EXHIBIT 4.4

                            FORM OF TRANSITION BONDS

<PAGE>

                       EXHIBIT A - FORM OF FIXED RATE BOND

REGISTERED                                   $

No. R-_______      CUSIP NO.________

                       SEE REVERSE FOR CERTAIN DEFINITIONS

      THE PRINCIPAL OF THIS CLASS A-_ TRANSITION BOND WILL BE PAID IN
INSTALMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT
OF THIS CLASS A-_ TRANSITION BOND AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN
ON THE FACE HEREOF. THE HOLDER OF THIS CLASS A-_ TRANSITION BOND HEREBY
COVENANTS AND AGREES THAT PRIOR TO THE DATE WHICH IS ONE (1) YEAR AND ONE (1)
DAY AFTER THE PAYMENT IN FULL OF THE SERIES 2001-1, CLASS A-_ TRANSITION BONDS,
IT WILL NOT INSTITUTE AGAINST, OR JOIN ANY OTHER PERSON IN INSTITUTING AGAINST,
THE ISSUER ANY BANKRUPTCY, REORGANIZATION, ARRANGEMENT, INSOLVENCY OR
LIQUIDATION PROCEEDINGS OR OTHER SIMILAR PROCEEDING UNDER THE LAWS OF THE UNITED
STATES OR ANY STATE OF THE UNITED STATES. TRANSFERS OF THIS GLOBAL TRANSITION
BOND SHALL BE LIMITED TO TRANSFERS IN THE CLEARING AGENCY OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
TRANSITION BOND SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE.


                                      A-1
<PAGE>

                          PSE&G TRANSITION FUNDING LLC

                   TRANSITION BONDS, SERIES 2001-1, CLASS A-_.

Interest       Original Principal         Expected Final
Rate                 Amount                Payment Date         Maturity Date

%              $

      PSE&G Transition Funding LLC, a limited liability company formed and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to the Registered Holder
hereof, or registered assigns, the Original Principal Amount shown above in
quarterly instalments on the Payment Dates (as defined below) and in the amounts
specified on the reverse hereof or, if less, the amounts determined pursuant to
Section 8.02(g) of the Indenture, in each year, commencing on the date
determined as provided on the reverse hereof and ending on or before the Final
Maturity Date, to pay the entire unpaid principal hereof on the Final Maturity
Date and to pay interest, at the Interest Rate shown above at a fixed rate, on
each March 15, June 15, September 15 and December 15, and if any such day is not
a Business Day, the next succeeding Business Day, commencing on September 15,
2001 and continuing until the earlier of the payment of the principal hereof and
the Final Maturity Date (each a "Payment Date"), on the principal amount of this
Class A-_ Transition Bond outstanding from time to time. Interest will be
computed (i) for the first Payment Date on the basis of the actual number of
days elapsed (determined on the basis of a 360-day year of twelve 30-day months)
from and including the Series Issuance Date, to but excluding such Payment Date,
and a 360-day year and (ii) for each succeeding Payment Date on the basis of a
360-day year of twelve 30-day months. Such principal of and interest on this
Series 2001-1, Class A-_ Transition Bond shall be paid in the manner specified
on the reverse hereof.

      The principal of and interest on this Series 2001-1, Class A-_ Transition
Bond are payable in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts. All
payments made by the Issuer with respect to this Class A-_ Transition Bond shall
be applied first to interest due and payable on this Class A-_ Transition Bond
as provided above and then to the unpaid principal of this Class A-_ Transition
Bond, all in the manner set forth in Section 8.02(g) of the Indenture.

      Reference is made to the further provisions of this Class A-_ Transition
Bond set forth on the reverse hereof, which shall have the same effect as though
fully set forth on the face of this Class A-_ Transition Bond.


                                      A-2
<PAGE>

      Unless the certificate of authentication hereon has been executed by the
Trustee whose name appears below by manual signature, this Class A-_ Transition
Bond shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.


                                      A-3
<PAGE>

      IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by an authorized Manager of the Issuer.

