Public Service Enterprise Group Incorporated · NYSE:PEG

Public Service Enterprise — Merger or Acquisition (May 2005)

41 slides from Public Service Enterprise's merger presentation, May 9, 2005

1. Slide 1: Exelon Corporation and Public Service Enterprise Group European Investor Meetings

   Exelon Corporation Public Service Enterprise Group European Investor Meetings May 9-13, 2005

2. Slide 2: Safe Harbor Language

   Safe Harbor Language This presentation includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, for example, statements regarding benefits of the proposed merger of Exelon and PSEG, integration plans,

3. Slide 3: Additional Information

   Additional Information This presentation is not a solicitation of a proxy from any security holder of Exelon or PSEG. The above- referenced Registration Statement on Form S-4 contains a preliminary joint proxy statement/prospectus and other relevant documents regarding the proposed merger of Exelon

4. Slide 4: Exelon Overview & Update

   Exelon Overview & Update Exelon.

5. Slide 5: Exelon Overview - 2004

   Exelon Overview - 2004 Earnings $1.86B EPS $2.78 ROE 21% Assets $42.8B Nuclear Fossil Power Team Illinois Pennsylvania EPS $1.00 Utility Utility ROE 22% Assets $16.4B EPS $1.69 ROE(1) 12% Assets $27.6B (1) Reflects parent company receivable added back to PECO Shareholders’ Equity. 5

6. Slide 6: 2004 Financial Summary

   2004 Financial Summary $2.78 Operating Earnings (+6.5% over 2003) Core growth in retail volumes Higher generation margins Acquisition of the second half of AmerGen Exelon Way cost savings Reduced losses at Enterprises Lower interest expense Dividend increases totaling 60% in 2004 (current annual rat

7. Slide 7: Looking Back: 2000 - 2004

   Looking Back: 2000 - 2004 Exelon had 9.6% average annual earnings per share growth driven by: PECO / Unicom merger Cost management initiatives Debt reduction and refinancings Effective commodity risk management Despite: Retail rate freeze Merchant power overbuild Volatile wholesale prices Note: See

8. Slide 8: 2005 Adjusted (non-GAAP) Operating EPS Guidance: $2.90 - $3.10

   2005 Adjusted (non-GAAP) Operating EPS Guidance: $2.90 - $3.10 $2.90 - $3.10 $3.10 Expected EPS Drivers $0.09 $3.00 $0.05 $0.10 $2.90 $0.11 ($0.03) Interest ($0.05) $2.78 $0.05 Other ($0.05) Revenue $2.80 ComEd Net Fuel CTC Load Growth Amort.& Depr./ Growth $2.70 Weather Nuclear O&M PECO Refueling E

9. Slide 9: PSEG Overview & Update

   PSEG Overview & Update 9

10. Slide 10: PSEG Overview - 2004

    PSEG Overview - 2004 2004 Earnings $726M* 2004 EPS $3.03* ROE 13% Assets $29B Regional Domestic/Int’l Leveraged Traditional T&D Wholesale Energy Energy Leases EPS $1.44 EPS $1.29 EPS $0.50 ROE 13% ROE 11% ROE 7% Assets $13.6B Assets $8.6B Assets $7.2B * From continuing operations, includes Parent im

11. Slide 11: PSEG 2004 Financial Review

    PSEG 2004 Financial Review $3.03 operating earnings includes impact of: Hope Creek Extended Outage ($0.34) Replacement Power Costs at Fossil and Salem ($0.15) Strengthening of Polish Zloty ($0.06) Increased annual dividend to $2.20 per share in 2004 2005 indicative annual dividend of $2.24 Energy Ho

12. Slide 12: PSEG 2005 Operating EPS Guidance

    PSEG 2005 Operating EPS Guidance $3.15 - $3.35 $3.03 + Improved - O&M + Currency - Preferred Nuclear & Impacts Dividend from Fossil Holdings Operations - Additional - NDT Shares 2004 Actual Power PSE&G Energy Other 2005 Estimate Holdings NDT = Nuclear Decommissioning Trust Funds 12

13. Slide 13: Merger Overview & Update

    Merger Overview & Update Exelon. © PSEG 13

14. Slide 14: Key Transaction Terms

    Key Transaction Terms Offer Price: 1.225 shares of Exelon per PSEG share Ownership: 68% Exelon shareholders 32% PSEG shareholders Governance: John W. Rowe to be CEO E. James Ferland to be non-executive Chairman 18 Board members — 12 nominated by Exelon — 6 nominated by PSEG Timing: Expected to close

15. Slide 15: Premier U.S. Utility Company

    Premier U.S. Utility Company Three urban utilities, with a low-cost, low-emissions generation fleet, in an integrated Regional Transmission Organization. Generation PEG: EXC: (MWs) Exelon PSEG EE&G U.S. Rank Nuclear 16,751 3,484 20,235 1 (1) TOTAL MW’s 34,457 17,018 51,475 1 Elec. Customers 5,200,00

