8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) August 11, 2015

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

(Exact name of registrant as specified in its charter)

New Jersey	001-09120	22-2625848
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

80 Park Plaza, P.O. Box 1171

Newark, New Jersey 07101-1171

(Address of principal executive offices) (Zip Code)

973-430-7000

(Registrant’s telephone number, including area code)

http://www.pseg.com

PUBLIC SERVICE ELECTRIC AND GAS COMPANY

(Exact name of registrant as specified in its charter)

New Jersey	001-00973	22-1212800
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

80 Park Plaza, P.O. Box 570

Newark, New Jersey 07101-0570

(Address of principal executive offices) (Zip Code)

973-430-7000

(Registrant’s telephone number, including area code)

http://www.pseg.com

PSEG POWER LLC

(Exact name of registrant as specified in its charter)

Delaware	001-34232	22-3663480
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

80 Park Plaza

Newark, New Jersey 07102-4194

(Address of principal executive offices) (Zip Code)

973-430-7000

(Registrant’s telephone number, including area code)

http://www.pseg.com

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

The information contained in Item 7.01 Regulation FD Disclosure in this combined Form 8-K is separately furnished, as noted, by PSEG, Public Service Electric and Gas Company (PSE&G) and PSEG Power LLC (Power). Information contained herein relating to any individual company is provided by such company on its own behalf and in connection with its respective Form 8-K. PSE&G and Power each makes representations only as to itself and makes no other representations whatsoever as to any other company.

Item 7.01 Regulation FD Disclosure

PSEG, PSE&G and Power

On August 11, 2015, PSEG is participating in investor meetings at the Goldman Sachs Power, Utilities, MLP and Pipeline Conference in New York, New York. A copy of the discussion materials being used at the meetings, including those reaffirming earnings guidance, is furnished as Exhibit 99 to this Form 8-K. The meeting materials will be on the pseg.com website under the investor tab, or at http://investor.pseg.com.

Item 9.01 Financial Statements and Exhibits

Exhibit 99. Discussion materials for August 11, 2015 meeting

2

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
(Registrant)
By:	/s/ Stuart J. Black
	STUART J. BLACK
	Vice President and Controller
	(Principal Accounting Officer)

Date: August 11, 2015

3

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.

PUBLIC SERVICE ELECTRIC AND GAS COMPANY
(Registrant)
By:	/s/ Stuart J. Black
	STUART J. BLACK
	Vice President and Controller
	(Principal Accounting Officer)

Date: August 11, 2015

4

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.

PSEG POWER LLC
(Registrant)
By:	/s/ Stuart J. Black
	STUART J. BLACK
	Vice President and Controller
	(Principal Accounting Officer)

Date: August 11, 2015

5

EX-99

We have the

energy

to make things better

… for you, for our investors

and for our stakeholders.

EXHIBIT 99

2

Forward-Looking Statement

Certain

of

the

matters

discussed

in

this

report

about

our

and

our

subsidiaries'

future

performance,

including,

without

limitation,

future

revenues,

earnings,

strategies,

prospects,

consequences

and

all

other

statements

that

are

not

purely

historical

constitute

“forward-looking

statements”

within

the

meaning

of

the

Private

Securities

Litigation

Reform

Act

of

1995.

Such

forward-looking

statements

are

subject

to

risks

and

uncertainties,

which

could

cause

actual

results

to

differ

materially

from

those

anticipated.

Such

statements

are

based

on

management's

beliefs

as

well

as

assumptions

made

by

and

information

currently

available

to

management.

When

used

herein,

the

words

“anticipate,”

“intend,”

“estimate,”

“believe,”

“expect,”

“plan,”

“should,”

“hypothetical,”

“potential,”

“forecast,”

“project,”

variations

of

such

words

and

similar

expressions

are

intended

to

identify

forward-looking

statements.

Factors

that

may

cause

actual

results

to

differ

are

often

presented

with

the

forward-looking

statements

themselves.

Other

factors

that

could

cause

actual

results

to

differ

materially

from

those

contemplated

in

any

forward-looking

statements

made

by

us

herein

are

discussed

in

filings

we

make

with

the

United

States

Securities

and

Exchange

Commission

(SEC),

including

our

Annual

Report

on

Form

10-K

and

subsequent

reports

on

Form

10-Q

and

Form

8-K

and

available

on

our

website:

http://www.pseg.com.

These

factors

include,

but

are

not

limited

to:

•

adverse changes in the demand for or the price of the capacity and energy that we sell into wholesale electricity markets,

•

adverse changes in energy industry law, policies and regulation, including market structures and transmission planning,

•

any inability of our transmission and distribution businesses to obtain adequate and timely rate relief and regulatory approvals from federal and state regulators,

•

changes in federal and state environmental regulations and enforcement that could increase our costs or limit our operations,

•

changes in nuclear regulation and/or general developments in the nuclear power industry, including various impacts from any accidents or incidents experienced at our facilities or by

others in the industry, that could limit operations of our nuclear generating units,

•

actions or activities at one of our nuclear units located on a multi-unit site that might adversely affect our ability to continue to operate that unit or other units located at the same site,

•

any inability to manage our energy obligations, available supply and risks,

•

adverse

outcomes

of

any

legal,

regulatory

or

other

proceeding,

settlement,

investigation

or

claim

applicable

to

us

and/or

the

energy

industry,

•

any deterioration in our credit quality or the credit quality of our counterparties,

•

availability of capital and credit at commercially reasonable terms and conditions and our ability to meet cash needs,

•

changes in the cost of, or interruption in the supply of, fuel and other commodities necessary to the operation of our generating units,

•

delays in receipt of necessary permits and approvals for our construction and development activities,

•

delays or unforeseen cost escalations in our construction and development activities,

•

any inability to achieve, or continue to sustain, our expected levels of operating performance,

•

any equipment failures, accidents, severe weather events or other incidents that impact our ability to provide safe and reliable service to our customers, and any inability to obtain

sufficient insurance coverage or recover proceeds of insurance with respect to such events,

•

acts of terrorism, cybersecurity attacks or intrusions that could adversely impact our businesses,

•

increases in competition in energy supply markets as well as for transmission projects,

•

any inability to realize anticipated tax benefits or retain tax credits,

•

challenges associated with recruitment and/or retention of a qualified workforce,

•

adverse performance of our decommissioning and defined benefit plan trust fund investments and changes in funding requirements,

•

changes in technology, such as distributed generation and micro grids, and greater reliance on these technologies, and

•

changes in customer behaviors, including increases in energy efficiency, net-metering and demand response.

All of the forward-looking statements made in this report are qualified by these cautionary statements and we cannot assure you that the results or developments anticipated by management will be

realized or even if realized, will have the expected consequences to, or effects on, us or our business prospects, financial condition or results of operations. Readers are cautioned not to place

undue reliance on these forward-looking statements in making any investment decision. Forward-looking statements made in this report apply only as of the date of this report. While we may elect

to update forward-looking statements from time to time, we specifically disclaim any obligation to do so, even if internal estimates change, unless otherwise required by applicable securities laws.

The

forward-looking

statements

contained

in

this

report

are

intended

to

qualify

for

the

safe

harbor

provisions

of

Section

27A

of

the

Securities

Act

of

1933,

as

amended,

and

Section

21E

of

the

Securities Exchange Act of 1934, as amended.

3

GAAP Disclaimer

These materials and other financial releases can be found on the pseg.com

website under the investor tab, or at http://investor.pseg.com/

PSEG presents Operating Earnings and Adjusted Earnings Before Interest, Taxes, Depreciation and

Amortization (EBITDA) in addition to its Income from Continuing Operations/Net Income reported in

accordance with accounting principles generally accepted in the United States (GAAP). Operating Earnings

and Adjusted EBITDA are non-GAAP financial measures that differ from Income from

Continuing Operations/Net Income. Operating Earnings exclude gains or losses associated with Nuclear

Decommissioning Trust (NDT), Mark-to-Market (MTM) accounting, and other material one-time items. PSEG

presents Operating Earnings because management believes that it is appropriate for investors to consider

results excluding these items in addition to the results reported in accordance with GAAP.

PSEG believes that the non-GAAP financial measure of Operating Earnings provides a consistent and

comparable measure of performance of its businesses to help shareholders understand performance trends.

PSEG is presenting Adjusted EBITDA because it provides investors with additional information to compare our

business performance to other companies and understand performance trends. Adjusted EBITDA excludes

the same items as our Operating Earnings measure as well as income tax expense, interest expense,

depreciation and amortization and major maintenance expense costs at Power’s fossil generation facilities.

This information is not

intended to be viewed as an alternative to GAAP information. The last three slides in

this presentation (Slides A, B and C) include a list of items excluded from Income from Continuing

Operations/Net Income to reconcile to Operating Earnings and Adjusted EBITDA with a reference to that slide

included on each of the slides where the non-GAAP information appears.

PSEG OVERVIEW

EXECUTIVE VICE PRESIDENT AND

CHIEF FINANCIAL OFFICER

Caroline Dorsa

PRESIDENT AND CHIEF OPERATING

OFFICER

Ralph LaRossa

VICE PRESIDENT

INVESTOR RELATIONS

Kathleen Lally

5

Operational Excellence: Maintaining

reliability and improving performance as we

control costs in low price environment

Financial

Strength:

Strong

financial

position

supports investment program and dividend

growth

Disciplined Investment:

•

Transformed business mix

•

Robust pipeline of opportunities

Results

•

Project 3

rd

year of EPS growth

•

Increased rate of dividend growth

•

Best in class utility growth rate

•

Stable business mix with upside

potential from power markets 

PSEG’s Strategy 

Investment program delivering results

DISCIPLINED

INVESTMENT

FINANCIAL

STRENGTH

OPERATIONAL

EXCELLENCE

ENGAGED

WORKFORCE

6

Two complementary businesses 

A stable platform, each with growth opportunities

Strategy:

Diverse (fuel and dispatch) fleet

geographically and environmentally well

positioned, with investments to enhance

competitiveness

Value Proposition:  Provides substantial

free cash flow in current environment and

upside from market rule improvements

Assets $12B

Operating Earnings $642M

Regional Competitive Generation

Strategy:  Investments aligned with public

policy and customer needs

Value

Proposition:

An

$11

billion

infrastructure program –

focused on

transmission –

produces double-digit rate

base growth through 2019

Assets  $22B

Operating Earnings

$725M

Electric

& Gas Delivery

and Transmission

2014

2014

ASSETS AND OPERATING EARNINGS ARE FOR THE YEAR ENDED 12/31/2014.

PSE&G AND POWER DO NOT ADD TO TOTAL DUE TO PARENT AND PSEG LONG ISLAND ACTIVITY.

SEE SLIDE A FOR ITEMS EXCLUDED FROM INCOME FROM CONTINUING OPERATIONS/NET INCOME TO RECONCILE

TO OPERATING EARNINGS.

