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) March 31, 2010

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

PSEG is participating in various meetings with investors from March 31, 2010 through April 7, 2010. A copy of the discussion materials being used at these meetings is furnished as Exhibit 99 to this Form 8-K.

Item 9.01 Financial Statements and Exhibits

Exhibit 99 Discussion Materials for 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: March 31, 2010

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: March 31, 2010

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: March 31, 2010

5

EX-99

PSEG

Public

Service

Enterprise

Group

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.

PSEG

–

Defining

the

Future

5

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

6

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

7

Earnings growth achieved…

…

through higher energy market pricing, increased production and lower

costs.

* See page 70 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*

8

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

9

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

$1,501

$258

$1,759

Total

185

5

190

July 2009

Economic Energy Efficiency

Stimulus

503

12

515

July 2009

Solar 4 All

Remaining

Spending

Thru 2009

Total

Amount

Approval

Date

($ Millions)

10

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

11

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

12

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

$64.4 million

$139.8 million

Increase

$2.3 billion

$3.8 billion

Rate Base

Request as of the 03/10 update

Electric

Request

Gas

13

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%

14

Power’s Northeast assets are located in

attractive markets near load centers …

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

15

…

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

16

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%

Total Fleet RTC Average

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

17

$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)

18

…

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

19

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)

**

*

20

$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

21

$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.

22

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

23

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

70

for

Items

excluded

from

Income

from

Continuing

Operations

to

reconcile

to

Operating

Earnings

24

Core Investment

$2.5B

Growth Investments

$5.2B

A $7.7 billion investment program over        

2010 –

2012…

…

supports long-term growth.

25

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%

26

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

27

*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

28

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

29

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.

Appendix

PSEG Power

32

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

33

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

34

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

35

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

(

)

(%)

36

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.

37

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

38

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

39

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

40

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

CO

2

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.

41

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

42

$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

CO

2

prices

as:

•

the fleet dispatch changes, and

•

the

CO

2

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

43

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.

44

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

45

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

46

$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

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.

47

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

48

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)

49

$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

50

$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

51

…

but Power’s diverse asset portfolio and hedging strategy has

mitigated the effects, providing strong results.

*See page 70 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings

Commodity prices have been volatile…

52

-$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.

PSEG Energy Holdings

54

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

55

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

56

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

57

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…

58

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.

59

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

PSEG

61

$(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

70

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*

62

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

70

for

Items

excluded

from

Income

from

Continuing

Operations

to

reconcile

to

Operating

Earnings

63

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%

64

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%

65

$-

$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.

66

$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

67

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%

68

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

69

$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.

70

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)

$          

(154)

$         

(7)

$            

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)

$        

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

For the Twelve Months Ended

December 31,

Reconciling Items Excluded from Continuing Operations to Compute Operating Earnings

(Unaudited)