8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) August 12, 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

On August 12, 2010, PSEG is participating in the Goldman Sachs Power & Utility Conference in New York. A copy of the discussion materials being used at the meeting is furnished as Exhibit 99 to this Form 8-K.

Item 9.01 Financial Statements and Exhibits

Exhibit 99 Discussion Materials for the August 12, 2010 Goldman Sachs Power & Utility Conference

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: August 12, 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: August 12, 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: August 12, 2010

5

EX-99

PSEG Public Service Enterprise Group

Goldman Sachs Power & Utility Conference

August 12, 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, consequences 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.  When used herein, the words “anticipate”, “intend”, “estimate”, “believe”

“expect”, “plan”, “should”, “hypothetical”, “potential”, “forecast”, “project”, variations of such words and similar expressions are intended to identify forward-

looking statements.  Although we believe that our expectations are based on reasonable assumptions, they are subject to risks and uncertainties and we

can give no assurance they will be achieved.  The results or developments projected or predicted in these statements may differ materially from what may

actually occur.  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, transmission planning 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 located 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 conditions 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 in receipt of necessary permits and approvals for our construction and development activities.

•

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 customer usage patterns.

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 gains or losses associated with Nuclear

Decommissioning Trust (NDT), Mark-to-Market (MTM) accounting, and other

material one-time items. PSEG presents Operating Earnings because

management believes that it is appropriate for investors to consider results

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

GAAP. PSEG believes that the non-GAAP financial measure of Operating

Earnings provides a consistent and comparable measure of performance of its

businesses to help shareholders understand performance trends.

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

Income from Continuing Operations 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

Caroline Dorsa

Executive Vice President and Chief Financial Officer

PSEG: the right mix for the

opportunities of today and tomorrow

PSE&G positioned

PSE&G positioned

to meet NJ’s

to meet NJ’s

energy policy and

energy policy and

economic growth

economic growth

objectives.

objectives.

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

5

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 36 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

2008 Operating Earnings*

2009 Operating Earnings*

2010 Guidance

$3.00 -

$3.25

PSEG –

Maintaining 2010 Guidance

$3.03

$3.12

* See Page 36 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

9

Q2 2010

Operating Earnings by Subsidiary

$ 800  

(3)

31

166

$606

2009

$ 756

8

19

192

$   537

2010

Operating Earnings

Earnings per Share

(0.01)

0.02

Enterprise

$   1.58

$   1.49

Operating Earnings*

0.06

0.03

PSEG Energy Holdings

0.33

0.38

PSE&G

$   1.20

$   1.06

PSEG Power

2009

2010

$ millions (except EPS)

Six months ended June 30

•See Page 35 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

10

PSEG 2010 Operating Earnings Guidance

$ 3.12

$ 1,579

$ 10

$ 43

$ 321

$ 1,205

2009A*

$ 3.00 –

$ 3.25

$ 1,520 –

$ 1,645

$ 5 –

$15

$ 30 –

$ 40

$ 425 –

$ 455

$ 1,060 –

$ 1,135

2010E

Enterprise

Earnings per Share

Operating Earnings*

PSEG Energy Holdings

PSE&G

PSEG Power

$ millions (except EPS)

* See Page 36 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

11

$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

12

$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.

*

*

*

*estimated

13

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 $0.02-$0.04/share

Spark

Spread

change

of

$5/MWh

at

market

–

impact

of $0.04-$0.08/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 36

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

14

Cash Exposure Net

of $320M of IRS

Deposits

12/31/08

12/31/09

July 2010

2

5

17

# of LILO/SILO Leases

2009 Activities

Terminated 12

LILO / SILO

leases

2010 Activities

Terminated 3 leases

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

~$80

~$400

$-

$500

$1,000

$1,500

PSE&G –

Review and Outlook

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

16

17

2009: Success in meeting State’s energy

and economic development goals…

…with reasonable contemporaneous returns.

