DEFERRED COMPENSATION PLAN FOR CERTAIN EMPLOYEES OF


                  COMMUNITY ENERGY ALTERNATIVES, INCORPORATED





                                February 1, 1995


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                                TABLE OF CONTENTS


1.    PURPOSE................................................................1

2.    DEFINITIONS OF THE TERMS USED IN THIS PLAN.............................1
      (a)   "Account"........................................................1
      (b)   "Affiliate"......................................................1
      (c)   "Assets".........................................................1
      (d)   "Beneficiary"....................................................1
      (e)   "Committee"......................................................1
      (f)   "Company"........................................................1
      (g)   "Compensation"...................................................2
      (h)   "Deferrable SAR".................................................2
      (i)   "Deferred Compensation"..........................................2
      (j)   "Disability".....................................................2
      (k)   "Employee".......................................................2
      (l)   "Plan"...........................................................2
      (m)   "SAR Income".....................................................2
      (n)   "SAR Plan".......................................................2

3.    ELECTION AS TO THE AMOUNT OF COMPENSATION AND/OR
      SAR INCOME THAT IS TO BE DEFERRED......................................2

4.    HOW THE ACCOUNT IS TO BE MAINTAINED....................................3
      (a)   Establishment of Account.........................................3
      (b)   Interest on Assets in the Account................................3
      (c)   Title and Beneficial Ownership of Assets.........................4

5.    DISTRIBUTION FROM THE ACCOUNT..........................................4
      (a)   Election as to the Commencement of the Distribution..............4
      (b)   Election as to the Timing of the Distribution(s).................4
      (c)   Distribution in Case of Certain Disability.......................5
      (d)   Distribution in Case of Death....................................5
      (e)   Request for Change in Distribution...............................6
      (f)   Not Terminated if Transferred to an Affiliate....................6
      (g)   Company may Distribution in Lump Sum if Distributable Amount
            Less than $5,000.................................................6
      (h)   Delay of Certain Distributions...................................6

6.    ASSIGNMENT.............................................................7

7.    PLAN DOES NOT CONSTITUTE AN EMPLOYMENT AGREEMENT.......................7

8.    AMENDMENT OR TERMINATION OF THE PLAN BY THE COMPANY....................7

9.    WHAT CONSTITUTES NOTICE................................................8

10.   ADVANCE DISCLAIMER OF ANY WAIVER ON THE PART OF THE
      COMPANY................................................................8

11.   EFFECT ON INVALIDITY OF ANY PART OF THE PLAN...........................8

12.   PLAN BINDING ON ANY SUCCESSOR OWNER....................................8

13.   LAWS GOVERNING THIS PLAN...............................................9

14.   WITHHOLDING FOR TAXES..................................................9

15.   MISCELLANEOUS..........................................................9

SCHEDULE A..................................................................10

SCHEDULE B..................................................................12



<PAGE>


             DEFERRED COMPENSATION PLAN FOR CERTAIN EMPLOYEES OF
                 COMMUNITY ENERGY ALTERNATIVES, INCORPORATED
                                February 1, 1995

      1.....PURPOSE.....The  purpose  of this  Plan is to  provide a method to
certain  select and key  employees  of the  Company to defer  compensation  as
provided herein.
      2.....DEFINITIONS OF THE TERMS USED IN THIS PLAN.     As  used  in  this
Plan, the following words and phrases shall have the meanings indicated:
            (a)..."Account" - The Deferred  Compensation  Account described in
Paragraph 4 of this Plan.
            (b)..."Affiliate"  -  Any  organization  which  is  a  member  of  a
controlled group of corporations (as defined in the Internal Revenue Code (Code)
section  414(b) as modified by Code section  415(h)) which includes the Company,
or any trades or businesses (whether or not incorporated) which are under common
control (as defined in Code section  414(c) as modified by Code section  415(h))
with the Company, or a member of an affiliated service group (as defined in Code
section  414(m)) which includes the Company,  or any other entity required to be
aggregated with the Company pursuant to regulations promulgated pursuant to Code
section 414(o).
            (c)..."Assets" - All Compensation, SAR Income and interest that have
been credited to an Employee's  Account in accordance  with  Paragraph 4 of this
Plan.
            (d)..."Beneficiary"   -   The   individual(s)   and/or   entity(ies)
designated and defined by Schedule B of the Plan.
            (e)..."Committee"- The Compensation Committee of the Company.
            (f)..."Company" --  Community  Energy  Alternatives,  Incorporated
and Affiliates.


