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) December 9, 2009

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

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, T-25

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

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

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 Public Service Enterprise Group Incorporated (PSEG), PSEG Power LLC (Power) and Public Service Electric and Gas Company (PSE&G). 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. Power and PSE&G each makes representations only as to itself and makes no other representations whatsoever as to any other company.

Item 7.01 Regulation FD Disclosure

On December 10, 2009, PSEG is participating in the New York Investor Meetings in New York, NY. A copy of the discussion materials being used at the meeting is furnished as Exhibit 99 to this Form 8-K.

Item 9.01 Financial Statements and Exhibits

Exhibit 99     Discussion Materials for the New York Investor Meetings

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/    DEREK M. DIRISIO
	Derek M. DiRisio
	Vice President and Controller
	(Principal Accounting Officer)

Date: December 9, 2009

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.

PSEG POWER LLC
(Registrant)
By:	/s/    DEREK M. DIRISIO
	Derek M. DiRisio
	Vice President and Controller
	(Principal Accounting Officer)

Date: December 9, 2009

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.

PUBLIC SERVICE ELECTRIC AND GAS COMPANY
(Registrant)
By:	/s/    DEREK M. DIRISIO
	Derek M. DiRisio
	Vice President and Controller
	(Principal Accounting Officer)

Date: December 9, 2009

5

EX-99

Public Service Enterprise Group

New York Investor Meetings

New York, New York

December 10, 2009

Exhibit 99

Delivering Value: Today and Tomorrow

2

Forward-Looking Statement

Readers are cautioned that statements contained in this presentation about our and our subsidiaries' future performance, including future

revenues, earnings, strategies, prospects and all other statements that are not purely historical, are forward-looking statements for purposes of

the

safe

harbor

provisions

under

The

Private

Securities

Litigation

Reform

Act

of

1995.

Although

we

believe

that

our

expectations

are

based

on

reasonable

assumptions,

we

can

give

no

assurance

they

will

be

achieved.

The

results

or

events

predicted

in

these

statements

may

differ

materially

from

actual

results

or

events.

Factors

which

could

cause

results

or

events

to

differ

from

current

expectations

include,

but

are

not

limited to:

Adverse changes in energy industry, law, policies and regulation, including market structures and rules, and reliability standards.

Any inability of our energy transmission and distribution businesses to obtain adequate and timely rate relief and regulatory approvals from

federal and state regulators.

Changes in federal and/or state environmental requirements that could increase our costs or limit operations of our generating units.

Changes

in

nuclear

regulation

and/or

developments

in

the

nuclear

power

industry

generally,

that

could

limit

operations

of

our

nuclear

generating

units.

Actions or activities at one of our nuclear units that might adversely affect our ability to continue to operate that unit or other units at the same

site.

Any inability to balance our energy obligations, available supply and trading risks.

Any deterioration in our credit quality.

Availability of capital and credit at reasonable pricing terms and our ability to meet cash needs.

Any inability to realize anticipated tax benefits or retain tax credits.

Changes

in

the

cost

of

or

interruption

in

the

supply

of

fuel

and

other

commodities

necessary

to

the

operation

of

our

generating

units.

Delays or cost escalations in our construction and development activities.

Adverse investment performance of our decommissioning and defined benefit plan trust funds, and changes in discount rates and funding

requirements.

Changes in technology and increased customer conservation.

For further information, please refer to our Annual Report on Form 10-K, including Item 1A. Risk Factors, and subsequent reports on Form 10-Q

and Form 8-K filed with the Securities and Exchange Commission.  These documents address in further detail our business, industry issues and

other

factors

that

could

cause

actual

results

to

differ

materially

from

those

indicated

in

this

presentation.

In

addition,

any

forward-looking

statements included herein represent our estimates only as of today and should not be relied upon as representing our estimates as of any

subsequent date.  While we may elect to update forward-looking statements from time to time, we specifically disclaim any obligation to do so,

even

if

our

internal

estimates

change,

unless

otherwise

required

by

applicable

securities

laws.

Delivering Value: Today and Tomorrow

3

GAAP Disclaimer

PSEG presents Operating Earnings in addition to its Net Income reported

in accordance with accounting principles generally accepted in the United

States (GAAP). Operating Earnings is a non-GAAP financial measure that

differs from Net Income because it excludes the impact of the sale of

certain non-core domestic and international assets and material

impairments and lease-transaction-related charges. 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.

This information is

not

intended to be viewed as an alternative to GAAP information. The

last

two

slides

in

this

presentation

include

a

list

of

items

excluded

from

Net

Income to reconcile to Operating Earnings, with a reference to that slide

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

PSEG Strategic Overview

Delivering Value: Today and Tomorrow

5

PSEG establishing a policy leadership position …

Electric and Gas

Delivery

Leveraged Leases and

Renewable Investments

Regional

Wholesale Energy

…

in promoting a sustainable energy future.

PSE&G positioned to

meet NJ’s energy policy

and economic growth

objectives with $1.7

billion investment

program.

PSEG Power’s low-cost

baseload

nuclear

fleet

well-positioned in

carbon constrained

environment.

PSEG Energy Holdings

positioned to pursue

attractive renewable

generation opportunities.   

