSEG Nuclear, we supplied the regional grid with 8.2 terawatt‑hours of reliable carbon‑free baseload energy during the third quarter, operating at a capacity factor of 95.5%. Salem Unit 1 recently entered its fall refueling following a 491‑day breaker‑to‑breaker run, matching Salem Unit 2’s back‑to‑back breaker‑to‑breaker run posted earlier this year. PSEG Power continues to generate stable cash flows that help fund our regulated investments while pursuing high‑value regional growth opportunities.
Turning briefly to our regional power market, PJM continues to have a significant resource adequacy problem and will require both existing and new generation to meet ever‑increasing electric demand in the region. We are following the activity of FERC and PJM regarding PJM’s reliability backstop procurement and Interim Resource Adequacy Service filings and considering how these developments interplay with our nuclear contracting efforts. In September, FERC accepted certain aspects of the RBP but rejected others, resulting in an anticipated delay of the RBP auction to March 2027 or later.
The FERC orders did not disturb the bilateral matchmaking process to match new generation with new large load customers, which has presented opportunities for us. FERC’s rejection of PJM’s IRAS filing reinforces that the focus has shifted to the states to address retail curtailment and cost issues associated with large load customers, and we look forward to continuing to work with New Jersey as it implements these rules. PSEG Power is continuing to develop terms with large load entities for contracting arrangements involving existing nuclear production, future nuclear upgrades, and other generation opportunities similar to recently announced power purchase agreements in the PJM region and specifically in New Jersey, which we believe can produce tangible benefits for PSEG, supply certainty for large loads, and create economic development opportunities for our state and the regional economy.
In early October, PSEG Nuclear participated in the first meeting of the Governor’s Nuclear Task Force which outlined the initial work plans to establish the process for evaluating new nuclear development in the state. We continue to support and enable development at our site in Salem County. We are reaffirming both our full‑year 2026 non‑GAAP operating earnings guidance and PSEG’s five‑year growth outlook of 6% to 8% through 2030. In summary, our teams continue to execute our business plan, we are delivering solid results and customer value, and we are making steady progress on the regulatory front. I’ll now turn the call over to Dan, who will review the financial results, and then I’ll rejoin the call for the Q&A session.
Dan Craig (Executive Vice President and Chief Financial Officer)
Thank you, Ralph, and good morning everybody. PSEG recorded net income of $0.76 per share for the third quarter of 2026 compared to $1.24 per share in 2025, and non‑GAAP operating earnings were $1.15 per share in the third quarter of 2026 compared to $1.13 per share in 2025. These quarterly results bring our year‑to‑date 2026 net income to $2.91 per share and non‑GAAP operating earnings to $3.56 per share. We provided you with information on slides 7 and 9 regarding the contribution to net income and non‑GAAP operating earnings by business for the third quarter and nine months ended September 30, 2026. Slides 8 and 10 contain waterfall charts that take you through the net changes for the quarter and year‑to‑date periods over the prior year and non‑GAAP operating earnings per share also by major business, starting with PSE&G which reported third quarter net income and non‑GAAP operating earnings of $506 million for 2026 compared to $515 million. in 2025. Referring to the quarter-over-quarter waterfall on Slide 8, transmission margin increased by $0.02 per share driven by higher investment. Our distribution margin increased by $0.03 per share compared to the year-ago period, partially reflecting higher investment in distribution and energy efficiency and an increase in the number of customers. On the expense side, distribution O&M was up a penny per share compared to the third quarter of 2025.
Depreciation and interest each rose by a penny per share due to ongoing capital investments, incremental debt, and the replacement of maturing debt at higher long-term interest rates. Taxes and other had a net unfavorable impact of $0.04 per share, driven mostly by the timing of taxes, which is recorded through an annual effective tax rate that nets to zero over a full year. Weather conditions during the third quarter, as measured by the temperature-humidity index, were 3% cooler than normal but 2% warmer than the third quarter of 2025. As a reminder, the Conservation Incentive Program, or CIP mechanism, decouples weather and other economic sales variances from a significant portion of our distribution margin while helping Public Service Enterprise promote the widespread adoption of energy conservation, including energy efficiency and solar programs.
Under the CIP, it’s the number of electric and gas customers that drives margin, and residential customer growth for electric was about 1% and gas was flat over the past 12 months. The CIP also benefits customers, as higher revenues from last year’s warmer-than-normal summer weather will continue to be refunded to electric customers, and this past October 1st, Public Service Enterprise implemented a 5% decrease for residential gas customers driven by higher revenues from a colder-than-normal winter in early 2026.
On the capital front, Public Service Enterprise invested approximately $1.1 billion during the third quarter, and we are on track to execute our full-year 2026 regulated capital investment plan of approximately $4.2 billion, focused on continued investments in infrastructure modernization like the third phase of our gas system modernization program, energy efficiency, electrification initiatives, and load growth. We are also maintaining our five-year regulated capital investment plan of $22.5 to $25.5 billion through 2030.
