1. Public Service Enterprise Group
Strategic Presentation to the
Financial Community
October 8, 2004
Short Hills, NJ

2. Agenda
• PSEG Strategic Overview Jim Ferland
• PSE&G Ralph Izzo
• PSEG Power Frank Cassidy
– PSEG Nuclear Chris Bakken
– PSEG Fossil Mike Thomson
– PSEG ER&T Steve Teitelman
Break
• PSEG Energy Holdings Bob Dougherty
• PSEG Financial Review Tom O’Flynn
• Summary Jim Ferland
• Final Q&A All
2

3. 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. For further information, please refer to our Annual Report on Form
10-K and subsequent reports on Form 10-Q and Form 8-K filed with the Securities and Exchange
Commission.
Go to http://media.corporate-ir.net/media files/nys/peg/reports/peg_10kp84.pdf for a full text
of our Forward-Looking Statement. 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.
3

4. PSEG 2004 Guidance
Earnings $750M - $800M*
EPS $3.15 – $3.35*
ROE 13% - 14%
Assets $28B
Regional
Traditional T&D
Domestic/Int’l Leveraged
Wholesale Energy
Energy Leases
Earnings $340M - $360M Earnings $300M - $350M Earnings $130M - $150M
* Includes the parent impact of $(40)M - $(45)M
4

5. Developments in 2004
• Significant fuel price increases
– Natural Gas (Henry Hub) + 39%
– Oil (#6 Resid) + 30%
– Coal (NJ) + 48%
• Higher electric energy prices
– PJM (PS Zone) + 24%
• Key competitive pressures
– Lower BGS and long-term contract margins
– Flat ER&T profits as opposed to continued growth
• Higher nuclear and fossil replacement power
and operating costs
5

6. Higher Energy Prices
PJM Western Hub
Round-The-Clock Forward Prices
$60
$50
$40
$/MWh
$30 BGS Auction 3
BGS Auction 2
$20
BGS Auction 1
$10
2000 2001 2002 2003 2004
0
1
2
3
4
0
1
2
3
00
01
02
03
04
0
1
2
3
4
-0
-0
-0
-0
-0
-0
-0
-0
-0
l-0
l-0
l-0
l-0
l-0
n-
n-
n-
n-
n-
pr
pr
pr
pr
pr
ct
ct
ct
ct
Ju
Ju
Ju
Ju
Ju
Ja
Ja
Ja
Ja
Ja
O
O
O
O
A
A
A
A
A
6

7. BGS and Long-term Contracts
PSEG Power Term Contracts
100
Generation output not under contract
90
% of Power Generation
2003 BGS (10 Month)
80
70
Other term energy contracts
60
2004 BGS
50 (12 Month)
40 2004 BGS (36 Month)
30
2003 BGS (34 Month)
20
10
United Illuminating
2004 2005 2006 2007 2008
7

8. Key Competitive Pressure: BGS Auction Results
20,000
NJ BGS Auction Structure
Total NJ BGS Load (MW)
16,000
1 Year
10 2005 FP Auction Load
12,000 50
months (projected)
Tranches
104
1 Year 3 Years
Tranches
8,000 2007 FP Auction Load
170 51 Tranches (projected)
Tranches
34 months
4,000
2006 FP Auction Load
51 Tranches (projected)
2002 2003 2004 2005 2006 2007 2008
Price (PSE&G) $51.12 $53.86 $55.60 $54.73 $55.15
Margin to Forwards $8 $5 $3 ~$0 ~$0
$3.2M $2M $1.2M ~$0 ~$0
Margin per Tranche*
* Annualized margin to forward curve on date of BGS auction
8

9. Key Competitive Pressure: ER&T Results
$300 $240M -
$260M
$250 $170M -
$190M
$200
Millions
$150
$100
$50
$0
97
98
99
00
01
02
03
an
st
ca
19
19
19
20
20
20
20
Pl
re
04
Fo
20
04
20
9

10. PSEG 2004 Earnings Drivers
($0.45)
$3.60 - $3.80
N/C
$0.08 ($0.08) $3.15 - $3.35
- Competitive
Pressures + Weather - Interest
- BGS + Improved
Margin
economy
- Trading
- Nuclear &
Fossil O&M
/ Operations
+ Other O&M
+ NDT
2004 Plan Power PSE&G Energy Parent 2004 Estimate
Holdings
10

11. PSEG 2005 Guidance
($0.06)
$0.17 ($0.01) ($0.07)
$3.15 - $3.35
$3.15 - $3.35
+ Improved - Transmission - Minor Items - Impact of
Nuclear & Rate Case convertible
Fossil securities
- O&M Increases
Operations
+ Modest
Improvements
on Contract
Renewals
- NDT
- O&M
2004 Estimate Power PSE&G Energy Other 2005 Estimate
Holdings
11