Compressed Air Energy 

Storage (CAES)

Solar

Offshore wind

Delivering Value: Today and Tomorrow

6

•

Maintaining 2009 earnings guidance range

•

Operational

excellence

–

focused

on

enhancing

asset

performance and achieving cost efficiencies across the

enterprise

•

Integrated generation and portfolio management to

optimize asset-based revenues

•

Core business investments providing attractive returns

•

Sharpened business focus

•

Strengthened balance sheet

•

Attractive dividend yield

Meeting Commitments and Delivering Value

PSEG: Making decisions and achieving results…

…

building a record that sets us apart.

Delivering Value: Today and Tomorrow

7

A commitment to the future …

•

Established

a

new

carbon

reduction

target

–

to

reduce

our

2005 carbon footprint by 25% by 2025.

•

Implementing and expanding our three-pronged strategy for

addressing climate change:

•

Energy Efficiency

•

Renewables

•

Clean central station generation, including nuclear

…

building on a strong history of environmental leadership.

Delivering Value: Today and Tomorrow

8

We have been active participants in re-shaping the nation’s

energy policy.

•

PSEG’s

commitment is demonstrated by real actions:

•

Investing over $200 million to deliver energy efficiency

•

Investing over $600 million to develop solar energy,

reduce carbon and create jobs

•

Investing over $400 million to improve nuclear facilities

and develop clean power

•

Committing $100 million for an early site permit to build

new nuclear

•

Developing a 350 MW wind farm off the coast of southern

NJ

Strong climate policies are essential to support investment.

Delivering Value: Today and Tomorrow

9

30%

35%

40%

45%

2007

2008

2009E

40%

45%

50%

55%

2007

2008

2009E

PSEG Power

Funds from Operations / Total Debt

PSE&G

Regulatory Equity Ratio

Improvement in key credit measures …

…

provides support for planned investment program.

Delivering Value: Today and Tomorrow

10

On track to meet 2009 earnings guidance…

…

but, it will be difficult to meet upper-end of range.

* See page 62 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.                    

** See page 63 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

2007 Operating Earnings**

2008 Operating Earnings**

2009 Guidance

$2.68

$3.00 -

$3.25

$3.03

YTD

September

2009

Operating

Earnings*:

$2.50

Delivering Value: Today and Tomorrow

11

…

continues 102-year history of paying common dividends.

70%

44%

Payout

Ratio

41% -

44%

43%

66%

63%

$1.10

$1.12

$1.33

$1.17

$1.29

$1.14

2004

2005

2006

2007

2008

2009E

*Indicated annual dividend rate

*

Dividends per Share

Sixth consecutive annual increase in common dividend …

Delivering Value: Today and Tomorrow

12

Operational excellence, financial strength and disciplined investment…

…

position us well in today’s market.

•

Operational excellence efforts support:

•

Reliability

•

Cost control

•

Customer value

•

Investing in core business initiatives at attractive risk 

adjusted returns.

•

Actively managing hedging portfolio in challenging markets.

•

Maintaining strong balance sheet.

PSEG Review and Outlook

Delivering Value: Today and Tomorrow

14

Q3 Operating Earnings by Subsidiary

$    477

(5)

25

97

$   360

2008

$   464

20

18

87

$   339

2009

Operating Earnings

Earnings per Share

(0.01)

0.04

Enterprise

$   0.94

$   0.92

Operating Earnings*

0.05

0.04

PSEG Energy Holdings

0.19

0.17

PSE&G

$   0.71

$   0.67

PSEG Power

2008

2009

$ millions (except EPS)

Quarter ended September 30,

* See page 62 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

Delivering Value: Today and Tomorrow

15

YTD Operating Earnings by Subsidiary

$    1,229

(14)

104

284

$   855

2008

$   1,264

17

58

253

$   936

2009

Operating Earnings

Earnings per Share

(0.03)

0.03

Enterprise

$   2.41

$   2.50

Operating Earnings*

0.20

0.12

PSEG Energy Holdings

0.56

0.50

PSE&G

$   1.68

$   1.85

PSEG Power

2008

2009

$ millions (except EPS)

Nine months ended September 30,

* See page 62 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

Delivering Value: Today and Tomorrow

16

Low-cost portfolio

Regional focus in competitive, liquid

markets

Assets favorably located near

customers/load centers

Many units east of PJM

constraints

Southern NEPOOL/ Connecticut

Texas assets –

low cost combined

cycle

Market knowledge and experience

to maximize the value of our assets

…

with low cost plants, in good locations, within solid markets.

Power’s assets support commitments in a dynamic environment…

15%

52%

8%

24%

Fuel Diversity*

Coal

Gas

Oil

Nuclear

Pumped

Storage

1%

Energy Produced*                   

(Nine months ended September 30, 2009)

51%

15%

34%

Pumped Storage

& Oil <1%

Nuclear

Coal

Gas

Total GWh: 44,400

Total MW: 15,576

* Includes Texas

Delivering Value: Today and Tomorrow

17

PSEG Power –

Gross Margin Performance

$0

$25

$50

$75

2008

2009

Nine months ended

September 30,

$54

$64

•

In 2009, PJM total gross margin was sustained by lower costs to serve,

including strong performance of our nuclear fleet, which offset lower overall

demand

•

Low gas pricing resulted in gas displacing coal-fired generation

Regional Performance

$47

$67

$2,234

Gross

Margin ($M)

YTD September 2009 Performance

Region

Low spark spreads, partially offset by

increase in gas-fired generation.

New York

Performance of Bridgeport Harbor

hurt by low energy prices and high

cost of coal.

New

England

Contribution to gross margin ($M)

+11% versus year ago; strong

nuclear production, higher contracted

prices and decline in cost to serve

offset 7.8% reduction in volumes and

BGS customer migration.

