8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) November 4, 2011

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

(Exact name of registrant as specified in its charter)

New Jersey	001-09120	22-2625848
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

80 Park Plaza, P.O. Box 1171

Newark, New Jersey 07101-1171

(Address of principal executive offices) (Zip Code)

973-430-7000

(Registrant’s telephone number, including area code)

http://www.pseg.com

PSEG POWER LLC

(Exact name of registrant as specified in its charter)

Delaware	001-34232	22-3663480
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

80 Park Plaza, T-25

Newark, New Jersey 07102-4194

(Address of principal executive offices) (Zip Code)

973-430-7000

(Registrant’s telephone number, including area code)

http://www.pseg.com

PUBLIC SERVICE ELECTRIC AND GAS COMPANY

(Exact name of registrant as specified in its charter)

New Jersey	001-00973	22-1212800
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

80 Park Plaza, P.O. Box 570

Newark, New Jersey 07101-0570

(Address of principal executive offices) (Zip Code)

973-430-7000

(Registrant’s telephone number, including area code)

http://www.pseg.com

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

The information contained in Item 7.01 Regulation FD Disclosure in this combined Form 8-K is separately furnished, as noted, by Public Service Enterprise Group Incorporated (PSEG), PSEG Power LLC (Power) and Public Service Electric and Gas Company (PSE&G). Information contained herein relating to any individual company is provided by such company on its own behalf and in connection with its respective Form 8-K. Power and PSE&G each makes representations only as to itself and makes no other representations whatsoever as to any other company.

Item 7.01 Regulation FD Disclosure

On November 6 - 9, 2011, PSEG is participating in the 2011 Edison Electric Institute Finance Conference in Florida. The attachment which is furnished as Exhibit 99 to this Form 8-K represents the discussion materials being used at the conference. The presentation will also be available on our website, www.pseg.com.

Item 9.01 Financial Statements and Exhibits

Exhibit 99      Discussion Materials

2

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
(Registrant)
By:	/s/ Derek M. DiRisio
	Derek M. DiRisio
	Vice President and Controller
	(Principal Accounting Officer)

Date: November 4, 2011

3

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.

PSEG POWER LLC
(Registrant)
By:	/s/ Derek M. DiRisio
	Derek M. DiRisio
	Vice President and Controller
	(Principal Accounting Officer)

Date: November 4, 2011

4

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.

PUBLIC SERVICE ELECTRIC AND GAS COMPANY
(Registrant)
By:	/s/ Derek M. DiRisio
	Derek M. DiRisio
	Vice President and Controller
	(Principal Accounting Officer)

Date: November 4, 2011

5

EX-99

PSEG

Public Service Enterprise Group

2011 EEI Financial Conference

November 6-9, 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

“will”,

“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 toward subsidized market mechanisms,

transmission

planning

and

cost

allocation

rules,

including

rules

regarding

how

transmission

is

planned

and

who

is

permitted

to

build

transmission

in

the

future,

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 our operations,

•

changes in nuclear regulation and/or general developments in the nuclear power industry, including various impacts from any accidents or incidents experienced at our facilities or by others in

the industry 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, or the credit quality of our counterparties, including in our leveraged leases,

•

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,

•

challenges associated with recruitment and/or retention of a qualified workforce,

•

adverse performance of our decommissioning and defined benefit plan trust fund investments and changes in discount rates and funding requirements, and

•

changes in technology and customer usage patterns.

For further information, please refer to our Annual Report on Form 10-K, including Item 1A. Risk Factors, and subsequent reports on Form 10-Q and Form 8-K filed with the

Securities and Exchange Commission.  These documents address in further detail our business, industry issues and other factors that could cause actual results to differ

materially from those indicated in this presentation.  In addition, any  forward-looking statements included herein represent our estimates only as of today and should not be relied

upon as representing our estimates as of any subsequent date.  While we may elect to update forward-looking statements from time to time, we specifically disclaim any

obligation to do so, even if our internal estimates change, unless otherwise required by applicable securities laws.

3

GAAP Disclaimer

PSEG presents Operating Earnings in addition to its Net Income reported in

accordance with accounting principles generally accepted in the United States

(GAAP). Operating Earnings is a non-GAAP financial measure that differs from

Net Income because it excludes gains or losses associated with Nuclear

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

material one-time items. PSEG presents Operating Earnings because

management believes that it is appropriate for investors to consider results

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

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

Earnings provides a consistent and comparable measure of performance of its

businesses to help shareholders understand performance trends.

