PSEG

Public

Service

Enterprise

Group

Presentation to the Financial Community

New York, New York

March 8, 2010

Exhibit 99

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 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 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

located

on

a

multi-unit

site

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 commercially reasonable 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 unforeseen cost escalations in our construction and development activities.

•

Increase in competition in energy markets in which we compete.

•

Adverse performance of our decommissioning and defined benefit plan trust fund investments, 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.

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.

4

Agenda

Ralph Izzo

Summary

BREAK

Anne Hoskins

PSEG –

Public Affairs and Policy

Caroline Dorsa

PSEG Financial Review and Outlook

Joe Hopf

PSEG

Power

–

Market

Overview

Dan Cregg

PSEG

Power

–

Review

and

Outlook

Ralph LaRossa

PSE&G –

Review and Outlook

Ralph Izzo

PSEG –

Defining the Future

Randall Mehrberg

PSEG

Energy

Holdings

–

Review

and

Outlook

Kathleen Lally

Welcome/Introduction

Presenter

Presentation

PSEG –

Defining the Future

Ralph Izzo

Chairman, President and Chief Executive Officer

6

PSEG:

the

right

mix

for

the

opportunities

of

today

and

tomorrow

PSE&G positioned

to meet NJ’s

energy policy and

economic growth

objectives

with $5.3 billion

investment program.

Electric & Gas Delivery

and Transmission

PSEG Power’s

low-cost baseload

nuclear and

coal fleet

is geographically well

positioned and

environmentally

responsible.

Regional Wholesale Energy

PSEG Energy Holdings

positioned to pursue

attractive renewable

generation opportunities:

•

Solar

•

Offshore wind

•

Compressed Air Energy

Storage (CAES)

Renewable Investments

7

A successful track record…

…

provides the confidence to capitalize on the opportunities of tomorrow.

PSEG

Power

resumed

independent

control

of

nuclear

fleet,

produced

record

levels

of

generation

and

achieved

top

quartile

performance;

fossil

fleet

retrofitted

to

meet

more

stringent environmental requirements.

PSE&G consistently recognized for reliability; investment programs expanded to meet NJ’s

goals for economic growth and clean energy.

Business focus improved; balance sheet strengthened; Holdings’

financial risk lessened with

sale of international investments, termination of offshore leases

Operational and financial focus has allowed PSEG to meet/exceed earnings objectives in

each of the past three years.

History of returning cash to shareholders through common dividend.

2007

2008

2009

8

Our focus on customers,

community and employees…

PSE&G named America’s Most Reliable

Utility 4 of past 5 years

Mid-Atlantic Region winner

for the 8

th

straight year

Carbon Disclosure

Leadership Index 2009

Second

year

in

a

row

One

of

139

companies

named

to

DJSI

North

America

and

one

of

only

10

U.S.

electric

companies

included

Industry Innovation Award

One of the 12 best places to work in NJ, 2009

…

has been widely recognized.

9

Earnings growth achieved…

…

through higher energy market pricing, increased production and lower

costs.

* See page 122 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

$2.68

$3.03

$3.12

2007 Operating Earnings*

2008 Operating Earnings*

2009 Operating Earnings*

10

Tomorrow’s energy market will reward…

…an operationally efficient, environmentally responsible,

integrated generation, transmission and distribution business.

Higher margins driven by

environmentally

responsible &

operationally flexible

energy supply

Superior operations =

customer satisfaction 

+ higher value

Business driven by the

need to address

environmental issues

and stable pricing

Infrastructure

investment to

support reliability +

improve performance

11

Investment programs, hedge profile

and cost control support 2010 outlook

$3.12

$3.00 - $3.25

2009 Operating Earnings*

2010 Guidance

* See page 122 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

12

*Indicated annual dividend rate

Seventh consecutive annual

dividend increase is part of a 103-year

history of paying common dividends…

43%

70%

44%

Payout

Ratio

42 –

46%

43%

66%

63%

Dividends per Share

…

and we remain comfortably within our targeted 40-50% payout range.

$1.10

$1.12

$1.14

$1.17

$1.29

$1.33

$1.37*

2004

2005

2006

2007

2008

2009

2010

13

Core Investment

$2.5B

Growth Investments

$5.2B

A $7.7 billion investment program over        

2010 –

2012…

…

supports long-term growth.

14

PSEG is advantaged…

…

with a strong balance sheet and cash flow to pursue

an investment program that seizes the opportunities of tomorrow.

Right Assets,

Right Markets

Operational

Flexibility

Environmental

Infrastructure

Improvements

2010

Integrated business model with assets located close to

load centers

Dispatch flexibility of operating assets and trading

capability supports margins in full-requirements markets

Environmentally responsible; pursuing investments in

renewables; nuclear uprates

Investments to improve reliability and functionality of grid

15

PSEG has provided investors with a better

than average return…

…

and we are positioned to deliver value over the long-term.

5 year

10 year

3 year

-10

-5

0

5

10

15

20

PSEG

S&P 500

Electrics

Dow Jones

Utility

Average

0

20

40

60

PSEG

S&P 500

Electrics

Dow Jones

Utility

Average

0

50

100

150

200

PSEG

S&P 500

Electrics

Dow Jones

Utility

Average

16

PSEG is responding to investors’

questions

PSE&G’s capital programs have nominal impact on rates

Stable supply costs provide room for regulatory support of capital programs

What is the impact

on customer from

capital programs?

Strong cash flow well in excess of PSEG and PSE&G’s equity requirements

Do you need equity?

Downside risk limited by recent auction results which incorporated lower           

market energy prices

Physical assets provide optionality

What is the

impact of migration?

Modest

payout

ratio

and

strong

balance

sheet

provide

support

–

7

th

consecutive

annual

increase

Is dividend secure?

Multi-year hedging through participation in full-requirements auctions

Asset balance dampens relative fuel price volatility

Capacity markets provide stability

What’s the impact of

commodity volatility?

Environmentally advantaged

Federal and State Policy initiatives support capital plans

How is PSEG affected

by policy changes?

PSEG Position

Investors’

Questions

PSEG –

Public Affairs and Policy

Anne Hoskins

Senior Vice President, Public Affairs and Sustainability

18

Political and economic factors shape 2010

policy agenda …

…and create opportunities for PSEG.

Political developments

and elections

Fiscal and economic

pressures

2010 Policy Landscape

Environmental protection

Job creation

Energy security and reliability

Regulatory reform

19

Political landscape: in the 2009 & 2010

elections…

178

257

Federal –

Midterm elections

Repeat of 1994 possible?

Tea party impact

Independent vote

Uncertainty in economic and employment recovery

Senate’s 60 “filibuster proof”

majority lost in

January

New Jersey

New administration, legislative leadership face

growing fiscal challenges

2

57

41

R

D

178

257

R

D

Current  U.S. Senate Make-up

Current U.S. House Make-up

...“change”

is central theme and reality.

20

Environmental Protection: Climate Change

PSEG advocating for carbon legislation and regulation…

...that put a price on carbon and support clean energy investment.

U.S. EPA

Regulating GHGs

under the CAA

Senator Murkowski seeking to block implementation

Legal challenges to EPA’s intended action anticipated

RGGI and other state/ regional regimes

Options

Economy-wide, cap & trade

Utility sector first

Carbon tax

Senate effort centered on

Kerry/Graham/Lieberman approach

Regulatory

Legislative

21

Environmental Protection: Air, Water, Waste

PSEG advocating for regulations that protect public health…

…and enable operation of sustainable electric generation.

EPA’s electric power sector agenda:

Air:

Mercury and Haz

Air Pollutant MACT standards

New CAIR rule

Tightening of the ozone and PM2.5 NAAQS

Water:  316 (b) draft rule anticipated in 2010

Waste: Draft rule for Coal Combustion By-products

(CCB) expected soon

22

Job Creation 

Political focus on job creation…

Regulatory approvals for utility investment in renewables,

energy efficiency and infrastructure upgrades

Federal Clean Energy Deployment Administration and

state incentives to help finance capital projects

Wind and solar –

RPS carve-outs and financing

New nuclear

ITC, PTC to support solar, wind and compressed air

storage

…is catalyst for government incentives for green investments.

23

Energy Security and Reliability

Political support for energy security...

Transmission/ Distribution

Susquehanna-Roseland transmission line

Other transmission upgrades in New Jersey

Distribution rate case

New Power Generation

New Haven and Kearny peakers

Nuclear Uprates

Nuclear early site permit

... provides a foundation for infrastructure investment

and economic growth.

24

Regulatory Reform 

PSEG is working to get the rules right…

Emission trading

Seeking

legislative

solution

to

continue

trading

of

NOx

and

SO

2

Environmental regulation

Supporting solutions that protect the environment and reflect economic

efficiency and certainty for business investment

Financial reform

Working to preserve over the counter energy trading for end-users

Utility rate regulation

Pursuing contemporaneous rate structures that support utility investment

…

to ensure regulation supports value for customers and opportunities

for PSEG growth.

25

Regulatory Reform

Working in New Jersey to build political and regulatory        

support for “Utility of the Future”...