PJM

PSEG Power Gross Margin ($/MWh)

Note: Excludes Texas

Delivering Value: Today and Tomorrow

18

PSEG Power –

Fuel Costs

159

338

Oil & Gas

80

130

Coal

20.00

32.40

$ / MWh

13,904

15,502

Total Generation

(GWh)

278

502

Total Fuel Cost

39

34

Nuclear

Total Fossil

($ millions)

239

468

2009

2008

Quarter ended 

September 30,

PSEG Power –

Fuel Costs

451

959

Oil & Gas

221

331

Coal

20.30

32.40

$ / MWh

38,576

42,771

Total Generation

(GWh)

782

1,386

Total Fuel Cost

110

96

Nuclear

Total Fossil

($ millions)

672

1,290

2009

2008

Nine months ended

September 30,

Note: Excludes Texas

Delivering Value: Today and Tomorrow

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0%

25%

50%

75%

100%

2010

2011

2012

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

0%

25%

50%

75%

100%

2010

2011

2012

$0

$50

$100

$150

Power’s hedging program provides near-term stability from

market volatility…

…

while remaining open to long-term market forces.

Estimated EPS impact of

$10/MWh PJM West around

the clock price change*

(~$2/mmbtu gas change)

Contracted Capacity

Price

(right

scale)

* As of October 2009: Assuming normal market commodity correlation and demand           

**

Excludes

Texas

–

No

capacity

market

Power has

contracted for a

considerable

percentage of its

future output

over the next two

years at

attractive prices.  

The pricing for

most of Power’s

capacity has been

fixed through May 

2013, with the

completion of

auctions in PJM

and NE.  

% sold

(left

scale)

$0.40 -

$0.70

$0.25 -

$0.45

$0.10 -

$0.20

Contracted Energy

Price

(right

scale)

% sold

(left

scale)

**

Delivering Value: Today and Tomorrow

20

Power’s hedging strategy secures pricing for near term output…

•

Sell expected nuclear and coal output forward over a two to three year horizon

•

Contract fuel to balance position

•

Buy gas as we sell output

•

Utilize liquid markets to manage risk

•

BGS annual recontracting opportunity; 3-year term mitigates volatility and

monetizes basis

•

Source contractual needs from market on opportunistic basis

•

BGS at maximum tranches is approximately 40-50% of Power’s coal and

nuclear output

•

Participation in the full requirements auctions supports margin

opportunity commensurate with market risk

•

Extension of developed skill set supports participation in adjoining

geographies within PJM

…

which mitigates the impact of market movements on earnings.

Delivering Value: Today and Tomorrow

21

Hedging our generation assets to increase our gross margin

opportunities…

PSEG Power's Generation Gross Margin

(Illustrative)

0%

10%

20%

30%

Gross Margin ($ M)

Generation at Market

Generation with Hedges

…

and reduce variability within market constraints.

Delivering Value: Today and Tomorrow

22

2003

2004

2005

2006

2007

2008

2009

Increase in Full Requirements

Component Due to:

Increased Congestion (East/West Basis)

Increase in Capacity Markets/RPM

Volatility in Market Increases Risk

Premium

The BGS auction process …

Market Perspective –

BGS Auction Results

…

cushions the impact of volatile markets on customers.

Note: BGS prices reflect PSE&G Zone

Full Requirements

3 Year Average

Round the Clock

PJM West

Forward Energy

Price

$55.05            

$65.41

~ $18

~ $21

$102.51

~ $32

$98.88

~ $41

~ $43

$111.50

~ $47

$103.72

$55.59

~ $21

Capacity

Load shape

Transmission

Congestion

Ancillary services

Risk premium

Green

$33 -

$34

$36 -

$37

$44 -

$46

$67 -

$70

$58-$60

$68 -

$71

$56 -

$58

*

*2009 RTC price was ~ $50/MWh at time of auction

Delivering Value: Today and Tomorrow

23

Recent market environment prompts BGS customer migration …

…

while mid-term markets and rolling auctions should mitigate this impact.

•

Historic high prices in recent past

•

Recent

spot

market

well

below

past

years’

levels

•

Creates incentive for customers to migrate

•

Difference represents loss of a portion of margin

per MWh

•

$0.04/sh impact to Power in Q3 2009

Short-Term

Medium-Term

•

Current forward pricing points to recovery

•

Eliminates incentive to migrate

•

Smaller loss of margin per MWh

•

Reduces overall impact to Power

Average BGS Rate

Historical Market Price at Peak

Current Forward Market Cost

Illustrative Forward Market Cost vs. BGS Rate

Delivering Value: Today and Tomorrow

24

0

10

20

30

40

50

60

2009

2010

Major elements of BGS pricing have not varied greatly from last

auction.

Other elements of BGS could have a moderate effect.

36 month RTC PJM-W Energy

0

25

50

75

100

125

150

175

2009

2010

Capacity

•

Risk premium –

Market and capital risk

•

Market –

depressed environment

•

Congestion

2010

2009

$149

$159

3-year average

$163

2012 / 2013

$110

$110

2011 / 2012

$174

$174

2010 / 2011

$191

2009 / 2010

BGS Auction

PS Zone RPM Prices

($/MW-day)

2010

2009

$53

$57

3-year average

$54

2012 / 2013

$53

$60

2011 / 2012

$51

$58

2010 / 2011

$52

2009 / 2010

BGS Auction

RTC PJM West ($/MWh)

Delivering Value: Today and Tomorrow

25

2008 Operating

Earnings*

Energy

Capacity

Other Margin

Cost

2009 Guidance

…

with visible sources of value to achieve this result.

