Mort Plawner - IR Tom O'Flynn - CFO Ralph Izzo - CEO

Paul Patterson – Glenrock Associates Ashar Khan - SAC Capital Management Analyst for Gerald Chung - Banc of America Securities Michael Goldenberg – Loomis Management David Frank – Piqua Capital Management Steven Huang - Citadel Investment Group Andrew Levy – Bear Wagner Specialists

Welcome to the Public Service Enterprise Group third quarter 2006 earnings conference call and webcast. (Operator Instructions) I would now like to turn the conference over to Mort Plawner. Please go ahead, sir.

Thank you and good morning. We appreciate your listening in today, either by telephone or over our website. I will be turning the call over to Tom O'Flynn, PSEG's CFO, for a review of our third quarter results. First, I need to make a few points. We issued our earnings release this morning. In case you have not seen it, a copy is posted on our website. We expect to file our 10-Q with the SEC later today, which will contain additional information. In today's webcast, Tom will discuss our future outlook and so I must refer you to our forward-looking disclaimer. Although we believe our forecasts are based on reasonable assumptions, we can give no assurance that they will be achieved. The results or events forecast in our statements today may differ materially from actual results or events. The last word on any of our businesses is contained in the various reports we file with the SEC. As a reminder, our guidance speaks as of the date it is issued. Any confirmation or update in guidance will only be done in a public manner, generally in the form of a press release or webcast such as this. PSEG may or may not confirm or update guidance with every press release. As a matter of policy, we will not comment on guidance during any one-on-one meeting or individual phone call. In the body of our earnings release we provided a table that reconciled net income to operating earnings. We've adopted this format to improve the readability of the release and to provide the required reconciliation between the GAAP term “net income” and the non-GAAP term “operating earnings”. The attachments to the press release provide a reconciliation for each of our major businesses. Operating earnings exclude the merger-related costs and the net impact of certain asset sales during the period presented. Operating earnings is our standard for comparing 2006 results to 2005 for all our businesses. We exclude such costs so that we can better compare our current period results with prior or future periods. Finally, Tom will take your questions at the conclusion of the prepared remarks. Please limit yourself to one question and one follow-up. Thank you, I will now turn the call over to Tom. Tom O'Flynn: Thanks, Mort. Good morning, everyone. Thanks for joining us. I hope you've had a chance to review the release we put out this morning. On this call, I will briefly go over our results for the third quarter, and discuss some of the major issues. Briefly, operating earnings for PSEG were $372 million for the quarter, an increase of $93 million or $0.34 from the third quarter of last year. Can you just make sure the mic is on mute, please? We've got a little bit of speaker interference or listener interference. Operator, if you're still there?

Yes, sir. Tom O'Flynn: Can you make sure all the phones are on mute with the exception of mine?

