Exhibit 99

PSEG

Public Service Enterprise Group 

2

Forward-Looking Statement

Readers are cautioned that statements contained in this presentation about our 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 the demand for or price of the capacity and energy that we sell into wholesale electricity markets,

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, 

any inability to achieve or continue to sustain, our expected levels of operating performance,

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 generally accepted accounting principlesin 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 page in this presentation (page A) 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

The Business of PSEG

Ralph Izzo

The Business of PSE&G

Ralph LaRossa

BREAK

The Business of PSEG Power

William Levis

The Business of Power ER&T

Shahid Malik

Q&A

PSEG Financial Review & Outlook

Caroline Dorsa

Summary

Ralph Izzo

Q&A

PSEG –

The Business of PSEG

Ralph Izzo

Chairman, President and Chief Executive Officer

6

The business of PSEG:

A focus on excellence

and a commitment to enhancing shareholder value

Operational

Excellence

Highly Valued /

Engaged

Employees

Reliability

Growth /

Value Creation

Strategy

Political /

Regulatory

Environment

Sustainable

Financial

Performance

7

Growing an operationally excellent, integrated

generation, transmission and distribution business

Renewable Investments

Electric & Gas Delivery

and Transmission

Regional Wholesale Energy

Assets $17.5B

Operating Earnings

$521M

Assets $11.1B

Operating Earnings

$845M

Assets $1B

Operating Earnings

$5M

Assets and operating earnings are for the year ended 12/31/2011. 

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

PSE&G positioned

to meet NJ’s

energy policy and

economic growth

objectives

with a $5.4 billion

investment program

through 2014

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

8

2011 –

A year of significant accomplishment

despite challenging markets

•

NJBPU approved

capital spending with

supportive recovery

mechanisms

•

Transmission

incentive rate

treatment granted

•

EEI Emergency

Response Award

•

10th consecutive

Reliability One Award

•

License extensions

obtained for Salem

and Hope Creek

•

Record production at

both Hope Creek and

the CCGT fleet

•

Texas assets sold

•

25 MW Solar project

in Arizona

•

Continued de-risking

of legacy portfolio

•

Denver building

sold

•

IRS settlement on

LILO/SILO tax

matters

•

Dynegy settlement

9

Consistently achieving earnings objectives

Guidance            $2.80-$3.05                      $3.00-$3.25                    $3.00-$3.25                     $2.50-$2.75

2008

* Operating earnings; See page A for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.

*Texas

generating

units

are

excluded

from

all

years’

operating

results.

10

Focused program which improved operating efficiency and

directed capital investment to PSE&G reduced the impact

of lower energy prices on operating earnings

•

O&M Growth per year

•

Transmission Rate Base

•

Utility Cap Stimulus Spending

•

Utility Solar & EE Cap Exp

•

EFORd Rate

CCGT

Coal

•

Nuclear Generation

•

Holdings Solar Investment

•

2.4% (planned)

•

$866

•

$0

•

$0

•

1.6%

•

8.4%

•

29.3TWh

•

$0

•

0.4% (actual)

•

$1,600

•

$760

•

$687

•

1.1%

•

6.6%

•

30.1TWh

•

$120

2008

PSEG Focus

($ millions, except as noted)

2011

$2.91

$2.74

Operating Earnings Per Share

$69.85

$43.57

PJM West RTC ($/MWh)

11

Returning cash to investors through common

dividends and preserving flexibility to invest for

future growth

PSEG Annual Dividend Rate

$1.17

$1.29

$1.33

$1.37

$1.37

2007

2008

2009

2010

2011

12

•

Improving efficiency

•

Supporting rules that improve

market transparency and

competition

•

Investing in infrastructure -

transmission and peaking -

reduces congestion and

provides reliable service at a

reasonable cost

•

Evaluating new investment

opportunities

Executing on strategy that fits today’s market:

solid, sustainable, value-creating

Market Environment

PSEG Strategy

•

Low natural gas price outlook

and slow recovery in demand

growth

•

Challenges to competitive

markets

•

Environmental mandates

affect generation dispatch

13

Operating efficiently in response to low commodity

prices

2011 –

2014 CAGR

Total O&M 2.9%

O&M

Pension

14

Supporting a competitive market place

Federal Court

•

Pending challenge to constitutionality

of LCAPP Act

•

Summary judgment motions pending

PJM

•

Filed with FERC proposed RPM auction

improvements to support new market-

based generation

•

FERC evaluation of generator

interconnection process is underway

FERC

•

Minimum offer price rule (MOPR) limits

ability of subsidized generation to distort

capacity markets

•

Below-MOPR bid if based on

reasonable cost / revenue expectations

State of New Jersey

•

Energy Master Plan policy goals

•

State support for subsidized generation

dependent on appeals process and

RPM auction outcome

•

Two appeals challenging LCAPP

implementation pending in NJ Appellate

Division

Long Term Capacity Agreement Pilot Program (LCAPP)

15

PSEG Power’s Position

Criteria Pollutants

(CSAPR)

•

Well positioned on NO

X

and SO

2

, net of anticipated allowances

Mercury & Air Toxics

(MATS)

•

Generally well positioned on Hg, particulate matter, and HCl

•

Comprehensive coal controls (SCR planned at Conemaugh)

High Electric Demand

Days (HEDD)

•

Compliance strategy under review (retirements or investments)

Coal Combustion

Byproducts

•

Power uses dry ash systems

•

Coal ash and scrubber waste tested as non-hazardous

316(b) Cooling Water

Regulations

•

Power shares general industry exposure on capital expenditure

•

Ongoing, positive industry dialogue with EPA

•

Power has over $150M in estuary enhancement program at Salem

Market uplift expected as a result of environmental rules (due to retirements, derates, higher VO&M

costs or higher emission allowances prices)

Estimated energy impact of CSAPR and MATS: $2-$5/MWh, not fully reflected in current forward prices

Retirements (MATS and HEDD) will provide strong support to capacity markets

Power is generally well positioned to meet the anticipated requirements:

Positioned to benefit from environmental leadership

16

Investments focused on growth to meet

customer requirements

PSEG 2012-2014E Capital Spending

$6.7 Billion

by Subsidiary

PSEG 2012-2014E Capital Spending

$6.7 Billion

Growth / Environmental / Maintenance

E = Estimate; Capital excludes IDC and AFUDC.

17

30%

35%

40%

45%

50%

55%

2012E

2013E

2014E

30%

35%

40%

45%

50%

55%

2012E

2013E

2014E

PSEG Power

Funds

from

Operations

/

Total

Debt

PSEG

Debt

as

Percent

of

Capital

•

Credit metrics remain above our floor levels, notwithstanding near-term

power market expectations

•

Investment Capacity exceeds $700 million in all years even with large capital

expenditures at PSE&G

•

PSEG maintains its capital structure throughout the forecast period

A

solid

financial

strategy

–

balance

sheet

strength

to direct investments to the areas of greatest

growth and value potential

18

Our 2012 earnings guidance is influenced by a

decline in energy prices and increased investment

at PSE&G

2012 Operating Earnings Forecast

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

Discontinued Operations.  E=Estimate.

2011 Operating Earnings*

2012 Guidance

$2.25 to $2.50E

$2.74

Opportunities beyond

2012 to create long-term

value include:

New Reliability Based

Transmission

Solar 4 All Extension

Energy Efficiency

Gas Infrastructure

New Build at Power

Holdings Solar

Future Dividend Growth

19

2010

2011

2012E

Our earnings mix has changed

Operating Earnings Contribution by Subsidiary*

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

Discontinued Operations.

$3.12

$2.74

$2.25-$2.50E

PSE&G

Power

Other

Operating EPS

27%

38%

~45%

61%

69%

~50%

20

Dividend growth based on greater and increasing

earnings contribution from stable, regulated

business

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

Discontinued Operations.  E=Estimate.

$1.42E

$1.37

Modest and Sustainable

Dividend Growth

Consistent With Stable

Regulated Growth and

Cash Generation 

Outlook at PSEG Power

$0.00

$0.50

$1.00

$1.50

2011 Dividend

2012 Dividend

21

The

business

of

PSEG:

The

events

of

2011

illustrate what our strategy means for employees,

customers and the communities we serve

eople

providing

afe,

Reliable,

conomic

and

reen

energy

P

S

E

G

22

PSEG Value Proposition

Operating

Excellence

Regulatory/

Market

Drivers

Financial

Strength

Disciplined

Investment

•

Clean, low cost Nuclear, CCGT, and Coal generating fleet

•

Large, reliable electric and gas distribution operations

•

Energy markets in midst of transformational change

Environmental compliance costs and low natural gas prices to force retirements

of 11 to 25 GW of existing generation in PJM

Infrastructure upgrades/reliability requirements driving regulated investment

•

PSEG in position to benefit from higher market prices for 

power and 13% CAGR in regulated rate base

•

Strong balance sheet provides flexibility and liquidity to

finance growth opportunities

•

Meaningful 2012 dividend increase and revised dividend

policy

•

Management long-term incentive leveraged to

shareholder value creation

The Business of

PSE&G

Ralph LaRossa

President and Chief Operating Officer, PSE&G

24

Operational

Excellence

Highly

Valued/Engaged

Employees

Reliability

Growth/

Value Creation

Strategy

Political/

Regulatory

Environment

Sustainable

Financial

Performance

The

business

of

PSE&G:

A

focus

on

excellence

and a commitment to enhancing shareholder value

25

PSE&G is the largest electric and gas distribution

and transmission utility company in New Jersey

providing renewable and energy efficiency solutions

*

Weather

normalized

-

estimated

annual

growth

per

year

over

forecast

period.

