Kathleen Lally - IR Ralph Izzo - Chairman, President, and CEO Dan Cregg - EVP and CFO

Neel Mitra - Tudor, Pickering Travis Miller - Morningstar Angie Storozynski - Macquarie Praful Mehta - Citigroup Mitchell Moss - Lord Abbett

Ladies and gentlemen, thank you for standing by. My name is Ginger, and I am your event operator today. I'd like to welcome everyone to today's conference, Public Service Enterprise Group's Third Quarter 2016 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 from members of the financial community. [Operator Instructions] As a reminder, this conference is being recorded today, Monday, October 31, 2016 ,and will be available for telephone replay beginning at 2:00 PM Eastern today until 11:30 PM. Eastern on November 7, 2016. It will also be available as an audio webcast on PSEG's corporate Web site at www.pseg.com. I'd now like to turn the conference over to Kathleen Lally. Please go ahead.

Thank you, Ginger. Good morning. Thank you for participating in PSEG's call this morning. As you are aware, we released third quarter 2016 earnings statements earlier this morning. The release and attachments as mentioned are posted on our Web site, www.pseg.com, under the Investor section. We also posted a series of slides that detail operating results by company for the quarter. Our 10-Q for the period ended September 30, 2016 is expected to be filed later today. As you know, the earnings release and other matters that we will discuss in today's call contain forward-looking statements and estimates that are subject to various risks and uncertainties. And although we may elect to update those forward-looking statements from time to time, we specifically disclaim any obligation to do so, even if our estimate changes unless required to do so. Our release also contains non-GAAP operating earnings. Please refer to today's 8-K or our other investor filings for a discussion of factors that may cause results to differ from management's projections, forecast, and expectations, and for a reconciliation of non-GAAP operating earnings to GAAP results. I would now like to turn the call over to Ralph Izzo, Chairman, President, and Chief Executive Officer of Public Service Enterprise Group; and joining Ralph on the call is Dan Cregg, Executive Vice President and Chief Financial Officer. At the conclusion of their remarks there will be time for your questions. Thanks, Ralph.