All lines are muted, sir. Tom O'Flynn: As I said, the operating earnings for PSEG were $372 million for the quarter, an increase of $93 million, or $0.34 from the third quarter of last year. Third quarter results were strong for power and holdings and slightly off for utility. At Power, higher prices for generation output and strong operations boosted margins for the quarter. However, high depreciation and the absence of an NDT restructuring gain in the same quarter last year somewhat dampened the quarter over quarter impact. PSEG results reflect the delay of rate relief caused by merger-related issues. However, we are pleased that earlier this week we reached an agreement to settle the outstanding gas and electric cases, which will allow us the opportunity to earn a fair rate of return. I'll provide more details in a moment. For holdings, our two Texas plants provided a significant uplift in our earnings for the quarter, both in terms of cash earnings as well as mark-to-market gains. Our overall results continue to support our 2006 operating earnings guidance of $3.45 to $3.75 a share, as well as our guidance for 2007, which is $4.60 to $5 per share. Power reported operating earnings of $203 million or $0.81 per share for the quarter, $67 million or $0.26 per share above '05 results. ESEG reported operating earnings of $86 million, or $0.34 for the quarter, lower than last year's results of $115 million or $0.47 per share. Finally, holdings reported operating earnings of $101 million or $0.40 per share for the quarter, an increase of $53 million or $0.20 over last year. As I go through the three major businesses, I'll provide more insight into the changes from last year, using earnings per share as the measure. I should note that PSEG had on average about 8 million more shares outstanding for the quarter compared to last year, a result of our prior mandatory convertible security. Full quarter-to-quarter reconciliation of our operating company's results can be found on attachment 6 of the press release. Starting with PSEG Power, we continue to benefit from strong operations throughout our generation fleet, and in particular, continued improvements at our nuclear operations. During the critical summer months, our New Jersey units at Hope Creek and Salem ran at a capacity factor of nearly 100%, coupled with the strong performance at Peak’s Bottom, our nuclear operations added about $0.03 per share from the same quarter of last year. For the quarter, our nuclear operations have shown tremendous improvement. Our New Jersey units ran at a capacity factor of 95% versus 86% for the first nine months of 2005. Our five-unit fleet has a year-to-date capacity factor of 96%, a 6% improvement over last year's results of 90%. I'm also very pleased to report that Salem Unit 2 synched to the grid earlier this morning after a successful refueling outage completed in just under 21 days 10 hours, a record time for that site. Congratulations to Bill Levis, Tom Joyce and our entire team for continued good work. As you're aware, our Salem and Hope Creek units are currently run under nuclear operating services contracts with Exelon. PSEG has provided notice to Exelon that it is electing to continue the contract for two years, during which times the companies will move into a transition phase. At the same time, PSEG continues to consider a number of long-term alternatives and we expect to define our long-term strategy well before the two-year period is completed. Alternatives range from rebuilding our standalone nuclear capabilities to long-term Exelon operations that could also be accompanied by a swap in nuclear capacity. PSEG also retains the right to extend the transition phase of the contract for an additional year if it so elects. Power also saw large margin improvements as a result of higher contract prices and other market hedging activities. Given our strategy of contracting for a few years into the future, we generally see market prices impacting us on a lag basis. Higher realized prices from our forward sales contracts added $0.34 to Power's earnings for the quarter versus last year's results. One driver to this increase is the recognition of a full quarter of the 2006 BGS auction results. This auction cleared, as you know, at $102 per megawatt hour and replaced a three--year-old BGS contract that rolled off at $55 per megawatt hour. This added $0.17 per share to the third quarter results, including the seasonal effect of pricing. Year-to-date, our margins have improved by over $6 per megawatt hour versus the same period last year, an increase we expect to sustain through year end. The impact of Power's Linden generation station, which was placed in service in May of this year, resulted in a reduction of $0.06 over the third quarter of 2005. This impact predominantly reflects higher interest and depreciation costs. Also the third quarter of this year overcame the absence of nuclear decommissioning trust fund gains of $38 million that were recognized in the third quarter of last year. These prior-year gains were the result of fund restructuring and asset rebalancing. We continue to make constructive progress on an environmental resolution regarding our 600 megawatt Hudson coal-fired generation facility in Northern New Jersey. The company has been in negotiations with the EPA and the NJDEP on a proposed alternate pollution reduction plan. The plan would achieve similar emission reductions to those contemplated in a 2002 agreement and allow for the Hudson unit to continue operating on coal beyond the current December 2006 deadline. Such agreement would allow investments in pollution control facilities of approximately $400 million to $500 million to be made over the next several years. While these negotiations are ongoing, Power is hopeful that a settlement can be reached in the near future. In anticipation of such a settlement, Power has increased its environmental reserves in the third quarter by approximately $15 million or $0.06 per share to cover costs expected as a result of this potential agreement. Now turning to PSEG, for the quarter the utility was down $29 million or $0.13 per share compared to the third quarter of 2005. The absence of rate relief to offset the expiration of the excess depreciation credit was responsible for $0.04 of this decline. Weather, while above normal, was below last year's record-setting levels and resulted in a $0.03 reduction quarter over quarter. Third quarter 2006 was 9.6% above normal, while third quarter '05 was 29.8% above normal. Moderately lower usage further reduced earnings about $0.02 per share. Although PSEG was challenged during the quarter with six major summer storms with record heat that pushed electric demand to an all-time peak, it continues to perform in the top quartile in national peer panels for frequency of customer interruptions, average