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Public Service Enterprise Group

        Bank of America
       Investor Meetings
        June 24-26, 2008
Forward-Looking Statement

    Readers are cautioned that statements contained in this presentation about our and our subsidiaries' future performance, including future
    revenues, earnings, strategies, prospects and all other statements that are not purely historical, are forward-looking statements for purposes of
    the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Although we believe that our expectations are based on
    reasonable assumptions, we can give no assurance they will be achieved. The results or events predicted in these statements may differ
    materially from actual results or events. Factors which could cause results or events to differ from current expectations include, but are not
    limited to:

•   Adverse Changes in energy industry, policies and regulation, including market rules that may adversely affect our operating results.
•   Any inability of our energy transmission and distribution businesses to obtain adequate and timely rate relief and/or regulatory approvals from
    federal and/or state regulators.
•   Changes in federal and/or state environmental regulations that could increase our costs or limit operations of our generating units.
•   Changes in nuclear regulation and/or developments in the nuclear power industry generally, that could limit operations of our nuclear
    generating units.
•   Actions or activities at one of our nuclear units that might adversely affect our ability to continue to operate that unit or other units at the same
    site.
•   Any inability to balance our energy obligations, available supply and trading risks.
•   Any deterioration in our credit quality.
•   Any inability to realize anticipated tax benefits or retain tax credits.
•   Increases in the cost of or interruption in the supply of fuel and other commodities necessary to the operation of our generating units.
•   Delays or cost escalations in our construction and development activities.
•   Adverse capital market performance of our decommissioning and defined benefit plan trust funds.
•   Changes in technology and/or increased customer conservation.

    For further information, please refer to our Annual Report on Form 10-K, including Item 1A. Risk Factors, and subsequent reports on Form 10-
    Q and Form 8-K filed with the Securities and Exchange Commission. These documents address in further detail our business, industry issues
    and other factors that could cause actual results to differ materially from those indicated in this presentation. In addition, any forward-looking
    statements included herein represent our estimates only as of today and should not be relied upon as representing our estimates as of any
    subsequent date. While we may elect to update forward-looking statements from time to time, we specifically disclaim any obligation to do so,
    even if our estimates change, unless otherwise required by applicable securities laws.




                                                                                                                                                            2
GAAP Disclaimer

 PSEG presents Operating Earnings in addition to its Net Income reported
 in accordance with accounting principles generally accepted in the United
 States (GAAP). Operating Earnings is a non-GAAP financial measure that
 differs from Net Income because it excludes the impact of the sale of
 certain non-core domestic and international assets and costs stemming
 from the terminated merger agreement with Exelon Corporation. PSEG
 presents Operating Earnings because management believes that it is
 appropriate for investors to consider results excluding these items in
 addition to the results reported in accordance with GAAP. PSEG believes
 that the non-GAAP financial measure of Operating Earnings provides a
 consistent and comparable measure of performance of its businesses to
 help shareholders understand performance trends. This information is
 not intended to be viewed as an alternative to GAAP information. The last
 slide in this presentation includes a list of items excluded from Net Income
 to reconcile to Operating Earnings, with a reference to that slide included
 on each of the slides where the non-GAAP information appears. These
 slides are intended to be reviewed in conjunction with the oral
 presentation to which they relate.

                                                                                3
PSEG Overview
Tom O’Flynn
Executive Vice President and Chief Financial Officer - PSEG
President and Chief Operating Officer – PSEG Energy Holdings
Our platform …




                                                                                       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
* 2007 capacity
** See page 65 for Items excluded from Net Income to reconcile to Operating Earnings
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
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
We are continuing to improve operational practices and participate
in market design discussions …
                                   Fossil fleet adopted operating model based on
         Operational               Nuclear’s success
         Excellence                Goal is to maintain (at a minimum) operating
                                   capability of nuclear fleet at 90% capacity factor
                                   PSE&G pursuing investments 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
                                   SAESA – Sale announced for $870 million equity value

