Exhibit 3.1


                          Certificate of Incorporation

                                       of

                  Enterprise Diversified Holdings Incorporated

      The undersigned, a corporation of the State of New Jersey, for the purpose
of forming a corporation  pursuant to the provisions of the New Jersey  Business
Corporation Act, does hereby certify as fellows:

      1.    The name of the corporation is Enterprise Diversified Holdings
            Incorporated.

      2.    The purpose for which the corporation is organized is to engage in
            any activity within the purposes for which corporations may be
            organized under the New Jersey Business Corporation Act.

      3.    The aggregate number of shares which the corporation shall have
            authority to issue is 1,000,000 shares of Capital Stock, without par
            value.

      4.    The number of directors of the corporation at any time may be
            increased or (in the event of an existing vacancy) diminished by
            vote of the Board of Directors, and in case of any such increase the
            Board of Directors shall have power to elect each such additional
            director to hold office until the next

<PAGE>

                                        3

            succeeding annual meeting of stockholders and until his successor
            shall have been elected and qualified.

      5.    The shareholders of the corporation, by the affirmative vote of the
            majority of the votes cast by the holders of shares entitled to vote
            for the election of directors, may remove one or more or all of the
            directors without cause. The Board of Directors, by the affirmative
            vote of a majority of the directors in office, may remove a director
            or directors for cause where, in the judgment of such majority, the
            continuation of the director or directors in office would be harmful
            to the corporation and may suspend the director or directors for a
            reasonable period pending final determination that cause exists for
            such removal.

      6.    To the full extent from time to time permitted by law, directors and
            officers of the corporation shall not be personally liable to the
            corporation or its shareholders for damages for breach of any duty
            owed to the corporation or its shareholders. No amendment or repeal
            of this provision shall adversely affect any right or protection of
            a director or officer of the corporation

<PAGE>

                                        4

            existing at the time of such amendment or repeal.

      7.    The address of the corporation's initial registered office is 80
            Park Plaza, Newark, New Jersey 07101, and the name of the
            corporation's initial registered agent at such address is Robert S.
            Smith.

      8.    The number of directors constituting the first Board of Directors of
            the corporation is seven, and the names and addresses of the
            persons who are to serve as such directors are as follows:

            E. James Ferland           80 Park Plaza
                                       Newark, NJ 07101

            William E. Marfuggi        80 Park Plaza
                                       Newark, NJ 07101

            T.J. Dermot Dunphy         80 Park Plaza
                                       Newark, NJ 07101

            Shirley A. Jackson         80 Park Plaza
                                       Newark, NJ 07101

            Marilyn M. Pfaltz          80 Park Plaza
                                       Newark, NJ 07101

            Harold W. Sonn             80 Park Plaza
                                       Newark, NJ 07101

            Josh S. Weston             80 Park Plaza
                                       Newark, NJ 07101

<PAGE>

                                        5

      9.    The name and address of the incorporator is Public Service
            Enterprise Group Incorporated, 80 Park Plaza, Newark, New Jersey
            07101.

      In Witness Whereof,  the undersigned,  the incorporator of the above-named
corporation,  has caused this  Certificate of  Incorporation to be executed this
20th day of June, 1989.


                                                   PUBLIC SERVICE ENTERPRISE
                                                      GROUP INCORPORATED

                                                   By: /s/ E. James Ferland
                                                      --------------------------
                                                         E. James Ferland
                                                         Chairman of the Board,
                                                         President and Chief
                                                         Executive Officer

Attest:

/s/ Robert S. Smith
-----------------------
    Robert S. Smith
       Secretary


<PAGE>



                            Certificate of Amendment

                                       of

                          CERTIFICATE OF INCORPORATION

                                       of

                  ENTERPRISE DIVERSIFIED HOLDINGS INCORPORATED


                              ---------------------



                 Authorizing 1,000,000 Shares of Preferred Stock

<PAGE>


                            CERTIFICATE OF AMENDMENT
                                       of
                          CERTIFICATE OF INCORPORATION
                                       of
                  Enterprise Diversified Holdings Incorporated

                             -----------------------

      Enterprise  Diversified Holdings  Incorporated,  a New Jersey corporation,
does  hereby  certify,  pursuant  to  subsection  14A:9-4(3)  of the New  Jersey
Business Corporation Act, that:

      (a) The  name of this  corporation  is  "Enterprise  Diversified  Holdings
Incorporated".

      (b) The  following is a copy of  resolutions  of the Board of Directors of
said corporation,  amending the Certificate of Incorporation of said corporation
dated June 20, 1989, as amended,  pursuant to  subsection  14A:9-2(4) of the New
Jersey Business Corporation Act:

      "Resolved,   that  Section  3  of  this   corporation's   Certificate   of
      Incorporation  dated  June 20,  1989 is hereby  amended by  deleting  said
      Section in its entirety and inserting the following:

            3. The  corporation  shall  have the  authority  to issue  1,000,000
      shares of  Common  Stock,  without  par  value,  and  1,000,000  shares of
      Preferred  Stock. The Board of Directors shall have authority to issue the
      shares  of  Preferred  Stock  from  time to time on such  terms  as it may
      determine,  and to divide the Preferred  Stock into one or more classes or
      series and in connection  with the creation of any such class or series to
      fix, by resolution or  resolutions  providing for the issue  thereof,  the
      designation,  the number of shares,  and the relative rights,  preferences
      and limitations  thereof, to the full extent now or hereafter permitted by
      law."

