PSEG Public Service Enterprise Group

Presentation to the Financial Community

New York, New York

March 7, 2011

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, and a potential shift away from competitive markets towards subsidized market mechanisms,

transmission planning and cost allocation rules, including rules regarding how transmission is planned and 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 slide in this presentation includes 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.  

4

Agenda

Presentation

Presenter

Welcome/Introduction

Kathleen Lally

PSEG –

Defining the Future

Ralph Izzo

PSE&G –

Review and Outlook

Ralph LaRossa

PSEG

Energy

Holdings

–

Review

and

Outlook

Randall Mehrberg

BREAK

PSEG

Power

–

Review

and

Outlook

Dan Cregg

Power

ER&T

–

Market

Overview

Joe Hopf

PSEG Financial Review and Outlook

Caroline Dorsa

Summary

Ralph Izzo

PSEG

–

Defining

the

Future

Ralph Izzo

Chairman, President and Chief Executive Officer

6

PSEG

Advantage:

value to customers and investors…

PSE&G positioned

to meet NJ’s

energy policy and

economic growth

objectives

with a $4.5 billion

investment program

through 2013

Electric & Gas Delivery

and Transmission

PSEG Power’s

low-cost, base load

and 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

…with a track record for safeguarding shareholder interests.

Right

platform

to

deliver

7

Earnings growth achieved…

…

through increased investment, higher output and lower costs.

* See page 120 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

$2.91

$3.09

$3.12

2008 Operating Earnings*

2009 Operating Earnings*

2010 Operating Earnings*

8

PSEG 2011 outlook influenced by lower

market prices…

* See page 120 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

$2.75E

$2.50E

…

offset

by

continuous

improvement

in

operations,

utility

growth,

and

generating

asset optionality.

9

Markets are responding to change in

underlying fundamentals

Gas/Power

Prices

Pre-2008

Now

Influenced by availability

of credit and consumer  

demand

Influenced by increased

availability of gas

supply from low-cost

shale deposits

Economic

Growth

Environmental

/Carbon

Policy

Supply

Influenced by expectations

of increased demand/          

tight supply

Government moves to

control carbon and other

pollutants

Influenced by economic 

growth and focus on       

renewables

Tight credit conditions after

2008 financial crisis leading

to less growth

Decline in economic growth,

reduction in emissions,

and increased supply of

low-cost gas 

Oversupply due to economic

slowdown

10

Market conditions continue to evolve

Gas/Power

Prices

Now

Beyond 2011

Tight credit conditions

after 2008 financial crisis 

leading to less growth

Price of gas range bound

over the near-term; long-term

to be influenced by cost

of production

Economic

Growth

Environmental

/Carbon

Policy

Supply

Influenced by increased

availability of gas supply

from low-cost shale deposits

Decline in economic    

growth, reduction in     

emissions, and increased  

supply of low-cost gas 

Oversupply due to       

economic slowdown   

Recovery in corporate

and consumer credit

support economic growth

Need to maintain economic

competitiveness while

complying with court mandated

reductions in pollutants

Availability of natural gas

and increasingly stringent

environmental requirements

could restrict coal generation;

State intrusion into market

11

PSEG Capital Spending 2011-2013

PSEG Capital

Spending Program

of $6.7 billion

over the next

3 years is weighted

toward growth

investments,

primarily at the

utility

PSEG

2011-2013

Capital Spending $6.7 billion

Core

30%

Growth

70%

12

PSEG -

An active participant in

market discussions

•Contractual support for

up to 2,000 MW of new

generation to stimulate

jobs and economic

growth, and suppress

wholesale power prices

•PSEG Power, as part of

P3, has filed a complaint

at FERC to require that

all new generators bid

into the market at cost

•PSEG has filed suit at

Federal District Court

asking that LCAPP be

ruled unconstitutional

PSEG Response

NJ Position

Long Term Capacity Agreement Pilot Program (LCAPP)

13

Source: MJ Bradley

There are numerous upcoming EPA

environmental regulations…

2010

2011

2012

2013

2014

2015

2016

2017

2018

Haz. Air

Pollutants

Criteria

Pollutants

Greenhouse

Gases

Coal

Combustion

By-Products

316(b)

Compliance with Federal GHG Reporting Rule

Compliance with PSD GHG BACT

Compliance with Toxics Rule

Pre-Compliance  Period

Develop

Toxics Rule

Develop

Transport

Rule

SIP provisions developed in response to revised NAAQS

Develop

Revised O3

NAAQS

Pre-Compliance Period

Compliance with

Federal CCB

Regulations

Dev. Coal Comb.

By-Products Rule

Pre-Compliance Period

Develop 316(b)

Regulations

Develop O3

Transport Rule

Estimated Compliance w/TR II

Phase-In of Compliance

Compliance w/GHG NSPS

Pre-Compliance Period

Develop GHG

NSPS

…

and Power is well positioned to succeed under numerous outcomes.

Today

Phase I Compliance

Phase II Compliance

14

PSEG Advantage:  Asset mix, strong

operations…

Reliability One Award

winner for Mid-Atlantic

Region

–

9

year

in

a

row

Regulatory agreements

and cost control provide

opportunity for improved

returns

Investment program

focused on providing

customer with clean,

reliable, economic energy

PSEG Power

PSE&G

…with balance sheet to support growth.

Strong platform open to

improvement in the

market

Low-cost generating fleet

operating at historically

high levels

Fuel flexibility supports

margins

Hedging strategy

mitigates near-term risk

Major environmental

compliance capital

program completed

Reducing risk

Building a platform for

renewables

and investing

through PPA-supported

projects

International lease

investments terminated

Holdings recourse debt

paid down

PSEG Energy Holdings

th

15

Constructive working relationship with NJ

vital to meeting customer, employee, and

shareholder interests

April 2010 –

Susquehanna-Roseland transmission project siting

approved by

NJBPU.

June/July 2010 –

Electric and Gas rate settlements approved

Market transition charge refund provided to customers

over 2-year period

December 2010 –

Morris Energy dispute settled

Settlement resolved a dispute over discounted gas rates and the application of

the Societal Benefits Clause.

April 2011 –

PSE&G expects BPU decision on request to spend $400 million on

Capital Infrastructure Program and Energy Efficiency supporting NJ economic

recovery

16

PSEG Dividend –

A 104-year commitment

to returning cash to shareholders

PSEG Annual Common Dividend Per Share 2001-2011E

$1.08

$1.08

$1.08

$1.10

$1.12

$1.14

$1.17

$1.29

$1.33

$1.37

$1.37

$1.00

$1.25

$1.50

17

PSEG received a perfect score of 100 on the Corporate Equality Index and

Best Places to Work 2010 Survey

conducted by the Human Rights Campaign.

The Edison Award. Presented annually by EEI

and recognizes U.S. and international electric

utilities for their innovation and role in advancing

the industry. 

Our focus on customers,

community and employees…

PSE&G named America’s Most Reliable

Utility 4 of past 6 years

Mid-Atlantic

Region

winner

for

the

9

straight

year

Carbon Performance Leadership Index (CPLI)

2010. Named Maplecroft Climate Innovation Index (CII) utility sector Leader.

First year in World Index, third year in the North

American Index.

Awarded Sustainability Leader Bronze Class.  PSEG is one of only

five U.S. electric companies included.

…

has been widely recognized.

th

PSE&G –

Review and Outlook

Ralph LaRossa

President and Chief Operating Officer, PSE&G

19

PSE&G

is positioned for growth…

…through investments in infrastructure, renewables

and energy efficiency.

Leader in reliability; focused

on maintaining position by

improving customer

responsiveness and

efficiency

Economically meeting

mandates for reliability,

service quality and access to

renewables

Largest provider of electric

and gas distribution services

and transmission in NJ 

Focused on regulatory

mechanisms that provide

reasonable and current

recovery of and return on

capital

20

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                

*** Energy Efficiency Annualized Savings (75% Electric/25% Gas Equivalent)

Electric

Gas

Customers

Growth

(2005 –

2010)

2.2 Million

4.0%

1.8 Million

4.0%

Electric Sales and Gas Sold and Transported

43,645 GWh

3,465 M Therms

Historical Annual Load Growth Distribution

(0.5%)*

(1.0%)*

Historical Annual Peak Load Growth Transmission

(0.1%)

Projected Annual Load Growth

1.3%**

0.8%**

Projected Annual Load Growth Transmission

1.4%

Sales Mix

Residential

33%

61%

Commercial

57%

36%

Industrial

10%

3%

Transmission

Electric

Gas

Approved Rate of Return

11.68% ROE

10.3% ROE

10.3% ROE

Renewables and Energy Efficiency

2009-2010

Total Program

Plan

Solar Loan

19 MW

81 MW

Solar 4 All

28 MW

80 MW

Energy Efficiency Initiative (lifetime equivalent)***

389 GWh

604 GWh

(2006 -

2010)

(2006 –

2010)

(2011 –

2013)

(2011 –

2013)

21

PSE&G is a nationally-recognized leader in

delivering safe and reliable service

Nine

consecutive

ReliabilityOne™

Awards

for

the

Mid-Atlantic

PSE&G nationally ranked third place in Solar Electric Power Association’s (SEPA)

Top Ten Utility Solar Integration Rankings

PSE&G ranked third on the American Customer Satisfaction Index which measures

residential customer satisfaction

PSE&G

ranked

second

nationally

for

“Being

a

Company

You

Can

Trust”

and

sixth

for

“Being

Well-Managed”

by

Market

Strategies

International

CS Week’s Best CIS Implementation at a Large Company

iPower

Project

Wins

SAP’s

2010

Best-Run

Utilities

Award

–

Innovation

Reliability Performance Metrics compared

to Peer Panel have been Top Quartile since:

System Average Interruption Frequency Index*

2000

Momentary Average Interruption Frequency Index*

2004

Gas Leak Reports per Mile

2003

Leak Response Rate

2000

Damages per Locate 1,000 Requests

2006

Customer Average Interruption Duration Index

2004

* SAIFI and MAIFI excluding major storms.

