Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2013

PSEG's, Power's And PSE&G's Respective Assets And (Liabilities) Measured At Fair Value On A Recurring Basis

	Recurring Fair Value Measurements as of March 31, 2013
Description	Total			Cash Collateral Netting (D)		Quoted Market Prices for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	Millions
PSEG
Assets:
Derivative Contracts:
Energy-Related Contracts (A)	$	127		$	—	$	—	$	56		$	71
Interest Rate Swaps (B)	$	52		$	—	$	—	$	52		$	—
NDT Fund (C)
Equity Securities	$	829		$	—	$	829	$	—		$	—
Debt Securities—Govt Obligations	$	378		$	—	$	—	$	378		$	—
Debt Securities—Other	$	327		$	—	$	—	$	327		$	—
Other Securities	$	68		$	—	$	—	$	68		$	—
Rabbi Trust (C)
Equity Securities—Mutual Funds	$	19		$	—	$	19	$	—		$	—
Debt Securities—Govt Obligations	$	115		$	—	$	—	$	115		$	—
Debt Securities—Other	$	47		$	—	$	—	$	47		$	—
Other Securities	$	2		$	—	$	—	$	2		$	—
Liabilities:
Derivative Contracts:
Energy-Related Contracts (A)	$	(150	)	$	26	$	—	$	(48	)	$	(128	)
Power
Assets:
Derivative Contracts:
Energy-Related Contracts (A)	$	58		$	—	$	—	$	56		$	2
NDT Fund (C)
Equity Securities	$	829		$	—	$	829	$	—		$	—
Debt Securities—Govt Obligations	$	378		$	—	$	—	$	378		$	—
Debt Securities—Other	$	327		$	—	$	—	$	327		$	—
Other Securities	$	68		$	—	$	—	$	68		$	—
Rabbi Trust (C)
Equity Securities—Mutual Funds	$	4		$	—	$	4	$	—		$	—
Debt Securities—Govt Obligations	$	22		$	—	$	—	$	22		$	—
Debt Securities—Other	$	9		$	—	$	—	$	9		$	—
Other Securities	$	—		$	—	$	—	$	—		$	—
Liabilities:
Derivative Contracts:
Energy-Related Contracts (A)	$	(41	)	$	26	$	—	$	(48	)	$	(19	)
PSE&G
Assets:
Derivative Contracts:
Energy Related Contracts (A)	$	69		$	—	$	—	$	—		$	69
Rabbi Trust (C)
Equity Securities—Mutual Funds	$	6		$	—	$	6	$	—		$	—
Debt Securities—Govt Obligations	$	38		$	—	$	—	$	38		$	—
Debt Securities—Other	$	16		$	—	$	—	$	16		$	—
Other Securities	$	1		$	—	$	—	$	1		$	—
Liabilities:
Derivative Contracts:
Energy Related Contracts (A)	$	(109	)	$	—	$	—	$	—		$	(109	)

	Recurring Fair Value Measurements as of December 31, 2012
Description	Total			Cash Collateral Netting (D)			Quoted Market Prices for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	Millions
PSEG
Assets:
Derivative Contracts:
Energy-Related Contracts (A)	$	234		$	(3	)	$	—	$	157		$	80
Interest Rate Swaps (B)	$	57		$	—		$	—	$	57		$	—
NDT Fund (C)
Equity Securities	$	789		$	—		$	789	$	—		$	—
Debt Securities—Govt Obligations	$	285		$	—		$	—	$	285		$	—
Debt Securities—Other	$	342		$	—		$	—	$	342		$	—
Other Securities	$	124		$	—		$	—	$	124		$	—
Rabbi Trust (C)
Equity Securities—Mutual Funds	$	18		$	—		$	18	$	—		$	—
Debt Securities—Govt Obligations	$	117		$	—		$	—	$	117		$	—
Debt Securities—Other	$	47		$	—		$	—	$	47		$	—
Other Securities	$	3		$	—		$	—	$	3		$	—
Liabilities:
Derivative Contracts:
Energy-Related Contracts (A)	$	(168	)	$	5		$	—	$	(62	)	$	(111	)
Power
Assets:
Derivative Contracts:
Energy-Related Contracts (A)	$	167		$	(3	)	$	—	$	157		$	13
NDT Fund (C)
Equity Securities	$	789		$	—		$	789	$	—		$	—
Debt Securities—Govt Obligations	$	285		$	—		$	—	$	285		$	—
Debt Securities—Other	$	342		$	—		$	—	$	342		$	—
Other Securities	$	124		$	—		$	—	$	124		$	—
Rabbi Trust (C)
Equity Securities—Mutual Funds	$	3		$	—		$	3	$	—		$	—
Debt Securities—Govt Obligations	$	23		$	—		$	—	$	23		$	—
Debt Securities—Other	$	9		$	—		$	—	$	9		$	—
Other Securities	$	1		$	—		$	—	$	1		$	—
Liabilities:
Derivative Contracts:
Energy-Related Contracts (A)	$	(61	)	$	5		$	—	$	(62	)	$	(4	)
PSE&G
Assets:
Derivative Contracts:
Energy Related Contracts (A)	$	67		$	—		$	—	$	—		$	67
Rabbi Trust (C)
Equity Securities—Mutual Funds	$	6		$	—		$	6	$	—		$	—
Debt Securities—Govt Obligations	$	39		$	—		$	—	$	39		$	—
Debt Securities—Other	$	15		$	—		$	—	$	15		$	—
Other Securities	$	1		$	—		$	—	$	1		$	—
Liabilities:
Derivative Contracts:
Energy Related Contracts (A)	$	(107	)	$	—		$	—	$	—		$	(107	)