<PAGE>
                                      -2-


      (c) The foregoing  resolutions were duly adopted by the Board of Directors
of said  corporation  at a meeting duly called and held on October 21, 1997,  at
which a quorum was present and acting  throughout and by written  consent of its
sole shareholder,  Public Service Enterprise Group Incorporated,  on October 21,
1997.

      (d) The number of shares entitled to vote is 100.

      (e) The number of shares  voted for the  amendment  is 100;  the number of
shares voted against the amendment is 0.

      (f)  The   amendment   is  not   intended  to  provide  for  an  exchange,
reclassification or cancellation of issued shares.

      (g) The  amendment  shall  be  effective  at the  time of  filing  of this
Certificate.

      IN WITNESS WHEREOF, said Enterprise  Diversified Holdings Incorporated has
made this Certificate this 21st day of October, 1997.




                                   ENTERPRISE DIVERSIFIED HOLDINGS INCORPORATED



                                   By  /s/ E. James Ferland
                                     ------------------------------------------
                                             E. James Ferland
                                             Chairman of the Board and
                                             Chief Executive Officer

[CORPORATE SEAL]

Attest:



By /s/ Edward J. Biggins, Jr.
  -----------------------------
         Edward J. Biggins, Jr.
         Secretary


<PAGE>




                            Certificate of Amendment

                                       of

                          CERTIFICATE OF INCORPORATION

                                       of

                  ENTERPRISE DIVERSIFIED HOLDINGS INCORPORATED


                                -----------------



                Establishing the 4.10% Cumulative Preferred Stock
                       as a series of the Preferred Stock.

<PAGE>


                            CERTIFICATE OF AMENDMENT
                                       of
                          CERTIFICATE OF INCORPORATION
                                       of
                  Enterprise Diversified Holdings Incorporated

                                -----------------

      Enterprise  Diversified Holdings  Incorporated,  a New Jersey corporation,
does  hereby  certify,  pursuant  to  subsection  14A:7-2(4)  of the New  Jersey
Business Corporation Act, that:

            (a) The name of this corporation is "Enterprise Diversified Holdings
      Incorporated".

            (b) The following is a copy of resolutions of the Board of Directors
      of said  corporation,  amending the Certificate of  Incorporation  of said
      corporation  dated June 20,  1989,  as amended,  pursuant  to  subsections
      14A:7-2(2) and 14A:7-2(3) of the New Jersey  Business  Corporation Act and
      Section 3 of said Certificate of Incorporation:

      RESOLVED, that a series of Preferred Stock of this Corporation, designated
"4.10% Cumulative  Preferred Stock" (hereinafter in these resolutions  sometimes
referred to as the "4.10% Preferred Stock"),  and consisting of 75 shares of the
par value of $1,000,000  each, be and the same is hereby created and established
as a series within the 1,000,000  shares of Preferred Stock of this  Corporation
upon the  effectiveness  of the  Certificate of Amendment of the  Certificate of
Incorporation  of this Corporation to authorize the issuance of 1,000,000 shares
of Preferred Stock;

      FURTHER RESOLVED, that the relative rights, preferences and limitations of
the shares of the 4.10% Preferred Stock are hereby determined to be as follows:

<PAGE>
                                      -2-


          (a) Dividends. The holder of shares of the 4.10% Preferred Stock shall
     be entitled to receive,  and the  corporation  shall be obliged to pay, but
     only when and as  declared by the Board of  Directors,  and only out of its
     earned surplus,  cash dividends thereon, at the rate per share per annum of
     4.10%,  and no more,  payable  quarterly,  with  respect  to each  calendar
     quarterly  period,  on or  prior  to the  last  day of each  such  calendar
     quarterly  period,  to wit, the last day of each January,  April,  July and
     October.  Dividends  on each  share of such  series of the 4.10%  Preferred
     Stock shall be cumulative from date of issuance.

          Subject to the provisions  contained  herein,  all  additional  earned
     surplus of the  corporation may be divided among and paid to the holders of
     Common Stock.