7

Delivering on commitments and realizing growth

Operational

Excellence

•

PSE&G:  Mid-Atlantic Reliability Award (13

th

consecutive year), top ranked

among

eastern electric and gas utilities in

business

customer satisfaction

•

PSEG Power:  Record output

from combined cycle units

•

PSEG Long Island:

Demonstrated management and integration capability

through a successful transition in first year

•

PSEG:  Cost-control benefits continue

Financial

Strength

•

Earnings

performance exceeded guidance in 2014

•

Cash flows and business mix

support strong credit ratings and ability to fully

fund robust investment pipeline without issuing new equity

•

Increased rate of

dividend growth in 2015

Disciplined

Investment

•

PSE&G

Transmission capital program execution and growth

Energy Strong infrastructure program

underway

Energy efficiency program extension

Further growth planned –

Gas System Modernization Program

•

Power:  Unit uprates, PennEast Pipeline, Solar Source and Keys CCGT

8

Robust pipeline of investment opportunities

supports growth objectives

2015E -

2019E*: $14.0 Billion

2010 –

2014: $12.6 Billion

Power Total***

$2.7B

PSE&G Total

$9.8B

PSE&G Total

$10.9B

PSEG Capital Spending

Power Total***

$2.9B

2015E–2019E:

•

$1.6B

of

capital

for

Gas

System

Modernization

Program

would

be

incremental

*INCLUDES ALL PLANNED SPENDING. **ENERGY STRONG EXCLUDES RISK AND CONTINGENCY. ***POWER CAPITAL SPENDING EXCLUDES

NUCLEAR FUEL.  ****INCLUDES PENNEAST

PIPELINE EQUITY INVESTMENT OF $0.1B.  E=ESTIMATE.  DATA AS OF AUGUST 4, 2015

9

Balance sheet strength supports capital

allocation

Timeframe

Actions taken

2010 –

2014:  

Transformed

business mix

•

Applied $16 billion towards investments and dividends

•

Improved credit ratings

•

Monetized Energy Holdings’ portfolio

•

Strong balance sheet sustained during period of low power

prices, while increasing the dividend

2015 –

Forward: 

Strong financial

position supports

continued growth

•

Increased rate of dividend growth in 2015

•

$14 billion investment program through 2019

•

Gas System

Modernization Program would increase capital

program by up to

$1.6

billion

•

Financial

capability supports further expansion of the

current capital plan

10

PSE&G’s investment program

Meeting public policy goals and customer needs

PSE&G Rate Base and Operating Earnings*

*SEE SLIDE A FOR ITEMS EXCLUDED FROM INCOME FROM CONTINUING OPERATIONS/

NET INCOME TO RECONCILE TO OPERATING EARNINGS.

2009-2014

Operating

EPS

CAGR:  18%

11

Operating Earnings

Disciplined investment program and focus on operational

excellence have supported growth

Power’s

diverse

fuel

mix and dispatch

flexibility continue to

generate strong

earnings and free cash

flow in low price

environment

PSE&G’s investment

program has driven

double digit compound

annual earnings

growth since 2010

Operating Earnings* Contribution by Subsidiary

*SEE SLIDE A FOR ITEMS EXCLUDED FROM INCOME FROM CONTINUING OPERATIONS/

NET INCOME TO RECONCILE TO OPERATING EARNINGS.  E=ESTIMATE

** 2015 PERCENTS USE MIDPOINT OF UPDATED EARNINGS GUIDANCE.

**

**

12

Containing customer bills while investing

in the system

•

PSE&G customers’ combined electric and gas bills declined 23% over the period.

•

Low gas prices drove rate decreases; in addition, gas customers received

bill credits of ~$400 in total from 2012 through 2014.

Gas

Electric

PSE&G Typical Residential Customer Bills*

*FOR ALL YEARS THE BILLING ASSUMES 7,200 KWH FOR ELECTRIC AND 1,010 THERMS FOR GAS ANNUALLY. E = ESTIMATE

13

PSE&G Planned and Potential Capital Projects

•

Planned capital spending

expected to drive double digit

rate base growth and high

single digit EPS growth

through 2017

•

Transmission expected to grow

to >50% of rate base in 2019

•

Seeking

to broaden

platform

to expand energy efficiency

and other

investments

PSE&G’s

robust capital investment pipeline

E = ESTIMATE

14

Economic

Drivers

Outlook

Combined

Cycle

Nuclear

Scrubbed

Coal

Peakers

Renewable

Energy

Margins

•

Low natural gas and

energy prices

•

Robust portfolio of gas

pipeline contracts

n/a

n/a

Capacity

Markets

•

Tightened

rules proposed

for capacity performance

n/a

Environmental

Regulations

•

Tighter air emissions

standards

Location

•

Assets in well-designed

markets, premium regions

•

Opportunities on 

brownfield sites

n/a

PSEG

Power

Capacity

(GW)

Total 13 GW

3.2

3.6

2.4

3.7

0.1

Power’s fleet has the desired attributes to be

successful in today’s and tomorrow’s market

•

Largest

nuclear

site

in

the

eastern

U.S.

and

ownership

in

large,

fully

scrubbed

coal

facilities

at

Keystone

and

Conemaugh

provide

economies

of

scale

that

enhance

energy

margins

in

current

low

market,

and

provide

for

upside potential if prices improve. 

•

Dual

fuel

peakers

meet

reliability

criteria

in

capacity

markets

and

provide

option

value

in

energy

market. 

Opportunity exists to repower peakers that do not meet NJ HEDD environmental regulations.

15

Power –

Growing value by improving market rules

and developing investment opportunities

Value  Source

Opportunities and Actions Taken

Improving

rules

will better

recognize value

of our fleet

•

PJM’s Capacity market –

2014 limits on demand response and

August

2015 Capacity Performance auction

•

Demand response treatment at U.S. Courts / FERC

•

Energy price formation at FERC

•

Increasing air standards through

Federal and State regulations

Our footprint

provides growth

opportunities

•

Nuclear and Combined Cycle plant uprates underway

•

New

build Keys CCGT in SWMAAC (Maryland)

•

Brownfield expansions

at existing sites

New peakers built at New Haven and Kearny

sites

Continue to explore further opportunities

•

PennEast pipeline -

equity investment and gas portfolio enhancement

•

Solar Source owns ~148 MW*,

with significant project pipeline

•

Continue to

seek opportunities

to expand the fleet

*PROJECT SIZE IN MEGAWATTS SHOWN IN DC (DIRECT CURRENT), AC EQUIVALENT IS 115 MW.

SWMAAC = SOUTHWEST MID-ATLANTIC AREA COUNCIL  -

LOCATIONAL DELIVERABILITY AREA WITHIN PJM.

16

PSEG Annual Dividend

An increased dividend growth rate with potential for consistent and

sustainable growth given our business mix and financial position

Payout Ratio

50%

58%

56%

54%

54%*

PSEG Annual Dividend Rate 

2011-2014 CAGR:  2.6%

*2015E PAYOUT RATIO REFLECTS THE MIDPOINT OF UPDATED OPERATING EARNINGS GUIDANCE.  E=ESTIMATE

17

Focus areas over business plan horizon

PSE&G

•

Capital program execution –

Transmission, Energy Strong and additional programs

•

Operational excellence and cost control

•

Regulatory framework

•

Continue to develop incremental growth opportunities

PSEG Power

•

Operational excellence and cost control

•

Strong

performance

at

Nuclear

and

Fossil

to

maximize

fleet

value

in

dynamic

markets

•

Monitor

and

shape

market

rules

-

Capacity

markets

and

environmental

regulations

•

Develop

growth

opportunities

-

Keys

CCGT

in

SWMAAC*

PSEG Long Island

•

Continue

execution

–

Integration

and

achievement

of

performance

metrics

*SWMAAC

=

SOUTHWEST

MID-ATLANTIC

AREA

COUNCIL

-

LOCATIONAL

DELIVERABILITY

AREA

WITHIN

PJM.

18

PSEG’s Value Proposition

•

A stable platform with predictable earnings and a robust

investment pipeline

•

PSE&G -

Best in class utility performance and growth profile

•

PSEG Power -

Well-positioned fleet that generates substantial

free cash flow in this market environment with upside

for improvements in pricing

•

Strong balance sheet

-

Supports strong credit rating,

growth objectives and the potential for sustainable

dividend growth

PSE&G

20

PSE&G

strategy

Building a

sustainable

platform that

balances

reliability,

customer rates

and public

policy to ensure

growth at

reasonable

returns

DISCIPLINED

INVESTMENT

ENGAGED

WORKFORCE

FINANCIAL

STRENGTH

OPERATIONAL

EXCELLENCE

21

PSE&G is the largest electric and gas distribution and

transmission utility company in New Jersey

Electric

Gas

Customers

Growth (2010 –

2014)

2.2 Million

0.3%

1.8 Million

0.3%

2014 Electric Sales and Gas Sold and Transported

40,737 GWh

2,628M

Therms*

Projected Annual Load Growth (2015 –

2017)**

1.1%

0.5%

Projected Annual Load Growth

Transmission (2015 –

2017)

0.9%

Sales Mix

Residential

32%

60%

Commercial

58%

36%

Industrial

10%

4%

Transmission

Electric

Gas

Approved Rate of Return***

11.68% ROE

10.3% ROE

10.3% ROE

Renewables and Energy Efficiency

Approved

Programs

2009-2014

Total

Program

Plan

Solar Loan Capacity

83 MW

178.5 MW

Solar 4 All  Capacity

100 MW

125 MW

Energy Efficiency Annual Electric savings

206 GWh

214 GWh

Energy Efficiency Annual Gas savings

6.5 M Therms

7 M Therms

*      GAS FIRM ONLY SALES.

**    ESTIMATED ANNUAL GROWTH PER YEAR, ASSUMES NORMAL WEATHER.

***  SOME PROJECTS APPROVED FOR SPECIFIC ROE.

22

Mid-Atlantic

ReliabilityOne

award winner

for 13

years in

a row

23

PSE&G’s

service and

reliability is

being

recognized by

customers

24

PSE&G has achieved annual growth in

operating earnings of ~18% over the past five years

with implementation of supportive rate mechanisms on our

expanded capital program and cost control

$0.63

$0.85

$1.03

$1.04

$1.21

$1.43

2009

2010

2011

2012

2013

2014

*SEE SLIDE A FOR ITEMS EXCLUDED FROM INCOME FROM CONTINUING OPERATIONS/NET INCOME TO RECONCILE TO OPERATING EARNINGS.

PSE&G’s Contribution to

PSEG Operating Earnings* Per Share

25

PSE&G

plans to invest $10.9B over the

next five years

Distribution

34%

Other

Transmission

32%

Major

Transmission

Incentive

Projects

24%

Solar/Energy

Efficiency

10%

2010-2014

$9.8B

PSE&G’s Capital Expenditures*

Distribution

35%

Other

Transmission

48%

Major

Transmission

Incentive

Projects

14%

Solar/Energy

Efficiency

3%

2015-2019E

$10.9B

*INCLUDES AFUDC.    E=ESTIMATE.