                                   Bid for new peaking capacity not accepted
         Growth with               Successful RFP in CT
       Manageable Risk
                                   Awaiting RTEP decision on additional transmission
                                   PSE&G pursuing pilot programs to prove capabilities in
                                   deploying energy efficiency investments
                                   Hope Creek uprate and Salem steam generator adding
                                   140MW
 … to support long-term growth and reliability.                                         8
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
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.
                                                                                                               10
* As per 2006 10-K
** As per 2007 10-K; also includes plans for PSEG Energy Holdings
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.
                                                                                              11
CO2 Emissions (lbs/MWh)




                                                                                                                                                                    0
                                                                                                                                                                        500
                                                                                                                                                                                   1,000
                                                                                                                                                                                           1,500
                                                                                                                                                                                                   2,000
                                                                                                                                                                                                           2,500
                                                                                                                                                                                                                                        3,000
                                                                                                                                         Big Rivers Electric Corp
                                                                                                                                                    NiSource Inc
                                                                                                                                             Vectren Corporation
                                                                                                                                                         Ameren
                                                                                                                                             Edison International




* Source: Energy Information Administration (2006)
                                                                                                                                                       E.ON U.S.
                                                                                                                                                      Dynegy Inc
                                                                                                                                                 Hoosier Energy
                                                                                                                                      East Kentucky Power Coop
                                                                                                                                                          Reliant
                                                                                                                                                       AES Corp
                                                                                                                                            Allegheny Energy Inc
                                                                                                                                                         DPL Inc
                                                                                                                                                     Mirant Corp
                                                                                                                                              Buckeye Power Inc
                                                                                                                                      Tennessee Valley Authority
                                                                                                                                   American Electric Power (AEP)
                                                                                                                                                    CMS Energy
                                                                                                                                                     DTE Energy
                                                                                                                                                                                                                   (Companies in PJM States)




                                                                                                                                                    Duke Energy
                                                                                                                                      Old Dominion Electric Coop
                                                                                                                                                                                                                                                                                 Power’s fleet has a low carbon profile …




                                                                                                                                                     FirstEnergy
                                                                                                                                                                                                                                               2006 CO2 Emissions Rate Ranking




                                                                                                                                                Progress Energy
                                                                                                                                                       Dominion
                                                                                                                                                             PPL
                                                                                                                                  Constellation Energy Group, Inc
                                                                                                                                        U S Bank National Assoc
                                                                                                                                 Cogen Technologies Linden Vent
                                                                                                                                                           PSEG
                                                                                                                                              Exelon Corporation
                                                     … which is well positioned for virtually any form of carbon restrictions.
                12
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.                                                                        13
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.
                                                                                                                                              14
* Open EBITDA reflects unhedged results of Power at market prices shown above
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.
                                                                                                                                          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
                                                                                        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
                                                                                 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.
                                                                                                                                            18
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.
                                                                                                                                            19
* See page 65 for Items excluded from Net Income to reconcile to Operating Earnings
Leveraged leases under challenge by IRS

• PSEG’s Energy Holdings’ Resources Subsidiary has $1.5 billion
  invested in LILO / SILO type lease transactions
• Have been in discussions with the Office of Appeals of the IRS
• Recorded $904 million in deferred taxes through March 31, 2008 related
  to these transactions. Under a total loss scenario, after tax interest of
  $195 million would become due
• In 2008, may decide to litigate. It is also possible that we may re-
  measure our reserve levels for these transactions in the near-term and
  record a material charge to earnings




… LILO / SILO potential tax liability manageable within key credit
metrics.                                                                      20
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


                                                                                        Dividends to
                                       $0.9                                                Parent

                                              Asset
                                              Sales
                          $ Billions




                                       $0.6
                                                                                       Investments*

                                              Cash from
                                                Ops
                                       $0.3



                                       $0.0
                                                          Sources            Uses



           Flexibility exists to finance potential Resources’ tax liability.
                                                                                                       21
* Investments exclude Intercompany loans.
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.
                                                                                                                              22
* Forecast includes some use of cash to meet potential IRS tax liability.
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.                                                                23
* See page 65 for Items excluded from Net Income to reconcile to Operating Earnings
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%.                                                                                                                       24
* See page 65 for Items excluded from Net Income to reconcile to Operating Earnings
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%.                                                                   25
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.                                                                                26
* Indicated annual dividend rate
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 6/12/08 (per share)                                                    $46.14
               Less Indicative Value of PSE&G, Energy Holdings                                          $11.75 - $13.00
               Implied PSEG Power Value (per share)                                                     $33.14 - $34.39

