 PSEG Public Service Enterprise Group European Investor Meetings September 8 - 10, 2010 Exhibit 99 |
 2 Forward-Looking Statement Readers are cautioned that statements contained in this presentation about our and our subsidiaries' future performance, including future revenues, earnings, strategies, prospects, consequences and all other statements that are not purely historical, are forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. When used herein, the words “anticipate”, “intend”, “estimate”, “believe”, “expect”, “plan”, “should”, “hypothetical”, “potential”, “forecast”, “project”, variations of such words and similar expressions are intended to identify forward-looking statements. Although we believe that our expectations are based on reasonable assumptions, they are subject to risks and uncertainties and we can give no assurance they will be achieved. The results or developments projected or predicted in these statements may differ materially from what may actually occur. Factors which could cause results or events to differ from current expectations include, but are not limited to: • Adverse changes in energy industry law, policies and regulation, including market structures, transmission planning and rules, and reliability standards. • Any inability of our transmission and distribution businesses to obtain adequate and timely rate relief and regulatory approvals from federal and state regulators. • Changes in federal and state environmental regulations that could increase our costs or limit operations of our generating units. • Changes in nuclear regulation and/or developments in the nuclear power industry generally that could limit operations of our nuclear generating units. • Actions or activities at one of our nuclear units located on a multi-unit site that might adversely affect our ability to continue to operate that unit or other units located at the same site. • Any inability to balance our energy obligations, available supply and trading risks. • Any deterioration in our credit quality. • Availability of capital and credit at commercially reasonable terms and conditions and our ability to meet cash needs. • Any inability to realize anticipated tax benefits or retain tax credits. • Changes in the cost of, or interruption in the supply of, fuel and other commodities necessary to the operation of our generating units. • Delays in receipt of necessary permits and approvals for our construction and development activities. • Delays or unforeseen cost escalations in our construction and development activities. • Increase in competition in energy markets in which we compete. • Adverse performance of our decommissioning and defined benefit plan trust fund investments and changes in discount rates and funding requirements. • Changes in technology and customer usage patterns. For further information, please refer to our Annual Report on Form 10-K, including Item 1A. Risk Factors, and subsequent reports on Form 10-Q and Form 8-K filed with the Securities and Exchange Commission. These documents address in further detail our business, industry issues and other factors that could cause actual results to differ materially from those indicated in this presentation. In addition, any forward-looking statements included herein represent our estimates only as of today and should not be relied upon as representing our estimates as of any subsequent date. While we may elect to update forward-looking statements from time to time, we specifically disclaim any obligation to do so, even if our internal estimates change, unless otherwise required by applicable securities laws. |
 3 GAAP Disclaimer PSEG presents Operating Earnings in addition to its Net Income reported in accordance with accounting principles generally accepted in the United States (GAAP). Operating Earnings is a non-GAAP financial measure that differs from Net Income because it excludes gains or losses associated with Nuclear Decommissioning Trust (NDT), Mark-to-Market (MTM) accounting, and other material one-time items. PSEG presents Operating Earnings because management believes that it is appropriate for investors to consider results excluding these items in addition to the results reported in accordance with GAAP. PSEG believes that the non-GAAP financial measure of Operating Earnings provides a consistent and comparable measure of performance of its businesses to help shareholders understand performance trends. This information is not intended to be viewed as an alternative to GAAP information. The last two slides in this presentation include a list of items excluded from Income from Continuing Operations to reconcile to Operating Earnings, with a reference to that slide included on each of the slides where the non-GAAP information appears. |
 PSEG – Defining the Future Ralph Izzo Chairman, President and Chief Executive Officer Caroline Dorsa Executive Vice President and Chief Financial Officer Kathleen A. Lally Vice President, Investor Relations |
