PSEG

Public

Service

Enterprise

Group

2010 Edison Electric Institute Financial Conference

November 1-2, 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 cost allocation rules, including rules

regarding who is permitted to build transmission going forward, 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.

•

Adverse changes in the demand for or price of the capacity and energy that we sell into wholesale electricity markets.

•

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

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.

Electric & Gas Delivery

and Transmission

PSEG Power’s

low-cost, load

following fleet

is geographically well

positioned and

environmentally

responsible.

Regional Wholesale Energy

PSEG Energy Holdings

positioned to

pursue attractive

renewable generation

opportunities.

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

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

8

Investment programs, hedge profile

and cost control support 2010 outlook

* See page 65 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

$3.12

$3.00 -

$3.25

2009 Operating Earnings*

2010 Guidance

PSEG Power

10

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 12/31/ 2009)

Total GWh: 59,808

51%

15%

34%

Pumped Storage

& Oil <1%

Nuclear

Coal

Gas

(As of 12/31/2009: Total MW Capacity: 15,548)

24%

8%

11

Power’s 13,500 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.

…

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

Salem 3

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

Bergen 3

12

13

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*

Scrubber*

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.

14

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 (SO2) 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

preemption,

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.

15

Various environmental initiatives over 2010-2020 could put

20 GW to 150 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.

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

Keystone

Conemaugh

Bridgeport

Mercer

Mercury

PSEG Projected HG Emission Rate for 2011

versus 2008 400 U.S. Coal Plants

Hudson

2

versus 2008 400 U.S. Coal Plants

0

2

4

6

8

10

12

14

0

10

20

30

50

60

40

0

50

100

150

200

250

17

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

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

… the current embedded cost of energy – relative to market – results in migration.

18

…

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.

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

•

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

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 September 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)

$0.40 -

$0.70

$0.20 -

$0.40

$0.01 -

$0.05

Contracted Energy

Price

(right

scale)

% sold

(left

scale)

**

*

20

The market environment has prompted BGS

customer migration …

…

market conditions will affect  future migration.

2009

2010

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

Energy prices lower than expected

Migration, at a lower impact per MWh, is anticipated to reduce earnings by

an incremental $0.04 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 per share impact to PSEG in 2009

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

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

Each 5% of migration would reduce earnings by $0.015 per share in 2011

21

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

2011

2012

Total Fleet RTC Average

22

Note: Forward prices as of October 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.

-$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

23

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

24

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)

SO2

NOx

25

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

26

%

Start

Success

(

)

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.

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

27

Power’s coal hedging reflects 2011 supply

matched with 2011 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

Mid $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)

Note: 2010 $/MWh

= full year

PSE&G

29

PSE&G is the largest utility in New Jersey providing

electric, gas and transmission services…

…and delivering renewable and energy efficiency solutions for customers.

*   Actual                                                      

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

*** Lifetime GWh + Lifetime Dtherms

converted to GWh

60%

31%

Residential

36%

58%

Commercial

0.9%**

0.4% -

1.3%**

Projected Annual Load Growth (2009 –

2012)

Sales Mix

3,500 M Therms

41,961 GWh

Electric Sales and Gas Sold and Transported

(0.4%)*

(0.6%)*

Historical Annual Load Growth (2005 -

2009)

4%

11%

Industrial

1.7 Million

3.2%

Gas

2.1 Million

3.0%

Customers

Growth

(2004 –

2009)

Electric

0.5%*

Historical Annual

Peak Load Growth

2005-2009

1,442

Network Circuit Miles

Key Statistics

Transmission

2.1%**

Projected PJM

Peak Load Growth

2009-2012

13,512 GWh

230 GWh

Energy Efficiency Initiative (lifetime equivalent)***

80 MW

1 MW

Solar 4 All

11.6 MW

2009

Renewables and Energy Efficiency

Solar Loan

81 MW

Total

30

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/July 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.

31

Our 2011 –

2013 capital plan calls for

investing $ 4.5 billion…

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2010

2011

2012

2013

NJ Infrastructure

Stimulus

Solar

Energy Efficiency

Transmission

Core Investment

…with contemporaneous recovery mechanisms approved

for $3.3 billion.