customer restoration time and a number of other variables. Also the quarter was affected by higher depreciation and amortization and increased O&M totaling $0.03 per share. On the regulatory front, we have reached a settlement agreement with the BPU staff and public advocate and other intervening parties on both the gas base rate case and electric distribution financial review. We caution these settlements are not final until acted upon by the BPU. We anticipate the approval and implementation of the new rates shortly. Our original gas petition was for $133 million. The settlement provides a $40 million increase in rates and a $39 million reduction in depreciation and amortization expenses resulting in $79 million of incremental margin. On the electric side, we sought to eliminate the $64 million rate credit authorized in August of 2003. The continuation of the rate credit has put pressure on PSEG's earnings this year. The settlement eliminates most of that rate credit which, with volume growth, represents additional revenues of $47 million. PSEG has agreed that these base rates would remain in effect until November of 2009. We also settled the BGSS filing that would lower residential gas bills by 6%, reflecting the lower commodity costs. Of course changes in the BGSS rates have no earnings impact to PSEG. Overall, we're pleased that we were able to lower gas residential bills by 4.4% and only increase electric bills by less than 1%. These settlements are fair, and give us the opportunity to earn an ROE of 10%, but more importantly, they reflect a regulatory climate in New Jersey that recognizes the importance of outstanding utility service to its customers while providing a fair return to investors. We're pleased that the BPU staff and the public advocate have been able to focus on these traditional issues so quickly after the demanding merger proceedings. Now finally onto Energy Holdings. As you recall, earlier this year Holdings was very successful in selling its interest in two coal-fired plants in Poland and its interest in RGE, a Brazilian electric company. These sales resulted in net proceeds of approximately $612 million, a net after-tax gain of approximately $51 million and improve the equity of Holdings by $240 million. These sales, coupled with operating cash flows, resulted in Holdings accumulating over $750 million of funds which it invested on a short-term basis with PSEG. In September, Holdings utilized these funds, returning $425 million of capital to PSEG and calling $300 million of debt for early retirement. Operating earnings for the third quarter of '06 were up sharply from the comparable period last year. The results were largely driven by our Texas generation business as the improvement in spark spreads in the Texas market continued into the third quarter. Our 2,000 megawatt plants have operated very well, able to benefit from high spark spreads available in the market. The margins achieved this year will be difficult to repeat in '07, as a result of projected lower spark spreads, planned maintenance outage and more normal weather. A recent drop in prices at the end of the third quarter led to a sizable unrealized gain for certain of our fixed price contracts that are required to be mark-to-market to earnings under the accounting rules. We have a number of contracts for delivery over the balance of the year, a portion for 2007 and one longer-term contract that runs through 2010. As prices declined at the end of the third quarter, these fixed price contracts became more valuable, leading to an unrealized gain. Holdings also reported continued lower interest expense for the quarter, driven by the redemption of debt in January and a short-term investment of cash in the asset sales for PSEG. The cost associated with the call of $300 million of notes in September totaled approximately $0.03 and were included in third quarter results. Also, Holdings had lower income taxes this quarter relative to last year, contributing approximately $0.09, largely driven by the absence of tax expenses incurred in the third quarter of 2005 in connection with the repatriation of funds under the Jobs Act. The balance of holdings businesses including resources leasing businesses, global South American distribution investments and domestic contracted generation plants, are meeting this year's expectations. That concludes my review of the business segments. I would now like to summarize the mark-to-markets earnings impact. We have experienced some meaningful mark-to-market impacts and have added schedule 11 to the earnings release which indicates that the third quarter impact to PSEG is $0.17, $0.05 and $0.12 for Power and Holdings respectively. As specified in this attachment, year-to-date PSEG has realized a benefit of $0.16 and we currently expect about one-third of that to reverse over the fourth quarter. Finally I would like to make some comments regarding our consolidated cash flow and liquidity. Through September, cash flow from operations has been very strong, generating more than $1.4 billion from operations. This represents more than $500 million of an increase versus the same period last year, which is largely driven by increased earnings at Power and reduced collateral requirements. In addition to meaningful excess cash from ops, the after-tax proceeds from the sales of assets at Holdings contributed an incremental $600 million of cash for 2006. Consistent with these factors, combined PSEG and Power have available liquidity of almost $3 billion. From a financing perspective, in April of this year we hit a maturity of $500 million at Power, and maturities totally $322 million earlier at PSEG. Through September, strong cash flow has allowed us not to refinance these maturities. From a balance sheet perspective, we have made significant improvements. At the end of 2005, our debt to capitalization as defined by our lenders was about 60%. As of September, this ratio had fallen to 53%, driven by strong earnings, collateral reductions and other equity improvements. That concludes my remarks. Just my last comment before we take questions is that we are looking forward to seeing everybody at the EI. I'm pleased to say that Ralph Izzo will be joining us for the duration of the conference and giving us his assessment of the company’s current position and prospects. As you know, Ralph has recently been promoted to President and COO of PSEG after serving as President of PSE&G for the past three years. Operator, and we can now open it up for questions. Paul Patterson – Glenrock Associates: Good morning, guys. The mark-to-market gains, how do we model that going forward? What is the expectation in the 2007 numbers for any mark-to-market adjustments? Do you expect any of those to reverse out? What is the expectation for that, since it was a big of a driver this quarter?