 5 PSE&G positioned to meet NJ’s energy policy and economic growth objectives. Electric & Gas Delivery and Transmission PSEG Power’s low-cost baseload nuclear and coal fleet is geographically well positioned and environmentally responsible. Regional Wholesale Energy PSEG Energy Holdings positioned to pursue attractive renewable generation opportunities. Renewable Investments PSEG : the right mix for the opportunities of today and tomorrow |
 6 A successful track record… … provides the confidence to capitalize on the opportunities of tomorrow. PSEG Power resumed independent control of nuclear fleet, produced record levels of generation and achieved top quartile performance; fossil fleet retrofitted to meet more stringent environmental requirements. PSE&G consistently recognized for reliability; investment programs expanded to meet NJ’s goals for economic growth and clean energy. Business focus improved; balance sheet strengthened; Holdings’ financial risk lessened with sale of international investments, termination of offshore leases Operational and financial focus has allowed PSEG to meet/exceed earnings objectives in each of the past three years. History of returning cash to shareholders through common dividend. 2007 2008 2009 |
    7 Earnings growth achieved… … through higher pricing, increased production and lower costs. $2.68 $3.03 $3.12 2007 Operating Earnings* 2008 Operating Earnings* 2009 Operating Earnings* * See page 66 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. |
   8 Investment programs, hedge profile and cost control support 2010 outlook $3.12 $3.00 - $3.25 2009 Operating Earnings* 2010 Guidance * See page 66 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. |
 9 First-Half 2010 Operating Earnings by Subsidiary $ 800 (3) 31 166 $606 2009 $ 756 8 19 192 $ 537 2010 Operating Earnings Earnings per Share (0.01) 0.02 Enterprise $ 1.58 $ 1.49 Operating Earnings* 0.06 0.03 PSEG Energy Holdings 0.33 0.38 PSE&G $ 1.20 $ 1.06 PSEG Power 2009 2010 $ millions (except EPS) Six months ended June 30 •See Page 65 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. |
 10 $2,091 $1,993 $163 $30 2008 2009 Sustainability Plan Non-pension O&M Expense (1) Pension Expense Manage Staffing Levels Control General and Administrative Expenses Capture Productivity Gains (1) Excludes O&M related to PSE&G clauses We have successfully managed our O&M … … through benchmarking efforts and operational excellence. $2,121M $2,156M |
 11 $1,000 $1,250 $1,500 $1,750 $2,000 $2,250 2009 2010 2011 2012 PSEG Consolidated O&M (1) C.A.G.R. (’09 –’12) = 0.7% (1) Excludes O&M related to PSE&G clauses Aggressive employee management of our O&M, including 2010 wage freeze … …and improving pension expense, will result in modest O&M growth. * * * *estimated |
 12 2009 Operating Earnings* 2010 Guidance Rigorous cost controls, hedging strategy and improved utility capital recovery… …help mitigate the risk of weak prices in 2010. $3.12 $3.00 - $3.25 PSE&G: Network Transmission Service (NTS) revenue increase for 2010 from 2009 ~ $0.03 EPS 2009 earned ROE = 8.3% 1% change in Distribution earned ROE in 2010 ~ $0.07 EPS 1% change in load in 2010 ~ $0.02 EPS PSEG Power: Revenue/Margin Nuclear output fully contracted Dark Spread change of $5/MWh at market – impact of $0.02-$0.04/share Spark Spread change of $5/MWh at market – impact of $0.04-$0.08/share Operations 1% change in nuclear capacity factor – impact of $0.01-$0.03/share O&M 1% change – impact of ~$0.01/share Drivers *See page 66 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings |
 Tomorrow’s energy market will reward… …an operationally efficient, environmentally responsible, integrated generation, transmission and distribution business. Higher margins driven by environmentally responsible & operationally flexible energy supply Superior operations = customer satisfaction + higher value Business driven by the need to address environmental issues and stable pricing Infrastructure investment to support reliability + improve performance 13 |
 14 PSEG has provided investors with a better than average return… … and we are positioned to deliver value over the long-term. 5 year* 10 year* 3 year* *For the period ended December 31, 2009. -10 -5 0 5 10 15 20 PSEG S&P 500 Electrics Dow Jones Utility Average 0 20 40 60 PSEG S&P 500 Electrics Dow Jones Utility Average 0 50 100 150 200 PSEG S&P 500 Electrics Dow Jones Utility Average |
 15 *Indicated annual dividend rate Seventh consecutive annual dividend increase is part of a 103-year history of paying common dividends… 43% 70% 44% Payout Ratio 42 – 46% 43% 66% 63% Dividends per Share … and we remain comfortably within our targeted 40-50% payout range. $1.10 $1.12 $1.14 $1.17 $1.29 $1.33 $1.37* 2004 2005 2006 2007 2008 2009 2010 |
