Kathleen A. Lally - Vice President of Investor Relations Ralph Izzo - Chairman, Chief Executive Officer, President, Chairman of Executive Committee, Chairman of PSEG Power LLC, Chairman of Public Service Electric & Gas Company, Chief Executive Officer of PSEG Power LLC and Chief Executive Officer of Public Service Electric & Gas Company Caroline D. Dorsa - Chief Financial Officer and Executive Vice President

Paul B. Fremont - Jefferies & Company, Inc., Research Division Dan Eggers - Crédit Suisse AG, Research Division Stephen Byrd - Morgan Stanley, Research Division Paul Patterson - Glenrock Associates LLC Leslie Rich - J.P. Morgan Asset Management, Inc. Steven I. Fleishman - BofA Merrill Lynch, Research Division Ashar Khan Kit Konolige - Konolige Research, LLC Angie Storozynski - Macquarie Research Travis Miller - Morningstar Inc., Research Division

Ladies and gentlemen, thank you for standing by. Welcome to the Public Service Enterprise Group First Quarter 2012 Earnings Conference Call and Webcast. [Operator Instructions] As a reminder, this conference is being recorded today, Wednesday, May 2, 2012, and will be available for telephone replay beginning at 1:00 p.m., May 2, 2012 to May 16, 2012. 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. Good morning. Thank you for participating in our call this morning. As you are aware, we released our first quarter 2012 earnings statements earlier this morning. The release and attachments are posted on our website at www.pseg.com under the Investors section. We also posted a series of slides that detail operating results by company for the quarter. Our 10-Q for the period ended March 31, 2012 is expected to be filed shortly. I won't go through the full disclaimer statements or the comments we have on the difference between operating earnings and GAAP results, but as you know, the earnings release and other matters that we will discuss in today's call contain forward-looking statements and estimates that are subject to various risks and uncertainties. Although we may elect to update forward-looking statements from time to time, we specifically disclaim any obligation to do so, even if our estimate changes, unless required to do so. Our release also contains adjusted non-GAAP operating earnings. Please refer to today's 8-K or other filings for a discussion of the factors that may cause results to differ from management's projections, forecasts and expectations and for a reconciliation of operating earnings to GAAP results. 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 Caroline Dorsa, Executive Vice-President and Chief Financial Officer. At the conclusion of their remarks, there will be time for your questions.

