PSEG Power plans a 200-MW nuclear uprate and is eyeing data center deals, while one unit at its Salem plant in New Jersey, jointly owned with Constellation Energy, faces an extended outage to address degraded equipment.

PSEG Power and Constellation Energy are planning a 200-megawatt uprate at their jointly owned Salem nuclear power plant in southern New Jersey, according to an earnings presentation by Public Service Enterprise Group, PSEG Power's parent company. Salem's current installed capacity is 2,280 MW. PSEG Power would hold a 112-MW share of the uprate, and Constellation would own the remainder. The uprate would support a recently announced nuclear-focused power purchase agreement with Google.

PSEG Power's roughly 3,760-MW nuclear fleet ran at a 95.5% capacity factor in the third quarter, up from 92.4% in the same period last year, according to the presentation.

The company also reported a setback at Salem. In its quarterly filing with the U.S. Securities and Exchange Commission, PSEG said Monday that a visual inspection last month during a scheduled refueling outage at Salem 1 revealed that the thermal shield inside the reactor vessel is degraded.

"We have initiated further testing, which is ongoing and is expected to extend the refueling outage," PSEG said. "The impact of the outage on Salem 1 will depend on the timing and results of the inspection and necessary repairs."

PSEG continues to explore potential deals with data center developers centered on PSEG Power's roughly 3.8-GW nuclear fleet, according to Ralph LaRossa, PSEG chair, president and CEO.

"PSEG Power is continuing to develop terms with large load entities for contracting arrangements involving existing nuclear production, future nuclear upgrades and other generation opportunities, similar to recently announced power purchase agreements in the PJM region and specifically in New Jersey," he said during the earnings call.

LaRossa said that a recent Federal Energy Regulatory Commission (FERC) decision rejecting key portions of the PJM Interconnection's proposed plan for interconnecting data centers and other large loads "reinforces that the focus has shifted to the states to address retail curtailment and cost issues associated with large load customers."

Public Service Electric and Gas Co. (PSE&G), a PSEG utility, is working with the administration of New Jersey Gov. Mikie Sherrill, D, and the state's utility regulators to limit electric cost increases for consumers and to consider new utility regulatory models, LaRossa said. For example, PSE&G plans to ask the New Jersey Board of Public Utilities (BPU) to approve a plan for recovering the costs of investments made since its last distribution rate case. "Our filing … is all about staying aligned with the governor's goals to keep rates flat for as long as possible," LaRossa said. PSEG said in its SEC filing that the utility expects to file the proposal by the end of the year.

The BPU's study on modernizing New Jersey's electric utility business model is now in its second phase, LaRossa noted. "This initiative is focusing on cost discipline, financing modernization, targeted incentives and shared savings and staged performance-based ratemaking," he said. He added that options outlined in the Phase 1 report, including multi-year rate plans, performance-based rates, performance incentive metrics, earnings sharing mechanisms, decoupling and shared savings mechanisms, offer "constructive paths to strengthen the connection between customer value, cost accountability and timely recovery of prudent investment."

PSE&G may have opportunities to invest in solar and in grid readiness for distributed resources, but the scope of those investments could depend on whether the state allows utilities to own generating assets, LaRossa said. "I think the policy is not yet certain here in New Jersey as to whether or not it will move in a regulated direction or stay solely competitive," he said.

On the financial side, PSEG's third-quarter net income fell to $376 million, or 76 cents per share, from $622 million, or $1.25 per share, a year earlier. The decline was mainly due to mark-to-market losses at PSEG Power, the Newark, New Jersey-based company said in its SEC filing. Third-quarter revenue slipped to $3 billion from $3.2 billion in the same period last year. Third-quarter operating income rose to $574 million from $565 million a year earlier, and weather-normalized electric sales increased about 1% over the last 12 months. PSEG expects operating earnings to grow at a compound annual rate of 6% to 8% through 2030, excluding one-time items.