Power’s commitment in 2009 reflects continued earnings

growth …

$1,107M

$1,170 -

$1,245M

$90 –

95M

($25 –

15M)

$38–

88M

O&M (pension)

Depreciation

Interest

Other

($40 –

30M)

Power’s

2008

Operating

Earnings

vs

2009

Guidance

Operations

Uprates

BGS

Recontracting

Fuel

Texas

More capacity

open to auction

BGSS

Other

* See page 63 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

Delivering Value: Today and Tomorrow

26

PSE&G’s current investment plan including the recently

approved NJ stimulus and EMP programs…

34%

53%

13%

0%

31%

4%

16%

49%

33%

15%

1%

51%

…

now provides for growth in rate base of 13%.

PSE&G Rate Base

28%

22%

5%

45%

Electric Transmission

Electric Distribution

Gas Distribution

Energy Master Plan

2008

Rate Base $6.6B

Equity Ratio ~ 50%

2009

Rate Base $7.3B

Equity Ratio ~ 51%*

2010

Rate Base $8.6B

Equity Ratio ~ 51%*

2011

Rate Base $9.7B

Equity Ratio ~ 51%*

*Includes Solar Loan II, which is pending regulatory approval

Delivering Value: Today and Tomorrow

27

0

400

800

1,200

1,600

2,000

2009

2010

2011

Base

Capital Infrastructure Stimulus

Energy Efficiency Stimulus

Solar 4 All

Solar II

PSE&G

Annual

Projected

Capital

Investments

($Millions)

PSE&G capital spending continues to grow through base

Transmission projects…

…

and new initiatives developed to meet the State’s employment

and environmental goals.

Delivering Value: Today and Tomorrow

28

PSE&G regulatory strategy…

•

Earn authorized returns

•

Minimize regulatory lag

•

Support state energy goals

•

Maintain/enhance local relationships

…

designed to support customer and shareholder requirements.

Delivering Value: Today and Tomorrow

29

New Jersey Electric & Gas Rate Case*

Filed:

May 29, 2009

6n6 Update:      September 25, 2009

Test Year:

2009

51.2%

Equity Ratio

11.5%

Return on Equity

*New Jersey BPU decision anticipated within 9-12 months.

$2.4 billion

$3.8 billion

Rate Base

$105.9 million

$147.0 million

Increase

Gas

Electric

Request

Includes tracking mechanisms for capital expenditures and pension costs.

Request

as

of

the

6n6

update

Delivering Value: Today and Tomorrow

30

2008 Operating

Earnings*

Weather

Transmission

Pension

Depreciation,

Interest and Other

2009 Guidance

$360M

$5 –

10M

$315 –

$335M

$10 -

15M

…

increasing pension, depreciation and interest costs.

($45 -

40M)

($15 -

10M)

In 2009, controlling O&M helps to mitigate the effects of…

*See page 63 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings

Delivering Value: Today and Tomorrow

31

PSEG Global focused on…

•

Renewables:

•

Solar:

•

A 2 MW DC facility was installed during 2009 and have an

additional 27 MW DC under contract for 2010 installation

for a total amount of $100M

•

Ongoing development and opportunity evaluation is

underway 

•

Compressed

Air

Energy

Storage

(CAES)

-

Energy

Storage

&

Power joint venture:

•

Technology to optimize renewable energy sources and

power augmentation technology to improve the capacity of

combined cycle plants

•

Offshore

Wind

–

Garden

State

Offshore

Wind

joint

venture:

•

350 MW wind farm approximately 16 miles off the shore of

southern New Jersey

…

identifying opportunities for renewable growth.

Delivering Value: Today and Tomorrow

32

Resources is focused on maximizing the value of its current

investment portfolio…

•

Net Investment in lease portfolio of $0.3B as of

September 30, 2009.

•

Book investment of $1.7B less deferred taxes of $1.4B.

•

As of September 30, 2009  the remaining tax exposure

relating to LILO/SILO leases has been reduced to

approximately $780 million including interest.

•

Cash on deposit with IRS of $320 million.

•

Recent

court

decision

–

positive

development

in

on-going

management of lease exposure.

…

while reducing the potential IRS exposure on LILO/SILO leases.

Delivering Value: Today and Tomorrow

33

-$0.2

$0.6

$1.4

$2.2

$3.0

Sources

Uses

PSEG Consolidated

2009E Sources and Uses

Cash Ops*

(Non-GAAP)

Shareholder

Dividend

Investment

(includes

Nuclear

Fuel)

Net Asset Sales

Internally generated cash in 2009 is expected to exceed

investment needs.

* Cash Ops (Non-GAAP) represents Cash Ops adjusted for securitization principal repayment, taxes associated with asset sales, and IRS deposits.

IRS Deposit

Net Debt

Reduction

Delivering Value: Today and Tomorrow

34

Our balance sheet has been strengthened…

…

which provides us substantial financial flexibility.