<PAGE>
            (g)..."Compensation"  - The total  remuneration  paid to an Employee
for services rendered to the Company or an Affiliate  excluding the Company's or
Affiliate's cost for any public or private employee benefit plan.
            (h)..."Deferrable  SAR" - A stock  appreciation  right under the SAR
Plan  granted no more than five  years  before  the date of any  deferral  under
Section 3 of this Plan.
            (i)..."Deferred  Compensation" - The amount of compensation deferred
pursuant to Paragraph 3 of this Plan.
            (j)..."Disability"   -  Disability   so  as  to  be  incapable  of
performing further work for the Company.
            (k) .."Employee" - Each employee of the Company as may be designated
by the Committee.
            (l)..."Plan"  -  This  Deferred   Compensation  Plan  for  Certain
Employees of Community Energy Alternatives, Incorporated.
            (m)..."SAR  Income"  - That  amount  to  which  an  Employee  may be
entitled to receive pursuant to the SAR Plan with respect to Deferrable SARs.
            (n)..."SAR   Plan"   -   The   Community   Energy    Alternatives,
Incorporated 1987 Stock Appreciation Rights Plan.
      3.....ELECTION AS TO THE AMOUNT OF COMPENSATION  AND/OR SAR INCOME THAT IS
TO BE DEFERRED.  An Employee may elect to defer any portion of his  Compensation
otherwise  payable  for  services  rendered  for the  Company  after the date of
adoption of this Plan.  An  Employee  may also elect to defer any portion of SAR
Income otherwise payable to him after the adoption of this Plan.
      Any such  election  must be made by filing with the Committee an "Election
in Connection With Deferral of  Compensation",  the form of which is attached to
this Plan as  Schedule A and is  hereinafter  referred  to as  "Schedule  A". An
Employee may change (using Schedule A for such purpose), not Later than December
31 of any year, the amount of  Compensation  and/or SAR Income to be deferred by
him with respect to the next succeeding  calendar year or years. In the calendar
year this Plan is  adopted,  or in the  calendar  year  that an  Employee  first
becomes  eligible to  participate in this Plan, an election may be made to defer
Compensation  and/or SAR Income for a part of that calendar  year.  Compensation
and/or  SAR  Income  may be  deferred  prospectively  only,  and the  amount  of
Compensation  and/or SAR Income to be deferred  may be changed only with respect
to future calendar years.
      4.....HOW THE ACCOUNT IS TO BE MAINTAINED.
            (a)...Establishment  of Account - The  Company  shall  establish  an
Account for each Employee who elects to participate in the Plan. Each Employee's
Account  shall be credited at the end of each month with an amount  equal to the
Deferred  Compensation and/or SAR Income which would have otherwise been payable
to him that month.
            (b)...Interest  on Assets in the  Account - The Assets  credited  to
each Employee's Account shall accrue interest each calendar quarter at an annual
rate equal to the rate charged by The Chase  Manhattan  Bank,  N.A. on the first
business  day of such  calendar  quarter  for prime  commercial  loans of 90-day
maturity (based on actual number of days, 360 days to the year), plus 1/2 of 1%.
Such interest  shall be computed on the average daily balance in the  Employee's
Account  during each  calendar  quarter,  excluding  any Assets  which have been
distributed  from the  Employee's  Account  during  such  quarter,  and shall be
credited  to the  Employee's  Account and  compounded  on the last day of March,
June,  September  and  December,  and  interest  in Assets  distributed  from an
Employee's  Account  shall accrue in the same manner to the date of, be credited
to the Employee's Account on the date of, and be paid with, such distribution.
            (c)...Title  and Beneficial  Ownership of Assets - The Plan shall be
unfunded. The Company shall be not be required to segregate any amounts credited
to any Employee's  Account,  which shall be established  merely as an accounting
convenience.  Title and  beneficial  ownership of any Assets,  whether  Deferred
Compensation,  Deferred SAR Income or interest credited to an Employee's Account
pursuant to Paragraphs  4(a) and (b)  hereinabove,  shall at all times remain in
the  Company,  and an Employee  shall not have any  interest  whatsoever  in any
specific assets of the Company.
      5.....DISTRIBUTION FROM THE ACCOUNT.
            (a)...Election  as to  the  Commencement  of the  Distribution  - By
election on Schedule A filed with the  Committee,  an Employee may elect to have
distribution  from his Account  commence either (1) within sixty (60) days after
