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) January 8, 2015

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 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

PSEG, Power and PSE&G

On January 8-9, 2015, PSEG is participating in a series of investor meetings at the Evercore ISI 2015 Utility CEO Conference in Palm Beach, Florida. The attachment, which is furnished as Exhibit 99 to this Form 8-K, represents the discussion materials being used at the meetings. The conference materials are posted on the pseg.com website under the investor tab, or at http://investor.pseg.com.

Item 9.01 Financial Statements and Exhibits

Exhibit 99. Discussion materials for January 8-9, 2015 investor meetings.

2

SIGNATURE

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

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

(Registrant)

By:	/s/ Stuart J. Black
	Stuart J. Black Vice President and Controller (Principal Accounting Officer)

Date: January 8, 2015

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/ Stuart J. Black
	Stuart J. Black Vice President and Controller (Principal Accounting Officer)

Date: January 8, 2015

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/ Stuart J. Black
	Stuart J. Black Vice President and Controller (Principal Accounting Officer)

Date: January 8, 2015

5

EX-99

We have the

energy

to make things better

…

for you, for our investors

and for our stakeholders.

Exhibit 99

Forward-Looking Statement

Certain of the matters discussed in this report about our and our subsidiaries' future performance, including, without limitation, future revenues, earnings, strategies, prospects, consequences and all other statements that are

not purely historical constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, which could

cause actual results to differ materially from those anticipated. Such statements are based on management's beliefs as well as assumptions made by and information currently available to management. 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. Factors that may cause actual results to differ are often presented with the forward-looking statements themselves. Other factors that could cause actual results to differ materially from those contemplated in any

forward-looking statements made by us herein are discussed in filings we make with the United States Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K and subsequent reports on Form 10-

Q and Form 8-K and available on our website: http://www.pseg.com. These factors include, but are not limited to:

•

adverse changes in the demand for or the 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, capacity market design, transmission planning and cost allocation rules, including how transmission projects are 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 and enforcement 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 manage our energy obligations, available supply and risks,

•

adverse outcomes of any legal, regulatory or other proceeding, settlement, investigation or claim applicable to us and/or the energy industry, 

•

any deterioration in our credit quality or the credit quality of our counterparties, 

•

availability of capital and credit at commercially reasonable terms and conditions and our ability to meet cash needs,

•

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,

•

any equipment failures, accidents, severe weather events or other incidents that impact our ability to provide safe and reliable service to our customers, and any inability to obtain sufficient insurance coverage or

recover proceeds of insurance with respect to such events,

•

acts of terrorism, cybersecurity attacks or intrusions that could adversely impact our businesses,

•

increases in competition in energy supply markets as well as competition for certain transmission projects, 

•

any inability to realize anticipated tax benefits or retain tax credits,

•

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 funding requirements, 

•

changes in technology, such as distributed generation and micro grids, and greater reliance on these technologies, and 

•

changes in customer behaviors, including increases in energy efficiency, net-metering and demand response.

All of the forward-looking statements made in this report are qualified by these cautionary statements and we cannot assure you that the results or developments anticipated by management will be realized or even if realized,

will have the expected consequences to, or effects on, us or our business prospects, financial condition or results of operations. Readers are cautioned not to place undue reliance on these forward-looking statements in

making any investment decision. Forward-looking statements made in this report apply only as of the date of this report. While we may elect to update forward-looking statements from time to time, we specifically disclaim

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

The forward-looking statements contained in this report are intended to qualify for the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,

as amended.

2

3

GAAP Disclaimer

These materials and other financial releases can be found on the

pseg.com

website under the investor tab, or at http://investor.pseg.com/

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 slides in this presentation include a list of items excluded from Net

Income to reconcile to Operating Earnings, with a reference to those slides

included on each of the slides where the non-GAAP information appears.

PSEG OVERVIEW

VICE PRESIDENT

INVESTOR RELATIONS

Kathleen Lally

EXECUTIVE VICE PRESIDENT AND

CHIEF FINANCIAL OFFICER

Caroline Dorsa

CHAIRMAN, PRESIDENT AND

CHIEF EXECUTIVE OFFICER

Ralph Izzo

5

PSEG’s Strategy –

delivering results

Our businesses’

focus on cost-

effective, reliable operations yields

strong cash flow

We are funding growth-oriented

investments aligned with customer

needs and state energy policies

We are enhancing the competitiveness

of our environmentally well-positioned

generation business

The results of our financial strategy

support a credit profile capable of

meeting our corporate objectives

and providing sustained dividend

growth for our shareholders

6

Two complementary businesses

Strong asset platform, performing well and positioned for the future

ASSETS AND OPERATING EARNINGS ARE FOR THE YEAR ENDED 12/31/2013.

PSE&G AND POWER DO NOT ADD TO TOTAL DUE TO PARENT, PSEG LONG ISLAND AND ENERGY HOLDINGS ACTIVITY.

SEE SLIDE A FOR ITEMS EXCLUDED FROM INCOME FROM CONTINUING OPERATIONS/NET INCOME TO RECONCILE

TO OPERATING EARNINGS.

.

Strategy:

Fuel diverse fleet is geographically

and environmentally well positioned, with

investments to enhance competitiveness

Value

Proposition:

Provides

substantial

free cash flow in current environment

and poised for price recovery 

Assets $12B

Operating Earnings $710M

Regional Competitive Generation

Strategy:

Positioned

to

meet

customers’

needs as we respond to state and federal

energy policy and economic growth objectives

Value

Proposition:

An

$11.3

billion

infrastructure program –

focused on

transmission –

that is expected to produce

double-digit rate base growth through 2016

Assets  $20B

Operating Earnings $612M

Electric & Gas Delivery

and Transmission

2013

2013

7

Delivering on commitments and pursuing

opportunities for growth

Operational

Excellence

•

Power:  Record 2013 output at Linden CCGT and Salem 2;

nuclear capacity factor greater than 90% for 9   straight year

•

PSE&G:  Mid-Atlantic Reliability Award (12   consecutive year)

•

PSEG Long Island:  Went “live”

on January 1, 2014

•

PSEG:  Cost-control benefits continue

Financial

Strength

•

Strong cash flows supported credit rating increases

•

Pension fully funded

•

Dividend increased

Disciplined

Investment

•

PSE&G

Transmission capital program execution and growth

Energy Strong infrastructure program underway

Solar 4 All Extension and Solar Loan III programs

•

Power:  Investments to enhance the fleet’s competitiveness –

130 MW Nuclear uprate, 150 MW CCGT uprate and efficiency improvement

th

th

8

Operating Earnings Mix 

Long term investment program has driven increased earnings

contribution from stable, regulated business

*SEE SLIDE A FOR ITEMS EXCLUDED FROM INCOME FROM CONTINUING OPERATIONS/

NET INCOME TO RECONCILE TO OPERATING EARNINGS; DISCONTINUED OPERATIONS REFLECT

TEXAS.

E=ESTIMATE

**

2014

PERCENTS

USE

MIDPOINT

OF

EARNINGS

GUIDANCE.

Power’s

diverse fuel mix

and dispatch flexibility

continues to generate

earnings and free cash flow

PSE&G’s

investment

in

transmission has

diversified its asset base

and, coupled with other

investments

and cost controls,

supported compound

annual earnings growth of

~18% over  2009 –

2013

Operating Earnings* Contribution by Subsidiary (%)

PSE&G

Power

Other

$2.44

$2.58

$2.60 -

$2.75E

$3.12

$2.74

$3.09

9

Maintaining a robust capital program

focused on growth

PSEG 2014 -

2018E Capital Spending

$13.1 Billion

PSEG 2009 -

2013 Capital Spending

$11.3 Billion

NOTE:

POWER

2009–2013

ACTUALS

ARE

RESTATED

TO

INCLUDE

SOLAR

CAPITAL

SPEND.     

POWER

CAPITAL

SPENDING

EXCLUDES

NUCLEAR

FUEL.

E=ESTIMATE.

DATA AS OF MARCH 31, 2014.

Power

$1.6B

PSE&G

$11.3B

Power

$2.8B

PSE&G

$8.4B

10

PSEG’s business profile has been transformed

through significant growth in utility capital spending, and we have consistently

identified attractive opportunities for additional investment

3 YEAR AVERAGE PSE&G CAPITAL

SPENDING GREW AT A RATE OF

23% PER YEAR FROM 2008 -

2013

AVERAGE PSE&G CAPITAL SPENDING

FOR THE 3-YEAR PERIOD

ENDING IN BASE YEAR.