35%

40%

45%

50%

9/30/09

12/31/08

(A)

Long

Term

Debt

(1+2+3+4)

/

Long

Term

Debt

(1+2+3+4)

+

Equity

(5)

% Long Term Debt

(A)

September 30, 2009

December 31, 2008

Long-Term Debt Due

(1)

449

$                          

559

$                          

Project level, Non Recourse Debt Due

(2)

5

286

Securitization Debt Due

194

188

Total Long-Term Debt Due Within One Year

648

1,033

Total Commercial Paper and Loans

243

19

Long-Term Debt

(3)

6,326

6,621

Project level, Non Recourse Debt

(4)

39

42

Securitization Debt

1,201

1,342

Total Long-Term Debt

7,566

8,005

Preferred Stock

80

80

Total Common Stockholders' Equity

(5)

8,685

7,771

TOTAL CAPITALIZATION

17,222

$                     

16,908

$                     

PSEG Consolidated ($Millions)

Delivering Value: Today and Tomorrow

35

Strong operations and risk controls…

…

position us to meet challenges of today’s market.

Asset optimization yielding

results

7

th

successful

BGS

auction

validates

hedging strategy

RPM capacity auction supports asset

values in constrained areas

Power’s dispatch profile provides

operating flexibility

PSE&G focused on reliability and

meeting energy goals

Organization focused on controlling

costs

Challenge to meet the

upper end of our $3.00 -

$3.25 per share operating

earnings guidance.

Investment focus on projects

with attractive risk-adjusted

returns

Infrastructure

Energy Efficiency

Solar

Delivering Value: Today and Tomorrow

36

Positioned for the Future

•

Maintaining 2009 earnings guidance range

•

Operational

excellence

–

focused

on

enhancing asset performance and

achieving cost efficiencies in all

businesses

•

Integrated generation and portfolio

management optimizing asset-based

revenues

•

Core business investments providing

attractive returns

•

Sharpened business focus

•

Balance sheet strengthened

•

Attractive dividend yield

•

Balanced business mix

•

BGS: A demonstrated mechanism for

meeting customer supply at market prices

for multi-year period

•

Establishing a leadership position in

energy policy –

Federal and State policies

provide opportunities for growth

•

T&D investments providing growth with

minimal rate impact

•

Attractive carbon footprint

•

Strong financial position and cash flow

provide

flexibility

in

volatile

markets

–

No

need to issue equity

Meeting Commitments and

Delivering Value

PSEG –

Delivering Value: Today and Tomorrow

Appendix

PSEG Power

Delivering Value: Today and Tomorrow

39

…

of serving full requirement load contracts, while maintaining

optionality

under a variety of conditions.

Power’s assets along the dispatch curve reduce the risk…

X

X

Ancillary Revenue

X

X

X

X

Capacity Revenue

X

X

Energy Revenue

X

X

Dual Fuel

Baseload units

Load following units

Peaking units

Illustrative

Salem

Hope

Creek

Keystone

Conemaugh

Hudson 2

Linden 1,2

Burlington 8-9-11

Edison 1-2-3

Essex 10-11-12

Bergen 1

Sewaren 1-4

Hudson 1

Mercer1, 2

Bergen 2

Sewaren 6

Mercer 3

Kearny 10-11

Linden 5-8 / Essex 9

Burlington 12  / Kearny 12

Peach

Bottom

Bridgeport

New

Haven

Nuclear

Coal

Combined Cycle

Steam

Peaking

BEC

Yards

Creek

National Park

Delivering Value: Today and Tomorrow

40

Operated by PSEG Nuclear

PSEG Ownership: 100%

Technology:

Boiling Water Reactor

Total Capacity: 1,211MW

Owned Capacity:  1,211MW

License Expiration: 2026

Filed for license

extension, August 2009

Operated by PSEG Nuclear

Ownership:

PSEG

-

57%,

Exelon –

43%

Technology:

Pressurized Water Reactor

Total Capacity: 2,345MW

Owned Capacity: 1,346MW

License Expiration: 2016 and

2020

Filed for license

extension, August 2009

Operated by Exelon

PSEG Ownership: 50%

Technology:

Boiling Water Reactor

Total Capacity: 2,224MW

Owned Capacity: 1,112MW

License Expiration: 2033

and 2034

Hope Creek

Salem Units 1 and 2

Peach Bottom

Units 2 and 3

Our five unit nuclear fleet…

…

is a critical element of Power’s success.

Delivering Value: Today and Tomorrow

41

0

2,000

4,000

6,000

8,000

10,000

12,000

Power’s output is sold forward…

…

through full requirement contracts and other hedging transactions.

2010                                

2011                                  

2012

2010                                

2011                               

2012

Nuclear

Coal

CC

Steam / Pk

Existing Hedges

Existing Loads+ Hedges

Existing Loads+ Hedges + Potential Future BGS

Total

Fleet

On-Peak

Average

MW*

Total

Fleet

Off-Peak

Average

MW*

0

2,000

4,000

6,000

8,000

10,000

12,000

* Includes Texas

Delivering Value: Today and Tomorrow

42

$0

$20

$40

$60

$80

$100

2004

2005

2006

2007

2008

2009

Fwd*

2010

Fwd

2011

Fwd

Commodity prices have been volatile…

*Average of 10 historical months and 2 forward months

…

but Power’s diverse asset portfolio and hedging strategy has

mitigated the effect of volatility, providing strong results.

Henry Hub NYMEX

($/MMBTU)

Western Hub RTC

($/MWh)

West Hub On Peak

($/MWh)

Central Appalachian Coal

($/Ton)

Note: Forward prices as of October 2009

$0

$20

$40

$60

$80

$100

$120

2004

2005

2006

2007

2008

2009

Fwd*

2010

Fwd

2011

Fwd

$0

$2

$4

$6

$8

$10

2004

2005

2006

2007

2008

2009

Fwd*

2010

Fwd

2011

Fwd

$0

$20

$40

$60

$80

$100

2004

2005

2006

2007

2008

2009

Fwd*

2010

Fwd

2011

Fwd

Delivering Value: Today and Tomorrow

43

$0

$20

$40

$60

$80

$100

2004

2005

2006

2007

2008

2009 Fwd

2010 Fwd

2011 Fwd

The effect of our hedging/forward sales strategy…

Power’s hedging strategy

secures

pricing

over

a

2

-

3

year

future time horizon.