          (b) Restrictions on Dividends on and Purchase of Junior Stock. So long
     as any of 4.10%  Preferred  Stock  shall  remain  outstanding,  no dividend
     (other than  dividends  payable in shares of Common Stock) shall be paid on
     or set  apart  for the  Common  Stock,  nor shall  any  shares  thereof  be
     purchased,  redeemed,  or  otherwise  acquired  by the  corporation  or any
     subsidiary  thereof  (other  than  shares  acquired  without  cost  to  the
     corporation or such subsidiary) unless

               (i)  all  dividends  on  all  outstanding  shares  of  the  4.10%
     Preferred  Stock for all past  quarterly  dividend  periods shall have been
     paid and full  dividends  thereon for the then current  quarterly  dividend
     period declared and a sum sufficient for the payment thereof set apart;

<PAGE>
                                      -3-


               (ii) after giving  effect to the payment of such dividend or such
     purchase,  redemption, or other acquisition, the capital of the corporation
     represented  by its Common Stock,  together with its surplus as then stated
     on its books of account, shall in the aggregate exceed the aggregate of the
     amounts   payable  on   involuntary   liquidation  or  dissolution  of  the
     corporation  in  respect of all  shares of the 4.10%  Preferred  Stock then
     outstanding.

          (c) Voting  Rights.  All  voting  rights in the  corporation  shall be
     vested exclusively in the holders of Common Stock.

          (d)  Redemption.  The  shares  of the  4.10%  Preferred  Stock  may be
     redeemed at the option of the Board of Directors of the  corporation at any
     time at par plus an amount equal to all  accumulated  and unpaid  dividends
     thereon to the date of redemption,  whether or not such dividends have been
     earned or declared.

          All shares of 4.10% Preferred Stock redeemed by the corporation  shall
     be cancelled and upon such cancellation  shall be restored to the status of
     authorized but unissued shares, not classified as to series.

          (e) Liquidation or  Dissolution.  On liquidation or dissolution of the
     corporation,  before  any  payment  or  distribution  shall  be made to the
     holders of Common Stock, if such liquidation or dissolution be involuntary,
     the holder of the 4.10%  Preferred  Stock  shall be entitled to be paid the
     sum of $1,000,000  per share,  of, if such  liquidation  or  dissolution be
     voluntary, the holder of the shares of 4.10% Preferred Stock shall be

<PAGE>
                                      -4-


     entitled to be paid the amount established by the Board of Directors,  plus
     an amount equal to all accumulated and unpaid dividends thereon to the date
     of such payment,  whether or not such  dividends  shall have been earned or
     declared. After such payments shall have been made in full to the holder of
     4.10%  Preferred  Stock,  it shall be  entitled  to no  further  payment or
     distribution.

          A consolidation  or merger to which the  corporation  shall be a party
     shall not be deemed a liquidation or dissolution of the corporation  within
     the meaning of this subdivision.

          (f) The shares of the 4.10% Preferred Stock are not transferable.

     FURTHER RESOLVED, that the Certificate of Incorporation of this Corporation
dated June 20, 1989, as amended, be and it hereby is further amended so that the
designation  and  number of  shares  of such  series  and the  relative  rights,
preferences and limitations of such series are as stated in these resolutions;

     FURTHER RESOLVED,  that the proper officers of this Corporation be and they
hereby are authorized and directed to execute on behalf of this  Corporation and
to file in the  office of the  Secretary  of State of the State of New  Jersey a
certificate  of  amendment  to  the   Certificate  of   Incorporation   of  this
Corporation,  as amended, setting forth a copy of these resolutions, as required
by subsection 14A:7-2(4) of the New Jersey Business Corporation Act".

<PAGE>
                                      -5-


          (c) The  foregoing  resolutions  were  duly  adopted  by the  Board of
     Directors of said  Corporation at a meeting duly called and held on October
     21, 1997, at which a quorum was present and acting throughout.

          (d) The Certificate of Incorporation  of this  corporation  dated June
     20, 1989, as amended, is further amended so that the designation and number
     of shares of the 4.10% Cumulative Preferred Stock of said corporation,  and
     the relative  rights,  preferences  and  limitations  of such series are as
     stated in said resolutions.

     IN WITNESS WHEREOF,  said Enterprise  Diversified Holdings Incorporated has
made this Certificate this 21st day of October, 1997.

                                   ENTERPRISE DIVERSIFIED HOLDINGS INCORPORATED

                                   By: /s/ E. James Ferland
                                      ---------------------------------------
                                                E. James Ferland
                                                Chairman of the Board

[CORPORATE SEAL]

Attest:

By: /s/ Edward J. Biggins, Jr.
   ----------------------------
        Edward J. Biggins, Jr.
        Secretary

<PAGE>



                            Certificate of Amendment

                                       of

                          CERTIFICATE OF INCORPORATION

                                       of

                  ENTERPRISE DIVERSIFIED HOLDINGS INCORPORATED


                                ----------------



                Establishing the 5.01% Cumulative Preferred Stock
                       as a series of the Preferred Stock.

<PAGE>


                            CERTIFICATE OF AMENDMENT
                                       of
                          CERTIFICATE OF INCORPORATION
                                       of
                  Enterprise Diversified Holdings Incorporated

                                ----------------

      Enterprise  Diversified Holdings  Incorporated,  a New Jersey corporation,
does  hereby  certify,  pursuant  to  subsection  14A:7-2(4)  of the New  Jersey
Business Corporation Act, that:

     (a) The  name of  this  corporation  is  "Enterprise  Diversified  Holdings
Incorporated".