PSE&G TOTAL CAPITAL SPENDING

IN BASE YEAR.

11

•

Energy Strong Agreement reached with all parties

Agreement recognizes the benefits of system investments that prevent or shorten

outages

Supports $1.22 billion capital program over several years on reasonable terms:

$1 billion recovered through accelerated, rate recovery mechanism

-

$820 million Electric  

-

$400 million Gas 

Allows PSE&G to earn a 9.75% ROE on the $1 billion recovered on accelerated basis

Requires PSE&G to file a base rate case by November 2017

Approved by the NJBPU in May 2014

•

Over 100 New Jersey municipalities supported Energy Strong

•

Energy Strong agreement clears path for PSE&G to begin the initial phase of this

robust capital program

Energy

Strong

Agreement

recognizes

benefits

of

system

investments

12

PSEG

Power

–

Value-advantaged

through

asset

diversity,

fuel flexibility, location and installed environmental controls

2013

PERIOD

*

INCLUDES

NEW

JERSEY

COAL

UNITS

THAT

FUEL

SWITCH

TO

GAS.

Fuel Diversity

Total MW: 13,450

Energy Produced

Total GWh: 54,264

Energy Market Served

Total MW: 13,450

Load Following

Peaking

Base load

Gas

Pumped

Storage

Nuclear

Oil

Coal*

Solar

13

PSEG –

Year to Date 2014 Highlights

Operating Earnings YTD up 9% to $2.27 per share from $2.09 for YTD 2013

PSE&G on track to record double-digit growth in earnings on expanded capital

investment program

PSEG Power expected to earn at upper level of expectations for the full year

Narrowed 2014 full–year, operating earnings guidance to $2.60-$2.75 per share,

from $2.55-$2.75 per share prior

Executing on our capital program

Replacement of PSE&G’s gas cast-iron pipe underway as part of $1.22 billion

Energy Strong capital program

Major transmission projects under $6.8 billion capital program are on-time

and on-budget

Market developments

PJM proposed changes to its Reliability Price Mechanism, Demand Curve Adjustment

and pending Demand Response (DR) issues supportive of price formation

14

SEE SLIDE A FOR ITEMS EXCLUDED FROM INCOME FROM CONTINUING

OPERATIONS/NET INCOME TO RECONCILE TO OPERATING EARNINGS.      

E = ESTIMATE.

$2.44

$2.58

$2.60 -

$2.75E

2014 operating earnings guidance narrowed; forecast full-year at upper end

of range, assuming normal weather and unit operations for rest of year

PSEG –

2014 Another Year of Growth

15

Balance Sheet Strength

2009

–

2013:

Reduced

risk

profile

and

transformed

business mix

•

Invested

$8.4

billion

in

PSE&G

•

Improved

credit

ratings

•

Monetized

and

de-risked

Holdings’

portfolio

2014

–

Forward:

Strong

cash

flows

and

increasingly

regulated business mix fully support:

•

PSE&G’s

$11.3

billion

approved

investment

program

through

2018

•

Opportunity for consistent

and

sustainable

dividend

growth

•

Additional

investment

capacity

to

deploy

in

opportunities

beyond

those

in

the

current

capital

plan

•

No

need

to

issue

equity

16

Investment opportunities exceeding $1 billion

Focused on providing our customers with access to low-cost gas

and cost-effective technologies that reduce emissions

as they also improve system reliability

Potential Investment

Description

Amount

($ Millions)

Bridgeport Harbor Station

New 450 MW CCGT Unit

$500 --

$700 

PSEG --

Long Island

Utility 2.0 Energy Efficiency Filing

$200 --

$345

Artificial Island

FERC 1000 Project*

$250 --

$300

PennEast Pipeline

Equity Interest

$100 --

$120

PSE&G Energy Efficiency

Program Extension

$100 --

$100

Total

$1,150-$1,565

*Artificial Island Project includes amount for related compensator which has been assigned to PSE&G.

INFORMATION AS OF NOVEMBER 11, 2014.

17

PSEG

Annual

Dividend

–

A

long

history

of

growth

and returning cash to shareholders with a financial position that

provides opportunity for consistent and sustained growth

Payout Ratio

70%

63%

66%

43%

44%

43%

44%

50%

58%

56%

55%*

PSEG Annual Dividend Rate 

*2014E PAYOUT RATIO REFLECTS THE MIDPOINT OF OPERATING EARNINGS GUIDANCE.  E=ESTIMATE

10-YEAR COMPOUND ANNUAL

RATE OF GROWTH 3.0%

18

Value Proposition

PSEG is positioned to expand its investment in PSE&G

projects that provide reasonable, risk-adjusted returns,

in ways that meet customer needs and state goals,

given strong cash flow of Power and growing cash

contribution from PSE&G.

PSEG will maintain a strong financial profile that

provides the opportunity to achieve our growth

objectives

and

maintains

our

track

record

of

returning

cash

to

shareholders.

PSE&G

20

PSE&G

strategy

Building a

sustainable

platform that

balances

reliability,

customer rates

and public

policy to ensure

growth at

reasonable

returns

21

PSE&G

is

the

largest

electric

and

gas

distribution

and

transmission utility company in New Jersey

*

WEATHER

NORMALIZED

-

ESTIMATED

ANNUAL

GROWTH

PER

YEAR

OVER

FORECAST

PERIOD.

**

SPECIFIC

PROJECTS

APPROVED

FOR

INCENTIVE

RATE

TREATMENT

WITH

ADDITIONAL

ROE.

Electric

Gas

Customers

Growth

(2009

–

2013)

2.2 Million

0.6%

1.8 Million

0.6%

Electric Sales and Gas Sold and Transported

41,286 GWh

3,813M

Therms

Projected

Annual

Load

Growth

(2014

–

2016)

0.6%*

0.5%*

Projected Annual Load Growth

Transmission

(2014

–

2016)

1.1%

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

Approved Programs

2009-2013

Total

Program

Plan

Solar Loan Capacity

79 MW

178.5 MW

Solar 4 All  Capacity

79 MW

125 MW

Energy Efficiency Annual Electric savings

182  GWh

204 GWh

Energy Efficiency Annual Gas savings

5M Therms

6M Therms

22

12 time

Mid-Atlantic

ReliabilityOne

award winner

and Outstanding

Response to a

Major Event

23

PSE&G’s operating earnings grew ~18%      

per

year

over

the

5-year

period

with

increased

investment,

cost control and supportive rate mechanisms

*SEE

SLIDE

A

FOR

ITEMS

EXCLUDED

FROM

INCOME

FROM

CONTINUING

OPERATIONS/NET

INCOME

TO

RECONCILE

TO

OPERATING

EARNINGS.

PSE&G Operating Earnings* Per Share

24

Growth in rate base is driven by investments with

constructive recovery mechanisms

PSE&G Rate Base

PSE&G’s

rate base

has

grown

~9%

annualized

with investment

focused on

meeting

customers’

requirements

25

Successfully

worked

with

regulators

to develop multiple solutions for New Jersey’s energy and

economic development goals

•

Solar Loan I

–

2008

•

Solar Loan II

–

2009

•

Solar 4 All

–

2009

•

Solar Loan III

–

2013

•

Solar 4 All Ext

–

2013

RENEWABLES

creative solutions to install

solar generation:

$0.7B

•

Carbon

Abatement

–

2008

•

Energy Efficiency

–

2009

•

Demand Response

–

2009

•

Energy Efficiency Ext –

2011

ENERGY EFFICIENCY

assisting customers with

controlling energy usage: 

$0.3B

•

NJ Capital Infrastructure

Program 1 (CIP 1)

–

2009

•

NJ Capital Infrastructure

Program 2 (CIP 2)

–

2011

•

Energy Strong

–

2014

DISTRIBUTION

improving electric and gas

delivery infrastructure:

$1.0B

NOTE: SPENDING THROUGH 2013 UNLESS INDICATED OTHERWISE

26

A 60% increase to $11.3 billion, in our

5-year investment program, including Energy Strong

PSE&G’s Capital Expenditures

2013-2017E

$7.0 Billion

2014-2018E

$11.3 Billion

E = ESTIMATE.   DATA AS OF MARCH 31, 2014.

