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) September 7, 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 September 8, 2010 through September 10, 2010, PSEG is participating in a series of investor meetings in Europe. A copy of the discussion materials being used at the meetings is furnished as Exhibit 99 to this Form 8-K.

Item 9.01 Financial Statements and Exhibits

Exhibit 99 Discussion materials for the European 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: September 7, 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: September 7, 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: September 7, 2010

5

EX-99

PSEG

Public

Service

Enterprise

Group

European Investor Meetings

September 8 -

10, 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

Ralph Izzo

Chairman, President and Chief Executive Officer

Caroline Dorsa

Executive Vice President and Chief Financial Officer

Kathleen A. Lally

Vice President, Investor Relations

5

PSE&G positioned

to meet NJ’s

energy policy and

economic growth

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.

Renewable Investments

PSEG

:

the right mix for the 

opportunities of today and tomorrow

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 pricing, increased production and lower costs.

$2.68

$3.03

$3.12

2007 Operating Earnings*

2008 Operating Earnings*

2009 Operating Earnings*

* See page 66 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

8

Investment programs, hedge profile

and cost control support 2010 outlook

$3.12

$3.00 - $3.25

2009 Operating Earnings*

2010 Guidance

* See page 66 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

9

First-Half 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 65 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

10

$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

11

$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

12

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

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

13

14

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*

*For the period ended December 31, 2009.

-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

15

*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

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 PSEG cash flow and approved PSE&G capital structure support financing

requirements

Do you need equity?

Anticipated narrowing spread between market price and embedded energy cost in

BGS should mitigate risk 

Physical assets provide optionality

What is the

impact of migration?

Modest payout ratio and strong

balance

sheet

provide

support

–

7

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

th

2010

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 support margins in full-requirements markets

Environmentally responsible; pursuing investments in 

renewables; nuclear uprates

Investments to improve reliability and functionality of grid

17

PSEG Power – Review and

Outlook

19

Investment

program supported by

strong cash flow and

credit metrics

Focus on operational

excellence to maximize

asset value

Portfolio approach to

hedging over multi-year

timeframe to derive

market premiums

Low-cost,

environmentally

responsible, operationally

flexible supply located in

premium markets

PSEG Power

–

Right assets in the right markets…

…

with dispatch flexibility supporting returns in volatile markets.

20

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.

21

Power’s 13,600 MW of Northeast assets are

located in attractive markets near load centers…

... and, exploring sale of 2,000 MW of gas-fired assets in Texas.

22

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 –

exploring sale of 2,000 MW

of combined cycle generation

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%

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

PSEG

Power

–

Gross Margin Performance

$0

$25

$50

$75

2010

2009

2008

$63

$53

First-Half 2010

Volume increased by 13% in First-Half 2010 vs. year ago in response to weather-related demand

Margins

influenced

by

BGS

migration

and

impairment

of

excess

SO

emission

allowances

Decline in gross margin influenced

by lower spark spread.

$47

Texas

Regional Performance

$26

$47

$1,435

First-Half

2010 Gross

Margin ($M)

First-Half 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)

SO

2

impairment.

PJM

PSEG Power Gross Margin ($/MWh)*

* Excludes Texas

Increase

in

generation

was

predominantly

from

combined

cycle

and

coal

with

continued

strong

nuclear

$53

2

25

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 in 2009.

Unscheduled outage in July 2010 is expected

to reduced the full-year, fleet capacity factor

by 0.5%.

Hope Creek scored highest possible INPO rating

in its 2010 review.

Top quartile INPO Index.

…

as we maintain our drive for excellence.

Nuclear Generation Output*

(000’s GWh)

Forced Loss Rate (

)

(%)

INPO Index (

)

NJ Units

1   Quartile

NJ Units

1   Quartile

* Total PS share nuclear generation; target established in Q1 2010.

st

st

26

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

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)

NOx

* Total PS share nuclear generation; target established in Q1 2010.

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

2

SO

27

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

** Total PS share nuclear generation; target established in Q1 2010.

28

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

(

)

(%)

99.7

96.5

98.6

97.0

98.9

99.3

99.7

2004

2005

2006

2007

2008

2009

2010 Target

29

$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)

30

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

* Hg MACT compliant with baghouse

31

Increasingly stringent environmental requirements could

significantly impact the electric power industry within the

next decade…

Major areas where new regulations are currently under development:

•

Management of Coal Combustion Residuals (CCRs)

–

Proposed new rule governing the use and disposition of coal combustion by-products under the

Resource Conservation and Recovery Act (RCRA).

