Public Service Enterprise (PEG) 8-K Regulation FD Disclosure

We have the

energy

to make things better

…

for you, for our investors

and for our stakeholders.

EXHIBIT 99

2

Forward-Looking Statement

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.

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 transmission planning,

•

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

for

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.

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 slide in this presentation includes 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.

4

2015 PSEG Conference Agenda

Presentation

Presenter

Welcome and Introductions

Kathleen Lally

PSEG

Ralph Izzo

PSE&G

Ralph LaRossa

Q&A Session

Break

PSEG Power

William Levis

Power ER&T

Shahid Malik

Q&A Session

Financial Review & Outlook

Caroline Dorsa

Summary and Q&A

Conference Conclusion

STRATEGY –

DELIVERING GROWTH

CHAIRMAN,

PRESIDENT

AND

CHIEF

EXECUTIVE

OFFICER

Ralph Izzo

6

Operational

Excellence:

Maintaining

reliability and improving performance as we

control costs in low price environment

Financial

Strength:

Strong

financial

position

supports investment program and dividend

growth

Disciplined Investment:

Results

PSEG’s Strategy 

Investment program delivering results

•

Transformed business mix

•

Robust pipeline of opportunities

•

Project

3

rd

year

of

EPS

growth

•

Increased rate of dividend growth

•

Best in class utility growth rate

•

Stable business mix with upside

potential from power markets 

DISCIPLINED

INVESTMENT

OPERATIONAL

EXCELLENCE

FINANCIAL

STRENGTH

ENGAGED

WORKFORCE

7

Two complementary businesses 

A stable platform, each with growth opportunities

Strategy:

Diverse

(fuel

and

dispatch)

fleet

geographically

and

environmentally

well

positioned,

with

investments

to

enhance

competitiveness

Value

Proposition:

Provides

substantial

free

cash

flow

in

current

environment

and

upside

from

market

rule

improvements

Assets $12B

Operating Earnings $642M

Regional Competitive Generation

Strategy:

Investments

aligned

with

public

policy and customer needs

Value

Proposition:

An

$11

billion

infrastructure

program

–

focused

on

transmission

–

produces

double-digit

rate

base

growth

through

2019

Assets  $22B

Operating Earnings $725M

Electric & Gas Delivery

and Transmission

2014

2014

ASSETS AND OPERATING EARNINGS ARE FOR THE YEAR ENDED 12/31/2014.

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

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

TO OPERATING EARNINGS.

8

Delivering on commitments and realizing growth

Operational

Excellence

•

PSE&G:  Mid-Atlantic Reliability Award (13

th

consecutive year), top ranked

among eastern electric and gas utilities in business customer satisfaction

•

PSEG Power:  Record output from combined cycle units

•

PSEG Long Island:  Demonstrated management and integration capability

through a successful transition in first year

•

PSEG:  Cost-control benefits continue

Financial

Strength

•

Earnings performance exceeded guidance

•

Cash flows and business mix support strong credit ratings and ability to fully

fund robust investment pipeline without issuing new equity

•

Increased rate of dividend growth in 2015

Disciplined

Investment

•

PSE&G

Transmission capital program execution and growth

Energy Strong infrastructure program underway

Energy efficiency program extension

Further growth planned –

Gas System Modernization Program

•

Power:  Unit uprates, PennEast Pipeline, Solar Source

9

**

**

Operating Earnings

Disciplined investment program and focus on operational

excellence have supported growth

Power’s

diverse fuel

mix and dispatch

flexibility continue to

generate strong

earnings and free cash

flow in low price

environment

PSE&G’s

investment

program has driven

double digit compound

annual earnings

growth since 2010

Operating Earnings* Contribution by Subsidiary

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

NET INCOME TO RECONCILE TO OPERATING EARNINGS.  E=ESTIMATE

** 2015 PERCENTS USE MIDPOINT OF EARNINGS GUIDANCE.

10

Robust pipeline of investment opportunities

supports growth objectives

2015E -

2019E*: $13 Billion

2010 –

2014: $12.6 Billion

Power Total***

$2.7B

PSE&G Total

$9.8B

PSE&G Total

$10.8B

PSEG Capital Spending

Power Total***

$2.0B

2015E–2019E:

•

$1.3B of capital for Gas System Modernization Program and Artificial Island would be incremental

*INCLUDES ALL PLANNED SPENDING. **ENERGY STRONG EXCLUDES RISK AND CONTINGENCY. ***POWER CAPITAL SPENDING EXCLUDES

NUCLEAR FUEL.  ****INCLUDES PENNEAST PIPELINE EQUITY INVESTMENT OF $0.1B.  E=ESTIMATE.  DATA AS OF MARCH 2, 2015.

11

Balance sheet strength supports capital

allocation

Timeframe

Actions taken

2010 –

2014:  

Transformed

business mix

•

Applied $16 billion towards investments and dividends

•

Improved credit ratings

•

Monetized Energy Holdings’

portfolio

•

Strong balance sheet sustained during period of low power

prices, while increasing the dividend

2015 –

Forward: 

Strong financial

position supports

continued growth

•

Increased rate of dividend growth in 2015

•

$13 billion investment program through 2019

•

Gas System Modernization Program and Artificial Island

increase capital program by $1.3 billion through 2019

•

Financial capability supports further expansion of the

current capital plan

12

PSE&G’s investment program

Meeting public policy goals and customer needs

PSE&G Rate Base and Operating Earnings*

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

NET INCOME TO RECONCILE TO OPERATING EARNINGS.

13

Containing customer bills while investing

in the system

•

PSE&G customers’

combined electric and gas bills declined 23% over the period.

•

Low gas prices drove rate decreases; in addition, gas customers received

bill credits of ~$400 in total from 2012 through 2014.

Gas

Electric

PSE&G Typical Residential Customer Bills*

*FOR ALL YEARS THE BILLING ASSUMES 7,200 KWH FOR ELECTRIC AND 1,010 THERMS FOR GAS ANNUALLY. E = ESTIMATE

14

PSE&G Planned and Potential Capital Projects

•

Planned capital spending

expected to drive double digit

rate base growth and high

single digit EPS growth

through 2017

•

Transmission expected to

grow to >50% of rate base in

2019

•

Gas System Modernization

Program and Artificial Island

investments would be

incremental

•

Seeking to broaden platform

to expand energy efficiency

and other investments

PSE&G’s

robust capital investment pipeline

E=ESTIMATE

15

Economic

Drivers

Outlook

Combined

Cycle

Nuclear

Scrubbed

Coal

Peakers

Renewable

Energy Margins

•

Low natural gas and

energy prices

•

Robust portfolio of gas

pipeline contracts

n/a

n/a

Capacity

Markets

•

Tightened rules proposed

for capacity performance

n/a

Environmental

Regulations

•

Tighter air emissions

standards

Location

•

Assets in well-designed

markets, premium regions

•

Opportunities on 

brownfield sites

n/a

PSEG Power Capacity (GW)

Total 13 GW

3.2

3.6

2.4

3.7

0.1

Power’s fleet has the desired attributes to be

successful in today’s and tomorrow’s market

•

Largest

nuclear

site

in

the

eastern

U.S.

and

ownership

in

large,

fully

scrubbed

coal

facilities

at

Keystone

and

Conemaugh

provide

economies

of

scale

that

enhance

energy

margins

in

current

low

market,

and

provide

for

upside

potential

if

prices

improve.

•

Dual

fuel

peakers

meet

reliability

criteria

in

capacity

markets

and

provide

option

value

in

energy

market. 

Opportunity

exists

to

repower

peakers

that

do

not

meet

NJ

HEDD

environmental

regulations.

16

Power

–

Growing

value

by

improving

market

rules

and

developing

investment

opportunities

Value  Source

Opportunities and Actions Taken

Improving rules

will better

recognize

value of our

fleet

•

PJM’s Capacity market –

2014 limits on demand response and

2015 Capacity Performance proposal

•

Demand response treatment at U.S. Courts / FERC

•

Energy price formation at FERC

•

Increasing air standards through Federal and State regulations

Our footprint

provides

growth

opportunities

•

Nuclear and Combined Cycle plant uprates are underway

•

Brownfield expansions at existing sites

New peakers built at New Haven and Kearny sites

Continue to explore further opportunities

•

PennEast pipeline -

equity investment and gas portfolio enhancement

•

Solar Source owns ~123 MW*, with significant project pipeline

•

Continue to seek opportunities to expand the fleet

*PROJECT SIZE IN MEGAWATTS SHOWN IN DC (DIRECT CURRENT), AC EQUIVALENT IS 96 MW.

17

PSEG Annual Dividend

An increased dividend growth rate with potential for consistent and

sustainable growth given our business mix and financial position

Payout

Ratio

50%

58%

56%

54%

55%*

PSEG Annual Dividend Rate 

2011-2014 CAGR:  2.6%

*2015E PAYOUT RATIO REFLECTS THE MIDPOINT OF OPERATING EARNINGS GUIDANCE.  E=ESTIMATE

18

Focus areas over business plan horizon

PSE&G

•

Capital

program

execution

–

Transmission,

Energy

Strong

and

additional

programs

•

Operational excellence and cost control

•

Regulatory framework

•

Continue to develop incremental growth opportunities

PSEG Power

•

Operational excellence and cost control

•

Strong

performance

at

Nuclear

and

Fossil

to

maximize

fleet

value

in

dynamic

markets

•

Monitor

and

shape

market

rules

-

Capacity

markets

and

environmental

regulations

•

Develop growth opportunities

PSEG Long Island

•

Continue

execution

–

Integration and achievement of performance metrics

19

PSEG’s Value Proposition

•

A stable platform with predictable earnings and a robust

investment pipeline

•

PSE&G -

Best in class utility performance and growth profile

•

PSEG

Power

-

Well-positioned

fleet

that

generates

substantial

free

cash

flow

in

this

market

environment

with

upside

for

improvements

in

pricing

•

Strong

balance

sheet

-

Supports

strong

credit

rating,

growth

objectives

and

the

potential

for

sustainable

dividend

growth

We have the

energy

to make things better

…

for you, for our investors

and for our stakeholders.

PSE&G

PRESIDENT

AND

CHIEF

OPERATING

OFFICER

Ralph LaRossa

22

PSE&G

strategy

Building a

sustainable

platform that

balances

reliability,

customer rates

and public

policy to ensure

growth at

reasonable

returns

23

PSE&G is the largest electric and gas distribution and

transmission utility company in New Jersey

*      GAS FIRM ONLY SALES.