27

Energy Strong Agreement supports customers’

needs in the aftermath of Superstorm Sandy

•

Settled with NJBPU Staff and all other parties in May 2014

for $1.22 billion; approved by the NJBPU in May 2014

•

Program addresses system resiliency and hardening by:

$620 million to raise, relocate or protect 29 switching and substations that

were damaged by water in recent storms

$350 million to replace and modernize 250 miles of low-pressure, cast

iron gas mains in or near flood areas

$100 million to create redundancy in the electric system, reducing outages

when damage occurs

$100 million to deploy smart grid technologies to better monitor

system

operations to increase our ability to more swiftly deploy repair

teams

$50 million to protect five natural gas metering stations and a liquefied

natural gas station affected by Sandy or located in flood zones

28

Over

70%

of

PSE&G’s

$11.3

billion

investment

program

will be recovered through contemporaneous mechanisms

Clause Recovery Mechanisms

Energy

Strong

/

Solar

/

Energy

Efficiency

FERC Formula Rates

Transmission

Traditional Recovery Mechanisms

Distribution Base Rates

E = ESTIMATE.   DATA AS OF MARCH 31, 2014.

2014-2018E PSE&G Capital Spending by Recovery Method

$11.3 Billion

29

The Energy Strong impact to customer bills is

expected to be fully offset

OUT-YEAR

BGS/BGSS,

SBC,

AND

DISTRIBUTION

RATES

HELD

CONSTANT

AT

CURRENT

2014

RATES.

RATES

RELATED

TO

ELECTRIC

RESTRUCTURING:

SECURITIZATION

(STC),

NON-UTILITY

GENERATION

CHARGE

(NGC),

&

TRANSITIONAL 

ENERGY

FACILITIES

ASSESSMENT

(TEFA),

ARE

REDUCED

TO

ZERO

BY

2017.

THE

RGGI

RECOVERY

CHARGE

(RRC),

SOLAR

PILOT

RECOVERY

CHARGE

(SPRC),

AND

CAPITAL

ECONOMIC

STIMULUS

INFRASTRUCTURE

INVESTMENT

PROGRAM

EXTENSION

(CIP

II)

BILL IMPACTS

ARE

INCLUDED

IN

THEIR

RESPECTIVE

GAS

AND

ELECTRIC

BARS

AND

FORECASTED

IN

OUT-

YEARS

BASED

UPON

LATEST ESTIMATE.

ENERGY

STRONG

BILL

IMPACTS

ARE

BASED

UPON

SETTLEMENT.

PSE&G’s Typical Average Residential Bill

Consumer

Price Index

PSE&G

TRANSMISSION

31

Transmission

represented

~36%

of

rate

base

at

YE

2013

up

from

~15%

at

YE

2009

Transmission

has

delivered,

and has grown

to represent 

~36% of rate

base

PSE&G’s Transmission Capital Expenditures

32

PSE&G’s existing major transmission

investment program remains on schedule and on budget

Major Transmission Projects

Project Roster

Approved

ROE

Inclusion

of CWIP in

Rate Base

100%

Recovery

of Costs

Due to

Abandonment

Project

Estimate

Up To

($ Millions)

Expected

In-service

Date

Susquehanna-Roseland

12.93%

$790

June 2014 /

June 2015

Northeast Grid Reliability

11.93%

$907

Jun-Dec

2015

North Central Reliability

11.68%

$390

Completed

Burlington–Camden 230kV

11.68%

$399

Completed

Mickleton–Gloucester–Camden 230kV

11.68%

$435

June 2015

Bergen—Linden Corridor 345kV

11.68%

$1,200

June 2018

33

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

Up To*

Through

Year-end 2013

Expected

In-service Date

$790M

$661M

Phase 1 –

Completed

Phase 2 –

June 2015

•

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

Customer Benefit: Improves reliability and reduces congestion

*PROJECT IS SHARED WITH PPL. PROJECT ESTIMATE REPRESENTS PSE&G’S CONSTRUCTION RESPONSIBILITY FOR THE NJ PORTION.    

Project Status:  The eastern part of line from Hopatcong to

Roseland, NJ in service April 2014; NJ construction planned to be

completed in Q3 2014.  PA portion outside plant construction in

progress.  Western portion in NJ and the PA portion is planned to go

in service June 2015. 

34

Northeast

Grid

Reliability

consists

of

upgrading approximately 50 overhead circuit miles of 138kV

transmission line to 230kV, constructing ~18 miles of new

underground 230kV lines, and converting/upgrading 12

existing stations to 230kV operation

Project Estimate

Up To

Through Year-end

2013

Expected

In-service Date

$907M

$228M

Jun -

Dec 2015

•

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

•

Project estimate has increased ~$12M associated with hardening

related scope changes as a result of Superstorm Sandy

Customer Benefit: Improves reliability and increases transfer capability

Project Status: Nearing completion of engineering/design and

licensing/permitting phase.  Outside and inside plant construction

are in progress

35

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

Up To

Through Year-end

2013

Expected

In-service Date

$390M

$349M

Completed

•

PJM RTEP project b1154

•

ROE of 11.68%

•

100% CWIP in rate base during development

•

100% recovery of prudently incurred costs due to abandonment

Project Status: In service April 2014

Customer Benefit: Improves power quality and increases transfer

capability

36

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

Project

Estimate

Up To

Through Year-end

2013

Expected

In-service Date

$399M

$301M

Completed

•

PJM RTEP project b1156

•

ROE of 11.68%

•

100% CWIP in rate base during development

•

100% recovery of prudently incurred costs due to

abandonment

Project Status: In service April 2014

Customer Benefit: Addresses voltage reliability and

increases transfer capability

37

Mickleton-Gloucester-Camden

230kV

consists of upgrading 10 circuit miles of overhead transmission,

installing ~16 circuit miles of new 230kV underground, 10

circuit miles of new 230kV overhead, and

modifications/upgrades at five existing stations

Project Estimate

Up To

Through Year-end

2013

Expected

In-service Date

$435M

$122M

June 2015

•

PJM RTEP project b1398

•

ROE of 11.68%

•

100% CWIP in rate base during development

•

100% recovery of prudently incurred costs due to abandonment

Customer Benefit: Addresses thermal reliability and increases transfer

capability

Project Status: Major permitting & siting complete, outside and inside

plant construction in progress

38

Bergen-Linden

Corridor

is

a

recently

approved

project which will provide a double-circuit 345kV line to

maintain reliability

Project Estimate

Up To

Through Year-end

2013

Expected

Completion Date

$1,200M

-

June 2018

•

PJM RTEP project b2436

•

30 miles of underground cable

•

New ~ 23 miles

•

Reconductor (Upgrade of 138 to 345) ~7 miles

•

13 miles of double circuit overhead conductor (replacing

double circuit 138 with double circuit 345)

•

11 station upgrades to 345kV

Customer Benefit: Addresses thermal and short-circuit

reliability

Project Status: Engineering

39

Planned transmission spend of $6.8 billion

is driven by PJM reliability projects, 69kV conversions and

life-cycle replacement projects

PSE&G’s Transmission Capital Expenditures

E= ESTIMATE.    DATA AS OF MARCH 31, 2014.

40

PSE&G’s

processes

and

culture

are

the

foundation for project execution success

Diverse, well-rounded team

Culture with a focus for on-time, on-scope and on-budget

execution

Successful recruitment, development and retention

strategies

Strong unions and supplier relationships

Cradle to grave project execution organization

Processes designed to be scalable, repeatable and

improvable

Emphasis on best practices and lessons learned

sharing

Improvements driven by performance metric

management

Collaborative relationship with regulatory agencies

Innovative design and construction practices to minimize

environmental impacts

Robust environmental compliance system

41

PSE&G’s

demonstrated

ability

to

successfully

execute large

projects leaves us

well positioned to

pursue new

opportunities

Future RTEP as

identified by PJM

Near-term participation

in RTO competitive

open planning windows

PJM

MISO

NYISO

Participating in

competitive solicitations

under FERC 1000 --

Artificial Island

recommendation

42

PSE&G’s

2014

operating

earnings

to benefit from increased investment in transmission and

on-going cost control

*SEE SLIDE A FOR ITEMS EXCLUDED FROM NET INCOME TO RECONCILE TO

OPERATING EARNINGS.  E =ESTIMATE.  DATA AS OF MARCH 31, 2014.

