Fair Value Measurements

12 Months Ended

Dec. 31, 2017

Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]

Fair Value Measurements

Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Accounting guidance for fair value measurement emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and establishes a fair value hierarchy that distinguishes between assumptions based on market data obtained from independent sources and those based on an entity’s own assumptions. The hierarchy prioritizes the inputs to fair value measurement into three levels:

Level 1—measurements utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that PSEG, PSE&G and Power have the ability to access. These consist primarily of listed equity securities and money market mutual funds, as well as natural gas futures contracts executed on NYMEX.

Level 2—measurements include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and other observable inputs such as interest rates and yield curves that are observable at commonly quoted intervals. These consist primarily of non-exchange traded derivatives such as forward contracts or options and most fixed income securities.

Level 3—measurements use unobservable inputs for assets or liabilities, based on the best information available and might include an entity’s own data and assumptions. In some valuations, the inputs used may fall into different levels of the hierarchy. In these cases, the financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. As of December 31, 2017, these consisted primarily of certain electric load contracts and gas contracts.

Certain derivative transactions may transfer from Level 2 to Level 3 if inputs become unobservable and internal modeling techniques are employed to determine fair value. Conversely, measurements may transfer from Level 3 to Level 2 if the inputs become observable.

The following tables present information about PSEG’s, PSE&G’s and Power’s respective assets and (liabilities) measured at fair value on a recurring basis as of December 31, 2017 and December 31, 2016, including the fair value measurements and the levels of inputs used in determining those fair values. Amounts shown for PSEG include the amounts shown for PSE&G and Power.

	Recurring Fair Value Measurements as of December 31, 2017
Description	Total			Netting  (E)			Quoted Market Prices for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	Millions
PSEG
Assets:
Cash Equivalents (A)	$	223		$	—		$	223		$	—		$	—
Derivative Contracts:
Energy-Related Contracts (B)	$	36		$	(433	)	$	15		$	442		$	12
NDT Fund (D)
Equity Securities	$	1,055		$	—		$	1,053		$	2		$	—
Debt Securities—U.S. Treasury	$	314		$	—		$	—		$	314		$	—
Debt Securities—Govt Other	$	270		$	—		$	—		$	270		$	—
Debt Securities—Corporate	$	402		$	—		$	—		$	402		$	—
Other Securities	$	92		$	—		$	92		$	—		$	—
Rabbi Trust (D)
Equity Securities—Mutual Funds	$	25		$	—		$	25		$	—		$	—
Debt Securities—U.S. Treasury	$	51		$	—		$	—		$	51		$	—
Debt Securities—Govt Other	$	34		$	—		$	—		$	34		$	—
Debt Securities—Corporate	$	119		$	—		$	—		$	119		$	—
Other Securities	$	2		$	—		$	2		$	—		$	—
Liabilities:
Derivative Contracts:
Energy-Related Contracts (B)	$	(21	)	$	477		$	(8	)	$	(485	)	$	(5	)
PSE&G
Assets:
Cash Equivalents (A)	$	223		$	—		$	223		$	—		$	—
Rabbi Trust (D)
Equity Securities—Mutual Funds	$	5		$	—		$	5		$	—		$	—
Debt Securities—U.S. Treasury	$	10		$	—		$	—		$	10		$	—
Debt Securities—Govt Other	$	7		$	—		$	—		$	7		$	—
Debt Securities—Corporate	$	24		$	—		$	—		$	24		$	—
Other Securities	$	—		$	—		$	—		$	—		$	—
Power
Assets:
Derivative Contracts:
Energy-Related Contracts (B)	$	36		$	(433	)	$	15		$	442		$	12
NDT Fund (D)
Equity Securities	$	1,055		$	—		$	1,053		$	2		$	—
Debt Securities—U.S. Treasury	$	314		$	—		$	—		$	314		$	—
Debt Securities—Govt Other	$	270		$	—		$	—		$	270		$	—
Debt Securities—Corporate	$	402		$	—		$	—		$	402		$	—
Other Securities	$	92		$	—		$	92		$	—		$	—
Rabbi Trust (D)
Equity Securities—Mutual Funds	$	6		$	—		$	6		$	—		$	—
Debt Securities—U.S. Treasury	$	13		$	—		$	—		$	13		$	—
Debt Securities—Govt Other	$	8		$	—		$	—		$	8		$	—
Debt Securities—Corporate	$	30		$	—		$	—		$	30		$	—
Other Securities	$	—		$	—		$	—		$	—		$	—
Liabilities:
Derivative Contracts:
Energy-Related Contracts (B)	$	(21	)	$	477		$	(8	)	$	(485	)	$	(5	)

	Recurring Fair Value Measurements as of December 31, 2016
Description	Total			Netting  (E)			Quoted Market Prices for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	Millions
PSEG
Assets:
Cash Equivalents (A)	$	365		$	—		$	365		$	—		$	—
Derivative Contracts:
Energy-Related Contracts (B)	$	186		$	(371	)	$	17		$	533		$	7
Interest Rate Swaps (C)	$	1		$	—		$	—		$	1		$	—
NDT Fund (D)
Equity Securities	$	957		$	—		$	954		$	3		$	—
Debt Securities—U.S. Treasury	$	227		$	—		$	—		$	227		$	—
Debt Securities—Govt Other	$	293		$	—		$	—		$	293		$	—
Debt Securities—Corporate	$	337		$	—		$	—		$	337		$	—
Other Securities	$	44		$	—		$	44		$	—		$	—
Rabbi Trust (D)
Equity Securities—Mutual Funds	$	22		$	—		$	22		$	—		$	—
Debt Securities—U.S. Treasury	$	37		$	—		$	—		$	37		$	—
Debt Securities—Govt Other	$	66		$	—		$	—		$	66		$	—
Debt Securities—Corporate	$	91		$	—		$	—		$	91		$	—
Other Securities	$	1		$	—		$	1		$	—		$	—
Liabilities:
Derivative Contracts:
Energy-Related Contracts (B)	$	(16	)	$	372		$	(18	)	$	(364	)	$	(6	)
PSE&G
Assets:
Cash Equivalents (A)	$	365		$	—		$	365		$	—		$	—
Derivative Contracts:
Energy Related Contracts (B)	$	—		$	—		$	—		$	—		$	—
Rabbi Trust (D)
Equity Securities—Mutual Funds	$	5		$	—		$	5		$	—		$	—
Debt Securities—U.S. Treasury	$	7		$	—		$	—		$	7		$	—
Debt Securities—Govt Other	$	13		$	—		$	—		$	13		$	—
Debt Securities—Corporate	$	18		$	—		$	—		$	18		$	—
Other Securities	$	—		$	—		$	—		$	—		$	—
Liabilities:
Derivative Contracts:
Energy-Related Contracts (B)	$	(5	)	$	—		$	—		$	—		$	(5	)
Power
Assets:
Derivative Contracts:
Energy-Related Contracts (B)	$	186		$	(371	)	$	17		$	533		$	7
NDT Fund (D)
Equity Securities	$	957		$	—		$	954		$	3		$	—
Debt Securities—U.S. Treasury	$	227		$	—		$	—		$	227		$	—
Debt Securities—Govt Other	$	293		$	—		$	—		$	293		$	—
Debt Securities—Corporate	$	337		$	—		$	—		$	337		$	—
Other Securities	$	44		$	—		$	44		$	—		$	—
Rabbi Trust (D)
Equity Securities—Mutual Funds	$	5		$	—		$	5		$	—		$	—
Debt Securities—U.S. Treasury	$	9		$	—		$	—		$	9		$	—
Debt Securities—Govt Other	$	16		$	—		$	—		$	16		$	—
Debt Securities—Corporate	$	23		$	—		$	—		$	23		$	—
Other Securities	$	—		$	—		$	—		$	—		$	—
Liabilities:
Derivative Contracts:
Energy-Related Contracts (B)	$	(11	)	$	372		$	(18	)	$	(364	)	$	(1	)

