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Public Service Enterprise Group Inc. (PEG) reported Monday that its first-quarter profit slipped 0.9% on investment and mark-to-market losses as the New Jersey-based electricity company deals with lower demand at its power-generation and utility businesses.

Still, the company has been able to manage through weakened usage with lower fuel costs and steps taken to minimize other costs. PSEG's earnings handily topped analysts' expectations, and the company reiterated its 2009 earnings view.

Shares of PSEG recently traded down 25 cents at $30.90.

PSEG posted earnings of $444 million, down from $448 million, a year earlier. Per-share earnings were flat at 88 cents. Excluding investment and mark-to-market impacts, earnings from continuing operations rose to 95 cents a share from 86 cents. Analysts polled by Thomson Reuters were looking for 80 cents a share.

Revenue figures weren't provided by PSEG in a press release detailing the quarterly results.

PSEG's power-generation business, which sells wholesale electricity into regional markets, recorded a 29% earnings jump for the quarter. The increase was driven by lower fuel costs, including greater use of natural gas-fired power plants due to a sharp drop in gas prices. At the same time, the company reduced its use of coal-fired plants. But executives during a conference call with analysts Monday said they don't expected this dynamic to continue in the summer months as warmer weather drives stronger demand.

The company's New Jersey-based utility segment reported a 9.6% drop in profit as poor economic conditions constrain energy demand, particularly to the commercial and industrial sectorsThe utility lowered its electricity sales forecast for the year to a decline of 1.5% to 2% from a decline of 0.5% to 1%.

PSEG is relying more on its utility business for growth with slumping power prices and weaker demand. Last month, it won approval for an estimated $694 million in new utility projects. PSEG awaits decisions from regulators on two other proposals for New Jersey, an estimated $190 million to encourage conservation and create so-called green jobs and $800 million in solar projects. The solar proposal would include larger solar "energy farms" and the installation of panels on up to 200,000 utility poles.

A decision on the efficiency proposal could come next month, while one on the solar projects is likely this fall, Ralph Izzo, PSEG's chairman and chief executive, said Monday.

-By Mark Peters and Mike Barris, Dow Jones Newswires; 201-938-4604; mark.peters@dowjones.com