Public Service Enterprise Group (PEG)

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Generation revenues increased $797 million due to

a net increase of $355 million from higher prices on a higher volume of BGS contracts modestly offset by the expiration of several contracts in May 2008,

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higher revenues of $331 million and $20 million resulting from a higher volume of generation being sold at higher prices into PJM and NEPOOL, respectively,

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$33 million from higher prices on a lower volume of sales in the New York power pool,

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$67 million from higher capacity prices resulting from the changes in the capacity markets in PJM, New York and Connecticut, and

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$32 million for ancillary and other services as well as a damage claim awarded by the federal government for an oil spill in the Delaware River in 2004,

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partially offset by $25 million of net losses on financial hedging transactions.

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Gas Supply revenues increased $154 million

including $130 million resulting from sales under the BGSS contract, comprised of $208 million from higher prices partly offset by lower sales volumes of $78 million due to customer conservation and milder winter temperatures in 2008, and

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a net increase of $27 million due to higher prices on sales to third party customers on a reduced sales volume.

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Trading revenues increased $23 million principally due to gains on electric-related contracts and contracts related to financial transmission rights.

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Generation revenues increased $797 million due to

a net increase of $355 million from higher prices on a higher volume of BGS contracts modestly offset by the expiration of several contracts in May 2008,

¡

higher revenues of $331 million and $20 million resulting from a higher volume of generation being sold at higher prices into PJM and NEPOOL, respectively,

¡

$33 million from higher prices on a lower volume of sales in the New York power pool,

¡

$67 million from higher capacity prices resulting from the changes in the capacity markets in PJM, New York and Connecticut, and

¡

$32 million for ancillary and other services as well as a damage claim awarded by the federal government for an oil spill in the Delaware River in 2004,

¡

partially offset by $25 million of net losses on financial hedging transactions.

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Gas Supply revenues increased $154 million

including $130 million resulting from sales under the BGSS contract, comprised of $208 million from higher prices partly offset by lower sales volumes of $78 million due to customer conservation and milder winter temperatures in 2008, and

¡

a
net increase of $27 million due to higher prices on sales to third party
customers on a reduced sales volume.

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Trading revenues increased $23 million principally due to gains on electric-related contracts and contracts related to financial transmission rights.

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Commodity related revenues increased $573 million due to

increased electric revenues of $432 million primarily due to $379 million in higher BGS revenues (higher auction prices of $491 million offset by decreased sales of $112 million) and $75 million in higher non-utility generation (NUG) prices, and

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increased gas revenues of $141 million due to $234 million in increased BGSS prices offset by $93 million in lower sales due to weather and economic conditions.

Delivery revenues decreased $23 million due to

decreased gas revenues of $23 million due to $14 million of lower SBC revenues and $9 million of lower sales due to weather and economic conditions. The SBC revenues were 10% lower in 2008, and

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flat electric revenues including $49 million in decreased sales and demands due to weather and economic conditions and a lower transmission peak, offset by $49 million for SBC, securitization transition charge and transmission rate increases. PSE&G retains no margins from SBC or STC collections as the revenues are offset in operating expenses below.

•

Commodity related revenues increased $573 million due to

increased electric revenues of $432 million primarily due to $379 million
in higher BGS revenues (higher auction prices of $491 million offset
by decreased sales of $112 million) and $75 million in higher non-utility
generation (NUG) prices, and

¡

increased gas revenues of $141 million due to $234 million in increased BGSS prices offset by $93 million in lower sales due to weather and economic conditions.

Delivery revenues decreased $23 million due to

decreased gas revenues of $23 million due to $14 million of lower SBC revenues and $9 million of lower sales due to weather and economic conditions. The SBC revenues were 10% lower in 2008, and

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flat electric revenues including $49 million in decreased sales and demands due to weather and economic conditions and a lower transmission peak, offset by $49 million for SBC, securitization transition charge and transmission rate increases. PSE&G retains no margins from SBC or
STC collections as the revenues are offset in operating expenses below.

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$485 million charge on leveraged leases in 2008, and

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$38 million decrease in leveraged lease income, due to lease adjustments,

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partially offset by $87 million in higher revenue from our Texas plants due to

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$172 million increase in electricity prices,

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partially offset by $31 million in higher unrealized MTM losses, and

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a $54 million decrease in electricity sales.

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$485 million charge on leveraged leases in 2008, and

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$38 million decrease in leveraged lease income, due to lease adjustments,

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partially offset by $87 million in higher revenue from our Texas plants due to

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$172 million increase in electricity prices,

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partially offset by $31 million in higher unrealized MTM losses, and

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a $54 million decrease in electricity sales.