               Implied Power Enterprise Value                                                           $19.8B - $20.4B

               Implied EV as a Multiple of:
                 2008 EBITDA                                                                            9.2x – 9.9x
                 Open EBITDA                                                                            7.1x – 7.8x
                    Plus $10 Carbon                                                                     6.6x – 7.3x
                   Plus $20 Carbon                                                                      6.2x – 6.8x


     (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.                                                                                                             27
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%
                                                                     28
APPENDIX
PSEG Power
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.                                                                                                           31
Our five unit nuclear fleet …


             Hope Creek
• Operated by PSEG Nuclear
                                                    Salem Units 1 and 2
• PSEG Ownership: 100%
                                                • Operated by PSEG Nuclear
• Technology:
                                                • Ownership: PSEG - 57%,
    Boiling Water Reactor
                                                    Exelon – 43%                           Peach Bottom Units 2 and 3
• Total Capacity: 1,061MW
                                                • Technology:
                                                                                             • Operated by Exelon
                                                    Pressurized Water Reactor
• Owned Capacity: 1,061MW*
                                                • Total Capacity: 2,304MW                    • PSEG Ownership: 50%
• License Expiration: 2026
                                                • Owned Capacity: 1,323MW*
*125MW uprate available for 2008 summer run
                                                                                             • Technology:
                                                                                                 Boiling Water Reactor
                                                • License Expiration: 2016 and
                                                  2020
                                                                                             • Total Capacity: 2,224MW

                                                                                             • Owned Capacity: 1,112MW
                                              *15MW uprate available for 2008 summer run
                                                                                             • License Expiration: 2033
                                                                                               and 2034
      … is a critical element of Power’s success.
                                                                                                                          32
We have completed 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
                                     • 15 MW uprate (PS share)
  2008
                                       available for 2008 summer
• 125 MW uprate available for          run
  2008 summer run



          INPO Assessments
            Hope Creek          Salem           Corporate


  … that will drive value for years to come.
                                                                       33
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.
                                                                                         34
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.
                                                                                                       35
* 2007 capacity
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.
                                                                                    36
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.


                                                                                                                      37
* Forecast capital spending associated with new peaking could be lower than amount indicated.
Power market dynamics …


                            On-Peak Versus Gas                                  Off-Peak Versus Coal
        $/MWh                                            $/MB           $/MWh                                           $/MB
                                                                                                                               $8
                                                                      $80
 $100                                                           $20

    $80
                                                                $15                                                            $6
                                                                      $60
    $60
                                                                $10                                                            $4
                                                                      $40
    $40
                                                                $5                                                             $2
                                                                      $20
    $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.
                                                                                                                                   38
* Forward prices as of 6/2/08
Rising coal and natural gas prices have driven LMPs ...
                          Central Appalachian Coal ($/Ton)                                                       Natural Gas Henry Hub ($/MMbtu)
   $110                                                                                               $11.0

   $100                                                                                               $10.5

                                                                                                      $10.0
    $90

                                                                                                       $9.5
    $80
                                                                                                       $9.0
    $70
                                                                                                       $8.5
    $60
                                                                                                       $8.0
    $50
                                                                                                       $7.5

    $40                                                                                                $7.0
                                                                 07
                                                   07
          07




                                         7




                                                                             08
                   7



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                                                                                             M
                                              2009        2010        2011
                                                                                                                          2009   2010   2011


                Electric PJM Western Hub RTC Price ($/MWh)                                                    On Peak Heat Rate Expansion (MMbtu/MWh)
    $85                                                                                               10.5


    $80
                                                                                                      10.0
    $75


    $70                                                                                                9.5


    $65
                                                                                                       9.0

    $60


    $55                                                                                                8.5
                                                                 07
                                                     07
          07




                                          7




                                                                              08
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                                                                                                                         2009    2010   2011
                                              2009        2010        2011


