PSEG Announces Sale of Share in MPC to BTU Power

Newark NJ / Burlington MA — October 4, 2004

PSEG and BTU Power Company ("BTU") announced today the signing of an agreement for BTU to purchase from PSEG Global its 50 percent equity interest in Meiya Power Company Limited ("MPC"). BTU Power will pay approximately $220 million for the shares, which, on an after-tax basis, is expected to be earnings neutral for PSEG. The sale is expected to close within 60 days and is subject to customary closing conditions and approvals.

MPC, the leading foreign-owned independent power producer in North Asia, develops, owns and operates electric power and steam generation facilities in the People's Republic of China ("PRC"), South Korea and Taiwan. MPC has an ownership interest in 14 projects in operation or construction — 12 in the PRC, 1 in South Korea and 1 in Taiwan. The projects collectively have a capacity of over 4,000 MWs, with more than 3,400 in operation. MPC's equity ownership in the projects is approximately 2,100 MWs.

"PSEG Global is proud of its role in starting and expanding MPC and establishing it as one of the most successful independent power companies in Asia," said Bob Dougherty, President of PSEG Energy Holdings, Global's immediate parent company. "The sale of MPC is in line with our stated long-term goal of selectively and strategically selling some of our investments when a sale is in the best interest of PSEG's shareholders." PSEG Global indicated the proceeds from the sale of MPC, coupled with funds on hand and future operating cash flows will be used, over time, to continue to reduce PSEG Energy Holdings debt and to return additional capital to PSEG.

"BTU is pleased to consummate another transaction with PSEG Global this year, following our successful acquisition of its share in Carthage Power Company in Tunisia," said Wael Almazeedi, Chief Executive Officer of the BTU Group. "With its growth potential, strong management team and proven track record, MPC will serve as a platform for realizing BTU's strategy to capitalize on the growth in energy demand in Asi"

Dresdner Kleinwort Wasserstein and Arctas Capital Group advised PSEG Global on the transaction, and PricewaterhouseCoopers Corporate Finance advised BTU.

MPC is headquartered in Hong Kong, with subsidiary offices in Beijing, Lanzhou, Shanghai, Seoul and Taipei. Other shareholders in MPC include AIF Energy and Darby Asian Infrastructure Mezzanine Capital Fund.

PSEG Global owns and operates power plants in the United States and power plants and electric distribution companies internationally. It is a direct subsidiary of PSEG Energy Holdings LLC and an indirect subsidiary of PSEG (NYSE:PEG) a diversified energy company based in Newark, NJ. Website: www.pseg.com.

BTU Power and its affiliates (collectively the "BTU Group") acquire operating assets and develop projects in the mid- and downstream segments of the energy value chain. The BTU Group's shareholders include leading institutional investors and commercial and investment banks in the Gulf Cooperation Council countries. The BTU Group operates out of offices in Burlington, Mass., USA and in Dubai, UAE.