It was a bit of a driver this quarter. It does move around, I think over the long run it is expected to be zero, to be honest. If you just go back, even in the first couple of quarters, the first quarter of this year it was down $0.07; the second quarter it was positive $0.06 so halfway through the year we are basically at zero. We were $0.17 up this year, the biggest part of that was Texas. It is one of the few contracts we mark-to-market. As I said, about one-third of that is based on quarter end forward prices we expect to reverse. Tom O'Flynn: Just in terms of our contracts, really the majority of our activities are either hedge accounting, which is not mark-to-market, or get normal purchase and sale. That is for the majority of our contracts at Power and most of our contracts at Holdings. The one major exception we have is a long-term contract we’ve got for 250 megawatts for four-and-a-half more years at Texas.

In the long run, Paul, I think it is going to move around quarter to quarter, but as we think about our business going forward, it is a net neutral. Paul Patterson – Glenrock Associates: Weather versus normal, you had mentioned what it was versus the year-over-year, but what is it versus normal? Do you have a rough idea of the last nine months how much weather has contributed? Tom O'Flynn: The last nine months were below normal by about $0.12. About two-thirds of that is gas. Paul Patterson – Glenrock Associates: So about $0.12 a share is lower than what normal weather would have brought in? Tom O'Flynn: Yes, and that is largely gas from January/February. Paul Patterson – Glenrock Associates: Finally, when is the settlement effective? I know you probably mentioned it, but somehow I got distracted when you were talking about it. When does the settlement become effective after the BPU rules on it? Tom O'Flynn: The settlement has to be reviewed by the BPU, we're hopeful that can be done in the near term. We are hopeful that upon it being approved, rates would be effective very shortly thereafter. We are obviously especially sensitive and optimistic that they will become effective before the winter heating season. Paul Patterson – Glenrock Associates: Was this expected in your 2007 guidance? Was this anticipated or something similar to this? Tom O'Flynn: We generally anticipated getting a fair resolution of this, though this is within the range of expectations. Paul Patterson – Glenrock Associates: Thanks a lot.