** Specific projects approved for incentive rate treatment with additional ROE.   

*** Energy

Efficiency

Annualized

Savings

(includes

conversion

of

gas

savings).

Electric

Gas

Customers

Growth

(2007 –

2011)

2.2 Million

0.7%

1.8 Million

0.7%

Electric Sales and Gas Sold and Transported

42,506 GWh

3,527 M Therms

Projected

Annual

Load

Growth

(2012

–

2014)

0.8%*

0.1%*

Historical

Annual

Peak

Load

Growth

Transmission

(2007

–

2011)

1.7%

Projected

Annual

Load

Growth

Transmission

(2012

–

2014)

1.4%

Sales Mix

Residential

33%

60%

Commercial

57%

36%

Industrial

10%

4%

Transmission

Electric

Gas

Approved Rate of Return

11.68% ROE**

10.3% ROE

10.3% ROE

Renewables and Energy Efficiency

2009-2011

Total Program

Plan

Solar Loan

38 MW

81 MW

Solar 4 All

59 MW

80 MW

Energy Efficiency Initiative (annualized equivalent)***

282 GWh

402 GWh

26

PSE&G’s investment program is a balance of key

objectives to realize sustainable growth

State Goal

PSE&G  Actions

Maintain reliability

•

Capital investments in transmission

•

Maintain superior distribution system

reliability

•

Capital infrastructure programs

70% of state electric

needs from clean energy

•

Solar 4 All program

•

Solar Loan program

Promote cost effective

conservation, energy

efficiency and demand

response

•

Carbon Abatement program

•

Energy Efficiency Economic Stimulus

•

Demand Response

•

Energy Efficiency Economic Stimulus

Extension

27

PSE&G is meeting objectives by providing reliable

service to customers and reasonable returns to

shareholders

•

Earned authorized return on equity

•

Ensuring customer satisfaction with focus on service

–

ReliabilityOne Mid-Atlantic Region 10

th

consecutive year

–

Storm response

•

Established regulatory framework for future growth

–

FERC Transmission formula rate treatment and incentive rates

for major Transmission projects

–

BPU approval of Capital Infrastructure and Energy Efficiency extensions

28

Combination of regulatory agreements and cost

containment have enabled us to achieve our

allowed ROE

0.0%

4.0%

8.0%

12.0%

2009

2010

2011

8.3%

11.1%

9.9%**

PSE&G Combined ROE*

*  Includes

Transmission,

Distribution

and

Renewables/Energy

Efficiency.

** 2010 excludes impact of MTC write-off.

29

0

200

400

600

800

1,000

1,200

2009

2010

2011

O&M

Pension

PSE&G O&M*

* Excludes Regulatory Clauses.

PSE&G has managed its O&M by streamlining the

organization and increasing productivity

2009 –

2011

CAGR: (4.1%)

30

SAIDI VS. O&M

$0.00

$3.00

$6.00

$9.00

$12.00

0

30

60

90

120

150

180

210

240

SAIDI

PSE&G provides high reliability at below average

cost which creates superior value to customers

Median

PSE&G

SAIDI = System Average Interruption Duration Index, a measure of average outage duration for all customers served.

31

PSE&G prioritizes public safety while maintaining

value to customers

PSE&G

Median

Leak

Response

Rate

=

Percentage

of

Utility

responses

to

reported

leaks

within

one

hour.

32

PSE&G is focused on execution of capital programs

to improve reliability and meet State energy policy

goals

PSE&G Capital Expenditures

33

Investment in Transmission ensures customer

reliability at a reasonable risk adjusted return for

investors

0

250

500

750

1,000

1,250

1,500

2009

2010

2011

2012E

2013E

2014E

Major Transmission Projects

Other RTEP

69kV Transmission

Other Transmission

•

Transmission represents approximately 66% of PSE&G’s planned investment from

2012-2014

•

Transmission is expected to comprise ~41% of PSE&G rate base by 2014, almost

doubling from 21% in 2011

•

Investments are driven by PJM mandated reliability projects and replacement of

aging infrastructure

Capital Expenditures

34

Approved

ROE

Inclusion of

CWIP in

Rate Base

100%

Recovery of

Costs Due to

Abandonment

Total

Estimated

Project

Costs

Susquehanna-Roseland

12.93%

$750

Northeast Grid Reliability

11.93%

$895

North Central Reliability

11.68%

$390

Burlington –

Camden 230kV

11.68%

$381

Mickleton –

Gloucester 230kV

11.68%

$435

Major

Transmission

Projects

FERC and PJM support for transmission investment has

created substantial opportunities for PSE&G to improve

reliability while earning contemporaneous returns

35

Major Project: Susquehanna-Roseland

•

PJM RTEP project b0489

•

ROE of 12.93% (including 1.25% incentive)

•

100% CWIP in rate base during development

•

100% recovery of prudently incurred costs due to

abandonment

•

In-service in phases between 2014-2015

Project Status:  Engineering and Licensing

Project

Description:

Susquehanna-Roseland

consists

of

constructing

150

miles

of

500kV

circuit

(46

miles

in

NJ)

with

two

new

500kV

GIS

switching

stations

at

Roseland

and

Hopatcong

Project

Estimate*

Through year-

end 2011

2012-2014E

$750M

$178M

$488M

*Project is shared with PPL. Project Estimate represents PSE&G’s construction responsibility for the NJ portion.

36

Major Project: Northeast Grid Reliability

•

PJM RTEP project b1304

•

ROE of 11.93% (including 0.25% incentive)

•

100% CWIP in rate base during development

•

100% recovery of prudently incurred costs due to

abandonment

•

In-service 2015

Project Status: Engineering and Licensing

Project Description:

Northeast Grid Reliability consists of upgrading approximately 50 overhead circuit

miles of 138kV transmission line to 230kV, constructing approximately 18 miles of new underground 230kV

lines, and converting twelve existing stations to 230kV operation

Project

Estimate

Through year-

end 2011

2012-2014E

$895M

$2M

$728M

37

Major Project: North Central Reliability

•

PJM RTEP project b1154

•

ROE of 11.68%

•

100% CWIP in rate base during development

•

100% recovery of prudently incurred costs due to

abandonment

•

In-service 2014

Project Status: Engineering and Licensing

Project Description:

North Central Reliability consists of upgrading 55 circuit miles of 138kV transmission

line to 230kV, and converting six existing stations to 230kV operation

Project

Estimate

Through year-

end 2011

2012-2014E

$390M

$20M

$370M

38

Major Project: Burlington-Camden 230kV

•

PJM RTEP project b1156

•

ROE of 11.68%

•

100% CWIP in rate base during development

•

100% recovery of prudently incurred costs due to

abandonment

•

In-service 2014

Project Status: Engineering, Licensing, and Outside

Plant Construction

Project

Estimate

Through year-

end 2011

2012-2014E

$381M

$43M

$338M

Project Description:

Burlington-Camden 230kV

consists of upgrading 37 circuit miles (30 miles of

overhead and 7 miles of underground) of 138kV transmission line to 230kV, converting the existing stations

to 230kV operation

39

Major Project: Mickleton-Gloucester-Camden 230kV

•

PJM RTEP project b1398

•

ROE of 11.68%

•

100% CWIP in rate base during development

•

100% recovery of prudently incurred costs due to

abandonment

•

In-service 2015

Project Status: Preliminary Design

Project Description:  Mickleton-Gloucester -Camden 230kV consists of upgrading 12 overhead circuit miles

of 138kV transmission to 230kV, installing approximately 20 circuit miles of new 230kV underground,

installing 10 circuit miles of new 230kV overhead, and upgrades at five existing stations

Project

Estimate

Through year-

end 2011

2012-2014E

$435M

$2M

$342M

40

PSE&G is replacing aging distribution infrastructure

to improve reliability at a reasonable return

0

250

500

750

1,000

2009

2010

2011

2012E

2013E

2014E

Dist. Capital Infrastructure

Programs

Distribution New Business

Distribution Base

•

Capital Infrastructure Program II was approved in 2011 with spending through

2012

•

Recent incidents in the gas industry have led to enhanced focus on safety of

natural gas pipeline systems

•

Utility storm response in NJ is under review by the Board of Public Utilities

Capital Expenditures

41

Providing solutions to New Jersey’s energy and

economic development goals

0

100

200

300

400

2009

2010

2011

2012E

2013E

2014E

Energy Efficiency

Renewables

($ Millions)

Approval Date

Total

Amount

Spending

Thru 2011

Remaining

Spending

Renewables

Solar Loan I & II

April 2008/

November 2009

$248

$127

$121

Solar 4 All

July 2009

451

361

90

Energy Efficiency

Carbon Abatement

December 2008

46

40

6

Energy Efficiency Economic Stimulus

July 2009

166

144

22

Demand Response

July 2009

45

15

30

Energy Efficiency Economic Stimulus

Extension

July 2011

95

-

95

Total

$1,051

$687

$364

Capital Expenditures

42

Contemporaneous recovery mechanisms represent

approximately $4.1 billion of the total $5.4 billion

capital spending forecast

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2009

2010

2011

2012E

2013E

2014E

Capital Infrastructure

Programs (CIP I & II)

Solar

Energy Efficiency

Transmission

Distribution (Base +

New Business)

PSE&G Capital Expenditures

43

PSE&G’s investment program provides opportunity

for ~13% annualized growth in rate base from

2011*

PSE&G Projected Rate Base

*Starting from 2011 year-end Rate Base of $7.6 billion.

