8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) February 24, 2017

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

(Exact name of registrant as specified in its charter)

New Jersey	001-09120	22-2625848
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

80 Park Plaza

Newark, New Jersey 07102

(Address of principal executive offices) (Zip Code)

973-430-7000

(Registrant’s telephone number, including area code)

http://www.pseg.com

PUBLIC SERVICE ELECTRIC AND GAS COMPANY

(Exact name of registrant as specified in its charter)

New Jersey	001-00973	22-1212800
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

80 Park Plaza

Newark, New Jersey 07102

(Address of principal executive offices) (Zip Code)

973-430-7000

(Registrant’s telephone number, including area code)

http://www.pseg.com

PSEG POWER LLC

(Exact name of registrant as specified in its charter)

Delaware	001-34232	22-3663480
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

80 Park Plaza

Newark, New Jersey 07102

(Address of principal executive offices) (Zip Code)

973-430-7000

(Registrant’s telephone number, including area code)

http://www.pseg.com

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

The information contained in Item 2.02. Results of Operations and Financial Condition in this Form 8-K is furnished solely for Public Service Enterprise Group Incorporated (PSEG). The information contained in Item 7.01 Regulation FD Disclosure in this combined Form 8-K is separately furnished, as noted, by PSEG, Public Service Electric and Gas Company (PSE&G) and PSEG Power LLC (Power). Information contained herein relating to any individual company is provided by such company on its own behalf and in connection with its respective Form 8-K. PSE&G and Power each makes representations only as to itself and makes no other representations whatsoever as to any other company. The materials furnished as Exhibits 99 and 99.1 are available on the pseg.com website under the investor tab, or at http://investor.pseg.com.

Item 2.02 Results of Operations and Financial Condition

PSEG

On February 24, 2017, PSEG announced unaudited financial results for the three months and twelve months ended December 31, 2016. A copy of the earnings release dated February 24, 2017 is furnished as Exhibit 99 to this Form 8-K.

Item 7.01 Regulation FD Disclosure

PSEG, PSE&G and Power

On February 24, 2017, PSEG conducted an earnings call regarding its results for the three and twelve months ended December 31, 2016. A copy of the slideshow presentation used during the earnings call is furnished as Exhibit 99.1 to this Form 8-K.

Item 9.01 Financial Statements and Exhibits

Exhibit 99	Press Release dated February 24, 2017
Exhibit 99.1	Slideshow Presentation

2

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED
(Registrant)
By:	/s/    Stuart J. Black
	STUART J. BLACK
	Vice President and Controller
	(Principal Accounting Officer)

Date: February 24, 2017

3

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.

PUBLIC SERVICE ELECTRIC AND GAS COMPANY
(Registrant)
By:	/s/    Stuart J. Black
	STUART J. BLACK
	Vice President and Controller
	(Principal Accounting Officer)

Date: February 24, 2017

4

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The signature of the undersigned company shall be deemed to relate only to matters having reference to such company and any subsidiaries thereof.

PSEG POWER LLC
	(Registrant)
By:	/s/    Stuart J. Black
	STUART J. BLACK
	Vice President and Controller
	(Principal Accounting Officer)

Date: February 24, 2017

5

EX-99

EXHIBIT 99

      Investor News NYSE: PEG

For further information, contact:

•    Kathleen A. Lally, Vice President – Investor Relations	Phone: 973-430-6565
•    Carlotta Chan, Manager - Investor Relations	Phone: 973-430-6596

PSEG ANNOUNCES 2016 RESULTS

NET INCOME OF $1.75 PER SHARE

Non-GAAP Operating Earnings of $2.90 Per Share

Common Dividend Increased 4.9%

Non-GAAP 2017 Operating Earnings Guidance $2.80 - $3.00 Per Share

(February 24, 2017 – Newark, NJ) Public Service Enterprise Group (PSEG) reported 2016 Net Income of $887 million, or $1.75 per share as compared to Net Income of $1,679 million, or $3.30 per share for 2015. Non-GAAP Operating Earnings for the year 2016 were $1,475 million or $2.90 per share compared to 2015 non-GAAP Operating Earnings of $1,476 million or $2.91 per share. Net Income for 2016 was largely impacted by expenses associated with the early retirement of coal-gas units at the Hudson and Mercer generating stations and reserves for a leveraged lease impairment. Net Income for 2015 includes insurance proceeds for the recovery of storm costs.

PSEG also reported a Net Loss for the fourth quarter of 2016 of $98 million, or $0.19 per share. This compares to fourth quarter 2015 Net Income of $309 million, or $0.60 per share. Non-GAAP Operating Earnings for the fourth quarter of 2016 were $279 million, or $0.54 per share compared to fourth quarter 2015 non-GAAP Operating Earnings of $255 million, or $0.50 per share. Net Loss in the fourth quarter reflects the impact of incremental depreciation expense and other expenses of $555 million pre-tax associated with the early retirement of the Hudson and Mercer coal/gas-fired generating stations.

“We delivered strong results in 2016 with full year non-GAAP Operating Earnings solidly within the range of our guidance” said Ralph Izzo, chairman, president and chief executive officer. “Continued growth at our regulated utility and a disciplined approach to expenses across Enterprise supported results. The Board’s recent decision to increase the common dividend by 4.9% to the indicative annual level of $1.72 per share represents confidence in our firm’s investment strategy and an acknowledgment of our strong financial condition.”

Management uses non-GAAP Operating Earnings in its internal analysis, and in communications with investors and analysts, as a consistent measure for comparing PSEG’s financial performance to previous financial results. Non-GAAP Operating Earnings exclude the impact of returns (losses) associated with the Nuclear Decommissioning Trust (NDT), Mark-to-Market (MTM) accounting and material one-time items such as the previously noted Hudson and Mercer retirements and lease impairment.

The tables below provide a reconciliation of PSEG’s Net Income to non-GAAP Operating Earnings for the full year and fourth quarter. See Attachment 11 for a complete list of items excluded from Net Income in the determination of non-GAAP Operating Earnings. The presentation of non-GAAP Operating Earnings is intended to complement, and should not be considered an alternative to, the presentation of Net Income, which is an indicator of financial performance determined in accordance with GAAP. In addition, non-GAAP Operating Earnings as presented in this release may not be comparable to similarly titled measures used by other companies.

PSEG CONSOLIDATED RESULTS (unaudited)

Full-Year Comparative Results

2016 and 2015

	Income					Diluted Earnings
	($ millions)					Per Share
	2016		2015			2016		2015
Net Income	$	887	$	1,679		$	1.75	$	3.30
Reconciling Items*		588		(203	)		1.15		(0.39	)
Non-GAAP Operating Earnings	$	1,475	$	1,476		$	2.90	$	2.91
				Avg. Shares			508M		508M

* See Attachment 11

PSEG CONSOLIDATED RESULTS (unaudited)

Fourth Quarter Comparative Results

2016 and 2015

	Income/(Loss)						Diluted Earnings
	($ millions)						Per Share
	2016			2015			2016			2015
Net Income/(Loss)	$	(98	)	$	309		$	(0.19	)	$	0.60
Reconciling Items*		377			(54	)		0.73			(0.10	)
Non-GAAP Operating Earnings	$	279		$	255		$	0.54		$	0.50
					Avg. Shares			508M			508M

* See Attachment 11

Ralph Izzo went on to say, “We continue to pursue opportunities to enhance earnings and reduce financial risk. Actions to transition our business mix in response to changing market conditions have supported earnings. For 2017, we forecast non-GAAP Operating Earnings of $2.80 - $3.00 per share. Based on the growth in our regulated utility’s investment program, PSE&G’s Net Income is forecast to grow 8.5% at the mid-point of 2017’s guidance

to represent 66% of our forecast non-GAAP Operating Earnings. Our investment program, coupled with the impact from retirement of Hudson and Mercer (which is excluded from our non-GAAP Operating Earnings) is expected to improve the resiliency of our infrastructure and the economic efficiency of our generating fleet. Our ultimate goal is to provide an attractive earnings and dividend profile as we also deliver value to the customer. Our balance sheet remains strong, and we are well positioned to meet our goals.”

The following table outlines PSEG’s 2016 non-GAAP Operating Earnings by subsidiary and expectations for 2017.

2017 Non-GAAP Operating Earnings Guidance and

2016 Non-GAAP Operating Earnings

($ millions, except EPS)

	2017E		2016A
PSE&G		$945 - $985		$889
PSEG Power		$435 - $510		$514
PSEG Enterprise/Other		$35 - $35		$72
Non-GAAP Operating Earnings		$1,415 - $1,530		$1,475
Non-GAAP EPS		$2.80 - $3.00		$2.90
E = Estimate    A= Actual

Due to the forward looking nature of non-GAAP Operating Earnings guidance, PSEG is unable to reconcile this non-GAAP financial measure to the most directly comparable GAAP financial measure. Management is unable to project certain reconciling items, in particular MTM and NDT gains (losses), for future periods due to market volatility.

Non-GAAP Operating Earnings Review and Outlook by Operating Subsidiary

See Attachments 5 and 6 for detail regarding the quarter-over-quarter and year-over-year reconciliations for each of PSEG’s businesses.

PSE&G

PSE&G reported Net Income of $193 million ($0.38 per share) for the fourth quarter bringing full year Net Income to $889 million ($1.75 per share). On a comparative basis, PSE&G reported Net Income of $156 million ($0.31 per share) and $787 million ($1.55 per share) for the fourth quarter and full year 2015, respectively.