     (b) The  following  is a copy of  resolutions  of the Board of Directors of
said corporation,  amending the Certificate of Incorporation of said corporation
dated  June 20,  1989,  as  amended,  pursuant  to  subsections  14A:7-2(2)  and
14A:7-2(3)  of the New Jersey  Business  Corporation  Act and  Section 3 of said
Certificate of Incorporation:

          RESOLVED,  that a  series  of  Preferred  Stock  of this  Corporation,
     designated  "5.01%  Cumulative   Preferred  Stock"  (hereinafter  in  these
     resolutions  sometimes  referred to as the "5.01%  Preferred  Stock"),  and
     consisting of 435 shares of the par value of $500,000 each, be and the same
     is hereby created and  established  as a series of Preferred  Stock of this
     Corporation;

          FURTHER   RESOLVED,   that  the  relative   rights,   preferences  and
     limitations  of  the  shares  of  the  5.01%  Preferred  Stock  are  hereby
     determined to be as follows:

<PAGE>
                                      -2-


          (a) Dividends. The holder of shares of the 5.01% Preferred Stock shall
     be entitled to receive,  and the  corporation  shall be obliged to pay, but
     only when and as  declared by the Board of  Directors,  and only out of its
     earned surplus,  cash dividends thereon, at the rate per share per annum of
     5.01%,  and no more,  payable  quarterly,  with  respect  to each  calendar
     quarterly  period,  on or  prior  to the  last  day of each  such  calendar
     quarterly period, to wit, the last day of each March,  June,  September and
     December.  Dividends  on each share of such  series of the 5.01%  Preferred
     Stock shall be cumulative from date of issuance.

          Subject to the provisions  contained  herein,  all  additional  earned
     surplus of the  corporation may be divided among and paid to the holders of
     Common Stock.

          (b) Restrictions on Dividends on and Purchase of Junior Stock. So long
     as any of 5.01%  Preferred  Stock  shall  remain  outstanding,  no dividend
     (other than  dividends  payable in shares of Common Stock) shall be paid on
     or set  apart  for the  Common  Stock,  nor shall  any  shares  thereof  be
     purchased,  redeemed,  or  otherwise  acquired  by the  corporation  or any
     subsidiary  thereof  (other  than  shares  acquired  without  cost  to  the
     corporation or such subsidiary) unless:

<PAGE>
                                      -3-


          (i) all  dividends on all  outstanding  shares of the 5.01%  Preferred
     Stock for all past quarterly dividend periods shall have been paid and full
     dividends thereon for the then current  quarterly  dividend period declared
     and a sum sufficient for the payment thereof set apart;

          (ii)  after  giving  effect to the  payment of such  dividend  or such
     purchase,  redemption, or other acquisition, the capital of the corporation
     represented  by its Common Stock,  together with its surplus as then stated
     on its books of account, shall in the aggregate exceed the aggregate of the
     amounts   payable  on   involuntary   liquidation  or  dissolution  of  the
     corporation  in  respect of all  shares of the 5.01%  Preferred  Stock then
     outstanding.

          (c) Voting  Rights.  All  voting  rights in the  corporation  shall be
     vested exclusively in the holders of Common Stock.

          (d)  Redemption.  The  shares  of the  5.01%  Preferred  Stock  may be
     redeemed at the option of the Board of Directors of the  corporation at any
     time at par plus an amount equal to all  accumulated  and unpaid  dividends
     thereon to the date of redemption,  whether or not such dividends have been
     earned or declared.

<PAGE>
                                      -4-


          All shares of 5.01% Preferred Stock redeemed by the corporation  shall
     be canceled and upon such  cancellation  shall be restored to the status of
     authorized but unissued shares, not classified as to series.

          (e) Liquidation or  Dissolution.  On liquidation or dissolution of the
     corporation,  before  any  payment  or  distribution  shall  be made to the
     holders of Common Stock, if such liquidation or dissolution be involuntary,
     the holder of the 5.01%  Preferred  Stock  shall be entitled to be paid the
     sum of  $500,000  per share,  or, if such  liquidation  or  dissolution  be
     voluntary,  the  holder of the  shares of 5.01%  Preferred  Stock  shall be
     entitled to be paid the amount established by the Board of Directors,  plus
     an amount equal to all accumulated and unpaid dividends thereon to the date
     of such payment,  whether or not such  dividends  shall have been earned or
     declared. After such payments shall have been made in full to the holder of
     5.01%  Preferred  Stock,  it shall be  entitled  to no  further  payment or
     distribution.

          A consolidation  or merger to which the  corporation  shall be a party
     shall not be deemed a liquidation or dissolution of the corporation  within
     the meaning of this subdivision.

<PAGE>
                                      -5-


          (f) The shares of the 5.01% Preferred Stock are not transferable.