(A) Represents money market mutual funds.

(B) Level 1—During 2016 a net fair value of $1 million relating to energy-related contracts was transferred from Level 2 into Level 1. These contracts represent natural gas futures contracts executed on NYMEX, and are being valued solely on settled pricing inputs which come directly from the exchange.

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 settled prices from similar assets and liabilities from an exchange, such as NYMEX, ICE and Nodal Exchange, 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—Unobservable inputs are used for the valuation of certain contracts. See “Additional Information Regarding Level 3 Measurements” below for more information on the utilization of unobservable inputs.

(C) 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.

(D) As of December 31, 2016, the fair value measurement table excludes cash of $1 million, which is part of the NDT Fund. The NDT Fund maintains investments in various equity and fixed income securities classified as “available for sale.” The Rabbi Trust maintains investments in a Russell 3000 index fund and various fixed income securities classified as “available for sale” as of December 31, 2017. The Rabbi Trust maintained investments in an S&P 500 index fund and various securities classified as “available for sale” as of December 31, 2016. 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).

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. Other Securities in the NDT and Rabbi Trust Funds consist primarily of investments in Dreyfus money market funds which seek a high level of current income as is consistent with the preservation of capital and the maintenance of liquidity. To pursue its goals, the fund normally invests in a diversified portfolio of high quality, short-term, dollar-denominated debt securities and government securities. The funds’ Net Asset Value is priced and published daily. The Rabbi Trust equity index fund is valued based on quoted prices in an active market.

Level 2—NDT and Rabbi Trust fixed income securities include investment grade corporate bonds, collateralized mortgage obligations, asset-backed securities and certain government and U.S. Treasury obligations or Federal Agency asset-backed securities and municipal bonds 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. The preferred stocks are not actively traded on a daily basis and therefore, are also priced using an evaluated pricing methodology. Certain short-term investments are valued using observable market prices or market parameters such as time-to-maturity, coupon rate, quality rating and current yield.

(E) Represents the netting of fair value balances with the same counterparty (where the right of offset exists) and the application of collateral. All cash collateral received or posted that has been allocated to derivative positions, where the right of offset exists, has been offset in the Consolidated Balance Sheets. As of December 31, 2017 and 2016, Power had net cash collateral/margin payments to counterparties of $146 million and $56 million, respectively. Of these net cash collateral/margin payments $44 million as of December 31, 2017 and $1 million as of December 31, 2016 were netted against the corresponding net derivative contract positions. Of the $44 million of cash collateral as of December 31, 2017, $(3) million was netted against assets, and $47 million was netted against liabilities. Of the $1 million of cash collateral as of December 31, 2016, $(3) million was netted against assets and $4 million was netted against liabilities.

Additional Information Regarding Level 3 Measurements

For valuations that include both observable and unobservable inputs, if the unobservable input is determined to be significant to the overall inputs, the entire valuation is categorized in Level 3. This includes derivatives valued using indicative price quotations for contracts with tenors that extend into periods with no observable pricing. In instances where observable data is unavailable, consideration is given to the assumptions that market participants would use in valuing the asset or liability. This includes assumptions about market risks such as liquidity, volatility and contract duration. Such instruments are categorized in Level 3 because the model inputs generally are not observable. PSEG’s Risk Management Committee (RMC) approves risk management policies and objectives for risk assessment, control and valuation, counterparty credit approval and the monitoring and reporting of risk exposures. The RMC reports to the Corporate Governance and Audit Committees of the PSEG Board of Directors on the scope of the risk management activities and is responsible for approving all valuation procedures at PSEG. Forward price curves for the power market utilized by Power to manage the portfolio are maintained and reviewed by PSEG’s Enterprise Risk Management market pricing group and used for financial reporting purposes. PSEG considers credit and nonperformance risk in the valuation of derivative contracts categorized in Levels 2 and 3, including both historical and current market data, in its assessment of credit and nonperformance risk by counterparty. The impacts of credit and nonperformance risk were not material to the financial statements.

For PSE&G, the natural gas supply contract is measured at fair value using modeling techniques taking into account the current price of natural gas adjusted for appropriate risk factors, as applicable, and internal assumptions about transportation costs, and accordingly, the fair value measurements are classified in Level 3. The fair value of Power’s electric load contracts in which load consumption may change hourly based on demand are measured using certain unobservable inputs, such as historic load variability and, accordingly, are categorized as Level 3. The fair value of Power’s gas physical contracts at certain illiquid delivery locations are measured using average historical basis and, accordingly, are categorized as Level 3. While these gas physical contracts have an unobservable component in their respective forward price curves, the fluctuations in fair value have been driven primarily by changes in the observable inputs. The following tables provide details surrounding significant Level 3 valuations as of December 31, 2017 and 2016.