44

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

2010

2014E

Typical Annual Bill

Combined Electric and Gas

Residential Customer

Additional investments by PSE&G will stimulate NJ

economy by creating jobs, while improving reliability

to customers

Supply

Supply*

Delivery and

Clauses

Delivery and

Clauses

Impact of

Transmission

investment

Impact of Renewable

and Distribution

investment

Lower

commodity

costs

are

expected

to

fully

offset

the

impact

to

customer

bills

* 2014 estimated supply cost is based on BGS rates effective 9/2011 and BGSS rates effective 12/2011.

45

PSE&G’s operating earnings growth has been

achieved with a focus on cost control and execution

of capital programs

0

100

200

300

400

500

600

2009

2010

2011

2012

Guidance

$321

$521

Earnings

Guidance

$430

PSE&G Operating Earnings*

$530-$560

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

46

The business of PSE&G:

Delivering value by

meeting the needs of our customers and

shareholders

Meeting

Commitments

Ready for

the Future

•

Achievement of allowed ROE

•

Focus on cost control while

maintaining operational

excellence

•

Celebrating a decade of

reliability excellence in our

region

•

Recognized efforts related to

major storm response during

Hurricane Irene and October

snow storm

•

Successful execution of capital

programs

•

Significant investments with

contemporaneous recovery

•

Transmission represents 66% of

total capital program

•

Pursuing new programs in support

of State energy goals

•

Maintaining reliability while

controlling costs

•

Projected annual rate base growth

of ~13% through 2014

The Business of

PSEG Long

Island

Ralph LaRossa

President and Chief Operating Officer, PSE&G

48

LIPA, a New York State agency, owns T&D and generation assets (formerly LILCO)

–

1.1 million electric customers

–

Public / private business model:

•

T&D owned by LIPA

•

Privately operated

–

Sound T&D operations, but ongoing rate concerns, challenged storm restoration efforts, low customer

satisfaction ratings

December 2011 –

PSEG and partner Lockheed Martin selected to manage T&D system

–

Management Services contract

–

Transition period: 2012 –

2013

–

Contract operating period: 2014 -

2023

–

Economic terms:

•

Fixed fee escalating at regional CPI

•

Up to 15% incentive fee for certain performance metrics

The business of PSEG:

Finding opportunities to

extend and profit from our operational excellence

Conference Break

The Business of

PSEG Power

William Levis

President & Chief Operating Officer, PSEG Power

51

The business of PSEG Power:

A focus on

operating excellence and a commitment to

enhancing shareholder value

Highly

Valued/Engaged

Employees

Growth/

Value Creation

Strategy

Political/

Regulatory

Environment

Operational

Excellence

Reliability

Sustainable

Financial

Performance

52

2011 accomplishments support availability of

low-cost, clean energy supply

Strong safety performance, O&M control,

reduced environmental footprint

Improvement in forced loss rate & EFORd

Meeting EPA requirements, nuclear license

renewal, prepared for future

Strong emphasis on developing people to

drive operational excellence

Uprates, peaker construction, evaluating

new opportunities

Operating Excellence

Reliability

Regulatory Environment

People

Growth/Value Creation

53

Asset diversity enables fleet optimization in

response to changing market dynamics

18%

44%

8%

Fuel Diversity

Coal

Gas

Oil

Nuclear

Pumped

Storage

1%

Energy Produced*

Total GWh: 53,980

56%

15%

Pumped Storage

& Oil <1%

Nuclear

Coal

Gas

Total MW: 13,060

28%

9%

* 2011

•

Well suited to serve load shaped

products

•

Market knowledge and experience to       

maximize the value of our assets

•

Multiple emission controls installed

Intermediate

Energy Market Served

Total MW: 13,060

28%

23%

34%

43%

Baseload

Peaking

•

Low-cost portfolio

•

Fuel flexibility

•

Regional focus in competitive, liquid markets

•

Assets favorably located near customers/load  

centers

54

$0

$1

$2

$3

$4

$5

$6

PPL

RECO

METED

PECO

JCPL

PEPCO

AECO

DPL

PSEG

BGE

$40

$42

$44

$46

$48

$50

WESTERN

HUB

PPL

RECO

METED

PECO

JCPL

PEPCO

AECO

DPL

PSEG

BGE

A well positioned fleet

Note: Reflects prices of original PJM load zones.

•

PSEG Power 2011 basis ~$5/MWhr RTC

•

While 5 year average has declined, volatile

periods help to maintain pricing

•

Premium pricing also seen in capacity

markets

2011 RTC LMPs

2011 Basis to PJM West RTC

PSEG North

PSEG Zone

Eastern MAAC

RPM Zones

Current plant locations

New Haven

Bridgeport

Bethlehem Energy Center

(Albany)

Conemaugh

Keystone

Peach Bottom

Bergen

Kearny

Essex

Sewaren

Edison

Linden

Mercer

Burlington

National Park

Hudson

Hope Creek

Salem

Yards Creek

55

A focus on operating excellence within a safety-

oriented culture to maximize the value of our assets

•

Benchmark performance

•

Improve performance based on

gaps identified

•

Establish performance metrics

within safety-oriented culture

•

Implement material condition

improvement plan

•

Improve outage performance

•

Increase output

•

Safety improvements

•

Strengthened nuclear fundamentals

and refueling outage excellence

•

Improved fossil outage planning and

execution, seasonal readiness

•

Implementation of capital projects on

time, on budget

•

Strengthened stakeholder confidence

•

Increase in generation output

56

2.1

1.0

0.9

3.0

1.4

0.7

0.6

0.6

0.6

0.7

0.7

2007

2008

2009

2010

2011

2012 P

28.4

29.3

30.3

29.6

30.1

30.1

2007

2008

2009

2010

2011

2012 P

94.0

91.7

99.0

93.9

84.1

93.6

96.0

97.0

98.0

98.5

88.6

2007

2008

2009

2010

2011

2012 P

License extension and renewal Salem 1 & 2

and Hope Creek

Hope Creek all-time generation record

Peach Bottom uprate 11 MW (based on

seasonal average)

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.

Nuclear Generation Output*

(000’s GWh)

Forced

Loss

Rate

(

)

(%)

Continued focus on superior nuclear performance

as we maintain our drive for excellence

st

st

57

Emphasizing combined cycle fleet operating

enhancements and continuing to respond to market

dynamics

10

12

13

15

15

16

2007

2008

2009

2010

2011

2012 P

2.5

1.6

1.5

1.2

1.1

0.8

2007

2008

2009

2010

2011

2012 P

7768

7810

7691

7533

7519

7500

2007

2008

2009

2010

2011

2012 P

Combined Cycle Output

(000’s GWh)

Forced

Outage

Rate

(

)

(% EFORD)

Period

Heat

Rate

(

)

(Btu/kWh)

Highest fleet output ever in 2011

Continued improvement in forced outage

rate

Successful heat rate improvement program

Benefiting from spark spread and heat rate

expansion

58

A coal fleet ready for stronger markets as

investment in back-end technology prepared fleet

for EPA rules

13

13

9

11

8

6

2007

2008

2009

2010

2011

2012 P

7.9

8.4

4.8

4.2

6.6

4.0

2007

2008

2009

2010

2011

2012 P

0.91

0.96

0.83

0.4

0.34

0.34

0.20

0.21

0.19

0.17

0.24

0.16

2007

2008

2009

2010

2011

2012 P

Lower gas prices have resulted in coal / gas

switching

Forced outage rate in 2011 impacted by

Hudson 2 reheat tubes

Environmental footprint reduced with

back-end technology

Coal Output

(000’s GWh)

Forced

Outage

Rate

(

)

(% EFORD)

SO

2

and

NO

x

Rates

(

)

(lb/MMBtu)

SO2

NO

x

59

19

13

14

15

10

10

2007

2008

2009

2010

2011

2012

77

91

92

95

93

93

2007

2008

2009

2010

2011

2012 P

Consistent record of start success (approx.

