Exhibit 4a(28)

|                     
|---------------------
|SUPPLEMENTAL MORTGAGE
|                     

Supplemental Indenture

Dated April 1, 2007



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SUPPLEMENTAL TO 
FIRST AND REFUNDING MORTGAGE
DATED AUGUST 1, 1924


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|                                       
|---------------------------------------
|PUBLIC SERVICE ELECTRIC AND GAS COMPANY
|TO                                     
|US BANK NATIONAL ASSOCIATION           
|Trustee 21 South Street                
|Morristown, New Jersey 07960           



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|                                                
|------------------------------------------------
|PROVIDING FOR THE ISSUE OF                      
|$850,000,000 FIRST AND REFUNDING MORTGAGE BONDS,
|MEDIUM-TERM NOTES SERIES E                      
|                                                
|                                                

RECORD IN MORTGAGE BOOK AND RETURN TO:
JAMES T. FORAN, ESQ.
80 PARK PLAZA, T5B
NEWARK, N.J. 07102-4194

Prepared by

(DONALD S. LEIBOWITZ, ESQ.)

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TABLE OF CONTENTS

|                                                   |  |                                                   |  |     
|-------------------------------------------------- |  | ------------------------------------------------- |  | ----
|                                                   |  |                                                   |  | Page
|RECITALS                                           |  | 1                                                
|FORM OF BOND                                       |  | 3                                                
|FORM OF CERTIFICATE OF AUTHENTICATION              |  | 5                                                
|GRANTING CLAUSES                                   |  | 6                                                
|                                                  
|ARTICLE I.                                        
|BONDS OF THE MEDIUM-TERM NOTES SERIES E.          
|                                                  
|DESCRIPTION OF SERIES                              |  | 7                                                
|                                                  
|ARTICLE II.                                       
|REDEMPTION OF BONDS OF
MEDIUM-TERM NOTES SERIES E.
|                                                  
|SECTION 2.01.                                      |  | RedemptionRedemption
  Price                     |  | 7   
|SECTION 2.02.                                      |  | Redemptions Pursuant to
  Section 4C of           |  |     
|                                                   |  | Article Eight of the Indenture                    |  | 7   
|SECTION 2.03.                                      |  | Interest on Called Bonds
  to Cease               |  | 8   
|SECTION 2.04.                                      |  | Bonds Called in Part                              |  | 8   
|SECTION 2.05.                                      |  | Provisions of Indenture
  Not Applicable          |  | 8   
|                                                  
|ARTICLE III.                                      
|CREDITS WITH RESPECT TO BONDS OF THE              
|MEDIUM-TERM NOTES SERIES E.                       
|                                                  
|SECTION 3.01.                                      |  | Credits                                           |  | 8   
|SECTION 3.02.                                      |  | Certificate of the Company                        |  | 8   
|                                                  
|ARTICLE IV.                                       
|MISCELLANEOUS.                                    
|                                                  
|SECTION 4.01.                                      |  | Authentication of Bonds of
  Medium-Term          |  |     
|                                                   |  | Notes Series E                                    |  | 8   
|SECTION 4.02.                                      |  | Additional Restrictions on
  Authentication of    |  |     
|                                                   |  | Additional Bonds Under Indenture                  |  | 8   
|SECTION 4.03.                                      |  | Restriction on Dividends                          |  | 9   
|SECTION 4.04.                                      |  | Use of Facsimile Seal and
  Signatures            |  | 9   
|SECTION 4.05.                                      |  | Time for Making of Payment                        |  | 9   
|SECTION 4.06.                                      |  | Effective Period of
  Supplemental Indenture      |  | 9   
|SECTION 4.07.                                      |  | Effect of Approval of
  Board of Public Utilities |  |     
|                                                   |  | of the State of New Jersey                        |  | 9   
|SECTION 4.08.                                      |  | Execution in Counterparts                         |  | 9   
|ACKNOWLEDGEMENTS                                   |  | 10                                               
|CERTIFICATE OF RESIDENCE                           |  | 12                                               

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SUPPLEMENTAL
INDENTURE, dated the 1st day of April 2007, for convenience of reference and
effective from the time of execution and delivery hereof, between PUBLIC SERVICE ELECTRIC
AND GAS COMPANY, a corporation organized under the laws of
the State of New Jersey, hereinafter called the Company, party of the first
part, and US Bank National Association, a national banking association
organized under the laws of the United States of America, as successor Trustee
to Wachovia Bank, National Association (previously known as Fidelity Union
Trust Company) under the indenture dated August 1, 1924, below mentioned,
hereinafter called the Trustee, party of the second part.