340

354

694

April 2009

NJ Capital Infrastructure Stimulus

30

17

47

December 2008

Carbon Abatement

63

2

65

July 2009

Demand Response

143

-

143

November 2009

Solar Loan II

50

55

$105

April 2008

Solar Loan I

$1,220

$539

$1,759

Total

146

44

190

July 2009

Economic Energy Efficiency

Stimulus

448

67

515

July 2009

Solar 4 All

Remaining

Spending

Thru 6/30/10

Total

Amount

Approval

Date

($ Millions)

18

New Jersey Electric & Gas Rate Agreement

--

A Balancing of Interests

51.2%

Equity Ratio

11.25%

Return on Equity

$6.2B

$2.3B

$3.8B

Rate Base

$204.2M

$64.4M

$139.8M

Increase

Total

Gas

Electric

51.2%

Equity Ratio

10.3%

Return on Equity

$6.0B

$2.27B

$3.75B

Rate Base

$100.0M

$26.5M

$73.5M

Increase

Total

Gas

Electric

Request

Agreement

…

in a difficult economic environment.

19

Projects to NY

Neptune HVDC project (685

MW) Sayreville to Long Island

Linden VFT project (330 MW)

Linden to Staten Island

Bergen O66 project (670 MW*)

Bergen to ConEd's

West 49th

St

Bergen U2-100 project (800

MW**) connecting Bergen to

NY

Projects to NJ

PSE&G’s evaluation of

the proposed backbone

Transmission projects:

Susquehanna -

Roseland***

Branchburg-

Roseland-

Hudson****

As a result NJ will need new generation, DSM or additional transmission

imports.

Total Import

Capability

~ 2,000 MW

Total Export

Capability

~ 2,500 MW

2010-2020 NJ Summer Peak

Growth Rate = 1.6%

Sources: Imports: PSE&G Estimates; Exports:  PJM 2009 RTEP;  Load Growth: PJM 2010 Load Forecast Report

NJ’s load is expected to grow 3,450MW by

2020, with net imports decreasing ~500MW.

* Project has

firm

contract

for

320MW;

**

Project

in

queue

–

no

firm

contracts;

***

PSE&G

has

announced

a

2-year

delay

of

the

in-service

date

for

the

S-R

Transmission line.;

****PSE&G

has

placed

development

activities

for

the

B-R-H

Transmission

line

on

hold

pending

further

guidance

from

PJM.

PSEG Power –

Review and

Outlook

21

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%

22

Power’s Northeast assets are located in

attractive markets near load centers …

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

23

…

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

24

Stringent environmental challenges are on the

horizon, with potentially broad industry impacts…

Controls on coal units done or under way

Power’s relative position very strong

High

NOx, SO

2

, Hg

(CATR)

High

Regional

High

High

Industry Impact

Emission restrictions net favorable to Power

Carbon

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.

25

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: 100%

2011: 65-70%

2012: 25-30%

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

Power’s assets are well positioned near load

centers…

…

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

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

26

$40

$45

$50

$55

$60

$65

Historical 5-year Average PJM Energy Price

(Around the Clock)

27

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

28

…

with sites in the eastern part of PJM.

Reliability Pricing Model –

locational

value

of Power’s generating fleet recognized…

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 2013/2014 RPM Auction.

•

Locational

value of Power’s

fleet recognized

•

Bid for 89 MW of new

capacity accepted for

2013/2014 auction; in-service

June 2013

•

On schedule to complete

178 MW of previously

cleared peaking capacity by

June 2012

$27.73

$16.46

$110.00

$174.29

$102.04

Rest of Pool

$245.00

$185.00

PSEG North Zone

$245.00

PSEG

$133.37

$139.73

2012 / 2013

$226.15

$245.00

2013/2014

$110.00

$174.29

$191.32

MAAC

$110.00

$174.29

$191.32

Eastern MAAC

2011 / 2012

2010 / 2011

2009 / 2010

$/MW-day

PJM Zones

0

2,000

4,000

6,000

8,000

10,000

12,000

09/10

10/11

11/12

12/13

13/14

PJM Capacity Available to Receive Auction Pricing

29

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 June 30, 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 

2014, with the

completion of

auctions in PJM

and NE.  