Thank you, Kathleen, and thank you, everyone, for joining us today. Earlier this morning, we reported operating earnings for the first quarter of 2012 of $0.85 per share, which equaled the operating earnings from 2011's first quarter. Our results for the first quarter are strong in the face of a continued sharp decline in the price of natural gas and a very mild winter. The date indicates that the first quarter of 2012 was the warmest since 1970, and that March of 2012 tied March of 1945 in terms of average temperature as the mildest March since 1895. Let me remind you, that this is the earliest the national weather service began keeping records. And if you can follow all those years, that basically says this is the tie for first as the warmest March in history. So our results were very strong in the face of these headwinds. In a few minutes, Caroline will review our earnings in greater detail. At the end of the call, you will have an understanding of our first quarter and outlook and how we've been able to report better-than-expected earnings. As always, our competitiveness is greatly aided by our employees, who continued to perform at the top of their profession. At PSEG Power, this was exhibited in the quarter by our Fossil employees, who took cost control to a new level. The alignment of expenses with operations demonstrates their understanding of the need to control costs in the current price environment. The focus on operating efficiency and the increased availability from our combined cycle assets positions us well in the power markets. Turning my attention to the utility. PSE&G's execution on its capital investment program, as it maintains a focus on meeting needs of its customers, is providing a growing source of earnings. PSE&G received good news in March from the National Park Service that identified our route for the Susquehanna-Roseland transmission line as its preferred alternative for the portion of the line that runs through the Delaware Water Gap Recreational Area. This is the route that was approved by state regulators, including the New Jersey Board of Public Utilities. A final decision is expected by October of this year. This $790 million dollar project is scheduled to enter service in June 2015. We are awaiting the BPU's approval for the $390 million North Central transmission line. This line is scheduled to enter service in 2014. Over the next 3 years, PSE&G plans to invest $5.4 billion on transmission, as well as energy efficiency, solar power and upgrading the reliability of the distribution system. In addition to the obvious customer and shareholder benefits, these capital programs will provide important jobs and support the state's economy. PSEG Power is adding 270 megawatts of new peaking capacity at its Kearny station in June 2012, in place of older, less efficient capacity that it will retire. It will also be adding 130 megawatts of new peaking capacity in Connecticut. The energy markets are in the midst of a major transformation. Today's low natural gas prices and the cost of meeting new environmental requirements will drive decision-making on the retirement of capacity. Capacity prices under PJM's reliability pricing model, or RPM, as it's most often referred to, reflect that markets have been well supplied. The upcoming PJM capacity auction should provide better insight into the future availability of supply. We have been focused on operating in an environment of low power prices for several years. The recent collapse in natural gas prices has been greater than we would have expected. But the benefits from the strategy we have pursued are clear. Operating efficiency in our power plants has improved. At the same time, directing capital investments at PSE&G has reduced the impact of lower energy prices on our operating earnings, improved the contribution to earnings from our regulated business and improved service to customers, all the while lowering their bill. And we have a strong balance sheet to finance our growth objectives and provide our shareholders with a meaningful cash return with the opportunity for future growth. Our efforts continue to support our guidance for 2012's operating earnings of $2.25 to $2.50 per share. With that, I'll turn the call over to Caroline, who'll discuss our financials in greater detail. Caroline D. Dorsa: Thank you, Ralph, and good morning, everyone. As Ralph said, PSEG reported operating earnings for the first quarter of 2012 of $0.85 per share versus operating earnings of $0.85 per share in last year's first quarter. Slide 4 provides a reconciliation of operating earnings to income from continuing operations and net income for the quarter. I'm sure you've noted the impact of taxes on our results and I will discuss these impacts, which relate to significant closure of 10 years of tax audits as we go through the numbers. As you can see on Slide 8, the contribution from PSE&G and Power to the quarter's operating earnings were similar. For the quarter, PSE&G reported operating earnings of $0.39 per share, compared with $0.32 per share last year. Power reported operating earnings of $0.39 per share compared with $0.53 per share last year. PSEG Energy Holdings and Enterprise, or the parent, together contribute operating earnings of $0.07 per share compared with operating earnings of less than a $0.01 per share during the first quarter of 2011. So now I'll review each company in more detail, starting with Power. As I just said, PSEG Power recorded operating earnings of $0.39 per share for the quarter of 2012 compared with operating earnings of $0.53 for the first quarter of 2011. Power's results in the first quarter were affected primarily by low gas prices, a very mild winter weather compared with more normal weather in the year-ago quarter, and a decline in realized energy and capacity prices. The output from Power's fleet declined 6.3% in the quarter. The reduction in output was heavily influenced by a lack of a normal winter, which Ralph just spoke about. Heating degree days, if you followed them, were approximately 21% below normal in the quarter and versus the year-ago quarter. Over all, this decline in volume reduced earnings by $0.02 per share quarter-over-quarter. Production from the nuclear fleet increased slightly from very strong levels in the year-ago quarter with the fleet operating at an average capacity factor of 98.2% during the quarter and output from Power's combined cycle natural gas fleet increased 8.3% in the quarter. The combined cycle fleet's availability improved in the quarter and the fleet operated at an average capacity factor of 56.6% versus 52.9% in the year-ago period. The decline in the price of gas across the curve since the start of the year has been accompanied by an almost equal expansion in market heat rates and this improvement drives the economics of the combined cycle fleet. However, the coal fleet was rarely called upon during the quarter, and when our New Jersey coal units were dispatched, primarily Hudson, they were operating part of that time on gas. Since our last update in February of 2012, the market price for gas has declined more sharply than the cost of coal. The discrepancy has further widened the cost of operating our coal unit on coal versus our gas units. In fact, gas would need to increase in price by approximately $3 per mcf or coal declined by $2 per mmBTU. When demand is evident therefore, it has become more economic to run the coal units on gas. Lower realized pricing reduced earnings by $0.08 per share quarter-over-quarter. This reflects a reduction in the average price of our hedges and the impact of the sharp decline in the price of gas on wholesale power prices. The decline in price for gas has affected pricing in our regions, as well as our zones. This had an impact on our Eastern combined cycle units, which was offset by higher volumes and higher market spreads. A decline in average PJM capacity prices to $110 per megawatt-day on June 1, 2011, from $174 per megawatt-day, reduced earnings in the quarter by $0.07 per share. Keep in mind, the $110 per megawatt-day price roll off on June 1 of this year to be replaced by a weighted average price for our fleet of $152.60 per megawatt day. Customer migration away from the BGS contract represented approximately 36% of BGS volumes in the quarter. This level of migration was in line with our expectations and compares with migration levels of 34% at the end of 2011. And we attribute approximately $0.04 per share of the reduction in Power's energy margin and earnings in the quarter to migration. Of this $0.04 total amount, an estimated $0.03 per share was the result of an expansion in headroom associated with the collapse in natural gas prices and the warmer than normal temperatures in this quarter. This headroom is expected to decline with the scheduled reduction in the BGS contract price on June 1, 2012. For the year, we continue to forecast customer migration in the range of 36% to 40%. The decline in the pricing -- declining pricing in the quarter was partially offset by a reduction in Power's fuel costs, given increased reliance on natural gas. On average, Power's gross margins in the quarter declined to $46 per megawatt hour from last year's quarter of $55 per megawatt hour. In response to the market conditions, Power has reduced the operating and maintenance expense at its fossil stations. This reduction in expense improved earnings in the quarter by $0.04 per share. You won't see the same improvement each quarter due to timing, but we do expect to capture most of that Q1 savings for the year. A decline in debt levels of Power coupled with the reduction in financing cost improved earnings comparisons quarter-over-quarter by $0.02 per share. And the absence of losses on wholesale energy contracts recognized in the year-ago quarter, more than offset the impact of lower volumes and prices on gas supply contracts and net, added $0.01 per share to earnings. Power continues to forecast output for 2012 in the range of 53 to 54 terawatt hours. Output for the remainder of the year is approximately 70% to 75% hedged at an average hedge price of $59 per megawatt hour. For 2013, forecast output of 52 to 54 terawatt hours is approximately 55% to 60% hedged and has an average price of $53 per megawatt hour. We continue to forecast the slight improvement in outlook for 2014 with the range of 53 to 55 terawatt hours. Of this amount, approximately 20% to 25% is hedged at an average price of $55 per megawatt hour. I recall some questions last quarter about small changes to the terawatt hour forecast and since they do move a bit as we update our models, we've moved to giving a range which we think is a better way to look at these estimates since they do change over time. Our forecast of Power's 2012 operating earnings remains at $575 million to $665 million. The year will be influenced by a decline in average realized energy prices. For the full year, capacity prices however, are expected to be flat with 2011 given the scheduled increase in capacity prices in June of this year that I just mentioned. Power's full-year results will also benefit from a decline in financing costs and continued strong control of operating and maintenance expenses. Let's now turn to PSE&G. PSE&G, as shown on Slide 20, reported operating earnings for the first quarter of 2012 of $0.39 per share compared with $0.32 per share for the first quarter of 2011. PSE&G's results in the quarter were influenced by higher transmission rates, increased investment levels, warmer than normal weather and an adjustment in tax for this quarter due to the settlement of the tax audit. An annualized increase in transmission formula rates of $94 million was effective on January 1 of this year and added $0.03 per share to earnings. The return on investments in energy efficiency, solar and infrastructure investment programs added $0.01 per share to earnings. Warmer than normal weather reduced electric and gas sales and lowered earnings by $0.02 per share. As I mentioned earlier, winter weather was the warmest in our record. So obviously, warmer than 2011. In addition, weak economic conditions continue to have an impact on demand. In terms of weather normalized demand, PSE&G appears to experience about a 1.9% decline in electric sales during the quarter and weather normalized sales to gas customers declined about 0.7%, quarter-over-quarter. Our estimates of weather normalized demand are imprecise. It's difficult to determine whether the decline is related to the weather, if people just turn off their heat or is it somewhat of a function of conservation. The impact on earnings from this decline in demand is small given PSE&G's rate structure. Higher levels of capital investment led to an increase in depreciation expense, which reduced quarterly earnings comparison by $0.01 per share, higher operating and maintenance expense of $0.01 per share was offset by other miscellaneous items also, $0.01 per share in both net. PSE&G's quarterly earnings also benefited from lower tax expense and this added $0.06 per share to earnings. The decrease in PSE&G's effective tax rate was due primarily to tax audit settlements with the IRS, which covered all audit issues for a 10-year period, 1997 to 2006. The estimated full-year impact on earnings from these settlements was all recognized in the first quarter. PSE&G recognized less revenue and therefore, less gross margin in the first quarter of 2012 under the gas weather normalization clause than would have been expected given the mild winter. The clause, which has a bottom line earnings test, was somewhat limited by the impact of the reduction in taxes on the company's earned return on equity. The gas weather normalization clause, which we've talked about before, allows PSE&G to accrue revenues based on the impact of weather, up to its authorized return on equity of 10.3%. If the reduction in taxes from the audit settlements didn't occur, we would have been able to accrue additional revenue under the gas weather normalization clause, resulting in the same operating earnings for our Gas business. We estimate that approximately $0.03 per share would have been available to us under the gas weather normalization clause, had there been no tax settlement compared with the $0.06 per share proven in earnings associated with the reduction in taxes. Effectively, the other $0.03 per share was allocated to the Electric business. You may want to keep this in mind as you think about utility earnings opportunity under the gas weather normalization clause as you do your modeling. It's still correct to model gas margin generally consistent with normal weather as you think ahead to the next heating season. As Ralph mentioned, the National Park Service issued a preliminary decision in March that identified our route for the Susquehanna-Roseland transmission line as a preferred alternative. The preliminary assessment was supported by the proposed mitigation offered by PSE&G and PPL Energy. We've updated our estimated capital cost for the Susquehanna-Roseland transmission line to reflect changes in a number of factors. S-R is now forecast to cost up to $790 million from our prior estimate of up to $750 million. We continue to forecast PSE&G's operating earnings for 2012 will fall within the $530 million to $560 million range. Results for the full year will be influenced by an increase in transmission rates. In addition, for the full year, we continue to forecast an increase in operation and maintenance expense as compared to the prior year. The increase is associated with higher pension costs and transmission-related expenditures, and keep in mind that the forecast increase in transmission O&M is factored into our estimate of revenue requirements under the formula rate treatment. Let me now turn to PSEG Energy Holdings and Enterprise. PSEG Energy Holdings and Enterprise reported operating earnings of $39 million or $0.07 per share compared with operating earnings of $1 million during the first quarter of 2011. The improvement in operating earnings is due to the settlement with the Internal Revenue Service of the cross-border lease transactions for all tax years, and the settlement of all federal audit issues for tax years 1997 through 2006. A reduction in the effective tax rate improved operating earnings by $38 million or $0.08 per share. A small reduction in leased earnings in 2012's first quarter at Holdings was approximately equal to a small asset impairment recognized in 2011's first quarter. The reduction in tax has occurred earlier in the year than expected, but is in line with the full-year guidance we provided on our Fourth Quarter Earnings Call and was the primary driver behind our forecasted improvement in PSEG Energy Holding and Enterprise operating earnings expectations for the full-year of $35 million to $45 million. PSEG had established conservative financial statement tax reserves with respect to the tax years covered by the settlement, which were greater than the actual and very substantial increase in taxes and interest associated with the final agreement. We expect the effective tax rate for the full year to be closer to 37% to 38% versus the 30% tax rate in the first quarter, which of course, reflects the settlements. The conclusion of the tax audits and settlement of the cross-border lease transactions will result in a net return of approximately $170 million in cash. We're extremely pleased that we were able to come to agreement on the substance of tax issues for this period of time. PSEG Energy Holdings and Enterprise now remains focused on the development of its $75 million investment in the 25-megawatt solar plant in Arizona scheduled for operation later this year. The operation of its existing solar plant at Holdings as well as the integration of the LIPA contract, which you'll recall is scheduled to start in 2014. The business team also continues its focus on and management of its legacy domestic lease portfolio. Finally, a word on financing. Our capital position remains strong. We ended the quarter with $931 million of cash on the balance sheet and debt represented 40% of our capitalization. We've made our planned contributions for 2012 to the pension and other postretirement benefit programs totaling $135 million, and we replaced $1.5 billion of credit facilities at Power and $475 million at PSEG that were set to expire in December of this year with $1.6 billion and $500 million respectively, both of which now don't expire until December of 2017. With the end of March, our credit capacity in total was $4.3 billion. Our capital position and forecast of earnings and cash flows place us in a strong position to finance our $6.7 billion capital program through 2013, and provides the ability to expand our capital expenditures without any new equity issuance. As Ralph said, we continue to forecast operating earnings for the full year of $2.25 to $2.50 per share. That concludes my comments, and I'll now turn the call back over to Alvis to open the lines for your questions.