**    ESTIMATED ANNUAL GROWTH PER YEAR, ASSUMES NORMAL WEATHER.

***  SOME PROJECTS APPROVED FOR SPECIFIC ROE.

Electric

Gas

Customers

Growth (2010 –

2014)

2.2 Million

0.3%

1.8 Million

0.3%

2014 Electric Sales and Gas Sold and Transported

40,737 GWh

2,628M

Therms*

Projected Annual Load Growth (2015 –

2017)**

1.1%

0.5%

Projected Annual Load Growth

Transmission (2015 –

2017)

0.9%

Sales Mix

Residential

32%

60%

Commercial

58%

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

2009-2014

Total

Program Plan

Solar Loan Capacity

83 MW

178.5 MW

Solar 4 All  Capacity

100 MW

125 MW

Energy Efficiency Annual Electric savings

206 GWh

214 GWh

Energy Efficiency Annual Gas savings

6.5 M Therms

7 M Therms

24

Mid-Atlantic

ReliabilityOne

award winner

for 13

years in

a row

25

PSE&G’s

service and

reliability is

being

recognized by

customers

26

PSE&G has achieved annual growth in

operating earnings of ~18% over the past five years

with implementation of supportive rate mechanisms on our

expanded capital program and cost control

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

PSE&G’s Contribution to

PSEG Operating Earnings* Per Share

27

PSE&G plans to invest $10.8B over the

next five years

PSE&G’s Capital Expenditures*

*INCLUDES AFUDC.    E=ESTIMATE.

28

PSE&G’s existing major Transmission

projects are being completed on schedule and on budget

Major Transmission Investments

Project Roster

Approved

ROE

Inclusion

of CWIP in

Rate Base

100%

Recovery

of Costs

Due to

Abandonment

Estimate

Up To

($ Millions)

Expected

In-service

Date

Susquehanna-Roseland

12.93%

$790

June 2014

-June 2015

Northeast Grid Reliability

11.93%

$907

June-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

29

A robust pipeline of Transmission

investments focus on reliability improvements and replacement

of aging infrastructure

Major Transmission Investments

Project Roster

Approved

ROE

Program Description

Estimate

Up To

($ Millions)

Expected

In-service

Date

Bergen—Linden Corridor 345kV

11.68%

PJM baseline project

receiving CWIP in rate base

treatment

$1,200

June

2018

PJM Regional Transmission

Expansion Plan (RTEP) –

multiple

projects

11.68%

PJM mandated system

reliability projects

$1,900

Various

69kV Upgrade –

multiple projects

11.68%

Upgrade of 26kV to 69kV

$1,500

Various

Transmission Lifecycle –

multiple

projects

11.68%

Replacement of aging

infrastructure

$1,100

Various

Transmission Hardening–

multiple projects

11.68%

Reliability projects focused

on system resiliency

$650

Various

*INCREMENTAL INVESTMENT IN HARDENING INCLUDED AS PART OF OTHER PROGRAMS.

30

Bergen-Linden Corridor is a project which will

provide a double-circuit 345kV line designed to maintain

system reliability

Project Estimate

Up To

Through Year-end

2014

Expected

Completion Date

$1,200M

$40M

June 2018

•

PJM RTEP project b2436 and b2437 with phased in-

service dates

•

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, Licensing and Construction

Marion Substation Pile Installation

31

Major Transmission programs focus on

reliability and replacing aging infrastructure

•

PJM’s Regional Transmission Expansion Plan (RTEP) identifies system

enhancements needed for reliability

•

69kV system upgrades improve system reliability and provide capacity

for future growth

•

Transmission Lifecycle is an ongoing program to manage transmission

asset life to maintain and improve system integrity and reliability

•

Transmission Hardening projects focus on increasing system resiliency

32

PSE&G has 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

•

Carbon Abatement      

–

2008

•

Demand Response 

–

2009

•

Energy Efficiency (EE)  –

2009

•

EE Extension

–

2011

•

EE Extension II

–

2015

ENERGY EFFICIENCY

assisting customers with

controlling energy usage 

•

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

* IF APPROVED.

To date we have

invested over $2B in

the above programs

Over $1B

ahead in

Energy Strong, Energy

Efficiency Ext II*

and

Solar programs

Gas System

Modernization Program

would increase

potential investment by

~$1.6B

33

PSE&G is successfully executing on

Energy Strong

with ~$150M deployed during the

latter half of 2014

Program

Approved

Spend thru 2014

Flood Mitigation

$620M

$19M

Electric Contingency Reconfiguration

$100M

$26M

Electric Advanced Technology

$100M

$10M

Gas Utilization Pressure Cast Iron (UPCI)

$350M

$94M

Gas Metering & Regulating (M&R)

$50M

$1M

TOTAL

$1,220M

$150M

33

34

Energy Strong will provide

increased reliability

and resiliency

•

Electric Flood Mitigation

•

Engineering and scheduling began on 16 of the 29 total planned substation

projects

•

Electric Contingency Reconfiguration

•

Over 100 projects have been started and 15 projects have been completed to

date, including installation of over 900 poles and 70 reclosers

•

Advanced Technology

•

A total of 60 relays replaced and 3 remote terminal unit (RTU) has been installed

•

Gas Utilization Pressure Cast Iron (UPCI)

•

Installed ~110 miles of gas main and replaced ~5,300 services

•

Gas Metering & Regulating (M&R)

•

Design and engineering completed for all of the eight stations scheduled

35

Extension of PSE&G’s award winning

Energy Efficiency program

•

Energy Efficiency Extension II seeks to extend the investment and time

frame for three previously approved programs already in the marketplace

allowing PSE&G to factor in lessons learned and balance policy issues

•

$95M of rate base investment

•

If approved, would extend existing programs, two of which have sizable

waiting lists:

•

Hospitals

•

Multifamily

•

Direct install –

government, non-profit, and small business

•

Would allow PSE&G to leverage past investments in people, capabilities,

systems and processes

36

Gas System Modernization Program

of

~$1.6B focusing on aging gas mains

•

PSE&G’s gas distribution system currently operates and maintains over

4,800

miles

of

cast

iron

and

unprotected

steel

main,

the

largest

such

system in any single state

•

The program provides for investment of ~$1.6B focused on replacing cast

iron and unprotected steel main over a five-year period, beginning mid-

2016

•

Program will replace approximately 160 miles of main per year

•

Requested accelerated clause-based recovery similar to the Energy Strong

program with a 9.75% ROE

•

This program is the first phase of a long-term replacement strategy

•

30-year cast iron and unprotected steel replacement program

•

Benefits:

•

Methane emission reduction is estimated at 24,500 metric tons of

CO

2

equivalent per year*

•

Higher pressure system allows usage of high efficiency appliances by customers

* EPA SUBPART W METHODOLOGY.

37

PSE&G’s demonstrated ability to

successfully execute projects on scope, on time, and on budget

leaves us well positioned to pursue FERC 1000 opportunities

•

Artificial Island

•

PSE&G’s proposal is one of four finalists

•

The proposal includes building 18 miles of 500kV transmission

line running from the Hope Creek Generating Station to the

Red Lion substation in Delaware

•

PJM 2014 Window #2

•

PJM staff has recommended awarding PSE&G two projects to

resolve criteria violations in the Sewaren and Mercer areas

38

Traditional Recovery Mechanisms

Distribution Base Rates

FERC Formula Rates

Transmission

Artificial Island

PSE&G continues to receive

contemporaneous/ 

formula rate recovery on ~75% of its investment program

Clause Recovery Mechanisms

Energy Strong / Infrastructure /

Solar / Energy Efficiency

Gas System Modernization Program

E = ESTIMATE.   DATA AS OF MARCH 2, 2015

20%

56%

24%

2010-2014 PSE&G Capital Spending

by Recovery Method

$9.8B

9%

9%

55%

2%

25%

2015-2019E PSE&G Capital with

Potential Upside by Recovery Method

$12.1B

39

Cost control actions taken:

•

PSE&G is utilizing the Lean Six Sigma discipline to achieve costs savings and process

improvements

•

Conducted organizational reviews resulting in streamlining of processes through

restructuring

•

Continued focus on vendor and inventory practices ensuring maximum value

•

Successful management of pension

2009 to 2015 CAGR = 0.3%

PSE&G O&M Expense

E=ESTIMATE

PSE&G has

controlled costs

through process

improvements and will

continue to drive future

efficiencies

$0

$500

$1,000

$1,500

2009

2010

2011

2012

2013

2014

2015E

40

PSE&G’s 2015 operating earnings

expected to benefit from increased investment in Transmission

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

OPERATING EARNINGS.  E =ESTIMATE.  DATA AS OF MARCH 2, 2015.

$612

$725

2013

2014

2015 Guidance

PSE&G Operating Earnings*

($ Millions)

$735 --

$775E

PSEG LONG ISLAND

CHAIRMAN OF THE BOARD

PSEG LONG ISLAND

Ralph LaRossa

42

PSEG Long Island is focused on

improving customer service and reliability

•

Provide best-in-class customer service, including building on our new

Call Center Technology platform to better serve our customers

•

According to J.D. Power, in 2014 PSEG Long Island showed the most

improvement in overall customer satisfaction of any large electric utility,

anywhere in the nation

•

Work to maintain industry-leading service reliability

•

Improve every aspect of the storm response process

•

Leveraged our new Outage Management System to improve storm logistics

and outage coordination

•

Contributed $0.02* to PSEG’s earnings per share in 2014, as expected

* EXCLUDES THE ENERGY RESOURCES & TRADE CONTRACT, WHICH WILL BE INCLUDED IN PSEG POWER’S RESULTS.

PSEG POWER

William Levis

PRESIDENT AND CHIEF OPERATING OFFICER

PSEG POWER

45

PSEG Power

strategy

Excellence in

operating our units

safely, reliably, cost-

competitively and in

an environmentally,

responsible manner

DISCIPLINED

INVESTMENT

DISCIPLINED

INVESTMENT

OPERATIONAL

EXCELLENCE

OPERATIONAL

EXCELLENCE

FINANCIAL

STRENGTH

FINANCIAL

STRENGTH

ENGAGED

WORKFORCE

ENGAGED

WORKFORCE

46

PSEG Power creating value by responding

to changing markets and regulations

Financial/Economic

Focus

Regulatory Focus

•

Nuclear units have performed well for

ten consecutive years

•

Hope Creek recorded its second

highest output in its history

•

Fleet diversity across the dispatch

curve and fuel types provide flexibility

to meet changing market conditions

•

Bergen 1 & 2 and Linden 1 individually,

and the CCGT fleet in total, set

generation records in 2014

•

Kearny 13 & 14 have shown increasing

output in each year since start-up

•

Getting the most out of

existing fleet

•

Locational advantage

•

O&M control programs

have delivered a CAGR of

2.6% between 2009 and

2015

•

Sites offer competitive

advantage for expansion

•

Strong regulatory

performance

•

Industry leadership in the

changing business

environment

Safety/Environmental

Focus

Fleet

Diversity/Efficiency

Focus

47

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

between Nuclear & Fossil

initiated

•

Exceeded earnings guidance

in 2014

•

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 began January 1, 2015

•

Completed three projects with one

underway, bringing Solar Source’s

portfolio to 123 MW

DC

•

Nuclear ESP is expected in 2016

48

PSEG Power met 2014’s challenges

Storm and

weather challenges

•

All of the generation

sites affected by

SuperStorm Sandy

were restored to

service by mid-2014,

with ongoing repairs

•

Cold weather

extremes created a

challenging

operating

environment, but

also presented

opportunities

Market

challenges

•

Transmission

(outages and build

outs) and gas

markets resulted

in pressure on

basis

•

Lower gas cost

impacted dark

spread pressuring

coal unit dispatch

•

Load impacted by

economy

Value

delivered

•

Expedited return from storm outages,

restored margin opportunities

•

High availability when needed

•

Flexibility of portfolio captured real-

time basis opportunities

•

Captured value through coal/gas

switching, unit flexibility

•

Management of gas assets benefited

customers and fleet

•

Achieved fuel cost savings

49

PSEG Power exceeded 2014’s earnings guidance

GUIDANCE

RANGE

Over $60M of additional

value gained from:

•

Weather, basis volatility

•

Fuel flexibility

•

Lower gas cost

•

Spark/dark spread

Initial

Guidance

Actual

Revised

Guidance

*EXCLUDES IMPACTS FROM STORM RECOVERY COSTS. SEE SLIDE A FOR ITEMS EXCLUDED FROM NET INCOME TO RECONCILE TO OPERATING

EARNINGS.