 16 PSEG is responding to investors’ questions PSE&G’s capital programs have nominal impact on rates Stable supply costs provide room for regulatory support of capital programs What is the impact on customer from capital programs? Strong PSEG cash flow and approved PSE&G capital structure support financing requirements Do you need equity? Anticipated narrowing spread between market price and embedded energy cost in BGS should mitigate risk Physical assets provide optionality What is the impact of migration? Modest payout ratio and strong balance sheet provide support – 7 consecutive annual increase Is dividend secure? Multi-year hedging through participation in full-requirements auctions Asset balance dampens relative fuel price volatility Capacity markets provide stability What’s the impact of commodity volatility? Environmentally advantaged Federal and State Policy initiatives support capital plans How is PSEG affected by policy changes? PSEG Position Investors’ Questions th |
 2010 PSEG is advantaged… … with a strong balance sheet and cash flow to pursue an investment program that seizes the opportunities of tomorrow. Right Assets, Right Markets Operational Flexibility Environmental Infrastructure Improvements Integrated business model with assets located close to load centers Dispatch flexibility of operating assets and trading capability support margins in full-requirements markets Environmentally responsible; pursuing investments in renewables; nuclear uprates Investments to improve reliability and functionality of grid 17 |
 PSEG Power – Review and Outlook |
 19 Investment program supported by strong cash flow and credit metrics Focus on operational excellence to maximize asset value Portfolio approach to hedging over multi-year timeframe to derive market premiums Low-cost, environmentally responsible, operationally flexible supply located in premium markets PSEG Power – Right assets in the right markets… … with dispatch flexibility supporting returns in volatile markets. |
 20 Power remains a leading provider in an excellent market… Pricing in 2009 was impacted by low economic demand, cool summer weather, and low gas prices Power’s hedging strategy enabled strong results 2010 forwards imply continued market challenges, but entities with the right assets in the right locations are best positioned Power will continue to utilize a hedging strategy that incorporates full requirement load contracts and other contracting to secure pricing over a 2-3 year forward horizon BGS continues to be the foundation of our hedging strategy Balanced generation portfolio in ideal position to serve BGS Three year nature of BGS provides pricing stability for customers and providers … and has a fleet ideally positioned to serve customers. |
 21 Power’s 13,600 MW of Northeast assets are located in attractive markets near load centers… ... and, exploring sale of 2,000 MW of gas-fired assets in Texas. |
 22 Low-cost portfolio Regional focus in competitive, liquid markets Assets favorably located near customers/load centers Many units east of PJM constraints Southern NEPOOL/ Connecticut Texas assets – exploring sale of 2,000 MW of combined cycle generation Market knowledge and experience to maximize the value of our assets … with low cost plants, in good locations, within solid markets. Power’s assets drive value in a dynamic environment… 15% 52% 8% Fuel Diversity Coal Gas Oil Nuclear Pumped Storage 1% Energy Produced (Twelve months ended December 31, 2009) Total GWh: 59,808 51% 15% 34% Pumped Storage & Oil <1% Nuclear Coal Gas Total MW: 15,548 24% 8% |
 23 … while maintaining optionality under a variety of conditions. Power’s PJM assets along the dispatch curve reduce the risk of serving full requirement load contracts… X X Ancillary Revenue X X X X Capacity Revenue X X Energy Revenue X X Dual Fuel Peaking units Baseload units Load following units Illustrative Salem Hope Creek Keystone Conemaugh Hudson 2 Linden 1,2 Burlington 8-9-11 Edison 1-2-3 Essex 10-11-12 Bergen 1 Sewaren 1-4 Hudson 1 Mercer1, 2 Bergen 2 Sewaren 6 Mercer 3 Kearny 10-11 Linden 5-8 / Essex 9 Burlington 12 / Kearny 12 Peach Bottom Nuclear Coal Combined Cycle Steam Peaking Yards Creek National Park Salem 3 Bergen 3 |
 24 PSEG Power – Gross Margin Performance $0 $25 $50 $75 2010 2009 2008 $63 $53 First-Half 2010 Volume increased by 13% in First-Half 2010 vs. year ago in response to weather-related demand Margins influenced by BGS migration and impairment of excess SO emission allowances Decline in gross margin influenced by lower spark spread. $47 Texas Regional Performance $26 $47 $1,435 First-Half 2010 Gross Margin ($M) First-Half Performance Region Improvement in generation offset by decline in price. New York Volumes and margins lower vs. year ago, reflecting decline in dark spreads. New England Margin improvement aided by strong weather-related demand offset by lower pricing and ($0.01) SO 2 impairment. PJM PSEG Power Gross Margin ($/MWh)* * Excludes Texas Increase in generation was predominantly from combined cycle and coal with continued strong nuclear $53 2 |
