Attached files

file filename
8-K - FORM 8-K - PUBLIC SERVICE ELECTRIC & GAS COd438102d8k.htm
PSEG
Public
Service
Enterprise
Group
2012 EEI Financial Conference
November 11-14, 2012
EXHIBIT 99


2
Forward-Looking Statement
Readers are cautioned that statements contained in this presentation about our future performance, including future revenues, earnings, strategies, prospects, consequences and all other statements that
are not purely historical, are forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995.  When used herein, the words “anticipate”,
“intend”, “estimate”, “believe”, “expect”, “plan”, “should”, “hypothetical”, “potential”, “forecast”, “project”, variations of such words and similar expressions are intended to identify forward-looking statements. 
Although we believe that our expectations are based on reasonable assumptions, they are subject to risks and uncertainties and we can give no assurance they will be achieved.  The results or
developments projected or predicted in these statements may differ materially from what may actually occur.  Factors which could cause results or events to differ from current expectations include, but are
not limited to:
• adverse changes in the demand for or 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 a potential shift away from competitive markets toward subsidized market mechanisms,
transmission planning and cost allocation rules, including rules regarding how transmission is planned and who is permitted to build transmission in the future, and reliability standards,
• any inability of our transmission and distribution businesses to obtain adequate and timely rate relief and regulatory approvals from federal and state regulators,
• changes in federal and state environmental regulations that could increase our costs or limit 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 balance our energy obligations, available supply and trading risks,
• any deterioration in our credit quality, or the credit quality of our counterparties, including in our leveraged leases, 
• 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,
• increase in competition in energy supply markets as well as competition for certain rate-based 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 discount rates and funding requirements, and
• changes in technology and customer usage patterns.
For further information, please refer to our Annual Report on Form 10-K, including Item 1A. Risk Factors, and subsequent reports on Form 10-Q and Form 8-K filed with the Securities and Exchange
Commission.  These documents address in further detail our business, industry issues and other factors that could cause actual results to differ materially from those indicated in this presentation.  In
addition, any  forward-looking statements included herein represent our estimates only as of today and should not be relied upon as representing our estimates as of any subsequent date.  While we may
elect to update forward-looking statements from time to time, we specifically disclaim any obligation to do so, even if our internal estimates change, unless otherwise required by applicable securities laws. 


3
GAAP Disclaimer
PSEG presents Operating Earnings in addition to its Net Income reported in
accordance with generally accepted accounting principles
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 page in this presentation (Page A)
includes a list of items excluded from Income from Continuing Operations to
reconcile to Operating Earnings, with a reference to that slide included on
each of the slides where the non-GAAP information appears.


PSEG
The Business of PSEG


5
Growing an operationally excellent, integrated
generation, transmission and distribution business
Renewable Investments
PSE&G positioned
to meet NJ’s
energy policy and
economic growth
objectives
with a $5.4 billion
investment program
through 2014
Electric & Gas Delivery
and Transmission
PSEG Power’s
low-cost, base load
and load following fleet
is geographically well
positioned and
environmentally
responsible
Regional Wholesale Energy
PSEG Energy Holdings
positioned to pursue
attractive renewable
generation
opportunities
Assets $17.5B
Operating Earnings
$521M
Assets $11.1B
Operating Earnings
$845M
Assets $1.2B
Operating Earnings
$23M
Assets and operating earnings are for the year ended 12/31/2011.   Energy Holdings includes Parent.
* See page A for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.


6
What you’ll hear from us today…
PSEG  is an operationally excellent, integrated generation,
transmission and distribution business
PSE&G, our regulated electric and gas distribution company,
is positioned to grow at double digit rates
PSEG Power operates a portfolio of competitive generation
assets with flexible fuel and dispatch mix
Management team has a track record of execution
-
Hurricane Sandy restoration efforts
Strong financial position with 105-year track record of paying
an annual dividend     


7
PSEG’s response to Hurricane Sandy continues
with round the clock restoration efforts
PSEG experienced the worst storm in its 107-year history when Hurricane Sandy brought
storm surges, heavy rain, and damaging wind that resulted in 1.7
million customers losing
power.  One week later, PSE&G had restored power to 90% of its customers.


