788784--2/26/2009--PUBLIC_SERVICE_ENTERPRISE_GROUP

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{cost, regulation, environmental}

{gas, price, oil}

{operation, natural, condition}

{cost, contract, operation}

{capital, credit, financial}

{cost, operation, labor}

{competitive, industry, competition}

{regulation, change, law}

{condition, economic, financial}

{product, liability, claim}

{tax, income, asset}

We are subject to comprehensive regulation by federal, state and local regulatory agencies that affects, or may affect, our business. Obtain fair and timely rate relief Treatment of previously approved stranded costs Market Transition Charge (MTC) collected during the four-year industry transition period Certain of our leveraged lease transactions may be successfully challenged by the IRS, which would have a material adverse effect on our taxes, operating results and cash flows. We are subject to numerous federal and state environmental laws and regulations that may significantly limit or affect our business, adversely impact our business plans or expose us to significant environmental fines and liabilities. Concerns over global climate change could result in laws and regulations to limit CO emissions or other greenhouse gases produced by our fossil generation facilities Remediation of environmental contamination at current or formerly owned facilities More stringent air pollution control requirements in New Jersey More stringent air pollution control requirements in New Jersey Our ownership and operation of nuclear power plants involve regulatory, financial, environmental, health and safety risks. Storage and Disposal of Spent Nuclear Fuel Nuclear Incident or Accident Risk Nuclear Incident or Accident Risk We may be adversely affected by changes in energy deregulation policies, including market design rules and developments affecting transmission. We face competition in the merchant energy markets. DSM and other efficiency efforts Changes in technology and/or customer conservation We are exposed to commodity price volatility as a result of our participation in the wholesale energy markets. Price fluctuations and collateral requirements Our cost of coal and nuclear fuel may substantially increase Our cost of coal and nuclear fuel may substantially increase Our inability to balance energy obligations with available supply could negatively impact results. If we are unable to access sufficient capital at reasonable rates or maintain sufficient liquidity in the amounts and at the times needed, our ability to successfully implement our financial strategies may be adversely affected. Capital market performance directly affects the asset values of our nuclear decommissioning trust funds and defined benefit plan trust funds. Sustained decreases in asset value of trust assets could result in the need for significant additional funding. An extended economic recession would likely have a material adverse effect on our businesses. In the event of an accident or acts of war or terrorism, our insurance coverage may be insufficient if we are unable to obtain adequate coverage at commercially reasonable rates. Inability to successfully develop or construct generation, transmission and distribution projects within budget could adversely impact our businesses. We may be unable to achieve, or continue to sustain, our expected levels of generating operating performance.

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788784--2/26/2009--PUBLIC_SERVICE_ENTERPRISE_GROUP_INC