For our customers, the value of these investments means fewer interruptions, faster restoration times, and more tools to manage their energy use. During the third quarter, the BPU approved an annual revenue increase of $14 million for investments under our Infrastructure Advancement Program and approved an annual increase of $8 million for investments under our Clean Energy Future Electric Vehicles Program. Both roll-ins took effect on October 1st. Moving on now to Public Service Enterprise Power and other, for the third quarter, Public Service Enterprise Power and other reported a net loss of $130 million in 2026 compared to net income of $107 million in 2025, and non-GAAP operating earnings were $68 million in the third quarter of 2026 compared to $50 million in the third quarter of 2025. Referring to the waterfall on Slide 8 for the third quarter of 2026 versus 2025, net energy margin rose by $0.04 per share driven by higher generation and capacity prices and gas operations, partly offset by the absence of Public Service Enterprise Long Island’s fuel and energy management fees.
O&M declined by $0.02 per share from the year-earlier quarter, benefiting from the absence of last fall’s refueling and fuel cycle extension work at our 100% owned Hope Creek Nuclear unit. Depreciation and interest expense were both flat, and taxes and other items had a net unfavorable impact of $0.02 per share in the third quarter compared to 2025. On the operating side, the nuclear fleet produced approximately 8.2 terawatt-hours during the third quarter and reached 23.9 terawatt-hours for the nine months ended September 30th. Capacity factors for the nuclear fleet were 95.5% and 94.3% for the same quarter and nine-month periods, respectively. We previously noted that Public Service Enterprise Power cleared approximately 3,600 megawatts of existing capacity in PJM’s July 2026 base residual auction at $325 per megawatt-day for the energy year beginning June 2028 through May of 2029.
As you know, the existing price collar of $1.75–$325 per megawatt-day will continue in effect for December’s capacity auction covering the 2029–2030 energy year. As we have stated in the past, our realized energy price for our five-unit nuclear fleet is historically aligned with the PECO Zone and has traded at about a 20% discount to the more liquid PJM Western Hub. Recently, the basis differential between these two hubs has widened to about a 30% discount, but our hedge position has limited near-term exposure to this pricing movement.
As of September 30, Public Service Enterprise Power had approximately 70 terawatt-hours of expected generation output sold forward. We have previously mentioned that we were more than 95% hedged for 2026 and have a high percentage of output sold forward for 2027 and less in 2028 and beyond. On the nuclear PTC front, similar to 2026, we expect that our current portfolio position for 2027 will result in the realized value of our nuclear generation output being above the level at which we would receive the Nuclear Production Tax Credit, which, as you know, is adjusted annually for inflation.
Touching on some recent financing activity, Public Service Enterprise had strong available liquidity totaling $3.9 billion as of the end of September. This includes over $830 million of cash on hand, primarily related to net Public Service Enterprise financing activity during the quarter. On the financing front, this past August Public Service Enterprise issued a billion dollars of secured medium-term notes, comprised of $650 million of 10-year notes at a rate of 5.4% and $350 million of 30-year notes at 6.05%.
A portion of the proceeds was used to redeem $425 million of 2.25% secured MTNs at maturity in September, with the balance used to provide cash on hand to support our capital spending plan. And also in September, Public Service Enterprise Power issued $400 million of five-year senior notes at a rate of 5.55%. Public Service Enterprise’s level of variable-rate debt represented approximately 3% of our total debt as of the end of September. Our variable-rate debt consisted of the unhedged portion, about $250 million, of the $500 million 364-day term loan at Public Service Enterprise Power maturing in December 2026 and commercial paper. Looking ahead, our solid balance sheet supports the execution of Public Service Enterprise’s predominantly regulated five-year capital spending plan without the need to issue new equity or sell assets and provides the opportunity for consistent and sustainable dividend growth.
In closing, we delivered solid operating and financial performance in the third quarter and year-to-date period, enabling us to maintain Public Service Enterprise’s full-year 2026 non-GAAP operating earnings guidance of $4.28 to $4.40 earnings through 2030 based on our confidence in executing our five-year regulated capital investment plan that also supports a 6% to 7.5% rate base CAGR over the same period. We continue to pursue nuclear revenue opportunities and believe recently announced agreements combining capacity upgrades with existing generating output provide wins for all parties, including the economic development interests of our region, and other opportunities, such as competitive transmission projects and incremental utility infrastructure projects, including system investments to connect solar and battery storage resources to the grid to meet new demand, also provide upside to our current growth outlook through 2030.
Finally, we expect to introduce Public Service Enterprise’s 2027 non-GAAP operating earnings guidance, roll forward our capital investment plan, update our rate base and long-term earnings CAGRs, and discuss this outlook all during our 2026 year-end call in February of 2027. That concludes our formal remarks, and we are now ready to begin the question-and-answer session.