WHEREAS,
on July 25, 1924, the Company executed and delivered to FIDELITY UNION TRUST
COMPANY, a certain
indenture dated August 1, 1924 (hereinafter called the Indenture) to secure
and to provide for the issue of First and Refunding Mortgage Gold Bonds of the
Company; and

WHEREAS, the Indenture has been recorded in the following
counties of the
State of New Jersey, in the offices, and therein in the books and at the pages,
as follows:

|           |  |            |  |      |                      |  |                 
|---------- |  | ---------- |  | ---- | -------------------- |  | ----------------
|County     |  | Office     |  |      | Book
Number          |  | Page
Number     
|          
|Atlantic   |  | Clerks    |  | 1955 | of Mortgages         |  | 160             
|Bergen     |  | Clerks    |  | 94   | of Chattel Mortgages |  | 123
  etc.      
|           |  |            |  | 693  | of Mortgages         |  | 88
  etc.       
|Burlington |  | Clerks    |  | 52   | of Chattel Mortgages |  | Folio
  8 etc.  
|           |  |            |  | 177  | of Mortgages         |  | Folio
  354 etc.
|Camden     |  | Registers |  | 45   | of Chattel Mortgages |  | 184
  etc.      
|           |  |            |  | 239  | of Mortgages         |  | 1 etc.          
|Cumberland |  | Clerks    |  | 786  | of Mortgages         |  | 638
  & c.      
|Essex      |  | Registers |  | 437  | of Chattel Mortgages |  | 1-48            
|           |  |            |  | T-51 | of Mortgages         |  | 341-392         
|Gloucester |  | Clerks    |  | 34   | of Chattel Mortgages |  | 123
  etc.      
|           |  |            |  | 142  | of Mortgages         |  | 7
  etc.        
|Hudson     |  | Registers |  | 453  | of Chattel Mortgages |  | 9
  etc.        
|           |  |            |  | 1245 | of Mortgages         |  | 484,
  etc.     
|Hunterdon  |  | Clerks    |  | 151  | of Mortgages         |  | 344             
|Mercer     |  | Clerks    |  | 67   | of Chattel Mortgages |  | 1
  etc.        
|           |  |            |  | 384  | of Mortgages         |  | 1
  etc.        
|Middlesex  |  | Clerks    |  | 113  | of Chattel Mortgages |  | 3
  etc.        
|           |  |            |  | 437  | of Mortgages         |  | 294
  etc.      
|Monmouth   |  | Clerks    |  | 951  | of Mortgages         |  | 291
  & c.      
|Morris     |  | Clerks    |  | N-3  | of Chattel Mortgages |  | 446
  etc.      
|           |  |            |  | F-10 | of Mortgages         |  | 269
  etc.      
|Ocean      |  | Clerks    |  | 1809 | of Mortgages         |  | 40              
|Passaic    |  | Registers |  | M-6  | of Chattel Mortgages |  | 178,
  etc.     
|           |  |            |  | R-13 | of Mortgages         |  | 268
  etc.      
|Salem      |  | Clerks    |  | 267  | of Mortgages         |  | 249
  etc.      
|Somerset   |  | Clerks    |  | 46   | of Chattel Mortgages |  | 207
  etc.      
|           |  |            |  | N-10 | of Mortgages         |  | 1
  etc.        
|Sussex     |  | Clerks    |  | 123  | of Mortgages         |  | 10
  & c.       
|Union      |  | Registers |  | 9584 | of Mortgages         |  | 259
  etc.      
|Warren     |  | Clerks    |  | 124  | of Mortgages         |  | 141
  etc.      

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2

and

WHEREAS, the
Indenture has also been
recorded in the following counties of the Commonwealth of Pennsylvania, in the
offices, and therein in the books and at the pages, as follows:

|             |  |            |  |                     |  |              
|------------ |  | ---------- |  | ------------------- |  | -------------
|             |  |            |  |                     |  | Page
  Number
|County       |  | Office     |  | Book Number         | 
|            
|Adams        |  | Recorders |  | 22
  of Mortgages   |  | 105          
|Armstrong    |  | Recorders |  | 208
  of Mortgages  |  | 381          
|Bedford      |  | Recorders |  | 90
  of Mortgages   |  | 917          
|Blair        |  | Recorders |  | 671
  of Mortgages  |  | 430          
|Cambria      |  | Recorders |  | 407
  of Mortgages  |  | 352          
|Cumberland   |  | Recorders |  | 500
  of Mortgages  |  | 136          
|Franklin     |  | Recorders |  | 285
  of Mortgages  |  | 373          
|Huntington   |  | Recorders |  | 128
  of Mortgages  |  | 47           
|Indiana      |  | Recorders |  | 197
  of Mortgages  |  | 281          
|Lancaster    |  | Recorders |  | 984
  of Mortgages  |  | 1            
|Montgomery   |  | Recorders |  | 5053
  of Mortgages |  | 1221         
|Westmoreland |  | Recorders |  | 1281
  of Mortgages |  | 198          
|York         |  | Recorders |  | 31-V
  of Mortgages |  | 446          

and

WHEREAS, the Indenture granted,
bargained, sold, aliened, remised, released, conveyed, confirmed, assigned,
transferred and set over unto the Trustee certain property of the Company, more
fully set forth and described in the Indenture, then owned or which might
thereafter be acquired by the Company; and