Dated: [         ], 2001

                                       PSE&G TRANSITION FUNDING LLC

                                       By:______________________________
                                       Name:
                                       Title: Manager


                                      A-4
<PAGE>

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

Dated: [         ], 2001

      This is one of the Class A-_ Transition Bonds of the Series 2001-1
Transition Bonds, designated above and referred to in the within-mentioned
Indenture.

                                       THE BANK OF NEW YORK,
                                         not in its individual capacity
                                         but solely as Trustee on behalf of
                                         the Transition Bondholders,

                                       By:_________________________________
                                          Name:
                                          Title:


                                      A-5
<PAGE>

                           REVERSE OF TRANSITION BOND

      This Series 2001-1, Class A-_ Transition Bond is one of a duly authorized
issue of Transition Bonds of the Issuer, designated as its Transition Bonds
(herein called the "Transition Bonds"), issued and to be issued in one or more
Series, which Series are issuable in one or more Classes. The Series 2001-1
Transition Bonds consist of eight Classes, including the Class A-_ Transition
Bonds (herein called the "Class A-_ Transition Bonds"). The Class A-_ Transition
Bonds have been issued under an indenture dated as of [January] , 2001, and a
series supplement thereto dated as of [January] , 2001 (such series supplement,
as supplemented or amended, the "Series Supplement" and, collectively with such
indenture, as supplemented or amended, the "Indenture"), each between the Issuer
and The Bank of New York, as Trustee (the "Trustee", which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the Collateral
pledged, the nature and extent of the security, the respective rights,
obligations and immunities thereunder of the Issuer, the Trustee and the Holders
of the Transition Bonds and the terms and conditions under which additional
Transition Bonds may be issued. All terms used in this Class A-_ Transition Bond
that are defined in the Indenture, as supplemented or amended, shall have the
meanings assigned to them in the Indenture.

      The Class A-_ Transition Bonds, the other Classes of Series 2001-1
Transition Bonds and any other Series of Transition Bonds issued by the Issuer
are and will be equally and ratably secured by the Collateral pledged as
security therefor as provided in the Indenture.

      The principal of this Class A-_ Transition Bond shall be payable on each
Payment Date only to the extent that amounts in the Collection Account are
available therefor, and only until the outstanding principal balance thereof on
such Payment Date (after giving effect to all payments of principal, if any,
made on such Payment Date) has been reduced to the principal balance specified
in the Expected Amortization Schedule which is attached to the Series Supplement
as Schedule A, unless payable earlier either because

            (i) an Event of Default has occurred and be continuing and the
      Trustee or the Holders of Transition Bonds representing not less than a
      majority of the Outstanding Amount of the Transition Bonds of all Series
      have declared the Transition Bonds to be immediately due and payable in
      accordance with Section 5.02 of the Indenture, or

            (ii) the Issuer, at its option, has called for the redemption of the
      Series 2001-1 Transition Bonds in whole pursuant to Section 8(b) of the
      Series Supplement and Section 10.01 of the Indenture.

However, actual principal payments may be made in lesser than expected amounts
and at later than expected times as determined pursuant to Section 8.02(g) of
the Indenture. The entire unpaid principal amount of this Series 2001-1, Class
A-_ Transition Bond shall be due and


                                      A-6
<PAGE>

payable on the earlier of the Final Maturity Date hereof and the Redemption
Date, if any. Notwithstanding the foregoing, the entire unpaid principal amount
of the Transition Bonds shall be due and payable, if not then previously paid,
on the date on which an Event of Default shall have occurred and be continuing
and the Trustee or the Holders of the Transition Bonds of all Series
representing not less than a majority of the Outstanding Amount of the
Transition Bonds have declared the Transition Bonds to be immediately due and
payable in the manner provided in Section 5.02 of the Indenture. All principal
payments on the Class A-_ Transition Bonds shall be made pro rata to the Class
A-_ Transition Bondholders entitled thereto based on the respective principal
amounts of the Series 2001-1, Class A-_ Transition Bonds held by them.

