Ladies and gentlemen, thank you for standing by. My name is Shamali and I am your event operator today. I would like to welcome everyone to today's conference, Public Service Enterprise Group's Fourth Quarter and Full Year 2022 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode [Operator Instructions] As a reminder, this conference is being recorded today, February 21, 2023, and will be available for replay as an audio webcast on PSEG's Investor Relations website at investor.pseg.com. I'd now like to turn the conference over to Carlotta Chan. Please go ahead.

Thank you, Shamali. Welcome to PSEG's fourth quarter and full year 2022 earnings presentation. Joining us on the call today are Ralph LaRossa, Chair, President and CEO of PSEG; and Dan Cregg, 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-K will be filed shortly. The 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 net loss as reported in accordance with generally accepted accounting principles 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 material. Following Ralph and Dan's prepared remarks, we will conduct a question-and-answer session. I will now turn the call over to Ralph.

Thank you, Carlotta, and thank you to everyone joining us on our call this morning. Since the third quarter 2022 earnings report, we've had several important updates. Dan will provide you with a full financial review later in our prepared remarks as I will focus on some strategic highlights. We are pleased to report strong operating and financial results for both the fourth quarter and full year of 2022. We successfully navigated last year's challenges including inflation, supply chain disruptions, energies price spikes, and the steep rise in interest rates to deliver a GAAP earnings of $2.06 per share, and non-GAAP operating earnings of $3.47 per share, placing our results for the full year above the midpoint of our 2022 non-GAAP earnings guidance. In fact, 2022 was the 18th year in a row that PSEG has delivered non-GAAP results at or above management's original operating earnings guidance. PSE&G which contributed the vast majority of our results posted in 8.2% annual increase in net income from the continued investment in its TND infrastructure, clean energy programs and a first full year of decoupling. PSE&G invested over $3 billion of capital during 2022 in transmission upgrades, gas system modernization, energy efficiency, electric vehicle infrastructure and launched our efforts to address the reliability of the last mile of our distribution system. At year end 2022, PSE&G's rate base topped $26.4 billion a 7.7% increase over the year end 2021. We know the importance shareholders placed on a predictability and visibility of our financial results and during the past 12 months we have taken many steps to deliver just that. First, we completed the strategic alternatives process, which included the sale of PSE&G fossil last February. This increased the regulated contribution to about 90% of our consolidated non-GAAP earnings. We completed a $500 million share repurchase program in May of 2022 and increased the cash return to shareholders by raising the annual dividend by $0.12 or 5.9% for 2022. Second, the passage of the inflation reduction act of 2022 will offer our nuclear generation a level of much needed stability when it goes into effect in 2024. While the industry waits for clarifications, we believe the inflation reduction act is a game changer that should provide the stability required for long term financial viability of the U.S. nuclear fleet. As a result of the nuclear production tax credits extending through at least 2032 we are now able to consider small but important value added investments, including the potential for capacity upgrades to [indiscernible] a fuel cycle extension to hold Creek and the license extension of our New Jersey units. Critical to these decisions will be our determination of how predictable and visible nuclear revenues could be beyond our current three years ZEC window. The Ira also created valuable incentives for PSE&G's customers to accelerate their transition to electric vehicles, which will advanced New Jersey's decarbonisation goals and expand our opportunities to invest in last mile reliability and make ready infrastructure. This aligns with the recent state objectives to increase electrification. Just last week, Governor Murphy issued three executive orders that establish or accelerate the state's existing 2050 targets for clean source energy, building electrification and electric vehicle adoption goals with new target dates in 2030 and 2035. The Board of Public Utilities and other state agencies were directed to collaborate with stakeholders to develop plans to reach these goals. These include an updated energy master plan in 2024, and a new proceeding to develop a future of natural gas utility plant to consider new revenue streams, such as conversion of existing facilities to district geothermal, and new technologies to meet the 2019 energy master plan goal of 50% reduced emissions below 2006 levels by 2030. Third, we announced our strategic decision to exit our investment in offshore wind generation by selling our 25% equity stake in Ocean Wind 1 backdoor joint venture partner Ørsted. This decision to exit or short generation was consistent with our goal to increase the predictability of our business. PSE&G will continue to provide Ocean Wind 1 to onshore construction management services to ensure the onshore substations and associated onshore cabling are ready to receive the project's output when it goes in service. We also intend to continue pursuing regulated transmission projects offshore and investing in related transmission and distribution projects onshore and enabling the New Jersey wind port in Salem County. Finally, last week, the BPU approved the settlement of our pension accounting filing, retroactive to January 1, 2023. An important step we have pursued to limit pension expense volatility. This improved business platform created by the strategic actions we have taken over the past two years, combined with our efforts to increase the predictability of our results, positions us to narrow our 2023 non-GAAP operating earnings to a range of $3.40 to $3.50 per share from our original guidance of $3.35 to $3.55 a share provided last November. This new $0.10 range compares to the $0.20 range we have provided in previous years. These strategic rules also drive our outlook for long term compound annual earnings growth rate of 5% to 7% through 2027 and enable us to pursue this growth path without the need to issue new equity during this five year period. Moving into 2023, we extended our 2022 dividend increase of $0.12 per share to set the 2023 indicative annual rate at $2.28 per share, marking our 116th year of paying a dividend to shareholders. PSE&G has begun executing its capital investment plan of over $3.4 billion for 2023 which is expected to be the largest single year spend in utilities 120 year history. This will be directed primarily towards infrastructure replacement, energy efficiency and last mile reliability. The good news is that additional headroom was created in our gas and combined customer bill, as the recent decline in natural gas prices has enabled PSE&G to reduce its residential default gas supply rate by $0.15 to $0.15 per therm for the balance of the winter 2020 to 2023 heating season. This decrease in the pastor commodity charge will reduce the typical residential winter gas bill by $13 per month annualized or 11.5%. Speaking of our customers, they rated PSE&G number one in 2022 JV Power customer satisfaction studies for both residential electric and natural gas service in the East among large utilities. This is the first time we have achieved both number one rankings in the same year. This honor culminated the year that saw PSEG recognized by the Edison Electric Institute with the Edison award, the industry's highest honor, for leadership and innovation. And speaking of leadership, PSEG's environmental, social and governance credentials continue to be recognized. In addition to our MSCI upgrades to triple A, its highest ESG rating PSEG was also named for the Dow Jones Sustainability North America index for the 15th year in a row, as well as just 100 list of America's most just companies for 2023 recognizes our commitment to serving our customers, workforce, communities, the environment and shareholders. None of this could be accomplished without our employees, who remain PSEG's most important resource. Together, we continue to be guided by PSEG's long standing commitment to operational excellence, discipline, investment, and financial strength. As I recognize our employees, I must take a moment to honor one that lost his life in a tragic act of violence. Some of you may have heard about the horrible loss when a member of the PSEG team was killed by a former employee. It was one of the saddest days in our company's history. Our condolences and prayers go out to all of those that have been impacted by this event. I also want to thank our employees who supported each other during this difficult time. We will continue to provide resources to protect the health, safety and wellbeing of all PSEG employees, including grief counseling for any employee seeking it. In closing, and as I mentioned earlier, we know the important stakeholders play some predictability and visibility of our financial results and goals. I have made increasing both factors, a key focus of PSEG's strategic plan. We intend to share the details of this plan on our upcoming investor conference on March 10 as we continue to build a practical path for decarbonizing the New Jersey economy. I'll now turn the call over to Dan and return after his remarks for Q&A.