22

…which creates superior value to customers.

PSE&G provides the highest reliability at

below average cost...

$0.00

$2.50

$5.00

$7.50

$10.00

0

50

100

150

200

250

System Average Interuption Duration Index

Median

PSE&G

*PSE&G versus peer utility companies.

SAIDI VS. O&M per MWh

*

23

PSE&G continues to invest in reliability and

green programs...

Based on Residential electric rates effective September 2010 (summer month)

…while managing electric rates below the regional average.

Electricity

(500kWh/month bill)

BGS

Delivery**

Clauses

and Other*

18.4

BGS***

Delivery**

20.5

19.2

Clauses

and Other*

*  Other includes impact in Solar 4 All, Solar Loan I  &  II, Energy Efficiency Economic, Carbon Abatement and Demand Response

**   Includes NJ Capital Infrastructure Program Stimulus impact

*** 2013 BGS assumes same generation rate but includes estimated net Transmission impact

24

PSE&G provides top-quartile reliability in

Gas Distribution

Gas Integrity Management Plans

Transmission:

Proving

the

integrity

of

the

pipeline

through

documentation

of original construction details and inspection

PSE&G

maintains

a

very

detailed

set

of

records

for

all

transmission

facilities

and their attributes

Monitor construction activities onsite

Patrol facilities every 2 weeks to look for signs of excavating or dumping and

perform leak surveys bi-annually

Perform integrity assessments on a 7-year cycle

PSE&G is in full compliance with all Federal and State

safety programs.

Distribution:

Monitoring

the

condition

of

the

pipeline

Leak survey all mains annually and all services every 3 years

Perform corrosion control monitoring on all protected steel annually

Perform inspections and maintenance on inside plant and outside plant annually

Aggressive damage prevention and leak management programs

PSE&G’s Gas system consists of 61 miles of transmission pipeline, 17,600 miles of distribution

main and 17,000 miles of distribution service

25

…while maintaining value to customers.

PSE&G prioritizes public safety…

* PSE&G versus peer utility companies.

26

PSE&G continues to invest in reliability...

Based on Residential gas rates effective December 2010 (winter month)

…while managing gas rates below the regional average.

Gas

(100 therm/month bill)

*  Other includes impact in Energy Efficiency Economic and Carbon Abatement

**   Includes NJ Capital Infrastructure Program Stimulus impact

*** Assume BGSS rate constant

27

…while cost management initiatives have streamlined the organization.

PSE&G O&M*

* Excludes Regulatory Clauses

PSE&G’s O&M growth has been

driven by higher pension expense…

2008 –

2010

CAGR: 2.0%

28

Oyster

Creek

New Jersey’s energy future requires

continued investment to ensure reliability…

Susquehanna-Roseland

Bergen O66

Bergen U2-100

…

while adapting to changes in resources.

Transmission Capacity Growth

Transmission Capacity Reductions

Susquehanna-Roseland ~1,500 MW

Northeast Grid (formerly BRH alternative) ~200 MW

Bergen O66 -

Bergen to ConEd's West 49th Street       

~(670 MW*)

Bergen U2-100 -

Bergen to New York ~(800 MW**)

Other Impacts to NJ

Long-term Capacity Agreement Pilot Program (LCAPP)

~2,000MW

Exelon has entered into an agreement with the state of New

Jersey to close Oyster Creek in 2019 ~(700MW)

2010-2020 Demand growth of ~1% based on 2011 PJM

Load Forecast report ~1,125MW

*   Project has firm contract for 320MW

**

Project

in

queue

–

no

firm

contracts

Sources: Imports: PSE&G Estimates; Exports:  PJM 2009 RTEP;  Load Growth: PJM 2011 Load Forecast Report

Arrows are general indicators and not intended to represent actual route

Impact is net reduction of ~400MW by 2020

29

Transmission investment recovery is supported by

formula rate treatment…

($ Millions)

Phase

In-Service

Spending Up

To

Susquehanna-Roseland

Engineering / Licensing

2014 East

2015 West

$750

Northeast Grid (formerly BRH Alternative)

Preliminary Design

2015

$700

Burlington –

Camden 230kV Conversion

Engineering / Licensing

2014

$381

West Orange 230kV Conversion

Engineering / Licensing

2014

$336

Approved RTEP projects thru 2013

Various

Various

$440

69 kV Reliability projects thru 2013

Various

Various

$215

Transmission Life Cycle

Various

Various

$350

…

and CWIP in rate base* for certain projects. 

* CWIP in Rate Base and 1.25% ROE incentive treatment approved for the Susquehanna-Roseland project and seeking

recovery of CWIP in Rate Base and abandonment for other major projects

Future Transmission project spending will be influenced by PJM

evaluation,

potentially

adding

additional

projects

over

2011

–

2015

and

revising required in-service dates.

Transmission Projects

Future Projects

30

FERC’s Transmission formula rate order grants

PSE&G an 11.68% ROE and a fully-forecasted

cost of service

Transmission represents approximately 60% of planned investment over the

2011-2013

plan

and

is

expected

to

comprise

~31%

of

PSE&G

rate

base

by

2013

Supportive

regulatory

treatment

with

contemporaneous

recovery

is

key

to

align

earnings growth with investment

Transmission Investment by Major Category

* Susquehanna-Roseland approved for 12.93% ROE.

Execution of the Transmission plan is critical to achieving PSE&G’s

future growth.

31

Our 2011 –

2013 capital plan calls for investing

$4.5 billion…

…with contemporaneous recovery mechanisms approved

for ~$2.1 billion.

PSE&G Capital Expenditures

32

PSE&G’s investment program provides opportunity

for ~9% annualized growth in rate base

PSE&G Projected Rate Base*

*Starting from 2009 Rate Base of $7.3 billion

33

2010: Success in meeting State’s energy

and economic development goals…

…with reasonable contemporaneous returns.

($ Millions)

Approval

Date

Total

Amount

Spending

Thru 2010

2011-2013

Spending

Solar Loan I & II

April 2008/

November 2009

$248

$70

$174

Carbon Abatement

December 2008

46

20

25

NJ Capital Infrastructure Stimulus

April 2009

694

588

106

Solar 4 All *

July 2009

465

203

260

Energy Efficiency Economic Stimulus **

July 2009

166

101

65

Demand Response

July 2009

65

5

41

Total

$1,684

$987

$671

*

Filing

amount

based

on

installation

of

80MW,

total

forecasted

spend

is

lower

due

to

a

lower

cost

per

watt

to

install

** Energy Efficiency Economic Stimulus totals exclude $24M of administrative costs

34

In addition, PSE&G is pursuing incremental

growth opportunities…

($ Millions)

Filing Date

Requested

Amount

Duration

Gas Distribution Capital Infrastructure Program II

November 23, 2010

$78

2011-2012

Energy Efficiency Economic Stimulus Program

January 24, 2011

95

2011-2014

Electric Distribution Capital Infrastructure Program II

February 18, 2011

229

2011-2013

Total

$402

…

to support reliability, New Jersey’s EMP goals, and economic

recovery.

35

PSE&G is advantaged…

…as we focus on meeting the needs of our customers and shareholders.

Right Assets,                   

Right Markets

Operational                      

Flexibility

Environmental

Infrastructure                

Investment

Creating renewable and energy efficiency solutions

Focused on regulatory mechanisms that provide

reasonable and current recovery of and return on capital

Largest provider of electric and gas distribution services

and transmission in NJ

Leader in reliability; focused on customer

responsiveness, efficiency and cost control

2011

PSEG Energy Holdings -

Review & Outlook

Randy Mehrberg

Executive Vice President Strategy and Development

President and Chief Operating Officer, PSEG Energy Holdings

37

PSEG Energy Holdings…

…continues to simplify the business and create sustainable growth

opportunities.