PSE&G’s Net Income in the fourth quarter continued to benefit from a return on its expanded investment in transmission and distribution infrastructure.

Growth in PSE&G’s investment in transmission, and the absence of an adjustment to Net Income for bonus depreciation in the year-ago quarter improved quarter-over-quarter Net Income comparisons by $0.06 per share. More normal weather conditions relative to unseasonably mild weather in the year-ago quarter improved Net Income by $0.01 per share. A decline in O&M of $0.03 per share and other expenses was offset by an increase in depreciation expense and taxes.

PSE&G implemented a $121 million increase in revenue under the company’s transmission formula rate on January 1, 2017. Transmission revenues are adjusted each year to reflect an update of the company’s investment program. PSE&G’s investment in transmission grew to $6.7 billion of rate base at the end of 2016, or 44% of the company’s consolidated rate base of $15.2 billion at the end of the year.

Electric sales, on a weather-normalized basis, were flat in the fourth quarter compared to the year-ago period as an increase in demand from the commercial sector offset a decline in sales to residential and industrial customers. For the year, the continued degradation of the industrial sector and increases in efficiency offset the impact of residential customer growth on sales. Weather-normalized firm gas sales declined slightly during the fourth quarter compared to the year-ago quarter and declined 1.9% for the full year.

PSE&G invested $2.8 billion during 2016 to upgrade and expand its transmission and distribution system. PSE&G upgraded 177 miles of gas pipes in more than 80 towns as it continues work under its three-year $905 million Gas System Modernization Program. Upgrades to the electric distribution system continue under the $1.2 billion Energy Strong infrastructure program.

For the 15^th year in a row, PSE&G’s work to protect and strengthen the system yielded recognition as the most reliable electric utility in the Mid-Atlantic.

PSE&G’s Net Income for 2017 is forecasted at $945 million - $985 million.

PSEG Power

PSEG Power reported a Net Loss of $302 million ($0.59 per share) in the fourth quarter of 2016 versus Net Income of $149 million ($0.29 per share) for the fourth quarter of 2015. For the full year 2016, PSEG Power reported Net Income of $18 million ($0.04 per share) versus Net Income for the full year 2015 of $856 million ($1.68 per share).

PSEG Power reported non-GAAP Operating Earnings of $69 million ($0.13 per share) for the fourth quarter of 2016 and non-GAAP Adjusted EBITDA of $155 million bringing full year non-GAAP Operating Earnings to $514 million ($1.01 per share) and non-GAAP Adjusted EBITDA to $1,201 million. On a comparative basis, PSEG Power reported non-GAAP Operating Earnings of $95 million ($0.19 per share) and non-GAAP Adjusted EBITDA of $218 million for the fourth quarter of 2015 and non-GAAP Operating Earnings of $653 million ($1.29 per share) and non-GAAP Adjusted EBITDA of $1,435 million for the full year 2015.

Management believes non-GAAP Adjusted EBITDA is useful to investors and other users of our financial statements in evaluating operating performance because it provides them with an additional tool to compare business performance across companies and across periods. Management also believes that non-GAAP Adjusted EBITDA is widely used by investors to measure operating performance without regard to items such as income tax expense, interest expense and depreciation and amortization, which can vary substantially from company to company depending upon, among other things, the book value of assets, capital structure and whether assets were constructed or acquired. Non-GAAP Adjusted EBITDA also allows investors and other users to assess the underlying financial performance of our fleet before management’s decision to deploy capital. Non-GAAP Adjusted EBITDA excludes the same items as our non-GAAP Operating Earnings measure as well as income tax expense, interest expense and depreciation and amortization. See Attachment 12 for a complete list of items excluded from Net Income in the determination of non-GAAP Adjusted EBITDA. The presentation of non-GAAP Adjusted EBITDA is intended to complement, and should not be considered an alternative to the presentation of Net Income, which is an indicator of financial performance determined in accordance with GAAP. In addition, non-GAAP Adjusted EBITDA as presented in this release may not be comparable to similarly titled measures used by other companies.

Power’s Net Loss for the fourth quarter reflects the impact of incremental depreciation and other expenses of $555 million pre-tax associated with the decision to retire the Hudson and Mercer coal/gas-fired generating stations on June 1, 2017. The company’s fourth quarter results also reflect the impact of a decline in energy prices on output and margins.

A decline in the average price received on energy hedges reduced Power’s quarter-over-quarter non-GAAP Operating Earnings by $0.05 per share. A reduction in output was partially offset by an improvement in off-system gas sales resulting in a net reduction of $0.01 per share in quarterly Net Income(Loss) comparisons. An increase in O&M expense of $0.03 per share associated with the cost of a planned refueling at Power’s 100% owned Hope Creek nuclear station was offset by a decline in taxes and other items.

Output from Power’s generating facilities was 7.6% lower in the fourth quarter compared to year-ago levels. Quarterly comparisons were affected by the refueling outage at Hope Creek, major maintenance on the gas-fired CCGTs during the shoulder period in the market and lower demand. For the year, output was 6.7% lower. The nuclear fleet operated at an average capacity factor of 86.9% producing 29.6 TWh of energy (57% of total energy output for 2016). Power’s gas-fired CCGT fleet operated at an average capacity factor of 57.2% for the year producing 16.4 TWh of energy (32% of 2016’s total energy output). The coal-fired fleet (primarily Keystone and Conemaugh) generated 4.8 TWh of energy during the year (9% of 2016’s total energy output) with the remaining output produced from Power’s peaking generating assets.

Power is forecasting output for 2017 of 49 - 51 TWh – a slight change from 51.5 TWh of energy produced in 2016. Following completion of the Basic Generation Service (BGS) auction in New Jersey in February 2017, Power enters the year with 100% of its 2017

baseload generation hedged. Approximately 80% - 85% of anticipated annual production is hedged at an average price of $46 per MWh. Power has hedged approximately 50 - 55% of its forecast generation in 2018 of 55 TWh at an average price of $43 per MWh. For 2019, Power has hedged 15 - 20% of forecast production of 60 TWh at an average price of $43 per MWh. Power assumes BGS volumes will represent approximately 11 TWh in 2017 – consistent with 2016 deliveries of 11.1 TWh under the BGS contract.

The forecast increase in output for 2018 and 2019 reflects the commercial start-up in mid-2018 of 1,300 MWs of new gas-fired combined cycle capacity at the Keys Energy Center in Maryland and Sewaren in New Jersey, and the mid-2019 commercial start-up of the 485 MW gas-fired combined cycle power plant at Bridgeport Harbor, Connecticut.

Power’s non-GAAP Operating Earnings for 2017 are forecast at $435 - $510 million. The forecast represents non-GAAP Adjusted EBITDA for the full year 2017 of $1,080 – $1,210 million.

Due to the forward looking nature of non-GAAP Adjusted EBITDA guidance, PSEG is unable to reconcile this non-GAAP financial measure to the most directly comparable GAAP financial measure. Management is unable to project certain reconciling items, in particular MTM and NDT gains (losses), for future periods due to market volatility.

PSEG Enterprise/Other

PSEG Enterprise/Other reported Net Income for the fourth quarter of 2016 of $11 million ($0.02 per share) compared to Net Income of $4 million for the fourth quarter of 2015. For the full year, PSEG Enterprise/Other reported a Net Loss of $20 million, ($0.04 per share) compared to Net Income in 2015 of $36 million ($0.07 per share). Net Income for the fourth quarter and full year 2016 include pre-tax charges of $10 million and $147 million, respectively related to an impairment of leveraged lease residual values and an estimated loss as a result of liquidity issues currently facing NRG REMA.

Non-GAAP Operating Earnings for PSEG Enterprise/Other in the fourth quarter 2016 were $17 million ($0.03 per share) compared to $4 million in the year-ago quarter. The results for the fourth quarter brought PSEG Enterprise/Other non-GAAP Operating Earnings for the full year to $72 million ($0.14 per share) versus $36 million ($0.07 per share) in 2015.

The increase in non-GAAP Operating Earnings quarter-over-quarter reflects the absence of certain corporate expenditures as well as certain tax items at PSEG Energy Holdings and contractual payments associated with the operation of PSEG Long Island.

For 2017, non-GAAP Operating Earnings for PSEG Enterprise/Other are forecast to be $35 million.

Capital Expenditures

PSEG currently plans to invest approximately $10.2 billion over 2017 – 2019 primarily in PSE&G (77%) and PSEG Power (23%).

Pension Expense

PSEG, at the end of 2016, merged its three qualified defined benefit pension plans and the pension plans’ assets into one plan. As a result, total net periodic benefit costs are expected to decrease by approximately $48 million (net of amounts capitalized) in 2017 from what they would have been without the merger of the plans, and total periodic benefit expense in 2017 is also expected to be $22 million lower than 2016’s level of expense. This is due to a change in the amortization period for gains and losses for the merged plan which resulted in lower amortization than that of the individual plans.