            … and this trend may continue.
                                                                                                                                                        39
* Forward prices as of 6/2/08
The implementation of carbon legislation will address
       the critical issue of global warming …

                                         By Fuel Type
                                              Coal               CTs                 CC
         Carbon tons/MWh                        1.0               0.6                0.4
                                                                                                                   PSEG Power Generation by Fuel
         Price ($/MWh)
                                                                                                                                 2007 Total GWh: 53,200*
                 @$10/ton                     $10.0              $6.0               $4.0
                                                                                                                                              Nuclear
                 @$20/ton                     $20.0             $12.0               $8.0

                 @$30/ton                     $30.0             $18.0              $12.0
                                                                                                                                                  54%

                                                                                                                                                                       Pumped
                    Dispatch curve implication @ $20/ton**
                                                                                                                                                                       Storage
                                   On margin                 $/MWh              Impact                                                                                   1%
                                                                                                                                                        19%
                                                                                                                                            25%
                                    (Illustrative)                             ($/MWh)
                                                                                                                                                                 Gas
               Coal                                                                                                      Coal
                                         50%                  $20.0               $10.0

               CTs                       10%                  $12.0                $1.2
                                                                                                                                                              Oil 1%
            Gas CC                       40%                   $8.0                $3.2
            Nuclear                       0%                   $0.0                $0.0

              Total                     100%                                      $14.4



        … and will put additional upward pressure on energy prices.
 * Excludes 2,000MW of combined cycle generation in Texas under PSEG Power’s operating control.
                                                                                                                                                                            40
** For illustration purposes – potential impact of CO2 on power prices with current dispatch – not an indication of net effect on income.
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.
                                                                                                                        41
* 2007 capacity
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.
                                                                                                            42
* BGS prices reflect PSE&G Zone
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
                                                                                                                                                                of 2011, by virtue
                                                                           % sold
                                                                            (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.                                                                                                                 43
* As of February 2008; Assuming normal market commodity correlations
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.
                                                                              44
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.
                                                                                                  45
The Regional Greenhouse Gas Initiative (RGGI) …

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


    … is a potential influence on market prices.
                                                                                                      46
The RGGI cap shows headroom …

• Affected Sources
  – Fossil fired electric generating units                                                           CO2 Emissions vs. RGGI Cap
    with a capacity of 25 megawatts                                                                    (Actuals through 2007)
    (MW) and larger
                                                                            200
                                                                                                                   RGGI Cap
                                                                                       Actual &
• Targets and Timing                                                                 Forecast CO2
                                                                            190

  – Three-year compliance periods


                                             CO2 (millions of short tons)
                                                                            180
    with the first running from 2009-
    2011                                                                    170

  – Stabilization of CO2 emissions at                                       160
    recent levels through 2015 (~188
    million tons per year)                                                  150

  – Achieve a 10% reduction of CO2                                                       Actual                                  Projected
                                                                            140
    emissions below recent levels by
    2019                                                                    130
                                                                              2000   2002     2004   2006   2008    2010      2012   2014    2016   2018
  – This translates into ~13% reduction
    below 1990 levels or ~35%
    reduction from BAU levels by 2020




… when viewed in comparison to historical emissions.                                                                                                       47
RGGI’s CO2 pricing projections …


                     $10


                     $8
  $/Ton (Nom inal)




                     $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.
                                                                                                          48
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.
                                                                                                                    49
* As of February 2008
PSE&G
PSE&G’s base investment plan …

 • Regulated electric transmission, electric and gas distribution system
 • Characteristics
    • FERC regulation for electric transmission (formula rates)
    • NJ BPU regulation for electric and gas distribution
         • Managing recovery lag on electric and gas distribution investments

                                     PSE&G Rate Base
                                                                         2012 Base Plan
                       2007 Actual
                                                                       Rate Base = $10.2 B
                    Rate Base = $6.4 B                                                           Gas
                                                                                             Distribution
                                             Gas                                                 30%
        Electric
                                         Distribution
     Transmission                                          Electric
                                             35%
          13%
                                                        Transmission
                                                             22%


