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|UNITED STATES                     
|SECURITIES AND EXCHANGE COMMISSION
|Washington,
  D.C. 20549          

FORM 10-K

(Mark One)

xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31, 2005

OR

o TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from ________ to ________

|                         |  |                                                                     |  |                                     
|------------------------ |  | ------------------------------------------------------------------- |  | ------------------------------------
|Commission
  File Number |  | Registrant, State of Incorporation,
  Address, and Telephone Number |  | I.R.S. Employer
  Identification No.
|                         |  |                                                                     |  |                                     
|333-127545               |  | PSE&G Transition Funding II LLC                                     |  | Applied For                         

|(A Delaware limited liability company)
|--------------------------------------

80 Park Plaza  T4D
P.O. Box 1171Newark, New Jersey 07101-1171973 297-2227http://www.pseg.com


Securities registered pursuant to Section 12
(b) of the Act: NONE

Securities registered pursuant to Section 12
(g) of the Act: NONE

Indicate
by check mark whether the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. Yes o   
No x

Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes o   No x

Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrants were
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yesx   Noo

Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. x

Registrant
is a wholly-owned subsidiary of Public Service Electric and Gas Company.
Registrant meets the conditions set forth in General Instruction I (1) (a) and
(b) of Form 10-K and is filing this Annual Report on Form 10-K with the reduced
disclosure format authorized by General Instruction I.

Indicate
by check mark whether the registrant is an accelerated filer (as defined in
Rule 12b-2 of the Exchange Act). Yes o   No x

Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes o   No x

Documents incorporated by reference: None

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TABLE
OF CONTENTS

PageFORWARD-LOOKING
  STATEMENTS
  iiPART IItem 1.
  Business
  1Item 1A.
  Risk Factors
  2Item 1B.
  Unresolved Staff Comments
  7Item 2.
  Properties
  7Item 3.
  Legal Proceedings
  7Item 4.
  Submission of Matters to a Vote of Security Holders
  7PART IIItem 5.
  Market for Registrants Common Equity and Related Stockholder Matters
  and Issuer Purchases of Equity Securities
  8Item 6.
  Selected Financial Data
  8Item 7.
  Managements Discussion and Analysis of Financial Condition and
  Results of Operations
  8Item 7A.
  Qualitative and Quantitative Disclosures About Market Risk
  9Item 8.
  Financial Statements and Supplementary Data
  9Report of Independent Registered Public Accounting Firm
  10Financial
  Statements
  11Notes to Financial Statements
  15Item 9.
  Changes in and Disagreements With Accountants on Accounting and
  Financial Disclosure
  19Item 9A.
  Controls and Procedures
  19Item 9B.
  Other Information
  19PART IIIItem 10.
  Directors and Executive Officers of the Registrant
  19Item 11.
  Executive Compensation
  19Item 12.
  Security Ownership of Certain Beneficial Owners and Management and
  Related Stockholder Matters
  19Item 13.
  Certain Relationships and Related Transactions
  19Item 14.
  Principal Accountant Fees and Services
  19PART IVItem 15.
  Exhibits and Financial Statement Schedules
  20Signatures
  22Exhibit Index
  23i

FORWARD-LOOKING STATEMENTS

Certain
of the matters discussed in this report constitute forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements are subject to risks and uncertainties, which
could cause actual results to differ materially from those anticipated. Such
statements are based on managements beliefs as well as assumptions made by and
information currently available to management. When used herein, the words anticipate,
intend, estimate, believe, expect, plan, potential, variations of
such words and similar expressions are intended to identify forward-looking
statements. We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. The following review of factors should not be construed as
a complete list that could effect forward-looking statements.

In
addition to any assumptions and other factors referred to specifically in
connection with such forward-looking statements discussed above, factors that
could cause actual results to differ materially from those contemplated in any
forward-looking statements include, among others, the following: state and federal
legal or regulatory developments; national or regional economic conditions;
market demand and prices for energy; customer conservation; distributed
generation technology; weather variations affecting customer energy usage; the
effect of continued electric industry restructuring; operating performance of
Public Service Electric and Gas Companys (PSE&G) facilities and third
party suppliers; and the payment patterns of PSE&Gs electric customers,
including the rate of delinquencies and the accuracy of the collections curve.

ii

PART I

ITEM 1.
  BUSINESSUnless
the context otherwise indicates, all references to Transition Funding II,
we, us or our herein mean PSE&G Transition Funding II LLC, a Delaware
limited liability company located at 80
Park Plaza, Newark, New Jersey 07102.

We were formed under the laws of
  the State of Delaware on July 18, 2005 and operate pursuant to a limited
  liability company agreement with Public Service Electric and Gas Company (PSE&G)
  as our sole member. PSE&G is an operating electric and gas utility and is
  a wholly-owned subsidiary of Public Service Enterprise Group Incorporated (PSEG).
  We were organized for the sole purpose of purchasing and owning bondable transition
  property (BTP) of PSE&G, issuing transition bonds (Bonds), pledging our
  interest in BTP and other collateral to a debt/security trustee (Trustee) to
  collateralize the Bonds, and performing activities that are necessary, suitable
  or convenient to accomplish these purposes.

The Electric Discount and Energy
  Competition Act, enacted in the State of New Jersey in February 1999 and amended
  in September 2002 (Energy Competition Act), authorizes electric public utilities,
  such as PSE&G, to recover, among other costs, basic generation service (BGS)
  transition costs. BGS transition costs represent the amount by which a public
  utilitys cost of supplying BGS exceeds the net revenues received by the
  public utility for providing such service during a four-year transition period
  ending July 31, 2003. BGS is a regulated electric generation service provided
  to any electric utility consumer that has not chosen an alternative power supplier.
  A public utility may recover BGS transition costs through an irrevocable non-bypassable
  charge called a BGS transition bond charge (TBC) that is assessed on all retail
  electric consumers. The Energy Competition Act permits special purpose entities
  formed by electric public utilities to issue debt securities secured by the
  right to receive revenues arising from the TBC.

On
July 12, 2005, the New Jersey Board of Public Utilities (BPU) issued an order
which authorized the issuance of Bonds by PSE&G with an initial total
principal balance not to exceed the lesser of PSE&Gs BGS transition costs
at the time of issuance or $100 million, plus transaction costs not to exceed
$2.7 million (Finance Order).

