Kathleen A. Lally - Vice President, Investor Relations Ralph Izzo - Chairman, President and Chief Executive Officer Thomas M. O'Flynn - Executive Vice President and Chief Financial Officer, Public Service Enterprise Group Incorporated, Public Service Electric and Gas Company, PSEG Services Corporation

Paul Patterson - Glenrock Associates Michael Goldenberg - Luminous Management Nathan Judge - Atlantic Equity

Ladies and gentlemen, thank you for standing by. My name is Susan and I am your event operator today. I would like to welcome everyone to today's conference, Public Service Enterprise Group Fourth Quarter Earnings Conference Call and Webcast. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session for members of the financial community. (Operator Instructions). As a reminder, this conference is being recorded Tuesday, February 03, 2009 and will be available for telephone replay, beginning at 2 PM Eastern Standard Time today until 2 PM Eastern Standard Time on February 10, 2009. It will also be available as an audio webcast on PSEG's corporate website at www.pseg.com. I would now like to turn the conference over to Kathleen Lally. Please go ahead. Kathleen A. Lally: Thank you, operator. Good morning everyone. Thank you for participating in our call today. As you are aware we released our fourth quarter and full year 2008 earnings statement earlier today. The release and attachments are posted on our website, www.pseg.com under the Investor section. We have also posted a series of slides that detail operating results by company for the quarter. Our 10-K for the period ended December 31, 2008 is expected to be filed later this month. I am not going to read the full disclaimer statement or the comments we have on the difference between operating earnings and GAAP results. But I do ask that you read all of these comments contained in our slides and on our website. The disclaimer statement with regards forward-looking statements, detailing the risk and uncertainties that could cause actual results to differ materially from forward-looking statements made therein. We also present a commentary with regard to the difference between operating earnings and net income reported in accordance with Generally Accepted Accounting Principles in the United States. PSEG believes that the non-GAAP financial measure of operating earnings provides a consistent and comparable measure of performance of metrics to help our shareholders understand performance trends. I would now like to turn the call over to Ralph Izzo, Chairman, President and Chief Executive Officer of Public Service Enterprise Group. Joining Ralph on the call is Tom O'Flynn, Executive Vice President and Chief Financial Officer. At the conclusion of their remarks there will be time for your questions. We ask that you limit yourself to one question and one follow-up.