2014 PSEG Power Operating Earnings*

($ Millions)

$642M

$550-$610M

50

PSEG Power has generating assets

in three competitive markets

•

Assets located near load

centers

•

Low cost portfolio

Fuel flexibility with gas cost

advantage

•

Positioned to benefit

from volatility in real-time

markets

•

Readiness for capacity

performance (CP) in PJM

•

Fleet positioned to 

maintain diversity and

efficiency after HEDD

•

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

51

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

•

Base Load ensures cash flow certainty

•

Load Following provides ability to serve load shape

•

Readiness for Capacity Performance (CP)

•

Peaking takes advantage of real-time prices and

reduces operational risk

•

Dual fuel capability at 87% of load following and

peaking units

Illustrative

Salem

Hope

Creek

Keystone

Conemaugh

Hudson 2

Linden 1,2

Bergen 1

Mercer 1, 2

Bergen 2

Peach

Bottom

Essex 9

Sewaren 1-4

Burlington 12

Yards Creek

Base Load Units

Peaking Units

Load Following Units

Kearny 12-13-14

Nuclear

Coal

Coal/Gas

Combined Cycle

Steam

Combustion Turbine /

Pumped Storage

Linden 5-8

POST -

HEDD

52

PSEG Power positioned to maintain diversity and

efficiency after a realignment of the fleet following HEDD

retirements

•

Maintain fuel diversity

•

Maintain load-serving

capability

•

Maintain low cost

structure

•

Improve

environmental &

heat rate profiles

•

Complete

Peach Bottom (PB)

uprate

Advanced Gas Path

(AGP)

Objective

2015

2017

13,337 MW

11,900 MW

Fuel Diversity

Energy Produced

55 -

57 TWh

54 TWh

E=ESTIMATE

Solar

Kalaeloa

Oil

Pumped

Storage

HEDD

Other

Peakers

AGP/PB

EPU

CCGT

Coal

Nuclear

Peakers

AGP/PB EPU

CCGT

Coal

Nuclear

Oil, Other gas, HEDD,

Pumped storage,

kalaeloa, Solar

2014

2017

2014

2017

E

E

53

PSEG

Power’s

fleet

is

expected

to

see

improvement in heat rate and decline in

emissions

•

AGP (Advanced Gas Path) investments

•

Other Efficiency improvements

•

HEDD retirements

54

PSEG Power’s fleet is among the lowest

emitting in the industry

0

20,000

40,000

60,000

80,000

100,000

10,000

20,000

30,000

40,000

50,000

60,000

70,000

2006

2007

2008

2009

2010

2011

2012

2013

2014

Generation

SO

NOx

2

•

Mercury reduced 80% across the timeframe above

•

More efficient testing and improved operational flexibility through utilization of Continuous

Emission Monitoring System testing

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

•

•

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: 2,307 MW

•

Owned Capacity: 1,324 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: 2,242 MW

•

Owned Capacity:

1,121 MW

•

License Expiration: 2033

and 2034

•

Next Refueling

Unit 2 -

Spring 2016

Unit 3 -

Fall 2015

•

Uprate:  130 MW (PS Share)

Unit 2 -

March 2015

Unit 3 -

2016

Owned

Capacity:

1,178

MW

56

PSEG Power Nuclear 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

Nuclear excellence program

Top quartile of cost performance/MWh

Brought security services in-house

Significant earnings contributor

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

underway

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 2011 -

2013

$44/MWh

$37/MWh

0

25

50

All US*

PSEG Nuclear**

58

Cost

control

actions

taken:

•

Fossil plant assessment

•

CCGT material condition assessment

•

Vendor contract renegotiations

•

Nuclear security services brought in-

house to control costs

•

Nuclear maintenance productivity study

•

Nuclear outage efficiency initiative

•

Materials management

2009 to 2015 CAGR = 2.6%

Power O&M Expense*

*EXCLUDES IMPACTS FROM STORM RECOVER COSTS. E=ESTIMATES

PSEG Power’s

focus on costs

has resulted in moderate

increase in O&M for

seven years

$0

$500

$1,000

$1,500

2009

2010

2011

2012

2013

2014

2015E

•

Fossil plant assessment

•

CCGT material condition assessment

•

Vendor contract renegotiations

•

Nuclear security services brought in-

house to control costs

•

Nuclear maintenance productivity study

•

Nuclear outage efficiency initiative

•

Materials management

59

PSEG Power’s Fossil Fleet has shown

improvement in performance

*LM6000 AND 7EA UNITS       E = ESTIMATE.    

•

Fossil Generation rebounded with market

•

Peaking Units maintain high start success

•

Record output from Kearny 13 & 14 peakers

•

Combined Cycle Generation set record

•

Bergen AGP uprate project scheduled for 2015

Fossil Generation

Peaking Start Success*

Coal Generation

Combined Cycle Generation

60

PSEG Power initiatives result in

continuing improvement in combined cycle heat rate

AGP projected efficiency

improvement 2015-2018

2018E

E= ESTIMATE.

7,300

7,400

7,500

7,600

7,700

7,800

2008

2009

2010

2011

2012

2013

2014

61

PSEG Power CCGT/Fossil initiatives

Actions Taken to Create Value

Capacity

•

Advanced

Gas

Path

(AGP)

investments

2014

through

2018

to

provide

additional

efficient capacity, heat rate improvements

•

New lower cost gas line at BEC with Dominion

Performance

•

EPRI efficiency initiatives

•

GE initiatives for large data analytic

•

Consolidation of unit testing

•

Auto tuning software

Maintenance

•

Ongoing outage efficiency improvement 

•

Improvements to reliability

•

Central fleet monitoring and diagnostic center

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 DECEMBER 31, 2014.

COMPLETION OF

CONEMAUGH

SCR/FGD IN 2015

$0

$200

$400

$600

$800

$1,000

2010

2011

2012

2013

2014

2015E

2016E

2017E

Penn East (equity investment)

Growth

Environmental/Regulatory

Maintenance

63

PSEG Power’s Growth Investments

Site

Project

Cost

Benefits

Status

BEC

Dominion Gas Line

$8

Access

to

a

2

nd

,

lower

cost

gas

supply:

Completed

Linden

AGP Upgrade

$69

Increased

capacity

and

improved

heat

rate:

Completed

Linden

Kearny

Black Start:

Linden 7/8 

Kearny 12

$13

New ancillary revenue source:

Linden Completed

Kearny Underway

CA / TX / VT 

Solar Source Projects

$44

Increased capacity: 21 MW

Completed

Peach Bottom

Peach Bottom EPU

(2014 –

2015)

$417

Increased capacity: 130 MW

PB2 March 2015,

PB3 in 2016

Bergen / BEC

Future AGP

Upgrades:

Bergen (2015)

BEC (2017-2018)

$98

Increased capacity and improved heat rate:

Underway

Various

Interim ISA’s*

No cost

Increased capacity: 69 MW

Completed

Eastern PA to

Mercer, NJ

PennEast Pipeline

$119

Estimated Earnings in 2019: 

Underway

Total Increased Capacity  –

371 MW              

* INTERCONNECTION SERVICE AGREEMENTS.

($ millions)

$13 million

88 MW capacity increase

~1.2% heat rate improvement

~ $3 million per year

63 MW capacity increase

~1.2% heat rate improvement

$8-9 million/year increase in margin

64

Additional investment opportunities under

consideration

Site

Project

Benefits

Bridgeport Harbor

CCGT development

New ISO NE Capacity:  475 MW

Hope Creek

Uprate

Additional PJM Nuclear Capacity:  20 MW

Edison / Essex

SCR retrofit

Continued operation of FT4s

Edison: up to ~ 470 MW

Essex:  up to ~ 330 MW

Bergen

Bergen 1 Uprate

(AGP-type uprate)

Additional PJM Capacity:  Up to 50 MW

Sewaren

CCGT development

New

PJM

Capacity:

450

–

625

MW

Various

Additional solar projects

under investigation

100’s of MW of new solar capacity under

evaluation

65

Hackettstown  (Mars)

New Jersey (2 MW)

COD September 2009

Thin film panels –

fixed tilt

Investment $13 million

15 year PPA with Mars, Inc.

Milford

Delaware (15 MW)

COD December 2012

Polycrystalline -

fixed tilt

Investment $47 million

20 year PPA with DEMEC

Badger I

Arizona (19 MW)

COD November 2013

Polycrystalline -

single axis

Investment $48 million

30 year PPA with APS

PSEG Solar Source owns ~123 MW

of solar facilities

*

with long term contracted revenues

*PROJECT SIZE IN MEGAWATTS SHOWN IN DC (DIRECT CURRENT), AC EQUIVALENT IS 96 MEGAWATTS.  E=ESTIMATE.

In Construction –

Rockfish

Maryland (13 MW)

COD -

June 2015E

Polycrystalline -

single axis

20 year PPA with SMECO

Queen Creek

Arizona (25 MW)

COD October 2012

Polycrystalline - single axis

Investment $75 million

20 year PPA with SRP

Newman

Texas (13 MW)

COD December 2014

Polycrystalline - single axis

Investment $22 million

30 year PPA with El Paso Elec.

Wyandot

Ohio (12 MW)

COD May 2010

Thin film panels – fixed tilt

Investment $44 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

Shasta A & B

California (4 MW)

COD March 2014

Polycrystalline - single axis

Investment $13 million

20 year PPAs with PG&E

Whitcomb

Vermont (4 MW)

COD October 2014

Polycrystalline - single axis

Investment $10 million

25 year PPA with VT Electric 

Power Producers, Inc.