…to create shareholder and customer value.

Smart Grid/PHEV

Infrastructure

T&D

Infrastructure

Replacement

Transmission

Backbone

Projects

Renewables

Development

Energy

Efficiency

Development

26

2010

PSEG is advantaged with a clean energy

foundation…

…

as the basis for shaping public policy to seize the opportunities of

tomorrow.

Right Assets,

Right Markets

Operational

Flexibility

Environmental

Infrastructure

Improvements

Public incentives support investment in transmission upgrades, 

renewables, energy efficiency and nuclear energy.

Well situated to meet public demand for renewables, energy

efficiency and building from bedrock reliable service.

Prepared to comply with more stringent regulations to reduce

pollutants and to displace non-compliant generation.

Creating jobs and improving energy security through

investments in transmission and generation.

PSE&G –

Review and Outlook

Ralph LaRossa

President and Chief Operating Officer, PSE&G

28

PSE&G

is positioned for growth…

…through investments in infrastructure, renewables

and energy efficiency.

Leader in reliability; focused

on maintaining position by

improving customer

responsiveness and

efficiency

Economically meeting

mandates for reliability,

service quality and access to

renewables

Largest provider of electric

and gas distribution services

and transmission in NJ. 

Creating renewable and

energy efficiency solutions

for NJ customers

Focused on regulatory

mechanisms that provide

reasonable and current

recovery of and return on

capital

29

PSE&G is the largest utility in New Jersey providing

electric, gas and transmission services,…

…and delivering renewable and energy efficiency solutions for customers.

*   Actual                                                      

**  Weather normalized = estimated annual growth per year over forecast period                

***

Lifetime

GWh

+

Lifetime

Dtherms

converted

to

GWh

60%

31%

Residential

36%

58%

Commercial

0.4%**

0.4% -

1.3%**

Projected

Annual

Load

Growth

(2009

–

2012)

Sales Mix

3,500 M Therms

41,961 GWh

Electric Sales and Gas Sold and Transported

(0.4%)*

(0.6%)*

Historical

Annual

Load

Growth

(2005

-

2009)

4%

11%

Industrial

1.7 Million

3.2%

Gas

2.1 Million

3.0%

Customers

Growth

(2004 –

2009)

Electric

0.5%*

Historical Annual

Peak Load Growth

2005-2009

1,442

Network Circuit Miles

Key Statistics

Transmission

2.1%**

Projected PJM

Peak Load Growth

2009-2012

13,512 GWh

230 GWh

Energy Efficiency Initiative (lifetime equivalent)***

80 MW

1 MW

Solar 4 All

11.6 MW

2009

Renewables

and Energy Efficiency

Solar Loan

81 MW

Total

30

PSE&G is a nationally recognized leader in

delivering safe and reliable service...

2009

ReliabilityOne™

National

Reliability

Excellence

Award

winner

8

consecutive

ReliabilityOne™

Awards

for

the

Mid-Atlantic

Solid regulatory relationships based on delivering service to customers

Solar Energy Industries Association (SEIA) Industry Innovation award

Solar Electric Power Association (SEPA) Innovation in Solar Program Design award

…and an innovator in developing programs to achieve renewable and

energy efficiency goals.

2004

CAIDI

2006

Damages per Locate 1,000 Requests

2000

Leak Response Rate

2003

Gas Leak Reports per Mile

2004

MAIFI (Excluding Major Storms)

SAIFI (Excluding Major Storms)

2000

Reliability Performance Metrics compared

to Peer Panel have been Top Quartile since:

National ReliabilityOne

Award

winner four of the last five years

31

…while all other costs have remained flat.

PSE&G O&M*

* Excludes Regulatory Clauses

PSE&G’s O&M growth has been

driven by increasing pension expense,…

2007 –

2009

CAGR: 2.4%

0

200

400

600

800

1,000

1,200

2007

2008

2009

32

…which creates superior value to customers.

PSE&G provides the highest

reliability at below average cost...

SAIDI

VS

O&M

$-

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

$10.00

0

50

100

150

200

250

300

350

System Average Interruption Duration Index (SAIDI)

PSE&G

33

Our 2010 –

2012 capital plan calls for

investing $ 5.3 billion…

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2009

2010

2011

2012

NJ Infrastructure

Stimulus

Solar

Energy Efficiency

Transmission

Core Investment

…with contemporaneous recovery mechanisms approved

for $3.6 billion.

34

2009: Success in meeting State’s energy and

economic development goals…

…with reasonable contemporaneous returns.

514

180

694

April 2009

NJ Capital Infrastructure Stimulus

30

17

47

December 2008

Carbon Abatement

64

1

65

July 2009

Demand Response

143

-

143

November 2009

Solar Loan II

$62

$43

$105

April 2008

Solar Loan I

$1,759

$258

$2,017

Total

185

5

190

July 2009

Economic Energy Efficiency

Stimulus

761

12

773

July 2009

Solar 4 All

Remaining

Spending

Thru 2009

Total

Amount

Approval

Date

($ Millions)

35

Branchburg

Branchburg

Roseland

Roseland

Hopatcong

Hopatcong

Hudson

Hudson

Transmission investment recovery…

Future Transmission project spending will be influenced by

PJM evaluation, potentially adding $1.5B in additional

projects over 2010 –

2015.

Various

$300

14 69kV Reliability projects thru 2012

Various

$200

20 Approved RTEP projects thru 2012

125 bps

2013

$1,100

Branchburg-Roseland-Hudson

125 bps

2012

$750

Susquehanna-Roseland

Incentive

In-Service

Spending

($ Millions)

…is supported by formula rate treatment and CWIP in rate base*.

* Approval of CWIP for 500kV backbone projects.

Transmission Projects

Future Projects

36

PSE&G’s investment program provides opportunity

for 14% annualized growth in rate base

PSE&G Rate Base

0

2,000

4,000

6,000

8,000

10,000

12,000

2009

2010

2011

2012

Gas Distribution

Electric Distribution

Electric Transmission

EMP

37

Filed:

May 29, 2009

12/09 Update:

January 29, 2010

Test Year:

2009

* Modified in February for 11.25% ROE from 11.5% ROE

New Jersey Electric & Gas Rate Case

51.2%

Equity

Ratio

Includes tracking mechanisms for capital expenditures and pension costs

11.25%*

Return on Equity

$74.0 million

$148.0 million

Increase

$2.3 billion

$3.9 billion

Rate Base

Request as of the 12/09 update

Electric

Request

Gas

38

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

PSE&G 2009

Regional Average

PSE&G 2012E

Clauses and Other

Delivery

BGS

0

2

4

6

8

10

12

14

16

18

20

PSE&G 2009

Regional Average

PSE&G 2012E

Clauses and Other

Delivery

BGS

The national average ratio for electric bills to

disposable income is 3.4%*, …

Based on tariff rates in effect in June 2009

…while PSE&G’s typical electric bill is 2.6% of disposable

income in New Jersey.

Electricity

(500kWh/month bill)

BGS

Delivery

Clauses

and

Other

18.1

Gas

(100 therm/month bill)

1.45

BGS****

Delivery **

20.1

*

Source

Moody’s

Industry

Outlook

–

July

2009

**   Includes base rate increases

***  Other includes NJ stimulus filing ,Solar 4 All and Solar I & II, EEE, and Demand Response

**** Assumes BGS/BGSS pricing remains constant

Delivery

BGSS

BGSS****

Delivery **

Clauses

and

Other***

1.62

1.40

18.7

Clauses

and

Other***

Clauses

and

Other

39

Regulatory Reform

Working in New Jersey to build political and regulatory        

support for “Utility of the Future”...

…to create shareholder and customer value.

Smart Grid/PHEV

Infrastructure

T&D

Infrastructure

Replacement

Transmission

Backbone

Projects

Renewables

Development

Energy

Efficiency

Development

40

PSE&G is advantaged…

…as we pursue a path in seizing the opportunities of tomorrow.

Right Assets,                   

Right Markets

Operational                      

Flexibility

Environmental

Infrastructure                

Investment

Creating renewable and energy efficiency solutions for

NJ and customers

Focused on regulatory mechanisms that provide

reasonable and current recovery of and return on capital

Largest provider of electric and gas distribution services

and transmission in NJ

Leader in reliability; focused on maintaining position by

improving customer responsiveness and efficiency

2010

PSEG Energy Holdings –

Review and Outlook

Randall E. Mehrberg

Executive Vice President, Strategy and Development

President and Chief Operating Officer, PSEG Energy Holdings

42

PSEG Energy Holdings

Simplifying the business and creating sustainable growth opportunities.

Maximizing the value of

the remaining portfolio

Transaction structures

and partnerships mitigate

financial risk

Streamlined business

and reduced financial risk

Capitalizing on

renewable opportunities

43

PSEG Energy Holdings…

PSEG Global

International assets sold*

Texas generating assets (2 –

1,000MW CCGTs) transferred to PSEG Power

Small remaining investment in domestic traditional generation joint venture

assets

PSEG Resources

Tax exposure reduced by $740 million through fourteen LILO/SILO lease

terminations, including Nuon

termination in January 2010

Maximizing value and minimizing risk for traditional leases and real estate

Long-term debt reduced by $1 billion over 2008 and 2009

Redemption of $642 million of Energy Holdings recourse debt

$368 million eliminated through bond exchange

$127 million of debt remaining

…

has streamlined its businesses and reduced its risk.