On
September 23, 2005, we issued $102.7 million of Bonds in four classes with stated
maturities ranging from two years to nine years, all of which remains
outstanding as of December 31, 2005. The net proceeds of the issuance were
remitted to PSE&G as consideration for the BTP. The Bonds are
collateralized by the BTP created under the Energy Competition Act and the
related Finance Order. The BTP represents the irrevocable right to recover,
through a TBC billed by PSE&G to its retail electric customers within
PSE&Gs service territory, an amount sufficient to pay:


  the
  interest, fees, expenses, costs, charges, credit enhancement and premiums, if
  any, and other amounts associated with the Bonds; and
  the
  principal amount of the Bonds.The
initial TBC rate (exclusive of sales and use tax) of $.0295 cents per Kilowatt-hour
(kWh) became effective in September 2005, in accordance with the Finance Order.
As the TBC is a usage-based charge based on access to PSE&Gs transmission
and distribution system, the customers will be assessed regardless of whether
the customers purchase electricity from PSE&G or a third party supplier.
Also, if on-site generation facilities that are connected to PSE&Gs
transmission and distribution system produce power that is delivered to
off-site retail electric customers in PSE&Gs service territory, the Bond
charge applies to the sale or delivery of that power.

Payments
are made to the bondholders on a semi-annual basis. Principal and interest on
the Bonds and the excess issuance costs will be paid from the following
sources:

1


  TBC
  collections remitted by the servicer (PSE&G) to the issuer (us);
  amounts from
  any third party credit enhancement;
  investment
  earnings on amounts held in accounts established under the indenture
  agreement;
  amounts
  payable to the issuer under any interest rate swap agreements;
  amounts
  received as payment of any indemnity obligation by PSE&G under the sale
  agreement or the servicing agreement; and
  other
  amounts available in the trust accounts held by the trustee.To
the extent that TBC collections are deficient or in excess of the principal and
interest on the Bonds, the TBC rate will be adjusted in the following year.

We
have no employees. Under the servicing agreement entered into by PSE&G and
us, PSE&G, as servicer, is required to manage and administer our BTP and to
collect the TBC on our behalf. We pay an annual servicing fee to PSE&G
equal to 0.05% of the initial balance of Bonds outstanding. The servicing fee
is recovered through the TBC. In addition we pay miscellaneous operating
expenses to PSE&G up to $100 thousand per quarter, administration fees up
to $31 thousand per quarter and trustee fees up to $4 thousand per quarter.
Interest earned on funds in the Capital Subaccount results in Net Income for us
and will be periodically remitted to PSE&G in the form of a dividend.

ITEM 1A.
  RISK FACTORSThe
following Factors should be considered when reviewing the business of
Transition Funding II. These factors could impact the business and cause results
to differ materially from those expressed in any statements made by, or on
behalf of Transition Funding II.

Source
of Funds for Payment on the Bonds

The
only source of funds for payments on the Bonds will be our assets. These assets
are limited to:


  the BTP, including the right to collect the TBC and to adjust
        the TBC at least annually;
  the funds on
  deposit in the trust accounts held by the trustee; and
  contractual
  rights under various contracts.The
Bonds are not insured or guaranteed by PSE&G in any capacity, or by PSEG,
any of its affiliates, the trustee or any other entity. Furthermore, it is not
anticipated that the Bonds will have the benefit of any liquidity facility or
of any third party credit enhancement, such as letters of credit or insurance,
although the servicer may obtain insurance or a letter of credit in support of
its obligation to remit TBC collections to the trustee. Thus, we must rely for
payment of the Bonds solely upon collections of the TBC and funds on deposit in
the accounts held by the trustee.

Judicial,
Legislative Or Regulatory Action That May Adversely Affect Your Investment

PSE&G has agreed to take legal
  or administrative actions as may be reasonably necessary to block or overturn
  any attempts to cause a repeal, modification or supplement to the Energy Competition
  Act, the BPU financing order or the rights of bondholders, and to resist proceedings
  of third parties, which, if successful, would result in a breach of PSE&Gs
  representations concerning the BTP, the BPU financing order or the Energy Competition
  Act. However, there is no assurance that any action PSE&G takes would be
  successful.

The Law Which Underpins The Bonds
  Might Be Invalidated By Judicial Action. The Energy Competition Act was
  adopted in February 1999 and amended in September 2002. In January 2001, PSE&G
  became the first utility to issue bonds pursuant to the Energy Competition Act.
  The BTP is a creation of statute. If a court were to

2

determine that the relevant provisions of the Energy Competition
  Act or the BPU financing order are unlawful, invalid or unenforceable in whole
  or in part, it could adversely affect the validity of the Bonds or the BTP,
  or our ability to make payments on the Bonds. Although a judicial determination
  of that kind will cause PSE&G to indemnify you, the amount of any indemnification
  might not be sufficient for you to recover all of your loss on the Bonds.

Laws
with financing provisions similar to the Energy Competition Act have been
enacted in other states, including California, Connecticut, Florida, Illinois,
Massachusetts, Michigan, Montana, New Hampshire, Pennsylvania, Texas, West
Virginia and Wisconsin. The validity of such legislation has been upheld in those
states where court challenges have been made and the judicial process has been
completed. A court might yet overturn a similar statute in another state, which
might give rise to a challenge to the Energy Competition Act or the BPU
financing order. Therefore, legal activity in other states might indirectly
affect the value of your investment.

The Energy Competition Act Might
  Be Overturned By the Federal Government Without Full Compensation. In the
  past, bills have been introduced in Congress prohibiting the recovery of stranded
  costs, and Congress could negate the existence or reduce the value of the BTP.
  Even if this preemption of the Energy Competition Act or the BPU financing order
  by the federal government were considered a taking under the U.S.
  Constitution for which the government had to pay just compensation to bondholders,
  there is no assurance that this compensation would be sufficient to pay principal
  of and interest on the Bonds on a timely basis.

The State,
Through Future Legislative Action Might Attempt to Invalidate the Bonds or
Their Underlying Assets. Unlike the citizens of the States of California, Massachusetts
and some other states, the citizens of the State of New Jersey do not have the
constitutional right to adopt, repeal or revise laws by initiative or
referendum.

Under the Energy Competition Act,
  the State of New Jersey has pledged not to impair the BTP. Despite this pledge,
  the State legislature might attempt in the future to repeal or amend the Energy
  Competition Act, or, as described below, the BPU may take certain actions that
  impair the BTP. Costly and time-consuming litigation might ensue from such actions,
  which might adversely affect the price and liquidity, or the weighted average
  lives, of the Bonds. Given the lack of judicial precedent, the outcome of any
  litigation cannot be predicted with certainty and, accordingly, bondholders
  could incur a loss of their investment.