PSE&G Operating Earnings*

($ Millions)

PSEG LONG ISLAND

44

PSEG was selected to operate Long Island Power

Authority’s (LIPA) electric transmission and distribution system

for 12 years starting in 2014

Pursuant

to

the

Operating

Services

Agreement

(OSA),

all

expenses

and

capital costs to operate the system are pre-funded by LIPA and passed

through to their customers

Compensation consists of a fixed fee and an incentive fee

Fixed compensation fee for 2014 with scheduled increases in 2015

and 2016

Starting in 2015 PSEG Energy Resources and Trading (ER&T) begins

managing fuel/energy contracts

PSEG Long Island expected to contribute $0.03 to operating earnings in 2014

increasing to $0.07 per share in 2016 including contribution at ER&T

Potential for an 8-year extension of the OSA

45

PSEG

Long

Island

commenced

operations

on January 1, 2014

Key elements of Operating Services Agreement

Increased PSEG

scope and control

Performance metrics

NY Department of

Public Service

oversight

Utility 2.0 –

Expanded program

filed ~$345 million

Use of PSEG brand

as PSEG Long Island

3-Year rate freeze

(2013-2015)

Early performance

Successful transition

to PSEG Long Island

Improved 

stakeholder

communications

Achieving reliability

and customer

satisfaction metrics

PSEG POWER

47

PSEG Power

strategy

Excellence in

operating our units

safely, reliably, cost-

competitively and in

an environmentally,

responsible manner

48

PSEG Power creating value by responding to

changing markets and regulations

Safety/Environmental Focus

Fleet Diversity/Efficiency

Focus

Financial/Economic

Focus

Regulatory Focus

•

Nuclear units operated at over 90%

capacity

factors

for

the

9

consecutive

year through 2013

•

Fleet diversity across the dispatch

curve and fuel types provide flexibility

to meet changing conditions

•

Linden CCGT and Salem 2 nuclear unit

achieved record output in 2013

•

“Getting the most out of

existing fleet”

•

Locational advantage

•

O&M control programs

have delivered a CAGR of

1.6% between 2009 and

2014

•

Sites offer competitive

advantage for expansion

•

Strong regulatory

performance

•

Industry leadership in the

changing business

environment

th

49

Financial

Strength

Disciplined

Investment

Operational

Excellence

•

Maximize value of existing generating

plants through implementation of the

Operational Excellence Model (OEM)

•

Workforce engagement and development

•

Deliver on Business Plan Commitments

•

Maintain competitive markets and improve

constituent

communication on issues    

important to Power

•

Successfully complete the Advanced Gas         

Path (AGP) uprates

•

Seek new opportunities in target markets        

(PJM, ISO-NE, NYISO)

•

Develop our renewables business (solar)

•

Maintain new nuclear option by successfully

managing the Early Site Permit (ESP) process

PSEG Power Delivering on priorities

•

OEM implemented and

achieving measures

•

Resource sharing program

initiated

•

Exceeded earnings guidance

in 2013

•

Ongoing effort in key markets

showing success

•

Successful court outcome

against subsidized generation

•

Accelerated schedule for

AGP to maximize opportunity

•

LIPA contract for fuel and generation

dispatch begins January 2015

•

New 13 MW Rockfish solar project

announced, established robust

pipeline

•

Nuclear ESP is expected in 2015

50

PSEG Power met 2013 challenges

Storm and

weather challenges

•

SuperStorm Sandy

impacted

our generating sites

•

Cold and hot weather

extremes created

challenging

operating

environment, but

also presented

opportunities

Market

challenges

•

Unit outages and

planned

transmission

outages resulted in

pressure on basis

•

Lower gas cost

impacted dark

spread pressuring

coal unit dispatch

•

Load impacted by

economy

Value

delivered

•

Optimized unit dispatch across fleet

during storm recovery

•

Expedited return from storm outages,

restored margin opportunities

•

High availability when needed

•

Achieved fuel cost savings

•

Captured value through coal/gas

switching, unit flexibility

•

Coal & oil sales optimized inventory

•

Flexibility of portfolio captured real-

time basis opportunities

51

PSEG Power exceeded 2013’s earnings guidance

$630-$685M

$710M

$535-$600M

Winter/

Summer

Volatility

Lower

Gas

Cost

Basis

Volatility

Spark/

Dark

Spread

Fuel

Flexibility

SOLAR/

KALAELOA

$15M*

GUIDANCE

RANGE

Over $100M of additional

value gained from fleet

flexibility, locational

advantage and market

volatility

Initial

Guidance

Actual

Revised

Guidance

OPERATING EARNINGS FOR PSEG POWER IN 2013; SEE SLIDE A FOR ITEMS

EXCLUDED FROM INCOME FROM CONTINUING OPERATIONS/NET

INCOME TO RECONCILE TO OPERATING EARNINGS.  *ASSETS TRANSFERRED TO POWER AT YEAR-END 2013.

52

PSEG Power has generating assets

in three competitive markets

•

Assets near loads

•

Low cost portfolio

•

Fuel flexibility with gas

cost advantage

•

Poised to benefit from

volatility in real-time

markets

•

Fleet will maintain

diversity and efficiency

after HEDD

•

Most sites suitable for

expansion

ISO

New

England

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

New York ISO

PJM

53

PSEG Power will maintain diversity and efficiency after a

realignment of the fleet due to HEDD

•

Maintain fuel diversity

•

Maintain load-serving

capability

•

Maintain low cost

structure

•

Environmental

improvement

•

Peach Bottom (PB)

uprate

•

Advanced Gas Path

(AGP)

•

Kalaeloa and Solar

transfer adds ~200MW

of capacity

Objective

2013

2017

13,450 MW

11,900 MW

Fuel Diversity

Energy Produced

55 -

56 TWh

54 TWh

E=ESTIMATE.

54

Power’s PJM assets along the dispatch curve reduce

the risk of serving full requirement load contracts and can take

advantage of volatile market conditions

Energy Revenue

X

X

X

Capacity Revenue

X

X

X

Ancillary Revenue

X

X

Dual Fuel

X

X

Illustrative

Salem

Hope

Creek

Keystone

Conemaugh

Hudson 2

Linden 1,2

Bergen 1

Mercer 1, 2

Bergen 2

Peach

Bottom

Burlington 8-9-11

Edison 1-2-3

Essex 10-11-12

Sewaren 6

Linden 5-8 / Essex 9

National Park

Salem 3

Bergen 3

Mercer 3

Sewaren 1-4

Burlington 12

Yards Creek

Base Load Units

Peaking Units

Load Following Units

Kearny 9-12-13-14

Nuclear

Coal

Coal/Gas

Combined Cycle

Steam

Combustion Turbine /

Pumped Storage

•

Base Load ensures cash flow certainty

•

Load Following provides ability to serve load shape

•

Peaking takes advantage of real-time prices and

reduces operational risk

•

Dual fuel flexibility for >60% of fleet

55

PSEG

Power

Nuclear

is

a

critical

element

of

our

success

Hope Creek

•

Operated by PSEG Nuclear

•

PSEG Ownership: 100%

•

Technology: Boiling Water

Reactor

•

Total Capacity: 1,178 MW

•

Owned Capacity:  1,178

MW

•

License Expiration: 2046

•

Next Refueling

Spring 2015

Salem

Units 1 and 2

•

Operated by PSEG Nuclear

•

PSEG Ownership:  57%

•

Technology: Pressurized Water

Reactor

•

Total Capacity: 2,365 MW

•

Owned Capacity: 1,358 MW

•

License Expiration: 2036

and 2040

•

Next Refueling

Unit 1 –

Spring 2016

Unit  2 --

Fall 2015

Peach Bottom

Units 2 and 3

•

Operated by Exelon

•

PSEG Ownership: 50%

•

Technology: Boiling Water

Reactor

•

Total Capacity: 2,251 MW

•

Owned Capacity:

1,125 MW

•

License Expiration: 2033

and 2034

•

Next Refueling

Unit 2 –

Spring 2016

Unit 3 –

Fall 2015

•

Uprate:  130 MW (PS Share)

Unit 2 -

2015/Unit 3 -

2016

56

PSEG Power Nuclear is core to the fleet and

has competitive advantages

*STRATEGY KNOWN AS THE “DIVERSE AND FLEXIBLE MITIGATION CAPABILITY”

OR FLEX, ADDRESSES

RECOMMENDATIONS OF THE NUCLEAR REGULATORY COMMISSION’S FUKUSHIMA TASK FORCE.