66

Gas Asset Optimization

Large wholesale provider to PSE&G and others

Storage capacity of approximately 75 Bcf (in the Gulf and market

regions)

Firm transportation of 1.3 Bcf/day on seven pipelines

Off-system sales margins shared with residential customers

Commercial & Industrial customers (C&I)

Weather and price volatility

Ancillary Services

LIPA Fuel and energy dispatch management

PSEG Power has other attractive sources of revenues to

round out a robust portfolio, in addition to energy and capacity

67

PSEG Power has delivered on its commitments

during volatile market conditions

2009

2010

2011

2012

2013

2014

Annual Cooling Degree Days

% greater/(less) than average

(17%)

35%

26%

13%

7%

(5%)

Annual Heating Degree Days

% greater/(less) than average

(1%)

(8%)

(11%)

(17%)

(1%)

5%

# Days over 90 degrees

12

48

29

29

21

12

# Days below 20 degrees

24

14

13

7

13

33

Gas Volatility:  Transco Z6

Min $2.50

Max $19.93

Min $3.76

Max $23.43

Min $3.38

Max $18.93

Min $2.40

Max $12.43

Min $3.10

Max $39.43

Min $1.39

Max $115.00

LMP Volatility:

PS Zone

Min $4

Max $156

Min $7

Max $289

Min $15

Max $417

Min $5

Max $370

Min $10

Max $335

Min $5

Max $1,021

Basis Volatility:

PJM-W to PS Zone

Min ($22)

Max $50

Min ($29)

Max $71

Min ($40)

Max $116

Min ($49)

Max $97

Min ($28)

Max $79

Min ($131)

Max $455

Power Earnings

On

Guidance

On

Guidance

High End

of Guidance

Above

Guidance

High End

of Guidance

High End

of Guidance

68

PSEG Power is an established leader

within the industry

•

National Nuclear Accrediting Board

•

Communications Advisory Committee

•

Board of Directors

•

Board of Directors Executive Committee

•

Emergency Preparedness Working Group

•

Security Working Group

•

Fukushima Response Steering Committee

•

Joint Information System Task Force

•

Nuclear Strategic Issues Advisory Committee Steering

Group

•

Chairman Nuclear Power Council

•

Executive Committee Nuclear Power Council

•

Vice Chair of the Executive Oversight Committee

•

Chair

•

Executive committee member

•

Chair of the Cooling Systems Committee

•

Member of various Committees at PJM

•

Chairman & Vice-Chair of the Supplier Sector of the New

England Power Pool (NEPOOL)

•

Chair of the PJM Power Providers Board

•

Board member & member of the board’s Executive

Committee of Independent Power Producers of New York

(IPPNY)

•

Member of water resources subcommittee

•

Member of Executive Committee

Utilities Service Alliance (USA) Fleet

BWR Owners Group

EPRI

NEI

INPO

National Coal Council

EEI

PJM/NY/ISO-NE

EPSA

UWAG

69

Developing People to drive operational excellence

and to optimize the workforce

•

Succession planning and development planning

•

Recent CNO retirement & succession was part of the plan

•

Training & development of employees

•

Rotational assignments for key leaders in PSEG Power

•

Outreach programs

•

Employee engagement

•

Shared resources between Fossil and Nuclear (outage support)

•

Diversity & inclusion

70

Power’s 2015 operating earnings

maintain solid performance

Power Operating Earnings

($ Millions)*

•

75-80% hedged at

$52/MWh

•

Increase in average

hedge price for energy

helps mitigate reset in

capacity price and volume

2015 Observations

2013

2014

2015 Guidance

$710

$642

$620 –

680E

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

PSEG POWER

ER&T

PSEG POWER

Shahid Malik

PRESIDENT

72

Agenda

•

Gas, Power, Spark Spreads

•

Gas and Power Basis

PSEG Power’s Portfolio

•

PJM

•

Northeast

PSEG Power’s Locational and Fleet Strengths

•

Robust capacity market pricing

•

Advantageous medium-term full requirements opportunity in NJ

•

Hedging plan mitigates risk while allowing for upside

Market Review

73

Market Review: 2014 was influenced by extremes in weather

highlighting the importance of winter

Q1:

Periods of extreme

cold temperatures

resulted in high gas

prices, significant

basis differentials, and

higher energy demand.

Q3:

A cooler than

normal summer,

combined with

increased supply of

gas, reduced energy

prices and basis.

2014 Q1 Gas

2014 Q1 PS Zone Electric

2014 Q3 PS Zone Electric

2014 Q3 Gas

74

Market Review: PSEG’s extensive gas asset portfolio gives

unparalleled access to Marcellus Shale gas

•

PSEG Power maintains a robust portfolio

of pipeline and storage assets in the

Mid-Atlantic

•

PSEG Power’s gas for generation was

~100 BCF in 2014, of which >60%

was supplied by Shale gas

•

PSEG Power procured over 400 BCF in

2014 with ~75% going to PSE&G’s utility

gas customers

•

When gas is surplus to customer needs,

PSEG Power sells surplus to others;

margins from such sales benefit PSE&G

gas customers and PSEG Power

Power’s Gas for Generation in 2014

Eastern PA Shale

Western PA Shale

Gulf Coast

Delivered Gas

75

Market

Review:

Winter

Z6

gas

prices

retain

seasonal

volatility;

spark spreads have continued to be robust in PJM

FORWARDS AS OF DECEMBER 31, 2014

2015 YTD Z6

PJM West vs. PS Zone Spark Spreads (2013-2018)

2015-2018 Z6

76

Market

Review:

New

pipelines

will

move

significant

quantities

of

Marcellus gas out of the region by 2018

New pipeline investment is expected to increase takeaway capacity from the low cost

Marcellus/Utica

shale

and

reduce

regional

surpluses

and

increase

gas

prices

by

2018

Pipeline capacity grows significantly by

2018

Historical and Expected Marcellus

Production

New England 3.4 bcf/d 

Southeast 6.4 bcf/d

Midwest 5.9 bcf/d

Gulf Coast 3.1 bcf/d

NJ/NY 1.4 bcf/d

0

5

10

15

20

25

30

2010

2011

2012

2013

2014

2015

2016

2017

2018

77

ANNUAL FORWARD BASIS TO PJM-WEST AS OF DECEMBER 31, 2014.

Power Basis in Eastern PJM:

Expected to be volatile but

positive on an annual basis with winter pricing driving value

Electric Basis will remain positive overall and stabilize within

3 years due to:

•

•

•

Export

of

~18

bcf/day

of

gas

which

will

significantly

strengthen

regional

gas

prices

Easing of transmission constraints in Virginia/Maryland

Construction of significant new gas-fired generation in VA/MD

PS Zone RTC Basis to PJM West

0

1

2

3

4

5

6

2012

2013

2014

2015

2016

2017

2018

PS Basis

Forward Curve for Electric Basis (prior to delivery year)

78

Regulatory

Framework:

Significant

reforms

already

implemented

and

new rules being promulgated to improve energy and capacity market designs

ISSUE /POLICY

OUTCOME

PJM

CAPACITY

•

Higher payments for enhanced reliability (Capacity Performance)

DEMAND RESPONSE

RULES

•

Stricter rules for eligibility and deployment

ENERGY PRICE

FORMATION

•

PJM and FERC forcing improvements to energy price formation;

higher caps

ISO-NE

CAPACITY

•

Higher prices in recent auction better reflect tight supply conditions

•

Implementation of sloping demand curve in FCA 9

•

Zonal demand curves expected in FCA 10

ENERGY

•

Demand response required to participate in Day Ahead markets

•

Implemented hourly offers/real time reoffers

•

Reserve market prices better reflect scarcity prices

•

5 minute interval LMP settlements expected Q1 2016

NYISO

CAPACITY

•

New Capacity Zone (LHV) leads to more accurate price signals

ENERGY

•

Improvement in price formation during reserve shortage conditions

FEDERAL

DEMAND RESPONSE

•

EPSA VS. FERC and national implications

ENVIRONMENTAL

REGULATIONS

•

HEDD, CPP, HAPS/MACT will lead to tightening of supply in

2015+ timeframe

79

Agenda

Market Review

•

•

PSEG Power’s Portfolio

•

•

PSEG Power’s Locational and Fleet Strengths

•

•

•

Gas, Power, Spark Spreads

Gas and Power Basis

PJM

Northeast

Robust capacity market pricing

Advantageous medium-term full requirements opportunity in NJ

Hedging plan mitigates risk while allowing for upside

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 and enhanced

opportunities for cost recovery to encourage reliability

•

Elimination

of

2.5%

holdback

offsetting

weak

demand

growth,

making

all

capacity resources annual products in end state, net CONE bidding safe

harbor, and the change in the demand curve (VRR) support price formation

and improve resource adequacy

•

Generator

performance/flexibility

is

key

objective

for

units

with

secure

fuel

supply capable of meeting more stringent operating standards

81

Capacity

Performance:

capacity performance standards with minimal to moderate investment

CP Compliant Assets

* EXCLUDES 205MW OF PUMPED STORAGE

Combined

Cycle

Steam

Nuclear

Combustion

Turbine

Meets CP

Requirement

with No to

Minimal

Investment

Moderate

Investment to

Meet CP

Requirement

Larger

Investment to

Meet CP

Requirement

of

PSEG’s

PJM

capacity

meets

the

new

How

does

our

fleet

stack

up?

*

>90%

Northeast Portfolio: New York and New England

82

•

Long Island Power Authority Management

Contract

•

Investment in new lateral to connect to the

Dominion pipeline at Bethlehem Energy

Center (BEC) allows for access to fuel supply

from Marcellus

•

Single state ISO

New York (774MW)

•

Gas pipeline infrastructure poses supply

challenges/opportunity

•

Significant siting and permitting challenges

•

High volatility due to extreme (winter) weather

conditions

•

Significant improvement in market construct

•

Small but dynamic market

New England (972MW)

83

PSEG Power acting as an agent for LIPA began

January 2015

Northeast

Portfolio:

Expanding

our

footprint

with

PSEG

Long

Island

38%

36%

16%

7%

3%

LIPA Capacity (6,163MW)

Steam

Combustion Turbine

Cables

Combined Cycle

Resource Recovery,

Pumped Storage, Solar

•

Additional experience in Eastern

NY and Connecticut markets

•

Bigger natural gas footprint

•

Fee-based services contract

•

Performing ISO bidding for LIPA’s

6,000MWs of generation/tolls

•

Procuring natural gas and oil for the

majority of these assets

•

Scheduling two DC transmission cables

(ISO-NE and PJM) into Long Island

•

Entering into financial hedges to reduce

LIPA customer’s price volatility

This relationship has provided PSEG Power:

84

Agenda

•

Robust capacity market pricing

•

Advantageous medium-term full requirements opportunity in NJ

•

Hedging plan mitigates risk while allowing for upside

PSEG Power’s Locational and Fleet Strengths

•

PJM

•

Northeast

PSEG Power’s Portfolio

•

Gas, Power, Spark Spreads

•

Gas and Power Basis

Market Review

85

2018 Onwards RPM Auction Impacted By:

•

Capacity Performance           

•

Demand response rules

•

Convex Demand Curve

•

Elimination of 2.5% Holdback

•

Change in Net CONE

•

Reduction in Load Forecast

•

Change in PJM Parameters

•

Environmental Retirements

Capacity Market Pricing:

PJM’s capacity market is transitioning

to recognize operating performance as well as locational value

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

RPM AUCTION RESULTS AS OF FEBRUARY 2015.  DELIVERY YEAR RUNS FROM JUNE 1 TO MAY 31 OF THE NEXT CALENDAR YEAR.