To our knowledge, no cases addressing
  these issues in the context of Bonds have been decided. There have been cases
  in which courts have applied the contract clause of the United States Constitution
  and parallel state constitutional provisions to strike down legislation reducing
  or eliminating taxes, parkway tolls, public charges or other sources of revenues
  servicing bonds issued by public instrumentalities or private issuers, or otherwise
  reducing or eliminating the security for bonds. Contracts of a state, such as
  the State Pledge, receive greater protection under federal law than private
  contracts. Based upon this case law, under the contract clause of the United
  States Constitution, and under the contract clause of the New Jersey Constitution,
  the State of New Jersey, including the BPU, could not take any action of a legislative
  character, including the repeal or amendment of the Energy Competition Act,
  that would substantially limit, alter or impair the BTP or other rights vested
  in the bondholders pursuant to the BPU financing order, or substantially limit,
  alter, impair or reduce the value or amount of the BTP, unless that action is
  (in the context of the State Pledge as a contract of the State) a reasonable
  exercise of the State of New Jerseys sovereign powers and of a character
  reasonable and appropriate to the public purpose justifying that action. For
  example, notwithstanding the State Pledge, it might be possible for the New
  Jersey legislature, without violating the contract clause of the United States
  Constitution or the contract clause of the New Jersey Constitution, to amend
  the Energy Competition Act in a manner which temporarily limits the rights of
  the bondholders in order to serve a significant and legitimate public purpose,
  such as responding to a national or regional catastrophe affecting PSE&Gs
  service area generally.

Moreover, under the takings clauses
  of the United States and New Jersey Constitutions, the State of New Jersey could
  not repeal or amend the Energy Competition Act, or take any other action in
  contravention of the State Pledge, without paying just compensation to the bondholders,
  if doing so would constitute a permanent appropriation of a substantial property
  interest of the bondholders in the BTP and deprive the bondholders of their
  reasonable expectations arising from their investments in the Bonds. There is
  no assurance, however, that, even if a court were to award just compensation,
  it would be sufficient for payment of the Bonds.

3

The BPU Might
Attempt to Take Action Which Reduces the Value of the Bonds. Pursuant to the Energy Competition
Act, the BPU financing order issued to PSE&G is irrevocable and the BPU may
not directly or indirectly, by any subsequent action, rescind or amend the BPU
financing order or reduce or impair the amount of bondable stranded costs authorized
to be recovered under the BPU financing order. Apart from the BPU financing
order, the BPU retains the power to adopt, revise or rescind rules or
regulations affecting PSE&G or a successor servicer. Any new or amended
regulations or orders by the BPU could affect the ability of the servicer to
collect the TBC on a full and timely basis and might affect the rating of the
Bonds, their price or the amortization of Bonds and their weighted average
lives, and may not trigger any obligation of PSE&G to indemnify you. As a
result, you could suffer a decline in value of your investment.

PSE&G, as servicer, is required
  to file with the BPU, on behalf of us, periodic adjustments of the TBC, intended
  to provide for timely payment of the Bonds, including scheduled payments of
  principal. The BPU may challenge PSE&Gs calculation of a proposed
  adjustment, which may cause delay, or refuse to permit an adjustment to take
  effect, on the ground that the adjustment contains a manifest error; that is,
  an arithmetic error evident on the face of the filing. Any such delay in the
  implementation of the adjustment could cause a delay in the payments on the
  Bonds. PSE&G has agreed to take legal or administrative actions, including
  instituting and prosecuting legal actions, as may be reasonably necessary to
  block or overturn any attempts to cause a repeal, modification or supplement
  to the Energy Competition Act, or the BPU financing order, or the letter to
  be delivered by PSE&G to the BPU within five business days following issuance
  of each series of Bonds specifying the terms of that series (referred to as
  an issuance advice letter), or the rights of bondholders. PSE&G has also
  agreed to resist proceedings of third parties, which, if successful, would result
  in a breach of its representations concerning the BTP, the BPU financing order
  or the Energy Competition Act. However, there is no assurance that any action
  PSE&G takes would be successful.

Servicing
Risks

Inaccurate
Consumption Forecasting or Unanticipated Delinquencies or Charge-Offs Might
Reduce Scheduled Payments on the Bonds. The TBC is assessed and collected by
the servicer and adjusted at least annually, as provided in the Energy
Competition Act, the BPU financing order and the servicing agreement.

A
shortfall of payments arising from the TBC might result if the servicer
inaccurately forecasts electricity consumption or underestimates consumer
delinquencies or charge-offs when setting the TBC, and delayed payments on the
Bonds could follow.

Inaccurate
forecasting of electricity consumption by the servicer might result from, among
other things: unanticipated weather or economic conditions; natural disasters;
technological changes; changes in the market structure of the electric
industry; increased conservation efforts; or consumers switching to
self-generated power without being required to pay TBCs.

Inaccurate
forecasting of delinquencies or charge-offs by the servicer might result from,
among other things: sudden and unexpected deterioration of the economy or the
occurrence of a natural disaster; sudden and unexpected regulatory changes that
make it more difficult for the servicer to disconnect nonpaying consumers, or
that require the servicer to apply more lenient credit standards in accepting
consumers; sudden and unexpected limitations on termination of service during
the heating season; or the introduction into the energy markets of less
creditworthy third party energy suppliers. In the future, consumers might pay
the TBC to third parties who supply them with electric power. These third
parties are obligated to forward the charge to PSE&G, as servicer, and to
pay PSE&G the TBC even if they fail to collect the charge from retail
electric consumers. A default by a third party that collects from a large
number of retail consumers might have a greater impact than a default by a
single retail consumer. PSE&G will have limited rights to collect the TBC
directly from consumers who receive their electricity bills from a third party,
but will not pay any shortfalls resulting from the failure of any third party
supplier to forward collections to PSE&G, as servicer. The servicer might
not be able to mitigate credit risks relating to third party suppliers to the
same extent to which it mitigates the risks relating to its consumers.

4

Billing and
Collection Practices Might Reduce the Collections Available for Payments on the
Bonds.The methodology of determining the amount of
the TBC to each consumer is specified in the BPU financing order. Although
PSE&G may not change this methodology, PSE&G, as servicer, may set, and
may change, its own billing and collection arrangements with each consumer. For
example, to recover part of an outstanding electricity bill, PSE&G may
agree to extend a consumers payment schedule or to write off the remaining
portion of the bill. Similarly, the BPU may require changes to these practices.
Under the methodology specified in the BPU financing order, this might result
in an extension of the consumers payment of TBCs. Thus, any changes in billing
and collection practices or regulations might make it more difficult for the
servicer to collect the TBC, and might adversely affect the value of the Bonds
and their weighted average lives.