This

information is not

intended to be viewed as an alternative to GAAP information.

The last two slides in this presentation include a list of items

excluded from

Income from Continuing Operations to reconcile to Operating Earnings, with a

reference to that slide included on each of the slides where the

non-GAAP

information appears. 

PSEG

–

Defining the Future

Ralph Izzo

Chairman, President and Chief Executive Officer

Caroline Dorsa

Executive Vice President and Chief Financial Officer

5

PSEG

Advantage:

Right

platform

to

deliver

value to customers and investors…

Electric & Gas Delivery

and Transmission

Regional Wholesale Energy

Renewable Investments

…with a track record for safeguarding shareholder interests.

$17.3B Market Cap*

$29.9B Assets**

*Market

capitalization

as

of

October

31,

2011;

asset

value

as

of

September

30,

2011.

PSE&G positioned

to meet NJ’s

energy policy and

economic growth

objectives

with a $5.2 billion

investment program

through 2013

PSEG Power’s

low-cost, base load

and load following fleet

is geographically well

positioned and

environmentally

responsible

PSEG Energy Holdings

positioned to pursue

attractive renewable

generation opportunities

6

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 growth and 

providing customers with

clean, reliable energy

PSEG Power

PSE&G

…with balance sheet to support growth.

Asset mix

Strong platform open to

improvement in the market

Well-run, low-cost

generating fleet combined

with fuel flexibility

supports margins

Hedging strategy mitigates

near-term risk

Major environmental

compliance capital

program completed

Actively working to defend

competitive power markets

Reducing risk

Building a platform for

renewables and investing

through PPA-supported

projects

International lease

investments terminated

Resources carefully

monitoring remaining

traditional leases and

other investments

PSEG Energy Holdings

th

7

Year to Date Operating Earnings –

by Subsidiary

Operating Earnings

Earnings per Share

$ millions (except EPS)

2011

2010

2011

2010

PSEG Power

$  710   

$  879

$  1.40

$  1.73

PSE&G

422

347

0.83

0.69

PSEG Energy Holdings

6

43

0.01

0.09

Enterprise

14

12

0.03

0.02

Operating Earnings*

$  1,152

$  1,281  

$  2.27

$  2.53

Nine months ended September 30

* See page 62 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

8

$2.53

(0.33)

0.14

(0.08)

0.01

$2.27

1.00

1.25

1.50

1.75

2.00

2.25

2.50

2.75

PSEG EPS Reconciliation –

YTD 2011 versus

YTD 2010

Nine Months

Ended 9/30/2011       

Operating

Earnings*

Nine Months

Ended 9/30/2010      

Operating

Earnings*

Interest

Lower Pricing (0.22)

Lower Generating

Volumes (0.03)

Migration (0.02)

Coal

Optimization 0.06

O&M (0.06)

D&A and

Interest (0.06)

WPT 0.02

Other (0.02)

PSEG Power

Margins:

Rate Relief 0.04

Transmission 0.03

Renewables,

Capital Stimulus

and Other 0.06

O&M 0.04

Weather 0.03

D&A (0.03)

Taxes (0.02)

Other (0.01)

PSE&G

PSEG Energy

Holdings

Enterprise

Absence

of Gain on

Lease Sales

and

Impairments (0.04)

ES&P

Investment

Write-off  (0.01)

Other (0.03)

* See

page

62

for

Items

excluded

from

Net

Income

to

reconcile

to

Operating

Earnings.

9

Outlook for 2011 Operating Earnings

at Upper End of Range

$3.12

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

2010 Operating Earnings*

2011E Earnings Guidance*

* See page 63 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

$2.75E

$2.50E

Strong 9-month results support full-year 2011 EPS at upper end of guidance.

$2.27

Operating

EPS

YTD

Actual

10

$1,000

$1,250

$1,500

$1,750

$2,000

$2,250

2010

2011E

2012E

2013E

O&M

PSEG

Consolidated

O&M

(1)

CAGR (’10-’13) = 1-2%

(1)

Excludes O&M related to PSE&G clauses.  E: Estimate.  CAGR:  Compound annual growth rate.

Focus on expense management…

…expected to limit CAGR in O&M, including pension, to 1-2%.