Thank you, Ralph. Good morning everybody. For the full year 2022 GAAP earnings were $2.06 per share, compared to a GAAP loss of $1.29 per share for the full year of 2021, which included fossil sale related impairments. Non-GAAP results for $3.47 per share for 2022 compared to 2021's non-GAAP results of $3.65 per share, which you may recall excluded depreciation related to the fossil assets held for sale in the fourth quarter of '21 and retirement of power debt. For the fourth quarter of 2022 GAAP earnings improved to $1.58 per share, compared with $0.88 per share for the fourth quarter of 2021. Non-GAAP operating earnings were $0.64 per share compared with $0.69 per share for the fourth quarter of 2021 which contain the fossil sale related items I just mentioned. We provided information on slides 9 and 11 regarding the contribution to non-GAAP operating earnings by business on the fourth quarter and full year periods ended December 31. Slides 10 and 12 contain waterfall charts that take you through the net changes quarter-over-quarter and year-over-year and non-GAAP operating earnings by major business which I will review now starting with PSE&G. Full year 2022 net income rose by $119 million or over 8% to $1.565 billion compared to 2021 net income of $1.446 billion reflecting higher earnings from continued investment in TND programs and the favorable impact of a full year of decoupling in 2022. For the fourth quarter of 2022, the utilities net income rose by $81 million to $352 million or $0.70 per share compared to $0.53 per share in the fourth quarter of 2021. As you can see on Slide 10 transmission margin and a penny per share compared to the year earlier quarter, reflecting growth and rate base partly offset by the timing of O&M recovery. Gas, electric and other margin contributed combined to add $0.07 per share compared with last year's fourth quarter reflecting GSMP II roll-ins the Conservation incentive program or CIP decoupling for both electric and gas, appliance service and other margins. On the expense side, O&M was flat versus the prior year quarter. Higher distribution depreciation and interest expense each reduce results by a penny per share reflecting higher plant in service and investment. Lower pension expense added a penny per share versus a year ago quarter and flow through taxes the impact of lower outstanding shares and other items added $0.10 per share compared to the fourth quarter of '21 with $0.07 of that amount reversing the timing impact of taxes from prior quarters in 2022. During '22, PSEG invested over $3 billion in planned capital spending to upgrade transmission and distribution facilities, enhance reliability and increased resiliency. In 2022, we also launched the IAP our $511 million infrastructure advancement program, which the BPU authorized last June to improve the reliability of the last mile of our electric distribution system and address aging substations and gas M&R stations. As Ralph mentioned a year in 2022 PSE&G's rate base stood at approximately $26.4 billion a 7.7% increase over year end 2021. Last Friday, the Board of Public Utilities approved an order authorizing PSE&G to modify its method of pension accounting for ratemaking purposes, which will mitigate variability in the calculation of PSE&G's pension expense for calendar year 2023 and beyond. The backdrop of economic conditions continue to improve in New Jersey during 2022. New Jersey's unemployment rate return to pre-pandemic levels of 3.3% in September, and remain below the national average at year end. System peak load reached 10,147 megawatts on August 9, exceeding the 10,000 megawatt level for the second year in a row. Weather normalized electric sales increased by 2% for the year with residential sales flat and CNI sales increasing by 3%. Weather normalize gas sales were flat for the year with residential gas sales down 1% while CNI sales increased by 2%. [The sale] mechanism because the impact of most customer usage from margin subject to earnings or rate cap limitations, leaving the change in the number of customers as the major driver of margin growth going forward. The number of electric and gas customer rose by approximately 1% each in 2022. Wrapping up the utility update. We've narrowed our forecast of PSE&G's net income for 2023 To $1.5 billion to $1.525 billion which reflects pension and OPEB updates compared to 2022 offset by the benefit of contemporaneously recovered investments, predictability of utility margin from the safety coupling, as well as the implementation of the pension accounting filing effective for calendar year '23. Now turning to carbon free infrastructure another. For full year 22 CFIOs net loss of $534 million or $1.06 per share reflected higher losses on both mark to market transactions and nuclear decommissioning trust fund related activity. The full year 2021 net loss included impairments and debt extinguishment costs related to the fossil sale. Non-GAAP operating earnings declined $174 million or $0.35 per share from $407 million for full year '21 reflecting the absence of the fossil assets. The fourth quarter 22 CFIOs net income improved to $436 million or $0.88 per share from $174 million in the year ago quarter, reflecting higher gains on both mark to market transactions and NDT fund related activities. Net income for the fourth quarter ‘21 included debt extinguishment costs and other charges related to the sale of fossil. For the fourth quarter 2022 the non-GAAP operating earnings loss of $34 million or $0.06 per share reflected the absence of the fossil assets compared to the fourth quarter 2021 non-GAAP earnings of $81 million or $0.68 per share, which reflected the cessation of depreciation and lower interest costs related to the fossil sale. Referring again to Slide 10, non-GAAP operating earnings were $0.22 per share lower in the fourth quarter than the fourth quarter of 2021 driven