Public Service Enterprise Group

Merrill LynchPower & Gas Leaders Conference

New York CitySeptember 25, 2007

1

Forward-Looking Statement

The statements contained in this communication about our and our subsidiaries’ future performance, including, without limitation, 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 information currently available and on reasonable assumptions, we can give no assurance they will be achieved. There are a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements made herein. A discussion of some of these risks and uncertainties is contained in 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 (SEC), and available on our website: http://www.pseg.com. 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 communication. 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 only intended to be reviewed in conjunction with the oral presentation to which they relate.

PSEG Strategic Overview

Ralph IzzoChairman of the Board, President andChief Executive Officer

PSEG Overview

4

Electric Customers: 2.1MGas Customers: 1.7M

Nuclear Capacity: 3,500 MWTotal Capacity: 13,600 MW

Traditional T&D

Leveraged Leases

2007E Operating Earnings(4): $1,245M - $1,370M2007 EPS Guidance(4): $4.90 - $5.30Assets (as of 06/30/07): $28.5BMarket Capitalization (as of 9/18/07): $22.25B

Regional Wholesale Energy

Domestic/Int’l Energy

2006 Operating Earnings: $262M(1) $515M(2) $227M(3)

2007 Guidance: $340M - $360M $840M - $920M $120M - $135M

Operating Earnings = Earnings Available and Excludes:

(1) Merger Costs of $1M

(2) Loss from Discontinued Operations of $239M

(3) Loss on Sale of RGE of $178M and Income from Discontinued Operations of $226M

Includes Operating Earnings from Global of $167M, Resources of $63M and Energy Holdings of $(3)M

(4) Includes the parent impact of $(55)M –$(45)M

5

PSEG over the past year …

… has positioned itself to be ready for the future.

• Smooth transition in operations– Management in place– PSEG Power to resume independent operation of nuclear capacity by

year-end– PSE&G national ReliabilityOne Award winner, two years running

• Partnering with NJ to meet environmental objectives in cost effective manner

– Investing in energy efficiency– Investing in renewable energy resources

• Redeploying capital at PSEG Energy Holdings

• Balance sheet strengthened

6

The current business environment …

• Convergence of market forces and policy creates the need to address:

– Environmental challenges• A carbon constrained future

– Critical infrastructure needs• Reliability and aging plant

– Capacity requirements in constrained markets

… creates opportunities for PSEG’s long-term growth.

7

Climate change is the preeminent issue of our time …

• The issue cuts across the PSEG group of companies

• Three critical strategies are required to meet carbon reduction goals:

• Conservation

• Renewables

• Clean, zero and low-carbon central station electric generating capacity

… with our response defining the future of the company.

8

Business as usual GHG emissions increase…

GHG: Greenhouse Gas

34

U.S. GHG Emissions 2004 – 2030

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,00020

04

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Mill

ion

Met

ric T

ons

CO

2-e Residential

CommercialIndustrialTransportationElectric PowerTotal

34% Increase in CO2emissions by 2030

The Energy Information Administration projects a 34% increase in CO2 emissions from 2004 levels in the business as usual case (no climate policy)

… to unacceptably high levels based upon recent findings of the Intergovernmental Panel on climate change.

9

EPRI has assessed reduction opportunities in the US Power sector, …

Source: Electric Power Research Institute (EPRI): Electric Technology in a Carbon Constrained Future CCS: Carbon Capture and Sequestration PHEV: Plug-in Hybrid Electric Vehicles DER: Distributed Energy Resource

… carefully noting that a multifaceted approach is needed.

10

States are not waiting for federal action …

Western Regional Climate Action Initiative Powering the Plains Regional Greenhouse

Gas Initiative

Climate Action Plans (includes all states

in regional programs except N & S Dakota)

• RPS • standards

(plus VT (goal),

MA, RI, CT, NJ, DE, MD, DC)

States developing greenhouse

gas registries

California motor vehicle CO2 emissions standards (plus VT, MA, RI, CT,

NJ, ME)

… with NE and California leading the way to cap greenhouse gas emissions.