	Quantitative Information About Level 3 Fair Value Measurements
Commodity	Level 3 Position	Fair Value as of December 31, 2017					Valuation Technique(s)	Significant Unobservable  Input	Range
		Assets		(Liabilities)
		Millions
Power
Electricity	Electric Load Contracts	$	1	$	(3	)	Discounted Cash flow	Historic Load Variability	0% to +10%
Gas	Gas Physical Contracts	11		(2		)	Discounted Cash flow	Average Historical Basis	-40% to -10%
Total Power		$	12	$	(5	)
Total PSEG		$	12	$	(5	)

	Quantitative Information About Level 3 Fair Value Measurements
Commodity	Level 3 Position	Fair Value as of December 31, 2016					Valuation Technique(s)	Significant Unobservable Input	Range
		Assets		(Liabilities)
		Millions
PSE&G
Gas	Natural Gas Supply  Contract	$	—	$	(5	)	Discounted Cash Flow	Transportation Costs	$0.60 to $0.80/Dth
Total PSE&G		$	—	$	(5	)
Power
Electricity	Electric Load Contracts	$	7	$	(1	)	Discounted Cash Flow	Historic Load Variability	0% to +10%
Gas (A)	Other	—		—
Total Power		$	7	$	(1	)
Total PSEG		$	7	$	(6	)

(A) Includes gas positions which were immaterial.

Significant unobservable inputs listed above would have a direct impact on the fair values of the above Level 3 instruments if they were adjusted. For energy-related contracts in cases where Power is a seller, an increase in the load variability would decrease the fair value. For gas-related contracts in cases where Power is a buyer, an increase in the average historical basis would increase the fair value.

A reconciliation of the beginning and ending balances of Level 3 derivative contracts and securities for the years ended December 31, 2017 and 2016, respectively, follows:

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

for the Year Ended December 31, 2017

				Total Gains or (Losses) Realized/Unrealized
Description	Balance as of January 1, 2017			Included  in Income (A)		Included in Regulatory  Assets/ Liabilities (B)		Purchases, (Sales)		Issuances/ Settlements (C)			Transfers In/Out (D)			Balance as of December 31, 2017
	Millions
PSEG
Net Derivative Assets (Liabilities)	$	1		$	26	$	5	$	—	$	(24	)	$	(1	)	$	7
PSE&G
Net Derivative Assets (Liabilities)	$	(5	)	$	—	$	5	$	—	$	—		$	—		$	—
Power
Net Derivative Assets (Liabilities)	$	6		$	26	$	—	$	—	$	(24	)	$	(1	)	$	7

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

for the Year Ended December 31, 2016

			Total Gains or (Losses) Realized/Unrealized
Description	Balance as of January 1, 2016		Included  in Income (A)		Included in Regulatory  Assets/ Liabilities (B)			Purchases, (Sales)		Issuances/ Settlements (C)			Transfers In/Out		Balance as of December 31, 2016
	Millions
PSEG
Net Derivative Assets (Liabilities)	$	13	$	13	$	(7	)	$	3	$	(21	)	$	—	$	1
PSE&G
Net Derivative Assets (Liabilities)	$	2	$	—	$	(7	)	$	—	$	—		$	—	$	(5	)
Power
Net Derivative Assets (Liabilities)	$	11	$	13	$	—		$	3	$	(21	)	$	—	$	6

(A) PSEG’s and Power’s gains(losses) attributable to changes in net derivative assets and liabilities for 2017 include $14 million in Operating Revenues, of which $(9) million is unrealized and $12 million in Energy Costs, all of which is unrealized. For 2016, $25 million is included in Operating Revenues, of which $(5) million is unrealized, and $(12) million is in Energy Costs, all of which is realized.

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

(C) Represents $(24) million and $(21) million in settlements for derivative contracts in 2017 and 2016, respectively.

(D) During the year ended December 31, 2017, $(1) million of net derivatives assets/liabilities were transferred from Level 2 to Level 3.

As of December 31, 2017, PSEG carried $2.6 billion of net assets that are measured at fair value on a recurring basis, of which $7 million of net assets were measured using unobservable inputs and classified as Level 3 within the fair value hierarchy.

As of December 31, 2016, PSEG carried $2.6 billion of net assets that are measured at fair value on a recurring basis, of which $1 million of net assets were measured using unobservable inputs and classified as Level 3 within the fair value hierarchy.

PSE&G [Member]

Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]

Fair Value Measurements

Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Accounting guidance for fair value measurement emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and establishes a fair value hierarchy that distinguishes between assumptions based on market data obtained from independent sources and those based on an entity’s own assumptions. The hierarchy prioritizes the inputs to fair value measurement into three levels:

Level 1—measurements utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that PSEG, PSE&G and Power have the ability to access. These consist primarily of listed equity securities and money market mutual funds, as well as natural gas futures contracts executed on NYMEX.

Level 2—measurements include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and other observable inputs such as interest rates and yield curves that are observable at commonly quoted intervals. These consist primarily of non-exchange traded derivatives such as forward contracts or options and most fixed income securities.

Level 3—measurements use unobservable inputs for assets or liabilities, based on the best information available and might include an entity’s own data and assumptions. In some valuations, the inputs used may fall into different levels of the hierarchy. In these cases, the financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. As of December 31, 2017, these consisted primarily of certain electric load contracts and gas contracts.

Certain derivative transactions may transfer from Level 2 to Level 3 if inputs become unobservable and internal modeling techniques are employed to determine fair value. Conversely, measurements may transfer from Level 3 to Level 2 if the inputs become observable.

The following tables present information about PSEG’s, PSE&G’s and Power’s respective assets and (liabilities) measured at fair value on a recurring basis as of December 31, 2017 and December 31, 2016, including the fair value measurements and the levels of inputs used in determining those fair values. Amounts shown for PSEG include the amounts shown for PSE&G and Power.