% sold

(left

scale)

$0.30 -

$0.60

$0.10 -

$0.30

$0.05 -

$0.10

Contracted Energy

Price

(right

scale)

% sold

(left

scale)

**

*

30

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.

31

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

Appendix

33

PSEG Power –

Gross Margin Performance

$0

$25

$50

$75

2010

2009

2008

$63

$51

Quarter ended June 30

Volume increased 20% vs. year ago in response to weather-related demand

Margins influenced by BGS migration and impairment of excess SO2

emission allowances

Decline in gross margin influenced

by lower spark spread.

$29

Texas

Regional Performance

$14

$20

$688

Q2 Gross

Margin ($M)

Q2 Performance

Region

Improvement in generation offset

by decline in price.

New York

Volumes and margins lower vs.

year ago, reflecting decline in dark

spreads.

New

England

Margin improvement aided by

strong weather-related demand

offset by lower pricing and ($0.01)

SO2 impairment.

PJM

PSEG Power Gross Margin ($/MWh)*

* Excludes Texas

Increase

in

generation

was

predominantly

from

combined

cycle

and

coal

with

continued

strong

nuclear

$50

34

Power’s coal hedging reflects 2010 supply

matched with 2010 sales…

…

while maintaining flexibility on supply post BET installation.

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)

0%

20%

40%

60%

80%

100%

2010

2011

2012

$0

$10

$20

$30

$40

$50

35

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

2010

2009

Earnings Impact ($ Millions)

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

20

$        

(6)

$         

     Activity (PSEG Power)

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

11

(39)

Market Transition Charge Refund (PSE&G)

(72)

-

Total Pro-forma adjustments

(41)

$       

(45)

$       

Fully Diluted Average Shares Outstanding (in Millions)

507

507

Per Share Impact (Diluted)

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

0.04

$     

(0.01)

$    

Gain (Loss) on MTM (PSEG Power)

0.02

(0.08)

Market Transition Charge Refund (PSE&G)

(0.14)

-

Total Pro-forma adjustments

(0.08)

$    

(0.09)

$    

(a) Income from Continuing Operations for the six months ended June 30, 2010 and 2009 is equal to Net Income.

For the Six Months Ended

30-Jun

36

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

Earnings Impact ($ Millions)

Gain (Loss) on Nuclear Decommissioning Trust (NDT)

Fund Related Activity

9

$             

(71)

$           

12

$             

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

(25)

16

10

Lease Transaction Reserves

-

(490)

-

Net Reversal of Lease Transaction Reserves

29

-

-

Asset Sales and Impairments

-

(13)

(32)

Premium on Bond Redemption

-

(1)

(28)

Merger-related Costs

-

-

-

Total Pro-forma adjustments

13

$           

(559)

$          

(38)

$            

Fully Diluted Average Shares Outstanding (in Millions)

507

508

509

Per Share Impact (Diluted)

Gain (Loss) on Nuclear Decommissioning Trust (NDT)

Fund Related Activity

0.02

$         

(0.14)

$         

0.02

$           

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

(0.05)

0.03

0.02

Lease Transaction Reserves

-

(0.96)

-

Net Reversal of Lease Transaction Reserves

0.05

-

-

Asset Impairments

-

(0.03)

(0.06)

Premium on Bond Redemption

-

-

(0.06)

Merger-related Costs

-

-

-

Total Pro-forma adjustments

0.02

$         

(1.10)

$         

(0.08)

$          

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

For the Twelve Months Ended

December 31,

Reconciling Items Excluded from Continuing Operations to Compute Operating Earnings

(Unaudited)