PSEG's Q3 2025: Contradictions Emerge on Data Center Timing, Energy Legislation, Nuclear Power, and PJM Market

Date of Call: November 3, 2025

Financials Results

• EPS: $1.24 net income per share in Q3 2025 vs $1.04 in Q3 2024; non-GAAP operating earnings $1.13 per share in Q3 2025 vs $0.90 per share in Q3 2024; narrowed full-year 2025 non-GAAP guidance to $4.00–$4.06 from prior $3.94–$4.06.

Guidance:

• Narrowed full-year 2025 non-GAAP operating earnings guidance to $4.00–$4.06 per share (upper half of prior $3.94–$4.06 range).
• Reaffirmed 5%–7% non-GAAP operating earnings CAGR through 2029.
• 2025 regulated CapEx ~ $3.8B; 5-year regulated CapEx plan $21B–$24B and company 5-year capital program $22.5B–$26B; management says balance sheet can fund plan without issuing new equity.
• Expect to introduce 2026 non-GAAP operating earnings guidance and roll forward capital, rate base and long-term CAGR in February 2026.

Business Commentary:

* Financial Performance and Earnings Growth: - PSEG reported solid third quarter and year-to-date operating and financial results, reflecting positively impacted by new rates from the October 2024 distribution rate case settlement. - The results enabled narrowing of the 2025 non-GAAP operating earnings guidance to the upper half of the range at $4 to $4.06 per share from prior guidance of $3.94 to $4.06 per share. - The growth was driven by the expected positive impact of new rates, full third-quarter benefits, and investments in energy infrastructure.

• Capital Investments and Infrastructure Modernization:
• PSEG invested approximately $1 billion in the third quarter and $2.7 billion over the first 9 months of 2025, as part of a planned full-year $3.8 billion regulated capital spending program.
• These investments focus on replacing and modernizing New Jersey's energy infrastructure, meeting load growth, and expanding energy efficiency programs.

• The investments are aimed at enhancing energy demand and customer bill reductions.

• Nuclear Operations and Efficiency Improvements:

• The nuclear fleet produced approximately 7.9 terawatt hours of reliable, carbon-free baseload energy during Q3.
• PSEG Nuclear declared approximately 3,500 megawatts of its eligible nuclear capacity in PJM's base residual auction at a market clearing price of $329 per megawatt day.

• The company successfully extended the fuel cycle at Hope Creek from 18 to 24 months, positioning it to produce more megawatt hours moving forward.

• Political and Regulatory Environment:

• Both candidates for New Jersey governor recognize the need to address a supply-demand imbalance to ensure reliable and affordable energy.
• PSEG is actively collaborating with potential policymakers to develop real solutions for the state's rising costs and affordability.
• The company is supportive of legislation that increases competition for generation supply and has sites with grid connection capability for potential in-state generation.

Sentiment Analysis:

Overall Tone: Positive

• Management described a "solid third quarter," said results allowed them to "narrow our full year 2025 non‑GAAP operating earnings guidance to the upper half of the range at $4 to $4.06 per share," reaffirmed a 5%–7% CAGR through 2029, and stated the balance sheet enables funding the 5‑year capital program "without the need to issue new equity."

Q&A:

• Question from Shahriar Pourreza (Wells Fargo Securities, LLC): How might the election affect data center deals in NJ, any pressure at Artificial Island, and timeline updates?
  Response: Data center inquiries continue (mostly smaller/edge projects, not hyperscale); timelines are dependent on post‑election policy and PSEG expects to work with the incoming administration.

• Question from Jeremy Tonet (JPMorgan Chase & Co): Any difference in conversations between New Jersey vs Pennsylvania assets and what constructs (regulated vs unregulated) would PSEG consider for supply additions?
  Response: Pennsylvania shows a more forward‑leaning appetite enabling larger projects; PSEG is open to regulated gas generation, more solar, regulated storage and enabling nuclear solutions without committing its own capital.