11

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

2009

2010

9/30/2011

Equity

Debt

(1)

Preferred

Stock

Debt

7,311

7,812

7,925

Preferred Stock

80

0

0

Common Shareholders Equity

8,788

9,633

10,159

Debt plus Equity

16,179

17,445

18,084

Debt Ratio

45.2%

44.8%

43.8%

(in $Millions)

12

Growth

$4.72 B

69%

Maintenance

$2.13 B

31%

PSEG’s consolidated capital spending

is focused on growth

Parent SC

$0.07 B 

1%

Power

$1.50 B

  22%

PSE&G

$5.24 B

  76%

Holdings

$0.04 B

1%

PSEG 2011-2013E Capital Spending

$6.85 Billion*

by Subsidiary

PSEG 2011-2013E Capital Spending

$6.85 Billion*

Growth vs. Maintenance Spend

*E: Estimate

.

$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

13

PSEG Dividend –

a major source of return

to shareholders …

PSEG Annual Common Dividend Per Share 2001-2011E

…

with a 104-year track record.

14

PSEG Advantage

Well-run, low-cost

generating platform

open to improvement

in power markets

Solid operating

performance,

regulatory agreements,

and cost control

enhance ability of

utility to earn

authorized returns

Financial Strength

Operational Excellence

Balance sheet

strength, combined

with the flexibility

and liquidity to

finance growth

opportunities

Our $6.9 billion capital

investment program

for 2011-2013 is

oriented to growth

400 MW of new

peaking capacity in

New Jersey and

Connecticut for 2012

Major environmental

compliance capital

program completed

Disciplined Investment

PSEG Power

–

Review and

Outlook

16

Low-cost portfolio

Fuel flexibility

Regional focus in competitive, liquid

markets

Assets favorably located near

customers/load centers

Many units east of PJM constraints

Market knowledge and experience to

maximize the value of our assets

Nuclear plants re-licensed

Multiple emission controls installed

…

and

is

well-positioned

to

respond

to

EPA

regulations.

18%

45%

8%

Fuel Diversity*

Coal

Gas

Oil

Nuclear

Pumped

Storage

1%

Energy Produced*

Total GWh: 56,727

52%

19%

28%

Pumped Storage

& Oil <1%

Nuclear

Coal

Gas

Total MW: 13,538

27%

9%

* Twelve months ended December 31, 2010.

Power has focused on optimizing its assets in a

dynamic environment…

17

... and

the

fleet

achieved

record

generation

levels

in

2010.

Power’s Northeast assets are located in

attractive markets near load centers...

18

…

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

Mercer 1, 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

19

19

-$10

$0

$10

$20

$30

$40

$50

$0

$10

$20

$30

$40

$50

$60

$70

2005

2006

2007

2008

2009

2010

2011

2012

2013

Annual Average

Historical Monthly

Forecast

Note: Forward prices as of October 2011.

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)

…

while

forward

dark

spreads

have

remained

low.

Forward spark spreads have increased significantly

from earlier this year…

20

Power’s fleet benefits from fuel mix and

dispatch flexibility …

Coal/Gas fuel mix has changed to ~40/60 due to gas commodity pricing vs coal.

52%

42%

42%

39%

48%

58%

58%

61%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2008

2009

2010

2011 July YTD

Coal

Gas CC

st

st

21

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

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

2004

2005

2006

2007

2008

2009

2010

2011 E

79.0

85.0

97.097.0

94.0

91.7

99.098.0

93.9

90.3

96.0

96.0

96.0

97.0

98.5

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.

INPO

Index

(

)

NJ Units

1

Quartile

NJ Units

* Total PS share nuclear generation

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

Nuclear Generation Output*

(000’s GWh)

Forced

Loss

Rate

(

)

(%)

Our nuclear performance has improved…

1    Quartile

22

Power’s coal fleet has seen significant

efficiency improvements…

14

15

15

13

13

9

11

9

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 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

23

Power’s combined cycle fleet benefits from

operating enhancements…

5

4

8

10

12

13

15

15

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

24

13

17

23

19

13

14

15

12

2004

2005

2006

2007

2008

2009

2010

2011 E

85

86

76

77

91

92

95

98

2004

2005

2006

2007

2008

2009

2010

2011 E

Consistent record of start success

provides opportunities in ancillary and

real time markets

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

2004

2005

2006

2007

2008

2009

2010

2011 E

Our peaking fleet rounds out a diverse

generation portfolio…

*High

Electric

Demand

Day

(HEDD):

New

Jersey

NO

x

regulation.