RPS: Renewable Portfolio Standard

11

Twenty-two states have Renewable Portfolio Standards …

U.S. RPS Requirements by Region

2.4

5.6

10.7

2.71.0

0.5

0.6

0.60.90.5

0.4-

2

4

6

8

10

12

14

2006 2007 2008 2009 2010 2011

Year Online

Cap

acity

(GW

)

Waste Coal

Other

Solar

Water

Wind

Planned Renewable Generation

*

* Waste coal meets Pennsylvania renewable standardsSource: Platts NewGen, December 2006

2006 - 2015

0%

1%

2%

3%

4%

5%

2004 2006 2008 2010 2012 2014

California

New England

Mid-Atlantic

New York

Texas

Southwest

Rockies

Midwest

Northwest

Share of US power demand

Source: GE Energy Financial Services

… and developers are responding to these Standards.

12

Regional Greenhouse Gas Initiative (RGGI) for the power sector is real …

• Agreement between 10 northeast states to cap CO2emissions from power plants

• Emissions capped at 2000-2004 baseline levels in 2009

- NJ cap = 22.9 million tons

• Reduce CO2 emissions by a total of 10% during 2015 –2018

• Allowance distribution methodology, “Leakage”, and harmonizing with a national program are major concerns

• NJ RGGI legislation and regulations are planned for Nov 2007

… and on schedule to go into effect January 1, 2009.

13

A key element of any Cap and Trade approach is the allowance distribution methodology.

• Different approaches have been debated:– Grandfathered (Historical)– Updated– Input– Output– Auction

• RGGI states are going down path of 100% auction

The price of the credits, however, is independent of the allocation method and determined primarily by the level of the CO2 cap.

14

Leakage needs to be addressed …

-

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Leak

age

Emis

sion

s (to

ns o

f CO

2)

(6,000,000)

(5,000,000)

(4,000,000)

(3,000,000)

(2,000,000)

(1,000,000)

-

NJ

Emis

sion

Red

uctio

ns (t

ons

of C

O2)

Leakage - Emissions Increases at Out of State Plants Caused by RGGI

NJ Emissions Reduced Caused by RGGI

RGGI Will Result in a Net Increase in CO2 Emissions

Based on RGGI State Workgroup data, RGGI results in a net increase in emissions when comparing the RGGI Reference Case versus RGGI Package Case 10/2006 Model Runs. Leakage offsets any benefits of the RGGI program for NJ.

… or RGGI states risk increased consumer costs AND increased CO2 emissions.

15

New Jersey climate initiatives …

• Energy Master Plan – No explicit CO2 target, but:– 20% energy efficiency by 2020

– Calls for 20% renewables by 2020

• NJ Global Warming Response Act:– Stabilization of economy-wide greenhouse gas emissions at

1990 levels by 2020.

– Reduction of economy-wide greenhouse gas emissions to 80% below 2006 levels by 2050.

– Establishes emissions portfolio standard for suppliers of power into NJ

… present numerous opportunities for PSE&G and PSEG Power.

16

New Jersey emissions differ significantly from national norms…

-

50

100

150

200

250

1990 1994 1998 2002 2006 2010 2014 2018 2022 2026 2030 2034 2038 2042 2046 2050

GH

G E

mis

sion

s. M

illio

ns o

f Ton

s

Business as Usual

1990 Level

80% Below 2006 Level

46.1%

21.1%

15.1%

17.7%

Transportation

Residential

Industrial

CommercialNote: 2006 Emissions from transportation

sector, and electric power generation attributed to end user

… with a large contribution from the transportation sector.