RPM Auction Results

($/MW-day)

Power’s

Average Prices

$242

$168

$168

$167

$165

Rest of Pool

Prices

$28

$126

$136

$59

$120

Power’s Cleared

Capacity (MW)

10,900

10,600

8,800

8,700

8,700

2013

/

2014*

2014 / 2015*

2015 / 2016*

2016 / 2017*

2017 / 2018

86

Auction Results: BGS Auction provides ability to forward

hedge our generation and protect our power basis

Capacity

Load shape

Transmission

Congestion

Ancillary

services

Risk premium

Green

$56

-

$58

BGS sales account for approximately 20% 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 2013-2015 ARE THE NEW BLENDED PRICES BEGINNING JUNE 1, 2015.

$94.30

$83.88

~ $46

$92.18

~ $48

~ $53

~ $59

$97.39

$48

-

$50

$45

-

$47

$39

-

$40

$37

-

$38

$38

-

$39

~ $62

$37

-

$38

$99.54

2011

2012

2013

2014

2015

87

Hedging strategy:

designed to protect gross margin

while leveraging the portfolio

2015

2016

2017

Volume TWh

36

36

36

Base Load

% Hedged

100%

80-85%

40-45%

(Nuclear and Base Load Coal)

Price $/MWh

$52

$52

$52

Volume TWh

21

19

19

Intermediate Coal, Combined

% Hedged

40-45%

0%

0%

Cycle, Peaking

Price $/MWh

$52

$52

$52

Volume TWh

55-57

55-57

55-57

Total

% Hedged

75-80%

50-55%

25-30%

Price $/MWh

$52

$52

$52

HEDGE PERCENTAGES AND PRICES AS OF FEBRUARY 2015. 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.

88

PSEG Power’s Value Proposition

•

Well-positioned fleet of merchant generating assets in attractive markets

•

Advantaged by low cost structure, fuel diversity and dispatch flexibility

•

Value add from strong gas supply capability

•

Significant drive by regulatory bodies to improve market constructs

•

Low capital requirements to meet enhanced performance standards

•

Organic growth opportunities to increase nuclear and combined cycle

generation

•

Hedging strategy is responsive to changing market dynamics, providing

attractive returns and free cash flow

We have the

energy

to make things better

…

for you, for our investors

and for our stakeholders.

PSEG

EXECUTIVE VICE PRESIDENT AND CHIEF

FINANCIAL OFFICER

Caroline Dorsa

91

Strong financial position to support our

business initiatives

2014 Financial Position

Strong 2014 earnings growth

Exceeded earnings guidance

Executed major PSE&G capital program

Strong balance sheet with no long term Parent debt

Solid credit metrics

2015 and Beyond

Third year of anticipated positive earnings growth in 2015

Controlled O&M growth

Balance Sheet and Cash Flow support investment program without equity issuance

Substantial additional investment capacity

Growth in PSE&G investments with contemporaneous/formula rate returns

Consistent and strong cash flow from both Power and PSE&G

Potential for accelerated and sustainable dividend growth

92

Earnings increase of 7% exceeded

guidance

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

PSEG Operating Earnings

2013

2014

PSE&G

$612

$725

PSEG Power

$710

$642

Other

($13)

$33

Operating Earnings

$1,309

$1,400

Operating EPS*

$2.58

$2.76

Revised Earnings Guidance (Oct 2014)

$2.60 -

$2.75

Earnings Guidance (Feb 2014)

$2.55 -

$2.75

Key Takeaways

18% increase in PSE&G

earnings

52% regulated earnings

contribution in 2014

Power’s results

exceeded guidance

$ Millions (except EPS)

93

Power produced significant and

consistent

Free Cash Flow

2012

Power Cash From Ops

2013

2014

2012

2013

2014

Power Free Cash Flow

$0.0

$0.5

$1.0

$1.5

94

PSE&G delivers increasing cash flow due

to investment program

2012

PSE&G Cash Investment

PSE&G Cash From Ops

(1)

2013

2014

(1)

PSE&G CASH FROM OPERATIONS ADJUSTS FOR SECURITIZATION PRINCIPAL REPAYMENTS OF ~$215 TO ~$240 MILLION OVER

3 YEAR PERIOD

2012

2013

2014

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

95

In 2014, Power’s Free Cash Flow supported PSE&G’s

capital program and shareholder dividend

Power

Cash from Ops

~$1.4B

PSE&G

Cash from Ops

(1)

~$1.6B

PSE&G

Cash Investment

~$2.2B

Power

Cash Investment

(3)

~$0.7B

Shareholder

Dividend

~$0.7B

PSE&G

Net Debt

~$0.7B

(1)

PSE&G CASH FROM OPERATIONS ADJUSTS FOR SECURITIZATION PRINCIPAL REPAYMENTS OF ~$240 MILLION.

(2)

OTHER CASH FLOW INCLUDES HOLDINGS NET CASH FLOW AND INVESTED CASH

(3)

POWER CASH INVESTMENT INCLUDES NUCLEAR FUEL AND EMISSION PURCHASES

Other

Cash Flow

(2)

~$0.1B

PSEG Consolidated

2014 Sources and Uses

$0.0

$1.0

$2.0

$3.0

$4.0

Sources

Uses

96

PSEG 2015–

2019E Capital Expenditures

(1)

PSEG growth spend represents ~70% of total investment

with new PSE&G investment opportunities of over $1B

Power & Other

Maintenance

PSE&G

Distribution

Maintenance

Power

Growth

PSE&G

Transmission

Growth

PSE&G

Energy Strong,

Solar and  

New Business

(1)

INCLUDES AFUDC AND IDC; PENNEAST PIPELINE EQUITY INVESTMENT OF~$0.1B IS INCLUDED IN POWER GROWTH.         E = ESTIMATE.   

PSEG

Planned

Spend

Maintenance ~$3.8B

PSE&G

Potential

Upside

PSEG

Potential

Spend

Potential Upside ~$1.3B

~$1.6B

~$0.6B

~$2.2B

~$1.9B

~$6.7B

~$14.3B

~$1.3B

~$13.0B

Planned

Growth

Investment

~

$9.2B

97

2014 –

2017E Rate Base

CAGR Growth of ~12%

Distribution

Transmission

PSE&G’s Capital Program drives double-digit

growth in rate base through 2019

~$11.4B

~$16.0B

~$6.9B

~$4.5B

~$2.1B

~$9.7B

~$3.1B

~$8.5B

Rate Base

Growth

E = ESTIMATE   

~$0.1B

2014

Rate Base

Planned

2017E

Rate Base

Potential

Upside

Potential

2019E

Rate Base

Planned

2019E

Rate Base

~$1.5B

~$8.4B

~$7.6B

~$18.2B

~$1.0B

~$9.5B

~$9.9B

~$19.4B

~$0.2B

2014 –

2019E Rate Base

CAGR Growth of ~10%

Rate Base

Growth

2014 –

2019E Potential Rate

Base CAGR Growth of ~11%

98

Continuing our track record of 5 year

double digit rate base growth leading to high single-digit growth in

earnings through 2017

2010 –

2015E

PSE&G 5 Year Rate Base CAGR

2011 –

2016E

2012 –

2017E

2013 –

2018E

2014 –

2019E

~11%

~13%

~12%

~10%

~10%

~11%

PLANNED

POTENTIAL

E = ESTIMATE.   

0%

5%

10%

15%

99

Substantial internal cash generation

supports our planned growth capital program and potential 

investment opportunities without the need for equity

PSE&G

Cash from

Ops

(1)

PSE&G Cash

Investment

PSE&G

Net Debt

PSEG 2015 -

2019E Sources and Uses

(1)

PSE&G CASH FROM OPERATIONS ADJUSTS FOR SECURITIZATION PRINCIPAL REPAYMENTS OF ~$260M FROM 2015-2019

(2)

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

(3)

POWER CASH INVESTMENT INCLUDES NUCLEAR FUEL AND EMISSION PURCHASES      E = ESTIMATES.

PSE&G

Cash from

Ops

(1)

PSE&G Net

Debt

Planned Programs

Including Potential Upside Projects

Shareholder

Dividend

Power

Cash from Ops

Shareholder

Dividend

Power

Cash from

Ops

Power Cash

Investment

(3)

PSE&G Cash

Investment

Power Net

Debt

Other Cash

Flow

(2)

Other Cash

Flow

(2)

Power Net

Debt

Power Cash

Investment

(3)

Sources

Uses

Sources

Uses

100

Power’s key credit metric

remains strong

providing opportunity for incremental investment

2015-2017E

Average

Increased contribution to earnings from the more

stable regulated business

Power’s annual Cash From Operations and Funds

From Operations each average ~$1.4B over the

2015 to 2017 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 

2013

2014

PSEG Power

Funds from Operations / Debt

0%

10%

20%

30%

40%

50%

60%

70%

101

Total Incremental Investment Capacity

through 2017

Substantial Investment Capacity to pursue

additional growth without the need for equity

Average Funds from Operations /Debt

2015 -

2017

Our incremental investment capacity can support over $6B in

regulated investments

$0.0

$4.0

Power

Parent

Total

($ Billions)

Power

PSEG

Estimate

~ 55%

~30%

Minimum

Threshold

30%

Low -

20’s

102

Pension Fund Returns

for the periods ending  December 2014

Well Funded Pension due to our long term asset

allocation strategy

2014 Funded Ratio ~93%

Cumulative pension contributions

total

less

than

$50M

through

2017

(1)

Modest pension expense in 2015

with pension income expected by

2017 given fully funded level

Annualized Return (%)

(1)

REPRESENTS CONTRIBUTIONS TO QUALIFIED PENSION PLANS.

Total company pension expense of <$0.07 per share in 2015, expected

return to pension income by 2017

0

5

10

15

1 Year

3 Year

5 Year

103

(1)

POWER EXCLUDES IMPACTS FROM STORM RECOVERY COSTS AND POTENTIAL RELATED INSURANCE PROCEEDS.

N.M.= NOT MATERIAL        E = ESTIMATE.

2014 –

2017E CAGR

Transmission

~(1.4%)

Distribution

~2.7%

Power

~1.0%

Other: N.M.

Controlling O&M growth, with manageable

pension impacts and PSE&G continuing to grow its asset base

PSEG

O&M

Expense

(1)

2014

-

2017E

CAGR:

~1.4%

$0

$500

$1,000

$1,500

$2,000

$2,500

2014

2015E

2016E

2017E

104

PSEG Operating Earnings

$ Millions (except EPS)

2013

2014

2015E

PSE&G

$612

$725

$735 -

$775

PSEG Power

$710

$642

$620 -

$680

Enterprise/Other

($13)

$33

$40 -

$45

Operating Earnings*

$1,309

$1,400

$1,395 -

$1,500

Operating EPS*

$2.58

$2.76

$2.75

-

$2.95

Regulated % of Earnings

47%

52%

52%

(1)

Increasing

PSE&G earnings with stable

contribution from Power

(1) REPRESENTS MID POINT OF GUIDANCE

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

INCOME TO RECONCILE TO OPERATING EARNINGS. E+ ESTMATE.