12. PSEG Business Drivers
Issue View Effect
Fuel Prices High and volatile prices will ST: Increases costs to serve full-
moderate, but remain above requirements contracts
historic levels LT: Improves earnings of nuclear fleet
Capacity Prices / Low prices for next two to three ST: Reduced profitability
Recovery years, recovering as supply / LT: Benefits all units, especially load-
Mechanisms demand come into balance following and peaking units
Energy Prices Higher prices near term, slow ST: Contract position dampens near-
downward drift as fuel costs term benefit
moderate LT: Better pricing as contracts renew
Nuclear / Fossil Plans in place to improve overall ST: Higher O&M costs
Operations performance LT: Greater output; O&M trending lower
Regulatory Continuance of sound regulatory ST: Fair resolution of transmission and
Relations relations at state and federal level distribution rate cases
LT: Acceptable rate treatment
International Moderate growth, improving ST: Stable, improving earnings
Economies fundamentals LT: Improved value, opportunities for
asset monetization
12

13. Business Strategy
Outlook for Market Fundamentals (Capacity Pricing, Energy Margins)
Weak / Depressed Improving
2004 2005 2006 2007 2008 2009
Reduce Debt to Improve Credit
Improve Nuclear & Fossil Performance and
Capability
Improve Profitability as Contracts Renew
Continue Modest Rate Base Growth at PSE&G
Continue to Monetize PSEG Energy Holdings Assets
Apply Improved Cash Flows to Share Buyback,
Selective Asset Acquisition
13

14. 2005-2009 Earnings Outlook
4% - 6%
$3.15 - $3.35
$3.15 - $3.35
2004 2005 2006 2007 2008 2009
Estimate Estimate
14

15. PSE&G Strategic Direction
Ralph Izzo
President and COO

16. PSE&G Overview
• 10th largest electric o.
ex C .
ic Co
Suss Passa
distribution utility in U.S. –
2M customers n Co.
Berge
N
Co.
n
War re
W E
Co.
r is
Mo r
• 9th largest gas distribution S
.
x Co
Esse Co.
son
utility in the U.S. – 1.6M Hud
customers
.
. n Co
n Co Unio
terdo
H un
STATEN
ISLAND
• 2nd largest peak Co.
t
er se
So m
transmission utility in .
Co
lesex
M idd
traditional PJM – 1,411 circuit r Co.
Mer ce
miles
.
Co
outh
M onm
KEY:
COMBINED ELECTRIC & GAS TERRITORIES
ELECTRIC TERRITORY
GAS TERRITORY
• 2,600-square-mile service
0 10ml
1 2 3 4 5 6 7 8 9
territory .
n Co
Co. Ocea
ngto n
Bu r li
- 6 major cities
.
en Co
- 300 communities Camd
Co.
ester
G louc
16

17. PSE&G Business Strategy
Provide safe, reliable, low-cost service
Manage the regulatory agenda
Invest in technology to benefit customers and
investors
17

18. Strategy Focuses on Performance
Safe Low Cost
Reliable
Top 10% Nationally Top 25% Regionally
Top 25% Regionally
People •OSHA •Overtime
•Lost Time Rate
Safe, •Staffing
•Total Availability
Motivated,
•MVA Rate
Productive
• Perception Survey
• Moment of Truth Survey
Customer • BPU Inquiry Ratio
Care • Fix It Right
• First Call Resolution
• CAIDI
• SAIFI
• MAIFI
Operations • Gas Leaks/Mile
Reliable, Low • Leak Response Rate
Cost • Transmission Availability
Index
•Total Capital Expenditures
•Return on assets
Financial
•Accountability O&M
Fair Return
•Non-Traditional Revenue
18

19. Measuring Performance Against Strategy
Reliable
Safe Low Cost
Top Quartile
Top Decile Top Quartile
Regionally
Nationally Regionally
2003 2004 2003 2004
Overtime
OSHA Index
People Staffing/100k Cust
OSHA Severity Rate
Motor Vehicle Accidents
Total Availability
2003 2004
SAIFI
Operations MAIFI
Leak Response Rate
Gas Leaks per Mile N/A
Trans Avail Index
Perception (ACSI)
Customer DBMOT N/A
BPU Inquiry Ratio
# BPU/Exec. Inquiries
N/A
Fix It Right
TBD
First Contact Resolution Gas Electric
CAIDI 2003 2004 2003 2004
Cap Ex (Total per Deca-therm / Mwh)
Financial O&M (Total per Deca-therm / Mwh)
Non-Traditional Revenues N/A N/A
Total Utility
2003 2004
Return on Assets
Worse than Mean Better than Mean Top Decile/Quartile
19

20. Measuring Performance – Electric
Electric Delivery Peer Panel Trends
2004 Forecast
2003
2000 2001 2002
People (Top Decile National Basis)
OSHA Incident Rate
Lost Time Severity Rate
Vehicle Accident Rate
Absenteeism
Operations (Top Quartile Regional Basis)
SAIFI (Excluding Major Storms)
MAIFI (Excluding Major Storms)
Transmission Availability
Customers (Top Quartile Regional Basis)
CAIDI (Excluding Major Storms)
O&M Productivity (Top Quartile Regional Basis)
O&M Expenditures per Customer
O&M Expenditures per MWh Sold
Capital Productivity (Top Quartile Regional Basis)
T&D CapEx per Customer
T&D CapEx per MWh Sold
Total Expenditures (Top Quartile Regional Basis)
T&D Expenditures per Customer
Expenditures per MWh Sold
N/A Below Mean Above Mean Above Strategy
Source: PA Consulting and PSE&G Peer Panel
20

