SECURITIES AND EXCHANGE COMMISION
                             WASHINGTON, D.C. 20549

                                    FORM T-1

       STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A
                    CORPORATION DESIGNATED TO ACT AS TRUSTEE

     CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT
                              TO SECTION 305(b)(2)

                            FIRST UNION NATIONAL BANK
               (Exact Name of Trustee as Specified in its Charter)

                                   22-1147033
                      (I.R.S. Employer Identification No.)

                 2 FIRST UNION CENTER, CHARLOTTE, NORTH CAROLINA
                    (Address of Principal Executive Offices)

                                   28288-0201
                                   (Zip Code)

                            FIRST UNION NATIONAL BANK
                                 21 SOUTH STREET
                              MORRISTOWN, NJ 07960
                    ATTENTION: CORPORATE TRUST ADMINISTRATION
                                 (973) 898-7166
            (Name, address and telephone number of Agent for Service)

                            PSEG ENERGY HOLDINGS INC.
               (Exact Name of Obligor as Specified in its Charter)

                                   NEW JERSEY
         (State or other jurisdiction of Incorporation or Organization)

                                   22-2625848
                      (I.R.S. Employer Identification No.)


                        80 PARK PLAZA, NEWARK, NEW JERSEY
                    (Address of Principal Executive Offices)

                                      07101
                                   (Zip Code)

                          9 1/8% SENIOR NOTES DUE 2004
                         (Title of Indenture Securities)

<PAGE>

1. General information.

Furnish the following information as to the trustee:

a) Name and address of each  examining or  supervisory  authority to which it is
   subject:
   Comptroller of the Currency
   United States Department of the Treasury
   Washington, D.C.  20219

   Federal Reserve Bank
   Richmond, Virginia 23219

   Federal Deposit Insurance Corporation
   Washington, D.C.  20429

b) Whether it is authorized to exercise corporate trust powers.

   Yes.

2. Affiliations with obligor.

   If  the  obligor  is  an  affiliate  of  the  trustee,   describe  each  such
affiliation.

   None.

3. Voting securities of the trustee.

   Furnish the following  information  as to each class of voting  securities of
the trustee:

                              As of June 30, 2000

--------------------------------------------------------------------------------
 Col. A            Col. B                 Col. C                   Col. D
--------------------------------------------------------------------------------

 Title of Class    Amount Outstanding
--------------------------------------------------------------------------------
Not Applicable

4. Trusteeships under other indentures.

   If the trustee is a trustee  under  another  indenture  under which any other
securities,   or  certificates  of  interest  or   participation  in  any  other
securities, of the obligor are outstanding, furnish the following information:

   (a) Title of the securities outstanding under each such other indenture.

   Not Applicable

   (b) A brief  statement of the facts relied upon as a basis for the claim that
no  conflicting  interest  within the  meaning of Section  310(b)(1)  of the Act
arises as a result of the trusteeship under any such other indenture,  including
a  statement  as to how  the  indenture,  including  a  statement  as to how the
indenture securities will rank as compared with the securities issued under such
other indenture.

   Not Applicable

5.  Interlocking  directorates  and  similar  relationships  with the obligor or
    underwriters.

    If the trustee or any of the directors or executive  officers of the trustee
is a director,  officer, partner, employee,  appointee, or representative of the
obligor or of any underwriter for the obligor,  identify each such person having
any such connection and state the nature of each such connection.