Transaction structures

and partnerships mitigate

financial risk

Streamlined business

and reduced financial risk

Capitalizing on

renewable opportunities

Maximizing the value of

the remaining portfolio

38

PSEG Energy Holdings has made significant

reductions in size and risks

International Energy:

Global has disposed of all but one

international asset

Domestic Generation:

Only 176 MW of Global domestic

generation remain

LILO/SILO:

Resources terminated all 18 LILO/SILO leases

Traditional Leases:

Resources continues to carefully

manage the remaining traditional leases and other

investments with an eye towards opportunistic monetization

39

$320M on

Deposit

with IRS

12/31/2008

12/31/2009

12/31/2010

# of LILO/SILO     

Leases at Year-End

17

5

0

Exposure to our potential lease tax liability

was reduced with aggressive asset

management

2009 Activities

Terminated 12

LILO/SILO leases

2010 Activities

Terminated 5

LILO/SILO leases

2008 Activities

Terminated 1

LILO/SILO lease

$0

$500

$1,000

$1,500

~$1,200

$660

$260

40

$1,149

$127

$ 0

$1,752

$505

$1,137

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

2005

2006

2007

2008

2009

2010

2009 Activity

Reduced

$368M via

Power debt

exchange

Redeemed

$10M

2010 Activity

Redeemed

remaining

$127M

Senior recourse debt has been completely

extinguished with proceeds from asset sales

Year-end Energy Holdings Senior Recourse Debt Balance Outstanding

2006 Activity

Redeemed

$603M with

proceeds from

asset sales

2008 Activity 

Redeemed

$632M with

proceeds from

asset sales

41

Energy Holdings is pursuing renewable

energy alternatives with emphasis on solar

•

Solar is a good strategic fit for PSEG

–

Predictable and attractive returns through long-term Power Purchase

Agreements with creditworthy counterparties

–

Improves geographic, technology, regulatory and market risk profile

–

Strong relationships established across the value chain

–

Favorable tax attributes, long-term earnings, short construction cycles and

proven technology

•

Solar In-Service

–

Installed 29 MW at three locations; ~$117 million investment to date

–

Projects completed ahead of schedule and under budget; operating

performance better than plan

42

Evaluating development of offshore wind and

CAES technology

•

Offshore Wind Economic Development Act signed into law

–

Preparing for deployment of wind resource assessment tool

–

Expect NJ BPU RFP and Federal Lease applications in 2011

•

Open key project development requirements

–

Revenue Mechanism; State net positive benefits test

–

Federal licensing (a multi-year process)

•

Energy Storage & Power (Compressed Air Energy Storage and Power

Augmentation)

–

Low gas prices have reduced on-peak to off-peak spread

43

PSEG Energy Holdings…

…

creating sustainable growth opportunities for PSEG.

Right Assets,                       

Right Markets

Operational                    

Flexibility

Environmental

Investment

Monetizing generation assets in non-core markets

Reduced tax exposure through lease terminations;

Achieving solid solar operating experience

Pursuing investments in renewable energy

Investing at attractive risk-adjusted returns to improve

PSEG’s earnings base

2011

Conference Break

PSEG Power –

Review and

Outlook

Dan Cregg

Vice President, PSEG Power Finance

46

PSEG Power

–

Right assets in the right markets…

…

with dispatch flexibility supporting returns in unpredictable markets.

Investment

program supported by

strong cash flow and

credit metrics

Operationally flexible, low

cost, environmentally

responsible supply

located in premium

markets

Portfolio approach to

hedging over multi-year

timeframe to derive

market premiums

Focus on operational

excellence to maximize

asset value

47

Low-cost portfolio

Fuel flexibility

Regional focus in competitive, liquid

markets

Assets favorably located near

customers/load centers

Many units east of PJM constraints

Southern NEPOOL/ Connecticut

Market knowledge and experience to

maximize the value of our assets

…

with low cost plants, fuel flexibility, good locations and solid markets.

Power’s diverse assets drive value in a

dynamic environment…

18%

45%

8%

Fuel Diversity

Coal

Gas

Oil

Nuclear

Pumped

Storage

1%

Energy Produced

(Twelve months ended December 31, 2010)

Total GWh: 56,727

52%

19%

28%

Pumped Storage

& Oil <1%

Nuclear

Coal

Gas

Total MW: 13,538

27%

9%

Power’s Northeast assets are located in

attractive markets near load centers…

... and the fleet produced record generation in 2010.

48

49

…

while maintaining fuel optionality under a variety of conditions.

Power’s PJM assets along the dispatch curve reduce

the risk of serving full requirement load contracts…

Energy Revenue

X

X

X

Capacity Revenue

X

X

X

Ancillary Revenue

X

X

Dual Fuel

X

X

Peaking units

Load following units

Nuclear

Coal

Combined Cycle

Steam

Peaking

Baseload 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

Yards

Creek

National Park

Salem 3

Bergen 3

50

Our nuclear performance has improved…

11.1

3.1

0.6

2.1

1.0

0.9

3.0

0.7

0.7

0.6

0.7

0.6

0.6

0.6

0.7

0

2

4

6

8

10

12

2004

2005

2006

2007

2008

2009

2010

2011 E

24.7

27.3

29.1

28.4

29.3

30.3

29.6

30.0

0

5

10

15

20

25

30

35

2004

2005

2006

2007

2008

2009

2010

2011 E

79.0

85.0

97.097.0

94.0

91.7

99.0

93.9

90.3

96.0

96.0

96.0

97.0

98.0

98.5

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

2004

2005

2006

2007

2008

2009

2010

2011 E**

Salem Unit 2 set a new all time generation

record

Five year average generation was 29 GWh

Salem 1 transformer forced outage in 2010

impacted forced loss rate by ~ 60%

…

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

**Index revised Jan 2011; average scores 4-7 points lower

st

st

51

Nuclear has seen consistent improvement in

operating results...

•

Safety

–

40%

improvement

in

OSHA

rate

vs.

2009

•

Uprates of 215 MWe completed since 2003

•

165 MWe additional uprates expected going forward

•

License renewal efforts underway for Salem and Hope

Creek

•

New Nuclear Early Site Permitting effort continues

…

combined with a focus on growth opportunities.

52

Power’s coal fleet has seen significant

efficiency improvements…

14

15

15

13

13

9

11

10

0

2

4

6

8

10

12

14

16

18

2004

2005

2006

2007

2008

2009

2010

2011 E

10.3

11.1

11.3

7.9

8.4

4.8

4.2

3.8

0

2

4

6

8

10

12

2004

2005

2006

2007

2008

2009

2010

2011 E

1.11

1.12

1.01

0.91

0.96

0.83

0.4

0.34

0.34

0.29

0.20

0.21

0.19

0.17

0.13

0.17

0

0.2

0.4

0.6

0.8

1

1.2

2004

2005

2006

2007

2008

2009

2010

2011 E

Market conditions were beneficial to increased

output in 2010

Forced outage rate continues to improve

Environmental footprint upgraded with BET

BET enables coal flexibility

…

as Back-End Technology investment has prepared us for the future.

Output

(000’s GWh)

Forced

Outage

Rate

(

)

(% EFORD)

SO

2

and

NO

x

Rates

(

)

(lb/mmbtu)

SO2

NO

x

53

Power’s combined cycle fleet benefits from

operating enhancements…

5

4

8

10

12

13

15

13

0

2

4

6

8

10

12

14

16

2004

2005

2006

2007

2008

2009

2010

2011 E

3.4

7

3.4

2.5

1.6

1.5

1.2

0.46

0

1

2

3

4

5

6

7

8

2004

2005

2006

2007

2008

2009

2010

2011 E

8079

7847

7928

7768

7810

7691

7533

7514

7200

7300

7400

7500

7600

7700

7800

7900

8000

8100

8200

2004

2005

2006

2007

2008

2009

2010

2011 E

Output

(000’s GWh)

Forced

Outage

Rate

(

)

(% EFORD)

Period

Heat

Rate

(

)

(mmbtu/KWh)

Highest output ever in 2010

Continued improvement in forced outage

rate

Benefiting from heat rate improvement

program

…and continues to react to market dynamics.

All data excludes Texas

54

Our peaking fleet rounds out a diverse

generation portfolio…

13

17

23

19

13

14

15

12

0

5

10

15

20

25

2004

2005

2006

2007

2008

2009

2010

2011 E

85

86

76

77

91

92

95

98

0

10

20

30

40

50

60

70

80

90

100

2004

2005

2006

2007

2008

2009

2010

2011 E

Peaking’s consistent record of start

success provides opportunities in

ancillary and real time markets

Peaking adds flexibility in serving load

and managing the needs of a diverse

market environment

Approximately 8,400 starts during 2010

HEDD is anticipated to reduce fleet size

…

and provides the 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

98.3

99.7

94

95

96

97

98

99

100

2004

2005

2006

2007

2008

2009

2010

2011 E

55

•

Safety

-

40%

improvement

in

OSHA

rate

vs

2009

•

All-time generation records were set by the fleet in 2010, paced by

record combined cycle output

•

BET / environmental completed, better flexibility

•

Total output record set at each of Linden, Bergen and BEC

•

Combustion turbine Equivalent Availability best in years

The Fossil fleet has shown consistent

improvement in operating results...

…

and remains among the most flexible in the industry to succeed in

dynamic markets.

56

Power's 3 Year O&M Spend

$500

$700

$900

$1,100

Pension

O&M

$1.0B

$0.5B

Power’s focus on operational efficiency

programs…

Three year O&M spend

declining and flat

O&M cost control program

and OEM implementation

has  resulted in cost

savings

CAGR (0.4%)

…

has resulted in a reduction in O&M over the last three years.

2008            2009            2010

57

The completion of Power’s major

environmental capital expenditure programs…

Power’s three year historical

capital spend of ~ $2B was

largely focused on BET

Looking forward from 2011 -

2013, Power’s total capital

spend will drop to $1.5B with

nearly half of the spend

focused on growth

–

New

generation

in

NJ

and CT

–

Nuclear

uprates

…

allows Power to focus on growth opportunities.

Power's 3 Year Capital Spend

2008

2009

2010

Growth

Environmental

Maintenance

$0.5B

$1.0B

58

Source: MJ Bradley

There are numerous upcoming EPA

environmental regulations…

2010

2011

2012

2013

2014

2015

2016

2017

2018

Haz. Air

Pollutants

Criteria

Pollutants

Greenhouse

Gases

Coal

Combustion

By-Products

316(b)

Compliance with Federal GHG Reporting Rule

Compliance with PSD GHG BACT

Compliance with Toxics Rule

Pre-Compliance  Period

Develop

Toxics Rule

Develop

Transport

Rule

SIP provisions developed in response to revised NAAQS

Develop

Revised O3

NAAQS

Pre-Compliance Period

Compliance with

Federal CCB

Regulations

Dev. Coal Comb.