Your next question comes from Ashar Khan - SAC Capital Management. Ashar Khan - SAC Capital Management: Good morning, Tom. Could you just go back, you had mentioned reaching debt targets at September. I was going back to the call a month ago. At what point, based on your outlook for next year, do you start having excess cash or capital return to shareholders? Where does that happen in your forecast? Tom O'Flynn: Sure, Ashar. Just to review our debt to cap is 53%; there are different ways to look at it, but the one we look at the most consistently is how our lenders define it. We expect to have continued improvements to that. In terms of when excess cash can be used to grow the business as opposed to retire debt, if that's what you're getting to, I think that's really an ’08 question. We still want to use cash fourth quarter in '07 to continue to improve our credit profile. And as you know, it's a mixture of cash flow coverage, cash flow to debt, as well as debt to cap. So as we look at the majority of those, I think it's realistically '08 before we would have cash flow that could be used for discretionary growth of the business. That's outside. We clearly feel comfortable we have the cash flow to run the business, including some CapEx and other fundamental business requirements, but in terms of cash for additional investments or share repurchase, things like that, in my mind that's an '08 question. Ashar Khan - SAC Capital Management: Tom, can you just mention, I don't know if could you update us on what your hedging is for the next couple of years? Where you are? Tom O'Flynn: It's pretty consistent, at least the ranges are still within where we are. We've shown this slide before. For 2006, we're at over 95% for the remaining couple of months. For '07 we're 85% to 95%, for ‘08 we're in the 65% to 80% range. '09 would be less than 50% is probably how I would characterize it right now. As we characterize those percentages, the denominator is really our base load nuke and coal. That's the majority of our margin, that's the easiest to project. As you know, looking forward your gas generation (a) it’s less profitable and (b) the volume is a little harder to measure because it’s based on regional prices, weather and all sorts of things. Ashar Khan - SAC Capital Management: Just going to, I don't know if Ralph or you could address it, as earnings grow huge, the next couple of years, how do you look at the dividend in respect to earnings in terms of payout? If could you give some indication as to how you would look at it? Tom O'Flynn: Ashar, this will be the last question and then we have to move on. I think in general, we’ve shown the dividend over the last couple of years, to grow through the dividend. Clearly our financial picture is better so as we assess the dividend in conjunction with our year end financial planning process, we will look to whether we have the ability to continue our growth and whether we can do better. But other than that, it's going to be hard for us to comment. Those are things that we do in conjunction with our year end financial and business planning process that culminates in our December board meeting. Next question, please.

Your next question comes from Gerald Chung - Banc of America Securities. Analyst for Gerald Chung - Banc of America Securities: Can you give us an update on the supply contract you have in Connecticut? I think it's supposed to reprice in '07? Tom O'Flynn: Yes. Our contract with the utility up in Connecticut does end at the end of this year. We would, if it was signed three years ago at this time, I think I've said before, it looked like a good contract then, but it is materially below market. So as we go forward in '07 we would expect materially better profitability out of our Connecticut unit, even for its 375 megawatt coal plant, New Haven is largely RMR, that's not going to change as much. We've done some forward hedging as you might expect, but we would expect to get prices running through our income statement in January more reflective of the market. Analyst for Gerald Chung - Banc of America Securities: Okay. So, going forward, we should expect a bit of an upside from the current Connecticut contract? Tom O'Flynn: Yes, only because we'd expect to be earning margins that are reflective of current market conditions as opposed to very old market conditions. Analyst for Gerald Chung - Banc of America Securities: Okay. Just one more question. Holdings has been monetizing assets quite a bit. Going forward, how should we be thinking about Holdings as a part of PSEG? Is this something that you guys are continuing to fold completely in the long term? Or is this something that we should see as a part of PSEG in the long term? Tom O'Flynn: I think we'll continue to look for opportunities to monetize assets. I think we've shown a couple this year that have been quite beneficial for debt holders and for PSEG equity holders. That's been out there for a while. I think as we look forward, as we’ve done before, we'll assess markets, assess the fit. But we'd likely continue to seek opportunities to monetize assets. No material change in the pace of those. That's one of the things we'll look at going forward. Analyst for Gerald Chung - Banc of America Securities: Thanks.