FORWARD-LOOKING STATEMENTS

Certain of the matters discussed in this report about our and our subsidiaries’ future performance, including, without limitation, future revenues, earnings, strategies, prospects, consequences and all other statements that are not purely historical constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those anticipated. Such statements are based on management’s beliefs as well as assumptions made by and information currently available to management. When used herein, the words “anticipate,” “intend,” “estimate,” “believe,” “expect,” “plan,” “should,” “hypothetical,” “potential,” “forecast,” “project,” variations of such words and similar expressions are intended to identify forward-looking statements. Factors that may cause actual results to differ are often presented with the forward-looking statements themselves. Other factors that could cause actual results to differ materially from those contemplated in any forward-looking statements made by us herein are discussed in filings we make with the United States Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K and subsequent reports on Form 10-Q and Form 8-K and available on our website: http://www.pseg.com. These factors include, but are not limited to:

• fluctuations in wholesale power and natural gas markets, including the potential impacts on the economic viability of our generation units;

• our ability to obtain adequate fuel supply;

• any inability to manage our energy obligations with available supply;

• increases in competition in wholesale energy and capacity markets;

• changes in technology related to energy generation, distribution and consumption and customer usage patterns;

• economic downturns;

• third party credit risk relating to our sale of generation output and purchase of fuel;

• adverse performance of our decommissioning and defined benefit plan trust fund investments and changes in funding requirements;

• changes in state and federal legislation and regulations;

• the impact of pending rate case proceedings;

• regulatory, financial, environmental, health and safety risks associated with our ownership and operation of nuclear facilities;

• adverse changes in energy industry laws, policies and regulations, including market structures and transmission planning;

• changes in federal and state environmental regulations and enforcement;

• delays in receipt of, or an inability to receive, necessary licenses and permits;

• adverse outcomes of any legal, regulatory or other proceeding, settlement, investigation or claim applicable to us and/or the energy industry;

• changes in tax laws and regulations;

• the impact of our holding company structure on our ability to meet our corporate funding needs, service debt and pay dividends;

• lack of growth or slower growth in the number of customers or changes in customer demand;

• any inability of Power to meet its commitments under forward sale obligations;

• reliance on transmission facilities that we do not own or control and the impact on our ability to maintain adequate transmission capacity;

• any inability to successfully develop or construct generation, transmission and distribution projects;

• any equipment failures, accidents, severe weather events or other incidents that impact our ability to provide safe and reliable service to our customers;

• our inability to exercise control over the operations of generation facilities in which we do not maintain a controlling interest;

• any inability to maintain sufficient liquidity;

• any inability to realize anticipated tax benefits or retain tax credits;

• challenges associated with recruitment and/or retention of key executives and a qualified workforce;

• the impact of our covenants in our debt instruments on our operations; and

• the impact of acts of terrorism, cybersecurity attacks or intrusions.

All of the forward-looking statements made in this report are qualified by these cautionary statements and we cannot assure you that the results or developments anticipated by management will be realized or even if realized, will have the expected consequences to, or effects on, us or our business, prospects, financial condition, results of operations or cash flows. Readers are cautioned not to place undue reliance on these forward-looking statements in making any investment decision. Forward-looking statements made in this report apply only as of the date of this report. While we may elect to update forward-looking statements from time to time, we specifically disclaim any obligation to do so, even in light of new information or future events, unless otherwise required by applicable securities laws.

The forward-looking statements contained in this report are intended to qualify for the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

From time to time, PSEG, PSE&G and PSEG Power release important information via postings on their corporate website at http://investor.pseg.com. Investors and other interested parties are encouraged to visit the corporate website to review new postings. The “Email Alerts” link at http://investor.pseg.com may be used to enroll to receive automatic email alerts and/or Really Simple Syndication (RSS) feeds regarding new postings.

Attachment 1

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

Consolidating Statements of Operations

(Unaudited, $ millions, except per share data)

	Three Months Ended December 31, 2016
	PSEG			PSEG Enterprise/ Other (a)			PSE&G			PSEG Power
OPERATING REVENUES	$	2,090		$	(306	)	$	1,475		$	921
OPERATING EXPENSES
Energy Costs		675			(418	)		588			505
Operation and Maintenance		793			92			365			336
Depreciation and Amortization		797			8			153			636
Total Operating Expenses		2,265			(318	)		1,106			1,477
OPERATING INCOME (LOSS)		(175	)		12			369			(556	)
Income from Equity Method Investments		2			—			—			2
Other Income and (Deductions)		24			(1	)		21			4
Other-Than-Temporary Impairments		(3	)		—			—			(3	)
Interest Expense		(97	)		(4	)		(75	)		(18	)
INCOME (LOSS) BEFORE INCOME TAXES		(249	)		7			315			(571	)
Income Tax Benefit (Expense)		151			4			(122	)		269
NET INCOME (LOSS)	$	(98	)	$	11		$	193		$	(302	)
Reconciling Items Excluded from Net Income (Loss) (b)		377			6			—			371
OPERATING EARNINGS (non-GAAP)	$	279		$	17		$	193		$	69
Earnings Per Share
NET INCOME (LOSS)	$	(0.19	)	$	0.02		$	0.38		$	(0.59	)
Reconciling Items Excluded from Net Income (Loss) (b)		0.73			0.01			—			0.72
OPERATING EARNINGS (non-GAAP)	$	0.54		$	0.03		$	0.38		$	0.13
	Three Months Ended December 31, 2015
	PSEG			PSEG Enterprise/ Other (a)			PSE&G			PSEG Power
OPERATING REVENUES	$	2,278		$	(206	)	$	1,402		$	1,082
OPERATING EXPENSES
Energy Costs		684			(343	)		546			481
Operation and Maintenance		808			110			389			309
Depreciation and Amortization		254			9			180			65
Total Operating Expenses		1,746			(224	)		1,115			855
OPERATING INCOME		532			18			287			227
Income from Equity Method Investments		2			(1	)		—			3
Other Income and (Deductions)		17			(21	)		18			20
Other-Than-Temporary Impairments		(8	)		—			—			(8	)
Interest Expense		(102	)		2			(77	)		(27	)
INCOME (LOSS) BEFORE INCOME TAXES		441			(2	)		228			215
Income Tax Benefit (Expense)		(132	)		6			(72	)		(66	)
NET INCOME	$	309		$	4		$	156		$	149
Reconciling Items Excluded from Net Income (b)		(54	)		—			—			(54	)
OPERATING EARNINGS (non-GAAP)	$	255		$	4		$	156		$	95
Earnings Per Share
NET INCOME	$	0.60		$	—		$	0.31		$	0.29
Reconciling Items Excluded from Net Income (b)		(0.10	)		—			—			(0.10	)
OPERATING EARNINGS (non-GAAP)	$	0.50		$	—		$	0.31		$	0.19

(a) Includes activities at Energy Holdings, PSEG Long Island and the Parent as well as intercompany eliminations.

(b) See Attachments 11 and 12 for details of items excluded from Net Income/(Loss) to compute Operating Earnings (non-GAAP).

Attachment 2

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

Consolidating Statements of Operations

(Unaudited, $ millions, except per share data)

	Year Ended December 31, 2016
	PSEG			PSEG Enterprise/ Other (a)			PSE&G			PSEG Power
OPERATING REVENUES	$	9,061		$	(1,183	)	$	6,221		$	4,023
OPERATING EXPENSES
Energy Costs		3,001			(1,552	)		2,567			1,986
Operation and Maintenance		3,008			390			1,475			1,143
Depreciation and Amortization		1,476			30			565			881
Total Operating Expenses		7,485			(1,132	)		4,607			4,010
OPERATING INCOME (LOSS)		1,576			(51	)		1,614			13
Income from Equity Method Investments		11			—			—			11
Other Income and (Deductions)		124			—			79			45
Other-Than-Temporary Impairments		(28	)		—			—			(28	)
Interest Expense		(385	)		(12	)		(289	)		(84	)
INCOME (LOSS) BEFORE INCOME TAXES		1,298			(63	)		1,404			(43	)
Income Tax Benefit (Expense)		(411	)		43			(515	)		61
NET INCOME (LOSS)	$	887		$	(20	)	$	889		$	18
Reconciling Items Excluded from Net Income (Loss) (b)		588			92			—			496
OPERATING EARNINGS (non-GAAP)	$	1,475		$	72		$	889		$	514
Earnings Per Share
NET INCOME (LOSS)	$	1.75		$	(0.04	)	$	1.75		$	0.04
Reconciling Items Excluded from Net Income (Loss) (b)		1.15			0.18			—			0.97
OPERATING EARNINGS (non-GAAP)	$	2.90		$	0.14		$	1.75		$	1.01
	Year Ended December 31, 2015
	PSEG			PSEG Enterprise/ Other (a)			PSE&G			PSEG Power
OPERATING REVENUES	$	10,415		$	(1,149	)	$	6,636		$	4,928
OPERATING EXPENSES
Energy Costs		3,261			(1,611	)		2,722			2,150
Operation and Maintenance		2,978			361			1,560			1,057
Depreciation and Amortization		1,214			31			892			291
Total Operating Expenses		7,453			(1,219	)		5,174			3,498
OPERATING INCOME		2,962			70			1,462			1,430
Income from Equity Method Investments		12			(2	)		—			14
Other Income and (Deductions)		152			(20	)		75			97
Other-Than-Temporary Impairments		(53	)		—			—			(53	)
Interest Expense		(393	)		8			(280	)		(121	)
INCOME BEFORE INCOME TAXES		2,680			56			1,257			1,367
Income Tax Benefit (Expense)		(1,001	)		(20	)		(470	)		(511	)
NET INCOME	$	1,679		$	36		$	787		$	856
Reconciling Items Excluded from Net Income (b)		(203	)		—			—			(203	)
OPERATING EARNINGS (non-GAAP)	$	1,476		$	36		$	787		$	653
Earnings Per Share
NET INCOME	$	3.30		$	0.07		$	1.55		$	1.68
Reconciling Items Excluded from Net Income (b)		(0.39	)		—			—			(0.39	)
OPERATING EARNINGS (non-GAAP)	$	2.91		$	0.07		$	1.55		$	1.29

(a) Includes activities at Energy Holdings, PSEG Long Island and the Parent as well as intercompany eliminations.