      Payments of interest on this Class A-_ Transition Bond due and payable on
each Payment Date, together with the instalment of principal payable on this
Class A-_ Transition Bond on such Payment Date shall be made by check mailed
first-class, postage prepaid, to the Person whose name appears as the Registered
Holder of this Class A-_ Transition Bond (or one or more predecessor of such
Transition Bond) in the Transition Bond Register as of the close of business on
the Record Date or in such other manner as may be provided in the Series
Supplement, except that with respect to Class A-_ Transition Bonds registered on
the Record Date in the name of a Clearing Agency, payments will be made by wire
transfer in immediately available funds to the account designated by such
Clearing Agency and except for the final instalment of principal payable with
respect to this Class A-_ Transition Bond on a Payment Date which shall be
payable as provided below. Such checks shall be mailed to the Person entitled
thereto at the address of such Person as it appears in the Transition Bond
Register as of the applicable Record Date without requiring that this Class A-_
Transition Bond be submitted for notation of payment. Any reduction in the
principal amount of this Class A-_ Transition Bond (or any one or more
predecessor to such Transition Bond) effected by any payments made on any
Payment Date shall be binding upon all future Holders of this Class A-_
Transition Bond and of any Class A-_ Transition Bond issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not noted hereon. If funds are expected to be available, as provided in the
Indenture, for payment in full of the then remaining unpaid principal amount of
this Class A-_ Transition Bond on a Payment Date, then the Trustee, in the name
of and on behalf of the Issuer, will notify the Person who was the Registered
Holder hereof as of the second preceding Record Date to such Payment Date by
notice mailed no later than five days prior to such final Payment Date and shall
specify that such final instalment will be payable to the Registered Holder
hereof as of the Record Date immediately preceding such final Payment Date and
only upon presentation and surrender of this Class A-_ Transition Bond and
shall specify the place where this Series 2001-1, Class A-_ Transition Bond may
be presented and surrendered for payment of such instalment.

      The Issuer shall pay interest on overdue instalments of interest on this
Class A-_ Transition Bond at the Interest Rate for Class A-_ to the extent
lawful.

      As provided in the Indenture, the Class A-_ Transition Bonds may be
redeemed, in whole, but not in part, in certain circumstances as provided in
Section 8(b) of the Series Supplement.


                                      A-7
<PAGE>

      This Class A-_ Transition Bond is a Transition Bond as such term is
defined in the Competition Act. Principal and interest due and payable on this
Transition Bond are payable from and secured primarily by bondable transition
property created and established by a bondable stranded cost rate order issued
by the State of New Jersey Board of Public Utilities pursuant to the Competition
Act. Bondable transition property consists of the irrevocable right to impose
and collect certain non-bypassable charges (defined in the Competition Act as
"transition bond charges") to be included in electric utility bills of all
electric service retail customers of Public Service Electric and Gas Company, a
New Jersey electric utility.

      The Competition Act provides that:

      "The State of New Jersey does hereby pledge and agree with the holders of
any transition bonds issued under the authority of this Act, with the pledgee,
owner or assignee of bondable transition property, with any financing entity
which has issued transition bonds with respect to which a bondable stranded
costs rate order has been issued and with any person who may enter into
agreements with an electric public utility or an assignee or pledgee thereof or
a financing entity pursuant to this act, that the State will not limit, alter or
impair any bondable transition property or other rights vested in an electric
public utility or an assignee or pledgee thereof or a financing entity or vested
in the holders of any transition bonds pursuant to a bondable stranded costs
rate order until such transition bonds, together with the interest and
acquisition or redemption premium, if any, thereon, are fully paid and
discharged or until such agreements are fully performed on the part of the
electric public utility, any assignee or pledgee thereof or the financing entity
or in any way limit, alter, impair or reduce the value or amount of the bondable
transition property approved by a bondable stranded costs rate order . . .".

      As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Class A-_ Transition Bond may be registered in the
Transition Bond Register upon surrender of this Class A-_ Transition Bond for
registration of transfer at the office or agency designated by the Issuer
pursuant to the Indenture, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Trustee duly executed by the
Holder hereof or his attorney duly authorized in writing, with such signature
guaranteed by an Eligible Guarantor Institution, and thereupon one or more new
Class A-_ Transition Bonds of any Authorized Denominations and in the same
aggregate initial principal amount will be issued to the designated transferee
or transferees. No service charge will be charged for any registration of
transfer or exchange of this Class A-_ Transition Bond, but the transferor may
be required to pay a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange.