The 3 year BGS Auction period

has the effect of pulling forward

prices back.

…

is to create a realized price that is a blend of prior and future pricing,

moderating volatility.

*PJM West Average of 10 historical months and 2 forward months

PJM West

PS Zone vs PJM West Basis

2009 realized

price

*

Delivering Value: Today and Tomorrow

44

-$10

$0

$10

$20

$30

$40

$50

2005

2006

2007

2008

2009

2010

2011

$0

$10

$20

$30

$40

$50

$60

$70

2005

2006

2007

2008

2009

2010

2011

Annual Average

Historical Monthly

Forecast

Note: Forward prices as of October 2009

Spark spreads are in line with rising historical averages…

PJM Western Hub Spark Spread (On-Peak –

Henry Hub * 7.5 Heat Rate)

PJM Western Hub Dark Spread (RTC –

Central Appalachian Coal * 10 Heat Rate)

…

but near term dark spreads have declined in response to weak demand.

Delivering Value: Today and Tomorrow

45

2012 / 2013 RPM Auction Results

•

PSEG Power’s assets are in

constrained zones, which

cleared at higher prices.

•

Power’s offer for 178MW of new

capacity was accepted by PJM.

•

Auction results reflect impact of

new transmission capability.

Delivering Value: Today and Tomorrow

46

…

Power expects to see continued strong margins from PJM’s

Reliability Pricing Model.

Through the new capacity construct, and pricing at auction

prices…

$185.00

PSEG North Zone

$16.46

$110.00

$174.29

$102.04

$111.92

$40.80

Rest of Pool

$133.37

$110.00

$174.29

191.32

MAAC

$139.73

$110.00

$174.29

$191.32

$148.80

$197.67

Eastern MAAC

2012 / 2013

2011 / 2012

2010 / 2011

2009 / 2010

2008 / 2009

2007 / 2008

PJM Zones

With nearly 1/3 of its capacity in PS North and nearly 2/3 of its capacity in

MAAC and EMAAC, Power’s assets in congested locations received higher

pricing in the 2012/2013 RPM Auction.

PJM Capacity Available to Receive Auction Pricing

0

2,000

4,000

6,000

8,000

10,000

12,000

07/08

08/09

09/10

10/11

11/12

12/13

Delivering Value: Today and Tomorrow

47

Power’s coal hedging strategy is matched up with generation…

…

with hedged coal pricing aligned with coal output sold.

$0

$10

$20

$30

$40

$50

2010

2011

2012

Anticipated Coal Cost

(Cost/MWh)

Hedged

Open

Mid $20’s

Mid $20’s

Low $40’s

Mid $40’s

To

High $30’s

Mid $40’s

Indicative

Pricing

($/MWh)

Prices lower,

moderating

Northern

Appalachian

Conemaugh

Prices lower,

moderating

Northern

Appalachian

Keystone

More limited

segment of

coal market

Metallurgical

Mercer

Flexibility after

BET in 2010

Adaro /

Domestic

Hudson

Higher price,

lower BTU,

enviro

coal

Adaro

Bridgeport

Harbor

Comments

Coal Type

Station

Delivering Value: Today and Tomorrow

48

$0

$5

$10

2010

2011

2012

Anticipated Nuclear Fuel Cost

(Cost/MWh)

Power has hedged its nuclear fuel needs through 2012…

…

with increased pricing over that time horizon.

Hedged

Delivering Value: Today and Tomorrow

49

PSEG Texas projected EBITDA reflects …

…

higher maintenance costs and market uncertainty.

Strong 2008 performance from favorable market in Spring 2008

For 2009:

Gross margin impact from new wind additions

Operations and maintenance costs approximately $15M higher in 2009 than 2007 as

plants enter periods of major maintenance

Longer-term: 

Continued uncertainty from wind

Positive impact from transmission build-up.

45 –

55

40 –

45%

115 –

125

17%

~4.0

2009

PSEG

Market

214

162

$186

Gross

Margin

($M)

147

47.9%

14%

9.0

2008

104

48.7%

15%

6.9

2007

$130

54.4%

16%

$6.7

2006

EBITDA*

($M)

Capacity

Factors

Reserve

Margin

Nat. Gas

Henry Hub Spot

($/mmBtu)

*Excluding Mark-to-Market Accounting effects

Delivering Value: Today and Tomorrow

50

The implementation of carbon legislation will address the critical issue of

global warming…

~$12.00 -

~$14.00

100%

Total

$0.00

$0.00

0%

Nuclear

$4.80 -

$3.60

$8.00

60%-

45%

Gas CC

$1.20 -

$0.60

$12.00

10% -

5%

CTs

$6.00 -

$10.00

$20.00

30% -

50%

Coal

Impact

$/MWh

On margin

(approximate)

Dispatch curve implication @ $20/ton*

By Fuel Type

$12.0

$18.0

$30.0

@$30

$8.0

$12.0

$20.0

@$20

$4.0

$6.0

$10.0

@$10

Price ($/MWh)

0.4

0.6

1.0

Carbon tons/MWh

CC

CTs

Coal

…

and activity continues in the direction of a national program.