•

Continued strong nuclear operations:

nine consecutive years of >90% capacity

factor through 2013

•

Significant earnings contributor

•

Top quartile of cost performance/MWh

•

One third new staff, recruitment of the

best new and experienced talent, and

attractive training program

•

Fukushima action plan

in response to NRC staff review

FLEX* plan submitted with implementation

starting with Fall outage

•

Peach Bottom extended power

uprate, 130 MW Power’s share,

scheduled in service 2015/2016

•

Active and influential participation at

INPO, NEI, EPRI, USA Alliance

57

Power’s nuclear fleet is well positioned

with significantly lower-than-average US cost structure

*SOURCE: ELECTRIC UTILITY COST GROUP

** SOURCE: PSEG NUCLEAR

Total

Fuel,

Capital

and

O&M

Costs*

3 YEAR AVERAGE 2010 -

2012

58

PSEG Power’s Fossil Fleet Performance

has shown improvement

*LM6000 AND 7EA UNITS

Capacity Factor

NJ Coal EFORp

Peaking Start Success*

NJ Combined Cycle EFORp

•

Fossil Capacity Factor rebounded with market

•

Peaking Units maintain high start success

•

Coal EFORp improving

•

CC EFORp less than 1% in 2013

•

Consistent recipient of EFORp payments

59

PSEG Power

improvements

achieved in

combined cycle

fleet efficiency

Actions Taken to Create Value

•

Operational Excellence Model

•

Training programs

•

Unit testing initiative

•

Outage work to restore

efficiency

•

Second gas line at BEC

•

Heat rate improvement

2008-2013 translates to

meaningful fuel savings

at current market prices

•

Advanced Gas Path (AGP)

investments 2014 through

2018 to provide additional

fuel savings

Combined Cycle Operating Heat Rate

*E= ESTIMATE.

60

Investing to expand CCGT capacity and

improve efficiency

o

Expand Power’s CCGT fleet, one of the

largest gas-fired portfolios in PJM, with

incremental base and peaking MWs

o

Retrofit Bergen, Linden and BEC with

Advanced Gas Path (AGP) components

at

cost

of

~$120M

over

2014

-

2018

AGP Project Benefits 

PSEG Power -

CCGT Uprate Project

CCGT capacity uprates of ~150 MW:   

-

Linden (63 MW –

Completed)

-

Bergen (31 MW –

2015)

-

BEC (58 MW –

2017-2018)

Increases Efficiency -

Combined Cycle

(CC)

heat

rate

improvement

~

1.2%

Upgrades technology and extends

maintenance outage cycles

61

PSEG Power’s fleet is among the lowest

emitting in the industry

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2006

2007

2008

2009

2010

2011

2012

2013

Generation

SO2

NOx

•

Mercury reduced 80% across the timeframe above

•

More efficient testing and improved operational flexibility through utilization of Continuous

Emission Monitoring System testing

•

Cost control through testing coordination program

62

PSEG Power’s capital expenditures for

environmental requirements are essentially complete*

*BASED ON CURRENTLY KNOWN AND QUANTIFIABLE ENVIRONMENTAL REQUIREMENTS.  E=ESTIMATE. 

DATA  AS OF MARCH 31, 2014.

63

PSEG Power is well-positioned

for

growth

when market conditions warrant

Available locations

Our sites possess infrastructure advantages

•

Bergen

•

Burlington

•

Essex

•

Edison

•

Kearny

•

Hudson

•

Linden

•

Sewaren

•

Bridgeport

Harbor

•

Electric Transmission Interconnections

•

Access to Gas Pipelines

•

Space

•

Emissions

64

Shasta A & B

California (4 MW)

COD March 2014

Polycrystalline -

single axis

Investment $13 million

20 year PPAs with PG&E

Hackettstown  (Mars)

New Jersey (2 MW)

COD September 2009

Thin film panels –

fixed tilt

Investment $13 million

15 year PPA with Mars, Inc.

Wyandot

Ohio (12 MW)

COD May 2010

Thin film panels –

fixed tilt

Investment $45 million

20 year PPA with AEP

JEA

Florida (15 MW)

COD September 2010

Thin film panels –

fixed tilt

Investment $59 million

30 year PPA with JEA

Queen Creek

Arizona (25 MW)

COD October 2012

Polycrystalline -

single axis

Investment $79 million

20 year PPA with SRP

Milford

Delaware (15 MW)

COD December 2012

Polycrystalline -

fixed tilt

Investment $49 million

20 year PPA with DEMEC

Badger I

Arizona (19 MW)

COD November 2013

Polycrystalline -

single axis

Investment $50 million

30 year PPA with APS

PSEG Solar Source owns ~123 MW

of solar facilities with long term contracted revenues*

Newman

Texas (13 MW)

COD December 2014

Polycrystalline -

single axis

Investment $22 million

30 year PPA with El Paso Elec.

Whitcomb

Vermont (4 MW)

COD October 2014

Polycrystalline -

single axis

Investment $10 million

25 year PPA with VT Electric

Power Producers, Inc.

*PROJECT SIZE IN MEGAWATTS SHOWN IN DC (DIRECT CURRENT).  E=ESTIMATE.

In Construction –

Rockfish

Maryland (13 MW)

COD -

June 2015E

Polycrystalline -

single axis

20 year PPA with SMECO

PSEG POWER

ER&T

66

Portfolio Management Strategy

Optimize value of assets

Manage risk vs. reward

Directly engage with

regulatory agencies

67

PSEG Power:  Enjoys real and sustainable

advantages in the merchant generation space

Market Review

•

Gas, Power, Spark Spreads

•

Regulatory construct

PSEG’s Competitive Advantage

•

Fuel flexibility

•

Heat Rate diversity

•

Access to Marcellus Shale gas

•

Asset flexibility

PSEG’s Sustainable Advantage

•

Positive cash-flow hedging into the long-term

•

Robust capacity market pricing in most concentrated load pocket in US

•

Long-term access to discounted Marcellus gas

68

Market Review:

Long-term fundamentals remain sound

•

Market influenced by increased gas

supply and capacity retirements

•

Insufficient gas infrastructure

continues to place upward pressure on

fuel prices during seasonal peaks

•

Market liquidity remains weak beyond

2015

NYMEX Natural Gas Price

PJM West RTC

PJM West Spark Spreads

F = FORWARDS AS OF DECEMBER 17, 2014; 2014F INCLUDES HISTORY AND

FORWARDS. 

69

Market Review:

New generation in PJM not

keeping pace with coal retirements

Forecast Reserve Margin (PJM October 2014)

•

PJM

forecasts

a

declining

Reserve

Margin

through

2018,

which

may

improve

forward

prices

•

Brattle estimates energy prices could rise at least $3-4/MWh from today’s prices

*PJM AS OF DECEMBER 23, 2014

SOURCE OF CHART DATA:  PJM

Cumulative Generation Retirements*

70

Competitive Advantage:

Heat Rate Diversity &

Flexible Dispatch

Illustrative

Salem

Hope

Creek

Keystone

Conemaugh

Hudson 2

Linden 1,2

Bergen 1

Mercer 1, 2

Bergen 2

Peach

Bottom

Burlington 8-9-11

Edison 1-2-3

Essex 10-11-12

Sewaren 6

Linden 5-8 / Essex 9

National Park

Salem 3

Bergen 3

Mercer 3

Sewaren 1-4

Burlington 12

Yards Creek

Base Load Units

Peaking Units

Load Following Units

Kearny 9-12-13-14

Nuclear

Coal

Coal/Gas

Combined Cycle (gas/oil)

Steam (gas/oil)

Combustion Turbine / Pumped Storage

(gas/oil)

PJM Dispatch Curve

71

Competitive/Sustainable Advantage:

PSEG expanding supply of low-cost Marcellus gas

PSEG plans to invest $100 -

$120 million in

the to-be-constructed PennEast Pipeline, a

105.5 mile pipeline that would bring gas

from eastern Pennsylvania to New Jersey

PSEG ER&T would contract for approximately

125mmcf/day of PennEast’s 1 bcf/day

capacity under a 15-year contract; other

project sponsors have committed to offtake

~500mmcf/day

PSEG and its customers would benefit from

the displacement of higher-cost, Gulf Coast

gas supply

Targeted in-service date is November 2017

Proposed PennEast Pipeline Project

72

Industry infrastructure build through 2018

to meet demand growth

New England 1.4 bcf/d 

Southeast 6.5 bcf/d

Midwest 2.3 bcf/d

Gulf Coast  2.8 bcf/d

New investment

will increase pipeline

takeaway capacity

from low-cost

Marcellus and Utica

shale basins to

meet demand in the

South and Midwest

NJ/NY 1.4 bcf/d

73

Sustainable Advantage: Forward power curves

indicate PSEG Zone retains premium price

* MARKET AS OF DECEMBER 17, 2014

SOURCE: ICE/BROKER QUOTES

Growing importance of the winter peak has influenced PJM reliability planning

…

with supportive implications for price formation

Monthly Power Price Summary*

74

Competitive Advantage:

PSEG’s extensive gas

asset portfolio gives unparalleled access to Marcellus Shale gas

75

Competitive Advantage:

In 2014, ~40% of Power’s

gas for generation comes from Marcellus

•

Our Combined Cycle and Peaking assets have been able to take advantage of locational gas price

volatility driven by production and logistical constraints

•

Lower cost shale supply provides additional savings during periods of lower residential gas demand

Spot Natural Gas Prices:  June 2013 –

December 2014*

* AS OF DECEMBER 17, 2014

76

Competitive Advantage:

Locational advantage

from short term basis volatility

$37

-

$38

$39

-

$40

ANNUAL FORWARD (F) BASIS TO PJM-WEST AS OF DECEMBER 17, 2014,  2014F INCLUDES HISTORY AND FORWARDS.