(b) See Attachments 11 and 12 for details of items excluded from Net Income to compute Operating Earnings (non-GAAP).

Attachment 3

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

Capitalization Schedule

(Unaudited, $ millions)

	December 31,			December 31,
	2016			2015
DEBT
Commercial Paper and Loans	$	388		$	364
Long-Term Debt*		11,395			9,561
Project Level, Non-Recourse Debt		—			7
Total Debt		11,783			9,932
STOCKHOLDERS’ EQUITY
Common Stock		4,936			4,915
Treasury Stock		(717	)		(671	)
Retained Earnings		9,174			9,117
Accumulated Other Comprehensive Loss		(263	)		(295	)
Total Common Stockholders’ Equity		13,130			13,066
Noncontrolling Interests		—			1
Total Equity		13,130			13,067
Total Capitalization	$	24,913		$	22,999

* Includes current portion of Long-Term Debt

Attachment 4

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, $ millions)

	Year Ended December 31,
	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income	$	887		$	1,679
Adjustments to Reconcile Net Income to Net Cash Flows From Operating Activities		2,424			2,240
NET CASH PROVIDED BY OPERATING ACTIVITIES		3,311			3,919
NET CASH USED IN INVESTING ACTIVITIES		(4,248	)		(3,942	)
NET CASH PROVIDED BY FINANCING ACTIVITIES		966			15
Net Change in Cash and Cash Equivalents		29			(8	)
Cash and Cash Equivalents at Beginning of Period		394			402
Cash and Cash Equivalents at End of Period	$	423		$	394

Attachment 5

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

Quarter-over-Quarter EPS Reconciliation

December 31, 2016 vs. December 31, 2015

(Unaudited)

Attachment 6

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

Year-over-Year EPS Reconciliation

December 31, 2016 vs. December 31, 2015

(Unaudited)

* See Attachments 11 and 12 for Items excluded from Net Income to reconcile to Operating Earnings (non-GAAP).

Attachment 7

PUBLIC SERVICE ELECTRIC & GAS COMPANY

Retail Sales and Revenues

(Unaudited)

December 31, 2016

Electric Sales and Revenues

Sales (millions kWh)	Three Months Ended		Change vs. 2015			Year Ended		Change vs. 2015
Residential		2,786		4.9	%		13,706		0.2	%
Commercial & Industrial		6,517		2.2	%		27,538		-0.6	%
Street Lighting		99		-1.9	%		336		0.4	%
Interdepartmental		2		0.5	%		10		-0.8	%
Total		9,404		3.0	%		41,590		-0.3	%
Revenue ($ millions)
Residential	$	384		-4.3	%	$	2,065		-5.2	%
Commercial & Industrial		328		-12.9	%		1,647		-17.7	%
Street Lighting		17		-6.3	%		68		-4.7	%
Other Operating Revenues*		177		31.4	%		680		14.8	%
Total	$	906		-2.6	%	$	4,460		-7.9	%
Weather Data	Three Months Ended		Change vs. 2015			Year Ended		Change vs. 2015
THI Hours - Actual		455		NM			19,453		2.5	%
THI Hours - Normal		330					15,929

* Primarily sales of Non-Utility Generator energy to PJM and Transmission related revenues.

Attachment 8

PUBLIC SERVICE ELECTRIC & GAS COMPANY

Retail Sales and Revenues

(Unaudited)

December 31, 2016

Gas Sold and Transported

Sales (millions therms)*	Three Months Ended		Change vs. 2015			Year Ended		Change vs. 2015
Firm Sales
Residential Sales		441		33.9	%		1,394		-6.9	%
Commercial & Industrial		283		28.2	%		966		-5.8	%
Total Firm Sales		724		31.6	%		2,360		-6.5	%
Non-Firm Sales
Commercial & Industrial		322		-24.9	%		1,888		-8.1	%
Total Non-Firm Sales		322					1,888
Total Sales		1,046		6.9	%		4,248		-7.2	%
Revenue ($ millions)
Residential Sales - Firm	$	135		59.1	%	$	362		17.5	%
Commercial & Industrial - Firm Sales		66		59.8	%		194		-18.7	%
Non-Firm Sales		8		52.4	%		27		-20.7	%
Other Operating Revenues**		44		-2.9	%		174		-0.3	%
Total	$	253		43.2	%	$	757		-0.3	%
Gas Transported	$	316		7.2	%	$	1,004		-3.3	%
Weather Data	Three Months Ended		Change vs. 2015			Year Ended		Change vs. 2015
Degree Days - Actual		1,527		38.3	%		4,365		-6.4	%
Degree Days - Normal		1,604					4,670

* CSG rate included in non-firm sales

** Primarily Appliance Service.

Attachment 9

PSEG POWER LLC

Generation Measures*

(Unaudited)

	GWhr Breakdown						GWhr Breakdown
	Three Months Ended						Year Ended
	December 31,						December 31,
	2016			2015			2016			2015
Nuclear - NJ		4,737			4,835			18,615			20,084
Nuclear - PA		2,551			2,430			10,938			9,929
Total Nuclear		7,288			7,265			29,553			30,013
Fossil - Coal/Natural Gas - NJ**		(10	)		(16	)		188			526
Fossil - Coal - PA		1,268			828			4,406			4,681
Fossil - Coal - CT		85			2			182			602
Total Coal		1,343			814			4,776			5,809
Fossil - Oil & Natural Gas - NJ		1,866			3,184			11,955			14,116
Fossil - Oil & Natural Gas - NY		1,263			1,462			5,202			5,153
Fossil - Oil & Natural Gas - CT		(5	)		—			24			122
Total Oil & Natural Gas		3,124			4,646			17,181			19,391
		11,755			12,725			51,510			55,213
	% Generation by Fuel Type						% Generation by Fuel Type
	Three Months Ended						Year Ended
	December 31,						December 31,
	2016			2015			2016			2015
Nuclear - NJ		40	%		38	%		36	%		36	%
Nuclear - PA		22	%		19	%		21	%		18	%
Total Nuclear		62	%		57	%		57	%		54	%
Fossil - Coal/Natural Gas - NJ**		0	%		0	%		0	%		1	%
Fossil - Coal - PA		11	%		7	%		9	%		9	%
Fossil - Coal - CT		1	%		0	%		0	%		1	%
Total Coal		12	%		7	%		9	%		11	%
Fossil - Oil & Natural Gas - NJ		16	%		25	%		24	%		26	%
Fossil - Oil & Natural Gas - NY		10	%		11	%		10	%		9	%
Fossil - Oil & Natural Gas - CT		0	%		0	%		0	%		0	%
Total Oil & Natural Gas		26	%		36	%		34	%		35	%
		100	%		100	%		100	%		100	%

* Excludes Solar and Kalaeloa

** Includes Pumped Storage. Pumped Storage accounted for <1% of total generation for the three months and year ended December 31, 2016 and 2015. Generation includes natural gas fuel switching intervals.

Attachment 10

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

Statistical Measures

(Unaudited)

	Three Months Ended December 31,						Year Ended December 31,
	2016			2015			2016			2015
Weighted Average Common Shares Outstanding (millions)
Basic		505			505			505			505
Diluted		508			508			508			508
Stock Price at End of Period							$	43.88		$	38.69
Dividends Paid per Share of Common Stock	$	0.41		$	0.39		$	1.64		$	1.56
Dividend Yield								3.7	%		4.0	%
Book Value per Common Share							$	26.01		$	25.86
Market Price as a Percent of Book Value								169	%		150	%
Total Shareholder Return		5.8	%		-7.3	%		17.8	%		-2.8	%

Attachment 11

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

Consolidated Operating Earnings (non-GAAP) Reconciliation

Reconciling Items	Three Months Ended December 31,						Year Ended December 31,
	2016			2015			2016			2015
	($ millions, Unaudited)
Net Income (Loss)	$	(98	)	$	309		$	887		$	1,679
(Gain) Loss on Nuclear Decommissioning Trust (NDT) Fund Related Activity, pre-tax (PSEG Power)		(9	)		(38	)		(5	)		(24	)
(Gain) Loss on Mark-to-Market (MTM), pre-tax(a) (PSEG Power)		77			(59	)		168			(157	)
Storm O&M, net of insurance recoveries, pre-tax (PSEG Power)		—			—			—			(172	)
Hudson/Mercer Early Retirement, pre-tax (PSEG Power)		555			—			669			—
Lease Related Activity, pre-tax (PSEG Enterprise/Other)		10			—			147			—
Income Taxes related to Operating Earnings (non-GAAP) reconciling items(b)		(256	)		43			(391	)		150
Operating Earnings (non-GAAP)	$	279		$	255		$	1,475		$	1,476
PSEG Fully Diluted Average Shares Outstanding (in millions)		508			508			508			508
	($ Per Share Impact - Diluted, Unaudited)
Net Income (Loss)	$	(0.19	)	$	0.60		$	1.75		$	3.30
(Gain) Loss on NDT Fund Related Activity, pre-tax (PSEG Power)		(0.02	)		(0.08	)		(0.01	)		(0.05	)
(Gain) Loss on MTM, pre-tax(a) (PSEG Power)		0.15			(0.12	)		0.33			(0.31	)
Storm O&M, net of insurance recoveries, pre-tax (PSEG Power)		—			—			—			(0.34	)
Hudson/Mercer Early Retirement, pre-tax (PSEG Power)		1.10			—			1.32			—
Lease Related Activity, pre-tax (PSEG Enterprise/Other)		0.02			—			0.29			—
Income Taxes related to Operating Earnings (non-GAAP) reconciling items(b)		(0.52	)		0.10			(0.78	)		0.31
Operating Earnings (non-GAAP)	$	0.54		$	0.50		$	2.90		$	2.91

(a) Includes the financial impact from positions with forward delivery months.