PSEG Power Generation

Energy Produced

(Nine months ended September 30, 2009)

51%

15%

34%

Pumped Storage

& Oil <1%

Nuclear

Coal

Gas

Total GWh: 44,400

**

*For

illustration

purposes

–

potential

impact

of

CO

2

on

power

prices

with

current

dispatch

–

not

an

indication

of

net

effect

on

income.

**Includes Texas

Delivering Value: Today and Tomorrow

51

The

RGGI

cap

on

CO

2

emission

shows

that

headroom

exists

…

…

compared to historical emission levels.

Affected Sources

Fossil-fired electric generating

units with a capacity of 25MW

and larger

Targets and Timing

Three-year compliance periods

with the first running from 2009-

2011

Stabilization of CO

2

emissions at

recent levels through 2015

(~188 million tons per year)

Achieve a 10% reduction of CO

2

emissions below recent levels by

2019

This translates into ~13%

reduction below 1990 levels or

~35% reduction from Business

as Usual (BAU) levels by 2020

CO2 Emissions vs. RGGI Cap

(Actuals through 2007)

130

140

150

160

170

180

190

200

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

RGGI Cap

Projected

Actual &

Forecast CO

Actual

PSE&G

Delivering Value: Today and Tomorrow

53

Transmission Growth

PJM approved the $750M Susquehanna to

Roseland line in October 2007.

Siting and permitting process underway

Incentives approved by FERC:

ROE: 12.93% (125 basis point adder)

100% CWIP in Rate Base

FERC approval of Sub-Transmission to

Transmission system reliability investments

represents about $340M through 2011, post-2011

~$60M per year.

Other approved RTEP projects ~$250M also

contribute meaningfully to improved reliability and

earnings growth.

PJM approved the Branchburg-Roseland-Hudson

line in November 2008.  PSE&G filed with FERC for

incentive ROE adder of 150 bps in this $1.1B

project; estimated in-service date of June 2013.

These opportunities will require substantial deployment of capital with siting

and permitting as the major challenges.

Branchburg

Roseland

Jefferson

New Freedom

Smithburg

Deans

MAPP

Hope Creek

Salem

Project

I-765

Interstate

Project

PSE&G implemented fully-forecasted formula rates with an 11.68%

base ROE, which provides attractive current return on investments.

RTEP

approved;

subject

to

siting

approval

Delivering Value: Today and Tomorrow

54

18.5

0

2

4

6

8

10

12

14

16

18

20

PSE&G

Average

2011

Based on tariff rates in effect in March 2009.

…

produces superior value to our electric and gas customers.

Electricity

(500kWh/month bill)

BGS

Delivery

Clauses

17.7

1.60

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

PSE&G

Average

2011

Gas

(100 therm/month bill)

BGSS

Delivery

Clauses

1.48

Source: Rates from PSE&G, NYPSC and PAPUC

1.53

BGSS

Delivery *

Clauses

BGS***

Delivery *

Clauses

Potential

Investments**

18.2

* Includes base rate increases

** Includes NJ stimulus filing (Capital and EEE), Solar 4 All and Solar II

Potential

Investments**

*** Assumes BGS/BGSS pricing remains constant

Combining operational excellence with prices comparable to

regional competitors …

Delivering Value: Today and Tomorrow

55

Energy efficiency investment and savings

Investment Timeline

2009 –

2011 (18 months)

Category

Residential

Whole House

Multi-Family

Industrial & Commercial

Small Business

Muni/Local/State Government

Hospital Efficiency

Data Center

Tech Demo Sub-Program

Building

Admin Sales, Training, Evaluation, IT

TOTAL

Expenditure

Annual

Lifetime

Annual

Lifetime

Jobs

($ millions)

$10

3,298

52,765

30,125

602,490

51

19

6,223

99,574

56,848

1,136,960

49

9,521

152,339

86,973

1,739,450

100

20

32,306

484,596

123,077

1,846,154

86

25

31,878

478,170

153,846

2,307,692

107

68

128,640

1,929,600

1,315,337

19,730,061

292

10

32,000

480,000

122,699

1,840,491

43

12

18,947

284,210

192,000

2,880,000

52

2

4,634

69,517

47,387

710,810

9

248,405

3,726,093

1,954,346

29,315,208

589

24

$190

257,926

3,878,432

2,041,319

31,054,658

689

Savings (MWh)

Savings (Dtherms)

Delivering Value: Today and Tomorrow

56

PSE&G Solar 4 All Program

Neighborhood Solar (40 megawatts) -

$258.4M investment

Solar

panels

on

utility

poles

and

street

lights

in

neighborhoods

throughout

PSE&G’s service territory.

Centralized Solar (40 megawatts) –

$256.1M investment

Solar systems on PSE&G land/buildings (25 megawatts).

Solar

systems

on

3

rd

Party

sites

(10

megawatts).

Solar systems on sites in UEZs

(5 megawatts).

BPU approved a 10% ROE on its equity capital invested (47.4% common equity in its

capital structure). Return and capital structure will change when a new WACC is

established

in

a

base

rate

case

proceeding.

Customer

rate

impact

mitigated

by

benefits

associated with ITC and the value of electricity and Solar Renewable Energy

Certificates (SRECs) generated by the projects

PSEG

Delivering Value: Today and Tomorrow

58

PSEG Power had substantial and growing …

…

excess cash due to declining capital expenditures.

