Correction: PSEG Energy Holding's Senior Notes Rated 'BBB-' by Fitch Ratings.

Business Editors

NEW YORK--(BUSINESS WIRE)--April 10, 2003

(This is an amended version of a press release issued earlier today, containing revised information on the $350 million, not $250 million, senior note issue in the first paragraph.)

Fitch Ratings has assigned a 'BBB-' rating to PSEG Energy Holdings (Energy Holdings) new $350 million issue of senior notes due 2007. The notes will be senior unsecured obligations and will rank equally with Energy Holdings' existing senior unsecured debt of about $1.7 billion. The notes will be issued under Rule 144A with registration rights. Proceeds will be used to retire a similar amount of PSEG Capital Corp. senior unsecured debt maturing in May 2003. The Rating Outlook is Stable.

The ratings reflect the currency and political risk associated with Energy Holdings' significant investments in international generation and distribution assets through subsidiary PSEG Global (Global) and a decline in the credit quality of several counter parties in the lease portfolio of subsidiary PSEG Resources (Resources). These risks are balanced by the predictable cash flow from Resources' leveraged lease portfolio, and the overall diversity of Energy Holdings' investments and cash flow. Energy Holdings recently implemented a revised less risky business strategy that deemphasizes growth and results in significantly lower investment expenditures and higher free cash flow (before asset sales and upstream dividends) over the next several years. As part of the revised business strategy, Energy Holdings' corporate parent, Public Service Enterprise Group, Inc. (PSEG), indicated it does not intend to invest additional funds in Energy Holdings. The absence of equity contributions is mitigated by the modest level of planned new investments going forward, particularly after 2003, manageable maturity schedule and good liquidity position provided by credit facilities that are largely undrawn. The ratings assume that free cash flow will be used for a combination of debt reduction and modest dividends to the parent.

Fitch estimates that on average roughly 25% of Energy Holdings' cash flow will be exposed to currency risk over the next several years, with the remainder generated domestically or paid in US dollars (USD). The exposure exists exclusively at Global, which develops acquires, owns and operates electric generation and distribution facilities in selected international and domestic markets, with a heavy concentration in South America. Favorably, about 38% of Energy Holdings' $1.5 billion investment in South America is in the relatively stable country of Chile ('A-' sovereign rating by Fitch), where Global owns 100% of the electric distribution company SAESA. The foreign currency risk is partly mitigated by inflation adjustments and other cost recovery mechanisms in the tariffs of the South American distribution companies, although the timeliness and effectiveness of such mechanisms is uncertain. Global's merchant generation investments in Texas remain exposed to a soft power market as a result of regional oversupply. To date, less than 25% of expected 2003 output from these plants have been sold forward. Importantly, Energy Holdings' forecast includes very little cash flow from the Texas assets over the next several years. The vast majority of Global's remaining generation investments sell power under long-term contract, including contracts in California with the Department of Water Resources (DWR) and Pacific Gas and Electric Company. The DWR contract has been renegotiated and should not be subject to further change.

The leveraged lease portfolio (held by wholly-owned subsidiary PSEG Resources) provides Energy Holdings with a relatively predictable cash flow stream, primarily from the associated tax benefits. (Resources' invests primarily in energy related leases in developed nations.) The portfolio of lease equity is denominated entirely in USD. Investments in the cross border portion of the lease portfolio are, in many cases, secured by letters of credit or Treasury securities deposited in US institutions. Over the past year, the ratings of three lessees (four transactions) have fallen below investment grade. The weakened counter parties include subsidiaries of Reliant Energy, Edison Mission Energy and Dynegy. While the potential default of a counter party is a concern, several mitigants are in place. The leases contain step in provisions that in the case of a default gives Resources the option to assume the debt obligation. Resources would only exercise this option if the value of the property exceeded the present value of the debt outstanding. Importantly, six of the eight generating stations covered by these four lease transactions are base load coal fired stations that should remain attractive assets. In addition, three of the four transactions benefit from protective covenants that limit cash distributions if certain financial measures are not maintained.

PSEG Energy Holdings is a wholly-owned subsidiary of Public Service Enterprise Group, Inc. Through two subsidiaries Energy Holdings owns and operates electric generation and distribution facilities in domestic and international markets and invests primarily in energy related leases in developed nations.