      Prior to the due presentment for registration of transfer of this Class A-
Transition Bond, the Issuer, the Trustee and any agent of the Issuer or the
Trustee may treat the Person in whose name this Class A-_ Transition Bond is
registered (as of the day of determination) as the owner hereof for the purpose
of receiving payments of principal of and interest on this Class A-_ Transition
Bond and for all other purposes whatsoever, whether or not this Class A-_
Transition


                                      A-8
<PAGE>

Bond may be overdue, and neither the Issuer, the Trustee nor any such agent
shall be affected by notice to the contrary.

      The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Transition Bonds under the Indenture
at any time by the Issuer with the consent of the Holders of Transition Bonds
representing a majority of the Outstanding Amount of all Transition Bonds at the
time Outstanding of each Series or Class to be affected. The Indenture also
contains provisions permitting the Holders of Transition Bonds representing
specified percentages of the Outstanding Amount of the Transition Bonds of all
Series, on behalf of the Holders of all the Transition Bonds, to waive
compliance by the Issuer with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Class A-_ Transition Bond (or any one of more
predecessor of such transition bonds) shall be conclusive and binding upon such
Holder and upon all future Holders of this Class A-_ Transition Bond and of any
Class A-_ Transition Bond issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof whether or not notation of such consent or
waiver is made upon this Class A-_ Transition Bond. The Indenture also permits
the Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of Holders of the Transition Bonds issued
thereunder.

      The term "Issuer" as used in this Series 2001-1, Class A-_ Transition Bond
includes any successor to the Issuer under the Indenture.

      The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Trustee and the Holders of
Transition Bonds under the Indenture.

      The Class A-_ Transition Bonds are issuable only in registered form in
Authorized Denominations as provided in the Indenture and the Series Supplement,
subject to certain limitations therein set forth.

      This Class A-_ Transition Bond and the Indenture shall be construed in
accordance with the laws of the State of New Jersey, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder and thereunder shall be determined in accordance with such
laws.

      No reference herein to the Indenture and no provision of this Class A-_
Transition Bond or of the Indenture shall alter or impair the obligation of the
Issuer, which is absolute and unconditional, to pay the principal of and
interest on this Class A-_ Transition Bond at the times and rate and in the
currency herein prescribed.


                                      A-9
<PAGE>

                                   ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee:

      FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ___

                         (name and address of assignee)

the within Class A-_ Transition Bond and all rights thereunder, and hereby
irrevocably constitutes and appoints

                         (name and address of appointee)

attorney, to transfer said Class A-_ Transition Bond on the books kept for
registration thereof, with full power of substitution in the premises.

Dated:

________       ____________________________*
               Signature Guaranteed:

________       ____________________________


*     NOTE: The signature to this assignment must correspond with the name of
      the registered owner as it appears on the face of the within Class A-_
      Transition Bond in every particular, without alteration, enlargement or
      any change whatsoever.


                                      A-10
<PAGE>

                     EXHIBIT B - FORM OF FLOATING RATE BOND

                                  Form of Bond

REGISTERED                                          $

No. R-_______                                       CUSIP NO.________

                       SEE REVERSE FOR CERTAIN DEFINITIONS

      THE PRINCIPAL OF THIS CLASS A-_ BOND WILL BE PAID IN INSTALMENTS AS SET
FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS CLASS A-_
BOND AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. THE
HOLDER OF THIS CLASS A-_ BOND HEREBY COVENANTS AND AGREES THAT PRIOR TO THE DATE
WHICH IS ONE (1) YEAR AND ONE (1) DAY AFTER THE PAYMENT IN FULL OF THE CLASS A-_
BONDS, IT WILL NOT INSTITUTE AGAINST, OR JOIN ANY OTHER PERSON IN INSTITUTING
AGAINST, THE ISSUER ANY BANKRUPTCY, REORGANIZATION, ARRANGEMENT, INSOLVENCY OR
LIQUIDATION PROCEEDINGS OR OTHER SIMILAR PROCEEDING UNDER THE LAWS OF THE UNITED
STATES OR ANY STATE OF THE UNITED STATES. TRANSFERS OF THIS GLOBAL TRANSITION
BOND SHALL BE LIMITED TO TRANSFERS IN THE CLEARING AGENCY OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
TRANSITION BOND SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE.