(A) Level 2—Fair values for energy-related contracts are obtained primarily using a market-based approach. Most derivative contracts (forward purchase or sale contracts and swaps) are valued using the average of the bid/ask midpoints from multiple broker or dealer quotes or auction prices. Prices used in the valuation process are also corroborated independently by management to determine that values are based on actual transaction data or, in the absence of transactions, bid and offers for the day. Examples may include certain exchange and non-exchange traded capacity and electricity contracts and natural gas physical or swap contracts based on market prices, basis adjustments and other premiums where adjustments and premiums are not considered significant to the overall inputs.

Level 3—For energy-related contracts, which include more complex agreements where limited observable inputs or pricing information are available, modeling techniques are employed using assumptions reflective of contractual terms, current market rates, forward price curves, discount rates and risk factors, as applicable. Fair values of other energy contracts may be based on broker quotes that we cannot corroborate with actual market transaction data.

(B) Interest rate swaps are valued using quoted prices on commonly quoted intervals, which are interpolated for periods different than the quoted intervals, as inputs to a market valuation model. Market inputs can generally be verified and model selection does not involve significant management judgment.

(C) The NDT Fund maintains investments in various equity and fixed income securities classified as “available for sale.” The Rabbi Trust maintains investments in an S&P 500 index fund and various fixed income securities classified as “available for sale.” These securities are generally valued with prices that are either exchange provided (equity securities) or market transactions for comparable securities and/or broker quotes (fixed income securities). The fair value measurements table excludes a $13 million cash contribution made to the Rabbi Trust Fund as of March 31, 2013. Of the $13 million, $3 million and $10 million were contributed to Power's and Services' portions of the Rabbi Trust Fund, respectively.

Level 1—Investments in marketable equity securities within the NDT Fund are primarily investments in common stocks across a broad range of industries and sectors. Most equity securities are priced utilizing the principal market close price or, in some cases, midpoint, bid or ask price (primarily Level 1). The Rabbi Trust equity index fund is valued based on quoted prices in an active market (Level 1).

Level 2—NDT and Rabbi Trust fixed income securities are limited to investment grade corporate bonds and United States Treasury obligations or Federal Agency asset-backed securities with a wide range of maturities. Since many fixed income securities do not trade on a daily basis, they are priced using an evaluated pricing methodology that varies by asset class and reflects observable market information such as the most recent exchange price or quoted bid for similar securities. Market-based standard inputs typically include benchmark yields, reported trades, broker/dealer quotes, and issuer spreads (primarily Level 2). Short-term investments and certain commingled temporary investments are valued using observable market prices or market parameters such as time-to-maturity, coupon rate, quality rating and current yield (primarily Level 2).

(D) Cash collateral netting represents collateral amounts netted against derivative assets and liabilities as permitted under the accounting guidance for Offsetting of Amounts Related to Certain Contracts

Schedule of Quantitative Information About Level 3 Fair Value Measurements

	Quantitative Information About Level 3 Fair Value Measurements
Commodity	Level 3 Position	Fair Value as of March 31, 2013					Valuation Technique(s)	Significant Unobservable Input	Range
		Assets		(Liabilities)
		Millions
Power
Electricity	Electric Swaps	$	—	$	(13	)	Discounted cash flow	Power Basis	$0 to $10/MWh
Electricity	Electric Load Contracts	—		(6		)	Discounted cash flow	Historic Load Variability	-5% to +10%
Other	Various (A)	2		—
Total Power		$	2	$	(19	)
PSE&G
Gas and Capacity	Forward Contracts (B)	$	69	$	(109	)	Discounted cash flow	Long-Term Gas Basis and Capacity Prices	(B)
Total PSE&G		$	69	$	(109	)
TOTAL PSEG		$	71	$	(128	)