* Nominal investment in Venezuela remaining

44

Ongoing portfolio management continues…

Global - International Asset Investment

0.0

0.5

1.0

1.5

2.0

2.5

2004

2005

2006

2007

2008

2009

2010

Est

Resources - Traditional Leases, Real

Estate and Other Investments

0.0

0.5

1.0

1.5

2.0

2.5

2006

2007

2008

2009

2010

Est

…

with opportunistic asset monetization as appropriate. 

Global- Domestic Generation Investment

0.0

0.5

1.0

1.5

2.0

2.5

2004

2005

2006

2007

2008

2009

2010

Est

Resources - LILO/SILO Exposure *

0.0

0.5

1.0

1.5

2.0

2.5

2006

2007

2008

2009

Feb.

2010

* Does not include IRS deposits of $ 320M

45

PSEG Energy Holdings is focused on

renewable energy opportunities

Complementing PSEG portfolio by increasing earnings base

with structured, low risk investments

Disciplined evaluation of favorable markets for renewables

Transaction structure and partnerships designed to mitigate risk

Expand geographic and regulatory diversity

Attractive and predictable returns

Pursuing renewable strategy through three primary vehicles

Solar Source LLC

Energy Storage and Power LLC

Garden State Offshore Energy LLC

46

Long-term off-take agreements with creditworthy counterparties

Capitalizing on existing renewable markets

Leveraging partnerships and alliances

A 2MW solar facility developed and installed in 2009

An additional 27MW in construction for completion in 2010

20-30 year Power Purchase Agreements for energy, capacity and green

attributes

Low risk Engineering, Procurement & Construction contracts

Projects that leverage the Investment Tax Credit

~$100M total investment to date

…

in the emergent solar industry.

PSEG Solar Source is building a

portfolio to take advantage of

attractive opportunities…

47

Solar Source’s first project…

…a 2MW Hackettstown, NJ Solar Facility

48

Energy Storage and Power LLC

(ES&P)…

Joint venture focused on licensing second generation compressed air

energy storage (CAES) and power augmentation

Converting

variable

renewable

resources

into

firm,

dispatchable

resources

Shifting the power produced by renewables from off-peak to on-peak

Providing grid stability

Reducing the need for new transmission

Two potential ES&P customers were awarded almost $60 million in

federal stimulus funds for projects in California and New York

Stimulus applications specifically incorporate ES&P technology

An additional $30M in state stimulus awarded in California

…

a resource that improves the utilization of renewables.

49

PSEG Energy Holdings

Garden State Offshore Energy LLC

Joint venture has been awarded a $4M grant to advance the

development of a 350MW wind farm

Enough energy to power over 110,000 NJ households

Approximately 16 miles off the shore of southern New Jersey

Geological studies completed enabling engineering for

construction of meteorological tower

Project

dependent

on

establishing

viable

state

revenue

mechanism

and

reasonable federal permitting timelines/processes

Offshore wind offers the opportunity in several markets to provide

high capacity factor renewables near load centers

50

PSEG Energy Holdings…

…

creating sustainable growth opportunities for PSEG.

Right Assets,                       

Right Markets

Operational                    

Flexibility

Environmental

Investment

Monetizing international and domestic generation

assets in non-core markets

Reducing tax exposure through lease terminations 

Pursuing investments in renewables

Investing at attractive risk-adjusted returns to improve

PSEG’s

earnings base

2010

PSEG Power –

Review and

Outlook

Dan Cregg

Vice President, PSEG Power Finance

52

PSEG Power

–

Right assets in the right markets…

Portfolio approach to

hedging over multi-year

timeframe to derive

market premiums

Investment

program supported by

strong cash flow and

credit metrics

Low-cost,

environmentally

responsible, operationally

flexible supply located in

premium markets

Focus on operational

excellence to maximize

asset value

…

with dispatch flexibility supporting returns in volatile markets.

53

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

drive value in a dynamic environment…

15%

52%

8%

Fuel Diversity

Coal

Gas

Oil

Nuclear

Pumped

Storage

1%

Energy Produced

(Twelve months ended December 31, 2009)

Total GWh: 59,808

51%

15%

34%

Pumped Storage

& Oil <1%

Nuclear

Coal

Gas

Total MW: 15,548

24%

8%

54

Power’s Northeast assets are located in

attractive markets near load centers …

... and the fleet has expanded to include 2,000MW in Texas.

55

…

while maintaining optionality under a variety of conditions.

Power’s PJM assets along the dispatch curve

reduce the risk of serving full requirement load

contracts…

X

X

Ancillary Revenue

X

X

X

X

Capacity Revenue

X

X

Energy Revenue

X

X

Dual Fuel

Peaking units

Baseload units

Load following 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

Nuclear

Coal

Combined Cycle

Steam

Peaking

Yards

Creek

National Park

Salem 3

Bergen 3

56

Gas Combined Cycle

Coal

Note: Forward prices as of 12/2009

Gas competed favorably with coal in 2009,

with operational flexibility favoring gas…

…

but forward markets indicate a return to historical norms.

Illustrative

dispatch

cost

for

Northeast

coal

and

combined

cycle

units

57

Our nuclear performance has improved…

11.1

3.1

0.6

2.1

1.0

0.9

0.4

0.7

0.6

0.7

0.6

0.6

0.6

2004

2005

2006

2007

2008

2009

2010 Target

25

27

29

28

29

30

30

2004

2005

2006

2007

2008

2009

2010 Target

79.0

85.0

97.0

94.0

91.7

99.0

98.0

96

96

97

96

97

98

2004

2005

2006

2007

2008

2009

2010 Target

Salem station set a new generation record.

Highest combined Salem and Hope Creek

Nuclear site output in Power’s history

Top quartile INPO Index

…

as we maintain our drive for excellence.

Nuclear Generation Output*

(000’s GWh)

Forced

Loss

Rate

(

)

(%)

INPO

Index

(

)

NJ Units

1st

Quartile

NJ Units

1st

Quartile

* Total PS share nuclear generation

58

Power’s coal fleet has shown improvement…

14

15

15

13

13

9

13

2004

2005

2006

2007

2008

2009

2010 Target

10.3

11.1

11.3

7.9

8.4

4.8

3.8

2004

2005

2006

2007

2008

2009

2010 Target

1.11

1.12

1.01

0.91

0.96

0.83

0.47

0.34

0.34

0.29

0.20

0.21

0.19

0.16

2004

2005

2006

2007

2008

2009

2010 Target

Market conditions reduced output in 2009

Operational results greatly improved

Environmental footprint improved

…

and back-end technology investments will prepare us for the future.

Output

(000’s GWh)

Forced

Outage

Rate

(

)

(% EFORD)

SO

2

and

NOx

Rates

(

)

(lb/mmbtu)

SO

2

NOx

59

Power’s combined cycle fleet is creating

value…

5

4

8

10

20

20

18

2004

2005

2006

2007

2008*

2009*

2010

Target*

3.4

7

3.4

2.5

1.8

1.5

0.8

2004

2005

2006

2007

2008*

2009*

2010

Target*

8079

7847

7928

7768

7587

7507

7452

2004

2005

2006

2007

2008*

2009*

2010

Target*

Output

(000’s GWh)

Forced

Outage

Rate

(

)

(% EFORD)

Period

Heat

Rate

(

)

(mmbtu/KWh)

Highest output ever in 2009

Approaching top quartile forced outage rate

Benefiting from heat rate improvement

program

…

benefiting from operating enhancements and market dynamics.

* Includes Texas

60

99.7

96.5

98.6

97.0

98.9

99.3

99.7

2004

2005

2006

2007

2008

2009

2010 Target

Our peaking fleet rounds out a diverse

generation portfolio…

13

17

23

19

13

14

12

2004

2005

2006

2007

2008

2009

2010 Target

85

86

76

77

91

92

94

2004

2005

2006

2007

2008

2009

2010 Target

Peaking start success provides

opportunities in ancillary and real time

markets

Peaking adds flexibility in serving load

and managing needs of a diverse market

environment

…

and provides ability to follow load during periods of high demand.

%

Start

Success

(

)

Forced

Outage

Rate

(

)

(% EFORD)

Equivalent

Availability

(

)

(%)

61

Stringent environmental challenges are on the

horizon, with potentially broad industry impacts…

High

High

Regional

High

High

Industry Impact

Emission restrictions net favorable to Power

Carbon

Controls on coal units done or under way

Power’s relative position very strong

NOx, SO

2

, Hg

(CAIR)

Peaking fleet replacement strategy

Upwind

states

anticipated

to

increase

NOx

stringency

Ozone air quality standards

(HEDD)

EPA required to perform cost-benefit analysis

Issue widely shared across industry

Potential capital spend exposure

Once-through cooling water

(316(b))

Power uses dry fly ash systems

Ash has been tested as non-hazardous

Coal ash regulation

Power’s Positioning

Issue

…but Power’s clean fleet is very competitively positioned for success.