The
Risks Associated With Potential Bankruptcy Proceedings

Risks
that might arise in the bankruptcy of PSE&G are described below and could
cause delayed payments or a loss, or decline in value, of your investment.

If the Servicer Defaults or Becomes
  Bankrupt, It Might Be Difficult to Find a Successor Servicer and Payments on
  the Bonds Might Be Suspended. PSE&G, as servicer, will be responsible
  for billing and collecting the TBC and for filing with the BPU to adjust this
  charge. If PSE&G ceased servicing the BTP, it might be difficult to find
  a successor servicer. Upon a servicer default based upon the commencement of
  a case by or against the servicer under the United States Bankruptcy Code, referred
  to as the Bankruptcy Code, or similar laws, the trustee and the issuer might
  be prevented from effecting a transfer of servicing. Upon a servicer default
  because of a failure to make required remittances, the issuer or the trustee
  would have the right to apply to the BPU for sequestration of TBCs. However,
  the Bankruptcy Code might prevent the BPU from issuing or enforcing this order.
  In either case of a servicer default, payments on the Bonds might be suspended.

Commingling
Might Obstruct Access to a Portion of the Our Funds In Case of Bankruptcy of
PSE&G. PSE&G
will not segregate the TBCs from the other funds it collects from its
consumers. The TBCs will be segregated only after PSE&G pays them to the
trustee. PSE&G will be permitted to remit collections on a monthly basis
only if it has the requisite credit ratings from the rating agencies or
provides credit enhancement satisfactory to the rating agencies or otherwise
obtains rating agency approval regarding how frequently it remits collections.
Otherwise, PSE&G will be required to remit collections within two business
days of the estimated collection date. Despite these requirements, PSE&G
might fail to pay the full amount of the TBCs to the trustee on a timely basis.

The Energy Competition Act provides
  that our rights to the BTP are not affected by the commingling of these funds
  with PSE&Gs other funds. In a bankruptcy of PSE&G, however, a
  bankruptcy court might rule that federal bankruptcy law does not recognize our
  right to TBCs that are commingled with other funds of PSE&G as of the date
  of bankruptcy. If so, the collections held by PSE&G as of the date of bankruptcy
  would not be available to pay amounts owing on the Bonds. In this case, we would
  have a general unsecured claim against PSE&G for those amounts.

Bankruptcy of
PSE&G Might Impair the Operation of the Energy Competition Act. The Energy Competition Act and the
BPU financing order provide that as a matter of New Jersey state law:


  BTP constitutes presently existing property of PSE&G for
        all purposes;
  PSE&G
  may sell, assign and otherwise transfer that property and PSE&G or we may
  pledge or grant a security interest in the property as collateral for Bonds;
  and
  a transfer of the BTP from PSE&G to us is a sale or other
        absolute transfer of the BTP, not a pledge of the BTP to secure a financing
        by PSE&G, and this characterization will not be affected by treatment
        of the transfer as a financing for tax or financial reporting purposes.5

These three provisions are important
  to maintaining payments on the Bonds in accordance with their terms during any
  bankruptcy of PSE&G. In addition, the transaction has been structured with
  the objective of keeping us separate from PSE&G in the event of a bankruptcy
  of PSE&G.

PSE&G and we will treat the
  transaction as a sale under applicable law, although for financial reporting
  and federal and state tax purposes the Bonds will be treated as a financing.
  In the event of a bankruptcy of PSE&G, a party in interest in the bankruptcy
  might assert that the sale of the BTP to the issuer was a financing transaction
  and not a sale or other absolute transfer and that the treatment
  of the transaction for financial reporting and tax purposes as a financing and
  not a sale lends weight to that position.

A
bankruptcy court generally follows state property law on issues such as the
three provisions described above, unless it determines that the state law is
contrary to a paramount federal bankruptcy policy or interest. If a bankruptcy
court in a PSE&G bankruptcy refused to enforce one or more of the state
property law provisions described above, the effect of this decision on you as
a bondholder would be similar to the treatment you would receive in a PSE&G
bankruptcy if the Bonds had been issued directly by PSE&G. A decision by
the bankruptcy court that, despite the separateness of PSE&G and the
issuer, the two companies should be consolidated, would have a similar effect
on you as a bondholder.

Other
Risks Associated With An Investment In The Bonds

Absence of Secondary Market for
  Bonds Might Limit Your Ability to Resell Bonds. The underwriters for the
  Bonds might assist in resales of the Bonds but they are not required to do so.
  A secondary market for the Bonds may not develop or continue or be sufficiently
  liquid to allow you to resell your Bonds.

We or Another Entity May Issue
  Additional Series of Bonds Whose Holders Have Conflicting Interests. We
  may issue other series of Bonds without your prior review or approval. These
  series may include terms unique to that particular series. A new series of Bonds
  may not be issued if it would result in the credit ratings on any outstanding
  series of Bonds being reduced or withdrawn. Moreover, PSE&G may sell BTP
  to one or more entities other than us to secure a new series of Bonds. In that
  case, PSE&G will need to obtain a separate financing order, which will specify
  an additional amount of bondable transition charges to be collected from consumers
  for the additional series of Bonds. Any additional series of Bonds issued by
  us or another entity will have an equal right to share in TBC collections with
  your Bonds. Sharing collections could cause delays in payments on your Bonds.

In
addition, some matters may require the vote of the holders of all series and
classes of Bonds. Your interests in these votes may conflict with the interests
of the bondholders of another series or of another class. Thus, these votes
could result in an outcome unfavorable to you.

The Ratings Do Not Assess the
  Expected Rate of Payment of Principal on the Bonds. The Bonds will be rated
  by one or more established rating agencies. The ratings merely analyze the probability
  that we will repay the total principal balance of each class of the Bonds at
  its final maturity and will make timely interest payments. The ratings do not
  otherwise assess the speed at which we will repay the principal of the Bonds.
  Thus, we may repay the principal of your Bonds later than you expect, which
  may materially reduce the value of your investment. A rating is not a recommendation
  to buy, sell or hold Bonds. The rating may change at any time. A rating agency
  may revise or withdraw its rating based solely upon its own judgment.

PSE&Gs
Obligation to Indemnify Us for a Breach of a Representation or Warranty Might
Not Be Sufficient to Protect Your Investment. If
PSE&G breaches a representation or warranty in the sale agreement, it is
obligated to indemnify us and the trustee for any liabilities, obligations,
claims, actions, suits or payments resulting from that breach, as well as any
reasonable costs and expenses incurred. In addition, PSE&G is obligated to
indemnify us and the trustee, for itself and on behalf of the bondholders, for:


  required
  payments of principal and interest on the Bonds in accordance with their
  terms and
  required
  deposits of amounts with us,6

in each case,
required to have been made, which are not made when so required as a result of
a breach of a representation or warranty.