                                      B-1
<PAGE>

                          PSE&G TRANSITION FUNDING LLC

                   TRANSITION BONDS, SERIES 2001-1, Class A-_.

Interest            Original Principal      Expected Final
Rate                      Amount            Payment Date        Maturity Date

LIBOR + [    ]%     $

      PSE&G Transition Funding LLC, a limited liability company formed and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to the Registered Holder
hereof, or registered assigns, the Original Principal Amount shown above in
quarterly instalments on the Payment Dates (as defined below) and in the amounts
specified on the reverse hereof or, if less, the amounts determined pursuant to
Section 8.02(g) of the Indenture, in each year, commencing on the date
determined as provided on the reverse hereof and ending on or before the Final
Maturity Date, to pay the entire unpaid principal hereof on the Final Maturity
Date and to pay interest, at the Interest Rate which is a floating rate of LIBOR
plus [ ]% per annum, on each March 15, June 15, September 15 and December 15,
and if any such day is not a Business Day, the next succeeding Business Day,
commencing on September 15, 2001 and continuing until the earlier of the payment
of the principal hereof and the Final Maturity Date (each, a "Payment Date"), on
the principal amount of this Class A-_ Bond outstanding on such Payment Date,
after giving effect to any payments of principal made on such Payment Date.
Interest will be computed for each Payment Date after the initial Payment Date
on the basis of a 360-day year of twelve 30-day months. In addition, on
September 15, 2001 (the initial Payment Date), the Issuer promises, subject to
the terms of the Indenture, to pay interest in the amount of (i) LIBOR plus [ ]%
multiplied by the number of days from and including the Series Issuance Date to
but excluding March 15, 2001 divided by 360, multiplied by the Original
Principal Amount of the Class A-_ Bonds, plus (ii) LIBOR plus [ ]% multiplied by
the number of days from and including March 15, 2001 to but excluding June 15,
2001, divided by 360, multiplied by the Original Principal Amount of the Class
A- Bonds, plus (iii) LIBOR plus [ ]% multiplied by the number of days from and
including June 15, 2001, to but excluding September 15, 2001, divided by 360,
multiplied by the Original Principal Amount of the Class A-_ Bonds.

      Notwithstanding the foregoing, upon the termination of the Class A-_ Swap
Agreement for any reason and for so long as there is no replacement Class A-
Swap Agreement in effect, the Interest Rate for the Class A-_ Bonds shall be the
fixed rate of [__] percent per annum (the "Class A-_ Gross Fixed Rate"),
effective from and including the Payment Date preceding such termination. The
Class A-_ Gross Fixed Rate shall be computed on the basis of a 360-day year of
twelve 30-day months or, for the initial Payment Date, the number of days
(calculated on the


                                      B-2
<PAGE>

basis of a 360-day year of twelve 30-day months) from and including the Series
Issuance Date to but excluding the initial Payment Date. At such time as the
Issuer enters into a replacement Class A-_ Swap Agreement pursuant to Section 9
of the Series Supplement, the Class A-_ Bonds shall revert to the Interest Rate
of LIBOR plus [ ] %, effective as of the next Payment Date following the date of
such replacement Class A-_ Swap Agreement and computed on the basis of the
actual number of days elapsed and a 360-day year. Principal of and interest on
this Class A-_ Bond shall be paid in the manner specified on the reverse hereof.

      Upon the termination of the Class A-_ Swap Agreement and payment by the
Class A-_ Swap Counterparty of any termination payment or other similar amount
to the Issuer in accordance with the terms of the Class A-_ Swap Agreement,
such amount shall be deposited directly into the Class A-_ Class Subaccount and
first used to make any payment required to be made to a Replacement Counterparty
and then to the extent not so used, shall be paid to the Holders of the Class
A-_ Bonds on the next Payment Date, pro rata based on the principal amount held
by each Holder.

      The principal of and interest on this Class A-_ Bond are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. All payments made by the
Issuer with respect to this Class A-_ Bond shall be applied first to interest
due and payable on this Class A-_ Bond as provided above and then to the unpaid
principal of this Class A-_ Bond, all in the manner set forth in Section 8.02(g)
of the Indenture.