WHEREAS, the Company, by various
supplemental indentures, supplemental to the Indenture, the last of which was
dated August 1, 2004 (No. 4), has granted, bargained, sold, aliened, remised,
released, conveyed, confirmed, assigned, transferred and set over unto the
Trustee certain property of the Company acquired by it after the execution and
delivery of the Indenture; and

WHEREAS, since the execution and
delivery of said supplemental indenture dated August 1, 2004 (No. 4), the
Company has acquired property which, in accordance with the provisions of the
Indenture, is subject to the lien thereof and the Company desires to confirm
such lien; and

WHEREAS, the Indenture has been amended
or supplemented from time to time; and

WHEREAS, it is provided in the Indenture
that no bonds other than those of the 5-1/2% Series due 1959 therein authorized
may be issued thereunder unless a supplemental indenture providing for the
issue of such additional bonds shall have been executed and delivered by the
Company to the Trustee; and

WHEREAS, the Company is making
provisions for the issuance and sale of its Secured Medium-Term Notes, Series E
(the Series E Notes), to be issued under an Indenture of Trust (the Note
Indenture) dated as of July 1, 1993 between the Company and The Chase
Manhattan Bank (National Association) as predecessor trustee (The Bank of New
York, as successor trustee to the predecessor trustee), as Trustee (the Note
Trustee); and

WHEREAS, such Note Indenture provides,
among other things, for the pledge and delivery by the Company of a series of
First and Refunding Mortgage Bonds of the Company to evidence the Companys
obligation to pay the principal and interest with respect to outstanding Series
E Notes; and for such purpose and in order to service and secure payment of the
principal and interest in respect of the Series E Notes, the Company desires to
provide for the issue of $850,000,000 aggregate principal amount of bonds under
the Indenture of a series to be designated as First and Refunding Mortgage
Bonds, Medium-Term Notes Series E (hereinafter sometimes called Bonds of the
Medium-Term Notes Series E); and

WHEREAS, the text of the Bonds of the
Medium-Term Notes Series E and of the certificate of authentication to be borne
by the Bonds of the Medium-Term Notes Series E shall be substantially of the
following tenor:

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3

(FORM OF BOND)

This Bond is not transferable
except as provided in the Indenture and in the Indenture of Trust dated as of
July 1, 1993 between the Company and The Chase Manhattan Bank (National
Association) (The Bank of New York, successor trustee) as Trustee.

|           |              | 
|---------- | ------------ | 
|REGISTERED | REGISTERED   | 
|NUMBER     | AMOUNT       | 
|R          | $850,000,000

PUBLIC SERVICE ELECTRIC AND GAS COMPANY
FIRST AND REFUNDING MORTGAGE BOND, 
MEDIUM-TERM NOTES SERIES E

Public
Service Electric and Gas Company (hereinafter called the Company), a
corporation of the State of New Jersey, for value received, hereby promises to
pay to The Bank of New York as succssor trustee to The Chase Manhattan Bank
(National Association)), under the Indenture of Trust dated as of July 1, 1993
between the Company and such trustee, or registered assigns, on the surrender
hereof, the principal sum of Eight Hundred Fifty Million Dollars, on April 1,
2042, and to pay interest thereon from the date hereof, at the rate of 10% per
annum, and until payment of said principal sum, such interest to be payable
April 1 and October 1 in each year; provided, however, that the Company shall
receive certain credits against such obligations as set forth in the
Supplemental Indenture dated April 1, 2007 referred to below.

Both
the principal hereof and interest hereon shall be paid at the principal
corporate trust office of US Bank National Association in the City of
Morristown, State of New Jersey, or (at the option of the registered owner) at
the corporate trust office of any paying agent appointed by the Company, in
such coin or currency of the United States of America as at the time of payment
shall constitute legal tender for the payment of public and private debts;
provided, however, that any such payments of principal and interest shall be
subject to receipt of certain credits against such payment obligations as set
forth in the Supplemental Indenture dated April 1, 2007 referred to below.

This
Bond is one of the First and Refunding Mortgage Bonds of the Company issued and
to be issued under and pursuant to, and all equally secured by, an indenture of
mortgage or deed of trust dated August 1, 1924, as supplemented and amended by
supplemental indentures thereto, including the Supplemental Indenture dated
April 1, 2007, duly executed by the Company and US Bank National Association as
Trustee. This Bond is one of the Bonds of the Medium-Term Notes Series E, which
series is limited to the aggregate principal amount of $850,000,000 and is
issued pursuant to said Supplemental Indenture dated April 1, 2007. Reference
is hereby made to said indenture and all supplements thereto for a
specification of the principal amount of Bonds from time to time issuable
thereunder, and for a description of the properties mortgaged and conveyed or
assigned to said Trustee or its successors, the nature and extent of the
security, and the rights of the holders of said Bonds and any coupons
appurtenant thereto, and of the Trustee in respect of such security.