by lower capacity prices for the remaining nuclear fleet, but regeneration volume recontracting lower prices and lower deck revenue compared to the year ago quarter. Combined these items drove electric gross margin to decline $0.34 per share. Gas operations improved by $0.04 per share, reflecting higher off system sales, higher commodity pricing and higher stores. Power related cost comparisons for the fourth quarter 2022 improve his overall O&M expense was $0.07 per share favorable compared to the year ago quarter. Again reflecting fossil assets sale, partly offset by the plan refueling at the 100% owned Hope Creek nuclear plant in this year's fourth quarter. Appreciation and interests were higher by a penny per share that reflected the March 2022 debt issuance of power versus the year earlier debt retirements related to the fossil sale. Activity was a pay per share favorable compare the fourth quarter of 2021 primarily reflecting the essence of 2021's donation to the PSEG foundation, partly offset by higher parent interest of $0.04. Taxes and other improved by a penny per share over the fourth quarter of 2021 and includes the accelerated receipt of expected tax carried out claim in '22 instead of '23, which is partially offset by the reversing of a timing impact from tax benefits in prior quarters in 2022. Turning to ops. The nuclear fleet operated and an average capacity factor of 85.8% during the fourth quarter, which included the Hope Creek and 7.3 terawatt hours requirement for generation. An unplanned outage at Salem unit two in late December 2022 occurred during a PJM region wide generation emergency action and resulted in capacity performance penalties. The net financial impact of the outage including replacement power, capacity penalties, as well as bonuses earned by the other operating PSEG units did not expect it to be material. For the full year the nuclear fleet operated at an average capacity factor of 92.2% producing 31.3 terawatt hours of generation. PSEG's forecasting total baseline baseload nuclear generation of approximately 31 terawatt hours for the full year of 23 hedged 95% to 100% and an average price of $31 per megawatt hour an increase of about $4 per megawatt hour compared to '22. For '24 total nuclear generation is forecast also to be approximately 31 terawatt hours, and 55% to 60% hedged than an average price of $32 per megawatt hour. In addition, in December, we exited certain legacy BGS or basic generation service contracts in order to rebalance our hedge portfolio and realign it to our baseload nuclear fleet and reduce volatility in 2023. Wrapping up CFIO we've narrowed our forecast of non-GAAP operating earnings to $200 million to $225 million from $185 million to $235 million. A quick update on financing activity and collateral postings. As of December 31, 2022, total available credit capacity was $3.7 billion including a billion at PSE&G. In addition, we have total cash and cash equivalents on hand of approximately $465 million. PSEG power had net cash collateral postings of $1.5 billion at December 31 primarily related to as a money hedge positions resulting from higher energy prices, which declined to $700 million through last Friday. Given the recent improvement in our collateral position, in January of this year, we prepaid $750 of a $1.5 billion short term loan that was due in April. Following the repayment of this term loan, PSEG had outstanding a total of $1.25 billion of 365 day term loans expiring this spring to support powers collateral needs and power had an outstanding a $1.25 billion term loan expiring in March of 2025. Combined, these term loans comprise $2.5 billion a variable rate debt. As we mentioned during our third quarter call, we entered into interest rate swaps during September and October of last year, which converted $1.05 billion of our outstanding term loans from floating to fixed rate reducing our variable rate debt exposure. Following the measurement of the pension at year end 2022, we've incorporated the impact of the actual 2022 investment returns, discount rate and interest rates into the 2023 pension [calculations]. Our expected return on plan assets increased to 8.1% for 2023, as the declining value of the fixed income securities due to higher interest rates during '22 enables a higher yield on them going forward. While 2022 investment returns has a negative impact on 2023 pension calculations, the increase in interest rates serves to reduce the pension liability with the funded status of a pension plan, ending the year at a solid 87%. In addition, the county settlement approved by the BPU will create a regulatory asset or liability to overlay our current accounting, which will partly mitigate the impact of certain expense related pension calculations going forward. As Ralph mentioned earlier, we've narrowed our 2023 non-GAAP operating earnings guidance to $3.40 to $3.50 per share around the same $3.45 per share midpoint, with regulated operations continuing to contribute approximately 90% of that total. As a reminder, PSEG does not forecast GAAP earnings related and related long term growth rates. PSE&G's forecast of 2023 net income is narrowed to $1.500 billion to $1.525 billion reflecting the predictability provided by the expected transmission distribution investment recovery, and focus on owned and cost control. Non-GAAP operating earnings guidance for CFIO is now forecasted at $200 million to $225 million. CFIOs narrowed guidance also removed the previously expected benefits of the tax carry back claim from PSEG's 2023 operating guidance. That concludes our prepared remarks. So Shamali please open the line. And we'll take some questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session for members of the financial community. [Operator Instructions] And the first question is from Shar Pourreza from Guggenheim Partners. Please proceed with your question.