PSEG -
Hurricane Sandy Update
8
In late October 2012, PSEG’s system was hit by Hurricane Sandy’s high winds, heavy rainfall and related
storm surge --
which caused severe damage to the transmission and distribution
system throughout our
service territory as well as to some of our generation infrastructure in the northern part of New Jersey.
At the peak of the outages, approximately 1.7 million of our customers were without power due to the
storm, the most in PSE&G’s history --
surpassing both Tropical Storm Irene and the October 2011
snowstorm.
With the assistance of mutual aid crews from other utilities, our associates worked to minimize the length
of time our customers were without electric or gas service.  PSEG Power has resumed operation at
some generating stations affected by the storm, with restoration efforts continuing at others.
PSE&G filed a petition with the BPU seeking authorization to defer on our books actually incurred,
uninsured, incremental storm restoration costs associated with our gas and electric distribution systems.
Transmission related storm costs to be reviewed as part of the existing Formula Rate process at the FERC.
PSE&G and Power are unable to estimate the possible loss or range of loss related to Hurricane Sandy;
however, such costs could be material. We maintain property insurance for both nuclear and non-nuclear
property. We intend to seek recovery from our insurers for any property damage above our self-insured
retentions; however, no assurances can be given relative to the timing or amount of such recovery.


9
We are executing well on our 2012 objectives
Major regulatory
approvals received for
transmission build out
Proposed up to $883
million solar energy
investment
Improved to 2
nd
place
(from 10
) on the 2012
J.D. Power Electric
Utility Residential
Customer Satisfaction
Study-East Region
Improved availability
of gas-fired CCGT
fleet and strong
nuclear performance
O&M under control
400 MW of new
peaking generation
for summer 2012
Continued de-risking
of legacy portfolio
IRS settlement on
LILO/SILO tax
matters
IRS audit resolution
25 MW Solar project
in Arizona
15 MW Solar project
in Delaware
th


Solid Financial Results
$ millions (except EPS)
2012
2011
Operating Earnings
$  1,029
$  1,152
Reconciling Items, Net of Tax
22
(105)
Income from Continuing Operations
$  1,051
$  1,047
Discontinued Operations
-
96
Net Income
$  1,051
$  1,143
EPS from Operating Earnings*
$  2.03
$  2.27
Nine months ended September 30    
* See Page A for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.
10


11
PSEG –
Maintaining 2012 Operating Earnings
Guidance
* See Page A for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.                     


12
A relentless focus on growth investments to offset
the earnings impact of a decline in energy prices
Holdings Growth
$0.1B
1%
Maintenance
$1.3B
20%
Power Growth
$0.7B
10%
PSE&G
Growth
$4.4B
66%
Environmental
$0.2B
3%
PSEG 2012-2014E Capital Spending*
$6.7 Billion
by Subsidiary
PSEG 2012-2014E Capital Spending*
$6.7 Billion
Growth / Environmental / Maintenance
E = Estimate; Capital excludes IDC and AFUDC.  *This forecast does not reflect the impact of new proposals recently filed with the NJBPU.
PSE&G
$5.4B
80%
Holdings
$0.1B
1.5%
Parent SC
$0.1B
1.5%
Power
$1.1B
17%


13
PSE&G’s investment program provides opportunity
for a minimum of 13% annualized growth in rate
base from 2011*
PSE&G Projected Rate Base
*Starting from 2011 year-end Rate Base of $8.1 billion.  This forecast does not reflect the impact of new proposals recently filed with the NJBPU. 
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2009A
2010A
2011A
2012
2013
2014
Gas Distribution
Electric Distribution
Transmission
Solar/Energy Efficiency


Power’s asset diversity enables fleet optimization
in response to changing market dynamics
18%
44%
8%
Fuel Diversity
Coal
Gas
Oil
Nuclear
Pumped
Storage
1%
Energy Produced*
Total GWh: 53,980
56%
15%
Pumped Storage
& Oil <1%
Nuclear
Coal
Gas
Total MW: 13,060
28%
9%
* 2011
Well suited to serve load shaped
products
Market knowledge and experience to       
maximize the value of our assets
Multiple emission controls installed
Intermediate
Energy Market Served
Total MW: 13,060
28%
23%
34%
43%
Baseload
Peaking
Low-cost portfolio
Fuel flexibility
Regional focus in competitive, liquid markets
Assets favorably located near customers/load  
centers
14


15
A focus on operational excellence and a capital program
that provides the opportunity for double digit operating
earnings growth at PSE&G*
PSEG Focus
($ millions, except as noted)
2011
2014E
O&M Growth per year
PSE&G Rate Base
Transmission
E&G Distribution
EMP
EFORd Rate -
CCGT
Nuclear Generation
Holdings Solar Assets
LIPA
2.8% (forecast)
$11,600
$4,600
$6,400
$630
1.1%
30.3TWh
$240
$10-$15
*Refers to earnings growth opportunity from approved investment programs at PSE&G, excluding recently filed solar over
2011-2014.
0.4% (actual)
$8,100
$1,600
$6,000
$450
1.1%
30.0TWh
$120
$0
2008
2.4% (planned)
$6,800
$866
$5,900
$0
1.6%
29.3TWh
$0
$0