      Reference is made to the further provisions of this Class A-_ Bond set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Class A-_ Bond.

      Unless the certificate of authentication hereon has been executed by the
Trustee whose name appears below by manual signature, this Class A-_ Bond shall
not be entitled to any benefit under the Indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.


                                      B-3
<PAGE>

      IN WITNESS WHEREOF, the Issuer has caused this instrument to be signed,
manually or in facsimile, by an authorized Manager of the Issuer.

Dated: [        ], 2001

                                       PSE&G TRANSITION FUNDING LLC

                                       By:____________________________
                                          Name:
                                          Title: Manager


                                      B-4
<PAGE>

                     TRUSTEE'S CERTIFICATE OF AUTHENTICATION

Dated: [        ], 2001

      This is one of the Class A-_ Bonds of the Series 2001-1 Transition Bonds,
designated above and referred to in the within-mentioned Indenture.

                                       THE BANK OF NEW YORK,
                                         not in its individual capacity
                                         but solely as Trustee on behalf of
                                         the Transition Bondholders,

                                       By:____________________________
                                          Name:
                                          Title:


                                      B-5
<PAGE>

                           REVERSE OF TRANSITION BOND

      This Class A-_ Bond is one of a duly authorized issue of Transition Bonds
of the Issuer, designated as its Transition Bonds (herein called the "Transition
Bonds"), issued and to be issued in one or more Series, which Series are
issuable in one or more Classes. The Series 2001-1 Transition Bonds consist of
eight Classes, including the Series 2001-1 Transition Bonds, Class A-_ (herein
called the "Class A-_ Bonds"). The Class A-_ Bonds have been issued under an
indenture dated as of [January] , 2001, and a series supplement thereto dated as
of [January] , 2001 (such series supplement, as supplemented or amended, the
"Series Supplement" and, collectively with such indenture, as supplemented or
amended, the "Indenture"), each between the Issuer and The Bank of New York, as
Trustee (the "Trustee", which term includes any successor trustee under the
Indenture), to which Indenture and all indentures supplemental thereto reference
is hereby made for a statement of the Collateral pledged, the nature and extent
of the security, the respective rights, obligations and immunities thereunder of
the Issuer, the Trustee and the Holders of the Transition Bonds and the terms
and conditions under which additional Transition Bonds may be issued. All terms
used in this Class A-_ Bond that are defined in the Indenture, as supplemented
or amended, shall have the meanings assigned to them in the Indenture.

      The Class A-_ Bonds, the other Classes of Series 2001-1 Transition Bonds
and any other Series of Transition Bonds issued by the Issuer are and will be
equally and ratably secured by the Collateral pledged as security therefor as
provided in the Indenture.

      The principal of this Class A-_ Bond shall be payable on each Payment Date
only to the extent that amounts in the Collection Account are available
therefor, and only until the outstanding principal balance thereof on such
Payment Date (after giving effect to all payments of principal, if any, made on
such Payment Date) has been reduced to the principal balance specified in the
Expected Amortization Schedule which is attached to the Series Supplement as
Schedule A, unless payable earlier either because

            (i) an Event of Default has occurred and is continuing and the
      Trustee or the Holders of Transition Bonds representing not less than a
      majority of the Outstanding Amount of the Transition Bonds of all Series
      have declared the Transition Bonds to be immediately due and payable in
      accordance with Section 5.02 of the Indenture, or

            (ii) the Issuer, at its option, has called for the redemption of the
      Series 2001-1 Transition Bonds in whole pursuant to Section 8(b) of the
      Series Supplement and Section 10.01 of the Indenture.