8,900 starts in 2011) provides opportunities in

ancillary and real-time markets

Adds flexibility to serve load and manage in a

diverse market environment

State NO

x

rules will influence fleet size

397 MW of new units

currently in construction

%

Start

Success

(

)

Forced

Outage

Rate

(

)

(% EFORD)

Equivalent

Availability

(

)

(%)

97.0

98.9

99.3

98.3

97.4

97.4

2007

2008

2009

2010

2011

2012 P

Backed by a peaking fleet which provides the ability

to meet load during high demand periods

60

Improved operations added $150M in after-tax

value in 2011, with improvement in environmental

profile

•

Nuclear capacity

•

Nuclear equivalent availability

•

Nuclear generation

•

Total generation

•

CC capacity

•

CC generation

•

Fossil EFORd

•

Fossil equivalent availability

•

SO

2

•

NO

x

•

3,445 MW

•

81%

•

24.7 TWhrs

•

45.0 TWhrs

•

1,221 MW

•

4.6 TWhrs

•

11%

•

82%

•

80K Tons

•

26K Tons

•

3,632 MW

•

93%

•

30.1 TWhrs

•

54.0 TWhrs

•

3,162 MW

•

15.4 TWhrs

•

8.6%

•

88%

•

14K Tons

•

12K Tons

2004  

2011

Today

61

Action taken consistent with industry guidance

Short Term

•

Conducted initial walk-downs of severe accident management procedures and equipment

–

No issues identified

Long Term

•

Additional resources required (people / equipment) for potential

multi-unit event

–

Expand responsibility of existing site personnel

–

Leverage existing on-site equipment and storage where possible

•

Review seismic assessments

–

Consistent with recent reviews conducted for early site permit and license renewal

Developing action plan in response to NRC staff

review of Fukushima event

62

Cost control programs have contained growth in

O&M as production has increased

Power's O&M

$0

$500

$1,000

$1,500

O&M

Pension

O&M cost control programs

have contained the growth

in expense

CAGR 2.9% for 2009 -

2011

2009                2010               2011*

$1,000

$500

$1,500

* Includes cancellation and renegotiation of a major contractual arrangement for parts & service.

63

In Service

Bridgeport Harbor 3 baghouse                    

Salem steam generator

Hope Creek uprate

Mercer baghouse

Hudson balance of plant

Keystone scrubber                                     

Mercer scrubber                                           

Hudson scrubber/SCR/baghouse

Spent fuel storage             

Demonstrated success in managing large capital

projects, achieving/exceeding desired results

In Service

Date

Near Term

New Haven peakers                      

Kearny peakers                             

Peach Bottom uprate

Peach Bottom steam path retrofit     

Conemaugh SCR                                     

$2.1 Billion

$1.1 Billion

2007

2008

2008

2008

2008

2009

2010

2010

2004 -

2011

2012

2012

2015 -

2016

2012

2014

64

Conclusion of major environmental spend places

Power in good position to meet CSAPR and MATS

Current Regulations and Compliance Measures

Description

Hudson (NJ)

Mercer (NJ)

Keystone

(PA)

`Bridgeport

(CT)

Conemaugh

(PA)

Status

NO

x

SCR

SCR

SCR

Low No

x

Burners

SCR

2014

Power is well 

positioned for

CSAPR & MATS

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

65

1,408

453

1,187

407

404

576

ICAP

UCAP

HEDD emission limits require environmental

modifications of peaking units in the state

PSEG

2,437

Others

1,482

New Jersey HEDD Capacity

ICAP MW*

PSEG Power HEDD Capacity

MW*

Potential conversion

to Gas

Water-injection,

under review

Uncontrolled; 

Retire by May

2015**

*Excludes PSEG’s Hudson 1 (322 MW) which retired in 2011. **Replacing 271 MW ICAP with 267 MW of new peaking in 2012 at Kearny.

***PJM notified of planned retirement of 283 MW (ICAP), representing 183 MW (UCAP).

2,437

1,998

UCAP is the capacity used for PJM’s RPM auction

**

***

66

Completion of major environmental capital

upgrades reduces future capital requirements

Environmental

Growth

Maintenance

2006

2007

2008

2009

2010

2011

2012E

2013E

2014E

$300

$600

$900

290

580

600

580

570

800

520

370

340

PSEG Power Capital Expenditures

2006-2014E

E=Estimate.

67

Potential sites include:

Bergen

Essex

Kearny

Hudson

Linden

Sewaren

Bridgeport

Considerations include:

Interconnection Capacity

Space

Fuel

Permitting

Assessing the viability of existing sites for gas-fired

development:  Sewaren and Essex appear to be the most

promising locations

68

Strong emphasis on investing in our workforce to

drive operational excellence

•

Improved performance with investments in people

–

Moved training center onsite at PSEG Nuclear

–

Developed mobile training trailers for Fossil on-the-job training

•

Conducted leadership training / rotations through succession planning

•

Ensuring key position pipelines full –

Nuclear operations

•

Maintain positive relationship with unions

–

Ability to adapt quickly to changing conditions

–

Roving workforce to support maintenance needs at different

locations

69

Positioned to

Deliver Value

•

Improved operating

performance of generation

fleet

•

Met environmental

commitments

•

Successfully executed

$2.1 billion of capital projects

•

Disciplined hedging strategies

managed volatility and

reduced risk

•

Nuclear up-rates and

improvements provide

additional, low cost generation

•

Combined Cycle fleet able to

take advantage of gas prices

and spark spreads

•

Meeting environmental

requirements

•

Peaker construction adding

~400 MW in 2012

•

Expansion opportunities

The business of PSEG Power:

Delivering Value

Delivered

on Promises

The Business of

Power ER&T

Shahid Malik

President, PSEG Energy Resources & Trade

71

The business of PSEG Power:

Our strategic

direction emphasizes optimizing the financial

performance of Power’s assets

Hedging Strategy

Flexible

Portfolio

Environmental

Rules

Commodity

Markets

Locational

Advantage

Regulatory

72

0

20

40

60

80

100

Jan-10

Jul-10

Jan-11

Jul-11

-

10

20

30

40

50

Western Hub RTC Forward 2014

Dark Spread

0

20

40

60

80

100

Jan-08

Jul-08

Jan-09

Jul-09

Jan-10

Jul-10

Jan-11

Jul-11

-

10

20

30

40

50

Western Hub RTC Forward 2012

Dark Spread

Actively managing our fleet in a volatile commodity

market, with an asset profile that provides diverse

opportunities for value creation

•

Steep natural gas decline has had a major impact on US power prices and Dark Spreads

•

Coal prices have been supported by long-term contracting and international demand

•

Decline in Dark Spread has led to reduced coal-fired generation in the last 15 months

•

Power’s investments in dual-fuel capability at Hudson and Mercer coal units have made

them more attractive than many other coal units in this environment, and we have switched

to gas generation as economics dictate

2014

Forward

Prices

&

Dark

Spread

2012

Forward

Prices

&

Dark

Spread

73

0%

20%

40%

60%

80%

100%

2012

2013

2014

$0

$10

$20

$30

$40

$50

Coal hedging reflects 2012 supply matched with

2012 sales, with further optimization of our coal

position in the global market

Contracted Coal

•

We actively manage coal supply and

transportation needs based on our

generation needs and market view

•

Our power hedging strategy

mitigates financial exposure to coal

price volatility

•

We have undertaken some financial

hedging to protect against expected

coal price declines

•

As contracts expire in next two years

we will aggressively renegotiate

terms

% Hedged

(left scale)

$/MWh

(right scale)

74

•

Low power prices are not a good environment for any merchant generator, although Power is

more of a hybrid with long-term contracting through BGS sales as well as forward hedging

•

Forward markets signal continued strength in Spark Spreads and Heat Rates

•

Strong spark spreads in the Northeast have benefitted our gas-fired fleet

•

Power is well positioned with hedged nuclear output and efficient combined cycle margin

contribution

Henry

Hub

Gas

Forwards

2013 and 2014 RTC

Forward

Prices

&

Spark

Spread

Managing our fleet to capitalize on volatility

75

An active gas management strategy providing

economic value to customers and our fleet

•

Large portfolio of gas transportation & storage assets

•

Manage gas supply needs of PSE&G and PSEG Power

•

Responsible for over 400 bcf of gas supply in 2011

•

126 bcf consumed by Power’s gas fired assets in 2011;

NJ units used 11% of total PJM gas

•

Well positioned to access Marcellus supplies; nearly

40% of pipeline capacity is adjacent to the region

•

Residential rates decreased eight times since January,

2009; total savings $614, or 35%

76

PJM assets are well positioned along the dispatch curve

and maintain fuel optionality while also reducing the risk of

serving full requirements contracts

Energy Revenue

Capacity Revenue

Ancillary Revenue

Dual Fuel

Peaking units*

Load following units

Nuclear

Coal

Combined Cycle

Steam

Peaking

Baseload units

Illustrative

* Some units have been announced for future retirements.