Thank you, Kathleen and thank you everyone for joining us today on the call. Earlier this morning, we reported operating earrings for the fourth quarter of $0.49 per share compared to $0.53 a year-ago. The results for the quarter brought operating earnings for 2008 to $2.92 per share and this is to be compared to $2.72 per share earned in 2007. Our 2008 operating earnings fell right in the middle of the $2.80 to $3.05 per share range for guidance, which we established over a year ago. We were able to overcome the impact on earnings from a decline in the value of our Nuclear Decommissioning Trust Fund of $0.10 per share in the fourth quarter and $0.14 per share for the year. This is to be compared to a $0.02 gain in 2007 amounting to a negative $0.16 per share swing. This was partially offset by a positive $0.01 swing in mark-to-market. We've also maintained our focus on operational excellence. There was evidence of this throughout the company. PSEG Power had a record year for generation. PSE&G, the Utility maintained its top decile reliability standard and PSEG Energy Holdings sold the last of its major international assets at very strong valuation. This operational excellence underpins our financial result. We have improved the strength of our balance sheet using proceeds from the sale of our major international assets to reduce debt and we are committing capital in areas that maintain reliability and advance the State's energy master plan goal. We also reduced our financial risk by establishing a reserve for a significant percentage of our potential LILO/SILO tax related risks. Turning our attention from the past and looking to the future, the policy issues shaping our industry have not changed over the past year, the need to meet customer's expectations of our infrastructure and to enter the challenge of climate change in an economic way remain ever present realities. We are also facing the challenge of a greater than anticipated economic contraction. We are aggressively responding to these challenges. First we have initiated a series of actions to reduce our cost structure. Second we have responded to Governor Corzine's call for the utility industry to invigorate the economy by proposing to spend $888 million on capital infrastructure and energy efficiency programs over a two-year period. The New Jersey Board of Public Utilities at year-end 2008 approved our proposal to invest $46 million on energy efficiency programs targeted at underserved urban markets. Our current proposals with regulatory support will expand on that effort, advancing the State's energy policy goal and help jumpstart the economy through the creation of jobs. However, we will not undertake these initiatives absent rate recovery as envisioned in the filling. That is to say, free of regulatory lag and at a return fully reflecting our cost to capital. The utility is also working on other programs to meet the State's energy master plan goal and other filings may follow-up. We indicated to you on our third quarter earnings call of 2008, that we were expecting operating earnings for 2009 to come in at the lower half of our previously stated range of $3.05 to $3.35 per share, this remains the case. Our adjusted range of $3.30 to $3.25 per share aligns guidance with this expectation. We have resolved our Indonesian coal contract issues and we expect to experience an increase in our pension expense that is higher than has been forecast in the fall. So with the commitment of management and the support of our employees to control costs, we will succeed in these difficult times and meet the earnings objectives we've established. These are challenging times, but they are also exciting times for PSEG. We are financially strong and we are well positioned to address the issues facing the industry. And now I'll turn the call over to Tom. Thomas M. O'Flynn: Thanks, Ralph. Good morning all. As Ralph said, PSEG reported operating earnings for fourth quarter of $0.49 per share versus operating earnings of $0.53 per share in last year's fourth quarter. As you can see in slide nine, PSEG Power provides the largest percentage of our earnings. Power reported operating earnings of $0.40 per share, flat with last year's results. PSE&G's operating results were also flat against the prior year at $0.15 per share. PSEG Energy Holdings reported a loss of $0.04 per share versus operating earnings of $0.02 per share in the prior year. The reduction in debt at the parent level in 2007 reduced parent company expenses in the quarter to $0.02 per share, versus $0.04 a year ago. We provide you with a waterfall chart on slide 11, taking you through the net changes in quarter-over-quarter operating earnings for each subsidiary. I will now go through each one in more detail. As I said, Power had operating earnings in the fourth quarter of $0.40 per share, consistent with that a year ago. Power's results were aided by higher prices which added $0.07 per share to Power's quarter-over-quarter earnings, the decline in operating and maintenance expense added $0.03 per share to earnings. These improvements were offset by the turmoil in the markets resulting in a decline in the value of Power's NDT fund of $0.10 per share. Very strong performance with both the nuclear and fossil fleets drove a record amount of generation in 2008. Power's New Jersey nuclear fleet operated at a capacity factor of 89.6% for the fourth quarter, resulting in a full year capacity factor of 90.6%. Including Power's interest in Peach Bottom, the fleet operated at a capacity factor of 91.3% for the quarter and 92.6% for the full year. Performance in the quarter was partially aided by the timing of refueling outages. Power's 100% Hope Creek nuclear facility operated at its full capacity rating during the 2008 fourth quarter and for the full year, compared to a 57.3% capacity factor during the year ago quarter when Hope Creek experienced a 33 day refueling outage. Generation from our coal fleet declined in the fourth quarter, as shown on slide 16. Total output was affected by a planned outage at the Mercer station to tie in the back-end technology of the unit. We're pleased that this phase of the project was completed on time, on budget and we continue to meet all milestones related to our environmental consent degree. We negotiated the settlement and contractual issues with our Indonesian coal supplier. As you recall, we contracted for an annual amount of 2.7 million tones of coal a year from Indonesia to meet the requirements of our Hudson and Bridgeport Stations. The renegotiated agreement results in pricing more reflective of market levels and also provides for greater supply flexibility. Installation of back-end technology at Hudson in 2010 should provide us with greater flexibility on our coal supply requirements at that station. We provide you with a breakdown of Power's fuel related cost structure for the fourth quarter and for 2008 on slide 17. As a result of the settlement and market conditions in general, we expect the cost of coal to the increase in 2009 by 25 to 27%. On slide 18, you can see that the increase in pricing and volume in 2008 supported a 10% improvement in Power's gross margin to $55 per megawatt hour. This margin increase was accompanied by 4% increase in total output, much of which came from higher combined cycle utilization, which obviously generates lower margin per megawatt hour. We forecast a further improvement in Power's gross margin of 3 to 