          FURTHER  RESOLVED,  that  the  Certificate  of  Incorporation  of this
     Corporation dated June 20, 1989, as amended,  be, and it hereby is, further
     amended so that the designation and number of shares of such series and the
     relative  rights,  preferences and limitations of such series are as stated
     in these resolutions;

          FURTHER RESOLVED, that the proper officers of this Corporation be, and
     they  hereby  are,  authorized  and  directed  to execute on behalf of this
     Corporation  and to file in the  office  of the  Secretary  of State of the
     State of New  Jersey a  certificate  of  amendment  to the  Certificate  of
     Incorporation  of this  Corporation,  as amended,  setting  forth a copy of
     these resolutions,  as required by subsection  14A:7-2(4) of the New Jersey
     Business Corporation Act;

          FURTHER  RESOLVED,  that this Corporation issue and sell 435 shares of
     its  5.01%  Preferred  Stock  to  its  sole  shareholder,   Public  Service
     Enterprise Group Incorporated, for the sum of $217,500,000; and

          FURTHER  RESOLVED,  that the officers of this Corporation be, and they
     hereby are,  authorized  and directed to take such other and further action
     as they shall

<PAGE>
                                      -6-


     deem  necessary  or advisable to carry out the intent and purposes of these
     resolutions.

          (c) The  foregoing  resolutions  were  duly  adopted  by the  Board of
     Directors of said  Corporation at a meeting duly called and held on January
     20, 1998, at which a quorum was present and acting throughout.

          (d) The Certificate of Incorporation  of this  corporation  dated June
     20, 1989, as amended, is further amended so that the designation and number
     of shares of the 5.01% Cumulative Preferred Stock of said corporation,  and
     the relative  rights,  preferences  and  limitations  of such series are as
     stated in said resolutions.

     IN WITNESS WHEREOF,  said Enterprise  Diversified Holdings Incorporated has
made this Certificate this 20st day of January, 1998.

                                  ENTERPRISE DIVERSIFIED HOLDINGS INCORPORATED

                                  By: /s/ E. James Ferland
                                     -----------------------------------
                                           E. James Ferland
                                           Chairman of the Board

[CORPORATE SEAL]

Attest:

By: /s/ Edward J. Biggins, Jr.
   ----------------------------
      Edward J. Biggins, Jr.
      Secretary

<PAGE>

                            CERTIFICATE OF AMENDMENT
                                       of
                          CERTIFICATE OF INCORPORATION
                                       of
                  ENTERPRISE DIVERSIFIED HOLDINGS INCORPORATED


      Enterprise  Diversified Holdings  Incorporated,  a New Jersey corporation,
does  hereby  certify,  pursuant  to  subsection  14A:9-4(3)  of the New  Jersey
Business Corporation Act, as follows:

      1.  The  name  of the  corporation  is  "Enterprise  Diversified  Holdings
          Incorporated".

      2.  The following  resolution was adopted by the sole  shareholder of said
          corporation,  amending the corporation's  Certificate of Incorporation
          dated June 20, 1989, pursuant to subsections 14A:9-1(2) and 14A:9-2(4)
          of the New Jersey Business Corporation Act:

            RESOLVED,  that the Certificate of Incorporation of this Corporation
            be amended by substituting  the name "PSEG Energy Holdings Inc." for
            the name "Enterprise Diversified Holdings Incorporated".

      3.  The date of the adoption of such amendment by the sole  shareholder of
          said Corporation is June 8, 1998.

      4.  The  number  of shares  of each  class and  series of the stock of the
          corporation entitled to vote thereon are as follows:

                  Designation             Number
                  -----------             ------
                  Common                  100

      5.  The  number  of shares  of each  class and  series of the stock of the
          corporation voting for and against such amendment is as follows:

                  Designation             Number For           Number Against
                  -----------             ----------           --------------
                  Common                  100                        -0-

      6.  No exchange,  reclassification  or  cancellation  of issued  shares is
          affected as a result of such amendment.

      7.  This amendment shall become effective upon filing.

      IN WITNESS WHEREOF,  Enterprise Diversified Holdings Incorporated has made
this Certificate this 10th day of June, 1998.

                                               Enterprise Diversified Holdings
                                               Incorporated
Attest:

/s/ Patrick M. Burke                           By: /s/ Robert J. Dougherty, Jr.
--------------------------------                  ------------------------------
Patrick M. Burke                                     Robert J. Dougherty, Jr.
Assistant Secretary                                  President

<PAGE>





                            Certificate of Amendment

                                       of

                          CERTIFICATE OF INCORPORATION

                                       of

                            PSEG ENERGY HOLDINGS INC.


                                -----------------



              Establishing the Series B Cumulative Preferred Stock
                       as a series of the Preferred Stock.

<PAGE>


                            CERTIFICATE OF AMENDMENT
                                       of
                          CERTIFICATE OF INCORPORATION
                                       of
                            PSEG Energy Holdings Inc.

                               ------------------

      PSEG Energy Holdings Inc., a New Jersey corporation,  does hereby certify,
pursuant to subsection  14A:7-2(4) of the New Jersey Business  Corporation  Act,
that:

     (a) The name of this corporation is "PSEG Energy Holdings Inc.".