 25 Our nuclear performance has improved… 11.1 3.1 0.6 2.1 1.0 0.9 0.4 0.7 0.6 0.7 0.6 0.6 0.6 2004 2005 2006 2007 2008 2009 2010 Target 25 27 29 28 29 30 30 2004 2005 2006 2007 2008 2009 2010 Target 79.0 85.0 97.0 94.0 91.7 99.0 98.0 96 96 97 96 97 98 2004 2005 2006 2007 2008 2009 2010 Target Salem station set a new generation record in 2009. Unscheduled outage in July 2010 is expected to reduced the full-year, fleet capacity factor by 0.5%. Hope Creek scored highest possible INPO rating in its 2010 review. Top quartile INPO Index. … as we maintain our drive for excellence. Nuclear Generation Output* (000’s GWh) Forced Loss Rate ( ) (%) INPO Index ( ) NJ Units 1 Quartile NJ Units 1 Quartile * Total PS share nuclear generation; target established in Q1 2010. st st |
 26 Power’s coal fleet has shown improvement… 14 15 15 13 13 9 13 2004 2005 2006 2007 2008 2009 2010 Target 10.3 11.1 11.3 7.9 8.4 4.8 3.8 2004 2005 2006 2007 2008 2009 2010 Target Market conditions reduced output in 2009. Operational results greatly improved. Environmental footprint improved. … and back-end technology investments will prepare us for the future. Output * (000’s GWh) Forced Outage Rate ( ) (% EFORD) SO 2 and NOx Rates ( ) (lb/mmbtu) NOx * Total PS share nuclear generation; target established in Q1 2010. 1.11 1.12 1.01 0.91 0.96 0.83 0.47 0.34 0.34 0.29 0.20 0.21 0.19 0.16 2004 2005 2006 2007 2008 2009 2010 Target 2 SO |
 27 Power’s combined cycle fleet is creating value… 5 4 8 10 20 20 18 2004 2005 2006 2007 2008* 2009* 2010 Target* 3.4 7 3.4 2.5 1.8 1.5 0.8 2004 2005 2006 2007 2008* 2009* 2010 Target* 8079 7847 7928 7768 7587 7507 7452 2004 2005 2006 2007 2008* 2009* 2010 Target* Output** (000’s GWh) Forced Outage Rate ( ) (% EFORD) Period Heat Rate ( ) (mmbtu/KWh) Highest output ever in 2009. Approaching top quartile forced outage rate. Benefiting from heat rate improvement program. … benefiting from operating enhancements and market dynamics. * Includes Texas ** Total PS share nuclear generation; target established in Q1 2010. |
 28 Our peaking fleet rounds out a diverse generation portfolio… 13 17 23 19 13 14 12 2004 2005 2006 2007 2008 2009 2010 Target 85 86 76 77 91 92 94 2004 2005 2006 2007 2008 2009 2010 Target Peaking start success provides opportunities in ancillary and real time markets. Peaking adds flexibility in serving load and managing needs of a diverse market environment. … and provides ability to follow load during periods of high demand. % Start Success ( ) Forced Outage Rate ( ) (% EFORD) Equivalent Availability ( ) (%) 99.7 96.5 98.6 97.0 98.9 99.3 99.7 2004 2005 2006 2007 2008 2009 2010 Target |
 29 $40 $45 $50 $55 $60 $65 Power’s assets are well positioned near load centers… … which resulted in a 9% growth in PJM gross margin from 2008 to 2009. Historical 5-year Average PJM Energy Price (Around the Clock) Note: excludes Dominion (less than 5 years of history) |
 30 Power’s portfolio is well positioned… Baghouse Scrubber 2010 SCR Mercer (NJ) Baghouse 2010 Scrubber 2010 SCR 2010 Hudson (NJ) Mercury/ Particulate SO 2 NOx Description Current Regulations and Compliance Measures Baghouse Ultra-low Sulfur Coal Low NOx Burners Bridgeport (CT) Scrubber (Hg MACT Compliant) Scrubber (Hg MACT Compliant) Scrubber Scrubber SCR 2014 SCR Conemaugh (PA) Keystone (PA) …to meet current regulatory requirements. Capital Spend Planned No Additional Capital Spend Planned * Hg MACT compliant with baghouse |
 31 Increasingly stringent environmental requirements could significantly impact the electric power industry within the next decade… Major areas where new regulations are currently under development: • Management of Coal Combustion Residuals (CCRs) – Proposed new rule governing the use and disposition of coal combustion by-products under the Resource Conservation and Recovery Act (RCRA). • Clean Air Transport Rule (CATR) – The CATR represents a court-mandated revision to the Clean Air Interstate Rule (CAIR) regulating sulfur dioxide (SO ) and nitrogen oxides (NOx) emissions under the Clean Air Act. • Hazardous Air Pollutants (HAPs) Maximum Achievable Control Technology (MACT) – Forthcoming court-mandated rule that will require coal- and oil-fired steam electric generating units to meet emissions limits for mercury (Hg) and other hazardous air pollutants (HAPs) pursuant to Section 112 of the Clean Air Act. • 316(b) Cooling Water Regulations – Forthcoming rule that will define how best available technology requirements for cooling water intake structures will be applied to large existing electric generating plants under Section 316(b) of the Clean Water Act. • Carbon Legislation / Greenhouse Gas (GHG) Best Available Control Technology (BACT) – Congress may move to establish a carbon cap-and-trade system to reduce GHG emissions from power plants. – Absent Congressional pre-emption, EPA is developing guidance that will inform how States determine BACT requirements for GHG emissions at major new and modified power plants under the Clean Air Act. 2 |