26

PSE&G’s existing major Transmission

projects are being completed on schedule and on budget

Major Transmission Investments

Project Roster

Approved

ROE

Inclusion

of CWIP in

Rate Base

100%

Recovery

of Costs

Due to

Abandonment

Estimate

Up To

($ Millions)

Expected

In-service

Date

Susquehanna-Roseland

12.93%

$790

Completed

Northeast Grid Reliability

11.93%

$907

June-Dec

2015

North Central Reliability

11.68%

$390

Completed

Burlington–Camden 230kV

11.68%

$399

Completed

Mickleton–Gloucester–Camden

230kV

11.68%

$435

Completed

27

A robust pipeline of Transmission

investments focus on reliability improvements and replacement

of aging infrastructure

Major Transmission Investments

Project Roster

Approved

ROE

Program

Description

Estimate

Up To

($ Millions)

Expected

In-service

Date

Artificial Island –

Upgrade Project

11.68%

FERC 1000 project

$110-$130

2019

Bergen—Linden Corridor 345kV

11.68%

PJM baseline project

receiving CWIP in rate base

treatment

$1,200

June

2018

PJM Regional Transmission

Expansion

Plan

(RTEP)

–

multiple

projects

11.68%

PJM mandated system

reliability projects

$1,900

Various

69kV Upgrade –

multiple projects

11.68%

Upgrade of 26kV to 69kV

$1,500

Various

Transmission

Lifecycle

–

multiple

projects

11.68%

Replacement of aging

infrastructure

$1,100

Various

Transmission Hardening–

multiple projects

11.68%

Reliability projects focused

on system resiliency

$650

Various

*INCREMENTAL INVESTMENT IN HARDENING INCLUDED AS PART OF OTHER PROGRAMS.

28

Bergen-Linden Corridor is a project which will

provide a double-circuit 345kV line designed to maintain

system reliability

Project

Estimate

Up To

Through Year-end

2014

Expected

Completion Date

$1,200M

$40M

June 2018

•

PJM RTEP project b2436 and b2437 with phased

in-

service dates

•

30 miles of underground cable

•

New ~ 23 miles

•

Reconductor (Upgrade of 138 to 345) ~7 miles

•

13 miles of double circuit overhead conductor (replacing

double circuit 138 with double circuit 345)

•

11 station upgrades to 345kV

Customer Benefit: Addresses thermal and short-circuit

reliability

Project Status: Engineering, Licensing and Construction

Marion Substation Pile Installation

29

Major Transmission programs focus on

reliability and replacing aging infrastructure

•

PJM’s Regional Transmission Expansion Plan (RTEP) identifies system

enhancements needed for reliability

•

69kV system upgrades improve system reliability and provide capacity

for future growth

•

Transmission Lifecycle is an ongoing program to manage transmission

asset life to maintain and improve system integrity and reliability

•

Transmission Hardening projects focus on increasing system resiliency

30

PSE&G has successfully worked with

regulators to develop multiple solutions for New Jersey’s

energy and economic development goals

•

Solar Loan I

–

2008

•

Solar Loan II

–

2009

•

Solar 4 All

–

2009

•

Solar Loan III

–

2013

•

Solar 4 All Ext

–

2013

RENEWABLES

creative solutions to install

solar generation

•

Carbon Abatement

–

2008

•

Demand Response

–

2009

•

Energy Efficiency (EE) –

2009

•

EE Extension

–

2011

•

EE Extension II

–

2015

ENERGY EFFICIENCY

assisting customers with

controlling energy usage 

•

NJ Capital Infrastructure

Program 1 (CIP 1)

–

2009

•

NJ Capital Infrastructure

Program 2 (CIP 2)

–

2011

•

Energy Strong

–

2014

DISTRIBUTION

improving electric and gas

delivery infrastructure

To date we have

invested over $2B in

the above programs

Over $1B ahead in

Energy Strong, Energy

Efficiency Ext II

and

Solar programs

Gas System

Modernization Program

may increase potential

investment by ~$1.6B

31

PSE&G is successfully executing on

Energy Strong

with ~$150M deployed during the

latter half of 2014

Program

Approved

Spend thru 2014

Flood Mitigation

$620M

$19M

Electric Contingency Reconfiguration

$100M

$26M

Electric Advanced Technology

$100M

$10M

Gas Utilization Pressure Cast Iron (UPCI)

$350M

$94M

Gas Metering & Regulating (M&R)

$50M

$1M

TOTAL

$1,220M

$150M

32

Energy Strong will provide

increased reliability

and resiliency

•

Electric Flood Mitigation

•

Engineering and scheduling began on 16 of the 29 total planned substation

projects

•

Electric Contingency Reconfiguration

•

Over 100 projects have been started and 15 projects have been completed to

date, including installation of over 900 poles and 70 reclosers

•

Advanced Technology

•

A total of 60 relays replaced and 3 remote terminal units (RTU) installed

•

Gas Utilization Pressure Cast Iron (UPCI)

•

Installed ~110 miles of gas main and replaced ~5,300 services

•

Gas Metering & Regulating (M&R)

•

Design and engineering completed for all of the eight stations scheduled

33

Extension of PSE&G’s award winning

Energy Efficiency program

•

Energy Efficiency Extension II approved by the BPU in April 2015 will

extend the investment and time frame for three previously approved

programs already in the marketplace, allowing PSE&G to factor in

lessons learned and balance policy issues

•

$95M of rate base investment approved at an ROE of 9.75%

•

Extends existing programs, two of which have sizable waiting lists:

•

Hospitals

•

Multifamily

•

Direct install –

government, non-profit, and small business

•

Allows PSE&G to leverage past investments in people, capabilities,

systems and processes

34

Gas System Modernization Program

of

~$1.6B focusing on aging gas mains

•

PSE&G’s gas distribution system currently operates and maintains over

4,800 miles of cast iron and unprotected steel main, the largest such

system in any single state

•

The program provides for investment of ~$1.6B focused on replacing cast

iron and unprotected steel main over a five-year period, beginning mid-2016

•

Program will replace approximately 160 miles of main per year

•

Requested accelerated clause-based recovery similar to the Energy Strong

program with a 9.75% ROE

•

This program is the first phase of a long-term, 30-year cast iron and

unprotected steel replacement plan

•

Benefits:

•

Methane emission reduction is estimated at 24,500 metric tons of CO

2

equivalent per year*

•

Directly creates and supports 500 New Jersey jobs

•

Higher pressure system allows usage of high efficiency appliances by customers

* EPA SUBPART W METHODOLOGY.

35

Traditional Recovery Mechanisms

Distribution Base Rates

FERC Formula Rates

Transmission

PSE&G continues to receive

contemporaneous/ 

formula rate recovery on ~75% of its investment program

20%

56%

24%

2010-2014 PSE&G Capital Spending

by Recovery Method

$9.8B

Clause Recovery Mechanisms

Energy Strong / Infrastructure /

Solar / Energy Efficiency

Gas System Modernization Program

9%

9%

57%

25%

2015-2019E PSE&G Capital with

Potential Upside by Recovery Method

$12.0B

E = ESTIMATE.   DATA AS OF JULY 31, 2015.

36

Cost control actions taken:

•

PSE&G is utilizing the Lean Six Sigma discipline to achieve costs savings and process

improvements

•

Conducted organizational reviews resulting in streamlining of processes through

restructuring

•

Continued focus on vendor and inventory practices ensuring maximum value

•

Successful management of pension

2009 to 2015 CAGR = 0.3%

PSE&G O&M Expense

E=ESTIMATE

PSE&G has

controlled costs

through process

improvements and will

continue to drive future

efficiencies

$0

$500

$1,000

$1,500

2009

2010

2011

2012

2013

2014

2015E

37

PSE&G’s 2015 operating earnings

expected to benefit from increased investment in Transmission

$612

$725

2013

2014

2015 Guidance

PSE&G Operating Earnings*

($ Millions)

$760 --

$775E**

*SEE SLIDE A FOR ITEMS EXCLUDED FROM NET INCOME TO RECONCILE TO

OPERATING EARNINGS.  E =ESTIMATE.  **UPDATED GUIDANCE ON JULY 31, 2015.

PSEG LONG ISLAND

39

PSEG Long Island is focused on

improving customer service and reliability

•

Provide best-in-class customer service, including building on our new

Call Center Technology platform to better serve our customers

•

According to J.D. Power, in 2014 PSEG Long Island showed the most

improvement in overall customer satisfaction of any large electric utility,

anywhere in the nation

•

Work to maintain industry-leading service reliability

•

Improve every aspect of the storm response process

•

Leveraged our new Outage Management System to improve storm logistics

and outage coordination

•

Contributed $0.02* to PSEG’s earnings per share in 2014, as expected

* EXCLUDES THE ENERGY RESOURCES & TRADE CONTRACT, WHICH WILL BE INCLUDED IN PSEG POWER’S RESULTS.

PSEG POWER

41

PSEG Power

strategy

Excellence in

operating our units

safely, reliably, cost-

competitively and in

an environmentally,

responsible manner

DISCIPLINED

INVESTMENT

ENGAGED

WORKFORCE

FINANCIAL

STRENGTH

OPERATIONAL

EXCELLENCE

42

PSEG Power creating value by responding

to changing markets and regulations

Safety/Environmental Focus

Fleet

Diversity/Efficiency

Focus

Financial/Economic

Focus

Regulatory Focus

•

Nuclear units have performed well for

ten consecutive years

•

Hope Creek recorded its second

highest output in its history

•

Fleet diversity across the dispatch

curve and fuel types provide flexibility

to

meet changing market conditions

•

Bergen 1 & 2 and Linden 1 individually,

and the CCGT fleet in total, set

generation records in 2014

•

Kearny 13 & 14 have shown increasing

output in each year since start-up

•

Getting the most out of

existing fleet

•

Locational advantage

•

O&M control programs

have delivered a CAGR of

2.6% between 2009 and

2015

•

Sites offer competitive

advantage for expansion

•

Strong regulatory

performance

•

Industry leadership in the

changing business

environment

43

Financial

Strength

Disciplined

Investment

Operational

Excellence

•

Maximize value of existing generating

plants through implementation of the

Operational Excellence Model (OEM)

•

Workforce engagement and development

•

Deliver on Business Plan Commitments

•

Maintain competitive markets and improve

constituent

communication on issues 

important to Power

•

Successfully complete the Advanced Gas

Path (AGP) uprates

•

Seek new opportunities in target markets

(PJM, ISO-NE, NYISO)

•

Develop our renewables business (solar)

•

Maintain new nuclear option by successfully

managing the Early Site Permit (ESP) process

PSEG Power Delivering on priorities

•

OEM implemented and

achieving measures

•

Resource sharing program

between Nuclear & Fossil

initiated

•

Exceeded earnings guidance

in 2014

•

Ongoing effort in key markets

showing success

•

Successful court outcome

against subsidized generation

•

Accelerated schedule for

AGP to maximize opportunity

•

LIPA contract for fuel and generation

dispatch began January 1, 2015

•

Solar Source’s portfolio is 148 MW

DC

•

Nuclear ESP is expected in 2016

•

New build Keys CCGT targeted

in-service 2018 in Maryland

44

PSEG Power met 2014’s challenges

Storm and

weather challenges

•

All of the generation

sites affected by

SuperStorm Sandy

were restored to

service by mid-2014,

with ongoing repairs

•

Cold weather

extremes created a

challenging

operating

environment, but

also presented

opportunities

Market

challenges

•

Transmission

(outages and build

outs) and gas

markets resulted in

pressure on basis

•

Lower gas cost

impacted dark

spread pressuring

coal unit dispatch

•

Load impacted by

economy

Value

delivered

•

Expedited return from storm outages,

restored margin opportunities

•

High availability when needed

•

Flexibility of portfolio captured real-

time basis opportunities

•

Captured value through coal/gas

switching, unit flexibility

•

Management of gas assets benefited

customers and fleet

•

Achieved fuel cost savings

45

PSEG Power exceeded 2014’s earnings guidance

GUIDANCE

RANGE

Over $60M of additional

value gained from:

•

Weather, basis volatility

•

Fuel flexibility

•

Lower gas cost

•

Spark/dark spread

Initial

Guidance

Actual

Revised

Guidance

*EXCLUDES IMPACTS FROM STORM RECOVERY COSTS.