Thank you, Kathleen, and thank you everyone for joining us today. PSEG reported strong results for the third quarter. Earlier this morning, we reported net income for the quarter of $0.64 per share versus $0.87 per share last year. Non-GAAP operating earnings for the third quarter of 2016 were $0.88 per share compared with non-GAAP operating earnings for the third quarter of 2015 of $0.80 per share. For the nine months, we reported net income of $1.94 per share versus $2.70 per share, but non-GAAP operating earnings for the nine months ended September 30, 2016, are $2.36 per share, which compares with non-GAAP operating earnings of $2.41 per share earned during the nine months ended September 30, 2015. Slides four and five contain the details on the results for the quarter and the nine months. We remain committed to our core operating philosophy of operational excellence, investing in a disciplined manner, and maintaining a strong financial position to support the growth expected by our shareholders. PSE&G continues to earn its return on an expanded capital investment program. PSE&G Power continues to manage through very difficult energy markets, and we continue to take strong actions to optimize both businesses in this environment. PSE&G Power has decided to retire the Hudson and Mercer coal fire generation stations in 2017. This is sooner than we would have forecasted just a few short years ago, but became inevitable in the face of changes in the energy market, which were amply demonstrated this summer. While we experienced very warm weather conditions, the abundance of low-cost gas supply, which is a benefit for our customers kept energy prices low, and is expected to keep power prices lower for longer. Careful analysis indicated it would be uneconomic to invest the capital necessary to assure the units would comply with PJM's new capacity performance reliability standards. Although the units have been dispatched infrequently, we expect the retirement of Hudson and Mercer to result in a further reduction in the fleet's emissions profile. These retirements continue the evolution of PSE&G Power's fleet into a portfolio of reliable, low-cost, flexible assets capable of competing in today's market. To be clear, retirement will also aid Power's future cash flow and return profile. The addition of 1,800 megawatts of new gas-fired capacity Keys, Sewaren, and Bridgeport Harbor over 2018 through '19 will further the transformation of the fleet. From a supply-demand standpoint I want to remind that the capacity at Sewaren and Bridgeport Harbor will replace older steam and coal-fired capacity that we will retire. The new capacity will improve the fleet's efficiency and lower its cost structure. The new units remain on time and on budget. These new units remain profitable even with the recent declines in market pricing, and continue to meet our hurdles for returns, which of course are in excess of our return expectations that we place on new utility investments. By the end of this decade our nuclear and gas-fired generation facilities will provide more than 90% of our electric output. Our nuclear fleet represents our cleanest energy resource for the foreseeable future. And our gas-fired combined cycle fleet represents an efficient flexible resource. We remain committed to operating the fleet in a safe, reliable manner, and assuring their availability over the long term. Power continues to focus on running the business efficiently, and has made targeted reductions in its workforce, and continues to identify measures to improve availability and margins in today's market. New investment opportunities for power do not involved the construction of additional new capacity, but we continue to look for opportunities to diversity the fleet. PSE&G also continues to identify new opportunities for growth. PSE&G is on track to invest $3 billion in 2016 as part of its five-year $12 billion capital program. In addition, PSE&G has recently reached the settlement with key parties that provides for an extension of its existing, innovative, landfill and brownfield solar programs subject to BPU approval. The settlement allows PSE&G to expand its investment in solar by approximately $80 million to construct 33 megawatts of grid-connected solar facilities over three years. We believe PSE&G's involvement in grid-connected solar extends the benefit of solar to all of its customers at a lower cost. We anticipate a decision from the New Jersey Board of Public Utilities by year end. PSE&G is also requesting approval from the BPU to partner with New Jersey Transit in the development of a new $270 million substation that both would utilize and would enhance the reliability and resilience of facilities damaged by Superstorm Sandy. The new substation would enter service by the end of 2020. For me it's hard to believe, but it has been four years since Superstorm Sandy struck. It touched all of our customers, and to-date we have invested more than $900 million under electric and gas programs approved by the BPU to improve our systems' resilience through raising substations, building redundancy, replacing gas pipe, and even trimming trees. The collaboration with New Jersey Transit on construction of a new substation represents a continuation of this type of work. The agreement to increase our investment in solar, our announced $300 million increase in base capital spend, and PSE&G's anticipated collaboration with New Jersey Transit represent a greater than $600 million increase in PSE&G's capital program. PSE&G's ability to earn its authorized return on investment continues to drive our forecast for double-digit growth in PSE&G's 2016 earnings. Based on our forecast for the year, PSE&G is expected to represent more than 60% of 2016 consolidated non-GAAP operating earnings. Its investment program continues to drive annual growth and rate base of 8% through the end of the decade with the potential for up to 10% with additional programs that we have planned. We have met significant challenges through our forecast presented by the lack of winter weather and low energy pricing. Even so, consistent with our comments on the second quarter earnings call in mid-summer, we're making a slight adjustment to the upper end of our full-year guidance. We are now guiding toward 2016 non-GAAP operating earnings of $2.80 to $2.95 per share, which represents a small reduction from our prior forecast of non-GAAP operating earnings of $2.80 to $3.00 per share. We are confident that the investments we're making, along with a focus on operational excellence and a strong balance sheet will drive long-term success. With that I'll turn the call over to Dan, who will discuss our financials in greater detail.