By-Products Rule

Pre-Compliance Period

Develop 316(b)

Regulations

Develop O3

Transport Rule

Estimated Compliance w/TR II

Phase-In of Compliance

Compliance w/GHG NSPS

Pre-Compliance Period

Develop GHG

NSPS

…and Power is well positioned to succeed under numerous outcomes.

Today

Phase I Compliance

Phase II Compliance

59

The potential impacts to Power vary…

…with Power generally well positioned for the relative near term.

Hazardous Air

Pollutants

(HAPs)

•MACT standard for Hg and other HAPs establishes emission limits

•Uncontrolled coal/oil units to install expensive capital or retire

•Potential for increased variable O&M cost

•Potential for higher electric prices

•Mercer and Hudson have BET

•Bridgeport Harbor has Hg control

•Keystone has scrubber, ESP and SCR

•Conemaugh has scrubber, ESP and planned SCR

Criteria

Pollutants

(CATR)

•CATR will establish NO

X

and SO2

emission limits

•Plant by plant, state and regional basis

•Uncontrolled units to install expensive capital or retire

•Potential for increased variable O&M cost

•Potential for higher electric prices

•The generation fleet as a whole is well positioned for CATR

Greenhouse

Gases

(GHG)

•Nationally, for the time being, carbon cap-and-trade not expected

•EPA’s GHG BACT may delay or impede permitting of new

and modified plant

•EPA’s NSPS could potentially lead to emission trading

•RGGI impact negligible, future uncertain

•Power believes it has limited exposure to GHG BACT

requirements

•Power would potentially benefit by NSPS with trading

Coal

Combustion

Byproduct

•Facilities with wet ash ponds will need to spend capital to

close or upgrade ponds (dam safety, liners, monitoring, etc)

•Potential for increased variable O&M cost

•Potential for higher electric prices

•Already utilizes dry ash handling systems and disposal at

Mercer, Hudson and BHS.  No cost conversion at Key/Con

•Coal ash scrubber waste tested as non-hazardous

•Power has established option for beneficial use of all coal

combustion residuals.

316(b)

Cooling Water

Regulations

•Power plants with once through cooling system are at risk.  Plants

located on tidal rivers, estuaries or Great Lakes may face

greater risk

•Invest in capital, or potentially retire

•Potential for higher electric prices

•Lower plant output

•Power shares general industry exposure

•Prior permits judged that Salem has best technology

available

•Power has over $150M in estuary enhancement program

•Depending on EPA final rule cost/benefit consideration may

limit exposure

Market Impact                                                   

Power Impact

60

Mercer Generating Station 1996

61

Mercer Generating Station 2010

62

Power’s investment program to mitigate air

pollutants…

Current Regulations and Compliance Measures

Description

Hudson (NJ)

Mercer (NJ)

Keystone (PA)

`Bridgeport (CT)

Conemaugh (PA)*

NO

x

SCR

SCR

SCR

Low NO

x

Burners

SCR

2014

SO

2

Scrubber

Scrubber

Scrubber

Ultra-low

Sulfur Coal

Scrubber

Mercury/

Particulate

Baghouse &

Activated

Carbon

Baghouse

& Activated

Carbon

Scrubber & SCR,

ESP

Baghouse &

Activated Carbon

Scrubber & SCR,

ESP

…places it in good position to meet anticipated regulatory requirements.

Capital Spend Planned

No Additional Capital Spend Planned

*Activated carbon under consideration.

63

0

50

100

150

200

250

Source: EPA (2009), EIA (2009), and PSEG Projections

0

2

4

6

8

10

12

14

0

10

20

30

40

50

60

PSEG Projected NOx Emission Rate for 2011

versus 2009 400 U.S. Coal Plants

Conemaugh

Hudson

Bridgeport

Mercer   Keystone

NOx

Keystone

Bridgeport

Conemaugh

Hudson   Mercer

SO

2

PSEG Projected SO2

Emission Rate for 2011

versus 2009 400 U.S. Coal Plants

Keystone

Conemaugh

Bridgeport

Mercer

Mercury

PSEG Projected HG Emission Rate for 2011

versus 2009 400 U.S. Coal Plants

Hudson

PSEG Power’s environmental program has

resulted in dramatically lower emissions…

…leaving Power’s coal fleet among the cleanest in the country.

64

0%

10%

20%

30%

40%

2011/2012

2012/2013

2013/2014

2014/2015

2015/2016

PJM has adequate reserves to meet near

term demand…

…but over the longer term, many influences will dictate sources of market sufficiency.

Unforecasted influences that could increase capacity:

=>Government interventions –

for example LCAPP

=>Load/demand rate of change

=> Demand response / Economic recovery

Unforecasted influences that could decrease capacity:

=>Government regulations –

for example coal retirements (20-45 GW’s),

HEDD

=>Load/demand rate of change

=>Demand response / Economic recovery

PJM Forecasted Capacity Reserves -

January 2011

PJM

•

Reserve margins to tighten going forward

due to:

–

Load growth

–

Anticipated unit retirements driven

by new EPA regulations (not

reflected in PJM’s forecast)

EMAAC

•

Most of Power’s assets located in EMAAC

•

Anticipated retirements driven by HEDD

rule

•

Transmission projects expected to

increase net imports into EMAAC,

offsetting retirements

•

Local legislation (NJ LCAPP) could initially

increase reserve margins but would

discourage long-term merchant investment

PSEG Power –

Market Overview

Joe Hopf

President, PSEG Energy Resources & Trade

66

ER&T employs a disciplined approach to

hedging…

…

designed to maximize profitability and reduce earnings volatility.

67

While market dynamics remain challenging…

•

Gas is range bound, with little volatility going forward due to gas supply

•

However near term volatility has brought market opportunities

•

Long term gas economics could improve

•

Coal as a global commodity is experiencing demand outpacing supply

•

Capacity

•

Continuing to work with PJM on refinement of long term market structures

•

PJM has established saturation targets for limited demand response

•

Transmission

•

Reassessing market impacts as conditions change

•

Basis impacts are changing but Power’s portfolio continues to be well positioned

•

Market supply tightening due to environmental regulation

…

Power has expertise to manage all products across the portfolio.

68

…through a balanced portfolio hedging strategy.

Pricing in 2010 was impacted by low economic demand and low gas prices, offset by

warmer summer and colder winter weather

Power’s hedging strategy combined with strong operations enabled solid

results

2011 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 contracting using other products to secure pricing

over a 2-3 year forward

horizon

BGS continues to be an important part of our hedging strategy

Balanced generation portfolio in ideal position to serve BGS

Three year nature of BGS provides reduced volatility for customers and

providers

Power’s fleet is economically optimized…

69

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.

3 Year Average

Round the Clock

PJM West Forward

Energy Price

Capacity

Load shape

Transmission

Congestion

Ancillary services

Risk premium

Green

Note: BGS prices reflect PSE&G Zone

2003

2004

2005

2006

2007

2008

2009

2010

2011

$55.59

$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

$45 -

$47

~ $48

$94.30

70

The market environment has prompted BGS

customer migration…

…

and market conditions will impact future migration patterns.

Gradual reset of BGS rates (one third per year), includes price component for volumetric risk of

migration

Energy prices lower than expected, but market prices strengthened during periods of high

weather-related demand in summer and winter of 2010

Option strategies being employed to manage changes in load volume

Supplying wholesale hedges to third party retail providers

PSE&G BGS-FP Energy Migration Estimate

0%

10%

20%

30%

71

Migration and headroom are a function of

market and BGS price differentials…

…with impact on Power’s margin in 2010 limited by warm

weather.

•Migration has grown steadily from 2009 –

2011

–Market prices have been below BGS prices

–Retail

penetration

has

expanded

beyond

C&I

to

include

residential

customers

–Approximate average migration of ~10% in 2009; ~24% in 2010; and

forecasted to be ~35% in 2011, assuming 38% to 40% at year-end

•Power margin is a direct function of headroom

•Headroom has varied by year

–2009 headroom was high, as mild weather resulted in low market prices

–2010 headroom was low, as extreme weather resulted in high market prices

–Retail providers are more likely to promote switching if headroom is seen as

sustainable

72

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 base

load coal output

is contracted

over the next few

years:

2011:     100% 

2012: 45-55%

2013: 20-30%

Total Fleet RTC Average

Nuclear / Pumped Storage

Base load Coal

Load Following Coal

Combined Cycle (CC)

Steam and Peakers

Other Load Contracts + Hedges

Existing BGS, Other Load Contracts, and Hedges

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

2011

2012

2013

-

73

With gas competing with coal at various times

of the year…

…

our strategy is to hedge our base load generation long term.

Contracted Energy

2011

2012

2013

Volume TWh

35

36

36

Base Load

% Hedged

100%

45% - 55%

20% - 30%

Price $/MWh

$68

$68

$72

Volume TWh

18

18

20

% Hedged

10% - 15%

Price $/MWh

$68

Volume TWh

53

54

56

Total

% Hedged

70% - 75%

30% - 40%

10% - 20%

Price $/MWh

$68

$68

$72

Intermediate Coal,

Combined Cycle,

Peaking

(Nuclear and

Base Load Coal)

74

Power’s asset mix and fuel diversity provides

optionality…

July 7, 2010 Hourly Generation and Load

-

2,000

4,000

6,000

8,000

10,000

12,000

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

Hour

Pk/Steam

CC

Coal

Nuclear

Loads and

Hedges

…and locational

diversity also captures market constraints.