However,
the amount of any indemnification paid by the seller might not be sufficient
for you to recover all of your loss on the Bonds. PSE&G will not be
obligated to indemnify any party for any changes of law. In addition, PSE&G
will not be obligated to repurchase the collateral in the event of a breach of
any of its representations and warranties, and neither the trustee nor the
bondholders will have the right to accelerate payments on the Bonds as a result
of a breach of any of PSE&Gs representations and warranties, absent an
event of default under the indenture. If PSE&G becomes obligated to
indemnify bondholders, the ratings on the Bonds will likely be downgraded as a
result of the circumstances causing the breach and the fact that the
bondholders will be unsecured creditors of PSE&G with respect to any of
those indemnification amounts.

PSE&Gs
Ratings Might Affect the Market Value of the Bonds.A
downgrading of the credit ratings on the debt of PSE&G might have an
adverse effect, at least temporarily, on the market value of your Bonds.

ITEM 1B.
  UNRESOLVED STAFF COMMENTSNot
Applicable.

ITEM 2.
  PROPERTIESWe
do not own any real property. Our primary asset is the BTP as described in Item
1. Business above.

ITEM 3.
  LEGAL PROCEEDINGSNone.

ITEM 4.
  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSOmitted pursuant to conditions set forth
in General Instruction I of Form 10-K.

7

PART II

ITEM 5.
  MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
        MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESAll
of our outstanding equity interests are owned by PSE&G.

ITEM 6.
  SELECTED FINANCIAL DATAOmitted pursuant to conditions set forth
in General Instruction I of Form 10-K.

ITEM 7.
  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
  RESULTS OF OPERATIONSUnless
the context otherwise indicates, all references to Transition Funding II,
we, us or our herein mean PSE&G Transition Funding II LLC, a Delaware
limited liability company located at 80
Park Plaza, Newark, New Jersey 07102.

On December 20, 2004, PSEG entered
  into an agreement and plan of merger with Exelon Corporation (Exelon), a public
  utility holding company which is headquartered in Chicago, Illinois, whereby
  PSEG will be merged with and into Exelon. We do not expect this transaction
  to have any effect on our operations. Upon merger, we will remain a special
  purpose subsidiary of PSE&G.

The following analysis of our financial
  condition and results of operations is in an abbreviated format pursuant to
  General Instruction I of Form 10-K. Such analysis should be read in conjunction
  with the financial statements contained in Item 8. Financial Statements and
  Supplementary Data.

RESULTS OF OPERATIONS

From September 23, 2005 through
  December 31, 2005, we recorded Transition Bond Charge (TBC) revenue of approximately
  $3.6 million, Servicing and Administrative Fees of approximately $50 thousand,
  Amortization Expense of approximately $2.3 million, Interest Income of approximately
  $5 thousand and Interest Expense of approximately $1.2 million. As a regulated
  entity, our amortization expense fluctuates with changes in revenue and interest
  expense. We defer any over or under collection of expense to match against future
  revenues. The initial TBC (exclusive of sales and use tax) was set at 0.0295
  cents per Kilowatt-hour (kWh) as approved by the State of New Jersey Board of
  Public Utilities (BPU). This rate will be trued-up annually in order to maintain
  accounts at appropriate levels and have adequate funds to meet our scheduled
  payments.

LIQUIDITY AND CAPITAL RESOURCES

The
principal amount of the Bonds, interest, and fees are being recovered through
the TBC payable by retail customers of electricity within Public Service
Electric & Gas Companys (PSE&G) service territory who receive electric
delivery service from PSE&G. As part of PSE&Gs responsibility as
servicer under the Servicing Agreement, PSE&G remits the TBC collections to
the debt/security trustee (Trustee) to make scheduled payments on the Bonds.
The first payment of bond principal, interest, and all related expenses will be
made by the Trustee on June 15, 2006. We currently expect that there will be
sufficient funds to make our scheduled payments.

8

ACCOUNTING ISSUES

Critical Accounting Policies

Unbilled Revenues

Electric
and gas revenues are recorded based on services rendered to customers during
each accounting period. PSE&G records unbilled revenues for the estimated
amount customers will be billed for services rendered from the time meters were
last read to the end of the respective accounting period. Unbilled usage is
calculated in two steps. The initial step is to apply a base usage per day to
the number of unbilled days in the period. The second step estimates seasonal
loads based upon the time of year and the variance of actual degree-days and
temperature-humidity-index hours of the unbilled period from expected norms.
The resulting usage is priced at current rate levels and recorded as revenue.
Each month the prior months unbilled amounts are reversed and the current
months amounts are accrued. Using benchmarks other than those used in this
calculation could have a material effect on the amounts accrued in a reporting
period. The resulting revenue and expense reflect the service rendered in the
calendar month.

ITEM 7A.
  QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISKWe
are not subject to the risk of fluctuating interest rates as all four classes
of Bonds were issued with fixed interest rates.

ITEM 8.
  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA9

REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

To the Sole
Member and Board of Managers of PSE&G Transition Funding II LLCNewark, New Jersey

We have
audited the accompanying balance sheet of PSE&G Transition Funding II LLC as of December 31, 2005, and
the related statements of income, members equity, and cash flows for the
period from July 18, 2005 (date of formation) to December 31, 2005. These
financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted
our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Companys internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all
material respects, the financial position of PSE&G Transition Funding II LLC as
of December 31, 2005 and the results of its operations and its cash flows for
the period July 18, 2005 (date of formation) to December 31, 2005, in
conformity with accounting principles generally accepted in the United States
of America.

/s/ Deloitte & Touche
LLP
Parsippany, New Jersey

March 20, 2006

10

PSE&G
TRANSITION FUNDING II LLC
  STATEMENT OF INCOME 
(THOUSANDS)

For the Period
  from July 18,
  2005 to
  December 31,
  2005OPERATING REVENUES

$
3,620OPERATING EXPENSESAmortization of
  Bondable Transition Property


2,345Servicing and
  Administrative Fees


50Total Operating
  Expenses


2,395OPERATING INCOME


1,225Interest Income


5Interest Expense


(1,225
)NET INCOME

$
5See Notes to
Financial Statements.