In
and by said indenture, as amended and supplemented, it is provided that with
the written approval of the Company and the Trustee, any of the provisions of
said indenture may from time to time be eliminated or modified and other
provisions may be added thereto provided the change does nor alter the annual
interest rate, redemption price or date, date of maturity or amount payable on
maturity of any then outstanding Bond or conflict with the Trust Indenture Act
of 1939 as then in effect, and provided the holders of 85% in principal amount
of the Bonds secured by said indenture and then outstanding (including, if such
change affect the Bonds of one or more series but less than all series then
outstanding, a like percentage of the then outstanding Bonds of each series
affected by such change, and excluding Bonds owned or controlled by the Company
or by the parties owning at least 10% of the outstanding voting stock of the
Company, as more fully specified in said indenture) consent in writing thereto,
all as more fully set forth in said indenture, as amended and supplemented.

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4

First
and Refunding Mortgage Bonds issuable under said indenture are issuable in
series, and the Bonds of any series may be for varying principal amounts and in
the form of coupon bonds and of registered bonds without coupons, and the Bonds
of any one series may differ from the Bonds of any other series as to date,
maturity, interest rate and otherwise, all as in said indenture provided and
set forth. The Bonds of the Medium-Term Notes Series E, in which this Bond is
included, are designated First and Refunding Mortgage Bonds, Medium-Term Notes
Series E.

In
case of the happening of an event of default as specified in said indenture and
said supplemental indenture dated March 1, 1942, the principal sum of the Bonds
of this series may be declared or may become due and payable forthwith, in the
manner and with the effect in said indenture provided.

The
Bonds of this series are subject to redemption as provided in the Supplemental
Indenture dated April 1, 2007.

This
Bond is transferable, but only as provided in said indenture and the Indenture
of Trust dated as of July 1, 1993 between the Company and The Chase Manhattan
Bank (National Association) as predecessor trustee (The Bank of New York, as
successor trustee to the predecessor trustee), as trustee, upon surrender
hereof, by the registered owner in person or by attorney duly authorized in
writing, at either of said offices where the principal hereof and interest
hereon are payable; upon any such transfer a new fully registered Bond similar
hereto will be issued to the transferee. This Bond may in like manner be
exchanged for one or more new fully registered Bonds of the same series of
other authorized denominations but of the same aggregate principal amount. No
service charge shall be made for any such transfer or exchange, but the Company
may require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto. The Company and the Trustee
hereunder and any paying agent may deem and treat the person in whose name this
Bond is registered as the absolute owner hereof for the purpose of receiving
payment of or on account of the principal hereof and the interest hereon and
for all other purposes; and neither the Company nor the Trustee hereunder nor
any paying agent shall be affected by any notice to the contrary.

The
Bonds of this series are issuable only in fully registered form, in any
denomination authorized by the Company.

No
recourse under or upon any obligation, covenant or agreement contained in said
indenture or in any indenture supplemental thereto, or in any Bond issued
thereunder, or because of any indebtedness arising thereunder, shall be had
against any incorporator, or against any past, present or future stockholder,
officer, or director, as such, of the Company or of any successor corporation,
either directly or through the Company or any successor corporation, under any
rule of law, statute or constitutional provision or by the enforcement of any
assessment or by any legal or equitable proceeding or otherwise, it being
expressly agreed and understood that said indenture, any indenture supplemental
thereto and the obligations issued thereunder, are solely corporate
obligations, and that no personal liability whatever shall attach to, or be
incurred by, such incorporators, stockholders, officers or directors, as such,
of the Company, or of any successor corporation, or any of them, because of the
incurring of the indebtedness thereby authorized, or under or by reason of any
of the obligations, covenants or agreements contained in the indenture or in
any indenture supplemental thereto or in any of the Bonds issued thereunder, or
implied therefrom.

This
Bond shall not be entitled to any security or benefit under said indenture, as
amended and supplemented, and shall not become valid or obligatory for any
purpose, until the certificate of authentication, hereon endorsed, shall have
been signed by US Bank National Association as Trustee, or by its successor in
trust under said indenture.