Generation Basis on July 7, 2010

On-Peak

$0

$10

$20

$30

$40

Sa/HC

Bus

PB Bus

Mercer

Hudson

Bergen

Linden

July 7, 2010 Circumstances-

Temperature max = 101 degrees

Gas = $6/MBtu

Day ahead on peak avg

> $170/MWh

Salem tripped

Real time LMP spiked to $450/MWh

Risk mitigated

Real time opportunity captured

Customer reliability maintained

July 7, 2010 LMPs

PS Zone

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

Hour

Day Ahead

Real Time

75

Power’s portfolio is positioned to take

advantage of market volatility…

January 24, 2011 Hourly Generation and Load

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

Hour

Pk/Steam

Oil

CC Oil

Burned

CC

Coal

Nuclear

Loads and

Hedges

…

and also mitigates operational risk.

Generation Basis on January 24, 2011

On-Peak

$0

$20

$40

$60

Sa/HC

Bus

PB Bus

Mercer

Hudson

Bergen

Linden

January 24, 2011 Circumstances-

Temperature min. = 5 degrees

Gas = $18/MBtu

Day ahead on peak avg > $180/MWh

Partial gas curtailment

Day ahead opportunity captured

Customer reliability maintained

January 24, 2011  LMPs

PS Zone

$0

$50

$100

$150

$200

$250

$300

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

Hour

Day Ahead

Real Time

76

Gas competed favorably with coal in 2010,

with operational flexibility favoring gas…

…

and Power’s diverse fleet is positioned to compete under various

market conditions.

PJM Fleet Flexibility

Base Coal

Base Coal

Base Coal

CC/Coal

CC/Coal

CC

PK

PK

PK

Int Coal

Int Coal

Int Coal

CC

CC

-

5,000

10,000

15,000

20,000

25,000

2008

2009

2010

Note: Forward prices as of February 2011

77

$0

$20

$40

$60

$80

$100

2004

2005

2006

2007

2008

2009

2010

2011

Fwd

$0

$20

$40

$60

$80

$100

2004

2005

2006

2007

2008

2009

2010

2011

Fwd

$0

$20

$40

$60

$80

$100

2004

2005

2006

2007

2008

2009

2010

2011 Fwd

Commodity prices have been volatile…

Henry Hub NYMEX

($/MMBTU)

Western Hub RTC

($/MWh)

West Hub On Peak

($/MWh)

Central Appalachian Coal

($/Ton)

$0

$2

$4

$6

$8

$10

2004

2005

2006

2007

2008

2009

2010

2011 Fwd

…

but Power’s diverse asset portfolio and hedging strategy

has mitigated the effects, providing strong results.

Note: Forward prices as of February 2011

78

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%

2011

2012

2013

$0

$10

$20

$30

$40

$50

Contracted Coal

Station

Coal Type

Pricing

($/MWh)*

Comments

Bridgeport

Harbor

Adaro

High $40’s

Higher price,

lower BTU,

enviro coal

Hudson

CAPP

Mid $40’s

Flexibility

after BET in

2010

Mercer

Metallurgical

NAPP/CAPP

Mid $40’s

More limited

segment of

coal market

Keystone

NAPP

Mid $20’s

To

High $20’s

Prices

moderating

Conemaugh

NAPP

Mid $20’s

To

High $20’s

Prices

moderating

% Hedged

(left scale)

$/MWh

(right

scale)

*Commodity plus transportation

79

$0

$5

$10

2011

2012

2013

Anticipated Nuclear Fuel Cost

Power has fully hedged its nuclear fuel needs

through 2013…

…

with increased costs over that time horizon.

Hedged

80

Note: Forward prices as of February 2011

Forward spark spreads indicate moderation from

2010 levels, and dark spreads continue to be

challenged…

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 both are expected to remain highly influenced by gas prices.

81

…

with sites in the eastern part of PJM.

The Reliability Pricing Model has recognized the

locational value of Power’s generating fleet…

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 2012

•

On schedule to complete

178 MW of previously

cleared peaking capacity

by June 2012

•

Upcoming auction

anticipated to be influenced

by updated demand

forecast, transfer

capabilities, and LCAPP

$/MW-day

PJM Zones

2009 / 2010

2010 / 2011

2011 / 2012

2012 / 2013

2013/2014

Eastern MAAC

$191.32

$174.29

$110.00

$139.73

$245.00

MAAC

$191.32

$174.29

$110.00

$133.37

$226.15

PSEG

$245.00

PSEG North Zone

$185.00

$245.00

Rest of Pool

$102.04

$174.29

$110.00

$16.46

$27.73

82

Power is advantaged…

…

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

Right Assets, Right Markets

Operational Flexibility

Environmental

Infrastructure investment

Newly completed back end technology and a well

positioned, environmentally sound fleet that compares

favorably vs the industry

Investing in various growth opportunities to prepare us

for the future

Diverse fleet of low cost units in competitive liquid

markets located near customers/load centers

Units along the dispatch curve with fuel flexibility and

improved performance provide value in dynamic market

2011

PSEG –

Financial Review and

Outlook

Caroline Dorsa

Executive Vice President and Chief Financial Officer

84

$0.71

$2.18

$(0.05)

$0.02

$0.02

$0.07

$0.10

$0.09

$0.85

$0.63

$2.15

$2.35

2008

2009

2010

$3.12*

We have consistently met our

earnings objectives

Holdings

PSE&G

Power

Parent

Operating Earnings per Share by Subsidiary*

$2.91*

*See page 120 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings; All periods reflect Texas in Discontinued Operations.

Guidance Range

$2.80 -

$3.05

$3.00 -

$3.25

$3.00 -

$3.25

$3.09*

85

$3.09

(.20)

.22

.01

.00

$3.12

$0.00

$0.65

$1.30

$1.95

$2.60

$3.25

In 2010, PSEG EPS benefited from growth at

PSE&G –

offset by the impacts of lower prices

at Power

2010       

operating

earnings*

2009       

operating

earnings*

2009 Debt

Exchange

Benefit

(Eliminated in

Consolidation) (.04)

Interest .04

Higher Volume

offset by Lower

Prices .00

WPT (.10)

Migration (.04)

Nuclear (.03)

O&M (.01)

Taxes (.04)

Other .02

PSEG

Power

Electric & Gas

Margin

(including Rate

Relief) .12

Transmission

Margin .04

O&M .04

Weather .02

D&A (.03)

Other .03

PSE&G

PSEG

Energy

Holdings

Enterprise

Lower Lease

Sales and

Impairment (.09) 

2009 Debt

Exchange

Costs

(Eliminated in

Consolidation) .04

Interest .03

Other .03

* See page 120 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

86

$1,000

$1,250

$1,500

$1,750

$2,000

$2,250

2010

2011

2012

2013

Pension

O&M

PSEG

Consolidated

O&M

(1)

C.A.G.R (’10-’13) = (0.0)%

(1)

Excludes O&M related to PSE&G clauses.

Aggressive expense management…

…should result in essentially no O&M growth.

87

PSEG’s 2011 earnings guidance reflects

continued improvement at PSE&G…

–

Network transmission service revenue increase

= ~ $0.05 per share

–

Full year of E&G Rate Relief = ~ $0.05 per share

–

Each 1% change in Load = ~ $0.02 per share

–

Each 1% change in O&M = ~ $0.01 per share

–

2010 Distribution ROE 9.9%; Each 10 bp = $0.01 per share

Revenue/Margin

–

Decline in average Hedge Price/Volume = ~ ($0.25-$0.30)

per share

–

Decline in Capacity revenues = ~ ($0.15-$0.20) per share

–

Improvement in WPT/BGSS = ~ $0.03-$0.05 per share

Other Expense

–

Higher O&M = ~ ($0.03) per share

–

Increase in Depreciation rate = ~ ($0.05) per share

–

Absence of LILO/SILO termination gains = ~ ($0.05) per share

–

Loss of Income from Asset Sales = ~ ($0.05) per share

2011 Drivers

…offset by a decline in margins at Power and Holdings.

Earnings Per Share

* See page 120 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

Guidance

$2.75

$2.50

88

PSEG’s long-term outlook is influenced by

Power’s hedge position…

2012

2013

Each $1/mcf Change in Natural Gas

Each $2/Mwh Change in Spark Spread

Each $2/Mwh Change in Dark Spread

Each 1% Change in Nuclear Capacity Factor

Each 1% Change in Depreciation Rate

$0.08 -

$0.10

$0.03

$0.02

$0.01

$0.01

$0.15 -

$0.20

$0.03

$0.03

$0.01

$0.01

Segment EPS Drivers

Each $100 Million of Incremental Investment

Each 1% Change in Sales:

Electric

Gas

Each 1% Change in O&M

Each 1% Change in ROE

$0.01

$0.01

$0.01

$0.01

$0.01

$0.02

$0.01

$0.01

$0.01

$0.01

…and increased investment at PSE&G.

89

Our capital spending is focused on

growth

PSEG 2011-2013 Capital Spending

$6.7 Billion

by Subsidiary

PSEG 2011-2013 Capital Spending

$6.7 Billion

Growth vs. Maintenance Spend

90

PSE&G’s capital program is directed at

improving reliability…

EMP  $0.5 B

12%

Electric

Distribution

$0.8 B

  18%

Transmission

$2.7 B

  60%

Gas Utility

  $0.5 B

  10%

…through investment in transmission and distribution.