OPERATOR
Ladies and gentlemen, we will now begin the question-and-answer session for members of the financial community. If you have a question, please press the star and the number one on your telephone keypad. If your question has been answered and you wish to withdraw your polling request, you may do so by pressing the star and the number two. If you are on a speakerphone, please pick up your handset before entering your request. One moment please for the first question.
The first question comes from the line of Shar Fariza with Wells Fargo. You may proceed with your question.
Shar Fariza (Analyst)
Hey guys, good morning.
Ralph LaRosa (Chair, President and Chief Executive Officer)
Hey Shar, how are you?
Shar Fariza (Analyst)
Hey Ralph, how you doing?
Ralph LaRosa (Chair, President and Chief Executive Officer)
We’re good.
Shar Fariza (Analyst)
Excellent, excellent. Just on, Ralph, on the hedge strategy for power. As we’re thinking about kind of the risks emerging, it sounds like the impact is more modest than people gave it credit for, I guess. Are you assuming it normalizes in a couple of years? What instruments are you using? Is it FTRs? And just any way to quantify what proportion of the forward-sold power could be impacted from basis changes? Maybe on an annual basis. Thanks.
Ralph LaRosa (Chair, President and Chief Executive Officer)
Yeah. Well, I’m going to let Dan give you a little more details. Let me just give you a high level on the whole thing, and there was a ton in your question there, so we haven’t been giving a lot on that, on the hedge details. But just think about it this way, Shar: the entire PJM grid, the prices have gone up, right? And so I think we’ve been saying for many years to take a look at the price at the PECO hub. And so the PECO hub has gone up. It hasn’t gone up as quickly as the Western Hub has gone up.
So where we hedge has gone up, maybe not as much as some folks have been thinking for our power business, but that is where we hedge and that is what we’ve been articulating for quite some time. The basis differential between the two shows up if you’re not covered in both places. And I’ll let Dan take a little more detail for you from there.
Dan Craig (Executive Vice President and Chief Financial Officer)
Yeah, especially as you look at this year and into next year, we have a very balanced hedge position. Given the ability to move things to PECO, I think that, you know, another thing to put things in context, if you think about what we had said for a long time was that we were hedging on a fairly strict ratable approach. When the PTC came in, we described that as a put option that we had, and it essentially had us thinking more about the overall position, stepping a little bit away from the pure ratable approach.
And I think that that same thinking goes into where we are now and how we have approached it. We’re taking a look at what the market is as we’re moving into our hedges. And with respect to products, which is another part of your question, you’ve got the ability to put on direct hedges where we are at that PECO Zone, as well as FTRs, but also some swaps and some options. And so there’s a host of products that we utilize to try to manage the overall position.
And ultimately we will get paid at that PECO hub.
Shar Fariza (Analyst)
Got it. Okay, that’s perfect. And then just lastly on the recent PJM deals, I mean, obviously it seems like the scarcity value for nuclear electrons is getting higher, even though the last deal didn’t come with clean energy attributes. Maybe just elaborating on your prepareds, just updated thoughts on Pennsylvania or New Jersey contract potential, and is it even possible to do a deal in New Jersey with the optics there? Thanks.
Ralph LaRosa (Chair, President and Chief Executive Officer)
Yeah, I think you’ve seen a deal recently that talked about New Jersey to some degree. I think the last Constellation deal talked about some of the upgrades that are going on at our Salem plant that we’ve been enabling. And I think that you saw that the governor applauded that as a way to bring the tech companies to the table to pick up their fair share of some of the costs that are being incurred in the grid and in the energy market as a whole. So I think there’s possibility to do things, certainly with that incremental power that you’re seeing at that location. I think the question about how much we’re going to see data centers showing up here in New Jersey remains an open item. We’ve talked about that for quite some time. And even, I think this election season, we have some municipalities that are voting on it at that level because the governor has said she’s leaving many of the decisions up to the local municipalities to decide as far as whether or not they want to embrace the data center industry or not.
And I think her plan is a good one and is kind of putting that at the place where folks have to make that decision and deal with the data centers directly. So I think there’s a possibility, but I’m not—and I know, Dan, you want to give a little more color on progress in that area.
Dan Craig (Executive Vice President and Chief Financial Officer)
I think. Sure. Just the way to think about it is that there remains some strong interest. I think these things don’t happen overnight, but you have started to see some incremental deals get done. I think Ralph’s take on it from a New Jersey perspective is spot on. I think there was an appreciation and an acknowledgement for what that was. And so conversations continue and advance. And I think we feel pretty good about where they are but don’t have anything to announce right now.
OPERATOR
Thank you. Our next question comes from the line of Richard Sunderland with Truist Securities. You may proceed with your question.