SEE SLIDE A FOR ITEMS EXCLUDED FROM NET INCOME TO RECONCILE TO OPERATING EARNINGS.

2014 PSEG Power Operating Earnings*

($ Millions)

46

PSEG Power has generating assets

in three competitive markets

•

Assets located near load

centers

•

Low cost portfolio

Fuel flexibility with gas cost

advantage

•

Positioned to benefit

from volatility in real-time

markets

•

Readiness for capacity

performance (CP) in PJM

•

Fleet positioned to 

maintain diversity and

efficiency after HEDD

•

Sites suitable for

expansion

ISO

New

England

New Haven

Bridgeport

Bethlehem Energy Center

(Albany)

Conemaugh

Keystone

Peach Bottom

Bergen

Kearny

Essex

Sewaren

Edison

Linden

Mercer

Burlington

National Park

Hudson

Hope Creek

Salem

Yards Creek

New York ISO

PJM

47

Power’s PJM assets along the dispatch curve reduce

the risk of serving full requirement load contracts and can take

advantage of volatile market conditions

Energy Revenue

X

X

X

Capacity Revenue

X

X

X

Ancillary Revenue

X

X

Dual Fuel

X

X

•

Base Load ensures cash flow certainty

•

Load Following provides ability to serve load shape

•

Readiness for Capacity Performance (CP)

•

Keys CCGT to be added to dispatch in 2018E

•

Peaking takes advantage of real-time prices

and reduces operational risk

•

Dual fuel capability at 87% of load following

and peaking units

Illustrative

Salem

Hope

Creek

Keystone

Conemaugh

Hudson 2

Linden 1,2

Bergen 1

Mercer 1, 2

Bergen 2

Peach

Bottom

Essex 9

Sewaren 1-4

Burlington 12

Yards Creek

Base Load Units

Peaking Units

Load Following Units

Kearny 12-13-14

Nuclear

Coal

Coal/Gas

Combined Cycle

Steam

Combustion Turbine /

Pumped Storage

Linden 5-8

POST -

HEDD

E = ESTIMATE

48

PSEG Power positioned to maintain diversity and

efficiency after a realignment of the fleet following HEDD

retirements

2014

2017

Solar

Kalaeloa

Oil

Pumped Storage

HEDD

Other gas

Peakers

AGP/PB EPU

CCGT

Coal

Nuclear

•

Maintain fuel diversity

•

Maintain load-serving

capability

•

Maintain low cost

structure

•

Improve

environmental &

heat rate profiles

•

Complete

Peach Bottom (PB)

uprate

Advanced Gas Path

(AGP)

Objective

2015

2017

13,337 MW

11,900 MW

Fuel Diversity

2014

2017

Oil, Other gas, HEDD,

Pumped storage,

Kalaeloa, Solar

Peakers

AGP/PB EPU

CCGT

Coal

Nuclear

E

Energy Produced

55 -

57 TWh

54 TWh

E

E=ESTIMATE

49

•

AGP

(Advanced Gas Path) investments

•

Other Efficiency improvements

•

HEDD retirements

PSEG Power’s fleet is expected to see

improvement in heat rate and decline in

emissions

E=ESTIMATE

50

PSEG Power’s fleet is among the lowest

emitting in the industry

•

Mercury reduced 80% across the timeframe above

•

More efficient testing and improved operational flexibility through utilization of Continuous

Emission Monitoring System testing

51

PSEG Power Nuclear is a critical element

of our success

Hope Creek

•

Operated by PSEG Nuclear

•

PSEG Ownership: 100%

•

Technology: Boiling Water

Reactor

•

Total Capacity: 1,178 MW

•

Owned Capacity:  1,178 MW

•

License Expiration: 2046

•

Next Refueling

Fall 2016

Salem

Units 1 and 2

•

Operated by PSEG Nuclear

•

PSEG Ownership: 57%

•

Technology: Pressurized Water

Reactor

•

Total Capacity: 2,307 MW

•

Owned Capacity: 1,324 MW

•

License Expiration: 2036

and 2040

•

Next Refueling

Unit 1 –

Spring 2016

Unit  2 --

Fall 2015

Peach Bottom

Units 2 and 3

•

Operated by Exelon

•

PSEG Ownership: 50%

•

Technology: Boiling Water

Reactor

•

Total Capacity: 2,242 MW

•

Owned Capacity:

1,121 MW

•

License Expiration: 2033

and 2034

•

Next Refueling

Unit 2 -

Spring 2016

Unit 3 -

Fall 2015

•

Uprate:  130 MW (PS Share)

Unit 2 -

March 2015

Unit 3 -

2016

52

PSEG Power Nuclear has competitive advantages

•

Continued strong nuclear operations

•

Nuclear excellence program

•

Top quartile of cost performance/MWh

Brought security services in-house

•

Significant earnings contributor

•

Recruitment of the best new and

experienced talent, and attractive

training program

•

Fukushima action plan

in response to NRC staff review

FLEX* plan submitted with implementation

underway

•

Peach Bottom extended power uprate,

130 MW Power’s share, scheduled in

service 2015/2016

•

Active and influential participation at

INPO, NEI, EPRI, USA Alliance

*STRATEGY KNOWN AS THE “DIVERSE AND FLEXIBLE MITIGATION CAPABILITY” OR FLEX, ADDRESSES

RECOMMENDATIONS OF THE NUCLEAR REGULATORY COMMISSION’S FUKUSHIMA TASK FORCE.

53

Power’s nuclear fleet is well positioned

with significantly lower-than-average US cost structure

0

25

50

All US*

PSEG Nuclear**

$37/MWh

*SOURCE: ELECTRIC UTILITY COST GROUP.

** SOURCE: PSEG NUCLEAR.

Total Fuel, Capital and O&M Costs*

3 YEAR AVERAGE 2011 -

2013

$44/MWh

54

Cost control actions taken:

•

Fossil

plant

assessment

•

CCGT material condition assessment

•

Vendor

contract renegotiations

•

Nuclear

security services brought in-

house to control costs

•

Nuclear maintenance productivity study

•

Nuclear outage efficiency initiative

•

Materials management

2009 to 2015 CAGR = 2.6%

Power O&M Expense*

*EXCLUDES IMPACTS FROM STORM RECOVERY COSTS.   E=ESTIMATE

PSEG Power’s

focus on costs

has resulted in moderate

increase in O&M for

seven years

$0

$500

$1,000

$1,500

2009

2010

2011

2012

2013

2014

2015E

55

PSEG Power’s Fossil Fleet has shown

improvement in performance

*LM6000 AND 7EA UNITS       E = ESTIMATE.    

Fossil

Generation

Coal Generation

Peaking

Start Success*

Combined Cycle Generation

•

Fossil Generation rebounded with market

•

Peaking Units maintain high start success

•

Record output

from Kearny 13 & 14 peakers

5

6

7

8

9

10

2011

2012

2013

2014

2015 E

10

12

14

16

18

20

2011

2012

2013

2014

2015 E

20

23

25

28

30

2011

2012

2013

2014

2015 E

•

Combined Cycle Generation set

record

•

Bergen

AGP uprate project scheduled for 2015

56

7,300

7,400

7,500

7,600

7,700

7,800

2008

2009

2010

2011

2012

2013

2014

PSEG Power initiatives result in

continuing improvement in combined cycle heat rate

AGP projected efficiency

improvement 2015-2018

2018E

E= ESTIMATE.

57

PSEG Power CCGT/Fossil initiatives

Actions Taken to Create Value

Capacity

•

New

Keys

CCGT

755MW

online

in

2018E

adds

geographic

diversity

to

fleet

•

Advanced

Gas

Path

(AGP)

investments

2014

through

2018

to

provide

additional

efficient capacity, heat

rate improvements

•

New

lower

cost

gas

line

at

BEC

with

Dominion

Performance

•

EPRI efficiency initiatives

•

GE initiatives for large data analytic

•

Consolidation of unit testing

•

Auto

tuning software

Maintenance

•

Ongoing outage efficiency improvement 

•

Improvements to reliability

•

Central fleet monitoring and diagnostic center

E = ESTIMATE

58

PSEG Keys Energy Center, our new-build

CCGT in SWMAAC* extends our geographic footprint in PJM

•

PSEG Fossil  acquired the Keys Energy Center

in Maryland in June 2015

•

Construction to begin this Fall to build a new,

755MW natural gas fired, combined-cycle gas

turbine in the SWMAAC region of PJM at an

estimated cost of $825 to $875 million

•

Commercial operation is targeted for 2018;

Keys has already cleared the 2017/2018

RPM auction

•

PSEG Fossil will oversee the construction and

operation of the Keys Energy Center

•

Keys project creates local construction jobs,

permanent operating positions, and adds to

the local tax base

•

Keys is positioned to benefit from access to

new gas transportation and infrastructure

additions

(Dominion-Transco)

PJM

*SWMAAC = SOUTHWEST MID-ATLANTIC AREA COUNCIL -

LOCATIONAL DELIVERABILITY AREA WITHIN PJM.

59

$0

$200

$400

$600

$800

$1,000

2010

2011

2012

2013

2014

2015E

2016E

2017E

Keys CCGT

Penn East (equity investment)

Growth

Environmental/Regulatory*

Maintenance

PSEG Power’s capital expenditures

dedicated toward growing portfolio

*BASED ON CURRENTLY KNOWN AND QUANTIFIABLE ENVIRONMENTAL REQUIREMENTS.  E=ESTIMATE. 

INCREMENTAL

INVESTMENT IN

KEYS 2015E-2017E

60

PSEG Power’s Growth Investments

Site

Project

Cost

($

millions)

Benefits

Status

Maryland

Keys 755 MW

CCGT

$825 -

$875

Geographic diversity

within PJM; highly

efficient gas fired unit in SWMAAC

2018

BEC

Dominion Gas Line

$8

Access

to

a

2

nd

,

lower

cost

gas

supply:

$8-9 million/year increase in margin

Completed

Linden

AGP Upgrade

$69

Increased capacity and

improved heat rate:

63 MW capacity increase

~1.2% heat rate improvement

Completed

CA / TX / VT

Solar Source

Projects

$44

Increased capacity: 21 MW

Completed

Peach Bottom

Peach Bottom

EPU

(2014 –

2015)

$417

Increased capacity: 130 MW

PB2

March 2015,

PB3 in 2016

Bergen /

BEC

Future AGP

Upgrades:

Bergen (2015)

BEC (2017-2018)

$98

Increased capacity and

improved heat rate:

88 MW capacity increase

~1.2% heat rate improvement

Underway

Various

Interim ISA’s*

No cost

Increased capacity: 69 MW

Completed

Eastern PA to

Mercer, NJ

PennEast Pipeline

$119

Estimated Earnings in

2019: 

$13 million

Underway

Total

Increased

Capacity

–

1,126

MW              

* INTERCONNECTION SERVICE AGREEMENTS.