32

PSE&G’s investment program provides opportunity

for 9.5% annualized growth in rate base*

PSE&G Projected Rate Base*

*Starting from 2009 Rate Base of $7.3 Billion.

33

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: $4.5 Billion

PSE&G Renewables /

EMP, $0.86B, 19%

Transmission,

$1.93B, 42%

Distribution, $1.75B,

39%

34

Roseland

Roseland

Hopatcong

Hopatcong

Hudson

Hudson

Transmission investment recovery…

Future Transmission project spending will be influenced by

PJM evaluation, potentially adding $700M in additional

projects over 2011 –

2015.

Various

$350

Transmission Life Cycle

Various

$215

11 69 kV Reliability projects thru 2013

Various

$870

23 Approved RTEP projects thru 2013

2015

$700

BRH alternative

125 bps

2015

$750

Susquehanna-Roseland

Incentive

In-Service

Spending

Up To

($ Millions)

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

* Approval of CWIP for 500kV backbone projects.

Transmission Projects

Future Projects

Bergen

Bergen

35

Success in meeting State’s energy and

economic development goals…

…with reasonable, contemporaneous returns.

222

472

694

April 2009

NJ Capital Infrastructure Stimulus

29

17

46

December 2008

Carbon Abatement

43

4

47

July 2009

Demand Response

161

-

161

November 2009

Solar Loan II

$26

$57

$83

April 2008

Solar Loan I

$928

$734

$1,662

Total

109

57

166

July 2009

Economic Energy Efficiency

Stimulus

338

127

465

July 2009

Solar 4 All

Remaining

Spending

Thru 9/30/10

Forecasted

Expenditures

Approval

Date

($ Millions)

36

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 (S-R)***

Branchburg-

Roseland-Hudson

(B-R-H)

Re-configured to

230 kV

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

imports.

Total Import

Capability

~ 1,700 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

Tran-Allegheny Interstate Line (TrAIL) Mid-2011Estimated in-service

Potomac-Appalachian Transmission Highline (PATH) Mid-2015 Estimated in-service

Mid-Atlantic Power Pathway (MAPP) Mid-2015 Estimated in-service

PA

NJ

WV

VA

MD

DE

S-R and

B-R-H

NJ’s load is expected to grow 3,445 MW by 2020,

with net imports decreasing ~800 MW…

* 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. 

37

…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

PSEG Energy Holdings

39

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 $1 billion through 17 LILO/SILO lease

terminations; including 4 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 remaining senior note called for redemption December 2010

…

has streamlined its businesses and reduced its risk.

* Nominal investment in Venezuela remaining

40

12/31/2008

12/31/2009

9/30/2010

Cash Exposure Net

of $320M of IRS

Deposits

1

5

17

# of LILO/SILO Leases

Remaining

2009 Activities

Terminated 12

LILO/SILO

leases

2010 Activities

Terminated 4 LILO/SILO

leases

Pursue additional lease

termination opportunities

Exposure to our potential lease tax

liability…

…was reduced with aggressive asset management.

*LILO/SILO leases are international leveraged leases.

$660

~$1,200

~$10

~$330

$0

$500

$1,000

$1,500

2008 Activities

Terminated 1

LILO/SILO lease

41

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

42

Long-term off-take agreements with creditworthy counterparties

Capitalizing on existing renewable markets

Leveraging partnerships and alliances

A  total installed capacity of 29MW in commercial service

A 2 MW solar facility developed and installed in 2009

27 MW placed in-service during Q3 2010 in Florida and Ohio

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

~$117M total investment to date

…

in the emergent solar industry.

PSEG Solar Source is building a portfolio

to take advantage of attractive

opportunities…

PSEG –

Financial Review and

Outlook

44

PSEG…

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

Met/exceeded

earnings and financial

objectives

Top quartile performance

in operations with year-

over-year improvements

and cost management.