11

PSE&G
TRANSITION FUNDING II LLC
  BALANCE SHEET
(THOUSANDS)

December 31,
  2005ASSETSCurrent Assets:Cash

$
5Receivable from
  Member


2,405Receivable from
  Affiliate


1,198Total Current
  Assets


3,608Noncurrent
  Assets:Restricted Cash


514Bondable
  Transition Property


100,355Total Noncurrent
  Assets


100,869TOTAL ASSETS

$
104,477LIABILITIESCurrent
  Liabilities:Current Portion
  of Long-Term Debt

$
7,705Acounts
        Payable
    
    
    33Accrued Interest

    
1,225Total Current
  Liabilities
    
    
    8,963Long-Term Debt
    
    
    94,995TOTAL
  LIABILITIES
    
    
    103,958MEMBERS EQUITYContributed
  Capital
    
    
    514Retained
  Earnings
    
    
    5Total Members
  Equity
    
    
    519TOTAL
  LIABILITIES AND MEMBERS EQUITY
    
    $
    104,477See Notes to Financial Statements.

12

PSE&G
TRANSITION FUNDING II LLC
  STATEMENT OF CASH FLOWS
(THOUSANDS)

For the
  Period from
  July 18, 2005 to
  December 31,
  2005CASH FLOWS FROM
  OPERATING ACTIVITIESNet Income

$
5Adjustments to
  Reconcile Net Income to Net Cash Flows from Operating Activities:Amortization of
  Bondable Transition Property


2,345Net Changes in
  Certain Current Assets and Liabilities:Receivable from
  Member


(2,405
)Receivable from
  Affiliate


(1,198
)Accounts
        Payable
    
    
    33Accrued Interest
    
    
    1,225Net Cash
  Provided By Operating Activities
    
    
    5CASH FLOWS FROM
  INVESTING ACTIVITIESRestricted Cash
    
    
    (514
    )Purchase of
  Bondable Transition Property
    
    
    (102,700
    )Net Cash Used in
  Investing Activities
    
    
    (103,214
    )CASH FLOWS FROM
  FINANCING ACTIVITIESProceeds from
  the Issuance of Long-Term Debt
    
    
    102,700Contributed
  Capital
    
    
    514Net Cash
  Provided By Financing Activities
    
    
    103,214Increase in Cash
  and Cash Equivalents
    
    
    5Cash and Cash
  Equivalents at Beginning of Period
    
    
    Cash and Cash
  Equivalents at End of Period
    
    $
    5Interest Paid
    
    $
    See Notes to Financial Statements.

13

PSE&G
TRANSITION FUNDING II LLC
  STATEMENT OF MEMBERS EQUITY
(THOUSANDS)

Contributed Capital

Retained Earnings

TotalBalance as of July 18, 2005

$


$


$
Net Income





5


5Contributed
  Capital


514





514Balance as of December 31, 2005

$
514

$
5

$
519See Notes to Financial Statements.

14

NOTES TO FINANCIAL STATEMENTS

Note 1.
Organization, Basis of Presentation and Significant Accounting Policies

Organization

Unless the context
otherwise indicates, all references to Transition Funding II, we, us or
our herein mean PSE&G Transition Funding II LLC, a Delaware limited
liability company located at 80 Park Plaza, Newark, New Jersey 07102.

We
were formed under the laws of the State of Delaware on July 18, 2005 and
operate pursuant to a limited liability company agreement with Public Service
Electric and Gas Company (PSE&G) as our sole member. PSE&G is an
operating electric and gas utility and is a wholly-owned subsidiary of Public
Service Enterprise Group Incorporated (PSEG). We were organized
for the sole purpose of purchasing and owning bondable transition property
(BTP) of PSE&G, issuing transition bonds (Bonds), pledging our interest in
BTP and other collateral to a debt/security trustee (Trustee) to collateralize
the Bonds, and performing activities that are necessary, suitable or convenient
to accomplish these purposes.

The Electric Discount and Energy
  Competition Act, enacted in the State of New Jersey in February 1999 and amended
  in September 2002 (Energy Competition Act), authorizes electric public utilities,
  such as PSE&G, to recover, among other costs, basic generation service (BGS)
  transition costs. BGS transition costs represent the amount by which a public
  utilitys cost of supplying BGS exceeds the net revenues received by the
  public utility for providing such service during the four-year transition period
  ended July 31, 2003. BGS is a regulated electric generation service provided
  to any electric utility consumer that has not chosen an alternative power supplier.
  A public utility may recover BGS transition costs through an irrevocable non-bypassable
  charge called a BGS transition bond charge (TBC) that is assessed on all retail
  electric consumers. The Energy Competition Act permits special purpose entities
  formed by electric public utilities to issue debt securities secured by the
  right to receive revenues arising from the TBC.

BTP represents the
irrevocable right of PSE&G, or its successor or assignee, to collect a
non-bypassable TBC from retail electric customers pursuant to a bondable
stranded cost rate order (Finance Order), which was issued on July 12, 2005 by
the State of New Jersey Board of Public Utilities (BPU) in accordance with the
Energy Competition Act. These orders are a matter of public record and are available
from the BPU. The Finance Order authorized the TBC to be sufficient to recover
the $102.7 million aggregate principal amount of Bonds, plus an amount
sufficient to provide for any credit enhancement, to fund any reserves and to
pay interest, redemption premiums, if any, servicing fees and other expenses
relating to the Bonds.

Our organizational
documents require us to operate in a manner so that we should not be
consolidated in the bankruptcy estate of PSE&G in the event PSE&G
becomes subject to a bankruptcy proceeding.

On December 20, 2004, PSEG entered
  into an agreement and plan of merger with Exelon Corporation (Exelon), a public
  utility holding company which is headquartered in Chicago, Illinois, whereby
  PSEG will be merged with and into Exelon. We do not expect this transaction
  to have any effect on our operations. Upon merger, we will remain a special
  purpose subsidiary of PSE&G.

Basis of
Presentation

The
financial statements included herein have been prepared pursuant to Generally
Accepted Accounting Principles in the United States of America (GAAP) and the
rules and regulations of the SEC.

15

NOTES
TO FINANCIAL STATEMENTS

Significant
Accounting Policies

Accounting for the Effects of Regulation

The application of
generally accepted accounting principles by us as a regulated entity differs in
certain respects from applications by non-regulated businesses. We prepare our
financial statements in accordance with the provisions of Statement of
Financial Accounting Standards (SFAS) No. 71 Accounting for the Effects of
Certain Types of Regulation (SFAS 71). In general, SFAS 71 recognizes that
accounting for rate-regulated enterprises should reflect the economic effects
of regulation. As a result, a rate regulated entity is required to defer the
recognition of costs (a regulatory asset) or the recognition of obligations (a
regulatory liability) if it is probable that, through the rate-making process,
there will be a corresponding increase or decrease in future rates.