61

Additional investment opportunities under

consideration

Site

Project

Benefits

Bridgeport Harbor

CCGT development

New ISO NE

Capacity:  475 MW

Hope Creek

Uprate

Additional

PJM Nuclear Capacity:  20 MW

Edison / Essex

SCR retrofit

Continued operation of FT4s

Edison: up

to ~ 470 MW

Essex:  up to ~ 330 MW

Sewaren

CCGT development

New PJM Capacity:  450 –

625 MW

Various

Additional solar projects

under investigation

100’s of MW of new solar

capacity under

evaluation

62

PSEG Solar Source owns ~148 MW

of solar facilities with long term contracted revenues*

*PROJECT SIZE IN MEGAWATTS SHOWN IN DC (DIRECT CURRENT)

Shasta A & Shasta B

California (2 x 2 MW)

COD March 2014

Polycrystalline -

single axis

Investment $13 million

20 year PPAs with PG&E

Hackettstown  (Mars)

New Jersey (2 MW)

COD September 2009

Thin film panels –

fixed tilt

Investment $13 million

15 year PPA with Mars, Inc.

Wyandot

Ohio (12 MW)

COD May 2010

Thin film panels –

fixed tilt

Investment $44 million

20 year PPA with AEP

JEA

Florida (15 MW)

COD September 2010

Thin film panels –

fixed tilt

Investment $59 million

30 year PPA with JEA

Queen Creek

Arizona (25 MW)

COD October 2012

Polycrystalline -

single axis

Investment $75 million

20 year PPA with SRP

Milford

Delaware (15 MW)

COD December 2012

Polycrystalline -

fixed tilt

Investment $47 million

20 year PPA with DEMEC

Badger I

Arizona (19 MW)

COD November 2013

Polycrystalline –

single axis

Investment $48 million

30 year PPA with APS

Newman

Texas (13 MW)

COD December 2014

Polycrystalline -

single axis

Investment $22 million

30 year PPA with El Paso Elec.

Whitcomb

Vermont (4 MW)

COD October 2014

Polycrystalline –

fixed tilt

Investment $10 million

25 year PPA with VT Electric

Power Producers, Inc.

Rockfish

Maryland (13 MW)

COD July 2015

Polycrystalline -

single axis

Investment $22 million

20 year PPA with SMECO

Columbia

California (25.5 MW)

COD Sept 2015 Est.

Polycrystalline –

fixed tilt

Investment $55 million

20 year PPA with PG&E

63

PSEG Power has other attractive sources of revenues to

round out a robust portfolio, in addition to energy and capacity

Gas Asset Optimization

Large wholesale provider to PSE&G and others

Storage capacity of approximately 75 Bcf (in the Gulf and market regions)

Firm transportation of 1.3 Bcf/day on seven pipelines

Off-system sales margins shared with residential customers

Commercial & Industrial customers (C&I)

Weather and price volatility

Ancillary Services

LIPA fuel and energy dispatch management

64

PSEG Power has delivered on its commitments

during volatile market conditions

2009

2010

2011

2012

2013

2014

Annual Cooling Degree Days

% greater/(less)

than average

(17%)

35%

26%

13%

7%

(5%)

Annual Heating

Degree Days

%

greater/(less) than average

(1%)

(8%)

(11%)

(17%)

(1%)

5%

# Days over 90 degrees

12

48

29

29

21

12

# Days below

20 degrees

24

14

13

7

13

33

Gas Volatility:  Transco Z6

Min $2.50

Max $19.93

Min $3.76

Max $23.43

Min $3.38

Max $18.93

Min $2.40

Max $12.43

Min $3.10

Max $39.43

Min $1.39

Max $115.00

LMP Volatility:

PS Zone

Min $4

Max $156

Min $7

Max $289

Min $15

Max $417

Min $5

Max $370

Min $10

Max $335

Min $5

Max $1,021

Basis Volatility:

PJM-W to PS Zone

Min ($22)

Max $50

Min ($29)

Max $71

Min ($40)

Max $116

Min ($49)

Max $97

Min ($28)

Max $79

Min ($131)

Max $455

Power Earnings

On

Guidance

On

Guidance

High End

of Guidance

Above

Guidance

High End

of Guidance

High End

of Guidance

65

PSEG Power is an established leader

within the industry

INPO

•

National Nuclear Accrediting Board

NEI

•

Communications Advisory Committee

•

Board of Directors

•

Board of Directors Executive Committee

•

Emergency Preparedness Working Group

•

Security Working Group

•

Fukushima Response Steering Committee

•

Joint Information System Task Force

•

Nuclear Strategic Issues Advisory Committee Steering

Group

EPRI

•

Chairman Nuclear Power Council

•

Executive Committee Nuclear Power Council

BWR Owners Group

•

Vice Chair of the Executive Oversight Committee

Utilities Service Alliance (USA) Fleet

•

Chair

EPSA

•

Executive committee member

UWAG

•

Chair of the Cooling Systems Committee

PJM/NY/ISO-NE

•

Member of various Committees at PJM

•

Chairman & Vice-Chair of the Supplier Sector of the New

England Power Pool (NEPOOL)

•

Chair of the PJM Power Providers Board

•

Board member & member of the board’s Executive

Committee of Independent Power Producers of New York

(IPPNY)

EEI

•

Member of water resources subcommittee

National Coal Council

•

Member of Executive Committee

66

Developing People to drive operational excellence

and to optimize the workforce

•

Succession planning and development planning

•

Recent CNO retirement & succession was part of the plan

•

Training & development of employees

•

Rotational assignments for key leaders in PSEG Power

•

Outreach programs

•

Employee engagement

•

Shared resources between Fossil and Nuclear (outage support)

•

Diversity & inclusion

67

Power’s 2015 operating earnings

maintain solid performance

Power Operating Earnings*

($ Millions)

2013

2014

2015 Guidance

$710

$642

$620 –

$680E

2015 Observations

•

Increase in average

hedge price for energy

helps mitigate reset in

capacity price and

volume

*  SEE SLIDE A FOR ITEMS EXCLUDED FROM NET INCOME TO RECONCILE TO OPERATING EARNINGS.      E = ESTIMATE.

PSEG POWER

ER&T

PSEG POWER

69

Market Review: 2014 was influenced by extremes in weather

highlighting the importance of winter

Q1:

Periods of extreme

cold temperatures

resulted in high gas

prices, significant

basis differentials, and

higher energy demand.

Q3:

A cooler than

normal summer,

combined with

increased supply of

gas, reduced energy

prices and basis.

70

Market Review: PSEG’s extensive gas asset portfolio gives

unparalleled access to Marcellus Shale gas

•

PSEG Power maintains a robust portfolio

of pipeline and storage assets in the

Mid-Atlantic

•

PSEG Power’s gas for generation was

~100 BCF in 2014, of which >60%

was supplied by Shale gas

•

PSEG Power procured over 400 BCF in

2014 with ~75% going to PSE&G’s utility

gas customers

•

When gas is surplus to customer needs,

PSEG Power sells surplus to others;

margins from such sales benefit PSE&G

gas customers and PSEG Power

Power’s Gas for Generation in 2014

40%

20%

6%

34%

Eastern PA Shale

Western PA Shale

Gulf Coast

Delivered Gas

71

Market Review: Winter Z6 gas prices retain seasonal volatility;

spark spreads have continued to be robust in PJM

FORWARDS AS OF AUGUST 3, 2015

2015 YTD Z6

PJM West vs. PS Zone Spark Spreads (2013-2018)

2015-2018 Z6

72

Market Review: New pipelines will move significant quantities of

Marcellus gas out of the region by 2018

New pipeline investment is expected to increase takeaway capacity from the low cost

Marcellus/Utica shale and reduce regional surpluses and increase gas prices by 2018

New England 3.4 bcf/d 

Southeast 6.4 bcf/d

Midwest 5.9 bcf/d

Gulf Coast  3.1 bcf/d

NJ/NY 1.4 bcf/d

Pipeline capacity grows significantly by

2018

Historical and Expected Marcellus

Production

0

5

10

15

20

25

30

2010

2011

2012

2013

2014

2015

2016

2017

2018

y

73

ANNUAL FORWARD BASIS TO PJM-WEST AS OF AUGUST 3, 2015.

E = YTD ACTUAL PLUS FORWARD;     F = FORWARD

Power

Basis

in

Eastern

PJM:

Expected

to

be

volatile

and

negative on an annual basis for 2015 and 2016

PS Zone RTC Basis to PJM West

Electric Basis is negative however it is viewed to be stabilizing and turning back to positive within

2 years due to:

•

Export of ~18 bcf/day of gas which will significantly strengthen regional gas prices

•

Easing of transmission constraints in Virginia/Maryland

•

Construction of significant new gas-fired generation in VA/MD

74

Regulatory Framework: Significant reforms already implemented and

new rules being promulgated to improve energy and capacity market designs

ISSUE /POLICY

OUTCOME

PJM

CAPACITY

•

Higher payments for enhanced reliability (Capacity Performance)

DEMAND RESPONSE

RULES

•

Stricter rules for eligibility and deployment

ENERGY PRICE

FORMATION

•

PJM and FERC forcing improvements to energy price formation;

higher caps

ISO-NE

CAPACITY

•

Higher prices

in recent auction better reflect

tight supply conditions

•

Implementation of sloping demand curve in FCA 9

•

Zonal demand curves expected in FCA 10

ENERGY

•

Demand response required

to participate in Day Ahead markets

•

Implemented hourly offers/real time reoffers

•

Reserve market prices better reflect scarcity prices

•

5 minute interval LMP settlements expected Q1 2016

NYISO

CAPACITY

•

New Capacity Zone

(LHV) leads to more accurate price signals

ENERGY

•

Improvement in price formation during reserve

shortage conditions

FEDERAL

DEMAND RESPONSE

•

EPSA VS. FERC and national implications; US

Supreme Court will

hear case

ENVIRONMENTAL

REGULATIONS

•

HEDD, CPP, HAPS/MACT

will lead to tightening of supply in

2015+ timeframe

75

PJM Capacity Performance Proposal: aims to

increase electric supply reliability

•

Capacity performance (CP) product places emphasis on reliability, with robust

performance standards, imposition of higher penalty structure and enhanced

opportunities for cost recovery to encourage reliability

•

Elimination of 2.5% holdback offsetting weak demand growth, making all

capacity resources annual products in end state, net CONE bidding safe harbor,

and the change in the demand curve (VRR) support price formation and improve

resource adequacy

•

Generator performance/flexibility is key objective for units with secure fuel supply

capable of meeting more stringent operating standards

June 2015

FERC Accepted PJM’s

Modified CP Proposal

August /September 2015

Transition Auctions for

2016/2017 & 2017/2018

Capacity Years

August 2015

RPM Auction for

2018/2019

Capacity Year

76

Capacity Performance: >90% of PSEG’s PJM capacity meets the new

capacity performance standards with minimal to moderate investment

CP Compliant Assets**

How

does

our

fleet

stack

up?