the date he ceases to be employed by the Company or, in the alternative,  (2) in
the month of January of the calendar year elected by the  Employee.  An Employee
may change such election by filing a subsequent  Schedule A, but any such change
shall apply only to future deferrals.  The actual date that  distribution  shall
commence  shall be a date  within the  elected  period to be  determined  by the
Committee in its sole discretion.
            (b)...Election as to the Timing of the Distribution(s) - By election
on Schedule A filed with the  Committee,  an  Employee  may elect to receive the
distribution of his Account in the form of (1) one lump-sum payment,  (2) annual
distributions over a five-year period or (3) annual distributions over a 10-year
period. An Employee may change such election by filing a subsequent  Schedule A,
but any such  change  shall  apply  only to  future  deferrals.  In the  event a
lump-sum  payment is made under this Plan, the Assets  credited to an Employee's
Account,  including interest at the rate provided in Paragraph 4(b) of this Plan
to the  date  of  distribution,  shall  be  paid  to the  Employee  on the  date
determined under Paragraph 5(a) of this Plan. In the case of a distribution over
a period of years,  the Company shall pay to the Employee on the date determined
under Paragraph 5(a) of this Plan and on the yearly  anniversaries of such date,
annual  installments  of the  unpaid  balance  of the  Assets in the  Employee's
Account,  including  interest  on the  unpaid  balance at the rate  provided  in
Paragraph  4(b) of this  Plan to the date of  distribution.  The  amount of each
installment  shall be determined by multiplying  the then unpaid  balance,  plus
accrued  interest,  in the  Employee's  Account by a fraction,  the numerator of
which is one and the  denominator of which is the number of annual  installments
remaining to be paid.
            (c)...Distribution  in Case of Certain  Disability - In the event of
an Employee's  Disability prior to a calendar year elected by the Employee under
Paragraph 5(a)(2) of this Plan for distribution to commence, distribution of the
Employee's  Account shall commence within six (6) months after such  Disability,
in accordance with the Employee's  election under Paragraph 5(b) of this Plan as
to the form of distribution.  The actual date that  distribution  shall commence
shall be a date  within  such  six (6)  month  period  to be  determined  by the
Committee in its sole discretion.
            (d)...Distribution  in Case of Death - In the event of an Employee's
death,  the  balance  of the  Employee's  Account  shall be  distributed  to the
Employee's  Beneficiary(ies)  over a period of not more than five (5) years,  in
accordance  with his election on Schedules A and B filed with the  Committee for
distribution  in case of  death.  Such  distribution  shall  be made in a manner
consistent  with  Paragraph 5(b) of this Plan and shall commence in the month of
January of the year after the year of the  Employee's  death,  on a date  within
said month to be determined by the Committee in its sole discretion.  Additional
annual payments for distributions made over a period of more than one year shall
be made on the yearly  anniversaries of such date. In the event of an Employee's
death after  distribution of his Account has commenced,  any election under this
paragraph  5(d) shall not extend the time of payment of his  Account  beyond the
time when  distribution  would have been completed if he had lived.  An Employee
may change Beneficiary  designations by filing a subsequent  Schedule B with the
Committee.
            (e)...Request for Change in Distribution - An Employee,  Beneficiary
or a legal  representative  may  request a change in the  timing,  frequency  or
amount of payments made from an Employee's  Account by filing a written  request
therefor with the Committee.  The Committee may, in its sole  discretion,  grant
such request only if such request specifies appropriate circumstances to justify
such a change  to  prevent  undue  hardship.  The  Committee  shall  inform  the
Employee,  Beneficiary or  representative of its decision within sixty (60) days
of its receipt of the written request.
            (f)...Not  Terminated  if  Transferred  to an  Affiliate  - For  the
purposes of this Paragraph 5, an Employee shall not be deemed to have terminated
his  employment  if he is  transferred  to  and  remains  in  the  employ  of an
Affiliate.
            (g)...Company  may Distribution in Lump Sum if Distributable  Amount
Less  than  $5,000  -  The  Company  reserves  the  right  to  make  a  lump-sum
distribution,  notwithstanding  any other  provision of this Plan,  if the total