Great. Thank you, Ralph, and thank you everybody for joining us on the call this morning. As Ralph mentioned, PSEG reported net income for the third quarter of 2016 of $0.64 per share versus net income of $0.87 per share in the last year's third quarter. Non-GAAP operating earnings for the third quarter of 2016 were $0.88 per share versus non-GAAP operating earnings of $0.80 per share in last year's third quarter, and a reconciliation of non-GAAP operating earnings to net income for the quarter and year-to-date can be found on slides four and five. We've also provided you with a waterfall chart on slide nine that takes you through the net changes in quarter-over-quarter non-GAAP operating earnings by major business. And a similar chart on slide 10 provides you with the changes to non-GAAP operating earnings by each business on a year-to-date basis. And I'll now review each company in more detail, starting PSE&G. PSE&G reported net income of $0.50 per share for the third quarter of 2016, compared with $0.44 per share of the third quarter of 2015, for a 14% improvement. Results for the quarter are shown on slide 12. The improvement in PSE&G's net income for the third quarter reflects growth from its expanded investment in electric and gas transmission and distribution facilities. Returns on PSE&G's expanded investment in Transmission added $0.03 per share to net income in the quarter. And incremental revenue associated with PSE&G's Energy Strong infrastructure program added $0.02 per share to net income in the quarter. Third quarter net income comparisons also benefitted by an increase in electric demand associated with weather conditions, which were approximately 30% warmer than normal and 9% warmer than conditions experienced in the third quarter of 2015. The increase in demand associated with the warmer than normal weather added $0.01 per share to third quarter net income. An increase in depreciation and O&M and other expense was offset by a decline in taxes and other items. Retail electric sales increased 3.6% in the quarter reflecting the much warmer summer weather than occurred in 2016 and on a weather normalized basis total sales were slightly positive versus the third quarter of 2015 with higher sales to residential and industrial customers offset by a decline in sales to commercial customers. As Ralph mentioned PSE&G's capital program led by an investment in transmission is on schedule. PSE&G is expected to invest $1.8 billion in transmission during 2016 as part of the five year $7.1 billion investment program to upgrade and expand the transmission network. PSE&G's investment in transmission is expected to grow to represent approximately 45% of year-end 2016's rate base. PSE&G recently filed an update of its formula rate for transmission at the Federal Energy Regulatory Commission, and the update which reflects an increase in the level of PSE&G's investment in transmission would provide for $121 million increase in annual transmission revenues effective January 1, 2017, subject to FERC approval. We are maintaining our forecast for PSE&G non-GAAP operating earnings for 2016 of $900 million to $935 million. Now let's turn to Power. PSE&G Power net income of $139 million were $0.27 per share to the third quarter of 2016 compared with net income of $206 million or $0.40 per share for the year ago quarter. Our non-GAAP operating earnings were $0.34 per share for the third quarter of 2016 compared to non-GAAP operating earnings for the third quarter of 2015 of $0.33 per share, and non-GAAP adjusted EBIDTA for the third quarter of 2016 was $397 million versus non-GAAP adjusted EBIDTA for 2015 of $401 million. Non-GAAP adjusted EBIDTA includes the same -- excludes the same items as our non-GAAP operating earnings measure as well as income tax expense, interest expect, depreciation and amortization and major maintenance at Power's fossil generating facilities. In the earnings release on page 18 provides you with detailed analysis of the impact on Power's non-GAAP operating earnings quarter-over-quarter. We have also provided you with more detail on generation for the quarter and for the nine months of the year on slide 19 and slide 20. Power's net income at the end of the third quarter includes one-time pre-tax charges amounting to $114 million pre-tax, $67 million after tax or $0.13 per share related to the early retirement of the Hudson and Mercer generating stations. These one-time charges which were excluded from Power's non-GAAP operating earnings mainly relate to the write down of excess coal inventory and materials and supplies as well as some other smaller items. Power's non-GAAP operating earnings for the third quarter, reflect a decline in the average price on energy hedges, which is partially offset by lower cost of serve load, which combined to reduce quarter-over-quarter operating earnings by $0.02 per share a decline in output during the quarter reduced operating earnings by $0.01 per share and a reduction in O&M expense improved results by $0.03 per share, an increase in depreciation expense associated with Power's capital program was more than offset by a decline in interest expense and other items, which combined to improved quarter-over-quarter net income by a $0.01 per share. As I mentioned, Power's third quarter results benefited from a reduction in O&M expense which added $0.03 per share to net income quarter-over-quarter. Year-to-date, a reduction in Power's O&M expense has improved net income comparison by $0.15 per share. Management's proactive response to lower energy pricing has been a major contributor to the decline in O&M and with timing of outages and major maintenance related work has also influenced comparisons. For example in 2015, refueling outage at Hope Creek occurred in the spring, and this year Hope Creek's refueling outage is currently underway in the fourth quarter. O&M expense in 2015 was also elevated due to major