5% during 2009. Power's gross margin in 09 will be aided by an increase in generation, including a full year production from the nuclear power upgrades and the roll-off of an under market contract. Our forecast of Power's gross margin in 2009 also reflects an increase in production from our combined cycle fleet, which as I just mentioned operates at lower margins than the average of our low-cost generation fleet. Now moving on to PSE&G. Our utility reported operating earnings for the fourth quarter of $0.15 per share, consistent with the fourth quarter of 2007. Results for the quarter were aided by colder than normal weather which added a $0.01 per share earned. This offset the impact of the decline in the economy on gas and electric sales. Earnings comparisons in the quarter also benefited from PSE&G's ability to tailor its workload to match the changes in operating conditions. The decline in operating maintenance expense added $0.04 per share to earnings, offsetting an increase in depreciation and taxes of the same amount. The economy weakened greater than expected in the fourth quarter. Electric sales to our two primary market segments, residential and commercial customers declined 3.8% in the fourth quarter resulting in 1.3% decline in electric sales to these two segments for 2008. Despite the challenging economic environment we have not experienced a large increase in our accounts receivable balance. But there is growth as a percent of longer date receivables. To offset this we increased customer outreach efforts as well as actively participated at the Federal and State levels to get our customers help with their utility bills. We have increased our allowance for doubtful accounts to cover the potential for account write-offs that could occur as a result of the economy's decline. PSE&G recently filed two proposals with the BPU, which called for spending on capital infrastructural projects, 698 million and energy efficiency programs of 190 million over a two-year period beginning April 1 of 2009. The proposals are based on a 51% equity ratio and a 10.3% return on equity. And as Ralph said, we provide for a timely recovery of our capital. PSE&G is expected to experience a decline in operating earnings in 2009, despite the modest benefit that could improve from regulatory approval of the capital infrastructure spending proposal. PSE&G's 09 operating earnings could be negatively impacted by an increase in pension expense as well as the expenses associated with the start-off of the company's new customer information system, iPower. PSE&G is planning to file a combine electric and gas rate case, later this year. It will take in the consideration higher cost, including pension expense as well as significant incremental capital investment. The 2009 earnings forecast assumes to return on equity for state jurisdictional assets decline to approximately 8.5 to 9%. Lastly let's move on energy holdings. Energy Holdings reported an operated earnings loss of $0.04 per share in the fourth quarter compared to operating earnings of $0.02 per share in last year's fourth quarter. Earnings for PSE&G in the fourth quarter were affected by market-to-market losses of $0.5 per share and higher operating maintenance expenses at the Texas generating station of $0.2 per share. Earnings comparisons were also impacted by the absence of earnings from international assets sold late in 2007, representing $0.3 per share as well as the decline in the return on a leverage lease portfolio of $0.2 per share. These items more than offset a decline in interest expense for pension share. Holdings expects to operate at close to a breakeven or modest positive level in 2009. Results will be influenced by a full year decline in income on the leveraged lease portfolio. The subsidiary's 2000 megawatts of gas fired Texas generating assets are also expected to be negatively affected by a forecast decline in natural gas prices versus very high prices in the first half of 2008, as well as the decline in availability and an increase in O&M expenses. Pension expense, slide 29 depicts the change in our forecast of 2009 pension expense verses our 2008 pension expense. We estimate our pension expense in 09 will increase $0.15 per share over 2008 expense, due to the decline in the market value for our pension assets. This year-over-year increase in pension expense also widened from our third quarter earnings update. A decline in interest rates used to calculate pension obligation at year-end has resulted in a higher than forecast increase in pension expenses of $0.06 per share as compared with a levels we discussed in our third quarter call. Our estimate assumes approximately 62% of PSEG's pension expense; pre capitalization is allocated to PSE&G. We would expect an appropriate cost to service adjustments following our rate case. As Ralph indicated, we forecast an increase in operating earnings for 2009 to $3 to $3.25 per share. The forecast for operating earnings by subsidiary company is provided for you on slide 30. Beginning with our results for the first quarter of 2009, we intend to remove the financial impact of the Nuclear Decommissioning Trust either positive or negative as well as mark-to-market changes from our calculation of operating earnings. We believe this more accurately depicts the basic drivers of our earnings and is consistent with how many of our piers report operating earnings. PSEG has worked hard to build its firm balance sheet. The sale of our major international assets as well as an increase in cash flow has allowed us to reduce debt. We lowered the debt levels at Holdings by more than 600 million in 2008. We closed out the year with 323 million in cash in our balance sheet and 3.5 billion of liquidity. PSE&G and PSEG Power have both demonstrated their ability to access the capital markets. PSE&G sold 275 million of medium term notes in November at a cost of approximately 6.3%. Power recently launched a 500 million retail medium term note program. This program offers Power an alternative source of funding at attractive levels. Power has sold slightly more than 200 million of the notes in the first two weeks of the offering with an all in cost of borrowing of approximately 6.5%. This program and the cash on hand provide meaningful financial flexibility at a time when the credit markets remain substantially closed. PSEG is focused on maintaining a strong operating performance and investing in a disciplined manner. The economic environment we face is challenging, and we expect to meet our commitments. We look forward to seeing many of you at our annual conference for the financial community on March 18. As we have in the past, we will discuss the strategic drivers of our business as well as the specific market and cost factors that influence each of our businesses. Given the uncertain economic conditions involved for commodity markets we currently face with, we do not plan to issue specific 2010 guidance until the second half of this year. Lastly on the common dividend as we stated in our press release, the dates for the Board of Directors to declare the common dividend for 2009 have been adjusted to reflect a change in their meeting schedule. The next regularly scheduled meeting for the Board of Directors is February 17, 2009. The dividend declared on that date will be payable on or before March 31, 2009 to shareholders of record as of March 10. With that operator, we'll now open it up for questions.