25

Source: MJ Bradley, PSEG

2010

2011

2012

2013

2014

2015

2016

2017

2018

Haz. Air

Pollutants

Criteria

Pollutants

Greenhouse

Gases

Coal

Combustion

316(b)

Compliance with Federal GHG Reporting Rule

Compliance with PSD/BACT and Title V Applies to GHG Emissions from New and Modified Sources

Compliance with Utility MACT

Pre-Compliance  Period

Develop Utility

MACT

Develop

Transport

Rule

Interim CAIR

Phase-in of CCR Regulations

Develop Coal Combustion

Residuals Rule

Develop 316(b)

Regulations

Revised Ozone NAAQS may require further NO

x

reductions

Phase-In of 316b Regulations by 2020

Compliance with GHG NSPS

Develop GHG NSPS

…to meet EPA environmental regulations.

Today

Compliance with Cross-State Air Pollution Rule

Power is well-positioned under numerous

outcomes…

26

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

PSEG Power’s Position

Hazardous Air

Pollutants (HAPs)

•

Fleet generally well-positioned on Hg, Particulate Matter, and HCl

•

Comprehensive coal controls in place  (SCR planned at Conemaugh)

Criteria Pollutants

(CSAPR)

•

Fleet well-positioned on NO

x

and SO2

Greenhouse Gases

(GHG)

•

Limited exposure to GHG BACT requirements

•

Potentially benefit from NSPS with trading

Coal Combustion

Residuals

•

Dry ash systems in use at Power’s coal units

•

Coal ash and scrubber waste tested as non-hazardous

316(b) Cooling Water

Regulations

•

Share general industry exposure

•

Over $150M in estuary enhancement program at Salem

•

Potential capital spend exposure

EPA air requirements are expected to influence markets

Uplift to market prices expected as a result of retirements, derates, higher variable

O&M costs, and/or higher emission allowance prices

The potential impacts to Power vary…

27

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

Capital Spend Planned

No Additional Capital Spend Planned

Power’s investment program to mitigate air

pollutants…

…has placed it in good position to meet anticipated regulatory

requirements.

28

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

PSEG Projected NO

x

Emission Rate for 2011

versus 2009 400 U.S. Coal Plants

Conemaugh

Hudson

Bridgeport

Mercer   Keystone

NO

x

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

…leaving

Power’s

coal

fleet

among

the

cleanest

in

the

country.

PSEG Power’s environmental program has

resulted in dramatically lower emissions…

29

The NJ DEP is considering an extension to the

permits of water-injected HEDD units in the

state…

PSEG

2,787

Others

1,482

RMR ends in 2011

Conversion to Gas

*Replacing 200 MW with 270 MW of new peaking in 2012 at Kearny.

Retire May 2015 or

extend to 2017

New Jersey HEDD Capacity

ICAP MW

PSEG Power HEDD Capacity

ICAP MW

…

which

will

affect

the

timing

of

retiring

these

units.

Water-

injected,

1,408

Uncontrolled

571*

Sewaren 1-4

453

Hudson 1

355

30

…through a balanced, portfolio hedging strategy.

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

Forward prices, spark spreads, and heat rates have improved in 2011, benefiting

companies with the right assets in the right locations

BGS continues to be an important part of our hedging strategy

Three year nature of BGS provides reduced volatility for customers and

generation providers

Impact of migration on margin in 2011 has diminished with decline in headroom

PSEG Power, as part of P3, is an active participant in market discussions challenging

subsidized pricing

Power’s fleet is economically optimized…

31

Full Requirements Component

Increase in Capacity Markets/RPM

Growing Renewable Energy Requirements

Component for Market Risk

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

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

Through Power’s participation in each of the

BGS auctions…

Capacity

Load shape

Transmission

Congestion

Ancillary services

Risk premium

Green

32

…with 2011’s margin affected by weather and improved market prices.

