Exhibit 99
Public Service Enterprise Group
Morgan Stanley
15th Annual Global Electricity and
Energy Conference
April 2, 2008
Forward-Looking Statement
Readers are cautioned that statements contained in this presentation about our and our subsidiaries’ future performance, including future
revenues, earnings, strategies, prospects and all other statements that are not purely historical, are forward-looking statements for purposes of
the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Although we believe that our expectations are based on
reasonable assumptions, we can give no assurance they will be achieved. The results or events predicted in these statements may differ
materially from actual results or events. Factors which could cause results or events to differ from current expectations include, but are not
limited to:
Adverse Changes in energy industry, policies and regulation, including market rules that may adversely affect our operating results.
Any inability of our energy transmission and distribution businesses to obtain adequate and timely rate relief and/or regulatory approvals from
federal and/or state regulators.
Changes in federal and/or state environmental regulations that could increase our costs or limit operations of our generating units.
Changes in nuclear regulation and/or developments in the nuclear power industry generally, that could limit operations of our nuclear
generating units.
Actions or activities at one of our nuclear units that might adversely affect our ability to continue to operate that unit or other units at the same
site.
Any inability to balance our energy obligations, available supply and trading risks.
Any deterioration in our credit quality.
Any inability to realize anticipated tax benefits or retain tax credits.
Increases in the cost of or interruption in the supply of fuel and other commodities necessary to the operation of our generating units.
Delays or cost escalations in our construction and development activities.
Adverse capital market performance of our decommissioning and defined benefit plan trust funds.
Changes in technology and/or increased customer conservation.
For further information, please refer to our Annual Report on Form 10-K, including Item 1A. Risk Factors, and subsequent reports on Form 10-
Q and Form 8-K filed with the Securities and Exchange Commission. These documents address in further detail our business, industry issues
and other factors that could cause actual results to differ materially from those indicated in this presentation. In addition, any forward-looking
statements included herein represent our estimates only as of today and should not be relied upon as representing our estimates as of any
subsequent date. While we may elect to update forward-looking statements from time to time, we specifically disclaim any obligation to do so,
even if our estimates change, unless otherwise required by applicable securities laws.
2
GAAP Disclaimer
PSEG presents Operating Earnings in addition to its Net Income reported
in accordance with accounting principles generally accepted in the United
States (GAAP). Operating Earnings is a non-GAAP financial measure that
differs from Net Income because it excludes the impact of the sale of
certain non-core domestic and international assets and costs stemming
from the terminated merger agreement with Exelon Corporation. 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 that slide included
on each of the slides where the non-GAAP information appears. These
slides are intended to be reviewed in conjunction with the oral
presentation to which they relate.
3
PSEG Overview
Tom O’Flynn
Executive Vice President and Chief Financial Officer - PSEG
President and Chief Operating Officer – PSEG Energy Holdings
Our platform …
… provides earnings stability and multiple sources of revenue for
growth.
Stable electric and gas
distribution and
transmission company
rated top quartile for
reliability providing
service in mature
service territory in New
Jersey.
Major electric generation
company with 13,300
MW of base-load,
intermediate and load
following capability
operating in attractive
markets in the Northeast
with operating control of
additional 2,000 MW of
capacity in Texas.
Redeployment of capital
through the sale of
international assets.
Focused on managing
lease portfolio and
potential investment in
renewables.
2007 Operating
Earnings:
$949M*
$115M*
$376M*
2008 Guidance:
$1,040M - $1,140M
$45M – $60M
$350M – $370M
* See page 62 for Items excluded from Net Income to reconcile to Operating Earnings
5
Our focus is to maximize benefits from existing assets …
… and build a substantial platform for ongoing growth.
Processes embedded
throughout the
organization on how
to manage, operate
and invest with
excellence as the
goal
Regulatory
mechanisms in place
supporting best-in-
class reliability
enhanced by market
dynamics
encouraging
investment
Maintain strong
balance sheet
providing
opportunity to
deploy capital to
meet shareholder
objectives for
growth with
reasonable risk
Operational
Excellence
Regulatory and
Market Environment
Growth with
Manageable Risk
6
Major influences on business environment remain:
PSEG Power’s base-
load nuclear assets
well situated in carbon
constrained
environment
PSE&G pursuing
investments in energy
efficiency and
renewables
Significant new
transmission capital
program to improve
reliability
Capital investment in
coal fleet to meet
environmental
requirements
maintains critical
infrastructure and
expands capability
New peaking capacity
leverages existing
brownfield sites;
potential for new
nuclear
Climate Change
Infrastructure
Requirements
Capacity Needs
PSEG assets are well positioned to meet the needs of customers
and shareholders in a challenging environment.
7
We are continuing to improve operational practices and participate
in market design discussions …
… to support long-term growth and reliability.