 32 Various environmental initiatives over 2010-2020 could put 20 GW to150 GW of existing fossil capacity at risk of retirement… Controls on coal units done or under way Power’s relative position very strong High NOx, SO 2 , Hg (CATR) High Regional High High Industry Impact Emission restrictions net favorable to Power Carbon Peaking fleet replacement strategy Upwind states anticipated to increase NOx stringency Ozone air quality standards (HEDD) EPA required to perform cost-benefit analysis Issue widely shared across industry Potential capital spend exposure Once-through cooling water (316(b)) Power uses dry fly ash systems Ash has been tested as non-hazardous Coal ash regulation Power’s Positioning Issue …but Power’s clean fleet is very competitively positioned for success. |
 33 Source: EPA, EIA (2006 and 2007) and PSEG Projection Power’s coal assets will have completed many environmental upgrades by 2010… …resulting in dramatically lower emissions. PSEG Projected NOx Emission Rate for 2011 versus 2008 400 U.S. Coal Plants Conemaugh Hudson Bridgeport Mercer Keystone NOx Keystone Bridgeport Conemaugh Hudson Mercer SO 2 PSEG Projected SO Emission Rate for 2011 versus 2008 400 U.S. Coal Plants Keystone Conemaugh Bridgeport Mercer Mercury PSEG Projected HG Emission Rate for 2011 versus 2008 400 U.S. Coal Plants Hudson 0 2 4 6 8 10 12 14 0 10 20 30 40 50 60 0 50 100 150 200 250 2 |
 34 Full Requirements Component Increase in Capacity Markets/RPM Growing Renewable Energy Requirements Component for Market Risk The NJ BGS auction is a primary mechanism for hedging price… Market Perspective – BGS Auction Results … the current embedded cost of energy – relative to market – results in migration. 2003 2004 2005 2006 2007 2008 2009 2010 3 Year Average Round the Clock PJM West Forward Energy Price $55.59 Capacity Load shape Transmission Congestion Ancillary services Risk premium Green $33 - $34 $36 - $37 $44 - $46 $67 - $70 $58 - $60 $68 - $71 $56 - $58 $48 - $50 ~ $21 $55.05 ~ $18 $65.41 ~ $21 $102.51 ~ $32 $98.88 ~ $41 $111.50 ~ $43 $103.72 ~ $47 $95.77 ~ $47 Note: BGS prices reflect PSE&G Zone |
 35 The 2009 market environment prompted BGS customer migration … … market conditions will affect future migration. 2009 Medium-Term Power Actions Gradual reset of BGS rates (by one third per year) Market prices strengthened during periods of high weather-related demand in Summer 2010 Smaller loss of margin per MWh Continued migration, at a lower impact per MWh, is anticipated to reduce earnings by 2 – 4 cents per share in 2010 Historic high prices in recent past Low spot market, especially given weak economy and weather Creates incentive for customers to migrate Difference represents loss of margin per MWh $0.08/sh impact to PSEG in 2009 BGS includes price component for volumetric risk of migration Option strategies being employed to manage changes in load volume Supplying wholesale hedges to third party retail providers Supplying hedges to other end use customers Power’s diverse physical assets provide basis hedge and flexibility to manage risk |
 36 … with sites in the eastern part of PJM. Reliability Pricing Model – locational value of Power’s generating fleet recognized… With nearly 1/3 of its capacity in PS North and nearly 2/3 of its capacity in MAAC and EMAAC, Power’s assets in congested locations received higher pricing in the 2013/2014 RPM Auction. • Locational value of Power’s fleet recognized. • Bid for 89 MW of new capacity accepted for 2013/2014 auction; in-service June 2013. • On schedule to complete 178 MW of previously cleared peaking capacity by June 2012. $27.73 $16.46 $110.00 $174.29 $102.04 Rest of Pool $245.00 $185.00 PSEG North Zone $245.00 PSEG $133.37 $139.73 2012 / 2013 $226.15 $245.00 2013/2014 $110.00 $174.29 $191.32 MAAC $110.00 $174.29 $191.32 Eastern MAAC 2011 / 2012 2010 / 2011 2009 / 2010 $/MW-day PJM Zones PJM Capacity Available to Receive Auction Pricing 0 2,000 4,000 6,000 8,000 10,000 12,000 09/10 10/11 11/12 12/13 13/14 |
 37 The result of Power’s hedging strategy is a portfolio of contracted output… … which dampens the impact of market volatility on earnings in the near term. Power’s anticipated nuclear and coal output is contracted over the next few years: 2010: 100% 2011: 65-70% 2012: 25-30% 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 Nuclear / Pumped Storage Coal Combined Cycle (CC) Steam and Peakers Existing BGS, Other Load Contracts, Hedges + Future BGS Existing BGS, Other Load Contracts, and Hedges 2010 2012 Total Fleet RTC Average 2011 |
 38 0% 25% 50% 75% 100% 2010 2011 2012 $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 0% 25% 50% 75% 100% 2010 2011 2012 $0 $50 $100 $150 Power’s hedging program provides near- term stability from market volatility… … while remaining open to long-term market forces. Estimated EPS impact of $10/MWh PJM West around the clock price change* (~$2/mmbtu gas change) Contracted Capacity Price (right scale) * As of June 30, 2010 Assuming normal market commodity correlation and demand ** Excludes Texas – No capacity market Power has contracted for a considerable percentage of its future output over the next two years at attractive prices. The pricing for most of Power’s capacity has been fixed through May 2014, with the completion of auctions in PJM and NE. % sold (left scale) $0.30 - $0.60 $0.10 - $0.30 $0.05 - $0.10 Contracted Energy Price (right scale) % sold (left scale) ** * |