maintenance related work at some of the fossil stations. Although we expect O&M expense in 2016 to decline year-over-year, you should anticipate an increase in O&M for the fourth quarter given the cost associated with the refueling of our 100% owned Hope Creek nuclear station. Over the long-term, you can expect constant diligence in controlling the growth of O&M. Now let's turn to Power's operations. Output at Power's generating facilities declined 4% in the quarter. And the nuclear fleet operated at an average capacity factor of 80% in the third quarter versus an average capacity factor of 95% in the year ago quarter as output declined 12% to 6.9 terawatt hours from 7.8 terawatt hours. The decline in output reflects the impact of extended outages at the two Salem units. And as we mentioned in our second quarter earnings call, output in the third quarter would be impacted by the expansion of the refueling outage at Salem 1 through July to complete repair work on the units baffle bolts and repair work at Salem 2 to repair an electrical fault. Both units have since returned to service and are operating at full capacity. Output from Power's gas fired combined cycle fleet declined slightly to 5.2 terawatt hours from 5.4 terawatt hours last year. The warmer than normal weather condition spurred an increase in demand for Power's coal fired generating stations and peaking fleet which together experienced an increase in output during the quarter to 2 terawatt hours from 1.6 terawatt hours. Power markets in the third quarter benefited from hotter than normal weather which had a favorable influence on the market and power was less hedged to going into the quarter than a year ago allowing the fleet to capture some upside in pricing. That said, a decline in power's gross margin in the quarter to $41.74 per megawatt hour from $0.42 and $0.7 reflects the impact of lower average prices on energy hedges. As we've indicated, we continue to expect bases to be seasonal that is positive in the winter assuming normal weather, and neutral to negative at other times of the year until more gas pipeline capacity goes into operation. Power continues to forecast output for 2016 of 15 to 52 terawatt hours. The forecast takes into account the extended outages at Salem as well as refueling outage at Hope Creek which is currently underway. Power has reduced its forecast of generation output for '17 and '18 by approximately 3 to 4%. Revised forecast recognizes the impact of low gas prices on the potential dispatch of the Keystone and Conemaugh coal fire generating stations with also some impact coming from the retirement of Hudson and Mercer's coal fire generating stations in mid 2017. Approximately, 75% to 80% of anticipated production in the fourth quarter of 2016 of 11 to 12 terawatt hours is hedged at an average price of $48 per megawatt hour. The average price per energy hedges for the full year approximates $50 per megawatt. And for 2017, Power has hedged 65 to 70% of its revised forecast to 51 to 53 terawatts hours of offering at an average price $47 per megawatt hour. And for 2018, Power has hedged approximately 25 to 30% of its revised forecast of 56 to 58 terawatts of output at an average price of $45 per megawatt hour. Hedged data continues to assume DGS hedges will cover 11 to 12 terawatt hours of output. The forecast of Power's non-GAAP operating earnings for 2016 has been revised to 460 to $500 million. And the forecast represents non-GAAP adjusted EBITDA for the full year of 1.270 billion to 1.35 billion. I would also like to point out that the retirement of Hudson and Mercer will continue to have an impact on Power's net income in the fourth quarter. In addition to the one-time charges recognized in the third quarter, Power expects to recognize incremental depreciation and amortization during the remainder of 2016 of $568 million per tax. And in 2017, Power expects to recognize incremental depreciation and amortization of 946 million pre-tax due to the shortening of the expected economic useful lives of Hudson and Mercer. Until the units are retired, we will continue to record a normal O&M and depreciation in our non-GAAP operating earnings. On an annual basis, these expenses amount to an estimated 60 million and 50 million pre-tax respectively. You should also see a reduction in Power's plan capital spending beyond 2017 of approximately 200 million to reflect the elimination of previously planned capital improvements at Hudson and Mercer. Now, I will turn to PSEG Enterprise and Other where we reported a net loss of $0.13 per share for the third quarter of 2016 compared to net income of $0.3 per share for the third quarter of 2015. Our non-GAAP operating earnings for the third quarter of 2016 were $0.04 per share compared to non-GAAP operating earnings of $0.03 per share for the third quarter of '15. During the third quarter of 2016 Energy Holdings completed its review of estimated residual values embedded in the NRG REMA leveraged leases. As a result of current and expected future market conditions, an impairment of $86 million after-tax related to the residual value of these leases was recorded in net income. The increase in non-GAAP operating earnings quarter-over-quarter results reflects certain tax items at PSEG Energy Holdings, and contractual payments associated with the operation of PSEG Long Island. The forecast of PSEG Enterprise and other full-year 2016 non-GAAP operating earnings remains $65 million. PSEG also closed the quarter ended September 30, 2016 with $450 million of cash on its balance sheet, with debt at the end of the quarter representing approximately 45% of consolidated capital. PSEG Power had debt at the end of the quarter representing 28% of capital. As Ralph mentioned, we've adjusted our forecast for non-GAAP operating earnings for the full year to $2.80 -- to $2.95 per share from $2.80 to $3.00 per share. And with that we are ready for your questions.