Good morning Ralph and team. It's actually Constantine here for Shar. Congrats on the quarter.

Hey -

Just wanted to start off with '23 guidance updates, and specifically on the utility. Do you have any updates on the O&M cost initiative targets and interest costs that are embedded in guidance versus what was presented in November especially as you're finding down some of the collateral needs. And just maybe to clarify, was the pension outcome the main driver for the 15 million decrease at the top end of the guidance?

I think the way to think about the tension honestly, is just reducing volatility overall, as we think about it EI was in November, we were providing guidance. And as you know, we snapped the tape at 12.31. And so I think the elimination of the ups and downs that could have come from year end, which was not known at the time was part of the reason that we had a wider range at that point and are more narrow now I would say that that number came in right about where we thought it was going to. And so I would say we are consistent with that. But with the absence of the movement that we could have had. We had presumed at that time, Constantine, that we would obtain what we did subsequently obtained from the BPU. So that was presumed already and I would say from an O&M perspective. I'd say it's fair to think about the assumptions as being consistent as what we said at EI. We may see some benefits coming through by virtue of collateral coming off a little quicker but the year is not over. We'll continue to see some movements. And we'll continue to manage that going forward.

Yes Constantine the only I would add from O&M standpoint, we would have been a culture of continuous improvement. And we'll continue to look for opportunities when they arise, but we don't normally publicize any specific numbers on that area.

Okay. Thanks for that clarification. This one might be more for Dan, again, with the, with the announced exit from offshore wind. And the first part being though that put option on the JV and the potential incremental acreage sales more directly? How are you thinking about the use of proceeds? And as we think about the old investment capacity slide, and with the sale proceeds the unwind of the short term financing? Is there a target FFO to debt metrics that we need to think about in your longer term planning assumptions?

Yes, I think, we sell on it that that exit from motion when one would be at our cost to date. And we've characterized it as being right around $200 million just in just an excess of $200 million, so that it certainly is nice to have back but it's not a major item to move the needle with respect to the broader numbers. I think we've talked about having an overall as a footstep threshold 13% to 14%. And we've talked in the past about living somewhere north of that into the 15, 16 area. And I think that's a fair way to continue to think about where we are.

Great, and maybe for just one second shifting to nuclear. What's the threshold for including operational or CapEx driven upside into the plan and the needs associated with it, just thinking about co-owner and some of the assets of just being de-announcements around some of the upgrades elsewhere. Curious on any thoughts or conversations that you've had?

Yes. So we'll have our normal run rate operating capital. And to the extent that there's an opportunity to deploy capital to enhance results overall. Obviously, that analysis is going to go through just like any other analysis, we would do and be up against the hurdle rate that's going to show that it's going to make sense for us to do that. I think we have some promise on some things going forward. And maybe we'll give you a little bit more color about that, as we get a little further down the road on it.

And any specific conversations that you've had or still too early?

About the CapEx?

With the co-owners.

We talk to our callers all the time. I mean, that's just the normal operating but nothing specific. Yes.

Okay, thank you. Appreciate it. Thanks for taking the questions.

Our next question comes from the line of Jeremy Tonet with JPMorgan. Pleae proceed with your questions.

Hi, good morning. It's actually Rich on for Jeremy. Can you hear me?

Sure. Yes.

Hey, thanks. circle back to the offshore we update just on the acreage. Any options here evaluating beyond an outright sale here? Also curious when we can expect the next update on this front?

Yes. So Rich, just unequivocally we're not going to be in the offshore generation business. I mean that and the timing of what we do, we'll just be keeping an eye on the market and see what makes sense.

Very clear. Got it. And then just Governor Murphy's executive orders within that I guess the 100% clean energy plan. How do you see this impacting the Energy Master Plan overall and curious at a high level, what you're focused on either from that front or from an EMP front?

So I would kind of say, there's a lot of good news in that announcement last week for a company like ours, and especially one, it's been focused. We kicked off this effort on the last mile last year and I think this just kind of reinforces the need for it from a customer standpoint, and from a reliability standpoint. So lots of opportunities. We'll certainly be engaged in that. I personally am tripling down on electric vehicles as much as we can in this area, and that's driving the decarbonisation in the state. And then from a gas system standpoint, certainly some push on whether or not there's a lot of expansion of the gas system, we have about a high 80% saturation rate for our customers. So we never had our business plan set up for growth on the gas side. That's not in our numbers. We just kind of hook up customers, as they call this, but our replacement plans are completely aligned. If you look at the wording that's in the executive order by reducing methane emissions. So we think there's just a lot of positives in that announcement. And we'll work with the state and policy makers on whatever we can self drive that in the Energy Master Plan.