•

Migration has grown steadily from 2009 –

2011

–

Market prices have been below BGS prices

–

Retail penetration has expanded to include residential customers

–

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

forecasted to be 32% to 33% in 2011, assuming 33% to 35% at year-end

•

Power margin is a direct function of headroom (the difference between the market

price of power versus the average price paid by customers under the BGS rate)

•

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

–

2011 headroom affected by higher market pricing

–

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

Migration and headroom are a function of

market and BGS price differentials…

33

Hedging Update…

…

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

Contracted Energy*

2011

2012

2013

Oct - Dec

Volume TWh

8

36

36

Base Load

% Hedged

100%

80-85%

40-45%

(Nuclear and Base Load Coal)

Price $/MWh

$68**

$63

$61

Volume TWh

5

22

22

Intermediate Coal, Combined

% Hedged

46%

Cycle, Peaking

Price $/MWh

$68**

$63

$61

Volume TWh

13

58

58

Total

% Hedged

80%

50-55%

25-30%

Price $/MWh

$68**

$63

$61

*Hedge percentages and prices as of September 30, 2011 for the October 2011 and forward time frame.  **Average price for full-year 2011. 

Revenues of full requirement load deals based on contract price, including renewable energy credits, ancillary, and transmission components but

excluding capacity.  Hedges include positions with MTM accounting treatment and options.

34

…

with

sites

in

the

eastern

part

of

PJM.

With nearly 1/3 of its capacity in PS North and nearly 2/3 of its capacity in EMAAC, Power’s

assets in congested locations received higher pricing.

•

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.

•

Latest auction influenced

by updated demand

forecast and transfer

capabilities.

$/MW-day

PJM Zones

2009 / 2010

2010 / 2011

2011 / 2012

2012 / 2013

2013 / 2014

2014 / 2015

Eastern MAAC

$191.32

$174.29

$110.00

$139.73

$245.00

$136.50

MAAC

$191.32

$174.29

$110.00

$133.37

$226.15

$136.50

PSEG

$245.00

PSEG North Zone

$185.00

$245.00

$225.00

Rest of Pool

$102.04

$174.29

$110.00

$16.46

$27.73

$125.99

Reliability Pricing Model –

locational value of

Power’s generating fleet recognized…

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

14/15

PSE&G –

Review and Outlook

36

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

(2006

-

2010)

(0.5%)*

(1.0%)*

Historical

Annual

Peak

Load

Growth

Transmission

(2006

–

2010)

(0.1%)

Projected

Annual

Load

Growth

(2011

–

2013)

1.3%**

0.8%**

Projected

Annual

Load

Growth

Transmission

(2011

–

2013)

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

37

New Jersey’s energy future requires continued

investment…

…

while adapting to changes in resources.

Transmission Capacity Growth

Transmission Capacity Reductions

Susquehanna-Roseland ~1,500 MW

North East Grid ~200 MW

Bergen

O66

-

Bergen

to

ConEd's

West

49th

Street       

~(670 MW*)

Lakewood

V3-026

-

Lakewood

to

New

York

~550

MW

Werner

X1-078

-

Werner

to

New

York

~525MW

Other Impacts to NJ

Long-term Capacity Agreement Pilot Program (LCAPP)

~2,000 MW

Exelon has entered into an agreement with the state of New

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

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

Load Forecast report ~1,125 MW

*   Project has firm contract for 320MW

Net impact to New Jersey is ~130MW by 2020

Susquehanna-Roseland

Bergen O66

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

Oyster

Creek

38

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

North East Grid

Preliminary Design

2015

$895

Burlington

–

Camden

230kV

Conversion**

Engineering / Licensing

2014

$381

North Central Reliability**

Engineering / Licensing

2014

$336

Mickleton –

Gloucester –

Camden**

Preliminary Design

2015

$435

…

and CWIP in rate base for certain projects. 

*CWIP in Rate Base and 1.25% ROE incentive treatment approved. 

** CWIP in rate base approved.

Transmission Projects

Future Projects

Future Transmission project spending will be influenced by PJM

evaluation,

potentially

adding

additional

projects

over

2011

–

2015

and

revising required in-service dates.

Hopatcong

Hopatcong

W Orange

W Orange

Burlington

Burlington

Gloucester

Hopatcong

Hopatcong

W Orange

W Orange

Camden

Mickleton

Hopatcong

Hopatcong

W Orange

W Orange

Burlington

Burlington

Gloucester

Hopatcong

Hopatcong

W Orange

W Orange

Camden

Mickleton

Bergen

Hudson

Bayonne

Sewaren

Middlesex

Bridgewater

Roseland

39

PSE&G’s capital program calls for

investing $5.2 billion…

…through investment in transmission and distribution.

*E: Estimate.