Your next question comes from Michael Goldenberg – Loomis Management. Michael Goldenberg – Loomis Management: Good morning, gentlemen. I think I missed a couple of things I just wanted to confirm. Did you say on the Hudson plant capital expenditures of $400 million to $500 million? Tom O'Flynn: Yes, That would be the environmental CapEx that I think we had in our Q last quarter, and we'll have it again. Michael Goldenberg – Loomis Management: Has that been updated? I'm just trying to understand if it's a view that hasn’t been changed or it has been updated and you still believe it's $400 million to $500 million. Tom O'Flynn: We still believe it. It is consistent with the number that we'll have in our Q that we expect to file later today. It was in our Q -- at least the prior Q, maybe going back a year or so -- it might have been $50 million less. Michael Goldenberg – Loomis Management: Should a settlement not be reached, you do not plan to shut the plant off on December 31st, right? Or in fact would PJM just not allow you to? Tom O'Flynn: That's hard to forecast. I think as I said, we are hopeful of a constructive resolution. The fact that we took a reserve of $15 million, though being a negative this quarter would be consistent with us having a reasonable expectation of getting a constructive resolution. We have just for technical reasons, we did put PJM on notice that we do not have a final resolution and, therefore, that could cause an issue in January. But that was more of a technical filing. At this point, it's hard to get into other “what ifs”. Michael Goldenberg – Loomis Management: My other question deals with the current rate settlement you've reached -- and congrats on doing that. I wanted to ask you, you mentioned there was a depreciation credit that will come into effect or shall I say non-cash adjustments that will not affect customers that should flow through the income statement. Could you outline them? Tom O'Flynn: The major pieces, part of our increase on the gas side of 133 requested an increase in depreciation. I think it was about $50 million. What we ended up doing was getting an increase of $40 million that would flow through and impact customers' rates. We actually decreased the depreciation or extended the useful life of the plants. The depreciation rate is less than 2%, which would suggest a fairly long life, which is certainly consistent with how we use our gas facilities. Pipes in the ground last a long time. Michael Goldenberg – Loomis Management: So besides the $87 million increase from increase in customer rates, how much of that is going to be additional benefit from change in the depreciation? Tom O'Flynn: There's another $39 million of non-cash expense reduction, if you will. So the total impact to our EBIT would be the $87 million plus the $39 million. Michael Goldenberg – Loomis Management: If can you comment in general about how the rate settlement compares to expectations. Can you talk about implied earned ROE or anything in that regard? Tom O'Flynn: No, I think what I'd say is the gas, that was a full rate case so that does contemplate a 10% ROE with the capital structure we've got, 47.5%, 48% equity so it's very consistent with our expectations, with our balance sheet. The 10% I believe is what we got in our last cash rate case which was early '02. Those are reasonable numbers. The electric, we keep on calling it a distribution financial review, it was not a full rate case. So the prior ROE of 9.75% back from August of '03 is still part of that. We were able to get 47 of the 69, I think. Our sense is there is certainly reason that we could ask for more, but it seemed like a reasonable result consistent with our general expectation of having being treated fairly over the last 100 years. We are appreciative that after a very extensive, exhaustive merger proceeding, folks were able to diligently tackle this quite promptly. Michael Goldenberg – Loomis Management: Just so I understand, if I'm not mistaken, following the merger break-up, you said you were expecting a 10% net income growth at PSE&G into '07? And correct me if I'm wrong on that number. Is that number expected now to be the same, higher or lower? Tom O'Flynn: It's in that range. Michael Goldenberg – Loomis Management: But 10% is the correct number? Tom O'Flynn: Yes. It's generally in that range. We haven't updated specifically subsidiary guidance. We’ve obviously got '07 guidance, got a growth from '07 to '08. We may, probably more towards the end of the year, update specific subsidiary guidance. Michael Goldenberg – Loomis Management: But the rate settlement doesn't change that? Tom O'Flynn: Correct. It's consistent with our prior expectations. Michael Goldenberg – Loomis Management: And you are expecting the new rates to be in effect January 1st? Tom O'Flynn: I think as I said earlier, we would hope that the BPU would be able to look at this in the near future, it's not formally docketed but we would expect it to be looked at shortly and reviewed. If approved by the BPU, we would be hopeful that rates would go into effect quite promptly. Particularly, we would like them to go into effect for gas prior to the heating season, which as I was trick-or-treating last night in my shorts, it wasn't in effect last night. But we're hoping the heating season does start soon in New Jersey. Michael Goldenberg – Loomis Management: Thank you very much for taking the time once again, thanks.