•

Clean Air Transport Rule (CATR)

–

The CATR represents a court-mandated revision to the Clean Air Interstate Rule (CAIR) regulating

sulfur

dioxide

(SO

)

and

nitrogen

oxides

(NOx)

emissions

under

the

Clean

Air

Act. 

•

Hazardous Air Pollutants (HAPs) Maximum Achievable Control Technology (MACT)

–

Forthcoming

court-mandated

rule

that

will

require

coal-

and

oil-fired

steam

electric

generating

units to meet emissions limits for mercury (Hg) and other hazardous air pollutants (HAPs) pursuant to

Section 112 of the Clean Air Act.

•

316(b) Cooling Water Regulations

–

Forthcoming rule that will define how best available technology requirements for cooling water intake

structures will be applied to large existing electric generating

plants under Section 316(b) of the Clean

Water Act.

•

Carbon

Legislation

/

Greenhouse

Gas

(GHG)

Best

Available

Control

Technology

(BACT)

–

Congress may move to establish a carbon cap-and-trade system to reduce GHG emissions from

power plants.

–

Absent Congressional pre-emption, EPA is developing guidance that will inform how States

determine BACT requirements for GHG emissions at major new and modified power plants

under the Clean Air Act.

2

32

Various environmental initiatives over 2010-2020 could put

20 GW to150 GW of existing fossil capacity at risk of

retirement…

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.

33

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.

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

SO

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

0

2

4

6

8

10

12

14

0

10

20

30

40

50

60

0

50

100

150

200

250

2

34

Full Requirements Component

Increase in Capacity Markets/RPM

Growing Renewable Energy Requirements

Component for Market Risk

The NJ BGS auction is a primary mechanism

for hedging price…

Market Perspective –

BGS Auction Results

…

the

current

embedded

cost

of

energy

–

relative

to

market

–

results

in

migration.

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

35

The 2009 market environment prompted

BGS customer migration …

…

market conditions will affect  future migration.

2009

Medium-Term

Power Actions

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

Market prices strengthened during periods of high weather-related demand  in

Summer 2010

Smaller loss of margin per MWh

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

earnings

by

2

–

4

cents

per

share

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

Supplying wholesale hedges to third party retail providers

Supplying hedges to other end use customers

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

36

…

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

PJM

Capacity

Available

to

Receive

Auction

Pricing

0

2,000

4,000

6,000

8,000

10,000

12,000

09/10

10/11

11/12

12/13

13/14

37

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%

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

2012

Total Fleet RTC Average

2011

38

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)

**

*

39

$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

40

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

Mid $40’s

To

High $40’s

2010-2011

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)

*2012 Primarily Keystone and Conemaugh.

0%

20%

40%

60%

80%

100%

2010

2011

2012

$0

$10

$20

$30

$40

$50

PSE&G –

Review and Outlook

42

PSE&G

is positioned for growth…

…through investments in infrastructure, renewables and energy efficiency.

Largest provider of electric

and gas distribution services

and transmission in NJ. 

Creating renewable and

energy efficiency solutions

for NJ customers

Leader in reliability; focused

on maintaining position by

improving customer

responsiveness and

efficiency

Economically meeting

mandates for reliability,

service quality and access to

renewables

Focused on regulatory

mechanisms that provide

reasonable and current

recovery of and return on

capital

43

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

44

…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

45

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)

46

         *  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 eastern

          portion of the S-R Transmission line.  ****PSE&G has placed development activities for the B-R-H Transmission line on hold; PJM is evaluating potential 230kV  

          alternatives.  

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. expected in-service 2012.

Bergen U2-100 project (800

MW**) connecting Bergen to

NY expected in-service 2012.

Projects to NJ

PSE&G’s evaluation of

the proposed backbone

Transmission projects:

Susquehanna -

Roseland***

Branchburg-

Roseland-

Hudson****

…As

a

result

NJ

will

need

a

mix

of

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% Annually

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…

47

New Jersey Electric & Gas Rate Agreement

--

A Balancing of Interests

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

Rate Agreement approved by NJ Board of Public Utilities (BPU) June 2010

…

in a difficult economic environment.

•The agreement requires PSE&G to return $122 million of Market Transition Charges to

customers over a 2-year period.

•Agreement

supports

a

review

by

the

BPU

of

policy

on

consolidated

tax

accounting

and

recovery of Societal Benefits Charge.