       Electric
     Distribution
         52%
                                                                 Electric
                                                               Distribution
          Equity Ratio ~ 48%                                       48%


… coupled with fair regulatory treatment provides a solid foundation for
projected future earnings growth from 2008 – 2012 of 7 - 8%.
                                                                                                            51
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.
                                                                                                                                                                     52
Sources: Imports: PSE&G Estimates; Exports: PJM 2008 Regional Transmission Expansion Plan; and Load Growth: PJM 2008 Load Forecast Report
public serviceenterprise group Bank of America
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public serviceenterprise group Bank of America
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public serviceenterprise group Bank of America

  • 1. Public Service Enterprise Group Bank of America Investor Meetings June 24-26, 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 * 2007 capacity ** See page 65 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 … Fossil fleet adopted operating model based on Operational Nuclear’s success Excellence Goal is to maintain (at a minimum) operating capability of nuclear fleet at 90% capacity factor PSE&G pursuing investments 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 SAESA – Sale announced for $870 million equity value Bid for new peaking capacity not accepted Growth with Successful RFP in CT Manageable Risk Awaiting RTEP decision on additional transmission PSE&G pursuing pilot programs to prove capabilities in deploying energy efficiency investments 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. 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. 10 * As per 2006 10-K ** As per 2007 10-K; also includes plans for PSEG Energy Holdings
  • 11. 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. 11
  • 12. CO2 Emissions (lbs/MWh) 0 500 1,000 1,500 2,000 2,500 3,000 Big Rivers Electric Corp NiSource Inc Vectren Corporation Ameren Edison International * Source: Energy Information Administration (2006) E.ON U.S. Dynegy Inc Hoosier Energy East Kentucky Power Coop Reliant AES Corp Allegheny Energy Inc DPL Inc Mirant Corp Buckeye Power Inc Tennessee Valley Authority American Electric Power (AEP) CMS Energy DTE Energy (Companies in PJM States) Duke Energy Old Dominion Electric Coop Power’s fleet has a low carbon profile … FirstEnergy 2006 CO2 Emissions Rate Ranking Progress Energy Dominion PPL Constellation Energy Group, Inc U S Bank National Assoc Cogen Technologies Linden Vent PSEG Exelon Corporation … which is well positioned for virtually any form of carbon restrictions. 12
  • 13. 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. 13
  • 14. 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. 14 * Open EBITDA reflects unhedged results of Power at market prices shown above
  • 15. 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. 15
  • 16. 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 16
  • 17. 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 17
  • 18. 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. 18
  • 19. 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. 19 * See page 65 for Items excluded from Net Income to reconcile to Operating Earnings
  • 20. Leveraged leases under challenge by IRS • PSEG’s Energy Holdings’ Resources Subsidiary has $1.5 billion invested in LILO / SILO type lease transactions • Have been in discussions with the Office of Appeals of the IRS • Recorded $904 million in deferred taxes through March 31, 2008 related to these transactions. Under a total loss scenario, after tax interest of $195 million would become due • In 2008, may decide to litigate. It is also possible that we may re- measure our reserve levels for these transactions in the near-term and record a material charge to earnings … LILO / SILO potential tax liability manageable within key credit metrics. 20
  • 21. 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 Dividends to $0.9 Parent Asset Sales $ Billions $0.6 Investments* Cash from Ops $0.3 $0.0 Sources Uses Flexibility exists to finance potential Resources’ tax liability. 21 * Investments exclude Intercompany loans.