(Operator Instructions). Your first question comes from Paul Patterson with Glenrock Associates. Paul Patterson - Glenrock Associates: Good morning guys.

Good morning, Paul. Thomas O'Flynn: Good morning Paul. Paul Patterson - Glenrock Associates: Just, circle back you. What was the mark-to-market benefit for the year? Thomas O'Flynn: It's on the attachment, but it was $0.03.

$0.03. Paul Patterson - Glenrock Associates: Okay $0.03. I mean I am not talking year-over-year, just talking about what it actually constituted? Thomas O'Flynn: The absolute number is on attachments. Paul Patterson - Glenrock Associates: Okay. And that was $0.03? Thomas O'Flynn: Yes. Paul Patterson - Glenrock Associates: Okay. So, Thomas O'Flynn: $0.03 all of Power, Holdings was flat. Paul Patterson - Glenrock Associates: Okay. And then we have about $0.14 if I recall that correctly, for the Nuclear Decommissioning trust fund? Thomas O'Flynn: Correct. Paul Patterson - Glenrock Associates: So, just with the changes in terms of reporting operating earnings and excluding those two factors we've got about $0.11 benefit, is that correct? Thomas O'Flynn: That's right.

Yes. As we discussed that will be a pro forma treatment for 2009 if we get that for 2008, it would $0.11 increase. Paul Patterson - Glenrock Associates: Okay. And then just what's the ROE for the PSE&G Power expected to be in 2009? I mean not Power sorry, the utility? Thomas O'Flynn: For the said average, we are saying about 8.5% - 9%. If you looked it up a little bit transmission does better. Paul Patterson - Glenrock Associates: Okay. So 8.5 on the distribution side, that you got... Thomas O'Flynn: 8.5 to 9 for the state jurisdictional losses which is about 85% of the asset base. Paul Patterson - Glenrock Associates: Great. Thanks a lot guys. Thomas O'Flynn: Okay.

Your next question comes from the line of (inaudible) with Jeffries.

Good morning. In your 2008 presentation you indicated that you would expect 8 to 9% growth from 2008 to 2009 and also I think from 2009 to 2010. Is this assumption still reasonable or if not, which number should we look at?

I think when we did that, that was during a materially different point in the economic and commodity cycle. And clearly in especially Power, much of the long-term growth is a function of longer term economic growth in commodity cycles. So, at this point those will be difficult numbers to meet in this type of environment. And I think in terms of longer term growth rates, as I said in this type of environment, it's difficult to forecast out two or three years in that way. And our March conference will lay out the driver's utility and for Power they said from market and from a cost standpoint and allow folks to look at various scenarios that could impact our growth. Thomas O'Flynn: If I guess, do the arithmetic 7 to 8 to 9 and we'll give greater clarity of intent at the end of 09.