Ralph LaRosa (Chair, President and Chief Executive Officer)
Hey, Rich. Thanks for calling.
Richard Sunderland (Analyst)
Hey, good morning. Thanks for the time today. Ralph, I wanted to pick up some of the language around your upcoming PSEG filing. Is that sort of a shift away from a full rate case, as you sort of spoke to on 2Q, and is this focused on rate changes or more of accounting efforts around how that lag has built into the business since the last rate changes? Any sort of bigger picture on that would be helpful.
Ralph LaRosa (Chair, President and Chief Executive Officer)
Yeah, Rich, I would try to keep it at a very high level now because we—and I appreciate the question. As we articulated on a call, look, we’re looking for a solution that supports the governor’s initiative. We have for the last—we talk about ad nauseam on these calls and in other interactions about how we’re aligned with the state’s policy. And that goes back, you know, two, three, four administrations here. We’ve always been successful in doing that.
And we think that there might be an opportunity here in a filing to do just that, stay aligned and still address the regulatory lag that exists. So we expect that we’ll be making a filing. That’s what I said in the prepared remarks. And as soon as we make that filing, we will communicate the details of that to you. But it’s all about staying aligned and enabling the governor’s policy.
Richard Sunderland (Analyst)
Okay. Okay. Understood. I guess, you know, maybe turn this to the bigger picture and, you know, the BPU phase two efforts, anything out of there that’s informing how you’re viewing the potential around this filing or anything you can speak to around just kind of the overall backdrop in the state and how that’s informing your strategy around this filing and presumably others thereafter.
Ralph LaRosa (Chair, President and Chief Executive Officer)
Yeah, I think, look, the timing of all of those recommendations that will come out of—I think it’s E3 is the consultant that’s been working on that with the BPU—that’ll come out and be made. I think, you know, if we were to make a filing that could be aligning, continuing the alignment from our standpoint with level setting our rates as the state rolls out new regulatory policies. But I think if you take a hard look at what’s there and what E3 has been talking about, these are things that the governor has said in the past and things that the company has said, companies have said in the past here in New Jersey.
So we continue to look forward to that, we continue to participate in those proceedings. But I don’t—I think our filing that we’re doing here is all about staying aligned with the governor’s goals to keep rates flat for as long as possible and we’ll see what we can do to be aligned there.
Richard Sunderland (Analyst)
Understood. Sounds like a lot more to come. I’ll leave it there. Thank you.
OPERATOR
Thank you. Our next question comes from the line of Matt Petit with Barclays. You may proceed with your question.
Nick Campanella (Analyst)
Hey, it’s Nick Campanella on for Matt. Hope you can hear me okay.
Ralph LaRosa (Chair, President and Chief Executive Officer)
Hey, Nick.
Nick Campanella (Analyst)
Hey, thanks for the time. Yeah, thank you. Thank you for all the disclosures. I really appreciate it. Maybe we should follow up there on the basis—you know, you said that you’re going to be above PTC level in ’27 still, despite the widening basis, maybe just to confirm that. And then how do you see that case playing out for ’28?
Dan Craig (Executive Vice President and Chief Financial Officer)
Yes, so we have said that and that is the case to confirm—you know, your question is confirmatory to what we said. And I think, you know, look, we can look to the forwards for where markets are right now. I think we’ve got, you know, over a year before we start to get into 2020. I’m not going to predict where markets are going to go. I think what we look for more fundamentally is what the supply-demand balance is. And I think continuing to watch what’s coming online, both from a generation and a demand standpoint, is ultimately what’s going to drive that.
But I think what we’ve seen is increasing announcements about demand more so than what generation is coming on, and generation continues to be a little bit of a struggle to see stuff coming on quickly, other than maybe some solar and storage. So I think you’re probably going to continue to see some upward pressure, but that’ll manifest itself in the forwards as we go forward.
Nick Campanella (Analyst)
Great. And then a lot of moving pieces as we kind of get ready for your next full fourth quarter update. You know, when we kind of take into account it seems like you can absorb the basis and you’re also maybe getting kind of a true-up in lag at the utility. But I guess we’ll see what the filing looks like. Just how do you kind of frame the 6% to 8%, ’27 and beyond? Can you be outside of the range in any given year? Do you still see yourself kind of growing inside of that range?
Any comments there would be helpful.
Ralph LaRosa (Chair, President and Chief Executive Officer)
Yeah, Nick, I cannot emphasize enough the reaffirmation that we made of our 6% to 8% growth rate and take a lot of time and a lot of pride in going through that. We stand by it and that’s where we think we’re going to be. So that’s why we came out and reaffirmed.
Nick Campanella (Analyst)
Thank you very much.
OPERATOR
Thank you. Our next question comes in line of Nick Amasucci with Evercore ISI. You may proceed with your question.
Nick Amasucci (Analyst)
Hey Ralph. Hey Dan. How are you?