*Forecast capital program does not include $400M of potential spending on distribution and energy efficiency.

2011-2013 Utility Capital Spending

$4.5 Billion

91

Sources

Uses

In 2010, cash flow was sufficient to

meet capital requirements…

…providing further balance sheet strength.

(1)

Cash from Operations adjusts for securitization principal repayments of ~$0.2B.

PSEG Consolidated

2010 Sources and Uses

Power Cash

from Ops

Shareholder

Dividend

Gross Proceeds

from Asset Sales

and Lease

Terminations

PSE&G

Investment

Debt

Redemptions

Taxes on Asset

Sales and

Lease

Terminations

Debt

Issuances

PSE&G

Cash from

Ops

(1)

Power

Investment

Includes

pension

contributions

of $0.4B

$4.7B

$4.7B

92

PSEG’s internally generated cash

flow over 2011 –

2013…

…supports our capital program and the shareholder dividend without

the need for equity.

* Cash from Operations adjusts for securitization principal repayments ~$0.7B

** 2011-2012 include bonus depreciation of ~$0.9B offset by ~$0.1B in 2013

Sources

Uses

Power

Cash

from Ops

Debt

Issued

PSE&G

Investment

Debt

Redeemed

Shareholder

Dividend

PSEG Consolidated                                               

2011 –

2013 Sources and Uses

PSE&G

Cash from

Ops*

Power

Investment

Texas Net

Proceeds

Includes:

Bonus Depreciation = ~$0.8B**

Pension Contribution = ~($0.5B)

Other

93

25%

30%

35%

40%

45%

50%

2008

2009

2010

2011-2013

Average

PSEG Power

Funds from Operations / Total Debt

Power’s credit metrics remain strong

during challenging markets...

Power free cash flow

produces strong

credit measures

providing sufficient

cushion for potential

gas price volatility

Free Cash Flow

(1)

~750

~950

~750

Average: ~700

Dividends to Parent

500

850

(2)

550

Average: ~550

(in $Millions)

(1)

Free Cash Flow represents cash from operations less cash used for investing.

(2)

Excludes dividend to Parent associated with transfer of Texas assets to PSEG Power.

…providing opportunities for incremental growth investments.

94

PSEG is responding to investors’

questions

Investors’

Questions

PSEG Position

How is PSEG affected

by policy changes?

Commercial operation of Back-End Technology puts us in good position

on potential Clean Air rules

What’s the impact of

commodity volatility?

Multi-year hedging

Asset balance dampens relative fuel price volatility

Capacity markets provide stability

How are you responding

to State incursion into

markets?

We are participating with other generators in a challenge at FERC to assure

competitive market mechanisms are upheld

We are also challenging the constitutionality of NJ’s actions

Do you need equity?

Strong cash flow enables us to execute our strategy, with room for additional

investment, without the need to issue equity

How is management

incented to deliver value to

shareholders?

Management’s long-term incentives are based on a combination of return on 

invested capital and total shareholder return relative to peers over a multi-year

period of time

PSEG –

Summary

Ralph Izzo

Chairman, President and Chief Executive Officer

96

PSEG Advantage: Investment focus supporting

customer needs and shareholder returns

Operational

Excellence

Environmental

Position

Financial

Strength

•Record Output

•Hope Creek

INPO 100 rating

•Completed

Back-End

Technology

installation

•Strong balance

sheet, credit

metrics, and

cash flow

•Mid-Atlantic

Reliability

Leader

•Investing in

renewables to

meet State

policy goals

•O&M focus

and capital

discipline to

support returns

•Installed

29 MW of solar

on-time and

under budget

•Developing

expertise for

solar PPAs

•Terminated

international

leases

PSEG Power

PSE&G

Energy

Holdings

Executive Profiles

98

Ralph Izzo

Chairman, President and Chief Executive Officer

Public Service Enterprise Group Incorporated

Ralph

Izzo

was

elected

chairman

and

chief

executive

officer

of

Public

Service

Enterprise

Group

Incorporated

(PSEG),

in

April

2007.

He

was

also

named

as

the

company’s

president

and

chief

operating

officer,

and

a

member

of

the

board

of

directors

of

PSEG,

in

October

2006.

Prior,

Mr.

Izzo

was

president

and

chief

operating

officer

of

Public

Service

Electric

and

Gas

Company

(PSE&G).

Since

joining

PSE&G

in

1992

Mr.

Izzo

was

elected

to

several

executive

positions

within

PSEG’s

family

of

companies,

including

PSE&G

senior

vice

president

–

utility

operations,

PSE&G

vice

president

–

appliance

service,

PSEG

vice

president

-

corporate

planning,

Energis

Incorporated

senior

vice

president

–

finance

and

information

services,

and

PSE&G

vice

president

-

electric

ventures.

In

these

capacities,

he

broadened

his

experience

in

the

areas

of

general

management,

strategic

planning

and

finance.

Mr.

Izzo

is

a

well-known

leader

within

the

utility

industry,

as

well

as

the

public

policy

arena.

His

public

policy

experience

includes

service

as

an

American

Physical

Society

Congressional

Science

Fellow,

in

the

office

of

U.S.

Senator

Bill

Bradley.

He

also

served

four

years

as

a

senior

policy

advisor

in

the

Office

of

New

Jersey

Governor

Thomas

H.

Kean,

specializing

in

energy,

science

and

technology. 

Mr.

Izzo’s

career

began

as

a

research

scientist

at

the

Princeton

Plasma

Physics

Laboratory,

performing

numerical

simulations

of

fusion

energy

experiments.

He

has

published

or

presented

over

35

papers

on

magnetohydrodynamic

modeling.

Mr.

Izzo

received

his

Bachelor

of

Science

and

Master

of

Science

degrees

in

mechanical

engineering

and

his

Doctor

of

Philosophy

degree

in

applied

physics

from

Columbia

University.

He

also

received

a

Master

of

Business

Administration

degree,

with

a

concentration

in

finance

from

the

Rutgers

Graduate

School

of

Management.

He

is

listed

in

numerous

editions

of

Who’s

Who

and

has

been

the

recipient

of

national

fellowships

and

awards.

Mr.

Izzo

has

received

Honorary

Degrees

from

the

New

Jersey

Institute

of

Technology

(Doctor

of

Science)

and

Thomas

A.

Edison

State

College

(Doctor

of

Humane

Letters).

Mr.

Izzo

serves

as

chair

of

Rutgers

University

Board

of

Governors

and

on

the

board

of

directors

for

the

New

Jersey

Chamber

of

Commerce,

the

New

Jersey

Utilities

Association,

the

Edison

Electric

Institute

(EEI),

the

Nuclear

Energy

Institute

(NEI)

and

The

Center

for

Energy

Workforce

Development.

99

J.A. “Lon”

Bouknight, Jr.

Executive Vice President and General Counsel

Public Service Enterprise Group Incorporated

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

counsel

in

January,

2010.

He

had

been

Executive

Vice

President

–

Law

since

November 2009.  In his current position, he has general supervisory

responsibilities

for

the

law

department,

office

of

the

corporate

secretary,

and

business assurance and resilience.

Mr. Bouknight was a partner in the Washington law office of Steptoe & Johnson,

where he served as a member of the regulatory and industry affairs department

and

as

former

chairman

of

the

firm.

His

practice

focused

on

the

electric

power

industry and on antitrust and competition issues in both regulated and unregulated

industries.

From 2005 to 2008, Mr. Bouknight served as executive vice president and

general counsel of Edison International, a major electric company based in

California. 

A graduate of Duke University School of Law, Mr. Bouknight has authored a

number of articles and lectured extensively on energy industry and competition

topics.

100

Daniel J. Cregg

Vice President –

Finance Power

PSEG Services Corporation

Daniel

J.

Cregg

was

named

vice

president

–

finance

power

for

PSEG

Services

Corporation,

in

December

2006.

Prior

to

this

appointment

he

was

director

–

financial

reporting

and

communications

at

PSEG

Power

(Power),

where

he

oversaw

financial

reporting

and

forecasting,

investor

communications,

financings,

rating

agency

interactions,

external

reporting,

and

cash

forecasting.

He

previously

held

leadership

positions

with

Power

in

the

areas

of

financial

valuations,

competitive

intelligence,

and

fundamental

market

modeling,

with

critical

responsibilities

in

Power’s

development

and

strategic

planning

activities.

Previously,

Mr.

Cregg

was

director

of

PSEG

corporate

development.

He

joined

PSEG

in

1991

with

overall

responsibility

for

tax

planning,

strategy

and

compliance

for

PSEG

Energy

Holdings,

including

domestic

and

international

tax

structuring

work

for

PSEG

Global

and

PSEG

Resources. 

Prior

to

joining

PSEG

Mr.

Cregg

spent

five

years

with

the

accounting

and

consulting

firm

of

Deloitte

and

Touche,

providing

consulting

services

to

a

wide

array

of

clients

with

an

emphasis

on

the

energy

industry.

Mr.

Cregg

has

been

involved

in

raising

awareness

and

funding

for

Sudden

Infant

Death

Syndrome

(SIDS)

for

the

last

ten

years.

He

is

also

an

executive

sponsor

for

Power’s

diversity

council

and

is

a

member

of

PEGPAC,

PSEG’s

Political

Action

Committee.

Mr.

Cregg

holds

a

Master

of

Business

Administration

degree

from

the

Wharton

School

of

the

University

of

Pennsylvania

and

is

a

graduate

of

Lehigh

University,

where

he

received

a

bachelor’s

degree

in

accounting.