• Question from Nicholas Campanella (Barclays Bank PLC): Does BYOG/additionality momentum change the contracting outlook for incumbent generators or nukes?
  Response: BYOG/additionality is being discussed but there are no mandatory requirements today; dialogue continues and it is not currently precluding front‑of‑the‑meter deals.

• Question from David Arcaro (Morgan Stanley): What is the level of mature applications in the data center pipeline?
  Response: Management updated mature applications to roughly 2,600–2,800.

• Question from David Arcaro (Morgan Stanley): How is affordability being considered in utility CapEx planning and T&D rate outlook?
  Response: Affordability is central—PSEG uses O&M discipline and regulator mechanisms to spread costs, but resource adequacy means new supply investments are also required.

• Question from William Appicelli (UBS Investment Bank): Is there opportunity in the lame‑duck veto session to pass legislation supporting supply additions or will it be handled by the new administration?
  Response: Legislation could be handled in lame‑duck or in 2026; management prefers faster action to address supply and affordability.

• Question from William Appicelli (UBS Investment Bank): How would a framework to add supply be structured—auctions, FRR, RFPs?
  Response: Multiple mechanisms (auctions, FRR) are possible; an effective integrated resource plan must define load, reliability targets, emissions profile and affordability.

• Question from William Appicelli (UBS Investment Bank): Views on forward curves relative to the PTC floor embedded in your outlook?
  Response: Fundamentals are pointing to stronger prices and have become more bullish, while current forwards have lagged that fundamental strength.

• Question from Nicholas Amicucci (Evercore ISI): What changes enabled Hope Creek's fuel cycle extension and are further extensions possible?
  Response: Hope Creek moved to a 24‑month cycle via fuel shuffling and design tweaks (no new fuel supplier) plus plant efficiency improvements, yielding more summer output; further changes may be possible at other plants like Salem.

• Question from Paul Zimbardo (Jefferies LLC): What is the hedging profile at Power for the next few years and has it changed?
  Response: Hedging remains a ratable multi‑year approach (historically ~3 years) with modest adjustments driven by the nuclear PTC; no material change to the characterization provided previously.

• Question from Paul Zimbardo (Jefferies LLC): Will there be a larger capital refresh in Q4 or will political/regulatory clarity be required first?
  Response: PSEG will perform its normal Q4 roll forward of capital, rate base and outlook and will provide full details then.

• Question from Carly Davenport (Goldman Sachs Group, Inc.): Status of discussions to refresh the GSMP II extension as 2026 approaches?
  Response: Negotiations with the BPU are ongoing; no specifics to disclose at this time.

• Question from Anthony Crowdell (Mizuho Securities USA LLC): Do gubernatorial candidates understand supply vs wire distinctions and affordability trade‑offs?
  Response: Yes—both candidates understand the distinction and PSEG is advocating for an integrated resource plan to address the combined bill and supply needs.

• Question from Anthony Crowdell (Mizuho Securities USA LLC): Could both the wires business and merchant generation outperform simultaneously with large‑load contracts?
  Response: Management believes a win‑win is possible and they actively optimize the portfolio to add shareholder value across both segments.

• Question from Andrew Weisel (Scotiabank Global Banking and Markets): With a potential increase to the capital plan, can PSEG continue to avoid issuing equity?
  Response: Management states the balance sheet is strong and they expect to fund the plan without issuing new equity; full assumptions will be detailed in the Q4 roll forward.

• Question from Andrew Weisel (Scotiabank Global Banking and Markets): How is PSEG addressing affordability for low‑income customers?
  Response: PSEG runs targeted assistance programs and analyses (identified ~500,000 potentially impacted customers) and cites programs that keep lower‑income percent‑of‑wallet manageable.

• Question from Andrew Weisel (Scotiabank Global Banking and Markets): Of the 11.5 GW large‑load pipeline, how much is data centers vs manufacturers and what's the timing?
  Response: Pipeline is almost entirely data centers (predominantly edge computing, not hyperscalers); about a ~20% conversion rate to projects and no detailed year‑by‑year timing provided.

Contradiction Point 1

Data Center Opportunities and Timing

It involves differing statements about the timing and progress of data center opportunities, which could impact strategic investments and expansion plans.