62

Power’s portfolio is well positioned…

Baghouse

Scrubber

2010

SCR

Mercer (NJ)

Baghouse

2010

Scrubber

2010

SCR

2010

Hudson (NJ)

Mercury/

Particulate

SO

2

NOx

Description

Current Regulations and Compliance Measures

Baghouse

Ultra-low

Sulfur Coal

Low Nox

Burners

Bridgeport (CT)

Scrubber

(Hg MACT Compliant)

Scrubber

(Hg MACT

Compliant)

Scrubber

Scrubber

SCR

2014

SCR

Conemaugh

(PA)

Keystone (PA)

…to meet current regulatory requirements.

Capital Spend Planned

No Additional Capital Spend Planned

63

0

50

100

150

200

250

Source: EPA, EIA (2006 and

2007) and PSEG Projection

Power’s coal assets will have completed

many environmental upgrades by 2010…

…resulting in dramatically lower emissions.

0

2

4

6

8

10

12

14

0

10

20

30

40

50

60

PSEG Projected NOX Emission Rate for 2011

versus 2008 400 U.S. Coal Plants

Conemaugh

Hudson

Bridgeport

Mercer   Keystone

NOx

Keystone

Bridgeport

Conemaugh

Hudson   Mercer

SO

2

PSEG Projected SO2 Emission Rate for 2011

versus 2008 400 U.S. Coal Plants

Keystone

Conemaugh

Bridgeport

Mercer

Mercury

PSEG Projected HG Emission Rate for 2011

versus 2008 400 U.S. Coal Plants

Hudson

64

Power’s

capital spending will decline

considerably…

…as we complete significant

environmental back-end technology projects in 2010.

PSEG Power Capital Spending

$0

$100

$200

$300

$400

$500

$600

$700

$800

2010

2011

2012

Maintenance

Growth

Environmental

65

Nuclear’s

operational excellence

program will create value for years to come…

RGGI

18

30

40 to 60

3,662

2009

None

21

25

40

3,484

2004

Progress toward

National Program

CO2

Program

19

O&M (non-fuel)                 

$/MWh

30

Output (000 GWh)

60

License Life

3,694

Capacity (MW)

2012E

Description

…as our efforts continue to pursue a potential new unit.

66

Fossil’s operational excellence program…

12,125

11,211

26,789

Emissions

NOx

Tons

37,863

15

447

30

11,886

2009*

80,287

16

349

21

11,123

2004

12,137

Emissions                      

SO

2

Tons

14

O&M (non-fuel)                    

$/MWh

211

Capital ($ Millions)

32

Output (000 GWh)

11,589

Capacity (MW)

2012E*

Description

…is expected to result in higher output at a lower cost.

* Includes Texas

67

$0

$100

$200

$300

$400

$500

$600

$700

$0

$10

$20

$30

$40

CO2

Price

($/ton)

While the prospects for a

cap and trade program may be delayed…

…Power remains well positioned to capture value if implemented.

CO

2

$/Ton Impact on PJM Prices and Power’s EBITDA

The impact on electric prices moderates at higher CO2

prices as:

•

the fleet dispatch changes, and

•

the CO2

intensity of the grid goes down.

Illustration at $20 CO

2

:

(2008 Data)

62 TWh

x ~ $11 to $14/MWh

~ $680 –

$870 M revenue

23M tons

x $20/ton

~ $460 M expense

PSEG Power –

Market Overview

Joe Hopf

President, PSEG Energy Resources & Trade

69

ER&T employs a disciplined approach to

hedging…

…

designed to maximize profitability and support earnings stability.

NJ BGS has been and will

continue to be a primary part

of hedging strategy

Years of experience in NJ

BGS coupled with our

market expertise supports

supplying load in other

geographies

Disciplined approach to

hedging, risk controls in

place to manage through

volatile markets

Diversity, location of assets

gives us ability to maximize

products of a full requirement

transaction

70

Power remains a leading provider in an

excellent market…

Pricing in 2009 was impacted by low economic demand, cool summer

weather, and low

gas prices

Power’s hedging strategy enabled strong results

2010 forwards imply continued market challenges, but entities with the right assets in

the right locations are best positioned

Power will continue to utilize a hedging strategy that incorporates full requirement load

contracts and other contracting to secure pricing over a 2-3 year forward horizon

BGS continues to be the foundation of our hedging strategy

Balanced generation portfolio in ideal position to serve BGS

Three year nature of BGS provides pricing stability for customers and providers

…

and has a fleet ideally positioned to serve customers.

71

Full Requirements Component

Increase in Capacity Markets/RPM

Growing Renewable Energy Requirements

Component for Market Risk

Through Power’s

participation in each of the BGS auctions…

Market Perspective –

BGS Auction Results

…

we have developed an expertise in serving full-requirements contracts.

2003

2004

2005

2006

2007

2008

2009

2010

3 Year Average

Round the

Clock PJM

West Forward

Energy Price

$55.59

Capacity

Load shape

Transmission

Congestion

Ancillary services

Risk premium

Green

$33 -

$34

$36 -

$37

$44 -

$46

$67 -

$70

$58 -

$60

$68 -

$71

$56 -

$58

$48 -

$50

~ $21

$55.05

~ $18

$65.41

~ $21

$102.51

~ $32

$98.88

~ $41

$111.50

~ $43

$103.72

~ $47

$95.77

~ $47

Note: BGS prices reflect PSE&G Zone

72

Years of experience and expertise

in serving full-requirement load contracts…

…

is yielding benefits

through disciplined auction participation for Power in other areas.

Current load contracts in PJM

RECO

PSE&G

JCPL

AECO

PECO

PEPCO

BGE

PPL

Power has been a

successful bidder

in multiple load

serving contracts

throughout PJM East

73

$0

$20

$40

$60

$80

$100

2004

2005

2006

2007

2008

2009

2010 Fwd

2011 Fwd

2012 Fwd

2013 Fwd

The effect of our multi-year hedging/forward

sales strategy…

…creates a realized price that is a blend of prior and future pricing.

PJM West

PS Zone vs PJM West Basis

l

2010

Realized Price

*Forward prices as of February 2010

*

Power’s hedging strategy enables current

year prices to be derived from contracts

secured

over

the

prior

2

-

3

years.

The fixed pricing of the BGS Auction has

the effect of realizing forward prices up to

three years ahead in the current year.

l

74

The 2009 market environment prompted

BGS customer migration …

…

while current market conditions lessen the incentive for 

future migration.

2009

Medium-Term

Power Actions

Current forward pricing reflects improvement over 2009 spot pricing

Gradual reset of BGS rates (by one third per year)

Offsets incentive to migrate

Smaller loss of margin per MWh

Continued migration, at a lower impact per MWh is anticipated to

have no

incremental financial impact on PSEG in 2010

Historic high prices in recent past

Low spot market, especially given weak economy and weather

Creates incentive for customers to migrate

Difference represents loss of margin per MWh

$0.08/sh impact to PSEG in 2009

BGS includes price component for volumetric risk of migration

Option strategies being employed to manage changes in load volume

Power’s diverse physical assets provide basis hedge and flexibility to

manage risk

Supplying wholesale hedges to third party retail providers

Supplying hedges to other end use customers

75

The result of Power’s hedging strategy is a

portfolio of contracted output…

…

which dampens the impact of market volatility on earnings in the near term.

Power’s

anticipated

nuclear and coal

output is

contracted over

the next few

years:

2010: 90-95%

2011: 50-60%

2012: 15-30%

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

Nuclear / Pumped Storage

Coal

Combined Cycle (CC)

Steam and Peakers

Existing BGS, Other Load Contracts, Hedges + Future BGS

Existing BGS, Other Load Contracts, and Hedges

2010

2011

2012

Total Fleet RTC Average

76

Power’s coal hedging reflects 2010 supply

matched with 2010 sales…

…

while maintaining flexibility on supply post BET installation.

0%

20%

40%

60%

80%

100%

2010

2011

2012

$0

$10

$20

$30

$40

$50

Contracted Coal

Mid $20’s

To

High $20’s

Mid $20’s

To

High $20’s

Mid $40’s

To

Low $40’s

Mid $40’s

To

Low $40’s

High $40’s

To

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

CAPP/NAPP

Mercer

Flexibility after

BET in 2010

Adaro  (2010)

CAPP/NAPP

(2011+)

Hudson

Higher price,

lower BTU,

enviro

coal

Adaro

Bridgeport

Harbor

Comments

Coal Type

Station

% Hedged

(left scale)

$/MWh

(right

scale)

77

$0

$5

$10

2010

2011

2012

Anticipated Nuclear Fuel Cost

Power has hedged its nuclear fuel

needs through 2012…

…

with increased costs over that time horizon.