2011-2013E Utility Capital Spending

$5.2 Billion*

Renewables/EMP

$0.7 B

Gas Utility

$0.6 B

11%

Electric Distribution

$1.0 B

20%

Transmission

$2.9 B

56%

13%

40

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

2010

2011

2012

2013

Susquehanna-Roseland *

RTEP 230 kV Conversions

Other RTEP

69kV Transmission

Other Transmission

FERC’s Transmission formula rate order grants

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

cost of service

Transmission represents approximately 56% of planned investment over the

2011-2013

plan

and

is

expected

to

comprise

~33%

of

PSE&G

rate

base

by

2013

Supportive

regulatory

treatment

with

contemporaneous

recovery

is

key

to

align

earnings growth with investment

Execution

of

the

Transmission

plan

is

critical

to

achieving

PSE&G’s

future growth.

Transmission Investment by Major Category**

* Susquehanna-Roseland approved for 12.93% ROE.  ** 2010 is actual data, 2011-2013 is projected data.

41

Our 2011 –

2013 capital plan calls for investing

$5.2 billion…

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

2010

2011E

2012E

2013E

NJ Infrastructure

Stimulus

Solar

Energy Efficiency

Transmission

Core Investment

…with

contemporaneous

recovery

mechanisms

approved

for ~$3.1 billion.

PSE&G Capital Expenditures

E:  Estimated.

42

PSE&G’s investment program provides

opportunity for ~11%* annualized growth

in rate base

PSE&G Projected Rate Base**

*Starting

from

2010

Rate

Base

of

$7.8

billion.

**2010

is

actual

data;

2011-2013

is

projected

data.

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

2010

2011

2012

2013

Gas Distribution

Electric Distribution

Electric Transmission

Energy Master Plan

43

Investment program supporting NJ’s energy

and economic goals has led to 45 MW of solar…

…

with 30 MW in development.

($ Millions)

Approval

Date

Total

Amount

Spending

Thru

9/2011

Remaining

Spending

Thru 2013

Solar Loan I & II

April 2008/

November 2009

$248

$104

$140

Carbon Abatement

December 2008

46

36

10

NJ Capital Infrastructure Stimulus I

April 2009

694

702

-

Solar 4 All *

July 2009

465

298

155

Energy Efficiency Economic Stimulus

July 2009

166

123

43

Demand Response

July 2009

65

13

32

Energy Efficiency Economic Stimulus

Extension

July 2011

95

-

91

NJ Capital Infrastructure Stimulus II

July 2011

273

10

263

Total

$2,052

$1,286

$734

* Filing amount based on installation of 80MW, total forecasted spend is lower due to a lower cost per watt to install.

PSEG Energy Holdings -

Review & Outlook

45

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

46

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’s legacy domestic

generation assets remain 

LILO/SILO:

Resources terminated all 18 LILO/SILO leases

Traditional Leases:

Resources continues to carefully manage the

remaining traditional leases and other investments

$264 million gross investment in a lease receivable from Dynegy

resulting in an after-tax charge of $170 million, or $0.34 per share

Energy Holdings fully reserved its

Leveraged Lease Reserve:

PSEG –

Financial Review and

Outlook

48

25%

30%

35%

40%

45%

50%

2008

2009

2010

2011-2013E

Average

PSEG Power

Funds from Operations / Total Debt

Power’s credit metrics remain strong ...

Power’s free cash

flow produces strong

credit measures and

provides sufficient

cushion for potential

gas price volatility

Free Cash Flow

(1)

~750

~950

~750

Average: ~725

Dividends to Parent

500

850

550

Average: ~475

(in $Millions)

(1)

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

…

providing opportunities for growth investments.

49

PSEG’s internally generated cash flow

between

2011

–

2013 …

…

supports capital investment and the shareholder dividend without

the need for equity issuance.

* Cash from Operations adjusts for securitization principal repayments ~$0.7B.  E:  Estimate.