Ralph LaRosa (Chair, President and Chief Executive Officer)
Nick Gay, as we call you.
Nick Amasucci (Analyst)
Yeah, I’ve been called a lot worse. I just wanted to kind of—following up on Nick’s, Thea’s question too—just as we kind of think about, you know, the roll-forward and kind of as we think about the next capital update, I guess what are kind of the nearer-term items that we could kind of see creep into that? If we think about, like, competitive transmission wins, potentially the nuclear contract thing—obviously that’s, you know, that’s pretty fluid—but, or we think about is it going to be more solar and storage type deals.
Ralph LaRosa (Chair, President and Chief Executive Officer)
Yeah, Nick, we’ve been—I don’t think things have changed all that much for us from a projection standpoint of what we’ve been talking about for the last few quarters. I think we have that opportunity as the policies continue to ripen here in New Jersey for us to do more on the solar and support for solar and batteries through our enabling of the grid readiness. There’s some real focus on VPP, the virtual power plants here in New Jersey—will be a small opportunity set for the utilities, but we’re all going to participate in that.
Some of it will be IT activities and so on to enable it. I think you will see some additional transmission continuing to be built in the PJM region. You know, everyone talks about this basis differential between the West and many of the other hubs here at PJM—it’s not just PECO that that differential exists in—and I think that that’s going to create opportunities as well through different ways that PJM comes up with its plans, whether it’s market-driven solutions or what they normally do in the RTEP process.
So I think you’re going to see more of that. I don’t want to front-run what that is. We’ll see what PJM comes out with, and we have been a participant and a successful participant in some of those proceedings in the past, and that’s that Maryland project that we have ongoing. So it’s more of the same for us, but continued clarity in our line of sight.
Nick Amasucci (Analyst)
Great, that makes sense. Perfect. Thanks, Ralph. Then if I could just follow up—somewhat of a cleanup item. I just want to make sure I understand it. The Salem uprates under development: Is there any of that earnings contribution within the current outlook or is that something that’s going to be longer dated?
Ralph LaRosa (Chair, President and Chief Executive Officer)
Yeah, that’s within our five-year plan, Nick. So that will be on by the time we get to the end of our five-year period.
Nick Amasucci (Analyst)
Perfect. Thanks, guys.
Ralph LaRosa (Chair, President and Chief Executive Officer)
Fair enough.
OPERATOR
Thank you. Our next question comes from the line of Carly Davenport with Goldman Sachs. Your line is now open.
Ralph LaRosa (Chair, President and Chief Executive Officer)
Good morning, Carly.
Carly Davenport (Analyst)
Morning. Thanks so much for taking the questions. Maybe just wanted to get your views on PJM’s sort of latest response to the FERC on the RBP last week. You know, you’ve mentioned you’ve submitted some projects into the RBP process. So just curious if you could expand a little bit on how you’re thinking about that process versus perhaps pursuing opportunities just in the bilateral market.
Ralph LaRosa (Chair, President and Chief Executive Officer)
Well, I think it’s really both, Carly. I think that, you know, I still think that the effort that’s been put forth has been helpful to try to make something happen. I think it has been a little bit bumpy with the back and forth with FERC, and I think that’s understandable. But I think what it probably has done more than anything else is just broaden the opportunity set to try to get some generation built for all this load that we’re seeing projected to come online as we step through the next number of years.
And so, you know, they’ve gone back and forth with FERC and I think there’s been a little bit of frustration from timing and from where things have landed that it’s a little bit of a do loop. But net-net, I still applaud the concept to try to get some generation built, because we’re going to need it. And I think it has, if nothing else, expanded the potential for some bilateral deals as well.
Carly Davenport (Analyst)
Got it. Okay, great. That’s helpful. Thank you. And then you highlighted some of the financing activity during the quarter. I guess just with the move in interest rates and the capital needs, how should we be thinking about the impacts to perhaps ’27 guidance or any earnings sensitivities with the move that we’ve recently seen in rates?
Ralph LaRosa (Chair, President and Chief Executive Officer)
Just—I think Dan and his team continue to do a great job of managing that. We’re through most of the ’26 financing that we needed. And, you know, I think we’re in fine shape as we move into ’27.
Dan Craig (Executive Vice President and Chief Financial Officer)
I think if you look forward in ’27, our activity will not be at the same level it was at in ’26. And you know, we do look for opportunities to hedge into next year, Carly. I think that, you know, we’re all facing a little bit of an increasing interest rate environment. We’ve got the regulatory construct that helps with some of that, especially given the magnitude of our transition business. And so, you know, we’re through our 26 plan and we’ll move into the 27 plan in that environment, but with a little bit of an eye towards what’s going on in 27 that we’re looking to right now in 2026.
Carly Davenport (Analyst)
Thank you for the time.