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

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

77

$0

$25

$50

$75

$100

2008

2009

2010

2011

Dark Spread

Spark Spread

PSEG Zone LMP's

Maximizing the dispatch of our coal and gas fleet to

maintain unit margins

$/MWh

•

Market prices have declined since 2008

•

Although dark spreads have declined, spark

spreads have increased

•

Since 2008 there has been active coal/gas

switching in our fleet

•

Coal generation and margin percentage

have been replaced by our combined cycle

output

50%

45%

47%

41%

50%

55%

53%

59%

0%

25%

50%

75%

100%

2008

2009

2010

2011

Coal

Gas

72%

34%

36%

30%

28%

66%

64%

70%

0%

25%

50%

75%

100%

2008

2009

2010

2011

Coal

Gas

% PSEG’s PJM Coal/Gas Generation

% PSEG’s PJM Coal/Gas Energy Margin

78

Operating within transparent markets undergoing

change in response to economic and regulatory

signals

Lower Reserve Margin

Regulatory

—

environmental

retirements

Economic

—

load

growth

Market

—

uneconomic

units

New

Build

—

minimal

new

generation

currently

Higher Reserve Margin

Regulatory

—

subsidized

generation

Economic

—

load

decline

Market

—

demand

response

New

Build

—

Transmission

Generation Retirement Notifications since 11/2011

Source: PJM TEAC, 2/16/2012

PJM Deactivation Requests (MW) as of:

1/1/11

11/1/11

3/1/12

1,542

2,579

7,985

79

The Reliability Pricing Model has recognized the

locational value of Power’s generating fleet with

sites in the eastern part of PJM

$/MW-day

2011 / 2012

2012 / 2013

2013 / 2014

2014 / 2015

Power’s      

Average Prices

$110

$153

$244

$162

Rest of  Pool

Prices

$110

$16

$28

$126

Latest and upcoming auction influenced by updated demand forecast

and transfer capabilities

Factors in upcoming auction:

Environmental Retirements

Transmission

New Build

Higher Net CONE

Higher MOPR

Power’s 10,500 MW of assets received higher pricing, with nearly 1/3 of its capacity in PS North

and nearly 2/3 of its capacity in EMAAC.

80

Full Requirements Component

Capacity Markets/RPM

Growing Renewable Energy Requirements

Component for Market Risk

Favorably hedging our generation at customer/load

centers through Power’s participation in each of the

BGS auctions

Market Perspective –

BGS Auction Results

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.

2005

2006

2007

2008

2009

2010

2011

2012

$44 -

$46

$67 -

$70

$58 -

$60

$68 -

$71

$56 -

$58

$48 -

$50

$65.41

~ $21

$102.51

~ $32

$98.88

~ $41

$111.50

~ $43

$103.72

~ $47

$95.77

~ $47

$45 -

$47

~ $48

$94.30

~ $46

$37 -

$38

$83.88

81

Managing the portfolio in a volatile basis

environment with market conditions continuing to

provide opportunity

MARKET DRIVERS

•

Extreme weather

•

Higher loads

•

Higher fuel prices

•

Transmission constraints

•

Fuel constraints

•

Milder weather

•

Lower loads

•

Lower gas basis

•

Transmission build

ON PEAK PS ZONE BASIS TO WEST HUB

82

Managing our ancillary revenue stream, which contributes

$100M in annual margin for Power, with potential to expand

services as dependence on intermittent resources grows

Reactive

Regulation

Sync/Non-sync

Reserves

Black Start

Nuclear

Coal

Combined Cycle

CT

83

In the midst of a declining price environment, PSEG Power’s

gross margin per MWh has remained robust

$52

$54

PSEG Power Gross Margin*

($/MWh)

$60

$55

Average Monthly PS Zone RTC LMP 

($/MWh)

*Gross margin reflects energy and capacity pricing.

84

Note:  PJM totals do not include ATSI and DEOK regions; announced retirement totals inclusive of retirements from 1/1/2010.

The EPA is in the process of implementing Clean

Air Act rules which will impact supply

Region

Total Capacity

(GW)

Total Coal Capacity

(GW)

Unscrubbed

Capacity

(GW)

Announced Coal

Retirements

(GW)

Announced Coal

Retirements

(as % of total)

PJM

180

79

30

14

8%

NY ISO

37

2.6

0.6

0.3

1%

ISO-NE

32

2.8

2.1

0.4

1%

U.S. Total

1,036

320

129

42

4%

Cross State Air Pollution Rule (CSAPR)

•

Final rule issued July 2011, having effective date January 2012

•

Rule

would

institute

new,

more

stringent

trading

program

for

NO

x

and

SO

2

emissions

•

US DC Circuit Court ruled to stay implementation on 12/30/11 pending judicial review

•

Final decision expected Summer 2012

Mercury and Air Toxics Standards (MATS)

•

Final rule released December 2011

•

Will require coal and oil-fired units to meet strict emissions limits, or retire

•

Effective early 2015; provides case-by-case extensions where needed to comply

Source: MJB&A Tracking, Ventyx Velocity, EPA NEEDS v4.10, PJM, NYISO, ISO-NE.  As of 2/29/2012.

85

EPA’s clean air rules will impact electricity markets,

and Power is well prepared for environmental

regulations

Sources: MJB&A Analysis, EIA (2010), EPA NEEDs v4.10

Technology

Est. Price Impact

($/MWh)

Natural Gas CC

$0.10-$0.50

Combustion Turbine

$1.00-$25.00

Coal (Controlled)

$1.00-$5.00

Coal (Uncontrolled)

$10.00-$20.00

Note:  Ranges are approximate reflecting variability in

emissions prices and differences among unit technology,

efficiency, fuel and environmental controls.

Energy

CSAPR Impact on NO

x

and SO2

Allowance Prices

Industry Impact:

•

Uncontrolled coal capacity considered at-risk of retirement, will impact reserve margins, capacity and energy prices

•

Older, less efficient, and uncontrolled plants will experience higher variable operating costs, impacting energy prices

Impact to PSEG Power:

•

Power’s clean fleet of nuclear, combined cycle, and environmentally advantaged coal units gives us a competitive

edge when bidding into markets

Capacity

86

Power is an active participant in regulatory

stakeholder processes in support of competitive

markets

ISSUE/POLICY

HOW ADDRESSED?

PJM

MOPR

CONE

DEMAND RESPONSE

RULES

ANCILLARY/ENERGY

Sufficiency/Exceptions under

regulatory review

FERC settlement/hearing

process on levels

Performance/eligibility/

compensation issues before

courts, FERC, EPA and PJM

stakeholder process

Regulation/Blackstart

modifications under

consideration in PJM

stakeholder process

NYISO

CAPACITY

Jurisdictional dispute at FERC

over retirement decisions;

Buyer-side mitigation in NYC

also at FERC

NEPOOL

FCM

Market design issues pending

at Court of Appeals, FERC and

ISO-NE stakeholder process

•

PJM RPM rules for capacity markets

•

PJM Energy/Ancillary Services Market Rules

•

New England Capacity Markets

•

New York Energy Markets

•

Trade Associations and ISO/RTO Senior

Committees

Recent Rulings

•

FERC challenge of Cost of New Entry (CONE)

rules

•

PJM Regulation rules

•

Capacity payments in New England for Forward

Capacity Auction 1 (FCA)

87

Contracting longer term hedges and other products

provides medium term financial stability

Contracted Energy

2012

2013

2014

Volume TWh

34

34

34

Base Load

% Hedged

100%

85-90%

30-35%

(Nuclear and Base Load Coal)

Price $/MWh

$59

$53

$57

Volume TWh

19

18

20

Intermediate Coal, Combined

% Hedged

35-40%

-

-

Cycle, Peaking

Price $/MWh

$59

-

-

Volume TWh

53

52

54

Total

% Hedged

75-80%

55-60%

20-25%

Price $/MWh

$59

$53

$57

*

Hedge

percentages

and

prices

as

of

February

9,

2012.

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.