	Quantitative Information About Level 3 Fair Value Measurements
Commodity	Level 3 Position	Fair Value as of December 31, 2012					Valuation Technique(s)	Significant Unobservable Input	Range
		Assets		(Liabilities)
		Millions
Power
Electricity	Electric Swaps	$	7	$	(1	)	Discounted cash flow	Power Basis	$0 to $10/MWh
Electricity	Electric Load Contracts	1		(2		)	Discounted cash flow	Historic Load Variability	-5% to +10%
Other	Various (A)	5		(1		)
Total Power		$	13	$	(4	)
PSE&G
Gas and Capacity	Forward Contracts (B)	$	67	$	(107	)	Discounted cash flow	Long-Term Gas Basis and Capacity Prices	(B)
Total PSE&G		$	67	$	(107	)
TOTAL PSEG		$	80	$	(111	)

Changes In Level 3 Assets And (Liabilities) Measured At Fair Value On A Recurring Basis

Changes in Level 3 Assets and (Liabilities) Measured at Fair Value on a Recurring Basis for the Three Months EndedMarch 31, 2013

				Total Gains or (Losses) Realized/Unrealized
Description	Balance as of January 1, 2013			Included in Income (A)			Included in Regulatory Assets/ Liabilities (B)		Purchases (Sales)		Issuances (Settlements) (C)		Transfers In (Out) (D)			Balance as of March 31, 2013
	Millions
PSEG
Net Derivative Assets (Liabilities)	$	(31	)	$	(34	)	$	—	$	—	$	10	$	(2	)	$	(57	)
Power
Net Derivative Assets (Liabilities)	$	9		$	(34	)	$	—	$	—	$	10	$	(2	)	$	(17	)
PSE&G
Net Derivative Assets (Liabilities)	$	(40	)	$	—		$	—	$	—	$	—	$	—		$	(40	)

Changes in Level 3 Assets and (Liabilities) Measured at Fair Value on a Recurring Basis

for the Three Months EndedMarch 31, 2012

				Total Gains or (Losses) Realized/Unrealized
Description	Balance as of January 1, 2012			Included in Income (A)		Included in Regulatory Assets/ Liabilities (B)		Purchases (Sales)		Issuances (Settlements) (C)			Transfers In (Out) (D)		Balance as of March 31, 2012
	Millions
PSEG
Net Derivative Assets (Liabilities)	$	21		$	34	$	35	$	—	$	(29	)	$	—	$	61
Non-Recourse Debt	$	(50	)	$	—	$	—	$	—	$	—		$	—	$	(50	)
Power
Net Derivative Assets (Liabilities)	$	24		$	34	$	—	$	—	$	(29	)	$	—	$	29
PSE&G
Net Derivative Assets (Liabilities)	$	(3	)	$	—	$	35	$	—	$	—		$	—	$	32

(A) PSEG’s and Power’s gains and losses attributable to changes in net derivative assets and liabilities include $(34) million and $34 million in Operating Income in 2013 and 2012, respectively. Of the $(34) million in Operating Income in 2013, $(24) million is unrealized. Of the $34 million in Operating Income in 2012, $5 million is unrealized.

(B) Mainly includes gains/losses on PSE&G’s derivative contracts that are not included in either earnings or OCI, as they are deferred as a Regulatory Asset/Liability and are expected to be recovered from/returned to PSE&G’s customers.

(C) Represents $10 million in settlements in 2013 and $(29) million in settlements in 2012.

(D) During the three months ended March 31, 2013, $2 million of net derivatives assets were transferred from Level 3 to Level 2, due to more observable pricing for the underlying securities. The transfer was recognized as of the beginning of the first quarter (i.e. the quarter in which the transfer occurred), as per PSEG’s policy. There were no transfers among levels for the three months ended March 31, 2012.

As

Schedule Of Fair Value Of Debt Table [Text Block]

	March 31, 2013				December 31, 2012
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	Millions
Long-Term Debt:
PSEG (Parent) (A)	$	35	$	52	$	38	$	57
Power -Recourse Debt (B)	2,340		2,781		2,340		2,818
PSE&G (B)	5,042		5,750		4,795		5,606
Transition Funding (PSE&G) (B)	639		703		690		765
Transition Funding II (PSE&G) (B)	32		34		32		34
Energy Holdings:
Project Level, Non-Recourse Debt (C)	26		26		44		44
Total Long-Term Debt	$	8,114	$	9,346	$	7,939	$	9,324

(A) Fair value represents net offsets to debt resulting from adjustments from interest rate swaps entered into to hedge certain debt at Power. Carrying amount represents such fair value reduced by the unamortized premium resulting from a debt exchange entered into between Power and Energy Holdings.

(B) The debt fair valuation is based on the present value of each bond’s future cash flows. The discount rates used in the present value analysis are based on an estimate of new issue bond yields across the treasury curve. When a bond has embedded options, an interest rate model is used to reflect the impact of interest rate volatility into the analysis (primarily Level 2 measurements).

(C) Non-recourse project debt is valued as equivalent to the amortized cost and is classified as a Level 3 measurement. The $18 million of Non-Recourse Debt associated with a commercial real estate property held for sale was reclassified to Other Current Liabilities in 2013.