*

Combined

Cycle

Steam

Nuclear

Combustion

Turbine

* EXCLUDES 205MW OF PUMPED STORAGE.

** KEYS 755 MW CCGT UNIT EXPECTED TO BE CP COMPLIANT IN 2018

Meets CP

Requirement

with No to

Minimal

Investment

Moderate

Investment to

Meet CP

Requirement

Larger

Investment to

Meet CP

Requirement

77

Northeast Portfolio: New York and New England

New England (972 MW)

•

Small but dynamic market

•

Significant improvement in market construct

•

High volatility due to extreme (winter) weather

conditions

•

Significant siting and permitting challenges

•

Gas pipeline infrastructure poses supply

challenges/opportunity

New York (774 MW)

•

Single state ISO

•

Investment in new lateral to connect to the

Dominion pipeline at Bethlehem Energy

Center (BEC) allows for access to fuel supply

from Marcellus

•

Long Island Power Authority Management

Contract

22%

26%

44%

8%

Northeastern Capacity (1,746 MW)

Coal

Oil

Gas Combined Cycle

Gas Peakers

78

PSEG Power acting as an agent for LIPA began

January 2015

•

Performing ISO bidding for LIPA’s 6,000

MWs of generation/tolls

•

Procuring natural gas and oil for the

majority of these assets

•

Scheduling two DC transmission cables

(ISO-NE and PJM) into Long Island

•

Entering into financial hedges to reduce

LIPA customer’s price volatility

This relationship has provided PSEG Power:

•

Additional experience in Eastern NY

and Connecticut markets

•

Bigger natural gas footprint

•

Fee-based services contract

38%

36%

16%

7%

3%

LIPA Capacity (6,163 MW)

Steam

Combustion Turbine

Cables

Combined Cycle

Resource Recovery,

Pumped Storage, Solar

Northeast Portfolio: Expanding our footprint with PSEG Long Island

79

2018 Onwards RPM Auction Impacted By:

•   Capacity Performance           

•   Demand response rules

•   Convex Demand Curve

•   Elimination of 2.5% Holdback

•   Change in Net CONE

•   Reduction in Load Forecast

•   Change in PJM Parameters

•   Environmental Retirements

Capacity Market Pricing:

PJM’s capacity market is transitioning

to recognize operating performance as well as locational value

*PSEG POWER’S AVERAGE PRICES AND CLEARED CAPACITY (MW) REFLECT BASE AND INCREMENTAL

RPM AUCTION RESULTS AS OF FEBRUARY 2015.  DELIVERY YEAR RUNS FROM JUNE 1 TO MAY 31 OF THE NEXT CALENDAR YEAR.

RPM Auction Results

($/MW-day)

2013 / 2014*

2014 / 2015*

2015 / 2016*

2016 / 2017*

2017 / 2018

Power’s

Average Prices

$242

$168

$168

$167

$165

Rest of Pool

Prices

$28

$126

$136

$59

$120

Power’s Cleared

Capacity (MW)

10,900

10,600

8,800

8,700

8,700

80

Auction Results: BGS Auction provides ability to forward

hedge our generation and protect our power basis

Capacity

Load shape

Transmission

Congestion

Ancillary

services

Risk premium

Green

BGS sales account for approximately 20% of our forward portfolio of hedges

3 Year Average

Round the Clock

PJM West

Forward Energy

Price

$/MWH; BGS PRICES REFLECT PSE&G ZONE; RESULTS FOR 2013-2015 ARE THE NEW BLENDED PRICES BEGINNING JUNE 1, 2015.

2011

2012

2013

2014

2015

$94.30

$83.88

~ $46

$92.18

~ $48

~ $53

~ $59

$97.39

$45

-

$47

$39

-

$40

$37

-

$38

$38

-

$39

~ $62

$37

-

$38

$99.54

81

HEDGE

PERCENTAGES

AND

PRICES

AS

OF

JUNE

30,

2015.

REVENUES

OF

FULL

REQUIREMENT

LOAD

DEALS

BASED

ON

CONTRACT

PRICE,

INCLUDING

RENEWABLE

ENERGY

CREDITS,

ANCILLARY,

AND

TRANSMISSION

COMPONENTS

BUT

EXCLUDING

CAPACITY.

HEDGES

INCLUDE

POSITIONS

WITH

MTM

ACCOUNTING

TREATMENT

AND

OPTIONS.

EXCLUDES

SOLAR

AND

KALAELOA.

Jul-Dec

2015

2016

2017

Volume TWh

18

37

37

Base Load

% Hedged

100%

85-90%

50-55%

(Nuclear and Base Load Coal)

Price $/MWh

$53

$51

$50

Volume TWh

11

19

18

Intermediate Coal, Combined

% Hedged

30-35%

0%

0%

Cycle, Peaking

Price $/MWh

$53

--

--

Volume TWh

25-30

55-57

55-57

Total

% Hedged

70-75%

55-60%

30-35%

Price $/MWh

$53

$51

$50

Hedging strategy:

designed to protect gross margin

while leveraging the portfolio

82

PSEG Power’s Value Proposition

•

Well-positioned fleet of merchant generating assets in attractive markets

•

Advantaged by low cost structure, fuel diversity and dispatch flexibility

•

Value add from strong gas supply capability

•

Significant drive by regulatory bodies to improve market constructs

•

Low capital requirements to meet enhanced performance standards

•

Organic growth opportunities to increase nuclear and combined cycle

generation

•

Hedging strategy is responsive to changing market dynamics, providing

attractive returns and free cash flow

PSEG

FINANCIAL

REVIEW & OUTLOOK

84

Strong financial position to support our

business initiatives

2014 Financial Position

Strong 2014 earnings growth

Exceeded earnings guidance

Executed major PSE&G capital program

Strong balance sheet with no long term Parent debt

Solid credit metrics

2015 and Beyond

Third year of anticipated positive earnings growth in 2015

Controlled O&M growth

Balance Sheet and Cash Flow support investment program without equity issuance

Substantial additional investment capacity

Growth in PSE&G investments with contemporaneous/formula rate returns and new Power investment

Consistent and strong cash flow from both Power and PSE&G

Potential for accelerated and sustainable dividend growth

85

Earnings increase of 7% exceeded

guidance

PSEG Operating Earnings

$ Millions (except EPS)

2013

2014

PSE&G

$612

$725

PSEG Power

$710

$642

Other

($13)

$33

Operating Earnings

$1,309

$1,400

Operating EPS*

$2.58

$2.76

Revised Earnings Guidance (Oct 2014)

$2.60 -

$2.75

Earnings Guidance (Feb 2014)

$2.55 -

$2.75

*SEE SLIDE A FOR ITEMS EXCLUDED FROM INCOME FROM CONTINUING OPERATIONS/NET INCOME TO RECONCILE TO OPERATING EARNINGS.

Key Takeaways

18% increase in PSE&G

earnings

52% regulated earnings

contribution in 2014

Power’s results exceeded

guidance

86

$0.0

$0.5

$1.0

$1.5

Power produced significant and

consistent

Free Cash Flow

2012

Power Cash From Ops

2013

2014

2012

2013

2014

Power Free Cash Flow

87

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

PSE&G delivers increasing cash flow due

to investment program

2012

PSE&G Cash Investment

PSE&G Cash From Ops

(1)

2013

2014

2012

2013

2014

(1)

PSE&G CASH FROM OPERATIONS ADJUSTS FOR SECURITIZATION PRINCIPAL REPAYMENTS OF ~$215 TO ~$240 MILLION OVER

3 YEAR PERIOD

88

In 2014, Power’s Free Cash Flow supported PSE&G’s

capital program and shareholder dividend

$0.0

$1.0

$2.0

$3.0

$4.0

Sources

Uses

Power

Cash from Ops

~$1.4B

PSE&G

Cash from Ops

(1)

~$1.6B

PSE&G

Cash Investment

~$2.2B

Power

Cash Investment

(3)

~$0.7B

Shareholder

Dividend

~$0.7B

PSE&G

Net Debt

~$0.7B

Other

Cash Flow

(2)

~$0.1B

PSEG Consolidated

2014 Sources and Uses

(1)

PSE&G CASH FROM OPERATIONS ADJUSTS FOR SECURITIZATION PRINCIPAL REPAYMENTS OF ~$240 MILLION.

(2)

OTHER CASH FLOW INCLUDES HOLDINGS NET CASH FLOW AND INVESTED CASH

(3)

POWER CASH INVESTMENT INCLUDES NUCLEAR FUEL AND EMISSION PURCHASES

89

~$1.6B

~$1.4B

~$2.2B

~$1.9B

~$6.8B

~$15.0B

~$1.1B

~$13.9B

PSEG

2015–

2019E

Capital

Expenditures

(1)

PSEG growth spend represents ~70% of total investment

Power & Other

Maintenance

PSE&G

Distribution

Maintenance

Power

Growth

PSE&G

Transmission

Growth

PSE&G

Energy Strong,

Solar and  

New Business

Planned

Growth

Investment

~$10.1B

PSEG

Planned

Spend

Maintenance ~$3.8B

PSE&G

Potential

Upside

PSEG

Potential

Spend

Potential Upside ~$1.1B

(1)

INCLUDES AFUDC AND IDC; KEYS ENERGY CENTER, PENNEAST PIPELINE EQUITY INVESTMENT OF~$0.1B IS INCLUDED IN

POWER GROWTH.  E = ESTIMATE. 

