EXHIBIT 4.2.1

                    FORM OF AMENDED AND RESTATED CERTIFICATE
                  OF FORMATION OF PSE&G TRANSITION FUNDING LLC


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                              AMENDED AND RESTATED
                            CERTIFICATE OF FORMATION

                                       OF

                          PSE&G TRANSITION FUNDING LLC

      AMENDED AND RESTATED CERTIFICATE OF FORMATION, dated [January] , 2001 (as
the same may be further amended, supplemented or otherwise modified and in
effect from time to time, this "Certificate of Formation"), of PSE&G TRANSITION
FUND ING LLC, a Delaware limited liability company (the "Company"), having its
principal office at 80 Park Plaza, T-4D, Newark, New Jersey 07102.

      SECTION 1. Capitalized Terms. Unless otherwise defined herein, all
capitalized terms shall have the meanings ascribed thereto in the Amended and
Restated Limited Liability Company Agreement of the Company, dated as of
[January] , 2001 (the "Agreement"), as the same may be amended from time to
time.

      SECTION 2. Name. The name of the limited liability company is PSE&G
Transition Funding LLC.

      SECTION 3. Address. The address of its registered office in the State of
Delaware is 1209 Orange Street, Wilmington, New Castle County, Delaware 19801.
The name of its registered agent at such address is The Corporation Trust
Company.

      SECTION 4. Term. The term of the Company shall continue until the Company
is dissolved and liquidated in accordance with Delaware Limited Liability
Company Act, chapter 18, title 6, sections 18-101 through 18-1109 of the
Delaware Code (as amended, the "Act"), subject to Sections 6.03 and 9.05 of the
Agreement. The existence of the Company as a separate legal entity shall
continue until the cancellation of this Certificate of Formation in accordance
with the Act.

      SECTION 5. Independent Managers.

      (a) The Company shall have at all times at least two individuals who are
each Independent Managers. The Independent Managers may not delegate their
duties, authorities or responsibilities hereunder or under the Agreement. If any
Independent Manager resigns, dies or becomes incapacitated, or such position is
otherwise vacant, no action requiring the unanimous affirmative vote of the
Managers shall be taken until a successor Independent Manager is appointed by
the Member and qualifies and approves such action.

      (b) Notwithstanding any other provision of this Certificate of Formation
or of the Agreement or any provision of law that otherwise so empowers the
Company, the Member,


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any Manager or any other Person, the Company shall not, and neither the Member
nor any Manager nor any other Person on behalf of the Company shall, without the
prior unanimous consent of the Managers, including each of the Independent
Managers, do any of the following: (i) engage in any business or activity other
than those set forth in Article II of the Agreement; (ii) incur any
indebtedness, other than the Bonds, obligations under agreements with third
party credit enhancers and swap or hedge agreement counterparties relating to
any Series of Bonds and ordinary course expenses as set forth in Article II of
the Agreement, or assume or guarantee any indebtedness of any other entity;
(iii) make a general assignment for the benefit of creditors; (iv) file a
petition commencing a voluntary bankruptcy case; (v) file a petition or answer
seeking reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or regulation; (vi) file an
answer or other pleading admitting or failing to contest the material
allegations of a petition filed against it in any proceeding seeking reorganiza
tion, arrangement, composition, readjustment, liquidation, dissolution or
similar relief under any statute, law or regulation, or the entry of any order
appointing a trustee, liquidator or receiver of it or of its assets or any
substantial portion thereof; (vii) seek, consent to or acquiesce in the
appointment of a trustee, receiver or liquidator of it or of all or any
substantial part of its assets; (viii) consolidate or merge with or into any
other entity or convey or transfer substantially all of its properties and
assets substantially as an entirety to any entity, or (ix) amend the Agreement,
this Certificate of Formation or take action in furtherance of any such action.
With regard to any action contemplated by the preceding sentence, or with regard
to any action taken or determina tion made at any time when the Company is
insolvent, each Manager will, to the fullest extent permitted by law, owe its
primary fiduciary duty to the Company (including the creditors of the Company).

      SECTION 6. Special Members. Upon the occurrence of any event that causes
the Member to cease to be a member of the Company, each person acting as an
Independent Manager pursuant to Section 5 hereof shall, without any action of
any Person and simultaneously with the Member ceasing to be a member of the
Company, automatically be admitted to the Company as a Special Member and shall
continue the Company without dissolution. No Special Member may resign from the
Company or transfer its rights as a Special Member unless (i) a successor
Special Member has been admitted to the Company as a Special Member by executing
a counterpart to the Agreement, and (ii) such successor has also accepted its
appointment as Independent Manager, provided, however, the Special Members shall
automatically cease to be members of the Company upon the admission to the
Company of a substitute Member. Each Special Member shall be a member of the
Company that has no interest in the profits, losses and capital of the Company
and has no right to receive any distributions of Company assets. Pursuant to
Section 18-301 of the Act, a Special Member shall not be required to make any
capital contributions to the Company and shall not receive a limited liability
company interest in the Company. A Special Member, in its capacity as Special
Member, may not bind the Com pany. Except as required by any mandatory provision
of the Act, each Special Member, in its capacity as Special Member, shall have
no right to vote on, approve or otherwise consent to any action by, or matter
relating to, the Company, including, without limitation, the merger,
consolidation or conversion of the Company. In order to implement the admission
to the