101

Caroline Dorsa

Executive Vice President and Chief Financial Officer

Public Service Enterprise Group Incorporated

Public Service Electric and Gas Company

PSEG Services Corporation

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

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

president and chief financial officer of Public Service Electric and Gas Company (PSE&G),

and PSEG Services Corporation.

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

Technology and Procurement organizations.  She is a member of PSEG’s corporate executive leadership team.

Ms. Dorsa had been a Director of PSEG since 2003, and a member of PSEG's Audit, Corporate Governance and

Finance Committees.

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

human health, strategy and integration. Immediately prior to her most recent role at Merck, Ms. Dorsa held positions as

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

held a range of financial positions at Merck, including serving as vice president and treasurer of the company for over 12

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

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

development in midtown Manhattan.

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

New Jersey State Board of Directors in Princeton, NJ.  She is also a member of the Board of Directors of Biogen Idec

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

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

102

Clarence (Joe) Hopf, Jr.

President

PSEG Energy Resources & Trade

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

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

generation

portfolio

and

basic

gas

supply

service,

purchasing

of

fuel,

mid-

and

back-office operations as well as trading and marketing activities.

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

PA, since 2006.  He was responsible for managing PPL’s wholesale/retail

marketing and trading operation in the United States.  Mr. Hopf has held a variety

of posts with increasing responsibility in the electric generation and energy trading

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

served as a vice president at Goldman Sachs in New York and, before that, at

AmerenEnergy in St. Louis.

103

Anne

E.

Hoskins

was

named

senior

vice

president

–

public

affairs

and

sustainability of PSEG Services Corporation, in January 2010.  In this position,

she is responsible for PSEG’s federal and state governmental affairs, corporate

philanthropy and sustainability, and leads the development of public policy

positions on issues affecting the company.  Prior to this appointment she was

vice president –

federal affairs and policy where she was responsible for

PSEG’s

federal

governmental

affairs.

Ms.

Hoskins

is

also

a

member

of

PSEG’s

Executive Officer Group.

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

for

Verizon

Wireless,

working

from

offices

in

Washington

and

New

Jersey.

She

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

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

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

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

Masters of Public Affairs degree from the Woodrow Wilson School at Princeton

University, and a Bachelor of Science degree from Cornell University.

Ms. Hoskins serves as a trustee for The Nature Conservancy of New Jersey

and is on the board of trustees for New Jersey Future, the Children’s

Specialized Hospital Foundation, Inc. and Clean Air, Cool Planet, a northeast

environmental collaborative to address climate change.

Anne E. Hoskins

Senior Vice President –

Public Affairs & Sustainability

PSEG Services Corporation

104

Thomas P. Joyce

President and Chief Nuclear Officer

PSEG Nuclear

Thomas P. Joyce was named president and chief nuclear officer

of PSEG Nuclear

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

operations of Salem/Hope

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

Salem, since

January 2007, and previously assumed the role of PSEG Nuclear’s site vice president as

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

Mr. Joyce has more than 34 years of experience in commercial nuclear power operations,

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

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

shortest head replacement outage.

Prior to joining PSEG, Mr. Joyce was site vice president at Exelon Nuclear’s Braidwood

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

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

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

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

and in the corporate offices of both Exelon Corporation and Exelon Nuclear.  Mr. Joyce holds

a Bachelor of Science degree in nuclear engineering from the University of Missouri at Rolla,

and a Master of Business Administration degree from the Keller Graduate School of

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

105

Ralph A. LaRossa

President and Chief Operating Officer

Public Service Electric and Gas Company

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

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

position, he was vice

president -

electric delivery for PSE&G.

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

variety of management positions in the utility’s gas and electric operations.  In 1998 he

received Gas Industry Magazine’s Outstanding Manager of the Year Award.  PSE&G is

New Jersey’s largest electric and gas utility.

Mr. LaRossa is a graduate of Stevens Institute of Technology and has completed the

Harvard Business School’s Program for Management Development. He serves on the

board of directors for the American Gas Association (AGA), New Jersey Utilities Association

(NJUA), New Jersey Performing Arts Center (NJPAC), Partnership for a Drug-Free NJ,

Choose New Jersey, and Bergen County’s United Way. He also serves on the board of

trustees for Montclair State University and the Newark Alliance,

as well as on the corporate

advisory board for the Boys & Girls Clubs of New Jersey.

106

William Levis

President and Chief Operating Officer

PSEG Power

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

Agreement between PSEG and Exelon Corporation. Under his leadership Nuclear’s Salem and Hope Creek stations have

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

resulted

in

the

closing

of

two

long

standing

NRC

cross-cutting

issues

-

problem

identification

and

resolution,

and

safety

conscious work environment.

Mr.

Levis

has

more

than

25

years

of

diversified

experience

in

the

nuclear

power

industry.

Before

coming

to

PSEG

he

was

Exelon Nuclear’s vice president Mid-Atlantic operations, where he provided executive oversight of day-to-day operations of

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

1998

and

was

promoted

to

site

vice

president

the

following

year.

In

2001

he

was

named

site

vice

president

at

Limerick

Generating Station.

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

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

and

set

new

records

in

the

areas

of

safety,

production

and

cost.

Mr.

Levis’

background

also

includes

experience

with

NRC,

Westec Services, General Electric Nuclear Services and the U.S. Navy.  He has a Bachelor of Science degree in marine

engineering

from

the

U.S.

Naval

Academy

and

holds

an

SRO

(senior

reactor

operator)

certification.

Mr.

Levis

retired

as

a

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

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

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

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

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

PSEG Nuclear, and PSEG Energy Resources and Trade.

107

Randall E. Mehrberg

Executive Vice President, Strategy & Development

PSEG Services Corporation

President

PSEG Energy Holdings

Randall E. Mehrberg is president of PSEG Energy Holdings.  PSEG Energy Holdings develops, manages and

owns renewable energy solutions including solar, energy storage and off shore wind.  PSEG Energy Holdings

also

owns

power

plants

in

the

United

States

and

energy

and

other

investments

in

the

United

States

and

abroad. 

Mehrberg is also PSEG’s executive vice president responsible for corporate strategy, public affairs, policy,

mergers

and

acquisitions,

and

corporate

communications.

He

is

a

member

of

PSEG’s

corporate

executive

leadership

team and has responsibility for overseeing the corporate balanced scorecard.  Mehrberg’s responsibilities include

PSEG’s emergent technology and transfer group, ensuring development of a corporate strategy that includes a comprehensive

assessment of the role of technology in the future of our industry.

Mehrberg

joined

PSEG

after

serving

for

eight

years

in

various

executive

leadership

positions

at

Chicago-based

Exelon

Corp.,

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

Mehrberg

was

an

equity

partner

in

the

Chicago

law

firm

of

Jenner

&

Block,

where

he

worked

from

1980

to

1993

and

again

from

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

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

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

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

number

of

business

and

civic

organizations,

including

serving

as

vice

chairman

of

the

board

of

Nuclear

Electric

Insurance

Limited.

Mr.

Mehrberg

currently

serves

as

a

board

member

of

the

University

of

Pennsylvania

Medical

School

and

the

University

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

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

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

Award,

the

Catholic

Charities

Award

for

Service

to

the

Poor,

and

the

H.O.P.E.

for

the

People

Award

–

Man

of

the

Year.

108

Margaret M. Pego

Senior Vice President –

Human Resources and

Chief Human Resources Officer

PSEG Services Corporation

Margaret M. Pego was named senior vice president –

human resources and chief

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

had been vice president –

human resources.

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

human resources department.

Ms. Pego holds a Bachelor of Arts degree in business administration from William

Paterson College, and a Master of Business Administration degree

with a concentration

in management and labor relations from Seton Hall University. In

addition, she holds a certificate in EEO

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

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

Ms. Pego is active in several local and national organizations

including the EEI Chief HR Executives Policy

Committee;

the

American

Gas

Association

HR

Policy

Committee;

The

Conference

Board

Advisory

Council

of

HR Management –

Council of HR Executives; and the Society for Human Resources Management. She is

the former Chair Center for Energy Workforce Development (CEWD) Executive Counsel. She is a former

member of the Supreme Court of New Jersey Attorney Ethics Committee. Ms. Pego is a 2002 Leadership

New Jersey graduate, a 1997 TWIN Honoree, 2006 Executive Woman of New Jersey Honoree and 2008 NJ

Best 50 Women in Business Honoree.  In addition, she is a member

of the board of trustees of the American

Conference on Diversity, the Boys and Girls Club Concert for Kids Committee, College of Saint Elizabeth,

Rutgers Business School and the Children’s Specialized Hospital.   

Appendix

110

PSEG 2011 Operating Earnings Guidance

-

by Subsidiary

$ millions (except EPS)

2011E

2010A

PSEG Power

$ 765 –

$ 855

$ 1,091

PSE&G

$ 495 –

$ 520

$ 430

PSEG Energy Holdings

$ 0 –

$ 5

$ 49

Enterprise

$ 5 –

$ 15

$ 14

Operating Earnings*

$ 1,265 –

$ 1,395

$ 1,584

Earnings per Share

$ 2.50 –

$ 2.75

$ 3.12

* See Page 120 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

111

PSEG Consolidated Debt / Capitalization

(1)

Includes debt due within one year and short-term debt; excludes Securitization Debt and Non-Recourse Debt.