So basically but I should assume there is another there is going to be 10 versus 9 lower then 8 to 9%?

Take a look at the weights so that,. Thomas O'Flynn: Yeah, take a look at weight, yeah.

Okay, thank you.

Your next question comes from the line of Michael Goldenberg, Luminous Management. Michael Goldenberg - Luminous Management: Good morning.

Hi Michael. Thomas O'Flynn: Hi, Michael. Michael Goldenberg - Luminous Management: I wanted a follow-up on this NDT issue, just unclear that the line that resulted in $80 million loss in 2008 would be excluded completely from 2009 whether it is positive or negative? Thomas O'Flynn: Yeah, it will be excluded from our operating earnings, correct. Michael Goldenberg - Luminous Management: Okay. And so I understand further do you have any projections at this time similar to pension because obviously you know this correlation between there is some drivers. Do know what you expected the 2009 NDT fund activities to be?

In normal markets, I think our planning expectation is a normal market for 2009. The expenses of the NDT and income from NDT are basically a wash. So, it's basically planned for zero. And if you look at what it was on the attachment 13, if you look back to 2007, if you call that a more normal market, we could add a couple of cents Michael Goldenberg - Luminous Management: Okay.

From the NDT and that starts certainly where it's been. It's been a couple of cents here, couple of cents there. Michael Goldenberg - Luminous Management: I understand would you characterize this as a normal market, I guess if what most economists are saying about 2009, were to be true would the number be significantly lower or would it still be, what about flat?

You maybe in a better position to predict the market. I'm certainly not going to give that one a shot. But obviously the assets are about half debt, half equity, the salient (ph) value during the year that what caused $0.14. And so if the market return normal kinds of level and I give assumption, I think the planning assumption is somewhere in the mid sixes for that with respect to assets that they return those kinds of levels then income and costs are basically. Thomas O'Flynn: But what we got that its really just stepping back on the Pro forma in out the NDT, I think obscures the fundamental drivers of our business as well as mark-to-market. Mark-to-market was only $0.03 this year as a positive, but you think of it drop year and there is a table back here on attachment 12, remember that we talked in the middle of the year. The Power had some benefits that we expected to largely reverse during the year. So, we feel it's more straightforward just to take both of those out of our operating earnings as we present them to you. They will obviously, still be there in the financials. Michael Goldenberg - Luminous Management: Got and just one final question I understand you will lay out most drivers, in March presentation but can you just give us a glimpse on PSE&G side, what are you expecting for electric sales both residential and commercial, industrial and gas commercial and industrials, can you speak what you expect for 2009?

We're assuming a much lower than historic growth rate, it's between 0 and 0.5%. Michael? Michael Goldenberg - Luminous Management: But you are assuming either flat to positive for both electric and gas and overall. I guess in overall megawatt hour sales growth?

That's correct. Michael Goldenberg - Luminous Management: Okay, got it. Thank you very much.

Your next question comes from the line of Angie Clozenski with McLaurie Capital (ph).

Thank you. Just about Michael's question. What was the weather impact on electric sales in the fourth quarter in 08, it seems like the sales were sharply down, seems like heating degree (ph) base were actually up for the quarter.

Angie in the quarter, we have THI hours were 8.5% below 07

Okay, fine.

You should realize though the THI was almost from the fourth quarter, right.

Okay. Now how you going to manage the PSEG's planned lower expenses because it seems like in the fourth quarter of 08 you expected to have between 10 and 15 million loss. Now it turns out we got 24 million. Now you are guiding to anywhere between zero and 10 million. How you're going to manage that? Thomas O'Flynn: You are referring to the repayment expenses?

Yes. Thomas O'Flynn: Yeah, the repayment expenses, have come down over the last two years as largely function of debt retirements.

Okay Thomas O'Flynn: We've had some debt impairment earlier in 2007...