Your next question comes from David Frank – Piqua Capital Management. David Frank – Piqua Capital Management: Good morning. Maybe I was a little confused before. The total mark-to-market for the quarter was $0.17 or was that for the nine months? Tom O'Flynn: That is for the quarter. For the nine months it's $0.16. It's on the attachment to the press release. David Frank – Piqua Capital Management: So the 148 has $0.17 of end-to-end gains in there. Tom O'Flynn: Correct. David Frank – Piqua Capital Management: Texas spark spreads, could you tell us what the realized spark spread was for you guys in the third quarter? The average? Tom O'Flynn: I've got it year-to-date. Generally year-to-date it's in the 19, 20 range. David Frank – Piqua Capital Management: And in the quarter, it was something significantly higher than that, I would imagine? Tom O'Flynn: It was, because I'm thinking year-to-date in June it was 16, 17. So it did average up during the quarter. Expectations for the year, the average in the fall it will be in the 18 range and next year, I think the forwards are in the 14, 15 range, last I saw. David Frank – Piqua Capital Management: Thank you.

Your next question comes from Steven Huang - Citadel Investment Group. Steven Huang - Citadel Investment Group: I wanted to just follow up with your lease portfolio. Has there been any new developments in that regard with the IRS? Tom O'Flynn: No, there have not been any developments. We will update the rolling exposure we have in our Q, but no, there have not been any meaningful developments. Steven Huang - Citadel Investment Group: And it continues to be something that you can't easily unwind, right? If you wanted to, to help generate some cash proceeds? Tom O'Flynn: I'd say in general, the leasing portfolio is one we expect to be in for a long period of time. Most of the time the leases do have tax recapture if there's sale or exits at an early time. That being said, there have been some leases we bought in the secondary market that are coming to the latter part of their lives and we have had some gains. But those are generally exceptions, rather than expectations. Just as examples we had the Seminole deal that we sold and had a nice gain at the end of '05. Prior, about a year-and-a-half ago, we did have a lease out in the Midwest with one of the generation companies, that they bought us out of. Steven Huang - Citadel Investment Group: Tom, do you have any other leases that are close to the end where the counterparty may look to buy out the leases again? Tom O'Flynn: Some pieces here and there, there is a lease out in the Northwest that we expect to file. It will be in our Q. We expect to buy out in the mid $20 million range, something like that. It's out about two years, 08/09. But nothing, certainly on the Seminole side. Steven Huang - Citadel Investment Group: On your Connecticut plants, following up on a previous question, when you said that you are now looking to re-contract, does that mean you do not win the latest auction? Tom O'Flynn: I'm not sure for confidentiality we're not allowed to comment on what we did and didn't win. I would say that there's no material contract that we won such that we would feel an obligation to report it, put it that way. There's obviously forward hedging that we do but nothing of a material size that we feel it was reasonable or meaningful to an investor to report a specific contract. Steven Huang - Citadel Investment Group: Can you remind us again under the hypothetical situation of you guys looking to split your regulated and unregulated, would you need New Jersey BPU approval?