    Not applicable


<PAGE>

6.  Voting securities of the trustee owned by the obligor or its officials.

   Furnish the following  information as to the voting securities of the trustee
owned  beneficially  by the obligor and each  director,  partner,  and executive
officer of the obligor:

                               As of June 30, 2000

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------
Col. A           Col. B                   Col. C                   Col. D
-------------------------------------------------------------------------------------------
<S>              <C>                      <C>                      <C>
Name of Owner    Title of Class           Amount owned             Percentage of Voting
                                          Beneficially             Securities represented
                                                                   by amount given in Col.C

-------------------------------------------------------------------------------------------
</TABLE>

Not Applicable

7. Voting securities of the trustee owned by underwriters or their officials.

    Furnish the following information as to the voting securities of the trustee
owned  beneficially  by each  underwriter  for the  obligor  and each  director,
partner, and executive officer of each such underwriter:

                               As of June 30, 2000

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------
Col. A           Col. B                   Col. C                   Col. D
-------------------------------------------------------------------------------------------
<S>              <C>                      <C>                      <C>
Name of Owner    Title of Class           Amount owned             Percentage of Voting
                                          Beneficially             Securities represented
                                                                   by amount given in Col.C

-------------------------------------------------------------------------------------------
</TABLE>

Not Applicable

8. Securities of the obligor owned or held by the trustee.

    Furnish the  following  information  as to  securities  of the obligor owned
beneficially  or held as collateral  security for  obligations in default by the
trustee:

                              As of June 30, 2000

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------
Col. A           Col. B                   Col. C                        Col. D
-------------------------------------------------------------------------------------------
<S>              <C>                      <C>                           <C>
Title of Class   Whether the securities   Amount owned beneficially     Percentage of class
                 Are voting or            or held as collateral         represented by
                 nonvoting Securities     Security for oblications      amount given in
                                          In default by Trustee         Col C.

-------------------------------------------------------------------------------------------
</TABLE>

Not Applicable

9. Securities of underwriters owned or held by the trustee.

   If the  trustee  owns  beneficially  or  holds  as  collateral  security  for
obligations in default any securities of an underwriter for the obligor, furnish
the following information as to each class of securities of such underwriter any
of which are so owned or held by the trustee:

                              As of June 30, 2000

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------
Col. A           Col. B                   Col. C                        Col. D
-------------------------------------------------------------------------------------------
<S>              <C>                      <C>                           <C>
Name of Issuer   Amount Outstanding       Amount owned beneficially     Percentage of class
And Title of                              or held as collateral         represented by
Class                                     security for oblications      amount given in
                                          In default by Trustee         Col C.

-------------------------------------------------------------------------------------------
</TABLE>

Not Applicable


<PAGE>

10.  Ownership  or  holdings  by the  trustee  of voting  securities  of certain
affiliates or security holders of the obligor.

     If the  trustee  owns  beneficially  or holds as  collateral  security  for
obligations  in default  voting  securities of a person who, to the knowledge of
the  trustee  (1) owns 10 percent or more of the voting  stock of the obligor or
(2) is an  affiliate,  other than a  subsidiary,  of the  obligor,  furnish  the
following information as to the voting securities of such person:

                               As of June 30, 2000

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------
Col. A           Col. B                   Col. C                        Col. D
-------------------------------------------------------------------------------------------
<S>              <C>                      <C>                           <C>
Name of Issuer   Amount Outstanding       Amount owned beneficially     Percentage of class
And Title of                              or held as collateral         represented by
Class                                     security for oblications      amount given in
                                          In default by Trustee         Col C.

-------------------------------------------------------------------------------------------
</TABLE>

Not Applicable

11. Ownership or holdings by the trustee of any securities of a person owning 50
percent or more of the voting securities of the obligor.

    If the trustee  owns  beneficially  or  holds  as  collateral  security  for
obligations  in default any  securities of a person who, to the knowledge of the
trustee,  owns 50  percent  or more of the  voting  securities  of the  obligor,
furnish the following  information as to each class of securities of such person
any of which are so owned or held by the trustee:

                               As of June 30, 2000

<TABLE>
<CAPTION>

-------------------------------------------------------------------------------------------
Col. A           Col. B                   Col. C                        Col. D
-------------------------------------------------------------------------------------------
<S>              <C>                      <C>                           <C>
Name of Issuer   Amount Outstanding       Amount owned beneficially     Percentage of class
And Title of                              or held as collateral         represented by
Class                                     security for oblications      amount given in
                                          In default by Trustee         Col C.