NJ enacted Regional Greenhouse Gas Initiative
(RGGI)
Awaiting NJ Energy Master Plan
PSEG Power exposed to heat rate expansion, gas
prices and carbon
Plan to add 300-400MW peaking capacity
Pursuing RFPs in CT and NY
Awaiting RTEP decision on additional transmission
PSE&G pursuing pilot programs to test energy
efficiency and conservation
Hope Creek uprate and Salem steam generator adding
140MW
Fossil fleet adopted operating model based on
Nuclear’s success
Goal is to maintain (at a minimum) operating
capability of nuclear fleet at 90% capacity factor
PSE&G pursuing pilot programs in advanced metering
and back office technology
Operational
Excellence
Regulatory and
Market Environment
Growth with
Manageable Risk
8
Improved processes and investment …
$1,800
$2,000
$2,200
$2,400
2007
2008
2009
2010
2011
… are expected to control the rate of growth in operating
expenses.
2007 -2011 :
CAGR: 2.1%
9
$2.80 - $3.05
Improved processes, markets and well-positioned assets …
2006
2007
2008
… allowed us to meet our commitments to earnings growth as we
also reduced balance sheet and international risk.
$1.73*
161
515
949
1,040 - 1,140
115
45 - 60
262
(66)
376
350 - 370
(15) - (10)
(63)
$2.71*
Holdings
PSE&G
Power
Parent
Operating Earnings by Subsidiary
* See page 62 for Items excluded from Net Income to reconcile to Operating Earnings
8% Growth
10
Spending for the next four years …
PSE&G
Other
PSEG Power
* As per 2006 10-K
** As per 2007 10-K; also includes plans for PSEG Energy Holdings
PSEG Energy
Holdings
$ 4.5B
$ 7.3B
$10.0
$8.0
$6.0
$4.0
$2.0
$0.0
… has increased primarily at PSE&G to support growth strategy.
2007 Forecast*
(2008 – 2011)
2008 Forecast**
(2008 – 2011)
Capital Expenditures
11
… supporting our growth initiatives, maintaining financial
flexibility.
Shareholder
Dividend
Debt
Reduction
Discretionary Cash
PSEG Use of Cash
Investment
$15.0
$10.0
$5.0
$0.0
$1.5 – $2.0B
$3.0B
Forecast*
(2008 –2011)
Forecast
(2008 –2011)
PSEG’s financing capability has improved with forecasted
discretionary cash expected to reach $3 billion …
* As presented at 2007 March Analyst Conference
12
PSEG Power’s capital program
2008
2007
2009
2010
2011
2007 10-K
($ millions)
$890
$562
$675
$620
$430
Program focused on meeting environmental commitments,
capital associated with new capacity ($500M) and exploring the
opportunity for new nuclear to improve the fleet’s reliability and
performance.
2006 10-K
($ millions)
$626
$584
$516
$527
$198
13
At Power, strong cash generation and declining
capital expenditures …
… should result in substantial discretionary cash available to
PSEG for additional growth and/or share repurchases.
($2.0)
($1.0)
$0.0
$1.0
$2.0
2007
2008
2009
2010
2011
$0.0
$2.0
$4.0
$6.0
$8.0
$10.0
Sources
Uses
Cash from
Ops
Net
Financing
Dividends
to Parent
Investments
Power Sources and Uses
(2008 – 2011 Forecast)
Power Cash Flow
Cash
from Ops
Declining Investments
Net Cash
Flow
Asset
Sales
Incremental debt
capacity while
maintaining target
credit measures
14
PSE&G’s capital program focused on improving reliability
2008
2007
2009
2010
2011
2012
2006 10-K
June 2007 10-Q
2007 10-K
5-year capital program: $3.0B
5-year capital program: $4.1B
5-year capital program: $5.3B
$10,200
$6,400
TOTAL
4,900
3,330
Electric
3,060
2,240
Gas
2,240
830
Transmission
2012 Base Plan
2007 Actual
PSE&G Rate Base ($ millions)
15
PSE&G’s capital program
Transmission
Electric and
Gas
Distribution
New
Programs
Future investment associated with meeting State energy
efficiency and renewable goals dependent on receiving
regulatory support before committing new capital, e.g.
$550M investment budgeted for AMI
Anticipate approval of $100M investment in solar in April
2008 as part of $225M capital investment program
Investments focused on improving customer support
enhancing efficiency and upgrading infrastructure
Expect to file electric and gas rate case in 2009 with rates
effective in 2010
Rate base growth supported by investment in new 500kV
lines to improve reliability ($900M) and upgrade of sub-
transmission system ($250M)
Seeking FERC approval for CWIP in rate base and 150 bps
adder to ROE on $600M - $650M Susquehanna line – if
approved, capital will be recovered as expensed
16
($1.5)
($0.5)
$0.5
$1.5
2007
2008
2009
2010
2011
Cash from
Ops
Net
Financing
Dividends
to Parent
Investments
PSE&G Sources and Uses
(2008 – 2011 Forecast)
PSE&G Cash Flow
Cash from
Ops
Growing Investments
Net Cash
Flow
At PSE&G, cash flow will be primarily directed towards
attractive reinvestment opportunities.