I want to... (ph) the third quarter guidance for 08 was just assuming expenses anywhere between 10 and 15 and we ended up with 24? So my question is basically what kind of cost cutting measures you are going to... Thomas O'Flynn: Yeah, I think the biggest piece in there was a meaningful contribution we made to the PSEG foundation. We tend to make that in lumpsum and the foundation spends over a period of time.

So, there year-over-year difference is the lack of this contribution? Thomas O'Flynn: Yes.

Okay. Thomas O'Flynn: Yeah and there was a one time, we tend to do that on a discreet basis, PSEG for facts makes the contribution to the foundation. The foundation is then the fiduciary to make contributions, to support the community in a number of good ways.

And that's their contribution it's safe to say it was higher than we were do... Thomas O'Flynn: Higher than normal, we don't have a contribution budgeted for 09 or for 0'10 at this point.

Okay. And now energy holdings; so you are pretty much assuming flat or breakeven earnings or a lack of them. Why is that, is that because you don't have any hedges for your gas assets and that 2008 numbers were impacted by the weather or what's the... I understand the divestitures of asset but how about the factors you're assuming in your contribution now? Thomas O'Flynn: Well, I'd like to think... the largest earning asset in Holdings is clearly 2000 max generation from Texas. Those assets had a very good year in 2008 especially the end of the second quarter when temperatures were quite hot. So EBITDA down in Texas was about $145 million for the two plants, for 2008, went into 2008 with a forecast of about 100, maybe 110, something like that. So that's the second quarter that really, materially helped that. As we look it from 2009, spreads have come off and we are facing some curtailment at our plant in the West or gas curtailments (ph) due to the win. So the capacity factor up there is probably 25 to 30% something in that range. So net-net embedded in that zero to 20 number for holding is an EBITDA number for 2009 in Texas of about 85 million. So it's materially lower than last year. We have found, to be honest, Texas is a tough market to predict. And as we look back we've been quite surprised in Texas for last few years. But that being said as we see it now 85 EBITDA seems like a reasonable number based on the floor it covers. The other piece of that is the virtually all the international assets were sold, and we have $25 million left internationally, something in that range. So, everything has been sold, good prices, good value cash redeployed. And then resources is basically at zero or slightly negative income, as we took our large impairment last summer.

And the last question I promise. You previously you didn't disclose segmental guidance. Now looking at PSEG Power number for 09, how should we think of it, I know that you cannot comment about the BGS auction but is it somehow reflective of what you guys seeing from the auction, be it the range, is it something that you feel is achievable through the auction?

I just the BGS auction is going on. We obviously are not going to comment on that anyway. But yes as we talked about our view for 2009, keep in mind we are largely hedged for 2009 but we can give some modest piece open. But, this is the type of business in general is reflect of general market conditions, gas, power, et cetera. And the BGS is also obviously a function of those same markets.

Maybe I will ask, are you assuming that there is going to be a risk premium embedded than BGS auction or not?

Yeah, I think I got it we got a stake just because it's following on as we speak. So, we're going to refrain from any comment of what so ever in the BGS.

Okay, thank you.

Your next follow-up question is from the line of Paul Patterson with Glenrock Associates. Paul Patterson - Glenrock Associates: Hi guys. I was wondering if you could just get us a little bit more of if it's possible when you think we might get the BPS released the results from the BGS auction?

Paul, the BGS auction has ranged in the past from two days to nine days. We're really just... Angie tried and now you're trying. We are just going to stay clear classification, okay. Paul Patterson - Glenrock Associates: Okay, and then just make sure I understand whether adjusted what was the electric sales growth in 2008 assuming normal weather, what do you guys estimate sales would have done? Thomas O'Flynn: First of all, attachments 9 and 10 give you non weather adjusted. Paul Patterson - Glenrock Associates: Yes, I am looking at them right now.

And at the risk of sounding like a broken record, you all know that weather adjustments are as much art as they are science. Paul Patterson - Glenrock Associates: Sure

But we think, that would have been about 1.5% down both electric and gas weather adjusted. But when you have THI hours off 8.5% and degree days off by 3.1%, slight inaccuracy may need be factored into that. Paul Patterson - Glenrock Associates: Okay sure. And then just on industrial, the deep decline in the quarter. What was causing that again? Was there a particular customer that, I mean it just seems like a very large number.