16. Slide 16: A "Win-Win" Combination

    A “Win-Win”Combination Combined Company Enhanced earnings Regulatory and market diversity Increased operating flexibility Strong, stable cash flow with commitment to solid investment grade ratings Experienced management team PSEG Brings Exelon Brings Excellence in transmission and Premier nuclear op

17. Slide 17: Strong Generation Platform

    Strong Generation Platform Premier nuclear operator, based on consistent top quartile performance Balanced and diverse generation portfolio Reliable and commercially responsive fossil operations Experienced leader in wholesale power marketing and risk management Complementary Generation Portfolio Po

18. Slide 18: Opportunity for Improved Nuclear Performance

    Opportunity for Improved Nuclear Performance 100.0% $14.00 $12.00 90.0% $10.00 $8.00 80.0% $6.00 $4.00 70.0% $2.00 60.0% $0.00 1999 2000 2001 2002 2003 2004 1999 2000 2001 2002 2003 Exelon-operated PSEG-operated Exelon Non-Fuel PSEG Non-Fuel Capacity Factor Capacity Factor Production Cost ($/MWh) Pr

19. Slide 19: Opportunity for Improved T&D Reliability

    Opportunity for Improved T&D Reliability 2003 Key Performance Indicators Exelon PSE&G Performance Quartile Performance Quartile Reliability – Outage Frequency (SAIFI) 1.09 2nd 0.63 1st Customer Satisfaction (ACSI) 70 4th 76 2nd Safety (OSHA Recordables Rate) 2.40 2nd 2.88 2nd Total T&D $/Customer $2

20. Slide 20: Financial Benefits

    Financial Benefits Stronger platform to achieve consistent earnings growth Annual synergies of approximately $400 million in year 1 growing to $500 million by year 2 Earnings accretion for both companies’ shareholders in year 1 Nuclear contract provides earnings benefit for both companies starting i

21. Slide 21: $500 Million of Synergies in Year 2

    $500 Million of Synergies in Year 2 By Business By Category Corporate, Business Supply Nuclear (1) Services Staffing 16% 39% Corporate 43% 34% Programs 15% 9% 9% Info 7% 11% 3% 14% Technology Trading Nuclear Genco Corp/ T&D Outage Nuclear Fossil Costs Production Improvements (1) Includes cost and pr

22. Slide 22: Solid Balance Sheet

    Solid Balance Sheet Exelon and PSEG believe they will retain solid investment-grade ratings on a combined basis Pro Forma Key Ratios (1) Year 1 Year 2 Funds from Operations / 28% 31% Average Total Debt Funds from Operations Interest Coverage 5.8x 6.2x EBITDA 7.0x 7.1x Interest Coverage Debt / Capita

23. Slide 23: Strong Cash Flow

    Strong Cash Flow EXC PEG Merger Adj EEG ($ in Billions) 2007 2007 2007 2007 (2) Estimated Net Income (1) 2.2 1.0 0.3 3.5 Depreciation & Amortization 1.9 1.0 - 2.9 (3) CapEx (2.0) (0.9) (0.1) (3.0) Dividends (1.2) (0.6) - (1.8) Cash Before Debt Maturities 0.9 0.5 0.2 1.6 Securitized Debt Retired (0.6

24. Slide 24: Anticipated Timeline - Update

    Anticipated Timeline - Update Dec 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Announce FERC, Transaction NJBPU, ICC 12/20/04 Regulatory Filings 2/4/05 File Joint Proxy Statement 2/10/05 1/17/05 Implement Nuclear Operating Services Agreement Develop Transition Implementation Plans Work to Se

25. Slide 25: EE&G Value Proposition

    EE&G Value Proposition Solid Delivery Business Stable growth Improving operations Constructive regulatory processes in IL, NJ and PA Geographic diversity Exceptional Generation Business Large, low cost, low emissions generation fleet in competitive markets with strengthening wholesale prices Fuel, d

26. Slide 26: Appendix

    Appendix 26

27. Slide 27: U.S. Electric Value Chain

    U.S. Electric Value Chain Annual Fuel Production Trading Transmission Distribution Other Revenues: $259 Billion $65 Billion $100 Billion $2 Billion $22 Billion $65 Billion $5 Billion COAL 1,002 MM Short Tons 92% of US Market ($26 Billion) 452 GW (summer capacity) Customers NATURAL GAS Fossil Fuel 6,

28. Slide 28: An Environmental Asset

    An Environmental Asset 250 200 Non- 150 Fossil GWhs Gas/Oil 100 Coal 50 0 AEP Sout- Exel- Ente- Duke FPL Dom- Prog- First Edis- Ame- Cin- PG- PS- TXU hern on rgy inion ress Ene- on ren ergy &E EG rgy Intl 2002 generation by fuel source 28

29. Slide 29: Illinois Post-2006 Update – Competition Benefiting IL Customers

    Illinois Post-2006 Update – Competition Benefiting IL Customers Since the onset of customer choice in 1997, more than 70% of ComEd’s biggest customers have chosen alternatives to bundled rates, some saving up to 15% Residential customers saved 20% with a rate reduction, and even more considering a 1