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5

IN WITNESS WHEREOF, the
Company has caused this Bond to be duly executed by its proper officers under
its corporate seal.Dated

|                       |                                          |                 
|---------------------- | ---------------------------------------- | ----------------
|                       | PUBLIC SERVICE ELECTRIC AND GAS COMPANY,
|                       |                                          |                 
|                       | By                                       |                 
|                       |                                          |                 
|                       |                                          | (Vice) President
|                       |                                          |                 
|(Seal)                 |                                          |                 
|                       |                                          |                 
|Attest:                |                                          |                 
|                       |                                          |                 
|                       |                                          |                 
|(Assistant)
 Secretary |                                          |                 
|                       |                                          |                 

(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION

This
Bond is one of the Bonds of the series designated therein which is described in
the within-mentioned indenture and supplemental indenture dated April 1, 2007,
as secured thereby.

| |                                         |                     
| | --------------------------------------- | --------------------
| | US BANK NATIONAL ASSOCIATION,
 TRUSTEE,
| |                                         |                     
| | By                                      |                     
| |                                         |                     
| |                                         | Authorized Signatory

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6

WHEREAS, the execution and delivery of
this supplemental indenture have been duly authorized by the Board of Directors
of the Company; and

WHEREAS, the Company represents that all
things necessary to make the bond of the series hereinafter described, when
duly authenticated by the Trustee and issued by the Company, a valid, binding
and legal obligation of the Company, and to make this supplemental indenture a
valid and binding agreement supplemental to the Indenture, have been done and
performed:

NOW, THEREFORE, THIS
SUPPLEMENTAL INDENTURE WITNESSETH that the Company, in consideration of
the premises and the execution and delivery by the Trustee of this supplemental
indenture, and in pursuance of the covenants and agreements contained in the
Indenture and for other good and valuable consideration, the receipt of which
is hereby acknowledged, has granted, bargained, sold, aliened, remised,
released, conveyed, confirmed, assigned, transferred and set over, and by these
presents does grant, bargain, sell, alien, remise, release, convey, confirm,
assign, transfer and set over unto the Trustee, its successors and assigns,
forever, all the right, title and interest of the Company in and to all
property of every kind and description (except cash, accounts and bills
receivable and all merchandise bought, sold or manufactured for sale in the
ordinary course of the Companys business, stocks, bonds or other corporate
obligations or securities, other than such as are described in Part V of the
Granting Clauses of the Indenture, not acquired with the proceeds of bonds
secured by the Indenture, and except as in the Indenture and herein otherwise
expressly excluded) acquired by the Company since the execution and delivery of
the supplemental indenture dated August 1, 2004 (No. 4), subsequent to the
Indenture (except any such property duly released from, or disposed of, free from
the lien of the Indenture, in accordance with the provisions thereof) and all
such property which at any time hereafter may be acquired by the Company;

All
of which property it is intended shall be included in and granted by this
supplemental indenture and covered by the lien of the Indenture as heretofore
and hereby amended and supplemented;

UNDER AND SUBJECT to any encumbrances or
mortgages existing on property acquired by the Company at the time of such
acquisition and not heretofore discharged of record; and

SUBJECT also, to the exceptions,
reservations and provisions in the Indenture and in this supplemental indenture
recited, and to the liens, reservations, exceptions, limitations, conditions
and restrictions imposed by or contained in the several deeds, grants,
franchises and contracts or other instruments through which the Company
acquired or claims title to the aforesaid property; and Subject, also, to the
existing leases, to liens on easements or rights of way, to liens for taxes,
assessments and governmental charges not in default or the payment of which is
deferred, pending appeal or other contest by legal proceedings, pursuant to
Section 4 of Article Five of the indenture, or the payment of which is deferred
pending billing, transfer of title or final determination of amount, to
easements for alleys, streets, highways, rights of way and railroads that may
run across or encroach upon the said property, to joint pole and similar
agreements, to undetermined liens and charges, if any, incidental to
construction, and other encumbrances permitted by the indenture as heretofore
and hereby amended and supplemented;

TO HAVE AND TO HOLD the property hereby
conveyed or assigned, or intended to be conveyed or assigned, unto the Trustee,
its successor or successors and assigns, forever;

IN TRUST, NEVERTHELESS,
upon the terms, conditions and trusts set forth in the Indenture as heretofore
and hereby amended and supplemented, to the end that the said property shall be
subject to the lien of the Indenture as heretofore and hereby amended and
supplemented, with the same force and effect as though said property had been
included in the Granting Clauses of the Indenture at the time of the execution
and delivery thereof;

AND THIS SUPPLEMENTAL INDENTURE FURTHER
WITNESSETH that for the considerations aforesaid, it is hereby
covenanted between the Company and the Trustee as follows:

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7

ARTICLE I.

BONDS OF THE MEDIUM-TERM NOTES SERIES E.

The
series of bonds authorized by this supplemental indenture to be issued under
and secured by the Indenture shall be designated First and Refunding Mortgage
Bonds, Medium-Term Notes Series E; shall be limited to the aggregate principal
amount of $850,000,000; shall be issued initially to the Note Trustee and shall
mature and bear interest as set forth in the form of bond set forth herein;
provided, however, that the Company shall receive certain credits against
principal and interest as set forth in Section 3.01 hereof. The date of each
Bond of the Medium-Term Notes Series E shall be the interest payment date next
preceding the date of authentication, unless such date of authentication be an
interest payment date, in which case the date shall be the date of
authentication, or unless such date of authentication be prior to the first
semi-annual interest payment date, in which case the date shall be April 1,
2007.