Assets  in an  Employee's  Account  are  $5,000  or less at any time  after  the
Employee ceases to be employed by the Company.
            (h)...Delay  of Certain  Distributions  -  Notwithstanding  anything
contained in this Plan to the contrary,  distribution  of an amount equal to 50%
of what the Company's  withholding  obligation for Federal and applicable  state
income tax purposes had the Company been  obligated to withhold in the year that
the Employee  elected to redeem such Deferrable SARs, would have been in respect
of SARs  which  were  vested  under the terms of the SAR Plan at the time of the
election to defer income related thereto, shall be deferred as described in this
paragraph.  Such deferred amount,  and all interest accrued with respect thereto
under  this Plan,  shall be paid in one lump sum upon the  earlier of the end of
(a) eleven (11) years from the date of the exercise of the vested SAR or (b) the
date upon which the audit period for the Company's  Federal or applicable  state
income  tax  return  for the year in  which  the  vested  Deferrable  SARs  were
exercised closes. Except,  however, if at the time noted in (a), above the issue
of the Company's  withholding  obligation in respect of such SAR Income is being
contested,  distribution of all amounts otherwise  distributable,  not exceeding
the amount in controversy, will be delayed until resolution of such contest.
      6.....ASSIGNMENT.  No benefit under the Plan shall in any manner or to any
extent be assigned,  alienated  or  transferred  by any Employee or  Beneficiary
under the Plan or be subject to attachment, garnishment or other legal process.
      7.....PLAN  DOES NOT CONSTITUTE AN EMPLOYMENT  AGREEMENT.  This Plan shall
not  constitute a contract for the  continued  employment of any Employee by the
Company. The Company reserves the right to modify an Employee's  Compensation at
any time and from time to time as it considers  appropriate and to terminate his
employment for any reason at any time notwithstanding this Plan.
      8.....AMENDMENT  OR TERMINATION  OF THE PLAN BY THE COMPANY.  The Board of
Directors of the Company may, in its sole discretion, amend, modify or terminate
this Plan at any time, provided,  however, that no such amendment,  modification
or termination  shall  materially  adversely  affect the right of an Employee in
respect of  Deferred  Compensation  previously  earned by him which has not been
paid,  unless such  Employee or his legal  representative  shall consent to such
change.
      9.....WHAT  CONSTITUTES NOTICE. Any notice to an Employee,  Beneficiary or
legal  representative  hereunder  shall be given either by  delivering  it or by
depositing  it in the United  States  mail,  postage  prepaid,  addressed to his
last-known  address.  Any  notice  to the  Company  or the  Committee  hereunder
(including  the filing of Schedules A and B) shall be given either by delivering
it,  or  depositing  it in the  United  States  mail,  postage  prepaid,  to the
Secretary of the Employee Benefits Policy Committee,  Public Service  Enterprise
Group Incorporated, 80 Park Plaza, T4B, Newark, New Jersey 07101.
      10....ADVANCE DISCLAIMER OF ANY WAIVER ON THE PART OF THE COMPANY. Failure
by the Company to insist upon strict compliance with any of the terms, covenants
or conditions hereof shall not be deemed a waiver of any such term,  covenant or
condition,  nor  shall  any  waiver  or  relinquishment  of any  right  or power
hereunder at any one or more times be deemed a waiver or  relinquishment  of any
such right or power at any other time or times.
      11....EFFECT ON  INVALIDITY OF ANY PART OF THE PLAN.  The  invalidity or
unenforceability  of any provision  hereof shall in no way affect the validity
or enforceability of any other provision.
      12....PLAN  BINDING ON ANY SUCCESSOR OWNER.  Except as otherwise  provided
herein, this Plan shall inure to the benefit of and be binding upon the Company,
its successors and assigns,  including but not limited to any corporation  which
may acquire all or  substantially  all of the  Company's  assets and business or
with or into which the Company may be consolidated or merged.
      13....LAWS  GOVERNING THIS PLAN. Except to the extent federal law applies,
this Plan shall be governed by the laws of the State of New Jersey.
      14....WITHHOLDING  FOR TAXES.  The Company  shall have the right to deduct
from any payment any sums  required to be withheld by federal,  state,  or local
tax law. There is no obligation  hereunder that any  Participant or other person
be advised in advance of the  existence  of the tax or the amount so required to
be withheld.
      15....MISCELLANEOUS.  The  masculine  pronoun  shall  mean the  feminine
wherever appropriate.