Modest dividends to the Parent are expected to continue as
PSE&G grows its asset base.
17
At Holdings, asset sales could continue to be a
significant source of cash in 2008.
Holdings plans to build renewables business with internal cash.
$1.2
$0.9
$0.6
$0.3
$0.0
Cash from
Ops
Net Financing
Dividends to
Parent
Investments*
Holdings Sources and Uses
(2008 – 2011 Forecast)
Asset
Sales
Sources
Uses
* Investments exclude Intercompany loans.
18
$0.0
$2.0
$4.0
$6.0
Sources
Uses
Holdings cash
generated
(remaining asset
sales and cash
ops) less cash
earmarked for
potential
renewable
investments
Holdings
Dividend
Shareholder
Dividend
PSE&G
Dividend
Discretionary
Cash
Parent Sources and Uses
(2008 – 2011 Forecast)
Power
Dividend
$3.0B
At PSEG, we forecast $3.0B of discretionary cash through
2011.
Cash flow from Power is the primary driver of discretionary cash.
19
2006 Operating
Earnings*
2007 Operating
Earnings*
2010E
2011E
Markets, assets and use of capital …
* See page 62 for Items excluded from Net Income to reconcile to Operating Earnings
… should continue to drive annual earnings guidance growth
of 8 - 9%.
$1.73
$2.71
$2.80 - $3.05
$3.05 - $3.35
2008
Guidance
2009
Guidance
+ 8 - 9%
+ 8 - 9%
20
Our returns have improved…
… and are forecast to remain strong on larger capital base.
Note: Calculations exclude the effects of non-recurring items
Note: Calculations exclude the effects of non-recurring items
PSEG
0
5
10
15
20
25
2006
2007
2008
2009
2010
2011
ROE
ROIC
21
Holdings
PSE&G
Power
Parent
$2.80
-
$3.05
2008
2009
2010
2011
1040
-
1140
45
-
60
350
-
370
(15)
–
(10)
Subsidiary
Annual Growth
5
–
7%
Discretionary Cash
Annual Growth
6
–
8%
5
–
7%
3%
Redeploying our $3.0B of discretionary cash towards
additional growth and / or share repurchases …
… drives our Consolidated earnings growth rate resulting in a total
shareholder return between 10 – 13%.
+ 8 – 9% Annual Growth
Subsidiary Earnings
Annual Growth
5
–
7%
“Discretionary Cash”
– Annual Growth /
Share Repurchases
3%
Annual
Dividend Yield
3%
Total Shareholder
Return
10 - 13%
22
$1.12
$1.14
$1.29
$1.17
$1.00
$1.25
$1.50
2005
2006
2007
2008
2009E
Our recent 10% dividend increase continues 100-year
history of paying common dividends.
Payout objective of 40 – 50% provides opportunity for growth with
earnings.
* Indicated annual dividend rate
*
44%
Payout
Ratio
40 – 50%
43%
66%
63%
?
23
PSEG’s current stock price…
… implies a low valuation for PSEG Power.
PSE&G
2008 Earnings Guidance $350M - $370M
Indicative 2008 P/E Multiple 12.5x – 13.5x
Resulting Value/Share $8.75 - $10.00/Share
PSEG Power
Stock Price as of 3/26/08 (per share)
$39.31
Less Indicative Value of PSE&G, Energy Holdings $11.50 - $12.75
Implied PSEG Power Value (per share)
$26.56 - $27.81
Implied Power Enterprise Value
$16.7B - $17.3B
Implied EV as a Multiple of:
2008 EBITDA
7.4x – 8.4x
Open EBITDA
6.0x – 6.7x
Plus $10 Carbon
5.6x – 6.2x
Plus $20 Carbon
5.2x – 5.8x
(1) Excludes incremental value of Texas generating assets (2,000 MW of combined cycle capacity) and potential tax liability at Resources
Energy Holdings
Book Equity Value/Share(1) $2.75
24
Fitting the pieces together - PSEG value proposition
PSEG well positioned in current business environment
Process improvement programs support efforts to:
- maintain reliability
- control costs
- provide value to the customer
Asset mix provides opportunities in attractive markets
Strengthened balance sheet supports capital investment
Return of cash to shareholders through dividends
provides discipline to investment process
Earnings growth and yield offer opportunity for double
digit shareholder returns of 10 – 13%
25
APPENDIX
PSEG Power
Low-cost portfolio
Strong cash generator
Regional focus in competitive,
liquid markets
Assets favorably located
Many units east of PJM constraints
Southern NEPOOL/ Connecticut
Near customers/load centers
80% of Fossil capacity has dual
fuel capabilities
Integrated generation and portfolio
management optimizes asset-
based revenues
… we continue to like the assets we have and their location.