OPERATOR
Thank you. Our next question comes from the line of David Arcaro with Morgan Stanley. You may proceed with your question.
David Arcaro (Analyst)
Hey, thanks. Good morning. I was wondering how you’re thinking about solar and storage investments from a regulated utility perspective. Utility-owned investments in that area.
Ralph LaRosa (Chair, President and Chief Executive Officer)
Hey, David, long time. How are you? Yeah, David, we would love to. We have in the past, just to refresh everyone’s memory, you know, we had our Solar for All program that we had here in New Jersey for quite some time that was focused mainly on some of the landfill opportunities that existed. And we executed on that. And those plants are still in and running. You all know about some of the work that we did, put some solar on poles here. We’ve done that in the past. And on the battery front, we were the first utility put in a filing over five years ago now on that front.
And so we continue to look for those opportunities. I think the policy is not yet certain here in New Jersey as to whether or not it’ll move in a regulated direction or stay solely competitive. And so we’re monitoring it and we’re going to participate. We have the knowledge and the skills here to do that, but we don’t want to front-run the policy of the state. We want to align with that state policy. So as that becomes clearer, we will, we will participate, but we will do so in a way that is wanted by the state of New Jersey.
David Arcaro (Analyst)
Yep, got it. Understood. That’s helpful. I was just wondering, you mentioned, you know, just thinking through how to address regulatory lag. I was wondering what types of proposals might you be supportive of or, you know, considering as you think about going forward now, if it’s something besides trackers, how you manage or propose new structures around regulatory lag.
Ralph LaRosa (Chair, President and Chief Executive Officer)
Yeah, David, again, I don’t want to front-run some of the discussions that were happening. It’s all constructive and, again, it’s all aligned with trying to keep rates flat. But stay tuned and we will communicate as quickly as we possibly can.
David Arcaro (Analyst)
Okay, got it. Thanks so much. I’ll leave it there. Appreciate it.
OPERATOR
Thank you. Our next question comes from the line of Michael Sullivan with Wolfe Research. Please proceed with your question.
Michael Sullivan (Analyst at Wolfe Research)
Hey, wanted to ask on your thoughts on the future of the capacity auction in PJM and where you think that’s going and then just as you get ready for this roll forward, how you, you know, come up with assumptions for 2031 given we’re going to be on kind of the current construct out there. Okay, great. And then I think there’s a, you know, another annual PJM open window coming up here. Maybe if you could just give us a sense of your expectations there for the opportunity set.
Ralph LaRosa (Chair, President and Chief Executive Officer)
Yeah, Michael, you know that crystal ball, sometimes it gets clear and sometimes it gets a little cloudier. You know, last week New Jersey had a pretty, pretty big conversation about energy here that was hosted by the New Jersey Business and Industry Association. And at that conference and discussion, PJM was represented and they talked a lot and there’s some good press that was written up about it that discussed, you know, where PJM really wants to be.
The residual auction. They reinforced that for the states to pick up the capacity issues and deal with what they need to from a generation standpoint in the states. So, you know, I think you’ve got to triangulate so many different things here. You’ve got to triangulate conversations like that. You got to triangulate the RBA that Dan was talking about before, the bilateral contracts that you see taking place, some of the mandates in individual states to bring your own generation if you’re going to build certain size load in those states, some of that here, some of that in other places.
And I can’t give you a specific answer on what’s going to where we’re going to be sitting in 2031, but I know what we’re going doing and that’s continuing to look at all of those inputs and trying to come up with the best way that we can participate and be part of that growth opportunity. Yeah, you talk about the transmission open window, right? Yeah, yeah. So look, I alluded to that a little bit earlier. I think that these basis conversations that we’re talking about, and again, it’s not just PICO to the West, it’s many of the other hubs as well, will create opportunities for RTEP-type solutions in that open window. So we’ll see, we’ll monitor. I think it’ll be more, if our crystal ball on that is right, there will be more opportunities than there was in the most recent open window.
Thanks, Michael.
OPERATOR
Thank you. Our next question comes from the line of Jeremy Tonay with JP Morgan. You may proceed with your question.
Ralph LaRosa (Chair, President and Chief Executive Officer)
You there, Jeremy.
Aiden Kelly (Analyst)
Hey, good morning. This is actually Aiden Kelly on for Jeremy. Can you guys hear me now? Good, good. Thanks for the time today. Just, just one small question on my end. Could you provide any update on PSE&G’s large load inquiries, you know, any thoughts or color on where the total count stands at this point in time, which like in the past was probably around 11.8 gigawatts as of December 25th. You kind of still see that as the same level or any kind of shift. And to date great. Thanks for the color there. That’s it for me. So I’ll leave it there.