[Operator Instructions] Your first question comes from the line of Paul Fremont with Jefferies. Paul B. Fremont - Jefferies & Company, Inc., Research Division: Just to clarify then, when you originally gave guidance for 2012, you were expecting the tax benefits to be roughly $0.14 per share, so that was already incorporated into the original guidance that you gave for this year, right? Caroline D. Dorsa: So let me just clarify how to think about that relative to guidance. So as I mentioned when we talked about the holdings and enterprise guidance, as you may recall, when we gave that guidance it was higher than the guidance we've given in the prior year even though we've done some things obviously to terminate some leases. So that was effectively reflecting a range of our expectations of possible overall settlements with the IRS for the tax years including LILO/SILO and everything else in that period. Related to the remainder that I talked about related to PSE&G, which is where most of the rest of the tax related events occurred. We forecast a range of things for many things whether it's tax or O&M, certainly, we had some thoughts relative to where things stood with the 10 years of open audits, but I would say you should think about it not as explicitly incorporating a particular number. It's really a range of things as we think about tax versus anything else and keep in mind when you go into PSE&G's numbers, that $0.06 that ended up occurring for PSE&G for taxes, $0.03 of that if it hadn't happened for tax, would have been there for you through the weather normalization clause. So one just substitutes for the other for the same bottom-line. So when I pull that apart, I look at Enterprise and Holdings and say there was a range of what we hopefully would see in the final tax settlement. When you go into PSE&G, $0.03 of those $0.06 would have been there with weather normalization, so you're really only looking at what we were trying to range around $0.03, maybe a little less as we were thinking about guidance that was different from what you would've expected. We're actually quite happy, frankly, to have 10 years of audits closed at this point and earlier in the year than we thought it might have occurred. Paul B. Fremont - Jefferies & Company, Inc., Research Division: And my second question would be just based on the types of margins that we've seen out of New England and New York recently, is the company current -- should we assume that the company is currently losing money on the New York and the New England investments?