How are you handling challenges with data center deals due to political factors, and what are the timelines for finalizing agreements? - Shahriar Pourreza (Wells Fargo Securities)

2025Q3: Data center opportunities are continuing with an emphasis on smaller-scale projects rather than hyperscale announcements. - Ralph LaRossa

Have you seen a significant increase in data center pipeline inquiries? Can you update us on nuclear plant opportunities and interest levels? - David Keith Arcaro (Morgan Stanley)

2025Q2: New Jersey continues to advocate for data centers. Interest remains high, as evidenced by CoreWeave's investment in Kenilworth. - Ralph A. LaRossa

Contradiction Point 2

Legislative Action on Energy Affordability

It highlights differing expectations regarding legislative action on energy affordability, which could impact regulatory strategy and customer support initiatives.

Can legislative action address the supply-demand imbalance, and should it be addressed during the lame duck session or post-election? - William Appicelli (UBS Investment Bank)

2025Q3: Legislation addressing the supply-demand imbalance is necessary, and discussions should start soon after the election. - Ralph LaRossa

Will there be any legislative action on energy affordability this year with the legislative recess and elections? - Paul Patterson (Glenrock Associates)

2025Q2: There is significant momentum for more control over reliability, affordability, and environmental policy. Conversations continue with the existing administration and gubernatorial candidates. There's potential for alignment and actions by the end of the year. - Ralph A. LaRossa

Contradiction Point 3

Nuclear Power Interest and Resource Adequacy

It reflects differing perspectives on the interest in nuclear power as a resource for large load customers and the state's ability to meet potential load demands, which are crucial factors in PSEG's strategic planning and resource adequacy.

Do New Jersey and Pennsylvania assets differ in data center contracting discussions? - Jeremy Tonet(JPMorgan Chase & Co)

2025Q3: There are differences in the types of entities involved in data center discussions, with forward-leaning appetite in Pennsylvania and more interest from smaller entities in New Jersey. This impacts the size and scale of projects. - Daniel Cregg(CFO)

Has interest in nuclear power among large load customers changed recently? - Durgesh Chopra(Evercore ISI)

2025Q1: There remains a strong interest in nuclear power for large load customers, with 6,400 MW in inquiries for new service connections. The interest has not slowed down, indicating continued demand for the nature of power provided by nuclear sources. - Dan Cregg(CFO)

Contradiction Point 4

Nuclear Fleet Commercial Deals and Five-Year Plan

It involves the potential impact of commercial deals for the nuclear fleet on the five-year plan, which is crucial for strategic planning and investor expectations.

What steps were taken to extend the fuel cycle at Hope Creek? - Nicholas Amicucci (Evercore ISI)

2025Q3: The fuel cycle extension involved shuffling of fuel and designing changes, which are common industry practices. The team also focused on efficiency improvements like cooling tower insulation upgrades. - Ralph LaRossa(CEO)

Could a nuclear fleet commercial deal affect the five-year plan? - Nicholas Campanella (Barclays)

2024Q4: Impact could depend on whether existing assets are sold or new ones built. A sale could speed up results, but new build would take longer. - Ralph LaRossa(CEO)

Contradiction Point 5

PJM Market and Reliability Concerns

It highlights differing perspectives on the outlook and reliability concerns in the PJM market, which is critical for PSEG's operations and customer service.

Can legislative action address the supply-demand imbalance, and should it be addressed during the lame duck session or post-election? - William Appicelli (UBS Investment Bank)

2025Q3: Legislation addressing the supply-demand imbalance is necessary, and discussions should start soon after the election. The need for supply from a reliability and affordability standpoint is urgent. - Ralph LaRossa(CEO)

What is your outlook for the PJM market, and how will FERC's revised auction structures affect customers and the nuclear fleet? - David Arcaro (Morgan Stanley)

2024Q4: We set our targets off the PTC floor for stability. Our focus is on reliability and affordability for customers. The premise of a PJM market is in question as we need to attract timely generation. Advocating for customers remains important. - Ralph LaRossa(CEO)