2008

2009

Excluding

Non-Recurring

Capex

Excess Cash

at Maintenance

Capex Levels

~ $525M

Excess Cash Flow

•

Cash Ops

excluding

changes in

working capital

•

Less: Investing

including Capex

of $822M and

Nuclear Fuel of

$150M

$800M -

$900M

•

Improving Earnings

& Cash Ops

•

Declining Capex

Excess Cash Flow =

Potential Dividends

PSEG Power Cash Flow

2009 Capex =

$693M

vs.

Sustainability

Capex =

$200M -

$225M

~ $1.3B

Delivering Value: Today and Tomorrow

59

PSE&G’s asset base is growing.

2009

Guidance

Retained

Earnings

Capex

Financing

Other Cash

Ops

2009

$315M -

$335M

Capex

~$1,050

Dividends to the Parent are dependent on capital needs.

PSE&G Cash Flow

Cash Flow Drivers

•

Capital Spending

•

Earnings

Cash Flow from

adjustments to NI

including

Depreciation

Delivering Value: Today and Tomorrow

60

PSE&G’s investments in Energy Efficiency, Stimulus and Solar are

conditioned upon receiving reasonable rate treatment.

Future investments are weighted towards PSE&G and growth.

$0

$500

$1,000

$1,500

$2,000

$2,500

2009

2010

2011

Power –

Sustainability

PSE&G -

Distribution

Infrastructure

Power –

BET

Environmental

PSE&G -

Transmission

PSE&G -

Other

Solar 4 All

Energy Efficiency

Solar II

(Pending approval)

Power –

Growth

2009

-

2011

Capital

Expenditures

Delivering Value: Today and Tomorrow

61

…with most of our credit facilities extending until 2012.

We have substantial liquidity…

4.9%

Union Bank of

California

5.2%

Citibank

5.9%

BNP Paribas

6.2%

BNY Mellon

6.4%

Scotia Bank

6.6%

Wachovia/Wells

6.6%

Barclays

6.9%

Royal Bank of

Scotland

7.0%

JPMorgan Chase

10.7%

Bank of America

Merrill

% of Total

Commitment

Institution

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Facility

Expirations

Dec11 = $122M

Dec12 = $2.5B

$100M Bilateral expiring  March 2010

2009

2010

2011

2012

$350M Syndicated expiring in July 2011

Non-PSE&G Credit Capacity

Delivering Value: Today and Tomorrow

62

Items Excluded from Income from Continuing Operations 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.

Pro-forma Adjustments, net of tax

2009 

2008 

2009 

2008 

Earnings

Impact

($

Millions)

Gain (Loss) on Nuclear Decommissioning Trust (NDT) Fund Related Activity

7

$         

(12)

$      

1

$         

(22)

$      

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

17

11

(22)

30

Lease Reserves

-

-

-

(490)

Premium on Bond Redemption

-

-

-

(1)

Total Pro-forma adjustments

24

$       

(1)

$        

(21)

$      

(483)

$    

Fully Diluted Average Shares Outstanding (in Millions)

507

508

507

509

Per

Share

Impact

(Diluted)

Gain (Loss) on Nuclear Decommissioning Trust (NDT) Fund Related Activity

0.01

$    

(0.02)

$   

-

$      

(0.04)

$   

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

0.03

0.02

(0.05)

0.06

Lease Reserves

-

-

-

(0.96)

Premium on Bond Redemption

-

-

-

-

Total Pro-forma adjustments

0.04

$    

-

$      

(0.05)

$   

(0.94)

$   

For the Quarters Ended

For the Nine Months Ended

September 30,

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

Reconciling

Items

Excluded

from

Continuing

Operations

to

Compute

Operating

Earnings

(Unaudited)

September 30,

Delivering Value: Today and Tomorrow

63

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.

Items Excluded from Income from Continuing Operations to

Reconcile to Operating Earnings

Pro-forma Adjustments, net of tax

2008

2007

Earnings

Impact

(in

Millions)

Asset Sales and Impairments:

Impairment of PPN

(9)

$             

(2)

$                  

Impairment of Turboven

(4)

(7)

Loss on Sale of Chilquinta

and Luz del Sur

-

(23)

Premium on Bond Redemption

(1)

(28)

Total Asset Sales and Impairments

(14)

(60)

Gain (Loss) on Nuclear Decommissioning Trust (NDT)

Fund Related Activity

(71)

12

Gain on Mark-to-Market (MTM)

16

10

Lease Reserves

(490)

-

Total Pro-forma to Operating Earnings

(559)

$        

(38)

$               

Fully Diluted Average Shares Outstanding (in Millions)

508

509

Per

Share

Impact

(Diluted)

Asset Sales and Impairments:

Impairment of PPN

(0.02)

$       

-

$                    

Impairment of Turboven

(0.01)

(0.01)

Loss

on

Sale

of

Chilquinta

and

Luz

del

Sur

-

(0.05)

Premium on Bond Redemption

-

(0.06)

Total Asset Sales and Impairments

(0.03)

(0.12)

Gain (Loss) on Nuclear Decommissioning Trust (NDT)

Fund Related Activity

(0.14)

0.02

Gain on Mark-to-Market (MTM)

0.03

0.02

Lease Reserves

(0.96)

-

Total Pro-forma to Operating Earnings

(1.10)

$       

(0.08)

$           

For the Twelve Months Ended

December 31,

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

Reconciling

Items

Excluded

from

Continuing

Operations

to

Compute

Operating

Earnings

(Unaudited)