 39 $0 $5 $10 2010 2011 2012 Anticipated Nuclear Fuel Cost Power has hedged its nuclear fuel needs through 2012… … with increased costs over that time horizon. Hedged |
 40 Power’s coal hedging reflects 2010 supply matched with 2010 sales… … while maintaining flexibility on supply post BET installation. Contracted Coal* Mid $20’s To High $20’s Mid $20’s To High $20’s Mid $40’s To Low $40’s Mid $40’s To Low $40’s Mid $40’s To High $40’s 2010-2011 Indicative Pricing ($/MWh) Prices lower, moderating Northern Appalachian Conemaugh Prices lower, moderating Northern Appalachian Keystone More limited segment of coal market Metallurgical CAPP/NAPP Mercer Flexibility after BET in 2010 Adaro (2010) CAPP/NAPP (2011+) Hudson Higher price, lower BTU, enviro coal Adaro Bridgeport Harbor Comments Coal Type Station % Hedged (left scale) $/MWh (right scale) *2012 Primarily Keystone and Conemaugh. 0% 20% 40% 60% 80% 100% 2010 2011 2012 $0 $10 $20 $30 $40 $50 |
 PSE&G – Review and Outlook |
 42 PSE&G is positioned for growth… …through investments in infrastructure, renewables and energy efficiency. Largest provider of electric and gas distribution services and transmission in NJ. Creating renewable and energy efficiency solutions for NJ customers Leader in reliability; focused on maintaining position by improving customer responsiveness and efficiency Economically meeting mandates for reliability, service quality and access to renewables Focused on regulatory mechanisms that provide reasonable and current recovery of and return on capital |
 43 PSE&G is the largest utility in New Jersey providing electric, gas and transmission services… …and delivering renewable and energy efficiency solutions for customers. * Actual ** Weather normalized = estimated annual growth per year over forecast period *** Lifetime GWh + Lifetime Dtherms converted to GWh 60% 31% Residential 36% 58% Commercial 0.4%** 0.4% - 1.3%** Projected Annual Load Growth (2009 – 2012) Sales Mix 3,500 M Therms 41,961 GWh Electric Sales and Gas Sold and Transported (0.4%)* (0.6%)* Historical Annual Load Growth (2005 – 2009) 4% 11% Industrial 1.7 Million 3.2% Gas 2.1 Million 3.0% Customers Growth (2004 – 2009) Electric 0.5%* Historical Annual Peak Load Growth 2005-2009 1,442 Network Circuit Miles Key Statistics Transmission 2.1%** Projected PJM Peak Load Growth 2009-2012 13,512 GWh 230 GWh Energy Efficiency Initiative (lifetime equivalent)*** 80 MW 1 MW Solar 4 All 11.6 MW 2009 Renewables and Energy Efficiency Solar Loan 81 MW Total |
 44 …which creates superior value to customers. PSE&G provides the highest reliability at below average cost... SAIDI VS O&M $- $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 $7.00 $8.00 $9.00 $10.00 0 50 100 150 200 250 300 350 System Average Interruption Duration Index (SAIDI) PSE&G |
 45 2009: Success in meeting State’s energy and economic development goals… …with reasonable, contemporaneous returns. 340 354 694 April 2009 NJ Capital Infrastructure Stimulus 30 17 47 December 2008 Carbon Abatement 63 2 65 July 2009 Demand Response 143 - 143 November 2009 Solar Loan II $50 $55 $105 April 2008 Solar Loan I $1,220 $539 $1,759 Total 146 44 190 July 2009 Economic Energy Efficiency Stimulus 448 67 515 July 2009 Solar 4 All Remaining Spending Thru 6/30/10 Total Amount Approval Date ($ Millions) |
 46 * Project has firm contract for 320MW. ** Project in queue – no firm contracts. *** PSE&G has announced a 2-year delay of the in-service date for the eastern portion of the S-R Transmission line. **** PSE&G has placed development activities for the B-R-H Transmission line on hold; PJM is evaluating potential 230kV alternatives. Projects to NY Neptune HVDC project (685 MW) Sayreville to Long Island. Linden VFT project (330 MW) Linden to Staten Island. Bergen O66 project (670 MW*) Bergen to ConEd's West 49th St. expected in-service 2012. Bergen U2-100 project (800 MW**) connecting Bergen to NY expected in-service 2012. Projects to NJ PSE&G’s evaluation of the proposed backbone Transmission projects: Susquehanna - Roseland*** Branchburg- Roseland- Hudson**** …As a result NJ will need a mix of new generation, DSM or additional transmission imports. Total Import Capability ~ 2,000 MW Total Export Capability ~ 2,500 MW 2010-2020 NJ Summer Peak Growth Rate = 1.6% Annually Sources: Imports: PSE&G Estimates; Exports: PJM 2009 RTEP; Load Growth: PJM 2010 Load Forecast Report NJ’s load is expected to grow 3,450MW by 2020, with net imports decreasing ~500MW… |