17

PSE&G has proposed a 3-pronged approach to help meet State targets …

… with energy efficiency as the top priority.Source: Global Energy Partners, LLC

18

NJ greenhouse gas emissions and goals …

-

20

40

60

80

100

120

140

160

180

200

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

PSEG Conceptual Reductions

150

155160

165

170

175180

185

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

BAU

PSEG

13.3

PSEG Reductions

Energy Master Plan Goal

NJ Global Warming Response Act(1990 levels by

2020)

Business as Usual

New Nuclear Plant (8.2 MM tons)

Annual tons of CO2 Reductions in 2020

Energy Efficiency (4.75 MM tons)

Solar Program (0.32 MM tons)

… represent a formidable challenge to achieve in the absence of additional nuclear power.

19

Policymakers are looking to Cap and Trade for the power industry to reduce CO2 emissions.

2004 Emission Rate Ranking(24 largest Generating Companies in PJM)

0

500

1,000

1,500

2,000

2,500

Gol

dman

Sac

hs

Arc

Ligh

t

Rel

iant

Res

ourc

es

Edi

son

Inte

rnat

iona

l

NR

G

Alle

ghen

y En

ergy

Inc

Mira

nt C

orp

WPS

Res

ourc

es C

orp.

DPL

Inc

Cin

ergy

Cor

p

Buck

eye

Pow

er In

c

Pep

co H

oldi

ngs,

Inc

AE

P

AES

Cor

p

Old

Dom

inio

n E

lec.

Coo

p

Dom

inio

n

PPL

Cor

p

Con

stel

latio

n

Inte

rnat

iona

l Pap

er C

o

Cal

pine

Cor

p

FPL

Gro

up, I

nc

PSE

G

Cog

en T

echn

olog

ies

Exe

lon

Cor

pora

tion

CO

2 Em

issi

on R

ate

(lbs/

MW

h)

PSEG’s generation carbon intensity is lower than many competitors and benefits from virtually any form of carbon restrictions.

20

The potential impact of CO2 on PSEG Power…

By Fuel Type

$12.0$18.0$30.0

Dispatch curve implication @ $10/ton*

On margin (approximate)

$/MWh Impact

Coal 50% $10.0 $5.00

CTs 10% $6.0 $0.60

Gas CC 40% $4.0 $1.60

Nuclear 0% $0.0 $0.00

Total 100% $7.20

@$30

$4.0$6.0$10.0@$10

$2.0$3.0$5.0@$5

Price ($/MWh)

0.40.61.0Carbon tons/MWh

CCCTsCoal

PSEG Power Generation by Fuel

55%

27%16%

Oil 1%

Pumped Storage

1%

Nuclear

Coal

Gas

Total GWh: 53,617

… is mitigated by a low-carbon generation portfolio.* For illustration purposes – potential impact of CO2 on power prices with current dispatch – not an indication of net effect on income.

21

PSE&G – Responding to environmental challenges …

• Conservation through energy efficiency improvements and investment in hybrids, electric-drive bucket trucks and alternative fuels will cut carbon emissions by 140,000 tons over 10 years

• Proposed investing $100 million in solar initiative that would meet 30 MW (50%) of renewable requirements over 2009-2010

• Advocating for direct investment by utilities in customer efficiency programs

–Most cost effective means of meeting State goals

… and playing a key role in designing programs to meet State goals.

22

Summary

• States are not waiting for federal government to take action on climate issues

• Key policy focus on electric sector is:–Energy efficiency–Renewables–New nuclear–Carbon capture/storage

• PSEG is well positioned:–Generating fleet less carbon intensive than many competitors–Policymakers need utility patient capital for investments in energy

efficiency and renewables–With a carbon constrained future, PSEG’s Salem/Hope Creek a

good location for new nuclear in latter part of next decade

23

PSEG – Meeting commitments

• Results on track to meet earnings guidance

• Meeting commitment to system reliability with major expansion oftransmission system

• Addressing NJ’s clean energy commitments– Solar initiative– PSE&G to use more energy efficient equipment and vehicles

• Focus on core businesses– Transmission investment– Hudson environmental commitment– Electroandes sale