Right set of assets, right markets at the right time …
18%
47 %
8 %
26 %
Fuel Diversity – 2007
Coal
Gas
Oil
Nuclear
Pumped
Storage
1%
Energy Produced - 2007
54%
25%
19%
Oil 1%
Pumped
Storage
1%
Nuclear
Coal
Gas
Total GWh: 53,200
Total MW: 13,300
28
Baseload units
Load following units
Peaking units
Salem
Hope
Creek
Keystone
Conemaugh
Hudson 2
Linden 1,2
Burlington 8-9-11
Edison 1-2-3
Essex 10-11-12
Bergen 1
Sewaren 1-4
Hudson 1
Mercer1, 2
Bergen 2
… position the company to serve full requirement load contracts.
Sewaren 6
Mercer 3
Kearny 10-11
Linden 5-8 / Essex 9
Burlington 12 / Kearny 12
Peach
Bottom
Bridgeport
New
Haven
Nuclear
Coal
Combined Cycle
Steam
GT Peaking
Power’s assets along the dispatch curve …
BEC
Illustrative
Yards
Creek
National Park
X
X
Ancillary Revenue
X
X
X
X
Capacity Revenue
X
X
Energy Revenue
X
X
Dual Fuel
2% to 10%
Peaking CF
30% to 50%
Combined Cycle CF
50% to 70%
85% to 90%
Coal CF
90% to 92%
Nuclear CF
29
24.8
27.4
28.5
28.8
29.2
2004
2005
2006
2007
2008 Target
We have delivered strong nuclear performance …
… while reducing cost of operations.
$589
$567
$564
$542
$554
2004
2005
2006
2007
2008 Target
Total Nuclear Output
(000 GWh)
O&M Total Incurred Cost
($ millions)
Note: Values represent Salem/Hope Creek/Peach Bottom, PSEG Share
30
We have some major 2008 initiatives …
… that will drive value for years to come.
Hope Creek Uprate
Unit 2 outage commenced
March 11 (Unit 1 complete)
$148 million (PS share)
multi-year project
15 MW uprate (PS share)
expected for 2008 summer
run
Salem Steam Generator Outage
Corporate
Salem
Hope Creek
INPO Assessments
Work to support extended
power uprate largely
completed in 2007
Technical issue under review
at NRC
125 MW uprate expected for
2008 summer run
31
Total Power Output (GWh)
… we are expanding the output of our existing fleet.
Through our ongoing focus on operational excellence …
0
10,000
20,000
30,000
40,000
50,000
60,000
2004
2005
2006
2007
Year
Nuclear
Coal
CC
Peaking/Steam
Strong Performance
Continued growth in output
Improved fleet performance
3,500
Nuclear
4,300
Peaking / Steam
3,150
Combined Cycle
2,350
Coal
A Diverse 13,300 MW Fleet
32
0
5,000
10,000
15,000
20,000
25,000
30,000
2004
2005
2006
2007
`
Total Fossil Output
(GWh)
… through a low-cost portfolio in which the majority of the output is
from coal facilities.
Fossil operations contribute to earnings …
A Diverse 9,800 MW Fleet (MW)
4,300
Steam / Peaking
3,150
Combined Cycle
2,350
Coal
Right Assets – Right Location
Fuel diversity
Technical diversity
Near load centers
Operation of 2,000 MW Texas Portfolio
Shared best practices
Leverage scale
33
Power’s eastern coal plants are in the right areas …
… and after capital investments, anticipate increased capacity factors.
System Interface
Power is also making considerable
investments beyond the pollution
control facilities for its coal assets.
Power’s New Jersey coal units are
mid-merit, with capacity factors
averaging 50% to 60%.
Capacity (MW)
Coal Units
1,578
Total
372
Bridgeport
648
Mercer 1&2
558
Hudson 2
Mercer 1&2
Hudson 2
Bridgeport Harbor 3
34
$0
$20
$40
$60
$80
2004
2005
2006
2007
2008E
$0
$2
$4
$6
$8
PJM Western Hub Off-Peak Prices
Coal Prices
$0
$20
$40
$60
$80
$100
2004
2005
2006
2007
2008E
$0
$5
$10
$15
$20
PJM Western Hub On-Peak Prices
Gas Prices
On-Peak Versus Gas
Off-Peak Versus Coal
$/MWh
$/MWh
Power market dynamics …
… have led to stronger electricity prices both on-peak and off-peak.
$/MB
$/MB
Note: Forward prices as of 2/29/08
35
$55
$60
$65
$70
$75
2009
2010
2011
8.5
9.0
9.5
10.0
10.5
2009
2010
2011
Rising coal and natural gas prices have driven LMPs ...
