(October 31, 2008 – Newark, NJ) - Public Service Enterprise Group (PSEG) (NYSE: PEG) reported income from continuing operations for the third quarter of 2008 of $476 million or $0.94 per share compared to income from continuing operations during the third quarter of 2007 of $490 million or $0.96 per share. Operating earnings in the third quarter of 2008 were equivalent to income from continuing operations.  Excluding a $7.0 million impairment of the company’s investment in Turboven, operating earnings in the third quarter of 2007 were $497 million or $0.97 per share.  Predominantly due to a gain on the sale of SAESA of $187 million, which was sold in July 2008, income from discontinued operations amounted to $180 million or $0.35 per share during the 2008 third quarter bringing net income for the period to $656 million or $1.29 per share.  By comparison, in the third quarter of 2007, income from discontinued operations raised net income by $16 million or $0.03 per share to $506 million, or $0.99 per share.

Ralph Izzo, chairman, president and chief executive officer of PSEG, said “Although the economy is experiencing unprecedented turbulence, the focus and dedication of PSEG’s employees to operational excellence continues to provide the solid foundation that allowed us to report very strong earnings for the first nine months of the year, and comfortably supports our 2008 earnings guidance of $2.80-$3.05 per share.”

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.

Izzo went on to say that “PSEG has worked hard to build a strong financial base through our commitment to operational excellence and prudent financial management.  In addition, we have reduced debt with proceeds from the sale of international assets.  PSEG has $3.35 billion of available liquidity with very modest financing requirements over the next 15 months which will help us navigate through these turbulent times.”

We have adjusted our full-year 2008 operating earnings guidance by subsidiary to reflect strong earnings from our Texas generating facilities at PSEG Energy Holdings, and the potential for a further decline in the value of Power’s NDT fund given the performance of financial markets in October.

Operating earnings guidance by subsidiary for 2008 has been adjusted as follows:

Ralph Izzo went on to say that “these results (at the mid-point) of 2008’s guidance represent growth of 8% over 2007’s operating earnings of $2.71 per share.  There have been numerous examples this year of our commitment to operational excellence.  These range from record setting output at our generation fleet to industry recognition of our utility reliability record.”

Operating Earnings Review and Outlook by Operating Subsidiary

See Attachment 6 for details regarding the quarter-over-quarter earnings reconciliations for each of PSEG’s businesses.

PSEG Power

PSEG Power reported operating earnings of $328 million ($0.65 per share) for the third quarter of 2008 compared with operating earnings of $338 million ($0.66 per share) reported during the third quarter of 2007.

PSEG Power’s margins benefited from higher energy pricing and an increase in generation output.  Higher realized prices and strong operations added $0.12 per share to earnings. More than half of the improvement in margins was driven by higher prices in PJM.  The strong performance of the nuclear fleet, coupled with higher output from the combined cycle units, also allowed PSEG Power to expand its margins during the quarter.  The benefits from increased generation offset higher operating and maintenance expense associated with planned outages ($0.03 per share) at  our fossil units, as well as an increase in operating expenses at the nuclear fleet ($0.03 per share) associated with an early start to the refueling outage at Peach Bottom 2 and outage-related work at Salem 1.  The improvement in margins was more than offset, however, by a reversal of most of the mark-to-market gains reported during the second quarter on positions entered into to hedge 2009 gas exposure ($0.05 per share).  Power’s quarterly earnings comparisons were also affected by a reduction in the value of securities held in the Nuclear Decommissioning Trust Fund ($0.02 per share).

William Levis, president and chief operating officer of PSEG Power, indicated that “the nuclear fleet is performing extremely well.”  During the quarter, the capacity factor of the nuclear units operated by PSEG Power increased to 98% as the result of the continued strong performance from Hope Creek.  The nuclear fleet (including PSEG Power’s interest in the Peach Bottom station) operated at a capacity factor of 94.6% in the third quarter.  The fleet’s performance for the quarter brought the year-to-date capacity factor to 93%.  The fleet’s full year 2008 capacity factor is projected at 91% taking into account the recently completed refueling outage at Peach Bottom 2, and the refueling outage currently underway at Salem No. 1.  This unit is expected to return to service in the first half of November.  Levis added that “PSEG Power’s performance is benefiting from the execution of the work at Hope Creek and Salem 2 which led to higher levels of capacity being available during the critical summer period.”  PSEG Power realized a 150MW increase in the capacity of the Hope Creek nuclear facility.  This is greater than the forecast increase of 125MW expected from the work associated with the unit’s uprate in capacity.  PSEG Power also realized a 23MW increase in Salem 2’s capacity following the replacement of its steam generator earlier in the year versus a planned increase in capacity of 15MW.

PSEG Power anticipates fourth quarter results will continue to benefit from higher energy pricing locked in earlier.  The improvement in margins, however, will be partially offset by planned fossil station maintenance programs, and partial reversal of most of the remaining mark-to-market gain ($0.01 per share) on positions booked earlier in the year.  We have also incorporated October’s disappointing stock market performance into the value of the NDT fund for the full year 2008.  As a result of the NDT related losses, the full year operating earnings guidance for PSEG Power has been adjusted to $1,010-$1,110 million from $1,040-$1,140 million.