Cash

Cash
consists primarily of highly liquid marketable securities and money market
funds.

Restricted Cash

As required by the Finance Order,
  we deposited an amount equal to 0.5% of the initial principal amount of the
  bonds, which was contributed by PSE&G, into the Capital Subaccount with
  the Trustee to be drawn in the event collections and other reserve funds are
  insufficient to make scheduled payments. The funds deposited into the Capital
  Subaccount are classified as Restricted Cash in Noncurrent Assets on the Balance
  Sheet.

BTP

Our regulatory asset for BTP was recorded at
the acquired cost and is being amortized over the life of the Bonds, based on
TBC revenues, interest expenses and other fees. The BTP is solely our property.

Revenues

Revenues are recorded on
a calendar month basis, based on services rendered by PSE&G to its
customers during each accounting period at the current rate (including the TBC)
and also include estimates for usage not yet billed. PSE&G records unbilled
revenues for the estimated amount customers will be billed for services
rendered from the time meters were last read to the end of the respective
accounting period. The unbilled revenue is estimated each month based on
weather factors, line losses, estimated customer usage by class, and applicable
customer rates based on regression analyses reflecting significant historical
trends and experience.

Amortization Expense

Amortization expense is
recorded on the BTP using the effective interest method. Amortization expense
is also adjusted based on the TBC revenue recorded and the deferred issuance
costs.

Interest Income

Interest Income consists
of interest earned on TBC
collections deposited with the Trustee and interest earned on funds in the
Capital Subaccount. Interest earned on deposited TBC funds reduce the BTP and
will affect the calculation of future TBC rates. Interest earned on funds in
the Capital Subaccount results in Net Income for us and will be periodically
dividended to PSE&G.

16

NOTES
TO FINANCIAL STATEMENTS

Interest
Expense

Interest Expense
consists solely of interest on the Bonds.

Income Taxes

We are a single-member
limited liability company. Accordingly, all Federal and State income tax
effects of our activities accrue to PSE&G.

Use of Estimates

The preparation of
financial statements in conformity with GAAP requires management to make
estimates and assumptions. These estimates and assumptions affect the reported
amount of revenues, expenses, assets and liabilities, as well as the disclosure
of contingencies. Actual results could differ from these estimates.

Note 2.
The Bonds

On September 23, 2005,
we issued $102.7 million of Bonds in four classes with stated maturities
ranging from two years to nine years, all of which remains outstanding as of
December 31, 2005. The fair value of the bonds was $101 million as of December
31, 2005. The net proceeds of the issuance were remitted to PSE&G as
consideration for the property right in the TBC.

Under applicable law,
the Bonds are not an obligation of PSE&G or secured by the assets of
PSE&G, but rather the Bonds are only recourse to us and are collateralized
on a pro rata basis by the BTP and our equity and assets. TBC collections are
deposited at least monthly by PSE&G with the Trustee and are used to pay
our expenses, to pay our debt service on the Bonds and to fund any credit
enhancement for the Bonds. We have also pledged the capital contributed by
PSE&G to secure the debt service requirements of the Bonds. The debt
service requirements include a capital subaccount and a reserve subaccount
which are available to bond holders. Any amounts collateralizing the Bonds will
be returned to PSE&G upon payment of the Bonds.

The significant terms of
the Bonds issued by Transition Funding II as of December 31, 2005 are as
follows:

Initial
  Principal
  Balance

Interest
  Rate

Current
  Portion
  Outstanding

Noncurrent
  Portion
  Outstanding

Final/
  Expected
  Payment Date

Final
  Maturity
  DateClass A-1

$
25,200,000

4.18
%

$
7,705,415

$
17,494,585

12/15/08

12/15/10Class A-2


35,000,000

4.34
%





35,000,000

6/15/12

6/16/14Class A-3


20,000,000

4.49
%





20,000,000

12/16/13

12/15/15Class A-4


22,500,000

4.57
%





22,500,000

6/15/15

6/15/17Total

$
102,700,000




$
7,705,415

$
94,994,585We expect to make principal payments
  of approximately $8 million, $9 million, $10 million, $10 million and $11 million
  for the years ended December 31, 2006, 2007, 2008, 2009 and 2010, respectively.
Note 3.
Significant Agreements and Related Party Transactions

Under the servicing agreement entered
  into by PSE&G and us, concurrently with the issuance of the Bonds, PSE&G,
  as servicer, is required to manage and administer our BTP and to collect the
  TBC on our behalf. Under the Finance Order, PSE&G withholds from the TBC
  collections an annual servicing fee equal to 0.05% of the initial balance of
  Bonds issued. In addition we pay miscellaneous operating expenses to PSE&G
  up to $100 thousand per quarter, administration fees up to $31 thousand per
  quarter and trustee fees up to $4 thousand per quarter. Servicing and administrative
  fees for the period ended December 31, 2005 were approximately $50 thousand.

17

NOTES TO FINANCIAL STATEMENTS

As of December 31, 2005,
we had a receivable from our sole member, PSE&G, of approximately $2.4
million related to TBC billings. As of December 31, 2005 we had a receivable of
approximately $1.2 million for funds deposited with our affiliate, PSE&G
Transition Funding LLC.

Note 4.
Selected Quarterly Data (Unaudited)

The information shown
below, in the opinion of Transition Funding II includes all adjustments,
consisting only of normal recurring accruals, necessary to a fair presentation
of such amounts.