Got it, very helpful it. Sorry, just wanted to circle back one last time to offshore wind [indiscernible] to acreage. Is that is that all committed? And can you just run the numbers on what's in there and what's net to PEG?

It’s 35,000 acres, and so there's about 35,000 acres that are still available to some degree, we've committed some of that are set if they go ahead skip check. I don't have the exact numbers in front of us, but it's a de minimis amount of that 35,000.

Yes, there's, as that project was going forward, there was a need for some incremental acreage. And so some of those were made available for that purpose.

Great. Thank you for the time today.

Thanks Rich.

Our next question comes from the line of Durgesh Chopra with Evercore ISI. Please proceed with your question.

Hey, good morning team. Thanks for taking my questions. Good morning, guys. Just on the bench in front, I just want to reconcile and make sure we have this accurately captured the accounting order from the BPU last week that roughly mitigates about 20% to 30% of the pension expense volatility. So if you can confirm that, Dan, if that's still the right number, and then maybe you can update us on the sort of the lift out approach that you had highlighted you were considering just any updates that you can share there as well.

Yes. I guess I'm the first question. I think that's a reasonable way to think about it, although you will see as you step through time, some of the components elements under changing. So it's not a I think it's a fair way to think about where we sit today. But as we step through time, some of that could move as some of the component elements end up changing. I think with respect to the list that we've talked about a little bit in the past, we are continuing to explore that as a potential. Again, as a reminder really what that does is just shrink the overall size of the pension for us. And I think that potential still exists for us we're still doing diligence on it and we're working our way through the process. And we'll have some more information for you as we go through the year. But I wouldn't expect anything to be imminent but I would hope to see something happen this year [indiscernible] Durgesh.

We might have lost him.

Durgesh are you on mute? Not sure he's still connected but --

Shamali we can move to the next question. And if Durgesh comes back, we'll continue with him.

Sure. No problem. Our next question comes from the line of David Arcaro with Morgan Stanley. Please proceed with your question.

Hey, Ralph and Dan. Good morning. Thanks for taking my question.

Hey Dave.

Let's see. I was curious on nuclear. So many of your peers recently announced higher levels of nuclear O&M heading into 2023. Curious if you would expect a similar dynamic in terms of upward O&M pressure on your nuclear units? And then separate but somewhat related on nuclear fuel. They also, we're taking a more conservative approach in terms of building inventory and lowering risk of any kind of Russian supply interruptions that could occur in the future. Wondering if you have considered a similar strategic approach in terms of sourcing nuclear fuel.

Yes. So a couple of things on that front, on the just from an O&M standpoint, as you recall, the inflation reduction act required anyone who wanted to participate in the PTC or not participate, but fully participate in the PTC to pay prevailing wages at the sites. And we have been doing that for years here at PSEG. So no awkward O&MM impact for us. I don't know if there's anything beyond that the others are talking about, but specifically for us, I don't see anything that would be driving additional O&M expenses at those plants. And then on a fuel supply. We were not as dependent on Russian fuel supply, as at all for our fuel supply. So it's not an issue for us that we needed to get in front of, and I think we'll talk a little bit more about that at the, at our investor meeting. But I just it's, again, that's something that was forefront for us or something that we had to proactively address. Because we're not, we're just not in that marketplace. I think there's an impact on the entire market. There'll be an impact for everyone. But that's something we are trying to jump in front of right now.

Yes, I think we got pretty good line of sight in the near term on nuclear fuel, David just given from the standpoint of the fuel in the reactor, and then you've got your upcoming fuel reloads and those that as you kind of go through the years, the near term is pretty well-hedged and known, and that's on top of the fuel that's in the reactor. So I think we're in pretty good shape for the pursuit for the foreseeable future.

Got it. Got it. Thanks. That's helpful. And then I just wanted to clarify on the collateral postings. It's great to see that they've come down maybe sooner than expected. I was wondering if you could just remind us of how the collateral kind of falls off through the year and is that earlier than you had previously anticipated I think $800 million that you were able to pay down earlier? Is that helpful for EPS in terms of taking some of the short term debt off the balance sheet for this year?

Yes, David, we've said before, if you think about most of the price differential and most of the period that we do have hedged, a lot of what we would expect to see is that those positions would roll off through '23 and into the winter of '24 was where the bigger element of the totals were. And so that timing is fairly consistent. I think, to the extent that you saw prices come down, you're going to see a lower overall balance to the extent that they go back up that'll continue to move. So it will continue to be dynamic, but to the extent that that stays a little bit lower as we run through these next 12 months, we would have less overall collateral posted and that would be a benefit.

Okay, great. Thanks so much.

Yes.

Our next question comes from the line of Durgesh Chopra with Evercore ISI. Please proceed with your question.

Are you back?

I am. Can you hear me now?

We can.

Okay, sorry about that. It was actually my headset. So Dan, thank you. I heard all of that. I appreciate it. Just the lift that was roughly another 20% to 30% that would reduce the pension volatility by and so if you were able to get that successfully, the uplift successfully executed that would essentially basically kind of the 50% of the pension expense volatility would have been taken care of includes [indiscernible] order last week. Am I thinking about that correctly?