Hedged

78

$0

$20

$40

$60

$80

$100

2004

2005

2006

2007

2008

2009

$0

$20

$40

$60

$80

$100

2004

2005

2006

2007

2008

2009

$0

$20

$40

$60

$80

$100

2004

2005

2006

2007

2008

2009

Commodity prices have been volatile…

Henry Hub NYMEX

($/MMBTU)

Western Hub RTC

($/MWh)

West Hub On Peak

($/MWh)

Central Appalachian Coal

($/Ton)

$0

$2

$4

$6

$8

$10

2004

2005

2006

2007

2008

2009

79

…

but Power’s diverse asset portfolio and hedging strategy has

mitigated the effects, providing strong results.

*See page 122 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings

Commodity prices have been volatile…

80

-$10

$0

$10

$20

$30

$40

$50

2005

2006

2007

2008

2009

2010

2011

2012

$0

$10

$20

$30

$40

$50

$60

$70

2005

2006

2007

2008

2009

2010

2011

2012

Annual Average

Historical Monthly

Forecast

Note: Forward prices as of February 2010

Forward spark spreads and dark spreads

are showing some moderation…

PJM Western Hub Spark Spread (On-Peak –

Henry Hub x 7.5 Heat Rate)

PJM Western Hub Dark Spread (RTC –

Central Appalachian Coal x 10 Heat Rate)

…

and are expected to remain highly influenced by gas prices.

81

$40

$45

$50

$55

$60

$65

Power’s assets are well positioned near load

centers…

…

which resulted in a 9% growth in PJM gross margin from 2008 to 2009.

Historical 5-year Average PJM Energy Price

(Around the Clock)

Note: excludes Dominion (less than 5 years of history)

82

…

and provides a forward price signal, with the 2013/2014 auction

set for May.

PJM’s

capacity construct has acknowledged

the value of Power’s fleet…

$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

$/MW-day

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

83

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 February 2010 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)

$0.35 -

$0.65

$0.20 -

$0.40

$0.05 -

$0.15

Contracted Energy

Price

(right

scale)

% sold

(left

scale)

**

*

84

Power is advantaged…

…

as we pursue a path to seize the opportunities of tomorrow.

Right Assets, Right Markets

Operational Flexibility

Environmental

Infrastructure investment

Well positioned, environmentally sound fleet compares

favorably vs

the industry

Investing in back-end technology and other growth

opportunities to prepare us for the future

Diverse fleet of low cost units in competitive liquid

markets located near customers/load centers

Units along the dispatch curve with fuel flexibility and

improved performance provide value in dynamic market

2010

PSEG –

Financial Review and

Outlook

Caroline Dorsa

Executive Vice President and Chief Financial Officer

86

PSEG…

…is focused on providing above average risk-adjusted returns.

Top quartile performance

in operations with year-

over-year improvements

and cost management.

Maintain balance

between risk and return

through prudent balance

sheet management

Met/exceeded

earnings and financial

objectives

Securing premium value in

transparent, competitive

markets; implementing

mechanisms supporting cost

recovery in reasonable

timeframe

87

$(0.12)

$0.14

$0.74

$1.92

$0.02

$(0.05)

$0.09

$0.07

$0.63

$0.71

$2.38

$2.30

2007

2008

2009

$3.12*

We have met or exceeded our earnings

objectives …

…

and expect 2010 earnings to remain strong.

Holdings

PSE&G

Power

Parent

Earnings per Share by Subsidiary

$2.68*

*See page 122

for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings

$3.00 -

$3.25

$2.80 -

$3.05

$2.30 -

$2.50

Guidance Range

$3.03*

88

$2,091

$1,993

$163

$30

2008

2009

Sustainability Plan

Non-pension

O&M

Expense

(1)

Pension

Expense

Manage Staffing Levels

Control General and

Administrative Expenses

Capture Productivity

Gains

(1)

Excludes O&M related to PSE&G clauses

We have successfully managed our O&M …

…

through benchmarking efforts and operational excellence.

$2,121M

$2,156M

89

Earnings were strong in 2009…

…benefiting from pricing, cost control and risk mitigation.

$3.12

$3.03

2008*

PSE&G

Power

Holdings /

Enterprise

2009*

($0.08)

$0.08

$0.09

Interest  0.03

Debt Exchange

Premium Eliminated

in Consolidation 

0.04

Recontracting

and Lower Fuel

Expense  0.04

BGSS and

Wholesale Power

Trading  0.01

O&M  0.02

Interest  0.03

Depreciation and

Other  (0.02)

Margin –

Gas,

Electric,

Transmission

and Appliance

Service  0.04

Weather  (0.01)

O&M  (0.06)

Depreciation

(0.03)

Taxes  (0.03)

Interest 0.01

2009 Lease Sales 

0.13

Lease Income 

(0.04)

Effective Tax Rate

and Other  (0.03)

Debt Exchange

Premium

Eliminated in

Consolidation 

(0.04)

Holdings:

Enterprise:

*See page 122

for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings

90

Cash Exposure Net

of $320M of IRS

Deposits

12/31/08

12/31/09

1/31/10

4

5

17

# of LILO/SILO Leases

2009 Activities

Terminated 12

LILO / SILO

leases

2010 Activities

Terminated 1 lease in

January

Pursue additional lease

termination opportunities

2008 Activities

Terminated 1

LILO / SILO lease

Exposure to our potential lease tax

liability…

…was reduced with aggressive asset management.

$660

~$1,200

~$270

~$590

$-

$500

$1,000

$1,500

91

$1,000

$1,250

$1,500

$1,750

$2,000

$2,250

2009

2010

2011

2012

PSEG Consolidated O&M

(1)

C.A.G.R. (’09 –’12) = 0.7%

(1)

Excludes O&M related to PSE&G clauses

Aggressive employee management of our

O&M, including 2010 wage freeze …

…and improving pension expense, will result in modest O&M growth.

92

2009 Operating Earnings*

2010 Guidance

Rigorous cost controls, hedging strategy

and improved utility capital recovery…

…help mitigate the risk of weak prices in 2010.

$3.12

$3.00 -

$3.25

PSE&G:

Network Transmission Service (NTS) revenue increase for  

2010 from 2009 ~ $0.03 EPS

2009 earned ROE = 8.3%

1% change in Distribution earned ROE in 2010 ~ $0.07 EPS 

1% change in load in 2010 ~ $0.02 EPS

PSEG Power:

Revenue/Margin

Nuclear output fully contracted

Dark

Spread

change

of

$5/MWh

at

market

–

impact

of

$0.03-$0.07/share

Spark

Spread

change

of

$5/MWh

at

market

–

impact

of $0.08-$0.12/share

Operations

1% change in nuclear capacity factor –

impact of                 

$0.01-$0.03/share

O&M 1% change –

impact of ~$0.01/share

Drivers

*See

page

122

for

Items

excluded

from

Income

from

Continuing

Operations

to

reconcile

to

Operating

Earnings

93

PSEG is shifting emphasis to growth

investments…

…to meet the requirements of the evolving energy markets.

Maintenance /

Regulatory

Investments

$2.5B

Growth

Investments

$5.2B

Capital Spending by Category

Total 2010-2012 Capital: $7.7 Billion

Wind (Holdings), $0.02B, 0%

New Nuclear, $0.05B, 1%

Transmission, $2.14B, 27%

Core Investment, $2.18B, 28%

94

PSE&G’s

capital spending is focused on

growth…

…with a substantial portion allowed to earn reasonable

contemporaneous returns.

PSE&G Capital Spending by Category

Total 2010-2012 Capital: $5.3 Billion

New Business,

$0.43B, 8%

Renewables,  $0.93B,

18%

Transmission,

$2.14B, 40%

Core Investment,

$1.26B, 24%

95

$-

$100

$200

$300

$400

$500

$600

$700

$800

2009

2010

2011

2012

Growth

Maintenance / Regulatory

Power Growth Capital

Spending (2010-2012)

Peakers

-

$306M

Nuclear Uprates

-

$136M

New Nuclear -

$53M

Other -

$32M

Power’s capital spend is expected to  

decline…

…

with increased emphasis on growth projects in the future.

96

$0

$1,000

$2,000

$3,000

$4,000

$5,000

Sources

Uses

In 2009, we had substantial cash

generation …

PSEG Consolidated

2009 Sources and Uses

Power Cash

from Ops

Shareholder

Dividend

Gross Lease

Proceeds

PSE&G

Investment

…which was applied toward improving our financial profile.

Debt

Redemptions

Lease Termination

Taxes & IRS Deposit

Debt

Issuances

PSE&G Cash

from Ops(1)

Power

Investment

(1)

PSE&G Cash from Operations adjusts for securitization principal repayments of ~ $190M

Regulated investment

Eliminated Parent Long-term

debt and minimized Holdings’

debt

Reduced Tax Risk

97

25%

30%

35%

40%

45%

50%

2007

2008

2009

•

2009 FFO to Debt remained strong comfortably

above minimum threshold level

•

Decline from 2008 expected due to Power debt

exchange which reduced Holdings refinancing

risk

40%

45%

50%

55%

2007

2008

2009

PSEG Power

Funds from Operations / Total Debt

PSE&G

Regulatory Equity Ratio

Key credit measures support our planned

investment program

Our balance sheet also provides a platform for future growth.