… and this trend may continue.
Central Appalachian Coal ($/Ton)
Natural Gas Henry Hub ($/MMbtu)
Electric PJM Western Hub RTC Price ($/MWh)
On Peak Heat Rate Expansion (MMbtu/MWh)
Note: Forward prices as of 2/29/08
$40
$50
$60
$70
$80
$90
2009
2010
2011
$6.5
$7.0
$7.5
$8.0
$8.5
$9.0
2009
2010
2011
36
$0
$5
$10
$15
$20
$25
$30
$35
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
As policymakers are looking to reduce CO2 emissions …
… Power stands in good position based on its low carbon fleet.
($/Ton)
The diversity of the portfolio makes Power well positioned to capture value
in a wide range of potential regulatory outcomes, with about half of Power’s
revenue increase expected to remain in EBITDA after the cost of carbon
credits.
$0
$200
$400
$600
$800
Estimated Impact of Carbon Prices on Energy Prices
and on Power’s EBITDA
37
Capacity prices in PJM to date have cleared above Net
Cost of New Entry (“CONE”) …
… with a proposal from PJM to increase Net CONE for the
2011/2012 auction to better represent rising construction costs.
$100
$150
$200
$250
$300
'07/'08
'08/'09
'09/'10
'10/'11
'11/'12
Delivery Year
Net Cost of
New Entry
Proposed Net
Cost of New
Entry
Proposed
Gross Cost of
New Entry
Gross Cost of
New Entry
Note: Auction prices and CONE reflect Eastern MAAC prices for 07/08, 08/09, and 09/10, and MAAC for 10/11, and RTO for 11/12
Auction pricing
for most of
Power’s assets
Potential
increase in
CONE
38
2003
2004
2005
2006
2007
2008
Ancillary services
Capacity
Congestion
Load shape
RECs
Transmission
Risk premium
Full Requirements
Round the Clock
PJM West
Forward Energy
Price
$33 - $34
$36 - $37
$55.59
$55.05
$65.41
$44 - $46
~ $21
~ $18
~ $21
$102.51
$67 - $70
~ $32
$98.88
~ $41
$58-$60
$68 - $71
~ $43
$111.50
Increase in Full Requirements Component Due to:
Increased Congestion (East/West Basis)
Increase in Capacity Markets/RPM
Volatility in Market Increases Risk Premium
Power’s fleet diversity and location ...
Market Perspective – BGS Auction Results
… has enabled successful participation in each BGS auction and
cushioned customer impacts.
Note: BGS prices reflect PSE&G Zone
39
0%
25%
50%
75%
100%
2008
2009
2010
2011
$0
$50
$100
$150
$200
0%
25%
50%
75%
100%
2008
2009
2010
2011
$60
$70
$80
Power’s hedging program provides near-term stability from
market volatility …
… while remaining open to long-term market forces.
Estimated impact of
$10/MWh PJM West
around the clock
price change*
($/share)
Contracted Energy
Contracted Capacity
% sold
(left
scale)
Estimated impact of
$30/MW-day capacity
price change*
($/share)
Price
(right
scale)
Price
(right
scale)
* Assuming normal market commodity correlations
Power has
contracted for a
considerable
percent of its
output over the
next three years
at increasing
prices.
The pricing for
most of Power’s
capacity has been
fixed through May
of 2011, by virtue
of the completed
auctions in PJM
and NE.
% sold
(left
scale)
$0.30 - $0.70
$0.15 - $0.45
$0.04 - $0.10
$0.01 - $0.02
$0.05 - $0.15
$0.00 - $0.01
$0.00 - $0.01
$0.00 - $0.01
40
Historical and Contracted Nuclear Fuel Cost
While nuclear fuel was volatile during 2007 …
… Power’s hedging strategy has mitigated market price
increases, with 100% hedged through 2011.
Contracted
$0
$2
$4
$6
$8
$10
2004
2005
2006
2007
2008
2009
2010
2011
41
0
6,000
12,000
18,000
2008
2009
2010
2011
Hedged
Coal
Total Output
85-95%
75-85%
55-65%
Power has contracts for supply of its coal through 2010 …
… and after installation of pollution control equipment, Power
anticipates increasing flexibility in fuel choices.
Coal Output
Percent coal hedged as
of Feb. 15th, 2008
42
… are expected to drive continued increases in Power’s gross
margin.
Operational improvements and recontracting in
current markets …
Gross Margin ($/MWh)
Hedged Energy
Hedged Capacity
Unhedged Energy
Unhedged Capacity
$0
$20
$40
$60
2005
2006
2007
2008E
2009E
2010E
2011E
43
Power’s open EBITDA is approximately $2.6 - $2.8 billion …
… which will vary depending upon market drivers.