Maintain balance

between risk and return

through prudent balance

sheet management

Securing premium value in

transparent, competitive

markets; implementing

mechanisms supporting cost

recovery in reasonable

timeframe

45

$(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 65 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings

46

$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

47

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

48

25%

30%

35%

40%

45%

50%

Full Year 2009

12 Months Ended

9/30/2010

•

FFO to Debt is strong and comfortably

above minimum threshold level

40%

45%

50%

55%

Full Year 2009

12 Months Ended

9/30/2010

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%

49

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 customers 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

50

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.

51

*Indicated annual dividend rate

Seventh consecutive annual dividend increase is

part of a 103-year history of paying common

dividends…

43%

70%

43%

Payout

Ratio

42 –

46%

44%

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

52

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

2010

Appendix

54

YTD Earnings Summary

-

-

Discontinued Operations, Net of Tax

$ 2.50

$  2.55

EPS from Operating Earnings*

$1,243

$1,282   

Net Income

1,243

1,282

Income from Continuing Operations

(21)

(12)     

Reconciling Items, Net of Tax

$  1,264

$1,294 

Operating Earnings

2009

2010

$ millions (except EPS)

Nine Months Ended September 30

* See page 64 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

55

YTD Operating Earnings by Subsidiary

$    1,264

17

30

253

$   964

2009

$1,294  

12

43

347

$892  

2010

Operating Earnings

Earnings per Share

0.03

0.02

Enterprise

$   2.50

$   2.55

Operating Earnings*

0.06

0.09

PSEG Energy Holdings

0.50

0.68

PSE&G

$   1.91

$   1.76

PSEG Power

2009

2010

$ millions (except EPS)

Nine Months Ended September 30

* See page 64 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

56

$2.50

(0.15)

0.18

0.03

(0.01)

$2.55

1.00

1.25

1.50

1.75

2.00

2.25

2.50

2.75

PSEG EPS Reconciliation –

YTD 2010

versus YTD 2009

Nine Months Ended

9/30/2010       

Operating Earnings*

Nine Months Ended

9/30/2009      

Operating Earnings*

Interest .03

2009 Debt Exchange

Benefit Eliminated in

Consolidation  (.04)

Higher Volume Offset

by Lower prices (.05)

Weather .05

Migration (.03)

Economy (.01)

Nuclear (.01)

WPT (.07) ; BGSS (.01)

O&M (.01); Other .03

SO

2

Impairment (.02)

Increase in effective tax

rate related to healthcare

legislation (.02)

PSEG

Power

Electric & Gas Margin

(Including Rate

Increases) .07

Transmission .03

Other .02

Appliance

Service .01

Weather .02

O&M  .01

Depreciation, Taxes &

Other .02

PSE&G

PSEG Energy

Holdings

Enterprise

2009 Lease Sales

& Other Investments (.06)

Interest .03

Effective Tax Rate and

Other  .02

2009 Debt Exchange Cost

Eliminated in Consolidation 

.04

* See

page

64

for

Items

excluded

from

Net

Income

to

reconcile

to

Operating

Earnings.

57

PSEG

Power

–

Gross Margin Performance

$0

$25

$50

$75

2010

2009

2008

$63

$55

Nine Months Ended Sept 30

Volume increased by 12% for YTD 9/30/2010 vs. year ago in response to weather-related demand

Margins

influenced

by

fuel

mix,

BGS

migration,

and

impairment

of

excess

SO

emission

allowances

Generation flat with year-ago levels.

$88

Texas

Regional Performance

$44

$62

$2,292

Gross Margin

($M)**

Nine Months Ended

September 30, 2010 

Region

Low spark spreads, partially offset

by increase in gas-fired generation.

New York

Generation increased with strong

weather-related demand.

New

England

Q3 contribution to gross margin

($M) flat versus year ago.  A 10%

increase in generation offsetting

lower realized prices and the cost of

the Salem nuclear outage.

PJM

PSEG Power Gross Margin ($/MWh)*

$54

**For the nine months ended September 30, 2010.

*Excludes Texas.