Target = 51.2%

98

Sources

Uses

PSEG Power’s internally generated cash

flow enables Power…

…

to strengthen its long term balance sheet; support the

shareholder dividend; and, allows PSE&G to retain earnings for

growth.

Sources

Uses

Cash

from Ops

Net Debt

Redemption

Investment

Dividends

to Parent

for payment

to

shareholders

Power                                       

2009–2012 Sources and Uses

Cash from

Ops*

Net Debt

Issuance

Intercompany

Capital

Contribution

Investment

PSE&G                                       

2009-2012 Sources and Uses

* Cash from Operations adjusts for securitization principal repayments ~ $0.8B

99

PSEG Consolidated Debt / Capitalization

(1)

Long-Term Debt includes Debt due within one year; excludes Securitization Debt and Non-Recourse Debt.

PSEG Consolidated ($Millions)

December 31, 2007

December 31, 2008

December 31, 2009

PSEG Total Short-term Debt

65

20

530

Long-Term Debt

(1)

:

Power

2,902

2,903

3,121

PSE&G

3,353

3,523

3,571

Holdings

1,137

505

127

Parent / Services

298

249

(38)

Total Long-Term Debt

7,690

7,180

6,781

Preferred Stock

80

80

80

Total Common Stockholders' Equity

7,299

7,771

8,788

TOTAL CAPITALIZATION

15,134

$                         

15,051

$                         

16,179

$                            

PSEG Consolidated ($Millions)

December 31, 2007

December 31, 2008

December 31, 2009

Debt

7,755

7,200

7,311

Preferred Stock

80

80

80

Total Common Stockholders' Equity

7,299

7,771

8,788

Debt Plus Equity

15,134

$                         

15,051

$                         

16,179

$                            

Debt Ratio

51.2%

47.8%

45.2%

100

At the end of 2009, Power and Parent available

liquidity totals approximately $2.4 billion …

…

with additional $800 million available to PSE&G.

Expiration

Total

Usage at

Available

Liquidity

Company

Facility

Date

Facility

12/31/2009

12/31/2009

($Millions)

Parent / Power

5-Year Credit Facility (Power)

Dec-12

$1,600

1

$117

$1,483

5-year Credit Facility (PSEG)

Dec-12

1,000

2

523

477

2-Year Credit Facility

Jul-11

350

0

350

Bilateral Credit Facility

Mar-10

100

42

58

Uncommitted Bilateral Agreement

26

Total Parent / Power Liquidity

$3,050

$2,368

PSE&G

5-year Credit Facility

Jun-12

$       600

3

$          -    $             600

ST Investment

211

Total PSE&G Liquidity

$       600

$             811

Total Liquidity Available

$3,179

1

Power Facility reduced by $75 million in 12/2011

2

PSEG Facility reduced by $47 million in 12/2011

3

PSE&G Facility reduced by $28 million in 12/2011

101

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

2010

2011

2012

Power Syndicated Facility - 1.60B

Expires 12/2012

Power 2-Year Facility - 0.35B

Expires 7/2011

PSEG Syndicated Facility - 1.00B

Expires 12/2012

Power Bilateral - .10B

Expires 3/2010

With our current facilities, PSEG/Power will

have at least $2.6 billion

of credit capacity

through 2012 ...

Non-PSE&G Credit Capacity

...and we will continue to ensure adequate liquidity.

102

PSEG value proposition

PSEG provides investors with a balanced portfolio of assets within a

shifting landscape for energy.

PSEG’s

focus on operational excellence and O&M control will yield

benefits now, and over the long-term.

PSEG’s

capital commitments are focused on improving reliability and

service quality at attractive risk-adjusted returns.

PSEG’s

strong balance sheet and cash flow support a capital program

that will benefit shareholders through ongoing support of dividends and

opportunity for future growth.

103

PSEG is advantaged…

…

with a strong balance sheet and cash flow to pursue an investment

program that seizes the opportunities of tomorrow.

Right Assets,                       

Right Markets

Operational                     

Flexibility

Environmental

Infrastructure               

Improvements

Integrated business model with assets located close to

load centers

Dispatch flexibility of operating assets and trading

capability supports margins in full-requirements markets

Environmentally responsible; pursuing investments in

renewables; nuclear uprates

Investments to improve reliability and functionality of grid

2010

Executive Profiles

105

Ralph Izzo

Chairman, President and Chief Executive Officer

Public Service Enterprise Group Incorporated

Ralph Izzo was elected chairman and chief executive officer of Public Service Enterprise Group

Incorporated (PSEG), in April 2007. He was also named as the company’s president and chief

operating officer, and a member of the board of directors of PSEG, in October 2006. Prior, Mr. Izzo

was president and chief operating officer of Public Service Electric and Gas Company (PSE&G).

Since

joining

PSE&G

in

1992

Mr.

Izzo

was

elected

to

several

executive

positions

within

PSEG’s

family

of

companies,

including

PSE&G

senior

vice

president

–

utility

operations,

PSE&G

vice

president

–

appliance

service,

PSEG

vice

president

-

corporate

planning,

Energis

Incorporated

senior

vice

president

–

finance

and

information

services,

and

PSE&G

vice

president

-

electric ventures.  In these capacities, he broadened his experience in the areas of general management, strategic planning

and finance.

Mr. Izzo is a well-known leader within the utility industry, as well as the public policy arena.  His public policy experience

includes service as an American Physical Society Congressional Science Fellow, in the office of U.S. Senator Bill Bradley. 

He also served four years as a senior policy advisor in the Office of New Jersey Governor Thomas H. Kean, specializing in

energy, science and technology. 

Mr. Izzo’s

career began as a research scientist at the Princeton Plasma Physics Laboratory, performing numerical

simulations of fusion energy experiments.  He has published or presented over 35 papers on magnetohydrodynamic

modeling. Mr. Izzo received his Bachelor of Science and Master of Science degrees in mechanical engineering and his

Doctor of Philosophy degree in applied physics from Columbia University.  He also completed the requirements for a Master

of Business Administration degree, with a concentration in finance from the Rutgers Graduate School of Management. He is

listed in numerous editions of Who’s Who and has been the recipient of national fellowships and awards. 

Mr.

Izzo

is

chairman

of

the

board

for

the

Drumthwacket

Foundation.

He

serves

on

the

board

of

directors

for

the

New

Jersey Chamber of Commerce, the New Jersey Utilities Association, the Edison Electric Institute (EEI), the Nuclear Energy

Institute

(NEI)

and

The

Center

for

Energy

Workforce

Development,

and

Rutgers

–

The

State

University

of

New

Jersey.

106

J.A. “Lon”

Bouknight, Jr.

Executive Vice President and General Counsel

Public Service Enterprise Group Incorporated

J.A. Bouknight, Jr. (“Lon”) was named executive vice president and general counsel in

January, 2010.

In this position, he has general supervisory responsibilities for the law

department, office of the corporate secretary, and corporate security and claims.

Bouknight

had been a partner in the Washington law office of Steptoe & Johnson, where

he has served as a member of the regulatory and industry affairs

department and as former

chairman of the firm. His practice focuses on the electric power

industry and on antitrust and

competition issues in both regulated and unregulated industries.

From 2005 to 2008, Bouknight

served as executive vice president and general counsel of

Edison International, a major electric company based in California. A graduate of Duke

University School of Law, he has authored a number of articles and lectured extensively on

energy industry and competition topics.

107

Daniel J. Cregg

Vice President –

Finance Power

PSEG Services Corporation

Daniel J. Cregg was named vice president –

finance power for PSEG Services

Corporation, in December 2006. Prior to this appointment he was director –

financial

reporting and communications at PSEG Power (Power), where he oversaw financial

reporting and forecasting, investor communications, financings, rating agency interactions,

external reporting, and cash forecasting.  He previously held leadership

positions with Power in the areas of financial valuations, competitive intelligence, and fundamental market modeling;

with critical responsibilities in Power’s development and strategic planning activities.

Previously, Mr. Cregg was director of PSEG corporate development.  He joined PSEG in 1991 with overall

responsibility for tax planning, strategy and compliance for PSEG Energy Holdings, including domestic and

international tax structuring work for PSEG Global and PSEG Resources. 

Prior to joining PSEG Mr. Cregg spent five years with the accounting and consulting firm of Deloitte and Touche,

providing consulting services to a wide array of clients with an

emphasis on the energy industry.

Mr. Cregg has been involved in raising awareness and funding for

Sudden Infant Death Syndrome (SIDS) for the last

ten years.  He is also an executive sponsor for Power’s diversity council and is a member of PEGPAC, PSEG’s

Political Action Committee.

Mr. Cregg holds a Master of Business Administration degree from the Wharton School of the University of

Pennsylvania and is a graduate of Lehigh University, where he received a bachelor’s degree in accounting.

108

Caroline Dorsa

Executive Vice President and Chief Financial Officer

Public Service Enterprise Group Incorporated

Public Service Electric and Gas Company

PSEG Services Corporation

Ms. Dorsa is responsible for all financial functions, including Internal Audit Services.  She also leads the Information

Technology and Procurement organizations.  She is a member of PSEG’s

corporate executive leadership team.