•

Annual basis benefits baseload

units

•

Intermediate units flexible to

seasonal opportunities

•

Combined Cycle and Peaking units

positioned to optimize daily and

hourly volatility

PS Zone On Peak Annual Basis to PJM-W

PS Zone Day Ahead On Peak Monthly Basis to PJM-W

PS Zone Real Time On Peak Hourly Basis to PJM-W

77

Sustainable Advantage:

BGS Auction provides

excellent opportunity to forward hedge our generation

Capacity

Load shape

Transmission

Congestion

Ancillary services

Risk premium

Green

BGS sales account for about a quarter of our forward portfolio of hedges

3 Year Average

Round the Clock

PJM West

Forward Energy

Price

$/MWH; BGS PRICES REFLECT PSE&G ZONE; RESULTS FOR 2012-2014 ARE THE NEW BLENDED PRICES BEGINNING JUNE 1, 2014.

78

Oct-Dec

2014

2015

2016

Volume TWh

8

36

36

Base Load

% Hedged

100%

100%

55-60%

(Nuclear and Base Load Coal)

Price $/MWh

$49

$50

$49

Volume TWh

5

21

21

Intermediate Coal, Combined

% Hedged

50-55%

5-10%

0%

Cycle, Peaking

Price $/MWh

$49

$50

$49

Volume TWh

13

55-57

55-57

Total

% Hedged

80-85%

65-70%

35-40%

Price $/MWh

$49

$50

$49

Sustainable Advantage: Hedging strategy

designed to protect gross margin while leveraging the portfolio

HEDGE PERCENTAGES AND PRICES AS OF SEPTEMBER 30, 2014. 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.   EXCLUDES SOLAR AND KALAELOA.

79

2017/2018 RPM Auction Influenced By:

•

Updated Demand Curve

•

Updated Transfer Capabilities

•

Environmental Retirements

•

New Build/Cost of New Entry

•

Minimum Offer Price Rule

•

Demand Response

Sustainable Advantage:

PJM’s capacity market

continues to recognize locational value

*PSEG POWER’S AVERAGE PRICES AND CLEARED CAPACITY (MW) REFLECT BASE AND INCREMENTAL

RPM

AUCTION

RESULTS.

DELIVERY

YEAR

RUNS

FROM

JUNE

1

TO

MAY

31

OF

THE

NEXT

CALENDAR

YEAR.

RPM Auction Results

($/MW-day)

2013 / 2014*

2014 / 2015*

2015 / 2016*

2016 / 2017*

2017 / 2018

Power’s

Average Prices

$242

$166

$166

$166

$165

Rest of Pool

Prices

$28

$126

$136

$59

$120

Power’s Cleared

Capacity (MW)

10,890

10,710

9,210

8,610

~8,700

80

PJM Capacity Performance Proposal:

aims to increase electric supply reliability

Capacity

performance

(CP)

proposal

places

emphasis

on

reliability

given

observed outages during times of extreme weather stress and anticipated

retirements;

Imposition

of

higher

penalty

structure

to

encourage

availability

Generator

availability

/

flexibility

is

key

objective

for

units

with

secure

fuel

supply capable of meeting operating standards

Elimination

of

2.5

%

holdback,

making

all

capacity

resources

annual

products,

net CONE bidding safe harbor, and the change in the demand curve

(VRR)

support price formation and improve resource adequacy

81

PSEG Power’s Value Proposition

•

Well-positioned fleet of merchant generating assets

concentrated in PJM market

•

Advantaged by low cost structure, fuel diversity and

dispatch flexibility

•

Low environmental capital requirements

•

Capacity uprates to enhance value of nuclear and

combined cycle stations

•

Consistent hedging strategy recognizes asset flexibility

•

Continue to meet commitments and to provide

free cash flow

PSEG

FINANCIAL

REVIEW & OUTLOOK

83

Strong financial position to support our

business initiatives

2013 Financial Position

Exceeded upwardly revised 2013 earnings guidance

Pension fully funded

Strong balance sheet and upgraded credit ratings

2014 and Beyond

Continued positive earnings trend in 2014

Controlled O&M growth

Balance Sheet and Cash Flow support investments without equity issuance

Growth in PSE&G investments with contemporaneous returns

Diversified Power assets with a balanced hedge profile

Growth

in

PSE&G

Cash

from

Operations,

with

continued

significant

Cash

from

Operations/FFO

at

Power

Increased

Dividend

by

$0.04

to

annual

rate

of

$1.48

per

share

for

2014

Opportunity for consistent and sustainable dividend growth

84

Exceeded upwardly revised guidance

in both businesses

PSEG Operating Earnings

$ Millions (except EPS)

2012

2013

PSE&G

$528

$612

PSEG Power

$663

$710

Other

$45

($13)

Operating Earnings

$1,236

$1,309

Operating EPS*

$2.44

$2.58

Upwardly Revised Earnings Guidance (Nov 2013)

$2.40 -

$2.55

Earnings Guidance (Feb 2013)

$2.25 -

$2.50

*SEE SLIDE A FOR ITEMS EXCLUDED FROM INCOME FROM CONTINUING OPERATIONS/NET INCOME TO RECONCILE TO OPERATING EARNINGS.

NOTE: 2012 OPERATING EARNINGS RE-STATED FOR TRANSFER OF ASSETS FROM PSEG HOLDINGS TO PSEG POWER.

85

PSE&G Cash

from Ops

(1)

~$1.4B

PSE&G

Capital

Investment

~$2.2B

In 2013, PSE&G invested over $2B, using $1.4B of

internally generated cash flow and debt, while maintaining its

capital structure  

(1) PSE&G CASH FROM OPERATIONS ADJUSTS FOR SECURITIZATION PRINCIPAL REPAYMENTS OF ~$220 MILLION.

Cash ~$0.1B

PSE&G 2013 Cash Flows

86

In 2013, Power’s Free Cash Flow supported PSE&G’s

capital program and shareholder dividend

Power

Cash from Ops

~$1.3B

PSE&G

Cash from Ops

(1)

~$1.4B

PSE&G

Capital

Investment

~$2.2B

Power

Capital

Investment

~$0.6B

Shareholder

Dividend

~$0.7B

Net Debt

Issuances

~$0.7B

PSEG Consolidated

2013 Sources and Uses

(1)

PSE&G CASH FROM OPERATIONS ADJUSTS FOR SECURITIZATION PRINCIPAL REPAYMENTS OF ~$220 MILLION.

(2)

OTHER CASH FLOW INCLUDES HOLDINGS NET CASH FLOW AND PARENT CASH.

Other

Cash Flow

(2)

~$0.1B

87

PSEG growth spend, including Energy Strong, of ~$6.4B

represents ~76% of total investment

PSEG 2014 –

2016E Capital Investment

Power & Other

Maintenance

PSE&G

Distribution

Maintenance

Power

Growth

PSE&G

Transmission

Growth

PSE&G

Solar and  

New Business

PSE&G

Energy

Strong

Approved Growth Investment ~$6.4B

E = ESTIMATE; CAPITAL INCLUDES AFUDC AND IDC.

DATA AS OF MARCH 31, 2014.

PSEG

Planned

Spend

Maintenance ~$2B

88

PSE&G’s Capital Program drives double-digit

growth in rate base and earnings over the 2013 to 2016 period

2013 –

2016E Rate Base CAGR Growth of ~12%

Distribution

Transmission

~$10.4B

~$14.6B

~$6.6B

~$3.8B

~$2.7B

~$6.5B

~$0.5B

~$1.0B

~$8.1B

2013

Rate Base

2016E

Rate Base

Transmission

Growth

Energy

Strong

Solar and

New Business

E = ESTIMATE.    DATA AS OF MARCH 31, 2014.