16
Hedging Update…
Contracted Energy*
*
Hedge
percentages
and
prices
as
of
September
28,
2012.
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.
Volume TWh
9
35
35
Base Load
% Hedged
100%
90-95%
50-55%
(Nuclear and Base Load Coal)
Price $/MWh
$54
$51
$49
Volume TWh
4
18
18
Intermediate Coal, Combined
% Hedged
35-40%
0%
0%
Cycle, Peaking
Price $/MWh
$54
$51
$49
Volume TWh
13
52-54
53-55
Total
% Hedged
80-85%
60-65%
30-35%
Price $/MWh
$54
$51
$49
Oct -Dec
2012
2013
2014


17
Hedging strategy designed to maximize value
in dynamic market
Power is well positioned with base-load output substantially hedged in 2013,
with intermediate and peaking capability open to the market
Hedge price data reflects expectations for an increase in customer migration away
from the Basic Generation Service (BGS) contract.  For 2013-2014, BGS is expected
to ultimately represent ~10-12 TWh of annual hedges.  BGS prices reflected in our
hedges represent a full-requirements price, less capacity value
BGS continues to represent an attractive means of hedging output by allowing us to
capture forward prices, monetize basis, and follow load effectively, given the
location of Power’s assets in eastern PJM
Hedging
activity
continues
to
reflect
consistent,
forward
sales
of
base
load
energy,
with fine tuning of hedges focused on optimizing company profitability


PSEG’s strong balance sheet provides the opportunity to
invest in solar, gas infrastructure, and energy efficiency
with room to consider incremental investments
2012-2014E PSEG Sources & Uses
Sources
Uses
Power Cash
from Ops
PSE&G Cash
from Ops
(1)
Debt
Redeemed
PSE&G Capital
Investment
Power Capital
Investment
Shareholder
Dividend
Debt
Issuances
Holdings
& Other
Net Cash
Flow
Cash
(1)
PSE&G Cash from Operations adjusts for securitization principal repayments of ~$680 Million in  2012-2014.  E=Estimate. 
18


30%
35%
40%
45%
50%
55%
2012E
2013E
2014E
30%
35%
40%
45%
50%
55%
2012E
2013E
2014E
PSEG Power
Funds from Operations / Total Debt
PSEG
Debt as Percent of Capital
Credit metrics remain above our floor levels, notwithstanding near-term
power market expectations
PSEG maintains its capital structure throughout the forecast period
A solid financial strategy –
balance sheet strength
to direct investments to the areas of greatest
growth and value potential
19


20
Modest and sustainable dividend growth consistent with
stable regulated growth and cash generation outlook at
Power
PSEG Annual Dividend Rate
$1.08
$1.08
$1.10
$1.12
$1.14
$1.17
$1.29
$1.33
$1.37
$1.37
$1.42
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Payout
Ratio
111%
62%
70%
63%
66%
43%
44%
43%
44%
50%
60%*
5-year Rate of Growth 3.95%
10-year Rate of Growth 2.78%
*Based on mid-point of 2012 operating earnings guidance.


21
PSEG Value Proposition
Operating
Excellence
Regulatory/
Market
Drivers
Financial
Strength
Disciplined
Investment
PSEG is positioned to withstand the
current weak power market by investing
in PSE&G projects providing
reasonable, risk adjusted returns; improving
the operating capability of our generating
fleet; and maintaining a strong balance
sheet to internally finance growth
and improve shareholder value


The Business of PSE&G


23
PSE&G is the largest electric and gas distribution
and transmission utility company in New Jersey
providing renewable and energy efficiency solutions
*  Weather normalized -
estimated annual growth per year over forecast period.
** Specific projects approved for incentive rate treatment with additional ROE.   
***
Energy
Efficiency
Annualized
Savings
(includes
conversion
of
gas
savings).
Transmission
Electric
Gas
Approved Rate of Return
11.68% ROE**
10.3% ROE
10.3% ROE
Renewables and Energy Efficiency
2009-2011
Total Program
Plan
Solar Loan
38 MW
81 MW
Solar 4 All
59 MW
80 MW
Energy Efficiency Initiative (annualized equivalent)***
282 GWh
402 GWh
Electric
Gas
Customers
Growth
(2007–2011)
2.2 Million
0.7%
1.8 Million
0.7%
Electric Sales and Gas Sold and Transported
42,506 GWh
3,527 M Therms
Projected Annual Load Growth (2012–2014)
0.8%*
0.1%*
Historical Annual Peak Load Growth Transmission (2007–2011)
1.7%
Projected Annual Load Growth Transmission (2012–2014)
1.4%
Sales Mix
Residential
33%
60%
Commercial
57%
36%
Industrial
10%
4%