For the period
  from July 18,
  2005 to
  September 30,
  2005

Quarter Ended
  December 31,
  2005(Thousands)Operating Revenues

$
2

$
3,618Operating Income


100


1,125Net Income





518

ITEM 9.
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
        ON ACCOUNTING AND FINANCIAL DISCLOSURENONE.ITEM 9A.
    CONTROLS AND PROCEDURES**Disclosure Controls and Procedures******We
      have established and maintain disclosure controls and procedures which are
      designed to provide reasonable assurance that material information is made
      known to the Chief Executive Officer and Chief Financial Officer by others
      within the entity. We have established a disclosure committee which is made
      up of several key management employees and which reports directly to the
      Chief Financial Officer and Chief Executive Officer. The committee monitors
      and evaluates the effectiveness of these disclosure controls and procedures.
      The Chief Financial Officer and Chief Executive Officer has evaluated the
      effectiveness of the disclosure controls and procedures as of December 31,
      2005 and, based on this evaluation, has concluded that the disclosure controls
      and procedures were effective in providing reasonable assurance during the
      period covered in this annual report.**Internal Controls**During
      the fourth quarter of 2005, we continued to make enhancements to internal
      controls to enable us to maintain the effectiveness of our internal control
      over financial reporting as of December 31, 2005. There were no significant
      changes in internal controls or in other factors that could significantly
      affect internal controls subsequent to the date of our most recent evaluation.
      It should be noted that the design of any system of controls is based, in
      part, on certain assumptions about the likelihood of future events, and
      provides reasonable assurance that the internal control system will succeed
      in achieving its stated objectives.ITEM 9B.
    OTHER INFORMATIONNONE.PART IIIITEM 10.
    DIRECTORS AND EXECUTIVE OFFICERS OF THE
        REGISTRANTOmitted
        pursuant to conditions set forth in General Instruction I of Form 10-K.ITEM 11.
    EXECUTIVE COMPENSATIONOmitted
        pursuant to conditions set forth in General Instruction I of Form 10-K.ITEM 12.
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
        OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSOmitted
        pursuant to conditions set forth in General Instruction I of Form 10-K.ITEM 13.
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSOmitted
        pursuant to conditions set forth in General Instruction I of Form 10-K.ITEM 14.
    PRINCIPAL ACCOUNTANT FEES AND SERVICESNot
        Applicable.19

PART IV

ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT
  SCHEDULES(A)
The following documents are filed as part of this
  report:Statement of Income for the period from July 18, 2005 to December 31, 2005 on
        page 11.Balance Sheet as of December 31, 2005 on page 12.Statement of Cash Flows for the period from July 18, 2005 to December 31, 2005
        on page 13.Statement of Members Equity for the
        period from July 18, 2005 to December 31, 2005 on page 14.Notes to Financial Statements on pages 15 through
  18.20

(B)
  A listing of
  exhibits being filed with this document is as follows. Certain Exhibits
  previously filed with the Commission and the appropriate securities exchanges
  are indicated as set forth below. Such Exhibits are not being refiled, but
  are included because inclusion is desirable for convenient reference.Exhibit
  NumberThis
  Filing
  
  Previous
  Filing1.1
  
  (b)
  
  1.1
  
  Underwriting Agreement
  dated as of September 9, 2005 among Public Service Electric and Gas Company,
  the Issuer and the Underwriters4.1
  
  (a)
  
  4.1
  
  Limited Liability Company
  Agreement of PSE&G Transition Funding II LLC4.1.1
  
  (b)
  
  4.1.1
  
  Amended and Restated
  Limited Liability Company Agreement of PSE&G Transition Funding II LLC
  dated as of September 23, 20054.2
  
  (a)
  
  4.2
  
  Certificate of Formation of
  PSE&G Transition Funding II LLC4.3
  
  (a)
  
  4.3
  
  Form of Amended and
  Restated Limited Liability Company Agreement of PSE&G Transition Funding
  II LLC4.3.1
  
  (b)
  
  4.3.1
  
  Indenture dated as of
  September 23, 2005 between PSE&G Transition Funding II LLC and the
  Trustee, including Master Definitions4.3.2
  
  (b)
  
  4.3.2
  
  Series Supplement dated as
  of September 23, 2005 between PSE&G Transition Funding II LLC and the
  Trustee4.4
  
  (a)
  
  4.4
  
  Form of Indenture with Form
  of the Series Supplement attached thereto4.5
  
  (a)
  
  4.5
  
  Form of Transition Bonds10.1
  
  (b)
  
  10.1
  
  Bondable Transition
  Property Sale Agreement dated as of September 23, 2005 between Public Service
  Electric and Gas Company and PSE&G Transition Funding II LLC, including
  Master Definitions10.2
  
  (b)
  
  10.2
  
  Servicing Agreement dated
  as of September 23, 2005 between Public Service Electric and Gas Company and
  PSE&G Transition Funding II LLC, including Servicing Procedures10.3
  
  (a)
  
  10.3
  
  Petition of PSE&G to
  the State of New Jersey Board of Public Utilities, dated July 9, 200310.4
  
  (a)
  
  10.4
  
  Financing Order of the BPU
  issued July 12, 2005 and consented to on July 19, 200525.1
  
  (a)
  
  25.1
  
  Statement of Eligibility
  under the Trust Indenture Act of 1939, as amended, of The Bank of New York,
  as Trustee under the Indenture31
  
  
  
  
  
  Certification by Robert E.
  Busch, Chief Executive Officer and Chief Financial Officer of PSE&G Transition
  Funding II LLC Pursuant to Rules 13a  14 and 15d  14 of the Securities
  Exchange Act of 193432
  
  
  
  
  
  Certification by Robert E.
  Busch, Chief Executive Officer and Chief Financial Officer of PSE&G
  Transition Funding II LLC Pursuant to Section 1350 of Chapter 63 of Title 18
  of the United States Code(a)
  Filed by Transition Funding
  II with Registration Statement No. 333-127545 under the Securities Act of
  1933, effective August 15, 2005, relating to the issuance of $102,700,000
  Transition Bonds.(b)
  Filed by Transition Funding
  II with Form 8-K under the Securities Exchange Act of 1934, on October 7,
  2005.21

SIGNATURES

Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

PSE&G Transition Funding II LLCBy
  /s/ ROBERT
  E. BUSCHRobert E.
  BuschPresident,
  Chief Executive Officerand Chief
  Financial OfficerDate: March
20, 2006

Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.

Signature
  
  Title
  
  Date/s/
  ROBERT E.
  BUSCH
  
  President,
  Chief Executive Officer,
  
  March 20, 2006Chief
  Financial Officer and ManagerRobert E. Busch
  
  (Principal
  Executive Officer andPrincipal
  Financial Officer)/s/
  MORTON A.
  PLAWNER
  
  Vice
  President, Treasurer and Manager
  
  March 20, 2006Morton A. Plawner/s/
  PATRICIA A.
  RADO
  
  Controller
  
  March 20, 2006(Principal
  Accounting Officer)Patricia A. Rado/s/
  R. EDWIN SELOVER
  
  Manager
  
  March 20, 2006R. Edwin Selover/s/
  BENJAMIN B.
  ABEDINE
  
  Manager
  
  March 20, 2006Benjamin B. Abedine22

EXHIBIT INDEX

A listing of
exhibits being filed with this document is as follows:

Exhibit
  Number
  
  Document31
  
  Certification
  by Robert E. Busch, Chief Executive Officer and Chief Financial Officer of
  PSE&G Transition Funding II LLC Pursuant to Rules 13a-14 and 15d-14 of the
  Securities Exchange Act of 193432
  
  Certification
  by Robert E. Busch, Chief Executive Officer and Chief Financial Officer of
  PSE&G Transition Funding II LLC Pursuant to Section 1350 of Chapter 63 of
  Title 18 of the United States Code23