     (b) The following is a copy of resolutions  of the Preferred  Stock Pricing
Committee  of the Board of  Directors of said  corporation,  acting  pursuant to
authority granted to it by the Board of Directors of said corporation,  amending
the Certificate of  Incorporation  of said  corporation  dated June 20, 1989, as
amended,  pursuant to  subsections  14A:7-2(2)  and 14A:7-2(3) of the New Jersey
Business Corporation Act and Section 3 of said Certificate of Incorporation:

          RESOLVED,  that a  series  of  Preferred  Stock  of this  Corporation,
     designated  "Series B Cumulative  Preferred  Stock"  (hereinafter  in these
     resolutions  sometimes referred to as the "Series B Preferred Stock"),  and
     consisting  of 1,467 shares of the par value of $100,000  each,  be and the
     same is hereby created and  established  as a series of Preferred  Stock of
     this Corporation;

<PAGE>
                                      -2-


          FURTHER   RESOLVED,   that  the  relative   rights,   preferences  and
     limitations  of the  shares of the  Series B  Preferred  Stock  are  hereby
     determined to be as follows:

          (a)  Dividends.  The holder of shares of the Series B Preferred  Stock
     shall be entitled to receive,  and the corporation shall be obliged to pay,
     but only when and as  declared by the Board of  Directors,  and only out of
     its earned surplus,  cash dividends  thereon,  for all periods through June
     30,  2008,  at the rate per share per  annum of  4.80%,  and no more,  and,
     thereafter, dividends shall be paid at such rate as shall be established by
     the Board of Directors of this Corporation, payable quarterly, with respect
     to each calendar quarterly period, on or prior to the last day of each such
     calendar  quarterly  period,  to wit,  the  last day of each  March,  June,
     September and December,  commencing  September 30, 1998.  Dividends on each
     share of such  series of the Series B Preferred  Stock shall be  cumulative
     from date of issuance.

          Subject to the provisions  contained  herein,  all  additional  earned
     surplus of the  corporation may be divided among and paid to the holders of
     Common Stock.

          (b) Restrictions on Dividends on and Purchase of Junior Stock. So long
     as any of Series B Preferred Stock

<PAGE>
                                      -3-


     shall remain  outstanding,  no dividend  (other than  dividends  payable in
     shares of Common Stock) shall be paid on or set apart for the Common Stock,
     nor shall any shares thereof be purchased,  redeemed, or otherwise acquired
     by the  corporation or any subsidiary  thereof (other than shares  acquired
     without cost to the corporation or such subsidiary) unless:

          (i) all dividends on all outstanding  shares of the Series B Preferred
     Stock for all past quarterly dividend periods shall have been paid and full
     dividends thereon for the then current  quarterly  dividend period declared
     and a sum sufficient for the payment thereof set apart;

          (ii)  after  giving  effect to the  payment of such  dividend  or such
     purchase,  redemption, or other acquisition, the capital of the corporation
     represented  by its Common Stock,  together with its surplus as then stated
     on its books of account, shall in the aggregate exceed the aggregate of the
     amounts   payable  on   involuntary   liquidation  or  dissolution  of  the
     corporation  in respect of all shares of the Series B Preferred  Stock then
     outstanding.

          (c) Voting  Rights.  All  voting  rights in the  corporation  shall be
     vested exclusively in the holders of Common Stock.

<PAGE>
                                      -4-


          (d)  Redemption.  The  shares of the Series B  Preferred  Stock may be
     redeemed at the option of the Board of Directors of the  corporation at any
     time at par plus an amount equal to all  accumulated  and unpaid  dividends
     thereon to the date of redemption,  whether or not such dividends have been
     earned or declared.

          All shares of Series B Preferred  Stock  redeemed  by the  corporation
     shall be  canceled  and upon such  cancellation  shall be  restored  to the
     status of authorized but unissued shares, not classified as to series.

          (e) Liquidation or  Dissolution.  On liquidation or dissolution of the
     corporation,  before  any  payment  or  distribution  shall  be made to the
     holders of Common Stock, if such liquidation or dissolution be involuntary,
     the holder of the Series B Preferred Stock shall be entitled to be paid the
     sum of  $100,000  per share,  or, if such  liquidation  or  dissolution  be
     voluntary,  the holder of the shares of Series B  Preferred  Stock shall be
     entitled to be paid the amount established by the Board of Directors,  plus
     an amount equal to all accumulated and unpaid dividends thereon to the date
     of such payment,  whether or not such  dividends  shall have been earned or
     declared. After such payments shall have

<PAGE>
                                      -5-


     been made in full to the holder of Series B  Preferred  Stock,  it shall be
     entitled to no further payment or distribution.

          A consolidation  or merger to which the  corporation  shall be a party
     shall not be deemed a liquidation or dissolution of the corporation  within
     the meaning of this subdivision.

          (f) The shares of the Series B Preferred Stock are not transferable.