  • 22. 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. 22 * Forecast includes some use of cash to meet potential IRS tax liability.
  • 23. 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. 23 * See page 65 for Items excluded from Net Income to reconcile to Operating Earnings
  • 24. 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%. 24 * See page 65 for Items excluded from Net Income to reconcile to Operating Earnings
  • 25. 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%. 25
  • 26. 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. 26 * Indicated annual dividend rate
  • 27. 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 6/12/08 (per share) $46.14 Less Indicative Value of PSE&G, Energy Holdings $11.75 - $13.00 Implied PSEG Power Value (per share) $33.14 - $34.39 Implied Power Enterprise Value $19.8B - $20.4B Implied EV as a Multiple of: 2008 EBITDA 9.2x – 9.9x Open EBITDA 7.1x – 7.8x Plus $10 Carbon 6.6x – 7.3x Plus $20 Carbon 6.2x – 6.8x (1) Excludes incremental value of Texas generating assets (2,000 MW of combined cycle capacity) and potential tax liability at Resources … implies a low valuation for PSEG Power. 27
  • 28. Fitting the pieces together - PSEG value proposition PSEG well-positioned in current business environment Process improvement programs support efforts to: - maintain reliability - control costs - provide value to the customer Asset mix provides opportunities in attractive markets Strengthened balance sheet supports capital investment Return of cash to shareholders through dividends provides discipline to investment process Earnings growth and yield offer opportunity for double digit shareholder returns of 10 – 13% 28
  • 31. Power’s assets along the dispatch curve … Nuclear National Park Coal Sewaren 6 Dispatch Cost ($/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. 31
  • 32. Our five unit nuclear fleet … Hope Creek • Operated by PSEG Nuclear Salem Units 1 and 2 • PSEG Ownership: 100% • Operated by PSEG Nuclear • Technology: • Ownership: PSEG - 57%, Boiling Water Reactor Exelon – 43% Peach Bottom Units 2 and 3 • Total Capacity: 1,061MW • Technology: • Operated by Exelon Pressurized Water Reactor • Owned Capacity: 1,061MW* • Total Capacity: 2,304MW • PSEG Ownership: 50% • License Expiration: 2026 • Owned Capacity: 1,323MW* *125MW uprate available for 2008 summer run • Technology: Boiling Water Reactor • License Expiration: 2016 and 2020 • Total Capacity: 2,224MW • Owned Capacity: 1,112MW *15MW uprate available for 2008 summer run • License Expiration: 2033 and 2034 … is a critical element of Power’s success. 32
  • 33. We have completed 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 • 15 MW uprate (PS share) 2008 available for 2008 summer • 125 MW uprate available for run 2008 summer run INPO Assessments Hope Creek Salem Corporate … that will drive value for years to come. 33
  • 34. 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. 34
  • 35. 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. 35 * 2007 capacity
  • 36. 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. 36
  • 37. 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. 37 * Forecast capital spending associated with new peaking could be lower than amount indicated.
  • 38. Power market dynamics … On-Peak Versus Gas Off-Peak Versus Coal $/MWh $/MB $/MWh $/MB $8 $80 $100 $20 $80 $15 $6 $60 $60 $10 $4 $40 $40 $5 $2 $20 $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 $/MB … have led to stronger electricity prices both on-peak and off-peak. 38 * Forward prices as of 6/2/08
  • 39. Rising coal and natural gas prices have driven LMPs ... Central Appalachian Coal ($/Ton) Natural Gas Henry Hub ($/MMbtu) $110 $11.0 $100 $10.5 $10.0 $90 $9.5 $80 $9.0 $70 $8.5 $60 $8.0 $50 $7.5 $40 $7.0 07 07 07 7 08 7 7 8 8 l- 0 -0 -0 -0 -0 v- p- n- n- ar ay ar ay Ju No Se Ja Ja M M M M 2009 2010 2011 2009 2010 2011 Electric PJM Western Hub RTC Price ($/MWh) On Peak Heat Rate Expansion (MMbtu/MWh) $85 10.5 $80 10.0 $75 $70 9.5 $65 9.0 $60 $55 8.5 07 07 07 7 08 7 07 8 08 l- 0 -0 -0 - p- n- n- - - ov ar ay ar ay Ju Se Ja Ja M M N M M 2009 2010 2011 2009 2010 2011 … and this trend may continue. 39 * Forward prices as of 6/2/08
