Public Service Enterprise Group (PEG)

BGS Auction Review

June 30, 2006 Form 10-Q, Page 90. In 2006, the BPU initiated a proceeding to review the annual BGS procurement process as well as the policy issues thereto for all of the New Jersey EDCs. In June 2006, the BPU ruled on certain issues regarding the acquisition of BGS for the period beginning in June 2007. The BPU agreed that a descending clock auction format should be used for the procurement of BGS-FP supply for 2007.

On July 10, 2006, PSE&G filed the Joint EDC proposal for the procurement of BGS for the period beginning June 1, 2007. This proposal includes a descending clock auction format to be held in February 2007 for the procurement of all BGS supply. On October 28, 2006, the BPU approved a descending clock auction format for BGS-FP and BGS-CIEP supply for the period beginning June 1, 2007. The BPU also approved auction rules and Supplier Master Agreements substantially similar to those filed by the EDCs on July 10, 2006. The EDCs were ordered to make a compliance filing with the BPU by November 3, 2006.

      In 2006, the BPU initiated a proceeding to review the annual BGS procurement process as well as the policy issues thereto for all of the New Jersey EDCs. In June 2006, the BPU ruled on certain issues regarding the acquisition of BGS for the period beginning in June 2007. The BPU agreed that a descending clock auction format should be used for the procurement of BGS-FP supply for 2007. The BPU also agreed that BGS suppliers should not be required to disclose the sources of supply behind the BGS contracts.

      On July 10, 2006, PSE&G filed the Joint EDC proposal for the procurement of BGS for the period beginning June 1, 2007. This proposal includes a descending clock auction format to be held in February 2007 for the procurement of all BGS supply. A decision by the BPU on this proposal is expected in the third quarter of 2006. PSE&G cannot predict the outcome of this proceeding.

      The BPU has initiated a proceeding to review the annual procurement process for BGS for all of the New Jersey Electric Distribution Companies. The BPU will review the procurement process as well as the policy issues directly related thereto. The BPU will consider written submissions as well as testimony supplied in the legislative-type hearing held on this issue on April 28, 2006. A BPU decision is expected by June 7, 2006. PSE&G cannot predict the outcome of this proceeding.