90

2014 –

2017E Rate Base

CAGR Growth of ~12%

Distribution

Transmission

PSE&G’s Capital Program drives double-digit

growth in rate base through 2019

~$11.4B

~$16.0B

~$6.9B

~$4.5B

~$2.2B

~$9.8B

~$3.1B

~$8.5B

Rate Base

Growth

~$0.1B

2014

Rate Base

Planned

2017E

Rate Base

Potential

Upside

Potential

2019E

Rate Base

Planned

2019E

Rate Base

~$1.5B

~$8.4B

~$7.6B

~$18.3B

~$1.0B

~$9.5B

~$9.8B

~$19.3B

2014 –

2019E Rate Base

CAGR Growth of ~10%

Rate Base

Growth

2014 –

2019E Potential Rate

Base CAGR Growth of ~11%

E = ESTIMATE   

91

0%

5%

10%

15%

Continuing our track record of 5 year

double digit rate base growth leading to high single-digit growth in

earnings through 2017

2010 –

2015E

PSE&G 5 Year Rate Base CAGR

2011 –

2016E

2012 –

2017E

2013 –

2018E

2014 –

2019E

~11%

~13%

~12%

~10%

~10%

~11%

PLANNED

POTENTIAL

E = ESTIMATE   

92

Substantial internal cash generation

supports our planned growth capital program and potential 

investment opportunities without the need for equity

Sources

Uses

Sources

Uses

PSE&G

Cash from

Ops

(1)

PSE&G Cash

Investment

PSE&G

Net Debt

PSEG 2015 -

2019E Sources and Uses

PSE&G

Cash from

Ops

(1)

PSE&G Net

Debt

Planned Programs

Including Potential Upside Projects

Shareholder

Dividend

Power

Cash from

Ops

Shareholder

Dividend

Power

Cash from

Ops

Power Cash

Investment

(3)

PSE&G Cash

Investment

Power Net

Debt

Other Cash

Flow

(2)

Other Cash

Flow

(2)

Power Net

Debt

Power Cash

Investment

(3)

(1)

PSE&G CASH FROM OPERATIONS ADJUSTS FOR SECURITIZATION PRINCIPAL REPAYMENTS OF ~$260M FROM 2015-2019

(2)

OTHER CASH FLOW INCLUDES PSEG LI, HOLDINGS NET CASH FLOW, INVESTED CASH, AND PARENT SHORT-TERM DEBT

(3)

POWER CASH INVESTMENT INCLUDES NUCLEAR FUEL AND EMISSION PURCHASES. DOES NOT REFLECT

$825-$875 MILLION KEYS INVESTMENT ANNOUNCED ON JUNE 17, 2015.

E = ESTIMATE.

93

0%

10%

20%

30%

40%

50%

60%

70%

Power’s key credit metric

remains strong

providing opportunity for incremental investment*

2015-2017E

Average

Increased contribution to earnings from the more

stable regulated business

Power’s annual Cash From Operations and Funds

From Operations each average ~$1.4B over the

2015 to 2017 period supported by:

–

Capacity Revenues

–

Hedged Generation

–

O&M Control

Financial strength can be used to pursue future

growth in both businesses beyond current plans

2013

2014

PSEG Power

Funds from Operations / Debt

*DOES

NOT

REFLECT

$825

-

$875

MILLION

KEYS

INVESTMENT

ANNOUNCED

ON

JUNE

17,

2015.

E=

ESTIMATE

94

Total

Incremental

Investment

Capacity

through 2017

Substantial Investment Capacity to pursue

additional growth without the need for equity

$0.0

$4.0

Power

Parent

Total

($ Billions)

Power

PSEG

Estimate

~ 55%

~30%

Minimum

Threshold

30%

Low -

20’s

Average

Funds

from

Operations

/Debt

2015

-

2017

Our incremental investment capacity can support over $6B in

regulated investments

DOES

NOT

REFLECT

THE

IMPACT

OF

$825

-

$875

MILLION

KEYS

CCGT

INVESTMENT

ANNOUNCED

JUNE

17,

2015.

95

$0

$500

$1,000

$1,500

$2,000

$2,500

2014

2015E

2016E

2017E

2014 –

2017E CAGR

Transmission

~(1.4%)

Distribution

~2.7%

Power

~1.0%

Other: N.M.

Controlling O&M growth, with manageable

pension impacts and PSE&G continuing to grow its asset base

PSEG O&M Expense

(1)

2014  -

2017E  CAGR: ~1.4%

(1)

POWER

EXCLUDES

IMPACTS

FROM

STORM

RECOVERY

COSTS

AND

POTENTIAL

RELATED

INSURANCE

PROCEEDS.

N.M.= NOT MATERIAL        E = ESTIMATE.

96

PSEG 2015 Updated Guidance for Operating Income

–

by Subsidiary, and PSEG Power Adjusted EBITDA

Anticipates

Another

Year

of

Growth

in

Operating

Earnings

$ millions (except EPS)

2015E

2014

PSE&G

$760 -

$775

$725

PSEG Power

$620 -

$680

$642

PSEG Enterprise/Other

$40 -

$45

$33

Operating Earnings*

$1,420 -

$1,500

$1,400

Earnings per Share

$2.80 -

$2.95E

$2.76

PSEG Power Adjusted EBITDA**

$ millions (except EPS)

2015E

2014

PSEG Power

$1,545 -

$1,645

$1,584

*   SEE SLIDE A FOR ITEMS EXCLUDED FROM NET INCOME TO RECONCILE TO OPERATING EARNINGS; INCLUDES THE FINANCIAL IMPACT

FROM MARK-TO-MARKET POSITIONS WITH FORWARD DELIVERY MONTHS.

** SEE SLIDE B FOR A RECONCILIATION OF ADJUSTED EBITDA TO OPERATING EARNINGS AND NET INCOME.   E = ESTIMATE.

97

$1.37

$1.42

$1.44

$1.48

$1.56

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

2011

2012

2013

2014

2015E

PSE&G

EPS

Annual Dividend Per Share

2011 –

2014  CAGR:  2.6%

Potential for meaningful and sustainable

dividend growth given significant contribution from regulated

earnings and Power’s strong free cash flow

5.4%

increase

Payout

Ratio

50%

58%

56%

54%

54%

(1)

$1.53

$1.45

(1)  THE 2015 PAYOUT RATIO IS BASED ON THE MIDPOINT OF PSEG'S 2015 UPDATED OPERATING EARNINGS

GUIDANCE OF $2.80-$2.95E PER SHARE. SEE SLIDE A FOR ITEMS EXCLUDED FROM INCOME FROM

CONTINUING OPERATIONS/NET INCOME TO RECONCILE TO OPERATING EARNINGS.  E= ESTIMATE.

98

PSEG’s longer-term outlook is influenced by

Power’s hedge position and increased investment at PSE&G

2015E**

2016E

Each $0.75/mcf Change in Natural Gas

Each $2/MWh Change in Spark Spread

Each $5/MWh Change in Dark Spread

Each 1% Change in Nuclear Capacity Factor

Segment EPS Drivers

Each $100 Million of Incremental Investment

Each 1% Change in Sales

Electric

Gas

Each 1% Change in O&M

Each 10 basis point Change in Distribution ROE

Each 10 basis point Change in Transmission ROE

$0.01

$0.01

$0.01

$0.01

$0.01

$0.01

$0.03-$0.06

$0.04

$0.04

$0.01

$0.01-$0.02

$0.02

$0.01

$0.01

$0.01

$0.01

$0.01

$0.01

$0.01

$0.01

Sensitivities derived from typical annual market variability*

* Estimated

annual

variability

approximating

one

standard

deviation

based

on

2011

–

2013

historical

data

and

forward

curve estimates applied to PSEG Power open positions.     ** July-December 2015.

E = ESTIMATE.    POWER EARNINGS SENSITIVITIES UPDATED FOR 2015 BGS AUCTION AND 12/31/14 PRICE CURVES.   

2015E

2016E

2017E

$0.10-$0.13

$0.04

$0.04

$0.01

$0.01

$0.01

$0.01

$0.01

$0.01

$0.01

2017E

99

PSEG Summary

•

Our 2014 earnings of $2.76 exceeded our revised operating earnings

guidance of $2.60 -

$2.75 per share

•

Continued third year of anticipated positive earnings trend in 2015 with

updated operating earnings guidance of $2.80 to $2.95 per share

•

Continued 5

th

straight year of expected double digit, 5 year growth in rate base

•

Anticipated high single digit earnings growth at PSE&G on three-year basis from

2014 to 2017, driven by transmission investments and planned programs

•

Power’s continued focus on operational excellence, market expertise and

financial strength delivers value in current price environment

•

Strong Balance Sheet and Cash Flow support PSE&G’s capital program and

Power’s new investment opportunity without the need for equity

•

Our $0.08 per share dividend increase is consistent with our long history

of returning cash to the shareholder through the common dividend, with

potential for consistent and sustainable growth

100

PSE&G

APPENDIX

101

PSE&G provides high reliability at below

average cost which creates superior value to customers

SAIDI

=

SYSTEM

AVERAGE

INTERRUPTION

DURATION

INDEX,

A

MEASURE

OF

AVERAGE

OUTAGE

DURATION

FOR

ALL

CUSTOMERS

SERVED,

EXCLUDING

MAJOR

EVENTS.

SOURCES:

PSE&G

PEER

PANEL

STUDY,

FIRST

QUARTILE

BENCHMARK

STUDY

AND

VARIOUS

REGULATORY REPORTS..

102

PSE&G prioritizes public safety

while maintaining value to customers

LEAK

RESPONSE

RATE

=

PERCENTAGE

OF

UTILITY

RESPONSES

TO

REPORTED

LEAKS

WITHIN

ONE

HOUR.

SOURCES:

PSE&G

PEER

PANEL

STUDY

AND AGA BENCHMARK STUDY.

103

PSEG POWER

AND ER&T

APPENDIX

104

Nuclear fuel needs have been hedged through 2017

Anticipated Nuclear Fuel Cost

Hedged

105

Power’s coal hedging reflects 2015 supply

matched with 2015 sales

$0

$10

$20

$30

$40

$50

0%

20%

40%

60%

80%

100%

2015

2016

2017

Contracted Coal

Station

Coal Type

Pricing

($/MWh)*

Comments

Bridgeport

Harbor

Adaro

Low $40’s

Higher price,

lower BTU,

enviro coal

Hudson

CAPP

Mid $40’s

Coal/Gas

Fuel

Flexibility

Mercer

Metallurgical

CAPP/NAPP

Mid $40’s

More limited

segment of

coal market

Keystone

NAPP

Mid $20’s

Prices

steady

Conemaugh

NAPP

Mid $20’s

Prices

steady

% Hedged

(left scale)

$/MWh

(right scale)

106

PSEG Power value advantaged

by asset diversity, fuel flexibility and location

Fuel Diversity*

Total MW: 13,146

Energy Produced*

Total GWh: 54,162

Energy Market Served*

Total MW: 13,146

Load Following

Peaking

Base load

Gas

Pumped

Storage

Nuclear

Oil

Coal**

Gas

Pumped

Storage

Nuclear

Oil

Coal**

*2014, EXCLUDES SOLAR AND KALAELOA.

**INCLUDES NEW JERSEY UNITS THAT FUEL SWITCH TO GAS.

107

Capacity Price per RPM Auction for PSEG Zone

Capacity Price per BGS Tranche

2015-2016

166

$         

Three Year Average ($/MW-day)

$173

2016-2017

177

$         

Average MW per Tranche (varies by EDC)

111

2017-2018

175

$         

Days per Year

365

   Average Capacity Price ($/MW-day)

173

$      

   Average Capacity Cost per Tranche

7,007,656

$  

MWh per Tranche

Average MW per Tranche (varies by EDC)

111

Hours per Year

8,768

Load Factor (varies by EDC)

~37%

MWh per Tranche, approx.

355,000

Capacity Cost per MWh

20

$                       

The full requirements BGS rate recognizes the

forward PJM capacity market price

108

PSEG

FINANCIAL

APPENDIX

109

Q2 Operating Earnings by Subsidiary

* SEE SLIDE C FOR ITEMS EXCLUDED FROM NET INCOME TO RECONCILE TO OPERATING EARNINGS.