• Meeting our balance sheet goals– S&P outlook revised to stable; commercial paper ratings upgraded

24

Strong earnings growth in 2007 and 2008 …

196 227

347 262

446 515

120-135

340-360

840-920

(71) (66) (55)-(45)

2005 2006 2007E 2008E

$5.60 - $6.10

$3.77* $3.71**

$4.90 - $5.30

Holdings

PSE&G

Power

Parent

Operating Earnings by Subsidiary

37%

15%

≈ 0

… with reduced international risk.* 2005, as reported: Excludes ($0.14) Merger Costs, ($0.07) Cumulative Effect of an Accounting Change and ($0.85) Discontinued Operations ** 2006, as reported: Excludes ($0.03) Merger Costs, ($0.70) Loss on Sale of RGE, and ($0.05) Discontinued Operations

25

Improved earnings causes our dividend payout ratio to decline below 50% ...

$2.20$2.24

$2.28

$2.34

$2.00

$2.10

$2.20

$2.30

$2.40

$2.50

$2.60

2004 2005 2006 2007 200835

40

45

50

55

60

65

70D

ividend Payout Ratio (%

)D

ivid

end

per S

hare

Payout Ratio

?*

*Indicated annual dividend rate

… providing us the flexibility to raise our dividend above recent levels.

26

Creating shareholder value for the long-term …

0

100

200

300

400

500

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

PEG S&P Electrics

… has been and will continue to be our focus.

Tota

l Ret

urns

(%)

Total Comparative Returns (8/31/97 – 8/31/07)

Public Service Enterprise Group

APPENDIX

29

PSEG Power – Solidly positioned …

• Nuclear and fossil fleet operating at historically high levels with opportunity for incremental improvement

• Near-term growth fueled by strong markets and roll-off of below market contracts

• Long-term growth influenced by: – Tightening reserve margins– Expansion capability at existing sites – Carbon advantaged portfolio

• Debate on energy policy will influence investment– Environmental compliance driving current investment– New nuclear capacity represents a partial solution to carbon

reduction goals

… to provide strong growth for PSEG.

30

Power’s assets reflect a diverse blend of fuels and technologies …

• Low-cost portfolio

• Strong cash generator

• Regional focus with demonstrated BGS success

• Assets favorably located– Many units east of PJM constraint

– Southern NEPOOL/ Connecticut constraint

– Near customers/load centers

• Integrated generation and portfolio management optimizes asset-based revenues

… which provides for risk mitigation and strong returns.

18%47 %

8 %26 %

Fuel Diversity – 2007

CoalGas

Oil Nuclear

PumpedStorage

1%

Energy Produced - 2006

55%

27%16%

Oil 1%

Pumped Storage

1%

Nuclear

Coal

Gas

Total GWh: 53,617

Total MW: 13,600

31

Power’s assets are located in attractive markets near load centers …

Current plant locations,site expansion capability

Bethlehem Energy Center(Albany)

New Haven

BergenKearnyEssex

SewarenEdison

LindenMercer

BurlingtonNational Park

Hudson

Conemaugh

KeystoneBridgeport

Peach Bottom

Hope CreekSalem

System Interface

... which experience higher prices during periods of high demand.

32

Our environmental response…

Emissions Control Technology Projects

2007 – 2010 Total

($ million)

Completion Date

Hudson Unit 2 $700 - $750

$490

2010

Mercer 2010

Environmental Capital Requirements

Hudson Unit 2 (608 MW)- NOx control – SCR- SO2 control – Scrubber- Hg and particulate matter control -

Baghouse

Mercer (648 MW) – Units 1&2- NOx control – SCR installation complete- SO2 control – Scrubbers- Hg and particulate matter control –

Baghouse

• Power’s New Jersey coal units are mid-merit, with capacity factors averaging 50% to 60%

• As markets tighten, increased production is anticipated

… will help preserve the availability of our fossil fleet.