          FURTHER  RESOLVED,  that  the  Certificate  of  Incorporation  of this
     Corporation dated June 20, 1989, as amended,  be, and it hereby is, further
     amended so that the designation and number of shares of such series and the
     relative  rights,  preferences and limitations of such series are as stated
     in these resolutions;

          FURTHER RESOLVED, that the proper officers of this Corporation be, and
     they  hereby  are,  authorized  and  directed  to execute on behalf of this
     Corporation  and to file in the  office  of the  Secretary  of State of the
     State of New  Jersey a  certificate  of  amendment  to the  Certificate  of
     Incorporation  of this  Corporation,  as amended,  setting  forth a copy of
     these resolutions,  as required by subsection  14A:7-2(4) of the New Jersey
     Business Corporation Act;

<PAGE>
                                      -6-


          FURTHER RESOLVED, that this Corporation issue and sell 1,467 shares of
     its  Series  B  Preferred  Stock to its sole  shareholder,  Public  Service
     Enterprise Group Incorporated, for the sum of $146,700,000; and

          FURTHER  RESOLVED,  that the officers of this Corporation be, and they
     hereby are,  authorized  and directed to take such other and further action
     as they  shall  deem  necessary  or  advisable  to carry out the intent and
     purposes of these resolutions.

     (c) The  foregoing  resolutions  were duly adopted by the  Preferred  Stock
Pricing  Committee of the Board of Directors  of said  Corporation  at a meeting
duly called and held on June 25, 1998,  at which a quorum was present and acting
throughout.

     (d) The Certificate of  Incorporation  of this  corporation  dated June 20,
1989,  as  amended,  is further  amended so that the  designation  and number of
shares of the Series B Cumulative  Preferred Stock of said corporation,  and the
relative  rights,  preferences  and  limitations of such series are as stated in
said resolutions.

<PAGE>
                                      -7-


     IN  WITNESS  WHEREOF,   said  PSEG  Energy  Holdings  Inc.  has  made  this
Certificate this 25th day of June, 1998.

                                         PSEG ENERGY HOLDINGS INC.

                                         By: /s/ E. James Ferland
                                            -----------------------------------
                                                  E. James Ferland
                                                  Chairman of the Board

[CORPORATE SEAL]

Attest:

By: /s/ Edward J. Biggins, Jr.
   ----------------------------
        Edward J. Biggins, Jr.
        Secretary


<PAGE>



                            Certificate of Amendment

                                       of

                          CERTIFICATE OF INCORPORATION

                                       of

                            PSEG ENERGY HOLDINGS INC.


                                -----------------



              Establishing the Series C Cumulative Preferred Stock
                       as a series of the Preferred Stock.

<PAGE>


                            CERTIFICATE OF AMENDMENT
                                       of
                          CERTIFICATE OF INCORPORATION
                                       of
                            PSEG Energy Holdings Inc.

                                -----------------

      PSEG Energy Holdings Inc., a New Jersey corporation,  does hereby certify,
pursuant to subsection  14A:7-2(4) of the New Jersey Business  Corporation  Act,
that:

     (a) The name of this corporation is "PSEG Energy Holdings Inc.".

     (b) The following is a copy of resolutions  of the Preferred  Stock Pricing
Committee  of the Board of  Directors of said  corporation,  acting  pursuant to
authority granted to it by the Board of Directors of said corporation,  amending
the Certificate of  Incorporation  of said  corporation  dated June 20, 1989, as
amended,  pursuant to  subsections  14A:7-2(2)  and 14A:7-2(3) of the New Jersey
Business Corporation Act and Section 3 of said Certificate of Incorporation:

          RESOLVED,  that a  series  of  Preferred  Stock  of this  Corporation,
     designated  "Series C Cumulative  Preferred  Stock"  (hereinafter  in these
     resolutions  sometimes referred to as the "Series C Preferred Stock"),  and
     consisting  of 1,450 shares of the par value of $100,000  each,  be and the
     same is hereby created and  established  as a series of Preferred  Stock of
     this Corporation;

<PAGE>
                                      -2-


          FURTHER   RESOLVED,   that  the  relative   rights,   preferences  and
     limitations  of the  shares of the  Series C  Preferred  Stock  are  hereby
     determined to be as follows:

          (a)  Dividends.  The holder of shares of the Series C Preferred  Stock
     shall be entitled to receive,  and the corporation shall be obliged to pay,
     but only when and as  declared by the Board of  Directors,  and only out of
     its earned surplus, cash dividends thereon, at the rate per share per annum
     of 4.875%, and no more,  payable  quarterly,  with respect to each calendar
     quarterly  period,  on or  prior  to the  last  day of each  such  calendar
     quarterly period, to wit, the last day of each March,  June,  September and
     December,  commencing  September 30, 1998.  Dividends on each share of such
     series of the Series C  Preferred  Stock shall be  cumulative  from date of
     issuance.

          Subject to the provisions  contained  herein,  all  additional  earned
     surplus of the  corporation may be divided among and paid to the holders of
     Common Stock.