	Recurring Fair Value Measurements as of December 31, 2017
Description	Total			Netting  (E)			Quoted Market Prices for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	Millions
PSEG
Assets:
Cash Equivalents (A)	$	223		$	—		$	223		$	—		$	—
Derivative Contracts:
Energy-Related Contracts (B)	$	36		$	(433	)	$	15		$	442		$	12
NDT Fund (D)
Equity Securities	$	1,055		$	—		$	1,053		$	2		$	—
Debt Securities—U.S. Treasury	$	314		$	—		$	—		$	314		$	—
Debt Securities—Govt Other	$	270		$	—		$	—		$	270		$	—
Debt Securities—Corporate	$	402		$	—		$	—		$	402		$	—
Other Securities	$	92		$	—		$	92		$	—		$	—
Rabbi Trust (D)
Equity Securities—Mutual Funds	$	25		$	—		$	25		$	—		$	—
Debt Securities—U.S. Treasury	$	51		$	—		$	—		$	51		$	—
Debt Securities—Govt Other	$	34		$	—		$	—		$	34		$	—
Debt Securities—Corporate	$	119		$	—		$	—		$	119		$	—
Other Securities	$	2		$	—		$	2		$	—		$	—
Liabilities:
Derivative Contracts:
Energy-Related Contracts (B)	$	(21	)	$	477		$	(8	)	$	(485	)	$	(5	)
PSE&G
Assets:
Cash Equivalents (A)	$	223		$	—		$	223		$	—		$	—
Rabbi Trust (D)
Equity Securities—Mutual Funds	$	5		$	—		$	5		$	—		$	—
Debt Securities—U.S. Treasury	$	10		$	—		$	—		$	10		$	—
Debt Securities—Govt Other	$	7		$	—		$	—		$	7		$	—
Debt Securities—Corporate	$	24		$	—		$	—		$	24		$	—
Other Securities	$	—		$	—		$	—		$	—		$	—
Power
Assets:
Derivative Contracts:
Energy-Related Contracts (B)	$	36		$	(433	)	$	15		$	442		$	12
NDT Fund (D)
Equity Securities	$	1,055		$	—		$	1,053		$	2		$	—
Debt Securities—U.S. Treasury	$	314		$	—		$	—		$	314		$	—
Debt Securities—Govt Other	$	270		$	—		$	—		$	270		$	—
Debt Securities—Corporate	$	402		$	—		$	—		$	402		$	—
Other Securities	$	92		$	—		$	92		$	—		$	—
Rabbi Trust (D)
Equity Securities—Mutual Funds	$	6		$	—		$	6		$	—		$	—
Debt Securities—U.S. Treasury	$	13		$	—		$	—		$	13		$	—
Debt Securities—Govt Other	$	8		$	—		$	—		$	8		$	—
Debt Securities—Corporate	$	30		$	—		$	—		$	30		$	—
Other Securities	$	—		$	—		$	—		$	—		$	—
Liabilities:
Derivative Contracts:
Energy-Related Contracts (B)	$	(21	)	$	477		$	(8	)	$	(485	)	$	(5	)

	Recurring Fair Value Measurements as of December 31, 2016
Description	Total			Netting  (E)			Quoted Market Prices for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	Millions
PSEG
Assets:
Cash Equivalents (A)	$	365		$	—		$	365		$	—		$	—
Derivative Contracts:
Energy-Related Contracts (B)	$	186		$	(371	)	$	17		$	533		$	7
Interest Rate Swaps (C)	$	1		$	—		$	—		$	1		$	—
NDT Fund (D)
Equity Securities	$	957		$	—		$	954		$	3		$	—
Debt Securities—U.S. Treasury	$	227		$	—		$	—		$	227		$	—
Debt Securities—Govt Other	$	293		$	—		$	—		$	293		$	—
Debt Securities—Corporate	$	337		$	—		$	—		$	337		$	—
Other Securities	$	44		$	—		$	44		$	—		$	—
Rabbi Trust (D)
Equity Securities—Mutual Funds	$	22		$	—		$	22		$	—		$	—
Debt Securities—U.S. Treasury	$	37		$	—		$	—		$	37		$	—
Debt Securities—Govt Other	$	66		$	—		$	—		$	66		$	—
Debt Securities—Corporate	$	91		$	—		$	—		$	91		$	—
Other Securities	$	1		$	—		$	1		$	—		$	—
Liabilities:
Derivative Contracts:
Energy-Related Contracts (B)	$	(16	)	$	372		$	(18	)	$	(364	)	$	(6	)
PSE&G
Assets:
Cash Equivalents (A)	$	365		$	—		$	365		$	—		$	—
Derivative Contracts:
Energy Related Contracts (B)	$	—		$	—		$	—		$	—		$	—
Rabbi Trust (D)
Equity Securities—Mutual Funds	$	5		$	—		$	5		$	—		$	—
Debt Securities—U.S. Treasury	$	7		$	—		$	—		$	7		$	—
Debt Securities—Govt Other	$	13		$	—		$	—		$	13		$	—
Debt Securities—Corporate	$	18		$	—		$	—		$	18		$	—
Other Securities	$	—		$	—		$	—		$	—		$	—
Liabilities:
Derivative Contracts:
Energy-Related Contracts (B)	$	(5	)	$	—		$	—		$	—		$	(5	)
Power
Assets:
Derivative Contracts:
Energy-Related Contracts (B)	$	186		$	(371	)	$	17		$	533		$	7
NDT Fund (D)
Equity Securities	$	957		$	—		$	954		$	3		$	—
Debt Securities—U.S. Treasury	$	227		$	—		$	—		$	227		$	—
Debt Securities—Govt Other	$	293		$	—		$	—		$	293		$	—
Debt Securities—Corporate	$	337		$	—		$	—		$	337		$	—
Other Securities	$	44		$	—		$	44		$	—		$	—
Rabbi Trust (D)
Equity Securities—Mutual Funds	$	5		$	—		$	5		$	—		$	—
Debt Securities—U.S. Treasury	$	9		$	—		$	—		$	9		$	—
Debt Securities—Govt Other	$	16		$	—		$	—		$	16		$	—
Debt Securities—Corporate	$	23		$	—		$	—		$	23		$	—
Other Securities	$	—		$	—		$	—		$	—		$	—
Liabilities:
Derivative Contracts:
Energy-Related Contracts (B)	$	(11	)	$	372		$	(18	)	$	(364	)	$	(1	)

(A) Represents money market mutual funds.

(B) Level 1—During 2016 a net fair value of $1 million relating to energy-related contracts was transferred from Level 2 into Level 1. These contracts represent natural gas futures contracts executed on NYMEX, and are being valued solely on settled pricing inputs which come directly from the exchange.

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 settled prices from similar assets and liabilities from an exchange, such as NYMEX, ICE and Nodal Exchange, 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—Unobservable inputs are used for the valuation of certain contracts. See “Additional Information Regarding Level 3 Measurements” below for more information on the utilization of unobservable inputs.

(C) 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.