However, actual principal payments may be made in lesser than expected amounts
and at later than expected times as determined pursuant to Section 8.02(g) of
the Indenture. The entire unpaid principal amount of this Class A-_ Bond shall
be due and payable on the earlier of the


                                      B-6
<PAGE>

Final Maturity Date hereof and the Redemption Date, if any. Notwithstanding the
foregoing, the entire unpaid principal amount of the Transition Bonds shall be
due and payable, if not then previously paid, on the date on which an Event of
Default shall have occurred and be continuing and the Trustee or the Holders of
the Transition Bonds of all Series representing not less than a majority of the
Outstanding Amount of the Transition Bonds have declared the Transition Bonds to
be immediately due and payable in the manner provided in Section 5.02 of the
Indenture. If the Transition Bonds are accelerated and the Bondable Transition
Property is liquidated in accordance with the Indenture, the proceeds of such
liquidation which are allocated to the Class A-_ Subaccount will be allocated
between and paid to the Holders of the Class A-_ Transition Bonds and the Swap
Counterparty, pro rata, based on the aggregate amount of principal and interest
due and payable on the Class A-_ Transition Bonds and the aggregate amount
payable to the Swap Counterparty in accordance with the Interest Rate Swap
Agreement. All principal payments on the Class A-_ Bonds shall be made pro rata
to the Class A-_ Bondholders entitled thereto based on the respective principal
amounts of the Class A-_ Bonds held by them.

      Payments of interest on this Class A-_ Bond due and payable on each
Payment Date, together with the instalment of principal payable on this Class
A-_ Bond on such Payment Date shall be made by check mailed first-class, postage
prepaid, to the Person whose name appears as the Registered Holder of this Class
A- Bond (or one or more predecessor of such Transition Bond) in the Transition
Bond Register as of the close of business on the Record Date or in such other
manner as may be provided in the Series Supplement, except that with respect to
Class A-_ Bonds registered on the Record Date in the name of a Clearing Agency,
payments will be made by wire transfer in immediately available funds to the
account designated by such Clearing Agency and except for the final instalment
of principal payable with respect to this Class A-_ Bond on a Payment Date which
shall be payable as provided below. Such checks shall be mailed to the Person
entitled thereto at the address of such Person as it appears in the Transition
Bond Register as of the applicable Record Date without requiring that this Class
A- Bond be submitted for notation of payment. Any reduction in the principal
amount of this Class A-_ Bond (or any one or more predecessor to such Transition
Bond) effected by any payments made on any Payment Date shall be binding upon
all future Holders of this Class A-_ Bond and of any Class A-_ Bond issued upon
the registration of transfer hereof or in exchange hereof or in lieu hereof,
whether or not noted hereon. If funds are expected to be available, as provided
in the Indenture, for payment in full of the then remaining unpaid principal
amount of this Class A-_ Bond on a Payment Date, then the Trustee, in the name
of and on behalf of the Issuer, will notify the Person who was the Registered
Holder hereof as of the second preceding Record Date to such Payment Date by
notice mailed no later than five days prior to such final Payment Date and shall
specify that such final instalment will be payable to the Registered Holder
hereof as of the Record Date immediately preceding such final Payment Date and
only upon presentation and surrender of this Class A-_ Bond and shall specify
the place where this Class A-_ Bond may be presented and surrendered for payment
of such instalment.


                                      B-7
<PAGE>

      The Issuer shall pay interest on overdue instalments of interest on this
Class A-_ Bond at the Interest Rate for Class A-_ in any lawful manner, subject
to the availability of such amounts in the Class A-_ Subaccount.

      As provided in the Indenture, the Class A-_ Bonds may be redeemed, in
whole, but not in part, in certain circumstances as provided in Section 8(b) of
the Series Supplement.

      This Class A-_ Bond is a Transition Bond as such term is defined in the
Competition Act. Principal and interest due and payable on this Transition Bond
are payable from and secured primarily by bondable transition property created
and established by a bondable stranded cost rate order issued by the State of
New Jersey Board of Public Utilities pursuant to the Competition Act. Bondable
transition property consists of the irrevocable right to impose and collect
certain non-bypassable charges (defined in the Competition Act as "transition
bond charges") to be included in electric utility bills of all electric service
retail customers of Public Service Electric and Gas Company, a New Jersey
electric utility.