Bonds
of the Medium-Term Notes Series E shall be issuable only in the form of fully
registered bonds in any denomination authorized by the Company. Interest on the
Bonds of the Medium-Term Notes Series E shall be payable semi-annually in
arrears on April 1 and October 1 of each year, payable initially on October 1,
2007, subject to receipt of certain credits against principal and interest as
set forth in Section 3.01 hereof and shall be payable as to both principal and
interest in such coin or currency of the United States of America as at the
time of payment shall constitute legal tender for the payment of public and
private debts, at the principal corporate trust office of the Trustee, or at
the corporate trust office of any paying agent appointed.

Bonds of the Medium-Term Notes Series E shall be transferable and exchangeable,
but only as provided in the Indenture and the Note Indenture, upon surrender
thereof for cancellation by the registered owner in person or by attorney duly
authorized in writing at either of said offices. The Company hereby waives any
right to make a charge for any transfer or exchange of Bonds of the Medium-Term
Notes Series E, but the Company may require payment of a sum sufficient to
cover any tax or any other governmental charge that may be imposed in relation
thereto.

ARTICLE II.

REDEMPTION OF BONDS OF MEDIUM-TERM NOTES SERIES E.

Section
2.01. RedemptionRedemption Price. Bonds of the Medium-Term Notes Series E
shall be subject to redemption prior to maturity under the conditions, and upon
payment of the amounts as may be specified in the following conditions:

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) at any
 time in whole or in part at the option of the Company upon receipt by the
 Trustee of written certification of the Company and of the Note Trustee that
 the principal amount of the Series E Notes then outstanding under the Note
 Indenture is not in excess of such principal amount of the Bonds of the
 Medium-Term Notes Series E as shall remain pledged to the Note Trustee after
 giving effect to such redemption; or (b) at any time by the application of
 any proceeds of released property or other money held by the Trustee and
 which, pursuant to Section 4C of Article Eight of the Indenture, as amended
 and supplemented, are applied to the redemption of Bonds of the Medium-Term
 Notes Series E, upon payment of 100% of the principal amount thereof, together
 with interest accrued to the redemption date, provided that any such payment
 shall be subject to receipt by the Company of certain credits against such
 obligations as set forth in Section 3.01 hereof.

SECTION 2.02. Redemptions Pursuant to
Section 4C of Article Eight of the Indenture. If, pursuant to Section 4C of
Article Eight of the Indenture, as amended and supplemented, any proceeds of
released property or other money then held by the Trustee shall be applied to
the redemption of the Bonds of the Medium-Term Notes Series E, the Trustee
shall give at least 45 days prior written notice of such redemption to the Note
Trustee whereupon on the date fixed for redemption such principal amount
thereof as is equal to such proceeds shall be redeemed; provided that no such
redemption shall be made unless the Trustee shall be in receipt of a written
certification of the Company and the Note Trustee that a like principal amount
of Series E Notes shall have been theretofore redeemed in accordance with the provisions
of the Note Indenture. For purposes of determining which of the Companys First
and Refunding Mortgage Bonds are subject to such mandatory redemption, the
Mortgage Trustee shall consider the 10% stated annual interest rate of the
Bonds of the Medium-Term Notes Series E, not the weighted average interest rate
of outstanding Series E Notes. Bonds of said series so redeemed shall be
cancelled.

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8

SECTION 2.03. Interest on Called Bonds
to Cease. Each Bond of the Medium-Term Notes Series E or portion thereof called
for redemption under Section 2.02 hereof shall be due and payable at the office
of the Note Trustee, as paying agent hereunder, at its redemption price and on
the specified redemption date, anything herein or in such Bond to the contrary
notwithstanding. From and after the date when each Bond of the Medium-Term
Notes Series E or portion thereof shall be due and payable as aforesaid (unless
upon said date the full amount due thereon shall not be held by the Note
Trustee, as paying agent hereunder, and be immediately available for payment),
all further interest shall cease to accrue on such bond or on such portion
thereof, as the case may be.

SECTION 2.04. Bonds Called in Part. If
only a portion of any Bond of the Medium-Term Notes Series E shall be called
for redemption pursuant to Section 2.02 hereof, upon payment of the portion so
called for redemption, the Note Trustee shall make an appropriate notation upon
the Bond of the principal amount so redeemed.

SECTION 2.05. Provisions of Indenture
Not Applicable. The provisions of Article Four of the Indenture, as amended and
supplemented, shall not apply to the procedure for the exercise of any right of
redemption reserved by the Company, or to any mandatory redemption provided, in
this Article in respect of the Bonds of the Medium-Term Notes Series E. There
shall be no sinking fund for the Bonds of the Medium-Term Notes Series E.

ARTICLE III.

CREDITS WITH RESPECT TO BONDS OF THE MEDIUM-TERM NOTES SERIES E.