Yes. I think you mean the list out. Right.

Yes. That's right.

So I think that's a good way to think about if you think about building blocks, you'll have an element related to the utility with respect to the unrecognized losses, and then you would have another element which would be of comparable size. I think the way you're thinking about the math is right. There is the only caveat is again, as you do go through times, you'll see the different cost components and return components changed a little bit. So you could see some of them, but I think that's a fair way to think about it there.

Okay, perfect. And just one last one again in terms of timing, you might have said that, expect an update sometime this year. So by Analysts Day or Investor Day in March, we shouldn't be expecting that you get a you get a bench and lift out, right. That's coming later in the year?

That's the right way to think about it. Yes.

Thank you so much. I appreciate it again, guys. And thank you for bringing me back in time to ask my questions.

Anytime Durgesh.

Take care of the headset.

And our next question comes from the line of Michael Sullivan with Wolfe Research. Please proceed with your question.

Hey, Michael.

Hey, Ralph, how are you. Great. Yes, I didn't want to like front run the hour, say too much here. But just can you maybe give us a little preview of what else to expect just in terms of new disclosures? I mean, I imagine the growth rate and all that is kind of set. But in terms of like some of the nuclear things you alluded to, or we get some more flavor there. And then I guess on offshore wind side, it sounds like that timings not really tied to the analyst day?

Yes. No, that's not. Look I would say this The Michael, if you walk out of that meeting with even more confidence in our ability to execute on the things that we've been talking about that would be my goal for that investor meeting. We've done that over the last year in some crazy turbulent times. And I think that you'll see more of that. And I want you to walk out of that meeting with more confidence. So more than doubling down on some of the things that we've got planned in the utility. And that should be the real highlight of the conversation a little more about our thoughts about how to respond to the governor's call for action.

Okay, great. And then I think this kind of got asked a little bit, but just on the offshore wind proceeds. So it sounds like the $200 million you already got back is not a big needle mover. But when you stack that on top of what you could potentially get for GSOE. I'd imagine that's a little more material. So kind of as we think about where those proceeds could go.

Yes, and just so we are 100% clear, we have not received the $200 million back yet, right? That's in the process with our partner, and we're going through dotting the I's and crossing the T's in that whole conversation. So more to come on that front. But I think the materiality of the GSOE is a TBD. And we'll see what the market gives us on that front. And then Dan, and the team will do what Dan and the team have done for many years and put it to the best use.

Sorry. So are you suggesting that it could end up being in material like is there a reason that no actually worth anything?

No, I just don't want to, we're not building a plan that's built that's based on getting some New York bight multiples on it. So I don't want people to walk away with some inflated opinion on what those acres are going to be worth. We'll see what the market comes back with.

Okay, fair enough. Okay. Thanks very much.

Yes.

Our next question comes from the line of Julien Dumoulin-Smith with Bank of America. Please proceed with your question. Julien Dumoulin-Smith: Hey, good morning team. Thanks for the time. Appreciate it. Good to chat with you guys.

It's been a while. Julien Dumoulin-Smith: It's been a second year. Absolutely. I'm so just with respect to how you guys want to come back to this real quickly. A couple different moving pieces. First off, if I heard right in the comments, BGS here, you guys are moving away from that seems like a slightly more important strategic decision after years of benefiting there. Can you talk about that a little bit here, again, obviously not a big contribution. But then also related here, probably more critical and looking forward here what's your latest interpretation of the PTC and how that interplays with your 24 hedges and ultimately how you think about hedging right now, considering what IRS may or may not do?

I want to give that to Dan to give you details on it. But that is not a recent move on our part. We have been moving away over time on the BGSS and I think we've BGS and we've talked about that for a while on that BGSS for BGS and we've been we've been doing that if it's a different product, right? It's more of a shape product than a than a baseball product that are nuclear plants with support but Dan will give you a lot more details on that and the GMP.

Yes, just to just to be super clear, Julian if you think about it, the BGS product is a default product in New Jersey on the electric side of the business. And so PCG power has used that as a hedge for a long time and PCG power had nuclear and fossil units and had a very shaped output, seasonality by virtue of having both nuclear and fossil generation. And as we sold the fossil units, and we still had some BGS obligations you think about those are three years at a time that was not an ideal fit for nuclear, which is more shaped in a more of a block power. And so really don't take too much from the sale of the BGS. It just those remaining legacy tranches were not a good fit for a nuclear output that looks more like block shape power. What is not is related to the BGSS, which is basic gas supply service that we provide to PSE&G Ng, and actually can leverage some of that excess capacity in a way that we've done for many years and will continue to do that. So the move away is for just the small remaining legacy tranches that we had on BGS on the electric side, that were taken on three years at a time and unrelated to BGSS. With respect to the interpretations, I would love to have more of an interpretation than I do right now. But we don't have guidance from Treasury related to how they will define grocery seats in determining what the PTC will be based upon. And so we are still a little bit at the mercy of what Treasury will do. I think the outcome of the PTC's is going to be positive and supportive. But the exact dynamics of exactly what numbers you would use to figure out what that's going to be is undetermined by that I mean to the other part of your question how they will account for hedges in their calculation. And so that's the guidance we're still waiting upon. I think that the outcome will influence how we will end up hedging the nuclear units. We will try to align with how they will define grocery seats so that ultimately the PTC that we get will kind of fit the overall mechanism as it's supposed to work. And we can end up with that steady ultimate result at the PTC threshold or above if the markets are higher and so we're still a little bit of a waiting game. And I don't even have a date to tell you when Treasury is going to come out with it. The PTC has come into play for the first time in Cal 24. Obviously, companies like ours hedge in advance of that. So I'd love to have information sooner rather than later. But other elements of the IRA do kick in 2023. So we have not heard back from Treasury, any guidance with respect to how they're thinking about that exact definition. Julien Dumoulin-Smith: Got it. And related here with their second New Jersey stakeholders. Any update in the how you're thinking about treating it? There any changes in that construct, as you think about like a belt and suspenders of the federal program here? And we heard some comments from your peers here.