PSE&G

PSE&G reported operating earnings of $97 million ($0.19 per share) for the third quarter of 2008 compared with operating earnings of $106 million ($0.21 per share) during the third quarter of 2007.  PSE&G’s quarterly results reflect unfavorable weather-normalized declines in electric sales ($0.01 per share) and miscellaneous expenses ($0.01 per share).

Ralph LaRossa, president and chief operating officer of PSE&G, said he’s “extremely proud of PSE&G being named America’s most reliable electric utility by PA Consulting.”  This is the third time in the last four years that the utility has received this recognition, and the seventh straight year that it has earned the ReliabilityOne Award for the Mid-Atlantic region.  “This recognition underscores PSE&G’s longstanding commitment to deliver safe, reliable, and affordable service to the people and businesses who power New Jersey,” LaRossa said, “even during these difficult economic times.”

PSE&G received support from the Federal Energy Regulatory Commission (FERC) for its transmission-related capital program with the FERC’s approval for a modest increase in transmission rates effective October 1, 2008.  PSE&G was granted a return on equity of 11.68% for its transmission investment.  Earlier this year, PSE&G was granted an incentive return of 125 basis points on its planned investment in the Susquehanna to Roseland 500Kv transmission line.  This line is expected to go into service at the end of 2012.

PSEG Energy Holdings

PSEG Energy Holdings reported operating earnings of $56 million ($0.11 per share) for the third quarter of 2008 versus operating earnings of $63 million ($0.12 per share) for the third quarter of 2007.

Holdings’ Global subsidiary recorded a $0.04 per share improvement in earnings as compared to the prior period.  The improvement was the result of stronger production and increased spark spreads from Global’s 2,000MW of gas-fired Texas generating capacity ($0.01 per share) coupled with mark-to-market gains of $0.04 per share.  These items more than offset the absence of income ($0.02 per share) from Chilquinta and Luz del Sur which were sold in the fourth quarter of 2007.  Global’s third quarter earnings also benefited from a net decrease in financing costs ($0.02 per share) which more than offset a higher tax rate ($0.01 per share).  Holdings’ Resources subsidiary recorded a $0.05 per share decline in quarter-over-quarter earnings.  The reduction in earnings was the result of lower income due to the company’s decision to recognize a substantial charge in the second quarter related to the IRS tax challenge on certain lease investments, and a higher tax rate on its lease portfolio.

Holdings’ Global subsidiary closed on the sale of SAESA on July 24.  The sale, which had a final equity value of $887 million plus the assumption of approximately $413 million of debt, resulted in an after-tax gain of $187 million which is reported in discontinued operations. PSEG Global’s after-tax proceeds amounted to approximately $600 million.

PSEG Energy Holdings’ operating earnings were expected to decline in 2008.  However, the full year forecast of operating earnings for 2008 has been adjusted to reflect stronger than anticipated power markets in Texas.  High natural gas prices and demand have more than offset the impact of added wind resources in West Texas on the dispatch of natural gas-fired generating assets.  Results during the fourth quarter will also reflect the loss of income from the sale of Chilquinta and Luz del Sur, as well as a decline in income on Resources’ leveraged lease portfolio.

2009 Earnings

The fundamental drivers for PSEG continue to support growth in earnings for 2009 over 2008. This is primarily due to an anticipated improvement in margins at PSEG Power.  PSEG, however, expects to experience some escalation in pension expense and financial costs as a result of stresses in the financial markets.  PSEG Power is also facing a potential adjustment in one of its coal contracts.  Ralph Izzo stated, “We are working to mitigate the impact of these pressures through implementation of rigorous cost control measures and a reduction in capital expenditures.  PSEG is currently expecting earnings for 2009 to come in at the lower half of our previously stated range of $3.05-$3.35 per share.”

Capital Spending

PSEG has reduced its forecast of capital expenditures for 2009 in response to volatility in the financial markets.  The company’s spending forecast during this period has been reduced by $275-$325 million from previously disclosed amounts.

Other Events

PSEG, as of September 30, 2008, had $658 million of remaining authorization under its $750 million common stock repurchase program.  The repurchase program was authorized in July 2008 to be executed over an 18-month period.

The following attachments can be found on www.pseg.com:

Attachment 1 – Operating Earnings and Per Share Results by Subsidiary
Attachment 2 – Consolidating Statements of Operations 
Attachment 3 – Consolidating Statements of Operations
Attachment 4 – Capitalization Schedule
Attachment 5 – Condensed Consolidated Statements of Cash Flows
Attachment 6 - Quarter-to-Quarter EPS Reconciliation
Attachment 7 – Year to Date EPS Reconciliation
Attachment 8 – Generation Measures
Attachment 9 – Retail Sales and Revenues
Attachment 10 – Retail Sales and Revenues
Attachment 11 – Statistical Measures
Attachment 12 – Non-Trading Mark-to-Market
Attachment 13 - NDT Impacts
Attachment 14 - Reconciling Items Excluded from Continuing Operations to Compute Operating Earnings 

FORWARD-LOOKING STATEMENT

Readers are cautioned that statements contained in this press release 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 release. 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.