(D) As of December 31, 2016, the fair value measurement table excludes cash of $1 million, which is part of the NDT Fund. The NDT Fund maintains investments in various equity and fixed income securities classified as “available for sale.” The Rabbi Trust maintains investments in a Russell 3000 index fund and various fixed income securities classified as “available for sale” as of December 31, 2017. The Rabbi Trust maintained investments in an S&P 500 index fund and various securities classified as “available for sale” as of December 31, 2016. 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).

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. Other Securities in the NDT and Rabbi Trust Funds consist primarily of investments in Dreyfus money market funds which seek a high level of current income as is consistent with the preservation of capital and the maintenance of liquidity. To pursue its goals, the fund normally invests in a diversified portfolio of high quality, short-term, dollar-denominated debt securities and government securities. The funds’ Net Asset Value is priced and published daily. The Rabbi Trust equity index fund is valued based on quoted prices in an active market.

Level 2—NDT and Rabbi Trust fixed income securities include investment grade corporate bonds, collateralized mortgage obligations, asset-backed securities and certain government and U.S. Treasury obligations or Federal Agency asset-backed securities and municipal bonds 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. The preferred stocks are not actively traded on a daily basis and therefore, are also priced using an evaluated pricing methodology. Certain short-term investments are valued using observable market prices or market parameters such as time-to-maturity, coupon rate, quality rating and current yield.

(E) Represents the netting of fair value balances with the same counterparty (where the right of offset exists) and the application of collateral. All cash collateral received or posted that has been allocated to derivative positions, where the right of offset exists, has been offset in the Consolidated Balance Sheets. As of December 31, 2017 and 2016, Power had net cash collateral/margin payments to counterparties of $146 million and $56 million, respectively. Of these net cash collateral/margin payments $44 million as of December 31, 2017 and $1 million as of December 31, 2016 were netted against the corresponding net derivative contract positions. Of the $44 million of cash collateral as of December 31, 2017, $(3) million was netted against assets, and $47 million was netted against liabilities. Of the $1 million of cash collateral as of December 31, 2016, $(3) million was netted against assets and $4 million was netted against liabilities.

Additional Information Regarding Level 3 Measurements

For valuations that include both observable and unobservable inputs, if the unobservable input is determined to be significant to the overall inputs, the entire valuation is categorized in Level 3. This includes derivatives valued using indicative price quotations for contracts with tenors that extend into periods with no observable pricing. In instances where observable data is unavailable, consideration is given to the assumptions that market participants would use in valuing the asset or liability. This includes assumptions about market risks such as liquidity, volatility and contract duration. Such instruments are categorized in Level 3 because the model inputs generally are not observable. PSEG’s Risk Management Committee (RMC) approves risk management policies and objectives for risk assessment, control and valuation, counterparty credit approval and the monitoring and reporting of risk exposures. The RMC reports to the Corporate Governance and Audit Committees of the PSEG Board of Directors on the scope of the risk management activities and is responsible for approving all valuation procedures at PSEG. Forward price curves for the power market utilized by Power to manage the portfolio are maintained and reviewed by PSEG’s Enterprise Risk Management market pricing group and used for financial reporting purposes. PSEG considers credit and nonperformance risk in the valuation of derivative contracts categorized in Levels 2 and 3, including both historical and current market data, in its assessment of credit and nonperformance risk by counterparty. The impacts of credit and nonperformance risk were not material to the financial statements.

For PSE&G, the natural gas supply contract is measured at fair value using modeling techniques taking into account the current price of natural gas adjusted for appropriate risk factors, as applicable, and internal assumptions about transportation costs, and accordingly, the fair value measurements are classified in Level 3. The fair value of Power’s electric load contracts in which load consumption may change hourly based on demand are measured using certain unobservable inputs, such as historic load variability and, accordingly, are categorized as Level 3. The fair value of Power’s gas physical contracts at certain illiquid delivery locations are measured using average historical basis and, accordingly, are categorized as Level 3. While these gas physical contracts have an unobservable component in their respective forward price curves, the fluctuations in fair value have been driven primarily by changes in the observable inputs. The following tables provide details surrounding significant Level 3 valuations as of December 31, 2017 and 2016.

	Quantitative Information About Level 3 Fair Value Measurements
Commodity	Level 3 Position	Fair Value as of December 31, 2017					Valuation Technique(s)	Significant Unobservable  Input	Range
		Assets		(Liabilities)
		Millions
Power
Electricity	Electric Load Contracts	$	1	$	(3	)	Discounted Cash flow	Historic Load Variability	0% to +10%
Gas	Gas Physical Contracts	11		(2		)	Discounted Cash flow	Average Historical Basis	-40% to -10%
Total Power		$	12	$	(5	)
Total PSEG		$	12	$	(5	)

	Quantitative Information About Level 3 Fair Value Measurements
Commodity	Level 3 Position	Fair Value as of December 31, 2016					Valuation Technique(s)	Significant Unobservable Input	Range
		Assets		(Liabilities)
		Millions
PSE&G
Gas	Natural Gas Supply  Contract	$	—	$	(5	)	Discounted Cash Flow	Transportation Costs	$0.60 to $0.80/Dth
Total PSE&G		$	—	$	(5	)
Power
Electricity	Electric Load Contracts	$	7	$	(1	)	Discounted Cash Flow	Historic Load Variability	0% to +10%
Gas (A)	Other	—		—
Total Power		$	7	$	(1	)
Total PSEG		$	7	$	(6	)

(A) Includes gas positions which were immaterial.

Significant unobservable inputs listed above would have a direct impact on the fair values of the above Level 3 instruments if they were adjusted. For energy-related contracts in cases where Power is a seller, an increase in the load variability would decrease the fair value. For gas-related contracts in cases where Power is a buyer, an increase in the average historical basis would increase the fair value.