There was a particular cogent who had reduced operation during the period. Paul Patterson - Glenrock Associates: Okay, even on the Texas part?

It's a small percentage of our units, it's about 12% of our units with the, it's a much smaller percentage by margin. Paul Patterson - Glenrock Associates: And then the Texas generation, it was discussion of higher O&M and lower availability in the news release? Could you give us the sense of to what the outlook for those two issues are on the Texas?

Yes, the big Texas lumpiness of outages, we tend to have outages come about every two, three years depending upon number of starts and the general expense of those. So it's not a dig of the long-term issue, just a lumpiness of outages. Though as we look at the forward market, we do see gas coming down. These are efficient gas plants so if gas comes down the spark margin on dollar basis gets compressed. On the curtailment issues Paul as what I mentioned in the West, if the wind in the west it impacts with gas flow, two issues that may help us longer term is cross multiplication of transmission in shorter term we're bidding some of those megawatts out to different power pole to see in a competitive process so will see how we that, Paul Patterson - Glenrock Associates: Now, we know going to have a meeting coming up there lot more information there but just in terms of this Indonesian contract that had to be negotiated and sort of few expectations going forward for 09, 10. Do we have any flavor there is to what you guys given all the dynamics that are happening in the market and try to get to wind up with contract in anything? Thomas O'Flynn: Well we think good shape for 09 we do have some we would try to add for this package and will keep it going in the future is some more detail on historical fuel prices. So we have broken out gas, coal, nuclear, 07, 08 give you generation hours so you can really give some cross multiplication and get the fuel price from megawatt hour. You did say that coal in general got 25 to 27% from 08 to 09. The Indonesian issue, we generally settled it and the overall cost impact walk you through is about $0.07 a share. Paul Patterson - Glenrock Associates: Okay. Thomas O'Flynn: Year-over-year, that's I think when we talked about it worst case gone back to November if you kind to cut through it all this is the worst case was higher than that was about $0.10 per share. End of the day we settled it through combination of things; one, prices came down a little bit; we talked about pricing being in the high 60s and are around sixty. We did move up towards market. We take it some benefit for some prior coal that had not yet been delivered so that gives us benefits and we will probably buy some less lower and lower amounts. So, net-net post to 08 going that $0.07 for that coal. Paul Patterson - Glenrock Associates: Okay, great. Thanks a lot guys.

(Operator Instructions). You have a follow-up question from Michael Goldenberg with Luminous Management. Michael Goldenberg - Luminous Management: Hi, my questions actually been answered. The only thing is just unclear, I know you stayed that from answering any sort of BGS option question but is the option still going on or has it ended we are just waiting for the results?

It's Kathleen's turn to say no comments. Michael Goldenberg - Luminous Management: You can even say whether it's still going on, okay. No problem, thank you very much.

Any other questions operator?

Your next question comes from the line of (inaudible) with Wachovia.

Hey good morning.

Good morning.

Can you guys give an update on your hedging positions over the next couple of years for Power's output? Thomas O'Flynn: Yeah, it's generally consistent. We update it on a regular basis, I think the last slide on the web. We had up from the mid-December but this year we're largely, we could say out sold for our coal and nuclear for 2009, that would leave our gas open, next year called coal and nuclear is about half and then 11 its about a quarter and 12 it's about 10%. We got the nuclear, we show to the amount of megawatts but they generate a higher portion of our margin, obviously the lower margin cost units. The only comment I'll say is that we have historically used BGS auction to lag forward if you will in our hedging profile. To the extent this older BGS expires and we're successful in new BGS. No comments on standing likelihood price. But historically we have used new BGS options to add incremental tender to our portfolio.

Thank you.

(Operator Instructions). You have a follow-up question from Angie Clozenski with McLaurie Capital (ph).

Thank you. I promise it's not going to be about the BGS auction. This time (ph) however, we're seeing some dramatic reductions in deliveries of coal to the North seas over the last, especially month and a half. And given where gas prices are, I was just wondering if you are guys seeing already fuel switching for basically high utilization of gas plants and lower of coal plants. And do you think that it can impact you, and I know that most of your coal plants are already hedged. But is there a possibility that you can operate your gas plants more?