*

88

Positioned to

Deliver Value

Delivered on

Promises

•

Achieved consistent gross

margin per MWh results

•

Successfully managed flexibility

of fleet during periods of

volatility

•

Increased participation in the

ancillary services market

•

Fuel switching in our NJ coal

fleet

•

Successfully implemented clean

portfolio

•

Utilize assets across the dispatch

curve to be able to take advantage of

volatility

•

Manage risk and exposure in both low

and high market price environments

•

Active fuel procurement and power

hedging strategy

•

Positioned for environmental changes

•

Active participant in regulatory and

stakeholder processes

The

business

of

PSEG

Power:

Successfully

executed its strategy, delivered value today, and is

well positioned for tomorrow’s challenges

Q&A

PSEG –

Financial Review & Outlook

Caroline Dorsa

Executive Vice President and Chief Financial Officer

91

PSEG’s execution of its financial program supports

sustainable, long-term shareholder value

Delivered on

Promises

Positioned to

Deliver Value

•

Earnings guidance achieved

•

Execution of capital

programs strengthened the

balance sheet and reduced

financial risk

•

Continued 105 year track

record of paying common

dividend

•

Expect to deliver value over the

long term as regulated company

earnings increase as a percent of

total earnings

•

Strong balance sheet and cash

flow from both businesses to fund

capital program and maintain

investment optionality

•

2012 Dividend re-set and future

growth supported by outlook for

regulated earnings and total

cash flow

92

$0.63

$2.35

$2.15

$0.11

$0.12

$0.04

$1.03

$0.85

$1.67

2009

2010

2011

Our business mix has changed with PSE&G 

growing from 20% to 38% of operating earnings

Operating Earnings by Subsidiary*

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

Discontinued Operations.

$3.09

$3.12

$2.74

PSE&G

Power

Other

93

Realized Operating Earnings versus Guidance Ranges

*See page A for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings; Reflects Texas in Discontinued

Operations.

Our strong 2011 subsidiary performance enabled

PSEG to deliver at the top end of our guidance

$450

$500

$550

2011

$700

$800

$900

2011

$1,200

$1,300

$1,400

2011

PSE&G

Power

PSEG

94

($0.5)

$0.0

$0.5

$1.0

$1.5

$2.0

In 2011, PSE&G funded its capital program with

internal cash flow, and paid a meaningful dividend

to PSEG

PSE&G 2011 Cash Flows

(1)

PSE&G Cash from Operations adjusts for securitization principal repayments of ~ $210M, and Includes ~$490M Bonus Depreciation

Cash from

Ops

(1)

Dividend to

Parent

LTD

Redeemed

LTD Issued

Reduced

Cash on

Hand

Capital

Investment

95

($0.5)

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

In 2011, Power had $1.7B of free cash flow, which

was used to support the shareholder dividend and

strengthen its balance sheet

(1)

Power Cash from Operations includes Bonus Depreciation ~$315M

Power 2011 Cash Flows

Cash from

Ops

(1)

Texas

Sale

Capital

Investment

Dividend

to Parent

LTD

Redemption

LTD

Issuance

Cash

Investment

Free Cash

Flow: $1.7B

96

-$0.5

$0.5

$1.5

$2.5

$3.5

$4.5

In 2011, PSEG executed its capital program and

had over $2B of free cash flow supporting the

dividend and strengthening the balance sheet

Power Cash

from

Ops

(1)

PSE&G

Cash from

Ops

(1)

Asset

Sales &

other net

cash flow

PSE&G

Capital

Investment

Power Capital

Investment

Shareholder

Dividend

Debt

Redeemed

LTD

Issued

Cash

Investment

PSEG 2011 Cash Flows

Free Cash

Flow:

$2.1B

(1)

PSE&G Cash from Operations includes Bonus Depreciation ~$490MP.  Power Cash from Operations includes Bonus Depreciation ~$315M.

(2)

PSE&G Cash from Operations adjusts for securitization principal repayments of ~ $210M

97

$1,000

$1,250

$1,500

$1,750

$2,000

$2,250

$2,500

2011

2012E

2013E

2014E

O&M

Pension

PSEG Consolidated O&M

(1)

CAGR (’11-’14) = 2.9%

(1)

Excludes O&M related to PSE&G clauses.  E = Estimate.

Focus on business drivers supports overall cost

control

2012 –

2014:

Cyclical maintenance

expenses at Power

Growth in transmission &

appliance service

Headcount relatively flat

Total fringe costs declining

98

Pension contributions will significantly decline as

our pension plan approaches being fully funded

Pension Plan Funded Status and Company Contributions

E =Estimate

$0

$100

$200

$300

$400

$500

2009

2010

2011

2012E

2013E

2014E

70%

80%

90%

100%

99

PSEG’s consolidated capital spending is focused

on growth, with minimal environmental spending

PSEG 2012-2014E Capital Spending

$6.7 Billion

by Subsidiary

PSEG 2012-2014E Capital Spending

$6.7 Billion

Growth / Environmental / Maintenance

E = Estimate; Capital excludes IDC and AFUDC.

100

$1.33

$1.37

$1.37

$1.42

2009

2010

2011

2012E

Modest and Sustainable

Dividend Growth Consistent

With Stable Regulated

Growth and Cash Generation

Outlook at PSEG Power

The 2012 dividend increase reflects a reset to

the dividend and a revision to our payout policy

PSEG Annual Common Dividend Per Share

E = Estimate

101

0%

10%

20%

30%

40%

50%

60%

70%

80%

2009

2010

2011

2012-2014E

Average

PSEG Power

Funds from Operations / Total Debt

Our focus on building a strong balance sheet

places us in an advantageous position to capitalize

on selected new opportunities

Power’s free cash flow

produces solid credit

measures despite low

natural gas prices

Free Cash Flow

(1)

~950

~750

~1,725

Average: ~415

Dividends to Parent

850

(2)

549

500

Average: ~525

(in $Millions)

(1)

Free Cash Flow represents cash from operations less cash used for Capital investment; E = Estimate.

(2)

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

102

PSEG’s strong credit profile provides the financial flexibility

for a range of ~$750M to >$1B of capital allocation options

depending upon business mix and return profile

2012-2014E PSEG Sources & Uses

Sources

Uses

Power Cash

from Ops

PSE&G Cash

from Ops

(1)

Debt

Redeemed

PSE&G Capital

Investment

Power Capital

Investment

Shareholder

Dividend

Debt

Issuances

Holdings

& Other

Net Cash

Flow

Cash

(1)

PSE&G Cash from Operations adjusts for securitization principal repayments of ~$680M in 2012-2014.  E=Estimate.

103

PSEG has a variety of options to enhance

shareholder value

New Reliability Based Transmission

Solar 4 All Extension

Energy Efficiency

Gas Infrastructure

New Build at Power

Holdings Solar

Future Dividend Growth

104

Guidance

$1.31

$1.13

PSEG’s 2012 earnings guidance of $2.25 to $2.50

reflects continued improvement at PSE&G and a

decline in margins at Power

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

2011 Operating Earnings*

2012E Earnings Guidance*

PSE&G Earnings Per Share

2012 Assumptions

PSE&G

Growth in investments that provide

contemporaneous returns

Transmission

Distribution economic stimulus programs

Programs supporting NJ’s Energy Master

Plan

Power

Impacted by lower energy prices

Near term effects minimized by hedges in place

~400MW new Peaking capacity in-service mid

2012

Energy Holdings / Parent

Operating earnings guidance of $0.07 to $0.09

Power Earnings Per Share

Guidance

$1.10

$1.05

$0.00

$0.50

$1.00

$1.50

$2.00

2011 Operating Earnings*

2012E Earnings Guidance*

*See page A for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings; 2011 reflects Texas in Discontinued

Operations. E = Estimate

105

PSEG’s long-term outlook is influenced by Power’s

hedge position and increased investment at

PSE&G

2013

2014

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 3% Change in Depreciation Rate

Segment EPS Drivers

Each $100 Million of Incremental Investment

Each 1% Change in Sales:

Electric

Gas

Each 1% Change in O&M

Each 10 bp Change in ROE

$0.01

$0.01

$0.01

$0.01

$0.01

$0.01

$0.01

$0.01

$0.01

$0.01

$0.14 -

$0.17

$0.04

$0.02

$0.01

$0.01

$0.04 -

$0.07

$0.04

$0.01

$0.01

$0.01

Note: EPS impacts assume normal market commodity correlation and demand.

106

A growing earnings contribution from our regulated

operations better positions us to grow cash returns

to shareholders

% of Earnings

2009 - 2011

72%

28%

PSE&G

Rest of PSEG

E = Estimate

2012 - 2014E

47%

53%

~

~

107

Holdings has significantly reduced its portfolio and

will continue to monetize legacy assets

Solar

Investments

Regulated

Energy

Leases &

Other

Merchant

Energy

Leases

LILO/SILO

Leases

International

Investments

Holdings Investment

Portfolio

$4.9B

$1.2B

Merchant

Energy Leases

Regulated

Energy Leases

& Other

Texas

Texas Transfer &

Sale ~$600M

LILO/SILO Lease

Terminations

~$1.2B

International &

Other Global

Asset Sales

~$2.1B

Dynegy Lease

Reserve ~$0.2B

2006

2011

Note: 2006 and 2011 data reflect book values of assets.

Transactions reflect market values for asset dispositions or, in the case of Dynegy,

book value reserve taken in 2011.