Carol and I are staring at each other, Paul. No, that's not the case.

Your next question comes from the line of Dan Eggers with Credit Suisse. Dan Eggers - Crédit Suisse AG, Research Division: Just to make sure I understand the weather normalization correctly. It affects the first quarter results, do they look at a full-year number also so that if you're under-earning over the course of the year, maybe some of that tax benefit gets spread out over more quarters or is it just a quarter-specific adjustment and the $0.03 of loss tax benefit is effectively lost for good? Caroline D. Dorsa: Right. So let me just describe a little bit how the weather normalization clause works, Dan. The weather normalization clause looks at the earnings over a winter season. So it starts late in the prior year and goes through May of this year. And so what you look at is the total amount of how the weather is in terms of being above or below normal and then you either accrue if you are below normal in terms of what your earnings would be, in other words, if it's warmer than normal, or you defer recognition if you've collected in excess if the weather is significantly colder than normal. And so, when you look at that, you look at it over a period, over a season, and you true up as you go through the season, which starts in October of the prior year and go through May of the current year. So as we've looked at what we were accruing relative to weather normalization, we were accruing a little bit. We have accrued a little bit under the weather normalization clause to date during the season, because the weather has been milder than normal all the way through the winter season starting in October. So we've accrued a few pennies year-to-date through the weather normalization clause. Now, because we have the tax settlement, it would -- basically it did not allow us to accrue all of the amount we would've been able to accrue because the first quarter was so warm. There was a little bit of accrual that occurred late last year, a little bit of accrual, but not as much as we would've otherwise been able to accrue because the weather was so warm. The other piece to keep in mind, that I mentioned in my remarks, is when you do all of this math and you have a, for example, a warmer than normal season, you get to accrue but you don't always get to accrue 100% to normal weather, you are stopped by earning of the 10.3%. So when I described kind of where we were, I mentioned that we didn't accrue $0.03 that we would've otherwise accrued because the tax settlement because that help us get to the 10.3% sooner. If we haven't had tax, we would've accrued $0.03 and we would've stopped because we would've been at the 10.3%. So it's a full season test, starts in the -- really the way to think about it is the late fall, goes through May. And then any true ups that you need in terms of whether -- if you're collecting, get collected in cash in the subsequent period as to any returns of cash if you over-collect them. Dan Eggers - Crédit Suisse AG, Research Division: I guess just looking at the coal generation fleet, and kind of the sustained low performance and the huge amount of commodity price that would have to happen to make those plans economic, seemingly. Where are you guys on the coal -- your purchase obligation perspective, where the inventories sit and is there more restructuring that needs to be done from a dispatch or a cost perspective as you kind of look at the forward curve right now? Caroline D. Dorsa: Yes. So we certainly have plenty of coal onsite and offsite storage. You may recall, we restructured the Adaro contract last year so that it no longer has a fixed commitment. It is a calculated price, which will always be effectively a little bit below market that goes out through 2016, but we no longer have a penalty for canceling shipment so we no longer have to actually take coal. We do have some purchase commitments for coal and related transportation that go through 2013, and we're in the process of trying to renegotiate some of those. Dan Eggers - Crédit Suisse AG, Research Division: Is there going to be -- should we -- you look out at the curb, is this the right expectation both from a cost structure perspective, the costs you've taken out from the coal fleet and the dispatch perspective for the rest of this year and maybe '13 as you look out?