We're not there yet in terms of something we're looking at. But we are not there yet we will have to see gas comedown a little more for it to make sense. We also need to be sensitive that, these are older facilities. And, they can't... we need to take into considerations moratorium on machines you go back and forth. But it's something we're looking at. It's hard for me comment on how or whether other folks are doing it but at least our facilities such as Mercer and in Bridgeport we're not at that point yet and Keith Town (ph) has very price coal, so it does need to get to that point.

Thank you.

Your next question comes from the line of Nathan Judge with Atlantic Equity. Nathan Judge - Atlantic Equity: Question generally about how you are seeing environmental legislation come together in Washington both on the RPS and carbon?

Nathan, this is Ralph. Well we will be testifying next week actually in support of a national RPS. I think I am reading the same comments you are reading that Mr. Buchanan (ph) is pretty aggressive and eager to move on climate change legislation this year. With all due respect we've heard those comments now for probably three years from various members of the House leadership. I do think in general that the mode in Washington is very aggressive on the environmental front in a way that will benefit us but tempered by economic realities. So, whether it's a national RPS or climate change legislation or stimulus package for pro environmental incentives all this will be have to be factored into the calculation of what the nation can afford. But, in general we're actively participating and I think all the signs are in the right direction. I would include on that list and I guess it will appear on the part of both the agencies as well as members to act on the care rule and that will also help company with our particular mix for that. Nathan Judge - Atlantic Equity: Could also give us an update on your perspective as far as investing into power. I think at some point you have looked at potentially investing in some new power plans et cetera. Given today's environment do you think perhaps that invesment's going to go forward and or is it switching to something else or perhaps you are just pulling back entirely? Thomas O'Flynn: Alright, that's the one area that we actively look in for opportunities. Right now, most of our efforts are focused on the RPM process in PJM and the ability to develop a couple of peeking projects that we think would be economically wise and serve the system well. And what we keep running into is not withstanding the reduction in asset values, people's expectations is still higher than ours for some things that go into the valuation. So, we continue to look for investment opportunities in power. But so far the best things that we've seen our ability to develop seekers (ph) in Connecticut and our own expectations for participating in the RPM auction coming up in May. Nathan Judge - Atlantic Equity: Just looking those long-term RPM prices, could there potentially be an impact on those capacity prices and out years related to weak demand in current markets and how do you see that playing out? Thomas O'Flynn: Of course supply and demand is at the heart of it but I think a combination of environmental constrains on high energy delivery days and just the natural aging process at some of this units. And still what we do talk about sales growth, we are we're not quite convinced that we're seeing demand destruction although it's difficult to say given the shortness of the timeframe over which we have some contraction data. So, I think that a combination of factors, not the least of which is revisiting, coal values and we've been on the records for a couple of years saying that the old cone of VJM had was too low. We've also been on the record saying we were not quite sure as to whether or not there was complete rationality behind the treatment of the DQE supply, versus the DQE demand. So I think that in the next few weeks we will likely see some type of filing from PJM to FERK and FERK (ph) ruling on that that will significantly influence may but overall you're not seeing an abundance of new investment in the area. So I think the pressures will be such that the supply will be tightening as more demand increases. This is... the May option will be for three years out. So, this is less about 09 demand and more about where do you expect demand to be in July of 12 out to May of 13. Nathan Judge - Atlantic Equity: Thank you very much.

There are no further questions at this time. Please continue with your presentation or closing remark.

I think we've pretty much covered it folks. What we... these are tough times. We're all facing them. We're quite proud of what we accomplished in 2008. And we have a firm eye on the horizon for 2009. We know exactly what our challenges are bur we have a good set of assets in markets that are functioning and functioning well. And with some operating performance that we could more of our people to produce. So we will try to look into the crystal-ball with you in March. Ours is probably not that much clear than yours but what we'll tell you is exactly what it means for us depending upon what your expectations are for credit markets, economic cycles, gas prices and the like. And with that thank you for spending time with us. We hope you're as pleased with our 08 results and where our outlook 09 is as we are and we will see you in next seven weeks.

Thank you.

Ladies and gentlemen that does conclude your conference call for today. You may disconnect and thank you for participating. Thank you.