Increase in generation was predominantly from combined cycle and coal with continued strong nuclear

2

58

PSEG Power –

Generation Measures (GWh)

7,309

7,738

3,131

2,241

7,409

6,253

0

10,000

20,000

2010

2009

Quarter Ended September 30

Total Nuclear

Total Coal*

Total Oil &

Natural Gas

* Includes figures for Pumped Storage. 

16,232

17,849

22,577

22,751

8,647

6,389

18,571

15,296

0

10,000

20,000

30,000

40,000

50,000

2010

2009

9 Months Ended Sept. 30

44,436

49,795

59

PSEG Power –

Fuel Costs

232

318

Oil & Gas

97

122

Coal

22.67

26.95

$ / MWh

16,232

17,849

Total Generation

(GWh)

368

481

Total Fuel Cost

39

41

Nuclear

Total Fossil

($ millions)

329

440

2009

2010

Quarter Ended September

30

641

817

Oil & Gas

240

336

Coal

22.30

25.65

$ / MWh

44,436

49,795

Total Generation

(GWh)

991

1,277

Total Fuel Cost

110

124

Nuclear

Total Fossil

($ millions)

881

1,153

2009

2010

Nine Months Ended

September 30

60

$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

61

PSE&G Capital Spending: 2010-2013

$6,130

$1,590

$1,490

$1,450

$1,600

Total

$890

$30

$190

$320

$350

Renewables/EMP

$2,170

$420

$390

$460

$900

Distribution

$3,070

$1,140

$910

$670

$350

Transmission

2010-2013E

2013E

2012E

2011E

2010E*

($ Millions)

Capital program provides growth in rate base of 9.5% per year from 2009

base of $7.3 Billion

Transmission investment represents 50% of planned capex over 2010-2013 and is

expected to comprise 31% of PSE&G rate base by 2013

Supportive regulatory treatment with contemporaneous recovery should align

earnings growth with investment

*Estimate

62

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

$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

63

0

200

400

600

800

1,000

HOLDINGS (Recourse)

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

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

100

50

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

Debt Maturity Profile –

As of October 27, 2010

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

PSE&G remarketed $64M (due 2028) and $100M (due 2033)

PSE&G refinanced $100M due 2031

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

Holdings called $127M of Senior Notes due 2011 

64

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

2010

2009

Earnings Impact ($ Millions)

Gain (Loss) on Nuclear Decommissioning Trust (NDT)

10

$       

7

$         

30

$       

1

$         

Fund Related Activity (PSEG Power)

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

19

17

30

(22)

Net Reversal of Lease Transaction Reserves (Energy Holdings)

-

-

-

-

Market Transition Charge Refund (PSE&G)

-

-

(72)

-

Total Pro-forma adjustments

29

$       

24

$       

(12)

$      

(21)

$      

Fully Diluted Average Shares Outstanding (in Millions)

507

507

507

507

Per Share Impact (Diluted)

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

0.02

$    

0.01

$    

0.06

$    

-

$      

Gain (Loss) on MTM (PSEG Power)

0.04

0.03

0.06

(0.05)

Net Reversal of Lease Transaction Reserves (Energy Holdings)

-

-

-

-

Market Transition Charge Refund (PSE&G)

-

-

(0.14)

-

Total Pro-forma adjustments

0.06

$    

0.04

$    

(0.02)

$   

(0.05)

$   

(a) Income from Continuing Operations for the three and nine months ended September 30, 2010 and 2009.

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

Reconciling

Items

Excluded

from

Continuing

Operations

to

Compute

Operating

Earnings

(a)

(Unaudited)

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

2009

2008

2007

Earnings Impact ($ Millions)

Gain (Loss) on Nuclear Decommissioning Trust (NDT)

Fund Related Activity (PSEG Power)

9

$             

(71)

$           

12

$             

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

(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 (PSEG Power)

0.02

$         

(0.14)

$         

0.02

$           

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

(0.05)

0.03

0.02

Lease Transaction Reserves

-

(0.96)

-

Net Reversal of Lease Transaction Reserves

0.05

-

-

Asset Sales and 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,

Reconciling Items Excluded from Continuing Operations to Compute Operating Earnings

(Unaudited)