We generally don't believe that we do. That being said, I want to be cautious to not be providing detailed legal opinions, but we generally provide that the current structure would allow for a separation. I think we've said that is something that we would think about over the longer term but certainly it is not on the near-term action list. Steven Huang - Citadel Investment Group: Great, thank you. Tom O'Flynn: The near-term action list is very much in the meat and potatoes – and Ralph will address this when he is out there for a couple days -- very much meat and potatoes, getting our feet on the ground, getting fair rate for PSE&G which we seem to be close to doing; getting the operations running well which certainly Salem with their return to ops is super; and other blocking and tackling. Steven Huang - Citadel Investment Group: Tom, one last thing. In your analyst day coming up in December, what should we be expecting for that, other than segment details? Are you guys going to help us out with longer-term guidance? What are you guys thinking about? Tom O'Flynn: We may touch on that a little bit at the EI. We'll hopefully give folks a good update. As I said, I'll be out there, Ralph will be out there for the duration for two-and-a-half days. I'm looking forward to showing him that there's not a lot of fun and games, not a lot of time at the gambling table at these things. So we hope to give people a detailed update. We want to circle shortly after that and just make sure that the December 4th date is the right time to have our investor conference. We just had a discussion over the last couple of days as to whether that may be too close to the EI such that it might be some of the same commentary, but we'll get back to you out there. Steven Huang - Citadel Investment Group: Okay. So at EI, you will give us the longer-term drivers? Tom O'Flynn: Yes. At EI, we'll speak to some of the longer-term drivers and then we want to come back and add a half-day investor conference that's currently scheduled for December. We just want to think about whether if we push that off until the first couple of months of '07, whether that wouldn't just allow us to have more time between EI and provide more depth to the story. We'll update you next week. Steven Huang - Citadel Investment Group: Okay. Sounds good.

Your next question comes from Andrew Levy – Bear Wagner Specialists. Andrew Levy – Bear Wagner Specialists: What do you mean no gambling? Tom O'Flynn: I can't stay up that late. Andrew Levy – Bear Wagner Specialists: Most of my questions have been asked. But just to understand, your comments from before, I guess after the conference call that you did after the merger ended, there was probably a little bit more emotion. So it sounds like on the conference call you seemed a little bit more hot and heavy back then about possibly taking a look at breaking yourselves up. But I guess for the time being, which is probably the wise thing, is just really get the house back in order, focus on the regulatory environment, get that back in order and go from there. Is that kind of where we're at?

I think that’s right. I think it was a combination that we perhaps discussed it more and then I think some of the subsequent reports in the press may have picked it up as suggesting it might have been more imminent. Clearly it's something that we and other companies like ourselves need to assess. But I think it's something we would look at over a longer-term basis. Certainly not an imminent question. Andrew Levy – Bear Wagner Specialists: Just real quick, you're not 100% sure whether you would need regulatory approval from the State of New Jersey, is that up in the air? Or is that something you're pretty certain that if you wanted to do some type of transaction a year or two down the line, it would be fairly easy to do, as far as the regulatory aspect of it?

I'd stay with where we are, Andy. We don't expect that we would need it, but I'm not in a position of giving definitive legal opinions. We think that there's the route for us to do it if we go like that. Andrew Levy – Bear Wagner Specialists: Great. Thanks. Tom O'Flynn: And your rates are going down, Andy both at gas and only up a little on electric. I don’t want to see any customer letter. Andrew Levy – Bear Wagner Specialists: I hear you. Have fun this weekend.

I have no further questions at this time. Tom O'Flynn: Okay. Thanks very much. Thanks for joining. We look forward to seeing everybody, Ralph, I and the team look forward to seeing everybody and are certainly pleased with the quarter. Earnings up, we appear poised to have a settlement at PSE&G, which is really one of our key action items coming in. We continue to have a good ops story, congrats once again to Bill Levis, Tom Joyce and the Island team for a 20 day, 10 hour refueling. See you next week.

Ladies and gentlemen, that does conclude your conference call for today.