24
Approved
ROE
Inclusion of
CWIP in
Rate Base
100%
Recovery of
Costs Due to
Abandonment
Total
Estimated
Project
Costs
($ millions)
Susquehanna-Roseland
12.93%
$790
Northeast Grid Reliability
11.93%
$895
North Central Reliability
11.68%
$390
Burlington –
Camden 230kV
11.68%
$381
Mickleton –
Gloucester 230kV
11.68%
$435
Major Transmission Projects
PSE&G’s investment in transmission is underway
and is expected to grow to represent 40% of rate
base


25
PSE&G is replacing aging distribution infrastructure
to improve reliability at a reasonable return
0
250
500
750
1,000
2009
2010
2011
2012E
2013E
2014E
Distribution Capital
Infrastructure Programs
Distribution New Business
Distribution Base
Capital Infrastructure Program II was approved in 2011 with spending through
2012
Recent incidents in the gas industry have led to enhanced focus on safety of
natural gas pipeline systems
Utility storm response in NJ is under review by the Board of Public Utilities
Capital Expenditures


26
Providing solutions to New Jersey’s energy and
economic development goals
0
100
200
300
400
2009
2010
2011
2012E
2013E
2014E
Energy Efficiency
Renewables
($ Millions)
Approval Date
Forecast
Amount
Spending
Thru 9/30/12
Remaining
Spending
Renewables
Solar Loan I & II
April 2008/
November 2009
$249
$192
$57
Solar 4 All
July 2009
443
422
21
Energy Efficiency
Carbon Abatement
December 2008
45
44
1
Energy Efficiency Economic Stimulus
July 2009
162
152
10
Demand Response
July 2009
45
26
19
Energy Efficiency Economic Stimulus
Extension
July 2011
95
4
91
Total
$1,039
$840
$199
Capital Expenditures*
*This forecast does not reflect the impact of new proposals recently filed with the NJBPU.


27
PSEG is working with the state to advance energy policy,
build infrastructure, and develop jobs …
helping to make
Governor Christie’s vision a reality
Photo:  PSEG Hackensack, NJ Solar Farm Groundbreaking –
July 31, 2012


PSE&G has filed proposals to increase its investment in
solar energy which –
if approved as filed –
would result in a
commitment of $1.5 billion
($ in Millions)
Investment
as of 9/30/12
Forecast
Existing
Programs
New
Proposals*
Total
Solar Loan
I & II
$192
$249
$193
$442
Solar 4 All
$422
$443
$690
$1,133
Total
$614
$692
$883
$1,575
+
=
*On July 31, 2012, PSE&G filed with the NJBPU to invest up to $883 million in additional solar energy projects over the next three to five years.
28


Evaluating the potential of over $1 billion of increased
investment in energy efficiency and gas infrastructure which
would drive growth in PSE&G rate base to 14% CAGR*
Potential Investment ($ millions)
Per Year Potential
Gas Infrastructure
$250-$300
Energy Efficiency
$90-$95
Total Potential Investment (Per Year)
$340-$395 Million
*compound annual growth rate over 2011-2014
29


30
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
2010
2014E
Typical Annual Bill
Combined Electric and Gas
Residential Customer
Additional investments by PSE&G will stimulate the NJ
economy by creating jobs, while improving reliability to
customers
Supply
Supply
Delivery and
Clauses
Delivery and
Clauses
Impact of
Transmission
investment
Impact of Renewable
and Distribution
investment
Lower
commodity
costs
are
expected
to
fully
offset
the
impact
to
customer
bills
1
2014 estimated supply cost is based on BGS rates effective 9/2012 and BGSS rates effective 10/2012.
2
Includes projected Solar Loan III and Solar 4 All Extension impacts in 2014 based on July 31, 2012 filing.  E = Estimate.
1
2


The
Business
of
PSEG
Power


32
$0
$1
$2
$3
$4
$5
$6
PPL
RECO
METED
PECO
JCPL
PEPCO
AECO
DPL
PSEG
BGE
$40
$42
$44
$46
$48
$50
WESTERN
HUB
PPL
RECO
METED
PECO
JCPL
PEPCO
AECO
DPL
PSEG
BGE
A well positioned fleet to respond to market
conditions and opportunities
Note: Reflects prices of original PJM load zones.
PSEG Power 2011 basis ~$5/MWh RTC
While 5 year average has declined, volatile
periods help to maintain pricing
Premium pricing also seen in capacity
markets
2011 RTC LMPs
2011 Basis to PJM West RTC
Current plant locations
?
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
PSEG North
PSEG Zone
Eastern MAAC
RPM Zones


33
PJM assets are well positioned along the dispatch curve
and maintain fuel optionality while also reducing the risk of
serving full requirements contracts
Energy Revenue
Capacity Revenue
Ancillary Revenue
Dual Fuel
Peaking units*
Load following units
Nuclear
Coal
Combined Cycle
Steam
Peaking
Baseload units
Illustrative
Salem
Hope
Creek
Keystone
Conemaugh
Hudson 2**
Linden 1,2
Burlington 8-9-11
Edison 1-2-3
Essex 10-11-12
Bergen 1
Sewaren 1-4
Mercer 1, 2**
Bergen 2
Sewaren 6
Mercer 3
Linden 5-8 / Essex 9
Burlington 12  / Kearny 12-13-14
Peach
Bottom
Yards
Creek
National Park
Salem 3
Bergen 3
* Some units have been announced for future retirements.
**
Hudson
and
Mercer
units
can
also
run
on
natural
gas.