(b) Income tax effect calculated at 40.85% statutory rate, except for lease related activity which is calculated at a combined leveraged lease effective tax rate and NDT related activity which is calculated at the 40.85% statutory rate plus a 20% tax on income (losses) from qualified NDT funds.

Attachment 12

PSEG Power Operating Earnings (non-GAAP) and Adjusted EBITDA (non-GAAP) Reconciliation

	Three Months Ended						Year Ended
Reconciling Items	December 31,						December 31,
	2016			2015			2016			2015
	($ millions, Unaudited)
Net Income (Loss)	$	(302	)	$	149		$	18		$	856
(Gain) Loss on NDT Fund Related Activity, pre-tax		(9	)		(38	)		(5	)		(24	)
(Gain) Loss on MTM, pre-tax (a)		77			(59	)		168			(157	)
Storm O&M, net of insurance recoveries, pre-tax		—			—			—			(172	)
Hudson/Mercer Early Retirement, pre-tax		555			—			669			—
Income Taxes related to Operating Earnings (non-GAAP) reconciling items(b)		(252	)		43			(336	)		150
Operating Earnings (non-GAAP)	$	69		$	95		$	514		$	653
Depreciation and Amortization, pre-tax (c)		85			73			329			301
Interest Expense, pre-tax (c) (d)		18			27			83			120
Income Taxes (c)		(17	)		23			275			361
Adjusted EBITDA (non-GAAP)	$	155		$	218		$	1,201		$	1,435
PSEG Fully Diluted Average Shares Outstanding (in millions)		508			508			508			508

(a) Includes the financial impact from positions with forward delivery months.

(b) Income tax effect calculated at 40.85% statutory rate, except for lease related activity which is calculated at a combined leveraged lease effective tax rate and NDT related activity which is calculated at the 40.85% statutory rate plus a 20% tax on income (losses) from qualified NDT funds.

(c) Excludes amounts related to Operating Earnings (non-GAAP) reconciling items.

(d) Net of capitalized interest.

	Three Months Ended					Year Ended
Supplemental Information	December 31,					December 31,
	2016			2015		2016			2015
	($ millions, Unaudited)
Fossil Major Maintenance, pre-tax	$	31		$	17	$	70		$	128
PSEG Enterprise/Other Operating Earnings (non-GAAP) Reconciliation
	Three Months Ended					Year Ended
Reconciling Items	December 31,					December 31,
	2016			2015		2016			2015
	($ millions, Unaudited)
Net Income (Loss)	$	11		$	4	$	(20	)	$	36
Lease Related Activity, pre-tax		10			—		147			—
Income Taxes related to Operating Earnings (non-GAAP) reconciling items(a)		(4	)		—		(55	)		—
Operating Earnings (non-GAAP)	$	17		$	4	$	72		$	36
PSEG Fully Diluted Average Shares Outstanding (in millions)		508			508		508			508

(a) Income tax effect calculated at a combined leveraged lease effective tax rate.

EX-99.1

Public Service Enterprise Group

PSEG Earnings Conference Call

4

Quarter & Year-End 2016

February 24, 2017

EXHIBIT 99.1

th

1

Forward-Looking Statements

Certain of the matters discussed in this presentation about our and our subsidiaries’ future performance, including, without limitation, future revenues, earnings, strategies, prospects,

consequences and all other statements that are not purely historical constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such

forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those anticipated. Such statements are based on management’s beliefs

as well as assumptions made by and information currently available to management. When used herein, the words “anticipate,” “intend,” “estimate,” “believe,” “expect,” “plan,” “should,”

“hypothetical,” “potential,” “forecast,” “project,” variations of such words and similar expressions are intended to identify forward-looking statements. Factors that may cause actual results to differ

are often presented with the forward-looking statements themselves. Other factors that could cause actual results to differ materially from those contemplated in any forward-looking statements

made by

us

herein

are

discussed

in

filings

we

make

with

the

United

States

Securities

and

Exchange

Commission

(SEC)

including

our

Annual

Report

on

Form

10-K

and

subsequent

reports

on

Form

10-Q and Form 8-K and available on our website: http://www.pseg.com. These factors include, but are not limited to:

•

fluctuations in wholesale power and natural gas markets, including the potential impacts on the economic viability of our generation units;

•     our ability to obtain adequate fuel supply;

•     any inability to manage our energy obligations with available supply;

•     increases in competition in wholesale energy and capacity markets;

•     changes in technology related to energy generation, distribution and consumption and customer usage patterns;

•     economic downturns;

•     third party credit risk relating to our sale of generation output and purchase of fuel;

•     adverse performance of our decommissioning and defined benefit plan trust fund investments and changes in funding requirements;

•     changes in state and federal legislation and regulations;

•     the impact of pending rate case proceedings;

•     regulatory, financial, environmental, health and safety risks associated with our ownership and operation of nuclear facilities;

•     adverse changes in energy industry laws, policies and regulations, including market structures and transmission planning;

•     changes in federal and state environmental regulations and enforcement;

•     delays in receipt of, or an inability to receive, necessary licenses and permits;

•     adverse outcomes of any legal, regulatory or other proceeding, settlement, investigation or claim applicable to us and/or the energy industry;

•     changes in tax laws and regulations;

•     the impact of our holding company structure on our ability to meet our corporate funding needs, service debt and pay dividends;

•     lack of growth or slower growth in the number of customers or changes in customer demand;

•     any inability of Power to meet its commitments under forward sale obligations;

•     reliance on transmission facilities that we do not own or control and the impact on our ability to maintain adequate transmission capacity;

•     any inability to successfully develop or construct generation, transmission and distribution projects;

•     any equipment failures, accidents, severe weather events or other incidents that impact our ability to provide safe and reliable service to our customers;

•

our

inability

to

exercise

control

over

the

operations

of

generation

facilities

in

which

we

do

not

maintain

a

controlling

interest;

•     any inability to maintain sufficient liquidity;

•     any inability to realize anticipated tax benefits or retain tax credits;

•     challenges associated with recruitment and/or retention of key executives and a qualified workforce;

•     the impact of our covenants in our debt instruments on our operations; and

•     the impact of acts of terrorism, cybersecurity attacks or intrusions.

All of the forward-looking statements made in this presentation are qualified by these cautionary statements and we cannot assure you that the results or developments anticipated by management

will be realized or even if realized, will have the expected consequences to, or effects on, us or our business, prospects, financial condition, results of operations or cash flows. Readers are

cautioned not to place undue reliance on these forward-looking statements in making any investment decision. Forward-looking statements made in this presentation apply only as of the date of

this presentation. While we may elect to update forward-looking statements from time to time, we specifically disclaim any obligation to do so, even in light of new information or future events,

unless otherwise required by applicable securities laws.

The forward-looking statements contained in this presentation are intended to qualify for the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of

the Securities Exchange Act of 1934, as amended.

2

GAAP Disclaimer

PSEG presents Operating Earnings and Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) in addition to its Net Income reported in

accordance with accounting principles generally accepted in the United States (GAAP). Operating Earnings and Adjusted EBITDA are

non-GAAP financial measures

that differ from Net Income. Operating Earnings exclude the impact of returns (losses) associated with the Nuclear Decommissioning Trust (NDT), Mark-to-Market

(MTM) accounting and material one-time items.  Adjusted EBITDA excludes the same items as our Operating Earnings measure as well

as income tax expense,

interest expense and depreciation and amortization. The last two slides in this presentation (Slides A and B) include a list of items excluded from Net Income to

reconcile to Operating Earnings and Adjusted EBITDA with a reference to those slides included on each of the slides where the non-GAAP information appears.

Management uses Operating Earnings in its internal analysis, and in communications with investors and analysts, as a consistent measure for comparing PSEG’s

financial performance to previous financial results. Management believes Adjusted EBITDA is useful to investors and other users of our financial statements in

evaluating operating performance because it provides them with an additional tool to compare business performance across companies and across periods.

Management also believes that Adjusted EBITDA is widely used by investors to measure operating performance without regard to items such as income tax expense,

interest expense and depreciation and amortization, which can vary substantially from company to company depending upon, among other things, the book value of

assets, capital structure and whether assets were constructed or acquired. Adjusted EBITDA also allows investors and other users to assess the underlying financial

performance of our fleet before management’s decision to deploy capital. The presentation of Operating Earnings and Adjusted EBITDA is intended to complement,

and should not be considered an alternative to, the presentation of Net Income, which is an indicator of financial performance determined in accordance with GAAP. In

addition, Operating Earnings and Adjusted EBITDA as presented in this release may not be comparable to similarly titled measures

used by other companies.