105

PSE&G

EPS

Annual Dividend Per Share

2011 –

2014  CAGR:  2.6%

(1)

THE 2015 PAYOUT RATIO IS BASED ON THE MIDPOINT OF PSEG'S 2015 OPERATING EARNINGS GUIDANCE OF $2.75-$2.95E PER SHARE. SEE SLIDE A FOR ITEMS

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

Potential for meaningful and sustainable

dividend growth given significant contribution from regulated

earnings and Power’s strong free cash flow

5.4%

increase

Payout Ratio

50%

58%

56%

54%

55%

(1)

$1.53

$1.45

$1.37

$1.42

$1.44

$1.48

$1.56

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

2011

2012

2013

2014

2015E

106

PSEG’s longer-term outlook is influenced by

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

2015E

2016E

Segment EPS Drivers

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 2015 BGS AUCTION AND 12/31/14 PRICE CURVES.   

2015E

2016E

2017E

2017E

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

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

$0.03-$0.06

$0.04

$0.04

$0.01

$0.02-$0.04

$0.03

$0.01

$0.01

$0.01

$0.01

$0.01

$0.01

$0.01

$0.01

$0.10-$0.13

$0.04

$0.04

$0.01

$0.01

$0.01

$0.01

$0.01

$0.01

$0.01

107

PSEG Summary

•

Our 2014 earnings of $2.76 exceeded our revised operating earnings

guidance of $2.60 -

$2.75 per share

•

Continued third year of anticipated positive earnings trend in 2015 with

operating earnings guidance of $2.75 to $2.95 per share

•

Continued 5

straight year of expected double digit, 5 year growth in rate base

•

Anticipated high single digit earnings growth at PSE&G on three-year basis from

2014 to 2017, driven by transmission investments and planned programs

•

Power’s continued focus on operational excellence, market expertise and

financial strength delivers value in current price environment

•

Strong Balance Sheet and Cash Flow support full capital program and new

potential opportunities without the need for equity

•

Our $0.08 per share dividend increase is consistent with our long history

of returning cash to the shareholder through the common dividend, with

potential for consistent and sustainable growth

th

PSEG EXECUTIVE

PROFILES

109

CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

Ralph Izzo

Ralph Izzo was elected chairman and chief executive officer of Public

Service Enterprise Group Incorporated (PSEG) in April 2007. He was

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

member of the board of directors of PSEG in October 2006.

Previously, Mr. Izzo was president and chief operating officer of Public

Service Electric and Gas Company (PSE&G).

Since joining PSE&G in 1992 Mr. Izzo was elected to several executive

positions within PSEG’s family of companies, including PSE&G senior vice

president

–

utility

operations,

PSE&G

vice

president

–

appliance

service,

PSEG

vice

president

-

corporate

planning,

and

PSE&G

vice

president -

electric ventures.  In these capacities he broadened his experience in the

areas of general management, strategic planning and finance.

Mr. Izzo is a well-known leader within the utility industry, as well as the

public policy arena.  He is frequently asked to testify before Congress and

speak to organizations on matters pertaining to national energy policy.

Mr. Izzo’s career began as a research scientist at the Princeton Plasma

Physics Laboratory, performing numerical simulations of fusion energy

experiments.  He has published or presented over 35 papers on

magnetohydrodynamic modeling. Mr. Izzo received his Bachelor of

Science and Master of Science degrees in mechanical engineering and his

Doctor of Philosophy degree in applied physics from Columbia University. 

He also received a Master of Business Administration degree, with a

concentration in finance from the Rutgers Graduate School of

Management. He is listed in numerous editions of Who’s Who and has

been

the

recipient

of

national

fellowships

and

awards.

Mr.

Izzo

has

received Honorary Degrees from the New Jersey Institute of Technology

(Doctor of Science), Thomas A. Edison State College (Doctor of Humane

Letters),

Bloomfield

College

(Doctor

of

Humane

Letters),

Rutgers

University

(Doctor of Humane Letters), and Raritan Valley Community College

(Associate of Science).

Mr. Izzo serves as chair of the New Jersey Chamber of Commerce, and on

the board of directors for The Williams Companies, the New Jersey Utilities

Association, the Edison Electric Institute (EEI), the Nuclear Energy Institute

(NEI), and The Center for Energy Workforce Development. He is the past

Chair of the Rutgers University Board of Governors.  He is also a member of

the Board of Trustees of Peddie School, Columbia University School of

Engineering Board of Visitors and the Princeton University Adlinger Center

for Energy and the Environment Advisory Council, as well as a member of

the

Visiting

Committee

for

the

Department

of

Nuclear

Engineering

at

MIT.

110

EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED, PUBLIC SERVICE ELECTRIC

AND GAS COMPANY, PSEG POWER LLC AND PSEG SERVICES CORPORATION

Caroline Dorsa

Caroline Dorsa was named executive vice president and chief financial

officer for Public Service Enterprise Group Incorporated (PSEG) in April

2009. She is also the executive vice president and chief financial officer

of Public Service Electric and Gas Company (PSE&G), PSEG Power and

PSEG Services Corporation.

Ms. Dorsa is responsible for all financial functions, including Internal Audit

Services, Investor Relations and Corporate Development. Given the array

of financial instruments which serve as the primary means of selling

wholesale

energy

to

customers,

Ms.

Dorsa

also

has

responsibility

for

the

Risk Management function, which provides independent oversight of the

PSEG Power trading organization.  In addition to her financial

responsibilities, Ms. Dorsa leads the Information Technology and

Procurement organizations.  She is a member of PSEG’s Executive Officer

Group.

In her role as chief financial officer, she has overseen the execution of the

Company’s financial strategy, which has involved a significant

deleveraging of the balance sheet and enhancement of the company’s

financial strength.  The company is in the midst of a major capital

investment program focused on deploying more than $6 billion over three

years to ensure the reliability and efficiency of the energy generation and

distribution system in New Jersey.  PSEG has an uninterrupted record of

paying dividends to shareholders for 108 years.

Ms. Dorsa had been a member of the PSEG Board of Directors for six years,

and a member of PSEG's Audit, Corporate Governance and Finance

Committees before joining the company’s management. Her previous

management position had been with Merck & Co., where she was senior

vice

president

–

global

human

health,

strategy

and

integration.

Prior

to

this,

Ms. Dorsa served as senior vice president and chief financial officer at

Avaya, Inc.  Earlier in her career, she held a range of financial positions at

Merck, including serving as vice president and treasurer of the company for

over 12 years. She was also the Secretary of the Finance Committee of

Merck's Board of Directors.

Before joining Merck, Ms. Dorsa worked for Mayor Edward Koch of the City

of New York promoting economic development in midtown Manhattan.

Ms. Dorsa is a member of the Junior Achievement of New Jersey State

Board of Directors.  She is a member of the Board of Directors and the

financial expert for the Finance and Audit Committee of Biogen Idec

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

Ms. Dorsa is also a member of the Board of Directors and Chairman of the

Audit Committee of Joule, a privately financed solar fuels company based in

Bedford, MA.

Ms.

Dorsa

holds

a

B.A.

from

Colgate

University

and

an

M.B.A

from

Columbia

Business School.

111

EXECUTIVE VICE PRESIDENT

AND GENERAL COUNSEL

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED, PUBLIC SERVICE

ELECTRIC AND GAS COMPANY, PSEG POWER, PSEG SERVICES

CORPORATION

Tamara L. Linde

Tamara Linda was named executive vice president and general counsel

for Public Service Enterprise Group Incorporated (PSEG) in July 2014.

She is also the executive vice president and general counsel of Public

Service Electric and Gas Company (PSE&G), PSEG Power and PSEG

Services Corporation.

As PSEG’s chief legal officer, Ms. Linde has responsibility for all legal and

regulatory

functions,

and

has

general

supervisory

responsibilities

for

the

office

of

corporate

secretary,

business

assurance

and

resilience

and

federal affairs and sustainability.  Ms. Linde is a member of PSEG’s

Executive Officer Group.

Previously

Ms.

Linde

was

vice

president

–

regulatory,

PSEG.

She

has

led

the company’s federal and state regulatory functions, as well as

managed corporate, environmental and labor/employment practices

within the company.

Ms. Linde has served as regulatory counsel on many

of the company’s most important initiatives in recent years.

Ms. Linde joined the law department of Public Service Electric and Gas

Company (PSE&G), as an attorney in 1990 handling a variety of natural gas

and

electric

regulatory

and

transactional

matters.

After

holding

several

other

legal positions at PSE&G she became general solicitor, in 2000. In that

position she was responsible for the regulatory affairs of the PSEG

companies including electric, gas and nuclear matters.  She has had

significant experience working on regulatory matters before various state

and federal regulatory agencies on industry issues relating to electric

transmission and distribution and energy markets.

Ms. Linde is a member of the New Jersey, New York, District of Columbia

and Texas bars.  She is past President of the Northeast Chapter of the

Energy Bar Association and served as chair of the Energy Bar Association

Electricity Regulation and Compliance Committee.  Ms. Linde graduated

from Seton Hall University School of Law with a Juris Doctorate and from

Seton Hall University with a bachelor’s degree. 

112

Ralph A. LaRossa

PRESIDENT AND CHIEF OPERATING OFFICER

PUBLIC SERVICE ELECTRIC AND GAS COMPANY

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

advanced through a variety of management positions in the utility’s gas

and electric operations.  In 1998, he received Gas Industry Magazine’s

Outstanding Manager of the Year Award. 

Mr.

LaRossa

is

a

graduate

of

Stevens

Institute

of

Technology

and

has

completed the Harvard Business School’s Program for Management

Development.  He serves on the board of directors for the American Gas

Association (AGA), New Jersey Utilities Association (NJUA), New Jersey

Performing Arts Center (NJPAC), Partnership for a Drug-Free NJ, and

Bergen County’s United Way. Mr. LaRossa is Chairman of Choose New

Jersey, Inc. and serves on its board of directors.  He is also the Chairman

of Montclair State University and serves on its board of trustees.

Ralph

A.

LaRossa

was

named

president

and

chief

operating

officer

of

Public Service Electric and Gas Company (PSE&G) in October 2006.

PSE&G is New Jersey’s oldest and largest regulated gas and electric

delivery utility, serving approximately 2.4 million customers, nearly three-

quarters of the state’s population.  Prior to this position he was vice

president -

electric delivery for PSE&G.

In addition, on January 1, 2014, Mr. LaRossa became Chairman of the

Board of PSEG Long Island, a subsidiary of Public Service Enterprise

Group (PSEG), which manages the electric transmission and distribution

systems on Long Island and in the Rockaways.  PSEG Long Island serves

1.1 million customers. 

113

William Levis

PRESIDENT AND CHIEF OPERATING OFFICER

PSEG

POWER

Mr. Levis has a Bachelor of Science degree in marine engineering

from the U.S. Naval Academy and holds an SRO (senior reactor

operator) certification.  He retired as a commander in the Naval

Reserves and attained his professional engineer license in 1985.

Mr. Levis is a member of Nuclear Energy Institute’s (NEI) Board of

Directors and serves as a member of the Institute of Nuclear Power

Operations (INPO) National Nuclear Accrediting Board.  He is a

member of the Philadelphia Archdiocese Catholic Charities Appeals

Board and its Operations Committee and is a member of the CEO

Council for Growth based in Philadelphia.