<PAGE>


                                                                      SCHEDULE A

              DEFERRED COMPENSATION PLAN FOR CERTAIN EMPLOYEES OF
           COMMUNITY ENERGY ALTERNATIVES, INCORPORATED (THE "PLAN")

             Elections In Connection With Deferral Of Compensation

Section 1...Election As To Compensation To Be Deferred.

Note:             THIS  SECTION IS TO BE USED TO MAKE OR TO CHANGE
            ANY  ELECTION  UNDER  PARAGRAPH  3 OF  THE  PLAN.  ANY
            CHANGE  IN  ELECTION   MUST  BE  MADE  NO  LATER  THAN
            DECEMBER  31 OF THE YEAR  PRECEDING  THE YEAR IN WHICH
            YOU WISH THE CHANGE TO APPLY.

      I hereby elect to defer, in accordance with the provisions of the Plan:

      (a)   _________________ a month of my Compensation;
      (b)   All of my Compensation  in excess of  $_______________
            per year;
      (c)   __________%   of  any  payments   made  pursuant  to  the  grant  of
            _________________________________   under   the   Community   Energy
            Alternatives Incorporated 1987 Stock
            Appreciation Rights Plan;
      (d)   __________% or  $_______________ of any award paid to me pursuant to
            the   Community   Energy   Alternatives    Incorporated    Incentive
            Compensation Plan;
      (e)   __________% or $_______________ of any project completion bonus paid
            to me.

Section 2...Election As To Commencement Of Distribution From Account

Note:       THIS  SECTION  IS TO BE USED (A) WHEN  FIRST  BECOMING  AN  EMPLOYEE
            COVERED BY THE PLAN AND (B) PRIOR TO DECEMBER 31ST OF ANY GIVEN YEAR
            IF THERE IS TO BE ANY  CHANGE  IN THE  ORIGINAL  ELECTION.  ANY SUCH
            CHANGE WILL ONLY APPLY TO FUTURE DEFERRALS.

      I hereby  elect,  in accordance  with the  provisions of the Plan, to have
distribution from my Account commence:

__________        (a)   Within  sixty (60) days  after I cease to be  employed
                  by the Company.
__________        (b)   In  the  month  of  January  of  the   calendar   year
                  following the year I cease to be employed by the Company.
__________        (c)   In the month of January, _______________________.