So we've tried to give the total generation numbers for '13, Dan. I think what Caroline tried to play out before is that the $0.04 that we had in Q1, we should not think of that as $0.16 for the year, but by the same token, it wasn't all $0.04 of timing and we think we'll be able to retain most, if not, all of those savings. Caroline D. Dorsa: And of course, folks have been looking out, as they think about the longer term, in terms of trying to make permanent, somebody's kinds of operational changes.

Your next question comes from the line of Stephen Byrd with Morgan Stanley. Stephen Byrd - Morgan Stanley, Research Division: You had a good development on Susquehanna-Roseland with the Park Service recent development. In your mind, does that put the degree of risk that the project won't meet targeted timing at a very low risk level? How do you think about sort of execution risk now that you continue to make more progress there?

So we've posted to PJM that we expect the in service date to be June of 2015 and throughout that posting, we anticipate the Parks Department's decision of October of this year. So we still look to be on track to that, Steven. If that permit is delayed, any significant amount of time at that point, we would revisit the in-service date. But right, now all systems are the same as they've been for probably the better part of the last 6 to 9 months or so. Stephen Byrd - Morgan Stanley, Research Division: Okay, great. And just going back to -- I know there's been a couple of questions on the coal units. As I think about Hudson and Mercer, we've seen other companies thinking about just the economic viability of some of the coal units and I'm just curious what those units, the dispatch is obviously currently very low with low gas and low demand through the wintertime. Is there a situation under which those units would be considered not economically viable and shut down candidates, or is that relatively unlikely under sort of any scenario that you can think of?

I think that you never say never, right? Because there's always some sort of business one can envision. However, we've always benefited from fuel diversity. The CapEx at those units is behind us. Still, we're pretty confident that given a return of normal demand, which was anything but the last 6 months, and some modest cooperation of prices that those units will be quite ready, willing and available to meet the needs of the customers in this space. Caroline D. Dorsa: And as I said, in different periods of when they run, this quarter, although it hasn't been very often, because they have the fuel flexibility, they can run on gas and gas is more economic to run on than coal, so that gives us even a little more than you would have with a normal coal unit. Stephen Byrd - Morgan Stanley, Research Division: Okay, so I guess the capacity factor was 2% for the New Jersey coal and gas units? Caroline D. Dorsa: Yes, it's pretty low. Remember, there was no demand from this such unusually mild winter. Stephen Byrd - Morgan Stanley, Research Division: Okay, understood. And just lastly, just anything new in terms of the ATDD units in terms of discussions with regulators or otherwise? Caroline D. Dorsa: Sure. So relative to those units, I think you remember because we've talked about that and given out that information relative to having given some notice for some of the units that we plan to retire, which we talked about, about 400 megawatts. For the remainder of the megawatts, which you may recall we've talked about and we've given the data on, there's about 1,200 megawatts that are water injected and another 400 megawatts that we also identified on older peakers. We continue to evaluate them. We really haven't nothing more to say relative to we're thinking about them, what we said before. We continue to look at alternatives for those units but nothing else to signal at this point.

Your next question comes from the line of Paul Patterson. Paul Patterson - Glenrock Associates LLC: Just on the mark-to-market of about $52 million, is that going to be -- I mean, will that be realized in 2012 or will some of that show up next year? How should we think about that gain? Caroline D. Dorsa: Sure. So you're talking about the mark-to-market in the reconciliation page, right? Related -- Paul Patterson - Glenrock Associates LLC: Right, on Page 11, Slide 11. Caroline D. Dorsa: Forward positions, right. So that will be realized over time in our numbers, and keep in mind we factor that in as we think about the net effect of our hedges as they roll off in '12 and '13. So you've got piece of that rolling off in '12 and a small piece of it rolling off in '13. Most of it rolls off in '12 but keep in mind, it's embedded in our numbers because it reflects the market value of our hedges. Given where the market prices are at this point in time, that changes as you've seen it change in various quarters as the market prices change. Eventually, those hedges mature, they come out and sort of get zeroed out of the mark-to-market and come above the line. Paul Patterson - Glenrock Associates LLC: Sure. And then with respect to this market monitor filing yesterday, basically asking that the MOPR test be applied differently than a generator, they don't -- an unnamed generator. It mentions that if they don't get a response by FERC by the 11th, that they might delay the auction results. Or they might request that the auction results are delayed. What is your sense about the timing of something like this having -- just any sense perceivably about how quickly FERC might actually act on this?

All we're aware of is that, as you know in RPM, there are a series of exemptions for very different types of technologies in terms of MOPR requirements, solar, wind. And what I think is in play now is a question regarding fuel cells, which are going to be a tiny, tiny portion of what RPM is all about. So I am unaware of any desire to delay RPM results for the possibility that a couple of megawatts of fuel cells may want to bid in. But we'll find out soon after this call. There's nothing different that's occurred there. Paul Patterson - Glenrock Associates LLC: And then finally on the sales growth weather adjusted of 1.9% decline. You mentioned that obviously, with the weather, it's a kind of tricky business. Could you give us any sense as to just sort of if you could elaborate a little bit on what you're seeing. Is that weather normalized demand and just whether or not the leap year is in that 1.9% decline or not? Caroline D. Dorsa: So relative to the weather normalized demand, and as we always say, it's a little more art than science. It appears from what we see that the decline in the weather normalized demand on the electric side was driven a little bit more by the commercial and the industrial relative to the residential and sometimes that moves around. Obviously, difficult employment situation in difficult economic situation and Jersey might not be that much of a surprise. Not as much by the residential, which was less than a percentage point weather normalized. So it's really more of what you see what's going on with C&I. And then on the gas side of course, it wasn't that much weather normalized. Paul Patterson - Glenrock Associates LLC: Yes. But is there a leap year impact in there or does that include the impact of the leap year or should we exclude -- I mean, should we back that out of the number? Caroline D. Dorsa: The total number of kilowatt hours of therms usually include the leap year just because it has the extra day. Didn't do the math to back that out and I'm not sure that would be really significant but it would be the total amount.