~ $40M
$1/MWh
~ $69 - 73/MWh
(PJM-West)
Energy
Gas ~$8.50 to $9.00/MB
Coal ~ $2.85 to $3.15/MB
Fuel
~ $1.0 – 1.05B
O&M
Capacity
~ $120M
$10/KW-yr
~ $60 - $65/KW-yr
(~ $165 - $178/MW-day)
EBITDA
Impact
Sensitivity
Assumption
$1.0
$1.5
$2.0
$2.5
$3.0
2008 Forecasted EBITDA $2.05B - $2.25B
* Open EBITDA reflects unhedged results of Power at market prices shown above
44
PSE&G
PSE&G operates in an attractive market …
NJ is ranked 3rdnationally in personal
income per capita
Mid-Atlantic ReliabilityOne Award winner
six years running
Solid regulatory relationships on traditional
utility matters
(0.2%)
1.6%
Historical Annual
Load Growth
2003-2007
3,502 M Therms
44,709 GWh
Electric Sales and Gas Sold
and Transported
0.4%
1.7 Million
Gas
1.0%
2.1 Million
Electric
Projected Annual
Load Growth
2008 - 2012
Customers
1.3%
Historical Annual Load Growth
2003-2007
10,378*
Billing Peak (MW)
1,429
Network Circuit
Miles
1.4%
Projected Annual Load Growth
2008 - 2012
Electric and Gas Distribution Statistics (12/31/07)
Transmission Statistics (12/31/07)
… and through a disciplined capital allocation process has become
a recognized leader in delivering safe and reliable service.
N
E
W
S
N
E
W
S
COMBINED ELECTRIC &
GAS TERRITORIES
ELECTRIC TERRITORY
GAS TERRITORY
KEY:
*Billing Peak includes adjustment for Voltage Reduction
46
By 2018, NJ’s load is expected to grow by 4,000 MW …
Projects to NY
• The Neptune HVDC project (685
MW) connecting Sayreville to
Long Island
• The Linden VFT project (330
MW) connecting Linden to
Staten Island
• The Bergen O66 project (670
MW) connecting Bergen to
ConEd's West 49th Street
substation
• The Bergen Q75 project (1,200
MW) connecting Bergen to
ConEd’s West 49th Street
substation
• Linden S104 project (200 MW)
connecting Linden to Goethals
Projects to NJ
• PSEG’s evaluation of
the proposed backbone
transmission projects:
• Northern 500kV
route into Jefferson
and Roseland
• Central 765kV route
into Deans
• Southern 500kV
route into Salem
… yet the net import capability into NJ is only increasing by ~1,900 MW
indicating need for additional generation, DSM or transmission imports
requiring RTEP investment.
Total Import
Capability
~ 5,000 MW
Total Export
Capability
~ 3,100 MW
2008-2018 NJ Summer Peak
Annual Growth Rate = 1.8%
Sources: Imports: PSE&G Estimates; Exports: PJM 2008 Regional Transmission Expansion Plan; and Load Growth: PJM 2008 Load Forecast Report
47
Transmission opportunities will require substantial
deployment of capital.
Transmission Growth
• PJM approval was received for the $600-$650
million Susquehanna to Roseland line in October
2007
Siting and permitting process underway
Incentive filing submitted to FERC for:
• 150 BPS adder to ROE
• 100% CWIP in Rate Base
• FERC approval of the MAPP projects also mandates
an additional $100 million of capital at Salem/Hope
Creek (2014-2015)
• Pending FERC approval of Sub Transmission to
Transmission system reliability investments
represents about $250 million through 2012, post-
2012 ~$60 million/year
• Other approved RTEP projects ~$250 million also
contribute meaningfully to improved reliability and
earnings growth
• Backbone projects are in preliminary stages but
present real opportunity to improve reliability
throughout the state, with the potential investment of
~ $1.5B through 2015
When coupled with formula rate design and additional incentives, it
will provide current return on forecasted capital expenditures
thereby improving profitability.
Branchburg
Roseland
Jefferson
New Freedom
Smithburg
Deans
MAPP
Hope Creek
Salem
Project
I-765
Interstate
Project
48
RGGI enabling legislation was signed into law in January
2008. It enables the utility to begin work with the BPU …
Section 13 of the RGGI Law permits utilities to invest and/or
offer programs in renewables, conservation and energy
efficiency
– The BPU will be adopting rules and regulations to determine utility
participation and the mechanisms for recovery of costs, which must be
completed during May/June 2008
Active Filings
– Carbon Abatement
$5 million pilot program intended to demonstrate PSE&G capabilities
– AMI
$15 million pilot program for advanced two-way communications. Potential
$600 million in capital through 2013
– Solar Initiative
$100 million pilot program to finance installation of PV Solar. Potential
PSE&G market up to $1.8 billion assuming 2% Solar RPS through 2020
… while we await the release of the Energy Master Plan. Our three
pilot programs will prove our capabilities at reducing carbon in an
economic manner.