89

PSE&G’s Cash from Operations and Power’s Free Cash Flow

support growth investments without the need for new equity

PSE&G

Net Debt

2014 –

2016E

PSEG Sources and Uses

(1)

PSE&G CASH FROM OPERATIONS ADJUSTS FOR SECURITIZATION PRINCIPAL REPAYMENTS OF ~$500M FROM 2014-2016

(2)

OTHER CASH FLOW INCLUDES PSEG LI, HOLDINGS NET CASH FLOW, CASH, AND SHORT TERM DEBT

PSE&G

Cash from Ops

(1)

PSE&G

Capital

Investment

With Energy Strong

Shareholder

Dividend

Power

Cash from Ops

Other

Cash Flow

(2)

Power Net

Debt

Power

Capital

Investment

E = ESTIMATE.        DATA AS OF MARCH 31, 2014.

90

Power’s key credit metric

supports incremental

investment opportunities

PSEG Power

Funds From Operations /

Debt

2014-2016E

Average

Increased contribution to earnings from the more

stable regulated business allows us to reset

Power’s FFO/Debt threshold from 35% to 30%,

providing additional financial flexibility

Power’s annual Cash From Operations and Funds

From Operations each average ~$1.1B over the

2014 to 2016 period supported by:

-

Capacity Revenues

-

Hedged Generation

-

O&M Control

Financial strength can be used to pursue future

growth in both businesses beyond current plans

E = ESTIMATE.  DATA AS OF MARCH 31, 2014.

91

Pension: Our Long Term Asset allocation

strategy resulted in a ~17% increase in pension assets during

2013

Trust Assets

12/31/2012

Cash

Contributions

Investment

Return

Gross Benefits

Paid

Trust Assets

12/31/2013

PBO Funded

Ratio

83%

Fully

Funded

Pension

106%

92

Improving Operating Earnings

and increased contribution from PSE&G

PSEG Operating Earnings

$ Millions (except EPS)

2012

2013

2014E

PSE&G

$528

$612

$710 -

$745

PSEG Power

$663

$710

$575 -

$610

Enterprise/Other

$45

($13)

$35 -

$40

Operating Earnings*

$1,236

$1,309

$1,320 -

$1,395

Operating EPS*

$2.44

$2.58

$2.60 -

$2.75

Regulated % of Earnings

43%

47%

53% -

54%

*SEE SLIDE A FOR ITEMS EXCLUDED FROM INCOME FROM CONTINUING OPERATIONS/NET  INCOME TO RECONCILE TO OPERATING EARNINGS.

NOTE: 2012 OPERATING EARNINGS RE-STATED FOR TRANSFER OF ASSETS FROM PSEG HOLDINGS TO PSEG POWER.

E=ESTIMATE.

93

PSE&G

EPS

$1.47

$1.40

Annual Dividend Per Share

(10 YEAR HISTORICAL CAGR ~3%)

(1)

THE 2014 PAYOUT RATIO IS BASED ON THE MIDPOINT OF PSEG'S 2014 OPERATING EARNINGS GUIDANCE OF $2.60-$2.75E PER SHARE. SEE SLIDE A FOR ITEMS

EXCLUDED FROM INCOME FROM CONTINUING OPERATIONS/NET INCOME TO RECONCILE TO OPERATING EARNINGS.

Opportunity

for

consistent and sustainable

dividend growth supported by strong cash flow from both

businesses

2.8% increase

Payout Ratio

43%

44%

50%

58%

56%

55%

(1)

E = ESTIMATE

$1.60

94

PSEG’s longer-term outlook is influenced by

Power’s hedge position and increased investment at PSE&G

2015E

2016E

Each $0.75/mcf Change in Natural Gas

Each $2/MWh Change in Spark Spread

Each $5/MWh Change in Dark Spread

Each 1% Change in Nuclear Capacity Factor

Segment EPS Drivers

Each $100 Million of Incremental Investment

Each 1% Change in Sales

Electric

Gas

Each 1% Change in O&M

Each 10 basis point Change in Distribution ROE

Each 10 basis point Change in Transmission ROE

$0.01

$0.01

$0.01

$0.01

<$0.01

<$0.01

$0.07-$0.10

$0.05

$0.04

$0.01

$0.00-$0.02

$0.05

$0.02

$0.01

$0.01

$0.01

$0.01

$0.01

<$0.01

<$0.01

Sensitivities derived from typical annual market variability*

*

Estimated

annual

variability

approximating

one

standard

deviation

based

on

2011

–

2013

historical

data

and

forward

curve

estimates

applied

to

PSEG

Power

open

positions.

E = ESTIMATE.    POWER EARNINGS SENSITIVITIES UPDATED FOR OCTOBER 31, 2014 PRICE CURVES.   

PSE&G

APPENDIX

96

PSE&G provides high reliability at below

average cost which creates superior value to customers

SAIDI = SYSTEM AVERAGE INTERRUPTION DURATION INDEX, A MEASURE OF

AVERAGE OUTAGE DURATION FOR ALL CUSTOMERS SERVED.

97

PSE&G prioritizes public safety

while maintaining value to customers

LEAK RESPONSE RATE = PERCENTAGE OF UTILITY RESPONSES TO REPORTED

LEAKS WITHIN ONE HOUR.

PSEG POWER

AND ER&T

APPENDIX

99

Nuclear

fuel

needs

have

been

hedged

through

2016

Anticipated Nuclear Fuel Cost

Hedged

$0

$5

$10

2014

2015

2016

($/MWh)

100

Power’s coal hedging reflects 2014 supply

matched with 2014 sales

Contracted Coal

Station

Coal Type

Pricing

($/MWh)*

Comments

Bridgeport

Harbor

Adaro

Low $40’s

Higher price,

lower BTU,

enviro coal

Hudson

CAPP

Mid $40’s

Coal/Gas

Fuel

Flexibility

Mercer

Metallurgical

CAPP/NAPP

Low $40’s

More limited

segment of

coal market

Keystone

NAPP

Mid $20’s

Prices

steady

Conemaugh

NAPP

Mid $20’s

Prices

steady

% Hedged

(left scale)

$/MWh

(right scale)

*COMMODITY PLUS TRANSPORTATION.

101

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

2014-2015

$172

Three Year Average ($/MW-day)

$172

2015-2016

$166

MW per Tranche (varies by EDC)

109

2016-2017

$178

Days per Year

365

   Three Year Average ($/MW-day)

$172

   Capacity Cost per Tranche

6,841,016

$  

MWh per Tranche

Energy MW per Tranche (varies by EDC)

109

Hours per Year

8,768

Load Factor (varies by EDC)

~37%

MWh per Tranche, approx.

350,090

Capacity Cost per MWh

$20

PSEG

FINANCIAL

APPENDIX

103

Q3 Operating Earnings by Subsidiary

Operating Earnings

Earnings per Share

$ millions (except EPS)

2014

2013

2014

2013

PSE&G

$  200

$  168

$  0.39

$  0.33

PSEG Power

171

221

0.34

0.43

PSEG Enterprise/Other

22

(4)

0.04 

-

Operating Earnings*

$  393

$  385

$ 0.77

$ 0.76

Quarter ended September 30

*

SEE

SLIDE

B

FOR

ITEMS

EXCLUDED

FROM

NET

INCOME

TO

RECONCILE

TO

OPERATING

EARNINGS.

104

$0.76

0.06

0.04

$0.77

(0.09)

0.00

0.25

0.50

0.75

1.00

Capacity  (0.09)

Re-Contracting

& Market

Pricing  (0.04)

Weather  (0.03)

O&M  0.06

Taxes &

Other  0.01

Transmission  0.04

Electric Volume

& Demand  0.01

Weather  (0.02)

Distribution

O&M  0.02

Interest  &

Other  0.01

Q3 2014       

Operating

Earnings*

Q3 2013       

Operating

Earnings*

PSEG Power

PSE&G

Enterprise/

Other

* SEE SLIDE B FOR ITEMS EXCLUDED FROM NET INCOME TO RECONCILE TO

OPERATING EARNINGS.

PSEG Long Island

and Other

PSEG

EPS

Reconciliation

–

Q3

2014

vs.

Q3

2013

105

Year to Date Operating Earnings by Subsidiary

Operating Earnings

Earnings per Share

$ millions (except EPS)

2014

2013

2014

2013

PSE&G

$  565

$  468

$  1.11

$  0.92

PSEG Power

551

595

1.09

1.17

PSEG Enterprise/Other

37

(2)

0.07

-

Operating Earnings*

$  1,153

$  1,061

$  2.27

$  2.09

Nine months ended September 30

*

SEE

SLIDE

B

FOR

ITEMS

EXCLUDED

FROM

NET

INCOME

TO

RECONCILE

TO

OPERATING

EARNINGS.