Your next question comes from the line of Leslie Rich. Leslie Rich - J.P. Morgan Asset Management, Inc.: I just had a question, Carolyn, on the IRS refund. You said $170 million, did you receive that yet or that's expected later this year or not until April of next year? Caroline D. Dorsa: So, no, we haven't received it yet, just to be direct on that. We have not received it yet, we just finalized the settlement, and I think we've talked about this before when we were talking about things like LILO/SILO. But of course now, we have everything, LILO/SILO together with all the 10 years of tax audits. The number I cited is net, so that is the net of the refund for the 10 years of tax audits plus the incremental effect of having settled LILO/SILO for all years, which means it goes beyond 2006. It's LILO/SILO all the way through the lease terminations of 2010. So what we're in the process of working on right now with the IRS is to, if you will, kind of effectively net, although it won't all be in 1 number, effectively net the fact that we've got some -- we've got audit related settlements for all issues for 10 years, plus the pull-through if you will, of LILO/SILO for the remaining 4 years after that. And when I talk about the $170 million, I'm talking about the net impact of all of those things. Since the IRS has not audited all the years through 2010, what we're working on is have them effectively sort of break out LILO/SILO because remember, we terminated a whole bunch, all of our leases, right, in '09 and '10. And those leases, we paid those termination payments based on the receipts from the counter parties. So now that we're settling LILO/SILO, some of those payments for terminations need to come back to us. So for the long-winded way of saying, it's not a single dollar amount in 1 check that we expect to get but we're working on trying to get them to accelerate finishing all the things they need to do to recognize the refund that they owe us on the terminations and I would hope to be able to have all of that done and have the net number in our hands either this year or early next year. Leslie Rich - J.P. Morgan Asset Management, Inc.: And then are other -- any other pieces remaining to be resolved in terms of lease terminations or anything else? Caroline D. Dorsa: No. In fact, what we did with the IRS is what I characterize as 2 separate settlements. One was the settlement of the audit years, 1997 through 2006 for everything for the enterprise. There was a separate and distinct settlement that settled and finalized the treatment of LILO/SILO-related leases for every year that they appear in our tax returns, all the way out through the end of the termination. So there on LILO/SILO, absolutely nothing and that is in dispute now with the IRS. Leslie Rich - J.P. Morgan Asset Management, Inc.: Okay. And then just finally on Hudson, what kind of heat rate do you have on that plant when you're running it as a gas plant? Caroline D. Dorsa: Including about '10 and '11, it's about a half turn on heat rate loss when you run the coal plant on gas.

Alvis, before we go to the next question, I just -- thinking out loud, Paul Patterson, your question about MOPR and complaint by Joe Bower [ph], the only other thing we can think of is that it is possible that several people have been filing requests for below MOPR treatment. In particular, those beneficiaries of the standard offer contract agreements under LCAPP and we're not proving to any specific information on whether or not they were granted below MOPR prices and perhaps that could be part of what is being debated at FERC. But we don't have any more information on that at this point in time. In addition to the fuel cell, which we do have information on.

Your next question comes from the line of Steve Fleishman with Bank of America. Steven I. Fleishman - BofA Merrill Lynch, Research Division: That is the issue by the way that something was -- the market monitor filed something last night to FERC regarding a agreement with one of the parties on that. So that's I think, what Paul was referring to. But I actually don't have a question on that. I have a question on your CCGT capacity factors. I'm actually a little surprised that they are not higher. We've seen a number of PJM-based CCGT's into the like 70s and 80s this quarter on capacity factor and I'm just curious, is that a function of basis issues our congestion issues, is that a function of being more in the East or what -- why didn't it actually move more?

I think it's because there was just no demand, Steve. We were seeing days where nukes were carrying the whole load without any problems. Steven I. Fleishman - BofA Merrill Lynch, Research Division: Okay. Because, I mean, that obviously was the same issue in Western PJM and we're seeing them in the 70s and 80s. So maybe just different market because there's more gas and less coal in your area.

And also, we have a higher percentage of nukes in our area and we do have a higher percentage of gas. I think both of those were conspired to give the mid-50s number that we see versus what you're seeing elsewhere. Steven I. Fleishman - BofA Merrill Lynch, Research Division: Okay. And then also, curious what you're seeing on basis in PJM, both this quarter and for the -- on the forward curves.

So I think in this quarter, we have seen some negative basis but the fourth curve is showing more $3 to $4, which is lower than we'd seen to start. Caroline D. Dorsa: Right.

Which is lower than we've seen historically. Caroline D. Dorsa: Right. Steven I. Fleishman - BofA Merrill Lynch, Research Division: Positive $3 or $4? Caroline D. Dorsa: Positive $3, right. Both on average days as Ralph said, workings were negative and of course that relates, specifically what was going with demand with the warm weather, but we continue to think about the low levels of positive basis in the forecast period. Steven I. Fleishman - BofA Merrill Lynch, Research Division: And one other question. We did see that the commission, I guess, finally approved a surcharge for the water utilities. It might have just been yesterday.