Due to the forward looking nature of Operating Earnings and Adjusted EBITDA guidance, PSEG is unable to reconcile these non-GAAP financial measures to the most

directly comparable GAAP financial measure.  Management is unable to project certain reconciling items, in particular MTM and NDT gains (losses), for future periods

due to market volatility.

These

materials

and

other

financial

releases

can

be

found

on

the

PSEG

website

at

www.pseg.com,

under

the

Investors

tab.

From

time

to

time,

PSEG,

PSE&G

and

PSEG

Power

release

important

information

via

postings

on

their

corporate

website

at

http://investor.pseg.com.

Investors

and

other

interested

parties

are

encouraged

to

visit

the

corporate

website

to

review

new

postings.

The

“email

alerts”

link

at

http://investor.pseg.com

may

be

used

to

enroll

to

receive

automatic

email

alerts

and/or

really

simple

syndication

(RSS)

feeds

regarding

new

postings

at

http://investor.pseg.com/rss.

PSEG

2016

Q4

and

Full

Year

Review

Ralph

Izzo

Chairman,

President

and

Chief

Executive

Officer

$

millions

(except

EPS)

2016

2015

Net

Income/(Loss)

$  (98) 

$  309

Reconciling

Items

377

(54)

Operating

Earnings

(non-GAAP)*

$   279 

$  255

EPS

from

Net

Income/(Loss)

$  (0.19)

$  0.60

EPS

from

Operating

Earnings

(non-GAAP)*

$  0.54

$  0.50

4

Q4 Results Summary –

Solid quarterly results

Quarter

ended

December

31

*

See

Slide

A

for

Items

excluded

from

Net

Income/(Loss)

to

reconcile

to

Operating

Earnings

(non-GAAP).

$ millions (except EPS)

2016

2015

Net Income

$  887 

$  1,679

Reconciling Items

588

(203)

Operating Earnings (non-GAAP)*

$  1,475

$  1,476

EPS from Net Income

$  1.75

$  3.30

EPS from Operating Earnings (non-GAAP)*

$  2.90

$  2.91

5

Full-Year

Results

Summary

–

At

upper

end

of

revised

guidance

Twelve Months ended December 31

* See Slide A for Items excluded from Net Income to reconcile to Operating Earnings (non-GAAP).

6

PSEG

2016

–

Another

Year

of

Successful

Capital

Deployment

Solid

2016

financial

performance

Net

Loss

of

$(0.19)

vs.

Net

Income

of

$0.60

per

share

in

Q4

2015;

Full-year

Net

Income

of

$1.75

vs.

$3.30

per

share

in

2015;

Decision

to

retire

Hudson-Mercer

units

resulted

in

$555

million

of

incremental

D&A

in

Q4

Non-GAAP

Operating

Earnings*

results

of

$0.54

vs.

$0.50

per

share

in

Q4

2015;

Full-year

non-GAAP

Operating

Earnings*

of

$2.90

vs.

$2.91

per

share

in

2015

PSE&G

achieved

13%

growth

in

Net

Income

over

2015

on

increased

investment

in

transmission

and

distribution

PSEG

Power

results

exceeded

revised

guidance

with

stringent

control

of

O&M

Operational

excellence

PSE&G

recognized

for

the

15th

consecutive

year

as

the

Mid-Atlantic

region’s

most

reliable

electric

utility

Nuclear

performance

stabilized

following

extended

outages

at

Salem

Disciplined

capital

investment

–

producing

results

PSEG

invested

$4.2

billion

in

2016:

$2.8

billion

at

PSE&G

and

$1.3

billion

at

Power

PSE&G’s

$905

million

GSMP

and

$1.2

billion

Energy

Strong

infrastructure

investments

continue

Solar

4

All

programs

total

158

MW

DC

with

latest

extension

to

provide

$80

million

for

development

of

33

MW

DC

of

grid-connected,

landfill/brownfield

solar

over

next

3

years

*

See

Slide

A

for

Items

excluded

from

Net

Income/(Loss)

to

reconcile

to

Operating

Earnings

(non-GAAP).

7

$2.80 -

$3.00E

PSEG Initiating 2017 Full-Year Guidance 

$2.91

$2.90

Growth in utility infrastructure investments continue to

drive a higher regulated earnings contribution in 2017

Non-GAAP Operating Earnings* and 2017 Guidance

* See Slide A for Items excluded from Net Income to reconcile to Operating Earnings (non-GAAP).  E = Estimate.                                

2015

2016

2017E

PSEG Annual Dividend –

Increased 4.9% to $1.72 per share

*INDICATIVE ANNUAL 2017 PSEG COMMON DIVIDEND RATE PER SHARE.

**2017

PAYOUT

RATIO

REFLECTS

THE

INDICATIVE

ANNUAL

DIVIDEND

RATE

DIVIDED

BY

THE

MIDPOINT

OF

2017

NON-GAAP

OPERATING

EARNINGS

GUIDANCE

OF

$2.80

-

$3.00

PER

SHARE.

8

Continuing an improved rate of growth in the dividend, building on

a 110-year history of returning cash to the shareholder

$1.17

$1.29

$1.33

$1.37

$1.37

$1.42

$1.44

$1.48

$1.56

$1.64

$1.00

$1.20

$1.40

$1.60

$1.80

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017E

PSEG Annual Dividend Rate 

Payout

Ratio

43%

44%

43%

44%

50%

58% 

56%

54%

54%

57%

59%**

$1.72*

10 year rate of growth: 3.9%

PSEG

2016 Q4 Operating Company Review

Dan Cregg

EVP and Chief Financial Officer

GAAP Operating Earnings*)

Results

Per Share

$ millions (except Per Share amounts)

2016

2015

2016

2015

PSE&G

(Net Income)

$  193 

$  156 

$  0.38

$  0.31

PSEG Power (Net Income/(Loss))

$  (302) 

$  149 

$  (0.59)

$  0.29

PSEG Power (non-

$  69

$  95

$  0.13

$  0.19

PSEG Enterprise/Other (Net Income)

$  11

$  4

$  0.02

$ 

-

PSEG Enterprise/Other (non-

GAAP Op. Earnings*)

$  17

$  4

$  0.03

$ 

-

10

Q4 Results by Subsidiary

Quarter ended December 31

*See Slide B for Items excluded from Net Income/(Loss) to reconcile to Operating Earnings (non-GAAP) for PSEG Power and PSEG Enterprise/Other.

11

PSEG EPS Reconciliation –

Q4 2016 versus Q4 2015

Q4 2016      

Net

(Loss)

Q4 2015       

Net

Income

PSEG

Power

PSE&G

Enterprise/

Other

* See Slide A for Items excluded from Net Income/(Loss) to reconcile to Operating Earnings (non-GAAP).

Recontracting/

Lower Prices  (0.05)

Lower Volume/

Higher Gas

Send-out  (0.01)

O&M  (0.03)

Interest, Taxes &

Other  0.03

Transmission

0.06

Weather  0.01

Distribution

O&M  0.03

D&A, Taxes and

Other  (0.03)

Q4 2015

Operating

Earnings

(non-GAAP)*

Q4 2016       

Operating

Earnings

(non-GAAP)*

PSEG-LI

and Other

$0.60

0.07

(0.06)

0.03

$0.50

$0.54

($0.19)

Returns on expanded investment and cost control support results

0.80

-0.20

-0.10

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

12

Year-to-Date Results by Subsidiary

*See Slide B for Items excluded from Net Income/(Loss) to reconcile to Operating Earnings (non-GAAP) for PSEG Power and PSEG Enterprise/Other.

Results

Per Share

$ millions (except Per Share amounts)

2016

2015

2016

2015

PSE&G (Net

Income)

$

889

$  787

$  1.75

$  1.55

PSEG Power (Net

Income)

$  18

$  856

$  0.04

$  1.68

PSEG Power (non-GAAP

Operating Earnings*)

$  514

$  653

$  1.01

$  1.29

PSEG Enterprise/Other (Net

Income/(Loss))

$  (20)

$  36

$  (0.04)

$  0.07

PSEG Enterprise/Other (non-GAAP Op. Earnings*)

$  72

$  36

$  0.14

$  0.07

Twelve Months ended December 31

13

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

2.00

2.25

2.50

2.75

3.00

3.25

3.50

PSEG EPS Reconciliation –

YTD 2016 versus YTD 2015

YTD 2016        YTD 2016       

Operating

Earnings

(non-

GAAP)*

YTD 2015       

Net

Income

Recontracting/

Lower Prices

(0.16)

Lower Gas Send-

Out and Fixed

Cost Recovery 

(0.13)

Capacity  (0.05)

Volume  (0.07)

O&M  0.13

Interest & Other

0.05

D&A  (0.03)

Absence of 2015

Tax Credits and

Other  (0.02)

PSEG

Power

Transmission

0.15

Distribution

Margin  0.03

Distribution

D&A and

Interest  (0.02)

Taxes and

Other  0.04

PSE&G

Enterprise/

Other

PSEG-LI,

Taxes and

Other

* See Slide A for Items excluded from Net Income to reconcile to Operating Earnings (non-GAAP).