Section
3.01. Credits. In addition to any other credit, payment or satisfaction to
which the Company is entitled with respect to the Bonds of the Medium-Term
Notes Series E, the Company shall be entitled to credits against amounts
otherwise payable in respect of the Bonds of the Medium-Term Notes Series E in
an amount corresponding to (i) the principal amount of any of the Companys
Series E Notes issued under the Note Indenture surrendered to the Note Trustee
by the Company, or purchased by the Note Trustee, for cancellation, (ii) the
amount of money held by the Note Trustee and available and designated for the
payment of principal or redemption price (exclusive of any premium) of, and/or
interest on, the Series E Notes, regardless of the source of payment to the
Note Trustee of such moneys and (iii) the amount by which principal of and
interest due on the Bonds of the Medium-Term Notes Series E exceeds principal
of and interest due on the Series E Notes. The Note Trustee shall make notation
on such Bonds authorized hereby of any such credit.

SECTION 3.02. Certificate of the
Company. A certificate of the Company signed by the President or any Vice
President, and attested to by the Secretary or any Assistant Secretary, and
consented to by the Note Trustee, stating that the Company is entitled to a
credit under Section 3.01 hereof or that Bonds of the Medium-Term Notes Series
E have been cancelled, and setting forth the basis therefor in reasonable
detail, shall be conclusive evidence of such entitlement, and the Trustee shall
accept such certificate as such evidence without further investigation or
verification of the matters stated therein.

ARTICLE IV.

MISCELLANEOUS.

Section
4.01. Authentication of Bonds of Medium-Term Notes Series E. None of the Bonds
of the Medium-Term Notes Series E, the issue of which is provided for by this
supplemental indenture, shall be authenticated by or on behalf of the Trustee
except in accordance with the provisions of the Indenture, as amended and
supplemented, and this supplemental indenture, and upon compliance with the
conditions in that behalf therein contained.

SECTION 4.02. Additional Restrictions on
Authentication of Additional Bonds Under Indenture. The Company covenants that
from and after the date of execution of this supplemental indenture no
additional bonds (as defined in Section 1 of Article Two of the Indenture)
shall be authenticated and delivered by the Trustee under Subdivision A of
Section 4 of said Article Two on account of additions or improvements to the
mortgaged property;

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9

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) unless
 the net earnings of the Company for the period required by Subdivision C of
 Section 6 of said Article Two shall have been at least twice the fixed
 charges (in lieu of 1-3/4 times such fixed charges, as required by said
 Subdivision C); and for the purpose of this condition (a) such fixed charges
 shall in each case include interest on the bonds applied for,
 notwithstanding the parenthetical provision contained in clause (4) of said
 Subdivision C, and (b) in computing such net earnings there shall be included
 in expenses of operation (under paragraph (c) of said Subdivision C) all
 charges against earnings for depreciation, renewals or replacements, and all
 certificates with respect to net earnings delivered to the Trustee in
 connection with any authentication of additional bonds under said Article Two
 shall so state; and (2) except to the extent of 60% (in lieu of 75% as
 permitted by Subdivision A of Section 7 of said Article Two) of the cost or
 fair value to the Company of the additions or improvements forming the basis
 for such authentication of additional bonds.

SECTION 4.03. Restriction on Dividends.
The Company will not declare or pay any dividend on any shares of its common
stock (other than dividends payable in shares of its common stock) or make any
other distribution on any such shares, or purchase or otherwise acquire any
such shares (except shares acquired without cost to the Company) whenever such
action would reduce the earned surplus of the Company to an amount less than
$10,000,000 or such lesser amount as may remain after deducting from said
$10,000,000 all amounts appearing in the books of account of the Company on
December 31, 1948, which shall thereafter, pursuant to any order or rule of any
regulatory body entered after said date, be required to be removed, in whole or
in part, from the books of account of the Company by charges to earned surplus.

SECTION 4.04. Use of Facsimile Seal and
Signatures. The seal of the Company and any or all signatures of the officers
of the Company upon any of the Bonds of the Medium-Term Notes Series E may be
facsimiles.

SECTION 4.05. Time
for Making of Payment. All payments of principal or redemption price of, and
interest on, the Bonds of the Medium-Term Notes Series E shall be made either
prior to the due date thereof or on the due date thereof in immediately
available funds. In any case where the date of any such payment shall be a
Saturday or Sunday or a legal holiday or a day on which banking institutions in
the city of payment are authorized by law to close, then such payment need not
be made on such date but may be made on the next succeeding business day with
the same force and effect as if made on the due date, and no interest on such
payment shall accrue for the period after such date.

SECTION 4.06. Effective Period of
Supplemental Indenture. The preceding provisions of Articles I, II and III of
this supplemental indenture shall remain in effect only so long as any of the
Bonds of the Medium-Term Notes Series E shall remain outstanding.