33

Long-term market prices …

$/mmbtu$/MWh

$2 0

$3 0

$4 0

$50

$6 0

$70

2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7Es t

2 0 0 8F w d

2 0 0 9Fw d

$0

$3

$6

$9

$12

(1) Central Appalachian coal (2) Forward prices as of August 20, 2007

PJM

Wes

tern

Hub

RTC

Electricity(left scale)

Coal(1)(right scale)

Natural Gas Henry Hub(right scale)

(2)(2) (2)

… influenced by market dynamics.

34

RPM Capacity Auction – Transparent Pricing Model• PJM released results on July 13 from its second capacity auction under the Reliability

Pricing Model (RPM) for the 2008-2009 delivery year.

2007- 2009 Capacity Auction Results

Unit Price Load Price CTR Value*

($/MW-day)2007/ 2008

2008/ 2009

2007/ 2008

2008/ 2009

2008/ 2009

$148.80 $143.51 $5.29

$210.11 $180.58 $29.53

$111.92 N/A N/A

2007/ 2008

Eastern MAAC $197.67 $177.51 $20.16

Southwest MAAC $188.54 $140.16 $48.38

Rest of Pool $40.80 N/A N/A

• Auctions scheduled in the next six months provide transition through the 2010-2011 delivery year.

• Future auction pricing to be influenced by increase in number of zones (2010 – 2011 delivery year), load growth, avoided cost for units, and capacity available (unit capability, retirements, new build).

May 20082011 – 2012

January 20082010 – 2011

Annual base auction in May of each subsequent year

October 20072009 – 2010

Auction DatePlanning Year

(6/1 to 5/31)

* CTR Value: Capacity Transfer Rights Allocated to Load Serving Entities (LSE) in constrained zones to provide them with access to supply from outside the zone

35

Capacity Position

• Only a portion of PSEG Power’s capacity was open to realize prices in the recent PJM-RPM auctions. Increasing amounts are open to realize prices in future years.

• A significant percent of Power’s capacity was contracted as part of New Jersey’s 3-year BGS* auction (Power currently serving 11 tranches from the 2005 auction, 20 tranches from 2006 and 19 tranches from 2007), as well as other contracting activity.

• The balance of Power’s PJM capacity has obtained price certainty through May 31, 2009 from the first two RPM auctions.

• All of Power’s New England capacity has obtained price certainty through May 31, 2010 as a result of the fixed price nature of the transitional FCM auction.

• Existing capacity hedges support our forecast year-over-year improvement in capacity margin for 2007 of $125 - $175 million with similar improvement in 2008.

* Delivery year runs from June 1 – May 31

36… while preserving market growth opportunities.

Power’s hedging strategy aims to balance stable earnings …

2007 2008 2009 2010

Percent of Power’s coal and nuclear energy output hedged (total portfolio)*

~100% ~100% ~50% ~10%

PJM RTC GWh

-

1,000

2,000

3,000

4,000

5,000

6,000

2 0 0 72 0 0 72 0 0 72 0 0 72 0 0 72 0 0 72 0 0 72 0 0 72 0 0 72 0 0 72 0 0 72 0 0 72 0 0 82 0 0 82 0 0 82 0 0 82 0 0 82 0 0 82 0 0 82 0 0 82 0 0 82 0 0 82 0 0 82 0 0 82 0 0 92 0 0 92 0 0 92 0 0 92 0 0 92 0 0 92 0 0 92 0 0 92 0 0 92 0 0 92 0 0 92 0 0 92 0 102 0 102 0 102 0 102 0 102 0 102 0 102 0 102 0 102 0 102 0 102 0 10

GW

h

Nuclear / Pumped Storage Coal CCSteam / CT Existing Load + Hedges + Future BGS Existing Load + HedgesExisting Hedges

2007 2008 2009 2010

*As of August 2007

37

Power’s hedging of coal and nuclear fuel …

-

10,000

20,000

30,000

40,000

50,000

2007 2008 2009 2010

Year

MW

hr (0

00's

)

Nuclear and Coal output Contracted sales

Power has contracted for 100% of its nuclear uranium fuel through 2011 and approximately 90% of its coal needs through 2009.