Operating Earnings

Earnings per Share

$ millions (except EPS)

2015

2014

2015

2014

PSE&G

$  167

$  151

$  0.33

$  0.30

PSEG Power

110

87

0.22

0.17

PSEG Enterprise/Other

12

7

0.02

0.02

Operating Earnings*

$  289

$  245 

$  0.57

$  0.49

Quarter ended June 30

110

PSEG EPS Reconciliation –

Q2 2015

versus Q2 2014

* SEE SLIDE C FOR ITEMS EXCLUDED FROM NET INCOME TO RECONCILE TO OPERATING EARNINGS.

Q2 2015       

Operating

Earnings*

Q2 2014       

Operating

Earnings*

PSEG Power

PSE&G

Enterprise/

Other

Re-Contracting & Lower

Cost to Serve  0.10

Higher Volume

0.02

Capacity  (0.08)

O&M  (0.01)

D&A  (0.01)

Taxes & Other

0.03

Transmission

Net Earnings  0.04

Gas Volume  0.01

Electric Volume

& Demand  0.01

Distribution

O&M  (0.02)

Taxes & Other

(0.01)

$0.49

0.03

0.05

0.00

$0.57

0.00

0.10

0.20

0.30

0.40

0.50

0.60

111

First Half Operating Earnings by Subsidiary

Operating Earnings

Earnings per Share

$ millions (except EPS)

2015

2014

2015

2014

PSE&G

$  409

$  365

$  0.80

$  0.72

PSEG Power

388

380

0.77

0.75

PSEG Enterprise/Other

21

15

0.04

0.03

Operating Earnings*

$  818   

$  760 

$  1.61

$  1.50

Six months ended June 30

•SEE SLIDE C FOR ITEMS EXCLUDED FROM NET INCOME TO RECONCILE TO OPERATING EARNINGS.

112

$1.61

0.01

0.02

0.08

$1.50

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

PSEG EPS Reconciliation –

First Half 2015

versus First Half 2014

YTD 2015       

Operating

Earnings*

YTD 2014       

Operating

Earnings*

Re-Contracting

& Lower Cost

to Serve  0.14

Gas Send-Out & Fixed

Cost Recovery  0.04

Higher Volume

0.02

Capacity  (0.18)

O&M  (0.02)

D&A  (0.01)

Taxes & Other

0.03

PSEG Power

Transmission

Net Earnings  0.07

Gas Volume &

Demand  0.02

Electric Volume &

Demand  0.01

Distribution

O&M  (0.01)

Taxes & Other  

(0.01)

PSE&G

Enterprise/

Other

PSEG Long

Island

* SEE SLIDE C FOR ITEMS EXCLUDED FROM NET INCOME TO RECONCILE TO OPERATING EARNINGS.

113

June 30, 2015

$ Billions 

PSEG

PSE&G

Power

Cash and Cash Equivalents

$0.6

$0.2

$0.0

Short Term Debt

$0.0

$0.0

N/A

Long Term Debt

(1)

9.2

6.6

2.5

Common Equity

12.7

7.2

5.7

Total Capitalization

$21.9

$13.8

$8.2

Total Debt / Capitalization

42%

48%

31%

PSE&G Regulated Equity Ratio

(2)

51.7%

Our balance sheet remains strong

(1)INCLUDES L-T DEBT DUE WITHIN 1 YEAR; EXCLUDES SECURITIZATION DEBT OF $134 MILLION AND NON-RECOURSE DEBT OF $16 MILLION.

(2)REGULATED EQUITY RATIO INCLUDES CUSTOMER DEPOSITS OF ~$98 MILLION AND EXCLUDES SHORT-TERM DEBT.

114

PSEG Sandy-related insurance settlement

proceeds

($ millions, pre-tax)

Pre-2015

2015

Total

PSEG Power

$44

$179

$223**

PSE&G

6

35

41***

PSEG

$50*

$214

~$264

*       PSE&G RECEIVED $6 MILLION OF INSURANCE SETTLEMENT PROCEEDS IN Q4 2012.  POWER RECEIVED $19 MILLION AND  $25 MILLION OF

INSURANCE SETTLEMENT PROCEEDS IN Q4 2012 AND Q2 2013, RESPECTIVELY.

**    POWER SHARE OF PROCEEDS REDUCED O&M; PROPERTY, PLANT AND EQUIPMENT; INCREASED OTHER INCOME.

*** PSE&G SHARE OF PROCEEDS REDUCED O&M; PROPERTY, PLANT AND EQUIPMENT; AND REGULATORY ASSETS.

115

$0.0

$0.5

$1.0

$1.5

Power Cash

from Ops

~$1.4B

Power Cash

Investment

(1)

~0.7B

Dividend

to Parent

~$0.9B

Power 2014 Cash Flows

Free Cash Flow

~$0.7B

Cash Used

~$0.2B

(2)

In 2014, Power had significant free cash flow

(1) POWER CAPITAL INVESTMENT INCLUDES NUCLEAR FUEL AND EMISSION PURCHASES

(2) POWER INVESTED CASH BALANCE DECREASED FROM ~$0.8B TO ~$0.6B

~$0.7B 

Shareholder

dividend

~$0.2B Capital

contribution to

PSE&G

116

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

PSE&G

Net Debt

~$0.7B

Parent Capital

Contribution

~$0.2B

PSE&G Cash

from Ops

(1)

~$1.6B

PSE&G Cash

Investment

~$2.2B

In 2014, PSE&G used $1.6B of internally

generated cash flow

and debt to invest over $2B while

maintaining its capital structure  

(1) PSE&G CASH FROM OPERATIONS ADJUSTS FOR SECURITIZATION PRINCIPAL

REPAYMENTS OF ~$240 MILLION.

Cash Invested

~$0.3B

PSE&G 2014 Cash Flows

117

PSEG Liquidity as of June 30, 2015

118

PSEG Energy Holdings

Investment Portfolio

Equipment

Investment  Balance*             

at 6/30/15

($Millions)

Merchant Energy Leases

NRG  REMA

Keystone, Conemaugh & Shawville (PA)

3 coal-fired plants (1,162 equity MW)

$355

NRG Energy, Inc./Midwest Gen**

Powerton & Joliet Generating Stations (IL)                             

2 coal-fired generating facilities (1,640 equity MW)

218

Regulated Energy Leases

Merrill Creek

Reservoir in NJ  (PECO, MetEd, Delmarva Power & Light)

150

Grand Gulf

Nuclear station in Mississippi (175 equity MW)

29

Real Estate Leveraged Leases

GM Renaissance Center; Wal-Marts

57

Real Estate Operating Leases

Office

Towers,

Shopping

Centers

-

28

properties

39

Generation Legacy Assets

GWF (in wind down stage), GSOE 

2

Other

Land

5

Total Holdings Investments

$855

*

BOOK BALANCE EXCLUDING  DEFERRED TAX ACCOUNTS.

**EME WAS ACQUIRED BY NRG ON APRIL 1 2014.

119

PSEG 2014 operating earnings up 7%

*

SEE SLIDE A FOR ITEMS EXCLUDED FROM INCOME FROM CONTINUING OPERATIONS/NET INCOME TO RECONCILE TO OPERATING EARNINGS.

Operating Earnings

Earnings per Share

$ Millions (except EPS)

2014

2013

2014

2013

PSE&G

$  725

$  612

$  1.43

$  1.21

PSEG Power

642

710

1.27

1.40

PSEG Enterprise/Other

33

(13)

0.06

(0.03)

Operating Earnings*

$  1,400 

$  1,309 

$  2.76

$  2.58

Twelve Months ended December 31

A

Items Excluded from Income from Continuing

Operations/Net Income to Reconcile to Operating Earnings

PLEASE SEE PAGE 3 FOR AN EXPLANATION OF PSEG’S USE OF OPERATING EARNINGS AS A NON-GAAP FINANCIAL MEASURE AND HOW IT

DIFFERS FROM NET INCOME.

2014

2013

2012

2011

2010

2009

Earnings Impact ($ Millions)

Operating Earnings

1,400

$      

1,309

$    

1,236

$    

1,389

$      

1,584

$    

1,567

$    

Gain (Loss) on Nuclear Decommissioning Trust (NDT)

Fund Related Activity (PSEG Power)

68

40

52

50

46

9

Gain (Loss) on Mark-to-Market (MTM)

(a)

(PSEG Power)

66

(74)

(10)

107

(1)

(11)

Lease Transaction Activity (PSEG Enterprise/Other)

-

-

36

(173)

-

29

Storm O&M (PSEG Power)

(16)

(32)

(39)

-

-

-

Market Transition Charge Refund (PSE&G)

-

-

-

-

(72)

-

Gain (Loss) on Asset Sales and Impairments (PSEG Enterprise/Other)

-

-

-

34

-

-

Income from Continuing Operations

1,518

$      

1,243

$    

1,275

$    

1,407

$      

1,557

$    

1,594

$    

Discontinued Operations

-

-

-

96

7

(2)

Net Income

1,518

$      

1,243

$    

1,275

$    

1,503

$      

1,564

$    

1,592

$    

Fully Diluted Average Shares Outstanding (in Millions)

508

508

507

507

507

507

Per Share Impact (Diluted)

Operating Earnings

2.76

$        

2.58

$     

2.44

$     

2.74

$       

3.12

$     

3.09

$     

Gain (Loss) on NDT Fund Related Activity (PSEG Power)

0.13

0.08

0.10

0.10

0.09

0.02

Gain (Loss) on MTM

(a)

(PSEG Power)

0.13

(0.14)

(0.02)

0.21

-

(0.02)

Lease Transaction Activity (PSEG Enterprise/Other)

-

-

0.07

(0.34)

-

0.05

Storm O&M (PSEG Power)

(0.03)

(0.07)

(0.08)

-

-

-

Market Transition Charge Refund (PSE&G)

-

-

-

-

(0.14)

-

Gain (Loss) on Asset Sales and Impairments (PSEG Enterprise/Other)

-

-

-

0.06

-

-

Income from Continuing Operations

2.99

$        

2.45

$     

2.51

$     

2.77

$       

3.07

$     

3.14

$     

Discontinued Operations

-

-

-

0.19

0.01

-

Net Income

2.99

$        

2.45

$     

2.51

$     

2.96

$       

3.08

$     

3.14

$     

(Unaudited)

For the Year Ended

December 31,

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

Reconciling Items, net of tax

(a)

Includes the financial impact from positions with forward delivery months.

B

Items Excluded from Net Income to Reconcile to Operating

Earnings and Adjusted EBITDA

PLEASE SEE PAGE 3 FOR AN EXPLANATION OF PSEG’S USE OF OPERATING EARNINGS AND ADJUSTED EBITDA AS NON-GAAP FINANCIAL

MEASURES AND HOW THEY DIFFER FROM NET INCOME.

C

Items Excluded from Income from Continuing

Operations/Net Income to Reconcile to Operating Earnings

PLEASE SEE PAGE 3 FOR AN EXPLANATION OF PSEG’S USE OF OPERATING EARNINGS AS A NON-GAAP FINANCIAL MEASURE AND HOW IT

DIFFERS FROM NET INCOME.