  • 40. The implementation of carbon legislation will address the critical issue of global warming … By Fuel Type Coal CTs CC Carbon tons/MWh 1.0 0.6 0.4 PSEG Power Generation by Fuel Price ($/MWh) 2007 Total GWh: 53,200* @$10/ton $10.0 $6.0 $4.0 Nuclear @$20/ton $20.0 $12.0 $8.0 @$30/ton $30.0 $18.0 $12.0 54% Pumped Dispatch curve implication @ $20/ton** Storage On margin $/MWh Impact 1% 19% 25% (Illustrative) ($/MWh) Gas Coal Coal 50% $20.0 $10.0 CTs 10% $12.0 $1.2 Oil 1% Gas CC 40% $8.0 $3.2 Nuclear 0% $0.0 $0.0 Total 100% $14.4 … and will put additional upward pressure on energy prices. * Excludes 2,000MW of combined cycle generation in Texas under PSEG Power’s operating control. 40 ** For illustration purposes – potential impact of CO2 on power prices with current dispatch – not an indication of net effect on income.
  • 41. Through the new capacity constructs, and repricing at market prices … Power’s capacity is located in three Northeast markets. NE NY Total Capacity 13,300MW* (~ 1,000 - 1,500 MW under RMR) PJM The RPM Auction to date has provided strong price signals in PJM. Delivery Year ($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. 41 * 2007 capacity
  • 42. 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. 42 * BGS prices reflect PSE&G Zone
  • 43. 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 of 2011, by virtue % sold (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. 43 * As of February 2008; Assuming normal market commodity correlations
  • 44. 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. 44
  • 45. 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. 45
  • 46. The Regional Greenhouse Gas Initiative (RGGI) … • Cooperative effort by Northeast states to design a regional cap-and-trade program to reduce carbon dioxide (CO2) emissions RGGI – Full participants – CT, MA, MD, ME, NH, VT, NY, States NJ, RI, and DE ME – Observers – PA, DC, and Eastern Canadian Provinces and New Brunswick VT NH • Timeline NY – April 2003 process proposed by Governor Pataki MA – 2003 – 2006 – Stakeholder process CT PA RI – December 20, 2005 Final 7 state MOU NJ – March 23, 2006 – Draft Model Rule MD – August 15, 2006 – Final Model Rule & amended Participating States MOU DE – 2007-2008 – State level adoption Observer States – First RGGI allowance auction September 2008 – January 1, 2009 – Implementation … is a potential influence on market prices. 46
  • 47. The RGGI cap shows headroom … • Affected Sources – Fossil fired electric generating units CO2 Emissions vs. RGGI Cap with a capacity of 25 megawatts (Actuals through 2007) (MW) and larger 200 RGGI Cap Actual & • Targets and Timing Forecast CO2 190 – Three-year compliance periods CO2 (millions of short tons) 180 with the first running from 2009- 2011 170 – Stabilization of CO2 emissions at 160 recent levels through 2015 (~188 million tons per year) 150 – Achieve a 10% reduction of CO2 Actual Projected 140 emissions below recent levels by 2019 130 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 – This translates into ~13% reduction below 1990 levels or ~35% reduction from BAU levels by 2020 … when viewed in comparison to historical emissions. 47
  • 48. RGGI’s CO2 pricing projections … $10 $8 $/Ton (Nom inal) $6 $4 $2 $0 2009 2011 2013 2015 2017 2019 2021 2023 2025 RGGI - ICF Base RGGI - ICF Base (Rev. Oct-06) … reflect moderate prices, based on the headroom in the cap. 48
  • 49. Operational improvements and recontracting in current markets … Gross Margin ($/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. 49 * As of February 2008
  • 50. PSE&G
  • 51. PSE&G’s base investment plan … • Regulated electric transmission, electric and gas distribution system • Characteristics • FERC regulation for electric transmission (formula rates) • NJ BPU regulation for electric and gas distribution • Managing recovery lag on electric and gas distribution investments PSE&G Rate Base 2012 Base Plan 2007 Actual Rate Base = $10.2 B Rate Base = $6.4 B Gas Distribution Gas 30% Electric Distribution Transmission Electric 35% 13% Transmission 22% Electric Distribution 52% Electric Distribution Equity Ratio ~ 48% 48% … coupled with fair regulatory treatment provides a solid foundation for projected future earnings growth from 2008 – 2012 of 7 - 8%. 51
  • 52. 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. 52 Sources: Imports: PSE&G Estimates; Exports: PJM 2008 Regional Transmission Expansion Plan; and Load Growth: PJM 2008 Load Forecast Report