Regulated electricity and gas operations contribute meaningfully to consolidated cash flow. Mechanisms are in place to insulate the regulated utility from commodity volatility; however, volatile electricity prices have been shifted within the corporate family to the unregulated PSEG Power LLC. Domestic unregulated generation owned by PSEG Power benefits from proximity to load. The analytical separation of PSEG Energy Holdings LLC's debt and cash flows from its affiliate companies' debt and cash flows results in a stronger consolidated financial profile for the rest of the company than if we consolidated PSEG Energy Holdings for analytical purposes. The proposed merger with Exelon Corp. may enhance operational and financial performance, as well as credit quality. Leverage ratios are weak, due in large part