34
Conclusion of major environmental spend places
Power in good position to meet MATS
Current Regulations and Compliance Measures
Description
Hudson (NJ)
Mercer (NJ)
Keystone
(PA)
Bridgeport
(CT)
Conemaugh
(PA)
Status
NO
x
SCR
SCR
SCR
Low NO
x
Burners
SCR
2014
Power is well 
positioned for
MATS
SO
2
Scrubber
Scrubber
Scrubber
Ultra-low
Sulfur Coal
Scrubber
Mercury/
Particulate
Baghouse &
Activated
Carbon
Baghouse
& Activated
Carbon
Scrubber &
SCR, ESP
Baghouse &
Activated
Carbon*
Scrubber &
SCR, ESP
Capital Spend Planned
No Additional Capital Spend Planned
*Use of trona (HCI) under evaluation.
MATS = mercury and air toxics


35
An active gas management strategy providing
economic value to customers and our fleet
Large portfolio of gas transportation & storage assets
Manage gas supply needs of PSE&G and PSEG Power
Responsible for over 400 bcf of gas supply in 2011
126 bcf consumed by Power’s gas fired assets in 2011;
NJ units used 11% of total PJM gas
Well positioned to access Marcellus supplies; nearly
40% of pipeline capacity is adjacent to the region
Residential rates decreased eight times since January,
2009; total savings $614, or 35%


36
$0
$25
$50
$75
$100
2008
2009
2010
2011
Dark Spread
Spark Spread
PSEG Zone LMP's
Maximizing the dispatch of our coal and gas fleet to
maintain unit margins
$/MWh
Market prices have declined since 2008
Although dark spreads have declined, spark
spreads have increased
Since 2008 there has been active coal/gas
switching in our fleet
Coal generation and margin percentage
have been replaced by our combined cycle
output
50%
45%
47%
41%
50%
55%
53%
59%
0%
25%
50%
75%
100%
2008
2009
2010
2011
Coal
Gas
72%
34%
36%
30%
28%
66%
64%
70%
0%
25%
50%
75%
100%
2008
2009
2010
2011
Coal
Gas
% PSEG’s PJM Coal/Gas Generation
% PSEG’s PJM Coal/Gas Energy Margin


Actively managing our fleet in a volatile commodity
market, with an asset profile that provides diverse
opportunities for value creation
37
Steep natural gas decline has had a major impact on US power prices and Dark Spreads
Coal prices have weakened somewhat both domestically and internationally in the last few months
Overall decline in Dark Spread has led to reduced coal-fired generation in the last 15 months
Power’s investments in dual-fuel capability at Hudson and Mercer coal units have made them
more attractive than many other coal units in this environment, and we have switched,
increasingly, to gas generation as economics dictate
* As of November 8, 2012
2014 Forward Prices & Dark Spread*
2013 Forward Prices & Dark Spread*


38
Low power prices are not a good environment for any merchant generator, although Power is
more of a hybrid with long-term contracting through BGS sales as well as forward hedging
Forward markets signal continued strength in Spark Spreads and Heat Rates
Strong spark spreads in the Northeast have benefitted our gas-fired fleet
Power is well positioned with hedged nuclear output and efficient combined cycle margin
contribution
* As of November 8, 2012.
Henry Hub Gas Forwards*
2013 and 2014 RTC
Forward Prices & Spark Spread*
Managing our fleet to capitalize on volatility


39
Note:  PJM totals do not include ATSI and DEOK regions; announced retirement totals inclusive of retirements from 1/1/2010.
The EPA is in the process of implementing
Clean Air Act rules which will impact supply
Region
Total Capacity
(GW)
Total Coal Capacity
(GW)
Unscrubbed
Capacity
(GW)
Announced Coal
Retirements
(GW)
Announced Coal
Retirements
(as % of total)
PJM
180
79
30
14
8%
NY ISO
37
2.6
0.6
0.8
2%
ISO-NE
32
2.8
2.1
0.4
1%
U.S. Total
1,036
320
129
43
4%
Mercury and Air Toxics Standards (MATS)
Final rule released December 2011
Will require coal and oil-fired units to meet strict emissions limits, or retire
Effective early 2015; provides case-by-case extensions where needed to comply
Cross State Air Pollution Rule (CSAPR)
Entire
rule
vacated
by
the
DC
Circuit
Court
of
Appeals
on
August
21,
2012
CAIR will continue to be enforced until a replacement rule is implemented
EPA requested
an en banc rehearing on October 5, 2012
Source: MJB&A Tracking, Ventyx Velocity, EPA NEEDS v4.10, PJM, NYISO, ISO-NE.  As of 4/27/2012.