Net

Income

YTD 2015       

Operating

Earnings

(non-

GAAP)*

$3.30

0.20

(0.28)

0.07

$2.91

$2.90

$1.75

PSE&G

2016 Q4 Review

15

PSE&G –

Q4 Summary of Results

$ millions (except EPS)

Q4 2016

Q4 2015

Variance

Operating Revenues

$  1,475

$  1,402

$  73

Operating Expenses

Energy Costs

588

546

42

Operation & Maintenance

365

389

(24)

Depreciation & Amortization

153

180

(27)

Total Operating Expenses

1,106

1,115

(9)

Net Income

$  193

$  156

$  37

EPS from Net Income

$  0.38

$  0.31

$  0.07

$0.31

0.07

$0.38

0.00

0.00

0.10

0.20

0.30

0.40

0.50

16

PSE&G EPS Reconciliation –

Q4 2016

versus Q4 2015

Q4 2016      

Net Income

Q4 2015    

Net Income

Transmission &

Distribution

Margin  0.06

Electric Weather

0.01

O&M  0.03

D&A, Taxes

& Other  (0.03)

Prior quarter results for reconciling items may not add to year-to-date (YTD) totals due to rounding.

17

PSE&G –

Monthly Heating Degree Days

Q4 2016 winter weather, as defined by heating degree days, was ~38% colder

than Q4 2015 (the warmest Q4 in our records) and ~5% warmer than normal

Monthly Heating Degree Days

Q4 2016 vs. Q4 2015 vs. Q4 Normal

0

100

200

300

400

500

600

700

800

900

October

November

December

Q4 16

Q4 15

Q4 Normal

18

PSE&G –

Q4 Operating Highlights

FERC formula rate revenue increase of $121 million effective January 1, 2017

PSE&G will file its distribution base rate case with the NJBPU no later than November 1, 2017

PSE&G residential gas customers receiving BGSS bill credits totaling ~$47 million during

Winter 2016-17; Since 2009, average annual residential gas bills have declined by 53%

–

or $892 –

due to supply rate reductions

Operations

PSE&G’s

2017

Net

Income

guidance

range

is

$945

-

$985

million,

an

8.5%

increase

to

the

mid-point

over

2016

Net

Income

of

$889

million

PSE&G invested $2.8 billion in 2016 capital expenditures to upgrade and expand T&D

Investment in transmission grew to 44% of rate base at year-end 2016, as consolidated

rate base increased by 12% to $15.2 billion

Financial

Electric sales were flat both for the quarter and for the full year on a weather normalized basis;

Weather adjusted gas sales declined slightly in Q4 and declined by 1.9% for the full year

PSE&G recognized for the 15th year as the Mid-Atlantic region’s most reliable electric utility

Regulatory and Market Environment

PSEG Power

2016 Q4 Review

20

PSEG Power –

Q4 Summary of Results

$ millions (except EPS)

Q4 2016

Q4 2015

Variance

Operating Revenues

$  921

$  1,082

$  (161)

Net Income/(Loss)

(302)

149

(451)

Reconciling Items

371

(54)

425

Operating Earnings (non-GAAP)*

$  69

$  95

$  (26)

EPS from Net Income/(Loss)

$  (0.59)

$  0.29

$  (0.88)

EPS from Operating Earnings (non-GAAP)*

$  0.13

$  0.19

$  (0.06)

*See

Slide

B

for

Items

excluded

from

Net

Income/(Loss)

to

reconcile

to

Operating

Earnings

(non-GAAP)

for

PSEG

Power.

21

Recontracting/

Lower Prices 

(0.05)

Lower  Volume/

Higher Gas

Send-out  (0.01)

PSEG Power EPS Reconciliation –

Q4 2016 versus Q4 2015

O&M

* See Slide B for Items excluded from Net Income/(Loss) to reconcile to Operating Earnings (non-GAAP) for PSEG Power.

Interest,

Taxes and

Other

$0.29

$0.19

0.03

$0.13

(0.06)

(0.03)

0.40

0.00

0.30

0.20

0.10

-0.60

($0.59)

Q4 2016       

Net (Loss)

Q4 2015       

Net

Income

Q4 2015       

Operating

Earnings

(non-GAAP)*

Q4 2016       

Operating

Earnings

(non-GAAP)*

-

~

~

-

-

-

-

-

22

PSEG Power –

Q4 Generation Measures –

Volume %

7,265

7,288

814

1,343

4,646

3,124

0

7,500

15,000

2015

2016

Quarter ended December 31

Total Nuclear

Total Coal*

Oil & Natural Gas

* Includes figures for Pumped Storage. Includes Hudson and Mercer when run on gas.

PSEG Power –

Generation (GWh)

12,725

11,755

Quarter ended December 31

PSEG Power –

Capacity Factors (%)

2015

2016

Combined

Cycle

PJM and NY

62.9%

41.5%

Coal*

NJ (Coal/Gas)

0.2%

0.8%

PA

48.6%

74.5%

CT

0.2%

10.1%

Nuclear

85.4%

85.3%

23

PSEG Power –

Full-Year Generation Measures –

Twelve months ended December 31

Total Nuclear

Total Coal*

Oil & Natural Gas

* Includes figures for Pumped Storage.  Includes Hudson and Mercer when run on gas. 

PSEG Power –

Generation (GWh)

Twelve months ended December 31

PSEG Power –

Capacity Factors (%)

Volume %

30,013

29,553

5,809

4,776

19,391

17,181

0

10,000

20,000

30,000

40,000

50,000

60,000

2015

2016

2015

2016

Combined Cycle

PJM and NY

64.2%

57.2%

Coal*

NJ (Coal/Gas)

5.6%

2.8%

PA

69.3%

65.1%

CT

17.9%

5.4%

Nuclear

90.4%

86.9%

55,213

51,510

24

PSEG Power –

Fuel Costs

Quarter ended December 31

($ millions)

2015

2016

Coal

23

31

Oil & Gas

62

58

Total Fossil

85

89

Nuclear

51

49

Total Fuel Cost

136

138

Total Generation

(GWh)

12,725

11,755

$ / MWh

10.69

11.74

PSEG Power –

Fuel Costs

Twelve months ended

December 31

($ millions)

2015

2016

Coal

163

109

Oil & Gas

485

272

Total Fossil

648

381

Nuclear

213

203

Total Fuel Cost

861

584

Total Generation

(GWh)

55,213

51,510

$ / MWh

15.59

11.34

25

PSEG Power –

Gross Margin Performance

$0

$10

$20

$30

$40

$50

$60

2014

2015

2016

$0

$10

$20

$30

$40

$50

$60

2014

2015

2016

$37

Quarter ended

December 31

Twelve  Months ended

December 31

$40

Lower generation and lower hedge prices offset higher market prices

Capacity revenues were flat vs. prior year

Spark spreads compressed in the quarter

Regional Performance

Region

Q4 Gross

Margin ($M)

Q4 2016 Performance

PJM

$407

Recontracting at lower prices and

lower volumes offset higher market

prices

New

England

$15

Higher generation offset by lower

hedges

New York

$13

Lower generation offset higher prices

PSEG Power Gross Margin ($/MWh)

$37

$42

$39

$42

2013

2014

2015

2016

2017

26

Full Requirements Component

Capacity Markets/RPM

Growing Renewable Energy/Transmission

Component for Market Risk

Market Perspective –

2017 BGS Auction Results

Latest auction results reflect mix of lower prices for

energy and capacity and higher transmission costs

Note: BGS prices are quoted in $/MWh and reflect PSE&G Zone; results from the 2015-2017 auctions will be the new blended prices beginning June 1, 2017.

$99.54

~ $53

~ $59

$92.18

~ $62

Three-Year Average

Round the Clock

PJM West Forward

Energy Price

Capacity

Load shape

Transmission

Congestion

Ancillary services

Risk premium

Green

$97.39

$39

-

$40

$38

-

$39

$37

-

$38

$33

-

$34

~ $63

$96.38

$90.78

~ $58

$32

-

$33

2017

2018

2019

Volume TWh

34

34

34

Base Load

% Hedged

100%

80-85%

35-40%

(Nuclear and Base Load Coal)

Price $/MWh

$46

$43

$43

Volume TWh

16

21

26

Intermediate, Combined Cycle,

% Hedged

45-50%

0%

0%

Peaking

Price $/MWh

$46

$ -

$ -

Volume TWh

49-51

54-56

59-61

Total

% Hedged

80-85%

50-55%

15-20%

Price $/MWh

$46

$43

$43

27

Hedging Update…

Contracted Energy*

*

HEDGE

PERCENTAGES

AND

PRICES

AS

OF

FEBRUARY

9,

2017,

UPDATED

WITH

2017

BGS

AUCTION

RESULTS.

REVENUES

OF

FULL

REQUIREMENT

LOAD

DEALS

BASED

ON

CONTRACT

PRICE,

INCLUDING

RENEWABLE

ENERGY

CREDITS,

ANCILLARY,

AND

TRANSMISSION

COMPONENTS

BUT

EXCLUDING

CAPACITY.

HEDGES

INCLUDE

POSITIONS

WITH

MTM

ACCOUNTING

TREATMENT

AND

OPTIONS.

28

PSEG Power –

Q4 Operating Highlights

Q4

output

down

7.6%

versus

Q4

2015

due

to

Hope

Creek

refueling

and

planned

CCGT

major

maintenance;

Full-year

generation

was

6.7%

lower

Annual

capacity

factor

for

the

nuclear

fleet

of

86.9%

produced

29.6

TWh

of

energy;

CCGT

fleet

had

a

capacity

factor

of

57.2%,

producing

16.4

TWh

of

energy

Hope

Creek

refueling

outage

completed

in

27

days

during

Q4

2016

Operations

Financial

2017

BGS

auction

priced

at

$90.78/MWh

vs.