-------------------------------------------------------------------------------------------
</TABLE>

Not Applicable

12. Indebtedness of the obligor to the trustee.

    Except  as noted in the  instructions, if the  obligor  is  indebted  to the
trustee, furnish the following information:

                               As of June 30, 2000

--------------------------------------------------------------------------------
Col. A           Col. B                   Col. C                        Col. D
--------------------------------------------------------------------------------
Nature of        Amount Outstanding       Date due
indebtedness

--------------------------------------------------------------------------------
Not Applicable

13. Defaults by the obligor.

   (a)  State  whether  there  is or has  been a  default  with  respect  to the
securities under this indenture. Explain the nature of any such default.

   None.


<PAGE>

   (b) If the trustee is a trustee under another indenture under which any other
securities,   or  certificates  of  interest  or   participation  in  any  other
securities,  of the  obligor  are  outstanding,  or is trustee for more than one
outstanding  series of securities  under the indenture,  state whether there has
been a default  under any such  indenture or series,  identify the  indenture or
series affected, and explain the nature of any such default.

   None

14. Affiliations with the underwriters.

    If any  underwriter is an  affiliate  of the  trustee,  describe  each  such
affiliation.

   Not applicable

15. Foreign trustee.

   Identify the order or rule pursuant to which the trustee is authorized to act
as sole trustee under indentures qualified or to be qualified under the Act.

   Not applicable - trustee is a national  banking  association  organized under
the laws of the United States.

16. List of Exhibits.

   List below all exhibits filed as part of this statement of eligibility.

_  1. Copy of Articles of Association of the trustee as now in effect.*

_  2. Copy of the  Certificate of the Comptroller of the Currency dated March 4,
      1998, evidencing the authority of the trustee to transact business.**

_  3. Copy of the Certification of Fiduciary Powers of the trustee by the Office
      of the Comptroller of the Currency dated April 7, 1999.***

_  4. Copy of existing by-laws of the trustee.***

_  5. -Not Applicable.

X  6. Consent of the trustee required by Section 321(b) of the Act.

X  7. Copy of report of  condition  of the trustee at the  close of  business on
      March 31, 2000, published pursuant to the requirements  of its supervising
      authority.

_  8. Copy of any order pursuant to which the foreign  trustee is authorized  to
      act as sole trustee under indentures qualified or to be qualified under
      the Act.
      - Not Applicable

_  9. Consent to service of  process required  of foreign  trustees  pursuant to
      Rule 10a-4 under the Act.
      - Not Applicable
---------------------
   *Previously  filed with the Securities  and Exchange  Commission on March 16,
1998 as an Exhibit to Form T-1 in connection with Registration  Statement Number
333-47985,  ** and filed with the Securities and Exchange Commission on July 15,
1998 as an Exhibit to Form T-1 in connection with Registration  Statement Number
333-59145,  *** and filed with the Securities and Exchange Commission on May 20,
1999 in connection with Registration Statement Number 333-78927 and incorporated
herein by reference.


<PAGE>

                                      NOTE

   The trustee  disclaims  responsibility  for the accuracy or  completeness  of
information  contained in this Statement of Eligibility  and  Qualification  not
known to the trustee and not obtainable by it through  reasonable  investigation
and as to which information it has obtained from the obligor and has had to rely
or will obtain from the principal underwriters and will have to rely.

                                   SIGNATURE

   Pursuant to the requirements of the Trust Indenture Act of 1939, the trustee,
First Union National Bank, a national banking association organized and existing
under the laws of the United States of America,  has duly caused this  Statement
of Eligibility and  Qualification to be signed on its behalf by the undersigned,
thereunto  duly  authorized,  all in the  Town of  Morristown  and  State of New
Jersey, on the 7th day of July, 2000.