40
$/MW-day
2011 / 2012
2012 / 2013
2013 / 2014
2014 / 2015
2015 / 2016
Power’s      
Average Prices
$110
$153
$244
$162
$167
Rest of  Pool Prices
$110
$16
$28
$126
$136
PSEG Power Cleared Approximately 9,000 MW
No New PSEG Power Generation Cleared the Auction
Preserving Optionality of HEDD Sites
2015/2016 RPM Auction Influenced By: 
Updated
Demand
Curve
Updated
Transfer
Capabilities
Environmental
Retirements
New
Build
Below
MOPR
Bids
The Reliability Pricing Model has recognized the
locational value of Power’s generating fleet with
sites in the eastern part of PJM
PJM Cleared Approximately 4,900 MW of New Generation


MOPR Reform –
Comparison of Features  
41
Design Feature
Existing MOPR
Proposed MOPR
Resource Type
All new generating resources (except nuclear,
coal, IGCC, hydro, wind, solar, have zero
minimum price threshold).
All new gas-fired resources (CC, CT, IGCC)
over 20 MW (except for landfill gas and
eligible cogeneration)
Locations
Any LDA for which separate VRR curve is
established
Entire PJM market region
Default MOPR
Lower of 90% NET CONE for the asset type
(70% where there is no applicable asset type
CONE ) or unit specific minimum offer floor
determined by the IMM and PJM
100% of NET CONE for asset type
Exemption
Unit specific alternative minimum offer
established through detailed review of project
cost/revenue
Specific exemptions for the following
categories subject to specific criteria: 
Self supply (traditional business models
building or contracting for the capacity needs
of their customers and consistent with specific
criteria)
Competitive entry
Duration of Mitigation
Until new resource clears in one RPM auction
Non-exempt units must clear in RPM auctions
for 3 separate delivery years, or must clear in
1 RPM auction in certain situations where
reliability could be detrimentally affected
Source:  www.pjm.com ;  Minimum Offer Price Rule Education Session Materials –
October 4, 2012


42
Full Requirements Component
Capacity Markets/RPM
Growing Renewable Energy Requirements
Component for Market Risk
Power’s participation in the BGS auctions provides
opportunity to realize the locational value of assets
Market Perspective –
BGS Auction Results
3 Year Average
Round the Clock
PJM West Forward
Energy Price
Capacity
Load shape
Transmission
Congestion
Ancillary services
Risk premium
Green
Note: BGS prices reflect PSE&G Zone.
2005
2006
2007
2008
2009
2010
2011
2012
$44 -
$46
$67 -
$70
$58 -
$60
$68 -
$71
$56 -
$58
$48 -
$50
$65.41
~ $21
$102.51
~ $32
$98.88
~ $41
$111.50
~ $43
$103.72
~ $47
$95.77
~ $47
$45 -
$47
~ $48
$94.30
~ $46
$37 -
$38
$83.88


43
Operated by PSEG Nuclear
PSEG Ownership: 100%
Technology: Boiling Water Reactor
Total Capacity: 1,173 MW
Owned Capacity:  1,173 MW
License Expiration: 2046
License renewal approved
July 2011
Next Refueling
Fall 2013
Operated by PSEG Nuclear
PSEG Ownership:  57%,
Exelon –
43%
Technology: Pressurized Water Reactor
Total Capacity: 2,326 MW
Owned Capacity: 1,336 MW
License Expiration: 2036 and 2040
License renewal approved
June 2011
Next Refueling
Unit 1 --
Spring 2013
Unit 2 –
Spring 2014
Operated by Exelon
PSEG Ownership: 50%
Technology: Boiling Water Reactor
Total Capacity: 2,247 MW
Owned Capacity: 1,123 MW
License Expiration: 2033 and 2034
Next Refueling
Unit 2 –
Fall 2014
Unit 3 –
Fall 2013
Hope Creek
Salem Units 1 and 2
Peach Bottom Units 2 and 3
Our five unit nuclear fleet is a critical element of
Power’s success


The
Business
of
PSEG
Holdings


45
Holdings has significantly reduced its portfolio and
will continue to monetize legacy assets
Solar
Investments
Regulated
Energy
Leases &
Other
Merchant
Energy
Leases
LILO/SILO
Leases
International
Investments
Holdings Investment
Portfolio
$4.9B
$1.2B
Merchant
Energy Leases
Regulated
Energy Leases
& Other
Texas
Texas Transfer &
Sale ~$600M
LILO/SILO Lease
Terminations
~$1.2B
International &
Other Global
Asset Sales
~$2.1B
2006
2011
Note: 2006 and 2011 data reflect book values of assets.
Transactions reflect market values for asset dispositions or, in the case of Dynegy,
book value reserve taken in 2011.  B=Billion.