 47 New Jersey Electric & Gas Rate Agreement -- A Balancing of Interests 51.2% Equity Ratio 10.3% Return on Equity $6.0B $2.27B $3.75B Rate Base $100.0M $26.5M $73.5M Increase Total Gas Electric Rate Agreement approved by NJ Board of Public Utilities (BPU) June 2010 … in a difficult economic environment. •The agreement requires PSE&G to return $122 million of Market Transition Charges to customers over a 2-year period. •Agreement supports a review by the BPU of policy on consolidated tax accounting and recovery of Societal Benefits Charge. •PSE&G reduced distribution capital budgets by $140 million per year over 2010-2012 to ensure ability to earn our allowed return on equity. •Rigorous management of O&M expenses will be key to optimizing rate agreement. |
 48 Regulatory Reform Working in New Jersey to build political and regulatory support for “Utility of the Future”... …to create shareholder and customer value. T&D Infrastructure Replacement Renewables Development Transmission Backbone Projects Energy Efficiency Development Smart Grid/PHEV Infrastructure |
 PSEG Energy Holdings – Review and Outlook |
 50 PSEG Energy Holdings Simplifying the business and creating sustainable growth opportunities. Maximizing the value of the remaining portfolio Transaction structures and partnerships mitigate financial risk Streamlined business and reduced financial risk Capitalizing on renewable opportunities |
 51 PSEG Energy Holdings… PSEG Global International assets sold* Small remaining investment in domestic traditional generation joint venture assets PSEG Resources Tax exposure reduced by approximately $900 million through sixteen LILO/SILO lease terminations, including three terminations in 2010 Maximizing value and minimizing risk for traditional leases and real estate Long-term debt reduced by $1 billion over 2008 and 2009 Redemption of $642 million of Energy Holdings recourse debt $368 million eliminated through bond exchange $127 million of debt remaining … has streamlined its businesses and reduced its risk. * Nominal investment in Venezuela remaining |
 52 PSEG Energy Holdings is focused on renewable energy opportunities Complementing PSEG portfolio by increasing earnings base with structured, low risk investments Disciplined evaluation of favorable markets for renewables Transaction structure and partnerships designed to mitigate risk Expand geographic and regulatory diversity Attractive and predictable returns Pursuing renewable strategy through three primary vehicles Solar Source LLC Energy Storage and Power LLC Garden State Offshore Energy LLC |
 53 Long-term off-take agreements with creditworthy counterparties Capitalizing on existing renewable markets Leveraging partnerships and alliances A total installed capacity of 29MW is expected to be in commercial operations by the end of Q3 2010 A 2MW solar facility developed and installed in 2009 An additional 27MW on schedule for Q3 2010 commercial operation 20 - 30 year Power Purchase Agreements for energy, capacity and green attributes Low risk engineering, procurement and construction contracts Projects that leverage the Investment Tax Credit ~$114M total investment to date … in the emergent solar industry. PSEG Solar Source is building a portfolio to take advantage of attractive opportunities… |
 54 Cash Exposure Net of $320M of IRS Deposits 12/31/2008 12/31/2009 July 2010 2 5 17 # of LILO/SILO Leases 2009 Activities Terminated 12 LILO/SILO leases 2010 Activities Terminated 3 LILO/SILO leases Pursue additional lease termination opportunities 2008 Activities Terminated 1 LILO/SILO lease Exposure to our potential lease tax liability… …was reduced with aggressive asset management. $660 ~$1,200 ~$80 ~$400 $- $500 $1,000 $1,500 |
 PSEG – Financial Review and Outlook |
 56 PSEG… …is focused on providing above average risk-adjusted returns. Top quartile performance in operations with year- over-year improvements and cost management. Maintain balance between risk and return through prudent balance sheet management Met/exceeded earnings and financial objectives Securing premium value in transparent, competitive markets; implementing mechanisms supporting cost recovery in reasonable timeframe |
 57 $(0.12) $0.14 $0.74 $1.92 $0.02 $(0.05) $0.09 $0.07 $0.63 $0.71 $2.38 $2.30 2007 2008 2009 $3.12* We have met or exceeded our earnings objectives … … and expect 2010 earnings to remain strong. Holdings PSE&G Power Parent Operating Earnings per Share by Subsidiary $2.68* $3.00 - $3.25 $2.80 - $3.05 $2.30 - $2.50 Guidance Range $3.03* *See page 66 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings |
 58 PSEG 2010 Operating Earnings Guidance - By Subsidiary $ 3.12 $ 1,579 $ 10 $ 43 $ 321 $ 1,205 2009A* $ 3.00 – $ 3.25 $ 1,520 – $ 1,645 $ 5 – $15 $ 30 – $ 40 $ 425 – $ 455 $ 1,060 – $ 1,135 2010E Enterprise Earnings per Share Operating Earnings* PSEG Energy Holdings PSE&G PSEG Power $ millions (except EPS) * See Page 66 for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings. |
 59 In 2009, we had substantial cash generation … PSEG Consolidated 2009 Sources and Uses Power Cash from Ops Shareholder Dividend Gross Lease Proceeds PSE&G Investment …which was applied toward improving our financial profile. Debt Redemptions Lease Termination Taxes & IRS Deposit Debt Issuances PSE&G Cash from Ops(1) Power Investment (1) PSE&G Cash from Operations adjusts for securitization principal repayments of ~ $190M Regulated investment Eliminated Parent Long-term debt and minimized Holdings’ debt Reduced Tax Risk $0 $1,000 $2,000 $3,000 $4,000 $5,000 Sources Uses |