                                                    FIRST UNION NATIONAL BANK

(Corporate Seal)                                    By: /s/ Frank Gallagher
                                                    Frank Gallagher
                                                    Vice President


<PAGE>

                                                                     EXHIBIT T-6

                               CONSENT OF TRUSTEE

   Pursuant to the  requirements of Section 321(b) of the Trust Indenture Act of
1939,  and in connection  with the proposed  issue of PSEG Energy  Holdings Inc.
Debt  Securities,  First Union  National Bank,  hereby  consents that reports of
examinations  by Federal,  State,  Territorial  or District  authorities  may be
furnished by such  authorities to the Securities  and Exchange  Commission  upon
request therefor.

                                                    FIRST UNION NATIONAL BANK

                                                    By: /s/ Frank Gallagher
                                                        Frank Gallagher
                                                        Vice President

Morristown, N.J.

July 7, 2000

<PAGE>

                         REPORT OF CONDITION                           EXHIBIT 7

Consolidating  domestic  and foreign  subsidiaries  of the First Union  National
Bank,  Charlotte,  North  Carolina,  at the close of  business on March 31, 2000
published in response to call made by Comptroller  of the Currency,  under title
12, United States Code,  Section 161.  Charter  Number 22693  Comptroller of the
Currency. Statement of Resources and Liabilities

                                     ASSETS
                                                             Thousand of Dollars
Cash and balance due from depository institutions:
  Noninterest-bearing balances and currency and coin.............  8,396,000
  Interest-bearing balances......................................    705,000
Securities.......................................................  /////////
  Held-to-maturity securities....................................  1,548,000
  Available-for-sale securities.................................. 49,122,000
Federal  funds  sold  and  securities   purchases  to  resell....  2,099,000
  Loans and lease financing receivables:
  Loans and leases, net of unearned income....139,835,000
  LESS: Allowance for loan and lease losses.....1,743,000
  LESS: Allocated transfer risk reserve.................0
  Loans and leases, net of unearned income, allowance, and
  reserve........................................................138,092,000
Trading assets.............................                       10,611,000
Premises and fixed assets (including capitalized leases).........  3,159,000
Other real estate owned..........................................    103,000
Investment in unconsolidated subsidiaries and associated          //////////
companies........................................................    922,000
Customer's liability to this bank on acceptances outstanding.....    842,000
Intangible assets................................................  4,949,000
Other assets..................................................... 11,168,000
Total assets.....................................................231,716,000

                                   LIABILITIES
Deposits:
     In domestic offices.........................................132,285,000
       Noninterest-bearing.....................19,943,000
       Interest-bearing.......................112,342,000
     In foreign offices, Edge and Agreement subsidiaries,
     and IBFs..................................12,481,000
       Noninterest-bearing........................527,000
       Interest-bearing........................11,954,000
Federal funds purchased and securities sold under agreements
 to repurchase................................................... 25,673,000
Demand notes issued to the U.S. Treasury.........................  2,084,000
Trading liabilities..............................................  6,231,000
Other borrowed money:............................................  /////////
     With a remaining maturity of one year or less............... 15,504,000
     With a remaining maturity of more than 1 year thru 3 yrs      4,912,000
     With a maturity of more than three years....................  1,867,000
Not applicable ..................................................   ////////
Bank's liability on acceptances executed and outstanding.........    847,000
Subordinated notes and debentures................................  4,994,000
Other liabilities................................................  6,894,000
Total liabilities................................................213,772,000
Not applicable...................................................///////////

                          EQUITY CAPITAL
Perpetual preferred stock and related surplus....................    161,000
Common Stock.....................................................    455,000
Surplus.......................................................... 13,306,000
Undivided profits and capital reserves...........................  4,996,000
Net unrealized holding gains (losses) on available-for-sale
 securities......................................................   (969,000)
Accumulated net gains (loses on cash flow hedges                           0
Cumulative foreign currency translation adjustments..............     (5,000)
Total equity capital............................................. 17,944,000
Total liabilities and equity capital.............................231,716,000