Ralph LaRosa (Chair, President and Chief Executive Officer)
We can. How are you? We’ve been staying at about that level. I don’t have the number right in front of me, but we’ve been staying at about that level. And I think that what we’re seeing continues to be what many people refer to as edge computing opportunities rather than the largest, you know, mega data centers that are out there, the hyperscaler types. So, you know, that’s consistent with some of the financial industries that are supported here in New Jersey.
OPERATOR
Thank you. Our next question comes from the line of Julian Dumoulin Smith with Jefferies. You may proceed with your question.
Julian Dumoulin Smith (Analyst)
Hey, good morning team. Thank you guys for the time. I appreciate it. Look, I wanted to come—hey, great. Thanks for the time, guys. Appreciate it. So look, I wanted to follow up less so in the spirit of long term, but just in the near term. What about tightening the guidance range here, guys? Anything that you’re seeing in the near term that’s driving some ambiguities. As I hear you guys talking about hedging, that’s not a 26 dynamic. As I hear you talking about rates, it’s longer-dated. But look, is there anything on the regulatory front that’s sort of impeding.
I know your typical cadence. And again you talk about like setting a record or, you know, a trend here. That’s why I’m asking, if you will. All right, well we’ll always nitpick if we can and then, if I can, zeroing now. But with that said, look, how do you think about 27 here? So Nick zeroed in on it. I’m going to double down on it a little bit. How do you think about where you’re hedged on 27 versus 26? And again, I know that it’s commercially sensitive to a certain point, but PTC floor, okay, that’s a given. How do you think about where you’re hedged on 26 and is it an uptick here in pricing?
Because I get that there’s a question of where and when you hedge that is important to consider here. And again, maybe the same is relevant for 28 here too. But really zeroing even on 27, how do you think about just what you’ve hedged? I imagine a lot of it’s established at this point. Is there a net increase just given the overarching trend from the last three years and given the ratable hedging program? Well, a net increase in hedge value, that is the dollar per megawatt hour rate that you’re getting, right? Or is there some other offset because of how and where you morally—where you hedge—where basis could be an offset to that. I just want to make sure I’m hearing you clearly because otherwise you would think that the multiyear trend we’ve seen, regardless of the basis, may very well provide an uptick in overall realized price. But tell me how you put that again, because I get PTC floor is kind of a baseline statement without giving too much specificity here.
Dan Craig (Executive Vice President and Chief Financial Officer)
No, Julian, don’t—I wouldn’t read too much in. I mean, we reaffirmed where we are. We haven’t kind of pushed you higher or lower. You should still be thinking somewhere around the midpoint of where we are. We just kind of left it where it is because it’s been consistent with us executing against it the entire year. Just be clear about one thing there, Julian. The net increase in the hedging. Is that what you were asking?
Ralph LaRosa (Chair, President and Chief Executive Officer)
Right. Look, I’ll try to give Dan a little bit of air cover here for 30 seconds. You can add some more if you’d like, but I’m only kidding, Dan. The end of the day, I think, Julian, what we were alluding to there in many of these conversations—and you just hit on it—is where are you assuming the hedge is taken, is made, and where is it being executed at? And if folks are assuming it’s all at the West, they may have a different value, as you asked, in the hedge—value going higher—versus somebody who was thinking it was going to be at PICO.
And so we’ve been reinforcing with folks that our hedge has been executed in the past and is currently, as we’ve talked about ad nauseam here, is at PICO. So we, you know, it has net—the, everything has gone up, but PICO has not gone up as much as the West. Yeah, I think, Julian, we’ve seen some people kind of jump on the Western price increasing and implied that for where we’re necessarily going to be, and our units are priced at PICO and not out there.
But we also have taken care to ensure that we are putting on positions that are closer to where our price is actually going to land. And so I kind of, I don’t want to give partial guidance to the guidance we haven’t given yet, which is kind of where your question goes to. But I think that we’re in a pretty good spot related to what prices look like against the backdrop of the movement that you’ve seen over the year. I’ll kind of leave it at that.
Dan Craig (Executive Vice President and Chief Financial Officer)
Yeah. Again, Julie, we’re trying to be respectful of the question but not go into details we haven’t, haven’t provided.
OPERATOR
Thank you. Our next question comes from the line of Steve d’ Ambrisi with RBC Capital Markets. You may proceed with your question.
Steve d’ Ambrisi (Analyst)
Hey, Ralph and Dan, good morning. Hey, Steve, just a quick one on new nuclear. I think you guys have been very clear about your appetite for new nuclear, but as a large operator and holder of the early site permit, can you just talk about how those conversations are progressing in the U.S.? Maybe like a quarter or two ago— It felt like there was a lot more focus on this and it seems like it’s quieted down a little bit, and there’s more of a focus even from the administration on uprates, just interest of the year, kind of what’s going on behind the scenes? Any real visible data points that we should be watching for either in the New Jersey process or more broadly? I know you said there was an October meeting, but just like what came out of that?