49
Even with our planned investments, delivery prices to
customers ...
6.8
5.5
5.1
0.00
4.00
8.00
2007
2012
2007
Regional
Average
Note: 2007 Rates are based on tariff rates in effect on December 31, 2007; Regional Average may not include Electric Transmission for all firms.
… are expected to grow less than inflation.
Electricity
0.48
0.45
0.42
0.00
0.20
0.40
0.60
2007
2012
2007
Regional
Average
Gas
2007-2012 Growth = 0.7%
Inflation = 2.1%
2007-2012 Growth = 1.4%
Inflation = 2.1%
Distribution
Transmission
Source: Rates from PSE&G, NYPSC and PAPUC; Inflation from Moody’s Economy.com, February 2008
50
PSEG Energy Holdings
Holdings’ portfolio has a diverse asset base . . .
Two businesses focused on maximizing value of existing investments
$45M - $60M projected 2008 operating earnings contribution
~ 55% of earnings from Resources
~ 45% of earnings from Global, targeting no international exposure by 2009
… with improved stability.
PSEG
Resources
49%
Chile & Peru
Distribution
Texas
Merchant
Generation
Other US
Generation
Two 1,000 MW CCGT‘s
1 in Central Texas (South Zone)
1 in West Texas
2007 Operating Earnings*
86% of the portfolio is
in energy-related
leveraged leases
2008 Guidance - Operating Earnings
12%
22%
17%
Texas
Merchant
Generation
25%
PSEG
Resources
56%
Other US
Generation
19%
~390MW owned in
CA, HI, NH
fully contracted
$ 115M
$ 45M - $60M
* See page 62 for Items excluded from Net Income to reconcile to Operating Earnings
Two companies sold
in 2007. SAESA in
Disc Ops.
52
Texas assets are a driver of Global’s results.
Two 1,000MW combined cycle facilities
- Two of the most efficient gas-fired plants in
Texas, constructed in 2001
- Forced outage rate less than 2%
Market Environment:
Bilateral forward market
Day ahead balancing and ancillary services
bid market
No capacity payments…margins derived
from energy and ancillary services
Nodal market transition begins in 2009
Natural gas units on the margin 90%
Reserve margins have been decreasing
Assets favorably located
15%
4,700
3,820
880
1.9%
4,100
West
Odessa
-8%
21%
Reserve
Margin
2007*
1.9%
1.9%
Annual
Growth
14,796
20,280
Total
Gas
Nuclear,
Coal, Wind**
Hydro
Load
Zone
12,161
2,635
16,000
Houston
12,680
7,600
16,750
South
Guadalupe
* Reserve Margins calculated on data provided by Global Energy.
** Wind is based on 8.7% of installed capacity (ERCOT Peak reliability %).
Odessa
Midland
Guadalupe
Austin
San Antonio
53
Due to market uncertainty …
Key drivers behind decision to remain largely unhedged beyond 2008:
Oversold market: Many generators seeking a hedge, limited appetite among hedge providers
Market uncertainty:
Uncertainty relating to move to a nodal pricing market
Recent sudden loss of wind generation in western ERCOT resulting in grid instability
Transmission maintenance: Extensive maintenance of 345kV line near Global’s Odessa unit
0%
20%
40%
60%
80%
100%
2008
2009
2010
2011
Texas CCGT Generation Output
… Global’s Texas assets are largely unhedged beyond 2008.
2008 Hedged
Spark Spread
$20-22/MWh
+/- $ 27 M
+/- $ 22 M
+/- $22 M
+/- $15M
Heat Rate:
+/- 500 Btu/KWh*
+/- $16M
+/- $14M
+/- $11M
+/- $7M
Natural Gas:
+/- $1/MMBtu*
*Pretax income effect
54
Projected long-term (2011) EBITDA influenced by several key
assumptions:
Major maintenance: approximately $10M higher in 2011 than in
2008
Capacity factor: projected to moderately increase due to decreasing
reserve margins impacting South Zone
Spark spreads: projected to be in line with 2008 levels
While there are a number of uncertainties relating to
future Texas market dynamics …
85 - 105
48 - 52%
19 – 20
13 -14%
8.25
2011
PSEG
Market
19 – 20
19.04
19.42
16.52
$11.97
Spark
Spread
85 - 105
45 - 47%
13%
8.50
2008
104
48.7%
15%
6.76
2007
130
54.4%
16%
10.82
2006
93
54.6%
17%
6.34
2005
$48
50.4%
25%
$5.42
2004
EBITDA
($M)
Capacity
Factors
Reserve
Margin
Nat Gas
NYMEX
… EBITDA is projected to remain at 2008 levels.
55
As renewable opportunities emerge …
… Global will focus on developing a renewable presence in core
markets.
Emerging aggressive RPS
targets in core PSEG markets
create an opportunity
PSEG is well positioned to
participate
Familiarity with infrastructure development, asset management,
energy policy, project financing and power markets
Experience with domestic and international renewable assets
PSEG Global is pursuing potential development of wind, biomass and solar projects, primarily in core markets
Cumulative 2008-2011 planned investment in renewables of
~$500 million
PSEG’s newly created entity, PSEG Renewable Generation, along with a private developer, submitted a proposal in response to a New Jersey BPU Office of Clean Energy Solicitation, to develop a 350 MW, 96 turbine wind farm approximately 16 miles off the southern New Jersey shore
The proposal is subject to receipt of all required permits, financing and other conditions
National Renewable Portfolio Standards (RPS)
56
0
20
40
60
2007
2008E
2009E
2010E
2011E
Resources is focused on managing its current investment
portfolio …
… which has experienced an improvement in counterparties credit
ratings (A3/A-).
PSEG Resources - Earnings Profile
2007 Adoption of FIN 48/FSP 13-2
Changes accounting methodology to record reserves
Results in lower lease revenues and higher interest expense totaling
approximately $25M (after-tax) per year
Cash flows will decrease modestly as the portfolio matures and as leases
terminate
$58M*
$30M-
$35M
$20M-
$25M
* Includes $12M gain from airline recovery and CBO settlement.
$5M-
$10M
$5M-
$10M
(Net Income)
57
Resources continues to monitor its tax risks …
PSEG position:
IRS disallowed deductions in November 2006 (as part of 1997-2000 audit)
PSEG has been in dialogue with the IRS
Ultimate resolution expected to take several years
In December 2007, PSEG made $100 million deposit to mitigate
financial risk associated with disallowed deductions
Other cases / legislative activity:
Monitoring several cases under appeal or scheduled for decision in 2008
No draft legislation providing for retroactive treatment of leases; prior
attempts were unsuccessful
… and maintains a flexible plan to handle the uncertainty.
58
PSEG
PSEG’s generating portfolio is well positioned …
… across multiple attractive markets.
Open Capacity
PSEG ��
2007 Total US Generation
15,700 MW
PSEG Power
2007 Total Capacity
13,300 MW
PSEG Global
2007 Total Owned Capacity
2,400 MW
NY
NE
PJM
Texas
CA
Other
PJM
Other
Texas
NE
NY
PSEG Power
2007 Energy Produced
53,200
GWh
Nuclear
54%
Coal
25%
Gas
19%
Oil 1%
Pumped
Storage
1%
Gas
92%
Oil 8%
PSEG Global
2007 Energy Produced
9,800
GWh
Nuclear
46%
Gas
30%
Coal
21%
PSEG
2007 Energy Produced
63,000
GWh
Oil 2%
Pumped
Storage
1%
+
+
=
=
60
PSEG’s generation portfolio provides attractive cash …
Combined fleet represents 15,700 MW of competitive generation
Assets are positioned in four attractive merchant markets
Growth opportunity available
Existing assets positioned for incremental growth
Site expansion capability
$1,993
TOTAL
$104
PSEG Global
(Texas)
$1,889
PSEG Power
PSEG Generation
2007 EBITDA ($M)
$2,700 - $2,900
TOTAL
~$100
PSEG Global
(Texas)
$2,600 - $2,800
PSEG Power
PSEG Generation
Open EBITDA* ($M)
… with opportunity for additional growth in a disciplined manner.
* Open EBITDA reflects unhedged results at PSEG Power and PSEG Global at market prices and current volume.
61
Items Excluded from Net Income to Reconcile to Operating Earnings
Please see Slide 3 for an explanation of PSEG’s use of Operating Earnings as a non-GAAP financial measure and how it differs from Net Income.
2007
2006
2007
2006
Merger related Costs:
PSE&G
-
$
(1)
$
-
$
Enterprise
-
(7)
(0.02)
Total Merger related Costs
-
$
(8)
$
-
$
(0.02)
$
Impact of Asset Sales:
Loss on Sale of RGE
-
(178)
-
$
(0.35)
$
Chilquinta & Luz Del Sur
(23)
-
(0.05)
-
Write down of Turboven
(7)
-
(0.01)
-
Premium on bond redemption
(28)
(7)
(0.06)
(0.02)
Total Impact of Asset Sales
(58)
$
(185)
$
(0.12)
$
(0.37)
$
Discontinued Operations:
Power - Lawrenceburg
(8)
$
(239)
$
(0.02)
$
(0.47)
$
Holdings:
SAESA
(33)
57
(0.06)
0.11
Electroandes
57
16
0.11
0.03
Elcho and Skawina
-
226
-
0.45
Total Holdings
24
$
299
$
0.05
$
0.59
$
Total Discontinued Operations
16
$
60
$
0.03
$
0.12
$
Years Ended Dec. 31,
Years Ended Dec. 31,
($ millions)
(EPS)
62