46
LIPA, a New York State agency, owns T&D and generation assets (formerly LILCO)
1.1 million electric customers
Public / private business model:
T&D owned by LIPA
Privately operated
Sound T&D operations, but ongoing rate concerns, challenged storm restoration efforts, low customer
satisfaction ratings
December 2011 –
PSEG and partner Lockheed Martin selected to manage T&D system
10-year LIPA Management Services agreement fully approved
Transition period: 2012 –
2013
Contract operating period: 2014 -
2023
Economic terms:
Fixed fee escalating at regional CPI
Up to 15% incentive fee for certain performance metrics
LIPA:
Finding
opportunities
to
extend
and
profit from our operational excellence


47
PSEG Resources Leveraged Lease Portfolio
Lessee
Equipment
9/30/12
Invested 
(millions)
S&P
Credit
Rating*
REMA (GenOn)
Keystone, Conemaugh & Shawville (PA)
3 coal fired plants (1,162
equity MW)
$337
B-
Edison Mission
Energy (EME)
Powerton & Joliet Generating Stations (IL)
2 coal fired generating facilities (1,640 equity MW)
218
CCC
Merrill Creek –
(PECO, MetEd,
Delmarva P&L)
Reservoir in NJ
133
BBB,
BBB-,
BBB+
Grand Gulf
Nuclear station in Mississippi (154 equity MW)
66
A+
Renaissance Ctr.
Office towers located in Detroit, MI leased to GM
41
BB+
Wal-Mart
Portfolio of 6 Wal-Mart stores
12
AA
E-D Centers
Portfolio of 8 shopping centers
22
NR
Total Leases
$829
*Indicative recent rating as of 10/15/2012 reflecting either Lessee, additional equity collateral support or parent company unsecured
debt rating.


PSEG Financial Review


49
PSEG 2012 Operating Earnings Guidance
-
By Subsidiary
$ millions (except EPS)
2012E
2011
PSEG Power
$575 –
$665
$845
PSE&G
$530 –
$560
$521
PSEG Energy Holdings/Parent
$35 –
$45  
$23
Operating Earnings*
$1,140 –
$1,270
$1,389
Earnings per Share
$2.25 –
$2.50
$2.74
* See page A for Items excluded from Income from Continuing Operations to reconcile to Operating Earnings.


50
Guidance
$1.31
$1.13
PSEG’s 2012 earnings guidance of $2.25 to $2.50
reflects continued improvement at PSE&G and a
decline in margins at Power
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
2011 Operating Earnings*
2012E Earnings Guidance*
PSE&G Earnings Per Share
2012 Assumptions
PSE&G
Growth in investments that provide
contemporaneous returns
Transmission
Distribution economic stimulus programs
Programs supporting NJ’s Energy Master
Plan
Power
Impacted by lower energy prices
Near term effects minimized by hedges in place
~400MW new Peaking capacity in-service mid
2012
Energy Holdings / Parent
Operating earnings guidance of $0.07 to $0.09
$0.00
$0.50
$1.00
$1.50
$2.00
2011 Operating Earnings*
2012E Earnings Guidance*
Power Earnings Per Share
Guidance
$1.10
$1.05
*See
page
A
for
Items
excluded
from
Income
from
Continuing
Operations
to
reconcile
to
Operating
Earnings;
2011
reflects
Texas
in
Discontinued
Operations. E = Estimate


51
2013
2014
Each $1/mcf Change in Natural Gas
Each $2/Mwh Change in Spark Spread
Each $2/Mwh Change in Dark Spread
Each 1% Change in Nuclear Capacity Factor
Each 3% Change in Depreciation Rate
Segment EPS Drivers
Each $100 Million of Incremental Investment
Each 1% Change in Sales:
Electric
Gas
Each 1% Change in O&M
Each 10 bp Change in ROE
$0.01
$0.01
$0.01
$0.01
$0.01
$0.01
$0.01
$0.01
$0.01
$0.01
$0.11
-
$0.14
$0.04
$0.01
$0.01
$0.01
$0.01
-
$0.03
$0.04
$0.01
$0.01
$0.01
Note: EPS impacts assume normal market commodity correlation and
demand.  Update as of September 28, 2012.
PSEG’s long-term outlook is influenced by
increased investment at PSE&G and Power’s
hedge position