Yes it was. Caroline D. Dorsa: Right. Steven I. Fleishman - BofA Merrill Lynch, Research Division: Is there -- are you starting to -- is there any movement already to look at doing that on gas and electric?

So the answer to that is yes and I believe 1 New Jersey gas utility has already put in a filing and we think the combination of what took place with water and how the staff is viewing the other filing that coming from the gas utility has allowed us to have conversations with the staff prior to submitting our filing about the types of things they like and would rather -- and as well as the types of things that they would rather not see into a filing. So I would describe what you're seeing as progress in terms of infrastructure clauses and we're factoring all that into our preparation for our own filing.

Your next question comes from the line of Ashar Khan with Visium.

Just to go over the year's tax items. Is it fair to assume we should not expect any more of these items for the remaining 3 quarters in your assumptions for the year? Caroline D. Dorsa: Sure, Ashar, yes. So as I mentioned, we settled 10 years of tax audits and also the LILO/SILO matter. That's the entirety of what you should expect us to settle in terms of IRS audits for the year. You know they've been outstanding for quite a while so when I gave the expectations for the full year effective tax rate to be about 37% to 38% for Enterprise, think of it as including the impact of everything recognized this first quarter for all the audit settlements bringing us to 30% with the subsequent 3 quarters being a more normal tax rate, which for us, is running the range of 40.5% to 41%, that's where you get the weighted average effect. But you're correct, there's nothing else to assume that would be unusual or different for tax for the rest of the year. It's really just because all the audits landed in this quarter.

And then the way you described the gas thing, the way that you kind of mentioned is that out of the $0.06, we can really look at $0.03 as being normal, right? Because if you hadn't had that, your gas earnings would have been higher by $0.03 anyway. Do you get a chance to get the remaining $0.03 as well as the year goes along, or is $0.03 the maximum that you could have earned under the clause on a normalized basis, which got impacted by this $0.06? Caroline D. Dorsa: Right. So let me just repeat that because I think you haven't obviously have the $0.03 right. Let me just identify how I would characterize it. The $0.03 that we got for tax that relates to gas effectively substituted for $0.03 that you would have seen, using this pre-tax equivalent in the gross margin line for gas. The bottom line operating earnings for the gas business is the same in this quarter as they would've been if we hadn't had the IRS settlement. You would've just had a different geographies if you will, on the P&L. You would have had the pretax equivalent of $0.03 on the gas weather normalization clause in margin. Instead, you have a lower margin in gas than you would otherwise have. You have a tax benefit and you have the very same bottom line operating earnings for the Gas business, whether we had the settlement or we didn't have the settlement. So that's the way I would encourage you to think about it. In terms of was there more that we could otherwise do, that's not related at all to tax. That's related to the gas business and having its overall earnings tax for 10.3%. And so, when you bump up against that 10.3%%, whether you have a little bit of warmer weather then you wouldn't be able to book anymore. So we've booked the maximum up to 10.3% now. It just happened in this quarter, that instead of booking it the way you would normally expect us to book it, which is on the gross margin line, we book it through the tax line. But the bottom line effect is the same for the operating earnings for the business for this quarter.

Okay and if I can just end up that discussion, so as we look up for comparability purposes going forward this year going to next, can we say like about $0.10 of this tax is something which would not repeat itself going forward into the next fiscal year? Caroline D. Dorsa: Yes. So I'd say -- and this, Ashar, one way to think about it is the Holdings and Enterprise, that total $39 million for this quarter, is effectively the result of the 10-year audit settlements. And as I said, obviously, we don't settle audits like that all the time. So I would think of that as things that you would necessarily -- you wouldn't see us having in Enterprise and Holdings guidance for the subsequent year. Related to PSE&G, as I said, $0.03 of what happened for tax would otherwise be substituted for by gas weather normalization and then you've got about this $0.03 that was everything else for PSE&G for the 10 years of tax, which again, you wouldn't think of in the subsequent years because we wouldn't be guiding to assume tax audit settlements.

Your next question comes from the line of Kit Konolige with Konolige Research. Kit Konolige - Konolige Research, LLC: So you were -- I wanted, Caroline, to review. You talked a little bit about the O&M savings that we were seeing at Power and I didn't quite catch your reference. Should we -- did you say that we shouldn't expect this level of O&M savings going forward? Caroline D. Dorsa: Sure, Kit. So what I said on the remarks was we have $0.04 savings on a quarter-over-quarter basis for Power's O&M. But of course, we have things like timing. So for example, of course how quicker than this outage right now and of course there's incremental spend when there are things like outages. So what I was signaling was you wouldn't expect to see us having O&M savings quarter-over-quarter of the extent to which we had in the first quarter, but our target is to have most of the $0.04 savings that we saw in this quarter carry through on a full-year basis, to be better than our prior expectations. But you're not going to see $0.03, $0.04 kind of savings every quarter through the year. So the target is, we have $0.04 I'm going to keep most of it as we go from a full-year basis, but don't assume that replication every quarter. Kit Konolige - Konolige Research, LLC: And can -- did you revise your thinking at all as a result of this level of O&M savings in the quarter for how you're tracking for the year on overall profitability, given market conditions at Power? Caroline D. Dorsa: So we haven't changed anything relative to our expectations for the full year, if that's where you're going. I think if you think about the other things that we just talked about in terms of lower generation given the weather and low gas prices, kind of extraordinarily low gas prices. I think it's too soon being in the first quarter and obviously, coming into the shoulder season and before the Summer, to change any full-year expectations at this point in time.