Ladies and gentlemen, we will now begin the question-and-answer session for members of the financial community. [Operator Instructions] Your first question is from Neel Mitra from Tudor, Pickering. Please go ahead with your question.

Hi, good morning.

Good morning, Neel.

Just based off of some of your peers' commentary, could you comment if you're seeing any cost inflation at your nuclear plants or any upwards pressure on pricing which you're having to contain?

Yes, Neel, so we have been commenting and participating in industry efforts to reverse the trend of some of the escalations in both O&M and capital being driven by the considerations emanating from the NRC. So we're part of an effort called Delivering the Nuclear Promise, to take the average industry cost structure of $35 a megawatt hour down to $30 a megawatt hour. We haven't released our specific cost structure, but suffice to say that we operate slightly below the industry average. So yes, there are cost pressures, but there's an active industry effort that we are front and center in participating to both control that escalation and reverse it.

Got it. And then just moving to the Keys center, some of your recent commentary is based off of the fact that you like the location in Southwest MAAC [ph] within PJM. Could you comment on why that's a good location compared to some other locations in PJM for a new build?

Sure. It's a couple of reasons. First of all, it is part of PJM-West hub where we do all of our hedging. So it does lend some balance to the portfolio, which is primarily PJM-East for where most our assets are located. It is a load pocket that is experiencing some modest degree of growth. There have been years where it looked like it was going to be about 4%. And it's been consistently the strongest pricing region from an energy market point of view in PJM for the past few years.

Okay, perfect. Thank you.

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

Good morning. Thank you.

Hi, Travis.

Looking at a high level, I know you guys like to have a strong balance sheet. Where you are right now with the growth projects that you have over the next two to three years, especially on the power side, how do you see that leverage changing? And to the extent that it stays in this kind of range, what's the opportunity to add leverage, perhaps up at the parent co or some other place on the balance sheet?

So I think our numbers are looked in, so when -- remained on average above 40% for the next three years given current market expectations. Our floor at Power is an FFO to debt of 30%, and as it's been the case in the past, Travis, our top priority is reinvesting in the business. That predominantly means reinvesting in regulated utility assets, although we continue to look for opportunities to acquire assets in Power that have allowed our portfolios in competitive markets that were interested in that being New York, New England, and PJM. But number one use of the balance sheet is reinvesting in the business. Number two is, given the cyclicality of the merchant generation business to provide support for the dividend in some of those ups and downs so that we can provide a consistent growth rate in that dividend. And last would be to repurchase shares if we were not seeing those growth opportunities, primarily in utility or had earnings that just dwarfed the growth in the dividend. But Dan, I don't know if you want to add some color to those specific numbers.

Yes, what I would say Travis is we have had a lot of success in finding opportunities to deploy capital. And we even referenced today an excess of $600 million at the utility. So rough reference is reinvesting the capital on the businesses as opportunity number one, and that's what we have been able to do. And having a strong cash flow coming from the Power side of the business, and the ability to provide financing there at the parent is enabling of that growth that we have throughout the business.

Okay. And on those generation projects, would you expect to have a higher percentage share of debt or leverage there such that your entire balance sheet, certainly in a small way given the relative size, would move toward more leverage is –- the question there simply is, is there going to be extra leverage at those projects as you go through the construction phase?