A reconciliation of the beginning and ending balances of Level 3 derivative contracts and securities for the years ended December 31, 2017 and 2016, respectively, follows:

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

for the Year Ended December 31, 2017

				Total Gains or (Losses) Realized/Unrealized
Description	Balance as of January 1, 2017			Included  in Income (A)		Included in Regulatory  Assets/ Liabilities (B)		Purchases, (Sales)		Issuances/ Settlements (C)			Transfers In/Out (D)			Balance as of December 31, 2017
	Millions
PSEG
Net Derivative Assets (Liabilities)	$	1		$	26	$	5	$	—	$	(24	)	$	(1	)	$	7
PSE&G
Net Derivative Assets (Liabilities)	$	(5	)	$	—	$	5	$	—	$	—		$	—		$	—
Power
Net Derivative Assets (Liabilities)	$	6		$	26	$	—	$	—	$	(24	)	$	(1	)	$	7

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

for the Year Ended December 31, 2016

			Total Gains or (Losses) Realized/Unrealized
Description	Balance as of January 1, 2016		Included  in Income (A)		Included in Regulatory  Assets/ Liabilities (B)			Purchases, (Sales)		Issuances/ Settlements (C)			Transfers In/Out		Balance as of December 31, 2016
	Millions
PSEG
Net Derivative Assets (Liabilities)	$	13	$	13	$	(7	)	$	3	$	(21	)	$	—	$	1
PSE&G
Net Derivative Assets (Liabilities)	$	2	$	—	$	(7	)	$	—	$	—		$	—	$	(5	)
Power
Net Derivative Assets (Liabilities)	$	11	$	13	$	—		$	3	$	(21	)	$	—	$	6

(A) PSEG’s and Power’s gains(losses) attributable to changes in net derivative assets and liabilities for 2017 include $14 million in Operating Revenues, of which $(9) million is unrealized and $12 million in Energy Costs, all of which is unrealized. For 2016, $25 million is included in Operating Revenues, of which $(5) million is unrealized, and $(12) million is in Energy Costs, all of which is realized.

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

(C) Represents $(24) million and $(21) million in settlements for derivative contracts in 2017 and 2016, respectively.

(D) During the year ended December 31, 2017, $(1) million of net derivatives assets/liabilities were transferred from Level 2 to Level 3.

As of December 31, 2017, PSEG carried $2.6 billion of net assets that are measured at fair value on a recurring basis, of which $7 million of net assets were measured using unobservable inputs and classified as Level 3 within the fair value hierarchy.

As of December 31, 2016, PSEG carried $2.6 billion of net assets that are measured at fair value on a recurring basis, of which $1 million of net assets were measured using unobservable inputs and classified as Level 3 within the fair value hierarchy.

Power [Member]

Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]

Fair Value Measurements

Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Accounting guidance for fair value measurement emphasizes that fair value is a market-based measurement, not an entity-specific measurement, and establishes a fair value hierarchy that distinguishes between assumptions based on market data obtained from independent sources and those based on an entity’s own assumptions. The hierarchy prioritizes the inputs to fair value measurement into three levels:

Level 1—measurements utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that PSEG, PSE&G and Power have the ability to access. These consist primarily of listed equity securities and money market mutual funds, as well as natural gas futures contracts executed on NYMEX.

Level 2—measurements include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and other observable inputs such as interest rates and yield curves that are observable at commonly quoted intervals. These consist primarily of non-exchange traded derivatives such as forward contracts or options and most fixed income securities.

Level 3—measurements use unobservable inputs for assets or liabilities, based on the best information available and might include an entity’s own data and assumptions. In some valuations, the inputs used may fall into different levels of the hierarchy. In these cases, the financial instrument’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. As of December 31, 2017, these consisted primarily of certain electric load contracts and gas contracts.

Certain derivative transactions may transfer from Level 2 to Level 3 if inputs become unobservable and internal modeling techniques are employed to determine fair value. Conversely, measurements may transfer from Level 3 to Level 2 if the inputs become observable.

The following tables present information about PSEG’s, PSE&G’s and Power’s respective assets and (liabilities) measured at fair value on a recurring basis as of December 31, 2017 and December 31, 2016, including the fair value measurements and the levels of inputs used in determining those fair values. Amounts shown for PSEG include the amounts shown for PSE&G and Power.

	Recurring Fair Value Measurements as of December 31, 2017
Description	Total			Netting  (E)			Quoted Market Prices for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	Millions
PSEG
Assets:
Cash Equivalents (A)	$	223		$	—		$	223		$	—		$	—
Derivative Contracts:
Energy-Related Contracts (B)	$	36		$	(433	)	$	15		$	442		$	12
NDT Fund (D)
Equity Securities	$	1,055		$	—		$	1,053		$	2		$	—
Debt Securities—U.S. Treasury	$	314		$	—		$	—		$	314		$	—
Debt Securities—Govt Other	$	270		$	—		$	—		$	270		$	—
Debt Securities—Corporate	$	402		$	—		$	—		$	402		$	—
Other Securities	$	92		$	—		$	92		$	—		$	—
Rabbi Trust (D)
Equity Securities—Mutual Funds	$	25		$	—		$	25		$	—		$	—
Debt Securities—U.S. Treasury	$	51		$	—		$	—		$	51		$	—
Debt Securities—Govt Other	$	34		$	—		$	—		$	34		$	—
Debt Securities—Corporate	$	119		$	—		$	—		$	119		$	—
Other Securities	$	2		$	—		$	2		$	—		$	—
Liabilities:
Derivative Contracts:
Energy-Related Contracts (B)	$	(21	)	$	477		$	(8	)	$	(485	)	$	(5	)
PSE&G
Assets:
Cash Equivalents (A)	$	223		$	—		$	223		$	—		$	—
Rabbi Trust (D)
Equity Securities—Mutual Funds	$	5		$	—		$	5		$	—		$	—
Debt Securities—U.S. Treasury	$	10		$	—		$	—		$	10		$	—
Debt Securities—Govt Other	$	7		$	—		$	—		$	7		$	—
Debt Securities—Corporate	$	24		$	—		$	—		$	24		$	—
Other Securities	$	—		$	—		$	—		$	—		$	—
Power
Assets:
Derivative Contracts:
Energy-Related Contracts (B)	$	36		$	(433	)	$	15		$	442		$	12
NDT Fund (D)
Equity Securities	$	1,055		$	—		$	1,053		$	2		$	—
Debt Securities—U.S. Treasury	$	314		$	—		$	—		$	314		$	—
Debt Securities—Govt Other	$	270		$	—		$	—		$	270		$	—
Debt Securities—Corporate	$	402		$	—		$	—		$	402		$	—
Other Securities	$	92		$	—		$	92		$	—		$	—
Rabbi Trust (D)
Equity Securities—Mutual Funds	$	6		$	—		$	6		$	—		$	—
Debt Securities—U.S. Treasury	$	13		$	—		$	—		$	13		$	—
Debt Securities—Govt Other	$	8		$	—		$	—		$	8		$	—
Debt Securities—Corporate	$	30		$	—		$	—		$	30		$	—
Other Securities	$	—		$	—		$	—		$	—		$	—
Liabilities:
Derivative Contracts:
Energy-Related Contracts (B)	$	(21	)	$	477		$	(8	)	$	(485	)	$	(5	)

