PSE&G LOI

I had a good conversation with Dave Wohlfarth of PSE&G yesterday concerning
the proposed LOI. He had received comments back from his Attorney (Ken
Caratta) and had 2 issues he needed to circle back with him on. These issues
concern the process of approvals by PSEG and ENA of the final Order that
would come from the NJ BPU relating to the transfer of assets over to their
unregulated affiliate "Newco". Ken is out of the office today but will be
back in Monday. Dave's target is to get us their comments late on Monday.
He would also like to have a conference call by mid-week to work through the
document with the expectation to have it signed by the end of the week. We
need to be ready to update our analysis once we receive their revisions to
the LOI.

Concerning the Filing - a Pre-Hearning Conference has been noticed and
scheduled with the Office of Administrative Law Judge for December 19th. It
is anticipated that the procedual schedule for comments and hearings will be
set at that time. Dave would like to finish the LOI prior to the hearing.
We will be participating and intervening in the hearings.

Good news on the Genco side of PSE&G - The NJ Supreme Court ruled 4 to 1 to
approve the transfer of the generation assets over to PSEG Power LLC and the
approximate $ 3 Billion securitization of "stranded costs" on the assets.
Getting this approve has been important to PSE&G and should help with
precedent on the eventual transfer of the gas assets.

Please give me a call if you have any questions.

- Gil -