Next question comes from the line of Angie Storozynski with Macquarie. Angie Storozynski - Macquarie Research: I wanted to ask a question about the head rule. You mentioned that you're still actually considering your options with regards to any CapEx spending. I find it a little bit surprising given the fact that we have the PJM capacity auction next week. Wouldn't you be actually bidding some of this CapEx into the auction?

So, Angie, you're actually right, the auction is next week so we're not going to comment on what we are on bidding, what we might bid as a CapEx improvement for environmental reasons or what we might do otherwise. It's just a highly competitive auction and we'll all know what the outcome is in 16 days. Angie Storozynski - Macquarie Research: Secondly, the price, the hedged price for your 2014 output has come down even though the percentage hasn't changed and the output, the projected output hasn't changed. What happened there? Caroline D. Dorsa: So in the hedge price for 2014, keep in mind that when we put together the hedge prices for each of the periods, they include both BGS and non-BGS. And you may recall, we've talked about before that when we put the hedge prices in for BGS, we take the full BGS price, we exclude capacity since we talk about capacity separately. And then the remainder of the BGS price, including some of the things that are essentially cost pass-throughs like transmission and green as well as premium, which is not a cost pass through, coming to that hedge price calculation. When we put in other like flat lock and West Hub hedges, they go in primarily just at an energy price. So in 2014, if you're recalling, what we had last quarter when we talked about the 2014 hedges, were at about $57 versus $55. At that point, having just come out of BGS and having not done very hedging for 2014, BGS was coming close to about 70% of that total number of hedges for 2014. Now that we've layered on some additional, if you go back and look at our numbers last year's first quarter, you can see exactly the same pattern. Now that the BGS is essentially done for the year in terms of its effect on 2014, you layer in other hedges that are West Hub, flat lock type hedges and you'll naturally see that number come down because the new hedges that go in don't have the BGS cost pass-throughs in them. So BGS has come down to be just a little more than 1/2 of that number now versus 70% and everything that comes in normally as you would expect, comes in at a net lower price than BGS. So that's all that's going on there, nothing sort of disorienting in terms of market price, just a normal weighted average mix of BGS with everything else. Angie Storozynski - Macquarie Research: But using that rationale, wouldn't you see an increase in the percentage of output hedge? Caroline D. Dorsa: Yes, so remember we're talking about a range here of the 20% to 25%. And so you're going from being at the lower end with the higher end still within the range because there's very little that's -- we're still in low numbers for 2014's hedges. Angie Storozynski - Macquarie Research: And then the last question, what is the normal -- what are the normalized sales growth embedded in your utility assumptions for this year? Caroline D. Dorsa: So we typically assume normal weather and then for overall growth, boy, it's really pretty small. It's just slightly less than 1% on the weather normalized basis, consistent with, if you look at long-term forecast, for example, from PJM as part of the RTEP, they took that down this year to be less than 1% if I recall correctly, it's like 0.8%. We typically follow those sorts of guidelines for our weather normalized forecast.

Your next question comes from the line of Travis Miller. Travis Miller - Morningstar Inc., Research Division: I wanted to go back to the earned ROE at PSE&G. Apart from that tax and the weather normalization at Gas, are there other areas where you're outperforming and thus [Audio Gap] earning higher ROE's than you'd expect?

No but we would encourage you, Travis, to realize that the utility is regulated at the 10.3% on the distribution side and 11.68% in general for formula rates on the transmission side with a couple of exceptions. Those exceptions being the Susquehanna-Roseland line, which I think is 150 basis points on top of that, and the Northeast Grid project, which is 125 basis points on top of it. So if you do the weighted averaging, it will all add up. So if transmission comes out to be north of 11.68% and distribution stays at that 10.3%. Travis Miller - Morningstar Inc., Research Division: And then all that net gets to a 10.3%...

No. See, if you do 11.68% for transmission, I think transmission is about a 1/3 or 40% of the rate base nowadays and then you, then weight the distribution so it's in the 10.3%. Caroline D. Dorsa: Right and then the transmission -- Travis Miller - Morningstar Inc., Research Division: So on distribution side, is there anything other than that tax issue that helps you earn that 10.3% right now?

I mean, yes a pretty good cost control and a fair regulatory treatment on capital recovery for expanded distribution programs that we have underway allow us to sustain near that 10.3%. Travis Miller - Morningstar Inc., Research Division: How are we thinking about next rate case timing given that you've done a good job earning that allowed ROE?

We don't forecast far into the future but you won't hear anything about that between now and the next call, I can guarantee you that for sure. We don't see it in the near term. Kathleen A. Lally: Thank you, operator. I think with that we'll conclude the call and I'm going to turn it over to Ralph for some concluding remarks.

So we talked a lot about taxes understandably, so and trying to understand the weather normalization clause. But I hope through all that, what you've seen is a very strong quarter and presumably, it speaks for itself, particularly in light of the headwinds that we've seen. I often take these opportunities to highlight the performance of our employees but I must give special recognition to our Fossil team. Not just for the last quarter but the last few years. These are a group of folks who have broadened our back end technologies, a well over $1 billion capital program on schedule and on budget, something we don't highlight. That have also put in 400 megawatts of peakers not only on budget but a year ahead of schedule for one of those peakers. And the adjusted O&M numbers this quarter to complicate for what's been going on in the marketplace as Caroline has mentioned, contributing $0.04 most of which, we expect to hold onto. It's just a superb job by our folks in the Fossil organization. So thank you, to everyone who's on the call, for joining us today and hopefully, we'll see you all soon at the various venues that we expect to be attending. Take care.

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