	Recurring Fair Value Measurements as of December 31, 2016
Description	Total			Netting  (E)			Quoted Market Prices for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
	Millions
PSEG
Assets:
Cash Equivalents (A)	$	365		$	—		$	365		$	—		$	—
Derivative Contracts:
Energy-Related Contracts (B)	$	186		$	(371	)	$	17		$	533		$	7
Interest Rate Swaps (C)	$	1		$	—		$	—		$	1		$	—
NDT Fund (D)
Equity Securities	$	957		$	—		$	954		$	3		$	—
Debt Securities—U.S. Treasury	$	227		$	—		$	—		$	227		$	—
Debt Securities—Govt Other	$	293		$	—		$	—		$	293		$	—
Debt Securities—Corporate	$	337		$	—		$	—		$	337		$	—
Other Securities	$	44		$	—		$	44		$	—		$	—
Rabbi Trust (D)
Equity Securities—Mutual Funds	$	22		$	—		$	22		$	—		$	—
Debt Securities—U.S. Treasury	$	37		$	—		$	—		$	37		$	—
Debt Securities—Govt Other	$	66		$	—		$	—		$	66		$	—
Debt Securities—Corporate	$	91		$	—		$	—		$	91		$	—
Other Securities	$	1		$	—		$	1		$	—		$	—
Liabilities:
Derivative Contracts:
Energy-Related Contracts (B)	$	(16	)	$	372		$	(18	)	$	(364	)	$	(6	)
PSE&G
Assets:
Cash Equivalents (A)	$	365		$	—		$	365		$	—		$	—
Derivative Contracts:
Energy Related Contracts (B)	$	—		$	—		$	—		$	—		$	—
Rabbi Trust (D)
Equity Securities—Mutual Funds	$	5		$	—		$	5		$	—		$	—
Debt Securities—U.S. Treasury	$	7		$	—		$	—		$	7		$	—
Debt Securities—Govt Other	$	13		$	—		$	—		$	13		$	—
Debt Securities—Corporate	$	18		$	—		$	—		$	18		$	—
Other Securities	$	—		$	—		$	—		$	—		$	—
Liabilities:
Derivative Contracts:
Energy-Related Contracts (B)	$	(5	)	$	—		$	—		$	—		$	(5	)
Power
Assets:
Derivative Contracts:
Energy-Related Contracts (B)	$	186		$	(371	)	$	17		$	533		$	7
NDT Fund (D)
Equity Securities	$	957		$	—		$	954		$	3		$	—
Debt Securities—U.S. Treasury	$	227		$	—		$	—		$	227		$	—
Debt Securities—Govt Other	$	293		$	—		$	—		$	293		$	—
Debt Securities—Corporate	$	337		$	—		$	—		$	337		$	—
Other Securities	$	44		$	—		$	44		$	—		$	—
Rabbi Trust (D)
Equity Securities—Mutual Funds	$	5		$	—		$	5		$	—		$	—
Debt Securities—U.S. Treasury	$	9		$	—		$	—		$	9		$	—
Debt Securities—Govt Other	$	16		$	—		$	—		$	16		$	—
Debt Securities—Corporate	$	23		$	—		$	—		$	23		$	—
Other Securities	$	—		$	—		$	—		$	—		$	—
Liabilities:
Derivative Contracts:
Energy-Related Contracts (B)	$	(11	)	$	372		$	(18	)	$	(364	)	$	(1	)

(A) Represents money market mutual funds.

(B) Level 1—During 2016 a net fair value of $1 million relating to energy-related contracts was transferred from Level 2 into Level 1. These contracts represent natural gas futures contracts executed on NYMEX, and are being valued solely on settled pricing inputs which come directly from the exchange.

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 settled prices from similar assets and liabilities from an exchange, such as NYMEX, ICE and Nodal Exchange, 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—Unobservable inputs are used for the valuation of certain contracts. See “Additional Information Regarding Level 3 Measurements” below for more information on the utilization of unobservable inputs.

(C) 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.

(D) As of December 31, 2016, the fair value measurement table excludes cash of $1 million, which is part of the NDT Fund. The NDT Fund maintains investments in various equity and fixed income securities classified as “available for sale.” The Rabbi Trust maintains investments in a Russell 3000 index fund and various fixed income securities classified as “available for sale” as of December 31, 2017. The Rabbi Trust maintained investments in an S&P 500 index fund and various securities classified as “available for sale” as of December 31, 2016. 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).

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. Other Securities in the NDT and Rabbi Trust Funds consist primarily of investments in Dreyfus money market funds which seek a high level of current income as is consistent with the preservation of capital and the maintenance of liquidity. To pursue its goals, the fund normally invests in a diversified portfolio of high quality, short-term, dollar-denominated debt securities and government securities. The funds’ Net Asset Value is priced and published daily. The Rabbi Trust equity index fund is valued based on quoted prices in an active market.

Level 2—NDT and Rabbi Trust fixed income securities include investment grade corporate bonds, collateralized mortgage obligations, asset-backed securities and certain government and U.S. Treasury obligations or Federal Agency asset-backed securities and municipal bonds 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. The preferred stocks are not actively traded on a daily basis and therefore, are also priced using an evaluated pricing methodology. Certain short-term investments are valued using observable market prices or market parameters such as time-to-maturity, coupon rate, quality rating and current yield.

(E) Represents the netting of fair value balances with the same counterparty (where the right of offset exists) and the application of collateral. All cash collateral received or posted that has been allocated to derivative positions, where the right of offset exists, has been offset in the Consolidated Balance Sheets. As of December 31, 2017 and 2016, Power had net cash collateral/margin payments to counterparties of $146 million and $56 million, respectively. Of these net cash collateral/margin payments $44 million as of December 31, 2017 and $1 million as of December 31, 2016 were netted against the corresponding net derivative contract positions. Of the $44 million of cash collateral as of December 31, 2017, $(3) million was netted against assets, and $47 million was netted against liabilities. Of the $1 million of cash collateral as of December 31, 2016, $(3) million was netted against assets and $4 million was netted against liabilities.