Coal and Nuclear Fuel

Gas supply secured based on sales of output

Coal and Nuclear Output

-

10,000

20,000

30,000

40,000

50,000

2007 2008 2009 2010Year

MW

hr e

quiv

alen

t (00

0's)

Coal Uranium Contracted sales

… is aligned with its low-cost generating output and our hedging strategies.

38

Power’s fleet diversity and location ...

Market Perspective – BGS Auction Results

2003 Auction 2004 Auction 2005 Auction 2006 Auction 2007 Auction

• Capacity• Load shape• Transmission• Congestion• Ancillary services• Risk premium

Full Requirements

Round the Clock PJM West

Forward Energy Price

$33 - $34 $36 - $37

$55 $55$66

$44 - $46

~ $21 ~ $18~ $21

$102

$67 - $70

~ $32

Increase in Full Requirements Component Due to:

Increased Congestion (East/West Basis)

Increase in Capacity Markets/RPM

Volatility in Market Increases Risk Premium

$99

~ $41

$58-$60

… has enabled successful participation in each BGS auction.

39

Operational improvements and recontracting in current markets …

$0

$10

$20

$30

$40

$50

$60

$70

2005 2006 2007 Est 2008 Est 2009 Est

… are expected to drive significant increases in Power’s gross margin.

Realized Gross Margin ($/MWh)

Energy Capacity

*Presented at March 26, 2007Financial Conference

40

PSE&G – A consistent, strong performer …

• Regulatory agreements provide opportunity to earn reasonable returns over 2007-2009

• Investment in transmission fuels long-term growth– Energy Master Plan (EMP) initiatives provide a secondary

source of growth

• Continued top quartile/top decile performance– National ReliabilityOne Award winner – two years running– American Customer Satisfaction Index (ACSI) Customer

Satisfaction Survey

… providing financial stability and multiple platforms for growth.

41

PSE&G’s base investment plan …

• Regulated electric transmission, electric and gas distribution system• Characteristics

• FERC regulation for electric transmission; NJ BPU regulation for electric and gas distribution

• Electric and Gas distribution rates frozen through November 2009

PSE&G Rate Base

Gas Distribution

31%Electric

Transmission22%

Electric Distribution

47%

Gas Distribution

34%

Electric Transmission

12%

Electric Distribution

54%

2006 Actual Rate Base = $6.5 B

2011 Base PlanRate Base = $8.7 B

Equity Ratio ~ 48%

… coupled with fair regulatory treatment provides a solid base for future earnings growth.

42

PSEG Energy Holdings - Reducing risk …

• Diverse asset base with improved stability and growing markets– Latin American distribution assets in stable economies– Gas-fired combined cycle generation in Texas

• A source of capital– Asset sales have reduced risk and contributed to an improved

balance sheet at PSEG– Agreement reached to sell Electroandes– Exploring potential sale of Chilquinta and Luz del Sur

• A source of growth– Texas generating assets benefit from location, low cost structure

and opportunity for expansion– Returned $150M from SAESA financing

… with redeployment of capital.

43

Improved risk profile by reducing capital invested in non-strategic assets …

$41

$175$104

$129

$50

$13

$(40) $(35) $(22)

… while increasing returns and sharpening focus on G&A.2004 2006

$2.6B

$2.0B

Chile & Peru

US

Other $900M

$400M

$1.3B

$150M

$500M

$1.4B

35%

15%

50%

7%

68%

25%

$317M**

63%

39%

2004 2006 2007Projected

$195M** $180M-$200M**

Composition of Global’s Pre-tax Contribution by Region*

G&A

Chile & Peru

US

Other 26%

53%

21%

4%

41%

55%

Global’s Invested Capital

$500M

$1.3 B

12/31/07 Projected

$1.6B

63%

30%

*Includes both consolidated and unconsolidated investments after project debt, before allocation of parent debt**Excludes interest, taxes, G&A and other corporate items to arrive at Global’s Operating Earnings, includes Electroandes