108

Tax Update

Final LILO/SILO settlement executed

Closing agreement establishes certainty for cross

border lease tax treatment for all years

Settlement Agreement, closing tax years 1997

through 2003, was also executed

Immaterial earnings impact and expected net refund

of ~$100M

109

PSEG Value Proposition

Operating

Excellence

Regulatory/

Market

Drivers

Financial

Strength

Disciplined

Investment

•

Clean, low cost Nuclear, CCGT, and Coal generating fleet

•

Large, reliable electric and gas distribution operations

•

Energy markets in midst of transformational change

Environmental compliance costs and low natural gas prices to force retirements

    of 11 to 25 GW of existing generation in PJM

Infrastructure upgrades/reliability requirements driving regulated investment

•

PSEG in position to benefit from higher market prices for 

power and 13% CAGR in regulated rate base

•

Strong balance sheet provides flexibility and liquidity to

finance growth opportunities

•

Meaningful 2012 dividend increase and revised dividend

policy

•

Management long-term incentive leveraged to

shareholder value creation

PSEG –

Summary

Ralph Izzo

Chairman, President and Chief Executive Officer

Q&A

Executive Profiles

113

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 named as the company’s president and chief operating officer and a member of the

board of directors of PSEG, in October 2006. Previously, 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.  He is frequently asked to testify before Congress

and speak to organizations on matters pertaining to national energy policy.  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), Thomas A. Edison State College (Doctor of Humane Letters), and Bloomfield 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), the Institute for Nuclear Power

Operations (INPO), the National Center on Addiction and Substance Abuse at Columbia University (CASA), and The Center for Energy

Workforce Development.  He is also a member of the Columbia University School of Engineering Board of Visitors and the Princeton

University Adlinger Center for Energy and the Environment Advisory Council.

114

J.A. “Lon”

Bouknight, Jr.

Executive Vice President and General Counsel

Public Service Enterprise Group Incorporated

Public Service Electric and Gas Company

PSEG Services Corporation

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.

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, business assurance and resilience, and public affairs and sustainability.  Mr.

Bouknight also serves as Executive Vice President, PSEG Power.

115

Caroline Dorsa

Executive Vice President and Chief Financial Officer

Public Service Enterprise Group Incorporated

Public Service Electric and Gas Company

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

Public

Service

Enterprise

Group

Inc.

(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.

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.

116

Anne E. Hoskins

Senior Vice President –

Public Affairs & Sustainability

PSEG Services Corporation

Anne

E.

Hoskins

serves

as

senior

vice

president

–

public

affairs

and

sustainability of PSEG Services Corporation. In this position, she is responsible

for PSEG’s federal and state governmental affairs; environmental, health and

safety

policy

and

compliance;

and

sustainability

initiatives

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.

Ms.

Hoskins

also

is

a

member of PSEG’s executive officer group and the PSEG corporate foundation.  Prior to joining

PSEG, Ms. Hoskins served as senior and regulatory counsel for Verizon Wireless and as an

associate in the 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 master 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

New

Jersey

chapter

of

The

Nature

Conservancy

and

is

on

the

board of trustees for New Jersey Future, the Children’s Specialized Hospital Foundation, Inc.,

Drumthwacket

Foundation,

Sustainable

Jersey

and

Clean

Air,

Cool

Planet

--

a

northeast

environmental collaborative to address climate change.

117

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 in 2005.

Mr. Joyce has more than 35 years of experience in commercial nuclear power operations. Under his leadership as president

and

chief

nuclear

officer,

Salem

and

Hope

Creek

combined

to

set

a

new

site

generation

record

in

2009.

In

2011,

the

stations

also received approval from the Nuclear Regulatory Commission (NRC) to extend their operating licenses an additional 20

years. Reinforcing the company’s strong ties to the local community, the license renewal approvals did not encounter any

formal legal contentions like many other plants across the country.  While leading Salem, the station completed two

successful

reactor

vessel

head

replacement

outages.

Salem

Unit

1

completed

its

outage

capturing

the

world

record

for

shortest head replacement outage.

Prior to 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 operators (SRO) license.

118

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.

119

William Levis

President and Chief Operating Officer

PSEG Power

PSEG Nuclear operates the Salem and Hope Creek nuclear generating stations in New Jersey and is a part owner of the Peach Bottom

generating station.  Under Levis’ leadership, the Salem and Hope Creek stations advanced to their highest levels of performance, producing

record generation and achieving top quartile performance in a number of indicators including INPO Index.  PSEG Fossil operates the

company’s portfolio of natural gas, coal and oil-fired electric generating units.  Its two New Jersey coal plants have been retrofitted with

approximately $1.5 billion of back-end technology equipment, making them two of the cleanest coal burning plants in the nation.  Under

Levis’ leadership, many of the process improvements from nuclear were modified and implemented across Fossil.  These changes

dramatically improved the performance of the entire fleet and resulted in record generation and reliability with a reduced environmental

footprint.  PSEG Energy Resources & Trade (ER&T) manages PSEG Power’s generation portfolio and basic gas supply service, the

purchase of fuel, and buys and sells electric and gas commodity.  ER&T is responsible for taking Power’s assets to the energy markets.

Before coming to PSEG, Mr. Levis was Exelon Nuclear’s vice-president – Mid-Atlantic operations.  During his years at Exelon, Mr. Levis

oversaw significant improvements, setting records for total annual megawatt production and establishing efficiency records for refueling

outages.  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 has a Bachelor of Science degree in marine engineering from the U.S. Naval Academy and holds an SRO (senior reactor operator)

certification.  He retired as a commander in the Naval Reserves and attained his professional engineer license in 1985.  Mr. Levis serves as

a member of Pennsylvania Congressman James Gerlach’s Service Academies Selection Committee.  He is also a member of Nuclear

Energy Institute’s Board of Directors, and serves as a member of the Institute of Nuclear Power Operations (INPO) National Nuclear

Accrediting Board.

William Levis is president and chief operating officer of PSEG Power, a position he’s held since June 2007.  PSEG

Power is a major, unregulated independent power producer in the U.S. with three main subsidiaries: PSEG Nuclear,

PSEG Fossil, and PSEG Energy Resources and Trade (ER&T). PSEG Power operates one of the most balanced

portfolios in the country, both in terms of fuel mix and market segment.  Its low-cost, load following fleet is

geographically well positioned in competitive markets. 

120

Shahid Malik

President

PSEG Energy Resources & Trade

Mr. Malik has an extensive background in the energy industry across the oil, gas, electric and renewable energy sectors in

Europe and the United States.  Previously, he was with Pittiglio, Rabin, Todd & McGrath (PRTM) in Pittsburgh, PA and

was responsible for all aspects of growing the global energy practice, with a primary focus on the North American utility

sector.

Prior to that he served as President & CEO of Strategic Energy, Great Plains Energy’s unregulated retail marketing

subsidiary and a provider of energy and services to business clients in North America.  He was accountable for the

Company’s

strategy

and

operations

and

led

a

successful

turnaround

of

the

company,

achieving

significant

growth

in

products and services while reducing costs. 

Mr. Malik’s career has included Executive Leadership positions with several energy companies including Entergy

Corporation,

Reliant

Energy

and

BP

Oil

Company.

In

addition,

he

served

on

the

Board

of

Directors

of

South

Jersey

Industries (NYSE: SJI) prior to joining PSEG.  Mr. Malik has been in the energy business for more than 20 years, since

receiving his Economics degree from Manchester University in England and an MBA from Rice University, Houston.

He sits on the Boards of Gilda’s Club (Cancer Care Centers) and Pittsburgh Musical Theater.

Shahid Malik was elected President of PSEG Energy Resources & Trade (ER&T) in December,

2011.  PSEG operates one of the most balanced portfolios in the country, both in terms of fuel mix

and

market

segment

(base

load

units,

load

following

units

and

peaking

units),

and

Mr.

Malik

is

essentially

responsible

for

taking

these

assets

to

market.

He

oversees

PSEG’s

generation

portfolio,

basic gas supply service, and the purchase and sale of all energy commodities.

121

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.  PSEG Energy Holdings also owns power plants,

energy, real estate and other investments in the United States.

Mr. Mehrberg is also PSEG’s

executive vice president responsible for corporate strategy, 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.

Mr.

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, Mr. 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.

Mr.

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

on

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,

The

Center

for

Collaborative

Change,

NJN

Television

Foundation,

Millennium

Park

and

the

Lincoln

Park

Zoo.

Mr.

Mehrberg

has

been

the

recipient

of

numerous

civic

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.