Additional Information Regarding Level 3 Measurements

For valuations that include both observable and unobservable inputs, if the unobservable input is determined to be significant to the overall inputs, the entire valuation is categorized in Level 3. This includes derivatives valued using indicative price quotations for contracts with tenors that extend into periods with no observable pricing. In instances where observable data is unavailable, consideration is given to the assumptions that market participants would use in valuing the asset or liability. This includes assumptions about market risks such as liquidity, volatility and contract duration. Such instruments are categorized in Level 3 because the model inputs generally are not observable. PSEG’s Risk Management Committee (RMC) approves risk management policies and objectives for risk assessment, control and valuation, counterparty credit approval and the monitoring and reporting of risk exposures. The RMC reports to the Corporate Governance and Audit Committees of the PSEG Board of Directors on the scope of the risk management activities and is responsible for approving all valuation procedures at PSEG. Forward price curves for the power market utilized by Power to manage the portfolio are maintained and reviewed by PSEG’s Enterprise Risk Management market pricing group and used for financial reporting purposes. PSEG considers credit and nonperformance risk in the valuation of derivative contracts categorized in Levels 2 and 3, including both historical and current market data, in its assessment of credit and nonperformance risk by counterparty. The impacts of credit and nonperformance risk were not material to the financial statements.

For PSE&G, the natural gas supply contract is measured at fair value using modeling techniques taking into account the current price of natural gas adjusted for appropriate risk factors, as applicable, and internal assumptions about transportation costs, and accordingly, the fair value measurements are classified in Level 3. The fair value of Power’s electric load contracts in which load consumption may change hourly based on demand are measured using certain unobservable inputs, such as historic load variability and, accordingly, are categorized as Level 3. The fair value of Power’s gas physical contracts at certain illiquid delivery locations are measured using average historical basis and, accordingly, are categorized as Level 3. While these gas physical contracts have an unobservable component in their respective forward price curves, the fluctuations in fair value have been driven primarily by changes in the observable inputs. The following tables provide details surrounding significant Level 3 valuations as of December 31, 2017 and 2016.

	Quantitative Information About Level 3 Fair Value Measurements
Commodity	Level 3 Position	Fair Value as of December 31, 2017					Valuation Technique(s)	Significant Unobservable  Input	Range
		Assets		(Liabilities)
		Millions
Power
Electricity	Electric Load Contracts	$	1	$	(3	)	Discounted Cash flow	Historic Load Variability	0% to +10%
Gas	Gas Physical Contracts	11		(2		)	Discounted Cash flow	Average Historical Basis	-40% to -10%
Total Power		$	12	$	(5	)
Total PSEG		$	12	$	(5	)

	Quantitative Information About Level 3 Fair Value Measurements
Commodity	Level 3 Position	Fair Value as of December 31, 2016					Valuation Technique(s)	Significant Unobservable Input	Range
		Assets		(Liabilities)
		Millions
PSE&G
Gas	Natural Gas Supply  Contract	$	—	$	(5	)	Discounted Cash Flow	Transportation Costs	$0.60 to $0.80/Dth
Total PSE&G		$	—	$	(5	)
Power
Electricity	Electric Load Contracts	$	7	$	(1	)	Discounted Cash Flow	Historic Load Variability	0% to +10%
Gas (A)	Other	—		—
Total Power		$	7	$	(1	)
Total PSEG		$	7	$	(6	)

(A) Includes gas positions which were immaterial.

Significant unobservable inputs listed above would have a direct impact on the fair values of the above Level 3 instruments if they were adjusted. For energy-related contracts in cases where Power is a seller, an increase in the load variability would decrease the fair value. For gas-related contracts in cases where Power is a buyer, an increase in the average historical basis would increase the fair value.

A reconciliation of the beginning and ending balances of Level 3 derivative contracts and securities for the years ended December 31, 2017 and 2016, respectively, follows:

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

for the Year Ended December 31, 2017

				Total Gains or (Losses) Realized/Unrealized
Description	Balance as of January 1, 2017			Included  in Income (A)		Included in Regulatory  Assets/ Liabilities (B)		Purchases, (Sales)		Issuances/ Settlements (C)			Transfers In/Out (D)			Balance as of December 31, 2017
	Millions
PSEG
Net Derivative Assets (Liabilities)	$	1		$	26	$	5	$	—	$	(24	)	$	(1	)	$	7
PSE&G
Net Derivative Assets (Liabilities)	$	(5	)	$	—	$	5	$	—	$	—		$	—		$	—
Power
Net Derivative Assets (Liabilities)	$	6		$	26	$	—	$	—	$	(24	)	$	(1	)	$	7

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

for the Year Ended December 31, 2016

			Total Gains or (Losses) Realized/Unrealized
Description	Balance as of January 1, 2016		Included  in Income (A)		Included in Regulatory  Assets/ Liabilities (B)			Purchases, (Sales)		Issuances/ Settlements (C)			Transfers In/Out		Balance as of December 31, 2016
	Millions
PSEG
Net Derivative Assets (Liabilities)	$	13	$	13	$	(7	)	$	3	$	(21	)	$	—	$	1
PSE&G
Net Derivative Assets (Liabilities)	$	2	$	—	$	(7	)	$	—	$	—		$	—	$	(5	)
Power
Net Derivative Assets (Liabilities)	$	11	$	13	$	—		$	3	$	(21	)	$	—	$	6

(A) PSEG’s and Power’s gains(losses) attributable to changes in net derivative assets and liabilities for 2017 include $14 million in Operating Revenues, of which $(9) million is unrealized and $12 million in Energy Costs, all of which is unrealized. For 2016, $25 million is included in Operating Revenues, of which $(5) million is unrealized, and $(12) million is in Energy Costs, all of which is realized.

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

(C) Represents $(24) million and $(21) million in settlements for derivative contracts in 2017 and 2016, respectively.

(D) During the year ended December 31, 2017, $(1) million of net derivatives assets/liabilities were transferred from Level 2 to Level 3.

As of December 31, 2017, PSEG carried $2.6 billion of net assets that are measured at fair value on a recurring basis, of which $7 million of net assets were measured using unobservable inputs and classified as Level 3 within the fair value hierarchy.

As of December 31, 2016, PSEG carried $2.6 billion of net assets that are measured at fair value on a recurring basis, of which $1 million of net assets were measured using unobservable inputs and classified as Level 3 within the fair value hierarchy.