      The Competition Act provides that:

      "The State of New Jersey does hereby pledge and agree with the holders of
any transition bonds issued under the authority of this Act, with the pledgee,
owner or assignee of bondable transition property, with any financing entity
which has issued transition bonds with respect to which a bondable stranded
costs rate order has been issued and with any person who may enter into
agreements with an electric public utility or an assignee or pledgee thereof or
a financing entity pursuant to this act, that the State will not limit, alter or
impair any bondable transition property or other rights vested in an electric
public utility or an assignee or pledgee thereof or a financing entity or vested
in the holders of any transition bonds pursuant to a bondable stranded costs
rate order until such transition bonds, together with the interest and
acquisition or redemption premium, if any, thereon, are fully paid and
discharged or until such agreements are fully performed on the part of the
electric public utility, any assignee or pledgee thereof or the financing entity
or in any way limit, alter, impair or reduce the value or amount of the bondable
transition property approved by a bondable stranded costs rate order . . . ".

      As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Class A-_ Bond may be registered in the Transition
Bond Register upon surrender of this Class A-_ Bond for registration of transfer
at the office or agency designated by the Issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Trustee duly executed by the Holder hereof or his attorney
duly authorized in writing, with such signature guaranteed by an Eligible
Guarantor Institution, and thereupon one or more new Class A-_ Bonds of any
Authorized Denominations and in the same aggregate initial principal amount will
be issued to the designated transferee or transferees. No service charge will be
charged for any registration of transfer or exchange of this Class A-_ Bond, but
the transferor may be required to pay a sum sufficient to cover any tax or other


                                      B-8
<PAGE>

governmental charge that may be imposed in connection with any registration of
transfer or exchange.

      Prior to the due presentment for registration of transfer of this Class A-
Bond, the Issuer, the Trustee and any agent of the Issuer or the Trustee may
treat the Person in whose name this Class A-_ Bond is registered (as of the day
of determination) as the owner hereof for the purpose of receiving payments of
principal of and interest on this Class A-_ Bond and for all other purposes
whatsoever, whether or not this Class A-_ Bond may be overdue, and neither the
Issuer, the Trustee nor any such agent shall be affected by notice to the
contrary.

      The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Holders of the Transition Bonds under the Indenture
at any time by the Issuer with the consent of the Holders of Transition Bonds
representing a majority of the Outstanding Amount of all Transition Bonds at the
time Outstanding of each Series or Class to be affected and upon satisfaction of
the Rating Agency Condition. The Indenture also contains provisions permitting
the Holders of Transition Bonds representing specified percentages of the
Outstanding Amount of the Transition Bonds of all Series, on behalf of the
Holders of all the Transition Bonds, to waive compliance by the Issuer with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Class A-_ Bond (or any one of more predecessor of such transition bonds)
shall be conclusive and binding upon such Holder and upon all future Holders of
this Class A-_ Bond and of any Class A-_ Bond issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Class A-_ Bond. The Indenture also
permits the Trustee to amend or waive certain terms and conditions set forth in
the Indenture without the consent of Holders of the Transition Bonds issued
thereunder.

      The term "Issuer" as used in this Class A-_ Bond includes any successor to
the Issuer under the Indenture.

      The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Trustee and the Holders of
Transition Bonds under the Indenture.

      The Class A-_ Bonds are issuable only in registered form in Authorized
Denominations as provided in the Indenture and the Series Supplement, subject to
certain limitations therein set forth.

      This Class A-_ Bond and the Indenture shall be construed in accordance
with the laws of the State of New Jersey, without reference to its conflict of
law provisions, and the obligations, rights and remedies of the parties
hereunder and thereunder shall be determined in accordance with such laws.


                                      B-9
<PAGE>

      No reference herein to the Indenture and no provision of this Class A-_
Bond or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on
this Class A-_ Bond at the times and rate and in the currency herein prescribed.


                                      B-10
<PAGE>

                                   ASSIGNMENT

Social Security or taxpayer I.D. or other identifying number of assignee:

      FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ___

                         (name and address of assignee)

the within Class A-_ Bond and all rights thereunder, and hereby irrevocably
constitutes and appoints

                         (name and address of appointee)

attorney, to transfer said Class A-_ Bond on the books kept for registration
thereof, with full power of substitution in the premises.

Dated:

________       ____________________________*
               Signature Guaranteed:

________       ____________________________

*     NOTE: The signature to this assignment must correspond with the name of
      the registered owner as it appears on the face of the within Class A-_
      Bond in every particular, without alteration, enlargement or any change
      whatsoever.


                                      B-11