Yes, I mean, I think if you take a look at what we're investing in to the business on the power side of the business, and you take a look at what our cash flow is coming from the business, it pretty well supports the ability to build that, a, without any equity at the parent, but without growing that leverage capacity or that leverage utilization at Power.

And to Dan's point, Travis, both Power and the utility can support that capital program without any equity issuance in any of the forecasts that we're able to come up with.

Okay, great. Thanks a lot.

Your next question is from Angie Storozynski from Macquarie. Please proceed with your question.

Thank you. So first on the Power side. Can you comment on what you're seeing on the power base, not the gas bases, but the power bases for your combined cycle gas front? It seems like the output from your New York and New Jersey units have come down slightly over the year despite this hot summer. And we are hearing from other power producers -- gas-fired producers in PJM that they're seeing some expansion in a negative power base as due to some congestion on transmission line as well as the gas plants are running now -- well, often 24/7. Is this a phenomenon you are actually seeing at your units?

Yes, Angie, that is correct. So we're, as you know, the basis differentials are very seasonal in nature. They tend to be somewhat strongly negative in the off seasons, the spring and the fall, less negative in the summer, and they turn positive in the winter. It's driven by two factors, you've identified both of them, one is our gas basis differentials, and transmission congestion. I forget the name of the transmission asset down in the PG&E area that is undergoing some renewal. It's Bagley Grayston [ph] which I believe according to PJM is scheduled for completion sometime next spring. That's all public information; you should check the PJM Oasis board for confirmation that -- in case I have the date wrong. And then obviously from a gas point of view, there's a much healthier degree of infrastructure that's brining gas from the Marcellus to the New York-New Jersey region than there is going to the PJM West region, which is a bit of a misnomer. It's actually south of here. And until the infrastructure corrects that arbitrage opportunity you'll continue to see gas-based generation being less expensive to operate up here than it is down there. But we remain confident that over time the market does correct any anomalies that exist and arbitrage opportunities that exist. And there's no shortage of projects that are either in permitting or in construction to move gas to the south. And as I said, there is a specific transmission project underway to correct congestion project underway to correct the congestion that we're seeing in the PG&E area.

Great. And now on the utility side, in your prepared remarks you mentioned the double-digit growth rate and then you mentioned something about 8%. Can you actually or just remind me or repeat your comments about the -- was that about the rate base growth or was that about the longevity of the current double-digit earnings growth?

Yes. So, as you know we don't forecast earnings growth. And what we've been forecasting is that for the next five years the utility capital program for approved programs, which support an 8% rate base growth and for programs that are fairly straight forward extensions of existing programs that 8% becomes 10%. But they've not been approved by the BPU yet. Of course as you know rate base growth is a good indicator of earnings growth, but then one has to add load growth and subtract O&M growth and those are two parts that are tougher to predict. We do a good job of controlling O&M. But I would not want to promise that we will be able to control O&M at a level of zero which is about the load has been growing, that's like 0.1%, 0.2%. So, it's suffice to say that the earnings growth would probably be a net subtraction from that net based growth, but we don't give an exact number, what that is.

Okay, thank you.

You are welcome.

Your next question is from Praful Mehta from Citigroup. Please proceed with your question.

Thank you. Hi, guys.

Hi, Praful.

Hi, sorry -- first question was on the separation - the generation separation side, the PEG Power side, I know we we've talked about this before. But given how ITP's are trading today, they really seem to struggle and I was wondering in that market context, does it make sense to think about PEG Power being separated or do you now reconsider and think more keeping PEG Power as part of the whole, PSE&G family?

I really don't have a lot new, to say about this subject. If we may - if and when or we were to make such a decision, it would be a market timing decision, it would have to do with the strength of the strategic arguments in favor of separation dwarfing the tactical benefits, that we continue to believe dominate the picture today in terms of staying together. So sure, you wouldn't try and do something in the middle of economic instability or major macroeconomic you can have like disruptions, but we're not market timers, the real question is, do we still have the financial synergies between the business, do we still have the build synergy between the business, do we still have a long-term investors who see the attractiveness of both, that's kind of strategic flexibility questions that we've talked about before.