** 2011-2012 includes 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

–

2013E

Sources

and

Uses

PSE&G

Cash from

Ops*

Power

Investment

Asset Sale

Proceeds

Includes:

Bonus Depreciation = ~$0.8B**

Pension Contribution = ~($0.5B)

Other Net

Cash Flow

50

PSEG Advantage –

Value Proposition: 

Compelling Risk-Adjusted Total Return

Investment

Opportunity

Value

Drivers

Disciplined

Capital

Allocation

•Clean and reliable nuclear, coal, and natural gas-fired generation fleet

•Large, reliable electric and gas distribution operations

•Heat rates and spark spreads are expected to improve further

•Environmental compliance costs

•Potential retirements of 11 to 25 GW of existing generation in PJM

•Market prices must rise to incent new generation investment

•PSEG positioned to benefit from higher utilization and market

heat rates as capacity factors improve

•Investments at PSE&G to yield ~11% CAGR in rate base

•Pursuing growth investments with reasonable, risk-adjusted returns

•Monetizing non-core assets through asset sales

•Strong balance sheet provides flexibility and liquidity to finance growth

opportunities

in

our

shareholders’

best

interest

–

without

dilution

•104-year history of paying an annual common stock dividend

•Returning capital to shareholders over time

51

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.

Second year in World Index, fourth year in the North

American Index.

PSEG is one of only two U.S. electric companies in the World Index.

…

has been widely recognized.

th

Appendix

53

0%

10%

20%

30%

40%

2011/2012

2012/2013

2013/2014

2014/2015

2015/2016

…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,

environmental

retirements

=>Load/demand rate of change

=>Demand response / Economic recovery

PJM Forecasted Capacity Reserves

(1)

PJM

•

Reserve margins to tighten, due to:

–

Load growth

–

Announced unit retirements

(2)

–

Anticipated environmental retirements

•

PJM

estimates

that

11

to

25

GW

of

coal

is

at

risk

(3)

•

Likely 3+ GW of oil / gas retirements due to HEDD and MACT

EMAAC

•

Most of Power’s assets located in EMAAC

•

Anticipated retirements, driven primarily by HEDD and HAPs-

MACT rules, beyond the coal retirements already announced

•

Transmission projects expected to increase net imports into

EMAAC, partially offsetting retirements

•

Local legislation (NJ LCAPP) could initially increase reserve

margins, but would discourage long-term merchant

investment

(1)

Reserve margin forecast from PJM as of March 2011. One percent of reserve margin equals ~1.3 GW of supply.

(2)

PJM’s reserve projections assume only 3.2 GW of retirements.

(3)

Source: PJM report as of August 2011.

PJM has adequate reserves to meet near-term

demand…

54

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

CAPP/NAPP

Low $40’s

More limited

segment of

coal market

Keystone

NAPP

High $20’s

Prices

moderating

Conemaugh

NAAP

High $20’s

to Low

$30’s

Prices

moderating

% Hedged

(left scale)

$/MWh

(right

scale)

* Commodity plus transportation.

55

$0

$5

$10

2011

2012

2013

Anticipated Nuclear Fuel Cost

…

with

increased

costs

over

that

time

horizon.

Hedged

Power has fully hedged its nuclear fuel needs

through 2013…

56

Operated by PSEG Nuclear

PSEG Ownership: 100%

Technology: Boiling Water Reactor

Total Capacity: 1,197MW

Owned Capacity:  1,197MW

License Expiration: 2046

License renewal approved

July 2011

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: 2036 and 2040

License renewal approved June

2011

Next Refueling

Unit 1 –

Fall 2011 (underway)

Unit 2 –

Fall 2012

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 (completed)

Hope Creek

Salem Units 1 and 2

Peach Bottom Units 2 and 3

…

is a critical element of Power’s success.

Our five unit nuclear fleet…

57

0%

25%

50%

75%

100%

2011

2012

2013

$0

$50

$100

$150

$200

$250

0%

25%

50%

75%

100%

2011

2012

2013

$0

$10

$20

$30

$40

$50

$60

$70

$80

…

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 October 2011, assuming normal market commodity correlation and demand.

Power has

contracted for a

considerable

percentage of its

future output

over the next two

years.  

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)

Contracted Energy

Price

(right

scale)

% sold

(left

scale)

*

$0.02 -

$0.06

$0.14 -

$0.28

$0.20 -

$0.40

Power’s hedging program provides near-term stability

from market volatility…

58

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.

59

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

60

PSEG Resources Leveraged Lease Portfolio

Lessee

Equipment

9/30/11

Invested 

($millions)

S&P

Credit

Rating*

REMA (GenOn)

Keystone, Conemaugh & Shawville (PA)

3 coal fired plants (1,162

equity MW)

331

B

Dynegy Holdings**

Danskammer & Roseton Generating Station (NY) 

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

0

NA

Edison Mission

Energy (EME)

Powerton & Joliet Generating Stations (IL)

2 coal-fired generating facilities (1,640 equity MW)

219

B-

Merrill Creek –

(PECO, MetEd,

Delmarva P& L)

Reservoir in NJ

129

BBB, BBB-,

BBB+

Grand Gulf

Nuclear station in Mississippi (154 equity MW)

100

A+

US West/Qwest***

Qwest headquarters located in Denver, CO

119

NR

Renaissance Ctr.