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Company of each Special Member pursuant to this Section, each person acting as
an Independent Manager pursuant to Section 5 hereof shall execute a counterpart
to the Agreement. Prior to its admission to the Company as Special Member, each
person acting as an Independent Manager pursuant to Section 5 hereof shall not
be a member of the Company.

      SECTION 7. Rights on Liquidation, Dissolution or Winding Up.

      (a) In the event of any liquidation, dissolution or winding up of the
Company, the Member shall be entitled to all remaining assets of the Company
available for distribution to the Member after payment of all liabilities, debts
and obligations of the Company to creditors, as set forth in Section 18-804 of
the Act.

      (b) Neither the sale of all or substantially all of the property or
business of the Company, nor the merger or consolidation of the Company into or
with another Company or other entity, shall be deemed to be a dissolution,
liquidation or winding up, voluntary or involuntary, for the purpose of this
Section 7.

      (c) The commencement of a bankruptcy, insolvency, receivership or other
similar proceeding by or against the Company or the Member shall not result in
the dissolution of the Company or in the cessation of the interest of the Member
in the Company. The withdrawal or resignation of the Member or the dissolution
of the Member shall not, by itself, constitute a dissolution of the Company.

      (d) Upon the occurrence of any event that causes the last remaining member
of the Company to cease to be a member of the Company, to the fullest extent
permitted by law, the personal representative of such member is hereby
authorized to, and shall, within 90 days after the occurrence of the event that
terminated the continued membership of such member in the Company, agree in
writing (i) to continue the Company and (ii) to the admission of the personal
representative or its nominee or designee, as the case may be, as a substitute
member of the Company, effective as of the occurrence of the event that
terminated the continued member ship of the last remaining member of the Company
in the Company.

      (e) Notwithstanding any other provision of this Certificate of Formation
or of the Agreement, the bankruptcy of the Member or any Special Member shall
not cause the Member or Special Member, respectively, to cease to be a member of
the Company, and upon the occurrence of such an event the business of the
Company shall continue without dissolution.

      SECTION 8. No Bankruptcy Petition; No Dissolution.

      (a) The Member hereby covenants and agrees that it shall not, prior to the
date which is one year and one day after the termination of the Indenture and
the payment in full of the Transition Bonds, any other amounts owed under the
Indenture, including, without limitation, any amounts owed to third-party credit
enhancers, and any amounts owed under any Hedge


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Agreement or Interest Rate Swap Agreement, acquiesce, petition or otherwise
invoke or cause the Issuer to invoke the process of any court or government
authority for the purpose of com mencing or sustaining a case against the Issuer
under any federal or State bankruptcy, insolvency or similar law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Issuer or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Issuer, provided,
however, that nothing in this Section 8 shall constitute a waiver of any right
to indemnification, reimbursement or other payment from the Company pursuant to
the Agreement.

      (b) To the fullest extent permitted by law, the Member and each Manager
and Special Member hereby covenants and agrees (or shall be deemed to have
hereby covenanted and agreed) that, until all of the Bonds and all amounts owed
under the Indenture have been paid in full, the Member and such Manager will not
consent to, or make application for, or institute or maintain any action for,
the dissolution of the Company under Section 18-801 or 18-802 of the Act or
otherwise.

      (c) In the event that the Member, any Special Member or any Manager takes
action in violation of this Section 8, the Company shall file an answer with the
court or otherwise properly contest the taking of such action and raise the
defense that the Member, the Manager or the Special Member, as the case may be,
has agreed in writing not to take such action and should be estopped and
precluded therefrom and such other defenses, if any, as its counsel advises that
it may assert.

      (d) The provisions of this Section 8 shall survive the termination of the
Agreement and the resignation, withdrawal or removal of the Member or any
Manager or the Special Member.

      SECTION 9. Conflict. In the event of any conflict or inconsistency between
the provisions of this Certificate of Formation and of the Agreement, the
provisions of this Certificate of Formation shall govern.


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      IN WITNESS WHEREOF, the undersigned has executed and delivered this
Amended and Restated Certificate of Formation of PSE&G Transition Funding LLC
this ___ th day of [January], 2001.

                                    PSE&G TRANSITION FUNDING LLC

                                    By: Public Service Electric and Gas Company,
                                          as sole Member

                                    By: /s/ James T. Foran
                                       -----------------------------------------
                                    Name:  James T. Foran

                                    Title: General Corporate Counsel of Public
                                           Service Electric and Gas Company


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