 60 •2009 FFO to Debt remained strong comfortably above minimum threshold level •Decline from 2008 expected due to Power debt exchange, which reduced Holdings refinancing risk 25% 30% 35% 40% 45% 50% 2007 2008 2009 40% 45% 50% 55% 2007 2008 2009 PSEG Power Funds from Operations / Total Debt PSE&G Regulatory Equity Ratio Key credit measures support our planned investment program …and our balance sheet provides a platform for future growth. Target = 51.2% |
 61 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0 2010 2011 2012 Power Syndicated Facility - 1.60B 1 Expires 12/2012 Power 2-Year Facility - 0.35B Expires 7/2011 PSEG Syndicated Facility - 1.00B 2 Expires 12/2012 With our current facilities, PSEG/Power will have approximately $2.6 billion of credit capacity through 2012 ... Non-PSE&G Credit Capacity ...and we will continue to ensure adequate liquidity. 1 Power facility reduced by $75M in 12/2011 2 PSEG facility reduced by $47M in 12/2011 Power Bilateral – 0.10B Expires 9/2015 August 2010 |
 62 Debt Maturity Profile – As of September 1, 2010 0 200 400 600 800 1,000 HOLDINGS (Recourse) 0 127 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 POWER 0 605 666 300 250 300 303 0 0 0 420 0 0 0 0 0 0 19 0 0 0 525 0 0 0 0 0 40 0 0 0 0 45 PSE&G excl. Securitization 0 0 300 725 250 300 171 0 400 0 259 134 0 0 0 23 0 0 64 0 0 0 150 100 0 250 250 365 0 250 300 0 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 Holdings Recourse PSE&G Power 2010 Financing Activity PSE&G maturity of $300M in March 2010 PSE&G issued $300M due 2040 PSE&G issued $300M due 2015 PSE&G issued $250M due 2020 in August 2010 PSE&G bond remarketing due 2028 closed September 1, 2010 Power remarketed $44M of tax-exempt bonds due 2042 Power called $48M due 2013 and $161M due 2014 Power issued $300M due 2013 Power issued $250M due 2020 Power exchanged $195M due 2011 for $156M due 2020 plus cash of $52M |
 63 PSEG value proposition PSEG provides investors with a balanced portfolio of assets within a shifting landscape for energy. PSEG’s focus on operational excellence and O&M control will yield benefits now, and over the long-term. PSEG’s capital commitments are focused on improving reliability and service quality at attractive risk-adjusted returns. PSEG’s strong balance sheet and cash flow support a capital program that will benefit shareholders through ongoing support of dividends and opportunity for future growth. |
 Appendix |
 65 Items Excluded from Income from Continuing Operations to Reconcile to Operating Earnings Please see Page 3 for an explanation of PSEG’s use of Operating Earnings as a non-GAAP financial measure and how it differs from Net Income. Pro-forma Adjustments, net of tax 2010 2009 Earnings Impact ($ Millions) Gain (Loss) on Nuclear Decommissioning Trust (NDT) Fund Related 20 $ (6) $ Activity (PSEG Power) Gain (Loss) on Mark-to-Market (MTM) (PSEG Power) 11 (39) Market Transition Charge Refund (PSE&G) (72) - Total Pro-forma adjustments (41) $ (45) $ Fully Diluted Average Shares Outstanding (in Millions) 507 507 Per Share Impact (Diluted) Gain (Loss) on NDT Fund Related Activity (PSEG Power) 0.04 $ (0.01) $ Gain (Loss) on MTM (PSEG Power) 0.02 (0.08) Market Transition Charge Refund (PSE&G) (0.14) - Total Pro-forma adjustments (0.08) $ (0.09) $ (a) Income from Continuing Operations for the six months ended June 30, 2010 and 2009 is equal to Net Income. For the Six Months Ended 30-Jun |
 66 Items Excluded from Income from Continuing Operations to Reconcile to Operating Earnings Please see Page 3 for an explanation of PSEG’s use of Operating Earnings as a non-GAAP financial measure and how it differs from Net Income. Pro-forma Adjustments, net of tax 2009 2008 2007 Earnings Impact ($ Millions) Gain (Loss) on Nuclear Decommissioning Trust (NDT) Fund Related Activity 9 $ (71) $ 12 $ Gain (Loss) on Mark-to-Market (MTM) (25) 16 10 Lease Transaction Reserves - (490) - Net Reversal of Lease Transaction Reserves 29 - - Asset Sales and Impairments - (13) (32) Premium on Bond Redemption - (1) (28) Total Pro-forma adjustments 13 $ (559) $ (38) $ Fully Diluted Average Shares Outstanding (in Millions) 507 508 509 Per Share Impact (Diluted) Gain (Loss) on Nuclear Decommissioning Trust (NDT) Fund Related Activity 0.02 $ (0.14) $ 0.02 $ Gain (Loss) on Mark-to-Market (MTM) (0.05) 0.03 0.02 Lease Transaction Reserves - (0.96) - Net Reversal of Lease Transaction Reserves 0.05 - - Asset Impairments - (0.03) (0.06) Premium on Bond Redemption - - (0.06) Total Pro-forma adjustments 0.02 $ (1.10) $ (0.08) $ PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED For the Twelve Months Ended December 31, (Unaudited) Reconciling Items Excluded from Continuing Operations to Compute Operating Earnings |