Fair enough. Thank you. And then, growing has been the nuclear discussion that we were having earlier, there is obviously discussion in New York to support nuclear with through this X program. Do you see other states looking to implement something like this or do you see that as a possibility in New Jersey or Pennsylvania in terms of support from nuclear or carbon free generation?

I do. I think, that a lot of states are realizing that these are long-lived assets these mean the nuclear plants that provides enormous benefits both from a carbon point of view, from a fuel diversity point of view, from a reliability point of view, and most of our markets are fairly short-term in nature, even three your capacity prices don't capture the full benefit of what I expect to be fairly extensive debate on how carbons to be priced in the future. So they -- every state may not come up with its own remedy, and regrettably the right remedy would be a national remedy, but we don't seem to have a lot of traction in that regard right now. So I do see most of the action focused at state-by-state level.

I appreciate it. Thank you.

[Operator Instructions] Your next question is from Gregg Orrill from Barclays. Please proceed with your question.

Yes. Thank you. I guess two questions. First, are you able to provide what your transmission rate base is for year-end '16 and '17? And then what are your thoughts around acquiring nuclear and/or coal asset?

Good morning, Greg. It's good to hear from you. So I'm going to do a little. People scurry around to find the rate base number, I do know that by '18 it's 50% of the rate base price -- by the end of 2018, but I don't know what it is. Now Dan has the magic numbers, where he's going to take you through?

I think we are -- I think what we've done historically as we put out numbers for particular years and then given some ranges in between those years. So I think you're heading towards about $7 billion, as you approach '16, and then with the overall growth in capital, you would see increases there, but we will provide kind of our normal set of numbers within our next update like…

I knew you are going to make it up, Dan, I wouldn't refer to. Gregg, your second question on interest on acquiring coal, we are believers in nuclear, but at the right price of course we would be interested, but we are not -- we have no interest in adding coal to our fleet, nor would you see us be a large fleet acquirer, I do think that in general, we signaled through our investors that our primary investors in the regulated utility and that's what we continue put our emphasis.

Thank you.

Your next question is from Mitchell Moss from Lord Abbett. Please proceed with your question.

Hey, guys, just quick questions on, first, just a follow-up on Angie's question regarding the combined cycle. How they are running with due to transmission gas supply issues. Do you see some of these issues being resolved by 2017 in terms of just gas takeaway in transmission or do you see it in longer terms, sort of a 2018 and beyond type of an issue.

Yes. So Mitchell, of course we are operating with the same crystal ball as you are, which without being too critical of your crystal ball, ours is pretty cloudy. Having said that, it's more of an '18 to '19 timeframe that these projects we think will have a takeaway capacity impact.

And regarding the REMA leases that you mentioned, you took a charge on. Have you been involved in any of the negotiations that NRG has mentioned with bondholders or with leaseholders as part of the any, I guess restructuring discussion?

No we haven't, Mitchell. I mean, we are obviously aware as you are of where the current situations are and certainly ready for discussions when the time is right, but not as yet.

Do you guys have a view on whether or not the REMA lease could be broken or restructured in a bankruptcy or is it a bankruptcy proof, I guess?

I think we are going to let that play out and let time tell what's going to happen. I think it's a fairly complicated situation and we'll let time become our best estimate. We got some disclosures within our 10-Q, that give you a little bit of sense as to, some thoughts on it. But I think, where it ends is ahead of us, yes.

Okay, great, Thank you so much.

[Operator Instructions]

Thanks, Ginger. We can give back 15 minutes to folks if there are no further questions.

Yes. So, there are no further questions. Presenters, please -- for any closing remarks.

Sure. So just to summarize, hopefully what you heard is that Power capital program remains on-budget, on-schedule, and based on current prices is still expected to create strong value for us. The utility continues to identify new customer-driven investment opportunities that fuel its growth. Lastly, there is no question we have a relentless focus on cost control. It's part of everyday life at PSEG. So with that, I'll just wish everyone a happy Halloween. We look forward to seeing you next week in Phoenix, and thanks for joining us this morning, take care everyone.

Ladies and gentlemen, that does conclude your conference call for today. Thank you for participating. You may now disconnect.