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

2008

2009

2010

Equity

Debt

(1)

Preferred

Stock

Debt

7,480

7,311

7,812

Preferred Stock

80

80

0

Common Shareholders Equity

7,771

8,788

9,633

Debt plus Equity

15,331

16,179

17,445

Debt Ratio

48.8%

45.2%

44.8%

(in $Millions)

112

PSEG Consolidated Debt / Capitalization

(1)

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

(2)

Power includes Texas Non-recourse Debt

PSEG Consolidated ($Millions)

December 31, 2008

December 31, 2009

December 31, 2010

PSE&G Short-Term Debt

20

$                                

-

$                                 

-

$                                 

PSEG Money Pool Short-Term Debt

-

530

64

Total Short-term Debt

20

530

64

Long-Term Debt

(1)

:

Power

(2)

3,183

3,121

3,455

PSE&G

3,523

3,571

4,283

Holdings

505

127

-

Parent / Services

249

(38)

10

Total Long-Term Debt

7,460

6,781

7,748

Preferred Stock

80

80

-

Total Common Stockholders' Equity

7,771

8,788

9,633

TOTAL CAPITALIZATION

15,331

$                         

16,179

$                            

17,445

$                            

December 31, 2008

December 31, 2009

December 31, 2010

Debt

7,480

7,311

7,812

Preferred Stock

80

80

-

Total Common Stockholders' Equity

7,771

8,788

9,633

Debt Plus Equity

15,331

$                         

16,179

$                            

17,445

$                            

Debt Ratio

48.8%

45.2%

44.8%

113

At the end of 2010, Power and Parent available

liquidity totals approximately $2.8 billion

PSEG will refinance credit facilities well ahead of scheduled expirations.

Expiration

Total

Available

Company

Facility

Date

Facility

Usage

Liquidity

($Millions)

PSE&G

5-year Credit Facility

Jun-12

$600

1

$0

$600

5-Year Credit Facility (Power)

Dec-12

$1,600

2

$133

$1,467

2-Year Credit Facility (Power)

Jul-11

$350

$0

$350

5-Year Bilateral - Credit Suisse (Power)

Sep-15

$100

$90

$10

5-year Credit Facility (PSEG)

Dec-12

$1,000

3

$77

$923

Total

$3,650

$3,350

$0

PSE&G ST Investment

$224

Total Liquidity Available

$3,574

Total Parent / Power Liquidity

$2,750

1

PSE&G Facility reduced by $28 million in 6/2011

2

Power Facility reduced by $75 million in 12/2011

3

PSEG Facility reduced by $47 million in 12/2011

PSEG /

Power

PSEG Money Pool ST Investment

114

Operated by PSEG Nuclear

PSEG Ownership: 100%

Technology: Boiling Water Reactor

Total Capacity: 1,197MW

Owned Capacity:  1,197MW

License Expiration: 2026

Filed for license extension,

August 2009

Next Refueling 2012

Operated by PSEG Nuclear

Ownership: PSEG --

57%,

Exelon –

43%

Technology:

Pressurized

Water

Reactor

Total Capacity: 2,337MW

Owned Capacity: 1,342MW

License Expiration: 2016 and 2020

Filed for license extension,

August 2009

Next Refueling

Unit

1

--

Fall

2011

Unit 2 –

Spring 2011

Operated by Exelon

PSEG Ownership: 50%

Technology: Boiling Water Reactor

Total Capacity: 2,245MW

Owned Capacity: 1,122MW

License Expiration: 2033 and 2034

Next Refueling

Unit 2 –

2012

Unit 3 –

Fall 2011

Hope

Creek

Salem

Units

1

and

2

Peach

Bottom

Units

2

and

3

Our five unit nuclear fleet…

…

is a critical element of Power’s success.

115

The forward PJM capacity market provides

an opportunity to recover costs…

…

which is incorporated in the full requirements BGS rate.

Capacity Price per RPM Auction for PSEG Zone

Capacity Price per BGS Tranche

2011-2012

110

$                  

Three Year Average ($/MW-day)

168

$             

2012-2013

154

$                  

MW per Tranch (varies by EDC)

~120

2013-2014

240

$                  

Days per Year

365

   Three Year Average ($/MW-day)

168

$           

   Capacity Cost per Tranche

7,358,400

$   

MWh per Tranche

Energy MW per Tranche (varies by EDC)

~120

Hours per Year

8,760

Load Factor (varies by EDC)

~42%

MWh per Tranche

400,000

Capacity Cost per MWh

18

$            

116

0%

25%

50%

75%

100%

2011

2012

2013

$0

$50

$100

$150

$200

$250

0%

25%

50%

75%

2011

2012

2013

$0

$10

$20

$30

$40

$50

$60

$70

$80

Power’s hedging program provides near-

term stability from market volatility…

…

while remaining open to long-term market forces.

Estimated EPS impact of $5/MWh

PJM West around the clock price

change* (~$1/mmbtu gas change)

Contracted Capacity

Price

(right

scale)

* As of February 2011 assuming normal market commodity correlation and demand.

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)

$0.05 -

$0.15

$0.20 -

$0.40

$0.30 -

$0.50

Contracted Energy

Price

(right

scale)

% sold

(left

scale)

*

117

New Jersey Board of Public Utilities (BPU)

The Board of Public Utilities consists of five commissioners

appointed by the Governor.  These appointees are 

confirmed by the NJ Senate for six-year, staggered terms.

The Governor appoints one of the five to serve as

Commission President.  There are currently four

commissioners and one open position:

Lee A. Solomon, Commission President

Nicholas Asselta

Joseph L. Fiordaliso

Jeanne M. Fox

Stefanie Brand, Director of Rate Counsel, appointed

Acting Public Advocate

118

Key economic indicators forecast renewed

growth…

The New Jersey economy declined by 0.02%

from 2008 to 2010 and is anticipated to grow

2.4% from 2010 to 2013

New Jersey total non-farm employment

declined by 2.5% from 2008 to 2010 and is

expected to grow 1.2% from 2010 to 2013

Real personal income in New Jersey declined

by 0.9% from 2008 to 2010 and is expected

to increase 2.6% from 2010 to 2013

Single family housing starts declined 10.7%

from 2008 to 2010 and are expected to

increase ~24% from 2010 to 2013

…over 2010 to 2013 timeframe.

Source: HIS Global Insight January 2011 Forecast.

NJ Total Employment

3,700

3,800

3,900

4,000

4,100

2008

2010

2013

NJ Real Gross State Product

$420,000

$440,000

$460,000

$480,000

$500,000

2008

2010

2013

NJ Real Personal Income

$380,000

$400,000

$420,000

$440,000

2008

2010

2013

NJ Single Family Housing Starts

0

5

10

15

20

2008

2010

2013

119

PSEG Resources Leveraged Lease Portfolio

Lessee

Equipment

12/31/10

Invested 

($millions)

S&P

Credit

Rating*

REMA (Reliant)

Keystone, Conemaugh

& Shawville

(PA)

3 coal fired plants (4,025 MW Total Capacity)

$325

B

Dynegy Holdings

Danskammer

& Roseton

Generating Station (NY)  370

MW coal-fired and 1,200 MW oil/gas fired

267

CCC

Edison Mission

Energy (EME)

Powerton

& Joliet Generating Stations (IL)

2 coal-fired facilities (2,582 MW Total Capacity)

218

B-

Merrill Creek –

(PECO, MetEd,

Delmarva P&L)

Reservoir in NJ

126

BBB, BBB-,

BBB+

Grand Gulf

Nuclear station in Mississippi (1,259 MW Capacity)

99

A+

US West/Qwest

Qwest headquarters located in Denver, CO

109

BB

Renaissance Center

GM headquarters located in Detroit, MI

40

BB-

Wal-Mart

Portfolio of 27 WalMart

stores

41

AA

E-D Centers

Portfolio of 8 shopping centers

23

NR

Total Leveraged

Leases

$1,249

120

Pro-forma Adjustments, net of tax

2010

2009

2008

Earnings Impact ($ Millions)

Gain (Loss) on Nuclear Decommissioning Trust (NDT)

Fund Related Activity (PSEG Power)

46

$          

9

$            

(71)

$         

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

(1)

(11)

14

Market Transition Charge Refund (PSE&G)

(72)

-

-

Net Reversal of Lease Transaction Reserves (Energy Holdings)

-

29

-

Lease Transaction Reserves (Energy Holdings)

-

-

(490)

Asset Impairments

-

-

(13)

Premium on Bond Redemption

-

-

(1)

Total Pro-forma adjustments

(27)

$         

27

$          

(561)

$       

Fully Diluted Average Shares Outstanding (in Millions)

507

507

508

Per Share Impact (Diluted)

Gain (Loss) on Nuclear Decommissioning Trust (NDT)

Fund Related Activity (PSEG Power)

0.09

$       

0.02

$       

(0.14)

$      

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

-

(0.02)

0.03

Market Transition Charge Refund (PSE&G)

(0.14)

-

-

Net Reversal of Lease Transaction Reserves (Energy Holdings)

-

0.05

-

Lease Transaction Reserves (Energy Holdings)

-

-

(0.96)

Asset Impairments

-

-

(0.03)

Premium on Bond Redemption

-

-

-

Total Pro-forma adjustments

(0.05)

$      

0.05

$       

(1.10)

$      

December 31,

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

Reconciling Items Excluded from Continuing Operations to Compute Operating Earnings

(Unaudited)

For the Twelve Months Ended

Please see Page 2 for an explanation of PSEG’s use of Operating Earnings as a non-GAAP financial measure and how it differs from Net Income.

Items Excluded from Income from Continuing

Operations to Reconcile to Operating Earnings