                                                Employee's Initials __________
                                                    Date _____________________


                                                                      SCHEDULE A

Section 3...Election As To The Timing Of The Distribution

Note:       THIS  SECTION  IS TO BE USED (A) WHEN  FIRST  BECOMING  AN  EMPLOYEE
            COVERED BY THE PLAN AND (B) PRIOR TO DECEMBER 31ST OF ANY GIVEN YEAR
            IF THERE IS TO BE ANY  CHANGE  IN THE  ORIGINAL  ELECTION.  ANY SUCH
            CHANGE WILL ONLY APPLY TO FUTURE DEFERRALS.

      I hereby elect, in accordance with the provisions of the Plan, to have the
distribution of my Account paid:

__________..(a)...In one lump sum
__________        (b)   In   annual   installments   over  a
                  period of five (5) years.
__________        (c)   In   annual   installments   over  a
                  period of ten (10) years.

Section 4...Election As To Method Of Distribution In Case Of Death

Note:             THIS  SECTION TO BE USED TO SELECT THE METHOD OF
            DISTRIBUTION  IN THE CASE OF  DEATH.  PERIOD  SELECTED
            MAY NOT BE MORE THAN FIVE (5) YEARS.

      In case of my death, I hereby elect,  in accordance with the provisions of
the Plan,  to have the  distribution  of my Account  paid over a period of _____
year(s) to my Beneficiary(ies) designated on Schedule B.

___________________, 19__



------------------------------            ------------------------------------
WITNESS                                   EMPLOYEE SIGNATURE


<PAGE>


                                                                      SCHEDULE B

              DEFERRED COMPENSATION PLAN FOR CERTAIN EMPLOYEES OF
           COMMUNITY ENERGY ALTERNATIVES, INCORPORATED (THE "PLAN")

      DESIGNATION OF BENEFICIARY(IES)

      In the event of my death,  I hereby  designate the following  individuals,
fiduciaries  or  other  entities,   either  in  their  own  right  or  in  their
representative  capacity,  in the  proportions  and in the  priority of interest
designated, to be the beneficiaries of any benefits owing to me under the Plan.
      PRIMARY BENEFICIARIES - The following  beneficiary(ies)  shall receive all
benefits  payable  under  the Plan in the  event of my death in the  proportions
designated hereunder. If any one or more of the primary beneficiaries designated
hereunder  shall  predecease  me, such  beneficiary's  share(s) shall be divided
equally among the remaining primary beneficiaries.

      NAME AND PRESENT            PROPORTIONATE INTEREST
ADDRESS OF PRIMARY BENEFICIARIES        OF PRIMARY              RELATIONSHIP
                                     BENEFICIARY(IES)            TO EMPLOYEE

-------------------------               ----------%            ---------------

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

-------------------------               ----------%            ---------------

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

-------------------------               ----------%            ---------------

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

-------------------------               ----------%            ---------------

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


                                                      ------------------------
                                                      Employee's Initials


<PAGE>


                                                                      SCHEDULE B

      SECONDARY BENEFICIARIES - The following beneficiary(ies) shall receive all
benefits  payable  under  the Plan in the  event of my death in the  proportions
designated  hereunder only if all of my primary  beneficiaries  have predeceased
me. If all primary  beneficiaries  have predeceased me and if any one or more of
the secondary  beneficiaries  designated  hereunder  shall  predecease  me, such
secondary  beneficiary's  share(s) shall be divided  equally among the remaining
secondary beneficiaries.

      NAME AND PRESENT            PROPORTIONATE INTEREST
    ADDRESS OF SECONDARY               OF SECONDARY             RELATIONSHIP
      BENEFICIARY(IES)               BENEFICIARY(IES)            TO EMPLOYEE

-------------------------               ----------%            ---------------

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

-------------------------               ----------%            ---------------

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

-------------------------               ----------%            ---------------

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

-------------------------               ----------%            ---------------

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

      ESTATE - In the event I have declined to designate a beneficiary hereunder
or if all of the  beneficiaries  that I have designated  predecease me, then all
benefits payable under the Plan shall be payable to my estate.
Date:____________________

------------------------------------      ------------------------------------
WITNESS                                     EMPLOYEE'S SIGNATURE