William Levis is president and chief operating officer of PSEG Power, a

position he’s held since June 2007.  PSEG Power is a major,

unregulated independent power producer in the U.S. with four main

subsidiaries: PSEG Nuclear, PSEG Fossil, PSEG Energy Resources and

Trade (ER&T) and PSEG Power Ventures.

PSEG Power operates one of the most balanced portfolios in the

country, both in terms of fuel mix and market segment (based load

units, load following units and peaking units).  Its low-cost, load

following

fleet

is

geographically

well

positioned

in

competitive

markets.

Its 13,337 MWs represent a diverse fuel mix which includes 45 percent

natural

gas,

27

percent

nuclear;

18

percent

coal,

8

percent

oil,

1 percent pumped storage, and 1 percent solar.

Before coming to PSEG, Mr. Levis was Exelon Nuclear’s vice-president –

Mid-Atlantic operations.  Prior to joining Exelon, Mr. Levis worked at

Ontario Hydro’s Pickering Plant and held several positions over a five-

year period with Carolina Power and Light’s Brunswick facility.

114

Shahid Malik

PRESIDENT

PSEG ENERGY RESOURCES & TRADE

company’s strategy and operations and led a successful turnaround of the

company, achieving significant growth in products and services while

reducing costs. 

Mr. Malik’s career has included Executive Leadership positions with several

energy

companies

in

the

US

and

Europe.

In

addition,

he

served

on

the

Board

of Directors of South Jersey Industries (NYSE: SJI) immediately prior to

joining PSEG.

Mr. Malik has been in the energy business for more than 20 years, since

receiving his Economics degree from Manchester University in England and

an MBA from Rice University, Houston.  He sits on the Executive Committee

of the Board of Trustees of Newark Museum as well as the Board of the

Electric Power Suppliers Association in Washington DC.

Shahid Malik was elected President of PSEG Energy Resources & Trade

(ER&T) in 2011.  PSEG operates one of the most balanced generation and

marketing portfolios in the country, both in terms of fuel mix and market

segment (base load units, load following units and peaking units), and Mr.

Malik is essentially responsible for managing these assets and taking

them to market.  He oversees PSEG’s generation portfolio and the

purchase, sale and risk management of all energy commodities.

Mr. Malik has an extensive background in the energy industry across the

oil, gas, electric and renewable energy sectors in Europe and the United

States.  Previously, he was with Pittiglio, Rabin, Todd & McGrath (PRTM) in

Pittsburgh,

PA

and

was

responsible

for

all

aspects

of

the

global

energy

business, with a primary focus on the North American utility sector.  Prior

to that he served as President & CEO of Strategic Energy, Great Plains

Energy’s retail marketing subsidiary and a provider of energy and services

to business clients in North America.  He was accountable for the

115

Derek M. DiRisio

PRESIDENT

PSEG SERVICES CORPORATION

Derek M. Di Risio was named President, PSEG Services Corporation, in July

2014.  He is responsible for the coordination and delivery of several

centralized services currently residing within PSEG Services Corporation

including corporate communications, corporate citizenship, corporate real

estate, information technology, procurement, payroll and other

transactional services.

Prior to his current role, Mr. Di Risio was vice president and controller of

Public Service Enterprise Group (PSEG), Public Service Electric and Gas

Company (PSE&G), PSEG Services Corporation, PSEG Energy Holdings

(Holdings) and PSEG Power, a position he assumed in December 2006. 

He

was

previously

vice

president

and

assistant

controller,

since

July 2004.

Mr.

Di

Risio

had

been

vice

president

–

planning

and

analysis

of

Holdings

since

March

2004,

and

vice

president

–

controller

for

Holdings

since

July

1998.

Prior

to

that

he

was

director

–

accounting

services

and

responsible

for several accounting and planning functions for Holdings, including

overall coordination of the business planning process, accounting research

and policy development, financial forecasts and analysis.

Mr. Di Risio was also responsible for the budgeting, analysis and reporting

process for PSE&G.

Mr. Di Risio joined PSE&G in September 1991 and has held a variety of

positions, including assignments with the internal auditing, electric

business, and corporate planning departments.  He was instrumental in

reengineering the Enterprise business planning process, and advancing the

use of performance metrics and balanced scorecard measures to improve

business results. Prior to joining PSE&G he worked for several firms,

including Chase Manhattan Bank.

Mr. Di Risio graduated from Rutgers University with a degree in

accounting/computer science, and received a Master of Business

Administration degree from the same university.  He is a certified public

accountant (inactive) and a certified internal auditor.  Mr. Di Risio also

completed the Program for Management Development at the Graduate

School of Business Administration of Harvard University.  He served on the

Drew University Board of Trustees and is currently a co-chairman of the

Board of Directors of the New Jersey All Stars Project Inc.

116

PRESIDENT AND CHIEF NUCLEAR OFFICER

PSEG NUCLEAR

Thomas P. Joyce

Thomas

P.

Joyce

was

named

president

and

chief

nuclear

officer

of

PSEG

Nuclear (Nuclear), in October 2008.  Mr. Joyce has announced his

retirement from PSEG effective the end of March 2015. He had been

senior vice president –

operations of Salem/Hope Creek for Nuclear, since

June

2007.

Mr.

Joyce

was

also

vice

president

–

Salem,

since

January

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

president as part of the Nuclear Operating Services Agreement between

PSEG and Exelon Corporation in 2005.

PSEG Nuclear’s  Salem and Hope Creek Generating stations comprise the

second largest commercial nuclear power facility in the United States.

Together the units provide enough electricity for three million homes.

Together the plants also provide 49 percent of New Jersey’s electricity.

Mr. Joyce has more than 38 years of experience in commercial nuclear

power operations. Under his leadership as president and chief nuclear

officer, Salem and Hope Creek combined to set a new site generation

record in 2009. In 2011, the stations also received approval from the

Nuclear Regulatory Commission (NRC) to extend their operating licenses

an additional 20 years. Reinforcing the company’s strong ties to the local

community, the license renewal approvals did not encounter any formal

legal contentions like many other plants across the country.

While leading Salem, the station completed two successful reactor vessel

head replacement outages. Salem Unit 1 completed its outage capturing

the world record for shortest head replacement outage.

Prior to coming to PSEG Mr. Joyce was site vice president at Exelon

Nuclear’s Braidwood Station. During his tenure the station achieved

overall performance improvements and retained their excellent INPO

rating.

The

plant

completed

a

refueling

in

15

days,

14

hours

–

setting

a

record for outage efficiency among U.S. pressurized water reactors. 

Before serving at Braidwood he held leadership positions at Exelon’s

Byron, Dresden, and Zion Stations, and in the corporate offices of both

Exelon Corporation and Exelon Nuclear.

Mr. Joyce holds a Bachelor of Science degree in nuclear engineering from

the University of Missouri at Rolla, and a Master of Business

Administration degree from the Keller Graduate School of Management. 

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

A

recognized

leader

in

the

nuclear

industry,

Mr.

Joyce

currently

serves

as

chairman of the Utilities Service Alliance (USA). The organization is

comprised of eight of America’s leading electric utilities operating 14

nuclear reactors located at 10 stations. Its two major objectives are to

improve individual plant and fleet performance and to reduce operating

and maintenance costs. Mr. Joyce also chairs the Nuclear Energy

Institute’s (NEI) Emergency Preparedness Working Group and the EPRI

Nuclear Power Council.

117

Richard P. Lopriore

PRESIDENT

PSEG FOSSIL

Mr. Lopriore has been a valuable part of the electric generation

industry for

more than 43 years. Prior to joining PSEG Fossil, he had been senior vice

president -

mid-Atlantic operations for Exelon Nuclear, responsible for oversight

of the Limerick, Peach Bottom, Oyster Creek and Three Mile Island stations. 

During his tenure, Three Mile Island achieved INPO 1 status (2007).

From 1997-1999, Mr. Lopriore was an Executive Advisor for Ontario Hydro

Nuclear Power Plant’s recovery and performance improvement program. 

Mr. Lopriore joined Exelon as plant manager of Byron Stations in

1999 and was

promoted to site vice president in 2001. In 2003 he became corporate vice

president -

operations support at Exelon’s nuclear headquarters, responsible for

both the Midwest and mid-Atlantic regions. He then became vice president -

operations, Midwest boiling water reactors in 2004 responsible for the Dresden,

LaSalle County, Quad Cities and Clinton nuclear plants.

Prior to Exelon, Mr. Lopriore held several key management positions at the

Brunswick Nuclear Plant in North Carolina, including plant manager. At Vermont

Yankee, he achieved an operational SRO certification for Boiling

Water

Reactors.

Mr. Lopriore received his Bachelor of Science degree from Southern Vermont

College and is a member of the American Nuclear Society.

He also served in the National Guard.

Richard P. Lopriore was elected president of PSEG Fossil in May 2007.  He oversees

operations for 13 generation facilities spanning four states. He

is also responsible

for the oversight of two service groups: Laboratory & Testing Services, and

Maintenance & Repair Services. Additionally, he is responsible for Construction,

Capital Projects and Engineering. 

The PSEG Fossil fleet is comprised of natural gas, coal and oil-fired electric

generating units that contribute about 9,700 megawatts of electricity to PSEG

Power’s generation portfolio. This includes an ownership interest of 1,000

megawatts in three jointly-owned facilities.

Under Lopriore’s leadership, nine LM6000 peaking units were constructed.  Fossil

also outfitted its two New Jersey coal plants with about $1.5 billion in new pollution

control equipment resulting in substantial reductions in emissions.  These plants are

among the cleanest, most responsible coal stations in the country. 

Mr. Lopriore instituted an in-depth Operational Excellence Model (OEM), one of the

first programs in the nation to drive standardization across a Fossil fleet.  The

program resulted in consistent improvement in operating results,

reliability and fleet

performance and the achievement of all-time generation records. He also revamped

PSEG Fossil’s training program. Two industry-first, award-winning mobile training

trailers were developed to take training directly to the work sites reducing costs and

increasing productivity.

118

Robert C. Braun

SENIOR VICE PRESIDENT & CHIEF OPERATING OFFICER

PSEG NUCLEAR

Robert C. Braun was elected President and Chief Nuclear

Officer to succeed Thomas Joyce, upon Mr. Joyce’s retirement

at the end of March 2015.  Mr. Braun will continue to be

responsible for the day-to-day operations of PSEG’s Salem and

Hope Creek Generating Stations.  He will report directly to

William Levis, and be a member of PSEG’s Executive Officers

Group.  Mr. Braun was named senior vice president and chief

operating officer of PSEG Nuclear, in September 2012. He had

been

senior

vice

president

–

PSEG

Nuclear

since

2009.

Mr. Braun joined PSEG Nuclear in March 2007 as vice

president of Operations Support.  Mr. Braun has more than 30

years of experience in commercial nuclear power operations.

Previously, Mr. Braun was site vice president of Exelon Corporation’s

Peach Bottom Atomic Power Station. Prior to his appointment at

Peach

Bottom,

he

was

vice

president

–

nuclear

oversight

of

Exelon’s

nuclear group headquarters and previously served as plant manager

of the company’s Limerick Generating Station, where he held a senior

reactor

operator

license.