Ralph LaRosa (Chair, President and Chief Executive Officer)
Yeah, look, I think again, alignment with our governor is all about enabling new nuclear here. She has been very vocal about the fact that she sees that as a long-term solution for the state and beyond the nuclear industry. So we’ve been participating where we can. And again, we think our site, based upon location, based upon the early site permit—and when I say location, not just where it sits within PJM, but where it also sits as far as access to ports and ability to move large pieces of equipment easily—gives us a real advantage.
And so we are out advocating as strongly as we can with those conversations that you’re alluding to and within those conversations that you’re alluding to. Yeah, I think New Jersey continues to have the conversations, and again the focus of the New Jersey policy conversations have been about educating and transparency for the public about, you know, what the industry is and what it might mean for energy prices here in New Jersey. So I think that’s been, you know, that first meeting was the start of that. There’s a website and a few other things that have been put up by the state of New Jersey to focus on it.
But I think from a data point standpoint in New Jersey, the first real action will be when the Board of Public Utilities holds its auction for new nuclear, which was called for by the legislation that was passed last year. So that’ll be the first thing here in New Jersey. Obviously, the federal government could be doing many things to help enable new nuclear, and I certainly am not going to front-run the federal government on that.
Dan Craig (Executive Vice President and Chief Financial Officer)
Yeah, Steve. I mean the only thing I’d add, and it’s not anything that you don’t know, but I think it’s a very complicated multi-party thing that folks are working on. And so that kind of becomes the—. And I think in instances where things may be a little quiet, my sense is, the way to describe it is that there’s still activity but it’s kind of tough to finalize anything or get to an announcement stage. So I think it’s suffering just from the nature of what it is and what people are trying to get done.
Steve d’ Ambrisi (Analyst)
Okay, that’s very helpful. Thanks guys. Appreciate the time.
Ralph LaRosa (Chair, President and Chief Executive Officer)
Thanks Steve.
OPERATOR
Thank you. Our last question comes from the line of Anthony Crowder with Mizuho. Please proceed with your question.
Anthony Crowder (Analyst)
Good morning. What’s going on? I was in Newark all day yesterday. It was a beautiful day in Newark. I guess just maybe one question or follow-up. Just, you talk about the potential that maybe getting a large load customer on either uprates or existing nuclear. I guess, does that change your hedging strategy? Maybe you would go more open as those conversations are going on? And then I have a follow-up.
Ralph LaRosa (Chair, President and Chief Executive Officer)
Beautiful day.
Dan Craig (Executive Vice President and Chief Financial Officer)
I think the way to think about it is that whatever is in place will be a contract for a portion of what you are looking to sell more broadly. So you would definitively have to take that into account as you’re looking at your overall position.
Anthony Crowder (Analyst)
Got it. And then this may be more of an EEI one on one question just given the time, so just throw the flag if necessary. If we think about how hedging works, is it—and I think everyone’s concern is that, you know, maybe you’re short the basis at PJM West and you’re long the Pico zone, which you guys are very clear that’s where you price your units—and they have this, like, exposure that you’re kind of short the PJM West price. I guess, is that how the hedging works or is that how you go about hedges?
And if this is better just to pick up at EEI, let me know.
Dan Craig (Executive Vice President and Chief Financial Officer)
No, I mean I think PJM West is a product that is available for you, but there’s other ways to move those positions closer to your actual unit and we do utilize those products to do exactly that.
Ralph LaRosa (Chair, President and Chief Executive Officer)
Yeah. And Anthony, it’s not a—it’s just there are other people that trade in those products. Listen to these calls like anybody else. So we are purposefully describing the best we can right now.
Anthony Crowder (Analyst)
That’s all I had. I’ll see you guys in Phoenix.
Ralph LaRosa (Chair, President and Chief Executive Officer)
Thanks Anthony.
Dan Craig (Executive Vice President and Chief Financial Officer)
Thanks Anthony.
OPERATOR
Thank you. That is all the time we have for questions and I would like to turn the floor back to Mr. LaRosa for closing comments.
Ralph LaRosa (Chair, President and Chief Executive Officer)
Thank you very much. Thank you all for calling in. We appreciate the ongoing interest. I just want to kind of tie out a couple things. It’s been a long summer—many storms, many activities that have gone on here that were challenges for the company beyond what we’ve talked about on this call. And I just want to thank the employees at Nuclear for the ongoing performance there. I think we just completed another breaker-to-breaker run at Salem 1. Our T&D operations both in Long Island and in New Jersey had outstanding years in a summer that was full of Friday night storms and have continued to perform very well.
And we’ll continue to have further conversations about the topics that we discussed today and look forward to it at EEI next week. So thanks for calling in and take care.
OPERATOR
Ladies and gentlemen, this concludes today’s teleconference. You may disconnect your lines at this time, please. Thank you for your participation.
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