$96.38/MWh

in

2016

for

PSE&G

2017

expected

generation

output

49-51

TWh;

BGS

load

projected

at

11

TWhs

Power

nearing

commencement

of

construction

at

Bridgeport

Harbor

site;

target

completion

in

2019

Construction

on

schedule

and

on

budget

at

Keys

and

Sewaren

7

for

targeted

2018

in-service

Power’s

total

debt

as

a

percentage

of

capitalization

at

year-end

was

29%

Power’s

FFO/Debt

at

December

31

remains

strong

Power’s

2017

non-GAAP

Operating

Earnings

guidance

range

is

$435

-

$510

million;

Non-GAAP

Adjusted

EBITDA

guidance

for

2017

is

$1,080

to

$1,210

million

Regulatory and Market

Environment

PSEG

30

PSEG Financial Highlights

Introducing 2017 non-GAAP Operating Earnings guidance of $2.80

PSE&G earnings forecast to grow 8.5% to comprise 66% of PSEG’s 2017 non-GAAP Operating Earnings

Focused on maintaining operating efficiency and customer reliability

PSEG capital spending forecast of $10.2 billion over 2017-2019

to be invested in PSE&G (77%) and Power (23%)

PSE&G infrastructure investment in reliability/resiliency/replacement

continues with ongoing GSMP and Energy Strong investments

PSEG Power’s $2 billion investment in new generation in PJM and New

England, will improve fleet efficiency and geographic diversity

Increased 2017 indicative common dividend by 4.9% to $1.72 per share

Financial position remains strong:

Continuing to pursue opportunities to enhance Operating Earnings and reduce financial risk

Positive cash from Power and increasing cash flow from operations at PSE&G supports

dividend growth and funds capital spending program without the need to issue equity

Debt as a percentage of capitalization was 47% at December 31, 2016

Introducing 2017 non-GAAP Operating Earnings guidance of $2.80 - $3.00 per share

31

2017 Federal Tax Reform –

PSEG is well positioned

Assumption

PSE&G

PSEG Power

PSEG Parent

Reduction of

Corporate

Tax Rate

Customer rates lowered with

reduction in tax rate

Return of excess deferred

tax liability –

impact on cash

and rate base growth

dependent on payback period

After-tax earnings and cash

flow increase

One-time non-cash earnings

benefit from reduction in

deferred tax liability

After-tax earnings and cash

flow improve

100% Expensing

of

Capital Expenditures

Impact on rate base growth

comparable to existing bonus

depreciation rules

Cash flow improves

Elimination

of

Deductibility of Interest

Expense and Border

Adjustment Tax

Change in cost anticipated to

be passed through to

customers

Well positioned given low

debt balance

Uncertainty on Border

Adjustment Tax

Well positioned given

low

debt balance

Given positive non-utility contribution to earnings and a strong balance sheet,

PSEG is well positioned for potential tax reform

32

PSEG 2017 Guidance -

By Subsidiary

$ millions (except EPS)

2017E

2016

2015

PSE&G (Net Income)

$945 -

$985

$889

$787

PSEG Power

$435 -

$510

$514

$653

PSEG Enterprise/Other

$35 -

$35

$72

$36

Operating Earnings (non-GAAP)*

$1,415 -

$1,530

$1,475

$1,476

Operating EPS (non-GAAP)*

$2.80 -

$3.00E

$2.90

$2.91

Segment Operating Earnings Guidance and Prior Results

(non-GAAP, except as noted)*

$ millions

2017E

2016

2015

PSEG Power

$1,080 -

$1,210

$1,201

$1,435

PSEG Power Adjusted EBITDA (non-GAAP)*

* See Slide A for Items excluded from Net Income to reconcile to Operating Earnings (non-GAAP) and Slide B for Items excluded from Net Income to reconcile to Operating Earnings

(non-GAAP) and Adjusted EBITDA (non-GAAP).  E = Estimate. 

PSEG Liquidity as of December 31, 2016

33

Reconciliation of Non-GAAP Operating Earnings

Please see Slide 2 for an explanation of PSEG’s use of Operating Earnings as a non-GAAP financial measure

and how it differs from Net Income.

A

2016

2015

2016

2015

Net Income (Loss)

(98)

$         

309

$     

887

$        

1,679

$   

(Gain) Loss on Nuclear Decommissioning Trust (NDT)

Fund Related Activity, pre-tax (PSEG Power)

(9)

(38)

(5)

(24)

(Gain) Loss on Mark-to-Market (MTM), pre-tax

(a)

(PSEG Power)

77

(59)

168

(157)

Storm O&M, net of insurance recoveries, pre-tax (PSEG Power)

-

-

-

(172)

Hudson/Mercer Early Retirement, pre-tax (PSEG Power)

555

-

669

-

Lease Related Activity, pre-tax (PSEG Enterprise/Other)

10

-

147

-

Income Taxes related to Operating Earnings (non-GAAP) reconciling items

(b)

(256)

43

(391)

150

Operating Earnings (non-GAAP)

279

$        

255

$     

1,475

$     

1,476

$   

PSEG Fully Diluted Average Shares Outstanding (in millions)

508

508

508

508

Net Income (Loss)

(0.19)

$      

0.60

$    

1.75

$       

3.30

$    

(Gain) Loss on NDT Fund Related Activity, pre-tax (PSEG Power)

(0.02)

(0.08)

(0.01)

(0.05)

(Gain) Loss on MTM, pre-tax

(a)

(PSEG Power)

0.15

(0.12)

0.33

(0.31)

Storm O&M, net of insurance recoveries, pre-tax (PSEG Power)

-

-

-

(0.34)

Hudson/Mercer Early Retirement, pre-tax (PSEG Power)

1.10

-

1.32

-

Lease Related Activity, pre-tax (PSEG Enterprise/Other)

0.02

-

0.29

-

Income Taxes related to Operating Earnings (non-GAAP) reconciling items

(b)

(0.52)

0.10

(0.78)

0.31

Operating Earnings (non-GAAP)

0.54

$       

0.50

$    

2.90

$       

2.91

$    

(a) Includes the financial impact from positions with forward delivery months.

December 31,

Year Ended

December 31,

PUBLIC SERVICE ENTERPRISE GROUP INCORPORATED

Consolidated Operating Earnings (non-GAAP) Reconciliation

Three Months Ended

Reconciling Items

($ millions, Unaudited)

($ Per Share Impact -

Diluted, Unaudited)

(b) Income tax effect calculated at 40.85% statutory rate, except for lease related activity which is calculated at a combined leveraged lease effective tax

rate and NDT related activity which is calculated at the 40.85% statutory rate plus a 20% tax on income (losses) from qualified NDT funds.

B

Reconciliation of Non-GAAP Operating Earnings and Non-GAAP

Adjusted EBITDA

Please see Slide 2 for an explanation of PSEG’s use of Operating Earnings and Adjusted EBITDA as non-GAAP financial measures and how they differ from Net Income.

2016

2015

2016

2015

Net Income (Loss)

(302)

$       

149

$     

18

$          

856

$     

(Gain) Loss on NDT Fund Related Activity, pre-tax

(9)

(38)

(5)

(24)

(Gain) Loss on MTM, pre-tax

(a)

77

(59)

168

(157)

Storm O&M, net of insurance recoveries, pre-tax

-

-

-

(172)

Hudson/Mercer Early Retirement, pre-tax

555

-

669

-

Income Taxes related to Operating Earnings (non-GAAP) reconciling items

(b)

(252)

43

(336)

150

Operating Earnings (non-GAAP)

69

$          

95

$       

514

$        

653

$     

Depreciation and Amortization, pre-tax

(c)

85

73

329

301

Interest Expense, pre-tax

(c) (d)

18

27

83

120

Income Taxes

(c)

(17)

23

275

361

Adjusted EBITDA (non-GAAP)

155

$        

218

$     

1,201

$     

1,435

$   

PSEG Fully Diluted Average Shares Outstanding (in millions)

508

508

508

508

(a) Includes the financial impact from positions with forward delivery months.

(c) Excludes amounts related to Operating Earnings (non-GAAP) reconciling items.

(d) Net of capitalized interest.

(b) Income tax effect calculated at 40.85% statutory rate, except for lease related activity which is calculated at a combined leveraged lease effective tax

rate and NDT related activity which is calculated at the 40.85% statutory rate plus a 20% tax on income (losses) from qualified NDT funds.

PSEG Power Reconciliations

Three Months Ended

Year Ended

December 31,

($ millions, Unaudited)

Reconciling Items

December 31,

2016

2015

2016

2015

Net Income (Loss)

11

$          

4

$         

(20)

$         

36

$       

Lease Related Activity, pre-tax

10

-

147

-

Income Taxes related to Operating Earnings (non-GAAP) reconciling items

(a)

(4)

-

(55)

-

Operating Earnings (non-GAAP)

17

$         

4

72

$          

36

$       

PSEG Fully Diluted Average Shares Outstanding (in millions)

508

508

508

508

(a) Income tax effect calculated at a combined leveraged lease effective tax rate.

($ millions, Unaudited)

PSEG Enterprise/Other Reconciliation

Reconciling Items

Three Months Ended

Year Ended

December 31,

December 31,