SECTION 4.07. Effect of Approval of
Board of Public Utilities of the State of New Jersey. The approval of the Board
of Public Utilities of the State of New Jersey of the execution and delivery of
these presents and of the issue of any Bond of the Medium-Term Notes Series E
shall not be construed as approval of said Board of any other act, matter or
thing which requires approval of said Board under the laws of the State of New
Jersey.

SECTION 4.08. Execution in Counterparts.
For the purpose of facilitating the recording hereof, this supplemental
indenture has been executed in several counterparts, each of which shall be and
shall be taken to be an original, and all collectively but one instrument.

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10

IN WITNESS WHEREOF, Public Service
Electric and Gas Company, party hereto of the first part, after due corporate
and other proceedings, has caused this supplemental indenture to be signed and
acknowledged or proved by its President or one of its Vice Presidents and its
corporate seal hereunto to be affixed and to be attested by the signature of
its Secretary or an Assistant Secretary; and US Bank National Association, as
Trustee, party hereto of the second part, has caused this supplemental indenture
to be signed and acknowledged or proved by its President or one of its Vice
Presidents, and its corporate seal to be hereunto affixed and to be attested by
the signature of its Secretary, Assistant Secretary; Vice President, or an
Assistant Vice President. Executed and delivered this 5th day of April 2007.

|                         |  |                              |                 
|------------------------ |  | ---------------------------- | ----------------
|Attest:                  |  |                              |                 
|                        
|                         |  | PUBLIC SERVICE ELECTRIC AND 
|                         |  | GAS COMPANY                 
|                         |  |                              |                 
|                         |  | By                           |                 
|                         |  |                              |                 
|                         |  |                              | M. A. Plawner   
|                         |  |                              | Vice President  
|                        
|Attest:                  |  |                              |                 
|                         |  |                              |                 
|                         |  |                              |                 
|S.L. Guibord             |  |                              |                 
|Assistant Secretary      |  |                              |                 
|                         |  |                              |                 
|                         |  | US BANK NATIONAL ASSOCIATION
|                         |  |                              |                 
|                         |  | By                           |                 
|                         |  |                              |                 
|                         |  |                              | N. Barnes       
|                         |  |                              | Vice
  President
|                        
|Attest:                  |  |                              |                 
|                         |  |                              |                 
|                         |  |                              |                 
|T. Brett                 |  |                              |                 
|Assistant Vice President |  |                              |                 

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11

|                    |      |  | 
|------------------- | ---- |  | 
|STATE OF NEW JERSEY | )    |  | 
|                    | SS:) |  | 
|COUNTY OF ESSEX     | )    |  | 

Be
it Remembered, that on this 5th day of April, 2007, before me, the subscriber,
a Notary Public of the State of New Jersey, personally appeared M.A. Plawner,
who, I am satisfied, is a Vice President of Public Service Electric and Gas
Company, one of the corporations named in and which executed the foregoing instrument,
and is the person who signed the said instrument as such officer, for and on
behalf of such corporation, and I having first made known to him the contents
thereof, he did acknowledge that he signed the said instrument as such officer,
that the said instrument was made by such corporation and sealed with its
corporate seal, that the said instrument is the voluntary act and deed of such
corporation, made by virtue of authority from its Board of Directors, and that
said corporation the mortgagor, has received a true copy of said instrument.

| |                                      
| | -------------------------------------
| |                                      
| | June Barnett                         
| | Notary
  Public of New Jersey        
| | My
  Commission Expires July 31, 2008

|                    |      | 
|------------------- | ---- | 
|STATE OF NEW JERSEY | )    | 
|                    | SS:) | 
|COUNTY OF ESSEX     | )    | 

Be
it Remembered, that on this 5th day of April 2007, before me, the subscriber, a
Notary Public of the State of New Jersey, personally appeared Norman Barnes,
who, I am satisfied, is a Vice President of US Bank National Association, one
of the corporations named in and which executed the foregoing instrument, and
is the person who signed the said instrument as such officer, for and on behalf
of such corporation, and I having first made known to him the contents thereof,
he did acknowledge that he signed the said instrument as such officer, that the
said instrument was made by such corporation and sealed with its corporate
seal, and that the said instrument is the voluntary act and deed of such
corporation, made by virtue of authority from its Board of Directors.

| |                                      
| | -------------------------------------
| |                                      
| | Melody
  Nedrick                     
| | Notary
  Public of New Jersey        
| | My
  Commission Expires March 3, 2010

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12

CERTIFICATE OF RESIDENCE

US
Bank National Association, Mortgagee and Trustee within named, hereby certifies
that its precise residence is 21 South Street, Morristown, New Jersey 07960.

| |                              |               
| | ---------------------------- | --------------
| | US BANK NATIONAL ASSOCIATION
| |                              |               
| | By                           |               
| |                              |               
| |                              | N. Barnes     
| |                              | Vice President

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