•PSE&G reduced distribution capital budgets by $140 million per year over 2010-2012 to

ensure ability to earn our allowed return on equity.

•Rigorous management of O&M expenses will be key to optimizing rate agreement.

48

Regulatory Reform

Working in New Jersey to build political and regulatory        

support for “Utility of the Future”...

…to create shareholder and customer value.

T&D

Infrastructure

Replacement

Renewables

Development

Transmission

Backbone

Projects

Energy

Efficiency

Development

Smart Grid/PHEV

Infrastructure

PSEG Energy Holdings –

Review and Outlook

50

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

51

PSEG Energy Holdings…

PSEG Global

International assets sold*

Small remaining investment in domestic traditional generation joint venture

assets

PSEG Resources

Tax exposure reduced by approximately $900 million through sixteen

LILO/SILO lease terminations, including three terminations in 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

52

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

53

Long-term off-take agreements with creditworthy counterparties

Capitalizing on existing renewable markets

Leveraging partnerships and alliances

A  total installed capacity of 29MW is expected to be in commercial operations by the

end of Q3 2010

A 2MW solar facility developed and installed in 2009

An additional 27MW on schedule for Q3 2010 commercial operation

20 -

30 year Power Purchase Agreements for energy, capacity and green attributes

Low risk engineering, procurement and construction contracts

Projects that leverage the Investment Tax Credit

~$114M total investment to date

…

in the emergent solar industry.

PSEG Solar Source is building a portfolio

to take advantage of attractive

opportunities…

54

Cash Exposure Net

of $320M of IRS

Deposits

12/31/2008

12/31/2009

July 2010

2

5

17

# of LILO/SILO Leases

2009 Activities

Terminated 12

LILO/SILO

leases

2010 Activities

Terminated 3 LILO/SILO

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

PSEG –

Financial Review and

Outlook

56

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

57

$(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

Operating Earnings per Share by Subsidiary

$2.68*

$3.00 -

$3.25

$2.80 -

$3.05

$2.30 -

$2.50

Guidance Range

$3.03*

*See page 66 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings

58

PSEG 2010 Operating Earnings Guidance

-

By Subsidiary

$ 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 66 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

59

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

$0

$1,000

$2,000

$3,000

$4,000

$5,000

Sources

Uses

60

•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

25%

30%

35%

40%

45%

50%

2007

2008

2009

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

…and our balance sheet provides a platform for future growth.

Target = 51.2%

61

$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

1

Expires 12/2012

Power

2-Year

Facility

-

0.35B

Expires

7/2011

PSEG

Syndicated

Facility

-

1.00B

2

Expires 12/2012

With our current facilities, PSEG/Power will have

approximately

$2.6

billion

of

credit

capacity

through 2012 ...

Non-PSE&G Credit Capacity

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

1

Power facility reduced by $75M in 12/2011

2

PSEG facility reduced by $47M in 12/2011

Power Bilateral –

0.10B

Expires 9/2015

August 2010

62

Debt Maturity Profile –

As of September 1, 2010

0

200

400

600

800

1,000

HOLDINGS (Recourse)

0

127

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

0

POWER

0

605

666

300

250

300

303

0

0

0

420

0

0

0

0

0

0

19

0

0

0

525

0

0

0

0

0

40

0

0

0

0

45

PSE&G excl. Securitization

0

0

300

725

250

300

171

0

400

0

259

134

0

0

0

23

0

0

64

0

0

0

150

100

0

250

250

365

0

250

300

0

0

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2031

2032

2033

2034

2035

2036

2037

2038

2039

2040

2041

2042

Holdings

Recourse

PSE&G

Power

2010 Financing Activity

PSE&G maturity of $300M in March 2010

PSE&G issued $300M due 2040

PSE&G issued $300M due 2015

PSE&G issued $250M due 2020 in August 2010

PSE&G bond remarketing due 2028 closed September 1, 2010

Power remarketed $44M of tax-exempt bonds due 2042

Power called $48M due 2013 and $161M due 2014

Power issued $300M due 2013

Power issued $250M due 2020

Power exchanged $195M due 2011 for $156M due 2020 plus cash of $52M

63

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

65

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

66

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)

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)

Total Pro-forma adjustments

0.02

$        

(1.10)

$        

(0.08)

$         

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

For the Twelve Months Ended

December 31,

(Unaudited)

Reconciling Items Excluded from Continuing Operations to Compute Operating Earnings