06/30/07

$1.9B

$1B

$500M

67%

26%

$150M 7%

$100M 7%

-2%

Strong operations and markets …

44

$ 382

(32)

95

208

$ 111

2006

$ 627

(33)

61

406

$ 193

2007

Operating Earnings Per Share$ Millions (except EPS)

(0.12)(0.13)Enterprise

$ 1.52$ 2.47PSEG

0.380.24PSEG Energy Holdings

0.821.60PSEG Power

$ 0.44$ 0.76PSE&G

20062007

$ 382

(32)

95

208

$ 111

2006

$ 627

(33)

61

406

$ 193

2007

Operating Earnings Per Share$ Millions (except EPS)

(0.12)(0.13)Enterprise

$ 1.52$ 2.47PSEG

0.380.24PSEG Energy Holdings

0.821.60PSEG Power

$ 0.44$ 0.76PSE&G

20062007

Six months ended June 30,

… supported first-half EPS growth of 63%.* See page 51 for Items excluded from Net Income to reconcile to Operating Earnings

45

The capital program has been expanded …

2007 2008 2009 2010 2011 TOTALCapital Spending Update ($ Millions)

$9711763123

TOTAL $1,343 $1,681 $1,408 $1,414 $1,201 $7,047Change from 2006 10-K

PSE&G $11 $175 $134 $359 $396 $1,075PSEG Power* 71 190 64 (86) (22) 217

PSEG Energy Holdings 1 - - - - 1Parent (1) 3 (1) - 1 2TOTAL $82 $368 $197 $273 $375 $1,295

PSE&G $616 $803 $765 $919 $4,074PSEG Power* 655 816 580 441 2,668

PSEG Energy Holdings 38 31 40 30 170Parent 34 31 23 24 135

… to support reliability, environmental commitments and growth.* Figures for PSEG Power exclude Nuclear Fuel

46

Liquidity is available with favorable terms and conditions …

Company FacilityExpiration

DateTotal

Facility

Available Liquidity 6/30/07

PSEG 5-year Credit Facility Dec-11 1,000$ 949$

PSE&G 5-year Credit Facility Jun-11 600 330

Energy Holdings 5-year Credit Facility Jun-10 150 135

Power 5-year Credit Facility Dec-11 1,600 1,402 Bilateral Credit Facility Mar-10 100 46 Bilateral Credit Facility Mar-08 200 200

Total 3,650$ 3,062$

($ Millions)

… thereby supporting our credit profile.

47

Our forecasted cash flows remain intact…

• We remain comfortable with a forecast improvement in cash

- Operating income in line with expectations- Electroandes sale to close in October- Planned rate mechanisms for transmission investments would provide cash recovery during construction

• Excess cash between $1.5 billion and $2.0 billion should be available through 2011

… with excess cash expected to be used to retire debt through first half of 2008, thereafter for incremental growth and/or share repurchase.

48

Right set of assets…• Large, diverse mix of low-cost, base-load, load-following generating assets• Reliable electric and gas distribution and transmission systems • Stable portfolio of investments in domestic generation, international distribution and leases

Right markets…• Generation assets operate in tightly constrained and growing markets• Nuclear and coal base-load capacity operate in markets where the price for power is set by

gas• Transmission and distribution assets provide service in a modest growth market with

reasonable regulation

At the right time…• Mid-Atlantic, New England and Texas recognizing the value of capacity in constrained areas• A move to control carbon benefits our nuclear-based fleet• Power has opportunity for brownfield development at existing sites• Values are improving for international assets• T&D set to benefit from capital investment for new infrastructure

PSEG – Excellent position for today …

… ready for tomorrow

49

• Meeting commitments– Earnings on track to meet guidance– System reliability enhanced with expansion of transmission system

• Turning challenges into opportunities– Addressing NJ’s Clean Energy goals

• Solar initiative• PSE&G to use more energy efficient equipment and vehicles• NJ support for emissions portfolio standard

• Building foundation for growth– Monetizing non-core assets– Meeting targets for debt reduction– Capital program expanded

Public Service Enterprise Group dedicated to …

… operational excellence, financial strength and disciplined investment.