Ms. Dorsa had been a Director of Public Service Enterprise Group Inc. (PSEG) since 2003, and a member of

PSEG's

Audit, Corporate Governance and Finance Committees.

Ms. Dorsa joined PSEG from Merck & Co., Inc. where she most recently served as senior vice president –

global

human health, strategy and integration.

Immediately prior to her most recent role at Merck, Ms. Dorsa held positions

as senior vice president and chief financial officer at both Avaya, Inc., and Gilead Sciences, Inc. Earlier in her career,

she held a range of financial positions at Merck, including serving as vice president and treasurer of the company for

over 12 years. She was also the Secretary of the Finance Committee of Merck's Board of Directors.

Prior to joining Merck, Ms. Dorsa worked for Mayor Edward Koch of the City of New York promoting economic

development in midtown Manhattan.

Ms. Dorsa is a member of the Board of Trustees of the Newark Museum and a member of the Junior Achievement

of New Jersey State Board of Directors in Princeton, NJ.  She is

also a member of the Board of Directors of Biogen

Idec (NASDAQ: BIIB), a biopharmaceutical company located in Cambridge, MA.

Ms. Dorsa holds a B.A. from Colgate University and an M.B.A from Columbia Business School.

Caroline Dorsa was named executive vice president and chief financial officer for Public

Service Enterprise Group Incorporated (PSEG) in April 2009. She is also the executive vice

president and chief financial officer of Public Service Electric

and Gas Company (PSE&G),

and PSEG Services Corporation.

109

Clarence (Joe) Hopf, Jr.

President

PSEG Energy Resources & Trade

Clarence (Joe) Hopf, Jr. was named president of PSEG Energy Resources & Trade in

June 2008. His responsibilities include management of PSEG Power’s generation

portfolio

and

basic

gas

supply

service,

purchasing

of

fuel,

mid-

and

back-office

operations

as well as trading and marketing activities.

Prior to joining PSEG, Mr. Hopf was president of PPL EnergyPlus

in Allentown, PA,

since

2006.

He

was

responsible

for

managing

PPL’s

wholesale/retail

marketing

and

trading operation in the United States.  Mr. Hopf has held a variety of posts with

increasing responsibility in the electric generation and energy trading business since

1981.  Prior to joining PPL in 2005 as a senior vice president, he served as a vice

president

at

Goldman

Sachs

in

New

York

and,

before

that,

at

AmerenEnergy

in

St.

Louis.

110

Anne E. Hoskins

Senior Vice President –

Public Affairs & Sustainability

PSEG Services Corporation

Anne

E.

Hoskins

was

named

senior

vice

president

–

Public

Affairs

and

Sustainability of PSEG Services Corporation, in January 2010.  In this position, she is

responsible for PSEG’s

federal and state governmental affairs, corporate philanthropy

and sustainability and leads the development of public policy positions on issues

affecting

the

company.

Ms.

Hoskins

is

also

a

member

of

PSEG’s

Executive

Officer

Group.

Prior to joining PSEG, Ms. Hoskins served as senior and regulatory counsel for

Verizon

Wireless,

working

from

offices

in

Washington

and

New

Jersey.

Ms.

Hoskins

also served as an associate in the Newark law firm of McCarter and English, an

attorney in the United States Office of the Comptroller of the Currency, and as Policy

Adviser in the Governor’s Office of Policy and Planning in New Jersey.

Ms. Hoskins holds a Doctor of Law degree from Harvard Law School, a Masters of

Public Affairs degree from the Woodrow Wilson School at Princeton University, and a

Bachelor of Science degree from Cornell University.

Ms.

Hoskins

serves

as

a

trustee

on

The

Nature

Conservancy

of

New

Jersey

and

is

on the Board of New Jersey Future.

111

Thomas P. Joyce

President and Chief Nuclear Officer

PSEG Nuclear

Thomas P. Joyce was named president and chief nuclear officer

of PSEG Nuclear

(Nuclear), in October 2008. He had been senior vice president –

operations of Salem/Hope

Creek for Nuclear, since June 2007.  Mr. Joyce was also vice president –

Salem, since

January 2007, and previously assumed the role of PSEG Nuclear’s

site vice president as

part of the Nuclear Operating Services Agreement between PSEG and Exelon Corporation.

Mr. Joyce has more than 32 years of experience in commercial nuclear power operations,

and led Salem through two successful reactor vessel head replacement outages. Salem Unit

1 completed its outage for the lowest station dose, while capturing the world record for

shortest head replacement outage.

Prior to coming to PSEG Mr. Joyce was site vice president at Exelon Nuclear’s

Braidwood

Station. During his tenure the station achieved overall performance improvements and

retained their excellent INPO rating.  The plant completed a refueling in 15 days, 14 hours –

setting a record for outage efficiency among U.S. pressurized water reactors.  Before serving

at Braidwood he held leadership positions at Exelon’s Byron, Dresden, and Zion Stations,

and in the corporate offices of both Exelon Corporation and Exelon Nuclear.

Mr. Joyce holds a Bachelor of Science degree in nuclear engineering from the University of

Missouri at Rolla, and a Master of Business Administration degree from the Keller Graduate

School of Management.  While at Byron, he earned his senior reactor operation (SRO)

license.

112

Ralph A. LaRossa

President and Chief Operating Officer

Public Service Electric and Gas Company

Ralph A. LaRossa was named president and chief operating officer of Public Service

Electric and Gas Company (PSE&G), in October 2006. Prior to this

position he was vice

president -

electric delivery for PSE&G.

Mr. LaRossa joined PSE&G in 1985 as an associate engineer and advanced through a

variety of management positions in the utility’s gas and electric operations. Past positions

include vice president -

delivery operations support, division manager -

Metropolitan electric

division, director -

distribution operations, manager -

gas distribution, project manager for

AWMS (automated work management system), assistant division manager, district manager

and field engineer in gas distribution. PSE&G is New Jersey’s largest electric and gas utility.

Mr. LaRossa is a graduate of Stevens Institute of Technology

with a Bachelor of

Engineering degree in industrial engineering, and has completed the Harvard Business

School’s Program for Management Development. In 1998 he received Gas Industry

Magazine’s Outstanding Manager of the Year Award. He is a member of the PJM

Designated Officers Committee. He serves on the board of directors for the American Gas

Association (AGA), New Jersey Utilities Association (NJUA), New Jersey Performing Arts

Center (NJPAC), Partnership for a Drug-Free NJ, and Bergen County’s United Way. He

also serves as a board of trustee’s member for Montclair State University, Newark Alliance,

New Jersey Institute for Social Justice, and the Liberty Science

Center.

113

William Levis

President and Chief Operating Officer

PSEG Power

Previously, Mr. Levis was also senior vice president and chief nuclear officer, as part of the Nuclear Operating Services

Agreement

between

PSEG

and

Exelon

Corporation.

Under

his

leadership

Nuclear’s

Salem

and

Hope

Creek

stations

have

advanced to the highest performance levels in the stations' history. Improvement in the stations' work environment has

resulted

in

the

closing

of

two

long

standing

NRC

cross-cutting

issues

-

problem

identification

and

resolution,

and

safety

conscious work environment.

Mr.

Levis

has

more

than

25

years

of

diversified

experience

in

the

nuclear

power

industry.

Before

coming

to

PSEG

he

was

Exelon Nuclear’s

vice president Mid-Atlantic operations, where he provided executive oversight of day-to-day operations of

the Limerick, Peach Bottom, Three Mile Island and Oyster Creek Stations. He joined Exelon as the Byron Station Manager in

1998

and

was

promoted

to

site

vice

president

the

following

year.

In

2001

he

was

named

site

vice

president

at

Limerick

Generating Station.

Prior to joining Exelon Mr. Levis worked at Ontario Hydro's Pickering Plant and held several positions over a five-year

period with Carolina Power & Light’s Brunswick facility. During this time the station was removed from the NRC Watch List

and

set

new

records

in

the

areas

of

safety,

production

and

cost.

Mr.

Levis’

background

also

includes

experience

with

NRC,

Westec

Services, General Electric Nuclear Services and the U.S. Navy.

He has a Bachelor of Science degree in marine

engineering

from

the

U.S.

Naval

Academy

and

holds

an

SRO

(senior

reactor

operator)

certification.

Mr.

Levis

retired

as

a

commander in the Naval Reserves and attained his professional engineer license in 1985.

William Levis was elected president and chief operating officer of PSEG Power (Power), effective

June 2007. He had been president and chief nuclear officer of PSEG Nuclear (Nuclear) since

January 2007, while retaining his position as Power’s president and COO. Power is a major

unregulated independent power producer in the U.S. with three main subsidiaries: PSEG Fossil,

PSEG Nuclear, and PSEG Energy Resources and Trade.