122

Margaret M. Pego, SPHR

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 of 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

124

PSEG 2012 Operating Earnings Guidance

-

By Subsidiary

$ millions (except EPS)

2012E

2011

PSEG Power

$575 –

$665

$ 845

PSE&G

$530 –

$560

$ 521

PSEG Energy Holdings/Parent

$35 –

$45  

$ 23

Operating Earnings*

$1,140 –

$1,270

$ 1,389

Earnings per Share

$ 2.25 –

$ 2.50

$2.74

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

125

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

2011

Equity

Debt

(1)

Preferred

Stock

Debt

7,311

7,812

7,060

Preferred Stock

80

0

0

Common Shareholders Equity

8,788

9,633

10,270

Debt plus Equity

16,179

17,445

17,330

Debt Ratio

45.2%

44.8%

40.7%

(in $Millions)

126

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

December 31, 2009

December 31, 2010

December 31, 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

(2)

3,121

3,455

2,751

PSE&G

3,571

4,283

4,270

Holdings

127

-

-

Parent / Services

(38)

10

39

Total Long-term Debt

6,781

7,748

7,060

Preferred Stock

80

-

-

Total Common Stockholders' Equity

8,788

9,633

10,270

TOTAL CAPITALIZATION

16,179

$                        

17,445

$                        

17,330

$                        

December 31, 2009

December 31, 2010

December 31, 2011

Debt

7,311

7,812

7,060

Preferred Stock

80

-

-

Total Common Stockholders' Equity

8,788

9,633

10,270

Debt Plus Equity

16,179

$                        

17,445

$                        

17,330

$                        

Debt Ratio

45.2%

44.8%

40.7%

PSEG Consolidated ($Millions)

127

At the end of 2011, Power and Parent available

liquidity totaled approximately $4.1 billion

Expiration

Total

Available

Company

Facility

Date

Facility

Usage

Liquidity

($Millions)

PSE&G

5-year Credit Facility

Apr-16

$600

$0

$600

5-Year Credit Facility (Power)

Dec-12

$1,525

1

$75

$1,450

5-Year Credit Facility (Power)

Apr-16

$1,000

$0

$1,000

5-Year Bilateral - Credit Suisse (Power)

Sep-15

$100

$100

$0

5-year Credit Facility (PSEG)

Dec-12

$477

2

$12

$465

5-year Credit Facility (PSEG)

Apr-16

$500

$0

$500

Total

$4,202

$4,015

$643

PSE&G ST Investment

$115

Total Liquidity Available

$4,773

Total Parent / Power Liquidity

$4,058

1

Power Facility was reduced by $75 million in December 2011

2

PSEG Facility was reduced by $23 million in December 2011

PSEG /

Power

PSEG Money Pool ST Investment

128

PSEG Resources Leveraged Lease Portfolio

Lessee

Equipment

12/31/11*

Invested 

($ millions)

S&P

Credit

Rating**

REMA (GenOn)

Keystone, Conemaugh & Shawville (PA)

3 coal fired plants (1,162

equity MW)

332

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)

218

CCC+***

Merrill Creek –

(PECO, MetEd,

Delmarva P&L)

Reservoir in NJ

129

BBB,

BBB-,

BBB+

Grand Gulf

Nuclear station in Mississippi (154 equity MW)

102

A+

Renaissance Ctr.

Office towers located in Detroit, MI leased to GM

41

BB+

Wal-Mart

Portfolio of 17 Wal-Mart stores

30

AA

E-D Centers

Portfolio of 8 shopping centers

23

NR

Total Leases

$875

*

The

investment

does

not

reflect

the

impact

of

deferred

taxes.

**As

of

March

1,

2012.

NA/NR:

Not

Applicable/Not

Rated.

***Indicative

rating

reflecting

either

Lessee,

additional

equity

collateral

support

or

parent

company

unsecured

debt

rating.

129

Operated by PSEG Nuclear

PSEG Ownership: 100%

Technology: Boiling Water Reactor

Total Capacity: 1,173MW

Owned Capacity:  1,173MW

License Expiration: 2046

License renewal approved

July 2011

Next Refueling

Spring 2012

Operated by PSEG Nuclear

Ownership: PSEG --

57%,

Exelon –

43%

Technology: Pressurized Water Reactor

Total Capacity: 2,326MW

Owned Capacity: 1,336MW

License Expiration: 2036 and 2040

License renewal approved

June 2011

Next Refueling

Unit 1--

Spring 2013

Unit 2 –

Fall 2012

Operated by Exelon

PSEG Ownership: 50%

Technology: Boiling Water Reactor

Total Capacity: 2,247MW

Owned Capacity: 1,123MW

License Expiration: 2033 and 2034

Next Refueling

Unit 2 –Fall 2012

Unit 3 –

Fall 2013

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

130

$0

$5

$10

2012

2013

2014

Anticipated Nuclear Fuel Cost

Hedged

Nuclear fuel needs have been hedged through

2014

131

The full requirements BGS rate recognizes the

forward PJM capacity market price

Capacity Price per RPM Auction for PSEG Zone

Capacity Price per BGS Tranche

2012-2013

155

$                 

Three Year Average ($/MW-day)

188

$                

2013-2014

245

$                 

MW per Tranch (varies by EDC)

~115

2014-2015

164

$                 

Days per Year

365

Three Year Average ($/MW-day)

188

$          

Capacity Cost per Tranche

7,902,360

$     

MWh per Tranche

Energy MW per Tranche (varies by EDC)

~115

Hours per Year

8,760

Load Factor (varies by EDC)

~42%

MWh per Tranche

400,000

Capacity Cost per MWh

20

$           

132

Slow economic recovery in NJ is constraining

growth in all market sectors

•

Modest residential growth limited

by housing market inactivity and

the slow economic recovery

•

Consumer spending is trending

with the slow economic recovery

and impacting growth in the

commercial sector

•

Industrial sales growth continues

to be constrained by slow

economic recovery

0.1%

0.1%

0.3%

(0.0%)

1.0%

0.8%

0.2%

0.8%

2012 -

2014 Projected

Sales* Growth -

Gas

2012 -

2014  Projected

Sales* Growth -

Electric

Residential

Commercial

Industrial

Total

Residential

Commercial

Industrial

Total

*  Weather normalized estimated annual growth per year over forecast period

133

Key economic indicators forecast renewed growth

over the 2011 to 2014 timeframe

•

The New Jersey economy increased by 2.0%

annually from 2009 to 2011 and is anticipated to

grow 2.3% per year from 2011 to 2014

•

New Jersey total non-farm employment declined

by 0.4% annually from 2009 to 2011 and is

expected to grow 1.4% per year from 2011 to

2014

•

Real personal income in New Jersey increased by

1.6% annually from 2009 to 2011 and is expected

to increase 2.3% per year from 2011 to 2014

•

Single family housing starts declined by 4.9%

annually from 2009 to 2011 and are expected to

increase ~33% per year from 2011 to 2014

Source: HIS Global Insight January 2012 Forecast.

NJ Total Employment

3,700

3,800

3,900

4,000

4,100

2009

2011

2014

NJ Real Gross State Product

$400,000

$420,000

$440,000

$460,000

$480,000

$500,000

2009

2011

2014

NJ Real Personal Income

$360,000

$380,000

$400,000

$420,000

$440,000

$460,000

2009

2011

2014

NJ Single Family Housing Starts

0

5

10

15

20

2009

2011

2014

134

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. Currently, the five commissioners

are:

Robert Hanna, Commission President

Jeanne M. Fox

Joseph L. Fiordaliso

Nicholas Asselta

Mary-Anna Holden

Stefanie Brand, Director of the Division of Rate Counsel

Items Excluded from Income from Continuing

Operations to Reconcile to Operating Earnings

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.

Page A

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

Reconciling

Items

Excluded

from

Continuing

Operations

to

Compute

Operating

Earnings

(Unaudited)

2011

2010

2009

2008

Gain (Loss) on Nuclear Decommissioning Trust (NDT)

Fund Related Activity (PSEG Power)

50

$           

46

$        

9

$            

(71)

$       

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

107

(1)

(11)

14

Lease Transaction Losses (Energy Holdings)

(173)

-

29

(490)

Market Transition Charge Refund (PSE&G)

-

(72)

-

-

Gain (Loss) on Asset Sales and Impairments (Energy Holdings)

34

-

-

(13)

Total Pro-forma adjustments

18

$           

(27)

$       

27

$          

(560)

$     

Fully Diluted Average Shares Outstanding (in Millions)

507

507

507

508

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

0.10

$        

0.09

$     

0.02

$       

(0.14)

$    

Gain (Loss) on MTM (PSEG Power)

0.21

-

(0.02)

0.03

Lease Transaction Loss (Energy Holdings)

(0.34)

-

0.05

(0.96)

Market Transition Charge Refund (PSE&G)

-

(0.14)

-

-

Gain (Loss) on Asset Sales and Impairments (Energy Holdings)

0.06

-

-

(0.03)

Total Pro-forma adjustments

0.03

$        

(0.05)

$    

0.05

$       

(1.10)

$    

For the Year Ended

December 31,

Pro-forma Adjustments, net of tax

Per Share Impact (Diluted)

Earnings Impact ($ Millions)