Mr.

Braun

began

his

career

at

Limerick

in

1982.

Mr. Braun has a Bachelor of Mechanical Engineering degree from

Villanova University and earned his Senior Reactor Operator (SRO)

license while at Exelon.

119

Margaret M. Pego,

SPHR

SENIOR

VICE

PRESIDENT

–

HUMAN

RESOURCES

AND

CHIEF HUMAN RESOURCES OFFICER

PSEG SERVICES CORPORATION

Margaret

M.

Pego

was

named

senior

vice

president

–

human

resources

and chief human resources officer of PSEG Services Corporation in

December

2006.

Prior,

she

had

been

vice

president

–

human

resources.

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

positions in the human resources department.

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

from William Paterson College, and a Master of Business Administration

degree with a concentration in management and labor relations from

Seton Hall University. In addition, she holds a certificate in EEO studies

from Cornell University, and has completed the Human Resources

Executive Program at the University of Michigan. She is also certified as a

senior professional in human resources.

Ms. Pego was named one of 2013’s HR Top 10 Breakaway Leaders by

Evanta, a leading organization that fosters leadership development and

collaborative exchange among North America’s top executives.

Ms. Pego is active in several local and national organizations, including the

EEI Chief HR Executive Advisory Committee; the American Gas Association

HR Policy Committee; the Conference Board Advisory Council of HR

Management –

Council of HR Executives; and the Society for Human

Resources Management.  In addition, she is Chair of the Children’s

Specialized Hospital Board, a member of the Children’s Specialized

Hospital Foundation Board, RWJ Health Care Corporation Board and

Rutgers Business School.  She is the former Chair of the Center for Energy

Workforce Development (CEWD) Executive Council. She is a former

member of the Supreme Court of New Jersey Attorney Ethics Committee.

Ms. Pego is a 2002 Leadership New Jersey fellow, 1997 TWIN Honoree,

2006 Executive Woman of New Jersey Honoree and 2008 NJ Best 50

Women in Business Honoree.  

120

PSE&G

APPENDIX

121

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,

EXCLUDING

MAJOR

EVENTS.

SOURCES:

PSE&G

PEER

PANEL

STUDY,

FIRST

QUARTILE

BENCHMARK

STUDY

AND

VARIOUS

REGULATORY REPORTS..

122

PSE&G prioritizes public safety

while maintaining value to customers

LEAK

RESPONSE

RATE

=

PERCENTAGE

OF

UTILITY

RESPONSES

TO

REPORTED

LEAKS

WITHIN

ONE

HOUR.

SOURCES:

PSE&G

PEER

PANEL

STUDY

AND AGA BENCHMARK STUDY.

123

PSEG POWER

AND ER&T

APPENDIX

124

$0

$5

$10

2015

2016

2017

Nuclear fuel needs have been hedged through 2017

Anticipated Nuclear Fuel Cost

Hedged

125

Power’s coal hedging reflects 2015 supply

matched with 2015 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

Mid $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

$0

$10

$20

$30

$40

$50

0%

20%

40%

60%

80%

100%

2015

2016

2017

126

PSEG Power value advantaged

by asset diversity, fuel flexibility and location

Fuel Diversity*

Total MW: 13,146

Energy Produced*

Total GWh: 54,162

Energy Market Served*

Total MW: 13,146

*2014, EXCLUDES SOLAR AND KALAELOA.

**INCLUDES NEW JERSEY UNITS THAT FUEL SWITCH TO GAS.

Load Following

Peaking

Base load

Gas

Pumped

Storage

Nuclear

Oil

Coal**

Gas

Pumped

Storage

Nuclear

Oil

Coal**

127

The full requirements BGS rate recognizes the

forward PJM capacity market price

Capacity Price per BGS Tranche

2015-2016

166

$        

Three Year Average ($/MW-day)

$173

2016-2017

177

$        

Average MW per Tranche (varies by EDC)

111

2017-2018

175

$        

Days per Year

365

173

$     

7,007,656

$ 

MWh per Tranche

Average MW per Tranche (varies by EDC)

111

Hours per Year

8,768

Load Factor (varies by EDC)

~37%

MWh per Tranche, approx.

355,000

Capacity Cost per MWh

20

$                      

Capacity Price per RPM Auction for PSEG Zone

Average Capacity Price ($/MW-day)

Average Capacity Cost per Tranche

128

PSEG

FINANCIAL

APPENDIX

129

Power Cash

from Ops

~$1.4B

Power Cash

Investment

(1)

~0.7B

Dividend

to Parent

~$0.9B

Power 2014 Cash Flows

Free Cash Flow

~$0.7B

Cash Used

~$0.2B

(2)

In 2014, Power had significant free cash flow

(1) POWER CAPITAL INVESTMENT INCLUDES NUCLEAR FUEL AND EMISSION PURCHASES

(2) POWER INVESTED CASH BALANCE DECREASED FROM ~$0.8B TO ~$0.6B

~$0.7B 

Shareholder

dividend

~$0.2B Capital

contribution to

PSE&G

$0.0

$0.5

$1.0

$1.5

130

PSE&G Cash

from Ops

(1)

~$1.6B

PSE&G Cash

Investment

~$2.2B

In 2014, PSE&G used $1.6B of internally

generated cash flow

and debt to invest over $2B while

maintaining its capital structure  

(1) PSE&G CASH FROM OPERATIONS ADJUSTS FOR SECURITIZATION PRINCIPAL REPAYMENTS OF ~$240 MILLION.

Cash Invested

~$0.3B

PSE&G 2014 Cash Flows

PSE&G

Net Debt

~$0.7B

Parent Capital

Contribution

~$0.2B

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

131

December 31, 2014

$

Billions

PSEG

PSE&G

Power

Cash and Cash Equivalents

$0.4

$0.3

$0.0

Short Term Debt

$0.0

$0.0

N/A

Long Term Debt

(1)

8.9

6.3

2.5

Common Equity

12.2

6.8

5.6

Total Capitalization

$21.1

$13.1

$8.1

Total Debt / Capitalization

42%

48%

31%

PSE&G Regulated Equity Ratio

(2)

51.4%

Our balance sheet remains strong

(1)INCLUDES L-T DEBT DUE WITHIN 1 YEAR; EXCLUDES SECURITIZATION DEBT OF $259 MILLION AND NON-RECOURSE DEBT OF $16 MILLION.

(2)REGULATED EQUITY RATIO INCLUDES CUSTOMER DEPOSITS OF ~$98 MILLION AND EXCLUDES SHORT-TERM DEBT.

132

PSEG Liquidity as of December 31, 2014

Expiration

Total

Available

Company

Facility

Date

Facility

Usage

Liquidity

($Millions)

PSE&G

5-year Credit Facility

Mar-18

$600

1

$14

$586

5-Year Credit Facility (Power)

Apr-19

$1,600

$97

$1,503

5-Year Credit Facility (Power)

Mar-18

$1,000

$0

$1,000

5-Year Bilateral (Power)

Sep-15

$100

$100

$0

5-year Credit Facility (PSEG)

Apr-19

$500

$8

$492

5-year Credit Facility (PSEG)

Mar-18

$500

3

$0

$500

Total

$4,300

$219

$4,081

1 PSE&G Facility to be reduced by $29M on April 15, 2016

$71

2 Power Facility to be reduced by $48M on April 15, 2016

PSE&G ST Investment

$294

3 PSEG Facility to be reduced by $23M on April 15, 2016

Total Liquidity Available

$4,446

Total Parent / Power Liquidity

$3,566

PSEG /

Power

PSEG Money Pool ST Investment

2

133

PSEG Energy Holdings

Investment Portfolio

Equipment

Investment  Balance*             

at 12/31/14

($Millions)

Merchant Energy Leases

NRG  REMA

Keystone, Conemaugh & Shawville (PA)

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

354

NRG Energy, Inc./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)

146

Grand Gulf

Nuclear station in Mississippi (175 equity MW)

55

Real Estate Leveraged Leases

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

62

Real Estate Operating Leases

Office

Towers,

Shopping

Centers

-

28

properties

42

Generation Legacy Assets

GWF (in wind down stage), GSOE 

2

Other

Land

5

Total Holdings Investments

$884

*  BOOK BALANCE EXCLUDING  DEFERRED TAX ACCOUNTS.

**EME WAS ACQUIRED BY NRG ON APRIL 1 2014.

134

PSEG 2014 operating earnings up 7%

*

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)

2014

2013

2014

2013

PSE&G

$  725

$  612

$  1.43

$  1.21

PSEG Power

642

710

1.27

1.40

PSEG Enterprise/Other

33

(13)

0.06

(0.03)

Operating Earnings*

$  1,400 

$  1,309 

$  2.76

$  2.58

Twelve Months ended December 31

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.

(a)

Includes the financial impact from positions with forward delivery months.

A

2014

2013

2012

2011

2010

2009

Earnings Impact ($ Millions)

Operating Earnings

1,400

$     

1,309

$   

1,236

$   

1,389

$     

1,584

$   

1,567

$   

Gain (Loss) on Nuclear Decommissioning Trust (NDT)

Fund Related Activity (PSEG Power)

68

40

52

50

46

9

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

(a)

(PSEG Power)

66

(74)

(10)

107

(1)

(11)

Lease Transaction Activity (PSEG Enterprise/Other)

-

-

36

(173)

-

29

Storm O&M (PSEG Power)

(16)

(32)

(39)

-

-

-

Market Transition Charge Refund (PSE&G)

-

-

-

-

(72)

-

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

-

-

-

34

-

-

Income from Continuing Operations

1,518

$     

1,243

$   

1,275

$   

1,407

$     

1,557

$   

1,594

$   

Discontinued Operations

-

-

-

96

7

(2)

Net Income

1,518

$     

1,243

$   

1,275

$   

1,503

$     

1,564

$   

1,592

$   

Fully Diluted Average Shares Outstanding (in Millions)

508

508

507

507

507

507

Per Share Impact (Diluted)

Operating Earnings

2.76

$       

2.58

$    

2.44

$    

2.74

$      

3.12

$    

3.09

$    

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

0.13

0.08

0.10

0.10

0.09

0.02

Gain (Loss) on MTM

(a)

(PSEG Power)

0.13

(0.14)

(0.02)

0.21

-

(0.02)

Lease Transaction Activity (PSEG Enterprise/Other)

-

-

0.07

(0.34)

-

0.05

Storm O&M (PSEG Power)

(0.03)

(0.07)

(0.08)

-

-

-

Market Transition Charge Refund (PSE&G)

-

-

-

-

(0.14)

-

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

-

-

-

0.06

-

-

Income from Continuing Operations

2.99

$       

2.45

$    

2.51

$    

2.77

$      

3.07

$    

3.14

$    

Discontinued Operations

-

-

-

0.19

0.01

-

Net Income

2.99

$       

2.45

$    

2.51

$    

2.96

$      

3.08

$    

3.14

$    

(Unaudited)

For the Year Ended

December 31,

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

Reconciling Items, net of tax