114

Randall E. Mehrberg

Executive Vice President, Strategy & Development

PSEG Services Corporation

President

PSEG Energy Holdings

Randall E. Mehrberg is president of PSEG Energy Holdings and Chairman of the Board of Energy Storage &

Power.  PSEG Energy Holdings develops, manages and owns renewable energy solutions including solar,

energy storage and off shore wind.  PSEG Energy Holdings also owns power plants in the United States and

energy and other investments in the United States and abroad.  Mehrberg is also PSEG’s

executive vice

president responsible for corporate strategy, public affairs, policy, mergers and acquisitions, and corporate

communications.  He is a member of PSEG’s

corporate executive leadership team and has responsibility for overseeing the

corporate balanced scorecard.  Mehrberg’s

responsibilities include PSEG’s

emergent technology and transfer group, ensuring

development of a corporate strategy that includes a comprehensive assessment of the role of technology in the future of our

industry.

Mehrberg

joined

PSEG

after

serving

for

eight

years

in

various

executive

leadership

positions

at

Chicago-based

Exelon

Corp.,

most recently as executive vice president, chief administrative officer and chief legal officer. Prior to his tenure at Exelon,

Mehrberg

was

an

equity

partner

in

the

Chicago

law

firm

of

Jenner

&

Block,

where

he

worked

from

1980

to

1993

and

again

from

1997 to 2000. He represented corporations, individuals, not-for-profits and government entities in a broad range of matters. 

From 1993 to 1997 he served as lakefront director and general counsel for the City of Chicago’s Park District.

Mehrberg holds a Doctor of Law degree from the University of Michigan Law School and a Bachelor of Science degree in

economics magna cum laude from the University of Pennsylvania’s Wharton School of Business. He has been active in a

number

of

business

and

civic

organizations,

including

serving

as

vice

chairman

of

the

board

of

Nuclear

Electric

Insurance

Limited.

Mr.

Mehrberg

currently

serves

as

a

board

member

of

the

University

of

Pennsylvania

Medical

School

and

the

University

of Michigan Law School, NJN Television Foundation, Millennium Park and the Lincoln Park Zoo.

Mehrberg has been the recipient of numerous awards, such as the AJC Judge Learned Hand Human Relations Award, the

Mexican-American Legal Defense and Education Fund Legal Services Award, the Chicago Bar association David C. Hilliard

Award,

the

Catholic

Charities

Award

for

Service

to

the

Poor,

and

the

H.O.P.E.

for

the

People

Award

–

Man

of

the

Year.

115

Margaret M. Pego

Senior Vice President –

Human Resources and

Chief Human Resources Officer

PSEG Services Corporation

Margaret M. Pego

was named senior vice president –

human resources and chief

human resources officer of PSEG Services Corporation, in December 2006. Prior, she

had been vice president –

human resources.

Ms. Pego

joined PSEG in 1974, and has held a variety of management positions in the

human resources department.

Ms. Pego

holds a Bachelor of Arts degree in business administration from

William

Paterson College, and a Master of Business Administration degree

with a concentration

in management and labor relations from Seton Hall University. In

addition, she holds a certificate in EEO

studies from Cornell University, and has also completed the Human Resources Executive Program at the

University of Michigan. She is also certified as a senior professional in human resources.

Ms. Pego

is active in several local and national organizations; including the EEI Chief HR Executives Policy

Committee;

the

American

Gas

Association

HR

Policy

Committee;

The

Conference

Board

Advisory

Council

of

HR Management –

Council of HR Executives;  Center for Energy Workforce Development (CEWD) Executive

Counsel Chair; and the Society for Human Resources Management. She is a former member of the Supreme

Court

of

New

Jersey

Attorney

Ethics

Committee.

Ms.

Pego

is

a

2002

Leadership

New

Jersey

graduate,

a

1997 TWIN Honoree, 2006 Executive Woman of New Jersey Honoree and 2008 NJ Best 50 Women in

Business Honoree.  In addition, she is a member of the board of trustees of the American Conference on

Diversity, the Boys and Girls Club Concert for Kids Committee, College of Saint Elizabeth, Leadership New

Jersey, Rutgers Business School and the Children’s Specialized Hospital.

Appendix

117

2009 summer weather greatly impacted

earnings …

Hours 90

o

F or Greater

27

43

55

55

38

33

5

2.0

3

5

0

20

40

60

80

100

120

140

160

2009

Normal

2008

May

June

July

August

September

Monthly Temperature-Humidity Index

2009 vs. 2008 and Normal

586

1,412

2,776

4,834

1,017

336

3,620

5,324

2,930

1,870

766

2,944

4,904

4,511

1,806

0

1,000

2,000

3,000

4,000

5,000

6,000

May

June

July

August

September

2009

2008

Normal

Monthly weather correlates to the impact on monthly

kWh sales and Residential revenue.

2009 summer weather was unfavorable for sales.  It

was both cooler than normal and cooler than the

weather that occurred in 2008

Unseasonably cool June and July more than offset

relatively warm August.

Hourly weather correlates to the impact on

monthly peak demands (kW) and Commercial

and Industrial revenue.

The number of peak producing hours, defined as

greater than 90

o

F were much lower than both

2008 and what would be normally expected.

Only August had a significant number of hourly

temperature readings in the 90s in 2009.

Summer Hourly Weather

Summer Monthly Summary

…

exemplified by the hours greater than 90 degrees.

118

PSE&G is developing innovative energy

solutions to align with the State’s EMP goals. 

Residential

Commercial

Pole Mounted

Industrial

photo

courtesy

of

enXco

2009,

D.Holey

PSE&G Site

Projects

3

rd

Party Site

Projects

Solar installed at

PSE&G owned

facilities

Solar to be

owned by PSE&G

and installed on

any public or

private third-party

host sites

Solar Loan Programs

Solar 4 All Programs

119

New Jersey regulatory agency changes

The Governor appoints the five Commissioners, who must be confirmed by the Senate, for

six-year staggered terms. The Governor appoints one of the five to serve as Commission

President.  Currently, the five commissioners are:

Elizabeth Randall, Acting President

Nicholas

Asselta

Jeanne M. Fox

Joseph L. Fiordaliso

Frederick F. Butler

Lee Solomon has been nominated for Commission President, to replace Frederick F. Butler

Assembly Bill No. 1391 has been introduced to reduce the number of BPU Commissioners

from five to three

Former Public Advocate Chin resigned in January 2010; Stefanie Brand, Director of Rate

Counsel appointed Acting Public Advocate

Public Advocate role being transformed

120

Operated by PSEG Nuclear

PSEG Ownership: 100%

Technology: Boiling Water

Reactor

Total Capacity: 1,199MW

Owned Capacity:  1,199MW

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: 2,234MW

Owned Capacity: 1,117MW

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.

121

PSEG Power Debt / Capitalization

(1)

Power Short-Term debt represents the Intercompany Loan with PSEG.

(2)

Long-Term Debt includes Debt due within one year and excludes Non-Recourse Debt.

Dec 07

Dec 08

Dec 09

Power

Short-Term Debt

(1)

238

$          

3

$              

194

$          

(Short-Term Investments)

-

-

Power

Long-Term Debt

(2)

2,902

2,903

3,121

Member's Equity

3,551

4,322

4,467

Total Capitalization

6,691

7,228

7,782

Power Debt To Capitalization

Dec 07

Dec 08

Dec 09

Short Term Debt

238

$          

3

$              

194

$          

Long-Term Debt

2,902

2,903

3,121

Member's Equity

3,551

4,322

4,467

Total Capitalization

6,691

$       

7,228

$       

7,782

$       

Total Debt to Cap

46.9%

40.2%

42.6%

FFO to Debt

39.9%

47.6%

40.2%

122

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

2007

2006

2005

Earnings Impact ($ Millions)

Gain (Loss) on Nuclear Decommissioning Trust (NDT)

Fund Related Activity

9

$           

(71)

$          

12

$           

11

40

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

(25)

16

10

28

(9)

Lease Transaction Reserves

-

(490)

-

-

-

Net Reversal of Lease Transaction Reserves

29

-

-

-

-

Asset Sales and Impairments

-

(13)

(32)

(178)

-

Premium on Bond Redemption

-

(1)

(28)

(7)

(6)

Merger-related Costs

-

-

-

(8)

(32)

Total Pro-forma adjustments

13

$          

(559)

$        

(38)

$          

(146)

$         

25

$           

Fully Diluted Average Shares Outstanding (in Millions)

507

508

509

505

489

Per Share Impact (Diluted)

Gain (Loss) on Nuclear Decommissioning Trust (NDT)

Fund Related Activity

0.02

$       

(0.14)

$       

0.02

$         

0.02

$         

0.08

$         

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

(0.05)

0.03

0.02

0.06

(0.02)

Lease Transaction Reserves

-

(0.96)

-

-

-

Net Reversal of Lease Transaction Reserves

0.05

-

-

-

-

Asset Impairments

-

(0.03)

(0.06)

(0.35)

-

Premium on Bond Redemption

-

-

(0.06)

(0.01)

(0.01)

Merger-related Costs

-

-

-

(0.02)

(0.07)

Total Pro-forma adjustments

0.02

$       

(1.10)

$       

(0.08)

$        

(0.30)

$        

(0.02)

$        

For the Twelve Months Ended

December 31,

Reconciling Items Excluded from Continuing Operations to Compute Operating Earnings

(Unaudited)

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED