1. Public Service Enterprise Group
Edison Electric Institute
Annual Finance Committee Meeting
Waldorf=Astoria
May 21, 2008

2. Forward-Looking Statement
Readers are cautioned that statements contained in this presentation about our and our subsidiaries' future performance, including future
revenues, earnings, strategies, prospects 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

3. GAAP Disclaimer
PSEG presents Operating Earnings in addition to its Net Income reported
in accordance with accounting principles generally accepted in the United
States (GAAP). Operating Earnings is a non-GAAP financial measure that
differs from Net Income because it excludes 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

4. PSEG Overview
Tom O’Flynn
Executive Vice President and Chief Financial Officer - PSEG
President and Chief Operating Officer – PSEG Energy Holdings

5. Our platform …
Stable electric and gas Redeployment of capital
Major electric generation
distribution and through the sale of
company with 13,300
transmission company international assets.
MW of base-load,
rated top quartile for Focused on managing
intermediate and load
reliability providing lease portfolio and
following capability
service in mature potential investment in
operating in attractive
service territory in New renewables.
markets in the Northeast
Jersey.
with operating control of
additional 2,000 MW of
capacity in Texas.
2007 Operating
$949M* $376M* $115M*
Earnings:
2008 Guidance: $1,040M - $1,140M $350M – $370M $45M – $60M
… provides earnings stability, multiple growth opportunities and
substantial cash flow. 5
* See page 63 for Items excluded from Net Income to reconcile to Operating Earnings

6. Our focus is to maximize benefits from existing assets …
Operational Regulatory and Growth with
Excellence Market Environment Manageable Risk
Maintain strong
Regulatory
Processes embedded balance sheet
mechanisms in place
throughout the providing
supporting best-in-
organization on how opportunity to
class reliability
to manage, operate deploy capital to
enhanced by market
and invest with meet shareholder
dynamics
excellence as the objectives for
encouraging
goal growth with
investment
reasonable risk
… and build a substantial platform for ongoing growth.
6

7. Major influences on business environment remain:
Infrastructure
Climate Change Capacity Needs
Requirements
• Capital investment in
• PSEG Power’s base- • Significant new coal fleet to meet
load nuclear assets transmission capital environmental
well situated in carbon program to improve requirements
constrained reliability maintains critical
environment infrastructure and
expands capability
• PSE&G pursuing
investments in energy • Potential to leverage
efficiency and existing brownfield
renewables sites; potential for
new nuclear
PSEG assets are well positioned to meet the needs of customers
and shareholders in a challenging environment. 7

8. We are continuing to improve operational practices and participate
in market design discussions …
Goal is to maintain (at a minimum) operating
Operational capability of nuclear fleet at 90% capacity factor
Excellence 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
NJ enacted Regional Greenhouse Gas Initiative
Regulatory and (RGGI)
Market Environment Draft NJ Energy Master Plan released
PSEG Power exposed to heat rate expansion, gas
prices and carbon
Bid for new peaking capacity not accepted
Growth with Pursuing RFPs in CT
Manageable Risk 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
… to support long-term growth and reliability. 8

9. Improved processes and investment …
2007 -2011:
$2,400 CAGR: 2.1%
$2,200
($ millions)
O&M
$2,000
$1,800
2007 2008 2009 2010 2011
… are expected to control the rate of growth in operating
expenses. 9

10. Improved processes, markets and well-positioned assets …
Operating Earnings by Subsidiary
8% Growth
$2.80 - $3.05
$2.71* 45 - 60
115
$1.73*
1,040 - 1,140
Holdings 161 949
515
Power
376 350 - 370
262
PSE&G
(66) (63) (15) - (10)
Parent
2006 2007 2008
… allowed us to meet our commitments to earnings growth as we
also reduced balance sheet and international risk. 10
* See page 63 for Items excluded from Net Income to reconcile to Operating Earnings

11. Spending for the next four years …
$10.0
Capital Expenditures
$8.0 $ 7.3B
$6.0
$ Billions
$ 4.5B
$4.0
$2.0
$0.0
2007 Forecast* 2008 Forecast**
(2008 – 2011) (2008 – 2011)
PSEG Energy
PSEG Power PSE&G Other
Holdings
… has increased primarily at PSE&G to support growth strategy.
11
* As per 2006 10-K
** As per 2007 10-K; also includes plans for PSEG Energy Holdings

12. PSEG’s financing capability has improved with forecasted
discretionary cash expected to reach $3 billion …
PSEG Use of Cash
$15.0
$3.0B Discretionary Cash
$10.0 Shareholder
$1.5 – $2.0B Dividend
$ Billions
Debt
Reduction
$5.0
Investment
$0.0
Forecast* Forecast
(2008 –2011) (2008 –2011)
… supporting our growth initiatives, and providing financial
flexibility to meet potential Resources’ tax liability.
12
* As presented at 2007 March Analyst Conference

13. PSEG Power’s capital program
2007 2008 2009 2010 2011
2006 10-K $584 $626 $516 $527 $198
($ millions)
2007 10-K $562 $890 $675 $620 $430
($ millions)
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.
*Forecast capital spending associated with new peaking could be lower than amount indicated.
13

14. At Power, strong cash generation and declining
capital expenditures …
Power Sources and Uses
Power Cash Flow
(2008 – 2011 Forecast)
Net Cash
Flow
Cash
$2.0 Asset
from Ops
Sales
Incremental debt
$10.0 capacity while
Net
Dividends
maintaining target
Financing
to Parent
$1.0 credit measures
$8.0
$ Billions
$6.0
$0.0
$ Billions
Cash from
Ops
$4.0
($1.0) Investments
Declining Investments
$2.0
($2.0)
$0.0
2007 2008 2009 2010 2011
Sources Uses
… should result in substantial discretionary cash available to
PSEG for additional growth and/or share repurchases. 14

15. PSE&G’s capital program focused on improving reliability
2007 2008 2009 2010 2011 2012
5-year capital program: $3.0B
2006 10-K
June 2007 10-Q 5-year capital program: $4.1B
5-year capital program: $5.3B
2007 10-K
PSE&G Rate Base ($ millions)
2007 Actual 2012 Base Plan
Transmission 830 2,240
Gas 2,240 3,060
Electric 3,330 4,900
TOTAL $6,400 $10,200
15

16. PSE&G’s capital program
• Rate base growth supported by investment in new 500kV
lines to improve reliability ($900M) and upgrade of sub-
transmission system ($250M)
Transmission
• Received FERC approval for CWIP in rate base and 125 bps
adder to ROE on $600M - $650M Susquehanna line – base
ROE increased by 50 bps for membership in RTO.
• Investments focused on improving customer support
Electric and enhancing efficiency and upgrading infrastructure
Gas
• Expect to file electric and gas rate case in 2009 with rates
Distribution
effective in 2010
• Future investment associated with meeting State energy
efficiency and renewable goals dependent on receiving
regulatory support before committing new capital, e.g.
New
$550M investment budgeted for AMI
Programs
• BPU approved $105M investment in solar in April 2008 as
part of $225M capital investment program
16

17. At PSE&G, cash flow will be primarily directed towards
attractive reinvestment opportunities.
PSE&G Cash Flow PSE&G Sources and Uses
(2008 – 2011 Forecast)
$1.5
Cash from
Ops $6.0
Net Cash Dividends
Net
Flow to Parent
Financing
$0.5
$ Billions
$4.0
$ Billions
Cash from
($0.5) Investments
Ops
$2.0
Growing Investments
($1.5) $0.0
2007 2008 2009 2010 2011 Sources Uses
Modest dividends to the Parent are expected to continue as
PSE&G grows its asset base.
17

18. At Holdings, asset sales could continue to be a significant
source of cash in 2008.
Holdings Sources and Uses*
(2008 – 2011 Forecast)
$1.2
Net Financing
$0.9
Dividends to
Asset
Parent
Sales
$ Billions
$0.6
Cash from
Investments**
Ops
$0.3
$0.0
Sources Uses
Flexibility exists to finance potential Resources’ tax liability.
* Forecast excludes potential for monetization of lease portfolio
18
** Investments exclude Intercompany loans.

19. At PSEG, we forecast $3.0B of discretionary cash through
2011.
Parent Sources and Uses
(2008 – 2011 Forecast)
$6.0 Holdings
Dividend
PSE&G
Discretionary
Dividend $3.0B Cash*
$4.0
$ Billions
Power
Dividend
$2.0
Shareholder
Dividend
$0.0
Sources Uses
Cash flow from Power is the primary driver of discretionary cash.
*Forecast includes some use of cash to meet potential IRS tax liability.
19

20. Markets, assets and use of cash flow …
+ 8 - 9%
+ 8 - 9%
$3.05 - $3.35
$2.80 - $3.05
$2.71
$1.73
2008 2009
2006 Operating 2007 Operating 2010E 2011E
Guidance Guidance
Earnings* Earnings*
… should continue to drive annual earnings guidance growth
of 8 - 9%. 20
* See page 63 for Items excluded from Net Income to reconcile to Operating Earnings

21. Redeploying our $3.0B of discretionary cash towards
additional growth and / or share repurchases …
+ 8 – 9% Annual Growth
Discretionary Cash Total Shareholder
Return
Annual Growth
≈ 3% 10 - 13%
$2.80 - $3.05
Holdings 6 – 8%
45 - 60
PSE&G Annual
350 - 370
Dividend Yield
≈ 3%
Subsidiary
5 – 7% Annual Growth
5 – 7%
1040 - 1140
Power “Discretionary Cash”
– Annual Growth /
Share Repurchases
≈ 3%
Parent (15) – (10)
2011
2008 2009 2010 Subsidiary Earnings
Annual Growth
5 – 7%
… drives our Consolidated earnings growth rate resulting in a total
shareholder return between 10 – 13%. 21

22. Our recent 10% dividend increase continues 100-year
history of paying common dividends.
$1.50
Dividend per Share
?
$1.29 *
%
10
$1.25 +
$1.17
$1.14
$1.12
$1.00
2005 2006 2007 2008 2009E
Payout
63% 66% 43% 44% 40 – 50%
Ratio
Payout objective of 40 – 50% provides opportunity for growth with
earnings. 22
* Indicated annual dividend rate

23. PSEG’s current stock price…
PSE&G Energy Holdings
2008 Earnings Guidance $350M - $370M
Book Equity Value/Share(1) $2.75
Indicative 2008 P/E Multiple 13.5x – 14.0x
Resulting Value/Share $9.00 - $10.25/Share
PSEG Power
Stock Price as of 5/16/08 (per share) $42.50
Less Indicative Value of PSE&G, Energy Holdings $11.75 - $13.00
Implied PSEG Power Value (per share) $29.50 - $30.75
Implied Power Enterprise Value $17.9B - $18.6B
Implied EV as a Multiple of:
2008 EBITDA 8.3x – 9.1x
Open EBITDA 6.4x – 7.1x
Plus $10 Carbon 6.0x – 6.6x
Plus $20 Carbon 5.6x – 6.2x
(1) Excludes incremental value of Texas generating assets (2,000 MW of combined cycle capacity) and potential tax liability at Resources
… implies a low valuation for PSEG Power. 23

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%
24

25. APPENDIX

26. PSEG Power

27. Right set of assets, right markets at the right time …
Fuel Diversity – 2007
• Low-cost portfolio
Total MW: 13,300
• Strong cash generator Oil Nuclear
8%
• Regional focus in competitive, 26 %
Pumped
liquid markets Storage
1%
18%
47 %
• Assets favorably located
Coal
Gas
– Many units east of PJM constraints
– Southern NEPOOL/ Connecticut
Energy Produced - 2007
– Near customers/load centers
Total GWh: 53,200
• 80% of Fossil capacity has dual
Nuclear
fuel capabilities
54% Pumped
• Integrated generation and portfolio Storage
1%
19%
management optimizes asset- Gas
25%
based revenues Oil 1%
Coal
… we continue to like the assets we have and their location.
27

28. Power’s assets along the dispatch curve …
Nuclear
National Park
Coal Sewaren 6
Dispatch Cost ($/MWh)
Mercer 3
Kearny 10-11
Combined Cycle
Burlington 8-9-11
Steam
Edison 1-2-3
GT Peaking
Essex 10-11-12
New
Haven Linden 5-8 / Essex 9
Bergen 1
Burlington 12 / Kearny 12
Linden 1,2
Yards
Keystone Sewaren 1-4
Creek
Conemaugh Hudson 1
Peach BEC
Hudson 2
Bridgeport
Bottom
Hope Bergen 2
Salem
Creek
Mercer1, 2
Illustrative
Baseload units Load following units Peaking units
Energy Revenue X X X
Capacity Revenue X X X
Ancillary Revenue X X
Dual Fuel X X
Nuclear CF 90% to 92%
Coal CF 85% to 90% 50% to 70%
Combined Cycle CF 30% to 50%
Peaking CF 2% to 10%
… position the company to serve full requirement load contracts. 28

29. We have some major 2008 initiatives …
Hope Creek Uprate Salem Steam Generator Outage
• NRC approved Hope Creek’s • Unit 2 outage concluded
extended power uprate within 58 days – on time
license amendment in May
• $148 million (PS share)
2008
multi-year project
• Work to support extended
• 15 MW uprate (PS share)
power uprate largely
expected for 2008 summer
completed in 2007
run
• 125 MW uprate expected for
2008 summer run
INPO Assessments
Hope Creek Salem Corporate
… that will drive value for years to come.
29

30. Fossil operations contribute to earnings …
Total Fossil Output A Diverse 9,800 MW Fleet (MW)
(GWh)
Coal 2,350
30,000
Combined Cycle 3,150
Steam / Peaking 4,300
25,000
Right Assets – Right Location
20,000
• Fuel diversity
• Technical diversity
15,000 `
• Near load centers
10,000
Operation of 2,000 MW Texas Portfolio
5,000
• Shared best practices
• Leverage scale
0
2004 2005 2006 2007
… through a low-cost portfolio in which the majority of the output is
from coal facilities.
30

31. Through our ongoing focus on operational excellence …
Total Power Output (GWh)
60,000
A Diverse 13,300 MW Fleet
50,000
Nuclear 3,500
40,000 Coal 2,350
Combined Cycle 3,150
GWh
30,000
Peaking / Steam 4,300
20,000
10,000 Strong Performance
0 • Continued growth in output
2004 2005 2006 2007
• Improved fleet performance
Year
Nuclear Coal CC Peaking/Steam
… we are expanding the output of our existing fleet.
31

32. Power’s eastern coal plants are in the right areas …
System Interface
Coal Units Capacity (MW)
Bridgeport Harbor 3 3
Bridgeport Harbor
Hudson 2 558
Mercer 1&2 648 Hudson 2
Hudson 2
Bridgeport 372
Mercer1 & 2
Mercer 1&2
Total 1,578
Power’s New Jersey coal units are Power is also making considerable
mid-merit, with capacity factors investments beyond the pollution
averaging 50% to 60%. control facilities for its coal assets.
… and after capital investments, anticipate increased capacity factors.
32

33. Power market dynamics …
On-Peak Versus Gas Off-Peak Versus Coal
$/MWh $/MB $/MWh $/MB
$100 $20 $80 $8
$80
$15 $60 $6
$60
$10 $40 $4
$40
$5 $20 $2
$20
$0 $0 $0 $0
2004 2005 2006 2007 2008 2004 2005 2006 2007 2008
Est Est
PJM Western Hub On-Peak Prices Gas $/MB PJM Western Hub Off-Peak Prices Coal $/MB
… have led to stronger electricity prices both on-peak and off-peak.
33
Note: Forward prices as of 4/28/08

34. Rising coal and natural gas prices have driven LMPs ...
Central Appalachian Coal ($/Ton) Natural Gas Henry Hub ($/MMbtu)
$90 $10.0
$9.5
$80
$9.0
$70
$8.5
$8.0
$60
$7.5
$50
$7.0
$40 $6.5
07
7
7
8
07
07
08
07
07
7
7
8
07
07
08
l-0
07
-0
-0
l-0
-0
-0
-
v-
p-
n-
n-
ay
ar
ar
-
v-
p-
n-
n-
Ju
ay
ar
ar
No
Ju
Ja
Ja
Se
M
M
No
Ja
Ja
Se
M
M
M
M
2009 2010 2011 2009 2010 2011
On Peak Heat Rate Expansion (MMbtu/MWh)
Electric PJM Western Hub RTC Price ($/MWh)
10.5
$80
$75
10.0
$70
9.5
$65
9.0
$60
8.5
$55
07
7
7
8
07
07
08
07
07
7
7
8
07
07
08
07
l-0
-0
-0
l-0
-0
-0
-
v-
n-
p-
n-
-
ay
v-
ar
ar
n-
p-
n-
Ju
ay
ar
ar
Ju
No
Ja
Ja
Se
No
M
M
Ja
Ja
Se
M
M
M
M
2009 2010 2011
2009 2010 2011
… and this trend may continue.
34
Note: Forward prices as of 4/28/08

35. As policymakers are looking to reduce CO2 emissions …
Estimated Impact of Carbon Prices on Energy Prices
and on Power’s EBITDA
$35
$30
$800
EBITDA ($M)
$25
$/MWh
$600
$20
$15 $400
$10
$200
$5
$0 $0
$0 $5 $10 $15 $20 $25 $30 $35 $40 $45
($/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.
… Power stands in good position based on its low carbon fleet.
35

36. Through the new capacity constructs, and repricing at
market prices …
Power’s capacity is located in three Northeast markets.
NE
NY Total Capacity 13,300MW
(~ 1,000 - 1,500 MW under RMR)
PJM
The RPM Auction to date has provided strong price signals in PJM.
Delivery Year ($MW/Day)
2008 2009 2010 / 2011
Zones $38-41/KW-yr / 2008
2007 2008 / 2009 2009 / 2010 2010 2011 / 2012
$49-51/KW-yr $56-60/KW-yr
Eastern MAAC* $197.67 $148.80 $191.32 $174.29 $110.00
MAAC --- --- $191.32 (a) $174.29 $110.00
Rest of Pool $40.80 $111.92 $102.04 $174.29 $110.00
* Majority of Power’s assets
(a) – includes APS
… Power expects to maintain strong margins. 36

37. Power’s fleet diversity and location ...
Market Perspective – BGS Auction Results
Increase in Full Requirements Component Due to:
Increased Congestion (East/West Basis)
Full Requirements
$111.50
Increase in Capacity Markets/RPM
$102.51 $98.88 • Ancillary services
Volatility in Market Increases Risk Premium
• Capacity
• Congestion
~ $43 • Load shape
~ $32 ~ $41
$65.41 • RECs
• Transmission
$55.59 $55.05
• Risk premium
~ $21
~ $18
~ $21
Round the Clock
$68 - $71
$58-$60
$67 - $70 PJM West
$44 - $46
$36 - $37
$33 - $34
Forward Energy
Price
2003 2004 2005 2006 2007 2008
… has enabled successful participation in each BGS auction and
cushioned customer impacts.
37
Note: BGS prices reflect PSE&G Zone

38. Power’s hedging program provides near-term stability from
market volatility …
Contracted Energy Power has
100% $80
contracted for a
nuclear output
% of coal and % sold
considerable
(left
75% Price
$/MWh
scale)
percent of its
(right
50% $70
scale)
output over the
next three years
25%
at increasing
0% $60
prices.
2008 2009 2010 2011
Estimated impact of
$10/MWh PJM West
around the clock $0.01 - $0.02 $0.04 - $0.10 $0.15 - $0.45 $0.30 - $0.70
price change*
($/share)
Contracted Capacity
The pricing for
100% $200
most of Power’s
% of capacity
$/MW-day
75% $150
capacity has been
Price
(right
fixed through May
scale)
50% $100
% sold of 2011, by virtue
(left
of the completed
25% $50
scale)
auctions in PJM
0% $0
Estimated impact of and NE.
2008 2009 2010 2011
$30/MW-day capacity
price change* $0.00 - $0.01 $0.00 - $0.01 $0.00 - $0.01 $0.05 - $0.15
($/share)
… while remaining open to long-term market forces. 38
* Assuming normal market commodity correlations

39. While nuclear fuel was volatile during 2007 …
Historical and Contracted Nuclear Fuel Cost
$10
$8
$6
$/MWh
$4
$2
$0
2004 2005 2006 2007 2008 2009 2010 2011
Contracted
… Power’s hedging strategy has mitigated market price
increases, with 100% hedged through 2011.
39

40. Power has contracts for supply of its coal through 2010 …
Coal Output
18,000
12,000
Total Output
GWH
Hedged
6,000
Coal
0
2008 2009 2010 2011
Percent coal hedged as
85-95% 75-85% 55-65% of Feb. 15th, 2008
… and after installation of pollution control equipment, Power
anticipates increasing flexibility in fuel choices.
40

41. Regional Greenhouse Gas Initiative (RGGI)
• Cooperative effort by Northeast states to
design a regional cap-and-trade program
RGGI
to reduce carbon dioxide (CO2)
emissions
States ME
– Full participants – CT, MA, MD, ME, NH, VT,
NY, NJ, RI, and DE
VT
– Observers – PA, DC, and Eastern Canadian
NH
Provinces and New Brunswick
NY
• Timeline MA
CT
– April 2003 process proposed by Governor
PA
Pataki RI
NJ
– 2003 – 2006 – Stakeholder process
– December 20, 2005 Final 7 state MOU MD
Participating States
– March 23, 2006 – Draft Model Rule DE
– August 15, 2006 – Final Model Rule & Observer States
amended MOU
– 2007-2008 – State level adoption
– First RGGI allowance auction September
2008
– January 1, 2009 – Implementation
41

42. The RGGI cap shows headroom…
• Affected Sources Forecast CO2 Emissions vs. RGGI Cap
(Ten RGGI States, Actuals through 2007)
– Fossil fired electric generating units 200
with a capacity of 25 megawatts
Historical CO2 RGGI Cap
(MW) and larger Emissions
190
• Targets and Timing 180
CO2 (millions of short tons)
– Three-year compliance periods
170
with the first running from 2009- Range of emissions
2011.
160
– Stabilization of CO2 emissions at
recent levels through 2015 (~188 150
million tons per year).
Actual Projected
– Achieve a 10% reduction of CO2 140
emissions below recent levels by
2019. 130
00 001 002 003 004 005 006 007 008 009 010 011 012 013 014 015 016 017 018 019
– This translates into ~13% reduction 20 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2 2
below 1990 levels or ~35%
reduction from BAU levels by 2020.
…when viewed in comparison to historical emissions. 42

43. RGGI’s CO2 pricing projections…
$10
$8
$/Ton (Nominal)
$6
$4
$2
$0
2009 2011 2013 2015 2017 2019 2021 2023 2025
RGGI - ICF Base RGGI - ICF Base (Rev. Oct-06)
…reflect moderate prices, based on the headroom in the
cap. 43

44. Operational improvements and recontracting in
current markets …
Gross Margin ($/MWh)
$60
$40
$20
$0
2005 2006 2007 2008E 2009E 2010E 2011E
Hedged Energy Unhedged Energy Hedged Capacity Unhedged Capacity
… are expected to drive continued increases in Power’s gross
margin.
44

45. Power’s open EBITDA is approximately $2.6 - $2.8 billion …
$3.0
EBITDA
Assumption Sensitivity
Impact
$2.5
Capacity ~ $60 - $65/KW-yr
$10/KW-yr ~ $120M
(~ $165 - $178/MW-day)
~ $69 - 73/MWh
Energy ~ $40M
$1/MWh
(PJM-West)
$2.0
Fuel Gas ~$8.50 to $9.00/MB
$ Billions
Coal ~ $2.85 to $3.15/MB
O&M ~ $1.0 – 1.05B
$1.5
2008 Forecasted EBITDA $2.05B - $2.25B
$1.0
… which will vary depending upon market drivers.
45
* Open EBITDA reflects unhedged results of Power at market prices shown above

46. PSE&G

47. PSE&G operates in an attractive market …
KEY:
3rd
• NJ is ranked nationally in personal COMBINED ELECTRIC &
GAS TERRITORIES
ELECTRIC TERRITORY
income per capita GAS TERRITORY
• Mid-Atlantic ReliabilityOne Award winner
six years running
N
• Solid regulatory relationships on traditional W E
S
utility matters
Transmission Statistics (12/31/07)
Historical Annual Load Growth Projected Annual Load Growth
Network Circuit
Billing Peak (MW)
Miles 2003-2007 2008 - 2012
1,429 10,378* 1.3% 1.4%
*Billing Peak includes adjustment for Voltage Reduction
Electric and Gas Distribution Statistics (12/31/07)
Historical Annual Projected Annual
Electric Sales and Gas Sold Load Growth Load Growth
and Transported
Customers
2003-2007 2008 - 2012
Electric 2.1 Million 44,709 GWh 1.6% 1.0%
Gas 1.7 Million 3,502 M Therms (0.2%) 0.4%
… and through a disciplined capital allocation process has become
a recognized leader in delivering safe and reliable service.
47

48. By 2018, NJ’s load is expected to grow by 4,000 MW …
Projects to NJ Projects to NY
2008-2018 NJ Summer Peak
Annual Growth Rate = 1.8%
• PSEG’s evaluation of • The Neptune HVDC project (685
MW) connecting Sayreville to
the proposed backbone
Long Island
transmission projects:
• The Linden VFT project (330
• Northern 500kV
MW) connecting Linden to
route into Jefferson
Staten Island
and Roseland
• The Bergen O66 project (670
• Central 765kV route
MW) connecting Bergen to
into Deans
ConEd's West 49th Street
substation
• Southern 500kV
route into Salem
• 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
Total Import Total Export
Capability Capability
~ 5,000 MW ~ 3,100 MW
… 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.
48
Sources: Imports: PSE&G Estimates; Exports: PJM 2008 Regional Transmission Expansion Plan; and Load Growth: PJM 2008 Load Forecast Report

49. 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
Jefferson Roseland
– FERC approved Incentive rate filing:
Branchburg
• 125 BPS adder to ROE
• 100% CWIP in Rate Base
Deans
I-765
• FERC approval of the MAPP projects also mandates
Interstate
an additional $100 million of capital at Salem/Hope
Smithburg
Project
Creek (2014-2015)
• FERC approval of Sub Transmission to
Transmission system reliability investments
New Freedom
represents about $250 million through 2012, post-
2012 ~$60 million/year
• Other approved RTEP projects ~$250 million also Hope Creek
contribute meaningfully to improved reliability and Salem
MAPP
earnings growth
Project
• 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. 49

50. RGGI enabling legislation was signed into law in January
2008.
• 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
• $105 million pilot program to finance installation of PV Solar. Potential
PSE&G market up to $1.8 billion assuming 2% Solar RPS through 2020
Our three pilot programs will prove our capabilities at reducing
carbon in an economic manner.
50

51. Even with our planned investments, delivery prices to
customers ...
Gas
Electricity
2007-2012 Growth = 0.7% 2007-2012 Growth = 1.4%
Inflation = 2.1% Inflation = 2.1%
8.00
Average cents/kWh, 500 kWh Bill
0.60
Average $/therm, 100 therm Bill
6.8
0.48
0.45
Transmission
0.42
5.5
5.1 0.40
4.00
0.20
Distribution
0.00 0.00
2007 2012 2007 2007 2012 2007
Regional Regional
Average Average
Source: Rates from PSE&G, NYPSC and PAPUC; Inflation from Moody’s Economy.com, February 2008
… are expected to grow less than inflation.
51
Note: 2007 Rates are based on tariff rates in effect on December 31, 2007; Regional Average may not include Electric Transmission for all firms.

52. PSEG Energy Holdings

53. 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
2007 Operating Earnings* 2008 Guidance - Operating Earnings
$ 45M - $60M
$ 115M
Two 1,000 MW CCGT‘s
22% in Central Texas (South Zone)
1
1 in West Texas
Texas
Merchant
Texas
Generation
Merchant
Generation
22%
PSEG
25%
Resources PSEG
49% 49% Resources
Chile & Peru
Other US
56%
Distribution
Generation
Two companies sold
17%
17% 19%
in 2007. SAESA in
Disc Ops.
Other US
Generation
12% ~390MW owned in
86% of the portfolio is
CA, HI, NH
12%
in energy-related
fully contracted
leveraged leases
… with improved stability.
53
* See page 63 for Items excluded from Net Income to reconcile to Operating Earnings