No, I mean, look, I think the upshot is that to the extent that PTC is a payment for the attribute, and ZEC is the payment for the attribute, we will net back that amount to the state. And that was in the original ZEC legislation that was put together. And so I think if that's net over the long run, this is going to be a very good thing for New Jersey because the payment for the attribute that's going to help nuclear ensure that it does have financial backing is going to be borne by the federal government rather than just New Jersey, and that'll be a positive thing on the bills over the long run.

And I would I would just support that by just saying from a belt and suspenders standpoint, I think anything we do here we be enough and policymakers in New Jersey would be for next generations. It's not something that would be belt and suspenders for anything near the near term. Julien Dumoulin-Smith: Got it. Understood what you mean by that. Appreciate that. All right. Excellent. Thank you guys very much. Appreciate it. Actually one last quick one on power, just if you don't mind with respect to all the commentary from the governor's office, etc. are you thinking about updating investments around power and the opportunities to maximize value of those assets here? And we've seen some commentary again, from some of your peers there but again, given what's going on with the governor, etc. I'm just curious if that is even more of an opportunity.

Yes, I think that was the PTC and that's in my opening remarks a little bit there Julian was all about hey, we potentially do some upgrades to Salem some change in the fuel cycle at Hope Creek and then long term extension of the licenses themselves. Not to mention everybody's talking about hydrogen element. But we'll talk a little bit more about that all on March 10. Julien Dumoulin-Smith: Got it. All right. That's what I thought. Thank you guys. Appreciate it. Good luck.

Our next question comes from the line of Paul Patterson with Glenrock Associates. Please proceed with your question.

Hello good morning.

Good morning Paul.

Just really quick just the extension of the licenses. Is that already reflected in the depreciation schedule of the assets?

No.

And how much might that lower the level of depreciation?

Yes. So the depreciation runs through 2036, 2040, 2046 for the New Jersey, and 2053, 2054, for the Pennsylvania units, and so those are presumptive of the extensions that gets you to those dates. But we've talked about those two things going on we talked about is the potential for another extension in New Jersey. That is not what is in place right now. And also, you may recall, [indiscernible] point had some questions raised by the NRC about their existing license extension, which has not changed what we have done. We believe that that will be restored without any change. And so with respect to the incremental 20 years, I don't have a number off the top of my head as to what that would do to us. But we can, that's easy math, I think that's all available. We could get that to you Paul.

Okay. Just over the years, we've seen different companies recognize these depreciation changes because of license extensions at different times. Some do it even before they file with the NRC. Some do it only when they get the NRC is official ruling on it. Any thoughts about when we might see the depreciation benefit show?

Yes. I think it's most likely what we have in hand, the extension.

And Paul let me just reiterate what Dan said about the timing. You got 36, 40 and 46 on these units. And normally, you would apply in about 10 years in advance. So just to kind of set the timeframe for you as to when the application going, we're just talking about it because it would be within the five years of our business plan.

Okay, got you. Thanks so much.

For the work done. Probably not for the receipt of the extension.

Okay, thank you.

Sure.

Our next question comes from the line of Travis Miller with Morningstar. Please proceed with your question.

Hi, everyone. Thanks for taking my question.

Morning Travis.

On the transmission, the onshore of the offshore transmission, any update on solicitations or development there anything along those lines?

No. We're waiting on that as well. I don't expect anything in the very near term on that. I think the BPU is committed to seeing through the work that they've approved so far, but we have not. There's no indication at this point on the timing of any new solicitations.

Okay, is a gating factor is the development in future off for when or would there be additional transmission for current?

I think a bunch of it has to do with the IRA and understanding how the tax treatment would be for a wire whether it's a wired it's deemed a generator lead or a wired deemed offshore transmission. So once they get through that process, I think there'll be some better idea of five times.

Okay, makes sense. And then I said I mentioned about the rate case at the end of the year. Anything unusual about that that would come out or just typical operating costs, capital updates?

No, just typical. Okay, that's all I had. Appreciate it.

Thanks Travis.

Our next question comes from the line of Anthony Crowdell with Mizuho. Please proceed with your question.

Hey, good morning, Ralph. Good morning Dan.

How are you?

Good. Just two quick ones, want to follow up from Durgesh’s two parter. You talked about maybe two of the three parts you were going to use to mitigate pension volatility. I think the third party didn't talk about was a pension tracker that you're going to ask for and rate case have filed the end of the year. Any feedback or discussion you've had with policymakers on support or anything around that?