PSEG’s strong financial position supports our
program to invest in growth
Credit Ratings
(Moody’s/S&P/Fitch)
Debt as a % of
Capitalization
Enterprise/Parent*
Baa2/BBB/BBB+
41%
PSEG Power
Baa1/BBB/BBB+
33%
Public Service E&G**
A1/ A-
/A+
48%
PSEG Credit Metrics
PSEG cash position at September 30 was in excess of $780 million
Power and Parent available liquidity totaled approximately $4.1 billion
Moody’s upgraded PSE&G’s secured debt rating to A1 with a Stable outlook
and affirmed ratings of PSEG (Baa2) and Power (Baa1) with Stable outlooks
Standard & Poor’s has a positive outlook on all of PSEG’s credit ratings
Fitch upgraded PSE&G’s secured debt rating to A+ with a Stable outlook
and affirmed ratings of PSEG (BBB+) and Power (BBB+) with Stable outlooks
* Corporate credit rating for S&P.  **Senior secured rating for PSE&G.  All data is as of September 30, 2012.
52


53
Power and Parent available liquidity totaled
approximately $4.1 billion at September 30, 2012
Company
Facility
Date
Facility
Usage
Liquidity
($Millions)
PSE&G
5-year Credit Facility
Apr-16
$600
$1
$599
5-Year Credit Facility (Power)
Mar-17
$1,600
$119
$1,481
5-Year Credit Facility (Power)
Apr-16
$1,000
$0
$1,000
5-Year Bilateral (Power)
Sep-15
$100
$100
$0
5-year Credit Facility (PSEG)
Mar-17
$500
$4
$496
5-year Credit Facility (PSEG)
Apr-16
$500
$0
$500
Total
$4,300
$224
$4,076
$662
PSE&G ST Investment
$48
Total Liquidity Available
$4,786
Total Parent / Power Liquidity
$4,139
PSEG /
Power
PSEG Money Pool ST Investment


54
PSEG Consolidated Debt / Capitalization
(1)
Includes long-term debt due within one year and short-term debt; excludes Securitization Debt and Non-Recourse Debt.
Debt
7,812
7,060
7,479
Common Shareholders Equity
9,633
10,270
10,806
Debt plus Equity
17,445
17,330
18,285
Debt Ratio
44.8%
40.7%
40.9%


Items Excluded from Income from Continuing
Operations to Reconcile to Operating Earnings
Please see Page 3 for an explanation of PSEG’s use of Operating Earnings as a non-GAAP financial measure and how it differs from Net Income.
A
(Unaudited)
2012
2011
2012
2011
Earnings Impact ($ Millions)
Gain (Loss) on Nuclear Decommissioning Trust (NDT)
Fund Related Activity (PSEG Power)
40
$        
7
$         
49
$       
49
$       
50
$       
46
$      
Gain (Loss) on Mark-to-Market (MTM)
(a)
(PSEG Power)
(76)
8
(34)
16
107
(1)
Dynegy Related Activity (PSEG Energy Holdings)
1
(170)
7
(170)
-
-
Market Transition Charge Refund (PSE&G)
-
-
-
-
-
(72)
Gain on Sale of Qwest Building (Energy Holdings)
-
-
-
-
34
-
Lease Transaction Loss (Energy Holdings)
-
-
-
-
(173)
-
Total Pro-forma adjustments
(35)
$       
(155)
$   
22
$       
(105)
$   
18
$       
(27)
$     
Fully Diluted Average Shares Outstanding (in Millions)
507
507
507
507
507
507
Per Share Impact (Diluted)
Gain (Loss) on NDT Fund Related Activity (PSEG Power)
0.08
$     
0.01
$   
0.10
$    
0.10
$   
0.10
$    
0.09
$   
Gain (Loss) on MTM
(a)
(PSEG Power)
(0.15)
0.02
(0.07)
0.03
0.21
-
Dynegy Related Activity (PSEG Energy Holdings)
-
(0.34)
0.01
(0.34)
-
-
Market Transition Charge Refund (PSE&G)
-
-
-
-
-
(0.14)
Gain on Sale of Qwest Building (Energy Holdings)
-
-
-
-
0.06
-
Lease Transaction Loss (Energy Holdings)
-
-
-
-
(0.34)
-
Total Pro-forma adjustments
(0.07)
$    
(0.31)
$  
0.04
$    
(0.21)
$  
0.03
$    
(0.05)
(a) Includes the financial impact from positions with forward delivery months.
PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
For the Three Months Ended
For the Nine Months Ended
December 31,
Pro-forma Adjustments, net of tax
2011
2010
September 30,
For the Twelve Months Ended
September 30,
Reconciling
Items
Excluded
from
Continuing
Operations
to
Compute
Operating
Earnings