30. Slide 30: Illinois Post-2006 Update – Process Moving Forward

    Illinois Post-2006 Update – Process Moving Forward 12/3/04 Illinois Commerce Commission (ICC) staff report to General Assembly endorsed an auction process similar to New Jersey’s (best fit with consensus of Procurement Working Group) ComEd made filings at the ICC on February 25 proposing an auction

31. Slide 31: Understanding the Auction: Product Laddering

    Understanding the Auction: Product Laddering ComEd Suggested Load Auctioned by Term Load Available in Each Auction Year 100% 5% of load 5 yrs. + 5 mos. 5 yrs. 5 yrs.>> 90% 5% of load 4 yrs. + 5 mos. 5 yrs. 5 yrs. Auction 2 Auction 3 Auction 4 Auction 5 Auction 6 25% Q1 2009 Q1 2010 Q1 2011 Q1 2012 i

32. Slide 32: Basic Generation Service (BGS) Auction Summary

    Basic Generation Service (BGS) Auction Summary Fourth annual reverse auction in NJ completed 2/16/05 While the wholesale price of energy increased by 18% over last year’s prices, the staggered terms of the auction contracts will result in customers of NJ’s largest utility (PSE&G) seeing an annual in

33. Slide 33: 2005 BGS Auction Results

    2005 BGS Auction Results $65.91 (36 Month NJ Avg.) $54.45 Transmission $52.70 (12 Month NJ Avg.) Ancillary services (10 Month NJ Avg.) Load shape ~ $21 Congestion ~ $18 Risk premium ~ $20 Capacity $44 - $46 $36 - $37 $32 - $33 RTC Forward Energy Cost 2003 Auction 2004 Auction 2005 Auction RTC = roun

34. Slide 34: ComEd Bundled Tariff for Mass Market

    ComEd Bundled Tariff for Mass Market 90 78 - 88 80 77 77 ATC range from $32 to $37 70 (current forward price = $37); 60 45 - 55 adders from 50 49 47 40% to 50% $/MWh 40 4 4 30 4 3 3 20 2 23 26 10 22 Sales mix: more ~ 13% rate higher rate sales increase 0 2000 2004 2007 Distr Trans Line Losses Energy

35. Slide 35: Higher gas & coal prices causing higher around-the-clock power prices

    Higher gas & coal prices, declining capacity margins and higher emission standards causing higher around the-clock (ATC) power prices Rolling Forward 12 Month (Year 1) ATC Prices Rolling Forward 13-24 Month (Year 2) ATC Prices $70 $70 $60 $60 $50 $50 $40 $40 $30 $30 $20 $20 Sep-04 Oct-04 Nov-04 Dec-

36. Slide 36: Break-Even Price for New Construction

    Break-Even Price for New Construction 70 92 60 79 50 66 2007 Forecast (1) Variable Costs Energy/ POLR Capacity 40 53 Price $/MWh $/MWh 30 40 20 2005 Market 26 Fixed Costs 10 13 0 0 Nuclear Coal Integrated Gasification Combined Cycle Gas Combined Cycle Turbine 2,230 Net MWe 670 Net MWe 810 Net MWe 50

37. Slide 37: Market Power Mitigation

    Market Power Mitigation Exelon Baseload 2/4/05 - Filed the merger Load Following Peaking application with FERC PSEG Baseload Load Following Proposed Divestiture Peaking “Virtual Divestiture” Transfer control of 2,600MW of baseload nuclear energy Divest a total of 2,900MW fossil fuel facilities Peaki

38. Slide 38: GAAP EPS Reconciliation 2000-2002

    GAAP EPS Reconciliation 2000-2002 2000 GAAP Reported EPS $1.44 Change in common shares (0.53) Extraordinary items (0.04) Cumulative effect of accounting change -- Unicom pre-merger results 0.79 Merger-related costs 0.34 Pro forma merger accounting adjustments (0.07) 2000 Adjusted (non-GAAP) Operatin

39. Slide 39: GAAP EPS Reconciliation 2003-2004

    GAAP EPS Reconciliation 2003-2004 2003 GAAP Reported EPS $1.38 Boston Generating impairment 0.87 Charges associated with investment in Sithe Energies, Inc. 0.27 Severance 0.24 Cumulative effect of adopting SFAS No. 143 (0.17) Property tax accrual reductions (0.07) Enterprises’ Services goodwill impa

40. Slide 40: Full Year 2004 Cash Reconciliation

    Full Year 2004 Cash Reconciliation Total Increase in Cash and Cash Equivalents to Free Cash Flow Reconciliation ($ in millions) GAAP Increase in Cash and Cash Equivalents $ 35 Adjustments for Goal: Discretionary Debt Activity: - Change in Short-Term Debt (164) - Net Long-Term Debt Retirements(1) 1,4

41. Slide 41: Cash Flow Definitions

    Cash Flow Definitions We define free cash flow as: Cash from operations (which includes pension contributions and the benefit of synthetic fuel investments), less Cash used in investing activities, less Transition debt maturities Common stock dividend payments at 2003 rates Other routine activities

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