I'll start and Dan can add anything he wants to put there. But look at the end of the day, whether it's a tract or any other kind of mechanism, we absolutely plan to have a conversation with the BPU about that. I'm just very happy with the near term what we were able to accomplish. And I think the combined with the American Water Adjustment or mechanism they put in for them I think the BPU is recognizing there may be some value here for not just for the companies but for the customers as well as they look at this. So we'll continue to have a conversation. I won't get tied into a tracker or mechanism but we'll have a conversation about it. It'd be part of the [rare case].

And then just one last housekeeping. If I look at the long term EPS growth rate 5% to 7%, capital spending drives rate base to your 6 to 7.5 a slight difference there. There is just a difference on the book ends there. The growth at the CFIO.

Yes, because the five to seven is for enterprise and the rate base growth is solely of utility, so anything and everything and CFIO is going to be in there. And then you'll have a little bit of noise as you go through O&M and different other components. But I think I think they're largely consistent. You should think about them that way.

Great. Thanks for taking my questions.

Thanks Anthony.

Our next question comes from the line of Paul Fremont with Lautenberg Dauman. Please proceed with your question.

Hey Paul.

Hey good morning.

Good morning.

Sort of a quick question on rate base growth. You guys I think had a range. But I think most of the stretch CapEx looked to be in the out years. So I was wondering how you got such a strong level of rate base growth in 2022?

The only thing I can think of. And I'm trying to interpret your question a little bit fall is whether any see web, it kind of worked its way through the numbers that could change your ultimate rate base as you go year-to-year.

Okay. Also, can you give us cents per share in terms of what change in pension cost you're assuming in 2023?

Yes, versus 22?

Yes.

At EI. we've given a range of $0.25 to $0.30 for pension and OPEB. And we're right within that range, that kind of around the midpoint of that range. So that's a consistent number. Obviously, EI we were estimating where we would come out, and we didn't see too much movement, either in markets or interest rates that moved us away from that. So you think about middle of that range? I'm in pretty good shape.

Okay, but you still got the accounting audit, right? And that didn't change the range is what you're saying?

It was assumed we had filed it at that point. And we had commented that we were optimistic that that would come through. It came through as expected. So it was part of what we were thinking at the time when we provide the range.

Great. And in terms of hedge guidance, I mean, is there a reason why we haven't seen sort of 25 hedge guidance for peg power?

No we got updated through '23 and '24. I mean, part of the answer could well be if you want to think about it this way, Paul, is that we still are awaiting what Treasury is going to do from the standpoint of, of guidance. And so that's going to be an important element as we go forward.

Okay, and then last question for me. You guys gave a gross margin per megawatt hour. Is there any guidance that you can provide on a gross margin per megawatt hour basis for peg power in 2023?

No, I mean, I think we've given you the overall hedge price across '23 and characterizes 95% to 100% fair. So I think you'll see that as we go through the quarters.

Okay. Thank you very much.

Thanks Paul.

Thanks Paul.

Our next question comes --

We have time for one more question.

Okay. No problem. And our last question comes from the line of Sophie Karp with KeyBanc Capital Markets. Please proceed with your question.

Hi. Good morning. Thank you for putting me in here. Most of my questions have been answered actually. But maybe I can just ask you about the gas utility future in New Jersey. Had given the -- in the comments that are coming out from the governor and just overall focus on electrification. How do you think about kind of the setup that you have going into this? What could be a multi decade trend? Specifically, are your electric and gas territories fully overlapped in terms of customers? Like where whatever you might lose as a gas business you will gain as an electric business or are they kind of cannibalized by other utilities? How should we think about that?

Yes. So it's a mixed bag for us that we have some gas only territory, some electric only territory but [indiscernible] our customers, bulk are combined. So I don't want to say it's a win-win, but it is a win-win for us to great expense. And because we're focused on all of our gas investments being in replacement activities, not new activities, but replacement activities that are going to help reduce methane, we're thinking those investments will make a ton of sense and will continue. So I actually think about this more from the standpoint of the speed in which we electrify and the cost to consumers and how we think about that. So we'll continue to drive that point. We'll be able to offset a bunch of it with the Energy Efficiency work that we've started. And we'll continue. We don't talk about our energy efficiency programs, half as much as we did in the past. But that's because it's just become such a core part of our business like any other anything else we do. So I'm thinking that the energy efficiency will help create more headroom on the bill. As we do that for customers the electrification can move faster in those areas, but for some of our urban centers, the challenges will remain and we'll have to really work closely with policymakers not to have sticker shock for everyone in the state.

Terrific, thanks so much. That’s all from me.

Thanks Sophie.

Thank you.

And that is all the time we have for questions. I would like to turn the floor back over to Mr. LaRossa for closing comments.

Well, thank you. And I just three things I want to hit on. One again, our thoughts and prayers to all those who were impacted by the tragic events that we had here earlier this month. The organization is still dealing with that and will continue for probably years to come. But during that time, we have always talked a lot about the transition and leadership here. And I think Ralph Izzo and a number of other people in the past, but no time, whatever either what I want to do more than now is thank the entire team and my direct reports that have been standing here with me and been able to not only deal with the tragic events, but also to execute on a plan that you heard earlier today. We've accomplished a lot in a short period of time. We'll continue to do that. And we'll continue to build your confidence and look forward to having that conversation with you on March 10 when we meet with you at the stock exchange in New York. Thanks for calling in.

And ladies and gentlemen this concludes the teleconference. You may disconnect your line at this time. Thank you for your participation.