Why invest in PSEG?

50

• Growing and visible stream of earnings –Hedging and RPM–Regulated utility operations

• Strong balance sheet

• Cash available for growth

• Competitive dividend yield

• Opportunities to invest in markets we know

… And, we still sell at a discount!

Earnings Per Share* P/E

2007E

16.4

16.8

2007E 2008E 2008E Yield %

PSEG $5.10 $5.85 14.3 2.8%

Merrill Lynch Index**

$3.03 $3.40 14.9 3.1%

*Mid-point of guidance range Priced as of August 27, 2007 **Merrill Lynch Index of Less-Regulated Utilities

51

New Officers

Izzo – PSEG -Chairman,

President & CEO

Levis – PSEG Power -President, CNO, COO

LaRossa – PSE&G – President & COO

O’Flynn – PSEG - EVP/ CFO, PSEG Holdings -

PresidentSimpson – PSEG Svcs

- President & COOSelover – PSEG

Svcs - EVP & Gen Counsel

Paszynsky

Pego

Hallerdin

Quinn

McLaughlin

Svenson

Frank – VP Supply Chain

Chouthai

Falck – SVP Law

McAuliffe

Leyden

Bonnifield

Black

Linde

Smith

Hoskins – VP –Fed Affairs &Policy

Thigpen – VP –State Gov Affairs

Byrd – SVP Finance, Business Development

& Strategy / M&A

Kahrer

Jennings

Seabrook

VP – M&A

Cregg

Moran

MacDonald

Plawner

Lally – VP –Investor Relations

McGrath

DiRisio

Krueger

Metzger

Brooks

Joyce – SVP Operations –

Salem/Hope Creek

Barnes – Site VP –Hope Creek

Fricker – VP –Operations Support

Braun – Site VP -Salem

Quinn

Wohlfarth

DePillo

Lopriore – President – PSEG Fossil

VP Fossil Ops

Ameo

Pastor

Latka

Dickens

Cardenas

Forline

Lark

Sundheim

Garcez

MatosNew OfficersKEY:

52

Items excluded from Net Income to reconcile to Operating Earnings

$ Millions (except EPS)2007 2006 2007 2006 2007 2006 2007 2006

Merger related Costs: PSE&G -$ (1)$ -$ (1)$ Power - (1) - (2) Enterprise - (1) - (5) Total Merger Related Costs -$ (3)$ -$ (8)$ -$ (0.01)$ -$ (0.03)$

Loss on sale of RGE (Holdings) -$ (177)$ -$ (177)$ -$ (0.70)$ -$ (0.70)$

Discontinued Operations: Power - Lawrenceburg (3)$ (8)$ (9)$ (17)$ (0.02)$ (0.03)$ (0.04)$ (0.07)$

Holdings: Elcho and Skawina -$ 223$ -$ 227$ Electroandes (15) 2 (14) 5 Total Holdings (15)$ 225$ (14)$ 232$ (0.05)$ 0.89$ (0.05)$ 0.92$

Total Discontinued Operations (18)$ 217$ (23)$ 215$ (0.07)$ 0.86$ (0.09)$ 0.85$

Quarter Ended June 30, Six Months Ended June 30,Impact to PSEG EPS

Quarter Ended June 30, Six Months Ended June 30,

Please see Slide 2 for an explanation of PSEG’s use of Operating Earnings as a non-GAAP financial measure and howit differs from Net Income.