          (b) Restrictions on Dividends on and Purchase of Junior Stock. So long
     as any of Series C Preferred  Stock shall remain  outstanding,  no dividend
     (other than  dividends  payable in shares of Common Stock) shall be paid on
     or set apart for the Common Stock, nor shall any shares thereof be

<PAGE>
                                      -3-


     purchased,  redeemed,  or  otherwise  acquired  by the  corporation  or any
     subsidiary  thereof  (other  than  shares  acquired  without  cost  to  the
     corporation or such subsidiary) unless:

          (i) all dividends on all outstanding  shares of the Series C Preferred
     Stock for all past quarterly dividend periods shall have been paid and full
     dividends thereon for the then current  quarterly  dividend period declared
     and a sum sufficient for the payment thereof set apart;

          (ii)  after  giving  effect to the  payment of such  dividend  or such
     purchase,  redemption, or other acquisition, the capital of the corporation
     represented  by its Common Stock,  together with its surplus as then stated
     on its books of account, shall in the aggregate exceed the aggregate of the
     amounts   payable  on   involuntary   liquidation  or  dissolution  of  the
     corporation  in respect of all shares of the Series C Preferred  Stock then
     outstanding.

          (c) Voting  Rights.  All  voting  rights in the  corporation  shall be
     vested exclusively in the holders of Common Stock.

          (d)  Redemption.  The  shares of the Series C  Preferred  Stock may be
     redeemed at the option of the Board of Directors of the  corporation at any
     time at par

<PAGE>
                                      -4-


     plus an amount equal to all accumulated and unpaid dividends thereon to the
     date of  redemption,  whether  or not such  dividends  have been  earned or
     declared.

          All shares of Series C Preferred  Stock  redeemed  by the  corporation
     shall be  canceled  and upon such  cancellation  shall be  restored  to the
     status of authorized but unissued shares, not classified as to series.

          (e) Liquidation or  Dissolution.  On liquidation or dissolution of the
     corporation,  before  any  payment  or  distribution  shall  be made to the
     holders of Common Stock, if such liquidation or dissolution be involuntary,
     the holder of the Series C Preferred Stock shall be entitled to be paid the
     sum of  $100,000  per share,  or, if such  liquidation  or  dissolution  be
     voluntary,  the holder of the shares of Series C  Preferred  Stock shall be
     entitled to be paid the amount established by the Board of Directors,  plus
     an amount equal to all accumulated and unpaid dividends thereon to the date
     of such payment,  whether or not such  dividends  shall have been earned or
     declared. After such payments shall have been made in full to the holder of
     Series C Preferred  Stock,  it shall be  entitled to no further  payment or
     distribution.

          A consolidation  or merger to which the  corporation  shall be a party
     shall not be deemed a liquidation or

<PAGE>
                                      -5-



     dissolution of the corporation within the meaning of this subdivision.

          (f) The shares of the Series C Preferred Stock are not transferable.

          FURTHER  RESOLVED,  that  the  Certificate  of  Incorporation  of this
     Corporation dated June 20, 1989, as amended,  be, and it hereby is, further
     amended so that the designation and number of shares of such series and the
     relative  rights,  preferences and limitations of such series are as stated
     in these resolutions;

          FURTHER RESOLVED, that the proper officers of this Corporation be, and
     they  hereby  are,  authorized  and  directed  to execute on behalf of this
     Corporation  and to file in the  office  of the  Secretary  of State of the
     State of New  Jersey a  certificate  of  amendment  to the  Certificate  of
     Incorporation  of this  Corporation,  as amended,  setting  forth a copy of
     these resolutions,  as required by subsection  14A:7-2(4) of the New Jersey
     Business Corporation Act;

          FURTHER RESOLVED, that this Corporation issue and sell 1,450 shares of
     its  Series  C  Preferred  Stock to its sole  shareholder,  Public  Service
     Enterprise Group Incorporated, for the sum of $145,000,000; and

<PAGE>
                                      -6-


          FURTHER  RESOLVED,  that the officers of this Corporation be, and they
     hereby are,  authorized  and directed to take such other and further action
     as they  shall  deem  necessary  or  advisable  to carry out the intent and
     purposes of these resolutions.

     (c) The  foregoing  resolutions  were duly adopted by the  Preferred  Stock
Pricing  Committee of the Board of Directors  of said  Corporation  at a meeting
duly  called and held on July 1, 1998,  at which a quorum was present and acting
throughout.

     (d) The Certificate of  Incorporation  of this  corporation  dated June 20,
1989,  as  amended,  is further  amended so that the  designation  and number of
shares of the Series C Cumulative  Preferred Stock of said corporation,  and the
relative  rights,  preferences  and  limitations of such series are as stated in
said resolutions.

<PAGE>
                                      -7-


     IN  WITNESS  WHEREOF,   said  PSEG  Energy  Holdings  Inc.  has  made  this
Certificate this 1st day of July, 1998.

                                        PSEG ENERGY HOLDINGS INC.

                                        By: /s/ Bruce E. Walenczyk
                                           -------------------------------------
                                                Bruce E. Walenczyk
                                                Vice President - Finance


[CORPORATE SEAL]

Attest:

By: /s/ Edward J. Biggins, Jr.
   ----------------------------
         Edward J. Biggins, Jr.
                  Secretary