106

$2.09

0.19

0.07

$2.27

(0.08)

0.00

0.50

1.00

1.50

2.00

2.50

YTD 2014       

Operating

Earnings*

YTD 2013       

Operating

Earnings*

Capacity  0.05

Re-Contracting

& Market Pricing

(0.07)

Weather  (0.03)

Lower Volume  (0.01)

O&M  (0.02)

D&A, Taxes

and Other  0.00

PSEG Power**

Transmission  0.10

Gas Volume,

Demand & Other

Revenue  0.03

Electric Volume

& Demand  0.01

Weather  (0.02)

Distribution

O&M  0.04

Lower Interest Expense &

Other  0.03

PSE&G

**

Enterprise/

Other

PSEG Long Island

And Other

*

SEE SLIDE B FOR ITEMS EXCLUDED FROM NET INCOME TO RECONCILE TO OPERATING EARNINGS.

**

PRIOR QUARTER RESULTS FOR RECONCILING ITEMS MAY NOT ADD TO YEAR-TO-DATE (YTD) TOTALS DUE TO ROUNDING.

PSEG EPS Reconciliation

–

YTD 2014 vs. YTD 2013

107

September 30, 2014

$ Billions 

PSEG

PSE&G

Power

Cash and Cash Equivalents

$0.7

$0.3

$0.0

Short Term Debt

$0.0

$0.0

N/A

Long Term Debt

(2)

8.6

6.1

2.5

Common Equity

12.1

6.6

5.5

Total Capitalization

$20.7

$12.7

$8.0

Total Debt / Capitalization

42%

48%

32%

PSE&G Regulated Equity Ratio

(1)

51.8%

Our balance sheet remains strong

(1)

REGULATED EQUITY RATIO INCLUDES CUSTOMER DEPOSITS OF ~$97 MILLION AND EXCLUDES SHORT-TERM DEBT.

(2)   INCLUDES L-T DEBT DUE WITHIN 1 YEAR; EXCLUDES SECURITIZATION DEBT OF $326 MILLION AND

NON-RECOURSE DEBT OF $16 MILLION.

108

PSEG Liquidity as of September 30, 2014

109

PSEG Energy Holdings

Investment Portfolio

Equipment

Investment Balance*             

at 9/30/2014

($ millions)

Merchant Energy Leases

NRG REMA

Keystone, Conemaugh & Shawville (PA)

3 coal-fired plants (1,162 equity MW)

$345

NRG Energy/Midwest Gen **

Powerton & Joliet Generating Stations (IL)                     

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

$218

Regulated Energy Leases

Merrill Creek

Reservoir in NJ  (PECO, MetEd, Delmarva Power & Light)

$197

Grand Gulf

Nuclear station in Mississippi (175 equity MW)

Real Estate Leveraged Leases

GM Renaissance Center; Wal-Marts; E-D (shopping) Centers

$73

Real Estate Operating Leases

Office Towers, Shopping Centers -

28 properties

$57

Generation Legacy Assets

GWF (in wind down stage), Bridgewater, GSOE 

$3

Other

Land & Receivables

$5

Total Holdings Investments

$898

*BOOK BALANCE EXCLUDING DEFERRED TAX ACCOUNTS.

**EME AND ITS SUBSIDIARIES FILED CHAPTER 11 BANKRUPTCY ON 12/17/2012.

ON APRIL 1,2014, EME WAS ACQUIRED BY NRG; ALL MONETARY DEFAULTS WERE CURED AT CLOSING

WITH NO CHANGE TO HOLDINGS’

STATED EQUITY VALUE.

110

Strong,

full

year

2013

operating

earnings

delivered

*

SEE SLIDE A FOR ITEMS EXCLUDED FROM INCOME FROM CONTINUING OPERATIONS/NET INCOME TO RECONCILE TO OPERATING EARNINGS.

Operating Earnings

Earnings per Share

$ millions (except EPS)

2013

2012

2013

2012

PSEG Power

$  710

$  663 

$  1.40

$  1.31

PSE&G

612

528

1.21

1.04

PSEG Enterprise/Other

(13)

45

(0.03)

0.09

Operating Earnings*

$  1,309 

$  1,236

$  2.58

$  2.44

Twelve Months ended December 31

A

Items Excluded from Income from Continuing

Operations/Net Income 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.

2013

2012

2011

2010

2009

2008

Earnings Impact ($ Millions)

Operating Earnings

1,309

$            

1,236

$       

1,389

$       

1,584

$          

1,567

$       

1,478

$       

Gain (Loss) on Nuclear Decommissioning Trust (NDT)

Fund Related Activity (PSEG Power)

40

52

50

46

9

(71)

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

(a)

(PSEG Power)

(74)

(10)

107

(1)

(11)

14

Lease Transaction Activity (PSEG Enterprise/Other)

-

36

(173)

-

29

(490)

Storm O&M (PSEG Power)

(32)

(39)

-

-

-

-

Market Transition Charge Refund (PSE&G)

-

-

-

(72)

-

-

Gain (Loss) on Asset Sales and Impairments (PSEG Enterprise/Other)

-

-

34

-

-

(13)

Income from Continuing Operations

1,243

$            

1,275

$       

1,407

$       

1,557

$          

1,594

$       

918

$          

Discontinued Operations

-

-

96

7

(2)

270

Net Income

1,243

$            

1,275

$       

1,503

$       

1,564

$          

1,592

$       

1,188

$       

Fully Diluted Average Shares Outstanding (in Millions)

508

507

507

507

507

508

Per Share Impact (Diluted)

Operating Earnings

2.58

$              

2.44

$         

2.74

$         

3.12

$            

3.09

$         

2.91

$         

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

0.08

0.10

0.10

0.09

0.02

(0.14)

Gain (Loss) on MTM

(a)

(PSEG Power)

(0.14)

(0.02)

0.21

-

(0.02)

0.03

Lease Transaction Activity (PSEG Enterprise/Other)

-

0.07

(0.34)

-

0.05

(0.96)

Storm O&M (PSEG Power)

(0.07)

(0.08)

-

-

-

-

Market Transition Charge Refund (PSE&G)

-

-

-

(0.14)

-

-

Gain (Loss) on Asset Sales and Impairments (PSEG Enterprise/Other)

-

-

0.06

-

-

(0.03)

Income from Continuing Operations

2.45

$              

2.51

$         

2.77

$         

3.07

$            

3.14

$         

1.81

$         

Discontinued Operations

-

-

0.19

0.01

-

0.53

Net Income

2.45

$              

2.51

$         

2.96

$         

3.08

$            

3.14

$         

2.34

$         

For the Year Ended

December 31,

(Unaudited)

Reconciling Items, net of tax

(a)

Includes the financial impact from positions with forward delivery months.

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

B

2014

2013

2014

2013

2013

2012

Earnings Impact ($ Millions)

Operating Earnings

393

$             

385

$          

1,153

$          

1,061

$       

1,309

$          

1,236

$          

Gain (Loss) on Nuclear Decommissioning Trust (NDT)

Fund Related Activity (PSEG Power)

17

12

40

29

40

52

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

(a)

(PSEG Power)

36

3

(138)

(22)

(74)

(10)

Lease Related Activity (PSEG Enterprise/Other)

-

-

-

-

-

36

Storm O&M, net of insurance recoveries (PSEG Power)

(2)

(10)

(13)

(25)

(32)

(39)

Net Income

444

$             

390

$          

1,042

$          

1,043

$       

1,243

$          

1,275

$          

Fully Diluted Average Shares Outstanding (in Millions)

507

508

507

507

508

507

Per Share Impact (Diluted)

Operating Earnings

0.77

$            

0.76

$         

2.27

$            

2.09

$         

2.58

$            

2.44

$            

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

0.04

0.02

0.08

0.06

0.08

0.10

Gain (Loss) on MTM

(a)

(PSEG Power)

0.07

0.01

(0.27)

(0.04)

(0.14)

(0.02)

Lease Related Activity (PSEG Enterprise/Other)

-

-

-

-

-

0.07

Storm O&M, net of insurance recoveries (PSEG Power)

(0.01)

(0.02)

(0.03)

(0.05)

(0.07)

(0.08)

Net Income

0.87

$            

0.77

$         

2.05

$            

2.06

$         

2.45

$            

2.51

$            

(a) Includes the financial impact from positions with forward delivery months.

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

Reconciling Items, net of tax

Three Months Ended

Nine Months Ended

Year Ended

September 30,

September 30,

December 31,

(Unaudited)

Items Excluded from Income from Continuing

Operations/Net Income 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.