21. Measuring Performance - Gas
Gas Delivery Peer Panel Trends
People (Top Decile National Basis) 2004 Forecast
2003
2000 2001 2002
OSHA Incident Rate
Vehicle Accident Rate
Absenteeism
Operations (Top Quartile Regional Basis)
CI Breaks Repaired / Mile of CI Main
3rd Party Damages / Miles of Main & Service
Leak Response / Within 1 Hour
Customers (Top Quartile Regional Basis)
Regulatory Complaint Rate
O&M Productivity (Top Quartile Regional Basis)
O&M$/Customer
O&M$/Mile of Mains & Services
O&M$/DKtm
O&M is sum of FERC gas distribution O&M for operation
and maintenance of mains & services
Capital Productivity (Top Quartile Regional Basis)
CapEx$/Customer
CapEx$ /Mile of Mains & Services
CapEx$/DThm
CapEx is sum of direct capital costs for new and
replacement mains & services
Total Expenditures (Top Quartile Regional Basis)
Total Expenditures per Customer
Total Expenditures per Mile of Mains & Services
Total Expenditures per DKtm
N/A Below Mean Above Mean Above Strategy
Source: PA Consulting and PSE&G Peer Panel
21

22. PSE&G Rates
Electric
Residential Rate ($/kWh)
$0.14 Residential Bill
$0.12 Annual
$844
Cost
$0.10
Annual 6,960
$0.08 Usage kWh
$0.06 $/kWh ’90-
0.75%
’99
$0.04
$/kWh ’99-
$0.02 -1.75%
’03
$0.00
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
$1.20
Gas
Residential Rate ($/therm)
$1.00
Residential Bill
Annual
$0.80
$1,401
Cost
$0.60
Annual 1,252
Usage therms
$0.40
$/therm
1.8%
’90–’99
$0.20
$/therm
9.7%
’99-’03
$0.00
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
22

23. PSE&G Business Strategy
Provide safe, reliable, low-cost service
Manage the regulatory agenda
Invest in technology to benefit customers and
investors
23

24. NJ Regulatory Structure
Board of Public Utilities (BPU) Term Expiration
Jeanne Fox, Board President 2008
Jack Alter 2005
Fred Butler 2009
Connie Hughes 2007
Vacant*
*Carol Murphy resigned effective 9/2004, remainder of term to be filled with appointee
NJ BPU is rated “A2” (Average) by
Regulatory Research Associates
24

25. New Jersey Regulatory Agenda
• Restructuring, completed in 2003, continues to work
well
• No commodity risk - - gas and electric
• Upcoming events
– Legislation on Performance and Quality of Service Standards
– BGS Auction - - February 2005
– Elimination of $64 million electric revenue credit
25

26. FERC Electric Transmission Rate Filing
• FERC order issued in January 2004, with PSE&G filing
scheduled early 2005
• New rates expected to be effective in June 2005
• Formula rates for both existing and new facilities
• New rates will likely place downward pressure on
earnings in near term
Socio-political, regulatory, economic and environmental pressures will
be driving increased transmission investment for at least 3 – 5 years
26

27. PSE&G Business Strategy
Provide safe, reliable, low-cost service
Manage the regulatory agenda
Invest in technology to benefit customers and
investors
27

28. Investing in Electric Transmission
• Replace assets that have increasing maintenance costs
or are approaching end-of-life cycle
• Replace aging systems with state-of-the-art technology
to reduce outage duration/occurrences
• Minimize risk and exposure associated with customer
outages
• $350M investment over next five years
28

29. Two-Way Customer Communications
• Pilot program
• Initial scope involves 3,500-
4,000 residential customers
• Duration: 12-18 months
• Launch date: Q1, 2005
• Market research will help
determine program’s future
29

30. Two-Way Customer Communication Benefits
• Customers
– Elimination of estimated bills
– Demand control
– Competitive supply pricing
• Third-Party Suppliers
– Risk management
– Flexible pricing
• Utility
– More efficient outage reporting, restoration and back office
operations
– Curtailment of meter tampering
– Growth of rate base
30

31. PSE&G 2005 Guidance
$340M - $360M
Key Assumptions
$325M - 345M
• Normal weather
• Sales growth:
– 1.5% Electric
– 1.4% Gas
• Transmission rates
effective in June 2005
2004 Estimate Sales Depr. O&M, Int., 2005 Estimate
Increases, Misc.
Offset by
Transmission
Rate Case
31

32. 2005-2009 Earnings Outlook and Drivers
1% -2%
$340M - $360M
$325M - $345M
2004 2005 2006 2007 2008 2009
Estimate Estimate
+ Electric and Gas sales growth
+ Rate relief
+ Infrastructure replacement and technology investments
- Transmission rate reset
32

33. Key Takeaways
• Operational excellence
• Positive regulatory relationships
• Technology investment
• Solid returns and predictable cash flow into the future
33