GM headquarters located in Detroit, MI

41

BB+

Wal-Mart

Portfolio of 17 Wal-Mart stores

29

AA

E-D Centers

Portfolio of 8 shopping centers

23

NR

Total Leases

$991

*Indicative recent rating reflecting either Lessee, additional equity collateral support or parent company unsecured debt rating.

** In Q3 2011, Energy Holdings fully reserved its $264 million gross investment in a lease receivable from Dynegy resulting in an after-tax charge of $170 million, or $0.34 per share.

*** Qwest was acquired by Century Link.  NR – Not Rated, NA – Not Applicable.

61

PSEG Consolidated Debt / Capitalization

(1)

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

December 31, 2009

December 31, 2010

September 30, 2011

PSE&G Short-Term Debt

-

$                            

-

$                            

-

$                            

PSEG Money Pool Short-Term Debt

530

64

-

Total Short-term Debt

530

64

-

Long-Term Debt

(1)

:

Power

3,121

3,455

3,350

PSE&G

3,571

4,283

4,535

Holdings

127

-

-

Parent / Services

(38)

10

40

Total Long-Term Debt

6,781

7,748

7,925

Preferred Stock

80

-

-

Total Common Stockholders' Equity

8,788

9,633

10,159

TOTAL CAPITALIZATION

16,179

$                       

17,445

$                       

18,084

$                       

December 31, 2009

December 31, 2010

September 30, 2011

Debt

7,311

$                         

7,812

$                         

7,925

$                         

Preferred Stock

80

-

-

Total Common Stockholders' Equity

8,788

9,633

10,159

Debt Plus Equity

16,179

$                       

17,445

$                       

18,084

$                       

Debt Ratio

45.2%

44.8%

43.8%

62

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

2011

2010

2011

2010

Earnings Impact ($ Millions)

Gain (Loss) on Nuclear Decommissioning Trust (NDT)

Fund Related Activity (PSEG Power)

7

$            

10

$        

49

$          

30

$          

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

8

16

16

28

Lease Transaction Reserves (Energy Holdings)

(170)

-

(170)

-

Market Transition Charge Refund (PSE&G)

-

-

-

(72)

Total Pro-forma adjustments

(155)

$       

26

$        

(105)

$       

(14)

$         

Fully Diluted Average Shares Outstanding (in Millions)

507

507

507

507

Per Share Impact (Diluted)

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

0.01

$       

0.02

$     

0.10

$       

0.06

$       

Gain (Loss) on MTM (PSEG Power)

0.02

0.03

0.03

0.05

Lease Transaction Reserves (Energy Holdings)

(0.34)

-

(0.34)

-

Market Transition Charge Refund (PSE&G)

-

-

-

(0.14)

Total Pro-forma adjustments

(0.31)

$      

0.05

$     

(0.21)

$      

(0.03)

$      

September 30,

September 30,

For the Three Months Ended

For the Nine Months Ended

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

Reconciling Items Excluded from Continuing Operations to Compute Operating Earnings

(Unaudited)

63

Items Excluded from Income from Continuing

Operations to Reconcile to Operating Earnings

Pro-forma Adjustments, net of tax

2010

2009

Earnings Impact ($ Millions)

Gain (Loss) on Nuclear Decommissioning Trust (NDT)

Fund Related Activity (PSEG Power)

46

$          

9

$         

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

(1)

(11)

Net Reversal of Lease Transaction Reserves (Energy Holdings)

-

29

Market Transition Charge Refund (PSE&G)

(72)

-

Total Pro-forma adjustments

(27)

$         

27

$       

Fully Diluted Average Shares Outstanding (in Millions)

507

507

Per Share Impact (Diluted)

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

0.09

$       

0.02

$    

Gain (Loss) on MTM (PSEG Power)

-

(0.02)

Net Reversal of Lease Transaction Reserves (Energy Holdings)

-

0.05

Market Transition Charge Refund (PSE&G)

(0.14)

-

Total Pro-forma adjustments

(0.05)

$      

0.05

$    

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